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Facts
The assessee failed to file a return of income for AY 2012-13, but engaged in significant transactions on the Multi Commodity Exchange (MCX). Upon noticing this, the AO initiated reassessment proceedings. During the assessment, credit entries in the assessee's bank account, claimed as professional fees, were added back as unexplained.
Held
The Tribunal held that the issue of whether the addition made was on a different ground than for which the case was reopened needed verification. It also noted that the Ld. CIT(A) had not provided an adequate opportunity of being heard to the assessee regarding the substantiation of professional fees. Therefore, the matter was restored to the CIT(A).
Key Issues
Whether the addition made by the AO was on a different issue than the one for which reassessment proceedings were initiated, and if the assessee was given a proper opportunity to present evidence for claimed professional fees.
Sections Cited
147, 148, 143(3), 68, 80D, 271(1)(c)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI BENCH “K (SMC
Before: SHRI OM PRAKASH KANT & SHRI RAHUL CHAUDHARY
ORDER
PER OM PRAKASH KANT, AM
This appeal by the assessee is preferred against order dated 30.03.2025 passed by the Ld. Additional/Joint Commissioner of Income-tax (Appeals) – 2, Chennai [hereinafter shall be referred as ‘Ld. CIT(A)’] for assessment year 2012-13, raising following grounds:
1. In the facts and circumstances of the case and in law, the Ld. Addl JCIT (Appeals)-2, Chennai has erred in upholding the addition of Rs. 8,00,187/- without making any addition in respect of reasons recorded for reopening and therefore the addition is bad in law as held in the case of CIT v. Jet Airways is bad in law as held in the case of CIT v. Jet Airways is bad in law as held in the case of CIT v. Jet Airways (I) Ltd. [2011] 331 ITR 236 (Bom)(HC). (I) Ltd. [2011] 331 ITR 236 (Bom)(HC).
2. In the facts and circumstances of the case and in law, the 2. In the facts and circumstances of the case and in law, the 2. In the facts and circumstances of the case and in law, the Ld. Addl.JCIT (Appeals) Ld. Addl.JCIT (Appeals)-2, Chennai has erred in confirming the 2, Chennai has erred in confirming the addition of Rs.8,00,187/ addition of Rs.8,00,187/- in respect of unexplained cash of unexplained cash credits, though they were the "Professional Fees" received credits, though they were the "Professional Fees" received credits, though they were the "Professional Fees" received during the Year. Year.
2. Before us, the Ld. Counsel for the assessee submitted that the Before us, the Ld. Counsel for the assessee submitted that the Before us, the Ld. Counsel for the assessee submitted that the ground No. 1 raised in the present appeal was not adjudicated by ground No. 1 raised in the present appeal was not adjudicated by ground No. 1 raised in the present appeal was not adjudicated by the Ld. CIT(A) and therefore, same might be treated as additional the Ld. CIT(A) and therefore, same might be treated as additional the Ld. CIT(A) and therefore, same might be treated as additional ground. The Ld. DR did not object for treating the said ground as ground. The Ld. DR did not object for treating the said ground ground. The Ld. DR did not object for treating the said ground additional ground. The said ground being purely of the legal in additional ground. The said ground being purely of the legal in additional ground. The said ground being purely of the legal in nature and not requiring nature and not requiring investigation of fresh facts fresh facts, same was admitted for adjudication admitted for adjudication.
Briefly stated, the facts Briefly stated, the facts of the case are that the assessee had are that the assessee had not filed a return of income for the relevant assessment year. Upon not filed a return of income for the relevant assessment year. Upon not filed a return of income for the relevant assessment year. Upon analysis of information available in the Income Tax Department’s analysis of information available in the Income Tax Department’s analysis of information available in the Income Tax Department’s database, it was noticed that the assessee had engaged in database, it was noticed that the assessee had engaged in database, it was noticed that the assessee had engaged in transactions transactions aggregating aggregating to to ₹51,53,51,129/- on the Multi Commodity Exchange (MCX) during the relevant financial year. In Commodity Exchange (MCX) during the relevant financial year. In Commodity Exchange (MCX) during the relevant financial year. In view of the same, and observing the failure of the assessee to file a view of the same, and observing the failure of the assessee to file a view of the same, and observing the failure of the assessee to file a return, the Assessing Officer recorded reasons to believe that return, the Assessing Officer recorded reasons to believe that return, the Assessing Officer recorded reasons to believe that income had escaped assessment and, accord income had escaped assessment and, accordingly, issued a notice ingly, issued a notice under Section 148 of the under Section 148 of the the Income-tax Act,1961( in short the Act) tax Act,1961( in short the Act) on 22.03.2019.
3.1 In response, the assessee filed a return of income on In response, the assessee filed a return of income on In response, the assessee filed a return of income on 03.04.2019 declaring a total income of ₹2,23,330/ 03.04.2019 declaring a total income of 2,23,330/-. Pursuant to statutory notices, the reas statutory notices, the reassessment was completed on 20.12.2019. sessment was completed on 20.12.2019. In the course of proceedings, the Assessing Officer observed credit In the course of proceedings, the Assessing Officer observed credit In the course of proceedings, the Assessing Officer observed credit entries in the assessee’s bank account which were claimed to entries in the assessee’s bank account which were claimed to entries in the assessee’s bank account which were claimed to represent professional fees received during the year. However, in the represent professional fees received during the year. However, in the represent professional fees received during the year. However, in the absence of supporting documentary evidence ng documentary evidence—such as contracts, such as contracts, agreements, or invoices agreements, or invoices—the explanation was not accepted, and the the explanation was not accepted, and the said amount was treated as unexplained under Section 68 of the said amount was treated as unexplained under Section 68 of the said amount was treated as unexplained under Section 68 of the Act.
