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TMI Blog2024 (11) TMI 960X X X X Extracts X X X X X X X X Extracts X X X X ..... propositions, which categorically held that the re opening cannot be done for verification, therefore, we hold that re opening of assessment is invalid and accordingly the consequent assessment also becomes invalid, unjustified and bad in law. Accordingly, the re opening of assessment by the AO and confirmed by the CIT(A) is hereby quashed for the reasons stated herein above. Since the re opening itself is quashed, the corresponding assessment order does not survive as well. Thus, the assessee succeeds in ground no.1. - Shri V. Durga Rao, Judicial Member And Shri K.M. Roy, Accountant, Member For the Assessee : Shri Kapil Hirani For the Revenue : Shri Abhay Y. Marathe ORDER PER K.M. ROY, A.M. The assessee has filed this appeal challenging the impugned order dated 11/10/2023, passed by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, [ learned CIT(A) ], for the assessment year 2015 16. 2. In its appeal, the assessee has raised following grounds: 1. The reopening of the assessment and the assessment so completed are illegal, invalid and deserves to be quashed as per law and in the interest of justice. 2. On the facts and circumstances of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... grounds of appeal with the kind permission of the Hon'ble Tribunal. 3. In the present case, the assessee is an Individual and filed her return of income for the year under consideration on 28/03/2016, disclosing total income of ₹ 7,56,742, for the income derived under the heads income from house property , income from business profession and income from other sources . The case was re opened and notice under section 148 of the Income Tax Act, 1961 ( the Act ) was issued on 20/03/2020. The assessee, while responding to the notice under section 148 of the Act, vide her letter dated 30/03/2021, submitted that she having already filed her return of income disclosing all relevant details, the notice under section 148 of the Act is illegal and invalid and hence requested the Assessing Officer to drop the same. However, in order to make statutory compliance of the notice under section 148 of the Act, the assessee again filed her return of income declaring the same income i.e., ₹ 7,56,742, which was disclosed in the original return of income. On the request of the assessee, the Revenue supplied reasons for re opening to the assessee which was primarily pertained to verifica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8377; 70,97,750, under section 56(2)(vii)(b) of the Act in the hands of Shri Vinod Durgukar, the husband of the assessee. Shri Durugkar, in response submitted that they have vide mutual agreement made additional payment of ₹ 53,16,327, to the vendors for the same property which also ought to be considered. The total payment thus made for purchase of property was thus ₹ 2,06,18,327, made jointly by the Shri Vinod Durgukar, and the assessee. The Assessing Officer accepted the source of the investment in the case of Shri Vinod Durugkar, and after giving credit for the additional payment so made completed the assessment of Shri Vinod Durgukar, by making an addition of ₹ 44,39,587, under sec. 56(2)(vii)(b) of the Act representing the 50% of the total difference considering the share of Shri Vinod Durugkar, in the property to be 50% and the balance belonging to the assessee. Despite completion of assessment in respect of Shri Vinod Durugkar, the husband of the assessee as above, the Assessing Officer made following additions in the hands of the assessee: Addition u/s 69 on account of Investment in property ₹ 1,95,07,200 x 50% = ₹ 97,53,600 Addition u/s 56(2) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in sub-clause (b) is disputed by the assessee on grounds mentioned in sub-section (2) of section 50C, the Assessing Officer may refer the valuation of such property to a valuation Officer, and the provisions of section 50C and sub-section (15) of section 155 shall, as far as may be, apply in relation to the stamp duty value of such property for the purpose of sub-clause (b) as they apply for valuation of capital asset under those sections. I have gone through the valuation report submitted by the Valuation Officer, Income Tax Department, Nagpur wherein the declared value and assessed value are shown at Rs. 1,53,02,000/- and Rs. 2,84,97,500/- respectively. 4.2.3 There is no dispute with regard to the fact that assessee had purchased immovable property and there was a difference of value as disclosed by the assessee and adopted by the Stamp Valuation Authority. It is also not a case where the assessee objected before the AO regarding valuation adopted by the Valuation Authority of Income Tax Department. 