2020 (3) TMI 949 - AT - Income Tax

Validity of reopening of assessment u/s 147 - assessee has sold an immovable property as not shown the above transaction in the AIR Schedule of his return of income - assessee has not shown capital gain under the head capital gain on sale of Plot which was sold through an agreement for a consideration of ₹ 38,50,000/- in his ROI - HELD THAT - When the assessee has neither disclosed the transaction in question nor offered any capital gain from the said transaction then the information received by the AO based on these documents, to which the assessee is a party, constitutes the tangible material to form the belief that income assessable to tax has escaped assessment. As regards the objection of the ld.AR of the assessee that reassessment ought to have been made u/s 153C of the Act as against u/s 147 of the Act, we find in the reasons recorded by the AO nowhere it is mentioned that the said document was sent by the AO of the searched person after recording his satisfaction. Even otherwise, if the conditions as stipulated u/s 153C r.w.s. 153A of the Act are not satisfied then the AO can invoke the provisions of Section 147/148 of the Act. Hence the decision relied on by the ld.AR of the assessee in the case of Shri Navrattan Kothari vs ACIT (supra) cannot be applied in the facts of the present case. In the said case, the AO has stated in the reasons recorded that the documents were seized and forwarded by the AO of the searched person. Accordingly, in the facts and circumstances of the case, we do not find any error or illegality in the initiation of proceedings u/s 147/148 of the Act. Thus the Ground No. 1 of the assessee is dismissed. Addition on account of the amount received for transfer of an immovable property - HELD THAT - Where the assessee is also a party to the illegal transaction of purchase and sale of the land in question then the alleged stand of the assessee of subsequent cancellation of the agreement does not inspire confidence. It is pertinent to note that the assessee claimed to have purchased this property in question vide sale deed dated 29-10-2010 for a consideration of ₹ 4.00 lacs only whereas the said plot of land was sold by the assessee vide agreement dated 25-12-2011 for a consideration of ₹ 38.50 lacs. In the absence of any development during this intervening period of one year from the date of purchase and till the date of sale, the appreciation of value from ₹ 4.00 lacs to ₹ 38.50 lacs indicates the involvement of the parties in mischievous acts of showing the minimum amount of purchase consideration by the assessee in comparison to the sale consideration shown in the sale agreement. Accordingly, in the facts and circumstances of the case, we do not find any substance or merit in the appeal of the assessee. Thus Ground No. 2 and 3 of the assessee are dismissed.

Summary

Issues:
1. Validity of reassessment order passed u/s 147 of the Act.
2. Addition of ?38.50 lacs on account of the amount received for the transfer of an immovable property.

Issue 1: Validity of reassessment order passed u/s 147 of the Act:
The assessee challenged the reassessment order passed u/s 147 of the Act, contending that the agreement forming the basis of reassessment was found during a search and seizure action, thus invoking Section 147/148 was inappropriate. The assessee argued that the provisions of Section 147/148 cannot be invoked if the agreement was discovered during a search and seizure action. However, the AO justified the reassessment based on tangible material indicating income escapement. The Tribunal upheld the reassessment, emphasizing that the information received by the AO, based on the agreement to which the assessee was a party, formed a valid basis for reassessment. The Tribunal found no error in invoking Section 147/148, dismissing the assessee's appeal.

Issue 2: Addition of ?38.50 lacs for the transfer of an immovable property:
Regarding the addition made on account of the amount received for the property transfer, the assessee claimed that the agreement was not legally enforceable, and the property was under dispute. The assessee argued that the consideration amount was never received, and there was a subsequent cancellation of the agreement. The Tribunal noted that the agreement clearly stated the consideration received by the assessee and that possession was handed over to the buyer. The Tribunal found the subsequent claim of non-receipt of consideration and the alleged cancellation agreement to be self-serving and an afterthought to avoid tax liability. The Tribunal emphasized that the cancellation agreement surfaced after the assessment was completed, indicating its questionable authenticity. The Tribunal dismissed the appeal, stating that the facts did not support the assessee's claims, and the transaction appeared to involve mischievous acts.

In conclusion, the Tribunal upheld the reassessment order passed u/s 147 of the Act and dismissed the appeal regarding the addition of ?38.50 lacs for the property transfer.