TMI Blog2020 (12) TMI 1071X X X X Extracts X X X X X X X X Extracts X X X X ..... o the Assessing Officer on 19/03/2015 by the ADIT(Inv.). Revenue has failed to demonstrate with relevant material or evidences that copies of document/information provided by the ADIT(Inv.) was available with the AO on or before recording reason for reopening of the assessment i.e. 30/03/2015 and further in our considered opinion, A.O. has reopened the assessment solely on the basis of information received of the ADIT (Investigation) and without forming an independent opinion and there cannot be any reassessment for verification and without satisfying the requisite condition under the law. A.O. issued notice to the assessee without any application of mind and satisfaction and same is not sustainable in the eyes of law - Decided in favour of assessee. - ITA. No: 308/AHD/2017 - - - Dated:- 23-12-2020 - Shri Mahavir Prasad, Judicial Member And Shri Amarjit Singh, Accountant Member For the Appellant : Shri Anil Kshatriya, AR For the Respondent : Shri O.P. Sharma, CIT/D.R. ORDER PER MAHAVIR PRASAD, JUDICIAL MEMBER 1. This appeal filed by the Assessee is directed against the order of the Commissioner of Income Tax ( hereinafter called CIT(A) ) order no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... land between the assesse and partnes of M/s. Akash Developers and Shri Revabhai Shankarbhai Patel Shri Jitendra Revebhai Patel. On the same day i.e. on 06/01/2007 and agreement for sale was executed between the partner of M/s. Akash Developers and Shri Shri Revabhai Patel and Shri Jitendra Patel in which land agreed to sale to Shri Revabhai Shri Jitendrabhai for a total consideration of ₹ 10,95,58,873/-. 4. Accordingly, the case was reopened and notice u/s 148 was issued on 31/03/2015 which was duly served upon the assesse on 31/03/2015. . (i) Agreement dated 06/01/2007 executed between Sardar (Mehsana) owners Association, Mehsana (first party), Partners of M/s Akash Developers, Mehsana (second party) and Mr. Rewabhai Shankarbhai Patel Mr. Jitendrahumar Rewabhai Patel of Visnagar (third party). This agreement shows that the original party who had owned the land i.e. land situated at Survey No.1990/50 of Mehsana city has given his consent to sell the said land. (Annexure-10 to the TEP) (ii) Agreement to sale dated 06/01/2007 of the said land executed between Partners of M/s Akash Developers, Mehsana (sailer party) and Mr. Rewabhai Shankarbhai Patel Mr. jitendra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ause that document only can spell the actual amount of transaction. However, the copy of said Banakhat had not been provided by the ADIT [Inv.) Mehsana. Therefore, during the course of the proceedings, the ADIT(Inv), Mehsana was specially asked vide letter dated 18/11/2015, to submit the copy of said Banakhat. However, the ADiT[!nvt), Mehsana in his reply dated. 19/02/2016, stated to have submitted all the details/documents available with his office vide his earlier latter dated 31/03/2015. Thus, it was transpired that the ADIT (Inv.J do not posses the said document. Meanwhile, the assessee as well as all the members of the Assessee, AOP were asked to submit the copy of such document along with other relevant details/documents. However, in turn, they replied not to have entered into any such Banakhat by the assessee. The assessee further submitted not to have signed even in the consent agreement dated 06/01/2007 referred above i.e. they are unaware about these documents as they have not executed any such document. However, to enquire further, summons dated 05/02/2016 were issued to following two persons- [1] Smt. Bhikhiben Amrutlal Patel, Secretary of Sardar Owners Association ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iscussed with the A/R and he was heard. 