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TMI Blog2021 (5) TMI 43X X X X Extracts X X X X X X X X Extracts X X X X ..... . Therefore, the assessee is ultimate owner of the property and he has executed the sale deed of the said property to M/s.Malabar Diamond Gallery Private Limited in the P.Y.2009-10 relevant to A.Y.2010-11 only. Based on these facts, the respondent formed an opinion that there is a reason to believe that the income chargeable to tax has been under assessed by the assessee. This Court is of the considered opinion that the petitioner in reply, articulated his case by saying that the petitioner had transacted the sale of his property in a genuine manner and therefore, he handed over the possession soon after the Sale agreement dated 15.12.2003. The petitioner had received the entire sale consideration and the said income was already assessed and the particulars regarding the sale agreement, the Power of Attorney were also furnished to the Assessing Officer during the Assessment Year 2004-05. Thus, the petitioner has genuinely transacted and therefore, the ground reason to believe is non-est and initiation of reopening of assessment is untenable. Any transaction, which is not within the parameters of the legality, cannot be considered as a valid transaction for the purpose of Inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner. The reasons for reopening of assessment in the case of the petitioner was furnished by the Department. Thus, the petitioner has to avail the opportunity to be provided for the purpose of reassessment. Section 147 is an initiation of proceedings and if the Department could able to establish that there is reason to believe, then the Courts are expected to be slow in interfering with such notices as the assessee would be provided with an opportunity to contest their case by producing documents and establishing the genuinity of the transactions. Courts cannot venture into the adjudication of disputed facts, which all are to be verified and adjudicated with reference to the documents and evidences to be produced by the respective parties. Further, under Article 226 of the Constitution of India, High Court is empowered to scrutinize the process, through which, a decision is taken by the competent authority in consonance with the Statute and certainly, not the decision itself. The only consideration would be to form an opinion, whether the pre-conditions as contemplated under the provisions of the Act are complied with or not. In the present case, the admitted facts a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Attorney was executed in favour of one Mr.B.Nagi Reddy, a partner in the firm, to sell the property. 4. The petitioner had furnished the copy of the sale agreement and Power of Attorney entered into. The Assessing Officer in order dated 12.03.2013 has drawn reference to Paragraph 7 of the Sale agreement, which is dealing with the capital gains. 5. During the Original assessment proceedings under Section 143(3) in response to the summons issued to Mr.B.Nagi Reddy, appeared before the Assessing Officer as per the sale agreement entered into between the petitioner and Sri Vinayaga Land Developers. The petitioner had disowned the rights in the said property after receiving the consideration of ₹ 1,07,18,000/- and the Power of Attorney was given in his favor to own, develop and sell the property. It was demonstrated before the Assessing officer that upon ultimate sale of the property for a consideration of ₹ 5,67,30,000/-, the whole income was offered as business income in the books of accounts of M/s.Vinayaga Land Developers. In this regard, Mr.B.Nagi Reddy submitted the Books of Accounts of the Firm for the Financial Year 2009-10 and the copy of the return of income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rained to move the present writ petition. 10. The counter filed by the respondent reveals that objection raised against the reasons recorded under Section 148(2) for issue of notice under Section 148 of the Act, were carefully perused and considered by the Department. It is stated that the ownership of the property could not be transferred between persons by way of executing the Power of Attorney or a sale agreement, as they do not come within the purview of Transfer of Property Act. The decision taken in consequence of part performance of the Act under Section 53-A of the Transfer of Property Act is subject to the conveyance of the ownership through registered document under Section 54 of Transfer of Property Act. It is stated that the petitioner has given only Power of Attorney and the property is not transferred through registered sale deed. These conditions does not provide or vest any discretion or power with Assessing Officer to accept the claim of the appellant that the transferor has relinquished the rights in the property during the A.Y.2004-2005 itself, without fulfilling the conditions. Therefore, by no stretch of reasoning, it can be said that Assessing Officer had a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11. 