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2014 (11) TMI 265 - AT - Income TaxReopening of assessment u/ 147 – Reason to believe - Held that:- As decided in Assistant Commissioner of Income-tax, Circle-1(1), Panaji, Goa Versus Durgadas K. Prabhu Shastri [2014 (10) TMI 35 - THE ITAT PANAJI] - The scope and effect of Sec.147 as substituted w.e.f. 1.4.1989 is substantially different from the provisions as stood prior to such substitution - The court has interpreted from time to time that there must be bona fide reason to believe - Where the AO has applied his mind to the material available with him, he cannot be permitted to review the assessment in the garb of ‘reason to believe' – in ACIT vs. Rajesh Jhaveri Stock Brokers Pvt. Ltd., [2007 (5) TMI 197 - SUPREME Court] it has been held that the intimation u/s 143(1) cannot be treated to be an order of assessment - The AO is bound to accept the return as has been filed by the Assessee and process it. Since the AO is bound to process the return without making any addition, no question of application of mind by the AO arises - it cannot be said that the AO has applied his mind and if the AO is taking action u/s 147 on the basis of the material available on record for escapement of the income as per the definition given under explanation 2(b), it cannot be said that such an action is illegal and without jurisdiction - Sec. 147 permitted the AO to assess or re-assess the income chargeable to tax when he has reason to believe income escaping assessment - The mere failure to take steps u/s 143(3) would not render the AO powerless to initiate proceedings u/s 147 of the Act even when intimation u/s 143(1) had been issued - with the amendment brought to Sec. 147 of the Act on and from 1.4.1989 and the elucidation on the scope of the authority and jurisdiction of the officer u/s 147 of the Act, the proceedings initiated by the AO u/s 147 are valid and the AO could have taken the action u/s 147 on the basis of the material available and filed along with the return - There is no need of any fresh tangible material for coming to the ‘reason to believe' that the income has escaped assessment in view of explanation 2 clause (b) of Sec. 147 – Decided against assessee. Adoption of FMV of agricultural land sold during the year as on 1.4.1981 - Whether the land sold by the Assessee is a Capital asset - Held that:- Provisions of Sec. 2(14) be referred to as ‘Capital asset' is defined u/s 2(14) of the Income Tax Act - the property of any kind held by the Assessee whether or not connected with his business or profession are capital asset but the assets which are given under sub-clause (i), (ii) and (iii) are excluded from the capital asset - The Assessee claims that the land sold by the Assessee is an agricultural land in India while the claim of the Revenue is that the land cannot be regarded to be an agricultural land - No agricultural activities or operations being carried out on the land were found - the AO is directed to treat only 4/5th of the land to be the capital asset and the consideration received to that extent be treated as if said consideration has been received on the transfer of capital asset and the capital gain on the transfer of such land be computed in accordance with the provision of the Income Tax Act to the extent each of the co-owner has the share proportionately the capital gain so computed on 4/5th of the total consideration be assessed in the hands of respective assessee – Decided in favour of assessee.
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