Naiyer Sultan , Kolkata V. ITO, Ward - 32(4), Kolkata

ITA 2613/KOL/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 6886 (ITAT-KOLKATA)
• Duration Of Justice: 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 18-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C J SINGH
• Keywords: Reopening of assessment; Capital asset; Tangible material; Difference of opinion; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 143(1); 147

Judgement Text

I.T .A. NO. 2613/KOL/2018 (A.Y. 2011-2012)-NAIYER SULTA N & I.T.A. N O. 2614/KOL/2018 (A.Y. 2011-2012)-MANUWAR SULTAN 1 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA A BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, VICE-PRESIDENT (KZ) AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER I.T.A. NO. 2613/KOL/2018 ASSESSMENT YEAR: 2011-2012 NAIYER SULTAN,..................................... .........................APPELLANT C/O. SUBASH AGARWAL & ASSOCIATES, ADVOCATES, SIDDHA GIBSON, 1, GIBSON LANE, SUITE 213, 2 ND FLOOR, KOLKATA-700 069 [PAN: AUUPS 6171 N] -VS.- INCOME TAX OFFICER,................................ .......................................RESPONDENT WARD-32(4), KOLKATA, & I.T.A. NO. 2614/KOL/2018 ASSESSMENT YEAR: 2011-2012 MANUWAR SULTAN,.................................... ..........................APPELLANT C/O. SUBASH AGARWAL & ASSOCIATES, ADVOCATES, SIDDHA GIBSON, 1, GIBSON LANE, SUITE 213, 2 ND FLOOR, KOLKATA-700 069 [PAN: AMBPS 7770 G] -VS.- INCOME TAX OFFICER,................................ ...........................................RESPONDE NT WARD-32(3), KOLKATA, APPEARANCES BY: SHRI SUBHAS AGARWAL, ADVOCATE, FOR THE ASSESSEES SHRI C.J. SINGH, JCIT, SR. D.R., FOR THE DEPARTMENT DATE OF CONCLUDING THE HEARING : MARCH 13, 2019 DATE OF PRONOUNCING THE ORDER : MAY 03, 2019 O R D E R PER SHRI P.M. JAGTAP, VICE-PRESIDENT (KOLKATA ZONE) :- THESE TWO APPEALS FILED BY THE TWO ASSESSEES ARE D IRECTED AGAINST TWO SEPARATE ORDERS BOTH DATED 19.11.2018 PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-9, KOLKATA FOR A.Y. 2011-12 AND I.T .A. NO. 2613/KOL/2018 (A.Y. 2011-2012)-NAIYER SULTA N & I.T.A. N O. 2614/KOL/2018 (A.Y. 2011-2012)-MANUWAR SULTAN 2 SINCE A COMMON ISSUE IS INVOLVED THEREIN, THE SAME HAVE BEEN HEARD TOGETHER AND ARE BEING DISPOSED OF BY A SINGLE CONS OLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. THE RELEVANT FACTS OF THE CASE GIVING RISE TO TH ESE APPEALS ARE THAT BOTH THE ASSESSES ARE INDIVIDUALS, WHO WERE THE CO- OWNERS OF TWO PIECES OF LAND PROPERTY SITUATED AT 41, PUDUPAKKAM VILLAGE UNDER TIRUPPORUR PANCHAYAT UNION, DISTRICT-KANCHEEPURAM, TAMILNADU A DMEASURING 4 ACRES 19 CENTS HAVING 50% SHARE EACH. THE SAID PROPERTY W AS COLLECTIVELY SOLD BY THEM