TaxTMI 
TaxTMI 
2011 (7) TMI 1148
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....erned with the appeals relating to the assessment made by the AO for the A.Y. 2003-04 & 2004-05. No other appeals, either by the assessee or by the revenue, pertaining to the A.Y. 2000-01, 2001-02, 2002-03, 2005-06 & 2006-07 are not pending before the Tribunal as no such appeal has been filed either by the assessee or by the department, as so informed by both the parties. 4. In the revenue's appeal, the revenue has disputed only that part of CIT(Appeals) order relating to the additions made by the AO on account of alleged unexplained gift claimed to have been received by the assessee in the periods relevant to the A.Y. 2003-04 & 2004-05. 5. In the Cross Objection, the assessee has taken the grounds challenging the validity of search conducted u/s 132 of the Act as well as the validity of notice issued u/s 153Aor validity of assessment made u/s 143(3)/153A of the Act. 6. Since the grounds raised in the Cross Objection goes to the root of AO's jurisdiction to make assessment u/s 153A, we first proceed to take up the Cross Objection filed by the assessee. 7. Now, we come to the Cross Objections filed by the assessee in both the assessment years i.e. A.Y. 2003-04 & 2004-05.....
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.....12 Ld. AO passed the order without valid approval of Addl. Commissioner of Income Tax in violation of sec. 153D. 2. The grounds of objections as herein above are without prejudice to each other and are to be considered with similar grounds raised during appeal to ld. CIT and assessee prays leave to add, alter and/or modify any of the grounds of objection on or before the date of hearing of the appeal." 9. The grounds whereby the assessee has objected before the ld. CIT(A) the proceedings u/s 153A, the jurisdiction thereto, transfer of jurisdiction, improper actions under the provisions of sec. 132 and improper opportunities granted to him, has been decided by ld. CIT(A) in identical manner in both the assessment years, namely, A.Y. 2003-04 & 2004-05, by observing and holding as under: - 8. "These are generalized grounds wherein the assessee has objected proceedings u/s 153A, the jurisdiction thereto, transfer of jurisdiction improper actions under the provisions of section 132 and improper opportunities granted to him. 8.1 The matter has been elaboratively discussed, and dealt with vide grounds of appeal no. 1,2,6 for the A.Y. 2000-01, and being fully....
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....h AO that it is not the duty of the AO to forward a copy of order under section to the assessee; it may be presumed that the copy thereof is communicated by the respective commissioner. Though for some time on account of departmental communication the assessee received notices from earlier jurisdictional AO, but the same will neither render transfer order u/s 127 nor assumption of Jurisdictional u/s 153A bad. 4.3 Regarding the objections of the appellant that doubts/objections of assessee about the proper jurisdiction were not addressed before proceeding with the assessment proceedings. Though it was the responsibility of ld. CIT, Meerut but in absence of any such communication, the AO could have furnished reasons, but in my view non furnishing thereof will neither vitiate jurisdiction or assessment. Thus, the assessee's objections are dismissed as unmerited. 4.4 Assessee's contention that no notice u/s 143(2) was issued is irrelevant as this cannot make the assessment void abinito, particularly considering that the return filed by the assessee u/s 153A is compulsory subjected to scrutiny and the circumstances, issuance of the notice is merely a formality." 11.....
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....al before the Commissioner or the Tribunal, a reference may be made to the following decisions: - i) Trilok Singh Dhillon Vs. CIT (2011) 332 ITR 185 (Chhattisgarh). ii) CIT Vs. Paras Rice Mills (2009) 313 ITR 182 (Punjab & Haryana). iii) Gaya Prasad Pathak Vs. Asstt. CIT (2007) 290 ITR 128 (MP). iv) Lal (M.B) Vs. CIT (2005) 279 ITR 298 (Del.). 16. The Division Bench of the Hon'ble Delhi High Court in the matter of M.B. Lal Vs. CIT (2005) 279 ITR 298 held that the validity of search proceedings cannot be examined in appeal filed before the Tribunal against block assessment and the remedy lies under Article 226 of the Constitution. 17. Similarly, in the case of CIT Vs. Paras Rice Mills (2009) 313 ITR 182 (P&H), the Hon'ble Punjab & Haryana High Court following the decisions of Hon'ble Delhi High Court in the M.B. Lal's case (2005) 279 ITR 298, held that while hearing an appeal against the order of assessment, the Tribunal cannot go into the question of validity or otherwise of any administrative decision for conducting search and seizure. 18. In the case of Gaya Prasad Pathak (2007) 290 ITR 128 (MP), it has been held by Hon'ble Madhya Prad....
