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2015 (12) TMI 393 - ITAT PUNE

2015 (12) TMI 393 - ITAT PUNE - TMI - Reopening of assessment - assessee has also assailed the action of the authorities below on merits and pleaded that the additions made are totally devoid of merits and are unsustainable in law - unexplained loan - Held that:- We find as a matter of fact that the impugned 'Annexure 4' showing loan received from Shri L.K. Jain (HUF) to the tune of ₹ 47.21 lacs was annexed along with the tax audit report filed and placed before the Assessing Officer in th .....

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Assessing Officer that there was a failure on the part of the assessee to disclose material facts fully and truly in tune with the authenticated tax audit report cannot be faulted. It is also clear that no conscious view was taken or no opinion was formed based on the impugned Annexure 4 to the tax audit report in the original assessment proceedings. Accordingly, it is not a case for change of opinion or a case of review. Therefore, the case laws cited by the assessee are clearly distinguishable .....

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e also find that Annexure 4 has no reference in the tax audit report and thus is not an integral part of tax audit report. This also establishes on facts that there is no nexus or live link between the impugned Annexure and the tax audit report. In view of these to important features, we find no difficulty in accepting the plea of the assessee that owing to some inadvertent error 'Annexure 4' not pertaining to assessee has crept in along with the tax audit report filed. The said Annexure 4 there .....

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le on facts and law. - Decided in favour of assessee. - ITA No. 947/PN/2014 - Dated:- 4-11-2015 - Sushma Chowla, JM And Pradip Kumar Kedia, AM For the Appellant : Shri K Srinivasan For the Respondent : Shri B C Malakar ORDER Per Pradip Kumar Kedia, AM The present appeal preferred by the assessee is against the order of CIT(A)-II, Pune dated 31.01.2014 relating to assessment year 2003-04 passed under section 143(3) r.w.s. 147 of the Income-tax Act, 1961 (in short "the Act"). 2. The Grou .....

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ances of the case and in law the original grounds raised before ITAT. a) The CIT(A) erred in confirming the addition of ₹ 47,21,887/- and the same may be deleted. b) AO and CIT (A) have erred in law in holding provision of section 68 are attracted and consequently shifting the ONUS on the assessee may be considered and suitable relief granted and justice done to the assessee. 4. The order of the lower authorities may be cancelled or appropriate suitable relief granted to the appellant. 5. .....

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der section 143(3) of the Act and the income was assessed at ₹ 1,36,55,245/-. 3.1 The assessment was reopened under section 147 of the Act by issuing a notice under section 148 of the Act on 29.03.2010 which was properly served on the assessee on the same date. Thereafter, a notice under section 143(2) of the Act dated 23.09.2010 was issued and served on the assessee. 3.2 The reasons recorded under section 148 of the Act for reopening the assessee are enumerated below ;- "The assessee .....

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unts of Shri L.K. Jain (HUF) as loan given to M/s Avi Constructions (loans & advances to firm/companies). Thus, this amount is required to be treated as unexplained cash credit u/s 68 of ₹ 47,21,887/- which was not reflected in the accounts of Shri L.K. Jain (HUF). 3. Accordingly to provisions of section 68, where any sum if found in the books of an assessee maintained for any previous year and the assessee offers no explanation about the nature and source thereof or the explanation of .....

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made u/s 143(3) r.w.s. 147 of the I.T. Act, 1961." 3.3 The Assessing Officer after completion of the assessment observed that tax audit report filed by the assessee, inter-alia, reflected loan taken from Shri L.K. Jain (HUF) amounting to ₹ 39,50,793/- during the year and outstanding loan as on 31.03.2003 has been shown at ₹ 47,21,887/-. It was observed by the Assessing Officer that while the loan taken from Shri L.K. Jain (HUF) is reflected as per Annexure 4 of the tax audit re .....

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, the assessee reiterated its submissions that the impugned Annexure 4 to the tax audit report is an inadvertent error and loan has in-fact been given by the assessee to Shri L.K. Jain (HUF) and not received as alleged. The amount which is to be recovered by the assessee from Shri L.K. Jain (HUF) stands at ₹ 1,12,88,068/- as appearing in Schedule D of the Balance Sheet as on 31.03.2003. It was submitted before the CIT(A) that the accounts of both the parties i.e. assessee and Shri L.K. Jai .....

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sessing Officer vide order dated 30.01.2012. 6. The aforesaid order of the CIT(A) was carried before the ITAT. Before the ITAT, the Ld. AR of the assessee also challenged the jurisdiction of the Assessing Officer in invoking section 147/148 of the Act and raised Grounds of Appeal to that effect. The ITAT observed that the issue of lack of jurisdiction with the Assessing Officer was not before the CIT(A). The CIT(A) has decided the matter only on merits. In this view of the matter, the ITAT resto .....

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eopening of the assessment are devoid of merit and the Assessing Officer has rightly exercised power under section 147 of the Act in accordance with law. On merits, the CIT(A) observed the findings of the earlier appellate order will hold good and he is in agreement with the earlier view on the issue. 8. Aggrieved with the action of the CIT(A), the assessee is in further appeal before us. 9. The grievance of the assessee is two-fold. The assessee has questioned the exercise of power under sectio .....

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lled for were duly filed in the course of assessment proceedings. After the assessment was completed, the audit query was raised by the Revenue by placing reliance on Annexure 4 annexed to the tax audit report and pursuant thereto, the Assessing Officer took objection to the correctness of the assessment order. The case of the assessee is thus protected by the embargo placed in first proviso to section 147 of the Act, as notice for reopening has been issued on 29.03.2010 i.e. after four years fr .....

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to disclose the material facts fully and truly at the time of the original assessment and therefore the CIT(A) has rightly sustained the action of the Assessing Officer. 12. On merits, the Ld. Authorized Representative on behalf of the assessee adverted our attention to the relevant Annexure 4 annexed to the tax audit report as appearing at Page No.12 of the Paper Book, which is the genesis of present controversy. Giving reference to the impugned Annexure 4 annexed to the tax audit report, he m .....

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hich ends at Annexure 3. Therefore, Annexure 4 is clearly superfluous and does not form part of the Report. He next contended that the aforesaid amount of ₹ 47.21 lacs has never been received from Shri L.K. Jain (HUF) as confirmed by the purported lender for which confirmatory letters were also filed with the Assessing Officer in the course of re-assessment proceedings. On the contrary, the money has been lent to Shri L.K. Jain (HUF) and not received as alleged. No such money is flowing or .....

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fore based on the tax audit report filed by the assessee itself, the Assessing Officer was justified in making the impugned addition. 14. We have carefully considered the rival submissions, orders of the authorities below and perused the case laws cited. Since the issue of jurisdiction under section 147 of the Act has been raised by the assessee which goes to the root of the matter, we shall deal with this issue first. We find as a matter of fact that the impugned 'Annexure 4' showing lo .....

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reflected in the Balance Sheet and accordingly was not subject-matter of the assessment in the original proceedings. Therefore, it is clear that the view taken by the Assessing Officer that there was a failure on the part of the assessee to disclose material facts fully and truly in tune with the authenticated tax audit report cannot be faulted. It is also clear that no conscious view was taken or no opinion was formed based on the impugned Annexure 4 to the tax audit report in the original asse .....

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