Subject: Income Tax Return along with computation of the total income and other documents,
Referred Sections:
Section 143(1) of that Income-tax Act,
Section 148 of the Act
Section 147 of the Act.
Section 54B of the Act,
Section 143(2) of the Act,
Section 143(3) of the Act
Section 153 of the Act.
Section 144 of the Act
Section 139 :”
Section 292B of the Act.
Section 68 of the Act.
Section 69 of the Act.
Referred Cases / Judgments
Hyderabad vs. Vodithala Education Society reported in [2013] 39 taxmann.com (100).
GKN Driveshaft Vs. ITO, (2003) 259 ITR 19
ITO Vs. Neeraj Goyal in ITA No. 6290/Del/2017,
ITO Vs. Neeraj Gooyal (supra).
Commissioner of Income-tax Vs.Bhaichand N Ghandhi, (1982)
CIT Vs. Ms. Mayawati 338 ITR 563.
ACIT Vs. Pardeep Publications (2010) 130 TTJ 92 (ASR)
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH: `A', NEW DELHI
BEFORE SH. AMIT SHUKLA, JUDICIAL MEMBER
AND
SH. O.P. KANT, ACCOUNTANT MEMBER
ITA No.1682/Del/2017
Assessment Year: 2010-11
Smt. Arti Sharma, Vs. Income Tax Officer,
C/o- Kunal Aggarwal & Ward-3(3), Gurgaon
Associates, 2nd Floor JMD
Megapolis, Sector-48, Sohna
Road, Gurgaon
PAN :BEXPS5432Q
(Appellant) (Respondent)
Assessee by Sh. Kunal Aggarwal, CA
Department by Sh. Ravi Kant Gupta, Sr.DR
Date of hearing 31.07.2018
Date of pronouncement 20.09.2018
ORDER
PER O.P. KANT, AM:
This appeal by the assessee is directed against order dated
09/02/2017 passed by the Ld. Commissioner of Income-tax
(Appeals)-1, Gurgaon [in short `the Ld. CIT(A')] for assessment
year 2010-11, raising following grounds:
1. That the assessment order is void-ab-initio, invalid and
illegal.
2. Without prejudice to other grounds and subject to the
rectification application made before the Ld. CIT(A)-1
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ITA No.1682/Del/2017
Gurgaon u/s 154 of the Act, if the computation filed is not a
valid return then the assessment should not therein, which
was not followed by the AO and hence the assessment is
invalid and illegal.
3. Without prejudice to other grounds and subject to the
rectification application made before the Ld. CIT(A)-1,
Gurgaon u/s 154 of the Act, if the computation filed is a
valid return of income then the notice u/s 143(2) should have
been issued as it was a mandatory requirement before
passing order u/s 143(3) as held in many cases. Therefore
the assessment is invalid and illegal.
4. Without prejudice to other grounds and subject to the
rectification application made before the Ld. CIT(A)-1
Gurgaon, Whether the Ld CIT(A)-1 Gurgaon was justified in
confirming the addition of Rs. 15,52,221/- and further
making the addition of Rs. 89,75,305/- u/s 68 of the Income
Tax Act, 1961 in the absence of books of accounts?
5. Without prejudice to other grounds, the addition of Rs.
89,75,305/- made u/s 68 of the Act by the Ld CIT(A)-1
Gurgaon is beyond the powers of CIT(A)
6. Without prejudice to other grounds and subject to the
rectification application made before the Ld. CIT(A)-1
Gurgaon, Whether the Ld CIT(A)-1 Gurgaon was justified in
confirming the additions of Rs. 36,611/- and Rs.
15,15,600/- u/s 68 of the Act in spite of the fact that
sufficient cash in hand was available with the assessee at
relevant point of time?
7. Without prejudice to other grounds and subject to the
rectification application made before the Ld. CIT(A)-1
Gurgaon, whether the CIT(A)-1 Gurgaon, was justified in
treating the advance of Rs. 89,75,305/- which later returned
to the buyers, be taxable in A.Y. 2010-11 without any
enquiry in spite of availability of registered sale deeds,
complete addresses of the buyers and without confronting
the same to the assessee during appellate proceedings?
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ITA No.1682/Del/2017
8. Without prejudice to the other grounds, whether the Ld.
CIT(A)-1 was justified in not annulling the assessment order
which was framed in just 26 days without affording the
sufficient opportunity to represent the case and to file
objections, thereby violating the principles of natural justice?
9. That the appellant reserves the right to amend, delete, add,
substitute, modify or alter any one or more of the grounds of
appeal at the time of hearing.
2. Briefly stated facts of the case are that for the year under
consideration, the assessee filed return of income on
28/03/2011, declaring total income of Rs.1,86,900/-from salary,
tuition income and bank interest. The said return was processed
under section 143(1) of that Income-tax Act, 1961 (in short `the
Act') on 09/07/2011. Subsequently, notice under section 148 of
the Act was issued on 2/03/2015 after recording reasons under
section 147 of the Act. In response, the Authorized
Representatives of the assessee appeared before the Assessing
Officer on 13/03/2015 and 23/03/2015. A copy of reasons
recorded for reopening the assessment was given to the
Authorized Representative. Thereafter, on 26/03/2015, the
Authorised Representative submitted a copy of acknowledgement
of Income Tax Return along with computation of the total income
and other documents, including bank statement of two bank
accounts pertaining to the assessee.
2.1 In the assessment proceedings, the Assessing Officer
observed total cash deposits of Rs.15,15,600/- on various dates
in one saving bank account maintained with the Axis bank. In
another saving bank account maintained with the Axis Bank,
which was opened on 12/06/2009, cash deposits of
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ITA No.1682/Del/2017
Rs.1,47,33,861/- was observed up to 31/03/2010. The interest
was also found to be credited in the bank account. The total cash
deposits in both the saving bank account was found to be
Rs.1,62,49,461/-. The assessee accepted the bank interest
amounting to Rs.1,89,494/- as its income and filed a revised
computation of the income, including the said amount before the
Assessing Officer and paid tax on said bank interest income.
2.2 In respect of cash deposits of Rs.1,47,33,861/- in one of the
saving bank account, the assessee claimed before the Assessing
Officer that cash deposits of Rs.1,46,97,250/- were made out of
the booking amount received in advance against sale of plots of
agriculture land to 55 persons at village Sardana, Gurgaon,
however, source of the balance amount of Rs. 36, 611/- was not
explained. On being asked by the Assessing Officer to furnish
proof of sale of such plots of land, the assessee furnished copies
of sale/conveyance deed in case of 8 sale transactions. It was
submitted that registration of the sale of such plots was made
later on as the registration was not allowed by the government
and the assessee had not kept the copies of the conveyance deeds
with her.
