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Income Tax Appellate Tribunal, AHMEDABAD “D” BENCH
Before: Shri Waseem Ahmed & Shri Siddhartha Nautiyal
आदेश/ORDER
PER : SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER:-
This is an appeal filed by the Revenue against the order of the ld. Commissioner of Income Tax (Appeals)-3, Ahmedabad, in Appeal no. CIT(A)-3/Cir.3(3)/349/15-16, in proceeding u/s. 144 r.w.s. 147 of the Act vide order dated 24/11/2016 passed for the assessment year 2011-12. The assessee has also filed Cross objection against the order passed by Ld. CIT(Appeals) challenging the validity of re-opening of assessment in the instant set of facts.
The Department has taken the following grounds of appeal:-
“1) "Whether the Ld. C1T(A) is right in law and on facts in deleting the addition of Rs.3,07,12,200/- made on account of undisclosed receipts out of sale of plots of land. " 2) "Whether the Ld. CIT(A) is right in law and on facts in reversing the findings of the Assessing Officer and in treating the deficit arised out of sale of land properties as short term capital loss of Rs. 4,46,421/- instead of business income. 3) "Whether the Ld. CIT(A) is right in law and on facts in reversing the findings of the Assessing Officer and in treating the surplus arised out of sale of land properties as Long term capital Gain of Rs. 7,60,514/- instead of business income. 4) "Whether the Id.CIT(A) is right in law and on facts in deleting the addition of Rs. 6,24,450/- made on account of undisclosed income from sale of units at Swagat Status-II scheme." 5) "Whether the Ld. CIT(A) is right in law and on 'facts in deleting the addition of Rs.8,00,000/- made on account of u/s. 68 of the Act."
I.T.A No. 231 & C.O. No. 50/Ahd/2017 A.Y. 2011-12 Page No. 3 DCIT vs. Mrunal Santramdas Verma 3. The assessee has filed the following cross objections:-
“1. Ld. CIT (A) erred in law and on facts dismissing ground challenging validity of assessment framed u/s 147 r w s 144 of the Act. Ld. CIT (A) ought to quashed the ex parte order passed by AO without jurisdiction. 2. Ld. CIT (A) further erred in law and on facts confirming validity of proceedings ignoring ratio of judgment relied upon by the appellant that order is bad in law & void ab initio when AO makes addition on issues other than those narrated in reasons recorded for re opening the assessment. 3. Ld. CIT (A) erred in law and on facts in holding the reassessment proceedings as valid in absence of AO first dealing with objections to reassessment raised by the appellant through a speaking order. The appellant craves leave to add, amend, edit, delete, change or modify all or any of the ground before or at the time of hearing.”
At the outset, the counsel for the assessee challenged the re-opening of assessment in instant set of facts and placed reliance on the decision of the jurisdictional Gujarat High Court in the case of Mohmed Juned Dadani 355 ITR 172 (Gujarat), wherein the High Court held that when the ground on which reopening of assessment was based, no addition was made by Assessing Officer, he could not make additions on some other grounds which did not form part of reasons recorded by him. The counsel for the assessee submitted that no additions were made in respect of those issues which formed the basis on which the assessment of the assessee was re- opened. He drew our attention to page 29 of the paper book and submitted that the “Reasons for reopening assessment” of the assessee mentions that assessee had sold immovable property on 17-02-2011 at � 6, 30, 700/-, however, the “Jantri value” of the said property was � 10, 06, 122/-. Accordingly, the difference of � 3, 75, 422/- was liable to be taxed u/s 50C
I.T.A No. 231 & C.O. No. 50/Ahd/2017 A.Y. 2011-12 Page No. 4 DCIT vs. Mrunal Santramdas Verma of the Act as there was under-valuation of property. The counsel for the assessee then drew our attention to page 3 of the assessment order (where the said property finds mention) and also at page 11 of assessment order and submits that in the assessment order, no addition is made in respect of the sale of the aforementioned property u/s 50C of the Act. Instead, in the assessment order, the assessing Officer has considered sale of this property along with other properties as mentioned in table given at page 3 of the assessment order, as income in the hands of the assessee, taxable @8% of the sale consideration. Accordingly, the primary argument of the counsel for the assessee is that no additions were made in the assessment order on the basis on which the assessment of the assessee was reopened. Accordingly, the assessment order is liable to be set aside on grounds of jurisdiction alone on the basis of direct judgement on the issue in the case of Mohmed Juned Dadani supra.
In response, DR submitted that though the additions have been made on different basis i.e. addition has not been made on the basis of difference between sale value of the property and Jantri value, however, the addition has been made with respect to the very same property, which finds mention in the “reasons for reopening assessment” issued by the learned AO. Accordingly, there is no infirmity in the order u/s. 147 of the Act.
