TaxTMI 
TaxTMI 
TaxTMI 
2020 (1) TMI 1366
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....arging interest u/s 234A, 234B & 234C of the Act. The interest so charged, being contrary to the provisions of law and facts, kindly be deleted in full." 2. Briefly the facts of the case are that the case of assessee was reopened U/s 147 of the Act and notice U/s 148 was issued on 25.03.2015, in response to which ROI was filed on 16.06.2015 declaring total income of Rs. 1,04,500/- as income from commission. The case was reopened on the ground of alleged sale of immovable property by the assessee for sale consideration of Rs. 7,00,000/-, the value of which was adopted at Rs. 7,17,826/- by stamp valuing authority. The assessment U/s 143(3) r.w.s 147 was completed after making addition of Rs. 7,71,826/- being alleged undisclosed short term capital gain on alleged sale of immovable property after invoking Section 50C of the Act. The assessee preferred an appeal before the ld.CIT(A), which was decided by ld. CIT(A) vide order dated 19.11.2018 sustaining the findings of the AO and addition made U/s 148 of the Act. Against the said order of the ld CIT(A), the assessee is in appeal before us. 3. During the course of hearing, the ld AR submitted that the assessee is an individual drawing ....
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....he same and there is no such evidence that the assessee was having ownership of said property. Once, it is an established fact that assessee was not the owner of property, how can he sell the same. Therefore, the reasons so recorded were on wrong presumption and without looking into the correct facts of the case. In support of our contention we rely upon the decision of Hon'ble Coordinated Bench in the case of Shailesh Kumar Chaturvedi Vs ITO (ITA No.1026/JP/2019 order dated 07.07.2020). 6. It was further submitted that in the instant case, the reasons were recorded by the AO on 25.03.2015 on the basis of CIB information available that a property has been sold by the assessee for sale consideration of Rs. 7,00,000/- and on the basis of said information and non filing of return, it was concluded that the income has escaped the assessment. After recording the reasons, a notice u/s 133(6) dated 03.08.2015 was issued to Sub-Registrar-2 to obtain the copy of Registered Sale deed of the transaction. It view of these facts, it emerges that the AO was having information from two sources viz. information received in the form of CIB Report and Information (Registered Sale deed) obtained fr....
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.... sub registrar-2 to obtain the copy of Sale deed. Given that, on the basis of this transaction, AO formed a reason of escapement in the hands of the assessee, therefore, it was essential on his part to at least examine the correct facts of the transaction beforehand. There is no dispute that the AO can rely upon the information received but at the same time, where he is assuming jurisdiction u/s 147, he is required to carry out further examination to make a establish formation of belief that income has escaped, whereas, nothing of this sort was done. In support of his contentions, he has relied upon the decision of Jaipur Bench in the case of M/s. Balaji Health Care Pvt. Ltd vs. ITO (ITA Nos. 566 & 567/JP/2018 vide order dated 30.1.2019). 9. It was accordingly submitted that in view of these facts and circumstances, once the AO reached to a decisive finding that the assessee has sold the property and the sale consideration of Rs. 7,00,000/-whose value adopted for stamp duty valuation purpose of Rs. 7,17,286/- has escaped the assessment, he was to make some inquiry to bring some tangible material rather than completely relying upon a one line information and then was to examine the....
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....on, the reasons recorded and/or the documents available on record must show a link/nexus and relevancy to the opinion formed by the Assessing Officer regarding escapement of income and the reasons are required to be read as they were recorded by the Assessing officer. It is for the Assessing officer to disclose and open his mind through the reasons recorded by him and he has to speak through the reasons that the income chargeable to tax has escaped assessment. In the present case, the reasons recorded by the Assessing officer before issuance of notice u/s 148 read as under:- "As per information available on record, during the period under consideration, the assessee has sold immovable property for consideration of Rs. 7,00,000/- which has been valued at Rs. 7,17,286/- for the purpose of charging stamp duty. On verification of record, it has been found that the assessee has not filed the return of income. Thus the assessee has failed to disclose fully and truly all material facts necessary for his assessment. Therefore, I have the reason to believe that the above income of Rs. 7,17,286/-, which is chargeable to tax has escaped assessment." 12. On perusal of the reasons so recorde....
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....s sought copy of the sale deed from the Sub-Registrar where the assessee has been shown as power of attorney holder of the owner of the immoveable property which again raises a question mark on the tangible nature of the CIB report. We therefore find that the AO has merely gone by the CIB report and was not even in possession of the sale deed and the exact specifics of the transaction at the time of recording of reasons and therefore, it is a case where the proceedings are vitiated for want of tangible material in possession of the AO and lack of reason to believe which is more in the realm of suspicion rather than formation of opinion that income has escaped assessment. The reasons thus recorded and/or the documents available on record, therefore, don't show a link/nexus and relevancy to the opinion formed by the Assessing Officer regarding escapement of income. Further, even though the reopening in the present case was after the expiry of four years from the end of the relevant A.Y 2008-09, given that there was no original return of income filed by the assessee and consequent assessment, it was not necessary for the AO to show that there was any failure to disclose fully or trul....
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....s assuming jurisdiction u/s 147, he is required to carry out further examination and analysis in order to establish the nexus between the material and formation of belief that income has escaped assessment and in absence thereof, the assumption of jurisdiction u/s 147 has no legal basis and resultant reassessment proceedings deserve to be set-aside. Our viewis fortified by the decision of the Hon'ble Delhi High Court in case of Meenakshi Overseas Pvt. Ltd. (supra) wherein it was held as under:- "19. A perusal of the reasons as recorded by the AO reveals that there are three parts to it. In the first part, the AO has reproduced the precise information he has received from the Investigation Wing of the Revenue. This information is in the form of details of the amount of credit received, the payer, the payee, their respective banks, and the cheque number. This information by itself cannot be said to be tangible material. 20. Coming to the second part, this tells us what the AO did with the information so received. He says: "The information so received has been gone through." One would have expected him to point out what he found when he went through the information. In other words....
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....orded have to be based on some tangible material and that should be evident from reading the reasons. It cannot be supplied subsequently either during the proceedings when objections to the reopening are considered or even during the assessment proceedings that follow. This is the bare minimum mandatory requirement of the first part of Section 147 (1) of the Act. 25. At this stage it requires to be noted that since the original assessment was processed under Section 143(1) of the Act, and not Section 143(3) of the Act, the proviso to Section 147 will not apply. In other words, even though the reopening in the present case was after the expiry of four years from the end of the relevant AY, it was not necessary for the AO to show that there was any failure to disclose fully or truly all material facts necessary for the assessment. 26. The first part of Section 147(1) of the Act requires the AO to have "reasons to believe" that any income chargeable to tax has escaped assessment. It is thus formation of reason to believe that is subject matter of examination. The AO being a quasi judicial authority is expected to arrive at a subjective satisfaction independently on an objective cr....