Shri Nishit Prabhatbhai Desai, Ahmedabad V. The Income Tax Officer, Ward-5(2)(3), Ahmedabad

ITA 1407/AHD/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 2219 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 08-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAKAR SHARMA A R SHRI O P JAIN
• Keywords: Reopening of assessment; Capital asset; Gift; Business income; Revision of order; Opportunity of being heard; Difference of opinion; Right to appeal; Reason to believe; Change of opinion; Reassessment proceedings; Borrowed satisfaction; Set aside
• Section: 143(3); 143(1); 148; 54; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI RIFAUR REHMAN, ACCOUNTANT MEMBER & MS. MADHUMITA ROY, JUDICIAL MEMBER SL. NO(S) ITA NO(S) ASSESSMENT YEAR(S) APPEAL(S) BY APPELLANT VS. RESPONDENT APPELLANT RESPONDENT 1. ITA NO.1407/AHD/2017 2007-08 NISHIT PRABHATBHAI DESAI, 2, KAILASH SOCIETY, BEHIND H. K HOUSE, ASHRAM ROAD AHMEDABAD 380 009. (PAN :AAPPD 7867 B) INCOME TAX OFFICER, WARD 5(2)(3), AHMEDABAD 380 009. 2. ITA NO.1408/AHD/2017 2007-08 ZABUBEN PRABHATBHAI DESAI INCOME TAX OFFICER, WARD 5(2)(4) 3. ITA NO.1409/AHD/2017 2007-08 GAURANG PRABHATBHAI DESAI INCOME TAX OFFICER, WARD 5(2)(2) 4. ITA NO.1410/AHD/2017 2007-08 RINABEN NISHITBHAI DESAI INCOME TAX OFFICER, WARD 5(2)(4) 5. ITA NO.1411/AHD/2017 2007-08 PUNITABEN G. DESAI --DO-- 6. ITA NO.1412/AHD/2017 2007-08 LATE PRABHATBHAI KARSANBHAI DESAI LEGAL HEIR ZABUBEN PRAPHATBHAI DESAI INCOME TAX OFFICER, WARD 5(2)(5) APPELLANT BY : SHRI SAKAR SHARMA, A.R. RESPONDENT BY : SHRI O. P. JAIN SR.D.R. DATE OF HEARING 24.06.2019 DATE OF PRONOUNCEMENT 27.06.2019 O R D E R PER MS. MADHUMITA ROY - JM: BY WAY OF THIS BUNCH OF APPEALS THE ASSESSEES APP ELLANTS HAVE CHALLENGED THE CORRECTNESS OF THE ORDER DATED 03.04.2017 PASSE D BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-5, AHMEDABAD U NDER SECTION 143 R.W.S. ITA NOS.1407 TO 1412/AHD/2017 ASSESSMENT YEAR 2007-08 - 2 - 147 OF THE ACT (HEREINAFTER REFERRED AS TO THE ACT ) FOR ASSESSMENT YEAR (A.Y.) 2007-08. 2. APPEAL BEING ITA NO.1407/AHD/2017 IS TAKEN AS A LEAD CASE. ITA NO.1407/AHD/2017 FOR A.Y. 2007-08 : 3. ONE OF THE GRIEVANCES OF THE ASSESSEE AS RAISED IN THIS APPEAL IS WITH RESPECT TO THE VALIDITY OF THE RE-ASSESSMENT PROCEE DING. THE SAID GRIEVANCE IS ARTICULATE BY GROUND NO.1 WHICH IS AS FOLLOWS: 1. THE LD. CIT (A) ERRED ON FACTS AND IN LAW IN UPHOLDING ACTION OF ASSESSING OFFICER IN ISSUING NOTICE U/S 148 AND MAKING CONSEQ UENTIAL ASSESSMENT U/S 147 WITHOUT APPRECIATING THAT NEITHER NOTICE ISSUED U/S 148 WAS VALID NOR CONDITIONS SPECIFIED TO ASSUME JURISDICTION TO MAKE ASSESSMENT U/S 147 WERE SATISFIED IN AS MUCH AS THERE WAS NO INDEPENDENT RECORDING OF REASO NS BY ASSESSING OFFICER WITHIN THE MEANING OF SECTION 148(2). 4. THE BRIEF FACTS LEADING TO THIS CASE IS THIS THA T THE ASSESSEE BEING AN INDIVIDUAL FILED ITS RETURN OF INCOME ON 25.03.2008 ALONG WITH COMPUTATION OF INCOME AT RS.2,65,840/- WHICH WAS PROCESSED U/S 143 (1) OF THE ACT. SUBSEQUENTLY, THE CASE WAS REOPENED BY ISSUANCE OF THE NOTICE DATED 27.03.2014 U/S 148 OF THE ACT. THE REASON RECORDED BY THE INCOME TAX OFFICER, WARD-10(3), AHMEDABAD FOR SUCH REOPENING IS AS FOLL OWS: THE COMMISSIONER OF INCOME TAX AHMEDABAD -III, AHM EDABAD VIDE LETTER NO. HQ.TECH.III/263/PK DESAI/2013-14 DATED 21.03.2014 A DDRESSED TO THE COMMISSIONER OF INCOME TAX AHMEDABAD-V, AHMEDABAD I N WHICH HE HAS PASSED REVISIONARY PROCEEDINGS U/S 263 OF THE I.T.ACT,1961 IN THE CASE OF SHRI PRABHAT KARSANBHAI DCSAI FOR A.Y. 2009-10 AND GIVEN VARIOUS FINDINGS AFTER MAKING INQUIRIES AND AFTER EXAMINING VARIOUS DETAILS FURNI SHED BY THE ABOVE NAMED ASSESSEE DURING THE SAID PROCEEDINGS THAT PERTAIN T O THE ASSESSEE NAMELY SHRI NISHITH PRABHATBHAI DESAI HAD SOLD THE IMMOVABLE PR OPERTY I.E. LAND TO PACIFICA DEVELOPERS PVT LTD. DURING THE F.Y. 2006-07 AND AGA INST THE SAID TRANSACTION ITA NOS.1407 TO 1412/AHD/2017 ASSESSMENT YEAR 2007-08 - 3 - ASSESSEE HAS RECEIVED AMOUNT OF RS.37,12,500/- ON 2 0/12/2006 ACCORDINGLY HAS RECEIVED TOTAL SALES J CONSIDERATION AGGREGATING OF RS.37,12,500/- WHICH WERE CREDITS REFLECTED IN THE ASSESSEE BANK ACCOUNT. THU S, IN VIEW OF THE FINDINGS GIVEN HEREIN ABOVE (CRYSTAL IS CLEAR THAT THE TOTAL SALES CONSIDERATION RECEIVED BY THE ASSESSEE PERTAIN TO A.Y 2007-08. THE PURCHASER PART Y I.E. M/S. PACIFICA DEVELOPERS PVT. LTD. FLOATED RESIDENTIAL SCHEME ON THE SAID LAND. ON VERIFICATION OF THE CASE RECORDS OF THE ASSESSEE IT IS FOUND THAT, THE ASSESSEE HAS FILED HER RETURN OF INCOME MANUALLY FOR THE AY 2007- 08 ON 25.03.2008 VIDE ACK.NO. 1030009013 WITH DECLARING THE TOTAL INCOME AT RS.2,65,840/-. THE SAME WAS PROCESS ED U/S. 143(1) OF THE ACT ON 24.03.2009 - HOWEVER, NO SCRUTINY ASSESSMENT U/S.143(3) OR OTHER APPLICABLE PROVISIONS OF THE ACT HAS BEEN MADE IN THE INSTANCE CASE. FURTHER, ON VERIFICATION OF THE ASSESSEE CASE RECOR DS, IT IS FOUND THAT THE ASSESSEE HAS DECLARED CAPITAL GAIN IN HER RETURN OF INCOME FOR A.Y.2007-08AND ALSO DECLARED CAPITAL GAIN IN HER RETURN OF INCOME IN SUCCEEDING ASSESSMENT YEARS IN RESPECT OF THE RESIDENTIAL UNITS SOLD BY THE LAN D PURCHASER PARTY I.E. PACIFICA DEVELOPERS PVT. LTD AND NOT SHOWN ENTIRE SALE PROCE EDS RECEIVED AGAINST THE SOLD LAND WHEREAS THE POSSESSION OF THE SOLD LAND WAS GI VEN TO THE PURCHASER PARTY I.E. M/S. PACIFICA DEVELOPERS PVT. LTD WHILE EXECUTING T HE SALE DEEDS. IN THESE CIRCUMSTANCES CRYSTAL CLEAR THAT TRANSACTION FULLY FALLS IN THE CATEGORY OF 'TRANSFER' AS PER THE PROVISION 53A OF TRANSFER OF PROPERTY ACT 1882 AS THE ASSESSEE HAD GIVEN POSSESSION TO THE PURCHASER PART