ON 15.04.2010 FOR A TOTAL CONSIDERATION OF RS.9,00,00,000/- WITH BOTH THE ASSESSES HAVING THEIR SHARE OF RS.4.50 CRO RES EACH. IN THE RETURNS OF INCOME FILED FOR THE YEAR UNDER CONSIDERATION I. E. A.Y. 2011-12, GAIN ARISING FROM THE SAID SALE WAS CLAIMED TO BE EXEMPT BY BOTH THE ASSESSEES ON THE GROUND THAT THE PROPERTY SOLD WAS A RURAL AG RICULTURAL LAND, WHICH WAS NOT TREATED AS A CAPITAL ASSET UNDER THE INCOME TAX ACT. IN SUPPORT OF THIS CLAIM, A CERTIFICATE ISSUED BY THE CONCERNED T EHSILDAR OF TIRUPPORUR WAS SUBMITTED BY THE ASSESSEES CONFIRMING THAT THEI R LAND SOLD DURING THE YEAR UNDER CONSIDERATION WAS LOCATED 20 KMS AWAY FR OM THE BOUNDARY OF CHENNAI MUNICIPAL CORPORATION. THE RETURN OF INCOME FILED BY SHRI MANUWAR SULTAN CLAIMING SUCH EXEMPTION WAS ACCEPTED BY THE ASSESSING OFFICER UNDER SECTION 143(1) ON 19.11.2012 WHILE IN THE ASSESSMENT COMPLETED UNDER SECTION 143(3) VIDE AN ORDER DATED 25.03.2014 FOR THE YEAR UNDER CONSIDERATION, THE CLAIM OF THE OTHER AS SESSEE SHRI NAIYER SULTAN FOR SUCH EXEMPTION WAS ALLOWED BY THE ASSESS ING OFFICER AFTER SCRUTINY. SUBSEQUENTLY CERTAIN INFORMATION WAS RECE IVED BY THE ASSESSING OFFICER BY WAY OF A COMMUNICATION FROM DDIT(INV.), UNIT-IV(1), CHENNAI ON 31.03.2014 AND ON THE BASIS OF THE SAME, ASSESSM ENTS IN CASE OF BOTH THE ASSESSEES FOR THE YEAR UNDER CONSIDERATION WERE REOPENED BY THE ASSESSING OFFICER AFTER RECORDING THE FOLLOWING REA SONS:- (I) REASONS RECORDED IN THE CASE OF NAIYER SULTAN: ............THE CASE OF NAIYER SULTAN, VIDE PAN-AU UPS6171N WAS ASSESSED U/S 143(3) OF THE INCOME TAX ACT, 1961 ON 25/0312014 FOR A. Y. 2011-12. HOWEVER, AFTER FINALI ZATION OF I.T .A. NO. 2613/KOL/2018 (A.Y. 2011-2012)-NAIYER SULTA N & I.T.A. N O. 2614/KOL/2018 (A.Y. 2011-2012)-MANUWAR SULTAN 3 ASSESSMENT U/S 143(3) OF THE INCOME TAX ACT, 1961 O N 25/0312014 (SINCE THE CASE WAS GETTING TIME BARRED ON 31/03/2014) THIS OFFICE RECEIVED A COMMUNICATION FR OM DDIT (INVESTIGATION) UNIT-IV)(1), CHENNAI ON 30/03/2014 (BY FAX, WITH THE COPY BY POST REACHING THIS OFFICE ON 31/03 /2014). THE SAID REPORT IS PLACED ON RECORD. THIS REPORT HA D TO DO WITH FINDINGS BY THE DDIT(INV), CHENNAI OFFICE IN R ELATION TO THE LEGAL POSITION OF A LAND SOLD BY THE ASSESSEE O N 15/04/2010 (RELEVANT TO A.Y 2011-12) FOR A CONSIDER ATION OF RS. 9,00,00,000 OF WHICH 50% SHARE CAME TO THE ASSE SSEE. THE REPORT STATED THAT THE SAID LAND HAD TO BE TREATED AS URBAN LAND FOR THE PURPOSE OF TAXATION AS OPPOSED TO RURA L- AS CONTENDED BY THE ASSESSEE. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE HAD STATED THAT THE SAID LAND WAS RURAL SINCE THE SAME WAS SIT UATED ABOUT 21 KMS AWAY FROM THE TAMBARAM MUNICIPALITY AN D 25 KMS AWAY FROM CHENNAI CORPORATION ON THE DATE OF SA LE. THE ASSESSEE HAD PRODUCED CERTIFICATES FROM THE TAHSILD AR, THIRUPORUR IN THIS REGARD. HOWEVER, AS PER THE REPORT OF THE DDIT(LNV.) UNIT-I V(1), CHENNAI THE AREA OF CHENNAI METROPOLITAN AREA IS MU CH LARGER THAN WHAT WAS STATED BY THE TAHSILDAR IN HIS REPORT AND THE SAID LAND WAS SITUATED AT ABOUT 3 KMS FROM THE CHENNAI METROPOLITAN AREA. SINCE THIS NEW FACT PLAC ES THE SOLD LAND INSIDE THE DISTANCE LIMITS SPECIFIED BY T HE INCOME TAX ACT, 1961 FOR EXEMPTION FROM TAXATION IT IS CLE AR GAINS ARE CHARGEABLE ON THE SALE OF THE SAID LAND. THIS GIVES THIS OFFICE SUFFICIENT REASON TO BELIEVE THAT INCOME IN THE FORM OF CAPITAL GAINS HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 147 OF THE INCOME TAX ACT, 1 961. HENCE, IT IS REQUIRED TO BE REOPENED FOR ASSESSMENT U/S 147 OF THE INCOME TAX ACT, 1961 ...... (II) REASONS RECORDED IN THE CASE OF MANUWAR SULTA N: .....THE INFORMATION VIDE LETTER NO. ITO(I&CI)- II/AIR/PROP/FINAL REPORT/2012-13/09 DATED 01/03/201 3 IN RESPECT OF THE AFORE-MENTIONED ASSESSEE WITH P AN- AMBPS7770G HAS BEEN RECEIVED FROM THE ITO (I&CI), K OLKATA THAT A LAND SITUATED AT CHENNAI WHICH WAS HELD JOIN TLY (50:50) WITH THE SAID ASSESSEE'S BROTHER NAMED NAIY ER SULTAN WITH PAN- AUUPS6171N (PRESENTLY ASSESSED UNDER ITO WARD 32(4), KOLKATA) HAD BEEN SOLD AT A SALE CONSIDERATI ON OF RS. 9 CRORE DURING THE FINANCIAL YEAR 2010-11 RELEVANT TO THE ASSESSMENT YEAR 2011-12. AS MANUAR SULTAN, AMBPS777 0G AND NAIYER SULTAN, AUUPS6171N BOTH HAD A 50% SHARE AND THUS RECEIVED RS. 4.50 CRORE EACH OUT OF THE SAID S ALE CONSIDERATION. I.T .A. NO. 2613/KOL/2018 (A.Y. 2011-2012)-NAIYER SULTA N & I.T.A. N O. 2614/KOL/2018 (A.Y. 2011-2012)-MANUWAR SULTAN 4 THE SALE DEED SAID TO HAVE BEEN REGISTERED IN THE S UB- REGISTRAR OFFICE NEELANKARAI; 271 KAZURA GARDEN, 2N D STREET, CHENNAI-600041. ON VERIFICATION OF THE ITR-4 FILED BY THE AFOREMENTIONED ASSESSEE FOR THE A.Y. 2011-12, IT IS SEEN THAT THE CAPITAL GAIN HAS BEEN SHOWN AS NIL. THE SAID AS SESSEE FILED RETURN DECLARING AN INCOME OF RS. 4,99,118. T HE CASE WAS COMPLETED U/S 143(1) ON 19/11/2012. IN VIEW OF THE ABOVE CIRCUMSTANCES, THERE IS REASON TO BELIEVE THAT THE ASSESSEE HAS ESCAPED INCOME CHARGEABLE TO TAX FOR THE SAID ASSESSMENT YEAR BY NOT DISCLOSING ANY CAPI TAL GAIN ON THE SALE LAND SITUATED AT CHENNAI..... THEREAFTER THE ASSESSMENT WAS COMPLETED BY THE ASSE SSING OFFICER UNDER SECTION 147/143(3) VIDE AN ORDER DATED 25.03.2015 I N CASE OF NAIYER SULTAN DENYING THE EXEMPTION CLAIMED BY THE ASSESSE E ON ACCOUNT OF GAIN ARISING FROM THE SALE OF PROPERTY AND BRINGING TO T AX SUCH GAIN WORKED OUT AT RS.4,48,27,660/- AS LONG-TERM CAPITAL GAIN I N THE HANDS OF THE ASSESSEE ON THE FOLLOWING