4. On appeal, the Ld. CIT(A) affirmed the addition, holding that On appeal, the Ld. CIT(A) affirmed the addition, holding that On appeal, the Ld. CIT(A) affirmed the addition, holding that the assessee failed to discharge the onus of proving the nature and ailed to discharge the onus of proving the nature and ailed to discharge the onus of proving the nature and source of the credits. While the assessee asserted that the credits source of the credits. While the assessee asserted that the credits source of the credits. While the assessee asserted that the credits represented professional fees received from a U.S.-based entity represented professional fees received from a U.S. represented professional fees received from a U.S. (Moran and Knobel Inc.), no corroborative evidence was submitted. (Moran and Knobel Inc.), no corroborative evidence was submitted. (Moran and Knobel Inc.), no corroborative evidence was submitted. The CIT(A) also noted that even if such receipts were accepted as CIT(A) also noted that even if such receipts were accepted as CIT(A) also noted that even if such receipts were accepted as professional fees, the deduction of expenses claimed against the professional fees, the deduction of expenses claimed against the professional fees, the deduction of expenses claimed against the same remained unsubstantiated and, therefore, not allowable. The same remained unsubstantiated and, therefore, not allowable. same remained unsubstantiated and, therefore, not allowable. relevant finding of the Ld. CIT(A) is reproduced as under: relevant finding of the Ld. CIT(A) is reproduced as under: relevant finding of the Ld. CIT(A) is reproduced as under:
“5. Decision: ecision: 5.1 From the Assessment Order u/s 143(3) r.w.s. 147 dated 5.1 From the Assessment Order u/s 143(3) r.w.s. 147 dated 5.1 From the Assessment Order u/s 143(3) r.w.s. 147 dated 20.12.2019, it is ascertained that during the course of 20.12.2019, it is ascertained that during the course of 20.12.2019, it is ascertained that during the course of Assessment proceedings, the Assessing Officer has required Assessment proceedings, the Assessing Officer has required Assessment proceedings, the Assessing Officer has required the Appellant to furnish the particulars of credit entries in the the Appellant to furnish the particulars of credit entries in the the Appellant to furnish the particulars of credit entries in the Appellant's Bank Account. The appellant explained the same t's Bank Account. The appellant explained the same t's Bank Account. The appellant explained the same to be "Professional Fees" received during the Year. However, it to be "Professional Fees" received during the Year. However, it to be "Professional Fees" received during the Year. However, it stated in the Assessment Order that the Appellant has failed stated in the Assessment Order that the Appellant has failed stated in the Assessment Order that the Appellant has failed to substantiate the above claim with supporting documents/ to substantiate the above claim with supporting documents/ to substantiate the above claim with supporting documents/ evidences and hence t evidences and hence treated the same as unexplained. reated the same as unexplained. 5.2 On the other hand, the Appellant in his Grounds of Appeal
5.2 On the other hand, the Appellant in his Grounds of Appeal 5.2 On the other hand, the Appellant in his Grounds of Appeal has stated that the receipts were deposited in ICICI Bank of has stated that the receipts were deposited in ICICI Bank of has stated that the receipts were deposited in ICICI Bank of the Appellant's NRE A/c. by Moran and Knobel Inc. a US the Appellant's NRE A/c. by Moran and Knobel Inc. a US the Appellant's NRE A/c. by Moran and Knobel Inc. a US based company. And that the Net Income of Rs. based company. And that the Net Income of Rs. 1,79,238/ 1,79,238/- has been declared in the Return of Income. The Appellant has has been declared in the Return of Income. The Appellant has has been declared in the Return of Income. The Appellant has remained non remained non-responsive to the opportunities afforded during responsive to the opportunities afforded during the course of Appeal proceedings. The Appellant's Grounds the course of Appeal proceedings. The Appellant's Grounds the course of Appeal proceedings. The Appellant's Grounds have been considered carefully. Even if one were to accept the have been considered carefully. Even if one were to accept the have been considered carefully. Even if one were to accept the Appellant's explanation, there needs to be supporting details, pellant's explanation, there needs to be supporting details, pellant's explanation, there needs to be supporting details, documents and Bank Statements, Copy of Agreement/ documents and Bank Statements, Copy of Agreement/ documents and Bank Statements, Copy of Agreement/ Contract, etc to the explanation, as rightly mentioned by the Contract, etc to the explanation, as rightly mentioned by the Contract, etc to the explanation, as rightly mentioned by the Assessing Officer in para 5.1 of the Order. Thus, the Appellant Assessing Officer in para 5.1 of the Order. Thus, the Appellant Assessing Officer in para 5.1 of the Order. Thus, the Appellant has only repeated a has only repeated and reiterated what he had said during the nd reiterated what he had said during the Assessment proceedings in the Grounds of Appeal also Assessment proceedings in the Grounds of Appeal also Assessment proceedings in the Grounds of Appeal also without furnishing the supporting details. The Assessing without furnishing the supporting details. The Assessing without furnishing the supporting details. The Assessing Officer has mentioned the same as Bank Statements only. Officer has mentioned the same as Bank Statements only. Officer has mentioned the same as Bank Statements only. Therefore, in the circumstance, it is concluded Therefore, in the circumstance, it is concluded that since the that since the Appellant has failed to discharge his onus by substantiating Appellant has failed to discharge his onus by substantiating Appellant has failed to discharge his onus by substantiating the source of the credits, the Assessing Officer has rightly the source of the credits, the Assessing Officer has rightly the source of the credits, the Assessing Officer has rightly assessed the same as unexplained cash credits. Accordingly assessed the same as unexplained cash credits. Accordingly assessed the same as unexplained cash credits. Accordingly the relevant Grounds are dismissed. the relevant Grounds are dismissed. 5.3 The Appellant has al 5.3 The Appellant has also filed a Ground that the AO erred in so filed a Ground that the AO erred in calculating deduction under chapter VI by not allowing calculating deduction under chapter VI by not allowing calculating deduction under chapter VI by not allowing deduction u/s. 80D of Mediclaim amount of Rs. 17,482/ deduction u/s. 80D of Mediclaim amount of Rs. 17,482/ deduction u/s. 80D of Mediclaim amount of Rs. 17,482/- whose maximum allowable deduction is Rs.15,000 / whose maximum allowable deduction is Rs.15,000 / whose maximum allowable deduction is Rs.15,000 /-. It is found that the Appellant has claimed it in the Ret found that the Appellant has claimed it in the Ret found that the Appellant has claimed it in the Return of Income. In the absence of specific observation on such Income. In the absence of specific observation on such Income. In the absence of specific observation on such disallowance by the Assessing Officer, the Jurisdictional disallowance by the Assessing Officer, the Jurisdictional disallowance by the Assessing Officer, the Jurisdictional Assessing Officer is directed to verify the claim and allow if Assessing Officer is directed to verify the claim and allow if Assessing Officer is directed to verify the claim and allow if the same is allowable as per the conditions prescribed in this the same is allowable as per the conditions prescribed in this the same is allowable as per the conditions prescribed in this regard. The Ground is allowed for statistical e Ground is allowed for statistical purposes. purposes.”
