TMI Blog2018 (11) TMI 515X X X X Extracts X X X X X X X X Extracts X X X X ..... on objective consideration of which we have no doubt - Decided against assessee. - ITA No. 11 of 2012, ITA No. 30 of 2014 - - - Dated:- 5-11-2018 - Mr. Justice Sanjay Karol, Judge And Mr. Justice, Chander Bhusan Barowalia, Judge. For the Appellants : Ms. Vishal Mohan, Mr. Sushant Keprate and Mr. Aditya Sood, Advocates For the Respondents : Mr. Vinay Kuthiala, Senior Advocate with Mr. Diwan Singh Negi, Advocate ORDER SANJAY KAROL, JUDGE. The appeals stand admitted on the following substantial questions of law: ITA No. 11 of 2012: (a) Whether the Ld. Income Tax Appellate Tribunal is right in law in upholding the addition made under Section 68 of the Income Tax Act of ₹ 3.12 crores when the books of accounts had been accepted and as such the provisions of Section 68 of the Income Tax Act, 1961 were not attracted? (b) Whether the Ld. Income Tax Appellate Tribunal is right in law in upholding that the assessee had failed to discharge his burden of proof in proving the cash credits when the books of account alongwith supporting vouchers had been accepted coupled with the fact that the purchases against the said sales stands accepted? ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amounting to ₹ 1,94,37,600/- effected only in one month of the year, 2007, were found unexplained and as such, charged to income tax with the initiation of consequential proceedings for imposition of penalty. 5. According to the assessee, with the introduction of new product Pan Shamama, process of retail counter sale on test market basis was introduced and the product sold as over the counter sale. For the Financial Year 2006-07, 2.5 tons of the produce was sold in the packaging of drums of 25 50 kilograms, at the sale price of ₹ 12,000/- per kilogram and with respect to Financial Year 2007-08, 1557.50 kilograms of such sales were effected. 6. The Authorities below, after considering the factual matrix, rejected such explanation resulting into the filing of present appeals. 7. Inviting our attention to the findings returned by the Authorities below, terming them to be absolutely erroneous, Sh. Vishal Mohan, learned counsel contends that in the absence of rejection of the books of accounts, the authorities erred in assessing the amount of sales as an income of the assessee. In support, he seeks reliance upon M/s. Lakhmichand Baijnath vs. Commissioner of Incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s apparently emanating from the information furnished in the return [Section 143(1)(a)(ii)]. 13. By virtue of sub-Section (3) of Section 143, the Assessing Officer is empowered to assess and pass an order on the evidence so produced by the assessee in relation to the queries put by the Officer or other material on record. The order has to be in writing, indicating the assessment of total income or loss of the assessee, after determining the sum payable by him or refund of amount due, if any, on the basis of such assessment. 14. We notice that failure of any person in filing the return under Section 143 of the Act or complying with the notice under Section 142(1) or terms thereof, so issued under sub-Section (2) of Section 143, the Assessing Officer, after accounting for all the relevant material which can be gathered, carry out assessment on the basis of what is commonly termed as Best Judgment Assessment. [Dhanalakshmi Pictures vs. Commissioner of Income-Tax, Madras, (1983) 144 ITR 452 (Madras)] 15. Chapter VI of the Act specifically deals with aggregation of income; set off and carry forward. How the income or the loss in the relevant assessment year is required to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer must reject the books of accounts maintained by the assessee. It is not a case of Best Judgment Assessment. In the instant case, certain entries reflected in the books of accounts, which on the basis of explanation furnished by the assessee were found not to be satisfactory, the Assessing Officer carry out the assessment under sub-Section 3 of Section 143 of the Act. 20. Falsification of books of accounts is one thing and not furnishing explanation with respect to the entry made therein is another thing. [Dilip N. Shroff vs. Joint Commissioner of Income Tax, Mumbai and another, (2007) 6 SCC 329] 21. Two more issues arise for consideration. The first being as to whether is it open for us to go into the explanation furnished by the assessee and the second as to whether the explanation furnished in the opinion of the Assessing Officer is satisfactory or not. Here only we may observe that we are dealing with a case where we are required to answer the substantial questions of law but not of fact, hence, required to deal only with the second issue. 22. What is opinion and what is satisfactory or so to say satisfaction of the Assessing Officer are the terms which require ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exercising his power regard must be had to the factors enumerated therein and therefore formation of opinion indisputably must be based on objective consideration. 29. In Sahara India (Firm) (1) v. CIT, (2008) 14 SCC 151 while dealing with Section 142(2-A) of the Act, the Apex Court held that opinion required to be formed by the assessing officer for exercise of power under the said provision must be based on objective criteria and not on the basis of subjective satisfaction. 30. The Apex Court in CIT v. Calcutta Knitwears, (2014) 6 SCC 444 held that for the purpose of Section 158- BD of the Act a satisfaction note is sine qua non and must be prepared by the assessing officer before he transmits the records to the other assessing officer who has jurisdiction over such other person. 31. In S.R. Bommai v. Union of India, (1994) 3 SCC, while construing the expression if the President is satisfied under Article 356(1) the Court at para 74 held that it is not the personal whim, wish, view or opinion or the ipse dixit of the President dehors the material but a legitimate inference drawn from the material placed before him which is relevant for the purpose. 32. In fact, dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e we find the assessee not to have explained to the satisfaction of the Assessing Officer. 36. Reliance on R.B. Jessaram Fatehchand (supra) in our considered view is equally of no help, for in the said case the Tribunal found the Assessing Officer to have adopted the perverse approach in rejecting the entries of cash in books of accounts on the basis of surmises and conjectures, which is not the case in hand, for all the authorities have found the assessee to have not sufficiently explained the source of income. 37. In Sumati Dayal (supra) the Apex Court observed that It is no doubt true that in all cases in which a receipt is sought to be taxed as income the burden lies on the Department to prove that it is within the taxing provision and if a receipt is in the nature of income, the burden of proving that it is not taxable because it falls within exemption provided by the Act lies upon the assessee. [See: Parimisetti Seetharamamma v. CIT, (1965) 57 ITR 532; AIR 1965 SC 1905]. But, in view of Section 68 of the Act, where any sum is found credited in the books of the assessee for any previous year the same may be charged to income tax as the income of the assessee of that pre ..... X X X X Extracts X X X X X X X X Extracts X X X X
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