Sanskruti Blders & Developers, Navi Mumbai V. ITD, NFAC, Delhi, Delhi

ITA 815/PUN/2022

AI Insights

The case involves Sanskruti Builders & Developers, who appealed against the order of the CIT(A) in the National Faceless Appeal Centre, Delhi, concerning the assessment year 2013-14. The primary contention was the AO's failure to supply a copy of the reasons recorded for reopening the assessment under section 147 of the Income-tax Act, 1961, prior to issuing notice under section 148. Additionally, the AO had estimated the income at 10% of the total sales agreement value due to non-filing of returns, which the assessee argued was already declared in the previous assessment year. The Tribunal found no merit in the first contention due to the assessee's non-compliance in filing the return within the stipulated period and remitted the second issue back to the AO for further examination.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 124171 (ITAT-PUNE)
• Duration Of Justice: 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: SMC
• Next Hearing Date: 12-03-2023
• Assessment Year: misc
• Appeal Filed On: 09-11-2022
• Other Referred Cases: GKN Driftshaft Ltd. Vs. ITO (2003) 259 ITR 19 (SC)
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income
• Section: 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT आयकर अपील सं. /ITA No.815/PUN/2022 नधा रण वष / Assessment Year : 2013-14 Sanskruti Blders & Developers, Shop No.3, Signature Point, Plot No.58, Sector-18, Kharghar, Navi Mumbai -410210 Maharashtra PAN : ABHFS8044C Vs. ITD, NFAC, Delhi Appellant Respondent आदेश / ORDER PER R.S. SYAL, VP: This appeal by the assessee arises out of the order dated 14-09-2022 passed by the CIT(A) in National Faceless Appeal Centre, Delhi in relation to the assessment year 2013-14. 2. The first issue raised herein is against the Assessing Officer (AO) framing the assessment u/s 147 of the Income-tax Act, 1961 (hereinafter also called `the Act’) without supplying copy of reasons recorded prior to issuance of notice u/s.148. 3. Briefly stated, the facts of the case are that a notice u/s.148 was issued on 20-03-2020 requiring the assessee to file income-tax return Assessee by None Revenue by Shri Mahesh Jasnani Date of hearing 13-03-2023 Date of pronouncement 14-03-2023 ITA No. 815/PUN/2022 Sanskruti Blders & Developers 2 for the A.Y. 2013-14 within a period of 30 days. No returns was filed. Thereafter, notice u/s.142(1) was issued on 12-10-2020 requiring the assessee to furnish certain details and information regarding six registered sale agreements amounting to Rs.2,32,62,500/- for which the assessee had not filed the return of income. The assessee contended before the AO that income in respect of these sale deeds was offered in the immediately preceding assessment year 2012-13. However, no evidence was furnished in support of such a contention, which led the AO to estimate income @10% of total sales agreement value at Rs.23,26,250/-. The assessee remained unsuccessful before the ld. CIT(A) on initiation of reassessment as well as on merits. Aggrieved thereby, the assessee has approached the Tribunal. 4. I have heard the ld. DR and gone through the relevant material on record. There is no appearance from the side of the assessee despite notice. I am, therefore, proceeding to dispose of the appeal ex parte qua the assessee. 5. The first issue, as noted above, is about the AO not supplying a copy of reasons, which led to the framing of the assessment. The assessee has requested to quash the assessment order passed u/s.147 without issuing a copy of reasons in the hue of the judgment of Hon’ble Supreme Court in GKN Driftshaft Ltd. Vs. ITO (2003) 259 ITA No. 815/PUN/2022 Sanskruti Blders & Developers 3 ITR 19 (SC). I have gone through the relevant facts which indicate that notice u/s.148 was issued on 20-03-2020 requiring the assessee to file its return within 30 days. No return was filed by the assessee within the stipulated period. Thereafter, a notice u/s.142(1) was issued on 12-10-2020. The assessee filed the return only on 25-05-2021. This shows that the assessee did not comply with the directions of the AO to furnish the return of income. Right to seek reasons recorded u/s.148 vests in an assessee when return is filed pursuant to notice and the assessment proceedings have yet to commence. If an assessee fails to furnish return within the stipulated period and the assessment proceedings commence, then there can be no question of taking shield of GKN Driftshaft Ltd. (supra) requiring the AO to furnish reasons before taking up the assessment. Here is a case in which notice u/s.148 was issued on 20-03-2020. Notice u/s.142 was issued on 12-10-2020. The assessee furnished its return after more than a year only on 25-05-2021. Thus, it is apparent that the claim to have access to the reasons recorded by the AO before issuing notice u/s.148 was legally lost because of non-filing of return and consequently the assessee cannot now demand that the assessment proceedings be quashed for non-supply of the reasons. I, therefore, uphold the impugned order on this score. ITA No. 815/PUN/2022 Sanskruti Blders & Developers 4 6. The second ground on merits is on sustenance of addition at Rs.23,36,250/- by applying 10% profit rate on the amount of sale proceeds. The assessee contended before the AO that profit in respect of such agreements was offered for taxation in the immediately preceding assessment year. However, no supporting documents were furnished to substantiate the claim, which led the AO to estimate income @10% of the amounts as recorded in the six agreements. It goes without saying that if the assessee recorded revenue of Rs.2,32,62,500/- in its accounts for the immediately preceding assessment year and filed return accordingly, there can be no question of making any addition on account of such revenue in the instant assessment year. However, the obligation is on the assessee to demonstrate that such revenue was duly recorded in its Profit and loss account accompanying the return of income for the preceding assessment year. Both the authorities have recorded that though the assessee claimed but did not furnish necessary evidence in this regard. I, therefore, set-aside the impugned order and remit the matter to the file of the AO for re-deciding this issue after allowing the assessee an opportunity to file necessary details in support of its contention that revenue of Rs.2,32,62,500/- was reflected in the Profit and loss account of the preceding year. In case, the contention of the assessee ITA No. 815/PUN/2022 Sanskruti Blders & Developers 5 turns out to be correct, then no addition should be made for the year under consideration. In the otherwise scenario, the AO is free to decide the issue on merits as per law after allowing reasonable opportunity of hearing to the assessee. 7. In the result, the appeal is partly allowed for statistical purposes. Order pronounced in the Open Court on 14 th March, 2023. Sd/- (R.S.SYAL) VICE PRESIDENT प ु णे Pune; दनांक Dated : 14 th March, 2023 Satish आदेश क त ल प अ े षत/Copy of the Order is forwarded to: 1. अपीलाथ / The Appellant; 2. यथ / The Respondent; 3. The Pr. CIT concerned 4. 5. िवभागीय ितिनिध, आयकर अपीलीय अिधकरण, SMC, Pune / DR, ITAT, Pune गाड फाईल / Guard file आदेशान ु सार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune ITA No. 815/PUN/2022 Sanskruti Blders & Developers 6 Date 1. Draft dictated on 13-03-2023 Sr.PS 2. Draft placed before author 13-03-2023 Sr.PS 3. Draft proposed & placed before the second member -- JM 4. Draft discussed/approved by Second Member. -- JM 5. Approved Draft comes to the Sr.PS/PS Sr.PS 6. Kept for pronouncement on Sr.PS 7. Date of uploading order Sr.PS 8. File sent to the Bench Clerk Sr.PS 9. Date on which file goes to the Head Clerk 10. Date on which file goes to the A.R. 11. Date of dispatch of Order. *