SMT ARTI SHARMA,GURGAON vs. ITO, GURGAON

PER O.P. KANT, AM: This appeal by the assessee is directed against order dated 09/02/2017 passed by the Ld. Commissioner of Income-tax (Appeals)-1, Gurgaon [in short ‘the Ld. CIT(A’)] for assessment year 2010-11, raising following grounds:

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Gurgaon u/s 154 of the Act, if the computation filed is not a valid return then the assessment should not therein, which was not followed by the AO and hence the assessment is invalid and illegal. 3. Without prejudice to other grounds and subject to the rectification application made before the Ld. CIT(A)-1, Gurgaon u/s 154 of the Act, if the computation filed is a valid return of income then the notice u/s 143(2) should have been issued as it was a mandatory requirement before passing order u/s 143(3) as held in many cases. Therefore the assessment is invalid and illegal. 4. Without prejudice to other grounds and subject to the rectification application made before the Ld. CIT(A)-1 Gurgaon, Whether the Ld CIT(A)-1 Gurgaon was justified in confirming the addition of Rs. 15,52,221/- and further making the addition of Rs. 89,75,305/- u/s 68 of the Income Tax Act, 1961 in the absence of books of accounts? 5. Without prejudice to other grounds, the addition of Rs. 89,75,305/- made u/s 68 of the Act by the Ld CIT(A)-1 Gurgaon is beyond the powers of CIT(A) 6. Without prejudice to other grounds and subject to the rectification application made before the Ld. CIT(A)-1 Gurgaon, Whether the Ld CIT(A)-1 Gurgaon was justified in confirming the additions of Rs. 36,611/- and Rs. 15,15,600/- u/s 68 of the Act in spite of the fact that sufficient cash in hand was available with the assessee at relevant point of time? 7. Without prejudice to other grounds and subject to the rectification application made before the Ld. CIT(A)-1 Gurgaon, whether the CIT(A)-1 Gurgaon, was justified in treating the advance of Rs. 89,75,305/- which later returned to the buyers, be taxable in A.Y. 2010-11 without any enquiry in spite of availability of registered sale deeds, complete addresses of the buyers and without confronting the same to the assessee during appellate proceedings?

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Rs.1,47,33,861/- was observed up to 31/03/2010. The interest was also found to be credited in the bank account. The total cash deposits in both the saving bank account was found to be Rs.1,62,49,461/-. The assessee accepted the bank interest amounting to Rs.1,89,494/- as its income and filed a revised computation of the income, including the said amount before the Assessing Officer and paid tax on said bank interest income. 2.2 In respect of cash deposits of Rs.1,47,33,861/- in one of the saving bank account, the assessee claimed before the Assessing Officer that cash deposits of Rs.1,46,97,250/- were made out of the booking amount received in advance against sale of plots of agriculture land to 55 persons at village Sardana, Gurgaon, however, source of the balance amount of Rs. 36, 611/- was not explained. On being asked by the Assessing Officer to furnish proof of sale of such plots of land, the assessee furnished copies of sale/conveyance deed in case of 8 sale transactions. It was submitted that registration of the sale of such plots was made later on as the registration was not allowed by the government and the assessee had not kept the copies of the conveyance deeds with her. 2.3 In respect of the cash deposits of Rs.15,15,600/- in another saving bank account, no source was explained. The Assessing Officer observed that agriculture land measuring 21 KANAL was purchased by the assessee by way of the purchase deed dated 03/08/2009 and same was sold by plotting in pieces as agriculture land. The Assessing Officer noted the submission of the assessee that booking of the plots were made even prior to execution of the purchase deed dated 03/08/2009, which was

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evident from the fact that the booking amount was received from 12/06/2009 onwards. The Assessing Officer noted that in view of the agriculture land purchased and sold in the same year, the land was never used as agricultural and land the assessee did not fulfill the provisions of section 54B of the Act, accordingly, he held the land as capital asset and the sale transaction was held as adventure in the nature of the trade in view of the various decisions of the Hon’ble Supreme Court cited in the assessment order. The Assessing Officer computed profit earned of Rs.1,10,71,250/- after subtracting cost of land of Rs.36,26,000/- out of the amount claimed as received against sale of plot amounting to Rs.1,46,97,250/-. The assessment was completed on 27/03/2015, after computing the total income is under:

a) Total Income declared in the ITR 1,86,900 b) Addition made for source of deposit not 36,611 explained c) Additional made for source of deposit not 15,15,600 explained d) Addition made for interest income on deposits 1,89,494 e) Addition made for profit from the trade 1,10,71,250 adventure. f) Total Addition made 1,28,12,955 g) Total Income assessed 1,29,99,855 h) Rounded off 1,29,99,860

2.4 Before the Ld. CIT(A), the assessee challenged assumption of jurisdiction under section 147 of the Act. The assessee also challenged that in absence of notice under section 143(2) of the Act, the assessment under section 143(3) of the Act was void ab initio. The additions made were also challenged on merit by the assessee.

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2.5 The Ld. CIT(A) found the reasons recorded by the Assessing Officer as cogent and adequate to form a belief that income had escaped assessment. The ground of the assessee that assessment was void ab initio in absence of notice under section 143(2) of the Act, was also rejected by the Ld. CIT(A) holding that no return of income was filed by the assessee in response to notice under section 148 of the Act and, therefore, there is no requirement to issue notice under section 143(2) of the Act before completion of the assessment. 2.6 On the issue of the merit of the addition, before the Ld. CIT(A), the assessee contended that the land sold by the assessee was agriculture land and the profit derived from sale of such land was not taxable. The assessee also submitted that land in question was beyond 8 kms from the municipal limit of Gurgaon and, therefore, it was not a capital asset. In support of the contention, the assessee relied on various case laws. The assessee also contended that amount received by the assessee from various persons were not sale proceeds and were mere advances and in those circumstances, same cannot be considered as income of the assessee in the year under consideration. 2.7 The Ld. CIT(A), however, asked the assessee for complete information in respect of the sale of plots including the amount of advance/sale recorded in sale deeds. The Authorised Representative of the assessee filed a year wise breakup of sale consideration with regard to the plots registered in respective years as under:

