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TMI Blog2010 (12) TMI 281X X X X Extracts X X X X X X X X Extracts X X X X ..... the notice in this case it cannot be ascertained who is the assessee. Further, it cannot be ascertained whether the service is being effected as prescribed by s. 282 of the Act on the persons addressed in their capacity a principal officers or members of an association. No doubt, the words others appear in the body of the notice but there is nothing in the notice by which the assessees can be connected with this association. Lastly, from the language of the notice it is also not clear whether the association is sought to be assessed or the addressees. If it is presumed that it is the association which was sought to be assessed, there is no indication in the notice as to the particular item of business or activity regarding which the fresh assessment was sought to be made. - Notice is not in accordance with law and therefore quashed. Nature of transaction - There is no evidence that the assessee has purchased the agriculture land at any rate which bears any comparison to its vast assets. Nor is there any evidence that the assessee has engaged in a series of sales of land or other property belonging to it. When the property was originally acquired in the form of ancestral and there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was removed from the record of rights in respect of this land. The land was thereafter standing in the name of the four brothers. Copies of the Forms 6 and 8-A and 7-12 have been furnished to the AO vide letter of the assessee dated26-2-2002. (2) On 10-6-1988 the four brothers executed an irrevocable power of attorney in favour of one Shri Patel Ganeshbhai Gokalbhai in respect of the land of 1 acre and 10 guthas of the said land and authorizing him to do all to convert the said land to Non-Agricultural, sell off the land as agricultural land, get plots laid out of the said land and sell off the said land etc. thereby putting him in complete enjoyment of the said land. Copy of irrevocable power of attorney in favour of Shri Patel Ganeshbhai Gokalbhai has been furnished to the AO vide letter of the assessee dated26-2-2002. (3) An application for conversion of the said land to non agricultural land was made on 26-12-1988. The matter was attended to by the irrevocable power of attorney holder Shri Patel Ganeshbhai Gokalbhai as mentioned in the statement of Shri Bhimabhai Ajabhai Satvara recorded by the AO on 26-2-2002. The said land was converted to non-agricultural land for re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5,500 '2434 24-4-89 160.25 Sq.mt 34,500 Total 2927.660 Sq.mt 544,120 The AO noticed that with regard to the profit earned by sale of plot of land and as per the information contained in the selling documents, the assessee has converted the land admeasuring 1 Acre 10 Guntha into non-agricultural land. The same works out in terms of sq.mt at 5050 sq.mt approx. Considering the land covered for the purpose of roads and streets and common plot salable land works out at 33.66 sq.mt. i.e. after deduction at rate of 33% of total land. From the above, it can be seen that the sale rate of land sold by the assessee works out only for 2927.660 sq.mt. for the consideration of Rs. 5,44,120 i.e. sale price works out at Rs. 186 per sq.mt. Thus, the value of total salable land works out at Rs. 6,26,076. In absence of any information produced by the assessee with regard to the remaining plots with them, I hold that entire plots of land have already been sold by the assessee during the year under consideration itself. Therefore, sale price of plot is taken at Rs. 6,26,000. 5. The AO after considering the facts the AO hold that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore the notice u/s. 158 is invalid notice and the proceedings for assessment and the assessment order on the AOP are invalid in law. In so far as the ground of appeal taken on the validity of the above notice is concerned, I find that the appellant has taken specific ground of appeal vide ground of appeal No. 1, wherein it has objected to the issue of notice u/s 148 as the same has been issued without specifying the status of AOP. I find that this issue has been decided by the CIT ( A ) vide para-4 of the order dtd. 2-11-2006 and since the issue has been decided by a speaking order, I do not think it fit to re-adjudicate this ground of appeal, hence reject the submission of the appellant. 8. The CIT(A) further held in respect of the ground whether all the assessees forming the AOP can be termed as AOP or are separately Co-Owners in their individual capacity. As under:- "Therefore, I agree with the finding of the AO that all the 4 persons commonly came together to derive benefit from the plots of land jointly converted by them from agricultural land to non-agricultural land. The AO has, therefore, rightly assessed the above persons in the status of AOP and brought to tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 33:1034 1132 1 1 Ajabhai Khodabhai Khimjibhai Khodabhai 1031:1034:1132/2 1032:1033:1132/2 1971 --------------------- 1) Jiviben Khimjibhai 2) Bhimjibhai Ajabhai Premjibhai Khimjibhai 3) Devabhai Ajabhai Narsibhai Khimjibhai 4) Jethabhai Ajabhai 5) Ramjibhai Ajabhai (Jiviben expired in the year 1980) ---------------------------------- Bhimjibhai Ajabhai Devabhai Ajabhai Jethabhai Ajabhai Ramjibhai Ajabhai 11. The learned AR further submitted that the co-owners inherited agriculture land bearing survey number 1132 of village Vajepar. Copies of land revenue record in Form No.6 are on record. At the passage of time, the agriculture operation could not be carried out and thereafter convert the agriculture land into non-agriculture land and divide in sub-plots. The co-owners, being illiterate labourers, were not conversant with the procedural aspects and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... furnish copies of sale deeds. A compilation of the same which were furnished before AR has been filed which is