TMI Blog2024 (1) TMI 1078X X X X Extracts X X X X X X X X Extracts X X X X ..... JCIT. So, this argument of the assessee is against the provisions of the Act - Thus, the reopening of assessment is held to be good in law and Ground No.1 raised by the assessee is hereby rejected. Addition on account of long term capital gain - As stated by the assessee that the above property was purchased by the assessee s father on 17.01.1985 for a sale consideration of Rs. 11,200/- only and the assessee claim of Rs. 3,48,000/- as land development charges without even proper evidences which is not sustainable in law. The registered sale deeds also does not describe that the plots were being surrounded by compound walls as on the date of sale in 2010. In the absence of any such details, we do not find any infirmity in the computation made by the AO and the assessee also failed to produce proper evidence in support of the claim of expenses incurred by the assessee. Therefore, this ground no.2 raised by the assessee is hereby rejected. Unexplained cash deposit - CIT(A) confirmed this addition solely on the ground that the sale agreement was entered by the assessee not in a stamp paper, but only in a white paper without even any witnesses and without mentioning the date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 in his Citizens Co-operative Bank Ltd., Dhoraji. The above sale agreement was entered by the assessee, his mother and other six legal heirs. However, sale deed could not be executed because of dispute between the family members. It is thereafter the sale consideration of Rs. 14,00,000/- was returned back to the purchasers on 02.08.2010 of Rs. 3,00,000/- and Rs. 11,00,000/- on 16.08.2010. Confirming the same a Notarized Affidavit dated 21.12.2018 from the purchasers, namely, Devjibhai Gowabhai Pardwa Gitaben Devjibhai Pardwa were filed by the assessee during assessment proceeding. 2.1 In the meanwhile, the very same plots were sold to (1) Shri Chandubhai Raghavbhai Gowani by registered sale deed dated 21.08.2010 for a consideration of Rs. 8,91,800/- and (2) Shri Pankajbhai Popatbhai Pansara Shivlal Anandbhai Khare for a consideration of Rs. 9,02,800/-. The above two sale deeds were executed by the assessee, his mother and other six legal heirs. Thus, the total consideration of Rs. 17,94,600/- and assessee s mother past savings of Rs. 55,400/- were deposited into the bank account of the assessee on 31.08.2010. Thus, the assessee pleaded a cash deposited were being sale consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case where income chargeable to tax has escaped assessment. In view of the above facts, I have reason to believe that there is failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment. In this case more than FOUR years have lapsed from the end of assessment year under consideration. Hence, necessary sanction to issue notice u/s 148 of the Act has been obtained separately from the Pr. Commissioner of Income tax-2. Rajkot as per the provisions of Section 151 of the Act. Notice u/s. 148 of the 1.T.Act is accordingly issued. 4. In response to the above notice, the assessee filed its return of income for the first time on 24.11.2018 declaring total income of Rs. 2,27,580/- and paid tax of Rs. 19,834/-. The return was taken up for scrutiny assessment the assessee claimed cost of development by lavelling the land and produced copies of the self-made vouchers for Rs. 1,40,000/-, Rs. 1,34,500/-, Rs. 37,500/- and Rs. 36,000/-. However, no original vouchers were produced for verification and the vouchers were without any revenue stamp. Therefore, the cost of improvement as claimed by the assessee was rejected by the AO and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt u/s. 148 of the I.T. Act, 1961. 2. That, the Learned CIT(A) has wrongly confirmed addition of Rs. 1,70,848/- on account of long term capital gain. 3. That, the Ld. CIT (A) has wrongly confirmed addition of Rs. 14,00,000/- on account of unexplained cash deposits. 4. That, the Ld. CIT(A) has wrongly confirmed addition of Rs. 33,717/- on account of interest income. 5. That, the Ld. AO has wrongly confirmed the initiation penalty proceedings u/s 271(1)(c) and 271F of the I.T. Act, 1961. 6. That, the Ld. CIT(A) has wrongly confirmed the interest charged u/s 234A and 234B of the I. T. Act, 1961. 7. That, the findings of the Learned CIT(A) are not justified and are bad- in-law. 8. The appellant craves to add, amend, alter or delete one or more grounds of appeals. 8. Ld. Counsel for the assessee Shri Kalpesh Doshi argued at length on both the points of reopening of assessment and additions sustained by the Ld. CIT(A) and relied upon various case laws and filed his Synopsis of Argument. 9. Per contra, Ld. Sr. DR Shri Ashish Kumar Pandey appearing for the Revenue submitted that the assessee had failed to file original Return of Income under Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the Act, even though, the assessee was liable to pay his share of long term capital gain on sale of the plots during the assessment year. Though, the AO has not recorded the bank name and bank account details in the reasons, but the assessee in its reply clearly stated the cash transaction in the bank account pertaining to the Citizens Cooperative Bank Ltd., Dhoraji Branch with Account No. 471081001000308. The Hon ble Supreme Court in the case of ITO vs. Lakhmani Mewal Das (1976) 103 ITR 437, held as follows: the reasons for the formation of the belief must have rational connection with or relevant bearing on the formation of the belief. Rational connection postulates that there must be a direct nexus or live link between the material coming to the notice of the ITO and the formation of this belief that there has been escapement of the income of the assessee from assessment in the particular year because of his failure to disclose fully and truly all material facts. It is no doubt true that the Court cannot go into sufficiency or adequacy of the material and substitute its own opinion for that of the ITO on the point as to whether action should be initiated for reopening ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e former category consists of the facts which, if established to be correct, will have a cause and effect relationship with the income escaping the assessment. The latter category consists of the facts, which, if established to be correct, could legitimately lead to further inquiries which may lead to detection of an income which has escaped assessment. There has to be some kind of a cause and effect relationship between reasons recorded and the income escaping assessment. 11.2 Thus, in our considered opinion the reasons recorded by the AO clearly established the assessee is a non-filer of return of income in spite of taxable income in his hand, which clearly falls under the provisions of Clause (a) of Explanation 2 of Section 147 of the Act. The AO has also brought on record the cash deposits as made by the assessee in his bank account. Therefore, we do not find any infirmity in the reasons recorded by the AO for reopening of assessment. Therefore, the reopening of assessment is hereby upheld. 12. Similarly, the sanction granted under Section 151 of the Act by the PCIT-2, Rajkot. In the proforma, it is clearly made out in Sl. No.8 whether the assessment is proposed to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... garding Ground No.3, addition of Rs. 14,00,000/- on account of unexplained cash deposit. Though, the CIT(A) confirmed this addition solely on the ground that the sale agreement was entered by the assessee not in a stamp paper, but only in a white paper without even any witnesses and without mentioning the date of receipt of cash. However, perusal of the bank account of the assessee clearly shows that this amount of Rs. 14,00,000/- was deposited in the bank account on 09.07.2010 by the assessee and withdrawn cash of Rs. 3,00,000/- on 02.08.2010 and Rs. 11,00,000/- on 16.08.2010, which was said to be repaid back to the first purchasers, as no sale deed could be executed by the assessee and his family members. Further, it is evidence from the registered sale deeds, the very same two plots were sold to two different parties for a consideration of Rs. 8,91,800/- and Rs. 9,02,800/ by the assessee and his family members on 23.08.2010. Thereafter, the sale consideration alongwith assessee s mother past savings were deposited in assessee s bank account on 31.08.2010 of Rs. 18,50,000/-. Thus, it cannot be said that the explanation offered by the assessee is not genuine, since, the very same ..... X X X X Extracts X X X X X X X X Extracts X X X X
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