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TMI Blog2024 (10) TMI 75X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment order. Therefore, the contention of the ld. AR that the notice under section 143(2) r.w.s. 129 does not contain any information about change of incumbent, is not justified. Thus, the additional ground raised by the ld. AR on behalf of the assessee is dismissed. Action of the CIT(A) in not deciding the validity of revised return filed on 05.03.2014 - DR submits that the AO issued notice u/s 143(2) of the Act is with reference to the revised return of income and argued that the AO conducted the assessment proceedings based on the revised return of income as filed by the assessee - HELD THAT:- CIT(A) containing gist of arguments an assessment based on non-est return of income , whereas, the impugned order was passed on 28.12.2018. On a careful examination of the same, we find no indication proof of receipt, filed, any sign of Office of the CIT(A), therefore, we hold that there was nothing before the ld. CIT(A) to decide the issue an assessment based on non-est return of income . Be that as it may, the assessee contended that the entire assessment proceeding is illegal in the eye of the law for not informing about the transfer of case from one jurisdiction to another ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al remanded the matter back to the file of the AO for his consideration afresh. We note that the AO made the addition solely on the basis of AIR information and the assessee, therein, denied the receipt of income from a particular source. It was contended that it is for the AO to prove that the assessee has received the income as the assessee cannot prove with evidence. We find the facts and circumstances in the said case are not similar to the facts of the present case and the finding of the ITAT Mumbai bench is not applicable to the facts on hand. Admittedly, there was no evidence before us to substantiate the credit card payments, except by placing reliance on case law as discussed herein above and thus, we find no infirmity in the order of the ld. CIT(A) and we agree with the reasons recorded by the ld. CIT(A). Appeal filed by the assessee is dismissed. - Shri S.S. Viswanethra Ravi, Judicial Member And Shri S.R. Raghunatha, Accountant Member For the Appellant : Shri K. Ravi Kannan, Advocate And Shri Varun Ranganathan, Advocate For the Respondent : Shri R.V. Aroon Prasad, Addl. CIT ORDER PER S.S. VISWANETHRA RAVI, JUDICIAL MEMBER: This appeal filed by the assessee is directed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he transfer of the case. Therefore, in the absence of the order of transfer u/s. 127 of the Act and communication of the reasons for transferring the case of the appellant form the Jurisdiction of Income Tax Officer, Business Range II (4) to the Jurisdiction of Deputy Commissioner of Income Tax, Non Corporate Circle - 2, the Deputy Commissioner of Income Tax, Non Corporate Circle -2 has no jurisdiction over the appellant. Therefore, the entire proceedings conducted by the Deputy Commissioner of Income Tax, Non Corporate Circle -2 is illegal and without Jurisdiction and is in violation of principles of Natural Justice. 3. Further, non communication of the reasons recorded for the transfer of the case cannot be saved at a later stage by showing that the reasons for transfer of the case existed in the file, although not communicated. This ground is supported by the decision of the Hon'ble Supreme Court in the case of Ajantha Industries [1976] 102 ITR 281 (SC) (Page 16 of Additional Paper book) wherein the Hon'ble Court held that communication of the order u/s. 127 of the Act is an essential requirement. The relevant portion of the decision is extracted hereunder: 9. This judgm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of Income Tax, Business Circle II, Chennai on the basis revised return of income. The ld. DR argued that the provisions under section 127 of the Act are not applicable. 5. After hearing both the parties, we note that the year under consideration is AY 2013-14, wherein, the assessee filed original return of income declaring a total income of ₹.7,70,900/- and the same is revised as ₹.18,69,969/- in terms of revised return of income. Having taken into account the revised return of income, wherein, the monetary limit for the assessment is changed from ₹.7,70,900/- to ₹.18,69,969/-, the argument of the ld. DR is that it cannot be assessed by the ITO as it should be assessed by the DCIT. Therefore, considering the same, the ITO, by proceedings dated 13.10.2014 forwarded the IT scrutiny folders for AY 2013-14 also to the DCIT by stating as jurisdiction in terms of change in the monetary limit in the revised return vest with the DCIT. Therefore, we find force in the argument of the ld. DR, that the provisions of section 127 of the Act are not applicable to the facts on hand. Thus, the first additional ground raised by the ld. AR on behalf of the assessee fails and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee is dismissed. 