TaxTMI 
TaxTMI 
2019 (9) TMI 601
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....through an authorized representative. Sh. Arora, on being questioned in the matter, would submit that he had been representing in the matter for quite some time, and that he makes a statement at bar that he has the authorization of all the family members, even though the Vakalatnama may have been signed only by Smt. Raj Mohini Gupta. Her affidavit (copy on record), he continued, be construed as she having authorized him on behalf of the family, i.e., the late assessee's wife and two sons, living together, as evident from the affidavit itself. The hearing in the matter was accordingly proceeded with. 3. The assessee, at the time of hearing, sought admission of additional grounds, raising legal pleas, challenging the reopening of the assessment in the instant case, as under: '1. That the initiation of proceedings u/s. 147/148 is illegal, invalid in the eyes of law as the case has been reopened on the basis of borrowed satisfaction and there was no application of mind. As such the initiation of proceedings u/s. 147/148 is illegal, invalid and void abinitio and the assessment order is liable to be cancelled. 2. That the reopening of the case is illegal, invalid ....
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....ITAT). On merits, it was argued by him that what was required for the purpose of reopening an assessment, as explained per several decisions by the Apex Court, settling the law in the matter, is that there must be a honest belief, held bona fide, even if prima facie, i.e., as to escapement of income chargeable to tax from assessment. The sufficiency of the reasons, or even the correctness of the information, cannot be gone into at that stage, which is a matter subsequent. 4. The assessee has, on the basis of the material on record, yielding primary facts, which are not disputed, raised legal pleas. How could the same be ousted at the threshold? The same is admitted (NTPC Ltd. v. CIT [1998] 229 ITR 383 (SC)). On merits, I find, equally, the assessee to have no case. The information received from the Investigation Wing of the Revenue is on the basis of material seized during search proceedings u/s. 132 of the Act. The statutory presumption u/s. 292C is as to the truth of its' contents. Further, the source of the information leading to the reason to believe, further, is the agreement to sell dated 01.6.2001 entered into between the assessee and one, Raj Kumar s/o Sh. Sardari ....
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.... of the assessment order). 5.1 The only issue raised on the merits of the assessment as framed is the disallowance of the assessee's claim u/s. 54 on the application of the capital gain arising to the assessee on the admitted sale of the Gandhi Nagar Property, i.e., on purchase of a residential house at 16F (Plot No. 358), Sector 14, Nanak Nagar, Jammu for a consideration of Rs. 27.10 lacs from one, Smt. Amriti Devi ('AD'). The basis of the said claim, made per a return filed on 21.6.2006 (PB pgs. 1-3), is the agreement to sell (ATS) dated 25.12.2001 (PB pgs. 38-39). The assessee failing to produce AD, claiming her whereabouts to be not known, the AO located her and recorded her statement u/s. 131 of the Act on 13.12.2006, wherein - her statement being reproduced at pgs. 3-4 of the assessment order, she averred that: (a) she had never owned any landed property at the stated address, much less sold it to any one; (b) that she had in fact taken a small room (without kitchen) in the backyard of the said residential property at a rent Rs. 35-40 per month from Sh. Om Prakash Gupta (OPG), the assessee, where she lived for 5-6 year before vacating it about two year....
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....from issuing summons u/s. 131 to the Naib Tehsildar (JDA, Zone B), who appeared on 26.12.2006 and informed the basis on which the said certificate had been issued, i.e., as being in response to an application for regularization/correction of the said house by OPG, and which (record) stood, after verification, corrected on 02.01.2004. As the relevant record was with the office of the Director, Land Management (DLM), JDA, the said office was enquired with by the AO, requiring it to clarify the ownership of the said property and, further, if OPG had purchased it from RL. On the basis of the documents provided by the Director's office, it transpired that RL had submitted an affidavit dated 13.11.2003 stating that Sh. Om Prakash s/o Sh. Jagiri Mal Gupta, is the sole occupant of plot no. 358 (House No. 16), measuring 9 Marlas, at Sector 14, Nanak Nagar, Jammu, who had constructed a house thereat. And that he had occupied the said premises as a tenant, and had no other concern/interest therein. And, accordingly, had no objection to the said plot being regularized in favour of OPG, passing the correction order. The assessee had also furnished an affidavit dated 04.9.2003 to the effect that....
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....cation/investigation could be made in such a short span of time. The enquiries conducted with the authorities concerned with reference to the documents furnished by the assessee clearly shows that the property was not sold by Smt. Amriti Devi or Sh. Rattan Lal to Sh. Om Parkash Gupta. The discussion made in the proceedings paragraph clearly shows that Sh. Om Parkash did not made any investment on the purchase of new house property at Nanak Nagar, Jammu. In his return of income filed subsequent to the issue of notice u/s 148, he has admitted that he had sold his house property at 559-A, Gandhi Nagar, Jammu for a consideration of Rs. 35 lacs. He has, however, claimed in the said return that he had purchased a new residential house at Nanak Nagar, Jammu from Smt. Amriti Devi w/o Sh. Rattan Lal. He was given innumerable opportunities to produce evidence to show that the new residential house was actually purchased by him subsequent to his selling of his house at 559-A, Gandhi Nagar, Jammu. However, discussion in the asstt. order clearly shows that he has not able to show that the new residential house was actually purchased by him. On the contrary sustained enquiries, investigati....
