TaxTMI 
TaxTMI 
2018 (12) TMI 1212
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....e CIT(A) further erred in confirming addition of Rs. 94809/- in Dairy Business Income. 4. That without prejudice to GOA-1 above the Hon'ble CIT(A) also erred in confirming addition of Rs. 1500000/- for unexplained investment in jwellery ignoring explanation made by the appellant and not considering following evidences which all totals to Rs. 1588450/-:- (i) Copy of Jwellery purchase bill dated 16.05.2011 of Rs. 361000/- by Seema Mundra and her Balance Sheet as at 31.03.2012; (ii) Copy of Jwellery purchase bill dated 30.01.2013 and 12.11.2012 for Rs. 105000/- and Rs. 134750/- by Sarla Mundra and her Balance Sheet as at 31.03.2013; (iii) Copy of Jwellery purchase bill dated 30.01.2013 for Rs. 420000/- by Rukmani Mundra and her Balance Sheet as at 31.03.2013; (iv) Copy of Jwellery purchase bill dated 07.04.2008 for Rs. 117700/- by Seema Mundra and her Revised Computation of Total Income by Seema Mundra wherein income of Rs. 117700/- is shown by her and she has paid tax Rs. 59100/-; and (v) Copy of Jewellery purchase bill dated 10.02.2012 for Rs. 450000/- by Sarla Mundra and her Revised Computation of Total Income wherein she ha....
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....nt year being the search year, the Assessing Officer should not have issued notice U/s 153A of the Act but the assessment could have been framed U/s 143(3) by issuing the notice U/s 143(2) of the Act. Hence, the ld AR has submitted that the assessment framed by the Assessing Officer is invalid and liable to be quashed. 4. On the other hand, the ld. CIT-DR has submitted that the Assessing Officer has not framed the assessment U/s 153A of the Act but the assessment has been framed U/s 143(3) after complying the procedural conditions of issuing notice U/s 143(2) of the Act. Since the assessee did not file the return of income U/s 139(1) of the Act, therefore, the Assessing Officer issued notice U/s 142 of the Act and consequently after the return of income filed by the assessee, the Assessing Officer has proceeded to frame the scrutiny assessment by issuing notice U/s 143(2) of the Act. He has relied upon the order of the ld. CIT(A). 5. We have considered the rival submissions as well as the relevant material on record. The assessee has raised the legal issue of validity of assessment framed by the Assessing Officer on the ground that the assessment year under consideration pert....
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....ssment year commencing on or after the 1st day of April, 1990 to a person who has not made a return within the time allowed under sub-section (1) of section 139 or before the end of the relevant assessment year, any such notice issued to him shall be deemed to have been served in accordance with the provisions of this sub-section,] 71[(ii)] to produce, or cause to be produced, such accounts or documents as the 72[Assessing] Officer may require, or 73[(iii)] 74to furnish in writing and verified in the prescribed manner information in such form and on such points or matters (including a statement of all assets and liabilities of the assessee, whether included in the accounts or not) as the 75[Assessing] Officer may require : Provided that- (a) the previous approval of the 76[Joint Commissioner] shall be obtained before requiring the assessee to furnish a statement of all assets and liabilities not included in the accounts; (b) the 77[Assessing] Officer shall not require the production of any accounts relating to a period more than three years prior to the previous year. Once the assessee has undisputedly not filed the return of income U....
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....ere was no return of income U/s 139(1) of the Act is well within the scope and procedure provided under Chapter (XIV) of the Act. The Coordinate Bench of this Tribunal in the case of Smt. Seema Mundra Vs DCIT (supra) has considered this issue in para 2.1 to 2.4 as under: "2.1 Apropos Ground No. 1 of the assessee, the facts as emerges from the order of the Id. CIT(A) are as under:- ''3. In the present case, it is seen that appellant derived income from job work in her proprietorship concern namely M/s. Preet Stone Industries, interest income and also declared agricultural income. Appellant c-filed her original return of income on 29-11-2014 for the A.Y. 2014-15 declaring total income at Rs. 2,81,210/- and also declared agricultural income of Rs. 1,72,000/-. Appellant belongs to Mundra Group, Kota on whose premises, a search u/s 132 of the Act was carried out on 13- 08-2013. Various assets/books of accounts and documents were found, inventorized and seized as per annexure prepared during the course of search. Pursuant to this, AO issued a notice u/s 142(2) r.w.s. T53A of the Act to the appellant, in compliance of which, appellant filed her return of income ....
