RAM SWAROOP BALAI,JAIPUR vs. DCIT, CIRCLE -7, JAIPUR

5. Under the facts and circumstances of the case ld. CIT (A) grossly erred in deleting the addition of Rs. 4,55,921/- ‘subject to verification by AO’ ignoring the facts that all relevant documents have already been submitted to the ld. AO who rejected the same without appreciating the facts available on records and without considering them in their true perspective and sense therefore complete addition should be deleted.

6. Under the facts and circumstances of the case ld. CIT (A) grossly erred in confirming the action of ld. AO in confirming the action of ld. AO for charging interest u/s 234A, 234B & 234C of the Act.

7. The appellant reserved her right to add, amend or alter the grounds of appeal on or before the date of appeal hearing.

3. The appeal filed by the assessee is delayed by 149 days. The assessee vide application dated Nil has prayed for condonation of delay. In support of the application for condonation, the assessee has filed an Affidavit which is reproduced hereunder :-

Ram Swaroop vs. DCIT. “ I, Ram Swaroop Balai S/o Shri Mohri Lal Balai aged 64 years, R/o Village Gajsinghpura, Ajmer Road, Jaipur, Rajasthan, do hereby solemnly affirm on oath as under :-

1. 1. That I am IT assessee and my PAN is AWCPS9424Q.

2. That an appeal is being filed by me before your honour for AY 2011-12 by the delay about 148 days late. Although there actually there is no delay if following facts are being considered.

3. The reason of late filing was that the order was not served physically. The same was send by on Email:DEVSINGHR2594@OUTLOOK.COM. This email had been used by the relative of mine. Such relative was also not so much aware about the notice/orders as issued by the Income Tax Department. Recently my counsel who surfed the Income Tax portal of the applicant and got to know about passing of CIT (A) order for the AY 2011-12 dated 04.08.2023.

4. That thereafter I asked to counsel to prepare the appeal and the appeal has been prepared on 28.02.2024 and signed by my.

5. That I am not in habit to check e-filling portal regularly etc. as it was under impression that my relative and counsel would have been sufficiently communicated about any of notices from the Income tax department. As I had engaged a counsel for the CIT (A) appeal proceedings. But it is also notable without having specific information the counsel also does not surf the income tax portal of mine. Thus there was no negligence’s of either assessee nor the counsel. Further it has never come in my notice before 23/02/2024 that any order has been passed, otherwise I could have contacted to the counsel and filed the appeal. Thus there was bonafide mistake of me.

6. That due to all this reason the appeal could not be filed within time.

7. That the contents or averment of application for condonation of delay are true and correct and may be treated as part of this affidavit.

Palce: Jaipur Sd/- Date : 26.02.2023 Deponent VERIFICATION Ram Swaroop vs. DCIT. I, the above named deponent, do hereby verified that the contentions of above para 1 to 7 are true and correct to the best of my knowledge, nothing has been concealed. God may help me. Palce: Jaipur Sd/- Date : 26.02.2023 Deponent The ld. A/R relied on the judgments of the Hon’ble Supreme Court in the case of Collector, Land & Acquisition vs. Mst. Katiji & Others (1987) 167 ITR 471 (SC) and requested for taking a liberal approach for condonation of delay. The ld. A/R further relying on the judgment of Hon’ble Supreme Court in the case of Vedbai vs. Shantaram Baburam Patil & Others, 253 ITR 798 (SC) submitted that the Apex Court have again reiterated that the expression “sufficient cause” should receive a liberal construction and held that advancing of substantial justice should be of prime importance. The ld. A/R, therefore, prayed that looking to the above facts and circumstances and settled legal position, the delay of 149 days caused may kindly be condoned.

4. Considering the reasons mentioned in the said application, we feel that the reasons mentioned by the assessee constitute sufficient cause for not filing the appeal within the time before us. Therefore, taking a lenient view and considering the principles laid down in the case of Collector, Land Acquisition vs. Mst. Katiji, 1987 AIR 1353 (SC), we condone the delay of 149 days in filing the appeal before us.

Ram Swaroop vs. DCIT.

