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TMI Blog2024 (3) TMI 525X X X X Extracts X X X X X X X X Extracts X X X X ..... o the declared income and therefore, the additions of any other amount, are completely without jurisdiction and deserves a complete deletion. Consequently, the impugned assessment framed u/s 148 dated 13.03.2015 also kindly be quashed. 1.2. The CIT (A) also erred in law as well as on the facts of the case in rejecting the contentions raised that no notice u/s 143(2) of the Act was ever issued/served within the stipulated period as prescribed u/s 148 r/w 143(2) of the Act. Hence, the impugned assessment order dated 31.03.2015 is barred by limitation and hence, deserved to be quashed. 1.3. The impugned order u/s 148 dated 13.03.2015 is bad in law and on facts of the case, for want of jurisdiction and various other reasons and hence, the same kindly be quashed. 2. Rs. 16,98,502/-: The Id. CIT (A) erred in law as well as on the facts of the case in confirming the impugned addition made of the amount of the opening cash-in-hand of Rs. 16,98,502/- alleging the same to be income from undisclosed sources of the current year, which is completely beyond jurisdiction and also contrary to the settled legal position. The Id. CIT (A) also erred in recording incorrect finding of the fact th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the year under consideration the appellant filed his ROI on 24.12.2010 declaring total income of Rs. 1,74,190/- (Remuneration of Rs. 2,00,000/- from M/s Nutan Deco Mark P. Ltd. and Rs. 1,48,500/- from job work income less deduction under Chaper-VI of Rs. 93,813/-) and Rs. 24,000/- from Agriculture Income. The assessment was completed by the AO vide order dated 13.03.2015 u/s 143(3)/147 by making addition of Rs. 16,98,502/- on account of undisclosed income and disallowance of Rs. 3,00,000/- on account of household expenses. 4. Aggrieved from the order of the assessment, the assessee preferred an appeal before the ld. CIT(A). Apropos to the grounds so raised the relevant finding of the ld. CIT(A) is reiterated here in below: "6.3. I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order of the Income tax act, 1961 for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under- The appellant argued that no addition of opening cash in hand is permissible. The appellant furnished a balance sheet where opening cash of Rs. 16,98,502 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nting to Rs. 2.41 Crore from his residential premises as well as bank lockers at Jaipur. The CBI lodged a written complaint against Sh. Nitin Jain and others. To explain the nature and source of acquisition of the money, Sh. Nitin Jain explained that apart from receiving Rs. 97 Lakh from Shri Nitin Bolia as advance against MOU dated 22.10.2009 executed between his mother Smt Sushila Jain and Shri Nitin Bolia in respect of immovable property situated at AA-11, Anita Colony, Bajaj Nagar, Jaipur. He was also in receipt of amount from other persons. On being asked by the CBI as regards the funds arranged by Shri Nitin Bolia, he stated that Rs. 58.00 Lakhs were arranged by him from the persons tabulated at Pg-2 of the assessment order which included Rs. 10 lakhs advance given by the assessee Shri Naveen Bolia. Thereafter, on the basis of information received and pursuant to CBI search conducted, the case of the assessee was reopened alleging that after discreet enquiries the CBI is of the opinion that the funds have been build up for explaining away the unaccounted cash found in the case of Shri Nitin Jain and no actual transaction as such took place. Since the assessee claimed to h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TO to reopen assessment, though wide, are not plenary. The words of the statute are "reason to believe" and not "reason to suspect". The reopening to the assessment after the lapse of many years is a serious matter. The Act, no doubt, contemplates the reopening of the assessment if grounds exist for believing that income of the assessee has escaped assessment. ------------ The provisions of the Act in this respect depart from the normal rule that there should be, subject to right of appeal and revision, finality about orders made in judicial and quasi-judicial proceedings. It is, therefore, essential that before such action is taken the requirements of the law should be satisfied. ------" Also refer Ajit Jain vs. Union of India & Ors. (2000) 242 ITR 302 (Del.) affirmed in Union of India vs. Ajit Jain & Anr. (2003) 260 ITR 0080 (SC) 2.2 The belief of the officer should be as to escapement of income and the belief should not be a product of imagination or speculation as further discussed in the ensuing paras. 