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....the top header of assessment order does not vitiate the entire order. We submit Hon'ble CIT(A) failed to appreciate that there arc plethora of judgments wherein because of failure to give notice u/s 143(2) assessment completed u/s 143(3) are vitiated. In circumstances akin to us Hon'ble Chandigarh Bench in Rajeev Kumar vs. AC1T (2017) 186 TTJ 522 relying on decision of Hon'ble Delhi Bench of ITAT in Upendra Kumara Sharma vs. DCIT, Circle 9(1) (ITA No.3141/DEL/09 dated 12.04.2010) have quashed assessment order. We may add that decision of Hon'ble Chandigarh Bench (supra) does answer doubts raised by Hon'ble CIT(A) also. We therefore submit assessment order be quashed. " 2.3 On the other hand, the Id. DR supported the order of the Id. CIT(A). 2.4 We have heard the rival contentions and perused the materials available on record. It is not imperative to repeat the facts and circumstances of the case as the Id. CIT(A) has elaborately discussed the issue in his order. However, it is noted that on the similar issue the ITAT Chandigarh Bench in the case of Rajeev Kumar vs ACIT (2017) 186 TTJ 522 relying on decision of ITAT Delhi Bench in the case of Upen....
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....dismissed. 6. Ground No. 2 of the appeal is regarding the disallowance of interest of Rs. 2,45,431/-. During the course of assessment proceedings, the Assessing Officer noted that the assessee has claimed loss on account of interest income of Rs. 2,45,431/- in computing total income. The Assessing Officer asked the assessee to explain and file the supporting evidence for claim of loss on account of interest income. However, no reply or submission was filed by the assessee, accordingly the Assessing Officer made an addition of Rs. 2,45,431/-. 7. On appeal, the ld. CIT(A) has confirmed the addition made by the Assessing Officer. 8. Before us, the ld AR of the assessee has submitted that the assessee has shown the loss on account of interest income as part of business profits. Further the department has accepted this claim in the earlier years and assessee has been taking a consistent decision of treating the interest income or loss as part of the business income of the assessee. He has further submitted that in the P&L account, the assessee has debited/credited interest paid or received from different persons together with bank charges wherein there is net loss of Rs. 2,45,4....
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....ident from personal P&L account) was not justified/fortified with explanation by the appellant. Even at the appellate stage the appellant is stating that his funds are so intermixed and interconnected that nexus is unverifiable. In short the appellant has not offered explanation to justify the loss as is evident from the personal P&L account. In absence of plausible explanation, the disallowance of loss made by the AO of Rs. 2,45,431/- is confirmed. Appellant's appeal in Ground No. 2(i) is dismissed." Once the assessee has claimed the loss on account of interest then it is the primary onus of the assessee to prove and establish the allowability of the claim against the business income. To the extent of the interest which was paid on the fund used for investment, the same cannot be allowed against the business income. The assessee has expressed his inability to segregate the details, therefore, in the facts and circumstances of the case, we do not find any reason to interfere with the order of the ld. CIT(A), hence, this ground of assessee's appeal is dismissed. 11. Ground No. 3 of the appeal is regard the addition of Rs. 94,809/- in dairy business. The Assessing Officer noted....
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....ng the interest income is 8.44% then even applying the deeming provisions of presumptive income U/s 44AD of the Act, no addition is called for as the net profit declared by the assessee is more than 8% as provided U/s 44AD of the Act. Accordingly we delete the addition made by the Assessing Officer. 16. Ground No. 4 of the appeal is regarding the addition on account of unexplained investment in jewellery. During the search operation, jewellery and silver articles of Rs. 1,72,21,146/- were found from the residence of Shri B.D. Mundra. During the course of assessment proceedings, the Assessing Officer asked the assessee to explain the ownership of jewellery and other silver articles as well as source and year of acquisition of the jewellery with documentary evidence. The assessee in reply dated 14/09/2015 referred to the CBDT Instruction No. 1916 dated 11/5/1994 and therefore, sought benefit of jewellery and ornaments to the extent of 500 gms. per married lady, 250 gms. per unmarried lady and 100 gms. per male member of the family. The assessee also submitted that gold jewellery stock was declared in VDIS 1997 by the family members and addition on account of its recycling jeweller....
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....Assessing Officer and confirmed the addition. He has referred to the letter dated 14/09/2015 filed during the assessment proceedings for the A.Y. 2014-15. Though the said letter was kept in the file of B.D. Mundra and sons instead of file of the assessee. The ld AR has pointed out that since this letter was submitted on the letter head of B.D. Mundra & Sons, therefore, the Assessing Officer has placed this letter in the file of the B.D. Mundra & Sons instead of assessee. He has referred to the purchase bills of Rs. 10,20,750/- made between 16/05/2011 to 30/01/2013. The Assessing Officer has also not considered the jewellery of Rs. 5,67,700/- recorded in the books of account which was purchased on 07/07/2008 and 10/02/2012. The jewellery which was not recorded in the books of account till the date of search was already offered in the revised return of income and paid the tax before initiation of proceedings U/s 153A of the Act. The ld AR has submitted that total jewellery declared in the revised return is Rs. 15,88,450/- on which tax has already been paid and therefore, the addition made of Rs. 15.00 lacs is to be deleted. 19. On the other hand, the ld CIT-DR has submitted that t....