5. The brief facts of the case are that the assessee is an Individual, filed his original return of income for the assessment year 2011-12 on 23.06.2011 declaring total income of Rs. 4,69,490/- which was processed under section 143(1) of the IT Act, 1961. Later on, it was noticed that during the year under consideration, the assessee has sold an immovable property bearing Khasra No. 1228 and 1229 situated at village Mahapura, Tehsil Sanganer, Jaipur for a sale consideration of Rs. 5,21,00,000/- along with two co-owners viz. Sh. Gopal S/o Sh. Mohari Lal and Sh. Madhoram S/o Sh. Ramchandra. As per the information available with the AO, the assessee has received a sum of Rs. 1,41,17,321/- as his share in the property sold in question out of total sale consideration of Rs. 5,21,00,000/-. On perusal of details filed, the AO noticed that the assessee has declared sale consideration of Rs. 96,07,500/- instead of Rs. 1,41,17,321/- as received by him against sale of property. The AO noticed that the assessee has claimed deduction u/s 54F at Rs. 46,78,000/- and deduction under sec. 54EC at Rs. 37,00,000/-. As per the AO, the deductions claimed by the assessee are not admissible in absence of evidences. Accordingly, notice under section 148 of the IT Act, 1961 was issued on 23.03.2018 after recording proper reasons and satisfaction of competent authority, which was duly served upon the assessee. In compliance to notice, the assessee has e-filed his return of income on 19.04.2018 declaring total income of Rs. 4,69,490/-. Thereafter, notice under section 143(2) of the IT Act, 1961 was issued Ram Swaroop vs. DCIT. on 25.09.2018 which was duly upon the assessee through Speed Post. Subsequently, notice under section 142(1) of the IT Act, 1961 along with questionnaire was issued on 31.10.2018 requiring certain data/information/explanation/evidence through electronically mode. Further, notice under section 142(1) of the IT Act, 1961 along with show cause notice was issued on 22.11.2018 and 06.12.2018. In compliance to the notices, the assessee filed requisite details vide letter dated 28.11.2018 and 10.12.2018 which have been placed on record. The AO considered the submissions of the assessee but could not found the same satisfactory. Accordingly, the AO completed the assessment under section 147/143(3) of the IT Act, 1961 dated 31.12.2018 by working out capital gain of Rs. 57,27,453/- instead of LTCG of Rs. 2,94,100/- as declared by the assessee considering sale consideration at Rs. 1,41,17,321/- as per the provision of section 50C of the IT Act and made an addition on account of long term capital gain for Rs. 54,33,353/- and reduced the indexed cost from Rs. 18,23,077/- to Rs. 8,99,545/- and assessed the total income at Rs. 59,02,840/- by raising a demand of Rs. 21,58,090/-. Aggrieved by the order of AO, the assessee preferred an appeal before the ld. CIT (A). The ld. CIT (A) considering the submissions filed before him, partly allowed the appeal of the assessee. Now the assessee is in appeal before us.

Ram Swaroop vs. DCIT. 6. At the time of hearing before us, the ld. A/R of the assessee reiterated the submissions as made before the lower authorities. The ld. A/R further filed ground-wise written submissions which are being reproduced hereunder :-

“ Ground No. 1 Initiation and complete proceeding is illegal Apropos to this ground we submits that in this case the Ld. AO did not issued the notice u/s 143(2) in the format as notified by the CBDT vide letter F.No. CBDT vide letter F.No. 225/162/2016/ITA.11. Ground No. 4 Disallowed Rs. 42,99,000/- by ignoring the facts which are sufficiently backed up; (a) Assessee did not received the full consideration In this instant case the Ld. CIT has appreciated the action of the Ld. AO of making an addition u/s 50C of the act assuming that the assesse received the amount of Rs. 1,41,17,321/- as his share in the total sales consideration taken for the purpose of stamp duty valuation. In this connection it is pertinent to mention that the assessee sold a land with two other co-owners situated at Village- Mahapura Tehsil- sanganer through a registered sale deed annexed at PB "45-68" dated 24/11/2018 for a total sale consideration of Rs. 5,21,00,000/- . It is an undisputed fact that the assessee sold the land for a consideration of Rs. 5,21,00,000/- and stamp duty valuation adopted by the registration authorities is Rs. 5,21,64,000/-. In this connection it is worth mentioning here that the sale consideration always been decided on the basis of the utility of the land which is outcome of the improvement made in the land and the cost of this improvement made is allowed as expenses on account of cost of improvement while calculating capital gain under income tax act. In this case the sale consideration is decided for Rs. 5,21,00,000/- in the registered sales deed which specifically include the cost of conversion of land which was to be incurred and borne by the seller of the land i.e. assessee as mentioned in sale deed at pg.no. 4.(PB 51)

Ram Swaroop vs. DCIT. In this case it is pertinent to mention that the buyer was a builder and coloniser, later on, after execution of the above said sale deed, for the convenience and as per mutual understanding and a verbal agreement between the buyer and seller cost of conversion was agreed to be paid by the buyer himself and it was also agreed that the this cost of conversion forming part of sales consideration was to be adjusted against the expenses incurred for the same by buyer. Thus, the buyer paid consideration to all the sellers after deducting the above said expense resultantly, assessee received only Rs. 98,01,000/- for his share, for which assessee also given the affidavit dated 10/12/2018 annexed at PB “34” but Ld. AO not appreciated the same. Assessee received this amount of Rs. 98,01,000/- in his bank account, bank statement of which is annexed at PB “73-101”. The assessee vide letter dated 28/11/2018 very well elaborately explained that assessee only received Rs. 98,01,000/- out of his share in total sale consideration of Rs. 1,41,00,000/- as cheque worth Rs. 42,99,000/- were not encashed by the assessee because the amount of Rs. 42,99,000/- were for conversion expenses and as per mutual understanding and a verbal agreement were to be adjusted from the total sales consideration of Rs. 5,21,00,000/-. The above said letter is annexed at PB “26”. If this was not the case that the buyer given the consideration after deduction of the above said expenses, the assessee would have taken criminal as well as civil remedy against the buyer for not paying full consideration and if the conversion expenses would have been incurred by the buyer, total sales consideration as agreed and mentioned in the sale deed would have been given to the seller without deducting any expenses on account of conversion expenses. Thus, in this case the assessee have disclosed the fully and truly all the material facts by disclosing the total sale consideration after deducting the conversation expenses. However, the Ld. CIT in the order dated passed 04/08/2023 observed that:- “8.2 . . . . . .As per the provisions of section 50C appellant has to adopt amount of sale consideration as per section 50C i.e Rs.1,41,17,321/- while computing the capital gain. If appellant has made any expenses as claimed by the appellant like conversion expenses including incidental expenses, the same has to be claimed under cost of improvement. In order to claim the same appellant needs to prove that payment for such expenses has been made and appellant has to submit documentary evidences regarding the same. In present case appellant has not submitted any evidence that any such expenses has been incurred by the appellant or by the buyer on behalf of the appellant. Accordingly AO has rightly disallowed the same. In view of the above ground of appeal no 5 is hereby dismissed.”

