Jurisdiction - power of Revisional Court for consideration of an application under Order 7 Rule 11 of C.P.C. on merit - HELD THAT:- Since an order passed in rejecting the claim under Order 7 Rule 11 of the Code for lack of cause of action amounts to a decree, therefore, such an order is appealable. But where an application under Order 7 Rule 11 is rejected that is not appealable. Under such circumstances, whenever the Court finds illegality or jurisdictional error committed by the Court below in rejecting application under Order 7 Rule 11 of the Code, then the revisional court has the jurisdiction under Section 115 to consider the legality and sustainability of such orders because it has the effect of leading to a consequence for disposal of the suit. In the event a revision is entertained, then in appropriate case the revisional court may pass appropriate order directing the court below to correctly assess the fact by following the provisions of law, but since the effect of rejection of a plaint under Order 7, Rule 11(a) has the force of a decree, the revisional court should not pass an order rejecting a plaint while exercising jurisdiction under Section 115.
This Court finds force in the submission of learned counsel for the petitioner to the extent that the Revisional Authority has a limited role in the matter of hearing on rejection of an application under Order 7 Rule 11 of C.P.C. and in the event, it feels that there is some substance in considering the application under Order 7 Rule 11 of C.P.C., then the Revisional Authority is to remit the matter back to the Original Authority for fresh consideration of the matter.
This Court is of the view that the Revisional Court while considering the revision has exceeded its jurisdiction and therefore, while interfering in the revisional order, this Court sets-aside the same and directs the Revisional Authority to take a decision thereon afresh taking into consideration the observation of this Court - Application disposed off.
CENVAT Credit - input services - construction services used in constructions of dormitory - no co-relation between such input services and manufacture/clearance of finished goods as these services are more closely associated to welfare activity - HELD THAT:- The appeal is admitted on substantial question of law.
Penalty u/s 271D/271E -violation of the provisions of section 269SS/269T - receipts and repayments in cash of transactions other than loans/deposits - HELD THAT:- As observed from the impugned order that the assessee categorically stated that it had been purchasing and selling the goods and materials from/to M/s Hindustan Plywood Company and the amounts in question were on account of trading transactions - As perused account of M/s Hindustan Plywood Company, a copy of which has been placed on record. Its perusal indicates that it is a running account in which there are purchase and sale transactions on different dates including 2.4.2007, 24.4.2007, 13.7.2007, 16.7.2007 and 27.11.2007 etc.
Apart from that, there are other receipts and payments in cash and by cheques as well. If we look at the totality of the account, it becomes clear that the same is in the nature of current account and does not primarily represent any acceptance or repayment of loans and deposits otherwise than by way of cash as contemplated u/s 269SS/269T - It goes without saying that no penalty can be imposed u/s 271D/271E in respect of receipts and repayments in cash of transactions other than loans/deposits. Under such circumstances, we set aside the impugned order and direct the deletion of the penalty. Appeal of the assessee is allowed.
Clandestine removal of goods - demand of duty and penalty based on several materials duly established during the proceedings and not just on statements of the employees - HELD THAT:- Tax Appeal is admitted for consideration of following substantial question of law:-
Whether the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) was justified in law and in facts in allowing the appeal of the assessee on the ground that the confirmation of the duty and penalty could not have been based on confessional statements alone?
Compromise between the parties during the pendency of the appeal before this Court - compounding of offence - HELD THAT:- This Court in the case of SUBE SINGH AND ORS. VERSUS STATE OF HARYANA AND ORS. [2013 (4) TMI 983 - PUNJAB AND HARYANA HIGH COURT] has considered the compounding of offences at the appellate stage and has observed that even when appeal against the conviction is pending before the Sessions Court and parties entered into a compromise, the High Court is vested unparallel power under Section 482 Cr.PC to quash criminal proceedings at any stage so as to secure the ends of justice.
