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TMI Blog2019 (2) TMI 979X X X X Extracts X X X X X X X X Extracts X X X X ..... apply to facts of present case. There was no reference of verification of information received from investigation wing with return of income of assessee. In the present case before us, Ld. AO verified original return of income filed by the assessee where he did not find the amount of cash seized by CBI. Assessee is a salaried person who was searched by CBI from whom cash was found and seized which, was not disclosed in return of income filed by assessee, we do not find any infirmity in action of Ld. AO in initiating reassessment proceedings under section 147 of the Act. The CIT(A) rightly upheld reassessment proceedings. Addition u/s 69A - Held that:- Assessee has supported its contention by submitting annual report of companies showing, above payment, reply by companies to assessing officer in response to various notices, confirmation by Sri Vipin Gupta, production of audited financial statement of Shri Vipin Gupta, copies of respective vouchers of above payment, coupled with the copy of agreement to sale. Assessee provided explanation that why property could not be transacted later on, for reason that after CBI search on assessee, buyer was not willing to buy the abov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .03.2018 for A.Y. 2011-12 on the following grounds of appeal: 1. That on the facts and in the circumstances of the case and in law, the order passed by Ld. Commissioner of Income Tax (Appeals) ( CIT(A) ) is bad in law. 2. That on the facts and circumstances of the case and in law, the Ld CIT(A) erred in confirming the action of the Ld. Assessing Officer ( Ld. AO ) of passing order u/s 147 Income Tax Act, 1961 ('the Act'). The said order passed by the Ld AO is void ab-initio on, inter alia, the grounds that: a) Assumption of jurisdiction under section 148 is bad in law as the Ld. AO did not apply his mind on the information received by the CBI and the reasons recorded by the him is not valid; and b) It is based on factually erroneous premises and built upon surmises and conjectures. 3. That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in confirming the action of the Ld. AO in making an addition of Rs.l,40,00,0001- under section 69A of the Act. 3.1 The Ld. AO and the Ld. CIT(A) erred in ignoring the fact that the aforesaid amount was received by the Appellant as advance against his property and in holding that the afo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 85,83,482/- on 28/03/12, was requested to be considered as return in response. During the course of assessment proceedings, assessee was asked to explain source of ₹ 2.10 crore and USD 40,000 seized by CBI. Assessee submitted that out of total cash found and seized, cash amounting to ₹ 1.40 crores was received from Sh. K. K. Agarwal, towards sale agreement of property situated at Kavi Nagar, Ghaziabad. Assessee submitted that source of funds by Shri K.K. Agarwal was through two companies controlled by Shri Vipin Gupta, wherein ₹ 30 lakhs has been given from M/s Allianz Fashion Pvt. Ltd. and ₹ 70 lakhs has been given from M/s Dolphin Fabrics Pvt. Ltd. Assessee submitted copy of balance sheet of those companies, for assessment year 2011 12, wherein, in loans and advances, payment of ₹ 30 lakhs and ₹ 70 lakhs respectively was shown in the name of Shri K.K. Agarwal. Payment vouchers were also produced and return of income of those companies was also produced before the Ld. AO. 2.1 Summons u/s 131 of the Act was issued to Shri K.K. Agarwal, who explained sources of fund in his statement. Regarding balance ₹ 40 lakhs, Sri KK Agrawal expl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat out of total 68.42 lakhs, ₹ 55 lakhs is part of Will executed by father of assessee and balance was received from his grandfather, through his parents. AO rejected explanation offered by assessee and held that out of ₹ 68.42 lakhs seized ₹ 55 lakhs is part of Will of father of assessee and made addition of balance sum of ₹ 1,342,000/-. Ld. AO thus, made addition of ₹ 13,42,000/-as unexplained money under section 69A of the Act. 3. Aggrieved by additions made by Ld.AO assessee preferred appeal before Ld. CIT (A) on issue of reopening of assessment, as well as on merits of additions. Ld. CIT(A) upheld issue of reopening of assessment and also confirmed addition so made in assessment order. 4. Aggrieved by order of Ld.CIT (A) assessee is in appeal before us now. 5. At the outset Ld. Counsel submitted that Ground No. 1 is general in nature and therefore do not require adjudication. 6. Ground No. 2 is in respect of challenge raised by assessee against initiation of proceedings under section 147 of the Act as void ab initio. Ld. Counsel submitted that Ld. A.O. assumed wrong jurisdiction under section 148, and entire proceedings are bad in l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e material and formation of reason to believe, that income has escaped assessment. He further submitted that there is no live link between reasons recorded for reopening. He further submitted that reopening has been initiated merely to make further investigation and rowing enquiries, which is not permitted. To substantiate his arguments, He supported them with the judicial precedents. He thus submitted that Ld.A.O, do not have jurisdiction to invoke re-assessment proceedings in present facts of the case. 8. Ld. Sr. DR submitted that reopening is valid. He submitted that assessee filed original return of income u/s 139(1) of the Act in which sum seized and found by CBI was not disclosed. Therefore, ₹ 2.10 crore found during course of such is a live link of escapement of income, which stood undisclosed in return of income. He submitted that Ld. AO applied his mind and noted that there is escapement of income. He further stated that original return of income was not assessed under section 143 (3) of Act. It was processed under section 143 (1) of the Act. Ld. AO then verified return of income originally filed by assessee and then concluded that there is escapement of income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seized