TMI Blog2022 (11) TMI 443X X X X Extracts X X X X X X X X Extracts X X X X ..... and the statements recorded do not find merit in this ground of appeal and up hold the decision of the CIT(A) on the validity of re assesseement and dismiss the grounds of appeal including the additional ground raised by the assessee. Addition of cash on the basis that it has been offered in the AOP - contentions of the Ld.AR are that though there is no mapping/ correlation of each entries with the A.O.P funds individually but the said money is part of the search proceedings and which has been taxed in the case of AOP - HELD THAT:- We find that the CIT(A) has passed an order considering the fact that the cash invested as contribution by the assessee in the capacity as partner is liable to taxed in the hands of the AOP but these facts are without any supporting evidences nor from the material information filed to explain how the transactions are routed. Basically the CIT (A) should have verified how the transactions have been reflected in the AOP on case to case basis but not on the general assumptions/ presumptions before granting the relief. Accordingly, we found the CIT(A) has only considered the facts of the scrutiny assessment and the assessee submissions and there is no f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsequential assessment order. 3. The appellant company craves leave to add, to amend, alter, delete and/or modify the above grounds of cross-objections on or before the final hearing. 1.2 At the time of hearing, the Ld.AR has raised the additional grounds of appeal as under: 1. That the CIT(A) erred in facts and in law, in issuing reopening notice u/s 147 of the Act without appreciating the fact that in the case of search and seizure of third party, AO is duly bound to initiate proceedings u/s 153C in case of person relating to whom some material is found. Thus, action of the Ld. AO in initiating the proceedings u/s 148 instead of Sec. 153C is Null void and deserves to be set aside. 1.3. The Ld. DR has no serious objections for admission of additional ground of appeal filed by the assessee. Accordingly we admit the additional ground of appeal and heard. 2. The brief facts of the case are that the assessee is an individual and proprietor of M/s Arkade Creations engaged in the business as real-estate developer. The assessee has filed the return of income for the A.Y 2009-10 on 25.09.2009 disclosing a total income of Rs. 26,24,185/-. Subsequently the case was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otice U/'s 148 has been issued on 28.03.2016, thereby reopening the assessment. This notice U/s 148 was duly served on the assessee on 29.03.2016. The reason recorded being as under: As a result of Search and Survey action conducted by the Investigation Wing, Mumbai, information has been received from DDIT(Inv.) Unit 3(4), Mumbai that Shri Amit Mangilal Jain in the capacity of partner has introduced capital in cash amounting to Rs. 6,80,00,000/-. This capital introduction in cash is nothing but money generated out of undisclosed income of Shri Amit Mangilal Jain. As such, it is also failure on the part of the assessee to make full and true disclosure of these material facts in the relevant assessment year, as far as the above issue is concerned. Therefore, I have a reason to believe that the income of Rs. 6,80,00,000/- has escaped assessment within the meaning of Section 147 of the Income Tax Act. 4. The A.O. has received the details and information, were the search and survey action was carried at M/s Ekata Bhoomi Group on 05.10.2015, and during the course of search action incriminating data of M/s Bhoomi group has been found relating to cash transactions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ures of Arkade Bhoomi Developers and Arkade Bhoomi Enterprise. This was done in the interest of revenue with reason that the inference so drawn from the information could be utilized in any pending assessments which were getting barred by limitation on 31.12.2016. Further, on the basis of this information passed, the DCIT Central Circle 6(2), Mumbai has arrived to a reasoning which is sufficient enough for her to reopen the assessment. During the course of reassessment proceedings, the assessing officer will reach to a finality whether the addition is required to be made in the hands of AOP or not. There is no need to jump to the conclusion that since, the assessment of the AOP has been reopened, the unaccounted cash does not belong to the assessee but belongs to the Joint Venture. In the foregoing paras, it has been clearly proved and a conclusion has been drawn that the unaccounted cash of Rs. 6,80,00,000/- belongs to the assessee only and not to any one else. 5. It is worth to mention here, that order U/s 143(3) of the I. T. Act, has been passed on 20.12.2011, assessing income at Rs. 32,05,523 /-. However, the assessee has filed income of Rs. 26,24,185/- on 21.07.2016, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e paper book and decisions and prayed for allowing the appeal. Contra, the Ld. DR supported the order of the CIT(A) on the validity of the reassessment proceedings. 