2012 (7) TMI 36 - AT - Income Tax

Unexplained cash credit - validity of issuance of notice under section 148 AO issued notice u/s 148 on the basis of information received from investigation wing addition on the ground of unaccounted money in the garb of bogus entry of Capital Gain/Gift is without any evidence Held that - for any return processed under section 143(1)(a), only one condition is required to be satisfied that the Assessing Officer must have reason to believe that income chargeable to Income tax has escaped the assessment. Notice issued by the Assessing Officer under section 148 of the Act is a valid notice as per the provisions of sections 147 & 148 of the Act. Unexplained cash credit credit worthiness of donor Held that - documentary evidences filed by the assessee were not certified by concerned authority or by the author of the document and, therefore, these documentary evidences are not admissible as per sections 62 & 63 of the Evidence Act, 1872. Assessee failed to discharge the onus to establish the genuineness of the gift shown by her in the Income tax return. Assessee has failed to establish her relationship with so-called donor Shri Govind Ram and also failed to establish the occasion for receiving such gift as per the evidences produced by the assessee. In favor of Revenue.

Issues Involved:
1. Validity of jurisdiction under Section 148 of the Income Tax Act.
2. Legitimacy of the assessment and the evidence supporting the alleged unaccounted money.
3. Application of Sections 68 and 69 without distinguishing both sections.
4. Genuineness of the gift transaction and the burden of proof on the assessee.
5. Allegation of re-opening being done at the instance of a superior officer and without proper application of mind.
6. Opportunity to rebut enquiries made at the appellate stage.
7. Relevance of decisions in other cases to the present case.
8. Dismissal of various tribunal and court decisions by the CIT(A).

Detailed Analysis:

1. Validity of Jurisdiction under Section 148:
The assessee challenged the validity of the notice issued under Section 148 of the Income Tax Act, arguing that the reasons recorded by the Assessing Officer (AO) were vague and lacked application of mind. The Tribunal upheld the AO's jurisdiction, citing that the notice was based on specific information from the Investigation Wing regarding bogus entries of capital gains and gifts. The Tribunal referenced the Supreme Court decision in ACIT vs. Rajesh Jhaveri Stock Brokers (P) Ltd., which allows reopening of assessments under Section 143(1)(a) if the AO has reason to believe that income has escaped assessment.

2. Legitimacy of the Assessment and Evidence:
The AO issued a notice under Section 148 based on information that the assessee received a bogus entry of Rs. 1,00,000 from M/s Essar Pee Advertising, Delhi. The assessee denied receiving any draft from M/s Essar Pee Advertising and claimed it was a gift from Shri Govind Ram. However, the assessee failed to produce Shri Govind Ram for examination. The AO concluded that the assessee introduced unaccounted money under the guise of a gift. The Tribunal supported this conclusion, emphasizing the need to look beyond apparent transactions and consider the surrounding circumstances and human conduct, as per the Supreme Court's rulings in CIT vs. Durga Prasad More and Workman of Associate Rubber Industry Limited.

3. Application of Sections 68 and 69:
The assessee argued that the AO made additions under Sections 68 and 69 without distinguishing between the two. The Tribunal did not find merit in this argument, as the AO's assessment was based on the evidence that the assessee failed to substantiate the genuineness of the gift transaction.

4. Genuineness of the Gift Transaction:
The assessee provided documents such as a gift deed, affidavit of the donor, and bank statements to prove the genuineness of the gift. However, the Tribunal found these documents insufficient as they were not certified by the concerned authority or the donor. The Tribunal held that the assessee failed to discharge the onus of proving the genuineness of the gift, as required by law.

5. Allegation of Re-opening at the Instance of Superior Officer:
The assessee claimed that the reopening was done at the instance of a superior officer without proper application of mind. The Tribunal dismissed this claim, noting that the AO had valid reasons to believe that income had escaped assessment, based on specific information from the Investigation Wing.

6. Opportunity to Rebut Enquiries:
The assessee argued that they were not given an opportunity to rebut the enquiries made at the appellate stage. The Tribunal found that the AO had given the assessee sufficient opportunity to produce the donor for examination, which the assessee failed to do. Therefore, the Tribunal upheld the assessment.

7. Relevance of Decisions in Other Cases:
The assessee contended that the CIT(A) erroneously relied on its own decision in another case without considering the specific facts of the present case. The Tribunal found that the facts and modus operandi in the present case were similar to those in the referenced case, justifying the CIT(A)'s reliance on the earlier decision.

8. Dismissal of Tribunal and Court Decisions:
The assessee argued that the CIT(A) unjustly dismissed various decisions of the Tribunal and Courts. The Tribunal found that the CIT(A) had provided a well-reasoned order, supported by Supreme Court decisions, and upheld the CIT(A)'s findings.

Conclusion:
The Tribunal dismissed all four appeals filed by the assessees, upholding the validity of the notice under Section 148, the assessment of unaccounted money, and the rejection of the assessee's claims regarding the genuineness of the gift. The Tribunal emphasized the importance of looking beyond apparent transactions and considering the surrounding circumstances and human conduct in tax evasion cases.

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