SHRI SARDAR (MEHSANA) OWNERS ASSOCIATION,,MEHSANA vs. THE ASSTT. COMMISSIONER OF INCOME TAX, MEHSANA CIRCLE,, MEHSANA

PER MAHAVIR PRASAD, JUDICIAL MEMBER

2 . AY. 2008-09 CIT/GNR/482/2015-16 arising out of assessment order dated 28/03/2016. Assessee has taken following grounds of appeal:

1. On facts as well as in the circumstances of the case of the appellant, the impugned order passed by the Ld. CIT(A) is bad in law, illegal and against the principles of natural justice, therefore the same deserves to be quashed and set aside, there was no allegation that there was failure on the part of the assessee in disclosing truly and fully material facts necessary for assessment as well as the reopening proceedings are initiated on the borrowed satisfaction without forming his own independent opinion.

2. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in not adjudicating and deciding the specific plea as emerging from submission made as per para-6.1(m) that who is the actual person who has paid the alleged sum of Rs.10,00,58,873/- and who is the real recipient and beneficial owner of such sum which is not the assessee and is the crux of the matter and therefore, the order is perverse on this count alone which is liable to be quashed and set aside.

3. Without prejudice to the above, on facts as well as in the circumstances of the case, the Ld. CIT(A) has grossly erred in not appreciating the merits of the case with reference to factual submission of the appellant and has further erred in sustaining the addition of Rs. 10,00,58,873/- on account of difference in sale consideration, when the case of the appellant is much more stronger on merits in the year under consideration. The order being perverse to the above extent, and not based on a proper appreciation of facts, the same deserves to be reversed.

2. Brief facts of the case are that the appellant is an association of persons incorporated on 28/10/1996 established solely for the purpose of welfare of the members of the association. And it is duly registered with the Competent Authority as NTC. The assesse maintains regular books of accounts duly audited by the auditors.

3. Ld. A.O. received an information from ADIT(Inv.), Mehsana on 19/03/2015 as per which it was found that an (agreement for sale) dated 21/09/2006 was made between the assesse (seller) and partners of M/s Akash developers (Purchaser) for the N.A. land situated at 1990/50 of Mehsana. Therefore, a consent agreement was executed on 06/01/2007 of the same land between the 3 . AY. 2008-09 assesse and partnes of M/s. Akash Developers and Shri Revabhai Shankarbhai Patel & Shri Jitendra Revebhai Patel. On the same day i.e. on 06/01/2007 and agreement for sale was executed between the partner of M/s. Akash Developers and Shri Shri Revabhai Patel and Shri Jitendra Patel in which land agreed to sale to Shri Revabhai & Shri Jitendrabhai for a total consideration of Rs. 10,95,58,873/-.

4. Accordingly, the case was reopened and notice u/s 148 was issued on 31/03/2015 which was duly served upon the assesse on 31/03/2015. .

"(i) Agreement dated 06/01/2007 executed between Sardar (Mehsana) owners Association, Mehsana (first party), Partners of M/s Akash Developers, Mehsana (second party) and Mr. Rewabhai Shankarbhai Patel & Mr. Jitendrahumar Rewabhai Patel of Visnagar (third party). This agreement shows that the original party who had owned the land i.e. land situated at Survey No.1990/50 of Mehsana city has given his consent to sell the said land. (Annexure-10 to the TEP) (ii) Agreement to sale dated 06/01/2007 of the said land executed between Partners of M/s Akash Developers, Mehsana (sailer party) and Mr. Rewabhai Shankarbhai Patel & Mr. jitendrakumar Rewabhai Patel of Visnagar (purchaser party) for sale of the land situated at Survey No.1990/50 of Mehsana City. As per this agreement the total sale value of the said land is Rs.10,95,58,873/-. (Annexure -1 to the TEP) (iii) Sale deed dated 20.12.2007 of the said land executed between Sardar (mehsana) owners Association, Mehsana (seller party) and Partners of M/s Akash Developers, Mehsana (purchaser party) for sale of the land situated at Survey No.l 990/50 of Mehsana City on total consideration of Rs.95,00,000/-. (Annexure-2 to the TEP)"

4. It is further stated by the A.O. that as per the agreement for sale dated 06/01/2007, it is mentioned that a Banakhat dated 21/09/2006 was drawn between above assessee and the partners of M/s. Akash Developers. The copy of this Banakhat dated 21/09/2006 has not been provided by the ADIT (Inv.). It was 4 . AY. 2008-09 requested the ADIT (Inv.), Mehsana to submit the copy o Banakhat, if available with his office.

