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TMI Blog2022 (12) TMI 187X X X X Extracts X X X X X X X X Extracts X X X X ..... offered the amount of capital gains to tax in the next corresponding assessment year, that is, 2016-17. The income by way of capital gain is chargeable in the year of capital assessment even though the consideration may be realised earlier or later or or there may not be realisation at all. In the present case, as explained above, the execution of development agreement with Gokulesh Infra did not give rise to transfer within the meaning of section 2(47)(v) of the Act in the year 2014-15. Therefore, the entire basis of reopening was erroneous of facts and misconceived in law. In such working of facts, the opinion formed by the assessing that he had reasons to believe about escapement of income in the assessment year 2015-16 was misconceived and without foundation of facts and without foundation in law. The present petition deserves to be allowed. Notice issued by the respondent under section 148 of the Act, is set aside. - Decided in favour of assessee. - HONOURABLE MR. JUSTICE N.V. ANJARIA AND HONOURABLE MR. JUSTICE BHARGAV D. KARIA Appearance: Mr. SN Divatia (1378) for the Petitioner(s) No. 1 Mrs. Kalpanak Raval (1046) for the Respondent(s) No. 1 CAV ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd part payment was received by the petitioner, however, full and final payment against was received in the subsequent year, that is, financial year 2015-16. 3.4 The petitioner filed return of income for next assessment year 2016-17 on 30.11.2016 declaring total income of Rs. 2,79,00,570/- including long time capital gain arising out of the said land transaction. The scrutiny assessment was completed under section 143(3) on 10.12.2018. 3.5 Now the reasons for reopening the case of the petitioner on 14.07.2021 may be extracted in its relevant part, 2. Brief details of information collected/received by the AO: The undersigned is in receipt of information from Jt. CIT(OSD), Central Circle-2, Baroda. The information pertains to a search assessment proceedings which was carried out on Akshar Group cases, Shri Mehul Patel and Shri Rakesh Patel which revealed that many seized documents pertain to Shri Chhaganlal Murji Dholu, who as per documents seized is among six land owners who have paid cash on money to the firm GOKULESH INFRA. There is a development agreement between the land owners and Gokulesh Infra firm. 3. Analysis of the information collected/received ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x as capital gain in the assessment year 2016-17. Since the transaction was of development agreement, the property would pass on a future date upon fulfillment of all obligations agreed upon between the parties, it was sought to be pointed out. It was then contended that for the purpose of classification of stamp duty also, the agreement was classified as development agreement. 3.6.2 Thus the crux of the objections of the assessee to the proposed reopening was that firstly the transaction was not of the sale, but was an agreement for development. Secondly, the transfer did not take place in the previous year corresponding to the assessment year 2015-16, but the transfer took place during previous year 2015-16, that is, relevant to assessment year 2016-17. Thirdly, it was the case that the gain arising out of the transaction was offered to tax for the assessment year 2016-17 and that no tax had thus escaped assessment. 4. Learned advocate for the petitioner assailing notice under section 148 of the Act as well as the reasons recorded for the purpose, submitted that assertion by the respondent that the petitioner paid cash on money to firm Gokulesh Infra was factually incorrect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh Infra, submitted the petitioner. It was submitted that there was tangible information available with the assessment officer, showing escapement of income. It was submitted that the original income was processed under section 143(1) of the Act only. It was submitted that the cash income discovered had not been reflected in the original return filed. 4.2.1 Learned advocate for the respondent submitted that although same transaction was of the assessment year 2016-17, receipt of cash, as per the information available was relatable to assessment year 2015-16, therefore, reopening was acted upon for the said year and the cash receipt was shown as per the information available. Learned advocate for the respondent submitted that there was sufficient prima facie material available with the AssessingOfficer to exercise the powers for re-assessment. 4.2.2 Learned advocate for the respondent further inferred his submissions by placing reliance into decision of this court in Heval Navinbhai Patel v. Income Tax Officer, Ward 3(2)(2) [(2021) 126 taxmnn.com 82 (Guj)], in which case the individual assessee had sold land for consideration of Rs.5.38 crores and had not filed return of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Particulars Amount Total Purchase Cost of said Property (A) Rs.54021895/- Cost of Acquisition of the assessee share 9.58% (B) Rs. 5175298/- Total Sale consideration of 45.36% sale of said property is (C) Rs.115240083/- Share of sale consideration @ 9.58% is Cost of acquisition of property sold 45.36% of (B) (D) Rs.11040000/- Gain to the assessee is (E) Rs. 2347515/- Indexed Cost of Acquisition (D) - (E) Rs. 8692485/- =2347515*1081/785-3232693 (F) Rs. 3232693/- Capital gain to the assessee is (D) - (F) = 11040000-3232693 = Rs.7807307/- 5.1.1 Similarly, the details of other property being land at Khatamba, in which the assessee had 30% share was also produced and the capital gain was shown, however, the details thereof is not required to be mentioned here as the same was not subj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 016-17. There is no gainsaying that the capital gain of this transaction was brought to tax by taking up income tax returns for limited scrutiny under section 143(3) on 10.12.2018 in Assessment Year 2016-17 as the assessee had offered capital gain chargeable to tax for the said assessment year. 5.5 The decision of the Supreme Court in Commissioner of Income Tax vs. Balbir Singh Maini [(2018) 12 SCC 354] would bring home the point. The question before the Apex Court was about when the transfer could be said to have effect under section 2(47)(v) of the Income Tax Act when a joint development agreement was executed. The Supreme Court considered the definition of transfer under section 2(47)(v) of the Income Tax Act read with Section 53A of the Transfer of Property Act, which provision deal with the doctrine of part performance. The development agreement in that case was not registered agreement. 5.5.1 It was held that even though the license was given thereunder, for the purpose of developing the land into flats and to sell the same under the said development agreement, it does not amount, in eye of law, to transfer under section 2(47)(v) of the Income Tax Act. It was held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugh given up, the tax may be payable. Where, however, the income can be said not to have resulted at all, there is obviously neither accrual nor receipt of income, even though an entry to that effect might, in certain circumstances, have been made in the books of account. 5.8 The Supreme Court in Uttar Pradesh v. Aryaverth Chawal Udhyog [(2015) 17 SCC 324] observed that the material on which the assessing authority based its opinion must not be arbitrary, irrational or irrelevant but must bring home the appropriate rationale of action taken. It was held that without proper material relied on, the reason to believe would become arbitrary and bad in law. 5.9 Similar was held by the Supreme Court in Ganga Saran and Sons (P.) Ltd. v. ITO [130 ITR 1], It is well settled as a result of several decisions of this Court that two distinct conditions must be satisfied before the Income Tax Officer can assume jurisdiction to issue notice under section 147 (a). First, he must have reason to believe that the income of the assessee has escaped assessment and secondly, he must have reason to believe that such escapement is by reason of the omission or failure on the part of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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