MR. RAHIL MAHESHKUMAR ZIAMUDDIN,USA vs. ASSISTANT COMMISSIONER OF INCOME-TAX, INTERNATIONAL TAXATION, CIRCLE-1(2), BANGALORE

PER CHANDRA POOJARI, ACCOUNTANT MEMBER:

This appeal by assessee is directed against order of NFAC dated 1.2.2023 for the assessment year 2012-13. 2. The brief facts of the case are that the assessee Rahil Mahesh Kumar is an Non-resident individual. The assessee has filed original return of income on 31/10/2015 declaring total income of Rs. 3,22,68,100/- as a Non-resident. The income returned included Capital gains of Rs. 3,09,21,434/- and Income from other sources of Mr. Rahil Mahesh Kumar Niamuddin, Massachussetts, USA

Page 2 of 25 Rs.13,56,669/-. Later, the assessment was reopened by recording reasons as follows:

2.1 Reason to believe escapement of Income:

The assessee, Vide registered document No 1425/8-81 dated 17/11/1980, has purchased property of 11 acres 25-Guntas in Survey Nos 19 and 20 of Poojanahalli Village, Devanahalli taluk for Rs. 40,000/-. Later during FY 2013-14, agreement for sale dated 03/02/2014 was entered by assessee with OMR Investment LLP on 03/02/2014 for sale of 7 acres 16.68 guntas of this property, and Rs. 18,54,25,000/- was received by the assessee.

2.2 Subsequently, vide agreement for sale dated 02/04/2014 the assessee agreed to transfer the entire property of 11 Acres and 25 guntas (including 7 acres and 16.68 guntas already transacted), for a total sale consideration of Rs. 20,16,17,000/-. Therefore, for AY 2015-16 assessee has filed the return declaring Rs. 1,61,92,000/- as sale consideration. (Rs. 20,16,17,000 - Rs.18,54,25,000). For computing the capital gain, the assessee had adopted FMV of the above-mentioned property as on 01.04.1981 at Rs.25 sq ft based on a valuer's report dated 20/06/2014.

2.3 The valuers report at point no. 37 states that no sale instances of that area were available to ascertain the FMV as on 01.04.1981, which is an incorrect statement and made without actually gathering sale instances from the sub-registrar's office. There was no reason for the valuer to ignore this value of Rs.40,000/- as per the sale deed dated 17/11/1980 and adopt an imaginary figure of Rs.25 sq ft which translates to value of Rs.65,68,112/- for the entire property purchased by the assessee

Mr. Rahil Mahesh Kumar Niamuddin, Massachussetts, USA

Page 3 of 25 for mere Rs.40,000/- just four months earlier. No reason has been attributed in the valuer's report for hiking the FMV 164 times.

2.4 As the FMV adopted as on 01/04/1981 (just 4 months after the purchase) was unreasonably high, this office made enquiries with SRO for other properties sold in Poojanahalli village which were sold during September, October and November 1980 and it is found that average rate per sq ft was 7.3 per sq ft. The assessee purchased a huge land parcel of 11 acres and therefore has paid a slightly higher price of Rs.12.2 sq ft as against average of Rs.7.3 sq ft. Adopting the actual rate paid by assessee, the capital gain comes to Rs.1,59,72,196/- as against capital loss of Rs. 13,56,678/- declared by the assessee.

2.5 Reopening of the case u/s 148 of Income-tax Act: Based on the reasons mentioned above, the assessing officer had reason to believe that the assessee had income that had escaped assessment and proceeded to reopen this case for AY 2015-16. Subsequently approval u/s 151 was sought from Commissioner of income tax as required as per provisions of Sec 151(1) of the Income Tax Act. After going through the reasons recorded and documents available on record, the Commissioner of Income Tax granted approval u/s 151 of Income Tax Act dated 27/03/2021 and the notice u/s 148 of the Act dated 30/03/2021was sent to assessee. 2.6 Consequently, on reopening of assessment, the AO recomputed the cost of acquisition of capital asset sold by assessee situated at Poojanahalli village measuring 4 acres 8.32 guntas and recomputed the capital gain on transfer of this property at Rs.1,36,54,117/-. Against this assessee went before the DRP challenging the issue relating to reopening of assessment raising a Mr. Rahil Mahesh Kumar Niamuddin, Massachussetts, USA

Page 4 of 25 ground that physical reopening of assessment is bad in law as well as challenging the merit of addition made by the AO regarding the cost of acquisition fixed by the AO on computation of capital gain. The ld. DRP given direction with regard to reopening of assessment as valid. However, ld. DRP has not given any direction with regard to computation of capital gain or fixation of cost of acquisition by AO. The ld. AO while passing the assessment order confirmed the final assessment order to the issue raised in the draft assessment order. He had also considered the direction of Tribunal given in for the assessment year 2014-15 vide order dated 18.7.2022. Against this assessee is in appeal before us by way of following grounds. Ground Nos.1 & 2 are related to each other, which are reproduced as under:-

3. The assessee in support of the aforesaid Grounds submitted that he had originally filed his Return of income for the assessment year 2015-16 on 31-10-2015 vide e-acknowledgement number 873497780311015. It is further submitted that the said Return of income was subjected to 147 proceedings by issuance of notice under section 148 of the Act dated 28-5-2018 bearing ITBA/AST/S/148/2- 18-19/1009932747(1). The assessee in compliance to the aforesaid notice filed his return of income again on 19-6-2018. The assessee on having filed the Return of income sought for reasons recorded and also duly submitted his objections to the reopening of the already

