2014 (5) TMI 850 - HC - Income Tax

Dismissal of application of revision u/s 264 of the Act - Unexplained investment u/s 69 of the Act Held that - The AO vide order dated 5.12.2011 and the CIT while passing order dated 28.3.2013, u/s 264 of the Act had completely ignored the same - the CIT had passed the order which is not a speaking one Relying upon CIT vs. Smt.P.K.Noorjahan 1997 (1) TMI 6 - SUPREME Court addition u/s 69 of the Act is within the discretion of the AO as according to the words used in the section, it was incumbent upon the AO to consider the facts and circumstances of the case before making an addition. It is clear from the orders passed by CIT and the AO that inspite of opportunity having been provided to the assessee to appear before them, but did not chose to appear and Shri Amit Kashyap could not be confronted to the assessee who had tried to own the responsibility for maneuvering the entire transaction - on a query being put to the counsel for the assessee as to why did the petitioner enter into transaction on behalf of Tarlochan Singh who was stranger and had no relationship with the assessee, but they were unable to give any reply much less satisfactory reply thus, no illegality or perversity could be pointed out in the orders passed by the AO and the CIT Decided against Assessee.

Summary

Issues Involved:
1. Quashing of the assessment order dated 5.12.2011.
2. Quashing of the order passed by the Commissioner of Income Tax-I, Jalandhar (CIT) dated 28.3.2013 in revision under section 264 of the Income Tax Act, 1961.

Detailed Analysis:

1. Quashing of the assessment order dated 5.12.2011:

The petitioner, engaged in a small business and later employed as a clerk with HDFC Bank, filed her income tax return for the assessment year 2009-10 declaring a net taxable income of Rs. 1,32,000/-. On 26.10.2008, an amount of Rs. 24,38,830/- was deposited in her account, which was utilized for purchasing gold coins for an NRI customer, Tarlochan Singh. The petitioner claimed that she facilitated this transaction under the persuasion of the bank manager, Amit Kashyap, and submitted affidavits from both Tarlochan Singh and Amit Kashyap to explain the source of the deposit. However, the Assessing Officer treated the amount as an unexplained investment under section 69 of the Income Tax Act and assessed the income at Rs. 25,71,000/-, raising a consequential demand of Rs. 10,37,474/- towards tax and interest.

2. Quashing of the order passed by the Commissioner of Income Tax-I, Jalandhar (CIT) dated 28.3.2013 in revision under section 264 of the Income Tax Act, 1961:

The petitioner filed an application under section 264 of the Act seeking revision of the assessment order. During the revision proceedings, Amit Kashyap confirmed his role in persuading the petitioner to route the transaction through her account. Despite this, the CIT dismissed the application for revision, maintaining the addition of Rs. 24,39,000/-. The CIT observed that the petitioner did not present herself during the proceedings, which hindered the ability to confront her with Amit Kashyap. The CIT found no significant difference in the situation presented during the revision proceedings compared to the assessment stage and thus rejected the application.

Court's Observations:

The court noted that the assessee had been given opportunities to present herself before both the Assessing Officer and the CIT but failed to do so. This non-appearance prevented the confrontation with Amit Kashyap, who had tried to take responsibility for the transaction. The court also questioned the petitioner's rationale for entering into a transaction on behalf of a stranger, to which the petitioner's counsel could not provide a satisfactory reply. The court found no illegality or perversity in the orders passed by the Assessing Officer and the CIT. The reliance on the judgment in CIT vs. Smt. P.K. Noorjahan was deemed inapplicable as the facts and circumstances of that case did not attract the provisions of section 69.

Conclusion:

The court dismissed the petition, finding no merit in the arguments presented by the petitioner. The orders passed by the Assessing Officer and the CIT were upheld, and the addition of Rs. 24,39,000/- as unexplained investment under section 69 of the Income Tax Act was maintained.