SHRI JASBIR SINGH , JALANDHAR V. INCOME TAX OFFICER,WARD-I (2), JALANDHAR

ITA 426/ASR/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8452 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 28-11-2019
• Assessment Year: 2011-2012
• Appeal Filed On: 19-07-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Sale consideration of property below Jantri Value; Capital asset; Question of law; Tangible material; Fair market value; Valuation report; Reason to believe; Borrowed satisfaction; Capital Gains
• Section: 50C; 143(1); 64; 48; 13; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DB, BEN CH AMRITSAR BEFORE SHRI N.K. CHOUDHRY, JM & DR. A.L.SAINI, AM ./ITA NO.426/ASR/2018 ( / ASSESSMENT YEAR: 2011-12) SHRI JASBIR SINGH C/O SURINDER MAHAJAN & ASSOCIATES, CHARTERED ACCOUNTANTS, 74, VIJAY NAGAR, JALANDHAR-144 001 (PUNJAB). VS. INCOME TAX OFFICER, WARD-1(2), JALANDHAR (PUNJAB). ./ ./PAN/GIR NO.: ACAPS 8461 R (APPELLANT) .. (RESPONDENT) APPELLANT BY : SH. SURINDER MAHAJAN, CA. RESPONDENT BY : SH. CHARAN DASS, DR. / DATE OF HEARING : 28/11/2019 /DATE OF PRONOUNCEMENT : 16/01/2020 / O R D E R PER DR. A.L. SAINI : THE CAPTIONED APPEAL FILED BY THE ASSESSEE, PERTAIN ING TO ASSESSMENT YEAR 2011- 12, IS DIRECTED AGAINST THE ORDER PASSED BY THE COM MISSIONER OF INCOME TAX (APPEALS)-2, JALANDHAR [IN SHORT CIT(A)], WHICH I N TURN ARISES OUT OF AN ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER U/S 147/143( 3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 27.12.2016. 2. GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE AS FOLLOWS: 1. THAT ON THE FACTS & CIRCUMSTANCES OF THE CASE, LEARNED COMMISSIONER OF INCOME TAX (APPEALS) [CIT(A)], HAS GROSSLY ERRED IN HOLDING THAT ASSESSING OFFICER HAS RIGHTLY ASSUMED JURISDICTION OVER THE CASE AND PROCEEDINGS U/S 148 OF THE ACT HAVE BEEN VALIDLY INITIATED BY THE ASSESSING OFFICER. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS GROSSLY ERRED IN HOLDING THAT PROVISI ONS OF SECTION 50C OF THE ACT HAVE ITA NO.426/ASR/2018 ASSESSMENT YEAR: 2011-12 SHRI JASBIR SINGH. 2 | P A G E RIGHTLY BEEN INVOKED SINCE EXISTENCE OF MEMORANDUM OF UNDERSTANDING PRIOR TO 01.10.2009 COULD NOT BE PROVED WITH IRREFUTABLE EVI DENCE. 3. THAT BOTH ASSESSING OFFICER AND LEARNED CIT(A) H AVE GROSSLY ERRED IN LAW IN FAILING TO APPRECIATE THAT IN LIGHT OF THE FACTS OF THE CASE, THE DEEMING PROVISIONS OF SECTION 50C WERE NOT ATTRACTED. 4. THAT BOTH ASSESSING OFFICER AND LEARNED CIT(A) H AVE GROSSLY ERRED IN LAW IN FAILING TO APPRECIATE THE 'SCOPE AND DOMAIN OF PRE AMENDED SECTION 50C OF THE ACT AS IT WAS THEN SO AVAILABLE ON THE STATUE. 5. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS GROSSLY ERRED IN HOLDING THAT CAPITAL GAIN IS TO BE WORKED OUT BY TAKING SALE CONSIDERATION OF PROPERTY AT RS. 2,03,00,000/- AS D ETERMINED BY DEPARTMENTAL VALUATION OFFICER AS AGAINST ACTUAL SALE CONSIDERATION OF RS. 1,21,00,000/-. 6. THAT VARIOUS OBJECTIONS FILED TOWARDS VALUATION DETERMINED BY DEPARTMENTAL VALUATION OFFICER HAVE BEEN BRUSHED ASIDE BY THE LEARNED CIT( A). 7. THAT THE APPELLANT REQUESTS FOR LEAVE TO ADD OR AMEND THE GROUNDS OF APPEAL BEFORE THE APPEAL IS HEARD OR DISPOSED OFF. 3. THE BRIEF FACTS QUA THE ISSUE ARE THAT RETURN OF INCOME DECLARING TOTAL INCOME OF RS. 11,79,410/- WAS FILED BY THE ASSESSEE ON 30.09. 2011 WHICH WAS PROCESSED U/S 143(1) OF THE I.T ACT, 1961 ON 11.11.2011. LATER ON , THE ASSESSEES CASE WAS REOPENED U/S 147/148 OF THE INCOME TAX ACT, 1961 AF TER RECORDING THE REASONS. IN RESPONSE TO NOTICE U/S 148 OF THE I.T ACT,1961, THE ASSESSEE FILED HIS RETURN OF INCOME ON 12.04.2016 DECLARING TOTAL INCOME OF RS.1 1,79,140/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE COUNSEL OF THE ASSES SEE RAISED HIS OBJECTION AGAINST THE INITIATION OF PROCEEDINGS U/S 147 OF THE I.T AC T, 1961. THE OBJECTION RAISED BY THE ASSESSEE WAS DULY DISPOSED OF BY THE ASSESSING OFFICER. THE ASSESSEE HAD SOLD AN IMMOVEABLE PROPERTY MEASURING 28 MARLAS, 24 SQ. FT. SITUATED AT 296, LAJPAT NAGAR, JALANDHAR VIDE REGISTERED SALE DEED NO. 6,30 0 DATED 20.10.2010. THE PROPERTY WAS SOLD TO M/S SIRJON CONSTRUCTION PVT. L TD THROUGH ITS DIRECTOR SH. RISHIKESH UPADYAYA S/O SH. GIRISH RAM UPADYAYA R/O 10, GREEN FIELD KAPURTHALA ROAD, JALANDHAR. THE PROPERTY WAS SOLD F OR RS.1,21,00,000/- WHEREAS VALUE AS PER STAMP DUTY VALUATION WAS TO THE TUNE O F RS.3,46,00,000/-. THEREFORE, AO MADE ADDITION ON ACCOUNT OF UNDISCLOSED LONG TER M CAPITAL GAIN(LTCG) TO THE TUNE OF RS.2,25,00,000/- (RS.3,46,00,000- RS.1,21,0 0,000). ITA NO.426/ASR/2018 ASSESSMENT YEAR: 2011-12 SHRI JASBIR SINGH. 