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Income Tax Appellate Tribunal, DELHI BENCH ‘SMC’, NEW DELHI
Before: Sh. N. K. Saini, Hon’ble
ORDER This is an appeal by the assessee against the order dated 17.01.2018 of ld. CIT(A)-32, New Delhi.
Following grounds have been raised in this appeal: “1. Assuming jurisdiction u/s 148 of the Income-tax Act, 1961 and rejecting the objections filed there being no reason to believe that income has escaped assessment;
2. Determining taxable income at Rs.6,29,130/- against the returned income in a sum of Rs.1,44,191/-;
3. Invoking the provision of Section 50C of the Income-tax Act, 1961 in a transaction entered into by the assessee with government undertaking;
4. Adopting the value determined by the DVO and rejecting the assessee's valuation and doing all that without providing due and adequate opportunity of hearing; 2 Ranjana Sen Gupta Raghavan
5. Confirming addition of Rs.4,84,939/- to the returned income on account of Long Term Capital Gain even after the CIT(A) holding that the actual consideration received by the assessee was indeed less than the stamp duty valuation. All the above actions being arbitrary, erroneous and unlawful must be quashed with directions for appropriate relief.”
3. Facts of the case in brief are that the case of the assessee was reopened on the basis of information received from ITO, Ward-7(1), Jaipur regarding sale of triangular shape land situated at NH-11, at the crossing of Ajmer Road and the road leading to Chand Pole, Opposite Old Government Hostel, Jaipur, measuring 523.53 sq. m. was sold on 10.04.2006 by six persons for a sale consideration of Rs.50,00,000/- as per sale deed dated 10.04.2006. However, the registering authority adopted the value at Rs.3,38,81,872/-. The assessee sold 1/12th share in the said property. The AO issued the notice u/s 148 of the Income Tax Act, 1961 (hereinafter referred to as the Act). However, there was no response from the assessee’s side. The AO increased the value of sale consideration as per valuation report and made the addition of Rs.4,84,942/-.
Being aggrieved the assessee carried the matter to the ld. CIT(A) who sustained the addition by observing as under: “Accordingly, taking the contents of the above sub-paras (5.3 to 5.3b) into consideration, I refuse to interfere with the reopening of the assessment in the present case vide the notice u/s 148 dated 26/03/2014 and hold the reopening valid. The ground at (b) is dismissed. 5.4 As regards the grounds at (c), (d) and (e) that relates to the adoption of the sale consideration as per that given by DVO and the assessment 3 Ranjana Sen Gupta Raghavan made thereby adding the increase in value of the property in question it is gathered from the appellant's submissions as well as the facts and arguments put forth by the AR of the appellant during the course of the appellate proceedings that the sale consideration received by the appellant (towards her share of the property) on sale of the property in question from M/s. Hindustan Petroleum (a PSU)was Rs.50,00,000/-. It is observed from the impugned order that there is no allegation of transfer of unaccounted money/any adverse comments on the sale of the property in question. However, it is also established that the actual consideration received was less than the stamp duty valuation. 5.4a In view of the above fact, the provisions of Section 50C are triggered. However, as per 50C(2), the valuation of DVO is to be mandatorily accepted by the AO and that is exactly what he has done as is observed from the impugned order. Accordingly, I am in agreement with the sale consideration adopted by the AO in the impugned order as per the provision of Section 50C(2) of the Act and the LTCG worked out in arriving at the LTCG and the difference is added as the appellant's income for the relevant AY on this point. Hence, the grounds at (c) through (e) above are dismissed.”
Now the assessee is in appeal. The ld. Counsel for the assessee at the very outset stated that this issue is covered in favour of the assessee vide order dated 01.08.2017 in for the assessment year 2007-08 in the case of Lipika Sen Vs DCIT(Intl. Taxation), Circle-3(2)(1), New Delhi by the ITAT Delhi Bench ‘SMC’, New Delhi (copy of the said order was furnished which is placed on record). It was further submitted that the said assessee was also a co- owner in the same property and the facts in the said case are identical to the facts of the assessee’s case.
In his rival submission, the ld. Sr. DR although supported the orders of the authorities below but could not controvert the aforesaid contention of the ld. Counsel for the assessee.
4 Ranjana Sen Gupta Raghavan 7. I have considered the submissions of both the parties and perused the material available on the record. In the present case, it is noticed that an identical issue having similar facts was a subject matter of the assessee’s appeal in the aforesaid referred to case of Lipika Sen Vs DCIT(Intl. Taxation), Circle-3(2)(1), New Delhi in for the assessment year 2007-08 wherein vide order dated 01.08.2017, the issue has been decided in favour of the assessee and the relevant findings have been given in paras 17 to 20 which read as under: “17. I have considered the facts of the case as emerging from the reassessment order, the impugned order of the CIT(A) and the other related documents as contained in the paper book filed by the assessee I have also perused the case laws as cited before me. The ITO, Jaipur vide his note informed the ADIT, Circle 1(2), International Taxation, New Delhi of the sale by six persons of a triangular shaped land situated at NH-11 admeasuring 523.53 sq. m. for a sale consideration of Rs.50 Lakhs as pet-sale deed dated 10.04.2006. The registering authority had adopted the value at Rs.3,38,81,872/- for the sale. Finding that Lipika Sen was one of the sellers of the land properly, it was suggested the resultant capital gain on the sale consideration received by Lipika Sen had to be looked into.