In the above stated observation the Ld. CIT stated two point as follows: i. The appellant should have shown full consideration for his part and then claim conversion expenses Our submission - The tax effect of both the process i.e taken by assessee and the Ld. CIT, is same in this case. And in the return of income filed in response to the notice u.s 148 of the act, the asseessee have opted the method as described by the Ld. CIT. ii. The appellant have not submitted documentary evidences for cost of conversation. Our submission - During the course of adjudication proceedings before the Ld. AO, assessee through a letter, annexed at PB page no “26”, dated 28/11/2018 requested for examination of the buyer to reach at true conclusion as the all expenses regarding conversion were incurred by the buyer and it can only be established by buyer through books of accounts, receipts, challans and other evidences but the Ld. AO ignored the request made by the assesse. Assessee through various letters reiterated the same facts before the Ld. AO but not appreciated by the Ld. AO and passed the assessment order arbitrarily in the mechanical manner. It is notable to mention here that all the consideration received by the assessee were through cheques and duly deposited by the assesse in his bank accounts and Ld. AO is failed to bring any cogent and corroborative material on record that assessee received any other amount from buyer, through cash or any other mode, whereas assessee’s contention is very well supported by the bank statements and affidavit of assesse and buyer of the land. Hence, the addition made by the Ld. AO arbitrarily and without conducting proper inquiry, even after legitimate request made by the assesse, under 50C of the act on the basis of mere conjuncture and surmises are liable to be deleted. (b) Ld. AO ignored the affidavit of the assessee In this case the Ld. AO while disallowing the cost of transfer expenses observed as follows “The assessee claimed cost of transfer expenses of Rs. 42,99,000/- The assessee was asked to furnish the justification and supporting document of his claim and show cause notice was also issued vide note sheet entry on 73/1212018- The AR of the assessee Ram Swaroop vs. DCIT. submitted reply on 10.12.2018 stating that "computation of total income where the gross amount of sale consideration is shown and the expenditure on conversion which was incurred by the purchaser is deducted". I have considered the reply of the assessee but the reply of the assessee is not tenable as the assessee failed to furnish the supporting document of his claim of transfer expenses. Therefore, the claim of the assessee of transfer expenses is disallowed. And added to the income of the assessee.” It is pertinent to mention that the above view taken by the Ld. AO is totally wrong as the assessee discharged his onus by providing his affidavit to support his contention which also give sanctity to the contention of the assessee, but the Ld. AO neither appreciated the affidavit of the assessee nor controverted it and it is settled law that Once an affidavit is furnished, it should be presumed to be a correct statement of facts, if not controverted. To support our contention we are relaying on the following judgements which states that, When a statement is given in affidavit the same is proved to be correct unless proved otherwise.  Jurisdictional ITAT Shri Ramesh Chand Mittal, Kota vs Income Tax Officer, Ward-2-2, Kota on 11 June, 2019 “5. We have considered the rival contentions and carefully gone through the orders of the authorities below and found from the record that during the course of assessment, it was explained to the AO that the gift was received on 31.05.2011 by the assessee from his mother in law who was having sufficient cash in hand at the time of giving gift as per income returned during the year. The Gift Deed was written on 28.09.2011 and due to oversight, this very date was mentioned as the date of gift in the Gift Declaration. The assessee also furnished a duly sworn and affirmed Affidavit, dated 04.02.2015, to this effect. An Affidavit is an important piece of evidence to prove or to disprove a fact which cannot be proved or disproved by documentary evidence. The Affidavit too has been summarily rejected by the AO.

6. It is held in the under-noted decisions that it is not open to the department to disbelieve the contents of an affidavit unless the person who gave the affidavit was put to cross examination and, if put to cross examination, not unless the Assessing Officer has found fault with the same :  Mehta Parikh & Co. v. CIT (1956) 30 ITR 181 (SC)  Dilip Kumar Roy v. CIT (1974) 94 ITR 1 (Bom.)

Ram Swaroop vs. DCIT.  Rajshree Synthetics P. Ltd. v. CIT (2002) 256 ITR 331 (Raj.)”

8. In view of above discussion, we restore the matter back to the file of the A.O. for deciding the issue afresh in terms of our above direction.

