Shankar Sewani, New Market V. Assessing Officer, AAYKAR BHAWAN

ITA 25/Ind/2024

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 5808 (ITAT-INDORE)
• Duration Of Justice: 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-07-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 09-07-2024
• Assessment Year: 2011-2012
• Appeal Filed On: 11-01-2024
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Loose papers; Cost of acquisition; Tangible material; Capital Gains
• Section: 147; 148; 143(3); 153A; 234B; 143(1); 153C

Judgement Text

आयकर अपीलȣय अͬधकरण, इंदौर Ûयायपीठ, इंदौर IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI B.M. BIYANI, ACCOUNTANT MEMBER ITA No.25/Ind/2024 (Assessment Year: 2011-12) Shri Shankar Sewani, 10 Kala Niketan, New Market, T.T. Nagar, Bhopal Vs. DCIT-1(1), Bhopal (Appellant / Assessee) (Respondent/ Revenue) PAN: ADKPS6959H Assessee by Ms. Nisha Lahoti, AR Revenue by Shri Ashish Porwal, Sr.DR Date of Hearing 10.07.2024 Date of Pronouncement 12.07.2024 O R D E R Per Vijay Pal Rao, JM: This appeal by the assesse is directed against the order dated 30.11.2023 of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centers,(NFAC) Delhi for A.Y.2011-12. 2. The assesse has raised following grounds of appeal: ITA No.25/Ind/2024 Shankar Sewani 2 “1. That on the facts and the circumstances of the case and in law the issue of notice u/s 148 and the assessment made pursuant to such notice are unlawful and without jurisdiction and therefore be cancelled. 2. That on the facts and the circumstances of the case and in law the Ld CIT(A) is not justified in passing the order ex parte without giving reasonable opportunity of being heard despite assessee already filed an adjournment application before CIT(A) on the date of hearing. The unjustified order be kindly quashed. 3. That on the facts and the circumstances of the case and in law the Ld CIT(A) is not justified is not justified in sustaining the addition of Rs.37,50,000 . The said unjustified and unlawful decision be may kindly deleted. 4. That on the facts and the circumstances of the case and in law it be held that the assessee did not receive any income of Rs.37500000 and no such income ever accrued or arises to the assessee in the previous year and therefore the addition sustained by the Ld. CIT(A) is unjustified and un lawful and therefore be deleted. 5. That on the facts and the circumstances of the case and in law that the levy of interest u/s 234B is unlawful and unjustified in view of subsection 3 of section 234B of the Act and therefore the said levy be cancelled.” 3. The Ld. AR has submitted that the assessee has challenged the validity of reopening of assessment by issuing notice u/s 148 of the Act in pursuant to the search and seizure action in case of Signature Group. Ld. AR has submitted that it was not upon to the Assessing Officer to resort to the provision of section 147/148 of the Act when the Assessing Officer has recorded the reasons for reopening of the assessment that during the search operation in Signature Group conducted by the Investigation Wing, Bhopal certain loose papers were seized from the premises of Signature Group showing the receipt of security money by the assessee as per ITA No.25/Ind/2024 Shankar Sewani 3 the agreement found from the possession of the searched person. The A.O could have initiated proceedings u/s 153C of the Act based on the material found in the search and seizure operation of third person. In support of her contention the Ld. AR has relied upon the decision of Hon’ble jurisdictional High Court in case of Ramballabh Gupta V.s ACIT 149 Taxman 451. The Ld. AR has referred to the impugned order of CIT(A) and submitted that CIT(A) has dismissed the appeal of the assessee ex-parte and not decided the issue raised by the assessee on merits. 3.1 On the other hand Ld.DR has submitted that the assessee has not responded to various notices issued by CIT(A) which is referred in the para No.4 of the impugned order. The assessee has neither requested for adjournment nor filed any details or submissions before CIT(A) in support of the grounds of appeal and therefore, the appeal of the assessee was dismissed for want of any details, documentary evidences and written submission in support of the grounds of appeal. 4. We have considered rival submissions as well as relevant material on record. The assessee has raised the issue of validity of ITA No.25/Ind/2024 Shankar Sewani 4 reopening of assessment in Ground No.1 and 2 of the grounds of appeal. This issue is purely legal in nature and goes to the root of the matter. The A.O has recorded the reasons in the assessment order as under: “ Shri Shankar Sewani, (PAN ADKPS6959H) has filed return of income showing total income of Rs.34,04,160/-. The assessee has shown income from house property, profit & gains from business & profession, short term capital gains, long term capital gains and income from other sources. No scrutiny assessment has been made in the case of the assessee. During the course of search operation in Signature group conducted by Investigation Wing, Bhopal, certain loose papers pages no. 41-43 of LPS- 65 were seized from the office premise of the Signature Group at Chunna Bhatti Square, Bhopal. These loose papers were in the form of an agreement prepared on stamp paper. According to this agreement dt. 29.01.2011, Shri Shankar Sewani and certain other persons received total Rs.1,50,00,000/- from Shri Raju Khilwani as security money. On perusal of the return of assessee and computation of income, it is noticed that receipt of Rs.1,50,00,000/- has not been declared by assessee. AIR information has also been received in case of the assessee. As per the AIR information available in respect of the assessee, the assessee has sold an immovable property worth Rs.1,35,00,000/- and Rs.30,10,000/- during the financial year 2010-11. On perusal of the sale deed of these properties, it is noticed that assessee alongwith his wife Smt. Anjali Sewani has sold property