TaxTMI 
TaxTMI 
2024 (8) TMI 1774
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.... the Income Tax Act, 1961. (b) That in any view of the matter, action of Ld. AO in disposing objections to reasons recorded by passing order by wrongly interpreting the provisions of law, is bad in law and against the facts and circumstances of the case. (c) That having regard to the facts and circumstances of the case, Hon'ble CIT(A) has erred in law and on facts in confirming the action of Ld. AO in passing the impugned assessment order and that too without assuming jurisdiction as per law. 3. That having regard to the facts and circumstances of the case, Hon'ble CIT(A) has erred in law and on facts in confirming the action of Ld. AO in making an addition of Rs. 1,37,92,000/- u/s 69 of the Act on account of unexplained investment, without considering the facts of the case and without observing the principles of natural justice. 4. That having regard to the facts and circumstances of the case, Hon'ble CIT(A) has erred in law and on facts in confirming the action of Ld. AO in making an addition of Rs. 8,62,500/- u/s 69 of the Act as long term capital gain, without considering the facts of the case and without observing the principles ....
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....lso obtained copy of recorded reasons against which written objections were filed. 3.4 The AO disposed of the said objections vide order dated 14.11.2017, and while disposing of the objections the Income Tax Officer, Ward II (1), Jalandhar, admitted the mistake committed by the AO while recording the reasons u/s 148. 3.5 The relevant portion of the disposal of objection is reproduced below for ready reference: "2. In this regard, it is stated that as per your letter submitted on 23.10.2017 you have filed a detailed objection to the reasons recorded by Assessing Officer before issuing Notice U/s 148 of the Income Tax Act. Your letter has been carefully considered by me and following objection have been summarised to settle before further proceedings in this case LT While recording the reasons the Assessing Officer mentioned Sale instead of Purchase the transactions of property made by you via deed no. 4927 & 5235 dated 20.08.2009 & 27.08.2009 respectively totaling to Rs. 1,37,92,000/- 3. Notice u/s 148 was issued to the assessee by Income Tax Officer, Ward 3(4), Jalandhar, i w areas. jurisdiction to issue notice lies with Joint Commissioner of Income Tax, Ran....
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....is also reflected in the ledger account of purchase, a copy of which has been submitted before the AO duly signed by the managing partner of Dynamic Builder and Developers. 3.8 Similarly, it is also submitted that the sale of property vide deed No.12769 dated 30.03.2010 amounting to Rs.8,62,500/- is also reflected in the ledger account of sale in the books of the partnership firm Dynamic Builders and Developers, a copy of which he submitted before the AO duly signed by the managing partnership of the firm. 3.9 He also referred to the balance sheet of the partnership firm to point out that the entire purchase which is a subject matter of the notice u/s 148 is also disclosed in the audited balance sheet of the partnership firm. 3.10 Similarly, the sales which is the subject matter of the notice u/s 148 is also recorded in the Profit and Loss account of the said partnership firm and is considered as part of gross sales. 3.11 In other words, the assessee wanted to explain that the entire investment for purchase of land amounting to Rs.1,37,92,000/- is the purchase of the partnership firm Dynamic Builders and Developers and is duly reflected in their books of account and the....
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....the case, Ld. AO has erred in law and on facts in making an addition of Rs. 1,37,92,000/- u/s 69 of the Act on account of unexplained investment, without considering the submissions of the assessee and without observing the principles of natural justice. Sir, in this connection it is submitted that the case u/s 148 was opened on the basis of the information that the following transactions of sale / purchase of immovable properties during the F.Y 2009-10 relevant to A.Y 2010-11 were made by the assessee, which was not correct: S. No. Sale Deed No & date Nature of transactions Value of transactions 1. No. 4927 dated 20.8.2009 Sale Rs. 68,96,000/- 2. No. 5235 dated 27.08.2009 Sale Rs. 68,96,000/- 3. No. 12769 dated 30.03.2010 Purchased Rs. 8,62,500/- Rs.1,46,54,500/- Sir, the reasons for reopening is that assessee sold properties for a consideration of Rs. 1,37,92,000/- and purchased property for a purchase price of Rs. 8,62,500/- but later Ld. AO vide letter dated 04.12.2017 raised a different point that assessee made unexplained investment of Rs. 1,37,92,000/-, and sale property for a ....
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....believe that the action of the AO in bringing to tax amount of Rs. 1,37,92,000/- u/s. 69 and of Rs. 8,62,500/- on account of LTCG cannot be faulted. Therefore, the addition of Rs. 1,46,54,500/- is upheld." 6. Now the matter is before the tribunal on the various grounds contained in the memorandum of appeal. The assessee has filed a short paper book containing 36 pages which includes the copy of the recorded reasons dated 28th March, 2017, as recorded by the income tax officer ward 3(4), Jalandhar, and also the copy of the disposal of objection by the income tax officer Ward 2(1) Jalandhar, dated 14/12/2017, and copies of submissions filed before the first appellate authority, along with judgments copies of various cases on which he relies upon for support. The arguments of the Ld. AR of the assessee are mainly concentrated and focused on two legal issues, firstly, he refers to the copy of the recorded reasons dated 28/03/2017, as recorded by the ITO Ward 3(4), Jalandhar, on the basis of which the notice u/s 148 dated 31/03/2017 has been issued. He submitted that from the recorded reasons it is ascertainable that the AO has gathered information that the assessee during the year h....
