TaxTMI 
TaxTMI 
2019 (8) TMI 775
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....e appellant. 3. That the said case in law and in the facts, on both, the learned CIT(A) has erred and has made additional addition of Rs. 13,69,100/-, on the basis of the fact that during the search proceeding unexplained 'Jewellery' was found at the resident premises of the appellant, in regarding of the same Assessing officer has stated in assessment order however, by virtue of mistake the same could not added in Assessment order whereas, the same matter was dealt with Assessing officer. 4. That the said case learned CIT(A) and Assessing officer, both has erred on law, whereas the provisions of section 234A(3) and 234B(3) are not applicable in the case of the appellant. 5. That the said case the learned CIT(A) and Assessing officer, both has erred on law in initiate penalty proceeding u/s 271(1)(C) & 271AAA of the Income Tax Act. 6. That the appellant craves leave to add, alter, modify withdraw, amend, substitute any ground (s) of appeal either before or at the time of hearing." [1.1]. The grounds of appeal taken by the assessee in appeal before Ld.CIT(A) are as under:- 1. "That the Ld Assessing Officer has erred on facts and in law....
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....bers of whole family or close relatives to the younger one. 3.1. The explanation offered are far from the satisfactory as no details of the receipt in the shape of occasions, name of the relatives or other details to prove the genuineness of the cash received as is alleged above. Therefore, the entire sum of Rs. 4,15,400/- is treated as unaccounted income of the assessee and will be added in the income of the assessee." [2.1]. The assessee filed appeal before Ld. CIT(A)-25, Delhi. Vide order dated 31.05.2016, Ld.CIT(A) confirmed the aforesaid addition of Rs. 4,15,400/- vide paragraph 7.4 of his aforesaid impugned order. The assessee's ground of appeal regarding interest u/s 234A and 234B of the Act was dismissed by Ld.CIT(A) vide paragraph 7.5 of his aforesaid impugned order dated 31.05.2016. Also, the assessee's ground of appeal regarding initiation of penalty proceedings was dismissed by Ld.CIT(A) vide paragraph 7.6 of the aforesaid impugned order dated 31.05.2016. Ld.CIT(A) made a further enhancement of Rs. 13,69,100/- being value of unexplained jewellery found during the course of search vide paragraphs 7.8 to 7.21 of his aforesaid impugned order dated 31.05.2016. T....
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....given by the Assessee. The same situation continues in the Appellate Proceedings and no details or justification regarding the Cash could be given. Hence there is no reason to interfere with the order of the Assessing Officer in this respect and the addition towards Unexplained Cash amounting to Rs. 4,15,400/- treated as Unaccounted Income of the Assessee is hereby confirmed. 7.5 The Appellant has challenged the imposition of interest u/s 234 A and 234 B. However, the levy of Interest u/s 234 A and 234 B is mandatory and is on the basis of the Income Tax Act, 1961. There is nothing to show that the Interest charged is excessive. Hence, this Ground of Appeal is also rejected. 7.6 The Appellant has also challenged the initiation of Penalty u/s 271 (1) (c ) and 271 AAA of the Income Tax Act, 1961. However, such ground challenging the mere initiation of Penalty is premature hence it is rejected. 7.7 Ground no. 4 & 5 are general in nature and the Appellant has been unable to provide any justification for the claims. These Grounds are also rejected. 7.8 During the Appellate Proceedings, it was noticed that as per Para 3 of the Assessment Order , it has....
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....Rs. 13,69,100/-. 7.10 In view of the above, it is clear that the Assessee could not explain the nature and source of Jewellery found in the Search Proceedings amounting to Rs. 13,69,100/- and has not challenged this finding of the Learned Assessing Officer, who having given the finding that the Jewellery found was Unexplained, failed to add the value of this Unexplained Jewellery amounting to Rs. 13,69,100/- to the Total Income of the Assessee. In view of this situation, an opportunity was given the Appellant u/s 251(21 of the Income Tax Act, 1961 to explain as to why enhancement of the income assessed by the Assessing Officer at Rs. 61,51,400/- vide Assessment Order u/s 143(3) dated 30.03.14 for AY 12-13, by Rs. 13,69,100/- should not be made, being the value of the Unexplained Jewellery found in the Search conducted u/s 132 of the Income Tax Act, 1961 upon the Assessee on 17.08.11. 7.11 A Notice u/s 251(2) of the Income Tax Act, 1961 for enhancement of Income was issued to the Appellant on 18.05.16, stating as under : "You have submitted an Appeal u/s 246(A) of the Income Tax Act, 1961 against the Assessment Order u/s 143(3) of the I.T. Act, 1961 dated ....
