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TMI Blog2016 (6) TMI 1047X X X X Extracts X X X X X X X X Extracts X X X X ..... vs. Rajesh Jhaveri Stock Brokers Pvt.Ltd. reported in [2007 (5) TMI 197 - SUPREME Court ] in the context of “reason to believe” held that if the Assessing Officer has cause or justification to know or suppose that income had escaped assessment, it can be said to have reason to believe that income had escaped assessment. The expression cannot be read to mean that the Assessing Officer should have finally ascertained the fact by legal evidence or conclusion. It is true that the question of capital gain came up for consideration before Assessing Officer. It is also true that the assessee had placed the materials with respect to sale of land before Assessing Officer during such assessment proceedings. However, the question of true value of the land not being reflected in the sale consideration and the transaction itself not reflecting the correct value received by the petitioner, obviously were not part of assessment proceedings. At that stage, the Assessing Officer cannot be said to have applied his mind to these aspects of the matter which emerged lateron. The sale of land by Kamal Gohil three months after his purchase from the petitioner at a value more than seven times of the pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by Jayeshbhai aTalakshi Kotak, Executive Director of PSPL Shri Alok Gunvaantray Upadhyay as POA (power of attorney) Holder of Shri Jayeshbhai Talakshi Kotak. The Assessee has allegedly paid ₹ 98,00,000/- to M/s. Palitana Sugar Mills Pvt.Ltd. (PSPL). The payment of ₹ 98,00,000/- is reflected in books of M/s. J.P.Infrastructure Pvt.Ltd., PAN AABCJ4936C, JP ISCOn Ltd.-IMC-Bhavnagar (ledger Plot Unit Holders A/c) as well as in books of accounts of PSPL(Ledger ISCON Mega City Scheme Deposit A/c. Asper order dated 11.8.2008 of the Hon'ble High Court of Gujarat for scheme of amalgamation, M/s. Palitana Sugar Mills Pvt.Ltd. Has been emerged and Iscon Megacity Division and Sundervans Bungalow land-Hotel Project Division of Palitana Sugar Mills Pvt. Ltd. Has been merged into M/s.J.P.Infrastructure Pvt.Ltd. w.e. From appointed date 1.4.2007. Subsequently, after a short period of 3 months on 5.3.2008, Shri Kamal M.Gohil sold the alleged land to M/s. Sterling Addlife India Pvt.Ltd. For a sum of ₹ 7,09,,85,880/-. The deed is signed as seller by Shri Kamal M.Gohil and Shri Jayeshbhai Talakshi Kotak and as purchaser by Shri Girishbhai Naranbhai Patel (Director, Sterling Ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Officer, learned counsel for the petitioner raised following contentions: (1) That the issue of capital gain arising out of sale of the said land was examined by the Assessing Officer in the original assessment proceedings. It was thereafter not open for him to re-visit this issue by re-opening the assessment. (2) Further notice for re-opening have been issued beyond period of four years after the end of relevant assessment year. There was no failure on the part of the petitioner to disclose truly and fully, all facts necessary for the assessment. Notice for re-opening therefore, could not have been issued. (3) Even otherwise reasons recorded by the Assessing Officer lack validity. From such reasons, it cannot be gathered in what manner income chargeable to tax in the hands of the petitioner can be stated to have escaped assessment. There was no material with Assessing Officer to form a belief that there has been an escapement of assessment of income. 6. On the other hand, learned counsel Shri Bhatt after taking us minutely through the recorded reasons submitted that the modus operandi employed by the petitioner in collusion with Kamal Gohil is apparent. The close pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... formation at its command to believe that Kamal Gohil was also used by Iscon group of companies for routing cash sale considerations to the original land owners-sellers reducing their capital gain tax liability and that Kamal Gohil is absconding. 9. In our opinion, the reasons cannot be said to be not germane to the question of assessable capital gains in the hands of the petitioner for the sale of the land in question. The Supreme Court in the case of Assistant Commissioner of Income-Tax vs. Rajesh Jhaveri Stock Brokers Pvt.Ltd . reported in 291 ITR 500 in the context of reason to believe held that if the Assessing Officer has cause or justification to know or suppose that income had escaped assessment, it can be said to have reason to believe that income had escaped assessment. The expression cannot be read to mean that the Assessing Officer should have finally ascertained the fact by legal evidence or conclusion. It was observed as under: 16. Section 147 authorises and permits the Assessing Officer to assess or reassess income chargeable to tax if he has reason to believe that income for any assessment year has escaped assessment. The word reason in the phrase reason ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer cannot be said to have applied his mind to these aspects of the matter which emerged lateron. The sale of land by Kamal Gohil three months after his purchase from the petitioner at a value more than seven times of the purchase cost was also not before the Assessing Officer. 11. In the case of Yogendrakumar Gupta vs. Income-Tax Officer , reported in 366 ITR 186 in the context of Assessing Officer's reasons to believe and also in the context of inquiries made by the Assessing Officer when new material was revealed lateron, the Court held and observed as under: 20. The Assessing Officer required jurisdiction to reopen under section 147 read with section 148 of the Act, where the information must be specific and reliable. As heldby the apex court in the case of Phool Chand Bajrang Lal (supra), since the belief is that of the Incometax Officer, the sufficiency of reasons for forming the belief, is not for the court to judge but is open to an assessee to establish that there exists no belief or that the belief is not at all a bonafide one or based on vague, irrelevant and non-specific information. To that limited extent, the court may look at the view taken by the Income- ..... X X X X Extracts X X X X X X X X Extracts X X X X
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