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TMI Blog1987 (3) TMI 164X X X X Extracts X X X X X X X X Extracts X X X X ..... 10/11-2-84. It is, therefore, prayed that the proceedings under section 147(b) may kindly be quashed or in the alternative it may be ordered that no capital gain has been arisen in this case." 2. By status the assessee is an individual and the accounting period was the year ending31-3-1976. The assesses receives income from house property and dividends. Assessment was originally completed under section 143(1) of the Income-tax Act, 1961 on8-3-1979. Subsequently on20-3-1981the learned ITO issued notice under section 148, after reopening the assessment under section 147(b) of the Act. The reasons recorded for reopening the assessment are as under : " There have been exchange of properties within the meaning of section 45 of the Income-tax Act and the assessee has received consideration of Rs. 5,26,800 in value for Alipur Road property in exchange of properties at 1/2 share 58 Janpath, 1/2 share Gali Batsshan, 1/2 share Noor Building, 1/2 share Sultan Building, 1/2 share 1249 Ballimaran and 1/2 share 1212, Ballimaran, Delhi the value of each transfer was, worked out to Rs. 1,43,150. Thus there is element of capital gain under section 45 of the IT Act for the value received in kind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as completed and it was a case of mere change of opinion ; (b) that assessment of income from capital gain was invalid as there was no evidence that the value of properties representing the share of the assessee was more than the value of the property given in lieu thereof to his brother. 7. The learned CIT(A) noted that the assessee had given the following note in the statement of assessable income : " Division of immovable property has taken place between the assessee and his brother Mohd. Suleman Japanwala as per orders of the Delhi High Court dated13-8-1975." In the learned CIT(A)'s view the learned ITO did not make any enquiry and income as returned was accepted under section 143(1) vide assessment order dated 8-3-1979 and that after the date of that order the learned ITO came into possession of information contained in the valuation report dated 20-4-1977 said to have been submitted by the DVO for the asstt. year 1965-66. He thus upheld the validity of the reopening with the following observation : " In all these cases assessments were reopened under section 147(b) on the basis of the material or on the basis of opinion as in the Supreme Court's case at 119-996 conc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the following cases : (a) in the case of Suganchand Chandanmal v. ITO [1976] 105 ITR 743 (Cal.) ; (b) in the case of H. Noronha v. ITO [1982] 133 ITR 199 (Kar.) (c) in the case of British Insulated Callendars' Cables Ltd. v. CIT [1983] 142 ITR 300 (Bom). 11. It was contended by the learned counsel that all details necessary for framing the proper assessment were placed in the record and filed along with the return. Mention was also made of the statement of income, copy of which is placed at page 1 of the paper book. It was the assessee's case that all details necessary for framing a proper assessment were placed in the record and the reopening was not justified. It was also contended that the so-called information said to have been noted by the learned ITO was already in existence and, therefore, the same could not be the basis for initiating the opening proceedings. 12. Shri Manjani's next contention was that in the present case the family dispute regarding property was settled through the Hon'ble High Court on the basis of a compromise submitted by the parties and that on account of that section 45 of the Act being inapplicable in the facts of the assessee's case, n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntative it was a mere cover to disguise the real transaction and intention. It was the revenue's case before us that it was an exchange of properties between the two brothers and the assessee having got the assets of higher value the capital gain was rightly assessable in the assessee's hands. Reliance by the learned departmental representative in this connection was placed on the ratio in the case of CIT v. Motors General Stores (P.) Ltd. [1967] 66 ITR 692 (SC) for the proposition that in the peculiar circumstances of the assessee's case the transaction was definitely, an exchange and thus covered under section. 45 read with section 2(47) of the Act. Thus according to him the capital gain was rightly exigible. 17. In fact to start with the learned departmental representative contended that the learned ITO was in possession of the information in the form of the valuation report and the assessment order for the asstt. year 1975-76 to enable him to form the opinion that income assessable to tax in the form of capital gains had escaped assessment and thus were the reopening proceedings rightly initiated and finalised. According to Shri Bajpai page 1 of the paper book being stateme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on and in what manner the assets of higher value were acquired by the assessee by giving the assets of lower value is not at all inferable. So, to say the least it could not be possible for the learned ITO to be able to conversant with all the aspects of the assessee's case merely by having a look at page 1 of the paper book. The assessment was framed in those circumstances. The learned ITO thereafter received the information through the DVO's report and in the order and report there was a vast difference between the value of the assets received and parted by the assessee. That was the starting point before the learned ITO to have initiated reopening proceedings under section 147(b) of the Act. A copy of the reasons recorded for reopening is placed in the paper book wherein it is definitely mentioned that on account of the valuation report dated 20-4-1977, which was noted by the learned ITO after the assessment, the value of the property received by the assessee was Rs. 5,26,800 and the assessee had parted with the property worth Rs. 1,43,150. The exigibility of capital gain was inferred in those circumstances and the reopening proceedings were initiated. We are satisfied that in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sheikh Haji Mohammed Suleman Japanwala received some property from their ancestors and with regard to the division of the same there was some dispute between the brothers and suit No. 201/75 is seen to have been filed by the assessee's brother against the assessee before the Hon'ble Delhi High Court as is clear from the copy of the plaintiff placed at page 26 of the paper book. It is further seen that the application under order 23, Rule 3 read with section 151 Civil Procedure Code was filed by the parties as is clear from the copy placed in the paper book, on 9-8-1975, pointing out to the Hon'ble High Court that the parties have come to settlement in the above case on terms and conditions incorporated in the application. It is the assessee's case that the said suit, after the application, was decreed in terms of the contents of the application and that the properties were received by the parties under that arrangement known as the family settlement. The revenue's case here is that the suit and settlement were less than genuine and that in fact a cover was sought to be given to deal transaction to avoid the incidence of tax and stamp duty. Revenue's contention is that the whole tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tlement, a father transferred some shares to some of his sons at a consideration which was less than the market value, as he wanted to have peace in the family and the transaction was bona fide, the transaction was not a transfer. In order to bring a case within the scope of Section 4(1)(a) of the Gift-tax Act. 1958, there must be a transfer for consideration and such consideration must have been found to be inadequate. Therefore. the provisions of Section 4(1)(a) were not attracted to the facts and circumstances of the case." 25. A similar view is seen to have been taken by the Hon'ble Bombay High Court in the case of Rasiklal Maneklal, (HUF) where there was a scheme of amalgamation of the two companies where the shares of one company were acquired by the other. It was held by theHon'ble Courtthat it constituted neither exchange nor relinquishment. In that case there was a scheme of amalgamation whereas in the case before us is a family settlement. We thus draw an analogy and see support for our conclusion. In our view the assessee's case definitely gets support from this ratio. 26. The ratio in the case of K.P. Varghese also supports the assessee's stand as nothing is seen to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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