2.3 Further, the belief must be of an honest and reasonable person based upon reasonable grounds. The officer may act on direct or circumstantial evidence, but his/her belie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.7 On this aspect, reliance is placed in the case of Balaji Health Care (P) Ltd. Vs. ITO (2019) 199 TTJ (Jp) 966 (DPB 16-26). It was held as under; "AO having reopened the assessment by arriving at a conclusion that the assessee-company has routed back its undisclosed income in the form of share capital/share premium solely on the basis of the report of the Director of IT, Investigation Wing, in the cases of some accommodation entry providers without carrying out his own examination in order to discover any link between the said persons and the assessee, the assumption of jurisdiction and initiation of proceedings under s. 147 by the AO does not satisfy the requirement of law and is set aside". 2.4 The ld. CIT(A) however, rejected these contentions, saying that AO analyzed the information received from CBI but ignored that the opinion was formed by the CBI (as specifically mentioned in the reason to believe when copies of ITRs were furnished to the CBI and not by the AO). 2.5. Reasons are wholly vague and not specific: 2.5.1 The impugned reasons nowhere suggest as to under what provision of law, there was some income of the assessee which escaped assessment. From a bare pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rently. The addition of credit appearing of Rs. 16,98,502/- is not the same thing as being the addition on account of advance which are to be dealt with u/s.68 and not u/s 69. The nature and scope of both the additions/ disallowance is altogether different, the statutorily prescribed procedure of recording reasons and issuance of notice u/s 148 with respect to amount of Rs. 6,98,502/- has not been admittedly observed. In any case, the enhancement in the figure of the initially alleged income of Rs. 10 Lakh (being Rs. 6,98,502/-), was without jurisdiction. Thus, once the addition on account of the income believed to have been escaped, has not been made, no addition of any other income could be made u/s 147, more so when prescribed legal procedure was not followed. 3.2 The ld. CIT(A) however without appreciating this legal position, simply rejected the contention and saying that Rs. 10 lakhs were part and parcel of the opening balance of Rs. 16,98,502/-without giving any justification. 3.3. Supporting Case Laws: 3.3.1. CIT vs. Shri Ram Singh (2008) 217 CTR (Raj) 345: (2008) 306 ITR 343 (Raj). The Rajasthan High Court construed the words used by Parliament in s. 147 particul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aped income, he would keep on making roving inquiries and thereby including different items of income, not connected or related with the reasons to believe, on the basis of which he assumed jurisdiction. It was further held that the Tribunal was right in holding that the AO had the jurisdiction to reassess issues other than the issues in respect of which proceedings were initiated but he was not so justified when the reasons for initiation of those proceedings ceased to survive. The observations of the Hon'ble High Court on pages 147 and 148 of in 336 ITR 136 are worth noting. 3.4. Also kindly refer CIT vs Mohmed Juned Dadani (2013) 355 ITR 172 (Guj). 4. Complete non application of mind- Borrowed Satisfaction: 4.1 To assume a valid jurisdiction u/s 147 of the Act, the ld. AO must form a reason to believe on his own and such a satisfaction or belief should not / cannot be borrowed from someone else. 4.2.1. A bare perusal of the impugned reasons (PB1-2) and the objections filed before the AO vide letter dated 03.02.2014 (PB 23-25) at para (B.) and (C) onwards clearly shows that the AO has merely referred to the information received from the CBI with regards to some search c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t when CBI enquires were in progress in May, 2010 no ROI was filed by that time but it was filed belatedly on 24.12.2010 showing advance of Rs. 10,00,000/-, is also irrelevant being incorrect in the present context in as much as again the vital fact ignored by him, was that the