2. Briefly the facts of the case are that the assessee is an AOP comprising of seven members , it has filed its return of income for the assessment year under consideration ( A.Y 2008-09 ) on 30/09/2008 declaring an income of ₹ 74,48,740/- which was accepted vide order dated 10/11/2010 u/s 143(3) of the Act. The declared income was on account of Long Term Capital Gain arising on sale of an open land on 20/12/2007 for declared sales consideration of ₹ 95lacs. Thereafter during a course of investigation by the Investigation Wing of Income Tax, some of the documents relating to the sale of the land came to the notice of that land indicating that the actual consideration against the sale of the land was much higher than what has been shown by the parties. The ADIT (Inv) vide his letter dated 31/03/2015 furnished information with regard to the sale of the land to the A.O of the case along with copies of two documents both dated 06/01/2007, (i) one is an agreement titling Banakahat Karar Lekh dated 06/01/2007 executed between - Sardar ( Mehsana) Owners Association, Mehsana , the assessee, Partners o/M/s Akash Developers as selle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly submitted brief facts of the case,(at para 2 of her letter) purportedly furnished by ADIT(lnv.) Mehsana, vide his letter dated 31/03/2015. In the last para, the ACIT has, once again, simply sought for your guidance and directions u/s 144A. Thus, neither the ACIT has expressed her reasoned opinion as to the nature of addition (if any) and amount involved, nor the ICIT has stated his considered views in his letter dated 16/02/2016. addresses to the assessee. The assessee is merely requested to offer its views with documents/details. Thus, in absence of dearly spelt out 'issue' from either of the authorities, the assessee feels handicapped of in addressing its views on un-specified subject matter. 3. However, as sought for vide your captioned notice, the assessee would like to bring the following facts, being its firm views, on record for favour of information and necessary action as here under: A. A regular assessment already completed u/s. 143(3) of the Act: (i) As may be verified from the record that for the A.Y.2008-09 the assessee submitted its voluntary return of income by due date on 30/09/2008, showing total income of ₹ 74,48,741/- alon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e latter. (ii) Immediately, the then DCIT records reasons with the opening line as per information received from ADIT (Inv.) Mehsana...., forming an opinion that it is a fit case for issuance of notice u/s 148 of the Act, instead of the fact that there was no 'failure on the part of the assesses . Even while recording the so-called reasons there is mentioned of the no mention as to failure on the part of the assessee'. (iii) He then, moves a proposal on the same date i.e. 31/03/2015 in prescribed performa routed through the }CIT, Mehsana, which proposal is forwarded by the latter vide his letter of even date, on 31/03/2015 to the Pr.CIT, Gandhinagar. (iv) The proposal for re-opening is approved by the Pr.CIT, Gandhinagar on the same date i.e. 31/03/2015, and reached in the office of DCIT, Mehsana on 31/03/2015, itself as per inward stamping on the Pr. CIT's letter of even date. (v) On 31/03/2015, the then DCIT issues a notice u/s 148 of the Act (so hurriedly that even filling relevant blanks in para 3 thereof are left out). (vi) From the sequence of events as narrated above it may kindly be rated that right from the receipt of letter dated 31 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same A.O. who has submitted the proposal. Thus, there is suppression of basic facts leading to re-opening of the assessment on wrong footing. Thus, the assumption of jurisdiction has been erroneous and consequent proceedings are invalid [Raymond Wollen Mills Ltd v. ITO others. 236 ITR 34 (c) The original assessment was made u/s 14-3(3) of the Act, and the notice u/s 148 is issued after a period of four years from the end of the assessment year but the reasons recorded do not reflect that there was any failure or omission on the part of the assessee to disclose to materials facts in the return of income. The re-opening is, therefore, not permissible in the law. [Ganesh Vallabhbhai Family Trust v. DCIT 306 ITR 221 (Guj.), Austin Engg. Co. Pvt. ltd. v. JC1T 207 Taxation 35 (Guj.)] (d) Besides, us per present. A.O's reference dated 15/02/2016, the root cause of the re-opening touches to the alleged TEP relied upon by the ADIT( lnv.) Mehsana, in his letter dated 31/03/2015. However, the facts remain that none of the authorities has enquired into the referred TEP and proceedings are initiated in a casual manner. Reliance of the department on such TEP without there b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther the ADIT has carried out any inquiry by the investigation wing nor carried out any examination of alleged parties involved namely Nangibhai Sagrambhai Chaudhry others [party of the first part] and Shri