TaxTMI 
TaxTMI 
2025 (9) TMI 557
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....reinafter in short 'the Act') on 12.11.2015 at the same returned income. Later, the case of the assessee was selected for scrutiny through CASS for the reason 'large deduction claimed u/s.54, 54B, 54C, 54D, 54F, 54G & 54GA". In response to statutory notices u/s.143(2)/142(1) of the Act, the assessee filed relevant documents like copies of Sale/Purchase agreement of the scheduled property, Court decree, MoU dated 13.12.2014, bank statement showing receipt of consideration, proof of investment in new property like Sale Deed, construction agreement, bank statement copies, agreement copies for claim of deduction u/s.54F of the Act etc.; and brought to the notice of the AO that he had entered into a sale/purchase agreement with one Mr.Renganatha Naidu on 15.06.2005/30.07.2005 for purchase of an immovable property [scheduled property] for a consideration of Rs. 13,37,700/- which consideration was enhanced to Rs. 14,21,000/-; and that as per the terms of the purchase agreements paid an advance of Rs. 4 lakhs, and the balance consideration had to be paid within '90' days meaning the essence of the contract was to execute the Sale-Deed within '90' days from the date of agreement; and despit....
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....legal title / ownership cannot be transferred by making small advance of Rs. 4,00,000/-. Moreover, the guideline value of the property of the property is Rs. 1,71,06,800 as on 1/4/2014 as per website of Tamil Nadu Registration Department. Hence the compensation of Rs. 1,45,00,000/- received through out of court settlement cannot considered as there is profits or gains arising from transfer of capital asset held by the assessee. 3. In view of the above facts, I have reason to believe that an income of Rs. 1,45,00,000/- has escaped from assessment due to failure on the part of you to declare fully and truly all material facts necessary for the assessment for AY 2015-16" 3. Objections raised by the assessee that the impugned issue cited by the AO in the 'reasons recorded' (supra) has already undergone scrutiny and there was no tangible material in the possession of the AO to re-open the assessment after four years from the relevant AY, without satisfaction of proviso to sec.147 of the Act, was brushed aside by the AO while disposing of the objections. And during the re-assessment proceedings, the AO called for relevant details in connection with the consideration/compensat....
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....tiation of proceedings u/s.147 it was necessary for the AO to show that while recording the reasons u/s 148 he was prima facie satisfied that the escapement of the income chargeable to tax for the relevant assessment year was as a result of the failure on the part of the assessee to disclose truly and fully and truly all material facts necessary for assessment. He submitted that from the recorded reasons itself such satisfaction should have been discernible. Drawing attention to the reasons recorded which has been reproduced at Page No.4 of the impugned order, the Ld.AR submitted that nowhere it was even prima facie apparent that in AO's opinion escapement of income had resulted because of assessee's failure to disclose truly & fully all material facts for its assessment. The Ld.AR therefore submitted that the twin conditions embedded in Section 147 & proviso to it were not fulfilled. The Ld.AR submitted that initiation of reassessment would have been permissible only if the AO was having in his possession fresh and tangible material which came in his possession subsequent to passing of the order u/s.143(3) and its relation with formation of belief should have been spelt out in the....
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.....143(3) and there was no fresh tangible material to form the requisite belief that there was an escapement of income of Rs. 1.45 Crs while the AO recorded reasons to re-open the original assessment wherein, the issue related to capital gains of Rs. 1.45 Crs and the claim of deduction u/s.54F of the Act, which was allowed. Therefore, according to the Ld.AR, on the basis of very same material, the AO's action to re-open the assessment is bad in law being nothing but review or change of opinion, which is impermissible. Therefore, he urged the legal issue against re-opening of assessment be allowed by relying on the decision of the Hon'ble Supreme Court in the case of CIT v. Kelvinator of India Limited reported in 320 ITR 561 (SC) wherein it was held that the AO has no power to review and the power to re-assess can't be based on change of opinion, and therefore he urged for allowing the legal issue against reopening. 6. Per contra, the Ld.CIT, DR supported the order of the Ld.CIT(A) and does not want us to interfere with the action of the Ld.CIT(A). 7. We have heard both parties and perused the records. Since, assessee has challenged the legal issue against re-opening of the asse....
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....an Lever Ltd. vs. R.B. Wadkar [(2004) 268 ITR 332], has, inter alia, observed that "..........It is needless to mention that the reasons are required to be read as they were recorded by the AO. No substitution or deletion is permissible. No additions can be made to those reasons. No inference can be allowed to be drawn on the basis of reasons not recorded. It is for the AO to disclose and open his mind through the reasons recorded by him. He has to speak through the reasons. "Their Lordships added that". The reasons recorded should be self-explanatory and should not keep the assessee guessing for reasons. Reasons provide link between conclusion and the evidence....". Therefore, the reasons are to be examined only as they were recorded by the AO before the issue of the notice. 8. From the aforesaid understanding of law governing the issue at hand, we have to examine the reasons already set out above and test whether the condition precedent necessary to usurp the re-opening jurisdiction can be discerned from perusal of the reasons recorded by the AO in the instant case (supra). From the reasons recorded by the AO (refer Page No.4 supra), at Para No.1, the contents are general in n....
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....rs had elapsed from the end of the relevant assessment year before he was resorting to re-open the assessment. Para No.2 of the reasons recorded revealed that there was no tangible material in possession of the AO to justify re-opening the assessment which fact is clear from AO's own admission at Para No.2 "on perusal of assessment records, it is found that you have received a sum of Rs. 1,45,00,000/-as per MoU dated 13.12.2014 as an out of court settlement to honor the agreement entered by assessee with the landowner, Shri S.Renganathan on 15.06.2005 by giving an advance of Rs. 4,00,000/-", which contents reveal that assessee had disclosed about (i) the assessee entering into unregistered agreement of sale/purchase of scheduled land on 15.06.2005 with land owner Shri S.Renganathan, by giving an advance of Rs.4 lakhs (ii) assessee received Rs. 1.45 Crs. as per MoU dated 13.12.2014 as out of Court settlement to honor agreement dated 15.06.2005 entered by assessee with land owner Shri S.Renganathan by paying Rs. 4 lakhs as advance. Thus, it is clearly discerned from the reasons recorded by the AO itself that all the material facts necessary for the claim of LTCG as well as the claim ....