K.Suresh, CHENNAI V. DCIT, CHENNAI

ITA 571/CHNY/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4261 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-06-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 20-03-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 07-03-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SUPRIYO PAL
• Assessee Lawyers: K RAVI
• Keywords: Reopening of assessment; Unexplained investment; Gift; Depreciation; Income from undisclosed sources; Peak credit; Cost of acquisition; Tangible material; Bad and doubtful debts; Difference of opinion; Corroborative evidences; Notional interest; Onus to prove; Revised return; Reason to believe; Change of opinion
• Section: 80C; 143(3); 147; 69; 148; 139

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI , . ' # , $ #% BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER . / ITA NOS. 568 TO 572/MDS/2017 / ASSESSMENT YEARS : 2008-09 TO 2012-13 MR. K. SURESH, OLD NO.12A, NEW NO.24, SWARNA MANGALAM, EAST ROAD, WEST CIT NAGAR, NANDANAM, CHENNAI 600 035. PAN AOBPS4696F ( /APPELLANT) V. THE DEPUTY COMMISSIONER OF INCOME-TAX, NON-CORPORATE WARD-2, CHENNAI. RESPONDENT) / APPELLANT BY : SHRI K. RAVI, ADVOCATE / RESPONDENT BY : SHRI SUPRIYO PAL, JCIT ! / DATE OF HEARING : 05.04.2017 '# ! / DATE OF PRONOUNCEMENT : 19.06.2017 & / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THESE APPEALS BY THE ASSESSEE ARE DIRECTED AGAIN ST THE COMMON ORDER OF THE COMMISSIONER OF INCOME-TAX(APPE ALS)2, CHENNAI, DATED 2.3.2017. - - ITA 568 TO 572/M/17 2 2. FIRST, WE TAKE UP ITA NOS.568 TO 571/MDS/2017. THE FIRST COMMON ISSUE IN ALL THESE APPEALS IS WITH REGARD TO REOPENING OF THE ASSESSMENT ON THE BASIS ON A NON-EST RETURN OF INCOME IN THESE ASSESSMENT YEARS. 3. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL ON RECORD. REGARDING FRAMING OF ASSESSMENT ON NON- EST RETURN OF INCOME, THE LD. A.R MADE AN ENDORSEMENT THAT THE ASSESSEE IS NOT INTERESTED IN PURSUING THIS GROUND. ACCORDI NGLY, THIS GROUND IS DISMISSED AS NOT PRESSED IN ALL THESE ASS ESSMENT YEARS 2008-09 , 2009-10, 2010-11 & 2012-13. HENCE, THIS GROUND IN ALL THESE APPEALS STANDS DISMISSED. 4. THE NEXT COMMON GROUND IS WITH REGARD TO VALIDI TY OF REOPENING OF THE ASSESSMENT FOR A.YS 2008-09, 2009- 10, 2010-11 & 2012-13. 4.1 WE CONSIDER THE FACTS FOR THE A.Y 2008-09, SIN CE THE FACTS ARE COMMON IN ALL THESE ASSESSMENT YEARS. 4.2 THE FACTS OF THE CASE ARE THAT THERE WAS A SAV INGS ACCOUNT MAINTAINED IN AXIS BANK ACCOUNT BY THE ASSE SSEES MOTHER (WHO IS THE PRIMARY HOLDER), JOINTLY WITH TH E ASSESSEE. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS FOR THE ASST. - - ITA 568 TO 572/M/17 3 YEAR 2011-12, THE ASSESSEE WAS ASKED TO EXPLAIN THE TRANSACTIONS IN THE AFORESAID ACCOUNT BY THE ITO, B USINESS WARD-II(4). AS PER THE ORAL ADVICE OF THE ITO, DUR ING THE ASSESSMENT PROCEEDINGS OF ASST. YEAR 2011-12, THE A SSESSEE OWNED UP THE TRANSACTIONS IN THE SAID BANK ACCOUNT AND FILED REVISED STATEMENT OF INCOME INCLUDING TRANSACTIONS FROM THE SAID BANK ACCOUNT FOR ASST. YEARS 2008-09 TO 2012-13. 4.3 THE REVISED RETURN FOR ASST. YEAR 2008-09 WAS FILED ON 17.2.2014, WHICH WAS BEYOND ALL THE TIME LIMITS PRE SCRIBED UNDER THE INCOME-TAX ACT, 1961. THE AO GAVE A NOTICE U/S .148 OF THE ACT ON 14.3.2014. 4.4 THE REASONS RECORDED BY THE AO FOR ISSUING OF NOTICE U/S.148 OF THE ACT WAS GIVEN BY LETTER DATED 5.2.20 15, THE CONTENT OF WHICH IS REPRODUCED BELOW: DURING THE COURSE OF SCRUTINY PROCEEDINGS IN THE CASE OF THE ASSESSEE FOR THE A.Y 2011-12, THE ASSESSEE WAS FOUN D TO BE HOLDING A JOINT ACCOUNT WITH HIS MOTHER SMT K.MANAG ALAM IN AXIS BANK, ADYAR BRANCH, CHENNAI. APPARENTLY ASSESS EE HAS USED THIS BANK ACCOUNT FOR HIS REAL ESTATE BUSINESS AND TRANSACTIONS MADE IN THIS ACCOUNT ARE NOT OFFERED/A CCOUNTED IN BOOKS/RETURN OF INCOME FILED BY ASSESSEE FOR THISE YEARS INCLUDING F.Y 2007-08. THE BANK ACCOUNT HAS SUBSTA NTIAL CASH DEPOSITS OF ABOUT 1.80 CRORES DURING THE FINANCIAL YEAR 2007-08 - - ITA 568 TO 572/M/17 4 RELEVANT TO A.Y 2008-09. MEANWHILE THE ASSESSEE HA S VIDE LETTER DATED 17.02.2014 FILED REVISED RETURN OF INC OME/STATEMENT FOR THE A.Y 2008-09 ADMITTING A REVISED TOTAL INCOM E OF ` 1,30,86,080/- COVERING THE TRANSACTIONS MADE IN THI S BANK ACCOUNT. 4.5 THE LD. A.R SUBMITTED THAT A PERUSAL OF THE AB OVE, INDICATES THAT THE AO WANTED TO EXAMINE THE SOURCE FOR CASH DEPOSITS AND THAT BY ITSELF DO NOT CONSTITUTE A VAL ID GROUND FOR REOPENING OF THE ASSESSMENT. 4.6 HE RELIED ON THE DECISION OF THE SUPREME COUR T IN CHHUGAMAL RAJPAL VS. CIT (79 ITR 603) IS CLEARLY AP PLICABLE TO THE FACTS OF THE PRESENT CASE. IN THAT CASE BEFORE THE SUPREME COURT, THE PURPORTED REASONS RECORD FOR REOPENING T HE ASSESSMENT WERE INTER ALIA:- IT APPEARS THAT THESE PERSONS ARE NAME-LENDERS AND THE TRANSACTIONS ARE BOGUS. HENCE, PROPER INVESTIGATIO N REGARDING THESE LOANS IS NECESSARY. HE SUBMITTED THAT SUPREME COURT DID NOT FIND THAT T HESE WERE SUFFICIENT REASONS FOR REOPENING THE ASSESSMENT. W ITH REGARD TO THE SENTENCE HENCE, PROPER INVESTIGATION REGARD ING THESE LOANS IS NECESSARY, THE SUPREME COURT OBSERVED THA T THIS - - ITA 568 TO 572/M/17 5 CONCLUSION THAT THERE IS A CASE FOR INVESTIGATION A S TO THE TRUTH OF THE ALLEGED TRANSACTIONS IS NOT THE SAME THING AS S AYING THAT THERE ARE REASONS TO ISSUE A NOTICE UNDER SECTION 1 48. 4.7 HE RELIED ON THE JUDGEMENT OF DELHI HIGH COU RT IN THE CASE OF CIT VS. BATRA BHATTA COMPANY (321 ITR 526 (DEL), WHEREIN IT WAS HELD AS BELOW : 4.8 HE RELIED ON THE JUDGEMENT OF BOMBAY HIGH CO URT IN THE CASE OF NIVI TRADING LIMITED VS. UNION OF IN DIA (375 ITR 308)(BOM.), WHEREIN IT WAS HELD THAT: MERE FACT THAT MORE DETAILS WERE SOUGHT OR SOME VERIFICATION WAS SOUGHT WITH REGARD TO VALUE OF THE SE SHARES IN TERMS OF SECTION 47(III), WOULD NOT ENABL E REVENUE TO RESORT TO SECTION 147 4.9 HE RELIED ON THE JUDGEMENT OF DELHI TRIBUNAL IN THE CASE OF BIR BAHADUR SINGH SIJWALI VS. ITO [53 TAXMA NN.COM 366 (DELHI TRIB), THE TRIBUNAL OBSERVED THAT THE AO SHOULD NOT HAVE PROCEEDED ON FALLACIOUS ASSUMPTION THAT BANK D EPOSITS CONSTITUTED UNDISCLOSED INCOME AND OVERLOOKED FACT THAT SOURCE MIGHT BY OTHER THAN ASSESSEES OWN INCOME AND THERE FORE HELD THAT THE REASONS RECORDED BY THE AO, WERE NOT SUFFI CIENT REASONS FOR REOPENING THE ASSESSMENT PROCEEDINGS. AS A - - ITA 568 TO 572/M/17 6 CONSEQUENCE NOTICE U/S.148 OF THE ACT WAS QUASHED. THIS VIEW WAS ALSO ADOPTED IN THE CASE OF GURPAL SINGH VS. IT O (71 TAXMANN.COM 108 (AMRITSAR-TRIB.) 4.10 HE RELIED ON THE JUDGEMENT OF BOMBAY HIGH CO URT IN THE CASE OF PRASHANT S. JOSHI VS. ITO (324 ITR 154) [BOM.], IT WAS HELD THAT REASONS WHICH ARE RECORDED BY THE AO FOR REOPENING AN ASSESSMENT, ARE ONLY REASONS WHICH CAN BE CONSIDERED WHEN FORMATION OF BELIEF IS IMPUGNED; SU CH REASONS CANNOT BE ALLOWED TO GROW WITH AGE AND INGENUITY BY DEVISING NEW GROUNDS IN REPLIES AND AFFIDAVITS NOT ENVISAGE WHEN REASONS FOR REOPENING AN ASSESSMENT WERE RECORDED. 