The satisfaction note acknowledges that the assessee had filed her return of income at Rs.1,50,755/- only. It is further stated by the Assessing Officer in that note that the capital gain has not been declared by the assessee and further that she has not disclosed her income properly in her return of income. It is on this background that the Assessing Officer records the need for certification of these facts for quantifying the amount of tax evaded. It is in that context that the Assessing officer records that he has reasons to believe that income chargeable to tax in excess of Rs. One Lakh has escaped assessment within the meaning of section 147/148 of the I.T. Act, 1961.
A reading this note reveals that in terms of the report of the ITO- Jaipur the basic facts relating to the sale of the plot at Jaipur has been informed and in that connection the resultant capital gain was advised to be looked into. Clearly, therefore, such a narrative cannot be construed as information about any escapement of income. At any rate the capital gain had been duly returned for assessment b\ the assessee in the regular return filed on 31.03.2008 (Page 1 of the Paper Book). Thus, there is no 5 Ranjana Sen Gupta Raghavan conceivable way for construing any escapement of income on this basis of the ITO - Jaipur's message. It was merely a contrary note. The endorsement of the Assessing Officer in the satisfaction note that the capital gain had not been returned by the assessee is contrary, to the material on record and so cannot be taken as conferring any validity to a flawed belief as to escapement of income. The further mention in the satisfaction note that the assessee has not disclosed her income properly in her return of income has only to be read in the context of the preceding mention of the capital gain itself not having been disclosed for assessment in the return. So to that extent the satisfaction note cannot be held to be conferring a valid jurisdiction for a Sec. 147 action for there is no rational connection with any relevant material to form a prim a facie belief as to escapement of any income. Further, the satisfaction note even while proposing verification of facts assumes the need to quantify the tax evaded. That approach, I am afraid, is not in conformity with fairness. The question of quantification can arise only where after conducting the verification some escaped income is established. Understandly to verify only with a view to establish the quantum of tax evaded would be to proceed on a foregone conclusion of tax having been evaded even before the verification. That will be defeating the very purpose of verification. To hold even before the completion of verification (hat income has escaped assessment would be admittedly to be doing so without any material on record. In my view the rejection of the objections raised by the assessee on the premises of the apex court decision ratios in ACIT v. Rajesh Jhaveri Stock Brokers Pvt. Ltd. (2007) 291 ITR 500 and ITO v. Biju Patnaik (1991) 188 ITR 247 is also wrong. In Rajesh Jhaveri's case supra the point at issue was whether initiating of the reassessment proceedings on the basis of the subjective satisfaction of the Assessing Officer was sustainable. The Court ruled in favour of the Revenue. It did not because there was a satisfaction on record unlike the present case which is conspicuous by the absence of any material to indicate any satisfaction as to escapement of income. In the case of Biju Patnaik supra the controversy was with reference to the year of taxability of capital gains. It was not in the context of any inadequacy or infirmity in the Assessing Officer's recording of satisfaction as to the escapement of income. The dismissal of the assessee's objections on the basis of these two cited decisions was thus erroneous. I further find that the Assessing Officer has simply adopted the contents of the communication as information leading the belief of escapement of income without any verification. The absence of any application of mind by the Assessing Officer for arriving at a prima facie 6 Ranjana Sen Gupta Raghavan belief as to escapement of income is clear on a perusal of the satisfaction note as reproduced in the assessment order. For all these reasons, and agreeing with the submissions made on behalf of the assessee, 1 hold that the jurisdiction assumed by the Assessing Officer to initiate reassessment proceedings is improper and invalid in the several lacunae in the recording of the satisfaction of the belief of escapement of income in the subject case. I allow the first ground of the assessee on jurisdiction by holding it is flawed and so illegal.
Having done so it is not necessary to deal with the second ground which impugns on the quantum of income assessed. The rest of the grounds taken are academic.”
So, respectfully following the aforesaid referred to order dated 01.08.2017 in the case of Lipika Sen Vs DCIT(Intl. Taxation), Circle-3(2)(1), New Delhi in the issue is decided in favour of the assessee and the impugned addition made by the AO and sustained by the ld. CIT(A) is deleted.
In the result, the appeal of the assessee is allowed. (Order Pronounced in the Court on 12/11/2018).