2020 (4) TMI 283

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.... 1. That in law and in the facts and in circumstances of the case, the ld. CIT (Appeals) grossly erred in confirming the reassessment proceedings u/s 148 of the Income-tax Act, 1961. 1.1. That the ld. CIT (A) grossly erred in ignoring that the ld. Assessing Officer had erred in deliberately not passing a speaking order to the legal objections raised before him prior to initiating the reassessment proceedings, nor even prior to passage of assessment order, thus making the assessment order illegal and void. 1.2. That the ld. lower authorities grossly erred in ignoring the facts that the notice u/s. 148 of the Act was issued without proper sanction, without any reason to believe, without any application of mind and the entire proceedings of reassessment deserved to have been quashed. 1.3. That on the facts and in the circumstances of the case, the ld. lower authorities grossly erred in issuing notice u/s 148 if the Income-tax Act, 1961 without satisfying the conditions of section 148, 149 & 151 of the Income-tax Act,1961. 1.4. That the assessment proceedings u/s 148 of the Act were initiated on the basis of surmises conjectures, suspicions ....

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.... with view to harass the assessee appellant. 3. That the ld. CIT(A) malafidely did not even bother to refer to the detailed written submission filed before him and also grossly erred in ignoring the finding arrived at by the Id. CIT(A) in the case of the sellers of the afore-said land. 4. The appellant craves leave to add, alter, modify or amend any ground on or before the date of hearing." Ground Nos. 1 to 1.4 are regarding validity of initiation of proceedings under section 147/148 of the IT Act. 2. The assessee is an Individual and proprietor of M/s. Moral Construction Company, engaged in the business of real estate transactions. During the year under consideration, the assessee along with Shri Ram Niranjan Tibra and Shri Parmanand R. Verma (the other assessees) jointly purchased agricultural land measuring 1.72 hectare bearing Khasra No. 2479 and Khasra No. 2489/4083 situated at Indali Road, Jhunjhunu (Rajasthan) vide sale deed dated 1st February, 2007 for a consideration of Rs. 8,40,000/-. The land was valued for stamp duty purposes at Rs. 8,70,000/-. The assessee filed his return of income on 30.03.2008 declaring total income of Rs. 7,31,750/-. The sai....

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....xamined the sellers who have specifically denied to have received any such extra consideration as well as the purchasers being the assessees. Thus the report of the DDIT Investigation is based only on suspicion and doubt without any detection of fact about the alleged unaccounted/unexplained money changed hands. The ld. Counsel has further contended that even the approval for issuing the notice under section 148 on the reasons recorded by the AO has been given by the ld. CIT without application of mind but mechanically. He has referred to the sanction granted by the ld. CIT and submitted that the ld. CIT has just signed the proforma against the typed word "Yes". Thus it is only a mechanical approval without application of mind when the word "Yes" was pre-typed by the AO and it was not even written by the ld. CIT. He has further contended that this issue was specifically raised by the assessee in his objection against the notice under section 148, however the AO while disposing off the objection vide communication dated 25.11.2014 has not dealt with this objection of the assessee. The ld. Counsel has stated at Bar that though the assessee challenged the notice issued under section 1....

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....to be correct to the extent of particulars of land, parties, date of transaction and consideration shown in the sale deed. Therefore, when these facts are not in dispute, then the other facts given in the said Tax Evasion Petition cannot be rejected. He has relied upon the orders of the authorities below and submitted that those loose papers were confronted with the assessee and, therefore, the AO has conducted the requisite enquiry in the assessment proceedings. The AO has given the finding that the assessee along with his partners have indulged in preparing their transactions in such loose papers which are reliable source in connection with the purchase of land in question, when part details and contents of the loose papers regarding the description of particulars of the land, parties and consideration mentioned in the sale deed are admitted than the other contents cannot be denied. 5. We have considered the rival submissions as well as the relevant material on record. There is no dispute that these assessees have jointly purchased the land in question vide sale deed dated 1st February, 2007 for a consideration of Rs. 8,40,000/-. However, the land was valued for the purpose of....