placed on record. The learned AR submitted that the CIT(A) has ignored the fact on record that the agriculture land in Survey No. 1032 was inherited property and the very fact is evident from land revenue record, which were in possession of the department. There were series of documents to suggest that co-owners were possessing inherited property and not come together own volition, as alleged. There was pride of possession. The agriculture land in Survey No 1031: 1034 portion of 1132 was inherited by Shri Ajabhai, son of Late Shri Khodabhai. Copies of land revenue records are at para Nos. 10 to 21 39 to 43 of paper book. The learned AR submitted that the CIT(A) has ignored vital factual aspects and settled individual pronouncements to suit his alleged finding. He did not appreciate facts properly, therefore the order of CIT(A) is not in accordance with law. The learned AR in support of his contention relied upon following decisions: Sr No. Case Name Citation 01 Murugesan Bros. v. CIT (1973) 88 ITR 432 (SC) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e plot No. 14 is kept by the co-owners for own residence and same is still in their possession. The copy of electricity bills are placed at Page No. 44 to 47 of paper book. 16. The learned DR on the other hand relied upon the order of CIT(A) and submitted that the CIT(A) discussed all issues in detailed given his dividing that the CIT(A) has rightly followed the discussion of his earlier order on issue of notice u/s 148, therefore the CIT(A) is right in non-adjudicating the issue. The CIT(A) has rightly confirmed the order of AO in respect of AOP status. He further submitted that the CIT(A) has rightly confirmed the order in respect of estimation of sale consideration as the assessee did not file any supporting evidence. 17. We heard the Ld. Representative of the valuation record perused and some through the decisions cited. There are two issues to be examined in this case first one is that whehter under the facts and circumstances of the case there is an AOP and second one is that whether the AO is correct in issuing notice u/s 147 and issue on merit of the case. For examining the first issue we have to see the word "association". The word "association" as defined in the Black ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore do not find any merit in the case of revenue that there was an AOP. Our above view is fortified by the judgment of Gauhati High Court in the case of Smt Jaswant Kaur Sehgal v. CIT 271 ITR 475 (Gauhati). 19. Now we come to examine the second issue ,It is well settled that the AO's jurisdiction to reopen an assessment u/s 147 of the Act would depend upon the issuance of a valid notice. It the notice issued by him is invalid for any reason then the entire proceedings that would be taken by him pursuant to such notice would be void for want of jurisdiction. The service of valid notice is a condition precedent to the jurisdiction of the AO to take proceeding u/s 147 of the Act. A similar issue came up before Hon'ble Calcutta High Court in the case of Bhagwan Devi Saraogi v. ITO 118 ITR 906 (Cal.) where in notice under section 147 of the Act issued is reproduced in the judgment at page 912 as under: "Notice under section 148 of the Income-tax Act, 1961, III ( 2 ) /762-a/A Income-tax Officer, III ( 2 ) Dated the 8 th January, 1963 To, Smt. Rama Devi Agarwalla others 3, Tarachand Dutt Street, Calcutta. your income Whereas I have reason to bel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8] 68 ITR 416 is of no assistance in the facts and circumstances of this case. In the said case the question of validity of the notice did not come up for consideration at all. The said case was concerned with the question of service of an otherwise valid notice. The decision of the Supreme Court in the case of Pannalal Binjraj v. Union of India [1957] 31 ITR 565, relied on by Mr. Pal, to my mind, has no application to the facts and circumstances of this case. The facts and circumstances of this case clearly go to indicate that there has been no acquiescence on the part of the petitioner in the jurisdiction of the ITO. The exercise of the power conferred on the court under art. 226 rests undoubtedly in the discretion of the court and in exercising the discretion the court in appropriate cases takes into consideration the conduct of the parties. Apart from the question that there has been no acquiescence in the jurisdiction of the ITO, I am further of the opinion that any amount of acquiescence on the part of the petitioner woud not have conferred any jurisdiction on the ITO, if the ITO lacked jurisdiction for failure to serve a valid notice in accordance with law. The validity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the case and in the light of the judgment of the Calcutta High court cited above, the contentions of revenue cannot be stated to with substance. From the notice in this case it cannot be ascertained who is the assessee. Further, it cannot be ascertained whether the service is being effected as prescribed by s. 282 of the Act on the persons addressed in their capacity a principal officers or members of an association. No doubt, the words others appear in the body of the notice but there is nothing in the notice by which the assessees can be connected with this association. Lastly, from the language of the notice it is also not clear whether the association is sought to be assessed or the addressees. If it is presumed that it is the association which was sought to be assessed, there is no indication in the notice as to the particular item of business or activity regarding which the fresh assessment was sought to be made. 23. In the light of the above discussion we find that action of the AO is without jurisdiction as the notice u/s 147 to the assessee is not in accordance with law. Therefore the order of AO is quashed. 24. On merit, whether it is an accretion to capital or c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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