TaxTMI 
TaxTMI 
2009 (8) TMI 802
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....umstances of the case as well as law on the subject, the learned CIT(A) has erred in confirming Rs. 56,200 as unexplained cash deposits when only deposit of Rs. 46,000 pertains to relevant assessment year. Remaining investments in deposits are either pertaining prior to 1st April, 1988 or after 31st March, 1989. 4. On the facts and in the circumstances of the case as well as law on the subject, the learned CIT(A) has erred in confirming the action of the AO in making audition of Rs. 78,795 being the loan amount given by the wife of the assessee to Pankaj Kumar & Brothers. 5. The appellant craves leave to add, alter or delete any ground either before or in the course of hearing of the appea1. 6. It is therefore prayed that above additions/disallowances made by the AO may please be deleted." ITA No. 4050/Ahd/2002: "1. On the facts and in the circumstances of the case as well as law on the subject, the learned CIT(A) has erred in not treating notice issued under s. 148 as invalid and illegal which was issued beyond 4 years in violation of proviso to s. 147 of the Act. 2. On the facts and in the circumstances of the case as well as law on the subject, the learned CIT(A) has erred....
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....the Act vide order dt. 26th March, 1992 on an income of Rs. 5,86,341. 4. Subsequently, the AO recorded the following reasons (as reproduced in the assessment orders) for reopening of the aforesaid assessments under s. 147 of the Act: Shri C.D. Singh "2. At the outset it is mentioned that a search operation under s. 132 of the IT Act was carried out at the business and residential premises of the assessee. During the course of search and seizure FDRs of Rs. 1,95,000 were found and seized as per Annex. 'O' to Panchnama dt. 2nd Sept., 1989. In his statement recorded under s. 132(4) of the IT Act in answer to question No. 61 the assessee stated that, the aforesaid FDRs were purchased in the name of his wife Smt. Ranidevi C. Singh and FDs of Rs. 5,000 purchased in the name of his daughter which was included in above said FDRs and same were purchased from his undisclosed income earned from his business and not reflected in the books of accounts. It is pertinent to mention that Smt. Ranidevi admitted in her statement recorded under s. 132(4) of the Act during the course of search and seizure operation in answer to question No. 7 that the FDs of Rs. 4,00,000 in Bank of Baroda, Kosamba h....
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....77,341. Thus, while finalizing the assessment the assessee's revised return was considered and the total income was assessed to Rs. 5,86,341 vide order, under s. 143(3) dt. 26th March, 1992. Subsequently, on verification of the details it is noticed that out of the total earth carting expenditure of Rs. 6,80,610 debited to P&L a/c filed along with the original return of income, it is noticed that in the revised return, the assessee after deducting the earth carting expenditure of Rs. 4,75,000 the balance amount of earth carting expenditure of Rs. 2,05,010 has been debited. Here, it is pertinent to mention on further verification of the records, it is noticed that all these expenses were paid to various persons in cash in violation to the existing provision of s. 40A(3) of the IT Act. Further in the statement recorded on oath under s. 132(4) of the IT Act during the search operation it was admitted by Shri C.D. Singh, one of the partners of the assessee in answer to question No. 57 that these payments were made out of the books of account as the same were not reflected in the cash book. Accordingly, as these expenditures were incurred by the assessee out of books of account the same....
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....from Kosamba Gram Panchayat about the floods filed is dated June, 1997 where as appellant claimed the same was in August, 1997. (6) Even when final show cause was given appellant has not attended before the AO. (7) No proof of any correspondence with the banks is submitted. It is thus observed that appellant was furnished full details why the case was reopened and he was fully aware that there was evasion detected but tried to stall/delay the proceedings on purpose. The reopening is thus seen to be correctly made." 7. Similarly in the case of M/s C.D. Singh & Sons, the learned CIT(A) held as under: "4. Appellant states there were no new facts with the Department and original assessment on 26th March, 1992 was completed after due diligence and taking into account all the material on record. Appellant relies on CIT vs. H.N. Shindore (1978) 113 ITR 679 (Bom), Sarogi Credit Corporation vs. CIT 1975 CTR (Pat) 1 : (1976) 103 ITR 344 (Pat), Dr. M.R. Dalal vs. CIT (1963) 49 ITR 492 (Bom) and CIT vs. Pranchand Bhandari (1984) 145 ITR 515 (Mad). However, AO is seen to specifically state why case was reopened in para 2 of the assessment order and the reopening is held to be valid." 8. T....
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....takes a different view subsequently and that too after expiry of 4 years from the end of the assessment year, that would not confer any jurisdiction on the AO to issue notice under s. 148 of the Act. The scope and effect of s. 147 as substituted w.e.f. 1st April, 1989, as also ss. 148 to 152 are substantially different from the provisions as they stood prior to such substitution. Under the old provisions of s. 147, separate cls. (a) and (b) laid down the circumstances under which income escaping assessment for the past assessment years could be assessed or reassessed. To confer jurisdiction under s. 147(a) two conditions were required to be satisfied-firstly the AO must have reason to believe that income, profits or gains chargeable to income-tax have escaped assessment, and secondly he must also have reason to believe that such escapement occurred due to reason of either omission or failure on the part of the taxpayer to disclose fully or truly all material facts necessary for his assessment of that year. Both these conditions were conditions precedent to be satisfied before the AO could have jurisdiction to issue notice under s. 148 r/w s. 147(a). But under the substituted s. 147....
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....e assessee's duty to disclose fully and truly all material facts necessary for assessment in the context of the provisions of s. 34 of the Indian IT Act, 1922, has been succinctly stated by the Supreme Court by their Lordships in Calcutta Discount Co. Ltd. vs. ITO (1961) 41 ITR 191 (SC). The Court observed: 'There can be no doubt that the duty of disclosing all the primary facts relevant to the decision of the question before the assessing authority lies on the assessee.' The Court further said: 'Does the duty, however, extend beyond the full and truthful disclosure of all primary facts? In our opinion, the answer to this question must be in the negative. Once all the primary facts are before the assessing authority, he requires no further assistance by way of disclosure. It is for him to decide what inferences of facts can be reasonably drawn and what legal inferences have ultimately to be drawn. It is not for somebody else-far less the assessee-to tell the assessing authority what inferences, whether of facts or law, should be drawn'." 9.1 Again in the case of Patidar Oil Cake Industries vs. Dy. CIT (2004) 190 CTR (Guj) 481 : (2004) 270 ITR 347 (Guj), Hon'ble High Court held:....
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.... Thereafter, a second appeal was filed by the assessee seeking further relief. The Tribunal partly allowed the appeal by ordering reduction in the estimate and also allowing deductions under s. 80G, etc. On 19th Feb., 1988, the AO passed an order determining the taxable income at Rs. 15,11,370. A month later, the successor AO issued a notice under s. 148 of the Act on the ground that the addition towards suppressed sales made by the ITO was less than the quantum of probable suppression having regard to the entries in the diary recovered at the time of search operations. The AO then concluded that by reason of failure to disclose fully and truly all material facts, the income chargeable to tax had escaped assessment and, therefore, he ordered issuance of notice under s. 148 of the Act. In these circumstances, Hon'ble High Court concluded that the initiation of reassessment proceedings under s. 147(a) is unwarranted and beyond the jurisdiction of the AO. The AO over-stepped his jurisdiction in seeking to make a reassessment as if nothing had happened earlier pursuant to the material seized during the search operations. It is not open to the assessing authority to go on resorting to r....