Vijay Vasant Sathe, Pune V. Income-tax Officer, Ward - 3(4), Pune

ITA 1588/PUN/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 2822 (ITAT-PUNE)
• Duration Of Justice: 8 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 04-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M K VERMA
• Assessee Lawyers: D R BARVE
• Keywords: Unexplained investment; Reason to believe; Set aside
• Section: 143(3); 69; 148

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC, PUNE BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO.1588/PUN/2018 / ASSESSMENT YEAR : 2010-11 VIJAY VASANT SATHE, S.NO.83/10, SARASWATI VIHAR COLONY, SHASTRI NAGAR, KOTHRUD, PUNE 411 038. PAN : BZZPS0960C. . / APPELLANT V/S THE INCOME TAX OFFICER , WARD 3(4), PUNE. . / RESPONDENT ASSESSEE BY : SHRI D.R. BARVE. REVENUE BY : SHRI M.K. VERMA. / ORDER PER ANIL CHATURVEDI, AM : 1. THIS APPEAL FILED BY THE ASSESSEE IS EMANATING OUT OF THE ORDER OF COMMISSIONER OF INCOME TAX (A) 3, PUNE DATED 19.07.2018 FOR THE ASSESSMENT YEAR 2010-11. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON R ECORD ARE AS UNDER :- ASSESSEE IS AN INDIVIDUAL STATED TO BE ENGAGED IN DEALING IN LAND ON COMMISSION BUSINESS. IN THIS CASE, NOTICE U/S 148 OF THE A CT DATED 31.03.2017 WAS ISSUED AND SERVED ON THE ASSESSEE. IN RESPONSE TO / DATE OF HEARING : 14.03.2019 / DATE OF PRONOUNCEMENT: 07.06.2019 2 ITA NO1588/PUN/2018 NOTICE, ASSESSEE FURNISHED RETURN OF INCOME FOR A.Y. 2010-1 1 ON 28.11.2017 DISCLOSING TOTAL INCOME AT RS.1,52,703/-. THER EAFTER, THE CASE WAS TAKEN UP FOR SCRUTINY AND ASSESSMENT WAS FRAM ED U/S 143(3) R.W.S. 147 OF THE ACT VIDE ORDER DT.15.12.2017 AND THE TO TAL INCOME WAS DETERMINED AT RS.8,02,700/-. AGGRIEVED BY THE ORDER OF A O, ASSESSEE CARRIED THE MATTER BEFORE LD.CIT(A), WHO VIDE ORDER DT.19.0 7.2018 (IN APPEAL NO.PN/CIT(A)-3/WD 3(4), PN/222/2017-18) DISMISSED TH E APPEAL OF ASSESSEE. AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSESS EE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS : JURISDICTION U/S 147. 1. THE LD.AO FELL IN ERROR OF LAW IN MAKING ADDITION BY TAKING RECOURSE TO THE JURISDICTION U/S 147 OF THE ACT AND FAILED TO A PPRECIATE THAT NO ADDITION WAS MADE ON THE ISSUE FOR WHICH THE NOTICE U/S 148 WAS ISSUED. THE INVOKING OF THE JURISDICTION RUNS CONT RARY TO THE LAW LAID DOWN BY THE HONBLE JURISDICTIONAL HIGH COURT. HEN CE, THE ADDITION MADE IS BAD IN LAW AND THEREFORE NEEDS TO BE CANCEL LED. 2. ADDITION U/S 69 OF THE ACT. THE CIT(A) FELL IN ERROR OF LAW IN REJECTING GOOD E XPLANATION OF THE ASSESSEE FOR SOURCE OF MONEY OF RS.6,50,000/-. 3. THE CIT(A) WAS NOT JUSTIFIED IN UPHOLDING THE ADDIT ION WHEN THE LD. AO HAD FAILED TO ISSUE NOTICES TO THE LENDERS. 3. WE FIRST TAKE UP GROUND NO.1 WHEREIN ASSESSEE HAS CH ALLENGED THE REOPENING. 