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Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD
Before: SMT.ANNAPURNA GUPTA & SHRI MAHAVIR PRASAD
आदेश/O R D E R PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER
Present appeal has been filed by the Assessee against order passed by the ld.Commissioner of Income-Tax (Appeals)-7, Ahmedabad [hereinafter referred to as “CIT(A)”] dated 20.8.2019 pertaining to the Asst.Year 2013-14.
Brief facts relating to the case are that the assessee had filed return of income declaring income of Rs.13,14,160/- for the impugned year which was processed and accepted under section 143(1)of the Income Tax Act, 1961 ("the Act" for short).
Subsequently, the AO came into possession of information from DCIT, Cent.Cir.2(1), Ahmedabad that the assessee had booked a property at ‘Dev Aurum’ scheme floated by ‘Dev Procon Ltd.’ during the financial year 2012-13 and for booking this property had paid advance of Rs.13.00 lakhs in cash. Accordingly, proceedings under section 147 was initiated for reopening of the case to bring to tax the alleged income which has escaped assessment. Thereafter, the addition of the said amount of Rs.13 lakhs was made to the income of the assessee in the assessment framed under section 144 read with section 147 of the Act vide order dated 3.12.2018. The matter was carried in appeal before the ld.CIT(A) who upheld the addition.
Aggrieved, the assessee has come before the Tribunal and has challenged the order of the ld.CIT(A) raising the following grounds:
“1.1 The order passed u/s.250 on 20-08-2019 for A.Y. 2013-14 by CIT(A)-7, Abad upholding the validity of proceedings u/s 147 and addition of Rs. 13,00,000/- as unexplained investment u/s.69 made by AO is wholly illegal, unlawful and against the principles of natural justice. 1.2 The Ld. CIT(A) has grievously erred in law and or on facts in not considering fully and properly the submissions made and evidence produced by the appellant with regard to the impugned additions. 2.1 The Ld.CIT(A) has grievously erred in law and on facts in confirming the validity of proceedings u/s 147 and addition of Rs. 13,00,000/- as unexplained investment u/s.69. 2.2 That in the facts and circumstances of the case as well as in law, the Ld.CIT(A) ought not to have upheld the validity of proceedings u/s 147 and addition of Rs. 13,00,000/- as unexplained investment u/s.69. 3.1 The Ld.CIT(A) has erred in relying upon the seized material, statement etc of Dev Procon Ltd group without providing the copy to the appellant and providing the opportunity to cross examine the concerned parties. The Ld CIT(A) has failed to appreciate that there was no evidence to prove that the appellant had paid on money of Rs.13,00,000/-“
Ground No.1.1 and 1.2 was stated to be general in nature. Ground No.2.1 and 2.2, it was stated, were legal grounds challenging the assessment framed under section 147 of the Act.
