TMI Blog2019 (3) TMI 1123X X X X Extracts X X X X X X X X Extracts X X X X ..... on 147 of the Act. Second reason recorded in the computer sheet was recorded after the issuance of the notice itself, though the Assessee had already filed its return in the same Circle on 28.11.1997 and assessment under Section 143 of the Act was completed on 29.01.1998 and therefore the said second reason was recorded after issuing notice under Section 148 of the Act which was not valid. Having regard to the submission of Revenue, we are rather dismayed with the manner in which the two authorities, of the Department have acted while invoking their substantive powers of re-assessment under Sections 147/148 of the Act. The said powers under the said Act are invoked only subject to the legal restrictions and limitations prescribed in those provisions and at the core of such power of reassessment lies the reason to believe that the income has escaped assessment in the hands of the Assessee for the assessment year in question. These two alleged lacunae or irregularities could not be held to be a sufficient reason for issuing a repeat Notice under Section 148 of the Act. Such repeat and subsequent Notice indicates that either the previous officer Mr. S.Ganapathy did not even ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment proceedings were commenced and the petitioner is being heard in the matter. 14. Therefore, I find that there is no fresh material in possession of the Assessing Officer suggesting escapement of the income at the time of issuance of notice dated 25.01.2001. Thus it is a clear case where the respondent is attempting to reopen a settled issue with no fresh materials and therefore, the impugned notice is wholly without jurisdiction as it is a mere change of opinion. 15. For the above reasons, theseWrit Petitions are allowed and the impugned orders are set aside. No costs. 2. In the present Intra-Court Appeal, the learned counsel for the Appellant/Revenue Ms.Hema Muralikrishnan has contended before us by drawing our attention towards the reasons recorded by the successor-in-office Mr.K.Rajaram, Deputy Commissioner of Income-Tax, Company Circle II (2), Chennai, that since he found certain 'technical defects' in the earlier notice under Section 147/148 of the At issued by the predecessor-in-office Mr.S.Ganesh Iyer , Deputy Commissioner of Income-Tax, Company Circle I(3), Chennai, he has again recorded 'fresh reasons' for issuing again a fresh no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TR 133 and also Sarifa Bibi s case reported in 204 ITR 631. The Court has stated that factors that raise a presumption that the land is non-agricultural land are: (i) Situation of the land, for example, land situated in an urban area within the municipal limits in the proximity of buildings and building sites. (ii) Sale of land to the non agriculturists for non agricultural purposes. (iii) Sale of land on the sq.yard basis at a price comparable to prices fetched by building sites. (iv) Sale for price at which no bonafide agriculturist would purchase for genuine agricultural purposes. (v) When the price is such that no prudent owner would sell it at a price worked out on capitalisation method taking into account its optimum agricultural yield in the most favourable circumstances. The Apex Court in CWT Vs. Officer-in-charge (Court of Wards) Paigah 105 P135 emphasis that the object of the Legislature in exempting the agricultural land from tax was to encourage the cultivation of agricultural land and agricultural operations. The Supreme Court considered the object of the Legislature in exempting agricultural land for the purposes of WT Act 1957 and observ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of M/s.T.V.Sundaram Iyengar Others 37 ITR 26, The Madras High Court has stated that capital gains arises when the amount receivable is known to the assessee and the agreement for sale is made and possession is handed over. Thus, I have reason to believe that the income chargeable to tax for the assessment year 1997-98 has escaped assessment. Hence assessment for the assessment year 1997-98 is hereby reopened u/s. 147 of the IT Act. Issue notice u/s.148. 4. The second officer Mr.K.Rajaram issued subsequent notice while the proceedings pursuant to the first notice under Section 147/148 of the Act for Assessment Year 1997-1998 were pending and reasons were recorded by the Successor-in-office and again a second fresh notice under Section 147 of the Act was issued by the predecessor-in-office on 23.07.2002 . The said freshly recorded reasons pointing out so called 'technical defect' in the previous notice dated.... (undated but served on 19.03.2001) are also quoted below: I.On going through the records I find quite a lot of irregularity in the issue of notice and recording of reasons u/s.148(2). Notice u/s. 148 was issued on 25.01.2001 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jab) and following the