2020 (10) TMI 1185 - AT - Income Tax

Validity of reopening of the assessment - information received by the ITO Ward-2, Bharatpur that during the search and seizure operation under section 132(1) - jurisdiction of the AO - development of the Revenue Residency Scheme and allotment of the plots to the members - HELD THAT - No substance in the objection raised by the assessee regarding validity of reopening of the assessment. As regards the jurisdiction of the AO who issued the notice under section 148, it is not in dispute that the ITO Ward-2 Bharatpur received the information and issued notice under section 148 was having territorial jurisdiction over the assessee. However, only after the assessee filed the return of income revealing her status as Salaried Person, the case of the assessee was transferred to the ITO Ward-3, Bharatpur who was having jurisdiction over the salaried assessees. No error or illegality in the initiation of proceedings under section 148 by ITO Ward-2, Bharatpur. Non disposal of the objection against the notice under section 148 - Only a reply to notice issued by the AO dated 30.09.2016 and not the objections against the notice issued under section 148 dated 30.03.2016. Even otherwise, this letter was filed by the assessee at the fag end of the assessment proceedings as the assessment order was finally passed on 3rd November, 2016. Therefore, this letter cannot be considered as an objection against the notice issued under section 148 of the Act. Hence in the absence of any objection raised by the assessee, there is no question of disposal of the same by the AO. Accordingly, there is no merit or substance in ground no. 2 of the assessee s appeal. Addition on account of On Money paid by the assessee - addition made on the basis of the statement of 3rd party - HELD THAT - A/R has given an evasive reply that those were not given to the assessee by the society. Thus in the absence of any contrary material, the facts brought on record by the AO which were duly supported and established by the seized material as well as the facts explained by Shri Madan Mohan Gupta in his statement cannot be disputed. Assessee has not produced any documentary evidence to controvert the seized material and statement of Shri Madan Mohan Gupta. Accordingly, we do not find any error or illegality in the impugned order of the ld. CIT (A) confirming the addition - Decided against assessee.

Summary

Issues Involved:
1. Validity of reopening the assessment under section 147 of the IT Act, 1961.
2. Non-disposal of objections against the notice under section 148.
3. Addition of ?4,00,000/- under section 69 for unexplained investment.

Issue-wise Detailed Analysis:

1. Validity of Reopening the Assessment under Section 147 of the IT Act, 1961:
The primary issue was whether the reopening of the assessment for the assessment year 2009-10 was valid. The assessee did not file any return of income under section 139(1) of the IT Act. The AO issued a notice under section 148 based on information from a search and seizure operation that revealed the assessee paid ?4,00,000/- as On Money for a plot in the Revenue Residency Scheme. The assessee argued that the AO did not apply his mind independently and acted merely on the information received. The tribunal held that the seized material and the statement of Shri Madan Mohan Gupta constituted tangible material for the AO to form a belief that income had escaped assessment. The tribunal also clarified that the ITO Ward-2, Bharatpur, had the territorial jurisdiction to issue the notice, and the case was later transferred to ITO Ward-3, Bharatpur, after the assessee filed the return revealing her status as a salaried person. Therefore, the tribunal upheld the validity of the reopening of the assessment.

2. Non-disposal of Objections Against the Notice Under Section 148:
The assessee contended that the AO did not dispose of the objections against the notice under section 148 before passing the assessment order. However, the tribunal found that the letter dated 24th October 2016, filed by the assessee, was a response to a notice issued by the AO seeking an explanation on the seized material and not an objection against the notice under section 148. The tribunal noted that the letter was filed at the fag end of the assessment proceedings, and there was no formal objection raised by the assessee against the notice under section 148. Consequently, the tribunal dismissed this ground of appeal, stating there was no merit or substance in the assessee's claim.

3. Addition of ?4,00,000/- Under Section 69 for Unexplained Investment:
The AO made an addition of ?4,00,000/- based on the statement of Shri Madan Mohan Gupta, who confirmed the receipt of On Money for the plot allotted to the assessee. The assessee argued that the addition was unjustified as it was based on a third-party statement without providing an opportunity for cross-examination. The tribunal noted that the seized material, including the diary entries and the statement of Shri Madan Mohan Gupta, provided detailed information about the On Money payments and were consistent with the facts. The tribunal emphasized that the assessee did not provide any contrary evidence or documents to refute the seized material and the statement. Citing the principle that seized documents should be considered in their entirety, the tribunal upheld the addition of ?4,00,000/- as unexplained investment under section 69.

Conclusion:
The tribunal dismissed the appeal of the assessee, upholding the validity of the reopening of the assessment, the non-requirement of disposing of objections against the notice under section 148, and the addition of ?4,00,000/- under section 69 for unexplained investment. The order was pronounced in the open court on 21/08/2020.