TMI Blog2023 (11) TMI 498X X X X Extracts X X X X X X X X Extracts X X X X ..... cordingly,a revised rent agreement was executed between the assessee and the tenant fixing the rent at Rs. 4,44,230/- per month and return of income was filed accordingly. However, according to the AO rent should have been charged as per the order of Rent Controller order from the date of the order. We note that in the case of other co-owner the addition made by the AO on account of notional rent was deleted by the Ld. CIT(A). We observe that the assessee has received rental of Rs. 60,000/- per month from 30.11.2012 which has been accepted by the Ld. CIT(A) in the case of other co-owner and which has not been challenged before the tribunal. Accordingly following the same, we hold that the addition confirmed by the Ld. CIT(A) on account of notional income is not sustainable and accordingly we set aside the order of Ld. CIT(A) and direct the AO to delete the addition. The appeal of the assessee is allowed. Rectification of mistake u/s 154 - AO stated that in the assessment order section and sub-section under which the assessment was framed, was wrongly mentioned as section 143(3) r.w.s 147 instead of section 144 r.w.s 147 of the Act - As per CIT(A) assessee has complie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore even on merit the revenue has no case and Ld. CIT(A) has rightly allowed the appeal of the assessee. Addition u/s 68 - assessee failed to substantiate the loans before the First Appellate Authority resulting into confirmation of the said addition - HELD THAT:- The provisions of Section 68 of the Act are not applicable to the loans/cash credits received in earlier years and only the cash credits which have been credited in the books of account of the assessee during the year are liable to be added u/s 68, in case, the assessee failed to satisfy with three ingredients of the said section. The case of the assessee finds support from the several decisions as discussed hereinafter. In the case of ACIT vs. ATS Promoters Builders (P) Ltd [ 2014 (11) TMI 323 - ALLAHABAD HIGH COURT] has held that the provisions of section 68 are not applicable where the sum is not even credited in the books of account during the year. In the present case these loans were received in FY 2013-14 and therefore the provisions of Section 68 cannot be invoked. Accordingly we set aside the order of Ld. CIT(A) and direct the AO to delete the addition. Accordingly the appeal of the assessee is al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be calculated by applying same rate in the whole financial year. The assessee replied vide letter dated 21.03.2016 submitting that the above property was let out at monthly rent of Rs. 1,20,000/- per annum of which the assessee s share is at prevalent rate for a period from December, 2008 to November, 2038. It was submitted that over a period, the rental value of property has increased. Besides the tenant was using the property for residential purposes of its staff. Hence the assessee started pressuring the tenant for increase of rent and even the matter went into dispute and suit was filed in the appropriate Court to get the eviction of property the court of home Controller decided the suit on 28.07.2012 holding that the rent payable by the tenant would be Rs. 4,44230/- per annum (with assessee s share ). Finally it was mutually agreed to the revise rent vide agreement dated 28.12.2015 w.e.f 1.12.2012 to Rs. 4,44,231/- per annum with assessee share Rs. 2,22,115/- per annum. However the AO added an amount of Rs. 4,68,566/- to the income of the assessee in assessment framed u/s 143(3) of the Act dated 31.03.2016 on the basis that according to rent controller order , the revised r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 of the Act dated 24.02.2020 wherein the AO stated that in the assessment order dated 10.12.2019, the section and sub-section under which the assessment was framed, was wrongly mentioned as section 143(3) r.w.s 147 instead of section 144 r.w.s 147 of the Act which was a mistake apparent from the record and accordingly the same was rectified. 8. The Ld. CIT(A) allowed the appeal of the assessee by quashing the order passed by the AO u/s 154 of the Act by observing and holding as under: I have considered the fact and merit of the case, I have also gone through the Assessment Order as well as grounds of appeal filed and written submission made by the appellant. After considering the facts of the case it is found that no notice was served u/s 139(9) of the I.T. Act, 1961 to the appellant declaring the return filed in response to notice u/s 148 of the Act as invalid. Further it is found that the assessee has complied to notice u/s 142(1) and it is an admitted fact that no notice u/s 143(2) of the Act has been issued by the AO. Hence, the assessment made cannot be said to have been made u/s 144 of the Act not being as per the provision of section 154 of the Act. Hence, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment order which is sought to be rectified. The ld Counsel argued that the order passed u/s 154 of the Act has to be annulled as the assessment order passed dated 10.12.2019 cannot be said to have been passed u/s 144 of the Act since there was no failure by the assessee as contemplated u/s 144 of the Act. The Ld. A.R stated that the debatable issue is whether on the facts and circumstances of the case the return of income filed on 20.04.2019 relating to AY 2012-13 is valid or invalid in the view of the provisions of Section 148,139(9) and 292(8) of the Act and therefore inference can only be drawn on the facts and provisions of law of the Act after long drawn discussion. Therefore under such circumstances, the provisions of Section 154 of the Act cannot be invoked. In defense of arguments the Ld. A.R relied on the series of decision namely a) T.S. Balaram , ITO vs. Volkart Bros ( 1971) 82 ITR 50 (SC), and ITO, North Satara vs . Arvind N. Mafatlal Ors. (1962) 045 ITR 0271 (SC). The Ld. A.R submitted that in view of the ratio laid down in the above decisions the appeal of the revenue may kindly be dismissed by upholding the order of ld CIT(A). 