9911796707
TMI Blog2021 (2) TMI 221X X X X Extracts X X X X X X X X Extracts X X X X ..... come Tax Act 1961 by adding advances received by the appellant. The Ld. Lower Authorities has failed in considering the fact that entire detail regarding advance received by the appellant was submitted during assessment proceedings and ld. AO has not pointed any defect in the same. 4. On the facts & circumstances of the case & in law also Ld. Lower authorities grossly erred in making and confirming adding of Rs. 8,02,000/- u/s 68 of the Income Tax Act by adding the cash gift received by the appellant from relatives despite of the fact that complete evidence of gift received was submitted during the assessment proceedings. 5. On the facts & circumstances of the case and in law also ld. AO grossly erred in finalizing the reassessment proceedings without issuing and serving notice u/s 143(2) of the Income Tax Act, 1961." 2. At the outset, the ld AR submitted that the assessee doesn't want to press ground no. 1, 2 and 5. Hence, these grounds of appeal are dismissed as not pressed by the assessee. 3. Regarding Ground no. 3 and 4, the ld AR submitted that the ld. AO made the addition of Rs. 53,35,000/- u/s 68 of the Income Tax Act by treating advances and gifts as unexplained cash ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted that where very reasons for which case of the assessee was reopened u/s 148 doesn't survive as no additions were made u/s 69, then addition for other transactions under section 68 cannot be made. It was submitted that the assessee has purchased an agricultural land for a consideration of Rs. 1,07,00,000/- and given the meagre sources of income, the Assessing Officer was having reasons to believe that amount of Rs. 1,07,00,000/- invested in purchase of immovable property has escaped assessment. It was submitted that where the AO was not satisfied with the explanation offered by the assessee, the addition could have been made u/s 69 of the Act as unexplained investment, however, no additions were made u/s 69 of the Act. It was submitted that where no additions have been made u/s 69, then in such circumstances, no further addition can be made in respect of any other income as done in the instant case where the additions have been made u/s 68 as unexplained cash credit and in support, reliance was placed on Hon'ble Rajasthan High Court decision in case of CIT vs Shri Ram Singh [2008] 217 CTR 345. 6. It was further submitted that even where it is held that additions in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... most of these people are having sizeable irrigated agricultural land and they grow vegetables which are cash rich crops. That the Ld. AO did not point out any fault and discrepancies within the statements recorded. He did not even record any dissatisfaction from their responses. That if the Ld. AO was not satisfied with the statements of these people, then he should have categorically recorded his dissatisfaction in that regard. He cannot merely make an addition u/s 68 of the Income Tax Act on the basis of non-production of PAN and Bank Account Statements. That even otherwise it is a settled law that the assessee is not required to prove the source of source u/s 68 of the Income Tax Act, 1961 and reliance was placed on the Hon'ble Rajasthan High Court's decision in case of CIT v. Bhim Singh Chundawat (2016) SCC Online Raj 3103. That when these people have accepted the transactions, have appeared before the Ld. AO, and have answered all the questions satisfactorily, then the addition made u/s 68 of the Income Tax Act, 1961 is unlawful. That in regards to the money received as gift from father and father-in-law, it was submitted that both the gift deeds were submitted before the Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee has originally filed her return of income on 23.05.2011 which was processed u/s 143(1) of the Act. Subsequently, notice u/s 148 was issued on 14.11.2013. On perusal of the assessment order, we find that the reasons for reopening the assessment was that the assessee has purchased an agricultural land situated at village- Ghegha, Patwar region- Awania, Inspecting Area Bagru Kalan, Tehsil- Sanganer, Distt. Jaipur for a consideration of Rs. 1,07,00,000/- on 21/12/2009 from Smt. Sunder Devi w/o Shri Shawan Keer. Given that the assessee was having meager source of income and not expected to make such huge investment, the Assessing Officer was having reasons to believe that amount of Rs. 1,07,00,000/- invested in purchase of immovable property has escaped assessment. 