17. The learned counsel appearing on behalf of the writ petitioner relied upon the sale agreement between the petitioner and Sri Vinayaga Land Developers dated 15.12.2003, solicited the attention of this Court regarding the consideration paid for the Sale agreement. Admittedly, the Sale agreement was an unregistered document. Perusal of the consideration column, the same reveals that the consideration fixed as under this agreement is ₹ 1,07,18,000/- for conveying the Schedule 'B' mentioned property. The details of the Banker's Cheq.No., Bank, Date and amounts are also furnished in the sale agreement itself. Further, the petitioner relied on the possession column in the said agreement, held that the possession itself was granted to said Sri Vinayaga Land Developers, a registered Partnership Firm and full satisfaction memo was also incorporated in the agreement. Relying on these clauses in the unregistered agreement, the learned counsel for the petitioner reiterated that for all purposes, the property belonged to the petitioner was sold in favour of Sri Vinayaga Land Developers and a general irrevocable Power of Attorney was also given in favour of Mr.B.Na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that when there is no dispute regarding the factual matrix presented by the petitioner before the Assessing Officer with supporting documents, then any further notice for reopening of assessment is nothing but change of opinion and cannot be construed as reason to believe . The facts adjudicated with reference to the documents and the tax paid already with reference to the sale consideration received by the petitioner pursuant to the agreement for sale dated 15.12.2003, there is no reason to believe for reopening of assessment and thus, the entire opinion formed by the respondents are nothing but change of opinion and not reason to believe. 21. The learned counsel for the petitioner is of an opinion that the Audit objections were taken into consideration. The Audit objection is found in proceedings dated 06.10.2017, wherefrom the reasons for reopening of the case of the petitioner for the Assessment Year 2010-11 was issued. The Audit objections raised regarding the execution of Power of Attorney and sale agreement for the purpose of transfer of property is relied on by the respondents for the purpose of reopening of assessment. The Audit objections raised with reference to Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ever, beyond four years, only if the authorities found that the assessee has not furnished true and full disclosure of his income, then alone, the reopening of assessment is permitted and not otherwise. Therefore, the impugned order does not meet out the requirement of Section 147 of the Act and therefore, the entire reopening is to be scrapped. 25. In support of his contention, the learned counsel for the petitioner relied on the judgments of the Hon'ble Supreme Court of India in the case of Commissioner of Income Tax, Delhi Vs. Kelvinator of India Limited, reported in (2010) 2 SCC 723 , wherein the Apex Court observed as follows: 5. On going through the changes, quoted above, made to Section 147 of the Act, we find that, prior to the Direct Tax Laws (Amendment) Act, 1987, reopening could be done under the above two conditions and fulfilment of the said conditions alone conferred jurisdiction on the assessing officer to make a back assessment, but in Section 147 of the Act (with effect from 1-4-1989), they are given a go-by and only one condition has remained viz. that where the assessing officer has reason to believe that income has escaped assessment, confers ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt must be by reason of the failure on the part of the assessee either to file a return referred to in the proviso or to truly and fully disclose the material facts necessary for the assessment. Thus, the duty of an assessee is limited to fully and truly disclosing all the material facts. The assessee is not required thereafter to prepare a draft assessment order. If the details furnished by the assessee were in conformity with the requirements of all applicable laws and known accounting principles, it is for the Assessing Officer to reach such conclusions as he considered was warranted from such data and any failure on his part to do so cannot be regarded as the assessee's failure to furnish the material facts truly and fully. Any lack of comprehension on the part of the Assessing Officer in understanding the details placed before him cannot confer a justification for reopening the assessment, long after the period of four years had expired. Further, If the Assessing Officer chooses to entertain the belief that the assessment has been made in the background of the assessee's failure to disclose truly and fully all material facts, it is necessary for him to record that fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansferred the property to the firm and the firm had become entitled to invoke section 53A as against the assessee. The Commissioner was therefore right in rejecting the revision petition that was filed by the assessee. 28 . The Hon'ble Supreme Court of India in the case of Larsen Toubro Ltd., Vs. State of Jharkhand in Civil Appeal No.5390 of 2007 (SC) , made the following observations: On being pointed out in audit, it was stated that since the goods had not been transferred to contractee counder the provisions of works contract, but it had been consumed and so it does not come under the purview of taxation. The reply is not tanable in view of the above judgements and hence the case needed to be reviewed. 29. In the case of Cholamandalam Investment Finance Co., Ltd., Vs. ACIT, reported in (2018) 89 taxmann.com 337 (Madras) , the High Court of Madras held as follows in Paragraphs 5 and 6, which are extracted hereunder: 5.What is interesting to note is that the reasons for reopening is verbatim repetition of the audit objections filed by the audit party. This position was clearly demonstrated by the learned counsel for the petitioner by comparing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer before he issued the impugned notice. On this ground alone, the assumption of jurisdiction by the Assessing Officer can be faulted. 