6. From the above, it was opened that the copy of agreement for sale (Banakhat) dated 21/09/2006 executed between the assessee and the partners of M/s Akash Developers is one of the vital document because that document only can spell the actual amount of transaction. However, the copy of said Banakhat had not been provided by the ADIT [Inv.) Mehsana. Therefore, during the course of the proceedings, the ADIT(Inv), Mehsana was specially asked vide letter dated 18/11/2015, to submit the copy of said Banakhat. However, the ADiT[!nvt), Mehsana in his reply dated. 19/02/2016, stated to have submitted all the details/documents available with his office vide his earlier latter dated 31/03/2015. Thus, it was transpired that the ADIT (Inv.J do not posses the said document. Meanwhile, the assessee as well as all the members of the Assessee, AOP were asked to submit the copy of such document along with other relevant details/documents. However, in turn, they replied not to have entered into any such Banakhat by the assessee. The assessee further submitted not to have signed even in the consent agreement dated 06/01/2007 referred above i.e. they are unaware about these documents as they have not executed any such 5 . AY. 2008-09 document. However, to enquire further, summons dated 05/02/2016 were issued to following two persons- [1] Smt. Bhikhiben Amrutlal Patel, Secretary of Sardar Owners Association, Mehsana. (2) Shri Jayantibhai Prabhudas Patel, Partner of M/s Akesh Developers.

8. In the view of the above facts gathered as a result of enquiry made during the assessment proceedings, it was revealed that the vital document in this case is neither made available by the ADIT(lnv), nor by the assessee or any of its members. Further, the assessee submitted not to have executed any such document in favour of M/s Akash Developers. Hence, to cope up with the situation arises, a reference was made vide letter dated 15/12/2016 to the Joint Commissioner of Income Tax, Mehsana Range narrating factual position of the case seeking directions. In response, the Joint CIT, Mehsana Range has issued directors vide his order dated 28/03/2016 which reads as under;-

DIRECTION U/S.144-A OF THE I.T. ACT. 1961

In this case a reference has been made by the Assistant Commissioner of Income Tax, Mehsana Circle Mehsana vide her letter dated 15/02/2016 u/s 144A of the IT.Act 1961 with regard to assessment proceedings pending with her u/s 147 for AssttYear 2008-09. In order to look in to the facts, assessment record was called for and vide this office letter No-MHN/]t CIT/F.No43/2015-16/ dated 16/02/2015 the assessee was given an opportunity to furnish necessary details/ evidences and to present its case, on request by the assessee vide its letter dated 20/02/2016 copies of relevant documents as well as the A.O's letter dated 6 . AY. 2008-09 15/02/2016 ( through which reference u/s 144A was made) provided, with regard to this reference before the undersigned Shri Dinesh Chhabra , Tax Consultant & A R of the assessee attended filed written submissions which arc placed on record. The facts of the case in connection with the reference were discussed with the A/R and he was heard.

3. However, as sought for vide your captioned notice, the assessee would like to bring the following facts, being its firm views, on record for favour of information and necessary action as here under:

A. A regular assessment already completed u/s. 143(3) of the Act:

(i) As may be verified from the record that for the A.Y.2008-09 the assessee submitted its voluntary return of income by due date on 30/09/2008, showing total income of Rs. 74,48,741/- along with a detailed statement of 'computation of income', auditor's report together with pro/it & loss account, balance sheet and allied 8 . AY. 2008-09 schedules & annexure. The return so file has been processed u/s 143(1) of the Act, accepting the returned income as such as per intimation dated 17/08/2009.

(ii) The case of the assessee having been picked up for scrutiny under CASS, a formal notice u/s 14-3(2) was issued. Subset}uently a specific notice u/s 142(1) of the Act was issued on 22/07/2010, calling details inter alia details of copy of sale deed of land, copy of purchase deed of land (vide item no.4 & 5 of notice) in support of Long Term Capital Gain disclosed in the return of income fay the assessee. A copy of notice is enclosed for ready reference. [Ane.1]

(iii) In response to which, the assessee submitted requisite details including copies of purchase deed, sale deed and copies of index under assessee's letter dated 21/09/2010. A copy of letter is enclosed for ready reference (Ane.2)

(iv) During the course of original assessment proceedings, the then DCfT, Mehsana scrutinized the details/documents submitted fay the assessee and after verification he placed them on record. The then AO. having fully satisfied with the assessee's submission, he accepted assessee's income under the head Long Term Capital Gain on sale of N.A, land sold during the year under consideration. finalized the regular assessment u/s 143(3) of the Act as per is order dated 10/11/2010. A copy of the same is enclosed for ready reference, (Ane.3) Thus, there is no failure on the part of the assessee to submit necessary details for the assessment year under consideration. (vi) From the aforesaid facts it may kindly be noted that in the assessee's case the regular assessment for the year under consideration (sought for re-opening) having been finalized by the then AO. after detailed scrutiny and application of mind to the facts, in the fitness of things, it had attained finality in the eyes of law.

B. Objections of the assesse against proceedings u/s 147/148 being bad in law & without valid jurisdiction:

(i) As may be verified from the records, more particularly para 2 of the ACIT’s present reference dated 15/02/2016, the then DCIT, Mehsana was in receipt of a letter dated 31/03/2015 from ADIT (inv.) Mehsana being some information furnished by the latter.

