TMI Blog2018 (9) TMI 1748X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the assessee in response to notice under section 148 of the Act, the Assessing Officer was justified in completing the assessment under section 144 of the Act. Addition u/s 68 - Held that:- Where such deposits are not appearing in books of accounts and, therefore, section 68 becomes inapplicable. Here the origin of investigation is the bank account, however, before the Ld. CIT(A) the assessee has submitted complete statement of accounts of the said deposits in bank account. In aforesaid facts and circumstances, the said sum are definitely credited in books of accounts and the assessee cannot be allowed to take shelter of the precedents, which are not applicable in the facts of the instant case. In the case of Ms. Mayawati (supra), the issue involved was of certain gifts received in cash, which were taxed by the AO under section 69 of the Act, and thus, the ratio of the said decision is not applicable over the facts of the instant case. In view of the aforesaid discussing, we do not find any infirmity in the action of the Ld. CIT(A) in sustaining the addition under section 68. Unexplained cash deposits - Held that:- In the instant case, the Ld. CIT(A) has properly analyz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Therefore the assessment is invalid and illegal. 4. Without prejudice to other grounds and subject to the rectification application made before the Ld. CIT(A)-1 Gurgaon, Whether the Ld CIT(A)-1 Gurgaon was justified in confirming the addition of ₹ 15,52,221/- and further making the addition of ₹ 89,75,305/- u/s 68 of the Income Tax Act, 1961 in the absence of books of accounts? 5. Without prejudice to other grounds, the addition of ₹ 89,75,305/- made u/s 68 of the Act by the Ld CIT(A)-1 Gurgaon is beyond the powers of CIT(A) 6. Without prejudice to other grounds and subject to the rectification application made before the Ld. CIT(A)-1 Gurgaon, Whether the Ld CIT(A)-1 Gurgaon was justified in confirming the additions of ₹ 36,611/- and ₹ 15,15,600/- u/s 68 of the Act in spite of the fact that sufficient cash in hand was available with the assessee at relevant point of time? 7. Without prejudice to other grounds and subject to the rectification application made before the Ld. CIT(A)-1 Gurgaon, whether the CIT(A)-1 Gurgaon, was justified in treating the advance of ₹ 89,75,305/- which later returned to the buyers, be taxable in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 1,47,33,861/- in one of the saving bank account, the assessee claimed before the Assessing Officer that cash deposits of ₹ 1,46,97,250/- were made out of the booking amount received in advance against sale of plots of agriculture land to 55 persons at village Sardana, Gurgaon, however, source of the balance amount of ₹ 36, 611/- was not explained. On being asked by the Assessing Officer to furnish proof of sale of such plots of land, the assessee furnished copies of sale/conveyance deed in case of 8 sale transactions. It was submitted that registration of the sale of such plots was made later on as the registration was not allowed by the government and the assessee had not kept the copies of the conveyance deeds with her. 2.3 In respect of the cash deposits of ₹ 15,15,600/- in another saving bank account, no source was explained. The Assessing Officer observed that agriculture land measuring 21 KANAL was purchased by the assessee by way of the purchase deed dated 03/08/2009 and same was sold by plotting in pieces as agriculture land. The Assessing Officer noted the submission of the assessee that booking of the plots were made even prior to execution of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng that no return of income was filed by the assessee in response to notice under section 148 of the Act and, therefore, there is no requirement to issue notice under section 143(2) of the Act before completion of the assessment. 2.6 On the issue of the merit of the addition, before the Ld. CIT(A), the assessee contended that the land sold by the assessee was agriculture land and the profit derived from sale of such land was not taxable. The assessee also submitted that land in question was beyond 8 kms from the municipal limit of Gurgaon and, therefore, it was not a capital asset. In support of the contention, the assessee relied on various case laws. The assessee also contended that amount received by the assessee from various persons were not sale proceeds and were mere advances and in those circumstances, same cannot be considered as income of the assessee in the year under consideration. 2.7 The Ld. CIT(A), however, asked the assessee for complete information in respect of the sale of plots including the amount of advance/sale recorded in sale deeds. The Authorised Representative of the assessee filed a year wise breakup of sale consideration with regard to the pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration of ₹ 12,80,900/- and computed income of ₹ 9,38,251/-. The Ld. CIT(A) justified the claim of the assessee to the extent of the profit arising from the sale consideration on account of sale deeds registered in financial years 2010-11, 2011- 12 and 2012-13, which were taxable in the assessment years 2011-12, 2012-13 and 2013-14. However, the claim of the assessee of return of the amounts to the purchaser at the time of the registration ( out of the amount claimed as received as advance) was rejected in absence of any documentary evidence of return of those amounts. The Ld. CIT(A) sustained addition amounting to ₹ 89,75,305/- i.e. the advance amount which was claimed by the assessee to have returned over the years, in addition to the amount of ₹ 9,38,251/- computed by the assessee as income for the year under consideration. The finding of the Ld. CIT(A) in this respect are reproduced