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TMI Blog2016 (8) TMI 208X X X X Extracts X X X X X X X X Extracts X X X X ..... The action of the learned CIT (A) is contrary to the procedure contemplated by the CBDT. 3. The learned Commissioner of Income Tax(Appeals) ought to have held the notice issued u/s. 153A of the Act, is illegal since return is called without granting statute recognised period for compliance and there is no reasons either recorded or communicated to know how the learned Assessing authority has exercised his discretion for compliance to the notice u/s. 1534A of the Act. 4. The appellant respectfully submits a period of clear 30 days to 45 days was considered reasonable for compliances with regard to filing of return in response to notices. 5. The learned Commissioner of Income Tax (Appeals) ought to have held the notice issued u / s . 143(2) of the Act, relates to the original return filed u/ s. 139 of the Act and not to the proceedings initiated u/s 153A of the Act, since the learned Assessing Authority has considered the income returned in the original return. 6. The learned Commissioner of Income Tax (Appeals) erred in holding the sum of Rs.ll,97,996/- the income earned on sale of Agri.Land is assessable under the head Business not under the head Capital Gains. 7. The lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l as the relevant material on record. The assessee has challenged the validity of assessment order passed under Section 153A on the ground that the assessee was not given an opportunity of hearing prior to grant of approval by the Joint Commissioner for framing the assessment under Section 153A of the Act. The learned Authorised Representative has placed reliance on the provisions of section 153D of the Act as well as the decision in the case of Akhil Ghulamali Somji Vs. ITO (supra). For ready reference we quote the Sectin153D as under : "153D. No order of assessment or reassessment shall be passed by an Assessing Officer below the rank of Joint Commissioner in respect of each assessment year referred to in clause (b) of sub-section (1) of section 153A or the assessment year referred to in clause (b) of sub- section (1) of section 153B, except with the prior approval of the Joint Commissioner: Provided that nothing contained in this section shall apply where the assessment or reassessment order, as the case may be, is required to be passed by the Assessing Officer with the prior approval of the Commissioner under sub-section (12)of section 144BA." The plain reading of the prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Inspecting Assistant Commissioner. An assessment made by the Income-tax Officer in violation of the provisions of section 144B of the Act would be an assessment without jurisdiction. In the instant case, the admitted position is that on receipt of the draft order of assessment, the assessee did file objections and the Income-tax Officer completed the assessment himself on the basis of the draft order without forwarding the draft order and the objections to the Inspecting Assistant Commissioner and obtaining directions from him. Such an order, on the face of it, is beyond the powers of the Income-tax Officer under section 143 read with section 144B of the Act and, hence, without jurisdiction. The Tribunal, in our opinion, was, therefore, justified in its conclusion that the assessment was liable to be annulled. It was right in holding that the assessment order passed by the Income- tax Officer the instant case without reference to the Inspecting Assistant Commissioner had rightly been annulled by the Commissioner of Income-tax (Appeals). In view of the above, we answer the question referred to us accordingly in favour of the assessee and against the Revenue. This reference is di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was not given the minimum period of 15 days and further when there is no reason recorded by the Assessing Officer for providing the period less than 30 days renders the notice issued under Section 153A of the Act is invalid and consequently the assessment is liable to be quashed. 9. On the other hand, the learned Departmental Representative has submitted that there is no such minimum time period is provided under Section 153A rather the return of income is required to be filed within a period as provided in the notice itself issued under Section 153A of the Act. He has referred to the provisions of section 153A and submitted that the provisions itself is simple and clear and therefore no such condition can be imported in the provision when nothing is provided of giving the minimum period of 15 days for filing the return of income. He has further contended that even otherwise the assessee has filed the return of income after about 5 months from the date of notice issued under Section 153A of the Act which was considered by the Assessing Officer and therefore the assessee cannot take a plea that the assessee was not given the minimum period of 15 days. 10. We have considered the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se the period of 30 days provided by the Assessing Officer for furnishing the return of income is a reasonable period. Further the assessee furnished its return of income in response to the said notice under Section 153A only on 3.2.2010 which is more than 4 months after the date of issue of notice under Section 153A. In view of the facts and circumstances when the Assessing Officer has granted 30 days to furnish the return in response to the notice under Section 153A and thereafter the assessee furnished the return only after more than 4 months which was accepted by the Assessing Officer, the objection raised by the assessee is devoid of any merit or substance and therefore rejected. 