AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2025 (11) TMI 1144
X X X X Extracts X X X X
X X X X Extracts X X X X
.... itself, it was common ground that the issue in all the appeals arose from a common backdrop of facts. It was pointed out that on the basis of information received from the Anti-Corruption Bureau ('ACB') relating to disproportionate assets (DA) of one Sh. Virambhai Lilabhai Desai, Deputy Mamlatdar, Class-III, E-Dhara Centre, Kalol, the case of the assessee, who was the son of Sh. Viram Bhai, was reopened u/s.147 of the Act for all the impugned years before us. The information related to DA of Sh. Virambhai, as a consequence of which offence u/s.12, 13(1)(b) and 13(2) of the Prevention of Corruption Act, 2018 had been registered on 19.01.2021 against Sh. Viram bhai and six other family members, which included the assessee before us. It was pointed out that in A.Ys. 2014-15 & 2015-16 orders passed u/s.147 of the Act making addition to the income of the assessee were subjected to revision by the Ld. PCIT u/s.263 of the Act finding errors therein causing prejudice to the interest of the Revenue. For the other two years i.e. A. Y 2017-18 & 2018-19, it was pointed out, the orders passed u/s 147 r.w.s 144C of the Act, basis the information shared by ACB, was in challenge before us....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... which comes to his knowledge, corroborating the same by making independent inquiries, for arriving at his belief of escapement of income. Reference was made to the decision of the Jurisdictional High court in the case of Kantibhai Dharamsinhbhai Narola vs ACIT SCA No. 19549 & others of 2018 dated 06-01-2021 para 32 as under; "32. The law as regards the reopening of the assessment under Section 147 of the Act 1961 is well-settled. (i) The Court should be guided by the reasons recorded for the reassessment and not by the reasons or explanation given by the Assessing Officer at a later stage in respect of the notice of reassessment. To put it in other words, having regard to the entire scheme and the purpose of the Act, the validity of the assumption of jurisdiction under Section 147 can be tested only by reference to the reasons recorded under Section 148(2) of the Act and the Assessing Officer is not authorized to refer to any other reason even if it can be otherwise inferred or gathered from the records. The Assessing Officer is confined to the recorded reasons to support the assumption of jurisdiction. He cannot record only some of the reasons and keep the other....
X X X X Extracts X X X X
X X X X Extracts X X X X
....3) of section 143, two conditions are required to be satisfied; (i) The Assessing Officer must have reason to believe that the income chargeable to tax has escaped assessment; (ii) Such escapement occurred by reason of failure on the part of the assessee either (a) to make a return of income under section 139 or in response to the notice issued under sub-section (1) of Section 142 or Section 148 or (b) to disclose fully and truly all the material facts necessary for his assessment for that purpose. (x) The Assessing Officer, being a quasi judicial authority is expected to arrive at a subjective satisfaction independently on an objective criteria. (xi) While the report of the Investigation Wing might constitute the material, on the basis of which, the Assessing Officer forms the reasons to believe, the process of arriving at such satisfaction should not be a mere repetition of the report of the investigation. The reasons to believe must demonstrate some link between the tangible material and the formation of the belief or the reason to believe that the income has escaped assessment." 8. Thereafter, our attention was drawn to the facts of the ca....
