TaxTMI 
TaxTMI 
2024 (8) TMI 1563
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....he approval of the Commissioner. 3. That the learned Commissioner of Income-Tax (Appeals) erred in law and on facts in not providing an opportunity of being heard by way of video conferencing even though a specific request was made in the written and such action is violation of principles of natural justice. 4. That the learned Commissioner of Income-Tax (Appeals) erred in law and on facts in holding that the sale consideration received was only Rs. 57,75,000/- and not Rs. 2,00,00,000/- and such a finding is perverse in law as being contrary to the materials on record. 5. That the learned Commissioner of Income-Tax (Appeals) erred in law and on facts in giving credence to the oral statement of Sr. Parasmal Lodha instead of relying on the signed written document, authenticity of which has been accepted by Mr. Lodha himself. 6. That the learned Commissioner of Income-Tax (Appeals) erred in law and on facts in adding a sum of Rs. 1,42,25,000/- u/s. 69 of the Act even though the appellant had fully explained the source of investment. 7. That the learned Commissioner of Income-Tax (Appeals) erred in law and on facts in not providing a proper ....
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....After hearing the appellant, the learned Assessing Officer made an addition of Rs. 1,42,25,000/- u/s. 69 of the Act. 4.1 Brief facts in respect of the above addition stating that during the lifetime, Mr. Anthony had entered into an Agreement for Sale on 26.03.2014 for sale of a residential property at 118/4, 1st Main Road, 1st Cross, Bazaar Street, Udayanagar, Bangalore - 560016 with one Mr. S. Parasmal Lodha. As per Agreement for Sale, the property was agreed to be sold for a sum of Rs. 2,00,00,000/-. The agreement itself recorded that a sum of Rs. 11,00,000/- was paid in cash on execution of the agreement. There is an endorsement in the agreement that a further sum of Rs. 60,00,000/- was paid in cash on 14th July 2014. The endorsement also states that the balance sum of Rs. 1,29,00,000/- will be paid before execution. A Deed of Absolute Sale was executed on 02.08.2014. The consideration mentioned in the Absolute Sale Deed was only Rs. 57,75,000/- being the guidance value. 4.2 Late Mr. Anthony received the balance consideration in cash. The total consideration of Rs. 2,00,00,000/- was paid by Sri. S. Parasmal Lodha in the following manner: (a) Rs. 57,75,000/- by che....
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....he limited scrutiny to complete scrutiny. (The Instruction is placed at page no. 33 to 40 of assessee's paper book). As per the above instruction, the learned assessing officer has to form a reasonable view based on certain materials. Further, the approval of the jurisdictional Pr. CIT / CIT / Pr. DIT / DIT is required for converting the 'limited scrutiny' case to 'Complete scrutiny'. The learned assessing officer ought to have followed the above procedure laid down by CBDT. In absence of such failure to follow the procedure as laid down in the above referred Instruction to convert the limited scrutiny to complete scrutiny, the entire assessment becomes null and void. Hence, he prayed that the Tribunal be pleased to hold that the assessment order is liable to be quashed. 5.3 He submitted that the appellant made an application under "FORM A" for seeking information under the Right to Information Act, 2005 seeking for any approval by the Principal Commissioner of Income Tax / Commissioner of Income tax for making scrutiny under section 69 of the Act. The appellant sought for this information for the reason that the learned assessing officer had selected the appellant's case for li....
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.... learned assessing officer has to record his satisfaction and such process should begin with after obtaining approval for complete scrutiny as per the instructions referred above. In the present case, the learned assessing officer has not sought for any approval from the PCIT and therefore, the entire proceedings are liable to be quashed. 5.6 The ld. A.R. submitted that the appellant relied on the decision of Hon'ble Delhi Tribunal in Balvinder Kumar v. PCIT 187 ITD 454 wherein it was held that the assessing officer cannot go beyond the reason for which the matter was selected for scrutiny. The facts of this case are that the assessee filed an appeal before the Income Tax Appellate Tribunal challenging the order passed u/s. 263 of the Act wherein it was held that the assessing officer has accepted the computation of capital gains without considering the details of indexed cost of acquisition. The assessee's case was selected for limited scrutiny for the verification of increase in capital. The order u/s. 263 of the Act was passed on the ground that assessing officer has not verified the claim u/s. 54 of the Act made by the assessee. The Hon'ble Tribunal held that the assessing o....
