9911796707
TMI Blog2009 (2) TMI 26X X X X Extracts X X X X X X X X Extracts X X X X ..... ich the objections filed by the petitioner to challenge the reasons recorded in the aforesaid notice were rejected. The petitioner, who is a medical practitioner, filed his return under Section 139 of the Act on 27th August, 2001 for the Assessment Year 2001-02 disclosing income of Rs. 2,48,640/-. Along with the return, a cash flow chart was appended which mentioned about the gift of Rs. 3,00,000/- given by Madhu Agrawal. However, on 23rd November, 2001 search and seizure operation under Section 132 of the Act was carried out on the premises of the petitioner and the Block Assessment order under Section 158-BC of the Act for the block period 1st April, 1995 to 23rd November, 2001 was completed by the Assessing Officer on 28th November, 2003 on an income of Rs. 43,50,775/- which included undisclosed income of Rs. 3,41,340/- for the assessment year 2001-02. This undisclosed income of Rs. 3,41,340/- comprised of the gift of Rs. 3,00,000/- said to have been given by Madhu Agrawal. This gift was found to be not genuine as she did not have the capacity to gift it. The petitioner filed an appeal before the Commissioner of Income Tax (Appeals) against the aforesaid Block Assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 31st August, 2006 passed by the Income Tax Appellate Tribunal in respect of the Block Assessment proceedings. The petitioner filed objections to the said notice which were rejected by a detailed order dated 12th November, 2008. We have heard Sri Rakesh Ranjan Agrawal, assisted by Sri Suyash Agrawal learned counsel for the petitioner and Sri Sambhu Chopra learned counsel for the respondents. Sri Rakesh Ranjan Agrawal learned counsel for the petitioner submitted that the initiation of the proceedings under Section 148 of the Act for the Assessment Year 2001-02 in respect of the gift given by Madhu Agrawal for Rs. 3,00,000/- is illegal and without jurisdiction as the said gift was disclosed by the petitioner in the Cash Flow Chart filed with the return of income on 27th August, 2001 and thereafter the assessment order was also passed. It is his submission that in such circumstances the assessment cannot be reopened under Section 147 of the Act since the petitioner had disclosed fully and truly all material facts necessary for assessment and it cannot be said that the income had escaped assessment. He further submitted that reopening of assessment on the same facts is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner filed an appeal against this order before the Commissioner of Income Tax (Appeals) and it was submitted on his behalf that the matter relating to the said gift was to be dealt with during the course of Block Assessment proceedings only and not in the regular assessment proceedings. It was for this reason that in the appeal filed by the petitioner against the order dated 23rd February, 2004, the Commissioner of Income Tax (Appeals) by the order dated 20th June, 2005 directed for deletion of the addition of Rs. 3,00,000/- made by the Assessing Officer. In this connection the relevant portion of the order dated 20th June, 2005 is reproduced below:- "..........During the course of hearing of the appeal I had asked the ld. representative of the appellant to clarify the stand of the appellant with regard to the issue whether the issue pertaining to gift was a matter to be dealt with in the regular assessment proceedings or whether the matter was to be dealt with in the block assessment proceedings as had been done by the A.O. The ld. representative of the appellant submitted that the matter relating to the gift was to be dealt with during the course of block assessment proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Thus, human probability does not suggest that Madhu Agrawal will be giving gift to the assessee. It is all adjustment to create capital for the assessee which is utilized in construction of the house property. Thus, gift is not treated as genuine. However, one important question remains as to whether this gift could be taxed in block assessment. The bank account of Rohit Agrawal and Dhruva Agrawal are not held as undisclosed. These are the sources from where the money has flown into the account of the assessee. The account, in which money has flown, is also not shown to be undisclosed. This, money is found deposited into a declared bank account of the assessee. This will, therefore, fall for consideration in the regular assessment and not in block assessment. Further only an account signed by Smt. Madhu Agrawal forwarded to the assessee was found during the course of the search. It as such does not reflect that the assessee's undisclosed income has passed to Madhu Agrawal and than routed to him as gift. What is only available at present is that the gift is not treated as genuine but it is not proved that it involves undisclosed money of the assessee. Thus, non-genuine nature o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year. Explanation 1.-Production before the Assessing Officer of account books or other evidence from which material evidence could with due diligence have been discovered by the Assessing Officer will not necessarily amount to disclosure within the meaning of the foregoing proviso. Explanation 2.- For the purposes of this section, the following shall also be deemed to be cases where income chargeable to tax has escaped assessment, namely:- (a) where no return of income has been furnished by the assessee although his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income-tax. (b) where a return of income has been furnished by the assessee but no assessment has been made and it is noticed by the Assessing Officer that the assessee has understated the income or has claime ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essed at all in the Regular Assessment proceedings for the Assessment Year 2001-02. It is also the contention of the learned counsel for the petitioner that the assessment cannot be reopened under Section 147 of the Act since the petitioner had disclosed all material facts necessary for assessment and, therefore, there was no reason to believe that the income relating to gift from Madhu Agrawal had escaped assessment. His further contention is that there was no relevant material in the formation of this belief as no fresh materials have been brought on record to reopen the assessment except the order dated 31st August, 2006 passed by the Income Tax Appellate Tribunal which order cannot be taken into consideration. This contention of learned counsel for the petitioner cannot be accepted in view of the decision of the Supreme Court in Maharaj Kumar Kamal Singh Vs. Commissioner of Income-Tax, Bihar and Orissa reported in 1958 (IT-2)-GJX-0133-SC. The Supreme Court examined the provisions of Section 34 (1)(b) of the Income Tax Act, 1922 and observed as follows:- "It is clear that two conditions must be satisfied before the Income-tax Officer can act under section 34(1) (b). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e-tax Officer erroneously fails to tax a part of assessable income, it is a case where the said part of the income has escaped assessment. The appellant's attempt to put a very narrow and artificial limitation on the meaning of the word "escape" in section 34(1)(b) cannot therefore succeed."(emphasis supplied) Thus, the order dated 31st August, 2006 of the Income Tax Appellate Tribunal arising out of the Block Assessment proceedings can be taken into consideration and form the basis for issuance of the notice under Section 148 of the Act read with Section 150 of the Act. Learned counsel for the petitioner also contended that the provisions of Section 150(1) of the Act are not applicable as there is no direction in the order of the Income Tax Appellate Tribunal dated 31st August, 2006 to assess the petitioner for the gift of Rs. 3,00,000/- given by Madhu Agrawal. In order to appreciate this contention, the provisions of Section 150(1) are quoted below:- "150(1). Notwithstanding anything contained in Section 149, the notice under Section 148 may be issued at any time for the purpose of making an assessment or reassessment or recomputation in consequence of or to give effe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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