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F.Y. 2009-10 - Rs.19,12,500/- F.Y. 2010-11 - Rs.36,10,000/- F.Y. 2011-12 - Rs.35,85,000/- F.Y. 2012-13 - Rs. 5,40,000/- Total - Rs.96,44,500/-

2.8 The Ld. AR also filed a revised computation of the profit for the year under consideration, which is reproduced as under:

Total Land Purchases area =6270 Sq. Yards Total Saleable area after plotting =4666 Sq. Yards Cost of Land share Purchases =36,26,000/- Cost per Sq. Yards =777.11 (approx) So in the instant transaction, the profit for the A.Y. 2010-11 is calculated as under: Sales Consideration (1125 Sq. Yards) 19,12,500.00 Less:- Purchase Cost (1125 Sq. Yards) 8,74,249.00 1125 X Rs.777.11 Profit 9,28,251.00

2.9 From the submission filed by the Authorised Representative of the assessee, the Ld. CIT(A) observed that against the booking amount of Rs.1,46,97,250/- claimed as received by the assessee, the total sale consideration of Rs.96,44,500/- was only shown by the assessee. The assessee claimed that excess advance amount was returned to the respective persons (buyer). The assessee also filed a list of the name of the persons to whom the advance received was returned. The Ld. CIT(A) has reproduced scanned copy of the relevant information of the year-wise advance received, sales consideration in cash, sales consideration in cheque and the amount returned. The Ld. CIT(A) in para 4.15 to

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4.22 upheld taxing the profit on sale of plots under the head business profit. As far as quantum of the unexplained cash deposits, the Ld. CIT(A) accepted the year-wise sale consideration recorded in the registered sale deeds submitted by the assessee. For the year under consideration, the assessee shown sale consideration of Rs.12,80,900/- and computed income of Rs.9,38,251/-. The Ld. CIT(A) justified the claim of the assessee to the extent of the profit arising from the sale consideration on account of sale deeds registered in financial years 2010-11, 2011- 12 and 2012-13, which were taxable in the assessment years 2011-12, 2012-13 and 2013-14. However, the claim of the assessee of return of the amounts to the purchaser at the time of the registration ( out of the amount claimed as received as advance) was rejected in absence of any documentary evidence of return of those amounts. The Ld. CIT(A) sustained addition amounting to Rs.89,75,305/- i.e. the advance amount which was claimed by the assessee to have returned over the years, in addition to the amount of Rs.9,38,251/- computed by the assessee as income for the year under consideration. The finding of the Ld. CIT(A) in this respect are reproduced as under:

“4.23 Now coming to the issue of the amount of income to be taxed in the year under consideration. In this regard, the appellant has contended that the amount of Rs.l,46,97,250/- taken by the AO as sale consideration for the purpose of computation of income was in fact only the advance received and the AO was therefore not justified in computing the income on this basis. In this regard, the year wise details of registration "of sale deeds and the corresponding sale consideration received by the appellant, as submitted by her vide reply dated 04/02/2017, has been reproduced above. The appellant has contended that the sale consideration of Rs. 12,80,900/- received by her during the FY 2009-10 can only be taken for computation of income for the year 2009-10 i.e. AY 2030-11. The appellant has computed the income of Rs. 9,38,251/- for the year 2009-10 relevant to AY 2010-11 based on these sale deeds. The remaining sale deeds have

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been shown to be registered in FY 2010-11, 2011-12 and 2012-13, The appellant has contended that only the amount of Rs.9,38,251/- is taxable in the AY 2010-11. 4.24 I do not agree with this contention of the appellant The claim of the appellant is justified only to the extent that the profits arising from the sale consideration on account of sale deeds registered in FY 2010-11, 2011-12 and 2012-13 are taxable in the AY 2011-12, 2012-13 and 2013-14 only. However, there is another issue arising out of the details submitted by the appellant As per the details filed by the appellant, following amounts were shown to have been returned to the purchaser at the time of registration out of the advance which were claimed to have been received in the AY 2009-10:- i. FY 2009-10 – Rs.14,44,125/- ii. FY 2010-11 – Rs.25,82,650/- iii. FY 2011-12 – Rs.15,62,100/- 4.25 Further, out of the advance claimed to have been received in FY 2009-10 amounts totaling Rs. 33,86,370/- were claimed to have been returned to the prospective buyers in the month of August, 2010 in cases where no registration deed was signed. No evidence with regard to the claim that the aforesaid amounts have been returned to the concerned persons was furnished by the appellant. It is evident from the facts discussed above that the claim of the appellant regarding returned of cash at the time of registration or otherwise is a self serving statement without any supporting evidence. In these circumstances of the case, there are only two possibilities: i. The cash which was claimed to have been returned at the time of registration or otherwise, totaling an amount of Rs. 89,75,305/-, was never received as advance and the claim was made by the appellant merely to explain the sources of cash deposits in the hank account. It may be relevant to mention here that even at the time of assessment proceedings or at the time of appellate proceedings no confirmation or evidences with regard to the claim of receipts of advance in this regard was furnished by the appellant. ii. The other possibility is that the sale consideration was not stated correctly in the registered sale deed and cash component claimed to have been returned at the time of registration of sale deed was the amount of consideration over and above the consideration shown in the registered sale deed. 4.26 In the first case, the amount of Rs. 89,75,305/- would he taxable as income in the year under consideration i.e. AY 2010-11 on the ground that the cash deposits in the bank account to this extent remain unexplained. In the second case, cash claimed to have been returned in the FY 2009TTTI, 2010-11 and 20H-12 would be taxable in respective AY as being consideration received by the appellant^ over and above the amounts shown in the respective sale deeds. 4.27 As mentioned above, the claim of advance having been received by the appellant was made by the appellant to explain the sources of cash deposits

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amounting to Rs.1,47,33,861/- in her bank "account No. 131010100623476. Further, as mentioned above, no evidence or confirmation with regard to the claim of the cash having been received as advance from the various persons was furnished by the appellant, In view of these facts, it is held that the cash amounting to Rs.89,75,305/-which was claimed to have been returned over the years was in met never received by the appellant in the year 2009-10 and accordingly the cash deposits in the bank account No. 131010100623476 to that extent remain unexplained. This amount is accordingly held to be income of the appellant for the year under consideration i.e. AY 2010-11, in addition to the amount of Rs. 9,38,251/-, computed by the appellant, as referred above.”

