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Income Tax Appellate Tribunal, DELHI BENCHES : G : NEW DELHI
Before: SHRI H.S. SIDHU & SHRI N.K. BILLAIYA
ORDER PER H.S. SIDHU, JM This appeal filed by the assessee is directed against the order passed by the Ld. CIT(A), Hladwani on 16.11.2017 in relation to the assessment year 2008-09 on the following grounds:-
1. That the learned Commissioner of Income Tax (Appeals),
Haldwani has erred both in law and on facts in sustaining the initiation of proceedings under section 147 of the Act and, completion of assessment uls 1471143(3) of the Act which were without jurisdiction and deserves to be quashed as such.
1.1 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that, there was no tangible, relevant, specific and reliable material on record on the basis of which, it could be held that, there was any reason to believe with the learned Assessing Officer that income of the appellant had escaped assessment and, in view thereof, the proceedings initiated were illegal, untenable and therefore, unsustainable.
1.2 That the learned Commissioner of Income Tax (Appeals) has further failed to appreciate that since there was no allegation in the reasons recorded that there is failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment uls 147 of the Act, the notice issued u/s 148 of the Act after a period of four years from the end of assessment year in a case where original assessment has been framed uls
143(3) of the Act was illegal and invalid.
1.3 That the learned Commissioner of Income Tax (Appeals) has also failed to appreciate that approval granted was a mechanical approval and hence initiation of proceedings uls 147 of the Act on this ground is invalid.
2 That the learned Commissioner of Income Tax (Appeals) has further erred-both in law and on facts in upholding an addition of Rs. 95,25,000/- representing alleged undisclosed/unexplained investment made by the appellant and brought to tax by invoking section 69B of the Act.
2.1 That the learned Commissioner of Income Tax
(Appeals) has further erred both in law and on facts in upholding an addition on the basis of search and seizure operation u/s 132 of the Act in the group of M/s Kanatal Resorts no 22/23/92012, whereby basis of seized laptop of Shri Deepak Mittal without appreciating that such evidence neither in law and nor on fact cold have been made a basis to assume that the land purchased by Shri Ganga Ram Adwani alongwith appellant was not Rs.
15,50,000/- allegedly purchased for Rs. 2,06,00,000/- in which share of appellant comes to Rs. 1,03,00,000/- being half share in purchasing 0.3480 hectare land represented undisclosed income of the appellant.
2.2 That the learned Commissioner of Income Tax (Appeals) has further erred both in law and on facts in overlooking the documentary evidence placed on record to establish that the purchase consideration of Rs. 15,50,000/- was the actual sum invested by the appellant.
2.3 That the learned Commissioner of Income Tax (Appeals) and the learned Income Tax Officer has erred both in law and on facts in invoking the provision contained in section 292C of the Act which are wholly inapplicable to the facts of the appellant.
2.4 That the learned Commissioner of Income Tax (Appeals) while upholding the addition has overlooked documentary evidence placed on record by the appellant to show that the investment made by the assessee was duly explained out of the funds available with the appellant and therefore, addition sustained is not in accordance with law.
2.5 That finding of the learned Commissioner of Income Tax
(Appeals) that, "thus, prima facie, it was evidently established that the assessee alongwith Shri Ganga Ram Adwani had paid of Rs. 95,25,000/- over and above the registered amount as undisclosed investment of the assessee which was out of his undisclosed income" is factually incorrect and hence not tenable.
2.6 That further finding of the learned Commissioner of Income Tax (Appeals) that "further the appellant has not substantiated his claim that he had asked for cross examination which was denied by the AO" is factually incorrect and contrary to record, legally misconceived and untenable.
2.7 That various adverse findings and conclusion recorded by the learned Commissioner of Income Tax (Appeals) are also factually incorrect, contrary to record, legally misconceived and untenable.
3. That both the authorities below have framed the impugned
order without granting sufficient proper opportunity to the appellant and therefore the same are contrary to principle of natural justice and hence vitiated.
4. That the learned Commissioner of Income Tax (Appeals)
has erred both in law and on facts in upholding the levy of interest under section 234 B of the Act which is not leviable on the facts and circumstances of the case of the appellant.
