Income Tax Appellate Tribunal - Mumbai
Anil Jaggi, Mumbai vs Acit, Cit 30(1), Mumbai on 20 December, 2017
Shri Anil Jaggi Vs. ACIT - A.Y. 2007-08 1
ITA No. 3049/Mum/2016
IN THE INCOME TAX APPELLATE TRIBUNAL "A" BENCH, MUMBAI
BEFORE SHRI G.S PANNU, AM AND SHRI RAVISH SOOD, JM
ITA No. 3049/Mum/2016
(निर्धारण वषा / Assessment Year:20 07-08)
Shri. Anil Jaggi Asst. Commissioner Of Income-Tax,
Flat No. 201, Gardenia B, Circle 30(1), C-13, Room No. 503,
Vasant Valley, Film City बिधम/ 5th Floor, Pratyashakar Bhavan.
Malad (E), Vs. Bandra Kurla Complex, Bandra (E),
Mumbai -400 064. Mumbai - 400 051.
स्थामी रेखा सं ./ जीआइआय सं ./ PAN No. AACPJ7052M
(अऩीराथी /Appellant) : (प्रत्मथी / Respondent)
अऩीराथी की ओय से / Appellant by : Shri J.P Bairagra, A.R
प्रत्मथी की ओय से/Respondent by : Shri V Justin, D.R
सुनवाई की तायीख / : 06.10.2017
Date of Hearing
घोषणा की तायीख / : 20.12.2017
Date of Pronouncement
आदे श / O R D E R
PER RAVISH SOOD, JUDICIAL MEMBER:
The present appeal filed by the assessee is directed against the order passed by the CIT(A)-41, Mumbai, dated 02.03.2016 which in itself arises from the order passed by the A.O under Sec. 143(3) of the Act, 1961 (for short „Act‟), dated 31.03.2015. The assessee assailing the order of the CIT(A) had raised before us the following grounds of appeal:-
Shri Anil Jaggi Vs. ACIT - A.Y. 2007-08 2 ITA No. 3049/Mum/2016 "1. The Ld. CIT(A) erred in confirming the re-opening of the assessment u/s 147 of the Income Tax Act.
2. The Ld. CIT(A) further erred in confirming the action of the AO of reopening the assessment u/s 147 without providing the copy of exact reasons recorded for re-opening of the assessment and the copy of necessary approval u/s. 151(1) taken from the Commissioner of Income Tax.
3. The Ld. CIT(A) further erred in confirming the re-opening of the assessment when the original assessment was completed u/s.143(3) and the same is re-opened after four years, without giving any finding that income has escaped assessment by reason of failure on the part of the assessee to disclose fully and truly all material facts needed for his assessment as per proviso to section 147 of the Income Tax Act.
4. The Ld. CIT(A) further erred in confirming the addition of Rs. 2,23,00,000/- as unexplained investments u/s 69B of the Income Tax Act, 1961.
5. The Ld. CIT(A) further erred in confirming the addition merely based on some detail available in pendrive allegedly collected from Hiranandani Group and on the statement u/s. 132(4) made by Shri Niranjan Hiranandani.
6. The Ld. CIT(A) further erred in confirming the addition by relying on statement given during cross-examination of Shri Niranjan Hiranandani, whereas from the cross-examination it is very clear that there is no proof regarding the receipt of on-money by Shri Niranjan Hiranandani from the Appellant.
7. The Appellant craves leave to add to, alter or amend any ground before or at the time of hearing."
2. Briefly stated, the facts of the case are that the assessee had filed his return of income on 10.08.2007, declaring income of Rs.89,52,275/- showing salary income from BG Exploration & Production India Ltd., capital gain from sale of equity shares/mutual fund units and interest income. The return of income filed by the assessee was processed as such under Sec. 143(1) of the Act. The case of the assessee was taken up for scrutiny assessment and the income of the assessee was assessed at Rs. 91,93,540/- under Sec. 143(3) on 19.11.2009. The Director General of Income-tax (Inv.), Mumbai as per his letter dated 27.03.2014 shared information with the A.O that the Search & seizure proceedings conducted on Hiranandani Group of cases revealed that the assessee had made "on money" payments to Shri Anil Jaggi Vs. ACIT - A.Y. 2007-08 3 ITA No. 3049/Mum/2016 Hiranandani Group for purchase of property in the projects of the said group, as under:
Concern of Hiranandani Group to Amount of money paid whom „On Money‟ paid.
Lake View Developers Rs. 85,00,000/-
Lake View Developers Rs. 30,00,000/-
Lake View Developers Rs. 60,00,000/-
Lake View Developers Rs. 32,00,000/-
Lake View Developers Rs. 16,00,000/-
Total Rs. 2,23,00,000/-
The A.O on the basis of the aforesaid information reopened the case of the assessee under Sec. 147 of the Act. The assessee submitted that his original return of income filed on 10.08.2007 may be treated as a return of income filed in compliance to notice issued under Sec. 148. The copy of the reasons to believe on the basis of which the case of the assessee was reopened were at the request of the assessee made available to him by the A.O vide his letter dated 28.04.2014.