2.10 The balance cash deposits of Rs.36,611/- and Rs.15,15,600/- were also held as unexplained by the Ld. CIT(A) observing as under:

4.28 Further, as all the cash receipts of the appellant have been accounted for while computing the aforesaid income, it is held that no amount of cash was \ available with the appellant for making the cash deposits amounting to Rs.36,611/- and Rs. 15,15,600/-. The additions made on this account are also confirmed. The AO is directed to re-compute the income accordingly. The grounds of appeal of foe appellant are partly allowed.”

2.11 Aggrieved with the sustaining of the above additions, the assessee is in appeal before the Tribunal. 3. Before us, the learned counsel of the assessee filed a letter modifying the ground No. 2 and 3 of the original grounds as under:

1) "Without prejudice to other grounds, if the original return r.w. computation filed is not a valid return then the assessment should not be made u/s 143(3) but only u/s 144 after following the procedure stated therein, which was not followed by the AO and hence the assessment is invalid and illegal. 2) Without prejudice to other grounds, if the original return r.w. computation filed is a valid return of income then the notice u/s 143(2) should have been issued as it was a mandatory requirement before passing order u/s 143(3) as held in many cases. Therefore the assessment is invalid and illegal. " It is submitted that the substance of the above grounds are same and no new plea is taken in the above grounds. The sole purpose of modifying the grounds is to correct the clerical error where the word "computation" has been

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replaced with "original return r.w. computation" and to delete "subject to the rectification application made before the Ld. CIT(A)-1 Gurgaon u/s 154 of the Act" because the rectification proceedings has been concluded.”

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According to him the assessment has been passed after considering the submissions made by the authorised representative of the assessees. He submitted that the assessee has remained evasive and accepted the interest income etc. when being pointed out by the Assessing Officer or the learned CIT(A). According to him the Assessing Officer has provided sufficient and reasonable opportunity of being heard to the assessee and therefore there is no violation of principles of natural Justice. 6.2 We have heard the rival submissions and perused the relevant material on record. The Ld. counsel of the assessee has submitted that assessment order has been passed within 26 days of issue notice under section 148 of the Act and thus, no sufficient opportunity has been provided to the assessee. We have observed that in this case notice under section 148 of the Act was issued on 02/03/2015. In response to the said notice issued, the Authorised Representative of the assessee, Sh. Dharmpal attended the office of the Assessing Officer on 13/03/2015. Thereafter, another Authorised Representative, Sh. NK Mahajan, CA, appeared before the Assessing Officer on 20/03/2015, who was also provided copy of reasons recorded under section 147 of the Act. On 25/03/2015, again Sh. Mahajan and Sh. Dharmpal attended the hearing before the Assessing Officer and submitted documents containing bank statement of two bank accounts, copy of purchase deed dated 03/08/2009 of the land, copy of Ekrarnama and receipt in respect of the money received from husband of the assessee for purchase of the land, details of booking amounts received as advance in cash from 55 persons, copy of 8 sale/conveyance deeds of plot, revised computation

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admitting the additional interest income, tax deposit receipt of Rs.29,310/-. The Assessing Officer asked to the Ld. Authorised representative of the assessee about the source of cash deposit in bank account, which was explained as booking amount against sale of plots received in advance. The Ld. AR provided details of purchase of agricultural land and sale of the same in plots of small size. The Ld. AR provided list of the persons alongwith booking amount to whom the plots were sold. The Ld AR also explained source of investment made in purchase of the land. In view of the above facts, in our opinion the Assessing Officer has passed the assessment order after considering all the submissions filed by the Ld. authorised representative. Before us, the Ld. counsel failed to produce any request of the assessee to the Assessing Officer seeking more time for filing of the information. Thus, it cann’t be said that the assessee has been deprived from filing any information in respect of the transactions carried out by her. The Assessing Officer after considering the submission of the assessee has formed his opinion and held that the income earned on sale of the plot was in the nature of an adventure in the trade. The Ld. Assessing Officer rejected the contention of the assessee that the sale of the plot was exempted same being sale of agricultural land. 6.3 The time limit for completion of the assessment, reassessment in general has been provided in section 153 of the Act. For completion of the assessment under section 147, time limit has been provided in sub-section 2 of section 153 of the Act. During the relevant period, the said section provided time limit for completion of the assessment under section 147 of the Act as one

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year from the end of the financial year in which notice under section 148 of the Act was served. In this case notice has been issued and served on 02/03/2015 and, therefore, limitation was available with Assessing Officer till 31/03/2016, however, the Assessing Officer promptly completed assessment on 27/03/2015. In our opinion, there is no prohibition in the law to complete the assessment before the limitation date. We do not find any error on the part of the Assessing Officer in completing the assessment prior to expiry of the limitation period. We have also noted that the Ld. CIT(A) has provided sufficient opportunity to assessee to explain the transactions of sale of land and thereafter sustained the additions in respect of the amount. The Assessing officer considered the advance amounts of Rs.1,46,97,250/- as sale consideration in the year under consideration and after reducing the purchase price of the land amounting to Rs.36,26,000/-, balance amount of Rs.1,10,71,250/- was treated as profit earned by the assessee. Whereas the Ld. CIT(A) has treated the sales of plot of land in the years, in which the sales were registered. The Ld. CIT(A) found total sales amount recorded in registered sale deed amounting to Rs.96,44,500/-. At this stage, the assessee claimed that the advance amount received in excess of Rs.94,44,500/- was returned to the customers who booked the plots. In absence of any evidence filed, the Ld. CIT(A) held this amount of Rs.89,75,305/-claim to have been returned by the assessee, as undisclosed income of the assessee. On merit, the assessee before us is aggrieved by the amount of addition worked out by the Ld CIT(A) and not against the amount of addition made in the

