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TMI Blog2018 (7) TMI 1398X X X X Extracts X X X X X X X X Extracts X X X X ..... f we look at the definition of “assessee” as defined in section 2(7), it talks about a person by whom any tax or any other sum of money is payable under the Act and includes every person in respect of whom any proceedings under this Act has been taken for the assessment of his income. In our view, the appellant clearly falls in the definition of an assessee as so defined and the contention so raised is clearly devoid of any merits and is hereby rejected. In the result, the additional ground of appeal is hereby dismissed and the assumption of jurisdiction by the AO u/s 147 of the Act is held to be valid. Addition on account of unexplained deposits - Held that:- The assessee’s explanation in this regard is that there were advances received towards the sale of land totalling to 18,00,000 which were deposited in his bank account and the said sale transactions were subsequently cancelled and the said amount was refunded. In support, the assessee has submitted the affidavits of these persons, namely Sitaram, Ramprasad, Hanuman, Gopal and Bajrang Lal along with source of cash available with these persons. The Revenue has not disputed the receipt and refund of money to these persons. Furth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as not got a right to cross-examine the Tehsildar. Further, we agree with the findings of the ld CIT(A) that certificate of Gram Panchayat cannot take precedence over the report of the Tehsildar who is the appropriate land revenue authority to assess the nature and location of the land. In the result, we donot find any infirmity in the order of the ld CIT(A) Reopening of assessment - for A.Y 2007-08 - Held that:- If we look at the definition of “assessee” as defined in section 2(7), it talks about a person by whom any tax or any other sum of money is payable under the Act and includes every person in respect of whom any proceedings under this Act has been taken for the assessment of his income. In our view, the appellant clearly falls in the definition of an “assessee” as so defined and the contention so raised is clearly devoid of any merits and is hereby rejected. Regarding contention of the ld AR that no sanction was taken by the AO from the appropriate authority u/s 151 before issuance of notice under section 148, during the course of hearing, the assessment records were called for and it was noted that the approval u/s 151 is duly placed on record. Hence, the said contention h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ld CIT(A) Alwar for A.Y 2006-07, A.Y 2007-08 and A.Y 2008-09 respectively. All these appeals were heard together and are being disposed off by this consolidated order. 2. Firstly, we shall take up appeal in ITA No. 751/JP/2015 for A.Y 2006-07 against the order of the ld CIT(A)- 3, Jaipur dated 31.08.2015 wherein the assessee has taken the following grounds of appeal:- "1. In the facts and circumstances of the case and in law, the ld. CIT(A) has erred in confirming the action of the ld. AO in making addition of ₹ 12,93,175/- towards alleged unexplained deposits in the bank account of the assessee. The action of ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by deleting the said addition of ₹ 12,93,175/-. 2. In the facts and circumstances of the case and in law, the ld. CIT(A) has erred in confirming the action of ld. AO in making addition of ₹ 1,59,32,450/- although having decided that the entire transaction of alleged sale of land do not pertain to the AY 2006-07 and pertain to the AY 2007-08. 3. (a) In the facts and circumstances of the case and in law, the ld. CIT(A) has erred in confirming ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cord. It was submitted that the omission to raise this legal ground while filing the appeal before the Tribunal was inadvertent. In support, the assessee has drawn reliance on the decision of Hon'ble Supreme Court in case of NTPC Ltd. [1998] 229 ITR 383 (SC). Further, the ld. AR submitted that the above ground was taken by the assessee before the ld. CIT(A) and even though this ground was not pressed before the ld. CIT(A), the assessee is not precluded from taking the said legal ground before the Tribunal. In support, reliance was placed on the decision of Hon'ble Punjab and Haryana High Court in the case of Vijay Kumar Jain v. CIT [1975] 99 ITR 349 wherein it was held that by giving up the ground, the assessee could not confirm jurisdiction on the Income Tax Officer where he had none and it was further held in that case that the Tribunal was bound to hear the appeal of the assessee and could not reject the appeal on the ground that certain grounds were not agitated before the appellate ACIT and thus could not be permitted to be agitated before the Tribunal. 