Revabhai Shankarbhail'atel and Jitendrakumar Revabhai Patel [party of the second part] of the alleged Banakhat Agreement dated 06/01/2007. Not only this, but the ADIT has neither carried out any inquiry about their assessments nor made any effort to pass on information to concerned A.Os.Thus, under referred letter, the ADIT has merely done a job of 'Post office' and his letter could not be termed as carrying 'authentic information' giving rise to reassessment proceedings u/s 147 of the Act. Furthermore, the present A.O. has also made no efforts to carry out any local inquiry to ascertain the status of the alleged Banakhat and/or to take remedial actions 'if any' in their cases, although enough time was available at A.0's disposal, (i.e. between 31/03/2015 date of issue of notice u/s 148 15/02/2016 date of reference u/s 144 A). Thus, so-called information passed on by the ADIT could not be said to be a pointer indicating escapement of income. [ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary of the assessee-association enforcing her attendance in the ACIT's office on 16/02/2016. (Ane.8) along with requisite details to be produced. !n response to which, Smt. Bhikhiben Patel has appeared before the A.O. on the given date and her statement has been recorded in the chamber of the JCIT on 16/02/2016. (b) As per ACIT's letter dated 15/02/2016, (on the second page) it is stated that so-called copy of Banakhat dated 21/09/2006, has not been provided by the ADIT (Inv.), although requested to him. She yet awaits the said document from the office of the ADIT (Inv.) (c) In the meanwhile, on IS/02/2016, the ACIT prepares a reference u/s 144A and files in the office of the JCIT, Mehsana on the same day which is 'seen' by him on 16/02/2016, as per dated initial of the JCIT. From the aforesaid facts, it may be noted that before completing necessary inquiries and gathering relevant documents on record, the ACIT has made a reference u/s 144A, without forming her own firm opinion. Thus, either the reference under consideration by the A.O. is pre-matured, or calling upon the assesse to submit their views before yourself, is misconceived concept of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there is any mention of alleged Banakhat nor there is any third party (as confirming party) also as may be notice from sale deed dated 27/12/2010, the sellers (Shrl Bobgrom gjvram PatefJ has specified at the bottom on page no. 5 that the land under consideration is under litigation before Uon'ble Gujarat High Court in first appeal no, 4387/2006, (v) As per assessee's knowledge and belie/ the alleged Banakhat Karar dated 06/01/2007, has been cancelled by the concerned parties on 07/01/2007, as per copy placed on record of the A.O. (Ane.9) (vi) The referred documents allegedly stated as consent Karar dated 06/01/2007 and alleged Banakhat Karar dated 06/01/2007 appear forged-ones for the primary facts as below: (a) That none of the document bears signature of authorized signatory of the assessee association. (b) That both the stamp paper are purchased fay one Mr, Govind under his signature as agent of the party. The assessee has no such person on its payroll of the given name. (c) The stamp vendor is the common namely Kanubhai Baldevbhai Potel (d) The stamps bear chronological serial no. i.e. 051123 and 051124, meaning thereby they are purchased at a s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lar Ltd vs DCIT 301ITR407(Bom)l Austin Engg.Co Ltd V JCIT 207 Taxman 35(Guj),Manjusha Estate (P) Ltd 214 Taxman 194 (Guj) Signature? Hotels (P) Ltd Vs ITO 338ITR Sl(Delhi) Raymond Wollen Mills Ltd Vs ITO 236ITR34 (SC) Ganesh Ballabhai Family Trust Vs DCIT 3061TR 221(Guj), Smt Sunita Oberoi Vs ITO 126TTJ 806 (Agra Trib), Pr CIT Raj Kishore Ptashad vs ITO 88ITR 152 (all), Sweta Organizers (P) Ltd Vs ACIT 118TTJ 426 (Ahd), CIT Vs Kurban Hussain Ibrahimji Mithlboravala 82ITR 823 (SC) , CIT vs Kelvinator India Ltd 320ITR 561 (SC), The A.O. has further stated that the objection raised by the assesse is not acceptable and the preceding initiated u/s. 147 of the Act was valid. The case of the assessee is that a communication was received by the Assessing Officer in discharge of its official duties and the same has been taken as an information for re opening of the case as held in the cases of ITO Vs Purushottam Das Bangur Others (SC) 2241TR 362, ITO Vs Selected Dalurband Coal Co Pvt Ltd (SC) 