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TMI Blog2018 (8) TMI 1631X X X X Extracts X X X X X X X X Extracts X X X X ..... n of Rs. 13,24,300/- as unexplained credits u/s 68 of the Income Tax Act, 1961. The action of the Id. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by treating the loan as genuine and deleting the addition of Rs. 13,24,300/-. 3. In the facts and circumstances of the case and in law, the Id. CIT(A) has erred in confirming the disallowance to the extent of Rs. 50,000 out of the total disallowance of Rs. 1,00,000 made by the Id. AO. The action of Id. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by quashing the above disallowances of Rs. 50,000/-. 4. The assessee craves her right to add, amend or alter any of the grounds on or before the hearing." The assessee has also raised addition ground, which reads as under: "In the facts and circumstances of the case and in law, ld. CIT(A) has erred in confirming the action of ld. A.O. of issuing notice U/s 148 of Income Tax Act, 1961 without obtaining proper sanction U/s 151 of the Income Tax Act, 1961. The action of the ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7- 08. The ld AR has submitted that the Assessing Officer reopened the assessment without ascertaining the fact whether the said amount was actually introduced as cash credit by the assessee during the period relevant to the assessment year under consideration. Even otherwise in absence of mandatory approval U/s 151 of the Act, the reopening of the assessment was invalid and liable to be quashed. 4. On the other hand, the ld DR has produced the assessment record for our consideration and has admitted the fact that the Assessing Officer had not obtained sanction U/s 151 of the Act prior to issuing the notice U/s 148 of the Act in the case of the assessee. The ld DR has submitted that since the reopening was as per the provisions of Section 150 of the Act and based on the order of the ld. CIT(A) for the A.Y. 2007-08, therefore, there is no requirement of obtaining the sanction U/s 151 of the Act. The ld DR has submitted that the provisions of Section 150 of the Act gives jurisdiction to the Assessing Officer to reopen the assessment if an assessment or reassessment of income in consequence of/or to give effect to any finding or directions contained in the order of the appellate auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have reasons to belief that escapement of income within the meaning of Section 147 of the IT Act, 1961. Action U/s 147 of the IT Act, 1961 is to be taken. Notice U/s 148 of the IT Act is issued." Thus, it is clear that the Assessing Officer has reopened the assessment by issuing notice U/s 148 dated 21/4/2011 based on the order of the ld. CIT(A) dated 12/1/2011 for the A.Y. 2007-07. Though, there can be an issue of sufficiency of reasons as the ld. CIT(A) in the order dated 12/1/2011 has not given a concluding finding that the amount of Rs. 13,24,300/- was introduced by the assessee in the books during the F.Y. 2005-06 relevant to the A.Y/. 2006-07 but the ld. CIT(A) has deleted the addition made by the Assessing Officer to that extent on the basis that out of the total addition of Rs. 20,43,800/- made on account of cash credit U/s 68 of the Act, the loan to the extent of Rs. 13,24,300/- was received in the preceding year. Thus, the credits of Rs. 13,24,300/- was considered by the ld. CIT(A) as old and not introduced during the year in question before the ld. CIT(A) and consequently the addition to that extent was deleted. Based on the said finding, the Assessing Officer has reope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 163 and the assessment, reassessment or recomputation to be made in pursuance of the notice is to be made on him as the agent of such non-resident, the notice shall not be issued after the expiry of a period of [six] years from the end of the relevant assessment year. [Explanation.-For the removal of doubts, it is hereby clarified that the provisions of sub-sections (1) and (3), as amended by the Finance Act, 2012 shall also be applicable for any assessment year beginning on or before the 1st day if April, 2012.] Provision for cases where assessment is in pursuance of an order on appeal, etc. 150. (1) Notwithstanding anything contained in section 149, the notice under section 148 may be issued at any time for the purpose of making an assessment or reassessment or recomputation in consequence of or to give effect to any finding or direction contained in an order passed by any authority in any proceeding under this Act by way of appeal, reference or revision [or by a Court in any proceeding under any other law]. (2) The provisions of sub-section (1) shall not apply in any case where any such assessment, reassessment or recomputation as is referred to in that sub-section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, as per the provisions of Section 151, the