Trimline Vyapar(P)Ltd, Kolkata V. ITO, Ward-9(1), Kolkata, Kolkata

CO 69/KOL/2012

• Counselvise Citation: [2013] 122 COUNSELVISE.COM (IT) 8786 (ITAT-KOLKATA)
• Duration Of Justice: 11 month(s) 8 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 21-06-2013
• Appeal Filed By: Assessee
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 13-07-2012
• Court: TRIBUNAL
• Department Lawyers: D K SONOWALJCIT
• Assessee Lawyers: A K TIBREWAL
• Keywords: Reopening of assessment; Unexplained investment; Gift; Income from undisclosed sources; Difference of opinion; Reason to believe; Change of opinion
• Section: 143(3); 147; 148

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH B , KOLKATA [ () . .. . . .. . , ,, , , !' #! $'# #! $'# #! $'# #! $'#, ,, , ] ]] ] [BEFORE HONBLE SRI N.S.SAINI AM & HONBLE SRI M AHAVIR SINGH, JM] '& '& '& '& /ITA NOS.1479&1480/KOL/2011 $' !()/ ASSESSMENT YEARS : 2006-07 & 2007-08 (+, / APPELLANT ) - ! - ( ./+, /RESPONDENT) I.T.O., WARD-9(1) . M/S.TRIMLINE VYAPAAR PVT. LT D. KOLKATA -VERSUS- KOLKATA (PAN: AAACT 9181 G ) C.O.NOS.69 & 70/KOL/2012 '& '& '& '& A/O ITA NOS.1479 & 1480/KOL/2011 $' !()/ ASSESSMENT YEARS : 2006-07 & 2007-08 (+, / CROSS OBJECTOR ) - ! - ( ./+, /RESPONDENT) M/S.TRIMLINE VYAPAAR PVT. LTD. . I.T.O., WARD-9( 1), KOLKATA -VERSUS- KOLKATA (PAN:AAACT 9181 G) +, 0 1 / FOR THE DEPARTMENT SHRI D.K.SONOWAL,JCIT, SR.DR ./+, 0 1 / FOR THE ASSESSEE SHRI A.K.TIBREWAL, FCA 2!3 0 4 /DATE OF HEARING : 12.06.2013 5( 0 4 /DATE OF PRONOUNCEMENT : 21.06.2013. 6 / ORDER PER SHRI N.S.SAINI, AM THESE ARE THE APPEALS FILED BY THE REVENUE AND TH E CROSS OBJECTIONS FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A)-VIII, KOLKATA DATED 14.09.2011 2. IN REVENUES APPEAL THE FOLLOWING GROUNDS WERE TAKEN : ITA NO.1479/KOL/2011 A.YR.2006-07 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A)-VIII ERRED IN LAW IN DECIDING THE APPEAL IN FAVOUR OF THE ASSESSEE BY DE LETING THE ADDITION OF RS.99,40,000 ON ACCOUNT OF INCOME FROM UNDISCLOSED SOURCES. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A)-VIII ERRED IN LAW IN DECIDING THE APPEAL IN FAVOUR OF THE ASSESSEE WITHO UT VERIFYING THE CASH DEPOSIT. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A)-VIII ERRED IN LAW IN DECIDING THE APPEAL IN FAVOUR OF THE ASSESSEE WITHO UT GIVING OPPORTUNITY TO AO AS PER PROVISION OF RULE 46A OF THE I.T.RULE, 1962. ITA NOS.1479&1480/KOL/2011& C.O.NOS.69&70/KOL/2012 ITO.WD.9(1).KOL VS M/S.TRIMLINE VYAPAAR PVT. LTD. A .YRS. 2006-07 & 2007-08 2 ITA NO.1480/KOL/2011 A.YR.2007-08 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A)-VIII ERRED IN LAW IN DECIDING THE APPEAL IN FAVOUR OF THE ASSESSEE BY DE LETING THE ADDITION OF RS.57,75,000 ON ACCOUNT OF INCOME FROM UNDISCLOSED SOURCES. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A)-VIII ERRED IN LAW IN DECIDING THE APPEAL IN FAVOUR OF THE ASSESSEE WITHO UT VERIFYING THE CASH DEPOSIT. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A)-VIII ERRED IN LAW IN DECIDING THE APPEAL IN FAVOUR OF THE ASSESSEE WITHO UT GIVING OPPORTUNITY TO AO AS PER PROVISION OF RULE 46A OF THE I.T.RULE, 1962. 2.1. IN THE CROSS OBJECTION FILED BY THE ASSESSEE T HE ASSESSEE HAS TAKEN THE FOLLOWING COMMON GROUND OF CROSS OBJECTION FOR BOTH THE YEARS UNDER CONSIDERATION :- 1. THAT THE LEARNED CIT(A) ERRED IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER IN INITIATING THE RE-ASSESSMENT PROCEEDINGS ALTHOUGH T HERE WERE NO REASONS TO BELIEVE WITHIN THE MEANING OF SEC.47 OF THE ACT THAT THE IN COME OF THE ASSESSEE HAS ESCAPED ASSESSMENT. 3. IN BOTH THESE YEARS UNDER CONSIDERATION THE ASSE SSEE HAS CHALLENGED THE JURISDICTION OF THE AO FOR REOPENING THE ASSESSMENT U/S 147 OF THE ACT AND AS IT IS A LEGAL ISSUE GOING TO THE ROOT OF THE MATTER WE ADJU DICATE THE SAME FIRST. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE RETURN OF INCOME FOR A.YRS. 2006-07 AND 2007-08 WAS FILED ON 29 TH MARCH, 2007 AND 27 TH OCTOBER, 2007 RESPECTIVELY AND THE SAME WERE PROCESSING U/S 143(1) OF THE I.T.ACT. THE REAFTER THE AO ISSUED NOTICE ON 26 TH FEBRUARY, 2010 FOR BOTH THE YEARS UNDER CONSIDERAT ION U/S 148 OF THE ACT FOR REOPENING OF THE ASSESSEE FOR THE FOLLOWING RECORDE D REASONS :- A.YR.2006-07 INFORMATION HAS BEEN RECEIVED THAT CASH DEPOSIT OF RS.36,15,000/- WAS MADE IN BANK (MAINTAINED BY THE ASSESSEE COMPANY) ACCOUNT NO.848 741 WITH ABN-AMRO BANK DURING THE PERIOD 01.01.06 TO 31.03.06. ON VERIFICA TION OF ITS ACCOUNTS FOR THE FINANCIAL YEAR 2005-06 RELATING THE A.Y. 2006-07, IT IS FOUND THAT (1) RS.99,379/- WAS RECEIVED ON ACCOUNT OF INTEREST DURING THE RELEVANT PREVIOUS YE AR (2) THERE WAS NO FRESH LOAN OR CAPITAL RECEIVED DURING THE RELEVANT PREVIOUS YEAR. (3) THERE WAS NO SALE OF SHARES. THERE WAS SALE OF INVESTMENT TO THE TUNE OF RS.5,51 ,420 BUT CHEQUE DEPOSITS WERE MORE THAN CRORE AT DIFFERENT DATES DURING THE PERIOD. (4 ) THERE HAS BEEN INCREASE OF CASH-IN- HAND ON COMPARISON WITH THE EARLIER YEAR. ALL THESE DOES NOT JUSTIFY THE CASH DEPOSITS OF RS.36,15,000/- AS WELL AS CHEQUE DEPOSITS AT DIFFER ENT DATES IN THE SAID BANK ACCOUNTS DURING THE RELEVANT PREVIOUS YEAR. ON THE BASIS OF THE ABOVE, I HAVE REASON TO BELIEVE ITA NOS.1479&1480/KOL/2011& C.O.NOS.69&70/KOL/2012 ITO.WD.9(1).KOL VS M/S.TRIMLINE VYAPAAR PVT. LTD. A .YRS. 2006-07 & 2007-08 3 THAT INCOME HAS BEEN ESCAPED FROM ASSESSMENT. CONSE QUENTLY, NOTICE U/S 148 IS ISSUED FOR THE PURPOSE OF REASSESSMENT U/S 147. A.YR.2007-08 INFORMATION HAS BEEN RECEIVED THAT CASH DEPOSIT OF RS.56,15,000/- WAS MADE IN BANK (MAINTAINED BY THE ASSESSEE COMPANY) ACCOUNT NO.848 88741 WITH ABN-AMRO BANK DURING THE PERIOD 01.04.06 TO 31.03.07. ON VERIFICA TION OF ITS ACCOUNTS FOR THE FINANCIAL YEAR 2006-07 RELATING THE A.Y. 2007-08, IT IS FOUND THAT (1) RS.1,71,161/- WAS RECEIVED ON ACCOUNT OF INTEREST DURING THE RELEVANT PREVIOUS (2) THERE WAS NO FRESH LOAN OR CAPITAL RECEIVED DURING THE RELEVANT PREVIOUS YEAR. (3) THE RE WAS NO SALE OF SHARES. THERE WAS SALE OF INVESTMENT TO THE TUNE OF RS.5,51,420/- BUT CHEQUE DEPOSITS WERE MORE THAN CRORE AT DIFFERENT DATES DURING THE PERIOD. (4) THERE HAS BEEN INCREASE OF CASH-IN-HAND ON COMPARISON WITH THE EARLIER YEAR. ALL THESE DOES NO T JUSTIFY THE CASH DEPOSITS OF RS.36,15,000/- AS WELL AS CHEQUE DEPOSITS MORE THAN CRORE AT DIFFERENT DATES IN THE SAID BANK ACCOUNTS DURING THE RELEVANT PREVIOUS YEAR. ON THE BASIS OF THE ABOVE, I HAVE REASON TO BELIEF THAT INCOME HAS BEEN ESCAPED FROM ASSESSMENT. CONSEQUENTLY, NOTICE U/S 148 IS ISSUED FOR THE PURPOSE OF REASSESSMENT U /S 147. 4.1. THE ASSESSEE CHALLENGED THE REOPENING OF THE A SSESSMENT BEFORE THE LD. CIT(A). THE ASSESSEE ARGUED THAT ON PERUSAL OF THE REASONS RECORDED BY THE AO IT WAS FOUND THAT THE REASONS ARE BASED ON SURMISES AND CONJECTU RES AND IRRELEVANT CONSIDERATIONS. THE ASSESSEE HAD SOLD SOME OF ITS INVESTMENTS IN SH ARES IN CASH. THE SOURCE OF CASH DEPOSITS OF RS.57,75,000/- IN ABN AMRO BANK ON DIFF ERENT DATES IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2007-08 WAS THE SAL E PROCEEDS OF INVESTMENT. THE DETAILS OF CASH BOOK PREPARED BY THE ASSESSEE IN EX CEL SHEET FOR A.YRS. 2006-07 AND 2007-08 RESPECTIVELY WERE FILED BEFORE THE LD. CIT( A). IT WAS SUBMITTED THAT SOURCE OF THE CASH DEPOSITS IN THE BANK ACCOUNT WAS DULY EXPL AINED. THE FRESH INVESTMENTS WERE