Mr. Rahil Mahesh Kumar Niamuddin, Massachussetts, USA

Page 5 of 25 concluded assessment vide his letter dated 12th June 2018. The learned Assessing officer neither disposed the said objections not did he conclude the proceedings by passing an order, which lead to the inference that the learned assessing officer had dropped the proceedings. While the position thus remained, the assessee was then in receipt of another notice under section 148 of the act dated 30th March 2021 proposing to reassess the income of the assessee. The assessee submitted that the issuance of the impugned notice under section 148 of the act without disposing the first notice issued as aforesaid and the return filed in pursuance of the same is invalid and void ab initio and therefore the proceedings so initiated need to be cancelled on this score alone. The ld. A.R. for the assessee placed reliance on the findings of the Hon’ble High Court of Calcutta in the case of Indian Tubes Co. Ltd reported in 272 ITR 439 (Cal) wherein his Lordship while considering an identical issue has struck down the Notice so issued by holding as under: “The only question that arises for determination, therefore, in this writ application is whether the Income-tax Officer could initiate fresh proceeding under section 148 of the Act on March 29, 1983, when pursuant to the earlier invalid notice dated February 11, 1983, the petitioner had already submitted the returns. After hearing the learned advocates for the parties and after going through the aforesaid materials, I find that the question involved herein has practically been answered by the Supreme Court in the case of CIT v. S. Raman Chettiar [1965] 55 ITR 630 relied upon by Dr. Pal. In the said case, an invalid notice under section 34 of the Indian Income-tax Act, 1922, which is equivalent to section 148 of the present Income-tax Act, was served and the return was submitted pursuant to such notice. The question was whether that was a valid return and whether the notice of assessment ignoring such return could be upheld.

In such facts, the Supreme Court was of the view that although the notice under section 34 was invalid, the return submitted pursuant to that invalid notice was a "return" within the meaning of section 22(3) of the said Act and the Income- tax Officer could not ignore or disregard that return and issue a fresh notice under section 34 on the assumption that there had been an omission or failure on the part of the assessee to make a return of his income under section 22, and on that ground the assessment under section 34 was held to be invalid. In the Mr. Rahil Mahesh Kumar Niamuddin, Massachussetts, USA

Page 6 of 25 said case, the Supreme Court further held that there was no warrant in the Income-tax Act for treating returns as "voluntary returns" and "non-voluntary returns" and whatever be the impelling cause or motive, if a return, otherwise valid, is filed by an assessee before the receipt of a valid notice under section 34, it is to be treated as a return within the meaning of section 22(3) of the 1922 Act.

Applying the aforesaid principles to the facts of the case, it is clear that when the petitioner filed returns in compliance with the invalid notice dated February 11, 1983, under section 148 of the 1961 Act, those returns should be treated as "returns" and as such before making assessment on the basis of those returns, no further notice under section 148 of the Act could be passed.”

3.1 The ld. A.R. submitted that the ld. DRP has merely upheld the reopening of the assessment and not given any finding on the contention of the Petitioner that a second Notice of reassessment could not have been issued pending disposal of the first Notice issued. The factual matrix of Indian Tubes cited above, his Lordship has held that even when the first Notice issued is invalid, there would be no scope for issuance of further notices till the Returns filed in pursuance of the first notices are not assessed in accordance of law. The same can also be discerned from the concluding paragraph of the judgement, wherein it was held as under:

“I, thus, quash the first two notices dated February 11, 1983, on the ground that the required satisfaction of the officer concerned was not taken for reopening assessments more than four years old. The other two notices dated March 29,1983, are set aside on the ground that those were issued at a point of time when the assessee had already submitted the returns for those periods pursuant to an earlier invalid notice and so long as those two returns are not assessed in accordance with law, there was no scope for issuing further notice under section 148.

The writ application, thus, succeeds. Those four notices under section 148 are quashed. The respondents are directed to proceed with the assessment on the basis of the returns filed by the petitioner pursuant to the earlier notices.”

Mr. Rahil Mahesh Kumar Niamuddin, Massachussetts, USA

Page 7 of 25 3.2 It is further submitted by the ld. A.R. that the aforesaid view has once again been recently endorsed by the Hon’ble High Court of Calcutta wherein their Lordships following the decision of Indian Tubes cited above and another decision of the division bench of the Calcutta High Court in the case of Coal India Limited have held as under:

“2. A short question of law involved in this writ petition is that whether a second notice under section 148 of the Income-tax Act, 1961 issued by the assessing officer after the expiry of one year as per Section 153(6)(i) is valid without disposing the return filed to the first notice issued under section 148 of the Income-tax Act for the very same assessment year. Here admittedly in this case returns in response to notices under section 148 of the Act and objections against the same relating to two relevant assessment years 2012-13 and 2013- 14 and were not disposed of bypassing final reassessment order on the same as per order passed in earlier Writ Petition, within the period of limitation prescribed under section 153(6)(i) of the Act and without disposing the same, the assessing officer in violation of the statutory provision by not making final assessment on the first notices, issued second notices under section 148 of the Act relating to the same assessment years, which is not permissible under the law. Learned advocate appearing for the petitioner relies on an unreported decision of a Division Bench of this Court dated Pr. CIT v. Coal India Ltd. [ITAT 187 of 2022, dated 13-12-2022] where inter alia a similar question of law was involved and the Court held in favour of assessee, relevant portion of the said judgment is as follows :

