BASANT JAIN,DELHI V. DCIT, CENTRAL CIRCLE 29, DELHI

ITA 2750/DEL/2023

AI Insights

The case involves an appeal by Basant Jain against the reassessment order for the Assessment Year 2013-14, which was based on alleged unexplained investment in property. The reassessment was initiated following a survey and subsequent findings that suggested discrepancies in the property transaction values reported by Jain. The Assessing Officer (AO) reopened the assessment under section 147 of the Income Tax Act, 1961, citing that income had escaped assessment. However, the Tribunal found that the AO's reliance on an unsigned and irrelevant agreement to sale, along with a statement from a seller that lacked proper authentication, rendered the reassessment invalid. The Tribunal's decision was influenced by a similar case (ITA No. 2725/Del/2023) where reassessment for the same transaction in a different assessment year was quashed.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 711549 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2013-2014
• Other Referred Cases: ITA No. 2725/Del/2023
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AJAY KUMAR ARORA
• Assessee Lawyers: R.S. SINGHVI
• Keywords: Business income; Reassessment proceedings; Unexplained investment; Competent authority; Reason to believe; Tangible material
• Section: 147; 148; 143(3); 68; 69; 133A

Judgement Text

"Page | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “A”: NEW DELHI BEFORE SHRI C. N. PRASAD, JUDICIAL MEMBER AND SHRI M. BALAGANESH, ACCOUNTANT MEMBER ITA No. 2750/Del/2023 (Assessment Year: 2013-14) Basant Jain, C-119, Shivaji Park, Punjabi Bagh, Delhi Vs. DCIT, Central Circle-29, Delhi (Appellant) (Respondent) PAN: ADBPJ2416P Assessee by : Shri R. S. Singhvi, CA Shri Satyajit Goel, CA Shri Rajat Garg, CA Revenue by: Shri Ajay Kumar Arora, Sr. DR Date of Hearing 04/06/2025 Date of pronouncement 25/07/2025 O R D E R PER M. BALAGANESH, A. M.: 1. The appeal in ITA No. 2750/Del/2023 for AY 2013-14, arises out of the order of the Commissioner of Income Tax (Appeals)-30, New Delhi [hereinafter referred to as ‘ld. CIT(A)’, in short] in Appeal No. 10075/2012-13 dated 25.07.2023 against the order of assessment passed u/s 143(3) of the Income- tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 01.03.2022 by the Assessing Officer, ACIT, Central Circle-29, New Delhi (hereinafter referred to as ‘ld. AO’). 2. The ground Nos. 1 and 2 raised by the assessee are challenging the validity of assumption of jurisdiction u/s 147 of the Act and consequential framing of reassessment thereon. The other grounds raised by the assessee are challenging the validity of addition made in the sum of Rs. 1.40 crores u/s 69 of the Act on account of unexplained investment in property. Printed from counselvise.com ITA No. 2750/Del/2023 Basant Jain Page | 2 3. We have heard the rival submissions and perused the material available on record. The assessee is an individual and had filed his return of income on 21.02.2021 only in response to notice u/s 147 of the Act issued to the assessee. The income declared in the return was Rs. 2,10,400/-. The reasons recorded for reopening assessment are as under:- “Name and address of the assessee Sh Basant Jam PAN ADBPJ24161 Assessment Year 2013-14 Reasons for reopening the case u/s 147 read with section 148 of the Income tax Act, 1961 Information has been received in this case from Dy. Director (Inv.). Panipat that during the FY 2012-13 pertaining to A.Y. 2013-14 that assessee has escaped income of Rs 2,41,50,000/- in lieu of land agreement. The information was initially forwarded to ITO, Ward-4(2), New Delhi Subsequently, this information was received in this Circle from ITO, Ward-4(2), New Delhi on 21 12.2020. 2 A survey action u/s 133A of the IT Act, 1961 was carried out at the business premise of Sh Basant Jain, Prop M's Jainsons Jewellers, Kacche Quarter, Jainson Road, Sonipat on date 03.05.2018 and incriminating documents were found and serzed On the basis of impounded documents and after various enquiries survey report was prepared by Dy Director (Inv. Panipat and approved by Principal Director Income Tax (Inv), Chandigarh. 