M/s Fateh Softech Pvt.Ltd., Chandigarh V. ITO-Ward-1(4), Chandigarh

ITA 54/CHANDI/2020

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 4476 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-05-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 03-03-2021
• Assessment Year: 2008-2009
• Appeal Filed On: 13-01-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHD PAGE OF; MEENAKSHI VOHRA ACIT ITA
• Keywords: Principle of natural justice; Period of limitation; Valuation report; Time period of passing order; Reason to believe; Borrowed satisfaction; Set aside
• Section: 143(2); 13; 147; 148

Judgement Text

, , SMC IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, SMC CHANDIGARH , BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER ./ ITA NO. 54/CHD/2020 / ASSESSMENT YEAR : 2008-09 M/S FATEH SOFTECH PVT. LTD. H. NO. 2144, SECTOR 15-C, CHANDIGARH INCOME TAX OFFICER, WARD-1(4), CHANDIGARH. ./PAN NO: AAACF9857H / APPELLANT /RESPONDENT ./ ITA NO. 55/CHD/2020 / ASSESSMENT YEAR : 2009-10 M/S FATEH SOFTECH PVT. LTD. H. NO. 2144, SECTOR 15-C, CHANDIGARH INCOME TAX OFFICER, WARD-1(4), CHANDIGARH. ./PAN NO: AAACF9857H / APPELLANT /RESPONDENT ./ ITA NO. 57/CHD/2020 / ASSESSMENT YEAR : 2011-12 M/S FATEH SOFTECH PVT. LTD. H. NO. 2144, SECTOR 15-C, CHANDIGARH INCOME TAX OFFICER, WARD-1(4), CHANDIGARH. ./PAN NO: AAACF9857H / APPELLANT /RESPONDENT HEARING THROUGH VIDEO CONFERENCING ! /ASSESSEE BY : SHRI PARIKSHIT AGGARWAL, CA ' ! / REVENUE BY : SMT. MEENAKSHI VOHRA, ACIT ITA 54,55 & 57/CHD/2020 PAGE 2 OF 17 # $ % /DATE OF HEARING : 04.03.2021 &'() % / DATE OF PRONOUNCEMENT : 24.05.2021 !/ ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEALS HAVE BEEN PREFERRED BY THE ASSE SSEE AGAINST THE ORDERS ALL DATED 31.10.2019 OF THE COMM ISSIONER OF INCOME TAX (APPEALS)-1, CHANDIGARH [HEREINAFTER REF ERRED TO AS CIT(A)]. ITA 54/CHD/2020 IS TAKEN UP FIRST FOR AD JUDICATION. ITA 54/CHD/2020 FOR A.Y. 2008-09 2. IN THIS APPEAL THE ASSESSEE HAS TAKEN FOLLOWING GROUNDS OF APPEAL:- 1. THAT ON LAW, FACTS AND CIRCUMSTANCES OF THE CA SE, THE WORTHY CIT(A) IN APPEAL NO. 10349/16-17 HAS ERRED IN PASSI NG THAT ORDER IN CONTRAVENTION OF THE PROVISIONS OF S. 250(6) OF THE INCOME TAX ACT, 1961. 2. THAT ON LAW, FACTS AND CIRCUMSTANCES OF THE CASE , WORTHY CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF LD. AO WHEREIN LD . AO HAD ERRED BY ISSUANCE OF NOTICE U/S 148 OF THE ACT AND HAD FURTH ER ERRED IN CONTINUATION AND COMPLETION OF THE SAID RE-ASSESSME NT PROCEEDINGS U/S 147 OF THE ACT EVEN WHEN THE WHOLE OF THE PROCESS W AS ILLEGAL AND AGAINST THE PROVISIONS OF INCOME TAX ACT AND HENCE REQUIRED TO BE DECLARED VOID-AB-INITIO. 3. THAT ON LAW, FACTS AND CIRCUMSTANCES OF THE CASE , WORTHY CIT(A) HAS ERRED IN COMPLETING THE IMPUGNED ASSESSMENT U/S 147 WITHOUT THE ISSUANCE OF VALID NOTICE U/S 143(2) OF THE INCOME T AX ACT, 1961. 4. THAT ON LAW, FACTS AND CIRCUMSTANCES OF THE CASE , WORTHY CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF LD. AO WHEREIN LD . AO HAD ERRED IN ITA 54,55 & 57/CHD/2020 PAGE 3 OF 17 MAKING AGGREGATE ADDITIONS OF RS.3,25,000/- ON ISSU E IN ASSESSMENT FINALIZED U/S 147 EVEN WHEN THE RE-ASSESSMENT PROCE EDINGS WERE INITIATED ON AN ALTOGETHER DIFFERENT ISSUE, THE FIN AL ADDITION IS ON A DIFFERENT ISSUE AND NO ADDITION ON THE ISSUE ON WHI CH RE-OPENING WAS INITIATED HAS BEEN MADE IN THE FINAL RE-ASSESSMENT ORDER. 