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10-01-2020, Jayashree Jayakar Mohanka, Section 149(1)(c), 153C, Tribunal Kolkata

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8 months 2 weeks ago #12030 by amit
Section - 149(1)(c), 153C, 149, 148
Order Date - 10-01-2020
Favouring - Assessee
Court - Tribunal Kolkata
Appellant - DCIT
Respondent - Jayashree Jayakar Mohanka
Justice - A. T. Varkey, JM & Dr. A. L. Saini, AM
Citation - 120Taxpundit94
Appeal No. - I.T(SS).A. Nos. 37 & 38/Kol/2018
Asstt. Year - 2005-06 & 2006-07


PER : A.T.Varkey, JM

Both these appeals pr ferred by the assessee is against the separate orders of the Ld. CIT(A)-21, Kolkata dated 28.02.2018 for AY 2005-06 and 2006-07.

2. First we take up the appeal of the revenue for AY 2005-06. The revenue has raised the following grounds of appeal:

“1. That on the facts and in the circumstances of the case, Ld. CIT(A) has erred in holding that the notice issued u/s. 148 of the I. T. Act, 1961 on 19.08.2013 for AY 2005-06 was barred by limitation without appreciating the fact that assessee had bank deposits in a foreign country and in that case, sixteen years from the end of the relevant assessment year is the time limit for reopening assessment as per section 149(1)(c) of the I. T. Act.

2.That the Ld. CIT(A) has erred in law by saying that as per the Finance Act, 2012 as enacted by the Parliament, Section 149(1)(c) was made effective prospectively from 01.07.2012 and thereby also has erred in law by observing that there was nothing expressly provided by the amending Act, which indicate Legislative mind to make the provision applicable to those proceedings which had become barred by limitation on 0-1.07.2012.

3.that the Ld. CIT(A) has erred in law in holding that the provision u/s. 149(1)(c) are retro-active in operation inasmuch as they are applicable for AY 2006-07 onwards and in such sense, the assessment order passed u/s. 147 on 19.01.2015 for AY 2005-06 was void ab initio.”

3. The sole issue involved in the grounds of appeal of Revenue is against the action of the Ld. CIT(A) in holding that the proceedings u/s. 147 of the Income-tax Act, 1961 (hereinafter referred to as the “Act”) become time barred prior to 01.07.2012 could not be revived by the amendment in section 149(1)(c) of the Act. Therefore, according to him the assessment reopened by the AO on 19.08.2013 was barred by limitation and accordingly, the Ld. CIT(A) cancelled the order u/s. 147/143(3) of the act dated 19.01.2015 since it is ‘ab initio’ void.

4. Briefly stated facts as observed by the AO are that the deceased assessee filed his return of income on 21.10.2005 declaring total income at R .4,85,860/-. The same was assessed and accepted u/s. 143(3) of the Act vide order da ed 15.10.2007. A search was conducted on 22.09.2011 on the business premises and residence of the Mohanka Group including the factory premises of M/s. Electro Zavod (India) Pvt Ltd being the flagship company as well as the residences of Late Lalit Mohanika & Smt. Jayashree Jayakar Mohanka, directors of the said company. In course of search operation, statement of Smt. Jayashree Jayakar Mohanka was recorded u/s. 132(4) of the Act. In the process, she was shown documents in possession of the department revealing investments made by her or on behalf in a bank account bearing no. 5091415336, maintained with M/s. HSBC, Switzerland. She admit ed that an account had been opened by her husband Late Lalit Mohanka, jointly with herself at the said bank. Subsequently, another statement was recorded u/s. 131 on 18.11.2011, in which she also admitted that the moneys invested therein did not appear in the regular books of accounts and were thereafter disclosed for tax purposes. According to AO, the assessee vide affidavit dated 13.07.2013 stated that she had no knowledge about the operations of the bank account in Switzerland and it was in the exclusive knowledge of her late husband. Thereafter she procured a bank statement relating to the bank account and a copy of the same had been submitted to the department on 19.02.2013 showing the said account was in the name of her late husband as first holder and herself as the second holder. The said statement recorded all transactions since inception of the account opened on 03.08.2004 till closure of the same on 24.02.2009 the entire period being during the lifetime of late Lalit Mohanka, who expired on 07.10.2009. So, according to AO the entire income was chargeable in the hands of late Lalit Mohanka, and thereafter on his demise, on his estate represented by the legal representative in terms of sec. 159 of the Act. According to AO, the bank account statement indicated that the same was opened on 06.08.2004 and that an aggregate amount of Rs.83,70,274.48 had been deposited into the said bank account during the year under consideration. It was also noted that the said deposit were not reflected in the balance sheet of the assessee and not offered to tax as income for the year in his return of income. In view of the above, the AO issued notice u/s. 148 on 19.08.2013 seeking to reopen the assessment for the AY 2005-06 and required the assessee to furnish a return of income in response to the said notice. In the objections, the assessee challenged the validity of the notice issued u/s. 148 arguing that the proceedings u/s. 147 for the AY 2005-06 had become time barred on 31 03.2012 and hence, the notice u/s. 148 issued on 19.08.2013 was without jurisdiction and ab initio void. According to the assessee the clause © of sec. 149(1) inserted by the Finance Act, 2012 extending the time limit for reopening of assessment from six years to sixteen years could not come to the rescue of the AO for the assessment year 2005-06 since the proceedings u/s. 147 for the relevant year had become time barred on 31.03 2012 whereas section 149(1)(c) of the Act came into force w.e.f. 01.07.2012. In support of this proposition the assessee relied on the judgment of Hon’ble Supreme Court in the case of S. S. Gadgil Vs. Lal & Co 53 ITR 231. Inspite of the above, the AO proceeded to continue with the reassessment proceedings and consequently framed the assessment u/s. 147/143(3) of the Act making the addition of Rs. 84,07,136.95. Aggr eved, assessee preferred an appeal before the Ld. CIT(A), who cancelled the reassessment proceedings by observing as under:

1. I have carefully considered the submissions of the Ld. AR and perused the relevant provisions of the Act. The facts of the case are in narrow compass. The appellant in the present case is legal heir of late LalitMohanka who had filed return of income from AY 2005-06 during his lifetime. A search u/s. 132 was conducted on 22.09.2011 at the business and residential premises of Late LalitMohanka and M/s. Electro Zavod India Pvt Ltd on the premise that the Department was in possession of information that a bank account in the name of Shri LalitMohanka was opened by him with HSBC Private Banking, Geneva, Switzerland. In the course of search and subsequent proceedings conducted by the Authorized Officer, Smt. Mohanka, Legal Heir of her husband admitted the existence of such an account. It also appears that subsequent to search Mrs. Mohanka based on the information provided by the tax department had requested the said Bank to provide her with Statement of the said Bank A/c and the copy thereof on being supplied by the Bank was provided to the tax department.
Subsequent to search, proceedings under Chapter XIV of the Act were initiated by the Ld. AO for the AY 2006-07 and onwards. On receipt of the relevant bank statements, the Ld. AO noted that the said bank account was opened and the deposits in the said bank account were first made by Shri Mohanka in FY 2004-05 being previous year relevant to the AY 2005-06. Since the said assessment year did not come within the ambit of provisions of Section 153C,

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