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.... Reddy Vs. Asstt. CIT (2003) 87 ITD 439 (Bang.) (SB). ii) Larger Bench of the Tribunal (of Five Members) in the case of Promain Ltd. Vs. DCIT (2005) 95 ITD 489 (Del.) (SB). iii) Decision of Hon'ble Delhi High Court in the case of MB. Lal Vs. CIT (2005) 279 ITR 298 (Del.). iv) Decision of Hon'ble Madhya Pradesh High Court in the case of Gaya Prasad Pathak Vs. Asstt. CIT (2007) 290 ITR 128 (MP) 24. In the case of Astt. CIT Vs. Chilka Vyankatesh Sidram, ITAT, Pune, 'A' Bench has observed that the view of the Spl. Bench of the Tribunal in the case of C. Ramaiah Reddy Vs. Asstt. CIT (supra) has been approved by the judgment delivered by the Hon'ble Hon'ble Delhi High Court in the case of MB. Lal Vs. CIT (supra). 25. In the case of Promain Ltd. (supra) the Larger Bench of Five Members of the Tribunal has held that the Tribunal cannot examine the validity of search action u/s 132 of the Act. In this case, the Spl. Bench was constituted to consider the question whether the Income Tax Appellate Tribunal has powers to adjudicate upon the issue relating to the validity of the search conducted u/s 132 while disposing the appeal against block assessment. This Sp....
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....e writ petition and the respondent was directed to decide the case on merit in accordance with law. It is thus, clear that the power to decide the issue by the department emanated from the direction of the Hon'ble High Court passed in the writ petition filed by the assessee. In the present case, the assessee has already filed a writ petition before the Hon'ble High Court of Allahabad challenging the validity of search operation of assessee, which is pending adjudication, and therefore, it is not within our jurisdiction at this stage to decide this issue regarding the validity of search action taken u/s 132 of the Act. 28. In view of the foregoing discussion, the grounds challenging the validity of search and seizure action taken u/s 132 of the Act are rejected. 29. Now, we shall come to the various grounds challenging the validity of notice issued u/s 153A, assessment proceedings initiated u/s 153A and assessment order made u/s 143(3)/153A of the Act. 30. We have heard both the parties and perused the orders of the authorities below. 31. On the question challenging the validity of assessment proceedings initiated u/s 153A and assessment order made by the concerned AO u/....
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....judicated or decided by him. Since these issues have not been decided and adjudicated by the ld. CIT(A) and these issues goes to the root of the matter, we find it appropriate to remit these issues to the file of the ld. CIT(A) for his decision. The ld. CIT(A) shall provide reasonable opportunity of being heard to the assessee as well as to the AO. Ld. CIT(A) shall consider all the facts and circumstances of the case, contentions and cases that may be raised by both the parties before him. The assessee shall be at liberty to raise any other contentions before the ld. CIT(A) regarding validity of assessment made u/s 153A of the Act as he so advised. 35. The next contention of the assessee is that AO has erred in framing assessment in absence of proper order u/s 127 of the Income Tax Act, 191. The assessee has also contended that ld. AO has erred in processing with the assessment without disposing assessee's objections regarding jurisdiction and without providing the copy of order of competent authority transferring jurisdiction to his office. The assessee has submitted that the copy of the transfer order was not provided to the assessee before completion of the assessment. He fur....
