TaxTMI 
TaxTMI 
2019 (4) TMI 1468
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....hri Awanindra Singh as well as his bank lockers/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) FDR....
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....eal vide ITA No.5615/Del/2004 and the assessee, aggrieved with addition sustained, is in appeal vide ITA No.5449/Del/2004. 4. The company CIL had filed the return for assessment year 1996 and 1997. The details with regard to income returned and income assessed in these two years are as under :- 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 Rev....
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....ry stand before the ITAT than the plea before the Metropolitan Magistrate. The assessee cannot be permitted to take a different stand before different authorities with regard to ownership of the same money. The assessee's claim before the ITAT that the money belonged to the company SCPL and CIL is gross misrepresentation of facts and 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 i....
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....d. Rs. 3 20.882 - belongs to M s Software Consultants (P) Ltd. and Rs. 3.93,115/- belongs to the NDMC. lnspite of sufficient opportunity allowed in this regard, no documentary evidence such as books of account of the aforesaid concerns or any letter from NDMC in support of his claim, have been produced furnished. Besides above cash amounting 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 fi....
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....red as a basis for holding the order of the learned CIT(A) to be wrong which was passed in the year 2000. Moreover, if this admission by Shri Awanindra Singh before the Metropolitan Magistrate is to be taken into account, then also the cash found from him which was seized by the CBI authorities and has been directed by the Metropolitan Magistrate 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 concer....
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.... 31.3.93 61,07,652 2,12,693 31.3.94 6,06,652 5,32,561 31.3.95 67,74,727 7,05,320 31.3.96 80,78,605 7,17,378 31.3.97 89,55,580 9,43,841 All the balance sheets also contained note that the company's FDRs stood in the name of directors and their relatives." 19. After considering this fact and submissions of both the sides, learned CIT(A) decided this issue in favour 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 w....
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..../s 143(3) and in whose balance sheet, FDRs were duly disclosed, then in our opinion, there would hardly be any justification to treat them as unexplained investment of the assessee merely because books of SCPL were not produced during the assessment proceedings of the assessee. If the Assessing Officer had any doubt, he could have got verified the same through the Assessing Officer of SCPL. Thus, when the FDRs belonged to 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....
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....rh, New Delhi, was purchased by the trust in AY96-97 and even a copy of sale deed was filed. In regard to flat at Mumbai the appellant filed payment receipts which showed that the payments were made by the two trusts in AY94-95. I find that the investments did not relate to the year under appeal and hence were wrongly added in this year. The AO has merely stated that die documents were not filed during die course of assessment proceedings but die fact remains 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 fina....
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.... In carry bag 1,29,097/- (out of Rs. 3,45,000) 3,20,882/- (b) NDMC In carry bag - Rs. 2,15,903/- (out of Rs. 3,45,000/-) In Office -Rs. 1,77,212/- 3,93,115/-" 30. He made the addition of all the above cash in the hands of the assessee. Learned CIT(A) deleted the addition of Rs. 1,91,785/- but sustained the addition of Rs. 3,93,115/- and Rs. 1,29,097/-. The Revenue is in appeal against the relief of Rs. 1,91,785/- allowed by the learned CIT(A) 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 re....
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....ccused Awanindra Singh and Priya Ranjan Singh. Both the accused persons have moved separate applications to plead guilty to offences U/s 420/406/467/468/471/474/477A/120B IPC. Heard I have examined both the accused persons. Accused Awanindra Singh is an Electronic Engineer from IIT. Accused Priya Ranjan Singh has done B.Sc (Non- Medical). Both the accused persons are well educated and having capacity to understand implication of pleading guilty. I am satisfied that both the accused persons are pleading their guilty voluntarily and without any force and coercion. They are also ready to face legal consequences of pleading their guilt and therefore, 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 dep....
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....ed against the order of learned CIT(A)-I, New Delhi dated 18th October, 2004. 37. The first ground of the assessee's appeal reads as under :- "1. That the learned Commissioner of Income Tax (Appeals)-1, New Delhi has erred both on facts and in law in failing to appreciate that the assessment made by the learned DCIT by an order dated 31st March, 2003 was barred by limitation and the assessment made was thus untenable in law. 1.1 That the learned Commissioner of Income Tax (Appeals) has erred in upholding the validity of the assessment made and failing to appreciate that even otherwise, the assessee had not been provided a fair and proper opportunity of being heard." 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....
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....vision of Section 153(2A) cannot be made applicable retrospectively, especially when, in the Act, it has been provided that the amended provision is applicable with effect from 1st June, 2001. 40. We have carefully considered the submissions of both the sides and perused the material placed before us. Section 153(2A), as it stood prior to amendment by the Finance Act, 2001, 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 under section 146 or in pursuance of an order, under section 250, section 254, 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 i....
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.... income under section 147. Similarly, sub-section (2A) of the section provided for a time limit of two years for making of fresh assessment in cases where the original assessment had been set aside or cancelled in appeal or revision. The period of two years provided for making such assessments or reassessments 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 time-limit for making such orders of assessment, reassessment or recomputation to one year. However, where 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 ....