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....d for which Penalty Proceedings u/s 271 (1) (c) were initiated. 5, The Assessee has challenged the initiation of Penalty u/s 271 (l)(c) of the Income Tax Act, 1961 (alongwith initiation of Penalty u/s 271AAA) in Ground no. 3 of the Appeal. This Ground is partly linked with the finding regarding the Unexplained Jewellery found during the Search Proceedings. The Assessing Officer has held the Jewellery found to be Unexplained and has initiated Penalty Proceedings u/s 271 (l)(c), but the Assessee has challenged only the initiation of Penalty u/s 271 (l)(c) and has not challenged the findings of the Learned Assessing Officer regarding the Assessee's failure to explain the nature and source of Jewellery found in the Search Proceedings amounting to Rs. 13,69,100/-. 6. In view of the above, it is clear that the Assessee could not explain the nature and source of Jewellery found in the Search Proceedings amounting to Rs. 13,69,100/- and has not challenged this finding of the Learned Assessing Officer, who having given the finding that the Jewellery found was Unexplained, failed to add the value of this Unexplained Jewellery amounting to Rs. 13,69,100/- to the Total In....
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.... detail regarding the claimed receipt of Cash, particularly the occasions, names of the relatives and other details to prove the genuineness of the Cash claimed to be received were given and hence the entire Cash found amounting to Rs. 4,15,400/- was treated as unaccounted income of the Assessee. 3. It is further clearly mentioned in Para 4 of the Assessment Order that the Assessee failed to explain the nature and source of the jewellery found. The specific observations of the Learned Assessing Officer in Para 4 of the Assessment Order are as under: - "For assessee's failure to explain the nature and source of jewellery found as discussed above satisfactorily I am satisfied that assessee has failed to file true and correct return of income for which penalty proceedings will be taken by issue of penalty notice u/s 271 (1) (c)." 4. Thus, the Learned Assessing Officer has given the clear finding that the Assessee could not explain the nature and source of the Jewellery found in the Search. However, while computing the Income of the Assessee in Para 5 of the Assessment Order the addition of only Rs. 4,15,400/-towards Unexplained Cash found in the Search P....
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.... 13,69,100/- which had found during the search proceeding at the premises of assessee. It matter is 100% tested water by assessing officer. Para no. 4 of the assessment order wherein stated that for assessee's failure to explain the nature and source of cash and Jewellery found as discussed above satisfactorily 1 am satisfied that assessee has failed to file true and correct return of income for which penalty proceedings will be taken by issue of penalty notice u/s 271(1 )(C) will be initiated. After plain reading of Para no. 4 of the assessment order It shows a typing mistake, the same matter had been already discussed during assessment proceeding and had been also accepted by assessing officer, it matter may be also verified with office note of assessing officer. The Law Powers of the [Commissioner (Appeals)] 251. (1) In disposing of an appeal, the [Commissioner (Appeals)] shall have the following powers- (a) in an appeal against an order of assessment, he may confirm, reduce, enhance or annul the assessment. (b) in an appeal against an order imposing a penalty, he may confirm or cancel such order or vary it so as....
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.... are very clear wherein the Learned Assessing Officer has made it clear that the explanations were not satisfactory. The Ld. Assessing Officer has stated in Para 3.1 of the Assessment Order that " The explanation offered are far from the satisfactory... ". The Learned Assessing Officer has also stated in Para 4 of the Assessment Order that "For assessee's failure to explain the nature and source of Jewellery found as discussed above satisfactorily I am satisfied that the assessee has failed to file true and correct return of income... ". 7.14 Thus, it is clear that contrary to the claim of the Assessee that on the issue of Jewellery, the Assessing Officer was satisfied with the explanations submitted by the Assessee, the Learned Assessing Officer has clearly recorded his dissatisfaction with the contentions of the Assessee and has clearly stated that the Assessee failed to explain the nature and source of Jewellery found in the Search. The Assessee's claim that the Assessing Officer recorded his satisfaction in the Office Note. However, firstly neither there is any such Office Note available on file nor could be produced by the Appellant and secondly, the findings in the m....
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....) , but the Assessee has challenged only the initiation of Penalty u/s 271 (l)(c) and has not challenged the findings of the Learned Assessing Officer regarding the Assessee's failure to explain the nature and source of Jewellery found in the Search Proceedings amounting to Rs. 13,69,100/-. In such a situation, it is not only clear that the value of the Unexplained Jewellery amounting to Rs. 13,69,100/- as to be added to the Income, but also that the issue directly arises from the Assessment Order. 7.18 An examination of various judicial pronouncements on the issue of enhancement of assessment by the Commissioned Appeals) shows that the enhancement of income in the instant case was fully justified. 7.19 It has been held by the Hon'ble Gujarat High Court in the case of Commissioner of Income Tax vs. Ahmedabad Crucible Company, 206 ITR 574 (as per headnote) that : "The powers of the Appellate Assistant Commissioner are not confined to the subject- matter of the appeal, but extend to the subject-matter of the assessment. The entire assessment is thrown open before the Appellate Assistant Commissioner, and so long as it does not travel outside the matters con....