5. We find that the additional ground of appeal which has been taken by the assessee wherein the assessee has challenged the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T has also granted the sanction to the AO u/s 151 and the only inference which can be drawn is that ld. JCIT has not seen the underlying document on the basis of which reasons are recorded. It was submitted that where he would have seen the sale deed, he would never have granted the sanction for reopening the case of AY 2006-07 as it is very evident that sale took place in AY 2007-08 and it was submitted that the basic requirement of invoking the provisions of section 147 is not complied with and the safeguards were treated lightly by ld. AO as well as ld. JCIT and, therefore, the reopening is bad in law and lacks jurisdiction. In support, reliance was placed on the decision of Supreme Court in the case of Chhugamal Rajpal v. S.P. Chaliha [1971] 79 ITR 603 (SC). Further reliance was placed on the decision of Bombay High Court in the case of Smt. Kalpana Shantilal Haria vs. ACIT. It was further submitted by the AR that in terms of provisions of section 148 of the Act, the impugned notice can be issued only to the assessee and if we analysed the definition of the term "assessee" as defined in section 2(7) of the Act, the appellant does not fall into the cited categories and therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d assessment. Thus, I have reasons to believe that income has escaped assessment. " 8. Firstly, we note that reasons recorded before issuance of notice are two-fold. Firstly, the sale of the land situated at village Ginor in respect of which capital gains has been stated to be chargeable to tax and which has escaped taxation. Secondly, the unexplained deposits found in assessee's bank account maintained with PNB which have also escaped taxation. Regarding the first ground, on perusal of the sale deed executed by the assessee with Jamna Devi and Narangi Devi, it is observed that the date on which the sale deed has been executed has been stated as 11.01.2006, the date of purchase of the stamp paper has been mentioned as 11.01.2007 and the date on which the sale deed was presented for registration with the stamp authorities and finally registered has been stated as 12.01.2007. Identical fact pattern exist in respect of other sale deeds so executed by the assessee with Jamna Devi and Narangi Devi. There could be two possible scenarios that we can visualise in this regard. Firstly, where there was an agreement to sell dated 11.01.2006 which was subsequently converted into a sale deed o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee's bank account maintained with PNB which have also escaped taxation, there has been no dispute and no contentions have been raised by the ld AR as well. It is a case where no return of income has been filed prior to issuance of notice u/s 148 of the Act and therefore, where the AO has found certain unexplained deposits in the assessee's bank account, the AO is well within his jurisdiction to form a prima facie view that such deposits have escaped taxation. In light of the same where the second ground of reopening has been held to be a valid ground for reopening, the assumption of jurisdiction by the AO under section 147 cannot be held invalid and the same is upheld. It is not a case that first ground is the main ground and the second is the ancillary ground for reopening the assessment. In our view, both grounds carry equal weight and importance and it cannot be said that if the first ground is held invalid, by default, the second ground has to be held invalid. 10. Further, we have gone through the contention regarding issuance of notice under section 148 to an assessee and not to any person and the fact that in the instant case, the appellant is not an assessee. If we look ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unexplained deposits and affidavits of these persons are merely self serving documents, it was submitted that the ld. CIT(A) has not pinpointed any defects in the documents and she has also not explained as to how she felt that assessee has cooked up a story. Regarding the observations of the ld. CIT(A) that no evidence/details were filed regarding failure of sale transactions, it was submitted that disputes are not documented unless taken up in Civil Court and therefore not evidence for the same can even exists. It was further submitted that when after negotiations, some disputes arose with the persons who gave advances, the deal was cancelled and the land was sold to some other persons whose details were submitted. Regarding observations of ld. CIT(A) that a common cash flow summary along with Smt. Jamna Devi and Smt. Narangi Devi having independent identity and carrying separate transaction, it was submitted that the sale deeds so executed with the two ladies were sham documents and the same were executed to protect the interests of the family in the property. It was accordingly submitted that all the sale transactions were entered into by the assessee only and the bank accounts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ong term capital gains on sale of land. The said ground was not pressed by the ld. AR during the course of hearing as the said addition was deleted by the ld. CIT(A) for the impunged assessment year and confirmed in AY 2007-08. The ground is therefore dismissed as not pressed. 