TaxTMI 
TaxTMI 
2020 (12) TMI 1071
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....ning proceedings are initiated on the borrowed satisfaction without forming his own independent opinion. 2. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in not adjudicating and deciding the specific plea as emerging from submission made as per para-6.1(m) that who is the actual person who has paid the alleged sum of Rs. 10,00,58,873/- and who is the real recipient and beneficial owner of such sum which is not the assessee and is the crux of the matter and therefore, the order is perverse on this count alone which is liable to be quashed and set aside. 3. Without prejudice to the above, on facts as well as in the circumstances of the case, the Ld. CIT(A) has grossly erred in not appreciating the merits of the case with reference to factual submission of the appellant and has further erred in sustaining the addition of Rs. 10,00,58,873/- on account of difference in sale consideration, when the case of the appellant is much more stronger on merits in the year under consideration. The order being perverse to the above extent, and not based on a proper appreciation of facts, the same deserves to be reversed. 2. Brief facts of the c....
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....e-2 to the TEP)" 4. It is further stated by the A.O. that as per the agreement for sale dated 06/01/2007, it is mentioned that a Banakhat dated 21/09/2006 was drawn between above assessee and the partners of M/s. Akash Developers. The copy of this Banakhat dated 21/09/2006 has not been provided by the ADIT (Inv.). It was requested the ADIT (Inv.), Mehsana to submit the copy o Banakhat, if available with his office. 5. With respect to the value of the property of Rs. 10,95,58,873/-, it is to submit that 'there are two agreements for sale of the same date i.e. 06/01/2007. One is between my above assessee, Partners of M/s. Akash Developers and Shri Shankarbhai Revabhai Patel & Shri Jitendra Revabhai Patel of Visnagar. In the said agreement of sale, no where the sale value of the property proposed to sale mentioned. The another agreement for sale of same date i.e. 06/01/2007 executed between partners of M/s. Akash Developers and Shri Revabhai Shankarbhai Patel and Shri Jitendra Revabhai Patel of Visnagar in which it was specifically mentioned at condition No.(l) on page.3 that the land decided between these two partners @ Rs. 1381/- per sq. ft. and taking into acc....
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....was also written to the subregister, Mehsana u/s.!33(6) of I.T. Act to obtain the copies of documents as above if registered. However, no nay document found to have registered in his office. 8. In the view of the above facts gathered as a result of enquiry made during the assessment proceedings, it was revealed that the vital document in this case is neither made available by the ADIT(lnv), nor by the assessee or any of its members. Further, the assessee submitted not to have executed any such document in favour of M/s Akash Developers. Hence, to cope up with the situation arises, a reference was made vide letter dated 15/12/2016 to the Joint Commissioner of Income Tax, Mehsana Range narrating factual position of the case seeking directions. In response, the Joint CIT, Mehsana Range has issued directors vide his order dated 28/03/2016 which reads as under;- DIRECTION U/S.144-A OF THE I.T. ACT. 1961 In this case a reference has been made by the Assistant Commissioner of Income Tax, Mehsana Circle Mehsana vide her letter dated 15/02/2016 u/s 144A of the IT.Act 1961 with regard to assessment proceedings pending with her u/s 147 for AssttYear 2008-09. In orde....
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....Mehsana , the assessee as first party Partners o/M/s Akash Developers as second party and Shri Revabahi Shankarbhai Patel and Shri Jitendra Kumar Revabhai Patel as third party . Through this document the first party has given its consent if the second party sales the property to the third party because vide their earlier banakhat dated 21/09/2006 they have agreed to sale this property to M/s Akash Developers. After analyzing the facts and applying her mind reasons for re-opening of the case u/s 147 were recorded by theA.O, approved by the appropriate authority . Notice u/s 148 issued and duly served on the assessee. Now the Assessing Officer has moved the reference u/s 144A so as to seek guidance / directions as to whether in the given facts and circumstances and in the light of submissions of the assessee before her during the course of re assessment proceedings, the sales consideration which works out at Rs. 10,95,58,873/- as against the sales consideration declared by the assessee at Rs. 95.00.000/- in its return of income be considered for computation of Long Term Capital Gains ? Hence this order. 3. Before issuing any direction to theA.O the assessee was acco....
