TaxTMI 
TaxTMI 
2019 (4) TMI 1468
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....kers/private vaults. Information gathered from CBI authorities revealed that following assets were found during the course of searches:- (A) Cash: 1. NDMC Collection Centre, Nirman Bhawan : (i) In carry bag 3,45,000/- (ii) In briefcase 1,91,785/- (iii) In office 1,77,212/- (iv) In Car No.DL-4C-B7242 28,000/- 7,41,997/- 2. Farm House at E-8, Pushpanjali Bagh, Bijwasan 11,60,000/- 3. A-2/177, Safdarjung Enclave, New Delhi 50,000/- 4. Locker No.3017, New Delhi Vaults Ltd. D-70, Defence Colony. 75,00,000/- 5. Locker No.1830L, M/s U and I Vaults, South Extention, Part-I, New Delhi 56,00,000/- 6. Locker No.109, Bank of Baroda, Bharat Nagar, New Delhi. 31,93,500/- 7. Premises at no.A-585, Sector 3, R.K. Puram, New Delhi. 6,15,000/- (B) FDRs : (i) FDRs/TDRs with Bank of Baroda, NIT, Faridabad 67,59,396/- (ii) FDRs with Bank of Baroda, New Friends Colony, New Delhi. 5,00,....
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....er :- A.Y. Date of filing return Income returned Income assessed 1996-97 24.09.1996 Loss of Rs. 10,457/- 98,39,543/- 1997-98 28.11.1997 20,620/- 78,70,620/- 5. On appeal, learned CIT(A) passed a consolidated order for these two years on 14th October, 2004 wherein he sustained the addition made by the Assessing Officer. The assessee, aggrieved with the order of learned CIT(A), is in appeal before us vide ITA No.5452/Del/2004 and 5453/Del/2004. 6. At the time of hearing before us, both the parties argued at length and also filed written submissions. Now, with this factual background, we take up each appeal separately for adjudication. ITA No.405/Del/2001:- 7. This appeal by the Revenue for the assessment year 1997-98 is directed against the order of learned CIT(A)-XIX, New Delhi dated 27th November, 2000. 8. Ground Nos.1 to 3 of the Revenue's appeal read as under :- "1. On the facts and in the circumstances of the case, the ld.CIT(A) has erred in restoring back the addition of Rs. 1,75,03,500/- to the file of the A.O. for fresh determination while observing that the claim of the assessee that the amount represented share application money received from ....
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....d deserves to be rejected. 10. Learned counsel for the assessee, on the other hand, relied upon the order of the learned CIT(A). He stated that CIL had filed the return of income before the Assessing Officer much before the order of the learned CIT(A). This fact is evident from the assessment order itself. The CIL had filed the return for assessment year 1996-97 on 24.09.1996 and for assessment year 1997-98 on 28.11.1997. These dates are noted in the respective assessment orders. Therefore, the allegation of the Revenue that the company CIL did not file the return of income is absolutely incorrect and contrary to the facts on record. He further stated that whether CIL has filed proper returns as per Company Law with the ROC is the matter between the ROC and CIL and it will have no relevance so far as the income tax assessment of Shri Awanindra Singh is concerned. He further stated that learned CIT(A) set aside the matter in the year 2000 while Shri Awanindra Singh pleaded guilty before the Metropolitan Magistrate in the year 2012. Therefore, the question of pleading guilty was not relevant at the time when learned CIT(A) passed the order. In any case, if the issue of pleading guil....
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....ng to Rs. 6.1 5.000 - was recovered from a close associate of the assessee, namely Sh. P R. Singh, who at the time of search by CBI authorities admitted that the cash belonged to the assessee. Further cash amounting to Rs. 28.000 - was also recovered by the C.B.I. authorities from the Maruti 800 Car no. DL 4C B-7242 which was parked in the assessee's residential premises. In the absence of any satisfactory explanation about the nature and source of acquisition of the aforesaid cash totaling to Rs. 1,88,60,497/- the sum of Rs. 1,88,60,497/- is being added to the Income of the assessee." 12. Learned CIT(A) set aside the matter to the file of the Assessing Officer for fresh determination with the following direction :- "This leaves the major amount of cash of Rs. 1,75,03,500/- claimed as belonging to M/s. Computer Land Integrators (1) Ltd. I find that the above company had filed return for The AY96-97 and 97-98 and evidence for the same was filed. The AO has disbelieved the claim merely on the ground that the records were not produced before the department. The returns were filed with ACIT, Company Circle 1(5), New Delhi. However, the company has shown share application money of ....
