2023 (3) TMI 1462

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....ncome Tax Act, 1961 [in short, "Act"] concerning Assessment Year (AY) 2018-19. 1.1 Besides this, challenge is also laid to the notice of demand issued under Section 156 and notice initiating penalty under Section 274 read with Section 270A of the Act, both of even date, i.e., 22.04.2021. 2. The record shows that via the impugned assessment order, the Assessing Officer (AO) has added to the petitioner firm's taxable income Rs. 23.06 crores received towards compensation received, by treating it as revenue received; and Rs. 2,96,97,213/- on account of variance in turnover. This addition was predicated on the difference between the turnover figures in the Income Tax Return (ITR) and in the GST-1/GST-3B return of the petitioner/assessee. ....

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....s revised) for the period of FY-2017-18. If, VAT returns have been revised during the year, please furnish the reasons for the revision of VAT return." 4. In response to the said notice, the petitioner filed a reply which, we are told, was uploaded on the designated portal on 17.03.2021. 5. Via this reply, the petitioner/assessee had furnished the details of the capital account and the ledger account concerning all three partners. 5.1 In the interregnum, the AO on 22.02.2021 had also issued yet another notice under Section 142(1) of the Act, wherein several other queries were raised, which were part of the annexure appended to the said notice. 6. As would be evident from a bare perusal of the impugned assessment order, only two ....

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....r/assessee was indulging in deliberate procrastination. 10.1 It was further asserted in the counter-affidavit that the additions were made pursuant to the queries raised in the notice dated 04.03.2020. 11. Insofar as the other facet is concerned, i.e., that personal hearing was not granted, the counter-affidavit contains a rather general explanation, which for the sake of convenience is extracted hereafter : "That the contents of Grounds P to Q are denied as false and incorrect. It is submitted that the time limit for completion of cases for the AO was 30.04.2020. During the month, AO was left with 132 cases to be complete the assessment, out of which 92 cases were time-barring by limitation on 30.04.2021. As stated in para-1....

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....nover figures, as reflected in the ITR of the petitioner firm and in the returns filed under the Goods and Services Tax Acts, a reconciliation statement was furnished. 16. Concededly, the AO did not issue any other notice concerning these two additions. However, while passing the assessment order, the AO has found fault with the petitioner/assessee and observed the following with regard to the additions : "From the contents of the above Note K-7 of the notes to account in the balance sheet it has been noticed that the alleged development agreement was executed by and entered into between the assessee firm M/s Shyam Communication Systems and M/s HMS Real Estate Pvt. Ltd. For undertaking the development of commercial complex on la....

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....mount of Rs. 30.40 crore a sum of Rs. 23,06,00,000/- was the compensation received by the assessee firm and balance of Rs. 7,34,00,000/- belonged to the other parties mentioned in this note as land owners. Therefore, it is held that this is not a capital receipt but income of the assessee as the assessee firm has failed to prove in the absence of any documentary evidence, as to who were other land owners, but work was to be executed as per agreement, how much work was executed till the settlement for withdrawal by the other parties and what were the circumstances/reasons under which such huge compensation was paid by the departing parties to the assessment firm. In view of these facts a sum of Rs. 23,06,00,000/- is treated as income of the ....

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....ould shed light as to why cancellation of development agreement, was brought about. 18.1 Insofar as addition on account of variation in turnover was concerned; the petitioner sought to explain the variation by filing reconciliation statement. This was brushed aside by the AO by holding that an adjustment made while reconciling the turnover figure in the ITR with the turnover figure appearing under the GST-1/GST-3B return had not been clarified. 19. To our minds, had the AO granted personal hearing to the petitioner, some light may have been shone on this aspect of the matter. 20. According to us, the best way forward would be to set aside the impugned assessment order dated 22.04.2021. 21. It is ordered accordingly. Liberty is, ....