"The short issue which arises for consideration in the instant appeal is whether the Assessing Officer could have issued a second notice under section 148 of the Act when the assessee had filed his return of income in response to the first notice issued under section 148A and such return was not disposed of. This question of law has been answered in several decisions and one of the earliest decisions is in the case of S. Raman Chettiar v. CIT reported in (1961) 42 ITR 700, wherein the Court held that when a return is furnished by the assessee in consequence of a notice issued under section 34 of the Income-tax Act, 1922, it was not open to the Income-tax Officer to ignore that return and issue a further notice under section 34(1)(a) on the assumption that there had been an omission or failure on the part of the assessee to make return of his income. This decision was affirmed by the Hon'ble Supreme Court in the Commissioner of Income Tax, Madras v. S. Raman Chettiar, (1965) 55 ITR 630. There is also a decision of the High Court of Allahabad to the same effect in the case of Commercial Art Press v. Commissioner of Income Tax, reported in (1978) 115 ITR 876. The aforementioned decisions were followed in the case of A.S.S.P. & Co. v. CIT reported in 1986 SCC OnLine Mad 317. Further, a learned Single Bench of this Mr. Rahil Mahesh Kumar Niamuddin, Massachussetts, USA

Page 8 of 25 Court has decided an identical issue in the case of The Indian Tube Co. Ltd. v. Income-tax Officer, reported in 2004 SCC OnLine Cal 362. The underlying legal principle is that, when a notice under section 148 of the Act is issued, the original assessment proceedings are entirely opened up or left open and the finality which had occurred in the first assessment order does not exist any longer. Therefore, without disposing of the return of income filed by the assessee in response to the first notice, the assessing officer could not have issued a second notice for reopening of the assessment which, at the relevant point of time, did not exist in the eye of law."

4. Considering the facts and circumstances of the case as appears from record, relevant provision of law under section 153(6)(i) of the Income-tax Act, 1961, and the judgment of the Division Bench of this Court in the case o f Indian Tubes Co. Ltd. v. I T O [2005] 272 ITR 439, I am of the considered opinion that the respondent assessing officer concerned was not justified in law in issuing impugned second notices under section 148 of the Income-tax Act, 1961, relating to the same assessment years instead of completing the assessment on returns filed in response to the first notices under section 148 of the Act after disposing the objection filed by the petitioner by passing a reasoned and speaking order as per earlier order/direction of this Court in earlier writ petition remanding the matter back to the assessing officer. Action of the assessing officer allowing the expiry of period of limitation of one year to complete the assessment as per Section 153(6)(i) of the Income-tax Act, 1961, from the date of order of this Court in earlier writ petition on the first notices under section 148 of the Act relating to same assessment year and issuing second notice in respect of the very same assessment year is not legal and valid.

5. In view of the reasonings and discussion made above the impugned second notices under section 148 of the Income-tax Act, 1961, relating to assessment years 2012-13 and 2013-14 and all subsequent proceedings are quashed.”

3.3 In view of the above, the ld. A.R. prayed that the Hon’ble Bench may be pleased to quash the illegal Notice issued u/s 148 of the Act dated 30-03-2021 and the subsequent proceedings under the said Notice.

Mr. Rahil Mahesh Kumar Niamuddin, Massachussetts, USA

Page 9 of 25 4. The learned DR submitted that the notice u/s 148 of the Act was issued on 30.3.2021 which is a different notice, not the second notice. In response to the notice u/s 148 of the Act dated 30.3.2021, the assessee filed the ROI for AY 2015-16 vide ack. No.345440390270421 on 27.4.2021. The objection regarding issuance of another notice u/s 148 of the Act as claimed by the assessee has been dealt by the DRP.

4.1 The ld. D.R. further submitted that the department is guided by the following judicial pronouncements while upholding the validity of the initiation of proceedings under section 147 of the Act. The Hon’ble Supreme Court in the case of Raymond Woolen Mills Limited (236 ITR 34) (SC) held that, what is to be seen is “whether there was prima facie some material on the basis of which the department can reopen the case. The sufficiency of correctness of the material is not to be considered at this stage”. The Apex Court in the case of ACIT Vs. Rajesh Jhaveri Stock Brokers Private Limited (291 ITR 500) held that while considering the issuance of notice u/s 147 of the Act, the final outcome of the proceedings is not relevant, “at the stage of issue of notice, the only question is whether there was relevant material in which a reasonable person could have formed requisite belief whether the materials would conclusive prove the esapement is not the concern at this stage”.

4.2 The ld. D.R. submitted that while upholding the issue of notice u/s 148 of the Act in the case of Aaspas Multimedia Limited, the Hon’ble Gujarat High Court (2017) 83 taxmann.com 82 (Gujarat) held that “The term reason to believe would mean cause or justification. If the Assessing Officer has cause or justification to know or suppose that income had escaped assessment, it can be said

Mr. Rahil Mahesh Kumar Niamuddin, Massachussetts, USA

Page 10 of 25 to have reason to believe that an income has escaped assessment. (para 7.3)”.

