2021 (12) TMI 1398 - AT - Income Tax

Reopening of assessment u/s 147 OR 153C r.w.s. 153A - additional grounds - As argued no failure on the part of the assessee to disclose fully and truly necessary facts for completion of the assessment - HELD THAT - The assessee has raised additional grounds for both the assessment years. The issue raised in the additional grounds is that the assessment completed u/.s 147 r.w.s. 143 of the Act is bad in law. The contention of the assessee is that there was a search in the premises of M/s.Davanam Jewellers Private Limited and during the course of search, there were certain material found pertaining to the assessee. Assessment orders for A.Y. 2006-2007 and A.Y. 2007-2008 ought to have been completed u/s 153C r.w.s. 153A of the Act and not u/s 147 r.w.s. 143(3) of the Act The issue raised in the additional grounds, namely, whether the assessment is to be completed u/s 147 or 153C of the Act has not been raised before the Income Tax Authorities. The issue raised in additional grounds is a jurisdictional issue, which goes to the root of the matter. Therefore, in the interests of justice and equity, we deem it appropriate, the same needs to be adjudicated first by the Income Tax Authorities. Accordingly, we restore the issue raised in the additional grounds to the files of CIT(A). At this point, we refrain from adjudicating the issue on merits. In the event, the CIT(A) decide the issue raised in additional grounds against the assessee, needless to state that the assessee is at liberty to file a fresh appeal raising all the issues raised in the original grounds and the additional grounds.

Summary

Issues:
1. Transfer of property leading to capital gains in assessment year 2006-2007.
2. Reopening of assessment for assessment year 2007-2008 based on undisclosed income.

Issue 1: Transfer of property leading to capital gains in assessment year 2006-2007
The appellant, a firm engaged in property development, purchased a piece of land and later sold it to another party. The Assessing Officer concluded that the appellant had transferred the land during the financial year relevant to assessment year 2006-2007, resulting in capital gains. Despite objections from the appellant, the Assessing Officer brought the income to tax in assessment year 2006-2007. The CIT(A) upheld this view, stating that the substantial amount received by the appellant during the relevant year indicated the crystallization of the property sale in 2006-2007.

Issue 2: Reopening of assessment for assessment year 2007-2008 based on undisclosed income
For assessment year 2007-2008, the Assessing Officer issued a notice for reopening the assessment based on undisclosed income related to the sale of the same property. The appellant raised objections to the notice, but the assessment order was passed bringing Rs.1.15 crore to tax on a protective basis. The CIT(A) confirmed this order, assessing the same figure on a protective basis. The appellant challenged the notice issued under section 148 of the Act, arguing that there was no failure to disclose necessary facts. Additionally, legal grounds were raised regarding the correctness of reopening the assessment under section 147 instead of section 153C r.w.s. 153A of the Act.

The Appellate Tribunal admitted additional grounds raised by the appellant, focusing on the jurisdictional issue of whether the assessment should have been completed under section 147 or 153C of the Act. The Tribunal restored this issue to the CIT(A) for adjudication, emphasizing that it is a jurisdictional matter that needs to be addressed first. The appeals were partly allowed for statistical purposes, with the issue raised in the additional grounds referred back to the CIT(A) for further consideration.