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2014 (10) TMI 459
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....hese seized documents, the AO has estimated income of the assessee (appellant) from property business at Rs. 13,11,200 and unexplained investment in property at Rs. 15,00,000 totaling to Rs. 28,11,200/-. But the then ld. CIT(A) deleted this addition in his order dated 20.05.2009 and this decision of the then ld. CIT(A)-I has been further confirmed by the Hon'ble ITAT Agra vide its order dated 21st April, 2011. Meanwhile, the assessment proceeding of the assessee (appellant) has been reopened u/s.147 after recording reason to believe on 10.09.2009 and the same is reproduced as under: "A search was conducted at the premises of the assessee on 16.09.2004 in which several books of account, documents etc. was seized including Annexure A-1. Annexure A-1 is a binded ledger which contains details of expenditure made by the assessee in various properties. In this book, property wise ledger account has been maintained and amount and dates of making payments in respect of each property is clearly mentioned. Such details contain payment made towards purchase of land, stamp, dalali expenses, registration expenses and construction expenses. The details of expenditure made as per entries in th....
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....y assessee in her returns for relevant years. Thus, the quantum of undisclosed expenditure relating to A.Y. 2004-05 comes to Rs. 37,92,600/- and relating to A.Y. 2005-06 comes to Rs. 58,25,000/-, both aggregating to Rs. 96,17,600/-. The assessments for relevant A.Ys. were made u/s.153A & 143(3) respectively. During course of assessment proceedings, the assessee was asked to prove the source of expenditure as mentioned in Annexure A-1. But no specific reply was given by her nor source of expenditure was otherwise explained. However, the assessments for the A.Y. 2004- 05 & 2005-06 in the case of the assessee were made on 29.12.2006 at income of Rs. 5,10,630/- & Rs. 33,05,640/- respectively. In the A.Y. 2004-05, no addition on a/c of unexplained expenditure in properties was made neither any finding was given to suggest that expenditure was explained by assessee or otherwise found to be explained. However, in A.Y. 2005-06 addition of Rs. 13,11,000/- was made on account of unexplained expenditure / investment in property and addition of Rs. 15,00,000/- on account of extra profit from contract business. In the assessment order also, no specific finding has been given that the expe....
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....as filed by the assessee. He has further discussed in the reasons recorded that any evidence of taking loans by the assessee is also not there on record, nor from perusal of reply of the assessee, the same appears to be furnished. He has also discussed that on examination of record including seized material, no evidence or explanation to justify the source of expenditure of Rs. 96,17,600/- is found and thus, in his view, at the most, addition of Rs. 13,11,000/- was only made on account of unexplained expenditure as against total expenditure of Rs. 96,17,600/- made during A.Y. 2004-05 and A.Y. 2005-06 in the above properties and therefore, he recorded his satisfaction that the income to the extent of Rs. 45,14,000/- for the impugned assessment year has escaped assessment on account of unexplained expenditure in properties and such unexplained expenditure is income of the assessee under the provision of section 69C of the I.T. Act, 1961. After recording the above reasons to believe for reopening of the assessment proceeding for the assessment year under consideration, a notice u/s.148 was issued to the assessee on 30.03.2010 and the same was sent by post on 31.03.2010. Thereafter, af....
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....essee on the basis of which the quantum of undisclosed investment comes to Rs. 96,17,600/- Annexure A-1 / Page no.8 Page no.21 & 22 Rs. 14,81,000, Rs. 13,42,600, Rs. 19,00,000 Page no.30 & 31 Rs. 14,11,000, Rs. 34,80,000 Total Rs. 96,17,500 No such payments / expenditure as mentioned above is shown by assessee in her returns for relevant years. Thus, the quantum of undisclosed expenditure relating to A.Y. 2004-05 comes to Rs. 37,92,600/- are relating to A.Y. 2005-06 comes to Rs. 58,25,000/-, both aggregating to Rs. 96,17,600/-. The assessment for relevant A.Y. was made u/s.143(3) of the I.T. Act, 1961. During course of assessment proceedings, the assessee was asked to prove the source of expenditure as mentioned in Annexure A-1. But no specific reply was given by her nor was source of expenditure otherwise explained. However, the assessment for the A.Y. 2005-06 in the case of assessee was made on 29.12.2006 at income of Rs. 33,05,640/-. However, in A.Y. 2005-06 addition of Rs. 13,11,200/-was made on account of unexplained expenditure / investment in property and addition of Rs. 15,00,000/- on account of unexplained investment. In the assessment ....