Y I.E M/S. PACIFICA DEVELOPERS PVT LTD. IN ALL MANNERS COMPLETELY. THUS, THE AS PE R THE PROVISION OF SECTION 2(47) OF THE IT ACT AS WELL AS TRANSFER OF PROPERTY ACT I T IS CLEAR THAT TOTAL SALE CONSIDERATION MUST BE OFFERED IN THE ASSESSEE RETUR N OF INCOME FOR A.Y. 2007-08 AS THE WHOLE SALES CONSIDERATION RECEIVED BY THE AS SESSEE DURING THE ASSESSEE DURING THE F.Y. 2006-07. IN VIEW OF THE ABOVE FACT AND FINDINGS THEREFORE I HAVE FIRM REASON TO BELIEVE THAT THE INCOME CHARGEABLE TO TAX TO THE EXTENT NOT LESS THAN RS. 1,00,000/- HAS ESCAPED ASSESSMENT FOR THE AY 2007-08 DUE TO THE OM ISSION OR FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MAT ERIAL FACTS NECESSARY FOR ASSESSMENT. THUS, THE CASE NEEDS TO BE RE-OPENED BY ISSUING NOTICE U/S. 148 OF THE I.T. ACT, 1961. THE TIME LIMIT FOR ISSUE OF NOTICE U/S. 148 FOR A.Y , 2007-08 EXPIRES ON 31/03/2014. THE ASSESSEE FURTHER MADE A REQUEST BY A LETTER DAT ED 28.05.2014 TO TREAT THE ORIGINAL RETURN DATED 25.03.2008 AS RETURN FILED IN RESPONSE TO NOTICE U/S 148 OF ITA NOS.1407 TO 1412/AHD/2017 ASSESSMENT YEAR 2007-08 - 4 - THE ACT. SUBSEQUENTLY, IN REPLY TO THE SHOW-CAUSE D ATED 12.03.2015, THE ASSESSEE INTER ALIA SUBMITTED AS FOLLOWS: WITHOUT PREJUDICE TO OTHER RIGHTS AND ENTITLEMENTS OF THE ASSESSEE, IT IS TO SUBMIT THAT THE REASSESSMENT PROCEEDINGS INITIATED U/S 147 IS BAD IN LAW AS IT IS SOLELY BASED UPON MERE CHANGE IN OPINION AND THE REVENUE H AS NOT BROUGHT ON RECORD ANY MATERIAL EVIDENCES SUGGESTING CONCEALMENT OF AN Y INFORMATION / INCOME BY THE ASSESSEE. HENCE ASSESSMENT PROCEEDINGS SHALL BE DROPPED ON SUCH COUNT TOO. IN LIGHT OF FOREGOING, YOUR GOOD SELF IS AGAIN REQU ESTED TO ACCEPT THE RETURNED INCOME AND CONCLUDE THE PROCEEDINGS. THE ASSESSEE W OULD CRAVE TO GRANT AN OPPORTUNITY OF BEING HEARD MORE PARTICULARLY IN CAS E EXPLANATIONS ARE NOT FOUND ACCEPTABLE ON FACE OF THIS SUBMISSION. HOWEVER, REASSESSMENT PROCEEDING WAS COMPLETED BY A ND UNDER AN ORDER DATED 30.03.2015 WHEREBY AND WHEREUNDER LONG TERM C APITAL GAIN OF RS.34,59,675/- HAS BEEN ADDED TO THE TOTAL INCOME O F THE ASSESSEE. BEING AGGRIEVED BY AND/OR DISSATISFIED WITH THE ORD ER PASSED BY THE LEARNED AO IN REASSESSMENT PROCEEDING AN APPEAL WAS PREFERR ED BEFORE THE LEARNED CIT(A) WHEREIN THE SAID GROUND OF REOPENING WAS FUR THER AGITATED BY THE ASSESSEE. IT WAS ALSO URGED BY THE ASSESSEE THAT BE FORE ISSUING THE ORDER U/S 147 OF THE ACT NO PERMISSION, WHATSOEVER, WAS OBTAINED FROM THE HIGHER AUTHORITY BY THE LEARNED ASSESSING OFFICER. THE SUBMISSION MA DE BY THE ASSESSEE THEREIN IS AS FOLLOWS: 1. ALL THESE GROUNDS RAISED FOR ILLEGAL RE-OPENING OF THE ASSESSMENT U/S 147 FOR AY: 2007-08. FIRST OF ALL, WE HEREWITH SUBMIT THE R EASONS RECORDED BY THE LD. ASSESSING OFFICER FOR RE-OPENING OF ASSESSMENT U/S 147 OF INCOME-TAX ACT. (ANNEXURE 1) 2. NO DOUBT IN THIS CASE NO. REGULAR ASSESSMENT U/ S 143(3) WAS MADE BUT THE RETURN WAS ACCEPTED U/S 143(1) BY THE LD. ASSESSMEN T OFFICER. AFTER HONBLE SUPREME COURT'S JUDGMENT IN CASE OF COMMISSIONER OF INCOME-TAX V/S RAJESH JAVERI STOCK BROKERS PVT. LTD. 291ITR 500 (SC), A G ENERAL BELIEF PREVAILED THAT IN CASE OF ORDER U/S 143(1) PASSED OR INTIMATION U/S 1 43(1)(A) ISSUED, WITHOUT ANY ITA NOS.1407 TO 1412/AHD/2017 ASSESSMENT YEAR 2007-08 - 5 - RESTRICTION RE-ASSESSMENT PROCEEDING CAN BE MADE. I T IS BLANKET PERMISSION. THIS TYPE OF BELIEF IS TOTALLY ILLEGAL. THE RE-OPENING P RE SUPPOSES ' INCOME ESCAPING ASSESSMENT. WE HEREWITH SUBMIT COPY OF IMPUGNED JUD GMENT AS PER (ANNEXURE 2). IN PARA 17 OF IMPUGNED JUDGMENT THE FOLLOWING WORDS ARE VERY IMPORTANT. ' BUT UNDER THE SUBSTITUTED SECTION 147 EXISTENCE OF ONLY THE FIRST CONDITION SUFFICES, IN OTHER WORDS IF THE ASSESSING OFFICER FOR WHATEVER R EASON HAS REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT. IT CONFERS JURI SDICTION TO RE-OPEN THE ASSESSMENT, IT IS HOWEVER TO BE NOTED THAT BOTH THE CONDITIONS MUST BE FULFILLED IF CASE FALLS WITHIN THE AMBIT OF PROVISIO TO SECTION 147. FROM THE ABOVE IT IS EVIDENT THAT EVEN IN CASE OF O RDER PASSED U/S 143(1) AND NO REGULAR ASSESSMENT MADE U/S 143(3), THE LD ASSESSME NT OFFICER ONLY ASSUMES JURISDICTION U/S 147, IF HE HAS REASON TO BELIEVE T HAT INCOME HAS ESCAPED ASSESSMENT. BEFORE ASSUME JURISDICTION U/S 147, IT IS IMPORTANT CONDITION THAT LD. ASSESSING OFFICER MUST HAVE REASONS TO BELIEVE THAT PARTICULA R INCOME OTHERWISE TAXABLE IN PARTICULAR YEAR HAS BEEN ESCAPED FROM ASSESSMENT. NOW WHAT IS REASON TO BELIEVE REASONS TO BELIEVE :- FOR RE-OPENING OF ASSESSMENT AFTER AMENDMENT OF SEC TION 147 WITH EFFECT 01.04.1989. THE ONLY CONDITION IS REQUIRED TO BE FU LFILLED IS AS FOLLOW :- 'THE LD ASSESSING OFFICER MUST HAVE REASONS TO BELI EVE THAT INCOME PROFIT OR GAIN CHARGEABLE TO INCOME-TAX HAVE ESCAPED ASSESSME NT.' IN THIS CONDITION THE IMPORTANT WORDS ARE REASON TO BELIEVE. THE HON'BLE SUPREME COURT AS WELL AS VARIOUS HIGH COURTS HAVE MADE AFFORD TO INTERPRET T HE WORD. REASON TO BELIEVE : - THE HON'BLE SUPREME COURT IN CASE OF LAKHMANI MEVAL DAS INTERPRETED THE WORDS 'REASONS TO BELIEVE AS FOLLOW :- THE PARAGRAP H 11 & 12 IMPUGNED JUDGMENT READS AS UNDER 'AS STATED EARLIER, THE REA SONS FOR THE FORMATION OF THE BELIEF MUST HAVE RATIONAL CONNECTION WITH OR RELEVA NT BEARING ON THE FORMATION OF THE BELIEF. RATIONAL CONNECTION POSTULATED THAT THE RE MUST BE A DIRECT NEXUS OR LIVE LINK BETWEEN THE MATERIAL COMING TO THE NOTICE OF T HE ITO AND THE FORMATION OF THIS BELIEF THAT THERE HAS BEEN ESCAPEMENT OF THE I NCOME OF THE ASSESSEE FROM THE ASSESSMENT IN THE PARTICULAR YEAR BECAUSE OF HIS FA