TaxTMI 
TaxTMI 
2024 (9) TMI 221
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....lowed the petitioner to amend his writ petition and also challenge the final assessment order. However, when the case was taken up in the Court, since on that day the statement was found to be false as the final order of assessment had not been passed, an affidavit has also been filed seeking apology by the Revenue. Be that as it may, we have heard the case finally now. 3. Brief facts which required to be noticed for adjudication of this case are as under:- The petitioner had purchased 92 kanals 2 marlas of agricultural land from three brothers, namely, Manjit Singh, Karnail Singh and Jarnail Singh on 14.05.2012. He further transferred the same to DSS Mega City projects company on 12.06.2012. As the land was agricultural land, it was not eligible to tax as it was not a capital asset, therefore, no income was taxable either in the hands of the seller or with the petitioner. The fact that the land was agricultural was verified by the ITO Intelligence, Karnal in its verification report dated 30.03.2015, which was forwarded to the Director of Income Tax, Intelligence and Criminal Investigation. The petitioner's assessment proceedings were completed and finalized for the year 2013....
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....nal assessment order, which was allowed to be challenged by this Court by amending the writ petition. It was submitted that there was no reason to believe to initiate proceedings under Section 148 of the Act and there was no document which had come on record as all the bank statements and material was already filed at the time of final assessment done under Section 143 (3) of the Act. 5. It was further submitted that the additions proposed in the draft assessment order dated 08.09.2021 related to capital gains and unexplained investment as the source of the same was doubted. However, after furnishing of the reply, the respondents proceeded to pass the order dated 29.09.2021 wherein the assessing officer changed the stand completely and contrary to the reasons recorded earlier and instead of treating the transfer of land under head capital gains, treated the entire consideration received as an adventure in the nature of trade. It has been argued that neither in the reasons recorded nor in the final order of assessment any material was referred indicating the purchase and sale of land as a commercial venture by the assessee. It is submitted that the final assessment order passed b....
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.... of passing of the order dated 29.09.2021 to point out that several opportunities were given to the petitioner to submit his reply and put up his case but he did not avail the same at his own peril for which the action of the revenue cannot be said to be violative of principles of natural justice. It is further stated that the petitioner sold the land measuring 92 kanals 2 marlas to M/s DSS Mega City Projects Private Limited on 12.06.2012 which he had purchased the land from Manjit Singh, Jarnail Singh and Karnail Singh on 14.05.2012. But he failed to substantiate the source of investment and failed to fully disclose all material facts necessary for assessment and, therefore, the assessing officer found the belief that the income chargeable to tax escaped assessment and re-opened the assessment under Section 147 of the Act after seeking necessary satisfaction of the Principal Commissioner of Income Tax, Panchkula. 10. It was also stated that the order passed by the assessing officer was appealable, and therefore, the writ petition should not be entertained. The reliance placed on verification report of the ITO Intelligence dated 30.03.2015 was misconceived. As the petitioner was....
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...., measured aerially,- (I) not being more than two kilometres, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than ten thousand but not exceeding one lakh; or (II) not being more than six kilometres, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than one lakh but not exceeding ten lakh; or (III) not being more than eight kilometres, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than ten lakh. Explanation.-For the purposes of this sub-clause, "population" means the population according to the last preceding census of which the relevant figures have been published before the first day of the previous year;" 15. The first question which is required to be examined is with regard to the alternative remedy. It is true that in the ordinary course, this Court should refrain from entertaining a writ petition where there is a statutory alternative remedy of appeal provided. 16. In Calcutta Discount Company Limited vs Income Tax Off....
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....1961 have undergone an amendment by the Finance Act, 2021, and consequently the matter would require a deeper and in depth consideration keeping in view the earlier case law. Accordingly, we set aside the observations made by the High Court in the impugned judgment observing that the writ petition would not be maintainable in view of the alternative remedy, clarify that this issue would be examined in depth by the High Court if and when it arise for consideration. We do deem it open to examine this issue in the present case after having examined the notice under Section 148A (b) including the annexure thereto, the reply filed by the petitioner and the order under Section 148 (d) of the Income Tах Act 1961." 19. The petitioner in the present petition challenges the proceedings initiated against him by reopening the final assessment invoking powers under sections 147 and 148 of the Act. The question would arise whether this court should entertain the writ petition. Reassessment and reopening of assessment are two issues which are different from regular assessment conducted under Section 143 of the Act. Regular appeal lies against regular assessment before the CIT (Appe....