3 | P A G E 4. AGGRIEVED BY THE STAND SO TAKEN BY THE LD. AO, T HE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) WHO HAS DISMISSED THE ASSESSEES TECHNICAL GROUND OF RE- OPENING U/S 147/148 OF THE ACT AND HELD THAT THE AO HAS DISCHARGED HIS DUTY BEFORE INITIATING THE RE-OPENING PROCEEDINGS U/S 147 OF TH E ACT. HOWEVER, THE LD. CIT(A) ALSO ADJUDICATED THE ASSESSEES APPEAL ON MERITS OBSERVI NG THE FOLLOWING: 5.17 I HAVE PERUSED THE COMMENTS MADE BY THE APPEL LANT IN RESPONSE TO THE VALUATION REPORT OF THE DVO AND FIND THAT PRIMARY FOCUS IS ON THE CIRCLE RATE WHICH HAS BEEN ADOPTED FOR THE PURPOSES OF VALUATION OF THE PROPER TY. THE APPELLANT HAS CONTENDED THAT CIRCLE RATE WHICH IS BEING ADOPTED BY THE STAMP VAL UATION AUTHORITY HAS RECENTLY BEEN REDUCED SUBSTANTIALLY AND THEREFORE, IT IS STATED T HAT LOWER VALUE MAY BE ADOPTED FOR THE PURPOSES OF TAKING DEEMED SALE CONSIDERATION OF THE PROPERTY. 5.18 HAVING CONSIDERED THE SUBMISSIONS MADE IN THIS REGARD, I FIND THAT PROVISIONS OF SECTION 50C (2) OF THE IT ACT DO PROVIDE FOR MAKING A REFERENCE TO THE VALUATION OFFICER, WHERE IT IS CONTENDED THAT VALUE ADOPTED BY THE STA MP VALUATION AUTHORITY IS HIGHER THAN THE FAIR MARKET VALUE OF THE PROPERTY AS ON THE DAT E OF TRANSFER, FURTHER, PROVISIONS OF SUBSECTION (3) OF SECTION 50C OF THE IT ACT ALSO PR OVIDE THAT WHERE THE VALUE ASCERTAINED UNDER SUBSECTION(2) EXCEEDS LIFE VALUE ADOPTED BY T HE STAMP VALUATION AUTHORITY, THEN THE VALUE SO ADOPTED BY SUCH AUTHORITY SHALL BE TAKEN A S THE FULL VALUE OF CONSIDERATION RECEIVED AS A RESULT OF TRANSFER. IN THIS CASE, THE STAMP VALUATION AUTHORITY HAD ADOPTED THE VALUE OF THE PROPERTY AS PER CIRCLE RATE AND AS AGAINST THIS DVO HAS VALUED THE PROPERTY AT RS, 2,03,00,000 WHICH IS LESS THAN THE STAMP DULY VALUE. THEREFORE, THE BENEFIT OF THIS REDUCTION IN DEEMED SALE CONSIDERATION HAS TO BE GIVEN TO THE APPELLANT AS PROVIDED UNDER THE PROVISIONS OF SECTION 50C (2) OF THE IT ACT. THE AO IS BEING DIRECTED TO RE-COMPUTE THE QUANTUM OF LONG TERM CAPITAL GAIN S ON SALE OF PROPERTY BY TAKING THE SALE CONSIDERATION AT RS.2,03,00,000 AND WORKOUT TH E AMOUNT OF CAPITAL GAINS ACCORDINGLY. 5. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE AS SESSEE IS IN APPEAL BEFORE US. THE SOLITARY GRIEVANCE OF THE ASSESSEE IN THIS APPE AL IS THAT REOPENING OF ASSESSMENT BY ASSESSING OFFICER U/S 147 OF THE ACT IS BAD IN LAW AND THEREFORE IT SHOULD BE QUASHED. 6. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY GON E THROUGH THE SUBMISSION PUT FORTH ON BEHALF OF THE ASSESSEE ALONG WITH THE DOCU MENTS FURNISHED AND THE CASE LAWS RELIED UPON, AND PERUSED THE FACT OF THE CASE INCLUDING THE FINDINGS OF THE LD CIT(A) AND OTHER MATERIALS AVAILABLE ON RECORD. THE MAIN GRIEVANCE OF THE ASSESSEE IS AGAINST THE ACTION OF THE AO IN REOPENI NG ASSESSMENT COMPLETED U/S. 143(1) OF THE ACT. ACCORDING TO LD. COUNSEL FOR TH E ASSESSEE, THE AO WITHOUT APPLICATION OF MIND AFTER RECEIPT OF INFORMATION FR OM ITO (HQ.) (TECH) O/O PR. ITA NO.426/ASR/2018 ASSESSMENT YEAR: 2011-12 SHRI JASBIR SINGH. 4 | P A G E COMMISSIONER OF INCOME TAX-1 JALANDHAR, HAS SIMPLY REOPENED THE ASSESSMENT. ACCORDING TO LD. COUNSEL, BEFORE THE AO DECIDES TO REOPEN THE ASSESSMENT, HE HAS TO SATISFY THE CONDITION PRECEDENT TO ASSUME JURISD ICTION AND FOR THAT HE TOOK OUR ATTENTION TO THE EXPRESSION USED IN SEC. 147 OF THE ACT WHICH STATES THAT AO SHOULD HAVE REASON TO BELIEVE ESCAPEMENT OF INCOME. ACC ORDING TO LD. COUNSEL, EVEN AFTER THERE IS A FOUNDATION BASED ON INFORMATION IS THERE, STILL THERE MUST BE SOME REASONS WARRANT HOLDING A BELIEF THAT INCOME CHARGE ABLE TO TAX HAS ESCAPED ASSESSMENT, WHICH EXPRESSION USED BY PARLIAMENT IS STRONGER THAN THE EXPRESSION SATISFIED AND IN THE PRESENT CASE SUCH REQUIREMEN T AS CONTEMPLATED BY LAW HAS NOT BEEN MET IN THE REASON RECORDED BY THE AO BEF ORE VENTURING TO RE-OPEN THE ASSESSMENT WHICH VITIATES THE RE-OPENING ITSELF. A CCORDING TO LD. COUNSEL, EVEN IF THE INFORMATION GIVEN BY THE ITO (HQ.) (TECH)O/O PR . COMMISSIONER OF INCOME TAX-1 JALANDHAR,IS ADVERSE AGAINST THE ASSESSEE, AT THE MOST IT MAY TRIGGER REASON TO SUSPECT; THEN AO HAS TO MAKE REASONABLE ENQUIRY AND COLLECT MATERIAL WHICH WOULD MAKE HIM BELIEVE THAT THERE IS IN FACT AN ESC APEMENT OF INCOME. WITHOUT DOING SO, THE JURISDICTIONAL FACT NECESSARY TO USUR P JURISDICTION TO REOPEN THE REGULAR ASSESSMENT CANNOT BE MADE BY THE AO. FOR T HE SAID PROPOSITION, THE LD. AR DREW OUR ATTENTION TO FOLLOWING CASE LAWS: I).PCIT