11. Ground No.5 is regarding invalid notice issued under Section 143(2) of the Act. 12. The learned Authorised Representative of the assessee has submitted that the Assessing Officer issued a notice under Section 143(2) after filing the return in response to notice under Section 153A of the Act however, the Assessing Officer chose to consider the return originally filed by the assessee under Section 139 of the Act and therefore the notice issued by the Assessing Officer under Section 143(2) relates ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion and notice issued under Section 143(2) so claimed by the assessee. The Assessing Officer has discussed this issue in para 6 and pointed out that in the return filed in response to the notice under Section 153A the assessee has declared les income than income declared in the original return filed under Section 139 of the Act and therefore the Assessing Officer took the total income returned by the assessee as declared in the original return while computing the total income. When the notice under Section 143(2) was issued after the return of income filed by the assessee in response to notice under Section 153A and further there was no time available to the Assessing Officer to issue notice on the original return of income then in the facts and circumstances of the case we find that the notice in question was issued only in respect of the return filed by the assessee under Section 153A of the Act. Hence this ground of the assessee is rejected. 15. Ground Nos.6 to 8 are regarding the income earned on sale of agriculture land is assessed as income from business instead of capital gains. The assessee earned an income of Rs. 11,97,996 from sale of Adyar Site. The assessee claimed th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment was not abated and in the absence of any fresh material, no addition can be made by the Assessing Officer. He has relied upon the decision dt.15.6.2014 of Delhi Bench of this Tribunal in the case of Sanjay Agarwal in ITA No.3184/Del/2013 and submitted that the scope of determining the total income in the reassessment famed under Section 153A is only addition of amounts those flow from the incriminating material found during the course of search. 17. On the other hand, the learned Departmental Representative has submitted that the assessee has claimed the exemption under Section 54B in the return filed in response to the notice issued under Section 153A therefore this is a fresh claim made by the assessee in the return filed under Section 153A and further the assessee has offered himself as income of STCG from sale of agriculture land. He has relied upon the orders of the authorities below and submitted that when the assessee has shown this property in question as business asset then the sale of same will give rise to the business income and not as capital gain. Even if it is treated as capital gain, it will be STCG as admitted by the assessee and the deduction under Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, since the learned Assessing Authority has considered the income returned in the original return. 6. The learned Commissioner of Income Tax (Appeals) erred in upholding the adoption of income under head "POOJA" at Rs. 35,00,000/- as against Rs. 3,22,553/-admitted by appellant, rejecting the appellant's contention that the offer is Gross receipt and not net income. 7. The Learned Commissioner of Income Tax (Appeals) erred in holding the loan from Mr. Sunil Patil is assessable as unexplained Credit for the assessment year 2006-07. 8. The learned Commissioner of' Income tax (Appeals) ought to have deleted the addition made on account of Cash Credit since the said transaction was considered while framing the assessment ujs.143(3) of the Act made on 21- 11-2008 and there is no material to suggest that the loan is not genuine. 9. The learned Commissioner of Income Tax (Appeals) ought to have held that the assessment for the assessment year 2006-07 does not get abated. 10. The learned Commissioner of Income tax (Appeals) erred in upholding the levy of interest u/s.234B as consequential. The appellant crave leave of the Hon'ble Tribunal to raise such other gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -09. Hence the assessee retracted its earlier statement recorded on 13.2.2009. The Assessing Officer again recorded the statement of assessee on 13.4.2009 wherein the assessee has took a stand that after reducing the expenses from the admitted Pooja income for the Assessment Year 2006-07 is only of Rs. 18,29,800. The Assessing Officer did not accept the contention of the assessee and made the addition of Rs. 35,00,000 as disclosed by the assessee in the statement recorded on 23.2.2009. The assessee challenged the action of the Assessing Officer before the CIT (Appeals) but could not succeed. 25. Before us, the learned Authorised Representative of the assessee has submitted that the original return under Section 143(3) was concluded and therefore, in the absence of any incriminating material, no addition can be made on the basis of the statement recorded during the search. He has further contended that the assessee has immediately after the statement recorded on 13.2.2009 filed a letter dt.6.4.2009 and explained that the actual gross receipts from Pooja was Rs. 50,64,000 for all the three years for the Assessment Years 2006-07 to 2008-09. Further the Assessing Officer recorded the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lakhs for the Assessment Year 2006-07 to 2008-09 respectively. We find that there is no ambiguity in the statement of assessee regarding the Pooja income which has been clearly corroborated by the seized material. Thus when there is a sufficient evidence being seized material which corroborates the statement of the assessee recorded under Section 132(4) on 23.2.2009 then the subsequent retraction of the statement by the assessee withut any corroborating evidence cannot be accepted as the assessee has not explained the facts and circumstances under which he had admitted a wrong income in the statement and how the income shown in the seized material is not correct. Therefore mere retraction of statement without explaining the circumstances as well as corroborating evidence, it cannot be accepted being an after thought. Accordingly, we do not find any substance in this ground of the assessee and the same is dismissed. 