GROUNDS:- (I) THE LAND PROPERTY SOLD BY THE ASSESSEE WAS ABOUT 3 KMS AWAY FROM THE CHENNAI METROPOLITAN AREA AS INFORMED BY DDIT (INV.), UNIT-IV(1), CHENNAI; (II) AS PER THE WEBSITE OF REGISTRATION DEPARTMENT, CHEN NAI, THE LAND PROPERTY SOLD BY THE ASSESSEE WAS CLASSIFI ED AS RESIDENTIAL LAND. (III) NO EVIDENCE WAS PRODUCED BY THE ASSESSEE TO ESTABLI SH THAT HE WAS DIRECTLY OR INDIRECTLY ASSOCIATED WITH ANY AGRICULTURAL ACTIVITY CARRIED ON SUCH PROPERTY. THE ASSESSMENT IN THE CASE OF OTHER ASSESSEE MANUWA R SULTAN WAS ALSO COMPLETED BY THE ASSESSING OFFICER UNDER SECTION 14 7/143(3) VIDE AN ORDER DATED 22.03.2016, WHEREIN THE CAPITAL GAIN AR ISING FROM THE LAND AS WORKED OUT AT RS.4,48,27,660/- WAS BROUGHT TO TAX I N THE HANDS OF THE ASSESSEE FOR THE SAME REASONS AS GIVEN IN THE CASE OF SHRI NAIYER SULTAN. 3. AGAINST THE ORDERS PASSED BY THE ASSESSING OFFIC ER UNDER SECTION 147/143(3), BOTH THE ASSESSEES PREFERRED THEIR APPE ALS BEFORE THE LD. I.T .A. NO. 2613/KOL/2018 (A.Y. 2011-2012)-NAIYER SULTA N & I.T.A. N O. 2614/KOL/2018 (A.Y. 2011-2012)-MANUWAR SULTAN 5 CIT(APPEALS) CHALLENGING THE VALIDITY OF THE SAID A SSESSMENTS AS WELL AS DISPUTING THE ADDITIONS MADE THEREIN ON ACCOUNT OF LONG-TERM CAPITAL GAIN. AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEES AS WELL AS THE MATERIAL AVAILABLE ON RECORD, THE LD. CIT(APPEA LS) DID NOT FIND MERIT IN THE PRELIMINARY ISSUE RAISED BY THE ASSESSEES CH ALLENGING THE VALIDITY OF THE ASSESSMENTS MADE BY THE ASSESSING OFFICER UN DER SECTION 147/143(3) AND UPHELD THE ASSESSMENTS MADE BY THE A SSESSING OFFICER AS VALID FOR THE FOLLOWING REASONS GIVEN IN HIS IMPUGN ED ORDER:- FROM THE REASONS RECORDED, IT IS CLEAR THAT IT IS NOT MERE' CHANGE OF OPINION' AS ALLEGED IN THE SUBMISSION OF THE APPELLANT. AS THE INFORMATION WAS RECEIVED AFTER COMPLETION OF ORIGINAL ASSESSMENT PROCEEDINGS, THE RE- ASSESSMENT PROCEEDINGS WERE INITIATED ON THE BASIS OF THAT INFORMATION. THE CASE LAWS CITED BY THE APPELLANT A RE NOT VALID IN THE FACTS AND CIRCUMSTANCES OF THE CASE. THE LD. CIT(APPEALS) ALSO CONFIRMED THE ADDITIONS M ADE BY THE ASSESSING OFFICER TO THE TOTAL INCOME OF THE ASSESSEES ON ACC OUNT OF LONG-TERM CAPITAL GAIN ARISING FROM THE SALE OF LAND BY HOLDI NG THAT THE SAID LAND WAS FALLING WITH THE CATEGORY OF URBAN LAND AS PER THE REPORT RECEIVED BY THE ASSESSING OFFICER FROM THE OFFICE OF DDIT(INV.), CH ENNAI. THE LD. CIT(APPEALS) ACCORDINGLY DISMISSED THE APPEALS OF B OTH THE ASSESSEES AND AGGRIEVED BY THE SAME, THEY ARE NOW IN APPEALS BEFO RE THE TRIBUNAL. 