4.11 HE RELIED ON THE JUDGEMENT OF BOMBAY HIGH COU RT IN THE CASE OF HINDUSTAN LEVER LTD. VS. R.B.WADKAR ACIT (266 ITR 48)(BOM.), IT WAS HELD THAT REASONS RECORDED BY THE AO CANNOT BE SUPPLEMENTED BY FILING AFFIDAVIT OR MAKIN G ORAL SUBMISSION, OTHERWISE REASONS WHICH WERE LACKING IN MATERIAL PARTICULARS WOULD GET SUPPLEMENTED, BY THE TIME MAT TER REACHES COURT, ON STRENGTH OF AFFIDAVIT OR ORAL SUBMISSION ADVANCED. - - ITA 568 TO 572/M/17 7 4.12 IT WAS SUBMITTED THAT THE REASONS RECORDED C ANNOT BE SUPPLEMENTED AFTER ISSUE OF NOTICE U/S.148 AND W HERE REASONS RECORDS FOR REOPENING DOES NOT INDICATE THA T THE AO HAD A BELIEF THAT INCOME HAD ESCAPED ASSESSMENT, TH EN NOTICE US/.148 IS WITHOUT JURISDICTION AND CONSEQUENTLY, T HE NOTICE U/S.148 AND ASSESSMENT MADE ON THAT BASIS SHOULD BE QUASHED. 4.13 HE SUBMITTED THAT IN THE INSTANT CASE, PERUS AL OF THE REASONS RECORDED DOES NOT INDICATE THAT THE AO HAD REASONS TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT. IT IS MORE IN THE NATURE OF A ROVING ENQUIRY. 4.14 HE SUBMITTED THAT THE CIT(APPEALS) WRONGLY OBSERVED THAT THE FOLLOWING SENTENCE IN THE REASONS RECORDED FOR REOPENING THE SOURCE FOR THE CASH DEPOSITS MADE BY THE ASSESSEE NEEDS TO BE EXAMINED.. IS A MERE COMMEN T AND IS NOT THE BASIS FOR RE-OPENING OF THE ASSESSMENT. HO WEVER, A PERUSAL OF THE REASONS RECORDED DOES NOT INDICATE S O. 4.15 HE SUBMITTED THAT THE CIT(APPEALS) HAS WRONG LY INFERRED THE REASONS THAT FROM THE INFORMATION IN THE POSSESSION OF THE AO, WHICH THE AO HAS NOT RECORDED IN THE - - ITA 568 TO 572/M/17 8 REASONS FOR RE-OPENING. THEREFORE, IN THE LIGHT OF THE PRINCIPLES LAID DOWN BY THE ABOVE REFERRED JUDGMENTS, IT IS PR AYED THAT NOTICE U/S.148 MAY BE QUASHED AND CONSEQUENT ASSESS MENT FRAMED UNDER SEC.143(3) R.W.S. 147 OF THE ACT MAY B E ANNULLED. ON THE FACE OF THE BANK STATEMENT (COMMON ANNEXURE A), IT IS CLEARLY MENTIONED THAT THE PRIMARY HOLDER OF THE A CCOUNT IS MRS. K. MANGALAM, WHO IS ASSESSEES MOTHER. THE AO HAS IGNORED THE PRIMARY EVIDENCE THAT THE ACCOUNT IS A JOINT AC COUNT, WHERE ASSESSEES MOTHER IS THE PRIMARY ACCOUNT HOLDER. 4.16 ACCORDING TO LD.A.R, THE AO HAD DISBELIEVED THE EXPLANATIONS OFFERED BY THE ASSESSEE THAT SOURCE FO R CASH DEPOSITS IN AXIS BANK ACCOUNT IF BY WAY OF REPAYMEN T BY PARTIES IN CASH TO WHOM MONIES WERE LENT BY CHEQUES, FOR WA NT OF CONFIRMATION FROM PARTIES. HOWEVER, THE OFFICER CH OOSE TO BELIEVE THAT THE TRANSACTIONS IN THE SAID AXIS BANK ACCOUNT WERE MADE BY THE ASSESSEE BY OVERLOOKING THE FACT THAT T HE PRIMARY HOLDER OF THE ACCOUNT IS MRS. K. MANGALAM, THE ASSE SSEES MOTHER AND FURTHER WITHOUT MAKING AN INDEPENDENT EN QUIRY WITH MRS. K. MANGALAM. - - ITA 568 TO 572/M/17 9 4.17 ACCORDING TO LD.A.R, IN THE PRESENT CASE, THE RE ARE NO OTHER MATERIALS OTHER THAN THE ASSESSEES OWN STATE MENT, TO TAKE A VIEW THAT THE TRANSACTIONS IN THE SAID BANK ACCOUNT ARE MADE BY THE ASSESSEE. IT IS BASED ON THE PRESUMPTIO N THAT THE BANK TRANSACTIONS BELONGED TO THE ASSESSEE, THE AO HAD FRAMED A SUSPICION THAT THE ASSESSEES INCOME HAD E SCAPED ASSESSMENT. THERE ARE NO OTHER REASONS FOR REOPENI NG OF ASSESSMENT. 4.18 HE RELIED ON THE JUDGEMENT OF MADRAS HIGH CO URT IN THE CASE OF ANIL KUMAR SATISH KUMAR NAHTA V. IAC, 242 ITR 238 (MAD.), IT WAS HELD AS UNDER: WHERE A RE-ASSESSMENT NOTICE HAS BEEN ISSUED ON TH E GORUND THAT THE FIRM STOOD DISSOLVED, MEANING THERE, BY TH AT IT WAS NOT A CASE OF CHANGE IN THE CONSTITUTION OF THE FIRM AND THIS GROUND WAS NON-EXISTENT, THE INITIATION OF RE-ASSESSMENT P ROCEEDINGS ON THE BASIS OF SUCH NOTICE CANNOT BE SUSTAINED BECAU SE THE VERY FOUNDATION O9N WHICH SUCH NOTICE PROCEEDED WAS NON- EXISTENT. 4.19 HE RELIED ON THE JUDGMENT OF GUJARAT HIGH CO URT IN THE CASE OF SAGAR ENTERPRISES VS. ACIT )(2002) 257 ITR 335(GUJ.) WHEREIN HELD THAT:- WHERE THE INITIATION OF RE-ASSESSMENT PROCEEDINGS HAS BEEN MADE ON THE GROUND THAT RETURN HAD NOT BEEN FILED A ND THAT A - - ITA 568 TO 572/M/17 10 CERTAIN INCOME HAD NOT BEEN DISCLOSED AND THE MATER IAL ON RECORD HAD SHOWED THAT RETURN HAD IN FACT BEEN FILE D AND THE REVENUE WAS NOT SURE WHETHER SUCH INCOME PERTAINED TO THE YEAR CONCERNED OR ANY OTHER YEAR, INITIATION HAS NO T BEEN UPHELD. 4.20 HE SUBMITTED THAT IN THE PRESENT CASE, ON PE RUSAL OF REASONS GIVEN FOR REOPENING OF ASSESSMENT, IT IS CL EAR THAT THE AO HAD FORMED THE BELIEF ON THE BASIS OF IMPROPER A PPRECIATION OF FACTS AND THEREFORE THE BELIEF FAILS AND SO THE RE-ASSESSMENT INITIATED BASED ON SUCH REASONS IS IMPERMISSIBLE IN LAW. 4.21 ACCORDING TO HIM, THE INCOME-TAX DEPARTMENT HAS INITIATED RE-ASSESSMENT PROCEEDINGS IN THE CASE OF ASSESSEES MOTHER MRS. K. MANGALAM BY ISSUE OF NOTICE U/S.148 DATED 31.3.2017 FOR A.YS 2010-11, 2011-12 AND 2012-13. T HE NOTICE WAS SERVED ON ASSESSEES MOTHER ON 4.4.2017. THIS IS A CLEAR INDICATION THAT THE REVENUE NOW FEELS THAT THE BANK ACCOUNTS OF MRS. K. MANGALAM MUST BE ASSESSED IN HER HANDS. 4.22 THEREFORE, HE SUBMITTED THAT INITIATION OF REASSESSMENT IS BAD IN LAW AND CONSEQUENTLY QUASH T HE REASSESSMENT ORDER. - - ITA 568 TO 572/M/17 11 4.23 THE DR SUBMITTED THAT DURING THE COURSE OF ASSESSMENT OF ASSESSMENT YEAR 2011-2, IT CAME TO TH E KNOWLEDGE OF THE ASSESSING OFFICER THAT TRANSACTION IN AXIS BANK, ADYAR BRNACH WERE UNACCOUNTED AND DURING THE FINANCIAL YEAR RELAEVANT TO A.Y 2008-09, THE SAME BANK ACOCUN T CONSISTS CASH DEPOSITS OF 1.80 CORES. IT WAS ALSO RECORDED T HAT A REVISED RETURN WAS FILED FOR A.Y 2008-09 ON 17.02.2014 ADMI TTING A REVISED TOTAL INCOME OF ` 1,30,86,080/-. THE ABOVE FACTS INDICATED THAT THE ASSESSING OFFICER POSSESSED A VA LID REASON TO BELIEVE THAT THE INCOME OF THE ASSESSEE AS ESCAP ED ASSESSMENT. THE BELIEF IS FURTHER STRENGTHENED BY THE FINDING IN THE SUBSEQUENT ASSESSMENT YEAR. HE PLACED RELIAN CE IN THE JUDGMENT OF SUPREME COURT IN THE CASE OF ESSESS KAY ENGINEERING PVT. LTD. VS. CIT IN 247 ITR 818 WHEREI N IT WAS HELD THAT THE ASSESSING OFFICER CANNOT BE PRECLUDED FROM REOPENING THE ASSESSMENT OF AN EARLIER YEAR ON THE BASIS OF THE FINDINGS OF FACT THAT EVOLVE IN THE FRESH MATERIALS IN THE COURSE OF ASSESSMENT OF THE NEXT YEAR. 4.24 ACCORDING TO LD.D.R, THE REOPENING IS NOT BA SED ON A MERE COMMENT THAT THE CASH DEPOSITS REQUIRE EXAMI NATION. - - ITA 568 TO 572/M/17 12 ACCORDING TO LD.D.R,HE AR HAS BEEN SELECTIVE IN HIS APPROACH TO THE CONCLUDING PART OF THE NOTING. THE ASSESSING OFFICER HAD REASONS TO BELIEVE THAT INCOME HAD ESCAPED ASSESSME NT AND HAD CLEARLY EXPRESSED IN THE FIRST PARAGRAPH OF THE ORDER SHEET NOTING THAT: THE ASSESSEE HAS USED THIS BANK ACCOUNT FOR HIS RE AL ESTATE BUSINESS AND TRANSACTIONS MADE IN THIS ACCOUNT ARE NOT OFFERED/ACCOUNTED IN BOOKS/RETURNS OF INCOME FILED BY THE ASSESSEE FOR THESE YEARS INCLUDING F.Y 2007-08. 