X X X X Extracts X X X X
X X X X Extracts X X X X
....essee had purchased immovable property/made cash transaction of Rs. 3,02,86,472/-. It is found that the assessee has undisclosed income from the disproportionate assets. The assessee has filed return of income, however, the assessee has failed to explain the source of undisclosed income for the year that has escaped assessment. Though the assessee has made above transaction as mentioned above. As return of income has filed for the AY 2014-15 for the year under consideration, disproportionate assets is his undisclosed income for the year that has escaped assessment, Accordingly, as no assessment was made in this case, the only requirement to initiate proceedings u/s 147 of the Act is to bring the undisclosed income of Rs. 3,02, 88,472/-. 7. No information of assets located outside India is available. 8. In this case return of income was filed for the year under consideration accordingly in this case, no assessment was made and the only requirement to initiate proceeding u/s 147 is reason to believe which has been recorded above (refer paragraphs 5 and 6). It is pertinent to mention here that in this case the assessee has chosen to file return of income, fo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ason reveals and we have noted that the AO mentions that on perusal and analysis of the information collected / materials available, there was no need for making any further enquiry u/s. 133(6) of the Act. The AO notes that the assessee had failed to disclose source of the said income and the disproportionate asset therefore was his undisclosed income for the impugned year. 13. Clearly the reasons do not specify the income which has escaped assessment. It only vaguely refers to disproportionate assets and mentions property purchased/ transactions in cash without specifying/identifying the DA giving its breakup, or for that matter identifying the property purchased in cash /cash transactions undertaken by the assessee. There is no detail or break up of Rs. 3.02 Crore of the alleged disproportionate assets of the assessee, as to which specific asset it relates to. No particulars are specified in the reason. In relation to the property purchased by the assessee in cash for Rs. 1.95 Crores, there is no identification /description of the same. The information is not clear as to whether the DA amount of Rs. 3.02 Crs includes the property purchased in cash of Rs. 1.95 Crs and if it doe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....are accordingly quashed. 19. Before us, several other contentions were also raised challenging the assumption of jurisdiction by the AO u/s.147 of the Act, but, since we have held the jurisdiction assumed by the AO to be invalid for the above reason, we are not dealing with the other contentions of the Ld. Counsel for the assessee before us. 20. Having held the assessment order passed in A.Y. 2014-15 and 2015-16 u/s.147 of the Act to be invalid and not sustainable in law, we take up the next contention of the Ld. Counsel for the assessee that no power of revision could have been exercised by the Ld. PCIT on an invalid order. The rationale being that a revisional authority cannot cure fundamental jurisdictional defects through revision. We are aware of this proposition of law being reiterated in a series of decisions of the coordinate Benches of the ITAT as under: i. Mumbai ITAT - Westlife Development Ltd. vs. Pr. CIT - ITA No.688 /Mum/2016, wherein it was held as under: "8. Challenging the jurisdictional defects of assessment order for assailing the jurisdictional validity of the revision order passed u/s 263: The first issue that arises for our con....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ceedings is itself illegal, then that cannot give rise to valid revision proceedings. Therefore, as per law, the validity of the order passed in the primary (original) proceedings should be allowed to be examined even at the subsequent stages, only for the limited purpose of examining whether the collateral (subsequent) proceedings have been initiated on a valid legal platform or not and for examining the validity of assumption of jurisdiction to initiate the collateral proceedings. If it is not so allowed, then, it may so happen that though order passed in the original proceedings was illegal and thus order passed in the subsequent proceedings in turn would also be illegal, but in absence of a remedy to contest the same, it may give rise to an 'enforceable' tax liability without authority of law. Therefore, the Courts have taken this view that jurisdictional aspects of the order passed in the primary proceedings can be examined in the collateral proceedings also. This issue is not res integra. This issue has been decided in many judgments by various courts, and some of them have been discussed by us in followings paragraphs. .................. ...............
