TaxTMI 
TaxTMI 
TaxTMI 
2025 (10) TMI 756
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....the case in passing the ex-parte order in gross breach of law, without providing adequate and reasonable opportunity of being heard. Hence the addition so made may kindly be deleted in full. 2. The ld.CIT(A) has grossly erred in law as well as on facts of the case in sustaining the trading addition of Rs. 7,24,872/- out of Rs. 9,12,460/- made by the ld.AO by applying a higher net profit rate of 15% on the estimated turnover of Rs. 60,83,077/- and further erred in not invoking any provisions of law while making the addition. Both the Ld.AO and CIT(A) have erred in not considering the vital facts and material available on record in its true perspective and sense. Hence the addition so made by the ld.AO and confirmed by the ld.CIT(A) may kindly be deleted in full. 3. The Ld.CIT(A) and the AO have grossly erred in law as well as on facts of the case in taking the entire cash deposits in the bank as turnover of the assessee and enhancing the turnover and thereby making the addition. Hence the addition so made by the AO is totally contrary to the provisions of law and facts of the case and make kindly be deleted. 4. The ld.AO has grossly erred in law as well as....
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....1. The brief facts of the case are that the assessee is having income from business and profession and engaged in the retail trading of Tyers and their spare parts and job work of tyre retreading. He declared income u/s 148. In this case the ld. AO has issued the notice u/s 148 on dt. 27.09.2016 on the reasons that " As per AIR information the assessee has deposited total Rs. 32,05,580/- in cash in his saving bank account of Axis Bank and PNB during the year, Further assessee has not filed return of income of the year hence nature and source of cash deposited remains unexplained". The ld. AO has issued the notice u/s 148 requiring the assessee to file the return. In response thereto the assessee has filled his return of income on dt. 21.10.2016 declaring the total income of Rs. 1,87,590/-. There after the ld. AO has issued the notices u/s 143(2) and 142(1). And the assessee has filed all the details required. 2. The ld.AO has further noted that the assessee has declared Rs. 1,95,570/- as net profit/income from Proprietor business. The ld. AO has stated that Rs. 43,99,231/- is credited in Axis Saving Bank and Rs. 6,70,000/- in the PNB bank totaling to Rs. 50,69,231....
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....uld get benefit of it. Therefore, the appellants gets a relief of Rs. 1,87,590/- Further stated that the appellant has challenged the estimation of turnover by the Assessing Officer. The Assessing Officer has estimated the trading receipts @120% of the cash and credit entries deposit in the bank account. The appellant failed to explain the entries in the bank account and the Assessing Officer very liberally took it as trading entries. Further, as in small business all the cash receipts are not deposited in the bank account and various small purchases and expenses are done in cash the Assessing Officer has increased the turnover by 20% which is not excessive. Hence this appeal. SUBMISSIONS: 1. No addition made on the reasons recorded u/s 148: As the ld. AO issued the notice u/s 148 on the reasons recorded as per assessment order that "As per AIR information the assessee has deposited total Rs. 32,05,580/- in cash in his saving bank account of Axis Bank and PNB during the year, Further assessee has not filed return of income of the year hence nature and source of cash deposited remains unexplained". However on perusal of the assessment order it has....
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....ue to possess jurisdiction, to put to tax, any other income, which subsequently came to his notice, in the course of reassessment proceedings, which were found by him, to have escaped assessment.-CIT vs. Atlas Cycle Industries (1989) 180 ITR 319 (P&H) concurred with. 1.2. In the case of CIT vs. Jet Airways (I) LTD331 ITR 0236(Bom):Held Reassessment-Scope-Items unconnected with escapement for which notice was issued-When Expln. 3 to s. 147 was introduced, Parliament stepped in to correct what it regarded as an interpretational error in the view which was taken by certain Courts that the AO has to restrict the assessment or reassessment proceedings only to the issues in respect of which reasons were recorded for reopening the assessment-However, Expln. 3 does not and cannot override the necessity of fulfilling the conditions set out in the substantive part of s. 147-AO has to assess or reassess the income ("such income") which escaped assessment and which was the basis of the formation of belief and if he does so, he can also assess or reassess any other income which has escaped assessment and which comes to his notice during the course of the proceedings-However, if after i....
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....quired to be fulfilled to assess or reassess the escaped income chargeable to tax. As per Expln. 3 if during the course of these proceedings the AO comes to conclusion that some items have escaped assessment, then notwithstanding that those items were not included in the reasons to believe as recorded for initiation of the proceedings and the notice, he would be competent to make assessment of those items. However, the legislature could not be presumed to have intended to give blanket powers to the AO that on assuming jurisdiction under s. 147 regarding assessment or reassessment of escaped income, he would keep on making roving inquiry and thereby including different items of income not connected or related with the reasons to believe, on the basis of which he assumed jurisdiction. For every new issue coming before AO during the course of proceedings of assessment or reassessment of escaped income, and which he intends to take into account, he would be required to issue a fresh notice under s. 148.- CIT vs. Jet Airways (I) Ltd. (2011) 239 CTR (Bom) 183 : (2011) 52 DTR (Bom) 71 : (2011) 331 ITR 236 (Bom) concurred with. The very basis of initiation of proceedings ....
