TMI Blog2021 (6) TMI 648X X X X Extracts X X X X X X X X Extracts X X X X ..... essment. There is nothing on record that the AO has disposed off the objections so raised by the assessee and dropped the first reassessment proceedings either by way of passing a specific order or even by way of any noting in the ordersheet and in absence thereof, it cannot therefore be presumed that such proceedings have been concluded by the AO - AO has issued a fresh notice u/s 148 basis fresh reasons cannot by implication be read and held as conclusion of first reassessment proceedings. We therefore find that it is a case where pending conclusion of the first reassessment proceedings, fresh reassessment proceedings have been initiated which cannot be sustained in the eyes of law and on this reason alone, the present reassessment proceedings initiated by way of notice u/s 148 dated 28.03.2014 are vitiated and same deserve to be set-aside. Non-disposing off objections raised by the assessee before the AO - The fact that the assessee has raised his objections against such reassessment proceedings is a matter of record and we find that the AO has not disposed off the said objections by way of passing any specific order and has proceeded ahead by way of issuing a show-cause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed by the assessee against the order of ld. CIT(A)-1, Jodhpur dated 18.07.2018 for the assessment year 2007-08 wherein the assessee has raised the following grounds of appeal:- 1. That the Authorities below have in confirming the proceedings initiated u/s 147 of the IT Act, 1961 by the ITO, Ward 7(2), Jaipur. 2. That the prejudice to the above, the authorities below further erred in confirming the addition of ₹ 50,00,000/- on account of alleged unexplained cash payment. 2. During the course of hearing, the ld AR submitted that the assessee is an agriculturalist and has no source of income other than agriculture income from the ancestral land received in Jagir. He has filed the return of income for the year under consideration as Karta of his HUF on 31.07.2007 declaring LTCG on sale of agricultural land at Nil, interest on FDR ₹ 2,37,763/- and agriculture income of ₹ 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 148 dt. 24.03.2014, he required the assessee to explain the source of cash payment of ₹ 50 lacs on purchase of land, calculation of capital gain on sale of land and source of cash deposit of ₹ 20 lacs in the bank account. Accordingly, the AO assessed the income at ₹ 1,57,91,730/- by making following additions:- Undisclosed short term capital gain ₹ 87,91,731/- Unexplained cash payment ₹ 50,00,000/- Unexplained cash deposit ₹ 20,00,000/- 4. It was submitted that before Ld. CIT(A), the assessee challenged the reopening of assessment. The Ld. CIT(A), however, upheld the validity of reopening by giving following findings:- (a) The AO has received specific information from the department regarding the income which was likely to have escaped assessment in case of the assessee. There are plethora of decisions in which it is held that the reassessment 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent and whether any income in fact has escaped assessment. In reasons dt.10.03.2014, he has referred to the investment made in land, acquisition of such land by RIICO resulting into short term capital gain but subsequently he himself took no cognizance of the same. In the second reasons dt. 24.03.2014, he referred to the investment made in land of ₹ 1 crore whereas subsequently he himself admitted that this amount is incorrect. Further in both the reasons he has stated that as per the information available in the sale deed assessee has purchased certain properties whereas there is no sale deed executed by the assessee for purchase of property. It may also be noted that in the second reasons dt. 24.03.2014, AO has referred to agreement dt. 22.05.2006. In this agreement, there is reference of payment of ₹ 50 lacs whereas in the reasons recorded the amount paid is stated at ₹ 1 crore. All these facts shows that AO has recorded the reasons on whims and fancy without having information available with him or without applying 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, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of proceedings initiated u/s 143(3) read with section 147, requirement to issue a notice u/s 143(2) is mandatory and section 292BB does not in any manner grant any privilege to AO in dispensing with issuance of such a notice. Further reliance was placed on the following cases:- M/s Kaizen Organics Pvt. Ltd. Vs. ACIT ITA No.834/JP/2017 order dt.19.12.2018 (Jaipur) (Trib.) Radhe Sham Jain Diamond Jewellers Pvt. Ltd. Vs. DCIT (2020) 193 DTR 59 (Chd.) (Trib.) 8. It was submitted that the assessee in response to notice u/s 148 vide letter dt. 16.01.2015 has specifically pointed out that return has been filed for which assessment is also completed by ITO, Ward-2(3) u/s 143(3) of the Act and the return so filed in capacity of Karta of HUF be treated as return filed in response to notice u/s 148. The AO took no objection to the same. Therefore, the finding of Ld. CIT(A) that assessee has not filed the return and no regular assessment order was passed is incorrect. In fact the Ld. CIT(A) taking cognizance of the said return has deleted the addition on account of LTCG made by the AO. In course of assessment proceedings of HUF, the assessee has explained the manner of calculatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... diction to reopen the assessment. The Hon'ble Court further held that merely because material lies embedded in the material or evidence, which the AO could have uncovered but did not uncover, is not a good ground to deny or strike down the notice of re- assessment. Where the AO could have found out the truth but he did not, does not preclude the AO from exercising the power of re-assessment to bring the escaped income. The SLP filed against this decision of the Hon'ble Delhi High Court has been dismissed by the Hon'ble Supreme Court (211-TIOL-72- SC-IT). Thus, the appellant contention that the AO had not complied with the basic conditions as envisaged u/s. 147, 148 151 is rejected being devoid of any merit. 4.3.3 As regards the appellant s objection regarding wrong mention of figures in the notice u/s 148 of the Act, It may refer to the provisions of Section 292B of the Act which is reproduced as below:- Return of income, etc., not to be invalid on certain grounds. 