TaxTMI 
TaxTMI 
2020 (4) TMI 793
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.... assessment order. The Officer, inter alia, while relying on the Balance Sheet and the books of account, took note of the credits amounting to Rs. 2,26,000/( Rupees two lakhs twenty six thousand only). The Officer treated that amount as "Cash credits" under Section 68 of the 1961 Act and added the same in declared income of the assessee (for short, 'second addition'). The Officer then proceeded to compute the income of the assessee for the concerned assessment year. The relevant part of the computation is mentioned below: " Credits: On examining the balance sheet and accounts books of assessee, it is apparent that the assessee has shown credit amount of Rs. 2,26,000/in the names of the following 15 persons: ... ... ... Accordingly, sufficient time and opportunity was granted to prove the veracity of credits of Rs. 2,26,000/as shown by assessee. However false/wrong particulars or explanation were submitted with respect to credits shown by assessee. In this manner, the credits of Rs. 2,26,000/shown in the name of 15 persons, is not correct and any correct proof/evidence has not been produced by assessee with respect to income of creditors and source of inco....
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.... but bogus entries and was justly added to the income of the appellant/assessee. The Court also noted other reasons to dismiss the appeal. Relevant part of the judgment is reproduced hereunder: "" In our view, none of the submissions advanced by the learned counsel for the appellant has force. Learned counsel has proceeded on the basic assumption, about the factum of purchase of goods, having accepted by the authorities below, while the categoric finding of the Assessing Officer, which has not been disturbed in appeal is, that regarding this purchase from unregistered dealer assessee was called upon during the course of assessment proceedings to prove the correctness and genuineness of his claim, but he completely failed, and therefore, the purchase cannot be accepted. In our view, this finding, rather is clear and categoric, that no purchase was affected by the assessee, and amount was shown in a bogus manner, shown to be standing to credit of alleged purchasers, who could not be shown, to be either existent, or to be the creditors of the assessee, much less for the consideration alleged by the assessee. It is clear from the assessment orders and the finding affirmed in t....
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.... Section 145(3) of the 1961 Act. For that, the appellant/assessee relies on the amendment of the 1961 Act which came into effect from 1.4.1997. It is urged that Section 145(2) prior to 1.4.1997 (pre-amendment) is akin to Section 145(3) post 1.4.1997 (post-amendment). It is thus urged that the Department committed error in mentioning Section 145(2) and not Section 145(3); Second, that the assessment order in reference to the first addition has incorrectly mentioned the term "not". According to the appellant/assessee, the prefix of the paragraph and the language used, makes it abundantly clear that the Department had relied upon Section 145(3) of the 1961 Act to impose the addition. The appellant/assessee has also placed reliance on the Hindi version of the assessment order to buttress this submission; Third, that the assessment was made under Section 144 as the same refers to Section 145(3). Under Section 144, the Officer has to make "best judgment assessment". The appellant/assessee urges that the purport of the stated provision is that the Officer reassesses the entire accounts and makes the assessment of total income and thereafter computes the income tax liability. Resultantly, ....
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....er Section 271(1)(c) dated 17.11.2006 qua the appellant/assessee for the selfsame assessment year 19981999. The Income-tax Officer had passed the said order as a consequence of the conclusion reached in the assessment order which had by then become final upto the stage of ITAT vide order dated 27.4.2006 to the effect that the stated purchases by the appellant/assessee from unregistered dealers were bogus entries effected by the appellant/assessee. Resultantly, the penalty proceedings under Section 271 were initiated by the Officer. That order, however, has now been set aside by the appellate authority [CIT(A)] in the appeal preferred by the appellant/assessee, vide order dated 13.1.2011 with a finding that the appellant/assessee had not made any concealment of income or furnished inaccurate particulars of income for the concerned assessment year. As a consequence of the decision of the appellate authority, even criminal proceedings initiated against the appellant/assessee have been dropped/terminated and the appellant/assessee stands acquitted of the charges under Section 276(C)(D)(1)(2) of the 1961 Act vide judgment and order dated 6.6.2011 passed by the Court of Additional Chief ....
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....of goods worth Rs. 3,57,463/and disclose of closing stock of Rs. 2,92,490/as disclosed in the trading account for the year ended on 31.3.98. ................ Without purchases of marbles, there could not have been sale and disclosure of closing stock in the trading account and it suggests that the appellant must have purchased marble slabs from unregistered dealers. ................ The explanation given by the appellant in respect of purchases from the unregistered dealer and their genuineness are substantiated by filing of affidavits, producing before the Assessing Officer in the course of remand report and the Assessing Officer did not find any objectionable in respect identity of the unregistered dealers and claim made for sale of marble slabs to the appellant in the Financial Year relevant to AY 9899. .............. Thus, there was no justification not to accept the purchase made from unregistered dealers. If such an addition is made, it would give unreasonable rate of profit. The vouchers in respect of purchases made from unregistered dealers were produced by the appellant." (emphasis supplied) Finally, in para....
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....llowed; (iii) any loss carried forward, deduction, allowance or relief claimed in the return, which, on the basis of the information available in such return, accounts or documents, is prima facie inadmissible, shall be disallowed: Provided further that where adjustments are made under the first proviso, an intimation shall be sent to the assessee, notwithstanding that no tax or interest is found due from him after making the said adjustments: Provided also that an intimation for any tax or interest due under this clause shall not be sent after the expiry of two years from the end of the assessment year in which the income was first assessable. (b) Where as a result of an order made under sub-Section (3) of this section or section 144 or section 147 or section 154 or section 155 or section 250 or section 254 or section 260 or section 262 or section 263 or section 264, or any order of settlement made under sub-Section (4) of section 245D relating to any earlier assessment year and passed subsequent to the filing of the return referred to in clause (a), there is any variation in the carry forward loss, deduction, allowance or relief claimed in the ....
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....reduced or is converted into income, the Assessing Officer shall, (A) in a case where the increase in income under subclause (i) of this clause has increased the total income of such person, further increase the amount of tax payable under sub-Section (1) by an additional income-tax calculated at the rate of twenty per cent on the difference between the tax on the total income so increased and the tax that would have been chargeable had such total income been reduced by the amount of adjustments and specify the additional income-tax in the intimation to be sent under subclause (i) of clause (a) of sub-Section (1); (B) in a case where the loss so declared is reduced under subclause (ii) of this clause or the aforesaid adjustments have the effect of converting that loss into income, calculate a sum (hereinafter referred to as additional income-tax) equal to twenty per cent of the tax that would have been chargeable on the amount of the adjustments as if it had been the total income of such person and specify the additional income-tax so calculated in the intimation to be sent under subclause (i) of clause (a) of sub-Section (1); (C) where any refund is due ....
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....ll be deemed to be a notice of demand issued under section 156 and all the provisions of this Act shall apply accordingly: Provided that an assessee, who has furnished a revised return under sub-Section (5) of section 139 after the service upon him of the intimation under sub-Section (1) of this section, shall be liable to pay additional income-tax in relation to the adjustments made under the first proviso to clause (a) of sub-Section (1) and specified in the said intimation, whether or not he has made the said adjustments in the revised return. (2) Where a return has been made under section 139, or in response to a notice under sub-Section (1) of section 142, the Assessing Officer shall, if he considers it necessary or expedient to ensure that the assessee has not understated the income or has not computed excessive loss or has not underpaid the tax in any manner, serve on the assessee a notice requiring him, on a date to be specified therein, either to attend his office or to produce, or cause to be produced there, any evidence on which the assessee may rely in support of the return: Provided that no notice under this sub-Section shall be served on the....
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.... the Assessing Officer, after taking into account all relevant material which the Assessing Officer has gathered, shall, after giving the assessee an opportunity of being heard, make the assessment of the total income or loss to the best of his judgment and determine the sum payable by the assessee on the basis of such assessment: Provided that such opportunity shall be given by the Assessing Officer by serving a notice calling upon the assessee to show cause, on a date and time to be specified in the notice, why the assessment should not be completed to the best of his judgment: Provided further that it shall not be necessary to give such opportunity in a case where a notice under sub-Section (1) of section 142 has been issued prior to the making of an assessment under this section. (2) The provisions of this section as they stood immediately before their amendment by the Direct Tax Laws (Amendment) Act, 1987 (4 of 1988), shall apply to and in relation to any assessment for the assessment year commencing on the 1st day of April, 1988, or any earlier assessment year and references in this section to the other provisions of this Act shall be constru....
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....le of marble slabs by them to the appellant/assessee in the financial year relevant to assessment year 19981999 and receipt of payments after two to three years. Further, there was no denial of purchase of marbles worth Rs. 4,78,900/( Rupees four lakhs seventyeight thousand nine hundred only) by the assessee and sale thereof worth Rs. 3,57,463/( Rupees three lakhs fiftyseven thousand four hundred sixty three only) with closing stock of Rs. 2,92,490/( Rupees two lakhs ninety two thousand four hundred ninety only), as disclosed in the trading account for the year ended on 31.3.1998. The appellate authority thus found that without purchases of marbles, there could be no sale and disclosure of closing stock in the trading account. In other words, the materials on record would clearly suggest that the concerned unregistered dealers had sold marble slabs on credit to the appellant/assessee, as claimed. As a consequence of this finding, the appellate authority concluded that there was neither any concealment of income nor furnishing of inaccurate particulars of income by the assessee. We are conscious of the fact that these observations are made by the competent forum (appellate authority....