4. BEFORE US, LD.A.R. SUBMITTED THAT AS PER THE REASONS R ECORDED FOR ISSUING NOTICE U/S 148 OF THE ACT THE ASSESSEE HAD SOLD AN IMMOVABLE PROPERTY FOR RS.30 LAKHS DURING A.Y. 2010-11 AND AS THE A SSESSEE HAD NOT FILED THE RETURN OF INCOME FOR A.Y. 2010-11, HE HAD REASON TO BELIEVE THAT INCOME OF RS.30 LACS HAD ESCAPED TAXATION. DURING THE COU RSE OF RE- ASSESSMENT PROCEEDINGS, IT WAS SUBMITTED BY THE ASSESS EE THAT THE 3 ITA NO1588/PUN/2018 TRANSACTION WAS EXECUTED BY THE ASSESSEE IN THE CAPAC ITY OF POWER OF ATTORNEY HOLDER ON BEHALF OF THE LAND HOLDERS. AO ON PE RUSING THE REGISTERED DEED OF POWER OF ATTORNEY WHICH WAS THE PART OF SALE DEED, NOTICED THAT ASSESSEE HAD PAID AN AMOUNT OF RS.6,50,000/ - TO THE OWNERS OF THE LAND. IT WAS ALSO NOTICED BY THE AO THAT ASSESSE E HAD RECEIVED RS.14,50,000/- TOWARDS SALE CONSIDERATION THROUGH CHEQU ES OF RS.7,00,000/- AND 7,50,000/- DATED 05.03.2010 AND 10.05.2010 RESPECTIVELY, DRAWN ON BANK OF MAHARASHTRA. THE ASSESS EE WAS ASKED TO EXPLAIN AS TO WHY THE AMOUNT OF RS.14,50,000/- NOT BE A DDED AS INCOME FROM CAPITAL GAIN ON SALE OF LAND. IT WAS SUBMITTED THAT HE DID NOT RECEIVE ANY MONEY ON ACCOUNT OF SALE CONSIDERATION AND IT WAS SU BMITTED THAT BOTH THE CHEQUES WERE DISHONORED BY THE PARTY AND W ERE RETURNED BACK BY THE BANK. IT WAS FURTHER SUBMITTED THAT THE LAND BEING AGRICULTURAL LAND DOES NOT COME UNDER THE PURVIEW OF SEC.2(14) OF THE A CT AND THEREFORE THE ASSESSEE IS NOT LIABLE FOR CAPITAL GAIN. AO T HEREAFTER ASKED THE ASSESSEE TO EXPLAIN THE SOURCES OF PAYMENTS OF RS.6,5 0,000/- TO THE LAND OWNERS TO EXECUTE THE POWER OF ATTORNEY. ASSES SEE SUBMITTED THAT HE HAD BORROWED THE AMOUNT AS HAND LOAN FROM FEW PERS ONS AND ALSO FURNISHED THE CONFIRMATIONS. THE CONFIRMATIONS FILED BY THE ASS ESSEE WERE NOT FOUND RELIABLE AND ACCEPTABLE BY AO AS HE WAS OF THE VIEW THAT THE SAME WERE NOT CONTAINING THE DETAILS OF PAN, PROPER RESID ENTIAL ADDRESS, AADHAR CARD NO. ETC. THE SUBMISSIONS OF THE ASSESSEE WE RE THUS NOT FOUND ACCEPTABLE TO AO. HE ACCORDINGLY CONSIDERED RS.6, 50,000/- AS UNEXPLAINED INVESTMENT U/S 69 OF THE ACT AND ADDED IT TO THE TOTAL INCOME. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD.CIT(A), WHO UPHELD THE ORDER OF AO. 4 ITA NO1588/PUN/2018 AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSESSEE IS NOW BEFORE US. 5. BEFORE US, LD.A.R. REITERATED THE SUBMISSIONS MADE BEFORE AO AND LD.CIT(A) AND FURTHER SUBMITTED THAT NOTICE U/S 148 OF THE ACT WAS ISSUED AS AO WAS OF THE VIEW THAT SALE CONSIDERATION OF RS.30 LACS RECEIVED BY THE ASSESSEE ON SALE OF LAND HAS ESCAPED TAXATION. HOWEVER IN THE ASSESSMENT ORDER, NO ADDITION OF THE AFORESAID ALLEGED REC EIPT OF SALE CONSIDERATION ON SALE OF LAND WAS MADE BUT AO MADE AD DITION ON A NEW ISSUE NAMELY, ADDITION U/S 69 OF THE ACT ON ACCOUNT OF UNEXPLAINED INVESTMENT. HE SUBMITTED THAT FOR THE ADDITION U/S 69 TH AT WAS MADE NO FRESH NOTICE U/S 148 OF THE ACT WAS ISSUED AND FURTHER N O ADDITION WAS MADE ON CAPITAL GAINS FOR WHICH THE REVENUE HAD ORIGINALLY ISSUED NOTICE U/S 148 OF THE ACT. HE THEREFORE PLACING RELIANCE ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. JET AIR WAYS INDIA LIMITED REPORTED IN (2011) 331 ITR 236 AND THE DECISION OF PUNE TRIBUNAL IN THE CASE OF SMT. MADHURI DHANANJAY MARATHE VS. ITO (I TA NOS.1639 & 1640/PUN/2017 DATED 30.08.2018) SUBMITTED THAT WHEN N O ADDITION HAS BEEN MADE ON THE GROUND ON WHICH THE REASONS WE RE RECORDED U/S 148 OF THE ACT THEN AO COULD NOT MAKE ADDITION ON SOME OTHER ISSUES. HE THEREFORE SUBMITTED THAT THE ORDER OF THE AO BE SET ASIDE. LD. D.R. ON THE OTHER HAND, SUPPORTED THE ORDER OF AO AND LD.CIT(A). 