217 ITR 597 , H.A. Nanji Co Vs ITO(Cal) 120 ITR 593, Sohan Singh Vs CIT (Del) 158 ITR 174, Rattan Singh Vs CIT (P H) 234 ITR 220, as such, Assessing Officer did not find any merit in the objecti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... objected such sale value of land for which it has mainly relied upon contention raised before AO. The appellant has also referred to direction issued by JCIT in the case of Mr Rewabhai S Patel Mr Jitendrakumar R Patei wherein no adverse inference regarding above transaction was given and assessment was completed in their cases without making any addition. The arguments taken by appellant along with observations made by AO are dealt as under: (i) The ADIT(Inv) Mehsana has handed over one agreement being Sanmati Patrak dated 06/01/2007 executed between appellant (first party), partners of Akash Developers (second party) being the firm to whom appellant has ultimately sold the land in current year and Mr Rewabhai S Patel Mr Jitendrakumar R Patel (third party) wherein it was stated that appellant is owner of land and appellant has executed agreement to sale on 21/09/2006 in favour of Akash developers and due to such agreement to sale, Akash Developers through its partners have executed agreement to sale in favour of third party and this . agreement was executed because appellant would not have any objection against transactions carried out between first and second party. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the argument of appellant that such agreement to sale dated 06/01/2007 is forged one cannot be accepted. The evidences including circumstantial evidences clearly suggest that value of land is ₹ 10,95,58,873/-. The agreement to sale executed between second party and third party may have been cancelled on the ground that second party was not ready to sell to third party and such fact can be established from the fact that second party being Akash Developers have subsequently sold such property to Shri BabararnSivram Patel of Brahmanwada, Unjha and not to third party. (iv) The above facts clearly prove that second agreement i.e. agreement to sale executed between second party and third party was correct one and had authentic value, it is pertinent to note that in first agreement being Sanrnati Patra executed between appellant, second party and third party on 06/01/2007 was also correct document as such document clearly refers to agreement to sale executed between second party and third party as discussed herein above hence even on this argument of appellant's argument that such agreement was forged one cannot be accepted. Appellant has also argued that none ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that JCIT while issuing direction u/s 144A of the Act dealt with this argument by stating that correction is being made for correct address of one party to the transaction and second correction is regarding correction in amount but same is also written in words and such observation of JCIT is not rebutted by appellant and even it bears signature of one of the party to the transaction. (vii) It is pertinent to note that when AO has brought two material evidences on record, the onus was shifted on appellant to prove that such agreement were never entered into nor appellant has produced any confirmation from Akash Developers or produced any partners which can support its contention that sale value mentioned in sale deed is correct and no more consideration as alleged by AO was received by appellant. The appellant has argued that AO has not made any concrete efforts to bring fact on record by making independent inquiries but fact is that onus was on appellant to prove that correct value of land was only ₹ 95,00,000/- whereas cancellation of Banakhat on 07/01/2007 as admitted by appellant itself, correct value as on the date of transaction was ₹ 10,95,58,873/-. The evi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , facts brought by AO was that partnership deed dated 31/03/2008 was executed between three persons including two persons mentioned herein above and it was mentioned that interest party has sold 15% of land for which ₹ 21,00,000 has been taken as advance and value of part sold works out at ₹ 1,85,00,000. It is pertinent to note that agreement to sale executed between second party being partners to Akashar Developers and third party referred supra on 06/01/2007 was cancelled on 07/01/2007 