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....nt of Rs. 19,34,10,000/- has escaped assessment in the case of assessment year 201314. The order further treats the amount as a short term capital gain for sum of Rs.15,58,35,000/- and unexplained investment amounting to Rs. 3,75,75,000/-. However, the final assessment order under Section 143(3) read with Section 147 of the Act holds the entire income of Rs. 19,34,10,000/- as adventure in the nature of business. 24. As per the written submissions and arguments raised before the Court the petitioner has made two fold arguments:- Firstly, there was no reason to believe that there is a case of escape assessment nor there was any new material available with the ITO to reach to a conclusion that the earlier assessment required to be re-assessed; and Secondly, that while notice was issued to the petitioner on 20.03.2020 under Section 148 of the Act alleging that the agricultural land had been purchased without showing the source of investment, and therefore, the income to the extent of Rs.19,34,10,000/- had escaped assessment; an amount of Rs. 15,58,35,000/- was liable to be treated as a short term capital gain; and Rs. 3,75,75,000/- was to be treated as unexplained ....
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....reme Court in Phool Chand Bajrang Lal vs ITO (1993) 4 SCC 77 as well as various judgments cited therein. 27. We have carefully considered the submissions as mentioned above and the facts which have been placed on record. 28. The assessment year is 2013-14. In relation to assessment year 2013-14, we find that the final assessment orders were passed in March, 2016 by the A.O. Before he passed the said order, he had got conducted the verification relating to the transactions done by the assessee of the agricultural land for which he invested Rs. 3,75,75,000/- and later on sold the same to the company M/s DSS Mega City Projects. The land was situated beyond the municipal limits. The ITO (Intelligence), Karnal submitted his verification report to the said effect on 30.03.2015. At the time of final assessment done in March, 2016, the A.O. did not include the said income as part of the business income nor he included it as agricultural income which falls beyond the municipal limits. Thus, it would not come within the ambit of capital asset in terms of Section 2 (14) (iii) (a) and (b) of the Act (supra), and would, therefore not liable to capital gain within the meaning of Income Tax....
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....by this Court of giving a wrong statement in the Court, however, the petitioner was allowed to challenge the final assessment order dated 29.09.2021. 32. From the perusal of the order passed on 29.09.2021, we find that the assessing officer has now completely changed his stand from what he had taken while issuing the draft assessment order. There is no show cause notice issued to the petitioner alleging that the income of Rs. 19,34,100,00/- was acquired as 'adventure in the nature of business'. From the show cause notice, we find that the same was categorized as escape in assessment on account of treating it as a short-term capital gain for a sum of Rs. 15,58,35,000/- and unexplained source of investment Rs. 3,75,75,000/-. Such change of reasons for reassessment and treating the income to be under the heading of 'adventure in the nature of business', is clearly based on surmises of the assessing officer. 33. We have extensively quoted the submissions of the counsel for the respondents, who has proceeded to submit that there was no evidence produced in support of any agricultural activity and would now, therefore, claim under the capital gain under Section 10 (37) of Section 5....
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.... provides for "reason to believe", either the reasons should appear on the face of the notice or they must be available on the material which have been placed before him." 37. We find that the Income Tax Officer or the Assessing Officer may re-open any assessment already done by him if he finds that there has been any relevant material which is disclosed subsequently relating to the said year or assessment and of such a nature which would reflect that such non-disclosure has resulted in an under assessment, he can issue notice under Section 148 of the Act and proceed accordingly. However, the ITO cannot be allowed to merely reopen the assessments already finalized based on his opinion that the earlier assessment was wrongful or that he has a reason to suspect that the assessment was done wrongfully. Re-assessment, therefore, has to be based on cogent material available before it, which was not available at that relevant time. The material on which the assessing officer based its opinion, therefore, cannot be irrelevant, irrational or vague. Merely on account of there being an error found based on a personal opinion of the ITO in relation to the earlier assessment, cannot be a re....