TaxTMI 
TaxTMI 
2018 (2) TMI 51
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....r of Income Tax. 3. The Ld. CIT(A) further erred in confirming the re-opening of the assessment when the original assessment was completed u/s.143(3) and the same is re-opened after four years, without giving any finding that income has escaped assessment by reason of failure on the part of the assessee to disclose fully and truly all material facts needed for his assessment as per proviso to section 147 of the Income Tax Act. 4. The Ld. CIT(A) further erred in confirming the addition of Rs. 2,23,00,000/- as unexplained investments u/s 69B of the Income Tax Act, 1961. 5. The Ld. CIT(A) further erred in confirming the addition merely based on some detail available in pendrive allegedly collected from Hiranandani Group and on the statement u/s. 132(4) made by Shri Niranjan Hiranandani. 6. The Ld. CIT(A) further erred in confirming the addition by relying on statement given during cross-examination of Shri Niranjan Hiranandani, whereas from the cross-examination it is very clear that there is no proof regarding the receipt of on-money by Shri Niranjan Hiranandani from the Appellant. 7. The Appellant craves leave to add to, alter or amend an....
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.... The assessee in his reply objected to the proposed action of the A.O on multiple grounds, viz. (i). that as the assessment in the hands of the assessee was already framed under Sec. 143(3), therefore, in the absence of any failure on the part of the assessee to truly and fully disclose all material facts necessary for completing the assessment, the same could not be reopened under Sec. 147 after expiry of four years from the end of the relevant assessment year; (ii). that despite persistent requests of the assessee the relevant parts of the statement of Sh. Niranjan Hiranandani and details of payments of money in excel sheet, on the basis of which the case of the assessee was claimed to have been reopened was supplied only as on 09.03.2015; (iii). that the reasons for reopening made available to the assessee by the A.O vide his letter dated 28.04.2014 though referred to "As per information received", however, there was no mention as to from where the information was received; (iv). the aggregate of the 5 amounts mentioned in the reasons to believe supplied to the assessee vide letter dated 28.04.2014 did not tally with the 5 separate amounts as were intimated to the assessee vide ....
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....o payment of "on money" could be gathered from his statement, primarily for the reason, viz. (i). that neither Sh. Niranjan Hiranandani had maintained any cash book, nor was he aware of the person who had made the entry in the pen drive; (ii). that Sh. Niranjan Hiranandani had no information regarding date of receipt of "on money", who had paid the same, who had received the cash in his concern and who had prepared the details without noting the said three things; and (iii). that Sh. Niranjan Hiranandani had neither issued any receipt of cash, nor was having any proof that the assessee had paid any cash towards purchase of flat. Thus, it was submitted by the assessee that the facts as emerged from the record did not prove escapement of income of the assessee. 6. The assessee assailed the validity of the reassessment proceedings before the CIT(A) on the ground that in the backdrop of the fact that assessment had already been framed in the hands of the assessee under Sec. 143(3), therefore, in the absence of escapement of income by reason of failure on the part of the assessee to disclose fully and truly all material facts necessary for completing the assessment, the A.O had wrong....
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....assessment framed by the A.O was beyond the statutory time limit contemplated under Sec. 153(2) of the Act. The CIT(A) rebutting the aforesaid contention of the assessee observed that as the assessment was framed under Sec. 147 within a period of one year from the end of the financial year in which the notice under Sec. 148 was served, therefore, the same was well in order. The CIT(A) further deliberated on the challenge thrown by the assessee to the validity of the reassessment on the ground that the A.O had failed to dispose off the objections raised by the assessee before him. The CIT(A) observing that the A.O had by way of a speaking order disposed off the objections raised by the assessee, as well as provided clarification on all the points which were raised by him, therefore, declined to accept the aforesaid contention of the assessee. 9. That as regards the objections filed by the assessee in respect of the addition of Rs. 2,23,00,000/- made by the A.O on merits, the CIT(A) observed that as the additions were based on the documentary evidence found during the course of the Search & seizure proceedings conducted on Hiranandani group, therefore, the same were well in order.....
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....n carried the matter in appeal before us. The ld Authorised representative (for short 'A.R') for the assessee at the very outset submitted that the A.O had wrongly assumed jurisdiction and initiated reassessment proceedings in the hands of the assessee. The ld. A.R averred that as the assessment in the case of the assessee already stood concluded under Sec. 143(3), vide order dated 19.11.2009, therefore, as per the mandate of Sec. 151(1) as was then available on the statute, after the expiry of a period of 4 years from end of the assessment year a notice under Sec. 148 could be issued by the A.O only if the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner was satisfied, on the reasons recorded by the Assessing Officer, that it was a fit case for the issue of such notice. The ld. A.R drawing our attention to the letter dated 28.06.2017 of the Asst. Commissioner of Income Tax-30(1), Mumbai, addressed to the assessee, therein averred that the concluded assessment of the assessee was reopened by the A.O after taking the approval of the Jt. CIT-24(1), Mumbai. The ld. A.R submitted that in the backdrop of the settled position of law, as the A.O....