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....te to be confiscated and deposited with NDMC cannot be considered as unexplained cash of the assessee because SCPL were the collecting agent for the taxes on behalf of NDMC and now, it is established and admitted by Shri Awanindra Singh that it was NDMC's tax collection which was siphoned off and kept in his lockers. Thus, it cannot be treated as unexplained cash for the purpose of income tax in his hands. 14. The Department has also pleaded that CIL neither filed the return of income nor the relevant forms and documents with the Registrar of Companies. So far as filing of the return of income is concerned, from the assessment order of CIL, we find that the return for assessment year 1996-97 was filed on 24.09.1996 and for assessment year 1997- 98 on 28.11.1997. Thus, the said company has filed regular returns of income tax with the concerned Assessing Officer. Therefore, the allegation that the said company did not file the return of income is factually incorrect. If there is any non-compliance under the Companies Act, it is for the Registrar of Companies to take appropriate action but it will have no bearing so far as income tax assessment is concerned. In view of the totality o....
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....r of the assessee by the following finding :- "6.2 I have considered the arguments raised on behalf of the appellant and the submissions made by the AO from time to time. In regard to the interest of Rs. 49,500/- it is found that TDRs were taken by- depositing Rs. 5 lacs on 29.1.96. As pointed out by the AR there was withdrawal of Rs. 5 lacs on 29.1.96 from the bank account of M/s. Software Consultants Pvt. lid. The appellant filed copy of ledger account of M/s. Software Consultants Pvt Ltd. The AO has merely commented that this evidence should not be accepted The AO had not found anything against the claim of the appellant except that books of account were not reliable and were not written in the normal course of business. As discussed above, computerized books were produced. The company had filed returns with the Department and the entire evidence cannot be wished away by claiming that it was not produced during the course of assessment The evidences were produced during the course of appellate proceedings and the AO had been given opportunity to rebut the evidences filed. In my opinion, the evidences filed cannot be rejected and the explanation of the appellant has to be accept....
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....SCPL, the interest, if any, can be considered in their hands only and not in the case of the assessee. In view of the above, we uphold the order of learned CIT(A) deleting the addition for interest on FDRs. Accordingly, ground Nos.5 & 6 of the Revenue's appeal are rejected. 21. Ground Nos.7 to 9 of the Revenue's appeal read as under :- "7. The ld.CIT(A) erred in deleting the addition of Rs. 50,96,735/- made on a/c of unexplained investment in property observing that the investment did not relate to the year under appeal. 8. The ld.CIT(A) has made this observation by relying upon the assessee's submission that these lands were acquired by two trusts in earlier years and have been duly assessed by the Department, and has completely ignored the fact that the source of investment of the properties in question have never been examined by the Department. 9. The ld.CIT(A) has also ignored the fact that the flats in Bombay and agricultural land at Vaishali had allegedly been acquired in A.Y. 94-95 and 93-94 respectively when the trusts had no source of income nor returns had been filed as had been stated by the trustee in her affidavit." 22. We have heard the submissions of both th....
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....s dial the investments were not made in regard to agricultural land in Bihar, land at Najafgarh and the two flats at Mumbai in the year under appeal. The addition made of Rs. 17,31,735 + Rs. 14,65,000 + Rs. 19,00,000 = Rs. 50,96,735 is hereby deleted as the investment did not relate to the year under appeal." 23. Thus, we find that learned CIT(A) has given the year of acquisition of all assets. The agricultural land in Bihar was acquired during the financial year relevant to assessment year 1993-94, agricultural land at Najafgarh was acquired during the financial year relevant to assessment year 1996-97 and flat at Mumbai during the financial year relevant to assessment year 1994-95. When no asset was acquired during the financial year relevant to the assessment year under consideration, there cannot be any question of unexplained investment in acquisition of such asset. ITA No.300/Del/2001:- 24. This appeal by the assessee for the assessment year 1997-98 is directed against the order of learned CIT(A)-XIX, New Delhi dated 27th November, 2000. 25. In this appeal by the assessee, following two grounds are raised:- "1. Ld.CIT(A) is not justified in upholding addition of Rs. 39....
