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TMI Blog2024 (8) TMI 1563X X X X Extracts X X X X X X X X Extracts X X X X ..... ed Commissioner of Income-Tax (Appeals) erred in law and on facts in not providing an opportunity of being heard by way of video conferencing even though a specific request was made in the written and such action is violation of principles of natural justice. 4. That the learned Commissioner of Income-Tax (Appeals) erred in law and on facts in holding that the sale consideration received was only Rs. 57,75,000/- and not Rs. 2,00,00,000/- and such a finding is perverse in law as being contrary to the materials on record. 5. That the learned Commissioner of Income-Tax (Appeals) erred in law and on facts in giving credence to the oral statement of Sr. Parasmal Lodha instead of relying on the signed written document, authenticity of which has been accepted by Mr. Lodha himself. 6. That the learned Commissioner of Income-Tax (Appeals) erred in law and on facts in adding a sum of Rs. 1,42,25,000/- u/s. 69 of the Act even though the appellant had fully explained the source of investment. 7. That the learned Commissioner of Income-Tax (Appeals) erred in law and on facts in not providing a proper opportunity to cross-examine Mr. Parasmal Lodha and holding that there is no provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. 4.1 Brief facts in respect of the above addition stating that during the lifetime, Mr. Anthony had entered into an Agreement for Sale on 26.03.2014 for sale of a residential property at 118/4, 1st Main Road, 1st Cross, Bazaar Street, Udayanagar, Bangalore - 560016 with one Mr. S. Parasmal Lodha. As per Agreement for Sale, the property was agreed to be sold for a sum of Rs. 2,00,00,000/-. The agreement itself recorded that a sum of Rs. 11,00,000/- was paid in cash on execution of the agreement. There is an endorsement in the agreement that a further sum of Rs. 60,00,000/- was paid in cash on 14th July 2014. The endorsement also states that the balance sum of Rs. 1,29,00,000/- will be paid before execution. A Deed of Absolute Sale was executed on 02.08.2014. The consideration mentioned in the Absolute Sale Deed was only Rs. 57,75,000/- being the guidance value. 4.2 Late Mr. Anthony received the balance consideration in cash. The total consideration of Rs. 2,00,00,000/- was paid by Sri. S. Parasmal Lodha in the following manner: (a) Rs. 57,75,000/- by cheque. (b) Rs. 1,42,25,000/- by cash on various dates 4.3 Mr. Anthony died on 07.10.2016. After his death, the present appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion, the learned assessing officer has to form a reasonable view based on certain materials. Further, the approval of the jurisdictional Pr. CIT / CIT / Pr. DIT / DIT is required for converting the 'limited scrutiny' case to 'Complete scrutiny'. The learned assessing officer ought to have followed the above procedure laid down by CBDT. In absence of such failure to follow the procedure as laid down in the above referred Instruction to convert the limited scrutiny to complete scrutiny, the entire assessment becomes null and void. Hence, he prayed that the Tribunal be pleased to hold that the assessment order is liable to be quashed. 5.3 He submitted that the appellant made an application under "FORM A" for seeking information under the Right to Information Act, 2005 seeking for any approval by the Principal Commissioner of Income Tax / Commissioner of Income tax for making scrutiny under section 69 of the Act. The appellant sought for this information for the reason that the learned assessing officer had selected the appellant's case for limited scrutiny, however, the learned assessing officer completed the assessment by making an addition under section 69 of the Act which is outsi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above. In the present case, the learned assessing officer has not sought for any approval from the PCIT and therefore, the entire proceedings are liable to be quashed. 