It is therefore, prayed that it be held that assessment made by the learned Assessing Officer and sustained by the learned
Commissioner of Income Tax (Appeals) deserves to be quashed as such. It be further held addition made and upheld by the learned Commissioner of Income Tax (Appeals) alongwith interest levied be deleted and appeal of the appellant be allowed.
2. The facts in brief are that the assessee filed his return of income electronically on 28.6.2008 declaring income of Rs. 13,14,870/-. The case of the assessee was processed under section 143(1) of the Income Tax Act, 1961 (hereinafter referred as the Act) on 19.01.2010 on returned income.
After recording reason for initiation of proceedings u/s. 147 of the act, notice u/s. 148 of the Act was issued on 6.8.2009. The assessment was completed u/s. 143/(147) of the Act on 30.12.2010 at returned income.
Subsequently, it came to notice that the assessee has purchased farm house land at Jwalapur, Haridwar jointly with Sh. Ganga Ram Adwani, R/o Rishikesh (being 50% share of each), for total consideration of Rs. 2.06 crore from Sh. Ashwani Kumar, S/o Sh. Shanta Prasad, R/o Nath House, haridwar as Karta of M/s Ashwani Kumar Mittal & Sons (HUF), for which excess money over and above the amount mentioned in the registered deed has been paid by the purchasers. The assessee has disclosed purchase consideration of Rs. 7,75,000/- in the computation filed alongwith the return of income for AY 2008-09 being 50% of the purchase price of the said farm house land as per registered deed dated 11.4.2007 for Rs. 15,50,000.
Accordingly, proceedings under section 147 were initiated to assess the undisclosed amount of investment made in purchase of the said property.
Accordingly, notice under section 148 of the Act was issued on 31.3.2015 after recording proper reasons for doing so and after taking prior approval of CIT, Dehradun. In response to this notice, the assessee vide letter dated 6.4.2015 that his return of income filed for AY 2008-09 on 28.6.2008 may kindly be treated as filed in response to notice u/s. 148 of the Act dated 31.3.2015. Notices u/s. 143(2) & 142(1) of the Act alongwith questionnaire were issued on 17.8.2015. In response to these notices, the assessee alongwith his AR attended the assessment proceedings and furnished requisite details. During the search and seizure operation u/s. 132 of the Income Tax Act, 1961 in the group of M/s Kanatal Resorts on 22/23.9.2011, laptop of Sh. Deepak Mittal was seized. In the laptop, the account annexurised as page 27 of A-2 contains that land measuring 0.5480 hectares (8 bighas) situated at Jwalapur, Haridwar known as farm house land was sold by Ashwani Kumar Mittal and Sons (HUF), which was purchased vide sale deed dated 11.4.2007, jointly by the assessee and Sh.
Ganga Ram Adwani, having equal shares, for Rs. 15,50,000/-. The sale deed for entire land was made at Rs. 15,50,000/-, but in actual the above land was sold for Rs. 2,06,00,000/-. The sale deed of this land was also found and seized at the time of search and was annexurised as A-11 pg. 143. Sh.
Deepak Mittal and Sh. Ashwani Kumar Mittal in their statements recorded u/s. 132(4) on 23.9.2011 have stated that the farm house land situated at Jwalapur, Haridwar was sold for total consideration of Rs. 2.06 crores in AY 2008-09 including cash received from the purchasers over and above the amount mentioned in the registered deed dated 11.4.2007. from these facts, it is clelary evidence that the assessee has jointly purchased half share of land measuring 0.5480 hectares at Jwalapur, Haridwar for Rs. 2,06,00,000/-, whereas as per sale deed dated 11.4.2007, purchase amount has been shown at Rs. 15,50,000/- only. This way, half share of the assessee comes to Rs. 1,03,00,000/- as against Rs. 7,75,000/- shown in the registered sale deed. AO observed that prima facie, it is clearly evident that the assessee has paid Rs. 95,25,000/- on and above the registered amount.
