DCIT-27(1) , MUMBAI vs. HABIB MOHAMMAD UMAR KHAN, MUMBAI

This appeal by the Revenue is directed against the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [in short ‘ the CIT(A)’ ] dated 06/09/2022 for the assessment year 2014-15.

Shri Suresh Kumar Menon representing the Department submits that the CIT(A) has erred in disposing the appeal of assessee on the ground that the assessee has opted for 'Viwad Se Vishwas Scheme, 2020'( in short 'VSVS'). The ld. Departmental Representative submits that scrutiny assessment u/s.143(3) of the Income Tax Act, 1961 [in short 'the Act'] was completed by Assessing Officer vide order dated 30/12/2016. The assessee filed appeal against the assessment order dated 30/12/2016 before the CIT(A). During pendency of first appeal, the assessee opted for 'VSVS' accepting additions made in the said assessment order. Thereafter, the assessment of the assessee for assessment year 2014-15 was reopened and the assessment order dated 24/03/2022 was passed u/s. 147 r.w.s. 144B of the Act. The assessee filed appeal against the said assessment order. The CIT(A) under the mistaken belief that assessee has opted for 'VSVS' against assessment order passed u/s. 147 r.w.s. 144B of the Act, vide impugned order dismissed the appeal of assessee for statistical purpose. There is an apparent error in the order of CIT(A). Hence, the impugned order may be set-aside and the appeal be restored to CIT(A) for fresh adjudication.

Shri Roshan Ochani appearing on behalf of the assessee fairly accepted that the CIT(A) has erred in holding that the assessee has opted for 'VSVS' to settle the dispute arising out of assessment order passed u/s.147 r.w.s. 144B of the Act. The assessee had opted for 'VSVS' in respect of additions made in scrutiny assessment proceedings i.e. against order dated 30/12/2016. The ld. Authorized Representatives for the assessee further submits that while passing the reassessment order u/s. 147 r.w.s. 144B of the Act, the Assessing Officer has failed to consider the documents furnished by the assessee to substantiate its contentions that possession of land was handed over to the assessee in 2019 and not at the time of execution of conveyance deed in the year 2013. The ld. Authorized Representative for the assessee further submitted that the assessee had purchased land from the partnership firm M/s. Planet Associates in 2013 for a consideration of Rs.3.28 crores. At the time of execution of conveyance deed in 2013 the assessee had paid only Rs.4.00 lacs. Thereafter, the assessee paid Rs.1.50 crores to the encroachers for vacating the land. After clearing of the encroachment, the possession of the land was handed over to the assessee in the year 2019. The partnership firm, M/s. Planet Associates has offered capital gain on sale of land in the assessment year relevant to the Financial Year 2019-20. The same was accepted by the Department. However, in the case of assessee, the Assessing Officer on the basis of recitals in the conveyance deed held that the possession of land was transferred to the assessee in the year 2013. The assessee in 2013 had not paid the agreed consideration, therefore, there was no question of substantiating source of funds for payment of consideration. The Assessing Officer made addition u/s. 69 of the Act on account of unexplained investment. The ld. Authorized Representative for the assessee submits that the issue can be restored to the Assessing Officer for re-appreciation of documents already furnished before him.

We have heard the submissions made by rival sides. Both sides are unanimous in stating that the CIT(A) has erred in disposing of the appeal of assessee on the wrong presumption of facts that assessee has settled the issue under 'VSVS'. It is an admitted position that the assessee had settled the additions made by Assessing Officer in assessment order passed u/s. 143(3) dated 30/12/2016 under 'VSVS'. The assessee has not opted for 'VSVS' in respect of the addition(s) made by Assessing Officer in assessment order dated 24/03/2022 passed u/s. 147 r.w.s. 144B of the Act. Therefore, the impugned order is based on wrong appreciation of facts and hence, liable to be quashed. We hold and direct accordingly.

The Revenue has prayed for restoring the appeal back to the file of CIT(A), whereas the assessee has pleaded that the appeal be restored to Assessing Officer as the assessment order has been passed by the Assessing Officer without considering the documents placed on record by the assessee. The ld. Authorized Representative for the assessee has pointed that vital facts were necessary purportedly not considered by the Assessing Officer while passing the assessment order. Without commenting on the merits of the issue, we deem it appropriate to restore this appeal to the file of Assessing Officer for passing the assessment order denovo, after considering the submissions and documents furnished by the assessee. The Assessing Officer shall grant reasonable opportunity of hearing to the assessee before passing assessment order afresh, in accordance with law.