ILURE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACT. IT IS NO DOUBT TRUE THAT THE COU RT CANNOT GO INTO SUFFICIENCY OR ADEQUACY OF THE MATERIAL AND SUBSTITUTE ITS OWN OPI NION FOR THAT OF THE ITO ON THE POINT AS TO WHETHER ACTION SHOULD BE INITIATED FOR REOPENING ASSESSMENT. AT THE ITA NOS.1407 TO 1412/AHD/2017 ASSESSMENT YEAR 2007-08 - 6 - SAME TIME WE HAVE TO BEAR IN MIND THAT IT IS NOT AN Y AND EVERY MATERIAL, HOWSOEVER VAGUE AND INDEFINITE OR DISTANT, REMOTE A ND FARFETCHED, WHICH WOULD WARRANT THE FORMATION OF THE BELIEF RELATING TO ESC APEMENT OF THE INCOME OF THE ASSESSEE FROM ASSESSMENT. THE FACT THAT THE WORD 'D EFINITE INFORMATION' WHICH WERE THERE IN S. 34 OF THE ACT OF 1922, AT ONE TIME BEFORE ITS AMENDMENT IN 1948, ARE NOT THERE IN S. 147 OF THE ACT OF 1961, WOULD N OT LEAD TO THE CONCLUSION THAT ACTION CAN NOW BE TAKEN OR REOPENING ASSESSMENT EVE N IF THE INFORMATION IS WHOLLY VAGUE, INDEFINITE, FARFETCHED AND REMOTE. TH E REASON FOR THE FORMATION OF THE BELIEF MUST BE HELD IN GOOD FAITH AND SHOULD NO T BE A MERE PRETENCE. THE POWER OF THE INCOME-TAX OFFICER TO REOPEN ASSES SMENT, THOUGH WIDE, ARE NOT PLENARY. THE WORD OF THE STATUTE ARE 'REASON TO BELIEF AND NOT 'REASON TO SUSPECT'. THE REOPENING TO THE ASSESSMENT AFTER THE LAPSE OF MANY YEAR IS A SERIOUS MATTER. THE ACT, NO DOUBT, CONTEMPLATES THE RE OPENING OF THE ASSESSMENT IF GROUNDS EXIST FOR BELIEVING THAT INCOME OF THE A SSESSEE HAS ESCAPED ASSESSMENT. THE UNDERLYING REASON FOR THAT IS THAT INSTANCES OF CONCEALED INCOME OR OTHER INCOME ESCAPING ASSESSMENT IN A LARGE NUMBER OF CAS ES COME TO THE NOTICE OF THE INCOME-TAX AUTHORITY AFTER THE ASSESSMENT HAS BEEN COMPLETED, THE PROVISION OF THE ACT IN THIS RESPECT DEPART FROM THE NORMAL RULE THAT THERE SHOULD BE, SUBJECT TO RIGHT OF APPEAL AND REVISION, FINALITY ABOUT ORDERS MADE IN JUDICIAL PROCEEDINGS. IT IS THEREFOR, ESSENTIAL THAT BEFORE SUCH ACTION IS T AKEN THE REQUIREMENTS OF THE LAW SHOULD BE SATISFIED. THE LIVE LINK OR CLOSE NEXUS W HICH SHOULD BE THERE BETWEEN THE MATERIAL BEFORE THE ITO IN THE PRESENT CASE AND THE BELIEF HE WAS TO FORM REGARDING THE ESCAPEMENT OF THE INCOME OF THE ASSES SEE FROM THE ASSESSMENT BECAUSE OF THE LETTER'S FAILURE OR OMISSION TO DISC LOSE FULLY AND TRULY ALL MATERIAL FACTS WAS MISSING IN THE CASE, IN ANY EVENT, THE MA JORITY OF THE LEARNED JUDGES IN THE HIGH COURT, IN OUR OPINION, WERE NOT IN ERROR I N HOLDING THAT THE SAID MATERIAL COULD NOT LED TO THE FORMATION OF THE BELIEF THAT T HE INCOME OF THE ASSESSEE RESPONDENT HAD ESCAPED ASSESSMENT BECAUSE OF THE FA ILURE OR OMISSION TO DISCLOSE FULLY AND TRULY MATERIAL FACT, WE WOULD, THEREFORE UPHOLD THE VIEW OF THE MAJORITY AND DISMISS THE APPEAL WITH COSTS. THE COPY OF IMPU GNED JUDGMENT IS ATTACHED HEREWITH AS (ANNEXURE 3). THE HON'BLE GUJARAT HIGH COURT IN CASE OF SHETH BRO THERS V/S JOINT COMMISSIONER OF INCOME-TAX ( 251 ITR 270) HA S VERY WELL TRIED TO INTERPRET. THE WORDS REASONS TO BELIEVE IN THE FALLOWINGS WORD S PARA 11 OF THE IMPUGNED JUDGMENT READS AS UNDER :- THUS, THE SETTLED LEGAL POSITION CAN BE SUMMARIZED, THAT: - A) THERE MUST BE MATERIAL FOR BELIEF: B) CIRCUMSTANCES MUST EXIST AND CANNOT BE DEEMED T O EXIST FOR ARRIVING AT AN OPINION. ITA NOS.1407 TO 1412/AHD/2017 ASSESSMENT YEAR 2007-08 - 7 - C) REASON T TO BELIEVE MUST BE HONEST AND NOT BASE D ON SUSPICIOUS, GOSSIP, RUMORS OR CONJUNCTURE. D) REASONS REFERRED MUST DISCLOSE THE PROCESS OF R EASONING BY WHICH HE HOLDS ' REASON TO BELIEVE' AND CHANGE OF OPINION DOES NOT C ONFER JURISDICTION TO REASSESS. E) THERE MUST BE NEXUS BETWEEN MATERIAL AND BELIEF . J) THE REASONS REFERRED MUST SHOW APPLICATION OF M IND BY THE AO. WE HEREWITH SUBMIT COPY OF IMPUGNED JUDGMENT AS PER (ANNEXURE 4 ) NOW YOUR HONOR ARE REQUESTED TO EVALUATE THE REASON S RECORDED BY THE ASSESSING OFFICER FOR INITIATOR OF RE-ASSESSMENT PROCEEDING. ON PLAIN READING OF THE REASONS RECORDED BY THE LD ASSESSING OFFICER FALLOW INGS POINTS WERE ARISED. 1. THE LD ASSESSING OFFICER HAS NOT APPLIED HIS MI ND BUT TOTALLY DEPENDED ON THE REVISIONARY PROCEEDINGS U/S 263 DONE BY HON'BLE COM MISSIONER OF INCOME-TAX , 3 IN THE CASE BY SHRI PRABHATBHAI K. DESAI. 2. THE LD ASSESSING OFFICER MENTIONED IN REASONS R ECORDED THAT THE ASSESSES HAD SOLD THE IMMOVABLE PROPERTY, I.E. LAND TO PACIFICA DEVELOPERS PVT. LTD. DURING FY 2006-07 AND RECEIVED RS 37,12,5007- ON FY 2006-0 7. FOR FORMING ABOVE MENTIONED BELIEF THE LD ASSESSING OFFICER TOTALLY R ELIED UPON ORDER OF HON'BLE COMMISSIONER OF INCOME-TAX - 3 (ORDER U/S 263 IN CA SE OF PRABHATBHAI K. DESAI) WITHOUT BRINGING ON RECORD IOTA OF INFORMATION WHIC H IS SUBSTANTIATED HIS BELIEF THAT SALE OF IMMOVABLE PROPERTY HAS BEEN MADE DURIN G AY 2007-08 AND CONSEQUENTLY FOLLOWINGS QUESTIONS ARISED FOR WHICH THE LD ASSESSING OFFICER HAS NO ANSWERS :-. A) IF LAND -WAS SOLD, -WHICH LAND AND -WHERE SAME - WAS SITUATED. B) NATURE OF LAND -WHETHER AGRICULTURAL OR NON-AGR ICULTURE LAND. C) IF AGRICULTURAL LAND SITUATED IN RURAL AREA : N O CAPITAL GAIN. D) THE PROOF REGARDING ASSESSEE'S OWNERSHIP OF LAN D WHICH -WAS ALLEGED TO BE SOLD IN REASON RECORDED. E) IF IMMOVABLE PROPERTY IS SOLD, TRANSFER CANNOT BE COMPLETED UNLESS DOCUMENTS IN -WRITING IS MADE AND SAME -WAS REGISTERED-WITH S UB-REGISTRAR OF STATE GOVERNMENT. J) DATE OF SALE -WHICH IS VERY IMPORTAN T FOR DETERMINING THE CAPITAL GAIN. IN FIRST PARA OF REASONS RECORDED, THE LD ASSESSMEN T OFFICER BELIEVED THAT LAND - WAS SOLD TO PACIFIC DEVELOPERS PVT. LTD. IN THE YEA R 2006-07 BRING BUT HE DID NOT BRING IOTA OF EVIDENCES REGARDING THE DESCRIPTION O F LAND AND IF SOLD BY WHICH DOCUMENT, WHETHER