TaxTMI 
TaxTMI 
2023 (7) TMI 1093
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....ng Officer (AO). 5. It is Mr Gupta's submission that even the authority granting approval has not applied its mind as to whether the AO had sufficient material available with him to form a belief that income which was otherwise chargeable to tax had escaped assessment. 6. The record shows that the petitioner had filed his Return of Income (ROI) for the aforementioned AY i.e., AY 2011-12 on 29.06.2012. 6.1 The ROI was processed under Section 143(1) of the Income Tax Act, 1961 [in short, "the Act"]. 7. The petitioner was served a notice dated 24.01.2014 under Section 133(6) of the Act. To this notice, the petitioner filed his response on 05.02.2014. 8. Thereafter, the petitioner was issued a non-statutory letter dated 10.06.2018 by the Assistant Commissioner of Income Tax (ACIT) seeking details of lands sold. The petitioner was also directed to furnish the documents with regard to the sale. 8.1 This notice was replied to by the petitioner via communication dated 23.06.2014. 9. The afore-mentioned correspondence led to the ACIT serving the notice dated 29.03.2018 under Section 148 of the Act on the petitioner. 10. The petitioner filed a reply on 11.04.2018 to t....
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.... Rs. 92,00,00/- whereas the market value as per the sale deed was Rs. 3,42,89,000/-. The AO has suggested that the necessary action as per the provision of Sec. 50C of the Act may be taken in hands of the assessee. On making enquiry by the ACIT, Cir. 31(1), New Delhi [prerestructuring] for A.Y. 2011-12, the assessee had submitted that following explanation with respect to the above stated transaction: "....the circle rate is higher than market rate because the land is uneven as this is a hilly land so very small portion of the land is usable....". Further, the assessee has enclosed a list containing details of lands sold during the financial year 2010-11, which is hereunder: S.No. Name of Party Area (Sq.Mtr.) Registry S.No. Amount actually received. Amount as per Circle Rate 1 M/s Krit Yug Infrabuild Pvt. Ltd. 44530 1284 I-10 92,00,000 3,42,89,000 2 Sh. Kamal Kant Malik 36432 10-I-10 65,00,000 2,80,52,640 3 M/s Nyas Infrabuild Pvt. Ltd. 36432 1127-I-10 75,00,0000 2,80,52,640 4 M/s Shree vaas Infrastructure Pvt. Ltd. 48600 204-I-11 1,00,00,000 3,74,22,000 5 M/s ....
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....ng land in Tehri Garhwal. One naali is equivalent to 20 muthis which further is equivalent to 200 sq. mtrs. The cost of acquisition as on 1.4.1981 even if taken at the highest rate, the cost of acquisition of land sold by Maharaja Manujendra Shah should have been Rs. 2,000/- per 250 sq. mtrs. * The A.O. is required to further work out the value of capital gain tax liability after taking into consideration the material found during the course of search and collected during the course of post search enquiries. In view of the above facts and documents found and seized during the course of search and perusal of ITR for A.Y. 2011-12, it is evident that the cost of acquisition claimed is much higher. In light of the facts it is therefore, requested to examine the same facts and take appropriate action in the light of provision of section 50C of Income Tax Act, 1961, by invoking the provision of section 153C/148 as deemed fit at your end.....". 3. On perusal of all details contained in the above referred letter/information, it is observed that the assessee had sold the above stated lands below the circle rate as prescribed by the stamp valuation authority. Hence, the pro....
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....ssary modifications, apply in relation to such reference as they apply in relation to a reference made by the Assessing Officer under sub-section (1) of section 16A of the Act. Explanation I.- For the purposes of this section, "Valuation Officer" shall have the same meaning as in clause (r) of section 2 of the Wealth-tax Act, 1957 (27 of 1957). Explanation 2.- For the purposes of this section, the expression "assessable" means the price which the stamp valuation authority would have, notwithstanding anything to the contrary contained in any other law for the time being in force, adopted or assessed, if it were referred to such authority for the purposes of the payment of stamp duty. (3) Subject to the provisions contained in sub-section (2), where the value ascertained under sub-section (2) exceeds the value adopted or assessed or assessable by the stamp valuation authority referred to in sub-section (), the value so adopted or assessed or assessable by such authority shall be taken as the full value of the consideration received or accruing as a result of the transfer. Following section 50CA shall be inserted after section 50C by the Finance Act....
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....re of the legal position that at the stage of issuing the notice u/s 148, the merits of the matter are not relevant and the Assessing Officer at that stage is required to form only a prima facie belief or opinion that income chargeable to tax has escaped assessment". 7.1 Further, pin the case of Rajesh Jhaveri Stock Brokers Pvt. Ltd. V. ACIT (2007) 291 ITR 500/161 Taxman 316 (Supreme Court). The Hon'ble Apex Court has held that:- "All that is required for the Revenue to assume valid jurisdiction u/s 148 is the existence of cogent material that would lead a person of normal prudence, acting reasonably, to an honest belief as to the escapement of income from assessment." 8. To conclude, I have independently examined the entire gamut of facts and circumstances surrounding the case as also the material available on record and after due application of mind on the same as brought out above, I, therefore, have, reasons to believe that an income of Rs. 18,56,68,835/- in the case of the assesseee that was chargeable to tax under the provisions of Income Tax Act, 1961 has escaped assessment during the A.Y. 2011-12 by reason of the failure on the part of the assesse....
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....alue adopted by any authority of the state government, for the purposes of payment of stamp duty in respect of such like transfers, the value so adopted or assessable, for the purposes of Section 48 of the Act, is deemed to be the full value of consideration accrued as result of such transaction. 26. In other words, the value fixed by the stamp valuation authority, which is the circle rate, should be taken as the full value of the consideration while calculating capital gains. 27. As noted above, there is no dispute whatsoever that capital gains were calculated by the petitioner by taking the circle rate into account; the cumulative value of which, as noticed above, was Rs. 20,26,60,280/-. Therefore, clearly, the provisions of Section 50C were not applicable, as the computation of capital gains was based on the circle rate. 28. A careful perusal of paragraphs four (4) and five (5) of the reasons recorded by the AO would show that the real difference in the long-term capital gain upon the sale of subject lands, as calculated by the respondent/revenue, and that which the AO has arrived at, was on account of the cost of acquisition. 29. The cost of acquisition that the pet....
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....et value of land as on 01.04.1981, by multiplying Rs. 8 per square meter with the total land area sold by the petitioner i.e., Rs. 2,63,194/-. The product of which is Rs. 21,05,552/-. 32. Counsel for the parties agree that the AO had to index the cost of acquisition, which is what the petitioner did. 33. Notwithstanding the above, the AO, as noticed above, has not applied his mind to the input received by him from the DCIT via letter dated 27.01.2015. It appears that the AO did not indicate as to why Rs. 8 per square metre was taken as the rate, as against Rs. 10 per square metre, while ascertaining the cost of acquisition. 34. Mr Gupta also says that the AO did not have the relevant material in his possession. This aspect has been emphasized by Dr Gupta by referring to assertions made in paragraphs 11 and 24 of the writ petition, wherein it is averred that the AO did not have relevant material in his possession before triggering the reassessment proceedings. 34.1 This plea is supported by Dr Gupta by referring to the counter-affidavit, where there is no denial qua the assertion made in the writ petition. 35. What makes matters worse is that the Principal Commissione....