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Income Tax Appellate Tribunal, MUMBAI BENCHES “F”, MUMBAI
Before: Shri Saktijit Dey & Shri Manoj Kumar Aggarwal
learned AR submitted, the assessment order reveals that only relying upon certain information received from the investigation wing and statements of third parties, the Assessing Officer has made additions without any independent enquiry. Whereas, the assessee has proved its bona fide by furnishing all necessary and relevant details relating to purchase of flat, payment of which were made through banking channels. Thus, he submitted, the addition made purely on conjecture and surmises were rightly deleted by the CIT(A). Finally, the learned AR submitted, identical issue arising in the case of assessee’s son , Shri Nikhil Vinod Aggarwal, was decided in favour of the assessee by the Tribunal. The learned AR submitted, facts of CO 234/Mum/2018 Vinod Aggarwal both the cases being identical, the decision of the Tribunal in case of Nikhil Vinod Aggarwal in dated 13.10.2017 should be followed.
We have considered rival submissions and perused material available on record. At the outset, we propose to address the legal issue raised by the assessee in the cross objection, concerning the validity of assessment order passed u/s. 143(3) read with section 147 of the Act. The first contention of the assessee challenging the validity of assessment order is, before issuing notice u/s. 148 of the Act, the Assessing Officer has not obtained sanction of the appropriate authority as prescribed u/s. 151 of the Act. As could be seen from the facts on record, in the case of the present assessee, prior to the reopening of assessment u/s. 147 of the Act, there was no assessment completed u/s. 143(3) of the Act. Therefore, the provisions of section 151(2) of the Act, as it existed during the relevant assessment year would apply. As per the said provision, in a case where four years have expired from the end of the relevant assessment year, no notice u/s. 148 of the Act can be issued by the Assessing Officer without obtaining the sanction of the Joint Commissioner of Income Tax (JCIT). Thus, as per the statutory mandate contained u/s. 151(2) of the Act, the appropriate authority from whom the Assessing Officer should have obtained sanction/approval before issuing notice u/s. 148 of the Act is the JCIT and not the CIT. Therefore, the CO 234/Mum/2018 Vinod Aggarwal notice issued u/s. 148 of the Act, in the present case, does not satisfy the condition of section 151(2) of the Act as the Department has failed to bring any material before the Bench to demonstrate that sanction/approval for issuance of notice u/s 148 of the Act was obtained from the JCIT. That being the case, the mandatory requirement of section 151(2) of the Act having not being fulfilled, the assessment order passed u/s. 143 read with section 147 of the Act is invalid. In this context, we may refer to the decision of Hon’ble Delhi High Court in the case of CIT vs. Soyuz Industrial Resources Ltd. (2015) 232 taxman 414. It is relevant to observe, under identical facts and circumstances, while deciding the case of Shri Nikhil Vinod Aggarwal (supra), the Tribunal has held as under:
“10. From the notice issued under section 148, it is evident that the Assessing Officer has obtained sanction of the CIT and not the Joint CIT. When this fact was pointed out to the learned Departmental Representative and a specific query was raised by the Bench, the learned Departmental Representative submitted that the approval of Joint CIT is not available on record and he further submitted that if such approval is available it will be furnished before the Bench. However, till date no such approval of Joint CIT has been brought on record by the learned Departmental Representative. Thus, it has to be presumed that no such approval of Joint CIT has been obtained by the Assessing Officer in terms of section 151(2) of the Act before issuance of notice under section 148 of the Act. When the provisions contained under the statute mandate a particular act to be done in a particular manner, it has to be done in that manner only. The Assessing Officer being bound by statutory provisions has to strictly comply with and act in accordance with the relevant statutory provisions. The argument of the Department that absence of approval from Joint CIT would not invalidate the assessment proceedings, since, the approval has been obtained from a higher authority is too specious an argument to be Shri Nikhil Vinod Aggarwal accepted. Obtaining of sanction from a higher authority does not satisfy the statutory mandate. That being the case, we hold that in absence of sanction / approval from the authority prescribed under section 151(2) of CO 234/Mum/2018 Vinod Aggarwal the Act, issue of notice under section 148 is invalid. Consequently, the assessment order passed in pursuance thereto is also invalid. In support of our aforesaid conclusion, we may refer to the decision of the Hon'ble Delhi High Court in case of CIT v/s Soyuz Industrial Resources Ltd., [2015] 232 taxman414.”
Moreover, it is relevant to observe, in course of assessment proceedings, the assessee has specifically objected to the validity of the proceedings initiated u/s. 147 of the Act. However, before completion of assessment, the Assessing Officer has not disposed of the objections of the assessee. For that reason also the assessment order passed u/s. 143(3) read with section 147 of the Act has to be declared as invalid, hence, deserves to be quashed.
