AI Drafter 
TaxTMI 
TaxTMI 
2017 (9) TMI 190
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....of deceased Takhiben Prajapati and is pursuing this petition in such capacity. Takhiben alongwith her four sons jointly held land bearing final plot No. 84/2 at Thaltej, Ahmedabad. This land was sold by them on 23.04.2008 for a sale consideration of Rs. 5.50 crores. Takhiben claiming that she had no taxable income did not file return of income for the relevant assessment year 2009-10. The other four sons did file their respective returns and disclosed this sale transaction. 3. The Assessing Officer issued a notice dated 31.03.2012 to Takhiben conveying to her that he had a reason to believe that income chargeable to tax in her case for the assessment year 2009-10 had escaped assessment and that she should, therefore, file a return within....
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.... in due course of time, such assessment became time barred. Neither the petitioner nor the department has produced the reasons recorded by the Assessing Officer for issuing the said notice dated 31.03.2012 nor the department has disputed the petitioner's averments that no final order of assessment was passed by the Assessing Officer pursuant to such notice in case of Takhiben. 5. It appears that in case of the other co-owners i.e. the four sons of Takhiben, assessment orders under section 153A read with section 143(3) of the Act came to be passed on 26.03.2015, in which, the question of correct valuation of the said land was a focal point. The Assessing Officer relied on the valuation reports and came to the conclusion that the fair ....
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....extent of Rs. 1,07,58,200/- (Rs. 1,10,00,000) (-) Rs. 2,41,800/-) for the A.Y. 2009-10 under the head income from capital gain. The above income/gain chargeable to tax has escaped assessment by reason of the failure on the part of the above named assessee trust who failed to disclose fully and truly all material fact necessary for the assessment for the A.Y. 2009-10 within the meaning of explanation 2(a) of section 147 of the IT Act 1961." 6. The petitioner, as the heir of Takhiben, raised objections to the notice for reopening under his communication dated 29.08.2016. Such objections were rejected by the Assessing Officer by an order dated 30.09.2016, upon which, this petition came to be filed. 7. Learned counsel for the petitioner r....
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....to the assessee not having filed the return would not be fatal to the notice. The reasons recorded do not proceed on this premise. The foundation of the reason is that the assessee has inflated the cost of acquisition of land to avoid capital gain. This came to the notice of Assessing Officer only recently when the assessement orders in case of co-owners were brought to his notice. He also made available the departmental file to show that the Commissioner had applied his mind and had sanctioned the issuance of the notice for reopening. He further submitted that the department has not accepted the order of Appellate Commissioner deleting the additions made by the Assessing Officer in case of co-owners. 9. The facts, though somewhat comple....
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....d not form part of the original assessment proceedings would ordinarily require further scrutiny. However, for multiple reasons, we cannot sustain the present notice. Our reasons are as follows: i. As would be demonstrated hereafter, the Assessing Officer has exhibited total non-application of mind while recording reasons and issuing impugned notice. As is well settled, recording of reasons is a mandatory requirement before the Assessing Officer can issue notice for reopening and that the notice must succeed or fail on the basis of reasons so recorded and the Assessing Officer cannot supply such reasons from any material or grounds outside of the reasons recorded by him. ii. In background of such legal position, we may per....
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....eturn of income. He therefore, had no basis for presuming as to what was the declaration made by the assessee in such return. He had no iota of information to believe that the assessee had claimed the cost of acquisition of the property at a particular rate which was, according to the Assessing Officer, not quite accurate. This was the main ground on which, the Assessing Officer now wishes to reopen the assessment. It is, therefore, not possible to sever the inaccurate recording of the Assessing Officer in the reasons recorded that the assessee had never filed the return of income. 12. The matter does not end here. The Assessing Officer, in the very first paragraph of the reasons, has referred to the fair market value of the plot of land....