TaxTMI 
TaxTMI 
2013 (9) TMI 47
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....de the material available on record as well as the duly substantiated submissions of the assessee, therein most arbitrarily drew adverse inferences in the hands of the assessee and sustained the addition of Rs.4,05,000/- in the hands of the assessee. 5. That without prejudice to the aforesaid even otherwise the CIT(A) gravely erred in law and facts of the case and failed to appreciate that no addition as regards the impugned deposit aggregating to an amount of Rs.4,05,000/- in the Current account of the assessees bank account made by the AO u/s 69A of the Act could not sustained in the eyes of law. 6. That without prejudice to the aforesaid even otherwise the CIT(A) misconceived the facts of the case and failed to appreciate that even in light of the contentions of the AO, the addition of Rs.4,05,000/- so made by the latter could not be sustained in the hands of the assessee as such. 7. That the CIT(A) acting in gross violation of the 'Principles of Natural Justice" and 'Principle of equity and fairness, had sustained the assessment framed by the AO, not on the basis of any concrete material made available on record, but rather by resorting to mere assumptions, presumptions and ....
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....rity as contemplated u/s 151(2) while issuing Notice u/s 148 of the Act. 2. That the A.O. has gravely erred in law and facts of the case by framing assessment u/ss. 148/143(3) of the Income Tax Act, 1961 without issuing a notice u/s 143(2) of the Act." 5. The Ld. counsel for the assessee, Mr. Ravish Sud, Advocate submitted that the grounds of appeal involved purely a question of law on the basis of facts available on record and therefore, in view of the decision of Hon'ble Supreme Court in the case of National Thermal Power Co. Ltd. vs. CIT (1998) 229 ITR 383(SC), additional grounds of appeal be admitted for adjudication. 6. The Ld. JCIT(DR), Mr. Mahavir Singh, on the other hand objected to the raising of the said grounds since these grounds were not taken at the commencement of the assessment proceedings. 7. We have heard the rival contentions and perused the facts of the case. The grounds before us in the form of additional grounds are legal grounds and therefore, the same are admitted in view of the decision of Hon'ble Supreme Court in the case of National Thermal Power Co. Ltd. vs. CIT (supra) for both the years in the appeals before us. 8. Now, we take up the appeal of th....
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....f ATM International. A perusal of current a/c no.681 with Oriental Bank of Commerce, Garha Road, Jalandhar of M/s. Meghna Impex (placed on filed) reveals that an amount of Rs.1,27,75,000/- has come into the Bank a/c No.328 of M/s. Supreme Industries, Jalandhar through clearing with State Bank of Bikaner & Jaipur, Adda Bastian, Jalandhar. This firm M/s. Supreme Industries, Jalandhar is the proprietary concern of Sh. Gurkirpal Singh. During the course of assessment proceedings in the case of Sh. Satbir Singh, prop M/s. Meghna Impex statement of Sh.Satbir Singh the prop. Was also recorded by the ITO III(2), Jalandhar wherein he reiterated the facts regarding his signing the blank cheque books of both the banks and giving these cheques to the assessee and his associate Sh. Ashok Kumar who managed the show. He was simply a paid employee of the office of Sh. Pavitar Singh CA. The ITO III(2), Jalandhar intimated during the course of assessment proceedings in the case of Meghna Impex that money had been withdrawn from the Bank account of Meghna Impex with Oriental Bank of Commerece and transferred to bank account No.328 of M/s. Supreme Industries. The detail of these transactions is given....
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....ssessee were disposed off by this office as under: 1. It is incorrect to say that the proceedings u/s 147 have been initiated merely on the basis of information form the Customs Authority . Statement of Sh.Satbir Singh so called prop. Of M/s. Meghna Impex was recorded on 21.5.2002 by the ITO -III(20, Jalandhar. While replying to Q.No.8 Sh.Satbir Singh so called prop. Of M/s. Meghna Impex stated that Sh. Gurkirpal Singh was also doing the business with Sh. Ashok Kumar. Sh. Gurkirpal Singh also got signed some blank cheque from me of State Bank of Bikaner & Jaipur as he was running his accounts with his bank. Again in answer to Q.No.10 he deposed that both Sh. Ashok Kumar and Sh. Gurkirpal Singh were doing withdrawals and deposits in the State Bank of Bikaner & Jaipur account. They can tell about the transactions in these accounts. Statement of Sh.Satbir Singh so called prop. of Meghna Impex was also recorded by the Income Tax Officer, Ward III(2), Jalandhar on 31.5.2002 which Sh.Satbir Singh admitted that Sh. Ashok Kumar of ATM International and Sh.Gurkirpal Singh were close friends. The entire transactions in the bank account of M/s. Meghna Impex (CA No.681) with Oriental Bank of ....
