1 IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR :ORDER: Commissioner of Income Tax, Jodhpur Vs. M/s Ravi Marble Industries D.B.INCOME TAX APPEAL NO.15/2010 Date of Order : 9th August 2010 PRESENT HON'BLE MR. JUSTICE DINESH MAHESHWARI HON'BLE MR.JUSTICE C.M.TOTLA Mr.M.R.Singhvi for the appellant. BY THE COURT: This appeal by the appellant (Revenue) under Section 260-A of the Income Tax Act, 1961 ['the Act'] is directed against the judgment and order dated 19.08.2009 passed by the Income Tax Appellate Tribunal, Jodhpur Bench, Jodhpur ['the Tribunal'] in ITA No.151/JU/2005 whereby the Tribunal dismissed the appeal and maintained the order dated 20.12.2004 passed by the Commissioner of Income Tax (Appeals)-II, Jodhpur ['the CIT (A)'] whereby the re-opened assessment order passed by the Assessing Officer ['the AO'] was quashed and addition of Rs.26 lacs in the income of the respondent-assessee, a partnership firm, was deleted. Briefly put, the relevant facts and background aspects of the matter are that the respondent-assessee filed the return 2 declaring 'nil' income on 05.04.2002. A notice under Section 148 of the Act had been issued to the assessee on 07.03.2002 on the directions issued by the Joint Commissioner of Income Tax ['JCIT'] on 20.01.2000. The action under Section 148 of the Act was initiated essentially on the basis of the alleged information that the assessee had purchased a land and made unexplained/unrecorded investment therein. After issuing the requisite notices, the assessment proceedings were taken up; and the AO held that partners of the assessee firm had made investment of a sum of Rs.26,50,000/- in cash out of undisclosed sources and proceeded to make an addition of Rs.26,00,000/- under Section 69 of the Act to the declared income of the firm. Aggrieved by the order so passed by the AO, the assessee preferred an appeal before the CIT (A). The learned CIT (A) called for the comments from the AO and thereafter proceeded to allow the appeal on 20.12.2004. The learned CIT (A) found the facts that in the first place, the AO reopened the proceedings under Section 147 as per the report of ADIT in the cases of partners of the assessee firm for the assessment years 1994-95 to 1997-98 in respect of purchase of the land in question but then, the addition so made by the AO on account of investment in purchase of land came to be deleted in appeal. It was noticed that the AO issued notices in the case of firm as per the directions of JCIT. However, it was also noticed that though such directions were issued as back 3 as on 20.01.2000, the AO issued notices in relation to the firm only on 07.03.2002 and that too, only after receiving the appellate order in the case of partners of the firm. The CIT (A) found the AO not justified in doing so without proper reasons and found it proper to quash the assessment order passed by the AO. Even on merits of the case, in relation to the addition of Rs.26,00,000/-, the CIT (A) found from the sale deeds that the land in question had been purchased by the partners of the firm and the assessee firm was not at all in picture and hence, found such addition entirely unwarranted. The CIT (A) said,- “It is surprising to mention here that the AO has reopened the assessments of partners of the firm in accordance to the directions issued by the Jt.CIT given vide letter dt. 20.1.2000 but he did not reopen the assessment in the case of assessee firm at that time. Had the Jt.CIT given direction for reopening the assessment in the case of firm he could have reopened the assessment simultaneously with the case of the partners of the assessee firm. It seems that AO has reopened the assessment in the case of assessee firm only after receiving the appellate order in the case of partners of firm. In my view the AO was not justified in doing so. It is also worthwhile to mention here that assessment cannot be reopened according to the direction given by superior authority and as per the provisions of section 147 there should be reason to believe on the part of AO that there is escapement of income but on going through the first para of the assessment order it seems that AO has reopened the assessment according to the directions of the Jt.CIT and he has mentioned nothing about the escapement of income by the assessee firm. The contention of the ld.AR that substantive addition can not be made in two hands, has also sufficient force because the AO has made substantive assessments in the hands of partners of the assessee firm and he has reopened the assessment for making substantive assessment in the case of assessee firm after lapse of more than 2 years, therefore the action of the AO for reopening the assessment is illegal. 4 So far as the ground No.2 about legality of the assessment order is concerned, it is seen that CIT (A) has deleted the additions made in the hands of the partners of the assessee firm on a/c of investment in purchase of the impugned land the Hon'ble ITAT has also approved the action of the CIT (A), therefore there was no need for reopening the assessment in the case of assessee firm and for making the assessment in the hands of the assessee firm. Therefore the assessment order passed by the AO in the case of appellant's firm deserves to be quashed and accordingly hereby quashed. So far as the addition of Rs.26 Lacs is concerned, it is seen from the Sale Deed that the land under reference has been purchased by the partners of the firm and the assessee frim is not at all in picture, therefore the addition of Rs.26 Lacs in the hands of appellant firm was unwarranted, hence the addition of Rs.26 Lacs on merits of the case also deserves to be deleted and accordingly the same is hereby deleted.” In its impugned judgment and order dated 19.08.2009, the Tribunal concurred with the CIT (A) particularly for the reason that only the partners of the assessee firm were the purchaser of the land and not the assessee firm. The Tribunal said,- “However, the ld. CIT (A) has considered the sale deed covering the sale of the land in question and found that the sale deeds are showing the partners of the assessee only as purchasers of the land. Since the assessee is not the purchaser under the sale deed, no addition in the hands of the assessee is sustainable for legal scrutiny. Thus observing the ld. CIT (A) has deleted the addition of Rs.26 lakhs made by the Assessing Officer. In the light of these undisputed facts and circumstances of the case, we are of the considered view that the action of the ld. CIT (A) in directing deletion of addition in dispute is well reasoned one and thereby not suffering from any infirmity requiring interference.” Seeking to maintain this appeal, the appellant (Revenue) has suggested in the memo of appeal that the 5 Tribunal has not examined the matter in its entirety and correct perspective; and that the corroborative statements of the two witnesses were not considered and appreciated by the Tribunal. After having heard the learned counsel for the appellant and having scanned through the orders placed on record, we are unable to find any question of law what to say of a substantial one being involved in this case. The fact of the matter remains as per the findings of facts by the CIT (A) and the Tribunal that the sale deeds in question show only the partners of the assessee firm as the purchasers of the land; and not the assessee firm itself. In the given fact situation, the assessment order as drawn in relation to the assessee firm seeking to make an addition of Rs.26,00,000/- with reference to such sale deeds could only have been set aside; and the learned CIT (A) has rightly done so. When the assessee firm is not shown having acquired any title or interest in the property under the sale deeds in question, by no stretch of reasonings, the amount of consideration in such sale deeds could have been added to the income of the assessee firm. The grounds as suggested on behalf of the appellant regarding value and worth of statements of witnesses are not even co-related with the real issue involved in the case as dealt with by the CIT (A) and the Tribunal and as reproduced hereinabove. 6 It is also noticed that in fact, the CIT (A) has found the very process of reopening wanting in the reasons and basis per Section 147 of the Act. In this case, it was precisely found by the CIT (A) that the AO mentioned nothing about his reasons to believe on escapement of income by the assessee firm and, rather, proceeded to reopen only according to the directions of the superior authority and such an action was unjustified and unsustainable. Taking a comprehensive view of the matter, we are satisfied that the CIT (A) and the Tribunal have dealt with the matter in accordance with law; and this appeal does not involve any substantial question of law worth consideration. The appeal fails and is, therefore, dismissed. (C.M.TOTLA),J. (DINESH MAHESHWARI),J. MK