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TMI Blog2024 (12) TMI 252X X X X Extracts X X X X X X X X Extracts X X X X ..... avail the opportunity to explain the entire transaction. There was sufficient tangible material on record which justifies the prima facie belief of the AO regarding the escapement of taxable income. The facts noted above clearly demonstrate that the AO indeed had tangible material having a live link to the reasons to believe for arriving at a prima facie opinion that the income has escaped assessment. We find that the PCIT has recorded her satisfaction after clearly applying her mind on the reasons recorded by the AO before giving approval. The approval, reproduced as above, amply demonstrate that the PCIT has examined the reasons recorded by the AO, agreed and was satisfied with the views of the AO for issuance of notice u/s 148. We therefore hold that the approval u/s 151(2) was not granted mechanically but was accorded after careful thought. We are of considered view that the approval u/s 151(2) was properly granted, and there was reason to believe on the basis of prima facie tangible materials on record leading to the conclusion that the assumption of jurisdiction by the AO u/s 148 is valid and legally permissible. Accordingly, the Ground No. 1 is dismissed. Addition u/s 69 - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ma & Mrs Meena Sharma. 5. To verify the transaction as reported in the AIR information, the Assessing Officer issued and served notice u/s 133(6) of the Act to the assessee and in response no compliance was made by the assessee. Notice u/s 148 was subsequently issued on 29.03.2019 after recording reasons and obtaining approval from the PCIT, Ghaziabad u/s 151(2) of the Act. 6. In the course of assessment proceedings, the Assessing Officer was not satisfied with the explanation of the assessee and made an addition of Rs. 70,95,000/- u/s 69 of the I T Act. 7. When the assessee went in appeal before the ld. CIT(A), the ld. CIT(A) restricted the addition to Rs. 41,47,382/-. 8. Aggrieved further, the assessee is in appeal before us. 9. Before us, the ld AR of the assessee vehemently contested the validity of the notice u/s 148. The ld. counsel for the assessee stated that the Assessing Officer issued notice u/s 148, simply on the basis of AIR Information received from sub-registrar to verify the source of investment made in purchase of house and without possession of any tangible material. The ld AR argued that the AO recorded incorrect facts as the Assessing Officer has considered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see, on merits, submitted that the assessee during the year under consideration along with wife Mrs Meena Sharma has purchased residential property for Rs. 90,95,000/- (purchase cost 8500000+ stamp duty 550000) on 16.02.2012.That for purchase of residential property assessee took housing loan of Rs. 20,00,000/- from Canara Bank, sold plot of land for Rs. 784,000/- and took unsecured loan from friends & relatives. That the above property was purchased in co-ownership where the Assessee and his wife have equal ownership in above residential property. Assessee share comes to Rs. 45,42,500/- (90,95,000/2) but the Ld. AO has treated total purchase value of residential property as unexplained investment in the hand of assessee only after allowing the credit of housing loan. 16. It was stated that the details of purchase consideration amounting to Rs. 85,00,000/- is given in conveyance deed at page no. 41 itself. The ld AR submitted that the assessee filed evidences in support of bank loan, sale of plot of land and unsecured loan taken from friends and relatives under rule 46A. The ld AR stated that the ld. CIT(A) while justifying the reopening the case, held that the source of investmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... initiating proceedings u/s 148, which shows that the PCIT has examined the reasons recorded by the AO and agreed and was satisfied with the views of the AO for issuance of notice u/s 148. The ld DR vehemently contested that the approval was not granted mechanically but was accorded after careful thought. 21. The ld DR, on the legal issue of assumption of jurisdiction, pointed out that the case laws relied upon by the assessee are all factually distinguishable. On merits, the ld DR relied on the orders of the CIT(A) and argued that the source of investment were not explained with documentary evidence. 