3. The A.O during the course of the reassessment proceedings observed that despite the fact that the income of the assessee after being subjected to certain additions/disallowances was originally assessed at Rs. 91,93,540/- vide assessment framed under Sec.
143(3) on 19.11.2009, however, the assessee had in response to the notice u/s 148 declared his total income as per the original return at Rs. 89,52,275/-.
4. The A.O during the course of the reassessment proceedings called upon the assessee to explain as to why the "on money" paid to Lake View Developers of Hiranandani group may not be assessed as an unexplained investment in his hands. The assessee in his reply Shri Anil Jaggi Vs. ACIT - A.Y. 2007-08 4 ITA No. 3049/Mum/2016 objected to the proposed action of the A.O on multiple grounds, viz. (i). that as the assessment in the hands of the assessee was already framed under Sec. 143(3), therefore, in the absence of any failure on the part of the assessee to truly and fully disclose all material facts necessary for completing the assessment, the same could not be reopened under Sec. 147 after expiry of four years from the end of the relevant assessment year; (ii). that despite persistent requests of the assessee the relevant parts of the statement of Sh. Niranjan Hiranandani and details of payments of money in excel sheet, on the basis of which the case of the assessee was claimed to have been reopened was supplied only as on 09.03.2015; (iii). that the reasons for reopening made available to the assessee by the A.O vide his letter dated 28.04.2014 though referred to "As per information received", however, there was no mention as to from where the information was received; (iv). the aggregate of the 5 amounts mentioned in the reasons to believe supplied to the assessee vide letter dated 28.04.2014 did not tally with the 5 separate amounts as were intimated to the assessee vide another letter dated 09.03.2015; (v). the aggregate of the amounts of Rs. 2.13 crores mentioned in the reasons to believe supplied to the assessee vide letter dated 28.04.2014 did not tally with the amount of Rs. 2.03 crores intimated to the assessee vide letter dated 09.03.2015;
(vi). the information on the basis of which escapement of income of the assessee was alleged was falling short of material facts, viz. date and mode of receipt of „on money‟, who had paid the money, to whom the money was paid, date of agreement and who had prepared the details;
(vii). that from the records it could neither be gathered as to what was the source from where the information was received in a pen drive and under what circumstances the statement of Shri. Niranjan Hiranandani was recorded, nor any opportunity was afforded to the assessee to cross-examine the aforesaid person whose statement was Shri Anil Jaggi Vs. ACIT - A.Y. 2007-08 5 ITA No. 3049/Mum/2016 being relied upon by the department; AND (viii). that as the purchase consideration for which the assessee had purchased the flats vide agreements which were registered on 21.11.2006 was more than the market value as determined by the sub-registrar, therefore, the said fact in itself ruled out the scope of payment of any "on money" by the assessee. The A.O after deliberating on the contentions of the assessee, wherein the latter had objected to the very assumption of jurisdiction for the reopening of the case by the A.O, as well as assailed the purported addition in his hands on the basis of alleged payment of "on money" on merits, was however not persuaded to accept the same. The A.O holding a conviction that the assessee had paid an amount of Rs. 2,23,00,000/- as "on money" to M/s Lake View Developers in respect of purchase of Flat No. 2501 in their project, therefore, made an addition of the said amount under Sec. 69B.
5. Aggrieved, the assessee assailed the assessment framed by the A.O before the CIT(A). That during the course of the appellate proceedings the CIT(A) called for a remand report from the A.O, alongwith a direction that an opportunity of cross-examination of Sh. Niranjan Hiranandani be allowed to the assessee. The A.O facilitated the cross-examination of Sh. Niranjan Hiranandani to the assessee, and furnished his remand report with the CIT(A). The assessee in his rejoinder to the remand report and the cross-examination of Sh. Niranjan Hiranandani submitted that no payment of "on money" could be gathered from his statement, primarily for the reason, viz. (i). that neither Sh. Niranjan Hiranandani had maintained any cash book, nor was he aware of the person who had made the entry in the pen drive;
(ii). that Sh. Niranjan Hiranandani had no information regarding date of receipt of "on money", who had paid the same, who had received the cash in his concern and who had prepared the details without noting the said three things; and (iii). that Sh. Niranjan Hiranandani had Shri Anil Jaggi Vs. ACIT - A.Y. 2007-08 6 ITA No. 3049/Mum/2016 neither issued any receipt of cash, nor was having any proof that the assessee had paid any cash towards purchase of flat. Thus, it was submitted by the assessee that the facts as emerged from the record did not prove escapement of income of the assessee.