9 . AY. 2008-09 (ii) Immediately, the then DCIT records reasons with the opening line" as per information received from ADIT (Inv.) Mehsana....," forming an opinion that it is a fit case for issuance of notice u/s 148 of the Act, instead of the fact that there was no 'failure on the part of the assesses”. Even while recording the so-called reasons there is mentioned of the no mention as to ‘failure on the part of the assessee'. (iii) He then, moves a proposal on the same date i.e. 31/03/2015 in prescribed performa routed through the }CIT, Mehsana, which proposal is forwarded by the latter vide his letter of even date, on 31/03/2015 to the Pr.CIT, Gandhinagar. (iv) The proposal for re-opening is approved by the Pr.CIT, Gandhinagar on the same date i.e. 31/03/2015, and reached in the office of DCIT, Mehsana on 31/03/2015, itself as per inward stamping on the Pr. CIT's letter of even date. (v) On 31/03/2015, the then DCIT issues a notice u/s 148 of the Act (so hurriedly that even filling relevant blanks in para 3 thereof are left out). (vi) From the sequence of events as narrated above it may kindly be rated that right from the receipt of letter dated 31/03/2015, from the ADIT (Inv.) Mehsana and ending with issuance of notice u/s 148of the Act dated 31/03/2015, all the formalities have been completed in a record speed in a single day, just to beat the limitation under the Act. Interestingly, everyone has mechanically processed the matter, in a casual manner, solely on the strength of information passed on by the ADIT (Inv.) Mehsana, without cross-verifying the facts on record and thus there is total non- application of mind in such a vital matter of serious and far reaching consequences for the tax payer. The proceedings so initiated are thus ab-initio-void, as challenged by the assesses under assessee's letter dated 30/11/2015. (Ane.4), more particularly for the reasons amongst others, as below:- (a) That the first point of challenging the alleged proceedings u/s 147of the Act is against the reasons recorded. The assesses is provided a 'gist' of reasons recorded and approval letter of the Pr.CIT under A.O's letter dated 26/11/2015. A perusal of theist of so-called reasons recorded, it is seen that the primary facts i.e. (1). The date of recording alleged reasons and. (2) Name and designation of the A.O. who recorded such reasons both are missing. Besides, the re-assessment proceedings have been blindly initiated on the basis of information received from ADIT (Inv.) Mehsana. No efforts are made by the A.Q. either to cross verify the facts available on record vis-a-vis so- called information from the agency OR making any independent inquiries from the concerned parties involved in the matter. It is settled position in law that the satisfaction on the basis of relevant material about escapement of income, ought to be 10 . AY. 2008-09 that of A.O. alone & none-else. [CIT v. Sohandevi Sadani [2007] 196 Taxation 707 (Raj.)], Idea Cellular Ltd. v. DCIT 301 ITR 407(Bom.), Austin Engg. Co. Ltd. v.JCIT 207 Taxation 35(Guj.), Manjusha Estate (P.) Ltd. 214 Taxation 194 (Guj.), Signature Hotels (P) Ltd. v. ITO 338 ITR 51 (Delhi)] (b) On going through prescribed Performa for proceedings u/s 147 of the Act, it is seen that against col.no. 8b, the remark offered by the A.O, states as 'assessed u/s 14-3(3) on 10/11/2010'. This is factually incorrect for the reason that as stated in para A above the regular assessment in this case has been completed u/s 143(3) of the Act on 10/11/2010, in the charge of the very same A.O. who has submitted the proposal. Thus, there is suppression of basic facts leading to re-opening of the assessment on wrong footing. Thus, the assumption of jurisdiction has been erroneous and consequent proceedings are invalid [Raymond Wollen Mills Ltd v. ITO & others 236 ITR 34 (c) The original assessment was made u/s 14-3(3) of the Act, and the notice u/s 148 is issued after a period of four years from the end of the assessment year but the reasons recorded do not reflect that there was any failure or omission on the part of the assessee to disclose to materials facts in the return of income. The re-opening is, therefore, not permissible in the law. [Ganesh Vallabhbhai Family Trust v. DCIT 306 ITR 221 (Guj.), Austin Engg. Co. Pvt. ltd. v. JC1T 207 Taxation 35 (Guj.)] (d) Besides, us per present. A.O's reference dated 15/02/2016, the root cause of the re-opening touches to the alleged TEP relied upon by the ADIT( lnv.) Mehsana, in his letter dated 31/03/2015. However, the facts remain that none of the authorities has enquired into the referred TEP and proceedings are initiated in a casual manner. Reliance of the department on such TEP without there being any evidence to substantiate the same, is wholly illegal and bad in law. If this system of making inquiries and making of assessment is accepted, then only God can save because every second person will come forward to give statements against any third person terming the poor fellow's business as bogus. [SmtSunita Oberoi v. ITO [2009] 126 TTJ 806 (Agra-Tri.)