2.3 In respect of the cash deposits of Rs.15,15,600/- in another
saving bank account, no source was explained. The Assessing
Officer observed that agriculture land measuring 21 KANAL was
purchased by the assessee by way of the purchase deed dated
03/08/2009 and same was sold by plotting in pieces as
agriculture land. The Assessing Officer noted the submission of
the assessee that booking of the plots were made even prior to
execution of the purchase deed dated 03/08/2009, which was
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ITA No.1682/Del/2017
evident from the fact that the booking amount was received from
12/06/2009 onwards. The Assessing Officer noted that in view of
the agriculture land purchased and sold in the same year, the
land was never used as agricultural and land the assessee did not
fulfill the provisions of section 54B of the Act, accordingly, he
held the land as capital asset and the sale transaction was held
as adventure in the nature of the trade in view of the various
decisions of the Hon'ble Supreme Court cited in the assessment
order. The Assessing Officer computed profit earned of
Rs.1,10,71,250/- after subtracting cost of land of Rs.36,26,000/-
out of the amount claimed as received against sale of plot
amounting to Rs.1,46,97,250/-. The assessment was completed
on 27/03/2015, after computing the total income is under:
a) Total Income declared in the ITR 1,86,900
b) Addition made for source of deposit not 36,611
explained
c) Additional made for source of deposit not 15,15,600
explained
d) Addition made for interest income on deposits 1,89,494
e) Addition made for profit from the trade 1,10,71,250
adventure.
f) Total Addition made 1,28,12,955
g) Total Income assessed 1,29,99,855
h) Rounded off 1,29,99,860
2.4 Before the Ld. CIT(A), the assessee challenged assumption of
jurisdiction under section 147 of the Act. The assessee also
challenged that in absence of notice under section 143(2) of the
Act, the assessment under section 143(3) of the Act was void ab
initio. The additions made were also challenged on merit by the
assessee.
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ITA No.1682/Del/2017
2.5 The Ld. CIT(A) found the reasons recorded by the Assessing
Officer as cogent and adequate to form a belief that income had
escaped assessment. The ground of the assessee that assessment
was void ab initio in absence of notice under section 143(2) of the
Act, was also rejected by the Ld. CIT(A) holding that no return of
income was filed by the assessee in response to notice under
section 148 of the Act and, therefore, there is no requirement to
issue notice under section 143(2) of the Act before completion of
the assessment.
2.6 On the issue of the merit of the addition, before the Ld.
CIT(A), the assessee contended that the land sold by the assessee
was agriculture land and the profit derived from sale of such land
was not taxable. The assessee also submitted that land in
question was beyond 8 kms from the municipal limit of Gurgaon
and, therefore, it was not a capital asset. In support of the
contention, the assessee relied on various case laws. The assessee
also contended that amount received by the assessee from
various persons were not sale proceeds and were mere advances
and in those circumstances, same cannot be considered as
income of the assessee in the year under consideration.
2.7 The Ld. CIT(A), however, asked the assessee for complete
information in respect of the sale of plots including the amount of
advance/sale recorded in sale deeds. The Authorised
Representative of the assessee filed a year wise breakup of sale
consideration with regard to the plots registered in respective
years as under:
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ITA No.1682/Del/2017
F.Y. 2009-10 - Rs.19,12,500/-
F.Y. 2010-11 - Rs.36,10,000/-
F.Y. 2011-12 - Rs.35,85,000/-
F.Y. 2012-13 - Rs. 5,40,000/-
Total - Rs.96,44,500/-
2.8 The Ld. AR also filed a revised computation of the profit for
the year under consideration, which is reproduced as under:
Total Land Purchases area =6270 Sq. Yards
Total Saleable area after plotting =4666 Sq. Yards
Cost of Land share Purchases =36,26,000/-
Cost per Sq. Yards =777.11 (approx)
So in the instant transaction, the profit for the A.Y. 2010-11 is
calculated as under:
Sales Consideration (1125 Sq. Yards) 19,12,500.00
Less:- Purchase Cost (1125 Sq. Yards) 8,74,249.00
1125 X Rs.777.11
Profit 9,28,251.00
2.9 From the submission filed by the Authorised Representative
of the assessee, the Ld. CIT(A) observed that against the booking
amount of Rs.1,46,97,250/- claimed as received by the assessee,
the total sale consideration of Rs.96,44,500/- was only shown by
the assessee. The assessee claimed that excess advance amount
was returned to the respective persons (buyer). The assessee also
filed a list of the name of the persons to whom the advance
received was returned. The Ld. CIT(A) has reproduced scanned
copy of the relevant information of the year-wise advance
received, sales consideration in cash, sales consideration in
cheque and the amount returned. The Ld. CIT(A) in para 4.15 to
8
ITA No.1682/Del/2017
4.22 upheld taxing the profit on sale of plots under the head
business profit. As far as quantum of the unexplained cash
deposits, the Ld. CIT(A) accepted the year-wise sale consideration
recorded in the registered sale deeds submitted by the assessee.
For the year under consideration, the assessee shown sale
consideration of Rs.12,80,900/- and computed income of
Rs.9,38,251/-. The Ld. CIT(A) justified the claim of the assessee
to the extent of the profit arising from the sale consideration on
account of sale deeds registered in financial years 2010-11, 2011-
12 and 2012-13, which were taxable in the assessment years
2011-12, 2012-13 and 2013-14. However, the claim of the
assessee of return of the amounts to the purchaser at the time of
the registration ( out of the amount claimed as received as
advance) was rejected in absence of any documentary evidence of
return of those amounts. The Ld. CIT(A) sustained addition
amounting to Rs.89,75,305/- i.e. the advance amount which was
claimed by the assessee to have returned over the years, in
addition to the amount of Rs.9,38,251/- computed by the
assessee as income for the year under consideration. The finding
of the Ld. CIT(A) in this respect are reproduced as under:
"4.23 Now coming to the issue of the amount of income to be taxed in the year
under consideration. In this regard, the appellant has contended that the amount
of Rs.l,46,97,250/- taken by the AO as sale consideration for the purpose of
computation of income was in fact only the advance received and the AO was
therefore not justified in computing the income on this basis. In this regard, the
year wise details of registration "of sale deeds and the corresponding sale
consideration received by the appellant, as submitted by her vide reply dated
04/02/2017, has been reproduced above. The appellant has contended that the
sale consideration of Rs. 12,80,900/- received by her during the FY 2009-10 can
only be taken for computation of income for the year 2009-10 i.e. AY 2030-11.
The appellant has computed the income of Rs. 9,38,251/- for the year 2009-10
relevant to AY 2010-11 based on these sale deeds. The remaining sale deeds have
9
ITA No.1682/Del/2017
been shown to be registered in FY 2010-11, 2011-12 and 2012-13, The appellant
has contended that only the amount of Rs.9,38,251/- is taxable in the AY 2010-11.
4.24 I do not agree with this contention of the appellant The claim of the
appellant is justified only to the extent that the profits arising from the sale
consideration on account of sale deeds registered in FY 2010-11, 2011-12 and
2012-13 are taxable in the AY 2011-12, 2012-13 and 2013-14 only. However,
there is another issue arising out of the details submitted by the appellant As per
the details filed by the appellant, following amounts were shown to have been
returned to the purchaser at the time of registration out of the advance which
were claimed to have been received in the AY 2009-10:-
i. FY 2009-10 Rs.14,44,125/-
ii. FY 2010-11 Rs.25,82,650/-
iii. FY 2011-12 Rs.15,62,100/-
4.25 Further, out of the advance claimed to have been received in FY 2009-10
amounts totaling Rs. 33,86,370/- were claimed to have been returned to the
prospective buyers in the month of August, 2010 in cases where no registration
deed was signed. No evidence with regard to the claim that the aforesaid amounts
have been returned to the concerned persons was furnished by the appellant. It is
evident from the facts discussed above that the claim of the appellant regarding
returned of cash at the time of registration or otherwise is a self serving statement
without any supporting evidence. In these circumstances of the case, there are
only two possibilities:
i. The cash which was claimed to have been returned at the time of
registration or otherwise, totaling an amount of Rs. 89,75,305/-, was
never received as advance and the claim was made by the appellant
merely to explain the sources of cash deposits in the hank account. It
may be relevant to mention here that even at the time of assessment
proceedings or at the time of appellate proceedings no confirmation
or evidences with regard to the claim of receipts of advance in this
regard was furnished by the appellant.
ii. The other possibility is that the sale consideration was not stated
correctly in the registered sale deed and cash component claimed to
have been returned at the time of registration of sale deed was the
amount of consideration over and above the consideration shown in
the registered sale deed.
