TMI Blog2018 (7) TMI 231X X X X Extracts X X X X X X X X Extracts X X X X ..... echanically issued notice u/s. 148 of the Act, on the basis of information allegedly received by him from the DCIT, Central Circle, Dehradun. We are of the considered view that proceedings initiated by invoking the provisions of section 147 of the Act by the AO and upheld by the Ld. CIT(A) are nonest in law and without jurisdiction, hence, the re-assessment is quashed. Since we have already quashed the re-assessment, the other grounds have become academic and are therefore not adjudicated and accordingly, the assessee’s appeal is allowed. - ITA No. 988/Del/2018 - - - Dated:- 24-5-2018 - SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER Assessee by : Sh. Gautam Jain, Adv. Sh. Piyush Kr. Kamal, Adv. Department by : Sh. K. Tiwari, Sr. DR. ORDER PER H.S. SIDHU, JM This appeal filed by the assessee is directed against the order passed by the Ld. CIT(A), Hladwani on 16.11.2017 in relation to the assessment year 2008-09 on the following grounds:- 1. That the learned Commissioner of Income Tax (Appeals), Haldwani has erred both in law and on facts in sustaining the initiation of proceedings under section 147 of the Act and, co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laced on record to establish that the purchase consideration of ₹ 15,50,000/- was the actual sum invested by the appellant. 2.3 That the learned Commissioner of Income Tax (Appeals) and the learned Income Tax Officer has erred both in law and on facts in invoking the provision contained in section 292C of the Act which are wholly inapplicable to the facts of the appellant. 2.4 That the learned Commissioner of Income Tax (Appeals) while upholding the addition has overlooked documentary evidence placed on record by the appellant to show that the investment made by the assessee was duly explained out of the funds available with the appellant and therefore, addition sustained is not in accordance with law. 2.5 That finding of the learned Commissioner of Income Tax (Appeals) that, thus, prima facie, it was evidently established that the assessee alongwith Shri Ganga Ram Adwani had paid of ₹ 95,25,000/- over and above the registered amount as undisclosed investment of the assessee which was out of his undisclosed income is factually incorrect and hence not tenable. 2.6 That further finding of the learned Commissioner of Income Tax (Appeals) that further the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per registered deed dated 11.4.2007 for ₹ 15,50,000. Accordingly, proceedings under section 147 were initiated to assess the undisclosed amount of investment made in purchase of the said property. Accordingly, notice under section 148 of the Act was issued on 31.3.2015 after recording proper reasons for doing so and after taking prior approval of CIT, Dehradun. In response to this notice, the assessee vide letter dated 6.4.2015 that his return of income filed for AY 2008-09 on 28.6.2008 may kindly be treated as filed in response to notice u/s. 148 of the Act dated 31.3.2015. Notices u/s. 143(2) 142(1) of the Act alongwith questionnaire were issued on 17.8.2015. In response to these notices, the assessee alongwith his AR attended the assessment proceedings and furnished requisite details. During the search and seizure operation u/s. 132 of the Income Tax Act, 1961 in the group of M/s Kanatal Resorts on 22/23.9.2011, laptop of Sh. Deepak Mittal was seized. In the laptop, the account annexurised as page 27 of A-2 contains that land measuring 0.5480 hectares (8 bighas) situated at Jwalapur, Haridwar known as farm house land was sold by Ashwani Kumar Mittal and Sons (HUF), which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of the said property, which has evidential value within the meanings of section 132(4A) read with section 292C of the I.T. Act, 1961. Thus, the AO observed that the arguments put forth in the written submissions dated 2.11.2015 and 10.3.2016 have no credence. Therefore, the AO held that assessee alongwith Sh. Ganga Ram Adwani got registered a purchase deed for ₹ 15,50,000/-, which was actually purchased for ₹ 2,06,00,000/-, in which share of the assessee comes to ₹ 1,03,00,000/- being half share. Thus, AO observed that it is clear that the assessee has made undisclosed investment of ₹ 95,25,000/- as his share in purchasing 0.5480 hectare land at village Jwalapur, District Haridwar on 11.4.2007. Accordingly, undisclosed investment made by the assessee amounting to ₹ 95,25,000/- was added to the total income of the assessee under section 69B of the Income Tax Act, 1961 vide order dated 30.3.2016 passed u/s. 143(3)/147 of the I.T. Act, 1961. 