5.6 The ld. A.R. submitted that the appellant relied on the decision of Hon'ble Delhi Tribunal in Balvinder Kumar v. PCIT 187 ITD 454 wherein it was held that the assessing officer cannot go beyond the reason for which the matter was selected for scrutiny. The facts of this case are that the assessee filed an appeal before the Income Tax Appellate Tribunal challenging the order passed u/s. 263 of the Act wherein it was held that the assessing officer has accepted the computation of capital gains without considering the details of indexed cost of acquisition. The assessee's case was selected for limited scrutiny for the verification of increase in capital. The order u/s. 263 of the Act was passed on the ground that assessing officer has not verified the claim u/s. 54 of the Act made by the assessee. The Hon'ble Tribunal held that the assessing officer cannot go beyond the reason for which the matter was selected for scrutiny. Therefore, it would not be open to Principal Commissioner of Income Tax to pass order u/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reproduced below; "Hence, we find that the Assessing Officer has taken up the issue and initiated proceedings for complete scrutiny without necessary approval with him. Therefore, the issue taken up by the Assessing Officer regarding disallowance of deduction under section 54B is prior to the necessary approval communicated to the Assessing Officer and therefore, in the absence of communication in writing to the Assessing Officer about the approval, the assumption of jurisdiction by the Assessing Officer is invalid. Consequently, the addition made by the Assessing Officer by denying the deduction under section 54B is not sustainable and the same is deleted." 5.9 He further relied on the decision of Delhi Tribunal in CBS International Projects Pvt. Ltd. v. Asst. CIT (ITA No. 144/Delhi/2019 dated 28.02.2019) wherein it was held as under; (Placed at Page 64 to 71 of assessee's paper book) "16. A perusal of the aforesaid instruction shows that the Assessing Officer can widen the scope of scrutiny even if it is selected for scrutiny assessment under computer aided scrutiny selection. However, the condition precedent for such action of the Assessing Officer is that he has to seek ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has laid down the procedure for converting the limited scrutiny to complete scrutiny. As per the above instruction, the learned assessing officer has to form a reasonable view based on certain materials. Further, the approval of the jurisdictional Pr. CIT / CIT / Pr. DIT / DIT is required for converting the 'limited scrutiny' case to 'Complete scrutiny'. The learned assessing officer ought to have followed the above procedure laid down by CBDT. In absence of such failure to follow the procedure as laid down in the above referred Instruction to convert the limited scrutiny to complete scrutiny, the entire assessment becomes null and void. Hence, he prayed that the Tribunal be pleased to hold that the assessment order is liable to be quashed. 5.12 He relied on the decision of Hon'ble Jaipur Tribunal in Smt. Manju Kaushik v. DCIT 78 ITR (Trib) 564 wherein it has upheld the above proposition. The relevant portion of the judgment is as under; (Para 4 of page 570) [placed at Page No. 49 to 63 of assessee's paper book] The Assessing Officer is duty bound to follow the instructions in case limited scrutiny assessment proceeding are proposed to be converted into complete scrutiny and wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er relied on the decision of Delhi Tribunal in CBS International Projects Pvt. Ltd. v. Asst. CIT (ITA No. 144/Delhi/2019 dated 28.02.2019) wherein it was held as under; (placed at Page 64 to 71 of assessee's paper book) "16. A perusal of the aforesaid instruction shows that the Assessing Officer can widen the scope of scrutiny even if it is selected for scrutiny assessment under computer aided scrutiny selection. However, the condition precedent for such action of the Assessing Officer is that he has to seek prior approval of the higher authorities. A perusal of the assessment order shows that the Assessing Officer has not mentioned as to when the permission from the Principal Commissioner of Income-tax was sought to make further enquiries in the case of the assessee. Considering the facts of the case in totality, in the light of the Central Board of Direct Taxes Instructions mentioned hereinabove, qua notice under section 143(2) of the Act, we are of the considered opinion that the assessment order so framed by the Assessing Officer is not in consonance with Instruction of the Central Board of Direct Taxes and, therefore deserves to be quashed" 5.15 In view of the above submis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for selection of case for scrutiny to the assessee concerned. 