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Income Tax Appellate Tribunal, DELHI BENCH “D”, NEW DELHI
Before: SHRI H.S. SIDHU & SHRI O.P. KANT
common Order dated 02.01.2013 passed by the Ld. Commissioner of Income Tax (Appeals-I), Dehradun relevant for the assessment year 2010-11. Since the issues involved in these appeals are common and identical, we are therefore, proceeding to dispose of these appeals by passing this consolidated order, by dealing Assessee’s Appeal being (A.Y. 2010-11) for the sake of convenience. However, we note that while filing the Appeal, the Revenue in Form No.36 has wrongly mentioned the assessment year as AY 2009-10, but the same is related to Assessment year 2010-11.
2. The grounds raised by the Revenue read as under:-
“1. Whether the Ld. CIT(A) has erred in law and in fact in deleting the addition of Rs. 5,67,085/- made on the basis of difference in opening capital shown by the assessee.
2. Whether the Ld. CIT(A) has erred in law and in facts in deleting the addition of Rs. 15,31,460/- made on the basis of unexplained advance tax standing in the balance sheet of the assessee which could not be reconciled by the assessee during the assessment proceedings.
3. Whether the Ld. CIT(A) has erred in law and in facts in deleting the addition of Rs. 25,00,000/- made on the basis of unexplained investment with M/s Ansal Housing & 2060/Del/2013 A.Y. 2010-11
& Construction Ltd. whereas this investment was not shown in the balance sheet by the assessee.”
The original grounds raised by the Assessee read as under:-
“Appeal against of Rs. 3,79,402/-. The aforesaid Addition has been made by Ld. A.O. by disallowing the expenditure of Rs. 3,79,402/- claimed by assessee in Profit & Loss Alc. The said addition was also upheld by Ld
CIT Appeals vide appellate order dated 02/01/2013. Even at the cost of brevity but for the sake of clarification, the grounds laid down by Ld. CIT Appeals are reiterated as under:
"The assessee showed net profit of Rs. 16,79,513/- in his profession. The AO observed that he had shown professional receipt of only 80,000/- He had shown interest income of Rs. 20,48,915/- also a~ part of his professional receipt. Thus, he had claimed deduction of Rs. 4,49,402/- against professional receipt of Rs.
80,000/- only. In other words, he had shown net loss of Rs. 3,69,402/- in profession. The AO asked him to produce his books of accounts which he failed to do. - He only claimed that he had to incur fixed cost in the form of Salary, Telephone expenses, Electricity charges, Legal & 2060/Del/2013 A.Y. 2010-11 books, etc. but could not generate much income due to ill health. The Assessing Officer was not satisfied with the explanation. He allowed expenses to the extent of Rs.
70,000/- and disallowed the remaining sum of Rs.
3,79,402/-. Thus, he estimated professional income at Rs. 10,000/-. The interest income was separately charged to tax under the head Income from other source."
"In appeal, the assessee reiterated the submission which has been considered. He claims to be a legal professional. As per the provision of section 44AA of the Income Tax Act, he was required to maintained books of accounts. He failed to do so neither the figure of his professional receipt nor those of his expenses relating to the same are amenable to verification, If does not appeal to reason that a senior citizen, who is not keeping will and has barely any professional receipt, should keep on incurring heavy expenses year after year and incurring' losses since the claim of loss is not substantiated and also does not appeal to reason, the AO' s action of disallowance of the same is upheld. The addition is confirmed also considering that the interest income was & 2060/Del/2013 A.Y. 2010-11 nothing but return on investment and the assessee was not in finance business it was correctly treatment as income from other sources. The AO's action is confirmed.
As per perusal of above the assessee humbly submits that even the Ld. CIT appeals has stated in the order that the addition is made on estimate basis as Ld. AO has estimated the Income to Rs 10000/-. The facts self evidently as per perusal of first para on page 7 where in on 4th line, it is stated that" Thus, he estimated professional income at Rs 10000/-.
Even at the cost of brevity but for the sake of clarifications the assessee humbly submits that various judicial guidelines held by Hon'ble tribunals, High Court and Supreme court have specifically ruled against adhoc addition for any such addition which are on the estimate basis made by the Ld. AO. Even the self evident provisions of Income Tax Act has been grossly flouted and great injustice done, that this is against the facts and circumstances of the case. The assessee craves indulgence to present all these at the time of hearing.
