TMI Blog2019 (5) TMI 1702X X X X Extracts X X X X X X X X Extracts X X X X ..... n a sum of ₹ 1,47,975/- on the same set of facts. It would show that A.O. did not verify the information as to how much capital gains has escaped assessment. A.O, therefore, acted only on the basis of suspicion and it could not be said that it was based on belief that income chargeable to tax had escaped assessment. The A.O. had to act on the basis of the reasons to believe and not on reasons to suspect. The issue is, therefore, covered in favour of the assessee by the Order of ITAT, Agra Bench in the case of Rameshwar, Jhansi vs. ITO 6(2), Jhansi [ 2014 (10) TMI 332 - ITAT AGRA] . - Decided in favour of assessee. - ITA. No. 7134/Del./2018 - - - Dated:- 2-5-2019 - SHRI BHAVNESH SAINI, JUDICIAL MEMBER For the Appellant : Shri Rakesh Gupta And Shri Somil Agarwal, Advocates. For the Respondent : Shri S.L. Anuragi, Sr. D.R. ORDER This appeal by Assessee has been directed against the Order of the Ld. CIT(A), Aligarh, Dated 10.07.2018, for the A.Y. 2009-2010. 2. Briefly the facts of the case are that as per AIR information, during the F.Y. 2008-2009, assessee had sold immovable property for ₹ 43,04,000/-. Proceedings under section 148 were initia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may be issued. Dated 01.02.2016 Sd/-Anil Kumar Sharma, Income Tax Officer, Ward-2(1), Ghaziabad . 3.1. He has referred to sale deed which is executed by the assessee and the co-owner Mr. Iqbal. He has submitted that in case of co-owner Mr. Iqbal, the A.O. passed the assessment order under section 147/143(3) Dated 06.12.2016 and returned income have been accepted at ₹ 1,99,980/-. Copy of the computation of income is also filed in which long term capital gains on the same property have been computed at ₹ 1,47,975/- and after adding the interest income, total income was declared in a sum of ₹ 1,99,980/- which is accepted by the A.O. Learned Counsel for the Assessee, therefore, submitted that A.O. has not verified any information and did not apply the mind to the facts of the case. The entire amount of sale consideration could not be disclosing capital gains, therefore, there were no reason to believe to the A.O. to have reopened the assessment. He has submitted that the issue is covered by the Order of ITAT, Agra Bench in the case of Rameshwar vs. ITO 6(2), Jhansi in ITA.No.20/Agra/2014, Dated 28.02.2014. Copy of the Order is placed on record and pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 ₹ 42,000/- and long term capital loss on sale of above land at ₹ 8,79,701/-. While computing the long term capital loss on sale of land, sale consideration was shown at ₹ 36,75,000/- and cost of land was computed @ ₹ 40/- per sq. meter as on 01.04.1981 (2.128 hectare =21280 sq. meter) and also showing the indexed cost of improvement at ₹ 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 ₹ 85,50,000/2 = ₹ 42,75,000/- but sale consideration declared was ₹ 36,75,000/- and hence, the difference was of ₹ 6,00,000/-], the AO required the assessee to explain the reasons fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .3, the same are reproduced as under :- The ITO-6(3), Jhansi vide letter dated 25.05.2009 has informed that during the assessment proceeding in the case of M/s Sahara City Homes (P) Ltd., Jhansi it was noticed that above assessee has sold land worth ₹ 85,50,000/- on 30.05.2005. In order to make confirmation with regard to value of land, a letter was issued on 15.02.2010 and served through registered post to the assessee. It was required in the notice to confirm land transaction and also to intimate as to how the capital gain arising out of land transaction has been reflected in his return of income. The assessee has not replied. The land situates at Aaraji Mauja, Jhansi Khas, Tehsil District, Jhansi, its Khata No. 374 373, the land is within the 8 km. from the Jhansi Municipality Limit, assessee was liable for payment of capital gain tax on the above transaction of land as per Income Tax Act, 1961. Sale Value of land at Jhansi Khas, Tehsil Jhansi =₹ 85,50,000/- The assessee share is half i.e. Assessee received =₹ 42,75,000/- Sold area of total land ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nformation 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 ₹ 19,50,000/- whereas the land value as per govt. rate was ₹ 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/s. 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 City Homes (P) Ltd., Jhansi, it was noticed that above assessee has sold land worth ₹ 19,50,000/- on 05.08.2003 as per govt. value ₹ 11,40,000/-. In order to make confirmation with regard to value of land, a notice u/s. 133(6) was issued and served upon the assessee. It was required in the notice to confirm land transaction and also to intimate as to how the capital gain arise out of land transaction has been reflected in his/her return of income. Since land situates within the 8 km. from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 mentioned above has not mentioned anything in the reasons if he was having reasons to believe that income chargeable to tax has escaped assessment. He has merely received information from ITO 6(3), Jhansi that the assessee has sold the land on 05.08.2003 at the higher rate as against Government value. The AO has not verified the information issued notice u/s. 133(6) to the assessee and required to confirm the transaction as to how the capital gains arise out of the transaction. It would mean that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er. 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 long-term capital gains arising from the transaction. On the basis of the information received by the Deputy Director (Investigation), the Assessing Officer issued notice under section 148. The files were then put up before the Commissioner and in response to the question whether the Commissioner was satisfied that income had escaped assessment, he wrote yes. Thereafter, the Assessing Officer reassessed the income and charged interest and levied penalty. The Commissioner (appeals) allowed relief partly but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come 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 correctly assumed jurisdiction u/s. 147 / 148 of the IT Act. Accordingly, we set aside the orders of the authorities below and quash the reassessment proceedings. It would result in deletion of all the additions. Ground No. 1 of appeal of assessee is, accordingly, allowed. In view of this, the other grounds have only academic interest and as such, we do not find it necessary to decide the issue on merits. 5. In the result, the appeal of the assessee is allowed. 7. In view of the above, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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