TMI Blog2024 (1) TMI 262X X X X Extracts X X X X X X X X Extracts X X X X ..... and the same is also allowed. The provisions of s. 68 69 use the word may indicating discretion conferred upon the AO by the statute, who is supposed to use such discretion judiciously and is not obliged always to make an addition. In view of the above discussion and in absence of any contrary evidence brought on record by the Revenue, we do not find any justification in making the addition considered u/s. 69 of the Act by the Id. CIT(A) and the same is directed to be deleted. The Ground No. 2 taken by the assessee is allowed. Appeal of the assessee is partly allowed. - HON'BLE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER For the Appellant : Shri Mahendra Gargieya, Advocate For the Respondent : Mrs. Monisha Choudhary, Addl. CIT ORDER PER: SANDEEP GOSAIN, JM The assessee has filed an appeal against the order of the Id. CIT(A)-1, Jaipur dated 22-07-2017 for the assessment year 2008-09 wherein the assessee has raised the following grounds of appeal. 1. The very action taken u/s 147 r.w.s. 148 is bad in law jurisdiction and being void ab initio, the same kindly be quashed. Consequently, the impugned assessment framed u/s 144/148 dated 29-02-2015 also kindly be quashed. 2. The AO erred i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om all reasonable doubts to have been served before 31.03.2015. 3.4 The Authorities below has repeatedly contended that the notice was served within the period of limitation provided u/s 149 of the Act. However, they completely ignored the mandatory provisions of S. 148(2) which provides that a valid service of a notice u/s 148 is a condition precedent for completion of the assessment validly, pursuant to proceedings initiated u/s 147 of the Act. The AO has also admitted this settled law at Pg. 10 of CIT (A) Order through his Remand Report. 3.4.1 Kindly refer: In the case of Y. Narayana Chetty Anr. vs. ITO (1959) 35 ITR 388 (SC) it was held that: The service of the requisite notice on the assessee is a condition precedent to the validity of any reassessment made under s. 34; and if a valid notice is not issued as required, proceedings taken by the ITO in pursuance of an invalid notice and consequent orders of reassessment passed by him would be void and inoperative. The notice prescribed by s. 34 cannot be regarded as a mere procedural requirement; it is only if the said notice is served on the assessee as required that the ITO would be justified in taking proceedings against him. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Act as well as under section 114 of the Evidence Act are rebuttable but in the absence of proof to the contrary the presumption of proper service or effective service on the addressee would arise . The reliance by ld.CITIA) on Atulbhai Hiralal (supra) is also misplaced Firstly, if it is a mere dismissal of SLP and not a declaration of law under Article 142 of the Constitution of India. Secondly, pertinently the notice was received back unserved as admitted by the CIT himself in para 3.1.2 (1) pg.12. Thus, when the post sent itself has come back there can't be any presumption of service. It is not claimed that the envelope had comeback with the remark left. The assessee never claimed to have changed the address nor that he was not available at the given address. Therefore, the impugned assessment order passed without complying with the mandatory requirement of 8.148(2), is a nullity being without jurisdiction and deserves to be quashed. 2.2 On the other hand, the Id. DR supported the order of the ld. CIT(A) 2.3 After a careful consideration, we find that the ld CIT(A) was justified in rejecting the claims so made by of the assessee by way of a detailed discussion in the light ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant to substantiate such elain Therefore, looking to the totality of facts and circumstances of the case, it would be appropriate to take the opening cash in hand as on 01-04-2007 at Rs. 50,000/- especially in view of the fact that the appellant was not filing its return of income being below taxable limits in earlier years. Therefore, the amount of Rs. 22,54,250/- (23,04,250-50,000) found to be remained unexplained. Hence, the addition of Rs. 29,98,450/- made by the AO on account of unexplained cash deposits in the bank account of the appellant is restricted to Rs. 22,54,250/- and is hereby sustained. However, the AO is hereby directed to go through the cash flow statement annexed as Annexure- A to this order very carefully alongwith the relevant bank statement and if there is any mistake, the AO is to recompute the peak credit and revise the addition accordingly. Hence, this ground of appeal is hereby allowed. Therefore this ground of appeal is partly allowed. (vii) It may be mentioned that the AO has made addition on account of unexplained deposits in the saving bank account of the appellant without stating the Section of the Act. Since I am having the powers co-terminus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of any other assessee. A partnership firm is an assessable entity distinct from the individual partner. The books of account of a partnership cannot be treated as those of the individual partner. In the facts and in the circumstances, s. 68 had no application at all to this case- Smt. Shanta Devi vs. CIT (1988) 171 ITR 532 (P H): TC 42R.1125 concurred with. 1.2 In this case the credits are admittedly found in the bank passbook however, the bank passbook is not books of accounts u/s 68 as held in the case of Smt. Shanta Devi vs. CIT (1988) 171 ITR 532 (P H) wherein, it was held as under (DPB 12-14): Perusal of section 68 would show that in relation to the expression books the emphasis is on the word 'assessee'. In other words, such books have to be the books of the assessee himself and not of any other assessee. In the present case, the assessee maintained no books of account. The cash credit entry of which the impugned amount formed part, was found in the books of account of the partnership firm, which in its own right, was an assessee. In view of this, the books of account;. of the partnership firm herein could not be considered that of the individual assessee herein and, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... matter