assessee had already filed return for A.Y.2009-10 in due course on dated 31.07.2009 (PB 8) showing closing balance of cash in hand of Rs. 16,98,502/- in his Balance Sheet which became the opening cash in hand of this year. Thus, the proved source of advance given of Rs. 10,00,000/- lakhs were already available. Furthermore, the allegation that the CBI found the explanation of Nitin Jain as receipt of advance against sale of mother's property was a concocted story, has got no relevance in the present case. Otherwise also the AO being quasi-judicial authority has to take own decision and can't borrow a decision from others. In other words, the ld. AO has merely borrowed satisfaction (as to escapement) from someone else, which is not permissible to confer valid power upon the ld. AO to initiate reassessment proceedings. 4.4. Supporting Case laws: 4.4.1 Balaji Health Care (P) Ltd. V. ITO (2019) 33 NYPT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s shows that the AO has merely gone by the report of the Director of IT, Investigation Wing and the said report even didn't have the statements of these persons-No further examination was carried out by the AO-Though the AO can rely on the report of Detractor of IT, Investigation Wing, where he is assuming jurisdiction under s. 147, he is required to carry out further examination and analysis in order to establish the nexus between the material and formation of belief that income has escaped assessment-In absence thereof, the assumption of jurisdiction under s. 147 has no legal basis-Therefore, the assumption of jurisdiction and initiation of proceedings under s. 147 by the AO to reopen the assessment proceedings does not satisfy the requirement of law and is set aside." 4.4.2 The Hon'ble ITAT Jodhpur, has also quashed the assessment made u/s 147 in the case of Surbhi Minchem P. Ltd vs. ITO in ITA No. 102 & 103/Jodh/2014 (DPB 53-65) vide order dated 16.05.2014. In para 8, it is held that: "From the above provisions, it is clear that for taking action u/s 147 of the Act, the Assessing Officer must have reason to believe that an income chargeable to tax has escaped assessment for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g detailed submissions without any justification at Pg. 16 Pr. 9.3. Hence this ground. Submission: 1. On this aspect following submissions were made before the CIT (A): "Additional GOA: Impugned assessment u/s 148/143(3) is without jurisdiction in absence of notice u/s 143(2): The admitted facts are that the assessee in this case filled ROI on 24.12.2010 manually which was processed u/s 143(1) on 23.02.2011 (Refer AO Pg-1). Thus, the assessment to this stage stood completed and only because of this a notice u/s 148 dated 05.08.2013 was issued, in response to which the assessee filed a letter dated 09.09.2013 wherein it was clearly submitted that the return of income filed originally may be treated as a return filed in response to the said notice u/s 148. Thus, a ROI again was filed u/s 148 on 09.09.2013. On the other hand, however, the AO had firstly issued a notice u/s 142(1). Thereafter, he issued a notice dt. 07.04.2014 (PB 26) u/s 143(2) followed by another similar notice dt. 14.07.2014 (PB 27) fixing the date of the hearing. Pertinently, in both the notices, the return of income filed originally on dt. 24.12.2010 has been referred to and not the ROI filed u/s 148 on 09.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tc. of previous years. Finally, the AO assumed that the assessee was not able to have cash in hand from the past savings and that cash in the hands of the assessee was `Nil` hence, added opening cash Rs. 16,98,502/- as undisclosed income of the assessee. The CIT (A) rejected the ground ignoring detailed submissions without any justification at Pg. 13 Pr. 6.3. Hence this ground. Submissions: 1. Source of cash in hand fully explained and established: 1.1.1 At the outset, it is submitted that the AO has repeatedly recorded incorrect findings of facts that the appellant did not filed any ROI for A.Y. 2008-09 (AO Pg 4) and again alleged that the assessee has not filed ROI for preceding years (AO Pg-5). However, such findings of the facts are runs completely contrary to the facts available on record. 