REGISTERED OR UNREGISTERED. ITA NOS.1407 TO 1412/AHD/2017 ASSESSMENT YEAR 2007-08 - 8 - 3. IT SALE OF LAND WAS TAKEN PLACE ON WHICH DATE I T WAS TRANSFERRED IN FAVOR OF PACIFICA DEVELOPER PVT. LTD. THOUGH SALE OF IMMOVABLE PROPERTY IS NOT DEFINED IN INCOME-TAX ACT, BUT SALE IS DEFINED IN THE TRANSFER OF PROPERTY ACT, 1882. THE SECTION 54 OF THE SAID ACT READS AS UNDER: SECTION 54 OF TRANSFER OF PROPERTY ACT: - ' SALE IS A TRANSFER OF OWNERSHIP IN EXCHANGE FOR A PRICE PAID OR PROMISED OR PART PAID & PART PROMISED. SALE HOW MADE: - SUCH TRANSFER IN THE CASE OF TANGIBLE IMMOVABLE PRO PERTY OF THE VALUE OF ONE HUNDRED RUPEES AND UPWARDS AND IN THE CASE OF A REV ERSAL OR OTHER INTANGIBLE THING CAN BE MADE ONLY BY REGISTERED INSTRUMENT. FROM THE ABOVE DEFINITION OF SALE, IT IS EVIDENT TH AT TRANSFER OF IMMOVABLE PROPERTY CANNOT HE MADE UNLESS REGISTERED INSTRUMEN T IS EXECUTED WHILE BASIC REQUIREMENT OF SALE OF LAND NAMELY REGI STERED INSTRUMENT WAS NOT AVAILABLE AT ALL, HOW THE LD. ASSESSING OFFICER-BEL IEVED THAT SALE OF LAND IN FAVOUR OF PACIFICA HAS TAKEN PLACE IN THE F.Y. 2006-07. IN CASE OF SHETH BROTHERS (SUPRA), IT IS HELD THAT REASON TO BELIEVE MUST BE HONEST AND NOT BASED ON SUSPICION, GOSSIP, RUMOR OR CONJUN CTURE. AS THE LD. ASSESSING OFFICER DID NOT HAVE BASIC MAT ERIAL OF SALE, IN SPITE OF THAT HE FORMED THE BELIEF REGARDING SALE OF IMMOVABLE PROPE RTY. EVERY ABOVE MENTIONED WORDS WOULD APPLY TO BELIEF OF LD. ASSESSING OFFICE R AND IN LAW, SAME IS NOT REASON TO BELIEVE. WHICH DID NOT GIVE POWER TO REOP EN THE ASSESSMENT MADE U/S 143(1) OF INCOME-TAX ACT. HERE, THE QUESTION DID NOT ARISE TO DECIDE WHETHER MATERIAL AVAILABLE WAS SUFFICIENT OR INSUFFICIENT FOR FORMING THE BELIEF R EGARDING SALE, AS IN THIS CASE EXCEPT SAY HEARING OF THE LD. COMMISSIONER OF INCOM E-TAX - 3, THERE WAS NO IOTA OF EVIDENCES OR INFORMATION FOR CONSTITUTING SALE O F LAND IN FAVOUR OF PACIFICA DEVELOPER PVT. LTD. IN THE AY. 2007-08. THERE MUST BE A DOCUMENT ON STAMP PAPER AND IT MUST BE REGISTRATION OF IMPUGNED DOCUM ENT TO CONSTITUTE SALE. THE LD. ASSESSING OFFICER HAVE NO EVIDENCE OTHER THAN T WO CHEQUES. THE ABOVEMENTIONED TWO CHEQUES RECEIVED FORM PACIFIED D EVELOPER PVT. LTD. WAS RECEIVED AGAINST SALE CONSIDERATION OF LAND, OR ANY OTHER PURPOSES? WHILE DESCRIPTION OF LAND IS NOT DEFINITE, WHERE IS THE Q UESTION TO DETERMINE THAT TWO CHEQUE RECEIVED -WERE AGAINST SALE CONSIDERATION OF LAND. THERE MAY BE NUMBER ITA NOS.1407 TO 1412/AHD/2017 ASSESSMENT YEAR 2007-08 - 9 - OF PURPOSES OF RECEIPT OF THE MONEY. IT MAY BE A LO AN, IT MAY BE A GIFT, IT MAY BE ADVANCE ETC. IN NUTSHELL NO IOTA OF EVIDENCE OR INFORMATION HAVE BEEN BROUGHT ON RECORD BY LD ASSESSING OFFICER TO FORM THE BELIEF THAT SALE OF L AND HAS TAKEN PLACE IN THE AY. 2007-08 AND CAPITAL GAIN WAS ESCAPED IN THE SAID AS SESSMENT YEAR. THE SECOND PARA OF REASON RECORDED WAS IN CONNECTIO N WITH RETURN FILED AND 143(1) ASSESSMENT WAS MADE. IT HAS NOTHING TO DO WI TH REASON TO BELIEVE. THE THIRD PARA SOME INCORRECT AND FALSE INFORMATION HAS BEEN MENTIONED WHICH WAS CONTRARY TO THE CONTENTION GIVEN IN PARA ABOVE. IN THE PARA 2 ONLY INCOME SHOWN WAS RS 70 ONLY FROM OTHER SOURCES WHERE AS IN THIRD PARA. IT WAS MENTIONED THAT CAPITAL GAIN IN RESPECT OF RESIDENTI AL UNITS SOLD WAS SHOW IN RETURN OF INCOME FOR AY 2007-08. IN FACT NO CAPITAL GAIN W AS SHOW IN AY. 2007-08 AND IN IMMEDIATE SUCCEEDING YEAR FOR SALE OF RESIDENTIA L UNITS BECAUSE NO CAPITAL GAIN WHATSOEVER AROUSE IN AY. 2007-08. FURTHER IN THIS PARA THE LD. ASSESSING OFFICER MENT IONED THAT LAND WAS TRANSFERRED WITHIN THE MEANING OF SECTION 53 A OF T RANSFER OF PROPERTY ACT TO PACIFICA DEVELOPERS PVT. LTD. AND POSSESSION OF THE LAND WAS ALSO GIVEN TO IMPUGNED PARTY AND AS PER SECTION 2(47) OF INCOME-T AX ACT & TRANSFER OF PROPERTY ACT. THE ASSESSES MUST BE OFFERED INCOME A RISED ON SALE CONSIDERATION RECEIVED IN THE FY 2006-07. THE REASONS RECORDED, ITSELF WAS CONTRADICTORY. ON THE ONE LAND. THE LD. ASSESSING OFFICER BELIEVED THAT SALE OF LAND HAS TA KEN PLACE IN FY. 2006-07, ON THE OTHER LAND, HE BELIEVED THAT TRANSFER OF LAND H AS TAKEN PLACE WITHIN THE MEANING OF SECTION 53A OF TRANSFER OF PROPERTY ACT. HOWEVER IN BOTH CASES THERE WAS NO IOTA OF EVIDENCES OR INFORMATION FOR FORMING THE BELIEF THAT INCOME HAS ESCAPED ASSESSMENT. THE LD ASSESSING OFFICER BELIEVED THAT POSSESSION O F LAND WAS GIVEN TO PURCHASING PARTY M/S PACIFICA DEVELOPERS PVT. LTD. THIS BELIEF ALSO CREATED MANY DOUBTS SUCH AS FOLLOWS. (1) NO DESCRIPTION OF LAND, WHICH LAND TRANSFERRED . (2) TRANSACTION PLACED AS PER SECTION 53A OF TRANS FER OF PROPERTY ACT BY WHICH DOCUMENT AS NO BANAKHAT, NO CHITHHI, NO ANY OTHER W RITING WAS BROUGHT ON RECORD BY LD. ASSESSING OFFICER. (3) HOW POSSESSION OF LAND WAS GIVEN TO IMPUGNED PARTY AND AT WHAT DATE IT WAS GIVEN. WHETHER DOCUMENT OR WRITING WAS MADE. GENERALLY POSSESSION IN CASE OF IMMOVABLE PROPERTY CAN BE GIVEN BY ANY WRI TTEN DOCUMENT. OTHERWISE ITA NOS.1407 TO 1412/AHD/2017 ASSESSMENT YEAR 2007-08 - 10 - IN CASE OF DISPUTE WHAT IS THE PROOF IN THE HAND OF POSSESSION RECEIVER AND HE WOULD BE HELPLESS. NO PRUDENCE MAN WOULD TAKE POSSE SSION WITHOUT ANY DOCUMENT OR EVEN SIMPLE WRITINGS. IN PRESENT CASE, NO IOTA OF EVIDENCE IN THE FORM OF AFFIDAVIT BY THE TRANSFEROR POSSESSION LETT ER ON STAMP PAPER OR ANY OTHER WRITING WHICH ENVISAGED THE TRANSFER OF POSSE SSION FROM THE VENDOR TO PURCHASER. THE HON'BLE MADRAS HIGH COURT, IN CASE OF COMMISSIO NER OF INCOME-TAX V/S G- SAROJA {301 ITR 124 (MAD)} HELD AS FOLLOWS :- 'SECTION 2(47)(V) OF INCOME-TAX ACT READ AS UNDER S ECTION 2(47)(V) OF