TMI Blog2020 (4) TMI 283X X X X Extracts X X X X X X X X Extracts X X X X ..... ared in the return of income filed for the relevant assessment year. Once the sellers as well as the purchasers have denied the allegation of any unaccounted purchase consideration/sale consideration paid or received in their statements recorded under section 131 of the Act, then in the absence of any such fact detected during the investigation carried out by the DDIT, the opinion formed by the DDIT and consequently by the AO is merely based on the allegation made in the complaint which is anonymous complaint as admitted and stated by the DDIT Investigation Reopening is based on a borrowed satisfaction which is also not based on any tangible material but merely on suspicion and allegations made in the anonymous complaint. The DDIT Investigation has stated this fact that the loose papers annexed to the complaint were neither prepared by the assessee nor belonging to the assessee. Therefore, such loose papers prepared by some anonymous person would not constitute a tangible material or incriminating material to form the belief that income assessable to tax has escaped assessment. Sanction accorded by the ld. CIT for issuing the notice under section 148 in the case of the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t satisfying the conditions of section 148, 149 151 of the Income-tax Act,1961. 1.4. That the assessment proceedings u/s 148 of the Act were initiated on the basis of surmises conjectures, suspicions and suffer from various infirmities and maladies, the proceedings are unwarranted, illegal, bad in law, against the principal of natural justice, against the settled legal principals and sound conscious and deserve to be quashed. 2. That on the facts and in the circumstances of the case the learned lower authorities grossly erred in making addition of ₹ 41,50,348/- in the hands of the assessee appellant u/s 69 of the Income-tax Act. 2.1 That on the facts and in the circumstances of the case the learned lower authorities grossly erred in adopting the purchase consideration of the impugned land purchased at ₹ 12,451,045/- as against purchase consideration of ₹ 8,40,000/- declared by the assessee appellant and other joint purchasers. 2.2 That on the facts and in the circumstances of the case the learned lower authorities grossly erred in comparing average selling price with average purchase price- deliberately ignoring material fact that entire land area pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 40,000/-. The land was valued for stamp duty purposes at ₹ 8,70,000/-. The assessee filed his return of income on 30.03.2008 declaring total income of ₹ 7,31,750/-. The said return of income was processed under section 143(1) of the IT Act at the declared income. There was a Tax Evasion Petition (TEP) received by the Office of the DDIT (Investigation)-I, Jaipur regarding suppression of purchase consideration by the assessee along with two other purchasers in respect of the land purchased vide Sale Deed dated 1st February, 2007. As per the details given in the said complaint, the actual amount paid by the purchasers was stated to be ₹ 1,32,01,045/- as against the purchase consideration of ₹ 8,40,000/- shown in the sale deed. The DDIT Investigation Jaipur conducted an enquiry and examined all the purchasers involved in these transactions being sellers as well as purchasers. The statements were recorded under section 131 of the IT Act on 17th February, 2014, however, neither the sellers nor the purchasers have accepted any amount as alleged in the complaint received or paid in respect of the said transactions of sale and purchase of the agricultural land. The D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... objection vide communication dated 25.11.2014 has not dealt with this objection of the assessee. The ld. Counsel has stated at Bar that though the assessee challenged the notice issued under section 148 before the Hon ble Jurisdictional High Court in the Writ Petition, however, the assessee would withdraw the said Writ Petition as this Tribunal has heard this appeal of the assessee and the objection against the reopening of the assessment. In view of the statement made by the ld. Counsel at Bar, the Bench has proceeded with the matter. The ld. Counsel has referred to the statements recorded by the ld. DDIT Investigation under section 131 of the sellers of the land and submitted that all the four sellers in their statements have denied having received any extra or alleged amount over and above the consideration shown in the sale deed. The reasons recorded by the AO and formation of belief that the income assessable to tax has escaped assessment, is based on the borrowed satisfaction and not AO s own opinion and decision. He has thus contended that the DDIT has specifically mentioned that there is unaccounted investment of ₹ 1,24,51,045/- made by the purchasers and also suggest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntly purchased the land in question vide sale deed dated 1st February, 2007 for a consideration of ₹ 8,40,000/-. However, the land was valued for the purpose of stamp duty at ₹ 8,70,000/-. The assessees are engaged in the real estate business and, therefore, maintaining the books of account and showing the transactions of purchase and sales in the regular books of account, therefore, there is no allegation by the department that the transaction in question was not disclosed by the assessee in their books of account. The assessee has duly explained the fact that the land was duly shown as part of the stock-in-trade and expenditure incurred by the assessee in development of the land is also recorded in the books of account. The sale of the land after the development work and curving out the plots is also not in dispute as the AO has given the details of the plots of land sold by the assessee. The assessment was reopened by the AO by recording the reasons at pages 2 and 3 of the assessment order as under :- The AO has recorded in the reasons the fact regarding the sale deed, the description of property, purchase consideration mentioned in the sale deed and sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion was made for 8,40,000/-. Although the purchasers i.e. Shri Om Prakash Morwal, Shri Parmanand R. Verma (Morwal) and Shri Ramniranjan Tibra and all the four sellers denied having any connection with-papers filed with the TEP, it is clear that details of purchasers of the plots as well as area of land purchased by them as mentioned in TEP are correct. Therefore, it is obvious that all the parties concerned (sellers and purchasers) are hiding true particulars of the land transactions un-consideration and that the actual value of this land transaction was indeed ₹ 1,32,91,045/-. Owing to the above discussion, it is clear that unaccounted investment of ₹ 1,24,51,045(₹ 1,32,91,045 - ₹ 8,40,000) was made by the above three purchasers, with their individual investment being ₹ 41,50,348/-. Similarly, total sales consideration in the hands of each seller comes to ₹ 33,22,761j- (as no return of income was filed by them for the AN. 2007-08 showing the resultant capital gains). Therefore, the case of the purchaser i.e. Shri Om Pralcash Morwal (PANAARPM0675Q) is being referred to you for taking appropriate action as per I.T.Act, 1961 for Financi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion and fact but it is a sort of direction with the finding and opinion on the issue. The DDIT and the AO have given much emphasis on the details of the subsequent sale of the plots by the assessees. However, there is no allegation that those details are not disclosed by the assessee as the same were duly recorded in the books of account and also declared in the return of income filed for the relevant assessment year. Once the sellers as well as the purchasers have denied the allegation of any unaccounted purchase consideration/sale consideration paid or received in their statements recorded under section 131 of the Act, then in the absence of any such fact detected during the investigation carried out by the DDIT, the opinion formed by the DDIT and consequently by the AO is merely based on the allegation made in the complaint which is anonymous complaint as admitted and stated by the DDIT Investigation vide letter dated 09/17.03.2015 as under :- F.No. DDIT(Inv)-1/JPR/2014-15/880 Date 09/17.03.2015 The Income-Tax Officer, Ward-1, Jhunjhunu. Sub- TEP in the case of Sh. Ramniranjan Tibra and others-reg ********************** Please refer to your letter no. 1721 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the land in question was in public domain as it was a registered deed available with the Sub Registrar, therefore, giving the particulars of the purchase and sale of the land as well as of the parties is not disclosing any new facts which were not either disclosed by the assessee or not available in the public domain. Further the assessee filed the return of income and it is not the case of the department that the said transaction of purchase is not disclosed by the assessee. The only allegation is that the correct or actual consideration paid by the assessees was not disclosed. The DDIT Investigation himself has admitted the fact that during the enquiry and investigation carried out, the sellers as well as the purchasers have denied having any such payment or receipt as alleged in the complaint and, therefore, it was only an expression of opinion of the DDIT that there was an unaccounted investment by the purchasers without any such fact or any material revealing such fact detected during the course of such investigation. Therefore, the reopening is merely based on suspicion and without any tangible material which could be regarded as incriminating material revealing the inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... much higher rates, is of no help to the AO as it is seen that such subsequent sales are of 'residential plots' vis-a-vis sale of 'land' by the appellants. The evaluated value of such 'residential plots' as per Stamp Valuation Authority itself ranges from ₹ 400 to ₹ 825 sq. yard as per the chart at page 13 of assessment orders, whereas the evaluated rate of land sold by appellants is approx. ₹ 42 per sq. yard, which shows that clearly some development of land and plotting has been done by the buyers before subsequent sale of land by them, even though such development might not be legal considering that no permission for conversion thereof was taken from the concerned authorities. Therefore, subsequent increase in value of land does not imply a higher sale consideration in the hands of the appellants. For the reasons stated above, it is held that the adoption of higher sale consideration of ₹ 33,22,761 is baseless and consequent computation of capital gains is incorrect. Therefore, in the facts and circumstances the reopening is based on a borrowed satisfaction which is also not based on any tangible material but merely on suspicio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he mechanical way of recording satisfaction by the Joint Commissioner, which accords sanction for issuing notice under section 148, is clearly unsustainable and we find that on such consideration both the appellate authorities have interfered into the matter. In doing so, no error has been committed warranting reconsideration. 9. As far as explanation to Section 151, brought into force by Finance Act, 2008 is concerned, the same only pertains to issuance of notice and not with regard to the manner of recording satisfaction. That being so, the said amended provision does not help the revenue. The Hon ble High Court has observed that the ld. CIT acted mechanically in order to discharge his statutory obligation when he merely wrote on the format Yes, I am satisfied . In the case in hand, the ld. CIT has even not written any affirmative sentence or word but has just signed against the column which was pre-typed Yes . Therefore, applying the principle as laid down by the Hon ble High Court, the sanction accorded by the ld. CIT for issuing the notice under section 148 in the case of the assessee is hyper mechanical. The said decision of the Hon ble Madhya Pradesh High Court was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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