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TMI Blog2021 (10) TMI 427X X X X Extracts X X X X X X X X Extracts X X X X ..... 2010-2011. 4. Ms. Razaq, at the outset, submitted that the petition is premature insofar as petitioner no.2 is concerned. She submitted that the procedure prescribed by the Hon'ble Supreme Court in G.K.N. Driveshaft (India) Limited v. Income Tax Officer - 259 ITR 19 was never followed insofar as the petitioner no.2 is concerned. 5. Technically, Ms. Razaq may have a point, but in the peculiar facts of the present case, there is no point in relegating petitioner no.2 to follow the said procedure. This is because it was even admitted by Ms. Razaq that there is no difference whatsoever, either on facts or in law insofar as the positions of the two petitioners are concerned. She pointed out that petitioner no.2 is the husband of petitioner no.1 and having regard to the provisions of Section 5A of the said Act, which are peculiar to the persons from Goa, the Department had to issue separate notices to both the petitioners. 6. Since, there is no difference whatsoever in the positions of the two petitioners, either on facts or in law, we believe that no purpose would be served by bifurcating the matter and relegating petitioner no.2 to follow the prescribed procedure at this belate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /2010/A in the court of the Civil Judge, Senior Division at Mapusa to challenge the sale deed dated 02.02.2010. This suit was disposed of by a consent decree based on consent terms signed by ADPL and Pandey. The petitioner no.1 though a party to this suit did not sign the consent terms. Pandey then proceeded to enter into a development agreement dated 28.06.2013 with another company M/s. Ocean View Properties LLP (OVP). 11. OVP then instituted Special Civil Suit No.22/2014/B inter alia for enforcement of agreement dated 28.06.2013. OVP ultimately agreed to purchase rights of petitioner no.1, her husband petitioner no.2, and Pandey to put an end to litigation and to be in a position to own and develop the said property. 12. Therefore, a deed of sale dated 12.12.2014 was entered into by and between the various parties as aforesaid. In terms of this deed, OVP paid to the petitioner no.1 consideration of Rs. 2 crores, representing the amount that Pandey had failed to pay under the sale deed dated 02.02.2010. OVP paid an additional amount of Rs. 2.36 crores towards the share of petitioner no.2 and by way of compensation. In short, the petitioners, by the year 2014, received tot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aried nor supplemented in this manner. He submits that this is an additional ground for striking down the impugned notices. 17. Mr. Naik has relied upon several decisions in support of his contentions including, but not restricted to. - (i) The Commissioner of Income Tax-8 Mumbai v. Mrs. Hemal Raju Shete - Income Tax Appeal No.2348/2013 decided on 29.03.2016, (ii) Smt. Raj Rani Devi Ramna v. Commissioner of Income Tax - 1992 (2) BLJR 1207, (iii) Commissioner of Income Tax v. Excel Industries Ltd., (iv) Mira Ananta Naik and others v. Deputy Commissioner of Income Tax (Investigation) & Ors. - (2009) 221 CTR (Bom) 149, (v) Nilamben Sandipbhai Parikh v. Assistant Commissioner of Income Tax, Circle 4(2) - (2019) 266 Taxman 191 (Guj), (vi) Commissioner of Income Tax v. Balbir Singh Maini - (2018) 12 SCC 354, (vii) GKN Sinter Metals Ltd. v. Ramapriya Raghavan - (2015) 371 ITR 225 (Bom) and (viii) Nivi Trading Ltd. v. Union of India - (2015) 64 Taxman.com 92 (Bombay). 18. Ms. Razaq defended the impugned notices inter alia relying upon the decisions in (i) John Sebastian Zezito Lobo v. Assistant Commissioner of Income Tax, Circle-2(1), Panaji & 2 Ors. - Writ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment was completed u/s. 143(3) r.w.s. 153C of I.T. Act, 1961 on 27.12.2011 accepting the return income of the assessee. It is noticed that assessee has sold one property vide sale deed dt 02.02.2010 for a sum of Rs. 3,00,000/- to Sri. Nagueshwar Pande. The sale deed was registered in the sub-registrar Ilhas, Panaji which states that the assessee has received the sale consideration of Rs. 3,00,00,000/- as under:- Rs. 1,00,00,000/- Cheque No. 030519 dt. 10.02.2010 Rs. 1,00,00,000/- Cheque No. 030520 dt. 15.02.2010 Rs. 45, 00,000/- DD dt. 02.02.2010 of Indian Overseas Bank Rs. 