Mrs. Manju Agarwal, Aligarh V. I.T.O.,-1(2), Aligarh

ITA 550/AGR/2012

• Counselvise Citation: 55020314 RSA 2012
• Duration Of Justice: 8 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 13-08-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 10-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Bogus purchase; Sale consideration of property below Jantri Value; Capital asset; Depreciation; Transfer pricing; Opportunity of being heard; International transaction; Wrong claim; Assessment record; Capital receipt; Reason to believe; Reassessment proceedings; Borrowed satisfaction
• Section: 50C; 142(1); 133(6); 32; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO. 550/AGRA/2012 ASSTT. YEAR : 2005-06 MANJU AGARWAL, VS. INCOME-TAX OFFICER, 5/1, GOOLAR ROAD, ALIGARH. 1(2), ALIGARH. (PAN: AFXPA 4444G) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI PANKAJ GARGH, ADVOCATE RESPONDENT BY : SHRI WASEEM ARSHAD, SR. D.R. DATE OF HEARING : 13.08.2013 DATE OF PRONOUNCEMENT OF ORDER : 23.08.2013 ORDER PER BHAVNESH SAINI, J.M.: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF LD. CIT(A), GHAZIABAD DATED 25.09.2012 FOR THE ASSESSMENT YEAR 2005-06. 2. THE APPEAL OF THE ASSESSEE WAS EARLIER DISMISSED IN DEFAULT VIDE ORDER DATED 27.05.2013. THE ASSESSEE FILED M.A. NO. 23/AGRA/201 3 EXPLAINING THE REASONS FOR NON-APPEARANCE ON THE DATE OF HEARING. M.A. OF THE ASSESSEE WAS ALLOWED AND THE APPEAL WAS RESTORED AND REFIXED FOR HEARING ON MERI TS. ITA NO. 550/AGRA/2012 2 3. THE ASSESSEE HAS FILED MODIFIED GROUNDS OF APPEA L. ON GROUND NO. 1 & 2, THE ASSESSEE CHALLENGED THE INITIATION OF RE-ASSESSMENT PROCEEDINGS U/S. 147 OF THE IT ACT. ON GROUND NO. 2 TO 6, THE ASSESSEE CHALLENGED THE CONFIRMATION OF ADDITION OF RS.2,31,60,000/-. THE FACTS OF THE CASE ARE THAT TH E ASSESSEE IS INDIVIDUAL AND DERIVED INCOME FROM LONG-TERM CAPITAL GAINS. SHE FI LED RETURN OF INCOME ON 20.12.2011 DECLARING HER INCOME OF RS.2,17,580/- IN THE OFFICE OF INCOME-TAX OFFICER, ALIGARH. NOTICE U/S. 142(1) WAS ISSUED ON 14.07.2011 TO PRODUCE THE ACCOUNT BOOKS AND DOCUMENTS AT THE OFFICE OF ITO, A GRA. SINCE THE JURISDICTION WAS CHANGED, THE RECORD WAS TRANSFERRED FROM ITO, AGRA TO THE OFFICE OF ITO, ALIGARH. THE ASSESSEE WAS GIVEN OPPORTUNITY. THE AO NOTICED THAT THE ASSESSEE HAS SHOWN IN HER RETURN SALE CONSIDERATION OF PROPERTY SITUAT ED AT AGRA MATHURA HIGHWAY. THE ASSESSEE FILED COPY OF WRIT PETITION FILED AGAINST THE ORDER OF ADM, AGRA. THE COURT ADMITTED THE WRIT PETITION BUT HAS NOT DIRECT ED OR PASSED ANY REMARK REGARDING VALUATION MADE. THE COURT HAS DIRECTED TH E OFFICER CONCERNED TO REGISTER THE DOCUMENT WITHOUT INSISTING FOR PENALTY AMOUNT. ON THE OTHER HAND, THE PETITIONERS/BUYERS HAVE BEEN DIRECTED TO DEPOSIT TH E AMOUNT OF RS.74,36,400/- WITH THE STAMP AUTHORITY IF NOT ALREADY DEPOSITED. IT IS STATED THAT THE ASSESSEE PURCHASED A PIECE OF LAND AT AGRA ON 25.02.1991 FOR RS.2,34,500/-. THE SAME LAND WAS SOLD ON 17.02.2005 AT RS.8,00,000/-. HOWEVER, T HE PROPERTY GOT REGISTERED AT RS.3,60,000/- ON PAYMENT OF STAMP VALUATION AT THE RATE OF 10% OF THE REGISTERED ITA NO. 550/AGRA/2012 3 VALUE OR LOCAL AREA RATE PER SQ. METER @ RS.900/- W HICH DENOTES COST PRICE OF LAND AT RS.36,00,000/-. THE ASSESSEE IN THE RETURN OF IN COME DECLARED RS.36,00,000/- AS SALE PRICE. A COMPLAINT WAS LODGED AGAINST THE PURC HASERS THAT THEY GOT REGISTERED THE PLOT AT THE LOWER RATE. ON THE COMPLAINT, THE A DM, AGRA FINALLY VALUED THE LAND AT RS.8,51,10,000/- ON WHICH THE PURCHASER HAD TO P AY THE STAMPS FOR GETTING REGISTERED THE PLOT. COPY OF THE ORDER DATED 29.07. 2005 IS FILED AT PAGE 30 OF THE PAPER BOOK. THE PURCHASERS PREFERRED THE WRIT PETIT ION BEFORE THE HONBLE ALLAHABAD HIGH COURT IN THIS REGARD IN WRIT PETITIO N NO. 68098/2006 IN THE NAME OF JAGDISH ARORA & ORS. VS. BOARD OF REVENUE AND THE H ONBLE HIGH COURT VIDE ORDER DATED 03.03.2008 QUASHED THE ORDER OF THE ADM , AGRA AND MATTER WAS REMITTED BACK TO THE ADM, AGRA FOR DECIDING THE ISS UE AFRESH WITHIN THREE MONTHS FROM THE DATE OF PRESENTATION OF CERTIFIED COPY OF THE ORDER. COPY OF THE SAME IS FILED AT PAGE 44 OF THE PAPER BOOK. IN PURSUANCE TO THE DIRECTION OF HONBLE ALLAHABAD HIGH COURT, THE ADM, AGRA AGAIN REVALUED THE PROPERTY FOR STAMP VALUATION AT RS.8,51,10,000/- VIDE ORDER DATED 11.0 6.2008. COPY OF THE SAME IS FILED AT PAGE 57 OF THE PAPER BOOK. THE SAID ORDER WAS CALLED FOR BY THE AO U/S. 133(6) OF THE IT ACT. THE AO APPLIED THE PROVISIONS OF SECTION 50C OF THE IT ACT AND TAKEN THE FULL VALUE OF CONSIDERATION AS PER OR DER OF ADM, AGRA AT RS.8,51,10,000/- AND COMPUTED THE CAPITAL GAIN AT R S.8,40,53,957/-. THE INITIATION OF RE-ASSESSMENT PROCEEDINGS AS WELL AS ADDITION ON MERITS WERE CHALLENGED BEFORE ITA NO. 550/AGRA/2012 4 THE LD. CIT(A). THE ASSESSEES WRITTEN SUBMISSION I S INCORPORATED IN THE APPELLATE ORDER IN WHICH THE ASSESSEE SUBMITTED THAT THE DIFF ERENCE IN THE SALE CONSIDERATION OF VALUE ASSESSED BY THE STAMP AUTHORITIES IS UNDER DISPUTE BEFORE THE HONBLE HIGH COURT, THEREFORE, CANNOT BE A WELL REASON TO I NITIATE THE RE-ASSESSMENT PROCEEDINGS U/S. 147 OF THE IT ACT. THE PROCEEDINGS INITIATED U/S. 147 OF THE IT ACT ARE WRONG, ILLEGAL AND UNJUSTIFIED AND THE ASSESSME NT MADE BY THE AO IS ILLEGAL AND VOID. THE ASSESSEE FILED RETURN OF INCOME SHOWING S ALE CONSIDERATION AT RS.36.00 LACS AS PER SALE DEED, WHICH IS CORRECT. VALUATION DETERMINED BY ADM (FINANCE), AGRA IS DETERMINED IN THE CASE OF BUYERS, THEREFORE , IT IS NOT APPLICABLE IN THE CASE OF ASSESSEE. THE LD. CIT(A) HELD THAT THE REASONS R ECORDED BY THE AO FOR REOPENING OF ASSESSMENT ON THE BASIS OF STATUTORY ORDER OF AD M, AGRA IS CORRECT. THEREFORE, REOPENING OF ASSESSMENT IS JUSTIFIED. THE LD. CIT(A ) ALSO AGREED IN PRINCIPLE THAT THE ORDER OF THE AO IN DETERMINING THE LONG TERM CA PITAL GAIN ON THE BASIS OF SECTION 50C OF THE IT ACT, HOWEVER, WITH REGARD TO THE AREA OF PROPERTY BELONGING TO THE ASSESSEE, IT WAS HELD THAT THE VALUE IN THE HANDS OF ASSESSEE WOULD COME TO RS.2,31,60,000/-. THE APPEAL OF THE ASSESSEE WAS, T HEREFORE, PARTLY ALLOWED. 4. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND FILED ALL THE ABOVE DOCUMENTS IN THE PAPER BOOK. HE HAS SUBMITTED THAT THE RE-ASSESSMENT ORDER IN THIS CASE HAS BEEN PASSED BY THE ITO, ITA NO. 550/AGRA/2012 5 WARD 1(2), ALIGARH WHEREAS THE REASONS FOR REOPENIN G OF ASSESSMENT HAVE BEEN RECORDED BY THE ITO 4(2), AGRA. AND ITO AT AGRA WA S HAVING NO JURISDICTION OVER THE ASSESSEE AND HE HAS MERELY FOLLOWED THE BORROWE D SATISFACTION FROM THE OFFICE OF DCIT-2, AGRA. THEREFORE, RE-ASSESSMENT IS BAD IN LAW. COPY OF REASONS IS FILED AT PAGE 2 OF THE PAPER BOOK. COPY OF THE NOTICE DAT ED 08.03.2011 U/S. 148 IS FILED AT PAGE 1 OF THE PAPER BOOK, IN WHICH ITO 4(2), AGRA M ENTIONED THE ADDRESS OF THE ASSESSEE AS 5/1, GULAR ROAD, ALIGARH. HE HAS SUBMIT TED THAT THE AO WAS AWARE OF THE FACT THAT HE HAS NO JURISDICTION AT AGRA, THERE FORE, HE SHOULD NOT HAVE RECORDED THE REASONS FOR REOPENING OF ASSESSMENT. HE HAS FUR THER SUBMITTED THAT FINALLY THE ORDER OF THE ADM, AGRA DATED 11.06.2008 HAS BEEN FU RTHER CHALLENGED BY THE BUYERS SHRI JAGDISH ARORA AND OTHERS BEFORE THE HIG H COURT IN WRIT PETITION NO. 32532/2008 AND THE HONBLE ALLAHABAD HIGH COURT ADM ITTED THE WRIT PETITION VIDE ORDER DATED 10.07.2008.THEREFORE, WHEN THE DETERMIN ATION OF VALUATION OF PROPERTY FOR STAMPS PURPOSE IS IN DISPUTE BEFORE THE HONBLE ALLAHABAD HIGH COURT AND SUBJUDICE BEFORE THE HIGH COURT, NO HIGHER VALUATIO N WOULD BE DEEMED TO BE DETERMINED. THEREFORE, THERE IS NO SATISFACTION OF THE AO TO INITIATE THE RE- ASSESSMENT PROCEEDINGS. HE HAS SUBMITTED THAT ADM, AGRA HAS NOT PASSED ANY ORDER IN THE CASE OF ASSESSEE. THEREFORE, SUCH ORDE R IS NOT BINDING UPON THE ASSESSEE. HE HAS SUBMITTED THAT THE ITO AT AGRA ISS UED THE STATUTORY NOTICE FOR COMPLETION OF ASSESSMENT ON VARIOUS DATES, COPIES O F THE SAME ARE FILED AT PAGES 4 ITA NO. 550/AGRA/2012 6 TO 7 OF THE PAPER BOOK AND SUBMITTED THAT SINCE AO AT AGRA WAS HAVING NO JURISDICTION OVER THE ASSESSEE, THEREFORE, THE RECO RD WAS TRANSFERRED TO ITO, ALIGARH AND RE-ASSESSMENT ORDER IS PASSED BY THE ITO, ALIGA RH ON DATED 29.12.2011 WITHOUT RECORDING REASONS FOR REOPENING OF ASSESSMENT. HE H AS SUBMITTED THAT THE ASSESSING OFFICER AT AGRA WHO HAS RECORDED THE REAS ONS FOR REOPENING OF ASSESSMENT WAS NOT HAVING ANY JURISDICTION OVER THE ASSESSEE AND HE DID NOT PASS ANY REASSESSMENT ORDER WHEREAS THE ASSESSING OFFICE R AT ALIGARH HAVING JURISDICTION OVER THE ASSESSEE, WHO HAS PASSED RE-A SSESSMENT ORDER DATED 29.12.2011 HAS NOT RECORDED ANY REASONS FOR REOPENI NG OF ASSESSMENT. THEREFORE, THE REASSESSMENT ORDER IS BAD IN LAW. HE HAS RELIED UPON THE ORDER OF ITAT, AGRA BENCH ON IDENTICAL FACTS IN THE CASE OF LATE SHRI S .N. BHARGAVA VS. ITO IN ITA NO. 58/AGRA/2009 DATED 14.06.2013. COPY OF THE ORDER IS PLACED ON RECORD. HE HAS RELIED UPON THE FOLLOWING DECISIONS : (I). DECISION OF HONBLE DELH HIGH COURT IN THE CAS E OF SIGNATURE HOTELS P. LTD. VS. ITO, 338 ITR 51. (II). DECISION OF HONBLE RAJASTHAN HIGH COURT IN T HE CASE OF CIT VS. SHREE RAJASTHAN SYNTEX LTD., 313 ITR 231. (III). DECISION OF HONBLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. MAHESH GUM AND OIL INDUSTRIES, 292 ITR 397. (IV). DECISION OF HONBLE DELHI HIGH COURT IN THE C ASE OF CIT VS. SFIL STOCK BROKING LTD., 325 ITR 285. ITA NO. 550/AGRA/2012 7 5. ON THE OTHER HAND, THE LD. DR RELIED UPON THE OR DERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT AT THE STAGE OF REOPENING OF ASS ESSMENT, THE ASSESSEE WAS HAVING TWO ADDRESSES. THEREFORE, THE AO AT AGRA WAS HAVING JURISDICTION OVER THE ASSESSEE AND WHEN THE ASSESSEE DISPUTED THE SAME, THEREFORE, THE JURISDICTION WAS CHANGED FROM AGRA TO ALIGARH. HE HAS SUBMITTED THAT THE AO AT AGRA HAS LEGALLY AND CORRECTLY INITIATED THE RE-ASSESSMENT PROCEEDINGS B Y RECORDING THE REASONS FOR REOPENING OF ASSESSMENT AT AGRA, THEREFORE, THERE I S NO NEED TO RECORD FRESH REASONS AT ALIGARH. HE HAS SUBMITTED THAT IN CASE OF TRANSF ER OF JURISDICTION, THERE IS NO NEED TO RECORD THE REASONS AFRESH. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND THE MATERIAL ON RECORD. SECTION 147 OF THE IT ACT PROVIDES AS UNDER : 147 . IF THE ASSESSING OFFICER HAS REASON TO BELIEVE THA T ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY AS SESSMENT YEAR, HE MAY, SUBJECT TO THE PROVISIONS OF SECTIONS 148 TO 1 53, ASSESS OR REASSESS SUCH INCOME AND ALSO ANY OTHER INCOME CHAR GEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PROCEEDINGS UNDER THIS SECTION, OR RECOMPUTE THE LOSS OR THE DEPRECIATION ALLOWANCE OR ANY OTHER ALLOWANCE, AS THE CASE MAY BE, FOR THE ASSESSMENT Y EAR CONCERNED (HEREAFTER IN THIS SECTION AND IN SECTIONS 148 TO 1 53 REFERRED TO AS THE RELEVANT ASSESSMENT YEAR : PROVIDED THAT WHERE AN ASSESSMENT UNDER SUB-SECTION (3) OF SECTION 143 OR THIS SECTION HAS BEEN MADE FOR THE RELEVANT ASSESSMENT YEAR, NO ITA NO. 550/AGRA/2012 8 ACTION SHALL BE TAKEN UNDER THIS SECTION AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLES S ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH A SSESSMENT YEAR BY REASON OF THE FAILURE ON THE PART OF THE ASSESSEE T O MAKE A RETURN UNDER SECTION 139 OR IN RESPONSE TO A NOTICE ISSUED UNDER SUB-SECTION (1) OF SECTION 142 OR SECTION 148 OR TO DISCLOSE FU LLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT, FOR TH AT ASSESSMENT YEAR: PROVIDED FURTHER THAT NOTHING CONTAINED IN THE FIRST PROVISO SHALL APPLY IN A CASE WHERE ANY INCOME IN RELATION TO ANY ASSET (INCLUDING FINANCIAL INTEREST IN ANY ENTITY) LOCATED OUTSIDE I NDIA, CHARGEABLE TO TAX, HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR : PROVIDED ALSO THAT THE ASSESSING OFFICER MAY ASSESS OR REASSESS SUCH INCOME, OTHER THAN THE INCOME INVOLVING MATTERS WHI CH ARE THE SUBJECT MATTERS OF ANY APPEAL, REFERENCE OR REVISION, WHICH IS CHARGEABLE TO TAX AND HAS ESCAPED ASSESSMENT. EXPLANATION 1.PRODUCTION BEFORE THE ASSESSING OFFI CER OF ACCOUNT BOOKS OR OTHER EVIDENCE FROM WHICH MATERIAL EVIDENC E COULD WITH DUE DILIGENCE HAVE BEEN DISCOVERED BY THE ASSESSING OFF ICER WILL NOT NECESSARILY AMOUNT TO DISCLOSURE WITHIN THE MEANING OF THE FOREGOING PROVISO. EXPLANATION 2.FOR THE PURPOSES OF THIS SECTION, TH E FOLLOWING SHALL ALSO BE DEEMED TO BE CASES WHERE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT, NAMELY : (A) WHERE NO RETURN OF INCOME HAS BEEN FURNISHED B Y THE ASSESSEE ALTHOUGH HIS TOTAL INCOME OR THE TOTAL INCOME OF AN Y OTHER PERSON IN RESPECT OF WHICH HE IS ASSESSABLE UNDER THIS ACT DU RING THE PREVIOUS YEAR EXCEEDED THE MAXIMUM AMOUNT WHICH IS NOT CHARG EABLE TO INCOME-TAX ; (B) WHERE A RETURN OF INCOME HAS BEEN FURNISHED BY THE ASSESSEE BUT NO ASSESSMENT HAS BEEN MADE AND IT IS NOTICED BY THE A SSESSING OFFICER THAT THE ASSESSEE HAS UNDERSTATED THE INCOME OR HAS CLAIMED EXCESSIVE LOSS, DEDUCTION, ALLOWANCE OR RELIEF IN THE RETURN ; ITA NO. 550/AGRA/2012 9 (BA) WHERE THE ASSESSEE HAS FAILED TO FURNISH A REP ORT IN RESPECT OF ANY INTERNATIONAL TRANSACTION WHICH HE WAS SO REQUIRED UNDER SECTION 92E; (C) WHERE AN ASSESSMENT HAS BEEN MADE, BUT (I) INCOME CHARGEABLE TO TAX HAS BEEN UNDERASSESSE D ; OR (II) SUCH INCOME HAS BEEN ASSESSED AT TOO LOW A RA TE ; OR (III) SUCH INCOME HAS BEEN MADE THE SUBJECT OF EXC ESSIVE RELIEF UNDER THIS ACT ; OR (IV) EXCESSIVE LOSS OR DEPRECIATION ALLOWANCE OR A NY OTHER ALLOWANCE UNDER THIS ACT HAS BEEN COMPUTED; (D) WHERE A PERSON IS FOUND TO HAVE ANY ASSET (INC LUDING FINANCIAL INTEREST IN ANY ENTITY LOCATED OUTSIDE INDIA. EXPLANATION 3.FOR THE PURPOSE OF ASSESSMENT OR REA SSESSMENT UNDER THIS SECTION, THE ASSESSING OFFICER MAY ASSESS OR R EASSESS THE INCOME IN RESPECT OF ANY ISSUE, WHICH HAS ESCAPED ASSESSME NT, AND SUCH ISSUE COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF T HE PROCEEDINGS UNDER THIS SECTION, NOTWITHSTANDING THAT THE REASON S FOR SUCH ISSUE HAVE NOT BEEN INCLUDED IN THE REASONS RECORDED UNDE R SUB-SECTION (2) OF SECTION 148. EXPLANATION 4.FOR THE REMOVAL OF DOUBTS, IT IS HER EBY CLARIFIED THAT THE PROVISIONS OF THIS SECTION, AS AMENDED BY THE F INANCE ACT, 2012, SHALL ALSO BE APPLICABLE FOR ANY ASSESSMENT YEAR BE GINNING ON OR BEFORE THE 1ST DAY OF APRIL, 2012. SECTION 148(2) OF THE IT ACT PROVIDES THAT THE ASSE SSING OFFICER SHALL, BEFORE ISSUING ANY NOTICE UNDER THIS SECTION, RECORD HIS R EASONS FOR DOING SO. THE ASSESSEE HAS FILED COPY OF REASONS RECORDED U/S. 148 FOR REO PENING OF ASSESSMENT BY ITO 4(2), AGRA AT PAGE 2 OF THE PAPER BOOK AND THE SAME READ AS UNDER : ITA NO. 550/AGRA/2012 10 REASONS FOR BELIEF THAT INCOME HAS ESCAPED ASSESSME NT : AS PER INFORMATION RECEIVED ON 24.01.2011 FROM DCI T-2, AGRA VIDE LETTER F.NO.DCIT-2/AGRA/INFORMATION/2010-11 DA TED 08.12.2010 THROUGH ADDL. CIT, RANGE-4, AGRA VIDE HIS LETTER F. NO.ADDL. CIT/R- 4/AGRA/INFORMATION/2010-11/DATED 22.12.2010 SMT. MA NJU AGARWAL, R/O 22, SHALIMAR ENCLAVE, KAMLA NAGAR, AGRA AND M/S . SETWELL ASSOCIATES, PARTNER SHRI RAJEEV AGARWAL, KAMLA NAGA R, AGRA HAD JOINTLY SOLD COMMERCIAL PROPERTIES BEARING KHASARA NO.1235-AREA 0.386 HECTARE I.E. 3860 SQ MTR. AND KHASARA NO. 123 6 AREA 0.794 HECTARE I.E. 7940 SQ MTR. TOTALING TO 11800 SQ MTR. SITUATED BY THE SIDE OF AGRA MATHURA HIGHWAY, MAUJA BYEPUR, AGRA TO SHRI JAGDISH ARORA R/O 50-60 RAJEEV NAGAR, SHEETALA ROAD, AGRA O N 17.02.2005 (F.Y. 2004-05) THROUGH SALE DEED NO. 731/2005 AND 7 32/2005 RESPECTIVELY. THE VALUE OF THE PROPERTY FOR THE STA MP DUTY PURPOSES WAS ORIGINALLY TAKEN AT RS.1,07,46,000/- ON WHICH S TAMP DUTY OF RS.10,74,600/-. LATER ON THE BASIS OF A COMPLAINT T HE ADM (FINANCE), AGRA FOUND THAT THE CONTENTS MENTIONED IN THE SALE DEEDS WERE NOT CORRECT. HE THEREFORE, VIDE HIS ORDER 29.07.2005 DE TERMINED THE VALUE OF THE PROPERTY UNDER SALE AT RS.8,51,10,000/- FOR STAMP DUTY PURPOSES AND WORKED OUT SHORT PAYMENT OF STAMP DUTY BY RS.74 ,36,400/- AND ALSO IMPOSED PENALTY OF RS.18,59,100/- TOTALING TO RS.92,95,500/-. THE ASSESSEE HAS PAID RS.92,95,500/-. AS PER THE ABOVE INFORMATION SMT. MANJU AGARWAL R/ O 22, SHALIMAR ENCLAVE, KAMLA NAGAR, AGRA HAD SOLD HER CO MMERCIAL PROPERTY BEARING KHASARA NO.1235- AREA 0.386 HECTAR E I.E. 3860 SQ MTR. SITUATED BY THE SIDE OF AGRA MATHURA HIGHWAY, MAUJA BYEPUR, AGRA TO SHRI JAGDISH ARORA R/O 50-60 RAJEEV NAGAR, SHEETALA ROAD, AGRA ON 17.02.2005 (F.Y. 2004-05) THROUGH SALE DEED NO. 731/2005. THE VALUE OF THE PROPERTY FOR THE STAMP DUTY PURPOS ES WAS ORIGINALLY TAKEN AT RS.36,00,000/- ON WHICH STAMP DUTY WAS PAI D AT RS.3,60,000/- . SUBSEQUENTLY, ADM (F&R) AGRA VIDE ORDER DATED 29. 