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TMI Blog2025 (5) TMI 1064X X X X Extracts X X X X X X X X Extracts X X X X ..... t in the aforesaid matter, the ld. CIT(A) passed the order u/s 250 on dated 31.07.2024 (hereinafter referred as "impugned order"). As per Section 253(3), the appeal was to be filed on/before dated 29.09.2024 however, the same has been filed on dated 01.10.2024. Thus, the appeal was filed with a delay of 2 days. 2. Reasonable Cause Exist: In this connection, it is humbly submitted that although there was no delay in filing the instant appeal, in as much as the same was e-filed on dated 29.09.2024 i.e within the statutory period of 60 days. However, the physical filing was delayed due to a bona fide delay in obtaining the necessary documents from the client. Despite our diligent efforts to request the documentation in a timely manner, the client encountered unforeseen circumstances that prevented the prompt supply of the appeal materials, which ultimately resulted delay in a physical filing that caused delay of two days later i.e on 01.10.2024 than the intended deadline. The unavoidable results of this were 'unintentional' and imminent delay in performance of the litigant obligations. 3. The applicant is a layman and not very conversant with the legal procedure and becaus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. DR not objected to assessee's application for condonation of delay and prayed that Court may decide the issue as deem fit in the interest of justice as delay is of two days only. 4. We have heard the contention of the parties and perused the materials available on record. The prayer by the assessee for condonation of delay of two days has merit as the assessee has filed the online appeal in time but the physical copy of the same were forwarded 2 days later and thereby register considered it delayed for 2 days. Considering that fact, we concur with the submission of the assessee. Thus, the delay of two days in filing the appeal by the assessee is condoned. 5. In this appeal, the assessee has raised the following grounds: - "1.1. The ld. CIT(A) erred in law as well as facts of the case in confirming the validity of the impugned notice u/s 148A of the Act as also the notice issued u/s 148 of the Act dated 30.03.2022 are bad in law and facts of the case, for want of jurisdiction and hence the same deserves to be quashed. The assessment proceeding consequent thereto also deserves to quashed. 1.2. The ld. CIT(A) erred in law as well as the facts of the case in confirming the val ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 50/-. 6.1 Ld. AO issued required statutory notice along with the questionnaire on 26/08/2022, 12/09/2022 and on 29/12/2022. In response to the same, the assessee submitted its reply alongwith 26AS, computation of income, copy of purchases deed and sale deed and details of expenses incurred and copy of return of income filed in response to the notice u/s 148. During the year under consideration, assessee, 'Ashok Kumar Jain (PAN: ACIPJ2962J)'was engaged in family business with his brothers at Raipur. 6.2 During the year under consideration, assessee has sold immovable property for a consideration of Rs.85,00,000/-, whereas stamp duty valuation was Rs.93,20,000/-. Assessee had purchased the said immovable property at Rs.65,74,500/-in the F.Y. 2011-12 and claimed Rs.85,76,163/-as cost of acquisition after indexation. Assessee has also claimed construction cost of Rs. 9,31,742/- after indexation. Further assessee has claimed that he has paid Rs. Rs.18,750/- and Rs.50,992/-as additional registration charges. During the assessment proceedings, assessee has submitted the documentary evidence regarding the payment of stamp duty. Further assessee has also offered income of Rs.78,74 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal before the ld. CIT(A)/NFAC. Apropos to the grounds so raised the relevant finding of the ld. CIT(A)/NFAC is reiterated here in below: "4.2 Decision 4.2.1 Briefly stated the fact of the case is that during the relevant previous year the appellant sold immovable property for consideration of Rs. 85,00,000/- whereas the Stamp Valuation Authority has determined the value of the property sold at Rs. 93,20,000/-. The AO found that while computing long term capital gains the appellant has claimed indexed cost of construction amounting to Rs. 9,31,742/-. However, as discussed by the AO in the impugned assessment order, the appellant failed to provide satisfactory details and documentary evidences in support of this construction expenditure claimed. The A.O. in the assessment completed therefore disallowed appellant's claim of deduction on account of 'indexed cost of construction' while computing capital gains. Accordingly, in the assessment computed taxable long term capital gain is computed at Rs. 7,43,837/- and the same was brought to tax. 4.2.2 During the course of appellate proceedings, the appellant filed copy of purchase deed dated 12.05.2011 towards purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision 5.2.1 In view of the detailed discussion made in the first ground of appeal, this ground of appeal need no separate adjudication and hence dismissed. 6.1 The third ground of appeal raised by the appellant read as under. "That the learned AO erred in facts and law by not allowing the credit of TDS of Rs 85375 which may kindly be allowed". 6.2 Decision 6.2.1 In the submission made, the appellant has not provided any details or documentary evidences to establish that he is eligible for credit for TDS amounting to Rs. 85,375/-. However, the A.O. is directed to allow due credit of TDS to the appellant after due verification. This ground of appeal raised by the appellant is thus allowed. 