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TMI Blog2021 (5) TMI 26X X X X Extracts X X X X X X X X Extracts X X X X ..... during the course of search from the searched person. Thus, the assessee s case is squarely covered by the decision of this Tribunal in G.Koteswara Rao [ 2015 (12) TMI 1280 - ITAT VISAKHAPATNAM] . The department has not brought any other evidence to establish that the joint receipt was not seized during the search/s 132. In the light of the aforesaid discussion and on consideration of facts and the law we, hold that the assumption of jurisdiction by the AO u/s 147 is bad in law, hence, we set aside the order of the Ld.CIT(A) and the assessments framed u/s 147 r.w.s. 143(3) are quashed. The appeals of the assesses allowed. - I.T.A.No.704/Viz/2019 to 706/Viz/2019, I.T.A.No.707/Viz/2019 to 709/Viz/2019, I.T.A.No.710/Viz/2019 to 712/Viz/2019, I.T.A.No.713/Viz/2019 to 715/Viz/2019, I.T.A.No.716/Viz/2019 to 718/Viz/2019 - - - Dated:- 27-4-2021 - I.T.A.No.719/Viz/2019 to 721/Viz/2019, I.T.A.No.722/Viz/2019 to 724/Viz/2019, I.T.A.No.725/Viz/2019 to 727/Viz/2019, I.T.A.No.73/Viz/2020 to 75/Viz/2020 Shri N.K.Choudhry, Hon ble Judicial Member And Shri D.S. Sunder Singh, Hon ble Accountant Member For the Appellants : Shri G.V.N.Hari, AR For the Respondent : Shri D.K.Sonow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed their case that due to the mistake of the Ld. Accountant appeals could not be filed which caused the delay. The department has not placed any material to show that the submissions made by the assessees are wrong or malafide. The assessees are not going to get any benefit by delaying the appeal and it is not the case of deliberate attempt or the intention of the assessee to file the appeal belatedly. Hon ble High Court of Telangana in the case of Thunuguntla Jagan Mohan Rao vs DCIT, Circle(2)1, Hyderabad, in ITTA No.20 of 2020 dated 13/08/2020 relied upon by the Ld.A.R condoned the delay of 154 days and held that while condoning the delay, the court should be liberal and show utmost consideration to the suitor if the explanation does not smack of malafide or it is not put forth as part of dilatory strategy. The Hon ble Supreme Court on similar facts of having no knowledge of passing the order, in the case of Senior Bhosale Estate (HUF) (supra) condoned the delay of 1754 days. We extract the relevant part of the order of Hon ble Apex court in Senior Bhosale Estate (HUF) [2019] 112 taxmann.com 134 (SC) which reads as under: 3. The appellant(s) had asserted that they had no know ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3,271 4,03,190 12,11,580 K.Lakshmi Uma 7,02,539 60,850 5,47,900 K.Prasad 9,96,109 09.12.2010 2,80,230 13,39,360 30.03.2012 K.Bhaskara Raju 8,82,490 31.03.2010 3,90,710 10,63,700 31.03.2012 K.Siva Rama Raju 9,55,230 4,32,490 11,72,850 S.Lavanya 5,56,410 2,07,790 6,36,620 K.Krishna Kumari 6,17,860 2,30,710 7,10,260 4.1 Subsequently, the assessees have filed the revised returns of income for the A.Y. 2009-10 on 30.03.2012 as per the details given below : Name of the appellant AY.2009-10 K.Subba Raju 1,42,270 K.Lakshmii Sirisha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount of ₹ 12,42,15,000/- and out of which a sum of ₹ 4,31,27,426/- was retained by the firm and the balance amount of ₹ 8,10,87,574/- was paid to the land owners. The Deputy Director of Income Tax(Inv){in short DDIT} during the search proceedings recorded the statement from Shri K.Subba Raju also on 11.04.2014, wherein he has confirmed that the builder had sold 48 flats and the remaining 14 flats were sold by them directly, however has not confirmed the actual amount received from the Builders. During the course of search proceedings, it was stated that the builder had submitted the Joint Receipt dated 21.12.2012 written on ₹ 100/- stamp paper to the DDIT(Inv.), as per which Sri K.Subba Raju and others have confirmed the receipt of ₹ 8,10,87,574/- from the Navya Group. The DDIT(Inv)has estimated the concealment of income of ₹ 2.65,06,574/- in the hands Shri K.Subba Raju and eight other family members for transfer of land to Navya Constructions for development purposes in the appraisal report. On the basis of the appraisal report received from the DDIT(Inv),the Assessing Officer (AO) has reopened the assessments and issued the notice u/s 148 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and 2011-12 31,35,728 K.Bhaskara Raju 2009-10,2010-11 and 2011-12 24,01,495 K.Siva Rama Raju 2009-10,2010-11 and 2011-12 19,16,425 S.Lavanya 2009-10,2010-11 and 2011-12 24,01,495 K.Krishna Kumari 2009-10,2010-11 and 2011-12 21,57,635 5.0 Against the order of the AO, the assessee went on appeal before the Ld.CIT(A) and challenged assessments on merits as well as on technical grounds. The Ld.CIT(A),with regard to assessee s objection of completion of assessment without communicating the reasons held that the AO has shown the reasons recorded to the Ld. AR of the assessee during the assessment proceedings and hence viewed that there was no lapse on the part of the AO in communicating the reasons to the assessee and accordingly dismissed the appeal of the assessee and held the reassessment made u/s 147r.w.s. 143(3) is valid. 5.1. With regard to invoking the jurisdiction u/s 147instead of 153C, the Ld.CIT(A) observed that the AO had relied on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uting the capital gains at Rs, 927,050 as against Ps. 1,78,185 admitted by the appellant by adopting the sale consideration of flats at ₹ 9,64,59,574 as against the actual consideration of ₹ 6,99,53,000 received by the appellant and other co-owners. 6. Any other grounds may be urged at the time of hearing. 6.0 Ground No.1 and 6 are general in nature which does not require specific adjudication. 7.0. Ground No.2 and 3 are related to the completion of assessment without communicating the reasons. The assessee in ground No.2 and 3 challenged the validity of reassessments made u/s 147 r.w.s. 143(3) without communicating the reasons. In the instant case, the AO had issued the notice u/s 148 calling for the return of income and the assessee has filed a letter dated 23.09.2016 to treat the return already filed as return in response to the notice u/s 148. Subsequently the assessee has requested for supply the reasons recorded for reopening the assessment, vide letter dated 21.10.2016. The AO did not furnish the reasons recoded for reopening the assessment as requested by the assessee, however shown the reasons recorded to Shri Rama Chandra Murthy, CA and the Ld.A.R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e reasons to the assessee, the legal requirement of supplying the reasons was complied with by the AO and hence argued that the Ld.CIT(A) has rightly upheld the validity of the assessment. Therefore, the Ld.DR requested to uphold the order of the Ld.CIT(A) and no interference is called for in the order of the Ld.CIT(A) and dismiss the appeals of the assessee. 8. We have heard both the parties and perused the material placed on record. In the instant case, the assessee has requested for supply of reasons and the AO has not communicated the reasons in writing, however, shown the reasons recorded to the authorized representative of the assessee during the course of assessment proceedings. The other objection of the AO was that the assessee had requested for reasons only in one case i.e. ShriK.Subba Raju and not other cases and hence viewed that the AO is not obliged in supplying reasons in other cases. There is no dispute that the AO has completed the assessment of all cases on the basis of the statement recorded from Mr. K. Subba Raju and on his assurance that he will take care of the tax matters and bear the taxes of all the family members. There is also no dispute that Mr.Subba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed for issue of notice u/s 148, in spite of the specific request made by the assessee for furnishing the reasons. As per the judgement of Hon ble Supreme Court in the case of M/s GKN Drive Shafts (India) Ltd. Vs. ITO, it is obligatory on the part of AO to communicate the reasons on furnishing the return of income. The assessee in response to the notice issued u/s 148 submitted a letter to the AO to treat the returns filed earlier as returns in response to the notice issued u/s 148. Thus the assessee has complied with the mandate of Hon ble Supreme Court judgement cited supra but the AO failed to communicate the reasons. The assessee relied on the decision of Hon ble High Court of Calcutta in the case of Berger Paints India Ltd. Vs. ACIT (Supra), wherein Hon ble High Court held that the assumption of jurisdiction of assessing officer u/s 147 depends upon existence of reasons followed by communication thereof to theassessee. If the notice served under section 148 is challenged, the AO cannot proceed with the assessment under section 147 unless reasons are communicated. In the instant case, the contention of the assessee is that the assessee has complied with the notice u/s 148 and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal Appeal No.156 of 2014 dated 06/03/2014 relied upon by the Ld.A.R and upheld the order of Tribunal and dismissed the appeal of the revenue. The department did not place any other judgments to controvert the decisions relied upon by the assessee. Similar issue was considered by Hon ble Karnataka High court in Pr.CIT vs V. Ramaiah in (2019) 103 Taxamann.com 201 and held that non communication of reasons recorded to the assessee is fatal to the assessment and the Hon ble Supreme court dismissed the SLP filed by the Revenue in [2019] 103 taxmann.com 202 (SC). For the sake of clarity we reproduce the relevant part of the order of Hon ble High court which reads as under: 5. Having heard the learned counsels for the parties, we are satisfied that no substantial question of law arises in the present appeal filed by the Revenue in as much as the recording of reasons for reassessment under Section 147/148 of the Income Tax Act or non-communication thereof to the assessee does not amount to a mere procedural lapse. In view of the aforesaid Supreme Court decision in GKN DRIVESHAFT's case, it goes to the root of the matter and renders the reassessment order passed by the assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the matter, but the recording of the reasons before the initiation of the reassessment proceedings and communication thereof to the assessee is sine qua non, as held by Hon'ble Supreme Court and that goes to the root of the matter and confers or deprives the assessing authority of the jurisdiction to undertake such reassessment proceedings, as the case may be. 9. In the present case, admittedly, such reasons were not supplied to the assessee during the contemporary period before going ahead with the reassessment proceedings. Therefore, the Tribunal in our opinion was perfectly justified in quashing such reassessment order. In view of the foregoing discussion, we hold that completion of assessment u/s 143(3) r.w.s 147 of the Act, without communicating the reasons recorded to the assessee, when specifically requested is unsustainable and liable to be quashed. 9. Now, we take up ground No.4 which relates to the question as to whether in the facts and the circumstances of the case and the law, the AO is right making the assessments u/s 147 instead of invoking the jurisdiction u/s 153C of the Act. 9.1. The Ld.AR argued that in the facts and circumstances of the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oncealed the income. Thus submitted that, the basis for reopening the assessment was the Joint Receipt that was seized by the department during the course of search and the statement recorded u/s 132(4), hence, argued that the AO ought to have taken action u/s 153C, but not u/s 147 of the Act. The Ld AR further argued that search assessments required to be made u/s 153A or 153C as per the scheme, but not under section u/s 147 of the act. Therefore argued that the assessment made u/s 147 r.w.s. 143(3) is invalid and required to be quashed and the assessee s appeals to be allowed. The Ld.AR relied on the decision of Hon ble Delhi High Court in the case of Pr.CIT (Central)-3 Vs. Anand Kumar Jain in ITA No.23/2021 dated 12/02/2021 and the decision of this Tribunal in the case of G.Koteswara Rao others in I.T.A. No.400/Viz/2014 dated 29.10.2015. 9.2. On the other hand, the Ld.DR relied on the order of the Ld.CIT(A) and argued that the Joint Receipt was supplied by the builder during the post search enquiries to the DDIT but not seized during the search, therefore, argued that the same should not be considered as the incriminating material for invoking the jurisdiction u/s 153C. Sim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and seized during the course of search, evidencing the payments stated to have been made by the builder to the assessee , which is the foundation for reopening the assessments. 10.1. As per section 153C of the Act, notwithstanding anything contained in section 139, 147, 148, 149, 151 and 153, where the AO is satisfied that any money, bullion, jewellery, valuable article or thing seized or requisitioned belongs to or the books of accounts or documents seized or pertains or pertain to or any other information contained therein relates to a person other than the person referred to in section 153A (searched person), then the AO of the searched person handover the books of accounts, documents or valuable articles or things or documents or the assets to the officer having jurisdiction over such other person and the AO of such other person shall proceed against each such other person and issue notice and assess or reassess the income as per section 153C of the act. As provided in section 153C once the conditions are satisfied for invoking the jurisdiction u/s 153C and the assessment must be made u/s 153C only, but not under section 147 of the Act. 10.2. The issue with regard to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of section 153A. Though, both provisions of the Act empowers the Assessing Officer to assess or reassess the income escaped from assessment, both sections are dealing with different situations. Section 147 comes into operation when, the Assessing Officer believes that there is an escapement of income chargeable to tax, either from the return already filed or through some external material evidence came to his knowledge, which shows the escapement of income. Whereas, section 153A comes into operation when there is search u/s 132 or books of accounts, or any other asset or other documents requisitioned u/s 132A. If Assessing Officer justified in proceeding with section 147 to reopen the assessment, then there would be no relevance to section 153A, which was inserted in to the Act to deal exclusively with search cases. The legislators in their wisdom clearly spelt out the provisions of law applicable to search cases by using the word shall to begin with section 153A, made it mandatory that the Assessing Officer bound to issue notice u/s 153A or 153C, thereafter proceed to assess or reassess the total income, where search is conducted u/s 132 or requisition is made u/s 132A. Therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X
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