MADE BY ACCOUNT PAYEE CHEQUES. THE ASSESSEE HAS FUR NISHED DETAILED DATE WISE CASH TRANSACTIONS FOR BOTH THE YEARS. THE COPY OF THE BA NK STATEMENT FOR BOTH THE YEARS WERE ALSO FURNISHED. IN VIEW OF THE ABOVE FACTS IT WAS S UBMITTED THAT THERE WAS NO ESCAPEMENT OF INCOME AS ALLEGED IN THE REASON U/S 1 48 OF THE ACT BY THE AO. THE LD. CIT(A) UPHELD THE REOPENING OF THE ASSESSMENT BY TH E AO FOR BOTH THE YEARS UNDER CONSIDERATION BY OBSERVING AS UNDER :- I HAVE CONSIDERED THE SUBMISSION OF THE AR OF THE APPELLANT AND PERUSED THE FACTS OF THE CASE AND THE MATERIAL AVAILABLE ON RECORDS,. TH IS GROUND OF APPEAL IS AGAINST THE VALIDITY OF THE RE-ASSESSMENT PROCEEDINGS INITIATED BY THE AO. I HAVE CAREFULLY PERUSED THE SUBMISSIONS MADE BY THE APPELLANT. THE APPELLAN T HAS CHALLENGED THE VALIDITY OF THE ORDER U/S 147 AND THE JURISDICTION OF THE AO FOR TA KING SUCH AN ACTION. THE APPELLANT ITSELF HAS ADMITTED THAT PRIOR TO SUCH PROCEEDINGS U/S 147 THE RETURN WAS ONLY PROCESSED U/S 143(1). THE HONBLE SUPREME COURT IN RAJESH JHA VERI STOCK BROKERS PRIVATE LTD. V. ACIT (2007) 291 ITR 500 (SC) HAS VERY CATEGORICALLY HELD THAT INTIMATION U/S 143(1) CANNOT BE TREATED AS AN ORDER OF ASSESSMENT AND THE RE BEING NO ASSESSMENT U/S 143(3), ITA NOS.1479&1480/KOL/2011& C.O.NOS.69&70/KOL/2012 ITO.WD.9(1).KOL VS M/S.TRIMLINE VYAPAAR PVT. LTD. A .YRS. 2006-07 & 2007-08 4 THE QUESTION OF CHANGE OF OPINION DOES NOT ARISE. T HE HONBLE SUPREME COURT HAS VERY CATEGORICALLY HELD THAT :IF THE ASSESSING OFFICER FOR WHATEVER REASON TO B ELIEVE THAT INCOME HAS ESCAPED ASSESSMENT IT CONFERS JURISDICTI ON TO REOPEN THE ASSESSMENT. AND THAT THE AO IS FREE TO INITIATE PROCEEDINGS U/S 147 AND FAILURE TO TAKE STEPS UNDER SECTION 143(3) WILL NOT RENDER THE AO POWERLESS TO INITIATE RE-ASSESSMENT PROCEEDINGS EVEN WHEN INTIMATION U/S 143(1) HAS BEEN ISSUED. THEREFORE, RESPECTFULLY FOLLOWING THE J UDGEMENT OF HONBLE SUPREME COURT IN RAJESH JHAVERI STOCK BROKERS PRIVATE LTD. V. ACIT(S UPRA) I UPHOLD THE ACTION OF THE AO IN INITIATING THE RE-ASSESSMENT PROCEEDINGS AND HEN CE, THIS GROUND OF APPEAL OF THE APPELLANT IS DISMISSED. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND MATERIALS AVAILABLE ON RECORD. THE REASON S FOR REOPENING OF THE ASSESSMENT FOR BOTH THE YEARS ARE SAME EXCEPT WITH CHANGE OF F IGURES. THE REASONS FOR REOPENING OF ASSESSMENT WAS THAT THERE WAS DEPOSITS IN CASH A S WELL AS CHEQUE IN THE BANK ACCOUNT MAINTAINED BY THE ASSESSEE WITH ABN AMRO BA NK AND THE ASSESSEE HAVING ONLY INTEREST INCOME WHICH WAS MUCH LESS THAN THE A MOUNT OF DEPOSIT AND HAVE NOT RECEIVED ANY FRESH CAPITAL OR LOAN DURING THE YEARS AND NOT SOLD ANY SHARES OR INVESTMENT EXCEPT FOR RS.5,51,420/- IN A.YR. 2007-0 8 THERE WAS NO SOURCE FOR MAKING AFORESAID DEPOSIT IN THE ABN AMRO BANK AND ON THESE FACTS THE AO FOUND BELIEF THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR BOTH THE YEARS UNDER APPEAL. 5.1. WE FIND IN THE ULTIMATE ASSESSMENT MADE FOR A. YR. 2006-07 THE AO FOUND THAT THE ASSESSEE IN ITS BOOKS OF ACCOUNT SHOWED SALE OF UNQUOTED SHARES IN CASH OF RS.99,40,000/-AND AS THE ASSESSEE COULD NOT SUBSTAN TIATE THE SALE TRANSACTION RECORDED IN THE BOOKS IN CASH WHICH ACCORDING TO THE AO WAS NOT PROVED AND THEREFORE THE AO ADDED THE AMOUNT TO THE INCOME OF THE ASSESSEE. 5.2. SIMILARLY THE IMPUGNED ORDER OF THE RE-ASSESSM ENT PASSED FOR A.YR.2007-08 SHOWS THAT THE ONLY ADDITION MADE IN THE RE-ASSESSM ENT WAS RS.57,75,000/- WHICH REPRESENTS SALE OF UNQUOTED SHARES IN CASH RECORDED IN THE BOOKS OF THE ASSESSEE WHICH ACCORDING TO THE AO COULD NOT BE PROVED BY THE ASSE SSEE. 5.3. THUS WE FIND THAT IN THE INSTANT CASE THE INCO ME WHICH WAS ADDED IN THE RE- ASSESSMENT WAS NOT ON THE BASIS OF ANY SUBSEQUENT I NFORMATION RECEIVED BY THE AO ITA NOS.1479&1480/KOL/2011& C.O.NOS.69&70/KOL/2012 ITO.WD.9(1).KOL VS M/S.TRIMLINE VYAPAAR PVT. LTD. A .YRS. 2006-07 & 2007-08 5 BUT WAS ONLY FOR THE REASON THAT THE ASSESSEE COULD NOT PROVE SALE TRANSACTION OF UNQUOTED EQUITY SHARES ALREADY RECORDED IN THE BOOK S OF ACCOUNT. 5.4. FURTHER WE FIND THAT IN THE RECORDED REASONS T HE AO FORMED BELIEF ABOUT ESCAPEMENT OF INCOME ON THE GROUND THAT THERE WAS D EPOSIT IN AMB AMRO BANK OF THE ASSESSEE BY CASH AS WELL AS BY CHEQUE AND THER E WAS INCREASE IN CASH BALANCE AS AT THE END OF THE RELEVANT YEARS IN COMPARE TO THE OPE NING CASH OF THOSE YEARS AND AS IN THE OPINION OF THE AO THE ASSESSEE HAS NOT SOLD ANY SHARES DURING THE YEAR UNDER CONSIDERATION AND THEREFORE HE BELIEVED THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. IT WAS NOT THE CASE OF THE REVENUE THAT BANK ACCOUNT WITH ABN AMRO BANK OF THE ASSESSEE WAS NOT A DISCLOSED BANK ACCOU NT RECORDED IN THE REGULAR BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE. 5.5. FURTHER IN THE IMPUGNED YEARS THE AO ADMITTED THAT THE ASSESSEE HAS SHOWN SALE OF SHARES IN BOTH THE YEARS AND