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TMI Blog2019 (7) TMI 1675X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer is not required to base his belief on any final adjudication of the matter. Thus it is evident that the AO has initiated the reassessment proceedings u/s 147/148 as per the provisions of the Act and all the conditions laid down for reopening has been fulfilled. Hence, this ground of the appellant fails and the ground of appeal is dismissed. Estimation of income - As in compliance of the agreement no registered sale deed was executed in the year under consideration and the amount of total area sold was also reduced from 34720 to 18954 sq.ft for the total consideration of ₹ 11,76,70,000/- instead of the original amount of ₹ 16,73,50,400/-. Therefore, the Assessing Officer has wrongly determined the profit @25% of ₹ 13,53,76,000/- without any basis or material in position merely on the basis of presumption which is not sustainable in the eye of law. Even otherwise, the sale deeds in dispute was executed in financial year 2015-16 for which the assessee has offered its income. Therefore, the ld.First Appellate Authority has rightly deleted the addition in dispute by passing the detailed order mention above. Therefore, no interference is called for in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... processed the same u/s.143(3) of the Income Tax Act on 16.12.2011 determining the total income at ₹ 1,32,140/-. Thereafter the case of the assessee was reopened u/s.147 of the Income Tax Act by issuing notice u/s.148 of the Income Tax Act on 10.03.2014 which were duly served upon the assessee after recording the reasons for reopening of the assessment. 5. In response to the same, the Authorised Representative of the assessee appeared and filed his letter dated 20.03.2014 stating that the Original Return filed u/s.139(1) of the Income Tax Act may be treated as Return filed in response to the notice u/s.148 of the Income Tax Act. The Authorised Representative of the assessee has requested the Assessing Officer to supply the copy of reasons recorded for reopening, same was provided by the Assessing Officer and the assessee filed its objection vide letter dated 10.02.2015 which was disposed off by the Assessing Officer vide letter dated 13.03.2015 rejecting the same. Thereafter, notice u/s.143(2)/142(1) of the Income Tax Act were issued and served upon the assessee. In response to the same the Authorised Representative appeared and filed the details. 6. During the year und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax Act. 7. Aggrieved by the assessment order dated 31.03.2015 passed u/s.143(3) r.w.s. 147 of the Income Tax Act the assessee filed appeal before the ld.First Appellate Authority vide impugned order dated 08.09.2016 who partly allowed the appeal filed by the assessee in which the addition in dispute has been deleted and the legal issue raised by the assessee has been decided against the assessee. 8. Now, the assessee is aggrieved against deciding the issue against the assessee and the Revenue is aggrieved against the deletion of addition made by the Assessing Officer in the impugned order. They both filed these cross appeals before the Tribunal. 9. At the time of hearing, the ld.CIT-DR relied on the order passed by the Assessing Officer and on the contrary the ld.Counsel for the assessee relied upon the order passed by the ld.CIT(A) on the deletion of addition in dispute as regard to the legal issue he argued the appeal and requested that the notice u/s.148 of the Income Tax Act is invalid may be cancelled. 10. We have heard both the sides and perused the relevant material on record, especially the order passed by the Revenue Authorities along with documentary evidence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the appellant. It was also submitted that the AO observation that the appellant had not disallowed the expenditure of ₹ 3,76,496/- u/s 40A(3) is also erroneous as the said expenditure was not claimed by the appellant against income in the P L account and the entire' expenditure had been transferred to work in progress. The appellant contended that the case was reopened on the basis of the audit objection and the AO had arrived to reopen the case on the basis of the audit objection and therefore void-ab-initio, 6.1.2. On the perusal of the details, it is observed that the case was reopened on the issue of non-disclosure of profit as per AS-7 accounting standards and nondisallowance of certain expenses u/s 40A(3) of the Act. The provisions of section 147 have undergone a drastic change since 01.04.89. The leading case on this issue is that of Indian Eastern Newspaper Society, 119 ITR 996 wherein, the Hon'ble Supreme Court held that the opinion of the Internal Audit Party on a point of law could not be regarded as information enabling the assessing officer to initiate reassessment proceedings u/s 147(b). It has also been stated that though the audit party does ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le to tax has escaped assessment. The word 'reason' in the phrase 'reason to believe5 would mean cause or justification. If the Assessing Officer has a cause or justification to think or suppose that income had escaped assessment, he can be said to have a reason to believe that such income had escaped assessment. The words 'reason to believe' cannot mean that the Assessing Officer should have finally ascertained the facts by legal evidence. They only mean that he forms a belief from the examination he makes or from any information that he receives. If he discovers or finds or satisfies himself that the taxable income has escaped assessment, it would amount to saying that he has reason to believe that such income had escaped assessment. The justification for his belief is not to be judged from the standards of proof required for coming to a final decision. A belief though justified for the purpose of initiation of the proceedings under section 147, may ultimately stand altered after the hearing and while reaching the final conclusion on the basis of the intervening enquiry. At the stage where he finds a cause or justification to believe that such income has escap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /-. In the year under construction a very limited construction work was carried out of ₹ 4,39,20,677/- which included the cost of the land of ₹ 3,44,04,150/-. It was further contended that no sale deed was executed for the property in the relevant assessment year. 6.2.2. On the perusal of the details, it is observed that during the relevant assessment year a very limited construction work was carried out as per the audited accounts work in progress of ₹ 4,39,20,677/- wherein the land cost was ₹ 3,44,04,1.50/- and the construction expenses was ₹ 95,16,527/-. The project was under construction upto 2015-16 wherein the construction expenses in each financial year was as following: Financial Years Cost of Construction (Rs) 2009-10 2784218 2010-11 10899178 2011-12 7599366 2012-13 9511635 2013-14 2596548 2014-15 4274084 2015-16 7494113 6.2.3. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowed. 11. After going through the finding given by the ld.First Appellate Authority on the issues involved in the Revenue appeal in which the ld.First Appellate Authority has deleted the addition in dispute, we are of the view that in compliance of the agreement no registered sale deed was executed in the year under consideration and the amount of total area sold was also reduced from 34720 to 18954 sq.ft for the total consideration of ₹ 11,76,70,000/- instead of the original amount of ₹ 16,73,50,400/-. Therefore, the Assessing Officer has wrongly determined the profit @25% of ₹ 13,53,76,000/- without any basis or material in position merely on the basis of presumption which is not sustainable in the eye of law. Even otherwise, the sale deeds in dispute was executed in financial year 2015-16 for which the assessee has offered its income. Therefore, the ld.First Appellate Authority has rightly deleted the addition in dispute by passing the detailed order mention above. Therefore, no interference is called for in the well-reasoned order passed by the ld.First Appellate Authority in deleting the addition in dispute and we dismiss the Revenue appeal and uphold th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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