3. Aggrieved with the aforesaid assessment order dated 30.3.2016, assessee appealed before the Ld. CIT(A) who vide his impugned order dated 16.11.2017 has affirmed the action of the AO and dismissed the appeal of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vs. Burlop Dealers Ltd. reported in 79 ITR 609 (SC). 3. Copy of judgment of Hon ble Supreme Court of India in the case of ITO and others vs. Lakhmani Mewal Das reported in 103 ITR 437(SC); 4. Copy of judgment of Hon ble Supreme Court of India in the case of Kishinchand Chellaram vs. CIT reported in 125 ITR 713. 5. Copy of judgment of Tribunal in the caes of Smt. K. Narasamma vs. ITO in 32 ITD 494 (Hyd.). 6. Copy of judgment of Hon ble Uttranchal High Court in the case of Mcdermott International Inc. vs. ACIT and others reported in 259 ITR 138. 7. copy of judgment of Hon ble Supreme Court in the case of CIT vs. PV Kalyansundaram reported in 294 ITR 49. 8. Copy of judgment of Tribunal in the case of ITO vs. Optec Disc. Manufacturing reported in 11 DTR 0264 (Chand). 9. Copy of Judgement of Hon ble Delhi High Court in the case of Haryana Acrylic Manufacturing Co. vs. CIT and others reported in 308 ITR 38 (Del). 10. Copy of judgment of Hon ble Bombay Tribunal in the case of DCIT vs. Gujarqat Ambuja Cements Ltd. reported in 57 DTR 0179. 11. Copy of judgment of Hon ble Delhi High Court in the case of Signatures Hotels Pvt. Ltd. vs. ITO reported in 338 ITR 51; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. New Delhi Television Ltd. Vs DCIT [2017] 84 taxmann.com 136 (Delhi) where Hon'ble Delhi High Court held that proceedings under section 147, beyond a period of 4 years can only be initiated if the Assessing Officer has reason to believe that there has been escapement of income and this escapement is owing to the lack of true and fair disclosure by the assessee. In this regard, it is essential to understand the meaning of the phrase 'true and fair disclosure'. The Court has considered the meaning of this phrase in Honda Siel Power Products Ltd. v. Dy. CIT [2012] 340 ITR 53/[2011] 197 Taxman 415/10 taxmann.com 2 (Delhi) where the Court held that that the term 'failure' on the part of the assessee is not restricted to the return and the columns of the return or the tax audit report. There can be omission and failure on the part of Hie assessee to disclose material facts fairly and truly during the course of the assessment proceedings. [Para 4. CIT Vs P.V.S. Beedies (P.) Ltd. [1999] 103 Taxman 294 (SC)/[1999] 237 ITR 13 (SC)/[1999] 155 CTR 538 (SC) where Hon'ble Supreme Court held that Audit party had merely pointed out a fact which had been overlooked by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which it is proposed to be issued notice u/s. 148 of the Income Tax Act. 2008-09 6. The quantum of income which has escaped assessment ₹ 95,25,000/- 7. Whether the clauses (a), (b) or (c) of the explanation 2 to the second proviso of section 147 are applicable. Clause (b) of the explanation 2 to the second proviso of section 147 is applicable. 8 Whether the assessment is proposed to be made for the first time? If reply is in affirmative, please state: Yes (a) whether any voluntary return had already been filed. Yes. Returned income ₹ 13,14,873/-. (b) if so, the date of filing the said return. 28.6.2008 9. If the answer to item 8 is in negative, please state (a) The income originally assessed NA (b) Whether it is a case of under assessment, assessment at too low a rate which has been made the subject of excessive relied or allowing excessive loss or depreciation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us Individual 4 District/circle/Range Ward 3, Haridwar 5 Assessment year in respect of which it is proposed to be issued notice u/s. 148 of the Income Tax Act. 2008-09 6. The quantum of income which has escaped assessment ₹ 95,25,000/- 7. Whether the clauses (a), (b) or (c) of the explanation 2 to the second proviso of section 147 are applicable. Clause (b) of the explanation 2 to the second proviso of section 147 is applicable. 