4.26 In the first case, the amount of Rs. 89,75,305/- would he taxable as income in
the year under consideration i.e. AY 2010-11 on the ground that the cash deposits
in the bank account to this extent remain unexplained. In the second case, cash
claimed to have been returned in the FY 2009TTTI, 2010-11 and 20H-12 would
be taxable in respective AY as being consideration received by the appellant^ over
and above the amounts shown in the respective sale deeds.
4.27 As mentioned above, the claim of advance having been received by the
appellant was made by the appellant to explain the sources of cash deposits
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ITA No.1682/Del/2017
amounting to Rs.1,47,33,861/- in her bank "account No. 131010100623476.
Further, as mentioned above, no evidence or confirmation with regard to the
claim of the cash having been received as advance from the various persons was
furnished by the appellant, In view of these facts, it is held that the cash
amounting to Rs.89,75,305/-which was claimed to have been returned over the
years was in met never received by the appellant in the year 2009-10 and
accordingly the cash deposits in the bank account No. 131010100623476 to that
extent remain unexplained. This amount is accordingly held to be income of the
appellant for the year under consideration i.e. AY 2010-11, in addition to the
amount of Rs. 9,38,251/-, computed by the appellant, as referred above."
2.10 The balance cash deposits of Rs.36,611/- and
Rs.15,15,600/- were also held as unexplained by the Ld. CIT(A)
observing as under:
4.28 Further, as all the cash receipts of the appellant have been accounted for
while computing the aforesaid income, it is held that no amount of cash was
available with the appellant for making the cash deposits amounting to
Rs.36,611/- and Rs. 15,15,600/-. The additions made on this account are also
confirmed. The AO is directed to re-compute the income accordingly. The
grounds of appeal of foe appellant are partly allowed."
2.11 Aggrieved with the sustaining of the above additions, the
assessee is in appeal before the Tribunal.
3. Before us, the learned counsel of the assessee filed a letter
modifying the ground No. 2 and 3 of the original grounds as
under:
1) "Without prejudice to other grounds, if the original return r.w. computation
filed is not a valid return then the assessment should not be made u/s 143(3)
but only u/s 144 after following the procedure stated therein, which was not
followed by the AO and hence the assessment is invalid and illegal.
2) Without prejudice to other grounds, if the original return r.w. computation
filed is a valid return of income then the notice u/s 143(2) should have been
issued as it was a mandatory requirement before passing order u/s 143(3) as
held in many cases. Therefore the assessment is invalid and illegal. "
It is submitted that the substance of the above grounds are same and no new
plea is taken in the above grounds. The sole purpose of modifying the grounds
is to correct the clerical error where the word "computation" has been
11
ITA No.1682/Del/2017
replaced with "original return r.w. computation" and to delete "subject to the
rectification application made before the Ld. CIT(A)-1 Gurgaon u/s 154 of the
Act" because the rectification proceedings has been concluded."
4. The ground No. 1 being general in nature and would be
covered by the other grounds of the appeal, therefore, same is not
required to be adjudicated specifically.
5. The Ld. counsel filed a paper book in two volumes
containing pages 1-165 and 1-216 respectively.
6. Addressing the ground No. 8 of the appeal the Ld. counsel
submitted that the Assessing Officer has completed the
assessment within 26 days from the date of issue of notice under
section 148 of the Act and without affording the sufficient
opportunity to represent the case and to file the objections,
thereby, the Assessing Officer has violated principle of natural
Justice. The Ld. counsel drawn our attention to the copy of notice
under section 148 of the Act dated 02/03/2015, which is
available on page 25 of the Paper Book and copy of the
assessment order dated 27/03/2015, which is available on page
32- 39 of the paper book. According to the Ld. Counsel, the case
was getting barred by limitation only on 31/03/2016 and thus,
there was sufficient time available with Assessing Officer for
completion of the assessment. The Ld. counsel submitted that
assessee has been denied sufficient opportunity of being heard
and therefore in view of the violation of the principle of natural
justice, the assessment should be annulled.
6.1 The Ld. DR, on the other hand, opposed the arguments of
the Ld. counsel and submitted that there is no bar in the ` Act' for
completing the assessment prior to the date of limitation.
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ITA No.1682/Del/2017
According to him the assessment has been passed after
considering the submissions made by the authorised
representative of the assessees. He submitted that the assessee
has remained evasive and accepted the interest income etc. when
being pointed out by the Assessing Officer or the learned CIT(A).
According to him the Assessing Officer has provided sufficient
and reasonable opportunity of being heard to the assessee and
therefore there is no violation of principles of natural Justice.
6.2 We have heard the rival submissions and perused the
relevant material on record. The Ld. counsel of the assessee has
submitted that assessment order has been passed within 26 days
of issue notice under section 148 of the Act and thus, no
sufficient opportunity has been provided to the assessee. We have
observed that in this case notice under section 148 of the Act was
issued on 02/03/2015. In response to the said notice issued, the
Authorised Representative of the assessee, Sh. Dharmpal
attended the office of the Assessing Officer on 13/03/2015.
Thereafter, another Authorised Representative, Sh. NK Mahajan,
CA, appeared before the Assessing Officer on 20/03/2015, who
was also provided copy of reasons recorded under section 147 of
the Act. On 25/03/2015, again Sh. Mahajan and Sh. Dharmpal
attended the hearing before the Assessing Officer and submitted
documents containing bank statement of two bank accounts,
copy of purchase deed dated 03/08/2009 of the land, copy of
Ekrarnama and receipt in respect of the money received from
husband of the assessee for purchase of the land, details of
booking amounts received as advance in cash from 55 persons,
copy of 8 sale/conveyance deeds of plot, revised computation
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ITA No.1682/Del/2017
admitting the additional interest income, tax deposit receipt of
Rs.29,310/-. The Assessing Officer asked to the Ld. Authorised
representative of the assessee about the source of cash deposit in
bank account, which was explained as booking amount against
sale of plots received in advance. The Ld. AR provided details of
purchase of agricultural land and sale of the same in plots of
small size. The Ld. AR provided list of the persons alongwith
booking amount to whom the plots were sold. The Ld AR also
explained source of investment made in purchase of the land. In
view of the above facts, in our opinion the Assessing Officer has
passed the assessment order after considering all the
submissions filed by the Ld. authorised representative. Before us,
the Ld. counsel failed to produce any request of the assessee to
the Assessing Officer seeking more time for filing of the
information. Thus, it cann't be said that the assessee has been
deprived from filing any information in respect of the transactions
carried out by her. The Assessing Officer after considering the
submission of the assessee has formed his opinion and held that
the income earned on sale of the plot was in the nature of an
adventure in the trade. The Ld. Assessing Officer rejected the
contention of the assessee that the sale of the plot was exempted
same being sale of agricultural land.
