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TMI Blog2021 (6) TMI 648X X X X Extracts X X X X X X X X Extracts X X X X ..... agricultural land at Nil, interest on FDR Rs. 2,37,763/- and agriculture income of Rs. 3 lacs. The income of the HUF was assessed by the AO u/s 143(3) vide order dt. 07.12.2009 by accepting the income declared. Subsequently, the AO issued notice u/s 148 dt. 28.03.2014 in the name of assessee. The assessee sought copy of reasons recorded for reopening vide letter dt. 17.10.2014. Thereafter vide letter dt. 16.01.2015, he again requested to provide the copy of reasons recorded and stated that the return already filed with ITO, Ward-2(3) may be treated as return filed in response to said notice. In response to same, assessee was provided two copies of reasons recorded by AO, one dt. 10.03.2014 and other dt. 24.03.2014. In the reasons dt. 10.03.2014, AO on the basis of sale deed available with him stated that assessee, along with 5 other co-owners, has purchased a land bearing Khasra No.388 from Sh. Ganga Ram on 24.05.2006 for Rs. 1,87,20,000/- in which assessee's share comes to Rs. 31,20,000/-. This land was acquired by RIICO on 16.09.2017 against which compensation of Rs. 2,05,72,485/- was received in which assessee's share is Rs. 34,28,748/- and thus, there is short term capital gai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t notice issued on the basis of information received from the Investigation Wing of the Department is valid. (b) No return of income has been filed by the assessee for AY under consideration and thus, no regular assessment order was passed in this case earlier. (c) The wrong mention of figures in the notice u/s 148 of the Act is covered by the provisions of section 292B of the Act which protect such notices/ summons which may have some mistake, defect or omission but are otherwise in conformity with the intent and purpose of the Act. Further, notice u/s 148 is only a procedural requirement by way of information to the assessee that his/her income chargeable to tax has escaped assessment within meaning of section 147 of the Act and asking for further information. The primary requirement is to examine whether any prejudice or confusion was caused to the assessee. In the show cause notice dt. 04.02.2015 issued by the AO, he specifically required the assessee to furnish details and evidences to explain the source of payment of Rs. 50 lacs (correct figure) towards purchase of property. (d) There is no force in the appellant's contention that non-issuance of notice u/s 143(2) rende ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng mind to the information, if any, available with him and without conducting any enquiry of his own. Therefore, on the basis of such vague reasons, which left the assessee guessing as to which income escaped assessment, notice issued u/s 148 and consequent assessment framed u/s 147 is illegal and bad in law. In this regard, reliance was placed on the following cases:- * PCIT Vs. RMG Polyvinyl (I) Ltd. (2017) 156 DTR 79 (Del.) * Sh. Kulwant Singh Vs. ITO (ITA No.841/JP/18 order dt.20.12.2018) (Jaipur) (Trib) 6. It was further submitted that AO provided the reasons after assessee explained vide his letter dt. 16.01.2015 that he has already filed the return with ITO, Ward-2(3) in the HUF capacity and the same be treated as a return filed in response to the notice issued u/s 148. Thereafter the assessee separately objected to the reasons recorded by AO dt. 10.03.2014 & 24.03.2014 vide letter dt. 21.01.2015. The AO, however, without disposing the objections has issued show cause notice dt. 04.02.2015 but the figures of Rs. 50 lacs, Rs. 4,02,87,606/- and Rs. 20 lacs mentioned therein has no live link with the reasons recorded by him. Further the AO himself has dropped the reasons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of LTCG made by the AO. In course of assessment proceedings of HUF, the assessee has explained the manner of calculation of capital gain where amount of compensation received at Rs. 4,02,87,606/- and payment made to the persons from whom the land was purchased at Rs. 3,14,95,874/- (2,64,95,874 + 50,00,000) resulted into capital gain of Rs. 87,91,732/- against which deduction u/s 54B was claimed. Considering the same, the AO assessed the income of HUF u/s 143(3) vide order dt.07.12.2009 by accepting the declared income. Thus, when assessment has already been completed/s 143(3), then reopening the case on same issue beyond four years amounts to change of opinion which is illegal and bad in law for which reliance was placed on the following cases:- * ACIT Vs. Marico Ltd. (2020) 190 DTR 109 (SC) * CIT Vs. India Cements Ltd. (2019) 181 DTR 105 (Mad.) (HC) In view of above, notice issued u/s 148 and consequent assessment framed u/s 147 is illegal and bad in law and the same be quashed. 