4.3 According to ld. D.R., Section 147 of the Act provides inter alia that if the Assessing Officer has the reason to believe that any income chargeable to tax has escaped assessment, he may subject to the provisions of sections 148 to 153, assess or reassess such income. In the present case, since both the necessary conditions to reopen the assessment have been duly fulfilled, namely, the AO has reason to believe and the income has escaped assessment, sufficient of the reasons is not to be gone into at this juncture. Further, the Assessing Officer has recorded detailed reasons pointing out the material available which had a live link with the formation of belief that the income chargeable to tax had escaped assessment. At this stage, as is often repeated, one would not go into sufficiency of such reasons.

4.4 He submitted that in the case of Rakesh Gupta (2018) 93 taxmann.com 271 (Punjab & Haryana), the Hon’ble Court while upholding the proceedings u/s 148 of the Act stated that “it is not necessary that the Assessing Officer must know or be certain that income has escaped assessment. The Assessing Officer must have reason to believe it has. He may finally accept the assessee’s case. That would make no difference to the validity of the invocation of sections 147 and 148 (para 22)”.

4.5. The ld. D.R. further submitted that the draft Assessment Order was passed on 31/03/2022. The date of filing of Objection by the assessee before the DRP was 28/04/2022 and the date of issue of direction by DRP was 07/12/2022. The assessee did not press on merit of the case.

Mr. Rahil Mahesh Kumar Niamuddin, Massachussetts, USA

Page 11 of 25 4.6. The ld. D.R. further submitted that the ITAT vide Order dated 18/07/2022 in for AY 2014-15, pertaining to this assessee has decided that Capital Gain is required to be taxed in AY 2015-16 and not in the AY 2014-15. It further observed that more so, it is already, subject to tax in the AY 2015-16 and cannot be brought to tax in the AY 2014-15 which amounts to double taxation. In view of the direction of Tribunal, the Capital Gain has been calculated by the Assessing Officer in Page 25 & 26 of Assessment Order dated 10/01/2023. Figures mentioned in the assessment order are part of record. The assessment order takes into consideration the direction of ITAT in A.Y.2014-15 and since the direction came after draft assessment order, the same has been added in A.Y.2015-16 as indicated in the order. However, if there is any discrepancy in calculation, the ld. D.R. submitted that the AO may be directed to recalculate the same after verifying from the records. He submitted that the assessee stated before DRP that the said 147 proceedings so initiated on 28/05/2018 was closed by on 31/12/2019 since barred by limitation. The notice u/s 148 was issued on 30.3.2021 which is a different notice, not the second notice. In response to the notice u/s 148 dated 31.1.2021, the assessee filed the ROI for AY 2015-16 vide ack. No.345440390270421 on 27.4.2021. The objection regarding issuance of another notice u/s 148 as claimed by the assessee has been dealt by the DRP.

Mr. Rahil Mahesh Kumar Niamuddin, Massachussetts, USA

Page 12 of 25 notice u/s 148 of the Act on 30.3.2021 and the assessee filed return of income for the assessment year 2015-16 vide acknowledgement No.345440390270421 on 27.4.2021. Now the contention of the ld. A.R. is that since the AO has not framed the assessment in respect of first notice issued u/s 148 of the Act on 28.5.2018 and framing reassessment order vide notice issued u/s 148 of the Act on 30.3.2021 is bad in law. For this purpose, he relied on the judgement of Kolkata High Court in the case of Elite Pharmaceuticals Vs. ITO 147 Taxmann.com 378 wherein held as follows:

“4. Considering the facts and circumstances of the case as appears from record, relevant provision of law under section 153(6)(i) of the Income-tax Act, 1961, and the judgment of the Division Bench of this Court in the case o £ Indian Tubes Co. Ltd. v. ITO [2005] 272 ITR 439. I am of the considered opinion that the respondent assessing officer concerned was not justified in law in issuing impugned second notices under section 148 of the Income-tax Act, 1961, relating to the same assessment years instead of completing the assessment on returns filed in response to the first notices under section 148 of the Act after disposing the objection filed by the petitioner bypassing a reasoned and speaking" order as per earlier "order/direction of this Court in earlier writ petition remanding the matter back to the assessing officer. Action of the assessing officer allowing the expiry of period of limitation of one year to complete the assessment as per Section 153(6)(z) of the Income-tax Act, 1961, from the date of order of this Court in earlier writ petition on the first notices under section 148 of the Act relating to same assessment year and issuing second notice in respect of the very same assessment year is not legal and valid.” 5.1 He also relied on the judgement in the case of Kolkata High Court in the case of Principal CIT Vs. Coal India Ltd. in 187 of 2022 dated 13.2022, wherein held as under:

“Where inter alia a similar question of law was involved and the Court held in favour of assessee, relevant portion of the said judgement is as follows:

"The short issue which arises for consideration in the instant appeal is whether the Assessing Officer could have issued a second notice under section 148 of the Act when the assessee had filed his return of income in response to the first notice issued under section 148A and such return was not disposed-pf. This question of law has been answered in several decisions and one of the earliest decisions is in the case of 5. Raman Chettiar v. CIT reported in (1961) 42 ITR 700, wherein the Court held that when a return is furnished by the assessee in consequence of a notice issued under section 34 of the Mr. Rahil Mahesh Kumar Niamuddin, Massachussetts, USA

