Income Tax Appellate Tribunal - Indore
Smt.Laxmi Kanta Goyal, Neemuch vs Income Tax Officer, Neemuch on 21 December, 2018
Dinesh Kumar Goyal & Laxmi Kanta Goyal
ITA Nos.544 to 548/Ind/2017
आयकर अपील
य अ धकरण, इंदौर यायपीठ, इंदौर
IN THE INCOME TAX APPELLATE TRIBUNAL,
INDORE BENCH, INDORE
BEFORE HON'BLE KUL BHARAT, JUDICIAL MEMBER
AND HON'BLE MANISH BORAD, ACCOUNTANT
MEMBER
ITA No 544 & 545/Ind/2017
Assessment Years 1996-97 & 1997-98
PAN : AIQPJ3159E
Late Shri Dinesh Kumar Goyal : Appellant
L/H Smt. Laxmikanta Goyal,
C/o M/s. Saree Sansar,
Tagore Marg,
Neemuch
V/s
Income Tax Officer,
Neemuch : Respondent
ITA No 546 to 548/Ind/2017
Assessment Years 1996-97, 1997-98 & 1999-2000
PAN : AIQPJ3158F
Smt. Laxmikanta Goyal : Appellant
/o M/s. Saree Sansar,
Tagore Marg,
Neemuch
V/s
Income Tax Officer,
Neemuch : Respondent
Revenue by Shri R.S. Ambedkar, Sr.DR
Assessee by Shri O.P. Batheja, Adv
Date of Hearing 04.12.2018
Date of Pronouncement 21.12.2018
1
Dinesh Kumar Goyal & Laxmi Kanta Goyal
ITA Nos.544 to 548/Ind/2017
ORDER
PER BENCH.
The above captioned appeals filed at the instance of two assessee's pertaining to Assessment Year 1996-97, 1997-98 and 1999-2000 are directed against the orders of Ld. Commissioner of Income Tax (Appeals) (in short 'Ld.CIT(A)'], Ujjain dated 19.06.2017 which are arising out of the order u/s 144 dated 27.12.2016 framed by ITO, Neemuch.
2. As the issues raised in these appeals are common these were heard together and being disposed off by this common order for the sake of convenience and brevity.
3. The grounds raised by the assessee's namely Late Dinesh Kumar Goyal through L/H Smt. Laxmikanta Goyal and Smt. Laxmikanta Goyal are as under; I ITA No.544/Ind/2017 in the case of late Shri Dinesh Kumar Goyal Assessment Year 1996-97
1. The ld. CIT (A) has grossly on facts and in law in dismissing the legal issue challenging validity of notice issued u/s 148 for escapement of income within the meaning of sec. 147 explanation 2(a) read with section 2 Dinesh Kumar Goyal & Laxmi Kanta Goyal ITA Nos.544 to 548/Ind/2017 150(1) of the Act, holding that this issue has been decided by the Hon'ble ITAT while deciding ITA No. 64/lnd/2014 dated 29-02-2016.
2. The ld. CIT (A) has grossly erred in ignoring the issue that the set aside assessment made on 27-12-2016 has been made in the name of deceased Sh. Dinesh Kumar Goyal, when it was in the knowledge of AO that the assessee had expired on 26-02-2015. Therefore, the assessment made by the AO in the name of the deceased person is bad in law and my kindly be quashed Without prejudice to the above The ld. CIT (A) has erred on facts and in law in confirming addition of Rs. 250,000/- made on account of unexplained cash credit is the name of Smt. Laxmi Kanta Goyal.
ITA No.545/Ind/2017 in the case of late Shri Dinesh Kumar Goyal Assessment Year 1997-98
1. The ld. CIT (A) has grossly erred on facts and in law in dismissing the legal issue challenging validity of notice issued u/s 148 for escapement of income within the meaning of sec. 47 explanation 2(a) read with section 150(1) of the Act, aiding at this issue has already been decided by the Hon'ble ITAT'while deciding ITA No.65/lnd/2014 dated 29-2-2016.
2. The ld.CIT (A) gas grossly erred in ignoring the issue that the set aside assessment made on 27-12-2016 has been made in the name of deceased Sh. Dinesh Kumar Goyal, when it was the knowledge of AO that the assessee had expired on 26-02-2015. Therefore, the assessment made by the AO in the name of the deceased person is bad in law and my kindly be quashed.
3 Dinesh Kumar Goyal & Laxmi Kanta Goyal ITA Nos.544 to 548/Ind/2017 Without prejudice to the above
3. The ld. CIT(A) has erred in confirming addition of Rs.4,50,000/- being on account of unexplained cash credits in the name of Sh. Mohan Das Goyal and Shri. Naman Goyal.
