Case Law Details
Smt. Nalini Anilbhai Amin Vs DCIT (ITAT Ahmedabad)
The proceedings, in the instant case, under section 147 of the Act were initiated by the AO on account of escapement of income of the capital gain generated on the sale of the property. This fact can be verified from the reasons recorded by the AO for initiating the proceedings under section 147 of the Act which is placed on page 16 of the paper book. However, the AO has made the addition for Rs. 1,55,01000.00 under the provisions of section 56(2)(vii)(a) of the Act on account of the money received by the assessee without consideration. As per the AO, the money has been received by the assessee without any consideration and therefore the same should be treated as income of the assessee under the head income from other sources under the provisions of section 56(2)(vii)(a) of the Act. The addition made by the AO came to be confirmed by the learned CIT (A) in part.
As per the learned AR for the assessee, the basis on which the proceeding under section 147 of the Act were initiated did not survive as there was no addition made in the assessment proceedings qua to that reason. Accordingly, the learned AR contended that the AO cannot make any addition under any other head as the basis for reopening the assessment under section 147 of the Act did not survive.
As per the Revenue the amount of sale consideration received by the assessee stands at ₹3,05,010,00.00 whereas the assessee has disclosed of sum of ₹1.50 crores in the books of accounts against the sale of the property. Thus, it is apparent that the amount which has not been disclosed by the assessee represents the sale consideration of the property which can be subject to tax under the provisions of section 48 of the Act. Furthermore, the assessee has shown the sale consideration of ₹1.50 crores under the head capital gain and the amount in dispute directly relates to the same property and therefore the same can only be brought to tax under the head capital gain. In other words, the same cannot be made subject to the tax under the provisions of section 56 of the Act. In our humble understanding, the principles laid down by the ITAT in the own case of the assessee (Supra) are directly applicable to the issue on hand. Hence, we are of the view that the initiation of the proceedings under section 147 of the Act are bad in law. Hence, the ground of appeal of the assessee is allowed.
As we have decided the issue in favour of the assessee on the technical ground raised by her by holding that the assessment proceedings under section 147 of the Act are invalid, accordingly, we do not find reason to adjudicate the issue raised by the assessee on merit. As such the issues raised by the assessee on merit become infructuous.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
The captioned appeal has been filed at the instance of the Assessee against the order of the Learned Commissioner of Income Tax (Appeals)-13, Ahmedabad, dated 15/01/2019 arising in the matter of assessment order passed under s. 143(3) r.w.s. 147 of the Income Tax Act, 1961 (here-in-after referred to as “the Act”) relevant to the Assessment Year 2012-2013.
2. The assessee has raised the following grounds of appeal:
The learned Commissioner of Income Tax (Appeals) has erred in confirming the action of the Assessing Officer in reopening the assessment u/s.147 of the Income Tax Act, 1961.
2. The learned Commissioner of Income Tax (Appeals) has erred in confirming the action of the Assessing Officer in passing an order u/s.143(3) r.w.s.147 of the I.T.Act, 1961 without appreciating the case on facts as well as in law and without considering the submissions as well as judicial pronouncements relied upon by the appellant and thereby rendering the reassessment order per incuriam.
3. The learned Commissioner of Income Tax (Appeals) has erred in confirming the addition to (he extent of Rs.1,25,51,000/- out of addition made by the assessing officer on account of alleged unexplained cash receipts.
The learned Commissioner of Income Tax (Appeals) has erred in treating the alleged amount received on transfer of capital) asset as per seized records of the search parly u/s.56(2)(viii)(a) of the I.T. Act, 1961.
4. The learned Commissioner of Income Tax (Appeals) has erred in not appreciating the fact that the appellant is only Power of Attorney Holder and was not the owner o f the asset which is subject to transfer.
5. The Appellant craves leave to add, alter, amend or modify any of the appeal on or before the date of hearing of appeal.
3. The assessee in ground Nos. 1 & 2 has challenged the validity of the assessment proceedings initiated under section 147 of the Act.
4. The proceedings, in the instant case, under section 147 of the Act were initiated by the AO on account of escapement of income of the capital gain generated on the sale of the property. This fact can be verified from the reasons recorded by the AO for initiating the proceedings under section 147 of the Act which is placed on page 16 of the paper book. However, the AO has made the addition for Rs. 1,55,01000.00 under the provisions of section 56(2)(vii)(a) of the Act on account of the money received by the assessee without consideration. As per the AO, the money has been received by the assessee without any consideration and therefore the same should be treated as income of the assessee under the head income from other sources under the provisions of section 56(2)(vii)(a) of the Act. The addition made by the AO came to be confirmed by the learned CIT (A) in part.
5. As per the learned AR for the assessee, the basis on which the proceeding under section 147 of the Act were initiated did not survive as there was no addition made in the assessment proceedings qua to that reason. Accordingly, the learned AR contended that the AO cannot make any addition under any other head as the basis for reopening the assessment under section 147 of the Act did not survive. The ld. AR also submitted that this Tribunal in the own case of the assessee in ITA No. 846/AHD/2012, involving identical facts and circumstances, has decided this issue in favor of the assessee.
