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TMI Blog2016 (8) TMI 208X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer has discussed this issue in para 6 and pointed out that in the return filed in response to the notice under Section 153A the assessee has declared les income than income declared in the original return filed under Section 139 of the Act and therefore the Assessing Officer took the total income returned by the assessee as declared in the original return while computing the total income. When the notice under Section 143(2) was issued after the return of income filed by the assessee in response to notice under Section 153A and further there was no time available to the Assessing Officer to issue notice on the original return of income then in the facts and circumstances of the case we find that the notice in question was issued only in respect of the return filed by the assessee under Section 153A of the Act. Hence this ground of the assessee is rejected. Income earned on sale of agriculture land - assessed as income from business instead of capital gains - deduction under Section 54B denied - Held that:- We find that there is no tax effect even if the income from sale of this property is treated as STCG instead of business income treated by the Assessing Officer and the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ong with the Balance Sheet wherein this amount of unsecured loan in the name of Mr. Sunil Patil has been shown and it is not clear whether this record was filed by the assessee along with the return of income filed on 24.11.2006 on which the assessment was completed for the year under consideration. Accordingly, we direct the Assessing Officer to verify whether this unsecured loan in the name of Mr. Sunil Patil was duly disclosed in the return filed on 24.11.2006 or during the assessment proceedings completed vide order dt.21.11.2008. This issue is set aside to the record of Assessing Officer for proper verification and re- adjudication. Disallowance made under Section 40A(3) - expenses claimed in excess of ₹ 20,000 - Held that:- Assessing Officer made the addition under Section 40A(3) of the Act when the assessee has not furnished the details of the expenditure of more than ₹ 20,000 in cash. The Assessing Officer took the figures from the ledger account however, the assessee claimed that the amount was not claimed as a business expenditure therefore it cannot be disallowed. Further the assessee also claimed that this is a double addition of the same amount of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome against the addition if it is not allowed against some other addition. Income of sale of property - assessed as business income as against capital gains - Held that:- There is no dispute that this land was purchased in the year 2004 and was sold in the year 2007 therefore the assessee retained this land for more than 3 years. It is not the case of the revenue that the land was shown as stock in trade. Therefore even if the land was shown as business asset and it was sold prior to the completion of construction work. It would not partake the character of business undertaking or asset on which depreciation is allowed. Therefore this land was sold as an individual asset and not as a particular unit of business of the assessee. Accordingly, we are of the view that the gain arisen from the sale of land will be assessed as ‘Long Term Capital Gain’ (LTCG). However if any gain is earned on the construction part of the property, the same will be assessed as STCG. Accordingly, principally we allow the claim of the assessee and direct the Assessing Officer to accept the claim of LTCG to the extent of the land and if any gain is earned by the assessee on account of construction of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earlier year then the addition to that extent cannot be made in the year under consideration. Accordingly, we direct the Assessing Officer to verify the dates of deposit in question and then decide this issue. - I.T.A. Nos.1186 to 1188 & 1197 & 1198/Bang/2013 - - - Dated:- 27-7-2016 - SHRI A.K. GARODIA, ACCOUNTANT MEMBER AND SHRI VIJAY PAL RAO, JUDICIAL MEMBER Appellant By : Shri Chandrashekar, Advocate. Respondent By : Smt. Neera Malhotra, CIT (D.R) ORDER Per Shri Vijay Pal Rao, J.M. These five appeals by the assessee are directed against the composite order of Commissioner of Income Tax (Appeals) dt.19.5.2013 arising from Assessment Order passed under Section 153 r.w.s. 143(3) of the Income Tax Act, 1961 (in short 'the Act') from 20.5.2006 to A.Y. 2009-10 respectively. 2. First we take up the appeal for Assessment Year 2005-06 wherein the assessee has raised the following grounds : 1. The learned Commissioner of income Tax (appeals) erred in holding that non issue of an opportunity of being heard by the Additional Commissioner before approving an order of assessment u/s. 153A r.w.s. 143(3) of the Act will not vitiate assessment proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roval of the Joint Commissioner. The learned Authorised Representative has submitted that the assessee ought to have been given an opportunity of hearing before granting the approval under Section 153A r.w.s. 153D and therefore the alleged approval is not valid and consequently assessment order passed under Section 153A is invalid and liable to be quashed. In support of his contention, he has relied upon the decision dt.30.3.2012 of Pune Bench of this Tribunal in the case of Akhil Ghulamali Somji Vs. ITO in ITA Nos.455 to 458/PN/2010. Thus the learned Authorised Representative has pleaded that in the absence of proper approval the assessment is liable to be set aside. 