Similarly, in the case of BAGHEL SINGH VERSUS STATE OF PUNJAB [2014 (5) TMI 1218 - PUNJAB AND HARYANA HIGH COURT], whereby the accused was convicted under Section 326 IPC and was sentenced to undergo rigorous imprisonment for two years, the parties entered into compromise during the pendency of the appeal.
In view of the fact that the parties have entered into a compromise and learned Addl. Sessions Judge, Shaheed Bhagat Singh Nagar has submitted her report in support of genuineness of the compromise, the present petition is allowed.
Assessment framed u/s. 153A for want of any incriminating material seized during the course of search - HELD THAT:- We find in these circumstances that all the judgments quoted at the assessee’s behest including that of hon’ble jurisdictional high court hereinabove hold that no addition is to be made in framing of search assessment without there being any in any incriminating evidence found in the course of search proceedings itself. Revenue’s case law does not involve any judgment of hon’ble jurisdictional high court. We follow hon’ble jurisdictional high court decision in these circumstances and hold that the lower authorities have wrongly initiated section 153A proceedings in absence of any such incriminating evidence. We accept assessee’s argument accordingly. The impugned search assessment itself stands quashed.
Validity of initiation of section 153A proceedings - AY 2010-11 - HELD THAT:- The assessee invites our attention to corresponding finding on the former issue as decided in preceding two assessment years. We find that facts of the instant case are not similar. We find that he filed his return of income on 30- 07-2010. The impugned search is dated 08-09-2011. The assessee does not place any material on record a regular or security assessment already stood framed in his case. Even time limitation u/s. 143(2)(Proviso) stipulating time period of six months from the end of the financial year of filing the return has not expired. This is not found to be a case of either deemed completion of assessment or completion of assessment. We accordingly accept Revenue’s argument that section 153A of the Act has rightly been invoked in case of the impugned assessment already pending. This first ground fails.
Unexplained election expenditure - HELD THAT:- The assessee files before us proof of payment of the impugned sum in prescribed form Appendix-1 in the shape of register of maintenance of day to day account. Photocopy of the document is also attached. The assessee accordingly prays for this additional evidence. The Revenue strongly objects to this admission and prays for affirming the impugned findings. We tend to differ with this technical objection. There is no dispute about genuineness thereof. We observe in these facts and circumstances that procedural technicality shall not come in the way of substantive justice. We proceed on this proposition and admit this additional evidence. The Assessing Officer is directed to make necessary verification and pass a consequential order after affording adequate opportunity of the hearing to the assessee.
Addition on the value of gold jewellery weighing 112.5 gms remained to be explained out of the total found 7711.54 gms - HELD THAT:- here is no dispute that the impugned explained jewelry weight is 1.46% of the total weight found during search. This is not the Revenue’s case that this jewelry does not contain stones and impurities therein. Both the authorities below also nowhere take into account the assessee’s social economic status. We are also alive of the fact that the assessee has not filed any specific evidence in support of the plea to have received the impugned jewelry on various social occasions. We draw inference from assessee’s and his families social economic status and hold that the impugned jewelry can be well said to have been received on various family functions and past savings thereof. We decide this ground in assessee’s favour
Expenses on foreign travel disallowance - HELD THAT:- We find these expenses to have been debited to personal account in personal books and balance to have been met from saving account in Corporation Bank. This made both authorities to treat the same as unexplained. The same factual position continues herein as well since the relevant capital account or trust’s accounts are nowhere produced before us where the assessee is stated to be serving. We affirm lower appellate findings accordingly.
Disallowance of deemed let out income and added back the same to the income of the assessee - HELD THAT:- We find that the annual ratable value in respect of bungalow at Jalore in the native place of assessee is the core question before us. Following the decision in the earlier year CIT(A) directed the Assessing Officer to assess the ratable value at ₹ 15,000/- keeping in view the inflationary trend in the market, the amount being increased by 20% in the year under consideration which comes to ₹ 18,000/- Accordingly Assessing Officer was directed to assess ₹ 18,000/- as deemed rent under section 23(4) of the Income Tax Act and balance addition of ₹ 2,22,352/- (₹ 2,40,352 - ₹ 18,000) was directed to be deleted. This reasoned finding of CIT(A), whereby he granted partial relief to the assessee, need no interference from our side. We uphold the same.
