TaxTMI 
TaxTMI 
2026 (8) TMI 376
X X X X Extracts X X X X
X X X X Extracts X X X X
.... deserved to be held as illegal, bad in law and without jurisdiction. 2. BECAUSE the Id. "CIT(A)" has erred in law and on facts in not quashing the assessment order even though the notice u/s. 148 of the Act, in pursuance of which the assessment proceedings u/s. 147 were initiated, having been issued after expiry of six years, was barred by limitation. 3. BECAUSE the Id. "CIT(A)" has erred in law and on facts in not quashing the assessment order by holding the same as illegal, bad in law and without jurisdiction even though reason to believe was recorded on incorrect facts. 4. BECAUSE the ld. "CIT(A)" has erred in law and on facts in not quashing the assessment order by holding the same as illegal, bad in law and without jurisdiction, even though the assessment was reopened u/s. 147 of the Act on change of opinion of the Assessing Officer. 5. BECAUSE the ld. "CIT(A)" has erred in law and on facts in not quashing the assessment order by holding the same as illegal, bad in law and without jurisdiction, even though the reason to believe was recorded merely on the basis of information available on Insite Portal Verification Module without independent....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 10. BECAUSE the Id. "CIT(A)" missed to note that the Assessing Officer had made the addition of Rs. 7.60,87,000/- under the head "income from other sources" by invoking section 56(2) of the Act on a mis-conception that the assessee had purchased the immovable property whereas as per the material and information on record, the assessee did not purchase any immovable property during the year under appeal and on a due consideration of this fact itself the Id. "CIT(A)" ought to have deleted the addition made in the assessment instead of directing the Assessing Officer to adopt the full value of consideration as given in the valuation report. 11. BECAUSE the direction given by the Id "CIT(A)" to adopt the value given in the valuation report (issued by the Valuation Officer after passing of the assessment order) is contrary to the provisions of law and as such the said direction is not sustainable. 12. BECAUSE, otherwise also, even on merits, looking to the adverse features of the property and the adverse circumstances under which the assessee was compelled to sell the property at a price below the stamp value, the Id. "CIT(A)" ought to have directed the Assess....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d the matter to the technical unit for determination of the fair market value of the property as per the provisions of section 56(2) r.w.s. 50C. However, the valuation report was not received from the technical unit till the date of passing of the assessment order. Therefore, the AO completed the assessment by making an addition of Rs. 7,60,87,000/- recording the fact that if the valuation report was received after the completion of assessment proceedings, an amendment / rectification would be made accordingly as per the provisions of section 154 and section 155 of the Income Tax Act. 3. Aggrieved with the said assessment order, the assessee went in appeal before the ld. CIT(A). It was submitted that he was an individual aged around 82 years who had sold a commercial property at B-17, Main Bhootnath Road, Indira Nagar, Lucknow that was occupied by various tenants. Since the tenants were not cooperative and had created multiple problems for the assessee, the assessee decided to dispose of the said property in his time so that his daughters did not have to suffer on account of any dispute later. He accordingly contacted some brokers for the purpose but was informed that since the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....2021, the ld. AO had acknowledged that the assessee had filed a return for the A.Y. 2013-14 on 10.03.2014 in which total income had been declared at Rs. 6,95,570/-. Thus, the entire satisfaction of the Assessing Officer had been derived on account of an incorrect assumption. Furthermore, the ld. AR argued that on the basis of AIR information with regard to the same transaction, an enquiry had already been done by ITO, Ward-1(4), Lucknow and after consideration of the reply submitted by the assessee, the ITO, Ward-1(4), Lucknow had chosen not to proceed with any further with regard to the information received in the annual information report. The ld. AR pointed out that the reasons to believe did not even exhibit an awareness of the fact that this enquiry had previously taken place and that the then Assessing Officer had been satisfied with the explanations filed by the assessee. Therefore, it was argued that since the reasons had been recorded without reference to the earlier enquiry, wherein the assessee had explained his situation and without knowledge of the fact that the assessee had already filed a return of income for the said assessment year, the entire reopening was bad in ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....minishes for the first and second floor. Furthermore, there was no parking available in the complex which was a huge negative point for receiving market value of the property. There was also a rumour that the metro would run in front of the property and the market value was likely to be reduced drastically. The assessee had not been able to find a buyer for four to five years and therefore, had to sell the property to existing tenants at much lower rates after waiting for five years. None of these facts had been considered by the ld. CIT(A) while directing the AO to adopt the rates of the Valuation Officer. Accordingly, he prayed that first since the assessment was bad in law and secondly because the assessee's objections had not been considered, the order was liable to be quashed and the assessee granted relief. 5. On the other hand, Sh. R.K. Agarwal, CIT DR (hereinafter referred to as the ld. DR) arguing on behalf of the Department submitted that the Department was relying on the following Supreme Court decisions which had held that reopening could not be held to be invalid. i. Raymond Woolen Mills Ltd., (1999) 236 ITR 34 (SC) In the above decision, the Hon'b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mpleted at a particular value, and the valuation report was received subsequently, the rate adopted in the valuation report would supplant the rate determined earlier by the AO without the benefit of the valuation and the order rectifying the same should be passed under section 154. Hence there was no infirmity in the orders of the ld. CIT(A). As regards the objections filed by the assessee, since they had been filed before the Valuation Officer, they were deemed to have been considered by the Valuation Officer before finalizing the valuation. Accordingly, he prayed that the orders of the ld. CIT(A) may kindly be upheld. 7. We have duly considered the facts and circumstances of the case and the arguments of both parties. We find that the two judgments cited by the Department do not help it in the given facts and circumstances of the case. In the case of Raymonds Wollen Mills Limited (supra), the Hon'ble Supreme Court had held that at the stage of reopening, the only thing to be seen was whether there was prima facie some material on the basis of which the Department could reopen the case but the sufficiency or correctness of such material could not be considered at this stage an....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ad sold an immovable property and declared such sales in the return of income filed by him. However, while recording the reasons, the AO had noted that the assessee had not filed a return of income. The Hon'ble Gujarat High Court held that the reasons recorded by the AO proceeded on two fundamental grounds, one was that the property in question was sold for a particular sum and secondly that the assessee had not filed a return of income. However, since the fact of the assessee having filed a return was not considered by the AO while recording the reasons, the impugned notice was bad in law and was accordingly fit to be quashed. In the case of Bankim Bhagwanji Chaauhan vs. ITO (supra), two brothers sold their immovable property by way of registered sale deed and field their return of income. On the basis of AIR, the AO served a notice upon them stating that they had not filed their return of income and to show cause why proceedings under section 148 should not be initiated against them. The assessee's filed their reply submitting the explanations but the notice under section 148 was issued. The Hon'ble High Court held that while passing the order of disposal of the objections agains....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., we find that the satisfaction of belief that income had escaped assessment hinged upon two things. Firstly, that the assessee had sold an immovable property at Rs. 2,61,00,000/- of which the stamp value of the property was Rs. 10,21,87,000/- and therefore, there was clear cut escapement of Rs. 7,60,87,000/- in accordance with the provisions of section 50 C of the Income Tax Act. Secondly, the AO had recorded the fact that the assessee had not filed his ITR for the F.Y. 2012-13 relevant to the assessment year 2013-14. Thereafter, the AO had invoked Explanation 2(a) to hold that where no return of income had been furnished by the assessee although his total or the total income of any other person in respect of which he was assessable under the Act during the previous year exceeded the maximum amount which was not chargeable to tax, the same would be held to be a case where income chargeable to tax had an escaped assessment. Thus, from the reasons by the AO, it is quite clear that his belief that the assessee had not filed a return of income, was intrinsic to his belief that income had escaped assessment in the hands of the assessee and since the AO was not aware that a return had b....