TaxTMI 
TaxTMI 
2025 (10) TMI 530
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....y, we are satisfied that sufficient cause has been shown. Accordingly, the delay of three days in filing the appeal is hereby condoned and the appeal is admitted for adjudication on merits. 3. The brief facts of the case are that the assessee, an individual, is the proprietrix of the concern M/s.Maries Blue Metals, which is engaged in the business of quarrying and crushing of blue metals. A survey action u/s. 133A of the Act was conducted at the business premises of the assessee on 26.02.2020, during the course of which certain books of account and documents were impounded, as per Annexure ANN/EJ/B&D/IMP dated 26.02.2020. 4. Subsequently, the assessee furnished her return of income u/s. 139(1) of the Act on 24.12.2020 declaring a total income of Rs. 20,99,500/-, which comprised income from business of Rs. 20,64,120/- and income from other sources of Rs. 35,375/-. The said return of income was selected for compulsory scrutiny assessment in view of the survey action conducted u/s. 133A of the Act. Accordingly, notice u/s. 143(2) of the Act was issued on 29.06.2021, followed by notice u/s. 142(1) of the Act. 5. During the course of survey, one Shri S.Isakkiraja, who was prese....
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.... correct turnover and not the figure noted during the course of the survey proceedings. 9. The assessee also stated that she had voluntarily agreed to offer 8% of the turnover, prior to allowing depreciation, as her business income. On this basis, the assessee submitted that the business income of Rs. 20,64,120/- as disclosed in the return of income filed for the relevant assessment year was in line with the statement furnished during the course of survey. It was, therefore, requested that no addition be made to the returned income and that the proposed addition be dropped. 10. The AO, however, did not accept the submissions of the assessee. According to the AO, statements were recorded from one of the purchasers, Shri Isakkiraja, who confirmed that the assessee was resorting to underinvoicing of sales. Furthermore, the turnover of Rs. 6,64,76,379/- had been computed in the presence of the assessee, based on the noting made by her, and not on any estimate prepared by the Department independently. The AO observed that the assessee failed to substantiate her claim that the said noting represented advances/debtor realizations, as no reconciliation supported by credible evidence ....
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....4. Accordingly, the AO rejected the explanation of the assessee with respect to the unsecured loan of Rs. 22,50,000/-. 16. With regard to the funds stated to have been received from her spouse, Shri Ramasubbu, it was submitted that the amounts were advanced out of the proceeds of a Mortgage Term Loan availed from M/s Shriram Transport Finance Company Limited. The AO verified and noted that the said loan had been availed to the extent of Rs. 50,00,000/- on 22.12.2017 and Rs. 20,00,000/- on 26.09.2018. The AO further observed that only Rs. 20,00,000/- had been directly transferred to the assessee on 07.03.2018. Accordingly, the AO accepted the assessee's explanation only to the extent of Rs. 20,00,000/-, while holding the balance sum of Rs. 49,70,000/- purportedly received from her spouse as unsubstantiated. 17. In view of the foregoing findings, the AO held that unsecured loans amounting to Rs. 72,20,000/- out of the total sum of Rs. 92,20,000/- remained unexplained. The same was, therefore, treated as unexplained cash credit u/s. 68 r.w.s 115BBE of the Act, and accordingly brought to tax for the impugned assessment year. 18. The assessment was thus completed by the AO u/s.....
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....nd the estimated turnover as additional business income was not based on any concrete evidence or material that indicated suppressed sales or income. The appellant's reported turnover, supported by GST filings and audited financials, merits consideration unless there exist any adverse findings upon with supporting evidences. 6.2.10 The undersigned is of the considered view that the reported turnover declared by the appellant in the return of income amounting Rs. 6,04,44,763/- is legitimate, as it was consistent with the appellant's GST filings and financial statements. More significantly, the AO failed to bring on record any substantial evidence to suggest that the turnover was understated or that the appellant was involved undisclosed sales. Therefore, any estimation of total income based on an estimated turnover, which is not supported by cogent and corroborative evidence, is merely speculative and lacks substantiation. Therefore, all the grounds raised by the appellant upon this issue are hereby treated as allowed and the AO is directed to delete the addition of Rs. 32,53,990/- made for the AY 2020-21." 20. Further, the relevant observations of the ld.CIT(A) in delet....