9. Per contra, the ld. DR has relied on the findings of the lower authorities and our reference was drawn to the findings of the ld. CIT(A) which are contained at para 4.3.2 to 4.4 of his order wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or taken or purported to have been furnished or made or issued or taken in pursuance of any of the provisions of this Act shall be invalid or shall be deemed to be invalid merely by reason of any mistake, defect or omission in such return of income, assessment, notice, summons or other proceeding if such return of income, assessment, notice, summons or other proceeding is in substance and effect in conformity with or according to the intent and purpose of this Act.]" 4.3.4 This section is to protect such notices/summons, returns etc. which may have some mistake, defect or omission but are otherwise in conformity with the intent and purpose of the Act. Furthermore, it may be noted that notice u/s 148 is only a procedural requirement by way of information to the assessee that his/her income chargeable to tax has escaped assessment within meaning of sec. 147 of the Act and asking for further information. In this connection, I also draw strength from the ratio laid down by the Hon'ble Delhi High Court in the case of CIT V/s Jagat Novel Exhibitors (P) Ltd. [2012] 18 taxmann.com 138 (Delhi) wherein the Hon'ble Court held that the defective notice/summon, if it serves intent an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of SKY Light Hospitality LLP vs. ACIT (W.P. (0)10870/2017 and CMNo. 44503/2017) vide order dated 02-02-2018 held that where no prejudice is caused to the assessee, error committed due to human errors, proceedings cannot be as invalid, which are otherwise is valid. The appellant's reliance on decision of Travanore Diagnostic Pvt. Ltd. (2016) 290 CTR 241 is misplaced. In fact, in the said order, the Hon'ble Kerala High Court held that "even within the time available for issuing notice u/s. 143(2) , if the AO is of the view that material available with him or discovered by him are such as to justify a belief of income escaping assessment u/s. 147, he is free to record the reasons for the belief and proceed to make the reassessment. Thus, the appellant's arguments being devoid of merits are rejected and keeping in view the provisions of section 292B of the Act and various judicial pronouncements discussed (supra), the validity of notice issued u/s 148 of the Act is upheld. 4.3.6 Further there is plethora of decisions ratio of which held that the reassessment notice issued on the basis of information received from the Investigation Wing of the Department is valid:- 1. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the course of the proceedings. 4.3.9 Lastly, it is observed that the AO issued a show-cause notice dated 04-02-2015 wherein he specifically required the assessee to furnish details and evidences to explain the source of payment of Rs. 50,00,000/- towards purchase of property mentioned above, justification for not offering the STCG of Rs. 87,91,731/- and source of deposits of Rs. 20,00,000/- reflecting in his saving bank account. However, on the appointed out that neither anybody attended before the AO nor any request for adjournment were filed. Under such circumstances, the AO was left with no option to decide the assessment within meaning of section 144 of the Act. Hence, no infirmity has been found in AO's action in completing the assessment u/s. 147/144 of the Act. It is seen from the assessment order, the AO had accorded ample opportunities to the assessee before finalizing the assessment, hence, he duly met the principle of natural justice. All the case-laws relied upon by the appellant are not directly applicable to the facts of the case as they were rendered as per peculiar facts and circumstances. The appellant failed to explain how the ratio of these judgments ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made addition on account of LTCG of Rs. 87,91,732/- and cash deposited in the bank account of Rs. 20 lacs. 12. It was further submitted that the Ld. CIT(A) taking cognizance of the return filed by the assessee as Karta of HUF which is assessed by AO u/s 143(3) deleted the addition of Rs. 87,91,732/- on the ground that since such income is assessed in case of HUF, it cannot be again taxed in the hands of assessee. He further deleted the addition of Rs. 20 lacs by accepting that source of the same is out of the withdrawal from same bank account only a week before the deposit. However, he confirmed the addition of Rs. 50 lacs on the ground that the contention of assessee that he and his father are holding substantial agricultural land without evidence or proof of agricultural income cannot be accepted. 