VIJAY VASANT SATHE,PUNE vs. INCOME-TAX OFFICER, WARD - 3(4), PUNE

आदेश / ORDER PER ANIL CHATURVEDI, AM :

This appeal filed by the assessee is emanating out of the order of 1. Commissioner of Income Tax (A) – 3, Pune dated 19.07.2018 for the assessment year 2010-11.

Assessee is an individual stated to be engaged in dealing in land on commission business. In this case, notice u/s 148 of the Act dated 31.03.2017 was issued and served on the assessee. In response to

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notice, assessee furnished return of income for A.Y. 2010-11 on

28.11.2017 disclosing total income at Rs.1,52,703/-. Thereafter, the

case was taken up for scrutiny and assessment was framed u/s 143(3)

r.w.s. 147 of the Act vide order dt.15.12.2017 and the total income was

determined at Rs.8,02,700/-. Aggrieved by the order of AO, assessee

carried the matter before Ld.CIT(A), who vide order dt.19.07.2018 (in

appeal No.PN/CIT(A)-3/Wd 3(4), Pn/222/2017-18) dismissed the appeal

of assessee. Aggrieved by the order of Ld.CIT(A), assessee is now in

appeal before us and has raised the following grounds :

“Jurisdiction u/s 147. 1. The Ld.AO fell in error of law in making addition by taking recourse to the jurisdiction u/s 147 of the Act and failed to appreciate that no addition was made on the issue for which the notice u/s 148 was issued. The invoking of the jurisdiction runs contrary to the law laid down by the Hon’ble jurisdictional High Court. Hence, the addition made is bad in law and therefore needs to be cancelled. 2. Addition u/s 69 of the Act. The CIT(A) fell in error of law in rejecting good explanation of the assessee for source of money of Rs.6,50,000/-. 3. The CIT(A) was not justified in upholding the addition when the Ld. AO had failed to issue notices to the lenders.”

reopening.

issuing notice u/s 148 of the Act the assessee had sold an immovable

property for Rs.30 lakhs during A.Y. 2010-11 and as the assessee had not

filed the return of income for A.Y. 2010-11, he had reason to believe that

income of Rs.30 lacs had escaped taxation. During the course of re-

assessment proceedings, it was submitted by the assessee that the

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transaction was executed by the assessee in the capacity of Power of

Attorney Holder on behalf of the land holders. AO on perusing the

registered deed of Power of Attorney which was the part of sale deed,

noticed that assessee had paid an amount of Rs.6,50,000/- to the owners

of the land. It was also noticed by the AO that assessee had received

Rs.14,50,000/- towards sale consideration through cheques of

Rs.7,00,000/- and 7,50,000/- dated 05.03.2010 and 10.05.2010

respectively, drawn on Bank of Maharashtra. The assessee was asked to

explain as to why the amount of Rs.14,50,000/- not be added as income

from capital gain on sale of land. It was submitted that he did not receive

any money on account of sale consideration and it was submitted that

both the cheques were dishonored by the party and were returned back

by the Bank. It was further submitted that the land being agricultural

land does not come under the purview of Sec.2(14) of the Act and

therefore the assessee is not liable for capital gain. AO thereafter asked

the assessee to explain the sources of payments of Rs.6,50,000/- to the

land owners to execute the Power of Attorney. Assessee submitted that

he had borrowed the amount as hand loan from few persons and also

furnished the confirmations. The confirmations filed by the assessee were

not found reliable and acceptable by AO as he was of the view that the

same were not containing the details of PAN, Proper residential address,

Aadhar Card No. etc. The submissions of the assessee were thus not

found acceptable to AO. He accordingly considered Rs.6,50,000/- as

unexplained investment u/s 69 of the Act and added it to the total

income. Aggrieved by the order of AO, assessee carried the matter before

Ld.CIT(A), who upheld the order of AO.

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Aggrieved by the order of Ld.CIT(A), assessee is now before us.