4. IN GROUNDS NO. 1 & 2 OF THESE APPEALS, A COMMON ISSUE IS RAISED BY BOTH THE ASSESSEES CHALLENGING THE VALIDITY OF THE RE-ASSESSMENT PROCEEDINGS INITIATED BY THE ASSESSING OFFICER IN T HEIR CASES, INTER ALIA, ON THE GROUND THAT THE REOPENING WAS BASED ON WRONG RE ASONS WITHOUT ANY TANGIBLE MATERIAL AND WITHOUT ANY INDEPENDENT APPLI CATION OF MIND BY THE ASSESSING OFFICER. 5. THE LD. COUNSEL FOR THE ASSESSEES INVITED OUR AT TENTION TO THE REASONS RECORDED BY THE ASSESSING OFFICER AND SUBMI TTED THAT THERE WAS NOTHING SPECIFICALLY TO SHOW THAT THE EXEMPTION CLA IMED BY THE ASSESSEES ON ACCOUNT OF GAIN ARISING FROM THE SALE OF RURAL A GRICULTURAL LAND WAS I.T .A. NO. 2613/KOL/2018 (A.Y. 2011-2012)-NAIYER SULTA N & I.T.A. N O. 2614/KOL/2018 (A.Y. 2011-2012)-MANUWAR SULTAN 6 WRONG. HE SUBMITTED THAT THE CLAIM OF THE ASSESSEES THAT THE LAND SOLD DURING THE YEAR UNDER CONSIDERATION WAS RURAL AGRIC ULTURAL LAND AS MADE IN THE RETURNS OF INCOME AND ACCEPTED IN THE REGULA R ASSESSMENTS WAS BASED ON A CERTIFICATE ISSUED BY THE CONCERNED TEHS ILDAR CONFIRMING THAT THE SAID LAND WAS LOCATED 20 KMS. OUTSIDE THE LIMIT OF CHENNAI MUNICIPAL CORPORATION. HE HAS SUBMITTED THAT THE INFORMATION STATED TO BE RECEIVED BY THE ASSESSING OFFICER FROM DDIT(INV.), CHENNAI O N THE OTHER HAND STATED THAT THE LAND WAS SITUATED AT ABOUT 3 KMS. F ROM THE CHENNAI METROPOLITAN AREA AND ON THE BASIS OF THIS INFORMAT ION, THE ASSESSING OFFICER ENTERTAINED THE BELIEF THAT THE CLAIM OF TH E ASSESSEES FOR EXEMPTION AS ALLOWED ORIGINALLY IN THE REGULAR ASS ESSMENTS WAS WRONG AND INCOME OF THE ASSESSEES IN THE FORM OF CAPITAL GAINS HAD ESCAPED ASSESSMENTS. HE CONTENDED THAT THIS INFORMATION REC EIVED BY THE ASSESSEES WAS VAGUE AND SINCE THE DISTANCE OF THE L AND FROM CHENNAI METROPOLITAN AREA WAS NOT RELEVANT TO DECIDE AS TO WHETHER THE SAID LAND WAS URBAN OR RURAL AGRICULTURAL LAND, THE BELIEF EN TERTAINED BY THE ASSESSING OFFICER ABOUT THE ESCAPEMENT OF INCOME AN D REOPENING OF ASSESSMENT ON THE BASIS OF SUCH BELIEF WAS WITHOUT INDEPENDENT APPLICATION OF MIND BY THE ASSESSING OFFICER. IN SU PPORT OF THIS CONTENTION, HE RELIED ON THE FOLLOWING JUDICIAL PRO NOUNCEMENTS:- (I) SHEO NATH SINGH VS.- ACIT (82 ITR 147) (SUPRE ME COURT); (II) GANGA SARAN & SONS (P) LIMITED VS.- ITO (13 0 ITR 1) (SC); (III)ITO VS.- LAKHMANI MEWAL DAS (103 ITR 437) (SC ); (IV)CYGNUS INVESTMENTS & FINANCE PVT. LTD. (ITA NO. 117/KOL/2018 DATED MAY 18, 2018) 6. THE LD. D.R., ON THE OTHER HAND, CONTENDED THAT SPECIFIC INFORMATION WAS RECEIVED BY THE ASSESSING OFFICER FROM DDIT(INV .), CHENNAI TO SHOW THAT THE LAND SOLD BY THE ASSESSEES DURING THE YEAR UNDER CONSIDERATION WAS URBAN LAND AND THE GAIN ARISING FROM THE SALE T HEREOF WHICH WAS CHARGEABLE TO TAX IN THE HANDS OF THE ASSESSEES AS LONG-TERM CAPITAL GAIN. HE CONTENDED THAT THE CLAIM OF THE ASSESSEES FOR EX EMPTION OF SUCH GAIN THUS WAS WRONGLY ALLOWED BY THE