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....s not communicated about the conversion of limited scrutiny to complete scrutiny. Hence, the disallowance u/s. 54B of the Act has to be deleted. The relevant portion of the judgment is reproduced below; "Hence, we find that the Assessing Officer has taken up the issue and initiated proceedings for complete scrutiny without necessary approval with him. Therefore, the issue taken up by the Assessing Officer regarding disallowance of deduction under section 54B is prior to the necessary approval communicated to the Assessing Officer and therefore, in the absence of communication in writing to the Assessing Officer about the approval, the assumption of jurisdiction by the Assessing Officer is invalid. Consequently, the addition made by the Assessing Officer by denying the deduction under section 54B is not sustainable and the same is deleted." 5.9 He further relied on the decision of Delhi Tribunal in CBS International Projects Pvt. Ltd. v. Asst. CIT (ITA No. 144/Delhi/2019 dated 28.02.2019) wherein it was held as under; (Placed at Page 64 to 71 of assessee's paper book) "16. A perusal of the aforesaid instruction shows that the Assessing Officer can widen the scop....
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.....11 He submitted that the learned assessing officer has not converted the limited scrutiny to complete scrutiny for completing the assessment as discussed above. The CBDT vide its Instruction no. 5/2016 has laid down the procedure for converting the limited scrutiny to complete scrutiny. As per the above instruction, the learned assessing officer has to form a reasonable view based on certain materials. Further, the approval of the jurisdictional Pr. CIT / CIT / Pr. DIT / DIT is required for converting the 'limited scrutiny' case to 'Complete scrutiny'. The learned assessing officer ought to have followed the above procedure laid down by CBDT. In absence of such failure to follow the procedure as laid down in the above referred Instruction to convert the limited scrutiny to complete scrutiny, the entire assessment becomes null and void. Hence, he prayed that the Tribunal be pleased to hold that the assessment order is liable to be quashed. 5.12 He relied on the decision of Hon'ble Jaipur Tribunal in Smt. Manju Kaushik v. DCIT 78 ITR (Trib) 564 wherein it has upheld the above proposition. The relevant portion of the judgment is as under; (Para 4 of page 570) [placed at Page No. 4....
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....ption of jurisdiction by the Assessing Officer is invalid. Consequently, the addition made by the Assessing Officer by denying the deduction under section 54B is not sustainable and the same is deleted." 5.14 He further relied on the decision of Delhi Tribunal in CBS International Projects Pvt. Ltd. v. Asst. CIT (ITA No. 144/Delhi/2019 dated 28.02.2019) wherein it was held as under; (placed at Page 64 to 71 of assessee's paper book) "16. A perusal of the aforesaid instruction shows that the Assessing Officer can widen the scope of scrutiny even if it is selected for scrutiny assessment under computer aided scrutiny selection. However, the condition precedent for such action of the Assessing Officer is that he has to seek prior approval of the higher authorities. A perusal of the assessment order shows that the Assessing Officer has not mentioned as to when the permission from the Principal Commissioner of Income-tax was sought to make further enquiries in the case of the assessee. Considering the facts of the case in totality, in the light of the Central Board of Direct Taxes Instructions mentioned hereinabove, qua notice under section 143(2) of the Act, we are of the c....
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.... to AIR/CIB/26AS data. Wider scrutiny in these cases can only be conducted as per the guidelines and procedures stated in Instruction No. 7/2014. iv. Reason for selection: In cases under scrutiny for verification of AIR/CIB/26AS data, the Assessing Officer has to intimate the reason for selection of case for scrutiny to the assessee concerned. 3. As far as the returns selected for scrutiny through CASS-2015 are concerned, two type of cases have been selected for scrutiny in the current Financial Year- one is 'Limited Scrutiny' and other is 'Complete Scrutiny'. The assessees concerned have duly been intimated about their cases falling either in 'Limited Scrutiny' or 'Complete Scrutiny' through notices issued under section 143(2) of the Income-tax Act, 1961 ('Act'). The procedure for handling 'Limited Scrutiny' cases shall be as under: a. In 'Limited Scrutiny' cases, the reasons/issues shall be forthwith communicated to the assessee concerned. b. The Questionnaire under section 142(1) of the Act in 'Limited Scrutiny' cases shall remain confined only to the specific reasons/issues for which case has been picked up for scrutiny. Further, the scope of....