9. We heard the rival submissions and perused the material on record in respect of validity of reassessment proceedings. The contention raised by the Ld. AR that the search and seizure operations took place and certain incriminating documents have been found and the A.O is bound to issue the notice u/s 153C of the Act and not U/sec147 of the Act therefore the proceedings are illegal and in valid. The Ld. DR submitted that the A.O. has dealt on the facts, law, objections filed by the assessee and followed the procedure and the CIT(A) has confirmed the action of the A.O. on the validity of reassessment at Page 7 Para 3.2 to 3.6 as under: 3.2 true that assessment was made in this case u/s 143(3) and the reopening is beyond 4 years and the proviso section 147 applies for reopening. However if he proviso to section 147 does not bar reopening if the condition is satisfied as laid down. This is not a case where some unverified information or tax evasion petition was forwarded to the AO. Search action was carried out in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f reopening. This is so because the formation of belief by the Assessing Officer is within his subjective satisfaction -refer Supreme Court's decision in the cases of ITO vs. Select Dalurband Coal Company Pvt. Ltd. (1996) 217 ITR 597, 599 (SC) and Central Province Manganese Ore Company Ltd. vs. ITO (1991) ITR 662, 666 (SC).The action u/s.147 is possible despite complete disclosure of material facts if there is any escapement of assessment proceedings vide Praful Chunilal Patel, Vasant Chunilal Patel vs. ACIT (1999) 236 ITR 832, 840 (Guj), Stock Exchange vs. ACIT (1997) 227 ITR 906 (Guj) and ITO vs. LabjmaniMewal Das (1976) 103 ITR 437 (SC). Reliance is further placed on the following judgments: 1) Rohilkhand Educational Charitable Trust vs. CCIT and Others 365 ITR 233 (All.) wherein the Hon'ble High Court held AO should have relevant and credible material with him to form requisite reason to believe that income of assessee has escaped assessment. Material available on record has rational connection and relevant bearing on such formation of belief for issuing valid notices for re assessment - sufficiency or correctness of material was not to be considered at this stage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Sec153A/153C of the Act are the special provisions dealing exclusively in the search cases and whereas the provisions of section 147 of the Act are invoked to all the types of escapement of income were the A.O. has recorded the satisfaction and has reason to believe. The Ld.DR submitted the relevant portion of statement of Shri Akshay Doshi recorded u/sec131 of the Act dated 2812-2015 4-01-2016 and the assessee was provided the opportunity of cross examination of Shri.Akshay doshi in the course of assesseement proceedings and complete statement recorded U/sec131 of the Act and cross examination statement made on 26-10-2016 placed at page 8 to 16 of the revenues factual paper book. We find the CIT(A) has considered the facts, provisions of law and judicial decisions and observed that in the case of search in Bhoomi group , the incriminating material was found, were the aassesee is one of the investor in the land and it was not disclosed by the Assessee in the original return of income or during original assesseement U/sec143(3) of the Act. We find the statement recorded above are linked with the assessee undisclosed income and these facts were not disclosed in the return of inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e purchase of land to the share of the assesee and irrespective of the facts, the CIT(A) has wrongly considered the assessee contribution as the attribution of cash offered by the AOP in the their assessments and no nexus is established or proved. Further, the CIT(A) is not clear to which assessment year the said amount has to be taxed and prayed for allowing the revenue appeal. Contra, the Ld. AR supported the order of the CIT(A) on the disputed issue and submitted that the CIT(A) has granted relief as the cash introduced was part of AOP transactions. 14. We heard the rival submissions and perused the material on record. The sole grievance of the revenue that the CIT(A) has erred in granting the relief by directing the A.O to delete the addition of cash on the basis that it has been offered in the AOP. The contentions of the Ld. DR that the there is no mapping/ nexus of the transaction with the AOP fund flow. At this juncture, we considered it appropriate to refer to the findings of the CIT(A) at page 19 Para 5.9 to 5.10 which is read as under: 5.9 A careful reading of the above replies shows that the amounts appearing in the said ledger can be divided in to two parts. Amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ains that the source for the cash invested on behalf of/as a contribution of the assessee was the on money generated in the other projects, where the assessee was a partner and the same is liable to be taxed in the hands of AOPs, which has been accepted by the department in the assessments of the said AOPs. Therefore, the same amount cannot be taxed in the hands of the assessee, which amounts to double taxation. Further, the AO brushed aside the explanation given by the assessee without bringing any other corroborative document on record and without finding fault with the explanation and disproving the evidences filed by the assessee. Therefore, the addition does not stand the test of appeal and the AO is directed to delete the addition. Assessee gets relief, the Ground of appeal allowed. 15. The Ld. AR has been emphasizing that the CIT(A) has considered the facts that the amount of contribution of the assessee invested is land / project is part of the assessee share as a partner and has been taxed in the hands of the AOP and was accepted by the revenue. Whereas the Ld.DR submitted that there is no such acceptance by the revenue in respect of the transactions in the AOP and th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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