SMT. RAJNI VERMA,MUZAFFARNAGAR vs. ITO, MUZAFFARNAGAR

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ITA 3614/DEL/2016Status: DisposedITAT Delhi16 February 2017AY 2006-078 pages

In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the AO had sufficient material to initiate reassessment proceedings and that the assessee's explanation for the source of investment was unsatisfactory. The additions made by the AO were confirmed.

What were the facts?

The assessee made an investment of Rs. 7,00,000/- in share application money during FY 2005-06, while her declared income was only Rs. 95,500/-. The Assessing Officer (AO) initiated reassessment proceedings under Section 147/148 of the Income Tax Act, 1961, and made additions to the assessee's income.

What were the issues?

Whether the reassessment proceedings were validly initiated and whether the assessee provided a satisfactory explanation for the source of her investment.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH: ‘SMC’, NEW DELHI

Before: SH. H.S. SIDHU

This appeal is filed by the Assessee against the order dated 14.12.2015 passed by the Ld. CIT(A), Muzaffarnagar on the following grounds:-

1.

That the notice issued U/s 148 and reassessment order

passed U/s 147 r.w.s. 143(3) are illegal, bad in law and without jurisdiction.

2. That, in view of the facts and circumstances, no satisfaction

is recorded by the assessing officer as required U/s 147/148 of the Act prior issuing the notice under section 147 of the Act.

3. The addition/ disallowances made by the assessing officer are illegal, unjust, highly excessive and are not based on any material on record by the assessing officer. The total income

of the appellant has been wrongly and illegally computed by the assessing officer at Rs. 12,70,000.00 as against declared income of Rs.95,500.00.

4. That, the Assessing Officer, in view of the facts and circumstances I of the case erred on facts and in law in making the addition of Rs.54,200.00 on account of Job Work.

The assessing officer has estimated the income from Job Work at Rs.1,20,000.00 against the income shown at Rs.65,800.00.

The CIT(A) has also erred in upholding the same.

5. That, the Assessing Officer, in view of the facts and circumstances of the case erred on facts and in law in making

the addition of Rs.20,300.00 on account of Income from Other

Sources. The assessing officer has estimated the income from Other Sources at Rs.50,000.00 against the income shown at Rs.29,700.00. The CIT(A) has also erred in upholding the same.

6. That, the assessing officer has erred in making addition of Rs.4,00,000.00 on account of Income from undisclosed

Sources, which is highly arbitrary, unjustified and against the facts of the case, as well as the CIT(A) has also erred in upholding the same.

7. That, the assessing officer has erred in making addition of Rs.7,00,000.00 on account of cash available. The CIT (A) has also erred in upholding the same.

8.

That the Assessing Officer, in view of the facts and circumstances of the case erred on facts and in law in making

the ad-hoc addition/ disallowance on estimated basis, which is unjust, arbitrary, unlawful, highly excessive, based on surmises and conjectures and cannot be justified by any material on record.

9.

The additions made and the observations made are unjust,

unlawful and based on mere surmises and conjectures. The additions made cannot be justified by any material on record.

10.

That the explanation given evidence produced, material

placed and available on record has not been properly considered and judicially interpreted and the same do not justify the additions/ allowances made.

11.

That the impugned Assessment Order passed by the Assessing Officer and order passed by CIT(A) are against the principles of natural justice and the same has been passed

without affording reasonable and adequate opportunity of being heard.

12.

That the interest u/s 234B has been wrongly and illegally

charged as the appellant could not have foreseen the disallowances/additions made and could not have included the same in current income for payment of Advance tax. The interest charged under various sections is also wrongly worked out.

13.

The appellant craves leave to add, amend, alter and or modify

the grounds of appeal of the said appeal.

All of the above grounds of appeal are without prejudice and are mutually exclusive to each other.

2.

In this case there is a delay of 89 days in filing the appeal before the Tribunal and in this behalf the assessee has filed the application dated 10.6.2016. After perusing the aforesaid application dated 10.6.2016, I am of the considered opinion that due to reasonable cause the delay was occurred, hence, the delay in dispute is condoned.

3.