VS. MEENAKSHI OVERSEAS LTD. 395 ITR 677(DEL .) (REFERRED TO PARA 19 TILL PARA 37). II).DCIT VS. GREAL WALL MARKETING PVT. LTD. ITA NO. 660/KOL/2011 (REFERRED TO PAGE 10 PARA 11) III).SHRI RAJ KUMAR GOEL VS. ITO ITA NO.1028/KOL/20 17 (REFERRED TO PAGE 5-8 PARA 11) (IV).CLASSIC FLOUR & FOOD PROCESSING PVT. LTD. VS. CIT ITA NOS. 764 TO 766/KOL/2014 (PAGE 7 PARA 12 TO 16) V).PCIT VS. SHODIMAN INVESTMENTS (P) LTD. (2018) 93 TAXMANN.COM 153 (BOM) PAGE 4 PARA 12 TO 14) VI).KSS PETRON PVT. LTD. VS. ACIT ITA NO. 224/MUM/2 014 (REFERRED TO PAGE 3 PARA 8-11) VII).PCIT VS. TUPPERWARE INDIA PVT. LTD. (2016) 236 TAXMAN 494 (REFERRED TO PAGE 3 PARA 6 AND 9) VIII).DCIT VS. NATIONAL BANK FOR AGRICULTURE AND RU RAL DEVELOPMENT ITA NO.4964/MUM/2014 (REFERRED TO PAGE 10- 13 PARA 12) 7. WE NOTE THAT THE COORDINATE BENCH OF THIS TRIBU NAL IN ITA NO. 660/KOL/2011 FOR ITA NO.426/ASR/2018 ASSESSMENT YEAR: 2011-12 SHRI JASBIR SINGH. 5 | P A G E AY 2002-03 IN THE CASE OF DCIT VS. GREAT WALL MARKE TING (P) LTD. VIDE ORDER DATED 03.02.2016 HAS HELD AS UNDER: 9. WE HAVE GIVEN A CAREFUL CONSIDERATION OF THE SU BMISSIONS MADE BY THE LEARNED COUNSEL FOR THE ASSESSEE. IT IS CLEAR FROM THE REASONS RECORDED BY THE AO THAT THE AO ACTED ONLY ON THE BASIS OF A LETTER RECEIVED FROM INVESTIGATION WING, NEW DELHI. THE REASONS RECORDED DOES NOT GIVE AS TO WHO HAS GIVEN THE BOGUS ENTRIES TO THE ASSESSEE. THE REASON S RECORDED ALSO DOES NOT MENTION AS TO ON WHICH DATES AND THROUGH WHICH MODE THE BOGUS ENTRIES WERE MADE BY THE ASSESSEE. THE REASONS RECORDED WHICH ARE EXTRACTED IN THE EARLIER PART OF THE ORDE R DOES NOT SHOW, WHAT WAS THE INFORMATION GIVEN BY DIT(INV.),NEW DELHI. THE DATE OF THE INFORMATION RE CEIVED BY THE AO WERE NOT SPELT OUT IN THE REASONS RECORDED. THE INVOLVEMENT OF THE ASSESSEE IS ALSO N OT SPELT OUT, EXCEPT MENTIONING THE CORPORATE BODIES WHO HAD SUBSCRIBED TO THE SHARE CAPITAL OF T HE ASSESSEE WERE NON-EXISTENT AND NOT CREDITWORTHY. ON IDENTICAL FACTS THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS INSECTICIDES (INDIA) LTD (SUPRA) HAS TAKEN A VIEW THAT THE REASO NS RECORDED WERE VAGUE AND UNCERTAIN AND CANNOT BE CONSTRUED AS SATISFACTION ON THE BASIS OF THE RE LEVANT MATERIAL ON THE BASIS OF WHICH A REASONABLE PERSON CAN FORM A BELIEF THAT INCOME HAS ESCAPED AS SESSMENT. THE HON'BLE DELHI HIGH COURT HAS ALSO COME TO THE CONCLUSION THAT THE REASONS RECORDED DI D NOT DISCLOSE THE AO'S MIND REGARDING ESCAPEMENT OF INCOME. THE HON'BLE DELHI HIGH COURT ULTIMATELY HELD THAT INITIATION OF PROCEEDINGS U/S 148 OF THE ACT WAS NOT VALID AND JUSTIFIED IN T HE EYES OF LAW. THE FACTS AND CIRCUMSTANCES IN THE PRESENT CASE ARE IDENTICAL TO THE CASE DECIDED BY T HE HONBLE DELHI HIGH COURT. FOLLOWING THE SAID DECISION WE HOLD THAT INITIATION OF RE-ASSESSMENT P ROCEEDINGS IS NOT VALID. ON THIS GROUND, THE ASSESSMENT IS LIABLE TO BE ANNULLED. 8. THE HONBLE BOMBAY HIGH COURT IN PR.CIT VS. SHOD IMAN INVESTMENTS (P) LTD. (2018) 93 TAXMANN.COM 153 (BOM) IT HAS BEEN HELD AS UNDER: 10. BESIDES, THE SUBMISSIONS MADE ON BEHALF OF THE REVENUE THAT IN VIEW OF THE DECISION OF THE APEX COURT IN RAJESH JHAVERI STOCK BROKERS (P) LTD.'S, CASE (SUPRA), THE ASSESSING OFFICER IS ENTITLED TO RE-OPEN THE ASSESSMENT FOR WHATEVER REASONS AND THE SAME CANNOT BE SUBJECTED TO JURISDICTIONAL REVIEW, IS PREPOSTEROUS. FIRST OF ALL, TAKING OUT A WORD OR SENTENCE FROM THE ENTIRE JUDGMENT, DIVORCED FROM THE CONTEXT AND RELY ING UPON IT, IS NOT PERMISSIBLE (SEE CIT V. SUN ENGG. WORKS (P) LTD. [L992] 64 TAXMAN 442/198 I TR 297 (SC). IT MAY BE USEFUL TO REPRODUCE THE CONTEXT IN WHICH THE SENTENCE IN RAJE SH JHAVERI STOCK BROKERS (P) LTD.'S CASE (SUPRA) BEING RELIED UPON BY THE REVENUE TO SUPPORT ITS CASE, WAS MADE. THE CONTEXT, IS AS UNDER: 'THE SCOPE AND EFFECT OF SECTION 147 AS SUBSTITUTED WITH EFFECT FROM APRIL 1, 1989, AS ALSO SECTIONS 148 TO 152 ARE SUBSTANTIALLY DIFFERENT FRO M THE PROVISIONS AS THEY STOOD PRIOR TO SUCH SUBSTITUTIONS. UNDER THE OLD PROVISIONS OF SECTION 147, SEPARATE CLAUSES (A) AND (B) LAID DOWN THE CIRCUMSTANCES UNDER WHICH INCOME ESCAPING ASSES SMENT FOR THE PAST ASSESSMENT YEARS COULD BE ASSESSED OR REASSESSED TO CONFER JURISDICT ION UNDER SECTION 147(A) TWO CONDITIONS WERE REQUIRED TO BE SATISFIED: FIRSTLY THE ASSESSIN G OFFICER MUST HAVE REASON TO BELIEVE THAT INCOME, PROFITS OR GAINS CHARGEABLE TO, INCOME TAX HAVE ESCAPED ASSESSMENT, AND SECONDLY HE MUST ALSO HAVE REASON TO BELIEVE THAT SUCH ESCAPEME NT HAS OCCURRED BY REASON OF EITHER OMISSION OR FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY OR TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT OF THAT YEAR. BOTH THE SE CONDITIONS PRECEDENT TO BE SATISFIED ITA NO.426/ASR/2018 ASSESSMENT YEAR: 2011-12 SHRI JASBIR SINGH. 