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....ating the profit and in cash deposit which is deposited in the bank account. Thus in view of the above submissions the Assessment order as well as notice U/s 148 may kindly be quashed. 3. No income escaped: Further it is submitted that the notice u/s 148 can be issued only when there is any escape of income because S. 147 provides that If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, here the assessee has not escaped any income he has disclosed all the income in the return of income, the AO has reopened the case on the basis of AIR information for cash deposits in the bank account and the ld. AO himself has not made any addition or brought on record any escapement of income. Hence if there is no escarpment then the notice issued u/s 148 is invalid. 4. Reason to believe and not reason to suspect: 4.1 It is submitted that even under the amended law by the finance act 1989 the condition precedent or words, which continues right since inception till date, are "reason to believe" and not "reason to suspect". The word "believe" has to be understood in contradistinction of s....
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....ders. The legislature under Section 147 has not clothed AO with such jurisdiction therefore the action could not be upheld in the background of facts of instant case. One more redeeming fact which had direct nexus with the subsequent re-assessment proceedings and ramification of the same had culminated into re-assessment orders was the impugned order where AO rejected the objections submitted by Assessees pursuant to notice under Section 147/148. Order passed by AO in this behalf was not a speaking order which could not be sustained. In view of legal infirmity in the notice under Section 147/148 and laconic order of AO while rejecting objections Assessee the consequential assessment Orders were liable to be annulled. (para16) 5. As the ld. CIT(A) has also not stated anything contrary to our other submissions on legal except one. Which shows the contradictory approach of the ld. CIT(A). 6. Thus notice u/s 148 cannot be given on wrong facts. Hence the same may kindly be quashed. GOA-2: Trading addition of Rs. 7,24,872/-: FACTS: Kindly refer facts of GOA-1. SUBMISSIONS: 1. No reason given for making the additions: At the very outset it is s....
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....prepared on the basis of bank statements itself which have also been filled before the Honble CIT(A)(PB8-12) both the lower authorities have not speak a single word thereon and not rebutted the same, when there is no wrong found then hoe the addition can be made and sustained. As on perusal of the details we have to submit that there was initial capital of Rs. 2,75,000/- of the assessee as he was doing business for last so many years Rs. 14,23,651/- was loan taken by the assessee from various person through the account payee cheque Rs. 27,23,020/- was other deposits ie cash re-deposits out of the cash withdrawals and remaining of Rs. 6,48,560/- is the turnover of the assessee all these are supported with the bank statement itself which is also on record. And we explained each and every entries before the lower authorities either in remand proceedings or before the ld. CIT(A), in case if they had any doubt they could have asked to the assessee but failed to do so rather made wrong additions, which is not permissible in the law. 2. Transaction not considered in full: Further it is submitted that the lower authorities have not considered and appreciated the true and ....
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....to the lower authorities " that if your honor wants any other supporting documents in support of our above contention kindly letus know, we shall file the same before your honor or before the ld. AO if your honor demands any comments from the AO. " but they failed to do so rather confirmed the wrong additions. 6. The ld. AO has proceeds only and only on his own assumption and presumption and other side he has denied the material, evidences etc. The ld. AO in his support has not brought on record any single evidences. The ld. AO despite having the relevant material, evidences and information's could not rebut the same with the adverse evidence. He has proceeded only on suspicion. An allegation remains a mere allegation unless proved. Suspicion cannot take the place of reality, are the settled principles kindly refer Dhakeshwari Cotton Mills 26 ITR 775 (SC) also refer R.B.N.J. Naidu v/s CIT 29 ITR 194 (Nag), Kanpur Steel Co. Ltd. v/s CIT 32 ITR 56 (All).All the addition deserves deletion on this submission alone. The AO neither speak a single word on the evidences filed by the appellant nor rebutted the same with the help of any supporting evidence. Also refer CIT v/s Kulwan....
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....come can be assessed and under what circumstances, while assessing escaped income. Income escaping assessment (Section 147) If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year) : Provided that where an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in respon....
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....r document received from the prescribed income-tax authority, under sub- section (2) of section 133C, it is noticed by the Assessing Officer that the income of the assessee exceeds the maximum amount not chargeable to tax, or as the case may be, the assessee has understated the income or has claimed excessive loss, deduction, allowance or relief in the return; (d) where a person is found to have any asset (including financial interest in any entity) located outside India. Explanation 3.-For the purpose of assessment or reassessment under this section, the Assessing Officer may assess or reassess the income in respect of any issue, which has escaped assessment, and such issue comes to his notice subsequently in the course of the proceedings under this section, notwithstanding that the reasons for such issue have not been included in the reasons recorded under sub-section (2) of section 148. Explanation 4.-For the removal of doubts, it is hereby clarified that the provisions of this section, as amended by the Finance Act, 2012, shall also be applicable for any assessment year beginning on or before the 1st day of April, 2012. The AO while completing the ....
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..... The Tribunal by its order set aside the reassessment. The High Court following the decision of Jet Airways (I) Ltd. (supra) held that "unless the Assessing Officer assesses the income with reference to which he had formed a reason to believe within the meaning of section 147 of the Act, it would not be open to him to reassess or assess any other income chargeable to tax which has escaped assessment and comes to his notice in reassessment proceedings." Also the Delhi High Court in CIT v. Living Media India Ltd. [2013] 35 taxmann.com 105, held that "where the Assessing Officer reopened the assessment of the assessee after recording reasons and served on it a notice under section 148 of the Act on 19th January,2010, and that when the original notice issued with reference to bad debts was no longer an issue, additional reasons recorded by the Assessing Officer subsequent to issuance of notice under section 148 of the Act could not be looked into for purposes of determining validity of proceedings initiated under notice dated 19th January 2010 and until and unless, there was an addition on the basis of the original reasons, no other additions could be made in view of the expression....