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....while the assessee is in appeal against the addition sustained. 31. At the time of hearing before us, the learned counsel for the assessee stated that SCPL was the collection agent for NDMC. Admittedly, the entire cash found from the NDMC Collection Centre was out of the collections made by SCPL from the customers and therefore, the same cannot be treated to be unexplained cash of the assessee. He further stated that in the charge sheet of the CBI, the CBI has given the working of actual tax collected, amount deposited by SCPL with the NDMC and the amount misappropriated. The total misappropriation in the CBI's report was more than Rs. 3 crores and which is admitted by Shri Awanindra Singh (the assessee) who is also director of SCPL. 32. Learned DR, on the other hand, has relied upon the order of the Assessing Officer and she stated that during assessment proceedings, the assessee never claimed that it is the cash which is of collection on behalf of NDMC and it is at the very late stage, as late as in the year 2014, Shri Awanindra Singh pleaded guilty before the Metropolitan Magistrate. 33. We have carefully considered the arguments of both the sides and perused the material pla....
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....ore, their plea of guilt is separately recorded. In view of plea of guilt, accused Awanindra Singh and accused Priya Ranjan Singh are hereby held guilty and for committing offences U/s 420/406/467/468/471/474/477A/120B IPC. Arguments heard on the point of sentences. Sh. Ratan Deep Singh, Ld APP for CBI has requested that maximum sentence be passed in view the quantum of misappropriation and further consequent loss to the exchequer. Ld. Defence Counsel has prayed for lenient view since the accused persons have already deposited the misappropriated amount with the CBI at initial stages of the investigation and further, both the accused persons have already remained in judicial custody for 90 days and further, they are facing trial for the last 16 years. I have carefully examined the matter. Both the accused persons have already spent 89 days in judicial custody. They are facing trial for the last 16 years They have already deposited the misappropriated amount with the CBI at initial stage of investigation. Accordingly, they are sentenced to the period already] undergone and further, both the accused persons are sentenced to pay fine "o Rs. 7 lacs. An amount of Rs. 3,03,13,9....
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...." 38. At the time of hearing before us, it is stated by the learned counsel that learned CIT(A) set aside the order of the Assessing Officer dated 29th March, 2000 vide his order dated 27th November, 2000. That the set aside assessment was completed u/s 250/143(3) on 31st March, 2003. That the period of limitation is governed by Section 153(2A). That prior to amendment in Section 153(2A), the set aside assessment was to be completed within the period of two years from the end of the financial year in which the relevant order was received. However, Section 153(2A) was amended by the Finance Act, 2001 and, as per the amended provision, the set aside assessment is to be completed within one year from the end of the financial year in which the order of set aside was passed. He submitted that in the amended provision itself and on the notes of clauses, it is clarified by the Government that the period of two years would continue to be applicable for the orders passed before 1st day of April, 2000 and, in such cases, order of fresh assessment may be made at any time up to 31st March, 2002. Thus, the intention of the legislature is very clear that where the order of set aside is after t....
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....4, section 263 or section 264, setting aside or cancelling an assessment, may be made at any time before the expiry of two years from the end of the financial year in which the order under section 146 cancelling the assessment is passed by the Assessing Officer or the order under section 250 or section 254 is received by the Chief Commissioner or Commissioner or, as the case may be, the order under section 263 or section 264 is passed by the Chief Commissioner or Commissioner.]" 41. From the above, it is evident that an order of fresh assessment in pursuance of an order u/s 250 setting aside or cancelling an assessment may be made at any time before the expiry of two years from the end of the financial year in which order of setting aside was passed/received by CCIT or CIT. 42. Section 153(2A) was amended by the Finance Act, 2001 with effect from 1st June, 2001 and the amended Section reads as under :- "[(2A) Notwithstanding anything contained in subsections (1) and (2), in relation to the assessment year commencing on the 1st day of April, 1971, and any subsequent assessment year, an order of fresh assessment in pursuance of an order under section 250 or section 254 or section....
