TaxTMI 
TaxTMI 
2026 (8) TMI 187
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....eclaring total income of INR 4,30,840/- which was assessed u/s. 143(3) of the Act. Thereafter, based on the information received from DDIT, Investigation-II, Ghaziabad that assessee has sold a property for a total consideration of INR 7,03,54,000/- and no capital gain was declared, the case of the assessee was re-opened u/s. 147 of the Act after recording the reasons and obtaining approval u/s. 151 of the Act and notice u/s. 148 was issued on 31.03.2021. Thereafter, various opportunities were given to the assessee for submissions which were duly available by the assessee and replies were filed which are partly reproduced in the reassessment order. The AO observed that assessee has sold its land situated at Muradnagar Palika Area, Ghaziabad and had received total sum of INR 7,03,54,000/- from various persons on various dates in cash and the same was not disclosed in the return of income filed and therefore, the same was assessed as unexplained money u/s. 69A of the Act and addition was made. 4. Against the said order, assessee filed an appeal before Ld. CIT(A) wherein assessee has taken multiple Grounds of appeal and challenged the re-assessment order based on the cryptic and ina....
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....in the Insight portal as per which the information was received from DDIT, Investigation Unit-II, Delhi, that assessee has sold immovable property at INR 703.54 Lakhs and has not shown capital gain in the ITR filed for the year under appeal. When inquiries were carried out by the Investigation Wing, assessee claimed that he has sold agricultural land and further purchased agricultural land and therefore, is eligible for deduction claimed u/s. 54B of the Act and therefore no capital gains was declared in the return filed. However, in the reasons recorded, satisfaction was recorded for the escapement of income by alleging that the land sold by the assessee was not the agricultural land and was a capital asset within the meaning of section 2(14) of the Act and therefore, deduction claimed u/s. 54B of the Act was not available to the assessee and the capital gain arisen on the transfer of capital assets was chargeable to tax which has escaped assessment. 9. Ld. AR submits that when the satisfaction was recorded of escapement of income by not disclosing the capital gains from the sale of land, the AO should have made the addition of the alleged consideration as Long Term capital gain....
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.... in possession of such receipts, this shows that the reasons were recorded of escapement of income without having any material in his possession and without making any independent inquiry or verification. Ld. AR submits that Ld. CIT(A) has appreciated these facts and deleted the additions to this extent of INR 6,00,46,000/- and requested for the confirmation of the order to this extent. Ld.AR further drew our attention to the copy of FIR filed by the buyer Shri Ram Kumar wherein he has admitted the fact that land was purchased by him from the assessee however, the assessee had not given the possession of the entire land and had illegally hold/received the consideration directly from the buyers to whom the plots were sold by Shri Ram Kumar. The copy of the said FIR is placed at pages 19-21 filed before us. 11. With respect to the confirmation of addition of INR 1,03,08,000/- made by Ld. CIT(A) by holding that the land owned by the assessee as capital asset and sale proceeds as business income, it is submitted by ld.AR that assessee has sold land owned by him which is in the nature of agricultural land and was sold to Shri Ram Kumar for a total consideration of INR 153.11 lacs out....
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....roduced the details of each individual receipts of cash received from each buyer to whom plots were sold by the assessee. He further submits that alleged buyer Shri Ram Kumar accepted the fact that the land was sold by the assessee and all the consideration received by him, was handed over to the assessee and thus the AO has rightly made the addition of the entire receipts of INR 703.54 lacs and therefore, Ld. Sr. DR requested for the restoration of the additions made by the AO. 14. Heard the contentions of both the parties at length and perused the material on record. During the year under appeal, the assessee has sold a piece of land having total area 5574 Square Yards for a total consideration of INR 1,52,26,000/-to Shri Ram Kumar and on the request of Shri Ram Kumar, the Sale Deeds were got registered in favour of the respective buyers directly. As per the Assessee Shri Ram Kumar after developing small piece of plots on the said land had sold them to various persons and issued the receipts for the consideration received. However, when the inquiry was carried out by the Investigation Wing, Shri Ram Kumar in his statement stated that entire consideration received by him was gi....
