TMI Blog1996 (7) TMI 173X X X X Extracts X X X X X X X X Extracts X X X X ..... 142(1) and 131 of the Income-tax Act, 1961. The view of the Assessing Officer was that assessee had been making purchases and sales on which he was earning huge profits and was also doing hawala business to accommodate other persons for evasion of tax. In the assessment order for the year 1985-86, the Assessing Officer had also mentioned that peak loans of Rs. 27.33 lakhs were noticed in the accounting years 1-7-1978 to 30-6-1979. It was also stated from the side of the revenue, and admitted on behalf of the assessee, that an offer was made from the side of the assessee to the department to assess undisclosed income at about Rs. 27 lacs and that offer had not been accepted by the revenue and thereafter since the assessee had not cooperated, the Assessing Officer passed a detailed order for the assessment year 1985-86 in which assessee's total income was assessed at Rs. 1,00,38,384. For the assessment years 1982-83 to 1984-85, short orders were passed based on Assessing Officer's order for the assessment year 1978-79 dated 18-2-1986 and the income was assessed at Rs. 9,29,000 for the assessment year 1982-83 and Rs. 6,00,000 for the assessment year 1983-84 and Rs. 83,79,380 for asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, again completed assessments for the abovementioned assessment years at Rs. 4,70,000 for assessment year 1982-83, Rs. 5,85,000 for assessment year 1983-84, Rs. 7,53,500 for assessment year 1984-85 and Rs. 12,69,140 for assessment year 1985-86. All these assessments are dated 23-3-1994. The Assessing Officer, however, mentioned that these assessments were being made under section 143(3) read with section 147. The assessee challenged all these assessments before the learned CIT(A). However, the grounds taken therein were against initiating proceedings under section 147 during the pendency of assessment proceedings and that the notices under section 148(1) were bad in law etc.. The learned CIT(A) has passed a very detailed order running into 33 pages which is a common order for all these assessment years and in which the learned CIT(A) has met with all the arguments which had been advanced on behalf of the assessee and has also supported his decision dismissing all the objections with citing extracts from various High Court and Supreme Court decisions, so far as the validity of the fresh assessments was concerned. However, so far as the quantum of assessments is concerned, he had a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngs before initiating fresh proceedings. The learned counsel thereafter referred to the decisions in the cases of CIT v. P. Krishnakutty Menon [1990] 181 ITR 237/47 Taxman 31 (Ker.), Sheila Brij Jaggi v. Eleventh ITO [1990] 184 ITR 50 (Bom.), CIT v. Laxmidevi Mehta [1993] 70 Taxman 399 (Cal.) and CIT v. Kurban Hussain Ibrahimji Mithiborwala [1971] 82 ITR 821 (SC). The learned counsel also stated that there was nothing to show that the Assessing Officer had recorded any reasons for issue of notices. He further pointed out that both in the orders of the Assessing Officer as well as in the orders of the CIT(A), date of notices was mentioned as 24-5-1993 and if that were true, assessment proceedings for the assessment years 1982-83 were timebarred under the provisions which are effective from 1-4-1989 and that for all the assessment years, if proceedings are considered to be governed by provisions of law before 1-4-1989. The learned counsel further pointed out that since the original assessments were made at much higher incomes for all these years (which we have already mentioned in the earlier part of this order) then the figures at which the present assessments are made, it could not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment year 1985-86 dated 23-3-1994. He submitted that the assessee had offered Rs. 27.33 lacs for being taxed, yet, no returns of income were filed by him nor any compliance was made to the statutory provisions and notices. He submitted that the searches had revealed large scale tax evasion not only by the assessee himself but by others also on the basis of assistance given by him by making hawala entries. 10. Regarding the validity of the issue of fresh notices, while the learned Departmental Representative heavily relied on the orders of the learned CIT(A), he pointed out that there were typographical errors in the orders of the Assessing Officer which had perhaps been repeated without verification in the orders of the learned CIT(A) when the dates for issue of notices under section 147/148 were given as 24-5-1993 and their service being on 31-3-1993. The learned Departmental Representative has filed photostat copies of the notices which were issued by the Assessing Officer and pointed out that the notices are dated 29-3-1993 and they were served on 30-3-1993. He has also filed photostat copies of the reasons recorded by the Assessing Officer before issue of notices, h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the approval of the CBDT had been received, the words pertaining to the approval having been received from the CIT had been scored out. He submitted that merely on account of this clerical mistake, which was apparent from the fact that the stamp as well as signatures and the date of approval of the CIT were clear on the prescribed performa, this minor mistake had to be ignored. 