6.3 The time limit for completion of the assessment,
reassessment in general has been provided in section 153 of the
Act. For completion of the assessment under section 147, time
limit has been provided in sub-section 2 of section 153 of the Act.
During the relevant period, the said section provided time limit for
completion of the assessment under section 147 of the Act as one
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ITA No.1682/Del/2017
year from the end of the financial year in which notice under
section 148 of the Act was served. In this case notice has been
issued and served on 02/03/2015 and, therefore, limitation was
available with Assessing Officer till 31/03/2016, however, the
Assessing Officer promptly completed assessment on
27/03/2015. In our opinion, there is no prohibition in the law to
complete the assessment before the limitation date. We do not
find any error on the part of the Assessing Officer in completing
the assessment prior to expiry of the limitation period. We have
also noted that the Ld. CIT(A) has provided sufficient opportunity
to assessee to explain the transactions of sale of land and
thereafter sustained the additions in respect of the amount. The
Assessing officer considered the advance amounts of
Rs.1,46,97,250/- as sale consideration in the year under
consideration and after reducing the purchase price of the land
amounting to Rs.36,26,000/-, balance amount of
Rs.1,10,71,250/- was treated as profit earned by the assessee.
Whereas the Ld. CIT(A) has treated the sales of plot of land in the
years, in which the sales were registered. The Ld. CIT(A) found
total sales amount recorded in registered sale deed amounting to
Rs.96,44,500/-. At this stage, the assessee claimed that the
advance amount received in excess of Rs.94,44,500/- was
returned to the customers who booked the plots. In absence of
any evidence filed, the Ld. CIT(A) held this amount of
Rs.89,75,305/-claim to have been returned by the assessee, as
undisclosed income of the assessee. On merit, the assessee before
us is aggrieved by the amount of addition worked out by the Ld
CIT(A) and not against the amount of addition made in the
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ITA No.1682/Del/2017
assessment order. Accordingly, the contention of the assessee of
not providing sufficient opportunity and violation of the principle
of natural Justice are rejected. The ground no. 8 of the appeal of
the assessee is accordingly dismissed.
7. In ground No. 2 (modified), the assessee has raised the issue
that if original return read with computation filed was not found
to be a valid return than the assessment should have been made
under section 144 of the Act following the procedure, which has
not been followed by the Assessing Officer and, therefore, the
assessment is invalid and illegal. In ground No. 3 (modified), the
assessee has raised the issue that if the original return read with
computation filed is found to be valid return than the notice
under section 143(2) of the Act should have been issued being a
mandatory requirement and therefore in absence of such a notice,
the assessment is invalid and illegal.
7.1 Both the grounds being connected, the Ld. counsel argued
both the grounds in a combined manner. The Ld. Counsel drawn
our attention to the letter dated 25/03/2015 filed before the
Assessing Officer by the Ld. Authorised Representative of the
assessee (which is available on page 27 of the paper book volume-
1). The Ld. counsel submitted that the assessee had been filing
income tax return regularly and in response to notice u/s 148 of
the Act, she submitted copy of the acknowledgement of the
Income Tax Return along with computation of income for
assessment 2008-09, 2009-10 and 2010-11 before the Assessing
Officer. The Ld. counsel submitted that during assessment
proceeding on 26/03/2015, the Ld. AR also filed revised
computation of the income after including the interest income
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ITA No.1682/Del/2017
earned on the deposits in banks. According to the Ld. counsel, in
view of the copy of the acknowledgement return of income filed or
the revised computation of income filed, the Ld. Assessing Officer
was required to issue notice under section 143(2) of the Act before
commencing the assessment proceeding. The Ld. counsel pointed
out that the Assessing Officer has not issued any notice under
section 143(2) of the Act and therefore completion of the
assessment under section 143(3) of the Act without issuing notice
under section 143(2) of the Act has rendered the assessment as
void ab-initio. In support of his contention, the Ld. counsel relied
on the decision of the Tribunal, Hyderabad Bench in the case of
ADIT (Exemption), Hyderabad vs. Vodithala Education Society
reported in [2013] 39 taxmann.com (100).
7.2 The Ld. counsel submitted alternatively that if the copy of
return of income or revised computation of income filed by the
assessee, was not treated by the Ld. Assessing Officer as valid
return than the assessment should have been completed under
section 144 of the Act and for which purpose, the Assessing
Officer was required to issue either notice under section 142(1) of
the Act or show cause notice proposing the addition to be made
before completion of the assessment under section 144 of the Act.
The Ld. counsel submitted that the Ld. Assessing Officer has not
followed due procedure of law for completion of the assessment
under section 144 of the Act, and therefore also the assessment
need to be annulled.
7.3 On the contrary, the Ld. DR submitted that in response to
notice under section 148 of the Act assessee has neither filed
fresh return of income nor submitted that the regular return of
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ITA No.1682/Del/2017
income filed by the assessee on 28/03/2011 might be treated as
return of income in response to notice under section 148 of the
Act. According to him, merely filing a copy of the
acknowledgement of regular return of income or revised
computation of income cannot constitute return of income filed in
response to notice under section 148 of the Act. Therefore, in
absence of any return of income filed by the assessee in response
to notice under section 148 of the Act, the Assessing Officer was
not required to issue notice under section 143 (2) of the Act for
completing the assessment under section 147 of the Act. The Ld.
DR submitted that a complete procedure has been laid down by
the Hon'ble Supreme Court in the case of GKN Driveshaft Vs. ITO,
(2003) 259 ITR 19 to be followed subsequent to the issue of
notice under section 148 of the Act. According to the guidelines in
the case, an assessee is required to file return of income in
response to the notice under section 148 of the Act and then only
can make request for providing reasons recorded. The Ld. DR,
however, submitted that there is an inadvertent error in
mentioning the assessment completed under section 144 of the
Act rather than section 143(3) of the Act. He submitted that the
mistake is in the nature of the curable mistake in terms of section
292B of the Act and due to such curable mistake, the assessment
cannot be annulled. On the issue of not issuing notice under
section 142(1) of the Act, he submitted that during assessment
proceeding all the queries were asked to the authorised
representative of the assessee and they have duly submitted the
information available with the assessee and therefore there was
due compliance on the part of the Assessing Officer. On the issue
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of no show cause notice issued before completion of the
assessment under section 144 of the Act, the Ld. DR submitted
that this being a procedural mistake, entire assessment cannot
be held illegal. He submitted that the Assessing Officer has
completed the assessment after acquiring a valid jurisdiction over
the case and therefore it cannot be held as invalid assessment
order.
7.4 In the rejoinder, the Ld. Council of the assessee referred to
the decision of the Tribunal (SMC) dated 13/03/2018, in the case
of ITO Vs. Neeraj Goyal in ITA No. 6290/Del/2017, wherein it is
held that the Assessing Officer is bound in law to assume
jurisdiction under section 143(2) to frame assessment order
whether with the return of income or without the return of
income and whether under section 143(3) or 144 or under some
other provision of the law.
