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2017 (6) TMI 138 - ITAT MUMBAI

2017 (6) TMI 138 - ITAT MUMBAI - TMI - Reopening of assessment - audit objection relied upon - unexplained cash deposits - Held that:- From the very reason recorded by the AO for reopening of assessment, it is clear that the same is on the basis of audit objection and no independent opinion has been formed by the AO while recording reasons. - From the audit objection, it is clear that the AO during the course of assessment proceedings has particularly enquired about cash deposit and assesse .....

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e : Dr. P Daniel, AR For the Revenue : Shri Purushottam Kumar, DR ORDER PER MAHAVIR SINGH, JM: This appeal by the assessee is arising out of the order of CIT(A)-32, Mumbai, in appeal No. CIT(A)-32/IT-202/ITO-20(2)(2)/2015-16 dated 30-12-2016. The Assessment was framed by ITO Ward -20(2)(2), Mumbai for the A.Y. 2009-10 vide order dated 17-03-2015 u/s 143(3) of the Income Tax Act, 1961 (hereinafter the Act ). 2. The first issue in this appeal of assessee is against the order of CIT(A) confirming t .....

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led his return of income on 26-09-2009 and original AY completed under section 143(3) on 23-12-2011. Subsequently, the assessment was reopened by recording the following reasons: - In this case scrutiny assessment u/s 143(3) for above assessment year was done on 23/1-2/2011 determining total income at ₹ 3,323684/- Subsequently, it was noticed that the assessee has not carried out any genuine business in trading and the cash deposited of ₹ 18,97,450/- in the bank represents the assess .....

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the, assessee stated the cash was received by him from various parties in return for the cheques given to them. The asses see was asked to produce evidence in support of his contention. The assessee failed to identify the parties with whom the transactions were made. As such, the cash deposits were treated as undisclosed income and added to the income. Form the above, it is evident that the cash deposited of ₹ 18,97,450/- in the bank for AY. 2009-10 is also income from undisclosed sources. .....

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s framed under section 143(3) read with section 147 of the Act vide order dated 17-03-2015 by making addition of cash deposits under section 69C of the Act amounting to ₹ 18,97,450/-. The learned Counsel for the assessee raised objection for recording of reasons before the AO and he argued that the AO has not adjudicated the objections except the following: - The representative then attended on 2nd December 2011 with partial details. He was requested to furnish fur/her details by 9th Decem .....

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ot possible for the AO to devote his time under the pressure of heavy work load of other time barring assessment and for the reasons' given above. Aggrieved, against the reopening assessee preferred the appeal before CIT(A), who confirmed the action of the AO vide Para 5.1 of his appellate order as under: - 5.1 Ground No. 1: This ground of appeal is regarding to order passed under section 143(3) read with section 147. This ground is against reopening of the assessment. The appellant is argui .....

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is upheld and ground 1 dismissed. Aggrieved now, assessee is in second appeal before Tribunal. 4. Before us, the learned Counsel for the assessee first of all argued that the re-opening is done on the basis of the reason that there is an audit objection. The learned Counsel for the assessee drew our attention to the relevant audit objection which reads as under: - During the Audit scrutiny, it is noticed that the case was selected through CASS in order to verify the sources of cash deposited &# .....

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income originally filled for AY 2009-10. The AO accepted the contention of the assessee and has not made any addition on the issue. However, the action of the AO is incorrect in view of the following facts: It is thus seen that only after the AO required the assessee to explain the source of cash deposit, the assessee has but forward his theory of so called trading in scrap. 5. The learned Counsel for the assessee stated that in view of this audit objection, the assessment was reopened after re .....

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ICICI bank is examined as is available in the note on audit objection. According to the learned Counsel this reopening is on the basis of audit objection and in the case of reopening on the basis of audit objection he relied on the decision of the Hon ble Bombay High Court in the case of Purity Techtextile Private Limited vs. ACIT (2010) 325 ITR 459 (Bom), Delhi High Court in the case of Xerox Modicorp Ltd. vs DCIT (2013) 350 ITR 308 (Delhi) and Gujarat High Court in the case of Reckitt Benckis .....

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sment was reopened for the reason that the assessee s cash deposits of ₹ 18,97,450/- has not been added by the AO during the original assessment proceedings. From the very reason recorded by the AO for reopening of assessment, it is clear that the same is on the basis of audit objection and no independent opinion has been formed by the AO while recording reasons. The audit party has spelt out the reason that, ………the assessee had done personal business on metal scrap du .....

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e following facts: It is thus seen that only after the AO required the assessee to explain the source of cash deposit, the assessee has but forward his theory of so called trading in scrap. From the audit objection, it is clear that the AO during the course of assessment proceedings has particularly enquired about cash deposit and assessee explained that this cash deposit in bank account is out of the business of sale of scrap on which account the income has been included in the return of income .....

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f time barring month of December and has thus killed the time and gave the Assessing officer a very short period during which and due to time barring pressure could not properly applied the mind and verified the facts and details produced / submitted. Therefore, your claim that AO has scrutinized and verified thoroughly in detail all the explanation, documents and by applying mind completed the assessment is not acceptable as it was not possible for the AO to devote his time under the pressure o .....

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lace in the reasons recorded. As noted earlier, it is impermissible to look into any record other than the reasons recorded to judge the validity of the reopening of the assessment. Further, the statement in the counter-affidavit that the facts relating to the past years disclosed that the petitioner was wholly dependent on the parent company for the technical inputs goes against the revenue, in the sense that it was always known to the revenue that the petitioner did not develop any technology .....

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f the judgment in Usha International Ltd. (supra). 9. Similarly, Hon ble Bombay High Court in the case of Purity Techtextile Private Limited Vs. ACIT (2010) 325 ITR 459 (Bom) has considered the almost similar issue which reads as under: - 16. Insofar as the companion writ petition is concerned (Writ Petition No. 268 of 2010), the reopening of the assessment has taken place within a period of four years from the expiry of the relevant assessment year. However, so far as this case is concerned, it .....

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