2015 (7) TMI 206 - AT - Income Tax

Tribunal upholds validity of notices under Sections 147 & 148, adds unexplained investments, interest levies.

Mrs. Suvina Krupal Versus Income Tax Officer, Ward 1, Madikeri

The Tribunal upheld the validity of notices issued under Section 148 and the assumption of jurisdiction under Section 147. The additions for unexplained ... Reopening of assessment - validity of the notices issued under Section 148 challenged - whether the Assessing Officer can invoke the provisions of section 150(1) of the Act to assume jurisdiction under Section 147 of the Act? - unexplained investment - Held that:- CIT (Appeals) has given a clear finding that the unexplained investment in the residential property fall in three years relevant to Assessment Years 2003-04 to 2005-06. The learned CIT (Appeals) has also rendered a finding that the addition to be made on account of unexplained investment in the said property may be divided among the three assessment years and had also held that the relevant portion of the unexplained investment i.e. ₹ 12,15,417 is taxable in Assessment Year 2005-06. In view of the above, we agree with the learned CIT (Appeals) that the facts of the assessee's case are distinguishable from the decisions cited by the assessee; that the learned CIT (Appeals) had rendered a clear ‘finding’ in the matter and that, therefore, in the facts and circumstances of the case on hand, the Assessing Officer has correctly assumed jurisdiction under Section 147 of the Act by invoking the provisions of section 150(1) of the Act. - Decided against assessee. As regards the additions made by the Assessing Officer towards unexplained investment of ₹ 1,15,710 for Assessment Year 2003-04 and of ₹ 5,13,517 for Assessment Year 2004-05, it is seen that the Assessing Officer has considered all the evidences produced by the assessee and allowed relief wherever the evidences produced and explanations put forth were found acceptable and has made additions only in respect of those amounts for which no evidence was produced. In the absence of any evidence to controvert the findings of the authorities below, the aforesaid additions made on account of unaccounted investments in the construction of the aforesaid residential building needs to be upheld. In view of the above factual matrix of the case, we concur with the learned CIT (Appeals) in upholding the additions made by the Assessing Officer in this regard. - Decided against assessee. Interest under Sections 234A, 234B and 234C is consequential and mandatory and the Assessing Officer has no discretion in the matter. This proposition has been upheld by the Hon'ble Apex Court in the case of Anjum H Ghaswala (2001 (10) TMI 4 - SUPREME Court) and we, therefore, uphold the action of the Assessing Officer in charging the said interest. - Decided against assessee. Issues Involved:1. Validity of notices issued under Section 148 and assumption of jurisdiction under Section 147.2. Unexplained investment in the construction of a residential property.3. Treatment of agricultural income as non-agricultural income.4. Levy of interest under Sections 234A, 234B, and 234C.Issue-Wise Detailed Analysis:1. Validity of Notices Issued Under Section 148 and Assumption of Jurisdiction Under Section 147:The assessee challenged the Assessing Officer's assumption of jurisdiction under Section 147 and the validity of the notices issued under Section 148. The core issue was whether the Assessing Officer could invoke Section 150(1) to assume jurisdiction under Section 147. Section 150(1) allows the issuance of notices under Section 148 to make assessments/re-assessments based on any finding or direction in an order passed by any authority in any proceeding under the Act.The assessee argued that the CIT (Appeals)'s observations in the order for Assessment Year 2005-06 were mere passing remarks and did not constitute a 'finding or direction.' The assessee cited judicial precedents, including Southern India Plywood Company v. ACIT, Rajinder Nath v. CIT, and Consolidated Coffee Ltd. v. ITO, to support this contention. However, the CIT (Appeals) distinguished the facts of the case from these precedents and upheld the Assessing Officer's actions.The Tribunal considered the rival contentions and material on record, including the cited judicial decisions. It noted that the CIT (Appeals) had given detailed reasoning for spreading the investment over three assessment years (2003-04 to 2005-06) and had rendered a clear finding that the unexplained investment in the property fell within these years. Therefore, the Tribunal agreed with the CIT (Appeals) that the Assessing Officer correctly assumed jurisdiction under Section 147 by invoking Section 150(1). Consequently, the grounds challenging the assumption of jurisdiction were dismissed.2. Unexplained Investment in the Construction of a Residential Property:The CIT (Appeals) had found that the investment in the residential property was spread over three years (Assessment Years 2003-04 to 2005-06), with an unexplained investment of Rs. 12,15,417 per year. The Assessing Officer, in compliance with this finding, assessed the balance unexplained investments for Assessment Years 2003-04 and 2004-05.For Assessment Year 2003-04, the Assessing Officer accepted certain claimed amounts but added Rs. 1,38,500 as non-agricultural income and Rs. 1,15,710 as unexplained investment. The assessee failed to provide evidence to counter these findings. Similarly, for Assessment Year 2004-05, the Assessing Officer added Rs. 5,13,517 as unexplained investment after considering the evidence. The Tribunal upheld the CIT (Appeals)'s decision to confirm these additions, as the assessee did not provide sufficient evidence to refute the Assessing Officer's findings.3. Treatment of Agricultural Income as Non-Agricultural Income:The assessee claimed Rs. 1,38,500 as agricultural income for Assessment Year 2003-04. However, the Assessing Officer rejected this claim, noting that the agricultural land was purchased only in September 2003, making it improbable for the assessee to derive agricultural income in the relevant period. The CIT (Appeals) upheld this decision, and the Tribunal found no evidence to contradict the Assessing Officer's findings. Consequently, the addition of Rs. 1,38,500 as non-agricultural income was upheld.4. Levy of Interest Under Sections 234A, 234B, and 234C:The assessee contested the levy of interest under Sections 234A, 234B, and 234C. The Tribunal noted that the charging of interest under these sections is consequential and mandatory, with no discretion available to the Assessing Officer, as upheld by the Supreme Court in Anjum H Ghaswala (252 ITR 1). Therefore, the Tribunal upheld the levy of interest but directed the Assessing Officer to recompute the interest chargeable while giving effect to the order.Conclusion:The assessee's appeals for Assessment Years 2003-04 and 2004-05 were dismissed. The Tribunal upheld the validity of the notices issued under Section 148 and the assumption of jurisdiction under Section 147, the additions made for unexplained investments, the treatment of claimed agricultural income as non-agricultural income, and the levy of interest under Sections 234A, 234B, and 234C. The order was pronounced in the open court on 29th June 2015.