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TMI Blog2019 (3) TMI 813X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 69 of the Act. Against the said order, the petitioner went in appeal before the Commissioner (Appeals), who by an order dated 11.8.2017, held in favour of the petitioner insofar as the addition made under section 69 of the Act is concerned. Thus, the order of the Assessing Officer insofar as the issue in respect of which the assessment is sought to be reopened, has merged with the order passed by the Commissioner (Appeals). The third proviso to section 147 postulates that the AO may assess or re-assess such income, other than the income involving matters which are the subject matters of any appeal, reference or revision, which is chargeable to tax or escaped assessment. Thus, the third proviso to section 147 of the Act permits the Assessing Officer to assess or re-assess only such income which was not subject matter of appeal, reference or revision. In the present case, the Assessing Officer seeks to reopen the assessment in respect of income involving a matter which was subject matter of appeal before the Commissioner (Appeals). The reopening of assessment by the impugned notice under section 148 of the Act is, therefore, also hit by the third proviso to section 147 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 148 of the Act as well as the order rejecting the objections raised by the petitioner. 5. Mr. Darshan Patel, learned advocate for the petitioner, assailed the impugned notice on the following grounds: - Inviting the attention of the court to the reasons recorded for reopening the assessment, it was submitted that the addition of ₹ 3,00,000/- sought to be made by the respondent is without jurisdiction and the entire reopening proceedings are not tenable in the light of the principle of merger as explained by the third proviso to section 147 of the Act, since the income sought to be reassessed has already been assessed and was subject matter of appeal before the Commissioner (Appeals) and has already been adjudicated by him. - The Assessing Officer has assumed jurisdiction under section 147 of the Act on a borrowed belief without any independent application of mind, which is evident on a perusal of the appellate authority s order in the original proceedings of the same assessment year. - Sanction under section 151 of the Act has not been granted in the present case and that even if the same has been granted, it has been mechanically gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed data, it is found that J.P. Iscon Pvt. Ltd. received total of ₹ 61,45,000/- from Shri Jankit C. Prajapati for Unit/Flat G-302, out of which ₹ 56,45,000/- was received by J.P. Iscon Pvt. Ltd. in cash and that the petitioner had paid such amount in cash to J.P. Iscon, but had not disclosed such cash payment in its return of income, profit and loss account and balance sheet for assessment year 2011- 12 to assessment year 2013-14 and hence, the source of such cash payment remained unaccounted and undisclosed in the hands of the assessee. 6.2 Strong reliance was placed upon paragraph 9(iii) of the reasons recorded, wherein the Assessing Officer has recorded thus: In fact when assessee was confronted during assessment proceeding u/s. 153A of the I.T. Act for AY 2011-12 and during appellate proceedings with seized documents in his own search, assessee made false statements/submissions that he had only made initial booking of Flat/Unit with only cheque consideration of ₹ 5,00,000/-. As has been found from the corroboration of seized material and statement under oath of Kalindi Shah (of J.P. Iscon group), the assessee had indeed made cash payment of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... king prior approval of the authority as required under the provisions of the Act. It was submitted that in the light of the fact that the assessment is sought to be reopened on the basis of fresh material which has been recovered during the course of search carried out at the premises of J.P. Iscon Pvt. Ltd., the contention of the petitioner with regard to the principle of merger would not be applicable to the facts of the present case. It was, accordingly, urged that the petition being devoid of merits, deserves to be dismissed. 7. The facts are not in dispute. A search under section 132 of the Act came to be conducted in the case of Kalol Prajapati Group on 6.11.2012. A warrant of authorization was also issued in the case of the petitioner pursuant to which proceedings under section 153A came to be instituted against the petitioner. From the material seized during the course of search, the Assessing Officer found that the total area of Flat G-302 purchased by the petitioner Jhankit Chandulal Prajapati was 2285 square feet and at the rate of ₹ 3,000/- per square feet, the total consideration for the flat works out at ₹ 68,55,000/-. The Assessing Officer further fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0/-. According to the Assessing Officer, therefore, the source of the cash payment of ₹ 3,00,000/- paid by assessee to M/s J.P. Iscon Pvt. Ltd. constitutes income of the assessee from undisclosed source which is not offered in his return of income and hence, remained untaxed. The Assessing Officer further noticed that in the order dated 18.3.2015 made under section 143(3) read with section 153A(1)(b) of the Act, the Assessing Officer had made an addition of ₹ 3,00,000/- as unaccounted investment; however, the same had been deleted by the Commissioner (Appeals) vide appellate order dated 10.8.2017, holding that the notings on the seized pages 1 to 5 referred to therein were schedule of payment and not actually paid. He further noted that the department had not filed further appeal before the Income Tax Appellate Tribunal due to low tax effect for assessment year 2011-12 and assessment year 2013-14. The Assessing Officer has, accordingly, recorded that source of cash payment of ₹ 3,00,000/- paid by the assessee in financial year 2010-11 to M/s J.P. Iscon Pvt. Ltd. constitutes income of the assessee from undisclosed source which is not offered in his return of income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under the section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year under consideration. 14. Thus, for the purpose of assuming jurisdiction under section 147 of the Act, the Assessing Officer should have reason to believe that the income chargeable to tax has escaped assessment. 15. In the facts of the present case, insofar as unexplained cash payment of ₹ 3,00,000/- made to M/s J.P. Iscon Pvt. Ltd. as revealed during the course of search in the case of M/s J.P. Iscon Pvt. Ltd. is concerned, the very same ₹ 3,00,000/- was subject matter of the earlier proceedings under section 143(3) read with section 153A of the Act, wherein on the basis of the material seized during the course of search on the premises of the petitioner, it was found that the petitioner had paid ₹ 3,00,000/- in cash for the assessment year under consideration to M/s J.P. Iscon Pvt. Ltd. Upon conclusion of those proceedings, an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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