9911796707
TMI Blog2013 (8) TMI 371X X X X Extracts X X X X X X X X Extracts X X X X ..... money over and above the recorded sale consideration. Alleged basis for such suspicion is that the Income Tax Department during the course of search in the case of M/s Kamakshi Hospitality, has found that there was exchange of money over and above the recorded sale consideration in relation to some property situated in Bani Park, Jaipur and therefore the sale consideration disclosed by the petitioner for that property also cannot be relied as the market value of petitioner's properties on mere basis of the alleged vicinity. It is further contended that the department has not found any material/evidence/proof during the course of search proceedings or post search assessment proceedings which could have led to the requisite formation of the belief that the transaction between the petitioner herein and Kamakshi International has been entered on a higher amount than shown in the registered sale deed. Even in the survey that was conducted by the department at the premise of the petitioner pursuant to search at the premise of M/s Kamakshi International, no contrary evidence/ material was found which could have led to such belief that the petitioner has also sold the land on a higher valu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issued on the basis of mere suspicion and not on the basis of reasons to believe. Respondents however rejected those objections vide order dated 28.03.2012. Learned counsel argued that reasons recorded by respondent no.1 for issuing notice under Section 148 of the Act of 1961 are not in consonance with the statutory provisions contained in Section 50C of the Act of 1961. Allegation of showing sale consideration of the plot of the petitioner towards lower side in the sale-deed cannot be justified because the position of law is very much clear and there is specific provision in the Act itself, which covers such nature of cases of understatement of sale consideration. As per Section 50C, it is the stamp valuation adopted by the Stamp Registering Authority, which has to be taken into consideration for the purpose of assuming the correct consideration liable to be taxed for the purpose of tax. Learned counsel for the petitioner argued that respondents have rejected the objections of the petitioner on the premise that sufficiency of reasons cannot be a question at the preliminary stage, whereas once the competent authority has formed a requisite opinion as to his belief for issuance of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be appropriately gone into in the writ jurisdiction under Article 226 of the Constitution of India. Learned counsel for the respondent submitted that notice under Section 147/148 of the Act of 1961 was issued only because the assessing officer had reasons to believe that the income of the petitioner has escaped assessment. The petitioner is free to file his reply and justify the sale consideration disclosed. Shri R.B. Mathur, learned counsel for the respondents cited judgment of the Supreme Court in GKN Drivershafts (India) Ltd. v. ITO [2003] 259 ITR 19 to argue that it was held in that case by the supreme Court that proper course of action for noticee, who has been served with notice under Section 148 of the Act, is to file return and if he so desires to seek reasons of notices, which the Revenue would be bound to furnish, on receipt of reasons filed objections which will be decided by a speaking order, which course has been adopted by the department. Petitioner was supplied reasons. He filed objections, which have been considered and rejected by the respondents. It cannot be therefore said that the assessing officer has wrongly assumed jurisdiction under Section 147 of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lued by the Valuer at Rs.3,53,29,230/- as against Rs.1.20 crores claimed by petitioner in the sale deed. Contention of the petitioner that Plot No.D-81 is residential property and plot No.D-112-A is commercial property is not only incorrect but patently false. Learned counsel for the respondent has in this connection referred to the sale-deeds of both the plots which are Annexure R-2 and R-3, and argued that therein both the plots have been described to be residential. The relevant deeds also nowhere indicates that the road size in front of the plot is 40' or 100' respectively. The deeds only indicate that the Plot No.D-81 is situated at Ghiya Marg whereas Plot No.D-112-A is situated on Power House Road, Bani Park, Jaipur. Learned counsel also sought to submit that a plea has been set up by the petitioner before this court that the plot of the petitioner is situated at T point whereas map of the locality furnished by the petitioner before the assessing officer during reassessment proceedings, the Plot No.D-81 is shown just opposite Plot No.F-34 and F-35 and actual T point plot is at D-83 and not D-81. Reference in this connection is made to the map of Bani Park so produced by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er to record reasons for such belief before initiating proceedings for reassessment. The question that arises for consideration is whether the reasons, which led to formation of belief by the assessing officer contained