SH. JOGINDER SINGH S/O. SH. GURDIAL SINGH,BATHINDA vs. INCOME TAX OFFICER, BATHINDA

The present appeal has been filed by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals), Bathinda dated 25.01.2019 in respect of Assessment Year 2009-10.

Joginder Singh v. ITO “1. The Ld.CIT(A) erred on facts and law in recording a finding relating to a transaction dated 08-06-2009 for purchase of property which pertained to AY 2010-11 although the assessee was in appeal against the assessment order of the AO for the AY 2009-10 which was passed after issue of notice u/s 148 for A.Y.2009-10.

2. The Ld.CIT(A) while dealing with the appeal of the assessee for A. Y.2009- 10 erred on facts and law in recording a finding on Ground of Appeal No. 2 and giving a direction with regard to Ground of Appeal No. 3 pertaining to a transaction for purchase of property on 08-06-2009 which related to Assessment Year 2010-11 whereas the AO while computing the payment of on-money considered the transaction of purchase of property by the assessee dated 18-02-2009 which was relevant to A.Y.2009-10 only.

5. That the appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed off.

The 1st issue pertains to validity of reopening of assessment u/s 147 3. of the act which is spread over to Ground nos. 1 to 3 are interlinked to each other in respect of the transaction of purchase of property on 08.06.2019.

This issue is decided against the assessee by the Ld. CIT(A) by confirming validity of reopening by observing as under:

“4.6 I have given careful consideration to the facts of the case and the point of law involved in this matter. The important issue to be decided is whether or not the order of CIT(A) dated 11/02/2016 as discussed above constitutes to be the directions issued in the terms of section 150 (1) of the Income Tax Act to bring into tax the income of the appellant as has been done by the Assessing Officer.

"Provision for cases where assessment is in pursuance of an order on appeal, etc.

(2) The provisions of sub-section (I) shall not apply in any case where any such assessment, reassessment or recomputation as is referred to in that subsection relates to an assessment year in respect of which an assessment, reassessment or recomputation could not have been made at the time the order which was the subject matter of the appeal, reference or revision, as the case may he, was made by reason of any other provision limiting the time within which any action for assessment, reassessment or recomputation may be taken. ”

4.6.1 The provision above comes into play only if there are any findings or directions in the order. This aspect was considered in the case of Rajinder Nath v. CIT [1979] 2 Taxman 204/120 ITR 14 (SC), the Hon'ble Apex Court has discussed the expression of "finding" and "direction" as under:- "The expressions "finding" and "direction" in section 153(3) are limited in meaning. A finding given in an appeal, revision or reference arising out of an assessment must be a finding necessary for the disposal of the particular case, that is to say, in respect of the particular assessed and in relation to the particular assessment year. To be a necessary finding, it must be directly involved in the disposal of the case. It is possible in certain cases that in order to render a finding in respect of A, a finding in a respect of B may be called for. For instance, where the facts show that the income can belong either to A or B and to no one else, a finding that it belongs to B or does not belong to B would he determinative of the issue whether it can be taxed as A's income. A finding respecting B is initially involved as a step in the process of reaching the ultimate finding respecting A. If, however, the finding as to As liability can be directly arrived at without necessitating a finding in respect of B, then a finding made in respect of B is an incidental finding only. It is not a finding necessary for the disposal of the case pertaining to A. As regards the expression "direction" in section I53(3)(ii) of the Act, it is now well settled that it must be an express direction necessary for the disposal of the case before the authority or court. It must also be a direction which the authority or court is empowered to give while deciding the case before it. ” 4.6.2 In the case of K.M. Sharma v. ITO [2002] 122 Taxman 426/254 ITR 111 the Hon’ble Apex Court held that fiscal statute more particularly on a provision such as the present one regulating period of limitation must receive strict construction. Law of limitation is intended to give certainty and finality to legal proceedings and to avoid exposure to risk of litigation to litigant. Proceedings, which have attained finality under existing law due to bar of limitation cannot be held to be open for revival unless the amended provision is clearly given retrospective operation so as to allow upsetting of proceedings, which had already been concluded and attained finality. The amendment to sub-section (1) of Section 150 is not expressed to be retrospective and, therefore, has to be held as only prospective. The amendment made to sub-section (1) of Section 150 which intends to lift embargo of period of limitation under Section 149 to enable Authorities to reopen assessments not only on the basis of Orders passed in proceedings under the I.T. Act but also on Order of a Court in any proceedings under any law has to be applied prospectively. Therefore, even as per rule, strict construction and limitation of section 149 applies until and unless ingredients of section 150(1) is fulfilled.

