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2015 (11) TMI 1878
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....se, the appellant stood assessed for the assessment year 2002-03 and there being no assessment related proceedings pending for the said assessment year, the assessment made earlier could not be treated to have abated; the Assessing Officer was not validly vested with the jurisdiction to issue notice under section 153A and make second assessment in pursuance thereof. 2. BECAUSE view which is contrary to the pleading as above, as has been taken by "CIT(A)" is wholly erroneous and illegal too. 3. It was submitted by Learned A. R. of the assessee that these grounds are not pressed. Accordingly, these grounds are rejected as not pressed. 4. Ground No. 3 & 4 are inter-connected, which read as under: 3. BECAUSE on a due consideration of the facts and circumstances of the case, particularly that - (a) the appellant had duly filed the "return", by stating that the "return" filed earlier be treated to be the "return" filed in compliance with the notice under section 153A; (b) the "return" filed in the said manner, even if, the same was belated, constituted "return filed" in compliance with the notice under section 153A; (c) the "ret....
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....s in the context of assessment u/s 147 whereas the judgment of Hon'ble Delhi High Court in the case of Ashok Chaddha (Supra) is in the context of assessment u/s 153A and in this judgment, it was held that the requirement of issue and service of notice u/s 143(2) is not applicable in the assessment made in compliance to notice u/s 153A. We also find that in the case of Rajeev Sharma (Supra), the decision of Hon'ble Allahabad High Court is in favour of the assessee but the same is in the context of section 147 of the Act. We have already considered both these judgments in a case and have decided the issue against the assessee by following the judgment of Hon'ble Delhi High Court and the judgment of Hon'ble Allahabad High Court in the case of Rajeev Sharma (Supra) was not followed because this judgment is in the context of section 148 assessment and not assessment u/s 153A. No other judgment has been brought to our notice by Learned A. R. of the assessee which is in the favour of the assessee and is in the context of assessment u/s 153A of the Act. Therefore, in the present case also, we follow the judgment of Hon'ble Delhi High Court and decide the issue against the a....
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....d that there is no merit in ground No. 5 and the same is also rejected. 12. Ground No. 6 to 10 are inter-connected, which read as under: "6. Because the CIT(A) has erred in law and on facts in upholding the addition of sums aggregating Rs. 20,00,000/- as had been borrowed from various persons as per particulars given below: Sl.No. Name of the lenders Amount Date of (Rs.) borrowing 1. Smat Rubber P. Ltd. 5,00,000 19/07/2000 2. Raj Kumar Agarwal 2,00,000 19/07/2000 3. Chandra Sekhar Agarwal 2,00,000 19/07/2000 4. Anil Kumar Khandelwal 1,50,000 19/07/2000 5. Khandelwal Trading Co. 2,50,000 19/07/2000 6. Saloni Garg 7,00,000 20/07/2000 Total 20,00,000 7. Because CIT(A) has erred in making observations to the effect that the onus of proving the identity, creditworthiness and genuineness of the borrowings (as made from the above mentioned persons) that had lied upon the appellant remained undischarged, in view of the principles laid down in various case laws (as have been specifically referred to in Para 5.4 of the impugned appellate order). ....
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....is undisputed fact that as per the assessment order, it is held by the A.O. that deduction of Rs. 156,942/- being interest on this very loan of Rs. 20 Lacs is allowable and he made addition of only Rs. 83,058/- after reducing this amount from the amount of Rs. 2.40 Lacs brought to tax by him as notional interest on loan given by the assessee of Rs. 20 Lacs. We are aware that it is held by learned CIT (A) that this notional interest of Rs. 2.40 Lacs cannot be brought to tax but this is immaterial because if the assessee actually received interest on this loan given by the assessee at any point of time, the same can be taxed only after reducing deduction allowed by the A.O. himself on account of interest paid by the assessee on this very loan. Having allowed deduction on account of interest on this very loan of Rs. 20 Lacs, the A.O. cannot say that the loan is unexplained and add the same u/s 68 because the A.O. cannot blow hot and cold together. We, therefore, delete this addition. 14. Ground No. 11 is as under: "11. BECAUSE the "CIT(A)" has erred in law and on facts in sustaining the addition of Rs. 15,000/- in the hands of the appellant, on account of alleged ''....
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....econd assessment in pursuance thereof. 2. BECAUSE view which is contrary to the pleading as above, as has been taken by "CIT(A)" is wholly erroneous and illegal too. 3. BECAUSE on a due consideration of the facts and circumstances of the case, particularly that - (a) the appellant had duly filed the "return", by stating that the "return" filed earlier be treated to be the "return" filed in compliance with the notice under section 153A; (b) the "return" filed in the said manner, even if, the same was belated, constituted "return filed" in compliance with the notice under section 153A; (c) the "return" so filed by the appellant, had duly been taken cognizance of by the Assessing Officer; (d) after the "return" had been filed in the aforesaid manner, the appellant was not served with any questionnaire nor any notice under section 143(2); the "CIT(A)" should have held that ACIT had lost jurisdiction to make assessment in pursuance of notice under section 153A and accordingly the assessment order dated 31/12/2008 was void abinitio. 4. BECAUSE various case laws as have been referred to and relied upon by the "C1T(A)"....
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....he reasons given by the Tribunal that no material was found during search, cannot be sustained since it is held by Hon'ble Allahabad High Court that the Assessing Officer has the power to reassess the returns of the assessee not only for the undisclosed income which was found during search but also with regard to the material that was available at the time of original assessment. Respectfully following this judgment of Hon'ble Allahabad High Court, we hold that there is no merit in ground No. 5 and the same is rejected." 22. Accordingly grounds Nos. 1 to 5 are rejected. 23. Ground Nos. 6 to 9 are inter-connected, which read as under: 6. BECAUSE the authorities below have erred in law and on facts in making/sustaining addition of Rs. 26,22,482/- made up of (a) Value of Indian Millennium Deposit (IMD) of 50,000 US$ (as worked out by the A.O. on 19.06.2001 which is the date of endorsement on "IMD" and delivered by State Bank of India. 24,50,918 (b) Undisclosed expenditure as worked out at the rate of 7% of above. 2,45,091 26,96,009 to the income of the appellant, on the ground that identity of the donor as also the cir....
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....ct., 2003 on the application of Sri K.C. Kapadia, which is established from the application sent by the Chief Manager, SBI, NRI Branch, Mumbai. 2. Such bonds could be purchased only by NRI against the foreign currency. Admittedly, the bonds were purchased against US dollars. Thus, the source of the money for the purchase of the bond, being US dollars is outside India. 3. The bonds reveal that they were transferable and, accordingly, they were transferred in favour of the assessee by Sri K.C. Kapadia. 4. As a result of transfers of such bonds in favour of the assessee, the assessee received the maturity amount from the SBI and credited in her account. Letter of the Chief Manager, SBI, NRI Branch, Mumbai, dt. 28th Feb., 2006 confirms the transfers by way of gift to the assessee by Sri K.C. Kapadia. 5. Undisputedly, in purchasing the four bonds the investments were made on 1st Oct., 1998 and not in the year under consideration and in the year under consideration, namely, in the asst. yr. 2004- 05 only the maturity amounts of the bond were received. 6. Thus, so far as the year under consideration is concerned, the source and nature of deposi....
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....cts as have been discussed in Para 21, 22 & 23 above." 18.1 As per the above paras, it is seen that this issue is covered in favour of the assessee by the judgment of Hon'ble Allahabad High Court rendered in the case of Kanchan Singh (supra). In that case also, the issue in dispute before the High Court was regarding Resurgent India Bond of 10,000 US$ each which were purchased by Shri K. C. Kapadia on 1st October, 1998 and were gifted by him to the assessee Kanchan Singh on 28/02/2006. The assessment year involved before Hon'ble Allahabad High Court was 2004-05. Under these facts, it was held by Hon'ble Allahabad High Court that there is no reason to doubt the genuineness of gift by Shri K. C. Kapadia to the assessee and therefore, the assessee was able to establish the nature and source of the money because the same were the maturity proceeds of four bonds purchased by Shri K. C. Kapadia on 1st October 1998 and therefore, no addition can be made in assessment year 2004-05. In the present case also, India Millennium Bond of US$ 50,000 were gifted by Jayesh Arvind Bhai Patel of Dubai to the assessee as gift letter dated 18/06/2001. This IMD Bond Certificate was ....
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....d expenses of Rs. 4.50 Lacs, but he confirmed the addition of only Rs. 15,000/- by saying that the family has many earning members. But neither the Assessing Officer nor the CIT(A) has given any basis for holding that the house hold withdrawal shown by the assessee is not sufficient. Hence, we delete this addition of Rs. 15,000/-. This ground is allowed. 29. In the result, the appeal of the assessee stands allowed partly. 30. Now we take up the appeal of the assessee for assessment year 2005-06 in I.T.A. No.348/Lkw/2013. 31. Ground Nos. 1 to 5 are as under: "1. BECAUSE on the facts and circumstances of the case, particularly that - (e) the appellant could not have been treated to be the person subjected to search under section 132(1); and (f) in any case, the appellant stood assessed for the assessment year 2002-03 and there being no assessment related proceedings pending for the said assessment year, the assessment made earlier could not be treated to have abated; the Assessing Officer was not validly vested with the jurisdiction to issue notice under section 153A and make second assessment in pursuance thereof. 2. BECAUSE view....
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....to the grounds raised by the same assessee in assessment year 2001-02 and also by the wife of the assessee Smt. Shaila Agarwal in I.T.A. No.387 and 352/Lkw/2013 and these grounds may be decided in the present year also in the similar line as in the case of Smt. Shaila Agarwal. 33. We have considered the rival submissions. We find that the issue raised by the assessee in these grounds regarding non-issue of notice u/s 143 (2) is decided by us in A.Y. 2001 - 02 against the assessee as per Para No. 7 above. The second issue about non finding of incriminating material in search is identical to the issue raised in the appeal of Smt. Shaila Agarwal. In the case of Smt. Shaila Agarwal, this issue was decided against the assessee and therefore, on similar line, in the present case also, this issue is decided against the assessee. For the purpose of ready reference, relevant Para from the tribunal order in the case of Smt. Shaila Agarwal is reproduced below "14. We have considered the rival submissions. We find that it was held by Hon'ble Allahabad High Court in the case of Raj Kumar Arora (supra) that the reasons given by the Tribunal that no material was found during searc....
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....d Shri Ashok Dayal (partner Sunder Talkies) and Shri Shailendra Kumar Singh regarding deal of Rs. 132 lac, the assessee has made cash payment of Rs. 5 lac to Shri Ashok Dayal up to 24/07/2004 and further payment of Rs. 10 lac has been made by the assessee by account payee cheque dated 23/07/2004 drawn on HDFC Bank and in addition to that, amount of Rs. 1.25 lac was paid in cash after 24/07/2004 till the date of search and in this manner, total cash payment of Rs. 6.25 lac was made by the assessee to Shri Ashok Dayal. The Assessing Officer made queries in the assessment proceedings and in reply, the assessee submitted that payment of Rs. 17.25 lac has been made by cheque and of Rs. 6.25 lac has been made in cash. The Assessing Officer held that addition is to be made for the cash payment of Rs. 6.25 lac and regarding cheque payment of Rs. 17.25 lac, it was held by Assessing Officer that the payment of Rs. 10 lac by cheque is verifiable from the bank account of M/s Vrindavan Tower P. Ltd. but the balance payment of Rs. 7.25 lac claimed to be made by the assessee by cheque is not verifiable. The Assessing Officer made addition of total amount of Rs. 13.50 lac being Rs. 6.25 lac on acc....
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.... Rs. 4.90 lac is not sufficient. As per Assessing Officer, such house hold withdrawal should be Rs. 6 lac but no separate addition was made by him on this basis that addition on account of suppressed income from Gopalaya is made and therefore, no separate addition is made for low house hold withdrawals. Since the CIT(A) has deleted the addition made by Assessing Officer on account of Gopalaya of Rs. 4,64,310/-, CIT(A) has held that an addition of Rs. 20,000/- on account of low house hold withdrawals will meet the ends of justice. He submitted that there is no basis indicated by CIT(A) for upholding addition of Rs. 20,000/- and therefore, the same should be deleted. 42. Learned D. R. of the Revenue supported the order of learned CIT(A). 43. We have considered the rival submissions. We find that the assessee has shown house hold withdrawal of Rs. 4.90 lacs. The same was estimated by Assessing Officer at Rs. 6.00 lac but CIT(A) has although agreed with the estimate of the A.O. about household expenses of Rs. 6.00 Lacs, but he confirmed the addition of only Rs. 15,000/- by saying that the family has many earning and tax paying members. But neither the Assessing Officer nor the CI....
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.... "3. That the Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs. 7,25,000/- out of Rs. 13,50,000/- on account of cash payment by admitting the additional evidence produced before him during the course of appellate proceedings in violation of Rule 46A of the IT Rule 1962 and without affording any opportunity to the AO or calling for a remand report." 52. Learned D. R. of the Revenue supported the order of Assessing Officer whereas Learned A. R. of the assessee supported the order of learned CIT(A). 53. We have considered the rival submissions. We find that as per Para 7.3 of his order, it is held by CIT(A) that as per the details submitted, payment of Rs. 7.25 lac has apparently been made by cheque by Smt. Laxmi Agarwal (vide cheque dated 14/07/2005). The CIT(A) held that the Assessing Officer may verify the same and after verification, delete the addition of Rs. 7.25 lacs. The objection of Learned D. R. of the Revenue was that it amounts to set aside, which is not within the power of CIT(A). We find force in the submissions of Learned D. R. of the Revenue that CIT(A) should not have given such direction to Assessing Officer for making verificatio....