TaxTMI 
TaxTMI 
2018 (9) TMI 1748
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....T(A)-1, Gurgaon u/s 154 of the Act, if the computation filed is a valid return of income then the notice u/s 143(2) should have been issued as it was a mandatory requirement before passing order u/s 143(3) as held in many cases. Therefore the assessment is invalid and illegal. 4. Without prejudice to other grounds and subject to the rectification application made before the Ld. CIT(A)-1 Gurgaon, Whether the Ld CIT(A)-1 Gurgaon was justified in confirming the addition of Rs. 15,52,221/- and further making the addition of Rs. 89,75,305/- u/s 68 of the Income Tax Act, 1961 in the absence of books of accounts? 5. Without prejudice to other grounds, the addition of Rs. 89,75,305/- made u/s 68 of the Act by the Ld CIT(A)-1 Gurgaon is beyond the powers of CIT(A) 6. Without prejudice to other grounds and subject to the rectification application made before the Ld. CIT(A)-1 Gurgaon, Whether the Ld CIT(A)-1 Gurgaon was justified in confirming the additions of Rs. 36,611/- and Rs. 15,15,600/- u/s 68 of the Act in spite of the fact that sufficient cash in hand was available with the assessee at relevant point of time? 7. Without prejudice to other grounds an....
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....ts income and filed a revised computation of the income, including the said amount before the Assessing Officer and paid tax on said bank interest income. 2.2 In respect of cash deposits of Rs. 1,47,33,861/- in one of the saving bank account, the assessee claimed before the Assessing Officer that cash deposits of Rs. 1,46,97,250/- were made out of the booking amount received in advance against sale of plots of agriculture land to 55 persons at village Sardana, Gurgaon, however, source of the balance amount of Rs. 36, 611/- was not explained. On being asked by the Assessing Officer to furnish proof of sale of such plots of land, the assessee furnished copies of sale/conveyance deed in case of 8 sale transactions. It was submitted that registration of the sale of such plots was made later on as the registration was not allowed by the government and the assessee had not kept the copies of the conveyance deeds with her. 2.3 In respect of the cash deposits of Rs. 15,15,600/- in another saving bank account, no source was explained. The Assessing Officer observed that agriculture land measuring 21 KANAL was purchased by the assessee by way of the purchase deed dated 03/08/2009 and s....
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....mpletion of the assessment. 2.6 On the issue of the merit of the addition, before the Ld. CIT(A), the assessee contended that the land sold by the assessee was agriculture land and the profit derived from sale of such land was not taxable. The assessee also submitted that land in question was beyond 8 kms from the municipal limit of Gurgaon and, therefore, it was not a capital asset. In support of the contention, the assessee relied on various case laws. The assessee also contended that amount received by the assessee from various persons were not sale proceeds and were mere advances and in those circumstances, same cannot be considered as income of the assessee in the year under consideration. 2.7 The Ld. CIT(A), however, asked the assessee for complete information in respect of the sale of plots including the amount of advance/sale recorded in sale deeds. The Authorised Representative of the assessee filed a year wise breakup of sale consideration with regard to the plots registered in respective years as under: F.Y. 2009-10 - Rs.19,12,500/- F.Y. 2010-11 - Rs.36,10,000/- F.Y. 2011-12 - Rs.35,85,000/- F.Y. 2012-13 - Rs. 5,40....
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....s. 9,38,251/- computed by the assessee as income for the year under consideration. The finding of the Ld. CIT(A) in this respect are reproduced as under: "4.23 Now coming to the issue of the amount of income to be taxed in the year under consideration. In this regard, the appellant has contended that the amount of Rs.l,46,97,250/- taken by the AO as sale consideration for the purpose of computation of income was in fact only the advance received and the AO was therefore not justified in computing the income on this basis. In this regard, the year wise details of registration "of sale deeds and the corresponding sale consideration received by the appellant, as submitted by her vide reply dated 04/02/2017, has been reproduced above. The appellant has contended that the sale consideration of Rs. 12,80,900/- received by her during the FY 2009-10 can only be taken for computation of income for the year 2009-10 i.e. AY 2030-11. The appellant has computed the income of Rs. 9,38,251/- for the year 2009-10 relevant to AY 2010-11 based on these sale deeds. The remaining sale deeds have been shown to be registered in FY 2010-11, 2011-12 and 2012-13, The appellant has contended that o....
