SATBIR SAGWAL,KARNAL vs. INCOME TAX OFFICER, WARD-4, KARNAL , KARNAL
Income Tax Appellate Tribunal, DELHI BENCH ‘G’, NEW DELHI
Before: SH. SUDHIR KUMAR & SH. BRAJESH KUMAR SINGHAssessment Year: 2011-12
PER SUDHIR KUMAR, JM:
This appeal by the assessee is directed against the order of National Faceless Appeal Centre (NFAC) Delhi [hereinafter referred to as “Ld. NFAC”], vide order dated 20.02.2024
pertaining to A.Y. 2011-12 and arises out of the assessment order dated 14-12-2018 passed by the Assessing Officer under Section 143(3) r.w.s. 147 of the Income Tax Act, 1961
[hereinafter referred as ‘the Act’].
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2. The assessee raised the following grounds in appeal:
1. That the Ld. Commissioner of Income Таx (Appeals) has erred in law as well as on facts in upholding the initiation of proceedings under section 148 in as much as there was no escapement of income leading to a reason to belief and as such the re-opening is illegal, arbitrary and unjustified.
2. That the Ld. Commissioner of Income Tax (Appeals) has erred in law as well as on facts in upholding the initiation of proceedings under section 148 in as much as there has been no reason to believe that there was an escapement of income and the reasons recorded are based only on borrowed information and as such upholding of the assessment passed u/s 147 is illegal, arbitrary and unjustified.
3. That Ld. Commissioner of Income Tax (Appeals) has erred in law as well as on facts upholding the initiation of proceedings u/s 148 despite the assessment having already been framed and completed twice over u/s 143(3) vide order dated 25.02.2014 and thereafter again under section 143(3) read with section 263 vide order dated 15.12.2016 which is only a change of opinion and as such upholding of the assessment passed u/s 147 is illegal, arbitrary and unjustified.
4. That Ld. Commissioner of Income Tax (Appeals) has erred in rejecting the application filed under Rule 46A of the Act for admission of additional evidence which evidence goes to the root of the matter and as such the order passed is arbitrary and unjustified.
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5. Without prejudice to the above, the Ld. Commissioner of Income Tax (Appeals) has erred in upholding the addition of Rs.78,00,000/- made on account of alleged unexplained investment in purchase of property treating the same to be income u/s 69 in utter disregard of the explanations rendered which is arbitrary and unjustified.
The brief facts of the case are that the assessee filed its return of income on 30-03-2012 declaring a total income of Rs. 1,66,230/- + Rs.1,23,000/-(Agriculture Income) which was processed vide order dated 21-07-2012 u/s 143(1) of the Act. The case of the assessee was selected into scrutiny under CASS. Accordingly notice u/s 143(2) of the Act dated 28-09-2012 was issued. A fresh notice u/s 142(1) was issued to the assessee. The Assessing Officer completed the assessment after making the addition of Rs.2,00,000/- as agreed by the ld.AR of the assessee for the A.Y.2011-12. Therefore, the assessment order was set aside under section 263 of the Act by the Principal Commissioner of Income Tax, Karnal vide order dated 11-02- 2016 and revised assessment was framed at income of Rs,1,08,67,030/-. Aggrieved the revised assessment order dated 15-12-2016 the assessee preferred the appeal, which is pending before the Ld. CIT(A), after remand from the Hon’ble ITAT. During the pendency of the aforesaid proceedings, notice u/s 148 of the Act dated 28-03-2018 was issued to the assessee.
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The reason for re-opening was recorded by the Assessing officer was that the assessee had purchased immovable property from Sh. Ishwar Singh for Rs.78 Lacs, whereas the sale deed was executed for Rs. 15 Lacs during the F.Y.2011-12. Notice under section 148 of the Act was issued to the assessee on 26/28-03-
2018 after taking the approval from the Pr. Commissioner of Income Tax. The reasons for re-opening of the assessment by the Assessing officer as under:
This assessee is an individual and has filed income tax return for the A.Y. 2011-12 on 30.03.2012 declaring income at Rs.
1,66,230/-. Further, the case of assessee was selected under scrutiny through CASS and assessment u/s 143(3) was completed vide order dated 25.02.2014 at an assessed income of Rs.3,66,230/-. Later on the said assessment order was revised by worthy Pr. CIT, Karnal u/s 263 being prejudicial to the interest of revenue, by passing an order dated 11.02.2016
to make fresh assessment. Consequently, the assessment was made u/s 143(3) r.w.s. 263 vide order dated 15.12.2016, enhancing the earlier assessed income of Rs.3,66,230/- to Rs.
