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2019 (9) TMI 601

..... s. 292C is as to the truth of its’ contents. - disallowance of the assessee’s claim u/s. 54 - HELD THAT:- the assessee can object to the reasons recorded after filing the return of income in response to the notice u/s. 148, and where so, the AO is bound to dispose the said objections per a speaking order prior to proceeding further in the matter. The assesseee in the present case has not raised any objection to the reason/s for issuing the notice u/s. 148 even till the date of the assessment. Deduction U/S 54 - in the original return assessee did not show the capital gain and claimed exemption u/s 54 - whether the property through which capital gain arisen, was belonging to the assessee or not - held that:- It has already been clarified that neither AD nor her husband, RL, was the owner of the subject property at any time, as well as the circumstances in which the name of RL came to be entered qua the said plot in the records of JDA. And, further, that her ownership in December, 2001, when RL was alive, only would validate the ATS dated 25/12/2001, on the basis of which the assessee makes a claim of transfer. Why, the house was admittedly constructed, and not purchased, .....

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..... ving authorized him on behalf of the family, i.e., the late assessee s wife and two sons, living together, as evident from the affidavit itself. The hearing in the matter was accordingly proceeded with. 3. The assessee, at the time of hearing, sought admission of additional grounds, raising legal pleas, challenging the reopening of the assessment in the instant case, as under: 1. That the initiation of proceedings u/s. 147/148 is illegal, invalid in the eyes of law as the case has been reopened on the basis of borrowed satisfaction and there was no application of mind. As such the initiation of proceedings u/s. 147/148 is illegal, invalid and void abinitio and the assessment order is liable to be cancelled. 2. That the reopening of the case is illegal, invalid and bad in the eyes of law. The reasons recorded, i.e., prior to the issue of notice u/s. 148(1) on 10.3.2006 (served on 16.3.2006), conveyed by the Assessing Officer (AO) to the assessee vide his letter dated 16/17.11.2006 (PB pg. 4), are as under: The ACIT (HQ) vide his office letter No. 6358 dated 03-03-2006 passed on a consequential information in case of search and seizure operation in case of M/s Mahajan & Co., Grou .....

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..... rd, yielding primary facts, which are not disputed, raised legal pleas. How could the same be ousted at the threshold? The same is admitted (NTPC Ltd. v. CIT [1998] 229 ITR 383 (SC)). On merits, I find, equally, the assessee to have no case. The information received from the Investigation Wing of the Revenue is on the basis of material seized during search proceedings u/s. 132 of the Act. The statutory presumption u/s. 292C is as to the truth of its contents. Further, the source of the information leading to the reason to believe, further, is the agreement to sell dated 01.6.2001 entered into between the assessee and one, Raj Kumar s/o Sh. Sardari Lal, per which the assessee sold a residential house (at 559A, Gandhi Nagar, Jammu) to the latter for ₹ 35 lacs. The information is relevant, from a reliable source, and specific, i.e., has a direct and live nexus with the reason to believe the assessee to have income in the form of capital gain, which had escaped assessment in-as-much as it was, on verification, found by the AO that the assessee had not returned any income for the relevant year, or otherwise disclosed this transaction to the Revenue. How could it be said that there .....

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..... agreement to sell (ATS) dated 25.12.2001 (PB pgs. 38-39). The assessee failing to produce AD, claiming her whereabouts to be not known, the AO located her and recorded her statement u/s. 131 of the Act on 13.12.2006, wherein - her statement being reproduced at pgs. 3-4 of the assessment order, she averred that: (a) she had never owned any landed property at the stated address, much less sold it to any one; (b) that she had in fact taken a small room (without kitchen) in the backyard of the said residential property at a rent ₹ 35-40 per month from Sh. Om Prakash Gupta (OPG), the assessee, where she lived for 5-6 year before vacating it about two years back; and (c) that she being a non-state subject, could not either purchase or sell any immovable property in the said of J&K, further adding that she was resident of Village Barnala, Distt. Gurdaspur, Punjab. She, further, on being confronted with the ATS dated 25.12.2001, purportedly excecuted by her, categorically denied having executed any such document, clarifying to be an illiterate, having no knowledge of hindi or english alphabets - the agreement (ATS) being in English and her signature in hindi. The statement of AD .....