9. The third additional ground raised by the ld. AR on behalf of the assessee is that without prejudice to the additional ground Nos. 1 2 above, the notice under section 143(2) r.w.s. 129 of the Act does not contain any information about change of incumbent. Against this ground, the ld. AR filed following written submissions: III. The Assessing officer failed to inform the change in incumbent of the office to the appellant 5. Assuming without admitting, the transfer from the Jurisdiction of Income Tax Officer, Business Range II (4) to the Jurisdiction of Deputy Commissioner of Income Tax, Non Corporate Circle -2 is only a change in incumbent of an office u/s. 129 of the Act and not a transfer u/s. 127 of the Act, even in such case the assessing officer has not informed the appellant about the change of incumbent of an office. The assessing officer has a legal obligation u/s. 129 to inform the appellant that the previous authority who was so long continuing the proceeding has been succeeded by another officer and that the officer so succeeding wants to continue the proceeding from the stage at which the proceeding was left by his predecessor. Mere mechanica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceeding is pending is an official act of which the assessee can have no clue unless he is informed. Therefore, in a given case, the valuable safeguard and right given to the assessee will be defeated if he is not informed of the facts pointed out at (a) and (b) above. Such a valuable right given to the assessee under the proviso to section 39 cannot be made to depend on mere chance of his being informed. In that view of the matter, the obligation of revenue to inform the assessee is inherent in the very scheme of section 39 of the Act. 13. Provisions of section 39 of the Wealth-tax Act are identical to provision of section 129 of Income-tax Act, 1961. If the ratio of the decision of Hon'ble Patna High Court is applied to the facts of the case before us, it is clear that the Assessing Officer has not informed the assessee about the change of Assessing Officer. Therefore, the conditions stipulated in section 129 and guidelines laid down by Hon'ble Patna High Court in the case of Jagdish Prasad Chaudhary (supra) are not fulfilled. To bring a case under the provisions of section 129, the Assessing Officer is duty bound to inform the assessee. Merely because the assessee has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ormation about change of incumbent was communicated to the assessee, thereby, the assessee has been deprived from exercising his right to be reheard conferred by the proviso to section 129 of the Act. We find that this ground is raised without prejudice to the additional ground No. 1 2. In the aforementioned paragraphs, we held that there is no applicability of section 127 of the Act to the facts of the present case and the assessment proceedings are valid under law. Against the second additional ground, we held that the notice under section 143(2) of the Act is not barred by limitation. In view of our decisions in additional ground No. 1 2, we hold that there is nothing remain for the additional ground No. 3 raised by the ld. AR as there is no significance for the reason that the assessee participated in the assessment proceedings through his authorized representative, which is evident from para 2 of the assessment order. Therefore, the contention of the ld. AR that the notice under section 143(2) r.w.s. 129 of the Act does not contain any information about change of incumbent, is not justified. Thus, the additional ground raised by the ld. AR on behalf of the assessee is dismisse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ional ground. We discussed the said additional ground in the aforementioned paragraphs, where we held that the provisions of the section 127 of the Act are not applicable and held the entire assessment proceedings are valid under law. Therefore, since, we held that assessment proceedings are valid under law, again remanding the matter to the file of the ld. CIT(A) on the issue of deciding as to whether the assessment proceedings made under revised return of income is valid or not does not arise. Therefore, in view of our decision in additional ground No. 1, we find no force in the argument of the ld. AR in remanding the matter to the file of the ld. CIT(A) Thus, ground No. 2 raised by the assessee fails and it is dismissed. 17. The assessee raised ground Nos. 3, 4 5 under the head Validity of exercise of re-drawing cash book in challenging the action of the ld. CIT(A) in confirming the order of the Assessing Officer in making the addition on account of computing unexplained investments by way of peak deficit balance. 18. The Assessing Officer found that the assessee had made cash deposits in his Axis Bank account to an extent of ₹.59,50,000/-. It was explained that the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ercise of re-drawing cash book. Now we consider the facts relating to the asst. years 2008-09. 10.1 The facts of the issue are that the assessee's mother had lent monies to various persons through axis bank account. Some of them had made repayments in cheque and some of them had made repayments in cash. During the assessment proceedings u/s. 143(3) for the asst. year 2011-12, the assessee was asked to explain transactions in the said axis bank account, as the assessee was asked to explain transactions in the said axis bank account, as the assessee was a joint account holder. As per the advice of the ITO, the assessee admitted the transactions in said bank account and filed revised return of income including transactions from the said bank account for asst. years 2008-09 to 2012-13. 