Page 13 of 25 Income-tax Act, 1922. it was not open to the Income-tax Officer to ignore that return and issue a further notice under section 34(1 )(a) on the assumption that there had been an omission or failure on the part of the assessee to make return of his income. This decision was affirmed by the Hon'ble Supreme Court in the Commissioner of Income Tax, Madras v. $. Raman Chettiar, M965) 55 ITR 630. There is also a decision of the High Court-of Allahabad to the same effect in the case of Commercial Art Press v. Commissioner of Income Tax, reported in (19781 1 15 ITR S76 The aforementioned decisions were followed in the case of A.S.S.P. & Co. v. CIT reported in 1986 SCC On Line Mad 317. Further, a learned Single Bench of this Court has decided an identical issue in the case of The Indian Tube Co. Ltd. v. Income-tax Officer, reported in 2004 SCC On Line Cal 362. The underlying legal principle is that, when a notice under section 148 of the Act is issued, the original assessment proceedings are entirely opened up or left open and the finality which had occurred in the first assessment order does not exist any longer. Therefore, without disposing of the return of income filed by the assessee in response to the first notice, the assessing officer could not have issued a second notice for reopening of the assessment which, at the relevant point of time, did not exist in the eye of law."

5.2 In our opinion, section 147 of the Act places no restriction on a number of attempts an ITO may invoke the power to initiate the reassessment proceedings in respect of particular order. The time limit prescribed u/s 149 of the Act alone would be the limiting factor. Such a view is subscribed in the following judgements:-

{AUTHORS} (i) Jagmohan Goenka vs. K.D. Banenee (1954) 26 ITR 637 (Cal) : TC51R.525; {AUTHORS} (ii) K.E.M.Mohammad Ibrahim Marcair vs. CIT (1964) 52 ITR 890 (Mad) : TC51R.388B ; {AUTHORS} (iii) Gurdaval Beriia vs. CIT (1966) 62 ITR 494 (Cal) : TC51R.526; {AUTHORS} (iv) CIT vsT. S.5.K.G. Arthanarisamv Chettiar (1980) 19 CTR (Mad) 240 : (1982) 136 ITR 145 (Mad); {AUTHORS} (v) Commercial Art Press vs. CIT (1978) 115 ITR 876 (All) : TC51R 527; {AUTHORS} (vi) CIT vs. Surendra Kumar Bhadani (1986) 55 CTR (Pat) 80 : (1987) 164 ITR 323 (Pat) : TC51R.528;

Mr. Rahil Mahesh Kumar Niamuddin, Massachussetts, USA

Page 14 of 25 {AUTHORS} (vii) Atma Ram Bindra Ban vs. CIT (1960) 39 ITR 418 (Punj) : TC51R.530. (viii) R. Kakkar Glass and Crockery House vs. CIT (2002; 173 CTR (P&H) 503 : (2002) 254 ITR 273 (P&H)

5.3 Further, it was held in the case of S.K. Gupta & Company Vs. ITO reported in 246 ITR 560 as under: 11. The second contention raised on behalf of the petitioner is that when the Tribunal quashed the assessment, the earlier notice issued by the AO under s. 148 and the return filed by the assessee revived and, therefore, the AO could have proceeded on those documents if it was permissible under the law. Reliance is placed on a judgment in S.P. Kochhar vs. ITO (1983) 37 CTR (All) 49 : (1984) 145 ITR 255 (All) : TC 51R.482, in which it was held that where an assessment is pending, a notice under s. 148 cannot be issued. Reliance is also placed on CIT vs. P. Krishnankutty Menon (1990) 81 CTR (Ker) 229 : (1990) 181 ITR 237 (Ker) : TC SIR.531. In that case reassessment proceedings had been initiated under s. 147(b) and during the pendency of the reassessment, further notices under s. 147(a) were issued. It was held that when the assessment was open no valid notice under s. 147(a) could be issued. This proposition of law was also not challenged on behalf of the Revenue. However, what is evident is that due to the time taken in the earlier round of proceedings, the limitation for making an assessment on the basis of the return of income, filed in pursuance of the notice dt. 5th Oct., 1990, had expired and, therefore, it cannot be said that either the said notice or the return of income had revived and could be treated to be pending. Such a situation has been taken care of by cl. (b) of Expln. 2 to s.

(b) where a return of income has been furnished by the assessee but no assessment has been made and it is noticed by the AO that the assessee has understated the income or has claimed excessive loss, deduction, allowance or relief in the return.

Thus, in view of this Explanation and the fact that because of the events, narrated above, no assessment was made on the assessee-partnership firm, it becomes a case where income chargeable to tax has escaped assessment. As stated in para. 7 of the counter-affidavit, the income was not stated by the assessee in the return that was filed in pursuance of the earlier notice under s. 148 on 16th Nov., 1990. The income declared in the said return was only Rs. 99,620 while as stated in para. 16 of the counter-affidavit during the course of search and seizure operations, the assessee had offered an additional income of Rs. 1 lakh. Therefore, all the conditions mentioned in cl. (b), reproduced above were satisfied in this case and the AO could reassess the income after issuing a notice under s.

Page 15 of 25 copy of which is at p. 38 of the paper book as annexure 5, did not specify whether it was issued to the AOP or to the partnership firm. No such ground has been set up in the writ petition. The notice has been issued to S.K. Gupta & Co. which, as admitted in the petition itself is a partnership firm and was being assessed to tax from before at general index register No. S.302/W1. This number is mentioned in the notice itself making it quite clear that it has been issued to the partnership firm. The conduct of the AO in making the order under s. 154 also indicated that he wanted only to assess a partnership firm and not an AOP. Therefore, in any case there is no infirmity in the notice on this account as well.