during course of search, with reasons recorded by Ld. AO. It cannot be considered as a borrowed satisfaction the Report of CBI. Ld. AO made his detailed enquiry by verifying return of income, where he did not find disclosure with respect to above cash found. Therefore, according to us, there is no infirmity in the reopening of the assessment under section 147 of the Act. 9.2 Regarding various judicial precedent cited by Ld. Counsel, first we consider the decision in case of Ashima Securities Pvt. Ltd. vs ITO ITA No. 3400 and 3401/del/2013 dated 20th 9/9/2017, wherein, it has been stated that AO cannot make further investigation and rowing enquiries. We have carefully perused the decision and found that in present case before us, there is valuable material available with Ld. AO of cash seized by CBI and, therefore, it cannot be said that there is any absence of any valuable material available with Ld. AO. In view of this, the above decisions cited do not apply to facts of present case. 9.3 Next decision cited by Ld. Counsel is of Hon ble Gujarat High Court in case of Krupesh G Thakkar V. Deputy Commissioner of Income Tax 77 taxmann.com 293, wherein, it has been stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reason merely based on report of investigation wing. There was no verification of return filed by assessee. There was also no reference, though assessment in that case was made under section 143(3) of the Act. In view of these facts of said decision, facts before us are clearly distinguishable. 9.9 Contrary to that Ld. Sr. DR referred decision of Sony India vs. ACIT dated 10/9/2018 and submitted that in the present case, there was no assessment made under section 143(3) of the Act and merely return was processed therefore on verification of return. It was found that assessee has not disclosed the above sum seized from him. It was further stated that Hon ble Supreme Court in 203 ITR 456 in Phool Chand Bajrang Lal vs Income Tax Officer has emphasised on veracity of information supplied during course of regular assessment. Therefore, he submitted that when information has been received from CBI about seizure of huge cash, which was not disclosed in return of income of assessee, reopening has been correctly initiated by Ld. AO. 9.10 Therefore on appreciation of facts in case of present assesee and that assessee is a salaried person who was searched by CBI from whom cash was fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpanies and also source of ₹ 40 lakhs paid by KK Aggarwal through his own proprietary concern that had huge turnover. 11.1 Ld. Counsel submitted that assessee has shown identity of parties from whom monies were received, their creditworthiness is also explained and genuineness of transaction with respect to property stood established, as copy of agreement was found during course search by CBI. He further submitted that original copy of Agreement could not be found during course of search as it generally belongs to purchaser and not to the seller, assessee as a matter of practice. He further stated that Shri KK Aggarwal, Sri Vipin Jain both have been examined under section 131 of the Act by Ld. AO, who have confirmed the transaction. He further stated that both these persons have confirmed that they have received money back. He further stated that deal of sale of immovable property was cancelled because of search by CBI in the case of assessee. The buyer (Sh. K.K. Agarwal) refused to buy the property. In view of this, addition of ₹ 1.40 crores cannot be made in hands of the assessee. 12 On the contrary, Ld. Sr. DR submitted entire dealing has been done by assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was subject to scrutiny by CBI. On perusal of report by CBI, it is observed that statement has been recorded under section 131 wherein Sh. KK Aggarwal admitted to have paid this money to assessee. Regarding veracity of agreement to sell entered into between assessee and Sh.K.K Aggarwal, CBI called upon notary who notarised the same. All the parties have confirmed the Agreement to sell to be in order. Shri KK Aggarwal explained the source of ₹ 1.40 crores. It was stated that ₹ 30 lakhs and ₹ 70 lakhs have been received from two companies through Shree Vipin Gupta. The balance sheets of both companies were shown to Ld. AO along with their return of income and confirmation voucher about payment of the sum by those companies to Shri KK Agarwal, who in turn deposited the money with assessee for purchase of property. The transaction is also shown in the agreement to sell, copy of which is found during course of search of premises of assessee by CBI. 13.3 In so far as genuineness of Sh.Vipin Gupta is concerned, that cannot be a reason for making addition in hands of assessee, as creditworthiness of Sh.Vipin Gupta need not be ascertained in the present facts of case. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e by Ld. AO cannot be sustained. 13.5 In our considered opinion, Ld. A.O failed to establish non genuineness of agreement to sell. There is no evidence on record to establish transaction to be bogus. Merely on surmises and conjunctures, Ld. A.O cannot make additions in hands of assessee, without there being cogent material against assessee on record. We are therefore inclined to delete addition made by Ld.AO. Accordingly, Ground No. 3 stands allowed. 14 Ground No. 4 has been raised in respect of addition amounting to ₹ 13,42,000/- as unexplained money under section 69A of the Act. The fact shows that, from two lockers with Canara Bank ₹ 37.59 lakhs and ₹ 13.48 lakhs was found and seized by CBI. From another locker with State Bank of India, a sum of ₹ 17.35 lakhs was found and seized. It was thus submitted total amount seized was ₹ 68.42 lakhs from three lockers. The assessee explained source of funds found in locker that it is out of Will of father of assessee. Assessee submitted notarised copy of Will before Ld. AO. The Will was executed in the year 2008. Admittedly, it was not registered. CBI and Income Tax Department examined no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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