6. The assessee assailed the validity of the reassessment proceedings before the CIT(A) on the ground that in the backdrop of the fact that assessment had already been framed in the hands of the assessee under Sec. 143(3), therefore, in the absence of escapement of income by reason of failure on the part of the assessee to disclose fully and truly all material facts necessary for completing the assessment, the A.O had wrongly assumed jurisdiction and reopened the case of the assessee. The CIT(A) however being of the view that as the A.O was in receipt of specific information from the investigation wing in respect of purchase of 3 flats, viz. Flat No. 2501A, 2501B and 2501C in "Somerset" project of Lakeview Developers (a project of Hiranandani group), which revealed that the assessee had paid "on money" for purchase of the aforesaid property, therefore, in the absence of full and true disclosure of all the material facts as regards the investment made by the assessee for purchase of the aforesaid property, the reopening of the case was validly done. The assessee further averred before the CIT(A) that the A.O by acting on the basis of vague information had initiated the reassessment proceedings on the basis of suspicions, which was not permissible as per the mandate of law. The CIT(A) after deliberating on the challenge thrown by the assessee to the validity of the reassessment proceedings on the ground that the same was based on suspicions and not on the basis of a bonafide belief, however, being of the view that as the A.O had initiated the reassessment proceedings on the basis of specific information that was backed by evidence, therefore, declined to accept the said objection of the assessee.
Shri Anil Jaggi Vs. ACIT - A.Y. 2007-08 7 ITA No. 3049/Mum/2016
7. The CIT(A) also did not find favour with the contention of the assessee that as the notice under Sec. 148, dated 29.03.2014 was served on the assessee on 01.04.2014, therefore, the assessment having been reopened beyond the stipulated period of 6 years from the end of the relevant assessment year could not be sustained. The CIT(A) observed that as the notice under Sec. 148 was issued to the assessee on 29.03.2014, i.e. within a period of 6 years from the end of the relevant assessment year, therefore, the statutory requirement for issuance of notice within the time limit contemplated under Sec. 149(1)(b) was duly satisfied. The CIT(A) further being of the view that the A.O had communicated all the evidences and information on the basis of which he had reopened the case of the assessee and framed the assessment, therefore, declined to accept the contention of the assessee that there was lapse on the part of the A.O to make available the information on the basis of which the case was reopened.
8. The CIT(A) was also not persuaded to accept the contention of the assessee that the assessment framed by the A.O was beyond the statutory time limit contemplated under Sec. 153(2) of the Act. The CIT(A) rebutting the aforesaid contention of the assessee observed that as the assessment was framed under Sec. 147 within a period of one year from the end of the financial year in which the notice under Sec. 148 was served, therefore, the same was well in order. The CIT(A) further deliberated on the challenge thrown by the assessee to the validity of the reassessment on the ground that the A.O had failed to dispose off the objections raised by the assessee before him. The CIT(A) observing that the A.O had by way of a speaking order disposed off the objections raised by the assessee, as well as provided clarification on all the points which were raised by him, therefore, declined to accept the aforesaid contention of the assessee.
Shri Anil Jaggi Vs. ACIT - A.Y. 2007-08 8 ITA No. 3049/Mum/2016
9. That as regards the objections filed by the assessee in respect of the addition of Rs. 2,23,00,000/- made by the A.O on merits, the CIT(A) observed that as the additions were based on the documentary evidence found during the course of the Search & seizure proceedings conducted on Hiranandani group, therefore, the same were well in order. The CIT(A) observed that the fact that the assessee had made payment of "on money" for purchase of 3 flats was corroborated from a perusal of the running cash ledger containing on-money cash receipts from flat purchasers as was recorded in the pen drive seized during the course of the aforesaid Search & seizure proceedings. The CIT(A) fortifying his view that the additions made by the A.O were well in order, observed that complete details as regards the name, address, PAN No., flat no. and amount of cash paid by the assessee had emerged from the material seized during the course of the Search & seizure proceedings. The CIT(A) further observed that Sh. Niranjan Hiranandani had in his statement recorded by the Investigation wing accepted the fact that the entries in the seized pen drive pertained to the "on money" received by his group from sale of flats and had admitted on amount of Rs. 475.60 crore on the said count as additional income u/s 132(4), which thereafter was offered before the Settlement Commission as the undisclosed income of the group. The CIT(A) further observed that Sh. Niranjan Hiranandani had even in his subsequent statement recorded u/s 131 confirmed his sworn statement recorded on 14.03.2014 by the Investigation wing under Sec. 132(4) to be correct. The CIT(A) observed that Sh. Niranjan Hiranandani had in his statement confirmed that the said pen drive was found at the residence of one of the ex-employees of his group company. It was further observed by the CIT(A) that Sh. Niranjan Hiranandani had further stated that as his organisation had a large employee base of 1600 people working under various firms and Shri Anil Jaggi Vs. ACIT - A.Y. 2007-08 9 ITA No. 3049/Mum/2016 companies of the group, therefore, pursuant to delegation of work to them, he was not directly dealing with the customers and as such could not comment on each and every customer‟s case. The CIT(A) in the backdrop of his aforesaid observations held a conviction that the material available on record duly evidenced the factum of making of payment of "on money" of Rs. 2,23,00,000/- by the assessee, which thus justified the making of an addition of the said amount under Sec. 69B in the hands of the assessee. Thus, the CIT(A) upheld both the validity of the reassessment proceedings and the addition made by the A.O on merits and dismissed the appeal of the assessee.
