Ms. Vidya Somani, New Delhi V. ITO, New Delhi

ITA 1265/DEL/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3815 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-06-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2001-2002
• Appeal Filed On: 22-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MONA MOHANTI
• Assessee Lawyers: SANJAY MEHRA
• Keywords: Business income; Assessment record; Reassessment proceedings
• Section: 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH H : NEW DELHI BEFORE SHRI C.L.SETHI, JM AND SHRI R.C.SHARMA, AM ITA NO.1265/DEL/2010 ASSESSMENT YEAR : 2001-02 MS.VIDYA SOMANI, 243/102, SITA RAM APARTMENTS, 102, PATPARGANJ, NEW DELHI 110 092. PAN NO.ABVPS2416G. VS. INCOME TAX OFFICER, WARD-35(1), NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SANJAY MEHRA, CA. RESPONDENT BY : SMT.MONA MOHANTI, SR.DR. ORDER PER R.C.SHARMA, AM : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF CIT(A) DATED 24.11.2009 FOR THE AY 2001-02, IN THE MATTER OF ORD ER PASSED U/S 147/144 OF THE IT ACT. 2. IN THIS APPEAL, ASSESSEE HAS CHALLENGED VALIDITY OF REOPENING U/S 147 AND ALSO SERVICE OF NOTICE AT THE PROPER ADDRESS BY FOL LOWING PROPER PROCEDURE PRESCRIBED UNDER THE IT ACT. THE ASSESSEE HAS ALSO CHALLENGED ADDITION OF RS.2 LAKHS SUSTAINED BY THE CIT(A) U/S 69A OF THE ACT. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PER USED. IN THIS CASE, AO GOT AN INFORMATION THAT ASSESSEE WAS IN RECEIPT OF ENTR Y OF RS.2 LAKHS FROM SHRI SANJAY MOHAN THROUGH CHEQUE NO.210695 DURING THE FINANCIAL YEAR UNDER CONSIDERATION. ON RECEIPT OF ABOVE INFORMATION, NOTICE U/S 148 WAS ISSUED AFTER RECORDING REASONS FOR ISSUE OF THE NOTICE AND GETTING APPROVAL FROM T HE ADDITIONAL CIT, RANGE-35, ITA-1265/DEL/2010 2 NEW DELHI. THE AO FURTHER OBSERVED THAT SINCE NO O NE APPEARED IN RESPONSE TO NOTICE AND NO RETURN OF INCOME WAS FILED BY THE ASS ESSEE, HE COMPLETED THE ASSESSMENT U/S 147/144 WHEREIN HE HAS ESTIMATED INC OME OF RS.50,000/- AND ALSO MADE AN ADDITION OF RS.2 LAKHS ON ACCOUNT OF ALLEGE D ENTRY RECEIVED BY THE ASSESSEE. 4. BY THE IMPUGNED ORDER, CIT(A) FOUND THAT ASSESSM ENT HAS BEEN VALIDLY REOPENED AND THERE WAS PROPER SERVICE OF NOTICE. W ITH REGARD TO MERITS OF THE ADDITION, HE OBSERVED THAT AO HAS REOPENED THE ASSE SSMENT WITHOUT VERIFYING THE ORIGINAL ASSESSMENT RECORDS OF THE ASSESSEE AS HE W AS NOT HAVING THE JURISDICTION OVER THE CASE. HE OBSERVED THAT IN THE ABSENCE OF ORIGINAL ASSESSMENT RECORDS, THE AO HAS WRONGLY ESTIMATED OTHER INCOME OF RS.50,000/ -. THE CIT(A) FOUND THAT ASSESSEE IS FILING THE RETURN OF INCOME AND AO SHOU LD HAVE VERIFIED THE DETAILS OF INCOME FROM THE PAN DATABASE AS RETURN OF INCOME WA S FILED BY THE ASSESSEE ON 31.10.2001 AND RETURN MUST HAVE ALSO BEEN PROCESSED BY THE AO BEFORE ISSUE OF NOTICE U/S 148. AS PER CIT(A), THE ASSESSEE HAS FI LED HER RETURN OF INCOME WHEREIN INCOME WAS DECLARED AT RS.1,49,950/- WHICH INCLUDES INCOME FROM BUSINESS AND PROFESSION AND INCOME FROM CAPITAL GAINS AND OTHER SOURCES. THE AO WAS ACCORDINGLY DIRECTED TO ACCEPT THE RETURN OF INCOME FILED BY THE ASSESSEE. IT WAS CONTENDED BEFORE THE CIT(A) THAT ASSESSEE WAS IN RE CEIPT OF RS.2 LAKHS FROM SHRI SANJAY MOHAN, THE PAYMENT SO RECEIVED WAS INCLUDED BY THE ASSESSEE IN HER GROSS BUSINESS RECEIPTS OF RS.3,60,000/-. NET PROFIT OF RS.1,08,016/- WAS