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Income Tax Appellate Tribunal, MUMBAI BENCHES “H”, MUMBAI
Before: Shri M. Balaganesh & Shri Amarjit Singh
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES “H”, MUMBAI Before Shri M. Balaganesh, Accountant Member & Shri Amarjit Singh, Judicial Member ITA No.3933 & 3934/Mum/2018 Assessment Years: 2011-12 & 2012-13 Kishon V. Soni DCIT, Circle-30(2) C-13, 6th Floor 302, Abhiram Apartment Vs. Indravan Compound Room No.601, Pratyakshkar Bhavan, Datt Mandir Road, Malad(E) Bandra Kurla Complex, Bandra(E) Mumbai-400 097 Mumbai-400 051 PAN:AAKPS8348F (Assessee) (Revenue)
Revenue By : Shri B. Yadagiri Assessee By : Shri Anuj Kisnadwala Date of Hearing :19.06.2019 Date of Pronouncement : 26.06.2019
O R D E R Per Amarjit Singh, Judicial Member The above mentioned appeals have been filed by the assessee against the order dated 20.04.2018 passed by the Commissioner of Income Tax (Appeals)- 41, Mumbai [hereinafter referred to as the “CIT(A)”] relevant to the A.Y.2011- 12 & 2012-13. ITA.NO.3933/M/2018 The assessee has filed the present appeal against the order dated 20/04/2018 passed by the Ld. Commissioner of Income-Tax (Appeals)-41 hereinafter called [CIT(A)], Mumbai, relevant to the A.Y 2011-12. The assessee has raised the following grounds: -
2 ITA No.3933 &3934/Mum/2018 Kishor V. Soni 1. “The Learned CIT(A) has erred in law and in facts in upholding the order passed by the Assessing Officer u/s. 143(3) r.w.s. 147 of the Income-tax Act, 1961, which is illegal and bad in law, 2. The learned CIT(A) has erred in law and in facts in not holding that the reopening of the assessment by issuing notice u/s. 148 of the Act was illegal and bad in law. 3. The learned CIT(A) has erred in law and facts in upholding the order of the Assessing Officer computing the total income of the appellant at Rs. 3,76,80,600/- as against the declared income of Rs. 1,54,18,950/. 4. The learned CIT(A) has erred in law and in facts in confirming the assessment of a sum of Rs. 1,79,81,000/- as alleged unaccounted cash received by the appellant from Ashirvad Buildtech Pvt. Ltd. 5. The learned CIT(A) has erred in law and on facts in upholding the action of the Assessing Officer in treating the capital gain on sale of land as business income of the appellant. 6. The appellant craves leave to add to, amend, alter or delete all or any of the foregoing grounds of appeal.
The brief facts of the case are that the assessee filed its return of income on 26/3/2013 declaring total income to the tune of Rs. 1,54,18,950/-. An information was received on 05/08/2013 from ADIT (Inv)-II, Jaipur informing that during the course of search and seizure proceedings carried out at the business premises of M/s. Ashirvad Buildtech Pvt. Ltd (Motisons Group), it was found that the assessee has received unaccounted cash on account of an development agreement entered by the assessee with M/s. Ashirvad Buildtech Pvt. Ltd. On verification, it was also found that the assessee did not file any return of income for AY 2012-13 within a stipulated time. Therefore, the case was reopened under the provisions of section 147 of the I.T. Act on the basis of reasons mentioned below:
“In this case, the return of income for A.Y 2011-12 was e-filed on 26.03.2013 declaring total income of Rs. 1,54,18,950/-. A search and seizure action was carried out by the ADIT (Inv.)-II, Jaipur in the cases of Motisons Group on 31.10.2012, during the course of which huge amount of unaccounted receipts were detected in respect of sale of flats constructed in plot No. A-29, Janta Colony, Jaipur. It has been conveyed by the ADIT (Inv.)-II, Jaipur that Shri Kishor Soni, the assessee, is the owner of the said plot and had entered into a development agreement with M/s. Ashirwad Builtech Pvt. Ltd. It is also conveyed that as per the development agreement, the assessee has the right to receive 50% of the sales receipts and thereby 50% of the unaccounted receipts also has been received by the assessee. Such receipts
3 ITA No.3933 &3934/Mum/2018 Kishor V. Soni have been quantified at Rs. 2,15,18,210/-. As per the copies of account, the receipts are spread over in the A.Y 2011-12 and 2012-13. On distributing the unaccounted receipts on a proportionate basis of the accounted receipts pertaining to A.Y 2011-12 works out to Rs. 1,79,81,000/- In view of the above, I have reasons to believe that income chargeable to assessment, amounting to Rs. 1,79,81,000/-, has escaped assessment within the meaning of the provisions of section 147 of the I.T. Act.” 3. Accordingly, notice u/s. 148 dated 17/08/2013 was issued upon the assessee. Notice u/s 143(2) and 142(1) dated 10/09/2014 were also issued upon the assessee. The assessee was the owner of the land situated at A-29, A-29A, Janata Colony, Jaipur. The