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TMI Blog2005 (12) TMI 213X X X X Extracts X X X X X X X X Extracts X X X X ..... reedom to the Assessing Officer to reopen the case for the earlier year and if necessary to examine afresh this issue and to make decision in accordance with law. 2.1 The relevant portion of the order of the CIT (Appeals) is quoted here for better appraisal of facts:- "5. I have considered the argument of the Ld. Counsel and perused the fact of the case. Since there has been lapse of time and the creditors are very small in nature it is definitely difficult on the part of the appellant now to bring them before the Assessing Officer. At the same time, on perusal of the balance sheet, I find that the same was in the earlier year and has figured in this year has coming from the earlier year, thus the norm desires that the same should not be added/disallowed in this year. In view of the above legal provision the Assessing Officer is directed to delete this addition in the present year. However, the Assessing Officer is free to reopen the case for the earlier year and if necessary to examine afresh of this issue and to take a decision in accordance with law." 3. The Ld. Sr. Counsel for the assessee Mr. M.N. Banerjee while arguing on this point before the Bench, took serious exception ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment, it is not possible to come to a different conclusion as suggested by learned standing counsel for the Department that the Inspecting Assistant Commissioner merely pointed out the law and not interpreted the law. In view of the foregoing reasons, we consider that the order passed by the Tribunal in the case of both the assessees appears to be in order." (iii) ITO v. Lakhmani Mewal Das [1976] 103 ITR 437 (SC) - In this case it has been held that the duty which is cast upon the assessee is to make a true and full disclosure of the primary facts at the time of the original assessment. Production before the Income-tax Officer of the account books or other evidence from which material evidence could with due diligence have been discovered by the Income-tax Officer will not necessarily amount to disclosure contemplated by law. The duty of the assessee in any case does not extend beyond making a true and full disclosure of primary facts. Once he has done that his duty ends. It is for the Income-tax Officer to draw the correct inference from the primary facts. It is no responsibility of the assessee to advise the Income-tax Officer with regard to the inference which he should draw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, the Department preferred appeals to the Supreme Court The Supreme Court saw no reason to differ and dismissed the appeals. 4. Further, the Sr. Ld. Counsel of the assessee submitted that the transaction of Rs. 1,40,000 belongs to 14 parties in the shape of supply of materials and the amount involved is either Rs. 1 lakh or Rs. 8,000 each as the assessee is engaged in spare parts dealing. The transaction being such an old one, initiation of proceedings even otherwise after a decade is totally invalid. In the meantime, the firm has been closed in 1993 and there is no contract with the said parties. 4.1 According to the Sr. Ld. Counsel, both factually and legally, the assessee's case stands on sound footing. Therefore, the order passed by the CIT (Appeals) confirming the validity of the initiation of proceeding under section 147/148 is totally invalid. 5. The Ld. D.R. Mr. S.K. Jain while defending the cause of the revenue, drew the attention of the Bench to the finding of the CIT (Appeals) and accordingly it has been deemed proper to quote the relevant portion of the order of the CIT (Appeals) which is self explanatory, as under:- "The appeal has been filed on 20-7-1999. The hea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -88. Ld. CIT(A) had no power to give such direction. The addition made by the Assessing Officer of Rs. 1,40,000 is arbitrary. Observations of the Assessing Officer and submissions of the appellant have been considered. Brief background of the case is that the Ld. CIT(A) while passing the order in the case of the appellant for assessment year 1988-89 in Appeal No. 968/AVIII/W-15(2)/94-95, dated 28-12-1995 in para 5 of the order made the following directions 'in view of the above legal' provision the Assessing Officer is directed to delete the addition in the present year. However, the Assessing Officer is free to reopen the case for the earlier year and if necessary to examine afresh this issue and to take a decision in accordance with law'. Assessing Officer in pursuance to this direction initiated proceeding under section 148 of the Income-tax Act for assessment year 1987-88 after obtaining approval of the statutory authority as already noted above. The identity and capacity of loan creditors and the genuineness of the transaction could not be proved by the appellant and Assessing Officer made addition. During the course of hearing of the appeal, remand report of the Assessing Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nbsp; from the end of the end of the relevant relevant assessment assessment year year 1. In cases (a) The case (b) If the (c) If the subj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r more, or more, reopen Assessing Assessing Officer Officer has to take has to take approval approval from from &n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Income-tax Act is valid. As regards the merits of the addition on account of unexplained credits, it is evident that even after several opportunities the appellant failed to prove the genuineness of the credits. The appellant even failed to produce the alleged creditors before the Assessing Officer. It is well-settled that the identity and capacity of the creditors and genuineness of the transaction has to be established by the appellant. The onus to do so has not been discharged by the appellant. The addition is upheld." 6. Further, according to the Ld. D.R., when sections 147 to 153 relate to procedural law, in all fairness, it should be applicable according to the time of issue of notice. In this connection, he cited a number, of case laws, the gist of which are analysed hereunder:- (i) Navketan Enterprises v. CIT [2001] 250 ITR 508 (Jharkhand) - In this case it has been held that the petitioner's application challenging the initiation of proceedings under section 147 by issuance of notice under section 148 on the ground that the Assessing Officer had wrongly obtained the approval of the Joint Commissioner before issuing notices instead of obtaining the approval of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment, summary assessment under section 143(1)(a) cannot give a clear-cut finding to the criteria of section 68 (identity, creditworthiness and genuineness of the creditors). In this connection, he relied on a catena of decisions which are also quoted as under: (1) Mahanagar Telephone Nigam Ltd. v. Chairman, CBDT [2000] 246 ITR 173 (Delhi) In this case it has been held that so long as the ingredients of section 147 are fulfilled, the Assessing Officer is free to initiate proceedings 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. (ii) Raymond Woollen Mills Ltd. v. ITO [1999] 236 ITR 34 (SC) - In this case it has been held that the case of the revenue was that the assessee was charging to its profit and loss account, fiscal duties paid during the year as well as labour charges, power, fuel, wages, chemicals, etc. However, while valuing its dosing stock, the elements of fiscal duty and the other direct manufacturing costs were not included. This resulted in undervaluation of inventories and understatement of profits. This in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ake the addition. 9. On hearing the contested rival submissions from both the sides and going through the case laws cited by them, we are of the considered opinion that the validity of initiation of proceedings under section 147/148 of the Act cannot be challenged by the assessee in this case for the reasons given below:- (i) As has been held in the case of Shankar Industries, as per the decision of the Hon'ble jurisdictional High Court, the onus lies on the assessee to prove the case prima facie in case of section 68 which has not been done in the impugned case. It has been rightly held by the Assessing Officer that when the case was decided ex parte despite several opportunities granted and the assessee could not prove it to be the opening balance in subsequent year, the case becomes weakened for the assessee in the impugned appeal. Even the same view has been held by the CIT (Appeals). (ii) The primary onus has not been discharged by the assessee at all as it appears from the facts and circumstances of the case. (iii) The relevant para 5 of the order of the CIT (Appeals) for the assessment year 1988-89 has been partly challenged by the Ld. Counsel of the assessee on the grou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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