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....ssessment and additions before the ld. CIT(A). The written submissions of the assessee are reproduced in the appellate order in which the assessee briefly explained that the search was conducted on the assessee on 16.09.2004. The assessee filed return of income showing an income of Rs. 4,30,737/-. Subsequently, the assessment was completed u/s. 143(3) vide order dated 29.12.2006. The AO at page No. 2, para 3 of the original assessment order has discussed and analyzed about the investments made by the assessee on the basis of papers/material found at the time of search. The AO while framing the original assessment order asked the assessee to explain the source of investment pertaining to the year under consideration on the basis of pages of Annexure A1 regarding properties at Bayu Vihar, Patholi (Rs.14,84,000/-), advance for Rahul Vihar (Rs.8,61,000/-) and land at Vaibhav Kunj, Dayalbagh, Agra (Rs.34,80,000/-). The assessee also filed explanations regarding the investments made together with source thereof. The assessee filed ledger accounts to explain the issue. It is, therefore, abundantly clear that the original assessme....
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....going through the changes, quoted above, made to section 147 of the Act, we find that, prior to Direct Tax Laws (Amendment) Act, 1987 , re- opening could be done under above two conditions and fulfilment of the said conditions alone conferred jurisdiction on the Assessing Officer to make a back assessment, but in section 147 of the Act [with effect from 1-4-1989], they are given a go-by and only one condition has remained, viz., that where the Assessing Officer has reason to believe that income has escaped assessment, confers jurisdiction to re-open the assessment. Therefore, post 1-4-1989 , power to reopen is much wider. However, one needs to give a schematic interpretation to the words "reason to believe" failing which, we are afraid, section 147 would give arbitrary powers to the Assessing Officer to re-open assessments on the basis of "mere change of opinion", which cannot be per se reason to reopen. We must also keep in mind the conceptual difference between power to review and power to re-assess. The Assessing Officer has no power to review; he has the power to reassess. But reassessment has to be based on fulfilment of certain pre-condition and if the concept of "change of o....
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....not examine a particular issue and in this respect, it has been held that it can be apparent and obvious to hold that the AO would not have gone into the said question or applied his mind, however, it has been clarified that this would depend on facts and circumstances of each case. For the sake of clarity, I am reproducing the relevant portion of the decision of Hon'ble Delhi High Court having majority view of full Bench in the above referred case of Usha International Ltd.: Conditions for reopening assessment * For reopening an assessment made under section 143(3), the following conditions are required to be satisfied:- The Assessing Officer must form a tentative or prima facie opinion on the basis of material that there is under-assessment or escapement of income; He must record the prima facie opinion into writing; The opinion formed is subjective but the reasons recorded or the information available on record must show that the opinion is not a mere suspicion. Reasons recorded and/or the documents available on record must show a nexus or that in fact they are germane and relevant to the subjective opinion formed by the Assessing Officer regarding escapement o....
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....n. In such cases there is no change of opinion? Reassessment proceedings will be invalid in case the assessment order itself records that the issue was raised and is decided in favour of the assessee. Reassessment proceedings in the said cases will be hit by principle of 'change of opinion'. Reassessment proceedings will be invalid in case an issue or query is raised and answered by the assessee in original assessment proceedings but thereafter the Assessing Officer does not make any addition in the assessment order. In such situations it should be accepted that the issue was examined but the Assessing Officer did not find any ground or reason to make addition or reject the stand of the assessee. He forms an opinion. The reassessment will be invalid because the Assessing Officer had formed an opinion in the original assessment, though he had not recorded his reasons. [Para 13] * In the second and third situation, the revenue is not without remedy. In case the assessment order is erroneous and prejudicial to the interest of the revenue, they are entitled to and can invoke power under section 263. [Para 14] * Thus, where an Assessing Officer incorrectly or erroneo....