5. Before us, the learned counsel for the assessee has raised an Before us, the learned counsel for the assessee has raised an Before us, the learned counsel for the assessee has raised an additional ground contending that the addition made by the additional ground contending that the addition made by the additional ground contending that the addition made by the Assessing Officer is unsustainable in law as it does not pertain to Assessing Officer is unsustainable in law as it does not pertain to Assessing Officer is unsustainable in law as it does not pertain to the issue for which the case was originally reopened. It is submitted ch the case was originally reopened. It is submitted ch the case was originally reopened. It is submitted that where reassessment proceedings are initiated for a specific that where reassessment proceedings are initiated for a specific that where reassessment proceedings are initiated for a specific reason, no addition can be made on a different issue unless the reason, no addition can be made on a different issue unless the reason, no addition can be made on a different issue unless the addition is also made on the issue for which reasons were recorded. addition is also made on the issue for which reasons were recorded. addition is also made on the issue for which reasons were recorded. In support, reliance is placed on the judgment of the port, reliance is placed on the judgment of the Hon’ble port, reliance is placed on the judgment of the Bombay High Court in Bombay High Court in CIT v. Jet Airways (I) Ltd. CIT v. Jet Airways (I) Ltd. [(2010) 195 Taxman 117 (Bom)]. Taxman 117 (Bom)].
5. Per contra, the learned Departmental Representative has Per contra, the learned Departmental Representative has Per contra, the learned Departmental Representative has submitted that in the instant case, no return was filed by the submitted that in the instant case, no return was filed by th submitted that in the instant case, no return was filed by th assessee in the regular course, and therefore, any addition made in assessee in the regular course, and therefore, any addition made in assessee in the regular course, and therefore, any addition made in the reassessment proceedings would be deemed to relate to income the reassessment proceedings would be deemed to relate to income the reassessment proceedings would be deemed to relate to income that had escaped assessment. It is thus contended that the ratio in that had escaped assessment. It is thus contended that the ratio in that had escaped assessment. It is thus contended that the ratio in Jet Airways (I) Ltd.(supra) (supra) is not applicable to the is not applicable to the facts of the present case.
We have heard rival submissions of the parties and perused We have heard rival submissions of the parties and perused We have heard rival submissions of the parties and perused the relevant materials on record the relevant materials on record. We find that section 147 of the Act . We find that section 147 of the Act provides that if the Assessing Officer has reason to believe that any provides that if the Assessing Officer has reason to believe that any provides that if the Assessing Officer has reason to believe that any income chargeable to tax income chargeable to tax has escaped assessment for any d assessment for any assessment, he may subject to the may subject to the provisos of section 148 to 153, provisos of section 148 to 153, assess or re-assess such income assess such income “and also any and also any other income chargeable to tax which has escaped assessment and which comes chargeable to tax which has escaped assessment and which comes chargeable to tax which has escaped assessment and which comes to his notice subsequently, in the co to his notice subsequently, in the course of proceedings under this urse of proceedings under this section”. Further, Explanation 3 to section 147 of the Act was . Further, Explanation 3 to section 147 of the Act was . Further, Explanation 3 to section 147 of the Act was inserted by the Finance (No. 2) inserted by the Finance (No. 2) Act of 2009, w.e.f. 01.04.1989 Act of 2009, w.e.f. 01.04.1989 , which provides as follows: provides as follows:
"Explanation 3. "Explanation 3.—For the purpose of assessment or reassessment For the purpose of assessment or reassessment under this section, the Assessing Officer may assess or reassess is section, the Assessing Officer may assess or reassess is section, the Assessing Officer may assess or reassess the income in respect of any issue, which has escaped assessment, the income in respect of any issue, which has escaped assessment, the income in respect of any issue, which has escaped assessment, and such issue comes to his notice subsequently in the course of the and such issue comes to his notice subsequently in the course of the and such issue comes to his notice subsequently in the course of the proceedings under this section, notwithstanding that the reasons proceedings under this section, notwithstanding that the reasons proceedings under this section, notwithstanding that the reasons for such issue have not been included in the reasons recorded under such issue have not been included in the reasons recorded under such issue have not been included in the reasons recorded under section (2) of section 148." sub-section (2) of section 148." 6.1 The issue came up before the Hon’ble Bombay High court in The issue came up before the Hon’ble Bombay High court in The issue came up before the Hon’ble Bombay High court in the case of Jet Airways (I) Ltd. (supra) as to whether Assessing the case of Jet Airways (I) Ltd. (supra) as to whether Assessing the case of Jet Airways (I) Ltd. (supra) as to whether Assessing Officer can make addition o Officer can make addition on any other ground if he did not make n any other ground if he did not make any addition on the issue for which case was reopened. The Hon’ble any addition on the issue for which case was reopened. any addition on the issue for which case was reopened. High Court held in in Jet Airways (I) Ltd. (supra) lays down that (supra) lays down that Explanation 3 does not override the principal condition under Explanation 3 does not override the principal condition under Explanation 3 does not override the principal condition under Section 147, namely, that Section 147, namely, that reassessment