(T.M)]- Obviously, the A.O. of this assessee had been guided primarily by the alleged information and so-called TEP from other agency without substance. (e) Almost total absence of time available with the officers concerned that any worthwhile examination of records or consideration of the matter was highly improbable if not outright impossible and more so the then A.O's proposal dated 11 . AY. 2008-09 31/03/2015, (transmitted at 4.18 P.M. by fax), getting alleged sanction of the Pr.CIT on the very same day i.e. on 31/03/2015. (Reaching back in JCIT's office at 5.05 P.M. by fax) and A.O. issues notice at the end of the same day. This manifests undue abnormality, all along the line and obviously, there is deliberate attempt of the department to somehow show that the procedural formality was maintained in a record time of a single working day. (f) The Performa of approval reveals that against col.no. 12, the Pr.CIT has simply noted 'yes' without recording his satisfaction in his own hand writing. Thus, there is non- application of mind to the facts of the case by the Competent Authority, it cannot be considered to be proper and valid sanction by the Pr.CIT [Raj Kishor Prasad v. ITO 88 CTR 152 (All.)] (g) As stated aforesaid the original assessment in the case had been under scrutiny under CASS on the basis of AIR data i.e. transaction of sale of immovable property and in the course of such proceedings the entire material has been placed by the assessee before the A.O. at the time when the original assessment was made and the A.O. applied his mind to that material and accepted the views canvassed by the assessee, then different view taken by his successor on the same facts clearly amounts to change of opinion hence consequent re-assessment proceeding would be invalid. [Sweta Organizers (P) Ltd. V.ACIT118 TTJ (Ahd.) 426] (h) Needless to state that the alleged re-opening proceedings are initiated on the basis of so-called information passed on by the ADIT (lnv.l Mehsana. However, neither the ADIT has carried out any inquiry by the investigation wing nor carried out any examination of alleged parties involved namely Nangibhai Sagrambhai Chaudhry & others [party of the first part] and Shri Revabhai Shankarbhail'atel and Jitendrakumar Revabhai Patel [party of the second part] of the alleged Banakhat Agreement dated 06/01/2007. Not only this, but the ADIT has neither carried out any inquiry about their assessments nor made any effort to pass on information to concerned A.Os.Thus, under referred letter, the ADIT has merely done a job of 'Post office' and his letter could not be termed as carrying 'authentic information' giving rise to reassessment proceedings u/s 147 of the Act. Furthermore, the present A.O. has also made no efforts to carry out any local inquiry to ascertain the status of the alleged Banakhat and/or to take remedial actions 'if any' in their cases, although enough time was available at A.0's disposal, (i.e. between 31/03/2015 date of issue of notice u/s 148 & 15/02/2016 date of reference u/s 144 A). Thus, so-called information passed on by the ADIT could not be said to be 12 . AY. 2008-09 a pointer indicating escapement of income. [Signature Hotels (P).Ltd v. 1TO 338 ITR 51 (Delhi)].Thus, the 'belief formed by the then A.O. is false and the assumption of jurisdiction by him in issuing notice u/s 148 of the Act is invalid and this renders the proceedings initiated by him u/s 147/148 are ab-initio-void. (i) It is well settled that the jurisdiction of the A.O. to re-open an assessment depends upon the issuance of valid notice. If the notice issued by the A.O. is invalid for aforesaid reasons, then entire proceedings taken by him would become void for want of jurisdiction. [CIT v. Kurban Hussain Ibrahimji Mithiborvala 82 ITR 823 (SC)] (j) And last but not the least, from the records it may be noticed that there is no independent satisfaction having recorded by the A.O. nor there is proper sanction of Pr.CIT for re-assessment u/s 147 of the Act. It is submitted that there is not a whisper, as regard the failure on the part of the assesses to make full and true disclosure of all material facts as contemplated under the provision of section 14-7 of the Act, in view of the facts that the assessee has bonafidely submitted exhaustive details along with its original return of income itself and further submitted material details called for by the then A.O., the assessee submits that there is mere change in opinion which is not permissible under the Act The law is well settled that the proceedings u/s 147/148 cannot be initiated merely because there is change of opinion and there are no new facts for justifying initiation of re-assessment proceedings. [CITv. Kelvinator of India Ltd 320 ITR 561 (SC)] (k) Having regard to the aforesaid facts and there being illegality and infirmity in the matter, the procedure laid down by the Apex Court in the case of GKN Drive Shaft (India) Ltd. v ITO 359 ITR 191 (S.C) & others, should be followed before proceedings further in the matter.