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....details of copy of sale deed of land, copy of purchase deed of land (vide item no.4 & 5 of notice) in support of Long Term Capital Gain disclosed in the return of income fay the assessee. A copy of notice is enclosed for ready reference. [Ane.1] (iii) In response to which, the assessee submitted requisite details including copies of purchase deed, sale deed and copies of index under assessee's letter dated 21/09/2010. A copy of letter is enclosed for ready reference (Ane.2) (iv) During the course of original assessment proceedings, the then DCfT, Mehsana scrutinized the details/documents submitted fay the assessee and after verification he placed them on record. The then AO. having fully satisfied with the assessee's submission, he accepted assessee's income under the head Long Term Capital Gain on sale of N.A, land sold during the year under consideration. finalized the regular assessment u/s 143(3) of the Act as per is order dated 10/11/2010. A copy of the same is enclosed for ready reference, (Ane.3) Thus, there is no failure on the part of the assessee to submit necessary details for the assessment year under consideration. (vi) From the aforesaid facts it ....
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....erious and far reaching consequences for the tax payer. The proceedings so initiated are thus ab-initio-void, as challenged by the assesses under assessee's letter dated 30/11/2015. (Ane.4), more particularly for the reasons amongst others, as below:- (a) That the first point of challenging the alleged proceedings u/s 147of the Act is against the reasons recorded. The assesses is provided a 'gist' of reasons recorded and approval letter of the Pr.CIT under A.O's letter dated 26/11/2015. A perusal of theist of so-called reasons recorded, it is seen that the primary facts i.e. (1). The date of recording alleged reasons and. (2) Name and designation of the A.O. who recorded such reasons both are missing. Besides, the re-assessment proceedings have been blindly initiated on the basis of information received from ADIT (Inv.) Mehsana. No efforts are made by the A.Q. either to cross verify the facts available on record vis-a-vis socalled information from the agency OR making any independent inquiries from the concerned parties involved in the matter. It is settled position in law that the satisfaction on the basis of relevant material about escapement of income, o....
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....rom other agency without substance. (e) Almost total absence of time available with the officers concerned that any worthwhile examination of records or consideration of the matter was highly improbable if not outright impossible and more so the then A.O's proposal dated 31/03/2015, (transmitted at 4.18 P.M. by fax), getting alleged sanction of the Pr.CIT on the very same day i.e. on 31/03/2015. (Reaching back in JCIT's office at 5.05 P.M. by fax) and A.O. issues notice at the end of the same day. This manifests undue abnormality, all along the line and obviously, there is deliberate attempt of the department to somehow show that the procedural formality was maintained in a record time of a single working day. (f) The Performa of approval reveals that against col.no. 12, the Pr.CIT has simply noted 'yes' without recording his satisfaction in his own hand writing. Thus, there is non- application of mind to the facts of the case by the Competent Authority, it cannot be considered to be proper and valid sanction by the Pr.CIT [Raj Kishor Prasad v. ITO 88 CTR 152 (All.)] (g) As stated aforesaid the original assessment in the case had been unde....
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....d reasons, then entire proceedings taken by him would become void for want of jurisdiction. [CIT v. Kurban Hussain Ibrahimji Mithiborvala 82 ITR 823 (SC)] (j) And last but not the least, from the records it may be noticed that there is no independent satisfaction having recorded by the A.O. nor there is proper sanction of Pr.CIT for re-assessment u/s 147 of the Act. It is submitted that there is not a whisper, as regard the failure on the part of the assesses to make full and true disclosure of all material facts as contemplated under the provision of section 14-7 of the Act, in view of the facts that the assessee has bonafidely submitted exhaustive details along with its original return of income itself and further submitted material details called for by the then A.O., the assessee submits that there is mere change in opinion which is not permissible under the Act The law is well settled that the proceedings u/s 147/148 cannot be initiated merely because there is change of opinion and there are no new facts for justifying initiation of re-assessment proceedings. [CITv. Kelvinator of India Ltd 320 ITR 561 (SC)] (k) Having regard to the aforesaid facts an....
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....he assesses had purchased non-agricultural land bearing survey no.1990/50 admeasuring 7373 sq. mtr. on 15/03/1997, under registered document bearing no. 1049 & 1050 from M/s. National Thread Works /or total consideration of Rs. 9,60,000/-. The same land has been sold on 20/12/2007 for Rs. 95,00,000/- to M/s. Aakash Developers as per registered documents no. 8989 registered be/ore the Sub-Registrar, Mehsana. On the same transaction the assessee has already disclosed LTCG o/Rs. 74,48741/-, in original ROI. (ii) With regard to alleged consent agreement dated 06/01/2007, a copy of which provided by the deportment, the assessee has categorically replied under its letter dated 30/11/2015 that the alleged agreement is never-ever executed by the assessee in favour of any party. The assessee has also repeatedly denied having signed the alleged document. Besides, it is neither registered nor there is evidentiary value. (iii). As stated in assessee's letter dated 09/12/2015, the assessee has never-ever executed alleged Banakhat dated 21/09/2006. favour of alleged parties namely Nangibfiai Sagorbhai Chaudhri and others. And the assessee denies having entered into any such....
