Shree Om Builders and Colonizers v. Asstt. CIT

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The Tax PublishersS.B. Civil Writ Petition No. 858 of 2013 Stay Application No. 739 of 2013 2013 TaxPub(DT) 1687 (Raj-HC) : (2013) 215 TAXMAN 0399 : (2013) 094 DTR 0154 Income Tax Act, 1961 --Reassessment--Reason to believe Presence of tangible material--Assessee had sold a residential plot D-81 to one 'K' for Rs. 1.20 crores. During the course of search and seizure at premises of 'K's sister concern, revenue found that said concern had purchased plot No. D112A by registered sale consideration of Rs. 2 crores while actual sale consideration was Rs. 7 crores of said plot, hence, actual cost of plot was suppressed by Rs. 5 crores. As both the plots D-I 12A and D-81 were in same locality and latter was in close vicinity of the former the, revenue believed that market value of both the plots should be almost same as such actual sale consideration of plot D-81 (assessee's) was actually much higher than the registered sale consideration. Assessing officer, therefore, for reopening assessment of assessee, issued notice under section 148. *Held:* Justified. Reason recorded by assessing officer was such that ordinary person of reasonable prudence would hold that income had escaped assessment. The assessing officer in order to acquire the jurisdiction to make reassessment of the income of the assessee with reference to section 148 has to arrive at twin satisfactions, viz., that (i) it has to have a reason to believe that income chargeable to tax has escaped assessment and further that (ii) such income has escaped assessment by reason of omission or failure on the part of the assessee to disclose fully and truly material facts before assessment of his income in the relevant assessment year. It is only when these two conditions are fulfilled that the assessing officer acquires jurisdiction to make reassessment. It is therefore imperative for the assessing officer to record reasons for such belief before initiating proceedings for reassessment. The question that arises for consideration is whether the reasons, which led to formation of belief by the assessing officer contained in section 147(a) that income of the petitioner escaped assessment on account of his omission or failure to disclose fully or truly material facts necessary for assessment, can be said to exist on the grounds referred to in the reasons supplied to the petitioner or otherwise disclosed in the order by which objections raised by them have been rejected. [Para 13] While the petitioner has contended that the plot which the petitioner sold to M/s. Kamakshi International vide sale-deed dt. 25-2-2009 is situated at D-81, Ghiya Marg, another plot with which comparison is sought to be made is situated at D-112-A, though also in Bani Park but is not situated in close vicinity and there is a distance of about 2.5 kilometers between these two properties whereas this fact is disputed by the respondents in their counter, but the petitioner in rejoinder has reasserted this fact that distance between these two plots is at-least more than two kilometers. Respondents in their counter have rather asserted that Plot No.D-81 at Bhragu Marg is very close to main Collectorate Circle of Bani Park, whereas Plot No. D-112 is far away from that Circle situated on Power House Road. Petitioner asserts that his plot is located on 40' wide road whereas the Plot of which comparison is sought to be made is located at 100' wide road, whereas the respondents have denied this fact by producing sale-deeds of two transactions asserting that neither of them mentions the width of the road that these two plots are situated at 40' or 100' wide roads, respectively. The assertion of the petitioner that Plot No.D-81 is situated at T point is refuted by the respondents by producing the map of Bani Park submitted by none other than the petitioner themselves before the assessing officer during reassessment proceedings wherein Plot No.D-81 is shown just opposite Plots No. F-34 and F-35 and actual T point is in front of Plot No.D-83 and not D-81. Yet another minus point enumerated by the petitioner to run down the value of their Plot D-81 at Bhragu Marg is that their existed 10' wide transformer of Rajasthan State Electricity Board just in front of this Plot but this is also contested by the respondents stating that the width of the plot is 75.3' and mere occupancy of 10' by transformer does not diminish the market value of the land as it still has 60' front opening on main Ghiya Marg. All these are matters of enquiry and investigation in the reassessment proceedings but for the present what is relevant for this court is to find out whether there exists some reasonable ground for assessing officer to form the requisite belief about escapement of the income of the assessee on account of his failure or omission to disclose fully or truly material facts in the return filed by him. This court finds that there does exist such reasonable ground to form such belief. Whether or not those grounds are adequate is not for this court to examine. [Para 20] At this stage, it is not for this court to examine whether or not those reasons were sufficient or adequate for forming the requisite belief. It is also not for this court to examine those reasons from the standpoint whether the material on which they are found conclusively proved the escapement of income as formation of such belief by the assessing officer is in the realm of the subjective satisfaction. Moreover, in this case, the assessing officer has not proceeded merely on the basis of report of the Valuer but also considered that such valuation was got done by a third party, i.e., the ICICI Bank, which has advanced loan of Rs. 1.25 crore to the petitioner on the land being valued by their valuer at Rs. 3,53,29,230 as against Rs. 1.20 crores. [Para 21] On critical examination of the reasons supplied to the petitioner after show cause notice, the objections raised by the petitioner and the order rejecting such objections passed by the assessing officer, this court is satisfied that the reasons were such which would impel an ordinary person of reasonable prudence to hold that the income (sic-had) escaped assessment. Those reasons do not fall merely within the realm of 'mere suspicion' so to say. There does exist some material with the assessing officer for issuance of notice under section 147 read with section 148 for formation of requisite belief as to the escapement of income. Judgments cited by petitioner in this behalf are, therefore, distinguishable and do not afford any help to him. [Para 22] SUBSCRIBE FOR FULL CONTENT