C. Pre-matured reference from the present A.O.

(a) As may be verified from the records the present A.O's initiated actions by issue notice u/s 143(2) dated 22/04/2015, followed by notice u/s 142(1) dated 26/11/2015. In response to which the assessee submitted a fairly detailed submission dated 30/11/2015, 09/12/2015 and 16/02/2016. (Ane.5,6,7) In the meanwhile the ACIT issued summons u/s 131 of the Act dated 05/02/201 6 in the name of Smt. Bhikhiben Amrudal Patel in the capacity has Secretary of the assessee-association enforcing her attendance in the ACIT's office on 16/02/2016.

13 . AY. 2008-09 (Ane.8) along with requisite details to be produced. !n response to which, Smt. Bhikhiben Patel has appeared before the A.O. on the given date and her statement has been recorded in the chamber of the JCIT on 16/02/2016. (b) As per ACIT's letter dated 15/02/2016, (on the second page) it is stated that so-called copy of Banakhat dated 21/09/2006, has not been provided by the ADIT (Inv.), although requested to him. She yet awaits the said document from the office of the ADIT (Inv.) (c) In the meanwhile, on IS/02/2016, the ACIT prepares a reference u/s 144A and files in the office of the JCIT, Mehsana on the same day which is 'seen' by him on 16/02/2016, as per dated initial of the JCIT. From the aforesaid facts, it may be noted that before completing necessary inquiries and gathering relevant documents on record, the ACIT has made a reference u/s 144A, without forming her own firm opinion. Thus, either the reference under consideration by the A.O. is pre-matured, or calling upon the assesse to submit their views before yourself, is misconceived concept of assuming the wrong jurisdiction.

However, since we have been invited to offer our views, this communication a as whole is filed under protest without prejudice to our rights and also to avail alternative available remedies. 3. Submission of the assesses on merits of the case: During the course of re-assessment proceedings the assessee has submitted material details/documents as under:

(i) That the assesses had purchased non-agricultural land bearing survey no.1990/50 admeasuring 7373 sq. mtr. on 15/03/1997, under registered document bearing no. 1049 & 1050 from M/s. National Thread Works /or total consideration of Rs.9,60,000/-. The same land has been sold on 20/12/2007 for Rs. 95,00,000/- to M/s. Aakash Developers as per registered documents no. 8989 registered be/ore the Sub-Registrar, Mehsana. On the same transaction the assessee has already disclosed LTCG o/Rs.74,48741/-, in original ROI. (ii) With regard to alleged consent agreement dated 06/01/2007, a copy of which provided by the deportment, the assessee has categorically replied under its letter dated 30/11/2015 that the alleged agreement is never-ever executed by the assessee in favour of any party. The assessee has also repeatedly denied having signed the alleged document. Besides, it is neither registered nor there is evidentiary value.

14 . AY. 2008-09 (iii). As stated in assessee's letter dated 09/12/2015, the assessee has never-ever executed alleged Banakhat dated 21/09/2006. favour of alleged parties namely Nangibfiai Sagorbhai Chaudhri and others. And the assessee denies having entered into any such Banakhat-Agreement/or Sale with third party.

(iv) As stated in assessee's letter dated 16/02/2016, the assessee has categorically stated that the signature in the alleged consent karar dated 06/01/2007,is none of the office bearers of the association but is forged one nor there is any rubber-stamping of the association. Secondly, the assessee has directly sold the referred land M/s. Aakash Developers as per registered document doted 20/12/2007 and iiLtym said M/s Aakgsh. Developers have sold the referred land to Shri Babaram Sivram Patel of Brahmanwada, Taluka, Uniha on 27/12/2010. as per registered, document no.8339 registered before, the Sub-Registrar. Mehsana. A copy of sale deed filed would reveal that nowhere in the final sale document dated 27/12/2012, there is any mention of alleged Banakhat nor there is any third party (as confirming party) also as may be notice from sale deed dated 27/12/2010, the sellers (Shrl Bobgrom gjvram PatefJ has specified at the bottom on page no. 5 that the land under consideration is under litigation before Uon'ble Gujarat High Court in first appeal no, 4387/2006, (v) As per assessee's knowledge and belie/ the alleged Banakhat Karar dated 06/01/2007, has been cancelled by the concerned parties on 07/01/2007, as per copy placed on record of the A.O. (Ane.9) (vi) The referred documents allegedly stated as consent Karar dated 06/01/2007 and alleged Banakhat Karar dated 06/01/2007 appear forged-ones for the primary facts as below: (a) That none of the document bears signature of authorized signatory of the assessee association. (b) That both the stamp paper are purchased fay one Mr, Govind under his signature as agent of the party. The assessee has no such person on its payroll of the given name. (c) The stamp vendor is the common namely Kanubhai Baldevbhai Potel (d) The stamps bear chronological serial no. i.e. 051123 and 051124, meaning thereby they are purchased at a same time, from the same vendor and by the same person. (e) The alleged dates of execution on both at the end, show having written by hand and the drafting is similar wording in both alleged papers.

15 . AY. 2008-09 (f) In the alleged Banakhat Karar there are corrections/over writing/editing which do not bear signatures of all the concerned parties at appropriate places. Thus, the alleged documents being relied upon by the deportment are dumb documents and absolutely carry no evidentiary value in the eyes of law. (vii) That to the assessee best knowledge and belief, the Secretary of the association whose statement has been recorded in the chamber of the JC1T on 16/02/2016, she has reiterated the true and correct facts in the subject matter and there is nothing stated adversely. (The assessee reserves its right to state in rebuttal, if any, on receipt of certified copy of such statement).

10. In the light of above facts and directions issued by the Joint commissioner of Income Tax, the Assessing Officer has added the difference between Rs.10,95,58,873/- and Rs. 95,00,000/- which comes to Rs.10,00,58,873/- is assessed to tax in the hands of the assesse.