4.25 HE SUBMITTED THAT WHEN THE CONTENTS OF THE R EASONS RECORDED ARE SEEN HOLISTICALLY AND NOT SELECTIVELY, AS DONE BY THE AR, IT INDICATES THAT THE ASSESSING OFFICER HAD CLEAR AND COMPLETE REASONS TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT. IT IS NOT IN THE NATURE OF ROVING ENQU IRY. THEREFORE, IT IS HELD THAT THE NOTICE U/S.148 IS VALID AND THE CONSEQUENT ASSESSMENT FRAMED U/S.143(3) R.W.S. 147 IS LEGITMAT E. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. IT IS A SETTLED LAW THAT ON TH E BASIS OF MATERIAL, PRIMA FACIE, AVAILABLE BEFORE THE ASSESSI NG OFFICER, OPINED THAT INCOME CHARGEABLE TO TAX HAS ESCAPED AS SESSMENT CAN BE FORMED. THE WORD REASON IN THE PHRASE REA SON TO - - ITA 568 TO 572/M/17 13 BELIEVE WOULD MEAN CAUSE OR JUSTIFICATION. IN CASE THE ASSESSING OFFICER HAS A CAUSE OR JUSTIFICATION TO KNOW OR SUP POSE THAT INCOME HAS ESCAPED ASSESSMENT, ACTION U/S 148 CAN B E TAKEN. BUT OBVIOUSLY, THERE SHOULD BE RELEVANT MATERIAL ON WHICH A REASONABLE MAN COULD HAVE FORMED A REQUISITE BELIEF . WHETHER THIS MATERIAL(S) WOULD CONCLUSIVELY PROVE THE ESCAP EMENT OF INCOME IS NOT THE CONCERN AT THAT PARTICULAR STAGE. SO WHAT IS REQUIRED IS THE SUBJECTIVE SATISFACTION OF THE ASSE SSING OFFICER BASED ON OBJECTIVE MATERIAL EVIDENCE. THE REASON WA S RECORDED AS DISCUSSED ABOVE. THE ARGUMENT OF THE LD.AR IS TH AT WHERE THERE WAS NO FRESH TANGIBLE MATERIAL TO REOPEN THE ASSESSMENT U/S 147, NO ACTION COULD BE TAKEN AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR UNLESS THE ASSESSEE HAS DISCLOSED FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT FOR THAT ASSESSMENT YE AR, INTER ALIA. 5.1 AS SEEN FROM THE ASSESSMENT ORDER, IT GIVES A CLEAR PICTURE THAT THE ASSESSING OFFICER HAS GOT MATERIAL EVIDENCE TO FORM HIS OPINION FOR TAKING RECOURSE TO SECTION 147 R.W.S 148 OF THE ACT. THERE CANNOT BE TWO OPINIONS. AT THE POIN T OF TIME WHEN - - ITA 568 TO 572/M/17 14 THE REASONS ARE RECORDED, FORMING OPINION OF ESCAP EMENT OF INCOME IS ONLY RELEVANT. HENCE, THIS PLEA OF THE L D.AR IS NOT TENABLE IN THE EYES OF LAW. IT IS TRUE THAT U/S 147 , THE ASSESSING OFFICER CAN EITHER ASSESS OR RE-ASSESS BUT FOR TAKI NG ACTION THERE UNDER, HE HAS TO RECORD REASONS THAT INCOME CHARGEA BLE TO TAX HAS ESCAPED ASSESSMENT . IT IS ALSO MANDATED BY SEC TION 148(2) TO RECORD REASONS IN WRITING. THE REASSESSMENT PROC EEDINGS U/S 147 ARE FURTHER SUBJECT TO SECTIONS 148,149,150,151 ,152 AND 153. BUT IN THE PRESENT CASE, WE ARE REQUIRED TO DE CIDE THE LIMITED ISSUE REGARDING THE VALIDITY OF PROCEEDINGS UNDERTAKEN AFTER FOUR YEARS OF THE ASSESSMENT YEAR IN QUESTION . THE ASSESSING OFFICER IS REQUIRED TO SEE IF THE CONDITI ONS LAID IN EXPLANATION 2(C) ARE SATISFIED BECAUSE IN THIS CASE NO ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT. IN CASE, (I) INCOME CHARGEABLE TO TAX HAS BEEN UNDER ASSESSED; O R (II) SUCH INCOME HAS BEEN ASSESSED AT TOO LOW RATE; OR (III) SUCH INCOME HAS BEEN MADE THE SUBJECTIVE OF EXCESS RELIEF UNDER THIS ACT; OR (IV)EXCESSIVE LOSS OR DEPRECIATION ALLOWANCE OR ANY OTHER ALLOWANCE UNDER THIS ACT HAS BEEN COMPUTED, THEN TH E ASSESSING OFFICER WOULD HAVE VALID COGNIZANCE U/S 1 47 OF THE - - ITA 568 TO 572/M/17 15 ACT. THE REASONS RECORDED BY THE ASSESSING OFFICER CLEARLY SPEAK FOR THE UNDER ASSESSMENT OF TAX HENCE, THE CO NDITIONS LAID ABOVE STAND FULFILLED IN SO FAR AS RE-ASSESSMENT PR OCEEDINGS ARE CONCERNED. IN SO FAR AS THE REASONS RECORDED, EXTRA CTED IN THE EARLIER PORTION OF THIS ORDER, WE ARE SATISFIED THA T THE ASSESSING OFFICER HAS REASON TO BELIEVE THAT INCOME HAS ESC APED ASSESSMENT. THIS FACT CONFERS JURISDICTION ON HIM T O REOPEN THE ASSESSMENT. THE POWER TO RE-ASSESS POST 1ST APRIL, 1989 ARE MUCH WIDER THAN THESE USED TO BE BEFORE. BUT STILL THE SCHEMATIC INTERPRETATION OF THE WORDS REASON TO BELIEVE FAI LING WHICH SECTION 147 WOULD GIVE ARBITRARILY POWERS TO THE AS SESSING OFFICER TO REOPEN THE ASSESSMENT ON THE BASIS OF ME RE CHANGE OF OPINION, WHICH CANNOT BE, PER SE A REASON TO REOPE N THE CASE. THE ACT HAS NOT GIVEN POWER TO THE ASSESSING OFFICE R TO REVIEW BUT HAS ONLY GIVEN POWER TO RE-ASSESS. THERE IS A C ONCEPTUAL DIFFERENCE BETWEEN THE TWO ASPECTS AS THE ASSESSING OFFICER HAS NO POWER AT ALL TO REVIEW THE ASSESSMENT. THE REASS ESSMENT, AS STATED ABOVE, HAS TO BE BASED ON FULFILLMENT OF CER TAIN PRE- CONDITIONS BUT THE CONCEPT CHANGE OF OPINION HAS TO BE TAKEN INTO CONSIDERATION OTHERWISE IT MAY GIVE UNBRIDLED POWER TO AN - - ITA 568 TO 572/M/17 16 ASSESSING OFFICER TO REOPEN ANY AND EVERY ASSESSMEN T ORDER WHICH WOULD SIMPLY AMOUNT TO A REVIEW. THE CONCEPT CHANGE OF OPINION IS AN IN-BUILT TEST TO CHECK THE ABUSE OF POWER BY THE ASSESSING OFFICER. SO, NOW ONLY WHEN THE ASSESSING OFFICER HAS A TANGIBLE MATERIAL TO BASE HIS CONCLUSION THAT THE RE IS AN ESCAPEMENT OF INCOME FROM ASSESSMENT AND THE REASON S RECORDED HAVE A LINK WITH THE FORMATION OF HIS BELI EF, HE HAS THE POWER U/S 147 OF THE ACT. 5.2 IN THE PRESENT CASE, THE ASSESSEE HAS NOT SHO WN BANK ACCOUNT WITH AXIS BANK, ADYAR BRANCH, CHENNAI. AS PER EXPLANATION 2 OF SECTION147, IT IS VERY CLEAR THAT DUE TO NON- DISCLOSURE OF THIS BY THE ASSESSEE, THE INCOME CHAR GEABLE TO TAX HAD ESCAPED ASSESSMENT. THE ASSESSEE HAS NOT PRODU CED ANYTHING BEFORE THE COMMISSIONER OF INCOME TAX (APP EALS) TO SHOW AS TO HOW THERE IS NO INCIDENCE OF TAX IN THI S ASSESSMENT YEAR. HENCE, THE ACTION OF COMMISSIONER OF INCOME TAX (APPEALS) AND THAT OF ASSESSING OFFICER IS FULLY COVERED BY THE PROVISIONS OF EXPLANATION 1 TO SECTION 147 OF THE A CT IS NOT CORRECT. THE SAID PROVISION READS AS UNDER: PRODUCTION BEFORE THE ASSESSING OFFICER OF ACCOUN TS BOOKS OR OTHER EVIDENCE FROM WHICH MATERIAL EVIDENCE COULD W ITH DUE - - ITA 568 TO 572/M/17 17 DILIGENCE HAVE BEEN DISCOVERED BY THE ASSESSING OFF ICER WILL NOT NECESSARILY AMOUNT TO DISCLOSURE WITHIN THE MEANING OF THE FOREGOING PROVISO. 