4. The ld. CIT (A) has erred in confirming addition of Rs. 18,OOO/- on account of low House hold withdrawals and not allowing its set off against trading addition of Rs. 53,571/- confirmed by him. ITA No.546/Ind/2017 in the case of Smt. Laxmi Kanta Goyal Assessment Year 1996-97
1. The ld. CIT (A) has grossly erred in dismissing the ground of appeal of the appellant that the id. AO had not followed the decision of Hon'ble ITAT for the A.Y. 1998-1999, dated 19-09-2008, which is equally relevant to the A.Y. 1996-97 and 1997-98.
2. The ld. CIT (A) has grossly erred on facts and in law in dismissing the issue challenging validity of notice u/s 148 within the meaning of see. 147 explanation 2(a) r.w.s. 150(1) of the Act, holding that this issue has already been decided by the Hon'ble ITAT while deciding ITA No. 61/lnd/2014, dated 29-02-2016.
Without prejudice to above:
3. The ld. CIT (A) has erred in confirming addition of Rs. 200,000/made on account of unexplained cash credit in the name of Sh. Bhagwan Das Goyal.
4 Dinesh Kumar Goyal & Laxmi Kanta Goyal ITA Nos.544 to 548/Ind/2017 ITA No.547/Ind/2017 in the case of Smt. Laxmi Kanta Goyal Assessment Year 1997-98
1. The ld. CIT (A) has grossly erred in dismissing the ground of appeal of the appellant that the Id. AO had not followed the decision of Hon'ble ITAT for the A.Y. 1998-1999, dated 19-09-2008) which is equally relevant to the A.Y. 1996-97 and 1997-98.
2. The ld. CIT (A) has grossly erred on facts and in law in dismissing the issue challenging validity of notice u/s 148 within the meaning of see. 147 explanation 2(a) r.w.s. 150(1) of the Act, holding that this issue has already been decided by the Hon'ble ITAT while deciding ITA No. 62/lnd/2014, dated 29-02-2016.
3. The ld. CIT (A) has erred in not deleting addition of Rs. 170,000/- being estimated profit on estimated sales, where as he has deleted such addition in the A.Y. 1996-97, in view of decision of Hon'ble ITAT in ITA No. 573/lnd/05, dated 19-09-2008.
ITA No.548/Ind/2017 in the case of Smt. Laxmi Kanta Goyal Assessment Year 1999-2000
1. The ld. CIT (A) has grossly erred on facts and in law in ignoring the facts that the reassessment proceedings irritated u/s 148 r.w.s. 147 explanation 2(a) on 28-03-2006 were void ab initio as these were based on fallacious assumption that the aggregate bank deposits of Rs. 1,85,553/- constituted undisclosed income of the assessee overlooking fact that source of deposit need not necessarily be income of the assessee, as such, the notice was issued without application of mind by the AO for verification of source of bank deposits and did not fulfill the requirement of law for issuance of notice u/s 147 explanation 2(a)/148. 5 Dinesh Kumar Goyal & Laxmi Kanta Goyal ITA Nos.544 to 548/Ind/2017
2. The ld. CIT (A) has erred on facts and in law in ignoring the legal position that when on ground on which reopening was based, no addition was made by the AO, he could not make addition on some other grounds which did not form the part of reasons recorded by him. Therefore; the Id. CIT (A) has erred in confirming addition of Rs. 3,81,460/- on account of unexplained investment in building.
3. The ld. CIT (A) has grossly erred on facts and in law in holding that the legal issue challenging validity of notice u/s 148 has been decided by the Hon'ble ITA.T in ITA 63/lnd/2014, dated 29-02-2016.
4. The ld. CIT (A) has erred on facts and in law in confirming addition of Rs. 3,81,460/- on account of investment in building."
4. From perusal of the above grounds we find that in ITA No.544, 545, 546 and 547/Ind/2017, common legal issue has been raised challenging the validity of the notice issued u/s 148 of the Act for the alleged escapement of income within the meaning of Section 147, explanation 2(a) read with section 150(1) of the Act. As confirmed by the Ld. Counsel for assessee that the facts relating to both the asseessee's namely Late Dinesh Kumar Goyal and Smt. Laxmikanta Goyal are almost similar, we will adjudicate these common issue on the basis of facts of Smt. Laxmikanta Goyal.
