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TMI Blog2021 (9) TMI 329X X X X Extracts X X X X X X X X Extracts X X X X ..... The Ld. CIT(A) erred on facts & law in confirming the validity of the proceedings u/s 1471148 because the Joint Commissioner of Income Tax did not record the satisfaction on the reasons recorded by the AO, as prescribed u/s 151, that the case of the assessee was fit for issue of notice u/s 148. 3. The Ld. CIT(A) erred on facts S law in confirming the validity of the proceedings u/s 1471148 because the ownership of land introduced as capital in the firm was ancestral belonging to the HUF while the reasons have been recorded u/s 147 & notice u/s 148 has been issued in the status of individual. 4. The Ld. CIT(A) erred on facts & law in confirming the validity of the proceedings u/s 147/148 because the reasons recorded by the AO to initiate the proceedings are reasons to suspect & not reasons to believe and further, there is no reason to believe that income of the assessee has escaped assessment. 5. The Ld. CIT(A) erred on facts & law in assessing the Long Term Capital Gains by invoking the provision of section 45(3) of the Income Tax Act, 1961 because no real income arose/received or accrued to the assessee on account of transfer of land as capital contribution to the partnersh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e u/s 148 has been provided. The objections against the same for which the assessee is entitled as per the binding precedent of the Apex Court in the case of GKN Driveshafts (India) Ltd. V. ITO(2002) 125 Taxman 963 (SC) are as under because the return of income in respect to notice u/s 148 has already been filed:- (i) The notice u/s 148 has not been served in accordance with the provisions of Section 282 of the Income Tax Act, 1961. (ii) The satisfaction of the Joint Commissioner of Income Tax on the reasons recorded which is mandatory in accordance with the provisions of Section 151(2), has not been recorded in accordance with the procedure laid down under the Act. (iii) The provisions of Section 45(3) are also not applicable because it is only a deeming provision which creates fiction only to fix the, year of transfer and consideration on transfer but there is no fiction regarding accrual of profits and gains on transfer of capital gain, (iv) It has been categorically stated in the reasons for initiating the reassessment proceedings that the capital was introduced by way of transfer of ancestral land but the status has been mentioned as individual. In view of the above ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or accruing as a result of the transfer of the capital asset. iv. The plea regarding ancestral land taken in individual status is not acceptable although the land was ancestral yet the assessee has become a partner in the firm in the capacity of individual and not in HUF capacity. Thus, this plea is also not acceptable. 5.3 The A.O. framed the assessment by making the addition of Rs. 3,87,03,600/- on account of Long Term Capital Gain. 6. Being aggrieved the assessee carried the matter to the Ld. CIT(A) and challenged the validity of the reassessment proceedings. The assessee furnished the written submission which had been incorporated by the Ld. CIT(A) in para 4.1 of the impugned order and read as under: In the above stated Grounds of Appeal the assessee has challenged the validity of proceedings u/s 147/148 & the submissions of the assessee are as under;- (i) The notice u/s 148 was not served in accordance with the provisions of section 282. (ii) The reasons to believe recorded by the AO are in fact reasons to suspect (iii) The proceedings u/s 147/148 have been challenged because the JCIT failed to record satisfaction in accordance with the procedure laid down u/s 151 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the appellant were met by the Assessing Officer vide order dated 15/11/2017 which has been extracted in paragraph 3 of assessment order. The service of notice in this case has been made on 27/03/2017 through notice server, therefore the contention is not acceptable. The appellant is making bald averment that the approving authority did not apply mind without mentioning the basis of such assumption. Similarly, the appellant is becoming judge in its own case by taking an argument that the provisions of section 45(3) of Income Tax Act could not have been applied in his case. In A.L.A. Firm v. CIT [1991] 189 ITR 285 (SC), a similar issue of capital gains was before the Assessing Officer and it was held that the jurisdiction of the Income-tax Officer to reassess income arises if he has, in consequence of specific and relevant information coming into his possession subsequent to the previous concluded assessment, reason to believe that income chargeable to tax had escaped assessment. It was held that even if the information be such that it could have been obtained by the Income-tax Officer during the previous assessment proceedings by conducting an investigation or an enquiry but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o FMV of the subject land as on 01.04.1981 but these were rejected arbitrarily. [Refer Para 5(ii) on Page No. 5 & 6 of the assessment order] 7. That the Ld. CIT(A) also rejected the certificate of Tehsildar & Valuation Report by the registered Valuer regarding the FMV of the subject land as on 01.04.1981. [Refer para 5.2.20 on Page No. 10 & 11 of the appellate order] 8. But neither the A.O. nort eh Ld. CIT(A) allowed any further opportunity to the assessee to submit the documentary evidence regarding the FMV of the property as on 01.04.1981. 