Raj Kumar, Mathura V. I.T.O.- 1(3)-3, Mathura

ITA 27/AGR/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 6347 (ITAT-AGRA)
• Duration Of Justice: 2 year(s) 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-05-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 23-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Period of limitation; Competent authority; Reason to believe; Reassessment proceedings
• Section: 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA (SMC) BENCH: AGRA BEFORE S HRI A. D. JAIN, JUDICIAL MEMBER I.T.A NO. 2 8 /AGRA/201 5 (ASSESSMENT YEAR - 200 6 - 0 7 ) SHRI S HYAM LAL S/O SRI RAM PRASAD KUNJ NAGAR, DELHI BYE PAS ROAD, MATHURA 28100 3 (U.P.) PAN NO. AEQPL2460M (ASSESSEE) V S .. INCOME TAX OFFICER, 1 ( 3 ) 4 , MATHURA . (R EVENUE ) I.T.A NO. 2 7 /AGRA/2015 (ASSESSMENT YEAR - 2006 - 07) RAJ KUMAR S/O SRI SHYAM LAL, KAMPOO GHAT, ARYA SAMAJ ROAD, MATHURA 28100 1 (U.P.) PAN NO. DGYPK0132A (ASSESSEE) VS.. INCOME TAX OFFICER, 1(3) 3 , MATHURA. (REVENUE) A SSESSEE BY SHRI M . M. AGARWAL , CA . REVENUE BY SHRI WASEEM ARSHAD , SR. DR. DATE OF HEARING 1 2 . 0 4 .201 7 DATE OF PRONOUNCEMENT 04 .0 5 .201 7 I.T.A NO. 2 8 & 27 /AGRA/201 5 2 ORDER ITA NO.28/AGRA/2015 THI S IS A SSESSEES APPEAL FOR ASSESSMENT YEAR 200 6 - 0 7 , TAKING THE FOLLOWING GROUNDS : 1. BECAUSE ON DUE CONSIDERATION OF THE FACTS, CIRCUMSTANCES OF THE CASE , SUBMISSIONS MADE HIM AND CITED PRECEDENTS, LEARNED CIT(A PPEALS ) , HAS GROSSLY ERRED IN UPHOLD ING THE VALIDITY OF IGNITION OF PROCEEDINGS UNDER SECTION 148 OF THE ACT. 2. BECAUSE LEARNED CIT (APPEALS) FAILED TO APPRECIATE THAT THERE WAS NO VALID REASON ASSIGNE D BY THE AO IN THE PURPORTED REASONS TO BELIEVE AND THE REASONS RECORDED BY THE AO WERE BASED ON CONJECTURES , SURMISES AND IN BAD FAITH. THE PROCEEDINGS SO INITIATED WERE ILLEGAL, BAD IN LAW AND WITHOUT JURISDICTION. 3. BECAUSE, LEARNED CIT (APPEALS) F AILED TO APPRECIATE THAT THERE WAS NO MENTION OF ANY INCOME ESCAPING ASSESSMENT FOR ASSESSMENT YEAR 2006 - 07 IN THE PURPORTED REASONS RECORDED BY THE AO AND IN ANY CASE, THE ISSUE OF NOTICE UNDER SECTION 148 OF THE ACT WAS BARRED BY LIMITATION. 4. BECAUSE HOLDING SO LEARNED CIT (APPEALS) FAILED TO APPRECIATE THAT VARIOUS JUDGMENTS REFERRED BEFORE HIM WERE FULLY APPLICABLE TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND HAVE WRONGLY DISTINGUISHED THEM. WITHOUT PREJUDICE TO THE ABOVE 5. BECAUSE IN THE FACTS AND CIRCUMSTANCES OF THE LEARNED CIT (APPEALS) ERRED IN HOLDING THAT AGRICULTURAL LANDS TRANSFERRED I.T.A NO. 2 8 & 27 /AGRA/201 5 3 BY APPELLANT TO PARTNERSHIP FIRM WERE AMENABLE TO BEING CHARGED TO TAX AS SHORT TERM CAPITAL GAINS IGNORING THE EVIDENCE ON RECORD AND SUBMISSIONS MADE BEFORE HIM. 6. BECAUSE, LEARNED CIT (APPEALS) FURTHER ERRED IN NOT APPRECIATING THAT THERE WAS NOTHING ON RECORD THAT LAND BEARING KHASRA NO. 249 WAS EVER CONVERTED INTO NON - AGRICULTURAL INCOME AND IN NOT DELETING THE ADDITION MADE IN THA T ASPECT. 2. GROUND NOS. 1 TO 4 CHALLENGE THE LD. CIT(A) S ACTION OF UPHOLDING INITIATION OF PROCEEDINGS U/S 148 OF THE INCOME TAX ACT. 3. AS PER THE ASSESSMENT ORDER, INFORMATION WAS RECEIVED THAT THE ASSESSEE HAD INVESTED HIS LAND WORTH RS. 30 LACS AS CAPITAL IN THE BOOKS OF THE FIRM M/S BHAKTI GROUP PROMOTERS & BUILDERS, IN WHICH , THE ASSESSEE WAS A PARTNER OF 5%. THE AO OF THE ASSESSEE RECORDED REASONS FOR INITIATION PROCEEDINGS AGAINST THE ASSESSEE U/S 147 OF THE ACT ON THE BASIS OF THIS INFORMATI ON, NOTING THEREIN, THAT THE ASSESSEE WAS N O T FILING RETURN S OF INCOME AND IT WAS REASON TO BELIEVE THAT ASSESSEE HAD CONCEALED INCOME CHARGEABLE TO TAX, WHICH HAD ESCAPED ASSESSMENT. 