TMI Blog2024 (1) TMI 1225X X X X Extracts X X X X X X X X Extracts X X X X ..... e partnership firm. He has simply gone by ITS records, i.e., information from the individual transaction statement and that there is no return of income filed by the name of Sai Developers. Therefore, he presumed that all the transactions belong to assessee. Once the sale deed or the agreement is between the two partnership firms, then how the transaction can be viewed in the individual hands by the ld. AO, is beyond comprehension. Even the reasoning given by the AO as incorporated above is not based on rationale reasoning either on facts or in law. Thus, reasons recorded by the ld. AO based on certain information that assessee has entered into transaction of immovable property itself is incorrect and based on such incorrect assumption of facts, notice u/s. 148 cannot be issued nor the same amount can be taxed in the hands of the assessee. At least when assessee has raised this objection and has filed all the documents like partnership deed, PAN of the partnership firm and more specifically the developer s agreement entered between two different parties. When all these documents were filed before him then how the assessment can be made u/s. 148 in the hands of the assessee. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10/2010 duly registered in the office of Sub Registrar, Kalyan -2. Thus the transaction of sale of property was pertaining to financial year 2010-11 relevant to AY 2011-12 However, the assessee has failed to offer any capital gains or income on the aforesaid transaction of sale of immoveable property. 03. As per provision of section 139(1) of the Income Tax Act, 1961, the assessee was required to file return of income for AY 2011-12 on or before 31/07/2011, however, the assessee has failed to deliver the return. Moreover, the assessee has failed to comply with notices issued by this office under Non Filers Monitoring System from time to time. Therefore the transactions of sale of immovable property remained unexplained. In view of the above, I Save reason to believe that the income of more than Rs. 1,00,000/- for the A.Y. 2011-12 has escaped assessment within the meaning of Explanation 2 to the provision to Section 147 of the Income Tax Act, 1961. 4. In this case more than four year has been elapsed from the end of the assessment year under consideration. Hence necessary sanction to issue notice under section 148 of the Income Tax Act 1961 may kindly be accorded as per pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uired to file the return of income for the year under consideration as per section 139(1) of the Act. Thus, as I was not required to furnish a return of income u/s. 139(1), there was no failure on my part and accordingly, invocation of explanation 2 to section 147 is completely unwarranted. 3. Your Honour has proceeded with the reopening on the erroneous premise that I had sold property during the year under consideration and further a mere suspicion that my income has escaped assessment in excess of Rs. 1,00,000/- which is contrary to the facts of my case. Thus, the basis of reopening seems to be mere reasons to suspect against the mandate of the section which is reasons to believe . Further, it may be noted that it is a well settled principle that mere information recorded In 26AS/ ITS details without any independent verification by itself cannot be a reason for reopening of the assessment. 5. The ld. AO disposed of the assessee s objection vide order dated 13/12/2018 rejecting assessee s objection. The relevant extract for rejecting the objection of the assessee was as under:- 3. I have gone through the objections of the assess and considered me pudictal prommunce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the assessee had sold immovable property during the year for Rs. 4,07,20,000/ vii. The assessee has failed to comply with the notices issued under Non-filer Monitoring System. Thus, there is a reason to believe, that the assessee, in his individual capacity has carried out the sale of immovable property transaction and has not filed his return of income for the year under consideration. 6. Thereafter, the ld. AO held that assessee instead of explaining the transaction in respect of sale of property, cash deposits and other deposits appearing in the bank account has not given any proper explanation and has been stating that he has not carried out any such transaction. Thereafter, he has proceeded to treat the sale consideration of Rs. 4,07,20,000/- as income from business and profession after observing as under:- 03. Now coming back to the main issues, as per available Information the assessee has sold a land situated at Village Gouripada Tal. Kalyan, Distt, Thane for a consideration of Rs. 4,07,20,000/ as per the registered document dated 20/10/2010 regd. Vide Regn No.10110/2010 on 25/10/2010 3.1. The assessee though claims to have carried out the tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing in view the fact that the sale of property transaction has not been disclosed and not offered to tax in the alleged partnership firm and in view the fact that the assessee did not provide any information in regard to purchase of land and sharing of sale proceeds of the land. I treat it to be an Adventure in the nature of Trade bring to tax the entire sale consideration of Rs. 4,07,20,000/-as income from Business Profession: Penalty proceedings u/s 271(1)(c) of the Income Tax Act, 1961, is initiated separately for concealing the particulars of income. 7. Apart from. that he also made addition of Rs. 49,85,200/- on account of receipts appearing in the bank account of assessee which has been treated as undisclosed income . 8. Ld. CIT (A) after incorporating the relevant finding of the ld. AO as well as the entire written submissions, by and large he has confirmed the reasoning of the ld. AO in so far as issue of validity of reopening u/s. 147 and held that he does not find any advertence in the reopening of the case by the ld. AO and confirmed the additions made by them. 9. We have heard both the parties on the issue of validity of reopening and also relevant observat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O proceeded to make assessment by issuing notice u/s. 148, and also made the addition in the hands of the assessee for the entire value of transaction. Once, assessee has brought these facts on record, then ld. AO could not have proceeded to tax the above transaction in the hands of the assessee, because the agreement and transaction was not with the assessee, albeit between two partnership firm. In fact, ld. AO should have issued notice u/s. 148 to the partnership firm, M/s. Sai Developers. He has simply gone by ITS records, i.e., information from the individual transaction statement and that there is no return of income filed by the name of Sai Developers. Therefore, he presumed that all the transactions belong to assessee. Once the sale deed or the agreement is between the two partnership firms, then how the transaction can be viewed in the individual hands by the ld. AO, is beyond comprehension. Even the reasoning given by the ld. AO as incorporated above is not based on rationale reasoning either on facts or in law. Thus, reasons recorded by the ld. AO based on certain information that assessee has entered into transaction of immovable property itself is incorrect and based on ..... 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