TaxTMI 
TaxTMI 
TaxTMI 
2021 (5) TMI 43
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.... 08.04.2011. Subsequently, the assessment was taken up for scrutiny and notice under Section 143(2) of the Act was also issued together with calling for certain details. The petitioner states that the details called for by the petitioner under Section 143(2) were fully furnished to the satisfaction. 3. During the course of original assessment proceedings, the petitioner was asked to explain as to why in connection with the property sold during the Financial year 2009-10 for a consideration of Rs. 5,67,30,000/-, the capital gains was not offered to tax in the return filed by him for Assessment Year 2010-11. The petitioner had submitted that the said property was transferred and possession was given to M/s.Vinayaga Land Developers, a partnership firm, for a consideration of Rs. 1,07,18,000/- through a Sale agreement dated 15.12.2003 and a registered Power of Attorney was executed in favour of one Mr.B.Nagi Reddy, a partner in the firm, to sell the property. 4. The petitioner had furnished the copy of the sale agreement and Power of Attorney entered into. The Assessing Officer in order dated 12.03.2013 has drawn reference to Paragraph 7 of the Sale agreement, which is dealing with t....
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....ncome liable to tax had escaped assessment within the meaning of Section 147 of the Act. The respondent by their letter dated 06.10.2017, furnished reasons for re-opening the assessment for the Assessment Year 2010-11. 9. In response to the reasons for re-opening of the completed assessment, the petitioner by letter dated 21.10.2017, furnished detailed reply along with annexure, requesting the respondent to drop the proceedings, since there was no reason to believe that the income liable to tax is escaped assessment. The petitioner has raised an objection regarding the jurisdiction of the authority for reopening of the assessment for 2010-11 and further, considered the other grounds and supportive judgments cited by the petitioner. In view of the fact that the respondent has not considered the objections, the petitioner is constrained to move the present writ petition. 10. The counter filed by the respondent reveals that objection raised against the reasons recorded under Section 148(2) for issue of notice under Section 148 of the Act, were carefully perused and considered by the Department. It is stated that the ownership of the property could not be transferred between persons ....
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....e reopening proceedings. 15. The petitioner had failed to justify as to how the provisions of Transfer of Property Act did not apply to him, so as to establish that no sale of property was made in the Assessment Year 2010-11. 16. It is a settled law that a transfer of immovable property could be only by way of sale through a register deed of conveyance. In other words, no rights, title or interest in an immovable property could be transferred in absence of a duly registered deed of conveyance. Reliance in this regard is placed on the decision of the Apex Court delivered in the case of M/s.Suraj Lamps and Industries. In the instant case, the sale deed was executed in Assessment Year 2010-11. Accordingly, the transfer has taken place in the said year only. Hence, the LTCG is to be determined in Assessment Year 2010-11. 17. The learned counsel appearing on behalf of the writ petitioner relied upon the sale agreement between the petitioner and Sri Vinayaga Land Developers dated 15.12.2003, solicited the attention of this Court regarding the consideration paid for the Sale agreement. Admittedly, the Sale agreement was an unregistered document. Perusal of the consideration column, the....
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.... Mr.B.Nagi Reddy and the execution of sale by Mr.B.Nagi Reddy as well as the sale consideration received were recorded. By narrating the entire facts and circumstances, the petitioner pleaded innocence of the transfer of the property during the Financial Year 2009-10. In fact, the petitioner Mr.Swaminathan Ganeshan disowned the rights of the property after receiving the consideration of Rs. 1,07,18,000/- and the Power of Attorney was given in favour of Mr.Nagi Reddy as the authorized agent to own and sell the property and subsequently, the property was sold for a consideration of Rs. 5,67,30,000/- and the whole income was offered as business income in the Books of Accounts of M/s.Vinayaga Land Developers. Relying on the said findings, the learned counsel for the petitioner has stated that when there is no dispute regarding the factual matrix presented by the petitioner before the Assessing Officer with supporting documents, then any further notice for reopening of assessment is nothing but "change of opinion" and cannot be construed as "reason to believe". The facts adjudicated with reference to the documents and the tax paid already with reference to the sale consideration receive....
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....essment is made after four years, but before lapse of 6 years. In such cases, Section 147 proviso contemplates that only on the failure of the assessee to disclose full and true income and the material facts necessary for assessment reopening of assessment is permissible and not otherwise. In the present case, the element of non-disclosure of full and true income is absent and therefore, the impugned notice itself is liable to be set aside. 24. The learned counsel for the petitioner strenuously contended that Section 147 is a self-containing provision, wherein the requirements for reopening of assessments are elaborately provided. Within four years, the authorities competent is to reopen on any circumstances, if any income escaped from assessment is identified or noticed. However, beyond four years, only if the authorities found that the assessee has not furnished true and full disclosure of his income, then alone, the reopening of assessment is permitted and not otherwise. Therefore, the impugned order does not meet out the requirement of Section 147 of the Act and therefore, the entire reopening is to be scrapped. 25. In support of his contention, the learned counsel for the pe....
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.... for the exercise of the power under section 147 within a period of four years from the end of the relevant assessment year is the belief reasonably entertained by the Assessing Officer that any income chargeable to tax has escaped assessment for that assessment year. In cases where the initiation of the proceedings is beyond the period of four years from the end of the assessment year, the Assessing Officer must necessarily record not only his reasonable belief that income has escaped assessment but also the default or failure committed by the assessee. Failure to do so would vitiate the notice and the entire proceedings. Mere escape of income is insufficient to justify the initiation of action after the expiry of four years. Such escapement must be by reason of the failure on the part of the assessee either to file a return referred to in the proviso or to truly and fully disclose the material facts necessary for the assessment. Thus, the duty of an assessee is limited to fully and truly disclosing all the material facts. The assessee is not required thereafter to prepare a draft assessment order. If the details furnished by the assessee were in conformity with the requirements o....
