TaxTMI 
TaxTMI 
2008 (9) TMI 459
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....d during the course of assessment proceedings. 5. That in any case the AO has erred in law and on facts while making the addition of Rs. 22 50,241 and charging interest under ss. 234B and 234C." 3. Briefly stated, the facts of the case are that the assessee is a jeweller. There was a survey under s. 133A of the IT Act, 1961 on 22nd Jan., 1999. During the course of survey following discrepancies were noticed: ------------------------------------------------------------- Particulars Found on Reflected as per Difference physical books of verification account/trading account as on &....
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.... from 6,079.500 gms. relatives Impurity 911.900 gms. 5,167.600 gms. -------------- Gold as per trading account 376.940 gms. 5,544.540 gms. -------------- Unexplained stock 2,792.935 gms. ....
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....umar Jain Rs. 5,00,000 Shri Rajnish Kumar Jain Rs. 3,00,000 Smt. Rajni Jain W/o Shri Rajnish Jain Rs. 3,00,000 -------------- Total : Rs. 14,00,000 -------------- I shall pay advance tax or surrender amount before the due date. ....
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....sp; 22-1-1999 ------------------------------------------------------------- 1 2 3 4 ------------------------------------------------------------- Cash Rs. 1,58,940 Rs. 3,080 Rs. 1,55.860 Gold 9,745.265 gms. 376.940 gms. 9,368.325 gms. ornaments Silver 7,000 gms. 4,605.560 gms. 2,384.440 gms. ------------------------------------------------------------- During the course of survey, Shri Rajnish Kumar, partner, stated that stock found during the survey included gold ornaments, weighing 6,079.500 gms. belonging to his relatives and friends....
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....bsp; -------------- This excess stock was surrendered in the following hands: Firm 962.270 gms. Shri Rajnish Kumar, partner 686.500 gms. Shri Sunit Kumar Jain, partner 686.500 gms. Smt. Rajni Jain W/o Shri Rajnish Kumar 457.665 gms. -------------- ....
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.... In the reopening assessment, the addition was made towards unexplained stock of gold at Rs. 22,58,241. On appeal, the learned CIT(A) confirmed the order of the AO. Further aggrieved, the assessee is in appeal before us. 4. The learned counsel for the assessee submitted that the assessee at the time of original assessment gave full details and answers to the queries made for the purpose of assessment. The AO vide letter dt. 15th Oct., 2000 asked for various clarifications for which the assessee has furnished details as follows: "Sir, Respectfully submitted as under: 1. Survey under s. 113A was conducted on the premises of the above noted assessee on 22nd Jan., 1999. The following assets were found at the time of survey: (a) Gold ornaments 9,745.265 gms. (b) Silver 7 kgs. (c) Cash Rs. 1,58,940 2. That the following explanation was submitted Regarding stock of gold Gold ornaments as per physical verification Gross &nbs....
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....nbsp; -------------- 3,169.875 gms. -------------- Gold as per trading account as on 21-1-1999 lying stock 376.940 gms. &....
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....bsp; Difference Rs. 1,55,860 -------------- That total difference between books and physical (a) Gold weight 2,792.935 gms. @ Rs. 437 Rs. 12,20,512 (b) Silver weight 2,394.440 gms. @ Rs. 7 Rs. 16,791 (c) Cash Rs. 1,55,860 -------------- &nbs....
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....; Rs. 14,00,000 ------------- After accepting the offered income, once again the reopening of the assessment amounts to change of opinion. Further, he submitted that the additional income is offered on agreed basis and the assessee has not withheld any information to the Department during the course of original assessment and the AO has completed assessment under s. 143(3) and examined the issue from all angles and concluded that the issue cannot be raked up again and again in the guise of assessment. He submitted that all the aspects emerging from the reasons recorded by the successor officer for initiation of reassessment proceedings had been considered in the original assessment proceedings and the initiation of assessment proceeding is invalid and cannot be sustained because there was nothing but a change of opinion because of change of the officer. He submitted that on the same set of facts and laws....