as under: 4.23 Now coming to the issue of the amount of income to be taxed in the year under consideration. In this regard, the appellant has contended that the amount of Rs.l,46,97,250/- taken by the AO as sale consideration for the purpose of computation of inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 05/-, was never received as advance and the claim was made by the appellant merely to explain the sources of cash deposits in the hank account. It may be relevant to mention here that even at the time of assessment proceedings or at the time of appellate proceedings no confirmation or evidences with regard to the claim of receipts of advance in this regard was furnished by the appellant. ii. The other possibility is that the sale consideration was not stated correctly in the registered sale deed and cash component claimed to have been returned at the time of registration of sale deed was the amount of consideration over and above the consideration shown in the registered sale deed. 4.26 In the first case, the amount of ₹ 89,75,305/- would he taxable as income in the year under consideration i.e. AY 2010-11 on the ground that the cash deposits in the bank account to this extent remain unexplained. In the second case, cash claimed to have been returned in the FY 2009TTTI, 2010-11 and 20H-12 would be taxable in respective AY as being consideration received by the appellant^ over and above the amounts shown in the respective sale deeds. 4.27 As mentioned above, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the above grounds are same and no new plea is taken in the above grounds. The sole purpose of modifying the grounds is to correct the clerical error where the word computation has been replaced with original return r.w. computation and to delete subject to the rectification application made before the Ld. CIT(A)-1 Gurgaon u/s 154 of the Act because the rectification proceedings has been concluded. 4. The ground No. 1 being general in nature and would be covered by the other grounds of the appeal, therefore, same is not required to be adjudicated specifically. 5. The Ld. counsel filed a paper book in two volumes containing pages 1-165 and 1-216 respectively. 6. Addressing the ground No. 8 of the appeal the Ld. counsel submitted that the Assessing Officer has completed the assessment within 26 days from the date of issue of notice under section 148 of the Act and without affording the sufficient opportunity to represent the case and to file the objections, thereby, the Assessing Officer has violated principle of natural Justice. The Ld. counsel drawn our attention to the copy of notice under section 148 of the Act dated 02/03/2015, which is available on p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale/conveyance deeds of plot, revised computation admitting the additional interest income, tax deposit receipt of ₹ 29,310/-. The Assessing Officer asked to the Ld. Authorised representative of the assessee about the source of cash deposit in bank account, which was explained as booking amount against sale of plots received in advance. The Ld. AR provided details of purchase of agricultural land and sale of the same in plots of small size. The Ld. AR provided list of the persons alongwith booking amount to whom the plots were sold. The Ld AR also explained source of investment made in purchase of the land. In view of the above facts, in our opinion the Assessing Officer has passed the assessment order after considering all the submissions filed by the Ld. authorised representative. Before us, the Ld. counsel failed to produce any request of the assessee to the Assessing Officer seeking more time for filing of the information. Thus, it cann t be said that the assessee has been deprived from filing any information in respect of the transactions carried out by her. The Assessing Officer after considering the submission of the assessee has formed his opinion and held that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontention of the assessee of not providing sufficient opportunity and violation of the principle of natural Justice are rejected. The ground no. 8 of the appeal of the assessee is accordingly dismissed. 7. In ground No. 2 (modified), the assessee has raised the issue that if original return read with computation filed was not found to be a valid return than the assessment should have been made under section 144 of the Act following the procedure, which has not been followed by the Assessing Officer and, therefore, the assessment is invalid and illegal. In ground No. 3 (modified), the assessee has raised the issue that if the original return read with computation filed is found to be valid return than the notice under section 143(2) of the Act should have been issued being a mandatory requirement and therefore in absence of such a notice, the assessment is invalid and illegal. 7.1 Both the grounds being connected, the Ld. counsel argued both the grounds in a combined manner. The Ld. Counsel drawn our attention to the letter dated 25/03/2015 filed before the Assessing Officer by the Ld. Authorised Representative of the assessee (which is available on page 27 of the paper bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of the acknowledgement of regular return of income or revised computation of income cannot constitute return of income filed in response to notice under section 148 of the Act. Therefore, in absence of any return of income filed by the assessee in response to notice under section 148 of the Act, the Assessing Officer was not required to issue notice under section 143 (2) of the Act for completing the assessment under section 147 of the Act. The Ld. DR submitted that a complete procedure has been laid down by the Hon ble Supreme Court in the case of GKN Driveshaft Vs. ITO, (2003) 259 ITR 19 to be followed subsequent to the