7.1 The fourth ground of appeal raised by the appellant read as under: "That the learned AO erred in facts and law by not allowing proper opportunity of being heard because as per provisions of Sec 148A of the Income tax Act a minimum period of 7 days is required to be given to the Assessee for submitting the reply but in the instant case such period of 7 days has not been provided therefore the issue of notice is invalid as the notice has been issued on 13 03 2022 and fixed the heari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against the provisions of law" 8.2 Decision 8.2.1 On perusal of the annexure to notice issued u/s. 148A(b) of the I. T. Act dated 17.03.2022 it is noted that sale of immovable property is shown at Rs. 93,20,000/-, and purchase of immovable property is shown at Rs. 85,00,000/-. It is to be noted that these mistakes by the A.O. in the notice issued, has been raised by the appellant only after attending the entire re-assessment proceedings without raising any objections before the A.O. In other words no objections were raised before the Assessing Officer but were raised only during the present appeal proceedings. In such cases, Hon'ble Supreme Court and several Hon'ble High Courts have held that the reassessment proceedings are not vitiated. The courts also held that the protection of section 292B of the IT Act 1961 is available in such cases. The Hon'ble courts have held that since the appellant willingly participated in the reassessment proceedings, they have lost the right to raise any discrepancy or deficiencies in the reassessment proceedings conducted by the A.O. and hence the same cannot be considered at the appellate stage. Further, it is well within the knowl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vs Ashish Agarwal, 2022 SCC OnLine Hon'ble Supreme Court 543 read with the time extension provided by Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (for short 'TOLA') allows extended reassessment notices to travel back in time to their original date when such notices were to be issued and then new Section 149 of the Act is to be applied at that point. Thus, the Apex Court has in fact legalised/validated all the notices issued under un-amended provisions by treating them to be deemed show cause notice u/s. 148A of the I. T. Act (as substituted by Finance Act, 2021) as a one time measure. Therefore, if the contention raised by the appellant is accepted, then it would render the said judgment of Hon'ble Supreme Court in Union of India vs. Ashish Agarwal (supra) nugatory. Considering the facts of the case and in law the contentions raised by the appellant in this ground of appeal is not acceptable. This ground of appeal raised by the appellant is thus dismissed. 10.1 The seventh ground of appeal raised by the appellant read as under. "That the leamed AO erred in facts and law by not considering the additional value of stamp duty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 93,20,000/- alleging that income of Rs. 1,78,23,747/- has escaped assessment under the provisions of income escaping assessment u/s 148/147 of the Act and that assessee did not filed ROI. The ld. AO issued various notice(s) and the assessee filed his ROI against notice u/s 148 of the Act and filed various replies and document. The ld. AO however completed the assessment u/s 144 r/w 147 on dt. 01.03.2023 with impugned addition/disallowance of Rs. 9,31,742/- on account of LTCG and disallowance of cost of construction claimed by the assessee. Aggrieved from the above order, the assessee filed appeal before ld. CIT(A)/NFAC on 13.03.2023 which was unfortunately dismissed vide order dt. 31.07.2024. Against the above order, the assessee filed this appeal. GOA-1: Addition without jurisdiction: At the outset it is submitted that all the input and additions are completely beyond jurisdiction, were beyond jurisdiction before the AO as detailed here in below. Facts: The ld. AO at page 1 of assessment order stated the reason to believe as under: "The case has been selected for scrutiny u/s 147 of I. T. Act, for the reason that the assessee has received interest other than in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 85,00,000/- without even considering and applying his mind that the assessee himself has already taken Rs. 93,20,000/- as his value as per S. 50C of the Act for computation of LTCG, while computing his income. Further, the assessee while forming his reasons to belief completely overlooked the fact that the impugned property purchased for Rs. 85,00,000/- does not exist and there is no such transaction is regards to any property sold during the year. The ld. AO merely on that basis of presumption stated that there were two transactions of sale and purchase of property existed, even after bring the fact to his knowledge that the assessee has already disclosed the entire transaction of a single sale of asset in his ROI filed against S. 148 of the Act. This is however, height of imagination. It is evident that the AO did not have any material showing two transaction took place. He was not in possession of any independent source of information. 1.4 Admittedly, the AO did not refer to any paper found during some Search or any statement recorded which might have indicated any possible transaction other than the one disclosed in the RIO filed by the assessee. Thus, it is evidently a cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts of the present case. 2.2 The information provided in the impugned Notice u/s 148 dt 30.03.2022 is vague, without any basis, wherein baseless conclusions were made and is based on entirely wrong factual premise that the assessee has sold a immovable property as well as purchased an immovable property. However, the assessee vide its various replies letters had categorically denied having purchased any property and had already disclosed the LTCG pertaining to sale of immovable property in his ROI filed against 148 of the Act during the year under consideration. 2.3 The Respondent-AO neither denied nor brought on record any reasonable basis of formation of such belief meaning thereby, the reasons are completely non-existent. 