Gujarat High Court
Munir Ismail Voraji vs Income Tax Officer on 25 April, 2017
Bench: M.R. Shah, B.N. Karia
C/SCA/20021/2016 CAV JUDGMENT
IN THE HIGH COURT OF GUJARAT AT
AHMEDABAD
SPECIAL CIVIL APPLICATION No. 20021 of 2016
With
SPECIAL CIVIL APPLICATION No. 21143 of 2016
FOR APPROVAL AND SIGNATURE:
HONOURABLE Mr. JUSTICE M.R. SHAH
and
HONOURABLE Mr. JUSTICE B.N. KARIA
=============================================================
1 Whether Reporters of Local Papers may be allowed to see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy of the judgment ?
4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India or any order made thereunder ?
============================================================= MUNIR ISMAIL VORAJI....Petitioner(s) Versus INCOME TAX OFFICER....Respondent(s) ============================================================= Appearance :
Mr MANISH J SHAH, ADVOCATE for the Petitioner(s) No. 1 Mr SUDHIR M MEHTA, ADVOCATE for the Respondent(s) No. 1 ============================================================= CORAM: HONOURABLE Mr. JUSTICE M.R. SHAH and HONOURABLE Mr. JUSTICE B.N. KARIA 25th April 2017 Page 1 of 25 HC-NIC Page 1 of 25 Created On Sun Aug 13 10:33:51 IST 2017 C/SCA/20021/2016 CAV JUDGMENT CAV JUDGMENT (PER : HONOURABLE Mr. JUSTICE M.R. SHAH) As common question of law and fact arise in both these petitions, but with respect to different assesses, both these writ petitions are heard, decided and disposed of together by this common judgment and order.
2. By way of this petition under Article 226 of the Constitution of India, being Special Civil Application No. 20021 of 2016, the petitioner-assessee has prayed for issuance of appropriate writ and/or order to quash and set aside the impugned notice under Section 148 of the Income-tax Act, 1961 [Annexure "F"] by which the Assessing Officer has sought to reopen the assessment for Assessment Year 2011-2012. The petitioner has also prayed to quash and and set aside the impugned order disposing of the objections raised against reopening of the assessment.
2.1 Similar prayer is made by the petitioner of Special Civil Application No. 21143 of 2016, in which case also, Page 2 of 25 HC-NIC Page 2 of 25 Created On Sun Aug 13 10:33:51 IST 2017 C/SCA/20021/2016 CAV JUDGMENT the assessment for Assessment Year 2011-2012 is sought to be reopened on the similar grounds on which assessment in the case of the petitioner of Special Civil Application No. 20021 of 2016 is sought to be reopened. It is required to be noted that as such, the petitioner of Special Civil Application No. 21143 of 2016 was a co-owner of the land in question.
2.2 For the sake of convenience, the facts arising in Special Civil Application No. 20021 of 2016 are narrated as under :-
3. The Petitioner-assessee filed return of income for Assessment Year 2011-2012 on 21st June, 2011. That, the assessee showed the Long Term Capital Gain of Rs. 2,19,551/- in regard to his share in the land, bearing Block no. 140 sold on 18th December, 2012 for consideration of Rs. 51,38,740/- by deducting therefrom, the indexed cost of that share at Rs. 49,19,189/- on the basis of 1st April, 1981 valuation cost of Rs. 6,91,869/- indexed by multiplying the same by Page 3 of 25 HC-NIC Page 3 of 25 Created On Sun Aug 13 10:33:51 IST 2017 C/SCA/20021/2016 CAV JUDGMENT the index of 711. That, at the time of original assessment, the assessee relied upon valuation made by the Government approved valuer, in support of his claim of fair market value as on 1st April, 1981 at Rs. 400/- per sqm. That, thereafter, the original return of income filed by the assessee came to be accepted by the Income-tax Department, accepting the fair market value of the land at Rs. 400/- per sqm.