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....15 dated 29.12.2015 in File of even number, Board has laid down Standard Operating Procedure for handling of cases under 'Limited Scrutiny' which were selected through Computer Aided Scrutiny Selection in 'CASS Cycle 2015'. In these cases, it was stated that the general scope of enquiry in scrutiny proceedings should be restricted to the relevant parameters which formed the basis for selecting the case for scrutiny. However, in revenue potential cases, it was further provided that 'Complete Scrutiny' could be conducted, if there was potential escapement of income above a prescribed monetary limit, subject to the approval of administrative Pr. CIT/CIT/Pr. DIT/DIT. 2. In order to ensure that maximum objectivity is maintained in converting a case falling under 'Limited Scrutiny' into a 'Complete Scrutiny' case, the matter has been further examined and in partial modification to Para 3(d) of the earlier order dated 29.12.2015, Board hereby lays down that while proposing to take up 'Complete Scrutiny' in a case which was originally earmarked for 'Limited Scrutiny', the Assessing Officer ('AO') shall be required to form a reasonable view that there is possibility of under assess....
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....The crux of the instructions are summarized as under: i. The questionnaire u/s 142(1) shall be confined only to the issue of limited scrutiny. ii. Approval of PCIT/CIT concern iii. PCIT/CIT concern shall grant approval in writing and after being satisfied on the merits of the case. iv. Such cases shall be monitored by range head. v. In limited scrutiny cases enquiry shall be restricted only on the issues of limited scrutiny. vi. Only after conversion of case to complete scrutiny and after following the procedure outlined above the A.O. may examined the issues other than limited scrutiny issues. vii. The A.O. shall intimate the assessee regarding conducting complete scrutiny. vi. The provisions of Sec. 144A should be invoked in suitable cases. viii. To prevent the roving and fishing enquiries, such cases should be picked up for review and inspection by administrative authorities. 7.3 Reliance is also being placed in the order of the Co-ordinate Bench of ITAT in the case of CBS International Projects Pvt. Ltd. Vs ACIT, New Delhi in ITA No. 144/Del/2019 and order of the Hon'ble Jurisdictional High Court in the ....
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....as agreed to be sold for a sum of Rs. 2,00,00,000/-. The agreement itself recorded that a sum of Rs. 11,00,000/- was paid in cash on execution of the agreement. There is an endorsement in the agreement that a further sum of Rs. 60,00,000/- was paid in cash on 14th July 2014. The endorsement also states that the balance sum of Rs. 1,29,00,000/- will be paid before execution. The learned assessing officer or the buyer has not given any findings for the above issue. Therefore, the denial of paying cash is incorrect. 8.3 The bank statement shows the receipt of cash nearer to the dates of sale agreements, endorsement as per the sale agreement and sale deed. He submitted the details as under; Details of amounts received as per above referred documents. Sl No Events Date Amount 01 Sale Agreement 26.03.2014 11,00,000 02 Advance Received 14.07.2014 60,00,000 03 Sale Deed (Through bank) 28.07.20214 57,75,000 Details of Cash deposits Sl No Events Date Amount 01 Cash Deposits (Out of advance received on 14.07.2014) 15.07.2014 48,00,000 02 Cash Deposits (Out of advance received on 14.07.2014) 26.07.2014 ....
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....nal in Sri Devaraj Urs Educational Trust ITA Nos. 500 to 506/Bang/2020 for the above proposition. The relevant portion of the judgment is reproduced below; "231. The AO failed to respond to the assessee's letter. It is admitted fact that in every year 150 MBBS students were admitted to the college in addition to 68 post graduate students. The total number of students in college admitted during the last 7 years was approximately 1526 persons. The ld. AO alleged in the assessment order that assessee has been collecting the capitation fees from around 800 students for admission in various courses. Out of 800, 5 students/parents responded to the AO's letter and out of them 2 persons have given statement. There is no discussion in Assessment order with regard to other 3 persons. In our opinion the statement of 2 cannot be basis for making such huge additions on collection of capitation fees. It cannot be considered as appropriate sample to frame the assessment on the basis of their statement. Further, the assessee requested for cross examination of all the parties whoever have given the statements against the assessee, if any, which was not provided at all. In view of this, suc....
