TaxTMI 
TaxTMI 
2021 (6) TMI 266
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....f A.O of not following the principle of natural justice and not granting the opportunity of cross examination to the appellant. The appellant craves leave to add, amend, supplement, alter and/or delete any of the above Grounds of Appeal. Further, the assessee has also filed before us revised additional grounds of appeal, as under: "(a) Whether on facts and circumstances of the case and in law, the reasons recorded by the Assessing Officer were sufficient for forming a belief that income chargeable to tax has escaped assessment, or, the Assessing Officer excluded / suppressed material facts, thereby vitiating the mandate of proviso to Section 147 of the Income Tax Act, 1961, and, hence, the entire foundation of re-assessment is vitiated and all proceedings are bad in law (b) Whether on facts and circumstances of the case and in law, notice issued under section 148 dated 25/03/2015 is void ab-initio, non-est and is without valid jurisdiction and authority of law and it makes all subsequent proceedings including order passed by learned Assessing Officer and impugned Order passed by Ld. CIT Appeal (26) bad in law, void abinitio and non-est; (c) Wh....
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....lue of the said plot "as on 13/10/2006" by Mr. S. B. Chinchghare, Valuation Officer, Income Tax department Thane, at Rs. 1,94,23,600/- (Rupees One Crore Ninety Four Lacs Twenty Three Thousand Six Hundred only) renders the Impugned Order passed by the CIT(Appeals) on 20th December 2017 otiose / perverse? (i) Whether the Impugned Orders suffer from perversity by holding that "illiterate and men of no means" are incompetent to contract and whether such finding is sufficient and reasonable enough to disbelieve and disregard Hon'ble Tribunal's finding of facts of the Society Members having received the cash component of Rs. 5,94,96,000/- (Rupees five Crores Ninety Four Lacs Ninety Six Thousand Only)? (j) Whether the lower authorities failed to consider that the entire proceedings against the Appellant initiated on the purported payment of cash by or on behalf of one Pathik Construction is purely based on suspicion, surmises, assumptions and conjectures ? " 2. Briefly stated, the assessee firm which is engaged in the business of a builder and developer had filed its return of income for A.Y 2008-09 on 26.09.2008, declaring its total income at Rs. 63,16,295/-. Income ....
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....i, Uran, Dist: Raigad, executed between (i) Jai Ganesh Co-operative Housing Society Ltd, i.e 'the lessee'; (ii). M/s Om Developer (assessee firm), i.e the 'assignor'; and (iii) M/s Pathik Constructions, i.e the 'assignee', the land was transferred to the assignee. As noticed by the A.O, the aforesaid sale transaction was recorded in the assessee's books of account at an amount of Rs. 2,22,00,000/-. On a perusal of the records, it was gathered by the A.O that search proceedings were conducted by the Investigation wing, Mumbai under Sec. 132 of the Act on 09.02.2009 in the case of Pathik Construction Group. It was observed by the A.O, that the documents seized during the course of the search proceedings included a sheet of paper with handwritten notes, identified as Annexure O-2 - Page no.92 (of the seized material). On a perusal of the seized document, it was noticed by the A.O that the same made a mention of certain payments in relation to a transaction in property styled as 'Jai Ganesh CHS', viz. (i) Cheque :Rs. 2,22,00,000/-; and (ii) Cash: Rs. 5,94,96,000/-. Observing that the assessee had disclosed the amount of sale consideration of Rs. 2,22,00,000/- which was received vide ch....
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....ecitals of the "Agreement of Assignment-Cum Sale", dated 23.04.2007. As observed by the CIT(A), the aforesaid property in question formed part of the 'Opening stock' of the assessee firm as on 01.04.2007. Further, as noticed by the CIT(A), the assessee had accounted for the sale receipts of Rs. 2,22,00,000/- that was received by cheques in its sales for the year under consideration. Accordingly, it was concluded by the CIT(A) that the assessee firm was the effective owner of the property on the date of its sale to M/s Pathik Constructions i.e 23.04.2007. As regards the claim of the assessee that it was just a pass through intermediary or a confirming party to the sales made to M/s Pathik Constructions, the CIT(A) observed, that as the assessee was the effective owner of the property in question, therefore, its aforesaid claim did not merit acceptance. Insofar the sale consideration of the property in question was concerned, the CIT(A) after referring to the contents of the document i.e Annexure O-2 - Page 92 that was seized in the course of the search proceedings conducted u/s 132 from the premises of M/s Pathik Constructions i.e the buyer of the property in question observed, that....