10. The assessee being aggrieved with the order of the CIT(A) had therein carried the matter in appeal before us. The ld Authorised representative (for short „A.R‟) for the assessee at the very outset submitted that the A.O had wrongly assumed jurisdiction and initiated reassessment proceedings in the hands of the assessee. The ld. A.R averred that as the assessment in the case of the assessee already stood concluded under Sec. 143(3), vide order dated 19.11.2009, therefore, as per the mandate of Sec. 151(1) as was then available on the statute, after the expiry of a period of 4 years from end of the assessment year a notice under Sec. 148 could be issued by the A.O only if the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner was satisfied, on the reasons recorded by the Assessing Officer, that it was a fit case for the issue of such notice. The ld. A.R drawing our attention to the letter dated 28.06.2017 of the Asst. Commissioner of Income Tax-30(1), Mumbai, addressed to the assessee, therein averred that the concluded assessment of the assessee was reopened by the A.O after taking the approval of the Jt. CIT-24(1), Mumbai. The ld. A.R submitted that in the backdrop of the settled position of law, as the A.O while issuing the notice dated 29.03.2014 had not obtained the Shri Anil Jaggi Vs. ACIT - A.Y. 2007-08 10 ITA No. 3049/Mum/2016 satisfaction of either of the aforesaid appropriate authorities, therefore, in the absence of valid assumption of jurisdiction by the A.O the reassessment proceedings on the said count itself was liable to be quashed. The ld. A.R in support of his contention that in absence of approval of the appropriate authority contemplated under Sec. 151(1) the reassessment framed stands vitiated, relied on the judgments of the Hon'ble High Court of Bombay in the case of Ghanshyam K. Khabrani Vs. Assistant Commissioner of Income-tax (2012) 346 ITR 443 (Bom) and DSJ Communication Vs. DCIT (41 taxmann.com 151). Per contra, the Ld. Departmental representative (for short „D.R‟) submitted that by way of a bonafide mistake the A.O had obtained the approval of the Jt. Commissioner of Income-tax, and on learning of the said mistake a noting to the said effect was recorded in the order sheet. It was averred by the ld. D.R that the said mistake fell within the purview of Sec. 292B and merely for the said technical mistake on the part of the A.O the assessment would not stand vitiated. The ld. A.R rebutting the contentions raised by the revenue, submitted that the obtaining of the approval from the appropriate authority as contemplated under Sec. 151(1) was the sine qua non for the very assumption of valid jurisdiction by the A.O, and the absence of the same would render the reassessment as nothing better than nullity. The ld. A.R submitted that in the backdrop of the very fact that the A.O was not even aware about the fact that the assessment in the case of the assessee already stood framed under Sec. 143(3), vide order dated. 19.11.2009, it could safely be concluded that there had been no application of mind by the A.O at the time of recording of the reasons to believe. The ld. A.R further averred that even otherwise a perusal of the reasons to believe made available by the A.O reveals that there is no mention of the fact that the income of the assessee had escaped assessment because of the failure on the part of the Shri Anil Jaggi Vs. ACIT - A.Y. 2007-08 11 ITA No. 3049/Mum/2016 assessee to truly and fully disclose all the material facts necessary for framing of assessment. It was thus averred by the ld. A.R that the assumption of jurisdiction by the A.O for reassessing the income of the assessee was also vitiated on the said ground. The ld. A.R further challenged the validity of the reassessment proceedings on the ground that though the original assessment in the case of the assessee was framed by the DCIT 26(2), Mumbai, however, thereafter the reassessment proceedings were initiated and the order was passed by the ACIT, 31, Mumbai.