5. On the other hand, the learned Departmental Representative has submitted that there is no requirement of any opportunity of being heard to the assessee at the time of approval of the Joint Commissioner for framing the assessment under Section 153A. The learned Departmental Representative has further submitted that the assessee has not disputed that the Assessing Officer got the approval of the Joint Commissioner before passing the impugned assessment under Section 153A and therefore there is no error or illegali ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e are of the clear opinion that incases falling under section 144B of the Act, the quasi-judicial function of the Income-tax Officer as an assessing authority comes to an end the moment the assessee files objections to the draft order. The power to determine the income of the assessee thereafter gets vested in the Inspect-ing Assistant Commissioner to whom the Income-tax Officer is required to forward the draft order together with objections. The only thing that remained to be done by the Income-tax Officer is to pass a final order in accordance with the directions given by the Inspecting Assistant Commissioner. The function of the income-tax Officer to make the final assessment under section 144B(5) of the Act is more in the nature of a ministerial function because he can pass the order only in accordance with the directions of the Inspecting Assistant Commissioner. He cannot vary ordepart from the directions given by the Inspecting Assistant Commissioner. Moreover, the requirements of section 144B of the Act re mandatory. The Income-tax Officer has no option but to follow the same. He cannot make the final order on the basis of the draft order without forwarding the same to the I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... khil Ghulamali Somji Vs. ITO (supra) was passing the assessment order under Section 153A of the Act without prior approval of the Joint Commissioner. There is no quarrel on that proposition of law and the grievance of the assessee is only non-grant of opportunity of hearing to the assessee and not that the assessment order passed by the Assessing Officer without approval. The assessee has not raised this issue or disputed the approval granted by the Joint Commissioner. Accordingly, in view of our above discussion this ground raised by the assessee is bereft of any merit or substance and the same is rejected. 7. Ground Nos.3 4 are regarding validity of invoking the provisions of section 153A by issuing a notice under Section 153A of the Act. 8. The learned Authorised Representative of the assessee has submitted that the Assessing Officer has provided less than 15 days in the notice issued under Section 153A of the Act to file the return of income which is contrary to the minimum period of 15 days provided under the statute. He has referred to the provisions of section 158BC of the Act and submitted that the period prescribed for filing the return shall not be less than 15 da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pply accordingly as if such return were a return required to be furnished under section 139; Thus the language of the provision is plain and unambiguous and the assessee is required to furnish the return within such period as prescribed in the notice itself. Therefore there may be issue of reasonable time period in the notice however it cannot be termed as not less than 15 days. The reasonable time period depends on the facts and circumstances of the case. Therefore the minimum period of 15 days as contended by the assessee cannot be imported to the provisions of Sections 153A(1)(a) when this provision begins with a non- obstante clause then the provisions of sections 139, 147, 148, 149, 151 and 153 shall have no over-riding effect on this provision. When the new provisions for assessment or reassessment in case of search under Section 132 of the Act was introduced and the legislature has intentionally not provided any such minimum time period allowing the assessee to furnish the return of income than the time period provided under Section 158BC cannot be read into this section. Even otherwise we find that the notice under Section 153A(1)(a) was issued on 24.9.2009 wherein the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee in the original return filed under Section 139 was consciously taken into consideration by the Assessing Officer and which does not mean that the notice issued under Section 143(2) of the Act after the return of income filed by the assessee in response to the notice under Section 153A is a notice under Section 143(2) in respect of the original return. 14. We have considered the rival submissions as well as the relevant material on record. The objection of the assessee against the notice under Section 143(2) is purely based on one fact that while computing the total income of the assessee, the Assessing Officer took the return of income declared in the original return filed under Section 139 of the Act. We find that the assessee filed the return of income on 03.02.2010 in response to notice issued under Section 153A. Subsequently a notice under Section 143(2) was issued on 10.2.2010. Therefore, it is manifest from the facts of the case that the notice in question was issued only after the return of income filed by the assessee in response to notice under Section 153A and it cannot be said that the said notice issued under Section 143(2) was in relation to the original ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee. Further the assessee has reported his nature of business as land developer and promoter. Accordingly, the CIT (Appeals) held that the income from sale of the property in question is taxable under the head profit and gains of the business . Consequently, the claim of deduction under Section 54B was also denied. 