TMI Blog2008 (4) TMI 422X X X X Extracts X X X X X X X X Extracts X X X X ..... a plot of land bearing No. 243 in Model Town, Kapurthala, from the Improvement Trust, during the financial year 1989-90. This plot was sold by the assessee to one Shri Ramesh Kumar in February, 1997, through power of attorney, (executed in favour of) Shri Vijay Kumar. Shri Ramesh Kumar further sold this plot to Shri Kharaiti Lal, by entering into an agreement for sale dt. 3rd June, 1997 with him. A fresh power of attorney was executed by the assessee for this purpose, on the asking of Shri Ramesh Kumar, in favour of Shri Sushil Kumar S/o Shri Kharaiti Lal, the purchaser. Shri Kharaiti Lal further sold this plot to Shri Varinder Kumar by executing a sale deed on 16th April, 2000. This transfer was by way of the power of attorney in favour of Shri Sushil Kumar S/o Shri Kharaiti Lal, as above. The reassessment proceedings in question were started to assess the capital gain in the hands of the assessee, who had arisen on the execution of the sale deed dt. 18th April, 2000. 6. The stand of the assessee challenging the AO's assumption of jurisdiction to reassess was that there had been no application of mind by the AO while recording the reasons for the reopening; that the AO had, in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that this ground was not raised by the assessee before the learned CIT(A). but being a legal ground, it is entitled to be raised even at this stage. The learned counsel for the assessee has placed reliance on the decision of the Hon'ble Madras High Court in the case of CIT vs. T.R. Rajakumari (l974) 96 ITR 78 (Mad), wherein, it has been, inter alia, held that where the initiation of reassessment proceedings is stated to be on the direction of the CIT, the reassessment proceedings are invalid. The learned counsel for the assessee has further relied on the decision of the Hon'ble Patna High Court in the case of Sheo Narain Jaiswal Ors. vs. ITO (l989) 176 ITR 352 (Pat), wherein, it has been held, inter alia, that the reasons to believe under s. 147 of the Act must be of the ITO concerned and not of any other officer; and that if the ITO does not form his own belief, but merely acts at the behest of any superior authority, it must be held that the assumption of jurisdiction under s. 148 of the Act was bad for non-satisfaction of the condition precedent. 9. The learned Departmental Representative, on the other hand, has stressed that in the reasons recorded, there is nothi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e reasons to suggest such a course. In T.R. Rajakumari, it has been held that there is a clear-cut distinction between jurisdiction and the procedure and that a defect in procedure will not normally amount to lack of jurisdiction; that s. 147(a) of the IT Act sets out certain conditions for invoking power and jurisdiction under that section; that if those conditions are not satisfied, there is no jurisdiction for the officer to reassess under that section; that even if the conditions precedent set out in s. 147(a) are treated as a matter of procedure, still, the contemplated procedure has to be followed for attracting the jurisdiction under that section; that hence, the extreme condition that even if the statutory procedure has not been followed, still the order of reassessment has to be taken as valid, cannot be accepted; and that the condition precedent for initiating reassessment proceedings is the reasonable belief of the officer that income had escaped assessment. Undoubtedly, there cannot be any second opinion about the said ratio of T.R. Rajakumari. However, as to how this decision goes to show that the facts in the present case are pari materia therewith, has not been demon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of notice, the only question is whether there was relevant material on which a reasonable person could have formed the requisite belief; that whether the material would conclusively prove escapement of income is not the concern at that stage; and that this is so because formation of the belief is within the realm of the subjective satisfaction of the officer. In the present case, it is nowhere the case of the assessee that the AO did not have cause or justification to know or suppose that income had escaped assessment. This being so, it has to be said that the AO had reasons to believe that income had escaped assessment. 14. In view of the above, we do not find any force in this grievance of the assessee and the same is hereby rejected. Cross-objection No. 1 raised by the assessee thus stands rejected. 15. Cross-objection No. 2, as noted hereinabove, is merely supportive of the impugned order. 16. Coming to the Department's appeal, in the assessment proceedings, the assessee maintained that he sold the plot owned by him, in February, 1997. to Shri Ramesh Kumar; that it was on the asking of Shri Ramesh Kumar that the power of attorney in this regard was executed in favour o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... virtue of the impugned order, the Department is aggrieved and is in appeal before us. 19. Before us, challenging the impugned order, the learned Departmental Representative has submitted that the assessee's contention that he had sold the plot in question to Shri Ramesh Kumar through power of attorney dt. 26th Feb., 1997, is not correct; that as noted by the AO, the assessee never filed any documentary evidence in support of his explanation and, therefore, the AO was justified in rejecting it as not acceptable and unsatisfactory; that reliance by the assessee merely on the Iqrarnama was again rightly rejected by the AO; that an agreement to sell does not confer any right; that Shri Ramesh Kumar was not at all the owner of the plot through any power of attorney; that in his statement recorded before the AO, which statement was rightly relied on by the officer, Shri Ramesh Kumar categorically stated that he had received Biana of Rs. 1 lac on the assessee's behalf and that this amount was handed over by Shri Ramesh Kumar to the assessee; that further power of attorney by the assessee in favour of Shri Vijay Kumar was cancelled by the assessee on 5th Aug., 1997; that it was Shri Sush ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent was to be used against the assessee, is in stark violation of the basic principle of natural justice, i.e., "audi alteram partem". Nobody can be condemned unheard. It is the mandatory requirement of law to afford every party full opportunity of hearing. It was on the basis of the statement of Shri Ramesh Kumar that the AO came to the conclusion that the sum of Rs. 1 lac was forfeited by the assessee. Non-confronting of the statement of Shri Ramesh Kumar to the assessee deprived the assessee of his right of rebutting it. The learned CIT(A) has categorically observed that the AO did not react on the issue of the confessional statement made by Shri Ramesh Kumar to assess Rs. 1 lac in his hand, though he was present at the time of hearing of the appeal before the learned CIT(A), nor did he offer any comment regarding the finding of the Dy. Director of IT to assess the said amount of Rs. 1 lac in the hands of Shri Ramesh Kumar. It remains firmly established that no material has come on record that the agreement between Shri Ramesh Kumar and Shri Kharaiti Lal was cancelled. The fact remains that though the assessee continued to be the legal owner of the plot in question till 18th Apr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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