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Income Tax Appellate Tribunal, “B” BENCH, PUNE
Before: SHRI D. KARUNAKARA RAO, AM & SHRI LALIET KUMAR, JM
आदेश / ORDER PER LALIET KUMAR, JM :
This appeal preferred by the assessee emanates from the order of the Ld. CIT(Appeals)-2, Pune dated 07.08.2017 for the assessment year 2009-10 as per the following grounds of appeal on record:
“1. On the facts and circumstances of the case and in law, the Ld. CIT(A) was not justified in dismissing the appeal of the assessee thereby confirming the order of AO of Rs.6,61,000/- as undisclosed income. The AO failed to substantiate the addition as the addition has not been made either of Ss. 69, 69A, 69B of the Act which assumes importance when assessee has not maintained books of account. In view of this addition is not sustainable. It be deleted.
On the facts and circumstances of the case and in law the reopening of the assessment S. 147 is bad in law and without jurisdiction. The AO failed to pass „speaking order dealing with each and every objection on merits. The Ld. CIT(A) failed to appreciate this legal position as mandated by Hon‟ble Supreme Court. The assessment being illegal and without jurisdiction as it was passed without following the mandated guidelines. It be cancelled.
3. On the facts and circumstances of the case and in law the Ld. CIT(A) failed to pass „speaking order‟ on the ground raised
before him that the AO initiated action under S.147 without recording satisfaction to initiate reassessment proceeding. The question raised was core issue going to the root of the matter. The Ld. CIT(A) failed to appreciate the issue in its proper perspective. The Order of the Ld. CIT(A) be set aside.
4. On the facts and circumstances of the case and in law the Ld. CIT(A) was not justified in confirming the adhoc addition of Rs.92,482/- made by the AO. It be deleted.
5. On the facts and circumstances of the case and in law the Ld. CIT(A) was not justified in confirming the addition made by the AO of Rs.1,25,000/- on account of in opening and closing balance in capital account especially when the assessee has not maintained the books of account. The addition being unsustainable be deleted.
6. The appellant craves to leave, add/amend or alter any of the above grounds of appeal.
2. The assessee has modified the ground No.3 in the appeal memo which reads as under:
“On the facts and circumstances of the case and in law not only that the AO failed to pass a „speaking order‟ in response to Grounds before AO but initiated action under S. 147 without recording satisfaction to initiate action u/s.147 which goes to the root of the matter and Ld. AO issued the notice u/s.148 to conduct deep verification of opening and closing balances which needs deep verification. This is contrary to verdict of Hon‟ble Supreme Court in the matter. The assessment being illegal and without jurisdiction be quashed.”
3. Apropos Ground No.1, the assessee has drawn our attention to Para 19 of the assessment order wherein the Assessing Officer had recorded that during the course of assessment, the assessee has failed to provide any evidence and source of investment in the property purchased by the assessee. The Assessing Officer after considering the submissions given by the assessee has accepted the saving available with the assessee for an amount of Rs.3,00,000/-. However, he had held that the remaining amount of Rs.6, 61,000/- invested by the assessee in purchase of immovable property remains unexplained. Hence, the AO had made the addition of Rs.6,61,000/-.
4. Feeling aggrieved, the assessee filed appeal before the Ld. CIT(Appeals) and the Ld. CIT(Appeals) at Para 5.2 dealt with the contentions of the assessee and has reiterated the findings recorded by the Assessing Officer. For the sake of completeness, Para 5.2 is reproduced herein below:
“5.2 I have gone through the facts of the case and it is observed that neither during the assessment proceedings nor at the appellate stage, any details have been filed which can explain the sources out of which the investment was made in the immovable property. Considering the returned income shown by the appellant over the years, the source apparently remained unexplained. The AO has already been very reasonable in giving benefit to the extent of Rs.3,00,000/- out of past savings. No interference in the order of AO is called for in this regard and it is held that the AO was perfectly justified in making addition of Rs.6,61,000/- as unexplained investment u/s.69 of the IT Act, as the appellant has thoroughly failed to discharge his onus with regard to sources of investments in the immovable properties. The Ground No.2 is accordingly dismissed.”
Before us, the Ld. AR of the assessee reiterated the submissions made before the Assessing Officer as well as the Ld. CIT(Appeals). It was submitted that the assessee was a maths teacher with chate coaching classes and was also giving home tuitions and on account of this he had saved Rs.3,00,000/-. Further, he had also saved Rs.3,00,000/- from agricultural income received from agricultural activities of his family. However, to support the above said savings by tuitions and agricultural income no evidence was given by the assessee.
Per contra, the Ld. DR has relied upon the order of the lower Authorities.
We have heard the rival contentions and perused the material available on record. Despite the opportunities given by the Assessing Officer and the Ld. CIT(Appeals) to the assessee and also before us, the assessee failed to bring any evidence showing the sources of investment made by the assessee in purchasing properties. As the assessee failed to explain the investment made by him and sources thereof more particularly from coaching classes, home tuitions and agricultural activities, no interference is required in the findings given by the Ld. CIT(Appeals) and the same is thereby upheld. Thus, ground No.1 raised in appeal by the assessee is dismissed.
Ground Nos. 2 and 3 pertains to the re-opening of assessment proceedings and in this regard, the assessee has filed modified ground of Ground No.3 which is extracted herein above.
The Ld. DR has submitted that this issue has been already adjudicated by the Co-ordinate Bench of the Tribunal, Pune in the matter of assessee in 2187 & 2545/PUN/2017 for the assessment years 2008-09, 2013-14 and 2014-15 dated 09.05.2019 and the Co-ordinate Bench of the Tribunal, Pune has decided this issue against the assessee.