4.3 In view of the above, on careful consideration of the facts and submissions the value determined by the Valuation authority to be taken and the AO has rightly adopted the valuatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents made by the rival parties and perused the material available on record. During the course of hearing, at the very outset, the learned Counsel, Shri Kapil Hirani, appearing for the assessee, requested the Bench to adjudicate Ground no.1, which relates to re opening of assessment before delving upon other grounds on merit. The arguments / submissions of the learned Counsel on the issue of re opening of assessment explaining it to be bad in law, are as follows: Ground 1 - The reopening of the assessment and the assessment so completed are illegal, invalid and deserves to be set aside in the interest of justice. 23.1. The Appellant at the outset submits that the reopening of the assessment and the assessment so completed are illegal, invalid and deserves to be set aside in the interest of justice. 23.2. The Appellant submits that the reopening has been done solely for the purpose of verification which is impermissible under law and which has vitiated the entire reopening as the same is contrary to the settled principles of law. 23.3. The Appellant invites your honours kind attention to the reasons recorded for reopening the assessment which categorically says that the reopening ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the judicial pronouncements referred to hereinabove prays before your honour to kindly treat the reopening as illegal and quash the re opening as well as the assessment completed pursuant to search illegal re opening in the interest or justice. 10. It is pertinent to reproduce now the reasons for re opening of the assessment by the Assessing Officer which are as under: 1. Brief details of the Assessee: The Assessee Vijaya Vinod Durugkar, is an individual resident of Behind Old Hislop College, Mahal, Nagpur-440002. The Assessee had filed return of income for A.Y. 2015-16 declaring Business income of Rs. 5,31,140/- on total turnover Rs. 19,62,440/- and Income from other sources of Rs. 1,65, 122/-. 2. Brief details of information collected/received by the AO: In this case, the information received from ACIT, Circle-4, Nagpur that the assessee had purchased immovable property jointly with her husband Shri Vinod Durugkar for sale consideration of Rs. 1,53,02,000/- and market value of Rs. 7,58,97,000/- during the F.Y. 2014-15. 3. Analysis of information collected/received: The information received is that the assessee had purchased immovable property jointly for a total sale conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his, we rely on Chapter VI of the publication issued by the All India Federation of Tax Practitioners viz. Re assessment Law, Procedure Practice (Practical Guide) on the issue of No Re assessment Just To Make An Enquiry or Verification , which is reproduced below: I. NO REASSESSMENT JUST TO MAKE AN FISHING ENQUIRY: 1.1 Though Explanation 2 of s. 147 authorizes the Assessing officer to reopen an assessment wherever there is an under statement of income , the AO is not entitled to assume that there is under statement of income merely because the assessee's income is shockingly low and others in the same line of business are returning a higher income. The invocation of the jurisdiction under section 147 on the basis of suspicions and presumptions cannot be sustained. Similarly assessment cannot be reopened merely to verify discrepancy. 1.2 In CIT v. Maniben Velji Shah (2006) 283 ITR 453 (Bom.)(HC). It was observed that Assessing Officer wanted to inquire about source of funds of an immovable property purchased by assessee. No reason to issue notice for reassessment. 1.3 In Banke Bihar Properties Pvt. Ltd. v. ITO (ITA NO. 5128/M/2015 dt. 22/04/2016) (Delhi) (Trib.); The Assessing O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... endra Goud Chepur v. ITO (AP T)(HC); www.itatonline.org: Merely because the assessee's income is shockingly low and others in the same line of business are returning a higher income. The invocation of the jurisdiction on the basis of suspicions and presumptions cannot be sustained. 3.2 Reassessment within four years General allegation No violation of provisions of S.11(3)(d)-Reassessment is bad in law: Areez Khambatta Benevolent Trust v. DCIT (2019) 415 ITR 70 (Guj.)(HC) IV POWER IS NOT AKIN TO REVIEW: 4.1 In Aventis Pharma Ltd. v. ACIT (2010) 323 ITR 570 (Bom.) (HC). The court observed that the power to reopen an assessment is conditional on the formation of a reason to believe that income chargeable to tax has escaped assessment. The power is not akin to a review. The existence of tangible material is necessary to ensure against an arbitrary exercise of power. 12. The learned Counsel for the assessee, in support of his arguments on account of re opening of assessment in the present case being bad in law, relied upon the following case laws: i) Nivi Trading Ltd. v/s Union of India Anr., [2015] 375 ITR 308 (Bom.); ii) CIT v/s Smt. Maniben Vilji Shah, [2006] 283 ITR 453 (Raj.); ..... X X X X Extracts X X X X X X X X Extracts X X X X
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