07.2005 DETERMINED THE VALUE OF THE PROPERTY BELONGING TO T HE ASSESSEE AT RS.2,70,97,705/- FOR STAMP DUTY PURPOSES ON WHICH S TAMP DUTY TOGETHER WITH INTEREST AND PENALTY WAS CHARGED AND PAID. IN VIEW OF THE ABOVE, IT IS A CASE WHERE PROVISION S OF SECTION 50C OF THE I.T. ACT, 1961 ARE CLEARLY ATTRACTED. HE NCE, CAPITAL GAIN TAX IS LIABLE TO BE CHARGED. SINCE THE ASSESSEE HAS NOT DISCLOSED LONG TERM CAPITAL GAIN ARRIVED AT ON SALE OF THE AFORESA ID PROPERTY IN A.Y. ITA NO. 550/AGRA/2012 11 2005-06, I HAVE THEREFORE, REASON TO BELIEVE THAT L ONG TERM CAPITAL GAIN ARRIVED AT ON THE SALE OF AFORESAID PROPERTY H AS ESCAPED ASSESSMENT ON ACCOUNT OF THE ASSESSEES FAILURE OR OMISSION ON HER PART TO DISCLOSE HER TRUE AND CORRECT INCOME BY WAY OF LONG TERM CAPITAL GAIN CHARGEABLE TO TAX IN THE A.Y. 2005-06. TO ASSESS THE SAME IN A.Y. 2005-06 PROPOSAL IS BEING SUBMITTED TO FOR KIND CONSIDERATION AND APPROVAL FOR ISSUE OF NOTICE UNDE R SECTION 148 OF THE IT ACT, 1961. DATED : 08.03.2011 SD/- (J.P. TIWARI) INCOME TAX OFFICER-4(2), AGRA. 6.1 ITAT, AGRA BENCH IN THE CASE OF LATE SHRI S.N. BHARGAVA VS. ITO (SUPRA) DECIDED THE IDENTICAL ISSUE AND THE FACTS AND FINDI NGS OF THE TRIBUNAL IN PARAS 3 TO 10 ARE REPRODUCED AS UNDER : 3. THE ASSESSEE IN THE PRESENT APPEAL HAS CHALLENG ED THE INITIATION OF REASSESSMENT PROCEEDINGS U/S. 147 OF THE IT ACT AS WELL AS THE ADDITION OF RS.5,92,809/- ON ACCOUNT OF UNEXPLAINED DEPOSIT IN THE BANK ACCOUNT AS SALE PROCEEDS OF SHARES. 4. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE INFO RMATION WAS RECEIVED FROM DDIT (INV.), GURGAON REGARDING BOGUS CLAIM OF LONG- TERM CAPITAL GAINS SHOWN ON ACCOUNT OF PURCHASE AND SALE OF SHARES THROUGH M/S. R.K. AGARWAL & CO., NEW DELHI BY THE A SSESSEE. THE NOTICE U/S. 148 WAS ISSUED WITH THE APPROVAL OF ADD ITIONAL CIT, RANGE-I, AGRA BY THE ITO 1(4), AGRA ON 28.03.2003 A S NO SUCH ASSESSEE WAS ASSESSED TO TAX WITH HIM AT THE ADDRES S GIVEN IN THE INFORMATION AND THE SAME WAS SERVED UPON THE ASSESS EE ON THE SAME DAY. AS PER INFORMATION, A SUM OF RS.5,92,809/- WAS REMITTED TO THE ASSESSEE THROUGH DRAFT DRAWN ON CORPORATION BANK, K AROL BAGH, NEW DELHI IN THE NAME OF M/S. R.K. AGARWAL & CO., NEW D ELHI. THE SAID AMOUNT OF DRAFT WAS FOUND CREDITED IN THE ACCOUNT O F THE ASSESSEE. IT WAS, THEREFORE, FOUND THAT SAID M/S. R.K. AGARWAL & CO. HAVE BEEN PROVIDING ENTRIES TO THE BENEFICIARIES BY SHOWING T HE PURCHASE AND ITA NO. 550/AGRA/2012 12 SALE OF SHARES WHICH HAD NOT TAKEN PLACE. IN RESPON SE TO NOTICE U/S. 148, THE ASSESSEE FILED WRITTEN REPLY THAT HE IS FI LING RETURN OF INCOME WITH THE INCOME-TAX OFFICER 3(4), MATHURA, HENCE, T HE NOTICE U/S. 148 WAS WRONG AND INCORRECT. ON 18.08.2003, AGAIN NOTIC E U/S. 142(1) WITH THE SAME QUERIES WAS ISSUED AND THE ASSESSEE C HALLENGED THE SAID NOTICE ALSO ON THE SAME REASONS. THEN THIS CASE WAS TRANSFERRED TO ITO, MATHURA AND, THEREFORE, NOTICE U/S. 142(1) WAS ISSUED ON 22.09.2003, 06.10.2003 AND THE ASSESSEE SUBMITTED T HAT HE HAS ALREADY FILED RETURN ON 26.03.1999. THE AO OBSERVED THAT NO COMPLIANCE HAS BEEN MADE TO THE STATUTORY NOTICES A ND SHOW CAUSE NOTICE WAS ISSUED TO EXPLAIN WHY THE RECEIPT OF RS. 5,92,809/- SHOWN AS CAPITAL RECEIPTS MAY NOT BE TAXED. DURING THE DISCU SSION, THE ASSESSEE CHALLENGED THE PROCEEDINGS U/S. 147 AND SUBSEQUENTL Y NOTICE U/S. 142(1) ON THE PLEA THAT NOTICE U/S. 148 WAS WITHOUT JURISDICTION. IN VIEW OF THIS POSITION, THEREFORE, A NOTICE U/S. 148 WAS ISSUED ON 13.01.2004 BY INCOME-TAX OFFICER 3(4), MATHURA WITH APPROVAL OF ADDITIONAL CIT, RANGE-3, MATHURA AND THE SAME WAS S ERVED UPON THE ASSESSEE ON THE SAME DATE. THEREAFTER NOTICE U/S. 1 42(1) WAS ISSUED BUT THE ASSESSEE DID NOT FILE FRESH RETURN U/S. 148 AND STATED THAT ORIGINAL RETURN FILED MAY BE TREATED AS RETURN FILE D IN RESPONSE TO NOTICE U/S. 148 AND STATED THAT ORIGINAL RETURN FIL ED MAY BE TREATED AS RETURN FILED IN RESPONSE TO NOTICE U/S. 148. THEREA FTER, PROCEEDINGS WERE TAKEN UP AND ULTIMATELY, THE ITO 3(4), MATHURA MADE THE ADDITION OF RS.5,92,809/- ON ACCOUNT OF UNEXPLAINED DEPOSITS IN BANK ACCOUNT OF ASSESSEE FOR BOGUS PURCHASE AND SALE OF SHARES THROUGH M/S. R.K. AGARWAL & CO., NEW DELHI. 5. THE LD. CIT(A) NOTED IN THE APPELLATE ORDER THAT THE ASSESSEE PREFERRED THE APPEAL AGAINST THE ORDER U/S. 148/144 PASSED BY THE ITO 3(4), MATHURA ON 24.03.2004 FOR THE ASSESSMENT YEAR UNDER APPEAL. THUS, THE ASSESSMENT ORDER IS DATED 24.03.2004. THE LD. CIT(A) ALSO RECORDED SOME FACTS IN THE APPELLATE ORDER AND WITH REGARD TO REOPENING OF ASSESSMENT U/S. 147 NOTED THAT FOR RE- ASSESSMENT PROCEEDINGS, EXISTENCE OF FRESH PRIMA FACIE MATERIA L IS REQUIRED AND THE REASON TO BELIEVE WOULD MEAN CAUSE OR JUSTIFICA TION, WHICH IS SATISFIED IN THIS CASE AND THE AO HAS REASON TO BEL IEVE THAT THE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT AND ACCORD INGLY CONFIRMED THE REOPENING OF ASSESSMENT IN THE MATTER. THE LD. CIT(A) ON MERITS ALSO, DISMISSED THE APPEAL OF THE ASSESSEE AND CONF IRMED THE ADDITION. ITA NO. 550/AGRA/2012 13 6. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT INITIALLY 148 PROCEEDINGS WERE INITIATED BY THE ITO 1(4), AGRA BY ISSUING NOTICE U/S. 148 ON 28.03.2003, IN WHICH THE AO RECORDED THE REA SONS, WHICH DID NOT SATISFY THE REQUIREMENT OF LAW. HE HAS SUBMITTE D THAT WHEN THE ASSESSEE INTIMATED THE ASSESSING OFFICER AT AGRA TH AT HE HAS ALREADY FILED RETURN OF INCOME WITH ITO, MATHURA, THEREFORE , THE AO AT AGRA HAS NO JURISDICTION TO ISSUE NOTICE U/S. 148. THE M ATTER WAS, THEREFORE, TRANSFERRED TO ITO, MATHURA, WHO WITHOUT RECORDING REASONS PROCEEDED WITH INCOME-TAX PROCEEDINGS AND WHEN HE W AS APPRISED THAT NOTICE U/S. 148 AND 142(1) ISSUED BY THE ITO, MATHURA IS WITHOUT JURISDICTION THEN A FRESH NOTICE U/S. 148 WAS ISSUE D ON 13.01.2004, COPY OF WHICH IS FILED AT PAGE 10 OF THE PAPER BOOK . HE HAS REFERRED TO PAGE 8 & 9, WHICH IS LETTER DATED 08.12.2003 ISSUED BY ITO, MATHURA AND COPY OF THE REASONS RECORDED BY THE ITO, AGRA. HE HAS SUBMITTED THAT THE ASSESSING OFFICER AT MATHURA SOLELY FOLLOW ED THE SAME REASONS, WHICH WERE RECORDED BY ITO, AGRA. THEREFOR E, IT WAS MERELY A BORROWED SATISFACTION AND THE ASSESSING OFFICER A T MATHURA DID NOT APPLY HIS MIND TO THE FACTS OF THE CASE AND WAS HAV ING NO REASONS TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED A SSESSMENT. THE AO AT MATHURA HAS ALSO NOT EXAMINED ANY INFORMATION , WHICH WAS ALLEGED TO HAVE BEEN SUPPLIED BY THE DDIT(INV.), GU RGAON. THEREFORE, RE-ASSESSMENT PROCEEDING IS BAD IN LAW. 7. ON THE OTHER HAND, THE LD. DR PRODUCED THE ASSES SMENT RECORD AND STATED THAT THERE IS NO ORDER SHEET AVAILABLE O N THIS FILE PERTAINING TO THE ASSESSEES CASE AND FROM THE RECORD, FILED T HE COPY OF NOTICE U/S. 148 DATED 28.03.2003 ISSUED BY ITO, AGRA, REASONS R ECORDED FOR REOPENING OF ASSESSMENT AND SANCTION GRANTED BY ADD L. CIT, RANGE-I, AGRA DATED 28.03.2003. THE LD. DR SUBMITTED THAT EX CEPT THE REASONS RECORDED AND COPY OF SAME FILED ON RECORD, THERE IS NO OTHER REASON AVAILABLE ON RECORD FOR REOPENING OF ASSESSMENT. TH E LD. DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW AND SUBMIT TED THAT RE- ASSESSMENT PROCEEDINGS ARE AS PER LAW AND ADDITIONS HAVE CORRECTLY BEEN MADE IN THE MATTER. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND THE MATERIAL AVAILABLE ON RECORD. THE ASSESSEE IN THE PAPER BOOK FILED LETTER ISSUED BY ITO 3(4), MATHURA DATED 08.12.2003 AT PAGE 8 OF THE PAPER BOOK, IN WHICH SAME FACTS HAVE BEEN RECORDED REGARDING RE OPENING OF ASSESSMENT BY AO AT AGRA AND THEREAFTER TRANSFERRED THE CASE TO HIM ITA NO. 550/AGRA/2012 14 AT MATHURA. COPY OF REASONS ARE FILED AT PAGE 9 OF THE PAPER BOOK, WHICH TALLY WITH THE REASONS SUPPLIED BY THE LD. DR FROM THE RECORD. COPY OF THE REASONS SUPPLIED BY THE LD. DR ARE REPR ODUCED AS UNDER : AN INFORMATION HAS BEEN RECEIVED FROM THE DDIT(INV.),GURGAON VIDE LETTER F.NO.DDIT(INV.)/GGN/ 02-03 DATED 12.03.2003 REGARDING TRANSACTION OF SHARES RE SULTING INTO LONG TERM CAPITAL GAINS THAT HAS BEEN FOUND BOGUS A S A RESULT OF INQUIRIES MADE BY THE SAID WING. ON INQUIRIES IT HAS BEEN FOUND THAT THE BANK A/C FROM WHICH MONEY HAS BEEN T RANSFERRED TO VARIOUS BENEFICIARIES HAVE BEEN OPERATED BY CERT AIN STOCK BROKERS, WHO HAVE BEEN PROVIDING ENTRIES TO THE BEN EFICIARIES BY SHOWING THEM TRANSACTIONS MADE BY THEM IN PURCHA SE / SALE OF SHARES OF CERTAIN COMPANIES, WHICH IN FACT NEVER TOOK PLACE. THE ASSESSEE IS ALSO ONE OF THE BENEFICIARY FIGURIN G IN THE LIST SUPPLIED BY THE DDIT WING, GURGAON AND AN AMOU NT OF RS.5,92,809 HAS BEEN REMITTED TO THE ASSESSEE THROU GH DRAFT NO. DD. 186676 DATED 12.04.97 FROM A/C. NO. CA-3097 HELD IN CORPORATION BANK, KAROL BAGH, NEW DELHI N THE NAME OF M/S. R.K. AGARWAL & COMPANY, 1748/55, NAIWALA, KAROL BAG H, NEW DELHI. THE SAID AMOUNT IS FOUND CREDITED IN THE BANK A/C. NO. SB/8069, CANARA BANK, VIBHAV NAGAR, AGRA WHICH BELONGS TO THE ASSESSEE. SINCE THE SAID TRANSACTION OF PURC HASE AND SALES OF THE SHARES HAS BEEN FOUND TO BE BOGUS AND THEREF ORE, ENTIRE AMOUNT OF SALE PROCEEDS OF SHARES CLAIMED TO HAVE B EEN RECEIVED BY THE ASSESSEE BY BANK DRAFT, IS THE INCO ME OF ASSESSEE FROM UNDISCLOSED SOURCES, WHICH HAS ESCAPE D ASSESSMENT WITHIN THE MEANING OF SECTION 147 OF THE IT ACT, 1961. SINCE, NO REGULAR ASSESSMENT HAS BEEN MADE IN THE ASSESSEES CASE FOR A.Y. 98-99, APPROVAL U/S. 151(2 ) OF THE IT ACT IS CONSIDERED NECESSARY TO ASSESS THE ABOVE SAI D INCOME BY ISSUING A NOTICE U/S. 148 OF THE IT ACT, 1961. FROM THE ABOVE, IT IS CLEAR THAT ABOVE REASONS WERE RECORDED BY THE ITO 1(4), AGRA, WHICH ON APPROVAL BY ADDL. CIT, RAN GE-I, AGRA, THE ITO 1(4), AGRA ISSUED NOTICE U/S. 148 OF THE IT ACT TO THE ASSESSEE. THERE IS NO OTHER REASONS AVAILABLE ON RECORD AS PR ODUCED BY THE LD. ITA NO. 550/AGRA/2012 15 DR. IT WOULD MEAN THAT THE AO AT MATHURA DID NOT RE CORD ANY REASONS AT HIS OWN, BUT MERELY FOLLOWED THE SAME REASONS WH ICH WERE RECORDED BY THE ITO AT AGRA. NO MATERIAL IS PRODUCE