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Income Tax Appellate Tribunal, ‘B’ /SMC BENCH, CHENNAI
Before: SHRI MAHAVIR SINGH, VICE-
: Mr. Mr. N.Arjunraj, C.A for अपीलाथ"क"ओरसे/ Appellant by Mr.S.Sridhar, Advocate : Mr. AR.V.Sreenivasan, Addl.CIT ""यथ"क"ओरसे/Respondent by : 27.02.2023 सुनवाईक"तार"ख/Date of hearing 28.02.2023 : घोषणाक"तार"ख /Date of Pronouncement आदेश / O R D E R This appeal filed by the assessee is arising out of order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi vide appeal No. ITBA/NFAC/S/250/2022-23 / 1047797656(1) dated 05.12.2022. The re-assessment was completed by the Income-tax Officer, Ward-3(3), Trichy for the assessment year 2013-14 u/s.143(3) r.w.s. 147 of the Income Tax Act, 1961 (hereinafter ‘the Act’) vide order dated 27.12.2018.
2. The first issue raised by the assessee in this appeal is against order of the CIT(A) confirming action of the Assessing Officer in reopening of assessment and assumption of 2 jurisdiction by the Assessing Officer u/s.143(3) r.w.s 148 of the Act, as there is no fresh or intangible material.
For this issue, the assessee has raised following grounds:-
“2. The NFAC erred in confirming the assumption of jurisdiction u/s 147 of the Act and ought to have appreciated that the order under consideration was passed out of time, invalid, passed without jurisdiction and not sustainable both on facts and in law.
3. The NFAC failed to appreciate that the re-assessment completed without following the prescription of the law laid down by the Supreme Court in the case reported in 259 ITR 19 should be reckoned as nullity in law and further ought to have appreciated that having not shown any fresh/tangible material as well as having not alleged the failure on the part of the appellant in disclosing fully and truly all material facts at the original stage, the re-assessment consequently completed would defy the law consistently followed in terms of the proviso below section 147 of the Act.”
Brief facts relating to above assessee are that the assessee is engaged in milk trading. She has also declared income i.e. business income from real estate business. The original assessment was completed by the Income Tax Officer, Ward-3(3), Trichy u/s.143(3) of the Act, vide order dated 28.03.2016. Subsequently, the Assessing Officer recorded reasons for reopening of assessment on the issue of violation of provisions of section 40A(3) in regard to cash payment of 3 Rs.18.00 lakhs. The Assessing Officer completed re- assessment u/s.143(3) r.w.s 147 of the Act by disallowing a sum of Rs.18,00,000/- u/s.40A(3) of the Act and also made addition of Rs.22,86,232/- on account of difference in value of closing stock.
Aggrieved against reopening, the assessee filed objections before the Assessing Officer, but the Assessing Officer confirmed reopening by stating that as there was reason to believe that income chargeable to tax for assessment year 2013-14, in this case, had escaped assessment, reopening was made u/s.147 of the Act after obtaining approval from the Additional CIT, Range-3, Trichy. According to him, reopening is valid and therefore, he proceeded to frame assessment on merits.
The Assessing Officer made addition on account of amount paid by the assessee of Rs.18.00 lakhs towards release of lease tenancy to Mr.E.Manickavel, who confirmed that he has received Rs.18.00 lakhs from Mrs.Seethalakshmi, the assessee, in order to release lease-holdings on the above said property. The facts are that the assessee purchased a vacant site admeasuring 17,859.60 sq.ft for a sum of Rs.27 4 lakhs. The Assessing Officer noticed that in the profit & loss account as on 31.03.2013, the assessee has debited a sum of Rs.18.00 lakhs towards expenses on lease rights release on the above said property. According to the Assessing Officer, the assessee has filed copy of unregistered lease release deed dated 26.04.2013 entered into between seller and Mr. E.Manickavel stating that the assessee has received a sum of Rs.18.00 lakhs towards release of lease from the above said sellers. According to the Assessing Officer, this is contradictory between the unregistered document and confirmation letter, when the assessee has debited a sum of Rs.18.00 lakhs towards payment made to release of lease rights in the financial year 2012-13 relevant to the assessment year 2013-14 and claimed the same as deduction. According to the Assessing Officer, this has escaped assessment and for this, he recorded reasons as under:-
“The assessee’ss case was selected for scrutiny under CASS complete scrutiny for the reason sale consideration of the property in ITR is less than sale consideration of property as reported in AIR.
During this year, the assessee has purchased a vaccant site ad-measuring 17,859.60 sq.ft for a sum of Rs,27,00,000, In the P & L account as on 31.3.2013, the assessee had debited a sum 5 of Rs.18,00,000 towards expenses of lease Rights Release on the above said property.
1.1 On perusal of the details filed by the assessee during the course of scrutiny assessment proceedings, it is seen that letter addressed by Smt. Uma Devi, M.Sathiskumar, M.Sakthivel, M.Lakshmi Priya (sellers) dated NIL that they had received a sum of Rs.27 lakhs as sale consideration from the assessee in respect of the above property and also filed runegistered sale receipt dated 14.3.2013 stating that assessee had paida sum of Rs.27 lakhs to the sellers and taken over possession as per POA registered with SRO, Thiruverumbur dated 14.03.2013. No complete sale document was registered. The assessee had converted the above property into plots and sold them as a P0A only. The assessee also filed a confirmation letter dt NIL from Sri E,Manickavel stating that he had received a sum of Rs.18,00000 from Srnt. SSeethaIakshmi (assessee) in order to release the lease-holdings on the above said property. Later on, the assessee filed a copy of unregistered Lease Release Deed’ dated 26.4.2 013 (FY.2013-14) entered between the sellers and Sri F.Manickavel, S/o, V.Eraniyan that the lessee had received a sum of Rs-18 lakhs towards release of ease from the above said sellers. So it is contradictory between the unregistered document and confirmation letter but the assessee debited a sum of Rs. 18,00,000 towards the payment made to release the lease right in the financial year 3012-13 relevant to the asst year 2013-14 itseIf.
On perusal of sale documents received from O/o Sub-