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TMI Blog2018 (9) TMI 1748X X X X Extracts X X X X X X X X Extracts X X X X ..... a valid return of income then the notice u/s 143(2) should have been issued as it was a mandatory requirement before passing order u/s 143(3) as held in many cases. Therefore the assessment is invalid and illegal. 4. Without prejudice to other grounds and subject to the rectification application made before the Ld. CIT(A)-1 Gurgaon, Whether the Ld CIT(A)-1 Gurgaon was justified in confirming the addition of Rs. 15,52,221/- and further making the addition of Rs. 89,75,305/- u/s 68 of the Income Tax Act, 1961 in the absence of books of accounts? 5. Without prejudice to other grounds, the addition of Rs. 89,75,305/- made u/s 68 of the Act by the Ld CIT(A)-1 Gurgaon is beyond the powers of CIT(A) 6. Without prejudice to other grounds and subject to the rectification application made before the Ld. CIT(A)-1 Gurgaon, Whether the Ld CIT(A)-1 Gurgaon was justified in confirming the additions of Rs. 36,611/- and Rs. 15,15,600/- u/s 68 of the Act in spite of the fact that sufficient cash in hand was available with the assessee at relevant point of time? 7. Without prejudice to other grounds and subject to the rectification application made before the Ld. CIT(A)-1 Gurgaon, whether th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er and paid tax on said bank interest income. 2.2 In respect of cash deposits of Rs. 1,47,33,861/- in one of the saving bank account, the assessee claimed before the Assessing Officer that cash deposits of Rs. 1,46,97,250/- were made out of the booking amount received in advance against sale of plots of agriculture land to 55 persons at village Sardana, Gurgaon, however, source of the balance amount of Rs. 36, 611/- was not explained. On being asked by the Assessing Officer to furnish proof of sale of such plots of land, the assessee furnished copies of sale/conveyance deed in case of 8 sale transactions. It was submitted that registration of the sale of such plots was made later on as the registration was not allowed by the government and the assessee had not kept the copies of the conveyance deeds with her. 2.3 In respect of the cash deposits of Rs. 15,15,600/- in another saving bank account, no source was explained. The Assessing Officer observed that agriculture land measuring 21 KANAL was purchased by the assessee by way of the purchase deed dated 03/08/2009 and same was sold by plotting in pieces as agriculture land. The Assessing Officer noted the submission of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was agriculture land and the profit derived from sale of such land was not taxable. The assessee also submitted that land in question was beyond 8 kms from the municipal limit of Gurgaon and, therefore, it was not a capital asset. In support of the contention, the assessee relied on various case laws. The assessee also contended that amount received by the assessee from various persons were not sale proceeds and were mere advances and in those circumstances, same cannot be considered as income of the assessee in the year under consideration. 2.7 The Ld. CIT(A), however, asked the assessee for complete information in respect of the sale of plots including the amount of advance/sale recorded in sale deeds. The Authorised Representative of the assessee filed a year wise breakup of sale consideration with regard to the plots registered in respective years as under: F.Y. 2009-10 - Rs.19,12,500/- F.Y. 2010-11 - Rs.36,10,000/- F.Y. 2011-12 - Rs.35,85,000/- F.Y. 2012-13 - Rs. 5,40,000/- Total - Rs.96,44,500/- 2.8 The Ld. AR also filed a revised computation of the profit for the year under consideration, which is reproduced as under: Total Land Pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxed in the year under consideration. In this regard, the appellant has contended that the amount of Rs.l,46,97,250/- taken by the AO as sale consideration for the purpose of computation of income was in fact only the advance received and the AO was therefore not justified in computing the income on this basis. In this regard, the year wise details of registration "of sale deeds and the corresponding sale consideration received by the appellant, as submitted by her vide reply dated 04/02/2017, has been reproduced above. The appellant has contended that the sale consideration of Rs. 12,80,900/- received by her during the FY 2009-10 can only be taken for computation of income for the year 2009-10 i.e. AY 2030-11. The appellant has computed the income of Rs. 9,38,251/- for the year 2009-10 relevant to AY 2010-11 based on these sale deeds. The remaining sale deeds have been shown to be registered in FY 2010-11, 2011-12 and 2012-13, The appellant has contended that only the amount of Rs. 9,38,251/- is taxable in the AY 2010-11. 4.24 I do not agree with this contention of the appellant The claim of the appellant is justified only to the extent that the profits arising from the sale co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsideration received by the appellant^ over and above the amounts shown in the respective sale deeds. 4.27 As mentioned above, the claim of advance having been received by the appellant was made by the appellant to explain the sources of cash deposits amounting to Rs. 1,47,33,861/- in her bank "account No. 131010100623476. Further, as mentioned above, no evidence or confirmation with regard to the claim of the cash having been received as advance from the various persons was furnished by the appellant, In view of these facts, it is held that the cash amounting to Rs. 89,75,305/-which was claimed to have been returned over the years was in met never received by the appellant in the year 2009-10 and accordingly the cash deposits in the bank account No. 131010100623476 to that extent remain unexplained. This amount is accordingly held to be income of the appellant for the year under consideration i.e. AY 2010-11, in addition to the amount of Rs. 9,38,251/-, computed by the appellant, as referred above." 