DATED

14.08.2014.

THIS ITA, HAVING BEEN HEARD AND RESERVED FOR

JUDGMENT

ON

14.06.2022

COMING

ON

FOR

PRONOUNCEMENT OF JUDGMENT, THIS DAY, P.S.DINESH

KUMAR J, PRONOUNCED THE FOLLOWING:-

JUDGEMENT

These appeals have been admitted to

consider following questions of law:

" a) whether the Tribunal is correct in law in

upholding the action of the assessing officer

in reopening the assessment under Section

147 of the Act for the assessment years

2005-06, 2006-07 and 2007-08 on the facts

and circumstances of the case?

b) Whether Tribunal erred in law in not

holding that there was no reason to believe

that income escaped assessment and all

mandatory

conditions

to

reopen

the

assessment under Section 147 of the Act

were

not

satisfied

on

the

facts

and

circumstances of the case?

3

c) Whether the Tribunal was correct in law in

reversing

the

deletion

made

by

the

Commissioner of Income Tax [Appeals] of the

addition under Section 69B in respect of

alleged unexplained investments made in

properties

of

Rs.

28,75,500/-

for

the

assessment year 2007-08 on the facts and

circumstances of the case? =

2. Brief facts of the case are, the assessee is

an individual who carries out contract works. He

filed returns of income for the assessment years

2005-06 to 2007-08 as follows:

AY

Original return of

income

2005-06 3,94,513

2006-07 18,09,501

2007-08 14,37,560

3. A search was conducted under Section 132

of the Income Tax Act, 1961 ('the Act' for short) in

the residential premises of one Shri. Ashok Kumar

Chowta and among other documents and papers, a

4

diary was also seized. It contained details of

payments made by Shri. Ashok Kumar Chowta to

the assessee. On April 21, 2009, a survey was

conducted in the business premises of the assessee

and his statement was recorded on May 11, 2009

and the assessee agreed to offer 8% additional

receipts as income but did not file his revised return

of income. On March 26, 2010, the Assessing

Officer issued notice under Section 148 of the Act

and called upon the assessee to show cause as to

why the amount agreed to be offered to tax was not

declared in the returns of income. On April 12,

2010, the assessee filed his return of income and

declared the same income as filed in the original

return of income. The case of the assessee was

selected for scrutiny by issuing notice under Section

143(2) of the Act. The assessee vide letter dated

May 30, 2010 objected on the ground that there

was

no

reason

to

believe

that

the

income

5

chargeable to tax had escaped assessment. On

December 24, 2010, the Assessing Officer passed

Assessment orders for the assessment years

2005-06 to 2007-08. Assessee challenged it

before the CIT (A)¹. By common order dated March

16, 2012, CIT (A) partly allowed the appeals. The

assessee and the Revenue preferred appeals

against the said order before the ITAT². Against the

appeal preferred by the Revenue, the assessee

preferred cross objections. By its judgment dated

August 14, 2014, the Tribunal partly allowed the

appeals and cross objections filed by the assessee.

The appeal preferred by the Revenue for the

assessment year 2007-08 was partly allowed and

dismissed the appeals for other assessment years.

Questions No.(a) & (b):

1 Commissioner of Income Tax (Appeals) – VI

2 Income Tax Appellate Tribunal, ‘A’ Bench, Bengaluru

6

4. Shri. Chadrashekar, learned advocate for the

appellant submitted that these two questions are

interlinked and the issue is with regard to validity of

reopening the assessment under Section 147 of the

Act for the assessment years 2005-06, 2006-07

and 2007-08. He submitted that reopening of

assessment under Section 147 of the Act, based on

a search conducted in the residence of Shri. Ashok

Kumar Chowta, is unsustainable, because, the right

procedure in such case is the one prescribed under

Section 153C of the Act. In support of his

contention,

he

placed

reliance

on

Manish

Maheshwari Vs. ACIT³ and Commissioner of Income

Tax Vs. IBC Knowledge Park (P.) Ltd.⁴ and arg