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....as under:- 23. "It becomes evident that the Court in Ranbaxy Laboratories Ltd., firstly took into consideration Section 147 of the Act, embodying the phrase "and also" prefixed to the expression "any other income chargeable to tax which has escaped assessment". It thus came to the conclusion that, while an assessment may be reopened based on certain grounds which may have led the AO to be of the opinion that income chargeable to tax had escaped assessment, once it is found that the reassessment power had been validly invoked, the power of the AO would not stand confined only to those aspects which may have been noticed in the original notice issued under Section 148 of the Act but would also extend to any other income which may be found to be exigible to tax. 24. This clearly appeals to reason, since Section 147 of the Act embodies a power to assess, reassess as well also to recompute. Consequently, and once that power is validly invoked, the original assessment would cease to exist in the eyes of law. Undoubtedly, once an assessment already made comes to be reopened, the AO stands empowered statutorily to undertake an assessment afresh in respect of the entire in....
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....ounsel for the assessee relied upon the following observations made by this court in CIT v. Atlas Cycle Industries [1989] 180 ITR 319 (page 322): " ...we are of the view that the Tribunal was right in cancelling the reassessment as both the grounds on which reassessment notice was issued were not found to exist, and the moment such is the position, the Income-tax Officer does not get the jurisdiction to make a reassessment." 9. Support was also drawn from the decision of the Rajasthan High Court in CIT v. Shri Ram Singh (2008) 306 ITR 343 (Raj) wherein judgment of this court in Atlas Cycle Industries' case (1989) 180 ITR 319 (P&H) was followed." 12. A plain reading of Explanation 3 to section 147 clearly depicts that the Assessing Officer has power to make additions even on the ground on which reassessment notice might not have been issued in case during the reassessment proceedings, he arrives at a conclusion that some other income has escaped assessment which comes to his notice during the course of proceedings for reassessment under section 148 of the Act. The provision nowhere postulates or contemplates that it is only when there is some addition ....
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....atories Limited (supra) [following Jet Airways's case (supra) of the Bombay High Court and followed later in Monarch Educational Society's case (supra)] with respect to the interpretation of Section 147 read with Explanation (3) of the Act, is restrictive, so as to sustain only additions made in the course of reassessment proceedings subject to the additions of amounts adverted to in the reassessment notice in the "reasons to believe" under Sections 147/148 of the Act and notice pursuant thereof?" However, the aforesaid reference ultimately came to be closed on 07 February 2020 on account of low tax effect. 29. In our considered opinion, and bearing in mind the import of Explanation 3 as well as the language in which Section 147 of the Act stands couched, we find no justification to differ from the legal position which had been enunciated in Ranbaxy Laboratories Ltd. We also bear in consideration the said decision having been affirmed and approved subsequently in Commissioner of Income-tax (Exemption) vs. Monarch Educational Society13 and Commissioner of Income-tax vs. Software Consultants 14. 30. We thus, come to the conclusion that the enunciati....
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....rt was made for making verification of the facts by independent inquiry or investigation. It is also relevant to state that even thereafter, the additions were made without having any corroborative material in the shape of Kachi and Pakki receipts and nor the statement of Shri Ram Kumar was ever supplied to the assessee nor any opportunity of cross examination was allowed. 20. Regarding sale consideration actually received by the assessee, it is observed that Shri Ram Kumar has lodged a FIR before the Police Authority on 06.11.2016 which is reproduced at page 19 to 21 of the order of Ld.CIT(A) wherein Shri Ram Kumar has alleged that he had entered into an agreement for purchase of land from Shri Ram Kumar of 13.5 Bigha for a total sum of INR 4,26,50,000/-. However, the assessee has only got the registration done for the land of 5500 Square Yards. This clearly shows that statement of Shri Ram Kumar during the course of proceedings before the Investigation Wing were not correct as before the Police authority, he accepted the fact that he had entered into an agreement for purchase of land owned by the assessee and it was further decided that assessee will execute the sales deeds di....