16. Before us, the learned Authorised Representative of the assessee has submitted that in the original return of income the assessee has shown this income as capital gains and there was no incriminating material found during the search to warrant the addition of this amount by treating the same as income being profit and gain from business and profession. The learned Authorised Representative of the assessee has submitted that when the time limit for issuing the notice under Section 143(2) was expired on the date of search then the assessment was not pending but was already over as on the date of search and proceedings under Section 153A are in the nature of reassessment as the original assessment for the year under consideration did not get abate. He has referred the return of income filed under Section 139 and submitted that the original return was filed o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hese grounds of the assessee's appeal. Assessment Year 2006-07 19. For the Assessment Year 2006-07, the assessee has raised following grounds : 1. The learned Commissioner of income Tax (appeals) erred in holding that non issue of an opportunity of being heard by the Additional Commissioner before approving an order of assessment u / s . 153A r.w.s. 143(3: of the Act will not vitiate assessment proceedings completed u/ s. 153A r.w.s. 143(3) of the Act. 2. The action of the learned CIT (A) is contrary to the procedure contemplatedby the CBDT. 3. The learned Commissioner of Income Tax(Appeals) ought to have held the notice issued ix] s 153A of the Act, is illegal since return is called without granting statute recognised period for compliance and there is no reasons either recorded or communicated to know how the learned Assessing authority has exercised his discretion for compliance to the notice u / s . 1534A of the Act. 4. The appellant respectfully submits a period of clear 30 days to 45 days was considered reasonable for compliances with regard to filing of return in response to notices. 5. The learned Commissioner of Income Tax (Appeals) ough ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 24. The assessee is a professional priest. The assessee was earning income from performing Pooja. The Assessing Officer noticed that the assessee has not disclosed the income for performing Pooja in the original return filed before the date of search. In response to the notice under Section 153A, the assessee declared income from Pooja of ₹ 3,22,553 on the gross receipts of ₹ 14,75,000 after claiming expenses of ₹ 11,52,447. During the course of search, document No. A/GSP/2 dt.13.2.2009 was seized and as per the noting in page 36 to 38 of this seized document, the assessee earned income of ₹ 35 lakhs for the Assessment Year 2006-07. In the statement recorded under Section 32(4) on 13.2.2009, the assessee stated that the assessee earned substantial income from Pooja in the form of cash and the same has not been disclosed in the income tax return. Accordingly, the assessee admitted the receipt from Pooja income for the Assessment Year 2006-07 of ₹ 35 lakhs for the Assessment Year 2007-08 of ₹ 20 lakhs and for the Assessment Year 2008- 09 of ₹ 20 lakhs. Thus the assessee admitted the total income from Pooja for three assessment years at S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not based merely on statement recorded under Section 132(4) of the Act but there is a seized material clearly showing the income of the assessee from Pooja at ₹ 35 lakhs for the year under consideration. The assessee has not disputed the seized material therefore, a subsequent retraction of the assessee is nothing but an after thought without any supporting evidence. He has relied upon the orders of authorities below. 27. We have heard the learned Authorised Representative as well as learned Departmental Representative and considered the relevant material on record. The first objection by the learned Authorised Representative is that the original assessment was completed under Section 143(3) and in the reassessment under Section 153A, no addition can be made except based on seized material. We find that the Assessing Officer has placed a copy of the seized material at page 10 of the assessment order which clearly shows different entries recorded by the assessee including an entry of Mandir and Pooja of ₹ 35 lakhs for the F.Y. 2005-06. Therefore, the addition made by the Assessing Officer is not based merely on statement recorded under Section 132(4) of the Act. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer accepted the credit in the name of Mr. Sunil Patil and therefore in the absence of any seized material during the search, the addition is not warranted. He has relied upon the decision of Hon ble Delhi High Court in the case of Anil Kumar Bhatia 352 ITR 493 (Del). 