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TMI Blog2022 (4) TMI 723X X X X Extracts X X X X X X X X Extracts X X X X ..... ngs i.e. statement recorded under section 131 of the Act, is contrary to the facts on record and such a statement cannot be relied upon to initiate the reassessment proceedings. Therefore, in the present case, reassessment on the basis of wrong facts cannot be upheld. It is well established that the reasons recorded by the AO cannot be further be substituted or added or deleted - We are of the view that the reference to market value of the flat as determined by stamp duty valuation authority also cannot justify initiation of reassessment proceedings under section 147 of the Act, as the validity of reassessment has to be tested only on the basis of reasons recorded by the Assessing Officer before issuing notice under section 148 of the Act and those reasons cannot be further improved. As the AO, in the present case, has failed to provide opportunity of cross examination to the assessee, which is contrary to the principle of natural justice, on this basis also assessment framed under section 143(3) r/w 147 is liable to be set-aside.Order passed by the CIT(A) is set aside and AO is directed to delete the addition made under section 69 - Decided in favour of assessee. - ITA No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied by the assessee. The Assessing Officer ( the AO ) passed order dated 29 August 2011 under section 143 (3) of the Act, after considering the response of the assessee to notices issued under section 142(1), without making any addition to the returned income of the assessee. 4. The AO vide notice dated 29 March 2016 issued under section 148 of the Act proposed to initiate reassessment proceedings. The reasons provided by the AO for reopening the assessment under section 147 of the Act reads as under: The assessee has filed return of income for the year under consideration on 23.07.2009 declaring total income at ₹ 2,16,530. The same has been processed u/s 143(1) of the Act. 2. As per this office record, vide copy of agreement dated 25.10.2008, the assessee has purchased a flat no.C 201 in the project Bhoomi Sarasawati from Sashwat Construwell Pvt. Ltd. whose agreement value is ₹ 22,75,500. A search and seizure action was conducted by the DDIT(Inv.), Unit 3(4), Mumbai, on 05.10.2015, on M/s. Ekta and Bhoomi Group which resulted into collection of evidence that the assessee has also paid ₹ 14,00,000, in cash for acquiring the said flat as extra consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 also requested the AO for grant of opportunity to cross examine the party on whose statement reliance is placed for initiating the impugned reassessment proceedings. 6. The AO vide assessment order dated 29 December 2016 passed under section 143 (3) read with section 147 of the Act in addition to the basis mentioned in the reasons for reopening the assessment also observed that the market value of the flat as determined by a stamp duty valuation authority is much more than the documented payment of ₹ 41,00,000 and thus the same circumstantially corroborate that extra consideration over and above the agreement value of ₹ 41,00,000 would have been paid by the assessee. Accordingly, the AO made an addition of ₹ 14,00,000 under section 69 of the Act as unexplained investment. 7. The CIT (A) vide impugned order dated 8 August 2018 dismissed the appeal filed by the assessee. Being aggrieved, the assessee is in appeal before us. 8. During the course of hearing, Shri Rahul Hakani, learned Authorised Representative ( learned A.R. ) submitted that the AO by not disposing of assessee s objection against initiation of reassessment proceedings has not followed the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue mentioned by the AO at ₹ 22,75,500 is not a crucial piece of evidence and does not in any way vitiate the reopening proceedings. The CIT(A) further by referring to the statement of Mr Akshay Doshi recorded under section 131 of the Act held that the crucial information is the information of on money of ₹ 14,00,000 paid by the assessee. Thus, on one hand, part of the statement of Mr Akshay Doshi recorded under section 131 of the Act was relied upon in support of initiation of reassessment proceedings to allege that the assessee has paid cash of ₹ 14,00,000 for purchase of the flat. However, the other part of the aforesaid statement wherein it was alleged that assessee entered into agreement on 25 October 2008 having agreement value of ₹ 22,75,500 was treated as not a crucial piece of evidence. Thus, from the aforesaid facts, it is evident that the statement recorded under section 131 of the Act is relied upon by the Revenue only partially, to suit its convenience. The Revenue has neither provided to the assessee nor brought on record agreement alleged to have value of ₹ 22,75,500. On the contrary, from the copy of agreement dated 25 October 2008 formi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment proceedings under section 147 of the Act, as the validity of reassessment has to be tested only on the basis of reasons recorded by the Assessing Officer before issuing notice under section 148 of the Act and those reasons cannot be further improved. 12. Further, in the present case, the AO has also not granted opportunity to the assessee to cross examine the person on the basis of whose statement proceedings under section 147 of the Act were initiated. We find that in Shri Abhishek Dhanotia v/s ITO: ITA No.655/Ind./2018, wherein reassessment was also initiated on the basis of similar search proceedings carried out on 5 October 2015 on M/s Ekta and Bhoomi Group and the statement of the Director of M/s Bhoomi Group was recorded on 28 December 2015 under section 131 of the Act, the Co-ordinate Bench of Tribunal, observed as under: 12. Now coming to the second objection of the assessee that the assessee was not provided cross examination. It is not in dispute that the information was gathered at the premises of the 3rd party addition is based upon the statement of the 3rd party. This fact is not rebutted by the revenue, therefore, in my considered view the assessee ough ..... X X X X Extracts X X X X X X X X Extracts X X X X
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