X X X X Extracts X X X X
X X X X Extracts X X X X
.... revision order passed u/s 263 is quashed." 10.2. It is further noticed by us that similar view has been taken by Chandigarh Bench of the Tribunal in the case of Steel Strips Ltd (supra). 11. Thus, after taking into account all the facts and circumstances of the case, we find that in this case, the original assessment order passed u/s 143(3) dt 24-10-2013 was null & void in the eyes of law as the same was passed upon a non-existing entity and, therefore, the Ld. CIT could not have assumed jurisdiction under the law to make revision of a non est order and, therefore, the impugned order passed u/s 263 by the Ld.CIT is also nullity in the eyes of law and therefore the same is hereby quashed." ii. Pune ITAT - Pioneer Distilleries Limited vs. Pr. CIT, wherein it was held as under: "When the assessment order is void and did not exist in law, the question which arises is whether the Commissioner can exercise his revisionary jurisdiction under section 263 of the Act against the same. The answer to the same is No. The Commissioner can exercise the jurisdiction under section 263 of the Act where the assessment order is live. In case the order is void, then....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... which came into effect by Finance Act 2021. The records of the case reveal that initially notice u/s.148 of the Act was issued to the assessee after recording reasons as per the old provisions of law vide notice dated 17.05.2021 and the reasons recorded for the same are as under: "Reasons for reopening of the assessment in the case of Arpan Virambhai Desai, for A.Y. 2017-18. Assessee is an individual. The assessee has filed his return of income for A.Y. 2017-18 on 26/03/2018 declaring total income of Rs. 10,95,690/-. 1. 1. As information received related to a criminal offence (Disproportionate Assets) case registered against Vikrambhal Lilabhai Desal and 6 others, was shared by the State Anti- corruption Bureau with the office of Pr.CCIT, Gujarat vide letter dated 19.02.2021. 2. 1. On perusal of the letter shared by the state Anti-corruption Bureau (ACB), it is gathered that ACB has registered an offence vide GNR-ACB-PS-Cr No.02/2021 under Section-12, 13(1)(b) and 13(2) of Prevention of Corruption Act-2018 on 19.01.2021 against Virambhai Lilabhai Desal, Deputy Mamlatdar, Class-III, EDhara Centre, Kalol and six other family members The assessee A....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d to be a case where income chargeable to tax has escaped assessment. In this case more than four years have lapsed from the end of assessment year under consideration. Hence necessary sanction to issue notice u/s 148 is to be obtain separately from Principal Commissioner of Income Tax as per the provisions of section 151 of the Act." 26. Consequent to the order of the Hon'ble Supreme Court in the case of Union of India vs. Ashish Agarwal, dated 04.05.2022 and in compliance to the directions of the Hon'ble Apex Court, proceedings under the new provisions of law as prescribed in Section 148A of the Act were initiated by issuing notice u/s.148A(b) of the Act to the assessee along with all information in the possession of the AO regarding escapement of income of the assessee. The information, which was supplied to the assessee in the present case as Annexure 'A' to the notice issued to the assessee u/s.148A(b) of the Act was placed before us at paper book pages nos. 326 to 334 as under: 27. As is evident from the above, the information related to that shared by the ACB with the Principal Chief Commissioner of Income Tax regarding the case registered against Viram....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the respective F. Ys. 11. Legal Contention: The Hon'ble Gujarat High Court in SCA No. 3250 of 2016 in the case of Peass Industrial Engineers (P) Ltd. vs. DCIT has held that when the Assessing Officer is armed with the tangible material in the form of specific information received by the Investigation Wing, Ahmedabad it is thoroughly justified in issuing a notice for reassessment. It is revealed from the said additional material available on hand and a reasonable belief is formed by the Assessing Officer that income of the assessee has escaped assessment and, therefore, once the reasonable belief is formulated on the basis of cogent tangible material, the AO is not expected to conclude at this stage the issue finally or to ascertain the fact by evidence or conclusion. Function of the Assessing Officer at this stage is to administer the statute. What is required at this stage is a reason to believe and not establish fact of escapement of income. Assessee has further claimed that notice u/s 148A(b) of the