×Latest Case Laws on Income Tax by various Income Tax Appellate Tribunals in India
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01-11-2019, Sunil Kanahaiyalal Gidwani, Section 147, 148, 68, Tribunal Pune
1. These appeals filed by the assessee are emanating out of the consolidated order of Commissioner of Income Tax (A) – 1, Kolhapur dated 27.11.2018 for the assessment years 2005-06 to 2007-08.
2. Before me, at the outset, both the parties submitted that though the appeals are for three different assessment years but the facts and issues involved in all the three appeals are identical except for the assessment years and the amounts involved and therefore the submissions made by them while arguing one appeal would be equally applicable to the other appeals also and thus, all the three appeals can be heard together. In view of the aforesaid submissions of both the parties, I, for the sake of convenience, proceed to dispose of all the three appeals by a consolidated order but however, proceed with narrating the facts for assessment year 2005-06 in ITA No.302/PUN/2019.
3. The relevant facts as culled out from the material on record are as under :-
Assessee is an individual stated to be having income from business. Assessee filed his return of income for A.Y 2005-06 on 27.10.2006 declaring total income of Rs.9,13,090/-. The return of income was initially processed u/s 143(1) of the Act. Thereafter, the case was reopened by issuing notice u/s 148 of the Act dated 19.03.2012 which was served on the assessee on 21.03.2012. In response to notice u/s 148 of the Act, the assessee vide letter dated 19.04.2012 submitted that the return of income filed by him on 27.10.2005 be treated as return of income in response to notice u/s 148 of the Act. The case was thereafter taken up for scrutiny and consequently the assessment was framed u/s 143(3) r.w.s 147 of the Act vide order dated 19.03.2013 and the total income was determined at Rs. 15,13,090/-. Aggrieved by the order of AO, assessee carried the matter before Ld.CIT(A), who vide consolidated order for A.Ys. 2005-06 to 2007-08 dated 27.11.2018 (in appeal No. SLI/219/13-14) granted partial relief to the assessee. Aggrieved by the order of Ld.CIT(A), the assessee is now in appeal and has raised the following grounds :
“1. Learned A.O. has erred in fact and in law in upholding the reopening of the assessment without appraising that there is no valid satisfaction / approval for reopening and reason recorded are arbitrary.
2. Learned CIT (A) has erred in fact and in law in confirming addition u/s.68 of Rs.350000/- in respect of loan given by the appellant to Gajanan Koli in spite of the fact that the loan is given out of tax paid Income and disclosed income and addition amounts to double' taxation.
3. Learned CIT (A) has erred in fact and in law in confirming the view of the AO in treating genuine business income of the appellant of Rs 6,99,960 as income from other source without any contrary evidence.”
4. Similar grounds have been raised by the assessee in ITA Nos.303 & 304/PUN/2019 for A.Ys. 2006-07 and 2007-08, respectively.
5. Before me, the Ld AR in the 1st ground of appeal is challenging the validity of the impugned reassessment order.
5.1. Ld.A.R. submits that the original return of income for AY 2005-06 was filed by the assessee on 27.10.2005 and it was initially processed u/s 143(1) of the Act. Thereafter, the notice u/s 148 dated 19.3.2012 was issued and served on the assessee on 21.03.2012. He submitted that on receipt of notice u/s 148 of the Act, the assessee before AO had raised objections against the reopening of the assessment. The AO vide order dated 15.02.2013 had disposed of the objections to the reopening raised by the assessee by rejecting the objections of assessee. Undisputedly, the notice u/s 148 of the Act is issued beyond the period of 4 years from the date of assessment year in question. He pointing to the copy of the reasons recorded for reopening the assessment (a copy of which is placed at page 10 of the Paper Book) submitted that the alleged reasons are advancing of interest free loans without obtaining any security by the assessee to Mr. Gajanan Koli with whom the assessee does not have any business relation. According to the AO, the sources of the aforesaid investment is not proved. He submitted that similar are the reasons recorded for re-opening in A.Y. 2006-07 and 2007-08. He submitted that in the reasons recorded for reopening the assessment there is no indication as to how income of the assessee chargeable to tax has escaped assessment. He submitted that from the reasons recorded it appears that the AO merely on the basis of suspicion and for further verification of the transaction has resorted to the reopening. He submitted that various High Courts have held that for making roving/fishing inquiry or for the purpose of investigation and without there being a specific finding of the escapement of income, reopening of assessment is not permissible. He therefore submitted that in the present cases, there is no reasonable belief by the AO of the income escaping assessment before issuing notice u/s 148 of the Act and therefore the reopening should be held to be invalid. He further submitted that the loans given by the assessee to Shri Gajanan Koli are reflected in the Balance sheet of the assessee which was filed by the assessee along with the original return of income and in support of which he pointed to the copy of the Balance Sheet placed in the Paper Book. He thereafter submitted that there is no evidence of escapement of income and that for mere verification, reassessment proceedings cannot be initiated. He therefore submitted that the reassessment be held to be invalid He thereafter submitted that for identical reasons, the reopening was resorted by the Department in the case of the family members of the assessee, viz, Shri Kailash Gidwani, Shri Sunil Gidwani and Shri Amit Gidwani. When the matter in their cases was carried before the Tribunal, the Co-ordinate Bench of the Tribunal vide order dated 11.09.2019 struck down the initiation of re-assessments in their cases. In support of his aforesaid contentions, he pointed to the order of the Tribunal and also pointed to the relevant paras therein where the reasons for reopening in those cases are noted. He therefore submitted that since the facts & circumstances of the present case are identical to that of his family members, then for this reason also following the order of the Co-ordinate Bench of the Tribunal, the reassessment in the case of the assessee for all the three years be held to be invalid.