issue of notice under section 148 of the Act. According to the guidelines in the case, an assessee is required to file return of income in response to the notice under section 148 of the Act and then only can make request for providing reasons recorded. The Ld. DR, however, submitted that there is an inadvertent error in mentioning the assessment completed under section 144 of the Act rather than section 143(3) of the Act. He submitted that the mistake is in the nature of the curable mistake in terms of section 292B of the Act and due to such curable mistake, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laimed that a revised computation of total income declaring income of ₹ 3,76400/- was filed for the assessment year in consideration along with the submission dated 25/03/2015, and same should be considered as return of income filed in response to notice under section 148 of the Act. This contention of the Ld. counsel cannot be accepted. As far as return of income is considered it is laid down in section 148 of the Act that return of income has to be filed in the prescribed form and verified in the prescribed manner. In our opinion, the computation of income filed cannot substitute return of income to be filed in the prescribed form and verified in prescribed manner. The Ld. counsel further submitted that while computing the total income in the assessment order under section 147 of the Act, the Assessing Officer has started the computation with income as per the regular return of income filed and therefore he has considered the regular return of income as return of income filed in response to notice under section 148 of the Act. We do not agree with this contention of the Ld. counsel as the regular return of income filed was already available on record and therefore the Ld. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner, shall serve on the assessee a notice requiring him, on a date to be specified therein, either to attend the office of the Assessing Officer or to produce, or cause to be produced before the Assessing Officer any evidence on which the assessee may rely in support of the return: 7.8 Thus, in our considered opinion, in the instant case, no return of income was filed in response to notice under section 148 of the Act, and therefore, the Assessing Officer was not required to issue notice under section 143(2) of the Act for completing the assessment/reassessment of the income escaped under section 147 of the Act. 7.9 In the case of Vodithala Education Society (supra), the return of income filed by the assessee was belated and thus it was treated as non-est. The Assessing Officer initiated action under section 147 of the Act and completed the assessment under section 147 read with section 143(3) of the Act without issuing any notice either under section 143(2) or section 142(1) of the Act. The Tribunal held the assessment as bad in law. But the Tribunal has noted that in the said case the Department did not raise the issue that the Assessing Officer has wrongly mentioned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uing notice u/s 143(2) of the Act is a mandatory requirement and not a curable procedural irregularity. When the statute requires an act to be done in a particular manner, then it has to be done in that ITA No.1163 CO 55 of 2011 Vodithala Education Society, Hyd. manner only. The Assessing Officer having proceeded to make an assessment u/s 143(3) read with section 147 of the Act, notice u/s 143(2) should have been issued to the assessee before completing the assessment. The Assessing Officer having not issued any notice u/s 143(2) of the Act, the assessment order is bad in law. In fact, the Assessing Officer himself in the remand report has admitted this fact and has stated that at least one notice u/s 143(2) and u/s 142(1) of the Act was required to be issued to the assessee before completing the assessment u/s 143(3) read with section 147 of the Act. (emphasis supplied externally) 7.10 We find that in the present case the Revenue has submitted before us that the mentioning of section 143(3) of the Act in the assessment order, instead of section 144 of the Act, is an inadvertent mistake, which is curable under section 292B of the Act. In view of the change of f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer should give an opportunity of being heard to the assessee and for this purpose the Assessing Officer will serve a notice calling upon the assessee to show cause on the date and time specified in the notice as why the assessment should not be completed to the best of his judgment. The show cause notice shall not be necessary where a notice under section 142(1) of the Act has been issued prior to the making assessment under section 144 of the Act. 7.15 In the instant case before us, we find that no show cause notice has been issued to the assessee for making best judgment assessment. However, we note that the Assessing Officer has raised various queries to the assessee, which is evident from para-5 of the assessment order. We find that the Assessing Officer has asked the assessee to furnish the source of the cash deposits in assessee s bank accounts. The Assessing Officer has further mention in order that the authorised representative of the assessee filed written submission on 26/03/2015. The Assessing Officer has reproduced the replies given by authorised representative. We find that the authorised representative submitted sale deed in few cases only. We als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the grounds submitted that addition under section 68 can be made only in the circumstances, where any sum is found credited in the books of accounts maintained by the assessee, whereas in the present case the sums have been found to be deposited in the bank accounts. According to him, the additions should have been made under section 69 of the Act and, therefore, the addition made under section 68 cannot be sustained. In support of the contention, the Ld. counsel relied on the decision of the Hon ble Bombay High Court in the case of Commissioner of Income-tax Vs.Bhaichand N Ghandhi, (1982) 11 taxman 59 and decision of the Hon ble Delhi High Court in the case of CIT Vs. Ms. Mayawati 338 ITR 563. 