5.3 IT IS POSSIBLE THAT WITH DUE DILIGENCE OF THE ASSESSING OFFICER WOULD HAVE ASCERTAINED THIS FACT AT THE TIM E OF ASSESSMENT, IF ANY ALSO, BUT IN VIEW OF THE EXPLANA TION (1) IT DOES NOT MEAN THAT THERE WAS NO DEFAULT ON THE PART OF T HE ASSESSEE. HENCE, REOPENING U/S.147 IS HELD TO BE VALID. THE ASSESSEE HAS TRIED TO TAKE SHELTER UNDER THE EXCEPTION PROVIDED IN THAT SECTION. BUT AS STATED ABOVE, WHEN THE ASSESSEE HAS NOT DISC LOSED FULLY AND TRULY THE FACTS NECESSARY FOR THE ASSESSMENT AN D THERE IS NO ASSESSMENT U/S.143(3) OF THE ACT, THIS PROVISO WIL L NOT COME TO ITS RESCUE. CONSEQUENTLY, WE HOLD THAT THE ENTIRE R EASSESSMENT PROCEEDING IN THIS CASE IS VALID AND THEREFORE, THE ACTION OF THE ASSESSING OFFICER IS UPHELD IN ALL THESE ASSESSMENT YEARS. ACCORDINGLY, THE GROUND RAISED BY THE ASSESSEE IN A LL THESE ASSESSMENT YEARS RELATING TO THE RE-OPENING OF ASSE SSMENT IS REJECTED. 6. THE NEXT COMMON GROUND IN THE A.Y 2008-09, 2009 -10, 2010-11 & 2012-13 WITH REGARD TO VALIDITY OF THE NO TICE - - ITA 568 TO 572/M/17 18 U/S.143(2) OF THE ACT. WE CONSIDER THE FACTS NARR ATED IN THE ASST. YEAR 2008-09. 6.1 THE FACTS OF THE ISSUE ARE THAT THE NOTICE U/ S.143(2) DATED 23.6.2014 WAS SERVED ON THE ASSESSEE ON 25.6. 2014. IT WAS MENTIONED IN THE NOTICE THAT IT WAS ISSUED IN C ONNECTION WITH RETURN OF INCOME FILED ON 22.7.2008 (PRINTED IN THE NOTICE) / 20.3.2014 (HAND WRITTEN INSERTION). THERE WAS NO R ETURN OF INCOME FILED ON 20.3.2014, ONLY A LETTER WAS FILED. 6.2 A VALID NOTICE U/S.143(2) ONLY GIVES JURISDI CTION TO AN AO TO FRAME AN ASSESSMENT. SUCH A NOTICE IS THE SOURCE OF POWERS THAT AN AO CAN EXERCISE IN AN ASSESSMENT PRO CEEDINGS. THE NOTICE U/S.143(2) SHOULD BE IN RESPECT OF A RET URN OF INCOME FILED BY THE ASSESSEE. 6.3 THE LD. A.R SUBMITTED THAT THERE IS AN ORIGIN AL RETURN OF INCOME FILED ON 22.7.2008 WITHIN THE TIME LIMIT U/S.139(1), AN ITR FILED ON 17.2.2014 BEYOND ALL TIME LIMITS UNDER THE ACT AND A LETTER FILED ON 20.3.2014 REQUESTING TO TREAT THE I TR FILED ON 17.2.2014 AS RETURN IN PURSUANCE OF NOTICE U/S.148. 6.4 ACCORDING TO LD. A.R, IT IS APPARENT FROM THE NOTICE U/S.143(2) OF THE ACT THAT THE AO WAS NOT SURE ABOU T THE RETURN - - ITA 568 TO 572/M/17 19 OF INCOME IN RESPECT OF WHICH HE HAS ASSUMED THE JU RISDICTION. THIS CANNOT BE VIEWED AS A MERE MISTAKE AS THE AO H AS TAKEN THE SAME APPROACH IN ASST. YEARS 2009-10, 2010-11 A ND 2012- 13. MOREOVER, THIS VAGUENESS IN ISSUING NOTICE U/S .143(2) OF THE ACT IS CARRIED FORWARD BY WAY OF INAPPROPRIATE APPR ECIATION OF FACTS IN FRAMING OF THE RE-ASSESSMENT. 6.5 ACCORDING TO HIM, THE CIT(APPEALS) WRONGLY OBS ERVED THAT THE ASSESSEE COULD NOT QUESTION THE VALIDITY OF NOT ICE U/S.143(2) OF THE ACT RELYING ON SEC.292BB OF THE ACT. IT IS SUBMITTED THAT SEC.292BB PRECLUDES THE ASSESSEE FROM TAKING THE FO LLOWING THREE GROUNDS: I) THAT THE NOTICE WAS NOT SERVED II) THAT THE NOTICE WAS NOT SERVED IN TIME III) THAT THE NOTICE WAS NOT SERVED IN A PROPER MAN NER. 6.6 SEC.292BB WILL NOT CURE THE INHERENT DEFICIEN CY IN THE NOTICE U/S.143(2) AND DOES NOT PRECLUDE THE ASS ESSEE CHALLENGING THE NOTICE IN RESPECT OF GROUNDS OTHER THAN THE 3 GROUNDS MENTIONED ABOVE. THEREFORE, THE NOTICE U/S. 143(2) OF - - ITA 568 TO 572/M/17 20 THE ACT SHOULD BE HELD AS VAGUE AND CONSEQUENTLY TH E ASSESSMENT SHOULD BE STRUCK DOWN AS VOID AB-INITIO. 6.7 FOR ASST. YEARS 2009-10, 2010-11 & 2012-13, T HE DATA AND FACTS ARE AS BELOW: ASST. YEAR DATE OF RETURN MENTIONED IN THE NOTICE U /S.143(2) 2009-10 16.04.2010 (PRINTED IN THE NOTICE) / 20.03. 2014 (HAND WRITTEN INSERTION) 2010-11 26.05.2010 (PRINTED IN THE NOTICE) / 20.03. 2014 (HAND WRITTEN INSERTION) 2012-13 30.5.2012 (PRINTED IN THE NOTICE) / 05.03.2 014 (HAND WRITTEN INSERTION) FOR ASSESSMENT YEARS 2009-10, 2010-11 & 2012-13, TH E LEGAL CHALLENGES ARE SAME AS THAT OF ASST. YEAR 2008-09. 6.8 ON THE OTHER HAND, THE LD.D.R RELIED ON THE O RDER OF CIT(APPEALS) WHEREIN HE HAS TAKEN A SUPPORT OF PROV ISIONS OF SEC.292BB OF THE ACT. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. IN OUR CONSIDERED OPINION, THERE SHOULD NOT BE ANY GRIEVANCE TO THE ASSESSEE BEING DUE OPPORTUNITY OF HEARING HAS BEEN GIVEN TO THE ASSESSEE. EVEN IF THERE IS ANY L APSE ON THE PART OF THE AO, IT IS ONLY PROCEDURAL IR-REGULARITY , THE PROVISION OF - - ITA 568 TO 572/M/17 21 SEC.292B OF THE ACT TAKES CARE OF IT. MORE SO, JURI SDICTIONAL HIGH COURT IN THE CASE OF AREVA T&D INDIA LTD. VS. ACIT REPORTED IN (2007) 294 ITR 0233 WHEREIN HELD THAT NON-CONSIDERI NG THE OBJECTIONS FOR REOPENING AS WELL AS NON-ISSUANCE OF NOTICE UNDER S. 143(2) ARE MERE PROCEDURAL IRREGULARITIES AND WI LL NOT MAKE THE REASSESSMENT A NULLITY IN LAW. ACCORDINGLY, THI S GROUND OF THE ASSESSEE IS DISMISSED IN ALL THESE ASSESSMENT YEARS . 8. THE NEXT GROUND IS WITH REGARD TO VALIDITY OF N OTICE U/S.142(1) FOR A.YS. 2008-09, 2009-10, 2010-11 & 20 12-13 . 8.1 THE LD. A.R SUBMITTED THAT A COMMON NOTICE U/S .142(1) DATED 3.12.2014 WAS ISSUED TO THE ASSESSEE FOR THE ABOVE ASST. YEARS. A NOTICE U/S.142(1) CAN BE ISSUED ON A PERS ON WHO HAS I) MADE A RETURN UNDER SECTION 139 OR II) IN WHOSE CASE THE TIME ALLOWED UNDER SUB-SECTIO N (1) OF 139 FOR FURNISHING THE RETURN HAS EXPIRED. 8.2 HE SUBMITTED THAT IN THE CASE OF THE ASSESSEE, POINT (II) ABOVE WILL NOT APPLY AS THE NOTICE U/S.142(1) IS IS SUED FOR INQUIRY BEFORE MAKING THE RE-ASSESSMENT. POINT (I) WILL AL SO NOT APPLY AS - - ITA 568 TO 572/M/17 22 THERE IS NO RETURN U/S.139 AFTER INITIATION OF THE RE-ASSESSMENT PROCEEDINGS. THEREFORE, THE COMMON NOTICE U/S.142(1 ) DATED 03.02.2014 FOR ASST. YEARS 2008-09, 2009-10, 2010-1 1 AND 2012- 13 IS INVALID IN THE EYES OF LAW. 8.3 THE LD.D.R HAS TAKEN A SUPPORT OF SEC.292BB OF THE ACT. 9. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. AS DISCUSSED IN PARA -7 OF THIS ORDER AND ALSO BY PLACING RELIANCE ON THE PROVISIONS OF SEC.292BB OF THE ACT, THIS GROUND RAISED BY THE ASSESSEE IN ALL THESE APPEALS IS REJECTED. 