28. Ground Nos.7 to 9 are regarding the addition on account of loan from Mr. Sunil Patil as unexplained credit. 29. A sum of Rs. 42 lakhs was shown in the name of Mr. Sunil Patil on 31.3.2006. The Assessing Officer made enquiry at the address furnished by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Balance Sheet wherein this amount of unsecured loan in the name of Mr. Sunil Patil has been shown and it is not clear whether this record was filed by the assessee along with the return of income filed on 24.11.2006 on which the assessment was completed for the year under consideration. Accordingly, we direct the Assessing Officer to verify whether this unsecured loan in the name of Mr. Sunil Patil was duly disclosed in the return filed on 24.11.2006 or during the assessment proceedings completed vide order dt.21.11.2008. This issue is set aside to the record of Assessing Officer for proper verification and re- adjudication. 33. For the Assessment Year 2007-08, the assessee has raised the following grounds : " 1. The learned Commissioner of income Tax (appeals) erred in holding that non issue of an opportunity of being heard by the Additional Commissioner before approving an order of assessment u/s 153A r.w.s. 143(3) of the Act will not vitiate assessment proceedings completed u/s 153A r.w.s. 143(3) of the act. 2. The action of the learned CIT (A) is contrary to the procedure contemplatedby the CBDT. 3. The learned Commissioner of Income Tax(Appeals) ought to have held the n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble Tribunal to raise such other ground or grounds at the time of hearing." 34. Ground Nos.1 & 2 are regarding validity of assessment under Section 153A on the ground of non-grant of opportunity of hearing to the assessee for granting approval by the Joint Commissioner. This issue is identical to the issue involved in Ground Nos.1 & 2 of the Assessment Year 2005-06. In view of our finding on this issue for the Assessment Year 2005-06, these grounds of the assessee's appeal stand dismissed. 35. Ground Nos.3 & 4 are regarding the validity of notice issued under Section 153A on the ground that the assessee was not given a clear 30 days notice. This issue is identical to the issue involved in Ground Nos.1 & 2 of the Assessment Year 2005-06. In view of our finding on this issue for the Assessment Year 2005-06, these grounds of the assessee's appeal stand dismissed. 36. Ground No.5 is not pressed by the ld. A.R. and the same is dismissed as not pressed. 37. Ground No.6 is regarding addition on account of income for performing Pooja. This issue is identical to the issue involved in Ground Nos.1 & 2 of the Assessment Year 2005-06. In view of our finding on this issue for the Assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levant record has not been examined by the Assessing Officer and also not available before us therefore in the facts and circumstances of the case, we set aside this issue to the record of Assessing Officer for proper examination of the relevant record as well as the details to be filed by the assessee and then decide the same after affording an opportunity of hearing to the assessee. 44. The assessee has also raised an additional ground which reads as under : "1. The learned CIT (Appeals) erred in holding that the addition of Rs. 39,00,000 has been made on seized material and payments have been made to Mr. Hiren Kumar Patel. Order of the learned CIT (Appeals) is opposed to law." 45. We have heard the learned Authorised Representative as well as learned Departmental Representative and considered the relevant material on record. This is not a new plea raised by the assessee before us but this addition was made by the Assessing Officer based on the seized material and the assessee has also challenged the action of the Assessing Officer before the CIT (Appeals) however in the ground raised before us in Form 36, the assessee did not raise this ground in the original ground filed al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of payment made by the assessee. 48. On the other hand, the learned Departmental Representative has submitted that the Assessing Officer has analysed the entries at page No.75 of the seized material as reproduced by the Assessing Officer at page 30 of the assessment order from which it is clear that the assessee has paid a sum of Rs. 18 lkahs on 7.8.2006 and again paid Rs. 1 lakh on 18.8.2006, total amounting to Rs. 19 lakhs which has been written in the margin as a figure of 19. Therefore the remaining amount written in the margin in the abbreviated form represents the amounts in lakhs and not in thousands as claimed by the assessee. He has relied upon the orders of the authorities below. 49. We have considered the rival submissions as well as the relevant material on record. The Assessing Officer made total addition of Rs. 58 lakhs on account of undisclosed investment being payment made by the assessee out of the books to one Mr. Hirenkumar Patel. The CIT (Appeals) while confirming the addition has granted the benefit of telescoping to the extent of an addition of Rs. 39 lakhs on account of Pooja income and therefore confirmed addition of remaining amount of Rs. 19 lakhs. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issued u/s 153A of the Act, is illegal since return is called without granting statute recognised period for compliance and there is no reasons either recorded or communicated to know how the learned Assessing authority has exercised his discretion for compliance to the notice u / s 1534A of the Act. 4. The appellant respectfully submits a period of clear 30 days to 45 days was considered reasonable for compliances with regard to filing of return in response to notices. 