Act is beyond Jurisdiction, Lack legality and has got time-barred is not acceptable on the ground that As per the directions of the Hon'ble Supreme Court i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....urnished single bill voucher or any other evidences regarding such transactions and no concrete evidence with explanation to justify its claim regarding the transactions of Rs. 5,38,000/- during F.Y.2016-17 relevant to A.Y.2017-18. On verification of the ITR filed by the assessee, it is noticed that the assessee has not mentioned such transactions in the ITR filed for A.Y.2017-18. The assessee has not produced a single evidence to prove the genuineness and creditworthiness of transactions. Moreover, by providing the documents/information to the assessee upon which the department has relied, the onus was casted on the assessee to justify the source of DA(Disproportionate Assets) of Rs. 5,38,000/- with the proper explanation and supporting documentary evidences. However, the assessee failed to do so. Having considered the submission of the assessee, it is found that the explanation/documentary evidences submitted by the assessee do not explain the fact that income arising from the impugned transaction/transaction itself, has been duly disclosed and relevant income arising there from has been offered for taxation for the relevant assessment year. 13. Therefore, in the light o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....11 Champaben Virambhai Desai AHVPD2462M 2015-16 13,03,975 12 Champaben Virambhai Desai AHVPD2462M 2016-17 14,67,500 13 Champaben Virambhai Desai AHVPD2462M 2017-18 8,15,945 14 Champaben Virambhai Desai AHVPD2462M 2018-19 21,43,516 15 Champaben Virambhai Desai AHVPD2462M 2019-20 5,83,476 16 Champaben Virambhai Desai AHVPD2462M 2020-21 95,29,252 17 Krunal Virambhai Desai AMBPD5662Q 2013-14 43,90,793 18 Krunal Virambhai Desai AMBPD5662Q 2014-15 5,01,42,716 19 Krunal Virambhai Desai AMBPD5662Q 2015-16 1,90,39,561 20 Krunal Virambhai Desai AMBPD5662Q 2016-17 1,97,02,682 21 Krunal Virambhai Desai AMBPD5662Q 2017-18 3,94,64,320 22 Krunal Virambhai Desai AMBPD5662Q 2018-19 3,81,19,665 23 Krunal Virambhai Desai AMBPD5662Q 2019-20 2,09,86,984 24 Krunal Virambhai Desai AMBPD5662Q 2020-21 4,71,12,951 25 Jayotsanaben Krunal Desai BNRPD0682A 2013-14 3,63,754 26 Jayotsanaben Krunal Desai BNRPD0682A 2014-15 14,59,322 27 Jayotsanaben Krunal Desai BNRPD0682A....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cation of the asset/s amounting to Rs. 5.38 Lakhs, which was attributable as disproportionate in relation to income of the assessee for the impugned year. Clearly the reasons forming belief of escapement of income of the assessee as noted by the AO do not specify the income which has escaped income. Further, it is evident from the order passed by the AO u/s 148A(d) of the Act, basis which he has assumed jurisdiction to reopen the case of the assesee, that he has merely borrowed belief of the ACB without applying any mind of his own to the information passed by the ACB to him. The AO has not cared to find out what the nature of the Disproportionate asset(DA) was which was attributed to the assessee by the ACB for the impugned year. 31. The facts pertaining to assumption of jurisdiction by the AO in A.Y 2017-18 & 2018-19 are identical to that in A.Y 2014-15 and 2015-16 dealt with us above. And therefore following our reasoning for those years, we hold, the AO to have reopened the case of the assessee for A.Y 2017-18 & 2018-19 without valid jurisdiction. The assessment orders passed as a consequence u/s. 147 of the Act are therefore set aside as invalid. 32. The assessee, theref....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ent, Government Résolution No. FCR-Cell-AML-Cell-2009, Sachivalaya, Gandhinagar, dated 01.08.2009. Income Tax Department, Enforcement Directorate and Director, ACB are also a member of the Anti-Money Laundering Cell. REIC (Regional Economic Intelligence Councils) : Kind attention Is also drawn to the REIC (Regional Economic Intelligence Councils), constituted by The Central Economic Intelligence Bureau ( CEIB) New Delhi, to cover all areas of Economic Offences with operational co-ordination with member agencies. Olrector, ACB and Principal Commissioner of Income Tax, Ahmedabad are also the members of REIC, Ahmedabad. The information being shared is in the background of the creation of the aforesaid Institutions, Anti-Money Laundering Cell and REIC. Page 1 of 30 326 Document 2 4. Intimation to Income Tax Authority : ACB vide the creation of Anti-Money Laundering Cell and REIC has been reporting all such registered cases of Disproportionate Assets accumulated by Government Servants to the Income Tax Department for initiating appropriate action vide violation of Income Tax Rules and Regulations, as deemed fit