11. The ld. A.R further took us through Page 30-42 of his „Paper book‟ (for short „APB‟). The ld. A.R drew our attention to the statement of Sh. Niranjan Hiranandani and submitted that the assessee had in his original return of income furnished details as regards purchase of flats from M/s Lakeview Developers by raising a loan from the ICICI Bank Ltd and had claimed deduction of Rs. 1,50,000/- in respect of the interest paid on the loan under Sec. 24 of the Act. It was submitted by the ld. A.R that the A.O while framing the original assessment under Sec. 143(3), vide his order dated. 19.11.2009 had perused the entitlement of the assessee towards claim of deduction u/s 24 while computing his income from house property. The ld. A.R submitted that the A.O after deliberating on the claim of the assessee, however, being of the view that as the flat was under construction during the year and the possession of the same was taken by the assessee in June, 2008, had thus disallowed the claim of deduction raised by the assessee under Sec. 24. The ld. A.R in the backdrop of the aforesaid facts averred that as the assessee had furnished all material facts as regards purchase of the flat under consideration, which had even been deliberated upon by the A.O during the course of the assessment proceedings, therefore, assumption of jurisdiction under Sec. 147 after a lapse of a period of four years from the end of Shri Anil Jaggi Vs. ACIT - A.Y. 2007-08 12 ITA No. 3049/Mum/2016 the assessment year on the ground that the income of the assessee had escaped assessment because of failure on the part of the assessee to truly and fully disclose all the material facts necessary for framing of assessment could not be sustained. The ld. A.R further took us through the relevant extract of the statement of Sh. Niranjan Hiranandani recorded by the investigation wing (Page 41 of „APB‟) and information gathered by the department from the pen drive on the basis of which payment of "on money" by the assessee for purchase of flats was being inferred (Page 42 of „APB‟). The ld. A.R taking us through the details as had emerged from the pen drive, therein submitted that the same neither did bear any date, nor any details as regards the recipient or the person giving the amounts under consideration emerged from the same. The ld. A.R further submitted that who had made the entries in the said pen drive had till date remained a mystery. That in the backdrop of the aforesaid facts, it was submitted by the ld. A.R that the print out of the contents of the pen drive were nothing better than a dumb document from which nothing could be safely gathered. The ld. A.R further drew our attention to the statement of Sh. Niranjan Hiranandani recorded under Sec. 131 of the Act on 25.08.2015 (Page 94 of „APB‟). The ld. A.R submitted that a perusal of the statement of Sh. Niranjan Hiranandani revealed that he had at no stage confirmed any transaction as regards receipt of any "on money" from the assessee. The ld. A.R further in order to buttress his contention that no "on money" was ever paid by the assessee, therein took us through the statement of Sh. Niranjan Hiranandani recorded by the A.O in the course of cross-examination carried out by the assessee on 25.08.2015. The ld. A.R submitted that a perusal of the answers of Sh. Niranjan Hiranandani to Q.No.1 to 3 revealed that he was neither aware of the person who had made the entries in the pen drive, and further on being queried as to whether the five Shri Anil Jaggi Vs. ACIT - A.Y. 2007-08 13 ITA No. 3049/Mum/2016 amounts mentioned against the name of the assessee in the print out taken from the pen drive were recorded by him in any cash book or rough book or diary, had answered in the negative. The ld. A.R further in order to drive home his contention that no adverse inferences on the basis of the printout taken from the pen drive were liable to be drawn in the hands of the assessee, therein averred that on cross examination Sh. Niranjan Hiranandani on being confronted with the fact that the print out of the pen drive did not divulge the date of receipt of money, details of the recipient and the payer, as well as the fact as to who had prepared the details, clearly expressed his unawareness and distanced himself from the same. The ld. A.R further submitted that Sh. Niranjan Hiranandani on being called upon to produce any evidence as regards payment of "on money" by the assessee had answered in the negative. Thus, in the backdrop of the aforesaid contentions the ld. A.R submitted that a perusal of the facts as had emerged from the records and the statement of Sh. Niranjan Hiranandani clearly revealed that no adverse inferences as regards payment of any "on money" by the assessee were liable to be drawn. Per contra, the ld. D.R relied on the orders of the lower authorities and submitted that the factum of payment of "on money" by the assessee stood established from a perusal of the contents of the pen drive, which thereafter had been affirmed by Sh. Niranjan Hiranandani in his statement recorded by the investigation wing during the course of Search & seizure proceedings and affirmed thereafter in his statement recorded u/s 131 by the department.