ASSESSING OFFICER I N THE ASSESSMENTS I.T .A. NO. 2613/KOL/2018 (A.Y. 2011-2012)-NAIYER SULTA N & I.T.A. N O. 2614/KOL/2018 (A.Y. 2011-2012)-MANUWAR SULTAN 7 ORIGINALLY COMPLETED AND THE ASSESSING OFFICER HAD REASON TO BELIEVE THAT THERE WAS ESCAPEMENT OF INCOME OF BOTH THE ASSESSEE S FROM THE ASSESSMENTS. HE CONTENDED THAT THERE WAS A LIVE-LIN K BETWEEN INFORMATION RECEIVED BY THE ASSESSING OFFICER AND T HE BELIEF ENTERTAINED BY HIM ABOUT THE ESCAPEMENT OF THE ASSESSEES INCOME AND THE ASSESSMENTS WERE VALIDLY REOPENED BY HIM IN CASE OF BOTH THE ASSESSEES AFTER RECORDING THE REASONS, WHICH CLEARLY SHOW HOW THE BELIEF OF ESCAPEMENT OF INCOME WAS FORMED BY THE ASSESSING OF FICER ON THE BASIS OF INFORMATION RECEIVED. HE CONTENDED THAT THE INFORMA TION RECEIVED BY THE ASSESSING OFFICER FROM DDIT(INV.), CHENNAI CONSTITU TED TANGIBLE MATERIAL AND IT WAS THUS NOT A CASE OF CHANGE OF OPINION AS RIGHTLY HELD BY THE LD. CIT(APPEALS). 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON THIS ISSUE AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. DURING THE YEAR UNDER CONSIDERATION, LAND OWNED JOINTLY BY BOTH THE ASSES SEES IN THE PRESENT CASE WAS SOLD AND THE GAIN ARISING FROM THE SAID LA ND WAS CLAIMED TO BE EXEMPT ON THE GROUND THAT THE SAID LAND BEING AN AG RICULTURAL LAND WAS NOT A CAPITAL ASSET WITHIN THE MEANING OF SECTION 2 (14). AS DEFINED IN SECTION 2(14), CAPITAL ASSET MEANS PROPERTY OF AN Y KIND HELD BY AN ASSESSEE, WHETHER OR NOT CONNECTED WITH HIS BUSINES S OR PROFESSION, BUT DOES NOT INCLUDE, INTER ALIA, AS PER CLAUSE (III) A GRICULTURAL LAND IN INDIA NOT BEING LAND SITUATED IN ANY AREA WITHIN THE DIST ANCE, MEASURED AERIALLY, NOT BEING MORE THAN 8 KMS FROM THE LOCAL LIMITS OF ANY MUNICIPALITY OR CANTONMENT BOARD WHICH HAS A POPULA TION OF MORE THAN 10 LAKHS. IN SUPPORT OF THIS CLAIM, A CERTIFICATE I SSUED BY THE CONCERNED TEHSILDAR OF TIRUPPORUR WAS SUBMITTED BY THE ASSESS EES SHOWING THAT THE LAND SOLD BY THEM WAS LOCATED 20 KM. AWAY FROM THE LIMIT OF CHENNAI MUNICIPAL CORPORATION. BASED ON THIS CERTIFICATE AS WELL AS THE PROVISIONS OF SECTION 2(14)(III), THE CLAIM OF THE ASSESSEES F OR EXEMPTION WAS ALLOWED BY THE ASSESSING OFFICER IN THE ASSESSMENTS ORIGINALLY COMPLETED UNDER SECTION 143(3)/143(1). THE SAID ASSESSMENTS, HOWEVER, WERE I.T .A. NO. 2613/KOL/2018 (A.Y. 2011-2012)-NAIYER SULTA N & I.T.A. N O. 2614/KOL/2018 (A.Y. 2011-2012)-MANUWAR SULTAN 8 SUBSEQUENTLY REOPENED BY HIM AFTER RECORDING THE RE ASONS AND A PERUSAL OF THE REASONS SO RECORDED BY THE ASSESSING OFFICER , WHICH ARE REPRODUCED IN THE FOREGOING PORTION OF THIS ORDER, SHOWS THAT THE BELIEF ABOUT THE ESCAPEMENT OF ASSESSEES INCOME FROM ASSESSMENTS WAS FORMED BY THE ASSESSING OFFICER ON