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TMI Blog2018 (1) TMI 91X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income Tax Act. 3 According to the petitioner, land CTS No.4619, admeasuring 3994.06 square meters was purchased by late Shri Balubhai Amin at Rs. 1,80,000/. The land is situate at Aurangpura, Aurangabad. After demise of Balubhai Amin in 1968, the property is inherited and belong to the petitioner i.e. J.B.Amin and Brothers (HUF). The value of the property has been shown in the Books of Accounts maintained by the petitioner as Rs. 1,80,000/. The petitioner alienated the land along with superstructure standing thereon for consideration of Rs. 18 crores on 27.04.2009. The consideration, in respect of the land, is stated to be Rs. 16 crores. The petitioner filed return of Income for the year 2009-2010 (Assessment year 2010-2011) wherein this transaction was duly disclosed. 4 According to the petitioner, it is permissible under Section 55(2)(b)(ii) of the Income Tax Act to compute market value of the property, which was assessed at Rs. 2,00,63,643/as on 01.04.1981, to be cost of acquisition. The computation of long term gain and indexation was made considering the aforesaid market value as on 01.04.1981. The Respondent Income Tax Department proposed to reassess income of the peti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t as on 31.03.2010, it is seen that the opening WDV of the land as on 01.04.2009 is shown at Rs. 1,80,000/in the statement of fixed assets. The Assessee, while filing return of income, shown cost of the land as Rs. 2,00,63,640/as on 01.04.1981 instead of Rs. 1,80,000/( book value). According to the Respondent - department, in view of Section 49(1)(iii)(a) of the Income Tax Act, cost of acquisition of the said land shall be deemed to be the cost for which previous owner of the property acquired it, as increased by the cost of any improvement of the assets incurred or borne by the previous owner or the assessee, as the case may be. It is also recorded in the notice that the assessee has wrongly taken cost of acquisition of the said land at Rs. 2,00,63,640/, being the market value based on valuation report prepared by M/s S.B.Shuttari, Chartered Engineer and Government Registered Valuer and after indexation, the effective cost reduced from sale consideration was Rs. 12,68,02,205/. According to the department, the assessee has wrongly taken market value as on 01.04.1981 instead of considering cost of acquisition reflected from its books of accounts. The department believed that the inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y not be essential for the assessee to consider the capital cost incurred by the previous owner or fair market value of the asset. 13 The petitioner contends that recording of reasons is the basic thing and no notice can be entertained founded upon extraneous ground not communicated to the petitioner under the notice or in the disclosure made by the department after receiving notice by the assessee calling upon the department to supply reasons for arriving at the conclusion and before directing the petitioner to file return of income. 14 The petitioner, placing reliance on the judgment of Division Bench of this Court in the matter of Hindustan Lever Ltd. Vs. R.B. Wadkar & others, reported in 2004 (3) Mh.L.J. 517, contends that it is necessary for the Assessing Officer to form his opinion and put it on record in black and white. The reasons recorded should be clear and unambiguous and should not suffer from any vagueness. The reasons recorded must disclose his mind. Reasons are the manifestation of mind of the Assessing Officer. In paragraph 20 of the judgment, it is observed by the Division Bench of this Court, thus: "20 The reasons recorded by the Assessing Officer nowhere sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. It is recorded in the judgment that disclosure of reasons provide a live link to the formation of the belief that income had escaped assessment. Similar is the view taken in the matter of Indivest Pte.Ltd. Vs. Additional Director of Income Tax, Mumbai, reported in (2012) 250 CTR (Bom) 15. 16 In yet another decision rendered by the Division Bench of this Court in the matter of M/s Pransukhlal Brothers Vs. Income Tax Officer - 16(3)(1) (Writ Petition Lodging No.2124 of 2014, decided on 20th August, 2014). It is observed that validity of reopening of an assessment can only be tested by the reasons recorded at the time of issuing the notice for reopening an assessment. These grounds for reopening of assessment can neither be substituted and/or supplemented. The reopening of assessment will either stand or fall only upon the reasons recorded before issuing the impugned notice. 