2019 (2) TMI 983

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....ring the relevant year as a General Power of Attorney holder, i.e., after acquiring the land vide GPA dated 23/12/2004. He was, further, sought to be questioned several times in this regard by the said Wing of the Department to, however, no avail. The assessee, accordingly, detailing the said transactions, was required by the Assessing Officer (AO) to show if the short-term capital gains arising on the said sale transactions, had been declared by him per his return of income for the relevant year. No reply being received, the AO noting the assessee to be in jail, inferred that the assessee had nothing to say in the matter and issued notice u/s. 148(1) qua the said capital gains. 4. The same stands impugned on two counts, both with respect to the reason/s recorded, the latter part of which, i.e., after listing the sale of property by the assessee on GPA basis, at para 1, reads as under: "2. As per the report of the DDI(Inv), the assessee is in jail. However, a registered letter was sent to the assessee to intimate whether he has declared capital gains on the sale of the above mentioned properties. Neither anybody attended on the appointed date and time nor filed any repl....

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....iled the return u/s. 139 and, further, that no capital gain qua the stated transaction/s, claimed to be yielding income to the assessee, had not been disclosed to the Department. A compilation of decisions was adduced by Sh. Bhasin, stating of him placing specific reliance on the decisions in CIT v. Paramjit Kaur [2009] 311 ITR 38 (P&H); Hindustan Lever Ltd. v. RB Wadkar [2004] 268 ITR 332 (Bom); and Pr. CIT v. RMG Polyvinyl (I) Ltd. [2017] 396 ITR 5 (Del). The ld. Departmental Representative (DR) was vehement in his objections. Taking the Bench through the proposal submitted by the AO to the Jt. CIT, Phagwara Range, Phagwara for approval, dated 18.03.2013, copy of which stands placed on record, the reason/s cannot be regarded as limited to that stated in the Annexure to the said proposal (reproduced supra), i.e., at para 11 thereof, which requires of the AO to state his reason/s for belief, but would also include what the AO writes in continuation, i.e., below para 11, as well, being a part of the relevant para (11) of the proposal form. The same reads as under: 'I have independently examined the assessment and the other related records of the assessee and after ind....

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....itled to take all the points before the assessing authority. The appeals are dismissed. There will be no order as to costs.' As such, he would continue, also citing decisions in ITO v. Lakhmani Mewal Das [1976] 103 ITR 437 (SC) and Great Arts (P.) Ltd. v. ITO [2002] 257 ITR 639 (Del), neither the sufficiency nor the accuracy of the reason/s recorded could be examined at the stage of the reopening. It was open for the assesses to state his claim on merits, including the correctness of the reason/s recorded, in the assessment proceedings. On being questioned if the assessment record, called for by the Bench, contained the assessee's return, he would, however, fairly concede to it being not so. 5. I have heard the parties, and perused the material on record. A live, direct and rational nexus between the 'reason/s recorded' and the belief as to the escapement of income, is a settled proposition of law on which there is no, nor possibly could be, any dispute. There is no mention of the assessee's return in the reason/s recorded - which are undisputedly on 18/3/2103, much less of its' contents. Had that been the case, it should have found mention in the reason/s recorded in-as-m....

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....ot filed the return of income and, in any case, would not have returned the said income. All this falls in the realm of anticipation, and is not grounded on 'facts' or a legal inference arising from the assessee's conduct. A proper inference as to the assessee having not returned the impugned income could only follow after the time allowed to him to respond had lapsed. True, it could be that the AO had, in the interim, received information, as from the registered owner of the properties under reference, having a bearing on the AO's belief. However, the same should, in that case, find mention in his reason/s recorded, and cannot be a matter of presumption. In fact, the time allowed to the said owner/s to respond, also sought simultaneously by the AO, was up to 20.03.2013. There was, thus, as on 18.03.2013, nothing on record to form a belief, i.e., which would transform the AO's suspicion into a legally sustainable belief. At this stage, it may be relevant to visit the reason/s that inform the order by the AO and the ld. CIT(A), both read out during hearing, rejecting the assessee's claim/s, so as to examine them for their validity. The AO, as afore-noted, seeks to justify his ....