D BEFORE US TO COUNTER THE SUBMISSIONS OF THE LD. COUNSEL FOR THE ASSESSEE. THE DETAILS NOTED IN THE ASSESSMENT ORDER AND THE APPELLATE ORD ER WOULD ALSO CLARIFY THAT INITIALLY THE RE-ASSESSMENT PROCEEDING S WERE INITIATED AT AGRA AND THE REVENUE DEPARTMENT FINDING NO JURISDIC TION OVER THE ASSESSEE TRANSFERRED THE CASE TO THE ITO, MATHURA A ND THE ITO MATHURA ALSO WITHOUT RECORDING FRESH REASONS PROCEE DED U/S. 148 AGAINST THE ASSESSEE ON THE BASIS OF SAME REASONS R ECORDED BY THE ITO, AT AGRA. WHEN THE ASSESSEE SERIOUSLY CONTESTED THE JURISDICTION OF THE ASSESSING OFFICER AT MATHURA BECAUSE HE COULD N OT PROCEED ON THE BASIS OF REASONS RECORDED AT AGRA, THE AO AT MATHUR A ISSUED FRESH NOTICE U/S. 148 ON DATED 13.01.2004 WITH THE APPROV AL OF ADDL. CIT, RANGE-3, MATHURA AND THE SAME WAS SERVED UPON THE A SSESSEE. THE ASSESSING OFFICER HAS NOWHERE RECORDED IN THE ASSES SMENT ORDER IF ANY FRESH REASONS HAVE BEEN RECORDED AT MATHURA BEF ORE ISSUING NOTICE U/S. 148 ON DATED 13.01.2004. THE AO MERELY RECORDED IN THE ASSESSMENT ORDER THAT FRESH NOTICE U/S. 148 WAS ISS UED ON 13.01.2004 WITH THE APPROVAL OF ADDITIONAL CIT, RANGE-3, MATHU RA, BUT THERE IS NO WHISPER OF RECORDING ANY FRESH REASONS AT MATHUR A BY THE PRESENT AO IN THE ASSESSMENT ORDER. EVEN THE LD. DR DURING THE COURSE OF ARGUMENTS, WHEN PRODUCED ASSESSMENT RECORDS BEFORE US, ACCEPTED THAT THERE IS NO OTHER REASONS RECORDED BY THE AO A T MATHURA. IT WAS, THEREFORE, CLEARLY PROVED THAT THE AO AT MATHURA ME RELY ACTED UPON THE REASONS RECORDED AT AGRA, COPY OF WHICH IS PLAC ED ON RECORD AND WAS ALSO SUPPLIED TO THE ASSESSEE (PB-9). IN THE AF ORESAID REASONS, IT IS CLEAR THAT THE AO HAS NOWHERE RECORDED THE NECES SARY INGREDIENTS OF SECTION 147 OF THE IT ACT THAT THE AO HAS REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR THE ASSESSMENT YEAR UNDER APPEAL. FURTHER, THE REASONS HAVE NOT BE EN RECORDED BY THE ASSESSING OFFICER OF THE PRESENT ASSESSEE. FURT HER THE CONCERNED AO AT MATHURA HAS NOWHERE REASON TO BELIEVE THAT AN Y INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. THE ASSES SING OFFICERS AT MATHURA AND AGRA DID NOT EXAMINE ANY OF THE INFORMA TION RECEIVED FROM DDIT (INV.) GURGAON BEFORE PROCEEDING WITH THE MATTER. THE AO AT MATHURA MERELY FOLLOWED THE REASONS RECORDED AT AGRA AND PROCEEDED WITH THE MATTER. HONBLE DELH HIGH COURT IN THE CASE OF SIGNATURE HOTELS P. LTD. VS. ITO, 338 ITR 51 HELD A S UNDER : ITA NO. 550/AGRA/2012 16 HELD, ALLOWING THE PETITION, THAT THE REASSESSMENT PROCEEDINGS WERE INITIATED ON THE BASIS OF INFORMAT ION RECEIVED FROM THE DIRECTOR OF INCOME-TAX (INVESTIGATION) THA T THE PETITIONER HAD INTRODUCED MONEY AMOUNTING TO RS. 5 LAKHS DURING FINANCIAL YEAR 2002-03 AS STATED IN THE ANNE XURE. ACCORDING TO THE INFORMATION, THE AMOUNT RECEIVED F ROM A COMPANY,, S, WAS NOTHING BUT AN ACCOMMODATION ENTRY AND THE ASSESSEE WAS THE BENEFICIARY. THE REASONS DID NOT S ATISFY THE REQUIREMENTS OF SECTION 147 OF THE ACT. THERE WAS N O REFERENCE TO ANY DOCUMENT OR STATEMENT, EXCEPT THE ANNEXURE. THE ANNEXURE COULD NOT BE REGARDED AS A MATERIAL OR EVI DENCE THAT PRIMA FACIE SHOWED OR ESTABLISHED NEXUS OR LINK WHI CH DISCLOSED ESCAPEMENT OF INCOME. THE ANNEXURE WAS NO T A POINTER AND DID NOT INDICATE ESCAPEMENT OF INCOME. FURTHER, THE ASSESSING OFFICER DID NOT APPLY HIS OWN MIND TO THE INFORMATION AND EXAMINE THE BASIS AND MATERIAL OF THE INFORMATI ON. THERE WAS NO DISPUTE THAT THE COMPANY, S, HAD A PAID-UP C APITAL OF RS.90 LAKHS AND WAS INCORPORATED ON JANUARY 4, 1989 , AND WAS ALSO ALLOTTED A PERMANENT ACCOUNT NUMBER IN SEPTEMB ER, 2001. THUS, IT COULD NOT BE HELD TO BE A FICTITIOUS PERSO N. THE REASSESSMENT PROCEEDINGS WERE NOT VALID AND WERE LI ABLE TO BE QUASHED. 8.1 HONBLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. SHREE RAJASTHAN SYNTEX LTD., 313 ITR 231 HELD AS UNDER : THE ASSESSEE COMPANY HAD LEASED OUT CERTAIN PLANT AND MACHINERY TO ANOTHER COMPANY UNDER AGREEMENTS EXECU TED ON DIFFERENT DATES FOR A SPECIFIED PERIOD OF TIME. THE DEPRECIATION CLAIMED BY THE ASSESSEE ON THE CAPITAL ASSETS LEASE D OUT TO THE LESSEE UNDER SECTION 32 OF THE INCOME-TAX ACT, 1961 FOR THE ASSESSMENT YEARS 1996-97, 1997-98 AND 1998-99 WAS A LLOWED BY THE ASSESSING OFFICER. THE LESSEE HAD CLAIMED RE VENUE EXPENDITURE FOR THE LEASE RENT PAID TO THE ASSESSEE BUT THE ASSESSING OFFICER HAD ALLOWED DEPRECIATION ON THE C APITAL VALUE OF THE PLANT AND MACHINERY. ON NOTICING THIS FACT, THE ASSESSING OFFICER OF THE ASSESSEE INITIATED PROCEEDINGS UNDER SECTION 147 OF THE ACT AND MADE AN ADDITION TO THE INCOME OF TH E ASSESSEE. THE COMMISSIONER (APPEALS) UPHELD THE ADDITION MADE BY THE ASSESSING OFFICER FOR THE ASSESSMENT YEARS 1996-97 AND 1997- ITA NO. 550/AGRA/2012 17 98 BUT DELETED THE ADDITION MADE BY THE ASSESSING O FFICER FOR THE ASSESSMENT YEARS 1998-99 AND 2001-02. ON THE FI NDING THAT THAT THE REASSESSMENT PROCEEDINGS HAD BEEN INITIATE D ON BORROWED SATISFACTION AND THAT THE LEASE AGREEMENTS BEING OPERATING LEASES THE ASSESSEE WAS THE OWNER OF THE LEASED ASSETS WHICH WERE LEASED OUT TO THE LESSEE COMPANY FOR A R ENT AND THEREBY THE ASSESSEE WAS ALSO A USER OF THE ASSETS, THE TRIBUNAL HELD THAT THE ASSESSEE WAS ENTITLED TO DEPRECIATION UNDER SECTION 32 OF THE ACT. ON APPEALS : HELD, (I) THAT THE REASSESSMENT PROCEEDINGS HAD BEE N INITIATED ONLY ON ACCOUNT OF THE OPINION OF THE ASS ESSING OFFICER OF THE LESSEE AND THE TRIBUNAL WAS RIGHT IN FIXING THAT IT WAS BORROWED SATISFACTION WHICH WAS NOT SUFFICIENT TO CONFER POWER ON THE ASSESSING OFFICER TO INITIATE REASSESS MENT PROCEEDINGS AGAINST THE ASSESSEE. AFORESAID DECISION HAS BEEN CONFIRMED BY THE HONBL E SUPREME COURT BY DISMISSING THE DEPARTMENTAL SPECIAL LEAVE PETITI ON AS IS REPORTED IN 313 ITR (STATUTE) 27. 