TaxTMI 
TaxTMI 
TaxTMI 
2024 (10) TMI 302
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....e addition of Rs. 21,57,000/- made by the AO on account of cash deposit in savings bank account of assessee as unexplained investment u/s - 69 of the IT Act, 1961? 2. Whether on the facts and in the circumstances of the case and in law, the Id. CIT(A) was justified in deleting the addition made by AO of Rs.2,41,86,217/-being interest on securities as unexplained investment u/s - 69 of the Income Tax Act, 1961? 3. Whether on the facts and in the circumstances of the case the Id. CIT(A) was justified in directing the AO to recomputed total income by calculating the business income at the rate of 5 % of total sales of appellant in liquor b business of Rs. 7,13,53,669/-? 4. Any other ground which may be adduced at the time of hearing. Grounds of Cross Objections: 1. The Ld. ACIT observed in his Assessment Order dated 10th December, 2018 reading as under:- "As per information available with the department, the assessee had made cash deposits amounting to Rs.21,57,000/- in Punjab & Sind Bank savings bank account and received interest on securities amounting to Rs.2,14,86,217/- and TDS was also made on it at Rs.4,50,000/- during F.Y.2010-11. For examining the above issues, proc....
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....edings initiated u/s.147 by ITO1(3), Raipur and reassessment concluded by ACIT without issuing any fresh notice u/s.148 is without jurisdiction more so when there is absence of an order u/s.127. 6. The Ld. CIT(A) erred in directing the Ld. A.O. to re-compute the total income at five percent of the total sales based on Hon'ble Andhra Pradesh High Court judgement in the case of CIT vs Mekala Bal Reddy instead of applying judgements of the same locality and the parties where the assessee is residing. The Hon'ble Jurisdictional Raipur Tribunal in the case of Smt. Leela Bal Yadav and Shri. Vednarayan Patel - ITA No.224/BLPR/2011 & No.225/BLPR/2011 respectively residing in the same locality where the assessee is residing had directed the A.O.to recompute the business income, on identical facts, at two percent of the total sales as against five percent levied by Ld. CIT(A). The Appellant craves leave to add, to amend, alter or vary the Grounds of Cross Objections either before or at the time of hearing of the Appeal. 3. The brief facts of the case are that the assessee is an individual, who had not filed her ITR for the year under consideration. However, as per the informatio....
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....tment has carried this matter before us in the present appeal which is cross objected by the assessee. Departments appeal and cross objection of the assessee is under adjudication in the present order. 6. At the outset, Ld. Authorized Representative, Shri N. M. Porwal, Adv. (in short "Ld. AR"), had submitted that there are certain legal issues involved in the present appeal, and therefore, he requested to first adjudicate the legal issues raised by the assessee in her cross objections filed against the appeal of the department. Such request of the Ld AR has been acceded to. 7. The legal conflicts assailed by the Ld. AR challenging the validity of the jurisdiction assumed by the Ld. AO i.e. ACIT-1(1)., who had culminated the assessment proceedings by passing the order u/s 147 of the Act, inter alia have following twofold contentions: (i) that the notice u/s 148 of the Act was issued to the assessee after the stipulated time period, therefore, the consequential assessment framed by the Ld. AO could not be sustained. (ii) that the ACIT-1(1), Bhilai, had assumed jurisdiction and framed assessment u/s 144 r.w.s. 147 on 10.12.2018, in absence of him having valid jurisdiction confer....
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.... and not reason to believe that income chargeable to tax has escaped assessment and, therefore, the assumption of jurisdiction by Ld. A.O. is invalid and, as such, action u/s.148 is not sustainable and has to be quashed. 4th GROUND OF CROSS OBJECTION The Ld. A.O. while making additions u/s. 147/148 had only 'reason to suspect' and not 'reason to believe'. There was no reason between material and Revenue's belief on income escapement, The assessment Order shows that the A.O. was not aware of even the nature of transaction. There is no reference to how A.O. had, at that juncture, formed a view that interest on securities of Rs. 2,14,86,217/- and amount deposited in bank count of Rs.21,57,000/- escaped assessment, Therefore, it has to be held that A.O. proceeded in a mechanical manner as had based his decision to reopen the assessment on available formation and there was absence of Independent application of mind by the A.O. Both the first ground of cross objection and the fourth ground of cross-objection being almost similar/identical, therefore, they are taken together. 11.1 In this case on checking the assessment records Produced by the Ld. D/R during the ....
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....g to Rs.2,14,86,217/- and TDS was also made on it at during E Y, 2010-11. For examining the above issues, proceedings were initiated u/s,147 of the Act and notice u/s 148 was issued on 26.03-2018 by ITO-1(3), Raipur. Besides, the Ld. ACIT has also confirmed, to this effect, in his Assessment Order on page-I -e para-2, reading as under:- "Under these circumstances and considering the limitation involved, there is no other alternative left with the undersigned except to complete the assessment ex- parte u/s,144 of the Act as per the material available on record. As per information available with the Department, the assessee had made cash deposits amounting to Rs.21,57,000/- in Punjab & Sind Bank Savings Bank A/c and received interest on securities amounting to Rs.2,14,86,217/- and TDS during FY 2010-11, For examining the above issues, proceedings were initiated u/s.147 of the Act. " In this connection, assessee relies on the Hon'ble Supreme Court judgement dated 4th January, 2019, in the case of Pr. CIT-5 vs Manzil Dinesh Kumar Shah - 101 Taxman 259(SC) also concludes to the same effect, reading as under (Paper Book page no. 1). "IT: SLP dismissed against High Court rulin....
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.... officers from 26th March, 2018 to the date of passing of assessment order on 10th December, 2018. Since the assessee never participated in the assessment proceedings and there is no service of notice u/s.148, order passed by the ACIT- I(I), Bhilai dated 10th December, 2018 is invalid and bad in law. 1.4 Therefore, Hon'ble Supreme judgement in the case of DCIT(Exemptions) vs Kalinga Institute of Industrial Technology - 454 ITR 582 dated 1st May, 2023 is not applicable to the facts of the assessee's case, reading as under:- "INCOME TAX : Where High Court set aside notice issued under section 143(2) in case of assessee on ground that jurisdictional officer had not adjudicated upon returns as jurisdiction had been changed after returns were filed, since records revealed that assessee had participated pursuant to notice issued under section 142 (1) and had not questioned jurisdiction of Assessing Officer, in such case order of High Court could not be sustained." In this case, assessee never participated as against the above Supreme Court judgement where the assessee had participated pursuant to notice. 1.5 In this connection, assessee relies for the proposition that re-....
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....sment order dated 10th December, 2018. 2.4 On perusal of Section-2(7A) of the Income-tax Act, 1961 which gives definition of "Assessing Officer", assessing officer is the one who is vested with the relevant jurisdiction on a particular date and not the one who is divested of his jurisdiction. In this case, The ITO-1(3), Raipur was vested with the jurisdiction upto 26th March, 2018 when he issued notice u/s.148. There is no Transfer Order u/sg 127 from ITO-1(3) Raipur to ITO-1(2), Bhilai Thereafter, jurisdiction was vested with ACIT-I(I), Bhilai from 12th September, 2018 which continued upto the date of passing the assessment order i.e. 10th December, 2018, 2.5 Therefore, in this case, ACIT-I(I), Bhilai can assess or reassess any income escaping assessment in the case of the assessee, Smt. Pankojani Walter for the A. Y. 2011-12 if ACIT1(1), Bhilai has reason to believe. Thus, it was wholly ACLT1(1), Bhilai having jurisdiction over the matter, who u/s,147 could have formed any reason to believe escapement of income and not the ITO-1(3), Raipur or ITO-1(2), Bhilai. To reiterate in the present case, The ITO-1(3) Raipur, who issued notice u/s.148 dated 26th March, 2018 and recorded ....
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....ct are "The AO" and which clearly means a particular officer who has the jurisdiction, over the case of a particular assessee It is not the case that the statute has mandated every A.O. to exercise jurisdiction, as per his own sweet will. GROUND NO.6 OF CROSS OBJECTION: The Ld. CIT(A) erred in directing the Ld. A.O. to re-compute the total income at five percent of the total sales based on Hon'ble Andhra Pradesh High Court judgement in the case of CIT vs Meka/a Bal Reddy instead of applying judgements of the same locality and the parties where the assessee is residing. The Hon'ble Jurisdictional Raipur Tribunal in the case of Smt Leela Bal Yadav and Shri Vednarayan Patel - ITA No,224/BLPR/2011 & No.225/BLPR/2011 respectively residing in the same locality Where the assessee is residing had directed the A.O. to recompute the business income, on identical facts, at two percent of the total income sales as against five percent levied by Ld. CIT(A). 1.1 In this case, CIT(A) erred in directing the A.O. in recomputing the total income at 5% of the total sales based on Hon'ble Andhra Pradesh High Court Judgement in the case of CIT vs. Mekala Bal Reddy. 1.2 The assessee is....
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.... 12. Based on written submissions, it was the prayer of Ld. AR that the department had failed to substantiate that the reassessment order passed u/s 144 r.w.s. 147 dated 10.12.2018 was a lawful order, as the Ld AO i.e. ACIT- 1(1), Bhilai was lacking valid assumption of jurisdiction while passing the assessment order, thus such order itself is at nullity in the eyes of law, therefore, the same deserves to quash and accordingly the order of Ld. CIT(A) passed in consequence to the said assessment order is also null and void, as it has no standing under the mandate of law. 13. During the hearing dated 23.04.2024, Ld. Sr. DR on behalf of the department has further furnished certain documents along with updated report from the Ld. AO in continuation to her earlier report dated 05.02.2024, the report of Ld. AO so furnished before us, is extracted as under: 14. We have considered the rival submissions, perused the material available on record and case laws relied upon by the Ld. AR. In order to decide the issue in hand which were raised as legal contentions by the Ld. AR under the cross objections filed by the assessee. Adverting to the first legal contentions of Ld. AR that the notice ....
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....ing the hearing before the tribunal no transfer order from ITO-1(3) to ITO-1(2) was found. Such fact strengthens the contentions of the Ld AR that ITO-1(3), Raipur, who had initiated the reassessment issue notice/s 148 dated 26.03.2018 have never transfer the case to ITO-1(2), Bhilai or no reference or nexus could be brought on record by the revenue regarding transfer of case ITO-1(3) to ACIT,1(1), Bhilai. In such situation, the transfer order u/s 127(1) dated 12.09. 2018 by PCIT-2, Raipur, wherein the transfer jurisdiction of the present case, reflecting at entry No 74 of the said order, in absence of reference of ITO, W-1(3) (only who had issued the notice of reopening assessment u/s 148), though indicating the transfer from ITO, W-1(2) to ACIT-1(1), Bhilai, but cannot confer valid jurisdiction upon the ACIT-1(1), Bhilai. On this issue, Ld. AR placed his reliance on the order in the case of Tata Sons passed by ITAT, Mumbai (supra), wherein it is decided that assessment has to be completed by authority who had initiated the proceedings for making assessment and another authority can take over the proceedings only after a proper order of transfer u/s 127. 16. In this case, though ....