12. We have heard the authorised representatives for both the parties, perused the orders of the lower authorities and the material available on record. We shall first take up the objection raised by the ld. A.R as regards the validity of the jurisdiction assumed by the A.O in reopening the concluded assessment of the assessee in the absence Shri Anil Jaggi Vs. ACIT - A.Y. 2007-08 14 ITA No. 3049/Mum/2016 of sanction of the appropriate authority contemplated in Sec. 151(1) of the Act. We find that it is a matter of a conceded fact that the assessment in the case of the assessee was earlier concluded under Sec. 143(3), vide order dated. 19.11.2009. That as per the mandate of Sec. 151(1) as was applicable to the year under consideration, viz. A.Y. 2007-08, in a case where an assessment under sub-section (3) of section 143 or under section 147 had been made for the relevant assessment year, no notice shall be issued under sec. 148 after the expiry of four years from the end of the relevant assessment year, unless the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner was satisfied, on the reasons recorded by such Assessing Officer, that it was a fit case for the issue of such notice. We find that in the case of the assessee before us, as the assessment for the year under consideration already stood framed under Sec. 143(3) on 19.11.2009 and the period of four years from the end of the assessment year, viz. A.Y. 2007-08 had expired on 31.03.2012, therefore, any reopening of the said concluded assessment of the assessee was thereafter permissible only after obtaining the approval of either of the aforesaid authorities as contemplated in the proviso of Sec. 151(1), viz. the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner. However, we find that in the case before us the A.O had concededly issued the notice under Sec. 148 after obtaining the approval of the Joint Commissioner of Income-tax-24(1), Mumbai. The ld. D.R on being confronted with the fact that as conceded by the A.O in his letter dated 28.06.2017 addressed to the assessee the approval for reopening the case was taken from the Joint Commissioner of Income Tax-24(1), Mumbai, the ld. D.R. though duly conceded that the A.O had erred by failing to take approval of the appropriate authority, however, averred that the same being a bonafide mistake Shri Anil Jaggi Vs. ACIT - A.Y. 2007-08 15 ITA No. 3049/Mum/2016 would thus be cured under Sec. 292B and the assessment would not be rendered as invalid on the said ground. We have given a thoughtful consideration to the facts of case in the backdrop of the settled position of law and are unable to persuade ourselves to accept the aforesaid contention of the ld. D.R. We are of the considered view that the legislature in all its wisdom in order to ensure finality to assessments and to leave no room for abuse of powers in the garb of reassessment, had thus in all fairness specified the authorities with whose approval alone the cases could be reopened by the A.O. We find that as a precautionary measure the time limit for reassessing a concluded assessment after the lapse of a period of four years from the end of the assessment year had been subject to the condition that the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner is satisfied, on the reasons recorded by such Assessing Officer that it is a fit case for the issue of such notice. We are unable to persuade ourselves to subscribe to the view of the ld. D.R that failure on the part of an assessing authority to take the approval of the appropriate authority while assuming jurisdiction under Sec. 147 and issuing a notice under Sec. 148 can be given a go by as being a technical mistake which would be curable under Sec. 292B of the Act. We are of the considered view that the failure on the part of the A.O to take the sanction of the appropriate authority contemplated under Sec. 151(1) would go to the very root of the validity of assumption of jurisdiction by the A.O. We are further of a strong conviction that issuing of notice under Sec. 148 by the A.O after taking approval from the wrong authority would in no way be better then a case where no approval had been sought, as in either case the obtaining of the sanction of the appropriate authority is found to be missing. We thus are of the considered view that as the A.O had issued notice under Sec. 148 without taking the approval of Shri Anil Jaggi Vs. ACIT - A.Y. 2007-08 16 ITA No. 3049/Mum/2016 the appropriate authority, therefore, the very assumption of jurisdiction under Sec. 147 by him is devoid of any force of law and cannot be sustained. We find that our aforesaid view is fortified by the judgment of the Hon'ble High Court of Bombay in the case of Ghanshyam K. Khabrani Vs. Assistant Commissioner of Income- tax (2012) 346 ITR 443 (Bom), wherein the High court deliberating on the scope of Sec. 151 held that powers which are conferred upon a particular authority have to be exercised by that authority and the satisfaction which the statute mandates of a distinct authority cannot be substituted by the satisfaction of another. We find that a similar view was once again taken by the High court in the case of DSJ Communication Vs. DCIT (2014) 222 Taxman 0129 (Bombay), wherein the reassessment proceedings were held to be invalid for the reason that the A.O while issuing the notice under Sec. 148 failed to comply with the statutory requirement of taking the approval under Sec. 151 of the appropriate authority, viz. the Joint Commissioner of Income-tax and had rather sought the approval of the Commissioner of Income-tax. We have deliberated on the validity of the reassessment proceedings in the backdrop of the settled position of law, and are of the considered view that as the notice under Sec. 148 in the case before us had been issued by the A.O without obtaining the approval of the appropriate authority, therefore, in the absence of valid assumption of jurisdiction on his part, the reassessment framed by him cannot be sustained and is thus liable to be quashed.
