TaxTMI 
TaxTMI 
2021 (3) TMI 46
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.... Mehsana, it was learnt that the partners in the assessee firm i.e. M/s. Akash Developers has purchased land of Market value Rs. 10,00,58,873/- at undervalued price of Rs. 95,00,000/-. Also, In this connection the ADIT (Inv.), Mehsana vide its letter dated 31/03/2015, furnished information with respect to sale of an immovable property situated at Survey No. 1990/50 of Mehsana city during the period relevant to A.Y. 2008-09 along with copies of following agreements and sale deeds of the aforesaid land- "(i) Agreement dated 06/01/2007 executed between Sardar (Mehsana) owners Association, Mehsana [first party), M/s. Akash Developers through its partners (second party) and Mr. Rewabhai Shankarbhai Patel & Mr. Jitendrakumar Rewabhai Patel of Visnagar (third party). This agreement shows that the original party who had owned the land i.e. land situated at Survey No. 1990/50 of Mehsana city has given his consent to sell the said land. (Annexure-10 to the TEP) (ii) Agreement to sale dated 06/01/2007 of the said land executed between M/s. Akash Developers, Mehsana (seller party) through its partners and Mr. Rewabhai Shankarbhai Patel & Mr. Jitendrakumar Rewabhai Patel of Vi....
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....6 whereby the Assessing Officer was directed to take action as per direction given as under on aforesaid issue and complete the assessment accordingly:- "In this case a reference has been made by the Income Tax Officer Ward-1 Mehsana vide his letter dated 29/02/2016 u/s. 144A of the I.T. Act 1961 with regard to assessment proceedings pending with him u/s. 147 for Asstt. Year 2008-09. In order to look in to the facts, assessment record was called for from the A.O. and vide this office letter No. MHN/JCIT/F. No. 43/2015-16/dated 02/03/2016 the assessee was asked to furnish necessary details/copies of documents etc in support of him claim. In response Shri Haresh Kansara CA & AR of the assessee attended, filed written submissions which are placed on record. The facts of the case in connection with the reference were discussed with the A/R and he was heard. 2. Briefly the facts of the case are that the assessee firm comprising of nine partners, furnished its return of income for the Asstt. Year 2008-09 on 20/01/2009 showing "NIL" income. Later on as per information received from the investigation wing of Income Tax Department it was known that during the period releva....
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....ded an opportunity of being heard, copies of both the documents relied upon by the department were given to Ld. A/R of the assessee and he was asked to explain as to why the unaccounted investment in the guise of suppression of purchase consideration should not be added to the declared income of the assessee. In response the assessee vide it's A/R's letter dated 22/03/2016 filed on 23/03/2016 submitted as under- From: M/s. Akash Developers 1, Samrajya Flats, Ambavadi, Mehsana. PAN: AAOFA4076G To, The Joint Commissioner of Income Tax, Mehsana Range, Mehsana. Dear Sir, Sub: Assessment proceedings for A.Y. 2008-09, Ref: Your Letter dated: 11.03.2016 The issue is in connection with the purchase and sale of the land at Mehsana bearing survey No. 1990/50 which was registered on 20/12/2007 in which sale consideration of Rs. 95,00,000/- is mentioned. it is alleged that there is a suppression of sale price in the transaction. There is a reference of one Banakhat Karar lekh and the "Sanmati karar lekh". In that connection, we would like to submit as under. The....
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....hem. Fourthly, the assessee firm has purchased land on 20/12/2007 for Rs. 95,00,000/-. After the purchase it was noticed that there is a litigation on the said land in the High Court of Gujarat. So the project for which the land was purchased cannot be materialized due to litigation and the firm decided to sell the land and in fact has sold the land on 24/12/2010 for Rs. 1,25,00,000/- and has paid the taxes due thereon. Both the transactions were done by the firm on or above Jantri Value as mentioned in the order sheet seems to be imaginary and not realistic. Fifthly, as per our submission the Income Tax Department has no material or proof or evidence showing the payment of value mentioned in the alleged Banakhats. More so, the department has no evidence to show that the assessee has paid more price than one mentioned in the purchase document of Rs. 95.00 lacs, the suppression cannot be concluded. We also request to provide us any materials against us which is proposed to be used against us, so that we can suitably reply and it will be as per the rules of the natural justice and fair play. So, in our submission the facts that. - The assessee firm....
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....r purchasing the land on 20/12/2007 for Rs. 95,00,000/- the assessee has sold it on 24/12/2010 for Rs. 1,25,00,000/-, makes it further clear that the assessee firm was actual investor. In the light of facts as evident from the Banakhat dated 06/01/2007 it can be safely inferred that the worth of the property while purchasing was not merely Rs. 95 lacs but Rs. 10,95,58,873/-. In view of the facts as discussed above 1 do not find any reason to hold that the property which was agreed to purchase for a consideration of Rs. 10,95,58,873/- was purchased for merely Rs. 95,00,000/- while getting the same registered with the office of Sub Registrar, the A.O. is therefore appears to be justified in his observation, that there has been suppression of investment or unaccounted investment by the assessee in purchase of the land, accordingly the A.O. is directed to assess difference between the two (10,95,58,873 - 95,00,000 = 10,00,58,873) as unaccounted investment by the assessee. The escaped income of the assessee as such is therefore to be taxed." 4. As the direction u/s. 144A of I.T. Act is binding on the A.O., therefore, in compliance of the aforesaid direction of Range Head, the differe....
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....ently set-aside by the learned CIT [A], against which an appeal was preferred which has been dismissed on the ground of low tax effect. Considering the aforesaid facts and circumstances of the case and solely on the observations made by another Assessing Officer with respect to the subsequent assessment years i.e., 2007-2008, the reopening was not permissible, more particularly in absence of any other tangible material available with the Assessing Officer that in the year 2005-2006, the assessee had received any on-money. Under the circumstances, it was not open for the Assessing Officer to re-open the assessment for A.Y. 2005-2006, that too beyond the period of four years and more particularly when the original assessment was done under Section 143(3) of the I.T. Act. 9. In view of the above and for the reasons aforestated, this petition succeeds. Impugned notice dated 26th March 2012 issued under Section 148 of the Income-tax Act, 1961 by the Revenue is hereby quashed and set-aside. Rule nisi made absolute. No costs." 13. The Hon'ble Gujarat High Court has further held in the matter of Vinodbhai Shamjibhai Ravani Vs. DCIT (79 Taxmann.com 237): Section 48,....