assessee on the basis of Memorandum of Understanding dated 16/11/2006, handed over development rights to M/s Ashirwad Buildtech Pvt. Ltd on the understanding that ABPL construct a building on the said plot at its own cost and after development ABPL would sell the flats constructed on the said plot and the assessee and ABPL would have an equal share to the extent of 50% on the said sale consideration. The Buildtech has shown the sale in sum of Rs. 2,03,61,500/- in the Financial Year of 2010- 11 and sale in sum of Rs. 2,43,67,000/- in the Financial Year 2011-12. The assessee explained that the amount of Rs. 1,42,16,000/- was still outstanding against ABPL. He received an amount of Rs. 1,01,51,000/- in the F.Y 2011-12. The explanation of the assessee was declined and the AO raised the addition in sum of Rs. 2,86,39,945/-. The total income of the assessee was assessed in sum of Rs. 3,76,80,600/-. Feeling aggrieved, the assessee filed appeal before the CIT(A) who confirm the addition. Therefore, the assessee has filed the present appeal before us. ISSUE NO.1 4. Under this issue, the assesse has raised a legal ground that the assessee filed the return of income on 26/03/2013 and time to serve the notice u/s 143(2) for processing the return for scrutiny assessment was yet to be expired on
4 ITA No.3933 &3934/Mum/2018 Kishor V. Soni 30/09/2013. so the notice u/s 148 dated 17/08/2013 is wrong against the law and facts. Therefore, the assessment is not liable to be sustained in the eyes of law. Specifically in view of the law settled in CIT(A) vs. Rajendra G. Shah 247 ITR 772 and Vardhaman Holdings Ltd. Vs. ACIT, Circle-1, Ludhiana [2016] 158 ITD 843/69 txmann.com 376 (Chandigarh-Trib.). With due consideration of the arguments advanced by the Ld. Representative of the parties and perusing the record, we noticed that the assessee filed the return of income on 26/03/2013. The time to serve notice u/s 143(2) was yet to expired on 30/09/2013 meaning thereby the period of scrutiny assessment was pending. The case of the assessee was reopened in view of the provisions u/s 148 of the Act dated 17/08/2013. At that time the period of scrutiny assessment in view of the provisions of section 143(2) was remained. Any how the AO concluded the assessment in view of the provision u/s 143(3) r.w.s 147 of I.T.Act, 1961 on 10/03/2015. The said assessment nowhere seems justifiable in view of the decision of Hon’ble Bombay High Court in the case of CIT vs. Rajendra G. Shah. The relevant finding is hereby reproduced as under:
On June 29, 1982, a return was filed by the assessee. Pending the said, return, notice under Section 148 of the Income-tax Act, 1961, came to be issued on January 28, 1985. The assessee was, accordingly, reassessed on March 15, 1985. This order under Section 147 came to be set aside on January 28, 1986, and the matter was remanded back for fresh assessment which was made on March 30, 1988. This was once again set aside by the appellate authority on February 17, 1989, with a direction to the Assessing Officer to make fresh assessment which was done on March 26, 1990. 2. In the present matter, the short point which arose for consideration before the Tribunal was whether proceedings under Section 148 could have been instituted when the return filed on June 29, 1982, was pending assessment. The Tribunal came to the conclusion that notice under Section 148 and proceedings taken by the Department thereafter were bad in law as there could not have been reopening of the assessment when the return dated June 29, 1982, was pending. We have examined the records ourselves and we find that there is nothing to indicate how reassessment proceedings could have been instituted when the main return filed by the assessee on June 29, 1982, was still pending assessment. All proceedings have been taken thereafter pursuant to the reopening of the assessment in 1985, losing
5 ITA No.3933 &3934/Mum/2018 Kishor V. Soni sight of the fact that the main return filed by the assessee on June 29, 1982, was pending. In the above circumstances, the Tribunal was right in annulling the assessment proceedings. Hence, no substantial question of law arises. Appeal is dismissed. 5. Thereafter the matter controversy was further adjudicated by the Hon’ble ITAT, Chandigarh Bench in case titled as Vardhaman Holdings Ltd. Vs. ACIT, Circle-1, Ludhiana [2016] 158 ITD 843/69 txmann.com 376 (Chandigarh-Trib.). The relevant finding has been given in para No.7 to 10 which are hereby reproduced as under:
