2021 (6) TMI 540 - AT - Income Tax

Reopening assessment u/s. 148 - incomplete information and unconcluded proceedings - AO considering the Value of Land Sold u/s 50C, as against the Stamp Authorities own Certified Value at the time of actual Registration of Conveyance of property and its sale transaction - HELD THAT - It is a settled legal proposition that reassessment proceedings can be initiated basis the information and material in possession of the Assessing officer and where on review and examination thereof, where he forms a reasonable belief that the income has escaped assessment and pursuant thereto, he records his reasons for reopening the assessment, seek appropriate approvals from the competent authority and thereafter, issue notice u/s 148 of the Act. In the instant case, we find that there is nothing on record which can demonstrate that the AO was in receipt of any information or having any material in possession prior to recording of the reasons and issuance of notice u/s 148. Very foundation in terms of material and information in possession of the AO, prior to recording of the reasons and issuance of notice u/s 148, for formation of reasonable belief that income has escaped assessment and reopening the assessment proceedings is conspicuously absent in the instant case. It is not a question of sufficiency or materiality of information in possession of the AO rather it is a case of complete absence of any information or material prior to recording of reasons and issuance of notice u/s 148 and in light of the same, the reassessment proceedings deserve to be quashed and set-aside. Thus the sole basis for adopting the enhanced value of the property is a communication received from the sub-registrar regarding revaluation of the property and reference made to this effect to the higher authorities dated 21.09.2009. However, such a communication is not supported by any revaluation order and even during the course of the present proceedings, no such revaluation order is either brought to our notice or placed on record. Further, we find that Deputy Director of Stamps vide reply dated 5.02.2018 in response to assessee s RTI application has confirmed that no such reference was either received from Sub-Registrar 4 Jaipur vide letter no. 57 dated 21.01.2009 or no such order passed in any such reference as evident from contents. We therefore find that even on merits, the case of the Revenue has no legs to stand in absence of any material in support of any revaluation/enhancement in value of the property by the stamp duty authority and the addition so made is hereby directed to be deleted. Appeal of the assessee is allowed.

Summary

Issues Involved:
1. Reopening of assessment under Section 148 of the Income Tax Act, 1961.
2. Adoption of higher sale value of land under Section 50C of the Income Tax Act, 1961.

Detailed Analysis:

Issue 1: Reopening of Assessment under Section 148
Contention of the Assessee:
The assessee argued that the reopening of the assessment under Section 148 was based on incomplete information and unconcluded proceedings under other laws, rendering the action bad in law and beyond jurisdiction. The assessee highlighted that the original return of income for Assessment Year (A.Y.) 2009-10 disclosed all material facts necessary for assessment, including the transaction value of the sale of lands, which was higher than the stamp duty value determined by the Sub Registrar of Stamps. The assessee contended there was no failure in disclosing material facts, and the notice for reassessment was issued without valid reasons.

Contention of the Revenue:
The Revenue argued that the Assessing Officer (AO) had specific information from the Sub Registrar that the value of the property was revised from ?76,00,000 to ?90,19,200, justifying the reopening of the assessment. The AO believed that the income chargeable to tax had escaped assessment.

Tribunal's Findings:
The Tribunal found that there was no material or information in possession of the AO prior to recording the reasons and issuing the notice under Section 148. The information from the Sub Registrar was obtained only during the reassessment proceedings, not before. Therefore, the reassessment proceedings were quashed due to the absence of any foundational material or information.

Issue 2: Adoption of Higher Sale Value under Section 50C
Contention of the Assessee:
The assessee contested the AO's adoption of the higher sale value of ?90,19,200 under Section 50C, arguing that the actual transaction value was ?76,00,000, which was above the assessed stamp duty value of ?75,06,000. The assessee emphasized that the alleged revaluation by the Sub Registrar was never communicated to the parties, and no additional stamp duty was demanded or paid. The assessee also presented a confirmation from the Deputy Director of Stamps, obtained through an RTI application, stating that no such revaluation reference was received or acted upon.

Contention of the Revenue:
The Revenue maintained that the AO correctly invoked Section 50C based on the Sub Registrar's communication, which indicated an enhanced property value of ?90,19,200 after spot verification.

Tribunal's Findings:
The Tribunal observed that the AO's reliance on the Sub Registrar's communication was not supported by any formal revaluation order. The Deputy Director of Stamps' RTI response confirmed that no revaluation reference was received or acted upon. Consequently, the Tribunal found no basis for adopting the enhanced property value and directed the deletion of the addition made by the AO.

Conclusion:
The Tribunal allowed the appeal of the assessee, quashing the reassessment proceedings and directing the deletion of the addition made under Section 50C. The judgment emphasized the necessity of having concrete information before reopening assessments and the requirement for formal revaluation orders to support any enhancement in property values for tax purposes.