Ld.CIT(A) and further submitted that notice u/s 148 of the Act was issued

as AO was of the view that sale consideration of Rs.30 lacs received by the

assessee on sale of land has escaped taxation. However in the

assessment order, no addition of the aforesaid alleged receipt of sale

consideration on sale of land was made but AO made addition on a new

issue namely, addition u/s 69 of the Act on account of unexplained

investment. He submitted that for the addition u/s 69 that was made no

fresh notice u/s 148 of the Act was issued and further no addition was

made on capital gains for which the Revenue had originally issued notice

u/s 148 of the Act. He therefore placing reliance on the decision of

Hon’ble Bombay High Court in the case of CIT Vs. Jet Airways India

Limited reported in (2011) 331 ITR 236 and the decision of Pune Tribunal

in the case of Smt. Madhuri Dhananjay Marathe Vs. ITO (ITA Nos.1639 &

1640/PUN/2017 dated 30.08.2018) submitted that when no addition

has been made on the ground on which the reasons were recorded u/s

148 of the Act then AO could not make addition on some other issues.

He therefore submitted that the order of the AO be set aside. Ld. D.R. on

the other hand, supported the order of AO and Ld.CIT(A).

record. The issue in the present case is with respect to re-opening of

assessment and the framing of the order u/s 143(3) r.w.s. 147 of the Act.

Before us, it is assessee’s contention that notice u/s 148 of the Act was

issued to tax capital gain on land. He submitted that AO while finalizing

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the assessment u/s 143(3) r.w.s 147 of the Act did not make any addition

on the amount received on sale of land but however made addition u/s

69 of the Act on account of unexplained investments which was not

covered in the original notice issued u/s 148 of the Act. Further neither

the AO had issued any fresh notice u/s 148 for proposing to make

addition u/s 69 of the Act. The aforesaid contentions of the assessee

have not been controverted by Revenue. We find that the Hon’ble

Bombay High Court in the case of CIT Vs. Jet Airways (I) Ltd., (supra) has

held that the AO has to assess or reassess the income which escaped

assessment and which was the basis of the formation of belief and if he

does so, he can also assess or reassess any other income which has

escaped assessment and which comes to his notice during the course of

proceedings. It has further held that if after issuing notice u/s 148 of the

Act, he accepts the contention of the assessee and holds that the income

which he had initially formed a reason to believe had escaped

assessment, has not escaped assessment, it is not open to him

independently to assess some other income. It has held that if the AO

intends to assess some other income, a notice u/s 148 of the Act would

be necessary. We further find that in the case of Smt. Madhuri

Dhananjay Marathe (supra), the Co-ordinate Bench of the Tribunal by

relying on the decision of Hon’ble Bombay High Court in the case of CIT

Vs. Jet Airways India Limited (supra) has held that re-assessment order

passed to be invalid and bad-in-law. In the present case, it is an

undisputed fact that no addition has been made by the AO on the issue

on which the notice for e-opening of assessment u/s 148 was issued but

addition has been made on a different issue namely, addition u/s 69 of

the Act. Considering the totality of the aforesaid facts and relying on the

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decision of Hon’ble High Court in the case of Jet Airways (I) Ltd., (supra),

we are of the view that in the present case, the assessment order is not sustainable in the eye of law. We therefore hold the reassessment order

passed by the AO to be invalid and bad-in-law and therefore set aside the

same. Since we have set aside the re-assessment order, the grounds

raised by the assessee on merits have been rendered academic and

therefore does not call for adjudication. Thus, the grounds of assessee are allowed.

Order pronounced on 7th day of June, 2019.

Sd/- Sd/- (SUSHMA CHOWLA) (ANIL CHATURVEDI) �या�यक सद�य / JUDICIAL MEMBER लेखा सद�य / ACCOUNTANT MEMBER

पुणे Pune; �दनांक Dated : 7th June, 2019. Yamini

आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to :

आदेशानुसार/ BY ORDER

// True Copy // व�र�ठ �नजी स�चव / Sr. Private Secretary आयकर अपील�य अ�धकरण ,पुणे / ITAT, Pune.