4.6.3 Therefore, it is settled that the term "finding" and "direction" lias to be a specific finding and direction. They cannot be incidental; rather finding and direction should be of the case and of the order which is before the authority adjudicating the same. In the present case, the order of the appellate authority has given following findings:

"However, before parting, it is necessary to caution the Assessing Officer to suitably intimate the Stamp Duty Authorities regarding the registration of the aforesaid sale and purchase deeds at prices lower than what actually exchanged hands, It must be categorically stated that the appellant has voluntarily admitted to have got the purchase deed of agricultural land registered at a much lesser value than the value agreed upon and paid. Similarly, the purchasers of land from the appellant also defaulted on the payment of genuine stamp duty. ”

The entire focus of the order is cautioning the Assessing Officer to intimate the Stamp Duty authorities and not to direct the Assessing Officer to make the assessments of enhanced consideration paid in the hands of the appellant.

4.6.4 In absence of any findings or directions in the appeal order dated 11/02/2016, the provisions of section 150(1) of the Income Tax Act cannot be invoked to extend the period of limitation, therefore the notice given by the Assessing Officer u/s 147 of the Income Tax Act is beyond period of limitation. 4.6.5 However, in this case purchase transactions of the-appellant were dated 18.02.2009 falling in AY 2009-10 and second transaction was dated 08.06.2009 falling in AY 2010-11. The period of limitation as per the provisions of the Income Tax Act for reopening assessment for the assessment year 2010-11 was to expire on 31/03/2017. The Assessing Officer has issued notice u/s 148 of the Acton that date, therefore in respect of 2nd transaction dated 08/06/2009 the notice of reassessment was issued well within time even if the contention of the appellant that there were no directions given by the appellant authority is accepted. The ground of appeal is decided partly in favour of the appellant for the reason that the notice of reassessment should have been issued by the Assessing Officer by 31/03/2017 in respect of purchase transaction dated 18.02.2009 falling in AY 2009-10 thus it was beyond the period of limitation therefore, set-aside whereas in respect of purchase transaction dated 08/06/2009 the same was within the period of limitation and hence upheld.

4. Having heard rival contentions on the issue, perusal of the material on record, impugned order, and case law cited before us we find no error or Joginder Singh v. ITO legal infirmity in the finding of the Ld. CIT(A) on the legal issue of validity of reopening of the assessment u/s 147 of the act. The section 150(1) of the act states that Notwithstanding anything contained in section 149, the notice under section 148 may be issued at any time for the purpose of making an assessment or reassessment or recomputation in consequence of or to give effect to any finding or direction contained in an order passed by any authority in any proceeding under this Act by way of appeal, reference or revision [or by a Court in any proceeding under any other law], In the present case, purchase transactions of the-appellant were dated 18.02.2009 falling in AY 2009-10 and second transaction was dated 08.06.2009 falling in AY 2010-11. The period of limitation as per the provisions of the Income Tax Act for reopening assessment for the assessment year 2010-11 was to expire on 31/03/2017. The Assessing Officer has issued notice u/s 148 of the Action that date, therefore in respect of 2nd transaction dated 08/06/2009 the notice of reassessment was issued well within time. Thus, in our view, the reopening of the assessment in respect of purchase transaction dated 08/06/2009, the same was being within the period of limitation and hence rightly upheld as valid.

Accordingly, the decision of the CIT(A) on this issue is sustained.

5.1 I have given careful consideration to the contention of the appellant and find that there existed enough material to come to a conclusion that extra money/premium has been paid in the purchase transaction which has been ostensibly accepted by the seller by filing sworn in affidavit in this regard. In these circumstances, the onus shifted to the appellant to bring on record evidence to the contrary to show that nothing more than the amount mentioned in the registered sale deed has been paid. There has been no effort on behalf of the appellant to bring on record evidence the contrary', therefore the Assessing Officer was justified in treating addition of amount paid as investment from unaccounted sources. I have also considered the contention of the appellant that consideration mentioned in registered document cannot be disbelieved by virtue of provisions of Section 91 & 92 of the evidence Act. The appellant placed reliance upon decision of Parmjjt Singh Vs. ITO 327 ITR 580. It is accepted that payment of premium over and above sale consideration mentioned in the registered document cannot be attributed to the immovable property transaction. However there is no bar in holding that more money exchanged hands which partakes character of payment though connected to transaction but not in respect of consideration. The appellant is obliged to tender explanation about source of this extra money which he has failed. However, as discussed in the paragraph above the action of the Assessing Officer in respect (transaction dated 08/06/2009 has been sustained; therefore the Assessing Officer is directed to recalculate the amount of extra money/premium invested by the appellant in this Joginder Singh v. ITO transaction and accordingly reduce the addition made in the assessment. In other words, the addition made by the Assessing Officer pertaining to transaction dated 08.02.2009 stands deleted.”

Order pronounced in the open court on 28.02.2023