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2018 (9) TMI 1755 - AT - Income TaxReopening of assessment - validity of issue of notice u/s 148 - Held that - The assessee has not raised the grounds relating to the issue of notice u/s 148 either in the form 35 i.e. memo of appeal or before the CIT(A) or in a separate petition for admission of additional ground with regard to validity of issue of notice u/s 148. CIT(A) has made a passing remark with regard to the validity of initiation of proceedings u/s 147 but no ground was raised by the assessee and adjudicated by the Ld.CIT(A). Therefore the grounds raised by the Ld.AR with regard to the issue of notice u/s 148 was neither born from the Ld.CIT(A) order nor from the appeal memo under Form 35. The assessee also did not file petition for admission of additional ground. Hence this ground is dismissed as infructuous. Unexplained investment in purchase of villas from M/s Vizag Profiles Group company - Held that - In this case neither the searched party has given a specific statement with regard to the receipt of money from the assessee nor the AO has collected the details of date wise payments from the Vizag Profiles Ltd. Even there the AO has not ascertained in the statement with regard to the unaccounted payment made by the assessee in the statement. Though the Managing Director has given general statement or the practice of the company with regard to the acceptance of cash component of 25% to 40% the general statements and the observations cannot be inferred adversely against the third party without the specific information and the relevant evidence. The department has no material to hold that the assessee had made the payment of 91, 27, 000/- to the VGP and to make the addition of 91, 27, 000/- as unaccounted consideration. Accordingly we set aside the orders of the lower authorities and delete the addition made by the AO and allow the appeal of the assessee on this ground. With regard to the difference in sale consideration in the registered sale deed the Ld.CIT(A) did not make any addition since at the end of the F.Y. the consideration recorded in sale deed the assessee s books are reconciled with the VGP s books. The department also did not place any evidence to show that the assessee has made over and above the consideration recorded in the books of account during the year. Therefore we do not see any reason to interfere with the order of the Ld.CIT(A) on this issue.
Issues Involved:
1. Validity of the notice issued under Section 148 of the Income Tax Act. 2. Addition of ?1,03,11,095/- towards unexplained investment in the purchase of villas. 3. Direction to consider cash payments of ?25,00,017/- and ?12,81,183/- for subsequent assessment years. Issue-wise Detailed Analysis: 1. Validity of the Notice Issued Under Section 148: The assessee argued that the CIT(A) should not have upheld the notice issued under Section 148, claiming it was void ab initio. However, the Tribunal found that the assessee did not raise this ground in the original appeal memo or before the CIT(A). The CIT(A) made a passing remark on the validity of the initiation of proceedings under Section 147, but no specific ground was adjudicated. Consequently, the Tribunal dismissed this ground as infructuous since it was neither born from the CIT(A) order nor from the appeal memo under Form 35, and the assessee did not file a petition for admission of an additional ground. 2. Addition of ?1,03,11,095/- Towards Unexplained Investment: The assessee purchased villas from Vizag Profiles Group and was alleged to have made payments outside the books of accounts in cash. The AO based the addition on information from the investigation wing, which indicated unaccounted cash payments. The CIT(A) observed discrepancies between the registered sale consideration and the actual payments made by the assessee, concluding that the assessee paid consideration over and above the recorded sale price in cash. The CIT(A) directed the AO to restrict the addition to ?47,99,995/- for the financial year 2008-09 and granted liberty to consider the balance in subsequent years. During the Tribunal hearing, the assessee argued that the entire payment was made during the financial year 2008-09 and provided a reconciliation statement. The Tribunal noted that the seized documents were from the premises of Vizag Profiles Ltd., not the assessee, and the presumption under Section 292C was not applicable. The Tribunal found that the department lacked specific evidence to prove unaccounted payments by the assessee. The general statements made by the Managing Director of Vizag Profiles regarding cash receipts were not sufficient to infer unaccounted payments by the assessee. Thus, the Tribunal deleted the addition of ?91,27,000/- and set aside the orders of the lower authorities. 3. Direction to Consider Cash Payments for Subsequent Assessment Years: The CIT(A) directed the AO to consider cash payments of ?25,00,017/- and ?12,81,183/- for the assessment years 2010-11 and 2011-12, respectively. The Tribunal found this direction unrelated to the impugned appeal under consideration for the assessment year 2009-10. Therefore, this ground was dismissed as infructuous for the year under consideration, and the assessee was granted liberty to appeal in the relevant assessment years. Conclusion: The Tribunal partly allowed the appeal of the assessee by deleting the addition of ?91,27,000/- towards unexplained investment and dismissed the appeal of the revenue. The directions given by the CIT(A) for subsequent assessment years were deemed unrelated to the current appeal and dismissed as infructuous. The order was pronounced in the open court on 26th September 2018.
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