3. As far as the returns selected for scrutiny through CASS-2015 are concerned, two type of cases have been selected for scrutiny in the current Financial Year- one is 'Limited Scrutiny' and other is 'Complete Scrutiny'. The assessees concerned have duly been intimated about their cases falling either in 'Limited Scrutiny' or 'Complete Scrutiny' through notices issued under section 143(2) of the Income-tax Act, 1961 ('Act'). The procedure for handling 'Limited Scrutiny' cases shall be as under: a. In 'Limited Scrutiny' cases, the reasons/issues shall be forthwith communicated to the assessee concerned. b. The Questionnaire under section 142(1) of the Act in 'Limited Scrutiny' cases shall remain confined only to the specific reasons/issues for which case has been picked up for scrutiny. Further, the scope of enquiry shall be restricted to the 'Limited Scrutiny' issues. c. These cases shall be completed expeditiously in a limited number of hearings. d. During the course of assessment proceedings in 'limited Scrutiny' cases, if it comes to the notice of the Assessing Officer that there is potential escapemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis for selecting the case for scrutiny. However, in revenue potential cases, it was further provided that 'Complete Scrutiny' could be conducted, if there was potential escapement of income above a prescribed monetary limit, subject to the approval of administrative Pr. CIT/CIT/Pr. DIT/DIT. 2. In order to ensure that maximum objectivity is maintained in converting a case falling under 'Limited Scrutiny' into a 'Complete Scrutiny' case, the matter has been further examined and in partial modification to Para 3(d) of the earlier order dated 29.12.2015, Board hereby lays down that while proposing to take up 'Complete Scrutiny' in a case which was originally earmarked for 'Limited Scrutiny', the Assessing Officer ('AO') shall be required to form a reasonable view that there is possibility of under assessment of income if the case is not examined under 'Complete Scrutiny'. In this regard, the monetary limits and requirement of administrative approval from Pr. CIT/CIT/Pr. DIT/DIT, as prescribed in Para 3(d) of earlier Instruction dated 29.12.2015, shall continue to remain applicable. 3. Further, while forming the reasonable view, the Assessing Officer would ensure that: a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nly after conversion of case to complete scrutiny and after following the procedure outlined above the A.O. may examined the issues other than limited scrutiny issues. vii. The A.O. shall intimate the assessee regarding conducting complete scrutiny. vi. The provisions of Sec. 144A should be invoked in suitable cases. viii. To prevent the roving and fishing enquiries, such cases should be picked up for review and inspection by administrative authorities. 7.3 Reliance is also being placed in the order of the Co-ordinate Bench of ITAT in the case of CBS International Projects Pvt. Ltd. Vs ACIT, New Delhi in ITA No. 144/Del/2019 and order of the Hon'ble Jurisdictional High Court in the case of Best Plastics Pvt. Ltd. 295 ITR 256 wherein it was held that the assessment order passed by the Assessing Officer disregarding the instructions of the CBDT are liable to the set aside and no substantial of law arises. The said judgment relied upon the decision of Hon'ble Supreme Court in the case of Commissioner of Customs Vs Indian Oil Corporation and also the judgment of Hon'ble Supreme Court in the case of UCO Bank Vs CIT: 237 ITR 889. Hence, we hold that the Assessing Officer can wide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orrect. 8.3 The bank statement shows the receipt of cash nearer to the dates of sale agreements, endorsement as per the sale agreement and sale deed. He submitted the details as under; Details of amounts received as per above referred documents. Sl No Events Date Amount 01 Sale Agreement 26.03.2014 11,00,000 02 Advance Received 14.07.2014 60,00,000 03 Sale Deed (Through bank) 28.07.20214 57,75,000 Details of Cash deposits Sl No Events Date Amount 01 Cash Deposits (Out of advance received on 14.07.2014) 15.07.2014 48,00,000 02 Cash Deposits (Out of advance received on 14.07.2014) 26.07.2014 19,00,000 03 Cash Deposits (Out of final cash received on date of sale deed) 09.08.2014 23,00,000 04 Cash Deposits (Out of final cash received on date of sale deed) 16.08.2014 8,00,000 05 Cash Deposits (Out of final cash received on date of sale deed) 14.10.2014 20,00,000 06 As per Sale Deed 02.08.2014 57,75,000 Total 1,75,75,000 The copy of bank statement is placed with her written submissions and the same was filed with AO. He submitted that the above details show that the appellant has received cash of Rs. 2,00,00,000/- from the buyer a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of them 2 persons have given statement. There is no discussion in Assessment order with regard to other 3 persons. In our opinion the statement of 2 cannot be basis for making such huge additions on collection of capitation fees. It cannot be considered as appropriate sample to frame the assessment on the basis of their statement. Further, the