TaxTMI 
TaxTMI 
2015 (10) TMI 2588
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....a sum of Rs. 58.3 lacs approx. The details are as under : 1.Mutual Funds Rs. 51 Lacs approx. 2.Shares Rs. 6.30 Lacs approx. 3.IPOs Rs. 1 Lacs approx. Total Rs. 58.3 Lacs approx. 3.During the assessment proceedings, the source of above investments was explained to be from sale of three houses, three cars and loan of Rs. 9.92 lacs. An amount of Rs. 5,25,000/- was offered for taxation in addition to the returned income. It was noted from the assessment record that assessee in support of his claim regarding sale of house properties submitted affidavit of Buyer and copies of the sale agreement and in support of sale of cars, the assessee submitted affidavits and photocopies of payment receipts. There was, however, no document on record regarding claim of loan of Rs. 9.92 lacs. Further, in support of cash deposits in the bank account, a document under the caption 'Details of cash flow in the bank account with ICICI Bank was also placed on record'. The Assessing Officer has accepted the contention of the assessee that funds were generated by sale of three houses without any evidence/documents of ownership of the said properties, date ....
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....l relevant papers were produced before the Assessing Officer during assessment proceedings. The ld. CIT in the impugned order noted that the assessee has produced only a copy of agreement dated 01.10.2007, between Smt. Neeraj K. Sehgal through authorized person Sh. Kirti Anand i.e. assessee and Smt. Shamsher Kaur, no other document was produced before the Assessing Officer. The allotment letter is issued by the Estate Manager, Housing Board Haryana, Ambala City which was produced by the assessee and the same revealed that the said house was allotted to Miss Neeraj K Sehgal and affidavit of Mrs. Shemshar Kaur, purchaser of the property filed and the assessee is the General Power of Attorney of Smt. Neeraj K. Sangal. So, how the assessee is claiming the receipt of sale consideration of this property is not verified by the Assessing Officer. (B) HIG Flat No. 5, First Floor, Amritsar Improevment Trust, 340 Acre Scheme, Amritsar 3.3. The assessee submitted that this house was allotted to Sh. Vijay Kumar Arora. Allotment letter was filed. The assessee has purchased the said property for Rs. 2,00,000/-on 20.02.2006 and then paid Rs. 1,00,000/-in March 2006. He has paid one installme....
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....ssessing Officer, therefore, did not examine this issue (C) EWS House, Sector 38/49 Chandigarh 3.5 The assessee submitted that said property was allotted to Shri Subhash Chander for Rs. 4,15,000/-. Copy of the allotment letter was filed. The owner has paid Rs. 63,750/- The assessee purchased the same for Rs. 2,14,000/- on GPA. Two instalments of Rs. 1,14,294/- were paid by assessee on03.07.2007 and31.10.2007.Both these entries exist in the bank account of the assessee. Accordingly, the assessee has taken the paid amount as Rs. 4,42,000/-. All these papers were submitted before Assessing Officer. 3.6 The ld. CIT noted that assessee has filed copy of the Agreement to Sell dated 10.01.2008 between himself and Smt. Reeta Sethi and no other document is filed. The assessee has now filed copy of the allotment letter, General Power of Attorney registered with Sub Registrar, Chandigarh by Shri Subhash Chander Arora in favour of the assessee giving of right to sell, transfer, gift, mortgage etc. The ld. CIT noted that, however, assessee has failed to bring on record credit worthiness of the alleged buyer and genuineness of the transactions. 4. The assessee further claimed sale of....
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....drawn has not been utilized anywhere else. No person would withdrew cash just to keep idle at home. The claim of assessee of re-deposit of cash is not tenable and noted some of the transactions to show that assessee neither deposited the cash available with him and also did not utilize the same anywhere else. Therefore, cash-flow was found after-thought. It was also noted that some of the transactions in the cash-flow have not been explained which are reflected in the bank account of the assessee. No submissions have been made by assessee regarding each and every entry of the bank account. The CIT also noted that the assessee, during the assessment proceedings had produced copy of his account maintained with M/s Master Capital Services Ltd. for the period 29.03.2007 to 31.03.2008. As per copy of the account, this account was closed on12.11.2007 on which dates, assessee's debit balance was Rs. 2,59,486/-.However, from the entries in his bank account maintained with ICICI Bank, it was noted that assessee has made this payment on different dates to M/s Master Capital Services Ltd. It was further noted that as per account, M/s Master Capital Services Ltd. has issued a cheque of Rs.....
