COMMISSIONER OF INCOME TAX Vs. RIPPEN AHUJA

JUDGEMENT

(1.) The Revenue is in appeal against the order dated July 13, 2007, passed by the Income-tax Appellate Tribunal, Bench "G", New Delhi (for brevity, "the Tribunal"), vide which the Tribunal has set aside the order dated October 19, 2004 passed by the Commissioner of Income-tax (in short, "the CIT") under section 263 of the Income-tax Act, 1961 (for short, "the Act"), whereby the assessment order dated November 28, 2003, was held to be prejudicial to the interests of the Revenue. The instant appeal was admitted for determining the following substantial question of law:

(2.) It is necessary to trace the factual matrix. The respondent-assessee filed return for the assessment year 2000-01 on January 5, 2001, declaring a total income of Rs. 4,24,100. It was processed and completed by the Assessing Officer after making an addition of Rs. 54,688 in the income of the assessee, vide assessment order dated November 28, 2003. The assessment order was found prejudicial to the interests of the Revenue. Consequently, the Commissioner of Income-tax issued notice under section 263 of the Act to the assessee and called for his explanation in respect of following gifts of Rs. 21 lakhs:

(3.) The respondent furnished explanation thereto and questioned the maintainability of the notice under section 263 of the Act. His stand was that when the proceedings under section 148 of the Act were initiated, the entire record was before the authorities, who, after a thorough examination, had exempted the amount from the income of the assessee being gifts. He took the stand that issuance of notice on mere suspicion or change of opinion was not valid. The assessee also took the stand that the persons from whom he received the gifts were income-tax assessees. With regard to donors, V.K. Sharma and Vikram Awasthy, it was submitted that they were family friends of the assessee and affluent businessmen. With respect of Smt. Kamlesh Ahuja, it was averred that she was the real aunt ("Tai") of the assessee. It was also pleaded that all the donors had confirmed giving gifts. It was urged that the notice be withdrawn.