4. VIDE ORDER DATED 1 8 .0 2 .2014, PASSED UNDER SECTIONS 147/143(3) OF THE ACT, THE AO ASSESSED SHORT TERM CAPITAL GAIN OF RS. 24 , 09 ,500/ - ON ACCOUNT OF THE CAPITAL CONTRIBUTION U/S 45(3) OF THE ACT. THE ASSESSMENT WAS COMPLETED AT A TOTAL INCOME OF RS.24,37,000/ - , BESIDES AGRICULTURAL INCOME OF RS.18,000/ - , AS AGAINST INCOME OF RS.27,500/ - RETURNED IN RESPONSE TO NOTICE U/S 148 OF THE ACT. I.T.A NO. 2 8 & 27 /AGRA/201 5 4 5. BEFORE THE LD. CIT(A), THE ASSESSEE , INTER ALIA, CONTENDED THAT THIS WAS A CASE WHERE NOTICE U/S 148 OF THE ACT HAD BEEN ISSUED AFTER A LAPSE OF MORE THAN 4 YEARS FROM THE END OF THE RELEVA NT ASSESSMENT YEAR; THAT IN SUCH A CASE, IN ACCORDANCE WITH SECTION 149(1) (B) OF THE ACT, NO NOTICE U/S 148 CAN BE ISSUED BY THE AO, UNLESS IN ADDITION TO THE REASON TO BELIEVE ESCAPEMENT OF INCOME, THE AO HAS FURTHER REASON THAT SUCH ALLEGED ESCAPED INCO ME AMOUNTS , OR IS LIKELY TO AMOUNT , TO RS.1 LACS OR MORE, FOR THAT YEAR; AND THAT IN THE PRESENT CASE, THE AO HAD NOT SPECIFIED THE QUANTUM OF INCOME ALLEGED TO HAVE ESCAPED ASSESSMENT. THE ASSESSEE PLACED RELI ANCE ON MAHESH KUMAR GUPTA VS. CIT, 363 ITR 300 (ALL.) AND ON AMAR NATH AGARWAL VS. CIT, 371 ITR 183 (ALL), WHEREIN, MAHESH KUMAR GUPTA (SUPRA) WAS RELIED ON. 6. THE LD. CIT(A) REJECTED THE ASSESSEES CONTENTIONS AND OBSERVED IN THE IMPUGNED ORDER THAT IN MAHESH KUMAR GUPTA (SUPR A), THE HONBLE ALLAHABAD HIGH COURT HAS HELD THAT THE SANCTIONING AUTHORITY WAS NOT AWARE OF THE QUANTUM , OR LIKELY QUANTUM OF THE INCOME ESCAPING ASSESSMENT IN THAT CASE, AS IT WAS NOT RECORDED IN THE REASONS AND, THEREFORE, THE NOTICE ISSUED U/S 148 OF THE ACT BEYOND FOUR YEARS OF THE END OF THE RELEVANT ASSESSMENT YEAR, WAS BARRED BY TIME; THAT SIMILARLY, IN AMAR NATH AGARWAL (SUPRA), THE HONBLE ALLAHABAD HIGH COURT HAD QUASHED THE REASSESSMENT PROCEEDINGS ON TWO COUNTS, NAMELY, THAT THE REASONS REC ORDED BY THE AO THAT THE ASSESSEE HAD FAILED TO DISCLOSE FULLY AND TRULY ALL I.T.A NO. 2 8 & 27 /AGRA/201 5 5 MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT AND THAT THE ESCAPED INCOME WAS LIKELY TO BE RS.1 LAC , OR MORE; THAT HOWEVER, IN THE ASSESSEES CASE, UNLIKE IN THE CASES CITED, THE AO HAD CLEARLY RECORDED THAT THE QUANTUM OF CAPITAL INTRODUCED BY THE ASSESSEE IN THE PARTNERSHIP FIRM IN A.Y. 2006 - 07 WAS RS.30 LACS; THAT THE AO HAD ALSO RECORDED THAT THE ASSESSEE HAD NOT BEEN FI LING RETURNS OF INCOME; THAT BOTH THESE FACTS, WHEN R E A D TOGETHER, WOULD INDICATE THAT NO CAPITAL GAIN WAS OFFERED TO TAX BY THE ASSESSEE IN A.Y. 2006 - 07 AND NO LOSS BROUGHT FORWARD FROM ANY EARLIER YEAR REMAINED TO BE ADJUSTED AGAINST THE SAID CAPITAL GAIN IN A.Y. 2006 - 07; THAT FURTHER, THE FIGURE OF RS.30 LA CS WAS SUBSTANTIALLY LARGER THAN THE MINIMUM FIGURE OF RS.1 LAC STIPULATED U/S 149(1)(B) OF THE ACT; AND THAT UNDER THESE CIRCUMSTANCES, HE [ THE LD. CIT(A)] WAS OF THE OPINION THAT BOTH THE DECISIONS CITED BY THE ASSESSEE WERE DISTINGUISHABLE ON FACTS, AS BOTH, THE AO AND THE SANCTIONING AUTHORITY WERE AWARE OF THE QUANTUM OF THE CAPITAL CONTRIBUTION AND THE SAID QUANTUM WAS CERTAINLY, AND NOT ONLY LIKELY , TO LEAD TO THE EARNING OF CAPITAL GAINS EXCEEDING RS.1 