THE BASIS OF INFORMATION RECEI VED IN THE FORM OF A COMMUNICATION FROM DDIT(INV.), CHENNAI, WHICH STATE D THAT THE AREA OF CHENNAI METROPOLITAN REGION WAS MUCH LARGER THAN WH AT WAS STATED BY THE TEHSILDAR IN HIS REPORT AND THE LAND SOLD BY TH E ASSESSEES WAS SITUATED AT ABOUT 3 KMS FROM THE CHENNAI METROPOLIT AN AREA. ON THE BASIS OF THE SAID INFORMATION, THE ASSESSING OFFICER ENTE RTAINED A BELIEF THAT THE GAIN ARISING FROM THE SALE OF THE SAID LAND WAS CHA RGEABLE TO TAX AND THE INCOME OF THE ASSESSEES IN THE FORM OF CAPITAL GAIN S HAD ESCAPED ASSESSMENT. AS RIGHTLY CONTENDED BY THE LD. COUNSEL FOR THE ASSESSEES IN THIS REGARD, THE LOCATION OF THE LAND FROM THE LOCA L LIMITS OF CHANNAI MUNICIPAL CORPORATION WAS RELEVANT TO DECIDE AS TO WHETHER THE SAID LAND WAS AN AGRICULTURAL LAND IN INDIA WITHIN THE MEANIN G OF CLAUSE (III) OF SUB- SECTION (14) OF SECTION 2 AND THE DISTANCE OF THE L AND FROM THE CHENNAI METROPOLITAN AREA WAS NOT RELEVANT IN THIS CONTEXT. THE INFORMATION RECEIVED BY THE ASSESSING OFFICER REGARDING THE LOC ATION OF THE LAND BEING SITUATED AT ABOUT 3 KMS FROM THE CHENNAI METROPOLIT AN AREA THUS WAS VAGUE AND IRRELEVANT TO DECIDE THE ISSUE RELATING T O THE EXEMPTION CLAIMED BY THE ASSESSEES IN RESPECT OF GAIN FROM TH E SALE OF THEIR LAND AND THERE WAS NO LIVE-LINK OR NEXUS OF THE SAID INFORMA TION WITH THE BELIEF ENTERTAINED BY THE ASSESSING OFFICER THAT THE EXEMP TION CLAIMED BY THE ASSESSEES WAS WRONGLY ALLOWED IN THE ASSESSMENTS OR IGINALLY COMPLETED AND THAT THERE WAS ESCAPEMENT OF INCOME OF THE ASSE SSEES FROM THE ASSESSMENTS. 8. IN THE CASE OF SHEO NATH SINGH VS.- CIT (SUPRA) CITED BY THE LD. COUNSEL FOR THE ASSESSEES, IT WAS HELD BY THE HONB LE SUPREME COURT THAT THE WORDS REASON TO BELIEF SUGGEST THAT THE BELIE F MUST BE THAT OF AN HONEST AND REASONABLE PERSON BASED UPON REASONABLE GROUNDS AND THE I.T .A. NO. 2613/KOL/2018 (A.Y. 2011-2012)-NAIYER SULTA N & I.T.A. N O. 2614/KOL/2018 (A.Y. 2011-2012)-MANUWAR SULTAN 9 ITO CANNOT ACT ON MERE SUSPICION, GOSSIP OR RUMOUR. IT WAS HELD THAT THE ITO WOULD BE ACTING WITHOUT JURISDICTION IF THE REA SON FOR HIS BELIEF THAT THE CONDITIONS ARE SATISFIED DOES NOT EXIST OR IS N OT MATERIAL OR RELEVANT TO THE BELIEF REQUIRED BY THE SECTION. IN THE CASE OF LAKHMANI MEWAL DAS (SUPRA) CITED BY THE LD. COUNSEL FOR THE ASSESSEES, HONBLE SUPREME COURT HELD THAT IT IS NOT ANY AND EVERY MATERIAL, HOWSOEV ER VAGUE AND INDEFINITE OR DISTANT, REMOTE AND FAR-FETCHED, WHICH WOULD WAR RANT THE FORMATION OF THE BELIEF RELATING TO ESCAPEMENT OF THE INCOME OF THE ASSESSEE FROM ASSESSMENT. HONBLE SUPREME COURT FURTHER HELD THAT ACTION CANNOT BE TAKEN FOR REOPENING ASSESSMENT IF THE INFORMATION I S WHOLLY VAGUE, INDEFINITE, FAR-FETCHED AND REMOTE. IT WAS HELD THA T THE REASON FOR THE FORMATION OF THE BELIEF MUST BE HELD IN GOOD FAITH AND SHOULD NOT BE A MERE PRETENCE. 