decisions in CIT Vs.Thakurlal 138 ITR 398 (MP) and Baldev Singh Giani V.CIT 248 ITR 266 (P H) the proceedings u/s.148 dt. 25.1.2001 was not pursued. since based on invalid notice. II. There was a sale agreement between the assessee and M/s.Shoreline Developers (P) Lyd. on 4.7.96, the assessee agreeing to sell 9.99 acres of land at Muttukadu for a consideration of ₹ 3.50 crores. This sale agreement though specified that this document shall be registered within 90 days, there are no evidences to show that there were any sale deed registered by both the vendor and the purchaser. The record also do not show application for 230A certificate. The assessee had not incurred any expenditure by way of agricultural expenditure in the last five years, as seen from the details filed. The assessee did not admit any agricultural income also in the return of income file. The parent document in the lands of the assessee indicates that because of poor yield these lands were sold to the assessee and there were a limited numbers of unyielding coconut trees. The VAO certificates indicate that there were coconut trees and casuarina trees. The assessee did n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s agreement then .. and to sell the scheduled property to any other person of their choice . 3. The sale shall be completed within 90 days from this date subject to the purchaser expressing his readiness to pay the balance sale consideration the time being the essence of this agreement. The amounts received of Ts.3.50 crores between 4.7.96 to 23.10.97 had been reflected in the account books of the assessee, ledger as advance from M/s.Shoreline Developers (P) Ltd. The assessee had filed a letter dated 21.3.2001 stating that the assessee had handed over the possession of their land at Muttukadu to Mr.Raj Kumar Sethupathi of M/s.Shoreline Developers (P) on 23.10.97 the date of last instalment received from him. The assessee did not speak about the sale of this agricultural land in the return of income furnished for the assessment year 1997-98. However, in the asst. year 1998-99, the assessee had offered as profit 1.75 crore and claimed exemption being agricultural income. Incidentally, according to the statement of the assessee the entire sale transactions were over by 23.10.97, and if so, the admission by way of profit of only 1.75 crore out of the sale price of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said to have been issued on 16.08.2002 for the Assessment Years 1997-98 and 1998-1999 and the alleged reason given by the successor-in-office viz., K.Rajaram is said to be that the brochure of M/s.Shoreline (P) Ltd., came on the record of the Assessing Authority only on 19.03.2001 when the Assessee appeared pursuant to the first notice under Section 147 of the Act which is said to be issued on 25.01.2001. But, since the earlier recorded reasons referred to such Brochure it was a defective notice and which defect could be cured according to the subsequent authority and there was thus a need to issue a fresh notice under Section 147 of the Act. 6. The second reason assigned by the successor-in-office Mr.K.Rajaram for issuing subsequent notice was that the second reason recorded in the computer sheet was recorded after the issuance of the notice itself, though the Assessee had already filed its return in the same Circle on 28.11.1997 and assessment under Section 143 of the Act was completed on 29.01.1998 and therefore the said second reason was recorded after issuing notice under Section 148 of the Act which was not valid. On these two purported technical defects or lacunae , ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cessor-in-office Mr. Mr.R.Rajaram points out two of the alleged defects, irregularities and lacunaes in the first reasons recorded viz., non availability of Brochure and that the Assessee had already filed returns in the same Circle on 28.11.1997 for assessment year 1998-1999 and assessment having completed on 29.01.1998. 9. These two alleged lacunae or irregularities could not be held to be a sufficient reason for issuing a repeat Notice under Section 148 of the Act. Such repeat and subsequent Notice indicates that either the previous officer Mr. S.Ganapathy did not even actually record any reason prior to or on 25.01.2001 or the Successor-in-office Mr.Rajaram was only trying to cover up the so called lacunae or defects. Both are impermissible situations in law, for invoking powers under Sections 147 and 148 of the Act. We are constrained to observe that the reassessment powers were invoked by assessing officers very casually and lightly not adhereing to the legal restrictions for exercise of such powers under Section 147/148 of the Act. The Assessee, in these circumstances, when served with the repeat or second notice for the same Assessment years, was compelled to approach th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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