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..../- has gone into your bank a/c and you are individually responsible to explain the same. As no explanation regarding this deposit in your account has been furnished by you, it is to be assessed in your hands as your income in you individual capacity. M/s. Supreme Inds. Is your proprietory concern. There is no question of AOP/Partnership firm. As such reasons have been recorded with proper application of mind. The proceedings u/s 147 had been initiated validly as stated supra and during the course of asstt. Proceedings the assessee has not furnished any satisfactory reply to the source of deposits in his bank a/c No.328 with State Bank of Bikaner & Jaipur, Adda Bastian, Jalandhar amounting to Rs.1,27,75,000/- and the reason why this amount of Rs.1,27,75,000/- was transferred by M/s. Meghna Impex to the account of the assessee has not been explained. The assessee during the proceedings stated that his cheque books was stolen and he had lodged a complaint with the Police Station in this regard. This contention of the assessee is not relevant to the source of credit entry of Rs.1,27,75,000/- in his bank account. In the absence of any satisfactory reply filed by the assessee during the....
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....before the Customs Authorities that export proceeds were arranged through Hawala channels from India to Dubai and remitted back into the account of Meghna Impex as export proceeds. The bills were over-invoiced to get such remittance back into India. The money was withdrawn from the account of M/s. Meghna Impex and these were given to the Hawala Operator in India. Based on this information, the AO found the belief that the money transferred from the bank account of Meghna Export to the bank account of Supreme Inds. Prop. Sh. Gurrkirpal Singh represented his income which had escaped assessment. 2.1. On a consideration of the reasons recorded, I am of the view that the AO had prima facie material to believe that income of the assessee had escaped assessment for the relevant assessment years. Ground No.1 of appeal is, therefore, rejected." 13. As regards the addition of Rs.1,27,75,000/-, the Ld. AR appearing on behalf of the assessee filed written submissions which are reproduced at pages 4 to 8 of his order in para 1.5 which were forwarded to the A.O. for his comments and the A.O. submitted the comments which are available in para 1.6 and the counter comments and the rejoinder etc. ....
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....without raising any objection with regard to non-issuance of notice u/s 143(2) of the Act and therefore, such objection cannot be raised before the Tribunal and the same is liable to be dismissed. 16. We have heard the rival contentions with regard to the legal issue and perused the facts of the case. As regards the additional ground No.1, the ground taken by the assessee was that notice u/s 148 cannot be issued without obtaining sanction of the appropriate authority as contemplated u/s 151(2) of the Act. The Ld. DR has placed on record the said sanction and has strongly objected to that the assessee should not take such ground without consulting the assessment record. On perusal of the sanction taken u/s 151(2) of the Act before issuance of notice u/s 148, we are of the view that the ground has been taken by the assessee without consulting the assessment record, which in fact, should not have been taken. In any case, there is no violation as contemplated u/s 151(2) of the Act and the additional ground No.1, so raised is dismissed. 17. As regards additional ground No.2 , where the assessee has alleged that the A.O. has erred in law and facts of the case by framing assessment u/s ....
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....ere, although the tribunal had jurisdiction to enter on the enquiry it has done or failed to do something in the course of the enquiry which is of such a nature that its decision is a nullity. It may have given its decision in bad faith. It may have made a decision which it had no power to make. It may have failed in the course of the enquiry to comply with the requirements of natural justice. It may in perfect good faith have misconstrued the provisions giving it power to act so that it failed to deal with the question remitted to it and decided some question which was not remitted to it. It may have refused to take into account something which it was required to take into account. Or it may have based its decision on some matter which, under the provisions setting it up, it had no right to take into account. I do not intend this list to be exhaustive." In the same case, Lord Pearce said "Lack of jurisdiction may arise in various ways. There may be an absence of those formalities or. things which are conditions precedent to the tribunal having any jurisdiction to embark on an ,enquiry. Or the tribunal may at the end make an order that it has no jurisdiction to make. Or, in the i....
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....d there is no yardstick to determine the magnitude of the error other than the opinion of the Court." 17.5. The aforesaid principle of law with greatest respect we are bound to follow. 17.6. Even as per records before us, it has been noticed that the assessee has been diligent in pursuing the remedy available through attending to the case proceedings before the AO and it is a settled law that objection regarding jurisdiction be raised at the earlier possible opportunity. Thus, there is no reason for coming forward for the assessee waiting for such long for raising said objection (legal ground) after completion of reassessment. Another issue to be addressed is that challenge is not to the continuation of proceedings by the A.O. whereas the purpose of issuance notice u/s 143(2) of the Act cannot be lost sight and we are supported by the principle of law as noticed in the case of Dhirendra Nath Goari ( In CA No.85 of 1961), Subal Chandra Nath Saha And Others ( In CA No.86 of 1961) vs. Sudhir Chandra Ghosh And Others (1964) 6 SCR 1001 : AIR 1964 SC 1300. In para-7 where the difference between a 'nullity' and an 'irregularity' has been noticed, which has been extracted hereinbelow: "....
