TaxTMI 
TaxTMI 
2012 (11) TMI 225
X X X X Extracts X X X X
X X X X Extracts X X X X
....e Act, 1872, the onus of disproving the authority in possession of material against the assessee lies squarely on the assessee. C.O. No. 412/Del/10 (Assessee's cross-objection): "On the facts and in the circumstances of the case and in law, the CIT(A) erred in rejecting the ground regarding section 148/147 action. The rejection being erroneous must be quashed with directions for appropriate relief." 2. Brief facts are: Assessee maintains regular books of accounts which are audited. For A.Y. 2001-02, assessee's regular assessment was completed u/s 143(3) on 30-12-2002 at an income of Rs. 18,97,560/-. Subsequently, a notice u/s 148 of the I.T. act, 1961 was issued on the assessee on 15-3-2007 after recording the reasons u/s 147 of the Act. 2.1. A search operation was conducted on one Manav Rachna Group (MRG) of Faridabad on 4-8-2005 and one property broker Shri Navneet Jhamb. During search, certain documents were recovered which revealed that a plot no. 42, Sector 6, Faridabad was purchased by Ashwani Mahajan, director of the assessee company. A seized paper suggested that the deal was agreed at Rs. 1,68,38,610/- out of which Rs. 30,00,000/- was to be paid in cheque and r....
X X X X Extracts X X X X
X X X X Extracts X X X X
....IT(A) upheld the reopening of proceedings by following observations: "I have carefully considered the submission made by Ld. AR and have gone through the assessment order A perusal of the reasons recorded by Assessing Officer for reopening of assessment shows that AO had specific information in his possession. For the purpose of reopening of case, it has only to be seen whether there was prima facie some material on the basis of which department could reopen the case. The sufficiency or correctness of the material is not to be considered at that stage. On the basis of information and documents sent by DCIT, Central, Faridabad, it can be concluded that there exist reasons for holding a belief of escapement of income. Thus I find that the Assessing Officer had reasonable material and ground for reopening of the case and his action is therefore upheld." 2.7. However, the additions were deleted on merits by following observations: "I have perused the assessment order, copy of documents seized, paper book submitted by AR and considered the arguments forwarded by ld. AR. The ld. AR has filed various documents to support that this plot has been subject matter of dispute and litig....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... case of K.P. Verghese (1981) 131 ITR 597 is relied. d) After considering totality of the case and documents, I find that in the absence of any such evidence, and the investment having been proved, no addition could be made under section 69 of the Income-tax Act. The AO is not justified in making the addition of Rs. 1,30,38,610/- on account of undisclosed investment by way of payment of on-money in excess of money mentioned in sale deed of this property. Hence, I direct him to delete this addition of Rs.1,30,38,610/-." 2.8. Aggrieved, the revenue is in appeal before us. The assessee has filed cross objection against upholding the validity of reopening of assessment and goes to the root of the matter. 3. Learned counsel for the assessee requested to first hear the crossobjection inasmuch as it deals with the validity of reopening proceedings. 3.1. It is vehemently argued that the provisions of sec. 147 were amended to apply time limit of 4 years strictly in cases where primary facts are disclosed by the assessee in respect of a transaction. Schedule 'E" being schedule of fixed assets as on 31-3-2001 in which an addition of Rs. 23,95,012/- has been shown as an e....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... to extend the time limit from 4 to 6 years. Assessing Officer has thus deliberately and contrary to case record noted that the transaction of purchase of plot was kept out of books. Whereas the fact of the matter is the purchase of the plot was very recorded in the books and reflected in accounts. The Assessing Officer recoursed to twisting reasons, is proved from the fact that on one hand the Assessing Officer himself says that the balance-sheet reveals that the above said plot has been purchased by the assessee on other hand contradictory conclusion is given that transaction is not entered in the books. The record and facts which clearly indicate that primary facts about the plot were very much incorporated in the books of a/c. This being so, the assessee's case squarely falls under the time limit of 4 years prescribing sec. 147. Notice u/s 148 having been issued after the expiry of 4 years, which is not disputed by the revenue, the notice issued u/s 147/148 is bad in law and the proceedings are ab initio void. 3.5. The recording of reasons, with the lack of bona fides cannot be a valid basis for reopening of the assessment. Assessee having made the primary disclosure in the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... There is also no statement of the seller on record that he has obtained on money. Under the circumstances, the additions made in this regard is not sustainable. 6.3 In this regard, we place reliance upon the Hon'ble Apex Court in the case of K.P. Varghese Vs. Income Tax Officer, Ernakulam and Another 131 ITR 597 (SC), wherein it has been held that the burden of proving is that of Revenue when there is allegation of understatement on concealment in the consideration shown. 6.4 We also place reliance upon the judgement of the Hon'ble Apex Court in the case of C.I.T. vs. P.V. Kalyanasundaram in (2007) 294 ITR 49 (SC) in which allegations of on money transaction on the basis of nonconvincing loose sheets found during the course of search and conflicting statement of the seller, was deleted by the tribunal (to which, one of us the Accountant Member was the party) and the same was affirmed by the Hon'ble High Court and Hon'ble Apex Court. 6.5 We also find that in the grounds of appeal the revenue has urged that Ld. Commissioner of Income Tax (Appeals) has erred in deleting the addition of Rs. 60,36,000/- paid in cash as the source of investment were not proved before the Assess....