17 . AY. 2008-09 5. Against the addition of Rs. 10,95,58,873/-, assesse preferred first statutory appeal before the ld. CIT(A) who confirmed the action of Ld. A.O. with following observations:

I have carefully considered the assessment order and submission filed by appellant. The brief facts of present addition are that appellant had purchased non agricultural land bearing survey no 1990/50 on 15/03/1997 and sold such land to Akash Developers for Rs.95,00,000/- in year under consideration and long term capital gain arising on sale of such transaction was offered to tax. It is observed that ADIT(Inv) Mehsana vide letter dated 31/03/2015 informed AO regarding following documents with reference to sale of above referred land. (i) Agreement dated 06/01/2007 executed between appellant (first party), partners of Akash Developers (seconu Party) and Mr Rewabhai S Patel & Mr Jitendrakumar R Patel (third party) (ii) Agreement to sale dated 06/01/2007 executed between partners of Akash Developers and Mr Rewabhai S Patel & Mr Jitendrakumar R Patel for sale consideration of above land at Rs.10,95,58,873/-. On the basis of above documents and relying upon direction issued u/s 144 A of the Act, AO considered sale value of land at Rs.10,95,58,873/- and made dddition of Rs.10,00,58,873/-. The appellant hay objected such sale value of land for which it has mainly relied upon contention raised before AO. The appellant has also referred to direction issued by JCIT in the case of Mr Rewabhai S Patel & Mr Jitendrakumar R Patei wherein no adverse inference regarding above transaction was given and assessment was completed in their cases without making any addition. The arguments taken by appellant along with observations made by AO are dealt as under: (i) The ADIT(Inv) Mehsana has handed over one agreement being "Sanmati Patrak" dated 06/01/2007 executed between appellant (first party), partners of Akash Developers (second party) being the firm to whom appellant has ultimately sold the land in current year and Mr Rewabhai S Patel & Mr Jitendrakumar R Patel (third party) wherein it was stated that appellant is owner of land and appellant has executed agreement to sale on 21/09/2006 in favour of Akash developers and due to such agreement to sale, Akash Developers through its partners have executed agreement to sale in favour of third party and this . agreement was executed because appellant would not have any objection against transactions carried out between first and second party.