10. The Ld. D.R on the othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n brief are that the assessee filed the return of income on 18.12.2012 declaring income of Rs. 87,64,009/-. Thereafter the case of the assessee was reopened u/s 147 of the Act by issuing notice u/s 148 of the Act on 28.03.2019. The assessee has filed return of income in response thereto on 27.04.2019 which was found to be invalid due to some reasons however no defective notice u/s 139(9) was issued before treating the return as invalid by the AO. Besides the AO did not issue notice u/s 143(2) of the Act during the assessment proceedings. It is pertinent to mention that the AO has not only assessed to income of the assessee on the basis of said return filed by the assessee but also issued notice u/s 142(1) of the Act with the detailed questionnaire mentioning therein and giving show cause notice for non-disclosure of the capital gain in the return filed and thereafter the AO presumed the return to be invalid. The AO thereafter framed the assessment u/s 143(3) r.w.s 147 of the Act assessing the income at Rs. 8,18,08,606/- by making addition on account of long term capital gain of Rs. 7,31,02,196/- vide order dated 10.12.2019. 15. In the appellate proceedings the Ld. CIT(A) allowed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can be made without issuing notice under section 143(2) of the Act. 5. In the case of Sanjeev Aggarwal Vs. DCIT [2016] 70 taxmann.com 265(Chandigarh-Trib.) the Hon'ble Chandigarh Tribunal has held that where the Assessing Officer passed an order under section 147 read with section 143(3)of the act for making assessment without issuing notice under section 143(2) of the Act, it would be invalid.. 6. CIT Vs. Bihari Lal Agrawal[2013] 33 taxmann.com 553 (Allahabad); 1. ITO Vs. DD Ahuja Brothers [2014] 45 taxmann.com 336(Lucknow-trib.); 2. G.N.Mohan Raju Vs. ITO[2015] 57 taxmann.com 415 (Bangalore-Trib.); 3. Mohinder Kumar Chhabra Vs. ITO [2014] 48 taxman.com 120(Delhi-Trib.) In view of the above judgments, I hereby quash the assessment made on 10.12.2019 The A.R has further argued, that without prejudice to the illegal initiation of proceedings under section 147 and the issuance of Notice u/s 148 besides the alleged addition of Capital Gains and the purported assessment made u/s 143(3)r.w.s. 147 of the IT Act, 1961, that the Sale Deed dated 21.03.2012 incorporates the sale of agricultural land to M/s Chandramauli Developers (P) Ltd for a conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act, the AO has treated the return of income as invalid which is wrong and in defense, he relied on certain decisions namely PCIT Vs Silver Line 363 ITR 465 (Delhi) and Sapthagiri Finance and Investments Vs ITO (2013)90 DTR (Mad)289. The ld AR contended that in absence of issue of notice u/s 143(2) of the Avct , the assessment framed u/s 143(3) r.w.s. 147 of the Act is illegal and invalid. The ld AR argued that the said defect of non issuance of notice u/s 143(2) is not curable even u/s 292BB of the Act. In defense of his arguments the ld AR relied on the PCIT Vs Hotel Blue Moon(2010)188 Taxman 113(SC) and Sanjeev Aggrawal vs DCIT (2016) 70 Taxman 265 (Chd Tribunal). 17. After hearing the rival contentions and perusing the material on record, we find that the AO himself admitted that no notice u/s 143(2) of the Act was either generated or served on the assessee giving reasons that the return filed by the assessee was an invalid return and therefore no notice u/s 143(2 was either generated or issued . We note that the case of the assessee was reopened u/s 147 of the Act by issuing notice u/s 148 on 28.03.2019 which was complied with by the assessee by filing return of inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITA NO. 96/Pat/2021 for AY 2016-17 The only issue raised in the grounds of appeal is against the confirmation of addition of Rs. 34,00,000/- by the Ld. CIT(A) as made by the AO u/s 68 of the Act. 20. Facts in brief are that the return was filed on 31.03.2017 declaring total income of Rs. 4,24,41,600/- which was revised by the assessee declaring total income of Rs. 2,49,73,811/-. The said revision was done in order to reduce the claim u/s 54EC and 54F against the declared long term capital gain on certain long term gain during the course of assessment proceedings. The AO observed that the assessee has taken unsecured loan of Rs. 34,00,000/- and accordingly called upon the assessee to furnish the details of names and addresses of the persons along with confirmation letters, bank statements and other evidences. The