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M/s Dharam Chand Sohan Lal & Company Versus The ITO, Ward-2 (3) , Alwar

2017 (9) TMI 465 - ITAT JAIPUR

Reopening of assessment - payments in cash in contravention to section 40A(3) - AO initiated proceedings u/s 148 to verify certain cash transactions and its disallowability u/s 40A(3) but made the addition made u/s 68 by treating the creditors as unexplained - Held that:- On perusal of the reassessment order passed under 147 read with section 143(3) of the Act, it is noted that in AY 2008-09, no disallowance has been made u/s section 40A(3) which form the basis for reopening of the assessment. T .....

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enses which apparently come to his notice during the course of reassessment proceedings. - Thus the very foundation of the proceedings u/s 147 are vitiated and accordingly, we are setting aside the order passed by the AO u/s 147 for both the years under consideration. - Decided in favour of assessee. - ITA No. 207/JP/16 And ITA No. 208/JP/16 - Dated:- 1-9-2017 - SHRI KUL BHARAT, JM AND SHRI VIKRAM SINGH YADAV, AM For The Assessee : Shri P.C.Parwal (C.A.) For The Revenue : Shri S.L. Chandel ( .....

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l which is purely a legal ground and which was not taken inadvertently earlier at the time of filing of this subject appeal: Under the facts and circumstances of the case, the order passed u/s 147 is illegal and bad in law. 3. It was submitted that in view of the decision of Hon ble Supreme Court in the case of CIT vs. NTPC Ltd reported in 229 ITR 383, the above said additional ground being a purely legal ground may be admitted for imparting substantial justice to the appellant. 4. Both the part .....

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assessee firm has made substantial transactions including cash deposits & withdrawals during the asst. year under consideration. Apart from this it is also noticed that assessee has made following payments in cash which is contravention to section 40A(3) of the I.T. Act. Period of Transaction Amount of Transaction F.Y. 2007-08 ₹ 53,26,090/- Thus, income on a/c of disallowance to be made u/s 40(A)(3) of the IT Act has escaped assessment. I have therefore reasons that the transactions me .....

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O and therefore, the reopening itself is null and void. It was further explained that in original proceedings u/s 143(3), AO has verified all the creditors and debtors in evidence to which copy of notice issued by the AO and reply submitted by the assessee was filed. The Ld. CIT(A) however, has not given any finding on this issue. 7. It was further submitted that the AO initiated proceedings u/s 148 to verify certain cash transactions and its disallowability u/s 40A(3) but made the addition made .....

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2014)355 ITR 172 (Guj.) HC) • Oriental Bank of Commerce Vs. Addl. CIT (2014) 109 DTR 1(Del.) (HC) • ACIT vs. Major Deepak Mehta (2012) 344 ITR 641 ( CHHATTISGARD) (HC) • CIT vs. Jet Airways (I) Ltd. (2011)331 ITR 236 (Bom.) (HC) • CIT vs. Adhunik Niryat Ispat Ltd. (2011) 63 DTR 0212 (Del.) (HC) • Ranbaxy Laboratories Ltd. vs. CIT (2011) 336 ITR 0136 (Del.) (HC) 9. The ld DR is heard who has vehemently argued the matter and relied on the order of the lower authorities. 10 .....

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s which have been urged on behalf of the revenue and the assessee can be dealt with, both as a matter of first principle, interpreting the section as it stands and on the basis of precedents on the subject. Interpreting the provision as it stands and without adding or deducting from the words used by Parliament, it is clear that upon the formation of a reason to believe under section 147 and following the issuance of a notice under section 148, the Assessing Officer has the power to assess or re .....

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be read as being in the alternative. On the contrary, the correct interpretation would be to regard those words as being conjunctive and cumulative. It is of some significance that Parliament has not used the word or . The Legislature did not rest content by merely using the word and . The words and , as well as also have been used together and in conjunction. The Shorter Oxford Dictionary defines the expression also to mean 'further, in addition, besides, too'. The word has been treate .....

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come' refer to the income chargeable to tax which has escaped assessment and in respect of which the Assessing Officer has formed a reason to believe that it has escaped assessment. Hence, the language which has been used by Parliament is indicative of the position that the assessment or reassessment must be in respect of the income in respect of which he has formed a reason to believe that it has escaped assessment and also in respect of any other income which comes to his notice subsequent .....

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ns of the assessee and does not assess or reassess the income which was the basis of the notice, it would not be open to him to assess income under some other issue independently. Parliament when it enacted the provisions of section 147 with effect from 1-4-1989 clearly stipulated that the Assessing Officer has to assess or reassess the income which he had reason to believe had escaped assessment and also any other income chargeable to tax which came to his notice during the proceedings. In the .....

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tice subsequently in the course of the proceedings' under section 147. The Rajasthan High Court held as follows : ...if is only when, in proceedings under section 147 the Assessing Officer, assesses or reassesses any income chargeable to tax, which has escaped assessment for any assessment year, with respect to which he had reason to believe to be so, then, only in addition, he can also put to tax, the other income, chargeable to tax, which has escaped assessment, and which has come to his n .....

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