10.2 The CIT(Appeals) dismissed this contention of the assessee by holding that the assessee had admitted the said transactions during the assessment proceedings. Neither the AO nor the CIT(Appeals) made any attempts to know the truth from the primary account holder, Mrs. K. Mangalam. 10.3 For the asst. year 2008-09, impugned notice u/s. 142(1) of the Act was issued calling for confirmation from part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e same cannot be ignored by making presumptions. The outflow in the above cases were totally ignored by the AO. If the inflows are treated as unaccounted income, the corresponding outflows should be treated as unaccounted expenses and consequently the net effect of the above exercise would be null. 11.3 According to the ld. A.R , the AO had made additions on the basis of suspicion, surmises and conjectures. The ld. AR relied on the judgment of the Supreme Court in the case of Dhakeswari Cotton Mills Ltd. vs. CIT (26 ITR 126)(SC), wherein it was held as below : Though ITO is not fettered by technical rules of evidence and pleadings and he is entitled to act on material which may not be accepted as evidence on account of law, but in making assessment under section 23(3) of 1922 Act he is not entitled to make a pure guess and make an assessment without reference to any evidence or any material at all . 11.4 It was submitted before the CIT(A) that redrawing of cash book should be held as illegal and consequently the peak negative balance arrived and closing cash balance arrived by the AO may be cancelled. 11.5 The CIT(A) held that the assessee had not discharged the initial burden plac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... However, after giving a enhancement proposal, the CIT(A), added the peak deficit to the income of the assessee. Enhancement is challenged separately below. The other legal challenges are the same as that of asst. year 2008-09. 11.13 For A.Y. 2012-13 The peak deficit balance that appeared on 31.3.2012 at ₹74,34,803/- was added to the taxable income of the assessee. The legal challenges are the same as that of asst. year 2008-09. 11.14 Further, the ld. A.R submitted that without prejudice to the above, the AO cannot make an addition of unexplained credit under sec.68 of the Act based on the entries in the bank statement, which do not constitute the books of account of the assessee. The AO cannot treat the bank account statement as books of the assessee, as the same does not constitute books of the assessee. The assessee relied on the judgment of the Bombay High Court in the case of CIT vs. Bhaichand H. Gandhi (141 ITR 67) for the proposition 11.15 The ld. A.R drew our attention to the definition of books of accounts in sec.2(12A) of the Act also supports that bank pass book cannot be treated as books of accounts. 11.16 He has also placed reliance on the order of the Tribunal, M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of M Co. had clealry disclosed the payment of interest to the assessee-company. Those entries which have been made in the normal course of business must be accepted as true. A partner of that company has also indicated periodical payment of interest on five different dates. Those entries were not made on a single date and they were made on five different dates. So, it is well evident that the assessee-company has received interest payment of Rs. 67,790. The mere fact that the correct calculation of interest comes to Rs. 44,616 as stipulated in the pronote would not render that payment of interest of Rs. 67,790 false. 12. 5 In the case of Janardan Prasad Ashok Kumar vs. CIT (1992) 193 ITR 186 (All) , the Allahabad High Court held that where the assessee had failed to prove the source of investment to the satisfaction of the taxing authorities, the authorities would be justified in treating the same as unexplained investment under section 69. Akberally Esufally vs. CIT (1966) 60 ITR 563 (Mad), CIT vs. M.K. Bros. (1986) 52 CTR (Guj) 228 : (1987) 163 ITR 249 (Guj). The Calcutta High Court in Mihir Chatterjee vs. CIT (1994) 118 CTR (Cal) 26 : (1994) 205 ITR 270 (Cal) held that where th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T(A) in confirming the addition of ₹.7,52,550/- towards credit card payments. The Assessing Officer with AIR information found the assessee made credit card payments to an extent of ₹.7,52,550/-. The Assessing Officer added the same to the total income of the assessee for not producing any evidence in substantiating the payments. The ld. CIT(A) confirmed the same as the assessee did not produce any evidence. 24. The ld. AR placed on record the decision of the Hon ble High Court of Delhi in the case of PCIT v. Forum Sales (P.) Ltd. [2024] 160 taxmann.com 93 (Delhi) and submits that the Assessing Officer wields an authority to make additions on the basis of estimation of income upon fulfilment of the conditions mentioned in section 145(3) of the Act. He argued vehemently that the Assessing Officer did not reject the books of accounts and proceed to add the credit card payments in the absence of any evidence is not justified. Further, he placed reliance in the case of Shivam Industries v. ACIT in ITA No. 1612/Del/2021 dated 27.02.2024 and argued that the addition made by the Assessing Officer is not maintainable as there was no rejection of books. Further, he placed on rec ..... 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