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TMI Blog2021 (7) TMI 108X X X X Extracts X X X X X X X X Extracts X X X X ..... he AY.2009-10. As verified, the assessee has not filed return of income for the AY.2009-10. Hence, I have reasons to believe that income chargeable to tax has escaped assessment within the meaning of Section 147. Issue notice u/s.148 of the I.T.Act". 3. There is no dispute that the Assessing Officer thereafter framed his re-assessment in issue dt.27-03-2015 making twin addition of un-explained investment in purchase of land of Rs. 1,04,20,000/- and profit on sale of land of Rs. 9,98,080/-; respectively. The CIT(A) has affirmed the same. 4. We notice from a perusal of the case file that the Forest Department of the Government of Andhra Pradesh through the DFO, Hyderabad had cancelled the assessee's sale deed itself on 20-11-2008 for the reason that the land in question was government/reserve forest land. This in our considered opinion, sufficiently takes care of the Assessing Officer's sole re-opening reason alleging escapement of income with the assessee's taxable income derived from sale of properties during FY.2008-09. No other sale deed other than that cancelled hereinabove has been executed at the assessee's behest. The Assessing Officer's corresponding sole re-opening reas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble Punjab & Haryana High Court in the case of Manjinder Singh Kang Vs CIT reported at 344 ITR 358". It is in this backdrop that we proceed to dispose of this appeal on the above ground of appeal. 4. To adjudicate on the above ground of appeal, only a few material facts need to be taken note of. This is a case of reopened assessment. As for the reasons for which the assessment was reopened is evident from the following observations at pages 1-2 of the assessment order: "An information was gathered by the Department that the assessee alongwih Sh. Narinder Singh, Mrs. Aspinder Kaur, Sh. Jaswinder Singh, Smt. Nirmal Kaur, Sm. Mohinder Kaur, Sh. Surinder Mohan Singh and Sh. Jiwan Singh were running a firm under the name and style of M/s. City Plaza, Jalandhar wherein they were dealing in real estate business. Vide dissolution deed dated 05.03.2003, old firm was dissolved and Sh. Joginder Singh along with Smt. Mohiner Kaur, Sh. Surinder Mohan Singh and Sh. Jiwan Singh Continued the business and took over the firm. As per said dissolution deed, these continuing partners paid the following amounts, through post dated cheques to the outgoing partners : Cheque No. Dated Amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act. During the course of investigations by the ADIT(Inv.), the assessee has not disclosed the facts which are now being disclosed at the time of appellate proceedings. Moreover, proof of payment made by the buyer has not been filed. The cheques issued by Shri Surinder Mohan Singh to the outgoing partners were found to be drawn on an account which was not in his name or in the name of partnership firm. In these facts and circumstances of the case, I am of the opinion that he Assessing Officer is fully justified in assuming jurisdiction in this case u/s. 147/148 of the Act and making assessment in this case. In the result, the ground of appeal No. 1 taken by the assessee is, therefore, dismissed." 6. Quite interestingly, even as the CIT(A) upheld the reassessment proceedings the very additions made on the basis of the reasons for reopening were quashed. The reasoning adopted by the CIT(A) in cancelling these additions were as follows: "6.4. I have considered the assessment order as well as the written submissions of the assessee. I have also considered the other material brought on record in the case of partnership firm M/s City Plaza as well as in the case of other pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d assessment, continue to survive. 8. We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position. 9. We have noted that the assessment was reopened on the ground that the partnership firm Citi Plaza, in which the assessee had 25% share, had issued three post dated cheques of Rs. 23,57,000 each and made bank payments of Rs. 40,90,630 towards principal and Rs. 40,92,568 towards interest, whereas the above "payments were much more than the income declared by the assessee". Learned CIT(A) himself holds, in paragraph 6.4 extracted above, that the post dated cheques issued by the partnership firm were not encashed and that the bank payments were not made by the partnership firm but by the buyers of the property sold by the partnership firm. During the appellate proceedings, the Assessing Officer was duly confronted with the related facts and he could not, as the CIT(A) has noted in so many words, controvert the stand of the assessee. Clearly, therefore, the reasons for reopening the assessment were incorrect. The CIT(A) has held so and the Assessing Officer is not in challenge against these f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment having been decided against this assessee, the CIT(A) ought also have held that the very reassessment proceedings are legally unsustainable on the facts of this case. There is an inherent contradiction in the approach of the CIT(A). 12. Learned Departmental Representative's defence for the stand of the CIT(A)'s order is reliance on Hon'ble jurisdictional High Court's judgment in the case of Majinder Singh Kang (supra). That was a case in which Their Lordships have held that even when the Assessing Officer does not make any addition in respect of the reasons for which reassessment proceedings are initiated, the reassessment proceedings can still be valid nevertheless. To quote the observations made by Their Lordships, "A plain reading of Explanation 3 to Section 147 clearly depicts that the assessing officer has power to make additions even on the ground on which re-assessment notice might not have been issued in case during reassessment proceedings, he arrives at a conclusion that some other income has escaped assessment which comes to his notice during the course of proceedings for re-assessment under Section 148 of the Act " and that "The provision nowhere postulate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rse of the reassessment proceedings whether in respect of the reasons recorded for reopening the assessment or in respect of the reasons other than the reasons recorded for reopening the assessment. 15. Moreover, particularly in the light of the scheme of law as visualized by Hon'ble Supreme Court's decision in the case of GKN Driveshafts Vs ITO [(2003) 259 ITR 101 (SC)], such a situation would be rather rare. 16. The reason is this. The reasons for reopening the assessment, as is the scheme of law visualized and set out by Hon'ble Supreme Court in the GKN Driveshaft's case (supra), are to be confronted to the assessee and the assessee has an opportunity to rebut these reasons. This is a stage prior to the Assessing Officer proceeding with the reassessment proceedings and after he has issued notice for reopening the assessment. In a situation in which the assessee can convince the Assessing Officer that these reasons are not good enough to make the additions, the reassessment proceedings are to be dropped anyway. 17. There is no bar on the nature of material that the assessee may seek to rely upon, even at the first stage, to demonstrate that the reasons for reopening are uns ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of Explanation 3 to Section 147, and the earlier judicial precedents, which were relied upon by the assessee, did not hold good law, as Their Lordships made clear in no uncertain words. The correctness of the reasons of reopening was not an issue before Their Lordships. The correctness of the reasons for reopening was not, directly or indirectly, in challenge. 19. As is evident from the discussions earlier in this order, here is a case in which the very reasons on account of which the CIT(A) has deleted the quantum additions were also good enough to hold that the initiation of reassessment proceedings is bad in law and yet the CIT(A) was fighting shy of the logical conclusions thereto and natural corollaries to these findings. It is also important to bear in mind the fact that the relief so granted by the CIT(A), on the basis of which the additions in respect of the reasons recorded for reopening the assessment were deleted and which were, in our considered view, good enough to quash the reassessment itself, is not even challenged in further appeal. These findings of the CIT(A) have thus reached finality. and are not even in dispute before us. If such be the facts, there can be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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