5.4 In our opinion, when there is no limit to the number of notices which can be issued u/s 148 of the Act and when the first reopening notice issued on 28.5.2018 u/s 148 of the Act has been culminated by lapse of time on 31.12.2019 and second reopening notice u/s 148 of the Act was issued on 30.3.2021, the proceedings in respect of earlier notice issued u/s 148 of the Act on 20.5.2018 stands terminated. In these circumstances, the second reassessment notice issued u/s 148 of the Act on 30.3.2021 is valid notice to reopen the assessment. Thus, the proceedings initiated vide first notice u/s 148 of the Act on 20.5.2018 held to be not pending, issue of second notice on 30.3.2021 would be valid. It is not the case of the assessee that first notice issued on 20.5.2018 still pending on the date of issuing of second notice u/s 148 of the Act on 30.3.2021. Being so we do not find any infirmity in issuing notice u/s 148 of the Act on 30.3.2021 and thereafter framing assessment u/s 147 of the Act r.w.s. 144C of the Act. Accordingly, these ground nos.1 & 2 of the assessee’s appeal are dismissed.

6. Next ground Nos. 3 & 4 of the assessee’s appeal are reproduced below:

3. Without prejudice to the above, the Learned Assessing Officer has erred in making an addition of Rs.4,4i,92,8i2/- to the Capital Gain on Sale of Infantry road property returned by the Assessee, which addition is Mr. Rahil Mahesh Kumar Niamuddin, Massachussetts, USA

Page 16 of 25 contrary to law in as much as the same was not a part of the Draft Assessment order passed u/s 143(3) r.w.s. 144C of the Act therefore needs to be deleted.

6.1 The ld. A.R. for the assessee in support of the aforesaid grounds, submitted that the learned Assessing officer had initially in the Draft Order of assessment dated 31-03-2022 computed the Income of the Appellant as under:

Long Term Capital Gain as Rs.1,36,54,117/- discussed above (A) Add : Income from Capital Rs.4,26,15,612/- Gain Less : Deduction u/s 54 Rs.1,03,37,500/- Net Income from Capital Rs.3,22,78,112/- Gain (B) Add: Income from other Rs.13,56,669/- sources as ITR(C) Total Income (A+B+C) Rs.4,72,88,898/- Less: Chapter VI-A Rs.10,000/- deduction u/s 80TTA Net Assessed Income Rs.4,72,78,898/-

(extracted from Draft assessment order)

6.2 Aggrieved by the aforesaid order, the Assessee had preferred his objections before the Dispute Resolution Panel, who have by their order dated 07/12/2022, rejected all the objections of the Assessee. Pursuant to the directions of the ld. DRP, the learned Assessing officer has then passed the impugned order of assessment dated 10-01-2023 assessing the Income of the assessee at Mr. Rahil Mahesh Kumar Niamuddin, Massachussetts, USA

Page 17 of 25 Rs.9,01,15,029/- which is at variance with her Draft assessment order and the directions of the DRP as under :

Long term Capital Gain Rs.3,22,78,112/- as per ITR Long term Capital Loss Rs.13,56,678/- as per ITR Net Long term Capital Rs.3,09,21,434/- Gain as per ITR Income from other Rs.13,56,669/- sources as ITR Less: Chapter VI-A Rs.10,000/- deduction u/s 80TTA Returned Income Rs.3,22,68,100/- Add: Long term Capital Rs.1,36,54,117/- Gain as per para 5 Add : Difference of Rs.4,41,92,812/- Rs.7,64,70,924/- & Rs.3,22,78,112/- Assessed Income Rs.9,01,15,029/-

(extracted from Final assessment order)

6.3 The ld. A.R. submitted that the learned Assessing Officer having passed a draft order of assessment assessing the Income of the assessee at Rs.4,72,78,898/-could not have varied the same in the final order of assessment unless the same was in pursuance of the directions of the DRP. Hence, the ld. A.R. submitted that in the absence of any such direction enhancing the income of the assessee or directing the A.O to incorporate the findings of the ITAT for the Asst year 2014-15, the said action of the learned Assessing officer is erroneous and as such the order needs to be quashed on this score also as the same is not in accordance with the provisions of Section 144C(10) r.w.s 144C(13) of the Act. The ld. A.R. for the assessee relied on the findings of the coordinate Bench in the case of the Xchanging Solutions Ltd, wherein under similar facts, the Bench has held as under:

Mr. Rahil Mahesh Kumar Niamuddin, Massachussetts, USA

Page 18 of 25 5. We have heard both the parties and perused the material on record. Similar issue came up for consideration in the case of Flextronics Technologies (India) (P.) Ltd. (supra) has held in paras 9 to 12 as under : "9. We have considered the rival submissions. We find that on identical facts, this Tribunal in the case of Software Paradigms Infotech (P.) Ltd. (supra) has quashed the final order of assessment observing as follows:—