9. The assessee on the advice of his counsel, engaged for filing the appeal before this Hon'ble Bench of ITAT, obtained the comparable sale instances from the local revenue authorities regarding the FMV of the subject land as on 01.04.1981. 10. Now there are now tow comparable sale instances according to which the fair market value of the land as on 01/04/1981 is more as compared to the fair market value adopted by the A.O. Now, it is requested before the Hon'ble Bench to kindly admit this additional evidence in the interest of natural justice in order to arrive at the correct capital gain after taking into consideration these t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It [1978] 113 ITR 522 (Delhi) * R.S.S.. Shanmugam Pillai and Sons V. CIT [1974] 95 ITR 109 (Mad.) * ITO V. B.N. Bhattachayra [ 1978] 112 ITR 423 (Cal.) (iv) Decision of ITAT, Delhi 'I' Bench in the case of UOP LIC Vs. Additional Director of Income reported in 108 ITD 186 in which it was held that the additional evidence should be admitted. If it to may pronounce the judgment but all for any other substantiate cause and in this case, the department was not in appeal, but still the department evidence was admitted since it has bearing in the judgment of the above said case. (v) Decision of Madhya Pradesh High Court in the case of CIT Vs. Gani Bhai Wahab Bhai reported in 232 ITR 900. (vi) Decision of ITAT, Delhi Bench, in the case of Electra (Jaipur)(P) Ltd. Vs. Inspecting Assistant Commissioner reported in 26 ITR 236 in which it was held as under: " Appeal CIT(A)- Additional evidence - Admissibility - if the evidence is genuine, reliable and proves the assessee's case, assessee should not be denied the opportunity to adduce it." (vii) Decision of Gawahati High Court in the case of CIT Vs. Parimal Kanti Chanda reported in 291 ITR 77 in which was held as under:- "Accord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e was placed on the decision of the ITAT Chandigarh Bench "B" in the case of Shri Tek Chand, Karnal Vs. ITO Ward-2, Kaithal in ITA No. 255/Chd/2020 for the A.Y. 2009-10 (copy of the said order was furnished which is placed on record). The reliance was also placed on the following case laws : * CIT Vs. S. Goyanka Lime & Chemical Ltd. [2015] 64 taxmann.com 313 (SC) * Arjun Singh Vs. ADIT [2000] 246 ITR 363 (M.P.) 10. In his rival submissions the Ld. CIT DR strongly supported the orders of the authorities below and further submitted that the A.O. as well as the approving authority recorded their satisfaction before issuing the notice under section 148 of the Act and that the JCIT being competent authority gave the approval after applying his mind, therefore, the reopening of the assessment was valid. It was further stated that earlier the assessee applied for Vivad Se Vishwas Scheme which could have happened only when the assessee was not having any case in his favour. 10.1 In his rejoinder the Ld. Counsel for the assessee submitted that due to wrong advice and under pressure the assessee thought to avail the immunity under Vivad Se Vishwas Scheme but withdrew the same and never ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recording the reasons for initiating the proceedings under section 147 / 148 of the Act and for obtaining the approval of the Ld. JCIT, it has been mentioned in column no. 11 as under: " Yes it is approved for 148 action " SD/- (Umesh Takyar) Joint Commissioner of Income Tax Range-1, Jalandhar From the aforesaid approval it is clear that the JCIT, Range-1, Jalandhar recorded the satisfaction in a mechanical manner without application of mind. He accorded the sanction for issuing notice under section 148 of the Act in a mechanical manner. 14.1 On a similar issue the Hon'ble Guwahati High Court in the case of Ladhuram Laxmi narayan Vs. ITO, Additional 102 ITR 595 (supra) held as under: 22. Sub-section (2) of Section 151 requires that before issuing a notice under Section 148, the Commissioner must be satisfied on the reasons recorded by the Income-tax Officer that it is a fit case for the issue of such notice. The submission of the learned counsel is that in the instant case there was no real satisfaction of the Commissioner or in other words there could not be satisfaction of the Commissioner as contemplated under Subsection (2) in the facts and circumstances of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . CIT, Karnal 14.2 From the aforesaid approval, it is clear that the Ld. Pr. CIT recorded satisfaction in the mechanical manner, without application of mind to accord sanction for issuing notice under section 148 of the Act. On an identical issue the Hon'ble M.P. High Court in the case of CIT Jabalpur Vs. S. Goyanka Lime & Chemical Ltd. reported at (2015) 56 Taxmann.com 390 by following its own decision in the case of Arjun Singh Vs. ADIT (2000) 246 ITR 363 (M.P) held as under: 7. We have considered the rival contentions and we find that while according sanction, the Joint Commissioner, Income Tax has only recorded so "Yes, I am satisfied". In the case of Arjun Singh (supra), the same question has been considered by a Coordinate Bench of this Court and the following principles arc laid down:- The Commissioner acted, of course, mechanically in order to discharge his statutory obligation properly in the matter of recording sanction as he merely wrote on the format "Yes, 1 am satisfied" which indicates as if he was to sign only on the dotted line. Even otherwise also, the exercise is shown to have been performed in less than 24 hours of time which also goes to indicate that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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