9. CONSIDERING THE ABOVE DISCUSSION, IT IS CLEAR TH AT THE ASSESSING OFFICER AT AGRA WAS NOT HAVING JURISDICTION OVER TH E ASSESSEE. THEREFORE, HE SHOULD NOT HAVE RECORDED THE REASONS FOR REOPENING OF ASSESSMENT AND FURTHER HE DID NOT EXAMINE ANY INFOR MATION SUPPLIED BY DDIT(INV.) AND THAT HE WAS HAVING NO REASONS TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT AND SUCH FACTS ARE ALSO NOT MENTIONED IN THE REASONS RECORDED FOR REOP ENING OF ASSESSMENT. THE AO AT MATHURA DID NOT DO ANYTHING I N THE MATTER AND MERELY FOLLOWED THE REASONS RECORDED BY ITO AT AGRA AND THAT HE HAS INITIATED THE PROCEEDINGS U/S. 148 AGAINST THE ASSE SSEE ON BORROWED SATISFACTION OF ITO, AGRA. HE HAS ALSO NOT EXAMINED ANY RECORD OF THE CASE OR THE INFORMATION RECEIVED FROM DDIT(INV.). T HE REASONS WHICH ARE NOT IN ACCORDANCE WITH LAW HAVE BEEN RECORDED A T AGRA BY THE ITO, WHO WAS NOT AUTHORIZED TO DO SO AND WAS NOT HA VING JURISDICTION OVER THE ASSESSEE AND THE ASSESSING OFFICER HAVING JURISDICTION OVER THE ASSESSEE AT MATHURA DID NOT DO SO AND MERELY AC TED ON THE ABOVE BORROWED SATISFACTION. IN OUR VIEW THE INITIATION O F RE-ASSESSMENT PROCEEDINGS U/S. 147 OF THE IT ACT IS CLEARLY BAD I N LAW AND AGAINST THE PROVISIONS OF LAW. THE ASSESSING OFFICER AT MAT HURA HAS, ITA NO. 550/AGRA/2012 18 THEREFORE, NOT VALIDLY ASSUMED THE JURISDICTION TO INITIATE THE RE- ASSESSMENT PROCEEDINGS BECAUSE HE HAS MERELY FOLLOW ED THE REASONS RECORDED BY ITO AT AGRA, WHO WAS HAVING NO JURISDIC TION OVER THE ASSESSEE. WE ACCORDINGLY SET ASIDE THE ORDERS OF T HE AUTHORITIES BELOW AND QUASH THE REASSESSMENT PROCEEDINGS U/S. 147 OF THE IT ACT. IN THE RESULT, ALL THE ADDITIONS WOULD STAND DELETED. THER EFORE, THERE IS NO NEED TO DECIDE THE ADDITIONS ON MERITS, WHICH IS WH OLLY ACADEMIC IN NATURE. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. THE FACTS NOTED ABOVE ARE NOT IN DISPUTE. IT IS NOT IN DISPUTE THAT THE ITO 4(2), AGRA RECORDED THE REASONS FOR REOPENING OF ASSESSMENT ON 08.03.2011, WHICH IS REPRODUCED ABOVE. FROM THE ABOVE IT IS CLEAR THAT T HESE REASONS WERE RECORDED AT AGRA AND NOTICE U/S. 148 DATED 08.03.2011 WAS ALSO ISSUED BY THE ITO 4(2), AGRA (PB-1), IN WHICH THE ADDRESS OF THE ASSESSEE IS GIV EN AT 5/1 GULAR ROAD, ALIGARH. THERE ARE NO OTHER REASONS AVAILABLE ON RECORD, IF ANY, RECORDED BY THE ITO WARD 1(2), ALIGARH. IT WOULD MEAN THAT THE ASSESSING OFF ICER, WHO HAS PASSED THE IMPUGNED REASSESSMENT ORDER AT ALIGARH DID NOT RECO RD ANY REASONS AT HIS OWN, BUT MERELY FOLLOWED THE SAME REASONS WHICH WERE RECORDE D BY THE ITO 4(2), AGRA. THE DETAILS NOTED IN THE ASSESSMENT ORDER AND FILED IN THE PAPER BOOK WOULD ALSO CLARIFY THAT INITIALLY THE RE-ASSESSMENT PROCEEDINGS WERE I NITIATED AT AGRA AND THE REVENUE DEPARTMENT FINDING NO JURISDICTION OVER THE ASSESSE E, TRANSFERRED THE CASE TO ITO 1(2), ALIGARH AND THE ITO ALIGARH WITHOUT RECORDING FRESH REASONS PROCEEDED U/S. 148 OF THE IT ACT ON THE BASIS OF SAME REASONS RECO RDED BY ITO AT AGRA. THE ITA NO. 550/AGRA/2012 19 ASSESSEE CONTESTED THE JURISDICTION OF THE AO AT AG RA, THEREFORE, IT APPEARS THAT THE RECORD WAS TRANSFERRED TO ITO, ALIGARH. THERE IS NO WHISPER IN THE IMPUGNED REASSESSMENT ORDER AS TO UNDER WHICH ORDER, THE JUR ISDICTION WAS CHANGED FROM AGRA TO ALIGARH. IT IS, THEREFORE, ACCEPTED FACT TH AT THERE IS NO OTHER REASON RECORDED BY THE AO AT ALIGARH. THE AO AT ALIGARH MERELY ACTE D UPON THE REASONS RECORDED BY THE ITO, AGRA. IN THE AFORESAID REASONS, IT IS C LEAR THAT THE AO HAS NOWHERE RECORDED NECESSARY INGREDIENTS OF SECTION 147 OF TH E IT ACT THAT THE AO HAS REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ES CAPED ASSESSMENT FOR THE ASSESSMENT YEAR UNDER APPEAL. THE ITO 4(2), AGRA ON THE BASIS OF THE ORDER OF ADM, DETERMINING THE HIGHER VALUATION FOR THE PURPO SE OF STAMP DUTY, FORMED HIS OPINION THAT THE LONG TERM CAPITAL GAIN HAS ESCAPED ASSESSMENT.THE LAST ORDER PASSED BY THE ADM, AGRA IS DATED 11.06.2008, WHICH WAS ALSO CHALLENGED BY THE BUYERS, I.E. JAGDISH ARORA AND OTHERS IN WRIT PETIT ION BEFORE THE HONBLE ALLAHABAD HIGH COURT AND THE HONBLE HIGH COURT ADMITTED THE WRIT PETITION AND DIRECTED THAT THE AMOUNT PAID IN THE DOCUMENTS WILL BE SUBJECT TO THE RESULT OF THIS PETITION. THE FINDING OF HONBLE HIGH COURT, ADMITTING THE WRIT P ETITION, DATED 10.07.2008 IN PARA 3 & 4 ARE REPRODUCED AS UNDER : 3. HAVING HEAD SRI RAVI KANT, LEARNED SENIOR COUNSE L IN OUR VIEW THE MATTER REQUIRES CONSIDERATION. HENCE THE W RIT PETITION IS ADMITTED. 4. THE PETITIONERS WILL DEPOSIT THIS AMOUNT OF RS. 74,36,400/- WITH THE STAMP AUTHORITY, IF NOT ALREADY DEPOSITED. WE DIRECT THE OFFICER CONCERNED TO REGISTER THE DOCUMENT WITHOUT INSISTING UPON THE ITA NO. 550/AGRA/2012 20 PENALTY AMOUNT. THE AMOUNT PAID ON THE DOCUMENT WIL L BE SUBJECT TO THE RESULT OF THIS PETITION. 