7.5 We have heard the rival submissions and perused the
relevant material on record including the paper book filed by the
assessee. The first issue before us is whether the assessee has
filed return of income in response to notice under section 148 of
the Act dated 02/03/2015 issued by the Assessing Officer. The
Ld. counsel drawn our attention to submission dated
25/03/2015 filed before the Assessing Officer. The said
submission is available on page 27 of the Paper book of the
assessee. On perusal of the said page of the paper Book, we find
that the assessee has filed copy of acknowledgement of income
tax return along with computation of the income for assessment a
2008-09, 2009-10 and 2010-11. Thus, it is evident that only
copies acknowledgement of the filing of regular return of income
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and computation of income of the relevant year has been filed by
the assessee, and even copy of return of income has not been
filed. Further, the assessee in this submission has nowhere
stated that the regular return of income filed might be treated as
return of income in response to notice under section 148 of the
Act. Further, the Ld. counsel of assessee has claimed that a
revised computation of total income declaring income of
Rs.3,76400/- was filed for the assessment year in consideration
along with the submission dated 25/03/2015, and same should
be considered as return of income filed in response to notice
under section 148 of the Act. This contention of the Ld. counsel
cannot be accepted. As far as return of income is considered it is
laid down in section 148 of the Act that return of income has to
be filed in the prescribed form and verified in the prescribed
manner. In our opinion, the computation of income filed cannot
substitute return of income to be filed in the prescribed form and
verified in prescribed manner. The Ld. counsel further submitted
that while computing the total income in the assessment order
under section 147 of the Act, the Assessing Officer has started
the computation with income as per the regular return of income
filed and therefore he has considered the regular return of income
as return of income filed in response to notice under section 148
of the Act. We do not agree with this contention of the Ld. counsel
as the regular return of income filed was already available on
record and therefore the Ld. Assessing Officer has computed the
total income for the purpose of section 147 of the Act, by way of
including the income escaped to the total income already reflected
in the regular return of income. By way of merely taking the
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ITA No.1682/Del/2017
amount in return of income declared in regular return as a
starting point for computation of the total income under section
147 of the Act, it cannot be treated that the assessee has filed a
return of income in response to notice under section 148 of the
Act. Thus, in our opinion, the assessee has failed to file any
return of income in response to notice under section 148 of the
Act.
7.6 The section 148 has prescribed that subsequent to filing of
the return of income in response to notice under section 148 of
the Act, the provisions of the Act apply accordingly as if such a
return of income was a return required to be furnished under
section 139 of the Act. The relevant part of the section 148 of the
Act is reproduced as under:
"Issue of notice where income has escaped assessment.
148. (1) Before making the assessment, reassessment or
recomputation under section 147, the Assessing Officer shall serve
on the assessee a notice requiring him to furnish within such period,
as may be specified in the notice, a return of his income or the
income of any other person in respect of which he is assessable
under this Act during the previous year corresponding to the relevant
assessment year, in the prescribed form and verified in the
prescribed manner and setting forth such other particulars as may
be prescribed; and the provisions of this Act shall, so far as may be,
apply accordingly as if such return were a return required to be
furnished under section 139 :"
7.7 Further, the notice under section 143(2) of the Act can be
issued when return is furnished under section 139 or a response
to notice under section 142(1) of the Act. For ready reference, the
relevant provision of section 143(2) is reproduced as under:
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ITA No.1682/Del/2017
"Assessment.
143. [(2) Where a return has been furnished under section 139, or in
response to a notice under sub-section (1) of section 142, the
Assessing Officer or the prescribed income-tax authority, as the case
may be, if, considers it necessary or expedient to ensure that the
assessee has not understated the income or has not computed
excessive loss or has not under-paid the tax in any manner, shall
serve on the assessee a notice requiring him, on a date to be
specified therein, either to attend the office of the Assessing Officer
or to produce, or cause to be produced before the Assessing Officer
any evidence on which the assessee may rely in support of the
return:"
7.8 Thus, in our considered opinion, in the instant case, no
return of income was filed in response to notice under section 148
of the Act, and therefore, the Assessing Officer was not required
to issue notice under section 143(2) of the Act for completing the
assessment/reassessment of the income escaped under section
147 of the Act.
7.9 In the case of Vodithala Education Society (supra), the
return of income filed by the assessee was belated and thus it
was treated as non-est. The Assessing Officer initiated action
under section 147 of the Act and completed the assessment
under section 147 read with section 143(3) of the Act without
issuing any notice either under section 143(2) or section 142(1) of
the Act. The Tribunal held the assessment as bad in law. But the
Tribunal has noted that in the said case the Department did not
raise the issue that the Assessing Officer has wrongly mentioned
the section as under section 143(3) of the Act read with section
147 of the Act. The relevant finding of the Tribunal is reproduced
as under:
"7. We have considered rival submissions of the parties and perused
the material on record. We have also gone through the orders of the
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revenue authorities. We have also carefully applied our mind to the
decisions relied upon by the parties. Undisputed fact is that the
assessment order in case of the assessee for the impugned
assessment year was passed u/s 143(3) read with section 147 of
the Act. Section 143(2) of the Act mandates that ITA No.1163 & CO
55 of 2011 Vodithala Education Society, Hyd. for an assessment to
be made u/s 143(3) of the Act, a notice u/s 143(2) of the Act is
required to be issued to the assessee within the period of 12 months
specifying the particulars of any claim of loss, deduction, allowance
or relief which the Assessing Officer has reason to believe to be
inadmissible and requiring the assessee to appear before him on the
specified date and to produce any evidence or particulars on which
the assessee may rely upon in support of such claim. Undisputedly,
in the facts of the present case, it is apparent from the materials on
record as well as the remand report submitted by the Assessing
Officer, no notice either u/s 143(2) of the Act or section 142(1) of the
Act was issued to the assessee before completing assessment. It is
also not the case of the department before us that the
Assessing Officer has wrongly mentioned it as 143(3) read
with section 147 of the Act. On the contrary, the learned
Departmental Representative has tried to make out a case that when
there is no valid return filed by the assessee, there is no requirement
of issuing notice u/s 143(2) of the Act. However, we are unable to
accept such contention of the learned Departmental Representative.
If the Assessing Officer treats the return filed belatedly to be a non
est return then certainly the Assessing Officer could not have
proceeded for making assessment u/s 143(3) of the Act. However,
once the Assessing Officer proceeds to complete the assessment u/s
143(3) of the Act, then the mandatory requirement under the statute
is that he must issue a notice u/s 143(2) of the Act, which has not
been done in the present case. As held by the Hon'ble Supreme
Court in the case of Hotel Blue Moon (supra) the requirement of
issuing notice u/s 143(2) of the Act is a mandatory requirement and
not a curable procedural irregularity. When the statute requires an
act to be done in a particular manner, then it has to be done in
that ITA No.1163 & CO 55 of 2011 Vodithala Education Society,
Hyd. manner only. The Assessing Officer having proceeded to make
an assessment u/s 143(3) read with section 147 of the Act, notice
u/s 143(2) should have been issued to the assessee before
completing the assessment. The Assessing Officer having not issued
any notice u/s 143(2) of the Act, the assessment order is bad in law.
