TMI Blog2013 (8) TMI 371X X X X Extracts X X X X X X X X Extracts X X X X ..... of 1961 for formation of requisite belief as to the escapement of income – Decided against the Assessee. - S.B. Civil Writ Petition No.858/2013 - - - Dated:- 28-2-2013 - Mohammad Rafiq, J. For the Appellant : Prakul Khurana, Anurag Kalavatiya and Sanjay Jhanwar. For the Respondent : R.B. Mathur and Nikhil Simlote. ORDER:- This writ petition has been filed by petitioner, Shree Om Builders and Colonizers, challenging; notice issued by respondent no.2 - the Deputy Commissioner of Income Tax, Central Circle-1, Jaipur, dated 12.12.2011, under Section 148 of the Income Tax Act, 1961 (for short, 'the Act of 1961'); reasons supplied for reopening of the case under Section 147 of the Act of 1961 for assessment year 2009-10 and the order dated 28.03.2012 rejecting objections submitted by the petitioner. Shri Prakul Khurana, learned counsel for the assessee, has argued that notice for initiating reassessment proceedings are based on mere surmises and conjectures that sale consideration mentioned in the registered sale-deed is less than the actual sale consideration and there has been exchange of money over and above the recorded sale consideration. Alleged basis for such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers from the main Railway Station of Jaipur towards Chinkara Canteen. Moreover, the plot of the petitioner is located on a 40' wide road whereas plot with which comparison is sought to be made is situated on a 100' wide road. Plot of the petitioner is situated at T point which, according to Vastu, is not considered good/auspicious and such property fetches less market value. Besides there being a transformer of the R.S.E.B. installed just in front of the plot of the petitioner, which occupies 10' front of the plot. Both the properties are not in close vicinity. There is distance between them of about 2.5 kilometers. The rate of the plot of the petitioner presumed by respondents no.1 and 2 is wholly unrealistic and unfounded and is not based on sale-deed of any plot in the close vicinity of the plot of the petitioner. Shri Prakul Khurana, learned counsel argued that petitioner in response to the notice, filed two replies respectively on 19.12.2011 and 27.03.2012 objecting against the issuance of the impugned notice describing the reasons for it to be illegal and without authority of law as the same has been issued on the basis of mere suspicion and not on the basis of reasons to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in ncome Tax officer Others Vs. Lakhmani Mewal Das (1976) 103 ITR 437 (SC), K.P. Varghese Vs. ITO Another (1981) 131 ITR 597 (SC), CIT Vs. Gillanders Arbuthnot Co. - (1973) 87 ITR 407 (SC), CIT Vs. George Henderson Co. Ltd., - (1967) 66 ITR 622 (SC), and that of Bombay High Court in Ajanta Pharma Ltd. Vs. ACIT Ors. - (2004) 267 ITR 200 (Bom), and that of Gujarat High Court in Garden Finance Ltd. Vs. ACIT (2004) 268 ITR 48 (Guj.) and that of Madras High Court in P.G. Foils Ltd. Vs. ITSC Another (2008) 302 IR 331 (Mad). Shri R.B. Mathur, learned counsel for the Revenue, opposed the writ petition and submitted that this writ petition has been filed merely against show cause notice at a preliminary stage, which should not be entertained. Whether or not the assessing officer in the assessment order records a finding as to escapement of income would be depended on material and evidence. While such facts are being asserted by the respondents and the petitioner is disputing them. A detailed enquiry cannot be undertaken by this court on this question. Those disputed questions of facts cannot be appropriately gone into in the writ jurisdiction under Article 226 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es or even from the material already on record or may be derived from the discovery of new and important material or fresh facts. Learned counsel, in support of his arguments, has relied on judgment of the Supreme Court in Kalyan Mavji Co. v. CIT [1976] 102 ITR 287. It is argued that the petitioner assessee has sold its property to M/s Kamakshi International whereas other sister concern of this party namely M/s Kamakshi Hospitality Private Limited has purchased property from other person at Plot No.D-112, Bani Park, in the same locality having almost the same size and under similar circumstances, in which case amount of Rs.2 crores was declared as sale consideration. After a survey conducted of the business premise of M/s. Kamakshi Hospitality Private Limited, it transpired that actual sale consideration was Rs.7 crores. The assessing officer also came in possession of a letter dated 23.12.2011 of I.C.I.C.I. Bank with copy of valuation of market value of Plot No.D-81, Ghiya Marg, got done by the Bank while dispersing/sanctioning loan of Rs.1.25 crores to the petitioner. Market value of this property has been valued by the Valuer at Rs.3,53,29,230/- as against Rs.1.20 crores cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Supreme Court in Raymond Woollen Mills Ltd. v. ITO [1999] 236 ITR 34, Phool Chand Bajrang Lal v. ITO [1993] 203 ITR 456 and S. Narayanappa v. CIT [1967] 63 ITR 219 (SC), learned counsel for the respondents argued that it is well settled proposition of law that sufficiency of reasons cannot be judged at the time of issue of notice. I have given my thoughtful consideration to rival submissions and perused the material on record. The assessing officer in order to acquire the jurisdiction to make reassessment of the income of the assessee with reference to Section 148 of the Act of 1961 has to arrive at twin