Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, MUMBAI BENCHES “SMC, MUMBAI
Before: Shri R P Tolani
O R D E R Per R P Tolani, Judicial Member
This is assessee’s appeal challenging that the learned CIT(A) erred in : i) Upholding initiation of re-assessment proceedings ii) Treating the loan amount of Rs.3,68,500/- as unexplained cash credit u/s. 68 iii) Confirming disallowance of Rs.10 lacs out of agricultural income and treating the same as unexplained cash credit. iv) Treating deposits in bank account No. 4603 amounting to Rs.13,83,930/- as unexplained cash credit u/s. 68 of the I.T.Act. v) Treating deposits in bank account No.978 amounting to Rs.1,65,000/- as unexplained cash credit u/s. 68 of the I.T.Act.
The learned counsel for the assessee adverting to ground no.1 about validity of reassessment proceedings, it is contended that the original assessment was made u/s. 143(3) vide order dated 13.11.2009. All the issues pertaining to assessment were duly discussed and assessee’s return was accordingly accepted.
Assessments were reopened on the following reasons:
“The case was selected for scrutiny under CASS on the basis of AIR Information viz. deposit of cash in SB account with Saraswat Co-op Bank Ltd. Rs.24,19,000/- (A/c No.4603 and deposit cash in SB account with same bank Rs.23,07,850/- (A/c No.4601). During the course of assessment proceedings, the assessee took the stand that he was only a joint holder of SB account no.4601 and the 1st holder was Ms.Shashikala Shetty, however, no confirmation was filed by the assessee from Ms. Shashikala confirming that she was responsible for the cash deposits in that account. Pan search in CBN reveals that Shashikala is not assessed to tax and she does not appear to be a family member of the assessee. In respect of A/c No.4603, the has explained the source of cash deposit as agricultural income of Rs.17,85,670/- and cash loans from 34 individuals, each loan below Rs.20,000/- totalling in all to Rs.6,56,000/-. In respect of all the 34 persons no evidence of I.D. proof, residence proof was submitted as all are not assessed to tax. In respect of agricultural income the assessee has not submitted any bills and vouchers of seeds, fertilizers, pesticides, electricity bills, wages bills etc. except 7/12 extract and copies of bills for sale.
2. In nother SB account No.4603 and CA account No.978 there are credit entries of Rs.37,15,092/- and 27,94,000/- respectively including cash and cheques, as the assessee return of income reflects that there exists no business income and for the same no explanation offered by the assessee. Therefore, I have reason to believe that such assessment was reason of the omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment for that year in consequence of information in the possession of the AO and income to the extent of Rs.1,18,91,942/- has escaped assessment within the meaning of section 147 of the I.T.Act, as the income chargeable to tax has been under assessed u/s. 143(3) and accordingly the case of the assessee is required to be reopened u/s. 148 of the Act, so as to reassess the assessee’s correct income for A.Y. 2007-08.” In the reasons, the AO himself has referred to the proceedings of the original assessment and alleges that the assessee did not file explanations. If that was the case, the addition would have been made in the original assessment. The recording of reason transpires that the AO developed second thought about the same details, which were filed during the course of original assessment. The assessee’s objections have been brushed aside by the learned CIT(A). The learned CIT(A) upheld the validity by observing as under:
“4. Ground No.1 to 4 are being dealt with in a consolidated manner since all the four grounds are related to the issue of initiation of proceedings u/s. 147 of the I.T.Act. The appellant has submitted that in the original assessment all information was provided by him and that the A.O. has reopened the case only on the basis of observations of the audit team. The appellant has referred to the decisions of the Hon’ble Supreme Court in the case of Eastern News Paper Society vs. CIT wherein it has been held that an audit opinion in regard to the application or interpretation of law cannot be treated by the A.O. as information for reopening of the assessment u/s. 147 of the I.T.Act. It is submitted that the A.O. was already aware of all the facts and therefore this is a case of merely change of opinion. The appellant has referred to the decisions in the case of Sita World Travels (I) Ltd. vs. CIT 274 ITR 186 (Del) and CIT vs. Kelvinator of India Ltd. 256 ITR 1 (Del).
Decision: I have gone through the facts of the case and find that the A.O. has initiated the proceedings u/s. 148 on the basis of information available through AIR regarding the deposits in the accounts held by the assessee. The A.O. has in fact disposed off by a speaking order the objections raised by the assessee to the reopening. The reference was made by the A.O. to the decision in the case of Eastern Newspaper Society referred supra cannot be held to apply in the present case since the reopening has been done on facts and not law. To this extent it cannot be said that it is a case of change of opinion because the amounts have remain unexplained and therefore the A.O. is right in initiating proceedings u/s. 148 and inquire into the correctness of the claim of the assessee. In light of these observations the action of the A.O. is upheld. The ground no.1 to 4 are dismissed.”
The learned counsel contends that learned CIT(A) looking at all these facts should have called for assessment record from the AO and should have verified whether the reasons were recorded and proceedings u/s. 147 were initiated on the basis of credit objection and whether the reasons amount to change of opinion in terms of decision in the case of Kelvinator of India Ltd., which is upheld by the Hon’ble Supreme Court (256 ITR 1). Without verifying the record it is not possible to hold whether it is a case of change of opinion or not. The learned CIT(A) has just summarily concluded that there is no change of opinion. The learned DR, on the other hand, contends that i) There is no reference to reasons being based on any audit objections
ii) The assessee’s contention that it was orally requested to the learned CIT(A) to call for assessment record is merely a self serving statement. iii) The assessment order is very cryptic and does not even refer to the agricultural income. Therefore, it becomes a fit case of non-disclosure of appropriate particulars. iv) The assessment order does not give any clue that any details were filed by the assessee.
Therefore, the proceedings u/s. 147 has been properly initiated.
I have heard the rival contentions and perused the material available on record. With regard to ground no.1, about validity of proceedings u/s. 148, it is apparent that original assessment was framed u/s. 143(3). The reasons referred to some proceedings related to the original assessment and alleged that some details were not filed by the assessee at that time. However, at the same time it is seen that no addition was made by the learned AO. There is merit in the contention of the learned DR that the original assessment order is very short and does not refer to agricultural income of the assessee, which indicates non-disclosure
5. Be that as it may, learned CIT(A) in the interest of justice should have called for assessment record and verified the proceeding sheet and correspondence between the AO and the assessee and considered the objections raised on the validity of section 147. It appears that this issue has been decided by the learned CIT(A) without verifying these aspects, which are relevant to decide ground no.1 In the entirety of facts and circumstances, interest of justice will be served if appeal is set aside and restored to the file of the CIT(A) to decide the same afresh after giving the assessee adequate opportunity of being heard on this aspect. The learned counsel for the assessee has filed an application for admission for additional evidence. After hearing both the parties, I am of the view that this additional evidence cannot be admitted at the level as the assessee could not explain how he was prevented by sufficient cause in not producing these documents before the learned CIT(A) and filing an appropriate application. Therefore, the application for admission of additional evidence is rejected. However, the assessee may be at liberty to take appropriate legal remedy before the learned CIT(A) in this behalf.
In the result, the assessee’s appeal is allowed for statistical purposes.
Order pronounced in the open court on this day of 3rd February, 2017.