6 | P A G E BEFORE THE ASSESSING OFFICER COULD HAVE JURISDICTIO N TO ISSUE NOTICE UNDER SECTION 148 READ WITH SECTION 147(A). BUT UNDER THE SUBSTITUTED SECT ION 147 EXISTENCE OF ONLY THE FIRST CONDITION SUFFICES.' THEREFORE, THE SENTENCE BEING RELIED UPON WAS MADE IN THE CONTEXT OF THE CHANGE IN LAW THAT UNDER THE AMENDED PROVISION 'REASON TO BELIEVE' THA T IN CASE OF ESCAPED ASSESSMENT, IS SUFFICIENT TO RE-OPEN THE ASSESSMENT. THIS UNLIKE T HE EARLIER PROVISION OF SECTION 147(A) OF THE ACT WHICH REQUIRED TWO CONDITIONS I.E. FAILURE TO D ISCLOSE FULLY AND TRULY ALL FACTS NECESSARY FOR ASSESSMENT AND REASON TO BELIEVE THAT INCOME HAS ES CAPED ASSESSMENT THUS, THE OBSERVATIONS BEING RELIED UPON MUST BE READ IN THE CONTEXT IN WH ICH IT RENDERED. ON SO READING THE SUBMISSION, WILL NOT SURVIVE. 11. FURTHER, A READING OF THE ENTIRE DECISION, IT IS CLEAR THAT THE REASONABLE BELIEF ON THE BASIS OF TANGIBLE MATERIAL COULD BE, PRIMA FACIE, F ORMED TO CONCLUDE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. MR. MOHANTY, LEARNE D COUNSEL IS IGNORING THE FACT THAT THE WORDS WHATEVER REASONS IS QUALIFIED BY THE WORDS HAVING REASONS TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT. THE WORDS WHATEVER REASON S ONLY MEANS ANY TANGIBLE MATERIAL WHICH WOULD ON APPLICATION OF THE FACTS ON RECORD L EAD TO REASONABLE BELIEF THAT INCOME CHARGEABLE, TO TAX HAS ESCAPED, ASSESSMENT THIS MAT ERIAL WHICH, FORMS THE BASIS, IS NOT RESTRICTED, BUT THE MATERIAL MUST LEAD TO THE FORMA TION OF REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT MERE OBTAI NING, OF MATERIAL BY ITSELF DOES NOT RESULT IN REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESS MENT. IN FACT, THIS WOULD BE EVIDENT FROM THE FACT THAT IN PARA 16 OF THE DECISION IN RAJESH JHAVERI STOCK BROKERS (P) LTD.'S, CASE (SUPRA), IT IS OBSERVED THAT THE WORD 'REASON' IN T HE 'REASON TO BELIEVE' WOULD MEAN CAUSE OR JUSTIFICATION. THEREFORE, IT CAN ONLY BE THE BASIS OF FORMING THE BELIEF. HOWEVER, THE BELIEF MUST BE INDEPENDENTLY FORMED IN THE CONTEXT OF THE MATER IAL OBTAINED THAT THERE IS AN ESCAPEMENT OF INCOME. OTHERWISE, NO MEANING IS BEING GIVEN TO THE WORDS 'TO BELIEVE' AS FOUND IN SECTION 147 OF THE ACT. THEREFORE, THE WORDS 'WHATEVER REAS ONS' IN RAJESH JHAVERI STOCK BROKERS (P) LTD.'S, CASE (SUPRA), ONLY MEANS WHATEVER THE MATER IAL, THE REASONS RECORDED MUST INDICATE THE REASONS TO BELIEVE THAT INCOME HAS, ESCAPED ASSESSM ENT. THIS IS SO AS REASONS AS RECORDED ALONE GIVE THE ASSESSING OFFICER POWER TO RE-OPEN A N ASSESSMENT, IF IT REVEALS/INDICATE, REASONS TO BELIEVE THAT INCOME CHARGEABLE TO TAX HA S ESCAPED ASSESSMENT. 12. THE RE-OPENING OF AN ASSESSMENT IS AN EXERCISE OF EXTRA-ORDINARY POWER ON THE PART OF THE ASSESSING OFFICER, AS IT LEADS TO UNSETTLING THE SE TTLED ISSUE/ASSESSMENTS. THEREFORE, THE REASONS TO BELIEVE HAVE TO BE NECESSARILY RECORDED IN TERMS OF SECTION 148 OF THE ACT, BEFORE RE-OPENING NOTICE, IS ISSUED. THESE REASONS, MUST I NDICATE THE MATERIAL (WHATEVER REASONS) WHICH FORM THE BASIS OF RE-OPENING. ASSESSMENT AND ITS REASONS WHICH WOULD EVIDENCE THE LINKAGE/NEXUS TO THE CONCLUSION THAT INCOME CHARGEA BLE TO TAX HAS ESCAPED ASSESSMENT. THIS IS A SETTLED POSITION AS OBSERVED BY THE SUPREME CO URT IN S. NARAYANAPPA V. CIT [1967] 63 ITR 219, THAT IT IS OPEN TO EXAMINE WHETHER THE REA SON TO BELIEVE HAS RATIONAL CONNECTION WITH THE FORMATION OF THE BELIEF. TO THE SAME EFFECT, TH E APEX COURT IN ITO V. LAKHMANI MERWAL DAS [1976] 103 ITR 437 HAD LAID DOWN THAT THE REASO NS TO BELIEVE MUST HAVE RATIONAL CONNECTION WITH OR RELEVANT BEARING ON THE FORMATIO N OF BELIEF I.E. THERE MUST BE A LIVE LINK BETWEEN MATERIAL COMING THE NOTICE OF THE ASSESSING OFFICER AND THE FORMATION OF BELIEF REGARDING ESCAPEMENT OF INCOME. IF THE AFORESAID RE QUIREMENTS ARE NOT MET, THE ASSESSEE IS ENTITLED TO CHALLENGE THE VERY ACT OF RE-OPENING OF ASSESSMENT AND ASSUMING JURISDICTION ON THE PART OF THE ASSESSING OFFICER. ITA NO.426/ASR/2018 ASSESSMENT YEAR: 2011-12 SHRI JASBIR SINGH. 