satisfactions viz., that (i) it has to have a reason to believe that income chargeable to tax has escaped assessment and further that (ii) such income has escaped assessment by reason of omission or failure on the part of the assessee to disclose fully and truly material facts before assessment of his income in the relevant assessment year. It is only when these two conditions are fulfilled that the assessing officer acquires jurisdiction to make reassessment. It is therefore imperative for the assessing officer to record reasons for such belief before initiating proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs vide Sale Deed dated 25-2-2009. This plot of land measures 1058 Sq. Yards and registered sale consideration for this plot of land was at Rs.1.20 Crores. Both the plots i.e. D-112-A and D-81 are in same locality and the later is in close vicinity of the former. As such the market value of both the plots should be almost same. It is learnt that the plot No.D-81, Ghiya Marg was free from any dispute. Therefore, no apparent reasons are evident for difference in market value of the both properties. It is pertinent to mention here that the plot D-112-A, Bani Park was registered at sales consideration of Rs.2 Crores. However the actual sales consideration was at Rs.7 Crores. Hence, there is sufficient reason to believe that the actual sale consideration for plot No.D-81 is actually much higher than the registered sales consideration. In view of above facts and circumstances I have got sufficient reasons to believe that M/s Om Builders Colonizers has suppressed the actual sales consideration of plot No.D-81, Ghiya Marg, Bani Park, Jaipur and the same amount has escaped assessment. Therefore, I propose to reassess the income of M/s Om Builders Colonizers for the assessment yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view of the judgments of this Court, it follows that an Income-tax Officer acquires jurisdiction to reopen assessment under Section 147(a) read with Section 148 of the Income Tax 1961 only if on the basis of specific, reliable and relevant information coming to his possession subsequently, he has reasons which he must record, to believe that by reason of omission or failure on the part of the assessee to make a true and full disclosure of all material facts necessary for his assessment during the concluded assessment proceedings, any part of his income, profit or gains chargeable to income tax has escaped assessment. He may start reassessment proceedings either because some fresh facts come to light which where not previously disclosed or some information with regard to the facts previously disclosed comes into his possession which tends to expose the untruthfulness of those facts. In such situations, it is not a case of mere change of opinion or the drawing of a different inference from the same facts as were earlier available but acting on fresh information. Since, the belief is that of the Income-tax Officer, the sufficiency of reasons for forming the belief, is not for the Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 147 authorises and permits the Assessing Officer to assess or reassess income chargeable to tax if he has reason to believe that income for any assessment year has escaped assessment. The word 'reason' in the phrase 'reason to believe' would mean cause or justification. If the Assessing Officer has cause or justification to know or suppose that income had escaped assessment, it can be said to have reason to believe that an income had escaped assessment. The expression cannot be read to mean that the Assessing Officer should have finally ascertained the fact by legal evidence or conclusion. The function of the Assessing Officer is to administer the statute with solicitude for the public exchequer with an inbuilt idea of fairness to taxpayers. As observed by the Delhi High Court in Central Provinces Manganese Ore Co. Ltd. v. ITO [1991 (191) ITR 662], for initiation of action under section 147(a) (as the provision stood at the relevant time) fulfillment of the two requisite conditions in that regard is essential. At that stage, the final outcome of the proceeding is not relevant. In other words, at the initiation stage, what is required is 'reason to believe', but not t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It will be open to the assessee to prove that the facts mentioned in the notice are incorrect. The assessee can also prove that no new facts came to the knowledge of the Income-tax Officer after completion of the assessment proceeding. While the petitioner has contended that the plot which the petitioner sold to M/s. Kamakshi International vide sale-deed dated 25.02.2009 is situated at D-81, Ghiya Marg, another plot with which comparison is sought to be made is situated at D-112-A, though also in Bani Park but is not situated in close vicinity and there is a distance of about 2.5 kilometers between these two properties whereas this fact is disputed by the respondents in their counter, but the petitioner in rejoinder has reasserted this fact that distance between these two plots is at-least more than two kilometers. Respondents in their counter have rather asserted that Plot No.D-81 at Bhragu Marg is very close to main Collectorate Circle of Bani Park, whereas Plot No.D-112 is far away from that Circle situated on Power House Road. Petitioner asserts that his plot is located on 40' wide road whereas the Plot of which comparison is sought to be made is located at 100' wide road, w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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