Reopening of assessment under Section 147 is valid if tangible material indicates income escapement; mere change of opinion is impermissible.

ORDER

PER SUCHITRA KAMBLE, JUDICIAL MEMBER:

This appeal is filed by the Assessee against order dated 28.10.2021, passed by the CIT(A), National Faceless Appeal Centre (NFAC), Delhi for the Assessment Year 2014-15.

2. The assessee has raised the following grounds of appeal :-

“1. Learned CIT(A) has erred in law and on the facts of the case in confirming the action of learned AO in assuming the jurisdiction u/s.147 of the Act.

2. Learned CIT(A) has erred in law and on facts of the case in confirming the action of learned AO in making an addition of Rs.69,49,250/- u/s.56(2)(vii)(b) of the Act.

3. Learned CIT(A) has erred in law and on the facts of the case in confirming the action of AO in charging interest u/s.234A/B/C/D.

4. The Learned CIT(A) has erred in law and on the facts of the case in confirming the action of AO in initiating penalty u/s.271(1)(c) of the Act which is wholly unsustainable in law and on facts of the case.”

2.1 The assessee has also raised the following additional ground:

“The appellant craves leave to raise this additional ground of appeal before Your Honors. The appellant, through oversite, could not raise in the original appeal memo, the following additional ground of appeal and therefore the appellant now craves leave to raise these additional grounds of appeal before Your Honor. This is a legal ground and therefore as per the decision of Hon'ble Supreme Court in the case of National Thermal Power (229 ITR 383), it can be raised before Your Honor:

“1. The CIT(A) has erred in law and on facts of the case in confirming the action of learned AO in making an addition of Rs.69,49,250/- as income from undisclosed sources.”

The appellant respectfully requests that this Honorable Tribunal admit these additional grounds of appeal, and in light of the above arguments, set aside the CIT(A)'s decision to reject the books of accounts. The appellant further requests a fair assessment based on the evidence provided without penalizing standard business practices such as counter sales.”

3. The assessee is engaged in the business of commission work and trading of Chemical. The original return of income was filed on 18.09.2014 declaring total income at Rs.1,91,250/-. The case was selected for scrutiny and assessment was completed under Section 143(3) of the Income Tax Act, 1961 on 29.09.2016 at Rs.1,91,250/-. The Revenue found that the assessee had jointly purchased agricultural land with Shri Harekrishna Jeramdas Agrawal at Village Ukhrala, Bhavnagar vide two separate purchase deeds registered on 08.07.2013 and 25.09.2013 for a consideration of Rs.29,26,500/- and Rs.1,09,72,000/- respectively (total Rs.1,38,98,500/-) and the assessee’s share works out to Rs.69,49,250/- (being 50% owner). This purchase of land was not shown by the assessee in his Balance Sheet for the year under consideration. The Assessing Officer observed that in view of the provisions of Section 69A of the Act, the value of investments which was not recorded in the books of account of the assessee and the same is required to be treated as income from the investments. Thus, the assessee purchased immovable property during the year under consideration without adequate consideration and therefore the provisions of Section 56(1)(vii) of the Act are applicable. After recording the reasons for reopening the case and also obtaining approval of the Higher Authorities, notice under Section 148 of the Act was issued on 31.03.2019. In response to notice under Section 148 of the Act, the assessee filed e-return of income on 11.04.2019 declaring total income at Rs.1,91,252/-. Copy of the reasons recorded was provided to the assessee and the assessee furnished the reply dated 27.06.2019. The objections raised by the assessee was disposed of vide order dated 03.10.2019. The notice under Section 142(1) of the Act was also issued and the assessee furnished his reply dated 07.11.2019. The