TaxTMI 
TaxTMI 
2025 (4) TMI 1993
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....that bill of purchase of Gold Bar dtd. 25/12/1985 is bogus and to treat sale proceed of Gold Bar as income from undisclosed sources. Further, CITA)-NFAC observed that sale bill is for sale of gold bar, whereas as per Wealth Tax Return the items shown are gold ornaments and the Appellant did not file copy of Valuation Report at any stage in support of valuation of jewellery. 2. CIT(A)-NFAC erred in Law and Facts in confirming the addition made by AD for unsecured deposits/gifts aggregating Rs. 13,54,250 as unexplained income u/s 68 of the Act on the alleged finding that assessee has failed to prove the credit worthiness and genuineness of the deposits/ Gifts and the appellant has not responded to the remand report of AO. 3. Ld. AD erred in law and facts to issue of notice u/s 148 of the income Tax Act, 1961 (the Act) as the assessing officer has no reason to believe that any income chargeable to tax has escaped assessment within the meaning of section 147 of the Act. The appellant craves leave to add/alter/amend/substitutes any or all grounds of appeal." 3. The assessee is an individual and for A.Y. 2009-10 assessee derived income from remuneration and ....
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.... & Order No.: ITBA/NFAC/S/250/2023-24/1055595028(1), dtd. 30/08/2023, is silent for Rs. 30,250 being interest amount on unsecured deposit of M/s. Ghewarchand Mohanlal Rs. 10,30,250 disallowed u/s 68 by Ld. AO in assessment order. CIT (A) granted relief for Rs. 10,00,000 instead of Rs. 10,30,250. Similarly, CIT (A) is silent on gift Rs. 25,000 from Kamladevi Goyal and gift Rs. 25,000 from Shashikala Bansal aggregating Rs. 50,000 disallowed u/s 68 by Ld. AO in the assessment order." 4.1. Ld. CIT (A) has partly allowed the appeal of the assessee order dated 30.08.2023, according to Ld. CIT (A), the appellant failed to explain the discrepancies pointed out by the Assessing Officer during the course of remand proceedings. Hence, the additions made in respect of unsecured loan/gifts in the cases of Shri Blau Ram Bodu Ram, Shri Naresh Sahu and Smt. Nooridevi Gehlot are confirmed. 5. The appellant has challenged the legality and validity of order of the Ld. CIT (A) dated 30.08.2023 before the Ld. ITAT. 6. During the course of arguments, the assessee submitted additional ground of appeal and made a specific request by moving an application with the grounds may kindly be taken on re....
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.... (2001) 170 CTR (Bom) 582: (2001) 251 ITR 416 (Bom), this Court has taken the view that in view of the proviso to s. 147 of the Income-tax Act, no action can be taken for reopening of an assessment after four years unless the Ld. AO has reason to believe that income had escaped assessment by reason of the failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. In the present case, we have gone through the reasons submitted in support of the notice under s. 148 of the Income-tax Act. In the entire reasons, there is no allegation of income having escaped assessment by reason of the failure on the part of the assessee to disclose fully and truly all material facts. In this case, we are concerned with reopening of an assessment after four years. ................in cases of reopening after four years, the Ld. AO must have reason to believe that income has escaped assessment by reason of failure on the part of the assessee to disclose fully and truly all material facts." Reopening of Assessment is not permitted for verification: "During the course of assessment proceedings of KRN Alloys P. Ltd., for A.Y. 2009....
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....from the information supplied by Ld. AO of the Company was not permitted to record the escapement of income within the meaning of provision of Section 147 of the of the Act. (iii) According to written statement, the reasons recorded on the basis of the information by some other officer could not satisfy the requirement in law. This is a case of only borrowed satisfaction, which is not at all permissible and therefore the power u/s 147 of the Act should not be exercised mechanically or as a manner of routine manner. Hon'ble High Court of Gujarat in the case of Shree Chalthan Vibhag Khand v. Deputy Commissioner of Income Tax, (2015) 376 ITR 419 (Guj.) has held that: "On the basis of the order passed by the Commissioner of Income Tax (Appeals) in the case of some other assessees, the satisfaction of the Ld. AO and the formation of opinion in the case of the assessee therein could not be sustained and the same could be said to be a borrowed satisfaction from another officer. Such borrowed satisfaction in the absence of any application of mind and any real finding in the case of the assessee, would not constitute valid reason to believe that the income has escaped assessmen....
