Radheshyam P.Trivedi, Ahmedabad V. The Dy,CIT, Circle-15, Ahmedabad

ITA 2226/AHD/2015

AI Insights

The case involves Shri Datta Radheshyam Trivedi, who appealed against the order of the Commissioner of Income-tax (Appeals)-7, Ahmedabad, which confirmed the action of the Assessing Officer in reopening the assessment under Section 147 of the Income Tax Act, 1961, for the Assessment Year 2008-09. The primary contention was the lack of a direct link between the information available to the Assessing Officer and the belief that income had escaped assessment. The Tribunal examined the reasons recorded for reopening the assessment and found them insufficient to establish a valid jurisdiction under Section 147.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 125326 (ITAT-AHMEDABAD)
• Duration Of Justice: 8 year(s) 1 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 23-08-2023
• Assessment Year: 2008-2009
• Appeal Filed On: 26-07-2015
• Other Referred Cases: ITO vs Lakhmani 103 ITR 437(SC)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revision of order; Reason to believe; Capital Gains
• Section: 147; 148; 54; 263; 54B; 250; 48; 73

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, AHMEDABAD BEFORE MRS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER AND SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER ITA No. 2226/Ahd/2015 िनधा榁रणवष榁/Assessment Year: 2008-09 Shri Datta Radheshyam Trivedi, L/h of Shri Radheshyam P. Trivedi, 9, Ashni Society, Room No.406, 4 th Floor, Jodhpur Gam Road, Satellite, Ahmedabad-380015 PAN : ACCPT 0933 B Vs. Dy. Commissioner of Income-tax, Circle-15, Ahmedabad अपीलाथ牸 अपीलाथ牸अपीलाथ牸 अपीलाथ牸/ (Appellant) 灹瀄 灹瀄 灹瀄 灹瀄 यथ牸 यथ牸यथ牸 यथ牸/ (Respondent) Assessee by : Shri Hardik Vora, AR Revenue by : Shri Ashok Kumar Suthar, Sr DR सुनवाई सुनवाईसुनवाई सुनवाई क琉 क琉क琉 क琉 तारीख तारीखतारीख तारीख/Date of Hearing : 24.08.2023 घोषणा घोषणाघोषणा घोषणा क琉 क琉क琉 क琉 तारीख तारीखतारीख तारीख /Date of Pronouncement: 15.09.2023 आदेश आदेशआदेश आदेश/O R D E R PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER: Present appeal has been filed by the assessee against order of the learned Commissioner of Income-tax (Appeals)-7, Ahmedabad [hereinafter referred to as "CIT(A)" for short] dated 01.05.2015 passed under Section 250 of the Income Tax Act, 1961 [hereinafter referred to as "the Act" for short], for the Assessment Year (AY) 2008-09. 2. The grounds raised by the assessee are as follows:- “1. On the facts and in circumstances of the case as well as law on the subject, the learned Commissioner of Income-tax (Appeals) has erred in confirming the action of Assessing Officer in reopening the assessment u/s 147 of the Act. 2 ITA No. 2226/Ahd/2015 Radheshyam P. Trivedi Vs. DCIT AY :2008-09 2. On the facts and in circumstances of the case as well as law on the subject, the learned Commissioner of Income-tax (Appeals) has erred in confirming disallowance of Rs.17,90,000/- claimed u/s 54B of the Act. 3. On the facts and in circumstances of the case as well as law on the subject, the learned Commissioner of Income-tax (Appeals) has erred in confirming the disallowance of brokerage amounting to Rs.2,25,000/-.” 3. The ground no. 1 raised by the assessee challenges the order of the ld. CIT(A) upholding the validity of the order passed u/s 147 of the Act in the present case . 