LACS. 7. CHALLENGING THE IMPUGNED ORDER, BEFOR E ME, THE LD. COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT THE LD. CIT(A) HAS ERRED IN FAILING TO APPRECIATE THAT IN THE REASONS RECORDED, THERE IS NO MENTION OF ANY INCOME OF MORE THAN RS.1 LAC S HAVING ESCAPED ASSESSMENT, AS IS THE STATUTORY MANDATE PRES CRIBED U/S 149(1)(B) OF THE ACT; AND THAT THE CASE LAWS CORRECTLY RELIED ON BY THE ASSESSEE HAVE WRONGLY I.T.A NO. 2 8 & 27 /AGRA/201 5 6 BEEN DISTINGUISHED BY THE LD. CIT(A) TO ILLEGAL LY DECIDE THE ISSUE AGAINST THE ASSESSEE. IT IS SUBMITTED THAT THE CASE IS FULLY COVERED BY THE ORDER DA TED 28.02.2017 PASSED BY THIS BENCH IN ITA NO. 29/AGRA/2015 IN THE CASE OF PATARIA VS. ITO - 3(3), MATHURA , WHERE , UNDER A SIMILAR SET OF FACTS AND IDENTICAL REASONS , NOTICE DATED 25.03.2013 ISSUED UNDER SECTION 148 OF THE ACT HAS BEEN DECLARED AS NULL AND VOID AB - INITIO. THE L EARNED CIT (APPEALS) , IT IS CONTENDED, HAS PASSED THE IMPUGNED ORDER ON THE SAME DAY AS IN THE CASE OF SRI PATARIA (SUPRA) AND ON SAME REASONING . 8. PER CONTRA, THE LD. DR HAS CONTENDED THAT TH ERE ARE CERTAIN ERROR S IN THE ORDER DATED 28.02.2017 PASSED BY THIS BENCH AND HENCE , THE ORDER PASSED IN THE CASE OF SRI PAT A RIA BE NOT FOLLOWED. THE L EARNED DR HAS FILED A COMPILATION COMPRISING OF 11 CAS ES IN SUPPORT OF HIS CLAIM. IN ADDITION, THE ORDER OF THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. T.C. ICE & COLD STORAGE (P) LTD. , IN ITA NO. 415/2011 HAS BEEN FILED. THESE CASE LAWS SHALL PRESENTLY BE DEALT WITH. 9. IN P ATARIA (SUPRA) I HA VE HELD AS UNDER: 9. I HAVE HEARD THE PARTIES AND HAVE PERUSED THE MATERIAL ON RECORD. THE OBSERVATION S OF THE LD. CIT(A) IN THE IMPUGNED ORDER AND THE ARGUMENTS OF THE LD. REPRESENTATIVES FOR BOTH THE PARTIES HAVE BEEN CONSIDERED. THE FOLLOWING ARE THE REASONS (APB 20) RECORDED BY THE AO TO INITIATE PROCEEDINGS U/S 147 OF THE ACT AGAINST THE ASSESSEE: I.T.A NO. 2 8 & 27 /AGRA/201 5 7 RE ASONS FOR INITIATING PROCEEDING U/S 147 IN THE CASE OF SRI PATARIA S/O SRI MANI RAM, VILLAGE MAHOLI DISTT. MATHURA FOR A.Y. 2006 - 07. AS PER THE INFORMATION RECEIVED FROM ITO - 3(1), MATHURA, THE ASSESSEE INTRODUCED HIS LAND IN TERM OF CAPITAL AMOUNTING TO RS .30,00,000/ - TO BECOME THE PARTNERS IN THE BHAKTI PROMOTORS & BUILDERS VIDE PARTNERSHIP DEED, DATED 01/AUG/2005, WHICH APPEARS TO HAVE BEEN ESCAPED FROM BEING TAXED, AS THERE IS NO INFORMATION WITH THIS OFFICE THAT HE FILES HIS RETURN OF INCOME. THEREFORE, I HAVE REASON TO BELIEVE THAT CAPITAL GAIN ARISING FROM TRANSFER OF THIS LAND HAS ESCAPED FROM BEING TAXED. SECTION 149(1)(B) OF THE ACT STATES THAT NO NOTICE U/S 148 SHALL BE ISSUED FOR THE RELEVANT ASSESSMENT YEAR, IF FOUR YEARS, BUT NOT MORE THAN SIX YEARS, HAVE ELAPSED FROM THE END OF THE RELEVANT ASSESSMENT YEAR , UNLESS THE INCOME CHARGEABLE TO TAX WHICH HA S ESCAPED ASSESSMENT AMOUNTS TO , OR IS LIKELY TO AMOUNT TO , RS. 1 LAC , OR MORE FOR THAT YEAR. THUS, THE REQUIREMENT OF SECTION 149(1)(B) OF THE ACT CLEARLY IS TH AT NOTICE U/S 148 OF THE ACT CAN ONLY BE ISSUED IF THE INCOME ESCAPING ASSESSMENT AMOUNTS TO , OR IS LIKELY TO AMOUNT TO RS.1 LAC . IN THE REASONS RECORDED, AS A READIN G THEREOF WOULD S H O W , THERE IS NO MENTION THAT INCOME AMOUNTING TO RS.1 LAC OR MORE IS BELIEVED TO HAVE ESCAPED ASSESSMENT. IT HAS NOT BEEN DISPUTED THAT THE ESCAPEMENT WAS BELIEVED ON ACCOUNT OF TRANSFER OF LAND AS CAPITAL INTRODUCED INTO