notice U/s 148 cannot be issued unless the Principal Chief Commissioner, Chief Commissioner, Principal Commissioner or Commissioner is satisfied on the reasons recorded by the Assessing Officer that it is a fit case for issue of such notice. Therefore, the condition set out in Section 151 and particularly in the proviso to Section 150(1) of the Act as existed at relevant time is a mandatory condition for issuing notice U/s 148 of the Act. If such notice is issued after expiry of four years from end of the relevant assessment year Section 151 gives jurisdiction to the Assessing Officer to initiate the proceedings U/s 147 and in absence of the sanction of the authority provided U/s 151 of the Act, the notice issued by the Assessing Officer is invalid. The provisions of Section 150 of the Act is only an exception to the limitation provided U/s 149 and therefore, the said Section cannot be taken as an exception to Section 151 of the Act. Hence, we are of the considered view that even if the assessment is reopened to make reassessment in consequence of or to give effect to any finding or direction of the appellate authority the requirement of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcumstances of the case and in law, the Id. CIT(A) has erred in confirming the disallowance to the extent of Rs. 50,000 out of the total disallowance of Rs. 1,00,000 made by the Id. AO. The action of Id. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by quashing the above disallowances of Rs. 50,000/-. 5. The assessee craves her right to add, amend or alter any of the grounds on or before the hearing." 7. Ground No.1 of the appeal is regarding the disallowance of interest of Rs. 4,94,606/- paid on unsecured loans. 8. We have heard the ld AR of the assessee as well as the ld DR and considered the relevant material on record. The Assessing Officer has disallowed the interest on unsecured loan on the ground that the loan itself were found to be unexplained and addition was made U/s 68 of the Act in the earlier years and therefore, the claim of interest being consequential to the claim of unsecured loans which was disallowed in the earlier year. Since this is a consequential issue to the issue of unsecured loans treated as unexplained cash credit by the Assessing Officer in the earlier year, accordingly, we set aside this i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecorded in the books. On appeal the ld. CIT(A) has called for a remand report and even during the remand proceedings, the assessee expressed its inability to produce books of account. Though, the ld AR of the assessee has now referred to the sale bills in support of his claim, however, we find that after expiry of about 10 years and in absence of books of account as well as other supporting evidence, this fact cannot be verified even from the government offices for want of relevant record preserved by the government offices after expiry of such a long period. Hence, in the facts and circumstances when the assessee did not produce books of account as well as other evidence in support of its claim that this amount of Rs. 7,68,966/- is part of the sales recorded in the books, then we do not find any reason to interfere in the orders of the authorities below qua this issue. Hence, this ground of assessee's appeal is dismissed. 13. Ground No. 3 of the appeal is regarding the addition made by the Assessing Officer on account of interest income which accrued to the assessee from the debtor but the assessee has not included said amount of Rs. 50241/- in the return of income. The A.O. made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eard the ld. AR of the assessee as well as the ld DR and considered the relevant material on record. The Assessing Officer made the addition of Rs. 1.00 lac due to the reasons that the books of account alongwith the relevant vouchers were not produced by the assessee for verification of expenses debited to the P&L account. 20. The assessee challenged the action of the Assessing Officer before the ld. CIT(A) and submitted that when the expenses booked by the assessed are not found to be excessive in comparison to the earlier year then the ad hoc disallowance is not called for or is not unjustified. The ld. CIT(A) after considering the facts and circumstances of the case has restricted the disallowance to Rs. 50,000/-. 21. Having gone through the relevant record, we find that there is no dispute that the assessee has not produced books of account as well as supporting vouchers for the expenditure booked in the P&L account. Though, the expenditure debited to the P&L account may not be excessive, however, the assessee is under obligation to establish that the said expenditure was incurred wholly and exclusively for the business of the assessee. In absence of any supporting evidence, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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