9. During the course of assessment, the A.O. has also disallowed interest of Rs. 1,56,538/- on the plea that interest bearing funds have 5 ITA 954/JP/2018_ Ramesh Chand Mittal Vs. ITO been diverted for non-business purposes. From the record, we found that before the A.O. the assessee has submitted statement of interest free fund available with the assessee in the form of his capital to the tune of Rs. 26,08,598/- and also interest free unsecured loan of Rs. 25,62,288/-. Thus, the interest free funds available with the assessee was much more than the interest free amount given by him. Accordingly, no disallowance of interest is warranted. We direct accordingly.

Ram Swaroop vs. DCIT. Accordingly, without remitting the matter to the record of the AO, the reassessment order passed by the AO is set aside being invalid. 9. Since we have set aside the reassessment order on legal issue, therefore, we do not propose to go to the other grounds raised by the assessee.

10. In the result, appeal of the assessee is allowed.” PRAYER Hence in view of above facts submissions and legal position of law, the addition may kindly be directed to be deleted.”

7. On the other hand, the ld. D/R supported the order of the ld. CIT (A).

8. We have heard the rival contentions, perused the material on record and gone through the orders of the lower authorities. In respect of ground nos. 1 & 2 challenging the order passed under section 147/148 of the IT Act, 1961, the ld. CIT (A) has decided the issue by observing in para 6.4 of his order as under : “ 6.4 During the course of appeal proceedings, appellant is contending that re- opening is barred by limitation, as at pre-enquiry stage (dated 28.08.2012 & 17.09.2012) assessee submitted all the evidences and explanations in support of his original ITR and queries raised by ADIT(C1) in consonance therewith but without alleging that it had failed to disclose fully and truly all material facts necessary for assessment and because of its failure there had been an escapement of income chargeable to tax, re-opening of assessment after expiry of four years from end of relevant assessment year was without jurisdiction. On perusal of the assessment order it is seen that the sale consideration of the property was 5,21,00,000/- and the value adopted by Sub Registrar was Rs. 5,21,64,000/-. As per sale deed share of the appellant was 1,41,17,321/- however appellant has declared only Rs. 96,07,500/-. Hence the AO had a reason to believe the income escaped assessment. Here it is not understandable how appellant is claiming that it has disclosed fully and truly all material facts when the appellant has only declared his share at Rs.96,07,500/-. Appellant has relied on the judgment of Hon’ble Delhi High Court in the case of Haryana Acrylic Manufacturing Co. However, the fact of the case are different from the case of appellant as no order u/s 143(3) of the I.T. has been passed in the case of the appellant. Further, AO had sufficient reasons to believe that income has escaped assessment. Appellant has also challenge the reasons for reopening were not provided to the appellant.

Ram Swaroop vs. DCIT. On perusal of assessment order it is seen AO has mentioned that the reasons for reopening were provided on 03.10.2018. It is further seen that the appellant in its ground of appeal no. 4 has challenged that the AO failed to pass a speaking order against the objection raised by the appellant on 28.11.2018. On one hand appellant is alleging the AO that the reasons for reopening were not provide and on the other hand appellant is alleging that the AO did not pass a speaking order disposing the objection raised by the appellant. It is not understandable, if reasons for reopening were not provided how would the appellant file any objection ? In view of the above ground of appeal no. 1 to 3 are hereby dismissed.”

Before us, the ld. A/R has not controverted the findings of the ld. CIT (A) nor submitted any submission in support of grounds raised regarding initiation of proceedings under section 147/148. We, therefore, find no reason to interfere with the order of the ld. CIT (A). Both these grounds are dismissed. 8.1 Ground No. 3 relates to objections not disposed off. In this ground the appellant has challenged the assessment proceedings on the ground that the AO has not disposed off the objections raised by the appellant on issuance of notice u/s 148 of the Income Tax Act, 1961. He has submitted that disposal of objections raised by the assessee against the proceedings u/s 148 before assuming jurisdiction is a pre requisite in reassessment proceedings and for this purpose he has relied on the judgement of the Hon`ble Supreme Court in the case GKN Driveshafts (India) Ltd. v/s ITO, 259 ITR

19. (SC) and accordingly has requested for quashing the assessment proceedings as has been completed in violation to law laid down by Hon`ble Supreme Court in the above cited case of GKN Driveshafts (India) Ltd. (supra).

Ram Swaroop vs. DCIT. 8.2 On the contrary, the ld. DR has given a written submission on 15.01.2025 wherein he has mentioned that the appellant had filed objections on 28.11.2018 and the AO has disposed off the objections vide letter dated 06.12.2018, a copy of which has also been enclosed by him. On perusal of the letter dated 06.12.2018 we have noticed that it was a notice issued by ld. AO u/s 142(1) of the Income Tax Act, 196 wherein by way of an annexure certain queries were raised from the appellant for assessment purpose and nothing is mentioned therein about the objections raised by the appellant. Hence the submission of the ld. DR is liable to be dismissed.

8.3 We have considered the rival submissions as well as the relevant material on record. The revenue has not disputed that the assessee has raised the objections vide letter dated 28.11.2018 against the notice issued under section 148 of the IT Act. The relevant part of the objections raised by the assessee are as under :-

“ Dear Sir, In response to the above refer notice u/s 148, we have following objections in the subjected case.