5. The facts in brief are that the appellant is an individual assessee. The assessee has desired to start business activity in form 6 Dinesh Kumar Goyal & Laxmi Kanta Goyal ITA Nos.544 to 548/Ind/2017 of hotel business and for that purposes she has applied for the bank loan. To avail bank loan the bank has required certain papers including the project report, Balance sheet and profit & loss account. The consultant of the assessee prepared the same and submitted to the bank and thereafter availed the loan from the bank. The assessee has not filed its return of income, therefore the Learned Assessing Officer (In short 'Ld.AO') has reopened the case u/s 148 and framed the assessment of the assessee for the above referred assessment year u/s 144 of the Income Tax act. Thereafter the assessee preferred an appeal before the Ld. CIT(A), Ujjain but due to non appearance the same was dismissed by the Ld. CIT(A), Ujjain. The assessee further filed an appeal before the ITAT, Indore Bench Indore and the bench has set aside the case and restored the matter to the Ld. CIT(A), Ujjain to consider the matter afresh and also decide the legal issue for reopening the case u/s 148 of the Act. The Ld. CIT(A) has further not decided the legal matter for reopening the case u/s 148 of the Act and dismissed the appeal of the assessee for non appearance. The assessee has further appeal to the ITAT, Indore Bench Indore and the said case was dismissed 7 Dinesh Kumar Goyal & Laxmi Kanta Goyal ITA Nos.544 to 548/Ind/2017 for non appearance. The assessee filed for restorance of appeal and the same was accepted by the Bench and the appeal was restored. Tribunal in its order dated 29.2.2016 ob observing that the Ld. A.O has passed the order u/s 144 and added the entire creditors, unsecured loans and thereafter the investment made in building is also added in the income estimated on the turnover shown in the profit and loss account attached with the project report, again directed the Assessing Officer to make fresh assessment, Ld. A.O framed the assessments on 29.12.2016 after making certain additions against which the assessee preferred appeal before Ld. CIT(A) and partly succeeded.
6. Now the assessee is in appeal before the Tribunal raising various issues including this common legal issue challenging the validity of the reassessment proceedings.
7. Ld. Counsel for the assessee submitted that the reassessment proceedings are void on account of two reasons; firstly the alleged notice issued u/s 148 of the Act for Assessment Year 1996-97 and 1997-98 which were required to be issued latest by 31.3.2003 and 31.3.2004 respectively were actually issued on 27.05.2005 which 8 Dinesh Kumar Goyal & Laxmi Kanta Goyal ITA Nos.544 to 548/Ind/2017 were beyond 4 years from the end of the relevant assessment year and are therefore barred by limitation. Secondly, reassessment proceedings for both the assessment years 1996-97 and 1997-98 in the case of both the assessee's were initiated on the basis of the findings given by Ld.CIT(A) in its appellate order for Assessment Year 1998-99 vide order dated 27.12.2014 wherein Ld. CIT(A) exceeded his powers, directing the Assessing Officer to issue notice u/s 148 of the Act for Assessment Year 1996-97 and 1997-98 in the case of both the assessee's.
8. Ld. Counsel for the assessee placed reliance on the following judgments;
(i) Computer Science Corporation India) (P) Ltd V/s Additional CIT (2014) 268 CTR 110 (Madhya Pradesh)
(ii) CIT V/s Hirdey Narain Yogendra Prakash (1971) 82 ITR 136 (All)
(iii) Consolidated Coffee Ltd V/s ITO (1985) 155 ITR 729 (Karnataka)
(iv) M.B. Traders V/s ACIT (2010) 132 TTJ 490 (Nagpur -
ITAT)
(v) Marubeni India (P) Ltd V/s CIT (2010) 328 ITR 306 (Del)
(vi) CIT V/s Green World Corporation (2009) 314 ITR 81 (SC) 9 Dinesh Kumar Goyal & Laxmi Kanta Goyal ITA Nos.544 to 548/Ind/2017
9. Per contra Departmental Representative vehemently argued and supported the orders of lower authorities.
10. We have heard rival contentions and perused the records placed before us. The assessee is before the Tribunal in its third round and since the first round common issue has been raised by both the assessee's challenging the validity of the notice issued u/s 148 of the Act as well as challenging the reassessment proceedings framed after issuance of notice u/s 148 of the Act.
11. The genesis of issue of notice u/s 148 of the Act was on account of the common finding given by Ld.CIT(A) in its appellate order dated 27.12.2004 for Assessment Year 1998-99 in the case of late Dinesh Kumar Goyal as well as Smt. Laxmikanta Goyal. We reproduce below the finding of Ld.CIT(A) in the case of Smt. Laxmikanta Goyal;
"6.1 The facts on record, the findings given by the AO in the assessment order and the report submitted, as well as the contentions of the appellant are carefully examined. In the facts and circumstances of the case, no return having been filed even in response to notice u/s 142(1), issue of notice u/s 148 is found to be perfectly justified, considering AO's report and accordingly there is no merit in such ground of appeal and the same is rejected.10
Dinesh Kumar Goyal & Laxmi Kanta Goyal ITA Nos.544 to 548/Ind/2017 6.2 The AO has himself noted that the amount added a capital balance was shown by the appellant in the balance sheet filed before the bank for the previous year relevant to AY 97-98 and accordingly there was absolutely no case for considering this amount as unexplained opening balance for the year under consideration. If the AO was of the view that such amount was not properly and adequately explained, he should have immediately taken recourse to appropriate proceedings for AY 1997-98 and earlier years as the facts of the case warranted. The AO when directed to submit a further report after enquiry also has done previous little to justify the addition made. It is admitted position that no return of income was filed by the appellant for any AY prior to AY 98-99 for several years. In that view of the matter, considering the facts of the case and the attitude of the appellant, the AO is directed to issue notice u/s 148 for AY 97-98 and 96-97 to bring to tax escaped income being unexplained accretion to the capital balance as reflected in the balance sheet filed with the bank.
