2013 (1) TMI 155 - HC - Income Tax

Bogus cash credit - reopening of assessment - Held that - No appeal is required to be filed when tax effect is less than Rs. 2 lakhs. The conditions mentioned in Clause-3 of the Circular dated 27.3.2000 i.e. where prosecution proceedings are contemplated against the assessee, are not attracted in this appeal. The circular has been issued by the Central Board of Direct Taxes and is binding upon the Department. In view of the aforesaid circular, the appeal is not maintainable and is dismissed as such.

Summary

Issues:
1. Appeal under Section 260(A) of the Income Tax Act, 1961 challenging the addition of Rs. 6 lakhs in the income of the assessee.
2. Justification of invoking Section 68 of the Act for making the addition of Rs. 6,00,000 as a bogus gift.
3. Ignoring the enquiry made by the ADIT (Inv.) about the alleged donors.
4. Validity of issuing notice u/s 147/148 irrespective of the time available for issuing notice u/s 143(2).

Analysis:

Issue 1:
The appeal was filed challenging the addition of Rs. 6 lakhs in the income of the assessee under Section 260(A) of the Income Tax Act, 1961. The Tribunal had deleted this addition, leading to the Commissioner proposing substantial questions of law regarding the justification of setting aside the assessment order without controverting the findings of the Assessing Officer and the CIT (A).

Issue 2:
The Assessing Officer had invoked Section 68 of the Act to add Rs. 6,00,000 as a bogus gift due to the failure of the assessee to prove the genuineness of the transactions, creditworthiness, and the real identity of the donors. The validity of this invocation was questioned in the appeal.

Issue 3:
The Tribunal, as the final fact-finding authority, was questioned for ignoring the enquiry conducted by the ADIT (Inv.) under Section 131(1)(d) of the Act regarding the alleged donors. This raised concerns about the adequacy of the investigation and its impact on the final decision.

Issue 4:
The validity of issuing notice under Section 147/148 was also raised, questioning whether such notice can be issued regardless of the time available for issuing notice under Section 143(2) of the Act. This issue highlighted the procedural aspects of issuing notices under different sections of the Income Tax Act.

The judgment detailed the facts of the case for the Assessment Year 2005-06, where the Assessing Officer added Rs. 6 lakhs to the income of the assessee based on a notice issued under Section 148 of the Act. The subsequent appeal process, including appeals before the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal, led to the deletion of the addition due to lack of material supporting the initiation of proceedings under Section 148. The judgment also discussed the maintainability of the appeal based on the tax effect, citing a circular by the Central Board of Direct Taxes setting monetary limits for filing appeals in different forums, ultimately leading to the dismissal of the appeal in this case.