2023 (7) TMI 1255 - AT - Income Tax

Reopening of assessment u/s 147 or assessment u/s 153C - Unexplained investment - assessee has purchased the property by paying on money - addition on the basis of statement of one Shri Madan Mohan Gupta scheme developer from whom assessee purchased a plot in residential project - HELD THAT - Since in this case there is no direct material related or pertained to the assessee but the information and disclosure based on the incriminating documents suggest that information came to the knowledge of the AO based on the incriminating documents revealed during the search. Therefore, we are of the view that in this case considering the peculiar circumstances, notice is correctly issued under section 148/147 of the IT Act and we are of the view that there is no direct evidence for issue of notice u/s. 153C of the Act in this case. Transaction of on money - As regards the facts found from the seized material, it is evidently clear that the receipt of the cheque money is accepted by Shri Madan Mohan Gupta. Even the possession of the land is given by Shri Madan Mohan Gupta . The receipt of the money was also given by Shri Madan Mohan Gupta. Not only that, based on these incriminating documents Shri Madan Mohan Gupta accepted the transaction of on money and has offered the tax in his after search disclosure and return. Therefore, no reason of accepting the contention of the assessee that he has not paid any on money for purchase this property. As regards the opportunity for cross examination, the ld. A/R did not demonstrate before us any request made so far before the lower authorities and even the ld. CIT (A) has categorically dealt this aspect in his order and we do not find any infirmity in his finding also. Therefore, assessee is expressly shown as purchaser of the plot based on the Receipt, possession letter and incriminating documents based on which even the seller has disclosed the on money payment. There is no reason or any material based on which we accede to the request of the assessee that he has not paid any on money . Even the assessee has not filed any other document specifically controverting these finding of fact of the lower authorities and, therefore, no merit in the grounds taken by the assessee.

Issues Involved:
1. Validity of reopening under sections 147/148.
2. Confirmation of additions as unexplained investment under sections 69 and 69B.
3. Charging of interest under sections 234A, 234B, and 234C.
4. Opportunity for cross-examination.
5. Procedural adherence and jurisdictional validity.

Issue-wise Detailed Analysis:

1. Validity of Reopening under Sections 147/148:
The primary contention was whether the reopening of assessments under sections 147/148 was valid when the correct procedure should have been under section 153C. The Tribunal upheld the reopening under sections 147/148, stating that the information and documents seized during the search on a third party (Shri Madan Mohan Gupta) did not directly pertain to the assessee. The Tribunal referred to the Gujarat High Court decision in Vijaybhai N. Chandrani vs. ACIT, which held that section 153C applies only when seized documents directly belong to the assessee. Since the documents in question were not directly related to the assessee, the reopening under sections 147/148 was deemed appropriate.

2. Confirmation of Additions as Unexplained Investment:
The Tribunal confirmed the additions made by the Assessing Officer (AO) under sections 69 and 69B for unexplained investments in plots. The AO had added amounts based on the seized register and statements from Shri Madan Mohan Gupta, which indicated 'on money' payments over the declared purchase price. The Tribunal found that the seized documents and corroborative statements provided sufficient grounds for the additions. The assessee's contention that no 'on money' was paid was dismissed due to the lack of contrary evidence and the acceptance of the transaction by the seller in the seized documents.

3. Charging of Interest under Sections 234A, 234B, and 234C:
The Tribunal noted that the charging of interest under sections 234A, 234B, and 234C is consequential in nature. Since the additions were upheld, the interest levied under these sections was also sustained. The assessee's denial of liability for interest was rejected as it was contrary to the provisions of law and the facts of the case.

4. Opportunity for Cross-Examination:
The Tribunal addressed the issue of cross-examination, noting that the assessee did not demonstrate any request made for cross-examination before the lower authorities. The Tribunal upheld the findings of the CIT(A), who had dealt with this aspect and found no infirmity in the process. The Tribunal referenced the Supreme Court decision in Andaman Timber Industries vs. CIT, emphasizing that the opportunity for cross-examination is crucial, but in this case, no such request was evident.

5. Procedural Adherence and Jurisdictional Validity:
The Tribunal examined whether the AO followed the correct procedure and had the jurisdiction to issue notices under sections 147/148. It was concluded that the AO had the requisite jurisdiction and had followed the due process. The Tribunal dismissed the assessee's claims about procedural lapses and jurisdictional invalidity, reaffirming the legality of the notices and the subsequent assessments.

Conclusion:
The Tribunal dismissed the appeals of the assessees, confirming the validity of reopening under sections 147/148, the additions made for unexplained investments, and the consequential interest charges. The Tribunal found no merit in the arguments regarding the opportunity for cross-examination and procedural adherence, thus upholding the orders of the lower authorities.

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