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Income Tax Appellate Tribunal, AHMEDABAD “A” BENCH, AHMEDABAD
Before: SMT. ANNAPURNA GUPTA & Ms. SUCHITRA KAMBLE
PER SUCHITRA KAMBLE, JUDICIAL MEMBER :
This appeal is filed by the assessee against order dated 23.05.2019 passed by the CIT(A)-12, Ahmedabad for the Assessment Year 2011-12.
The assessee has raised the following grounds of appeal :-
“1. The learned Commissioner of Income Tax (Appeal)-12, Ahmedabad, has grievously erred in facts and law while passing the order under consideration.
2. That learned Commissioner of Income Tax (Appeal)-12, Ahmedabad erred in upholding the validity of Notice issued u/s.148 of the Act.
3. That learned Commissioner of Income Tax (‘Appeal)-12, Ahmedabad, erred in facts and in law in upholding the disallowance of Rs.4,91,871/- made by the Assessing Officer u/s. 36(i)(iii) of Income Tax Act, 1961.”
The original return of income was filed on 28.03.2012 showing total income of Rs.41,81,710/- which was processed under Section 143(1) of the Income Tax
Assessment Year: 2011-12 Page 2 of 4 Act, 1961 on 25.04.2012. Thereafter, a revised return was field on 11.01.2013 showing total income of Rs.16,37,210/-. The revised income was on account of capital gain of Rs.25,44,449/- which pertained to sale of agriculture which was exempt from capital gain. Search action under Section 142 of the Act was carried out in the group case of Shayona Group on 15.10.2013 in which documents showing to a land transaction was found which pertained to all partners of the firm M/s. Shayona Land Corporation. The residence of premises of all the partners were covered under search action except that of Shri Sanjay R. Patel. The assessments in case of the other seven partners were made under section 153A of the Act making additions arising out of out of the incriminating documents. In assessee’s case, after recording the reasons and taken approval as per procedure, notice was issued under Section 148 of the Act on 28.03.2016. In response to the notice issued under Section 148 of the Act the assessee filed return on 02.06.2016 declaring income of Rs.16,37,270/-. Notices under Section 143(2) and 142(1) of the Act were issued on 21.06.2016 along with questionnaire and copy of reasons recorded. In response to these notices issued, the assessee raised objections against the reopening of the assessments which was dealt by the Assessing Officer by a speaking order on 14.07.2016. The Assessing Officer after taking cognisance of the assessee’s reply objected that during the search survey under Section 133A of the Act was conducted on Shop No.22/23 Shayona Complex and various documents pertaining to a land transaction were found and impounded. An agreement for sale dated 20.03.2010 between Shri Rameshbhai Desai and Shri Sureshkumar Ranchhodbhai Patel for a total sale consideration of Rs.4,57,41,388/- was made. This issue was confronted vide statement of Shri Sureshkumar Ranchhodbhai Patel recorded on 10.12.2013. After taking cognisance of all the aspects of the said transactions, the Assessing Officer held that since the funds for purchase of land has been sourced from the unsecured loans from Shreeji Finance taken by the firm, M/s. Sayona Land Corporation, the addition will be substantive in case of the firm. However, it is a fact that the partners are equally liable to the firm and hence protective addition has been made in case of the partners with substantive addition in case of the firm. Thus, the difference of Rs.3,45,01,388/- was divided between the eight partners and thus Rs.43,12,673/- was added as unaccounted investment under Section 69 of the Act on protective basis. The Assessing Officer further made disallowance of Assessment Year: 2011-12 Page 3 of 4 Rs.4,91,871/- towards the disallowance under Section 36(1)(iii) of the Act. The Assessing Officer also made disallowance under Section 14A of the Act amounting to Rs.1,71,576/- 4. Being aggrieved by the Assessment Order, the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee.
The Ld. AR submitted that on the basis of material found, the reopening is not permissible in respect of protective addition as the reasons are only of assumption. The reasons categorially not mentioned by the assessee as purchaser or seller and there was no nexus between the information and formation of the assessee’s involvement in the transaction. Thus, the Ld. AR submitted that there was no application of mind while reopening the assessee’s case. The Ld. AR further submitted that notice issued under Section 148 of the Act is also not erroneous as the Assessment Order mentioned in the said notice is that of 2009-10 and not the year under consideration.
The Ld. DR submitted that the notice issued under Section 148 of the Act was that for the year 2011-12 only and the mistake in the paragraph no.2 of the notice is a typographical error as the subject itself mentions notice under Section 148 for the A.Y. 2011-12. As regards reopening not permissible under protective addition, it will not be appropriate as the assessee is the partner in the group that has been searched and, therefore, the reopening was validly done.
We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that the subject of notice under Section 148 of the Act clearly mentions that the Assessment Year is 2011-12 and, therefore, mention of Assessment Year 2009-10 is just a typographical error, appears to be genuine contention of the Ld. AR. As regards reopening not permissible in respect of protective addition, since the substantive addition has already been made in case of the firm, the Assessing Officer cannot make protective addition in the present assessee’s case which tantamount to double taxation and, therefore, ground no.2 is allowed.
Since the assessment itself becomes bad in law as stated hereinabove, the merit is not decided upon.
Assessment Year: 2011-12 Page 4 of 4 9. In the result, appeal of the assessee is allowed.
Order pronounced in the open Court on this 24th April, 2024.