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....rly enunciated in the said decision is that the question raised has been decided ultimately in the light of the decision of the Supreme Court in the case of Hukumchand Mills Ltd. v. CIT [1967] 63 ITR 232. Accordingly, it must first be determined as to what is the subject-matter of the appeal and that can only be determined by finding out what the Appellate Assistant Commissioner decided, whether expressly or impliedly. The subject- matter of the appeal before the Tribunal can only be the decision, whether expressed or implied, of the Appellate Assistant Commissioner, and the jurisdiction of the Tribunal is thus restricted to the subject-matter of the appeal. Once the subject-matter of the appeal is determined, the Tribunal has very wide powers to deal with all questions of fact and law pertaining to this subject-matter of appeal, and it can allow a new question of law to be raised in support of the same. The same decision at page 694 also deals with the powers of the Appellate Assistant Commissioner. In this context, it has been observed that the powers of the Appellate Assistant Commissioner are not confined to the subject-matter of the appeal, but extend to the subject-m....
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.... be answered in the affirmative..." 7.20 It was held by the Hon'ble Supreme Court in the case of CIT vs Nirbheram Daluram, 224 ITR 610 that the CIT(Appeals) was entitled to direct additions in respect of items of income not considered by the Assessing Officer. It was held by the Hon'ble Supreme Court in this case as under : "In this appeal, by special leave, the question that falls for consideration relates to the scope of the powers of the Appellate Assistant Commissioner while dealing with appeals against orders of Assessing Officers under section 251 of the Income-tax Act, 1961 (hereinafter referred to as "the Act"). The matter relates to the assessment year 1956-57. Nirbheram Daluram (hereinafter referred to as "the assessee") is a partnership firm carrying on business in grains, rice, gunny bags and oil seeds, etc. Under order dated March 11, 1957, assessment was originally made on a total income of Rs. 28,724. On reassessment in proceedings initiated under section 147 of the Act the Income-tax Officer included in the total income a sum of Rs. 2,45,000 referable to ostensible transactions in hundi loans shown by the assessee. The assessee filed an appeal agai....
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.... by the said decision of the High Court, the Revenue has filed this appeal. Shri Ranbir Chandra, learned counsel appearing for the Revenue, has submitted that the High Court was in error in construing narrowly the powers conferred on the Appellate Assistant Commissioner under section 251 of the Act. Learned counsel has pointed out that the decision in Addl. CIT v. Gurjargravures Pvt. Ltd. [1978] 111 ITR 1 (SC), on which reliance has been placed by the High Court, was a decision of a two-judge Bench and that its correctness has been doubted by a Bench of three judges in Jute Corporation of India Ltd. v. CIT [1991] 187 ITR 688 (SC). In Jute Corporation of India Ltd. v. CIT [1991] 187 ITR 688, this court has referred to the earlier decision of this court in CIT v. Kanpur Coal Syndicate [1964] 53 ITR 225, 229, which was also a decision of a three judge Bench wherein the scope of section 31 (3)(a) of the Indian Income- tax Act, 1922 (which was almost identical to section 251(1)(a) of the Act) was considered and it was held (at page 693): "If an appeal lies, section 31 of the Act describes the powers of the Appellate Assistant Commissioner in such an appeal. Un....
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....t of the decision in the Gujarat case that the three judge Bench decision in Kanpur Coal Syndicate case [1964] 53 iTR 225 (SC) was not brought to the notice of the Bench in Gurjargravures Pvt. Ltd. [1978] 111 ITR 1 (SC). In the circumstances, the view of the larger Bench in Kanpur Coal Syndicate case [1964] 53 ITR 225 (SC) holds the field." Having regard to the decision in Jute Corporation of India Ltd. [1991] 187 ITR 688 (SC), it must be held that the High Court was in error in holding that the appellate power conferred on the Appellate Assistant Commissioner under section 251 was confined to the matter which had been considered by the Income-tax Officer and the Appellate Assistant Commissioner exceeded his jurisdiction in making an addition of Rs. 2,30,000 on the basis of the other 10 items of hundis which had not been explained by the assessee. This means that even if question No. 2 is answered in the affirmative, questions Nos. 1 and 3 must be answered in the negative. The appeal is, therefore, allowed, the impugned judgment of the High Court in so far as it relates to questions Nos. 1 and 3 is set aside and the said questions are answered in the negative, i.e., in fav....
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....nd was the "money received on functions or during meet by elderly members of whole family or close relatives to the younger one." [Italicized words have been quoted from assessment order]. The AO had rejected this explanation on the ground that "no details of the receipt in the shape of occasions, name of the relatives or other details to prove the genuineness of the cash received". [Italicized words have been quoted from assessment order]. We find from perusal of the record that the assessee failed to furnish any satisfactory explanation regarding the aforesaid addition of Rs. 4,15,400/- even during the appellate proceedings before Ld.CIT(A). Even during the appellate proceedings in ITAT, the assessee has failed to furnish any satisfactory explanation regarding the aforesaid amount of Rs. 4,15,400/-. Relevant portion of the order of Ld.CIT(A) has already been reproduced in foregoing paragraph 2.1 of this order. In view of the foregoing discussion and as the assessee has failed to bring any material for our consideration during appellate proceedings in ITAT, to persuade us to take a view different from the view taken by Ld.CIT(A) in his impugned order; the addition made by the A....