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....ged documents being relied upon by the deportment are dumb documents and absolutely carry no evidentiary value in the eyes of law. (vii) That to the assessee best knowledge and belief, the Secretary of the association whose statement has been recorded in the chamber of the JC1T on 16/02/2016, she has reiterated the true and correct facts in the subject matter and there is nothing stated adversely. (The assessee reserves its right to state in rebuttal, if any, on receipt of certified copy of such statement). 4. In view of the above stated fact and peculiar circumstances of the case there is no reason to take any adverse view in the case of the assesses and the proceedings so initiated should be dropped. However, if there is any reservation/ disagreement in this regard, you are requested to grant a reasonable time and opportunity to the assessee, along with reasons for such disagreement so that the same can be appropriately addressed, before proceeding further in the matter, 4. However, the Assessing Officer has not agreed with the aforesaid submission made by the assesse. The Assessing Officer has also not accepted the objection of the assesse regarding re....
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....f above facts, the Assessing officer has stated that the property which was agreed to sale for a consideration of Rs. 10,95,58,873/- was sold for merely Rs. 95,00,000/- on 20/12/2007 while getting the same registered with the office of Sub Registrar ,the A.O is therefore directed to assess difference between the two t 10,95,58,873-95,00,000= 10,00,58,873) as income of the assessee escaped to tax on this issue. 10. In the light of above facts and directions issued by the Joint commissioner of Income Tax, the Assessing Officer has added the difference between Rs. 10,95,58,873/- and Rs. 95,00,000/- which comes to Rs. 10,00,58,873/- is assessed to tax in the hands of the assesse. 5. Against the addition of Rs. 10,95,58,873/-, assesse preferred first statutory appeal before the ld. CIT(A) who confirmed the action of Ld. A.O. with following observations: I have carefully considered the assessment order and submission filed by appellant. The brief facts of present addition are that appellant had purchased non agricultural land bearing survey no 1990/50 on 15/03/1997 and sold such land to Akash Developers for Rs. 95,00,000/- in year under consideration and long term capital ....
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....006 and on 06/10/2007 Rs. 61,00,000/- is paid which is mentioned in second clause of agreement compiled at paper book page no 64.1n this agreement, it is clearly stated that land is transferred at Rs. 1381 per Sq meter for advances payment referred supra was made and 25% of total consideration is Rs. 2,54,00,000/- and for total area sold, it comes to Rs. 10,95,58,8/3/-. It is observed that in first agreement referred supra, the fact is stated that second party and third party has also executed agreement to sale and this fact find support from second agreement provided by ADIT(Mehsana). The appellant has argued that second agreement being agreement to sale executed between second party and third party on 06/01/2007 was cancelled subsequently on 07/D1/2007 and same is compiled at paper book page nos. 62, 50, 66. On careful consideration of such facts, it is observed that at the end of agreement to sale; dated 06/01/2007, it is stated that on 07/01/2007, agreement dated 06/01/2007 executed between both parties are cancelled with the mutual consent of both the parties. Even it is stated that consideration of Rs. 61,00,000/- paid by third party to second party have bee....
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....hus argument of appellant that such agreement was never been executed by it cannot be accepted. The facts discussed herein above clearly prove the existence and correctness of both agreement referred supra and such first agreement provided by ADIT being "Sanmati Patra" executed between all three parties clearly suggest appellant has already entered into agreement to sale with Aakash Developers on 21/09/2006, hence, plea of appellant regarding non execution of such agreement cannot be accepted. The entire trail of events along with cancellation of agreement dated 06/01/7007 on 0//01/2007 itself suggest the authenticity of ail the agreement and appellant was duty bound to provide such agreement during assessment proceedings. (vi) The argument of appellant that both stamp papers are purchased by Mr Govind under his signature and no such person is on pay roll of the given name , stamp vendor is common person and both stamp paper bear chronological serial number but such fact no way help the appellant as appellant himself has stated that second agreement was cancelled subsequently which clearly establishes the existence of second agreement being agreement to sale betwe....
