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TMI Blog2019 (5) TMI 844X X X X Extracts X X X X X X X X Extracts X X X X ..... nce and also Tax Evasion Petition (TEP) detailing undisclosed investment made by the assessee in certain properties - HELD THAT:- If the grounds set out in the re-assessment notice are nonexistent, i.e., either no addition is made on such grounds or the addition so made does not finally pass the scrutiny by the appellate forums, then, obviously, no further addition can be made for income which comes to his notice during the course of proceedings u/s 147 - If the AO fails to acquire a valid jurisdiction to make re-assessment on the basis of his reasons, then, he is also debarred for making additions for other incomes chargeable to tax which escaped assessment and come to his notice subsequently in the course of proceedings u/s 147. Only addition made by the AO out of the recorded reasons stands deleted. As in Jet Airways [ 2010 (4) TMI 431 - HIGH COURT OF BOMBAY] we order to delete the addition since the sole addition made by the AO on the foundation of the recorded reasons has not passed the judicial scrutiny by the Tribunal in an earlier para. Thus, there can be no question of making any other addition to the income. We, therefore, hold that the initiation of reassessment w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion and offered the same as additional income. Thus, it is evident that this component of additional income towards excess salary claimed by the assessee amounting to ₹ 4,21,500/- is not in the air. The assessee himself admitted to have made false claim in his Profit and loss account filed along with the original return of income for the year. In our considered opinion, such amount is rightly chargeable to tax. Advertisement expenses - TDS u/s 194C - HELD THAT:- When there was failure on the part of the assessee to deduct tax at source attracting the provisions of section 40(a)(ia), there could have been no reason to be aggrieved by such a surrender made during the course of survey without further showing as to why the disallowance be not made. As such, the surrender to this extent cannot be said to be devoid of any substance. Surrender of suppressed receipts - receipts from tuition fee - HELD THAT:- This component of additional income is properly backed by the evidence in as much as the assessee, in fact, received higher tuition fee to this extent but did not include the same in his receipts chargeable to tax. Investment in purchase of flat - HELD THAT:- There is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee had claimed total expenses of ₹ 5,42,704/-. In the absence of original bills or vouchers, the AO made disallowance @15% amounting to ₹ 81,405/-. The ld. CIT(A) confirmed the additions apart from upholding the initiation of re-assessment proceedings. Aggrieved thereby, the assessee has come up in appeal before the Tribunal. 4. We have heard both the sides and gone through the relevant material on record. In sofaras the first addition is concerned, the AO has reproduced the reasons recorded prior to issue of notice u/s.148 of the Income-tax Act, 1961 (hereinafter also called the Act ) in the assessment order itself. It has been recorded in such reasons that It was also observed by the Investigation Wing that the assessee has taken opening capital balance as on 01-04-2008 at ₹ 23,29,401/- as against the closing balance on 31-03-2008 at ₹ 19,29,401/-. The excess capital balance of ₹ 4.00 lakh has been taken by the assessee. From the above reasons, it is apparent that the AO referred to the excess capital shown by the assessee as on 01-04-2008 by ₹ 4.00 lakh which formed the basis for the addition. Instantly, we a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and other income chargeable to tax which escaped assessment and comes to the notice of the AO in the course of the proceeding, amply shows that the existence of the former is a pre-condition for taxing the latter. To put it simply, if the grounds set out in the re-assessment notice are nonexistent, i.e., either no addition is made on such grounds or the addition so made does not finally pass the scrutiny by the appellate forums, then, obviously, no further addition can be made for income which comes to his notice during the course of proceedings u/s 147. Without there being such a deterrent, the AO could have got unhindered powers to initiate re-assessment at the drop of a hat without any legally sustainable reasons and then made other additions resulting in multiplicity of proceedings, which the legislature has sought to curb. Any lawful jurisdiction to make addition on account of other incomes coming to the notice of the AO during the course of proceedings u/s 147 can be acquired only on the foundation of a validly acquired jurisdiction on legally sustainable items of income escaping assessment forming reasons for issuing notice u/s 148. In other words, if the AO fails to acquire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s.143(2) of the Act was issued and served as affirmed by the postal authorities, we hold that no exception can be taken to the view adopted by the ld. CIT(A) on this score. This ground is not allowed. 