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TMI Blog2023 (10) TMI 264X X X X Extracts X X X X X X X X Extracts X X X X ..... o the reason to le for escapement of income without any further material and reason with 'AO' that the sale of property gave rise to income 'chargeable to tax' and such income exceed 'maximum amount not chargeable to tax' and in case of notice being issued after the end of four years from relevant assessment year, by further amount of not less than Rs. 1 lac. In doing so, learned 'CIT(Appeals)' further erred in not binding himself with the decisions of this Hon'ble Tribunal besides others, in the case of "Badam Singh Rajpali (ITA No. 358/Agra/2011) and 'Chander Devi (ITA No. 401/Agra/2015)' which were duly referred and relied upon before him. 3. Because on due consideration of facts and circumstances of the case learned CIT (Appeals) has erred in holding that notice dated 31.03.2016 issued under section 148 of the 'Act' was duly served on account of purported remark contained on the envelop regarding refusal thereof, without properly appreciating the submissions made before him particularly to the fact that the said envelop had reaches Naujheel Post Office on 5.04.2016 and the attempt to deliver the envelop could have been made on or after 6.04. 2016 whereas the addressee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gned order dated 29.12.2016 determining the assessed income at Rs. 51,60,273/-. No return of income was filed by the appellant under section 139(1) or in response to the notice under section 148. Information was received by the A.O. that during the year under consideration, the appellant had sold an Immovable property for a sale consideration of Rs. 50,40,273/- Since no response was made by the appellant to the AO's inquiry letters issued under section 133(6) on 25.01.2016 and 19.02.2016, after obtaining the statutory sanction under section 151, a notice under section 148 was issued by him on 30.03.2016. This notice was returned unserved by the posts department with the remark that it was refused. The subsequent notices issued under section 142(1) and section 274 r.w.s. 271(1)(b) were not answered by the appellant. Thereafter, a show-cause notice under section 144 was issued by the AO. on 16.11.2016 and on its non-service through the speed post, ITI was deputed to serve it personally on the appellant. Vide his report dated 06.12.2016, the ITI has reported that Shri Tej Singh had expired and the said notice was refused by the legal heirs of the appellant on the ground that Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly referred and relied upon before him. The Ld. AR further submitted that, while recording the reasons for escapement of taxable income, the A.O. did not know about the cost of acquisition of the property sold by Late Sh. Tej Singh and A.O was not aware of the property sold was capital asset or not, hence the reasons were recorded by the A.O. without application of mind. 6. The Ld. Departmental Representative submitted that the reasons were recorded on the basis incomplete information available with the A.O. but with the full application of mind and they exhibit coherence and A.O's bonafide belief in the escapement of income. Further submitted that, the assessee had not filed any return of income for the year under consideration and deliberately did not comply with the verificationary letters issued by the A.O. prior to the issue of notice u/s 148. The assessee cannot escape taxation simply by evading the enquiry proceedings conducted by the Department prior to formation of belief for escapement of taxable income. Therefore, submitted that the Ground No. 1 & 2 of the assessee is devoid of merit. 7. We have heard both the parties and perused the material available on record. The p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting to be received in cash, contrary to the contents of the sale deed and the A.O. did not made any attempt to find out the cost of acquisition of the same. The Co-ordinate Bench of the Agra Tribunal in the case of Badal Singh Raj Vs. ITO, Jhansi in ITA No. 358/Agr/2011 (A.Y 2004-05) vide order dated 22/06/2012 in the similar situation quashed the assessment proceedings wherein held as under:- "4. We have considered the rival submissions and the material on record. The reasons for reopening of assessment have been incorporated in the impugned order, which is also reproduced above. Copy of same is also filed at page 11 of the paper book. According to section 147 of the IT Act, the essential ingredient of this section has been that "if the Assessing Officer has reason to belief that any income chargeable to tax has escaped assessment in any assessment year........" Therefore, before invoking jurisdiction u/s. 147 of the IT Act, the Assessing Officer shall have reason to believe that any income chargeable to tax has escaped assessment. The AO for the reasons recorded for reopening of assessment as mentioned above has 5 ITA No. 358/Agra/2011 not mentioned anything in the reasons if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... satisfied does not exist or is not material or relevant to the belief required by the section. The court can always examine this aspect though the declaration or sufficiency of the reasons for the belief cannot be investigated by the court." 4.1 Hon'ble Delhi High Court in the case of CIT vs. Atul Jain & Smt. Vinita Jain, 299 ITR 383 held - "There must be "reason to believe" warranting the issuance of a notice of reassessment by the Assessing Officer. If there are no reasons, then the entire foundation for initiating the proceedings is bad and the notice initiating proceedings must be quashed. Mere satisfaction of the Assessing Officer for the issuance of a notice is not enough, there must be reasons on record which led him to believe that a notice should be issued. After a foundation based on information is set up, there must still be some reasons which warrant the holding of a belief so as to necessitate the issuance of a notice under section 148 of the Income-tax Act, 1961. The assessee purchased shares and subsequently sold these shares at a much higher value. For the assessment year 1997- 98, the assessees disclosed long-term capital gains arising from the transaction. O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led to incorporate the material and its satisfaction for reopening the assessment, the same was invalid. On a reference : Held, that the Assessing Officer had not examined the information received from the survey circle before recording his own satisfaction of escaped income and initiating reassessment proceedings. The Assessing Officer had thus acted only on the basis of suspicion and it could not be said that it was based on belief that the income chargeable to tax had escaped income. The Assessing Officer had to act on the basis of "reasons to believe" and not on "reasons to suspect". The Tribunal rightly concluded that the Assessing Officer had failed to incorporate the material and his satisfaction for reopening the assessment and therefore the issuance of notice under section 148 of the Act for reassessment proceedings was not valid." 