AI OCR 
TaxTMI 
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2023 (8) TMI 20
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....tion of Id. CIT (A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by quashing the reassessment proceedings. 2. In the facts and circumstances of the case and in law Id. AO has erred in re- opening the case of the assessee by issuing notice under section 148 of the Income Tax Act 1961, being not in accordance with the provisions of Section 151 of Income Tax Act 1961. The action of the ld. AO is illegal, unjustified and arbitrary and against the facts of the case. Relief may please be granted by quashing such re-assessment proceedings. 3. In the facts and circumstances of the case and in law the ld. CIT(A) has erred in confirming the action of ld.. AO of disallowing deduction u/s 54B and, thereby, computing capital gains at Rs. 63,95,407. The action of the ld. CIT (A) is illegal, unjustified and arbitrary and against the facts of the case. Relief may please be granted by quashing the disallowance and deleting the said addition of Rs. 63,95,407. 4. In the facts and circumstances of the case and in law the ld. CIT(A) has erred in confirming the action of Id. AO of making addition of Rs. 4,24,14,300 u/s 69. The action of the ld.....
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....e case and in law, ld. CIT (A) has erred, in confirming the action of ld. AO, by not allowing the claim u/s 54B and, thereby, computing Capital Gains at Rs. 19,92,602. The action of Id. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by allowing the claim of the assessee made u/s 54B and deleting the said addition of Rs. 19,92,602. 4. In the facts and circumstances of the case and in law, ld. CIT(A) has erred in rejecting the plea of the assessee, of the land sold by the assessee, during the relevant previous year, being an agricultural land outside the purview of Capital Asset, as defined u/s 2(14) of the Income Tax Act, 1961. The action of the ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by deleting the addition, on account of Capital Gains, as made by the Id. AO and sustained by ld. CIT(A). 5. In the facts and circumstances of the case and in law ld. CIT (A) has erred in confirming the action of ld. AO of making the addition of Rs. 67,98,375 u/s 69. The action of ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may ....
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....ee filed his return of income declaring total income of Rs. 1,80,544/-. 2.1 Shri Madan Mohan Gupta nowhere in his statements recorded on 23.05.2013, solely on the basis of which the reopening was done, mentioned the fact of assessee having purchased land by paying amount in cash over and above that mentioned in the respective deed. Question no. 21 of the statements of Shri Madan Mohan Gupta on 23.05.2013 as has been relied upon by the ld. AO does not, in any way, relate to the transaction undertaken by the assessee. Merely on the basis of such information, AO reopened the case of the assessee, without having any other corroborative evidence or without recording any satisfaction of 'on money' in the form of cash having been paid by the assessee for purchase of the properties. The AO by issuing notice under section 148 of the IT Act proposed to assess the 'on money' payment made by the assessee for purchase of lands as found in the statement of Shri Madan Mohan Gupta as recorded under section 132(2) of the IT Act in search and seizure proceedings carried out on 23.05.2013 and thereafter the statement of Shri Shankar Lal Saini and Shri Kanhiya Lal Saini were also recorded on 05.08.20....
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....f the statements recorded on 23.05.2013, submitted that the details mentioned at Page Number 21 to 25 were related to the land purchased/sold by the assessee. [PB : 4] 1.4. Shri Madan Mohan Gupta nowhere in his statements recorded on 23.05.2013, solely on the basis of which the reopening was done, mentioned the fact of assessee having purchased land by paying amount, in cash, over and above that mentioned in the respective deed. Question No. 21 of the statements of Shri Madan Mohan Gupta on 23.05.2013 as has been relied upon by the ld. AO does not, in any way, relate to the transaction undertaken by the assessee. Snapshot of Q.No. 21 [PB : 134] is set out here under for the sake of ready reference. 1.5. Merely on the basis of such information ld. AO reopened the case of the assessee, without having any other corroborative evidence or without recording any satisfaction of 'on money', in the form of cash, having been paid by the assessee for purchase of the properties. 1.6. For the proposition, that no reopening can be done merely on the basis of information received from the Investigation Wing, as the same cannot be considered as a tangible material, warranting reopening, reli....