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....orwal) and Shri Ramniranjan Tibra, Jhunjhunu was received in the office. Among other allegations, complainant had alleged that a land at Indali Road, Jhunjhunu, was purchased by above three purchasers in Rs. 1,32,91,045/- and on this they have colonized many plots. In support of this allegation complainant filed copy of registered sale deed and so hand written calculation alongwith the TEP. Summons u/s 131 was issued to all three purchasers i.e. Shri Om Prakash Morwal, Shri Parmanand R. Verma (Morwal) and Shri Ramniranjan Tibra' and their statements were recorded oath. During proceedings, sellers of the said land i.e. Shri Shyam Lal, Shri Sajjan Lal, Shri Ramav, and Shri Santosh Kumar were also summoned u/s 131 and their statements were also recorded oath. On verification of hand written papers filed with the TEP, it was observed that Indali proj land was purchased in Rs. 1,32,91,045/- and registry of said land was done in Rs. 8,40,000/- . However, all the sellers and purchasers stated that the said land transaction was made for 8,40,000/-. Although the purchasers i.e. Shri Om Prakash Morwal, Shri Parmanand R. Verma (Morwal) and Shri Ramniranjan Tibra....

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....DDIT wherein it is stated that though purchasers as well as the sellers denied having any connection with the papers filed with Tax Evasion Petition (TEP), it is clear that the details of the purchasers of the plots as well as areas of the land purchased by them as mentioned the TEP are correct. The DDIT goes further to say that it is obvious that all the persons concerned (sellers and purchasers) are hiding true particulars of the land transaction under consideration and that the actual value of the land transaction was indeed Rs. 1,32,91,045/- as alleged in the TEP. The DDIT has not stopped there but also given his opinion that it is unaccounted investment in the hands of the purchasers and undisclosed sale consideration in the hands of the sellers. It is also specified that the case of purchaser Shri Om Prakash Morwal is being referred for taking appropriate action. The DDIT Investigation has also suggested the remedial action under section 148 for the assessment year 2007-08 is getting barred by limitation on 31.03.2014. Thus this communication is not forwarding the information and fact but it is a sort of direction with the finding and opinion on the issue. The DDIT and the AO....

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....he transaction and to conduct the further investigation for ascertaining the correct facts leading to the evasion of tax, if any, but the allegation in the complaint itself would not constitute a tangible material or a basis for holding that there is an suppression of purchase/sale consideration and evasion of tax. Further, the contents of the complaint remained unsubstantiated in the absence of corroborating evidence. Even the complaint was not proved by the complainant as the department was not having the name and particulars of the complainant. In such circumstances the allegations in the complaint were required to be proved by independent corroborative evidence. The DDIT Investigation though conducted an enquiry from the sellers as well as the purchaser (assessee) but nothing has come out in the said enquiry to substantiate the allegations made in the complaint. The sellers as well as the purchasers have categorically denied in their statements recorded under section 131 of the Act of having any payment or receipt of any money over and above the consideration stated in the sale deed. The sale deed and transaction of purchase and sale of the land in question was in public domain....

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....itted that after making purchase they started selling of the land in succeeding years after dividing them into plots. Further in their statement when they were confronted with the papers, the buyers have admitted that the details appearing in these loose papers resembles only upto the extent of name of party, the dates of sale and the area of land sold, whereas the other details mentioned in the same papers in respect of charging of higher rate of land sold, total amount of receipts etc.were denied by them. The TEP and the documents therein cannot be said to constitute any evidence of suppression of sale value of the land by the appellants, on several counts. Most importantly, the author thereof is not known and also not examined or crossexamined. Secondly, the sale consideration and cost of plot, as mentioned in the TEP is not established by any corroborating evidence and is flatly denied by the parties to the transaction in their statements. Thus, the adoption of sale price at Rs. 33,23,761 in the hands of each appellant, is not supported by proper evidence. Even the facts that subsequent sale of plots in the same land took place at much higher rates, is of no help to the AO as i....

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....he issue of recording the satisfaction in mechanical manner without application of mind for according sanction for issuing the notice under section 148 has held in para 7 to 9 as under :- "7. We have considered the rival contentions and we find that while according sanction, the Joint Commissioner, Income Tax has only recorded so "Yes, I am satisfied". In the case of Arjun Singh (supra), the same question has been considered by a Coordinate Bench of this Court and the following principles are laid down:- 'The Commissioner acted, of course, mechanically in order to discharge his statutory obligation properly in the matter of recording sanction as he merely wrote on the format "Yes, I am satisfied" which indicates as if he was to sign only on the dotted line. Even otherwise also, the exercise is shown to have been performed in less than 24 hours of time which also goes to indicate that the Commissioner did not apply his mind at all while granting sanction. The satisfaction has to be with objectivity on objective material.' 8. If the case in hand is analysed on the basis of the aforesaid principle, the mechanical way of recording satisfaction by the ....

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2020 (4) TMI 283