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....f the reassessment proceedings on the ground that though the original assessment in the case of the assessee was framed by the DCIT 26(2), Mumbai, however, thereafter the reassessment proceedings were initiated and the order was passed by the ACIT, 31, Mumbai. 11. The ld. A.R further took us through Page 30-42 of his 'Paper book' (for short 'APB'). The ld. A.R drew our attention to the statement of Sh. Niranjan Hiranandani and submitted that the assessee had in his original return of income furnished details as regards purchase of flats from M/s Lakeview Developers by raising a loan from the ICICI Bank Ltd and had claimed deduction of Rs. 1,50,000/- in respect of the interest paid on the loan under Sec. 24 of the Act. It was submitted by the ld. A.R that the A.O while framing the original assessment under Sec. 143(3), vide his order dated. 19.11.2009 had perused the entitlement of the assessee towards claim of deduction u/s 24 while computing his income from house property. The ld. A.R submitted that the A.O after deliberating on the claim of the assessee, however, being of the view that as the flat was under construction during the year and the possession of the same was taken ....
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....are of the person who had made the entries in the pen drive, and further on being queried as to whether the five amounts mentioned against the name of the assessee in the print out taken from the pen drive were recorded by him in any cash book or rough book or diary, had answered in the negative. The ld. A.R further in order to drive home his contention that no adverse inferences on the basis of the printout taken from the pen drive were liable to be drawn in the hands of the assessee, therein averred that on cross examination Sh. Niranjan Hiranandani on being confronted with the fact that the print out of the pen drive did not divulge the date of receipt of money, details of the recipient and the payer, as well as the fact as to who had prepared the details, clearly expressed his unawareness and distanced himself from the same. The ld. A.R further submitted that Sh. Niranjan Hiranandani on being called upon to produce any evidence as regards payment of "on money" by the assessee had answered in the negative. Thus, in the backdrop of the aforesaid contentions the ld. A.R submitted that a perusal of the facts as had emerged from the records and the statement of Sh. Niranjan Hiranand....
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....ad concededly issued the notice under Sec. 148 after obtaining the approval of the Joint Commissioner of Income-tax-24(1), Mumbai. The ld. D.R on being confronted with the fact that as conceded by the A.O in his letter dated 28.06.2017 addressed to the assessee the approval for reopening the case was taken from the Joint Commissioner of Income Tax-24(1), Mumbai, the ld. D.R. though duly conceded that the A.O had erred by failing to take approval of the appropriate authority, however, averred that the same being a bonafide mistake would thus be cured under Sec. 292B and the assessment would not be rendered as invalid on the said ground. We have given a thoughtful consideration to the facts of case in the backdrop of the settled position of law and are unable to persuade ourselves to accept the aforesaid contention of the ld. D.R. We are of the considered view that the legislature in all its wisdom in order to ensure finality to assessments and to leave no room for abuse of powers in the garb of reassessment, had thus in all fairness specified the authorities with whose approval alone the cases could be reopened by the A.O. We find that as a precautionary measure the time limit for r....
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....hority, viz. the Joint Commissioner of Income-tax and had rather sought the approval of the Commissioner of Income-tax. We have deliberated on the validity of the reassessment proceedings in the backdrop of the settled position of law, and are of the considered view that as the notice under Sec. 148 in the case before us had been issued by the A.O without obtaining the approval of the appropriate authority, therefore, in the absence of valid assumption of jurisdiction on his part, the reassessment framed by him cannot be sustained and is thus liable to be quashed. 13. We shall now advert to the validity of the reopening of the concluded assessment of the assessee after a period of four years from the end of the assessment year. We find that the A.O taking recourse to the first proviso of Sec. 147 had initiated reassessment proceedings, for the reason that the income of the assessee chargeable to tax had escaped assessment because of failure on the part of the assessee to truly and fully disclose all the material facts necessary for his assessment. The ld. A.R had assailed before us the validity of the reassessment proceedings for the reason that the reasons recorded by the A.O f....
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....fully and truly disclose all material facts necessary for his assessment. We find that the validity of the reopening of a concluded assessment which had been reopened after a lapse of a period of four years from the end of the assessment year, in the absence of mention of such a fact in the 'reasons to believe' is no more res integra in light of the judgment of the Hon'ble High Court of Bombay in the case of Nirmal Bang Securities (P) Ltd. Vs. ACIT (2016) 382 ITR 93 (Bom), wherein the Hon'ble High Court taking cognizance of the fact that there was no allegation in the reasons recorded that there was any failure on the part of the assessee to disclose fully and truly all material facts necessary for framing of assessment in the hands of the assessee, had quashed the reassessment proceedings by observing as under:- "24. In view of the aforesaid well settled legal position and there admittedly being not even an allegation in the reasons recorded that there was any failure on the part of the Petitioner to disclose truly and fully any material fact necessary for assessment, let alone the details thereof, the impugned notice dated 30th March, 2007 and the impugned order dated 5t....
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.... paid" the name, address and PAN No. of the assessee is mentioned alongwith the details of the property purchased by him, viz. Flat no.2501 in "Somerset" building from Lakeview Developers (a Hiranandani group concern), however, the same would not conclusively prove suppression of investment and payment of "on money" by the assessee for purchase of the property under consideration. We find that the information as emerges from the print out of the pen drive falls short of certain material facts, viz. date and mode of receipt of 'on money', who had paid the money, to whom the money was paid, date of agreement and who had prepared the details, as a result whereof the adverse inferences as regards payment of "on money" by the assessee for purchase of the property under consideration remain uncorroborated. We further find that what was the source from where the information was received in the pen drive also remains a mystery till date. We find that Sh. Niranjan Hiranandani in the course of his cross-examination had clearly stated that neither he was aware of the person who had made the entry in the pen drive, nor had with him any evidence that the assessee had paid any cash towards purch....