11. The assessee has also challenged the initiation of re-assessment proceedings on the ground that the AO failed to obtain sanction before the issue of notice u/s.148. In this regard, the ld. CIT(A) has recorded on page 8 of the impugned order that notice u/s.148 was issued on 15-03-2016 which is within a period of four years from the end of the relevant assessment year and further no scrutiny assessment was done earlier. He further observed that the requirement of approval is only when there is previous scrutiny assessment and the period of more than four years from the relevant assessment year has elapsed. The ld. AR could not point out any infirmity in the raison d etre given by the ld. CIT(A). We, therefore, refuse to interfere in the impugned order to this extent. 12. Another legal ground raised by the assessee is against not passing a separate order to the objections taken by the assessee against the initiation of re-assessment. In this regard, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee is liable for the consequences. 16. Here, we are confronted with a situation in which the assessee made surrender of additional income of ₹ 25.00 lakh during the course of survey. As against the claim of the ld AR that the surrender was extracted by the Revenue authorities under coercion, we find the facts are otherwise. Page 8 of the paper book is a composition of the surrendered income of ₹ 25.00 lakh, which comprises of three items, namely, ₹ 4,21,500/- towards excess salary claimed; ₹ 1,76,365/- towards the amount paid for Advertisement charges without deduction of tax at source and the resultant application of section 40(a)(ia) of the Act; and suppressed receipts of ₹ 18,84,750/-. Statement of assessee was recorded at the time of survey, a copy of which is available on page 29 onwards of the paper book. Through question no. 10, the assessee was called upon to state the number of employees working with him along with the salary paid. He submitted that two persons were working with him during the period relevant to the assessment year under consideration and the salary paid to them was to the tune of ₹ 3.00 lakh. The s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8377; 18,84,750- be taxed as an additional income. Here again, we find that this component of additional income is properly backed by the evidence in asmuchas the assessee, in fact, received higher tuition fee to this extent but did not include the same in his receipts chargeable to tax. 19. Total of the above three amounts comes to ₹ 24,82,615/-. There is no reference to the source of the remaining additional income making such addition at ₹ 25.00 lakh. To this extent, that is, ₹ 17,385/-, the surrender is not backed by any evidence and the same cannot be acted upon. We, therefore, reduce the addition to ₹ 24,82,615/-. 20. In the result, the appeal is partly allowed. A.Y. 2014-15 : 21. The only issue raised in this appeal is against the confirmation of addition of ₹ 50.00 lakh made by the AO towards surrender made by the assessee during the course of survey but not offered for taxation. 22. The facts of this issue are that certain material was found during the course of survey which transpired that the assessee had earned certain income which was not offered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The assessee agreed with the same and offered additional income. Here again, we find that the disallowance was rightly included in the composition of surrender for the same reasons as set out by us for the preceding year. 26. The last item is a sum of ₹ 5.00 lakh. A flat at Aman Residency was purchased for a sum of ₹ 24.62 lakh. The assessee had declared consideration of ₹ 14.62 only in his balance sheet. On being called upon to explain as to why additional sum paid outside the books of account be not added, the assessee submitted that the flat was jointly purchased with his wife, Mrs. Chhaya Prabhakar Gawande. He agreed that the amount of investment of ₹ 10.00 lakh was unexplained. A sum of ₹ 5.00 lakh was offered in the name of his wife and the remaining equal sum was offered as his own additional income. 27. There is no doubt that the assessee agreed to surrender a sum of ₹ 5.00 as additional income. However, the fact of the matter is that the amount of ₹ 5.00 lakh represents application of undisclosed income. While dealing with the suppressed receipts shown by the assessee to the tune of ₹ 27,48,310 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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