The brief facts of the case are that in this case that after recording reasons, notice under section 148 of the Income Tax Act, 1961 (in Short “Act”) was issued on 25.2.2013. Initially the assessee objected the initiation of proceedings, which has been decided as per order passed on 14.2.2014. In response, the assessee filed copy of return filed initially on 13.7.2006 with written petition dated 30.10.2013. The assessee has also enclosed chart of taxable income and copy of statement of affairs (capital account, balance sheet) as on 31.3.2006. Later, notices u/s. 143(2) and 4 142(1) of the Act were issued calling for specific evidences and clarifications. Later, notice u/s. 142(1) of the Act was also issued on 26.2.2014, fixing date on 4.3.2014, but no compliance was made.

Thereafter, the AO observed that the assessee has made investment of Rs. 7 lacs in share application money during FY 2005-06 whereas she had filed return of income showing income of Rs. 95,500/-. On these primary facts the AO observed a big mismatch between investment made and income declared. Therefore, the AO formed his belief to initiate proceedings u/s. 147 of the Act on the basis of material / tangible information and accordingly he assessed the income of the assessee at Rs. 12,70,000/- u/s. 147/143(3) of the Act vide his order dated 14.3.2014. Against the assessment order dated 14.3.2014, assessee appealed before the Ld. CIT(A), who vide his impugned order dated 14.12.2015 has dismissed the appeal of the assessee. Aggrieved with the impugned order dated 14.12.2015, assessee is in appeal before the Tribunal.

4.

Ld. Counsel for the assessee did not press the ground no. 4, 5 & 6, hence, the same are dismissed as not pressed. He only pressed the ground no. 1, 2, 3 & 7. The ground no. 8 to 13 are consequential in nature, hence, the same are not being adjudicated upon. With regard to ground no. 1 & 2 which are legal in nature, he submitted that notice issued u/s. 148 of the Act and reassessment order passed u/s. 147 r.w.s.

143(3) of the Act are illegal, bad in law and without jurisdiction and no satisfaction is recorded by the AO as required u/s. 147/148 of the Act prior to issue of the notice under section 147 of the Act. With regard to ground no. 3 & 7 which are common in nature, he submitted that the addition/disallowance made by the AO are illegal, unjust, highly excessive and are not based on any material on record by the AO. The total income of the assessee has been wrongly and illegally computed by the AO at Rs. 12,70,000/- as against declared income of Rs. 95,500/-, hence, the addition of Rs. 7 lacs may be deleted.

5.

On the other hand, Ld. DR relied upon the order of the Ld. CIT(A) and stated he has passed a well reasoned order, which does not need any interference on my part.

6.

I have heard both the parties and perused the records especially the impugned order. As regards ground no. 1 & 2 which are in legal in nature, I find that AO has observed that the assessee has made investment of Rs. 7,00,000/- in share application money during FY 2005-06 whereas she had filed return of income showing income of Rs. 95,500/-. On these primary facts, the AO observed that a big mis match between investment made and income declared. Hence, the AO had formed his belief to initiate proceedings u/s. 147 of the Act on the basis of material / tangible information. Therefore, I do not find any infirmity in the order of the Ld. CIT(A) in dismissing these legal grounds, hence, the finding of the Ld. CIT(A) is upheld and ground no. 1 & 2 raised by the Assessee stand dismissed.

6.1 As regards ground no. 3 & 7 is concerned, from the perusing of the assessment order, it is noted that the assessee has made investment in share application money with M/s Rana Girders of Rs. 7,00,000/- in cash.

The assessee has explained the source of the same with reference to capital as on 31.3.2006 of Rs. 8,17,000/-. On composite perusal of the facts, it is noted that the assessee has shown income of Rs. 95,500/- from knitting, sewing and other sources with withdrawals of Rs. 30,000/- thereby leaving surplus of Rs. 65,500/-. The assessee has further filed capital account of previous years in which income of the same range has been shown as accumulated over the year almost by the same amount resulting into cash accumulated over 10 to 15 years withdrawals are shown just Rs. 2,500/- per month. The assessee has not shown to be maintaining bank account. From the facts of the case, it is noted that the explanation of the assessee that she had made investment of Rs. 7 lacs in cash in share application with M/s Rana Girders out of this lacks genuineness. It has been gathered by the AO that the assessee apparently has not received any income till date from this investment.

Onus is on the assessee to furnish satisfactory explanation regarding source of investment made. The explanation submitted during the assessment proceedings as well as appellate proceedings has been found to be unsatisfactory. Thus addition made by the AO amounting to Rs. 7 lacs was rightly confirmed by the Ld. CIT(A), which does not need any interference on my part, hence, I uphold the same and reject the ground no. 3 & 7 accordingly.

7.

In the result, the Appeal of the Assessee is dismissed.

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