3.1 The contention of the ld. Counsel for the assessee before us was that there was no link between the information available with the Assessing Officer and the formation of belief of escapement of income ,in the reasons recorded for reopening the case of the assessee, and that therefore the assumption of jurisdiction to frame assessment by the Assessing Officer under Section 147 of the Act was not in accordance with the law. Our attention was drawn to the reasons recorded in the case of the assessee placed before us at page no.1 of the paper-book as under:- “REASONS FOR ISSUE OF NOTICE U/S 148 IN THE CASE OF SHIR RADHESHYAM P. TRIVEDI, FOR A.Y. 2008-09 As per the information received from CIT-III. Ahmedabad by CIT-VII, Ahmedabad, it is noticed that during the course of revision proceedings u/s 263 of the IT Act 1961 by CIT-III Ahmedabad in the case of Shri Riddhish Balkrishna Trivedi, it was found that as per the sale deed dated 08/06/2007 available on record, Shri Riddhish Balkrishna Trivedi along with his mother Smt. Sudhaben B. Trivedi and Shri Radheshyam Purshottam Trivedi had sold the land situated at final plot No. 27 in TP Scheme No. 37 (Danilimda North), Sector-5 (Akhari Yojna) admeasuring 9,286 square meters on 08/06/2007 to M/s. Deeodeep Malls Developers Pvt. Ltd. for a total consideration of Rs.7,81,00,000/-. Shri Riddhish Balkrishna Trivedi was having one fourth share in the land so sold, Smt Sudhaben B. Trivedi was also having one fourth 3 ITA No. 2226/Ahd/2015 Radheshyam P. Trivedi Vs. DCIT AY :2008-09 share in the aforesaid land so sold and the rest of the half share was held by Shri Radheshyamu P Trivedi who is the brother of father of Riddhish B. Trivedi. Earlier to conversion to non-agricultural land, the land was demarketed as Survey No. 73 admeasuring 12,849 square meters situated at village Danilimda. In the case of Mr. Riddhish B. Trivedi proceedings u/s 263 of the 1.T.Act 1961 were initiated and claim of Rs. 31,00,000/- made u/s 54B of the IT Act by the assessee was disallowed in the order passed u/s 263 of the I.T. Act. Claim of brokerage of Rs. 5,00,000/- was also disallowed in the case of Shri Balkrishna P. Trivedi HUF while passing the order u/s 263 of the I.T. Act. On the verification of ITR for AY 2008-09 in the case of Shri Radheshyam Purshottam Trivedi, it is noticed that Out of Total Sale Consideration of Rs 7,81,00,000/- total share of the assessee was of Rs.3,90,50,000/- assessee has shown Total Long Term Capital Gain of Rs. 80,09,030/-, he has claimed deduction of Rs. 1,12,50,970/- u/s 48 of the Act in which he has claimed expenditure on transfer of Rs. 16,25,000/-. He has also claimed exemption of Rs 1,97,90,000/- u/s 54/54B/54D/54EC/54F/54G/54GA. From the ITR 2008- 09 it is difficult for A.O. to find out the exact section of 54 series under which assessee has claimed exemption and it is also difficult to recognized different heads for the claim of expenditure on transfer. Hence, in view of the above facts, it is seen that this is a clear cut case of tax evasion and I have reason to believe that income has been escaped to the extent of Rs. (1,12,50,970 +16,25,000) 1,28,75,970/- in the case of Shri Radheshyam P. Trivedi (PAN ABBPT0241Q).” 4. On going through the contents of the reasons recorded for reopening the assessment as above, we are in complete agreement with the ld. Counsel for the assessee that there was no live link between the information available with the Assessing Officer and the formation of belief of escapement of income in the case of the assessee. 