22. We have heard the rival submissions and have perused the relevant material on record. Having heard the rival submission we find that the issue to be adjudicated first is the validity of assumption of jurisdiction by the AO. We find the reasons recorded for the reopening u/s 148 states as below: "Reasons for the belief that the income has escaped assessment: AIR information was received from the office of the Sub-registrar under section 285BA of the I.T. Act, 1961 relating to purchase of immovable property by the assessee for Rs. 90,95,000/-(including stamp duty) on 16.02.2012. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income-tax, Ghaziabad." 24. From the examination of the reasons recorded as above, we find that the AO recorded his reasons on 25.03.2019 mentioning the reasons for reopening. On receipt of information relating to purchase of immovable property, the AO examined the ITR of the assessee which showed the assessee had declared salary income of Rs 3,43,253/- and capital gain of Rs 1,45,566/- which led the AO to believe that the income and receipt declared in the ITR was not commensurate with the investment Rs 90,95,000/- made. Accordingly, to verify the transaction, notice u/s 133(6) on 13.08.2018 was issued to the assessee which remained uncompiled with. We therefore find for a fact that for verification of the transaction, the AO had issued notice u/s 133(6). We find that the ld DR correctly pointed out that the notice u/s 148 was not issued for verification of the source of investment rather notice u/s 133(6) was issued for verification of the information. 25. We also find that the AO had also issued notice u/s 133(6) 24.08.2018 to the Sub- Registrar-V Ghaziabad and collected a copy of Purchase Deed which mentioned that property is Joint property. We find that the purchase deed of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the I T Act. It does not lie in the mouth of the assessee now to say that the AO should have verified from the AO of the wife of the assessee whose name/PAN featured in the purchase deed when he himself failed to avail the opportunity to explain the entire transaction. We are of the view that that there was sufficient tangible material on record which justifies the prima facie belief of the AO regarding the escapement of taxable income. The facts noted above clearly demonstrate that the AO indeed had tangible material having a live link to the "reasons to believe" for arriving at a prima facie opinion that the income has escaped assessment. 28. The reliance on Maniben Valji Shah and Bakulbhai Ramanlal Patel are factually distinguishable. In Maniben Valji Shah the Bombay High Court held that "there is no question of the assessing officer having any basis to reasonably entertain the belief that any part of the income of the assessee had escaped the assessment and that such escapement was by reason of omission or failure on the part of the assessee to disclose fully and truly all material facts." In Bakulbhai Ramanlal Patel the reasons recorded by the AO itself states that various ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of facts. This is the precise reason that there is a plethora of judgments on this issue that are cited by both the parties, and we have to repeatedly navigate through the various views expressed by the court. 20. In light of the above judicial principles, the crux lies in the recorded reasons which shed light on the mind of the AO and having perused the same in the instant case, we are not persuaded with Mr. Vohra's submission that the observations of the AO are based purely on conjunctures and surmises, without reference to any tangible material. At this stage, we may refer to our decisions in Vedanta Ltd v. Assistant Commissioner of Income Tax in W.P. (C) 13036/2019 decided on 20.12.2019 and also in RDS Project Ltd. in W.P. (C) 11274/2019 decided on 23.10.2019 wherein we have extensively examined the case law on this issue. 21. In the above judgments, we have noted the views of the Supreme Court in Assistant CIT v. Rajesh Jhaveri Stock Broker Pvt. Ltd. (2008) 14 SSC W.P.(C) 11302/2019 & W.P.(C) 11303/2019 Page 19 of 47 208, wherein it has been held that the expression "reason" in Section 147 of the Act means a "cause" or "justification". The Assessing Officer can be said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had merely appended the expression "approved". In fact, this decision supports the case of Revenue as it observed further as follows: "The mere appending of the expression 'approved' says nothing. It is not as if the CIT (A) has to record elaborate reasons for agreeing with the noting put up. At the same time, satisfaction has to be recorded of the given case which can be reflected in the briefest possible manner. In the present case, the exercise appears to have been ritualistic and formal rather than meaningful, which is the rationale for the safeguard of an approval by a higher ranking officer. For these reasons, the Court is satisfied that the findings by the ITAT cannot be disturbed." In the instant case, the satisfaction is not ritualistic, brief but meaningful. 