7 | P A G E 13. IN THIS CASE, THE REASONS AS MADE AVAILABLE TO THE RESPONDENT- ASSESSEE AS PRODUCED BEFORE THE TRIBUNAL MERELY INDICATES INFORMATION RE CEIVED FROM THE DIT (INVESTIGATION) ABOUT A PARTICULAR ENTITY, ENTERING INTO SUSPICIOUS TRANS ACTIONS. HOWEVER, THAT MATERIAL IS NOT FURTHER LINKED BY ANY REASON TO COME TO THE CONCLUSION THAT THE RESPONDENT-ASSESSEE HAS INDULGED IN ANY ACTIVITY WHICH COULD GIVE RISE TO REASON TO BEL IEVE ON THE PART OF THE ASSESSING OFFICER THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. IT IS FOR THIS REASON THAT THE RECORDED REASONS EVEN DOES- NOT INDICATE THE AMOUNT WHICH AC CORDING TO THE ASSESSING OFFICER, HAS ESCAPED ASSESSMENT. THIS IS AN EVIDENCE OF A FISHIN G ENQUIRY AND NOT A REASONABLE BELIEF THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. 14. FURTHER, THE REASONS CLEARLY SHOWS THAT THE ASS ESSING OFFICER HAS NOT APPLIED HIS MIND TO THE INFORMATION RECEIVED BY HIM FROM THE DDIT (INV. ). THE ASSESSING OFFICER HAS MERELY ISSUED A RE-OPENING NOTICE ON THE BASIS OF INTIMATI ON REGARDING RE-OPENING NOTICE FROM THE DDIT (INV.) THIS IS CLEARLY IN BREACH OF THE SETTLE D POSITION IN LAW THAT RE- OPENING NOTICE HAS TO BE ISSUED BY THE ASSESSING OFFICE ON HIS OWN SAT ISFACTION AND NOT ON BORROWED SATISFACTION. 15. THEREFORE, IN THE ABOVE FACTS, THE VIEW TAKEN B Y THE IMPUGNED ORDER OF THE TRIBUNAL CANNOT BE FOUND FAULT WITH. THIS VIEW OF THE TRIBUNAL IS I N ACCORDANCE WITH THE SETTLED POSITION IN LAW. 16. THEREFORE, THE QUESTION; AS FRAMED DOES NOT GIV E RISE TO ANY SUBSTANTIAL QUESTION OF LAW. THUS, NOT ENTERTAINED.' 9. HAVING TAKEN INTO CONSIDERATION THE AFORESAID JU DICIAL PRECEDENTS AND OTHER CASE LAWS CITED BEFORE US BY BOTH THE PARTIES, IN ORDER TO APPRECIATE THE LEGAL GROUND RAISED BEFORE US, WE NEED TO LOOK INTO THE REASONS RECORDE D BY THE AO BEFORE PROPOSING TO REOPEN THE ASSESSMENT, WHICH IS REPRODUCED AS UNDER . IN THIS CASE AN INFORMATION WAS RECEIVED FROM THE ITO (HQ.)(TECH.) O/O PR. COMMISSIONER OF INCOME TAX-I, JALANDHAR. THIS CASE WAS SELECTED UND ER CODE 007. AS PER INFORMATION RECEIVED THE SALE DEED IS RS. 1,21,00,000/- WHEREAS STAMP DUTY H AD BEEN PAID ON RS.3,46,00,000/- AND PAID ADDITIONAL STAMP DUTY OF RS. 18,36,000/-. TO CIRCUM VENT THE LAW ASSESSEE HAD FILED AN UNREGISTER COPY OF AGREEMENTS DATED 04.09.2009 AND 02.04.2010 AS PER THESE AGREEMENTS THE LAND WAS TRANSFERRED TO SIRJAN CONSTRUCTION PVT. LTD. FOR SU M OF RS.1,21,00,000/-. IT APPEARS THAT THESE AGREEMENTS ARE AN AFTERTHOUGHT AND MOREOVER HAVE NO LEGAL SANCTIONS. IN THIS CASE ESCAPEMENT OF AN AMOUNT OF RS.2,25,00,000/-, AS PER SECTION 48 RE AD WITH SECTION 50C OF THE INCOME TAX ACT, 1961. THE SECTION 50C HAS BEEN AMENDED BY THE FINAN CE ACT 2009 WITH EFFECT FROM 01.10.2009 IS READ AS UNDER:- WHERE THE CONSIDERATION RECEIVED OF ACCRUING AS A RESULT OF TRANSFER BY AN ASSESSEE OF A CAPITAL ASSET, BEING LAND OR BOTH IS LESS THAN THE VALUE AD OPTED OR ASSESSED (OR ASSESSABLE) BY ANY AUTHORITY OF A STATE GOVERNMENT (HEREAFTER IN THIS SECTION REFERRED TO AS THE STAMP VALUATION AUTHORITY FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER, THE VALUE SO ADOPTED OR ASSESSED (OR ASSESSABLE) SHALL, FOR THE PURPOSE OF SECTION-48, BE DEEMED TO BE THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF SUCH TRANSFER. IT SHOW THAT THE ACTUAL SALE OF CONSIDERATION. THE TOTAL CONSIDERATI ON OF RS.3,46,00,000/- THE SELLER OF THE PROPERTY HAVE NOT DISCLOSED THE TRUE SALE CONSIDERA TION. THE TOTAL CONSIDERATION OF RS.3,46,00,000/- INCLUDING OF THE AMOUNT OF RS. 18, 36,000/- HAS BEEN PAID ADDITIONAL STAMP DUTY BY THE ASSESSEE HAS ESCAPED ASSESSMENT. THE ASSESSE E HAD FILED HIS INCOME TAX RETURN FOR THE ASSESSMENT YEAR 2011-12 DECLARING INCOME AT RS.11,7 9,140/- OUT OF WHICH HE HAS SHOWN LTCG OF ITA NO.426/ASR/2018 ASSESSMENT YEAR: 2011-12 SHRI JASBIR SINGH. 8 | P A G E RS. 10,38,634/- ONLY. THEREFORE, THE SOURCE OF MAKI NG SUCH HUGE INVESTMENT IS NOT EXPLAINED. I, THEREFORE, HAVE REASONS TO BELIEVE THAT THE DIFFERE NCE OF SALE DEED RS.1,21,00,000/- AND THE VALUE OF RS.3,46,00,000/ -ON WHICH STAMP DUTY HAD BEEN CH ARGED COMES TO RS. 2,25,00,000/-, FOR THE ASSESSMENT YEAR 2011-12 IS TO BE DETERMINED AS PER PROVISIONS OF SECTION 50C OF THE INCOME TAX ACT, HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF C LAUSE (B) TO EXPLANATION 2 OF THE SECTION 147 OF THE INCOME TAX ACT, 1961. IN ORDER TO BRING THE SAID INCOME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX, WHICH COMES INTO NOTICE SUBSEQUE NTLY IN THE COURSE OF THE ASSESSMENT PROCEEDING WITHIN THE AMBIT OF TAXATION, IT IS FIT CASE TO ISSUE NOTICE U/S 148 OF THE INCOME TAX ACT, 1961.' 