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....23-04- 2007 for plot No 31, Sector 47 admeasuring 5549.59 sq meters situated at Dronagiri Uran between M/s Jai Ganesh Coop Society Ltd.(Lessee), M/s Cm Developers(Assignor) and M/s Pathik Constructions (Assignee ) as below: "7. Whereas the lessee JAY GANESH CO-OPERATIVE HOUSING SOCIETY LIMITED vide an Agreement dated 15th October 2006 assigned all its right, title, interest and benefits in respect of the said Plot no. 31 admeasuring 5549.59 sq. mtrs. of JAI GANESH CO-operative Housing Society Limited, at Sector -47, Dronagiri, Tal. Uran, Dist. Raigad to M/s. GM DEVELOPERS a Partnership firm, through its Partners 1) MR. PRAMOD D. MORE and 2) MR GAJANAND G. KANADE (hereinafter referred to as the ASSIGNOR) for proper consideration and had upon receipt of the Agreed consideration for the same, handed over possession of the plot to the Assignor." 6.2. I t is abundantly clear from the above that the appellant was the effective owner of the said proper t y as on the date of s ale of the same to MIs Pathik Constructions on 23.04.2007. The proper ty has also been shown by the appellant as part of its opening stock as on 0.1.04.2007 and the cheque receipts of Rs. 2,22,00,00....
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....greement to transfer and assign' entered into with Jai Ganesh Co-op society Ltd. on 15.10.2006 for ta consideration of Rs. 2,21,98,360/-. It is an absurd proposition that the appellant received the consideration of Rs. 2.22 crores as confirming party and in turn paid the same to members of the society when the said consideration has been received much later after 15.10.2016. iii. The notings in the sheet of paper seized under annexure 0-2 at the premises of M/s Pathik Construct ions have to be interpreted considering the sur rounding facts and circumstances of the case. The notings mention payment details in respect of Plot no.31, Sector-47, Dronagiri which is the property sold by the appellant to M/s Pathik Constructions. Though the appellant 's name is not mentioned therein, the logical conclusion to be drawn is that the payments noted therein pertain to the appellant and more so as the cheque component of the payment matches with the consideration received shown by the appellant. 6.5. As regards the actual consideration received on account of sale of the aforementioned property to >/s Pathik Constructions, it would be relevant to consider the notings in....
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....t No.31, sect -47, Dronagiri has to be taxed in the hands of the appellant. The addition made by the Assessing Officer is sustained. The appellant's ground of appeal on this issue is dismissed. 7. As regards the appellant's contention that no opportunity was given by the A.O to cross examine the party, I find that the AO had issued show cause notice to the appellant to explain as to why the amount of Rs. 5,94,96,000/ - noted in the seized document should not be treated to have been received by the appellant. In response, the appellant had simply stated that the sale of land was included in the sale a/c of Jai Ganesh Society in its books and that the P & L a/c showed the true picture of the sales and no further proceeds were received. There is nothing on record to indicate that the appellant had sought for cross examination of the party. Nothing to that effect has been brought to my notice during appellate proceedings also. I find that due opportunity of being heard was accorded to the appellant and there was no violation of principles of natural justice. The appellant's ground of appeal on this issue is dismissed." 5. The assessee being aggrieved with t....
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....tax and has escaped assessment.] In our considered view, the aforesaid 3rd proviso to Sec. 147 provides for an embargo on the A.O in assessing or reassessing the income of an assessee, involving matters which are subject matter of an appeal, reference or revision in the case of the assessee. In other words, the restriction provided in the 3rd proviso to Sec. 147 is qua the assessing or reassessing of income of an assessee involving matters which are subject matter of an appeal, reference or revision in its case. We are unable to agree with the claim of the ld. A.R, that pendency of an appeal, reference or revision on a particular matter in the case of an assessee would preclude the revenue from reopening the case of a third party. To sum up, though the legislature in all its wisdom had in order to avoid parallel proceedings contemplated a restriction by way of a 3rd proviso to Sec.147, but the same, in our considered view cannot be stretched to the extent of reading restrictions on reopening the case of a third party. In fact, if the 3rd proviso to Sec. 147 is construed in the manner it has been projected by the ld. A.R before us, the same would disentitle the revenue from initi....
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....unt as required to the credi ted to the profit & loss account for the A.Y. 2008 -09 was at Rs. 8,16,26,625/-. Thus, I have reasons to believe that the income to the extent of Rs. 5,91,37,940/ - chargeable to tax had escaped the assessment within the meaning of provisions of Section 147 of the Act. Hence, this is a fit case for reopening the assessment by issue of notice u/s 148 of the Act. Accordingly, if approved notice u/s 148 of the Act will be issued. Sd/- (Sudha Ramchandani) Dy. Commissioner of Income tax-28(2), Mumbai" As can be gathered from the aforesaid reasons, the A.O was in receipt of information from the ITO, Ward-3, Panvel, vide a letter dated 23.02.2015, wherein it was intimated that a land deal was executed between M/s Pathik Construction and Jai Ganesh Cooperative Housing Society Ltd. for a total consideration of Rs. 8,16,26,625/-, which comprised of viz. (i) Cheque payment: Rs. 2,21,30,625/-; and (ii) Cash receipt: Rs. 5,94,96,000/-. As is discernible from the reasons to believe, the A.O was inter alia intimated that Jai Ganesh Cooperative Housing Society Ltd. had assigned its rights, title, interest and benefits pertaining to the aforesaid pr....
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....d assessment is that the formation of belief by the A.O that the income of the assessee chargeable to tax had escaped assessment should have a nexus with the material available with him. We are unable to subscribe to the claim of the ld. A.R, who had tried to impress upon us that the material available before the A.O prompting the reopening of a concluded assessment should conclusively prove that the income of the assessee had escaped assessment. We thus not finding favour with the claim of the ld. A.R that the A.O had reopened the case of the assessee in the absence of sufficient material, reject the same. The additional ground of appeal No. (a) is accordingly dismissed. 8. We shall now deal with the claim of the ld. A.R that the notice under Sec.148 was issued by the A.O de hors necessary satisfaction of the appropriate authority as required per the mandate of Sec.151 of the Act. As averred by the ld. A.R, the Commissioner of Income-tax-28, Mumbai, while sanctioning the issuance of notice under Sec. 148 to the assessee, on the basis of the reasons recorded by the A.O, had failed to apply his mind and had recorded his satisfaction in a mechanical manner. In order to buttress hi....
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....of subsection (1) of Sec.151 the sanction for issuance of such notice had to be obtained from either of the aforementioned appropriate authorities. Insofar obtaining of approval from Commissioner of Income-tax-28, Mumbai as the appropriate authority is concerned, we find that there is no dispute to the said extent. The grievance of the assessee before us is that the CIT-28, Mumbai, had granted the sanction in a mechanical manner i.e without application of mind. We have deliberated at length on the issue under consideration and are unable to accept the aforesaid claim of the assessee. As observed by us hereinabove, the CIT-28, Mumbai, had after considering the reasons to believe that were recorded by the A.O i.e. DCIT-28,(2), Mumbai, dated 12.03.2015, had categorically stated, as under : "Yes, I am satisfied that it is a fit case for issue of notice under Sec. 148 of I.T. Act." In our considered view, the aforesaid recording of satisfaction by the appropriate authority i.e CIT-28, Mumbai, can by no means be brought within the realm of grant of approval in a mechanical manner, as had been canvassed by the ld. A.R before us. On a perusal of the records, we find, that the A....
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....oceeding with and framing the assessment in its hands. 9.1 We have given a thoughtful consideration to the aforesaid claim of the assessee and are unable to accept the same. Admittedly, in case an assessee applies for a copy of the reasons to believe on the basis of which recourse has been taken to proceedings u/s 147 of the Act, the A.O remains under a statutory obligation to furnish the same before proceeding any further with the assessment. But then, where there is no request by the assessee for supply of the reasons to believe, no obligation in our considered view would be cast upon the A.O to furnish the same. As the assessee in the case before us had at no stage applied for a copy of the reasons to believe on the basis of which its case was reopened, therefore, no fault can be attributed to the A.O in not supplying the same. In the backdrop of the aforesaid facts, finding no substance in the claim of the ld. A.R that the assessment framed u/s 143(3) r.w.s 147, dated 21.03.2016 would stand vitiated as the A.O had failed to supply the copy of the reasons to believe to the assessee, we reject the same. The additional ground of appeal no. (b) is accordingly dismissed. 10....
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....As stated in the agreement, the assessee i.e M/s Om developers after paying the aforesaid purchase consideration was put into possession of the property in question. (v). On the basis of an "Agreement of Assignment-Cum-Sale", dated 23.04.2007 the assessee firm agreed to transfer its rights, title, interest and benefits in respect of the aforesaid Plot No. 31 (admeasuring 5549.59 sq. mtrs) at Sector 47 Dronagiri, Taluka : Uran, District: Raigad, to M/s Pathik Constructions ("Assignee"), for a consideration of Rs. 2,22,00,000/-. The CHS was also made a party to the said "Agreement of Assignment-Cum-Sale", dated 23.04.2007, in order to enable M/s Pathik Constructions to get the land in question transferred in its name. The consideration of Rs. 2,22,00,000/- was received by the assessee i.e M/s Om Developers ("Assignor") from M/s Pathik Constructions ("Assignee"), as under: S.No Particulars Amount 1. Cheque No. 000197, dated 13.03.2007, drawn on IDBI Bank, Vashi Branch.- Rs. 25,00,000/- 2. Cheque No. 007072, dated 10.04.2007, drawn on IDBI Bank, Vashi Branch. Rs. 25,00,000/- 3. Cheque No. 007080, dated 25.04.2007, drawn on IDBI Bank, Vashi Bran....
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....n "Agreement of Assignment-Cum-Sale", dated 23.04.2007 for an ostensible consideration of Rs. 2,20,00,000/-. Insofar the claim of the ld. A.R that as the "Agreement to Transfer and Assign", dated 15.10.2006 entered into between the assessee firm and Jai Ganesh Cooperative Housing Society Ltd was an unregistered agreement executed on a Rs. 100/- stamp paper, therefore, de hors transfer of the title of the property under consideration no adverse inference as regards vesting of the ownership of the same in the assessee could have been drawn, we are afraid does not find favour with us. Admittedly, transfer of title of any immovable property of a value of one hundred rupees and upwards as per Sec. 17 of The Registration Act, 1908, has to be carried out on the basis of a registered document. But then, we cannot remain oblivious of the fact that the contents of the aforesaid 'agreement', dated 15.10.2006 had been referred to and form part of the recitals of the "Agreement of Assignment-cum-sale", dated 23.04.2007, executed between, viz. (i). Jai Ganesh Cooperative Housing Society Ltd.; (ii). M/s Om Developers (i.e the assessee firm); and (iii). M/s Pathik Constructions, on the basis of wh....
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....e Annexure O-2 - Page 92 was seized in the course of the search proceedings from the premises of M/s Pathik Construction, the contents of the same have to be read in the backdrop of the said fact. Notings in the seized document i.e Annexure O-2 - Page 92 clearly refer to certain payments made in relation to a transaction in a property styled as 'Jai Ganesh CHS', viz. (i). Cheque :Rs. 2,22,00,000/-; and (ii) Cash: Rs. 5,94,96,000/-. On a perusal of the contents of the aforesaid seized document, we further find that the rate at which purchase of the property was transacted is clearly stated to be @ Rs. 14,720/- per sq. mtr. Further, the rate at which the said property was thereafter sold is also clearly mentioned to be @ Rs. 25,600/- per sq. mtr. On the basis of the aforesaid notings it was observed by the lower authorities that the assessee firm i.e M/s Om Developers had transferred its rights, interest and benefits in the property in question i.e Plot No. 31 (admeasuring 5549.59 sq. mtrs) at Sector 47 Dronagiri, Taluka: Uran, District: Raigad to M/s Pathik Construction for a total consideration of Rs. 8,16,96,000/-. As observed by the lower authorities, out of the total considerati....
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....R had placed on our record an order that was passed by the ITAT, "C" Bench, Mumbai while disposing off the revenue's appeal in the case of M/s Pathik Constructions (ie. buyer of the property in question) in ITA No. 1498 to 1499/Mum/2012, dated 13.02.2015. As is discernible from the said order, M/s Pathik Constructions i.e the buyer of the property in the course of the search proceedings conducted in its case was found to have received onmoney of Rs. 10.65 crores (i.e over and above the accounted sale consideration of Rs. 3.25 crores) on a subsequent sale of the property in question to M/s Iconic Realtors Ltd. In the course of the search proceedings partners of M/s Pathik Constructions had categorically admitted the payment of on-money for purchase of the property in question. Although, the aforesaid statement was subsequently retracted, but in the absence of any material supporting such retraction the same was rejected by the A.O. As is discernible from the aforesaid order M/s Pathik Construction had in the course of the post search assessment proceedings in its case claimed that its undisclosed income from sale of the property in question be computed as under: "Unexplained Cash....