9. We therefore, find that the reason for reopening were to verify source of investments towards purchase of the agricultural land amounting to Rs. 1,07,00,000/-. During the course of assessment proceedings, the assessee was asked to furnish details regarding source of the investments. In response, the assessee submitted that she has received advance of Rs. 50,00,000/- from M/s P. G. Way Network Marketing Pvt. Ltd. to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owards sale of another agriculture land and receipt of gifts. We therefore find that there are two independent transactions one is purchase of agricultural land by the assessee amounting to Rs. 1,07,00,000/- and the second is of the sale of agricultural land by the assessee amounting to Rs. 45,33,000/-. Advance received from the second transaction has been claimed to be utilized towards discharge of consideration towards the first transaction of purchase of the agricultural land and to that extent, these two transactions can be said to be connected, however, retain their respective attributes and character. The Assessing Officer has not made any addition towards unexplained investments u/s 69 of the Act in respect of which the reason for escapement of income were recorded and notice u/s 148 was issued, however, he has brought the second set of transactions to tax as unexplained cash credit u/s 68 of the Act which reads as under: "68. Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 47. If the AO has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income or 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 this section, or re-compute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year)." 26. But then if it were to be so read, the word "also" becomes redundant, and to make sense of the sentence, the section would be required to be read by ignoring the words "also", as well, in which event, the section would read as under: "147. If the AO has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income or any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f precedent is reflected in a judgment of the Rajasthan High Court in CIT v. Shri Ram Singh [2008] 306 ITR 343 . The Rajasthan High Court construed the words used by Parliament in section 147 particularly the words that the Assessing Officer 'may 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 section 147. The Rajasthan High Court held as follows : ". . . if is only when, in proceedings under section 147 the Assessing Officer, assesses or reassesses any income chargeable to tax, which has escaped assessment for any assessment year, with respect to which he had "reason to believe" to be so, then, only in addition, he can also put to tax, the other income, chargeable to tax, which has escaped assessment, and which has come to his notice subsequently, in the course of proceedings under section 147. To clarify it further, or to put it in other words, in our opinion, if in the course of proceedings under section 147, the Assessing Officer were to come to the conclusion, that any income chargeable to tax, which, according to his "reason to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pra) and of the Rajasthan High Court in Shri Ram Singh's case (supra) would not be affected by the amendment brought in by the insertion of Explanation 3 to section 147.- 16. Explanation 3 lifts the embargo, which was inserted by judicial interpretation, on the making of an assessment or reassessment on grounds other than those on the basis of which a notice was issued under section 148 setting out the reasons for the belief that income had escaped assessment. Those judicial decisions had held that when the assessment was sought to be reopened on the ground that income had escaped assessment on a certain issue, the Assessing Officer could not make an assessment or reassessment on another issue which came to his notice during the proceedings. This interpretation will no longer hold the field after the insertion of Explanation 3 by the Finance Act (No. 2) of 2009. However, Explanation 3 does not and cannot override the necessity of fulfilling the conditions set out in the substantive part of section 147. An Explanation to a statutory provision is intended to explain its contents and cannot be construed to override it or render the substance and core nugatory. Section 147 has th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of purchase and sale of land and where there are no additions made u/s 69 towards the source of purchase of land for which the AO issues notice u/s 148, the AO cannot bring to tax the other transaction to tax u/s 68 of the Act. 15. Further, on merits, we find that once the summons have been issued and these persons have appeared and given their statements before the AO wherein they have confirmed that they have advanced the amount to the assessee towards purchase of the agricultural land and has also disclosed the source of their earnings/savings, the assessee has discharged the necessary onus cast on her in terms of identity, creditworthiness and genuineness of the transactions in the facts and circumstances of the present case. Similar is the position regarding receipt of gifts from father and father-in-law which is duly supported by the respective gift deeds, the contents and authencity of which are not in dispute. In case of CIT vs Shri Bhim Singh Chundawat (supra), the Hon'ble Rajasthan High Court held as under: "4. A bare perusal of the order passed by the CIT(A) reveals that the CIT(A) discussed the creditworthiness and genuineness of each and every individual transaction ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