10. AFTER HAVING PERUSED REASONS RECORDED BY THE AO BEF ORE REOPENING AND WHEN THE VALIDITY OF THE ORDER U/S. 147 OF THE ACT DEPENDS U PON THE AO ASSUMING JURISDICTION AS CONTEMPLATED BY LAW TO MAKE AN ORDER OF ASSESSMENT U/S. 147 OF THE ACT AND FOR THAT IT IS NECESSARY THAT THE CONDITIONS LAID DOWN IN THE S AID SECTION VIZ., AO SHOULD RECORD REASON TO BELIEVE THAT THE INCOME CHARGEABLE TO T AX FOR THAT ASSESSMENT YEAR HAS ESCAPED ASSESSMENT. IF THIS CONDITION IS NOT SATIS FIED AT THE FIRST PLACE, THEN IT CANNOT BE SAID THAT AO HAS VALIDLY ASSUMED JURISDICTION U/ S. 147 OF THE ACT . THEREFORE, THE QUESTION FOR CONSIDERATION IS WHETHER ON THE BASIS OF THE REASONS RECORDED BY THE AO TO REOPEN THE ASSESSMENT IT CAN BE SAID THAT AO ON THE BASIS OF WHATEVER MATERIAL BEFORE IT, HAD REASONS WHICH HE HAD INDICATED IN HI S REASONS RECORDED WHICH WARRANT HOLDING A BELIEF THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. THE REASONS RECORDED BY AO TO REOPEN HAS TO BE EVALUATED ON A S TAND-ALONE BASIS AND NO ADDITION/EXTRAPOLATION CAN BE MADE OR ASSUMED WHILE ADJUDICATING THE LEGAL ISSUE OF AOS USURPATION OF JURISDICTION U/S. 147 OF THE ACT . FROM THE REASONS ALREADY SET OUT ABOVE AND FROM THE GIST OF THE REASONS RECORDED BY THE AO, WE UNDERSTAND THAT THE AO RECEIVED INFORMATION FROM ITO(HQ.) (TECH) O/O PR. C OMMISSIONER OF INCOME TAX-1 JALANDHAR. AFTER GETTING THE INFORMATION FROM THE I TO(HQ.) (TECH) O/O PR. COMMISSIONER OF INCOME TAX-1 JALANDHAR, THE AO SHOU LD APPLY HIS MIND AND TO EXAMINE BASED ON THIS INFORMATION THAT INCOME HAS E SCAPED ASSESSMENT. IN THIS CASE AO HAS NOT APPLIED HIS MIND AND IT IS A BORROWED SATISFACTION ONLY. THE RELEVANT PARA OF THE REASONS RECORDED IS REPRODUCED BELOW FOR REA DY REFERENCE: IN THIS CASE AN INFORMATION WAS RECEIVED FROM THE ITO (HQ.)(TECH.) O/O PR. COMMISSIONER OF INCOME TAX-I, JALANDHAR. THIS CASE WAS SELECTED UNDER CODE 007. AS PER INFORMATION RECEIVED THE SALE DEED IS RS. 1,21,00,000/- WHEREAS STAMP DUTY HAD BEEN PAID ON RS.3,46,00,000/- AND PAID ADDITIONAL STAMP DUTY OF RS. 18,36,000/-. ITA NO.426/ASR/2018 ASSESSMENT YEAR: 2011-12 SHRI JASBIR SINGH. 9 | P A G E WE NOTE THAT REASONS RECORDED BY AO ARE ONLY ON THE BASIS OF INFORMATION FROM THE ITO(HQ.) (TECH) O/O PR. COMMISSIONER OF INCOME TAX- 1 JALANDHAR. BASED ON THIS INFORMATION THE AO OUGHT TO HAVE CONDUCTED FURTHER ENQUIRY TO EXAMINE WHETHER THERE IS TANGIBLE MATERIAL WHICH SUGGESTS THAT INCOME HAS ESCAPED ASSESSMENT, WHICH HE HAS NOT DONE, THEREFORE BASED OF THE BORROWED SATISFACT ION HE HAS REOPENED THE ASSESSMENT. THE REASONS SHOULD BE RECORDED STANDALONE BASIS AND NOT ON THE BASIS OF BORROWED SATISFACTION. IT SHOULD BE REMEMBERED THAT REASONS SHOULD NOT BE RECORDED BASED ON SURMISE AND GUESS WORK. THE AO IN HIS REASONS RECORDED STATED A S FOLLOWS: TO CIRCUMVENT THE LAW ASSESSEE HAD FILED AN UNREGIS TER COPY OF AGREEMENTS DATED 04.09.2009 AND 02.04.2010 AS PER THESE AGREEMENTS THE LAND WAS TRA NSFERRED TO SIRJAN CONSTRUCTION PVT. LTD. FOR SUM OF RS.1,21,00,000/-. IT APPEARS THAT THESE AGREEMEN TS ARE AN AFTERTHOUGHT AND MOREOVER HAVE NO LEGAL SANCTIONS. THE AO HAS FAILED TO STATE IN HIS REASONS THAT HOW AND WHY THESE AGREEMENTS ARE AN AFTERTHOUGHT AND DO NOT HAVE LEGAL SANCTIONS. 11. IT IS CLEARLY EVIDENT FROM THE REASONS RECORDED BY THE ASSESSING OFFICER THAT THERE WAS ACTUALLY NO REASON FOR HIM TO HAVE FORMED A BEL IEF ABOUT THE ESCAPEMENT OF ANY INCOME OF THE ASSESSEE FROM THE ASSESSMENT, BUT THE ASSESSMENT WAS REOPENED BY HIM TO VERIFY OR TO CONDUCT FURTHER ENQUIRY OR TO EXAMI NE CERTAIN PARTICULARS FURNISHED BY THE ASSESSEE IN THE RETURN OF INCOME. THEREFORE, IT IS ABUNDANTLY CLEAR FROM THE REASONS RECORDED THAT THESE ARE BASED ON INFORMATION FROM T HE ITO(HQ.) (TECH) O/O PR. COMMISSIONER OF INCOME TAX -1 JALANDHAR. THEREFORE, IT IS CLEAR THAT THERE IS NO INDEPENDENT APPLICATION OF MIND BY AO. IF THE AO DE CIDES TO REOPEN THE ASSESSMENT, HE HAS TO SATISFY THE CONDITION PRECEDENT TO ASSUME JURISDICTION. IN THE ASSESSEE`S CASE THE INFORMATION WAS RECEIVED FROM THE ITO(HQ.) (TEC H) O/O PR. COMMISSIONER OF INCOME TAX -1 JALANDHAR, AND EVEN IF THE INFORMATIO N GIVEN BY THE ITO(HQ.) (TECH) O/O PR. COMMISSIONER OF INCOME TAX-1 JALANDHAR, IS ADVE RSE AGAINST THE ASSESSEE, AT THE MOST IT MAY TRIGGER REASON TO SUSPECT; THEN AO HA S TO MAKE REASONABLE ENQUIRY AND COLLECT MATERIAL WHICH WOULD MAKE HIM BELIEVE THAT THERE IS IN FACT AN ESCAPEMENT OF ITA NO.426/ASR/2018 ASSESSMENT YEAR: 2011-12 SHRI JASBIR SINGH. 