6. On the other hand the learned DR contended that there is no issue in the case on hand with respect to the provisions of section 50C of the Act. It means the property was purchased by the assessee at the circle value. Therefore, the amount received by the assessee does not relate to the purchase of the land. Accordingly, the amount received by the assessee without any consideration is subject to tax under the provision of section 56(2)(vii)(a) of the Act. It was also contended that there was the issue relating to the provisions of section 50C of the Act in the own case of the assessee of earlier year in ITA No. 846/AHD/2012 which is not there in the case on hand. Thus the principles laid down in the own case of the assessee by the ITAT are not applicable. The ld. DR vehemently supported the order of the authorities below.
7. We have heard the rival contentions of both the parties and perused the materials available on record. At the outset we note that this ITAT in the own case of the assessee (Supra) has decided this issue, involving identical facts and circumstances, by holding as under:
First of all, we find pertinent to refer the reasons recorded by the AO for initiating the proceedings under section 147 of the Act which reads as under:
In this case, as per AIR information, the assessee has sold immovable property worth Rs.25,52,160/- during the F.Y. 2010-11 relevant to A.Y. 201112. The assessee has not filed his return of income for A.Y. 2011-12.
Considering the facts of the case, I have reason to believe that assessee’s income w.r.t. LTCG/LTCL has escaped assessment for A.Y. 2011-12 within the meaning of section 147 of the Act. Therefore, this is a fit case to initiate proceedings u/s.147 of the income tax Act, 1961. Issue notice u/s.148 of the Act.
9.1 On perusal of the above reasons, it is transpired that there was the property which was sold by the assessee but the assessee failed to disclose the income under the head capital gain on account of transfer of such property. Accordingly, the AO formed his reason to believe that income of the assessee has escaped assessment.
9.2 Moving further, we find that the AO in the assessment framed under section 147 read with section 143(3) of the Act has made the addition for the money received by the assessee from the company namely M/s Multi Industria l Ceramic Pvt Ltd amounting to Rs. 40 Lakh. The relevant finding of the AO as appearing in the assessment order is reproduced as under:
In the absence of such details, it can be safely assumed that the said amount of Rs.40,00,000/- received by the assessee from the company is “Income from other sources” u/s.56(2)(vii) having been received without consideration.
In view of the discussion above, the entire amount o f Rs.40,00,000/- received by the assessee from M/s. Multi Industria l Ceramics Pvt. Ltd. is treated as “Income from other Sources” of the assessee. This amount is clearly reflected as receipts in the assessee’s bank account and the same has been subsequently invested in mutua l funds.
9.3 From the above, there remains no dispute to the fact that the basis/reason on which the proceedings were initiated under section 147 of the Act, there was no addition made by the AO qua to that reason. Thus, the basic premise on which the satisfaction was recorded by the AO for initiating the proceedings under section 147 of the Act i.e. escapement of income on account of sale of the property does not survive. Once the basic foundation goes, then there cannot be any addition on account of any other income which has come to the notice of the AO during the proceedings under section 147 of the Act. In holding so, we draw support and guidance from the judgment of Hon’ble Jurisdictional High Court in case of CIT vs. Mohmed Juned Dadani reported in 355 ITR 172 wherein it was held as under:
In the result, it is held that the Tribunal was right in law in coming to the conclusion that when on ground on which the reopening o f assessment was based, no addition were made by Assessing Officer in the order of assessment, he could not make additions on some other grounds which did not form part of reasons recorded by him. [Para 33]
9.4 In view of the above, we draw our conclusion that the proceedings initiated under section 147 of the Act is invalid as there was no escapement of income in the hands of the assessee on account of sale of the property.
Accordingly, the assessment proceedings initiated under section of the Act is invalid and therefore we quash the same. Hence the additional ground of appea l of the assessee is allowed.
7.1 Coming to the case on hand, we note that the proceedings under section 147 of the Act were initiated against the assessee for the amount received against the sale of the property. The relevant extract of the reason recorded by the AO stand as under:
It was noticed that the total amount paid for the land is Rs.3,05,01,000/-. As per sale deed, Rs.1,50,00,000/- was paid to Smt.Nalini Anilbhai Amin. Thus, it is clear that Rs.1,55,01,000/- was paid in cash to Smt. Nalini Anilbhai Amin and Shri Jayant C. Amin and it was not offered for taxation.
7.2 As per the Revenue the amount of sale consideration received by the assessee stands at ₹3,05,010,00.00 whereas the assessee has disclosed of sum of ₹1.50 crores in the books of accounts against the sale of the property. Thus, it is apparent that the amount which has not been disclosed by the assessee represents the sale consideration of the property which can be subject to tax under the provisions of section 48 of the Act. Furthermore, the assessee has shown the sale consideration of ₹1.50 crores under the head capital gain and the amount in dispute directly relates to the same property and therefore the same can only be brought to tax under the head capital gain. In other words, the same cannot be made subject to the tax under the provisions of section 56 of the Act. In our humble understanding, the principles laid down by the ITAT in the own case of the assessee (Supra) are directly applicable to the issue on hand. Hence, we are of the view that the initiation of the proceedings under section 147 of the Act are bad in law. Hence, the ground of appeal of the assessee is allowed.
7.3 As we have decided the issue in favour of the assessee on the technical ground raised by her by holding that the assessment proceedings under section 147 of the Act are invalid, accordingly, we do not find reason to adjudicate the issue raised by the assessee on merit. As such the issues raised by the assessee on merit become infructuous. Thus we dismiss the same as infructuous.
8. In the result, the appeal of the assessee is partly allowed.
Order pronounced in the Court on 29/04/2022 at Ahmedabad.