TaxTMI 
TaxTMI 
2020 (10) TMI 1185
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....delete any of the grounds of the appeal, either before or during the course of hearing." The hearing of the appeal is concluded through Video Conference due to prevailing condition of COVID 19 pandemic. Ground No. 1 is regarding validity of reopening of the assessment. 2. The assessee is an Individual and has not filed any return of income under section 139(1) of the I.T. Act. The AO issued notice under section 148 of the IT Act on 30th March, 2016 on the basis of the information received by the ITO Ward-2, Bharatpur that during the search and seizure operation under section 132(1) of the IT Act in case of Rajendra Kumar Jain, Rajendra Kumar Bardia, Madan Mohan Gupta and other Groups it was found that Shri Madan Mohan Gupta had developed a Revenue Residency Scheme at Jaisingpura, Bhankrota, Tehsil Sanganer, Jaipur for the members of Rajasthan Tehsildar Seva Parishad of Jaipur in which 205 plots of various sizes were allotted to the members of the Rajasthan Tehsildar Seva Parishad against payment which includes On Money of Rs. 2,000/- per sq. yard. The assessee being the Member of the Rajasthan Tehsildar Seva Parishad, was allotted a plot in the Revenue Residency Scheme and....
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....ions issued by the superiors and not on the basis of belief of the AO. 4. On the other hand, the ld. D/R has submitted that there is specific information and facts detected during the search and seizure action in case of Madan Mohan Gupta and Others wherein a diary was found containing the entries of allotment of 205 plots to the members of Rajasthan Tehsildar Seva Parishad one of whom is the assessee against the payment, which is bifurcated into two parts - one is payment through cheque and another is On Money payment @ Rs. 2000/- per sq. yards. The ld. D/R has submitted that Shri Madan Mohan Gupta has explained all the details recorded in the diary and clearly brought out the fact that the total consideration against the allotment of plot in the Revenue Residency Scheme @ Rs. 3,150/- per sq. yard out of which On Money was received by him @ Rs. 2000/- per sq. yard and the balance was received through cheque and shown in the receipt issued by him. The ld. D/R has further pointed out that it is clear that Shri Madan Mohan Gupta has developed the Revenue Residency Scheme and he has allotted the plots to the members of the Rajasthan Tehsildar Seva Parishad by issuing the receipts a....
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.... the assessee who has completed the assessment. 5. We have considered the rival submissions as well as the relevant material on record. There is no dispute that the assessee has not filed any return of income under section 139(1) and the AO has initiated the proceedings under section 148 when the specific information regarding On Money payment of Rs. 4,00,000/- by the assessee against the allotment of plot in Revenue Residency Scheme developed by Shri Madan Mohan Gupta as revealed by the seized material found from his possession containing the entries of all 205 allottees of the plots. The said information further manifest that the plots were allotted to the members of the Rajasthan Tehsildar Seva Parishad @ Rs. 3150/- per sq. yard out of which Rs. 2000/- per sq. yard was paid by each member as On Money and the rest of the amount is shown in the record. All these entries recorded in the diary by Shri Madan Mohan Gupta were explained by him in his statement recorded under section 132(4). Therefore, the said seized material along with statement of Shri Madan Mohan Gupta constitutes a tangible material to form the belief that the income assessable to tax has escaped assessment. ....
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....s that pointed towards the fact that commission income as well as huge cash deposits in his saving banks accounts were not reflected in the regular return of income. Therefore, the A.O has some evidences in his possession pointing towards escapement of income. Accordingly, he has acted under section 148 of the Act. The sequence of events has clearly established that the AO has indeed gone into the factual matrix of the information and evidences before issuing notice u/s 148 of the Act. Legal Position: The reopening of the assessment in the present case is under the provisions of Section 147(1). The Assessing Officer must have reason to believe that any income chargeable to tax has escaped assessment for the Assessment Year in question. The expression 'reason', as the Supreme Court in Assistant CIT Vs. Rajesh Jhaveri Stock Broker Pvt. Ltd.2 has held, means a cause or justification. If the Assessing Officer has a cause or justification to know or suppose that income had escaped assessment, he can be said to have reason to believe that income had escaped assessment. The Supreme Court has held that the expression cannot be read to mean that the Assessing Offic....
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....es, disguising the transactions as genuine. The ADIT (Investigation) prepared a list of beneficiaries of such accommodation entries for the Assessment Years 2004-05 upto 2009-10. In this context, the reasons which have been recorded under Section 148 state that the petitioner-M/s. Pankaj Hospital Ltd. is one of the beneficiaries which had taken the benefit of accommodation entries during the Financial Year 2005-06 relevant to the Assessment Year 2006-07 from four bogus companies created by Tarun Goyal in lieu of cash deposits in equal amounts plus premium thereon. The total amount involved is Rs. 2,21,50,000/-. Consequently the assessment was sought to be reopened on the ground that the petitioner had arranged accommodation entries of a total amount of Rs. 2.21 crores from the aforesaid four bogus companies created by the Chartered Accountant in lieu of cash deposits of equal amounts plus premiums which were not disclosed to the Income Tax Department. On this basis, the assessment was sought to be reopened as there was reason to believe that the income had escaped assessment in the Assessment Year 2006-07. In pursuance of the judgment of the Supreme Court in G.K.N. Driveshafts (Ind....
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.... a full disclosure of facts in regard to either the credit worthiness of the companies which made the investments or the genuineness of the transaction. A cloud was cast on the genuineness of the transaction once a search took place at the premises of the Chartered Accountant who, according to the Department has stated that he had set up 90 bogus companies, all within his control and in which the Directors were his own employees only for the purpose of providing accommodation entries in favour of various beneficiaries. Among the beneficiaries is the petitioner to whom a payment of Rs. 2.21 crores was made through the four companies which created a conduit. Whether it is actually so, is a matter of fact which would have to be determined in the course of the proceedings after the assessment is reopened. At this stage, the only issue before the Court is to whether there was reason to believe that any income chargeable to tax had escaped assessment. From the reply which was furnished by the assessee during the course of the assessment proceedings, it does not emerge that the assessee had discharged the onus of establishing the credit worthiness of the companies which had osten....
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....s possession and he has issued & served notice under section 148 of the Act after taking due approval from the competent authority. Therefore, I find no infirmity in the procedural aspect of the reassessment proceedings. The A.O has followed due process of law. In view of the foregone, the appellant's ground of appeal on this issue is dismissed." Accordingly in view of the facts and circumstances of the case, we do not find any substance in the objection raised by the assessee regarding validity of reopening of the assessment. As regards the jurisdiction of the AO who issued the notice under section 148, it is not in dispute that the ITO Ward-2 Bharatpur received the information and issued notice under section 148 was having territorial jurisdiction over the assessee. However, only after the assessee filed the return of income revealing her status as Salaried Person, the case of the assessee was transferred to the ITO Ward-3, Bharatpur who was having jurisdiction over the salaried assessees. Accordingly, we do not find any error or illegality in the initiation of proceedings under section 148 by ITO Ward-2, Bharatpur. Ground No. 2 is regarding non dis....
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....e has further contended that when the assessee has no relation or nexus with Shri Madan Mohan Gupta but the allotment was made by the Rajasthan Tehsildar Seva Parishad, then the statement of Shri Madan Mohan Gupta cannot be the basis of such addition. In support of his contention, he has relied upon the decision of Jodhpur Bench of the Tribunal dated 18.01.2019 in case of Shri Mehtab Singh Ujjawal vs. ITO in ITA No. 271/Jodh/2018. 10. On the other hand, the ld. D/R has submitted that the seized material as well as the statement of Shri Madan Mohan Gupta established the fact that the members of Rajasthan Tehsildar Seva Parishad have paid On Money against the allotment of the plot in the Revenue Residency Scheme which was developed and sold by Shri Madan Mohan Gupta. He has further submitted that the diary containing the entries of consideration by each allottee of 205 plots gives the details about the rate per sq. yard as well as On Money payment of Rs. 2000/- per sq. yard. This rate was mentioned against each and every plot number and allottee. The said diary also contains the payment which was not in dispute. Therefore, both components of the payment were duly recorded in the s....
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....Residency Scheme, at Jaisingpura, Bliankrota, Tehsil Sanganer, Jaipur, therefore the on money payment of Rs. 4 lakhs may be deemed to be the income of the assessee for the assessment year under consideration. Hence, an addition of Rs. 4 lakhs is made to the income of the assessee as unexplained investment from undisclosed source within the meaning of section 69 of the I.T. Act. Since, the assessee had furnished inaccurate particulars of income or concealed his income by not disclosing actual investment in purchasing the plot No. 167 in the Revenue Residency Colony situated at Bhankrota, Tehsil Sanganer, Jaipur which established the intention of the assessee. Accordingly, penalty proceedings u/s 271(1)(c) r.w.s. 274 are being initiated separately." From these findings, the fact regarding purchase of plot bearing no. 167 measuring 200 sq. yards against the payment already made by the assessee of Rs. 2,35,600/- are not disputed by the assessee. It is pertinent to note that this amount of Rs. 2,35,600/- along with the On Money payment of Rs. 4,00,000/- is duly recorded in the seized material being a diary maintained by Shri Madan Mohan Gupta. The entries recorded in the dia....