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....47/148. 1.12. The provisions of section 153C are over-riding in nature and contain non obstante clause for sections 139,147,148,149,151 and 153. 1.13. Section 147 and 153C are not interchangeable but are mutually exclusive sections. It is not the choice of the revenue to invoke either of the two sections at its whims. The scope of the two sections has been legislated differently with a definitive purpose. 1.14. For the above ratio reliance is placed on the following judicial pronouncements:- 1.14.i Arun Kumar Kapoor [2011] 140 TTJ 249 (Amritsar) 1.14.ii G. Koteswara Rao [2015] 64 taxmann.com 159 (Visakhapatnam - Trib.) 1.14.iii Rajat Shubra Chatterji, ITA No. 2430/Del/2015, ITAT Delhi Bench 1.15. The above mentioned judgments have been followed by the Hon'ble ITAT, Jaipur Bench, in the case of Shri Navrattan Kothari, in ITA No. 425/JP/2017 [Order Dated 13.12.2017], wherein under identical set of facts the entire re-assessment proceedings were quashed. Ld. CIT(A) in his order at Page 7 has relied upon the decision of Hon'ble ITAT, Ahmedabad Bench in the case of Shailesh S Patel [2018] 97 Taxmann.com 570 (Ahm - ITAT)], ignoring the legal position that jurisdictional ITA....
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....purchase/land sale transaction of Shri Kanhaiya Lal, Shankar Lal and Shri Madho Lal. Therefore information was obtained from Raj Stamps, according to while Shri Madho Lal Saini, Shri Shankar Lal Saini and Shri Kanhaiya Lal Saini had purchase/sold land on various dated. Accordingly, to this information, Shri Madho Lal Saini S/o Shri Nanu Ram has sold agriculture land at village- Jaisinghpura, Bankrota for a sale consideration of Rs. 2,07,80,000/- on 01/09/2006. The land has is situated within 8 Kms. of municipal limits and thus, the land sold by the assessee falls within the ambit of the definition of capital asset in terms of provisions of section 2(14) of the Income Tax Act, 1961 and accordingly, the capital gain arising on sale of this land is chargeable to tax. However, the value of this property was taken at Rs. 2,07,80,000/- for the purpose of Stamp Duty. The details of purchase value of the land has not been mentioned in the deed available. Thus, the sale proceeds to the extent of Rs. 2,07,80,000/- is chargeable to tax as LTCG. Shri Madho Lal S/o Shri Nanu Lal purchase land at Village-Badanpura, Tehsil- Amer vide sale deed dated 27/09/2006 and 11/10/2006 from Shri Kanha Ram....
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....he assessee along with his two sons Shri Shankar Lal Saini and Shri Kanhiya Lal Saini had invested the money in purchase of land as aforesaid. The diary found from the possession of Shri Madan Mohan Gupta allegedly contained dealings in respect of certain properties purchased by the assessee along with his two sons, namely Shri Shankar Lal Saini and Shri Kanhiya Lal Saini. The details recorded in the seized diary found from Shri Madan Mohan Gupta revealed the payment of cash in respect of the land purchased by Saini family members i.e. father and sons. The statement of Shri Madan Mohan Gupta was recorded by Investigation Wing in which he has explained the transactions of land purchased by Saini family members. The department also recorded the statements of Shri Shankar Lal Saini and Shri Kanhiya Lal Saini and in their statements they have accepted the said transaction of purchase of land as it was through registered sale deeds but they have specifically denied any payment of cash over and above the purchase consideration shown in the respective sale deeds through cheques. Therefore, in the search and seizure proceedings and in the subsequent investigation what was detected by the D....
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....terial found from Shri Madan Mohan Gupta as well as other material gathered during post search inquiry has not established any direct or proxy connection with the transaction of purchase of land by the assessee then the assumption and presumption of the AO that the assessee might have paid cash over and above the consideration shown in the sale deeds is only surmises and conjectures. We note that the Assessing Officer of the assessee, while framing the assessment under section 144 read with section 147 of the Act dated 18.03.2015 accepted the sale consideration as recorded in the sale deeds for the purpose of the assessing the capital gain. The AO, however, made additions on account of unexplained investment by them on account of cash payment reflected in the seized material. Therefore, the AO has not disturbed the sale consideration received by the assessee and his two sons in respect of sale of land. Accordingly, when the transaction of sale of land and sale consideration is accepted by the AO of the Saini family members as recorded in the sale deeds then the addition made by the AO on account of cash payment by the assessee u/s 69 of the Act has no legs to stand in the absence o....