5. THAT ON LAW, FACTS AND CIRCUMSTANCES OF THE CASE , WORTHY CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF LD. AO WHEREIN LD . AO HAD ERRED IN MAKING THE ASSESSMENT IN HASTE AND WITHOUT AFFORDIN G REASONABLE FRAMED IS AGAINST THE PRINCIPLES OF NATURAL JUSTICE AND HENCE DESERVES TO BE QUASHED. 6. THAT ON LAW, FACTS AND CIRCUMSTANCES OF THE CASE , THE WORTHY CIT (A) HAS ERRED IN CONFIRMING THE ACTION OF LD. ASSESSING OFFICER WHEREIN LD. ASSESSING OFFICER HAD ACTED WITH A BIASED AND PREJU DICE MIND IN FRAMING THE IMPUGNED ASSESSMENT ORDER AND CARRYING OUT THE RE- ASSESSMENT PROCEEDINGS AND THEREFORE THE SAID APPEA L IS ILLEGAL AND DESERVES TO BE QUASHED. 7. THAT ON LAW, FACTS AND CIRCUMSTANCES OF THE CASE , THE WORTH CIT(A) ' HAS ERRED IN CONFIRMING THE ACTION OF LD. AO WHEREI N LD. AO HAD ADOPTED RS. 32,84,000/- THE CURRENT VALUE OF THE CO NSTRUCTION EXP. AND ADDED RS. 2,05,000/- THE PROPORTIONATE CONST, EXP., EVEN THOUGH THE CONSTRUCTION ACTIVITY WAS ACTUALLY CARRIED OUT IN F Y 2006-07 AND THAT TOO BY M/S ICRMS(P) LTD., TO WHOM THE PROPERTY WAS GIVEN ON LEASE. 8. THAT ON LAW, FACTS AND CIRCUMSTANCES OF THE CASE , THE WORTHY CIT (A) HAS ERRED IN CONFIRMING THE ACTION OF LD. ASSESSING OFFICER WHEREIN LD. ASSESSING OFFICER HAD ADOPTED RS. 32,84,000/- AS THE CONSTRUCTION EXP. AND ADDED RS. 2,05,000/- THE PROPORTIONATE CONST. EXP., EVEN THROUGH THE CONSTRU CTION ACTIVITY WAS ACTUALLY CARRIED OUT IN FY 2006-07. THE RESPONDENT HAS MADE THIS ADDITION IN A.Y. 2008-09 AS HE LACKED POWERS BY VIR TUE OF LIMITATION PERIOD TO ASSESSEE A.Y. 2006-07. 9. THAT ON LAW, FACTS AND CIRCUMSTANCES OF THE CASE , THE WORTHY CIT (A) HAS ERRED IN CONFIRMING THE ACTION OF LD. ASSESSING OFFICER WHEREIN LD ASSESSING OFFICER ON HIS OWN WITHOUT MAKING ANY REF ERENCE TO DVO HAD ADOPTED RS. 32,84,000/- AS THE CONSTRUCTION EXP. AN D ADDED RS. 2,05,000/- THE PROPORTIONATE CONST. EXP. 10.THAT ON LAW, FACTS AND CIRCUMSTANCES OF THE CASE , THE WORTHY CIT (A) HAS ERRED IN CONFIRMING THE ACTION OF LD. JCIT WHER EIN THE LD. JCIT HAD ERRED IN NOT CONDUCTING THE RELEVANT ASSESSMENT PRO CEEDINGS FAIRLY AS THE APPLICATION MOVED BY THE APPELLANT U/S 144A HAS BEEN DISPOSED OFF BY THE LD. JCIT WITHOUT GRANTING ANY OPPORTUNIT Y OF BEING HEARD. ITA 54,55 & 57/CHD/2020 PAGE 4 OF 17 11. THAT ON LAW, FACTS AND CIRCUMSTANCES OF THE CAS E, THE WORTHY CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF LD. AO WHEREI N LD AO HAD ERRED IN MAKING ADDITION OF RS. 1,20,000/- IGNORING THE F ACT, SUBMISSION AND DOCUMENTS PLACED ON RECORD BY ERRONEOUSLY HOLDING T HAT SUCH INCOME CLAIMED BY THE APPELLANT TO HAVE BEEN EARNED FROM A GRICULTURAL OPERATION IS ACTUALLY EARNED FROM OTHER SOURCES. 12. THAT THE APPELLANT CRAVES LEAVE FOR ANY ADDITIO N, DELETION OR AMENDMENT IN THE GROUNDS OF APPEAL ON OR BEFORE THE DISPOSAL OF THE SAME. 2. A PERUSAL OF THE ABOVE GROUNDS OF APPEAL REVEAL THAT GROUND NO. 1 AND 12 ARE GENERAL IN NATURE, HENCE THEY NEED NO SPECIFIC ADJUDICATION. GROUND NO. 2 TO 6 3. THE ASSESSEE THROUGH GROUND NOS. 2 TO 6 HAS AGIT ATED THE VALIDITY OF THE RE-OPENING OF THE ASSESSMENT U/S 14 7 READ WITH 148 OF THE ACT. 4. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE MATERIAL AVAILABLE ON RECORD. THE ASSESSING OFFICER ( IN SHO RT AO) RECORDED THE FOLLOWING REASONS FOR RE-OPENING OF TH E ASSESSMENT : REASON FOR REOPENING THE CASE U/S 147/ 148 OF THE INCOME TAX ACT. 1961 AN INFORMATION WAS RECEIVED FROM THE DEPUTY DIRECTO R OF-. INCOME- TAX (INVESTIGATION)-II, CHANDIGARH VIDE HIS OFFICE LETTER NO. 3578 DATED 02 .03.2015 THAT ABOVE NOTED ASSESSEE HAD BEEN EVADING RENTAL INCOME FROM HOUSE PROPERTY. ON PERUSAL OF RETURN OF THE SAID ASSESSEE COMPANY F OR A.Y. 2008-09J IT IS OBSERVED THAT FIXED ASSETS HAVE BEEN SHOWN AT RS.36,29,120/-BUT N O INCOME UNDER ANY HEAD HAS BEEN SHOWN EXCEPT AGRICULTURE INCOME OF RS.L,2G.GQM- THEREFORE, I HAVE REASON TO BELIEVE THAT THE RENTAL INCOME FROM THE-HOUSE PROPERTY HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 14 7(A) OF IT ACT, 1961 FOR A.Y. 2008-09. ITA 54,55 & 57/CHD/2020 PAGE 5 OF 17 5. A PERUSAL OF THE ABOVE REASONS REVEAL THAT THE A O OBSERVED THAT THE ASSESSEE HAD SHOWN FIXED ASSETS OF RS. 36. 29 LACS BUT HE HAD NOT OFFERED ANY INCOME FROM THE SAID PROPERTY E XCEPT AGRICULTURE INCOME OF RS. 1,20,00,000/-. THIS, IN MY VIEW IS A VAGUE REASON. MERELY POSSESSION OF A FIXED ASSET D OES NOT MEAN THAT THE ASSESSEE MIGHT HAVE EARNED ANY INCOME FROM THE SAID ASSET WHICH WOULD HAVE ESCAPED ASSESSMENT. ADMITTED LY THE ASSESSEE OWNS AGRICULTURAL LAND WHERE UPON CERTAIN CONSTRUCTION HAS BEEN MADE BY THE ASSESSEE. IT HAS BEEN USED FO R ITS OWN PURPOSES. THE REASONS RECORDED BY THE ASSESSING OFF ICER DO NOT DISCLOSE THAT THE ASSESSEE HAS USED ANY OF HIS ASSE TS FOR ANY BUSINESS OR RENTAL PURPOSES. THE FORMATION OF BELI EF BY THE AO IN THIS CASE REGARDING THE ESCAPEMENT OF INCOME OF THE ASSESSEE, IN MY VIEW IS BASED ON JUST ASSUMPTIONS AND PRESUMPTIO NS AND THERE WAS NO RELIABLE MATERIAL AVAILABLE WITH THE A O TO FORM THE BELIEF THAT THE INCOME OF THE ASSESSEE HAD ESCAPED ASSESSMENT. IN THIS VIEW, RE-OPENING OF THE ASSESSMENT IN THIS CASE, IN MY VIEW IS BAD IN LAW AND THE SAME IS THEREFORE QUASHE D. 6. HOWEVER, SINCE THE ISSUES ON MERITS ARE ALSO INV OLVED, APPEALS RELATING TO SUBSEQUENT YEARS ALSO, THEREFOR E, I PROCEED TO DECIDE THE ISSUES ON MERITS ALSO. ITA 54,55 & 57/CHD/2020 PAGE 6 OF 17 GROUND NO. 7 TO 10 : 7. THE BRIEF FACTS RELATING TO THE ISSUE ON MERITS ARE THAT THE AO IN THIS CASE RECEIVED A REPORT FROM THE PUNJAB V IGILANCE BUREAU THAT THE CONSTRUCTION/DEVELOPMENT WORK AMOUN TING TO RS. 32.84 LACS WAS CARRIED OUT BY THE ASSESSEE ON I TS PROPERTY SITUATED AT VILLAGE SIUANK, DISTT. SAS NAGAR DURING THE YEARS FROM 2008 TO 2011. ON BEING SHOW CAUSED AS TO WHY THE PROPORTIONATE AMOUNT MAY NOT BE ADDED TO HIS RETURN ED INCOME FOR THE YEAR UNDER CONSIDERATION AS INVESTMENT FROM UNDISCLOSED SOURCES, THE ASSESSEE EXPLAINED THAT THE REPORT REL IED UPON BY THE AO WAS ERRONEOUS. THAT, INFACT, THE PROPERTY WA S INITIALLY ON LEASE FOR TWO YEARS WITH M/S ICRMS PVT. LTD. AND AS PER AGREEMENT THE M/S ICRMS PVT. LTD. HAS DONE ALL THE CONSTRUCTION ON THIS PROPERTY AND AT THAT TIME, THE LABOUR QUARTERS ON THE PROPERTY HAS BEEN RENOVATED TO BE M ADE INTO TOILETS. AS SUCH, THE DETAILS OF COST ON THE CONSTR UCTION OF BOUNDARY, PATHWAY, TOILETS, ETC. MAY BE SOUGHT FROM M/S ICRMS PVT. LTD. (UNDER VARIOUS LITIGATIONS). THAT W AS PROPER LEASE AGREEMENT BETWEEN M/S ICRMS PVT. LTD AND FATE H SOFTECH PVT. LTD. IN THIS REGARD. THAT THE COPY OF SAID LEASE AGREEMENT MAY BE OBTAINED FROM M/S ICRMS PVT. LTD. AS SHRI JATINDER SINGH DUA (SHAREHOLDER & DIRECTOR OF ICRMS PVT. LTD.) HAS STOLEN THE COMPANY RECORDS AS DETAIL ED IN FIR ITA 54,55 & 57/CHD/2020 PAGE 7 OF 17 286/13 AND THE ORDERS OF DISMISSAL OF BAIL APPLICAT ION OF JS DUA BY ASJ, CHANDIGARH & HON'BLE HIGH COURT. IT WAS ALSO PLEADED THAT THE CONSTRUCTION OTHERWIS E HAD BEEN DONE IN THE YEAR 2006-07 AND HENCE, NO INCOME CAN BE ADDED IN THE YEAR UNDER CONSIDERATION EVEN ON PROPO RTIONATE BASIS. THE ASSESSEE ALSO RELIED UPON THE VALUATION REPORT OF THE APPROVED VALUER M/S NANDINI ASSOCIATES TO SUBMIT TH AT THE CONSTRUCTION WAS MADE IN THE YEAR 2006-07 AND THAT THE TOTAL ESTIMATED CONSTRUCTION VALUE OF THE PROPERTY AT THA T TIME WAS AT RS. 15787.70. 