'3.3.1 We have heard the rival contention of both parties in the matter and perused and carefully considered the material on record. The undisputed facts on record, as brought out by the discussions above, is that the AO, as per law, was required to pass the final order of assessment dated 17/1/2014 for asst. year 2009-10 u/s 143(3) r.w.s 144C of the Act in conformity with the directions issued by the DRP u/s 144C(5) of the Act, which are binding on him as per section 144C(10) thereof and within the time prescribed u/s 144C(13) of the Act. We find that instead of passing the final order of assessment as required by law, the AO passed the impugned final order of assessment dated 17/1/2014 u/s 143(3) r.w.s 92CA of the Act; which, as contended by the id AR, is identical to the draft order of assessment passed on 14/3/2013 by only incorporating this TPO's proposals and , thereby evidently giving the DRP's mandatory directions issued u/s 144C(5) of the Act a complete go-by. In our view, it is factually established that the AO in the final order of assessment dated 17/1/2014 has not given effect to or carried out the binding directions of the DRP as required u/s 144C(10) within the time specified u/s 144C(13) of the Act; which is a clear violation of the binding provisions of sec. 144C(10) and (13) of the Act. Therefore, in our considered opinion, the conduct of the AO/TPO in passing the impugned final order of assessment dated 17/1/2014 is a clear case of defiance and disregard to the binding directions of the higher authorities, i.e, the DRP in the case on hand. In fact, in the impugned order dated 17/1/2014 there is not even a single reference to the DRP's directions issued us/144C(5) of the Act vide order dated 30/12/2013.

3.3.2 In the factual and legal matrix of the case on hand, as discussed above, we are of the considered view that the impugned final order of assessment for asst. year 2008-09 passed u/s 143(3) r.w.s 92CA of the Act by the AO, in violation of the express mandatory provisions of sec. 144C(10) and (13) of the Act by not passing the impugned order in pursuance of and in conformity with the binding directions of the DRP issued u/s 144C(5) of the Act, within the time specified for this purpose, has rendered the said impugned final order of assessment unsustainable in law. We, therefore, quash the impugned final order of assessment for asst. year 2009-10 passed by the AO u/s 143(3) r.w.s 92CA of the Act dated 17/1/2014 in the case on hand. W hold and direct accordingly. Consequently, ground No. 17 of assessee's appeal is allowed.' 10. Respectfully following the aforesaid view of the Tribunal, we quash the impugned order of assessment. Since the impugned order of assessment is Mr. Rahil Mahesh Kumar Niamuddin, Massachussetts, USA

Page 19 of 25 quashed on the ground that the same is not in conformity with the provisions of section 144C of the Act and further on the ground that the time for passing the final order of assessment is barred by time, we are of the view that the other issues raised by the assessee in its grounds of appeal and the grounds raised by the revenue in its appeal does not require any consideration. As far as the decision cited by the learned DR in the case of H & M Hennes & Mauritz India (P.) Ltd. (supra) is concerned, we find that in the said decision, the counsel for the Assessee has in para 3.8 of the said order prayed for setting aside the final order of assessment of AO to pass orders in accordance with the directions of the DRP. Thus, it is a case of concession by the Assessee and not on the basis of arguments advanced by the parties. The law is well settled that a decision on concession of the counsel cannot be regarded as a precedent. Therefore, the decision cited by the learned DR does not support the case of the revenue.

raised by the assessee on merits of the addition made do not require any adjudication.

12. In the result, the appeal of the assessee is allowed."

In the present case also, as pointed out by the AR, the DRP included Evoke Technologies Limited in the list of comparables and similarly the DRP excluded ICRA Techno Analytics Limited from the list of comparables. The ALP adjustment made by the TPO has been changed on account of these two directions of DRP, however, the Assessing Officer retained the original Transfer Pricing Adjustment at Rs. 8,67,23,600 in the final assessment order as made in the draft assessment order. Being so, we are not in a position to uphold the order of the Assessing Officer on this count. As provided in the Section 144C(13) of the Act, the final order of the Assessing Officer should be in conformity with the directions given by the DRP. In the present case, while working out the ALP adjustment, he has not followed the direction of the DRP, consequently, the assessment order is bad in law as held by co-ordinate Bench in the case cited above. Accordingly, the assessment framed in this case is quashed and set aside. However we make it clear that, this order would not, in any way, stop the revenue from taking such steps as are available to it in law and the assessee also from contesting the action of the revenue in accordance with the law, if it so desires.

6.4 Further, the ld. A.R. submitted that the learned DR has vide his submissions dated 21st April 2023, stated as under :

Mr. Rahil Mahesh Kumar Niamuddin, Massachussetts, USA 6.5 The ld. A.R. submitted that the observations of the learned DR are incorrect in as much as the ITAT while disposing of the appeal for the assessment year 2014-15 deleted the addition made in the said year on the basis that there was no transfer of property in assessment Year 2014-15 and that the same needs to be taxed in the assessment Year 2015-16. It is therefore submitted by the ld. A.R. that the action of the learned AO is incorrect and beyond the power u/s 144C(13) of the Act in as much as she has chosen to make a fresh addition in the impugned assessment year on the basis of the addition determined in the Assessment year 2014-15 by the learned CIT(A) which now stands cancelled by the order of the ITAT in for the Assessment year 2014-15. In fact the Bench has dismissed Ground nos. 12, 13 & 15 in the appeal as infructuous and have not given any finding on the quantum of income etc. The same is discernible from the relevant findings of the bench reproduced below:

Mr. Rahil Mahesh Kumar Niamuddin, Massachussetts, USA 6.6 The ld. A.R. thus submitted that the action of the learned AO in assuming that the Bench has upheld the addition as determined by the learned CIT(A) with a direction to include the same in the Income of the assessment year 2015-16 is incorrect, and as such is illegal and void and the addition made needs to be deleted and the assessment order needs to be cancelled on this score.