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....n the information received from the other Assessing officer. It is a case when the Ld. AO failed to record his own satisfaction as to the escapement of income by the Appellant. 13. The Ld. DR. has relied on two judgments of the Hon'ble Supreme Court in the case of ACIT vs. Rajesh Jhaveri Stock Brokers Pvt. Ltd. reported at (2007) 291 ITR 500 and in the case of Raymond Woollen Mills Ltd. vs. ITO (1999) 236 ITR 34 (SC). Relevant portion of judgement is reproduced hereunder: "In this case, we do not have to give a final decision, as to whether there is suppression of material facts by the assessee or not. We have only to see whether there was prima facie some material on the basis of which the Department could reopen the case. The sufficiency or correctness of the material is not a thing to be considered at this stage. We are of the view that the court cannot strike down the reopening of the case in the facts of this case. It will be open to the assessee to prove that the assumption of facts made in the notice was erroneous. The assessee may also prove that no new facts came to the knowledge of the Income-tax Officer after completion of the assessment proceeding. We ar....
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..... 21st Oct., 2005 under s. 143(2) of the Act, stating that there were certain points with respect to return of income for the asst. yr. 2002-03 on which he would like to have further information. 1.4 The petitioner thereupon wrote a letter dt. 8th Nov., 2005 and reiterated the request for supply of the reasons recorded by the AO for reopening the assessment. He referred to the decision of the apex Court in case of GKN Driveshafts (India) Ltd. vs. ITO (2003) 179 CTR (SC) 11: (2003) 259 ITR 19 (SC). He also relied on the decision of this Court in case of Arvind Mills Ltd. vs. Asstt. CWT (2004) 191 CTR (Guj) 233: (2004) 270 ITR 467 (Guj) in support of such a prayer. 1.5 In response to such letter, the AO supplied the reasons recorded under his communication dt. 8th Nov., 2005. Such reasons read as under: In this case, the assessee company has filed its return of income for asst. yr. 2002-03 on 28th Oct., 2002 showing total income at Rs. 7,23,29,973. The case was processed under s. 143(1) on 16th Jan., 2003. On perusal of the case records, it is noticed that there is escapement of income chargeable to tax on the following points: (1) The assessee com....
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....ent proceedings cannot be reopened to circumvent time-limit for issuing the notice under s. 143(2) of the Act. He submitted that time-limit provided in the proviso to s. 143(2) of the Act, must be given its due weightage. If the AO for any reason failed to issue such a notice within the time-limit, he cannot proceed under s. 147 for taking such a return in scrutiny. In support of this contention, counsel relied on the following decisions: (a) In case of Dy. CIT vs. Maxima Systems Ltd. (2010) 236 CTR (Guj) 443: (2010) 40 DTR (Guj) 49: (2012) 344 ITR 204 (Guj), wherein a Division Bench of this Court observed that assessment which was framed under s. 143(3) of the Act pursuant to a notice under s. 143(2) which was served beyond the period of limitation prescribed under the proviso, was not a valid assessment. (b) In case of Asstt. CIT & Anr. vs. Hotel Blue Moon (2010) 229 CTR (SC) 219: (2010) 35 DTR (SC) 1: (2010) 321 ITR 362 (SC) wherein the apex Court held that notice under s. 143(2) of the Act was mandatory even in the block assessment proceedings if the AO desired to complete such assessment under s. 143(3) of the Act. (c) In case of Kanubhai M.....
