TaxTMI 
TaxTMI 
2004 (1) TMI 296
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....ial and business premises of Sh. Parshotam Dass and his allied concerns like M/s. Ram Kumar Parshotam Dass (hereinafter called RKPD), Jaitu etc. and other related persons and further coupled with enquiries made by the Department had revealed that the assessee had introduced a bogus cash credit of Rs. 40,000 on 28-2-1984 in the name of RKPD who was not the actual money lender but was engaged in the racket of name lending only. Notice under section 148 was issued. The assessee objected to the legality of initiation of reassessment proceedings on the plea that subsequent information to the Assessing Officer that the money lenders were not genuine did not justify the re-assessment proceedings. The contention of the assessee was negatived. The Assessing Officer called upon the assessee to prove the genuineness of the alleged loan transaction, in response to which an affidavit of Sh. Parshotam Dass, partner of M/s. RKPD, Jaitu, confirming deposits was filed. The assessee was further required to produce the creditor which was not done. On these facts, it was opined that Sh. Parshotam Dass and his other related concerns were only name-lenders. The said sum alongwith interest of Rs. 1,920 w....
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....burden of proof rested on it. 4. Mr. R.S. Bansal, CA, appearing for M/s. Ashoka Industries, Jaitu, stated that the facts in this case were similar to that of M/s. Assam Tea Co. and the deposits were accepted from M/s. RKPD, the same partnership firm in which Sh. Parshotam Dass was partner. It was contended for the appellant that the assessment for the assessment year 1984-85 was framed under section 143(3) whereas in the other two years, the returns were processed under section 143(1). It was explained that during the course of assessment proceedings under section 143(3), the Assessing Officer investigated the genuineness of loan transaction with M/s. RKPD and got satisfied with the explanation tendered at the assessment stage. Having done so, the ld. A.R. stated that the Assessing Officer was not justified in enquiring about the same transaction in the reassessment proceedings. He relied on various decisions to bring home the point that the Assessing Officer was not competent to draw adverse inference against the assessee on similar set of facts which were examined by him at the time of original assessment. Other contentions raised by Mr. Bansal, were the reiteration of the arg....
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.... and confirmed in the first appeal were valid or not. Before going into this question, it would be apposite to deal with the contention raised by Mr. Bansal to the effect that the Assessing Officer having accepted the transaction in original assessment proceedings could not have initiated the reassessment proceedings on the same facts. Section 147, prior to its substitution by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989 had two clauses, namely (a) and (h). In the present appeals, we are concerned with the unamended provisions. Relevant portion of clause (a) of section 147, empowers the Assessing Officer to assess or re-assess any income, where he has reason to believe that by reason of the omission or failure on the part of assessee to disclose fully and truly all material facts necessary for assessment, any income chargeable to tax has escaped assessment. It shows that the proceedings under section 147(a) read with section 148 can be initiated if two conditions are satisfied, namely, (i) the Assessing Officer must have reason to believe that the income chargeable to tax has escaped assessment and (ii) he must have reason to believe that such income has escaped asses....
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....e aforesaid two assessees is that the amounts were received through banking channels from M/s. RKPD which was a firm and the statement of Smt. Savitri Devi. W/o Sh. Parshotam Dass, a stranger to the firm was inconsequential insofar as the transactions of the assessee with the said firm were concerned. 6.2 At this juncture, it would be relevant to get enlightened from certain judicial precedents on this point. In the case of Kashmiri Lal Kasturi Lal & Co. v. CIT [1989] 177 ITR 477 (Punj. & Har.), the Income-tax Officer found in the account books of the assessee that firm 'G' had advanced a sum of Rs. 20,000 to the assessee by way of cash credit. At the time of original assessment, it did not come to light whether 'G' had really advanced by way of cash credit or was merely a bogus firm lending its name. Later on when the assessment proceedings were initiated against 'G', it transpired that it had indulged in Hawala business with various parties including the assessee and that firm merely lent its name to the assessee and no amount was in fact advanced. In this case, the Tribunal found that the ITO had reason to believe on the basis of subsequent information that the assessee had e....
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....the creditors might have a rational connection with the loans of the assessee. It was found that the material was not available in the order of the Tribunal as to whether the confessional statements related in any manner with the loans to the assessee or not. It was finally held that the Tribunal would be justified in upholding the re-opening of the assessment under section 147(a), if the confessional statements were in any manner related to the assessee; otherwise not. 6.5 In the case of Phool Chand Bajrang Lal, the assessee had claimed that it had borrowed a sum of Rs. 50,000 from a Calcutta Company. Such loan was stated to have been raised and returned in cash though interest on such loan was paid by cheque/bank draft. During the assessment proceedings, the ITO finalised the return by allowing deduction of such interest. Thereafter, he entertained some doubts about the genuineness of the loan transaction. An enquiry from his counterpart at Calcutta revealed that the Calcutta Company had not advanced any loans to any person. The ITO of the assessee examined the Managing Director of the Calcutta Company who admitted that he had made a confession to the ITO at Calcutta, that the....
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....ically stated that she had never advanced any loan to anybody during the last 8 years. She was asked if she knew Sh. Sushil Kumar, Ashok Kumar, Bhagwati Devi, in response to which she stated that neither she knew these persons nor any loan was advanced to them. It was further inquired whether she knew Parkash, Mahavir Pd. S/o Sh. Devi Dayal, Krishan Goel S/o Sh. Krishna Murari Goel and whether she had any transaction with them for the last 3 years, it was stated that she did not know these persons nor any transaction was made with them. On an examination of her preliminary and concluding statements, it becomes abundantly clear that no question was asked regarding financial transactions of her husband with any party. Nothing was placed on record by the Revenue to show that the search unearthed any specific incriminating material casting doubt over the genuineness of the transactions of M/s. RKPD with these assessees. No statement, much less the confessional statement of Sh. Parshotam Dass, was recorded at any stage that could show that he had lent his name or of his associated concerns to the assessees in question. The department swung into action by initiating the reassessment proc....
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....tion 148 are annulled, there cannot be any question of charging interest under these sections. 6.9 In the result, the appeal(s) of M/s. Assam Tea Co. and those of M/s. Ashoka Industries are hereby allowed. 7. The Revenue has come up in appeal against the orders passed by the DCIT(A) on 10-1-1994 in the case of M/s. Bant Ram & Co., another connected assessee, for the assessment year 1983-84 holding that the notice issued was barred by time limitation. The assessee, in cross-objection is, however, supporting the impugned order and praying, in the alternative, for deletion of addition on merits. 7.1 The facts of this assessee are that it had shown cash credit in the name of M/s. RKPD for Rs. 35,000 and a sum of Rs. 1,112 was shown to have been paid as interest to the said concern. The Assessing Officer issued notice under section 148 on similar facts as taken note of above and made the addition of Rs. 36,112 being the principle amount and interest paid to M/s. RKPD. In the first appeal, a preliminary objection was raised on behalf of the assessee that notice under section 148 was bad in law and beyond time, inasmuch as it was dated 19-3-1991 for the assessment year 1983-84 wh....