1996 (7) TMI 173 - AT - Income Tax

Summary

Issues Involved:
1. Validity of reopening of assessments under sections 147/148.
2. Estimation of income from house property.
3. Estimation of income from bogus hawala business.
4. Charging of interest under sections 139(8), 215, and 216.
5. Validity of assessment orders framed under section 143(3) instead of section 144.
6. Relief granted by CIT(A) on estimated interest income.

Detailed Analysis:

1. Validity of Reopening of Assessments under Sections 147/148:
The primary objection raised by the assessee was against the reopening of assessments. The assessee argued that since the original assessment proceedings were set aside by the CIT(A), no fresh notices under sections 147/148 could be issued. The assessee relied on various judicial precedents to support this argument. However, the Tribunal found that the notices were issued within the permissible time frame and with the prior approval of the CIT. The Tribunal noted that the reasons for the belief that income had escaped assessment were properly recorded and approved. The Tribunal agreed with the Departmental Representative that the amended provisions of section 147, effective from 1-4-1989, were procedural and retrospective, thus applicable to the case. Consequently, the Tribunal upheld the validity of the reassessment notices and the subsequent assessments.

2. Estimation of Income from House Property:
The assessee contested the estimation of income from house property, arguing that the property was in the name of the assessee's mother. The Tribunal, however, found that the property was occupied by the assessee and that there was no evidence to support the claim that the property belonged to the mother. The Tribunal upheld the assessment of income from the property as the assessee's income, noting that the exemption for self-occupied property was not applicable for the assessment years in question.

3. Estimation of Income from Bogus Hawala Business:
The assessee argued that the estimation of income from bogus hawala business was without basis, as all material had been seized by the income-tax department and no cogent material was brought on record by the Assessing Officer. The Tribunal found that the Assessing Officer had sufficient basis for the estimation, given the evidence of large-scale tax evasion and hawala transactions discovered during searches. The Tribunal upheld the estimation of income from the hawala business.

4. Charging of Interest under Sections 139(8), 215, and 216:
The assessee objected to the charging of interest under these sections. The Tribunal, however, did not find merit in this objection, noting that the assessee had not complied with statutory provisions and notices, and thus, the interest charges were justified.

5. Validity of Assessment Orders Framed under Section 143(3) Instead of Section 144:
The assessee argued that the assessment orders were invalid as they were framed under section 143(3) instead of section 144. The Tribunal rejected this objection, stating that the mere typographical error of mentioning section 143(3) instead of section 144 did not invalidate the assessments, especially since no returns were filed by the assessee.

6. Relief Granted by CIT(A) on Estimated Interest Income:
The revenue challenged the relief granted by the CIT(A) on estimated interest income. The Tribunal found that the CIT(A) had provided a reasonable basis for the relief, noting that the revenue had not substantiated its allegations with documentary evidence despite two searches and the seizure of various documents. The Tribunal upheld the CIT(A)'s decision to grant relief on the estimated interest income.

Conclusion:
The Tribunal dismissed all four appeals filed by the assessee, all four appeals filed by the revenue, and all four cross objections filed by the assessee. The Tribunal upheld the validity of the reassessment notices and the subsequent assessments, the estimation of income from house property and bogus hawala business, and the charging of interest under sections 139(8), 215, and 216. The Tribunal also upheld the relief granted by the CIT(A) on estimated interest income.