Addition u/s 14A r.w. Rule 8D - investments which generates exempt income has been made out of his personal account and he has not claimed any expenses on account of interest - HELD THAT:- We are not inclined to interfere with the finding of the CIT(A) because only after analyzing the facts of the case he rightly restricted the disallowance to ₹ 42,709/- instead of ₹ 1,14,622/-.
Addition on account of labour charges - HELD THAT:- CIT(A) correctly observed that AO has not made any specific observation that labour expenses made by the assessee were not genuine. The labour charges debited are as per the Audit Report under section 44AB submitted before the Assessing Officer along with the return of income. Assessing Officer has not pointed out any specific defect in the details even in respect of a single party. Even the Assessing Officer did not issue any show cause notice to the assessee before making addition to the total income of the assessee. In view of this, Assessing Officer was not justified in disallowing the same by observed that the same were made in cash. In fact, in such business labor expenses are made in cash, Assessing Officer has not made out any case as to whether cash payment were in excess of ₹ 20,000/- and were hit by provisions of section 40(A)(3) of the Act. In case that transaction was found to be genuine and identity of payee was established and that payment was not exceeding the prescribed limit, then disallowance under section 40A(3) of the Act cannot be made. Assessee had made the payment to labour contractor and no single payment exceeded ₹ 10,000/-. It is well known that labour needs the cash payment urgently and contractor is required to pay the same in cash to avoid labour problems.
Bogus sub-contract expenses - HELD THAT:- AO has not brought anything on record to verify the genuineness of the payment. He has not made any effort to verify whether such expenses were incurred for business purpose or not. Once the genuineness of expenditure has not been disputed such adhoc addition is not justified and such addition can be made only by bringing some material on record to justify the same, which has not been done in this case. Therefore the CIT(A) was justified in deleting the addition of ₹ 50,00,000/- and the same is upheld.
Addition of penalty payments as not allowable expenses - HELD THAT:- Since the issue was covered by the order of the ITAT in assessee’s own case in A.Y. 2008-09 and the facts being same, for same reasoning CIT(A) deleted the addition . Nothing contrary has been brought to our notice by the Revenue. Therefore we are not inclined to interfere with the decision of the CIT(A), who has deleted the disallowance made on account of penalty payment for delayed execution of contract.
Disallowance u/s 40(a)(ia) of the Act in respect of transport charges - HELD THAT:- Since all details regarding transport charges, specifying PAN, rate of deduction of TDS, date of deposit in Govt. account, etc. were already before the Assessing Officer and that too twice - once vide letter dated 10th September, 2012 and the second vide letter dated 18th February, 2013 - during assessment proceedings, which was also conveyed to CIT(A). In this background the CIT(A) observed that Assessing Officer has not applied his mind in dealing with the issue and even the amount and the names of concerned parties did not tally. There was also contradiction in the name of parties. On a comparative analysis of facts, in this background, CIT(A) observed that there seems to be wrong identification of figures and parties. In view of this the CIT(A) deleted the addition by observing that the disallowance was made without any basis hence the same was directed to be deleted. This reasoned factual finding of CIT(A) need no interference from our side.
Addition in respect of agricultural income - HELD THAT:- We find that the income the income assessed under the head ‘income from other sources’ has rightly been deleted by CIT(A) because similar income has been consistently accepted by Assessing Officer in past and there is no change in the facts and circumstances of the case. Even the agricultural holding of the assessee has not been disputed. Under the facts and circumstances, the Assessing Officer was not justified in deviation from the earlier stand of Revenue in this regard without bringing any changed circumstances for this addition. Accordingly, in the aforecited facts and circumstances, CIT(A) has rightly deleted the addition.