THE COMES INTO AID DEPARTMENT ONLY IF THE CONDITIONS OF SECTION 53A OF THE TRANSFER OF PROPERTY ACT ARE FROM A READING OF THE ABOVE PROVIS IONS, IT IS CLEAR THAT UNLESS THERE IS A WRITTEN IT, SECTION 53A OF THE TRANSFER OF PROPERTY ACT WILL NOT COME INTO OPERATION. THE ABOVEMENTIONED JUDGMENT SQUARELY APPLIED TO OUR CASE. IN OUR CASE ALSO NO WRITTEN DOCUMENT WAS ALSO BROUGHT ON RECORD BY THE ASSESSING OFFICER AND THEREFORE THE LD. ASSESSING OFFICER COULD NOT FORM THE BELIEF THAT A TRANSACTION OF LAND IN VIEW OF SECTION 2(47)(V) HAS TAKEN PLACE DU RING AY. 2006-07. THE COPY IMPUGNED JUDGMENT IS ATTACHED HEREWITH AS (ANNEXURE 5). BELIEF:- BEFORE ISSUING THE NOTICE U/S 148, THE LD. ASSESSIN G OFFICER SHOULD FORM BELIEF THAT THE INCOME WAS ESCAPED. SUCH BELIEF SHOULD NOT BE A PRODUCT OF IMAGINATION OR SPECULATION. THERE MUST BE REASON TO INDUCE THE BELIEF. THE BELIEF SHOULD BE THAT, BY REASON OF OMISSION OR FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY MATERIAL FACTS THAT THE INCOME HAS ESCAPE D ASSESSMENT IN ANY PARTICULAR YEAR. UNLESS THE ESCARPMENT IS AS CONSEQUENCES OR R ESULT OF SUCH OMISSION OR FAILURE THE PROVISION HAVE NO APPLICATION. SUCH A B ELIEF COULD NOT BE ENTERTAINED BY THE ASSESSING OFFICER IF HE HAD NO REASON TO THI NK THAT ESCAPEMENT WAS BY REASON OF SUCH OMISSION OR FAILURE. IT IS BEYOND DOUBT THAT BELIEF FOR ESCAPEMENT OF IN COME MUST BE THAT OF ASSESSING OFFICER. ON PERUSAL OF REASON RECORDED, IT IS IMPRE SSED THAT THE LD. ASSESSING OFFICER HAS NOT APPLIED HIS MIND. WHAT THE LD. COMM ISSIONER OF INCOME-TAX, 3 AHMEDABAD COMMUNICATED HIS SUSPICION THAT LAND HAS BEEN SOLD BY THE ASSESSEE TO PACIFICA DEVELOPERS PVT. LTD. WITHOUT PASSING AN Y PROOF OR EVEN IOTA OF EVIDENCE FOR SUCH BELIEF TO ASSESSING OFFICER. WITH OUT OBTAINING ANY FURTHER INFORMATION, EVIDENCE OR PROOF. HE SIMPLY TOOK SUPE RIORS AUTHORITY AS GOD'S VERSION AS TRUTH. ITA NOS.1407 TO 1412/AHD/2017 ASSESSMENT YEAR 2007-08 - 11 - THE BELIEF OF ASSESSING OFFICER IS SUSPICIOUS. ON T HE ONE HAND HE BELIEVED THAT LAND WAS SOLD AND ON OTHER HAND HE BELIEVE THAT SEC TION 53A OF TRANSFER OF PROPERTY ACT WAS APPLICABLE TO COVER , TRANSACTION OF 2(47)(V) OF INCOME TAX ACT. A SINGLE TRANSACTION CANNOT BE COVERED UNDER BOTH S ECTIONS I.E. 2(47)(I) AS WELL AS 2(47)(V) OF INCOME-TAX ACT., THE SECTION 2(47)(I) R EFERRED TO SALE, EXCHANGE OR RELINQUISHMENT OF THE ASSETS. WHERE AS 2(47)(V) REF ERRED OF TRANSACTION COVER UNDER SECTION 53A OF TRANSFER OF PROPERTY ACT, 1882 . IN THE FIRST PARA OF REASON RECORDED, HE BELIEVED T HAT SALE HAS TAKEN PLACE. WHERE AS SECTION 2(47)(V) REFERRED FOLLOWING :- 'ANY TRANSACTION INVOLVING THE ALLOWING OF THE POSS ESSION OF ANY IMMOVABLE PROPERTY TO BE TAKEN OR RETAINED IN PART PERFORMANC E OF A CONTRACT OF THE NATURE REFERRED TO IN SECTION 53A OF TRANSFER OF PROPERTY ACT, 1882. ' IN PARA THIRD OF REASON RECORDED, HE BELIEVED THAT TRANSACTION OF IMMOVABLE PROPERTY WAS MADE FOR PART PERFORMANCE OF CONTRACT. IF SALE WAS MADE, IT WAS FALL COMPLETION OF CONTRACT. IF TRANSACTION WAS MADE AS REFERRED TO SECTION 53A OF TRANSFER OF PROPERTY ACT IT WAS PART COMPLETION OF CONTRACT. HOW BOTH CAN BE POSSIBLE. IF FULL THEN IT FALL AND IF PART, THEN PA RT FROM THE ABOVE IT WAS PROVED THAT BELIEF OF THE ASSESSING OFFICER WAS BASED ON WITHOU T INFORMATION, EVIDENCE OR PROOF. IT WAS ONLY ASSUMPTION OR PRESUMPTION OR SUS PENSION. WHICH IS NOT PERMITTED IN LAW TO ISSUE NOTICE U/S 148 OF INCOME- TAX ACT AND CONSEQUENTLY A RE- ASSESSMENT FRAMED WAS ILLEGAL, ULTRAVIRES & LIABLE TO BE QUASHED. NEXUS BETWEEN THE REASONS & BELIEF:- THE HONBLE SUPREME COURT IN THE CASE OF GANGA SARA N & SONS PVT. LTD. V/S INCOME-TAX OFFICER 130 ITR 11 (SUP ) - LAST PARA PA GE NO. 7 READ AS UNDER :- 'IF THERE IS NO RATIONAL AND INTELLIGIBLE NEXUS BET WEEN THE REASON AND THE BELIEF SO THAT, ON SUCH REASONS, NO ONE PROPERLY INSTRUCTED O N FACTS AND LAW COULD REASONABLY ENTERTAIN THE BELIEF. THE CONCLUSION -WO ULD BE IN ESCAPABLE THAT THE INCOME TAX OFFICER COULD NOT HAVE REASON TO BELIEF THAT ANY PART OF THE INCOME OF THE ASSESSEE HAD ESCAPED ASSESSMENT AND SUCH ESCAPE MENT -WAS BY REASON OF THE OMISSION OR FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS AND THE NOTICE ISSUED BY HIM WOULD B E LIABLE TO HE STRUCK DOWN AS INVALID.' WE HEREWITH SUBMIT SAID JUDGMENT AS PER (ANNEXURE: 6) SUFFICIENT, INSUFFICIENT OR AT ALL INSUFFICIENT. IT IS SETTLED PRINCIPLE THAT COURT CAN NOT INVESTIG ATE INTO ADEQUACY OR SUFFICIENCY OF THE REASONS. NOW LET US TAKE ONE EXAMPLE. SUPPOSE W E WANT TO TAKE DINNER. THE ITA NOS.1407 TO 1412/AHD/2017 ASSESSMENT YEAR 2007-08 - 12 - DISH PREPARED CONTAIN CHAPATI, DAL. RICE AND VEGETA BLE BUT IT DID NOT CONTAINED PICKLES, CHATNI OR EVEN PAPAD. ONE CAN SAY THAT PLA T WAS INSUFFICIENT DISH BUT IN THE DISH NO CHAPATI, NO RISE, NO DAL AND ONLY VEGET ABLE AND PAPAD WERE AVAILABLE THEN CERTAINLY ONE WOULD SALE IT WAS NO D ISH LIABLE TO BE CALLED FOR DINNER. IN OUR CASE ALSO CHAPATI, RISE & DAL WERE NOT AVAIL ABLE. NO REGISTERED SALE DEED, NO BANAKHAT, CHITTHI, OR ANY OTHER WRITING WHICH SU GGEST TRANSACTION. EVEN DESCRIPTION OF LAND, MEASUREMENT, PRICE ETC. NOT AV AILABLE EVEN DATE OR YEAR OF TRANSACTION NOT AVAILABLE. NO IOTA OF EVIDENCE REGA RDING HAND OVER OF POSSESSION, THEN HOW IT CAN BE CALLED DISH FOR DINNER. IT WAS N OT A DISH AT ALL. OVER AND ABOVE VARIOUS JUDGMENT CITED ABOVE THE FOL LOWING JUDGMENTS WOULD BE HELPFUL TO DECIDE THAT THERE WAS NO REASON TO BELIE VE THAT ANY INCOME HAS ESCAPED ASSESSMENT. CHHUGAMAL RAJPAL V/S S. P. CHALIHA & OTHER (79 ITR 603 ( SUPREME) (ANNEXURE : 7 ) BOMBAY PHARMA PRODUCTS V/S INCOME-TAX OFFICER (2 37 ITR 614 ) (ANNEXURE 8) IN NUTSHELL, THE NOTICE ISSUED U/S 148 IS ILLEGAL, ULTRAVIRES AND WITHOUT ANY BASE FURTHER THESE WAS NO IOTA OF INFORMATION ON THE BAS IS OF WHICH, THE LD. ASSESSING OFFICER FORMED THE BELIEF THAT IN THIS CASE A LEGIT IMATE CAPITAL GAIN OTHERWISE LIABLE TO TAX HAS BEEN ESCAPED FROM ASSESSMENT.. EV EN IN REASSESSMENT. THE LD. ASSESSMENT OFFICER FAILED TO PROVE SALE OF LAND IN AY. 2007-08 AS NO REGISTERED STAMPED DOCUMENT WAS BROUGHT ON RECORD TO PROVE SAL E WITHIN THE MEANING OF SEC. 2(47)(I). INTER ALIA, THE LD. ASSESSING OFFICE R FAILED TO PRODUCE ANY BANAKHAT, CHITTHI OR ANY OTHER WRITING TO COVER TRA NSACTION WITHIN THE MEANING OF SECTION 2(47)(V) OF INCOME-TAX ACT. IT IS THEREFORE YOUR HONOR ARE REQUESTED TO CANCEL OR QUASH ASSESSMENT ORDER PASSED U/S 143(3) R.W.S. 147 OF INCOME-TAX ACT AND OBLIGE. HOWEVER, THE PLEA OF THE ASSESSEE WAS NOT FOUND ACC EPTABLE AND THE LEARNED CIT(A) UPON REJECTION OF THE SAME DECIDED T HE ISSUE ON MERIT AGAINST THE ASSESSEE CONFIRMING THE ORDER PASSED BY THE LEA RNED AO. HENCE, THE INSTANT APPEAL. ITA NOS.1407 TO 1412/AHD/2017 ASSESSMENT YEAR 2007-08 - 13 - 5. AT THE TIME OF HEARING OF THE INSTANT APPEAL THE LEARNED ADVOCATE APPEARING FOR THE ASSESSEE SUBMITTED BEFORE US THAT IN TERMS OF THE PROVISION U/S 147 OF THE ACT, THE LEARNED AO MUST HAVE REASONS TO BELIEVE THAT INCOME FROM PROFIT AND GAIN CHARGEABLE TO INCOME TAX HAS ESCAPE D ASSESSMENT. IT ONLY CONFERS JURISDICTION TO REOPEN THE ASSESSMENT. THE LEARNED AO MUST HAVE REASONS TO BELIEVE THAT PARTICULAR INCOME OTHERWISE TAXABLE IN PARTICULAR YEAR HAS BEEN ESCAPED FROM ASSESSMENT. IN THE INSTANT CA SE IN REGULAR ASSESSMENT U/S 143(3) THOUGH WAS NOT MADE, RETURN WAS ACCEPTED UND ER SECTION 143(1) BY THE ASSESSING OFFICER. HE, FURTHER RELIED UPON THE JUDG MENT PASSED IN THE MATTER OF COMMISSIONER OF INCOME-TAX-VS-RAJESH JAVERI STOCK B ROKERS PVT. LTD. 291 ITR 500 (SC), WHEREIN IT HAS HELD THAT A GENERAL BE LIEF PREVAILING EARLIER THAT IN CASE OF ORDER U/S 143(1) PASSED OR INTIMATION U/S 1 43(1)(A) ISSUED, WITHOUT ANY RESTRICTION RE-ASSESSMENT PROCEEDING CAN BE MADE AS A BLANKET PERMISSION IS TOTALLY ILLEGAL. THE RE-OPENING PRE SUPPOSES 'INCOM E ESCAPING ASSESSMENT. IT WAS FURTHER ARGUED BY THE ADVOCATE THAT THE LEARNED AO HAS NOT APPLIED HIS MIND AND TOTALLY DEPENDING UPON THE REVISIONARY PRO CEEDING U/S 263 INITIATED BY THE LEARNED CIT(A)-3 IN CASE OF PRABHATBHAI K DE SAI REOPENED THE INSTANT ASSESSMENT PROCEEDING AGAINST THE ASSESSEE WHICH IS EVIDENT FROM THE REASONS RECORDED BY THE LEARNED AO. FURTHER THAT WHEN IT HA S BEEN DECIDED BY NUMBER OF JUDICIAL PRONOUNCEMENT THAT REASON TO BELIEF MUS T BE HONEST AND NOT BASED ON SUSPICION, GOSSIP, RUMOR OR CONJECTURE, THE INST ANT REOPENING IS BAD IN LAW IN THE ABSENCE OF INDEPENDENT OBSERVATION OWNING TO TH E REASON FOR ESCAPE ASSESSMENT BY THE ASSESSEE. MOREOVER, NO MATERIAL O F SALE OR ANY OTHER COGENT DOCUMENT WHEN NOT AVAILABLE WITH THE ASSESSING OFFI CER HE COULD NOT HAVE FIRM BELIEF REGARDING SUCH SALE OF IMMOVABLE PROPER TY; THIS BELIEF DOES NOT EMPOWER THE ASSESSING OFFICER TO REOPEN THE ASSESSM ENT MADE U/S 143(1) OF THE INCOME TAX ACT. FURTHER THAT SINCE THE REOPENIN G WAS MADE WITHOUT ITA NOS.1407 TO 1412/AHD/2017 ASSESSMENT YEAR 2007-08 - 14 - APPROVAL OF ACIT/JCIT THE PROVISION OF SECTION 151 OF THE ACT HAS NOT BEEN COMPLIED WITH. HENCE, THE REOPENING IS BAD AND LIAB LE TO BE SET ASIDE AS ALSO SUBMITTED BY THE LEARNED AR. ON THE OTHER HAND, LEA RNED DR RELIED UPON THE ORDER PASSED BY THE AUTHORITIES BELOW. 5. HEARD THE RESPECTIVE PARTIES, PERUSED THE RELEVA NT MATERIALS AVAILABLE ON RECORD. THE MOOT POINT INVOLVED IN THIS PARTICULAR MATTER AS TO WHETHER THE LEARNED AO HAS INVOKED JURISDICTION U/S 147 IN DUE PROCESS OF LAW I.E. WITH THE APPROVAL OF THE HIGHER AUTHORITY AND CONSEQUENTLY W HETHER THE REASON WAS RECORDED INDEPENDENTLY UPON APPLICATION OF MIND BY THE LEARNED AO OR IS A PRODUCT OF BORROWED SATISFACTION. WE WOULD LIKE TO ADDRESS THE FIRST POINT REGARDING THE APPROVAL FOR INITIATING PROCEEDING U/S 148 OF THE ACT. SANCTION OF ISSUANCE OF NOTICE IS THE FIRST AND FOREMOST CONDITION RATHER THE PRECONDITION TO BE CO MPLIED WITH BY THE ASSESSING OFFICER BEFORE INVOKING SECTION 147 FOR R EASSESSMENT PROCEEDING. SECTION 151 READS AS FOLLOWS: 151. (1) NO NOTICE SHALL BE ISSUED UNDER SECTION 148 BY AN ASSESSING OFFICER, AFTER THE EXPIRY OF A PERIOD OF FOUR YEARS FROM THE END OF THE RELEVANT 1. INSERTED BY THE FINANCE ACT, 2012, W.E.F. 1-7-2012. 2. SUBSTITUTED FOR 'TWO', IBID. 3. INSERTED, IBID. 4. FOR RELEVANT CASE LAWS, SEE TAXMANN'S MASTER GUIDE TO INCOME TAX ACT. 5. FOR THE MEANING OF THE TERM 'ANY FINDING OR DIRECTI ON CONTAINED IN AN ORDER PASSED BY A COURT IN ANY PROCEEDINGS UNDER AN Y OTHER LAW', SEE TAXMANS DIRECT TAXES MANUAL, VOL.3. 