3. During the course of survey statement of Smt. Neelam has been recorded u's 131(1) of the Income Tax Act, 1961 on date 03.05.2018 in which she has admitted that Sh. Basant Jain & ors Have purchased a land from her and ors. Situated at village Rasoi, Sonipat. Smt. Neelam in her statement stated that she has received payment of Rs. 1,85,43,750/- for 86 marla (te her & her sons share) and Sh Raj Kumar has received payment of Rs. 62,53,125/- for 29 marla for his share out of total sales of 203 marla. In this way, the per marla sales value is Rs. 1.85.43,750/86 Rs. 62,53,125/29 Rs 215625/- while the total 203 marla has been sold. Hence the total sales consideration value is Rs 4,37,71,875/- (total area sold 203 marla) as per the agreement instead of Rs. 1,14,19,000/- Smt. Neelam (seller) in support of her claim has produced copy of agreement & bank pass book. Further, Smt. Neelam has received total payment of Rs. 1,85.43,750/- on sale of her & her sons share of lands 86 marlas out of 203 marla which was itself greater than the amount of registry of land. Another seller Sh Raj Kumar has also confirmed the version of Smt Printed from counselvise.com ITA No. 2750/Del/2023 Basant Jain Page | 3 Neelam. Smt Neelam the seller of land also stated in her statement that other sellers are her family members only and they have also received the amount as per agreement. In this way, it clearly shows that the assessee Sh. Basant Jain & others had made registry at less value but actually paid the total amount of consideration of Rs 4.37,71.875. where assessee Basant Jain's share was Rs. 2,41,50,000/-(i.e. 43771875 *112/203) 4. It is clear that the assessee Sh Basant Jam & Ors have made total payment on account of purchase of said land at Rs 4.37,31,875/- for 203 marla where as per the assessee Sh. Basant Jam's share was 112 marla cost of which is Rs. 2,41,50,000- but they had made registry of the said land at less value by Rs. 3.23,12,875/- (4,37,31,875 1,14,19,000). So, Rs. 2.41.50 000 in the hands of assessee ou account of payment made for purchases of land from Smt. Neelam & Ors remams unexplained. 5. Therefore, on the facts of case as stated above, I have 2.41 50.000 has escaped assessment for the AY 2013-14 aforesaid income chargeable to tax which has escaped assessment reason to believe that income of Rs Therefore. I propose to reassess the aforesaid income chargeable to tax which has escaped assessment. (Vijay Singh) Dy Commissioner of Income Tax, Central Circle-20. New Delhi 4. The assessee is a proprietor of M/s. Jainson Jewellers. A survey u/s 133A of the Act was carried out at the business premises of M/s. Jainson Jewellers on 03.05.2018. During the course of survey, a statement of Smt Neelam was recorded u/s 131(1) of the Act in which she had admitted that Shri Basant Jain & Co. ors had purchased rural agricultural land from her situated at Village Rason, Sonipat on 07.11.2012. It was alleged that registered value of the property was Rs. 1,14,19,000/- and there was some higher payments made to the sellers over and above the registered value. Accordingly, the ld AO concluded that Rs. 2,41,50,000/- was paid by the assessee over and above the circle rate which constitutes unexplained investment made by the assessee and hence he had reason to believe that the income of the assessee had escaped assessment for the year under consideration. Accordingly, after obtaining the necessary approval u/s 151 of the Act from the competent authority, the assessment of the assessee was sought to be reopened u/s 147 of the Act vide issuance of notice u/s 148 of the Act. The assessee bought only 112 marlas of land out of total 203 marla Printed from counselvise.com ITA No. 2750/Del/2023 Basant Jain Page | 4 was Rs. 1,14,19,000/- as per sale deed dated 07.11.2012 and assessee’s share of purchase consideration was Rs. 63 lakhs. The ld AO placed reliance on the copy of agreement dated 29.07.2011 as reflecting the value of purchase consideration of 203 marlas of Rs. 4,37,71,875/-, meaning thereby each marla was purchased by the assessee for Rs. 2,15,625/-. Based on this agreement, the ld AO concluded that assessee should have purchased his extent of land @Rs 215625/- per marla and proposed an addition of Rs. 1.40 crores in the following manner:- Total amount of sale consideration paid by the assessee Rs. 2,41,50,000/- Less: Valuation of sale consideration as shown at sale deed/registry Rs, 63,00,000/- Less: Addition u/s 68 already made for the amounts paid as biana/advance during the F.Y. 2011 -12 relevant to A.Y. 2012-13 Rs. 38,50,000/- Balance amount of sale consideration paid during the F.Y. 2012-13 relevant to A.Y 2013-14 Rs. 1,40,00,000/- Addition made u/s 69 for F.Y. 2012-13 relevant to A.Y. 2013-14 Rs. 1,40,00,000/- 5. This action of the ld AO was upheld by the ld CIT(A). 