in Section 147(a) that income of the petitioner escaped assessment on account of his omission or failure to disclose fully or truly material facts necessary for assessment, can be said to exist on the grounds referred to in the reasons supplied to the petitioner or otherwise disclosed in the order by which objections raised by them have been rejected. Reasons as supplied for reopening of the case of the petitioner for reassessment, following was mentioned as the basis for arriving at the requisite satisfaction in terms of Section 147 of the Act:- "A search and seizure operation u/S 132 Income Tax Act, 1961 was carried out of 23.07.2009 in the case of Shri Mahaveer Singh Sankhla the then Zonal Chief Engineer (Civil), RRVPNL, Jaipur, his family members and other connected cases. Consequent upon the search, the Mahaveer Singh Sankhla Group of cases were centralized with Center Circle-1, Jaipur. M/s Kamakshi Hospitali ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ani 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 year 2009-10. Accordingly, action u/S 147/148 of the Income Tax Act 1961 is hereby initiated. Issue notice u/S 148." Before proceeding to examine the merits of the case, it would be apposite to take stock of the relevant case law of the subject. In this connection following observations of the Supreme Court in Lakhmani Mewal Das (supra), are apt to quote:- "8. The grounds or reasons which lead to the formation of the belief contemplated by section 147(a) of the Act must have a material bearing on the question of escapement of income of the assessee from assessment because of his failure or omission to disclose fully and truly all material facts. Once there exist reasonable grounds for the Income-tax Officer to form the above belief, that would be sufficient to clothe him with jurisdiction to issue notice. Whether the grounds are adequate or not is not a matter for the court to investigate. The sufficiency of the grounds which induce the Income-tax Officer to act is, therefore, not a justiciable issue. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Court to judge but it is open to an assessee to establish that there in fact existed no belief or that the belief was not at all a bona fide one or was based on vague, irrelevant and non-specific information. To that limited extent, the Court may look into the conclusion arrived at by the Income-tax Officer and examine whether there was any material available on the record from which the requisite belief could be formed by the Income-tax Officer and further whether that material had any rational connection or a live link for the formation of the requisite belief. It would be immaterial whether the Income-tax Officer at the time of making the original assessment could or, could not have found by further enquiry or investigation, whether the transaction was genuine or not, if one the basis of subsequent information, the Income-tax Officer arrives at a conclusion, after satisfying the twin conditions prescribed in Section 147(a) of the Act, that the assessee had not made a full and true disclosure of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lment 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 the established fact of escapement of income. At the stage of issue of notice, the only question is whether there was relevant material on which a reasonable person could have formed a requisite belief. Whether the materials would conclusively prove the escapement is not the concern at that stage. This is so because the formation of belief by the Assessing Officer is within the realm of subjective satisfaction (see ITO v. Selected Dalurband Coal Co. Pvt. Ltd. [1996 (217) ITR 597 (SC)] ; Raymond Woollen Mills Ltd. v. ITO [1999 (236) ITR 34 (SC)]. The scope and effect of section 147 as substituted with effect from April 1, 1989, as also sections 148 to 152 are substantially different from the provisions as they stood prior to such substitution. Under the old provisions of section 147, separate clauses (a) and (b) laid down the circumstances under which income escaping assessment for the past assessment years could be assessed or reassess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, whereas the respondents have denied this fact by producing sale-deeds of two transactions asserting that neither of them mentions the width of the road that these two plots are situated at 40' or 100' wide roads, respectively. The assertion of the petitioner that Plot No.D-81 is situated at T point is refuted by the respondents by producing the map of Bani Park submitted by none other than the petitioner themselves before the assessing officer during reassessment proceedings wherein Plot No.D-81 is shown just opposite Plots No.F-34 and F-35 and actual T point is in front of Plot No.D-83 and not D-81. Yet another minus point enumerated by the petitioner to run down the value of their Plot D-81 at Bhragu Marg is that their existed 10' wide transformer of Rajasthan State Electricity Board just in front of this Plot but this is also contested by the respondents stating that the width of the plot is 75.3' and mere occupancy of 10' by transformer doe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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