8. HOWEVER, THE AO DID NOT AGREE WITH THE ABOVE SUB MISSIONS AND RELIED UPON THE REPORT OF THE VALUER SUBMITTED BY THE PUNJAB VIGILANCE BUREAU AND ADDED AN AMOUNT OF RS. 2.05 LA CS PROPORTIONATE TO THE EXPENSES CARRIED OUT DURING TH E YEAR INTO THE RETURNED INCOME OF THE ASSESSEE. 9. THE CIT(A) CONFIRMED THE ADDITION SO MADE BY THE AO. 10. THE ASSESSEE HAS THUS COME IN APPEAL BEFORE THI S TRIBUNAL. 11. I HAVE HEARD THE SUBMISSIONS AND PERUSED THE MA TERIAL ON RECORD. FIRST OF ALL, IT IS SEEN THAT THERE WAS NO EVIDENCE BEFORE THE AO REGARDING THE DATE OF THE CONSTRUCTION OF TH E PROPERTY. CONSEQUENTLY, THE VALUE OF THE PROPERTY HAS BEEN MA DE ON ESTIMATION BASIS. THE LD. COUNSEL FOR THE ASSESSEE HAS BROUGHT ITA 54,55 & 57/CHD/2020 PAGE 8 OF 17 MY ATTENTION TO THE REPORT OF THE VALUER OBTAINED F ROM PUNJAB VIGILANCE BUREAU UPON WHICH THE AO HAS RELIED UPON, WHEREIN, THE YEAR OF CONSTRUCTION HAS BEEN MENTIONED AS 2008 TO 2011. THE VALUE OF THE PROPERTY, HOWEVER, HAS BEEN ASSESS ED AS ON 3.3.2015. THEREFORE, THE VALUE OF THE PROPERTY HAS BEEN ESTIMATED IN THE YEAR 2015 AND THE ADDITION HAS BEE N MADE ON PROPORTIONATE BASIS TAKING THE VALUE OF THE PROPERT Y AS ON 3.3.2015, WHEREAS, IT IS OWN CASE OF THE DEPARTMENT THAT THE PROPERTY HAS BEEN CONSTRUCTED FROM 2008 TO 2011. O N THE OTHER HAND, THE ASSESSEE HAS PRODUCED THE REPORT OF THE A PPROVED VALUER TO SUBMIT THAT THE VALUE OF THE PROPERTY WAS AT APPROXIMATELY RS. 15 LACS. THIRDLY, CONSTRUCTION O F THE PROPERTY HAS BEEN DISPUTED BY THE ASSESSEE. THE ASSESSEE BE FORE THE AO HAS CATEGORICALLY MENTIONED THAT THE CONSTRUCTION I N THE SHAPE OF BOUNDARY, PATHWAY AND TOILETS WAS MADE BY M/S ICRMS DURING THE FINANCIAL YEAR 2006-07 AS PER THE LEASE AGREEME NT OF THE ASSESSEE WITH THE SAID COMPANY. THE ASSESSEE HAD FURTHER REQUESTED THE AO TO GET A LL THE DETAILS IN THIS RESPECT FROM M/S ICRMS COMPANY, HOW EVER, THE AO TOTALLY IGNORED THE AFORESAID REQUEST OF THE ASS ESSEE AND SIMPLY RELIED UPON THE REPORT OF THE VALUER ATTACHE D ALONGWITH THE REPORT OF THE PUNJAB VIGILANCE BUREAU. ITA 54,55 & 57/CHD/2020 PAGE 9 OF 17 12. AS OBSERVED ABOVE, THE SAID VALUATION WAS DONE AS PER THE VALUE OF THE CONSTRUCTION IN THE YEAR 2015. IN THI S CASE, EVEN THE AO DID NOT MAKE ANY INDEPENDENT QUERY. MOREOVER, T HE AO IN THE CIRCUMSTANCES WAS SUPPOSED TO REFER THE MATTER TO THE DEPARTMENTAL VALUATION OFFICER TO GET APPROXIMATE D ATE OF CONSTRUCTION OF THE PROPERTY AS WELL AS VALUE OF TH E PROPERTY ON THE DATE OF CONSTRUCTION. NO SUCH EXERCISE HAS BEE N DONE BY THE AO. THE ADDITION HAS BEEN MADE JUST ON ESTIMATION BASIS ON THE BORROWED SATISFACTION OF THE PUNJAB VIGILANCE BUREA U WITHOUT ANY INDEPENDENT INVESTIGATION IN THE MATTER BY THE AO. SUCH AN ADDITION MADE ON THE BASIS OF MERE SUSPICION, IN MY VIEW, IS NOT SUSTAINABLE IN THE EYES OF LAW. THIS ADDITION IS A CCORDINGLY SET ASIDE. GROUND NO. 11 : 13. VIDE GROUND NO. 11, THE ASSESSEE HAS AGITATED T HE ADDITION OF RS. 1.20 LACS MADE BY THE AO AS 'INCOME FROM OTH ER SOURCES' AS AGAINST DECLARED BY THE ASSESSEE AS AGRICULTURA L INCOME. THE ASSESSEE HAD SHOWN AGRICULTURAL INCOME OF RS. 1.20 LACS CONTENDING THAT THE SAME WAS EARNED FROM THE LEASE OF THE AGRICULTURAL LAND. THE ASSESSEE IN THIS RESPECT PR ODUCED AFFIDAVIT OF ONE