On this basis, reasons to believe that an income to the extent of Rs. 92,25,000/- has escaped assessment and accordingly, notice u/s. 142(1) dated 17.8.2015 was issued, to explain that on the basis of seized documents from Sh. Deepak Mittal during the course of search and seizure operation on 22.9.2011 and as accepted by Sh. Ashwani Kumar Mittal, why the purchase of land be not taken at Rs. 2.06 crores in respect of land purchased jointly with Sh. Ganga Ram Advani and accordingly, unexplained investment be not calculated. In response thereto, the assessee filed his reply dated 02.11.2015. After considering the reply filed by the assessee, the AO observed that the proceedings u/s. 147 of the Act were initiated on the basis of transactions relating to the property purchased by the assessee from the sellers in whose premises information / documents showing underhand payments in respect of such property, was found and seized during the course of search oration at the premises of the sellers and contents of the seized documents were confronted in the statement recorded u/s. 132(4) of the seller of the said property, which has evidential value within the meanings of section 132(4A) read with section 292C of the I.T.
Act, 1961. Thus, the AO observed that the arguments put forth in the written submissions dated 2.11.2015 and 10.3.2016 have no credence.
Therefore, the AO held that assessee alongwith Sh. Ganga Ram Adwani got registered a purchase deed for Rs. 15,50,000/-, which was actually purchased for Rs. 2,06,00,000/-, in which share of the assessee comes to Rs. 1,03,00,000/- being half share. Thus, AO observed that it is clear that the assessee has made undisclosed investment of Rs. 95,25,000/- as his share in purchasing 0.5480 hectare land at village Jwalapur, District Haridwar on 11.4.2007. Accordingly, undisclosed investment made by the assessee amounting to Rs. 95,25,000/- was added to the total income of the assessee under section 69B of the Income Tax Act, 1961 vide order dated 30.3.2016 passed u/s. 143(3)/147 of the I.T. Act, 1961.
3. Aggrieved with the aforesaid assessment order dated 30.3.2016, assessee appealed before the Ld. CIT(A) who vide his impugned order dated 16.11.2017 has affirmed the action of the AO and dismissed the appeal of the assessee.
4. During the hearing, Ld. Counsel of the assessee stated that learned Commissioner of Income Tax (Appeals), Haldwani has erred both in law and on facts in sustaining the initiation of proceedings under section 147 of the Act and, completion of assessment uls 147/143(3) of the Act which were without jurisdiction and deserves to be quashed, because there was no tangible, relevant, specific and reliable material on record on the basis of which, it could be held that, there was any reason to believe with the Assessing Officer that income of the assessee had escaped assessment and, 9 in view thereof, the proceedings initiated were illegal, untenable and therefore, unsustainable. He draw our attention towards page no. 26-PB which is copy of reasons recorded in the first round and page no. 32-PB which is a copy of reasons recorded in the second round and stated that learned Commissioner of Income Tax (Appeals) has further failed to appreciate that since there was no allegation in the reasons recorded that there is failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment uls 147 of the Act, the notice issued u/s 148 of the Act after a period of four years from the end of assessment year in a case where original assessment has been framed uls 143(3) of the Act was illegal and invalid. It was further contended that learned Commissioner of Income Tax (Appeals) has also failed to appreciate that approval granted was a mechanical approval and hence initiation of proceedings uls 147 of the Act on this ground is invalid. In view of above, he requested to quash the reassessment. To support his contention, Ld. Counsel of the assessee has filed two Paper Books one is containing the containing pages 1 to 136 in which records at the stage assessment as well as appellate were available and in the second paper book which is containing pages 137 to 360 having the decisions of the Hon’ble Supreme Court of India; Hon’ble High Courts and the Tribunal by which the legal issue raised by the assessee is squarely covered. The following are the case laws on which the Assessee’s counsel relied.
Copy of judgment of Hon’ble Supreme Court of India
in the case of Chhugamal Rajpal vs. SP Chalitha and others reported in 79 ITR 603 (SC).
2. Copy of judgment of Hon’ble Supreme Court of India
reported in 79 ITR 609 (SC).
3. Copy of judgment of Hon’ble Supreme Court of India
in the case of ITO and others vs. Lakhmani Mewal
Das reported in 103 ITR 437(SC);
4. Copy of judgment of Hon’ble Supreme Court of India
in the case of Kishinchand Chellaram vs. CIT reported in 125 ITR 713.
5. Copy of judgment of Tribunal in the caes of Smt. K.
Narasamma vs. ITO in 32 ITD 494 (Hyd.).