can validly proceed in reassessment can validly proceed in respect of other issues only if the Assessing Officer makes an respect of other issues only if the Assessing Officer makes an respect of other issues only if the Assessing Officer makes an addition on the issue which formed the basis of the belief that addition on the issue which formed the basis of the belief that addition on the issue which formed the basis of the belief that income had escaped assessment. The Hon’ble High Court held that income had escaped assessment. The Hon’ble High Court held that income had escaped assessment. The Hon’ble High Court held that the expression "and also" in the expression "and also" in Section 147(1) is to be read Section 147(1) is to be read cumulatively, and unless reassessment is made on the original cumulatively, and unless reassessment is made on the original cumulatively, and unless reassessment is made on the original issue, no addition on other issues is permissible. The relevant issue, no addition on other issues is permissible. issue, no addition on other issues is permissible. finding of the Hon’ble High Court in reproduced as under: finding of the Hon’ble High Court in reproduced as under: finding of the Hon’ble High Court in reproduced as under:
“16. Explanation 3 lifts the embargo, which was inserted by judicial 16. Explanation 3 lifts the embargo, which was inserted by judicial 16. Explanation 3 lifts the embargo, which was inserted by judicial interpretation, on the making of an assessment or reassessment on interpretation, on the making of an assessment or reassessment on interpretation, on the making of an assessment or reassessment on grounds other than those on the basis of which a notice was issued grounds other than those on the basis of which a notice was issued grounds other than those on the basis of which a notice was issued under section 148 setting out the reasons for the belie under section 148 setting out the reasons for the belie under section 148 setting out the reasons for the belief that income had escaped assessment. Those judicial decisions had held that had escaped assessment. Those judicial decisions had held that had escaped assessment. Those judicial decisions had held that when the assessment was sought to be reopened on the ground when the assessment was sought to be reopened on the ground when the assessment was sought to be reopened on the ground that income had escaped assessment on a certain issue, the that income had escaped assessment on a certain issue, the that income had escaped assessment on a certain issue, the Assessing Officer could not make an assessment or reassessme Assessing Officer could not make an assessment or reassessme Assessing Officer could not make an assessment or reassessment on another issue which came to his notice during the proceedings. on another issue which came to his notice during the proceedings. on another issue which came to his notice during the proceedings. This interpretation will no longer hold the field after the insertion of This interpretation will no longer hold the field after the insertion of This interpretation will no longer hold the field after the insertion of Explanation 3 by the Finance Act (No. 2) of 2009. However, Explanation 3 by the Finance Act (No. 2) of 2009. However, Explanation 3 by the Finance Act (No. 2) of 2009. However, Explanation 3 does not and cannot override the necessit Explanation 3 does not and cannot override the necessit Explanation 3 does not and cannot override the necessity of fulfilling the conditions set out in the substantive part of section fulfilling the conditions set out in the substantive part of section fulfilling the conditions set out in the substantive part of section
An Explanation to a statutory provision is intended to explain 147. An Explanation to a statutory provision is intended to explain 147. An Explanation to a statutory provision is intended to explain its contents and cannot be construed to override it or render the its contents and cannot be construed to override it or render the its contents and cannot be construed to override it or render the substance and core nugatory. Section 147 has thi substance and core nugatory. Section 147 has this effect that the s effect that the Assessing Officer has to assess or reassess the income ("such Assessing Officer has to assess or reassess the income ("such Assessing Officer has to assess or reassess the income ("such income") which escaped assessment and which was the basis of income") which escaped assessment and which was the basis of income") which escaped assessment and which was the basis of the formation of belief and if he does so, he can also assess or the formation of belief and if he does so, he can also assess or the formation of belief and if he does so, he can also assess or reassess any other income which has escaped assess reassess any other income which has escaped assess reassess any other income which has escaped assessment and which, comes to his notice during the course of the proceedings. which, comes to his notice during the course of the proceedings. which, comes to his notice during the course of the proceedings. However, if after issuing a notice under section 148, he accepted However, if after issuing a notice under section 148, he accepted However, if after issuing a notice under section 148, he accepted the contention of the assessee and holds that the income which he the contention of the assessee and holds that the income which he the contention of the assessee and holds that the income which he has initially formed a reason to believe had escap has initially formed a reason to believe had escaped assessment, ed assessment, has as a matter of fact not escaped assessment, it is not open to has as a matter of fact not escaped assessment, it is not open to has as a matter of fact not escaped assessment, it is not open to him independently to assess some other income. If he intends to do him independently to assess some other income. If he intends to do him independently to assess some other income. If he intends to do so, a fresh notice under section 148 would be necessary, the so, a fresh notice under section 148 would be necessary, the so, a fresh notice under section 148 would be necessary, the legality of which would be tested in the event legality of which would be tested in the event of a challenge by the of a challenge by the assessee. 