THEREFORE THE CONTRARY FACTS OBSERVED IN THE RECORDED REASONS WERE ERRONEOUS. IN THE ABOVE CIRCU MSTANCES WE FIND THAT THE BELIEF ABOUT THE ESCAPEMENT OF INCOME WAS FORMED ON THE BA SIS OF AN ERRONEOUS ASSUMPTION OF FACTS AND THEREFORE REOPENING OF ASSESSMENT WAS NOT VALID. FURTHER WE FIND THAT NO ADDITION WAS MADE IN BOTH THE YEARS UNDER APPEAL ON THE GROUND THAT ANY DEPOSIT EITHER IN CASH OR IN CHEQUE MADE BY THE ASSESSEE WITH ABN AMRO BANK FOR WHICH REOPENING WAS MADE IN THE INSTANT CASE. 5.6. WE FIND THAT NO ADDITION WAS MADE IN RESPECT O F CHEQUE DEPOSIT WITH ABN AMRO BANK BY THE ASSESSEE IN BOTH THE YEARS. AS PER RECORDED REASONS THE CASH DEPOSIT IN THE ABN AMRO BANK BY THE ASSESSEE IN THE A.YR. 2006-07 WAS RS.36,15,000/- AND IN THE A.YR. 2007-08 ALSO WAS RS .36,15,000/- WHEREAS ADDITION MADE ON RE-ASSESSMENT IN THE A.YR.2006-07 WAS RS.99 ,40,000/- AND IN THE A.YR.2007- 08 WAS RS.57,75,000/- BOTH OF WHICH REPRESENTS SALE OF UNQUOTED EQUITY SHARES IN CASH BY THE ASSESSEE AS PER ITS BOOKS OF ACCOUNT. ITA NOS.1479&1480/KOL/2011& C.O.NOS.69&70/KOL/2012 ITO.WD.9(1).KOL VS M/S.TRIMLINE VYAPAAR PVT. LTD. A .YRS. 2006-07 & 2007-08 6 5.7. IT IS NOT THE CASE OF THE REVENUE THAT IN THE INSTANT CASE ASSESSMENTS WERE REOPENED FOR THE REASONS THAT ANY INFORMATION WAS R ECEIVED BY THE DEPARTMENT ON THE BASIS OF WHICH A BELIEF WAS FORMED BY THE AO TO THE EFFECT THAT THE SALE OF UNQUOTED EQUITY SHARES CLAIMED BY THE ASSESSEE FOR BOTH THE YEARS WAS NOT GENUINE OR BOGUS. 5.8. THUS WE FIND THAT NO ADDITION WAS MADE IN THE ASSESSMENT ORDER IN RESPECT OF RECORDED REASONS FOR WHICH ASSESSEMENTS WERE REOPEN ED IN THE CASE OF THE ASSESSEE AND THE ADDITIONS WERE MADE WITH RESPECT TO ISSUES FOR WHICH NO REASONS WERE RECORDED U/S 148(2) OF THE IT ACT. WE FIND THAT THE HONBLE DELHI HIGH COURT IN THE CASE OF RANBAXY LABORATORIES LTD. VS CIT REPORTED I N 336 ITR 136 (DELHI) HAS HELD AS UNDER :- HELD, THAT SECTION 148 WAS SUPPLEMENTARY AND COMPL EMENTARY TO SECTION 147. SUB- SECTION (2) OF SECTION 148 MANDATES REASONS FOR ISS UANCE OF NOTICE BY THE ASSESSING OFFICER AND SUB-SECTION (1) MANDATES SERVICE OF NOT ICE TO THE ASSESSEE BEFORE THE ASSESSING OFFICER PROCEEDS TO ASSESS, REASSESS OR R ECOMPUTE ESCAPED INCOME. SECTION 147 MANDATES RECORDING OF REASONS TO BELIEVE BY THE ASSESSING OFFICER THAT THE INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT. ALL THESE CONDITIONS WERE REQUIRED TO BE FULFILLED TO ASSESS