18 . AY. 2008-09 (ii) The ADIT(Inv) Mehsana has handed over second agreement being agreement to sale executed between second party and third party for agreed consideration of Rs.10,95,58,873/- on 06/01/2007 i.e. date on which first agreement referred supra was executed. Even in this agreement, there is reference to agreement executed between appellant and second party on 21/09/2006 and on 06/10/2007 Rs.61,00,000/- is paid which is mentioned in second clause of agreement compiled at paper book page no 64.1n this agreement, it is clearly stated that land is transferred at Rs 1381 per Sq meter for advances payment referred supra was made and 25% of total consideration is Rs.2,54,00,000/- and for total area sold, it comes to Rs. 10,95,58,8/3/-. It is observed that in first agreement referred supra, the fact is stated that second party and third party has also executed agreement to sale and this fact find support from second agreement provided by ADIT(Mehsana). The appellant has argued that second agreement being agreement to sale executed between second party and third party on 06/01/2007 was cancelled subsequently on 07/D1/2007 and same is compiled at paper book page nos. 62, 50, 66. On careful consideration of such facts, it is observed that at the end of agreement to sale; dated 06/01/2007, it is stated that on 07/01/2007, agreement dated 06/01/2007 executed between both parties are cancelled with the mutual consent of both the parties. Even it is stated that consideration of Rs.61,00,000/- paid by third party to second party have been returned back on very same date. Now, these facts clearly prove that agreement to sale was executed between second party and third party wherein consideration of Rs, 10,95,58,873/- is fixed which further support the contention of AO that fair market value of land as on the date of transaction is Rs. 10,95,58,873/- and not Rs.95,00,000/-. Even in writing made on 07/01/2007 referred by appellant itself, no reason for cancellation has been made but it is clearly stated that Rs.61,00,000/- given with reference to agreement to sale dated 06/01/2007 and referred in such agreement itself was returned back which further prove that real and correct consideration of land is Rs. 10,95,58,873/-. When appellant itself is saying that agreement to sale dated 06/01/2007 is cancelled on 07/01/2007, the argument of appellant that such agreement to sale dated 06/01/2007 is forged one cannot be accepted. The evidences including circumstantial evidences clearly suggest that value of land is Rs.10,95,58,873/-. The agreement to sale executed between second party and third party may have been cancelled on the ground that second party was not ready to sell to third party and such fact can be established from the fact that second party being Akash Developers have subsequently sold such property to Shri BabararnSivram Patel of Brahmanwada, Unjha and not to third party. (iv) The above facts clearly prove that second agreement i.e. agreement to sale executed between second party and third party was correct one and had authentic value, 19 . AY. 2008-09 it is pertinent to note that in first agreement being " Sanrnati Patra" executed between appellant, second party and third party on 06/01/2007 was also correct document as such document clearly refers to agreement to sale executed between second party and third party as discussed herein above hence even on this argument of appellant's argument that such agreement was forged one cannot be accepted. Appellant has also argued that none of the document bears signature of authorised person but such argument cannot be accepted as such agreement has signature of President of appellant firm and no documents were submitted which can prove that such document was forged one, Even signature of second party being partners of Aakash Developers also tallies with final sale deed executed by such partnership firm subsequently. Thus argument of appellant that such agreement was never been executed by it cannot be accepted. The facts discussed herein above clearly prove the existence and correctness of both agreement referred supra and such first agreement provided by ADIT being "Sanmati Patra" executed between all three parties clearly suggest appellant has already entered into agreement to sale with Aakash Developers on 21/09/2006, hence, plea of appellant regarding non execution of such agreement cannot be accepted. The entire trail of events along with cancellation of agreement dated 06/01/7007 on 0//01/2007 itself suggest the authenticity of ail the agreement and appellant was duty bound to provide such agreement during assessment proceedings. (vi) The argument of appellant that both stamp papers are purchased by Mr Govind under his signature and no such person is on pay roll of the given name , stamp vendor is common person and both stamp paper bear chronological serial number but such fact no way help the appellant as appellant himself has stated that second agreement was cancelled subsequently which clearly establishes the existence of second agreement being agreement to sale between second party and third party and even existence of first agreement for reasons stated herein above. It is already observed that as first party has executed agreement to sale with second party in 2006 and second party wished to make agreement to sale with third party in 2007 and as appellant being first party does not make any interference in such transaction, two agreements i.e. sale agreement between second party and third party and " Sanmati Patra" between all the three parties were made on very same date 06/01/2007, hence, Stamp papers might have been purchased from single vendor by any one of the party and they are numbered serially. (vi) So far as argument of appellant that there are correct/on in agreement to sale and such correction do not bear signatures of all concerned parties, it is observed that JCIT while issuing direction u/s 144A of the Act dealt with this argument by 20 . AY. 2008-09 stating that correction is being made for correct address of one party to the transaction and second correction is regarding correction in amount but same is also written in words and such observation of JCIT is not rebutted by appellant and even it bears signature of one of the party to the transaction. (vii) It is pertinent to note that when AO has brought two material evidences on record, the onus was shifted on appellant to prove that such agreement were never entered into nor appellant has produced any confirmation from Akash Developers or produced any partners which can support its contention that sale value mentioned in sale deed is correct and no more consideration as alleged by AO was received by appellant. The appellant has argued that AO has not made any concrete efforts to bring fact on record by making independent inquiries but fact is that onus was on appellant to prove that correct value of land was only Rs.95,00,000/- whereas cancellation of Banakhat on 07/01/2007 as admitted by appellant itself, correct value as on the date of transaction was Rs.10,95,58,873/-. The evidences collected by AO and discussed herein above, clearly prove that correct sale value of land and appellant's statement recorded u/s 131 nowhere helps it more particularly when circumstantial evidences clearly suggest correct value of land which is not as per sale deed. (viii) The appellant has relied upon the statement of Bhikhiben A Patel recorded on 16/02/2016 wherein she has stated that consent agreement dated 06/01/2007 was never executed by the appellant in favour of any party. As stated in above paras, circumstantial evidences would suggest that document dated 06/01 /200/ was there. The appellant has not brought any confirmation of second and third party wherein they have denied execution of such agreement. The appellant itself is repeatedly stating that banakhat dated 06/01/2007 executed between second and third party was cancelled on 07/01/20107 which prove that- (a) There was Agreement to sale on 06/01/2007 (b)Said Agreement clearly state that consent agreement was executed on 06/01/2007 and same was valid agreement. Even said consent agreement state that agreement to sale was entered between appellant and Aakash Developers on 21/9/2006 hence all agreement dated 21/09/2006, 06/01/2007 (both) were executed and valid agreement (c) The appellant argued that as there were defects in title & litigation of Rs.61,00,000/- paid on 06/01/2007 by third party to second party was returned back on 07/01/2007. This suggest that value of land without defects was Rs.10.96 crore as mentioned in banakhat dated 06/01/2007 and appellant has sold dear land to Aakash Developers has current value of land is 10.96 crore. The appellant has stated that all agreement relied upon by AO falls in AY 2007-08 and not in AY 2008-09. It is observed that appellant has sold land to Aakash Developers in current year and the agreement relied upon by AO determining fair 21 . AY. 2008-09 market value of land and does not determine taxing event. Thus this, plea of appellant regarding taxability is rejected. (xi) The appellant has heavily relied upon directions issued by JCIT on 23/03/2016 in the case of third party referred supra and being Revabhai S Patel and Shri Jitendra kumar R Patel wherein no adverse finding is given with reference to above transactions and assessment orders have been passed without making addition. In above referred two cases, facts brought by AO was that partnership deed dated 31/03/2008 was executed between three persons including two persons mentioned herein above and it was mentioned that interest party has sold 15% of land for which Rs 21,00,000 has been taken as advance and value of part sold works out at Rs 1,85,00,000. It is pertinent to note that agreement to sale executed between second party being partners to Akashar Developers and third party referred supra on 06/01/2007 was cancelled on 07/01/2007 and land was in fact transferred by appellant to Akash Developers or registered sale deed on 20/12/2007 hence JCIT has given direction u/s 144A stating that both persons referred supra cannot constitute partnership form on 01/04/2008 as they have no rights in property. Even JCIT at para 4.3 has categorically stated that as agreement to sale dated 06/01/2007 was cancelled on 07/01/2007, it proves and authenticate the fact that land in question has worth of Rs.10,95,58,873/-. In these circumstances, JCIT has held that no addition should be made in the hands of two persons referred supra and facts in. appellant's case is on entirely different footing and has no relevance with facts referred by appellant in above two cases for which 3CIT has given clean direction u/s 144A of the Act. The appellant has completely misinterpreted the facts of both cases and emphatically argued that JCIT has given wrong direction in appellant's case but such argument cannot be accepted for the reasons stated herein above and base of addition in both the cases are on different footings and has no relevance with each other. The appellant has also argued that department has not taken any adverse step in the case of Aakash Developers being party to whom appellant has sold the property but not taking of any action by department against Akash Developers does not make addition in present case futile. Considering the facts discussed herein above, it is held that AO was correct in making addition relying upon directions given by JCIT v/s. 144A of the Act and addition made by AO of Rs. 10,00,58,873/- is upheld.