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....easons must be relevant to subjective opinion * As recorded above, the reasons recorded or the documents available must show nexus that in fact they are germane and relevant to the subjective opinion formed by the Assessing Officer regarding escapement of income. At the same time, it is not the requirement that the Assessing Officer should have finally ascertained escapement of income by recording conclusive findings. The final ascertainment takes place when the final or reassessment order is passed. It is enough if the Assessing Officer can show tentatively or prima facie on the basis of the reasons recorded and with reference to the documents available on record that income has escaped assessment. [Para 19] Deemed formation of opinion * Even if the Assessing Officer did not examine a particular subject matter, entry or claim/deduction and therefore had not formed any opinion, it must not be presumed that he must have formed an opinion. This is not what was argued by the assessee or held and decided. There cannot be deemed formation of opinion even when the particular subject matter, entry or claim/deduction is not examined. [Para 23] * Distinction between disclosure o....
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....t is a case of no opinion. [Para 25] * The aforesaid have not to be read in isolation but are to be read with caveat set out above. Whether or not the Assessing Officer had applied his mind and examined the subject matter, claim, etc. depends upon factual matrix of each case. The Assessing Officer can examine a claim or subject matter even without raising a written query. There can be cases where an aspect or question is too apparent or obvious to hold that the Assessing Officer did not examine a particular subject matter, claim etc. The stand and stance of the assessee and the Assessing Officer in such cases are relevant. [Para 27] General provision * Section 114 of the Indian Evidence Act is a general provision dealing with presumption of facts, inferences drawn from facts, patterns drawn from experience and observations based upon habits of the society, human action, usages and ordinary course of human affairs and conduct. The presumption is no evidence or proof. It only shows on whom the burden of proof lies. Section 114 is permissive and not a mandatory provision. Nine situations by way of illustrations are stated. These are by way of example or guidelines. As a permi....
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....s including papers filed and submitted with the return and during the original proceedings are relevant and material. Sometimes application of mind and formation of opinion can be ascertained and gathered even when no specific question or query in writing had been raised by the Assessing Officer. The aspects and questions examined during the course of assessment proceedings itself may indicate that the Assessing Officer must have applied his mind on the entry, claim or deduction etc. It may be apparent and obvious to hold that the Assessing Officer would not have gone into the said question or applied his mind. However, this would depend upon the facts and circumstances of each case. [Para 39] 11. In the above decision, it can be seen that under the heading "crux of the issue", it has been held by the Full Bench that re-assessment proceeding will be invalid in case, the assessment order itself records that the issue was raised and it is decided in favour of the assessee and re-assessment proceeding in the said cases will be hit by the principle of "change of opinion". Under the same heading of the judgement, it has also been held that re-assessment proceeding will be invalid in ....
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....was examined. After examining of these investments in properties and taking into account the explanation given by the assessee(appellant) at the time of original assessment proceeding that she does not keep/prepare books of account relating to her business / profession and computerized copy of ledger account has been made on the basis of transaction recorded in bank statement and also taking into account the details of payments being made for purchase of various lands and taking of loans from time to time from family members for purchase of these lands, the AO has held that on the basis of these information given by the assessee during original assessment proceeding, the full details about the receipts on sale of these lands relating to the business of the assessee are not available and, therefore, he has further held that even if it is assumed that the assessee has made investment for purchase of properties out of her business, he has estimated the total receipt from construction business at Rs. 2 crore on which, he has applied 8% of profit rate and computed a net profit of Rs. 16 lac. After computing the net profit at Rs. 16 lac, he has further given deduction of Rs. 2,88,800/- o....
