9911796707
TMI Blog2014 (10) TMI 332X X X X Extracts X X X X X X X X Extracts X X X X ..... limits of Jhansi and hence, being a capital asset within the meaning of section 2(14) of the Act and the gain arising on sale of such land will be chargeable to capital gain tax and therefore, after recording the reason to believe that capital gain chargeable to tax arising out of sale of land has escaped assessment within the meaning of section 147 of the Act, a notice u/s 148 dated 02.08.2011 has been issued and served to the assessee. In response to notice u/s 147, a return of income was filed showing agricultural income of Rs. 42,000/- and long term capital loss on sale of above land at Rs. 8,79,701/-. While computing the long term capital loss on sale of land, sale consideration was shown at Rs. 36,75,000/- and cost of land was computed @ Rs. 40/- per sq. meter as on 01.04.1981 (2.128 hectare =21280 sq. meter) and also showing the indexed cost of improvement at Rs. 3,24,237/-. On finding that there is difference in sale consideration as per the information received by the AO than what was declared by the assessee [ as per the information, the sale consideration should be Rs. 85,50,000/2 = Rs. 42,75,000/- but sale consideration declared was Rs. 36,75,000/- and hence, the differ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sp; Rs. 42,75,000/- Less : Indexed Cost of acquisition Rs. 20,899/- Index cost of improvement Rs. 3,24,237/- Rs. 39,29,237/- In view of the above computation, the assessment is completed at net income of Rs. 39,29,860/-. 3. The assessee challenged the reopening of the assessment as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sp; =21,280 sw. Meter Value of land as on 01.04.81 @ Rs. 10 per sq. meter =Rs.2,12,800/- Index cost of acquisition =2,12,800/- 497 &nbs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the reason for reopening of the assessment recorded, we find that issue is covered in favour of the assessee by order of ITAT, Agra Bench in the case of Shri Badam Singh Rajpali Vs. ITO (Supra) in which the facts and finding are reproduced as under :- "2. Briefly, the facts of the case are that the assessee had sold certain agriculture land on 05.08.2003 for a sum of Rs. 19,50,000/-. As per the AO, the assessee had not filed any income tax return showing capital gain arising out of sale of agriculture land. Information was received by the AO from ITO 6(3), Jhansi that during the year assessee had sold the land to M/s. Sahara City Homes (P) Ltd. for a consideration of Rs. 19,50,000/- whereas the land value as per govt. rate was Rs. 11,40,000/-. On receipt of this information, the AO had issue notice u/s. 133(6) was not replied. The reasons as recorded by the AO for issuance of notice u/s. 148 are reproduced as under : "Reasons recorded u/a. 148(2) of the IT Act, 1961 in the case of Shri Badam Singh Rajpoot S/o Shri Ram Prasad R/o 195, O/S Unnao Gate, Distt. Jhansi, AY 2004-05. The ITO 6(3), Jhansi has informed that during the assessment proceedings in the case of M/s. Sahara Ci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It need not to prove conclusively and accordingly, upheld the reassessment proceedings u/s. 148 of the IT Act and dismissed the appeal of the assessee on this reason. 3. The ld. counsel for the assessee reiterated the submissions made before the ld. CIT(A) and submitted that ingredients of section 147 of the Act have not been satisfied in this case. Therefore, reopening of assessment is bad in law. On the other hand, the ld. DR relied upon the orders of the authorities below. 4. We have considered the rival submissions and the material on record. The reasons for reopening of assessment have been incorporated in the impugned order, which is also reproduced above. Copy of same is also filed at page 11 of the paper book. According to section 147 of the IT Act, the essential ingredient of this section has been that "if the Assessing Officer has reason to belief that any income chargeable to tax has escaped assessment in any assessment year........" Therefore, before invoking jurisdiction u/s. 147 of the IT Act, the Assessing Officer shall have reason to believe that any income chargeable to tax has escaped assessment. The AO for the reasons recorded for reopening of assessment as men ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion if the reason for his belief that the conditions are satisfied does not exist or is not material or relevant to the belief required by the section. The court can always examine this aspect though the declaration or sufficiency of the reasons for the belief cannot be investigated by the court." 4.1 Hon'ble Delhi High Curt in the case of CIT vs. Atul Jain & Smt. Vinita Jain, 299 ITR 383 held - "There must be "reason to believe" warranting the issuance of a notice of reassessment by the Assessing Officer. If there are no reasons, then the entire foundation for initiating the proceedings is bad and the notice initiating proceedings must be quashed. Mere satisfaction of the Assessing Officer for the issuance of a notice is not enough, there must be reasons on record which led him to believe that a notice should be issued. After a foundation based on information is set up, there must still be some reasons which warrant the holding of a belief so as to necessitate the issuance of a notice under section 148 of the Income-tax Act, 1961. The assessee purchased shares and subsequently sold these shares at a much higher value. For the assessment year 1997-98, the assessees disclosed lon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal held that since the Assessing Officer failed to incorporate the material and its satisfaction for reopening the assessment, the same was invalid. On a reference : Held, that the Assessing Officer had not examined the information received from the survey circle before recording his own satisfaction of escaped income and initiating reassessment proceedings. The Assessing Officer had thus acted only on the basis of suspicion and it could not be said that it was based on belief that the income chargeable to tax had escaped income. The Assessing Officer had to act on the basis of "reasons to believe" and not on "reasons to suspect". The Tribunal rightly concluded that the Assessing Officer had failed to incorporate the material and his satisfaction for reopening the assessment and therefore the issuance of notice under section 148 of the Act for reassessment proceedings was not valid." 4.3 Considering the reasons for reopening of assessment in the light of above discussion and the case laws referred to above, we are of the view that the AO has not satisfied the ingredients of section 147 of the Act in the reasons recorded for reopening of assessment. Therefore, the AO has not ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
