9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2024 (4) TMI 1052 - AT - Income TaxValidity of reopening of assessment u/s 147 - Reason to believe - as argued AO has failed in giving the exact reason for reopening the assessment and the reasons which the assessee came to the knowledge of the assessee from the assessment order are vague in nature - HELD THAT - When asked, during hearing, the Ld. Counsel agreed and confirmed that the reasons for reopening were not asked for by the assessee during the course of either assessment proceedings or appellate proceedings. The Hon ble Supreme Court in its judgement of GKN Driveshaft (India) Ltd. 2002 (11) TMI 7 - SUPREME COURT held that when a notice u/s 148 of the Income tax Act is issued, the proper course of action for the noticee is to file return and if he so desires, to seek reasons for issuing notices. The assessing officer is bound to furnish reasons within a reasonable time. On receipt of reasons, the noticee is entitled to file objections to issuance of notice and the assessing officer is bound to dispose of the same by passing a speaking order. Thus as agreed by assessee has not sought for any reason during the course of entire assessment and therefore seeking relief merely on technical ground is not tenable. Therefore, relying on facts and the judgment of Hon. Supreme Court the ground of appeal is dismissed. Addition u/s 69C on account of the capital introduced by the partner - HELD THAT - In the present case, the partner (Late Dhaval B. Patel, who is expired on 18.12.2021 and we have taken note of the death certificate placed on record) has explained the source funds towards introduction of the capital. Therefore, if the department was not satisfied with the explanation given by the partners, then it is legitimate for the department to draw inference that these amounts represent undisclosed profits/unexplained credits and to assess them in their hands in their own individual assessment. Thus, the amounts credited to the partners bank account cannot be assessed in the hands of the firm. Once the partner has owned that the money deposited in his accounts are of his own, the AO is entitled to and may proceed against the partner and assess the same in his individual hands. Thus we are of the opinion that Ld.CIT(A) has not taken into consideration, principles to the facts of the judicial pronouncement as referred above in case of CIT Vs. Pankaj Dyestuff Industries ( 2005 (7) TMI 601 - GUJARAT HIGH COURT and has erred in confirming the addition. Therefore, the ground of the assessee is allowed. Addition u/s 69C of the Act on account of unsecured loans - HELD THAT - Counsel explained with the help of remand report and the facts reproduced by the Ld.CIT(A) in his order, that the assessee has proved the identity and genuineness by providing PAN, bank statement and copy of ITR of the person who lent money to the assessee as unsecured loan. It was also observed by the AO in the remand report that the person who lent money by cheque to the assessee had deposited cash in his account to clear the cheque. Since the identity, genuineness and creditworthiness of the depositor are proved by the assessee and hence the primary onus cast upon the assessee is discharged and the onus now shifted to the AO to show why the assessee's case could not be accepted and why it must be held that such loans remained unexplained and treating as dubious and doubtful. In order to arrive at such a conclusion, the AO has to be in possession of sufficient and adequate material. Further the assessee cannot be presumed to have special notice about the source of source or origin of origin. Once the assessee has explained the source of the funds having come from the depositors as an explanation to support the loans received, it is not expected from the assessee to explain the source of the source. Even if it is assumed that the person who lent the money, was unable to explain the nature and source of the funds received by them which were given as loan to the assessee than its unexplained amount could be treated as unexplained investment in the hands of the depositors u/s. 69 of the Act or other section but could not be taxed in the hands of the assessee as unexplained expenditure u/s 69C of the Act in absence of any evidence. Thus CIT(A) is not justified in confirming the addition.
Issues Involved:
1. Condonation of Delay 2. Reassessment Proceedings u/s 148 3. Addition u/s 69C on account of Partner's Capital 4. Addition u/s 69C on account of Unsecured Loans Condonation of Delay: The Assessee filed an appeal with a delay of 266 days, attributing it to the negligent attitude of the Accountant. The Tribunal condoned the delay, referencing the Supreme Court's judgment in Collector, Land Acquisition v. Mst. Katiji, which emphasized that 'sufficient cause' in the Limitation Act is elastic enough to serve the ends of justice. Reassessment Proceedings u/s 148:The Assessee argued that the reassessment proceedings u/s 148 were upheld erroneously as the AO failed to provide exact reasons for reopening. The Tribunal noted that the Assessee did not seek reasons during the assessment or appellate proceedings. Citing the Supreme Court's judgment in GKN Driveshaft (India) Ltd. Vs Income Tax Officer, it was held that the Assessee should have sought reasons, and thus, the ground of appeal was dismissed. Addition u/s 69C on account of Partner's Capital:The Assessee contested the addition of Rs. 17,14,000/- u/s 69C, arguing that the source of the partner's capital was satisfactorily explained. The Tribunal found that the CIT(A) erred by not considering the Gujarat High Court's judgment in CIT Vs. Pankaj Dyestuff Industries, which stated that if partners own the money deposited, it cannot be assessed in the firm's hands. The addition was deleted, and the ground of the Assessee was allowed. Addition u/s 69C on account of Unsecured Loans:The Assessee challenged the addition of Rs. 33,00,000/- u/s 69C for unsecured loans from Jadhav Tractors and Bhadreshkumar S. Shah. The Tribunal observed that the Assessee had proved the identity, genuineness, and creditworthiness of the lenders. It held that the Assessee is not required to explain the source of the source. Referencing the decision in Rohini Builders Vs. DCIT, the Tribunal deleted the addition, allowing the Assessee's ground. Conclusion:The appeal of the Assessee was partly allowed, with the Tribunal deleting the additions made u/s 69C on account of partner's capital and unsecured loans.
|
