TaxTMI 
TaxTMI 
2019 (2) TMI 735
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....&CI), Unit-2/F.Trans/SP/2016-17 dated 24.02.2017 stating that the assessor has sold immovable property situated at Village Acole, Taluka Nalasopara for consideration of Rs. 3,51,00,000/- and sale deed was registered on 24/12/2013. As seen in Index II, the Market Value of the property as per Stamp Duty Authorities is taken Rs. 40,62,50,000/- which attracts section 50C of the I.T.Act, 1961. 3. In view of the above, I have reason to believe that income to the tune of Rs. 40,62,50,000/- has escaped assessment for the assessment year 2014-15 in view of the provisions of section 147 of the I.T.Act, 1961. Necessary approval from the Jt. CIT - 22(3), Mumbai is necessary under the provisions of section 151(2) of the I.T.Act, 1961. A proposal in the prescribed proforma is enclosed herewith." 3. Upon being supplied the reasons, the Petitioner raised the objections to the notice of reopening of the assessment under letter dated 12/09/2018. These objections were, however, rejected by the A.O. by an order dated 26th November, 2018. Thereupon this Petition has been filed. 4. Inviting our attention to the reasons recorded, the counsel for the Petitioner pointed out that the ground for reopening....
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....roperty, for a consideration of Rs. 3.80 Crores in favour of the said company. The agreement itself stated that the Petitioner had received such consideration at the time of execution of the agreement. The agreement also listed several disputes concerning the said property, pending before the Civil Courts at various stages. The agreement further recorded as under- "3. Payment of Purchase Price of Consideration. 3.1 The Purchaser has paid the aforesaid purchase price or consideration money of Rs. 3,80,00,000/- (Rupees Three Crores Eighty Lakhs only) to the Vendor on or before the execution of this agreement the receipt whereof the Vendor does hereby confirm, admit and acknowledge, and from the same does hereby release and discharge the Purchaser forever. The Vendor confirms that she has received the entire purchase price payable by the Purchaser and consequently the agreement herein shall not be revoked or cancelled by her under any circumstances. 3.2 The Purchaser confirms that it was agreed to purchase and acquire the Vendor's share right title and interest in the said Property subject to the aforesaid litigations and claims set out in clauses 2.1 and 2.2 above, at the Purc....
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....f any provisions hereof, the same shall be referred to the arbitration of a sole arbitrator if the parties agree upon the appointment of the sole arbitrator, failing which the dispute shall be referred to arbitration in accordance with the provisions of Arbitration & Conciliation Act, 1996 or any statutory re-enactment or modification thereof. The arbitration shall take place in Mumbai." 7. In the return filed for the A.Y. 2008-09, as noted, the Petitioner did not offer such receipt of Rs. 3.80 Crores stating the reason that there was no transfer of the immovable property, and therefore, the capital gain cannot be stated to have accrued. It was the A.O. who took the contrary stand. After giving an opportunity to the Petitioner to make representation, he passed the order of the assessment on 31/03/2008 in which he held that the assessee had sold her rights in the property to the purchaser and the assessee had no liability in respect of the said property since the purchaser had taken over the liabilities and purchased the property on "as is where is" basis. The relevant portion of the order of A.O. reads as under - "(7) The submission made by the assessee is duly considered.....
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....subject to any reservation or to any acquisition or requisition proceedings, the Purchaser shall not hold the Vendor liable or responsible for clearing the same. 3.4 The Vendor shall, simultaneously, with the execution of this agreement, execute a comprehensive irrevocable Power of Attorney in favour of the Purchaser and its nominees, authorizing them to do the various acts deeds matters and things in respect of the said Property, and another Power of Attorney in favour of Purchaser and its nominee or nominees authorizing them inter alia to withdraw and settle the pending cases. 8. A plain reading of the terms and conditions as reproduced above clearly shows that the assessee has sold her rights to the property to the purchaser and has also given the purchaser a power of attorney to deal with the property in the capacity of having the rights of owner of the property. The assessee has no liability with respect to the said property since the purchaser has taken over all the liabilities and has purchased the property on "as is where is" basis. The assessee has also handed over the possession of the property to the purchaser. It is further seen that the assessee has been utilized th....
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..... You have not accepted that the capital gains are assessable in AY 2008-09 and you contested before the A.O. that only in order to buy peace you did not contest the order and paid the taxes." 10. In plain terms, the action of the A.O. to reopen the assessment is wholly impermissible. Since in the present case the assessee had not filed the return of income for the A.Y. 2014-15, as per the settled law, there would be no question of change of opinion since the A.O. had no occasion to form any opinion with respect to the issue at hand. However, in such a case, the requirement that the A.O. must have reason to believe that the income to tax has escaped the assessment must exist before the A.O. can issue a notice under Section 148 of the Act. In other words, if it is found that the reasons recorded by the A.O. for issuing the notice lack validity, such a notice would be invalid. In this context, we recall, the Petitioner had received entire sale consideration of Rs. 3.80 Crores at the time of execution of the agreement-to-sell in the year 2007. The assessee contended that since there was no transfer of property, such a consideration cannot be taxed as a 'capital gain' in the h....