14. In Ground No. 3(a) read with 3(b), the assessee has challenged the action of the AO in invoking provisions of section 50C and adopting sale consideration of ₹ 23,41,244/- instead of actual sale consideration of ₹ 18,46,095/-. In this regard, it was submitted that the value adopted by the Sub-Registrar for stamp duty purposes is not final value which has to be taken for tax purposes. It was submitted that where the assessee claims that the fair market value is less than the stamp duty value, then in terms of section 50C(2), the AO is required to refer the matter to the Valuation Officer. It was submitted that the ld. CIT(A) has erred in holding that the assessee has not requested the AO for making reference to the Valuation Officer and it was submitted that the assessee before the ld. CIT(A) claimed that AO should have referred the case to Valuation Officer and thus specific request was made. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tural land and therefore levying capital gains on the same. It was submitted that the ld. CIT(A) while holding that the land in question as capital asset has placed reliance on the remand report submitted by the AO who has in turn relied upon the certificate of Tehsildar. It was submitted that the enquiry with Tehsildar was conducted at the back of the assessee and no opportunity of cross examination was given to the assessee. In support, reliance was placed on the decision of Hon'ble Supreme Court in case of Andaman Timber Industries, Civil Appeal No. 4228 of 2006, dated 2nd Sept 2015 and Hon'ble Delhi High Court in case of CIT vs. Ashwani Gupta [2010] 322 ITR 396 (Delhi). It was further submitted that the assessee, in order to support his contention has submitted a certificate of Gram Panchayat and as per the said certificate, village Goner is situated at a distance of 9 k.m from the municipality limits of Jaipur Nagar Nigam. It was submitted that the ld. CIT(A) has failed to appreciate the said certificate by placing reliance only on the Tehsildar report and where he had any doubt on the said certificate of the Gram Panchayat, summons u/s 131 could have been issued or the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the assessment u/s 147 of Income Tax Act, 1961. The action of the ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by quashing the reassessment proceedings, being illegal and without any basis. 2. In the facts and circumstances of the case and in law, the ld. CIT(A) has erred in confirming the action of the ld. AO in making addition of ₹ 3,80,000/- of alleged unexplained deposits in the bank account of the assessee. The action of ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by deleting the said addition of ₹ 3,80,000/-. 3. (a) In the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in enhancing the income and charging the Long Term Capital Gain at ₹ 1,62,72,000/-. The action of the ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by deleting the said addition of ₹ 1,62,72,000/-. (b) In the facts and circumstances of the case and in law, the ld. CIT(A) has erred in taxing the capital gain amounting to ₹ 1,62,72,000/- arising out of sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase are that the assessee has not filed any original return of income and subsequently on receipt of notice u/s 148, a return of income was filed disclosing agriculture income of ₹ 1,20,000/-. The assessment u/s 147 r.w.s 143(3) was thereafter completed at a total income of ₹ 18,51,320/-. 22. Regarding ground No. 1 of assessee's appeal, the assessee has challenged the action of the AO in reopening the assessment proceedings u/s 147 of the Act. The AO, on observing that a sum of ₹ 16,50,000/- has been deposited in the bank account of the assessee, formed the belief that income to the tune of ₹ 25,55,000 has escaped assessment and, thereafter, the assessment was reopened u/s 147 by issuance of notice u/s 148 of the Act. The said action of the AO has been confirmed by the ld. CIT(A) and regarding the error in figure of escapement of income committed by the AO, the same was treated as inadvertent error and procedural defect curable u/s 292B. 23. During the course of hearing, the ld. AR submitted that the proceedings of section 147 are punitive in nature and therefore, the AO is duty bound to carry out confirmation of belief with due diligence and not in a casu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld. CIT(A) in very casual manner held that the error committed by the AO is inadvertent error which could be cured u/s 292B of the Act. 24. In order to appreciate, the contention so raised by the ld. AR, it would be relevant to refer to the reasons which have been recorded before issuance of notice u/s 148 of the Act and the same are reproduced as under:- "Return of income has not been filed by the assessee. During the year under consideration, the assessee has deposited a sum of ₹ 16,50,000/- in his bank account no. 3801 with Punjab National Bank. Sources of these deposits are not explained. Thus, the income of ₹ 25,55,000/- has escaped assessment. Thus, I have reasons to believe that income has escaped assessment." 