3. The assessee has been served notice under section 133(6) dated 03.11.2017 of which reply has been mailed to the assessing officer. Here we are enclosing the copy of mailed reply herewith.

4. With the objection on the validity of notice u/s 148 we are enclosing detail/attachments herewith. a. Copy of ITR-V b. Copy of notice dated 17.08.2012 and reply dated 28.08.2012 and 17.09.2012 c. Copy of Sale agreement for Rs. 5,21,00,000 d. Copy of bond certificate of RECL dated 16.03.2011 for Rs. 37,00,000 to claim exemption under section 54EC e. Valuation report for the investment made in house in the year 2010 to 2012 for a sum of Rs. 46,80,425. f. Receipt of cost /expense incurred on the land in the year 1999. Total amount is Rs. 9,56,150.

5. The Assessee’s share of sale in the property is Rs. 1,41,00,000 out of which the cheque of Rs. 42,99,000 was not received. As per the terms of sale agreement which is mentioned on page no. 4 of sale deed, the conversion expense including incidental expense shall be borne by the seller, accordingly the purchaser has given only cheque of Rs. 98,01,000 the detail of the same is mentioned hereunder : Cheque received Cheque not received 20,00,000 12,00,000 4,51,000 20,00,000 8,00,000 10,99,000 15,00,000 15,00,000 15,00,000 20,50,000 Ram Swaroop vs. DCIT. We are enclosing herewith the bank statement of State Bank of India from 01.04.2010 to 01.04.2012, when it is clear that the assessee has received the cheque of Rs. 98,01,000 only.

6. Further to confirm the fact from the purchaser we are submitting herewith address of the purchaser with the request to issue the notice u/s 131 of Income Tax Act to know the facts. M/s. Shrinath Arcade Pvt. Ltd. Sukham, B 157-158 10-B Scheme, Gopalpura bypass, Jaipur.”

Thus the assessee has raised the objections against the reopening of the assessment on the ground that there is no tangible material to conclude or to form the opinion that income chargeable to tax for the assessment year 2011-12 escaped assessment within the meaning of section 147 of the IT Act, 1961. These objections raised by the assessee no doubt are required to be disposed off by the AO by a separate and speaking order before passing the reassessment order. The assessee has relied upon various decisions including the decision of Hon’ble Gujarat High Court in the case of Pushpak Bullion Pvt. Ltd. vs. DCIT, 379 ITR 81 (Guj.) wherein the Hon’ble Gujarat High Court while considering the issue of validity of reassessment order passed by the AO without disposing off the objections has observed in para 7 to 9 as under :-

“7. Having heard the learned advocates for the respective parties and considering the impugned orders by the AO disposing of the objections, it appears that the AO has disposed of the said objections without deciding it on merits and solely on the ground that as the assessee has not filed the return pursuant to the notice issued under Section 148 of the Act within a period not less than 30 days from the date of receipt of the notice under Ram Swaroop vs. DCIT. Section 148 of the Act. That while disposing of the said objections on the aforesaid ground, the AO has relied upon and considered the decision of the Division Bench of this Court in the case of Sahakari Khand Udyog Mandal Ltd. (supra). However, on considering the directions issued by the Division Bench of this Court in the case of Sahakari Khand Udyog Mandal Ltd. (supra), it appears that AO has misread and/or misinterpreted the directions issued by the Division Bench of this Court in the case of Sahakari Khand Udyog Mandal Ltd. (supra).

8. In the case of Sahakari Khand Udyog Mandal Ltd. (supra) the Division Bench had an occasion to consider the various difference stages from the date of notice under Section 148 of the Act to the reassessment order and ultimately after considering the decision of the Hon'ble Supreme Court in the case of GKN Driveshafts (India) Ltd. (supra), in para 14 had issued the following directions; "1. Once the Assessing Officer serves to an assessee a notice of reopening of assessment under section 148 of the Income Tax Act, 1961, and within the time permitted in such notice, the assessee files his return of income in response to such notice, the Assessing Officer shall supply the reasons recorded by him for issuing such notice within 30 days of the filing of the return by the assessee without waiting for the assessee to demand such reasons.

2. Once the assessee receives such reasons, he would be expected to raise his objections, if he so desires, within 60 days of receipt of such reasons.

7. The Chief Commissioner of Income Tax and Cadre Controlling Authority of the Gujarat State, shall issue a circular to all the Assessing Officers for scrupulously carrying out the directions contained in this judgment."

