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TMI Blog2012 (8) TMI 275X X X X Extracts X X X X X X X X Extracts X X X X ..... . Whether the Tribunal was justified in law in holding that reopening of assessment under section 148 of the Act is valid and complies with all the mandatory conditions for reopening on the facts and circumstance of the case? 2. Whether the Tribunal was justified in law in confirming the addition of Rs.75,50,000/- made by the Assessing officer under section 68 of the Act on the facts and circumstance of the case? 3. Whether the Tribunal was justified in law in-confirming the addition of Rs.75,50,000/ - when the Assessing Officer summoned and recorded the statement from all the persons and all of them have confirmed the advance paid for purchase of shops and explained their sources on the facts and circumstance of the case consequently gave a perverse finding? 4. Whether the authorities below are justified in law in charging interest under section 234A sum of Rs.18,84,432/- and 234B sum of Rs.24,52,570/- contrary to the provisions of section 234A(3) and 234B(3) of the Act on the facts and circumstance of the case?" 4. Notice had been issued to the respondent - revenue regarding admission of the appeal on 18.4.2011 and thereafter on the appearance of learned standing counsel for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt of the income of the firm; that it had been received from as many as 14 persons by way of advance for sale of shops in a shopping complex that was being constructed by the assessee - firm etc. 10. The Assessing Officer did not find the explanation offered by the partner of the firm to claim licit source of the sum of Rs.75,50,000/-, rejected the stand of the assessee that it was not income, but concluded that the amount having been shown as cash credit in the books of accounts of the assessee and as received from fourteen persons, applied the provisions of section 68 of the Act, assessed the cash credit amount as undisclosed income of the assessee during the assessment year relevant to the period when the amount had been so credited in the books of accounts of the firm and brought it to tax as per the assessment order dated 21.3.2005. 11. The aggrieved assessee appealed to the Commissioner of Income Tax - (Appeals)-II, Bangalore. Assessee had raised various contentions before the Appellate Commissioner and the appeal came to be dismissed as per the order dated 29.9.2009 (copy at Annexure-D). 12. A further appeal to the Appellate Tribunal also having been dismissed by the Appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessing officer had reason to believe that at the best it amounted to suspicion and it is well settled on authority of law that a mere suspicion or a mere satisfaction, that there may be some income, which had not been taxed is not at all a ground for re-opening the assessment, at any rate determination on this question has been quite settled that a mere suspicion or information by itself cannot constitute a reason for re-opening a concluded assessment and therefore, there was no occasion for the assessing officer to pass an assessment order on the basis of re-opening of the assessment. 16. In support of this contention, Mr. Shankar has placed reliance on the following authorities, which touches upon the vivid situation and hues and shades involving occasions when the revenue had sought to re-open the concluded assessment but, which were found fault by the court opining that there is no real reason to believe for the re-opening as indicated by the assessing authorities etc. 1. GANGA SARAN & SONS P. LTD., VS. ITO 130 ITR 1 (SC) 2. ITO VS. LAKHMANI MEWAL DAS 103 ITR 437 (SC) 3. CALCUTTA DISCOUNT CO. LTD. VS. ITO 41 ITR 191 (SC) 4. INDIAN OIL CORPORATION VS ITO 159 ITR 95 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rm during the period when the cash credit entries had been made, but also is a situation, which clearly attracted the provisions of Section 68 of that Act that the reopening was based on material as found in the premise that it was the partner of the firm, who had claimed that he had drawn the amount from the account of the firm; that all transactions though were huge in terms of the amount having not been depicted in the books of accounts of the assessee, but for the first time being revealed after the search and the fact that all transactions were settled through cash payments though were transactions of money in lakhs and one such transaction being 20 lakhs of rupees, all did indicate that the assessee did not at all properly elicit source of income; that mere indicating of the creditors in itself is not the end and therefore, contends that there is no need for interference. It is also submitted that the reasons had in fact been recorded before the issue of notice; that it had been so recorded prior to issue of notice on 28.1.2004; that the very reason indicated the basis for re-opening. This was thoroughly examined by all the three authorities, who had satisfied such recording ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot the established fact of escapement of income. At the stage of issue of notice, the only question is whether there was relevant material on which a reasonable person could have formed the requisite belief Whether material would conclusively prove escapement of income is not the concern at that stage. This is so because the formation of the belief is within the realm of the subjective satisfaction of the Assessing Officer." 