“11.3 In the present case, there is no transfer of land per say vide JDA dated 31.1.2014 and developer only got right to construct and the ownership of property as such does not get transferred to him to the developer on execution of JDA. The assessee has to receive Rs.7.5 crores as refundable deposit, out of this assessee has received in this assessment year an amount of Rs.3.75 crores and balance Rs.3.25 crores to be received by assessee within 4 months from the date of execution of JDA dated 31.1.2014 and another balance Rs.50 lakhs shall be to the first party at the Mr. Rahil Mahesh Kumar Niamuddin, Massachussetts, USA

Page 22 of 25 time of handing over the super-built up area of 10,337 sq.ft. to the owners. Being so, the capital gains as a result of this JDA can arise only at point of receipt of consideration by the assessee and not on the date of JDA. More so, in the absence of any act in furtherance of contract by the developer, it cannot be held that transfer did took place u/s 2(47)(v) of the Act in the assessment year under consideration. Being so, we are of the opinion that capital gain arising out of the impugned JDA dated 31.1.2014 to be taxed in the assessment year 2015-16 only and not in assessment year 2014-15. More so, it is already subject to tax in the assessment year 2015-16 and cannot be brought to tax in the assessment year 2014-15, which amounts to double taxation. Accordingly, this ground of appeal of assessee is allowed.”

7.1 According to ld. D.R., the assessee intentionally concealed these facts before the ld. DRP with regard to passing of the order by Tribunal on 7.12.2022 for the assessment year 2015-16. The above findings of the Tribunal in assessment year 2014-15 is having direct bearing with the computation of income for the assessment year 2015-16. Hence, the AO has considered these observations of the Tribunal while passing the final assessment order for the assessment year 2015-16 on 10.1.2023 and same to be confirmed.

Page 23 of 25 assessment as above, the AO has passed the impugned final order dated 10.1.2023 with bringing new item of income to taxation, which is not permitted under law. The action of the AO by passing the final assessment order, which is deviated from the draft assessment order dated 31.3.2022 which prevented the assessee to go before the ld. DRP for their directions and the assessee is deprived of challenging the draft assessment order before ld. DRP, which is clear violation of the binding provisions u/s 144C(10) & 144C(13) of the Act. Therefore, in our considered opinion, the conduct of AO in passing the final order of assessment on 10.1.2023 is a clear case of defiance and disregard to the binding direction of the higher authorities i.e. the ld. DRP. In view of this, we are not in a position to sustain the additions made consequent to the observation of ITAT in assessment year 2014-15 vide order in dated 18.7.2022. However, we make it clear that AO is at liberty to take action in accordance with law so as to give effect to the observation of the Tribunal in ITA No.892/Bang/2019 dated 18.7.2022 by separate and distinct order in accordance with law and he cannot bring the same income into tax by clubbing it with the final assessment order dated 10.1.2023. Accordingly, he has to pass the final order in conformity with the draft assessment order as directed by the ld. DRP. This ground is partly allowed for statistical purposes. 8.1 Further, with regard to non-adjudication of grounds by ld. DRP on merit, we find that the assessee has raised ground Nos. 3 & 4 before ld. DRP which are reproduced as follows:- “Ground of Objection No.3: The Assessing Officer erred in not assessing the capital gains arising on sale of the poojanahalli by bifurcating the value gains of the lands as up to the date of conversion of land as related to Agricultural lands and the balance gains related to the period from the date of conversion to the date of sale applying the ratio and principles laid down by the Supreme Court in the case of CIT Vs. Bai Shirinbai K. Kooka (1962) 46 ITR 86 (SC).

Mr. Rahil Mahesh Kumar Niamuddin, Massachussetts, USA Page 24 of 25 Ground of Objection No.4: The Assessing Officer having already assessed the Long-Term Capital gains arising on account of the Joint Development of the Property No.123 for the AY 2014-15 holding the date of transfer as on 31.1.2014, the date of JDA, has failed to delete sum of Rs.3,22,78,112/- being the capital gains thereon offered to tax by the assessee, even when he was appraised of the double taxation effect caused out of the AO’s action and hence the same is liable to deletion.” 8.2 It is on record that before the ld. DRP, the assessee stated that except the ground of objection no.1, all other grounds are not pressed. This is evident from the following findings recorded by ld. DRP as follows: “Panel: During the course of DRP proceedings, this panel has carefully considered and perused the grounds and objections of the assessee. Having considered the objections of the assessee, it is pertinent to note that during the DRP proceedings, the assessee has stated that except the ground of objection No.1 all other grounds are not pressed. The e-mail submission of the assessee received by this office on 30.11.2022, which is reproduced as under: “Dear Sirs, Further to the hearing of the case of Mr. Rahil Mahesh Kumar Nizamuddin, for the assessment year 2015-16, I wish to mention that we are pressing ground one of the objection to the draft order, pertaining to the validity notice u/s 148. The other grounds are not pressed.” In view of the above submissions, this panel rejects the grounds of objections no.2, 3 & 4 of the assessee. Accordingly, this panel disposes the ground nos.2, 3 & 4 of the assessee. “ 8.3 Being so, the assessee cannot have any grievance with regard to non-adjudication of grounds relating to the addition made by AO in his draft assessment order. Accordingly, the grounds relating to this issue are dismissed.