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assessment order. Accordingly, the contention of the assessee of not providing sufficient opportunity and violation of the principle of natural Justice are rejected. The ground no. 8 of the appeal of the assessee is accordingly dismissed. 7. In ground No. 2 (modified), the assessee has raised the issue that if original return read with computation filed was not found to be a valid return than the assessment should have been made under section 144 of the Act following the procedure, which has not been followed by the Assessing Officer and, therefore, the assessment is invalid and illegal. In ground No. 3 (modified), the assessee has raised the issue that if the original return read with computation filed is found to be valid return than the notice under section 143(2) of the Act should have been issued being a mandatory requirement and therefore in absence of such a notice, the assessment is invalid and illegal. 7.1 Both the grounds being connected, the Ld. counsel argued both the grounds in a combined manner. The Ld. Counsel drawn our attention to the letter dated 25/03/2015 filed before the Assessing Officer by the Ld. Authorised Representative of the assessee (which is available on page 27 of the paper book volume- 1). The Ld. counsel submitted that the assessee had been filing income tax return regularly and in response to notice u/s 148 of the Act, she submitted copy of the acknowledgement of the Income Tax Return along with computation of income for assessment 2008-09, 2009-10 and 2010-11 before the Assessing Officer. The Ld. counsel submitted that during assessment proceeding on 26/03/2015, the Ld. AR also filed revised computation of the income after including the interest income

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earned on the deposits in banks. According to the Ld. counsel, in view of the copy of the acknowledgement return of income filed or the revised computation of income filed, the Ld. Assessing Officer was required to issue notice under section 143(2) of the Act before commencing the assessment proceeding. The Ld. counsel pointed out that the Assessing Officer has not issued any notice under section 143(2) of the Act and therefore completion of the assessment under section 143(3) of the Act without issuing notice under section 143(2) of the Act has rendered the assessment as void ab-initio. In support of his contention, the Ld. counsel relied on the decision of the Tribunal, Hyderabad Bench in the case of ADIT (Exemption), Hyderabad vs. Vodithala Education Society reported in [2013] 39 taxmann.com (100). 7.2 The Ld. counsel submitted alternatively that if the copy of return of income or revised computation of income filed by the assessee, was not treated by the Ld. Assessing Officer as valid return than the assessment should have been completed under section 144 of the Act and for which purpose, the Assessing Officer was required to issue either notice under section 142(1) of the Act or show cause notice proposing the addition to be made before completion of the assessment under section 144 of the Act. The Ld. counsel submitted that the Ld. Assessing Officer has not followed due procedure of law for completion of the assessment under section 144 of the Act, and therefore also the assessment need to be annulled. 7.3 On the contrary, the Ld. DR submitted that in response to notice under section 148 of the Act assessee has neither filed fresh return of income nor submitted that the regular return of

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income filed by the assessee on 28/03/2011 might be treated as return of income in response to notice under section 148 of the Act. According to him, merely filing a copy of the acknowledgement of regular return of income or revised computation of income cannot constitute return of income filed in response to notice under section 148 of the Act. Therefore, in absence of any return of income filed by the assessee in response to notice under section 148 of the Act, the Assessing Officer was not required to issue notice under section 143 (2) of the Act for completing the assessment under section 147 of the Act. The Ld. DR submitted that a complete procedure has been laid down by the Hon’ble Supreme Court in the case of GKN Driveshaft Vs. ITO, (2003) 259 ITR 19 to be followed subsequent to the issue of notice under section 148 of the Act. According to the guidelines in the case, an assessee is required to file return of income in response to the notice under section 148 of the Act and then only can make request for providing reasons recorded. The Ld. DR, however, submitted that there is an inadvertent error in mentioning the assessment completed under section 144 of the Act rather than section 143(3) of the Act. He submitted that the mistake is in the nature of the curable mistake in terms of section 292B of the Act and due to such curable mistake, the assessment cannot be annulled. On the issue of not issuing notice under section 142(1) of the Act, he submitted that during assessment proceeding all the queries were asked to the authorised representative of the assessee and they have duly submitted the information available with the assessee and therefore there was due compliance on the part of the Assessing Officer. On the issue

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of no show cause notice issued before completion of the assessment under section 144 of the Act, the Ld. DR submitted that this being a procedural mistake, entire assessment cannot be held illegal. He submitted that the Assessing Officer has completed the assessment after acquiring a valid jurisdiction over the case and therefore it cannot be held as invalid assessment order. 7.4 In the rejoinder, the Ld. Council of the assessee referred to the decision of the Tribunal (SMC) dated 13/03/2018, in the case of ITO Vs. Neeraj Goyal in ITA No. 6290/Del/2017, wherein it is held that the Assessing Officer is bound in law to assume jurisdiction under section 143(2) to frame assessment order whether with the return of income or without the return of income and whether under section 143(3) or 144 or under some other provision of the law. 7.5 We have heard the rival submissions and perused the relevant material on record including the paper book filed by the assessee. The first issue before us is whether the assessee has filed return of income in response to notice under section 148 of the Act dated 02/03/2015 issued by the Assessing Officer. The Ld. counsel drawn our attention to submission dated 25/03/2015 filed before the Assessing Officer. The said submission is available on page 27 of the Paper book of the assessee. On perusal of the said page of the paper Book, we find that the assessee has filed copy of acknowledgement of income tax return along with computation of the income for assessment a 2008-09, 2009-10 and 2010-11. Thus, it is evident that only copies acknowledgement of the filing of regular return of income

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and computation of income of the relevant year has been filed by the assessee, and even copy of return of income has not been filed. Further, the assessee in this submission has nowhere stated that the regular return of income filed might be treated as return of income in response to notice under section 148 of the Act. Further, the Ld. counsel of assessee has claimed that a revised computation of total income declaring income of Rs.3,76400/- was filed for the assessment year in consideration along with the submission dated 25/03/2015, and same should be considered as return of income filed in response to notice under section 148 of the Act. This contention of the Ld. counsel cannot be accepted. As far as return of income is considered it is laid down in section 148 of the Act that return of income has to be filed in the prescribed form and verified in the prescribed manner. In our opinion, the computation of income filed cannot substitute return of income to be filed in the prescribed form and verified in prescribed manner. The Ld. counsel further submitted that while computing the total income in the assessment order under section 147 of the Act, the Assessing Officer has started the computation with income as per the regular return of income filed and therefore he has considered the regular return of income as return of income filed in response to notice under section 148 of the Act. We do not agree with this contention of the Ld. counsel as the regular return of income filed was already available on record and therefore the Ld. Assessing Officer has computed the total income for the purpose of section 147 of the Act, by way of including the income escaped to the total income already reflected in the regular return of income. By way of merely taking the