17. We have approached the issue of interpretation that has arisen 17. We have approached the issue of interpretation that has arisen 17. We have approached the issue of interpretation that has arisen for decision in these appeals, both as a.matter of first principle, for decision in these appeals, both as a.matter of first principle, for decision in these appeals, both as a.matter of first principle, based on the language used in section 147(1) and on the basis of based on the language used in section 147(1) and on the basis of based on the language used in section 147(1) and on the basis of the precedent on the sub the precedent on the subject. We agree with the submission which ject. We agree with the submission which has been urged on behalf of the assessee that section 147(1) as it has been urged on behalf of the assessee that section 147(1) as it has been urged on behalf of the assessee that section 147(1) as it stands postulates that upon the formation of a reason to believe stands postulates that upon the formation of a reason to believe stands postulates that upon the formation of a reason to believe that income chargeable to tax has escaped assessment for any that income chargeable to tax has escaped assessment for any that income chargeable to tax has escaped assessment for any assessment year, the A assessment year, the Assessing Officer may assess or reassess ssessing Officer may assess or reassess such income "and also" any other income chargeable to tax which such income "and also" any other income chargeable to tax which such income "and also" any other income chargeable to tax which comes to his notice subsequently during the proceedings as having comes to his notice subsequently during the proceedings as having comes to his notice subsequently during the proceedings as having escaped assessment. The words "and also" are used in a escaped assessment. The words "and also" are used in a escaped assessment. The words "and also" are used in a cumulative and conjunctive sens cumulative and conjunctive sense. To read these words as being in e. To read these words as being in the alternative would be to rewrite the language used by the alternative would be to rewrite the language used by the alternative would be to rewrite the language used by Parliament. Our view has been supported by the background which Parliament. Our view has been supported by the background which Parliament. Our view has been supported by the background which led to the insertion of Explanation 3 to section 147. Parliament must led to the insertion of Explanation 3 to section 147. Parliament must led to the insertion of Explanation 3 to section 147. Parliament must be regarded as being aware of be regarded as being aware of the interpretation that was placed on the interpretation that was placed on the words "and also" by the Rajasthan High Court in Shri Ram the words "and also" by the Rajasthan High Court in Shri Ram the words "and also" by the Rajasthan High Court in Shri Ram Singh's case (supra). Parliament has not taken away the basis of Singh's case (supra). Parliament has not taken away the basis of Singh's case (supra). Parliament has not taken away the basis of that decision. While it is open to Parliament, having regard to the that decision. While it is open to Parliament, having regard to the that decision. While it is open to Parliament, having regard to the plenitude of its legisla plenitude of its legislative powers to do so, the provisions of section tive powers to do so, the provisions of section 147(1) as they stood after the amendment of 1 147(1) as they stood after the amendment of 1-4-1989 continue to 1989 continue to hold the field. hold the field.” 6.2 In the instant case, reasons recorded, has been reproduced by In the instant case, reasons recorded, has been reproduced by In the instant case, reasons recorded, has been reproduced by the Assessing Officer. For ready reference same is extracted as the Assessing Officer. For ready reference same is extracted the Assessing Officer. For ready reference same is extracted under:
“It is seen from Non It is seen from Non-filer data, the assessee has not filed return of filer data, the assessee has not filed return of Income for Α.Υ. 2012 Income for Α.Υ. 2012-13. However it is observed from the details 13. However it is observed from the details available on I available on I-taxnet, It Is found that during the F.Y.2011 taxnet, It Is found that during the F.Y.2011-12 relevant to the A.Y.2012 relevant to the A.Y.2012-13, the assessee has entered into the ntered into the following transactions: following transactions: Sr. No. Nature of the Transaction Nature of the Transaction Summary reference Summary reference 1. The The assessee assessee has has made made CIB Transaction ransaction code:502 National/Multl National/Multl Commodity Commodity Exchangve Contract of Rs. 10 Exchangve Contract of Rs. 10 Lakhs and above for Sale or Lakhs and above for Sale or Purchase in the Exchange Purchase in the Exchange- 3. As per CIB Information, during the year under consideration the As per CIB Information, during the year under consideration the As per CIB Information, during the year under consideration the assessee was engaged in the transaction of National/Multi assessee was engaged in the transaction of National/Multi assessee was engaged in the transaction of National/Multi Commodity Exchange Contract of Rs. 51,53,51,129/ Commodity Exchange Contract of Rs. 51,53,51,129/- -In MCX Stock Exchange Ltd. Exchange Ltd.
A letter vide no. NMS2/AA0PV0747R/3006131 dated, 17 4. A letter vide no. NMS2/AA0PV0747R/3006131 dated, 17 4. A letter vide no. NMS2/AA0PV0747R/3006131 dated, 17-02- 2014 was generated 2014 was generated-&-Issued from system against the Information Issued from system against the Information available on NMS Cycle available on NMS Cycle-2, I-Tax Net Portal however; the assessee Tax Net Portal however; the assessee has not complied with the sald letter till date. As such Information has not complied with the sald letter till date. As such Information has not complied with the sald letter till date. As such Information has duly been verified on the ITBA Portal on 360 degree pr has duly been verified on the ITBA Portal on 360 degree pr has duly been verified on the ITBA Portal on 360 degree profile.