The Ld. AR of the assessee has submitted that the judgment of the Hon’ble High Court and the Jurisdictional High Court have not been considered while deciding this issue.
We have heard the submissions and perused the material available on record. We find that the Co-ordinate Bench of the Tribunal, Pune in the case of assessee in 2187 & 2545/PUN/2017 (supra.) has dealt with the identical issue vide Para 11 and 12 which are reproduced to the following effect:
“11. The assessee has also challenged the initiation of reassessment proceedings on the ground that the AO failed to obtain sanction before the issue of notice u/s.148. In this regard, the ld. CIT(A) has recorded on page 8 of the impugned order that notice u/s.148 was issued on 15-03- 2016 which is within a period of four years from the end of the relevant assessment year and further no scrutiny assessment was done earlier. He further observed that the requirement of approval is only when there is previous scrutiny assessment and the period of more than four years from the relevant assessment year has elapsed. The ld. AR could not point out any infirmity in the raison d‟etre given by the ld. CIT(A). We, therefore, refuse to interfere in the impugned order to this extent.
Another legal ground raised by the assessee is against not passing a separate order to the objections taken by the assessee against the initiation of re-assessment. In this regard, it is observed that notice u/s.148 was issued on 15-03-2016 which was served on 16-03-2016. No reply was filed in response to notice u/s.148. It is not coming either from the assessment order or from any other material that assessee raised any objection to the initiation of re-assessment proceedings, which could have warranted the passing of a separate order by the AO before espousing the assessment on merits. It is further pertinent to note on a perusal of the grounds taken before the ld. CIT(A) that no such issue was taken up. The ld. AR has not invited our attention towards any material divulging the raising of objections before the AO against the initiation of re assessment proceedings. In such circumstances, there could have been no occasion for the AO to pass a separate order disposing the objections to the re-assessment. We, therefore, dismiss this ground of appeal.”
12. In the present case, there is no change in facts and law and therefore, respectfully following the decision of Co-ordinate Bench of the Tribunal as mentioned herein above, we dismiss ground No. 2 and modified Ground No.3 raised in appeal by the assessee.
13. Ground No.4 pertains to ad-hoc disallowance made by the Assessing Officer and confirmed by the ld. CIT(Appeals) amounting to Rs.92,482/-.
The Ld. AR of the assessee has drawn our attention to Para 6 & 6.1 of the order of Ld. CIT(Appeals) and submitted that both the Authorities below have confirmed the addition on estimate basis by restricting disallowance to 15% and the same are reproduced to the following effect:
“6. In ground No.3, the appellant is aggrieved against addition of Rs.92,482/- being 15% of various expenses as the assessee failed to produce the supporting details like bills, vouchers etc. In the grounds, it has been submitted that the AO was not justified in making the disallowance as no books were maintained. 6.1 I do not find any merit in the argument taken particularly when the appellant himself is admitting that no details or books were maintained. I accordingly confirmed the AO‟s action in disallowing 15% of the expenses at Rs.92,482/-“
Per contra, the Ld. DR has relied upon the order of the lower Authorities.
We have heard the rival contentions and perused the order passed by the Assessing Officer as well as the Ld. CIT(Appeals) and making disallowance @15% is not emanating from the record and if we look at the order of the Assessing Officer, it is clear that the Assessing Officer made the disallowance based on estimate basis which comes to Rs.92,482/-. In our view, once the basic amount of Rs.6,16,000/- is added back as unexplained investment then the disallowance @15% made by the Assessing Officer and confirmed by the Ld. CIT(Appeals) is at higher side and therefore, we restrict the disallowance @5% of the 6,16,549/-. Thus, the assessee gets the relief of Rs.61,654/-. We order accordingly. Thus, ground No.4 raised in appeal by the assessee is partly allowed.
Ground No.5 pertains to the difference between opening balance of the present assessment year and closing balance of the earlier year.
The Ld. CIT(Appeals) has decided the issue vide Para 7.2 of his order in following manner:
“7.2 During the appellate proceedings, no argument whatsoever has been taken by the appellant against the addition so made and only legal arguments were raised against notice u/s.148 of the IT Act. Considering the facts noted in the assessment order, I hold that there is clear cut discrepancy of Rs.1,25,000/- in opening capital as compared to closing capital balance of the preceding year. The appellant is involved in the dubious practice of enhancing his capital balance without offering commensurate income in the return over the years. This sort of manipulation can never be permitted and therefore, the AO was perfectly justified in adding the same as unexplained credit. The order of the AO is accordingly confirmed and the ground is dismissed.”
18.1 The above said facts of difference between opening balance and closing balance was not rebutted by the Ld. AR of the assessee before the Ld. CIT(Appeals) and before us.
Per contra, the Ld. DR has relied upon the order of the lower Authorities.
We have heard the rival contentions and perused the material available on record. The order of the Ld. CIT(Appeals) seems to be reasonable and fair as no contrary documents or evidences to explain or reconcile the opening balance and closing balance was brought on record by the assessee. Thus, the order of the Ld. CIT(Appeals) is upheld. Accordingly, ground No.5 raised in appeal by the assessee is dismissed.
In the result, appeal of the assessee is partly allowed. 21.
Order pronounced on 07th day of February, 2020.
Sd/- Sd/- D. KARUNAKARA RAO LALIET KUMAR ACCOUNTANT MEMBER JUDICIAL MEMBER ऩुणे / Pune; ददनाांक / Dated : 07th February, 2020. SB आदेश की प्रनिलऱपप अग्रेपषि / Copy of the Order forwarded to : अऩीऱाथी / The Appellant. 1. प्रत्यथी / The Respondent. 2.
The CIT(Appeals)-2, Pune.