SHOWN AS NET INCOME FROM BUSINESS AND PROFESSION AFTER DEDUCTING EXPENDITURE INCURRED FOR EARNING THE INCOME. THE CIT(A) DELETED THE ESTIMAT ED ADDITION OF RS.50,000/- MADE BY THE AO AND DIRECTED THE AO TO RETAIN THE AD DITION OF RS.2 LAKHS U/S 69B, AGAINST WHICH THE ASSESSEE IS IN FURTHER APPEAL BEF ORE US. 5. WE HAVE CONSIDERED THE RIVAL CONTENTIONS, CAREFU LLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND FROM THE RECORD THAT ASSESSEE HAS ALREADY FILED HER REGULAR RETURN OF INCOME ON 31.10.2001 MUCH PRI OR TO ISSUE OF NOTICE U/S 148 ITA-1265/DEL/2010 3 DATED 28.3.2008, AND WITHOUT VERIFYING THE SAME, TH E AO HAS FRAMED ASSESSMENT ON 26.12.2008 U/S 147/144, WHEREIN WITHOUT TAKING C OGNIZANCE OF THIS RETURN, THE AO HAS ESTIMATED INCOME OF RS.50,000/- AND ALSO MAD E AN ADDITION OF RS.2 LAKHS ON ACCOUNT OF ENTRY ALLEGED TO BE RECEIVED BY THE A SSESSEE. SINCE THE RETURN FILED BY THE ASSESSEE ALREADY DECLARED INCOME OF RS.1,08, 016/-, THE CIT(A) DIRECTED THE AO FOR DELETION OF RS.50,000/- ADDED BY HIM ON ESTI MATED BASIS. FROM THE COMPUTATION OF INCOME, BALANCE SHEET AND PROFIT & L OSS ACCOUNT FILED ALONGWITH THE RETURN OF INCOME, WE FOUND THAT ASSESSEE HAD SH OWN GROSS BUSINESS RECEIPT OF RS.3,60,000/- WHICH INCLUDED RS.2 LAKHS RECEIVED FR OM SHRI SANJAY MOHAN. SINCE RS.2 LAKHS HAS ALREADY BEEN FORMED PART OF THE GROS S RECEIPTS SHOWN BY THE ASSESSEE, THERE IS NO JUSTIFICATION FOR MAKING SEPA RATE ADDITION OF RS.2 LAKHS U/S 69B. OUT OF THE GROSS RECEIPT OF RS.3,60,000/- AFT ER CLAIM OF EXPENSES, THE ASSESSEE HAD SHOWN NET PROFIT FROM BUSINESS AT RS.1 ,08,016/-. THE TOTAL INCOME DECLARED BY THE ASSESSEE UNDER THE HEAD CAPITAL GA IN WAS RS.38,933/-, BUSINESS INCOME AT RS.1,08,016/- AND INCOME FROM OTHER SOURC ES AT RS.10,798/-. THUS, THE GROSS TOTAL INCOME OF RS.1,57,747/- WAS ALREADY DEC LARED BY THE ASSESSEE IN HER RETURN OF INCOME FILED MUCH PRIOR TO ISSUE OF NOTIC E U/S 148. SINCE THE ASSESSEE HAS NOT FURNISHED EVIDENCE IN SUPPORT OF THE EXPEND ITURE SO INCURRED UNDER THE HEAD BUSINESS INCOME, WHEREIN AGAINST GROSS RECEIPT OF RS.3,60,000/-, THE ASSESSEE HAD SHOWN NET PROFIT OF RS.1,08,016/-, WE DIRECT TH E AO TO DISALLOW 10% OF THE EXPENDITURE SO CLAIMED. ACCORDINGLY, AO IS DIRECTE D TO TAKE NET PROFIT FROM BUSINESS AT RS.1,33,000/-, WHICH COMPRISES OF INCOM E OF RS.1,08,016/- DECLARED BY THE ASSESSEE AND RS.25,000/- ON ACCOUNT OF DISALLOW ANCE OF 10% OF THE EXPENDITURE SO CLAIMED. ACCORDINGLY, GROSS TOTAL I NCOME OF ASSESSEE IS TO BE TAKEN AT RS.1.82 LAKHS IN PLACE OF RS.1.57 LAKHS AS DECLA RED BY THE ASSESSEE. THE AO IS DIRECTED TO VERIFY THE CLAIM OF DEDUCTION U/S 80L, 88 AND 88C OF THE IT ACT AND TO RECOMPUTE THE NET TAXABLE INCOME. WE DIRECT ACCORD INGLY. 6. WE DO NOT FIND ANY INFIRMITY IN THE ORDERS OF LO WER AUTHORITIES IN INITIATING THE REASSESSMENT PROCEEDINGS AND ASSUMING JURISDICT ION BY ISSUE OF NOTICE U/S 148. ITA-1265/DEL/2010 4 ACCORDINGLY, GROUND TAKEN BY THE ASSESSEE WITH REGA RD TO ASSUMPTION OF JURISDICTION U/S 147 BY THE AO IS DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED IN PART. DECISION PRONOUNCED IN THE OPEN COURT ON 11 TH JUNE, 2010. SD/- SD/- (C.L.SETHI) (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 11.06.2010. VK. COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT DEPUTY REGISTRAR ITA-1265/DEL/2010 5