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TMI Blog2024 (9) TMI 221X X X X Extracts X X X X X X X X Extracts X X X X ..... tice along with the draft assessment order before this Court. When the case came up before the Court, it was informed that the Revenue has passed the final assessment order which actually had not been passed. By that time when the case was taken up, the apology was accepted by this Court of giving a wrong statement in the Court, however, the petitioner was allowed to challenge the final assessment order. AO has now completely changed his stand from what he had taken while issuing the draft assessment order. There is no show cause notice issued to the petitioner alleging that the income was acquired as adventure in the nature of business . From the show cause notice, we find that the same was categorized as escape in assessment on account of treating it as a short-term capital gain and unexplained source of investment - Such change of reasons for reassessment and treating the income to be under the heading of adventure in the nature of business , is clearly based on surmises of the AO. There was no evidence produced in support of any agricultural activity and would now, therefore, claim under the capital gain under Section 10 (37) of Section 54 of the Act. But the assessee, as we fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... MR. JUSTICE SANJAY VASHISTH Present: For the Petitioner : Ms. Radhika Suri, Senior Advocate assisted by Ms. Parnika Singla, Advocate, and Mr. Abhinav Narang, Advocate,. For the Respondents : Mr. Saurabh Kapoor, Senior Standing Counsel. SANJEEV PRAKASH SHARMA, J. 1. The writ petition was originally filed by the petitioner seeking quashing of notice dated 20.03.2020 issued under Section 148 of the Income Tax Act, 1961 (hereinafter to be referred as the Act ), draft assessment order under Section 144 read with Section 147 of the Act dated 08.09.2021 and the order dated 22.09.2021 whereby the objections filed by the assessee were rejected. 2. The writ petition came up for hearing on 29.09.2021 when the respondents counsel stated that final assessment order has been passed whereafter this Court allowed the petitioner to amend his writ petition and also challenge the final assessment order. However, when the case was taken up in the Court, since on that day the statement was found to be false as the final order of assessment had not been passed, an affidavit has also been filed seeking apology by the Revenue. Be that as it may, we have heard the case finally now. 3. Brief facts which req ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le and purchase of property and submitted that merely because of change of opinion fresh notice could not have been issued. It was also stated that the amount was part of the financial statement which was part of the A.O s record and there was no fresh tangible material. The petitioner thereafter preferred the writ petition assailing the said proceedings. It has been submitted that the land did not fall within the municipal limits of Panchkula and was 15 kms far from Panchkula and 20 kms far from municipal limits of Naraingarh, therefore, the agricultural land was not a capital asset within the meaning of Section 2 (14) (iii) (b) of the Act and no capital gain would arise on the sale of the agricultural land. 4. Learned counsel for the petitioner has further challenged the final assessment order, which was allowed to be challenged by this Court by amending the writ petition. It was submitted that there was no reason to believe to initiate proceedings under Section 148 of the Act and there was no document which had come on record as all the bank statements and material was already filed at the time of final assessment done under Section 143 (3) of the Act. 5. It was further submitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tated that the order impugned dated 29.09.2021 was uploaded on the portal at 04.39 p.m. and demand notice issued at 04.24 p.m. wherein it is stated that the time of generation of assessment order was 15:37:03 and notice of demand is 15:38:06. The same are auto selected for generating in one go only. As a defined sequence, the assessment order generates first and immediately in succession, the demand notice and computation sheet is generated. No fault can be found with the procedure. 9. Learned counsel for the revenue further submits that at this stage the petitioner cannot be allowed to raise the grievance that he was not given any opportunity and have tabulated the dates from 20.03.2020 when the initial notice under Section 148 of the Act was issued to the date of passing of the order dated 29.09.2021 to point out that several opportunities were given to the petitioner to submit his reply and put up his case but he did not avail the same at his own peril for which the action of the revenue cannot be said to be violative of principles of natural justice. It is further stated that the petitioner sold the land measuring 92 kanals 2 marlas to M/s DSS Mega City Projects Private Limited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ite to quote Section 2 (14) (iii) (a) and (b) of the Act, which is reproduced as under:- Section 2 (14) (iii) (a) and (b) of the Income Tax Act, 1961- Definitions . 2. In this Act, unless the context otherwise requires.