TMI Blog2023 (10) TMI 264X X X X Extracts X X X X X X X X Extracts X X X X ..... eals)-1, Agra [ Ld. CIT(A) , for short], dated 25/09/2018 for Assessment Year 2009-10. 2. Grounds taken in this appeal are as under: 1. Because on due consideration of facts and circumstances of the case and material available on record, learned CIT (Appeals) has erred in upholding the validity notice dated 31.03.2016 issued under section 148 of the Act . 2. Because while upholding the validity of notice dated 31.03.2016 issued under section 148 of the Act , learned CIT(Appeals) despite holding that reasons won recorded on the basis of incomplete information, has erred in not appreciating that mere the fact of sale of property for any amount could not lead to the reason to le for escapement of income without any further material and reason with AO that the sale of property gave rise to income chargeable to tax and such income exceed 'maximum amount not chargeable to tax and in case of notice being issued after the end of four years from relevant assessment year, by further amount of not less than Rs. 1 lac. In doing so, learned CIT(Appeals) further erred in not binding himself with the decisions of this Hon'ble Tribunal besides others, in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deed ignoring the fact that the purchase deed had been submitted as additional evidence and remand report had been called from the AO and the AO had not raised any objection with regard to the genuineness while submitting remand report. Learned CIT (Appeals) thus erred in setting aside the assessment, which is legally not permissible. 8. Because the order under appeal is illegal, bad in law and against the principles of natural justice. 9. Because, the appellant craves leave to add, delete, modify or substitute grounds of appeal. 3. Brief facts of the case as mentioned in the order of the CIT(A) are that in this case, assessment has been completed u/s 147/144 vide the impugned order dated 29.12.2016 determining the assessed income at Rs. 51,60,273/-. No return of income was filed by the appellant under section 139(1) or in response to the notice under section 148. Information was received by the A.O. that during the year under consideration, the appellant had sold an Immovable property for a sale consideration of Rs. 50,40,273/- Since no response was made by the appellant to the AO's inquiry letters issued under section 133(6) on 25.01.2016 and 19.02 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion , has erred in not appreciating that mere the fact of sale of property for any amount could not lead to the reason to believe for escapement of income, without any further material and the reason with AO that the sale of property gave rise to income chargeable to tax and such income exceed 'maximum amount not chargeable to tax and in case of notice being issued after the end of four years from relevant assessment year, by further amount of not less than Rs. 1 lac. In doing so, Ld. CIT(A) further erred in not binding himself with the decisions of the Tribunal besides others, in the case of Badam Singh Rajpali (ITA No. 358/Agra/2011) and Chander Devi (ITA No. 401/Agra/2015) which were duly referred and relied upon before him. The Ld. AR further submitted that, while recording the reasons for escapement of taxable income, the A.O. did not know about the cost of acquisition of the property sold by Late Sh. Tej Singh and A.O was not aware of the property sold was capital asset or not, hence the reasons were recorded by the A.O. without application of mind. 6. The Ld. Departmental Representative submitted that the reasons were recorded on the basis incomplete inform ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not sufficient, but it is the satisfaction of the A.O. that the transaction event though unreported, contain income, which is chargeable to tax and such income is more than the amount of income is not chargeable to tax and in case, notice is being issued beyond a period of Four years from the relevant assessment year, the escaped income is further more than one lakh over and above, the income not chargeable to tax. It is apparent from the reasons recorded that A.O. did not looked into the sale deed, the copy of which must have been available on record and made due application of mind, but such a state of mind continued till passing of the assessment order and made addition towards whole of sale consideration stating to be received in cash, contrary to the contents of the sale deed and the A.O. did not made any attempt to find out the cost of acquisition of the same. The Co-ordinate Bench of the Agra Tribunal in the case of Badal Singh Raj Vs. ITO, Jhansi in ITA No. 358/Agr/2011 (A.Y 2004-05) vide order dated 22/06/2012 in the similar situation quashed the assessment proceedings wherein held as under:- 4. We have considered the rival submissions and the material on record. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee under obligation to file reply to the same. Merely because no reply was filed, the AO acted in haste and initiated proceedings u/s. 147 of the IT Act without recording satisfaction for initiation of proceedings in the matter. Hon ble Supreme Court in the case of Sheo Nath Singh vs. Appellate Asst. Commissioner of Income-tax, 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 Hon ble Delhi High Court 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 ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a High Court in the case of CIT vs. Smt. Paramjit Kaur, 311 ITR 38 held The assessee filed her original return declaring nil income. The Assessing Officer initiated reassessment proceedings on the basis of information received from the survey circle that the assessee had got prepared a demand draft for a sum of Rs. 83,040 which was not accounted in the books 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o have been escaped from being taxed, as there is no information with this office that he files his return of income. Therefore, I have reason to believe that Capital Gain arising from transfer of this land has escaped from being taxed. Section 149(1)(b) of the Act states that no notice u/s 148 shall be issued for the relevant assessment year, if four years, but not more than six years, have elapsed from the end of the relevant assessment year, unless the income chargeable to tax which has escaped assessment amounts to, or is likely to amount to, Rs. 1 lac, or more for that year. Thus, the requirement of section 149(1)(b) of the Act clearly is that notice u/s 148 of the Act can only be issued if the income escaping assessment amounts to, or is likely to amount to Rs. 1 lac. In the reasons recorded, as a reading thereof would show, there is no mention that income amounting to Rs. 1 lac or more is believed to have escaped assessment. It has not been disputed that the escapement believed on account of transfer of land as capital introduced into the firm. The reasons recorded do not reveal the AO to be in possession of any material or information recording either the nature of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mention therein. Even assuming for the sake of argument, the income was liable to be taxed as short term gain unless there is any material before the authority concerned that it exceeds the limit of Rs. 1 Lakh, extended period of limitation of six years will not be available to the department. The normal period of limitation is four years for giving the notice under section 148 and where the escaped income is likely to amount to Rs. 1 Lakh or more, the extended period of limitation of six years would be attracted. This objection of the petitioner has been rejected by the impugned order on the ground that since the permission has been granted by the Joint/Additional Commissioner, Income Tax, statutory requirement stands fulfilled vide para-3 of the order which is reproduced below:- You have also objected that it is not mentioned in the reasons of taking action U/S 148 that the escaped income is more that 100000/-. In this connection this to inform that it is mentioned in notice U/S148 itself that the notice is being issued after proper sanction of Joint/Addl. Commissioner of Income Tax. This fulfills the requirement of law, you have provided the reasons of initiating action U/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 970] 77 ITR, 661 (MP) and, 9. Fisher Xomox Sanmar Ltd. V. Assistant CIT, [2007] 294 ITR 620 [2008] 168 Taxman 251 (Mad.) 14. None of the judgments referred to above have any connection to the point in issue even remotely. They relate either to the question of non-disclosure of income or failure on the part of the assessee to disclose the income fully or truly and what amounts to reason to believe an information . None of these points were urged before us and we failed to understand the filing of the rulings by the counsel as referred to herein above. 15. The only point urged and pressed before us is whether in absence of anything in the reasons recorded to suggest that the income chargeable to tax which has escaped the assessment is Rs. one lakh or more having not been mentioned the reassessment notice given after four years of the close of the assessment order is valid or not. 16. For the reasons given above, we find sufficient force in the argument of the learned counsel for the petitioner that on the basis of the reasons recorded by the Assessing Officer, the initiation of the reassessment proceedings relevant to the Assessment Year 2000-2001 by means of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 114/33 taxmann.com 409 (All) a coordinate Bench of this Court held that it is imperative for the Assessing Officer to record in his that the escaped income is likely to be Rs. 1 lac or more so that the Chief Commissioner or Commissioner may record his satisfaction u/s 151 of the Act. The Court further held that if the said reason has not been recorded by the Assessing Officer, the initiation of the reassessment proceedings after more than four years would be clearly barred by time. 22. A similar provision, namely, Section 34(1A)(ii) existed under the Income Tax Act, 1922. A full Bench of this Court in Jai Kishan Srivastava v. ITO [1960] 40 ITR 222 (All) held that non-recording of the reason by the Assessing Officer that the escaped income was likely to be Rs. 1 lac or more was fatal to the issuance of the notice for reassessment. 23. In K.S. Rashid Son v. ITO [1964] 52 ITR 355 (SC) a Constitutional Bench of the Supreme Court held: The second point which is very important is that in regard to the cases falling under section 34(1A), action can be taken only where the income which has escaped assessment is likely to amount to Rs. 1 lakh or more. In other words, it is onl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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