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M/s. Jansons Versus The Assistant Commissioner of Income Tax, Circle 1 (1) , Bangalore.

2016 (10) TMI 583 - ITAT BANGALORE

Validity of reopening of assessment - unexplained investment - Held that:- As while completing the original assessment, the facts with regard to surrender statement of the assessee during the course of survey of ₹ 10,12,000 as unexplained investment in excess stock was available before the AO, but he did not act on it for the reasons best known to him. But once he has already applied his mind to these facts and has opted not to make an addition in this regard, he cannot make addition of th .....

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of assessment is on account of change of opinion, it is bad in law and is not sustainable in the eyes of law. - Decided in favour of assessee. - ITA No.1390/Bang/2010 - Dated:- 26-8-2016 - SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER For The Appellant : Shri Ravi Shankar, Advocate For The Respondent : Mrs. Jahanzeb Akhter, CIT(DR) ORDER This appeal is preferred by the assessee against the order dated 07.11.2006 of the CIT(Appeals)-I, Bangalore for the assessment year 2001-02 inter alia on the followi .....

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ice to the above, the learned CIT[A] is not justified in upholding the addition of ₹ 10,12,000/- as the alleged excess stock discovered during the course of Survey under the facts and in the circumstances of the appellant's case. 4. The learned CIT[A] failed to appreciate that the appellant has clearly shown the closing stock correctly in the Profit & Loss account and Balance Sheet filed along with the return of income and therefore, there was no justification to make the impugned .....

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urged at the time of hearing of the appeal, your appellant humbly prays that the appeal may be allowed and Justice rendered and the appellant may be awarded costs in prosecuting the appeal and also order for the refund of the institution fees as part of the costs. 2. Besides assailing the order of CIT(Appeals) on merits, the assessee has challenged the validity of reopening of assessment on the ground that all information were available before the Assessing Officer while completing the original .....

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ng income of ₹ 79,090 and assessment was completed on 1.3.2004 at ₹ 89,090 against the returned income of ₹ 79,090, against which an appeal was filed, but the same was dismissed by the CIT(Appeals) and thereafter no further appeal was filed. 4. On 16.2.2006, the AO formed a view to reopen the assessment u/s. 148 of the Act and accordingly reasons were recorded and notice u/s. 148 was issued on 17.2.2006 to which the assessee has filed objections to the notice u/s. 148 of the Ac .....

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ates fixed for hearing on 10.7.06 and 1.8.06, none appeared on behalf of the assessee. Again on 14.8.06 and 10.10.06, when the matter was listed for hearing before the AO, none appeared on behalf of the assessee. Accordingly assessment was completed vide order dated 7.11.2006 u/s. 143(3) r.w.s. 147 of the Act. The AO has also completed the assessment in search proceedings including an income of ₹ 10,12,000 admitted by the assessee during the course of survey towards investment in excess st .....

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for the AY 2001-02. Consequently, notice u/s. 148 was issued and assessment was completed u/s. 143(3) r.w.s. 147 of the Act at ₹ 11,01,090 by making an addition of ₹ 10,12,000 as undisclosed investment in excess stock. 5. This order of the AO was challenged before the CIT(Appeals) on the legal ground, but no explanation was furnished with regard to source of investment in excess stock. The CIT(Appeals) has dealt with this issue in detail in his order in the light of the aforesaid fa .....

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the addition while completing the original assessment u/s. 143(3) of the Act on 1.3.2004, but he did not make any addition of the alleged investment in excess stock; meaning thereby, during the course of assessment proceedings he was convinced with the explanation furnished by the assessee with regard to investment in excess stock. The AO, however, made the addition of this alleged investment in excess stock while completing the assessment consequent to search on 10.10.2006 and the addition made .....

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tended that information with regard to the investment in excess stock found during the course of survey, was available with the AO while completing the assessment, but he did not make any addition in this regard only for the simple reason that he was convinced with the explanation of the assessee. Therefore, the same evidence which was available before the AO while completing the assessment cannot be used for reopening the assessment, as it amounts to change of opinion of the AO on a particular .....

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he Act, having recorded the reasons for doing so. 9. Having carefully examined the orders of lower authorities in the light of rival submissions, I find that undisputedly a survey was conducted in the business premises of the assessee before a search was conducted and assessee has offered the investment in the excess stock. It is also evident from the record that while submitting the return, assessee did not include the said unexplained investment in excess tock in its return of income, but the .....

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ed investment in excess stock to the tune of ₹ 10,12,000, because no addition was made in this regard while completing the assessment u/s. 143(3) of the Act. 10. Later on, when he was completing the assessment pursuant to the search, he included this unexplained investment in the assessed income, but it was set aside by the Tribunal on the ground that this unexplained investment in excess tock was not found during the course of search. Now the AO wants to add that unexplained investment in .....

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