In fact, the Assessing Officer himself in the remand report has
admitted this fact and has stated that at least one notice u/s 143(2)
and u/s 142(1) of the Act was required to be issued to the assessee
before completing the assessment u/s 143(3) read with section 147
of the Act."
(emphasis supplied externally)
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ITA No.1682/Del/2017
7.10 We find that in the present case the Revenue has submitted
before us that the mentioning of section 143(3) of the Act in the
assessment order, instead of section 144 of the Act, is an
inadvertent mistake, which is curable under section 292B of the
Act. In view of the change of facts of the present case, the ratio of
the case of Vodithala Education Society (supra) is not applicable
over the facts of the instant case.
7.11 The Ld. counsel has relied on the decision of the Tribunal
(SMC) bench in the case of ITO Vs. Neeraj Gooyal (supra). In the
said case, the assessee did not comply to the notice issued under
section 148 of the Act for filing return of income. The assessee
also did not comply with subsequent notice issued under section
142(1) of the Act for filing return of income. In the circumstances,
the Assessing Officer completed the assessment under section
144 of the Act. The assessee challenged that no notice under
section 143(2) of the Act was issued and, therefore, the
assessment should be held as void ab-initio. The Ld. CIT(A)
accepted the arguments of the assessee and held that the
Revenue cannot argue that the provisions of section 143(2) hold
true only in cases where the return is filed by the assessee.
According to the Ld. CIT(A), the procedure prescribed in the event
of filing of return of income will also hold to the event of non-filing
of return of income and therefore the Assessing Officer was bound
in law to assume the jurisdiction under section 143(2) to frame
assessment order whether with the return of income or without
the return of income and whether under section 143(3) or 144 or
under some other provisions of the law. This finding of the Ld.
Commissioner of Income-tax (Appeals), has been upheld by the
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ITA No.1682/Del/2017
Tribunal. In our opinion, the finding of the law on the issue is not
correct and it is well settled that notice under section 143(2) can
be issued only subsequent to the filing of the return of income by
the assessee in terms of section 139 of the Act.
7.12 In view of the above discussion, we hold that as no return of
income was filed by the assessee in response to notice u/s 148 of
the Act, the assessment should have been completed under
section 144 of the Act and mentioning of the section 143(3) of the
Act in the assessment order is an mistake on the part of the
Assessing Officer and which is a curable mistake under section
292B of the Act.
7.13 Now the issue before us for consideration is whether the
Assessing Officer has complied with the requirement of section
144 of the Act.
7.14 According to the section 144 of the Act, before making
assessment under section 144 of the Act, the Assessing Officer
should give an opportunity of being heard to the assessee and for
this purpose the Assessing Officer will serve a notice calling upon
the assessee to show cause on the date and time specified in the
notice as why the assessment should not be completed to the best
of his judgment. The show cause notice shall not be necessary
where a notice under section 142(1) of the Act has been issued
prior to the making assessment under section 144 of the Act.
7.15 In the instant case before us, we find that no show cause
notice has been issued to the assessee for making best judgment
assessment. However, we note that the Assessing Officer has
raised various queries to the assessee, which is evident from
para-5 of the assessment order. We find that the Assessing Officer
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ITA No.1682/Del/2017
has asked the assessee to furnish the source of the cash deposits
in assessee's bank accounts. The Assessing Officer has further
mention in order that the authorised representative of the
assessee filed written submission on 26/03/2015. The Assessing
Officer has reproduced the replies given by authorised
representative. We find that the authorised representative
submitted sale deed in few cases only. We also not that further
queries were raised to the assessee as mentioned in para 7, para
8 and para 10 of the assessment order. We find that though
specifically the Assessing Officer has not mentioned issuing of
any notice under section 142(1) of the Act, but for all practical
purposes queries having raised and the assessee has partly
responded the queries. The Income-tax Act has not provided any
statutory format of notice under section 142(1) of the Act. One of
the purposes of issuing notice under section 142(1) of the Act is
to authorize the Assessing Officer for raising queries to the
assessee. The queries can be raised even through order sheet of
the file or even the authorised representative can be asked orally
during assessment proceedings. In the instant case, we find that
the Assessing Officer has raised queries from time to time for
making assessment, however the assessee submitted only part
information particularly in respect of the sale transactions. We do
not find any illegality in the assessment proceedings, which is
fatal for annulling the entire assessment proceedings, particularly
when a copy of the reasons recorded was already provided to the
assessee and all the queries in respect of the addition in dispute
have been raised during the assessment proceedings. We do not
find any violation of the principle of the natural Justice. Whereas
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ITA No.1682/Del/2017
we find that the assessee has played game of hide and seek and
accepted the undisclosed income pointed out either by the
Assessing Officer or by the Ld. CIT(A) when she found herself
cornered. In the facts and circumstances of the case, in our view,
the Assessing Officer has complied the requirement of issuing
notice under section 142(1) of the Act and thus, the conditions of
completing the assessment under section 144 of the Act are
fulfilled. In view of our aforesaid discussion, we are of the opinion
that in absence of any return of income filed by the assessee in
response to notice under section 148 of the Act, the Assessing
Officer was justified in completing the assessment under section
144 of the Act. Thus, both grounds No. 2 and 3 of the appeal are
dismissed.
8. Qua the ground No. 4, the assessee has challenged that in
absence of books of accounts addition of Rs.15,22,221/- and
addition of Rs.89,75,305/- could not have been made under
section 68 of the Act.
8.1 The Ld. counsel supporting the grounds submitted that
addition under section 68 can be made only in the circumstances,
where any sum is found credited in the books of accounts
maintained by the assessee, whereas in the present case the
sums have been found to be deposited in the bank accounts.
According to him, the additions should have been made under
section 69 of the Act and, therefore, the addition made under
section 68 cannot be sustained. In support of the contention, the
Ld. counsel relied on the decision of the Hon'ble Bombay High
Court in the case of Commissioner of Income-tax Vs.Bhaichand N
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ITA No.1682/Del/2017
Ghandhi, (1982) 11 taxman 59 and decision of the Hon'ble Delhi
High Court in the case of CIT Vs. Ms. Mayawati 338 ITR 563.
8.2 On the other hand, the Ld. DR submitted that the assessee
was required to maintain books of accounts corresponding to the
amounts received as advance against booking of plots, which
have been ultimately deposited in bank account and therefore it
hardly makes difference if the addition has been made under
section 68 or section 69 of the Act.
8.3 We have heard the rival submissions of the parties.
According to section 68 of the Act where any sum is found
credited in the books of an assessee maintained for any previous
year and the assessee offers no explanation about the nature and
source or the explanation offered by him is not in opinion of the
Assessing Officer satisfactory, the sum so credited may be
charged to Income-tax as income of the assessee. According to
section 69, where the assessee has made investment, which are
not recorded in the books of accounts, if any maintain by him for
any source of income and the assessee offers no explanation
about the nature and source of the investment or explanation
offered by him is not, in the opinion of the Assessing Officer
satisfactory, the value of the investment may be deemed to be
income of the assessee.
