SH. HULAS RAHUL GUPTA,NEW DELHI vs. DCIT, NEW DELHI

O R D E R PER PRASHANT MAHARISHI, A. M. 1. This is an appeal filed by the assessee against the order of the ld CIT(A)-4, New Delhi dated 08.09.2015 for the Assessment Year 2007- 08. 2. The assessee has raised the following grounds of appeal:- “1. That the learned Commissioner of Income Tax (Appeals) has grossly erred both in law and on facts in sustaining an order of assessment under section 143(3)/147 of the Act at an income of Rs.1,41,09,790/- as against returned income of Rs. 1,36,78,108/-. 2 That the learned Commissioner of Income Tax (Appeals) has further erred both in law and on facts in sustaining the initiation of proceedings under section 147 of the Act and. further completion of assessment under section 143(3)/147 of the Act without satisfying the statutory pre-conditions for initiation of the proceedings and, further completion of assessment under the Act. 2.1 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate the fact that the reasons recorded were mere reasons to suspect and were not cogent enough to clothe him with the jurisdiction to frame the assessment in as much as the same were based on mere suspicion, conjectures and surmises Page | 1 Sh. Hulas Rahul Gupta Vs DCIT, (Assessment Year: 2007-08) and thus, the proceeding initiated under section 148 was a mere pretence without there being any escapement of income and the same should have been quashed, as such. 3 That the learned Commissioner of Income Tax (Appeals) has erred in law and on facts in sustaining an addition of Rs. 4, 31,680/- by treating the long term capital gain as business income and brought to tax under section 28(va) of the Act. 3.1 That the learned the learned Commissioner of Income Tax (Appeals) while sustaining the instant assessment has proceeded on irrelevant and extraneous consideration, by disregarding the submissions/ material/ evidence furnished by the assessee appellant in shape of detailed replies and information’s and as such, the addition so sustained, is wholly untenable on facts and also in law.

4. That the learned Commissioner of Income-tax (Appeals) has grossly erred in sustaining the assessment without providing to the assessee, a fair and proper and meaningful opportunity of being heard, thereby violating the principles of natural justice and thus such an order is vitiated both on facts and in law.”

3. The brief history of the litigation shows that the assessee filed its return of income on 31.10.2007 declaring income of Rs. 13678108/-. The assessment was completed on 05.11.2009 at the total income of Rs. 13678108/-. The 147 notice was issued on 27.03.2012 to tax the non- compete fees The reasons recorded were sent to the assessee on 18.02.2013 and the assessee submitted its objection on 05.03.2013. The assessment order was passed u/s 147 read with section 143(3) of the Act, wherein, as per the version of the ld AO the objection of the assessee against reopening of the assessment were disposed off. Meanwhile, the assessee preferred writ petition before the Hon'ble Delhi High Court in WPC No. 1925/2013 against the notice dated 29.03.2012 issued u/s 148 of the Act. The Hon’ble High Court vide order dated 23.03.2013 disposed off the writ petition directing the ld AO, setting aside the original assessment order passed on 05.03.2013, to dispose off the objection of the petitioner by speaking order in accordance with the law and only thereafter to proceed with the assessment. The ld AO therefore, recorded these facts in para 3 of his Page | 2 Sh. Hulas Rahul Gupta Vs DCIT, (Assessment Year: 2007-08) assessment order and passed assessment order u/s 143(3) read with section 147/ u/s 260A of the Act on 21.03.2014 determining the total income of the assessee of Rs. 14109790/-. Consequently, the addition of Rs. 4361680/- was made to the total income of the assessee. The assessee preferred appeal before the ld CIT(A) who upheld the reopening of the assessment as well as addition of Rs. 431680/-. Therefore, the assessee is in appeal before us. The assessee challenges reopening of the assessment as well as the addition on the merits of the case. The merit of the case is related to the only dispute whether a sum of Rs. 431680/- being non-compete fees shall be chargeable to tax as long term capital gain or business income. The assessee has offered the same as long term capital gain the AO has taxed it as business income. On the reopening the simple challenge is that despite the direction of the Hon'ble High Court the ld AO has not disposed of the objection raised by the assessee.

4. The ld AR pleaded that despite the direction of the Hon'ble High Court the ld AO has not disposed off the objection raised by the assessee by passing an independent and separate speaking order.