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.... I.T. Act, 1961." Thus, it is clear that the basis of reopening of the assessment is the seized material found during the course of search and seizure operation in the case of Rajendra Jain Group and the statement of Shri Madan Mohan Gupta recorded u/s 132(4) and 131 of the Act. The Assessing Officer analyzed the statement and the seized material for his satisfaction as recorded in paras 4 and 5 of the assessment order as under:- "4. In his statements, recorded during the course of search/post search proceedings, Shri Madan Mohan Gupta submitted that the following pagers of various exhibits are related to land transactions at Chainpura behind Entertain Paradise, Jaipur. Sr. Annexure No. & Exhibit No. Page No. Found/seized from 1 Annexure A Exhibit-1 15 to 24, 27, 38, 43, 44, and 69 to 74 Residential premises 2 Annexure A Exhibit-2 47 and back side of 48, 50 to 54 Residential premises 3 Annexure A Exhibit-5 1 to 77 Residential premises 4 Annexure AS Exhibit-1 1 to 3,7,9,10 Office premises 5. Further in the statements of Shri Madan Mohan Gupta, he submitted that on the above page, details w.r.t. a land transactions at Village chainpura behind ente....
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....y or other valuable article or thing, seized or requisitioned, 81belongs to; or (b) any books of account or documents, seized or requisitioned, pertains or pertain to, or any information contained therein, relates to, a person other than the person referred to in section 153A, then, the books of account or documents or assets, seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person] 82[and that Assessing Officer shall proceed against each such other person and issue notice and assess or reassess the income of the other person in accordance with the provisions of section 153A, if, that Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person 82a[for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made and] for the relevant assessment year or years referred to in sub-section (1) of section 153A] :] 8 3[Provided that in case of such other person, the reference to the date of initiation of the search under secti....
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....ction 153C r.w.s. 153A of the Act. Once the case of reassessment is made out by the AO which falls in the preview of specific provisions of section 153C of the Act, the AO cannot resort to invoke the provisions of Section 147/148 of the Act to assessee or reassess income of the assessee. The action of the AO to initiate the proceedings Under section 147/148 of the Act vitiates the entire reassessment proceedings and the assessment order. Once, the AO is satisfied that the documents seized belong to the persons other than the searched person, the Assessing Officer shall proceed against such other persons and issued notice u/s 153C and assessee or reassess income of such other persons in accordance with the provisions of section 153A of the Act. Therefore, it is mandatory for the AO to proceed u/s 153C if he is satisfied that the seized material reveals the income of such other persons to be assessed or reassessed. The Amritsar Bench of this Tribunal in case of ITO vs. Arum Kumar Kapoor (supra) while deciding an identical issue of validity of initiation of proceedings u/s 147/148 on the basis of seized material has held in paras 7.2 and 8 as under:- "7.2. The undisputed facts are t....
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....nce, notice issued under s. 148 of the Act and proceedings under s. 147 of the Act by the AO are illegal and void ab initio. In view of the provisions of s. 153C of the Act, s. 147/148 stands ousted. In the instant case, the procedure laid down under s. 153C has not been followed by the AO and, therefore, assessment has become invalid. We also observe that the CIT(A) was justified in following the ratio laid down by the Hon'ble Supreme Court in the case of Manish Maheshwari v. Asstt. CIT [2007] 289 ITR 341 / 159 Taxman 258 wherein it has been held that if the procedure laid down in s. 158BD is not followed, block assessment proceedings would be illegal. The CIT(A) has correctly observed that the provisions of s. 153C are exactly similar to the provisions of s. 158BD of the Act in block assessment proceedings. Thus, considering the entire facts and the circumstances of the present case, we hold that the CIT(A) was fully justified in quashing the reassessment order. We also do not find any merit in the submissions of the learned Departmental Representative that during the course of search, it was found at premises of M/s. Today Homes & Infrastructure (P.) Ltd. pertaining to M/s. ....