Unexplained expenditure u/s 69C - Bogus purchases - HELD THAT:- In this case, during the assessment proceedings it came to the notice of the Assessing Officer that in the relevant assessment year the assessee had made certain purchases from some parties, who were not available to cross-examine for the genuineness of the above purchases. It was found by the Assessing Officer that though the purchases were claimed to have been made on credit basis, the payments were shown to have been made after substantial lapse of time after the date of purchase. Assessing Officer held that the transactions relating to those purchases were bogus and, therefore, treated the amount allegedly paid for those purchases as income of the assessee. On second appeal, the Tribunal found that there was no evidence anywhere that those concerns gave bogus vouchers to the assessee and further there was nothing to indicate that any part of the fund given by the assessee to those parties came back to the assessee in any form. He, thus, held that the evidence was not adequate to conclude that the purchases made were bogus and, therefore, deleted the aforesaid addition to the income of the assessee.CIT(A) was rightly deleted the addition made by the Assessing Officer u/s 69C.
Unexplained expenditure u/s 69C on account of sub-contract charges - HELD THAT:- The unexplained expenditure made by the Assessing Officer by invoking the provisions of section 69C of the Act has been deleted by us, relying on various judicial pronouncements as discussed in paragraph 14 of this order. For the sake of brevity, the same are not reproduced here once again. Assessing Officer had all the machinery under the IT Act, 1961 to make investigation through the Banks by calling for records and reaching out the parties who were not co-operating with the assessee and bring the actual facts on record. In view of above, the CIT(A) was justified in deleting the addition because the AO has also not been able to bring on record the evidences that the amount of the payment for purchases, which were made by the assessee to the respective parties via banking channels. There is nothing on record to suggest that said payments were received back by the assessee in any manner. This reasoned finding of the CIT(A) needs no interference from our side whereby he has rightly deleted this addition in question.
Addition u/s 69C of the Act on account unexplained expenditure as the assessee allegedly did not purchase any goods from three parties - HELD THAT:- AO has mainly relied upon an article published in Times Of India which refers to certain business enterprises. It was further seen that the article itself was with reference to certain works entrusted to them. The article has been published on 06-02- 2013 and which falls in FY 2012-13 i.e. AY 2013-14. This cannot be basis for making any addition or disallowance by the Assessing Officer in AY 2010-11. The authenticity of source of such article has not been independency investigated by the Assessing Officer in the case of proprietorships concern of the assessee namely M/s. Ratansingh & Bros. No other reason has been brought on record by the Assessing Officer to substantiate adverse conclusion against the assessee. Assessing Officer has not taken any personal initiative except issuing notices u/s 133(6) of the Act to ascertain the genuineness of the purchases in question.
CIT(A) found from the records produced before him by the assessee that the purchases made could not be said to be not genuine. If the Assessing Officer has not made any effort to rebut the assessee's claim about the genuineness of the purchases, the assessee cannot be made for such lapse. Therefore, in our opinion, the CIT(A) was justified in deleting the addition.
Validity of continued detention - whether the continued detention of the detenus is vitiated on the ground that the grounds of detention were not communicated as provided under Article 22(5) of the Constitution of India, since the detenus were denied the opportunity to view the CCTV footages within the time provided under sub-section (3) of Section 3 of the COFEPOSA Act? - HELD THAT:- On a plain reading of clause (5) of Article 22 of the Constitution of India, the requirement is to communicate to the detenu the grounds on which the order of detention has been made. The expression “communicate to such person the grounds on which the order has been made” was interpreted in various judicial pronouncements and it is now well settled that the constitutional requirement under Article 22(5) would not be fulfilled by just serving the grounds of detention on the detenu. It is also mandatory that the documents relied upon by the detaining authority in the grounds of detention also must be supplied to the detenu.
The Constitution Bench in THE STATE OF BOMBAY VERSUS. ATMA RAM SRIDHAR VAIDYA [1951 (1) TMI 33 - SUPREME COURT] also held that it is obvious that the grounds for making the order are the grounds on which the detaining authority was satisfied that it was necessary to make the order. What must be supplied are “the grounds on which the order has been made” and nothing less. It is, therefore, clear that if the representation has to be intelligible to meet the charges contained in the grounds, the information conveyed to the detained person must be sufficient to attain that object. Without getting information sufficient to make a representation against the order of detention, it is not possible for the detenu to make an effective representation.