6. INSERTED BY THE DIRECT TAX LAWS (AMENDMENT) ACT, 19 87, W.E.F. 1-4- 1989. ITA NOS.1407 TO 1412/AHD/2017 ASSESSMENT YEAR 2007-08 - 15 - 7. SUBSTITUTED BY THE FINANCE ACT, 2015, W.E.F. 1-6-20 15. PRIOR TO ITS SUBSTITUTION, SECTION 151, AS SUBSTITUTED BY THE DI RECT TAX LAWS (AMENDMENT) ACT, 198, W.E.F. 1-4-1989 AND LATER ON AMENDED BY THE FINANCE ACT, 1990, W.E.F. 1-4-1990, FINANCE (NO.2) ACT, 1998, W.E.F. 1-10- 1998, FINANCE ACT, 2008, W.R.E.F. 1-10-1998 AND FIN ANCE (NO.2) ACT, 2014, W.R.E.F. 1-6-2013, READ AS UNDER : ASSESSMENT YEAR, UNLESS THE PRINCIPAL CHIEF COMMISS IONER OR CHIEF COMMISSIONER OF PRINCIPAL COMMISSIONER OR COMMISSIO NER IS SATISFIED, ON THE REASONS RECORDED BY THE ASSESSING OFFICER, THAT IT IS A FIT CASE FOR THE ISSUE OF SUCH NOTICE. (2) IN A CASE OTHER THAN A CASE FALLING UNDER SUB-S ECTION (1), NO NOTICE SHALL BE ISSUED UNDER SECTION 148 BY AN ASSESSING OFFICER , WHO IS BELOW THE RANK OF JOINT COMMISSIONER, UNLESS THE JOINT COMMISSIONE R IS SATISFIED, ON THE REASONS RECORDED BY SUCH ASSESSING OFFICER, THAT IT IS A FIT CASE FOR THE ISSUE OF SUCH NOTICE. (3) FOR THE PURPOSES OF SUB-SECTION (1) AND SUB-SEC TION (2), THE PRINCIPAL CHIEF COMMISSIONER OR THE CHIEF COMMISSIONER OR THE PRINCIPAL COMMISSIONER OR THE COMMISSIONER OR THE JOINT COMMI SSIONER, AS THE CASE MAY BE, BEING SATISFIED ON THE REASONS RECORDED BY THE ASSESSING OFFICER ABOUT FITNESS OF A CASE FOR THE ISSUE OF NOTICE UND ER SECTION 148, NEED NOT ISSUE SUCH NOTICE HIMSELF.] IN VIEW OF THE PROVISION OF SECTION 151 SANCTION IS THE FIRST AND FOREMOST CONDITION TO BE FULFILLED. THE RELEVANT DOCUMENTS BEING THE REASON RECORDED BY THE ASSESSING OFFICER DATED 24.03.2017 APPEARING AT PAGE 3 OF PAPER BOOK, OR THE ISSUANCE OF NOTICE U/S 148 OF THE ACT DATED 27.03.2014 APPEARING AT PA GE 1 OF THE PAPER BOOK DOES NOT GIVE ANY INDICATION OF OBTAINING SANCTION FROM THE ACIT/JCIT BY THE ASSESSING OFFICER FOR REOPENING THE ASSESSMENT OF T HE ASSESSEE U/S 148 OF THE ACT THOUGH IN TERMS OF THE PROVISION OF SECTION 151 IT IS THE PRE-CONDITION FOR INITIATING PROCEEDING U/S 148 OF THE ACT. NON-COMPL IANCE OF THE SAME REMAINS ITA NOS.1407 TO 1412/AHD/2017 ASSESSMENT YEAR 2007-08 - 16 - A DEFECT WHICH IS ADMITTEDLY NOT CURABLE. WE FIND T HAT THE LEARNED DR FAILED TO CONTROVERT THIS PARTICULAR ASPECT OF THE MATTER AT THE TIME OF ARGUMENT ADVANCED BEFORE US DURING HEARING. IN THAT VIEW OF THE MATTE R IN THE ABSENCE OF THE VERY BASIS OR FOUNDATION OF THE REOPENING BEING THE SAN CTION OF THE HIGHER AUTHORITY RENDERS THE ENTIRE PROCEEDING VOID IN LA W AND THUS LIABLE TO BE SET ASIDE. THE SECOND ISSUE RELATING TO THE REASONS TO BELIEF IS ALSO REQUIRED TO BE ADDRESSED. IT IS A WELL SETTLED PRINCIPLE OF LAW T HAT THE REASONS FOR THE CONFIRMATION OF THE BELIEF MUST HAVE RATIONAL CONNE CTION WITH A RELEVANT BEARING CONFIRMATION OF BELIEF. THERE MUST BE A DIR ECT NEXUS OR LIVE LINK BETWEEN THE MATERIAL GIVING TO THE NOTICE OF THE IT O AND FORMATION OF THIS BELIEF THAT THERE HAS BEEN ESCAPEMENT OF INCOME OF THE ASSESSEE FROM THE ASSESSMENT IN THAT PARTICULAR YEAR BECAUSE OF HIS F AILURE TO DISCLOSE FULLY AND TRULY MATERIALS OF FACTS. SUCH REASONS FOR THE FORM ATION OF BELIEF MUST BE HELD IN GOOD FAITH AND SHOULD NOT BE A MERE PRETENCE. IT SHOULD BE 'REASON TO BELIEF AND NOT 'REASON TO SUSPECT'. THUS, THERE MUST BE SO ME MATERIAL FOR BELIEF; CIRCUMSTANCES MUST EXIST AND CANNOT BE DEEMED TO EX IST FOR ARRIVING AT AN OPINION; REASON TO BELIEVE MUST BE HONEST AND NOT B ASED ON SUSPICIOUS, GOSSIP, RUMORS OR CONJUNCTURE; MOST IMPORTANTLY REASONS REF ERRED MUST DISCLOSE THE PROCESS OF REASONING BY WHICH HE HOLDS 'REASON TO B ELIEVE' AND CHANGE OF OPINION DOES NOT CONFER JURISDICTION TO REASSESS; T HERE MUST BE NEXUS BETWEEN MATERIAL AND BELIEF AND FINALLY THE REASONS REFERRE D MUST SHOW APPLICATION OF MIND BY THE ASSESSING OFFICER. WHILE ANALYZING THE REASONS RECORDED BY THE LEARNED AO, WE FIND THAT THE LEARNED AO TOTALLY DEP ENDED ON THE REVISIONARY PROCEEDING U/S 263 DONE BY THE LEARNED CIT(A) IN CA SE OF PRABHATBHAI KARSANBHAI DESAI FOR A.Y. 2009-10 AND HAS NOT APPLI ED HIS MIND ITA NOS.1407 TO 1412/AHD/2017 ASSESSMENT YEAR 2007-08 - 17 - INDEPENDENTLY. IT APPEARS THAT THE LEARNED AO TOOK INTO CONSIDERATION THIS PARTICULAR FACT OF THE MATTER THAT THE ASSESSEE HAS SOLD THE IMMOVABLE PROPERTY I.E. LAND TO PACIFICA DEVELOPERS PVT. LTD. DURING T HE F.Y. 2006-07 AND RECEIVED RS.37,12,500/- ON F.Y. 2006-07. NO IOTA OF INFORMAT ION OTHER THAN THIS CITS ORDERS RELATING TO SUCH SALE OF IMMOVABLE PROPERTY HAS BEEN BROUGHT TO OUR NOTICE BY THE ASSESSING OFFICER WHILE FORMING AN OP INION OF ESCAPING ASSESSMENT AGAINST THE ASSESSEE. THE DETAILS OF SUCH LAND IN QUESTION, THE NATURE OF LAND IN QUESTION, THE PROOF REGARDING ASSESSEES OWNERSHIP ON THAT PARTIC ULAR LAND WHICH ALLEGED TO HAVE BEEN SOLD BY THE ASSESSEE, THE COGENT DOCUMENT S RELATING TO SUCH SALE OF LAND BEING THE DEED OF CONVEYANCE REGISTERED WITH T HE GOVERNMENT AUTHORITY, AS WELL AS THE DATE OF SALE IN ORDER TO DETERMINE T HE CAPITAL GAIN FAILED TO DRAW THE ATTENTION OF THE LEARNED AO TO BE CONSIDERED WH ILE FORMING REASONS TO BELIEF OF ESCAPE ASSESSMENT BY THE ASSESSEE. IN THI S ASPECT WE FIND NO IOTA OF EVIDENCE OR INFORMATION HAVE BEEN BROUGHT ON RECORD BY THE ASSESSING OFFICER TO FRAME THE BELIEF THAT SALE OF LAND HAS TAKEN PLA CE IN THE A.Y. 2007-08 AND CAPITAL GAIN WAS ESCAPED IN THE SAID ASSESSMENT YEA R. BEFORE THE APPELLATE AUTHORITY THE ASSESSEE SUBMITT ED THE FOLLOWING IN RESPECT OF SAID GROUND: THE SECOND PARA OF REASON RECORDED WAS IN CONNECT ION WITH RETURN FILED AND 143(1) ASSESSMENT WAS MADE. IT HAS NOTHING TO DO WI TH REASON TO BELIEVE. THE THIRD PARA SOME INCORRECT AND FALSE INFORMATION HAS BEEN MENTIONED WHICH WAS CONTRARY TO THE CONTENTION GIVEN IN PARA ABOVE. IN THE PARA 2 ONLY INCOME SHOWN WAS RS 70 ONLY FROM OTHER SOURCES WHERE AS IN THIRD PARA. IT WAS MENTIONED THAT CAPITAL GAIN IN RESPECT OF RESIDENTI AL UNITS SOLD WAS SHOW IN RETURN OF INCOME FOR AY 2007-08. IN FACT NO CAPITAL GAIN W AS SHOW IN AY. 2007-08 AND ITA NOS.1407 TO 1412/AHD/2017 ASSESSMENT YEAR 2007-08 - 18 - IN IMMEDIATE SUCCEEDING YEAR FOR SALE OF RESIDENTIA L UNITS BECAUSE NO CAPITAL GAIN WHATSOEVER AROUSE IN AY. 2007-08. FURTHER IN THIS PARA THE LD. ASSESSING OFFICER MENT IONED THAT LAND WAS TRANSFERRED WITHIN THE