4.1 The reasons, in the first two paragraphs, reveal the information in the possession of the Assessing Officer on the basis of which he formed the belief of escapement of income in the case of the assessee. As per the said paragraph, 4 ITA No. 2226/Ahd/2015 Radheshyam P. Trivedi Vs. DCIT AY :2008-09 we find that the Assessing Officer had information that a piece of land sold by the assessee during the year was co-owned with one Shri Riddhish Balkrishna Trivedi ,with the assessee being half owner of the land, and Shri Trivedi ¼th owner of the land. That the said land was sold for a consideration of Rs. 7.8 crores. That in the case of Shri Riddhish B. Trivedi, order u/s 263 of the Act had been passed noting that he had been incorrectly allowed claim of exemption/deduction against capital gains returned from sale of land u/s 54B of the Act. 4.2 From this information, the Assessing Officer formed a belief that the income of the assessee from capital gains had also escaped assessment. The succeeding two paragraphs of the reasons record his reasons for so believing. A perusal of these two paragraphs show that his belief of escapement of income of the assessee had no link with the information relating to Shri Riddhish B. Trivedi, of whom having wrongly claimed deduction under Section 54B of the Act. In the case of the assessee, the Assessing Officer notes certain facts and figures relating to the capital gain returned by him pointing out that he had shown Long Term Capital Gains of Rs.80,09,030/-, had claimed deduction Rs.1,12,50,970/- under Section 48 of the Act which included expenditure on transfer of Rs.16,25,000/-, and had also claimed exemption of Rs.1,97,90,000/-under Section 54/54B/54D/54EC/54F/ 54G/54GA. He further notes that it is not clear under which section the assessee had claimed deduction. Therefore, this portion of the reason only records certain factual information relating to the capital gain returned by the assessee and reveal that the Assessing Officer was not even aware under which Section the assessee had claimed deduction of Rs.1.97 crores. From this, he concludes that it is a clear-cut case of tax evasion. 5 ITA No. 2226/Ahd/2015 Radheshyam P. Trivedi Vs. DCIT AY :2008-09 4.3 We fail to understand how the Assessing Officer arrives at this conclusion. The information in his possession being that Shri Riddhish B. Trivedi had claimed incorrect deduction u/s 54B of the Act of capital gain in which the assessee was also a co-owner, there is nothing in the reason revealing that there was any identity of facts of the assessee’s claim of deduction against capital gain returned to tax with that of Shri Riddhish B. Trivedi. The Assessing Officer is not even aware of the Section under which the assessee has claimed deduction of its capital gain. In view of the same, we agree with the ld. Counsel for the assessee that, on the basis of information regarding incorrect claim of deduction of capital gain by Shri Riddhish B. Trivedi, the Assessing Officer could not have arrived at a belief that the assessee’s income had also escaped assessment in the absence of complete particulars of deduction claimed by the assessee against the capital gain returned by him. 4.4 It is settled law that the fulfilment of one of the basic condition for initiating action u/s 147 of the Act, of the AO having reason to believe that income has escaped assessment, requires live link between material coming to the knowledge of the AO and his formation of belief of escapement. The Hon’ble apex court having held so in the case of ITO vs Lakhmani 103 ITR 437(SC). 