In HARIKISAN VERSUS STATE OF MAHARASHTRA [1962 (1) TMI 58 - SUPREME COURT], a Constitution Bench of the Supreme Court held that it is not sufficient that the detenu has been physically delivered the means of knowledge with which to make his representation. In order that the detenu should be in a position effectively to make his representation against the order of detention, he should have knowledge of the grounds of detention which are in the nature of the charge against him setting out the kinds of prejudicial acts which the authorities attribute to him.
The Writ Petitions are allowed and the detenus are set at liberty forthwith, if their detention is not required in respect of any other case.
Preventive detention - Dual right of the detenu to make a representation to the Advisory Board as well as to the Government - Whether a person who has been detained under the Kerala Anti-Social Activities (Prevention) Act (KAAPA) is entitled to be informed that he has a right to make a representation to the Government as well as to the Advisory Board against the detention or whether it is sufficient that he is informed that he has got a right to make a representation either to the Government or to the Advisory Board? - HELD THAT:- Unlike an order under Section 15(1) of the KAAPA, the detenu will not be given notice before an order under Section 3(1) is passed. A person who has been detained under Section 3(1) of the KAAPA does not get any opportunity before his arrest. His right accrues only on his arrest, at which point of time, the officer arresting him shall read out the detention order to him and give him a copy of such order - The grounds of detention along with copies of the relevant documents shall be furnished to the detenu as soon as possible and, at any rate, within five days of his detention. A detenu under the Preventive Detention Laws would be arrested and detained abruptly. Unlike in the trial of a criminal case, the person concerned who has been detained under the KAAPA would not get much opportunity to mould his defence and to put forward his arguments. A detenu's right is confined to make a representation to the Government as well as to the Advisory Board. The Advisory Board shall also hear the detenu if he expresses a desire to be heard in person. Before the Government, the detenu will not get an opportunity to be heard in person while considering the representation. The rights of the detenu would be protected by providing a meaningful opportunity to him to make representations as provided under Section 7(2) of the KAAPA.
The wording of Section 7(2) and particularly the word "and" occurring in the expression "right to represent to the Government and before the Advisory Board" makes the position clear that the Legislature intended that the detenu should be informed that he has distinct rights of making a representation to the Government as well as to the Advisory Board. The detaining authority cannot substitute the word "or" for the word "and" occurring in Section 7(2) of the KAAPA. The information supplied in Ext. P2 representation is contrary to the information which is contemplated under Section 7(2) of the KAAPA. The continued detention of the detenu is, therefore, vitiated. For the aforesaid reasons, the continued detention of the detenu is illegal and he shall be released forthwith.
Sustainability of a FIR - FIR not in consonance with the procedure mandated in Section 154 Cr.P.C. - Constraint on use of the CAG report as a document in a criminal proceeding - HELD THAT:- There is no statutory provision in any of the Penal laws in respect of which the FIRs are registered, reconciling the procedure contemplated in Section 154(1) of the Code. That being so, the Lokayuktha Police ought not to have yielded to register the FIRs by blowing away the mandatory procedure. The irregularity/illegality committed in registration of the FIRs, without there being any material in the nature of information goes to the very root of the matter which cannot be cured by whatever means.
Constraint on use of the CAG report as a document in a criminal proceeding - HELD THAT:- In this era of advanced Information Technology with the enablement conferred on the citizen of the country to have easy access to information by way of Right to Information Act, 2005, it is unrealistic to presume CAG report as a confidential document, till it meets finality in the Parliament or the Legislature. The Code no where contemplates a Police Officer acting under Section 157 of the Code to publish the source of information which drives him to register a suo moto complaint in respect of a cognizable offence. Likewise it is always open to a concerned/aggrieved informant to approach the jurisdictional Police even on suspicion about commission of a cognizable offence, to be dealt in accordance with Section 154(1) of the Code.
