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TMI Blog2021 (5) TMI 953X X X X Extracts X X X X X X X X Extracts X X X X ..... sons for reopening of assessment in the case of assessee on wrong facts as according to records put forth before us, it is reflected that the assessee was regularly income tax assessee and filing here return of income as well as for the year under consideration also. As the assessee had filled her return of income and disclosed the said transaction and despite the material available on record which had not been taken in to consideration before recording the reasons by the A.O. which shows that the notice has been issued by the A.O. only on factually incorrect facts and on the presumption, assumption and suspicion and without any material on record. Therefore, we are of the view that the very basis of reopening of assessment is based on incomplete or wrong facts available on record as the said transaction of sale of the property has already been duly disclosed by the assessee in her return of income and the assessee had also filed her return of income. All these facts reflect non-application of mind by the A.O. while recording the reasons and it cannot be held that there is the nexus between the material available on record and formation of belief that the income has escaped asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hence the same may kindly be allowed. 2.3 The ld. CIT(A) has further grossly erred in law as well as on the facts of the case in confirming the action of the ld. AO in allowing the claim of legal expenses of ₹ 51,558/- only as against the actual claim of ₹ 1,54,674/- claimed by the assessee without any justifiable basis. Hence the claim so denied by the ld. AO and CIT(A) is being totally contrary to the provisions of law and facts on the record and hence the same may kindly be allowed. 3. The ld. AO has grossly erred in law as well as on the facts of the case in charging interest u/s 234 A,B,C. The appellant totally denies it liability of charging of any such interest. The interest, so charged, being contrary to the provisions of law and facts, may kindly be deleted in full. 4. The appellant prays your honour indulgences to add, amend or alter of or any of the grounds of the appeal on or before the date of hearing. 2. The hearing of the appeal and C.O. were concluded through video conference in view of the prevailing situation of Covid-19 Pandemic. 3. There is delay of 178 days in filing this appeal, for which the assessee filed an application for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the Courts to do substantial justice to parties by disposing of matters on 'merits'. The expression sufficient cause' employed by the legislature is adequately elastic to enable the Courts to apply the law in a meaningful manner which subserves the ends of justice-that being the life-purpose of the existence of the institution of Courts. It is common knowledge that this Court has been making a justifiably liberal approach in matters instituted in this Court. But, the message does not appear to have percolated down to all the other Courts in the hierarchy. The said judgment is a leading case on the subject and has a binding force on all the officers subordinate thereto. 6. The action or inaction by an assessee, on the advice of its counsel, whether correct or incorrect, if caused a delay, has been held to be reasonable and sufficient cause in these cases also. Kindly refer N. Balakrishnan v. M. Krishna Murthy (1998) 7 SCC 123 published in 30 BCAJ 922, Concord of India Insurance Co. Ltd. v. Smt. Nirmala Devi and Anothers. 118 ITR 507 . That it is also settled that for the mistake of the Counsel, the party cannot be suffered. Reliance on Mahaveer Prasad J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tigant or an attempt to save limitation in the underhand way. If the party who is seeking condonation of delay has not acted in malafide manner and reasons explained are factually correct then the Court should be liberal in construing the sufficient cause and lean in favour of such party. A justice-oriented approach has to be taken while deciding the matter for condonation of delay. However, this does not mean that a litigant gets free right to approach the court at its will. 6. If we apply the settled principles as laid down by the Hon ble Supreme Court as well as other courts on the facts of the present case we find that the assessee has explained cause of delay, therefore, in the facts and circumstances of the case, we condone the delay of 178 days in filing the present appeal and admit the appeal for hearing. 