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....red to various documents from the Paper Book as well as audit objection, queries raised by Assessing Officer and replies filed by assessee time to time on all the issues raised in the proceedings under section 263 of the Act and therefore, submitted that the Assessing Officer took one of the possible view under the law with which the Commissioner did not agree, could not be treated the assessment order to be erroneous or prejudicial to the interest of revenue. 8. On the other hand, ld. DR relied upon impugned order and submitted that Assessing Officer passed the brief assessment order which shows he has not applied his mind to the fact of the case. No proper investigation have been carried out by the Assessing Officer at the assessment stage. There is no mention in the order under section 263 of the Act if the CIT acted only on audit objections while exercising jurisdiction under section 263 of the Act. The ld. DR submitted that when assessee was cornered by the Assessing Officer, assessee made surrender of income of Rs. 5,25,000/- before Assessing Officer. He has submitted that since Assessing Officer has not examined the entire issue properly, therefore, impugned order was cor....
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....hat during the course of assessment, assessee was asked to explain the source of investments and assessee filed the source of investment being the three properties as well as loan received in a sum of Rs. 9.92 lacs from Shri Bhupesh Sehgal. The Audit Party also examined the ICICI bank statement in which various deposits were there and assessee explained at assessment stage that he has made investments in shares and mutual funds in a sum of Rs. 58.3 lacs. The assessee has explained the source at the assessment stage which was not verified by the Assessing Officer during the assessment proceedings. The Audit Party also noted in the Audit Objections regarding sale of the properties made by assessee as referred to above, shows that assessee also earned capital gains. The Audit Party also explained that assessee has not explained source of investment for remaining amount of Rs. 33.03 lacs and Assessing Officer has not verified this fact. The audit party, however, given benefit to the source in a sum of Rs. 15,35,000/- which is sale consideration received by assessee on account of sale of three properties and loan received from Shri Bhupesh Sehgal in a sum of Rs. 9.92 lacs. The audit par....
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....ch orders, which deem necessary in the circumstances of the case. In the present set of facts and circumstances, the Commissioner of Income Tax has issued the show cause notice under section 263 of the Act on account of the audit objection raised in the present case. 20. We find that similar issue of exercise of revisionary powers by the Commissioner of Income Tax on the basis of audit objections arose before the Hon'ble Punjab & Haryana High Court in CIT Vs. Sohana Woollen Mills (supra) and it was held that mere audit objection and the fact that a different view could be taken, were not enough to say that the order of Assessing Officer was erroneous or prejudicial to the interests of Revenue. The Hon'ble Court further held that "whether satisfaction of the Commissioner for exercising jurisdiction was called for or not, has to be decided having regard to the given fact situation". 21. The Hon'ble Gauhati High Court in B & A Plantation & Industries Ltd. & Another Vs. CIT & Others (supra) has laid down the difference between revisionary, rectification and re-assessment proceedings. The fact situation before the Hon'ble Guahati High Court that rectification pr....
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....at notice issued by the Commissioner of Income Tax at the suggestion of the Audit Department without applying his mind could not be sustained in law. 23. In the back drop of the abovesaid settled legal precedents, we find that the Commissioner of Income Tax in the present case had also initiated the proceedings under section 263 of the Act on the basis of the audit objections. Show cause notice was issued in the present case for non- deduction of tax at source, out of certain expenses incurred by the assessee and order passed by the Commissioner of Income Tax under section 263 of the Act directing the Assessing Officer to re-determine the income of the assessee by applying a rate other than the rate applied by the Assessing Officer, being without jurisdiction, is not tenable in law. We find no merit in the plea of the learned D.R. for the Revenue that the source of information in the present case was audit objection, but there was independent application of mind by the Commissioner of Income Tax. The provisions of section 263 of the Act are clear and absolute that the power is to be exercised by the Commissioner of Income Tax from the examination of the records of the proc....