We have heard the learned representatives of both the parties, perused the findings of the authorities below and considered the material available on record. The undisputed facts of the case are that the assessee had filed return for assessment year 2002-03 as on 30.10.2002. The return was revised as on 31.3.2004. Undoubtedly, the revised return was with the time as per the provisions of section 139(5) of the Act, which read as under : [(5) If any person, having furnished a return under sub-section (1), or in pursuance of a notice issued under sub-section (1) of section 142, discovers any omission or any wrong statement therein, he may furnish a revised return at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier : Provided that where the return relates to the previous year relevant to the assessment year commencing on the 1st day of April, 1988, or any earlier assessment year, the reference to one year aforesaid shall be construed as a reference to two years from the end of the relevant assessment year.]" 8. In said circumstances, we also observe that time available with the Assessing Officer for issuing notice under section 143(2) of the Act is up to 31.3.2005 i.e. within twelve months from the end of the month in which the return has been filed by the assessee. 9. The provisions of section 143(2) as it stood for the relevant assessment year read as under : "Provided that no notice under clause (ii) shall be served on the assessee after the expiry of twelve months from the end of the moth in which the return is furnished. 10. From the bare perusal of the above provisions, it is quite clear that in the facts of the present case, the time was available to the Assessing Officer upto 31.3.2005 for issuing of notice under section 143((2) of the Act. This period is computed as twelve months from end of the month in which the assessee had filed revised return. Since we observe that in the provisions of section 143(2) of the Act as is stood at the relevant
6 ITA No.3933 &3934/Mum/2018 Kishor V. Soni time was twelve months from the end of the month, in which the return is furnished. Since the term 'return' has not been stated to be under any particular head whether regular return, belated return or revised return. Therefore, we take it as to be computed from the end of the month in which the assessee in the present case had fi led the revised return, the same being within the prescribed time. Admittedly, from the chronology of events, it appears that notice under section 148 of the Act has been issued within the time limit available to the Assessing Officer for issuing notice under section 143(2) of the Act. Now, the issue to be decided is whether under the said circumstances, the Assessing Officer could have voluntarily issued notice under section 148 of the Act or not. 6. On appraisal of the above mentioned finding, we are of the view that the AO has sufficient time to issue the notice u/s 143(2) of the Act so the assessment provision u/s 148 is not justifiable. Accordingly, we set aside the finding of CIT(A) on this issue and held that assessment made in view of the provision of 148 of the Act is not justifiable hence is hereby order to be set aside. Accordingly, we decide the issue in favour of the assesee and against the revenue. Since the assessee has succeeded on the point of legal issues, therefore, there is no need to decide the case on merits being the same would be academic in nature.
In the result, the appeal filed by the assessee is hereby dismissed.
ITA. No. 3934/Mum/2018 The assessee has filed the present appeal against the order dated 20/04/2018 passed by the Ld. Commissioner of Income-Tax (Appeals)-41 hereinafter called [CIT(A)], Mumbai, relevant to the A.Y 2012-13.
The assessee has raised the following grounds: - 1. “The Learned CIT(A) has erred in law and in facts in upholding the order passed by the Assessing Officer u/s. 143(3) r.w.s. 147 of the Income-tax Act, 1961, which is illegal and bad in law, 2. The learned CIT(A) has erred in law and in facts in not holding that the reopening of the assessment by issuing notice u/s. 148 of the Act was illegal and bad in law. 3. The learned CIT(A) has erred in law and facts in upholding the order of the Assessing Officer computing the total income of the appellant at Rs. 1,25,27,930/- as against the declared income of Rs. 83,03,890/.
7 ITA No.3933 &3934/Mum/2018 Kishor V. Soni 4. The learned CIT(A) has erred in law and in facts in confirming the assessment of a sum of Rs. 35,37,210/- as alleged unaccounted cash received by the appellant from Ashirvad Buildtech Pvt. Ltd. 5. The learned CIT(A) has erred in law and on facts in upholding the action of the Assessing Officer in treating the capital gain on sale of land as business income of the appellant. 6. The appellant craves leave to add to, amend, alter or delete all or any of the foregoing grounds of appeal. 7. The brief facts of the present case are quite similar to the fact of the case as narrated above while deciding the ITA. No.3933/M/2018, therefore, there is no need to repeat the same. However, the figure is different.