7. The brief facts of the case are that the assessee is a regular IT assessee. She filed her ROI on 08.05.2009 declaring total income at ₹ 1,78,250/- which was assessed u/s 143(1) of the Income Tax Act, 1961 (in short, the Act). Subsequently, on the basis of information from AST software, it was alleged that during the year under consideration, the assessee joi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses of ₹ 1,54,274/- as the shop was under litigation with the tenant before Civil Judge lower range west Jaipur as mentioned in sale deed. In support of the same, the assessee submitted litigation papers of the same before the AO. However, the AO concluded that the assessee failed to file documentary evidence in support of the legal expenses incurred. The AO however, looking to fact that there was some dispute going on with the tenant, allowed ₹ 51,558/- only (1/3rd of ₹ 1,54,674/-) as against ₹ 1,54,674/- claimed by the assessee. Thus he disallowed ₹ 1,03,116/- and finally estimated the LTCG at ₹ 5,17,894/- as against Nil claimed by the assessee. 8. Being aggrieved by the order of the A.O., the assessee preferred appeal before the ld. CIT(A) and after considering the submissions of both the parties and well as material available on record, the ld. CIT(A) has confirmed the action of the AO by stating that the AO has estimated the cost of acquisition by obtaining comparable case from Dy. Director General, (registration stamps), circle-3, Jaipur and adopted the cost by taking rate per square meter and after providing opportunity to the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld. AO has stated that the assessee has not filed the return and not disclosed sale consideration for the relevant assessment year is absolutely wrong. Because the assessee was regularly Income Tax Assessee and filing her return of income for this year also. For the year under consideration she has filed her return of income on 08.05.2009 declaring the total income of ₹ 1,78,250/- in which she has also shown loss from Long Term Capital Gain of -₹ 1,190/- vide computation(PB 2-3) and shown net income of ₹ 1,78,250/- including the income from business with the ITO Ward 6(2) Jaipur. Copy of IT return with computation is enclosed (PB 1-4). In the return the assessee herself shown the capital gain/loss on such property and in page 2 of the assessment order the ld. AO himself admitted the same. Hence the concealed income if any must be recorded at ₹ 5,17,894/- and not entire sale consideration of ₹ 18,75,000/- (of all three co-owners) in the reasons recorded. Thus ld. AO has issued the notice on wrong facts and reasons that the assessee has not filled her return of income and not disclosed the said transaction or despite the material available on record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot hope to salvage the impugned notice. Through the affidavit-in-reply a faint attempt has been made to entirely shift the center of the reasons to a completely new theory viz. the possible applicability of section 50C of the Act. The reasons recorded nowhere mentioned this possibility. Reasons recorded, in fact, ignored the fact that the sale consideration as per the sale deed was ₹ 50 lakhs and that the assessee had by filing the return offered his share of such proceeds by way of capital gain. In the case of Vijay Harishchandra Patel vs. ITO 400 ITR 167(Guj.) (2018) where it has been held that When very basis for reopening no longer survives, assumption of jurisdiction u/s 147 by AO by issuing notice u/s 148 was without authority of law and could not be sustained. However the ld. AO nowhere stated that what documents he was having with him at the time of recording the reason. Hence the observation are wrong and baseless and her own and liable to be ignored. Thus the reassessment proceeding on the basis of wrong or incorrect reason and wrong material are illegal and liable to be quashed. 3. No income escaped: further it is submitted that the notice u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amply clear that the same contains conclusions and is bereft of reasons.(para 12) 5. No notice u/s 148 can be given or reopen for verification the doubtful transaction: Further it is also settled legal position that no notice u/s 148 can be given for reopen the case for verification the transaction because that indicates reason to suspect not reason to believe. And in the present case on the perusal of the reason recorded itself is clear that the AO was having reason to suspect not reason to believe and for that there is no provisions in law. kindly refer CIT v/s M/s Sahil Knit Fab 249 CTR 454(P H) also kindly refer a direct decision of Bakul Bhai Raman Lal Patel 56 DTR 212(Guj.) . 6o Satisfaction or application of mind by the Add. CIT and Pr. CIT: Further on perusal of the reason recorded and approval u/s 151 by the competent authority it is clearly proved that they have not applied their mind on the reasons recorded they have only expressed or mentioned yes on the reason forwarded while as per decision of Pr. CIT vs. N. C. Cables Ltd.