assessee requested for cross examination of all the parties whoever have given the statements against the assessee, if any, which was not provided at all. In view of this, such statements cannot be relied upon. The department despite its attempts failed to collect any corroborative information regarding collection of capitation fees, except relying on uncorroborated entries in the loose papers/Excel sheets, wants to frame the assessments in all these assessment years relying upon the same which is not acceptable. The revenue authorities bound to follow the principle of natural justice and ought to have given proper opportunity of examination and cross examination of the parties concerned whose statements are relied upon to frame the assessment. In our opinion the discovery of documents not only sufficient to conclude the collection of unaccou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for sale of agriculture land for Rs. 1,20,00,000/- and deposited the same in the bank account, whereas the buyer had declared the cost of acquisition at Rs. 22,00,000/-The assessing officer determined the addition of Rs. 77,80,000/- as unexplained income being the difference in the value as per sale deed and sale consideration declared by the assessee. The Hon'ble High Court accepted the sale consideration at Rs. 1,20,00,000/- as declared by the assessee. The relevant portion of the judgment is reproduced below herein the findings of the Tribunal has been accepted by the High Court; "8. The Income-tax Appellate Tribunal considered the submissions and found that the evidence led in the light of the explanation submitted by the assessee, source of deposit in question in the bank is sale of land by him. The reasons shown by the authorities below for deposit and the explanation of the assessee are wholly arbitrary. The assessee had explained that the land was sold for Rs. 1.20 crores out of which Rs. 20 lakhs was paid in advance and remaining sale consideration was paid to him at the time of registration of sale deed. Out of which Rs. 93 lakhs was paid in cash and Rs. 7 lakhs by dem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assessing Officer has also failed to contradict the explanation furnished by the assessee with some positive evidence. On the basis of documents, explanation of the assessee and others and the prevalent practice in the land transaction it can be safely inferred that whatever the assessee had explained about the source of the deposit cannot be doubted especially in the absence of contrary material on record. We, thus, while setting aside orders of the authorities below in this regard, direct the Assessing Officer to delete the addition in question made at Rs. 77,80,000 on account of income from undisclosed sources. The grounds involving the assessee are, thus, allowed." 9. We have gone through the orders passed by the Assessing Officer, Commissioner of Income-tax (Appeals) and the Income-tax Appellate Tribunal and find that the questions of law as raised do not arise for consideration inasmuch as findings recorded by the Income-tax Appellate Tribunal are findings of fact, which do not call for consideration or reconsideration of this court." 8.10 In view of the above submissions, he prayed that the Hon'ble Tribunal be pleased to allow the appeal. 9. The ld. D.R. submitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ving entered into the unregistered sale agreement for the purpose of obtaining loan from bank, but denied making any cash payments. The AO found that he had taken loan of Rs. 90,00,000/- from L&T Housing Finance Ltd. against property purchase of 57,75,000/-. Further, as mentioned above, the assessee had received cheque of Rs. 89,06,344/of L&T Housing Finance Ltd. through ICICI Bank from Shri Lodha, of which Rs. 31,31,344/- was returned to Shri Lodha via cheque. The assessee thus retained Rs. 57,75,000/- which is the sale amount shown in the registered sale deed. The ld. D.R. stated that the AO also recorded statement of Shri Noratanmal (to whom Shri Lodha had said to have sold the property) and found that the property was sold to him for Rs. 69,44,000/-. 9.1 He also submitted that the AO found that the sale consideration of the immoveable property could be substantiated at Rs. 57,75,000/- and concluded that the assessee had tried to introduce his unexplained money in the garb of sale consideration and avoided paying tax on the same by claiming exemption u/s 54 of the Act. The assessee had utilized the differential amount of Rs. 1,42,25,000/- for construction of house property and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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