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Income Tax Appellate Tribunal, DELHI ‘SMC’ BENCH,
Before: SHRI N.K.BILLAIYA, & SHRI SUCHITRA KAMBLE,
PER SUCHITRA KAMBLE, JUDICIAL MEMBER
This appeal is filed against the order dated 26/07/2018, passed by the CIT(A)-2, Gurgaon, for Assessment Year 2009-10.
Grounds of appeal are as under:-
1. That the learned Commissioner of Income Tax (Appeals) has grossly erred both in law and on facts in upholding the initiation of proceedings under section 147 of the Act and, completion of assessment under section 147/143(3) of the Act without appreciating that the same were without jurisdiction and hence deserved to be quashed as such.
1.1 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that there was no specific relevant, reliable and tangible material on record to form a “reason to believe” that income of the appellant had escaped assessment and in view thereof the proceedings initiated are illegal, untenable and therefore unsustainable.
1.2 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that reasons recorded mechanically without application of mind do not constitute valid reasons to believe for assumption of jurisdiction u/s 147 of the Act.
1.3 That in absence of any valid approval obtained under section 151 of the Act, initiation of proceedings u/s 147 of the Act and assessment framed u/s 147/143(3) of the Act are invalid and deserve to be quashed as such.”
2 That the learned Commissioner of Income Tax (Appeals) has also erred both in law and on facts in sustaining an addition of Rs. 5,00,000/- on account of an alleged unexplained investment in mutual funds of Kotak Mutual Funds and Escort Investment Trust Ltd. during the instant assessment year u/s 69 of the Act.
2.1 That the finding of the learned Commissioner of Income Tax (Appeals) that “no supporting documents were produced or substantially explained to the satisfaction of Assessing Officer regarding the case available” is factually incorrect and legally misconceived.
2.2. That further concluding of the learned Commissioner of Income Tax (Appeals) that “the fact that appellant gone the cash to Shri Jagdish for making investment in mutual funds and through his account investment in name of the appellant was made, all point to doubtful transaction” is also unsubstantiated, misconceived and based on surmises, cogent and therefore unsustainable.
2.3. That the finding of the learned Commissioner of Income Tax (Appeals) that “ the explanation of doing tuition, receiving gifts from relatives etc only point out to a case of capital building by the appellant” is based on no material much less valid material and is thus not in accordance with law.”
The assessee filed her return of income declaring income of Rs.1,63,807/- from tuition and interest. As per AIR information, the Assessing Officer, observed that the assessee invested in purchasing of Units of Mutual Fund amounting to Rs.14,00,000/- which was not explained by the assessee. Thereafter, the notice dated 22/03/2016 u/s 148 of the Act was issued and subsequent notices 142(1) and 143(2) of the Act along with questionnaire were issued and served upon the assessee. In response, Chartered Accountant of the assessee attended the assessment proceedings and furnished the requisite information/documents/evidences. The assessee explained before the Assessing Officer that the investment of Rs.5 lakhs in the mutual funds was made from opening cash in hand of Rs.69,850/- and from petty gifts. The assessee furnished cash flow chart thereby explaining the source of investment in mutual funds and also furnished a reply on 25/07/2016 wherein the assessee mentioned that the assessee gave cash to Shri Jagdish S/o. Chotu Ram for making investment into Kotak Mutual Funds, through whose bank account the investment in Kotak Mutual Funds in the name of the assessee was made. The Assessing Officer was not satisfied with the explanation of the assessee and made addition of Rs.5 lakh to the return of income of the assessee.
Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee.
The Ld. AR submitted that the proceedings were initiated u/s 148 of the Act and it is apparent from the said proceedings that the said proceedings were initiated on the basis of AIR information that there are investment for purchase of units of Rs.9 lakhs is Escort Investment Trust Ltd. and Rs.5 Lakhs of Kotak Mutual Funds. The Ld. AR submitted that merely AIR information cannot be the basis to assume jurisdiction u/s 147 of the Act. Investment alone cannot be a ground to assume that income of the assessee has escaped assessment and as such the reasons recorded mechanically do not confirm valid jurisdiction u/s 147 of the Act. The Ld. AR further submitted that there is no justification for the Assessing Officer to form an opinion that merely because the assessee had invested/investment, therefore, they represent the income of the assessee which has escaped. The Ld. AR relied upon the decision of the ITAT in the case of Amrik Singh vs. ITO (159 ITD 329). The Ld. AR further submitted that the ITO do not obtain any approval before sending the said communication to the assessee and therefore such communication is not