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TMI Blog2015 (7) TMI 617X X X X Extracts X X X X X X X X Extracts X X X X ..... udicial pronouncements that rule of consistency must invariably be followed in Income-tax proceedings. If a particular view is taken in one assessment year, the same should be followed in other assessment year or succeeding assessment year unless and until contrary facts are brought on record. The order of the Tribunal in the immediately preceding years, where the reopening made on the same facts under section 147 of the Act was held to be invalid by the Tribunal repeatedly in three assessment years, should be followed in the instant assessment year. We accordingly, following the said order of the Tribunal, hold that the reopening of assessment is bad and accordingly the assessment framed consequent thereto deserves to be quashed. Accordingly we annul the assessments for assessment years 2003-04 and 2004-05 framed consequent to the bad reopening. Since the assessment is annulled, we find no justification to decide the issues on merit. - Decided in favour of assessee. Addition on account of cash deposit in different bank accounts of the assessee - Held that:- Assessing Officer has made addition of the cash deposits in the bank accounts of the assessee having placed strong relianc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .369 & 370/LKW/2014 - - - Dated:- 30-6-2015 - Shri Sunil kumar Yadav and Shri. A. K. Garodia, JJ. For the Petitioner : Shri. Ajay Wadhva, Advocate For the Respondent : Dr. Anant Kumar Agrawal, D.R. ORDER PER SUNIL KUMAR YADAV: These appeals are preferred by the assessee as well as the Revenue against the respective orders of the ld. CIT(A). 2. Since common issues are involved in these appeals, these were heard together and are being disposed of through this consolidated order. We, however, prefer to adjudicate them one after the other. I.T.A. Nos. 369 370/LKW/2014: BY THE ASSESSEE. 3. These appeals relate to assessment years 2003-04 and 2004-05. Besides challenging the addition made on merit, the assessee has raised a preliminary objection with regard to the validity of reopening of the assessment under section 147 of the Income-tax Act, 1961 (hereinafter called in short the Act ). 4. During the course of hearing, the ld. counsel for the assessee has invited our attention that the original returns accompanied with copies of audited balance sheet, profit and loss account with tax report filed for the impugned assessment years were process ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 250000 Cash 21-6-2002 20000 Cash 22-6-2002 100000 Cash 1-7-2002 250000 Cash 3-7-2002 10000 Cash 3-7-2002 250000 Cash 9-7-2002 450000 Cash 13-7-2002 25000 Cash 22-7-2002 100000 Cash 24-7-2002 75000 Cash 26-7-2002 168000 Cash 29-7-2002 15000 Cash Total 5129000 Bank A/C N0.2633 (Punjab National Bank, Shastri Nagar, Kanpur D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10-6-2002 500000 cash 25-6-2002 20000 cash 8-7-2002 1000000 cash 12-7-2002 250000 cash 17-5-2002 500000 cash 17-5-2002 5000 cash 20-8-2002 1500 cash 19-9-2002 10000 cash 30-10-2002 500000 cash 8-10-2002 150000 cash 9-10-2002 10000 cash 20-1-2003 52000 cash 20-1-2003 1000000 cash 20-1-2003 340000 cash 16-12-2002 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income Tax Officer 6(2) Kanpur 5. The return was filed in response thereto and the Assessing Officer has made an addition of ₹ 2,03,72,500/-, under section 68 of the Act having observed that cash deposit in the banks were not duly explained by the assessee. Our attention was also invited by the ld. counsel for the assessee, Shy Ajay Wadhwa, Advocate that for the similar reasons the assessment was also reopened for assessment years 2000-01, 2001-02 and 2002-03 and the validity of the reopening of assessment was questioned and the matter was reached upto the Tribunal and the Tribunal in assessment year 2000-01 has categorically held that the reopening of assessment solely on the direction of the ADIT (Investigation) is not valid in the eyes of law and the Tribunal has accordingly knocked down the assessment framed consequent to the said reopening. The order of the Tribunal is avai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e are of the opinion that initiation of proceedings u/s 147 of the Act, so far as allegation of escapement of income on account of unexplained deposits in bank is concerned, was illegal and bad in law and cannot be sustained. 19.1 From the above noting it is clear that there was no application of mind by Assessing Officer. 6. This order of the Tribunal was later on followed in assessment years 2001-02 and 2002-03 where the reopening was done for the same reasons and the Tribunal again held the reopening to be invalid and quashed the assessment framed consequent to the bad reopening. These orders of the Tribunal are available at pages 104 to 128 of the compilation of the assessee. The relevant observations of the Tribunal for assessment year 2002-03 are extracted hereunder for the sake of reference:- 6. We have heard the rival submissions. Shri Praveen Kumar, ld.CIT(DR) submitted that the ld.CIT(A) was not justified in following the order of the I.T.A.T., Lucknow-B, Lucknow dated 18.11.2009 passed in assessee's case for the assessment year 2000-01. Shri Praveen Kumar, Id. D.R. pointed out that while deciding the appeal for assessment year 2000-01, the Tribunal h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... KNP/ gift/RCFSL/0708/1860 dated 24.03.08, it