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....ed by the legislature simply for the security or benefit of the parties to the action themselves, and that no public interests are involved, such conditions will not be considered as indispensable, and either party may waive them without affecting the jurisdiction of the court." 17.7 Having noticed material facts, we consider it appropriate with great respect in accordance with the principle of law that at the most the present kind of grievance is 'merely an error within jurisdiction', which can be determined only by construing the empowering statute, which will give guidance on the subject and in the present case. Further we are supported by the decision of ACIT vs. Hotel Blue Moon decided by the Hon'ble Supreme Court reported in (2010) 321 ITR 362 dated 2nd Feb., 2010. Thus, the purpose is to give opportunity to the assessee for bringing to the knowledge the proceedings being undertaken in accordance with law which too has been done by the A.O. The relevant part of the decision in the case of ACIT & Anr. Vs. Hotel Blue Moon reported in (2010) 321 ITR 362 (SC) in para 15 is reproduced as under: "But s. 143(2) itself becomes necessary only where it becomes necessary to check the ....
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....s. 153BC(b), the issue of notice is not mandatory but optional and are to be applied to the extent practicable. In support of that contention, the learned counsel has relied on the observation made by this Court in Dr. Partap Singh's case (supra). In this case, the Court has observed that s. 37(2) provides that "the provisions of the Code relating to searches, shall so far as may be, apply to searches directed under s. 37(2). Reading the two sections together it merely means that the methodology prescribed for carrying out the search provided in s. 165 has to be generally followed. The expression "so far as may be" has always been construed to mean that those provisions may be generally followed to the extent possible. The learned counsel for the respondent has brought to our notice the observations made by this Court in the case of Maganlal v. Jaiswal Industries & Ors. [1989] 4 SCC 344, wherein this Court while dealing with the scope and import of the expression "as far as practicable" has stated "without anything more the expression 'as far as possible' will mean that the manner provided in the code for attachment or sale of property in execution of a decree shall be applicable i....
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.... (ITA 292 of 2008) decided on 3.5.2011. 10. We find considerable force in the submission of the learned counsel. The Kerala High Court in K.J.Thomas's case (supra), while considering similar issue, had held as under: "The procedure under S. 143(2) of the Act is to ensure that an adverse order is issued only after proper opportunity is given to the assessee. In this case, it is conceded that the assessee got opportunity to file reply and detailed reply was in fact filed and reassessment notice and final order were also issued within the time- limit prescribed under the Act." 11. Further, this Court in M/s Panchwati Motor (P) Ltd.'s case (supra) while examining the scope of Section 292 BBof the Act and its applicability had noted as under: "Section 292BB of the Act was inserted by Finance Act, 2008 w.e.f. 1.4.2008. It reads thus:- "292BB: Where an assessee has appeared in any proceeding or co-operated in any inquiry relating to an assessment or reassessment, it shall be deemed that any notice under any provision of the Act, which is required to be served upon him, has been duly served upon him in time in accordance with the provisions of this Act and such assessee shall be precl....
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....w. " 20. Accordingly, under the aforesaid facts and circumstances of the case and the decisions of the Hon'ble Courts referred to hereinabove, we are bound to follow the decision of the Hon'ble Punjab & Haryana High Court in the case of CIT vs. Ram Narain Bansal (supra), which is directly on the question involved in the present case and the decisions as relied upon by the ld. counsel for the assessee are not directly on the issue, do not support the case of the assessee. Thus, in view of the above discussions and our findings hereinabove, we dismiss additional ground No.2 raised by the assessee. 21. As regards ground No.2, though the same has not been argued by the ld. counsel for the assessee but on the facts and circumstances of the case, we concur with the views of the ld. CIT(A) in para 2 & 2.1 who has rightly dismissed the said ground which has been taken before the ld. CIT(A) as well. We find no infirmity in the same. Thus, ground No.2 of the assessee is dismissed. 22. As regard grounds on merit i.e. grounds No. 2 to 7, the ld. counsel for the assessee argued on the same lines, as submitted before the ld. CIT(A) and the ld. DR, on the other hand, relied upon the orders of ....
