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TMI Blog2024 (5) TMI 910X X X X Extracts X X X X X X X X Extracts X X X X ..... ed his return of income and deposited huge cash in his bank account, therefore, the approval was granted to the AO to verify the same. Therefore, we are not inclined to adjudicate on the various issues raised by the assessee on reopening of the assessment. Additions made u/s 68 and u/s 69A - assessment was reopened after lapse of 6 years - Mandate to reopen the assessment - The reason for reopening the assessment was properly explained by the assessee. AO cannot stretch beyond the mandate. We observe that the assessee has not made proper submissions during the reassessment proceedings and appellate proceedings, it does not matter as long as the information is coming from the proceedings. In this case, the AO was satisfied that the assessee owned agricultural land and sold the same during this assessment year. Therefore, the mandate to reopen the assessment was completed by bringing on record the relevant documents to prove the sources of cash deposits. Therefore, the AO cannot travel beyond the mandate, he cannot proceed to make any other additions beyond the reasons recorded to reopen the assessment. Therefore, confirming the other additions beyond the mandate is uncalled for. CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , notice u/s 143(2) was issued on the same date for fixing the hearing on 21/12/2018. Since, none appeared on behalf of the assessee, the Assessing Officer proceeded to complete the assessment based on the material available on record. The Assessing Officer made the following observations from the information submitted by the assessee. For the sake of clarity the same is reproduced below. During the year F.Y. 2010-11, he sold the agriculture land measuring 5 kanal in the makrola village Gurgaon, Haryana and some part of land sale chawla village ear nazafgarh in Delhi and received the sale consideration of Rs. 18,75,000/- and Rs. 25,75,000/- respectively and gross amount of Rs. 44,50,000/- in cash during the year. Out of that gross amount of Rs. 42,85,000/- deposited in state bank of India sec 12 Dwarka and balance of Rs. 1,65,000/- incurred to meet his family needs in expenditure during the A.Y 2011-12 assessee did not file the return due to below the taxable limit. His receipt on sale of agriculture land is fully exempt income tax u/s 10 of the Income Tax Act, 1961. His income is below the taxable limit, hence, assessee did not filed income tax return on or before due date. 3. Aft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. 1961 is not allowable. Therefore, this amount i.e. Rs. 40,96.805/- which is the almost the same amount which remains unexplained and is thus it is disallowed and added back to the income of the assessee The assessee made cash credits amounting to Rs 42,85,000/- and filed income tax return declaring Gross Taxable Income of Rs. 2,15,684/- (which included only interest income and income from commission of sale of properties) As per provisions of the Section 68 of Income Tax, 1961 when a sum is found credited in the books of the accounts of the assessee and assessee offers no explanation for the said amount, the same may be added back to the income of the assessee as unexplained cash credits. As the assessee has failed to offer any explanation in this regard, the same is added back to income of the assessee as per provisions of Section 68 of Income Tax Act, 1961 and an addition of Rs 40,96,805/- is made on this count. As the assessee has concealed-the-particulars of his income/furnished inaccurate particulars of income/ the satisfaction for initiation of penalty u/s 271(1)(c) of the Income Tax Act, 1961 is hereby recorded in respect of addition made in this respect. (Addition: Rs. 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00/- arbitrarily without appreciating facts of sale proceeds of transaction due to agricultural land sale which would result to only profits or capital gain for taxability but not entire sale proceeds. 6. Appellant craves the right to add, delete, amend any of the grounds of appeal either before or at the time of hearing of appeal . 6. After filing the grounds of appeal several notices of hearing was issued to the assessee through ITBA Portal, however, assessee sought adjournment only on 05/03/2020 and on 19/05/2023. And otherwise there was no compliance from the assessee side, therefore, the Ld. CIT(A) proceeded to dismiss the appeal filed by the assessee relying on the decision in the case of CIT (Central) vs. B. N. Bhattacharjee Anors, [1979] 10 CTR 354 (SC) and findings of the Assessing Officer. After considering the detailed findings of the Assessing Officer, he proceeded to confirm the addition u/s 69 of the Act and accordingly, dismissed the appeal filed by the assessee. 