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..... PG had purchased it from RL. On the basis of the documents provided by the Director s office, it transpired that RL had submitted an affidavit dated 13.11.2003 stating that Sh. Om Prakash s/o Sh. Jagiri Mal Gupta, is the sole occupant of plot no. 358 (House No. 16), measuring 9 Marlas, at Sector 14, Nanak Nagar, Jammu, who had constructed a house thereat. And that he had occupied the said premises as a tenant, and had no other concern/interest therein. And, accordingly, had no objection to the said plot being regularized in favour of OPG, passing the correction order. The assessee had also furnished an affidavit dated 04.9.2003 to the effect that he was in possession of the said plot of land, and had constructed a pucca house thereat, residing therein with his family for the last two years. Apart from the said affidavit, RL had made a declaration on oath before the Munsiff, Judicial Magistrate, first class, Jammu, again on 13.11.2003, to the same effect, also stating the circumstances under which his name had entered as an occupant of plot no. 358 (House No. 16), Sector 14, Nanak Nagar, Jammu, i.e., as OPG was not present at the time of survey made by the JDA for regularizing the s .....

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..... he had sold his house property at 559-A, Gandhi Nagar, Jammu for a consideration of ₹ 35 lacs. He has, however, claimed in the said return that he had purchased a new residential house at Nanak Nagar, Jammu from Smt. Amriti Devi w/o Sh. Rattan Lal. He was given innumerable opportunities to produce evidence to show that the new residential house was actually purchased by him subsequent to his selling of his house at 559-A, Gandhi Nagar, Jammu. However, discussion in the asstt. order clearly shows that he has not able to show that the new residential house was actually purchased by him. On the contrary sustained enquiries, investigations and examinations conducted by this office has proved beyond any doubt that no residential property at Nanak Nagar, Jammu was purchased by the assessee as claimed by him in his return of income for the relevant Asstt. Year. In fact examination has proved that Agreement to Sell entered into by the assessee with Smt. Amriti Devi was a bogus and a forged document which was fabricated by him with the sole intention of reducing his tax liability under the head Long Term Capital Gains arising from the sale of property at 559-A, Gandhi Nagar, Jammu. I, .....

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..... e basis of following groundsa) Firstly the property claimed to have been purchased by the appellant was in the name of Sh Rattan Lal and after the death of Sh. Rattan Lal he was survived by a wife and sons. Smt Amriti devi wife of Late Sh. Rattan Lal has herself declared in the statement dated 14.12.2009 recorded during remand proceedings that her husband was a state subject and her sons are state subject but she does not hold a state subject of the state. As per the laws of the state, after the death of Sh. Rattan Lal, only his sons will get the rights in property and not his wife as she is a non state subject. Therefore, she cannot sign an agreement to sell or issue an irrevocable power of attorney in respect of a property in which she does not have any legal right. Thus, the documents submitted by the appellant have no legal validity. b) Secondly, the plot in question belongs to Jammu Development Authority and cannot be transferred without prior approval of Jammu Development Authority. It is only after the permission of the JDA that property and legal possession can be transferred after getting a transfer letter & possession letter from the JDA after paying requisite transfe .....

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..... ial house, the income of which is chargeable under the head Income from house property (hereafter in this section referred to as the original asset), and the assessee has within a period of one year before or two years after the date on which the transfer took place purchased, or has within a period of three years after that date constructed, one residential house in India, then, instead of the capital gain being charged to income-tax as income of the previous year in which the transfer took place, it shall be dealt with in accordance with the following provisions of this section, that is to say,- (i) if the amount of the capital gain is greater than the cost of the residential house so purchased or constructed (hereafter in this section referred to as the new asset), the difference between the amount of the capital gain and the cost of the new asset shall be charged under section 45 as the income of the previous year; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase or construction, as the case may be, the cost shall be nil; or (ii) if the amount of the capital gain is equal to or .....

