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2019 (2) TMI 1194 - AT - Income TaxReopening of assessment - unexplained source of investment of assessee s half share in the impugned two properties - mistake by mentioning assessment year 2010-11 instead of 2009-10 - HELD THAT - Notices u/s. 142(1) and notice u/s. 271(1)(b) were also issued to the assessee by mentioning the assessment year correctly. Typographical mistake in mentioning the assessment year was occurred for the first time in passing order u/s. 271(1)(b) on 26.7.2016 and notice was issued u/s. 156 for demand of 10, 000/- continued the mistake by mentioning assessment year 2010-11 instead of 2009-10 and same mistake continued in further correspondences till passing the assessment order on 31.10.2016 and issuing the demand notice u/s. 156; penalty notice u/s. 271(1)(c). Such mistake in mentioning the assessment year wrongly in subsequent correspondences are nothing but mistake apparent from record with was recognized later and rectified by the AO by passing a valid order u/s. 154 of the Act on 13.01.2017. The argument of the assessee on this account fails and therefore it was rightly held that the assessment order dated 31.10.2016 is a valid order which does not need any interference on my part hence uphold the action of the CIT(A) on the issue of dispute and reject the grounds raised by the assessee. Assessee did not file any evidence in support to explain the source of investment of his half share in the impugned two properties. The assessee had not brought any evidence on record to explain such investment the action of the AO to treat the unexplained investment made by the appellant is considered to be appropriate. It is gathered from the purchase deed of these two properties that the actual sale consideration was paid for these properties were 20, 00, 000/- and 10, 00, 000/- respectively. The value taken by the AO in assessment order as purchase consideration (unexplained investment) has been the value mentioned in the purchase deeds for the purpose of stamp duty. Such stamp duty value is for the purpose of application of provision of section 50C of the Act to compute the capital gain in the hand of the seller. The unexplained investment u/s 69 of the Act will be the actual amount paid by the assessee. In view of the same 50% of the total consideration of 20, 00, 000/- and 10, 00, 000/- i.e 15, 00, 000/- and stamp duty of 4, 32, 300/ (Rs. 3, 67, 900/- and 1, 64, 900/- paid over such purchase amount totaling to 19, 32, 300/ should be considered as unexplained investment in the hand of the assessee u/s 69. I note that the case law cited by the AR is distinguished on facts of the present case. Hence the assessee gets relief of 33, 85, 200/- and the remaining addition of 19, 32, 300/- was rightly confirmed by the CIT(A) which does not need any interference on my part therefore uphold the action of the CIT(A) on the merits - decided against assessee.
Issues:
1. Validity of assessment order passed by the Ld. AO. 2. Opportunity of being heard regarding production of evidences. 3. Issuance of notice u/s. 143(2) of Income Tax Act. 4. Assessment of income tax amount. 5. Validity of notice for assessment year 2010-11. 6. Unexplained investment in immovable properties. 7. Addition made by the A.O. 8. Compliance with principles of natural justice. 9. Applicability of section 271(1)(C). 10. Misunderstanding and wrong interpretation of Law. Issue 1 - Validity of Assessment Order: The Assessee challenged the assessment order as bad in law, wrong on facts, and against the principle of natural justice. The grounds included the absence of any transaction in the relevant assessment year, expiration of time limits for passing the order, and lack of notice u/s. 143(2) of the Income Tax Act. The Assessee argued that the order was unsustainable and void ab initio due to procedural irregularities. Issue 2 - Opportunity of Being Heard: The Assessee contended that both the Ld. ITO and Ld. CIT(A) passed orders without providing an opportunity to produce evidence regarding investment in agriculture properties. The lack of a hearing before the assessment order was a point of contention, highlighting a violation of natural justice principles. Issue 3 - Notice u/s. 143(2) of Income Tax Act: The absence of a notice u/s. 143(2) of the Income Tax Act was raised as a procedural flaw by the Assessee. Citing relevant case laws, the Assessee argued that the assessment proceedings should have ended if the notice was not served within the stipulated period, emphasizing the importance of timely issuance of notices for due process. Issue 4 - Assessment of Income Tax Amount: Disputes arose regarding the assessment of the income tax amount, with the Assessee asserting that the assessing officer erred in determining the tax liability. The Assessee sought deletion of the assessed amount, claiming it was inaccurately calculated based on the circumstances of the case. Issue 5 - Validity of Notice for Assessment Year 2010-11: The Assessee raised concerns about the validity of the notice issued for the assessment year 2010-11, pointing out discrepancies related to the purchase of agriculture land in the preceding assessment year. The Assessee argued that such discrepancies rendered the notice invalid and requested the deletion of the order based on this premise. Issue 6 - Unexplained Investment in Immovable Properties: The case involved unexplained investment in immovable properties jointly purchased by the Assessee. The Assessee failed to provide evidence regarding the source of investment, leading to the AO treating a portion of the investment as unexplained income. The Tribunal upheld the AO's decision, considering the lack of evidence from the Assessee. Issue 7 - Addition Made by the A.O.: The Assessee challenged the addition made by the A.O., claiming it lacked merit and was based on unfounded grounds. The Assessee argued that the addition was arbitrary and not supported by the factual circumstances of the case, emphasizing the absence of a proper opportunity to present submissions. Issue 8 - Compliance with Principles of Natural Justice: The Assessee contended that the assessment order was illegal due to a violation of the principles of natural justice. The lack of a fair hearing and the arbitrary nature of the order were highlighted as reasons for the order's unsustainability and non-compliance with legal principles. Issue 9 - Applicability of Section 271(1)(C): The Assessee argued that the provisions of section 271(1)(C) were not applicable in their case. The assertion was made based on the perceived arbitrariness, illegality, and violation of fundamental legal principles evident in the impugned assessment order. Issue 10 - Misunderstanding and Wrong Interpretation of Law: The Assessee claimed that the assessing officer misunderstood and wrongly interpreted the law in passing the assessment order. The Assessee sought to challenge the order on the grounds of misinterpretation and misunderstanding of legal provisions, aiming to rectify the alleged errors in the assessment process.
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