(2017) 98 CCH 0010 Del HC it has been held that Section 151 of the Act clearly stipulates that the CIT, who is the competent authority t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nta Devi Gaekwad (Dead) Through LRS v/s DCIT 250 CTR 0421(Guj.). Where it has been held Computation of capital gain-Cost of Acquisition-Fair market value-Reverse Indexing Method-Assessee is the mother of erstwhile ruler of Baroda-During year under consideration, assessee had sold certain jewellery/valuable articles made of gold diamonds and pearls for consideration of ₹ 9,05,09,176, which she inherited from her son-Assessee, by following the method of reverse indexation worked out fair market value of said jewellery at ₹ 3,47,25,492/-as on April 1, 1974 and computed capital gains at ₹ 2,78,84,432-However, AO held that all items of jewellery were not sold during year under consideration and accordingly, estimated value of items as on April 1, 1974 at ₹ 5.00 Lac as against the returned value of gold jewellery of ₹ 6,65,270/-as on March 31, 1974 and calculated capital gain at ₹ 4,49,97,090-CIT(A) held that the cost of acquisition as per fair market value as on April 1, 1974 should be ₹ 1,39,48,363/- instead of ₹ 5,11,44,000/-adopted by the assessee-Issue as to whether, Tribunal below committed substantial error of law in holding that Fai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment has also taken incomparable case. Hence the value shown by the assessee should be taken and reverse indexation should also be accepted. Therefore under these facts, circumstances legal position the additions so made may kindly be deleted in full and oblige. 10. On the other hand, the ld DR has vehemently supported the orders of the revenue authorities. 11. We have heard the ld. Counsels of both the parties and have perused the material placed on record. We have also deliberated upon the decisions cited in the orders passed by the authorities below as well as cited before us and we have also gone through the orders passed by the revenue authorities. From perusal of the record, we noticed that in the present case, the A.O. had recorded the reasons for reopening of assessment by mentioning that the assessee has not field its return of income. Later on, it was noticed that the assessee has sold a property situated at Shop No. 150, Chandpole Bazar, Jaipur to Smt. Meena Sharma during the F.Y. 2008-09 for sale consideration of ₹ 18,75,000/-, however of the Sub-Registrar had adopted final face value of such property at ₹ 16,37,653/- for the purpose of chargin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was held as under: 13. We have heard the rival contentions and purused the material available on record. Firstly, it is noted that in the instant case, the notice under section 148 in exercise of powers under section 147 has been issued on 23.03.2014 after the expiry of period of four years from the end of the impunged assessment year i.e, AY 2007-08. In terms of proviso to section 147 of the Act, an action under the said provisions can be taken by reason of failure on the part of the assessee to file his return of income or to disclose fully and truly all necessary facts necessary for his assessment for the subject assessment year. The contention of the Revenue at the time of recording the reasons was that the assessee had failed to file his return of income for the impugned assessment year and the same was not reflected in the IT system. Per contra, the ld AR has submitted that return of income for the AY 2007-08 was filed by the assessee manually with ITO- Ward 6(1) Jaipur vide acknowledgment no. 2611000925 on 21.05.2008. It is relevant to note that the return of income so filed manually is with ITO Ward 6(1) who is the same officer who has subsequently issued the notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... return. Importantly, even the second factual assertion of the Assessing Officer in the reasons recorded is totally incorrect. He has referred to said sum of ₹ 1,18,95,000/- as a sale price of the property. The assessee had produced before the Assessing Officer, the sale deed in which, the sale consideration disclosed was ₹ 50 lakhs. 12. The Assessing Officer may be correct in pointing out that when the sale consideration as per the sale deed is ₹ 50 lakhs but the registering authority has valued the property on the date of sale at ₹ 1,18,95,000/- for stamp duty calculation, section 50C of the Act would apply, of course, subject to the riders contained therein. However, this is not the cited reason for reopening the assessment. The reasons cited are that the assessee filed no return and that 1/3rd share of the assessee from the actual sale consideration of ₹ 1,18,95,000/-therefore, was not brought to tax. These reasons are interconnected and interwoven. In fact, even if these reasons are seen as separate and severable grounds, both being factually incorrect, Revenue simply cannot hope to salvage the impugned notice. Through the affidavit-in-reply a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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