TaxTMI 
TaxTMI 
2019 (4) TMI 359
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....iled his objections which were disposed off by the Assessing Officer and thereafter considering the submission of the assessee, the Assessing Officer made an addition of Rs. 28,35,265/- as deemed dividend u/s 2(22)(e) in the hands of the assessee besides other additions towards unexplained cash deposit in the bank account, rental and interest income and assessment was completed u/s 147 read with section 143(3) vide order dated 17.03.2015. Being aggrieved, the assessee carried the matter in appeal before the ld. CIT(A) who has confirmed the action u/s 147 and also upheld the additions made by the Assessing Officer. Against the said finding of the ld. CIT(A), the assessee is in appeal before us. 3. In Ground No. 2, the assessee has challenged the assumption of jurisdiction by the Assessing Officer u/s 147 by issuance of notice u/s 148 and the consequent order passed u/s 147 r/w section 143(3) of the Act. 4. The ld. AR submitted that on perusal of the reasons so recorded before issuance of notice u/s 148, it may be noted that there is nothing in the reasons to justify the formation even a prima facie view that the income of the assessee has escaped assessment and it was submitte....
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....t was submitted that the initiation of proceedings u/s 147 in view of this fact is meant/initiated with a view to make more and deeper enquiries to cover the subjected receipts as a case of deemed dividend and it was submitted that it was an attempt on the part of the AO to explore some income and not to show that some income already existed which escaped assessment. It was accordingly submitted that it is a case of overstretching of the powers conferred u/s 147 of the Act, which are supposed to have been exercised sparingly, only in the strict compliance of law, and in the light of the settled judicial guidelines, hence the impugned reason is nothing but a reason to suspicion and therefore, the consequent proceedings, u/s 147 deserve to be quashed. 5. Per contra, the ld. DR submitted that from the perusal of the assessment order, it is clear that the Assessing Officer had sufficient material to form belief that income pertaining to AY 2010-11 had escaped assessment. It was submitted that during the course of assessment proceedings of M/s Raj Auto Wheels Pvt. Ltd., Ajmer, it came to the notice of the Department that certain loan amount was received by the appellant from M/s Raj ....
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.... income of Rs. 1.02 Crores escaped assessment. Therefore it is a fit case for issue of notice u/s 148 of the Income-tax Act, 1961." 7. The reasons so recorded thus talk about the fact that the assessee is a Director and beneficial holder of more than 10% voting power in M/s Raj Auto Wheels Pvt Ltd. It further talks about the fact that the said company has advanced a sum of Rs. 1.02 Crores to the assessee during the course of assessment proceedings in case of M/s Raj Auto Wheels Pvt Ltd. On perusal of assessee's ledger account maintained with M/s Raj Auto Wheels, it is noticed that the said account is termed as "Govind Garg - Advance A/c" and has debits totaling to Rs. 1,01,95,000 and credits totaling to Rs. 50,95,000 with closing balance of Rs. 51,00,000. These are undisputed facts which are emerging from the records which are sufficient enough to hold a prima facie view that the conditions for invoking the provisions of section 2(22)(e) are satisfied and given the fact that no original assessment has happened, the income to that extent has escaped assessment. The Assessing officer thus has the tangible material in his possession to form a prima facie view that the advances are ....
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....gible but factually, there was only one agreement and the date of agreement was clearly mentioned thereon being 14.07.2009. It was further submitted that the assessee did not make the payment of Rs. 1 crore within 6 months which itself shows that the parties had cancelled their agreement and was not formalized in terms of sale deed. It was further submitted that the dispute as to the true nature of the subjected amount given by the company to the assessee director, came up for consideration in the assessment of the company M/s Raj Auto Wheels Pvt. Ltd. wherein the AO considered the advance given for non-business purposes and interest @ 12% was charged on the said amount on the basis that company is interest free fund on the allegation that the assessee has paid interest to other parties but not charged interest on the loans given to two persons covered u/s 40A(2)(b) of the Act. However when the matter was taken before ld. CIT(A). The ld. CIT(A) has given a categorical finding that the advance of Rs. 51,000,00/- given by the company to Shri Govind Garg for purchase of land for showroom and service station and such advance are for the purpose of business and for the commercial exp....
