SMT. S. RAJALAKSHMI Vs. I.T.O.

JUDGEMENT

(1.) This appeal is filed under Sec. 260A of the Income Tax Act, 1961 (for short the "I.T.Act, 1961") taking exception to the Judgment and Order dated 27th March, 2018 passed by the "D" Bench of the Income Tax Appellate Tribunal, Mumbai (for short the "ITAT"), whereby the ITAT dismissed the appeal of the appellant and upheld the exercise of power by the Assessing Officer (for short "A.O.") under Sec. 147 of the I.T.Act, 1961 for the Assessment Year (for short "A.Y.") 2007-08. According to the appellant, though the reasons recorded by the respondent - revenue, for invoking Sec. 147 of the I.T. Act, 1961 did not contain any basis or material whatsoever to give rise to any "reason to believe" that the appellant's income had escaped assessment, notice under Sec. 148 of the I.T.Act was issued. It is in this backdrop that the learned Senior Counsel appearing on behalf of the appellant submitted that the order of the ITAT gave rise to the following substantial question of law:-

(2.) Before we advert to the legal submissions canvassed by the learned Senior Counsel as well as the Revenue, it would be apposite to set out the brief facts of the case and which are undisputed before us. In the case of Mr S. Ganesh (son of the appellant herein), for the A.Y. 2007-08 the addition of certain investments made in Birla Mutual FundStandard Chartered Mutual Funds were brought to tax against Shri S. Ganesh (son of the appellant herein). This was done on the basis and as per the Annual Information Return (for short "AIR") that the assessee had made total investments of Rs. 23,83,43,112.00. The assessee was, therefore, asked to reconcile the investments made by him. After hearing Mr S. Ganesh, the A.O. made said addition of Rs. 23.83 Crores to the total income of the assessee - Shri S. Ganesh. Being aggrieved thereby, Mr S. Ganesh filed an appeal before the Commissioner of Income Tax (Appeals) [for short "CIT(A)"]. Before CIT (A) it was inter alia submitted by Mr S. Ganesh that the details in respect of the investments in Birla Mutual Fund in the amount of Rs. 29,50,000.00, investment in Standard Chartered Mutual Fund in the amount of Rs. 64 Lacs and another investment in Standard Chartered Mutual Fund in the amount of Rs. 50 Lacs stood in the joint name of his mother (the appellant herein) as the first holder and Shri S. Ganesh (being her son) as the second holder. The CIT(A) then called for a Remand Report from the A.O. and after considering the same as well as the comments of the assessee, the CIT(A) sustained the addition of 2,93,50,000.00 and deleted the balance additions. Being aggrieved by the order of the CIT(A), Mr. S. Ganesh preferred an appeal before the ITAT. Before the ITAT it was submitted that since his mother (the appelllant herein) was the first holder in respect of the 3 investments mentioned above, if any addition is to be made in respect to the same, they should be made in the hands of his mother (the appelllant herein) and not in his hands. This argument of Shri S. Ganesh was accepted by the ITAT in the appeal filed by him. In paragraph 14 of the ITAT order dated 16th Nov., 2012, the ITAT categorically recorded that considering the facts of the case as discussed therein, the ITAT was of the considered view that there was force in the submission of Mr S. Ganesh that the investments in respect of which he was the second holder and his mother was the first holder, the addition, if any, should have been made on account of unexplained investment in the hands of his mother (the appellant herein) and not in the hands of Mr S. Ganesh. Accordingly, the ITAT held that there was no justification for making the addition of Rs. 29,50,000.00 in Birla Mutual Fund, and Rs. 64 Lacs and Rs. 50 Lacs respectively in Standard Chartered Mutual Fund in the hands of Mr S. Ganesh as he was the second holder along with his mother who was the first holder.

(3.) Considering the above facts and the observations of the ITAT in the case of Mr S. Ganesh, the assessment was re-opened in the case of the appellant on the ground that income chargeable to tax had escaped assessment within the meaning of Sec. 147 of the I.T.Act, 1961, and accordingly, a notice under Sec. 148 of the I.T.Act, 1961 was issued. This notice was dated 21st March, 201 In response to the notice, the appellant's authorized representative, vide its letter dated 28th April, 2013, stated that the appellant is not able to trace out all the documents including the bank statements and TDS certificates which are required to file the return of income-tax. The appellant further stated that she had made an application to her bankers for issuance of bank statements and requested for further time to file her return of income tax.