for a consideration of Rs.1,35,00,000/- i.e. at par with the collector guidelines whereas the property having collector guidelines price Rs.30,10,000/- was sold for Rs.30,00,000/-. During the course of enquiry to the assessee, it was also noticed that assessee purchased property of Rsw.13,38,300/- and also claimed exemption from capital gains on sale of immovable property. For verification purpose, assessee was required to provide copies of purchased deeds of properties which were sold by the assessee so that indexed cost of acquisition may be examined. Assessee was also required to provide copy of registered deed of property worth Rs.13,38,300/- alongwith other supporting documents. ITA No.25/Ind/2024 Shankar Sewani 5 Assessee did not provide any of these documents required for examination of his case. In absence of submission of assessee regarding copies of sold/purchased immovable property & other supporting documents, genuineness of capital gain shown by assessee in his return of income is not verifiable. There are tangible material on record to show that the assessee has failed to disclose truly and fully all material facts. Therefore, I have reason to believe that the income to the extent of Rs.3,28,48,300/- (Rs.1,50,00,000/- received cash from Shri Raju Khilwani + Rs.1,35,00,000/- property sold + Rs.30,10,000/- property sold+Rs.13,38,300/- property purchased) has escaped assessment for the F.Y 2010-11 relevant to the A.Y 2011-12 within the meaning of section 147 of the Income Tax Act, 1961. In this case a return of income was filed for the year under consideration but no scrutiny assessment u/s 143(3) of the Act was made. Accordingly, in this case, the only requirement to initiate proceeding u/s 147 is reason to believe which has been recorded above. It is pertinent to mention that in this case the assessee has filed return of income for the year under consideration but no assessment as stipulated u/s 2(4) of the Act was made and the return of income was only processed u/s 143(1) of the Act. In view of the above, provisions of clause (b) of explanation 2 to section 147 are applicable to facts of this case and the assessment year under consideration is deemed to be a case where income chargeable to tax has escaped assessment. In this case more than four years have lapsed from the end of assessment year under consideration. Hence necessary sanction to issue notice u/s 148 has been obtained from the Principal Commissioner of Income Tax as per the provisions of section 151 of the Act”. The reasons recorded by the A.O states that during the course of search operation in Signature Group certain loose papers marked as LPS-65 were seized from the office premises of the searched person. Those loose papers are in the form of an agreement dated ITA No.25/Ind/2024 Shankar Sewani 6 29.1.2011 whereby the assessee and other persons received a total sum of Rs.1.5 crores from Shri Raju Khilwani as security money. The second reason recorded by the A.O is regarding the AIR information in respect of sale of immoveable property of Rs.1.35 crores and Rs.30.10 lakhs but the assessee has duly offered the capital gain in the return of income and therefore the A.O has dropped the second issue regarding the sale of immoveable property and consequential capital gain in para 7 of the assessment order as under: “7. Sale of property for Rs.1,35,00,000/- : During the year assessee had sold immovable property (residential house) for Rs.1,35,00,000/-. The assessee has submitted copy of registered deed of sale of property and purchase of property. The property was jointly purchased in FY 200-04 for a consideration of Rs.35,00,000/-. The reply of the AR has been considered. The assessee has duly offered the capital gain on the aforesaid property to tax in return of income.” Thus the Assessing Officer accepted the capital gain declared by the assessee in the original return of income and no addition was made in respect of the capital gain arising from the sale of immoveable property. ITA No.25/Ind/2024 Shankar Sewani 7 5. As regards the documents seized during the course of search operation in case of Signature Group the issue raised by the assessee cannot be decided conclusively in the absence of date of alleged search and seizure operation because in any case the proceedings u/s 153C could have been initiated only for six assessment years as provided u/s 153A r.w.s. 153C of the Act. In the absence of the date of search it is not possible to ascertain whether the assessment year under consideration is falling within the block period of 6 years as provided in Section 1563A r.w.s. 153C of the Act. We further noted that CIT(A) has not decided this issue on merits and dismissed the same summarily while deciding Ground No.2 as under: “Ground No.2 2. That on the facts and in the circumstances of the case and law, the issue of notice u/s 148 and the assessment made pursuant to such notice are unlawful and without jurisdiction and, therefore, be cancelled. As neither any written submissions nor any documentary evidence has been produced in support of ground of appeal. I find no infirmity or illegality in the assessment order and hence this ground of appeal is dismissed.” Therefore in the facts and circumstances of the case we set aside the impugned order of CIT(A) and the matter is remanded to the record of A.O for fresh adjudication including the objections of ITA No.25/Ind/2024 Shankar Sewani 8 the assessee against the notice issued u/s 148 of the Act. Needless to say the assessee be given an appropriate opportunity of hearing before passing the fresh order and disposing off the objections raised by the assessee against the notice issued u/s 148 of the Act. 6. In the result appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 12.07.2024. Sd/- Sd/- (B.M. BIYANI) (VIJAY PAL RAO) Accountant Member Judicial Member Indore,_12.07.2024 Dev/Sr. PS Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Sr. Private Secretary Income Tax Appellate Tribunal Indore Bench, Indore