TaxTMI 
TaxTMI 
2026 (6) TMI 240
X X X X Extracts X X X X
X X X X Extracts X X X X
....d 271AAC of the Act are challenged. 3. For the Assessment Year 2022-23, the petitioner firm filed returns declaring an income of Rs. 23,37,05,400/-. The case was selected for scrutiny through Computer-Assisted Scrutiny Selection (CASS). A notice under Section 143(2) of the Act was issued on 31.05.2023. On 04.01.2024, a notice under Section 142(1) of the Act was issued, requiring the production of the information contained in the Annexure. From that day, through several e-mails, the petitioner firm furnished the required information. Another notice under Section 142(1) of the Act was issued on 07.02.2024, seeking the information mentioned in the Annexure and noting certain discrepancies. The petitioner firm provided the information/explanation. Again, on 14.02.2024, yet another notice under Section 142(1) of the Act was issued, calling for the information required in the Annexure thereto. In the Annexure, among other things, under paragraph No.3, in respect of the seven properties mentioned in the table (valued at Rs. 3,60,65,028/-), the petitioner firm was required to furnish a copy of the purchase deed, the mode of payment, etc. 4. In response, the petitioner furnished the i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....osing a penalty of Rs. 28,12,072/-. Aggrieved by all three orders, these Writ Petitions are filed. 8. Mr.Suhrith Parthasarathy, learned for the Petitioner, would submit that: (a) The conditions for invoking Section 68 of the Act are not satisfied. There must be a sum credited in the assessee's books of account, and the assessee must either fail to offer an explanation regarding the nature and source of such credit or offer an unsatisfactory explanation. Both these conditions are absent in the instant case, and therefore the respondent erred in invoking Section 68 of the Act. (b) Once the amounts are credited to the accounts of the partners and creditors, they are in the hands of the partners and creditors and cannot be taxed in the hands of the firm. The law on this point has been laid down by the Division Bench of the Bombay High Court in Narayandas Kedarnath Vs. Commissioner of Income-tax, Central [(1952) 22 ITR 18]. This position has been consistently followed in the following judgments:- *Suganchand Chandamal Vs. ITO [1976 SCC OnLine Cal 320] *CIT Vs. Metachem Industries [1999 SCC OnLine MP 471] *VR Global Energy Pvt. Ltd. Vs. ITO....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the show cause notice put across the substance of the matter under consideration by the assessing authority. Therefore, a repeat show-cause notice need not be issued for the purpose of ultimately treating income under Section 68 of the Act or any other provision. (b) Once the transfer of assets is not proved and the value of the assets booked is also considered bogus, the source of the liability booked by the assessee firm against the asset is to be treated as an unexplained credit. Thus, it is rightly brought to tax under Section 68 read with Section 115BBE of the Act. (c) Once the order has been duly passed, the dictum of the Hon'ble Supreme Court of India in Chhabil Dass Agarwal's case (cited supra) renders the Writ Petition not entertainable, as the petitioner has an effective alternative remedy under Section 246A of the Act. 10. I have considered the case of the parties. 11. The petitioner has filed returns, treating the seven properties mentioned in the show cause notice as 'assets' and claiming depreciation. Admittedly, the properties were not in the firm's name. It is contended that the property was acquired from the legal heirs of the deceased p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the husk of the legal title behind. In that context, with reference to the position prevailing before the year 2001, a written agreement and putting the party into possession was held enough to claim part performance under Section 53-A of the Transfer of Property Act, 1882 and therefore, it was held that the income should be treated as the rental income to the assessee by considering him as the owner of the house property. Furthermore, by that time, the issue was decided by the Hon'ble Supreme Court of India, Section 22 of the Act itself was amended to specifically include a person in possession of the property in a part performance of a contract of the nature referred to in Section 53A of the Transfer of Property Act, 1882. The Hon'ble Supreme Court of India held that the amendment was declaratory in nature and would be applicable retrospectively. 14. In this context, in the present case, it is to be noted that, first, there was no written agreement at all, and, more so, registration became mandatory post 2001. Further, what is claimed is depreciation, and Section 32 of the Act does not contain a clause similar to Section 22 of the Act. Therefore, in the present context, where ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ument, title deed, proof relating to the utilisation of the property, documents of transfer of property, documents relating to the value of the property, and the details of the capital gain/loss account submitted by the said four persons. Finally, the assessee was called upon to furnish the documents mentioned above, and it was further stated that, failing the production of the above documents, the said sum of Rs. 3,60,65,028/- will be treated as an unexplained investment under Section 69 read with Section 115BBE of the Act and added to the total income. 18. Thus, it can be seen that the show-cause notice clearly sets out the gamut of facts being considered by the assessing authority, i.e., the absence of any agreement or instrument of transfer of title and proof regarding the value of the property, etc., and the mind of the assessing authority to add the said sum to the total income. In this regard, in the explanation submitted, the only plea raised is that, in order to invoke Section 69 of the Act, the second condition, i.e., the investment should not be recorded in the books of account, is absent in the instant case, as it is recorded in the books of account of the assessee, ....