MR. KULDEEP SINGH S/O SHRI CHHAJU SINGH FROM WHOM THE AGRICULTURE INCOME/BATAI WAS RECEIVED. HOWEVER, THE AO REJECTED THE AFORESAID AFFIDAVIT OF SHRI KULDEEP SINGH AND H ELD THAT THE ITA 54,55 & 57/CHD/2020 PAGE 10 OF 17 AFORESAID INCOME OF THE ASSESSEE WAS NOT FROM AGRIC ULTURE ACTIVITY AND ASSESSED THE SAME AS 'INCOME FROM OTHER SOURCES '. THE LD. CIT(A) CONFIRMED THE ADDITION MADE BY THE AO. 14. BEFORE THIS TRIBUNAL, THE LD. COUNSEL FOR THE A SSESSEE HAS SUBMITTED THAT THE ASSESSEE HAS CONTINUOUSLY BEEN O FFERING THE AGRICULTURAL LAND ON BATAI AND THAT THE AFORESAID A MOUNT OF RS. 1.20 LACS WAS EARNED BY THE ASSESSEE FROM AGRICULTU RE OPERATIONS. THE LD COUNSEL HAS FURTHER SUBMITTED T HAT DURING THE SUBSEQUENT YEARS, THE SAID LESSEE WAS EXAMINED BY T HE AO AND STATEMENT WAS ALSO RECORDED AND AFTER HAVING SATISF IED, NO ADDITION HAS BEEN MADE IN THIS RESPECT IN THE SUBSE QUENT YEARS. MOREOVER, IT HAS NOT BEEN DENIED BY THE AO THAT THE ASSESSEE IS IN POSSESSION OF AGRICULTURAL LAND AND THE LESSEE H AS ADMITTED THAT HE HAS PAID AFORESAID AMOUNT OF RS. 1.20 LACS AS BATAI TO THE ASSESSEE. IN VIEW OF THIS, I DO NOT FIND ANY JUSTI FICATION ON THE PART OF THE AO TO MAKE THE IMPUGNED ADDITION. IN V IEW OF THIS, THE ADDITION MADE BY THE AO ON THIS ISSUE IS DELETE D. 15. IN THE RESULT, THE APPEAL OF THE ASSESSEE STAND S ALLOWED. ITA NO. 55/CHD/2020 FOR A.Y. 2009-10 THE ASSESSEE IN THIS APPEAL HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL : ITA 54,55 & 57/CHD/2020 PAGE 11 OF 17 1. THAT ON LAW, FACTS AND CIRCUMSTANCES OF THE CASE, T HE WORTHY CIT(A) IN APPEAL NO. 10636/16-17 HAS ERRED IN PASSING THAT OR DER IN CONTRAVENTION OF THE PROVISIONS OF S. 250(6) OF THE INCOME TAX ACT, 1961. 2. THAT ON LAW, FACTS AND CIRCUMSTANCES OF THE CASE, W ORTHY CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF LD. AO WHEREIN LD. AO HAD ERRED BY ISSUANCE OF NOTICE U/S 148 OFTHE ACT AND HAS FURTHER ERRED IN C ONTINUATION AND COMPLETION OF THE SAID RE-ASSESSMENT PROCEEDINGS U/S 147 OFTHE ACT EVEN WHEN THE WHOLE OFTHE PROCESS WAS ILLEGAL AND AGAINST THE PROVISION S OF INCOME TAX ACT AND HENCE REQUIRED TO BE DECLARED VOID-AB-INITIO. 3. THAT ON LAW, FACTS AND CIRCUMSTANCES OF THE CASE, W ORTHY CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF LD. AO WHEREIN LD. AO HAD ERRED IN MAKING ADDITION OF RS. 8,21,000/- ON ISSUE IN ASSESSMENT F INALIZED U/S 147 EVEN WHEN THE RE-ASSESSMENT PROCEEDINGS WERE INITIATED ON AN ALTOGETHER DIFFERENT ISSUE, THE FINAL ADDITION IS ON A DIFFERENT ISSUE AND NO A DDITION ON THE ISSUE ON WHICH RE-OPENING WAS INITIATED HAS BEEN MADE IN THE FINAL REASSESSMENT ORDER. 4. THAT ON LAW, FACTS AND CIRCUMSTANCES OF THE CASE, W ORTHY CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF LD. AO WHEREIN LD. AO HAD ERRED IN MAKING THE ASSESSMENT IN HASTE AND WITHOUT AFFORDING REASONABL E OPPORTUNITY TO THE APPELLANT AND THEREFORE THE IMPUGNED ASSESSMENT FRA MED IS AGAINST THE PRINCIPLES OF NATURAL JUSTICE AND HENCE DESERVES TO BE QUASHED. 5. THAT ON LAW, FACTS AND CIRCUMSTANCES OF THE CASE, T HE WORTHY CIT (A) HAS ERRED IN CONFIRMING THE ACTION OF LD. AO WH EREIN LD. AO HAD ACTED WITH A BIASED AND PREJUDICE MIND IN FRAMING T HE IMPUGNED ASSESSMENT ORDER AND CARRYING OUT THE RE-ASSESSMENT PROCEEDINGS AND THEREFORE THE SAID APPEAL IS ILLEGAL AND DESERVES T O BE QUASHED. 