6. At the outset, we find that same reasons were recorded by the ld AO for AY 2012-13 on the presumption that income to the extent of Rs. 2,41,50,000/- had escaped assessment for the very same transaction for AY 2012-13 and the assessment was reopened and addition was made thereon for AY 2012-13. This Tribunal in ITA No. 2725/Del/2023 for AY 2012-13 dated 16.11.2023 quashed the reassessment order as void ab initio. 7. Further, we find that the agreement to sale date 29.07.2011 relied upon by the ld AO was not at all signed by the assessee. Only Smt Neelam had put her signature on the same. Further, the date of signature is mentioned as 17.12.2018 which is absolutely not related at all for the year under consideration. This goes to prove that the entire agreement to sale dated 29.07.2011 being an unsigned document, is not legally enforceable at all. This agreement to sale is enclosed at pages 8 to 12 of the Paper Book. First of all, the assessee was not even party to the said agreement to sale. Hence, the entire Printed from counselvise.com ITA No. 2750/Del/2023 Basant Jain Page | 5 reasons recorded by the ld AO by placing reliance on the such agreement to sale dated 29.07.2011 is absolutely not relatable to the assessee herein. Hence, the entire reasons recorded by the ld AO are totally flawed. 8. On perusal of the reasons recorded, we find that the ld AO had also placed reliance on statement of Smt Neelam dated 17.12.2018. The said statement is enclosed at pages 39 to 43 of the Paper Book. On perusal of the said statement, we find the authority who had recorded the said statement is not even mentioned. No Government officer’s name or designation is mentioned thereon. Hence, reliance placed on such statement of Smt Neelam is legally not sustainable and consequentially reasons recorded for reopening of the assessment by placing such reliance of illegal statement recorded supra is flawed. 9. Further, it is also pertinent to note that the ld AO having relied on agreement to sale dated 29.07.2011 (which falls in AY 2012-13) is not even mentioning in his assessment order framed for AY 2013-14 as to what happened to the said agreement to sale. In other words, the ld AO’s order is silent on the final outcome of agreement to sale dated 29.07.2011 as to whether the same got culminated in the form of registered sale deed. This is very important in view of fact that if that agreement to sale had culminated as registered sale deed then how the very same land could be subject matter of purchase by the assessee on 07.11.2012 (falling in AY 2013-14). 10. So all these facts eventually go to prove that reasons recorded by the ld AO are totally flawed and accordingly assumption of jurisdiction u/s 147 of the Act also becomes flawed. Hence, it could be safely concluded that the ld AO did not have not tangible material at the time of recording the reasons which had live link to form a belief that the income of the assessee had escaped assessment. The ld AO had formed a belief that income of the assessee to the tune of Rs. 2,41,50,000/- had escaped assessment by considering the alleged purchase rate of Rs. 215625/- per marla qua the assessee for purchase of 112 marlas. But this figure of Rs. 215625/- marlas was taken by the ld AO from the Printed from counselvise.com ITA No. 2750/Del/2023 Basant Jain Page | 6 unsigned agreement to sale dated 29.07.2011 wherein, the assessee is not even a party. Hence it could be safely concluded that the entire assumption of jurisdiction by the ld AO u/s 147 of the Act is completely baseless by placing reliance on irrelevant and illegal documents which becomes fatal to the very assumption of jurisdiction for reopening the assessment. Hence, we have no hesitation to conclude that the reassessment proceedings are to be quashed as void ab initio. Accordingly, ground Nos. 1 and 2 raised by the assessee are hereby allowed. 11. Since the reassessment proceedings are quashed, the adjudication of other grounds on merits become academic in nature and they are left open. 12. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 25/07/2025. -Sd/- -Sd/- (C. N. PRASAD) (M. BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 25/07/2025 A K Keot Copy forwarded to 1. Applicant 2. Respondent 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, New Delhi Printed from counselvise.com "