8.2 On the other hand, the Ld. DR submitted that the assessee was required to maintain books of accounts corresponding to the amounts received as advance against booking of plots, which have been ultimately deposited in bank account and therefore it hardly makes difference if the addition has been made under section 68 or section 69 of the Act. 8.3 We have heard the rival submissions of the parties. According to section 68 of the Act where any sum is found credited in the boo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nged that sustaining addition under section 68 of the Act is beyond the powers of the Ld. CIT(A). 8.5 The learned counsel submitted that the Assessing Officer treated the difference of the amount of advance received and amount paid for purchase of the land as business income of the assessee, whereas the Ld. CIT(A) has treated part of the amount of advance received as undisclosed income of the assessee under section 68 of the Act. He submitted that the section 68 says about satisfaction of the Assessing Officer for making the addition, whereas the commissioner of Income Tax (Appeals), being appellate authority and not the Assessing Officer, cannot make addition under section 68 of the Act. In support of the contention, the Ld. counsel relied on the decision of the Tribunal in the case of ACIT Vs. Pardeep Publications (2010) 130 TTJ 92 (ASR) (UO). 8.6 The Ld DR, on the other hand, submitted that the Ld. CIT(A) is having coterminous power of the Assessing Officer and he has not taxed any new source of income and thus he was justified in making addition under section 68 of the Act. 8.7 We have heard the rival submissions and perused the relevant material on record. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of the Act if the option given to the appropriate officer under the provisions of the Act is judicially exercised. We, therefore, hold that such an assessee has a right of appeal under s. 30 of the Act against the order of the ITO assessing the association of members instead of the members thereof individually. If an appeal lies, s. 31 of the Act describes the powers of the AAC in such an appeal. Under s. 31(3)(a) in disposing of such an appeal the AAC may, in the case of an order of assessment, confirm, reduce, enhance or annul the assessment; under clause (b) thereof he may set aside the assessment and direct the ITO to make a fresh assessment. The AAC has, therefore, plenary powers in disposing of an appeal. The scope of his power is coterminous with that of the ITO. He can do what the ITO can do and also direct him to do what he has failed to do. If the ITO has the option to assess one or other of the entities in the alternative, the AAC can direct him to do what he should have done in the circumstances of a case. Under s. 33(1), an assessee objecting to an order passed by an AAC under s. 28 or s. 31 may appeal to the Appellate Tribunal within 60 days of the date o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee at the relevant point of time. 9.1 The Ld. counsel of the assessee referred to cash flow statement of the assessee from 01/04/2009 to 31/03/2010 available on page 72 to 74 of the Paper Book. This cash flow statement was filed before the Ld. CIT(A). In view of the Ld. counsel, if the availability of the cash with the assessee is considered according to the cash flow statement, addition of ₹ 36,611/- and ₹ 15,15,600/-would not be warranted. 9.2 The Ld. DR, on the other hand, relied on the order of the lower authorities. 9.3 We have heard the rival submissions and perused the relevant metal on record. We find that the Ld. CIT(A) has taken into account all cash receipts while sustaining the additions in dispute. The Ld. CIT(A) in the impugned order has observed as under: 4.27 As mentioned above, the claim of advance having been received by the appellant was made by the appellant to explain the sources of cash deposits amounting to ₹ 1,47,33,861/- in her bank account No. 131010100623476. Further, as mentioned above, no evidence or confirmation with regard to the claim of the cash having been received as advance from the various p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore the Ld. CIT(A). Accordingly, he submitted that the request of the assessee for restoring the matter to the Assessing Officer should be rejected. 8.2 We have heard the rival submission and perused the relevant material on record. We find that in the process of reconciliation of the amount of bank deposits with the sale consideration recorded in registered sale deeds, the assessee claimed before the Ld. CIT(A) that amount of ₹ 89,75,305/- was returned to the buyers of the plots. The observation of the Ld. CIT(A) in this regard are reproduced as under: 4.25 Further, out of the advance claimed to have been received in FY 2009-10 amounts totaling ₹ 33,86,370/- were claimed to have been returned to the prospective buyers in the month of August, 2010 in cases where no registration deed was signed. No evidence with regard to the claim that the aforesaid amounts have been returned to the concerned persons was furnished by the appellant. It is evident from the facts discussed above that the claim of the appellant regarding returned of cash at the time of registration or otherwise is a self serving statement without any support evidence. In these circumstance ..... X X X X Extracts X X X X X X X X Extracts X X X X
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