17 It appears to be the contention of the department that since the petitioner has demonstrated book value of the property at Rs. 1,80,000/and has assessed income for several years by showing book value of the property, as specified above, the conduct of the petitioner, according to Respondentdepartment, amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is the contention of the Respondent - department that the objection to the valuation report prepared by S.B.Shuttari, Chartered Engineer and Government Valuer, for the said land @ Rs. 2,00,63,640/has been recorded in the communication setting out reasons for reopening of assessment under Section 148 of the Income Tax Act by the Assistant Commissioner of Income Tax. Since there is already a disclosure in respect of disagreement of the department to the valuation report prepared by S.B.Shuttari, Chartered Engineer & Government Valuer, it is the reason supporting issuance of notice under Section 147 of the Act and there is no question of any new reason being introduced. The reason is already recorded in the order disclosing the reasons and as such, objection of the petitioner to the notice, does not deserve to be considered. 23 Learned Counsel appearing for the RespondentDepartment is justified in referring to the provisions of Section 55(2)(b)(ii) of the Act that, where the capital asset became the property of the assessee by any of the modes specified in subsection (1) of Section 49, and the capital asset became the property of the previous owner before 01.04.1981, it would be at t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 2,00,63,640/, being the market value based on valuation report prepared by the S.B.Shuttari, Chartered Engineer Govt. registered valuer and after indexation the effective cost reduced from sale consideration was Rs. 12,68,02,205/giving rise to LTCG of Rs. 3,31,97,795/. " 27 There is a clearcut mention in the reasons that the assessee has wrongly taken cost of the land, being the market value based on the valuation report of S.B.Shuttari, Chartered Engineer & Government approved valuer. It is, thus, not open for the petitioner to contend that the assessee/petitioner was taken by surprise and that the notice has been confirmed or that the order rejecting the objection, raised by the petitioner, records extraneous consideration. In fact, the reasons recorded in the order while rejecting the objection raised by the petitioner cannot be said to be extraneous since the reference in respect of the grounds does appear in the reasons for reopening assessment, communicated on 03.11.2016. 28 Learned Counsel appearing for the Respondent, placing reliance on the judgment in the matter of Majinder Singh Kang Vs. Commissioner of Incometax, reported in (2012) 344 ITR 358 (Punjab & Haryana), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lieve", 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)]." 30 Learned Counsel appearing for the Respondent also contends that it would not be permissible for the petitioner to raise challenge to the order passed by the Assessing Officer under Section 148 of the Act in exercise of jurisdiction under Article 226 of the Constitution when efficacious remedy is available to the assessee under the Act. In the matter of Commissioner of Income Tax & others Vs. Chhabil Dass Agrawal (Civil Appeal No.6704 of 2013, decided by the Hon'ble Supreme Court on 08.08.2013, it is observed in paragraphs 20 and 21 of the judgment, thus: "20 In the instant case, the Act provides complete machinery ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee may also prove that no new facts came to the knowledge of the IncomeTax Officer after completion of the assessment proceeding. We are not expressing any opinion on the merits of the case. The questions of fact and law are left open to be investigated and decided by the assessing authority. The appellant will be entitled to take all the points before the assessing authority. The appeals are dismissed. There will be no order as to costs." 32 On the question of maintainability of the petition, the petitioner has relied upon the judgment in the matter of Jeans Knit Pvt. Ltd., Bangalore Vs. The Deputy Commissioner of Income Tax, Bangalore & others, reported in (2017) 390 ITR 10 (2016 SCC OnLine SC 1536) and Ajanta Pharma Ltd., Mumbai Vs. Assistant Commissioner of Income Tax, reported in [2003(5) Mh.L.J. 352]. 33 Even holding the challenge to be maintainable, since it is observed by us that the objection raised by the petitioner is devoid of substance and that there is very much reference to the objection in the communication indicating "reasons for belief", issued by Respondent Department and that no new material or ground has been introduced in the final order and that the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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