On perusal and verification of the Information available on 5. On perusal and verification of the Information available on 5. On perusal and verification of the Information available on system and after considering the same prima facle it is observed system and after considering the same prima facle it is observed system and after considering the same prima facle it is observed that, the assessee has the Income chargeable to tax. it can be seen that, the assessee has the Income chargeable to tax. it can be seen that, the assessee has the Income chargeable to tax. it can be seen from the above that despite of having such a huge tra from the above that despite of having such a huge tra from the above that despite of having such a huge transaction in Commodity Market but falled to disclose Capital gain thereon. Commodity Market but falled to disclose Capital gain thereon. Commodity Market but falled to disclose Capital gain thereon. Further, despite of having known sources the assessee has Further, despite of having known sources the assessee has Further, despite of having known sources the assessee has transacted in Commodity Market therefore, it is room to believe that transacted in Commodity Market therefore, it is room to believe that transacted in Commodity Market therefore, it is room to believe that the assessee has some undisclosed sources which is char the assessee has some undisclosed sources which is char the assessee has some undisclosed sources which is chargeable to tax 6. Besides, giving an opportunity to comply with the above fact the 6. Besides, giving an opportunity to comply with the above fact the 6. Besides, giving an opportunity to comply with the above fact the assessee did not consider the matter seriously and failed to comply assessee did not consider the matter seriously and failed to comply assessee did not consider the matter seriously and failed to comply with the matter till date. Considering the above fact and abstaining with the matter till date. Considering the above fact and abstaining with the matter till date. Considering the above fact and abstaining from filing the return of Income It i from filing the return of Income It is reason to belleve that the s reason to belleve that the assessee has concealed his Income earned during the financial year assessee has concealed his Income earned during the financial year assessee has concealed his Income earned during the financial year 2011-12 corresponding to the A.Y. 2012 12 corresponding to the A.Y. 2012-13 of Rs. 51,53,51,129/ 13 of Rs. 51,53,51,129/- Rupees Fifty One Crore Fifty Three Lakhs Fifty OneThousand Rupees Fifty One Crore Fifty Three Lakhs Fifty OneThousand Rupees Fifty One Crore Fifty Three Lakhs Fifty OneThousand OneHundred TwentyNine] which is charge OneHundred TwentyNine] which is chargeable to tax has deemed to able to tax has deemed to be an escaped assessment and therefore the provisions of section be an escaped assessment and therefore the provisions of section be an escaped assessment and therefore the provisions of section 147 of the I.T. Act, 1961are applicable 147 of the I.T. Act, 1961are applicable to this case." 6.3 In the instant case, the Assessing Officer had recorded reasons In the instant case, the Assessing Officer had recorded reasons In the instant case, the Assessing Officer had recorded reasons to believe that income had escaped assessm to believe that income had escaped assessment in respect of ent in respect of substantial transactions (to the tune of substantial transactions (to the tune of ₹51.53 crores) on the MCX, 51.53 crores) on the MCX, firstly, no capital gain disclosed and , no capital gain disclosed and secondly secondly, source of investment from undisclosed sources. investment from undisclosed sources. On perusal of the On perusal of the reassessment order, it is evident that the Assessing Officer reassessment order, it is evident that the Assessing Officer reassessment order, it is evident that the Assessing Officer examined the bank credits that were claimed to be the source of examined the bank credits that were claimed to be the source of examined the bank credits that were claimed to be the source of such transactions and found the same to be unsubstantiated. It such transactions and found the same to be unsubstantiated. It such transactions and found the same to be unsubstantiated. It was in that context that the addition of was in that context that the addition of ₹8,00,187/ 7/- was made as unexplained cash credit. unexplained cash credit. The relevant finding of the Assessing The relevant finding of the Assessing Officer is reproduced as under: Officer is reproduced as under:
“5.1 Unexplained Cash Credit “5.1 Unexplained Cash Credit On perusal of the bank statements It is seen that the assessee It is seen that the assessee On perusal of the bank statements has credit entries on various dates which are the sou has credit entries on various dates which are the sou has credit entries on various dates which are the source of Trading in the Commodity transactions, the same credits Trading in the Commodity transactions, the same credits Trading in the Commodity transactions, the same credits were explained as Professional Fees received during the year were explained as Professional Fees received during the year were explained as Professional Fees received during the year. As per assessee's work profile assessee was engaged in preparing As per assessee's work profile assessee was engaged in preparing As per assessee's work profile assessee was engaged in preparing Legal Documents, amendments and other admistrative works for Legal Documents, amendments and other admistrative works for Legal Documents, amendments and other admistrative works for the client's lient's lient's retirement retirement retirement plan plan plan as as as per per per the the the advice advice advice from from from Mr Mr Mr Balakodingudi. During the course of the assessment proceedings Balakodingudi. During the course of the assessment proceedings Balakodingudi. During the course of the assessment proceedings assessee was asked to submit the documentary evidence regarding assessee was asked to submit the documentary evidence regarding assessee was asked to submit the documentary evidence regarding the the the receipt receipt receipt of of of Professional Professional Professional fees fees fees alongwith alongwith alongwith the the the copy copy copy of of of Agreement/Contract and o Agreement/Contract and other supporting documentary evidence. ther supporting documentary evidence. However till date assessee has not submitted any kind of However till date assessee has not submitted any kind of However till date assessee has not submitted any kind of supporting documentary evidence to justify the credit entries as supporting documentary evidence to justify the credit entries as supporting documentary evidence to justify the credit entries as Professional Fees. The asseessee failed to substantiate his Professional Fees. The asseessee failed to substantiate his Professional Fees. The asseessee failed to substantiate his arguments by documentary evidences. arguments by documentary evidences. The onus lies on the The onus lies on the assessee to explain the source of Credit entries in the banks from assessee to explain the source of Credit entries in the banks from assessee to explain the source of Credit entries in the banks from documentary evidences which assessee failed. On verification of documentary evidences which assessee failed. On verification of documentary evidences which assessee failed. On verification of details submitted by the assessee it is found that the assessee has details submitted by the assessee it is found that the assessee has details submitted by the assessee it is found that the assessee has debited expenses of Rs 6,52,187/ debited expenses of Rs 6,52,187/- against the receipt of Rs ainst the receipt of Rs 831425/- (Rs 800187/ (Rs 800187/- claimed as professional fees + Rs 31238/ claimed as professional fees + Rs 31238/- as Profit on sale of Share) during the year. However no details in as Profit on sale of Share) during the year. However no details in as Profit on sale of Share) during the year. However no details in these expenses were furnished by the assessee till the date of these expenses were furnished by the assessee till the date of these expenses were furnished by the assessee till the date of passing this order. The onus lies on t passing this order. The onus lies on the assessee to substantiate he assessee to substantiate the expenses claimed with documentary evidences which the the expenses claimed with documentary evidences which the the expenses claimed with documentary evidences which the assessee failed. Since the income is treated as Unexplained so assessee failed. Since the income is treated as Unexplained so assessee failed. Since the income is treated as Unexplained so expenses claimed against such income, suo moto does not exist. expenses claimed against such income, suo moto does not exist. expenses claimed against such income, suo moto does not exist.