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....ing is clearly emerged that both i.e. earlier concept of Block assessment and the new scheme of assessment is separate provisions created for assessment of search cases where the search is conducted u/s 132 or requisition was made u/s 132A of the Act. 12. Under the provisions of section 147, the Assessing Officer is having power to re-open the assessment, if he is of the opinion that the income chargeable to tax has escaped assessment. Before doing so, the Assessing Officer should satisfy himself that, there is material which suggests that there is an escapement of income. The AO can exercise these powers with a reasonable belief coupled with some material which suggest the escapement of income. Once the conditions precedent for assumption of jurisdiction to commence the reassessment proceedings, he has to cross the hurdles attached with reassessment by way reasons for reopening of assessment, time limit for issue of notice and provision for obtaining sanction of higher authority in certain circumstances. Under the provisions of section 153A to 153C these hurdles are cleared by using the non abstante clause in the said section. In other words, under the new provisions of section ....
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....ear 2009-10. The Assessing Officer reopened the assessment year 2008-09, which is falling within those six assessment years immediately preceding the assessment year in which search is conducted. The assessee case falls within the provisions of section 153C, as the incriminating document seized in the case of search in another case. The Assessing Officer, on satisfying the above condition is under obligation to issue notice to the person requiring him to furnish the return for the six assessment years immediately preceding the assessment year in which search is took place. Thereafter, the Assessing Officer has to assess or reassess the total income of those six assessment years. The word "shall" used in section 153A made it clear that the Assessing Officer has no option, but to issue notice and proceed thereafter to assess or reassess the total income. In the instant case, the Assessing Officer issued notice u/s 148 to reopen the assessment. Therefore, in view of the non-abstante clause begin with section 153A, the Assessing Officer has no jurisdiction to issue notice u/s 148 reopen the assessment of those six assessment year which falls within the exclusive jurisdiction of section....
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....sessment is pending on the date of initiation of the search, it shall abate. In other words pending proceedings will not be proceeded with thereafter. The assessment has now to be made u/s 153A (1)(b) and the first proviso. It also means that only one assessment will be made under the aforesaid provisions as the two proceedings i.e. assessment or reassessment proceedings and proceedings under this provision merged into one. If assessment made under sub-section (1) is annulled in appeal or other legal proceedings, then the abated assessment or reassessment shall revive. This means that the assessment or reassessment, which had abated, shall be made, for which extension of time has been provided under section 153B. 53. The question now is - what is the scope of assessment or reassessment of total income u/s 153A (1) (b) and the first proviso? We are of the view that for answering this question, guidance will have to be sought from section 132(1). If any books of account or other documents relevant to the assessment had not been produced in the course of original assessment and found in the course of search in our humble opinion such books of account or other documents have to be ta....
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....ent order was to be passed, the undisclosed income was to be assessed in the different assessment years to which it related. But all this had to be made in a single assessment order. The block assessment so made was independent of and in addition to the normal assessment proceedings as clarified by the Explanation below Section 158BA(2). After the introduction of the group of Sections namely, 153A to 153C, the single block assessment concept was given a go-by. Under the new Section 153A, in a case where a search is initiated under Section 132 or requisition of books of account, documents or assets is made under Section 132A after 31.5.2003, the Assessing Officer is obliged to issue notices calling upon the searched person to furnish returns for the six assessment years immediately preceding the assessment year relevant to the previous year in which the search was conducted or requisition was made. The other difference is that there is no broken period from the first day of April of the financial year in which the search took place or the requisition was made and ending with the date of search/requisition. Under Section 153A and the new scheme provided for, the AO is required to exe....
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....ment by Section 153 has also been done away with in a case covered by Section 153A. With all the stops having been pulled out, the Assessing Officer under Section 153A has been entrusted with the duty of bringing to tax the total income of an assessee whose case is covered by Section 153A, by even making reassessments without any fetters, if need be. 21. Now there can be cases where at the time when the search is initiated or requisition is made, the assessment or reassessment proceedings relating to any assessment year falling within the period of the six assessment years mentioned above, may be pending. In such a case, the second proviso to sub section (1) of Section 153A says that such proceedings "shall abate'. The reason is not far to seek. Under Section 153A, there is no room for multiple assessment orders in respect of any of the 'six assessment years under consideration. That is because the Assessing Officer has to determine not merely the undisclosed income of the assessee, but also the total income of the assessee in whose case a search or requisition has been initiated. Obviously there cannot be several orders for the same assessment year determining the total ....
