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2019 (3) TMI 813

sed on same material found in search - HELD THAT:- An income has been held to be income chargeable to tax in the proceedings u/s 143(3) r.w.s 153A of the Act and has been added to the income of the petitioner under section 69 of the Act, the very same income thereafter cannot be said to be income which has escaped assessment, inasmuch as such income has already been assessed. Therefore, on the reasons recorded, the Assessing Officer could not have formed the belief that income chargeable to tax has escaped assessment, inasmuch as such income has already been assessed u/s 143(3) r.w.s 153A of the Act. The assumption of jurisdiction under section 147 of the Act on the part of the Assessing Officer therefore, lacks validity and hence, cannot be sustained. - Earlier an assessment order u/s 143(3) r.w.s 153A of the Act had been made making an addition under section 69 of the Act. Against the said order, the petitioner went in appeal before the Commissioner (Appeals), who by an order dated 11.8.2017, held in favour of the petitioner insofar as the addition made under section 69 of the Act is concerned. Thus, the order of the Assessing Officer insofar as the issue in respect of which .....

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.2017 deleted the addition of ₹ 3,00,000/-. Revenue did not prefer any appeal before the Income Tax Appellate Tribunal on account of low tax effect involved. 4. Thereafter, by the impugned notice dated 30.3.2018, assessment of the petitioner is sought to be reopened on the ground that ₹ 3,00,000/- has escaped assessment towards undisclosed income in respect of Flat No.G-302 purchased from M/s J.P. Iscon Pvt. Ltd. By a letter dated 25.4.2018, the reasons recorded came to be furnished to the petitioner. By a communication dated 23.6.2018. the petitioner raised objections to the reasons recorded. By an order dated 20.8.2018, the respondent rejected the objections filed by the petitioner. Being aggrieved, the petitioner has filed the present petition challenging the impugned notice under section 148 of the Act as well as the order rejecting the objections raised by the petitioner. 5. Mr. Darshan Patel, learned advocate for the petitioner, assailed the impugned notice on the following grounds: - Inviting the attention of the court to the reasons recorded for reopening the assessment, it was submitted that the addition of ₹ 3,00,000/- sought to be made by the respondent .....

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Act is without authority of law. 6. Vehemently opposing the petition, Mrs. Mauna Bhatt, learned senior standing counsel for the respondent, submitted that in this case the order under section 143(3) read with section 153A of the Act had been made based upon the search carried out at the premises of the petitioner-assessee, whereas the impugned notice under section 148 of the Act has been issued on the basis of the reasons recorded which are based upon the search carried out in the premises of M/s J.P. Iscon Pvt. Ltd. from whom the petitioner had purchased the property in question. 6.1 Referring to the reasons recorded for reopening the assessment, it was submitted that the Assessing Officer has recorded that on analysis of seized data, it is found that J.P. Iscon Pvt. Ltd. received total of ₹ 61,45,000/- from Shri Jankit C. Prajapati for Unit/Flat G-302, out of which ₹ 56,45,000/- was received by J.P. Iscon Pvt. Ltd. in cash and that the petitioner had paid such amount in cash to J.P. Iscon, but had not disclosed such cash payment in its return of income, profit and loss account and balance sheet for assessment year 2011- 12 to assessment year 2013-14 and hence, the so .....

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ngly, urged that the Assessing Officer on the basis of the material found during the course of search in the case of J.P. Iscon Pvt. Ltd., has after duly applying his mind to the facts of the case, found that income chargeable to tax has escaped assessment and that formation of such opinion being based on material found during the course of search, there is no warrant for interference by this court. 6.5 As regards the contention regarding lack of sanction under section 151 of the Act, the learned counsel referred to the contents of paragraph 8 of the affidavit-in-reply filed by the respondent, to submit that he has categorically stated therein that notice under section 148 of the Act was issued after taking prior approval of the authority as required under the provisions of the Act. It was submitted that in the light of the fact that the assessment is sought to be reopened on the basis of fresh material which has been recovered during the course of search carried out at the premises of J.P. Iscon Pvt. Ltd., the contention of the petitioner with regard to the principle of merger would not be applicable to the facts of the present case. It was, accordingly, urged that the petition be .....

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sed such cash payment in its return of income, profit and loss account and balance sheet for assessment year 2011-12 to assessment year 2013-14 and hence, the source of such cash payment remained unaccounted and undisclosed in the hands of the assessee. The Assessing Officer further found that on verification of the return of income filed by the assessee, it was noticed that the assessee had shown total income of Rs.Nil only for assessment year 2011-12 and had not offered the amount of ₹ 3,00,000/- (being undisclosed and unaccounted cash paid to M/s J.P. Iscon Pvt. Ltd. in financial year 2010-11) as income and hence, the assessee had understated his income to the extent of ₹ 3,00,000/-. According to the Assessing Officer, therefore, the source of the cash payment of ₹ 3,00,000/- paid by assessee to M/s J.P. Iscon Pvt. Ltd. constitutes income of the assessee from undisclosed source which is not offered in his return of income and hence, remained untaxed. The Assessing Officer further noticed that in the order dated 18.3.2015 made under section 143(3) read with section 153A(1)(b) of the Act, the Assessing Officer had made an addition of ₹ 3,00,000/- as unaccou .....

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of ₹ 3,00,000/- under section 69 of the Act for the year under consideration. 12. Now, on the basis of the material found during the course of search carried out in the case of J.P. Iscon Pvt. Ltd., wherein similar facts are revealed, viz., that the petitioner had paid ₹ 56,45,000/- in cash, out of which an amount of ₹ 3,00,000/- was paid during the year under consideration, the Assessing Officer seeks to reopen the assessment under section 147 of the Act. 13. Section 147 of the Act provides that if the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of section 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under the section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year under consideration. 14. Thus, for the purpose of assuming jurisdiction under section 147 of the Act, the Assessing Officer should have reason to believe that the income char .....

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the Assessing Officer insofar as the issue in respect of which the assessment is sought to be reopened, has merged with the order passed by the Commissioner (Appeals). The third proviso to section 147 of the Act postulates that the Assessing Officer may assess or re-assess such income, other than the income involving matters which are the subject matters of any appeal, reference or revision, which is chargeable to tax or escaped assessment. Thus, the third proviso to section 147 of the Act permits the Assessing Officer to assess or re-assess only such income which was not subject matter of appeal, reference or revision. In the present case, the Assessing Officer seeks to reopen the assessment in respect of income involving a matter which was subject matter of appeal before the Commissioner (Appeals). The reopening of assessment by the impugned notice under section 148 of the Act is, therefore, also hit by the third proviso to section 147 of the Act and is not permissible in law. 17. For the foregoing reasons, the petition succeeds and is, accordingly, allowed. The impugned notice dated 30.3.2018 issued under section 148 of the Income Tax Act, 1961 seeking to reopen the assessment .....

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