25. It is a case where no return of income has been filed by the assessee prior to issuance of notice u/s 148 of the Act and therefore, where the AO has found certain unexplained deposits in the assessee's bank account, the AO is well within his jurisdiction to form a prima facie view that such deposits have escaped taxation. Regarding the contention of the ld AR that the AO has not applied his mind and has copy pasted the figures from the reasons recor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3,80,000/- made by the AO on account of unexplained deposits. During the course of assessment proceedings, the AO observed that there is a total deposits of ₹ 17,00,000/- in the bank account of the assessee consisting of 1.5 lacs in cash and ₹ 15.5 lacs through cheque/demand draft. The assessee submitted that an amount of ₹ 13,20,000/- was received from M/s Fine Tech Macro Developers Pvt. Ltd. for sale of land and copies of sale deed were produced. However, in respect, the balance deposits of ₹ 3,80,000/-, no explanation was furnished by the assessee and the same was treated by the AO as made out of the said unexplained source and brought to tax in the hands of the assessee company. 29. Being aggrieved, the assessee carried the matter in appeal before the ld. CIT(A) who has confirmed the said addition and her findings are contained at Para 2.3 of her order which are reproduced as under:- "2.3 I have carefully considered the facts of the case and also submission of the appellant and material available on record. The appellant claimed in this year that cash deposits were out of the old advances received against the proposed transactions of sale of land whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal. 34. It was submitted that it is a settled legal proposition that ld. CIT(A) is not open to travel outside the record while enhancing the income. She has to restrict herself to the source of income which has been subject matter of consideration by AO from the point of view of taxability. In the present case, ld. CIT(A) has accepted the fact that enhancement can be made only when the AO has discussed the transaction in assessment order [CIT(A) page 34]. However, ld. CIT(A) only after considering that the transaction of sale of land has been discussed, made enhancement in the year under appeal. Ld. CIT(A) also mentioned that in para 6 of AO order for A.Y. 2007-08 i.e. the year under appeal, ld. AO has discussed about the capital gains for sale of the land in question and, therefore, it is not a new source of income. 35. In view of above, it was submitted that the only dispute which arises is that whether mere mention of a line will amount to discussion? In this regard, it is submitted that ld. CIT (A) has confused herself with the meaning of error and discussion. Mention of one line in AO order where there is no corresponding enquiry is an error and not discussion. Attention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lay areas. When a direction u/s 150 is given to issue notice u/s 148, ld. AO is again bound to take approval of higher authority in spite of the fact that some higher authority has given direction. Reliance is placed on Hon'ble Allahabad High Court Judgment in the case of Smt. Maya Rastogi vs. CIT [2011] 196 Taxman 283 (All) which held as under: "Section 148 (see below) 5 is titled 'Issue of notice where income has escaped assessment'. The notices are issued in case income escapes assessment. This is irrespective of the fact that the case is covered by section 149 or section 150. 