10. THE NEXT COMMON GROUND FOR ALL THE A.YS 2008 -09 TO 2012 -13 IS WITH REGARD TO VALIDITY OF EXERCISE OF RE-DRAWING CASH BOOK. NOW WE CONSIDER THE FACTS RELATING TO THE A SST. YEARS 2008-09 10.1 THE FACTS OF THE ISSUE ARE THAT THE ASSESSEE S MOTHER HAD LENT MONIES TO VARIOUS PERSONS THROUGH AXIS BANK AC COUNT. SOME OF THEM HAD MADE REPAYMENTS IN CHEQUE AND SOME OF THEM HAD MADE REPAYMENTS IN CASH. DURING THE ASSES SMENT PROCEEDINGS U/S.143(3) FOR THE ASST. YEAR 2011-12, THE ASSESSEE - - ITA 568 TO 572/M/17 23 WAS ASKED TO EXPLAIN TRANSACTIONS IN THE SAID AXIS BANK ACCOUNT, AS THE ASSESSEE WAS ASKED TO EXPLAIN TRANSACTIONS I N THE SAID AXIS BANK ACCOUNT, AS THE ASSESSEE WAS A JOINT ACCO UNT HOLDER. AS PER THE ADVICE OF THE ITO, THE ASSESSEE ADMITTED THE TRANSACTIONS IN SAID BANK ACCOUNT AND FILED REVISED RETURN OF INCOME INCLUDING TRANSACTIONS FROM THE SAID BANK AC COUNT FOR ASST. YEARS 2008-09 TO 2012-13. 10.2 THE CIT(APPEALS) DISMISSED THIS CONTENTION OF THE ASSESSEE BY HOLDING THAT THE ASSESSEE HAD ADMITTED THE SAID TRANSACTIONS DURING THE ASSESSMENT PROCEEDINGS. NE ITHER THE AO NOR THE CIT(APPEALS) MADE ANY ATTEMPTS TO KNOW THE TRUTH FROM THE PRIMARY ACCOUNT HOLDER, MRS. K. MANGALAM. 10.3 FOR THE ASST. YEAR 2008-09, IMPUGNED NOTICE U /S.142(1) OF THE ACT WAS ISSUED CALLING FOR CONFIRMATION FROM PA RTIES TO WHOM MONIES WERE LENT. NEITHER THE ASSESSEES MOTHER NO R THE ASSESSEE IS CONTINUING BUSINESS RELATIONSHIP WITH M OST OF THE PERSONS TO WHOM MONIES WERE LENT AND THEREFORE THE ASSESSEE IS NOT ABLE TO GET THEIR CO-OPERATION IN THE ASSESSMEN T PROCEEDINGS BY WAY OF CONFIRMATION LETTERS. FURTHER, THE REASS ESSMENT FOR ASST. YEAR 2008-09 WAS DONE AFTER A CONSIDERABLE TI ME GAP. - - ITA 568 TO 572/M/17 24 MOREOVER, THOSE PERSONS WHO HAD REPAID IN CASH MAY BE WORRIED ABOUT THE PROVISION OF SEC.269T OF THE ACT, WHICH T HOSE PERSONS MAY HAVE VIOLATED BY MAKING REPAYMENT IN CASH TO TH E ASSESSEE. THE AO WAS NOT SATISFIED WITH THE EXPLANATION OFFER ED BY THE ASSESSEE THAT REPAYMENTS IN SOME OF THE CASES ARE R ECEIVED IN CASH. THE AMOUNTS WERE LENT BY WAY OF CHEQUE FROM A XIS BANK ACCOUNT, WHICH CLEARLY ESTABLISHES THE IDENTITY OF THE PAYEE. 10.4 THE AO HAD STATED THAT AMOUNT LENT TO PERSONS BY WAY OF CHEQUES WERE RECEIVED IN MODES OF CASH IS NOT ACCEP TABLE BY CITING THE EXAMPLE OF TRANSACTIONS WHERE AMOUNT LEN T BY WAY OF CHEQUES WERE RECEIVED BACK THROUGH MODE OF CHEQUE. THIS REASONING LACKS LOGIC. 10.5 THE AO HAD ALLEGED THAT RECEIVING BACK IN CAS H OF LOANS LENT BY CHEQUES IS AGAINST THE PRINCIPLE OF HUMAN P ROBABILITIES, WHICH IS WHOLLY BASELESS. THE AO HAD ALLEGED THAT MOST OF THE DEBTORS ARE BUSINESS MEN WHICH IS A PRESUMPTION AND NOT SUPPORTED BY MATERIALS ON RECORD. THE AO HAD ALLEGE D THAT REPAYMENTS WERE RECEIVED THROUGH BANKING CHANNEL IN SUBSEQUENT YEAR, WHICH IS NOT SUPPORTED BY ANY MATE RIAL ON RECORD. - - ITA 568 TO 572/M/17 25 10.6 BASED ON THE ABOVE ALLEGED ASSUMPTIONS, THE AO HAD REDRAWN THE CASH BOOK OF THE ASSESSEE BY EXCLUD ING CASH REPAYMENTS RECEIVED FROM SOME OF THE PARTIES. THE PEAK DEFICIT BALANCE, THAT APPEARED ON 19.2.2008 AT 52,405/- WAS ADDED TO THE TAXABLE INCOME OF THE ASSESSEE. 11.1 THE LD. A.R SUBMITTED THAT THE ASSESSEE SUB MITTED BEFORE THE CIT(APPEALS) THAT THE EXERCISE OF REDRAW ING CASH BOOK ON THIS BASIS IS WHOLLY ILLEGAL AND WITHOUT ANY STA TUTORY AUTHORITY. THAT THE AO HAD ASSUMED THAT THE DEBTORS HAD NOT M ADE REPAYMENTS. THAT THE AO HAD REDRAWN THE BOOKS OF A CCOUNTS WITHOUT REJECTING THE BOOKS OF ACCOUNTS, WHICH IS B ASED ON SURMISES AND CONJECTURES AND WITHOUT PROPER APPRECI ATION OF THE CIRCUMSTANCES OF THE CASE. 11.2 IT WAS ALSO SUBMITTED BEFORE THE CIT(A) THAT THE AO HAD NOT DISCUSSED OR DISPUTED THE OTHER PARTS OF THE TR ANSACTION WHICH ARE THROUGH ACCOUNT PAYEE CHEQUES AND THE SAME CANN OT BE IGNORED BY MAKING PRESUMPTIONS. THE OUTFLOW IN THE ABOVE CASES WERE TOTALLY IGNORED BY THE AO. IF THE INF LOWS ARE TREATED AS UNACCOUNTED INCOME, THE CORRESPONDING OUTFLOWS S HOULD BE - - ITA 568 TO 572/M/17 26 TREATED AS UNACCOUNTED EXPENSES AND CONSEQUENTLY TH E NET EFFECT OF THE ABOVE EXERCISE WOULD BE NULL. 11.3 ACCORDING TO THE LD. A.R , THE AO HAD MADE ADDITIONS ON THE BASIS OF SUSPICION, SURMISES AND CONJECTURES. THE LD. AR RELIED ON THE JUDGMENT OF THE SUPREME COURT IN THE CASE OF DHAKESWARI COTTON MILLS LTD. VS. CIT (26 ITR 126)(S C), WHEREIN IT WAS HELD AS BELOW : THOUGH ITO IS NOT FETTERED BY TECHNICAL RULES OF EVIDENCE AND PLEADINGS AND HE IS ENTITLED TO ACT ON MATERIAL WHICH MAY NOT BE ACCEPTED AS EVIDENCE ON ACCOUNT OF LAW, BUT IN MAKING ASSESSMENT UNDER SECTION 23(3) OF 1922 ACT HE IS NOT ENTITLED TO MAK E A PURE GUESS AND MAKE AN ASSESSMENT WITHOUT REFERENCE TO ANY EVIDENCE OR ANY MATERIAL AT ALL 11.4 IT WAS SUBMITTED BEFORE THE CIT(A) THAT REDRA WING OF CASH BOOK SHOULD BE HELD AS ILLEGAL AND CONSEQUENTLY THE PEAK NEGATIVE BALANCE ARRIVED AND CLOSING CASH BALANCE A RRIVED BY THE AO MAY BE CANCELLED. 11.5 THE CIT(A) HELD THAT THE ASSESSEE HAD NOT DIS CHARGED THE INITIAL BURDEN PLACED ON HIM WITHOUT APPRECIATING W HY IT IS NOT PRACTICABLE FOR THE ASSESSEE TO PRODUCE CONFIRMATIO N LETTERS IN THE PECULIAR FACTS OF THE CASE. IN PARA 7.6 OF HER ORD ER, THE CIT(A) HAS CERTIFIED THAT ASSESSMENT HAS NOT BEEN FRAMED O N ANY GUESS - - ITA 568 TO 572/M/17 27 WORK. FURTHER, IN PARA 5 THE CIT(A) HELD THAT THE ADDITION IS BASED ON A SCIENTIFIC AND SUITABLE CODE, WITHOUT DE TAILING ABOUT SUCH A CODE. 11.6 IT WAS SUBMITTED BY THE LD. A.R THAT WITHOUT PREJUDICE TO THE ASSESSEES STAND THAT THE BANK ACC OUNT IS HELD BY THE ASSESSEES MOTHER, ASSUMING FOR A MOMENT, PA RTIES TO WHOM MONIES WERE LENT HAD NOT REPAID IN CASH, THEN ALL SUCH LOANS SHOULD BE TREATED AS BAD DEBTS AS THE SAME WE RE NOT REALIZED TILL DATE. 11.7 THE EXERCISE OF REDRAWING CASH BOOK WAS CARRI ED OUT TO VERIFY SOURCE OF CASH DEPOSITS IN THE AXIS BANK ACC OUNT HELD BY THE ASSESSEES MOTHER. THE PEAK BALANCE IN THAT BA NK ACCOUNT FOR EACH OF THE ASST. YEARS IS AS BELOW : 2008-09 1,20,07,202 2009-10 1,47,45,486 2010-11 92,00,767 2011-12 1,10,11,782 2012-13 1,64,28,318 11.8 ACCORDING TO LD. A.R, IF PEAK CREDIT IS WORK ED OUT ON THE BASIS OF THAT AXIS BANK STATEMENT, THE MAXIMUM ADDITION FOR ALL THE YEARS TAKEN TOGETHER WOULD BE 1,64,28,318/- AS THIS IS - - ITA 568 TO 572/M/17 28 THE PEAK BALANCE ACROSS ALL THE YEARS. WHEREAS, TH E ASSESSEE HAD OFFERED ADDITIONAL INCOME AS BELOW: 2008-09 1,27,61,144 2009-10 14,54,486 2010-11 15,49,289 2011-12 16,49,056 2012-13 18,59,653 TOTAL 1,92,73,628 11.9 CONSIDERING THE ABOVE, HE SUBMITTED THAT THE RE CANNOT BE ANY ADDITIONS ON THE BASIS OF PEAK CASH D EFICIT IN THE CASH BALANCE. THEREFORE, IT IS PRAYED THAT THE PEA K CASH DEFICIT ADDITIONS BE DELETED. 