THE FIRM. THE REASONS RECORDED DO NOT REVEAL THE AO TO BE IN POSSESSI ON OF ANY MATERIAL OR INFORMATION RECORD ING EITHER THE NATURE OF THE I.T.A NO. 2 8 & 27 /AGRA/201 5 8 LAND, OR EVEN THE LOCUS/SITUATION THEREOF, AND THE DATE, COST OR MODE OF ACQUISITION OF THE LAND BY THE ASESSEE, MUCH LESS ANY ABOUT EITHER THE EXIGIBILITY OF THE TRANSFER TO TAX , OR THE AMOUNT OF CAPITAL GAIN ARISING THERE - FROM. NOW, OBVIOUSLY, IN THE ABSENCE OF ANY OF THE SAID BASIC REQUISITE EVIDENCE, THE AO COULD POSSIBLY HAVE NOT BECOME AWARE, THOUGH SO OBSERVED BY THE LD. CIT(A), OF THE QUANTUM OF CAPITAL GAIN. AS SUCH, THERE IS NEITHER ANYTHING E VIDEN T, N OR EVINCIBLE FROM THE REASONS RECORDED, ABOUT ANY INCOME CHARGEABLE TO TAX ESCAPING ASSESSMENT. 10. AS IS WELL SETTLED, THE REASONS RECORDED ARE TO BE CONSIDERED IPSO FACTO, AS THEY ARE , WITHOUT SUPPLEMENT ING THEM , WITHOUT BOLSTERING THEM. CIT VS. SAMRAJ KRISHAN CHAUDHARY , 368 ITR 638 (ALL ) HANDED DOWN BY THE HONBLE JURISDICTIONAL HIGH COURT, AM ONGST A PLETHORA OR OTHER DECISIONS , IS ELOQUENT ON THE ISSUE. 11. THE LD. CIT(A) AS WELL AS THE DEPARTMENT BEFORE THIS BENCH, ON THE OTHER HAND, WOULD HAVE AS UPH E LD THE REASONS , BY OFFERING A JUSTIFICATION WHICH IS BASED ON MERE SU PP OSITION, I.E., THE AO WAS AWARE OF THE QUANTUM OF CAPITAL CONTRIBUTION, WHICH WOULD LEAD TO EARNING OF CAPITAL GAIN EXCEEDING ONE LAC R UPEES, SANS THE REASONS MEETING THE MANDATE OF THE LAW. TRUE, RS.30 LACS IS AN AMOUNT MUCH LARGER THAN THE AMOUNT OF RS.1 LAC. BUT THEN, THE FORMER FIGURE REPRESENTS THE CAPITAL CONTRIBUTION MADE, WHEREAS THE LATTER AMOUNT IS THAT LAID DOWN U/S 149(1)(B) OF THE ACT, AS A PRE REQUISITE , TO BE RECORDED IN THE REASONS AS MINIMUM INCOME CHARGEABLE TO TAX WHICH HAS I.T.A NO. 2 8 & 27 /AGRA/201 5 9 ESCAPED ASSESSMENT. AS RIGHTLY CONTENDED, IT IS CAPITAL GAIN AND NOT CAPITAL CONTRIBUTION, WHICH IS TAXABLE. 12. IN THE ABOVE VIEW OF THE MATTER, THE DISTINCTION ERRONEOUSLY SOUGHT TO BE DRAWN BY THE LD. CIT(A), BETWEEN THE FACTS OF THE PRESENT CASE A ND THOSE IN MAHESH KUMAR GUPTA (SUPRA) AND AMAR NATH AGARWAL (SUPRA), IS , REALLY , NON - EXISTENT. 13. AT THIS JUNCTURE, IT WOULD BE APT TO REPRODUCE HEREIN, THE RELEVANT PORTION OF MAHESH KUMAR GUPTA (SUPRA): 11. THE REASON ASSIGNED FOR REOPENING IS THAT THE PETITIONER AFTER CONVERTING THE LEASEHOLD LAND INTO FREEHOLD SOLD THE PROPERTY WITHIN THREE YEARS AFTER CONVERTING THE LAND INTO FREEHOLD RESULTING INTO SHORT TERM CAPITAL GAIN IN VIEW OF THE KARNATAKA HIGH COU RT'S DECISION REFERRED TO ABOVE. WHAT INCOME IS SAID TO HAVE BEEN ESCAPED DOES NOT FIND MENTION THEREIN. EVEN ASSUMING FOR THE SAKE OF ARGUMENT, THE INCOME WAS LIABLE TO BE TAXED AS SHORT TERM GAIN UNLESS THERE IS ANY MATERIAL BEFORE THE AUTHORITY CONCERNE D THAT IT EXCEEDS THE LIMIT OF RS. 1 LAKH, EXTENDED PERIOD OF LIMITATION OF SIX YEARS WILL NOT BE AVAILABLE TO THE DEPARTMENT. THE NORMAL PERIOD OF LIMITATION IS FOUR YEARS FOR GIVING THE NOTICE UNDER SECTION 148 AND WHERE THE ESCAPED INCOME IS LIKELY TO A MOUNT TO RS.1 LAKH OR MORE, THE EXTENDED PERIOD OF LIMITATION OF SIX YEARS WOULD BE ATTRACTED. THIS OBJECTION OF THE PETITIONER HAS BEEN REJECTED BY THE IMPUGNED ORDER ON THE GROUND THAT SINCE THE PERMISSION HAS BEEN GRANTED BY THE JOINT/ADDITIONAL COMMISS IONER, I.T.A NO. 2 8 & 27 /AGRA/201 5 10 INCOME TAX, STATUTORY REQUIREMENT STANDS FULFILLED VIDE PARA - 3 OF THE ORDER WHICH IS REPRODUCED