TaxTMI 
TaxTMI 
2008 (6) TMI 243
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....Jan., 1990. The assessee had filed Form No. 12 on 30th Aug., 1989 which was duly signed by all the partners. During October, 1992 the assessee's business premises was searched under s. 132(1) and certain books of accounts were seized by the Department. An order under s. 132(5) was passed on 26th Feb., 1993. The AO on that basis issued notice under s. 148 on 22nd Nov., 1993. The reason for issuing notice under s. 148 was that it was found that as per books of accounts of the assessee C-5 and C-7 total credits of Rs. 28,000, Rs. 62,250 and Rs. 90,250 were recorded in the books of accounts which have not been explained by the assessee in the original return filed by the assessee. The assessee in response to the notice under s. 148 filed reply stating that the return filed originally may be treated as return filed in response to notice under s. 148 of the Act. The assessee explained briefly that details of expenditure and list of creditors are filed and submitted that the same are verifiable from the seized books. The assessee was asked to produce the creditors but the assessee informed the AO that since it is an old matter, summons under s. 131 be issued for verification of the credit....
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....ny material and without ascertaining any entry from the books of accounts merely on presumption and surmises and conjectures reopened the assessment which is bad in law and liable to be quashed. In support of his contention he relied upon the decision of Hon'ble High Court of Madhya Pradesh in the case of Arjun Singh & Anr. vs. Asstt. Director of IT (2000) 159 CTR (MP) 53 : (2000) 246 ITR 363 (MP). 7. On the other hand, the learned Departmental Representative relied upon the orders of the authorities below and submitted that during the search books of accounts of the assessee were seized which revealed that the assessee recorded unexplained credits in the books of accounts therefore, on that basis the AO correctly reopened the assessment. 8. We have considered the rival submissions and the material available on record. Sec. 147 of the Act provides- "147. Income escaping assessment.-If the AO has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of ss. 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his no....
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....roposed to reopen the assessment under s. 147(a) for the mere reason that prima facie the petitioner had not given full particulars i.e., full address of the creditors. The same reason was adduced for reopening the assessment for the year 1979-80. There was not even an allegation that these credits were not genuine or that income had escaped assessment. Apart from that even in the detailed letter preceding the issue of the printed notice, the respondent had not even alleged that there had been escapement of income. From the records it was seen that the credits had been disclosed with the GIR numbers of the creditors. No information relating to the credits which had been sought had been withheld. Hence, in these cases, there was no failure to furnish material particulars nor escapement of income. The reassessment proceedings were not valid and were liable to be quashed." Hon'ble High Court of Delhi in the case of CIT vs. Atul Jain (2007) 212 CTR (Del) 42 : (2008) 299 ITR 383 (Del) held: "Held, dismissing the appeals, that the only information was that the assessee had taken a bogus entry of capital gains by paying cash along with some premium for taking a cheque for that amoun....
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....n calculating the interest. For the asst. yr. 1972-73, the accounting year of the assessee was the calendar year ending on 31st Dec., 1971. The assessee paid advance tax of Rs. 19,30,000 upto 15th Dec., 1971, and paid Rs. 6,01,750 in March, 1972, that is to say, after the expiry of its accounting year but before the end of the financial year. The ITO charged interest on the assessee under s. 215. He also started reassessment proceedings on the ground that benefit under s. 80G was granted in excess. In reassessment proceedings, the ITO did not find any merit in the said two grounds but made addition on some other ground. The Tribunal took into account the payment of advance tax after the end of the accounting year but before the end of the financial year and held that no interest was payable by the assessee under s. 215. It also held that the grounds on which the reassessment notice was issued were non-existent and cancelled the reassessment. On a reference: Held, (i) that the Tribunal was right in cancelling the reassessment as both the grounds on which the reassessment notice was issued were not found to exist and therefore, the ITO did not get jurisdiction to make a reasses....
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....roduced by the assessee in his books of accounts in the form of cash creditors. To assess this income it is, therefore, necessary to issue notice under s. 148 of the Act. Accordingly notice is issued." 9. Considering the facts of the case noted above in the light of the provisions of s. 147 of the Act and the reasons recorded for reopening of the assessment, it is clear that the reopening of assessment in the matter is clearly unjustified and bad in law. The necessary ingredients of s. 147 of the Act are that the AO has reason to believe that any income chargeable to tax has escaped assessment for any assessment year. In the reasons recorded, the AO nowhere mentioned if he has reason to believe that any income chargeable to tax has escaped assessment. The AO merely recorded that on the basis of the seized material it was revealed that there are unexplained cash credits recorded in the books of accounts and referred to an order passed under s. 132(5) of the Act. The learned counsel for the assessee filed copy of the order passed under s. 132(5), dt. 26th Feb., 1993 in which the AO has nowhere recorded about unexplained credits for the asst. yr. 1989-90. It would therefore clearly....