Penalty proceedings u/s 271(1)(c) is initiat Penalty proceedings u/s 271(1)(c) is initiated separately for ed separately for furnishing inaccurate particulars of income. furnishing inaccurate particulars of income. 5.2 It is pertinent to note that it is an admitted preposition of law 5.2 It is pertinent to note that it is an admitted preposition of law 5.2 It is pertinent to note that it is an admitted preposition of law that in respect of a self that in respect of a self- sufficient fact no further evidence is sufficient fact no further evidence is required to be furnished by an assessee who claims the existence of required to be furnished by an assessee who claims the existence of required to be furnished by an assessee who claims the existence of such fact. Contrary to non existence of self suffici such fact. Contrary to non existence of self sufficient fact burden of ent fact burden of proof is always on the assessee to establish the existence of proof is always on the assessee to establish the existence of proof is always on the assessee to establish the existence of particular facts. The onus never shifts to the Department. From this particular facts. The onus never shifts to the Department. From this particular facts. The onus never shifts to the Department. From this it follows that the assessee who wishes to the Revenue to believe it follows that the assessee who wishes to the Revenue to believe it follows that the assessee who wishes to the Revenue to believe the existence of particular facts, onus the existence of particular facts, onus heavily lies upon him to heavily lies upon him to furnish आयकर अ�ध आयकर अ�ध Seal of the necessary detail(s) / evidence(s) to Seal of the necessary detail(s) / evidence(s) to establish the existence of particular facts. From this establish the existence of particular facts. From this it also follows it also follows that the burden of proof does not shift upon the Revenue to that the burden of proof does not shift upon the Revenue to that the burden of proof does not shift upon the Revenue to disapprove the existence of the disapprove the existence of the fact and accordingly it is duty of the fact and accordingly it is duty of the person to prove that he is correct. The onus is not upon the Revenue person to prove that he is correct. The onus is not upon the Revenue person to prove that he is correct. The onus is not upon the Revenue to prove that he is not incorrect. From this it also follows non to prove that he is not incorrect. From this it also follows non to prove that he is not incorrect. From this it also follows non furnishing of details / evidences in support of existence of a nonself furnishing of details / evidences in support of existence of a nonself furnishing of details / evidences in support of existence of a nonself sufficient fact from the assessee would lead the Revenue to take a act from the assessee would lead the Revenue to take a act from the assessee would lead the Revenue to take a contrary view to that of the claim made by contrary view to that of the claim made by the assessee. assessee.” 6.4 Thus, though the addition made is in respect of unexplained Thus, though the addition made is in respect of unexplained Thus, though the addition made is in respect of unexplained credits, such credits were directly linked to the source of the credits, such credits were directly linked to the source of the credits, such credits were directly linked to the source of the commodity transactions forming the very basis of the reasons actions forming the very basis of the reasons actions forming the very basis of the reasons recorded for reopening the assessment. The Assessing Officer had recorded for reopening the assessment. The Assessing Officer had recorded for reopening the assessment. The Assessing Officer had examined whether the investments made in the commodity examined whether the investments made in the commodity examined whether the investments made in the commodity exchange could be explained by the credits in the assessee’s bank exchange could be explained by the credits in the assessee’s bank exchange could be explained by the credits in the assessee’s bank account. Upon the assess account. Upon the assessee’s failure to substantiate those credits, ee’s failure to substantiate those credits, the addition was made. Therefore, the addition, though not strictly the addition was made. Therefore, the addition, though not strictly the addition was made. Therefore, the addition, though not strictly in the form of unexplained investment in commodity transaction unexplained investment in commodity transaction, unexplained investment in commodity transaction but pertains to the very source of the said transactions and cannot pertains to the very source of the said transactions and cannot pertains to the very source of the said transactions and cannot be considered extraneous to the reasons recorded. d extraneous to the reasons recorded.