MEANING OF SECTION 53 A OF T RANSFER OF PROPERTY ACT TO PACIFICA DEVELOPERS PVT. LTD. AND POSSESSION OF THE LAND WAS ALSO GIVEN TO IMPUGNED PARTY AND AS PER SECTION 2(47) OF INCOME-T AX ACT & TRANSFER OF PROPERTY ACT. THE ASSESSES MUST BE OFFERED INCOME A RISED ON SALE CONSIDERATION RECEIVED IN THE FY 2006-07. THE REASONS RECORDED, ITSELF WAS CONTRADICTORY. ON THE ONE LAND. THE LD. ASSESSING OFFICER BELIEVED THAT SALE OF LAND HAS TA KEN PLACE IN FY. 2006-07, ON THE OTHER LAND, HE BELIEVED THAT TRANSFER OF LAND H AS TAKEN PLACE WITHIN THE MEANING OF SECTION 53A OF TRANSFER OF PROPERTY ACT. HOWEVER IN BOTH CASES THERE WAS NO IOTA OF EVIDENCES OR INFORMATION FOR FORMING THE BELIEF THAT INCOME HAS ESCAPED ASSESSMENT. THE LD ASSESSING OFFICER BELIEVED THAT POSSESSION O F LAND WAS GIVEN TO PURCHASING PARTY M/S PACIFICA DEVELOPERS PVT. LTD. THIS BELIEF ALSO CREATED MANY DOUBTS SUCH AS FOLLOWS. (1) NO DESCRIPTION OF LAND, WHICH LAND TRANSFERRED . (2) TRANSACTION PLACED AS PER SECTION 53A OF TRANS FER OF PROPERTY ACT BY WHICH DOCUMENT AS NO BANAKHAT, NO CHITHHI, NO ANY OTHER W RITING WAS BROUGHT ON RECORD BY LD. ASSESSING OFFICER. (3) HOW POSSESSION OF LAND WAS GIVEN TO IMPUGNED PARTY AND AT WHAT DATE IT WAS GIVEN. WHETHER DOCUMENT OR WRITING WAS MADE. GENERALLY POSSESSION IN CASE OF IMMOVABLE PROPERTY CAN BE GIVEN BY ANY WRI TTEN DOCUMENT. OTHERWISE IN CASE OF DISPUTE WHAT IS THE PROOF IN THE HAND OF POSSESSION RECEIVER AND HE WOULD BE HELPLESS. NO PRUDENCE MAN WOULD TAKE POSSE SSION WITHOUT ANY DOCUMENT OR EVEN SIMPLE WRITINGS. IN PRESENT CASE, NO IOTA OF EVIDENCE IN THE FORM OF AFFIDAVIT BY THE TRANSFEROR POSSESSION LETT ER ON STAMP PAPER OR ANY OTHER WRITING WHICH ENVISAGED THE TRANSFER OF POSSE SSION FROM THE VENDOR TO PURCHASER THE ASSESSEE FURTHER RELIED UPON THE JUDGMENT PASSE D BY THE HONBLE APEX COURT IN THE CASE OF GANGA SARAN & SONS PVT. LTD. V /S INCOME-TAX OFFICER 130 ITR 11 (SUP) AND THE ORDER PASSED IN THE MATTER OF CHHUGAMAL RAJPAL-VS-S. P. CHALIHA & OTHER (79 ITR 603 ( SUPREME COURT). ITA NOS.1407 TO 1412/AHD/2017 ASSESSMENT YEAR 2007-08 - 19 - IT APPEARS FROM THE RECORD THAT THE LEARNED AO HAS ADMITTED THAT INCOME WAS OFFERED IN SUBSEQUENT ASSESSMENT YEAR WH EN SALE DEED WERE EXECUTED. WE THEREFORE, FIND NO ESCAPEMENT OF INCOM E WITHIN THE MEANING OF SECTION 147 OF THE ACT. THUS IN OUR CONSIDERED VIEW, THE LEARNED AO HAS MA DE REOPENING ON THE DICTATES OF SUPERIOR AUTHORITY AND NOT OF HIS O WN AND WITHOUT ANY APPLICATION OF MIND; THE SAME WAS DONE IN TUTORED M ANNER. FURTHER THAT THE LEARNED AO ADMITTEDLY FAILED TO COMPLY WITH THE PRO VISION OF SECTION 151 OF THE ACT. FURTHER THAT IT APPEARS FROM THE RECORDS T HAT HE HIMSELF HAS ACCEPTED IN ASSESSMENT YEAR 2010-11 THAT INCOME WAS CHARGEABLE AT THE TIME OF EXECUTION OF SALE DEED. WHEN IN THE ORIGINAL ASSESSMENT THE L EARNED AO ACCEPTED THE MATTER, REASSESSMENT PROCEEDING CANNOT BE INITIATED INDICATING A MERE CHANGE OF OPINION. THERE MUST BE A TENABLE MATERIAL ON THE BASIS OF WHICH AN ASSESSMENT IS SOUGHT TO BE REOPENED EVEN WITHIN A P ERIOD OF FOUR YEARS IS NOW WELL ESTABLISHED IN VIEW OF THE JUDGMENT PASSED BY THE HONBLE SUPREME COURT IN THE MATTER OF CIT-VS-KELVINATOR OF INDIA LTD REP ORTED IN 256 ITR 1 (DEL) (FB). THE REASON FOR REOPENING AS IT APPEARS AT PAG E 3 OF THE PAPER BOOK ALSO INDICATES THAT TIME LIMIT FOR ISSUANCE OF SUCH NOTI CE U/S 148 FOR A.Y. 2007-08 EXPIRES ON 31.03.2014 WHICH STRENGTHEN THE CASE OF THE ASSESSEE SHOWING THAT IN ORDER TO REOPEN THE ASSESSMENT BY HOOK AND CROOK WITHOUT THE APPROVAL AND/OR SANCTION OF THE HIGHER AUTHORITY IN TERMS OF THE PROVISION OF SECTION 151 OF THE ACT, THE LEARNED AO IN HOT HASTE ISSUED SUCH NOTICE FOR REOPENING THAT TOO IN ABSENCE OF ANY EVIDENCE TO BE RELIED UPON TO FORM SUCH BELIEF RELATING TO THE PARTICULAR ISSUE INVOLVED. SUCH ACTION IS ERRON EOUS, ARBITRARY AND WITHOUT DUE PROCESS OF LAW AND HENCE THE ENTIRE PROCEEDING INITIATED WITHOUT ANY SOLID FOUNDATION OF LAW IS VITIATED. ITA NOS.1407 TO 1412/AHD/2017 ASSESSMENT YEAR 2007-08 - 20 - FURTHER THAT ON THE BASIS OF THE ABOVE DISCUSSION AND OBSERVATION WE FIND THE ENTIRE PROCEEDING IS VOID AB INITIO I.E. I NVALID FROM THE VERY OUTSET AND THEREFORE IS LIABLE TO BE QUASHED AND HENCE THE ENT IRE PROCEEDING UNDER SECTION 148 OF THE ACT AS INITIATED BY THE REVENUE AGAINST THE ASSESSEE IS HEREBY QUASHED. THUS, ASSESSEES APPEAL IS ALLOWED. 6. SINCE THE PRELIMINARY PART HAS BEEN ALLOWED IN F AVOUR OF THE ASSESSEE REST OF THE GROUNDS BECOME ACADEMIC AND NO ORDER NE ED BE PASSED. 7. THE ISSUE INVOLVED IN REST OF THE APPEALS IS IDE NTICAL TO THAT OF THE ISSUE ALREADY BEEN DEALT WITH BY US IN ITA NO.1407/AHD/20 17 FOR A.Y. 2007-08 AND IN THE ABSENCE OF ANY CHANGED CIRCUMSTANCES THE SAM E SHALL APPLY MUTATIS MUTANDIS. HENCE, THE REST OF THE APPEALS PREFERRED BY THE ASSESSEE ARE ALSO ALLOWED. 8. IN THE COMBINED RESULT, ALL THE ASSESSEES APPEA LS ARE ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 27/06/2019 SD/- SD/- ( RIFAUR REHMAN ) ( MS. MADHUMITA ROY ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 27/06/2019 PRITI YADAV, SR.PS ITA NOS.1407 TO 1412/AHD/2017 ASSESSMENT YEAR 2007-08 - 21 - / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A)-5, AHMEDABAD. 5. , , / DR, ITAT, AHMEDABAD 6. !' #$ / GUARD FILE. / BY ORDER, //TRUE COPY// / (DY./ASSTT.REGISTRAR) , !' / ITAT, AHMEDABAD 1. DATE OF DICTATION 26.06.2019 (DICTATION PAGES 10) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 26.06.2019 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S 27.06.2019 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER