TaxTMI 
TaxTMI 
2009 (2) TMI 26
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.... Madhu Agrawal. However, on 23rd November, 2001 search and seizure operation under Section 132 of the Act was carried out on the premises of the petitioner and the Block Assessment order under Section 158-BC of the Act for the block period 1st April, 1995 to 23rd November, 2001 was completed by the Assessing Officer on 28th November, 2003 on an income of Rs. 43,50,775/- which included undisclosed income of Rs. 3,41,340/- for the assessment year 2001-02. This undisclosed income of Rs. 3,41,340/- comprised of the gift of Rs. 3,00,000/- said to have been given by Madhu Agrawal. This gift was found to be not genuine as she did not have the capacity to gift it. The petitioner filed an appeal before the Commissioner of Income Tax (Appeals) against the aforesaid Block Assessment order dated 28th November, 2003. The Commissioner of Income Tax (Appeals) by the order dated 7th May, 2004 granted relief of Rs. 3,00,000/- relating to the gift given by Madhu Agrawal. Feeling aggrieved by the said order dated 7th May, 2004, the Department filed an appeal before the Income Tax Appellate Tribunal. The Tribunal by the order dated 31st August, 2006 observed that the gift of Rs. 3,00,000/- ma....
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....kesh Ranjan Agrawal learned counsel for the petitioner submitted that the initiation of the proceedings under Section 148 of the Act for the Assessment Year 2001-02 in respect of the gift given by Madhu Agrawal for Rs. 3,00,000/- is illegal and without jurisdiction as the said gift was disclosed by the petitioner in the Cash Flow Chart filed with the return of income on 27th August, 2001 and thereafter the assessment order was also passed. It is his submission that in such circumstances the assessment cannot be reopened under Section 147 of the Act since the petitioner had disclosed fully and truly all material facts necessary for assessment and it cannot be said that the income had escaped assessment. He further submitted that reopening of assessment on the same facts is not permissible under Section 148 of the Act after the assessment order passed under Section 143(3) had merged with the order dated 20th June, 2005 passed by the Commissioner of Income Tax (Appeals) in respect of the amount of Rs. 3,00,000/- given by Madhu Agrawal, which order had become final since the Department did not file appeal. He also submitted that the proceedings could not have been initiated under Secti....
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....r of Income Tax (Appeals) by the order dated 20th June, 2005 directed for deletion of the addition of Rs. 3,00,000/- made by the Assessing Officer. In this connection the relevant portion of the order dated 20th June, 2005 is reproduced below:- "..........During the course of hearing of the appeal I had asked the ld. representative of the appellant to clarify the stand of the appellant with regard to the issue whether the issue pertaining to gift was a matter to be dealt with in the regular assessment proceedings or whether the matter was to be dealt with in the block assessment proceedings as had been done by the A.O. The ld. representative of the appellant submitted that the matter relating to the gift was to be dealt with during the course of block assessment proceedings only...... ...........Addition if any in respect of this alleged gifts was, therefore, required to be made only during the course of block assessment proceedings. No addition could be made during the course of regular assessment proceedings on protective basis. The addition made by the A.O. of Rs.3 lakhs on protective basis is directed to be deleted. At the cost of re-petition I may like to reiterate that ....
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....ld as undisclosed. These are the sources from where the money has flown into the account of the assessee. The account, in which money has flown, is also not shown to be undisclosed. This, money is found deposited into a declared bank account of the assessee. This will, therefore, fall for consideration in the regular assessment and not in block assessment. Further only an account signed by Smt. Madhu Agrawal forwarded to the assessee was found during the course of the search. It as such does not reflect that the assessee's undisclosed income has passed to Madhu Agrawal and than routed to him as gift. What is only available at present is that the gift is not treated as genuine but it is not proved that it involves undisclosed money of the assessee. Thus, non-genuine nature of the gift would fall for consideration in the regular assessment and not in block assessment. We, therefore, confirm the order of the ld. CIT (A) but on different ground and reject this ground of the revenue."(emphasis supplied) Once this categorical finding had been recorded by the Income Tax Appellate Tribunal in the aforesaid order in respect of the Block Assessment proceedings, there was no occasion fo....
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....e diligence have been discovered by the Assessing Officer will not necessarily amount to disclosure within the meaning of the foregoing proviso. Explanation 2.- For the purposes of this section, the following shall also be deemed to be cases where income chargeable to tax has escaped assessment, namely:- (a) where no return of income has been furnished by the assessee although his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income-tax. (b) where a return of income has been furnished by the assessee but no assessment has been made and it is noticed by the Assessing Officer that the assessee has understated the income or has claimed excessive loss, deduction, allowance or relief in the return; (c) where an assessment has been made, but--- (i) income chargeable to tax has been underassessed; or (ii) such income has been assessed at too low a rate; or (iii) such income has been made the subject of excessive relief under this Act; or (iv) excessive loss or depreciation allowance or any other allowance under this Act has been....
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....assessment. His further contention is that there was no relevant material in the formation of this belief as no fresh materials have been brought on record to reopen the assessment except the order dated 31st August, 2006 passed by the Income Tax Appellate Tribunal which order cannot be taken into consideration. This contention of learned counsel for the petitioner cannot be accepted in view of the decision of the Supreme Court in Maharaj Kumar Kamal Singh Vs. Commissioner of Income-Tax, Bihar and Orissa reported in 1958 (IT-2)-GJX-0133-SC. The Supreme Court examined the provisions of Section 34 (1)(b) of the Income Tax Act, 1922 and observed as follows:- "It is clear that two conditions must be satisfied before the Income-tax Officer can act under section 34(1) (b). He must have information in his possession, which, in the context, means that the relevant information must have come into his possession subsequent to the making of the assessment order in question and this information must lead to his belief that income chargeable to income-tax has escaped assessment for any year, or that it has been under-assessed or assessed at too low a rate or has been made the subject of e....
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....Assessment proceedings can be taken into consideration and form the basis for issuance of the notice under Section 148 of the Act read with Section 150 of the Act. Learned counsel for the petitioner also contended that the provisions of Section 150(1) of the Act are not applicable as there is no direction in the order of the Income Tax Appellate Tribunal dated 31st August, 2006 to assess the petitioner for the gift of Rs. 3,00,000/- given by Madhu Agrawal. In order to appreciate this contention, the provisions of Section 150(1) are quoted below:- "150(1). Notwithstanding anything contained in Section 149, the notice under Section 148 may be issued at any time for the purpose of making an assessment or reassessment or recomputation in consequence of or to give effect to any finding or direction contained in an order passed by any authority in any proceeding under this Act by way of appeal, reference or revision." (2).................... As seen from the relevant portion of the order dated 13th March, 2008 passed by the Income Tax Appellate Tribunal in respect of the Block Assessment proceedings, the matter had been examined on merits and it was found as a fact that th....