52. Section 151(2) (see footnote 3) provides that 'no notice will issue under section 148 by an Assessing Officer...' This shows that section 148 is subject to section 151 of the Act. The condition mentioned therein will apply to cases covered by section 150 of the Act. 53. The aforesaid intention is also clear from section 150 of the Act. This section provides 'Notwithstanding anything contained in section 149, the notice under section 148 may be issued at any time....; subject to the conditions mentioned in section 150. If the legislature wanted section 151 of the Act not to apply to cases covered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ects are disputed by ld. CIT (A). III. Shri Jagdish Narayan Sharma, in this background, in order to safeguard his land, on wrong legal advice, executed a sale deed in favour of his daughter-in-laws. The reason leading to execution of sale deed has not at all been countered by the ld. CIT (A) IV. Ld. CIT (A) disregarded the submissions mainly for the solitary reason of a sale deed having been executed amongst the parties leading to presumption that sale has taken place. She has further herself admitted the fact that the sale deed is not conclusive evidence and the said presumption is rebuttable by the assessee through effective evidence. In this regard it is submitted that during the appellate proceedings affidavits of the purchasers were submitted in which the purchasers have confirmed to the fact that there was no transfer of funds and the sale deed represents a sham document executed only to protect the interest of the family. Ld. CIT(A) has erred in holding that assessee has failed to produce evidence for rebuttal of presumptions because all the possible evidences were placed on record. Ld. CIT(A) further failed to specify as to how assessee has failed to discharge his oblig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order, the endorsement by Sub- Registrar is highly mechanical from which no conclusion can be drawn as the Sub- Registrar has not strike off the irrelevant portions. It is not clear whether the consideration has flown and passed before him. Therefore, the contention of ld. CIT (A) is devoid of merits. VIII. Admittedly sale deed can be persuasive evidence but for sure cannot be conclusive evidence. Any persuasive evidence has to be weighed with reference to other allied/circumstantial evidences and, thereafter, in totally a conclusion can be drawn. In the present case, the following specific evidences before the lower authorities were enough to prove that apparent was not real and it can be concluded that sale deed is a sham document : a. Affidavits, b. Documentary evidences of multiple disputes, c. No evidence of source of income of the buyers IX. Attention is drawn towards the bank statement of the assessee, Narangi Devi and Jamna Devi. From perusal of the same, a reasonable inference which can be drawn is that Jamna Devi and Narangi Devi were not in a capacity to purchase a land worth ₹ 1,67,20,000. There is no evidence of payment or receipt of such huge sum. If t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of appellate proceedings, it was noticed that the appellant has conducted a sale transaction of land wherein he has sold land to his two daughters in law, Jamna Devi and Narangi Devi in this year for ₹ 1,62,72,000/- The AO has discussed this issued in the assessment order for this year at page no. 6 of his order as under: "Working of income under the head capital gains : The assessee has sold his land during the year under consideration for ₹ 18629148/ (16272000 + 2357148/) the Village- "Goner,Tehsil-Sanganer, Jaipur" This Capital Gain transaction was inadvertently not added by AO to appellant's income in this year. Therefore an enhancement notice was issued to the appellant on this issue which reads as under: "The present appeal is filed against order u/s 143(3)/ 147 of IT Act dated 24 022014 passed by the. Income Tax Officer, Ward 7(2), Jaipur. It has been noted, during appellate proceedings that as per the registered sale deed dated 11.01.2007 vide which the land was sold by you to Smt. Jamna Devi and Smt. Narangi Devi, the transaction concluded pertained to AY 2007-08. Prom the perusal of record and assessment order it is found that inadvert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ." 44. We have heard the rival contentions and purused the material available on record. The issue which arise for consideration is whether the ld CIT(A) was justified in bringing to tax long term capital gains, on sale of land by the assessee to his two daughter-in-laws, by way of enhancement of income in terms of provisions of section 251(1)(a) of the Act which reads as under: "251(1) In disposing of an appeal, the Commissioner(Appeals) shall have the following powers: (a) In an appeal against an order of assessment, he may confirm, reduce, enhance or annual the assessment." 45. Regarding the powers of the ld CIT(A) by way of enhancement of income in hands of the assessee, the matter had come up for the consideration before the Hon'ble Supreme Court in case of CIT vs Shapoorji Pallonji Mistry reported in 44 ITR 891 wherein the question framed for consideration was "whether in an appeal filed by an assessee, the Appellate Assistant Commissioner can find a new source of income not considered by the Income-tax Officer and assess it under his powers granted by section 31 of the Income-tax Act ? 