JMD Media Pvt. Ltd, Surendranagar V. ITO, Ward-2(1)(2), Ahmedabad

ITA 107/AHD/2019

AI Insights

The case involves JMD Media Pvt. Ltd., which appealed against the order of the Commissioner of Income-Tax (Appeals)-2, Ahmedabad, concerning the assessment year 2012-13. The primary contention was the validity of the assessment reopened under section 147 of the Income Tax Act, 1961, based on alleged gains from the sale of immovable property. The assessee argued that no such sale deed was registered in the relevant year, and thus, the reopening was based on incorrect information. The Tribunal examined the reasons for reopening provided by the Assessing Officer and the evidence submitted by the assessee, including correspondence with the Sub-Registrar and the Enforcement Directorate, which indicated that the property sale was under litigation and not registered.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 133511 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-01-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 15-01-2023
• Assessment Year: 2012-2013
• Appeal Filed On: 24-01-2019
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reason to believe; Set aside
• Section: 147

Judgement Text

आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरणआयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण, अहमदाबाद 瀈यायपीठ अहमदाबाद 瀈यायपीठअहमदाबाद 瀈यायपीठ अहमदाबाद 瀈यायपीठ ‘B’ अहमदाबाद। अहमदाबाद।अहमदाबाद। अहमदाबाद। IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, AHMEDABAD BEFORE SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER AND SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER ITA No.107/Ahd/2019 Assessment Year : 2012-13 JMD Media Pvt. Ltd. 5/19/10, Nr. Jagdish Ashram At & Post Lakhtar Surendranagar. PAN : AACCJ 0837 H ITO, Ward-2(1)(2) (erstwhile ITO, Ward - 2(1)(2) Ahmedabad. (Applicant) (Responent) Assesseeby : None Revenue by : Shri Rakesh Jha, Sr.DR स ु नवाई क तार ख/Date of Hearing : 16/01/2023 घोषणा क तार ख /Date of Pronouncement: 18/01/2023 आदेश/O R D E R PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER Present appeal has been filed by the assessee against order passed by the ld.Commissioner of Income-Tax (Appeals)-2, Ahmedabad [hereinafter referred to as “ld.CIT(A)”] dated 7.12.2018 passed under section 250(6)of the Income Tax Act, 1961 [hereinafter referred to as "the Act" for short]for the Asst.Year 2012-13. 2. At the time of hearing, none appeared on behalf of the assessee. Notice of hearing was sent to the assessee through RPAD at the address mentioned in form no.36. However, the same was returned by the postal authority with remark “left”. The assessee ITA No.107/Ahd/2019 2 has not intimated the Registry about change of address if any. Therefore, we proceed to decide the appeal of the exparte after hearing the ld.DR and considering the material available on record. 3. Ground no.1 raised by the assessee is a legal ground challenging validity of the assessmentframed under section 147 of the Act on the ground that there was no valid reason for the formation of belief of escapement of income. The said ground reads as under: “The Ld CIT(A) - 2 has erred in law and on the facts in confirming the reopening of the assessment whereas the very information provided by the Sub-Registrar being wrong, the decision/finding based upon the wrong information cannot be held legal. So the reopening being illegally initiated, there is no valid reason to believe in the case, the re-opening itself being bad in law should be set aside and dropped.” 4. We have gone through order of the ld.CIT(A) where the assessee had challenged reopening as bad in law in ground no.1 raised therein. The reasons recorded for reopening the case of the assessee are placed before us at P.B 102 and are reproduced hereunder : ITA No.107/Ahd/2019 3 As is evident from the above escapement of income as per the AO related to gains on sale of immoveable property not returned to tax and the information came in possession of the AO regarding the said transaction from the sub registrars office where the sale deed was registered. 5. Before the Ld.CIT(A) the assessee pointed out that the information was incorrect as no sale deed was registered in the impugned year. His submissions challenging the validity of the reopening for the above reason are reproduced at para 4.2 of the order as under: ITA No.107/Ahd/2019 4 6. A perusal of the above reveals that the assessee had pointed out that the fact of information received from the Registrar regarding sale of property by the assessee was incorrect since there was no such sale deed registered with the Registrar. ITA No.107/Ahd/2019 5 7. The ld.CIT(A)’s finding after considering submission of the assessee at para 4.3 of the order are as under: “4.3. I have carefully considered the facts of the case, assessment order and submission of the appellant. The Assessing Officer has reopened the assessment duly recording the reasons for escapement of income and has followed dire procedure of law. Therefore, the reopening is held to be valid and the ground of appeal is dismissed.” 8. The ld.DR has relied on the orders of the Revenue authorities. 