& 2060/Del/2013 A.Y. 2010-11
That the assessee humbly submits that on the facts and the circumstances of the case, the conclusion reached by CIT Appeals is grossly wrong that the assessee was no in finance business and had not maintained books of accounts which is clearly self contradictory in the order itself and against the facts and circumstances of the case. That the assessee humbly submits that the unexplained investment in NSC is against the facts and circumstances of the case and deserves to be deleted.
The Ld. CIT (Appeals) erred as he failed to consider the financial statements of appellant the said NSC as truly declared and have been paid through the cash / bank balance available with him. This allowance is grossly unfair and against the principal of natural justice. In view of above the appellant humbly submitted that the addition made is erroneous and should be deleted.
That the assessee humbly craves indulgence to submit any other grounds that the Ld. Tribunal may consider and permit to be raised or which these assessee may submit in the interest of justice during the course of proceedings.”
& 2060/Del/2013 A.Y. 2010-11
At the time of hearing, Ld. Counsel of the Assessee stated that assessee has filed Application dated 09.1.2014 for permission to raise additional grounds of Appeal
. He requested that first the additional legal grounds raised by the assessee may be considered and decided, because the legal grounds goes to the root of the matter and very much essential, hence he requested that the additional grounds may be admitted in the interest of justice. The contents of the said Application read as under:- “9th January, 2014 Before The Income Tax Appellate Tribunal Delhi Bench ‘D’ New Delhi In the matter of: Sh. JN Puri, AY 2010
11. PERMISSION TO RAISE ADDITIONAL GROUND OF APPEAL Hon’ble Sir(s),
“1. The appellant named above seeks the permission of the Hon’ble Bench to raise, urge and argue the following additional grounds of Appeal, which is purely legal in nature and, read as under:-
“Ground No. 1 That the Ld. CIT(A) has erred both in law and on facts in sustaining the initiation of proceedings under section 147 of the Act and, further completion of assessment under section 143(3)/147 of the Act without satisfying the statutory pre-conditions for initiation of the proceedings and, completion of assessment under the Act.
& 2060/Del/2013 A.Y. 2010-11
Ground No. 2 That the Ld. CIT(A) further erred in sustaining the proceedings initiated under section 148 of the Act pending proceedings under section 143(2) of the Act and thus, proceedings so initiated is without jurisdiction and therefore deserves to be quashed as such.”
It is submitted that an assessee is entitled to raise a legal ground at any stage of the proceedings including on a reference or an appeal before the Hon’ble High Court.
The Hon’ble Supreme Court, in the case of National
Thermal Power Corporation Ltd. vs. CIT reported in 229
ITR 383 has held that where all the material facts are on record and an additional ground raised is purely legal in nature, such ground should be admitted at any stage of the proceedings.”
Ld. DR raise objection on the admission of additional grounds and stated that assessee has not raised these legal grounds before the AO and Ld. CIT(A), therefore, these additional grounds may not be admitted.
We have heard both parties on the admission of additional grounds, as aforesaid, we are of the view that in the interest of justice, the additional grounds raised by the assessee mentioned in para no. 4 at page no. 7 & 8 of this order are purely legal and do & 2060/Del/2013 A.Y. 2010-11 not require fresh facts which is to be investigated and go to the root of the matter. In the interest of justice, we admit the additional ground raised by the assessee, in view of the decision of the Hon’ble Supreme Court of India in the case of NTPC Limited 229 ITR 383 and proceed to decide the additional grounds first.
ASSESSEE’S APPEAL NO. 2060/DEL/2013(AY. 2010-11)
The brief facts of the case are that the assessee filed return of income on 20.7.2010 declaring total income of Rs. 17,48,077/-.
Return was processed u/s. 143(1) on 28.12.2011. In this case proceedings u/s. 148 were initiated and notice u/s. 148 was issued on March 28, 2011. The assessee’s case was selected for scrutiny.