46. The legal proposition laid down by the Hon'ble Supreme Court reads as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment new sources, as his power of enhancement should be restricted only to the income which was the subject-matter of consideration for purposes of assessment by the Income-tax Officer." In Bishwanath Prasad Bhagwat Prasad v. Commissioner of Income-tax [1956] 29 ITR 748, the Appellate Assistant Commissioner had actually remanded the case, but while considering the powers of the Appellate Assistant Commissioner, the Divisional Bench appears to have approved of the above- quoted passage from the Madras case. The observations in that case may be treated as obiter. In Narrondas Manordass v. Commissioner of Income-tax [1957] 31 ITR 909 is to be found the earlier case of the Bombay High Court, which was followed in the judgment under appeal. In that case, the assessee was carrying on business in Bombay and also in Rajkot. The profits from the Rajkot business were assessed by the Income-tax Officer at ₹ 1,17,643. The Income-tax Officer also found remittances to the extent of ₹ 4 lakhs from Rajkot to Bombay,but did not include that amount in the assessment in view of the concession allowed by the Part B States Taxation Concession Order. The assessee appealed with respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned Chief Justice in the judgment under appeal considers that this court has thus given approval to his view and also the view of the Patna High Court in the earlier case. In our opinion, this court must be held not to have expressed its final opinion on the point arising here, in view of what was stated at pages 709 and 710 of the report. This court, however, gave approval to the opinion of the learned Chief Justice of the Bombay High Court that section 31 of the Income-tax Act confers not only appellate powers upon the Appellate Assistant Commissioner in so far as he is moved by an assessee but also a revisional jurisdiction to revise the assessment with a power to enhance the assessment. So much, of course, follows from the language of the section itself. The only question is whether in enhancing the assessment for any year he can travel outside the record that is to say, the return made by the assessee and the assessment order passed by the Income-tax Officer with a view to finding out new sources of income not disclosed in either. It is contended by the Commissioner of Income-tax that the word "assessment" here means the ultimate amount which an assessee must p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t are provided in section 251 of the Act wherein appellate authority has power to confirm, reduce, enhance or annul the assessment or he may set aside the assessment and refer the case back to the ITO for making fresh assessment in accordance with directions given in appeal and after making such further enquiry as may be necessary. These powers are, inter alia, mentioned in the other powers. According to sub- section (2) of section 251, the AAC has no power to enhance assessment or a penalty, or reduce the amount or refund unless the appellant has a reasonable opportunity for showing cause against such enhancement or reduction. An explanation has been provided according to which the AAC may consider and decide any matter arising out of the proceedings in which the order appealed against was passed, notwithstanding the fact that such matter was not raised before him. A perusal of sections 246 to 251 of the Act makes it clear that any questions arising out of the assessment orders in an appeal by the assessee can be possible and wide powers are given to the appellate authority, but these powers are circumscribed by the assessment order in the matters arising thereof or a matter ari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar source of income with a view to its taxability or to its non- taxability and not to any incidental connection". In the instant case, the AAC had himself, after issuing notice, considered the new material and had gone into new sources of income for the consideration of which he had no jurisdiction. 8. In fact, we fail to understand as to why when the order was brought to the notice of the Commissioner he proceeded into wrong direction when he had ample powers under other provisions of this Act. There are various other provisions under the Act which can be invoked in cases of escaped income or such situation where the new sources had been left to be considered, but that would not give powers to the AAC to transgress his jurisdiction." 48. In case of CIT v. Sardari Lal & Co. [2001] 251 ITR 864 (Delhi) (FB), the matter again came up for consideration before the Full Bench of the Hon'ble Delhi High Court regarding the first appellate authority's power to take into account a new source of income and to consider the correctness of the view expressed earlier in case of CIT v. Union Tyres [1999] 240 ITR 556, and the Full Bench of the Hon'ble Delhi High Court has held that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in an appeal against an order imposing a penalty, he may confirm or cancel such order or vary it so as either to enhance or to reduce the penalty; (c) in any other case, he may pass such orders in the appeal as he thinks fit. (2) The [* * *] Commissioner (Appeals) shall not enhance an assessment or a penalty or reduce the amount of refund unless the appellant has had a reasonable opportunity of showing cause against such enhancement or reduction. Explanation.-In disposing of an appeal, the [* * *] Commissioner (Appeals) may consider and decide any matter arising out of proceedings in which the order appealed against was passed, notwithstanding that such matter was not raised before the [* * *] Commissioner (Appeals) by the appellant. 38. The provision clarifies that in an appeal against an order of assessment, the Appellate Authority may confirm, reduce, enhance, or annul the assessment. In an appeal against an order imposing a penalty, he may confirm or cancel such order or vary it so as either to enhance or to reduce the penalty. The explanation to the provision further emphasizes that the Appellate Authority may consider and decide any matter arising out of proceedings i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, if any, prescribed by the statutory provisions. Absent any statutory provision, the appellate authority is vested with all the plenary powers which the subordinate authority may have. 42. In CIT v. Shapoorji Pallonji Mistry [1962] 44 ITR 891 (SC) the assessment year was 1947-1948, and the case was finally decided in 14.02.1962. So the Act considered was pre-Independence enactment. Examining section 31 of the old Act, the Supreme Court has held that there is no doubt that the appellate authority can "enhance the assessment". This power must, at least, fall within the words "enhance the assessment", if they are not to be rendered wholly nugatory. 43. Now, we may examine the authorities that also have dealt with the powers of the appellate authority but seem to have taken a divergent path. 44. In CIT v. Rai Bahadur Hardutroy Motilal Chamaria,[1967] 66 ITR 443 (SC) a three-Judge Bench of the Supreme Court has observed that it is only the assessee who has a right conferred under section 31 to prefer an appeal against the order of assessment made by the Income-tax Officer. If the assessee does not appeal the order of assessment becomes final subject to any po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 251(1)(a) of the Act and once an assessment order is brought before the authority, his competence is not restricted to examining only those aspects of the assessment about which the assessee makes a grievance and ranges over the whole assessment to correct the Assessing Officer not only regarding a matter raised by the assessee in appeal but also regarding any other matter considered by the Assessing Officer and determined in assessment. 49. There is a solitary but significant limitation, according to Union Tyres, to the power of revision: It is not open to the Appellate Commissioner to introduce in the Assessment a new source of income and the assessment must be confined to those items of income which were the subject-matter of the original assessment. 50. In course of time, Union Tyres was doubted. In. Sardari Lal & Co.,(supra) the same issue-whether the appellate authority has the power under section 251 to discover a new source of income-was referred to a Full Bench. After examining the authorities holding the fielding on that issue, the learned Full Bench has held that the inevitable conclusion is that whenever the question of taxability of income from a new source of inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assed under section 143(3) read with section 147 of the Act, it is noted that the said deposits in assessee's bank has been examined however, there is no linkage with the impunged sale transactions which are the subject matter of enhancement by the ld CIT(A). Further, there is a sale transaction which is the subject matter of assessment which relates to sale of ancestral land situated at the same village Goner, Village Goner, Tehsil Sanganer, Jaipur vide sale deed dated 26.12.2006 to M/s Fine Tech Macro Developers Pvt. Ltd for a consideration of ₹ 13,20,000 and which has been valued by the stamp duty authorities at ₹ 14,88,000. The said transaction has been brought to tax by the Assessing officer after providing the index cost of acquisition. We thus find that the impunged sale transactions relating to sale of land by the assesee to his two daughters-in-law for a total consideration of ₹ 1,62,72,000 was neither the subject matter of notice issued under section 148 and the subsequent return filed by the assessee nor the subject matter of assessment order passed by the Assessing officer. It is clearly a new source of income which has been discovered by the ld CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in bringing to tax the subject transaction, we donot deem it appropriate to examine and the address the arguments and contentions so raised by both the parties on merits of the taxability of the subject transaction. 