ISSUE NO.1
Under this issue the assessee has also raised the legal ground by saying that the assessee filed the return of income on 31/10/2013 which is well within the time limit prescribed u/s 139(4) of the Act but the AO issued the notice u/s. 148 dated 17/08/2013 which is not justifiable hence the assessment is not liable to be sustained in the eyes of law. We find that the Ld. Counsel for the assessee rightly placed reliance on decision of Hon’ble Allahabad High Court in the case of ITA. No. 100 of 2015 dated 30.03.2017 wherein it was held:- “21. Chapter XIV of Act, 1961 contains provisions laying down procedure for assessment and it runs from Sections 139 to 158. Broadly, Section 139(1) casts an obligation on every person to furnish voluntarily a Return of his total income or total income of any other person in respect of which he is assessable if such total income during previous year exceeds maximum amount which is not chargeable toIncomeTax. 22. Where Assessee fails to file voluntary Return under Section 139(1) within time prescribed, A.O. may issue a notice under Section 142(1) requiring such person to furnish a Return of his income in the prescribed form. Such Return can be directed to be filed before the end of relevant A.Y. 23. Section 139(4) provides that a person who has not furnished a return within the time allowed under sub-Section (1), or within the time allowed under a notice issued under Section 142(1), may furnish return for any previous year at any time before expiry of one year from the end of relevant A.Y. or before completion of assessment, whichever is earlier. 24. A notice under Section 142(1) can also be issued to a person who has made a Return under Section 139, requiring to produce such accounts or documents as A.O. may require. For the purpose of exercising power under Section 142(1), before issuing notice, A.O. must be satisfied that the documents needed for the purpose of making assessment, have some bearing on the pending assessment. 25. This Court in Juggilal Kamlapat Cotton and Spinning and Weaving Mills Co.
8 ITA No.3933 &3934/Mum/2018 Kishor V. Soni Ltd. Vs. ITO 1983 (142) ITR 710 (Alld) has observed that arriving at such a satisfaction is a part of jurisdictional fact so that A.O. acquires jurisdiction to issue a notice under Section 142(1) for production of any document only, if, after application of mind, he arrived at a conclusion that documents directed to be produced would have a bearing on the assessment and he requires the same for makingassessment. 26. Where a Return has been filed under Section 139 or in response to notice under Section 142(1), but A.O., where he has reason to believe that any claim of loss, exemption, deduction, etc. made Return inadmissible, serve on the Assessee a notice specifying particulars of such claim, etc. and may require Assessee to produce relevant evidence as material to justify such need. 27. Where A.O. does not find any reason to issue notice under Section 143(2), it may make assessment summarily under Section 143(1). The period within which notice under Section 143(2) can be served is during F.Y. in which Return is furnished or within six months from the end of month in which Return is furnished whichever is later. On the date specified in the notice under Section 143(2), or soon or later, A.O. can pass an order in writing accepting or rejecting claims and make an assessment determining total income. 28. Where a person fails to file Return voluntarily or after service of notice, A.O. may proceed to make a best judgment assessment after taking into account all relevant materials which A.O. has gathered. 29. Sections 147 and 148 relates to procedure for reassessment or opening of assessment where A.O. has reason to believe that any income chargeable to tax has escaped assessment for any A.Y. 30. Section 148 provides for issue of notice where income has escaped assessment and A.O. intents to make reassessment or re-computation under Section147. 31. Looking into the scheme of procedure for assessment as briefly discussed above, we find that, in the present case, dispute relates to A.Y. 2010-10 (F.Y. 2009-10, i.e., 01.04.2009 to 31.03.2010). Time to file Return of income under Section 139(4) was obviously available to Assessee upto 31.03.2012. It is also not disputed that return was actually filed by Assessee on 17.02.2012. In these circumstances, we do not find any occasion on the part of Revenue to have served a notice under Section 148 of Act, 1961 upon Assessee on 18.11.2011 inasmuch as neither assessment was made till date nor there was any occasion to assume that there was any escapement of income from assessment. This entire exercise of reassessment commencing from notice dated 18.11.2011, in our view, and even otherwise, was illegal.”
Respectfully following the said decision, accordingly, the assessment in the present case is also not justifiable and hence is hereby ordered to be set aside. The appeal of the assessee is hereby allowed.
9 ITA No.3933 &3934/Mum/2018 Kishor V. Soni 9. In the result, appeals filed by the assessee are hereby ordered to be allowed. Order pronounced in the open court on this day of 26th June, 2019
Sd/- Sd/- (M. Balaganesh) (Amarjit Singh) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Dated : 26/06/2019 * Thirumalesh, Sr.PS Copy of the Order forwarded to : 1. The Appellant. 2. The Respondent. 3. The CIT(A), Mumbai. 4. The CIT 5. The DR, „H‟ Bench, ITAT, Mumbai BY ORDER
(Assistant Registrar) Income Tax Appellate Tribunal, Mumbai