An alert citizen upholding the mission of 'combat against corruption' is certainly laudable. But it shall not be a free style battle. The penal laws under which the alleged offence fall will take over, if offence is proved in a court of law. The procedure contemplated by the Code to invoke criminal law into motion being the first step for registration of a criminal case, inroading of the procedure laid down by rule of law is not at all permissible. An attempt is made to justify the action of Lokayuktha Police that the case is not registered solely on the report of C.A.G. but also on the independent enquiry conducted by the C.I.D. Police on the direction of the Lokayuktha.
Unexplained investment in the property - Addition based on seized papers - HELD THAT:- Since no explanation of the assessee have been called for on the seized papers specifically, therefore even if presumption under section 292C lay against the assessee but fact remained that the revenue has also failed to explain about the entries contained in the seized paper. The assessee explained that these are rough notings and dumb documents and assessee did not make any investment in purchase of any of the property, therefore, it is for the revenue to explain that assessee actually made investment in some identified property. As noted above, the Assessing Officer merely presumed purchase of some property without having any area or location or identity of the property in it, therefore, on mere presumptions, such a huge addition against the assessee would be wholly unwarranted.
Considering details noted in the seized paper, it is clear that the seized paper is merely a rough noting having mentioning the year 2003-04, therefore, Assessing Officer was not justified in interpreting the seized paper to be a purchase of property by assessee and others. The seized paper is, therefore, clearly dumb document and did not lead to anywhere so as to make any addition against the assessee. We, accordingly, set aside the orders of authorities below and delete the entire additions.
Claim of rebate for second time - Rule 18 of the Central Excise Rules, 2002 - HELD THAT:- The issue has already been interpreted by Hon'ble Supreme Court of India in M/S. SPENTEX INDUSTRIES LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE & OTHERS [2015 (10) TMI 774 - SUPREME COURT] and as per the view taken, the exporters are entitled to both the rebates under Rule 18 and not one kind of rebate only.
The order passed by the revisional authority dated 07.10.2009, the orders passed by the appellate authority and the order passed by the adjudicating authority are hereby quashed - petition allowed.
Claim of rebate for second time - Rule 18 of the Central Excise Rules, 2002 - HELD THAT:- The issue has already been interpreted by Hon'ble Supreme Court of India in M/S. SPENTEX INDUSTRIES LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE & OTHERS [2015 (10) TMI 774 - SUPREME COURT] and as per the view taken, the exporters are entitled to both the rebates under Rule 18 and not one kind of rebate only.
The order passed by the revisional authority dated 01.09.2009, the orders passed by the appellate authority and the order passed by the adjudicating authority are hereby quashed - petition allowed.
Revision u/s 263 by CIT - Assessment u/s 153C - assessee had sold two pieces of land at Hydernagar and different rates were adopted in both the sales though there was not much of time gap between the two dates of sale - huge variation in the market value of the land though the lands are situated in the same locality and no reason for such variation is forthcoming from the assessment order - A.O. has not verified this issue while passing the assessment order under section 143(3) read with section 153C and hence, held that the assessment order is both erroneous in so far as it is prejudicial to the interests of the Revenue - HELD THAT:- As revision proceedings have been initiated at the behest of the A.O. and not independently by the Ld. CIT because the proposal was sent to the Ld. CIT by the Assessing Officer. This issue has been considered in the case of M/s. Aashi Plywood Industries Ltd., Hyderabad [2016 (1) TMI 176 - ITAT HYDERABAD] wherein held that except for some cosmetic charges, the reasons are adopted verbatim by the CIT. In these circumstances, revision orders passed by the Ld. CIT are not maintainable for want of valid initiation of the proceedings under section 263 - we thus hold that the revision proceedings under section 263 of the I.T. Act are not sustainable - Decided in favour of assessee.
