TMI Blog2016 (10) TMI 971X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee three years prior to the recording of reasons by the AO. Once the alleged land was shown in the balance sheet of HUF, taxes were paid in the hands of HUF, and then how that very alleged unexplained investment can be considered in the hands of the individual ? The AO has not verified any facts from the record, and he simply reproduced information came from the ADIT and issued notice under section 147. As observed earlier, even the ADIT was not sure about the quantum of alleged unexplained investment as well as in the status of the assessee in whose hand it is to be assessed. Quantum was apprehended at ₹ 7 crores, but was subject to verification from the DVO and a suggestion was made to this effect by the ADIT. In spite of that, ld.AO did not bother to collect information for harbouring a belief that income chargeable to tax has escaped assessment. On overall evaluation of the material available on record, we are of the view that a live link is totally missing between the material available with the AO for formation of a belief that income chargeable to tax has escaped. Therefore, we allow this ground of appeal in both the years and quash re-assessment orders. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relevant period of limitation referred to in sub-section 3 and 4 section 253, if it is satisfied that there was sufficient cause for not presenting it within that period. Expression sufficient cause employed in this section has also been used in section 5 of Indian Limitation Act, 1961. This expression has fallen for consideration before the Hon ble High Courts as well as before the Hon ble Supreme Court, and the Hon ble Courts are unanimous in observing that whenever such issue fallen for consideration before adjudicating authority, then alleged sufficient cause is to be considered with justice oriented approach. We deem it appropriate to make reference to the decision of Hon ble Supreme Court in the case of Collector Land Acquisition Vs. Mst. Katiji Others, 1987 AIR 1353. The relevant part of the judgment reads as under: 1. Ordinarily a litigant does not stand to benefit by lodging an appeal late. 2. Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this when delay is condoned the highest that can happen is that a cause would be decided on merits after hearing the par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is cause. There is no presumption that delay in approaching the court is always deliberate. This Court has held that the words sufficient cause under Section 5 of the Limitation Act should receive a liberal construction so as to advance substantial justice vide Shakuntala Devi lain Vs. Kuntal Kumari [AIR 1969 SC 575] and State of West Bengal Vs. The Administrator, Howrah Municipality [AIR 1972 SC 749]. It must be remembered that in every case of delay there can be some lapse on the part of the litigant concerned. That alone is not enough to turn down his plea and to shut the door against him. If the explanation does not smack of mala fides or it is not put forth as part of a dilatory strategy the court must show utmost consideration to the suitor. But when there is reasonable ground to think that the delay was occasioned by the party deliberately to gain time then the court should lean against acceptance of the explanation. While condoning delay the Could should not forget the opposite party altogether. It must be borne in mind that he is a looser and he too would have incurred quiet a large litigation expenses. It would be a salutary guideline that when courts condone the delay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eturn of income for the Asstt.Year 2004-05 on 29.3.2006 declaring total income at ₹ 23,130/-. The assessee had filed revised return in individual capacity on 12.9.2005 for the Asst.Year 2004-05 declaring total income at ₹ 48,200/-. After this inquiry at the end of the DDIT, assessee has filed revised computation of total income for the Asstt.Years 2004-05 and 2006-07 in the case of HUF. He has also paid cheque of ₹ 4.70 lakhs in four instalments. In other words, the assessee has owned up declaration made during the course of statement recorded by the DDIT. According to the assessee, it was statement in the capacity as karta of HUF and revised computation of income was submitted by the HUF. Taxes have also been paid partly. The ld.AO has sought to reopen the assessment of the assessee in his individual case. He has recorded following reasons in both the assessment years. REASONS FOR REOPENING THE CASE OF Shri.Karsanbhai O. Kakadia (PAN:- AMXPK2145H ) for A.Y.2006-07 The ADIT(Inv.) Unit-II Surat has forwarded his report on the enquiry of TEP conducted in the case of Hetalben R. Desai and Others vide letter dated 31- 8-2010. The TEP was regarding an allegat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s being reopened separately on this issue. The assessee has later sold these lands : (a) at Survey No.51, Block 559/B admeasuring 31,869 sq. m. to S/Shri.Dhirubhai Arjanbhai Patel, Chandubhai Parbatbhai Dabaria and Shaileshbhai Parbatbhai Dabaria. The transaction led to payment and receipt of a cash at ₹ 55.5 lakhs which has been admitted by both the seller and the purchasers. The assessments of three purchasers is being reopened u/s 147 separately. Thus the assessee sold the land @ ₹ 214 per sq mtr. [Rs.12,75,000 + 55.5 lakh/31,869= 68,25,000/31869] (b) land at Survey No.51, Block 42; 9915 sq.mtr. to Shri. Narayanbhai Parshottambhai Mayani on 27-06-2005 for a documented price of ₹ 2,00,000/- @ ₹ 20 per sq mtr which is less than the jantry value. The addition as per section 50C on this transaction comes to ₹ 3,04,732/-.No disclosure was made on this transaction . The two pieces of land were worth ₹ 7 crores @ of ₹ 1675 per sq mtr [ 7 cr/(31869+9915)= 7cr/41784] as per the allegation. However the same were claimed to be purchased by the assessee including the unaccounted investment at ₹ 105 per sq mtr,[(9915+31869)41,784 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the