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amount in return of income declared in regular return as a starting point for computation of the total income under section 147 of the Act, it cannot be treated that the assessee has filed a return of income in response to notice under section 148 of the Act. Thus, in our opinion, the assessee has failed to file any return of income in response to notice under section 148 of the Act. 7.6 The section 148 has prescribed that subsequent to filing of the return of income in response to notice under section 148 of the Act, the provisions of the Act apply accordingly as if such a return of income was a return required to be furnished under section 139 of the Act. The relevant part of the section 148 of the Act is reproduced as under:

“Issue of notice where income has escaped assessment. 148. (1) Before making the assessment, reassessment or recomputation under section 147, the Assessing Officer shall serve on the assessee a notice requiring him to furnish within such period, as may be specified in the notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed; and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139 :”

7.7 Further, the notice under section 143(2) of the Act can be issued when return is furnished under section 139 or a response to notice under section 142(1) of the Act. For ready reference, the relevant provision of section 143(2) is reproduced as under:

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“Assessment. 143. [(2) Where a return has been furnished under section 139, or in response to a notice under sub-section (1) of section 142, the Assessing Officer or the prescribed income-tax authority, as the case may be, if, considers it necessary or expedient to ensure that the assessee has not understated the income or has not computed excessive loss or has not under-paid the tax in any manner, shall serve on the assessee a notice requiring him, on a date to be specified therein, either to attend the office of the Assessing Officer or to produce, or cause to be produced before the Assessing Officer any evidence on which the assessee may rely in support of the return:”

7.8 Thus, in our considered opinion, in the instant case, no return of income was filed in response to notice under section 148 of the Act, and therefore, the Assessing Officer was not required to issue notice under section 143(2) of the Act for completing the assessment/reassessment of the income escaped under section 147 of the Act. 7.9 In the case of Vodithala Education Society (supra), the return of income filed by the assessee was belated and thus it was treated as non-est. The Assessing Officer initiated action under section 147 of the Act and completed the assessment under section 147 read with section 143(3) of the Act without issuing any notice either under section 143(2) or section 142(1) of the Act. The Tribunal held the assessment as bad in law. But the Tribunal has noted that in the said case the Department did not raise the issue that the Assessing Officer has wrongly mentioned the section as under section 143(3) of the Act read with section 147 of the Act. The relevant finding of the Tribunal is reproduced as under:

“7. We have considered rival submissions of the parties and perused the material on record. We have also gone through the orders of the

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revenue authorities. We have also carefully applied our mind to the decisions relied upon by the parties. Undisputed fact is that the assessment order in case of the assessee for the impugned assessment year was passed u/s 143(3) read with section 147 of the Act. Section 143(2) of the Act mandates that ITA No.1163 & CO 55 of 2011 Vodithala Education Society, Hyd. for an assessment to be made u/s 143(3) of the Act, a notice u/s 143(2) of the Act is required to be issued to the assessee within the period of 12 months specifying the particulars of any claim of loss, deduction, allowance or relief which the Assessing Officer has reason to believe to be inadmissible and requiring the assessee to appear before him on the specified date and to produce any evidence or particulars on which the assessee may rely upon in support of such claim. Undisputedly, in the facts of the present case, it is apparent from the materials on record as well as the remand report submitted by the Assessing Officer, no notice either u/s 143(2) of the Act or section 142(1) of the Act was issued to the assessee before completing assessment. It is also not the case of the department before us that the Assessing Officer has wrongly mentioned it as 143(3) read with section 147 of the Act. On the contrary, the learned Departmental Representative has tried to make out a case that when there is no valid return filed by the assessee, there is no requirement of issuing notice u/s 143(2) of the Act. However, we are unable to accept such contention of the learned Departmental Representative. If the Assessing Officer treats the return filed belatedly to be a non est return then certainly the Assessing Officer could not have proceeded for making assessment u/s 143(3) of the Act. However, once the Assessing Officer proceeds to complete the assessment u/s 143(3) of the Act, then the mandatory requirement under the statute is that he must issue a notice u/s 143(2) of the Act, which has not been done in the present case. As held by the Hon'ble Supreme Court in the case of Hotel Blue Moon (supra) the requirement of issuing notice u/s 143(2) of the Act is a mandatory requirement and not a curable procedural irregularity. When the statute requires an act to be done in a particular manner, then it has to be done in that ITA No.1163 & CO 55 of 2011 Vodithala Education Society, Hyd. manner only. The Assessing Officer having proceeded to make an assessment u/s 143(3) read with section 147 of the Act, notice u/s 143(2) should have been issued to the assessee before completing the assessment. The Assessing Officer having not issued any notice u/s 143(2) of the Act, the assessment order is bad in law. In fact, the Assessing Officer himself in the remand report has admitted this fact and has stated that at least one notice u/s 143(2) and u/s 142(1) of the Act was required to be issued to the assessee before completing the assessment u/s 143(3) read with section 147 of the Act.” (emphasis supplied externally)

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7.10 We find that in the present case the Revenue has submitted before us that the mentioning of section 143(3) of the Act in the assessment order, instead of section 144 of the Act, is an inadvertent mistake, which is curable under section 292B of the Act. In view of the change of facts of the present case, the ratio of the case of Vodithala Education Society (supra) is not applicable over the facts of the instant case. 7.11 The Ld. counsel has relied on the decision of the Tribunal (SMC) bench in the case of ITO Vs. Neeraj Gooyal (supra). In the said case, the assessee did not comply to the notice issued under section 148 of the Act for filing return of income. The assessee also did not comply with subsequent notice issued under section 142(1) of the Act for filing return of income. In the circumstances, the Assessing Officer completed the assessment under section 144 of the Act. The assessee challenged that no notice under section 143(2) of the Act was issued and, therefore, the assessment should be held as void ab-initio. The Ld. CIT(A) accepted the arguments of the assessee and held that the Revenue cannot argue that the provisions of section 143(2) hold true only in cases where the return is filed by the assessee. According to the Ld. CIT(A), the procedure prescribed in the event of filing of return of income will also hold to the event of non-filing of return of income and therefore the Assessing Officer was bound in law to assume the jurisdiction under section 143(2) to frame assessment order whether with the return of income or without the return of income and whether under section 143(3) or 144 or under some other provisions of the law. This finding of the Ld. Commissioner of Income-tax (Appeals), has been upheld by the