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....ising the powers of attorney granted to the partners by the assessee, does not in any manner militate against the operation of section 53A of the Transfer of Property Act. The petitioner herself recognised this fact, when she made her return and reported the capital gain on the basis that she had effected transfer of property in August, 1993. After the assessee parted with possession of the property, such possession having been given only after payment of the agreed consideration for the sale, she could no longer assert possessory rights against the firm to which possession was given. The fact that the firm chose to sell the property in portions to others does not in any manner affect the fact that the petitioner had transferred the property to the firm and the firm had become entitled to invoke section 53A as against the assessee. The Commissioner was therefore right in rejecting the revision petition that was filed by the assessee." 28. The Hon'ble Supreme Court of India in the case of Larsen & Toubro Ltd., Vs. State of Jharkhand in Civil Appeal No.5390 of 2007 (SC), made the following observations: "On being pointed out in audit, it was stated that since the goods had n....
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.... escaped assessment or not must be determined by the Assessing Officer himself. The Assessing Officer cannot blindly follow the opinion of an audit authority for the purpose of arriving at a belief that income has escaped assessment. In the present facts, it would be noticed that the reasons for which the assessment for the assessment year 2006-2007 is sought to be reopened by communication dated 12.10.2011 are identical to the objection of the audit authority dated 29.12.2009. The reasons do not rely upon any tangible material in the audit report but merely upon an opinion and the existing material already on record. This itself indicates that there was no independent application of mind by the Assessing Officer before he issued the impugned notice. On this ground alone, the assumption of jurisdiction by the Assessing Officer can be faulted." 30. It is contended that in the case of Asianet Star Communications P.Ltd., Vs. Assistant Commissioner of Income Tax, Non-Corporate Circle, reported in [2019] 106 taxmann.com 293 (Madras), this Court passed the following observations: "36. Mr.Narayanaswamy next relies on Explanation (1) to section 147, which states that production of accou....
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....ed, the legislature has put in the Explanation, which has been set out above. In view of the Explanation, it will not be open to the assessee to say, for example - "I have produced the account books and the documents: You, the assessing officer examine them, and find out the facts necessary for your purpose: My duty is done with disclosing these account-books and the documents". His omission to bring to the assessing authority's attention these particular items in the account books, or the particular portions of the documents, which are relevant, amount to "omission to disclose fully and truly all material facts necessary for his assessment". Nor will he be able to contend successfully that by disclosing certain evidence, he should be deemed to have disclosed other evidence, which might have been discovered by the assessing authority if he had pursued investigation on the basis of what has been disclosed. The Explanation to the section, gives a quietus to all such contentions; and the position remains that so far as primary facts are concerned, it is the assessee's duty to disclose all of them - including particular entries in account books, particular portions of documents....
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.... that the transaction had concluded. 33. Through an unregistered sale agreement, the title of the property cannot be transferred nor such an agreement can be treated as a valid document under Section 54 of the Transfer of Property Act. Thus, the very contention raised on behalf of the petitioner that the reopening of assessment initiated under Section 147 is without jurisdiction, is incorrect and the authorities competent invoked jurisdiction under Explanation to Sub Clause (c) (i) of the Act, wherein income chargeable to tax had been under assessed, is also contemplated as a ground to invoke Section 147 of the Act for reopening of the assessment. Thus, the jurisdiction point raised is untenable. 34. Regarding the facts, it is admitted by the petitioner that he transferred the property by way of an unregistered Sale agreement dated 15.12.2003 in favour of M/s.Vinayaga Land Developers. Further, it is admitted that General Power of Attorney was executed in favour of one Mr.B.Nagi Reddy dated 19.12.2003, who in turn, executed a registered Sale Deed in favour of another person in the year 2010. Based on these admitted facts, the authorities competent found that during the Assessment ....
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....alid transaction for the purpose of Income Tax Act. Assessees are doing many transactions in a calculated manner and at the advice of legal and account any brains. Therefore, the complex nature of transactions, which all are made, not within the parameters of the provisions of any law of the land, then the Income Tax department cannot consider such transactions as a valid transactions for the purpose of accepting the informations provided or the transactions made. In other words, any illegal or irregular transactions made by an assessee cannot be considered as a valid transaction for the purpose of assessment, though the said transaction appears to be genuine, as far as the assessee is concerned. Make it more clear, in the context of the case on hand, Sale agreement can never be considered as completion of sale nor Sale agreement does not provide title to the purchaser. Power of Attorney is given by the assessee in the present case is in favour of Mr.B.Nagi Reddy and power is given on behalf of the owner of the property. Thus, for all purposes, the sale transactions were not completed and the mere Sale agreement or the Power of Attorney would not confer any title to the purchaser n....
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....s. ITO and others, [2003] 259 ITR 19(SC), the procedures were followed in the case of the petitioner. The reasons for reopening of assessment in the case of the petitioner was furnished by the Department. The objections raised by the petitioners were also dealt with and reply to the objections for reopening of the Assessment Year 2010-11 is also furnished in proceedings dated 22.12.2017. In the said proceedings itself, the Assistant Commissioner of Income Tax relied on the judgment of the Apex Court in the case of M/s.Suraj Lamps and Industries, wherein it was held that "a transfer of immovable property by way of sale can only be by a deed of conveyance and in the absence of a deed of conveyance (duly stamped and registered as required by law), no right title or interest in an immovable property can be transferred." 40. Thus, the petitioner has to avail the opportunity to be provided for the purpose of reassessment. Section 147 is an initiation of proceedings and if the Department could able to establish that there is reason to believe, then the Courts are expected to be slow in interfering with such notices as the assessee would be provided with an opportunity to contest their c....