2014 (4) TMI 1282 - AT - Income Tax

Unaccounted investment made by the assessee in purchase of the subject property - CIT-A deleted the addition - as argued that the Director of APIPL had, on oath, admitted that the acquired value mentioned in the seized material (computer sheet) was the value which was paid to the land owners for the purchase of the property by the assessee - HELD THAT - CIT (A) had called for a remand report wherein the AO, admittedly, conceded that the said addition was made in the hands of the assessee purely based on the report of the ADIT (Inv). Surprisingly, the ADIT (Inv) came to a conclusion by relying on the statement of Sri Aga, Director of APIPL, on oath. As a matter of fact, APIPL had nothing to do with the transaction between the assessee and the sellers of the subject property, namely, Shri Chennappa and Shri Jagadish Chandra Ankalagi. Since the issue which has been examined in detail by the CIT (A) has not been disputed by the Revenue with any documentary evidence even during the course of hearing before us, we are of the view that the CIT (A) was justified in deleting the addition made by the AO. It is ordered accordingly.- Decided against revenue.

Summary

Issues Involved:
1. Validity of the assessment order under Section 147 read with Section 143(3) of the Income Tax Act.
2. Non-issuance of notice under Section 143(2) and its curability under Section 292BB.
3. Deletion of an addition of Rs. 3,39,22,177 made by the Assessing Officer (AO).

Issue-wise Detailed Analysis:

1. Validity of the Assessment Order under Section 147 read with Section 143(3):
The assessee contested the validity of the assessment order under Section 147 read with Section 143(3) of the Income Tax Act. The Tribunal examined the circumstances under which the assessment was reopened. The reopening was based on a survey conducted under Section 133A at the premises of a member of the assessee, M/s Ashad Properties and Investments Pvt Ltd (APIPL). The Tribunal upheld the CIT(A)'s findings that the reopening was not justified as the AO did not conduct any independent enquiry and solely relied on the report of the ADIT (Investigation). The Tribunal noted that the AO failed to bring any corroborative evidence on record to justify the reopening. Therefore, the Tribunal found no infirmity in the CIT(A)'s decision to invalidate the assessment order.

2. Non-issuance of Notice under Section 143(2) and its Curability under Section 292BB:
The assessee argued that no notice under Section 143(2) was issued, which is a mandatory requirement, and this defect is not curable under Section 292BB. The Tribunal agreed with the CIT(A)'s findings that the failure to issue a notice under Section 143(2) vitiates the assessment proceedings. The Tribunal emphasized that the issuance of notice under Section 143(2) is a mandatory requirement and its non-issuance cannot be cured under Section 292BB. Consequently, the Tribunal upheld the CIT(A)'s decision to invalidate the assessment order on this ground as well.

3. Deletion of Addition of Rs. 3,39,22,177 made by the AO:
The primary issue raised by the Revenue was the deletion of an addition of Rs. 3,39,22,177 made by the AO on account of alleged unaccounted investment in the purchase of property. The AO based the addition on a table prepared by the ADIT (Investigation) from impounded excel sheets, which were internal calculations made one year after the purchase transaction. The CIT(A) found that these calculations were not related to the actual purchase transaction and were merely internal estimates. The CIT(A) noted that the AO failed to bring any corroborative evidence on record and relied solely on the statement of Mr. Mehmood Aga, Director of APIPL, which was not substantiated by any independent enquiry or evidence. The Tribunal concurred with the CIT(A)'s detailed reasoning and upheld the deletion of the addition, noting that the AO did not conduct any independent enquiry and failed to substantiate the addition with credible evidence.

Conclusion:
The Tribunal dismissed the Revenue's appeal and upheld the CIT(A)'s decision to delete the addition of Rs. 3,39,22,177 made by the AO. The Tribunal also dismissed the assessee's cross objections, finding no infirmities in the CIT(A)'s findings regarding the validity of the assessment order and the non-issuance of notice under Section 143(2). The Tribunal's decision was based on the lack of independent enquiry and corroborative evidence by the AO, and the mandatory nature of the notice under Section 143(2).