Notices u/s. 142(1)/143(2) were issued on August 26, 2011 fixing of date of compliance for September 13, 2011. On 13.9.2011, the assessee attended the proceedings and requested for adjournment and accordingly the case was adjourned for 5.10.2011. On 5.10.2011, the assessee again appeared and filed confirmation letters of Sh. BB Sharma and Sh. RN Sharma in which it has been stated that he received back amount of advance of Rs. 5,00,000/- and Rs. 4,70,000/- respectively. The assessee enjoys income from profession and interest. Alongwith the return of income assessee & 2060/Del/2013 A.Y. 2010-11 has filed the Computation of Income, P&L account and balance sheet. The written submissions/ documents/ details were produced which were examined by the AO. Thereafter, the AO completed the assessment at a total income of Rs. 67,76,020/- u/s. 143(3)/147 of the I.T. Act, 1961 vide his order dated 28.12.2011 and made various additions.
Against the order of the Ld. AO, assessee appealed before the Ld. CIT(A), who vide impugned order dated 02.1.2013 has partly allowed the appeal of the assessee.
Aggrieved with the order of the Ld. CIT(A), Assessee is in appeal before the Tribunal.
At the time of hearing Ld. Counsel for the assesse has filed Two Paper Books one is having the various decisions of the various Courts containing pages 1 to 81 and the second the Paper Book containing the pages 1 to 96 having the copy of computation of income alongwith financial statements for the year ended on 31.3.2010; copy of balance sheet for the years ending on 31.3.2009 and 31.3.2008; copy of notice under section 148 dated 28.3.2011; copy of reasons recorded before issuing Notice u/s. 148 dated 28.3.2011; copy of reply to AO dated 18.4.2011; copy of reply to AO and again copy of reply to AO; copy of cash flow statement filed & 2060/Del/2013 A.Y. 2010-11 before the AO; copy of reply to AO dated 22.12.2011 alongwith Annexure; copy of reply to AO; copy of notice from AO dated 22.12.2011; copy of reply to AO; copy of submissions before CIT(A) and copy of assessment order for AY 2007-08 in assessee’s own case.
Ld. Counsel of the assessee stated that the Ld. CIT(A) erred both in law and on facts in sustaining the initiation of proceedings under section 147 of the Act and, further completion of assessment under section 143(3)/147 of the Act without satisfying the statutory pre-conditions for initiation of the proceedings and, completion of assessment under the Act. Ld. Counsel for the assessee stated that AO has recorded his reasons for issuing of notice u/s. 147 of the I.T.
Act on the same reasons mentioned in the Notice, but no fresh material was available with the AO, except the material already filed by the assessee with the return of income. Therefore, the issuance of notice u/s. 148 of the I.T. Act is illegally bad in law and without jurisdiction, keeping in view of the Hon’ble Delhi High Court decision in the case of CIT vs. Orient Craft Ltd. 354 ITR 536 (Delhi) and CIT vs. Atul Kumar Swami 362 ITR 693 (Delhi). Ld. Counsel of the assessee requested that the assessment may be quashed by respectfully following the above precedents. & 2060/Del/2013 A.Y. 2010-11
Ld. DR relied upon the orders of the authorities below and requested that the appeal of the Assessee may be dismissed.
We have heard both the parties and perused the relevant records, especially the orders of the authorities below. No doubt that the assessee has raised various grounds in his appeal, but at the time of hearing before us, he mainly argued the ground relating to challenging the notice issued u/s. 148 of the I.T. Act and assessment proceedings. For the sake of convenience, the contents of the notice dated 28.3.2011 issued by the AO as well as the reasons recorded by the AO are reproduced as under:-
“Notice under section 148 of the Income Tax Act, 1961 Office of the Asstt. Commissioner of Income Tax, Circle-1, Dehradun Dated: March 28, 2011 To Sh. JN Puri, 16, Minispal Road, Dehradun
Whereas I have reason to believe that Your/income in respect of which you are assessable/ chargeable to tax for the assessment year 2010-11 has escaped assessment within the meaning of section 147 of the Income TaxAct, 1961. & 2060/Del/2013 A.Y. 2010-11
I therefore propose to reassess the income / loss / depreciation allowance for the said assessment year and hereby require you to deliver to me on or before April, 18, 2011, a return in the prescribed form of your income / the income of in respect of which you are assessable for the said assessment year.
This notice is being issued after obtaining the necessary satisfaction of the Commissioner of Income Tax, Dehradun, Addl.
Commissioner of Income Tax, Range-I, Dehra Dun/The Central Board of Direct Taxes.