Ram Swaroop vs. DCIT. 8.1 From the aforesaid, it does not appear that any observation has been made by the Division Bench and/or any direction is issued by the Division Bench that assessee has to file return of income in response to the notice under Section 148 of the Act within a period not less than 30 days. What is observed/directed by the Division Bench is that if the assessee when files his return of income in response to notice under Section 148 of the Act, the AO shall supply the reasons recorded by him for issuing such notice within 30 days of the filing of the return by the assessee without waiting for the assessee to demand such reasons. The Division Bench has further observed and directed that once the assessee receives such reasons, he would be expected to raise his objections, if he so desires, within 60 days of receipt of such reasons and if objections are received by the Assessing Officer from the assessee within the time permitted hereinabove, the Assessing Officer would dispose of the objections, as far as possible, within four months of date of receipt of the objections filed by the assessee. That the Division Bench has also further clarified that requirement and the time-frame for supplying the reasons without being demanded by the assessee would be applicable only if the assessee files his return of income within the period permitted in the notice for reopening and likewise the time frame for the Assessing Officer to dispose of the objections would apply only if the assessee raises objections within the time provided hereinabove. The Division Bench has also further observed and clarified that this however, would not mean that if in either case, the assessee misses the time limit, the procedure provided by the Supreme Court in the case of GKN Driveshafts (India) Ltd. (supra) would not apply and it only means that the time frame provided hereinabove would not apply in such cases. Meaning thereby, the aforesaid time limit shall be strictly adhered to by the AO to supply reasons recorded; by the assessee to file objections, if he so desire within 60 days and by the AO to dispose of the objections within four months. As further clarified even in case the assessee misses the time limit, the procedure provided by the Supreme Court in the case of GKN Driveshafts (India) Ltd. (supra) shall be followed. It is true that on receipt of notice under Section 148 of the Act, the assessee is required to file return within time prescribed in such notice and/or within reasonable time and simultaneously asked for the reasons recorded for reopening and AO is bound to dispose of such objections within time provided by the Division Bench in the case of Sahakari Khand Udyog Mandal Ltd. (supra), however in any case before the order of assessment under Section 143(3) r/w Section 147 of the Act. However, at this stage also, the AO must give reasonable time to the assessee to challenge the order disposing of the objection by way of petition under Article 226 of the Constitution of India. 8.2 In the case of GKN Driveshafts (India) Ltd. (supra), the Hon'ble Supreme Court has laid down an elaborate procedure as to the manner of dealing with objections raised against a notice under Section 148 of the Act in the following words:— ". . However, we clarify that when a notice under section 148 of the Income-tax Act is issued, the proper course of action for the notice is to file a return and if he so desires, to seek reasons for issuing notices. The Assessing Officer is bound to furnish reasons within a reasonable time. On receipt of reasons, the notice is entitled to file objections to issuance of notice and the Assessing Officer is bound to dispose of the same by passing a speaking order. In the instance case, as the reasons have been disclosed in these proceedings, the Assessing Officer has to dispose of the objections, if filed, by passing a speaking order, before proceeding with the assessment in respect of the abovesaid five assessment years."

Ram Swaroop vs. DCIT. 8.3 In a subsequent decision in the case of Garden Finance Ltd. (supra), the effect of Supreme Court decision in the case of G.K.N. Driveshaft (India) Ltd. (supra) came up for consideration and by a majority opinion it has been thus laid down by this Court as under: "What the Supreme Court has now done in the G.K.N. Driveshafts (India) Ltd. v. ITO [2003] 259 ITR 19 is not to whittle down the principle laid down by the Constitution Bench of the Apex Court in Calcutta Discount Co. Ltd. v. ITO case [1961] 41 ITR 191 but to require the assessee first to lodge preliminary objection before the Assessing Officer who is bound to decide the preliminary objections to issuance of the re-assessment notice by passing a speaking order and, therefore, if such order on the preliminary objections is still against the assessee, the assessee will get an opportunity to challenge the same by filing a writ petition so that he does not have to wait till completion of the re-assessment proceedings which would have entailed the liability to pay tax and interest on re-assessment and also to go through the gamut of appeal, the second appeal before Income-tax Appellate Tribunal and then reference/tax appeal to the High Court. Viewed in this light, it appears to me that the rigour of availing of the alternative remedy before the Assessing Officer for objecting to the re- assessment notice under section 148 has been considerably softened by the Apex Court in G.K.N. Driveshafts (India) Ltd. v. ITO case [2003] 259 ITR 19 in the year 2003. In my view, therefore, the G.K.N. Driveshafts (India) Ltd. v. ITO case (2003) 259 ITR 19 (SC) does not run counter to the Calcutta Discount Co. Ltd. v. ITO case (1961) 41 ITR 191 (SC) but it merely provides for challenge to the re-assessment notice in two stages, that is,— (i) raising preliminary objections before the Assessing Officer and in case of failure before the Assessing Officer, (ii) challenging the speaking order of the Assessing Officer under section 148 of the Act (p.87)." 8.4 Thereafter, in the case of Arvind Mills Ltd. (supra), the Division Bench of this Court had an opportunity to consider the aforesaid two decisions and after considering both the aforesaid decisions, in para 9 the Division Bench has observed and held as under: "9. The position in law is thus well settled. After a notice for re- assessment has been issued an assessee is required to file the return and seek reasons for issuance of such notice. The Assessing Officer is then bound to supply the reasons within a reasonable time. On receipt of reasons, the assessee is entitled to file preliminary objections to issuance of notice and the Assessing Officer is under a mandate to dispose of such preliminary objections by passing a speaking order, before proceeding with the assessment in respect of the assessment year for which such notice has been issued." 8.5 Thus, considering the aforesaid decision of the Hon'ble Supreme Court in the case of GKN Driveshafts (India) Ltd. (supra) and the decision of the Full Bench of this Court in the case of Garden Finance Ltd. (supra) and the decision in the case of Arvind Mills Ltd. (supra) and the decision of the Division Bench in the case of Sahakari Khand Udyog Mandal Ltd. (supra) impugned orders disposing of the objections without deciding the objections on merits cannot be sustained and same deserve to be quashed and set aside. The impugned orders passed by the AO disposing of the objections are absolutely on misinterpretation and/or misreading of the decision of the Division Bench in the case of Ram Swaroop vs. DCIT. Sahakari Khand Udyog Mandal Ltd. (supra). As observed herein above in the case of Sahakari Khand Udyog Mandal Ltd. (supra) the Division Bench has never provided/prescribed/stipulated any time limit for the assessee to file return of income pursuant to notice under Section 148 of the Act, more particularly within a period not less than 30 days and failure to file return of income within a period not less than 30 days, AO need not decide the objections on merits. Such interpretation by the AO is absolutely on misinterpretation and/or on misread of the decision of the Division Bench of this Court in the case of Sahakari Khand Udyog Mandal Ltd. (supra). As observed herein above, it is true that on receipt of notice under Section 148 of the Act, the assessee is required to file return of income pursuant to notice under Section 148 of the Act within the time prescribed in the notice and/or within extended period and/or within reasonable period and assessee may in a given case request the AO to treat the original return as return of income pursuant to the notice under Section 148 of the Act and simultaneously may request for reasons recorded and on receipt of the reasons recorded, the assessee is required to raise objection, if he so desires, within reasonable time and thereafter the AO is bound to decide the objection on merits and decide and dispose of the objections within reasonable time, more particularly, within the time prescribed/directed by the Division Bench in the case of Sahakari Khand Udyog Mandal Ltd. (supra) and communicate the decision disposing of the objections at the earliest, however before finalizing the assessment under Section 143(3) of the Act r/w Section 147 of the Act, however after giving reasonable time to the assessee to challenge the decision/order disposing of the objections.