and land was in fact transferred by appellant to Akash Developers or registered sale deed on 20/12/2007 hence JCIT has given direction u/s 144A stating that both persons referred supra cannot constitute partnership form on 01/04/2008 as they have no rights in property. Even JCIT at para 4.3 has categorically stated that as agreement to sale dated 06/01/2007 was cancelled on 07/01/2007, it proves and authenticate the fact that land in question has worth of ₹ 10,95,58,873/-. In these circumstances, JCIT has held that no addition should be made in the hands of two persons referred supra and facts in. appellant's case is on entirely different footing and has no relevance with fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the decision of lower authorities and also referred page no. 1 of the Assessment Order stating that Assessing Officer has received information from the ADIT(Inv.) by letter dated 19/03/2015 and the information which was received on 31/03/2015 pertain to the report of the ADIT(Inv.) on Tax Evasion Petition. 9. We have gone through the relevant record and heard both the sides and perused the material on record and question before us is that whether reopening of the case is sustainable as per law or not. In this case original assessment order was passed u/s 143(3) of the Act on 10.11.2010. Ld. A.O. after examining books of account, cash book, ledger, bill, voucher etc. during the assessment proceeding and total income of ₹ 744874/- was assessed. In the reopening assessment have been made on the basis of information received from the A.D.I.T.(Investigation) Mehsana regarding agreement dated 06/01/2003 executed between Mehsana Owners Association, Mehsana ( First Party) partners of Akash Developers Mehsana (Second Party) and Mr. Rawashai Shankar Bhai Patel and Mr. Jitendra Kumar Revabhai Patel of ( Third Party). This agreement shows that the original party who owned the land ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ticed that only document relevant to the issue of recording reason is the information received from ADIT(Inv.), Mehsana placed at page no. 36 of the paper book which is reproduced is as under: To The Assistant Commissioner of Income Tax Mehsana Circle, Mehsana Sir, Sub: TEP in the case of M/s. Sardar (Mehsana) Owners Association (PAN AACAS9854C)- UIN150205152X- Forwarding of findings regarding- ********************************** Kindly refer to the above In this connection, please find enclosed herewith the following documents for information and necessary action in the case of M/s. Sardar (Mehsana) Owners Association (PAN-AACAS9854C) in the Assessment Year 2008-09. Copy of inquiry report along with its enclosures submitted to the Joint Director of Income Tax (Inv.) Unit-II, Ahmedabad vide this office letter No. ADIT(Inv.)/Mehsana/TEP/Cat-X/2014-15 dated 19.03.2015. Copy of letter No. P. DI/INV/AHD/TEP/150205152X/2014-15 dated 31.03.2015 of the ITO, O/o the Pr. DIT (Inv.), Ahmedabad on the above mentioned subject. Yours faithfully, (Phanishwar) Assistant Director of Income-tax (Inv.) Mehsana 12. Ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght of above facts and material produced during the course of appellate proceeding, it is consider that revenue has failed to demonstrate with relevant material or evidences that copies of document/information provided by the ADIT(Inv.) was available with the Assissing Officer on or before recording reason for reopening of the assessment i.e. 30/03/2015 and further in our considered opinion, A.O. has reopened the assessment solely on the basis of information received of the ADIT (Investigation) and without forming an independent opinion and there cannot be any reassessment for verification and without satisfying the requisite condition under the law. In our considered opinion, A.O. issued notice to the assesse without any application of mind and satisfaction and same is not sustainable in the eyes of law. In view of the above stated peculiar facts and circumstances, the reopening of the assessment is not valid. Therefore, the reassessment proceeding is quashed since the reassessment proceeding has been quashed. Therefore, the other ground of appeal of the assesse on merit are not required to be adjudicated. 15. In the result, appeal filed by the Assessee is allowed. Order pro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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