TMI Blog2015 (6) TMI 1175X X X X Extracts X X X X X X X X Extracts X X X X ..... opening of the assessment was valid - Decided against assessee - ITA No. 780/Chd/2012 - - - Dated:- 15-6-2015 - SHRI H. L. KARWA, VICE PRESIDENT For The Appellant : Shri Sudhir Sehgal Ashok Goyal For The Respondent : Shri R. K.Gupta ORDER PER H. L. KARWA, VP This appeal filed by the assessee is directed against the order of CIT(A) II, Ludhiana, dated 30.05.2012 relating to assessment year 2002-03. 2. Ground Nos 1 and 2 of the appeal reads as under:- 1. That the Ld. CIT(A) has erred in confirming the action of the Assessing Officer in wrongly assuming jurisdiction u/s 147 of the Act and reopening of the case u/s 148 of the Income Tax Act. 2. That the reopening of the assessment has been made against the facts and circumstances of the case. 3. Briefly stated the facts of the case are that for the assessment year 2002 03, the assessee submitted a return of income on 6.3.2003 declaring total income at ₹ 5,87,895/-. The return was processed u/s 143(1) of the Income-tax Act, 1961 (in short the Act ). Subsequently, information was received from ACIT, CC-V, Ludhiana to the effect that his assessee one Shri Jagdish Duggal r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idual who does not maintain regular books of account, the bank account has to be treated as the account for the purpose of section 68. The provisions of section 68 are clearly applicable to the case of the assessee whereby the credit has not been explained and the same need to be treated as income of the assessee for the assessment year 2002-03. So the credit of ₹ 5 lakhs is treated as income of the assessee for assessment year 2002-03 and added the same to the income as returned by the assessee. 5. Being aggrieved by the order of Assessing Officer the assessee carried the matter in appeal before the CIT(A). Before the CIT(A), the assessee has challenged the validity of reopening of the assessment made u/s 147 of the Act. The main contention of the assessee before the CIT(A) was that Assessing Officer in his reasons recorded has totally relied upon the letter of the ACIT, CC-V, Ludhiana and has not formed his independent opinion and has also not applied his mind for formation of belief. Therefore, the issuance of notice u/s 148 was not proper. It was also submitted by the assessee before the CIT(A) that Assessing Officer has reopened the case just to investigate further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the basis of relevant and sufficient materials coming to his knowledge for information. He further submitted that Assessing Officer has reopened the assessment on the basis of material or information supplied by ACIT, CC-V, Ludhiana related to gift of ₹ 5 lakhs received by the assessee from one Shri Jagdish Duggal, resident of Sarabha Nagar, Ludhiana. 9. In the present case originally return filed by the assessee on 6.9.2003 was processed u/s 143(1) of the Act and a notice u/s 148 was issued on 20.3.2008. The assessee has challenged the validity of reopening of assessment as per the submissions noted herein above. As regards the scope of the expression reason in the phrase reason to believe and also the scope and effect of section 147 as substituted w.e.f. April 1, 1989, as also sections 148 to 150 has been considered by the Hon'ble Supreme Court in the case of ACIT v Rajesh Jhaveri (2007) 291 ITR 500 (SC) at page 511 512 and observed as under:- 16. Section 147 authorises and permits the Assessing Officer to assess or reassess income chargeable to tax if he has reason to believe that income for any assessment year has escaped assessment. The word reason i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Both these conditions were conditions precedent to be satisfied before the Assessing Officer could have jurisdiction to issue notice under section 148 read with section 147(a). But under the substituted section 147 existence of only the first condition suffices. In other words if the Assessing Officer for whatever reason has reason to believe that income has escaped assessment it confers jurisdiction to reopen the assessment. It is, however, to be noted that both the conditions must be fulfilled if the case falls within the ambit of the proviso to section 147. The case at hand is covered by the main provision and not the proviso. 18. So long as the ingredients of section 147 are fulfilled, the Assessing Officer is free to initiate proceeding under section 147 and failure to take steps under section 143(3) will not render the Assessing Officer powerless to initiate reassessment proceedings even when intimation under section 143(1) had been issued. 