OR REASSESS THE ESCAPED INCOME CHARGEABLE TO TAX. UNDER EXPLANATION 3 IF DURING THE COURSE OF THE PROCEEDINGS THE ASSES SING OFFICER COMES TO THE CONCLUSION THAT SOME ITEMS HAVE ESCAPED ASSESSMENT, THEN NOTWI THSTANDING THAT THOSE ITEMS WERE NOT INCLUDED IN THE REASONS TO BELIEVE AS RECORDED FOR INITIATION OF THE PROCEEDINGS AND THE NOTICE, HE WOULD BE COMPETENT TO MAKE ASSESSMEN T OF THOSE ITEMS. FOR EVERY NEW ISSUE COMING BEFORE THE ASSESSING OFFICER DURING TH E COURSE OF PROCEEDINGS OF ASSESSMENT OR REASSESSMENT OF ESCAPED INCOME, AND W HICH HE INTENDS TO TAKE INTO ACCOUNT, HE WOULD BE REQUIRED TO ISSUE A FRESH NOTI CE UNDER SECTION 148. THE ASSESSING OFFICER WAS SATISFIED WITH THE JUSTIFICATIONS GIVEN BY THE ASSESSEE REGARDING THE ITEMS OF CLUB FEES, GIFTS AND PRESENTS AND PROVISION FOR LEA VE ENCASHMENT, BUT DURING THE ASSESSMENT PROCEEDINGS, HE FOUND THE DEDUCTION UNDE R SECTIONS 80HH AND 80-I AS CLAIMED BY THE ASSESSEE TO BE NOT ADMISSIBLE. HE CO NSEQUENTLY PROCEEDED TO MAKE DEDUCTIONS UNDER SECTIONS 80HH AND 80-I AND ACCORDI NGLY REDUCED THE CLAIM ON THESE ACCOUNTS. THE VERY BASIS OF INITIATION OF PROCEEDIN GS FOR WHICH REASONS TO BELIEVE WERE RECORDED WAS INCOME ESCAPING ASSESSMENT IN RESPECT OF ITEMS OF CLUB FEES, GIFTS AND PRESENTS, ETC. BUT WHILE THESE ITEMS WERE NOT DISTU RBED, THE ASSESSING OFFICER PROCEEDED TO REDUCE THE CLAIM OF DEDUCTION UNDER SECTIONS 80H H AND 80-I WHICH WAS NOT PERMISSIBLE. THE TRIBUNAL WAS RIGHT IN HOLDING THAT THE ASSESSING OFFICER HAD THE JURISDICTION TO REASSESS ISSUES OTHER THAN THE ISSU ES IN RESPECT OF WHICH PROCEEDINGS WERE INITIATED BUT HE WAS NOT JUSTIFIED WHEN THE RE ASONS FOR THE INITIATION OF THOSE PROCEEDINGS CEASED TO SURVIVE. 5.9. FURTHER THE HONBLE RAJASTHAN HIGH COURT IN TH E CASE OF CIT VS SHRI RAM SINGH 306 ITR 343 (RAJ) HAS HELD AS UNDER :- ITA NOS.1479&1480/KOL/2011& C.O.NOS.69&70/KOL/2012 ITO.WD.9(1).KOL VS M/S.TRIMLINE VYAPAAR PVT. LTD. A .YRS. 2006-07 & 2007-08 7 PURSUANT TO SEARCH OPERATIONS, THE ASSESSING OFFICE R ISSUED A NOTICE TO THE ASSESSEE UNDER SECTION 148 OF THE INCOME-TAX ACT, 1961, ON T HE GROUND THAT THE ASSESSEE HAD PURCHASED A PLOT OF LAND FROM UNDISCLOSED SOURCES O F INCOME. THE ASSESSEE EXPLAINED THAT HE HAD PURCHASED THE LAND FROM HIS AGRICULTURA L INCOME WHICH WAS LYING DEPOSITED WITH A COMPANY AND FILED THE RETURN ACCORDINGLY. TH E ASSESSING OFFICER MADE AN ADDITION TO THE INCOME OF THE ASSESSEE ON THE GROUN