Deduction u/s 80IB in respect of scrap sales - determination of gains derived from the industrial undertaking for the purpose of computing deduction - HELD THAT:- The issue is covered in favour of the assessee by the decision of Hon'ble Jurisdictional High Court in the case of Sadhu Forging Ltd. [2011 (6) TMI 9 - DELHI HIGH COURT] wherein held receipts from sale of scrap being part and parcel of the activity and being proximate thereto would also be within the ambit of gains derived from the industrial undertaking for the purpose of computing deduction under section 80- IB - Thus we direct the Assessing Officer to compute the deduction under Section 80IB after taking into account the scrap sales.
Maintainability of appeal on low tax effect - Tax effect below the monetary limit - HELD THAT:- DR on a query by the Bench, fairly conceded that the tax involved in all the above ten cases was less than ₹ 10.00 lacs. Considering these facts, we dismiss the appeals holding them as not maintainable. Appeal filed by the Assessing Officers stands dismissed.
Defective appeal - HELD THAT:- Bench noticed that the Revenue has filed the present Appeal against the impugend order by rasing the Grounds of Appeal dated 12.11.2013 which was unsigned, which is contrary to the Rules. Therefore, the present Appeal is “Defective” and is not maintainable in the eyes of law, hence, the same is dismissed as such. But in the interest of justice, if so advised, the Revenue is at liberty to file the Application to recall this order, after rectifying the defect.
Since we have already dismissed the Revenue’s Appeal being “Defective”, as aforesaid, the Cross Objection filed by the Assessee has become infructuous and dismissed as such. Even otherwise, we note that the Cross Objection is barred by limitation and there is a delay of 579 days in filing the Cross Objection which was communicated to the Assessee.
Reopening of assessment u/s 147 - assessee had PE in India - HELD THAT:- AO had completed the original assessment u/s 143(3) of the Act after considering all the materials submitted by the assessee. Later, the AO reopened the assessment u/s 147 relying on the same materials submitted by the assessee. There was no fresh material or any information which gives the impression that the income of the assessee has escaped assessment. The initiation of reassessment proceedings u/s 147 on the basis of the same material on record and holding there was escapement of income as the income arose from transfer of the asset is to be assessed as ‘business income’ is on change of opinion. It was held in the case of Phool Chand Bajranglal [1993 (7) TMI 1 - SUPREME COURT] where the AO comes into possession of fresh information or new facts, which lead him to form a reasonable belief that income has escaped assessment, he can reopen the assessment. In the present case, AO had not found any fresh information nor new facts.
Also held in the case of Tractbel Industry Engg. Vs. Asst. DIT [2011 (1) TMI 1470 - DELHI HIGH COURT], during the course of original assessment proceedings, the assessee was called upon to give information and details regarding the nature of business activities in India, it was stated in the letter that the assessee does not have any PE in India. AO in original assessment accepted the contention of assessee.
Reassessment on the ground that the assessee had PE in India on the same facts was held to be not justified and liable to be quashed. In the present case also, the AO had accepted the contention of assessee i.e. treating the income as ‘capital gains’ and the source of income was reassessed and intended to treat the income as business income. It clearly establishes that the AO has changed his opinion, therefore, the reopening of assessment deserves to be quashed.
Question of law or fact - reopening of assessment beyond a period of four years - HELD THAT:- Tribunal recorded that the AO only on the base of information supplied by the investigation wind at Mumbai that the assessee had received share application money from one of the tainted companies, issued notice
Tribunal was of the opinion that the AO himself did not satisfy about the requirement and issued notice under section 148 of the Act without forming a reason to believe that the income of the assessee had escaped assessment. Tribunal regardlessly proceeded to examine the issue on merits and deleted the addition towards share application money.
Upon perusal of the judgement of the Tribunal with the assistance of learned counsel for the Revenue, we are of the opinion that the issues raised are fundamentally questions of facts. The Tribunal having perused the facts on record come to the factual findings. No question of law arises. Under the circumstances quite apart from the validity of reopening, in our opinion, judgement does not require any further consideration. Appeal dismissed.
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