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2019 (10) TMI 600 - AT - Income TaxValidity of notice u/s 148 - assessment of unexplained source of deposits in Canara Bank - HELD THAT - No new issue has cropped up, subsequently on new set of facts. The reason forming belief was deposit of ₹ 31.00 lakhs which was sourced from the sale of land which attracts the capital gains tax and the assessee did not offer the same for taxation. Thus the issue for reopening and addition made is one and the same. we hold that the AO has rightly issued notice u/s 148, accordingly, we uphold the order of the Ld.CIT(A) and dismiss the appeal of the assessee on this ground. Merits of the case, the Ld.CIT(A) found that the impugned land was sold for non agricultural purpose and admitted that the said land is situated within the limits of GVMC. Therefore, the Ld.CIT(A) held that the sale consideration attracts capital gains tax and accordingly upheld the order of the AO. During the appeal hearing, the Ld.AR did not advance any arguments on merits of the case. Since the said land is within the limits of GVMC and the land was sold for non agricultural purposes to non agriculturists, we uphold the order of the Ld.CIT(A) and dismiss the appeal of the assessee. The appeal of the assessee is dismissed.
Issues:
Validity of notice u/s 148 of the Income Tax Act, 1961. Detailed Analysis: The appeal was filed against the order of the Commissioner of Income Tax (Appeals) for the Assessment Year 2007-08. The assessee raised an additional ground challenging the validity of the notice u/s 148 of the Act, arguing that it is a legal ground crucial to the assessment. The additional ground questioned whether the notice u/s 148 should be quashed as invalid, leading to the voidness of the reassessment proceedings. The assessee contended that the notice was based on incorrect assumptions regarding the source of deposits in Canara Bank. The AO believed the deposits were unexplained due to the sale of agricultural land, but the assessee argued that the source was known and should not be taxed as unexplained. The dispute centered on whether the notice was valid based on the source of the deposits. The Department argued that the deposits were unexplained as the sale of agricultural land proceeds were not declared for tax. The AO reopened the assessment to tax the unexplained source of investment, which the assessee contested. The AO's belief was that the deposits were unexplained, while the assessee maintained they were sourced from the sale of land. The Department emphasized that the AO's actions were valid and upheld by the CIT(A), as the source of the deposits remained in question. The dispute revolved around the taxability of the deposits and the validity of the notice u/s 148. The Tribunal analyzed the facts, noting that the assessment for the relevant year was completed under section 143(1) without taxing the deposits. The reopening was based on the belief that the deposits were unexplained, despite being linked to the sale of land. The Tribunal rejected the assessee's argument that the notice was invalid due to the source of the deposits being known. The Tribunal cited relevant case law to support the decision that the AO's actions were justified. The Tribunal upheld the CIT(A)'s order, emphasizing that the deposits were taxable as unexplained. The Tribunal also confirmed that the sale of land attracted capital gains tax, dismissing the assessee's appeal on both grounds. In conclusion, the Tribunal dismissed the appeal, affirming the validity of the notice u/s 148 and upholding the taxability of the deposits sourced from the sale of land. The decision highlighted the importance of correctly assessing the source of income and adhering to tax obligations, ultimately supporting the Department's position on the matter.
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