11.10 FOR A.Y. 2009-10 THE PEAK DEFICIT BALANCE THAT APPEARED ON 23.3.2009 AT 2,34,41,535/- WAS ADDED TO THE TAXABLE INCOME OF TH E ASSESSEE. THE LEGAL CHALLENGES ARE THE SAME AS THAT OF ASST. YEAR 2008-09. 11.11 FOR A.Y. 2010-11 THE PEAK DEFICIT BALANCE THAT APPEARED ON 29.1.2010 AT 76,96,929/- WAS ADDED TO THE TAXABLE INCOME OF THE ASSESSEE. THE LEGAL CHALLENGES ARE THE SAME AS THAT OF ASST. YEAR 2008-09. - - ITA 568 TO 572/M/17 29 11.12 FOR A.Y. 2011-12 THE PEAK DEFICIT BALANCE THAT APPEARED ON 6.7.2010 AT 77,34,068/- WAS ADDED TO THE TAXABLE INCOME OF THE ASSESSEE. ORIGINALLY THE AO RECORDED THAT THERE WAS NO PEAK C ASH DEFICIT IN HER ASSESSMENT ORDER DATED 28.3.2014. HOWEVER, AFT ER GIVING A ENHANCEMENT PROPOSAL, THE CIT(A), ADDED THE PEAK DE FICIT TO THE INCOME OF THE ASSESSEE. ENHANCEMENT IS CHALLENGED SEPARATELY BELOW. THE OTHER LEGAL CHALLENGES ARE THE SAME AS THAT OF ASST. YEAR 2008-09. 11.13 FOR A.Y. 2012-13 THE PEAK DEFICIT BALANCE THAT APPEARED ON 31.3.2012 AT 74,34,803/- WAS ADDED TO THE TAXABLE INCOME OF THE ASSESSEE. THE LEGAL CHALLENGES ARE THE SAME AS THAT OF ASST. YEAR 2008-09. 11.14 FURTHER, THE LD. A.R SUBMITTED THAT WITHOUT PREJUDICE TO THE ABOVE, THE AO CANNOT MAKE AN ADDITION OF UNEXPLAINE D CREDIT UNDER SEC.68 OF THE ACT BASED ON THE ENTRIES IN THE BANK STATEMENT, WHICH DO NOT CONSTITUTE THE BOOKS OF ACC OUNT OF THE - - ITA 568 TO 572/M/17 30 ASSESSEE. THE AO CANNOT TREAT THE BANK ACCOUNT ST ATEMENT AS BOOKS OF THE ASSESSEE, AS THE SAME DOES NOT CONSTIT UTE BOOKS OF THE ASSESSEE. THE ASSESSEE RELIED ON THE JUDGMENT OF THE BOMBAY HIGH COURT IN THE CASE OF CIT VS. BHAICHAND H. GANDHI (141 ITR 67) FOR THE PROPOSITION 11.15 THE LD. A.R DREW OUR ATTENTION TO THE DEFI NITION OF BOOKS OF ACCOUNTS IN SEC.2(12A) OF THE ACT ALSO SUP PORTS THAT BANK PASS BOOK CANNOT BE TREATED AS BOOKS OF ACCOUN TS. 11.16 HE HAS ALSO PLACED RELIANCE ON THE ORDER OF THE TRIBUNAL, MUMBAI BENCH IN THE CASE OF SMT. MANSAI M AHENDRA PITKAR VS. ITO (73 TAXMANN.COM 68) (MUMBAI TRIB). THEREFORE, IT IS PRAYED THAT ADDITION U/S.68 BASED ON ENTRIES IN BANK PASS BOOK CANNOT BE MADE. 11.17 ON THE OTHER HAND, THE LD.D.R RELIED ON THE ORDER OF LD.CIT(A). 12. WE HAVE HEARD BOTH THE PARTIES AND PERUSED TH E MATERIAL ON RECORD. SECTION 69 MAKES IT CLEAR THAT THE ONUS IS ON THE ASSESSEE AS REGARDS FURNISHING OF EXPLANATION RELAT ING TO - - ITA 568 TO 572/M/17 31 INVESTMENT WHICH IS NOT RECORDED IN THE BOOKS OF AC COUNTS, IF ANY, MAINTAINED BY HIM. WHERE THE ASSESSEE OFFERS N O EXPLANATION OR WHERE THE EXPLANATION OFFERED BY HIM IS NOT SATISFACTORY IN THE ASSESSING OFFICERS OPINION, TH E VALUE OF THE UNEXPLAINED INVESTMENT WOULD BE TREATED AS THE INCO ME OF THE FINANCIAL YEAR IN QUESTION. IN THE CASE OF JATINDR A NATH SARMAH VS. ITO (1978) 113 ITR 898 (GAU), THE GAUHATI HIGH COURT OBSERVED THAT WHERE THE EXPLANATIONS FURNISHED BY T HE ASSESSEE WERE NOT FULLY RELIED UPON BY THE DEPARTMENT, IT CA NNOT BE SAID THAT THE DEPARTMENT HAD ANY FURTHER BURDEN TO PROVE THAT THIS WAS AN INCOME OF THE ASSESSE.E 12.1 IN THE CASE OF RAGHBIR SINGH VS. ITAT & ORS. (2007) 209 CTR (P&H) 394 ASSESSEE FAILED TO ESTABLISH THE CAPA CITY OF NRI DONOR TO MAKE GIFT OF HUGE AMOUNT OR THE SOURCE FRO M WHICH GIFT WAS MADE AND HENCE ADDITION OF AMOUNT AS DEEMED INC OME OF ASSESSEE WAS HELD JUSTIFIED. 12.2 IN THE CASE OF RAHMAT DEVELOPMENT & ENGG. CO RPN. VS. CIT (1981) 130 ITR 602 (CAL), THE CALCUTTA HIGH COU RT OPINED THAT 'UNLESS THE ASSESSEE HAD GIVEN THE SOURCE OF I NVESTMENT OF - - ITA 568 TO 572/M/17 32 THIS ADDITIONAL AMOUNT, WHATEVER BE THE AMOUNT, THA T MUST HAVE COME FROM SOME SOURCE OF INCOME OF THE ASSESSEE.' 12.3 HOWEVER, WITHOUT REFERENCE TO ANY SUPPORTIN G EVIDENCE OR MATERIAL,THE ITO CANNOT MAKE ANY ADDITION AS UNEXPL AINED INVESTMENT NOTWITHSTANDING SEIZURE OF CERTAIN DOCUM ENTS FROM THE ASSESSEE [ASHOK KUMAR RASTOGI VS. CIT (1991) 10 0 CTR (ALL) 204. 12.4 IN THE CASE OF CIT VS. SOUTHERN SHIPPING CO. (P) LTD. (2000) 241 ITR 464 (MAD), THE ASSESSEE HAD ADVANCED A SUM OF RS. 5 LAKHS ON A PRONOTE WHICH STIPULATED INTEREST AT 44 PAISE PER THOUSAND RUPEES PER DAY. THE SAID PRONOTE WAS RECOV ERED DURING THE SEARCH OF THE BUSINESS PREMISES BY THE R EVENUE AUTHORITIES. SUSTAINING ADDITION, THE HIGH COURT HE LD THAT EVEN THOUGH THE ASSESSEES ACCOUNTS DO NOT REVEAL ANY RE CEIPT OF INTEREST WITH REGARD TO THIS AMOUNT, THE ENTRIES FO UND IN THE BOOKS OF M & CO. HAD CLEALRY DISCLOSED THE PAYMENT OF INT EREST TO THE ASSESSEE-COMPANY. THOSE ENTRIES WHICH HAVE BEEN MAD E IN THE NORMAL COURSE OF BUSINESS MUST BE ACCEPTED AS TRUE. A PARTNER OF THAT COMPANY HAS ALSO INDICATED PERIODICAL PAYME NT OF INTEREST ON FIVE DIFFERENT DATES. THOSE ENTRIES WERE NOT MAD E ON A SINGLE - - ITA 568 TO 572/M/17 33 DATE AND THEY WERE MADE ON FIVE DIFFERENT DATES. SO , IT IS WELL EVIDENT THAT THE ASSESSEE-COMPANY HAS RECEIVED INTE REST PAYMENT OF RS. 67,790. THE MERE FACT THAT THE CORRE CT CALCULATION OF INTEREST COMES TO RS. 44,616 AS STIPULATED IN TH E PRONOTE WOULD NOT RENDER THAT PAYMENT OF INTEREST OF RS. 67 ,790 FALSE. 12. 5 IN THE CASE OF JANARDAN PRASAD ASHOK KUMAR V S. CIT (1992) 193 ITR 186 (ALL) , THE ALLAHABAD HIGH C OURT HELD THAT WHERE THE ASSESSEE HAD FAILED TO PROVE THE SOURCE O F INVESTMENT TO THE SATISFACTION OF THE TAXING AUTHORITIES, THE AUTHORITIES WOULD BE JUSTIFIED IN TREATING THE SAME AS UNEXPLAINED IN VESTMENT UNDER SECTION 69. AKBERALLY ESUFALLY VS. CIT (1966) 60 IT R 563 (MAD), CIT VS. M.K. BROS. (1986) 52 CTR (GUJ) 228 : (1987) 163 ITR 249 (GUJ). THE CALCUTTA HIGH COURT IN MIHIR CHATTE RJEE VS. CIT (1994) 118 CTR (CAL) 26 : (1994) 205 ITR 270 (CAL) HELD THAT WHERE THE FACTS ON RECORD CLEARLY ESTABLISHED THAT THE EXPLANATIONS OFFERED BY THE ASSESSEE AS REGARDS INV ESTMENT IN HOUSE PROPERTY ARE NOT BASED ON TRUTH, INCLUSION OF THE SAME IN ASSESSEES INCOME WOULD BE JUSTIFIED. THE BOMBAY HI GH COURT IN BASTIRAM NARAYANDAS MAHESWARI VS. CIT (1994) 117 CT R (BOM) 198 OPINED THAT WHERE THE ADDITION ON ACCOUNT OF SU PPRESSED - - ITA 568 TO 572/M/17 34 PRODUCTION HAS BEEN DIRECTED BY TRIBUNAL AFTER CONS IDERING MATERIAL AND EVIDENCE ON RECORD, THE SAME WOULD BE JUSTIFIED. 