6.3 There is no merit in the appellant's contention that only tentative projected balance-sheets were submitted to the bank and these were not factual and hence income should not have been estimated on the basis of such balance-sheets given to the bank. On examination of the facts available on record, it emerges that the appellant and her husband Sri Dinesh Kumar Goyal bas apparently defrauded the bank, as they have filed identical balance sheets both In the case of her and her husband by merely changing the name and the FY/AY as will be clear from the balance-sheets so filed enclosed herewith as Annexure-A-I & A-2 & B-1 & B-2. Reference in this respect may be made to the observation of Hon'ble Madras High Court to the effect that no notice of sub-standard morality on the part of assessee should be taken so as to enable them to go back on their sworn statements given to the banks as observed in the case of 11 Dinesh Kumar Goyal & Laxmi Kanta Goyal ITA Nos.544 to 548/Ind/2017 Coimbatore Spinning & Weaving Co. Ltd. Vs, CIT 9 5 I TR 3 75(Mad.). I n a series 0 f later judgment, it bas been held that t be sworn statements given to the bank cannot be Ignored. Some of the decisions are noted hereunder:-
(i) Jai Chand Kanji & Co. Vs. CIT 157ITR 451(Raj.).
(ii) Swadeshi Cotton Mills Co. Ltd. Vs. CIT 180 ITR 651,655 (AlI.)
(iii) Puranlal Rajkumar vs. CIT 107 CTR (Cal.) 27, 30.
(iv) Kaila Sweet Supplier Vs. CIT 100 Taxman 58, 61(All.).
7. Proceeding further, the addition made by the AO for unexplained cash credit is similarly based on the balance sheet filed to the bank and such credit balances as per facts available on record are shown to be coming from earlier AY and hence, there is no case for making such addition for the year under consideration. The AO would be free to examine the issue regarding addition of any or all of such cash credits in the proceeding to be initiated for AY 97-98 and 96-97 as per directions recorded above.
8. Finally, the addition made by the AO determining NP on the basis of past records, in the face of total non-compliance made by the appellant is required to be confirmed and is accordingly confirmed.
12. On the basis of the finding given by Ld. CIT(A) referred above in para 6.1, 6.2 and 7, the Assessing Officer issued notice u/s 148 of the Act for assessing the income of the assessee for Assessment Year 1996- 97 and 1997-98 on 27.5.2005. Now whether this action of the Assessing Officer of issuing notice u/s 148 of the Act merely on the basis of finding 12 Dinesh Kumar Goyal & Laxmi Kanta Goyal ITA Nos.544 to 548/Ind/2017 given by Ld. CIT(A) allegedly directing the Assessing Officer to reopen the cases for Assessment Year 1996-97 and 1997-98 by issuing notice u/s 148 of the Act can be held to be justified needs to be examined in the light of the legal pronouncements as well as the undisputed fact that the cases have been reopened after the lapse of 4 years from the end of the relevant assessment years and the material evidence was only in the form of direction given by Ld. CIT(A).
13. We find that the Hon'ble jurisdictional High Court in the case of Computer Science Corporation (India) (P) Ltd V/s Addl. CIT (supra) held that the "direction given by CIT(A) shall not be construed to be of binding nature by the AO and it will be open for AO to proceed with the assessment proceedings in accordance with law, uninfluenced by the said impugned observations/directions contained in the impugned order'.
14. The Co-ordinate Bench of Nagpur in the case of M.B. Traders V/s ACIT (supra) held that "direction of the higher authority including that of the CIT(A) will not confer power to assume jurisdiction to the AO to initiate reassessment proceedings".
13
Dinesh Kumar Goyal & Laxmi Kanta Goyal ITA Nos.544 to 548/Ind/2017
15. The Hon'ble Apex Court in the case of CIT V/s Green World Corporation (supra) adjudicating the very same issue observed that "when a statute provides for different hierarchies providing for forums in relation to passing of an order as also appellate or original order; by no stretch of imagination a higher authority can interfere with the independence which is the basic feature of any statutory scheme involving adjudicatory process". Relevant portion of the judgment of the Hon'ble Apex Court is reproduced below;
"30. Indisputably, CIT (Shimla) had no jurisdiction to issue directions. Notices issued pursuant thereto would be bad in law. We may, however, place on record that the revenue in the 'List of Dates' while questioning the observations made by the High Court that the notices under section 148 of the Act for the assessment years 1996-97 and 1997-98 are not saved from the rigours of the law of limitation, under the exclusionary provisions of sections 150(1) and 153(3)(i/) of the Act, stated :-
"In this regard, it is important to note that these notices were issued to give effect to the directions contained in the revision order under section 263 passed by the CIT on 12-7-2004 unlike section 149 of the Act, there is no time limit under section 150(1) that starts with non obstante clause and to that extent the observations of the Hon'ble High Court are in error.
