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TMI Blog2013 (8) TMI 742X X X X Extracts X X X X X X X X Extracts X X X X ..... come 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, Agra. 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 situated 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 directed or passed any remark regarding valuation made. The court has directed the officer concerned to register the document without insisting for penalty amount. On the other hand, the petitioners/buyers have been directed to deposit the 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, the property got registered at Rs.3,60,000/- on payment of stamp valuation at the rate of 10% of the register ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or reopening of assessment on the basis of statutory order of ADM, 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 capital 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, therefore, 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, Ward 1(2), Aligarh whereas the reasons for reopening of assessment have been recorded by the ITO 4(2), Agra. And ITO at Agra was having no jurisdiction over the assessee and he has merely followed the borrowed 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 dated 08.03.2011 u/s. 148 is filed at page 1 of the paper book, in which ITO 4(2), Agra mention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Oil Industries, 292 ITR 397. (iv). Decision of Hon'ble Delhi High Court in the case of CIT vs. SFIL Stock Broking Ltd., 325 ITR 285. 5. On the other hand, the ld. DR relied upon the orders of the authorities below and submitted that at the stage of reopening of assessment, 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 by recording the reasons for reopening of assessment at Agra, therefore, there is no need to record fresh reasons at Aligarh. He has submitted that in case of transfer 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 that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has claimed excessive loss, deduction, allowance or relief in the return ; (ba) where the assessee has failed to furnish a report 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 underassessed ; or (ii) such income has been assessed at too low a rate ; or (iii) such income has been made the subject of excessive relief under this Act ; or (iv) excessive loss or depreciation allowance or any other allowance under this Act has been computed; (d) where a person is found to have any asset (including financial interest in any entity located outside India. Explanation 3.--For the purpose of assessment or reassessment under this section, the Assessing Officer may assess or reassess the income in respect of any issue, which has escaped assessment, and such issue comes to his notice subsequently in the course of the proceedings under this section, notwithstanding that the reasons for such issue have not been included in the reasons recorded under sub-section (2) of section 148. Explanation 4.--For the removal of doubts, it is hereby clarified that the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ently, ADM (F&R) Agra vide order dated 29.07.2005 determined the value of the property belonging to the assessee at Rs.2,70,97,705/- for stamp duty purposes on which stamp duty together with interest and penalty was charged and paid. In view of the above, it is a case where provisions of section 50C of the I.T. Act, 1961 are clearly attracted. Hence, capital gain Tax is liable to be charged. Since the assessee has not disclosed Long Term Capital Gain arrived at on sale of the aforesaid property in A.Y. 2005-06, I have therefore, reason to believe that Long term Capital Gain arrived at on the sale of aforesaid property has escaped assessment on account of the assessee's 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 under 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 findings of the Tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 filed in response to notice u/s. 148 and stated that original return filed may be treated as return filed in response to notice u/s. 148. Thereafter, 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 material is required and the reason to believe would mean cause or justification, which is satisfied in this case and the AO has reason to believe that the income chargeable to tax has escaped assessment and accordingly confirmed the reope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ook 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 reopening of assessment by AO at Agra and thereafter transferred the case to him 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 reproduced 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 resulting into Long Term Capital Gains that has been found bogus as 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 transferred to various beneficiaries have been operated by certain stock brokers, who have been providing entries to the beneficiaries by showing them transactions made by them in purchase / sale of shares of certain companies, which in fact never took place. The assessee is also one of the beneficiary figuring in the list supplied by the DDIT Wing, Gurgaon and an amount of Rs.5,92,809 has been remitted to the assessee through Draf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ued on 13.01.2004 with the approval of additional CIT, Range-3, Mathura, but there is no whisper of recording any fresh reasons at Mathura 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 at Mathura. It was, therefore, clearly proved that the AO at Mathura merely acted upon the reasons recorded at Agra, copy of which is placed on record and was also supplied to the assessee (PB-9). In the aforesaid reasons, it is clear that the AO has nowhere recorded the necessary 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 been recorded by the Assessing Officer of the present assessee. Further the concerned AO at Mathura has nowhere reason to believe that any income chargeable to tax has escaped assessment. The Assessing Officers at Mathura and Agra did not examine any of the information received from DDIT (Inv.) Gurgaon before proceeding with the matter. The AO at Mathura merely followed the reasons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made by the Assessing Officer for the assessment years 1998-99 and 2001-02. On the finding that that the reassessment proceedings had been initiated 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 rent 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 been initiated only on account of the opinion of the Assessing 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 reassessment proceedings against the assessee." Aforesaid decision has been confirmed by the Hon'ble Supreme Court by dismissing the departmental Special Leave Petition as is reported in 313 ITR (Statute) 27. 9. Considering the above discussion, it is clear that the Assessing Officer at Agra was not having jurisdiction over the assessee. Therefore, he should not have recorded the reasons for reopening of assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so clarify that initially the re-assessment proceedings were initiated at Agra and the Revenue Department finding no jurisdiction over the assessee, 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 recorded by ITO at Agra. The assessee contested the jurisdiction of the AO at Agra, 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 jurisdiction was changed from Agra to Aligarh. It is, therefore, accepted fact that there is no other reason recorded by the AO at Aligarh. The AO at Aligarh merely acted upon the reasons recorded by the ITO, Agra. In the aforesaid reasons, it is clear that the AO has nowhere recorded necessary 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. The ITO 4(2), Agra on the basis of the order of ADM, determining the higher valuation for the purpose of stamp duty, formed his opinion that the long term capital gain has escaped assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vides that Director General or Chief Commissioner or Commissioner may after giving the assessee 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 case 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 transfer is from Assessing Officer or Assessing Officers to any Assessing Officer or Officers where the offices of all such officers are situated in the same city, locality or places. In the present case, the reasons for reopening of assessment 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 evidence is produced before us to prove if any order or reasons have been recorded before transferring the jurisdiction from Agra to Aligarh or any opportunity of being heard have been granted to the assessee before doing so because office of ITO, Agra and Aligarh are not situated in the same city, locality or places. Contention of the ld. DR is, therefore, rejected. It is, therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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