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TMI Blog2013 (7) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... t giving opportunity to AO as per provision of Rule 46A of the I.T.Rule, 1962." ITA No.1480/Kol/2011 A.Yr.2007-08 "On the facts and in the circumstances of the case, the ld. CIT(A)-VIII erred in law in deciding the appeal in favour of the assessee by deleting the addition of Rs.57,75,000 on account of income from undisclosed sources. On the facts and in the circumstances of the case, the ld. CIT(A)-VIII erred in law in deciding the appeal in favour of the assessee without verifying the cash deposit. On the facts and in the circumstances of the case, the ld. CIT(A)-VIII erred in law in deciding the appeal in favour of the assessee without giving opportunity to AO as per provision of Rule 46A of the I.T.Rule, 1962." 2.1. In the Cross Objection filed by the assessee the assessee has taken the following common ground of Cross Objection for both the years under consideration :- "1. That the learned CIT(A) erred in upholding the action of the Assessing Officer in initiating the re-assessment proceedings although there were no reasons to believe within the meaning of Sec.47 of the Act that the income of the assessee has escaped assessment." 3. In both these years under consideration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earlier year. All these does not justify the cash deposits of Rs.36,15,000/- as well as cheque deposits more than crore at different dates in the said bank accounts during the relevant previous year. On the basis of the above, I have reason to belief that income has been escaped from assessment. Consequently, Notice u/s 148 is issued for the purpose of reassessment u/s 147." 4.1. The assessee challenged the reopening of the assessment before the ld. CIT(A). The assessee argued that on perusal of the reasons recorded by the AO it was found that the reasons are based on surmises and conjectures and irrelevant considerations. The assessee had sold some of its investments in shares in cash. The source of cash deposits of Rs.57,75,000/- in ABN Amro Bank on different dates in the previous year relevant to the assessment year 2007-08 was the sale proceeds of investment. The details of cash book prepared by the assessee in excel sheet for A.Yrs. 2006-07 and 2007-08 respectively were filed before the ld. CIT(A). It was submitted that source of the cash deposits in the bank account was duly explained. The fresh investments were made by Account payee cheques. The assessee has furnished deta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have not received any fresh capital or loan during the years and not sold any shares or investment except for Rs.5,51,420/- in A.Yr. 2007-08 there was no source for making aforesaid deposit in the ABN AMRO bank and on these facts the AO found belief that income chargeable to tax has escaped assessment for both the years under appeal. 5.1. We find in the ultimate assessment made for A.Yr. 2006-07 the AO found that the assessee in its books of account showed sale of unquoted shares in cash of Rs.99,40,000/-and as the assessee could not substantiate the sale transaction recorded in the books in cash which according to the AO was not proved and therefore the AO added the amount to the income of the assessee. 5.2. Similarly the impugned order of the re-assessment passed for A.Yr.2007-08 shows that the only addition made in the re-assessment was Rs.57,75,000/- which represents sale of unquoted shares in cash recorded in the books of the assessee which according to the AO could not be proved by the assessee. 5.3. Thus we find that in the instant case the income which was added in the re- assessment was not on the basis of any subsequent information received by the AO but was only for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessements were reopened in the case of the assessee and the additions were made with respect to issues for which no reasons were recorded u/s 148(2) of the IT Act. We find that the Hon'ble Delhi High Court in the case of Ranbaxy Laboratories Ltd. vs CIT reported in 336 ITR 136 (Delhi) has held as under :- "Held, that section 148 was supplementary and complementary to section 147. Sub- section (2) of section 148 mandates reasons for issuance of notice by the Assessing officer and sub-section (1) mandates service of notice to the assessee before the Assessing Officer proceeds to assess, reassess or recompute escaped income. Section 147 mandates recording of reasons to believe by the Assessing Officer that the income chargeable to tax had escaped assessment. All these conditions were required to be fulfilled to assess or reassess the escaped income chargeable to tax. Under Explanation 3 if during the course of the proceedings the Assessing officer comes to the conclusion that some items have escaped assessment, then notwithstanding that those items were not included in the reasons to believe as recorded for initiation of the proceedings and the notice, he would be competent to ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 148 of the Act were initiated by the Assessing Officer based on non-existing facts, because ultimately the assessee had been able to explain the income, which the Assessing Officer believed to have escaped assessment. The Assessing Officer was justified in initiating the proceedings under section 147 of the Act. But once the Assessing Officer reached the conclusion that the income which he believed to have escaped investment had been explained, the Assessing Officer did not continue to possess jurisdiction to tax any other income, which came to his notice subsequently in the course of the proceedings." 5.10. In view of the above settled legal position in our considered opinion the impugned orders of the re-assessment are unsustainable as the reopening of assessment on the recorded reasons was not valid. We therefore allow this ground of cross objection of the assessee for both the years. 5.11. In view of our above decision the grounds of appeal of the Revenue for both the years have become infructuous and only academic in nature. We therefore refrain from adjudicating the same and dismiss the appeals of the Revenue for both the years under consideration. 6. In the result t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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