J.SUDHAKAR REDDY,AM. -
(1.) BOTH these appeals are filed by the assessee. As the issues arising in both the appeals are similar for the sake of convenience, they are heard together and disposed of by way of this common order.
(2.) FACTS in brief: - The assessee is a company and is in the business of providing engineering and professional services to M/s Komori Corporation, Japan, since Spetember,1995 in connection with
erection, commissioning, training etc. for equipments supplied by the aforesaid company to various
entities in India. For the Assessment Year 2005 -06 the assessee has filed a return of income on
28.10.2005 declaring an income of Rs.29,23,020/ -. For the Assessment Year 2004 -05 the assessee company filed a return of income on 28.10.2004 declaring total income of Rs.19,38,640/ -. For both the
AYs the returns were processed u/s 143(1) of the Act later. The assessments were reopened by the issue
of notice u/s 148 on 30.3.2011. Assessment order u/s 147 r.w.s. 143(3) were passed assessing the total
income for the Assessment Year 2005 -06 at Rs.60,07,060/ - and at Rs.1,13,62,950/ - for the Assessment
Year 2004 -05. Inter alia he made an addition on the ground that the assessee has income from
undisclosed sources. Aggrieved the assessee carried the matter before the First Appellate Authority. The
assessment was challenged both on the ground of reopening as well as on merits. The First Appellate
Authority dismissed both the grounds.
(3.) AGGRIEVED the assessee filed this appeal before us on the following grounds.
"1. Under the facts and circumstances of the case, the Ld.AO has grossly erred in making an addition of Rs.30,84,043/ - to the returned income of the assessee as income from undisclosed sources which is without any evidence, arbitrary, based on surmise and conjectures, without application of mind and against the facts of the case.
2. Without prejudice to the ground of appeal no.1, and under the facts and circumstances of the case, the assessment order u/s 147 passed by the Ld.AO is invalid and bad at law as the reopening of assessment is based on incomplete and improper reasons to believe.
3. Without prejudice to the ground of appeal no.1, and under the facts and circumstances of the case, the assessment order u/s 147 passed by the Ld.AO is invalid and bad at law as the reopening of assessment made by the Ld.AO is without application of mind.
4. Without prejudice to the ground of appeal no.1, and under the facts and circumstances of the case, the assessment order u/s 147 passed by the Ld.AO is invalid and bad at law as the statutory notice required to be issued u/s 148 of the Act before making such assessment u/s 147 was not served on the assessee at all.
5. Without prejudice to the ground of appeal no.1, and under the facts and circumstances of the case, the assessment order u/s 147 passed by the Ld.AO is invalid and bad at law as the statutory procedure for such assessment prescribed in law has not been followed and the necessary sanctions from Ld JCIT as prescribed u/s 151(2) have not been obtained before reopening of assessment in the case of assessee.
6. The appellant craves to add, withdraw, and revise any or all the above grounds of appeal, either before or during the course of hearing in the interest of justice."
The Ld. Counsel for the assessee Mr.Sunil Arora submitted that the reopening is bad in law. He referred to page 12 of his paper book running into 57 pages, which contains the reasons for reopening and
submitted that the reopening was based on a letter received from ITO, Ward 1, Yavatmal, Maharashtra
along with a letter by the Dy.CIT (Hq -II), Nagpur. He submitted that the letter does not in any way
constitute material to allege that there is undisclosed income in the hands of the assessee. He argued that
there is no independent application of mind by the Assessing Officer. He further submitted that a notice
u/s 148 was not served on the assessee and hence the reassessment is bad in law. He contended that the
Assessing Officer has not obtained the approval of the JCIT as prescribed u/s 151(2) of the Act before the
reopening of assessments.
4.1. On merits he submits that the assessee has accounted for all the receipts from M/s Komori Corporation, Japan and that there is no undisclosed income. He submits that the assessee has furnished complete records before the Assessing Officer. He submits that the only information that the Assessing Officer had against the assessee, was the receipt of two amounts of Japanese Yen 63,54,253/ - and 12,50,028/ - from M/s Komori Corporation during the relevant year, for which he wanted reconciliation. The assessee submits that reconciliation statements have been given and it has been demonstrated before the assessing authority that the amounts in question were duly accounted for by the assessee in its books of accounts. He further submitted that the assessee wanted to know the specific information regarding the alleged amounts, so that he could give explanation and has made various efforts by filing request letters as well as applications and appeals under the RTI Act. But despite specific orders by the appellate authorities under the RTI Act, no further details/instructions about the alleged figures of remittances from M/s Komori Corporation had been provided to the assessee. To substantiate the claim the assessee filed the following: -
i. Affidavit of Mr.Gangadhar Kahate, Director of appellant company within the terms of Rule 20 of Appellate Tribunal Rules 1963, which is enclosed on page no.13 to 14 of the paper book;
ii. Confirmation from M/s Komori Corporation, Japan, Japan regarding remittances made to appellant company. A copy of the same is enclosed on page no.15 of the paper book.
iii. Statement showing reconciliation of receipts from Komori Corporation, Japan as per books of accounts of appellant with the figures specified in reasons to believe. The same is enclosed on page no.16 to 17 of the paper book;
iv. Ledger a/c of M/s Komori Corporation in the books of the assessee for the period 1.4.2004 to 31.3.2005. A copy of the same is enclosed on page no.18 to 22 of the paper book;
v. FIRC's in respect of remittances received from M/s Komori Corporation during the relevant year. Copies of the same on sample basis are enclosed on page no.23 to 27 of the paper book;
vi. Invoices issued to M/s Komori Corporation during the relevant year. Copies of the same on sample basis are enclosed on page no.28 to 29 of the paper book.
4.2. He argued that the addition u/s 68 is bad in law, if it is the case of the Revenue that the amount in question is not credited in the books of accounts. He pointed out that the addition can be made u/s 68 only if there is a credit in the books of accounts and the same is not explained. He vehemently contended that the assessee cannot be asked to explain an alleged receipt, without specifically providing the assessee with the details. He prayed for a relief.