TaxTMI 
TaxTMI 
2017 (6) TMI 1113
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....ted reasons recorded by the 'AO' and in any case, the issue of notice under section 148 of the 'Act was barred by limitation. 4. Because holding so learned CIT (Appeals) failed to appreciate that various judgments referred before him were fully applicable to the facts and circumstances of the case and have wrongly distinguished them. WITHOUT PREJUDICE TO THE ABOVE 5. Because in the facts and circumstances of the learned CIT (Appeals) erred in holding that 'agricultural lands' transferred by 'appellant' to partnership firm were amenable to being charged to tax as short term capital gains ignoring the evidence on record and submissions made before him. 6. Because, learned CIT (Appeals) further erred in not appreciating that there was nothing on record that land bearing khasra no. 249 was ever converted into non-agricultural income and in not deleting the addition made in that aspect. 2. Ground nos. 1 to 4 challenge the ld. CIT(A)'s action of upholding initiation of proceedings u/s 148 of the Income Tax Act. 3 3. As per the assessment order, the assessee became a partner of M/s Bhakti Group Promoters and Builders on 01.08.2005 by introducing h....
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....he Hon'ble Allahabad High Court had quashed the reassessment proceedings on two counts, namely, that the reasons recorded by the AO did not indicate that the assessee had failed to disclose fully and truly all material facts necessary for his assessment and that the escaped income was likely to be Rs. 1 lac, or more; that however, in the assessee's case, unlike in the cases cited, the AO had clearly recorded that the quantum of capital introduced by the assessee in the partnership firm in A.Y. 2006-07 was Rs. 30 lacs; 5 that the AO had also recorded that the assessee had not been filing returns of income; that both these facts, when red together, would indicate that no capital gain was offered to tax by the assessee in A.Y. 2006-07 and no loss brought forward from any earlier year remained to be adjusted against the said capital gain in A.Y. 2006-07; that further, the figure of Rs. 30 lacs was substantially larger than the minimum figure of Rs. 1 lac stipulated u/s 149(1)(b) of the Act; and that under these circumstances, he [The ld. CIT(A)] was of the opinion that both the decisions cited by the assessee were distinguishable on facts, as both, the AO and the Sanctioning Authority ....
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....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 the land, or even the locus/situation thereof, and the date, cost or mode of acquisition of the land by the asessee, much less any about either the exigibility of the transfer to tax, or the amount of capital gain arising there-from. Now, obviously, in the absence of any of the said basic requisit....
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....e 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:- 10 "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/S148 not computation of income. The computation of income will be provided after proper hearing & giving proper opportunities to be heard." 12. The stand of the department as is evident from the above quoted paragraph has no legs to stand. The Joint/Additional Commissioner, Income....
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....stion 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 13 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 notice dated 23.3.2007 after more than four years is clearly barred by time." 14. Then, in "Amar Nath Agarwal" (supra), it has been held as follows: 16. From the aforesaid, it is clear that two distinct conditions must be satisfied befor....
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....Commissioner may record his satisfaction u/s 151 of the Act. 15 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 only in regard to cases where the escaped income is of a high magnitude that the restriction of the period of limitation has been removed." 24. Since no reasons were recorded that the escaped income ....