Having held so, we propose to deal the issue on merit also as, in our view, the assessee has a strong case on merit. It is evident from the assessment order, the Assessing Officer has primarily relied upon certain information received from the Investigation Wing, which contained statement recorded from the Directors/promoters of Hiranandani Group admitting receipt of on money. It is also evident from the assessment order itself, in response to the query raised by the Assessing Officer, the assessee has appeared from time to time and, as per Assessing Officer’s own version, filed some details. However, alleging that the assessee did not furnish name of the person (broker), who fixed the final rate and conditions of payment, the Assessing Officer rejected assessee’s claim of non-payment of on money. In this regard, it is the specific contention of the assessee that no broker was CO 234/Mum/2018 Vinod Aggarwal involved in the transaction relating to purchase of flat. Moreover, it is evident, in course of assessment proceedings the assessee has repeatedly requested the Assessing Officer to communicate and bring to his notice the adverse materials in his possession for effective rebuttal. However, the Assessing Officer has refused to divulge any information available with him which were ultimately utilized against the assessee. Even though the statements of third parties were utilized for making the addition, no opportunity for cross-examination was offered to the assessee. This, in our view, is in gross violation of rules of natural justice. It is further relevant to observe, the Assessing Officer has not conducted any enquiry worth its name independently to ascertain the fact whether the assessee has actually paid on money in cash or not. Non-furnishing of details by the assessee as alleged by the Assessing Officer certainly cannot prevent him from making any further enquiry and investigation to ascertain the truth. Simply relying upon the statement of third parties, the Assessing Officer cannot make the addition purely on conjectures and surmises and in the process ignore the evidence brought on record by the assessee by way of payment made through banking channel and the documentary evidence thereof. It is relevant to observe, while deciding identical issue in the case of Shri Nikhil Vinod Aggarwal (supra), the Bench has held as under:
CO 234/Mum/2018 Vinod Aggarwal
“11. Even otherwise also, the assessee has a strong case on merit as well. As evident from the facts on record, the Assessing Officer has made the addition on account of alleged on-money paid by the assessee towards purchase of flat relying upon the information obtained from the search operation carried out in the case of Hiranandani Group. Further, he has relied upon the statements recorded from the directors and promoters of Hiranandani Group in course of search. However, though, the assessee in the course of assessment proceedings, has repeatedly requested the Assessing Officer to provide the information / adverse material in his possession, neither such adverse material was provided to the assessee nor confronted to him. Further, the statement recorded from third parties which were relied upon by the Assessing Officer for making the addition were neither confronted to the assessee nor the assessee was Shri Nikhil Vinod Aggarwal permitted to cross-examine the concerned persons. Neither in the assessment order the Assessing Officer has discussed in detail the nature of information / material available with him directly implicating the assessee for paying on-money for purchase of flat nor the learned Departmental Representative has brought on record any such material as may be available with the Assessing Officer. It is evident from the assessment order,, the Assessing Officer without disclosing adverse material / information available with him to the assessee during the assessment proceedings, has simply called upon the assessee to furnish the name of persons who according to the Assessing Officer negotiated for purchase of flat between the assessee and the builder. Unless, the assessee is confronted with the adverse material in possession of the Assessing Officer, he cannot be expected to rebut them considering the fact that the from very beginning the assessee has consistently stated that he has not paid any on-money over and above the declared sale consideration. The learned Commissioner (Appeals) while deciding the issue has clearly brought out the aforesaid factual aspect in his order. We agree with the learned Commissioner (Appeals) that once the assessee has furnished the details of transactions relating to purchase of flat and has stated that he has not paid on-money over and above the declared sale consideration, burden shifts to the Assessing Officer to falsify Shri Nikhil Vinod Aggarwal assessee's claim by bringing cogent evidence on record. Merely, referring to certain adverse material and statement of third parties, but, without confronting them to the assessee the Assessing Officer cannot make the addition. In view of the aforesaid, we do not find any infirmity in the order of the learned Commissioner (Appeals) in deleting the addition. Accordingly, we uphold the order of the learned Commissioner (Appeals) by dismissing the ground raised by the Revenue.” The aforesaid decision of the co-ordinate Bench, under identical facts and circumstances, equally applies to the present appeal also. Therefore, on CO 234/Mum/2018 Vinod Aggarwal overall consideration of facts and material on record, we are of the view that the learned CIT(A) was justified in deleting the addition made by the Assessing Officer. Thus, the assessee deserves to succeed on merits as well.
In the result, the departmental appeal is dismissed and the cross- objection is allowed.
Order pronounced in the open court on this day of 19th September 2018.