55,00,000/- Cheque No. 030521 dt. 02.02.2010 The assessee has not declared the above transaction in her return of income for the AY 2010-11. It is learnt from the information received that the said property was purchased in 2006 for Rs. 1,36,52,400/-. Thus there is concealment/ escapement of income (Long Term Capital Gain) for the AY 2010-11 as below : Particulars Amount (In Rs.) Sale Consideration (As per Sale Deed) 3,00,00,000/- Purchase (2006) 1,36,52,400/- Indexed Cost (1,36,52,400 * 632/ 519) Rs. 1,66,75,113 Capital Gain 1,33,75,113/- In view of the above facts, it is abunda ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 12.12.2014 which in turn, had referred to the sale deed dated 02.02.2010. 25. In fact, the sale deed dated 12.12.2014 supersedes the sale deed dated 02.02.2010 and records the compromise reached between the petitioners, Pandey and OVP. This deed very clearly refers to the receipt of only Rs. 1 crore by petitioner no.1 in pursuance of sale deed dated 02.02.2010 and certainly not to the receipt of Rs. 3 crores during the Assessment Year 2010-11. Perhaps, realizing this difficulty, submission was now made before this Court that the consideration of Rs. 3 crores was "accrued" to the petitioners during the Assessment Year 2010-11 and therefore, there were capital gains during the said assessment year which had escaped assessment due to the failure on the part of the assessees to disclose the transaction dated 02.02.2010. 26. As noted earlier, the reasons proceeded on the basis that an amount of Rs. 3 crores was in fact received by the petitioners during the Assessment Year 2010-11. The submission now made before the Court is not based on any factum of receipt but rather, based on "accrual". This was not at all the reason that prompted the assessing officer to reopen the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... into at this stage but at the same time, as was explained in Lakhmani Mewal Das (supra) it is open to the assessee to contend that the assessing officer did not hold the belief that there had been non-disclosure. The existence of the belief could always be challenged though not the sufficiency of the reasons for the belief. The expression "reason to believe" does not mean a purely subjective satisfaction. The reason must be held in good faith. It cannot be merely a pretense. More importantly, it is open to the Court to examine whether the reasons for the formation of the belief have a rational connection with or a relevant bearing on the formation of the belief and are not extraneous or irrelevant for the section. To this extent, the action of the assessing officer is open to challenge in a Court of law. 30. In Oriental Insurance Co. v. Commissioner of Income-tax - 378 ITR 421 (Delhi), it was held that powers under Section 147 of the said Act can be invoked only in cases where the assessing officer has reason to believe that income chargeable to tax has escaped assessment. The reason to believe must be based on tangible material and cogent facts. The powers cannot be exercised me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ason about "accrual" was sought to be put forward. 34. Reliance was placed on the decision of the Hon'ble Supreme Court in the case of Morvi Industries Ltd. (supra) to submit that certain accounting systems contemplate income on an accrual basis. While it is true that certain systems indeed admit income on an accrual basis, this was not even the reason recorded by the assessing officer for the reopening of the assessment. As noted earlier, neither can new reasons be furnished nor can there be any additions to the reasons already disclosed or the reasons already existing and recorded at the time of the issuance of the impugned notices. Therefore, Morvi Industries Ltd. (supra) can be of no assistance to the Department in the present case. 35. Other decisions relied upon by Mr. Naik need not be considered in detail. In Smt. Raj Rani Devi Ramna (supra) the Division Bench of Patna High Court, relying on the decision of the Division Bench of Calcutta High Court in Nita Chandra Naskar v. Smt. Champahlnta Debi - (1919) 29 CLJ 250 has held that the true test of determining whether there is a transfer of ownership or not is the intention of the parties to the transaction. If the intent ..... X X X X Extracts X X X X X X X X Extracts X X X X
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