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TMI Blog2018 (1) TMI 91X X X X Extracts X X X X X X X X Extracts X X X X ..... een introduced in the final order and that the petitioner has not been taken to surprise, we do not find any reason to cause interference in the instant matter. - Decided against assessee - Writ Petition No. 13064 of 2017 - - - Dated:- 22-12-2017 - R. M. Borde And Smt. Vibha Kankanwadi, JJ. Mr. P.M.Shah, Senior Counsel i/by Mr.S.P.Shah, advocate for the Petitioner Mr. Alok Sharma, Standing Counsel for the Respondent JUDGMENT ( Per R. M. Borde, J. ) 1 Heard. Rule. Rule made returnable forthwith and heard finally by consent of learned Counsel for respective parties. 2 The petitioner assessee is praying for issuance of writ of certiorari or any other appropriate writ, order or direction in the nature of writ of certiorari to quash and set aside order dated 04.08.2017, passed by the Assistant Commissioner of Income TaxII, Aurangabad, whereby objection tendered by the assessee for issuance of notice under Section 148 of the Income Tax Act, 1961, is rejected. The petitioner is also praying to uphold the objection raised by him vide communication dated 11.11.2016 and to drop the proceedings initiated vide notice dated 14.09.2016, under Section 148 of the Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Respondent, however, was pleased to reject the objection raised by petitioner assessee by an order dated 04.08.2017 on the ground that the market value estimated by the present petitioner as on 01.04.1981 is incorrect and that only cost of acquisition can be computed for capital gain. Since the Respondent department proposed to proceed further with the action on new and distinct ground than the reason originally recorded by the Respondentdepartment, the petitioner has approached this Court with a prayer to quash and set aside the order passed by the Respondent rejecting the objection as well as for setting aside the notice issued under Section 148 of the Act. 7 The notice issued by the Assistant Commissioner of Income Tax, CircleII, Aurangabad, on 03.11.2016, records that the assessee is a Hindu United Family (HUF) and has presented return of income for the year 20102011 on 31.07.2010 declaring total income amounting to ₹ 3,48,67,770/. On perusal of the return of income, it is noticed that the assessee offered long term capital gain to the tune of ₹ 3,31,97,795/on the land sold for consideration of ₹ 16 crores on 27.04.2009. It is noted that on perusal of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act. According to Respondent, fair market value shown by the petitioner assessee, on the basis of report of the valuer, cannot be accepted and the valuation arrived at by the valuer is 100% higher than the actual market rate. 10 Relying upon Section 49 (1) of the Income Tax Act, it is contended by the petitioner that the cost of acquisition of the asset shall be deemed to be the cost for which previous owner of the property has acquired it, as increased by the cost of any improvement of the assets incurred or borne by the previous owner or the assessee, as the case may be. 11 Clause (ii) of sub section (2)(b) of Section 55 provides that: Section 55 (2) (b) (ii): where the capital asset became property of the assessee by any of the modes specified in subsection (1) of section 49, and the capital asset became the property of the previous owner before the 1st day of April 1981, means the cost of the capital asset to the previous owner or the fair market value of the asset on the 1st day of April, 1981, at the option of the assessee. 12 It is contended by learned Counsel appearing for the petitioner that it is the option of the assessee either to compute capital ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orded should be selfexplanatory and should not keep the assessee guessing for the reasons. Reasons provide link between conclusion and evidence. The reasons recorded must be based on evidence. The Assessing Officer, in the event of challenge to the reasons, must be able to justify the same based on material available on record. He must disclose in the reasons as to which fact or material was not disclosed by the assessee fully and truly necessary for assessment of that assessment year, so as to establish vital link between the reasons and evidence. That vital link is the safeguard against arbitrary reopening of the concluded assessment. The reasons recorded by the Assessing Officer cannot be supplemented by filing affidavit or making oral submission, otherwise, the reasons which were lacking in the material particulars would get supplemented, by the time the matter reaches to the Court, on the strength of affidavit or oral submissions advanced. 