BELOW: - 'YOU HAVE ALSO OBJECTED THAT IT IS NOT MENTIONED IN THE REASONS OF TAKING ACTION U/S 148 THAT THE ESCAPED INCOME IS MORE THAT 100000/ - . IN THIS CONNECTION THIS TO INFORM THAT IT IS MENTIONED IN NOTICE U/S148 ITSELF THAT THE NOTICE IS BEING ISSUED AFTER PROPER SANCTION OF JOINT/ADDL. COMMISSIONER OF INCOME TAX. THIS FULFILLS THE REQUIREMENT OF LAW, YOU HAVE PROVIDED THE REASONS OF INITIATING ACTIO N U/S148 NOT COMPUTATION OF INCOME. THE COMPUTATION OF INCOME WILL BE PROVIDED AFTER PROPER HEARING & GIVING PROPER OPPORTUNITIES TO BE HEARD.' 12. THE STAND OF THE DEPARTMENT AS IS EVIDENT FROM THE ABOVE QUOTED PARAGRAPH HAS NO LEGS TO STAND. THE JOINT/A DDITIONAL COMMISSIONER, INCOME TAX WAS NOT AWARE ABOUT THE FACT THAT THE INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED THE ASSESSMENT IS RS.1 LAKH OR MORE FOR THE RELEVANT ASSESSMENT YEAR. THE PROVISO TO SECTION 151 (1) FORTIFIES OUR VIEW WHICH SAYS THAT AFTE R THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR NO NOTICE UNDER SECTION 148 SHALL BE ISSUED OR UNLESS THE CHIEF COMMISSIONER OR COMMISSIONER IS SATISFIED ON THE REASONS RECORDED BY THE ASSESSING OFFICER THAT IT IS A FIT CASE FOR ISS UE OF SUCH NOTICE. ON A TRUE AND PROPER CONSTRUCTIONS OF THE PROVISO IT IS IMPERATIVE THAT THE ASSESSING OFFICER IN HIS REASON SHOULD STATE THAT THE ESCAPED INCOME IS LIKELY TO BE RS.1 LAKH OR MORE SO THAT THE CHIEF COMMISSIONER I.T.A NO. 2 8 & 27 /AGRA/201 5 11 OR THE COMMISSIONER MAY REC ORD HIS SATISFACTION. THE SANCTIONING AUTHORITY MUST BE AWARE THAT IT HAS EXERCISED POWER OF EXTENDED PERIOD OF LIMITATION UNDER 149 (1) (B) OF THE ACT. EXCEPTION HAS BEEN CARVED OUT BY CLAUSE (B) TO SECTION 149(1) IN RESPECT OF THE INCOME CHARGEABLE TO TA X WHICH HAS ESCAPED ASSESSMENT, AMOUNTS TO RS.1 LAKH OR MORE. TO FALL WITHIN EXCEPTION CLAUSE THE RELEVANT FACTS SHOULD HAVE BEEN RECORDED BY THE ASSESSING AUTHORITY IN ITS ORDER WHILE RECORDING THE REASON SO THAT A SANCTIONING AUTHORITY MAY APPLY ITS MIND TO THE PROPOSITION WHILE GRANTING THE SANCTION. 13. THE LEARNED COUNSEL FOR THE DEPARTMENT AFTER CLOSE OF THE ARGUMENT HAS FILED THE FOLLOWING JUDGEMENTS FOR CONSIDERATION OF THIS COURT: - 1. GKN DRIVESHAFTS (INDIA) LTD. VS. ITO [2002] 259 ITR 19/125 TA XMAN TAXMAN 963 (SC) 2. DR. H.S. BAWA VS. CIT, [2012] 25 TAXMANN.COM 15/210 TAXMAN 57 (P & H). 3. VIKRAM KOTHARI (HUF) VS. STATE OF U.P., [2011] TAXMANN.COM 280/200 TAXMANN.COM 152 (ALLD). 4. EXPORT CREDIT GUARANTEE CORPORATION OF INDIA VS. ADDL. CIT [201 3] 30 TAXMANN.COM, 211 (BOM). 5. ASSTT.CIT VS. RAJESH JHAVRI, [2007] 291 ITR 500/161 TAXMAN 316 (SC). I.T.A NO. 2 8 & 27 /AGRA/201 5 12 6. CHIEF COMMISSIONER (ADMN.) (U.P.) V. KANHAIYA LAL KAPOOR, [2005] 147 TAXMAN, 12 (ALL). 7. POORAN MAL VS. DIRECTOR OF INSPECTION, [1974) 93 ITR 505 (SC) 8. DEEP CHAND DAGA VS. ITO [1970] 77 ITR, 661 (MP) AND, 9. FISHER XOMOX SANMAR LTD. V. ASSISTANT CIT, [2007] 294 ITR 620 [2008] 168 TAXMAN 251 (MAD.) 14. NONE OF THE JUDGMENTS REFERRED TO ABOVE HAVE ANY CONNECTION TO THE POINT IN ISSUE EVEN REMOTEL Y. THEY RELATE EITHER TO THE QUESTION OF NON - DISCLOSURE OF INCOME OR FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE THE INCOME FULLY OR TRULY AND WHAT AMOUNTS TO 'REASON TO BELIEVE AN INFORMATION'. NONE OF THESE POINTS WERE URGED BEFORE US AND WE FAILED T O UNDERSTAND THE FILING OF THE RULINGS BY THE COUNSEL AS REFERRED TO HEREIN ABOVE. 