M/S DUO ASSOCIATES ,BANGALORE vs. ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE-7(2)(1), BANGALORE

O R D E R

Per PAVAN KUMAR GADALE, JM :

“The appellant denies itself liable to be assessed on a 1. total income of Rs.8,38,11,710/- as against the returned income of Rs.1,38,11,710/- under the facts and circumstances of the case.

Page 2 of 7 The learned CIT(A) erred in confirming the addition of 2. Rs.7,00,00,000/- as unexplained cash credits under the facts and circumstances of the case. The order of the learned CIT(A) is bad in law as sufficient 3. opportunity of being heard was not provided to the appellant under the facts and circumstances of the case. The learned CIT(A) grossly erred in holding that the 4. documents/evidences furnished before him are additional evidences in as much as all the documents/ evidences were already on the records of the department and thus the same does not constitute additional evidences as per rule 46A of the Income Tax Rules, 1962 under the facts and circumstances of the case. The order of the assessment is bad in law as the mandatary 5. conditions for assumption of jurisdiction under section 148 of the Income Tax Act, 1961 (the Act) have not been complied with on tile ground that: a) The re-assessment proceedings have been completed without service of notice under section 148 of the Act which is a condition precedent to assume jurisdiction under section 147 of the Act. b) Without prejudice, the order of assessment passed under section 143(3) r.w.s 147 of the Act without issue of notice under section 143(2) of the Act is invalid and liable to be set aside. c) The re-assessment proceedings have been completed in violation of the settled procedure for reassessment as laid down by the Apex Court in the case of GKN Driveshaft's India Ltd. vs. ITO, 259 ITR 19. d) The document' titled "Reasons recorded for issuance of Notice u/s 148" provided by the assessing officer are not reasons recorded for issue of notice under section 148 of the Act. e) Without prejudice, assuming but not admitting that the document titled "Reasons recorded for issuance of Notice u/s 148" are the reasons recorded under section 148, these cannot be the reasons to believe and the same are reasons

Page 3 of 7 to suspect which is impermissible in the eyes of law. f) The assessing officer has not independently applied his mind to the facts of the case and the assessment was completed merely based on satisfaction recorded by the predecessor officer which amounts to borrowed satisfaction which is impermissible and unsustainable in the eyes of law and thus the order of the assessment needs to be quashed under the facts and circumstances of the case. g) The sanction as required under section 151 of the Act has not been obtained from the Commissioner of Income Tax before issue of notice under section 148 of the Act or having been obtained, the copy of the same has not been provided to the appellant on the facts of the case. 7. a. The learned CIT(A) erred in holding that the date of issue of notice under section 148 of the Act as the date of service under the facts and circumstances of the case. b. The learned CIT(A) grossly erred in holding that no prejudice has caused to the appellant by not issuing the notice under section 143(2) of the Act under the facts and circumstances of the case. 8. a. The authorities below failed to apply their mind as the alleged transaction as per the ledger extract relied upon by the assessing officer is not the receipt of cash by the appellant and it is the payment made to Mr. Dayanand Pai. Thus the addition by holding that the appellant has received a sum of Rs.7,00,00,000/- from Mr. Dayanand Pai is unwarranted and hence the same needs to be deleted under the facts and circumstances of the case. b. The action of the assessing officer is not justified in law in not affording an opportunity to cross-examine Mr. Dayananda Pai which is against the principles of natural justice. Further, the learned CIT(A) erred in confirming the additions without providing an opportunity to cross- examine is not in accordance with law under the facts and circumstances of the case. c. The order of assessment is further bad in law as the documents found during search in the case of Mr. Dayananda Pai were used against the appellant without providing an opportunity to rebut the claims/ statements Page 4 of 7 made against him under the facts and circumstances of the case. Without prejudice, the order of assessment is further bad 9. in law as the assessment ought to have been completed under section 153C of the Act under the facts and circumstances of the case. 10. a. The appellant denies itself liable to be levied to interest under sections 234A, 234B and 234C of the Act and further the computation of interest was not provided to the appellant as regard to the rate, period and method of calculation of interest under the facts and circumstances of the case. The appellant expressly urges that the period of levy of interest is not in accordance with sections 234A, 234Band 234C of the Act. b. Without prejudice, the interest levied under sections234A, 234B and 234C of the Act requires to be waived off under the facts and circumstances of the case.

Contra, the learned DR objected to the submissions and relied on the CIT(A) order.

Page 7 of 7 to represent its case before the CIT(A) along with evidence and the CIT(A) shall provide adequate opportunity of hearing. Further the assessee shall co-operate in submitting the information and documents for early disposal of the appeal. We order accordingly.