1,08,67,030/--
Further, a information has been received from the O/o DDIT(Inv.), Karnal vide letter No. 1576 dated 29.01.2018 in the case of above mentioned assessee. As per the information, Sh. Satbir Singh S/o Maan Singh had purchased immovable property from Sh. Ishwar Chandar S/o Chaman Lal H.No. 19, Randhir Colony for Rs.78 Lacs (as per agreement to sell),
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whereas the sale deed was executed for Rs.15 Lacs during the F.Y. 2010-11. 3. On further analysis of the information it is seen that the assessee has submitted before the court that he had made payment of Rs. 78 Lacs for the purchase of said property, however, the sale deed was executed at circle rate for Rs.15
Lacs. Case being worth investigating, necessary approval u/s 133(6) of the I.T. Act, 1961 was obtained from the Competent
Authority and query letter dated 08.03.2018 was issued to the assessee to furnish source of investment made in the purchase of property at Rs.78 Lacs. But the assessee has failed to file any reply to the letter issued.
Perusal of the assessment record and reply filed by the assessee showed that the aforesaid information was not available during the assessment proceedings on both occasions and has escaped assessment. Therefore, I have reason to believe that unexplained investment of Rs.78 Lacs has escaped assessment within the meaning of Section 147 of the 1.T. Act, 1961 for A.Y. 2011-12. 5. The assessee had purchased immovable property of Rs.78 Lacs during the F.Y. 2010-11. However, the assessee has neither disclosed any such transactions during the assessment proceedings u/s 143(3) nor during the proceedings u/s 263 of the Act. So it is clear that the escapement of income on the part of assessee, as he has failed to disclose all true material facts and information. Since in this case 4 years from the end of the 6 relevant assessment year has expired & assessee failed to disclose truly all material facts necessary for his assessment for the year under consideration. Therefore, I have reason to believe that income for the year under consideration has escaped assessment. I have carefully considered the assessment records containing the submission made by the assessee during the assessment proceedings and have noted that the assessee has not disclosed any details of purchase of property of Rs.78 Lacs.
In view of the above facts & circumstances, this is a case of non-disclosure of material facts on part of assessee & thus, remains un-examined during the course of assessment proceedings on both occasions. Hence, the provisions of Explanation 1 of section 147 of the Act are applicable in this case. Therefore, this case is not being a case of change of opinion by the AO. Therefore, notice u/s 148 of the Act is required to be issued to assess the escaped income of Rs.78,00,000/- as well as any other income which comes to the notice during assessment proceedings. Notice u/s 148 is to be issued to the assessee for A.Y. 2012-13. 4. According to the Assessing Officer the assessee had purchased the immovable property for Rs.78,00,000/- and did not disclose in the ITR. The Assessing officer completed the assessment under section 143(3) read with section 147 of the Act at Rs.1,86,67,030/- after making the addition of Rs.
78,00,000/-. Aggrieved the order from the Assessing Officer, the 7
assessee preferred the appeal before the Ld. CIT(A), who vide his order dated 20-02-2024 dismissed the appeal, against which the assessee is in appeal before the tribunal. Ld. CIT(A) has observed in his order as under:
“6.4 After due consideration of the material on record, the ground-wise discussion and decision in this appeal is as under.
Ground No.1 to 5 are on single issue of validity of proceedings w/s.147 of the Act. Therefore, these grounds are decided together clear from the record that in various proceedings prior to initiation of assessment proceedings uis.147, assessee had not disclosed true and correct facts regarding his total investments in the property. It is clear from the record that the fact of assessee investing total of Rs. 78 lakh in the property but registering it at Rs. 15 lakh was not on record. After completion of the assessment vide order dated 15.12.2016 passed us. 143(3) r. w.s. 263 of the Act, AO received information from the Investigation Wing/Section of Income-tax Department that assessee had purchased an Immovable property for Rs. 78 lakh and it was registered at only Rs. 15 lakh. Assessee has not brought anything on record to demonstrate that he had declared the said transaction before Assessing Officer or any other Income-tax Authority. Therefore, assessee's contentions in his written submission are found to be irrelevant because through that submission assessee is mainly harping on the arguments that there was no reason to believe that income has escaped assessment, that there was change of opinion and there was borrowed satisfaction in the 8 form of information received from Investigation Wing. It is networthy that AO did not mechanically initiate proceedings proceedings u/s. 147. Prior to initiating such proceedings, assessee was given opportunity by way of letter/notice u/s.133(6). However, assessee did not comply with that notice. Moreover, as per the facts on record, this issue of investment in House Property was never examined. Therefore, assessee's contention that AO sought to reopen the assessment on borrowed information is incorrect. All the judicial pronouncements relied upon by the assessee are on the issue of change of opinion. The facts in assessee's case are different from the facts in those cases. In view of these facts, Ground No. 1 to 5 are dismissed 7.1 Regarding Ground No.6, which is the only direct ground on the issue of addition of Rs. 78 lakh made by AO u/s. 69, the so called additional documents have already been held to be inadmissible. As per the other facts on record, it is seen that the assessee purchased a property at House No. 19, Randhir Colony, Kamal, Haryana, from one Shri Ishwar Chand, son of Chamanlal. The property was registered with Deputy/Joint