9. KEEPING IN VIEW THE PROPOSITION PROPOUNDED BY TH E HONBLE SUPREME COURT IN THE CASE OF SHEO NATH SINGH (SUPRA ) AND LAKHMANI MEYAL DAS (SUPRA) AND HAVING REGARD TO THE FACTS OF THE CASE, WE FIND THAT THE ASSESSMENTS COMPLETED ORIGINALLY IN CASE OF THE TWO ASSESSEES WERE REOPENED BY THE ASSESSING OFFICER ON THE BASIS OF V AGUE AND IRRELEVANT INFORMATION, WHICH WAS INDEFINITE AND FAR-FETCHED F OR THE FORMATION OF ANY BELIEF THAT WAS ENTERTAINED BY THE ASSESSING OF FICER THAT THE LAND SOLD BY THE ASSESSEES WAS NOT AN AGRICULTURAL LAND WITHI N THE MEANING OF SECTION 2(14)(III) AND THAT THE GAIN ARISING FROM S UCH SALE WAS CHARGEABLE TO TAX. IT IS THUS ABUNDANTLY CLEAR THAT THE REASON S RECORDED BY THE ASSESSING OFFICER FOR THE BELIEF WHICH WAS FORMED B Y HIM FAILED TO SATISFY THE REQUIREMENTS OF SECTION 147 AND THE INITIATION OF REASSESSMENT PROCEEDINGS WITHOUT SATISFYING THIS MANDATORY REQUI REMENT WAS BAD-IN- LAW. THE ASSESSMENTS COMPLETED BY THE ASSESSING OFF ICER UNDER SECTION 147/143(3) IN CASE OF BOTH THE ASSESSEES IN PURSUAN T TO SUCH INVALID INITIATION THUS ARE LIABLE TO BE CANCELLED BEING BA D-IN-LAW. WE ORDER ACCORDINGLY AND ALLOW GROUNDS NO. 1 & 2 OF BOTH THE SE APPEALS. I.T .A. NO. 2613/KOL/2018 (A.Y. 2011-2012)-NAIYER SULTA N & I.T.A. N O. 2614/KOL/2018 (A.Y. 2011-2012)-MANUWAR SULTAN 10 10. AS A RESULT OF DECISION RENDERED BY US ON THE P RELIMINARY ISSUE INVOLVED IN GROUNDS NO. 1 & 2 CANCELLING THE ASSESS MENTS MADE BY THE ASSESSING OFFICER UNDER SECTION 147/143(3), THE OTH ER GROUNDS RAISED BY THE ASSESSEES IN THEIR APPEALS CHALLENGING THE ADDI TIONS MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(APPE ALS) ON ACCOUNT OF LONG-TERM CAPITAL GAIN HAVE BECOME INFRUCTUOUS OR A CADEMIC. WE, THEREFORE, DO NOT CONSIDER IT NECESSARY OR EXPEDIEN T TO DECIDE THE SAME. 11. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE S ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON MAY 03, 2019. SD/- SD/- (S.S. VISWANETHRA RAVI) (P.M. JAGTAP) JUDICIAL MEMBER VICE -PRESIDENT (KZ) KOLKATA, THE 3 RD DAY OF MAY, 2019 COPIES TO : (1) NAIYER SULTAN, C/O. SUBASH AGARWAL & ASSOCIATES, ADVOCATES, SIDDHA GIBSON, 1, GIBSON LANE, SUITE 213, 2 ND FLOOR, KOLKATA-700 069 (2) MANUWAR SULTAN, C/O. SUBASH AGARWAL & ASSOCIATES, ADVOCATES, SIDDHA GIBSON, 1, GIBSON LANE, SUITE 213, 2 ND FLOOR, KOLKATA-700 069 (3) INCOME TAX OFFICER, WARD-32(3)/32(4), KOLKATA, (4) COMMISSIONER OF INCOME TAX (APPEALS)-9, KOLKAT A, (5) COMMISSIONER OF INCOME TAX- , (6) THE DEPARTMENTAL REPRESENTATIVE (7) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.