31. Similarly, the reliance placed on the case of Madhya Pradesh High Court decision in the case of S Goyenka Lime & Chemicals Ltd, is factually distinguishable. This case relied on the case of Arjun Singh (246 ITR 363(SC) where the satisfaction of CIT which merely stated "I am satisfied" was considered as mechanical without application of mind and also the fact that the satisfaction was recorded on the ground tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Officer's reasons to believe. Therefore, it was held that the recording of the satisfaction by the AO was unjustified and without independent application of mind. However, there is no requirement to provide elaborate reasoning to arrive at a finding of approval when the Principal Commissioner is satisfied with the reasons recorded by the AO. Similarly, in Virbhadra Singh v Deputy Commissioner, Circle Shimla [2017] 88 taxmann.com 888 (Himachal Pradesh) where the competent authority was in agreement with the reasons assigned by the Assessing Officer, so placed before him, which came to be considered and sanction accorded with proper application of mind, by recording "I am satisfied that it is a fit case for issuance of notice u/s 148", the issuance of notice under section 147/148 was held to be valid." In view of the discussion as above, we are of considered view that the approval u/s 151(2) was properly granted, and there was reason to believe on the basis of prima facie tangible materials on record leading to the conclusion that the assumption of jurisdiction by the AO u/s 148 is valid and legally permissible. Accordingly, the Ground No. 1 is dismissed. 34. Now th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceived in May 2012 but he ignored that out of such sale proceeds two cheque of Rs. 600000/- and Rs. 500000/- were given on 12.03.2012 and 15.03.2012 which were cleared on 01.06.2012. 39. It is submitted that in remand report the Assessing Officer has again treated total purchase consideration as unexplained investment in the hands of the assessee while assessee owns 50% ownership in the residential property purchased during the year. The CIT(A) has also not given any finding on unsecured loans taken by assessee's wife. The ld. CIT(A) has allowed the relief to assessee to the extent of Rs. 29,47,618/-i.e. addition made in the hand of assessee's wife where the assessment order in her case was passed u/s 147/143(3) of the Act in place of correct relief amount of Rs. 35,47,500/-. 40. In view of above facts and submissions, the ld. counsel for the assessee concluded that it is clear that during the year under consideration assessee has made investment in residential property for Rs. 45,47,500/- only. Source of payment made to purchase of residential property was duly proved in the light of documents filed by the assessee before Assessing Officer as well as ld. CIT(A). Therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ii) Payment of Rs. 600000/- & Rs 500000/-, these cheques were cleared on 01.06.2012 from a/c no. 1149101028730 maintained with Canara Bank in the name of Mrs Meena Sharma. Before clearance of these cheque, in bank a/c a sum of Rs 14,00,000/- was received by Mrs Meena Sharma which is on account of sale of residential house for Rs 37,00,000/- sold by assessee & wife Meena Sharma. iv) Payment of Rs. 20,00,000/- is on account of housing loan taken from Canara Bank. Housing loan sanction letter & statement are filed at page no. 82- 83 of the paper book. The source of this payment was accepted by both the CIT(A) as well as the AO. v) Cash payment of Rs. 800,000/- was made to seller from cash available with assessee & wife Mrs Meena Sharma. vi) The assessee and his wife used their savings of Rs 19,58,197/- lying in SBI, Vijaya Bank, and Syndicate Bank as noted above and their capital accumulated of Rs 4,57,920/-. 44. We find from the perusal of the documents before us that the assessee has duly explained the source of his share of the investment made in the property purchased. As far as the veracity of unsecured loan taken by the wife of the assessee and amount received on account ..... X X X X Extracts X X X X X X X X Extracts X X X X
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