6. Now assesse has come before us by way of second statutory appeal.

22 . AY. 2008-09 7. During the course of appellate proceedings before us, the Ld. Counsel has contended that regular assessment have been completed u/s 143(3) of the Act. On 10/11/2010 and the same was reopened after four years from the end of the relevant assessment year on 31/03/2015 and the A.O. has reopened the assessment without forming his own independent opinion. The Ld. Counsel has referred the various pages of paper book furnished during the course of appellate proceedings before us. Ld. Counsel has submitted that it is categorically mentioned in the reason recorded by the assesse that case of the assesse was reopened on the basis of information obtained from the ADIT(Inv.). The Ld. Counsel has further vehemently stated that as per the copy of reason recorded in the paper book, the A.O. has recorded the reason on 30/03/2015. However, the ADIT(Inv.) has sent the information to the assesse on 31/03/2015 as per the copy of letter placed in the paper book. Citing these facts, Ld. Counsel has contended that when the information was passed to the assessing officer by the ADIT(Inv.) on 31/03/2015 then how the Assessing Officer has recorded the reason for reopening on 30/03/2015 which establish that the back dated reason for reopening was prepared in a mechanical manner without application of own mind and the relevant material.

24 . AY. 2008-09

Particulars Sr.No. 1 Income Tax Return 2 Statement of Computation of Total Income 3 Audit Report 4 Assessment order u/s. 143(3} of l.T.Act dated 10.11.2010 5 Information received from ADITflnv ), Mehsana 6 Approval for initiation of proceedings u/s. 1 47 of l.T.Act * 7 Notice u/s. 148 of l.T.Act 8 Reply of the assessee in response to notice u/s. 148 9 Information u/s. 133(6) of l.T.Act 10 Statement recorded u/s. 1 31 of l.T.Act of one of the members of the assessee-AOP 11 Request for direction u/s, 1 44A of I. Act 12 Direction u/s. 1 44A of l.T.Act 13 Assessment order u/s. 1 43(3) r.w.s. 1 47 of l.T.Act dated 28.03.2016 14 Appeal order passed by the CIT(A)-Gandhinagar dated .12.2016

25 . AY. 2008-09 To The Assistant Commissioner of Income Tax Mehsana Circle, Mehsana

Sir, Sub: TEP in the case of M/s. Sardar (Mehsana) Owners Association (PAN AACAS9854C)- UIN150205152X- Forwarding of findings regarding-

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Kindly refer to the above In this connection, please find enclosed herewith the following documents for information and necessary action in the case of M/s. Sardar (Mehsana) Owners Association (PAN-AACAS9854C) in the Assessment Year 2008-09.

Copy of inquiry report along with its enclosures submitted to the Joint Director of Income Tax (Inv.) Unit-II, Ahmedabad vide this office letter No. ADIT(Inv.)/Mehsana/TEP/Cat-X/2014-15 dated 19.03.2015. Copy of letter No. P. DI/INV/AHD/TEP/150205152X/2014-15 dated 31.03.2015 of the ITO, O/o the Pr. DIT (Inv.), Ahmedabad on the above mentioned subject.

Yours faithfully,

(Phanishwar) Assistant Director of Income-tax (Inv.) Mehsana

Date: 30.03.2015 ( Y. S. Meena) Deputy Commissioner of Income-tax Mehsana Circle, Mehsana 13. As per the evidences provided by the revenue, the information pertaining to the assesse wherein reference to the documents was made was the letter of the ADIT(Inv.), Mehsana dated 31/03/2015 as cited above in this order and the revenue has not placed any evidence or material to substantiate that the information/document was provided to the assesse by any other authority on or before 30/03/2015 on the basis of which was case was reopened. There is 27 . AY. 2008-09 no other document produced before us by the Revenue to controvert for any information and material has been provided to the Assessing Officer on 19/03/2015 by the ADIT(Inv.).

Order pronounced in Open Court on 23 - 12- 2020