Further section 150(2) provides necessary restriction on section 150( 1) and even under the said restriction provided by section 150(2), the issue 14 Dinesh Kumar Goyal & Laxmi Kanta Goyal ITA Nos.544 to 548/Ind/2017 of notices under section 148 of the assessment years 1996-97 and 1997- 98 in instant case is within the restricted time limit provided under section 150(2) of the Income-tax Act." section 150 of the Act reads as under :-
"150. Provision for cases where assessment is in pursuance of an order on appeal, etc.-(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 effect to any finding or direction contained in an order passed by any authority in any proceeding under this Act by way of appeal, reference or revision or by a Court in any proceeding under any other law.
(2) The provisions of sub-section (1) shall not apply in any case where any such assessment, reassessment or recomputation as is referred to in that sub-section relates to an assessment year in respect of which an assessment, reassessment or recomputation could not have been made at the time the order which was the subject-matter of the appeal, reference or revision, as the case may be, was made by reason of any other provision limiting the time within which any action for assessment, reassessment or recomputation may be taken."
The aforementioned provision although appears to be of a very wide amplitude, but would not mean that recourse to reopening of the proceedings in terms of sections 147 and 148 of the Act can be initiated at any point of time whatsoever. Such a proceeding can be initiated only within the period of limitation prescribed therefore as contained in section 149 of the Act.
15 Dinesh Kumar Goyal & Laxmi Kanta Goyal ITA Nos.544 to 548/Ind/2017 Section 150(1) of the Act is an exception to the aforementioned provision. It brings within its ambit only such cases where reopening of the proceedings may be necessary to comply with an order of the higher authority. For the said purpose, the records of the proceedings must be before the appropriate authority. It must examine the records of the proceedings. If there is no proceeding before it or if the assessment year in question is also not a matter which would fall for consideration before the higher authority, section 150 of the Act will have no application. In ITO v. Murlidhar Bhagwan Oas [1964] 52 ITR 335 (SC), it was held "The proceedings would be in time, if the second proviso to section 34(3) of the Act could be invoked. The question, therefore, is what is the true meaning of the terms of the second proviso to section 34(3) of the Act. It reads:
'Provided further that nothing in this section limiting the time within which any action may be taken, or any order, assessment or reassessment may be made, shall apply to a reassessment made under section 27 or to an assessment or reassessment made on the assessee or any person in consequence of or to give effect to any finding or direction contained in an order under section 31, section 33, section 33A, section 338, section 66 or section 66A'.
Prima facie this proviso lifts the ban of limitation imposed by the other provisions of the section in the matter of taking an action in respect of or making an order of assessment or reassessment falling within the scope of the said proviso. The scope of the proviso is confined to an assessment or re-assessment made on the assessee or any person in consequence of an order to give effect to any finding or direction contained in any order made under section 31 i.e., in an appeal before the Assistant Appellate Commissioner, under section 33 i.e., in an appeal before the Tribunal, 16 Dinesh Kumar Goyal & Laxmi Kanta Goyal ITA Nos.544 to 548/Ind/2017 under section 33A i.e., in a revision before the Commissioner, under section 338, i.e., in a revision before the Commissioner against an order of the Income-tax Officer, and under sections 66 and 66A, i.e., in a reference to the High Court and appeal against the High Court's order to the Supreme Court. Learned counsel for the appellant contends that the scope of the proviso is only confined to the assessment of the year that is the subject-matter of the appeal or the revision, as the case may be. Learned counsel for the Department argues that the comprehensive phraseology used in the proviso takes in its broad sweep any finding given by the appropriate authority necessary for the disposal of the appeal or the revision, as the case may be, and to any direction given by the said authority to effectuate its finding and that the said finding or direction may be in respect of any year or any person. As the phraseology used in the proviso is not clear or unambiguous. the question raised cannot be satisfactorily resolved without having a precise appreciation of a brief history of section 34 of the Act culminating in the enactment of the proviso in the present form." (p. 339) This Court noticed the development of law as also the fact that the decision of the Income-tax Officer given in a particular year does not operate as res judicata to opine:
"The lifting of the ban was only to give effect to the orders that may be made by the appellate, revisional or reviewing Tribunal within the scope of its jurisdiction. If the intention was to remove the period of limitation in respect of any assessment against any person, the proviso would not have been added as a proviso to sub-section (3) of section 34, which deals with completion of an assessment, but would have been added to sub-section (1) thereof."17
Dinesh Kumar Goyal & Laxmi Kanta Goyal ITA Nos.544 to 548/Ind/2017 In regard to the question that what would be the meaning of the term 'finding' or 'direction', it was held:
"A "finding", therefore, can be only that which is necessary for the disposal of an appeal in respect of an assessment of a particular year. The Appellate Assistant Commissioner may hold, on the evidence, that the income shown by the assessee is not the income for the relevant year and thereby exclude that income from the assessment of the year under appeal. The finding in that context is that that income does not belong to the relevant year. He may incidentally find that the income belongs to another year, but that js not a finding necessary for the disposal of an appeal in respect of the year of assessment in question. The expression "direction" cannot be construed in vacuum, but must be collated to the directions which the Appellate Assistant Commissioner can give under section 31. Under that section he can give directions, inter alia, under section 31 (3)(b), ( c) or (e) or section 31 (4). The expression "directions"
in the proviso could only refer to the directions which the Appellate Assistant Commissioner or other Tribunals can issue under the powers conferred on him or them under the respective sections. Therefore, the expression "finding" as well as the expression "direction" can be given full meaning, namely, that the finding is a finding necessary for giving relief in respect of the assessment of the year in question and the direction is a direction which the appellate or revisional authority, as the case may be, is empowered to give under the sections mentioned therein."