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....aneous sources and there is no fresh material with the AO for reopening the assessment. Further, he relied on the following judgments: (i) In the case of CIT vs. Amritsar Swadeshi Woollen Mills (1989) 180 ITR 144 (P&H); (ii) In the case of CIT vs. Laxmi Pat Singhania (1992) 194 ITR 75 (All); (iii) In the case of CIT vs. Kelvinator of India Ltd. (2002) 174 CTR (Del)(FB) 617 : (2002) 256 ITR 1 (Del)(FB); (iv) In the case of CIT vs. Foramer France (2003) 185 CTR (SC) 512 : (2003) 264 ITR 566 (SC). 4.1 Further, he relied on the decision of Tribunal, Amritsar Bench, in the case of Smt. Poonam Rani vs. AO in ITA No. 68/Asr/2004 for the asst. yr. 1998-99, order dt. 2nd June, 2005, wherein it has been held as under: "5. We have heard both the parties at some length and given our thoughtful consideration to the rival submissions with reference to facts, evidence and material on record. We find from the copy of the first assessment order placed at p. 24 of the paper book that this issue was examined in detail at the time of completing the first assessment under s. 143(3) on 18th Oct., 2000. The AO was fully aware of the fact that the assessee had not completed construction ....
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....ed that such an order has been passed on application of mind. It is well known that a presumption can also be raised to the effect that in terms of cl. (e) of s. 114 of the Indian Evidence Act, 1872, judicial and official acts have been regularly performed. If it be held that an order which has been passed purportedly without application of mind would itself confer jurisdiction upon the AO to reopen the proceeding without anything further, the same would amount to giving a premium to an authority exercising quasi judicial function to take benefit of its own wrong. Hence, it is clear that s. 147 of the Act does not postulate conferment of power upon the AO to initiate reassessment proceedings upon a mere change of opinion.' The ratio of this judgment is directly applicable to the facts of the present case. Here also, the AO was aware of the fact that the assessee had not yet completed the construction of house at the time of completing the assessment under s. 143(3). Still the AO allowed the claim for exemption under s. 54F by making an agreed addition of Rs. 50,000. The subsequent action of the AO for reopening the assessment on the basis of same facts and material was mere chan....
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....ent, if the AO has reason to believe that income has escaped from assessment. Under the amended provisions of s. 147, the AO can reopen the assessment for whatever reason, if he has reason to believe that income has escaped from assessment and even if it is within s. 147 of the IT Act. Further, he submitted that this case falls under s. 147(a) of the Act and the AO is justified in reopening the assessment. He relied on the judgment of Hon'ble Supreme Court in the case of Asstt. CIT vs. Rajesh Jhaveri Stock Brokers (P) Ltd. (2007) 210 CTR (SC) 30 : (2007) 291 ITR 500 (SC). He also relied on the orders of the authorities below. 5.1 Regarding affidavits, he submitted that these documents are afterthought and self-serving documents and need not to be considered. Hence, the same were not considered by the AO. 5.2 Regarding cross-examination of the assessee, it was submitted by the learned Departmental Representative that the affidavit was filed by the assessee at the time of reassessment proceedings. At the time of survey on 22nd Jan., 1999, it was submitted that the assessee was not in a position to identify the friends and relatives to whom excess jewellery belonged to. Even at ....
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....aires is placed on record: (i) Letter dt. 15th/16th Oct., 2000 received from the ITO, Ward 2(7), Amritsar, Annexs. D and D-I. (ii) Letter from the ITO, Ward 2(7), Amritsar, dt. 15th May, 2001, Annex. E. (iii) Letter addressed to Asstt. CIT, Amritsar, dt. 26th Feb., 2002, Annex. F. Further, there was observation by the AO made in the original assessment order dt. 26th June, 2002, which reads as under: "Questionnaire was issued in response to which proceedings were attended to by Shri Joginder Pal, accountant, Shri Rajnish, partner, in the company of Shri R.K. Malhotra, Advocate. Information called for from time-to-time has been furnished, which have been placed on records after verification. Books of account produced have been test checked and case discussed with them." After that the AO, has not made any addition towards excess stock of jewellery found during the course of survey. The AO formed an opinion that there was no reason for making further addition with regard to excess jewellery found during the course of survey. Notice of reopening was issued on 19th Oct., 2005. Sec. 147 does not confer jurisdiction to the AO to review its earlier proceedings. If that w....
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.... is erroneous and the AO has detected any mistake on the issue, which was earlier not considered by him. In the absence of such observation by the AO mere change of opinion cannot be the reason for reopening of the assessment. This is not the case of non-assessment of an item of income chargeable to tax in the original assessment. The policy of law is that there must be a point of finality in all legal proceedings, that stale issues should not be reactivated beyond a particular stage and that lapse of time must induce repose in and set at rest judicial and quasi judicial controversies as it must in other spheres of human activity. When once a final assessment has been made, it cannot be reopened except and insofar as provided in the Act. The essential principle as to the rule of finality of an assessment is that the AO cannot change his mood and try to reopen a closed state of affairs. But, if it is a case where the reopening is sought in consequence of information in his possession or even otherwise which leads to a reasonable belief that there has been an escapement and if that information is not the product of a change in his mood but is attributable to concrete material noticed....