15 Similarly, in the matter of Sabharwal Properties Industries Pvt. Ltd. others Vs. Income Tax Officer, reported in [2016] 382 ITR 547 Delhi, the Delhi High Court has quashed the notice and order passed by the Income Tax Officer on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer must have reason to believe that there is escape of income and the conclusion, so reached and the formation of opinion, must be recorded in the order proposing to reopen the assessment in view of Section 147 of the Income Tax Act. 20 The petitioner, pointing out judgment in the matter of Godrej Industries Ltd. Vs. B.S.Singh, Deputy Commissioner of IncomeTax and others, reported in (2015) 377 ITR 1, contends that the sustainability of the reopening notice would be tested only on the basis of reason recorded at the time of issuing the notice. The reasons cannot be added to, deleted from or supplemented. Besides, when a notice for reassessment is challenged, the burden is on the Revenue to establish that the jurisdictional requirement stands satisfied. 21 In the instant matter, according to the petitioner, a new ground has been excavated by the department for supporting notice under Section 148 and in fact no such disclosure was made by the Assessing Officer while reason for his belief was supplied by the Income Tax Department. 22 Learned Counsel appearing for RespondentDepartment has invited our attention to communication dated 03.11.2016 where under reasons for reopenin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aluer, is also not free from flaws and lacunae. It is recorded in the order that there are guidelines issued by the Directorate of Income Tax, New Delhi, for valuation of immovable properties, which must be followed by the approved valuer and the Income Tax Department. It is further recorded that guidelines of the year 2009 have not been adhered to while arriving at the conclusion regarding valuation of the property as on 01.04.1981. Since the valuation made by the approved valuer is not acceptable to the Respondent, the capital gain assessed by the assessee, on the basis of valuation of the property in the year 1981, also becomes unacceptable. 26 The petitioner contends that ground of erroneous valuation has been introduced for the first time in the order and there is no notice to the petitioner in that regard. It is basically the contention of the petitioner that there is no reference to erroneous valuation by the approved valuer in the Statement of Reasons for reopening assessment, provided by the department. The contention does not appear to be correct. In the penultimate paragraph of the reasons for reopening of assessment supplied by the Respondent on 03.11.2016, it is rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Brokers Pvt.Ltd., (Appeal (civil) No.2830 of 2007, decided on 23.05.2007, is relied upon. In paragraph no.16 of the judgment, it is recorded thus: 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 to believe would mean cause or justification. 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 an 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. The function of the Assessing Officer is to administer the statute with solicitude for the public exchequer with an inbuilt idea of fairness to taxpayers. As observed by the Delhi High Court in Central Provinces Manganese Ore Co. Ltd. Vs. ITO [1991 (191) ITR 662], for initiation of action under section 147(a) (as the provision stood at the relevant time) fulfillment of the two requisite conditions in that regard is essential. At that st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... instant case. 21 In the light of the same, we are of the considered opinion that the Writ Court ought not to have entertained the Writ Petition filed by the assessee, wherein he has only questioned the correctness or otherwise of the notices issued under Section 148 of the Act, the reassessment orders passed and the consequential demand notices issued thereon. 31 Similar proposition has been laid down in the matter of Income Tax Officer, Calcutta Vs. M/s Selected Darulband Coal Co., reported in AIR 1995 SC 1934. Our attention is also invited to the judgment of the Hon'ble Supreme Court in the matter of Raymond Woollen Mills Ltd. Vs. IncomeTax Officer and others, reported in (1999) 236 CTR SC 34. In paragraph 3 of the judgment, it is recorded thus: 3 In this case, we do not have to give a final decision as to whether there is suppression of material facts by the assessee or not. We have only to see whether there was prima facie some material on the basis of which the Department could reopen the case. The sufficiency or correctness of the material is not a thing to be considered at this stage. We are of the view that the court cannot strike down the reopening of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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