is transpired that the assessee has deposited cash deposits amounting to ₹ 3,16,07,800/- on different dates in Bank A/c No.622-05046398, Bank a/c No.2633 and Bank a/c No.31126 maintained with Standard Chartered Bank, Kanpur, Punjab National Bank, Shastri Nagar, Kanpur and State Bank of India, Naveen Market, Kanpur respectively during the F.Y: 2001-02 relevant to A.Y. 2002-03 as per following details:- Date of Deposit Amount Mode of deposit The Dy. Director of Income Tax (Inv)-2 Kanpur in his report had stated that the assessee had failed to prove the source of cash deposits in the above mentioned Bank Accounts. However in view of the above facts, the assessee company was given one more opportunity by the undersigned to explain the source of acquisition of the above cash deposits amounting to ₹ 3,16,07,800/- in above Bank accounts for which a show cause letter was issued on 02-03-2009 fixing date for compliance on 9-3- 2009. It was specifically mentioned in the show cause letter that failure on part of the assessee company would entail the undersigned to initiate proceedings u/s 147 of the I.T. Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hown at ₹ 1573555/- in the A.Y. 1999-00. The Loans Advances shown are more than the preceding year i.e. ₹ 67163442/-in the year relevant to A.Y. 2000- 2001 and ₹ 6628S442/- in A.Y. 1999-00. This shows that the assessee has shown short receipt of interest of approximately ₹ 1100000/- in the A.Y. 2000-2001 . 21. After having considered the rival submissions, facts and circumstances of the case here again, we are of the opinion that the AO having not referred to any material which could justify his conclusion that assessee should have earned more interest than interest in the previous year, the initiation can not be said to be valid, there being any detail as to the period for which the advances/loans were given or how much interest was received or could have received as per agreements, simply to doubt that interest received by the assessee in this year, being less than the interest received in the previous year as resulted in escapement of interest income of approximately 11 lakhs and that too only, because, total amount of allowance and advances at the end of this year was a little more than the amount outstanding at the end of previous year. Here aga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 01, this Bench of the Tribunal has categorically held that the reassessment proceedings have been initiated on suspicion and for making roving enquiries and since it is trite law that proceedings under Section 147 cannot be initiated either on the basis of mere suspicion or making fishing or roving enquiries, the initiation of proceedings under Section 147 of the Act on this ground was also illegal and bad in law. Thus, the above decision supports the view taken by the Tribunal in assessment year 2000-01. 6.4(ii) Shri Praveen Kumar, Id.D.R. also relied on the decision of the Supreme Court in the case of Raymond Woollen Mills Ltd. vs. ITO the Hon'ble Supreme Court held that The sufficiency or correctness of the material is not a thing to be considered at this stage. We are of the view that the court cannot strike down the reopening of the case in the facts of this case. It will be open to the assessee to prove that the assumption of facts made in the notice was erroneous. The assessee may also prove that no new facts came to the knowledge of the Income-tax Officer after completion of assessment proceedings. We are not expressing any opinion on the merits of the case. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... followed by the ld. CIT(A) in assessment years 2001-02 and 2002-03 having noted that the reopening was done on the same facts and reasons in those assessment years. But in the impugned assessment year, the ld. CIT(A) has taken all together a different view having noted that the principle of res-judicata would not be applicable in Income-tax proceedings. The ld. CIT(A) even did not agree to the proposition of law that in Income-tax proceedings the rule of consistency is to be followed. Whereas in the preceding assessment year where the reopening made on same facts and reasons was held to be invalid and the assessment framed consequent thereto was quashed by the Tribunal, the same order should have been followed in the impugned assessment year, as the reopening was done on the basis of same facts. The ld. counsel for the assessee has further contended that in the light of these facts, the reopening made in the impugned assessment year is invalid and the assessment framed consequent thereto deserves to be quashed. 8. The ld. D.R., on the other hand, has placed reliance upon the order of the ld. CIT(A). 9. Having carefully examined the orders of the lower authorities in the ligh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onfirmed by the ld. CIT(A) as the assessee even could not produce the books of account. 12. Now the assessee is in appeal before the Tribunal and has placed reliance upon various judicial pronouncements in support of his contention that wherever books of account are lost or not available for any reason, the net profit of the assessee should be estimated. 1. P.K. Noorjahan, 155 CTR (SC) 509 ( 237 ITR 570). 2. Naim Ali Khan vs. ACIT, 86 TTJ 721 (Agra). 3. Jindal Udyog vs. Income Tax Officer, 78 TTJ 820 (Chd). 4. Pragati Engineering Corporation vs. Income Tax Officer, 225 Taxman 231. 5. CIT vs. Jay Engg. Works, 113 ITR 389. 