11. The learned Departmental Representative emphasised that even as per the commentary of Chaturvedi Pithisaria, page-3539 -- Fourth Edition, it was clear that the amendment being of a procedural nature was retrospective in effect and would apply to all the proceedings which were to be initiated after that date even in respect of the earlier assessment years. He pointed out that the main difference between the old provisions of section 147(a) and 147(b) and the present provisions of section 147, was that several pre-conditions and restrictions imposed on the Assessing Officer to enable him to issue notice under those two sub-sections, had been dispensed with and now the only requirement was the satisfaction of the Assessing Officer to the effect that any income chargeable to tax has escaped assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction detailed reasons were recorded while reopening the proceedings for the assessment year 1985-86. The reasons recorded by the Assessing Officer also took note of the search which had been conducted at the premises of the assessee and it would reasonably lead the Assessing Officer to believe that income liable to tax had escaped assessment for the assessment years 1982-83 to 1985-86. He referred to page-5 of the assessment order for the assessment year 1985-86 and pointed out that there were total sales of about 4.50 crores to Asian Trading Co., etc. which were discovered in the search conducted on 27-8-1984. He submitted that these papers were never contested by the assessee and, yet, at no stage assessee filed his return of income for the impugned assessment years. No attempt was made to explain the adverse evidence found during the course of search. 12. Regarding the objections of the learned counsel of the assessee to the effect that since the assessment proceedings which had been set aside by the learned CIT(A) for these assessment years vide his orders dated 10-3-1988 and 11-3-1988 had got time barred and hence, no fresh proceedings under section 147/148 could be initiat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in all the four years than what has finally been assessed in these fresh assessments, the entire basis that income had escaped assessment was wrong, the learned Departmental Representative submitted that in the first instance the income originally assessed was not on any proper basis and hence those assessments had been set aside by the learned CIT(A). Secondly, according to the learned Departmental Representative there was no assessed income existing nor was there any returned income by the assessee in the absence of any return having been filed by him and hence, the total income which has now been assessed is the income which can be said to have escaped assessment and which justifies the issue of notices by the Assessing Officer for all these years. 14. So far as the objections regarding proper opportunity not having been given by the CIT(A) to the assessee, estimate of income from house property at Rs. 10,000 and upholding of income from hawala are concerned business he relied on the order of the Assessing Officer and also of the CIT(A) but submitted that the CIT(A) was not justified in giving relief to the assessee against which part of the order of the learned CIT(A), the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the assessment years under consideration. The learned counsel again relied on the case law which he had already cited and also on the decisions in the cases of Ladhuram Laxmi Narayan v. ITO [1976] 102 ITR 595 (Gowhati), East Coast Commercial Co. Ltd v. ITO [1981] 128 ITR 326 (Cal.) and Govinda Choudhury Sons v. ITO [1977] 109 ITR 370 (Ori.) to support his contentions that reopening of assessments in the facts and circumstances of this case was invalid and all the assessments framed by the Assessing Officer should be quashed as invalid being against provisions of law. 16. In appeals filed by the revenue, the revenue has objected to reliefs of Rs. 60,000, Rs. 75,000 Rs. 2,96,978 and Rs. 1,47,257 having been given by the learned CIT(A) for estimate of interest income on rotation basis. He submitted that when the income as mentioned above was generated, it was only normal for the Assessing Officer to estimate income from interest on that newly generated income. The learned counsel for the assessee strongly supported the orders of the learned CIT(A) on this issue. 17. In his cross objections, the assessee has again challenged the validity of the assessment orders and their bein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the changed language of the provisions of section 147 the requirement of proving by the revenue that assessee had failed to disclose truly and fully all the material facts necessary for his assessment or that there was fresh information in his possession on the basis of which fresh reassessment proceedings were being initiated, have been dispensed with and now the Assessing Officer has to establish that he had a reasonable basis for forming a belief that income liable to tax had escaped assessment. Of course, different periods with reference to different quantum of income have now been prescribed and that too with reference to the section under which the earlier assessments had been made, but they are not relevant for our purposes because in the instant case as for all the assessment years under consideration no returns of income had been filed by the assessee, for all the years the escaped income is more than Rs. 1,00,000 and in all the years the notices have been issued within a period not exceeding 10 years and hence, in our opinion, neither the issue of notices nor the framing of fresh assessments can be said to be invalid. We also agree with the submissions of the learned D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re being framed, admitted by, in a situation were not even a return of income was filed, cannot invalidate the assessments framed by the Assessing Officer. This objection of the assessee is, therefore, also rejected. 19. Coming to the quantum of income, we are of the opinion, that the Assessing Officer as well as the learned CIT(A) have given sufficient justification for the estimate of income of the assessee. So far as the estimate of income from house property is concerned, in the absence of any evidence having been advanced by the assessee to the contrary inspite of particulars having been given to him and in view of the fact that assessee's mother is not found to be having any source of income so also this particular premises being found to be occupied by the assessee and assessee's address having been given as those premises, in our opinion, the Assessing Officer as well as the CIT(A) were justified in assessing the income from the impugned property as assessee's income from house property. We are also not prepared to attach much weight to the argument of the assessee to the effect that even if it is treated as self-occupied property, no income from there should be assessed ..... 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