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....in the year under consideration i.e. AY 2010-11 on the ground that the cash deposits in the bank account to this extent remain unexplained. In the second case, cash claimed to have been returned in the FY 2009TTTI, 2010-11 and 20H-12 would be taxable in respective AY as being consideration received by the appellant^ over and above the amounts shown in the respective sale deeds. 4.27 As mentioned above, the claim of advance having been received by the appellant was made by the appellant to explain the sources of cash deposits amounting to Rs. 1,47,33,861/- in her bank "account No. 131010100623476. Further, as mentioned above, no evidence or confirmation with regard to the claim of the cash having been received as advance from the various persons was furnished by the appellant, In view of these facts, it is held that the cash amounting to Rs. 89,75,305/-which was claimed to have been returned over the years was in met never received by the appellant in the year 2009-10 and accordingly the cash deposits in the bank account No. 131010100623476 to that extent remain unexplained. This amount is accordingly held to be income of the appellant for the year under considerat....
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....assessment within 26 days from the date of issue of notice under section 148 of the Act and without affording the sufficient opportunity to represent the case and to file the objections, thereby, the Assessing Officer has violated principle of natural Justice. The Ld. counsel drawn our attention to the copy of notice under section 148 of the Act dated 02/03/2015, which is available on page 25 of the Paper Book and copy of the assessment order dated 27/03/2015, which is available on page 32- 39 of the paper book. According to the Ld. Counsel, the case was getting barred by limitation only on 31/03/2016 and thus, there was sufficient time available with Assessing Officer for completion of the assessment. The Ld. counsel submitted that assessee has been denied sufficient opportunity of being heard and therefore in view of the violation of the principle of natural justice, the assessment should be annulled. 6.1 The Ld. DR, on the other hand, opposed the arguments of the Ld. counsel and submitted that there is no bar in the 'Act' for completing the assessment prior to the date of limitation. According to him the assessment has been passed after considering the submissions made by ....
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..... counsel failed to produce any request of the assessee to the Assessing Officer seeking more time for filing of the information. Thus, it cann't be said that the assessee has been deprived from filing any information in respect of the transactions carried out by her. The Assessing Officer after considering the submission of the assessee has formed his opinion and held that the income earned on sale of the plot was in the nature of an adventure in the trade. The Ld. Assessing Officer rejected the contention of the assessee that the sale of the plot was exempted same being sale of agricultural land. 6.3 The time limit for completion of the assessment, reassessment in general has been provided in section 153 of the Act. For completion of the assessment under section 147, time limit has been provided in sub-section 2 of section 153 of the Act. During the relevant period, the said section provided time limit for completion of the assessment under section 147 of the Act as one year from the end of the financial year in which notice under section 148 of the Act was served. In this case notice has been issued and served on 02/03/2015 and, therefore, limitation was available with Ass....
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....notice, the assessment is invalid and illegal. 7.1 Both the grounds being connected, the Ld. counsel argued both the grounds in a combined manner. The Ld. Counsel drawn our attention to the letter dated 25/03/2015 filed before the Assessing Officer by the Ld. Authorised Representative of the assessee (which is available on page 27 of the paper book volume- 1). The Ld. counsel submitted that the assessee had been filing income tax return regularly and in response to notice u/s 148 of the Act, she submitted copy of the acknowledgement of the Income Tax Return along with computation of income for assessment 2008-09, 2009-10 and 2010-11 before the Assessing Officer. The Ld. counsel submitted that during assessment proceeding on 26/03/2015, the Ld. AR also filed revised computation of the income after including the interest income earned on the deposits in banks. According to the Ld. counsel, in view of the copy of the acknowledgement return of income filed or the revised computation of income filed, the Ld. Assessing Officer was required to issue notice under section 143(2) of the Act before commencing the assessment proceeding. The Ld. counsel pointed out that the Assessing Offi....
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....or providing reasons recorded. The Ld. DR, however, submitted that there is an inadvertent error in mentioning the assessment completed under section 144 of the Act rather than section 143(3) of the Act. He submitted that the mistake is in the nature of the curable mistake in terms of section 292B of the Act and due to such curable mistake, the assessment cannot be annulled. On the issue of not issuing notice under section 142(1) of the Act, he submitted that during assessment proceeding all the queries were asked to the authorised representative of the assessee and they have duly submitted the information available with the assessee and therefore there was due compliance on the part of the Assessing Officer. On the issue of no show cause notice issued before completion of the assessment under section 144 of the Act, the Ld. DR submitted that this being a procedural mistake, entire assessment cannot be held illegal. He submitted that the Assessing Officer has completed the assessment after acquiring a valid jurisdiction over the case and therefore it cannot be held as invalid assessment order. 7.4 In the rejoinder, the Ld. Council of the assessee referred to the decision of the ....
