Hon'ble Bachchoo Lal,J.
Heard Sri Shambhoo Chopra, the learned counsel for the appellants and Sri Rahul Agrawal, the learned counsel for the assessee.
The assessee had claimed long term capital gains of Rs. 14,78,214/- on sale of shares of G.K.C.L. Out of the total amount of Rs. 14,78,214/- it was alleged that an entry of Rs. 4,49,214 was credited in the account of the assessee on 7.4.1998 which was cleared on 12.4.1998. The assessing officer found reasons to believe that the claim of long term capital gains pertaining to the Assessment Year 1999-2000 was a bogus entry and accordingly reopened the case U/s 148 for the Assessment Year 1998-1999 and 1999-2000.
The present appeal relates to the Assessment Year 1998-1999. The reasons recorded for reassessment U/s 147 read with 148 is as under:
"Apart from the above the assessee has also shown receipt of sales proceeds of the shares of G.K.C.L. (the same share of which sales proceeds of Rs. 4,99,214/- mentioned above) as under:
Rs. 6,00,000 on 20.08.1998 Rs. 3,79,000 on 20.08.1998 The fictitious entry of long term capital gain as mentioned -2- above has been introduced by the assessee in his books of accounts claiming that it represents the sale proceeds of the shares as mentioned above. The unaccounted for money generated by the assessee has been introduced in the garb of sale proceeds of the aforesaid share. In a large number of assessee it is found that they have surrendered the entries and paid taxes also before the respective officers of their jurisdiction. Therefore, I have reason to believe that the income to the tune of amount which represents sale proceeds of shares is actually the assessee's unaccounted money from undisclosed sources. This has escapted assessment. Therefore, this is a case where income has escaped assessment under the provisions of section 147 and issue of notice u/s 148 of the I.T. Act is warranted.
Hence, I have reason to believe that the above income of Rs. 14,78,214/- has escaped assessment within the meaning of section 147 of the I.T. Act, 1961. Therefore, action U/s 147 is to be taken for which proposal for obtaining approval of the CIT-I, Agra is being sent U/s 151(1) before issuing U/s 148 of the I.T. Act, 1961"
The assessee questioned the validity of the notice and proceedings initiated U/s 147 read with 148 of the Income Tax Act in the assessment proceedings. The Assessing Officer did not consider the validity of the proceedings initiated and found that the entries were bogus and added the amount as undisclosed income in the assessment year in question.
The assessee filed an appeal which was partly allowed and an amount of Rs. 10,29,003/- was deleted since in the opinion of the Appellate Authority it related to the Assessment Year 1999-2000. The appellate authority further held that since the amount -3- of Rs. 4,49,214 was wrongly assessed in the year 1999-2000 and the same was deleted by him in the appeal for that year, the same was added in the Assessment Year 1998-1999. The appellant, being aggrieved, filed an appeal before the tribunal which was allowed on the short ground that the notice issued U/s147/148 of the I.T. Act was invalid and the entire reassessment proceedings were void ab-initio. The department, being aggrieved filed the present appeal U/s 260-A of the Income Tax Act which was admitted on the following substantial questions of law:-
"(1) Whether on the facts and in the circumstances of the case, the Tribunal is justified in law in quashing the reassessment proceedings U/s 147 of the Act by holding that the reasons recorded by the AO for re-opening the assessment were invalid and and void ab-initio ?
(2) Whether on the facts and in the circumstances of the case, the Tribunal is justified in law in setting aside the order of the CIT (A) by which the CIT (A) had enhanced the assessment with the observation that Rs. 4,49,214 was excluded by the AO on the ground that this amount had already been considered in A/Y 1999-2000?"
Having heard the learned counsel for the parties and, from a perusal of the reasons recorded U/s 147, it is apparently clear that the entries of Rs. 63,790/- are dated 29.8.1998. These entries consequently relate to the Assessment Year 1999-2000. Therefore, the re-opening of the Assessment Year proceedings U/s 148 for the Assessment Year 1998-1999 was clearly invalid.
With regard to the entry of Rs. 4,99,214/- admittedly, the draft of that amount is dated 7.4.1998 which was cleared on 12.4.1998 and therefore, these entries relate to the Assessment Year 1999-2000 which could not be added by the appellate authority in re-
assessment proceedings U/s 148 for the Assessment Year 1998-1999.
The court is of the opinion that the notice issued U/s148 for reopening the assessment on the ground that certain income had escaped assessment for the Assessment Year 1998-1999 for which we are concerned in the present appeal was apparently invalid and consequently no proceedings for re-assessment could have been made. The tribunal was justified in allowing the appeal and setting aside the assessment order. We do not find any infirmity in the order of the tribunal. The appeal fails and is dismissed. The questions of law are decided against the department and in favour of the assessee.
Order Date :- 23.5.2014 Masarrat (Bachchoo Lal,J.) (Tarun Agarwala,J.)