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2023 (9) TMI 1334 - AT - Income TaxReopening of assessment u/s 147 - Addition made in respect of unexplained investment towards purchase of agricultural land - HELD THAT:- AO observed that since the assessee had purchased part of such land from one of the parties to the aforesaid MOU, the AO was of the view that since the aforesaid MOU mentioned the price of properties at a much higher value, the AO had “reason to believe” that substantial cash consideration was given by the assessee for the purchase of the aforesaid land and therefore, income had escaped assessment. It was on the basis of the aforesaid facts, that the Assessing Officer initiated proceedings u/s 147 of the Act. In our view, the AO has given detailed reasonings on the basis of which he formed the belief that looking into the instant set of facts, the AO had reasonable belief that the assessee had made cash payments in respect of purchase of the aforesaid properties, thereby leading to escapement of income. It is a well settled principle of law that that while recording the reasons, the AO need not establish the actual escapement of income. The belief at that time is only prima-facie and not conclusive. In the case of Raymond Woollen Mills Ltd. [1997 (12) TMI 12 - SUPREME COURT] observed that the Court has only to see whether there was prima-facie some material on the basis of which the Department could reopen the case. The sufficiency or correctness of the material is not a thing to be considered at this stage. Accordingly, in our view, the AO had sufficient material to form a prima facie belief that the assessee had made cash payments for purchase of aforesaid properties, thereby leading to escapement of income. Therefore, we find no infirmity in the order of Ld. CIT(Appeals) when he held that issuance of notice under Section 147 of the Act was valid in the instant set of facts. Violation of Rule 46 of the Income Tax Rules - allegation of Department that there was violation of Rule 46A of the Income Tax Rules in the instant set of facts, wherein the CIT(Appeals) did not confront the AO with the additional information on the basis of which the relief was granted to the assessee - HELD THAT:- As relief has been granted to the assessee only on the basis of the fact that on comparison of the MOU and the Registration Deed of properties which were purchased by the assessee, there was only one plot of land pertaining to survey number 171 palki which was mentioned in the MOU. The other plots of land which were purchased by the assessee did not form part of the MOU and were purchased from third parties / persons. Accordingly, we observe that no additional documents / information formed the basis for Ld. CIT(Appeals) allowing relief to the assessee which was not present before the AO. During the course of appellate proceedings, Ld. CIT(Appeals) made a comparison between the contents of MOU and the details of properties which were purchased by the assessee, and on comparison of the two, CIT(A) was of the view that since there was only one common property in the aforesaid agreements, and therefore the additions could be made only on the basis of the aforesaid property which was mentioned in the MOU and not with respect to other properties not forming part of the MOU. We are of the considered view that there was no violation of Rule 46A of the Income Tax Rules, since no additional documents / information / data was made the basis of allowing relief to the assessee which was not before the Assessing Officer at the time of framing the assessment. CIT(A) giving part relief to the assessee and excluding those plots of land which should not form part of the MOU - HELD THAT:- CIT(Appeals) while allowing the assessee’s appeal observed that no additions have been made by the Assessing Officer in the case of the other family members, who were the joint holders in the aforesaid property. We observe that in the instant facts the additions were made only on the basis of MOU entered between third parties and there was no mention of the assessee’s name in the MOU. Further, the aforesaid MOU on the basis of which additions were made by the Assessing Officer had also been subsequently cancelled and was not acted upon. Therefore, in view of the aforesaid judgements cited above, we are of the considered view that CIT(Appeals) has not erred in facts and in law in holding that it would not be legally correct to extrapolate the addition in the hands of the assessee on the basis of facts relating to 1.25 bighas mentioned in the MOU, to the total land of 13.75 bighas purchased by the assessee.
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