2.4 Further, the very Reason to Believe are based on wrong factual premise, such reasons to believe are no reasons at all. Consequently, the reassessment proceedings initiated vide the impugned notice u/s 148, deserves to be quashed. Reliance is placed on Rajhans Processors v. Union of India [2023] 149 taxmann.com 29 (Raj), wherein it was held as under:- "12. Resultantly, we are of the firm view that the very foundation of the impugned notice, the reason ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n his ROI before the AO, completely disclosing the transaction with himself taking the value of purpose of 50C of the Act as per stamp authorities and paying the due tax thereon. However the authorities below completely ignored this fact and that there existed no transaction of purchased of any immovable property by the assessee, these facts were at all not dealt with by the ld. AO which is against the judicial guidelines and the binding directions given by the Hon'ble Apex Court in the case of GKN Diveshaft (2002) 259 ITR 19 (SC). Unfortunately, however, the ld. AO without adverting to assessee's contention, straightaway issued the impugned Notice u/s 148 of the Act wherein he held income of Rs. 1,78,23,747/- had escaped assessment. 3.2 The law is well settled and such an approach on the part of the AO was clearly in violation of the categorical directions given by the Hon'ble Apex Court in the case of GKN Diveshaft (supra) and various other decisions following the Apex Court decision that before proceeding to complete the assessment by issuing notices u/s 142(1) of the Act, it is an incumbent upon the Assessing Officer to first dispose of all the objections and only then to pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The order disposing of the objections should deal with each objection and give proper reasons for the conclusion. No attempt should be made to add to the reasons for reopening of the assessment beyond what has already been disclosed." 4. Reassessment is time barred by limitation : 4.1 With the enactment of Finance Act, 2021, the old provisions of sections 147, 148, 149 and 151 stood substituted with effect from 01.04.2021 and replaced by the existing provisions of the said sections as per sections 1(2)(a) and 40 to 44 of the Finance Act, 2021. 4.2 S. 148A reads "...The Assessing Officer shall, before issuing any notice under section 148...". The language of the Sec 148A is clear, unambiguous and obliges the AO to comply with the prescribed procedure before issuance of Notice u/s 148. Such procedure, is a precursor to the issuance of the issue u/s 148 and therefore, has to be initiated within the stipulated period of limitation u/s 149 of the Act. Hence, in the amended law any Reopening proceedings even though proposed to be initiated has to be in accordance with the mandatory condition prescribed u/s 148A, 148 and 149 of the Act. 4.3 The law is well settled that the provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missible: 2.1 Admittedly, the very escaped income of Rs. 1.78 cr which formed part of reasons to believe was not added to declared income as against which however, the ld. AO chose to make any addition of LTCG which was already disclosed by the assessee himself. Such an approach is, completely impermissible by law and the AO has acted completely beyond jurisdiction. Thus, once the addition on account of the income believed to have been escaped, has not been made, no addition of any other income could be made u/s 147 of Act, more so when prescribed legal procedure was not followed. 2.2 Supporting Case Laws: 2.2.1 CIT vs. Shri Ram Singh (2008) 217 CTR (Raj) 345: (2008) 306 ITR 343 (Raj) (DC 1-6). The Rajasthan High Court construed the words used by Parliament in s. 147 particularly the words that the AO may assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under s. 147. The Hon'ble Court held as follows: "It is only when, in proceedings under s. 147 the AO, assesses or reassesses any income chargeable to tax, which has escaped assessment for any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the reasons for initiation of those proceedings ceased to survive. The observations of the Hon'ble High Court on pages 147 and 148 of in 336 ITR 136 are worth noting. 2.2.4 Also kindly refer CIT vs Mohmed Juned Dadani (2013) 355 ITR 172 (Guj) (DC 7-15). However, it may be clarified that, nothing came to the notice of the AO as contemplated by Explanation-III to S. 147 as much as the AO himself, first, made inquiries through notices u/s142, and when no reply was received, made the impugned additions and disallowances. Therefore, the AO cannot take help of the said Explanation, nor even he has whispered a single word on this aspect. Therefore, all the impugned additions, deserves to be, deleted, in toto, on this legal ground alone." 9. The ld. AR of the assessee in addition to the above written submission so filed vehemently argued that the assessee re-opening in the case of the assessee was without jurisdiction and for that he relied upon the decision of apex court in the case of Rajiv Bansal (para 19F) and thereby stated that the re-opening is bad in law. He also stated that ld. AO has not made any addition on the reasons for case was re-opened but the addition was made on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bills/letters submitted by the assessee-appellant it is found was found by the ld. CIT(A) that the work carried out is not related to construction today existing structure and hence cannot be considered as expenditure on account of 'cost of construction'. The expenditure incurred is in the nature of current repairs and maintenance and furniture and fixture which cannot be treated as cost of improvement to the capital asset sold. Therefore, considering the findings given by the A.O. in the assessment order as well as the details and documentary evidences provided by the appellant during the course of appellante proceedings, in my considered opinion, appellant's claim of indexed cost of acquisition of Rs. 9,31,742/- is not an allowable deduction while computing taxable capital gains. The action of the A.O. in denying the same is therefore in accordance with the provisions of law and hence upheld. This ground of appeal raised by the appellant is thus dismissed. With that observation he confirmed the view of the ld. AO and thereby not considered the claim of the assessee. Before us the ld. AR of the assessee specifically argued that considering the principles of natural jus ..... X X X X Extracts X X X X X X X X Extracts X X X X
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