accordingly. We would appreciate receiving guidance in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....04.2006 to 31.03.2020 Dig! Toll free number 1064, toregister Ant -correphievrenmpmint 32 Document 3 B - Immovable + Movable Assets at the end of Check Period 2 (D-C) Expenditure over the known source of Income Rs. 1,74,99,162/- C - Income Earned During Check Period D - Expenditure Incurred during Check Perlod 13 Disproportiona te Assets (B-A) + (D- C) Rs. 30,47,05,469/- 122.39 % 4 Percentage of D.A. D.A. X 100 / C Rs. 30,47,05,469/- X 100 + Rs. 24,89,60,538/- Disproportiona te Assets D.A. X 100 / C Rs. 30,47,05,469/- X 100 + Rs. 24,89,60,538/- & Information of the Accused and his family with the details of the Businesses carried out by them :- Sr. No. Name Relation Concerned Person Date of Birth PAN 1 Virámbhal Lilabhai Desal Self 31.05.1962 ADUPD8297M 2 Champaben Virambhal Desal Wife 13.02.1967 AHVPD2462M 3 Krunal Virambhal Desal Son 17.05.1991 4 Arpan Virambhai Desai Son 13.08.1993 AMBPD5662Q ATXPD2656H 5 Tejal Virambhai Desal Daughter 24.02.1990 ALVPD1141M 6 Krunal Dayotsanaben Desal Son-In-Law 11.08.1993 |BNRPD0682A 7. Payalben Arpan Desai Son-In-Law 12.07.1994 BNRPD0685H 8 M/s. VLEE Hospitality LLP ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... No. A/501, Vitthal Velocity, Naroda, Ahmedabad ·Viram Desai 2012-13 57,400 13 Residential Flat No. A/502, Vitthal Velocity, Naroda, Ahmedabad Champaben Desal 2012-13 47,900 14 Agriculture Land - Survey No. 1622, Langhnaj, Mehsana Champaeben/Tejal ben/Krunal Desai/Arpan Desal 2010-11 72,140 15 Plot No. 1445/2, Sector 2B, Gandhinagar Krunal Desai 2010-11 9,95,750 16 Shop No. 7, Ajanta Complex, Gandhinagar Arpan Desai 2013-14 5,24,650 17 Office No. 4/5/6/7/8/9/10/11/12/13, Ashwamegh Complex, Gandhinagar Krunal Desal 2017-18 99,450 18 Residential Flat + A/502, Satyamev Famosa, Gandhinagar Krunal Desal/Arpan Desal 2013-14 17,80,200 19 Plot No. 225, Sector 7, Gandhinagar Krunal Desai/Arpan Desa 2018-19 3,20,600 20 Agriculture Land - Survey/Block No. 214/B1, Por, Gandhinagar Payal Desai 2013-14 16,38,064 21 Agriculture Land - Survey/Block No. 166, Moti Sinholi, Gandhinagar Payal Desai 2013-14 23,95,100 22 Agricultue Land - Survey No. 332/2, Jethlaj, Gandhinagar . Banakhat Krunal Desai 2014-15 20,00,500 23 Office.No. O/2, Suman Tower, Sector-11, Gandhinagar Krunal Desai 2008-09 30,100 24 N A Land - FP. No. 57, Sargasan, Gandhinagar 40% Share Tejal De....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 3 ADC Bank 107004650886 Champaben Desai 46,000 4 ADC Bank 607088055512 Champaben Desal 39,47,540 Dial Toll free number 1064, tg regnter Anti-corruption coneinalle Page S of lu 330 Document 6 5 Axis Bank 913010009734962 Champaben Desal 34,79,300 6 ADC Bank 607049132175 Krunal Desai 18,57,000 7 Axis Bank 910010017009219 Krunal Desal 1,00,37,750 8 Kotak Bank 5011467385 Krunal Desai 11,81,000 9 Canara Bank 3519101001016 Krúnal Desai 8,05,500 10 Axis Barik 915010018045055 Krunal Desal 8,45,500 11 Axis Bank 916010042691432 Krunal Desal 1,55,000 12 Axis Bank 915010030520488 Krunal Desai 4,95,500 13 ADC Bank 607088081575 Arpan Desai 14,19,000 14 Axis Bank 912010046937314 Arpan Desal 69,21,150 15 Canara Bank 3519101001017 Arpan Desal 51,000 16 Kotak Bank 4111488092 Arpan Desal 5,00,000 17 Axis Bank 915010018417104 - Arpan Desai 2,50,000 18 Axis Bank 916010041499226 Arpan Desal 1,21,000 19 Axis Bank 913010001624074 Jyotsanaben 50,94,000 20 Axis Bank 910010017009222 Tejalben Desal 48,54,000 21 Axis Bank 913010001500064 Payalben Desai 25,28,000 22 Axis Bank 9150300006295639 Champabien Desal 13,00,000 23 Axis Bank 915030....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... OF FUND IS ONIDENTIFIED Rs.87.50.000 Rs.87,50,000 Rs.87,50,000 Rs.87,50,000 Layering 010010017009222 RX37,52579 FOREIGN REMITTANCE OF 3 Hx 4.51,20.633 Dial Toll free number 1064. to register Ante Corruptitetompienie Page For 10 332 Document 8 Brief of Infographics :- "Accused has purchased Agriculture land on 06.05.2010 for Rs.28,72,400/- vide Survey No.1622,1677,1678,1679 At. Langnaj, District Mahesana." Prima-facie, during the course of Investigation, 10 has found that accused has made a transaction by creating a placement of their mixed illicit proceeds in the name of Malajibhai Rabari by legitimate deposit in bank accounts. Through multiple transactions they disguised their illicit proceeds origin by using bank account of Maljibhai Rabar. The amount was transferred to their own bank accounts as a sale proceeds by creating an Agreement for Sale on Rs.100.00 Stamp paper for amount of Rs.10.00 Cr without handing over the possession of the said property till date as gleaned from the records of Sub-Registrar, Mehsana. Thereafter they used the layered fund for creation of foreign assets. 5. Brief of Amount Transferred abroad : No Name....