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TMI Blog2019 (5) TMI 1702X X X X Extracts X X X X X X X X Extracts X X X X ..... ch, assessee share was worked to Rs. 20,24,070/-. Since, assessee has purchased agricultural land within the prescribed period, he was entitled for deduction under section 54B of Rs. 20,24,070/- and on the balance of Rs. 22,79,930/-, assessee is liable to pay tax of long term capital gains, which have not been disclosed. The A.O. considering the above, computed the long term capital gains of Rs. 18,01,265/-. 2.1. The assessee challenged the reopening of the assessment as well as addition on merit. However, the Ld. CIT(A) confirmed the reopening of the assessment. However, the addition on merit was modified and appeal of assessee was partly allowed. 3. The assessee, in the present appeal, challenged the reopening of the assessment as well as addition on merits on several grounds of appeal. Learned Counsel for the Assessee referred to PB-17 which are reasons for reopening of the assessment. The same is reproduced as under : "Shri Yameen, S/o Shri Ajmoo, Rawli Road, Murad Naqar. Ghaziabad (A Y 2009-10) Reason for the belief that income has escaped assessment On the basis of AIR information, verification letter was issued to the assessee to verify the sale of immovable prope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .No.20/Agra/2014 Assessment Year 2006-07 Rameshwar Satisfaction note. Dayaram alias Kallu Nagaria Ka Kua outside Unnov Gate Jhansi. PIN-284 001.PAN AOXPR4258Q vs. The Income Tax Officer, 6(2), Jhansi, Awas Vikas Tiraha, Jhansi. 284003. (Appellant) (Respondent) Appellant by : Shri Manoj Badal, C.A. Respondent by : Shri Anirudh Kumar, Jr. D.R Date of Hearing : 27.02.2014 Date of Pronouncement : 28.02.2014 ORDER PER BHAVNESH SAINI, JUDICIAL MEMBER : 1. This appeal by the assessee is directed against the order of ld. CIT(A)-II, Agra dated 05.09.2013 for A.Y. 2006-07, challenging the reopening of the assessment under section 148 of the I.T. Act. 2. In this case, assessment proceeding has been reopened u/s 147 of the Act after receiving information from another Income Tax Officer i.e. ITO-6(3), Jhansi that the assessee had sold agricultural land bearing Arazi No 374 & 373 situated at Mauja Jhansi Khas ad measuring 4.256 hectare for Rs. 88,50,000/- on 30.05.2005 jointly with another person named Sri Kaushal and also finding from the office record that the assessee has not filed any return of in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion collected from Tehsildar u/s 133(6) of the Act as mentioned in the assessment order. The AO did not accept valuation report submitted by the assessee for the purpose of determining the cost of acquisition because as per the AO, in the report, location of land is not correctly mentioned. Computation of capital gain as made by him in the assessment order is as under:- Total area sold 4.256 Hectare Assessees share in sales 2,128 Hectare Assessees Share in sales (1 Hect. = 2.47 Acre 5,256 Acres Total cost of land (5.256*Rs. 800/-) Rs. 4205/- Yameen Munna, Ghaziabad. Index cost of acquisition (Rs. 4205/-* 497/100) Rs. 20899/- Income from long term capital gain Sales 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 well as addition on merit before Ld. CIT(A). The written submission filed by the assessee before Ld. CIT(A) is incorporated in the appellate order. The Ld. CIT(A) noted the reasons for reopening of the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of Badam Singh Rajpali Vs. ITO in ITA.No.358/Agra/2011 for A.Y. 2004-05 quashed the reopening of the assessment vide order dated 22.06.2012. Copy of the order is placed on record. Learned D.R. accepted that issue is covered in favour of the assessee on identical facts. 6. On consideration of the facts of the case, in the light of 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 record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also noted in the impugned order. The ld. CIT(A) considering the issue of reopening of assessment, noted in para 2.2 of the appellate order that at the stage of initiation of reassessment proceedings u/. 148 of the IT Act, it is a trite law that the AO should have reason to believe that income assessable to tax has escaped assessment. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 82 ITR 147 held "The words reason to believe suggest that the belief must be that of an honest and reasonable person based upon reasonable grounds and that the Income-tax Officer may act on direct or circumstantial evidence but not on mere suspicion, gossip or rumour. The Income-tax Officer would be acting without jurisdiction 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 Honble 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ks of account of the assessee. On appeal by the assessee the first appellate authority upheld the validity of the notice under section 148 of the Income-tax Act, 1961, but set aside the assessment on the addition made by the Assessing Officer and remitted the matter to him to frame a fresh assessment. On second appeal, the 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 pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there is an escapement of income on account of long term capital gains. The A.O, therefore, recorded reasons to believe that capital gains on sale consideration of Rs. 43,04,000/- chargeable to tax has escaped assessment. The A.O. did not verify the information and even did not compute as to how much capital gain have been escaped assessment in the facts of the case. The reasons are thus, vague and did not show any application of mind on the part of the A.O. The A.O. in the case of the co-owner of the same property Shri Iqbal has accepted the long term capital gains in a sum of Rs. 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. The 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 (supra). Following the same decision, I set aside the Orders of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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