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Tribunal. In our opinion, the finding of the law on the issue is not correct and it is well settled that notice under section 143(2) can be issued only subsequent to the filing of the return of income by the assessee in terms of section 139 of the Act. 7.12 In view of the above discussion, we hold that as no return of income was filed by the assessee in response to notice u/s 148 of the Act, the assessment should have been completed under section 144 of the Act and mentioning of the section 143(3) of the Act in the assessment order is an mistake on the part of the Assessing Officer and which is a curable mistake under section 292B of the Act. 7.13 Now the issue before us for consideration is whether the Assessing Officer has complied with the requirement of section 144 of the Act. 7.14 According to the section 144 of the Act, before making assessment under section 144 of the Act, the Assessing Officer should give an opportunity of being heard to the assessee and for this purpose the Assessing Officer will serve a notice calling upon the assessee to show cause on the date and time specified in the notice as why the assessment should not be completed to the best of his judgment. The show cause notice shall not be necessary where a notice under section 142(1) of the Act has been issued prior to the making assessment under section 144 of the Act. 7.15 In the instant case before us, we find that no show cause notice has been issued to the assessee for making best judgment assessment. However, we note that the Assessing Officer has raised various queries to the assessee, which is evident from para-5 of the assessment order. We find that the Assessing Officer

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has asked the assessee to furnish the source of the cash deposits in assessee’s bank accounts. The Assessing Officer has further mention in order that the authorised representative of the assessee filed written submission on 26/03/2015. The Assessing Officer has reproduced the replies given by authorised representative. We find that the authorised representative submitted sale deed in few cases only. We also not that further queries were raised to the assessee as mentioned in para 7, para 8 and para 10 of the assessment order. We find that though specifically the Assessing Officer has not mentioned issuing of any notice under section 142(1) of the Act, but for all practical purposes queries having raised and the assessee has partly responded the queries. The Income-tax Act has not provided any statutory format of notice under section 142(1) of the Act. One of the purposes of issuing notice under section 142(1) of the Act is to authorize the Assessing Officer for raising queries to the assessee. The queries can be raised even through order sheet of the file or even the authorised representative can be asked orally during assessment proceedings. In the instant case, we find that the Assessing Officer has raised queries from time to time for making assessment, however the assessee submitted only part information particularly in respect of the sale transactions. We do not find any illegality in the assessment proceedings, which is fatal for annulling the entire assessment proceedings, particularly when a copy of the reasons recorded was already provided to the assessee and all the queries in respect of the addition in dispute have been raised during the assessment proceedings. We do not find any violation of the principle of the natural Justice. Whereas

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we find that the assessee has played game of hide and seek and accepted the undisclosed income pointed out either by the Assessing Officer or by the Ld. CIT(A) when she found herself cornered. In the facts and circumstances of the case, in our view, the Assessing Officer has complied the requirement of issuing notice under section 142(1) of the Act and thus, the conditions of completing the assessment under section 144 of the Act are fulfilled. In view of our aforesaid discussion, we are of the opinion that in absence of any return of income filed by the assessee in response to notice under section 148 of the Act, the Assessing Officer was justified in completing the assessment under section 144 of the Act. Thus, both grounds No. 2 and 3 of the appeal are dismissed. 8. Qua the ground No. 4, the assessee has challenged that in absence of books of accounts addition of Rs.15,22,221/- and addition of Rs.89,75,305/- could not have been made under section 68 of the Act. 8.1 The Ld. counsel supporting the grounds submitted that addition under section 68 can be made only in the circumstances, where any sum is found credited in the books of accounts maintained by the assessee, whereas in the present case the sums have been found to be deposited in the bank accounts. According to him, the additions should have been made under section 69 of the Act and, therefore, the addition made under section 68 cannot be sustained. In support of the contention, the Ld. counsel relied on the decision of the Hon’ble Bombay High Court in the case of Commissioner of Income-tax Vs.Bhaichand N

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Ghandhi, (1982) 11 taxman 59 and decision of the Hon’ble Delhi High Court in the case of CIT Vs. Ms. Mayawati 338 ITR 563. 8.2 On the other hand, the Ld. DR submitted that the assessee was required to maintain books of accounts corresponding to the amounts received as advance against booking of plots, which have been ultimately deposited in bank account and therefore it hardly makes difference if the addition has been made under section 68 or section 69 of the Act. 8.3 We have heard the rival submissions of the parties. According to section 68 of the Act where any sum is found credited in the books of an assessee maintained for any previous year and the assessee offers no explanation about the nature and source or the explanation offered by him is not in opinion of the Assessing Officer satisfactory, the sum so credited may be charged to Income-tax as income of the assessee. According to section 69, where the assessee has made investment, which are not recorded in the books of accounts, if any maintain by him for any source of income and the assessee offers no explanation about the nature and source of the investment or explanation offered by him is not, in the opinion of the Assessing Officer satisfactory, the value of the investment may be deemed to be income of the assessee. 8.3 In the case of Bhaichand N Ghandhi, a sum was found deposited in the bank passbook, however, same was not shown in the cashbook maintained by him. In the circumstances, it is held by the Hon’ble Bombay High Court that the passbook supplied by the bank to the assessee could not be regarded as books of the assessee and the addition made under section 68 of the Act was

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not justified. In the present case before us, the assessee has prepared statement of account on the basis of deposits appearing in bank statement. In the said statement of accounts, the assessee has explained the said deposits as advance received against sale of plots. Therefore, it is not the case, where such deposits are not appearing in books of accounts and, therefore, section 68 becomes inapplicable. Here the origin of investigation is the bank account, however, before the Ld. CIT(A) the assessee has submitted complete statement of accounts of the said deposits in bank account. In aforesaid facts and circumstances, the said sum are definitely credited in books of accounts and the assessee cannot be allowed to take shelter of the precedents, which are not applicable in the facts of the instant case. In the case of Ms. Mayawati (supra), the issue involved was of certain gifts received in cash, which were taxed by the AO under section 69 of the Act, and thus, the ratio of the said decision is not applicable over the facts of the instant case. In view of the aforesaid discussing, we do not find any infirmity in the action of the Ld. CIT(A) in sustaining the addition under section 68 of the Act. Accordingly, the ground No. 4 of the appeal is dismissed. 8.4 Qua the ground No.5, the assessee has challenged that sustaining addition under section 68 of the Act is beyond the powers of the Ld. CIT(A). 8.5 The learned counsel submitted that the Assessing Officer treated the difference of the amount of advance received and amount paid for purchase of the land as business income of the assessee, whereas the Ld. CIT(A) has treated part of the amount of advance received as undisclosed income of the assessee under