13. It was submitted by the ld AR that both the assessee and his father are agriculturalist having no other source of income. There is no dispute as to the fact that the agreement for purchase of land was made on 13.01.2003 by Sh. Shivdan Singh, father of assessee. However, in view of the facts mentioned in above, a fresh agreement was made on 22.05.2006 which shows that Rs. 50 lacs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - "6 Ground No. 4 relates to the addition of Rs. 50,00,000/- on account of unexplained cash payment. As discussed above, the appellant had made payment of Rs. 50,00,000/- against purchase of the aforesaid land. Since the assessee failed to explain the source of above payment, the AO made the addition of Rs. 50,00,000/- treating it unexplained cash payment. The appellant claimed before me that he belongs to the family of landlords (Jagirdaar) and his father was the landlord of huge portions of agricultural lands. It was further claimed that the said payment of Rs. 50,00,000/-towards advance for purchase of the subject land was made out of the agricultural income of the assessee and merely because the assessee has not been filing returns of income and has not declared the agricultural income in the returns, the accrual of agricultural income cannot be denied particularly considering the quantum of agricultural land-holding in the name of assessee, on which agriculture operations are being carried out on a large scale. 6.1 Upon consideration of the facts of the case and appellant's submissions, it is observed that though the appellant claimed that Rs. 50,00,000/- was paid out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e have heard the rival contentions and perused the material available on record. We note that there are two notices u/s 148 available on assessment records. The first notice is dated 20.03.2014 for which prior approval of the competent authority was obtained on 20.03.2014 in respect of the reasons so recorded by the AO on 10.03.2014. The second notice u/s 148 is dated 28.03.2014 after seeking prior approval of the competent authority on 27.03.2014 in respect of the reasons so recorded by the AO on 24.03.2014. It is also noted that both the notices u/s 148 have been served on the assessee and the assessee has in turn responded to these two notices individually vide his letter of even date 21.01.2015 and has filed his objections to the reasons so recorded by the Assessing officer. It is therefore not in dispute that both these notices u/s 148 have been issued by the AO and duly served on the assessee and thus, two separate proceedings have been initiated by the AO u/s 147 by virtue of these two separate notices issued u/s 148 carrying separate reasons in respect of independent transactions of purchase of property by the assessee and stating as to why the AO has formed the belief that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upra) and the decision of the Hon'ble Rajasthan High Court in case of K.C Mercantile Ltd (supra). Therefore, on account of non-disposing off the objections raised by the assessee, the present proceedings are again vitiated and deserves to be set-aside. 19. On merits of addition of Rs. 50 lacs towards unexplained investment in land, we find that the ld CIT(A) has deleted the addition on account of capital gains in the hands of the assessee on compulsory acquisition of such land by RIICO holding that the capital gains has been declared and accepted by the Revenue by way of assessment order passed u/s 143(3) in the hand of appellant's HUF and therefore, the same cannot be taxed in the hands of the assessee in his individual capacity. And on perusal of the computation of capital gains of Rs. 87,91,732 so offered by assessee's HUF, we find that the assessee HUF has claimed the aforesaid amount of Rs. 50 lacs towards purchase of land besides other costs and which has been accepted and allowed by the AO while assessing the capital gains in the hands of assessee's HUF. Therefore, where the investment has been claimed and allowed as the cost in the hands of the assessee's HUF, any additio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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