TMI Blog2017 (6) TMI 517X X X X Extracts X X X X X X X X Extracts X X X X ..... ilable with Mrs Meena Godbole to justify the gifting of amounts to the Assessee. Therefore, it is a case where the explanation furnished by the Assessee is neither amenable to any verification and nor it refers to any specific source of funds. Therefore, the income tax authorities have rightly considered the sum as unexplained cash credit within the meaning of Section 68 of the Act. Thus, on this aspect, Assessee fails. Deemed dividend addition u/s 2(22)(e) - Held that:- As no business considerations have been explained for the giving and receipt of monies from the company. Therefore, we uphold the invoking of section 2(22)(e), in principle. With regard to the quantum of amount assessable u/s 2(22)(e) we have perused the statement of account pertaining to the period under consideration and in terms there of, it is quite clear that the opening balance of ₹ 6,52,674/- cannot be construed an amount received during the year, and thus the same cannot be assessed u/s 2(22)(e) in this year. AO has assessed an amount of ₹ 3,93,445/- which is the closing balance at the end of the year, a part of which is from the opening balance. The only amount which can be assessed u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5,57,934/-. Subsequently, Assessing Officer issued notice u/s 148 of the Act dated 4.11.2011 reopening the assessment on the basis of the information received from the DG Investigations (Mumbai) with respect to investment made in a flat at Adarsh Cooperative Housing Society Limited, Mumbai. In this context, the reasons recorded by the Assessing Officer for issuing notice u/s 148 of the Act have been adverted to at the time of hearing, which reads as under : The above objection of the appellant is not a valid for the year under consideration. The assessment was reopened on the issue of verification of investment of ₹ 5,00,000/- in flat with Adarsh CHS Ltd. by the appellant during the year under consideration. During the course of reassessment proceedings, one of the subject matter of the investigation is the investment made by the appellant in the flat with Adarsh CHS Ltd. and as a part of those investigations, the AO inquired into the various loans taken by the appellant during the period under consideration and the investment of ₹ 5,00,000/- in the flat is also a part of those investigation of loans received by the appellant. Therefore, to say that the AO has not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assessing Officer. 8. We have carefully considered the rival submissions. The crux of the controversy before us revolves around the scope of the power of the Assessing Officer to make additions, when reassessment has been initiated by issuance of notice u/s 147/148 of the Act. In the present case, as the reasons recorded for issuance of notice u/s 148 shows, the assessment was reopened in order to verify the investment made by the Assessee of ₹ 5,00,000/- for the flat at Adarsh Cooperative Housing Society Ltd. Factually speaking, in the ensuing assessment, which is the subject matter of controversy before us, the aforesaid income has not been assessed, which implies that the explanation furnished by the Assessee was found satisfactory. The Assessing Officer has made three other additions, which we have detailed earlier. The question is whether the Assessing Officer has the power to assess such other incomes in a situation where he has not assessed the income, which had prevailed with him to form an opinion of escapement of income in the reasons recorded for initiation of proceedings u/s 147/148 of the Act. An identical situation has been considered by the Hon ble Bombay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t aside. We hold so. 11. Before parting, we refer to the argument raised by the Ld. DR which is essentially based on the reasoning taken by the CIT (Appeals) in para 19 of his order. As per the CIT (Appeals), even if the Assessing Officer did not make an addition on account of investment in flat amounting to ₹ 5,00,000/-, the impugned reassessment does not get vitiated because the three additions in question are part of the investigation carried out by the Assessing Officer in relation to the investment in flat at Adarsh Cooperative Housing Society Ltd. In our considered opinion, the aforesaid reasoning is untenable in view of the law on the subject enunciated by the Hon ble Bombay High Court in the case of Jet Airways (supra) and therefore it deserves to be repelled. We hold so. 12. In the result, as far as the appeal for assessment year 2005-06 is concerned, the same is allowed, as above. 13. It was a common point between the parties that so far as the assessment years 2006-07 and 2008-09 are concerned, the facts and circumstances are pari materia to those considered by us in earlier paras in the appeal for assessment year 2005-06 and therefore our decision in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly based on the affidavit of the mother, a copy of which has been placed in the Paper Book filed before us. We have perused the said affidavit of the Assessee s mother, Mrs Meena Godbole and find that apart from making general averments of having advanced monies to the Assessee during the period 2001 to 2011, no specific details have been provided. It is also not stated as to the manner in which the amounts have been advanced to the Assessee. The affidavit also does not bring out any concrete sources of income available with Mrs Meena Godbole to justify the gifting of amounts to the Assessee. Therefore, it is a case where the explanation furnished by the Assessee is neither amenable to any verification and nor it refers to any specific source of funds. Therefore, in our considered opinion, considering the entirety of facts and circumstances of the case, the income tax authorities have rightly considered the sum of ₹ 5,00,000/- as unexplained cash credit within the meaning of Section 68 of the Act. Thus, on this aspect, Assessee fails. 19. The next issue raised by the Assessee is with regard to the addition of ₹ 3,93,445/- made by the Assessing Officer as deemed divi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on on account of deemed dividend under section 2(22)(e) of the Act to ₹ 1,50,000/- as against ₹ 3,93,445/- made by him. Thus, on this aspect, Assessee partly succeeds. 22. The last issue in this appeal is with regard to an adhoc disallowance made out of the expenses debited to the Profit and Loss Account on account of the telephones, car, computer expenses etc. The Assessing Officer disallowed 20% of the total expenses, being ₹ 18,662/- and the same has been reduced by the CIT(Appeals) to 10%. It is quite clear from the order of the authorities below that the disallowance is purely adhoc based on mere surmises and conjectures and therefore the same is directed to be deleted in its entirety. Thus, on this aspect also, Assessee succeeds. 23. The appeal for the assessment year 2009-10 is, thus, partly allowed. 24. In the result, the appeals for the assessment years 2005-06, 2006-07 and 2008-09 are allowed, and that for the assessment year 2009-10 is partly allowed. 25. In so far as the captioned stay applications are concerned, the same have been rendered infructuous and are accordingly dismissed. Order pronounced in the open court on the 31st day of M ..... X X X X Extracts X X X X X X X X Extracts X X X X
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