TaxTMI 
TaxTMI 
2020 (1) TMI 1666
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....sing officer. 2. That on the facts and circumstances of the case, Learned Commissioner of Income Tax (Appeals) has grossly erred in holding that provisions of section 50C of the Act have rightly been invoked since existence of memorandum of understanding prior to 01.10.2009 could not be proved with irrefutable evidence. 3. That both assessing officer and learned CIT(A) have grossly erred in law in failing to appreciate that in light of the facts of the case, the deeming provisions of section 50C were not attracted. 4. That both assessing officer and learned CIT(A) have grossly erred in law in failing to appreciate the "scope" and "Domain" of pre amended section 50C of the Act as it was then so available on the statue. 5. That on the facts and circumstances of the case, Learned Commissioner of Income Tax (Appeals) has grossly erred in holding that capital gain is to be worked out by taking sale consideration of property at Rs. 2,03,00,000/- as determined by Departmental Valuation Officer as against actual sale consideration of Rs. 1,21,00,000/-. 6. That various objections filed towards valuation determined by departmental Valuation Office....
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....e consideration of the property. 5.18 Having considered the submissions made in this regard, I find that provisions of section 50C (2) of the IT Act do provide for making a reference to the valuation Officer, where it is contended that value adopted by the stamp valuation authority is higher than the fair market value of the property as on the date of transfer, Further, provisions of subsection (3) of section 50C of the IT Act also provide that where the value ascertained under subsection(2) exceeds life value adopted by the stamp valuation authority, then the value so adopted by such authority shall be taken as the full value of consideration received as a result of transfer. In this case, the stamp valuation authority had adopted the value of the property as per circle rate and as against this DVO has valued the property at Rs, 2,03,00,000 which is less than the stamp duly value. Therefore, the benefit of this reduction in deemed sale consideration has to be given to the appellant as provided under the provisions of section 50C (2) of the IT Act. The AO is being directed to re-compute the quantum of long term capital gains on sale of property by taking the sale considera....
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.... ii).DCIT Vs. Greal Wall Marketing Pvt. Ltd. ITA No.660/Kol/2011 (referred to page 10 para 11) iii).Shri Raj Kumar Goel Vs. ITO ITA No.1028/Kol/2017 (referred to page 5-8 para 11) (iv).Classic Flour & Food Processing Pvt. Ltd. Vs. CIT ITA Nos. 764 to 766/Kol/2014 (page 7 para 12 to 16) v).PCIT Vs. Shodiman Investments (P) Ltd. (2018) 93 taxmann.com 153 (Bom) page 4 para 12 to 14) vi).KSS Petron Pvt. Ltd. Vs. ACIT ITA No. 224/Mum/2014 (referred to page 3 para 8-11) vii).PCIT Vs. Tupperware India Pvt. Ltd. (2016) 236 Taxman 494 (referred to page 3 para 6 and 9) viii).DCIT Vs. National Bank for Agriculture and Rural Development ITA No.4964/Mum/2014 (referred to page 10- 13 para 12) 7. We note that the coordinate bench of this Tribunal in ITA No. 660/Kol/2011 for AY 2002-03 in the case of DCIT Vs. Great Wall Marketing (P) Ltd. vide order dated 03.02.2016 has held as under: "9. We have given a careful consideration of the submissions made by the learned counsel for the assessee. It is clear from the reasons recorded by the AO that the AO acted only on the basis of a letter received from Investigation Wing, New Del....
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.... by the Revenue to support its case, was made. The context, is as under: "The scope and effect of section 147 as substituted with effect from April 1, 1989, as also sections 148 to 152 are substantially different from the provisions as they stood prior to such substitutions. Under the old provisions of section 147, separate clauses (a) and (b) laid down the circumstances under which income escaping assessment for the past assessment years could be assessed or reassessed to confer jurisdiction under section 147(a) two conditions were required to be satisfied: firstly the Assessing Officer must have reason to believe that income, profits or gains chargeable to, income tax have escaped assessment, and secondly he must also have reason to believe that such escapement has occurred by reason of either omission or failure on the part of the assessee to disclose fully or truly all material facts necessary for his assessment of that year. Both these conditions precedent to be satisfied before the Assessing Officer could have jurisdiction to issue notice under section 148 read with section 147(a). But under the substituted section 147 existence of only the first condition suffices."....