6.2 IT IS, THEREFORE, PLEADED THAT THE MATTER IS SU BJUDICE BEFORE THE HONBLE ALLAHABAD HIGH COURT WITH REGARD TO DETERMINATION O F VALUATION OF PROPERTY FOR THE PURPOSE OF STAMP DUTY. THE VALUATION DETERMINED BY ADM, AGRA IS SUBJECT TO THE RESULT OF THIS WRIT PETITION, THEREFORE, COULD NOT BE SAID TO BE FINAL DECISION ARRIVED BY ADM, AGRA. THEREFORE, WHEN THE MATTER IS SUBJUDI CE BEFORE THE HONBLE HIGH COURT ON ADMISSION OF WRIT PETITION, THERE SHOULD N OT HAVE BEEN ANY SATISFACTION OF THE AO OR TO HAVE REASONS TO BELIEF THAT INCOME CHA RGEABLE TO TAX HAS ESCAPED ASSESSMENT ON ACCOUNT OF DETERMINATION OF HIGHER VA LUE FOR THE PURPOSE OF STAMP DUTY BY ADM, AGRA. FURTHER, NO ORDER HAS BEEN PASSE D BY THE ADM, AGRA IN THE CASE OF ASSESSEE, THEREFORE, THERE SHOULD NOT HAVE BEEN ANY SATISFACTION ON THE PART OF THE AO TO INITIATE THE RE-ASSESSMENT PROCEEDINGS AGAINST THE ASSESSEE AT AGRA. THE LD. DR CONTENDED THAT THE ASSESSEE WAS HAVING T WO ADDRESSES AT THE TIME OF INITIATION OF RE-ASSESSMENT PROCEEDINGS AND WHEN TH E REASONS WERE RECORDED BY THE AO AT AGRA AND ON CHANGE OF JURISDICTION, THE MATTE R WAS TRANSFERRED TO THE ITO, ALIGARH, THERE IS NOT ILLEGALITY IN INITIATING THE RE-ASSESSMENT PROCEEDINGS AT AGRA AND THERE IS NO BAR AT THE ASSESSING OFFICER, ALIGA RH TO CONTINUE WITH THE SAME PROCEEDINGS. THE CONTENTION OF THE LD. DR IS NOT LE GALLY SUSTAINABLE AND IS REJECTED BECAUSE THE PROVISIONS OF SECTION 127 OF THE IT ACT WOULD OPERATE IN SUCH ITA NO. 550/AGRA/2012 21 CIRCUMSTANCES. SECTION 127 OF THE IT ACT PROVIDES T HAT DIRECTOR GENERAL OR CHIEF COMMISSIONER OR COMMISSIONER MAY AFTER GIVING THE A SSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD IN THE MATTER, WHEREVER IT IS POSSIBLE TO DO SO, AND AFTER RECORDING HIS REASONS FOR DOING SO, TRANSFER ANY CA SE FROM ONE OR MORE ASSESSING OFFICERS SUBORDINATE TO HIM TO ANY OF THE ASSESSING OFFICER. IT IS ALSO PROVIDED THAT NO OPPORTUNITY IS REQUIRED TO BE GIVEN WHERE SUCH T RANSFER IS FROM ASSESSING OFFICER OR ASSESSING OFFICERS TO ANY ASSESSING OFFI CER OR OFFICERS WHERE THE OFFICES OF ALL SUCH OFFICERS ARE SITUATED IN THE SA ME CITY, LOCALITY OR PLACES. IN THE PRESENT CASE, THE REASONS FOR REOPENING OF ASSESSME NT HAVE BEEN RECORDED BY THE ITO, AGRA AND AS PER ASSESSMENT ORDER, ON CHANGE OF JURISDICTION, THE RECORD WAS TRANSFERRED TO ITO, ALIGARH, BUT NO MATERIAL OR EVI DENCE IS PRODUCED BEFORE US TO PROVE IF ANY ORDER OR REASONS HAVE BEEN RECORDED BE FORE TRANSFERRING THE JURISDICTION FROM AGRA TO ALIGARH OR ANY OPPORTUNIT Y OF BEING HEARD HAVE BEEN GRANTED TO THE ASSESSEE BEFORE DOING SO BECAUSE OFF ICE OF ITO, AGRA AND ALIGARH ARE NOT SITUATED IN THE SAME CITY, LOCALITY OR PLAC ES. CONTENTION OF THE LD. DR IS, THEREFORE, REJECTED. IT IS, THEREFORE, CLEAR THAT T HE ITO AT ALIGARH DID NOT HAVE ANY REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TAX HA S ESCAPED ASSESSMENT. ITO AT AGRA ALSO DID NOT EXAMINE THE ISSUE THAT THE FINAL ORDER OF ADM, AGRA DATED 11.06.2008 IS SUBJECT MATTER IN WRIT PETITION BEFOR E THE HIGH COURT AND HAS NOT YET REACHED FINALITY. ITA NO. 550/AGRA/2012 22 7. CONSIDERING THE ABOVE DISCUSSION, IT IS CLEAR TH AT THE ITO, AGRA WAS NOT HAVING JURISDICTION OVER THE ASSESSEE, THEREFORE, S HOULD NOT HAVE RECORDED THE REASONS FOR REOPENING OF ASSESSMENT AND FURTHER, HE WAS HAVING NO REASONS TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED A SSESSMENT BECAUSE THE ORDER OF ADM, AGRA HAS NOT REACHED FINALITY ON ADMISSION OF WRIT PETITION BY THE HONBLE HIGH COURT. THE ASSESSING OFFICER AT ALIGARH DID NO T DO ANYTHING IN THE MATTER AND MERELY FOLLOWED THE REASONS RECORDED BY THE ITO AT AGRA AND CONTINUED WITH THE RE-ASSESSMENT PROCEEDINGS AGAINST THE ASSESSEE ON B ORROWED SATISFACTION OF ITO, AGRA, WHO HAS ALSO BORROWED SATISFACTION FROM THE O FFICE OF DCIT-2, AGRA. THE REASONS WHICH ARE NOT IN ACCORDANCE WITH LAW HAVE B EEN RECORDED AT AGRA BY THE ITO, WHO WAS NOT AUTHORIZED TO DO SO, AS WAS HAVING NO JURISDICTION OVER THE ASSESSEE AND THE ASSESSING OFFICER HAVING JURISDICT ION OVER THE ASSESSEE AT ALIGARH DID NOT DO ANYTHING WITH REGARD TO THE INITIATION O F RE-ASSESSMENT PROCEEDINGS AND HAS NOT RECORDED ANY REASONS FOR RE-ASSESSMENT PROC EEDINGS AND MERELY ACTED ON THE BORROWED SATISFACTION. THE ISSUE IS, THEREFORE, SQUARELY COVERED BY THE ORDER OF ITAT, AGRA BENCH IN THE CASE OF LATE SHRI S.N. BHAR GAVA (SUPRA). IN VIEW OF THE ABOVE DISCUSSION, WE ARE OF THE VIEW THAT THE INITI ATION OF RE-ASSESSMENT PROCEEDINGS U/S. 147 OF THE IT ACT IS CLEARLY BAD I N LAW AND AGAINST THE PROVISIONS OF LAW. THE AO AT ALIGARH HAS, THEREFORE, NO VALIDL Y ASSUMED THE JURISDICTION TO ITA NO. 550/AGRA/2012 23 PASS RE-ASSESSMENT ORDER BECAUSE HE HAS MERELY FOLL OWED THE REASONS RECORDED BY THE ITO, AGRA, WHO WAS HAVING NO JURISDICTION OVER THE ASSESSEE. WE ACCORDINGLY SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND Q UASH THE RE-ASSESSMENT PROCEEDINGS U/S. 147 OF THE IT ACT. IN THE RESULT, ALL ADDITIONS WOULD STAND DELETED. THERE IS NO NEED TO DECIDE THE ADDITION ON MERIT, W HICH IS WHOLLY ACADEMIC IN NATURE. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (A.L. GEHLOT) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A), CONCERNED BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. GUARD FILE SR. PRIVATE SECRETARY TRUE COPY