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2013 (4) TMI 677 - HC - Income TaxRe opening of assessment - evasion of tax on the short terms capital gain arising in its hand on sale of land - as per AO Actual sale deeds executed by the society in favour of other signatories to the MOU was only a device to avoid liability to pay tax on short term capital gain - Petitioner had filed return of income for the said assessment year 2005-06 which was accepted without scrutiny - Held that:- Merely because an assessment was not previously framed after scrutiny, would not give unlimited right to the AO to reopen by merely issuing a notice without valid reasons. As decided in Inductotherm (India) Pvt. Ltd. Vs. M. Gopalan, Dy. CIT [2012 (9) TMI 16 - Gujarat High Court] referring to Rajesh Jhaveri Stock Brokers P. Ltd. (2007 (5) TMI 197 - SUPREME Court) it is well settled that absence of notice under section 143(2) within the time permitted, scrutiny assessment under section 143(3) cannot be framed. However, merely because no such notice was issued, to contend that the assessment cannot be reopened, is not backed by any statutory provisions. Thus AO has committed a grave error in issuing impugned notice as petitioner had first entered into MOU to form a consortium of different entities to bid for a large piece of land which would require sizable investment & thereupon, entered into an agreement to sale with the society. Ultimately, as per the terms of the agreement and the understanding between the petitioner and other signatories to the MOU at the instance of the petitioner, the society entered into a separate sale deeds in favour of various parties. Thus failure to see how the revenue can contend that under such circumstances, there was escapement of income under the head of short term capital gain. Merely because the petitioner entered into an agreement with the said society which agreement contained a clause that the final sale deed would be executed in favour of such other persons as the petitioner may indicate, by itself cannot give rise to a presumption that the land in question stood transferred in favour of the petitioner on the date of such agreement as contended by the revenue. The society had not, by virtue of agreement dated 08.04.2004, transferred the property in favour of the petitioner. The society had only agreed to do so on certain terms and conditions. Most important condition being that of the purchaser paying remaining purchase price without which the sale could never be completed. In the meantime the possession of the land was retained by the society. An agreement to sale without there being anything more,obviously cannot be equated with transfer of property. Section 5 of the Transfer of Property Act also enforces this view. Reassessment notice quashed. In favour of assessee.
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