6. THAT ON LAW, FACTS AND CIRCUMSTANCES OF THE CASE, T HE WORTHY CIT (A) HAS ERRED IN CONFIRMING THE ACTION OF LD. AO WHERE IN LD. AO HAD ADOPTED RS. 32,84,000/- THE CURRENT VALUE OF THE CONSTRUCTION E XP. AND ADDED RS. 8,21,000/- THE PROPORTIONATE CONST, EXP., EVEN THOU GH THE CONSTRUCTION ACTIVITY WAS ACTUALLY CARRIED OUT IN FY 2006-07 AND THAT TOO BY M/S ICRMS (P) LTD., TO WHOM THE PROPERTY WAS GIVEN ON LEASE. 7. THAT ON LAW, FACTS AND CIRCUMSTANCES OF THE CASE, T HE WORTHY CIT (A) HAS ERRED IN CONFIRMING THE ACTION OF LD. AO WHEREI N LD. AO HAD ADOPTED RS. 32,84,000/- AS THE CONSTRUCTION EXP. AN D ADDED RS. 8,21,000/- THE PROPORTIONATE CONST, EXP., EVEN THOU GH THE CONSTRUCTION ACTIVITY WAS ACTUALLY CARRIED OUT IN FY 2006-07. TH E RESPONDENT HAD MADE THIS ADDITION IN A.Y. 2009-10 AS HE LACKED POW ERS BY VIRTUE OF LIMITATION PERIOD TO ASSESSEE A.Y. 2006-07. 8. THAT ON LAW, FACTS AND CIRCUMSTANCES OF THE CASE, T HE WORTHY CIT (A) , HAS ERRED IN CONFIRMING THE ACTION OF LD. AO WHER EIN LD. AO ON HIS OWN ITA 54,55 & 57/CHD/2020 PAGE 12 OF 17 WITHOUT MAKING ANY REFERENCE TO DVO HAD ADOPTED RS. 32,84,000/- AS THE CONSTRUCTION EXP. AND ADDED RS. 8,21,000/- THE PROP ORTIONATE CONST, EXP. 9. THAT THE APPELLANT CRAVES LEAVE FOR ANY ADDITION, D ELETION OR AMENDMENT IN THE GROUNDS OF APPEAL ON OR BEFORE THE DISPOSAL OF THE SAME. 16. A PERUSAL OF THE ABOVE GROUNDS OF APPEAL REVEAL THAT GROUND NOS. 1 AND 9 OF THE GROUNDS OF APPEAL TAKEN BY THE ASSESSEE ARE GENERAL IN NATURE. GROUND NO. 2 & 3 : 17. VIDE GROUND NOS. 2 AND 3, THE ASSESSEE HAS AGIT ATED THE VALIDITY OF THE RE-OPENING OF THE ASSESSMENT U/S 14 7 READ WITH SECTION 148 OF THE ACT. AT THE OUTSET THE LD. COUN SEL FOR THE ASSESSEE HAS INVITED MY ATTENTION TO THE REASONS RE CORDED BY THE AO FOR FORMING BELIEF FOR RE-OPENING OF THE ASSESSM ENT. REASONS FOR ISSUING NOTICE UNDER SECTION 148 OF THE INCOME TAX ACT, 1961 THE ASSESSEE HAD FILED ITS RETURN OF INCOME FOR THE A.Y. 2009-10 AT NIL INCOME AND HAD SHOWN AGRICULTURAL INCOME AT RS. 1,1 0,000/-. AS PER INFORMATION RECEIVED FROM THE OFFICE OF THE DEPUTY DIRECTOR OF INCOME TAX (INVESTIGATION)-II, CHANDIGARH VIDE HIS LETTER DATED 03.02.2016 AND ON THE BASIS OF REPORT OF PUNJAB VIGILANCE BUREAU, IT HAS BEEN NOTICED THAT THE ASSESSEE COMPANY HAS BEEN USING ITS ASSETS FOR ARRANGING MARRIAGE FUNCTIONS AND AFTER PERUSAL OF THE INCOME TAX RETURN OF THE ASSESSEE, IT HAS BEEN NOTICED THAT THE ASSESSEE IS NOT SHOWING ANY SUCH INCOME. MOREOVER, IT HAS ALSO BEEN NOTICED THAT THE ASSESSEE HAD ALSO INVESTED A SUM OF RS. 32.84 LAC ON THE CONSTRUCTION /DEVELOPMENT OF A FARM HOUSE/RESORT AT ITS LAND BUT NO SUCH EXPENSES ARE REFLECTED IN THE BALANCE SHEET OF THE COMPANY. THEREFORE, IT IS CLEA R THAT THE EXPENSES HAVE BEEN MET OUT FROM THE INCOME .WHICH HAS NOT BE EN SHOWN IN THE RETURN OF INCOME FILED BY THE ASSESSEE. THEREFORE, KEEPING IN VIEW THE FACTS NARRATED ABOVE , I HAVE REASONS TO BELIEVE THAT AN INCOME OF RS. 32,84,000/- HAS ESCAP ED ASSESSMENT WITHIN THE MEANING OF SECTION 147(A) OF THE INCOME TAX ACT, 1961 FOR THE A.Y. 2009-10. ITA 54,55 & 57/CHD/2020 PAGE 13 OF 17 18. A PERUSAL OF THE ABOVE REASONS RECORDED REVEAL THAT RE- OPENING OF THE ASSESSMENT HAS BEEN MADE BY THE AO O N THE REPORT OF INVESTIGATION WING THAT THE ASSESSEE COMP ANY HAS BEEN USING ITS ASSETS FOR ARRANGING MARRIAGE FUNCTIONS. HOWEVER, THE ASSESSEE HAS NOT OFFERED ANY INCOME FROM THE ABOVE ACTIVITY. FURTHER IT WAS NOTICED THAT THE ASSESSEE HAD ALSO I NVESTED A SUM OF RS. 32.84 LACS ON CONSTRUCTION/ DEVELOPMENT OF FARM HOUSES/RESORT AT ITS LAND BUT NO SUCH EXPENSES ARE REFLECTED IN THE BALANCE SHEET OF THE COMPANY. THEREFORE, THE AO FORMED THE BELIEF THAT THE INCOME OF THE ASSESSEE HAD ESCAPED ASSESSMENT. 