6.5 Though, initially during the hearing 17/07/2025, initially during the hearing 17/07/2025, the assessee initially during the hearing 17/07/2025, contested that no addition was made in respect of item for which contested that no addition was made in respect of item for which contested that no addition was made in respect of item for which reasons was recorded, h reasons was recorded, however, when the finding of the Ld. owever, when the finding of the Ld. Assessing Officer in para 5 Assessing Officer in para 5.7 of the impugned assessment order to .7 of the impugned assessment order to the effect that investment in commodity market transaction was the effect that investment in commodity market transaction was the effect that investment in commodity market transaction was linked to the credit appear in the books of accounts and source of linked to the credit appear in the books of accounts and source of linked to the credit appear in the books of accounts and source of which the assessee failed to explain, came to our notice, t the assessee failed to explain, came to our notice, t the assessee failed to explain, came to our notice, the matter was fixed for clarification and the parties were asked to explain how ification and the parties were asked to explain how ification and the parties were asked to explain how the ratio in the case of Jet Airways (I) Ltd. (supra) apply in the case the ratio in the case of Jet Airways (I) Ltd. (supra) apply in the case the ratio in the case of Jet Airways (I) Ltd. (supra) apply in the case of the assessee. The Ld. counsel for the assessee however submitted of the assessee. The Ld. counsel for the assessee however submitted of the assessee. The Ld. counsel for the assessee however submitted that finding of the Ld. Assessing Officer in para 5.1 of connection that finding of the Ld. Assessing Officer in para 5.1 of connect that finding of the Ld. Assessing Officer in para 5.1 of connect between the investment in commodity transaction and the credit between the investment in commodity transaction and the credit between the investment in commodity transaction and the credit from professional receipt appearing in the books of accounts was from professional receipt appearing in the books of accounts was from professional receipt appearing in the books of accounts was not correct finding of fact finding of fact. The Ld. counsel submitted that in the . The Ld. counsel submitted that in the assessment order, the Assessing Officer has nowhere elaborated as assessment order, the Assessing Officer has nowhere elabo assessment order, the Assessing Officer has nowhere elabo how the stated transaction transaction of Rs.51,53,51,529/- were were sourced out of the meager amount of Rs.8,00,187/ amount of Rs.8,00,187/- of the professional receipt. of the professional receipt.
We have heard rival submissions of the parties and perused We have heard rival submissions of the parties and perused We have heard rival submissions of the parties and perused the relevant materials on record the relevant materials on record. We are of the opin . We are of the opinion that the Assessing Officer has Assessing Officer has made the addition of unexplained credit by the addition of unexplained credit by way of professional fee amounting to Rs.8,00,187/- in relation to way of professional fee amounting to Rs.8,00,187/ way of professional fee amounting to Rs.8,00,187/ the investment in commodity transactions the investment in commodity transactions, thus, addition in fact , thus, addition in fact has been made on the basis of reasons recorded has been made on the basis of reasons recorded and therefore, the and therefore, the ratio of the Jet Airways (I) Pvt. Ltd. (supra) does not apply in the ratio of the Jet Airways (I) Pvt. Ltd. (supra) does not apply in the ratio of the Jet Airways (I) Pvt. Ltd. (supra) does not apply in the instant case, but the Ld. counsel for the assessee has disputed this but the Ld. counsel for the assessee has disputed this but the Ld. counsel for the assessee has disputed this factual finding of the Ld. Assessing Officer finding of the Ld. Assessing Officer having connection having connection between between between the the the investment investment investment in in in commodity commodity commodity transactions transactions transactions and and and corresponding credit of Rs.8,00,187/ corresponding credit of Rs.8,00,187/- appearing in his books of appearing in his books of accounts, therefore, in the facts and circumstances of the case, therefore, in the facts and circumstances of the case, therefore, in the facts and circumstances of the case, it need verification as to need verification as to whether the ratio of the Jet Airways (I) Pvt. whether the ratio of the Jet Airways (I) Pvt. Ltd. apply in the case of the assessee or not td. apply in the case of the assessee or not. Accordingly, the . Accordingly, the matter is restored back to the file of the Ld. CIT(A) for deciding restored back to the file of the Ld. CIT(A) for deciding restored back to the file of the Ld. CIT(A) for deciding afresh after providing opportunity to both the Assessing Officer as afresh after providing opportunity to both the Assessing Officer as afresh after providing opportunity to both the Assessing Officer as well assessee to support their contention. well assessee to support their contention. The additional The additional ground of the appeal of the assessee is accordingly allowed for statistical the appeal of the assessee is accordingly allowed for statistical the appeal of the assessee is accordingly allowed for statistical purposes.
7.1 As far as merit of the addition is concerned, the Ld. counsel As far as merit of the addition is concerned, the Ld. counsel As far as merit of the addition is concerned, the Ld. counsel for the assessee submitted that the Ld. CIT(A) had not provided any for the assessee submitted that the Ld. CIT(A) had not provided any for the assessee submitted that the Ld. CIT(A) had not provided any opportunity of being heard and the opportunity of being heard and the notices issued by him could not notices issued by him could not be complied and therefore, one more opportunity might be provided be complied and therefore, one more opportunity might be provided be complied and therefore, one more opportunity might be provided to the assessee to substantiate the source of the professional fee. In to the assessee to substantiate the source of the professional fee. In to the assessee to substantiate the source of the professional fee. In view of facts and circumstances of the case and in the prayer of the view of facts and circumstances of the case and in the prayer of the view of facts and circumstances of the case and in the prayer of the assessee, we feel it appropriate to restore this issue also to the file it appropriate to restore this issue also to the file it appropriate to restore this issue also to the file of the Ld. CIT(A) for deciding afresh after taking into consideration of the Ld. CIT(A) for deciding afresh after taking into consideration of the Ld. CIT(A) for deciding afresh after taking into consideration submission or supporting evidence filed by the assessee if any submission or supporting evidence filed by the assessee if any submission or supporting evidence filed by the assessee if any before him. The grounds on merit raised by the assessee are also before him. The grounds on merit raised by the assessee are also before him. The grounds on merit raised by the assessee are also allowed for statistical purposes. wed for statistical purposes.
In the result, the appeal of the assessee is allowed for In the result, the appeal of the assessee is allowed for In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open Court on nounced in the open Court on 31 31/07/2025.