TaxTMI 
TaxTMI 
2024 (10) TMI 75
X X X X Extracts X X X X
X X X X Extracts X X X X
....raised by the ld. AR on behalf of the assessee is that the entire proceeding is illegal in the eyes of law for not informing about the transfer of case from one jurisdiction to another jurisdiction as per section 127 of the Income Tax Act, 1961 ["Act" in short]. The ld. AR drew our attention to the written submissions in this regard. The written submissions filed by the ld. AR are reproduced herein below for ready reference: I. The Transfer of case of the appellant was not in accordance with section 127 of the Income Tax Act, 1961: 1. The first notice u/s. 143(2) of the Income Tax Act, 1961 (hereinafter referred to as "the Act") dated 03/09/2015 (Page 1 of Additional Paper book) is issued by the Income Tax Officer, Business Range II(4) Thereafter, a subsequent notice u/s. 143(2) r.w.s 129 of the Act dated 07/10/2015 (Page 2 of Additional Paper book) and all further communications thereafter have been issued by Deputy Commissioner of Income Tax, Non Corporate Circle - 2. Therefore, the inference is that the case has been transferred from the Jurisdiction of Income Tax Office Business Range II(4) to the Jurisdiction of Deputy Commissioner Income Tax, Non Corporate C....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d the authorities to pass the order of transfer. It is apparent that if a case file is transferred from the usual place of residence or office where ordinarily assessments are made to a distant area, a great deal of inconvenience and even monetary loss is involved. That is the reason why before making an order of transfer the legislature has ordinarily imposed the requirement of a show-cause notice and also recording of reasons. The question then arises whether the reasons are at all required to be communicated to the assessee. It is submitted, on behalf of the Revenue, that the very fact that reasons are recorded in the file, although these are not communicated to the assessee, fully meets the requirement of Section 127 (1). We are unable to accept this submission. 11. We are clearly of opinion that the requirement of recording reasons under Section 127(1) is a mandatory direction under the law and non-communication thereof is not saved by showing that the reasons exist in the file although not communicated to the assessee." Therefore, since no order u/s. 127 of the Act was passed and since the reasons recorded in writing for the transfer of the case was not comm....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e Circle -2 is barred by limitation because the according to the proviso to section 143(2), no notice u/s. 143(2) shall be served on the assessee after the expiry of "six months" from the end of the financial year in which the return is furnished. The appellant filed his return of income on 23/07/2013. The time limit to serve a notice u/s. 143(2) is within "six months" from the end of the financial year 2013-14.i.e on or before 30/09/2014. However, the notice u/s. 143(2) r.w.s.129 of the Act was issued on 07/10/2015. Therefore, the notice u/s. 143(2) r.w.s 129 is time barred and Deputy Commissioner of Income Tax, Non Corporate Circle -2 does not have jurisdiction over the appellant. 7. The ld. DR vehemently opposed the submissions of the ld. AR and submits that the notice issued by the Assessing Officer is not barred by limitation, is within limitation. 8. We note that the assessee filed revised return of income on 05.03.2014 and the time limit available for the Assessing Officer to issue notice under section 143(2) of the Act is within 6 months from the end of the financial year 2013-14 i.e., 30.09.2014. On perusal of the assessment order, we note that the notice under secti....
X X X X Extracts X X X X
X X X X Extracts X X X X
....proviso to 129 of the Income Tax Act, 1961. This ground is supported by the decision of the Hon'ble Income Tax Appellate Tribunal, Agra Bench in the case of DCIT v. Ramesh Chand Jain [2007] 108 ITD 446 (Agra)) (Page 21 of Additional Paper book) wherein the Hon'ble tribunal has held that the assessing office is duty bound to inform about the change in incumbent of an office u/s. 129. The relevant portion of the decision is extracted hereunder: "12. In the case of Jagdish Prasad Chaudhary (supra), the Hon'ble Patna High Court had an occasion to examine the provisions of section 39 of Wealth-tax Act. Section 39 of the Wealth- tax Act deals with the effect of the transfer of authorities during the pendency of the proceedings. The proviso to section 39 gives a right to assessee to demand that before the proceedings are continued by the succeeding officer, the previous proceedings or part thereof, may be reopened or that before any order is passed against him, he may be re-heard. This condition implies and postulates that before the assessee can demand the right given to him under the said proviso, he must necessarily have a right to be put on notice of two facts, na....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Tax v. M. Sreedharan [1992] 62 taxman 344 (KER.) (Page 27 of Additional Paper book) wherein the hon'ble court held that non intimation of the information that the succeeding authority intends to continue the proceeding from the stage at which it was left by his predecessor is illegal and unreasonable. The relevant portion of the judgement is extracted hereunder: "9. In this batch of cases, it cannot be denied that the succeeding assessing authority did not intimate to the assessee his intention to continue the proceeding from the stage at which it was left by his predecessor. There is no plea or proof in this case that the assessee was aware that the assessing authority had been succeeded by another and that the successor proposed to pass the penalty order. In these circumstances, we are of the view that the AAC was justified in holding that the successor- assessing authority had acted illegally and unreasonably in imposing the penalties without intimating to the assessee his intention to continue the proceedings from the stage at which it was left by his predecessor. There has been a breach of the valuable rights of the assessee, specified in section 274(1) read with....
X X X X Extracts X X X X
X X X X Extracts X X X X
....and prayed to remand the matter to the ld. CIT(A). 15. The ld. DR submits that the Assessing Officer issued notice under section 143(2) of the Act is with reference to the revised return of income and argued that the Assessing Officer conducted the assessment proceedings based on the revised return of income as filed by the assessee. No ground whatsoever raised before the ld. CIT(A) and drew attention to the ld. CIT(A)'s order. He vehemently argued that the revised return is a valid return. 16. Having heard both the parties, we notice that the Assessing Officer issued notice under section 143(2) of the Act dated 03.09.2014 in response to the revised return which was served on the assessee on 08.09.2014, whereas, another notice under section 143(2) r.w.s. 129 of the Act dated 07.10.2015 is also issued to the assessee, which was received on 12.10.2015. The assessee appeared before the assessment proceedings by filing relevant evidence, which is evident from para 2 of the assessment order. On perusal of the impugned order at page 2, we note that the ld. CIT(A) reproduced grounds of appeal, wherein, we find no mention of challenge to the validity of revised return of income. We f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....in the mode of cash is not acceptable. The Assessing Officer extracted the redrawn the cash bvook at page 3 to 5 of the assessment order and applied the peak deficit balance as on 06.08.2012 at Rs..51,22,635/-. The ld. CIT(A), by placing reliance on the decision of this Tribunal in assessee's own case for AYs 2008-09 to 2012-13 confirmed the order of the Assessing Officer in making the addition. 19. The ld. AR submits that the assessee's mother lent money to various persons through Axis Bank account and some were repaid in cash. The assessee filed return of income by admitting the said transactions from assessment years 2008-09 to 2012-13. The ld. AR drew our attention to the decision of the Hon'ble Supreme Court in the case of DSP, Chennai v. K. Inbasagaran, reported as (2006) 1 SCC 420 and argued that the money found in joint possession cannot be saddled in the hands of one of the joint holders in the absence of any evidence. He argued vehemently that the transaction of monies by assessee's mother cannot be made in the hands of the assessee as he is a joint holder. 20. The ld. DR relied on the order of the ld. CIT(A). 21. Heard both the parties and perused the material a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ear 2008-09 was done after a considerable time gap. Moreover, those persons who had repaid in cash may be worried about the provision of sec.269T of the Act, which those persons may have violated by making repayment in cash to the assessee. The AO was not satisfied with the explanation offered by the assessee that repayments in some of the cases are received in cash. The amounts were lent by way of cheque from axis bank account, which clearly establishes the identity of the payee. 10.4 The AO had stated that amount lent to persons by way of cheques were received in modes of cash is not acceptable by citing the example of transactions where amount lent by way of cheques were received back through mode of cheque. This reasoning lacks logic. 10.5 The AO had alleged that receiving back in cash of loans lent by cheques is against the principle of human probabilities, which is wholly baseless. The AO had alleged that most of the debtors are business men which is a presumption and not supported by materials on record. The AO had alleged that repayments were received through banking channel in subsequent year, which is not supported by any material on record. 10.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r, in para 5 the CIT(A) held that the addition is based on a scientific and suitable code, without detailing about such a code. 11.6 It was submitted by the ld. A.R that without prejudice to the assessee's stand that the bank account is held by the assessee's mother, assuming for a moment, parties to whom monies were lent had not repaid in cash, then all such loans should be treated as bad debts as the same were not realized till date. 11.7 The exercise of redrawing cash book was carried out to verify source of cash deposits in the Axis bank account held by the assessee's mother. The peak balance in that bank account for each of the asst. years is as below : 2008-09 Rs. 1,20,07,202 2009-10 Rs. 1,47,45,486 2010-11 Rs. 92,00,767 2011-12 Rs. 1,10,11,782 2012-13 Rs. 1,64,28,318 11.8 According to ld. A.R, If peak credit is worked out on the basis of that axis bank statement, the maximum addition for all the years taken together would be Rs. 1,64,28,318/- as this is the peak balance across all the years. Whereas, the assessee had offered additional income as below: 2008-09 Rs. 1,27,61,144 2009-10 Rs. 14,54,4....
X X X X Extracts X X X X
X X X X Extracts X X X X
....in bank pass book cannot be made. 11.17 On the other hand, the ld.D.R relied on the order of ld.CIT(A). 12. We have heard both the parties and perused the material on record. Section 69 makes it clear that the onus is on the assessee as regards furnishing of explanation relating to investment which is not recorded in the books of accounts, if any, maintained by him. Where the assessee offers no explanation or where the explanation offered by him is not satisfactory in the Assessing Officer's opinion, the value of the unexplained investment would be treated as the income of the financial year in question. In the case of Jatindra Nath Sarmah vs. ITO (1978) 113 ITR 898 (Gau), the Gauhati High Court observed that where the explanations furnished by the assessee were not fully relied upon by the Department, it cannot be said that the Department had any further burden to prove that this was an income of the assessee. 12.1 In the case of Raghbir Singh vs. ITAT & Ors. (2007) 209 CTR (P&H) 394 assessee failed to establish the capacity of NRI donor to make gift of huge amount or the source from which gift was made and hence addition of amount as deemed income o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ards investment in house property are not based on truth, inclusion of the same in assessee's income would be justified. The Bombay High Court in Bastiram Narayandas Maheswari vs. CIT (1994) 117 CTR (Bom) 198 opined that where the addition on account of suppressed production has been directed by Tribunal after considering material and evidence on record, the same would be justified. 12.6 In the present case, the assessee is not able to explain the deposits made into Axis Bank A/c Adyar branch, Chennai. The assessee was not able to discharge the burden to prove that the sources were disclosed income of the assessee. In the absence of satisfactory explanation, the Assessing Officer was compelled to arrive at the un-explained cash by calculating the peak value of deficit cash balance in the books of the assessee in each assessment year. As a result, the Assessing Officer computed the unexplained income by redrawing the cash book and considered the peak value of the credit which is arrived after due credit for the amount of cash withdrawn from the bank. We do not find any infirmity in the method followed by the lower authorities in computing the unexplained investments in ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... ITA No. 5181/M/2012 dated 05.12.2014 and argued that the addition cannot be made solely on the basis of AIR information. 25. The ld. DR argued that the case law as relied on by the ld. AR are on different set of facts and not applicable to assessee's case. He vehemently argued that no evidence was brought on record before the Tribunal as well as before the authorities below and pleaded to confirm the order of the ld. CIT(A). 26. Heard both the sides and perused the material available on record. The ld. AR vehemently argued taking into account the decision of the Hon'ble High Court of Delhi in the case of PCIT v. Forum Sales (P.) Ltd. (supra) and the order of the Delhi Bench in the case of Shivam Industries (supra) and argued that the addition made by the Assessing Officer is not maintainable as the books of assessee were not rejected. We note that the Assessing Officer can make an assessment in the manner provided under section 144 of the Act if he is not satisfied about the correctness or completeness of the accounts of the assessee, or where the method of accounting provided in sub-section (1) of section 145 of the Act has not been regularly followed by the assessee, where....