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....lieve that income chargeable to tax has escaped assessment. 12. The re-opening of an Assessment is an exercise of extra-ordinary power on the part of the Assessing Officer, as it leads to unsettling the settled issue/assessments. Therefore, the reasons to believe have to be necessarily recorded in terms of Section 148 of the Act, before re-opening notice, is issued. These reasons, must indicate the material (whatever reasons) which form the basis of re-opening. Assessment and its reasons which would evidence the linkage/nexus to the conclusion that income chargeable to tax has escaped Assessment. This is a settled position as observed by the Supreme Court in S. Narayanappa v. CIT [1967] 63 ITR 219, that it is open to examine whether the reason to believe has rational connection with the formation of the belief. To the same effect, the Apex Court in ITO v. Lakhmani Merwal Das [1976] 103 ITR 437 had laid down that the reasons to believe must have rational connection with or relevant bearing on the formation of belief i.e. there must be a live link between material coming the notice of the Assessing Officer and the formation of belief regarding escapement of income. If the af....
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....y of Rs. 18,36,000/-. To circumvent the law assessee had filed an unregister copy of agreements dated 04.09.2009 and 02.04.2010 as per these agreements the land was transferred to Sirjan Construction Pvt. Ltd. for sum of Rs.1,21,00,000/-. It appears that these agreements are an afterthought and moreover have no legal sanctions. In this case escapement of an amount of Rs.2,25,00,000/-, as per section 48 read with section 50C of the income tax Act, 1961. The section 50C has been amended by the Finance Act 2009 with effect from 01.10.2009 is read as under:- "Where the consideration received of accruing as a result of transfer by an assessee of a capital asset, being land or both is less than the value adopted or assessed (or assessable) by any authority of a State Government (hereafter in this section referred to as the "stamp valuation authority" for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed (or assessable) shall, for the purpose of section-48, be deemed to be the full value of the consideration received or accruing as a result of such transfer. It show that the actual sale of consideration. The total consideration of ....
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....by the AO, we understand that the AO received information from ITO(hq.) (tech) O/o Pr. Commissioner of Income Tax-1 Jalandhar. After getting the information from the ITO(hq.) (tech) O/o Pr. Commissioner of Income Tax-1 Jalandhar, the AO should apply his mind and to examine based on this information that income has escaped assessment. In this case AO has not applied his mind and it is a borrowed satisfaction only. The relevant para of the reasons recorded is reproduced below for ready reference: "In this case an information was received from the ITO (Hq.)(Tech.) O/o Pr. Commissioner of Income Tax-I, Jalandhar. This case was selected under code 007. As per information received the sale deed is Rs. 1,21,00,000/- whereas stamp duty had been paid on Rs.3,46,00,000/- and paid additional stamp duty of Rs. 18,36,000/-. We note that reasons recorded by AO are only on the basis of information from the ITO(hq.) (tech) O/o Pr. Commissioner of Income Tax-1 Jalandhar. Based on this information the AO ought to have conducted further enquiry to examine whether there is tangible material which suggests that income has escaped assessment, which he has not done, therefore based of the bor....
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....gnite/trigger "reason to suspect" for which reopening cannot be made for further examination to be carried out by him in order to strengthen the suspicion to an extent which can form the belief in his mind that income chargeable to tax has escaped assessment. No quantification of income escaping assessment has been spelt out by the AO in the reasons recorded for justifying reopening u/s. 147 of the Act. It has to be kept in mind that merely on an allegations leveled by the ITO(hq.) (tech) O/o Pr. Commissioner, can only raise suspicion in the mind of the AO which is not the sufficient/requirement of law for reopening of assessment. The 'reasons to believe' is not synonymous to 'reason to suspect'. 'Reason to suspect' based on an information can trigger an enquiry to find out whether there is any substance or material to substantiate that there is merit in the information adduced by the ITO(hq.) (tech) O/o Pr. Commissioner, and thereafter the AO has to take an independent decision to re-open or not. And the AO should not act on dictate of any other authority (like in this case information given by the ITO(hq.) (tech) O/o Pr. Commissioner), because then it would be borrowed satisfacti....
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....Officer, where it is contended that value adopted by the stamp valuation authority is higher than the fair market value of the property as on the date of transfer, Further, provisions of subsection (3) of section 50C of the IT Act also provide that where the value ascertained under subsection(2) exceeds life value adopted by the stamp valuation authority, then the value so adopted by such authority shall be taken as the full value of consideration received as a result of transfer. In this case, the stamp valuation authority had adopted the value of the property as per circle rate and as against this DVO has valued the property at Rs, 2,03,00,000 which is less than the stamp duly value. Therefore, the benefit of this reduction in deemed sale consideration has to be given to the appellant as provided under the provisions of section 50C (2) of the IT Act. The AO is being directed to re-compute the quantum of long term capital gains on sale of property by taking the sale consideration at Rs.2,03,00,000 and workout the amount of capital gains accordingly." We note that aggrieved by the order of AO, the assessee filed appeal before CIT(A), who directed the Assessing Officer to refer t....