31. On the other hand, the learned Departmental Representative has relied upon the orders of the authorities below and submitted that this issue was not examined by the Assessing Officer while passing the order under Section 143(3) of the Act. 32. We have considered the rival submissions as well as the relevant material on record. There is no quarrel on the proposition that if the assessment for a particular assessment year is not pending as on the date of search then it willmay not abate because of the search and seizure action under Section 132 of the Act but the Assessing Officer shall reassess the total income of the assessee. Therefore if during the search proceedings no incriminating material or other evidence found then a particular income or item of income which is accepted in the assessment under Section 143(3) cannot be reassessed. In the case on hand though the assessee has submitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erred in upholding the adoption of income under head POOJA ₹ 20,00,000/- as against ₹ 3,60,220/- admitted by appellant, rejecting the appellant's contention that the offer is Gross receipt and not net income. 7. The ld. CIT (Appeals) ought to have considered the repayment of loan to Mr. Sunil Patil during the year 2007-08 as available to set off against the income assessed under unexplained investment for the same reasons for deleting the additionofRs.12,50,000 under unexplained credit. 8. The learned CIT (Appeals) ought to have deleted the addition since the borrowal was shown in the return of income filed under Section 139 of the Act and the assessment for the assessment year 2007-08 does not get abated since notice under Section 143(2) was issued and time to issue such a notice had expired. 9. The Learned Commissioner of Income Tax (Appeals) erred in upholding the disallowance made u/s. 40A(3) of the Act without considering the contention that section 40A(3) is not applicable and addition is not warranted. 10. The Learned Commissioner of Income Tax (Appeals) erred in upholding the addition of ₹ 3 lakhs made applying the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 86,160 under Section 40A(3) of the Act. 41. Before us, the learned Authorised Representative submitted that the amount taken out by the Assessing Officer from the ledger account has not been claimed as business expenditure and therefore the same cannot be disallowed under Section 40A(3) of the Act. He has further contended that this is also a double addition as an amount of ₹ 3 lakhs in the name of Smt. Vani Mahesh was also added by the Assessing Officer under Section 69B of the Act as unexplained investment. 42. On the other hand, the learned Departmental Representative has contended that there is no double addition as far as this amount of ₹ 3 lakhs in the name of Smt. Vani Mahesh. He has referred to the finding of CIT (Appeals) and submitted that the addition made on account of unexplained credit is a different transaction. He has relied upon the orders of the authorities below. 43. Having considered the rival submission as well as relevant material on record, we find that the Assessing Officer made the addition under Section 40A(3) of the Act when the assessee has not furnished the details of the expenditure of more than ₹ 20,000 in cash. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer noted that the amount mentioned in the seized material are in the form of abbreviation and which represent the amount in lakhs, not in thousands. The Assessing Officer has observed that the assessee himself has written ₹ 19 lakhs in the form of 19 . Therefore the Assessing Officer treated this amount as ₹ 19 lakhs as against the claim of ₹ 19,000. The CIT (Appeals) has confirmed the action of the Assessing Officer. 47. Before us, the learned Authorised Representative of the assessee has submitted that there is nothing on record to prove that the assessee has paid the alleged amount of ₹ 58 lakhs to Mr. Hirenkumar Patel. He had submitted that the amounts noted down in the margins of the diary entry rewritten in thousands and not in lakhs. He has submitted that these amounts in the margin clearly shows that they represent entries in the diary and not an extra payment which is not recorded in the said diary. The assessee right from the beginning has explained this before the Assessing Officer. He has not paid the alleged amount of ₹ 58 lakhs as stated by the Assessing Officer what the payments were made, the same were recorded in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .No.055331 of the Dhanalakshmi Bank and M.G.Road. 16,65,000 1,00,000 17,65,000 07-08-06 Cash 35,000 18,00,000 18-08-06 +5 Road 19+1+5+5 30 12/10/06 30+5 17/12 35+12+6 53.+ .5 Ch.No.55339 of the Dhanalakshmi Bank and M.G. 1,00,000 From the numbers written in the margin it is clear that the Assessing Officer took the first number being 19 as sum total of ₹ 18 lakhs + ₹ 1 lakh, the payment made by the assessee on 7.8.2006 and on 8.8.2006 respectively. The other numbers mentioned in the margins are not recorded in the books of accounts therefore those were considered by the Assessing Officer as payment out of books. As it is apparent from these numbers written in the margin that a proper care was taken for distinguishing the amounts in thousands by putting a point (.) before the number as in the case of last number written as 0.5. Therefore the other numbers written in the margin with the dates clearly indicates the payment made by the assessee in lakhs. Therefore we do not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the head Business and not under the head capital gain. 10. The Learned Commissioner of Income Tax (Appeals) having upheld the income from contract ought to have directed the ld . Assessing Authority to consider the addition as accretion to the opening account of work in progress for the year 2009 - 10 . 11. The Learned CIT(A) erred in upholding the disallowance made under Section 40A(3) of the Act without considering the contention that provisions of section 40A(3) of the Act without considering the contention that provisions of section 40A(3) of the Act without considering the contention that provisions of section 40A( 3) are not applicable and addition is not warranted. 