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....y such Director General or Chief Commissioner or Commissioner as the Board may, by notification in the Official Gazette, authorize in this behalf. (3) Nothing in sub-section (1) or sub-section (2) shall be deemed to require any such opportunity to be given where the transfer is from any Assessing Officer or Assessing Officers (whether with or without concurrent jurisdiction) to any other Assessing Officer or Assessing Officers (whether with or without concurrent jurisdiction) and the offices of all such officers are situated in the same city, locality or place." 39. On perusal of the provisions contained in section 127(3), we find that nothing in sub-section (1) or sub-section(2) of sec. 127 shall be deemed to require any such opportunity to be given where the transfer is from any Assessing Officer or Assessing Officers (whether with or without concurrent jurisdiction) to any other Assessing Officer or Assessing Officers (whether with or without concurrent jurisdiction) and the offices of all such officers are situated in the same city, locality or place. Therefore, the mandatory requirement of providing a reasonable opportunity of being heard and recording reasons for ....
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....963) (SC) 395. We have gone through this decision and find that decision was rendered in connection with departmental enquiry conducted against the Government servant and it was rendered in the light of the provisions contained in Article 311(2) and Article 166 of Constitution of India. This decision shall not apply to the present case in as much as sub-section (3) of sec. 127 has specifically excluded the operation or applicability of sub-section (1) or sub-section (2) of sec. 127 in the cases where transfer of case is made from one officer to another situated in the same city, locality or place. 42. Our view that no opportunity was required to be given to the assessee and consequently, or no reasons were required to be recorded before the case is transferred from one Assessing Officer to another situated in the same city, locality or place, is fortified by the following decisions: - i) Kashiram Aggarwala Vs. Union of India (1965) 56 ITR 14 (SC) ii) S.L. Singhania Vs. CIT (1992) 193 ITR 275 (Del.) iii) T.S. Sujatha Vs. Union of India (1999) 238 ITR 599 (Ker.) iv) Power Controls and Others Vs. CIT (2000) 241 ITR 807 (Del.) 43. In the case o....
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.... of India (1965) 56 ITR 14 (SC) was cited, where it was held that order of transfer was purely administrative in nature passed for consideration of consideration and no possible prejudice could be involved in the transfer as under the proviso to sec. 127(1) it was not necessary to give the assessee an opportunity to be heard and there was consequentially no need to record reasons for the transfer. This decision of Hon'ble Supreme Court relied upon by the revenue was distinguished by the Hon'ble High Court of Gauhati by observing that this decision is not of any assistance to the revenue in that case since that was a transfer from the ITO to another ITO in the same city, or, as stated in the judgment itself "in the same locality" and the proviso to sec. 127(1), therefore, applied. In other words, the Hon'ble Gauhati High Court has taken a view that the requirement of providing opportunity of being heard and consequentially recording reasons for the transfer was not necessary in the cases where there was a transfer from the ITO to another ITO in the same city or locality or place. The relevant observations of the Hon'ble High Court in this regard are as under: - "Mr. Sharma ....
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....n this case, the Hon'ble High Court has considered the provisions contained in sec. 127(1) of the Act, which is not applicable to the present case by virtue of the provisions contained in sec. 127(3) of the Act. Therefore, this decision relied upon by the assessee is of no assistance to him. 49. In the light of the specific provisions contained in sec. 127(3), and discussion made above, we do not find any basis to render the transfer order to be invalid or without jurisdiction and consequently, the assessment order made by the AO to whom case was validly transferred, is within his jurisdiction on this count. Hence, the assessee's objections in this regard are rejected. 50. Further, the assessee has objected that the Assessing Officer has completed the assessment under sec. 153A read with sec. 143(3) without serving any valid notice u/s 143(2) of the Act. The assessee has further contended that the notices purportedly issued u/s 143(2) do not confirm to the requirement of valid notices as contemplated u/s 143(2) of the Act. He submitted that the A.O. should have assigned reasons of enquiry in the notice purportedly issued u/s 143(2) of the Act. In this connection, the assessee....