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....d been appreciated by the other such authorities before whom the proceedings as regards the aforesaid issue are going on. Thus, to be brief and explicit, the aforesaid facts therein itself establishes the bonafides of the assessees contention that the latter was not in any way connected but through out remained unaware of such misuse of his Bank a/c by certain third parties. The AO acted most arbitrarily and despite appreciating that the said Meghna Impex was owned by Sh. Satbir Singh, wherein the latter not only held the aforesaid A/c No.681 with a Nationalised Bank i.e. Oriental Bank of Commerece, Jalandhar but rather was holding all the licences and registrations as are required for effecting the 'Exports', with different departments/government authorities and had consistently been carrying out 'Exports'( as had been gathered by the assessee on perusal of the latter persons Bank a/c as is so available on assessment record, reflecting credit of 'Export sale proceeds' in the said latter persons Bank a/c). Thus, the approach of the A.O. in going by the impugned statement of the said Sh.Satbir Singh wherein the latter, merely in order to save his skin had falsely implicated the asse....
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....prejudice to the aforesaid, it even otherwise be submitted that in light of the findings of the AO that all the amounts credited in the A/c 328 of the assessee stood withdrawn on the same date, addition of the entire amount could even otherwise, could not have been made in the hands of the assessee. That without prejudice to the aforesaid contentions, it was further submitted that no addition could have been made in the hands of the assessee u/s 69A of the Act, as regards the amounts as stood deposited in the A/c No.328 of the assessee because the said section in light of facts of the case is not applicable to the case of the present assessee. The said section 69A reads as under: 69A Unexplained money, etc. Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the [A....
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....t be sustained in the eyes of law. 24. In the remand report, the AO vide para 1.6 has submitted that Meghna Impex is dummy concern floated by Sh. Gurkirpal Singh, Sh.Ashok Kumar and Sh. Pavitar Singh CA. Bank Account was opened in the name of Sh. Satbir Singh an employee of the C.A. and blank cheques were go signed from Sh. Satbir Singh by these persons. For the sake of convenience, we reproduce the said remand report in para 1.6 of CIT(A) as under: "The asstt. proceedings were initiated on the basis of information from the customs Department and subsequently from the Additional CIT, Range-3, Jalandhar that a dummy concern in the name of M/s. Megna Impex was floated by S/Sh.Gurkirpal Singh, Ashok Kumar and Sh. Pavitar Singh CA Bank account was opened in the name of Sh.Satbir Singh an employee of the C.A. Bank cheques were got signed from Sh. Sabir Singh by these persons Sh.Satbir Singh revealed before the customs Department that timing/crank shafts were never procured and there was no question of their Export. Fictitious bills were raised and DEPBs of Rs.1.85 crores were availed fraudulently. These DEPBs were later on cancelled ab initio void by the DGFT Ludhiana. The DEPBs fraud....
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....account of M/s. Megna Impex is the one where the deposits were fraudulent or otherwise taken but not by one person but by three persons alongwith Sh. Satbir Singh. On the statement of Sh.Satbir Singh before the Custom Authorities, it has been admitted that the firm Megna Impex was floated by the said persons. Therefore, the money in M/s. Megna Impex belongs to the association of these persons. The assessee has time and again before the A.O. and before the ld. CIT(A) which is part of the assessment order and the order of the ld. CIT(A) has submitted that some cheque books have been stolen and have been misused by some unscrupulous elements of the society for the reasons best known to them for which the assessee most unfortunately is ignorant and as soon as the assessee learnt of the said theft and misuse of the cheque books, he immediately lodged a complaint with the Police Authorities which is a matter of record, which fact has been brought to the notice of the various authorities before whom proceedings have been going on, for the said misuse of the bank account and with regard to the deposits and withdrawals, the assessee has not found the said bank account has been explained tim....
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.... them void ab initio and penalty of Rs.2 crores was imposed. The said facts are as per report of the A.O. available in para 1.8 of CIT(A)'s order. 26. Therefore, the in facts and circumstances of the case, the ld. CIT(A) is not justified in taxing the said deposits in the hands of the assessee and no addition of Rs.1,27,75,000/- is required to be made in view of our findings hereinabove and the same is directed to be deleted. 27. Also on identical facts, assessment was made in the hands of Sh. Ashok Kumar one of the co-owners of said M/s. Meghna Impex. As stated the addition of 40% from the withdrawals of bank account of M/s. Meghna Impex, as estimated income by the AO, was added. 28. It is pertinent to mentioned here that the ld. CIT(A) has deleted the said addition in his order in appeal No.140/04-05/CIT(A)/Jal dated 30.11.2004. It has been argued and pleaded by the ld. DR that the said order is in appeal before the ITAT, Amritsar Bench, but no reference of the same order or of ITAT, Amritsar was placed on record before us. The Ld. CIT(A) in the case of Sh. Ashok Kumar has held that number of persons appeared to be involved in M/s. Meghna Impex including M/s. Supreme Industrie....