4.5 Moreover, we find that his belief of escapement of income of the assessee has nothing to do with any incorrect claim of exemption of capital gains, but is apparently on account of claim of deduction against consideration received from sale of land for computing capital gains earned. We note that the Assessing Officer mentions income of Rs.1,28,75,970/- to have escaped assessment, being Rs.1,12,50,970/- + Rs.16,25,000/-. These 6 ITA No. 2226/Ahd/2015 Radheshyam P. Trivedi Vs. DCIT AY :2008-09 figures /amounts added up by the AO relate to claim of deduction u/s 48 of the Act of Rs. 1,12,50,970/- and expenses incurred on transfer of Rs.16,25,000/- and the Assessing Officer himself notes that the amount of Rs.1,12,50,970/- includes expenditure on transfer of Rs.16,25,000/-. Therefore, firstly, the addition of Rs.16,25,000/- to Rs.1.25 crores is grossly incorrect for arriving at the income which has escaped assessment in the case of the assessee. Secondly, there is no basis mentioned in the reasons for the belief of the Assessing Officer that the assessee’s entire claim of deduction under Section 48 of the Act was incorrect. And this escapement of income has absolutely no link or correlation with the information in the possession of the AO that the other co-owner of land had incorrectly claimed deduction under Section 54B of the Act. 5. In view of the above, we are in complete agreement with the assessee that the reasons recorded by the AO showing his formation of belief of escapement of income of the assessee were insufficient for assuming a valid jurisdiction to frame assessment u/s 147 of the Act since... • The reasons exhibited no live link between the information in the possession of the Assessing Officer and the formation of belief of escapement of income; • There was no basis for formation of belief of escapement of income • There was complete inapplication of mind by the AO while recording reasons for escapement of income. The assessment order passed, therefore, is directed to be quashed. 7 ITA No. 2226/Ahd/2015 Radheshyam P. Trivedi Vs. DCIT AY :2008-09 6. Since we have quashed the assessment, the other grounds raised by the assessee on merits need no adjudication being mere academic in nature. In view of the above, the assessee’s appeal is allowed in above terms. 7. In effect, the appeal of the assessee is allowed in above terms. Order pronounced in the open Court on 15/09/2023 at Ahmedabad. Sd/- Sd/- (SIDDHARTHA NAUTIYAL) JUDICIAL MEMBER (ANNAPURNA GUPTA) ACCOUNTANT MEMBER Ahmedabad; Dated 15/09/2023 **bt आदेश आदेशआदेश आदेश क琉 क琉क琉 क琉 灹ितिलिप 灹ितिलिप灹ितिलिप 灹ितिलिप अ灡ेिषत अ灡ेिषतअ灡ेिषत अ灡ेिषत/Copy of the Order forwarded to : 1. अपीलाथ牸 अपीलाथ牸अपीलाथ牸 अपीलाथ牸 / The Appellant 2. 灹瀄यथ牸 灹瀄यथ牸灹瀄यथ牸 灹瀄यथ牸 / The Respondent. 3. संबंिधत संबंिधतसंबंिधत संबंिधत आयकर आयकरआयकर आयकर आयु猴 आयु猴आयु猴 आयु猴 / Concerned CIT 4. आयकर आयकरआयकर आयकर आयु猴 आयु猴आयु猴 आयु猴)अपील अपीलअपील अपील (/ The CIT(A)- 5. िवभागीय िवभागीयिवभागीय िवभागीय 灹ितिनिध 灹ितिनिध灹ितिनिध 灹ितिनिध ,आयकर आयकरआयकर आयकर अपीलीय अपीलीयअपीलीय अपीलीय अिधकरण अिधकरणअिधकरण अिधकरण/DR,ITAT, Ahmedabad, 6. गाड榁 गाड榁गाड榁 गाड榁 फाईल फाईलफाईल फाईल /Guard file. आदेशानुसार आदेशानुसारआदेशानुसार आदेशानुसार/ BY ORDER, TRUE COPY सहायक सहायकसहायक सहायक पंजीकार पंजीकारपंजीकार पंजीकार (Asstt. Registrar) आयकर आयकरआयकर आयकर अपीलीय अपीलीयअपीलीय अपीलीय अिधकरण अिधकरणअिधकरण अिधकरण ITAT, Ahmedabad 1. Date of dictation ......25.08.2023........ Date on which the typed draft is placed before the Dictating Member :.....28.08.2023.......... 1. Other Member......13.09.2023.................. 2. Date on which the approved draft comes to the Sr.P.S./P.S......14.09.2023.................... 3. Date on which the fair order is placed before the Dictating Member for pronouncement...15.09.2023. 4. Date on which the fair order comes back to the Sr.P.S./P.S...15.09.2023................ 5. Date on which the file goes to the Bench Clerk...15.09.2023............. 6. Date on which the file goes to the Head Clerk... 7. The date on which the file goes to the Assistant Registrar for signature on the order............ 8. Date of Despatch of the Order..................