2.10 The balance cash deposits of Rs. 36,611/- and Rs. 15,15,600/- were also held as unexplained by the Ld. CIT(A) observing as under: 4.28 Further, as all the cash receipts of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 148 of the Act dated 02/03/2015, which is available on page 25 of the Paper Book and copy of the assessment order dated 27/03/2015, which is available on page 32- 39 of the paper book. According to the Ld. Counsel, the case was getting barred by limitation only on 31/03/2016 and thus, there was sufficient time available with Assessing Officer for completion of the assessment. The Ld. counsel submitted that assessee has been denied sufficient opportunity of being heard and therefore in view of the violation of the principle of natural justice, the assessment should be annulled. 6.1 The Ld. DR, on the other hand, opposed the arguments of the Ld. counsel and submitted that there is no bar in the 'Act' for completing the assessment prior to the date of limitation. According to him the assessment has been passed after considering the submissions made by the authorised representative of the assessees. He submitted that the assessee has remained evasive and accepted the interest income etc. when being pointed out by the Assessing Officer or the learned CIT(A). According to him the Assessing Officer has provided sufficient and reasonable opportunity of being heard to the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see has formed his opinion and held that the income earned on sale of the plot was in the nature of an adventure in the trade. The Ld. Assessing Officer rejected the contention of the assessee that the sale of the plot was exempted same being sale of agricultural land. 6.3 The time limit for completion of the assessment, reassessment in general has been provided in section 153 of the Act. For completion of the assessment under section 147, time limit has been provided in sub-section 2 of section 153 of the Act. During the relevant period, the said section provided time limit for completion of the assessment under section 147 of the Act as one year from the end of the financial year in which notice under section 148 of the Act was served. In this case notice has been issued and served on 02/03/2015 and, therefore, limitation was available with Assessing Officer till 31/03/2016, however, the Assessing Officer promptly completed assessment on 27/03/2015. In our opinion, there is no prohibition in the law to complete the assessment before the limitation date. We do not find any error on the part of the Assessing Officer in completing the assessment prior to expiry of the limitation p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er book volume- 1). The Ld. counsel submitted that the assessee had been filing income tax return regularly and in response to notice u/s 148 of the Act, she submitted copy of the acknowledgement of the Income Tax Return along with computation of income for assessment 2008-09, 2009-10 and 2010-11 before the Assessing Officer. The Ld. counsel submitted that during assessment proceeding on 26/03/2015, the Ld. AR also filed revised computation of the income after including the interest income earned on the deposits in banks. According to the Ld. counsel, in view of the copy of the acknowledgement return of income filed or the revised computation of income filed, the Ld. Assessing Officer was required to issue notice under section 143(2) of the Act before commencing the assessment proceeding. The Ld. counsel pointed out that the Assessing Officer has not issued any notice under section 143(2) of the Act and therefore completion of the assessment under section 143(3) of the Act without issuing notice under section 143(2) of the Act has rendered the assessment as void ab-initio. In support of his contention, the Ld. counsel relied on the decision of the Tribunal, Hyderabad Bench in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent cannot be annulled. On the issue of not issuing notice under section 142(1) of the Act, he submitted that during assessment proceeding all the queries were asked to the authorised representative of the assessee and they have duly submitted the information available with the assessee and therefore there was due compliance on the part of the Assessing Officer. On the issue of no show cause notice issued before completion of the assessment under section 144 of the Act, the Ld. DR submitted that this being a procedural mistake, entire assessment cannot be held illegal. He submitted that the Assessing Officer has completed the assessment after acquiring a valid jurisdiction over the case and therefore it cannot be held as invalid assessment order. 