52. In the result, the ground of appeal is allowed in favour of the assessee . 53. Regarding Ground No. 4 of the appeal, the assessee has challenged the action of the AO in invoking the provisions of section 50C whereby the AO has considered sale consideration of ₹ 14,88,000/- instead of actual sale consideration of ₹ 13,20,000/-. 54. In this regard, it was submitted that the sale consideration of the property as per the registered sale deed was ₹ 13,20,000 as against the value adopted by the stamp valuation authority amounted to ₹ 14,88,000. The difference between the two was ₹ 1,68,000 i.e. 12.7%. The provisions of Section 50C are punitive in nature and are for taking care of the undervaluation of the properties sold. In such a situation, Section 50C provides for replacement of the stamp duty valuation in place of the declared sale consideration if the stamp duty value is higher than the declared sale consideration. It is without disp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n that ld. AO while discharging his duties is bound to refer the valuation to the valuation officer when the assessee has disputed the value adopted by the Stamp Authorities, even if the assessee has not made a specific request for the same. 57. Reliance was placed on the following judicial pronouncements: • Sunil Kumar Agarwal [2014] 47 taxmann.com 158 (Cal.) • Smt. Kamlesh Tiwari, ITA No. 587/JP/2013 • Vijay Kumar Patni, ITA No. 202/JP/2012 • Sarwan Kumar v. ITO [2014] 45 taxmann.com 16 (Delhi - Trib.) • Anil Kumar Jain vs. ITO [2013] 34 taxmann.com 258 (Delhi-Trib.) • Raj Kumari Agarwal vs. DCIT [2014] 47 taxmann. Com 88 (Agra-Trib.) 58. We find that the facts and circumstances of the case are identical to the facts as in ITA No. 751/JP/2015 and similar contentions have been raised by the ld AR. Our findings and directions contained in Para 15 in ITA No. 751/JP/2015 (Supra) shall apply mutatis mutandis to this matter as well. The ground of assessee's appeal is therefore dismissed. 59. Regarding Ground No. 4(a) read with 4(c), the assessee has challenged the action of the AO in treating lands sale as capital assets instead of agricultu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns have been raised by the ld AR. Our findings and directions contained in Para 18 in ITA No. 751/JP/2015 (Supra) shall apply mutatis mutandis to this matter as well. The ground of assessee's appeal is therefore dismissed. 63. In this appeal (ITA No. 753/JP/2015) for A.Y 2008-09, the assessee has taken the following ground of appeal: "In the facts and circumstances of the case and in law, the ld. CIT(A) has erred in confirming the action of ld. AO in making addition of ₹ 18,15,462/- towards alleged unexplained deposits in the bank account of the assessee. The action of ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by deleting the said addition of ₹ 18,15,462/-." 64. Further, the assessee has moved an application for admission of an additional ground of appeal which reads as under:- "In the facts and circumstances of the case and in law, ld. AO has erred in reopening the assessment u/s 147 of the Income Tax Act, 1961. The action of the ld. AO is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by quashing the reassessment proceedings being illegal and with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of unexplained deposits where AO observed that the assessee has failed to produce necessary explanation of the source of such deposits. 71. During the course of assessment proceedings, the AO observed that there are cash deposits of ₹ 17,95,000/- and cheque deposits of ₹ 20,462/- totalling to ₹ 18,15,462/- in the assessee's bank account. The assessee was asked to explain the source of deposits made by him in his bank account and in absence of any explanation furnished by the assessee, the said deposits were treated as made out of unexplained source and brought to tax in the hands of the assessee. 72. Being aggrieved, the assessee carried the matter in appeal before the ld. CIT(A) who has confirmed the said addition and her findings are contained at Para 2.3 which are reproduced as under:- "2.3 I have carefully considered the facts of the case and also submission of the appellant and material available on record. The appellant claimed in this year that cash deposits were out of the old advances received against the proposed transactions of sale of land which stood cancelled in AY 2006-07 however, he expressed his inability to produce those persons. The appell ..... X X X X Extracts X X X X X X X X Extracts X X X X
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