13. We shall now advert to the validity of the reopening of the concluded assessment of the assessee after a period of four years from the end of the assessment year. We find that the A.O taking recourse to the first proviso of Sec. 147 had initiated reassessment proceedings, for the reason that the income of the assessee chargeable to tax had escaped assessment because of failure on the part of the assessee to Shri Anil Jaggi Vs. ACIT - A.Y. 2007-08 17 ITA No. 3049/Mum/2016 truly and fully disclose all the material facts necessary for his assessment. The ld. A.R had assailed before us the validity of the reassessment proceedings for the reason that the reasons recorded by the A.O for reopening the case of the assessee does not make any mention of escapement of the income of the assessee for failure on his part to fully and truly disclose all material facts necessary for his assessment. We have perused the copy of the „reasons to believe‟ on the basis of which the case of the assessee was reopened by the A.O (Page 31 of „APB‟). We find that nowhere in the reasons to believe there is any mention by the A.O that the case of the assessee had been reopened for the reason of the failure on the part of the assessee to fully and truly disclose all material facts necessary for his assessment. We find that the assessee by challenging the validity of the reopening of the concluded assessment in his case on the present ground, had sought our indulgence for adjudicating as to whether in the absence on the part of the A.O to make a mention in the „reasons to believe‟ that the case of the assessee had been reopened for the reason of the failure on the part of the assessee to fully and truly disclose all material facts necessary for his assessment, the assumption of jurisdiction by him to frame the reassessment can be held to be valid, or not. We have given a thoughtful consideration to the issue before us and find that as per the mandate of first proviso of Sec. 147, a concluded assessment can be reopened after a period of four years from the end of the assessment year, subject to the condition that the income of the assessee chargeable to tax had escaped assessment for the reason of the failure on the part of the assessee to fully and truly disclose all material facts necessary for his assessment. We are of the considered view that failing satisfaction of the aforesaid condition, the reopening of a concluded assessment after a period of four years from the end of the assessment year cannot be justified. We find that the Shri Anil Jaggi Vs. ACIT - A.Y. 2007-08 18 ITA No. 3049/Mum/2016 „reasons to believe‟ on the basis of which the case of the assessee before us was reopened, does not refer to any such ground for reopening the case of the assessee. We are unable to gather from the „reasons to believe‟ which form the very foundation for assumption of jurisdiction for reopening the case of the assessee, that the jurisdiction for reassessing the income of the assessee after lapse of a period of four years from the end of the assessment year was assumed by the A.O because of the failure on the part of the assessee to fully and truly disclose all material facts necessary for his assessment. We find that the validity of the reopening of a concluded assessment which had been reopened after a lapse of a period of four years from the end of the assessment year, in the absence of mention of such a fact in the „reasons to believe‟ is no more res integra in light of the judgment of the Hon'ble High Court of Bombay in the case of Nirmal Bang Securities (P) Ltd. Vs. ACIT (2016) 382 ITR 93 (Bom), wherein the Hon‟ble High Court taking cognizance of the fact that there was no allegation in the reasons recorded that there was any failure on the part of the assessee to disclose fully and truly all material facts necessary for framing of assessment in the hands of the assessee, had quashed the reassessment proceedings by observing as under:-
"24. In view of the aforesaid well settled legal position and there admittedly being not even an allegation in the reasons recorded that there was any failure on the part of the Petitioner to disclose truly and fully any material fact necessary for assessment, let alone the details thereof, the impugned notice dated 30th March, 2007 and the impugned order dated 5th December, 2007 are liable to be quashed and set aside on this ground alone".
We thus in the backdrop of the facts involved in the present case read with the settled position of law as had been deliberated at length hereinabove, being of the considered view that now when there is no allegation in the reasons recorded as regards the failure on the part of Shri Anil Jaggi Vs. ACIT - A.Y. 2007-08 19 ITA No. 3049/Mum/2016 the assessee to disclose fully and truly all material facts necessary for framing of assessment in the hands of the assessee, therefore, following the judgment of the Hon'ble High Court of Bombay in the case of Nirmal Bang Securities (supra) are of the view that the reassessment proceedings in light of the aforesaid jurisdictional defect in the assumption of jurisdiction cannot be sustained. We thus in the backdrop of our aforesaid observations, therefore, hold that the reassessment proceedings initiated by the A.O beyond a period of four years from the end of the assessment year, without making a mention in the „reasons to believe‟ that the income of the assessee chargeable to tax had escaped assessment because of failure on the part of the assessee to disclose fully and truly all material facts necessary for framing of assessment, cannot be sustained and on the said count too is liable to be vacated.