opinion that the assessee's unaccounted investment is much more than what he has admitted for A.Y. 2006-07. Hence, the case needs re- ; opening u/s. 147 of the I.T. Act, 1961. Sd/- Place: Surat (Sanjay V. Deshmukh) Date : 12.10.2010 Dy. Commissioner of Income-Tax Circle-9, Surat REASONS FOR REOPENING THE CASE OF Shri.Karsanbhai O. Kakadia (PAN:- AMXPK2145H ) for A.Y.2004-05 The ADIT(Inv.) Unit-II Surat has forwarded his report on the enquiry of TEP conducted in the case of Hetalben R. Desai and Others vide letter dated 31- 8-2010. The TEP was regarding an allegation that two pieces of land (at Survey No.51, Block 559B admeasuring 31,869 sq.mtr. and Survey No.51, Block 42, admeasuring 9915 sq.m.) together worth ₹ 7 crores sold was sold at very low prices by one Mrs. Hetalben R Desai to some individuals .The report states that the sale of the said land by Hetalben and subsequent holders resulted in transfer of unaccounted money which was accepted under oath before the ADIT. The amount of disclosures of unaccounted money grossing upto ₹ 1.61 crores was made as below:- Sr. Names P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ukh) Date : 12.10.2010 Dy. Commissioner of Income-Tax Circle-9, Surat Accordingly, the ld.AO has reopened the assessment and initiated assessment proceedings. The ld.AO thereafter passed assessment order on 22.12.2011 in the Asstt.Years 2004-05 and 2006-07 respectively under section 143(3) r.w.s 147 of the Income Tax Act. 9. Dissatisfied with reopening of the assessment, the assessee carried the matter before the ld.CIT(A). But appeals to the ld.CIT(A) did not bring any relief to the assessee in both the years. 10. The ld.counsel for the assessee, while imputing orders of the Revenue authorities contended that there was no material with the AO in the case of the assessee (individual) to harbor a belief that income chargeable to tax has escaped. He pointed out that return in the case of HUF was filed on 29.3.2006 for the Asstt.Year 2004-05. The assessee has shown both pieces of the land in the balance sheet. The DDIT has conducted an inquiry on 22.3.2007. The assessee agreed on unaccounted investment in this land. The assessee has filed revised computation in HUF and also paid taxes of ₹ 4.70 lakhs in four instalments. This tax was paid in HUF. All these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Dhariya Construction, 328 ITR 515. On the strength of these decisions, it was contended that even on the basis of DVO s report, the assessment cannot be reopened. 11. With regard to action of the AO in proceeding mechanically without making any analysis of the information, he relied upon following decisions: i) Rasalika Trading Investment Co. P.Ltd. Vs. DCIT Anr. (2014) 365 ITR 447 (Del.) ii) IT Vs. SFIL Stock Broking Ltd. (2010) 325 ITR 285 (Del) iii) Signature Hotels P.Ltd. Vs. ITO, Another (20111) 338 ITR 51 (Del) iv) Sarthak Securities Co.Ltd. Vs. ITO (2010) 329 ITR 110 (Del) v) ITO Vs. On Exim Pvt.Ltd. ITA No.1116/del/2011 12. In his next proposition, he contended that assessment was sought to be reopened on the premises that unexplained investment of more than ₹ 7 crores was made by the assessee. But ultimately, the AO has not made any addition on account of this premise. He did not make any addition on the basis of DVO s report, which has been suggested by the DDIT. He made addition only on the basis of alleged disclosure of the assessee before the DDIT in the statement recorded under section 131 of the Act. Therefore, according ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice. The AO has put assessment machinery in motion by issuance of notice under section 143(2) and 142(1) of the Act. These notices were issued in the month of August, 2011. Thereafter, the assessee alleged to have filed return on 19.12.011. The assessment order has been passed on 22.12.2011. If the assessee did not file return, then the assessment is not depended upon the action of the assessee. The AO has to pass assessment order within the limitation. If the assessee files objections against reopening of assessment on last date of expiry of limitation, the AO cannot be expected to dispose of the objections, because, he has already set the assessment machinery in motion, and he was at the verge of completion of the assessment order. In this case, we do not see any irregularity for not disposing of that objection filed by the assessee against the reopening of the assessment. On this reason, the proceeding cannot be quashed. 16. A bare perusal of section 147 would indicate that this section contemplates that if the AO has reasons to believe any income chargeable to tax has escaped assessment for any assessment year Meaning of the above would be that there should be reason to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent, there was no material with the Revenue to say that unexplained investment was made by the assessee in his individual cases. The ADIT who has investigated the assessee has suggested for obtaining DVO s report. The ld.AO ought to have first obtained report, then visualize in the light of that report. Thus, at the time when he has recorded reasons for reopening of the assessment he was not possessing any material in the individual cases of the assessee. The DVO has submitted his report on 5.12.2011 and valued the land at ₹ 19.12 lakhs for Block No.559/B at the time of purchases and ₹ 22.31 lakhs at the time of sale i.e. on 18.10.2005. In the case of HUF, the assessee has already shown value of investment at ₹ 55 lakhs. He has already paid tax of ₹ 4.70 lakhs in instalments. He has shown this land in HUF much prior to investigation started by the DDIT. He has paid taxes on account of alleged unexplained investment by way of revised computation. All these steps were taken by the assessee three years prior to the recording of reasons by the AO. Once the alleged land was shown in the balance sheet of HUF, taxes were paid in the hands of HUF, and then how that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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