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TMI Blog2013 (4) TMI 677X X X X Extracts X X X X X X X X Extracts X X X X ..... to A.Y. 2005-06 the assessee has purchased land admeasuring 33817 sq.mt. For a toal consideration of Rs. 24,68,97,917/- from the society M/s. Purshottam Farmers Co.op cotton ginning & pressing at Varachha Road, Surat. The satakhat without possession cum agreement to sale dated 8/4/2004 entered between M/s. Purshottam Farmers Co.op and the assessee. It is pertinent to note that original agreement to sale was signed between the Purshottam Farmers Co.op society and the company M/s. Ratna Trayi Reality Services Pvt. Ltd. In April 2004, while the transaction as per final sales deeds are in October and December 2005 i.e. after a gap of more than one and half year. Considering the fact that land is an appreciating asset, M/s. Ratna Trayi Reality Services Pvt. Ltd. has tried to evade tax on the short terms capital gain arising in its hand. I have reason to believe that the income has escaped assessment by the assessee." 3. Petitioner raised objections under communication dated 16.07.2012 against reopening of the assessment. Such objections, however, were rejected by the respondent by an order dated 15.01.2013. The petitioner has, thereupon, filed this petition. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etitioner had purchased the land in question at the very point of time when the agreement to sale took place between the petitioner and the said society on 08.04.2004. Actual sale deeds executed by the society in favour of other signatories to the MOU was only a device to avoid the petitioner's liability to pay tax on short term capital gain. 8. In view of such facts, counsel for the petitioner vehemently contended that impugned notice lacked validity. He submitted that from the reasons recorded, it cannot be stated that the Assessing Officer had reason to believe that income chargeable to tax had escaped assessment. Counsel further submitted that the notice was issued beyond the period of four years from the end of the relevant assessment year. It was, therefore, necessary that income escaping tax should be in the excess of Rs. 1 lac. In the present case, reasons recorded nowhere mentioned the amount of tax, which might have escaped assessment arising out of the said transaction. In support of his contentions, counsel placed heavy reliance on the decision of Division Bench of thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax had escaped assessment would be a relevant consideration even in cases, where the court is examining challenge to a notice for reopening where no scrutiny assessment was previously framed. Division Bench of this Court in case of Inductotherm (India) Pvt. Ltd. Vs. M. Gopalan, Dy. Commissioner of Income Tax or his successor in a judgement dated 06.08.2012 in Special Civil Application No. 858 of 2006 examined the assessee's following contentions: "10. This brings us to the second limb of the petitioner's challenge namely, that the power under section 147 of the Act cannot be exercised to circumvent the proceedings under section 143(3) of the Act because the notice under section 143(2) of the Act has become time barred and further that in any case, reasons recorded would not permit the Assessing Officer to reopen the assessment." 12.In this context, referring to the decision of Apex Court in case of Assistant Commissioner of Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts and ascertain for ourselves whether, on the basis of the reasons recorded by the Assessing Officer, it can be stated that he could form a belief that income chargeable to tax had escaped assessment. In our opinion, the Assessing Officer has committed a grave error in issuing impugned notice on the basis of reasons recorded. As noted earlier, the 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. The petitioner participated in such auction proceedings. The bid was accepted being the highest. Petitioner, 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. We fail to see how the revenue can contend that under such circumstances, there was escapement of income under the head of short term capital gain. 14. Section 45 of the Act pertains to 'capital gains'. Sub section (1) thereof provides inter alia that any profits or gains aris ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agreement. There may be variety of situations under which the ultimate sale deed may not take place. For example, if the petitioner itself fails to muster enough resources to pay the remaining sale price, the agreement to sale would fail. As per the terms of agreement; the seller may either forfeit the earnest money or a portion of the sale consideration deposited by the petitioner upfront but surely the sale would not be completed. In a given case after the agreement to sale, both parties may not ultimately execute the sale deed and cancel the agreement on mutually agreed terms. We can think of many other situations developing other situations between the agreement to sale and actual sale due to which, the final event of sale may never take place. The revenue's attempt therefore to equate an agreement to sale to one of the transfer of property, in our opinion, lacked any valid basis in law. 16. Section 5 of the Transfer of the Property Act, which is more relevant for our consideration pertains to definition of transfer of property and reads as under: "5. "Transfer of Property" defined.-In the fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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