15. THE ONLY POINT URGED AND PRESSED BEFORE US IS WHETHER IN ABSENCE OF ANYTHING IN THE REASONS RECORDED TO SUGGEST THAT THE INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED THE ASSESSMENT RS. ONE LAKH OR MORE HAVING NOT BEEN MENTIONED THE REASSESSMENT NOTICE GIVEN AFTER FOUR YEARS OF THE CLOSE OF THE ASSESSMENT ORDER IS VALID OR NOT. 16. FOR THE REASONS GIVEN ABOVE, WE FIND SUFFICIENT FORCE IN THE ARGUMENT OF THE LEARNED COUNSEL FOR THE PETITIONER THAT ON THE BASIS OF THE REASONS RECORDED BY THE ASSESSING OFFICER, THE I.T.A NO. 2 8 & 27 /AGRA/201 5 13 INITIATION OF THE REASSESSMENT PROCEEDINGS RELEVANT TO THE ASSESSMENT YE AR 2000 - 2001 BY MEANS OF THE NOTICE DATED 23.3.2007 AFTER MORE THAN FOUR YEARS IS CLEARLY BARRED BY TIME. 1 4 . THEN, IN AMAR NATH AGARWAL (SUPRA), IT HAS BEEN HELD AS FOLLOWS: 16. FROM THE AFORESAID, IT IS CLEAR THAT TWO DISTINCT CONDITIONS MUST BE SATISFIED BEFORE THE ASSESSING OFFICER CAN ASSUME JURISDICTION TO ISSUE A NOTICE UNDER SECTION 148 OF THE ACT, NAMELY, THAT HE MUST HAVE REASONS TO BELIEVE THAT THE INCOME OF THE ASSESSEE HAD ESCAPED ASSESSMENT AND, THAT HE MUST HAVE REASONS TO BELIEVE THA T SUCH ESCAPEMENT WAS BY REASONS OF THE OMISSION OR FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT. IF EITHER OF THESE CONDITIONS ARE NOT FULFILLED, THE NOTICE ISSUED BY THE ASSESSING OFFICER WOULD BE WITHOUT JURISDICTION. 17. FURTHER, FROM A PERUSAL OF SECTION 149(L)(B) OF THE ACT, IT IS IMPERATIVE THAT THE ASSESSING OFFICER, IN HIS REASONS, SHOULD ALSO STATE THAT THE ESCAPED INCOME IS LIKELY TO BE RS.L LAC OR MORE, WHICH IS AN ESSENTIAL INGR EDIENT FOR SEEKING THE APPROVAL AND SATISFACTION THAT IS TO BE RECORDED BY THE COMPETENT AUTHORITY UNDER SECTION 151 OF THE ACT. I.T.A NO. 2 8 & 27 /AGRA/201 5 14 18. CONSEQUENTLY, BEFORE TAKING ANY ACTION, THE ASSESSING OFFICER IS REQUIRED TO SUBSTANTIATE HIS SATISFACTION IN THE REASONS RECORDED BY HIM. IF THE CONDITIONS MENTIONED ARE NOT SATISFIED, THEN THE ISSUANCE OF NOTICE WOULD BE INVALID. 19. THE REASONS RECORDED BY THE ASSESSING OFFICER IS, THAT THE ASSESSEE HAD SOLD THE PROPERTY WITHIN THREE YEARS AFTER CONVERTING LEASE HOLD LAND TO FREE HOLD RESULTING INTO SHORT TERM CAPITAL GAINS IN VIEW OF THE JUDGMENT IN DR. V. V. MODY (SUPRA). 20. THE AFORESAID REASONS, MAKES IT CLEAR THAT THE ASSESSEE WAS REQUIRED TO PAY SHORT TERM CAPITAL GAINS TAX INSTEAD OF LONG TERM CAPITAL GAINS TAX AND, THEREFORE, THE ASSESSING OFFICER HAD REASONS TO BELIEVE THAT THE INCOME HAD ESCAPED ASSESSMENT. IN THE INSTANT CASE, ADMITTEDLY, THE NOTICE WAS ISSUED AFTER FOUR YEARS BUT BEFORE SIX YEARS. IN OUR OPINION, THE REASONS SO RECORDED BY THE ASSESSING OFFICER WAS NOT SUFFICIENT TO INTIATE PROCEEDINGS UNDER SECTION 148 OF THE ACT. WE FIND FROM THE REASONS RECORDED BY THE ASSESSING OFFICER THAT NO SUCH REASONS HAS BEEN RECORDED TO THE EFFECT THAT THE ESCAPED INCOME IN LIKELY TO BE RS.1 LAC OR MORE EXCEPT FOR THE ASSESSMENT YEAR 2001 - 02. 21. IN MAHESH KUMAR GUPTA V. CIT [2014] 363 ITR 300/[2013] 215 TAXMAN 114/33 TAXMANN.COM 409 (ALL) A COORDINATE BENCH OF THIS COURT HELD THAT IT IS IMPERATIVE FOR THE ASSESSING OFFICER TO RECORD IN HIS THAT THE ESCAPED INCOME IS LIKELY TO BE RS.1 LAC OR MORE S O THAT THE CHIEF COMMISSIONER OR I.T.A NO. 2 8 & 27 /AGRA/201 5 15 COMMISSIONER MAY RECORD HIS SATISFACTION U/S 151 OF THE ACT. THE COURT FURTHER HELD THAT IF THE SAID REASON HAS NOT BEEN RECORDED BY THE ASSESSING OFFICER, THE INITIATION OF THE REASSESSMENT PROCEEDINGS AFTER MORE THAN FOUR YEARS WOULD BE CLEARLY BARRED BY TIME. 22. A SIMILAR PROVISION, NAMELY, SECTION 34(1A)(II) EXISTED UNDER THE INCOME TAX ACT, 1922. A FULL BENCH OF THIS COURT IN JAI KISHAN SRIVASTAVA V. ITO [1960] 40 ITR 222 ( ALL) HELD THAT NON - RECORDING OF THE REASON BY THE ASSESSING OFFICER THAT THE ESCAPED INCOME WAS LIKELY TO BE RS.1 LAC OR MORE WAS FATAL TO THE ISSUANCE OF THE NOTICE FOR REASSESSMENT. 