19. THE LD. COUNSEL FOR THE ASSESSEE, IN THIS RESP ECT HAS SUBMITTED THAT THE ASSESSEE DOES NOT OWN ANY MARRIA GE PALACE OR RESORT AS ALLEGED BY THE AO. THAT THERE WAS NO RELI ABLE INFORMATION/DOCUMENT/EVIDENCES AVAILABLE WITH THE A O TO FORM THE BELIEF THAT THE ASSESSEE HAS BEEN RUNNING ANY M ARRIAGE PALACE OR HAD CONSTRUCTED A RESORT AS HAS BEEN ALLE GED IN THE REASONS RECORDED. HE HAS FURTHER SUBMITTED THAT EV EN OTHERWISE, THE AO HAS NOT MADE ANY ADDITION ON ACCOUNT OF INCO ME FROM ANY MARRIAGE PALACE/RESORT. THE LD. DR ON THE OTHER HAND HAS RELIED UPON THE F INDINGS OF THE LOWER AUTHORITIES. ITA 54,55 & 57/CHD/2020 PAGE 14 OF 17 20. I FIND THAT THE REASONS RECORDED BY THE AO ARE VAGUE AND ARE BASED ON BORROWED SATISFACTION. THE AO AFTER R ECEIPT OF THE ALLEGED INFORMATION WAS SUPPOSED TO APPLY HIS MIND AND SHOULD HAVE FORMED THE BELIEF BASED ON SOME RELIABLE EVIDE NCES THAT THE ASSESSEE OWNED ANY MARRIAGE PALACE/RESORT. EVEN AF TER ASSESSMENT, THE AO HAS NOT MADE ANY ADDITION ON ACC OUNT OF ANY OWNERSHIP OF THE ASSESSEE OF ANY MARRIAGE PALACE/RE SORT. THE AO DID NOT HAVE ANY MATERIAL TO FORM THE BELIEF THAT T HE INCOME OF THE ASSESSEE HAD ESCAPED ASSESSMENT. THEREFORE, TH E RE-OPENING OF THE ASSESSMENT IN MY VIEW IS BAD IN LAW AND THE SAME IS ACCORDINGLY ORDERED TO BE QUASHED. GROUND NO. 4 TO 8 : 21. VIDE GROUND NOS. 4 TO 8 THE ASSESSEE HAS AGITAT ED THE ADDITION OF RS. 8.21 LACS ON PROPORTIONATE BASIS FO R THE YEAR UNDER CONSIDERATION IN RESPECT OF THE ALLEGED CONST RUCTION MADE BY THE ASSESSEE IN THE PROPERTY TOTALING RS. 32.84 LACS ALLEGEDLY DURING THE YEARS 2008 TO 2011. THIS ISSUE HAS ALRE ADY BEEN DISCUSSED AND DECIDED IN EARLIER PARAS OF THIS ORDE R WHILE DECIDING THE APPEAL OF THE ASSESSEE IN ITA NO. 54/C HD/2020 FOR ASSESSMENT YEAR 2008-09. THE FINDING ARRIVED THERE IN WILL MUTATIS-MUTANDIS APPLY FOR THE YEAR UNDER CONSIDERA TION ALSO. IN VIEW OF THIS THE PROPORTIONATE ADDITION OF RS. 8.21 LACS MADE BY ITA 54,55 & 57/CHD/2020 PAGE 15 OF 17 THE AO IN RESPECT OF THE ALLEGED CONSTRUCTION IS OR DERED TO BE DELETED. 22. IN THE RESULT, APPEAL OF THE ASSESSEE STANDS AL LOWED. ITA NO. 57/CHD/2020 FOR A.Y. 2011-12 : THE ASSESSEE IN THIS APPEAL HAS TAKEN THE FOLLOWIN G GROUNDS OF APPEAL : 1. THAT ON LAW, FACTS AND CIRCUMSTANCES OF THE CASE, T HE WORTHY CIT(A) IN APPEAL NO. 10269/18-19 HAS ERRED IN PASSING THAT ORDER IN CONTRAVENTION OF THE PROVISIONS OF S. 250(6) OF THE INCOME TAX ACT, 1961. 2. THAT ON LAW, FACTS AND CIRCUMSTANCES OF THE CASE, W ORTHY CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF LD. AO WHEREIN LD. AO HAD ERRED BY ISSUANCE OF NOTICE U/S 148 OF THE ACT AND HAD FURTH ER ERRED IN CONTINUATION AND COMPLETION OF THE SAID RE-ASSESSMENT PROCEEDINGS U/S 147 OF THE ACT EVEN WHEN THE WHOLE OF THE PROCESS W AS ILLEGAL AND AGAINST THE PROVISIONS OF INCOME TAX ACT AND HENCE REQUIRED TO BE DECLARED VOID-AB-INITIO. 3. THAT ON FACTS AND CIRCUMSTANCES AND LEGAL POSITION OF THE CASE, WORTHY CIT(A) HAS ERRED IN COMPLETING THE IMPUGNED ASSESSMENT U/S 147 WITHOUT THE ISSUANCE OF VALID NOTICE U/S 143(2) OF THE INCOME TAX ACT, 1961. 4. THAT ON LAW, FACTS AND CIRCUMSTANCES OF THE CASE, W ORTHY CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF LD. AO WHEREIN LD . AO HAD ERRED IN MAKING THE ASSESSMENT IN HASTE AND WITHOUT AFFOR DING REASONABLE OPPORTUNITY TO THE APPELLANT AND THEREFORE THE IMPUGNED ASSESSMENT FRAMED IS AGAINST THE PRINCIPLES OF NATURAL JUSTICE AND HENCE DESERVES TO BE QUASHED. 