2021 (10) TMI 681 - AT - Income Tax

Reopening of assessment u/s 147 - Scope of conditions as envisaged as per provisions of Section 151 - mandation of recording satisfaction by the Commissioner - assessee had made deposit during the year under consideration in SBBJ Bank - HELD THAT - While drawing strength from the decision of Hon ble Rajasthan High court in the case of CIT Vs Uttam Chand Nahar 2006 (4) TMI 56 - HIGH COURT, RAJASTHAN we are of the view that in the present case, the conditions U/s 151 of the Act for recording satisfaction by the Commissioner has been validly done as the said satisfaction was on the basis of reasons recorded by the A.O. and not de hors it and thus according to us, the satisfaction independent of reason recorded by the A.O. is not envisaged any way in Section 151 of the Act. Therefore, considering the totality of facts and circumstances of the case, we dismiss this ground of appeal raised by the assessee. Unexplained income of the assessee - As submitted that during the year under consideration, he sold a rural agricultural land situated at Gram-Barso, Tehsil and Distt.- Bharatpur which is excluded from the purview of capital asset as per provisions of Section 2(14) of the Act and the said sale consideration received from the sale of the land was deposited in his bank account - As document of transfer is required by law to be reduced in writing and needs registration as has been done by executing sale deed which was got registered, therefore, the terms contained in the sale deed are to be believed which exclusively contains that a sum of ₹ 6.75 lacs were sale consideration of the entire land belonging to the assessee as well as his co-owners and thus when once an specific evidence by way of registered document has been placed on record, then in that eventuality as per Section 92 of the Indian Evidence Act, 1872, no contrary oral evidence is permissible. Thus, considering the totality of facts and circumstances more particularly when the registered sale deed has been executed between the parties which specifically contains that a sum of ₹ 6.75 lacs were paid by the purchasers to the assessee and his co-owners in lieu of purchase of the entire land in question and the said conveyance deed has also been corroborated by the statement of Smt. Nutan Sharma and Smt. Pushpa Arora recorded U/s 133(6) of the Act and no contrary evidence has been lead by the assessee in order to controvert or rebut the said presumption which is attached with the registered document. The case law relied by the ld. AR in the case of Shri Pappu Ram saran 2020 (9) TMI 228 - ITAT JAIPUR is not applicable on the facts and circumstances of the present case under consideration, therefore we are not conveniencd with the arguments put forth by the assessee before us. Therefore, we feel no reasons to interfere into or to deviate from the findings so recorded by the ld. CIT(A) - Appeal of the assessee is dismissed.

Summary

Issues Involved:
1. Legality of the notice issued under Section 147 of the Income Tax Act.
2. Validity of the assessment order dated 26/12/2017.
3. Justification of the addition of ?12,22,000 as unexplained money under Section 69A of the Income Tax Act.

Issue-Wise Detailed Analysis:

1. Legality of the Notice Issued under Section 147 of the Income Tax Act:
The assessee challenged the notice issued under Section 147, arguing that the reassessment proceedings were initiated in violation of Section 151. The Commissioner’s sanction for initiation was merely a “YES” without any reason, indicating a lack of application of mind. The assessee cited several judgments, including Principal Commissioner of Income-tax v. N.C. Cables Ltd. and Commissioner of Income-tax, Jabalpur (MP) v. S. Goyanka Lime & Chemical Ltd., to support the argument that such mechanical approval is insufficient and invalid.

The Revenue argued that the reopening was based on information about cash deposits of ?19,00,500, and the Commissioner’s satisfaction was valid as it was based on the reasons recorded by the Assessing Officer (A.O.). The Revenue cited the Hon’ble Rajasthan High Court’s decision in CIT Vs Uttam Chand Nagar, which held that the satisfaction of the Commissioner must be based on the reasons recorded by the A.O.

The Tribunal found that the A.O. had justification for initiating the proceedings based on the information about cash deposits. The procedural defect claimed by the assessee was not considered a defect as per the jurisdictional High Court’s decision. The Tribunal upheld the validity of the notice issued under Section 147, dismissing the assessee’s ground.

2. Validity of the Assessment Order Dated 26/12/2017:
The assessment order dated 26/12/2017 was challenged on similar grounds as the notice under Section 147. The Tribunal’s analysis and conclusions on the legality of the notice under Section 147 also applied to the validity of the assessment order. The Tribunal found that the A.O. had valid reasons to believe that income had escaped assessment based on the information received about cash deposits. The procedural requirements under Section 151 were duly fulfilled, and the assessment order was upheld as valid.

3. Justification of the Addition of ?12,22,000 as Unexplained Money under Section 69A:
The assessee argued that the addition under Section 69A was not sustainable as the assessee, being an agriculturist, did not maintain any books of accounts. The assessee claimed that the cash deposits were from the sale of agricultural land, and the sale consideration was distributed among co-owners. The assessee also argued that the addition was based on ex parte evidence and that cross-examination of witnesses was not allowed.

The Revenue contended that the sale deed showed a sale consideration of ?6.75 lakhs, not ?20.80 lakhs as claimed by the assessee. The statements of the purchasers corroborated the sale consideration mentioned in the sale deed. The Tribunal noted that the registered sale deed, which showed a sale consideration of ?6.75 lakhs, was a valid document and could not be contradicted by oral evidence. The Tribunal found that the assessee failed to provide any documentary evidence to support the higher sale consideration.

The Tribunal relied on the Indian Evidence Act, which excludes oral evidence when the terms of a contract are required to be in writing. The Tribunal concluded that the addition of ?12,22,000 as unexplained money under Section 69A was justified, as the assessee failed to prove the source of the cash deposits. The Tribunal upheld the addition and dismissed the assessee’s ground.

Conclusion:
The Tribunal dismissed the appeal filed by the assessee, upholding the legality of the notice issued under Section 147, the validity of the assessment order dated 26/12/2017, and the addition of ?12,22,000 as unexplained money under Section 69A. The Tribunal’s decision was based on the findings that the procedural requirements were duly fulfilled, and the assessee failed to provide sufficient evidence to support the claims.