- xxx xxx xxx (14) capital asset means xxx xxx xxx (iii) agricultural land in India, not being land situate (a) in any area which is comprised within the jurisdiction of a municipality (whether known as a municipality, municipal corporation, notified area committee, town area committee, town committee, or by any other name) or a cantonment board and which has a population of not less than ten thousand; or (b) in any area within the distance, measured aerially, (I) not being more than two kilometres, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than ten thousand but not exceeding one lakh; or (II) not being more than six kilometres, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than one lakh but not exceeding ten lakh; or (III) not being more than eight kilometres, from the local limits of any municipality or cantonment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to challenge to proceedings initiated under Section 148 of the Act. 18. In Red Chilli International Sales (supra), the Supreme Court has held as under:- We are with the petitioner that the impugned judgment rejecting the writ petition on the ground of alternative remedy does not take into consideration several judgments of this Court on the jurisdiction of High Court, as writ petitions have been entertained to be examined whether the jurisdiction preconditions for issue of notice under Section 148 of the Income Tax Act, 1961 is satisfied. The provisions of reopening under the Income Tax Act, 1961 have undergone an amendment by the Finance Act, 2021, and consequently the matter would require a deeper and in depth consideration keeping in view the earlier case law. Accordingly, we set aside the observations made by the High Court in the impugned judgment observing that the writ petition would not be maintainable in view of the alternative remedy, clarify that this issue would be examined in depth by the High Court if and when it arise for consideration. We do deem it open to examine this issue in the present case after having examined the notice under Section 148A (b) including the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns were made on account of purchase and sale of the land and no undisclosed income or capital gain was added and the returns were finally accepted. 23. The notice under Section 148 of the Act was issued to the petitioner on 20.03.2020 and the subsequent order under Section 144 read with Section 147 of the Act for the assessment year 2013-14 reflects that the assessing officer has made additions of Rs. 19,34,10,000/ and held that the assessee has failed to furnish the facts regarding the source of investment as well as any other income relating to it and the income to the extent of Rs. 19,34,10,000/- has escaped assessment in the case of assessment year 201314. The order further treats the amount as a short term capital gain for sum of Rs.15,58,35,000/- and unexplained investment amounting to Rs. 3,75,75,000/-. However, the final assessment order under Section 143(3) read with Section 147 of the Act holds the entire income of Rs. 19,34,10,000/- as adventure in the nature of business. 24. As per the written submissions and arguments raised before the Court the petitioner has made two fold arguments:- Firstly, there was no reason to believe that there is a case of escape assessment no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e same would, therefore, fall within the meaning of undisclosed income from business. He, therefore, has proceeded to examine the case in terms of Section 50C of the Act as inserted by the Finance Act, 2002 with effect from 01.04.2003 relating to transfer by an assessee of capital asset being land or building or both. The A.O. has also proceeded to hold adventure in nature of business as the total income under the said heading under Section 56 (2) (vii) and Section 50C of the Act. 26. Learned counsel for the respondents relies on judgment of Supreme Court in Phool Chand Bajrang Lal vs ITO (1993) 4 SCC 77 as well as various judgments cited therein. 27. We have carefully considered the submissions as mentioned above and the facts which have been placed on record. 28. The assessment year is 2013-14. In relation to assessment year 2013-14, we find that the final assessment orders were passed in March, 2016 by the A.O. Before he passed the said order, he had got conducted the verification relating to the transactions done by the assessee of the agricultural land for which he invested Rs. 3,75,75,000/- and later on sold the same to the company M/s DSS Mega City Projects. The land was sit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment. The power available, as noticed above, is of reassessment and not of review of earlier assessment. 31. We also noticed that the petitioner had challenged the order and notice dated 20.03.2020 as well as show cause notice dated 23.09.2021 along with the draft assessment order before this Court. When the case came up before the Court, it was informed that the Revenue has passed the final assessment order which actually had not been passed. By that time when the case was taken up, the apology was accepted by this Court of giving a wrong statement in the Court, however, the petitioner was allowed to challenge the final assessment order dated 29.09.2021. 32. From the perusal of the order passed on 29.09.2021, we find that the assessing officer has now completely changed his stand from what he had taken while issuing the draft assessment order. There is no show cause notice issued to the petitioner alleging that the income of Rs. 19,34,100,00/- was acquired as adventure in the nature of business . From the show cause notice, we find that the same was categorized as escape in assessment on account of treating it as a short-term capital gain for a sum of Rs. 15,58,35,000/- and unex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hers (2015) 17 SCC 324 , a three Judges Bench of the Supreme Court examined the issue and difference between the change of opinion and reasons to believe while considering the provisions of the Central Sales Tax Act, 1956 and held as under:- 19. Under Section 21(1) of the Act, the reassessment proceedings can only be initiated if the assessing authority has reason to believe that there is a case of escaped assessment and not otherwise. It is now trite law that whenever a statute provides for reason to believe , either the reasons should appear on the face of the notice or they must be available on the material which have been placed before him. 37. We find that the Income Tax Officer or the Assessing Officer may re-open any assessment already done by him if he finds that there has been any relevant material which is disclosed subsequently relating to the said year or assessment and of such a nature which would reflect that such non-disclosure has resulted in an under assessment, he can issue notice under Section 148 of the Act and proceed accordingly. However, the ITO cannot be allowed to merely reopen the assessments already finalized based on his opinion that the earlier assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X
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