TaxTMI 
TaxTMI 
2012 (12) TMI 901
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....o refusing to interfere with the re-opening of assessment, by the AO. 2. The year under consideration is 1995-96; the appellant had, during the period, received a gift worth Rs.31 lacs from an NRI, Shri Jagjit Singh Kochar. The gift was received by way of Cheque no. 522348 dated 09.09.1994 drawn from the donor's NRE A/c No. 19912012 with the Bank of America, New Delhi. The appellant deposited the cheque in her savings bank account, and the amount was subsequently used by her for opening a fixed deposit on 03.02.1995. The appellant filed a return of income under Section 139(1) of the Act declaring the total income of Rs. 2,32,130/-. The return was processed under Section 143(1)(a) of the Act on 29.02.1996. Thereafter, the ACIT, Circle 30(1), New Delhi initiated reassessment proceedings under Section 147 and issued notice dated 28.03.2002 under Section 148 of the Act. The appellant was examined by the A.O. on 10.03.2003. During the reassessment, the A.O. doubted the creditworthiness and genuineness of the gift. The gifts received by the appellant including Rs.31 Lacs from the NRE A/c of the Donor and the domestic gifts worth Rs.74,914/- were deemed to be her income and were added u....
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....ion of the Respondent falls foul of the law laid down by the Supreme Court in Chhugamal Rajpal which is clearly applicable to the facts of these appeals." 4. The appellant relied on the judgment of the Supreme Court in CIT v. Kelvinator of India Ltd., (2010) 2 SCC 723 wherein it was held that the Assessing Officer shall have the right to re-open assessment u/s 147 of the Act only if there is 'tangible material' to show that income has escaped assessment. The Assessing Officer shall not be allowed to arbitrarily re-open assessment. It was also urged that the notice served under section 148 of the Act is defective. 5. The Appellant further argued that the notice served by ACIT, Circle 30(1), New Delhi was without jurisdiction as it was ACIT, Circle 28 who had the jurisdiction. Thus, notice, which is the essential requisite for reassessment, was wrongly issued. The Appellant also contended that reliance placed on the provisions of Section 124(3) to uphold the validity of reassessment is erroneous. It was contended that the provisions of that section are inapplicable to the present case because the appellant is not challenging the jurisdiction of the ACIT, Circle 28(1), New Delhi bef....
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.... had been made by the A.O. u/s 68 of the Act was incorrect as she (the assessee) provided substantial evidence to prove the identity, creditworthiness and genuineness of the gifts received. Thus, the additions cannot be made under section 68 of the Act. It was held, on the strength of the ruling in CIT v. Lovely Exports P. Ltd. [2009] 319 ITR (SC.) It was submitted that the assessee had prima facie proved- (1) the identity of the donor; (2) the genuineness of the transaction, namely, that it was transmitted through banking channels; (3) the creditworthiness or financial strength of the donor All these constituted acceptable proof or acceptable explanation by the assessee. Thus, there was reasonable cause to make additions under section 68. 8. It was argued by the Appellant that she only had to prove prima facie the identity of the donor, the capacity of such donor to gift the money and lastly, the genuineness of the transaction. The Supreme Court has held in the case of Sreelekha Banerjee v. CIT 49 ITR 112 that it has always to be borne in mind that while considering the explanation of the assessee, the Department cannot act unreasonably. Respondent's Plea: 9. The Revenue co....
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....r Singh Sehgal v. ACIT (1997) 227 ITR 512 wherein the court has held that: "27. The court can examine the reasons only in a limited way. If any authority is required for this proposition one can have a look at the following decision of the apex court (ITO v. Lahkmani Mewal Das: [1976]103 ITR 437(SC) ), wherein the Supreme Court at pages 445 and 446 pointed out as follows : "Once there exist reasonable grounds for the Income Tax Officer to form the above belief, that would be sufficient to clothe him with jurisdiction to issue notice. Whether the grounds are adequate or not is not a matter for the court to investigate. The sufficiency of the grounds which induce the Income Tax Officer to act is, therefore, not a justiciable issue. It is, of course, open to the assessee to contend that the Income Tax Officer did not hold the belief that there had been such non-disclosure. The existence of the belief can be challenged by the assessee but not the sufficiency of the reasons for the belief. The expression 'reason to believe' does not mean a purely subjective satisfaction on the part of the Income Tax Officer. The reason must be held in good faith. It cannot be merely a pretence. It i....
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....urisdiction, i.e. whether it was that of ITO Ward 28 or 30 is concerned, the Court notices that the assessee understood her rights correctly, and filed the returns before the concerned officer. Also, the question was not urged earlier in the manner sought to be made out during these proceedings. Furthermore, it would be relevant to extract Sections 124(3)-(5) which provide a challenge procedure in such cases: "(3) No person shall be entitled to call in question the jurisdiction of an Assessing Officer- (a) where he has made a return [under sub-section (1) of section 115WD or] under sub-section (1) of section 139, after the expiry of one month from the date on which he was served with a notice under sub-section (1) of section 142 or [sub-section (2) of section 115WE or] sub-section (2) of section 143 or after the completion of the assessment, whichever is earlier; (b) where he has made no such return, after the expiry of the time allowed by the notice under [sub-section (2) of section 115WD or sub-section (1) of section 142 or under sub-section (1) of section 115WH or under section 148 for the making of the return or by the notice under the first proviso to section 115WF or under....
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....s from Shri Jagjit Singh Kochar and Smt. Rubinder Singh Kochar (NRIs) against the payments made in cash along with premium. The amount of the said bogus gifts is to be assessed in the hands of the assessee which amounts to Rs. 31,00,000/-. Under the circumstances I have reason to believe that the income chargeable to tax has escaped assessment. Issue Notice under Section 148." It is evident that the ACIT had merely recorded the fact of some information having been received from the ADIT (Inv) that the appellant had received bogus gift of Rs.31,00,000/-. In addition, there was no other material to indicate that the AO had applied his mind to the information, or made any further inquiries, to satisfy prima facie that he could act on the basis of the information. 16. This Court, in CIT v Atul Jain 293 ITR 383 held that: "The AO did not verify the correctness of the information received by him but merely accepted the truth of the vague information in a mechanical manner. The AO has not even recorded his satisfaction about the correctness or otherwise of the information or his satisfaction that a case has been made out for issuing notice under Section 148 of the Act. Read in this li....