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....nt of legitimate tax as per the Act. e) On being pointed out the above contradictions, assessee came forward with another argument by filing fresh objection letter on 02/01/2015 as discussed in para 3.10 above. This time, it was argued and admitted that the amount of 'temporary advance' got by the assessee from company was Rs. 51,00,000/-. Whereas as per the so called 'agreement' the advance claimed to had received by the assessee in lieu of this so called 'agreement' were shown at Rs. 32,45,000/- only (Rs 16,85,000 on 3.7.2009 & Rs. 15,60,000/- on 24.7.2009). This again proves that assessee is again and again furnishing false, fabricated and wrong information and arguments before the department to evade payment of tax. f) Assessee himself admitted in the letter filed on 02/01/2015 that the amount of advance received by the assessee from company during the F.Y. 2009-10 was Rs. 51,00,000/-. It was then argued that in subsequent year i.e. in F.Y. 2010-11 assessee had repaid the amount and as on 31.3.2011 the amount of outstanding balance with the assessee remained at Rs. 1,00,000/- only. This admission itself proves beyond any doubt that asse....
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....2010 after claiming depreciation of Rs. 30,23,022/-as per I.T. Act was dedared at Rs. 13,86,022/-. Thus the accumulated profit of the company as on 31.3.2010 comes to Rs. 28,35,265/- (Rs 14,48,485 + Rs. 13,86,780/). It may be mentioned here that this accumulated profit was arrived at by the company after deducting the allowable depredation as per Income-tax Act. Thus it is unknown what is the basis of a further deduction of Rs. 6,07,615/- from the accumulated profit of Rs. 28,35,265/- asked for by the assessee in his written reply filed on 02/01/2015 and further restricting with 80% of the balance amount. 3.12 In view of the above discussed facts and circumstances of the case, it has become absolutely clear and established on record that assessee's case is fully covered by provisions of Sec. 2(22)(e) which at one point of time has even been admitted by the assessee himself. All the efforts put in by the assessee to justify his arguments have been proven futile and in that exercise, the 'mens-rea' in the minds of the assessee has been exposed. Thus after considering all the facts of the case in its legality and the contradictions found as discussed in the foregoing....
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....alance with the firm. He further submitted that there was also cash lying from his Truck income. The Assessing Officer however observed that as per capital account, there was no withdrawal and further no cash book in support of the withdrawal made from M/s Govind Garg & Co however, he accepted source of cash deposits of Rs. 1.10 lakh from Truck income and after giving credit thereof, an amount of Rs. 7,57,000/- was brought to tax on account of unexplained cash deposit in the bank account of the assessee. On appeal, the ld. CIT(A) has confirmed the said addition. 15. During the course of hearing, the ld. AR submitted that the allegation of the Assessing Officer that cash book was not furnished is not correct as the AO never asked for it at first place. It was submitted that the AO in his showcause dated 25.02.2015 had asked the assessee to explain the source of deposit with the necessary supporting evidence. In response, the assessee filed copy of his capital account along with fund flow statement. It was accordingly submitted that the AO never asked the assessee to produce the cash book of the proprietary concern and it is not in dispute that such books of the proprietary concer....
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....icate, the same has not been claimed. The submission so filed by the assessee was not found acceptable as the Assessing Officer observed that in the return of income filed by the HUF, it has shown net taxable house property income of Rs. 2, 07,522/-. Further, no documentary evidence like any agreement entered into between Bank of Baroda and Govind Swaroop Garg (HUF) has been furnished. The AO accordingly held that the property income shown in the hands of the HUF might be a different property as even there is difference in rental income shown in the return of income HUF and as per ITS of Sh. Govind Swaroop Garg (Individual). After allowing deduction for repair & maintenance @ 30%, the net rental income of Rs. 1,80,592/- was brought to tax in the hands of the assessee. Being aggrieved, the assessee carried the matter in appeal before the ld. CIT(A) who has confirmed the said addition holding that assessee has not produced any documentary evidence that the rental income of Rs. 2,57,988/- pertains to Govind Swaroop Garg (HUF) and not to the appellant. 19. During the course of hearing, the ld. AR reiterated the submission made before the lower authorities. It was submitted that the ....