13. It was further contended that the computer in which the accounts are maintained was not working properly and in 2007 it was discovered that the employee of the assessee-company, Shri. Ramsevak had perhaps stolen some jewellery and in order to cover up the trail, he destroyed/washed out the records in the computer. An FIR was lodged with the Police Station on 22.11.2007. Shri. Ramsevak was found missing from the office since 22.11.2005 and a report was also lodged with the Police Station on 22.11.2005. Copies of the reports are available at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R., on the other hand, has submitted that the books of account were not produced by the assessee in any of the assessment year though there was substantial amount of cash deposit in different bank accounts of the assessee. If the assessee has deposited cash on its receipt from the earlier borrowers, it could have furnished the details of the borrowers from whom cash was received. The Assessing Officer has afforded number of opportunities to the assessee, but he did not produce the same. In the absence of any details of the borrowers and the books of account, the contentions of the assessee cannot be accepted and the Assessing Officer has rightly made the addition of the cash deposits. 17. Having carefully examined the orders of the lower authorities in the light of the rival submissions, we find that the cash books were never produced before the Assessing Officer either in the impugned assessment year or in earlier assessment years when the reopening was done. But in earlier assessment year the reopening was held to be bad, therefore, there was no question of addition on account of cash deposit in the bank account, but in the impugned assessment year by framing regular assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er cash deposits are in the bank accounts, the onus is upon the assessee to explain the source and nature of deposit. During the course of hearing, the ld. counsel for the assessee has filed the statement of loan and advances and interest received during the impugned assessment year. But from the details it is not clear whether the deposits made by the assessee were actual receipts from the earlier borrowers. Our attention was invited to various judicial pronouncements in which it has been held that once the books of account are rejected, the net profit of the assessee can be estimated on the gross turnover of the assessee. But in the instant case, it is not clear as to how much loan was advanced and how much was received by the assessee. Copy of the balance sheet is placed on record. Though it was contended on behalf of the assessee that it was on the verge of closing of its business and whatever amount was recovered from the debtors, it was deposited in the bank. But from a carful perusal of balance sheet, the facts are otherwise. 20. Having carefully examined the orders of the lower authorities on the impugned issue, we find that the Assessing Officer has made addition of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 crore. The said application of the assessee was accepted by the Bombay Stock Exchange and accordingly to the rules, the assessee-company was given two months to deposit the balance amount. Since the assessee-company failed to comply with the requirements, Bombay Stock Exchange forfeited the earnest money and communicated the same to the assessee-company in July, 2006. The assessee-company accordingly written off the said amount in its books of account as revenue expenditure which was disallowed by the Assessing Officer after treating it to be capital expenditure. 23. The assessee preferred an appeal before the ld. CIT(A) with the submission that the assessee had applied for the membership of Bombay Stock Exchange for limited rights of trading in shares which was in pursuit of its objects enshrined in its memorandum of association. It was further contended that such payment was in normal course of business of the assessee. When the assessee could not pay the balance amount, the said amount was forfeited and the said action was taken in the interest of the business of the company. Therefore, the forfeiture was an act of business expediency and the same should be allowed as reven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has noticed from the Schedule-6 forming part of the profit and loss account that the assessee has claimed a sum of ₹ 16.40 lakhs as against ₹ 80,000/-claimed in the immediately preceding year under the head office rent . From the perusal of balance sheet and reply dated 28.10.2009, the Assessing Officer noticed that in Schedule-3 of the balance sheet, an amount of ₹ 7.70 lakhs has been shown as advance to be recovered in cash or in kind or for value to be received as on 31.3.2006. Likewise, another amount of ₹ 7.70 lakhs has been shown as rent paid under protest as on 31.3.2006. However, under these two heads, the amount has been shown as Nil on 31.3.2007. The Assessing Officer observed that it appears that these two amounts of ₹ 7.70 lakhs each (Rs.15.40 lakhs) appearing in the balance sheet as on 31.3.2006 under the head loans and advances have been debited in the profit and loss account under the head rent . The assessee was required to furnish the details of expenses debited under the head rent and expenses thereof. In response it was stated that ₹ 15.40 lakhs being the amount of advance payment on rent paid to Shri. L.C. Agarwal and ren ..... X X X X Extracts X X X X X X X X Extracts X X X X
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