8 Whether the assessment is proposed to be made for the first time? If reply is in affirmative, please state: No (a) whether any voluntary return had already been filed. (b) if so, the date of filing the said return. 9. If the answer to item 8 is in negative, please state (a) The income originally assessed ₹ 13,14,870/- (b) Whether it is a case of under assessment, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issued u/s. 148 of the Act after a period of four years from end of assessment year in case where assessment has been framed u/s. 147/143(3) of the Act is illegal and invalid. The case law relied by the Ld.DR are on distinguished facts. Our aforesaid view is fortified by the decision of the Hon ble Delhi High Court in the case of CIT vs. Viniyas Finance and Investment (P) Ltd. wherein the Hon ble has held as under:- 7. On going through the purported reasons we find that there is no mention of the respondent-assessee not having made a full and true disclosure of the material facts necessary for assessment. On the contrary the purported reasons indicate that the amounts mentioned therein had been shown in the books of accounts as receipts from the companies mentioned therein. We also note that at serial No.5 of the list of companies from which amounts have been allegedly received, the name of the assessee has been shown. This means that the assessee received the received money from itself, which can hardly be an allegation in this case. 8. For the foregoing reasons we feel that the Tribunal has approached the matter in the correct perspective and has held the issuance of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e AO deprived himself of that opportunity by proceeding on the erroneous premise that Assessee had not filed a return when in fact it had. 14. To compound matters further the in the assessment order the AO has, instead of adding a sum of 78 lakh, even going by the reasons for reopening of the assessment, added a sum of ₹ 1.13 crore. On what basis such an addition was made has not been explained. 15. For the aforementioned reasons, the Court is satisfied that no error was committed by the ITAT in holding that reopening of the assessment under Section 147 of the Act was bad in law. ii) 395 ITR 677 (Del) Pr. CIT v. Meenakshi Overseas (P) Ltd. v. ITO 36. In the present case, as already noticed, the reasons to believe contain not the reasons but the conclusions of the AO one after the other. There is no independent application of mind by the AO to the tangible material which forms the basis of the reasons to believe that income has escaped assessment. The conclusions of the AO are at best a reproduction of the conclusion in the investigation report. Indeed it is a borrowed satisfaction'. The reasons fail to demonstrate the link between the tangible material and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n has to be recorded of the given case which can be reflected in the briefest possible manner. In the present case, the exercise appears to have been ritualistic and formal rather than meaningful, which is the rationale for the safeguard of an approval by a higher ranking officer, For these reasons, the Court is satisfied that the findings by the ITAT cannot be disturbed. (B). Hon ble High Court of Madhya Pradesh in the case of CIT vs. S. Goyanka Lime Chemicals Ltd. reported in (2015) 56 taxmann.com 390 (MP) has held as under:- 7. We have considered the rival contentions and we find that while according sanction, the Joint Commissioner, Income Tax has only recorded so Yes, I am Satisfied . In the case of ARjun Singh vs. Asstt. DIT (2000) 246 ITR 363 (MP), the same question has been considered by a Coordinate Bench of this Court and the following principles are laid down:- The Commissioner acted, of course, mechanically in order to discharge his statutory obligation properly in the matter of recording sanction as he merely wrote on the format Yes, I am satisfied which indicates as if he was to sign only on the dotted line. Even otherwise also, the exercise is shown ..... X X X X Extracts X X X X X X X X Extracts X X X X
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