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.... decisions to the facts of the present case, we find that there is no dispute that the original assessment for the A.Y. 2001-02 was completed u/s 143(3) on 13-2-2004 determining the total income at Rs. 26354942360/-. Thereafter, a search and seizure action was initiated in assessee's case by the Department on 2-7-2005 on which date the assessment for the A.Y. 2001-02 was not pending. Therefore, in view of the non- obstinate clause with which sub section (1) of section 153A opens, the A.O. has no jurisdiction to issue notice u/s 148 of the Act in respect of those six assessment years which falls within the exclusive jurisdiction of section 153A of the Act and accordingly the A.O. was not justified in issuing notice u/s 148 on 28-8-2006 and in completing the impugned assessment u/s 143(3) r.w.s. 147 of the Act on 31-10-2006. The A.O. instead of complying with the requirement of section 153A proceeded with the provisions of section 147/148 which are not applicable in the assessment u/s 153 A of the Act, therefore, the impugned assessment completed u/s 143(3) r.w.s. 147 of the Act is a nullity and as such the assessment order dtd. 31-10-2006 passed u/s 143(3) r.w.s. 147 of the Act ....
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....ghtly quashed by the Learned CIT(Appeals). In the present case before us, it is an admitted fact, as also evident from the reasons recorded and the assessment order that the initiation of reopening proceedings was made by the Assessing Officer on the basis of information received from the Directorate of Income-tax (Inv.) on the basis of search & seizure operation conducted at the premises of Rock Land Group of Cases and the documents related to the assessee found during the course of search were made available to the Assessing Officer of the present assessee. We thus respectfully following the decision of Co-ordinate Bench of the ITAT in the case of ACIT vs. Arun Kapur - 140 TTJ 249 (Amritsar) hold that provisions of sec. 153C of the Act were applicable in the present case for framing the assessment, if any, which excludes the application of sec. 147 of the Act, hence, notice issued under sec. 148 of the Act and assessment framed in furtherance thereto under sec. 147 read with section 143(3) of the Act are void ab initio. The reassessment in question is accordingly quashed. The ground No.1 is accordingly allowed." Therefore, in conjoint reading of provisions of section 153A, 153C....
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....an Buildmart Pvt. Ltd. and there is no change of the ownership of the said land as belong to M/s Kalyan Buildmart Pvt. Ltd. We find that there is no transaction of sale and purchase of land in question between the assessee and Shri Madan Mohan Gupta. What was transferred by Shri Madan Mohan Gupta and his wife Smt. Shashi Kala Gupta were the shares of M/s Kalyan Buildmart Pvt. Ltd. which owned the land in question. There may be a case of under valuation of shares and understatement of consideration paid by the assessee however, it is not a case of purchase of land. The purchase consideration of shares was accepted by the AO while completing the assessment u/s 143(3) r.w.s. 153A and therefore, the AO is precluded to reassess the income on the basis of non existing transaction of purchase of land. Further, the AO himself was not sure about the escapement of income and assess the income in the hands of the assessee only on protective basis. The very basis of invoking the provisions of section 147/148 is contrary to the facts and record that it was a transaction of purchase of shares of M/s Kalyan Buildmart Pvt. Ltd. and not purchase of land owned by the said company. Even if the purcha....
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....) of section 143 a presumption can be raised that such an order has been passed on application of mind. It is well known that a presumption can also be raised to the effect that in terms of clause (e) of section 114 of the Indian Evidence Act judicial and official acts have been regularly performed. If it be held that an order which has been passed purportedly without application of mind would itself confer jurisdiction upon the Assessing Officer to reopen the proceeding with out anything further, the same would amount to giving a premium to an authority exercising quasi-judicial function to take benefit of its own wrong." 17. The above said decision of the Full Bench of the Delhi High Court was upheld by the Supreme Court in the decision reported in Commissioner of Income-tax v. Kelvinator of India Ltd [2010] 320 ITR 561 (SC)., wherein the Supreme Court held that the concept of "change of opinion" on the part of the Assessing Officer to reopen the assessment did not stand obliterated after the substitution of Section 147 of the Income Tax Act. The Supreme Court also held that the Assessing Officer has power to reopen the assessment, provided there is "tangible material" to come ....
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....sing Officer. We quote hereinbelow the relevant portion of Circular No. 549 dated October 31, 1989 ([1990] 182 ITR (St.) 1,29), which reads as follows : "7.2 Amendment made by the Amending Act, 1989, to reintroduce the expression 'reason to believe' in section 147.-A number of representations were received against the omission of the words 'reason to believe' from section 147 and their substitution by the 'opinion' of the Assessing Officer. It was pointed out that the meaning of the expression, 'reason to believe' had been explained in a number of court rulings in the past and was well settled and its omission from section 147 would give arbitrary powers to the Assessing Officer to reopen past assessments on mere change of opinion. To allay these fears, the Amending Act, 1989, has again amended section 147 to reintroduce the expression 'has reason to believe' in place of the words 'for reasons to be recorded by him in writing, is of the opinion'. Other provisions of the new section 147, however, remain the same." (emphasis supplied) 18. Similar view has been taken by this Court in the decision reported in Commissioner of Income-....
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....not acquire jurisdiction to initiate any proceeding under section 147 of the Act after the expiry of four years from the end of the assessment year. Thus, in cases where the initiation of the proceedings is beyond the period of four years from the end of the assessment year, the Assessing Officer must necessarily record not only his reasonable belief that income has escaped assessment but also the default or failure committed by the assessee. Failure to do so would vitiate the notice and the entire proceedings. The relevant words in the proviso are, ". . . . unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee ... . ." Mere escape of income is insufficient to justify the initiation of action after the expiry of four years from the end of the assessment year. Such escapement must be by reason of the failure on the part of the assessee either to file a return referred to in the proviso or to truly and fully disclose the material facts necessary for the assessment. Whenever a notice is issued by the Assessing Officer beyond a period of four years from the end of the relevant assessment year, such ....
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....subject, it is the duty of the High Court to interfere. That was also a case where the proceedings were sought to be initiated against the assessee under section 147 of the Act. 20. In the case of ICICI Securities Ltd . v. Assistant Commissioner of Income Tax 3(2), Mumbai, the Bombay High Court vide order dated 22.08.2006 in W.P.No.1919 of 2006, while dealing with the issue on the reopening of assessment, held as follows: "7. In the facts of the present case, there is nothing new which has come to the notice of the revenue. The accounts had been furnished by the Petitioner when called upon. Thereafter the assessment was completed under section 143(3) of the Income Tax Act. Now, on a mere relook, the officer has come to the conclusion that the income has escaped assessment and he is of course justified in his analysis. In our view, this is not something which is permissible under the proviso to section 147 of the Income Tax Act which speaks about a failure on the part of the assessee to make a proper return. In the present case, no such case is made out on the record. 8. In the circumstances, we allow this petition in terms of prayer (a) and quash and set aside the notice da....
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.... entitle it to the deduction under Section 10A. The issue, however, before the Court, is as to whether that can form the basis of the reopening of the assessment beyond a period of four years. The reasons which have been disclosed by the Assessing Officer do not set out as to what facts the assessee had failed to fully and truly disclose. Even a prima facie reference to the basis on which it is sought to be inferred that there was a failure to disclose all material facts has not been set out in the reasons. In that view of the matter, we are of the view that the primary jurisdictional requirement for reopening the assessment beyond a period of four years has not been fulfilled in this case. Since the order passed by the CIT (Appeals) for Assessment Year 2007-08 has been passed after the assessment for Assessment Year 2005-06 has been sought to be reopened by the notice dated 29 June 2011, we have, for the purposes of this discussion, kept that circumstance out of consideration. We have come to the conclusion that the Assessing Officer having failed to establish that there was a failure on the part of the assessee to disclose fully and truly all material facts for Assessment Year 20....