5. THAT ON LAW, FACTS AND CIRCUMSTANCES OF THE CASE, T HE WORTHY CIT (A) HAS ERRED IN CONFIRMING THE ACTION OF LD. AO WHEREIN LD. AO HAD ACTED WITH A BIASED AND PREJUDICE MIND IN FRAMING T HE IMPUGNED ASSESSMENT ORDER AND CARRYING OUT THE RE-ASSESSMENT PROCEEDINGS AND THEREFORE THE SAID APPEAL IS ILLEGAL AND DESERV ES TO BE QUASHED. 6. THAT ON LAW, FACTS AND CIRCUMSTANCES OF THE CASE, T HE WORTHY CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF LD. AO WHEREI N LD. AO HAD ADOPTED RS. 32,84,000/- THE CURRENT VALUE OF THE CONSTRUCTION EXP. ITA 54,55 & 57/CHD/2020 PAGE 16 OF 17 AND ADDED RS. 8,21,000/- THE PROPORTIONATE CONST, E XP., EVEN THOUGH THE CONSTRUCTION ACTIVITY WAS ACTUALLY CARRIED OUT IN FY 2006-07 AND THAT TOO BY M/S ICRMS (P) LTD., TO WHOM THE PROPERT Y WAS GIVEN ON LEASE. 7. THAT ON LAW, FACTS AND CIRCUMSTANCES OF THE CASE, T HE WORTHY CIT (A) HAS ERRED IN CONFIRMING THE ACTION OF LD. AO WH EREIN LD. AO HAD ADOPTED RS. 32,84,000/- AS THE CONSTRUCTION EXP . AND ADDED RS. 8,21,000/- THE PROPORTIONATE CONST, EXP., EVEN THOU GH THE CONSTRUCTION ACTIVITY WAS ACTUALLY CARRIED OUT IN F Y 2006-07. THE RESPONDENT HAD MADE THIS ADDITION IN A.Y. 2011-12 A S HE LACKED POWERS BY VIRTUE OF LIMITATION PERIOD TO ASSESSEE A .Y. 2006-07. 8. THAT ON LAW, FACTS AND CIRCUMSTANCES OF THE CASE, T HE WORTHY CIT (A) HAS ERRED IN CONFIRMING THE ACTION OF LD. AO WH EREIN LD. AO ON HIS OWN WITHOUT MAKING ANY REFERENCE TO DVO HAD ADO PTED RS. 32,84,000/- AS THE CONSTRUCTION EXP. AND ADDED RS. 8,21,000/- THE PROPORTIONATE CONST, EXP. 9. THAT THE APPELLANT CRAVES LEAVE FOR ANY ADDITION, D ELETION OR AMENDMENT IN THE GROUNDS OF APPEAL ON OR BEFORE THE DISPOSAL OF THE SAME. 23. A PERUSAL OF THE ABOVE GROUNDS OF APPEAL REVEAL THAT GROUND NOS. 1 AND 9 ARE GENERAL IN NATURE. GROUND NO. 2 & 3 : 24. THE ASSESSEE VIDE GROUND NOS. 2 AND 3 HAS AGITA TED THE VALIDITY OF THE RE-OPENING OF THE ASSESSMENT U/S 14 7 READ WITH SECTION 148 OF THE ACT. 25. A PERUSAL OF THE REASONS RECORDED SHOWS THAT TH E SAME ARE IDENTICAL AS RECORDED FOR RE-OPENING OF THE ASSESSM ENT FOR ASSESSMENT YEAR 2009-10. AS ALREADY HELD IN THE ASS ESSMENT YEAR 2009-10, THE RE-OPENING OF THE ASSESSMENT ON THE BA SIS OF INVALID REASONS IN THIS APPEAL IS ALSO LIABLE TO BE QUASHED . IT IS HELD ACCORDINGLY. ITA 54,55 & 57/CHD/2020 PAGE 17 OF 17 GROUND NO. 4 TO 8 : 26. VIDE GROUND NOS. 4 TO 8, THE ASSESSEE HAS AGITA TED THE ADDITION OF RS. 8.21 LACS ON ACCOUNT OF PROPORTIONA TE ADDITION FOR THE YEAR UNDER CONSIDERATION IN RESPECT OF THE INVESTMENT/CONSTRUCTION OF PROPERTY VALUING RS. 32. 84 LACS AS PER THE REPORT OF THE VALUATION OFFICE OF PUNJAB VI GILANCE BUREAU. THIS ISSUE HAS ALREADY DECIDED WHILE DECIDING THE A PPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2008-09 AND IN VIEW OF MY FINDING GIVEN ABOVE, WHILE DECIDING THE APPEAL OF THE ASSES SEE FOR ASSESSMENT YEAR 2008-09, THIS ISSUE IS ACCORDINGLY DECIDED IN FAVOUR OF THE ASSESSEE. THE IMPUGNED ADDITION MADE BY THE AO IS THEREFORE ORDERED TO BE DELETED. 27. IN THE RESULT, APPEAL OF THE ASSESSEE STANDS AL LOWED. 28. IN VIEW OF MY FINDINGS GIVEN ABOVE, ALL THE CAP TIONED THREE APPEALS OF THE ASSESSEE STAND ALLOWED. ORDER PRONOUNCED ON 24.05. 2021. SD/- ( ) (SANJAY GARG) / JUDICIAL MEMBER POONAM '* +, -, / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. # . / CIT 4. # . ( )/ THE CIT(A) 5. ,/0 1 , % 1 , 23405 / DR, ITAT, CHANDIGARH 6. 04 6$ / GUARD FILE