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32. When a statute provides for different hierarchies providing for forums in relation to passing of an order as also appellate or original order; by no stretch of imagination a higher authority can interfere with the 18 Dinesh Kumar Goyal & Laxmi Kanta Goyal ITA Nos.544 to 548/Ind/2017 independence which is the basic feature of any statutory scheme involving adjudicatory process.:"
16. Respectfully following the above judgments and on applying the same on the facts of the instant appeals, we find that the Ld. A.O has not applied his mind, nor gathered any material evidence and merely issued the notices u/s 148 of the Act on fallacious assumptions by acting only on the directions of Ld. CIT(A) who is legally not having such powers to give direction to reopen the assessment. It is also not disputed that the Ld. A.O has not taken the prior approval of Joint Commissioner of Income Tax u/s 151 of the Act before issuing notice u/s 148 of the Act which is a mandatory requirement. In our considered view the Assessing Officer has simply acted upon i.e. initiated the reopening proceedings on the directions of Ld. CIT(A) and has totally ignored his part of the job i.e. his satisfaction. Respectfully following the above judgments of Apex Court and other lower courts, we are of the considered view that the notice u/s 148 of the Act issued for escapement of income within the meaning of Section 147 of explanation 2(a) read with section 150(1) of the Act for Assessment Year 1996-97 and 1997-98 in the case of Smt. Laxmikanta Goyal and Late Dinesh Kumar Goyal through his legal heir Smt. Laxmikanta Goyal are against the settled principles of law and are 19 Dinesh Kumar Goyal & Laxmi Kanta Goyal ITA Nos.544 to 548/Ind/2017 thus void ab initio. We accordingly set aside the finding of both the lower authorities and quash the impugned assessment proceedings in the case of both the assessee's for both the assessment years 1996-97 and1997- 98 being invalid and bad in law and also direct the Ld. Assessing Officer to delete the additions made therein. We thus allow this common issue raised by both the assessee's challenging the validity of issuance of notice u/s 148 of the Act in favour of the assessee and other grounds being academic in nature are rendered to be infructuous and these are dismissed being infructuous. In the result appeal of the assessee's for Assessment Year 1996-97 and 1997-98 partly are allowed.
17. Now we take up ITA No.548/Ind/2017 in the case of Smt. Laxmi Kanta Goyal for Assessment Year 1999-2000. In this appeal the assessee apart from challenging the addition of Rs.3,81,460/- confirmed by Ld. CIT(A) has also raised following ground;
" The ld. CIT (A) has grossly erred on facts and in law in ignoring the facts that the reassessment proceedings irritated u/s 148 r.w.s. 147 explanation 2{a) on 28-03-2006 were void ab initio as these were based on fallacious assumption that the aggregate bank deposits of Rs. 1,85,553/- constituted undisclosed income of the assessee overlooking fact that source of deposit need not necessarily be income of the assessee, as such, the notice was issued without application of mind by the AO for 20 Dinesh Kumar Goyal & Laxmi Kanta Goyal ITA Nos.544 to 548/Ind/2017 verification of source of bank deposits and did not fulfill the requirement of law for issuance of notice u/s 147 explanation 2(a)/148".