1.1.2 It is pertinent to note that the ROI for AY 2007-08 was filed on dated 31.07.2007 along with the copy of balance sheet and P&L A/c (PB 21-22) followed by the ROI for AY 2008-09 filed on dated 31.07.2008 along with the copy of balance sheet and P&L A/c (PB 6-7) and thereafter, ROI for AY 2009-10 was filed on dated 31.07.2009 declaring total income 1,47,932/- (PB 8) and notab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n hand of the subjected amount of Rs. 16,98,502/- must have been accepted as was available with the assessee. As per the settled principle of accountancy when all the figures debit and credit are admitted except one which is under dispute, the same is only the balancing figure which, the AO was bound to accept. 1.3 No addition legally permissible unless accounts rejected: Needless to say that the accounts so maintained in the regular course of business has a binding evidentiary value u/s 145 of the Act r/w S.34 of The Indian Evidence Act,1872. Unless the assessing officer reject the books of accounts under cogent ground provided u/s 145(3) of the Act, he does not get any jurisdiction at all to make any variation in the declared results. In other words, S. 145 mandates the AO to accept the results based on the accounts. There is a consistent view of various High Courts and Tribunals to this effect. 2. No addition of opening capital / opening cash in hand permissible u/s 68 (or u/s 69A): In the present case, the AO, referring to the balance sheet filed for the preceding year i.e. A.Y. 2009-10 (PB 10) observed that as per assessee there was balance of cash in hand as on 01.04.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ailable with the assessee till the A.Y. 2009-10 however, only because of suspicion he presumed non availability of the same. In fact, the AO was not justified to make any presumption ones the Balance Sheets of the current year as also the preceding years have clearly shown the outgoings / expenditure / investment etc. and the AO did not found any fault therewith. 3.2 Further with regard to the discussion that the assessee has utilized the available cash towards so many withdrawals, are mere suspicion. In fact, the assessee himself supplied these details as stated at pg. 6 by AO himself and all such withdrawals were already recorded in the accounts hence due to these withdrawals, the availability of cash couldn't be doubted because they were already stood considered. Similarly, with regard to the law household expenditure incurred at Rs. 3,60,000/- at pg.5 of the Assessment Order, the said addition already stands deleted at pg.15 pr.7.3 of Appellate Order) hence there is no question of utilization thereof. In any case, the AO & CIT (A) have merely suspected but completely failed to prove that the cash so admittedly available, stood utilized elsewhere. Therefore, the availability ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ility of funds with the assessee from the sale proceeds of jewellery belonging to his mother-in-law, receipt from a party and also the amount of opening balance and savings from earlier years and deleted all the additions-Findings recorded by the Tribunal are purely findings of fact-There is no reason to interfere with the same-No substantial question of law arises-CIT vs. Pradeep Shantaram Padgaonkar (1983) 143 ITR 785 (MP) relied on" 6.2 Also refer CIT vs Kulwant Rai (2007) 210 CTR 380 (Delhi) para 16-17 Read held "Search and seizure-Block assessment-Computation of undisclosed income-Cash found during search-Assessee had withdrawn Rs. 2 lakh from bank some time back and there is no material with the Department to show that this money had been spent and was not available with the assessee-Tribunal has found that the withdrawals shown by the assessee are far in excess of cash found during the course of search-In the absence of any material to support the view that the entire cash withdrawals must have been spent by the assessee, Tribunal was justified in holding that the addition was not sustainable-Order of the Tribunal does not give rise to a substantial question of law" In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ainly assessable as business income and cannot be considered as income falling under s. 68/69A-AO having applied his mind in accepting the said additional income as business income, there was no error in the assessment order-Thus, the Principal CIT was not justified in expecting the AO to apply s. 115BBE as also s. 271AAC by merely imposing and substituting his own opinion, which is not the legislative intent even behind Expln. 