10. In the instant case also the return was processed u/s 143(1) of the Act. In view of the above decision of the Hon'ble Supreme Court, if the Assessing Officer for whatever reason has reason to believe that income has es ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore, there is no merit in the submissions made on behalf of the assessee that reopening of the assessment was invalid. While taking such a view I am fortified by the decision of Hon'ble Delhi High Court in the case of Rajat Export Import India Pvt. Ltd v ITO (2012) 341 ITR 135 (Delhi) wherein the Hon'ble Delhi High Court observed as under:- At the stage when reasons are recorded for reopening the assessment, the Assessing Officer is not required to build a fool proof case for making addition to the assessee s income ; all that he is required to do at that stage is to form a prima facie opinion or belief that income has escaped assessment. The relevancy of the material before the Assessing Officer is to be judged only from that perspective and not from the perspective as to whether the material is sufficient or adequate to sustain the addition ultimately. That will be an aspect which the Assessing Officer will examine and decide in the course of the reassessment proceedings after hearing the assessee in the manner required by law. 11. In the above case, Investigation Wing provided the information along with cheque number and bank details that the assessee has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tional evidence submitted before him. 15. Shri R.K. Gupta, Ld. DR submitted that assessee s case does not fall under any of the exceptions mentioned in Rule 46A of the I.T. Rules, 1962. He, therefore, submitted that CIT(A) was justified in not admitting the additional evidence submitted by the assessee before him. 16. I have considered the rival submissions. The assessee submitted the following documents as additional evidence before the CIT(A):- i) The copy of the affidavit confirming that the gift has been given by Shri Jagdish Duggal to the assessee. ii) The copy of the Gift deed executed between the donor (Shri Jagdish Duggal) and the donee (the Assessee) iii) The copy of Cheque No. 300403 dated 11.10.2001 drawn on Canara Bank received by the assessee. iv) The copy of the bank statement in case of Shj Jagdish Duggal wherein the amount of ₹ 5,00,000/- vide Ch. No. 300402 paid to the assessee is duly reflected. v) The copy of the explanation of all the entries in the bank statement of Shri Jagdish Duggal for the period 1.4.2001 to 31.3.2002. 17. The Ld. CIT(A) did not admit the additional evidence mainly on the ground that assessee did not avail the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee s case was never fixed on 3.10.2008. These observations are factually wrong and, therefore, the order of CIT(A) is not sustainable. At this stage it would be worthwhile to refer to section 250(4) of the I.T. Act, which reads as under:- The Commissioner (Appeals), may before disposing of any appeal, make such further inquiry as he thinks fit, or may direct the Assessing Officer to make further inquiry and report the result of the same to the Commissioner (Appeals) 19. As per the above provision, the CIT(A) at the time of hearing of the appeal can make such further inquiry as he deems fit and may ask the Assessing Officer to make further inquiry. It is well settled that the above provision in the Act vests the CIT(A) with the power to make further inquiry which would include the power to admit further evidence. It is relevant to observe here that the procedure and manner in which such evidence is to be produced is provided in Rule 46A of I.T. Rule 1962. Sub rule (1) of rule 46A provides the grounds on which the CIT(A) can allow additional evidence. Sub Rule (2) provides that the CIT(A) while admitting such evidence must record its reasoning in writing. Sub Rule (4) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee to adduce the evidence relevant to the ground of appeal on merits and, therefore, the assessee was prevented by sufficient cause from producing the additional evidence before the Assessing Officer which is relevant for deciding the merits of the case. Thus, in view of the provisions of section 250(4) of the I.T. Act read with Rule 46A, the CIT(A) should have admitted the additional evidence submitted by the assessee before him. Accordingly, I direct the CIT(A) to admit the additional evidence and decide ground No.3 relating to the addition of ₹ 5 lakhs made on account of gift received form Shri Jagdish Duggal as income from undisclosed sources. 22. In view of the above, I allow ground No. 4 of the appeal. 23. So far as ground No. 3 is concerned, I set aside the findings of the CIT(A) on this issue and remand the same to the CIT(A) with a direction to decide the matter afresh in accordance with law considering the additional evidence referred to above, produced by the assessee before him. At this stage, I do not think it necessary to give any comments / observations on merits of the case. The CIT(A) is directed to decide the issue on merits in accordance with law. ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