18. At the outset Ld. Counsel for the assessee submitted that the additions made by the Ld. A.O will not stand for, as he could not make the additions on some other grounds which did not form the part of the reasons recorded by him. He also submitted that the Assessing Officer may have made other additions but before making any such addition for other reasons, addition should have been made for the reasons recorded in the notice issued u/s 148 of the Act. He placed reliance on following judgments;
(i) Munni Devi V/s ITO ITA No. 3534/Del/2014 dated 15.09.2016
(ii) Baby Yadav V/s ITO ITA No. 5394/Del/2016 dated 27.04.2017
(iii) Amrik Singh V/s ITO (2016) 159 ITD 329 (Amritsar Trib) dated 11.5.2016
(iv) Gurpal Singh V/s ITO (2016) 159 ITD 797 (Amritsar Trib) dated 27.5.2016
(v) Vinod Maheshwari V/s ITO ITA No. 1498/Del/2015 dated 09.09.2016 21 Dinesh Kumar Goyal & Laxmi Kanta Goyal ITA Nos.544 to 548/Ind/2017
(vi) Praveen Kumar Jain V/s ITO ITA No. 1331/Del dated 22.01.2016
(vii) Saraf Gramodyog Sansthan V/s ITO (2007) 108 ITD 115 (Agra)
(viii) C.M. Mahadeva V/s CIT ITA No. 795/2009 (Karnataka High Court) dated 24.08.2015
(ix) Prashant S. Joshi V/s ITO (2010) 324 ITR 154 (Bombay)
(x) Ingram Micro (India) Exports (P) Ltd V/s DCIT (2017) 78 taxmann.com 140 (Bombay)
(xi) CIT V/s Expeditors International India (P) Ltd (2012) 18 TAXMANN.COM.29 (Delhi)
(xii) CIT V/s Mohmed Juned Dadani (2014) 355 ITR 172 (Gujarat)
(xiii) ACIT V/s Major Deepak Mehta (2012) 344 ITR 641 (Chattisgarh)
(xiv) CITV/s Jet Airways (I) Ltd (2011) 331 ITR 236 (Bombay)
(xv) Ranbaxy Laboratories Ltd V/s CIT (2011) 336 ITR 136 (Delhi) (xvi) CIT V/s Ram Singh (2008) 306 ITR 343 (Raj.) 22 Dinesh Kumar Goyal & Laxmi Kanta Goyal ITA Nos.544 to 548/Ind/2017
19. Ld. Counsel for the assessee also challenged the reopening and submitting that the Ld. A.O proceeded on the fallacious assumptions that the bank deposits constitutes undisclosed income and he completely over ruled the fact that the sources of deposits need not necessarily be the income of the assessee. From the point of view of the department it can be a case of examination and verification but then the reassessment proceedings cannot be resorted to only to examine the facts of the case no matter how desirable that be unless there is a reason to believe rather than to suspect that the income has escaped the assessment. In support of this contention reliance is placed on following decisions;
(i) Bir Bahadur Singh Sijwali V/s ITO (2015) 54 Taxmann.com 366 (Delhi-Trib.)
(ii) Satyadev Singh V/s ITO, ITA No.243/Agra/2017 (Agra I.T.A.T.) order dated 04.06.2018
(iii) Khaliq Ahmed V/s ITO, ITA No.71/LKW/2017 (Lucknow-
I.T.A.T.) order dated 16.01.2018
23
Dinesh Kumar Goyal & Laxmi Kanta Goyal
ITA Nos.544 to 548/Ind/2017
(iv) Baby Yadav alias Anita Yadav V/s ITO ITA
No.539/Del./2016 (I.T.A.T.-Delhi) order dated
27.04.2017.
(v) Gurpal Singh V/s ITO (2016) 71 Taxmann.Com 108
(Amritsar Trib)
(vi) Mariyam IsmailRajwani V/s ITO ITA No.676/Ahd/2016
(Ahmedabad-I.T.A.T.) order dated 09.08.2016
(vii) Indra Pal Singh V/s ITO ITA No.721/LKW/2016 (Lucknow-I.T.A.T.) order dated 18.09.2018
(viii) M/s. Dharam Chand Sohan Lal & Company V/s ITO ITA No.307 & 208/JP/16 (Jaipur-I.T.A.T.) order dated 01.09.2017
(ix) Amrut Metal Coats V/s ITO CO No. 4/Ahd/2013 of ITA No.1626/Ahd/2012 and Co No.5/Ahd/2013 of ITA No.1627/Ahd/2012, A.Y.2007-08 and 2008-09 (I.T.A.T.- Ahmedabad) order dated 27.1.2016
(x) Subrata Saha V/s ITO, ITA No.2395/Kol/2017 (I.T.A.T. -
Kolkata) order dated 25.07.2018
(xi)Venu Gopal Karavadi V/s ITO ITA No.2002/Hyd/2017 (Hyderabad-I.T.A.T.) order dated 27.04.2018
(xii) Martech Peripherals (P) Ltd V/s DCIT (2017) 394 ITR 733 24 Dinesh Kumar Goyal & Laxmi Kanta Goyal ITA Nos.544 to 548/Ind/2017 (Madras HC)
20. Per contra Departmental Representative vehemently argued and supported the orders of lower authorities.
21. We have heard rival contentions and perused the records placed before us. We will first take up the legal issue raised in Ground No.2 wherein the assessee has challenged the validity of the assessment proceedings initiated by issuance of notice u/s 148 of the Act. Before moving further we will first like to reproduce the notice issued u/s 148 of the Act for the Assessment year 1999- 2000;
"Smt. Laxmikanta Goyal W/o Shri Dinesh Goyal A.Y. 1999- 2000 reasons recorded u/s 148(2) of the IT Act. In the case Smt. Laxmikanta Goyal W/o Shri Dinesh Goyal A.Y. 1999- 2000.