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....income as per the regular return of income filed and therefore he has considered the regular return of income as return of income filed in response to notice under section 148 of the Act. We do not agree with this contention of the Ld. counsel as the regular return of income filed was already available on record and therefore the Ld. Assessing Officer has computed the total income for the purpose of section 147 of the Act, by way of including the income escaped to the total income already reflected in the regular return of income. By way of merely taking the amount in return of income declared in regular return as a starting point for computation of the total income under section 147 of the Act, it cannot be treated that the assessee has filed a return of income in response to notice under section 148 of the Act. Thus, in our opinion, the assessee has failed to file any return of income in response to notice under section 148 of the Act. 7.6 The section 148 has prescribed that subsequent to filing of the return of income in response to notice under section 148 of the Act, the provisions of the Act apply accordingly as if such a return of income was a return required to be furnis....
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....ssment under section 147 read with section 143(3) of the Act without issuing any notice either under section 143(2) or section 142(1) of the Act. The Tribunal held the assessment as bad in law. But the Tribunal has noted that in the said case the Department did not raise the issue that the Assessing Officer has wrongly mentioned the section as under section 143(3) of the Act read with section 147 of the Act. The relevant finding of the Tribunal is reproduced as under: "7. We have considered rival submissions of the parties and perused the material on record. We have also gone through the orders of the revenue authorities. We have also carefully applied our mind to the decisions relied upon by the parties. Undisputed fact is that the assessment order in case of the assessee for the impugned assessment year was passed u/s 143(3) read with section 147 of the Act. Section 143(2) of the Act mandates that ITA No.1163 & CO 55 of 2011 Vodithala Education Society, Hyd. for an assessment to be made u/s 143(3) of the Act, a notice u/s 143(2) of the Act is required to be issued to the assessee within the period of 12 months specifying the particulars of any claim of loss, deduction, a....
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.... of the Act." (emphasis supplied externally) 7.10 We find that in the present case the Revenue has submitted before us that the mentioning of section 143(3) of the Act in the assessment order, instead of section 144 of the Act, is an inadvertent mistake, which is curable under section 292B of the Act. In view of the change of facts of the present case, the ratio of the case of Vodithala Education Society (supra) is not applicable over the facts of the instant case. 7.11 The Ld. counsel has relied on the decision of the Tribunal (SMC) bench in the case of ITO Vs. Neeraj Gooyal (supra). In the said case, the assessee did not comply to the notice issued under section 148 of the Act for filing return of income. The assessee also did not comply with subsequent notice issued under section 142(1) of the Act for filing return of income. In the circumstances, the Assessing Officer completed the assessment under section 144 of the Act. The assessee challenged that no notice under section 143(2) of the Act was issued and, therefore, the assessment should be held as void ab-initio. The Ld. CIT(A) accepted the arguments of the assessee and held that the Revenue cannot argue that ....
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....ank accounts. The Assessing Officer has further mention in order that the authorised representative of the assessee filed written submission on 26/03/2015. The Assessing Officer has reproduced the replies given by authorised representative. We find that the authorised representative submitted sale deed in few cases only. We also not that further queries were raised to the assessee as mentioned in para 7, para 8 and para 10 of the assessment order. We find that though specifically the Assessing Officer has not mentioned issuing of any notice under section 142(1) of the Act, but for all practical purposes queries having raised and the assessee has partly responded the queries. The Income-tax Act has not provided any statutory format of notice under section 142(1) of the Act. One of the purposes of issuing notice under section 142(1) of the Act is to authorize the Assessing Officer for raising queries to the assessee. The queries can be raised even through order sheet of the file or even the authorised representative can be asked orally during assessment proceedings. In the instant case, we find that the Assessing Officer has raised queries from time to time for making assessment, how....
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....plots, which have been ultimately deposited in bank account and therefore it hardly makes difference if the addition has been made under section 68 or section 69 of the Act. 8.3 We have heard the rival submissions of the parties. According to section 68 of the Act where any sum is found credited in the books of an assessee maintained for any previous year and the assessee offers no explanation about the nature and source or the explanation offered by him is not in opinion of the Assessing Officer satisfactory, the sum so credited may be charged to Income-tax as income of the assessee. According to section 69, where the assessee has made investment, which are not recorded in the books of accounts, if any maintain by him for any source of income and the assessee offers no explanation about the nature and source of the investment or explanation offered by him is not, in the opinion of the Assessing Officer satisfactory, the value of the investment may be deemed to be income of the assessee. 8.3 In the case of Bhaichand N Ghandhi, a sum was found deposited in the bank passbook, however, same was not shown in the cashbook maintained by him. In the circumstances, it is held by t....
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.... hand, submitted that the Ld. CIT(A) is having coterminous power of the Assessing Officer and he has not taxed any new source of income and thus he was justified in making addition under section 68 of the Act. 8.7 We have heard the rival submissions and perused the relevant material on record. It is settled law that the CIT(A) is having plenary powers in disposing of an appeal in the scope of his power as coterminous with that of the Assessing Officer. The Hon'ble Supreme Court in the case of CIT Vs Kanpur Coal Syndicate (SC) 53 ITR 229 has observed as under: "The next question is whether the said option is given only to the ITO and is denied to the AAC and the Appellate Tribunal. Under the Act the ITO, after following the procedure prescribed, makes an assessment under s. 23 of the Act. Doubtless in making an assessment at the first instance he has to exercise the option whether he should assess the AOP or the members thereof individually. It is not because that any section of the Act confers an exclusive power on him to do so, but because it is part of the process of assessment; that is to say, he has to ascertain who is the person liable to be assessed for the tax. I....
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....ion to assess one or other of the entities in the alternative, the AAC can direct him to do what he should have done in the circumstances of a case. Under s. 33(1), an assessee objecting to an order passed by an AAC under s. 28 or s. 31 may appeal to the Appellate Tribunal within 60 days of the date on which such order is communicated to him. Under s. 33(4), ''The Appellate Tribunal may, after giving both parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit, and shall communicate any such order to the assessee and to the Commissioner." Under s. 33(5), "Where as the result of an appeal any change is made in the assessment of a firm or AOP or a new assessment of a firm or AOP is ordered to be made, the Appellate Tribunal may authorise the ITO to amend accordingly any assessment made on any partner of the firm or any member of the association." Under this section the Appellate Tribunal has ample power to set aside the assessment made on the AOP and direct the ITO to assess the individuals or to direct the amendment of the assessment already made on the members. The comprehensive phraseology used both in s. 31 and s. 33 of the Act does not coun....
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....the appellant to explain the sources of cash deposits amounting to Rs. 1,47,33,861/- in her bank "account No. 131010100623476. Further, as mentioned above, no evidence or confirmation with regard to the claim of the cash having been received as advance from the various persons was furnished by the appellant. In view of these facts, it is held that the cash, amounting to Rs. 89,75,305/- which was claimed to have been returned over the years was in fact never received by the appellant in the year 2009-10 and accordingly the cash deposits in the bank account No.131010100623476 to that extent remain unexplained . This amount is accordingly held to be income of the appellant for the year under consideration i.e. AY 2010-11, in addition to the amount of Rs. 9,38,251/-, computed by the appellant, as referred above. 1.28 Further, as all the cash receipts of the appellant have been accounted for while computing the aforesaid income, it is held that no amount of cash was available with the appellant for making the cash deposits amounting to Rs. 36,611/- and Rs. 15,15,600/-. The additions made on this account are also confirmed. The AO is directed to re-compute the income accordingly....
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....e appellant. It is evident from the facts discussed above that the claim of the appellant regarding returned of cash at the time of registration or otherwise is a self serving statement without any support evidence. In these circumstances of the case, there are only possibilities:- i. The cash which was claimed to have been returned at the time of registration or otherwise, totaling an amount of Rs. 789,75,305/-, was never received as advance and the claim was made by the appellant merely to explain the sources of cash deposits in the bank account. It may be relevant to mention here that even at the time of assessment proceedings or at the time of appellate proceedings no confirmation or evidences with regard to the claim of receipts of advance in this regard was furnished by the appellant. ii. The other possibility is that the sale consideration was not stated correctly in the registered sale deed and cash component claimed to have been returned at the time of registration of sale deed was the amount of consideration over and above the consideration shown in the registered sale deed. 4.26 In the first case, the amount of Rs. 89,75,305/- would be....