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.... the notice under section 148 has been served, or the appellate or revisionary order mentioned in section 153(2A) has been received or passed, as the case may be, on or after 1st April, 1999, but before 1st April, 2000, the existing time limits will continue and such assessment, reassessment or recomputation may be made at any time up to 31st March, 2002." 44. In the light of the above amended provision, the question before us is whether in respect of the order of the learned CIT(A) dated 27th November, 2000, the old provisions of Section 153(2A) would be applicable or the new provision as amended by the Finance Act, 2001 would be applicable. It is the claim of the Revenue that the amended provision would be applicable where the order of set aside is received by the Chief Commissioner or Commissioner after 1st June, 2001 i.e., the date from which the amended provision of Finance Act, 2001 would be effective. While the claim of the learned counsel is that the amended provision would be applicable to all the orders of set aside received by the Chief Commissioner or Commissioner after the 1st day of April, 2000 as provided in proviso to Section 153(2A). We would like to reproduce th....
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....nts is more than necessary considering that the scope of such assessment or reassessment is generally limited to a few specific issues. With a view to bringing about an early finalization of such proceedings, the Act has amended sub-sections (2) and (2A) of section 153 to reduce the timelimit for making such orders of assessment, reassessment or recomputation to one year." Thus, the legislature has taken a conscious decision to reduce the period of two years for making reassessment of set aside matters to one year. They have also consciously provided that the old provisions of two years would be applicable where such order of set aside was passed or received on or before 1st April, 2000. Thus, to our mind, there is no doubt that where the order of set aside is passed by the CIT(A) under Section 250 after 1st day of April, 2000, the new provision of Section 153(2A) providing the time limit of one year would be applicable. 46. We find that Hon'ble Jurisdictional High Court has also considered the applicability of limitation under Section 153(2A) in the case of Bhan Textile P.Ltd. (supra). The facts of the said case are that the assessment in respect of the assessee was completed....
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.... learned CIT(A) upheld the assessment order. The assessee preferred an appeal to the ITAT which held the assessment to be barred by limitation under Section 153(2A). Hon'ble Jurisdictional High Court upheld the order of the ITAT. 48. We find that the precise dispute before the Hon'ble Jurisdictional High Court was whether in respect of such an order of set aside, Section 153(2A) was applicable or Section 153(3)(iii) was applicable and Hon'ble Jurisdictional High Court held that Section 153(2A) was applicable. However, the facts are identical. That in the said case also, the order of set aside was received on 12th May, 2000 i.e., after the 1st day of April, 2000 but before 1st June, 2001 and notice under Section 143(2) issued on 24th February, 2003 which was held to be barred by limitation. Thus, this decision also supports the case of the assessee. In any case, after considering the proviso to Section 153(2A) as well as the memorandum explaining the provisions of Finance Act, 2001, we are clearly of the opinion that the amended provisions would be applicable where the appellate order is passed or received after 1st April, 2000. As per amended provision, the set aside a....
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....d by the CBI that they were collecting the actual charges of water and electricity bills from the consumers but remitting less amount to NDMC by resorting to fraud in their collection statement. Based on above information, a search was conducted by CBI at the NDMC collection centre at Nirman Bhawan on 27th September, 1996 and also at the residence and the bank lockers of Shri Awanindra Singh. In the said search, apart from various other assets, substantial cash was found. It was explained by Shri Awanindra Singh that the cash amounting to Rs. 1,75,03,500/- belonged to CIL i.e., the assessee. However, the Revenue did not accept the claim of Shri Awanindra Singh and, in his assessment, the above sum was added as unexplained cash. In the first round of appeal, CIT(A), vide his order dated 27th November, 2000 set aside the matter to the file of the Assessing Officer. The Assessing Officer, in the order of reassessment, repeated the addition. In the second round, the CIT(A), vide order dated 18th October, 2004, accepted the assessee's claim that the cash belonged to CIL i.e., the assessee. However, the Revenue did not accept the order of the learned CIT(A) and challenged the deletion of....