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.... on which the assessee may rely in support of the return: [Provided that no notice under clause (ii) shall be served on the assessee after the expiry of six months from the end of the financial year in which the return is furnished.]" 55. On perusal of the aforesaid provisions of section 143(2), we find that the provisions contained in clause (i) of sub-section (2) of section 143 was applicable only for the period before 1^st day of June, 2003. Under this clause (i), it was provided that where a return has been furnished under sec. 139, or in response to a notice under sub-section (1) of section 142, and where the Assessing Officer has reason to believe that any claim of loss, exemption, deduction, allowance or relief made in the return is inadmissible, the Assessing Officer shall serve on the assessee a notice specifying particulars of such claim of loss, exemption, deduction, allowance or relief and requiring the assessee, on a date to be specified therein, to produce or cause to be produced, any evidence or particulars specified therein or on which the assessee may rely, in support of such claim. This clause (i) to sec. 143(2) was inserted by the Finance Act, 2002 wi....
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....3(2)(ii), it has been further provided that no notice under clause (ii) shall be served on the assessee after the expiry of six months from the end of the financial year in which the return is furnished. The present Proviso to section 143(2)(ii) is substituted by the Finance Act, 2008 w.e.f. 1.04.2008. Prior to its substitution, Proviso to section 143(2)(ii) as amended by the Finance Act, 2003 w.e.f. 1.06.2003, provided that no notice under clause (ii) shall be served on the assessee after the expiry of 12 months from the end of the month in which the return was furnished. 56. In the present case, with a view to enable him to finalize the assessment proceedings the AO had issued two separate letters dated 7^th November, 2007 in both the Assessment Years i.e. Assessment Year 2003-04 and 2004-05 requiring the assessee to furnish various details and explanation in respect of source of various assets and to prove whether they were recorded in regular books of accounts in the respective period. In this notice, the assessee was asked to furnish cash flow statement etc, bank statements, details of movable and immovable property, source of cash found at the time of search, source of jew....
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.... on which you may reply, in support of the return filed by you. Sd/- (VIRENDER KUMAR) Asstt. Commissioner of Income tax Central Circle, Meerut". 57. In the course of hearing of these appeals, it was stated by the assessee that though the aforesaid notices were received by the assessee, the notices do not satisfy the requirement of section 143(2) of the Act. We have gone through the contents of the said notice and find that by this notice, the assessee was required to attend the AO's office on 16^th November, 2007 either in person or by a representative duly authorized in writing this behalf or produce or cause there to be produced at the said time any document, account and any other evidence on which the assessee may rely, in support of the return filed by him. Therefore, in the light of the contents of the notice and letter dated 7-11-2007, we are of the considered opinion that the notice u/s 143(2) issued by the AO on 7.11.2007 satisfies the conditions enumerated in sec. 143(2)(ii) of the Act and therefore, it cannot be said to be invalid. 58. In the case of CIT vs. Rajiv Sharma [2010] 5 taxmann.com 101 (All.), the Hon'ble Allahabad High ....
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....e)(Trib.), the Tribunal has taken a view that compliance of the provisions of sec. 143(2) can happen only after receipt of return or documents as specified u/s 142(1)(ii), hence, issue of notice u/s 143(2) prior to such stage does not serve any purpose and hence, the same is redundant. The Tribunal further held that as no notice u/s 143(2) was served on the assessee after the filing of the return, the assessment proceedings are quashed as null and void. This decision gives no assistance to the assessee's case inasmuch as in the present case, the AO has duly issued notice u/s 143(2)(ii) on 7.11.2007 within the period of 12 months from the end of the month of September, 2007 in which the return was filed by the assessee on 25.09.2007 in pursuance to the notice issued by the AO u/s 153A on 10.09.2007. There is no quarrel as to the proposition that issuing notice u/s 143(2) is mandatory before completing the assessment u/s 143(3) read with section 153A of the Act. In the present case, the notice u/s 143(2) has been issued and served upon the assessee after the return was filed by the assessee as stated above. Therefore, the assessment proceedings completed by the AO cannot be considere....
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.... at Rs. 29,55,529. CIT(A) deleted the additions of Rs. 15,13,909/- made on account of deposits in bank account. Out of these deposits of Rs. 15,13,909/-, the amount of Rs. 7,50,000/- shown as two gifts received on 22.07.2002 of Rs. 4,00,000/- and Rs. 3,50,000/- from Laxmi Agarwal, D/o Ram Kumar Agarwal, R/oI-69, Brahmpuri, Delhi and Kasho Ram Gupta, S/o Sita Ram Gupta, R/o 320, Kucha Ghasi Ram, Chandni Chowk, Delhi-110 006 respectively. No explanation was submitted before the Assessing Officer. Since the documents were submitted before the CIT (A), the remand report was called from the Assessing Officer. In the remand report, the Assessing Officer has mentioned that except the two credit entries of Rs. 4,00,000/- and Rs. 3,50,000/- in the bank account, the other entries have been verified and nothing adverse has been found. With regard to these two entries pertaining to gifts received by the assessee, the Assessing Officer has observed that since the matter was not taken up in the original assessment proceedings, hence no report submitted on the issue and the issue was left to be decided by the CIT (A) on merits. 67. Learned DR submitted that the CIT (A) has admitted documents, ....
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....as income from undisclosed sources. He pleaded that without cross examination, no addition can be sustained. For all these propositions, he relied on various decisions of ITAT which were submitted in compilation of case laws (Paper Book - II). 69. After hearing both the sides, we find that wherever the money has received in bank account of assessee by way of gifts, the onus is on the assessee to establish the identity of the donor, his capacity to make the gift and also to establish that amount so received was in fact a gift. The genuineness of the gift transaction cannot be determined without looking into the aspects of human probabilities, relationship of the donor and donee, the occasion for making the gift and existence of reciprocity and if the assessee fails to establish any of these facts, the amount shown so received can be treated as assessee's income form undisclosed sources representing the assessee's own money, introduced in the garb of gift received. The CIT (A) granted the relief on the basis of documents filed, i.e., gift deeds, affidavits of donors and income-tax particulars of these donors along with wealth-tax return and statement of affairs. He has simply stat....
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....sment Year 1999-2000. Page 40 is copy of ration card where name of Laxmi is appearing. Page 41 is copy of PAN card of Laxmi Agarwal. These documents can prove the identity of the donor but these will definitely not sufficient to prove the creditworthiness and genuineness of gift amount. She is assessed to tax that by itself will not prove that she was having Rs. 4,00,000/- to make the gift. No document or proof submitted which could establish that she had made the gift from her own known sources. The completed assessment of past years can only establish that she is assessed to tax in past but it will not definitely prove that she had made a genuine gift from her known source for natural love and affection. The return of income and her statement of accounts for relevant year in which the gift was made have not been filed before us. The statement of her bank account indicating the transaction of Rs. 4,00,000/- has also not been filed. In the absence of such documentary evidence in support of what is stated in the affidavits and memorandum of gift cannot be accepted at face. The source of donation is not supported by debit entries in the bank account of the donor. No copy of bank acco....
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....iness of the donor was not proved. 3. The CIT (A) failed to appreciate that in case of gifts the onus lied on the assessee to prove not only the genuineness of gift but also the existence of love & affection between the donee and the donor." 73. In the appeal, the issue involved regarding gift received by the assessee. During the year, the assessee has shown receipt of four gifts as following :- Date Name of Donor Amount 06.04.2004 Capt. Sanjeev Juneja Rs. 8,00,000/- 06.12.2003 Anand Jain Rs. 9,00,000/- 13.11.2003 Balbir Singh Rs.10,00,000/- 29.07.2003 Kirodimal Goyal Rs.10,00,000/- 74. The Assessing Officer made the addition by holding as under :- "During the year under consideration, assessee has received gifts as under :- Date Name of Donor Amount Remarks 06-04-2004 Cap. Sanjeev Juneja Rs.8,00,000/- Donor is not produced, identity, credit worthiness and genuineness of the transaction is also not proved. Relationship between donor and donee is not established, occasion on which such huge amount of gift was given is also not shown. From the inquiries conducted by this office it h....