The Tax PublishersS.B. Civil Writ Petition No. 858 of 2013 Stay Application No. 739 of 2013
2013 TaxPub(DT) 1687 (Raj-HC) : (2013) 215 TAXMAN 0399 : (2013) 094 DTR 0154

Income Tax Act, 1961

--Reassessment--Reason to believe Presence of tangible material--Assessee had sold a residential plot D-81 to one 'K' for Rs. 1.20 crores. During the course of search and seizure at premises of 'K's sister concern, revenue found that said concern had purchased plot No. D112A by registered sale consideration of Rs. 2 crores while actual sale consideration was Rs. 7 crores of said plot, hence, actual cost of plot was suppressed by Rs. 5 crores. As both the plots D-I 12A and D-81 were in same locality and latter was in close vicinity of the former the, revenue believed that market value of both the plots should be almost same as such actual sale consideration of plot D-81 (assessee's) was actually much higher than the registered sale consideration. Assessing officer, therefore, for reopening assessment of assessee, issued notice under section 148. Held: Justified. Reason recorded by assessing officer was such that ordinary person of reasonable prudence would hold that income had escaped assessment.

The assessing officer in order to acquire the jurisdiction to make reassessment of the income of the assessee with reference to section 148 has to arrive at twin satisfactions, viz., that (i) it has to have a reason to believe that income chargeable to tax has escaped assessment and further that (ii) such income has escaped assessment by reason of omission or failure on the part of the assessee to disclose fully and truly material facts before assessment of his income in the relevant assessment year. It is only when these two conditions are fulfilled that the assessing officer acquires jurisdiction to make reassessment. It is therefore imperative for the assessing officer to record reasons for such belief before initiating proceedings for reassessment. The question that arises for consideration is whether the reasons, which led to formation of belief by the assessing officer contained in section 147(a) that income of the petitioner escaped assessment on account of his omission or failure to disclose fully or truly material facts necessary for assessment, can be said to exist on the grounds referred to in the reasons supplied to the petitioner or otherwise disclosed in the order by which objections raised by them have been rejected. [Para 13] While the petitioner has contended that the plot which the petitioner sold to M/s. Kamakshi International vide sale-deed dt. 25-2-2009 is situated at D-81, Ghiya Marg, another plot with which comparison is sought to be made is situated at D-112-A, though also in Bani Park but is not situated in close vicinity and there is a distance of about 2.5 kilometers between these two properties whereas this fact is disputed by the respondents in their counter, but the petitioner in rejoinder has reasserted this fact that distance between these two plots is at-least more than two kilometers. Respondents in their counter have rather asserted that Plot No.D-81 at Bhragu Marg is very close to main Collectorate Circle of Bani Park, whereas Plot No. D-112 is far away from that Circle situated on Power House Road. Petitioner asserts that his plot is located on 40' wide road whereas the Plot of which comparison is sought to be made is located at 100' wide road, whereas the respondents have denied this fact by producing sale-deeds of two transactions asserting that neither of them mentions the width of the road that these two plots are situated at 40' or 100' wide roads, respectively. The assertion of the petitioner that Plot No.D-81 is situated at T point is refuted by the respondents by producing the map of Bani Park submitted by none other than the petitioner themselves before the assessing officer during reassessment proceedings wherein Plot No.D-81 is shown just opposite Plots No. F-34 and F-35 and actual T point is in front of Plot No.D-83 and not D-81. Yet another minus point enumerated by the petitioner to run down the value of their Plot D-81 at Bhragu Marg is that their existed 10' wide transformer of Rajasthan State Electricity Board just in front of this Plot but this is also contested by the respondents stating that the width of the plot is 75.3' and mere occupancy of 10' by transformer does not diminish the market value of the land as it still has 60' front opening on main Ghiya Marg. All these are matters of enquiry and investigation in the reassessment proceedings but for the present what is relevant for this court is to find out whether there exists some reasonable ground for assessing officer to form the requisite belief about escapement of the income of the assessee on account of his failure or omission to disclose fully or truly material facts in the return filed by him. This court finds that there does exist such reasonable ground to form such belief. Whether or not those grounds are adequate is not for this court to examine. [Para 20] At this stage, it is not for this court to examine whether or not those reasons were sufficient or adequate for forming the requisite belief. It is also not for this court to examine those reasons from the standpoint whether the material on which they are found conclusively proved the escapement of income as formation of such belief by the assessing officer is in the realm of the subjective satisfaction. Moreover, in this case, the assessing officer has not proceeded merely on the basis of report of the Valuer but also considered that such valuation was got done by a third party, i.e., the ICICI Bank, which has advanced loan of Rs. 1.25 crore to the petitioner on the land being valued by their valuer at Rs. 3,53,29,230 as against Rs. 1.20 crores. [Para 21] On critical examination of the reasons supplied to the petitioner after show cause notice, the objections raised by the petitioner and the order rejecting such objections passed by the assessing officer, this court is satisfied that the reasons were such which would impel an ordinary person of reasonable prudence to hold that the income (sic-had) escaped assessment. Those reasons do not fall merely within the realm of 'mere suspicion' so to say. There does exist some material with the assessing officer for issuance of notice under section 147 read with section 148 for formation of requisite belief as to the escapement of income. Judgments cited by petitioner in this behalf are, therefore, distinguishable and do not afford any help to him. [Para 22]