23. IN K.S. RASHID & SON V. ITO [1964] 52 ITR 355 (SC) A CONSTITUTIONAL BENCH OF THE SUPREME COURT HELD: THE SECOND POINT WHICH IS VERY IMPORTANT IS THAT IN REGARD TO THE CASES FALLING UNDER SECTION 34(1A), ACTION CAN BE TAKEN ONLY WHERE THE INCOME WHICH HAS ESCAPED ASSESSMENT IS LIKELY TO AMOUNT TO RS. 1 LAKH OR MORE. IN OTHER WORDS, IT IS ONLY IN REGARD TO CASES WHERE THE ESCAPED INCOME IS OF A HIGH MAGNITUDE THAT THE RESTRICTION OF THE PERIOD OF LIMITATION HAS BEEN REMOVED. 24. SINCE NO REASONS WERE RECORDED THAT THE ESCAPED INCOME IS LIKELY TO BE RS.1 LAC OR MORE SO THAT THE CHIEF COMMISSIONER OR COMMISSIONER MAY RE CORD HIS SATISFACTION UNDER SECTION 151, THE INITIATION OF REASSESSMENT PROCEEDINGS AFTER MORE THAN FOUR YEARS WAS CLEARLY BARRED BY TIME. I.T.A NO. 2 8 & 27 /AGRA/201 5 16 15. THE RATIO DECIDENDI OF BOTH THE DECISIONS OF THE HONBLE JURISDICTIONAL HIGH COURT EVIDENTLY IS THAT IN THE AB SENCE OF ANYTHING IN THE REASONS RECORDED TO SUGGEST THAT THE INCOME CHARGEABLE TO TAX WHICH HA S ESCAPED ASSESSMENT IS ONE LAC R UPEES OR MORE, THE NOTICE ISSUED U/S 148 OF THE ACT BEYOND FOUR YEARS OF THE END OF THE RELEVANT ASSESSMENT YEAR, IS INVALID. THIS RATIO, IN MY CONSIDERED OPINION, IS APPLICABLE TO THE PRESENT CASE WITH FULL FORCE AND THE LD. CIT(A) HAS ERRED IN HOLDING TH AT THE DECISIONS IN BOTH THESE CASES ARE DISTINGUISHABLE. 16. FOR THE FOREGOING DISCUSSION, RESPECTFULLY FOLLOWING THE DECISIONS IN MAHESH KUMAR GUPTA (SUPRA) AND AMAR NATH AGARWAL (SUPRA), FINDING FORCE IN THE GRIEVANCE RAISED BY THE ASSESSEE IN THIS REGARD, THE SAME IS ACCEPTED. THE CIT(A)S ORDER ON THIS ISS UE IS REVERSED. THE NOTICE (PB - 32 ) DATED 2 2 .0 3 .2013 , ISSUED U/S 148 OF THE ACT AND ALL PROCEEDINGS PURSUANT THERETO, CULMINATING IN THE ORDER UNDER APPEAL , ARE HELD TO BE NULL AND VOID AB INITIO . 17. AS SUCH, NOTHING FURTHER SURVIVES FOR ADJUDICATION. 18. IN THE RESULT, THE APPEAL IS ALLOWED. 10 . THE L EARNED DR HAS FILED A COPY OF THE ORDER PASSED BY THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF AMAR NATH AGARWAL (SUPRA) , FOR THE PROPOSITION THAT THE JUDGMENT DOES NOT DECIDE THE ISSUE. THIS ARGUMENT IS BASED ON AN INCORRECT READING OF THE ORDER OF THE HONBLE ALLAHABAD HIGH COURT. IN PARA 21 OF THE ORDER, AS REPRODUCED ABOVE, REFERENCE HAS BEEN MADE TO THE RATIO DECENDI IN I.T.A NO. 2 8 & 27 /AGRA/201 5 17 THE CASE OF MAHESH KUMAR GUPTA (SUPRA). IN PARA 24, IT HAS BEEN CONCLUSIVELY HELD THAT SINCE NO REASONS WERE RECORDED THAT THE ESCAPED INCOME IS LIKELY TO BE RS.1 LAC OR MORE , SO THAT THE CHIEF COMMISSIONER OR COMMISSIONER MAY RECORD HIS SATISFACTION UN DER SECTION 151, THE INITIATION OF REASSESSMENT PROCEEDINGS AF TER MORE THAN FOUR YEARS WAS CLEARLY BARRED BY TIME. 11 . APROPOS THE OTHER CASE LAWS RELIED ON BY THE DEPARTMENT, IN GOODYEAR INDIA LTD. VS. STATE OF HARYANA AND ANOTHER, 188 ITR 402 (SC), IT HAS BEEN HELD THAT A PRECEDENT IS AN AUTHORITY FOR WHAT IT ACTUALLY DECIDES