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....etc clearly show the sources of funds for making the investments. Hence, the circumstantial evidences produced by the assessee proves the sources of funds. Therefore, merely on the statement of the other party, addition cannot be made. He relied on the decision of Hon'ble Allahabad High Court in the case of Commissioner of Income Tax Vs Intezar Ali, 372 ITR 651 wherein the Hon'ble High Court held that when the circumstantial evidences submitted by the assessee, which goes to prove that the amount received by the seller towards the sale of the property, will be sufficient proof for discharging the burden cast on the assessee. In the instant case, the seller received the sale consideration for sale of agriculture land for Rs. 1,20,00,000/- and deposited the same in the bank account, whereas the buyer had declared the cost of acquisition at Rs. 22,00,000/-The assessing officer determined the addition of Rs. 77,80,000/- as unexplained income being the difference in the value as per sale deed and sale consideration declared by the assessee. The Hon'ble High Court accepted the sale consideration at Rs. 1,20,00,000/- as declared by the assessee. The relevant portion of the judgment is rep....
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....en total consideration of Rs. 1,20,00,000. There was also nothing on record to suggest either that assessee was having any other source of income which has been given more weightage by the authority below than the explanation of the assessee that the source of the deposit in question was sale receipt of the land sold by him as the selling of land and deposit made out of the sale receipt made on the same day, when sale deed was registered has not been disputed. We thus find that preponderance of probability is more in favour of the explanation of the assessee. In its remand report which was furnished before the learned Commissioner of Income-tax (Appeals) on the submission of the assessee made before him, the Assessing Officer has also failed to contradict the explanation furnished by the assessee with some positive evidence. On the basis of documents, explanation of the assessee and others and the prevalent practice in the land transaction it can be safely inferred that whatever the assessee had explained about the source of the deposit cannot be doubted especially in the absence of contrary material on record. We, thus, while setting aside orders of the authorities below ....
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....nd their statements was recorded. In her statement, the assessee's LR stated that a total of Rs. 1,42,25,000/- was paid to the assessee in cash by the buyer as per agreement to sell, while Rs. 89,06,344/- was paid by cheque on 05.08.2014. For Rs. 71,00,000/- cash stated to have been received the assessee's LR said the amounts were mentioned in the unregistered agreement. However, for the balance Rs. 71,25,000/- he had no proof. The AO also confronted the LR with the fact of return of Rs. 31,31,344/- (Rs. 89,06,344/- - Rs. 57,75,000/-) to Shri Lodha by the assessee via cheque dated 7.8.2014 to which the assessee's LR stated that it was the excess payment returned to him. Shri Lodha in his statement admitted having entered into the unregistered sale agreement for the purpose of obtaining loan from bank, but denied making any cash payments. The AO found that he had taken loan of Rs. 90,00,000/- from L&T Housing Finance Ltd. against property purchase of 57,75,000/-. Further, as mentioned above, the assessee had received cheque of Rs. 89,06,344/of L&T Housing Finance Ltd. through ICICI Bank from Shri Lodha, of which Rs. 31,31,344/- was returned to Shri Lodha via cheque. The ....
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....2,25,000/-, which has been considered as unexplained income of the assessee. In support of the claim of assessee, the assessee furnished the unregistered sale agreement dated 26.3.2014 made with Parasmal Lodha. On questioning, the assessee stated that the assessee received a sale consideration of Rs.2 Crores instead of Rs. 57.75 lakhs shown in the sale deed. The ld. AO not ready to accept this contention of the assessee. However, the claim of assessee supported by the unregistered sale agreement. This fact has been accepted by Parasmal Lodha. However, he stated that the said sale agreement has been made for limited purpose of availing housing loan from L&T Housing Finance Ltd. against which he has taken Rs. 90 lakhs from L&T Housing Finance Ltd., however, stopped the enquiry at this stage and not carried to the logical conclusion. In our opinion, it is appropriate to remit the issue to the file of ld. AO to carry out necessary enquiry on this issue and provide an opportunity of cross examining Parasmal Lodha to know what was the exact amount in respect of property bearing 118/4, 1st Main Road, 1st Cross, Bazaar Street, Udaynagar, Bangalore 560 016. Accordingly, the issue in dispute....