The Hon’ble Gujarat High Court in the case of General Motors India Pvt. Ltd. vs. DCIT, 354 ITR 244 (Guj.) has held that disposal of the objections before passing Ram Swaroop vs. DCIT. the reassessment order is a mandatory requirement. The Hon’ble Bombay High Court in the case of Allana Cold Storage Ltd. vs. ITO (supra) after considering the judgment of Hon’ble Supreme Court in case of GKN Driveshafts (India) Ltd. vs. ITO, 259 ITR 19 (SC) has held in para 7 & 8 as under :-

“7. We have noted the submissions of both counsel. The law as laid down by the apex court is binding on this court as well as on the authorities functioning under the statute. This being the position, we fail to understand as to why the first respondent did not decide the objections separately which he is duty bound to decide. The whole idea in laying down the law in the above referred judgment of the apex court is to give an opportunity to the assessee to know as to what is the decision on his objections, which decision has also to be arrived at after giving an opportunity to the assessee. In the present case, the assessee has been denied this opportunity. Not only that but in the first three writ petitions what we find is that a common order has been passed on the objections as well as for the reassessment In the fourth matter, the assessment order does not disclose any decision on the objections at all and undoubtedly no such decision has been given separately on the objections.

8. Having noted this scenario, in our view the proper course will be to interfere with the assessment orders passed in all four matters by the concerned officer. We are aware that when an alternative remedy is resorted to, the writ jurisdiction is not to be exercised, but that is a rule of self-limitation. The orders challenged in the present matter are clearly against the law laid down by the apex court and, therefore, the exercise of writ jurisdiction is called for. That being so, we allow all these petitions and quash and set aside the orders of assessment passed in all these four petitions. Inasmuch as the assessment orders are set aside, the appeals filed by the petitioners no longer require to be prosecuted. The same will stand disposed of.”

Thus the requirement of disposing off the objections against the notice issued under section 148 by a separate and speaking order is a mandatory requirement in view of the judgment of the Hon’ble Supreme Court in case of GKN Driveshafts (India) Ltd. vs. ITO (supra), the failure of the AO to dispose off the objection renders the reassessment order not sustainable in law. In the case in hand there is complete failure on the part of the AO to dispose off the objections against notice Ram Swaroop vs. DCIT. under section 148 of the Act and not merely a procedural irregularity of separate and speaking order. Accordingly, in the facts and circumstances of the case and specifically involving the issue of addition of Rs. 42,99,000/-, we find that in this case the AO does not deserve a second inning. Accordingly, without remitting the matter to the record of the AO, the reassessment order passed by the AO is set aside being invalid.

8.4 Ground No. 4 relates to disallowance of Rs. 42,99,000/- on account of transfer expenses. Although we have quashed the whole proceedings u/s 148 and also the assessment order passed by AO in ground no. 3, we are deciding this ground showing our decision on the merits of the case.