arising out of the proceedings before the assessing authority, more particularly for which separate provisions are made in the Act. The Tribunal had elaborately discussed the provisions of the Act and the case law on the subject and has rightly come to the conclusion that new sources not mentioned in the return or considered by the ITO are beyond the scope of powers of the AAC. The case relied on by the Learned Counsel for the petitioner that power of setting aside the assessment order remanding the case for reconsideration of the whole matter including the evasion by the assessee, is not applicable in the facts of the present case because the matter arising in that case was one which arose out of the proceedings before the ITO. The question was not about new and fresh material for the purposes of enhancement. On the contrary, the case is clearly covered by the decisions of the Supreme Court, CIT vs. Shapoorji Pallonji Mistry (supra) wherein it has been held that, In an appeal filed by the assessee the AAC has no power to enhance the assessment by discovering new sources of income not mentioned in the return of the assessee or considered by the ITO in the order appealed aga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is also noted from the record that the assessee was having total interest funds to the tune of Rs. 15.13 crores whereas total loan given to subsidiaries were to the tune of Rs. 12.92 crores (PB 41) only and if the amount of interest charged is further reduced from this amount then it comes to Rs. 6.35 Crores (Rs.12.92 Cr. Minus Rs. 6.57 Cr.) which is more than the disallowance confirmed by the Id. CIT(A) amounting to Rs. 1,74,18,626/-. The decisions relied upon by the ld. AR of the assessee finds favour in this case. Since, the assessee has not challenged the finding of the ld. AO. The addition made by the ld. AO is confirmed and that of the ld. CIT(A) is reversed. In this view of the matter, we feel that the Id. CITA) has exceeded his jurisdiction and the enhancement made by the ld. CIT(A) deserves to be deleted. Thus Ground No. 1 of the assessee is allowed Hence the ratio of the above case laws fully applies. In any case, the CIT (A) has never given any opportunity to the appellant before taking the decisions which otherwise amounts to enhancement of the income in the sense that without deleting addition made by AO u/s 68 he made addition u/s 69 though did not gave any mathem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stated that all the transaction of giving cheque and cash withdrawal pertained/belonged to him which means that he claimed his ownership over the amounts deposited in the bank account and thereafter on the withdrawal therefrom. He never said that the cash shown withdrawn was utilized or taken away by him in any manner and that the same was not available with the appellant. He doesn't dispute the fact of redeposits of cash out of such cash withdrawals by the appellant in its bank account nor it is the case of the revenue that Shri. Sunil Sharma denied the appellant the access of such cash withdrawals. The certificate was given only in the capacity of the owner but the further fact was read by the ld. CIT (A)to suit his own purpose. Therefore, his conclusion that such cash withdrawals were not available is his own imagination without any supporting material. 2.2.2 Pertinently, even after excluding such withdrawals of Rs. 22.92 lakhs, the shortfall of Rs. 7.06 lakhs only against which appellant. was having undisputed cash withdrawals of Rs. 6.99 lakhs further leaving a meager Rs. 7,250/- which could be met by the opening cash in hand of Rs. 50,000/- accepted by the CIT(A). This w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns of deposits or credit through banking channels/ bank transfers/ RTGS and cash withdrawals which fact has been noted by the AO also in para 3 page 3 of assessment order which was further detailed by the AO in the remand report in para 4.3 at page 23 of CIT(A) order that there were credits through bank transfers/RTGS from Ratnawali Jewelers ( RJ ), Sajit, Katoda Jewelers, etc. on different dates. But benefit of such credits was denied by the AO alleging that no substantial supporting evidence was filed to prove the genuineness of the transaction. However, we are not in agreement with the AO for the reason that if an evidence is relied upon then it has to be read/relied upon in toto. Parties cannot be permitted to read only a part thereof because it suits him best and ignore or doubt the other part which does not suit to their wishes. When the AO relied upon the saving bank account and made addition of cash deposits made therein, of Rs. 29,98,450/- and when in the same very bank account, also there were bank transfers/RTGS, then such credits could not be ignored/denied. The very fact that the credits were on account of bank transfers/RTGS from third parties itself prima facie prove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee cannot/should not claim as an owner thereof and the money transferred belonged to him only. He also confirmed the fact of withdrawal but there is nothing in the certificate to show that cash withdrawal was taken back by him and/or utilized by him elsewhere and in any case it was not available with the assessee. There apart, the lower authorities did not find any fault or defect in the cash flow statement. The Id CIT(A) observed that the assessee failed to comply with the notices issued by the AO and therefore, the certificate issued by RJ filed as an additional evidence could not be proved. We have already held that even without any supporting evidence the undisputed fact of credits through bank transfers has proved the genuineness of the source available in the very bank account. Otherwise also, the assessee explained the difficulties and the circumstances which were beyond its control in producing RJ due to their non-cooperation. The ld DR also could not convert these facts. At the same time, it is also a fact that the AO chose not to make any inquiry directly from those parties who transferred funds but merely suspected. It may be clarified that the Id CIT(A) has no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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