TMI Blog2020 (7) TMI 627X X X X Extracts X X X X X X X X Extracts X X X X ..... have deleted the various additions made by the AO and partly sustained by the CIT(A), therefore, the penalty does not survive. Accordingly the order of the CIT(A) partly sustaining the penalty levied by the AO u/s 271(1)(c) is set aside and the AO is directed to cancel the penalty. - Decided in favour of assessee. - ITA Nos.3396 & 3397/Del/2017, ITA Nos.3398 & 3399/Del/2017 - - - Dated:- 24-7-2020 - Shri R.K. Panda, Accountant Member And Shri Amit Shukla, Judicial Member For the Assessee : Shri Kapil Goel, Advocate For the Revenue : Shri Saras Kumar, Sr.DR ORDER PER R.K. PANDA, AM: ITA Nos.3396 3398/Del/2017 filed by the respective assessees are directed against the separate orders dated 31st March, 2017 of the CIT(A)-30, New Delhi relating to assessment year 2010-11. ITA Nos. 3397 3399/Del/2017 filed by the respective assessees are directed against the separate orders dated 21st April, 2017 confirming the penalty levied u/s 271(1)(c) of the Act for the assessment year 2010-11. For the sake of convenience, all these appeals were heard together and are being disposed of by this common order. ITA No.3396/Del/2017 (A.Y. 2010-11). 2. Facts of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e along with a detailed questionnaire. The assessee appeared from time to time and filed the requisite details before the AO. Rejecting various explanations given by the assessee, the AO completed the assessment u/s 147/143(3) on 19th March, 2014 determining the total income at ₹ 50,12,770/- by computing the same as under:- Income as declared in ITR ₹ 9,43,897/- Add: Redemption of Mutual Fund as discussed above ₹ 65,826/- Add: Unexplained cash credits as discussed above ₹ 23,10,000/- Add: Unexplained cash credits as discussed above ₹ 10,00,000/- Add: Unexplained credit card expenses as discussed above ₹ 6,86,000/- Add: Saving Bank Interest as discussed above ₹ 7,049/- Total Income ₹ 50,12,772/- Rounded Off ₹ 50,12,770/- 4. In the case of Joginder Dahiya, vide ITA No.3398/Del2017, the AO computed the income at ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o addition in the order passed by the AO. 4. That there is no coherence in reasons given post assessment available at page 4 of the impugned order, vis-a-vis AIR information narrated at Page 1 of the assessment order and assessment finally made, which all are at variance and there is no meeting point, due to which reasons recorded notice issued u/s 148 and all subsequent proceedings becomes bad in law, which requires to be quashed. On Merits 5. That Ld. CITA erred in sustaining addition of amounting ₹ 65,826/- which is not forming part of reasons recorded as such and same is outrightly bad because there is no separate notice issued u/s 148 for the same. Even otherwise on merits addition is plainly bad. 6. That Ld. CITA erred in not deleting the complete addition of ₹ 23,10,000/- which is also not forming part of reasons recorded as such and same is outrightly bad because there is no separate notice issued u/s 148 for the same. Even otherwise on merits addition is plainly bad. 7. That Ld. CITA erred in confirming the addition of ₹ 6,86,000/- which is not forming part of reasons recorded as such and same is outrightly bad because there is no separate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Tribunal in holding that the AO had the jurisdiction to reassess issues other than the issues in respect of which proceedings are initiated, but, he was not so justified when the reasons for the initiation of those proceedings seized to survive. The appeal filed by the Revenue was accordingly dismissed. He submitted that similar view has been taken by the Mumbai Bench of the Tribunal in the case of Juliet Industries Ltd., vide ITA No.5452/M/2016, order dated 4th April, 2018 for A.Y. 2009-10. He also relied on the following decisions:- i) Dr. Shiva Kant Mishra vs. CIT, 380 ITR 257 (All); and ii) M/s PVP Ventures Limitedm 65 Taxmann.com 221 (Madras High Court) 10. He submitted that identical facts are involved in the case of Joginder Dahiya. However, in the case of Raj Bala, there is an additional fact that officer recording reasons i.e., DCIT, Circle 2(1), New Delhi, who happened to issue notice u/s 148 and record reasons u/s 148 was not the AO as assessment is framed by ITO, Ward- 21(4) who has nowhere recorded reasons and nowhere has issued any notice u/s 148. This has happened because the monetary limit of ₹ 20 lakhs of Metro cities of Delhi, etc., to asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submission of the ld. Counsel for the