TMI Blog2014 (12) TMI 177X X X X Extracts X X X X X X X X Extracts X X X X ..... mited [2007 (5) TMI 197 - SUPREME Court] - the intimation u/s 143(1) cannot be treated as order of assessment - Prior to 01.04.1989, AO had to pass an assessment order if he decides to accept the return but now amended provisions, requirement of passing the order has been dispensed with and instead only intimation is required to be sent - as there is no assessment u/s 143(3), the question of change of opinion does not arise - what is required at the time of issuance of notice u/s 147 is reason to believe that the income has escaped assessment, but not the established act of escapement of income – thus, the assessee’s contentions on reopening are not valid – Decided against assessee. Revised return filed with revised audited accounts – Held that:- Assessee’s action cannot be supported in the light of the fact that proceedings are u/s 147 - in the case of Commissioner of Income-Tax Versus Sun Engineering Works Pvt. Limited [1992 (9) TMI 1 - SUPREME Court] - it was held that proceedings u/s 147 are for the benefit of Revenue and not for the benefit of assesse - Since, assessee has offered incomes originally which were accepted, the proceedings being initiated are only to add some m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the said company towards land development cost and without doing any land development cost, assessee has received the entire amount and utilized for further investing in various other group concerns. Accordingly, A.O. was of the opinion that the total receipts of ₹ 99,65,65,250 for A.Y. 2007-08 and ₹ 54,77,75,359 for A.Y. 2008-09 are assessee s income. In arriving at that, A.O. has noted statement recorded from Mr. Prasad V. Potluri and also various amounts of inflow and outflow in assessee s ING Vysya Bank and thereafter, giving due opportunity to assessee, the gross receipts from NCCPL were brought to tax. 3. Before the Ld. CIT(A), assessee contested that initiation of proceedings under section 147 were not correct and it was only change of opinion by A.O. as the original returns were accepted. This contention of assessee were rejected by Ld. CIT(A) by stating as under : 7.6. The notice u/s 148 was issued following a survey at the appellant's business premises on 20.07.2011 in which it was noticed that there were no bills or vouchers claimed by the appellant in its returns. The Assessing Officer had also recorded a statement from Sri Prasad V. Potluri, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 148 and the proceedings u/s 147. 4. Another ground raised before Ld. CIT(A) was nonproviding copy of statement of Mr. Prasad V. Potluri. Ld. CIT(A) directed the A.O. to provide copy to assessee and opportunity to assessee to make its submissions. Ld. CIT(A) records that assessee has no submissions to make and the grievance of Assessee has been redressed. 5. Next objection raised by assessee was that assessee s revised returns filed on 12.02.2013 are to be treated as valid returns. It was assessee s contention that since proceedings under section 148 were initiated, assessee can validly revise the returns and relied on various case law. Ld. CIT(A), however, rejected these contentions by stating as under: 9.9. The AR has sought to argue that a return filed in response to a notice u/s 148 is to be treated as a return required to be furnished u/s 139 and consequently, the appellant was entitled, all over again, to revise its returns of income. I do not agree with this view of the AR for reasons discussed below. Firstly, as held in the case of CIT v Sun Engg Works Ltd 198 ITR 297 (SC), proceedings u/s 147 are for the benefit of the revenue and not for the benefit of Assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... receipts and are taxable accordingly. Ld. CIT(A) final findings are as under : 11.4. Indeed, it is interesting to note that though NCC was aware of the lack of any development activity having actually been carried out by the appellant at least in July 2012 when the statement of its Managing Director was recorded by the Assessing Officer, it has failed to take any legal action for recovery of the amount even till March, 2014, i.e. more than a year and half later. 11.5. To conclude, I hold that a. The revised filed by the appellant were not valid and no cognisance can be taken of these returns. b. The revision of accounts carried on by the appellant was not valid and no cognisance can be taken of the revised audited results. c.The receipts from NCC were in the nature of revenue receipts and liable to tax. 11.6. Since it is undisputed that the appellant did not carry out any of the developmental works and that it had admittedly not incurred any expenses for earning this income, I hold that the Assessing Officer had correctly brought the entire receipts of ₹ 47,15,18,833 for AY 2008-09 and ₹ 99,65,65,250 for AY 2007-08 to tax as income of the appellant. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roceedings, A.O. found that the expenditure entries made in the books of accounts are not genuine and accordingly, he brought to tax entire receipts as shown in the P L Account as income of assessee. In the re-assessment proceedings after the notice under section 148 was issued, assessee revised its accounts and claimed that no income has accrued to it or loss should be assessed. 11. As far as re-opening of assessments are concerned, we support the orders of Ld. CIT(A) on the issue as A.O. has reason to believe that incomes have escaped at that point of time. AO did not find any expenditure vouchers in assessee s premises during survey proceedings and so, he has reason to believe that income has escaped assessment. Thus he has validly initiated proceedings under section 147. As no assessment under section 143(3) was originally done and only returns were accepted under section 143(1), following the principles laid down by Hon ble Supreme Court in the case of Rajesh Jhaveri Stock Brokers Ltd 291 ITR 500(SC), the intimation under section 143(1) cannot be treated as order of assessment. Prior to 01.04.1989, A.O. had to pass an assessment order if he decides to accept the return bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his possession, reason to believe that there has been underassessment on account of the existence of any of the grounds contemplated by the provisions of s. 147(b) r/w the Explan. 1 thereto. (Para 7) The principle laid down in V. Jaganmohan Rao's case (1970) 75 ITR 373 (SC) : TC51R.313 is only to the extent that once an assessment is validly reopened by issuance of notice the previous underassessment is set aside and the ITO has the jurisdiction and duty to levy tax on the entire income that had escaped asessment during the previous year. What is set aside is, only the previous underassessment and not the original assessment proceeding. An order made in relation to the escaped turnover does not affect the operative force of the original assessment, particularly if it has acquired finality, and the original order retains both its character and identity. It is only in cases of underassessment based on cls. (a) to (d) of Expln. 1 to s. 147, that the assessment of tax due has to be recomputed on the entire taxable income. The judgment in Jaganmohan Rao's case, therefore, cannot be read to imply as laying down that in the reassessment proceedings validly initiated, Assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which is chargeable to tax but has escaped assessment and the ITO's jurisdiction under the section is confined only to such income which has escaped assessment. It does not extend to reconsidering generally the concluded earlier assessment. Claims which have been disallowed in the original assessment proceeding cannot be permitted to be re-agitated on the assessment being reopened for bringing to tax certain income which had escaped assessment because the controversy on reassessment is confined to matters which are relevant only in respect of the income which had not been brought to tax during the course of the original assessment. A matter not agitated in the concluded original assessment proceedings also cannot be permitted to be agitated in the reassessment proceedings unless relatable to the item sought to be taxed as escaped income'. Indeed in the reassessment proceedings for bringing to tax items which had escaped assessment, it would be open to an assessee to put forward claims for deduction of any expenditure in respect of that income or the non-taxability of the items at all. Even in cases where the claims of Assessee during the course of reassessment proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... As per the report of Inspector, the lands in Sy.No.664 721 of Nadergul village are agricultural lands wherein is agricultural activity is being carried out even on the date of inspection. Some of the lands in these survey No. are barren lands and a village by name Rangannaguda is situated in this survey no. No trace of any development work was found to have taken by taken place in these survey Nos. 15. Not only that A.O. has summoned the VRO and his statement was extracted in paras 5 and 6 of the order which also indicate that the so-called land sold to M/s. New Cyberabad City Projects Ltd., is in fact owned by various agriculturists and they are conducting agricultural operations and as per VRO records, neither assessee nor M/s. New Cyberabad City Projects Ltd., or any of its associates are owners of the lands. A.O. also made an attempt to trace the trail of money received by assessee company and the outflows are to various individuals and also to various group concerns. However, except analyzing the flow of money, A.O. did not enquire about the ultimate recipients of the money and how the funds received from M/s. New Cyberabad City Projects Ltd., are utilized. Since, there ..... X X X X Extracts X X X X X X X X Extracts X X X X
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