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....16 wherein she has stated that consent agreement dated 06/01/2007 was never executed by the appellant in favour of any party. As stated in above paras, circumstantial evidences would suggest that document dated 06/01 /200/ was there. The appellant has not brought any confirmation of second and third party wherein they have denied execution of such agreement. The appellant itself is repeatedly stating that banakhat dated 06/01/2007 executed between second and third party was cancelled on 07/01/20107 which prove that- (a) There was Agreement to sale on 06/01/2007 (b)Said Agreement clearly state that consent agreement was executed on 06/01/2007 and same was valid agreement. Even said consent agreement state that agreement to sale was entered between appellant and Aakash Developers on 21/9/2006 hence all agreement dated 21/09/2006, 06/01/2007 (both) were executed and valid agreement (c) The appellant argued that as there were defects in title & litigation of Rs. 61,00,000/- paid on 06/01/2007 by third party to second party was returned back on 07/01/2007. This suggest that value of land without defects was Rs. 10.96 crore as mentioned in banakhat dat....
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....s are on different footings and has no relevance with each other. The appellant has also argued that department has not taken any adverse step in the case of Aakash Developers being party to whom appellant has sold the property but not taking of any action by department against Akash Developers does not make addition in present case futile. Considering the facts discussed herein above, it is held that AO was correct in making addition relying upon directions given by JCIT v/s. 144A of the Act and addition made by AO of Rs. 10,00,58,873/- is upheld. 6. Now assesse has come before us by way of second statutory appeal. 7. During the course of appellate proceedings before us, the Ld. Counsel has contended that regular assessment have been completed u/s 143(3) of the Act. On 10/11/2010 and the same was reopened after four years from the end of the relevant assessment year on 31/03/2015 and the A.O. has reopened the assessment without forming his own independent opinion. The Ld. Counsel has referred the various pages of paper book furnished during the course of appellate proceedings before us. Ld. Counsel has submitted that it is categorically mentioned in the reason re....
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....tion from the A.D.I.T. (Investigation) on 19/03/2015 as per which it was found that a Banakhat dated 21/09/2006 was found by him and same is forwarded to the A.O. The Revenue has filed paper book containing 262 pages but no document/evidence has been filed in the paper book or produced during the course of appellate proceedings before us to demonstrate that the Assessing Officer has received the said information from the ADIT(Inv.), Mehsana letter No. ADIT(Inv.)/Mehsana/TEP/Cat-X/2014-15 dated 19/03/2015 as mentioned in the assessment orders. In the paper book filed by the revenue, the copies of following documents have been filed: Sr.No. Particulars 1 Income Tax Return 2 Statement of Computation of Total Income 3 Audit Report 4 Assessment order u/s. 143(3} of l.T.Act dated 10.11.2010 5 Information received from ADITflnv ), Mehsana 6 Approval for initiation of proceedings u/s. 1 47 of l.T.Act* 7 Notice u/s. 148 of l.T.Act 8 Reply of the assessee in response to notice u/s. 148 9 Information u/s. 133(6) of l.T.Act 10 Statement recorded u/s. 1 31 of l.T.Act of one of the members of the assessee-AOP 11 Request for ....
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....Visnagar (purchaser party). As per this agreement to sale, the total sale value of the said land was Rs. 10,95,58,873/-. However, the sale deed dated 20.12.2007 of the said land was executed between Sardar (mehsana) Owners Association, Mehsana (seller party) and partners of M/s. Akash Developers, Mehsana (purchaser party) on total sale consideration of Rs. 95,00,000/- only. Therefore, it is clear that the sale deed dated 20.12.2007 was exedcuted on undervalue of the said land by Rs. 10,00,58,873/- (Rs. 10,95,58,873/- - Rs. 95,00,000/-). In view of the above, I have reason to believe that the income chargeable to tax has escaped assessment in this case for A.Y. 2008-09 within the meaning of sec. 147 of the I.T. Act. Therefore, it is a fit for issuance of notice u/s. 148 of the I.T. Act. Date: 30.03.2015 ( Y. S. Meena) Deputy Commissioner of Income-tax Mehsana Circle, Mehsana 13. As per the evidences provided by the revenue, the information pertaining to the assesse wherein reference to the documents was made was the letter of the ADIT(Inv.), Mehsana dated 31/03/2015 as cited above in this order and the revenue has not placed any evidence or mat....