assessee that since the AO has accepted the income declared in the return filed in response to the notice issued u/s 148, he could not have made other additions without issuing fresh notice u/s 147. According to him, the AO had the jurisdiction to reassess issues other than the issues in respect of which proceedings are initiated, but, he was not so justified when the reasons for the initiation of those proceedings cease to survive. We find merit in the above argument of the ld. Counsel for the assessee. We find identical issue had come up before the Hon ble Delhi High Court in the case of Ranbaxy Laboratories (supra). The Hon ble High Court held that the AO had the jurisdiction to reassess issues other than the issues in respect of which proceedings are initiated, but, he was not so justified when the reasons for the initiation of those proceedings cease to survive. The relevant observation of the Hon ble High Court reads as under:- 17. Now, coming back to the interpretation which was given by the Bombay High Court to Sections 147 and 148 in view of the precedent on the subject. The Court held as under:- 11. ... Interpreting the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that income which comes to his notice subsequently in the course of the proceedings under the section as having escaped assessment. If upon the issuance of a notice under Section 148(2), the Assessing Officer accepts the objections 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 1st April 1989 clearly stipulated that the Assessing Officer has to assessee 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 absence of the assessment or reassessment the former, he cannot independently assess the latter. Section 147 has this effect that the Assessing Officer has to assessee or reassess the income ( such income ) which escaped assessment and which was the basis of the formation of belief and if he does so, he can also assess or reassess any other income which has escaped assessment and which comes to his notice during the course of the proceedings However, if a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the justifications given by the assessee regarding the items viz., club fees, gifts and presents and provision for leave encashment, but, however, during the assessment proceedings, he found the deduction under Section 80 HH and 80-I as claimed by the assessee to be not admissible. He consequently while not making additions on those items of club fees, gifts and presents, etc., proceeded to make deductions under Section 80HH and 80-I and accordingly reduced the claim on these accounts. 20. The very basis of initiation of proceedings for which reasons to believe were recorded were income escaping assessment in respect of items of club fees, gifts and presents, etc., but the same having not been done, the Assessing Officer proceeded to reduce the claim of deduction under Section 80 HH and 80-I which as per our discussion was not permissible. Had the Assessing Officer proceeded not to make disallowance in respect of the items of club fees, gifts and presents, etc., then in view of our discussion as above, he would have been justified as per explanation 3 to reduce the claim of deduction under Section 80 HH and 8-I as well. 21. In view of our above discussions, the Tribunal was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which in turn were based on payment of credit card (₹ 16,02,000/-), which cannot give reason to believe for income escaping assessment, particularly because AO has mentioned in para - 2 of the order The AIR information reconciliation has been filed . 2. That assumption of jurisdiction u/s 148 is invalid in as much as Ld. AO has accepted return income of ₹ 21,73,285/- which was basis of reopening and reasons recorded, on which there is no addition in the order passed by the AO. 3. That there is no coherence in reasons given post assessment available at page 4 of the impugned order, vis-a-vis AIR information narrated at Page 1 of the assessment order and assessment finally made, which all are at variance and there is no meeting point, due to which reasons recorded notice issued u/s 148 and all subsequent proceedings becomes bad in law, which requires to be quashed. On Merits 4. That Ld. CITA erred in sustaining addition of ₹ 20,00,000/- treating it to be undisclosed business receipts, which was never part of reasons recorded u/s 148 for the same, even on merits treating complete business receipts as income is not correct as only profit element can b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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