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE M ATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS WITH RESPECT TO RE-OPENING OF ASSESSMENT AND THE FRAMING OF THE ORDER U/S 143(3) R.W.S. 147 OF THE ACT. BEFORE US, IT IS ASSESSEES CONTENTION THAT NOTICE U/S 14 8 OF THE ACT WAS ISSUED TO TAX CAPITAL GAIN ON LAND. HE SUBMITTED THAT A O WHILE FINALIZING 5 ITA NO1588/PUN/2018 THE ASSESSMENT U/S 143(3) R.W.S 147 OF THE ACT DID NOT MAKE ANY ADDITION ON THE AMOUNT RECEIVED ON SALE OF LAND BUT HOWEVER MA DE ADDITION U/S 69 OF THE ACT ON ACCOUNT OF UNEXPLAINED INVESTMENTS WHIC H WAS NOT COVERED IN THE ORIGINAL NOTICE ISSUED U/S 148 OF THE ACT. FURTHER NEITHER THE AO HAD ISSUED ANY FRESH NOTICE U/S 148 FOR PROPOSING TO MAKE ADDITION U/S 69 OF THE ACT. THE AFORESAID CONTENTIONS OF T HE ASSESSEE HAVE NOT BEEN CONTROVERTED BY REVENUE. WE FIND THAT T HE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. JET AIRWAYS (I) L TD., (SUPRA) HAS HELD THAT THE AO HAS TO ASSESS OR REASSESS THE INCOME WHICH ESCAPED ASSESSMENT AND WHICH WAS THE BASIS OF THE FORMATION OF BELIEF AND IF HE DOES SO, HE CAN ALSO ASSESS OR REASSESS ANY OTHER INC OME WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE DURING THE COURSE OF PROCEEDINGS. IT HAS FURTHER HELD THAT IF AFTER ISSUING NOTIC E U/S 148 OF THE ACT, HE ACCEPTS THE CONTENTION OF THE ASSESSEE AND HOLD S THAT THE INCOME WHICH HE HAD INITIALLY FORMED A REASON TO BELIEVE HAD ESCAP ED ASSESSMENT, HAS NOT ESCAPED ASSESSMENT, IT IS NOT OPEN TO HIM INDEPENDENTLY TO ASSESS SOME OTHER INCOME. IT HAS HELD THAT IF THE AO INTENDS TO ASSESS SOME OTHER INCOME, A NOTICE U/S 148 O F THE ACT WOULD BE NECESSARY. WE FURTHER FIND THAT IN THE CASE OF SMT. M ADHURI DHANANJAY MARATHE (SUPRA), THE CO-ORDINATE BENCH OF THE TRIBUNAL BY RELYING ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN T HE CASE OF CIT VS. JET AIRWAYS INDIA LIMITED (SUPRA) HAS HELD THAT RE-AS SESSMENT ORDER PASSED TO BE INVALID AND BAD-IN-LAW. IN THE PRESENT CAS E, IT IS AN UNDISPUTED FACT THAT NO ADDITION HAS BEEN MADE BY THE A O ON THE ISSUE ON WHICH THE NOTICE FOR E-OPENING OF ASSESSMENT U/S 148 WAS ISSUED BUT ADDITION HAS BEEN MADE ON A DIFFERENT ISSUE NAMELY, ADDITION U/S 69 OF THE ACT. CONSIDERING THE TOTALITY OF THE AFORESAID FACTS A ND RELYING ON THE 6 ITA NO1588/PUN/2018 DECISION OF HONBLE HIGH COURT IN THE CASE OF JET AIRWAYS ( I) LTD., (SUPRA), WE ARE OF THE VIEW THAT IN THE PRESENT CASE, THE ASSES SMENT ORDER IS NOT SUSTAINABLE IN THE EYE OF LAW. WE THEREFORE HOLD THE REASS ESSMENT ORDER PASSED BY THE AO TO BE INVALID AND BAD-IN-LAW AND THERE FORE SET ASIDE THE SAME. SINCE WE HAVE SET ASIDE THE RE-ASSESSMENT ORDE R, THE GROUNDS RAISED BY THE ASSESSEE ON MERITS HAVE BEEN RENDERED A CADEMIC AND THEREFORE DOES NOT CALL FOR ADJUDICATION. THUS, THE GROUNDS OF ASSESSEE ARE ALLOWED. 7. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 7 TH DAY OF JUNE, 2019. SD/- SD/ - ( SUSHMA CHOWLA ) ( ANIL CHATURVEDI ) / JUDICIAL MEMBER ' / ACCOUNTANT MEMBER PUNE; DATED : 7 TH JUNE, 2019. YAMINI #$%&'(' % / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4. 5 6. CIT(A)-3, PUNE. PR. CIT-2, PUNE. '#$ %%&',) &', *+ / DR, ITAT, SMC PUNE; $-.// GUARD FILE. / BY ORDER // TRUE COPY // 012%3&4 / SR. PRIVATE SECRETARY ) &' , / ITAT, PUNE.