4.3 Considering the reasons for reopening of assessment in the light of above discussion and the case laws referred to above, we are of the view that the AO has not satisfied the ingredients of section 147 of the Act in the reasons recorded for reopening of assessment. Therefore, the AO has not correctly assumed jurisdiction u/s. 147 / 148 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s likely to amount to Rs. 1 lac. In the reasons recorded, as a reading thereof would show, there is no mention that income amounting to Rs. 1 lac or more is believed to have escaped assessment. It has not been disputed that the escapement believed on account of transfer of land as capital introduced into the firm. The reasons recorded do not reveal the AO to be in possession of any material or information recording either the nature of the land, or even the locus/situation thereof, and the date, cost or mode of acquisition of the land by the assessee, much less any about either the eligibility of the transfer to tax, or the amount of capital gain arising there-from. Now, obviously, in the absence of any of the said basic requisite evidence, the AO could possibly have not become aware, though so observed by the ld. CIT(A), of the quantum of capital gain. As such, there is neither anything evident, nor evincible from the reasons recorded, about any income chargeable to tax escaping assessment. 10. As is well settled, the reasons recorded are to be considered ipso facto, as they are, without supplementing them, without bolstering them. "CIT Vs. Samraj Krishan Chaudhary", 368 ITR 638 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reproduced below:- "You have also objected that it is not mentioned in the reasons of taking action U/S 148 that the escaped income is more that 100000/-. In this connection this to inform that it is mentioned in notice U/S148 itself that the notice is being issued after proper sanction of Joint/Addl. Commissioner of Income Tax. This fulfills the requirement of law, you have provided the reasons of initiating action U/S148 not computation of income. The computation of income will be provided after proper hearing & giving proper opportunities to be heard." 12. The stand of the department as is evident from the above quoted paragraph has no legs to stand. The Joint/Additional Commissioner, Income Tax was not aware about the fact that the income chargeable to tax which has escaped the assessment is Rs. 1 Lakh or more for the relevant Assessment Year. The proviso to section 151 (1) fortifies our view which says that after the expiry of four years from the end of the relevant Assessment Year no notice under section 148 shall be issued or unless the Chief Commissioner or Commissioner is satisfied on the reasons recorded by the Assessing Officer that it is a fit case for issue of such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment notice given after four years of the close of the assessment order is valid or not. 16. For the reasons given above, we find sufficient force in the argument of the learned counsel for the petitioner that on the basis of the reasons recorded by the Assessing Officer, the initiation of the reassessment proceedings relevant to the Assessment Year 2000-2001 by means of the notice dated 23.3.2007 after more than four years is clearly barred by time." 14. Then, in "Amar Nath Agarwal" (supra), it has been held as follows: 16. From the aforesaid, it is clear that two distinct conditions must be satisfied before the Assessing Officer can assume jurisdiction to issue a notice under Section 148 of the Act, namely, that he must have reasons to believe that the income of the assessee had escaped assessment and, that he must have reasons to believe that such escapement Was by reasons of the omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment. If either of these conditions are not fulfilled, the notice issued by the Assessing Officer would be without jurisdiction. 17. Further, from a perusal of Section 149(l) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment. 23. In K.S. Rashid & Son v. ITO [1964] 52 ITR 355 (SC) a Constitutional Bench of the Supreme Court held: "The second point which is very important is that in regard to the cases falling under section 34(1A), action can be taken only where the income which has escaped assessment is likely to amount to Rs. 1 lakh or more. In other words, it is only in regard to cases where the escaped income is of a high magnitude that the restriction of the period of limitation has been removed." 24. Since no reasons were recorded that the escaped income is likely to be Rs. 1 lac or more so that the Chief Commissioner or Commissioner may record his satisfaction under section 151, the initiation of reassessment proceedings after more than four years was clearly barred by time." 15. The ratio decidendi of both the decisions of the Hon'ble Jurisdictional High Court evidently is that in the absence of anything in the reasons recorded to suggest that the income chargeable to tax which has escaped assessment is one lac rupees or more, the notice issued u/s 148 of the Act beyond four years of the end of the relevant assessment year, is invalid. This ratio, in my considered opinion, is applicabl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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