D OF UNEXPLAINED INVESTMENT. THE COMMISSIONER OF INCOME-TAX (APPEALS) UPHELD THE ADD ITION MADE BY THE ASSESSING OFFICER ON THE GROUND THAT THE ASSESSEE HAD FAILED TO PROVE THE SOURCE OF THE DEPOSITS. THE TRIBUNAL HELD THAT THE PROCEEDINGS FOR REASSESS MENT UNDER SECTION 148 OF THE ACT WERE INITIATED BY THE ASSESSING OFFICER BASED ON NO N-EXISTING FACTS. ON APPEAL: HELD, DISMISSING THE APPEAL, THAT THE TRIBUNAL WAS JUSTI FIED IN HOLDING THAT THE PROCEEDINGS FOR REASSESSMENT UNDER SECTION 148 OF T HE ACT WERE INITIATED BY THE ASSESSING OFFICER BASED ON NON-EXISTING FACTS, BECA USE ULTIMATELY THE ASSESSEE HAD BEEN ABLE TO EXPLAIN THE INCOME, WHICH THE ASSESSING OFF ICER BELIEVED TO HAVE ESCAPED ASSESSMENT. THE ASSESSING OFFICER WAS JUSTIFIED IN INITIATING THE PROCEEDINGS UNDER SECTION 147 OF THE ACT. BUT ONCE THE ASSESSING OFFI CER REACHED THE CONCLUSION THAT THE INCOME WHICH HE BELIEVED TO HAVE ESCAPED INVESTMENT HAD BEEN EXPLAINED, THE ASSESSING OFFICER DID NOT CONTINUE TO POSSESS JURISDICTION TO TAX ANY OTHER INCOME, WHICH CAME TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PROCEE DINGS. 5.10. IN VIEW OF THE ABOVE SETTLED LEGAL POSITION I N OUR CONSIDERED OPINION THE IMPUGNED ORDERS OF THE RE-ASSESSMENT ARE UNSUSTAINA BLE AS THE REOPENING OF ASSESSMENT ON THE RECORDED REASONS WAS NOT VALID. W E THEREFORE ALLOW THIS GROUND OF CROSS OBJECTION OF THE ASSESSEE FOR BOTH THE YEARS. 5.11. IN VIEW OF OUR ABOVE DECISION THE GROUNDS OF APPEAL OF THE REVENUE FOR BOTH THE YEARS HAVE BECOME INFRUCTUOUS AND ONLY ACADEMIC IN NATURE. WE THEREFORE REFRAIN FROM ADJUDICATING THE SAME AND DISMISS THE APPEALS OF THE REVENUE FOR BOTH THE YEARS UNDER CONSIDERATION. 6. IN THE RESULT THE APPEALS OF THE REVENUE ARE DIS MISSED AND THE CROSS OBJECTIONS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE COURT ON 21.06.2013. SD/- SD/- [ .#! $'# , ] [ .., ,, , ] [MAHAVIR SINGH ] [N.S.SAINI] JUDICIAL MEMBER ACCOUNTANT MEMBER ( (( (4 4 4 4) )) ) DATE: 21.06.2013. R.G.(.P.S.) ITA NOS.1479&1480/KOL/2011& C.O.NOS.69&70/KOL/2012 ITO.WD.9(1).KOL VS M/S.TRIMLINE VYAPAAR PVT. LTD. A .YRS. 2006-07 & 2007-08 8 6 0 .$$7 87(9- COPY OF THE ORDER FORWARDED TO: 1. M/S.TRIMLINE VYAPAAR PVT. LTD., 6, SURA EAST ROAD, KOLKATA-700010. 2 I.T.O., WARD-9(1), KOLKATA. 3 . CIT KOLKATA 4. CIT(A)-VIII, KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. /7 .$/ TRUE COPY, 62/ BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES