TaxTMI 
TaxTMI 
2013 (7) TMI 999
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....nst the different orders of CIT (A)-22, Mumbai dated 16.9.2010 for the AYs 2003-2004 & 2004-2005. Grounds raised in both the appeals are reproduced as under: "Grounds raised for the AY 2003-04: 1. The Ld CIT (A) erred in confirming the action of AO of reopening assessment us 147 of the Act. Your appellant submits that the reopening is illegal, void and same ought to be quashed. Without prejudice to the above, your appellant submits that the Ld CIT (A) erred in confirming the disallowance by restricting allowance of expenses only to 10% of fees received. Your appellant submits that the expenses claimed by your appellant are allowable as claimed. 2. The Ld CIT (A) erred in confirming the action of AO of charging interest u/s 234B at Rs. 1,41,493/- from the first day of the assessment year to the date of assessment year to the date of assessment order u/s 143(3) r.w.s. 147. Your appellant submits that interest u/s 234B ought to have been charges from the date of determination of total income u/s 143(1) / 143(3) ie regular assessment till the completion of reassessment u/s 143(3) r.w.s. 147 of the Act." Grounds raised for the AY 2004-05: 1. ....
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....ed by the assessee under various heads are as under: 4. Salary Rs. 7081162/- 5. Capital Gains STCG Rs. 1429292/- LTCG Rs. 6279589/- Rs.7708881/- 6. Income from other sources Interest on FD & IT refund Rs. 32713/- Interest on debenture Rs. 3612/- Rs. 36325/- The assessee has wrongly set off Rs. 6,92,448/- of his personal expenses against the above cited incomes. The wrong claim of the assessee resulted in escapement of income from tax. In view of this, I have reason to believe that income of Rs. 6,92,448/- chargeable to tax has escaped assessment. Proceedings u/s 147 of the IT Act, 1961 is being initiated in the matter." 5. Bring our attention to the above extract, Ld Counsel mentioned that the source of the information is the "statements of income" which is filed by the assessee. Thus, AO does not have any tangible material gathered from any source other than the return and its enclosures before issue of notice u/s 147 of the Act. Further, she mentioned that the assessment reopened for the AY 2003-04 i....
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....angible material" in possession of the AO, Ld DR relied on the provisions of section 147 and 148 of the Act and mentioned that there no such requirement in law. 8. Further we have perused the cited order of the Tribunal by Ld Counsel in the case of HV Transmissions Ltd (supra) and find that the judgment in the case of Rajesh Jhaveri Stock Brokers (P) Ltd (supra) was discussed. This order of the Tribunal applies to cases of assessment originally completed summarily or u/s 143(3) of the Act. For the sake of completeness of the order, we reproduce the contents of para 8 of the said Tribunal's order which are as under: "8. We have considered the rival submissions and also perused the relevant material on record. It is observed that the assessment completed in this case originally u/s 143(1) was reopened by the AO for the following reasons recorded u/s 148(2):................................ As is clearly evident from the reasons recorded by the AO, there was no new material coming to the possession of the AO on the basis of which the assessment completed u/s 143(1) was reopened and this position has not been disputed even by the learned DR. Relying on the decision ....
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....1. It was held by the Third Member that section 147 applied both to section 143(1) as well as section 143(3) and, therefore, except to the extent that a reassessment noticed issued u/s 148 in a case where the original assessment was made u/s 143(1) cannot be challenged on the ground of a mere change of opinion, still it is open to an assessee to challenge the notice on the ground that there is no reason to believe that income chargeable to tax has escaped assessment. As regards the decision of Hon'ble Supreme Court in the case of Rajesh Jhaveri Stock Brokers (P) Ltd (supra) cited by the Revenue and relied upon by the Accountant Member, the Third Member held that the same was applicable in cases where the return was processed u/s 143(1) but later on notice was issued u/s 148 and the assessee challenges the notice on the ground that it is prompted by a mere change of opinion. The Third Member then referred to the decision of Hon'ble Supreme Court in the case of CIT vs. Kelvinator of India (supra) wherein it was held that there should be "tangible material" to come to the conclusion that income had escaped assessment. Relying on the said decision, it was held by the Third Member that ....
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....r grounds are dismissed as academic. 11. In the result, both the appeals filed by the assessee are allowed pro-tanto. ITA NO.8509/M/2010 (AY:2005-2006) (By assessee) ITA NO.8510/M/2010 (AY:2006-2007) (By assessee) ITA NO.8511/M/2010 (AY:2007-2008) (By assessee) 12. We shall now take up the rest of the three appeals for adjudidaction. These three appeals are filed by the assessee on 7.12.2010 is against the different orders of CIT (A)-22, Mumbai commonly dated 16.9.2010 for the AYs 2005-2006, 2006- 2007 & 2007-2008 respectively. In these appeals the assessee commonly raised the following ground relevant to the AY 2005-2006 . "The Ld CIT (A) erred in confirming the disallowance by restricting allowance of expenses only to 10% of fees received. Your appellant submits that the expenses claimed by your appellant are allowable as claimed." 13. Briefly stated facts relevant to the addition are that the assessee is a Managing Director of Geometric Software Solutions Co. Ltd and declared the income from salary and business income (professional fee received from a solitary party). The AY-wise professional fee earned by the assessee for all the three assessment year....
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....decisions relied upon by the assessee in support of the claim of the said expenditure. In fact, the CIT (A) remanded the matter to the files of the AO to find out the genuineness of the claim and after receiving of the remand report of the AO dated 13.7.2010, CIT (A) held that the claim of the expenditure of the assessee should be restricted uniformly to 10% of business income (professional fee) in all the assessment years under consideration. Para 3.3 of the impugned order for the AY 2003-2004 being a speaking order contains relevant discussion in this regard which was relevant for all these assessment years also. While restricting to 10% of the income, the CIT (A) essentially considered the fact that the assessee failed to prove that the expenditure under consideration was incurred for business purposes. He also referred to AO's remand report where no evidences in support of the expenses was claimed in the return and were not furnished even during the remand proceedings. He also mentioned about the absence of any letter issued to the assessee in this regard. Thus, CIT (A) restricted the disallowance on ad-hoc basis adopting the flat rate of 10% of the income reported by the asses....