8.3 In the case of Bhaichand N Ghandhi, a sum was found
deposited in the bank passbook, however, same was not shown in
the cashbook maintained by him. In the circumstances, it is held
by the Hon'ble Bombay High Court that the passbook supplied by
the bank to the assessee could not be regarded as books of the
assessee and the addition made under section 68 of the Act was
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ITA No.1682/Del/2017
not justified. In the present case before us, the assessee has
prepared statement of account on the basis of deposits appearing
in bank statement. In the said statement of accounts, the
assessee has explained the said deposits as advance received
against sale of plots. Therefore, it is not the case, where such
deposits are not appearing in books of accounts and, therefore,
section 68 becomes inapplicable. Here the origin of investigation
is the bank account, however, before the Ld. CIT(A) the assessee
has submitted complete statement of accounts of the said
deposits in bank account. In aforesaid facts and circumstances,
the said sum are definitely credited in books of accounts and the
assessee cannot be allowed to take shelter of the precedents,
which are not applicable in the facts of the instant case. In the
case of Ms. Mayawati (supra), the issue involved was of certain
gifts received in cash, which were taxed by the AO under section
69 of the Act, and thus, the ratio of the said decision is not
applicable over the facts of the instant case. In view of the
aforesaid discussing, we do not find any infirmity in the action of
the Ld. CIT(A) in sustaining the addition under section 68 of the
Act. Accordingly, the ground No. 4 of the appeal is dismissed.
8.4 Qua the ground No.5, the assessee has challenged that
sustaining addition under section 68 of the Act is beyond the
powers of the Ld. CIT(A).
8.5 The learned counsel submitted that the Assessing Officer
treated the difference of the amount of advance received and
amount paid for purchase of the land as business income of the
assessee, whereas the Ld. CIT(A) has treated part of the amount
of advance received as undisclosed income of the assessee under
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ITA No.1682/Del/2017
section 68 of the Act. He submitted that the section 68 says about
satisfaction of the Assessing Officer for making the addition,
whereas the commissioner of Income Tax (Appeals), being
appellate authority and not the Assessing Officer, cannot make
addition under section 68 of the Act. In support of the contention,
the Ld. counsel relied on the decision of the Tribunal in the case
of ACIT Vs. Pardeep Publications (2010) 130 TTJ 92 (ASR) (UO).
8.6 The Ld DR, on the other hand, submitted that the Ld. CIT(A)
is having coterminous power of the Assessing Officer and he has
not taxed any new source of income and thus he was justified in
making addition under section 68 of the Act.
8.7 We have heard the rival submissions and perused the
relevant material on record. It is settled law that the CIT(A) is
having plenary powers in disposing of an appeal in the scope of
his power as coterminous with that of the Assessing Officer. The
Hon'ble Supreme Court in the case of CIT Vs Kanpur Coal
Syndicate (SC) 53 ITR 229 has observed as under:
"The next question is whether the said option is given only
to the ITO and is denied to the AAC and the Appellate
Tribunal. Under the Act the ITO, after following the
procedure prescribed, makes an assessment under s. 23
of the Act. Doubtless in making an assessment at the first
instance he has to exercise the option whether he should
assess the AOP or the members thereof individually. It is
not because that any section of the Act confers an
exclusive power on him to do so, but because it is part of
the process of assessment; that is to say, he has to
ascertain who is the person liable to be assessed for the
tax. If he seeks to assess an AOP as an assessable entity,
the said entity can object to the assessment, inter alia, on
the ground that in the circumstances of the case the
assessment should be made on the members of the
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ITA No.1682/Del/2017
association individually. The ITO may reject its contention
and may assess the total income of the association as
such and impose the tax on it. Under s. 30 an assessee
objecting to the amount of income assessed under s. 23 or
the amount of tax determined under the said section or
denying his liability to be assessed under the Act can
prefer an appeal against the order of the ITO to the AAC. It
is said that an order made by the ITO rejecting the plea of
an association of persons that the members thereof shall
be assessed individually does not fall under one or other
of the three heads mentioned above. What is the
substance of the objection of the assessee? The assessee
denies his liability to be assessed under the Act in the
circumstances of the case and pleads that the members of
the association shall be assessed only individually. The
expression ``denial of liability'' is comprehensive enough to
take in not only the total denial of liability but also the
liability to tax under particular circumstances. In either
case the denial is a denial of liability to be assessed under
the provisions of the Act. In one case the assessee says
that he is not liable to be assessed to tax under the Act,
and in the other case the assessee denies his liability to
tax under the provisions of the Act if the option given to the
appropriate officer under the provisions of the Act is
judicially exercised. We, therefore, hold that such an
assessee has a right of appeal under s. 30 of the Act
against the order of the ITO assessing the association of
members instead of the members thereof individually. If an
appeal lies, s. 31 of the Act describes the powers of the
AAC in such an appeal. Under s. 31(3)(a) in disposing of
such an appeal the AAC may, in the case of an order of
assessment, confirm, reduce, enhance or annul the
assessment; under clause (b) thereof he may set aside the
assessment and direct the ITO to make a fresh
assessment. The AAC has, therefore, plenary powers
in disposing of an appeal. The scope of his power is
coterminous with that of the ITO. He can do what
the ITO can do and also direct him to do what he
has failed to do. If the ITO has the option to assess
one or other of the entities in the alternative, the
AAC can direct him to do what he should have done
in the circumstances of a case. Under s. 33(1), an
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ITA No.1682/Del/2017
assessee objecting to an order passed by an AAC under s.
28 or s. 31 may appeal to the Appellate Tribunal within 60
days of the date on which such order is communicated to
him. Under s. 33(4), ``The Appellate Tribunal may, after
giving both parties to the appeal an opportunity of being
heard, pass such orders thereon as it thinks fit, and shall
communicate any such order to the assessee and to the
Commissioner." Under s. 33(5), "Where as the result of an
appeal any change is made in the assessment of a firm or
AOP or a new assessment of a firm or AOP is ordered to be
made, the Appellate Tribunal may authorise the ITO to
amend accordingly any assessment made on any partner
of the firm or any member of the association." Under this
section the Appellate Tribunal has ample power to set
aside the assessment made on the AOP and direct the ITO
to assess the individuals or to direct the amendment of the
assessment already made on the members. The
comprehensive phraseology used both in s. 31 and s. 33 of
the Act does not countenance the attempt of the Revenue to
restrict the powers of the AAC or of the Appellate Tribunal:
both of them have power to direct the appropriate authority
to assess the members individually instead of the AOP as
a unit."
(Emphasis supplied externally)
8.8 Further, in the case of CIT Vs Shapoorji Palloonji Mistry 44
ITR 891 the Hon'ble Supreme Court held that although the
appellant Asstt. Commissioner has powers to enhance the
assessment, but he has no power to travel beyond the record to
enhance assessment of any year by discovering new source of
income either in the return of income made by the assessee or the
assessment order passed by the Income-tax Officer.
8.9 In the instant case, the Ld. CIT(A) has properly analyzed the
facts in respect of the deposits appearing in the bank account
and reconciled the same with the business profit and made
addition of undisclosed income for the amount which could not
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be reconciled with the business profit . Keeping in view the above
judicial position, we are of the opinion that the addition sustained
by the Ld. CIT(A) is in respect of the source of income already
assessed by the Assessing Officer. In view of the aforesaid
discussion, the ground No. 5 raised by the assessee is dismissed.
