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2016 (2) TMI 622 - AT - Income TaxValidity of the assessment - notice u/s.158BC(c) has not been properly served - Held that - The stand taken by the assessee about the criteria of the notice u/s.158BC is not acceptable. We do not find any infirmity in the order of the CIT(A) on this issue. Once the assessee has been served the notice and in compliance to the same the assessee has responded by filing the return, now he cannot take a ground that the service of notice is improper. Further, the Ld. counsel for the assessee could not prove that the notice was not served by registered post, a finding given by the CIT(A). He has not addressed as to in which manner the notice was served otherwise than by Registered Post. In view of the above, the various decisions relied on by the Ld. Counsel for the assessee are not applicable to the facts of the present case. - Decided against assessee Transaction and sale of land - business income OR long term capital gain - CIT(A) confirming the transaction as business income - Held that - It is an admitted fact that during the course of search the audited books of accounts were not found. The assessee in the block return declared long term capital loss for first 2 years, i.e. A.Yrs. 1994-95 and 1995-96 whereas for A.Yrs. 1996-97 and 1997-98 the assessee declared long term capital gain. The AO considering the continuous purchase and sale of land by the assessee treated the same as adventure in nature of trade. The Ld.CIT(A) after considering the facts of the case and on proper appreciation of the seized documents vis- -vis reply of the assessee from time to time has enhanced the income of the assessee by ₹ 4,75,000/-. We do not find any infirmity in the order of the CIT(A) in absence of any material brought to our notice to take a different view. Addition u/s 68 - Held that - ind in the instant case the AO made addition of ₹ 4 lakhs to the total income of the assessee u/s.68 on the basis of the statement recorded from the assessee that he had taken loan of ₹ 4 lakhs on different dates during F.Yrs. 1994-95 to 1997-98 in cash from Shri P.S. Puslori. We find the CIT(A) deleted the addition on the ground that while the AO has recorded the statement of Shri P.S. Puslori, however, the AO did not confront the same to the assessee which was utilized against the assessee. The information collected at the back of the assessee which was utilized against him was not confronted to the assessee for which the Ld.CIT(A) held that the addiction made by the AO is incorrect. Since admittedly the assessee was not confronted with the adverse findings collected by the AO at the back of the assessee, therefore the principles of natural justice have been violated. In view of the detailed reasoning given by the Ld.CIT(A) and in absence of any contrary material brought to our notice against the order of the CIT(A) deleting the addition we find no infirmity in the order of the CIT(A). - Decided against revenue Addition u/s 69 - repayment of loan - Held that - CIT(A) after proper appreciation of the facts of the case directed the AO not to make any addition u/s.68 . However, he directed the AO to make addition of ₹ 1,01,506/- u/s.69 of the Act in absence of any plausible explanation given by the assessee towards the repayment of the above loan. The Ld. Counsel for the assessee before us also could not give any proper explanation nor he could explain how the order of the CIT(A) is erroneous. Since the Ld.CIT(A) on the basis of analysis of the seized document and on the basis of the various statements recorded from the assessee u/s.132(4) as well as u/s.131 has given valid reasons, therefore, in absence of any contrary material brought to our notice by either side we do not find any infirmity in the order of the CIT(A). - Decided against revenue and assessee
Issues Involved:
1. Validity of the assessment due to improper service of notice u/s.158BC(c). 2. Classification of income from the sale of land as business income versus long-term capital gain. 3. Levy of surcharge under section 113. 4. Validity of the assessment due to the timing of the notice u/s.143(2). 5. Admissibility of the appeal despite delayed payment of tax liability. 6. Deletion of additions based on advances to various parties. 7. Deletion of additions based on the consideration paid for the purchase of land. 8. Deletion of additions based on peak credit in the account of S.R. Kulkarni. 9. Confirmation and deletion of additions based on loans taken and their repayments. 10. Confirmation and deletion of additions based on blank cheques issued and seized during the search. Detailed Analysis: 1. Validity of the Assessment Due to Improper Service of Notice u/s.158BC(c): The assessee challenged the validity of the assessment on the grounds that the notice u/s.158BC(c) was not properly served. The Tribunal noted that the CIT(A) found the notice was issued through RPAD and served on the assessee, who filed the return in response. The Tribunal upheld the CIT(A)'s decision, stating that the assessee could not challenge the service of notice after filing the return. The Tribunal dismissed the ground raised by the assessee. 2. Classification of Income from Sale of Land: The AO treated the sale of land as business income, while the assessee claimed it as long-term capital gain. The CIT(A) found that the AO's decision was not based on proper appreciation of facts and evidence. The CIT(A) sustained an addition of Rs. 4,75,000/- as unrecorded income. The Tribunal upheld the CIT(A)'s order, noting no infirmity and dismissed the grounds raised by the assessee. 3. Levy of Surcharge under Section 113: The Tribunal referred to the Supreme Court's decision in CIT Vs. Vatika Township Pvt. Ltd., which held that the levy of surcharge u/s.113 is prospective and not retrospective. Accordingly, the Tribunal held that surcharge is not leviable, allowing the ground raised by the assessee. 4. Validity of the Assessment Due to Timing of Notice u/s.143(2): The assessee argued that the notice u/s.143(2) was issued before filing the return, making the assessment proceedings void. The Tribunal found that a fresh notice u/s.143(2) was issued after the return was filed. The Tribunal dismissed the additional ground raised by the assessee, stating that the procedural mistake did not invalidate the assessment proceedings. 5. Admissibility of Appeal Despite Delayed Payment of Tax Liability: The Revenue challenged the CIT(A) admitting the appeal despite the assessee's delayed payment of tax liability. The Tribunal upheld the CIT(A)'s decision, noting that the Tribunal had previously allowed the assessee to approach the CIT(A) after paying the tax due. The ground raised by the Revenue was dismissed. 6. Deletion of Additions Based on Advances to Various Parties: The AO made an addition of Rs. 24,24,428/- based on advances to various parties. The CIT(A) deleted the addition, noting that the AO did not properly verify the entries in the seized diaries and the cash flow statements. The Tribunal upheld the CIT(A)'s order, dismissing the grounds raised by the Revenue. 7. Deletion of Additions Based on Consideration Paid for Purchase of Land: The AO made additions of Rs. 15,57,000/- and Rs. 11,74,000/- based on unrecorded consideration for land purchase. The CIT(A) deleted the additions, finding no proper appreciation of facts and evidence by the AO. The Tribunal upheld the CIT(A)'s order, dismissing the grounds raised by the Revenue. 8. Deletion of Additions Based on Peak Credit in the Account of S.R. Kulkarni: The AO made an addition of Rs. 4,94,275/- based on peak credit in the account of S.R. Kulkarni. The CIT(A) deleted the addition, noting that the AO did not properly consider the submissions and evidence provided by the assessee. The Tribunal upheld the CIT(A)'s order, dismissing the ground raised by the Revenue. 9. Confirmation and Deletion of Additions Based on Loans Taken and Their Repayments: The AO made an addition of Rs. 1,71,761/- based on unexplained loans and repayments. The CIT(A) deleted the addition u/s.68 but directed an addition of Rs. 1,01,506/- u/s.69. The Tribunal upheld the CIT(A)'s order, dismissing the grounds raised by both the assessee and the Revenue. 10. Confirmation and Deletion of Additions Based on Blank Cheques Issued and Seized During the Search: The AO made an addition of Rs. 20,50,000/- based on blank cheques issued and seized during the search. The CIT(A) sustained Rs. 15,50,000/- and deleted Rs. 5,00,000/-. The Tribunal upheld the CIT(A)'s order, dismissing the grounds raised by both the assessee and the Revenue. Conclusion: The Tribunal partly allowed the appeal by the assessee and dismissed the appeal filed by the Revenue. The Tribunal upheld the CIT(A)'s decisions on various issues, finding no infirmity in the CIT(A)'s appreciation of facts and evidence.
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