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....sessee. It is submitted by the learned counsel that reopening of assessment cannot be based upon the directive of the higher authorities. As per Section 147, the satisfaction of the Assessing Officer for escapement of income is a sine qua non. In this case, there is no satisfaction by the Assessing Officer that there was any escapement of income in the case of CIL. In fact, since beginning till today i.e., at the time of hearing of this appeal by the ITAT, the stand of the Revenue is always that the money belonged to Shri Awanindra Singh and it should be assessed in his hands as unexplained money. It is not in dispute that the dispute is only with regard to cash found by the CBI in the search of Shri Awanindra Singh at his residence and his bank lockers. With regard to such cash, the contention of Shri Awanindra Singh was that it belonged to CIL while, as per Revenue, it is the unexplained money of Shri Awanindra Singh. Thus, when the Revenue never accepted that this money belonged to CIL, where is the question of holding it to be unexplained money of CIL and resultantly, escapement of income in the hands of CIL. He, therefore, submitted that the reopening of assessment is bad in l....
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....Therefore, when the alleged money did not belong to the assessee, the same cannot be treated as unexplained income of the assessee. He made a statement at the Bar that in the assessee's balance sheet, this money has been shown as seized by the CBI authorities and neither this money has been deposited in the bank account nor has been utilized for any other purpose. 55. Learned DR, on the other hand, relied upon the orders of lower authorities. She stated that learned CIT(A) has considered the assessee's contention in respect of reopening of assessment as well as claimed that it is the share application money in detail and has rejected the same with adequate reasons. She heavily relied upon the same. She further stated that it is the assessee who was claiming that it was the share subscription money claimed to have been received from large number of persons in cash. The Assessing Officer examined those persons and found the claim of the assessee to be wrong. Therefore, in these circumstances, the addition for share subscription money being unexplained is fully justified. She further stated that proper reasons have been recorded for reopening of assessment and the assessment has been....
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....he above reasons, we find that at the end of the reasons when the Assessing Officer has sought the approval of the competent authority, it has been mentioned "Kind approval is sought in these cases to issue notices u/s 148 of I.T. Act as no return of income has been filed for these years". (emphasis by underlining supplied by us). From a perusal of the assessment order, we find that the Assessing Officer on the first page first paragraph of the assessment order for assessment year 1996-97 has mentioned "The assessee filed return of income on 24.09.1996 declaring total loss of Rs. 10,457/-". Similarly, in assessment year 1997-98, in the first page first paragraph, the Assessing Officer has recorded "The assessee filed return of income on 28.11.1997 declaring total income of Rs. 20,620/-". Thus, the assessee had filed the returns for assessment year 1996-97 and 1997-98 much before the recording of reasons for reopening of assessment. The reasons for reopening of assessment were recorded on 31st July, 2002 while the return for assessment year 1996-97 was filed on 24th September, 1996 and for assessment year 1997-98 on 28th November, 1997. Therefore, the main premise on the basis of wh....
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....peal before the Hon'ble High Court. During the course of hearing before the High Court, it was submitted by the learned counsel for the Revenue that since the period for issuing notice to the assessee u/s 143(2) of the Act had already elapsed, the Assessing Officer was of the view that income had escaped assessment, the Assessing Officer had no option but to resort to Section 147. The Hon'ble High Court did not agree with the above contention of the learned counsel for the Revenue and held :- "We are of the opinion that in view of the decisions that we have mentioned above, for the purposes of initiating reassessment proceedings, the Assessing Officer could not have made up his mind that the income of the assessee has escaped assessment while a valid return was still pending before him. If the Assessing Officer had allowed the time to elapse for taking action under section 143(2) of the Act, it was entirely his own doing. What the Assessing Officer is now trying to do in an indirect (and incorrect) manner is what he could not have done directly." 60. That the above decision would be squarely applicable to the facts of the assessee's case, as, in this case also, the time limit fo....