The pleading of the ld.counsel for the assessee before us was that the information available with the Assessing Officer(AO) could not have lead to formation of a belief of escapement of income of the assessee in the impugned year. In this regard, he drew our attention to para-3.2 of the assessment order which contained the information in the possession of the AO on the basis of which he had formed belief of escapement of income of Rs.13.00 lakhs ,being on- money paid by the assessee to Dev Procon Ltd. for a flat/shop purchased by the assessee . The relevant paragraph is reproduced hereunder:
“3.2 This office is in possession of certain documents relating to proceedings before Hon'ble Income Tax Settlement Commission (ITSC), Mumbai in the case of M/s Dev Procon Ltd. under ITSC no. GJ/AHCC/147/2014-15/lT. This office is also in possession of the list of flat/shop buyer in the 'Dev Aurum' project, supplied by M/s Dev Procon Ltd to Hon'ble ITSC Mumbai. This list gives details of the buyers who had made payment to M/s Dev Procon Ltd for purchase of flat/shop. The details pertaining to the (SI. No. 83 of the list) is reproduced here as under:
1 2 3 4 5 6 7 8 9 10 11 Name of P Total Sr U Address Deal value Advance Collection Receivabl Collection as Party A on money amount . n on the as per e as on per books of N received collected N i basis of books of 31.03.201 accounts Amount data fcr 43 upto o t account 4 on the 31.03.2016 units (Rs.) 31.03.201 31.03.201 . basis of 31.03.201 4 4 deal N 4 value o
4 74,01,108 83 F Harjitsinh 75, A 1,06,07,07 13,00,000 87,01,106 19,05,96 84,85,660/- 1 D Sikh C- B 5A Tapova 7/- 601 flat V a n t Society, P Ambaw S 9 adi. C 9 Ahmeda . 9 bad 6 8 0 K 1
Referring to the above, the ld.counsel for the assessee pointed out that the Department was in possession of certain documents relating to the proceedings before the Hon’ble Settlement Commission in the case of Dev Procon Ltd. containing the information of list of flat/shops, buyers in the Dev Aurum project, which was supplied by Dev Procon Ltd. to Settlement Commission, Mumbai.The said list,he pointed out, gave details of buyers who had made payment to Dev Procon Ltd. for purchase of flat/shop. The ld.counsel pointed out that in the said details at Sr.83, the assessee, Shri Harjeetsingh was listed, whose details are reproduced at para 3.2 as above. Referring to the contents of the table, the ld.counsel for the assessee pointed out that details provided the deal value of the unit purchased which was showed at Rs.1.06 crores; advance money paid by the assessee of Rs.13 lakhs’; amount actually collected as per the books and the balance amount remaining and other such details. The ld.counsel for the assessee pointed out that all these information were relating to as on 31.3.2014; that information of advance money received from the assessee of Rs.13.00 lakhs, which had been added to the income of the assessee also was as on 31.3.2014. The ld.counsel for the assessee pointed out that previous year before us was ending on 31.3.2013 i.e. previous year 2012-13 relating to the AY 2013-14. The ld.counsel for the assessee contended that on the basis of the information as on 5 31.3.2014 advance receipt of Rs.13 lakhs from the assessee for a property purchased, it was not possible for the AO to have formation of a belief that escapement of income for the year ending 31.3.2013 i.e. relating to Asst.Year 2013-14, which is impugned before us. He therefore stated that the reasons were not sufficient for formation of belief of escapement of income, and therefore jurisdiction assumed by the AO to frame assessment in the present case was not in accordance with law and passed as a consequence of making addition of amount of Rs.13 lakhs need to be quashed.
The ld.DR at this juncture was asked at Bar to demonstrate as to how on the basis of this information pertaining to 31.3.2014 any belief of escapement of income for the year ending 31.3.2013 i.e. preceding year could have been formed. The ld.DR was unable to provide any justification and he fairly agreed that information in the possession of the AO pertained to as on 31.3.2014.
In view of the above, we find merit in the contentions of the ld.counsel for the assessee that the information of advance money paid by the assessee to Dev Procon Ltd. pertained to as on 31.3.2014 and this definitely could not have led to the belief that income had escaped assessment for the year ending 31.3.2013 i.e. for the financial year 2012-13 pertaining to Asst.Year 2013-14, which is impugned before us.
In view of the above, we hold that reasons recorded by the AO were insufficient and could not have lead to formation of belief of escapement of income for the impugned year. Jurisdiction assumed by the AO to frame assessment under section 147 accordingly is held as bad in law. The order passed as a consequence, making
6 addition of Rs.13.00 lakhs on account of the said advance, is directed to be set aside. Ground No.2.1 and 2.2 are allowed.
Remaining grounds raised relate to the merits of the case. Since we have held the assessment order passed to be invalid, the adjudication of the grounds based on merit, is mere academic exercise, and therefore the same are not being adjudicated upon by us.
In the result, appeal of the assessee is allowed in above terms. Order pronounced in the Court on 13th July, 2022 at Ahmedabad.