2022 (6) TMI 187 - AT - Income Tax

Reopening of assessment u/s 147 or assessment u/s. 153C - HELD THAT - Appellant had not proved the existence of conditions precedent for exercise of jurisdiction u/s. 153C - Therefore the question of jurisdiction to assess the escaped income under the provisions of section 153C does not arise. Therefore we hold that the AO was justified in initiating the re-assessment proceedings u/s. 147 of the Act. Thus the ground of appeal no. 1 and 2 stands dismissed. Unexplained investments in the form of on-money consideration to Marvel Group at the time of booking of a flat in the name of wife of the appellant Mrs. Vidisha Bajoria - HELD THAT - The case of the AO is that the appellant had paid on-money consideration at the time of booking of a flat in the name of wife of the appellant Mrs. Vidisha Bajoria to Marvel Group. As undisputed position that the flat was booked in the name of wife of the appellant and also sale deed was executed only in the name of wife of the appellant Mrs. Vidisha Bajoria. Without going into the sufficiency or otherwise of the evidence indicating the payment of on-money consideration we are of the considered opinion that even assuming for a moment that such on-money consideration was paid to Marvel Group the addition if any is warranted only in the hands of the wife of the appellant not in the hands of the appellant-assessee. Therefore we hold that the addition made on account of unexplained investments for payment of on-money consideration at the time of booking of a flat is not warranted. Accordingly we direct the Assessing Officer to delete the same. Thus ground of appeal no. 3 stands allowed.

Summary

Issues Involved:
1. Validity of jurisdiction under section 147 of the Income Tax Act.
2. Addition of unexplained investments under section 69 of the Income Tax Act.
3. Change in interest under section 234B of the Income Tax Act.

Issue 1: Validity of jurisdiction under section 147 of the Income Tax Act:
The appellant contested the reopening of the assessment under section 147, arguing that the Assessing Officer should have proceeded under section 153C instead. The Tribunal held that the appellant failed to establish the necessary conditions for invoking jurisdiction under section 153C, thus justifying the Assessing Officer's decision to initiate reassessment proceedings under section 147. Consequently, the grounds challenging the jurisdiction under section 147 were dismissed.

Issue 2: Addition of unexplained investments under section 69 of the Income Tax Act:
The Assessing Officer added Rs. 10,00,000 as unexplained investments, alleging that the appellant had paid on-money consideration to Marvel Group during the booking of a flat. However, the Tribunal observed that even if the payment was made, it was in the name of the appellant's wife, as evidenced by the flat being registered in her name. Therefore, any addition should have been made in the wife's hands, not the appellant's. Consequently, the Tribunal directed the Assessing Officer to delete the addition of Rs. 10,00,000, ruling in favor of the appellant on this ground.

Issue 3: Change in interest under section 234B of the Income Tax Act:
The appellant contested the change in interest under section 234B, arguing that the liability to pay tax was not foreseeable at the time of advance tax payment. However, the Tribunal did not delve into this issue as the decision regarding the addition of unexplained investments rendered this ground inconsequential. Consequently, no specific ruling was provided on this issue in the judgment.

In conclusion, the Tribunal partly allowed the appeal filed by the assessee, dismissing the challenges to the jurisdiction under section 147 but ruling in favor of the appellant regarding the addition of unexplained investments. The Tribunal directed the Assessing Officer to delete the addition of Rs. 10,00,000 made on account of alleged on-money consideration, emphasizing that any such addition should have been in the hands of the appellant's wife, not the appellant himself.