MADHAV TUKARAM BHOSLE,MUMBAI vs. ITO 26(1)(3), MUMBAI

The assessee is a salaried employee working in the office of Tourism department. The revenue carried out survey operation in the case of Jay deep developers and found that unaccounted cash transactions were entered in sale of flats. It was noticed that the assessee herein has entered into an agreement on 15.12.2005 for purchase of flat for a sum of Rs.17,50,000/-. It was noticed that the unaccounted cash transaction relating thereto was noted as Rs.3,59,750/-. Hence the assessing officer reopened the assessment of the year under consideration in order to assess the unexplained investment of RS.3,59,750/-. Since the assessee failed to explain the sources before the AO and hence the AO assessed the above said amount as income of the assessee.

Before Ld CIT(A), the assessee explained that it had sold the above said flat on 26.11.2005, i.e., prior to the date of its purchase and received consideration partly by way of cash and partly by way of cheque. It was submitted that the consideration received by way of cash as well as withdrawals made from bank accounts were used to give the cash component of Rs.3,59,750/- in December, 2005. The assessee also contended that the entire transactions have taken place in the year relevant to AY 2006-07 and hence the AO was not justified in assessing the above said amount in AY 2007-08. The assessee also furnished documents to support his contentions. Further the assessee also challenged the reopening of assessment on the ground that the reason for reopening was not provided to the assessee. All the grounds were rejected by Ld CIT(A) and hence the assessee has filed this appeal before the Tribunal.

I heard the parties and perused the record. I agree with the view taken by Ld CIT(A) that the reopening was valid, since the assessee has not sought for reason for reopening of assessment. Even otherwise, the AO has recorded proper reasons for reopening and hence the same is valid.

I notice that the assessee has furnished all the documents for the first time before Ld CIT(A) and the Ld CIT(A) has decided the issue without confronting the same with the AO. Further, there appears to be merit in the contention of the assessee that the cause of action, if any, shall arise only in AY 2006-07, since the transactions have taken place in the year relevant to that year only. The Ld D.R submitted that the builder has admitted income in AY 2007-08 and hence the addition was made in AY 2007-08. In my view, the addition would depend upon the facts prevailing in the case of the assessee and hence the offer made by the builder in AY 2007-08 would not change the year of chargeability in the hands of the assessee. There is no material to show that the assessee has 3 Shri Madhav Tukaram Bhosle paid the cash component during the year relevant to AY 2007-08. On the contrary, the explanations furnished by the assessee would show that the entire transactions have taken place in the year relevant to AY 2006-07. Accordingly I am of the view that the addition cannot be made in AY 2007-08. Accordingly, I set aside the order passed by ld CIT(A) on this issue and direct the AO to delete the impugned addition made in AY 2007-08.

In the result, the appeal of the assessee is treated as allowed. Order has been pronounced in the Court on 18.9.2017.