Shri Jaideep Singh Vs ITO (ITAT Jaipur)
A question that arises for con sideration is whether the AO can issue second notice u/s 148 and initiate fresh reassessment proceedings before completion/conclusion of proceedings initiated by way of first notice u/s 148 either by way of dropping the first reassessment proceedings or completing the proceedings by passing the reassessment order u/s 147 of the Act. As we have noted above, the assessee has raised a specific objection against initiation of the first reassessment proceedings vide its letter dated 21.01.2015 and has requested to drop such proceedings as he has not made any investment in the property so specified by the AO, the particulars of which was mentioned in the reasons dated 10.03.2014. There is nothing on record that the AO has disposed off the objections so raised by the assessee and dropped the first reassessment proceedings either by way of passing a specific order or even by way of any noting in the ordersheet and in absence thereof, it cannot therefore be presumed that such proceedings have been concluded by the AO. The fact that the AO has issued a fresh notice u/s 148 basis fresh reasons cannot by implication be read and held as conclusion of first reassessment proceedings. We therefore find that it is a case where pending conclusion of the first reassessment proceedings, fresh reassessment proceedings have been initiated which cannot be sustained in the eyes of law and on this reason alone, the present reassessment proceedings initiated by way of notice u/s 148 dated 28.03.2014 are vitiated and same deserve to be set-aside.
FULL TEXT OF THE ORDER OF ITAT JAIPUR
This is an appeal filed by the assessee against the order of ld. CIT(A)-1, Jodhpur dated 18.07.2018 for the assessment year 2007-08 wherein the assessee has raised the following grounds of appeal:-
“1. That the Authorities below have in confirming the proceedings initiated u/s 147 of the IT Act, 1961 by the ITO, Ward 7(2), Jaipur.
2. That the prejudice to the above, the authorities below further erred in confirming the addition of Rs. 50,00,000/- on account o f alleged unexplained cash payment.”
2. During the course of hearing, the ld AR submitted that the assessee is an agriculturalist and has no source of income other than agriculture income from the ancestral land received in Jagir. He has filed the return of income for the year under consideration as Karta of his HUF on 31.07.2007 declaring LTCG on sale of agricultural land at Nil, interest on FDR Rs.2,37,763/- and agriculture income of Rs.3 lacs. The income of the HUF was assessed by the AO u/s 143(3) vide order dt. 07.12.2009 by accepting the income declared. Subsequently, the AO issued notice u/s 148 dt. 28.03.2014 in the name of assessee. The assessee sought copy of reasons recorded for reopening vide letter dt. 17.10.2014. Thereafter vide letter dt. 16.01.2015, he again requested to provide the copy of reasons recorded and stated that the return already filed with ITO, Ward-2(3) may be treated as return filed in response to said notice. In response to same, assessee was provided two copies of reasons recorded by AO, one dt. 10.03.2014 and other dt. 24.03.2014. In the reasons dt. 10.03.2014, AO on the basis of sale deed available with him stated that assessee, along with 5 other co-owners, has purchased a land bearing Khasra No.388 from Sh. Ganga Ram on 24.05.2006 for Rs.1,87,20,000/- in which assessee’s share comes to Rs.31,20,000/-. This land was acquired by RIICO on 16.09.2017 against which compensation of Rs.2,05,72,485/- was received in which assessee’s share is Rs.34,28,748/- and thus, there is short term capital gain of Rs.3,08,748/- (34,28,747-31,20,000). Hence, income escaped assessment in respect of the assessee amounts to Rs.34,28,748/-(31,20,000 + 3,08,748). In the reasons dt. 24.03.2014, the AO on the basis of sale deed available with him stated that assessee has purchased a land bearing Khasra No.325 on 22.05.2006 for Rs.3,14,95,875/- out of which Rs.1 crore has been paid till 22.05.2006. Since assessee is not filing the return of income, source of investment of Rs.1 crores remains unexplained and thus, income to that extent has escaped assessment.
3. It was submitted by the ld AR that against first reasons recorded by AO, the assessee vide reply dt. 21.01.2015 submitted that he has not purchased any such land and thus, proceedings so initiated is bad in law and be cancelled. Against second reasons recorded by AO, assessee vide reply dt.21.01.2015 submitted that only Rs.50 lacs was paid on 22.05.2006 for purchase of land as against Rs.1 crore stated in the reasons which is considered in the return of M/s Jaideep Singh HUF. Further assessment in case of M/s Jaideep Singh HUF has already been completed u/s 143(3) and thus reopening of the case amounts to change of opinion which is not permissible in view of the decision of Hon’ble Supreme Court in case of CIT Vs. Kelvinator of India. The AO without disposing the objections issued show cause notice dt. 04.02.2015 in which he did not take cognizance of the reasons recorded u/s 148 dt. 10.03.2014. However, in respect of second reasons recorded u/s 148 dt. 24.03.2014, he required the assessee to explain the source of cash payment of Rs.50 lacs on purchase of land, calculation of capital gain on sale of land and source of cash deposit of Rs.20 lacs in the bank account. Accordingly, the AO assessed the income at Rs.1,57,91,730/-by making following additions:-