22. Mr. Aravind, learned counsel has also submitted that the authorities have gone into the question of accepting or otherwise, the explanation offered by the assessee on the touchstone of the genuineness and credit worthiness of the creditors and that the Tribunal and lower appellate authority found no occasion warranting a different finding from the view of the assessing authority on this aspect, but to reject the explanation; that there is no occasion to interfere on such findings by the High Court in an appeal under Section 260A of the Act. In support of this contention reliance is sought to be placed on the following decision :- 1. (2007) 292 ITR 225 (KAR) ACIT VS. VISHWANATH & CO. 2. (2012) 246 CTR (JHARKHAND) 82 MUKESH SHAW Vs. ITO 3. (2008) 304 ITR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d noticing and even as recorded by the authorities below the re-opening of the assessment proceedings of the firm was because of the submission or explanation offered by one of its partner Rishabchand Bhansali, who claimed that an amount found in his books of accounts which was in turn advanced to some other person, was drawn by this partner from the account of the firm, is by none other than the partner of the very firm. A firm always acts through its partners, and therefore, there cannot be a dichotomy of the stand in the case of the individual partner being different from that of the firm. What the partners states whether he is a partner in the capacity of HUF or in his individual capacity, nevertheless it is on behalf of the firm, because only through this finding this aspect has been noticed by the authorities below also. It is in the wake of such a stand taken by the partner, there was an occasion for investigating the transactions of the firm, who had claimed the amount as its amount and which was the very version of the assessee and its partner. 27. Insofar as the recording of the reasons is concerned this has been thoroughly examined by the three authorities below and in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the authorities follow, we are unable to accept the submission of the learned counsel for the appellant-assessee that there was no reason and it was only a suspicion based on which the re-opening has been made. In our considered opinion, until and unless the statutory provisions are mis-used or abused or invoked arbitrarily to victimize an assessee or the action is in a biased manner, interference is not warranted particularly, to render ineffective the statutory provisions. The very purpose of issuing notice under Section 148 of the Act is to bring to tax the income, which is otherwise suspicious assessment. Therefore, in the wake of the findings recorded by the authorities below, we are not very impressed that we can exercise appellate jurisdiction under Section 260-A of the Act to hold that the very reopening cannot be sustained. 31. Insofar as merits of the matter relating to bringing the amount to tax is concerned, this amount is an income brought to tax in the hands of the firm on the authorities finding the explanation offered being not acceptable. 32. The case of the assessee firm was not that credit entries were in dispute and though it is urged very strongly by Sri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by an assessing authority if is erroneous on facts, there is scope for interference by the Tribunal and if it is erroneous on law, there is scope for interference ever; up to the High Court in an appeal. But it does not mean that the revenue having not proved certain position or not made good such position, the order renders itself to be bad in law.
35. There is no question of the revenue proving anything against the assessee, but it is the duty of the assessee for proving taxable income. Therefore, to pay corresponding tax is the statutory duty of the assessee and not because the assessing authority determines or quantifies the liability of the tax, the liability is fastened on the assessee and in this background. We find that if the authorities had occasion to examine the amount of Rs.75,50,000/- which according to the authorities had not been properly accounted for, particularly, being in the nature of cash credits as claimed by the assessee and therefore, thought it fit to bring it to tax as the income earned during the relevant period, we do not find occasion to interfere in a matter of this nature and therefore dismiss the appeal. X X X X Extracts X X X X X X X X Extracts X X X X
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