In this ground the appellant has challenged the action of the AO in adopting sale consideration of property at Rs. 1,41,17,321/- as against Rs. 96,07,500/- declared by the assessee. The ld. AR has submitted that as per Sale Agreement between the appellant and the buyer M/s. Shreenath Arcade Pvt. Ltd. there was a term that all expenses for issuing Group Housing JDA Patta of the land were to be borne by the seller. As the seller was not having enough liquidity of funds and hence he could not deposit the said charges with JDA and all such charges were paid by the buyer and the buyer has deducted such charges from the sale consideration paid by it on behalf of the seller. The ld. AR during the hearing of AFFIDAVIT IN THE MATTER OF RAM SWAROOP (PAN No. AWCPS9424Q) R/O PLOT NO. 104 GAJSINGHPURA, MUNSHI COLONY, HEERAPURA, JAIPUR RAJASTHAN 302 020. V/s NFAC, DELHI. APPEAL NO. ITA 225/JPR/2024 OF A.Y. 2011-12 I, Hansraj Mishra (PAN – ABYPM3043Q) S/o Late Shri Shiv Prasad Mishra Aged 56 years in the capacity of Director of M/s. Shreenath Arcade Pvt. Ltd., Address: 156-157, 10B Scheme, Gopalpura Byepass, Jaipur (Rajasthan) do hereby affirm on oath as under :-

1. 1. That this affidavit is being provided in reference to the above captioned matter.

2. That our above named Company is an Income Tax Assessee having PAN-AAPCS2140F filing income tax return regularly after getting conducted Audit of Accounts.

3. That our Company is indulged in the activities of Builder and colonizer.

4. That in the year 2007 our company got entered into a transaction with Shri Ramswaroop Balai S/o of Mohrilal, Gopal S/o Mohri Lal and Madhoram S/o Ramchandra R/o Gajsingh Pura (hereinafter referred as the sellers), to purchase the land for its project in village Mahapura under Sanganer Tehsil, District Jaipur Rajasthan namely Khasra No. 1228 and 1229 totaling 2.52 Hectr on the pretext tht sellers will get issued Group Housing JDA Patta from Jaipur Development authority (JDA) in the name of our Company and all expenditure on conversion charges and incidental thererto for this shall be borne by the sellers themselves.

Ram Swaroop vs. DCIT.

5. That in view of such agreement we the buyer company and above sellers have get entered into an agreement named ‘VIKRAY PATRA’ dated 24..11.2010 before issuing JDA Patta and such condition of bearing Expenses on the part of seller have duly mentioned in such VIKRAY PATRA at page 4.

7. That as per mutual decision our company paid all Conversion charges and incidental expenses for issuing Group Housing JDA Patta and the sellers returned the cheques to the tune of said expenses incurred by our company.

Ram Swaroop vs. DCIT.

9. That therefore our company have made the payment to Ramswaroop Balai of Rs. 98,01,000/- only and adjusted amount of Rs. 42,99,000/- out of Rs. 1,41,00,000/- against expenses incurred for issuing Group Housing JDA Patta. For Shreenath Arcade Private Limited Sd/- Director DEPONENT VERIFICATION I, Hansraj Mishra (PAN ABYPM3043Q) S/o Late Shri Shiv Prasad Mishra Aged 56 years in the capacity of Director of M/s. Shreenath Arcade Pvt. Ltd. Address: 156-157, 10B Scheme, Gopal Pura Byepass, Jaipur (Rajasthan) do hereby verify and declare that the content of the Affidavit are true and correct to the best of my knowledge and belief. No part of it is false and nothing material has been concealed therein. For Shreenath Arcade Private Limited Place : Jaipur. Sd/- Date : 14/08/2024 Director DEPONENT From the above affidavit it is clear that the buyer had made payment of all charges required for Group Housing Patta which was the responsibility of the seller as per their Sale Agreement and had deducted a sum of Rs. 42,99,000/- from the amount paid to the seller on this account. The AO disallowed the claim of the appellant by stating that no documentary evidence was submitted by him except an Affidavit of the assessee which is only a self serving document and he has also stated that no confirmation of the buyer party has been filed justifying the payment of sum to JDA on his behalf. The ld. CIT (A) sustained the action by holding that as per section 50C the value determined by the Registering Authority has to be taken as Ram Swaroop vs. DCIT. sale consideration. We agree with the contention of the ld. CIT (A) that sale consideration has to be adopted as per section 50C of the Income Tax Act, 1961 but the expenses incurred by the seller as a pre- condition of the Sale Agreement is to be deemed as transfer expenses which are required to be allowed out of sale consideration. Therefore, the ld. CIT (A) has erred in not allowing the transfer charges incurred for executing the sale transaction. The contention in the affidavit of the buyer have not been controverted by the ld. DR and therefore we are inclined to accept the contention of the ld. AR that deduction of Rs. 42,99,000/- being transfer charges is required to be allowed. Thus Ground No. 4 is allowed.

8.5 Ground NO. 5 relates to deletion of addition subject to verification by the AO. Although we have quashed the whole proceedings u/s 148 and also the assessment order passed by AO in ground no. 3, we are deciding this ground showing our decision on the merits of the case.

In this ground the appellant has challenged the action of the ld. CIT (A) wherein he has set aside the issue of allowing only a sum of Rs. 4,44,079/- out of Rs. 9,00,000/- claimed as cost of acquisition of the property sold by him. We observe from the order of the ld. CIT (A) that he has set aside this issue to the AO for reconsideration of the matter and taking a fresh action for this purpose. As the However as we have already quashed the whole proceedings and the order of the AO being invalid, the issue of fresh consideration shall also go and hence the direction of the ld. CIT (A) are also quashed.

In the result, this appeal of the assessee is partly allowed.