2(a) to s. 263-Further, merely because the assessee has taken a mistaken view of the correct legal position by wrongly showing such additional income under head income from other sources in her return, the same cannot be taken as an admission as there is no estoppel against statute-Therefore, Principal CIT was not justified in invoking the provisions of s. 263 by wrongly holding that the assessment order under s. 143(3) was passed without considering that the additional income fell under the purview of ss. 68 and 69 and that tax was chargeable under s. 115BBE as against normal rates-Hence, the proceedings initiated under s. 263 and the impugned order are quashed" 6.5 Kindly refer Rameshwar Prasad Shringi vs. PCIT (2021) 92 ITR_Trib (Trib) 652 (JP) "Revis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , creditworthiness and genuineness of individual transactions-AO has taken a prudent, judicious and reasonable view in accepting the explanation of the assessee in support of the cash deposits after considering the entire material available on record-Thus, order passed under s. 143(3) cannot be held as erroneous insofar as prejudicial to the interest of Revenue-Impugned order passed by the Principal CIT under s. 263 is accordingly set aside" Hence, the impugned addition kindly be deleted." 6. In this appeal the ld. AR of the assessee also placed on record a detailed paper book and index of the same is extracted here in below : S.No. Particulars Pg. No. 1. Balaji Health Care (P) Ltd. vs ITO (2019) 33 NYPTTJ 131 (Jp) 1-15 2. CIT vs Jet Airways (I) Ltd. (2011) 52 DTR 71 / 331 ITR 236(Mum) 16-26 3. CIT vs Rajeev Sharma (2010) 232 CTR 303 / 336 ITR 678 (All) 27-39 4. ACIT vs Greater Noida Industrial Development Authority (2015) 281 CTR 204 / 379 ITR 14 (All) 40-48 5. CIT v/s Parmeshwar Bohra (2007) 301 ITR 404 (Raj.) 49-52 6. M/s Surbhi Minchem (P) Ltd. vs ITO in ITA No. 102 86 103/Jodh/2014 dated 16.05.2014. 53-65 7. UOI vs. Ajit Jain 86 Anr.(2003) 181 CTR 200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g-5). Against this set of facts it is evident that the return of income for AY 2007-08 was filed on dated 31.07.2007 along with the copy of balance sheet and P&L A/c (PB 21-22) followed by the ROI for AY 2008-09 filed on dated 31.07.2008 along with the copy of balance sheet and P&L A/c (PB 6-7). Thereafter, ROI for AY 2009-10 was filed on dated 31.07.2009 declaring total income 1,47,932/- (PB 8) and notably (and admittedly), the balance sheet for AY 2009-10 was also filed along with the ROI wherein the closing balance of cash in hand of Rs. 16,98,502/- was disclosed (PB 10), which became the opening balance of cash in hand of the subjected year i.e. A.Y. 2010-11. This contention raised before us and before the lower authority were never challenged. Even the ld. AO himself (Refer AO Pg-4), to this opening cash in hand, added the income of the current year i.e. A.Y. 2009-10 of Rs. 2,37,993/-. Accordingly, the closing balance of cash in hand of Rs. 16,98,502/- became the opening balance of the cash in hand as on 01.04.2009. Thus, addition made of the entire cash in hand of Rs. 16,98,502/-, admittedly was of the closing balance of cash in hand supported by the Balance Sheet and ROI fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... voked any particular provision of law yet however, assuming that it was a case of S.68 (or even u/s 69A), the provision speaks of the credit found during the previous year in the books of account maintained by the assessee. Therefore, the law is well settled that credit found on the first day or carried forward from the preceding year cannot be added in this year. The ld. AR of the assessee on these aspect of the matter has relied upon the decision of the decision of this co-ordinate bench decision in Parmeshwar Bohra v/s ITO 27 TW 55(JD). Page 61 para 22 has held that "--- Therefore, we hold that the opening capital cannot be added as unexplained investment u/s 69 of the Act for the AY 1993-94." This decision was affirmed in CIT v/s Parmeshwar Bohra (2007) 301 ITR 404 (Raj.) (DPB 50-52) holding that clear finding recorded by the Tribunal that the impugned amount was credited in the books of account of the assessee in the earlier previous year and was shown as closing capital of that year - carried forward amount of the previous year does not become an investment or cash credit of the relevant year. Respectfully following the finding of the co-ordinate bench and affirmed by the jur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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