15. We shall now take up the case of the assessee on merits and deliberate on the validity of the addition of Rs. 2.23 crore made by the A.O on the ground that the assessee had made a payment of "on money" for purchase of flats from M/s Lakeview developers. We have perused the facts of the case and the material available on record on the basis of which the addition of Rs. 2.23 crore had been made in the hands of the assessee. We have further deliberated on the material placed on record and the contentions of the ld. A.R to drive home his contention that no payment of any "on money" was made by the assessee for purchase of flats from M/s Lakeview Developers. We find that the genesis of the conclusion of the A.O that the assessee had paid "on money" of Rs. 2.23 crore for purchase of property under consideration is based on the contents of the pen drive which was seized from the residence of an ex-employee of Hiranandani group. We have perused the print out of the pen drive (Page 42 of APB) and find ourselves to be in agreement with the view of the ld A.R that though Shri Anil Jaggi Vs. ACIT - A.Y. 2007-08 20 ITA No. 3049/Mum/2016 against the heading "Amount of on money paid" the name, address and PAN No. of the assessee is mentioned alongwith the details of the property purchased by him, viz. Flat no.2501 in "Somerset" building from Lakeview Developers (a Hiranandani group concern), however, the same would not conclusively prove suppression of investment and payment of "on money" by the assessee for purchase of the property under consideration. We find that the information as emerges from the print out of the pen drive falls short of certain material facts, viz. date and mode of receipt of „on money‟, who had paid the money, to whom the money was paid, date of agreement and who had prepared the details, as a result whereof the adverse inferences as regards payment of "on money" by the assessee for purchase of the property under consideration remain uncorroborated. We further find that what was the source from where the information was received in the pen drive also remains a mystery till date. We find that Sh. Niranjan Hiranandani in the course of his cross-examination had clearly stated that neither he was aware of the person who had made the entry in the pen drive, nor had with him any evidence that the assessee had paid any cash towards purchase of flat. We have deliberated on the fact that Sh. Niranjan Hiranandani in his statement recorded on oath in the course of the Search & seizure proceedings had confirmed that the amounts aggregating to Rs. 475.60 crore recorded in the pen drive were the on-money received on sale of flats, which was offered as additional income under Sec. 132(4) and thereafter offered as such for tax in the petition filed before the Settlement commission. We are of the considered view that there is substantial force in the contention of the ld. A.R that mere admission of the amounts recorded in the pen drive as the additional income by Sh. Niranjan Hiranandani, falling short of any such material which would inextricably evidence payment of "on money" by the assessee would not lead to drawing of adverse Shri Anil Jaggi Vs. ACIT - A.Y. 2007-08 21 ITA No. 3049/Mum/2016 inferences as regards the investment made by the assessee for purchase of the property under consideration. We rather hold a strong conviction that the very fact that the consideration paid by the assessee for purchase of the property under consideration when pitted against the „market value‟ fixed by the stamp valuation authority is found to be substantially high, further fortifies the veracity of the claim of the assessee that his investment made towards purchase of the property under consideration was well in order. We are of the considered view that though the material acted upon by the department for drawing of adverse inferences as regards payment of "on money" by the assessee formed a strong basis for doubting the investment made by the assessee for purchase of the property under consideration, but the same falling short of clinching material which would have irrefutably evidenced the said fact, thus, does not inspire much of confidence as regards the way they have been construed by the lower authorities for drawing of adverse inferences in the hands of the assessee. We thus are of a strong conviction that as the material relied upon by the lower authorities does not corroborate the adverse inferences drawn as regards the investment made by the assessee, therefore, the same cannot conclusively form a basis for concluding that the assessee had made payment of "on money" for purchase of the property under consideration. We thus in the backdrop of our aforesaid observations are of the considered view that the adverse inferences drawn by the A.O as regards payment of "on money" of Rs. 2.23 crore by the assessee for purchase of Flat No. 2501 from M/s Lakeview Developers are based on of premature observations of the A.O, which in the absence of any clinching evidence cannot be sustained. We thus are unable to subscribe to the view of the lower authorities and set aside the order of the CIT(A) sustaining the addition of Rs. 2.23 crores in the hands of the assessee.
Shri Anil Jaggi Vs. ACIT - A.Y. 2007-08 22 ITA No. 3049/Mum/2016
16. The appeal of the assessee is allowed.
Order pronounced in the open court on 20.12.2017
Sd/- Sd/-
(G.S. Pannu) (Ravish Sood)
ACCOUNTANT MEMBER JUDICIAL MEMBER
भुंफई Mumbai; ददनांक 20.12.2017
नन.स./ Rohit Kumar
आदे श की प्रनिलऱपि अग्रेपषि/Copy of the Order forwarded to :
1. अऩीराथी / The Appellant
2. प्रत्मथी / The Respondent.
3. आमकय आमुक्त(अऩीर) / The CIT(A)-
4. आमकय आमुक्त / CIT
5. ववबागीम प्रनतननधध, आमकय अऩीरीम अधधकयण, भुंफई / DR, ITAT, Mumbai
6. गार्ड पाईर / Guard file.
सत्मावऩत प्रनत //True Copy// आदे शधिुसधर/ BY ORDER, उि/सहधयक िंजीकधर (Dy./Asstt. Registrar) आयकर अिीऱीय अधर्करण, भंफ ु ई / ITAT, Mumbai