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TMI Blog1996 (12) TMI 100X X X X Extracts X X X X X X X X Extracts X X X X ..... ngst others a bunch of loose papers marked as BM-5 was seized vide Annexure "BM" to Panchnama placed on the records. The deposition of the assessee was also recorded under section 132(4) of the Act and a copy is placed at page 27 of the paper book. An order under section 132(5) placed at page 11 of the paper book was passed on 21-8-1981, holding cash seized from the residence amounting to Rs. 80,000 and cash paid to Sri I.M. Dhawan amounting to Rs. 2,00,000 as concealed income. The original return showing total income at Rs. 61,750 was filed on 17-6-1982 and the assessment under section 143(3) was completed on 28-3-1984 on total income of Rs. 1,31,750 including Rs. 70,000 as unexplained gift received by the minor sons of the assessee. The assessee filed an appeal against that assessment order on 11-4-1984. During the pendency of this appeal, a notice under section 148 was issued and served on the assessee as on 27-3-1985 and the assessment was reopened on the basis of certain vital information found in the seized documents about the assessee's business activities in sanitary goods which was admitted by him under section 132(4) and on the basis of large amount of credits in a few Ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) should have decided the appeal preferred by the assessee against the aforesaid assessment order, on its merit inasmuch he should have held the original assessment order passed under section 143(3) was very much in force even when the present appeal was taken up for hearing. 5. In this case, the return was filed on 17-6-1982 and the assessment was made on total income of Rs. 1,31,750 under section 143(3) on 28-3-1984. While making the assessment, the ITO found that a sum of Rs. 1,10,000 was credited in the Savings Bank Account No. 4166 in Dena Bank which is a joint account of Mst. Nikhil Agarwal (son of the assessee) with the assessee. He found that these deposits constituted gifts received from several persons. As the assessee could not explain the credit of Rs. 70,000 out of Rs. 1,10,000 the Assessing Officer added the same as income of the assessee. 6. The assessee being aggrieved by the addition of Rs. 70,000, filed an appeal before the CIT(A) and contended that as the gifted money belongs to the assessee's minor son the addition should be deleted. The CIT(A) decided the appeal by passing the order as under :--- " During the pendency of appeal the assessment made unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... D.R. tried to distinguish the Supreme Court decision in the case of Sun Engg. Works (P.) Ltd. on the ground that the assessment has not reached finality as the appeal was pending and, therefore, the original order does not survive under the circumstances. 9. We have carefully considered the rival contentions, relevant facts and material placed on the record and have also gone through the decisions and judicial pronouncements on which reliance is placed by both the parties. According to the ratio of Supreme Court decision in the case of Sun Engg. Works (P.) Ltd. on reassessment, original assessment is at large and the original assessment is reopened only as regards income escaping assessment. According to the decision claims which have been disallowed in the original assessment cannot be permitted to be reagitated on the assessment being reopened for bringing to tax certain income which has escaped assessment, because the controversy on reassessment is confined to the matters which are relevant only in respect of income which had not been brought to tax during the course of the original assessment. In the reassessment proceedings, it is not open to the assessee to seek a review of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atter of the application before the Settlement Commission filed by Amritlal Agarwal (HUF). The ITO rejected the explanation of the assessee for the reasons and on the ground that the said HUF filed application before the Settlement Commission about amounts found in seized books marked as BM-1 to BM-4 and that entries in the seized books marked as BM-5 were not subject-matter of the petition. He, therefore, brought following amount to tax on accounts of reopening of assessment :--- (i) Income from undisclosed business in sanitary goods ... Rs. 25,000 (ii) Income from undisclosed sources representing cash paid to Sri I.M. Dhawan ... Rs. 2,00,000 12. Before the CIT(A) the assessee submitted that all the information brought out by search and seizure operation were before the ITO and, therefore, reopening of assessment and bringing to tax a sum of Rs. 2,00,000 amounted to change of opinion. The CIT(A) considered the submission of the assessee and confirmed the action of the ITO under section 147 for the reasons given in his order as follows :--- " As a fact, in the ground of Appeal No. 3 of the first appeal filed against the assessment year 1981-82 (Appeal No. 37/II(2)/(A)-X/84-85) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (4) of the Act passed by the Settlement Commission, a copy of which is placed at page 15 of the paper book. The representative of the assessee also argued that sanitary goods are purchased by HUF and are accepted by the Settlement Commission for assessment years 1980-81 and 1982-83. It was also asserted on behalf of the assessee that no business in sanitary goods was carried on by the assessee and the assessee has never admitted the same. 14. As regards cash of Rs. 2,00,000 paid to Sri I.M. Dhawan, it was submitted that the amount was paid by the wife of the assessee and has already been assessed in her case as it is evident from the assessment order dated 10-6-1985 of Smt. Rajni Agarwal for assessment year 1982-83, placed at page 44 of the paper book. The learned representative of the assessee further argued that since, this point was not disputed and challenged before the ITAT, the order of the Dy. Commissioner (Appeals) becomes final. He also contended that the statement of Sri I.M. Dhawan is vague and that the assessee was not confronted with that. He also pointed out that this matter was considered in the proceeding and in the order under section 132(5) dated 21-8-1981 also a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer. According to him, since the returns of the assessee's wife were filed on 12-6-1984 and her assessments were made on 10-6-1985, while the assessee's assessment completed on 28-3-1984, the notice under section 148 was validly issued on 27-3-1985. He also clarified this point further that the return of the assessee's wife was not filed till the assessment of the assessee was finalised and, therefore, the assessee has been shifting his stand. He also took us through the order of the CIT(A) and relied on para-3 of his order. In order to prove the case of the department and to support his contention, he placed reliance on the following decisions:-- (i) ITO v. Laxmi Narayan & Co. [1995] 54 ITD 671 (Cal.) ; (ii) ITO v. Selected Dalurband Coal Co. (P.) Ltd. [19961] 217 ITR 597 (SC). 