10 | P A G E INCOME. WITHOUT DOING SO, THE JURISDICTIONAL FACT NECESSARY TO USURP JURISDICTION TO REOPEN THE REGULAR ASSESSMENT CANNOT BE MADE BY THE AO. THE REASONS RECORDED BY AO TO REOPEN HAS TO BE EVALUATED ON A STAND-ALONE B ASIS AND NO ADDITION/EXTRAPOLATION CAN BE MADE OR ASSUMED WHILE ADJUDICATING THE LEGAL ISSUE OF AOS USURPATION OF JURISDICTION U/S. 147 OF THE ACT. 12. WE NOTE THAT THE INFORMATION GIVEN BY THE ITO( HQ.) (TECH) O/O PR. COMMISSIONER, CAN ONLY BE A BASIS TO IGNITE/TRIGGER REASON TO S USPECT FOR WHICH REOPENING CANNOT BE MADE FOR FURTHER EXAMINATION TO BE CARRIED OUT B Y HIM IN ORDER TO STRENGTHEN THE SUSPICION TO AN EXTENT WHICH CAN FORM THE BELIEF I N HIS MIND THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. NO QUANTIFICATION O F INCOME ESCAPING ASSESSMENT HAS BEEN SPELT OUT BY THE AO IN THE REASONS RECORDED FO R JUSTIFYING REOPENING U/S. 147 OF THE ACT. IT HAS TO BE KEPT IN MIND THAT MERELY ON A N ALLEGATIONS LEVELED BY THE ITO(HQ.) (TECH) O/O PR. COMMISSIONER, CAN ONLY RAISE SUSPICI ON IN THE MIND OF THE AO WHICH IS NOT THE SUFFICIENT/REQUIREMENT OF LAW FOR REOPENING OF ASSESSMENT. THE REASONS TO BELIEVE IS NOT SYNONYMOUS TO REASON TO SUSPECT. REASON TO SUSPECT BASED ON AN INFORMATION CAN TRIGGER AN ENQUIRY TO FIND OUT WHET HER THERE IS ANY SUBSTANCE OR MATERIAL TO SUBSTANTIATE THAT THERE IS MERIT IN THE INFORMATION ADDUCED BY THE ITO(HQ.) (TECH) O/O PR. COMMISSIONER, AND THEREAFTER THE AO HAS TO TAKE AN INDEPENDENT DECISION TO RE-OPEN OR NOT. AND THE AO SHOULD NOT A CT ON DICTATE OF ANY OTHER AUTHORITY (LIKE IN THIS CASE INFORMATION GIVEN BY THE ITO(HQ. ) (TECH) O/O PR. COMMISSIONER), BECAUSE THEN IT WOULD BE BORROWED SATISFACTION. IN SUCH A SCENARIO, WHEN THE AO WAS IN RECEIPT OF T HE INFORMATION FROM ITO(HQ.) (TECH) O/O PR. COMMISSIONER, HE OUGHT TO HAVE MADE ENQUIRIES TO UNRAVEL THE TRUTH. IT HAS TO BE REMEMBERED THAT INFORMATION IS NOT SYNONY MOUS TO TRUTH. THE AO FAILED TO QUANTIFY THE ESCAPEMENT OF INCOME IN THE REASONS RE CORDED. THE AO IS A QUASI JUDICIAL AUTHORITY EMPOWERED TO REOPEN THE COMPLETED ASSESSM ENT ONLY IN A GIVEN CASE WHEREIN THERE IS REASON TO BELIEVE ESCAPEMENT OF CH ARGEABLE INCOME TO TAX WHICH IS THE JURISDICTIONAL FACT AND SINE QUA NON TO ASSUME JURISDICTION TO REOPEN A COMPLETED ASSESSMENT. IT MUST BE KEPT IN MIND THAT REASONS TO BELIEVE POSTULATES FOUNDATION BASED ON INFORMATION AND BELIEF BASED ON REASON. E VEN IF THERE IS FOUNDATION BASED ON ITA NO.426/ASR/2018 ASSESSMENT YEAR: 2011-12 SHRI JASBIR SINGH. 11 | P A G E INFORMATION THERE MUST BE SOME REASON WARRANT HOLDI NG THE BELIEF THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. IT HAS T O BE KEPT IN MIND THAT THE HONBLE SUPREME COURT IN GANGA SARAN & SONS P. LTD. VS. ITO (1981) 130 ITR 1 (SC) HELD THAT THE EXPRESSION REASON TO BELIEVE OCCURRING IN SECTION 147 IS STRONGER THAN THE EXPRESSION IF SATISFIED AND SUCH REQUIREMENT HAS TO BE MET BY THE AO IN THE REASONS RECORDED BEFORE USURPING THE JURISDICTION U /S. 147 OF THE ACT. IT MUST BE KEPT IN MIND THAT INFORMATION ADVERSE AGAINST THE ASSESS EE MAY TRIGGER REASON TO SUSPECT THEN THE AO IS DUTY BOUND TO MAKE REASONABLE ENQUIR Y TO COLLECT MATERIAL WHICH WOULD MAKE HIM BELIEF THAT THERE IS IN FACT AN ESCA PEMENT OF INCOME WHICH REQUIREMENT OF LAW HAS NOT BEEN FULFILLED IN THIS C ASE BY THE AO. 13. WE NOTE THAT REASONS RECORDED BY THE ASSESSING OFFICER HAS BEEN PARTLY DELETED BY THE LD CIT(A), WHICH IS EVIDENT FROM HIS FINDINGS, WHICH IS REPRODUCED BELOW: 5.17 I HAVE PERUSED THE COMMENTS MADE BY THE APPEL LANT IN RESPONSE TO THE VALUATION REPORT OF THE DVO AND FIND THAT PRIMARY FOCUS IS ON THE CIRCLE RATE WHICH HAS BEEN ADOPTED FOR THE PURPOSES OF VALUATION OF THE PROPER TY. THE APPELLANT HAS CONTENDED THAT CIRCLE RATE WHICH IS BEING ADOPTED BY THE STAMP VAL UATION AUTHORITY HAS RECENTLY BEEN REDUCED SUBSTANTIALLY AND THEREFORE, IT IS STATED T HAT LOWER VALUE MAY BE ADOPTED FOR THE PURPOSES OF TAKING DEEMED SALE CONSIDERATION OF THE PROPERTY. 5.18 HAVING CONSIDERED THE SUBMISSIONS MADE IN THIS REGARD, I FIND THAT PROVISIONS OF SECTION 50C (2) OF THE IT ACT DO PROVIDE FOR MAKING A REFERENCE TO THE VALUATION OFFICER, WHERE IT IS CONTENDED THAT VALUE ADOPTED BY THE STA MP VALUATION AUTHORITY IS HIGHER THAN THE FAIR MARKET VALUE OF THE PROPERTY AS ON THE DAT E OF TRANSFER, FURTHER, PROVISIONS OF SUBSECTION (3) OF SECTION 50C OF THE IT ACT ALSO PR OVIDE THAT WHERE THE VALUE ASCERTAINED UNDER SUBSECTION(2) EXCEEDS LIFE VALUE ADOPTED BY T HE STAMP VALUATION AUTHORITY, THEN THE VALUE SO ADOPTED BY SUCH AUTHORITY SHALL BE TAKEN A S THE FULL VALUE OF CONSIDERATION RECEIVED AS A RESULT OF TRANSFER. IN THIS CASE, THE STAMP VALUATION AUTHORITY HAD ADOPTED THE VALUE OF THE PROPERTY AS PER CIRCLE RATE AND AS AGAINST THIS