-----
In assessment year 1998-1999 during the course of assessment proceeding the assessee has filed bank statement of Mandsaur Commissioner Cooperative Bank Neemuch in which the assessee Smt. Laxmikanta Goyal W/o Shri Dinesh Goyal Neemuch has paid more than 1,85,553/-. The assessee has not filed return of income. I have therefore reasons to believe that the income of Rs.1,85,553/- chargeable to tax has escaped assessment within the meaning to explanation to (a) of section 147 of the IT Act. For the A.Y. 1999-2000. Send 25 Dinesh Kumar Goyal & Laxmi Kanta Goyal ITA Nos.544 to 548/Ind/2017 proposal to Hon'ble JCIT Ratlam range, Ratlam for his kind approval for issue of notice under section 148 for A.Y. 1999- 2000"
22. The above impugned notice issued u/s 148 of the Act was issued alleging the escapement of income of Rs.1,85,553/- which was the total of various deposits in the bank account held by the assessee at Mandsaur Commissioner Co-Operative Bank, Mandsaur. However from perusal of the impugned assessment order we find that the addition was made for un-explained investment in construction of building at Rs.9,62,800/- which was subsequently scaled down to Rs.3,81,460/-by Ld. CIT(A). However no addition has been made by Ld.A.O for the alleged bank deposits at Rs.1,85,553/-. In the given facts whether the Ld. A.O can assess other income of the assessee without assessing the income for which reasons were recorded?. We find that judgment of Hon'ble Bombay High Court in the case of CIT V/s Jet Airways India Ltd squarely applies on the facts as well as in the favour of the assessee as the Hon'ble Court held that "Section 147 of the Act provides that the Assessing Officer may assess the income which has escaped assessment and also any other income chargeable to tax which has 26 Dinesh Kumar Goyal & Laxmi Kanta Goyal ITA Nos.544 to 548/Ind/2017 escaped assessment which comes to his notice subsequently in the course of proceedings under the section. Explanation 3 of Section 147 inserted by Finance Act 2009 with retrospective effect from 1.4.1989 provides that the Assessing Officer may assess or reassess income in respect of any issue.... notwithstanding reasons for which such issue have not been included in the reasons recorded. Hon'ble Court further held that the word 'and' also indicate that reassessment must be in respect to the income for which the Assessing Officer has formed an opinion and also in respect of any other income which comes to his notice subsequently. However, if the Assessing Officer accepts the objection of the assessee and does not assess the income which was a basis of the notice it is not open to him to assess the income under some other issue independently".
23. Applying the above judgment and the facts of the assessee in the instant appeal, we find that the case of the assessee was opened for assessment after issuance of notice u/s 148 of the Act after 4 years from the end of the assessment year for the alleged escapement of income of Rs.1,85,553/- being the deposits in the 27 Dinesh Kumar Goyal & Laxmi Kanta Goyal ITA Nos.544 to 548/Ind/2017 bank and assessment framed thereafter on 27.12.2016. Ld.A.O did not made any addition for Rs.1,85,553/- or part thereof but has made addition for other income i.e. unaccounted investment at Rs.9,62,800/-. We therefore respectfully following the judgment of Hon'ble Bombay High Court and the given facts and circumstances of the case are of the considered view that as the Ld.A.O has not assessed the income for which the reasons were recorded in the notice issued u/s 148 of the Act, and therefore it was not open to him to make the addition for unaccounted investment of Rs.9,62,800/-. We accordingly set aside the finding of Ld.CIT(A) and direct the Ld.A.O to delete the addition of Rs.9,62,800/-. We accordingly allow this legal issue raised in Ground No.2 in the assessee's appeal. As regards Ground No. 1 & 3, we find no reason to adjudicate the same as we have already deleted the addition and therefore Ground No. 1 & 3 are rendered to be infructuous and dealing with them are merely academic in nature and are therefore dismissed being infructuous. Ground No.4 is general in nature which needs no adjudication. Appeal of the assessee for Asse4ssment Year 1999-2000 is partly allowed/ 28 Dinesh Kumar Goyal & Laxmi Kanta Goyal ITA Nos.544 to 548/Ind/2017
24. In the result all the appeals of both the assessee are partly allowed.
The order pronounced in the open Court on 21.12.2018.
Sd/- Sd/-
( KUL BHARAT) (MANISH BORAD)
JUDICIAL MEMBER ACCOUNTANT MEMBER
दनांक /Dated : 21 December, 2018
/Dev
Copy to: The Appellant/Respondent/CIT concerned/CIT(A)
concerned/ DR, ITAT, Indore/Guard file.
By Order,
Asstt.Registrar, I.T.A.T., Indore
29