12. The learned Commissioner of Income tax (Appeals) erred in upholding the addition of R s . 22 , 444 / - made under the longer payable. head Credits no Longer payable. 13. The learned CIT (Appeals) erred in upholding the levy of interest u/s.234B as consequential. The appellant crave leave of the Hon'ble Tribunal to raise such other ground or grounds at the time of hearing. 51. Ground Nos.1 to 6 are identical to the grounds stand disposed of in view of our findings in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e income of sale of property assessed as business income as against capital gains. 57. During the previous year relevant to the assessment year under consideration, the assessee sold Moodabidiri property i.e. Pandit Health Resort Spa for a consideration of ₹ 2.5 Crores to M/s. Benefit Filmcity (India) Pvt. Ltd., Mumbai. This land was purchased by the assessee on 30.07.2004 for a consideration of ₹ 40 lakhs and was sold on 14.9.2007 after development and setting of Hotel under the name Pandit Health Resort Spa. The Assessing Officer noted that that this property is nothing but a resort set up by the assessee for carrying out his hotel business. When the construction work was in progress, he sold the property. The assessee claimed the income from sale of property as income from capital gains. The Assessing Officer assessed the said income as business income by considering the fact that the assessee has shown this property in his Balance Sheet as business asset. The CIT (Appeals) confirmed the action of the Assessing Officer. 58. Before us the learned Authorised Representative has submitted that the assessee purchased the land in the year 2004 and sold after 4 ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e has offered the income from the said project for the assessment year 2009-10. He has referred the return of income and computation of income for the Assessment Year 2009-10 wherein the assessee has offered revenue receipts of ₹ 3.32 Crores. Thus the learned Authorised Representative has submitted that there is a double addition to the extent of ₹ 11,61,020 which was assessed by the Assessing Officer during the year under consideration. 64. On the other hand, the learned Departmental Representative has relied upon the orders of the authorities below. 65. We have considered the rival submissions as well as the relevant material on record. We find that the assessee has offered the income from this project for the Assessment Year 2009-10. Therefore the addition made by the Assessing Officer from this project for the year under consideration is required to be reduced from the income for the Assessment Year 2009-10 to avoid double taxation of the same income. Accordingly, we direct the Assessing Officer to take necessary step in this aspect. 66. Ground No.11 is regarding disallowance under Section 40A(3) of the Act which is identical and stand dismissed in view of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t off of income estimated on percentage completion method, without considering that the appellant had taken up contract of only one project, which was completed in financial year 2008-09. 6. The learned CIT (Appeals) erred in upholding the levy of interest under Section 234B as consequential. The appellant crave leave of the Hon'ble Tribunal to raise such other ground or grounds at the time of hearing. 71. Ground Nos.1 2 are regarding addition on account of Pooja income. These grounds are identical to that of the earlier assessment year and therefore in view of our finding for the Assessment Year 2005-06 this issue is decided against the assessee. 72. Ground No.3 is regarding rejecting the claim of setting off of STCG from sale of mutual fund units. The Assessing Officer disallowed the claim of Short Term Capital Loss on sale of SBI Mutual Fund units to be set off against the business income on the ground that the income from Mutual Fund is exempt under Section 10(35) of the Act. The CIT (Appeals) has confirmed the action of the Assessing Officer. 73. We have heard the learned Authorised Representative as well as learned Departmental Representative and co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by her husband (the assessee) and the details and source of funds are available with him. The Assessing Officer accordingly made an addition by holding that the Fixed Deposit was made out of the funds of Sri Gopal S Pandit, the assessee. The assessee challenged the action of the Assessing Officer before the CIT (Appeals). However, the CIT (Appeals) has deleted the addition by granting the telescoping benefit of the addition of ₹ 30 lakhs made on account of undisclosed income from Pooja. 79. Before us, the learned Authorised Representative has submitted that the deposits were not made during the assessment year 2009-10 and therefore this cannot be assessed to tax during the year under consideration. 80. On the other hand, the learned Departmental Representative has submitted that this plea was not raised before the authorities below and therefore the assessee cannot be allowed to take a fresh plea. 81. Having considered the rival submissions and relevant material on record, we are of the view that the dates of deposits is matter of record as per the seized material available with the Assessing Officer and therefore if the deposits or part of the deposits were made in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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