6. Copy of judgment of Hon’ble Uttranchal High Court in the case of Mcdermott International Inc. vs. ACIT
and others reported in 259 ITR 138.
copy of judgment of Hon’ble Supreme Court in the case of CIT vs. PV Kalyansundaram reported in 294
ITR 49.
Copy of judgment of Tribunal in the case of ITO vs.
Optec Disc. Manufacturing reported in 11 DTR 0264
(Chand).
9. Copy of Judgement of Hon’ble Delhi High Court in the case of Haryana Acrylic Manufacturing Co. vs.
CIT and others reported in 308 ITR 38 (Del).
Copy of judgment of Hon’ble Bombay Tribunal in the reported in 57 DTR 0179.
11. Copy of judgment of Hon’ble Delhi High Court in the case of Signatures Hotels Pvt. Ltd. vs. ITO reported
in 338 ITR 51;
Copy of judgment of Hon’ble Bombay High Court in the case of Titanor Components Ltd. vs. ACIT
reported in 343 ITR 183.
Copy of judgment of Hon’ble Delhi High Court in the Ltd. reported in 357 ITR 646 (Del.)
Copy of judgment of Hon’ble Delhi High Court in the case of CIT vs. Living Media India Ltd. reported in 359 ITR 106.
Copy of order of Hon’ble Delhi High court in the case
of Pr. CIT vs. NC Cables Ltd. in ITA No. 335/2015.
Copy of judgment of Hon’ble Chhattisgarh High Court
in the case of Maruti Clean Coal and Power Ltd. vs.
ACIT reported 400 ITR 397.
Copy of judgment of Hon’ble Bombay High Court in the case of Hindustan Lever Ltd. vs. ACIT reported in 268 ITR 332 and
Copy of order of Tribunal in the case of Bhikam
Singh. Vs. ACIT in ITA No. 1081/Del/2017.
On the contrary, Ld. DR relied upon the orders of the authorities below and stated that Assessing Officer issued the notice u/s. 148 after due application of mind. Hhe further stated that the AO has followed due procedure before issuing the notice u/s 148 of the I.T. Act, 1961. The Assessing Officer had tangible material in the form of information received from the Investigation Wing. The Assessing Officer did not proceed to any hearsay, conjecture or surmises. He stated that following decisions may be kindly considered with regard to reopening of case beyond 4 years u/s. 147 of the I.T. Act:
“1. Honda Siel Power Products Ltd. v. Dy. CIT [2012] 20 taxmann.com 5 (SC)/[2012] 206 Taxman 33
(SC)(MAG.)/[2012] 340 ITR 64 (SC)/[2012] 247 CTR 316
(SC) where Hon'ble Supreme Court held that assessee having not pointed out during assessment proceedings about expenses incurred relatable to tax free income u/s 14A there was omission and failure on its part to disclose fully and truly material facts and hence reopening of assessment was justified
Honda Siel Power Products Ltd. v. Dy. CIT [2011] 10
taxmann.com 2 (Delhi)/[2011] 197 Taxman 415
(Delhi)/[2012] 340 ITR 53 (Delhi)/[2012] 247 CTR 322
(Delhi) where Hon'ble Delhi High Court held that assessee having not pointed out during assessment proceedings about expenses incurred relatable to tax free income u/s 14A there was omission and failure on its part to disclose fully and truly material facts and hence reopening of assessment was justified
New Delhi Television Ltd. Vs DCIT [2017] 84
taxmann.com 136 (Delhi) where Hon'ble Delhi High Court held that proceedings under section 147, beyond a period of 4 years can only be initiated if the Assessing Officer has reason to believe that there has been escapement of income and this escapement is owing to the lack of true and fair disclosure by the assessee. In this regard, it is essential to understand the meaning of the phrase 'true and fair disclosure'. The Court has considered the meaning of this phrase in Honda Siel Power Products Ltd. v. Dy. CIT
[2012] 340 ITR 53/[2011] 197 Taxman 415/10 taxmann.com 2 (Delhi) where the Court held that that the term 'failure' on the part of the assessee is not restricted to the return and the columns of the return or the tax audit report. There can be omission and failure on the part of Hie assessee to disclose material facts fairly and truly during the course of the assessment proceedings. [Para
42]
CIT Vs P.V.S. Beedies (P.) Ltd. [1999] 103 Taxman
294 (SC)/[1999] 237 ITR 13 (SC)/[1999] 155 CTR 538
(SC) where Hon'ble Supreme Court held that Audit party had merely pointed out a fact which had been overlooked by Assessing Officer and this was not a case of information on a question of law. Reopening of case under section 147(b) on basis of factual information given by internal audit party was valid in law.