12.6 IN THE PRESENT CASE, THE ASSESSEE IS NOT ABL E TO EXPLAIN THE DEPOSITS MADE INTO AXIS BANK A/C ADYAR BRANCH, CHENNAI. THE ASSESSEE WAS NOT ABLE TO DISCHARGE TH E BURDEN TO PROVE THAT THE SOURCES WERE DISCLOSED INCOME OF THE ASSESSEE. IN THE ABSENCE OF SATISFACTORY EXPLANATION, THE ASS ESSING OFFICER WAS COMPELLED TO ARRIVE AT THE UN-EXPLAINED CASH BY CALCULATING THE PEAK VALUE OF DEFICIT CASH BALANCE IN THE BOOKS OF THE ASSESSEE IN EACH ASSESSMENT YEAR. AS A RESULT, THE ASSESSING OFFICER COMPUTED THE UNEXPLAINED INCOME BY REDRAWIN G THE CASH BOOK AND CONSIDERED THE PEAK VALUE OF THE CREDIT WH ICH IS ARRIVED AFTER DUE CREDIT FOR THE AMOUNT OF CASH WITHDRAWN F ROM THE BANK. WE DO NOT FIND ANY INFIRMITY IN THE METHOD FOLLOWED BY THE LOWER AUTHORITIES IN COMPUTING THE UNEXPLAINED INVESTMENT S IN THESE A.YS. THE SAME IS CONFIRMED. THIS GROUND IN ALL TH ESE APPEALS IS DISMISSED. - - ITA 568 TO 572/M/17 35 13. THE NEXT GROUND FOR A.Y 2011-2 IS WITH REGARD TO ENHANCEMENT OF ASSESSMENT BY CIT(A). 13.1 THE FACTS OF THE CASE ARE THAT DURING THE PEN DENCY OF THE APPEAL FOR THE AY 2011-12, AN ENHANCEMENT PROPOSAL WAS GIVEN BY CIT(A) VIDE HIS LETTER DATED 2.3.2016, WHEREIN I T WAS PROPOSED TO SUBSTITUTE THE PEAK DEFICIT CASH BALANC E OF ` 77,34,068/- FOR THE ADDITION OF 27,25,000/- MADE IN THE ORIGINAL ASSESSMENT. 13.2 THE ASSESSEE FILED ITS OBJECTIONS ON 21.3.201 6. SEC.251(1)(A) OF THE ACT CONFERS THE CIT(APPEALS) T HE POWER TO ENHANCE THE ASSESSMENT. THE CONCEPT OF ENHANCEMENT OF ASSESSMENT HAD BEEN SUBJECTED TO JUDICIAL SCRUTINY IN MANY CASES. THE LD. A.R RELIED ON THE JUDGMENT BY THE SUPREME COURT IN THE CASE OF SHAPOORJI PALLONJI MISTRY (44 ITR 891), IT WAS HELD THAT THE APPELLATE ASSISTANT COMMISSIONERS PO WER TO ENHANCE THE ASSESSMENT DOES NOT INCLUDE POWER TO IN CLUDE A NEW SOURCE OF INCOME. HE SUBMITTED THAT THE AO HA S SPECIFICALLY NOTED IN HIS ASSESSMENT ORDER THAT THE RE ARE NO PEAK CREDIT IN THE CASH BOOK. IN DOUBLE ENTRY SYSTEM OF BOOK KEEPING - - ITA 568 TO 572/M/17 36 THERE WILL BE AS MANY CREDITS IN THE BOOKS OF ACCOU NTS AS THESE ARE TRANSACTIONS. THE ASSESSEE CANNOT BE EXPECTED TO OFFER SUO MOTO EXPLANATION FOR ALL SUCH CREDITS. IT IS O NLY WHEN THE AO SUSPECTS ANY CREDIT IN THE BOOKS OF ACCOUNTS, THE S COPE OF SEC.68 BEGINS. IN THE CASE OF THE ASSESSEE, THE AO HAS NOT SUSPECTED THE GENUINENESS OF OTHER CREDITS. THEREF ORE, THE PROPOSAL TO ENHANCE INCOME BY SUSPECTING THE REPAYM ENTS WOULD AMOUNT TO TAXING A NEW SOURCE OF INCOME. THI S ACTION IS AGAINST THE LAW LAID DOWN BY THE SUPREME COURT OF I NDIA. 13.3 THE LD. A.R SUBMITTED THAT THE CIT(A) DID NO T CONSIDER THE OBJECTIONS RAISED BY THE ASSESSEE AND ENHANCED THE ASSESSMENT. WHILE MAKING THE ENHANCEMENT, THE CIT(A) DIRECTED A SEPARATE ADDITION OF PEAK DEFICIT CASH B ALANCE OF 77,34,068/- CONTRARY TO THE PROPOSAL MADE U/S.251(2 ) TO SUBSTITUTE 77,34,078/- INSTEAD OF 27,25,000/-. ACCORDING TO HIM, THE CIT(A) HAS VIOLATED THE PRINCIPLES OF NATU RAL JUSTICE BY ENHANCING THE ASSESSMENT BY AN AMOUNT EXCEEDING THE AMOUNT FOR WHICH ENHANCEMENT WAS PROPOSED AND HE PRAYED TH AT THE ADDITION TO BE DELETED. 13.4 THE LD.D.R RELIED ON THE ORDER OF LD.CIT(A). - - ITA 568 TO 572/M/17 37 14. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE POWER OF THE CIT(APPEALS) IS CO-TER MINUS WITH THE ASSESSING OFFICER. THE CIT(APPEALS) CAN DO WHAT ASSESSING OFFICER COULD DO. THE PROVISIONS OF SEC.251(1)(A) EMPOWERS THE CIT(APPEALS) TO CORRECT THE ERRORS COMMITTED BY THE ASSESSING OFFICER. THE LEGISLATURE HAS CONFERRED ON THE CIT( A) RATHER EXTRAORDINARY POWER. IT IS CLEAR THAT THE CIT(A) HA S BEEN CONSTITUTED A REVISING AUTHORITY AGAINST THE DECISI ONS OF THE ASSESSING OFFICER; A REVISING AUTHORITY NOT IN THE NARROW SENSE OF REVISING WHAT IS THE SUBJECT-MATTER OF THE APPEAL, NOT IN THE SENSE OF REVISING THOSE MATTERS ABOUT WHICH THE ASSESSEE MAKES A GRIEVANCE, BUT A REVISING AUTHORITY IN THE SENSE TH AT ONCE THE APPEAL IS BEFORE HIM HE CAN REVISE NOT ONLY THE ULT IMATE COMPUTATION ARRIVED AT BY THE ASSESSING OFFICER BUT HE CAN REVISE EVERY PROCESS WHICH LED TO THE ULTIMATE COMP UTATION OR THE ASSESSMENT. IN OTHER WORDS, WHAT HE CAN REVISE IS N OT MERELY AN ULTIMATE AMOUNT WHICH IS LIABLE TO TAX, BUT HE IS E NTITLED TO REVISE THE VARIOUS DECISIONS GIVEN BY THE ASSESSING OFFICE R IN THE COURSE OF THE ASSESSMENT AND ALSO THE VARIOUS INCOM ES OR - - ITA 568 TO 572/M/17 38 DEDUCTIONS WHICH CAME IN FOR CONSIDERATION OF THE A SSESSING OFFICER. IT FOLLOWS FROM THE FOREGOING DISCUSSION THAT THE CIT(A) IS CLOTHED WITH APPELLATE AS WELL AS REVISIONAL POW ERS SO AS TO DO JUSTICE TO THE ASSESSEE AND ALSO TO WATCH THE INTER ESTS OF THE REVENUE. HIS POWERS ARE WIDE ENOUGH TO INCLUDE THE POWER TO EXAMINE ALL MATTERS COVERED BY THE ASSESSMENT ORDER AND EVEN TO CORRECT THE ASSESSMENT IN RESPECT OF ALL SUCH MA TTERS TO THE PREJUDICE OF THE ASSESSEE. THE QUESTION WHETHER A P ARTICULAR EXPENDITURE COULD NOT BE DEDUCTIBLE IN VIEW OF THE PROVISIONS OF THE ACT IS A MATTER WHICH DIRECTLY ARISES IN THE CO URSE OF ASSESSMENT AND IF THE ASSESSING OFFICER FAILS TO EX AMINE THAT ASPECT, THE CIT(A) WOULD HAVE THE JURISDICTION TO D IRECT HIM TO DO SO. IT IS TO BE NOTED THAT THE POWERS ARE RESTRICT ED TO THE SOURCE OF INCOME AS MENTIONED IN THE RETURN AND IN THE ASS ESSMENT ORDER. THUS, PROVIDED AN INCOME WAS CONSIDERED BY A N ITO, THE CIT(A) HAS THE FULLEST JURISDICTION IN RESPECT OF I T; HE CAN INCLUDE IT IN THE ASSESSMENT, EVEN THOUGH IT WAS EXCLUDED BY T HE ITO, AND, NATURALLY, WHEN HE INCLUDES IT, HE MUST INCLUDE IT UNDER ONE OR THE OTHER HEAD. THERE CANNOT BE ANY JUSTIFICATION FOR S AYING THAT, WHILE HE CAN DO SO, HE CANNOT TAKE OUT AN INCOME WR ONGLY - - ITA 568 TO 572/M/17 39 INCLUDED UNDER ONE HEAD BY THE ITO AND INCLUDE IT U NDER THE CORRECT HEAD. IN OUR CONSIDERED OPINION, ANY ADDI TION ON ACCOUNT OF UNEXPLAINED INVESTMENT WOULD NOT CONSTIT UTE A NEW SOURCE OF INCOME AS IT WAS SUBJECT-MATTER OF ASSES SMENT BEFORE THE AO. IT WAS NOT THEREFORE OPEN TO CIT(APPEALS) E NHANCED THE ASSESSMENT WHICH IS WITHIN THE PROVISION OF SEC.251 (1)(A) OF THE ACT AND THE SAME IS CONFIRMED. HENCE, THIS GROUND IN ASSESSEES APPEAL IN A.Y 2011-12 IN ITA NO.571/MDS. /2017 IS REJECTED. 15. THE NEXT GROUND IS WITH REGARD TO ADDITION OF INTEREST OF ` 11,00,000/- FOR A.Y 2008-09 ON THE BASIS OF ASSUMP TIONS 15.1 THE LD. A.R SUBMITTED THAT THE AO, HAVING REJ ECTED THE CLAIM THAT REPAYMENTS WERE RECEIVED BACK IN CASH, P ROCEEDED TO MAKE ADDITION OF NOTIONAL INTEREST ON THE LOANS OUT STANDING TO THE TUNE OF 1.10 CRORES (APPROXIMATELY) AT THE RATE OF 24% P.A . FOR A PERIOD OF 5 MONTHS WORKED OUT AT 11,00,000/-. THIS ADDITION IS ALSO A PRESUMPTION WITHOUT ANY SUPPORTING EVIDENCE. FURHTER, HE SUBMITTED THAT AO ALLEGED THAT AMOUNTS LENT THROUG H CHEQUES - - ITA 568 TO 572/M/17 40 WERE RECEIVED THROUGH BANKING CHANNELS ONLY WITHOUT HAVING ANY BASIS OR MATERIAL IN SUPPORT THEREOF. IT WAS SUBMIT TED BEFORE THE CIT(A) THAT THE ASSESSMENTS CANNOT BE MADE BASED ON MERE SURMISES AND CONJECTURES AND IT WAS PRAYED THAT ADD ITION ON ACCOUNT OF NOTIONAL INTEREST BE DELETED. 