2023 (9) TMI 1149 - AT - Income Tax

Validity of re-assessment proceedings - AO received certain information from ITO (Investigation), Pune - As per the said reasons, there was a Sathekhat between assessee and Mr. Phaltane for sale of some land at a total consideration - HELD THAT - We have perused the copy of the Sathekhat filed by the ld.AR - It is observed that nowhere in the Sathekhat amount of Rs. 1.50 crore is mentioned. Thus, it is clear that the reopening is based on a Sathekhat alleging sale consideration of Rs. 1.50 crore, but said Sathekhat does not mention anywhere the amount of Rs. 1.50 crore. There is no dispute that assessee purchased land from Mr. Phaltane vide registered sale deed dated 18.07.2009 for Rs. 55,00,000/-. The allegation of the AO that land was purchased for Rs. 1.50 crore is without any evidence. Thus, the AO has failed to establish, based on the impugned document, that there was escapement of any income in the reasons recorded; therefore, the reopening is quashed. We find support from the observations of Hon ble Jurisdictional High Court. In the reopening reason the AO has also mentioned that assessee has claimed excess depreciation. However, there is no addition made by the AO on this basis. Addition as based on the impugned Sathekhat and allegation that the impugned Sathekhat mentions that the land was sold for Rs. 1.5 Crores . As observed by us in earlier paragraphs that there is no mention of Rs. 1.5 crores in the Sathe Khat. Rather there is no figure of Rs. 1.5 crores or words Rs. 1.5 crores. Therefore, in this situation the value mentioned in the registered Sale Deed is taken to be true. Hence, the AO is directed to delete the addition. Appeal of the assessee is allowed.

Summary

Issues involved:
The issues involved in the judgment are the validity of re-assessment order under section 143(3) r.w.s. 147, confirmation of addition of Rs. 95,00,000, and the request for leave to add, alter & amend the grounds of appeal if necessary.

Validity of Re-assessment Order:
The Assessee challenged the re-assessment order on various grounds, including non-service of Notice u/s 143(2), failure to reject objections raised, lack of conclusive evidence, absence of independent inquiry before issuing notice u/s. 148, and failure to provide cross-examination. The Assessee claimed that the re-assessment proceedings were bad in law and requested for quashing the same. The Tribunal found that the reasons for reopening the assessment were based on a document that did not mention the alleged amount, thus concluding that there was no justification for the AO to reopen the assessment. Citing the Hon'ble Bombay High Court, the Tribunal emphasized the importance of clear and unambiguous reasons for reopening, based on evidence. Consequently, the reopening was quashed.

Confirmation of Addition of Rs. 95,00,000:
The Assessee contested the addition of Rs. 95,00,000 made by the AO, highlighting that the alleged sale consideration of Rs. 1.5 Crores was not supported by conclusive evidence. The Assessee argued that the entire reassessment was based on guesswork and surmise, lacking a clear basis. The Tribunal observed that the impugned document did not mention the amount of Rs. 1.5 crores, and as the registered Sale Deed indicated a consideration of Rs. 55,00,000, the AO was directed to delete the addition of Rs. 95,00,000. Consequently, the ground of the Assessee challenging the addition was allowed.

Request for Leave to Add, Alter & Amend Grounds of Appeal:
The Appellant sought permission to add, alter, and amend the grounds of appeal if necessary. However, specific details regarding the need for such modifications were not provided in the summary of the judgment.

In conclusion, the Tribunal ruled in favor of the Assessee, quashing the re-assessment order due to lack of clear justification for reopening and directing the deletion of the addition of Rs. 95,00,000 based on insufficient evidence. The appeal of the Assessee was allowed, emphasizing the importance of clear and evidence-based reasoning in tax assessments.