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Shri H.P. Basavaraju Versus Income Tax Officer Ward-1 (1) , Mysore

2015 (11) TMI 486 - ITAT BANGALORE

Re-opening of the assessment - Held that:- In the case on hand, the Assessing Officer reopened the assessment in respect of the income on account of advance given by the assessee for purchase of land and an addition of ₹ 1 Crore was made by the Assessing Officer on this account while passing the re-assessment order. However the learned CIT (Appeals) deleted the said addition of ₹ 1 Crore made by the Assessing Officer which was the reason for initiation of proceedings under Section 14 .....

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would not now survive since they are made not on grounds on which the assessments were reopened. These two additions at (i) and (ii) are accordingly deleted.- Decided in favour of assessee. - ITA No. 496/Bang/2014 - Dated:- 9-10-2015 - Vijaypal Rao, JM And Jason P Boaz, AM For the Appellant : Shri S Venkatesan, CA For the Respondent : Shri Sunil Kumar Agarwala, JCIT (DR) ORDER Per Shri Jason P Boaz, AM This appeal by the assessee is directed against the order of the CIT (Appeals), Mysore dt.26. .....

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tor. At the time of survey action, the Department noticed from documents found at the premises that the assessee had entered into a transaction vide Registered Sale Deed dt.23.7.2010 for sale of land at S.No.231/1, Bogadi village, Kasba Hubli, Mysore, in which the assessee was a confirming party. It was also noticed therefrom that the assessee had paid an advance of ₹ 2,27,78,130 to one Sri Mohammed Ahmed, the land owner, as per sale agreement dt.18.7.2007. However, since the said land was .....

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48 of the Act dt.31.1.2012 to the assessee. The assessee in response thereto vide letter dt.9.2.2012, requested that the return of income filed earlier on 31.3.2009 be treated as filed in response to the notice under Section 148 of the Act. The Assessing Officer, however, required the assessee to file a return of income in response to notice issued under Section 148 of the Act, which was complied with by the assessee on 19.2.2012. The assessee did not ask for furnishing of the reasons recorded f .....

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s.1,89,402 3. Negative cash balance Rs.2,98,176 4. Loans not confirmed Rs.2,03,13,256 5. Excess Asset Rs.9,50,000 6. Cash deposit- no source Rs.4,50,000 7. Advance to Mohd. Ahmed Rs.1,00,00,000 8. Credit in Bank Account Rs.1,00,00,000 In the aforesaid order of assessment, the Assessing Officer has made several additions / disallowances including a sum of ₹ 1 Crore out of the advance given to Sri Mohammed Ahmed, which was considered as the investment / asset not declared by the assessee as .....

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eal before the CIT (Appeals), Mysore. In the grounds raised before the learned CIT (Appeals), the assessee challenged the reopening of the assessment as well as the additions made by the Assessing Officer. The assessee also filed certain additional evidences vide letter dt.13.8.2013 seeking their admission and written submissions dt.8.11.2013. The learned CIT (Appeals) called for a remand report from the Assessing Officer on the submissions filed by the assessee. The Assessing Officer filed the .....

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es disallowed Rs.1,89,402 3. Loans not confirmed Rs.2,03,13,256 4. Excess Asset Rs.9,50,000 5. Advance to Mohd. Ahmed Rs.1,00,00,000 6. Credit in Bank Account Rs.1,00,00,000 Thus ultimately, the learned CIT (Appeals) sustained two additions (i) ₹ 2,98,176 being negative cash balance and (ii) ₹ 4,50,000 in respect of cash deposit in bank account. The learned CIT (Appeals) has deleted the addition of ₹ 1 Crore in respect of the assessee's transaction with Sri Mohammed Ahmed a .....

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ing grounds :- " 1. The order of the learned CIT (Appeals) in so far as it sustains additions impugned in the appeal before him and only allowing the appeal partly instead of totally is opposed to law, equity, eight of evidence, facts and circumstances of the appellant s case. 2. The learned CIT (Appeals) ought to have held that the order of re-assessment is bad in law and void ab initio for want of requisite jurisdiction especially, the mandatory requirements to assume jurisdiction under S .....

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h balance on 5.4.2007 and 7.4.2007 : ₹ 2,98,176 3.2 The learned CIT (Appeals) failed to appreciate the explanation that the appellant is the Managing Partner of 3 firms and Managing Director of 2 companies and has been the custodian of the funds of the above 3 firms and 2 companies and such funds used to be in his possession and control and he used to deposit such funds in his own bank account and in the bank accounts of the 3 firms and 2 companies, which are managed by him as and when req .....

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lf liable to be charged to interest under Section 234A, 234B and 234C of the Act, which under the facts and in the circumstances of the appellant s case deserves to be cancelled. 5. For the above and other grounds that may be urged at the time of hearing of the appeal, your appellant humbly prays that the appeal may be allowed and justice rendered and the appellant may be awarded costs in prosecuting the appeal and also order for the refund of the institution fees as part of the costs." 4. .....

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2,27,78,170 as per sale agreement dt.18.7.2007 does not mean that the same amounts to income of the assessee escaping assessment. It was submitted that the failure to show the amount in the Balance Sheet of the assessee did not warrant a presumption that the advances are given out of undisclosed income. The learned Authorised Representative submits that the said advances were given from various concerns where the assessee was a partner or director and the same was reflected in the financial sta .....

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tted that in view of the above, it is clear that the assessment made under Section 143(3) rws 147 of the Act requires to be cancelled and in support of this contention placed reliance on the decision of the Hon'ble Rajasthan High Court in the case of CIT Vs. Shri Ram Singh (2008) 217 CTR (Raj) 345 and of the Hon'ble Bombay High Court in the case of Jet Airways (I) Ltd. reported in 331 ITR 236 (Bom.). 5.2 Per contra, the learned Departmental Representative supported the impugned order of .....

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that the assessee sought for the reasons recorded and the learned CIT (Appeals) declined to interfere. It was submitted by the learned Departmental Representative that in view of the above, the reopening of the assessment by the Assessing Officer is justified. 5.3.1 We have considered the rival contentions and perused and carefully considered the material on record. Admittedly, the assessee did not seek the reasons recorded for initiation of assessment proceedings under Section 147 of the Act b .....

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t;the assessee had paid an amount of ₹ 2,27,78,130 as advance to Sri Mohammed Ahmed the land owner, as per the sale agreement dated 18.7.2007. As per the schedules filed with the return of income, this amount of advance is not reflected in the Balance Sheet filed by the assessee. Hence income chargeable to tax had escaped assessment as mentioned in Section 147 of the Income Tax Act, 1961". Considering the fact that the Assessing Officer had the aforesaid material based on which he arr .....

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3.2 At the same time, we are conscious of the fact that the very basis on which the re-assessment has been initiated (supra) does not now survive. The Hon'ble High Court of Rajasthan in the case of CIT V Shri Ram Singh (supra) held that it is only when, in proceedings under s. 147 the AO assesses or reassesses any income chargeable to tax, which has escaped assessment for any assessment year, with respect to which he had "reason to believe" to be so, then only, in addition, he can .....

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