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....e void ab initio and the entire reassessment proceedings may please be quashed, because the same cannot be cured or protected by provisions of section 292B of the Act . 7.2 The second issue argued by the Ld. AR, relates to the jurisdiction issue, where he refers to the copy of the recorded reasons dated 28/03/2017, to point out that the same is recorded by the Income Tax Officer - Ward - 3(4), Jalandhar, whereas the jurisdictional officer of the assessee is ITO - Ward - II (1) Jallandhar, who ultimately conducted the hearing and passed the assessment order u/s 143(3)/ 147 of the Act dated 27/12/2017. He submitted that the notice u/s 148, has been issued by ITO Ward -3(4), Jalandhar, who recorded the reasons and issued the notice u/s 148, (but who is not the jurisdictional officer) and subsequently the case records has been transferred to ITO Ward - II(1), Jalandhar ( who held proper jurisdiction over the assessee ), for hearing of the case and completion of assessment procedure . He submitted that the proceedings becomes legally defective, since no fresh notice u/s 148 has been issued by the jurisdictional AO, to assume jurisdiction to complete assessment u/s 147, and he simply ....
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....ong with copies of audited accounts reflecting all financial transactions, which is much before the date of issue of notice u/s 148 on the assessee on 31/03/2017, but the AO has not given any cognizance to the same. As such he submits that on merits also there is no case of escaped income, because all the financial transactions are considered in the hands of the firm. 9. The Ld. DR on the other hand relied on the order of the Ld. CIT(A) and argued that there was a minor mistake contained in the recorded reasons where purchase has been mentioned as sales and sales has been mentioned as purchase, and the said mistake is inadvertent error, which is protected by section 292B of the Act, and the notice is in substance and effect in confirmity with or according to the intent and purpose of this Act and the same cannot be held to be invalid. 10. On the jurisdiction issue the Ld DR submitted that in the instant case the notice u/s 148 has been issued on 31/03/2017, and the return u/s 148 has been filed on 12/09/2017, which is after the stipulated period of thirty days and as such as per provisions of section 124(3)(b) of the Act, the assessee is not entitled to call in question the j....
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....fice, he has not even read the recitals in the deeds, and has recorded completely incorrect facts that there has been sales of Rs.1,37,92,000/- which has not been accounted for, and the same has escaped assessment within the meaning of the Act and again went on to record another incorrect fact that there has been an investment in property amounting to Rs. 8,62,500/- which is unexplained. The relevant portion is reproduced for easy reference: "I therefore, have reasons to believe that profit on sale of immoveable properties amounting to Rs. 1,37,92,000/- has not been accounted, for A.Y 2010-11 & has escaped assessment, within the meaning of section 147 of the LT Act, 1961. Further, the investment of Rs.8,62,500/- in the property has also remained unexplained as the assessee did not response to any of the notices/letters issued u/s 133(6) of the LT -ct 1961. Thus, income of the assessee to the tune of Rs. 1,46,54,500/- in respect of issues as mentioned supra has escaped assessment for the A.Y. 2010-11 'within the meaning of section 147 of the Income Tax Act, 1961." 12. It clearly proves that the AO has not read the contents and recitals of the deeds, before proceeding....
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....essment proceedings, namely, that there is a difference between the profit before tax (Rs.42,79,340/-) and the amount declared in the VDIS (Rs.7,23,490/-). The reasons recorded however are not so explicit and do not refer to this fact. We are to be guided only by the reasons recorded for re-assessment and not by the reasons or explanation given by the Assessing Officer at a later stage in respect of the notice of re-assessment. [This legal position is well settled and if any authority is needed, reference may be made to the following judgments: - (i) Jamna Lal Kobra v. ITO, (1968) 69 ITR 461 (Allahabad); (ii) Commissioner of Income Tax v. Agarwalla Brothers, (1991) 189 ITR 786 (Patna); (iii) G. M. Rajgharia v. ITO, (1975) 98 ITR 486; (iv) Asa John Devinathan and Another v. Addl. Commissioner of Income-Tax, (1980) 126 ITR 270 (Mad.); (v) East Coast Commercial Co. Ltd. v. ITO, (1981) 128 ITR 326 (Cal.); (vi) Equitable Investment Co. (P.) Ltd. v. Income-Tax Officer, G. Ward, and Ors., (1988) 174 ITR 714 (Cal.); (vii) S. Sreeramachandra Murthy and Anr. V. Deputy Commissioner of Income-Tax and Anr., (2000) 243 ITR 427 (A.P.). ....