AND NOT WHAT MAY REMOTELY FOLLOW FROM IT. HOWEVER, IN VIEW OF THE FACT THAT , AS OBSERVED HEREINABOVE, IN AMAR NATH AGARWAL , (SUPRA), THE HONBLE JURISDICTIONAL HIGH COURT HAS IN FACT DECIDED THE ISSUE, GOODYEAR INDIA LTD. (SUPRA) IS NOT APPLICABLE. SIMILAR IS THE POSITION REGARDING HINDUSTAN TEA TRADING CO. LTD. VS. CIT, 182 CTR 585 (CAL.) IN CIT VS. RUBY TRADERS & EXPORTS LTD. , 182 CTR 596 (CAL.), IT HAS BEEN HELD THAT DISM ISSAL OF SLP BY A NON - SPEAKING ORDER HAS NO BINDING EFFECT UNDER ARTICLE 141 OF THE CONSTITUTION OF INDIA. IN THE PRESENT CASE, THIS DECISION IS ALSO NOT APPLICABLE. 12 . IN BENGAL WATERPROOF LTD. VS. COMMISSIONER OF CENTRAL EXCISE, 2007 (122) ECC 285 ( BOM), THE ISSUE OF SUB - SILENTIO HAS BEEN DWELT ON. HOWEVER, AS CONSIDERED , THIS THEORY IS NOT APPLICABLE TO THE PRESENT CASE, SINCE , AS OBSERVED, IN AMAR NATH AGARWAL (SUPRA), THE HONBLE JURISDICTIONAL HIGH COURT HAS IN FACT I.T.A NO. 2 8 & 27 /AGRA/201 5 18 DECIDED THE ISSUE. HUMAYUN SULEMAN MERCHANT VS. CIT, (DPB 64 - 86) IS ALSO ON THE SUBJECT OF SUB SILENTIO AND IT IS, AS SUCH, NOT APPLICABLE. IN PRAGATI CONSTRUCTION CO. LTD. VS. ACIT , IT HAS BEEN HELD, IN THE FACTS OF THAT CASE, THAT BONA FIDE ACCEPTANCE OF THE A SSESSEES VERSION WILL NOT GIVE THE ASSESSEE A VESTED RIGHT TO ARGUE THAT ERROR IN APPRECIATION AND APPRAISAL SHOULD CONTINUE AD INFINITUM. HOWEVER, IN VIEW OF MY OBSERVATIONS HEREINABOVE, THERE IS NO ERROR IN PATARIA(SUPRA), AND, THEREFORE, THIS DECISION HAS NO APPLICAT ION . I N CIT VS. ORISSA CORPORATION LTD., 1986 AIR 1849 (SC), JAGMOHAN RAM CHANDRA VS. CIT, 274 ITR 405 (ALL) AND PARAS COLLINS DISTILLERS VS. ITO, 130 ITD 114 (HYD), IT HAS BEEN HELD THAT INITIAL CAPITAL CAN BE TAXED. THESE DECISIONS CONCERN CASH CRE DIT. IN PATARIA (SUPRA), HOWEVER, THE ISSUE WITH REGARD TO SECTION 149 (1)(B) OF THE I.T. ACT HAS BEEN CONSIDERED AND DECIDED. THEREFORE, THE FACTS IN THESE CASES ARE AT VARIANCE WITH THOSE OF PATARIA (SUPRA). 13 . FOR THE ABOVE DISCUSSION, THE FACTS IN THE PRESENT CASE BEING IN P ARI MATERIA WITH THOSE OF PATARIA (SUPRA), THE FINDINGS THEREIN ARE SQUARELY APPLICABLE TO THE PRESENT CASE. AS SUCH, IN ACCORDANCE THEREWITH, RESPECTFULLY FOLLOWING THE DECISIONS IN MAHE SH KUMAR GUPTA (SUPRA) AND AMAR NATH AGARWAL (SUPRA), FINDING FORCE IN THE GRIEVANCE RAISED BY THE ASSESSEE IN THIS REGARD, THE SAME IS ACCEPTED. THE CIT(A)S ORDER ON THIS ISS UE IS REVERSED. THE NOTICE (PB - 32 ) DATED 2 2 .0 3 .2013 , I.T.A NO. 2 8 & 27 /AGRA/201 5 19 ISSUED U/S 148 OF THE AC T AND ALL PROCEEDINGS PURSUANT THERETO, CULMINATING IN THE ORDER UNDER APPEAL , ARE HELD TO BE NULL AND VOID AB INITIO . ITA NO. 27/AGRA/2015 14 . THE FACTS IN THIS APPEAL ARE , MUTATIS MUTANDIS, EXACTLY SIMILAR TO THOSE IN ITA NO.28/AGRA/2015. NO SEPARATE ARGUMENT WITH REGARD TO ITA NO.27/AGRA/2015 HAS BEEN ADVANCED FROM EITHER SIDE. THEREFORE, M Y ABOVE OBSERVATIONS AND FINDINGS IN ITA NO. 28/AGRA/2015 ARE SQUARELY APPLICABLE TO ITA NO.27/AGRA/2015 ALSO AND AS IN ITA NO. 28/AGRA/2015, IN THE PRESENT APPEAL ALSO , THE NOTICE U/S 148 OF THE ACT AND ALL PROCEEDINGS P URSUANT THERETO, CULMINATING IN THE ORDER UNDER APPEAL, ARE HELD TO BE NULL AND VOID BY AB INITIO. 15 . IN THE RESULT, BOTH THE APPEALS ARE ALLOWED. O RDER PRONOUNCED IN THE OPEN COURT ON 04 / 0 5 / 201 7 . SD/ - ( A.D. JAIN) JUDICIAL MEMBER DATED : 04 / 0 5 /2017 *AKV* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR