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TMI Blog2021 (5) TMI 586X X X X Extracts X X X X X X X X Extracts X X X X ..... contention of the Ld. AR that the provisions of Section 153C of the Act are non-obstantive provisions and the same specifically excludes the operation of Sec. 147 of the Act, therefore, the Assessing Officer in the present case has grossly erred in invoking the provisions of Sec. 147, instead of 153C of the Act appears to be correct in legal parlance. When any incriminating documents are found Section 153C is invoked and the same has to be applied by the Revenue authorities as Section 147 has its own separate footing for invoking the provisions. If Sec. 147 is permitted on the basis of documents found in the course of search of 3rd party premises, then the provisions of Sec. 153C of the Act would become redundant. As decided in ARUN KUMAR KAPOOR [ 2012 (6) TMI 403 - ITAT AMRITSAR] held that the notice issued u/s 148 of the Act and the consequent assessment framed u/s 147 of the Act is void-ab-initio as in the instant case, assessment based upon incriminating documents found during the course of search of 3rd party premises can be made u/s 153C of the Act. Thus, the assessment in the present case itself becomes null and void. Where the basis for making the addition in the hands of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ainst the principles of natural justice. 2. The Ld. CIT(A) has erred in law and facts of the case in sustaining the legality of assessment proceedings under section 147 r.w.s 148 of the Act, which was completed by the Ld. A.O without passing any speaking order, which is against the principles for disposal of objections to reopening assessment as laid down by the Hon'ble Apex Court in GKN Driveshafis (India) Ltd. vs. DCIT: 259ITR 19 (SC). 3. The Ld. CIT(A) has erred in law and facts of the case in holding the sales consideration of property of the appellant HUF as ₹ 85,52,993 under section 50C of the Act as against ₹ 77,50,000 declared by the appellant HUF and further erred in sustaining the above difference of ₹ 8,02,993 as alleged onmoney for the purpose of computing capital gains in the hands of the appellant HUF which is highly arbitrary, uncalled for, unjustified and bad in law. 4. The Ld. CIT(A) has erred in law and facts of the case in confirming the action of the Ld. Assessing Officer to make reference for valuation under section 55A of the Act for the purposes of making addition on account of alleged undisclosed income under section 69A of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deration. The Assessing Officer enhanced the assessee's income under the head capital gains by ₹ 2,92,044/- by reducing the cost of acquisition and disallowed the assessee's claim of exemption on account of capital gain on sale of shares amounting to ₹ 9,47,957/-. The assessment was completed at an income of ₹ 2,15,34,140/-/-. 4. Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee. 5. The Ld. AR submitted that though the appeal is filed by the Revenue, the cross objection be taken up first as the assessee is challenging the validity of the assessment order itself. The Ld. AR submitted that the assessee is registered as a HUF and is assessed to tax vide PAN: ASDHK7622M. The assessee filed its return of income for the year under consideration on 28.03.2010 declaring total income of ₹ 6,38,800/-. Original assessment proceedings under Section 143(3) was completed at return income declared by the assessee vide order dated 22.12.2010. During the year under reference, the assessee has sold its ½ share in residential property situated at 8, Kachnar Marg, DLF Gurgaon, Hary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r purportedly establishes that the assessee received the alleged money over and above the declared sale consideration of ₹ 77,50,000/-. However, on further appeal before the CIT(A), the CIT(A) on the basis of valuation report of the DVO assessed the total sale consideration to ₹ 85,52,993/- by restricting the additions under Section 69A of the Act to ₹ 8,02,993/-. With respect to the disallowance of ₹ 9,47,957/- made on account of 54F of the Act, the same was allowed by the CIT(A) during the appeal proceedings. On being aggrieved by the CIT(A) order, revenue preferred an appeal before the Tribunal vide appeal no. 2724/Del/2015. In response to this, the assessee filed cross objections vide c/o no. 456/Del/2015. The Ld. AR submitted that on perusal of the reasons to believe provided by the Assessing Officer, it can be observed that the Assessing Officer has not provided approval of appropriate authority for reopening the case. The assessee during the course of proceedings vide letter dated 05.11.2012 requested the Assessing Officer to provide the copy of sanction from appropriate authority. However, the same has yet not being provided to the assessee. The Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ened the case. The same is also evident from the fact that additions have been made by the Assessing Officer without giving any specific finding to the case and passing a protective order based on the additions made by the Assessing Officer at CC-19. In absence of any specific finding of the Assessing Officer, the reasons for reopening recorded by the assessee is mechanical in nature and thus the reopening deserves to be annulled. The Ld. AR submitted that the assessee during the course of proceedings, filed objections in response to the reasons for reopening provided by the Assessing Officer vide letter dated 05.03.2013. However, the Assessing Officer without disposing the objections raised by the assessee adjudicated the matter, thus denying the assessee to prove with the matter in accordance with the law. The Ld. AR pointed out the decision of Hon'ble Apex Court in the case of Home Finders Housing Ltd. v. ITO [2018] 94 taxmann.com 84 (SC)(Supra), wherein the Hon'ble Apex Court upheld the decision of Hon'ble Madras High Court remanding the matter back to the Assessing Officer wherein the Assessing Officer did not dispose off the objections filed by the assessee. During the cours ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee and without considering the objections filed by the assessee stated that the reply is unacceptable and dealt in with the merits of the case. The Assessing Officer had never disposed off the objections filed by the assessee which is a statutory requirement for the Assessing Officer to vest in with powers to complete the assessment in lawful manner. Henceforth, the pre-requite finding of Hon'ble Apex Court is not present in the case of assessee and therefore, the said decision is not applicable on the assessee. The Ld. AR further submitted that the Assessing Officer received the information in respect of the valuation report from the CIT(A)-13, before whom the appeal of the purchaser was pending for adjudication. The Assessing Officer who assessed the case of the buyer did not find it worth passing on and thus did not record his satisfaction in this respect. The CIT(A)-13 who passed the information to the Assessing Officer, while adjudicating the matter in case of buyer of property granted substantial relief to the buyer and held that the "valuation report of the valuer cannot be taken as yardstick for unaccounted investment". Hence, the basis for reopening the case, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t recorded in the books of account, if any, maintained by assessee for any source of income; and (c) No satisfactory explanation is offered by the assessee as regards such money, bullion or other valuable article. If the aforesaid conditions are satisfied then the money or value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee of the financial year in which it is so found. However, the Assessing Officer is bound to make enquiries and gather sufficient material before proceeding to make addition on this count. The Ld. AR relied upon the decision of CIT vs. N. Sowbhagmull Mahavirchand (1983) 142 ITR 747 (Mad). Although the Assessing Officer, in the order made additions under Section 69A of the Act, however, he had nowhere mentioned in the order that how the assessee was found to be the owner of alleged money. Moreover, the question of ownership does not arise since no money as alleged by the Assessing Officer has been found either from the possession of the assessee or the buyers of the property. The Assessing Officer in order to make the alleged additions, solely relied upon the copy of valuation report obtained by the buyers for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the provisions of Sec. 147, instead of 153C of the Act. If the alleged action of the Assessing Officer under Sec. 147 is permitted on the basis of documents found in the course of search of 3rd party premises, then the provisions of Sec. 153C of the Act would become redundant. Further, to support the aforesaid contention reliance is sought to be placed on the decisions of the Amritsar Tribunal in the case of ACIT vs. Arun Kumar Kapoor (140 TTJ 249) wherein also the case of the assessee was re-opened u/s 147 of the Act based upon the documents found during the course of search of 3rd party premises. The Tribunal categorically held that Assessing Officer has erred in re-opening the case of the assessee u/s 147 of the Act as the assessment based upon alleged incriminating documents found during the course of search at the 3rd party premises could only be made u/s 153C of the Act. The said order was referred in the very recent judgment of Tribunal, Delhi Bench in case of Shelly Aggarwal, New Delhi vs. ITO, Ghaziabad (ITA 1501/Del/2017) dated 08.08.2017 wherein also, the case of the assessee was re-opened u/s 147 of the Act based upon alleged incriminating documents found during the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bra Chatterji vs. ACIT, New Delhi ITA No. 2430/Del/2015 dated 20.5.2016 hold that provisions of sec. 153C of the Act were applicable in the present case for framing the assessment, if any, which excludes the application of sec. 147 of the ~ hence, notice issued under sec. 148 of the Act and assessment framed in furtherance thereto under sec. 147 read with section 143(3) of the Act are void ab initio. Hence, the reassessment in question is accordingly quashed. Since I have already quashed the reassessment, there is no need to adjudicate other grounds." Thus, the Ld. AR pointed out that the present case of the assessee is squarely covered by the decision of the Tribunal itself in the case Shelly Aggarwal, New Delhi vs. ITO, Ghaziabad (ITA 1501/Del/2017) dated 08.08.2017 on account of identical facts. Also similar decision was taken by the Tribunal in the case of Sushil Gaur vs. ITO (1500/Del/2017). Therefore, in the instant case also, the issue of notice u/s 148 of the Act and consequent re-assessment proceedings u/s 147 of the Act deserve to be quashed. 7. As regards the Revenue's appeal, the Ld. AR submitted that in the assessment order, the Assessing Officer has made an additi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee were disposed of by a speaking order which clearly shows application of mind on the part of the Assessing Officer. The Ld. DR submitted that as a result of a search and seizure action under Section 132 of the Income Tax Act, 1961 in the Dawat Group of cases, some incriminating documents showing payment of on-money by Sh Abhinav Arora and Mrs. Ranju Arora for sale of property at 8, Kachnar Marg, DLF, Gurgaon to the assessee along with M/s P S Chawla and Sons was found. The Assessing Officer of Sh Abhinav Arora and Mrs. Ranju Arora passed on the information to the Assessing Officer of the assessee herein. Since, the information contained fresh material, the Assessing Officer rightly re-opened the case under Section 148. As the incriminating material seized did not belong to the assessee but only contained material regarding undisclosed income of the assessee, provisions of Section 153C need not be invoked and notice under Section 148 was rightly issued. The Assessing Officer, thereafter proceeded to add the on money based on valuation report seized to the income of the assessee. The CIT(A) has restricted the addition from 2,18,88,000/- to ₹ 8,02,993/- based on valuation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visions of Sec. 153C of the Act would become redundant. This is also supported by the decisions of the Amritsar Tribunal in the case of ACIT vs. Arun Kumar Kapoor (140 TTJ 249) relied by the Ld. AR during the hearing wherein also the case of the assessee was re-opened u/s 147 of the Act based upon the documents found during the course of search of 3rd party premises. The Tribunal categorically held that Assessing Officer has erred in re-opening the case of the assessee u/s 147 of the Act as the assessment based upon alleged incriminating documents found during the course of search at the 3rd party premises could only be made u/s 153C of the Act. The said order was referred in the very recent judgment of Tribunal, Delhi Bench in case of Shelly Aggarwal, New Delhi vs. ITO, Ghaziabad (ITA 1501/Del/2017) dated 08.08.2017 wherein also, the case of the assessee was re-opened u/s 147 of the Act based upon alleged incriminating documents found during the course of search at Mr. Abhinav Arora and Mrs. Ranju Arora. The Tribunal while adjudicating the afore-said case, categorically held that the notice issued u/s 148 of the Act and the consequent assessment framed u/s 147 of the Act is void- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he valuation officer. However, the Assessing Officer without disposing the objections filed by the assessee and without waiting for the valuation report of the DVO passed an order under Section 147 of the Act dated 30.03.2013 at an assessed income of ₹ 2,15,34,135/-. The addition of ₹ 2,18,88,000/- has been made on account of Unexplained Money under Section 69A of the Act wherein the Assessing Officer held that the additions made in the hands of buyer purportedly establishes that the assessee received the alleged money over and above the declared sale consideration of ₹ 77,50,000/-. Though the Ld. DR in the submissions stated that the objections were disposed of but the Assessment Order does not reveal the same. Further, on perusal of the reasons to believe provided by the Assessing Officer, it can be observed that the Assessing Officer has not provided approval of appropriate authority for reopening the case. From the reasons also we can observe that the Assessing Officer reopened the case only on the basis of letter received from the CIT(A)-13, New Delhi dated 22.03.2012 who informed that additions have been made in the hands of buyers for the property in questi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of Hon'ble Apex Court is not applicable to the assessee and the assessee is still guarded by the legislation laid down by the Hon'ble Apex Court in the case of GKN Driveshafts (India) Ltd. Further, the Assessing Officer received the information in respect of the valuation report from the CIT(A)-13, before whom the appeal of the purchaser was pending for adjudication. The CIT(A)-13 who passed the information to the Assessing Officer, while adjudicating the matter in case of buyer of property granted substantial relief to the buyer and held that the "valuation report of the valuer cannot be taken as yardstick for unaccounted investment". Hence, the basis for reopening the case, i.e., the copy of valuation report, was held to be invalid for the purpose of making any addition in the hands of the buyer by the CIT(A) and hence the reasons to believe ceased to exist in case of the assessee. Thus, on this aspect also the assessment becomes void-ab-initio. As regards to Ground No. 3 of the cross objections, the CIT(A) observed that the Assessing Officer had referred the property for valuation to the DVO during the pendency of re-assessment proceedings. However, the said report of the DV ..... X X X X Extracts X X X X X X X X Extracts X X X X
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