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....ntries and explain source of the deposits. The Assessing Officer also called for details of investments made by assessee and whether assessee has received any loan during the assessment year under appeal as well as in earlier years. The Assessing Officer also asked the assessee to furnish details of movable/immoveable properties in his name and in the names of his family members. The assessee filed the reply dated 29.11.2010 (PB-11) before the Assessing Officer at assessment stage in which assessee has submitted copy of the bank account with ICICI Bank Ltd., Mohali. The assessee also explained he has made investments in shares and mutual funds in a sum of Rs. 58.3 lacs as against AIR information of investment of Rs. 29 lacs. The assessee also explained that has received loan of Rs. 9.92 lacs from assessee Shri Bhupesh Sehgal during assessment year under appeal. It was also explained that he does not own any other immoveable property and he owns Accent Car in addition to the investment in shares and mutual funds. 12(i)The assessee further filed reply before Assessing Officer dated07.12.2010(PB-13) with which also assessee filed complete copy of the SB account with ICICI Bank and ....
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....ng Officer at assessment stage which clearly proved that assessee received the amounts on account of sale of the properties, sale of the cars and from personal sources for which cash-flow statement was filed. The Assessing Officer examined all these documents and was satisfied with the source of investments made in shares and mutual funds. The assessee offered amount for capital gains on redemption of mutual funds, was also examined at the assessment stage. Therefore, it is clearly established that the assessee in explanation to explain the source of the investments in shares and mutual funds offered sufficient material and evidence before Assessing Officer to explain applicability of the funds for making investments in shares and mutual funds. Since the issue before Assessing Officer was with regard to source of investment in mutual fund and shares to be examined, therefore, there was no need for the Assessing Officer to go into the past history of the assessee as to how the assessee acquired the properties or the cars in question. Further, Agreement to Sell and GPA were registered in the name of assessee proves bonafide explanation of assessee. In case of Sale of Property, Seller....
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....granting the special deduction under section 80-IB. The order of revision disallowing the special deduction was not valid." 13. The ld. DR contended that since the Assessing Officer passed brief order, therefore, CIT was justified in invoking jurisdiction under section 263 of the Act. In this case, as noted above Assessing Officer has issued query letters on all the points as have been considered under section 263 of the Act and the assessee filed replies before Assessing Officer, evidences and material in support of the reply. Therefore, mere non discussion or non mention of these facts in the assessment order would not lead to assumption that Assessing Officer did not apply his mind or that he had not made enquiry on the subject and this would not justify interference by the CIT for issuing notice under section 263 of the Act. We are fortified in our view by decision of the Allahabad High Court in the case of CIT V Krishna Capbox (P) Ltd. 372 ITR 310 in which it was held as under : "The assessee's return for the assessment year 2008-09 was processed under section 143(1) of the Income-tax Act, 1961. Notice under section 143(2) was issued to the assessee. The Assess....
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....assessment stage. The audit party in their objection, even after examination of the record, did not take adverse view against the assessee for a sum of Rs. 9.92 lacs and merely directed Assessing Officer to take remedial action of remaining amount of Rs. 33.03 lacs. It is, therefore, clear that Assessing Officer was satisfied with the explanation of the assessee with regard to loan received in the bank account of the assessee in a sum of Rs. 9.92 lacs received from Shri Bhupesh Sehgal. The assessee in his submissions before CIT filed affidavit of Shri Bhupesh Sehgal in which he has explained that the amount in question was given through bank transfer, would support the contention of the assessee that assessee received genuine loan. The satisfaction of the Assessing Officer could not be substituted by CIT in proceedings under section 263 of the Act. If CIT was not satisfied with inadequate enquiry conducted by Assessing Officer, he should have examined and hold enquiry in the matter even during the proceedings under section 263 of the Act. If the CIT being revising authority felt inadequate enquiry by Assessing Officer on this aspect, the CIT must make enquiry and show that assessme....