We have heard the rival contentions and perused the material on record. The primary issue for consideration before us is that though in the “Reasons” recorded for reopening the assessment, the AO has sought to tax the difference between the sale value of the property and the Jantri value u/s
I.T.A No. 231 & C.O. No. 50/Ahd/2017 A.Y. 2011-12 Page No. 5 DCIT vs. Mrunal Santramdas Verma 50 C of the Act, however, in the assessment order additions have been made in respect of the above property (along with other properties owned by the assessee) on a different basis i.e. 8% of the total sale consideration has been taxed in the hands of the assessee. The Hon'ble Supreme Court in the case of Pr. CIT v Lark Chemicals (P.) Ltd [2018] 99 taxmann.com 312 (SC) held that where High Court having noticed that order passed consequent to reassessment, had not confirmed addition attributable to reasonable belief of Assessing Officer while issuing reopening notice, and set aside the said reassessment order, SLP filed against decision of High Court was to be dismissed. In the case of CIT v. Mohmed Juned Dadani [2013] 30 taxmann.com 1 (Gujarat), the Hon'ble Gujarat High Court held that when on ground on which reopening of assessment was based, no addition was made by Assessing Officer, he could not make additions on some other grounds which did not form part of reasons recorded by him. In the case of CIT v. Jet Airways (I) Ltd. [2010] 195 Taxman 117 (Bombay), the Bombay High Court held that if after issuing notice under section 148, Ld. Assessing Officer accepts contention of assessee and holds that income, for which he had initially formed a reason to believe that it had escaped assessment, has, as a matter of fact, not escaped assessment, it is not open to him to independently assess some other income; if he intends to do so, a fresh notice under section 148 would be necessary, legality of which would be tested in event of a challenge by assessee. In the recent case of Aishwarya Rai Bachchan v. Pr. CIT [2022] 135 taxmann.com 335 (Mumbai - Trib.), ITAT held that where AO recorded reasons on basis of which reassessment was initiated, but did not make any addition in reassessment proceedings, in such case primary reason to believe that
I.T.A No. 231 & C.O. No. 50/Ahd/2017 A.Y. 2011-12 Page No. 6 DCIT vs. Mrunal Santramdas Verma income had escaped assessment would fail and reassessment could not be treated as a valid order. Again in ACIT v. Everest Education Society [2021] 126 taxmann.com 78 (Pune - Trib.), ITAT held that where reasons recorded and notice issued under section 147/148 was with respect to underutilization of income of assessee trust for which there had been no addition made, but Assessing Officer made addition on account of 'anonymous donation' under section 115BBC, Assessing Officer having acted beyond his jurisdiction, and therefore Commissioner (Appeals) had rightly directed Assessing Officer to delete addition so made.
6.1 Now, coming to specific facts of the instant case, we note that the reassessment proceedings were reopened by the Ld. Assessing Officer on the following basis:
“Shri Mrunai Santramdas Varma, 307-308, Sarthak Square, Bodakdev, Ahmedabad. In this ease, the information under soured code 001 is received from the D.l..(l&CI) Ahmedabad through Jt. GIT Range-7, Ahmedabad on 03/05/2013. The assessee has sold immovable property on 17-02-2011 at Rs.6,30,700/- vide Reg. No. 3101 With SUB Registrar (WADAJ) and paid stamp duty thereon of Rs. 49,300/-. However, the ‘JANTRI VALLE' value shown of this property is of Rs. 10,06,122/-. Therefore, there is difference of Rs 3,75,422/- which is liable to tax u/s 50C of the IT Act as under valuation of the property. Therefore, I have reason to believe that income to the tune of at least Rs 3,75,422/- has escaped assessment. In view of this, the case is fit to re-open u/s 147 of the IT Act 1961 for A. Y. 2011- 12. Notice u/s 148 of the IT Act issued accordingly. Sd/- (N K GOEL) Assistant Commissioner of Income Tax, Circle-7, Ahmedabad.”
I.T.A No. 231 & C.O. No. 50/Ahd/2017 A.Y. 2011-12 Page No. 7 DCIT vs. Mrunal Santramdas Verma 6.2 However, in the assessment order, we note that the Ld. Assessing Officer has not made any additions and nor even discussed the issue on the basis of which the reassessment proceedings were initiated. Accordingly, in our view, the order passed by the AO u/s 147/148 of the Act is liable to be set aside on the grounds of jurisdiction, in light of the discussion above.
6.3 Having held that additions made during reassessment proceedings deserve to be set aside on grounds of jurisdiction, we are not going into the individual grounds with respect to merits of the case.
In the result, appeal of the Department is dismissed and the Cross Objection of the assessee is allowed. Order pronounced in the open court on 09-12-2022
Sd/- Sd/- (WASEEM AHMED) (SIDDHARTHA NAUTIYAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad : Dated 09/12/2022 आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से,
उप/सहायक पंजीकार आयकर अपील�य अ�धकरण, अहमदाबाद