9. In ground No. 6, the assessee has raised the issue that
Addison under section 68 for the amount of Rs.36,611/- and
Rs.15,15,600/- has been confirmed in spite of the fact that
sufficient cash in hand was available with the assessee at the
relevant point of time.
9.1 The Ld. counsel of the assessee referred to cash flow
statement of the assessee from 01/04/2009 to 31/03/2010
available on page 72 to 74 of the Paper Book. This cash flow
statement was filed before the Ld. CIT(A). In view of the Ld.
counsel, if the availability of the cash with the assessee is
considered according to the cash flow statement, addition of
Rs.36,611/- and Rs.15,15,600/-would not be warranted.
9.2 The Ld. DR, on the other hand, relied on the order of the
lower authorities.
9.3 We have heard the rival submissions and perused the
relevant metal on record. We find that the Ld. CIT(A) has taken
into account all cash receipts while sustaining the additions in
dispute. The Ld. CIT(A) in the impugned order has observed as
under:
"4.27 As mentioned above, the claim of advance having been received by the
appellant was made by the appellant to explain the sources of cash deposits
amounting to Rs.1,47,33,861/- in her bank "account No. 131010100623476.
Further, as mentioned above, no evidence or confirmation with regard to the
claim of the cash having been received as advance from the various persons was
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furnished by the appellant. In view of these facts, it is held that the cash,
amounting to Rs.89,75,305/- which was claimed to have been returned over the
years was in fact never received by the appellant in the year 2009-10 and
accordingly the cash deposits in the bank account No.131010100623476 to that
extent remain unexplained . This amount is accordingly held to be income of the
appellant for the year under consideration i.e. AY 2010-11, in addition to the
amount of Rs. 9,38,251/-, computed by the appellant, as referred above.
1.28 Further, as all the cash receipts of the appellant have been accounted for
while computing the aforesaid income, it is held that no amount of cash was
available with the appellant for making the cash deposits amounting to
Rs.36,611/- and Rs.15,15,600/-. The additions made on this account are also
confirmed. The AO is directed to re-compute the income accordingly. The
grounds of appeal of the appellant are partly allowed."
9.4 Before us, the Ld. counsel could not point out particular
amount of the advance received, which has not been considered
by the Ld. CIT(A). The Ld. counsel has made a general statement
and not pointed out any specific error in the finding of the Ld.
CIT(A) on this issue. In absence of any specific error in the
amount of cash receipts considered by the Ld. CIT(A) for
explaining the cash deposits, we do not find any infirmity in the
order of the Ld. CIT(A) and accordingly we uphold the same. The
ground No. 6 of the appeal raised by the assessee is, accordingly
dismissed.
8. In ground No. 7, the assessee has raised the issue that while
considering the addition of Rs.89,75,305/-, no enquiry has been
done from the address of the buyers and addition has been
confirmed without confronting the same to the assessee.
8.1 The Ld. counsel submitted that the matter may be restored
to the file of the Assessing Officer for verification of the sum of
advance returned to the buyers.
8.1 The Ld. DR opposed the request of the Ld. counsel of the
assessee. He submitted that sufficient opportunity was already
34
ITA No.1682/Del/2017
provided to the assessee and it was the onus of the assessee to
come forward and file necessary evidence in support of its claim
of refund of advance money to the buyers, but the assessee has
not discharged its onus, not only before the Assessing Officer but
even before the Ld. CIT(A). Accordingly, he submitted that the
request of the assessee for restoring the matter to the Assessing
Officer should be rejected.
8.2 We have heard the rival submission and perused the
relevant material on record. We find that in the process of
reconciliation of the amount of bank deposits with the sale
consideration recorded in registered sale deeds, the assessee
claimed before the Ld. CIT(A) that amount of Rs.89,75,305/- was
returned to the buyers of the plots. The observation of the Ld.
CIT(A) in this regard are reproduced as under:
"4.25 Further, out of the advance claimed to have been received in
FY 2009-10 amounts totaling Rs.33,86,370/- were claimed to have
been returned to the prospective buyers in the month of August,
2010 in cases where no registration deed was signed. No evidence
with regard to the claim that the aforesaid amounts have been
returned to the concerned persons was furnished by the appellant. It
is evident from the facts discussed above that the claim of the
appellant regarding returned of cash at the time of registration or
otherwise is a self serving statement without any support evidence.
In these circumstances of the case, there are only possibilities:-
i. The cash which was claimed to have been returned at the
time of registration or otherwise, totaling an amount of
Rs.789,75,305/-, was never received as advance and the
claim was made by the appellant merely to explain the
sources of cash deposits in the bank account. It may be
relevant to mention here that even at the time of assessment
proceedings or at the time of appellate proceedings no
confirmation or evidences with regard to the claim of receipts
of advance in this regard was furnished by the appellant.
ii. The other possibility is that the sale consideration was not
stated correctly in the registered sale deed and cash
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ITA No.1682/Del/2017
component claimed to have been returned at the time of
registration of sale deed was the amount of consideration
over and above the consideration shown in the registered
sale deed.
4.26 In the first case, the amount of Rs. 89,75,305/- would be
taxable as income in the year under consideration i.e. AY 2010-11
on the ground that the cash deposits in the bank account to this
extent remain unexplained. In the second case, cash claimed to have
been returned in the FY 2009-10, 2010-11 and 2011-12 would be
taxable in respective AY as being consideration received by the
appellant over and above the amounts shown in the respective sale
deeds.
4.27 As mentioned above, the claim of advance having been
received by the appellant was made by the appellant to explain the
sources of cash deposits amounting to Rs.1,47,33,861/- in her bank
account No.131010100623476. Further, as mentioned above, no
evidence or confirmation with regard to the claim of the cash having
been received as advance from the various persons was furnished
by the appellant. In view of these facts, it is held that the cash
amounting to Rs.89,75,305/- which was claimed to have been
returned over the years was in fact never received by the appellant
in the year 2009-10 and according the cash deposits in the bank
account No.131010100623476 to that extent remain unexplained.
This amount is accordingly held to be income of the appellant for the
year under consideration i.e. AY 2010-11, in addition to the amount
of Rs.9,38,251/-, computed by the appellant, as referred above."
8.3 From the above observation, we note that no evidence with
regard to the claim that the amounts were returned to the
concerned person, were filed before the Ld. CIT(A). Even before
us, the Ld. Counsel of the assessee has only made the
submission that no enquiry has been carried out by the
Department for verification but no such evidence like copy of
confirmations of parties, copy of bank statement of the assessee
indicating refund of money, copy of the bank statement of the
buyer parties etc. have been filed to discharge the primary onus
of the assessee. In view of the aforesaid, the request of the Ld.
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ITA No.1682/Del/2017
Counsel of the assessee for restoring the matter to the Ld.
Assessing Officer, cannot be accepted. Accordingly, the ground 7
of the appeal is dismissed.
9. The ground No. 9 of the appeal being general in nature, we
are not required to adjudicate upon.
10. In the result, the appeal of the assessee is dismissed.
Order is pronounced in the open court on 20th Sept., 2018.
Sd/- Sd/-
(AMIT SHUKLA) (O.P. KANT)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated: 20th September, 2018.
RK/-(D.T.D.)
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(A)
5. DR
Asst. Registrar, ITAT, New Delhi
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