7.4 In the rejoinder, the Ld. Council of the assessee referred to the decision of the Tribunal (SMC) dated 13/03/2018, in the case of ITO Vs. Neeraj Goyal in ITA No. 6290/Del/2017, wherein it is held that the Assessing Officer is bound in law to assume jurisdiction under section 143(2) to frame assessment order whether with the return of income or without the return of income and whether under section 143(3) or 144 or under some other pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... computed the total income for the purpose of section 147 of the Act, by way of including the income escaped to the total income already reflected in the regular return of income. By way of merely taking the amount in return of income declared in regular return as a starting point for computation of the total income under section 147 of the Act, it cannot be treated that the assessee has filed a return of income in response to notice under section 148 of the Act. Thus, in our opinion, the assessee has failed to file any return of income in response to notice under section 148 of the Act. 7.6 The section 148 has prescribed that subsequent to filing of the return of income in response to notice under section 148 of the Act, the provisions of the Act apply accordingly as if such a return of income was a return required to be furnished under section 139 of the Act. The relevant part of the section 148 of the Act is reproduced as under: "Issue of notice where income has escaped assessment. 148. (1) Before making the assessment, reassessment or recomputation under section 147, the Assessing Officer shall serve on the assessee a notice requiring him to furnish within such period, as m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 147 of the Act. The relevant finding of the Tribunal is reproduced as under: "7. We have considered rival submissions of the parties and perused the material on record. We have also gone through the orders of the revenue authorities. We have also carefully applied our mind to the decisions relied upon by the parties. Undisputed fact is that the assessment order in case of the assessee for the impugned assessment year was passed u/s 143(3) read with section 147 of the Act. Section 143(2) of the Act mandates that ITA No.1163 & CO 55 of 2011 Vodithala Education Society, Hyd. for an assessment to be made u/s 143(3) of the Act, a notice u/s 143(2) of the Act is required to be issued to the assessee within the period of 12 months specifying the particulars of any claim of loss, deduction, allowance or relief which the Assessing Officer has reason to believe to be inadmissible and requiring the assessee to appear before him on the specified date and to produce any evidence or particulars on which the assessee may rely upon in support of such claim. Undisputedly, in the facts of the present case, it is apparent from the materials on record as well as the remand report submitted by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra) is not applicable over the facts of the instant case. 7.11 The Ld. counsel has relied on the decision of the Tribunal (SMC) bench in the case of ITO Vs. Neeraj Gooyal (supra). In the said case, the assessee did not comply to the notice issued under section 148 of the Act for filing return of income. The assessee also did not comply with subsequent notice issued under section 142(1) of the Act for filing return of income. In the circumstances, the Assessing Officer completed the assessment under section 144 of the Act. The assessee challenged that no notice under section 143(2) of the Act was issued and, therefore, the assessment should be held as void ab-initio. The Ld. CIT(A) accepted the arguments of the assessee and held that the Revenue cannot argue that the provisions of section 143(2) hold true only in cases where the return is filed by the assessee. According to the Ld. CIT(A), the procedure prescribed in the event of filing of return of income will also hold to the event of non-filing of return of income and therefore the Assessing Officer was bound in law to assume the jurisdiction under section 143(2) to frame assessment order whether with the return of income or wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment order. We find that though specifically the Assessing Officer has not mentioned issuing of any notice under section 142(1) of the Act, but for all practical purposes queries having raised and the assessee has partly responded the queries. The Income-tax Act has not provided any statutory format of notice under section 142(1) of the Act. One of the purposes of issuing notice under section 142(1) of the Act is to authorize the Assessing Officer for raising queries to the assessee. The queries can be raised even through order sheet of the file or even the authorised representative can be asked orally during assessment proceedings. In the instant case, we find that the Assessing Officer has raised queries from time to time for making assessment, however the assessee submitted only part information particularly in respect of the sale transactions. We do not find any illegality in the assessment proceedings, which is fatal for annulling the entire assessment proceedings, particularly when a copy of the reasons recorded was already provided to the assessee and all the queries in respect of the addition in dispute have been raised during the assessment proceedings. We do not find an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... offered by him is not in opinion of the Assessing Officer satisfactory, the sum so credited may be charged to Income-tax as income of the assessee. According to section 69, where the assessee has made investment, which are not recorded in the books of accounts, if any maintain by him for any source of income and the assessee offers no explanation about the nature and source of the investment or explanation offered by him is not, in the opinion of the Assessing Officer satisfactory, the value of the investment may be deemed to be income of the assessee. 