9. We have considered the challenge to the reopening by the assessee as per his submissions made before the ld.CIT(A) and have taken note of the reasons recorded by the AO as also the order of the ld.CIT(A) dismissing the ground raised by the assessee in this regard. On going through all the above, we find that the ld.CIT(A) has passed a very cryptic non-speaking order on the issue, giving no reasons as to how he found reopening to be valid in the light of the facts before him, and contentions made by the assessee. On the contrary, we find merit in the contentions of the assessee that reopening was based on incorrect information. A perusal of the reasons recorded by the AO reveals that information in his possession leading to belief of escapement of income was obtained from Sub-Registrar, Memnagar, Ahmedabad, revealing that the assessee has sold an immovable property vide registration no.12975 dated 12.12.2011 for registered price of Rs.2,25,00,000/- and in the return ofincome no capital gainhadbeendisclosed with respect to the same. The assessee, while challenging the reasons for reopening, had contended that fact of registration of sale of property by the assessee during the impugned year was an incorrect fact, and that no sale deed had been registered during the year at all. The assessee had pointed out to the ld.CIT(A) that even before the AO, he had objected to reopening for this reason .Copy of the letter filed to ITA No.107/Ahd/2019 6 the AO objecting to the reopening, stating that Enforcement Directorate had restrained passing of the title of the property, is placed before us in PB Page No.86 to 91 alongwith copy of the letter of the Sub-Registrar stating that the property is not registered. The relevant contents of the said letter are as under: “(5) Further we submit that as a matter of fact vide letter dated 10/01/2012 issued by Sub-Registrar, Ahmedabad to the Asst. Directorate of Enforcement, Ahmedabad the document is not registered and hence the issue is under litigation when the Directorate of Enforcement has retrained the passing of title of the property. A copy of said letter written by Sub- Registrar is attached EXHIBIT-A. (6) By a letter dated 21.07.2011, the Asst.Director of Enforcement Directorate had written to Joint Sub Registrar (6) By a letter dated 21.07.2011, the Asst.Director of Enforcement Directorate had written to Joint Sub Registrar asking him "Not to allow transfer/sale of the property to any person/ party without prior approval of the Directorate of Enforcement . A copy of said letter now obtained by us is attached EXHIBIT-B. (7) The said directions were reiterated by letter dated 21.12.2011 (Copy attached EXHIBIT-C). 10. Placed at PB Page No.72 to 95 is another reply of the assessee to the AO dated 25.1.2016 reiterating the contentions and enclosing therein copies of the following: “i) Copy of letter dated 10.1.2012 by Sub-Registrar, Ahmedabad to Assistant Director, Directorate of Enforcement, Ahmedabad which clearly states that the document under reference is not registered. Copy of letter addressed to the Buyer MrJagdishbhai Ishwarbhai Patel ii) Copy of letter dated 27.1.2012 from Director of Enforcement to Assistant Sub-Registrar, Ahmedabad restraining the Sub-Registrar to register the document under reference. iii) Copy of Letter dated 4.1.2012 from the Buyer of the property, JagdishbhaiIshwarbhai Patel HUF, Krushub J Patel HUF and Ankit J Patel HUF to Sub-Registrar, Ahmedabad requesting for the registration of the document ITA No.107/Ahd/2019 7 iv) Copy of Letter dated 16.12.2011 from Sub-Registrar, Ahmedabad to Assistant Director, Directorate of Enforcement intimating regarding the presentation of document for registration and for necessary direction v) Copy of letter dated 21.12.2011 from Director of Enforcement to Sub- Registrar office restraining them to register the document.” 11. It is clearly evident from the above that the assessee had substantiated with evidence his contention that facts noted in the reasons of registration of a property sold by the assessee during the year was incorrect fact. All relevant documents had also been filed to the ld.CIT(A) to prove that the Enforcement Directorate had restrained from registering the sale of the property and the sub registrar had acceded to his request. He had further pointed out that sub-Registrar had in fact stated on oath, in an affidavit before the Hon’bleGujarat High Court in PMLA proceeding of the same property, that the sale deed had not been registered because of the directions of the Directorate of Enforcement Ahmedabad who had made provisional attachment of the property. This affidavit of the sub-Registrar was also filed to the ld.CIT(A). 12. But we find that the ld.CIT(A) has conveniently chosen to ignore this contention of the assessee, and has gone on to hold that the reasons recorded were sufficient for assumption of jurisdiction to frame assessment by the AO under section 147 of the Act. 13. The Ld.DR was unable to demonstrate that in the light of facts as pointed out by the assessee as above of no transfer of the impugned property being registered ,how could the reasons recorded by AO noting facts to the contrary have given him valid jurisdiction to frame assessment u/s 147 of the Act. 14. In view of the above, since we have noted that fact recorded by the AO in the reasons for belief of escapement of income of the ITA No.107/Ahd/2019 8 assessee, being sale of property by the assessee during the year, was incorrect fact, the reasons recorded by the AO, we hold, could not have lead to formationof believe of escapement of income of the assessee. In view of the same, the jurisdiction assumed by the AO to frame assessment under section 147 of the Act is held to be not in accordance with law, and the assessment order so passed is held to be invalid and accordingly quashed. This legal ground raised by the assessee in Ground No. is allowed. 15. So far as additions on merit are concerned, in view of our finding that the assessment order passed under section 147 of the Act is bad in law, adjudication of quantum additions raised in the remaining ground is mere academic exercise, the same are not being dealt with by us. 16. In view of the above, appeal of the assessee is allowed in the terms indicated above. Order pronounced in the Court on 18 th January, 2023 at Ahmedabad. Sd/- Sd/- (SIDDHARTHA NAUTIYAL) JUDICIAL MEMBER (ANNAPURNA GUPTA) ACCOUNTANT MEMBER Ahmedabad, dated 18/01/2023 vk*