16. In reply, the learned counsel for the assessee submitted that no fresh facts have come to light and there is nothing new in this case and, therefore, the ratio of the Supreme Court decision in the case of Selected Dalurband Coal Co. (P.) Ltd. on which reliance is placed by the learned D.R. is not applicable to the instant case. 17. We have carefully considered the rival contentions, the relevant fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not tenable and in our opinion has rightly been rejected by the authorities below. 19. However, the assessee's contention that the matter of cash payment of Rs. 2,00,000 was already before the Assessing Officer and was considered in the proceedings and in the order under section 132(5) dated 21-8-1981, appears to be correct as it is evident from the order under section 132(5) placed at page-11 of the paper book that the cash amounting to Rs. 2,00,000 paid to Sri I.M. Dhawan is considered as concealed income of the assessee. This simply means that this item of concealed income was already in the knowledge of the Assessing Officer while passing the order under section 132(5) which is an order passed in a summary manner, but while passing the regular assessment on 28-3-1984 he has not brought this concealed income to tax. This is, therefore, inferred that after considering the explanation of the assessee and after due deliberation at the time of regular assessment the Assessing Officer has dropped the addition of Rs. 2,00,000 which was considered as concealed income in the order under section 132(5). Undoubtedly, this amounts to change of opinion and in our opinion, therefore, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is covered by the Settlement Commission is not borne out by the evidence and has rightly been rejected by the Assessing Officer on the ground that the HUF has come up for the settlement for the assessment years 1980-81 and 1982-83 and that the amounts found in the seized books marked BM-1 to BM-4 are covered by the Settlement Commission and that the entries in the seized books of account marked BM-5 were not subject-matter of the petition. In the absence of evidence adduced by the assessee to prove his contention in our opinion, the Assessing Officer was well within his jurisdiction and was competent to issue notice under section 148 read with section 147(a) on the basis of material available on the record. In our opinion, the seized books of account marked as BM-5 and contents thereof could constitute the basis for the formation of the requisite belief under section 147(a) and, therefore, we hold that the reassessment notice under section 148 was valid on this ground and for this reason. Since the assessment is reopened under section 147(a) the contention of the assessee that the proceedings are barred by limitation, is not correct. 21. In view of this, as well as for the reason ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onditions prescribed in section 147(a) that the assessee had not made full and true disclosure of the material facts at the time of original assessment and, therefore, income chargeable to tax had escaped assessment." When we consider the position of documents marked as BM-5, Savings Bank Account No. 237 with Oriental Bank of Commerce and statement of the assessee recorded under section 132(4) of the Act and the role they played in reopening of the assessment, we find that the ratio of the Supreme Court decision in the case of Phool Chand Bajrang Lal is squarely applicable to the instant case and, therefore, in our opinion, the action of the Assessing Officer is fully justified. 22. In this view of the matter as well as for the reasons mentioned above, we hold that the reopening of assessment under section 147(a) was valid on this ground and to that extent, the order of the CIT(A) is upheld. 23. Ground No. 4(a) relates to the addition of Rs. 2,00,000 as unexplained cash payment to Sri I. M. Dhawan. In the foregoing paragraphs we have also held that once the Assessing Officer treats the sum of Rs. 2,00,000 as concealed income under section 132(5) and deliberately drops the same i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and needs no comments and no decision. 28. In ITA No. 3912 (Cal.) of 1992, Ground No. 1 is that the Assessing Officer was not justified in completing the assessment on an ex parte basis. 29. After hearing both the parties and after going through the assessment order and appellate order we find that the authorities below have given sufficient reasons for passing the ex parte order for confirming the same respectively and, therefore, in the absence of any evidence to controvert their findings we decline to interfere with their orders. This ground is, therefore, rejected. 30. Ground No. 2 relating to addition of Rs. 2,00,000 as payment of cash to Sri I. M. Dhawan has already been decided in favour of the assessee in ITA No. 552/Cal./90 and, therefore, this ground is rejected as being infructuous. 31. Ground No. 3 runs as under :-- "That on the facts and in the circumstances of the case, the ld. A.C., Inv. Circle has erred in alleging that the assessee had undisclosed income from dealing in sanitarywares and on the basis of such erroneous allegation, erred in holding that the assessee had undisclosed income of Rs. 25,000 from the said source." 32. Briefly stated, the facts are t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order under section 245D(4) of the Act and submitted that the income from purchase of sanitarywares is taken at Rs. 25,000. According to the learned counsel for the assessee, the sanitary goods are purchased by the HUF and is accepted by the Settlement Commission. He further contended that no such business in sanitary goods is carried on by the assessee and that the assessee has never admitted the same. In order to prove his contention, he invited our attention to the question and answer No. 27 in the statement of the assessee recorded under section 132(1) on 25-5-1981 a copy of which is placed at page-27 of the paper book. 36. The learned deptt. representative on the other hand contended that since the assessee could not explain the sources of the purchase of sanitary goods and since the assessee admitted in his statement to have carried on the business, the ITO was justified in estimating the income from the undisclosed business at Rs. 35,000 in the absence of details and proof. He further contended that the assessee was given several opportunities and the assessment was set aside but in spite of that there was no response from the assessee's side to explain the concealed income ..... X X X X Extracts X X X X X X X X Extracts X X X X
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