7. Aggrieved with the above order, the assessee is in appeal before us. 8. At the time of hearing, the Ld. AR submitted as under: 1. Ld A.O has drawn reason to believe only on basis of reason to suspect on g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sanction/approval from PCIT u/s. 151(1) in the Reason to Believe itself which is not correct legal procedure as per provisions of s. 147 r.w.s 148 r.w.s 151(1) of I.T Act 1961. Moreover, Ld JCIT who is not authorized under Law of provisions of section 147 r.w.s 148 r.w.s 151(1) to express her Satisfaction on reason to believe of Ld. A.O, has in fact expressed her Satisfaction on Income escaping assessment by doing so, Illegality has crept in by which Ld. PCIT was not only biased but also illegally influenced while Ld PCIT accorded his approval of satisfaction of reason to believe of Ld. A.O. for which Ld. PCIT has failed to apply his mind independently in a fair objective manner as she(Ld PCIT) has stated in her satisfaction on the basis of reasons stated by Ld. A.O. perusal of matter wherein Ld JCIT has also expressed her satisfaction contrary to provisions of Law. So, Satisfaction on reason to believe of Ld A.O. being illegally influenced biased by Ld. JCIT which was also sanctioned/approved by Ld. PCIT u/s151(1) of I.T. Act 1961 in a mechanical without independent application of mind, is devoid of correct legal procedure and Hence Proceeding u/s 148 r.w.s 147 needs to be quashed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rect legal procedures for which act being arbitrary unfair, Proceeding uls. 148 r.w.s 147 needs to be quashed being devoid of merit. Relevant case law(s) relied on: A.) Hon'ble Gujarat High Court in Hotel Oasis (Surat) (P) LTD. v. DCIT (2011) 57 DTR (Guj) 378, has held that that assessment cannot be reopened merely to make inquiries. Assumption of jurisdiction by the AO is invalid and as such, the impugned notice under s. 148 is not sustainable and is quashed. 3. Without prejudice to above argument(s), Ld A.O. has failed to communicate Reason to Believe that income escaped assessment along with the sanction/approval of PCIT while issuing/serving Notice u/s. 148 of IT Act 1961 dated 27/03/2018 on Appellant which is bad in law so for which act of Ld.A.O. being arbitrary unfair, Proceeding u/s. 148 r.w.s 147 needs to be quashed being devoid of merit. It is mandated under provision of section 148(2) of I. T. Act 1961 that Ld A.O. shall record reasons of income escaping assessment in Notice u/s. 148 in itself, but in this case same has not been done. So it is not legal to issue said Notice u/s. 148. Relevant case law(s) relied on: A.) ITAT Delhi bench in Sh. Balwant Rai Wadhwa vs. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sue any SCN(show cause Notice) u/s 251(2) r.w.s 251(1) of IT Act 1961 while Ld.CIT(A) not only changed addition source head income from section 68 to section 69A but also enhanced addition from Rs. 4096805/- done by Ld A.O. to Rs. 4285000/- Interestingly, Request of Appellant for short adjournment on dated 12/05/2023 was also not accepted by him who closed hearing on same date 19/05/2023, but actually passed appeal order on 19/06/2023 after a month of last date of hearing which confirms the arbitrariness in action of Ld.CIT(A) acting in an unfair manner. Therefore, proceeding u/s. 148 r.w.s 147 needs to be quashed being devoid of merit. Relevant case laws relied on: A.) Excess of Jurisdiction of Ld.CIT(A) u/s. 251(1) r.w.s 251(2) -Adaab Hotels Ltd vs. DCIT, ITA No.242/Del/2021, ITAT-Delhi Bench dated 29/05/2023. B.) Excess of Jurisdiction of Ld.CIT(A) u/s. 251(1) M/s Ginni Gold Ltd vs. Addl.CIT, ITA No.673/Del/2015, ITAT-Delhi Bench dated 15/04/2021. 6. Without prejudice to above argument(s), It may be stated here that taxability of agricultural/exempt income may only be considered as business income as profits or capital gain as per facts circum of such agricultural/exempt income, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO has taken proper approval and the same was approved by the proper authority. Now the assessee has raised several arguments including the approval process. We are not inclined to accept any of the argument put forth by the Ld AR, most of them are based on presumptions that AO should have completed the assessee one way or the other. Further, the approval process is not complicated in the case of the assessee which required proper application of mind, the fact that the assessee has not filed his return of income and deposited huge cash in his bank account, therefore, the approval was granted to the AO to verify the same. Therefore, we are not inclined to adjudicate on the various issues raised by the assessee on reopening of the assessment. 12. Coming to the merits of the case, yes, there is merit in the case of the assessee that the agricultural land was sold and the proceeds were deposited in the bank account. We observed from the record that the assessee has not filed his return of income and only on the notice u/s 148, he has filed the return of income. At the same time, we observe that the case was reopened on the basis of cash deposits in assessee s bank account. On veri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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