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..... ion of capital gains arising on the said transfer upon investment of the said capital gain on: (a) purchase of a residential house in India within a year prior to the date of transfer; or (b) purchase of a residential house in India within a period of two years from the date of the transfer; or (c) construction of a residential house in India within a period of three years from the date of transfer. 7.2 The assessee has admitted capital gain at ₹ 26.64 lacs (PB pgs. 1 - 3), which it appears would stand to be enhanced by ₹ 4.10 lacs in-as-much as his claim toward cost of improvement (at ₹ 1.75 lacs before indexation) has not been accepted, and which has also not been appealed against before the tribunal (also refer para 4.1 of the appellate order). The claim u/s. 54 is for ₹ 27.10 lacs, being the purchase consideration of a residential house at 16F, Sector 14, Nanak Nagar, Jammu, and in support of which he relies on the ATS dated 25.12.2001 entered into between him and AD, and the fact that the said house stands transferred in his name by the JDA, albeit subsequently. An examination of the assessee s claim during assessment proceedings, however, reveals the f .....

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..... y to him at any time; in fact, having not owned any property in J&K, which she was not entitled to in view of her being not a state subject, and that, she being illiterate, with no knowledge of written language, the ATS dated 25/12/2001 is a forged document; (h) the statement dated 14/12/2009 by AD, recorded in the course of remand proceedings, reiterating her statement dated 13/12/2006; (i) the sale agreement dated 25/12/2001 is not registered even subsequently, even as required by law (Registration Act, 1908). 7.3 All the above statements are corroborative and, in fact, not denied or rebutted at any stage with any material/evidence. The facts of the case stand elaborately discussed in the assessment order (pgs. 2-9) and the remand report dated 04.02.2008 (PB pgs. 17-21). All this makes it abundantly clear that the assessee purchased/acquired the subject plot (at Sector 14, Nanak Nagar, Jammu) and constructed a residential house thereat. RL s/o Sh. Sant Ram, and his wife AD, lived in the said house as tenants for several (5-6) years, and apparently enjoyed good relations with the assessee (OPG) and his family. As, however, the assessee was not present at his residence at the t .....

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..... other document. She was, however, despite several opportunities extended during the assessment proceedings, not produced by the assessee, nor even her address furnished, stating that he was not liable to keep track of her, which was regarded as unreasonable and irrational by the AO, particularly considering that the document (ATS dated 25.12.2001) being relied upon by the assessee to claim his right to the property, was an unregistered document, so that the assessee would require her presence for registration thereof in future or for executing a document of title, viz. sale deed. Why, as it transpires, RL, her husband, extended full cooperation to the assessee in causing the correction in the records of the JDA, and which was only subsequent to 25/12/2001! Clearly, therefore, the two families were in contact with each other, even as the onus to produce her was on the assessee, which has not been met at any stage. Why did, then, the assessee not produce AD, giving lame excuses instead? In fact, even the witnesses to the ATS were not produced, though were sought to be, again, contacted by the AO. The plea of her cross-examination, accepting which would require the matter being restor .....

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..... subject property, much less in December, 2001, i.e., during the life time of RL. RL, however, having expired by the time the reassessment proceedings were initiated, the assessee replaced him with his wife. In fact, an agreement with RL himself would have been of little assistance in view of his affidavit and deposition of November, 2003, besides absence of any document evidencing his title to the subject property. As regards the remand report dated 21.12.2009 (PB pg. 48), what, one wonders, was the need for calling for the same. There was no inconsistency in the facts on record, with the assessee s case being wholly unproved, nay, disproved, and who had, even until then, i.e., December, 2009, and despite the proceedings having commenced in March, 2006, not produced any witness or document to prove or in support of his claim, with that produced, i.e., ATS dated 25.12.2001, being disproved or, in the very least, unproved. Rather, what, one wonders, explains the volte face attributable to AD per a statement dated 21/12/2009, i.e., days after reiterating her version (of 13/12/2006) on 14/12/2009. This is indeed quizzical, as is the need to, in the absence of any contrary material on r .....

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