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....Copy of bank account directly obtained from bank was also provided to assessee for rebuttal but assessee has not satisfied the revenue Assessee before the investigation wing filed the copy of affidavit of donor namely Shri Anand Jan, Balbir Singh and Kirodimal Goyal and from the perusal of the affidavits it is noticed that all affidavits were prepared and notarized on very same date i.e. 16-05-2006 it is unbelievable that 3 different donors out of one is residing in Japan, one is residing in Haryana and one is residing in Nangoli, Delhi were available at the same time and together approached to the same notary for preparing the affidavit. This is nothing but a cooked document to prove the genuineness of the transaction. But assessee in the entire proceedings failed to establish relationship with the donor. Mere filing of the confirmation letter and copy of bank statement do not discharge the onus which is cast upon the assessee. Assessee did not produce the donor which was specifically called for vide quarry dated 07-11­2007 and 27-11-2007. It is also not proved for giving a huge sum of Rs. 37,00,000/- as gift what was the occasion. In the ....
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..... Mohankala & Ors. (2007) 291 ITR 278 (SC), Dy. CIT vs. Vijay Prakash (HUF) (2009) 120 TTJ 429 (Asr.), Kanchan Singh vs. CIT (2009) 221 CTR 456 (All) and on the matter relating to onus the reliance of the assessee is on C.I.T. Orissa Corporation Pvt.Ltd [1986] 159 ITR 78 (SC), Sumati Dayal v. CIT-Bangalore [1995] 214 ITR 801(SC) , Smt.Sonu Agarwal v. ITO, ITA No. 698/Luc/08, Jan 23, 2009 is applied. 11.6. It is thus obviously not the case of the A.O. that either the documents furnished by the assessee were not satisfactory or otherwise any discrepancy was noticed or the gifts were not genuine. From the remand report it is also apparent that neither any additional documents in support were required by A.O. nor the same that were produced were rejected particularly when he was specifically asked to do so by this office vide letter dated 15.10.2009. Thus, I am of the view that upon the examination of the documents, the A.O. himself is satisfied about genuineness of the transaction. There is nothing on record, found during the search or otherwise is the case of the A.O. that the assessee is earning income not returned to tax. Neither any undisclosed asset was found no....
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.... donors. The affidavits filed by three different donors located at different places were obtained from a common notary on 16.05.2006. How all these donors assembled at one place to obtain these affidavits needs verification. She pleaded that these were nothing but cooked documents made to give the colour of genuineness. The assessee has failed to establish any genuine relationship between the donors and the donees. The occasion is also not established. Existence of natural love and affection was also missing. There is variation in copy of bank account filed by assessee and obtained from the bank. In such a situation, the CIT (A)'s order is perverse and deserves to be set aside. 77. Learned AR submitted that the CIT (A) has rightly deleted the addition. The revenue has failed to disprove the affidavits submitted by the donors which the CIT (A) has rightly relied upon. He also submitted that the affidavits, confirmation of gifts and particulars of bank accounts were submitted. The assessee has proved the identity, creditworthiness and genuineness of transactions. He also pleaded that since the assessee is not maintaining any books of account, therefore, no addition can be made u/s....
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....erefore, the ownership of the money deposited in bank accounts pertains to the assessee. The assessee has to prove the genuineness of the acquisition of the amounts. Assessee claims that these were received as gifts. Thus assessee has to prove the identity of donor, creditworthiness and also the genuineness of transactions. If assessee fails to prove the genuineness of the gifts, the amount can be added to his income. The additions made by the tax authorities under a wrong provision of Income-tax Act, 1961 cannot absolve the assessee from being taxed under the correct provisions of Income-tax Act, 1961. The tax authorities below are duty bound to tax the undisclosed income of the assessee, if any, under the provisions of Income-tax Act, 1961. Since the assessee has received the gift in his bank account, the assessee has to establish the identity of the donor, capacity of the donor to make the gift and must also establish that he has received these amounts as genuine gifts. The genuineness of the gifts cannot be determined without looking into the facts of the human probabilities, relationship of donor and donee, the occasion of making gifts and existence of reciprocity, if any. In ....