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.... (supra), under such situation, the remedy lies to make necessary correction in the original assessment order by invoking the power of section 263, if it has been felt that the AO in the original assessment order has not made the addition on the basis of seized document correctly resulting into an erroneous assessment order which was prejudicial to the interest of revenue also. Under the facts and circumstances of the case, as discovered by me from the assessment record as well as after going through the original assessment order and assessment order under appeal before me that was passed after reopening the proceeding u/s.147, it is very evident that the earlier AO who has passed original assessment order dated 29.12.2006 has formed his opinion of making the addition of Rs. 28,11,200/- after examination of the seized document and if any reassessment proceeding is initiated on the basis of the same seized document by another AO taking the view that the addition made by the earlier AO did not cover the full amount of investment recorded in the seized document, it would amount to nothing but change of opinion and such change of opinion for reopening of assessment proceeding u/s.14....
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....have reopened the assessment. He has relied upon the decision of full Bench of Delhi High Court in the case of CIT vs. Kelvinator of India Ltd., 256 ITR 01, order of ITAT, Mumbai Bench in the case of Chika Overseas (P) Ltd. vs. ITO, 131 ITD 471 and order of ITAT, Agra Bench in the case of ITO vs. Shri Haresh Chand Agarwal HUF in ITA No. 282/Agra/2013 dated 20.12.2013. 5. We have considered rival submissions and material available on record. Hon'ble full Bench of Delhi High Court in the case of Kelvinator of India Ltd. 256 ITR 01 by following circular no.549 of CBDT held that on mere change of opinion of AO cannot be a ground for re-assessment and that amendment of sec. 147 w.e.f. 1.4.89 has not altered the position. Hon'ble Gujrat High Court in the case of Garden Silk Mills P. Ltd., 237 ITR 668 held that "however wide the scope of taking action u/s 148 of IT Act, it does not confirm jurisdiction on change of the interpretation of a particular provision earlier adopted by the assessing authority. For coming to the conclusion that there has been excessive loss or depreciation allowance or that there has been under assessment or assessment at a lower rate or for applying other prov....
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....e AO at original assessment stage, therefore, reappreciation of evidence at subsequent re-assessment proceedings is not permitted on mere change of opinion by subsequent AO. The re-assessment proceedings have been initiated again on similar issue and totally on identical facts regarding investment in property which have already been considered in the original assessment proceedings. It is, therefore, a case of change of opinion and such a change of opinion for reopening of section 147 is not permitted under law. The AO in the re-assessment order himself has mentioned that addition is made on account of unexplained expenditure/investment in the properties in the original assessment order. Such facts recorded by the AO in the reassessment order clearly strengthen the stand of the assessee for quashing of reassessment proceedings. No new material or fresh information have been received at the re-assessment stage. Therefore, it is merely a fresh application of mind by the subsequent AO on the same set of facts. The contention of the ld. DR is, therefore, liable to be rejected that investment in property was not considered at the original assessment stage. Further, the same seized mater....
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....œà¥‹ à¤à¥€ कागजात पà¥à¤°à¤¸à¥à¤¤à¥à¤¤ किये हैं उनसे जमीनों की खरीद बिकà¥à¤°à¥€ व उसकी पà¥à¤°à¤¾à¤ªà¥à¤¤à¤¿à¤¯à¤¾à¤‚ की पूरà¥à¤£ जानकार नहीं होती है। यदि यह मान à¤à¥€ लिया जाये कि निरà¥à¤§à¤¾à¤°à¤¿à¤¤à¥€ ने उपरोकà¥à¤¤ पà¥à¤°à¤¾à¤ªà¤°à¥à¤Ÿà¥€à¤œ को खरीदने में अपने वà¥à¤¯à¤µà¤¸à¤¾à¤¯ से निवे किया था परनà¥à¤¤à¥ वà¥à¤¯à¤µà¤¸à¤¾à¤¯ à¤....