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Before: SHRI N.K. SAINI & SMT. BEENA A PILLAI
ORDER PER BEENA PILLAI, JUDICIAL MEMBER: These are cross appeals filed by the Assessee as well as the Revenue against the order dated 15th September, 2011 passed by the ld. CIT(A)-XXX, New Delhi on the following grounds:
Grounds of appeal
): 1. “That ld. Commissioner of Income Tax (Appeal) has sustained the addition of Rs. 1,00,000/- each from the cash withdrawn from Saving Accounts and other Account and kept in locker and cash received from late Sh. Tule Ram Bansal, i.e. father of Mr. Ram Bhaj Bansal, Assessee, for the marriage of Mr. Brijesh Bansal, out of his past savings, total amounting to Rs. 2,00,000/- (Rs. One Lakh from each source, is based on presumption and on estimates. The additions sustained on account of undisclosed sources of Rs. 2,00,000/- be deleted).
2. Assessee craves his right to add, delete or alter any or all grounds of appeal during the pendency of appeal or up to hearing of Appeal before Hon’ble Commissioner of Appeals.” Grounds of ITA No. 5353/D/2011(Revenue’s appeal): “On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in: Deleting the addition of Rs. 10.85 lacs made u/s 69 of the Income Tax Act, 1961 as the assessee was not able to satisfactorily substantiate the ownership of Rs. 10.85 found in his possession. The CIT(A) has relied upon the assessee’s submission which were already rebutted by the Assessing Officer in the assessment order. The appellant craves the right to alter, amend, add or substitute the grounds of appeal.”
2. Brief facts arising in this appeal as recorded by the authorities below are as under: The assessee filed its return of income for the relevant assessment year on 28/03/2007, declaring taxable income of Rs. 1,51,185/-. In the present case there was a search operation by CBI on 02.02.2005. During the search, cash was found in locker no. 88-A and locker no. 434 with State Bank of India, New Delhi amounting to Rs. 3 lakh & 9,85,000/- respectively. The lockers were held in the name of assessee and Mrs. Kaushalya Bansal. Accordingly, CBI passed prohibitory orders on 03/02/2005 (copy of the punchnama has been enclosed at page no. 5 to 18 of the PB). The case for assessment year 2006-07 was reopened u/s 147 of the Act by the ld. Assessing Officer on 3001.2009, on the reasons recorded as under: “Reasons for reopening of assessment u/s 147 of the I.T. Act, 1961 1. The assessee is an individual drawing salary from MCD. He has filed his return of income for the A.Y. 2006-07 on 30.07.2006 declaring income of Rs. 1,51,185/-.
There was a search operation by CBI in the case of the assessee. As per information received from Supdt. Of Police, CBI/ACU-VII/New Delhi during the course of assessment proceedings for the A.Y. 2005- 06, vide their letter dated 02.11.2007, it has come to notice that vide “Observation cum Seizure Memo” dated 28.09.2005, received by this office as an Annexure, the position of cash found in Locker Number 88-A & Locker No. 434 with State Bank of India, Ring Road, Lajpat Nagar, New Delhi amounted to Rs. 3,00,000/- and Rs. 9,85,000/- respectively. The Lockers are stated to be in the name of the assessee and Ms. Kaushalya Bansal and the “Observation cum Seizure Memo” dated 28.09.2005 was made in case reference no. RC 2(A)/2005, CBI, AW-VII, New Delhi.
The assessee is employed with MCD having taxable income of Rs. 1,51,190/- only. Therefore, there is no proper explanation for possession of Rs. 12,85,000/- being the cash as on the date of seizure i.e. 28.09.2005.
I have, therefore, reasons to believe that income to the extent of Rs. 12,85,000/- being the cash found in the 2 lockers held by the assessee, as discussed above, has escaped assessment with the meaning of section 147 of the I.T. Act.
While doing so I have also kept in mind the ratio of Hon’ble Supreme Court’s decisions in the following cases: a) Raymond Woolen Mills vs. ITO (1999) 236 ITR 34 (SC) Sufficiency & correctness of material need not be looked at initial stage – while considering whether commencement of reassessment proceedings was valid, the court had only to see the department could reopen the case. The sufficiency or correctness of the material is not a thing to be considered at that stage. “P- 2-Sh. Ram Bhaj Bansal – A.Y. 2006-07. b) ACIT vs. Rajesh Zaveri Stock Broker P. Ltd. (2007) 291 ITR 500 (SC) Section 147 authorizes and permits the Assessing Officer to assess or reassess income chargeable to tax if he has reason to believe that income for any assessment year has escaped assessment. The word “reason” in the phrase “reason to believe” would mean cause or justification. If the Assessing Officer has cause or justification to know or suppose that income had escaped assessment, it can be said to have reason to believe that an income had escaped assessment. The expression cannot be read to mean that the Assessing Officer should have finally ascertained the fact by legal evidence or conclusion. In other words, at the initiation stage, what is required is “reason to believe”, but not the established fact of escapement of income. At the stage of issue of notice, the only question is whether there was relevant material on which a reasonable person could have formed a requisite belief. Whether the materials would conclusively prove the escapement is not the concern at that stage. This is so because the formation of belief by the Assessing Officer is within the realm of subjective satisfaction.”
I also hold that besides the issue noted herein above, if “any other income chargeable to tax has escaped assessment and comes to the notice of the Assessing Officer in the course of the proceedings under this section” (please refer to the wordings of section 147 as provided in the Act), the same would also be added to the total income of the assessee.”
4. The ld. Assessing Officer then completed the assessment proceedings by making an addition of Rs. 12,85,000/- being the total cash found in the lockers.
5. Aggrieved by the order of the Assessing Officer, the assessee preferred an appeal before the ld. CIT(A). 5.1 The ld. CIT(A) deleted the addition to an extent of Rs. 10,85,000/-. 6. Aggrieved by the order of the ld. CIT(A) both Revenue as well as assessee are in appeal before us. 7. We have perused the records and the arguments made by both the parties. It is noted that the CBI had passed the prohibitory order dated 02/02/2005 in respect of the lockers in which the cash was found. The lockers remained un-operated event during the next assessment year in consideration. This event took place in the financial year 1.04.2004 to 31.03.2005, relevant assessment year being, 2005-06. 8. Subsequently the ld.AO issued notice u/s. 148 for the year under consideration being 2006-07, on 30/01/2009 on the basis of the information sought from the CBI. The ld. Assessing Officer treated the same cash which were found in the lockers, and seized by the CBI on 03.02.2005. In our considered opinion, the said amount relates to the A.Y. 2005-06. The punchnama at page 11 of the paper book, prepared by the CBI dated 03/02/2005 is very clear that the amounts were ceased in the financial year relevant to A.Y. 2005-06. The prohibitory order issued by the CBI, of the even date (at page 9 of the paper book) shows that the prohibitory order continued to be in effect, at the time when the ld.AO issued the notice for re-opening, for assessment year 2006-07. 9. Legally, it is to hold that, the cash found in the lockers by the CBI on 02.02.2005, which was the basis for reopening the assessment for A.Y. 2006-07, as the cash found pertains to the A.Y. 2005-06. There does not arise any question to add the cash seized pertaining to A.Y 2005-06, in the A.Y.2006-07. 10. We, therefore, on the basis of above discussion, allow the appeal raised by the assessee and dismissed the ground of appeal
raised by the Revenue.