assessee replied the queries by the AO by submitting that the unsecured loans were taken in earlier years and are being carried /brought forward to the current financial year. The assessee submitted that Rs. 14,00,000/- was taken from Nirmala Singh and Rs. 10,00,000/- from Ram Prit Singh and Rs. 10,00,000/-from Rohit Engicon Pvt. Ltd.. However no confirmations were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act has been fulfilled by the assessee. With regard to the basis for excess premium, we have noticed that the AO has considered the share premium amount as excess in nature, only for the reason that it is in excess of Book value of shares. We have noticed that the book value of shares would value only Equity shares and not Preference shares . Hence, the very basis on which the AO determined the excess premium should, in our view, is not sustainable. In any case, the assessee has shown that the transaction is a commercial transaction involving receipt of money @ Rs. 500/- per share and repayment of the same @ Rs. 750/- per share after a period of five years. Yet another point, which supports the case of the assessee is that the assessee had received funds in the earlier years and not during the year under consideration. During the year under consideration, the assessee has transferred the funds to preference shares account and shares premium account by passing journal entries. There should not be any doubt that the provisions of sec.68 shall apply only in the year in which the cash credit was found. 16. In view of the foregoing discussions, we are of the view that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 4,95,12,849/- to the income of the assessee. 25. The Ld. CIT(A) allowed the appeal of the assessee by observing and holding as under: As regards the denial of exemption as per sale deed submitted before Assessing Officer as well during appellate proceedings it is mentioned that in case the cheque amount will not be realized by the appellant then the sale deed will stand nonexistent and amount paid by the purchaser will be forfeited. In this case amount of consideration could not be realized by the appellant because the said cheque was bounced and payment could not be effected. After this the appellant took back the possession of land and filed case in High court civil court. The compromise between appellant and purchaser took place in A.Y. 2016-17 and the said land was sold to third party in A.Y. 2016-17. Appellant received Rs. 7,04,95,032/- as sale consideration in A.Y. 2016-17 and accordingly, appellant calculated capital gain tax and tax due was duly paid. On the other hand, Assessing Officer states in assessment order that 7. d. The exemption claimed by the assessee includes claim of repayment of housing loan of Rs. 1,97,16,393/- on 22.03.2016 which is p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax. In view of the above, addition made by the Assessing Officer on account of disallowance of exemption claimed under section 54F 54EC of the Act is hereby deleted. As regards the addition on account of disallowance of claim of loan liability to the tune of Rs. 34,00,000/- On perusal of assessment order, it is observed that after availing several opportunities the appellant has not provided the reason why the name of M/s Rohit Engicon Put. Ltd. was not disclosed in earlier replied. On the basis of material available on record the A.O added the loan liabilities of the assessee in his total income. During the assessment proceedings as well as appellate proceedings the appellate failed to substantiate the loan liabilities of Rs. 3400000/-. Hence the addition made by the A.O, is hereby confirmed. As regards the addition on account of enhancement in declared business income to the tune of Rs. 19,19,300/- Ongoing through the submission made by the appellant, it is observed that the assessee during the financial year 2015-2016 had carried on business under the Kumar enterprises as a proprietor. The appellant during the financial year 2015- 2016 relevant to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of M/s Kumar Enterprise was furnished before the AO. The assessee has been shown the business income of Rs. 4,87,700/- from M/s Kumar Enterprise in his total income. The AO rejected the books of account u/s 145(3) on the ground that income from M/s Kumar Travels and M/s Taran Communications were not shown in the books of account and therefore the same were liable to be rejected. The AO estimated the income of Rs. 2,00,000/- per month and after revising the income shown by the assessee , made an addition of Rs. 19,19,300/- on estimated basis. 29. The Ld. CIT(A) in the appellate proceedings allowed the appeal of the assessee by observing and holding as under: On going through the submission made by the appellant, it is observed that the assessee during the financial year 2015-16 had carried on business under the Kumar Enterprises as a proprietor. The appellant during the financial year 2015-16relevant to assessment year 2016- 17 had not carried on any other business either under the name Kumar Travels or under Taran Communication. The businesses under the Kumar Travels and Taran Communication were dormant. The Balance Sheet and profit and loss account of M/s Kumar Enterprise ..... X X X X Extracts X X X X X X X X Extracts X X X X
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