9911796707
TMI Blog2009 (4) TMI 131X X X X Extracts X X X X X X X X Extracts X X X X ..... mmitted breach of agreement and failed to perform their part of contract. Ultimately, on October 11, 1995, the petitioner made a total assignment in favour of Lalit Amrutlal Shah and Sunil Shridhar Deshpande for a total consideration of Rs.12,00,000. 3. It is submitted that the petitioner filed a return on November 6, 1996, in respect of the assessment year 1996-97 disclosing income derived from the said memorandum of agreement dated January 2, 1995. According to the petitioner, the competent authority, the Assistant Commissioner of Income-tax, Circle-2(1) Dhule assessed the income and passed a speaking order under section 143(3) of the Act on January 9, 1998. The Deputy Commissioner of Income-tax, Circle-2(1) Dhule issued a notice, dated December 29, 1999, purporting to be under section 154 of the Income-tax Act. The notice was replied by the petitioner on January 5, 2000. According to the petitioner, the notice indicates that the long-term capital gain on sale of right to purchase of a open plot at Kothrud, Pune, was sought to be treated as casual income and bringing it to tax liability at 40 per cent. 4. The petitioner further contends that respondent No. 2 passed order on May ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tled to examine those reasons, but the notice under section 148 is not required to contain the reasons recorded by the Assessing Officer. (2) CIT v. Kelvinator of India Ltd. [2002] 256 ITR 1 (Delhi) [FB] ; [2002] 174 CTR Delhi 617 [FB]. In this case it is observed that the expression "reason to believe" finds place in the provisions of clauses (a) and (b) of section 147 and sub-section (2) of section 148 mandates that before jurisdiction under section 147 is invoked by the Assessing Officer he is to record his reasons for doing so or before issuing any notice under section 147. Therefore, formation of reason to believe and recording of reasons were imperative before the Assessing Officer could reopen a completed assessment. (3) CIT v. Vijay Flexible Containers [1990] 186 ITR 693 (Bom); [1989] 81 CTR (Bom) 29. This case relates to purchase of immovable property. (4) Asiatic Oxygen Ltd. v. CIT [1991] 189 ITR 483 (Cal) ; [1992] 107 CTR (Cal) 22. This judgment was cited on the issue of casual and non-recurring receipts. (5) Jindal Photo Films Ltd. v. Deputy CIT [1998] 234 ITR 170 (Delhi). It is observed that (headnote) : "The power to reopen an assessment was conferred by the Legis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer to assess or reassess income chargeable to tax if he has reason to believe that income for any assessment year has escaped assessment. The word 'reason' in the phrase 'reason to believe' would mean cause or justification. If the Assessing Officer has cause or justification to know or suppose that income had escaped assessment, it can be said to have reason to believe that an income had escaped assessment. The expression cannot be read to mean that the Assessing Officer should have finally ascertained the fact by legal evidence or conclusion. The function of the Assessing Officer is to administer the statute with solicitude for the public exchequer with an inbuilt idea of fairness to taxpayers. As observed by the Supreme Court in Central Provinces Manganese Ore Co. Ltd. v. ITO [1991] 191 ITR 662, for initiation of action under section 147(a) (as the provision stood at the relevant time) fulfilment of the two requisite conditions in that regard is essential. At that stage, the final outcome of the proceeding is not relevant. In other words, at the initiation stage, what is required is 'reason to believe', but not the established fact of escapement of income. At the stage of is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisions of the Income-tax Act and the Rules and the material placed on record. 10. We have perused the assessment order passed under section 143(3) of the Income-tax Act, 1961, on January 9, 1998. The Assistant Commissioner of Income-tax, Circle 2(1), Dhule, while passing the assessment order observed in paragraph 3 that the assessee had sold his right to purchase open plot (NA) at Kothrud, Pune, and copy of the agreement of acquisition of right to purchase and deed in respect of right to purchase executed by the builders were filed on record. After saying so the Assistant Commissioner observed that subject to the above remarks the total income was computed as per the chart mentioned in the order. From the perusal of the order we do not find any application of mind on the part of the Assistant Commissioner of Income-tax to the facts of the case, the issue to be dealt with and the reasons for passing the order. The value of the land was not determined by the Revenue. The issue relating to capital gain or casual income was also not addressed by the Revenue. In the light of the same, in the facts of the case, we find that the Assessing Officer was justified in issuing the notice und ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