5. CIT Vs Kiranbhai Jamnadas Sheth (HUF) [2013] 39
taxmann.com 116 (Gujarat)/[2014] 221 Taxman 19
(Gujarat)(MAG.) where Hon'ble Gujarat High Court held that Assessment without scrutiny would mandate reassessment beyond 4 years even if assessee made true disclosure.
6. Dishman Pharmaceuticals & Chemicals Ltd. Vs CIT
[2012] 346 ITR 228 (Gun The assessee had shown an amount as loan from company. The assessee had not disclosed that it had substantial interest in the company.
Reassessment proceedings after four years to assess amount as deemed dividend was held to be valid.”
We have heard both the parties and carefully considered the case laws and the relevant documents available on record. We note that in this case return of income declaring income at Rs. 13,14,870/- was filed by the assessee on 26.8.2008 and which was processed on 19.1.2010 u/s. 143(1) of the Act (Page 1-5 of Paper Book). It is noted that in the 1st round of proceedings u/s. 147 of the Act, a notice dated 6.8.2009 u/s. 148 (Pg. 6-PB) of the Act and further questionnaire dated 8.11.2010 was issued and reply thereof was furnished by the assessee on 18.11.2010. After considering the same, the AO passed the order dated 30.12.2010 u/s. 143(3)/147 of the Act. Thereafter, in the 2nd round of proceedings u/s. 147 of the Act again notice dated 13.3.2015 u/s. 148 of the Act was issued (Page. 23-PB) wherein it was stated that notice is being issued with the prior approval of the JCIT, Haridwar Range, Haridwar. We note that the AO while recording the reasons for the belief that income has escaped assessment has recorded the reasons as under:-
“Reasons for initiating proceedings u/s. 148/151 and for obtaining the approval of the Jt. /Addl. Commissioner of Income
Tax/ Commissioner of Income Tax/ CBDT.
1 Name and address of the Sh. Sunil Agarwal assessee Sh. Balaji Complex, Ranipur More, Haridwar 2 Permanent Account No. AANPA0687L 3 Status Individual 4 District/circle/Range Ward 3, Haridwar 5 Assessment year in respect of 2008-09 which it is proposed to be issued notice u/s. 148 of the Income Tax Act.
6. The quantum of income which Rs. 95,25,000/- has escaped assessment 7. Whether the clauses (a), (b) Clause (b) of the or (c) of the explanation 2 to explanation 2 to the the second proviso of section second proviso of section 147 are applicable. 147 is applicable.
8 Whether the assessment is Yes proposed to be made for the first time? If reply is in affirmative, please state: (a) whether any voluntary Yes. Returned income Rs. return had already been filed. 13,14,873/-. (b) if so, the date of filing the 28.6.2008 said return.
If the answer to item 8 is in negative, please state (a) The income originally NA assessed (b) Whether it is a case NA of under assessment, assessment at too low a rate which has been made the subject of excessive relied or allowing excessive loss or depreciation 10 Whether the provisions of No. section 150(1) are applying. If the rely is in the affirmative, the relevant facts may be stated against item no. 11 and it may also be brought out that the provisions of section 150(2) would not stand in the way of initiating proceedings u/s. 147.
Reasons for the belief that Information received from income has escaped DCIT, Central Circle, assessment. Dehradun that a search was conducted on 22.9.2011 laptop of sh. Ashwani Kumar Mittal was seized. The laptop contains details of sale of 8 bighas of land @ 25.75 lacs per bigha to Sh. Gnga Ram Adwani and Sh. Sunil Kumar Agarwal which 18
comes to Rs. 2.06 crore. Sunil Agarwal’s share comes to Rs. 1.03 crore. Sale deed of this land was made for Rs. 15.50 lacs in which his share comes to Rs. 7.75 lacs. Rs. 95.25 lacs was paid over and above the amount shown in the sale / purchase deed made on 5.4.2007. I have therefore, reasons to believe that Rs. 95.25 lacs escaped assessment.