292B. No return of income, assessment, notice, summons or other proceeding, furnished or made or issued or taken or purported to have been furnished or made or issued or taken in pursuance o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aterial. The Hon'ble Kerala High Court in this case held as below:- The procedure under section 143(2) is to ensure that an adverse order is issued only after proper opportunity is given to the assessee. Where it was conceded that the assessee got opportunity to file reply and the detailed reply was in fact filed and the reassessment notice and the final order were also issued within the time limit prescribed under the Act, there was no reason to interfere with the order of assessment on the ground that written notice was not issued to the assessee before the completion of assessment under section 143(2). In the appellant's case, proper notice u/s. 148 of the Act was issued by the AO and subsequently notices u/s 142(1) of the Act were issued by the AO and assessment was completed after hearing the appellant and giving him enough opportunities to file details in respect of return of income filed by her, therefore, the ratios laid down by the Hon'ble Delhi and Kerala High Court (supra) are squarely applicable to the case of the appellant. Recently, the Hon'ble Delhi High Court in the case of SKY Light Hospitality LLP vs. ACIT (W.P. (0)10870/2017 and C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en the order of assessment was silent, all possible angles and aspects of a controversy had been examined and determined by the Assessing officer. The principle that a mere change of opinion could not be a basis for reopening completed assessments would be applicable only to situations where the AO had applied his mind and taken a conscious decision on a particular matter in issue. It would have no application where the order of assessment did not address itself to the aspect which was the basis for reopening of the assessment. 4.3.8 It is further observed that the provision of sec. 147 provides that if the Assessing Officer has reason to believe that any income chargeable to tax had escaped assessment, he may subject to the provision of sec. 148 to 153, assess or reassess such income and also any other income chargeable to tax which has been escaped assessment and which comes to his notice subsequently in the course of the proceedings. Use of word any other income chargeable to tax is quite relevant. Thus, the AO can assess also 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 ..... or ₹ 3,14,95,875/-. Thereafter due to serious illness and considering his inability to execute the transaction, he entered into a consent letter with sellers of land stating that the assessee in capacity of buyer s son shall execute the transaction on his behalf. Accordingly, assessee entered into an agreement dt. 22.05.2006 with sellers of land and paid ₹ 15 lacs on 09.05.2006 and ₹ 35 lacs on 22.05.2006 from the money given to him by his father out of the past savings. Meanwhile the land was compulsory acquired by RIICO Ltd. and the assessee received compensation of ₹ 4,02,87,606/- on 13.10.2006 in his bank account. Out of said amount, assessee paid balance amount of ₹ 2,64,95,874/- to sellers of land resulting into capital gain of ₹ 87,91,732/- against which deduction u/s 54B was claimed and LTCG was declared at Nil in the return filed by him as Karta of his HUF on 31.07.2007. 11. It was submitted that the AO observed that assessee has made cash payment of ₹ 50 lacs to the sellers of land but failed to explain the source of such cash payment. Accordingly, he made addition of ₹ 50 lacs by treating it as unexplained income of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch gives discretion to the AO, considering the facts circumstances of the case, not to make the addition even if he is not fully satisfied with the explanation of assessee. It is a fact on record that assessee has no source of income other than the agricultural income. Even the lower authorities have not found any other source of income in the hands of the assessee. Hence, it cannot be presumed that assessee has any undisclosed income which is invested in purchase of land. Strict rule of evidence do not apply to the income tax proceedings. Human conduct and preponderance of the probabilities needs to be considered before making any addition u/s 69 in as much as the section uses the word may and not shall . In these circumstances, even if the source of investment in land is not found to be satisfactory explained, no addition can be made in the peculiar facts of the case. In this regard, reliance was placed on the following decisions:- Sumati Dayal Vs. CIT (1995) 214 ITR 801 (SC) CIT vs. Smt. P.K. Noorjahan (1999) 237 ITR 570 (SC). 15. 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. CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting to purchase of seeds or pesticides on the basis of which it could be said that he was engaged in agricultural operations on his land. In a situation where the assessee fails to produce any satisfactory evidences about his being engaged in agricultural activities and also unable to state as to whom the agricultural produce was sold, it has to be proved, which the assessee contends to be his agricultural income. Even the appellant himself admitted the fact he does not have any evidence of proof of agricultural income. Since the appellant failed to furnish any evidences, his claim of agricultural income is a bald claim, which cannot be accepted. The above view gets support from the decision in the case of Avdhesh Kumar Jain Vs. CIT reported in 178 ITR 433; Gopi Ram Lila Vs. CIT reported in 225 ITR 320; Ridhkaran Das Poonam Chand Bhura Vs. CIT reported in 231 ITR 604; and Smt. Kamala Bai Vs. CIT reported in 221 ITR 674. In the light of the facts discussed above, it is held that the appellant's claim that payment of ₹ 50,00,000/- out of the agricultural income remains to be proved. Hence, the AO's action in treating ₹ 50,00,000/- as unexplained cash payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the AO. The fact that the AO has issued a fresh notice u/s 148 basis fresh reasons cannot by implication be read and held as conclusion of first reassessment proceedings. We therefore find that it is a case where pending conclusion of the first reassessment proceedings, fresh reassessment proceedings have been initiated which cannot be sustained in the eyes of law and on this reason alone, the present reassessment proceedings initiated by way of notice u/s 148 dated 28.03.2014 are vitiated and same deserve to be set-aside. 18. Now, coming to notice u/s 148 dated 28.03.2014 and the underlying reasons recorded by the AO dated 24.02.2014, the ld A/R has challenged the initiation of reassessment proceedings u/s 147 on account of non-disposing off objections raised by the assessee before the AO vide his letter dated 21.01.2015. The fact that the assessee has raised his objections against such reassessment proceedings is a matter of record and we find that the AO has not disposed off the said objections by way of passing any specific order and has proceeded ahead by way of issuing a show-cause calling for further information/clarification and passing the reassessment order. The sai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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