SHABANA KHAN,JABALPUR vs. PR-1, JABALPUR. COMMISSIONER OF INCOME TAX, JABALPUR

& 29/JAB/2022 (AY: 2012-13) Kadeer Khan & Anr. v. Pr. CIT 4.1 The Revenue‟s case, valid in principle, is misplaced in the facts and circumstances of the case, being, rather, de hors the same. The basis for the reassessment proceedings is the reason/s to believe non-returning and, thus, escapement of income by way of capital gains from tax. The assessees having admittedly not sold any land during the relevant year, it removes the very basis of the reassessment proceedings. The information giving rise to the reason to believe escapement of income is found wrong as a fact, and there has been thus no valid assumption of jurisdiction to assess. This is in fact primarily the reason for the Apex Court instituting a procedure in GKN Driveshafts (India) (P.) Ltd. v. ITO [2002] 259 ITR 19 (SC), requiring an assessee to object to the reason/s recorded, which the AO is supposed to meet per a speaking order before proceeding further in the matter of assessment. The whole idea is to weed out such without basis cases at the threshold, for which the assesses would otherwise be required to move the Hon‟ble High Court under it‟s writ jurisdiction. Considering the assessee‟s reply before the AO, disclosing the correct facts, as the assessee‟s objection to the issue of notice u/s. 148(1), the AO was constrained not to proceed ahead with the assessment. It is for this reason that despite Explanation 3 to s. 147, which enables assessment of incomes other than qua which the reassessment proceedings had been initiated, with the law in the matter having been already sufficiently clarified (V. Jaganmohan Rao v. CIT [1970] 75 ITR 373 (SC); CIT v. Sun Engineering Works (P.) Ltd. [1992] 198 ITR 297 (SC)), the Hon‟ble Courts have, as in CIT v. Jet Airways (I) Ltd. [2011] 331 ITR 236 (Bom), held that the same does not override the necessity of conditions set out in the substantive part of sec. 147.

4.2 We are conscious, we may clarify, that all that is necessary at the stage of the initiation of proceedings, is a honest, prima facie belief, and the sufficiency and the correctness of the materials is not a thing to be considered at that stage, and neither is the reason to believe conclusive of the matter, which is to be decided in the ensuing assessment proceedings on merits after hearing the assessee. So, & 29/JAB/2022 (AY: 2012-13) Kadeer Khan & Anr. v. Pr. CIT however, the question is: What is the material before the AO which led him to believe escapement of income from tax due to non-returning of capital gain on the sale of land (for Rs. 50 lacs) by the assessee/s during the relevant year in the instant case? That is, it is a case of no reason at all, striking at the root of the assumption of jurisdiction to assess. Rather, as Shri Usrethe would point out during hearing, the AO was not in the possession of sale (purchase) deed at the time of recording the reason to believe and issue of notice u/s. 148(1) on 30/03/2019 inasmuch as the letter seeking information regarding, as the AO states in his order (para 1): „sold of immovable property‟, was issued by him to the Sub- Registrar only on 16/04/2019, i.e., 17 days later. A reason to believe escapement of income from tax is a jurisdictional issue, which accordingly the law provides for being recorded (u/s. 148(2)) and, further, approval in certain circumstances by a higher ranking authority (s.151), which approval was thus clearly granted mechanically in the instant case/s, again invalidating it as well as the ensuing proceedings (CIT v. S. Goyanka Lime & Chemicals Ltd. [2005] 231 Taxman 73 (MP)). 4.3 Further, true, the instant are revision proceedings, separate and distinct from the reassessment proceedings, which can be said to have attained finality, and which cannot be lightly, if at all, disturbed (CIT v. Mtt. Ar. S. Ar. Arunachalam Chettiar [1953] 23 ITR 180 (SC); Hindustan Coca Cola Beverage (P.) Ltd. v. CIT [2007] 293 ITR 226 (SC); CIT vs. D & H Secheron Electrodes Ltd. [2008] 301 ITR 20 (MP)). A non-appeal, as explained by the Apex Court in Mela Ram & Sons vs. CIT [1956] 29 ITR 607 (SC), gives a valuable right to the other side. So, however, in our view, the present case would be covered by the principle of law enshrined in the legal maxim “sublato fundamento cadit opus”, i.e., when the cause (foundation) is removed, the effect (consequent action) ceases. As explained by the Apex Court in Kiran Singh vs. Chaman Paswan [1954] AIR 1954 SC 340, an order passed by an authority without jurisdiction is a nullity, and its invalidity can be challenged whenever and wherever it is sought to be enforced or relied 4 | P a g e & 29/JAB/2022 (AY: 2012-13) Kadeer Khan & Anr. v. Pr. CIT upon. It is this principle, it may be noted, that prevailed with the Tribunal in the cases cited by the assessee, as indeed with the Hon'ble High Court in Keshab Narayanan Banerjee vs. CIT [1998] 101 Taxman 512 (Cal). It is to be noted that in the present case there was no occasion for the assessees to challenge the assessment proceedings inasmuch as there was acceptance of the returned income. The assessee‟s challenge to the reassessment proceedings in the instant, collateral proceedings is thus valid.

1. 1. The Appellants: a) Shri Kadeer Khan b) Shabana Khan both r/o 28/1, Adarsh Nagar Colony, Behind Vimal Nursing Home, Adhartal, Jabalpur.