15.2 THE LD.D.R SUBMITTED THAT THE MONEY DEPOSIT ED INTO THE AXIS BANK ACCOUNT HAS BEEN UTILIZED FOR MONEY L ENDING ACTIVITIES AND THERE IS NO EVIDENCE THAT NO INTERES T HAS BEEN CHARGED BY THE ASSESSEE AND THE ADDITION OF INTERES T OF ` 11 LAKHS ON THE LOAN IS JUSTIFIED. 15.3 WE HAVE HEARD BOTH THE PARTIES AND PERUSED TH E MATERIAL ON RECORD. THE ASSESSEE LENT MONEY TO VARIOUS PER SONS AS PER THE AXIS BANK STATEMENT. THE MONEY WAS ADVANCED THR OUGH BANKING CHANNELS, HOWEVER REPAYMENT WAS BY CHEQUE I N THE ASSESSMENT YEAR UNDER CONSIDERATION. THE ASSESSING OFFICER COMPUTED THE INTEREST AT 24% PER ANNUM FOR A PERIOD OF 5 MONTHS ON AN AMOUNT OF ` 1.1 CRORES LENT OUT BY THE ASSESSEE IN THE ASSESSMENT YEAR UNDER CONSIDERATION. THE ASSESS EE IS NOT ABLE TO SHOW THAT THE ASSESSEE HAS LENT MONEY WITHO UT CHARGING - - ITA 568 TO 572/M/17 41 INTEREST. HENCE, ESTIMATING INTEREST CHARGED BY TH E ASSESSEE AT 24% P.A ON THE ABOVE AMOUNT OF ` 1.1 CRORES FOR A PERIOD OF 5 MONTHS IS VERY REASONABLE AS THIS WAS PRIVATE LENDI NG IN OPEN MARKET AND THE SAME IS CONFIRMED. THE RAISED BY THE ASSESSEE IN ITA NO.568/MDS./2017 IS REJECTED. 16. THE NEXT GROUND IS WITH REGARD TO DISALLOWANCE OF DEDUCTION U/S. 80C FOR THE A.Y 2011-12. 17. THE LD. A.R TO SUBSTANTIATE THE CLAIM OF ` 1,00,000/- U/S. 80C OF THE ACT, SUBMITTED THAT THE ASSESSEE HAD FU RNISHED TO THE AO A LIST OF PAYMENTS MADE TOWARDS LIC PREMIUM TO T HE TUNE OF ` 1,27,464/- WHICH INADVERTENTLY INCLUDED PAYMENT OF 49,130/- WHICH WAS CLAIMED IN THE RETURN OF INCOME FILED BY THE ASSESSEES SPOUS MRS. PONMANI SURESH. IT WAS SUBMI TTED THAT THE AO HAD EXCLUDED THE ABOVE SUM OF ` 49,130/- FROM 1,27,464/- AND THEREBY RESTRICTED DEDUCTION U/S.80C TO RS.78,334/- INSTEAD OF ` 1,00,000/- 17.1 IT IS SUBMITTED THAT THE ACTUAL PAYMENTS MAD E BY THE ASSESSEE TOWARDS LIC PREMIUM FOR SELF AND CHILDREN DURING THE RELEVANT ASST. YEAR IS RS.1,43,562/-, WHICH DOES NO T INCLUDE - - ITA 568 TO 572/M/17 42 49,130 WHICH WAS PAID BY THE ASSESSEES SPOUSE. OU T OF PAYMENT OF ` 1,43,562/-, THE AMOUNT ELIGIBLE FOR DEDUCTION U/S.80C IS ` 1,24,554/-. THE LIST OF PAYMENTS, THE WORKINGS FO R CALCULATING ELIGIBLE AMOUNT OF DEDUCTIONS AND CORRE SPONDING LIC RECEIPTS ARE ENCLOSED HEREWITH. 17.2 THIS GROUND WAS RAISED AS AN ADDITIONAL GROU ND BEFORE THE CIT(A). HOWEVER, THE ORDER OF CIT(A) IS COMPLETELY SILENT ON THE SAME. IT IS THEREFORE PRAYED THAT DE DUCTION U/S.80C BE RESTORED TO THE ORIGINAL CLAIM OF ` 1,00,000/-. 17.3. THE LD.D.R RELIED ON THE ORDER OF LD.CIT(A) . 18. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THIS GROUND OF APPEAL IS NOT EMANATED F ROM THE ORDER OF THE LOWER AUTHORITIES AND THERE IS NO EVIDENCE T O SHOW THAT THE ASSESSEE IS ENTITLED FOR DEDUCTION/S.80C OF THE ACT , LWHICH WAS NOT CONSIDERED BY THE ASSESSING OFFICER. ACCORDINGL Y, THIS GROUND IS REJECTED. 19. THE NEXT GROUND IS WITH REGARD TO DISALLOWANCE OF COST OF RENOVATION IN COMPUTING CAPITAL GAINS FOR A.Y 2012- 13. - - ITA 568 TO 572/M/17 43 19.1 FOR THE PURPOSE OF COMPUTING LTCG, THE ASSESS EE HAD FURNISHED THE BREAK UP FOR COST OF ACQUISITION AS B ELOW : S.NO. PARTICULARS AMOUNT (IN ) 1 COST OF PROPERTY AS PER DEED 40,00,000 2 STAMP DUTY & REGISTRATION CHARGES 3,60,000 3 BROKERAGE 80,000 4 COST OF RENOVATION 6,18,500 5 TOTAL 50,58,720 6 50% SHARE 25,29,360 THE AO HAD CALLED FOR EXPLANATION AND EVIDENCE IN S UPPORT OF COST OF RENOVATION OF ` 6,18,500/-. THE ASSESSEE HAD EXPLAINED THE NATURE OF COST SHE HAD INCURRED TOWARDS RENOVAT ION OF THE BUILDING IN HER LETTER DATED 5 TH MARCH 2015, WHICH IS REPRODUCED BELOW: WHAT THE ASSESSEE HAS SOLD IS AN OFFICE SPACE TOGETHER WITH UNDIVIDED INTEREST IN LAND. THE PROP ERTY WAS ACQUIRED IN NOV 2007 AND HAS BEEN IMMEDIATELY LET OUT FOR COMMERCIAL PURPOSES. IT WAS A BUILDING CONSTRUCTED AND COMPLETED DURING THE YEAR 1999 AS EVIDENCED BY THE RECITALS IN THE SALE DEED AND THE ASSESSEE HAS ACQUIRED IT AFTER FEW YEARS OF USE BY THE ERSTWHILE OWNERS. WITHOUT THE RENOVATION, THIS PREMISES WOULD NOT HAVE BEEN SUITABLE FOR LETTING O UT. THE ASSESSEE HAD ENGAGED PEOPLE TO THE RENOVATION WORK AFTER BUYING THE MATERIALS THAT THEY WANTED FO R THE PURPOSE OF THE WORK. THE ASSESSEES HUSBAND HELPED TO EXECUTE THE RENOVATION WITHOUT ANY CONSIDERATION , SINCE HE HAD A SHARE IN THE PROPERTY. - - ITA 568 TO 572/M/17 44 THE AO NEVER DISPUTED THE FACT THAT RENOVATION WAS CARRIED OUT. HOWEVER, SHE DISALLOWED ENTIRE COST OF RENOVATION F OR WANT OF EVIDENCE, WITHOUT CONSIDERING THE MERITS OF EXPLANA TION OFFERED BY THE ASSESSEE. COPY OF SALE DEED FOR PURCHASE OF PROPERTY IS ENCLOSED. A SPECIFIC GROUND WAS RAISED IN THIS RE GARD BEFORE THE CIT(A). HOWEVER, THE ORDER OF CIT(A) IS SILENT IN THIS RESPECT. IT IS PRAYED THAT A REASONABLE ALLOWANCE TOWARDS COST OF RENOVATION SHOULD BE ALLOWED. 19.2 WE HAVE HEARD BOTH THE PARTIES AND PERUSED T HE MATERIAL ON RECORD. THE ASSESSEE HAS NOT PRODUCED THE EVIDENCE REGARDING THE COST OF RENOVATION. IN THE A BSENCE OF IT, ASSESSING OFFICER HAS NOT CONSIDERED COST OF RENOVA TION. THE BURDEN IS ON THE ASSESSEE TO PRODUCE NECESSARY EVI DENCE TO CLAIM DEDUCTION. BEING SO, WE DO NOT FIND ANY INFIR MITY IN THE ORDER OF THE LOWER AUTHORITIES. 20. THE NEXT GROUND FOR A.Y 2012-13 THE CIT(APPEA LS) ERRED IN HOLDING THAT ASSESSMENT WAS FRAMED U/S.143(3) WH EN IN FACT IT WAS FRAMED U/S.143(3) R.W.S.147- AS A CONSEQUENCE, CHALLENGES TO RE-OPENING WERE NOT DEALT WITH BY CIT(APPEALS). - - ITA 568 TO 572/M/17 45 20.1 SINCE WE HAVE ALREADY DEALT IN GROUND NO.1 TH AT REOPENING IS VALID, WE DISMISS THIS GROUND AS INFRU CTUOUS. ACCORDINGLY, THIS GROUND IS REJECTED FOR THE ASSESS MENT YEAR 2012-13. 21. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED ON 19 TH JUNE, 2017 AT CHENNAI. SD/- SD/- ( $% & ) ( ' ( ) $ ) *%+,-,./01,2345,.62,+778,293 : ;< /JUDICIAL MEMBER ! ;<=>>70.?,.?@A1BA2 ': /CHENNAI, C; /DATED, THE 19 TH JUNE, 2017. K S SUNDARAM ;D EFGF /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. H3 /CIT(A) 4. H /CIT 5. FIJ K /DR 6. JLM /GF. - - ITA 568 TO 572/M/17 46