TMI Blog2012 (8) TMI 275X X X X Extracts X X X X X X X X Extracts X X X X ..... ed its expenditure or otherwise earlier & if the officer records that he has reason to believe that assessee had taxable income and a non-filing of the return, is not merely suspicion and therefore in bringing to tax such amount by re-opening - no exercise by appellate jurisdiction under Section 260-A is warranted to hold that the very reopening cannot be sustained - against assessee. - Income Tax Appeal No.27 of 2011 - - - Dated:- 10-7-2012 - D V Shylendra Kumar And B Manohar, JJ. For Appellants: Ms A Shankar And M Lava, Advs. For Respondent: Shri K V Aravind, Adv. JUDGEMENT This is an appeal by the assessee under section 260-A of the Income Tax Act, 1961 [for short 'the Act'] against the order of the Tribunal dated 23.09.2010 and on the premise that the Tribunal has committed errors and illegalities in dismissing the appeal of the assessee. 2. The assessee - appellant is a partnership firm said to have been constituted on 16.3.1996 in the name and style of M/s. Kaveri Associates and has been continued thereafter, with change of composition of partners, but under the same name and style and the questions raised for examination in this appeal arose for the peri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of one Rishabchand Bhansali who is also a partner of the firm and it is claimed that he is partner in his capacity as Kartha of Hindu Undivided Family comprising of himself and his brothers. However, a perusal of the copy of the partnership deed dated 16.8.1997 available in the assessment records indicates that the firm had come to be reconstituted as per this deed and Rishabchand Bhansali had a share of 20% in the firm on reconstitution and in fact three other brothers also had shares of 20%, 20% and 12.5% respectively in the very firm and they had held shares in their individual capacity etc. 9. Be that as it may, insofar as this appeal is concerned, to complete the narration of facts, search of the premises of Rishabchand Bhansali - partner of the firm had indicated that said Rishabchand Bhansali had drawn a sum of Rs.75,50,000/ - from the firm and said amount had been drawn for the purpose of loaning this amount to Sri Balakrishna and his educational institution Vishwabharathi Vidhya Mandir and as a sequel, the Assessing Officer had after follow up action etc., had issued notice to the firm under section 148 of the Act, reopening the assessment under section 147 of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 148 which reads as under:- "It is noticed that the firm M/s. Kaveri Associates has not filed any return of income for the Asst. Year 1999-2000 till today. As per the information in the HUF file of Shri Rishabchand Misrimal Bhansali, who is a partner of M/s. Cauvery Associates he has withdrawn Rs. 71,75,000/- from the above firm as on 31.3.1999. For lending Rs.71,50,000/-, the assessee firm must be having taxable income. As the assessee has not filed the return of income, the income has escaped assessment as per clause (a) to Explanation 2 to section 147. Hence the assessment proceedings initiated under Section 147 of the Act. Issue notice under Section 148." reveals that the assessing officer had mentioned the name of the assessee wrongly atleast in one place for this reason in the sense it had been mentioned as M/s. Cauvery Associates whereas the name of the firm was M/s. Kaveri Associates and this in itself indicated there was some confusion in the minds of the assessing officer with regard to the very name of the firm. However, it is more importantly contended that the so called reasons recorded does not really indicate any formation of belief on the part of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ained or was found to be convincing is a extraneous consideration for bringing to tax cash credit amounts as income of an assessee under Section 68 of the Act; that a recording or finding to the effect such amounts which were cash credits and which were properly explained by the assessee, nevertheless is income of the assessee during the previous year when the entries were made, is nothing short of recording a perverse finding and the Tribunal has committed an error in law in affirming such findings of the lower authorities and that the order of the Tribunal is not sustainable for such reasons. In support of such submissions Mr. Shankar, learned counsel, has placed reliance on the following decisions both of the Supreme Court as well as other High Courts viz., a. CIT VS. DAULAT RAM RAWATMULL 87 ITR 349 (SC) b. ARAVALI TRADING CO. ITO 220 CTR 622 (RAJ) c. NEMI CHAND KOTHARI VS. CIT 264 ITR 254 (GAU) d. KANHAIALAL JANGID VS. ACIT 217 CTR 354 (RAJ) AND e. CIT VS. LOVELY EXPORTS P. LTD. 216 CTR 195 (SC) 18. On the contrary, Sri K.V. Aravind, learned Standing counsel appearing for the revenue has submitted that having regard to the concurrent findings recorded b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olving immovable property and huge amounts, had never, at any point of time, revealed such transactions to the revenue; that the explanation putforth subsequent to the notice claiming that the firm had not started its business and therefore, that no income was earned was rejected by the authorities; that the firm had been receiving amounts and even as per its own version for commercial purposes and therefore, the explanation having been rejected, bringing to tax this amount was inevitable as it disclosed income which had escaped assessment. It is therefore, urged that the appeal has no merit and has to be dismissed. 21. Mr. Aravind, learned Standing counsel for the revenue has also drawn our attention to the judgment of the Supreme Court in the case of ACIT VS. RAJESH JHAVERI STOCK BROKERS P. LTD., 291 ITR 500 , which has been referred to and applied by the Tribunal to reject the contention on behalf of the assessee to the effect that the reopening of the assessment was bad on noticing the following paragraph:- "The expression "reason to believe" in section 147 would mean cause or justification. If the Assessing Officer has cause or justification to know or suppose that inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submissions made at the Bar and the contentions urged with the supporting decisions. 26. What is contended basically on behalf of the assessee is that the very re-opening of the assessment is bad and bringing to tax cash credits as income of the assessee, is also bad on settled legal principles. The basic undisputed facts were that the assessee had claimed the status of a firm and whether or not the notice mentioned it, the stand of the assessee is that it is a partnership firm and in income tax parlance a partnership firm is a person and an assessable entity at the relevant period and that is not in dispute. Insofar as the argument of application of mind or lack of it, regarding the discrepancy in the name of the assessee and therefore, the assessment proceedings is vitiated, is concerned, we find that the description is only in the name of the assessee firm and not as to, who is the firm. At any rate the wrong spelling assuming that to be so, in describing the name of the assessee has not caused any prejudice per se to the assessee as the assessee was quite aware of the proceedings that it was in respect of the very firm. In our considered view, it is difficult to assume, that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cumstances, if the officer records that he has reason to believe that assessee had taxable income and a non-filing of the return, is not merely suspicion and therefore in bringing to tax such amount by re-opening. We do not find, it can amount to a mere suspicion or a surmise as submitted by Sri Shankar, learned counsel. 28. As to whether the recording of reasons to believe constitutes a real reason or otherwise has to be culled out from the facts and circumstances of each case and in this regard, we cannot lose sight of the fact that information is provided in respect of the assessee by its own partner and while the assessee had never filed its returns not disclosing its expenditure and therefore, there was no record available with the revenue with respect to the assessee. 29. A return was being filed for the first time only after issue of notice under Section 148 of the Act, no doubt showing nil income in the return, but that is a matter to be examined for acceptance by the assessing authority who had proposed reopening and that the authorities below have concurrently opined that the recording of the reasons by the revenue was sufficient for the purpose of issue of notice und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enue to proceed further as against the person, who has lent the money to the firm. The firm though had transactions had not indicated the income from its transactions but claiming that it had no income liable to tax was not further accepted by the authorities below. 33. We sitting in appeal under Section 260-A of the Act do not find it proper to examine the appeal for the purpose of finding as to whether explanation offered by the assessee firm should have been accepted by the authorities below. The explanation was rejected and in the circumstances, we find that if the authorities had opined on the facts and circumstances that the re-opening was not bad in law and justified in the facts and circumstances, and to bringing to tax the cash credits of the assessee was also justified and finding recorded, which was examined by the authorities, we do not find occasion to interfere in respect of an order of this nature. 34. We also find that the arguments to the effect that the Department has not established through the factual position as against the stand taken by the assessee is arguments, which is principally based on the premises that the Department is expected to prove or produc ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