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....ent resident of the State. As on 03.01.2004 if Sh. Rattan Lal was alive, then how come Smt. Amriti Devi sold the property to the appellant? The provisions of section 54 are reproduced as under:............ On the perusal of above section, it is clear that the appellant should have purchased the property one year before or two years after the date of transfer. 4.2 As far as the agreement to sell and irrevocable power of attorney dated 25.12.2001 produced by the appellant is concerned, the document does not seem to have legal validity on the basis of following groundsa) Firstly the property claimed to have been purchased by the appellant was in the name of Sh Rattan Lal and after the death of Sh. Rattan Lal he was survived by a wife and sons. Smt Amriti devi wife of Late Sh. Rattan Lal has herself declared in the statement dated 14.12.2009 recorded during remand proceedings that her husband was a state subject and her sons are state subject but she does not hold a state subject of the state. As per the laws of the state, after the death of Sh. Rattan Lal, only his sons will get the rights in property and not his wife as she is a non state subject. Therefore, she cannot si....
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.... in rejoinder, submit that the Revenue had no case in view of the subsequent remand report by the AO, which had been ignored by the ld. CIT(A) in passing his order. 7. I have heard the parties, and perused the material on record. 7.1 Section 54 of the Act reads as under: 'Profit on sale of property used for residence. (1) Subject to the provisions of sub-section (2), where, in the case of an assessee being an individual or a Hindu undivided family, the capital gain arises from the transfer of a longterm capital asset, being buildings or lands appurtenant thereto, and being a residential house, the income of which is chargeable under the head "Income from house property" (hereafter in this section referred to as the original asset), and the assessee has within a period of one year before or two years after the date on which the transfer took place purchased, or has within a period of three years after that date constructed, one residential house in India, then, instead of the capital gain being charged to income-tax as income of the previous year in which the transfer took place, it shall be dealt with in accordance with the following provisions of this secti....
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....vious year in which the period of three years from the date of the transfer of the original asset expires; and (ii) the assessee shall be entitled to withdraw such amount in accordance with the scheme aforesaid.' (emphasis, supplied) The assessee in the instant case has sold his residential house at Gandhi Nagar, Jammu during the previous year relevant to AY 2002-03 for a consideration of Rs. 35 lacs, receiving Rs. 2 lacs by cheque and the balance Rs. 33 lacs in cash, during the period from 01.6.2001 to 12.12.2001 (refer para 1 (pg.1) of the assessment order, para 3.1 of the appellate order). He is, therefore, entitled to deduction u/s. 54 in computation of capital gains arising on the said transfer upon investment of the said capital gain on: (a) purchase of a residential house in India within a year prior to the date of transfer; or (b) purchase of a residential house in India within a period of two years from the date of the transfer; or (c) construction of a residential house in India within a period of three years from the date of transfer. 7.2 The assessee has admitted capital gain at Rs. 26.64 lacs (PB pgs. 1 - 3), which it ....
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....PG s/o Sh. Jagiri Mal Gupta, in whose favour, therefore, the plot may be regularized, passing a correction entry (in the records of the JDA), to which he had no objection; (f) statement of Sh. Kulwant Singh, Naib Tehsildar, JDA (Zone-B) in response to summons u/s. 131, that the certificate issued by the JDA in respect of the correction of its record on 02.01.2004, i.e., listing the assessee as the occupant of the property, was in response to an application for regularization/correction of the said property in his name; (g) statement on oath u/s. 131 of the Act dated 13.12.2006 by Smt. Amriti Devi w/o Sh. Rattan Lal, deposing to have occupied the Nanak Nagar property as a tenant of OPG (assessee) and, further, had not sold any property to him at any time; in fact, having not owned any property in J&K, which she was not entitled to in view of her being not a state subject, and that, she being illiterate, with no knowledge of written language, the ATS dated 25/12/2001 is a forged document; (h) the statement dated 14/12/2009 by AD, recorded in the course of remand proceedings, reiterating her statement dated 13/12/2006; (i) the sale agreement dated 2....
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..... It is clear that neither she nor her husband owned the subject property at any time. Needless to add, there is no registration of the ATS dated 25/12/2001, nor the returning of capital gain by AD on the sale of the subject property, with the Revenue making no attempt - and rightly so, to assesss the same in her hands or her late husband. The assessee's plea of her cross-examination is wholly misplaced. As clarified by the AO, both in the assessment order and the remand report, she is the assessee's witness. The onus was on the assessee to, in discharge of his burden of proof, exhibit that ATS dated 25.12.2001 is a valid document. Why, until the AO made efforts to contact her, it could not even be said if RL had a wife, and with that name, as her name appeared in no other document. She was, however, despite several opportunities extended during the assessment proceedings, not produced by the assessee, nor even her address furnished, stating that he was not liable to keep track of her, which was regarded as unreasonable and irrational by the AO, particularly considering that the document (ATS dated 25.12.2001) being relied upon by the assessee to claim his right to the property,....
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....e did indeed construct a house thereat, as the material on record suggests, he, in receipt of Rs. 33 lacs in cash from June to December, 2001 (with Rs. 21 lacs being received on 12/12/2001 itself), implying him to be the owner of the land, why one wonders did not state so, producing the document of title to the land? The same is understandable as it is inconsistent with his case of having bought a built house from AD. If, as stated, he was in September, 2003 already residing in the house for two years, the house would have been constructed earlier. The period indicated by the statement dated 13/12/2006 of AD also suggests the same. Clearly, therefore, the ATS dated 25/12/2001 is a forged document, and even otherwise of no consequence as AD was never the owner of the subject property, much less in December, 2001, i.e., during the life time of RL. RL, however, having expired by the time the reassessment proceedings were initiated, the assessee replaced him with his wife. In fact, an agreement with RL himself would have been of little assistance in view of his affidavit and deposition of November, 2003, besides absence of any document evidencing his title to the subject property. ....