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....r, in view of the decision of the apex Court in case of Asstt. CIT vs. Rajesh Jhaveri Stock Brokers (P) Ltd. (2007) 210 CTR (SC) 30: (2007) 291 ITR 500 (SC), the Revenue would have much greater latitude for reopening the assessment. (3) He further submitted that the reasons recorded by the AO would demonstrate that he had valid reasons to believe that the income chargeable to tax had escaped assessment. 4. Having, thus, heard the learned counsel for the parties and having perused the documents on record, we may first deal with the question of recording of the reasons before issuance of notice. It is undoubtedly true that to reopen an assessment, the AO must record his reasons before issuing notice for reopening. In that view of the matter, the question of such reasons having been recorded before issuance of notice assumes significance. As noted, counsel for the petitioner contended that such reasons were not recorded before issuance of notice. For this purpose, he highlighted that such reasons were not supplied immediately though the petitioner demanded the same. Such reasons when produced before the Court showed that they do not carry any date. 5. We hav....
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....O concerned recorded that the notice is issued after recording reasons. Further, as noted, the issue arose when the audit party brought certain discrepancies to the notice of the AO. He mulled over various options available to the Revenue and suggested to the CIT that the best option would be to exercise powers under s. 147 of the Act. These factors coupled with the affidavit-in-reply filed by the respondent would convince us that in exercise of writ jurisdiction, it would not be open for us to hold that reasons were not recorded by the AO before issuance of notice. 9. This brings us to the second limb of the petitioner's challenge namely, that the power under s. 147 of the Act cannot be exercised to circumvent the proceedings under s. 143(3) of the Act because the notice under s. 143(2) of the Act has become time-barred and further that in any case, reasons recorded would not permit the AO to reopen the assessment. 10. It is undoubtedly true that proviso to s. 143(2) of the Act prescribes a time-limit within which such notice could be issued. It is equally wellsettled that such notice is mandatory and in absence of notice under s. 143(2) of the Act within the....
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....an it be said that any assessment is done by them? The reply is an emphatic no. The intimation under s. 143(1)(a) was deemed to be a notice of demand under s. 156, for the apparent purpose of making machinery provisions relating to recovery of tax applicable. By such application only recovery indicated to be payable in the intimation became permissible. And nothing more can be inferred from the deeming provision. Therefore, there being no assessment under s. 143(1)(a), the question of change of opinion, as contended, does not arise." 12. Despite such difference in the scheme between a return which is accepted under s. 143(1) of the Act as compared to a return of which scrutiny assessment under s. 143(3) of the Act is framed, the basic requirement of s. 147 of the Act that the AO has reason to believe that income chargeable to tax has escaped assessment. This power to reopen assessment is available in either case, namely, while a return has been either accepted under s. 143(1) of the Act or a scrutiny assessment has been framed under s. 143(3) of the Act. A common requirement in both of cases is that the AO should have reason to believe that any income chargeable to tax has....
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....ained the fact by legal evidence or conclusion. The function of the AO is to administer the statute with solicitude for the public exchequer with an inbuilt idea of fairness to taxpayers As observed by the Delhi High Court (sic--Supreme Court) in Central Provinces Manganese Ore Co. Ltd. vs. ITO (1991) 98 CTR (SC) 161: (1991) 191 ITR 662 (SC), for initiation of action under s. 147(a) (as the provision stood at the relevant time) fulfilment of the two requisite conditions in that regard is essential. At that stage, the final outcome of the proceeding is not relevant. In other words, at the initiation stage, what is required is reason to believe, but not the established fact of escapement of income. At the stage of issue of notice, the only question is whether there was relevant material on which a reasonable person could have formed a requisite belief. Whether the materials would conclusively prove the escapement is not the concern at that stage. This is so because the formation of belief by the AO is within the realm of subjective satisfaction [see ITO vs. Selected Dalurband Coal Co. (P) Ltd. (1996) 132 CTR (SC) 162: (1996) 217 ITR 597 (SC); Raymond Woollen Mills Ltd. vs. ITO (1999)....