30. It is contended that in the case of Asianet Star Communications P.Ltd., Vs. Assistant Commissioner of Income Tax, Non-Corporate Circle, reported in [2019] 106 taxmann.com 293 (Madras) , this Court passed the following observations: 36. Mr.Narayanaswamy next relies on Explanation (1) to section 147, which states that production of account books or other evidence from which material evidence could, with due diligence have been discovered by the Assessing Officer, will not necessarily amount to disclosure within the meaning of the foregoing proviso. 37. However, I do not believe that the explanation is at all applicable in the present case. The Explanation targets those situations where relevant details are camouflaged in some part of the voluminous documents filed so as to lead to the inference that the Assessing Authority would be justified having in missing the same. This is, however, a case where the assessee has staked its claims and has produced all documentation in support thereof transparently and conclus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o contend successfully that by disclosing certain evidence, he should be deemed to have disclosed other evidence, which might have been discovered by the assessing authority if he had pursued investigation on the basis of what has been disclosed. The Explanation to the section, gives a quietus to all such contentions; and the position remains that so far as primary facts are concerned, it is the assessee's duty to disclose all of them - including particular entries in account books, particular portions of documents and documents, and other evidence, which could have been discovered by the assessing authority, from the documents and other evidence disclosed. 11. Does the duty however extend beyond the full and truthful disclosure of all primary facts? In our opinion, the answer to this question must be in the negative. Once all the primary facts are before the assessing authority, he requires no further assistance by way of disclosure. It is for him to decide what inferences of facts can be reasonably drawn and what legal inferences have ultimately to be drawn. It is not for somebody else - far less the assessee - to tell the assessing authority what inferences whether of f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the jurisdiction point raised is untenable. 34. Regarding the facts, it is admitted by the petitioner that he transferred the property by way of an unregistered Sale agreement dated 15.12.2003 in favour of M/s.Vinayaga Land Developers. Further, it is admitted that General Power of Attorney was executed in favour of one Mr.B.Nagi Reddy dated 19.12.2003, who in turn, executed a registered Sale Deed in favour of another person in the year 2010. Based on these admitted facts, the authorities competent found that during the Assessment Year 2004-05, the Sale deed was not registered and there was an Audit objections that an unregistered Sale agreement cannot be a valid sale nor be considered as a document under Section 54 of the Transfer of Property Act, and initiated action for reopening of assessment. The Audit objections also raised that the ownership of the Property, cannot be transferred between persons by way of executing a Power of Attorney or a Sale agreement as they do not come under the purview of the Transfer of Property Act. The decision taken in consequence of part performance of the Act under Section 53-A of the Transfer of Property Act is subject to the conveyance of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be genuine, as far as the assessee is concerned. Make it more clear, in the context of the case on hand, Sale agreement can never be considered as completion of sale nor Sale agreement does not provide title to the purchaser. Power of Attorney is given by the assessee in the present case is in favour of Mr.B.Nagi Reddy and power is given on behalf of the owner of the property. Thus, for all purposes, the sale transactions were not completed and the mere Sale agreement or the Power of Attorney would not confer any title to the purchaser nor can be construed as completion of sale transaction. Therefore, the reasons stated by the Assessing Officer for reopening of assessment is to be considered. This apart, the Audit party also raised an objection, which is legally correct and in consonance with Sections 53-A and 54 of the Transfer of Property Act. Sale deed admittedly was not executed and the sale deed was executed by the Power holder on behalf of the petitioner / assessee in favour of M/s.Malabar Diamond Gallery Private Limited in the P.Y.2009-10 relevant to A.Y.2010-11 only. Thus, the Department formed an opinion that the entire capital gains of ₹ 5,67,30,000/- has to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by a deed of conveyance and in the absence of a deed of conveyance (duly stamped and registered as required by law), no right title or interest in an immovable property can be transferred. 40. Thus, the petitioner has to avail the opportunity to be provided for the purpose of reassessment. Section 147 is an initiation of proceedings and if the Department could able to establish that there is reason to believe, then the Courts are expected to be slow in interfering with such notices as the assessee would be provided with an opportunity to contest their case by producing documents and establishing the genuinity of the transactions. Courts cannot venture into the adjudication of disputed facts, which all are to be verified and adjudicated with reference to the documents and evidences to be produced by the respective parties. Further, under Article 226 of the Constitution of India, High Court is empowered to scrutinize the process, through which, a decision is taken by the competent authority in consonance with the Statute and certainly, not the decision itself. The only consideration would be to form an opinion, whether the pre-conditions as contemplated under the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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