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.... years would be applicable only where the appellate or revisionary order setting aside an assessment is received or passed before 1st April, 2000. If the contention of the Revenue that the amended provision of Section 153(2A) would be applicable in respect of the cases where the appellate or revisionary order is received or passed after 1st June, 2001, there was no necessity of proviso to Section 153(2A) and the said proviso would become redundant. It cannot be presumed that the legislature would provide a proviso which is redundant. That in the CBDT's Circular No.14 of 2001 paragraph 68.3, it has been clearly provided "The period of two years provided for making such assessments or reassessments 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 asid....
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....te his case in respect of the matters covered in the show-cause notice dated March 5, 1999. Thereafter, the learned Assessing Officer may pass order under section 144 taking the explanation into account. Therefore, this matter is restored to the file of the Assessing Officer. Thus, ground No.2 of the appeal is treated as allowed." 47. When the matter was taken up by the Assessing Officer, he issued a notice under Section 143(2) of the Act on 24th February, 2003. The assessee claimed the notice to be barred by limitation in view of provisions of Section 153(2A). Since the assessee did not cooperate with the Assessing Officer, he completed the assessment once again as originally framed. On appeal, 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 ....
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.... under challenge - (i) initiation of proceedings under Section 147 and (ii) upholding of the addition by the CIT(A) in respect of amount claimed to have been received as share subscription money. By way of ground Nos.1 to 6, the assessee has challenged the validity of reopening of assessment and by ground No.7 onwards, the assessee has challenged the addition of Rs. 98.50 lakhs for assessment year 1996- 97 and Rs. 76.50 lakhs for assessment year 1997-98 in respect of share subscription money. The facts of the case are that SCPL had been authorized by NDMC to collect electricity and water charges from the consumers residing in the areas within the jurisdiction of NDMC. On the basis of information, it was found 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....
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.... application money claimed to have been received by the assessee. He stated that along with the return of income, the assessee duly submitted the audited accounts which clearly reflect the share subscription money received by the assessee. If the Revenue wanted to examine the genuineness of such share subscription money, it could have issued the notice u/s 143(2). When the Assessing Officer failed to issue notice u/s 143(2), Section 148 cannot be resorted for the purpose of examination of the correctness of the share subscription money. He further stated that the Assessing Officer has also mentioned that learned CIT(A) gave direction that the source of cash be examined in the case of the company CIL i.e., the assessee. 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 R....
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....subsequently, Shri Awanindra Singh, by pleading guilty before the Metropolitan Magistrate, has admitted that this money was the misappropriated amount of the electricity and water charges collection by SCPL. The Metropolitan Magistrate has held him guilty for misappropriation and also directed confiscation of misappropriated amount of Rs. 3,03,13,951/-. Admittedly, it included the sum of Rs. 1,75,03,500/- which Shri Awanindra Singh claimed as belonging to CIL and which CIL claimed to have been received from share applicants. Admittedly, now, it is evident that this money did not belong to CIL but it was the collection charges of electricity and water bills by SCPL which was tried to be misappropriated by Shri Awanindra Singh. 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 tha....
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....sent to the undersigned by ld.CIT(A)-19, New Delhi, it is noticed that such share application money worth Rs. 98.50 lacs and Rs. 76.50 lacs were received from various persons during AY 96-97 & 97-98 respectively which needs to be examined. In view of this, I am satisfied that income worth Rs. 98.50 lacs for AY 96-97 and Rs. 78.50 lacs for AY 97-98 has escaped assessment which needs to be examined within the meaning of section 147 of the I.T. Act. 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 and also time limit for issue of notice u/s 148 will get barred by limitation on 31.3.2003 for both the years". (Emphasis supplied)." 57. From a perusal of the 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 asse....
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.... We have already recorded the finding that the assessee had already filed the return of income for respective years. Therefore, now the question remains whether the notice could be issued under Section 148 for the purpose of certain examination. 59. We find that Hon'ble Jurisdictional High Court has considered this issue in the case of Ved and Co. (supra). In the said case, the assessee had filed its return of income on 29th September, 1994. On 11th June, 1996, noticed under Section 148 was issued. The reason recorded for issuing notice to the assessee for reassessment was that the assessee had wrongly claimed excessive deduction u/s 80-O of the Income-tax Act. The ITAT has quashed the reopening of assessment and the Revenue was in appeal 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....
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....1), Mumbai." 62. Hon'ble Jurisdictional High Court did not approve the same and held as under :- "All that is required from the assessee is a verification and in terms of section 47(iii) of the Income-tax Act and for enabling it, the assessee was called upon to appear before the Assessing Officer. Thus, it is for verification of the value of these shares and whether the computation is on the market rate on the date of such transfer. This, to our mind, would not in any manner enable the Revenuerespondents to resort to section 147 of the Income-tax Act. In the view that we have taken above, it is not necessary to refer to other judgments relied upon by Mr. Pardiwalla and which also reiterate the settled principle that the reasons ought to be recorded on the date of the issuance of the notice and which must disclose the requisite satisfaction. The reasons as recorded cannot then be substituted or supplemented by filing an affidavit in the court. Thus, additional reasons cannot be supplied and on affidavit. We are of the view that it is not necessary to refer to this principle any further in the facts and circumstances of the present case." 63. That the ratio of the above ....