5. The ld. Commissioner of Income Tax (Appeals) ought to have held the notice issued u/s 143(2) of the Act, relates to the original return filed u/s 139 of the Act and not to the proceedings initiated u/s 153A of the Act, since the learned Assessing Authority has considered the income returned in the original return. 6. The ld. Commissioner of Income Tax (Appeals) erred in upholding the adoption of income under head "POOJA" Rs. 20,00,000/- as against Rs. 3,85,376/- admitted by appellant, rejecting the appellant's contention that the offer is Gross receipt and not net income. 7. The ld. CIT (Appeals) erred in ;holding the appellant has made an additional investment of Rs. 15,00,000 on Flat and that requi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt out of his unaccounted income. Thus the assessee admitted the unaccounted income of Rs. 15 lakhs being investment in the Flat. The Assessing Officer accordingly made an addition of the said amount of Rs. 15 lakhs under Section 69B of the Act. The assessee challenged the action of the Assessing Officer before the CIT (Appeals) but could not succeed. 53. Before us, the learned Authorised Representative of the assessee has submitted that when there is an addition on account of Pooja income of Rs. 20 lakhs then the benefit of telescoping against the addition of unexplained investment could have been given. 54. On the other hand, the learned Departmental Representative has relied upon the orders of the authorities below. 55. Having considered the rival submission as well as the relevant material on record. We find merits in the submission of the learned Authorised Representative that when there is an addition on account of Pooja income for Rs. 20 lakhs for the year under consideration then the benefit of telescoping of the said amount shall be given against the addition of unexplained investment. Even otherwise if an addition of Rs. 20 lakhs was made by the Assessing Officer and w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see retained this land for more than 3 years. It is not the case of the revenue that the land was shown as stock in trade. Therefore even if the land was shown as business asset and it was sold prior to the completion of construction work. It would not partake the character of business undertaking or asset on which depreciation is allowed. Therefore this land was sold as an individual asset and not as a particular unit of business of the assessee. Accordingly, we are of the view that the gain arisen from the sale of land will be assessed as 'Long Term Capital Gain' (LTCG). However if any gain is earned on the construction part of the property, the same will be assessed as STCG. Accordingly, principally we allow the claim of the assessee and direct the Assessing Officer to accept the claim of LTCG to the extent of the land and if any gain is earned by the assessee on account of construction of the property, the same will be treated as STCG. 61. Ground No.10 is regarding addition on account of contract receipts. 62. The Assessing Officer noted that the assessee has not declared any income in respect of certain projects from which substantial work in progress has been declared. Acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ddition made by the Assessing Officer under Section 41(1) of the Act for the Assessment Year 2006-07 then this addition cannot be made for the year under consideration. Hence, we direct the Assessing Officer to verify the fact as pointed out by the assessee and then decide the same accordingly. 70. For the Assessment Year 2009-10, the assessee has raised the following grounds : " 1. The learned Commissioner of Income Tax (Appeals) erred in upholding the adoption of income under head "POOJA" Rs. 30,00,000j- as against RsA,09,165j- admitted by the appellant, rejecting the appellant's contention that the offer is Gross receipt and not net Income. 2. The Authorities below erred in adopting the income from pooja at Rs. 30,00,000/-, as there is no material to suggest that the appellant has earned such income. 3. The Learned Commissioner of Income Tax (Appeals) erred in rejecting the set off of short term loss claimed on sale of SBI Mutual Fund to the extent of Rs. 4,24,380j-, holding the income from Mutual Funds are exempt u/ s . 10(35) of the Act. 4. The learned Commissioner of Income Tax (Appeals) erred in rejecting the set off of profit profit estimated on contract receip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the project offered by the assessee on completion during the year under consideration. Accordingly this ground stand disposed off. 76. The assessee has raised an additional ground which reads as under : "1. The learned CIT (Appeals) erred in holding that the deposits inthenames of the family members of the appellant are assessable in the hands of the appellant for the Assessment Year 2009-10. Order of the learned CIT (Appeals) is opposed to law." Though this issue was raised by the assessee before the CIT (Appeals) but could not succeed however in the original grounds raised along with Form No.36, the assessee inadvertently did not raise this ground and accordingly filed the additional ground. 77. Having considered the facts and circumstances of the case as well as submissions of the parties, we find that this is not a fresh plea raised by the assessee but the additional ground raised is emanating from the impugned orders of the authorities below. Accordingly, we admit the additional ground for deciding on merits. 78. During the course of search and seizure operation, a Fixed Deposit of Rs. 28 lakhs was detected in the name of Smt. Rajeshwari G Pandit, Smt. Sushma G Pand ..... X X X X Extracts X X X X X X X X Extracts X X X X
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