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TMI Blog2021 (7) TMI 1024X X X X Extracts X X X X X X X X Extracts X X X X ..... or that the Commissioner of Income Tax (Appeals) failed to appreciate that the assessment was not completed as per the directions of the Hon'ble Income Tax Appellate Tribunal. 5. For that the Commissioner of Income Tax (Appeals) erred in upholding the addition of Rs. 4,36,59,000/- as business income on sale of land. 6. For that the Commissioner of Income Tax (Appeals) failed to appreciate that the impugned land was agricultural land within the meaning given in the exclusion under section 2(14)(a) of the Income Tax Act. 7. For that the Commissioner of Income Tax (Appeals) failed to appreciate that the appellant is not in the business of buying and selling of lands and that the appellant has bought lands only for investment purposes. 8. For that the Commissioner of Income Tax (Appeals) erred in concluding the purchase and sale of the land as business activity and the resultant gain as business profits in the hands of the appellant. 9. For that the Commissioner of Income Tax (Appeals) failed to appreciate the facts and circumstances under which the impugned land was sold by the appellant. 10.For that the Commissioner of Income Tax (Appeals) failed to appreciate that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rise from the facts as found by the authorities below and having bearing on the tax liability of the assessee, notwithstanding the fact that the same was not raised before lower authorities. In the case of M/s. Jute Corporation of India Ltd., vs. CIT, [1990] 88 CTR 66 (SC), the Hon'ble Supreme Court held that there is no reason to justify curtailment of the powers of the AAC in entertaining additional grounds raised by the assessee in seeking modification of the order of assessment passed by the AO. The Hon'ble Jurisdictional High Court in the case of CIT vs. M/s. Indian Bank, [2015] 55 taxmann.com 372, considered an identical issue and held that the assessee has right to raise additional grounds before Tribunal and if the same is beneficial to the assessee, same should be considered by the Tribunal. Insofar as arguments of the ld.DR that the assessee has not taken this legal ground challenging validity of assessment in first round of litigation, we find that the ITAT, Chennai Bench in the case of M/s. Hemal Knitting Industries v. ACIT, [2010] 127 ITD 160 held that as long as the issue had not reached finality whether it in the second or third round, it is always open to question o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee under the head 'income from capital gains'. The assessee preferred an appeal before the first appellate authority, who vide his order dated 22.11.2012 deleted addition made by the AO on sale of land. The Revenue has preferred further appeal against order of the CIT(A) before the ITAT. The ITAT, Chennai vide its order dated 30.08.2013 in ITA No.408/Mds/2013 has set aside the appeal to the file of the AO and directed him to re-examine the issue whether lands sold by the assessee are agricultural lands and the same are used for agricultural activities or stock-in-trade purchased for the purpose of buying and selling property, the income from which is assessable under the head 'income from business'. 8. Pursuant to the directions of the Tribunal, the AO has taken up assessment and has completed assessment u/s.143(3) r.w.s. 147 r.w.s. 254 of the Act, and has assessed profit derived from sale of agricultural land under the head 'income from business or profession' by holding that the assessee has not carried out any agricultural activity on the land purchased but was involved in systematic activity of buying and selling of lands which is in the nature of adventure in the nature of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nbaxy Laboratories Ltd v CIT [2011] 336 ITR 136 (Del) 5) CIT v Mohmed Juned Dadani [2013] 355 ITR 172 6) Oriental Bank of Commerce v AdCIT [2014] 90 CCH 27 Del High Court 7) PVP Ventures Limited v ACIT [2015] 94 CCH 0147 (Chennai HC) 10. The ld.DR on the other hand strongly opposing additional grounds filed by the assessee challenging validity of reopening of assessment submitted that there is no merit in arguments advanced by the ld.AR for the assessee, because once assessment has been reopened, the AO has jurisdiction to assess / re-assess total income including income which is escaped from tax and hence, the AO has power to assess any other income which is escaped from tax and further which has come to his knowledge during the course of reassessment proceedings. The ld.DR referring to para 31 of the decision of the Hon'ble High Court of Madras in the case of PVT Ventures Limited v ACIT [2015] 94 CCH 147 submitted that the moment AO has gained entry lawfully through the first check-post, the proceedings for reassessment begin. In the course of those proceedings, if issues other than those which triggered the formation of his opinion u/s.147 of the Act, come to his notice, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... luding the Jurisdictional High Court of Madras. The Hon'ble High Court of Rajasthan in the case of CIT v. Shri Ram Singh, [2008] 306 ITR 343 had held that once the AO came to the conclusion that income with respect to which he had entertained 'reason to believe' to have escaped assessment, was found to have been explained, his jurisdictional came to a stop at that, and he did not continue to possess jurisdiction, to put to tax, any other income, which subsequently came to his notice, in the course of reassessment proceedings, which were found by him, to have escaped assessment. The Hon'ble High Court of Bombay in the case of CIT v. Jet Airways (I) Ltd., [2011] 331 ITR 236 had considered an identical issue and after considering various decisions, including decision of Hon'ble High Court of Rajasthan in the case of CIT vs. Shri Ram Singh, supra, held that AO may assess or reasssess the income in respect of any issue which come to his notice, subsequently in the course of the proceedings though the reasons for such issue were not included in the notice, however, after issuing a notice u/s.148, the AO accepted the contention of the assessee and holds that the income which he has initia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso be permitted to visit restaurants, duty-free shops etc., before boarding the flight. His access to the facilities inside the airport is dependent upon his right of entry into the airport. This is how sub-sections (1) and (2) of section 148 and Explanation 3 to section 147 have to be understood. The sum and substance of ratio laid by various High Courts are that unless the AO succeeds in taxing income escaped assessment which is basis for reasons for reopening of assessment, then he cannot tax any other income which escaped from tax and which came to his knowledge subsequently during course of reassessment proceedings. 13. In this case, on perusal of facts available on record, it is abundantly clear that the AO has formed reasonable basis of escapement of income for taxing income escaped assessment on account of non-disclosure of money lent by the assessee to his wife for purchase of agricultural lands. However, in the reassessment proceedings, the AO has accepted the explanation of the assessee regarding money lent by the assessee to his wife and has not made any addition, but he has made addition towards profit deriving from sale of lands under the head 'income from business ..... X X X X Extracts X X X X X X X X Extracts X X X X
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