DVO HAS VALUED THE PROPERTY AT RS, 2,03,00,000 WHICH IS LESS THAN THE STAMP DULY VALUE. THEREFORE, THE BENEFIT OF THIS REDUCTION IN DEEMED SALE CONSIDERATION HAS TO BE GIVEN TO THE APPELLANT AS PROVIDED UNDER THE PROVISIONS OF SECTION 50C (2) OF THE IT ACT. THE AO IS BEING DIRECTED TO RE-COMPUTE THE QUANTUM OF LONG TERM CAPITAL GAIN S ON SALE OF PROPERTY BY TAKING THE SALE CONSIDERATION AT RS.2,03,00,000 AND WORKOUT TH E AMOUNT OF CAPITAL GAINS ACCORDINGLY. WE NOTE THAT AGGRIEVED BY THE ORDER OF AO, THE ASSE SSEE FILED APPEAL BEFORE CIT(A), WHO DIRECTED THE ASSESSING OFFICER TO REFER THE MAT TER TO DVO. DVO ESTIMATED FAIR MARKET VALUE OF PROPERTY AT RS. 2,03,00,000/- AS AG AINST CIRCLE RATE OF RS. 3,46,00,000/- THEREFORE LD. CIT(A) DIRECTED THE AO TO COMPUTE THE LONG TERM CAPITAL GAIN BY ITA NO.426/ASR/2018 ASSESSMENT YEAR: 2011-12 SHRI JASBIR SINGH. 12 | P A G E TAKING SALE CONSIDERATION AT RS. 2,03,00,000/- AS A GAINST ACTUAL SALE CONSIDERATION OF RS. 1,21,00,000/-, WHEREAS AO DETERMINED THE SALE C ONSIDERATION IN THE REASONS RECORDED BY HIM AT RS. 3,46,00,000/-.THAT IS, AS P ER REASONS RECORDED BY AO THE INCOME WAS ESCAPED ASSESSMENT TO THE TUNE OF RS.2,2 5,00,000/- (RS.3,46,00,000- RS.1,21,00,000). HOWEVER, LD CIT(A) REDUCED IT TO R S.2,03,00,000/-, THIS CLEARLY SHOWS THAT THERE IS NON APPLICATION OF MIND BY ASSE SSING OFFICER, WHILE RECORDING THE REASONS, WHICH MAKES THE REOPENING BAD IN LAW. FOR THAT LD. COUNSEL RELIES ON THE JUDGMENT OF HON`BLE BOMBAY HIGH COURT IN THE CASE O F JET AIRWAYS (I) LIMITED 331 ITR 236 (BOM), WHEREIN IT WAS HELD AS FOLLOW: 21. EXPLANATION 3 LIFTS THE EMBARGO, WHICH WAS INSERTE D BY JUDICIAL INTERPRETATION, ON THE MAKING OF AN ASSESSMENT OR REASSESSMENT ON GROUNDS OTHER THAN THOSE ON THE BASIS OF WHICH A NOTICE WAS ISSUED UNDER S. 148 SETTING OUT THE REASONS FOR THE BELIEF THAT INCOME HAD ESCAPED ASSESSMENT. THOSE JUDICIAL DECISIONS HAD HELD THAT WHEN THE ASSESSMENT WAS SOU GHT TO BE REOPENED ON THE GROUND THAT INCOME HAD ESCAPED ASSESSMENT ON A CERTAIN ISSUE, THE AO C OULD NOT MAKE AN ASSESSMENT OR REASSESSMENT ON ANOTHER ISSUE WHICH CAME TO HIS NOTICE DURING THE P ROCEEDINGS. THIS INTERPRETATION WILL NO LONGER HOLD THE FIELD AFTER THE INSERTION OF EXPLN. 3 BY THE FI NANCE ACT (NO. 2) OF 2009. HOWEVER, EXPLN. 3 DOES N OT AND CANNOT OVERRIDE THE NECESSITY OF FULFILLING THE CONDITIONS SET OUT IN THE SUBSTANTIVE PART OF S. 1 47. AN EXPLANATION TO A STATUTORY PROVISION IS INTENDED TO EXPLAIN ITS CONTENTS AND CANNOT BE CONSTRUED TO OVERRIDE IT OR RENDER THE SUBSTANCE AND CORE NUGATO RY. SEC. 147 HAS THIS EFFECT THAT THE AO HAS TO ASSESS OR REASSESS THE INCOME ('SUCH INCOME') WHICH ESCAPED ASSESSMENT AND WHICH WAS THE BASIS OF THE FORMATION OF BELIEF AND IF HE DOES SO, HE CAN A LSO ASSESS OR REASSESS ANY OTHER INCOME WHICH HAS ESCAPED ASSESSMENT AND WHICH, COMES TO HIS NOTICE D URING THE COURSE OF THE PROCEEDINGS. HOWEVER, IF AFTER ISSUING A NOTICE UNDER S. 148, HE ACCEPTED TH E CONTENTION OF THE ASSESSEE AND HOLDS THAT THE INCOME WHICH HE HAS INITIALLY FORMED A REASON TO BE LIEVE HAD ESCAPED ASSESSMENT, HAS AS A MATTER OF FACT NOT ESCAPED ASSESSMENT, IT IS NOT OPEN TO HIM INDEPENDENTLY TO ASSESS SOME OTHER INCOME. IF HE INTENDS TO DO SO, A FRESH NOTICE UNDER S. 148 WOULD BE NECESSARY, THE LEGALITY OF WHICH WOULD BE TESTE D IN THE EVENT OF A CHALLENGE BY THE ASSESSEE. THE REASONS RECORDED BY AO DOES NOT STAND THE TEST AS LAID BY PLETHORA OF JUDICIAL PRECEDENCE AS DISCUSSED ABOVE WHICH IS NECESSARY TO ASSUME JURISDICTION U/S 147 OF THE ACT, THEREFORE, IN THE LIGHT OF THE AFORESAID F ACTS AND CIRCUMSTANCES OF THE CASE AS DISCUSSED, WE FIND THAT THE REASONS RECORDED BY THE AO TO JUSTIFY REOPENING THE ASSESSMENT U/S. 147 FAILS AND, THEREFORE, THE VERY ASSUMPTION OF JURISDICTION TO REASSESS ITA NO.426/ASR/2018 ASSESSMENT YEAR: 2011-12 SHRI JASBIR SINGH. 13 | P A G E THE ASSESSEE FAILS AND THEREFORE, WE QUASH THE REOP ENING AND CONSEQUENT REASSESSMENT ORDER FRAMED BY HIM. 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE COURT ON 16.01.2020. SD/- SD/- ( N.K. CHOUDHRY ) (A.L.SAINI) ' / JUDICIAL MEMBER / ACCOUNTANT MEMBER AMRITSAR AMRITSAR # / DATE: 16/01/2020 ( BCG, PS ) COPY OF THE ORDER FORWARDED TO: 1. SHRI JASBIR SINGH C/O SURINDER MAHAJAN & ASSOCIA TES, CHARTERED ACCOUNTANTS, 74, VIJAY NAGAR, JALANDHAR-144 001 (PUNJAB). 2. INCOME TAX OFFICER, WARD-1(2), JALANDHAR (PUNJAB ). 3. C.I.T(A)-2, JALANDHAR 4. C.I.T.- CONCERNED. 5. THE SR. DR, I.T.A.T., AMRITSAR. TRUE ORDER BY ORDER ASSISTANT REGISTRAR ITAT, AMRITSAR BENCH