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.... who has advanced these amounts, the transaction was accepted in total in the absence of any adverse findings. In this background the under signed is of the view that the action of the AO to treat the amounts of Rs. 9,00,000/- and Rs13,50,000/- amounting to Rs. 22,50,000/- as bogus unsecured loan u/s 68 of the Act lacks merits. Receipt of Rs. 49,70,000/- from the appellant's spouse 6.2.17 As evident from the bank statements furnished by the appellant, that was made available before the course of assessment proceedings, that the appellant's spouse, Shri. Ramasubbu, has made remittances to the appellant's proprietary concern, M/s. Maries Blue Metals, amounting to Rs. 40,27,000/- during the FY 2017 18 and Rs. 29,43,000/- during the FY 2018-19. The appellant has substantiated the above receipts from the bank statements of Shri. Ramasubbu. The AO during the course of assessment proceedings has examined the bank statements and has arrived at a conclusion that a sum of Rs. 20,00,000/- was alone transferred to the appellant's proprietary concern on 07.03.2018 and treated the balance amount as bogus. 6.2.18 On examination of the bank statement, it can be seen that....
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....ls are backed by verifiable sources, and were correctly recorded in the respective financial years. Therefore, the addition of Rs. 72,20,000/- as bogus unsecured loans u/s 68 r.w.s. 115BBE of the Act is unwarranted. Accordingly, all the grounds raised by the appellant upon this issue are hereby treated as allowed and the AO is directed to delete the addition of Rs. 72,20,000/- as bogus unsecured loans u/s 68 r.w.s.115BBE for the AY 2020-21." 21. Aggrieved of the above order passed by the ld.CIT(A), the Revenue is in appeal before us challenging the relief given by the ld.CIT(A). 22. The ld.DR, appearing on behalf of the Revenue, submitted that the turnover of Rs. 6,64,76,379/-, as determined on the date of survey, was based on documents duly impounded during the course of survey proceedings in the presence of the assessee. Accordingly, such turnover cannot be disregarded. It was further contended that the assessee, in her statement recorded at the time of survey, had voluntarily agreed to offer 8% of the said turnover as income. However, in contravention thereof, the assessee subsequently filed her return of income declaring a lower figure of business income, which is not val....
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....ty in the findings recorded therein warranting any interference. It was thus prayed that the order of the ld. CIT(A) be upheld and the appeal of the Revenue be dismissed. 28. We have heard the rival submissions advanced by both sides, examined the material available on record, and duly perused the paper book filed by the assessee. At the very outset, we observe that the ld.AR has raised a legal ground challenging the very validity of the assessment order. In view of the settled principles of law, a jurisdictional ground strikes at the very root of the assessment proceedings. Therefore, in the interest of justice, it becomes imperative to adjudicate upon such a legal issue as a preliminary matter before proceeding further into the merits of the case. 29. The ld.DR, however, has strongly opposed the admission of the said legal ground by invoking the provisions of Rule 27 of the ITAT Rules. It has been contended by the ld.DR that since the assessee did not raise the issue of jurisdiction before the lower authorities, the same cannot now be permitted to be agitated for the first time before this Tribunal. The preliminary question, therefore, that arises for consideration is wheth....
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.... administrative procedure that, in the ordinary course, upon completion of a survey action, the jurisdiction of the assessee is generally centralized and transferred from the regular jurisdictional Assessing Officer to the Central Charge. From the date on which such centralization is effectuated, the erstwhile Assessing Officer of the regular charge ceases to exercise jurisdiction, which thereafter vests exclusively with the Assessing Officer of the Central Charge. 34. However, such centralization of jurisdiction can only be validly effected through an order of transfer issued by the jurisdictional Principal Commissioner of Income Tax, in exercise of the powers conferred u/s. 127 of the Act. 35. In the present case, we observe that the Principal Commissioner of Income Tax-1, Madurai, vide Notification No.11/2020-21 (C.No.440/PCIT/MDU- 1/2020-21 dated 03.12.2020), passed an order u/s. 127 of the Act dated 09.12.2020, whereby the jurisdiction over the assessee was transferred from the Income Tax Officer, Ward-4, Tirunelveli, to the Assessing Officer, Central Circle-2, Madurai, with immediate effect from 09.12.2020. The said order, inter alia, directed the concerned Assessing Of....
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....f the Act, issued by the ITO, Ward-4, Tirunelveli, is without jurisdiction and, therefore, invalid and liable to be quashed. 41. It is a well-settled legal proposition that an assessment order passed by an Assessing Officer pursuant to a notice u/s. 143(2) of the Act issued by an officer lacking jurisdiction is null and void ab initio. In support of this principle, reliance is placed on the following judicial precedents: 42. The Hon'ble Calcutta High Court in PCIT v. Nopany & Sons [2022] 286 Taxman 388 (Cal) has held as under:- "6. The short issue which falls for consideration is whether the assessing officer, who had jurisdiction over the assessee at the relevant time had issued notice under section 143(2) of the Act before taking up the scrutiny assessment under section 143(3). Before we go into the facts, we take note of the legal position as laid down by the Hon'ble Supreme Court in Asstt. CIT v. Hotel Blue Moon [2010] 188 Taxman 113/321 ITR 362, wherein the Hon'ble Supreme Court held that omission on the part of the assessing officer to issue notice under section 143(2) cannot be a procedural irregularity and the same is not curable and, therefore, the r....
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....With regard to the merits of the matter, the CIT(A) held it in favour of the assessee. Therefore, the revenue was on appeal before the Tribunal and cross-objection was filed by the assessee questioning that portion of the order of the CIT(A) which held that there is no procedural irregularity committed by the assessing officer. The Tribunal considered the correctness of the finding of the CIT(A) and, on facts, found that both the assessing officers, namely, the assessing officer, who had jurisdiction over the assessee till 6-4-2009 and the assessing officer, who had jurisdiction post the said date had not issued notice under section 143(2) of the Act within the prescribed period of six months from the end of the financial year in which the return was filed. This factual position could not be controverted by the revenue before us. As pointed out by the Hon'ble Supreme Court in the case of Hotel Blue Moon (supra), non-issuance of notice under section 143(2) is not a procedural irregularity and, therefore, it is not curable. Thus, on facts, it having been established that no notice was issued under section 143(2) of the Act, the order passed by the Tribunal was perfectly legal and....
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....age under section 292BB of the Act which was rejected on the ground that the very foundation of the jurisdiction of the assessing officer was on the issuance of notice under section 143(2) of the Act and the same having been complied with, the revenue cannot take shelter under the provisions of section 292BB of the Act." 43. Respectfully following the foregoing judgment of the Hon'ble Calcutta High Court, it is held that the assessment order dated 29.09.2022 passed by the AO u/s. 143(3) of the Act, pursuant to a notice u/s. 143(2) of the Act issued by a non-jurisdictional officer, namely ITO, Ward-4, Tirunelveli, is without jurisdiction and, accordingly, stands quashed. Thus, the legal ground raised by the assessee invoking Rule 27 of the ITAT Rules is allowed in favour of the assessee. 44. On merits of the case, with regard to the issue concerning the addition of Rs. 32,53,990/- towards undisclosed business income of the assessee, we observe that the said addition was made solely on the basis of statements recorded during the course of the survey, without any corroborative evidence to substantiate that the noting in the impounded material genuinely represented the actual sal....
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.... 21-01-2013 A V TILES COMPANY 13, 50, 000.00 2 :- 01-2013 TO CASA 908654 13,50,000.00 05-02-2013 BY CASH 1.00.000.00 06-02-2013 PASS BOOK 56.00 3 26-02-2013 BY CASH 1,00,000.00 3 13-03-2013 BY CASH 1,00,000.00 5 26-03-2013 Folio charges-Mar- 150.00 3 26-03-2013 Service tax-Mar-20 19.00 28-03-2013 BY CASH 1,10, 200.00 26-03-2013 TO TRANSFER 908655 1,10, 200.00 lage Totel: 29, 10, 425.00 26,60,200.00 26.60.200.0 Document 2 S.S.RAMASUBBU, S/O MR.SUDALAIMUTHU, 9/72 V AMBAI ROAD, ALANGULAM. TIRUNELVELI DISTRICT. AMOUNT TRANS TO MRS.MINNALKODI 1.4.2017 TO 31.3.2018 DEBIT BALANCE : 2,000,000.00 DIRECT TRANS. TO MINNALKODI 07.03.2018 MINNALKODI 05.01.2018 PAID TO DEEPA MACHINE LESS; RETURN 7.2.2018 7.2.2018 4000000 1000000 1000000 2,000,000.00 MACHINERY PAYMENT -26.3.2018 LESS:ADJUSTMENT FOR GIFT 48,000.00 21.000.00 27,000.00 MAINT.EXP. TOTAL AMT.TRANS.17-18 4,027,000.00 : AMOUNT TRANS TO MRS.MINNALKODI 1.4.2018 TO 31.3.2019 DEBIT BALANCE : 4.027.000.00 170,000.00 200,000.00 158,000.00 380,000.00 Nature of Expenditure Fuel Expneses Machinery Spares Electric Motor Machinery Spares Machine....