8.3 In the case of Bhaichand N Ghandhi, a sum was found deposited in the bank passbook, however, same was not shown in the cashbook maintained by him. In the circumstances, it is held by the Hon'ble Bombay High Court that the passbook supplied by the bank to the assessee could not be regarded as books of the assessee and the addition made under section 68 of the Act was not justified. In the present case before us, the assessee has prepared statement of account on the basis of deposits appearing in bank statement. In the said statement of accounts, the assessee has explained the said deposits as advance received against sale of plot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Hon'ble Supreme Court in the case of CIT Vs Kanpur Coal Syndicate (SC) 53 ITR 229 has observed as under: "The next question is whether the said option is given only to the ITO and is denied to the AAC and the Appellate Tribunal. Under the Act the ITO, after following the procedure prescribed, makes an assessment under s. 23 of the Act. Doubtless in making an assessment at the first instance he has to exercise the option whether he should assess the AOP or the members thereof individually. It is not because that any section of the Act confers an exclusive power on him to do so, but because it is part of the process of assessment; that is to say, he has to ascertain who is the person liable to be assessed for the tax. If he seeks to assess an AOP as an assessable entity, the said entity can object to the assessment, inter alia, on the ground that in the circumstances of the case the assessment should be made on the members of the association individually. The ITO may reject its contention and may assess the total income of the association as such and impose the tax on it. Under s. 30 an assessee objecting to the amount of income assessed under s. 23 or the amount of tax determi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such orders thereon as it thinks fit, and shall communicate any such order to the assessee and to the Commissioner." Under s. 33(5), "Where as the result of an appeal any change is made in the assessment of a firm or AOP or a new assessment of a firm or AOP is ordered to be made, the Appellate Tribunal may authorise the ITO to amend accordingly any assessment made on any partner of the firm or any member of the association." Under this section the Appellate Tribunal has ample power to set aside the assessment made on the AOP and direct the ITO to assess the individuals or to direct the amendment of the assessment already made on the members. The comprehensive phraseology used both in s. 31 and s. 33 of the Act does not countenance the attempt of the Revenue to restrict the powers of the AAC or of the Appellate Tribunal: both of them have power to direct the appropriate authority to assess the members individually instead of the AOP as a unit." (Emphasis supplied externally) 8.8 Further, in the case of CIT Vs Shapoorji Palloonji Mistry 44 ITR 891 the Hon'ble Supreme Court held that although the appellant Asstt. Commissioner has powers to enhance the assessment, but he has no powe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the year 2009-10 and accordingly the cash deposits in the bank account No.131010100623476 to that extent remain unexplained . This amount is accordingly held to be income of the appellant for the year under consideration i.e. AY 2010-11, in addition to the amount of Rs. 9,38,251/-, computed by the appellant, as referred above. 1.28 Further, as all the cash receipts of the appellant have been accounted for while computing the aforesaid income, it is held that no amount of cash was available with the appellant for making the cash deposits amounting to Rs. 36,611/- and Rs. 15,15,600/-. The additions made on this account are also confirmed. The AO is directed to re-compute the income accordingly. The grounds of appeal of the appellant are partly allowed." 9.4 Before us, the Ld. counsel could not point out particular amount of the advance received, which has not been considered by the Ld. CIT(A). The Ld. counsel has made a general statement and not pointed out any specific error in the finding of the Ld. CIT(A) on this issue. In absence of any specific error in the amount of cash receipts considered by the Ld. CIT(A) for explaining the cash deposits, we do not find any infirmity in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces of cash deposits in the bank account. It may be relevant to mention here that even at the time of assessment proceedings or at the time of appellate proceedings no confirmation or evidences with regard to the claim of receipts of advance in this regard was furnished by the appellant. ii. The other possibility is that the sale consideration was not stated correctly in the registered sale deed and cash component claimed to have been returned at the time of registration of sale deed was the amount of consideration over and above the consideration shown in the registered sale deed. 4.26 In the first case, the amount of Rs. 89,75,305/- would be taxable as income in the year under consideration i.e. AY 2010-11 on the ground that the cash deposits in the bank account to this extent remain unexplained. In the second case, cash claimed to have been returned in the FY 2009-10, 2010-11 and 2011-12 would be taxable in respective AY as being consideration received by the appellant over and above the amounts shown in the respective sale deeds. 4.27 As mentioned above, the claim of advance having been received by the appellant was made by the appellant to explain the sources of cash dep ..... X X X X Extracts X X X X X X X X Extracts X X X X
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