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section 68 of the Act. He submitted that the section 68 says about satisfaction of the Assessing Officer for making the addition, whereas the commissioner of Income Tax (Appeals), being appellate authority and not the Assessing Officer, cannot make addition under section 68 of the Act. In support of the contention, the Ld. counsel relied on the decision of the Tribunal in the case of ACIT Vs. Pardeep Publications (2010) 130 TTJ 92 (ASR) (UO). 8.6 The Ld DR, on the other hand, submitted that the Ld. CIT(A) is having coterminous power of the Assessing Officer and he has not taxed any new source of income and thus he was justified in making addition under section 68 of the Act. 8.7 We have heard the rival submissions and perused the relevant material on record. It is settled law that the CIT(A) is having plenary powers in disposing of an appeal in the scope of his power as coterminous with that of the Assessing Officer. The Hon’ble Supreme Court in the case of CIT Vs Kanpur Coal Syndicate (SC) 53 ITR 229 has observed as under:

“The next question is whether the said option is given only to the ITO and is denied to the AAC and the Appellate Tribunal. Under the Act the ITO, after following the procedure prescribed, makes an assessment under s. 23 of the Act. Doubtless in making an assessment at the first instance he has to exercise the option whether he should assess the AOP or the members thereof individually. It is not because that any section of the Act confers an exclusive power on him to do so, but because it is part of the process of assessment; that is to say, he has to ascertain who is the person liable to be assessed for the tax. If he seeks to assess an AOP as an assessable entity, the said entity can object to the assessment, inter alia, on the ground that in the circumstances of the case the assessment should be made on the members of the

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association individually. The ITO may reject its contention and may assess the total income of the association as such and impose the tax on it. Under s. 30 an assessee objecting to the amount of income assessed under s. 23 or the amount of tax determined under the said section or denying his liability to be assessed under the Act can prefer an appeal against the order of the ITO to the AAC. It is said that an order made by the ITO rejecting the plea of an association of persons that the members thereof shall be assessed individually does not fall under one or other of the three heads mentioned above. What is the substance of the objection of the assessee? The assessee denies his liability to be assessed under the Act in the circumstances of the case and pleads that the members of the association shall be assessed only individually. The expression ‘‘denial of liability'' is comprehensive enough to take in not only the total denial of liability but also the liability to tax under particular circumstances. In either case the denial is a denial of liability to be assessed under the provisions of the Act. In one case the assessee says that he is not liable to be assessed to tax under the Act, and in the other case the assessee denies his liability to tax under the provisions of the Act if the option given to the appropriate officer under the provisions of the Act is judicially exercised. We, therefore, hold that such an assessee has a right of appeal under s. 30 of the Act against the order of the ITO assessing the association of members instead of the members thereof individually. If an appeal lies, s. 31 of the Act describes the powers of the AAC in such an appeal. Under s. 31(3)(a) in disposing of such an appeal the AAC may, in the case of an order of assessment, confirm, reduce, enhance or annul the assessment; under clause (b) thereof he may set aside the assessment and direct the ITO to make a fresh assessment. The AAC has, therefore, plenary powers in disposing of an appeal. The scope of his power is coterminous with that of the ITO. He can do what the ITO can do and also direct him to do what he has failed to do. If the ITO has the option to assess one or other of the entities in the alternative, the AAC can direct him to do what he should have done in the circumstances of a case. Under s. 33(1), an

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assessee objecting to an order passed by an AAC under s. 28 or s. 31 may appeal to the Appellate Tribunal within 60 days of the date on which such order is communicated to him. Under s. 33(4), ‘‘The Appellate Tribunal may, after giving both parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit, and shall communicate any such order to the assessee and to the Commissioner." Under s. 33(5), "Where as the result of an appeal any change is made in the assessment of a firm or AOP or a new assessment of a firm or AOP is ordered to be made, the Appellate Tribunal may authorise the ITO to amend accordingly any assessment made on any partner of the firm or any member of the association." Under this section the Appellate Tribunal has ample power to set aside the assessment made on the AOP and direct the ITO to assess the individuals or to direct the amendment of the assessment already made on the members. The comprehensive phraseology used both in s. 31 and s. 33 of the Act does not countenance the attempt of the Revenue to restrict the powers of the AAC or of the Appellate Tribunal: both of them have power to direct the appropriate authority to assess the members individually instead of the AOP as a unit.” (Emphasis supplied externally) 8.8 Further, in the case of CIT Vs Shapoorji Palloonji Mistry 44 ITR 891 the Hon’ble Supreme Court held that although the appellant Asstt. Commissioner has powers to enhance the assessment, but he has no power to travel beyond the record to enhance assessment of any year by discovering new source of income either in the return of income made by the assessee or the assessment order passed by the Income-tax Officer. 8.9 In the instant case, the Ld. CIT(A) has properly analyzed the facts in respect of the deposits appearing in the bank account and reconciled the same with the business profit and made addition of undisclosed income for the amount which could not

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be reconciled with the business profit . Keeping in view the above judicial position, we are of the opinion that the addition sustained by the Ld. CIT(A) is in respect of the source of income already assessed by the Assessing Officer. In view of the aforesaid discussion, the ground No. 5 raised by the assessee is dismissed. 9. In ground No. 6, the assessee has raised the issue that Addison under section 68 for the amount of Rs.36,611/- and Rs.15,15,600/- has been confirmed in spite of the fact that sufficient cash in hand was available with the assessee at the relevant point of time. 9.1 The Ld. counsel of the assessee referred to cash flow statement of the assessee from 01/04/2009 to 31/03/2010 available on page 72 to 74 of the Paper Book. This cash flow statement was filed before the Ld. CIT(A). In view of the Ld. counsel, if the availability of the cash with the assessee is considered according to the cash flow statement, addition of Rs.36,611/- and Rs.15,15,600/-would not be warranted. 9.2 The Ld. DR, on the other hand, relied on the order of the lower authorities. 9.3 We have heard the rival submissions and perused the relevant metal on record. We find that the Ld. CIT(A) has taken into account all cash receipts while sustaining the additions in dispute. The Ld. CIT(A) in the impugned order has observed as under:

“4.27 As mentioned above, the claim of advance having been received by the appellant was made by the appellant to explain the sources of cash deposits amounting to Rs.1,47,33,861/- in her bank "account No. 131010100623476. Further, as mentioned above, no evidence or confirmation with regard to the claim of the cash having been received as advance from the various persons was

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furnished by the appellant. In view of these facts, it is held that the cash, amounting to Rs.89,75,305/- which was claimed to have been returned over the years was in fact never received by the appellant in the year 2009-10 and accordingly the cash deposits in the bank account No.131010100623476 to that extent remain unexplained . This amount is accordingly held to be income of the appellant for the year under consideration i.e. AY 2010-11, in addition to the amount of Rs. 9,38,251/-, computed by the appellant, as referred above. 1.28 Further, as all the cash receipts of the appellant have been accounted for while computing the aforesaid income, it is held that no amount of cash was available with the appellant for making the cash deposits amounting to Rs.36,611/- and Rs.15,15,600/-. The additions made on this account are also confirmed. The AO is directed to re-compute the income accordingly. The grounds of appeal of the appellant are partly allowed.”

9.4 Before us, the Ld. counsel could not point out particular amount of the advance received, which has not been considered by the Ld. CIT(A). The Ld. counsel has made a general statement and not pointed out any specific error in the finding of the Ld. CIT(A) on this issue. In absence of any specific error in the amount of cash receipts considered by the Ld. CIT(A) for explaining the cash deposits, we do not find any infirmity in the order of the Ld. CIT(A) and accordingly we uphold the same. The ground No. 6 of the appeal raised by the assessee is, accordingly dismissed. 8. In ground No. 7, the assessee has raised the issue that while considering the addition of Rs.89,75,305/-, no enquiry has been done from the address of the buyers and addition has been confirmed without confronting the same to the assessee. 8.1 The Ld. counsel submitted that the matter may be restored to the file of the Assessing Officer for verification of the sum of advance returned to the buyers. 8.1 The Ld. DR opposed the request of the Ld. counsel of the assessee. He submitted that sufficient opportunity was already

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provided to the assessee and it was the onus of the assessee to come forward and file necessary evidence in support of its claim of refund of advance money to the buyers, but the assessee has not discharged its onus, not only before the Assessing Officer but even before the Ld. CIT(A). Accordingly, he submitted that the request of the assessee for restoring the matter to the Assessing Officer should be rejected. 8.2 We have heard the rival submission and perused the relevant material on record. We find that in the process of reconciliation of the amount of bank deposits with the sale consideration recorded in registered sale deeds, the assessee claimed before the Ld. CIT(A) that amount of Rs.89,75,305/- was returned to the buyers of the plots. The observation of the Ld. CIT(A) in this regard are reproduced as under:

“4.25 Further, out of the advance claimed to have been received in FY 2009-10 amounts totaling Rs.33,86,370/- were claimed to have been returned to the prospective buyers in the month of August, 2010 in cases where no registration deed was signed. No evidence with regard to the claim that the aforesaid amounts have been returned to the concerned persons was furnished by the appellant. It is evident from the facts discussed above that the claim of the appellant regarding returned of cash at the time of registration or otherwise is a self serving statement without any support evidence. In these circumstances of the case, there are only possibilities:- i. The cash which was claimed to have been returned at the time of registration or otherwise, totaling an amount of Rs.789,75,305/-, was never received as advance and the claim was made by the appellant merely to explain the sources of cash deposits in the bank account. It may be relevant to mention here that even at the time of assessment proceedings or at the time of appellate proceedings no confirmation or evidences with regard to the claim of receipts of advance in this regard was furnished by the appellant. ii. The other possibility is that the sale consideration was not stated correctly in the registered sale deed and cash

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component claimed to have been returned at the time of registration of sale deed was the amount of consideration over and above the consideration shown in the registered sale deed. 4.26 In the first case, the amount of Rs. 89,75,305/- would be taxable as income in the year under consideration i.e. AY 2010-11 on the ground that the cash deposits in the bank account to this extent remain unexplained. In the second case, cash claimed to have been returned in the FY 2009-10, 2010-11 and 2011-12 would be taxable in respective AY as being consideration received by the appellant over and above the amounts shown in the respective sale deeds.

4.27 As mentioned above, the claim of advance having been received by the appellant was made by the appellant to explain the sources of cash deposits amounting to Rs.1,47,33,861/- in her bank account No.131010100623476. Further, as mentioned above, no evidence or confirmation with regard to the claim of the cash having been received as advance from the various persons was furnished by the appellant. In view of these facts, it is held that the cash amounting to Rs.89,75,305/- which was claimed to have been returned over the years was in fact never received by the appellant in the year 2009-10 and according the cash deposits in the bank account No.131010100623476 to that extent remain unexplained. This amount is accordingly held to be income of the appellant for the year under consideration i.e. AY 2010-11, in addition to the amount of Rs.9,38,251/-, computed by the appellant, as referred above.”

8.3 From the above observation, we note that no evidence with regard to the claim that the amounts were returned to the concerned person, were filed before the Ld. CIT(A). Even before us, the Ld. Counsel of the assessee has only made the submission that no enquiry has been carried out by the Department for verification but no such evidence like copy of confirmations of parties, copy of bank statement of the assessee indicating refund of money, copy of the bank statement of the buyer parties etc. have been filed to discharge the primary onus of the assessee. In view of the aforesaid, the request of the Ld.

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Counsel of the assessee for restoring the matter to the Ld. Assessing Officer, cannot be accepted. Accordingly, the ground 7 of the appeal is dismissed. 9. The ground No. 9 of the appeal being general in nature, we are not required to adjudicate upon. 10. In the result, the appeal of the assessee is dismissed.

Order is pronounced in the open court on 20th Sept., 2018.

Sd/- Sd/- (AMIT SHUKLA) (O.P. KANT) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 20th September, 2018. RK/-(D.T.D.) Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR

Asst. Registrar, ITAT, New Delhi