Case Law Details
It is very sad that AO without following the principles of natural justice and inspite of clear findings of the ITAT in the order dated 18.06.2010 has repeated the same orders as was done originally way back in 1998. Inspite of levying the cost of 5000/- on AO, which we were informed was paid to assessee, there is no change in the attitude of the Revenue with reference to assessees/assessments are concerned. By taking up the assessment at the fag end of the time barring period and by denying natural justice and not considering the evidence on record, assessees were forced to file appeals before the ITAT unnecessarily by incurring heavy cost of not only appeal fees but also engaging Counsels to defend the case. There should be an end to this sorry state of affairs. We have considered the plea of the learned Counsel that the order is bad in law, hence to be quashed. We could have accepted the plea but what we notice is that AO has issued a show cause notice dated 22.12.2011 after supply of the statement to assessee which was contested in earlier two rounds. We find that there is no reply given to the particular show cause notice and there is no reference to the letters filed by assessees earlier which should have been considered by AO in the re-assessment proceedings. Since AO did not have much time to complete the assessment nor assessee has placed all the facts in its correct perspective before AO, we are constrained to set aside the matter again with clear directions to AO so that he could complete the assessment according to the law and facts.
AO should not rely on statement under section 132(4) alone for making addition in the assessments. This issue was already considered twice by the ITAT when the orders were set aside earlier. As copy of the statement was given to the assessees, AO is directed to complete the assessment only on the basis of incriminating material if any, after considering assessee’s explanation with reference to the papers seized and transactions/investments found by the Department. In no case AO should make assessment only on the basis of 132(4) statements which stands modified/ withdrawn, unless there is corroborative evidence linking the statement with the undisclosed /unearthed incomes. We make it clear that in case AO repeats the same orders without examining the material on record, the orders will be quashed without any further consideration.
AO should examine the books of account placed on record vis-à-vis the seized material, bank statements and other material placed by assessee, so as to quantify any undisclosed income. There is already evidence on record that Smt. Sushila Malge has been filing the returns much before the search and they were scrutiny assessments in her case as well. Just because her affairs are being looked after by her husband, it does not mean that she is benami. In case AO has to hold that she is benami, it should be based on evidence and burden is on the Revenue. Unless there is evidence, no addition should be made in the hands of Shri Suresh Malge on mere conjectures, surmises and presumptions. These aspects should be examined by AO and only when there is clear evidence/findings addition of income of Smt. Sushila Malge can be made in the hands of Shri Suresh Babu, otherwise they should be examined separately/ independently without getting prejudiced by earlier orders of AO i.e. AO should determine the undisclosed income separately in respective hands. Further, on the facts of the case we order costs to be paid to assessees. AO should pay the cost of Rs. 20,000/- to Shri Suresh Babu Malge for making him come again in appellate proceedings. This amount was fixed keeping in view that assessee has paid Rs. 10,000/- as appellate fees. In the case of Smt. Sushila Malge, AO should pay an amount of Rs. 15,000/- as cost as she has paid an amount of .5,500/- as appellate fees in her appeal. These amounts should be paid within two months from the date of the order and Revenue is free to decide whether these amounts should be recovered from the officer(s) concerned. Since the orders are being approved by a senior officer in the rank of Commissioner of Income tax, we sincerely hope that the CIT also monitors these assessments and applies his mind while granting the approvals.
The re-assessment proceedings should be started immediately without any loss of time so that there are no complaints by assessees that principles of natural justice have not been fulfilled and assessees are not been given enough opportunity. Assessees are also directed to co-operate with AO and furnish all the details so that examination of the seized material and the explanation of assessee can be considered by AO. Assessees are also requested to remind AO/ CIT, if no action was taken by AO as directed above. With these directions/observations, the orders of AO dated 30.12.2011 are set aside to do afresh, after considering the material on record, making fresh enquiries if required and giving due opportunity to assessees. We again make it clear that orders will be quashed if AO repeats the additions in the same manner, as was done thrice earlier.
INCOME TAX APPELLATE TRIBUNAL, MUMBAI
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