3.1 That thereafter, the petitioner was served with a notice under Section 148 of the Act on 16th October, 2014 alleging that the income chargeable to tax has escaped the assessment, asking the petitioner to file the return. That, at the request of the assessee, the Assessing Officer asked for the reasons recorded from Income-tax Officer, Ward-2 [3](3), Surat as in the meantime, the jurisdiction was transferred from I.T.O Ward-9 (3) Surat to ITO Ward-2 [3](3), Surat. That, the said Assessing Officer supplied the reasons recorded to reopen the assessment for A.Y.2011-12, which reads as under :-
Page 4 of 25
HC-NIC Page 4 of 25 Created On Sun Aug 13 10:33:51 IST 2017 C/SCA/20021/2016 CAV JUDGMENT "In this case, information has been received from the ITO (I&CI)-I & II, Surat wherein it was mentioned that the assessee along with 16 other co-owners sold land situated at Survey No. 145. Block No. 140, Moje Mata Varachha, Surat for a sale consideration of Rs. 3,81,73,500/- on 20.12.2010. On verification of the details on the ITD, it is noticed that the assessee has filed his return of income for A.Y. 2011-12 declaring total income at Rs. 2,24,620/- on 21.06.2011. The assessee has not offered the said transaction in his return of income for taxation.
On perusal of the return of income, it was also noticed that the assessee has not offered the capital gain fully and truly in view of Section 50C of the Act. From the Income Tax angle, it may of potential nature. Hence, I have reason to believe that the income for A.Y. 2011- 12 amounting to Rs. 29,36,423/- escaped assessment as the assessee has failed to disclose fully and truly all material facts necessary in the return of income within the meaning of section 147 of the Income Tax Act.
So, a notice u/s. 148 of the I.T. Act, 1961 is to be issued for the A.Y. 2011-12, for reopening of the assessment."
Page 5 of 25 HC-NIC Page 5 of 25 Created On Sun Aug 13 10:33:51 IST 2017 C/SCA/20021/2016 CAV JUDGMENT 3.2 That, on receipt of the reasons recorded, the assessee submitted his objections against the reasons recorded vide letter/ communication dated 20th January, 2016. The assessee pointed out that in fact, the petitioner had filed the return of income and had shown therein, the capital gain by deducting therefrom, the sale proceed, the indexed cost of acquisition. At this stage, it is required to be noted that in the reasons recorded, it was stated that the assessee had not offered the aforesaid transaction in his return of income for taxation, and therefore, the assessee clarified that while filing the return of income, the assessee had shown the capital gain. The assessee also stated that the sale price was equivalent to jantri price. That, considering the objections raised by the assessee, the Assessing Officer dropped the assessment proceedings by an order dated 15th March 2016. However immediately thereafter, within a period of a week, the Assessing Officer issued second notice under Section 148 of the Act on 22nd March 2016 alleging inter alia Page 6 of 25 HC-NIC Page 6 of 25 Created On Sun Aug 13 10:33:51 IST 2017 C/SCA/20021/2016 CAV JUDGMENT that the income chargeable to tax has escaped assessment for A.Y 2011-2012. That, thereafter, on a request made by the assessee, the Assessing Officer supplied the reasons recorded for reopening, which reads as under :-
"The assessee filed return of income for A.Y.2011-12 on 21.06.2011 declaring total income of Rs. 2,24,620/-. As per the computation of total income, the assessee has shown LTCG of Rs. 2,19,551/- and income from other sources at Rs. 5070/-.
In this case, information was received from the ITO (I&CI) Surat that the assessee has sold immovable property i.e. non agriculture land bearing Survey B. No. 145, Block No.140, T.P.No. 24, F.P. No.5, Moje Mota Varachha, Dist.Surat along with co-owners for a consideration of Rs. 3,81,73,500/-. The ITO (I&CI) further informed that the assessee has taken the FMV as on 1.4.1981 @ Rs. 400/- on the basis of the valuation report dated 24.03.2011 of approved valuer Shri P.K. Desai and also suggested to refer the matter to the Valuation Officer to determine the correct value as on 1.4.1981.Page 7 of 25
HC-NIC Page 7 of 25 Created On Sun Aug 13 10:33:51 IST 2017 C/SCA/20021/2016 CAV JUDGMENT As it was noticed that the assessee has taken the FMV as on 1.4.1981 @ Rs. 400/- per sqr. Mtr which was found on higher side as compared to the data/sale instances obtained from the Sub Registrar and the matter was referred to the Valuation Officer to determine the FMV as on 1.4.1981. The assessee has not provided the required data to the Valuation Officer for the purpose of valuation. However, the Valuation Officer has assessed the FMV as on 1.4.1981 @ Rs. 65 per sqr. Mtr. On the basis of available data with him and adopted on other cases.
In the return of income, the assessee has shown his share from the sale proceeds at Rs. 51,38,740/- and has deducted the indexed cost of acquisition of Rs. 49,19,189/- and net LTCG of Rs. 2,19,551/-. On the basis of the valuation officer's report, the taxable Long term capital gain comes to Rs. 49,39,370/-, instead of Rs. 2,19,551/- disclosed in the return of income. Thus, an amount Rs. 41,19,819/- is required to be taxed in the hands of the assessee on account of undisclosed long term capital gain.
I have gone through the evidential materials available on record and on the basis of these materials, I am satisfied that the assessee has not offered the taxable long term Page 8 of 25 HC-NIC Page 8 of 25 Created On Sun Aug 13 10:33:51 IST 2017 C/SCA/20021/2016 CAV JUDGMENT capital gain fully and truly in his return of income filed for A.Y. 2011-12. Due to non disclosure of this income, I have reason to believe that income of Rs. 41,19,819/- chargeable to tax has escaped assessment for A.Y. 2011-12, within the meaning of section 147 of the Act. Hence, the case of the assessee needs to be re-opened u/s. 147 of the Act. I am satisfied that the case of the assessee is fit for action u/s 147 of the IT Act."
3.3 On receipt of the reasons recorded, the assessee submitted his objections to the second show cause notice issued under Section 148 of the Act, and also raised objection against reopening of the assessment. It was stated by the assessee that the reopening of the assessment cannot be done on the basis of Valuation Report [DVO's report]; that the reference cannot be done without pendency of assessment proceedings; that there is no valuation report, as the letter dated 10th March, 2016 of the Valuer simply informs that the rate which has been adopted in other two properties in the same Town Planning Scheme. It was also submitted Page 9 of 25 HC-NIC Page 9 of 25 Created On Sun Aug 13 10:33:51 IST 2017 C/SCA/20021/2016 CAV JUDGMENT that prior to 1st July 2012, there was no justification to refer to valuation under Section 55A of the Act because the reference could be made only when the report of the registered valuer was less than the fair market value; and whereas, as per the valuation report, the fair market value is much less. It was also submitted that the proceedings have been initiated on the basis of information from the Income Tax Officer [I&CI], Surat, who has merely suggested to refer the matter for ascertaining the fair market value as on 1st April, 1981 to the Valuation Officer, and therefore, the reopening of assessment was on the basis of borrowed satisfaction from a different Income-tax Officer. It was further submitted that without pointing out any discrepancy in the report of the approved Valuer, reference to the DVO was not permissible. That, by an order dated 7th October 2016, the Assessing Officer disposed of the objections by not agreeing with the objections raised by the assessee. Hence, the petitioner has preferred the present Special Civil Application under Article 226 of Page 10 of 25 HC-NIC Page 10 of 25 Created On Sun Aug 13 10:33:51 IST 2017 C/SCA/20021/2016 CAV JUDGMENT the Constitution of India challenging the impugned Notice under Section 148 of the Act, and also the impugned reassessment proceedings.
3.4 In the case of co-owner of the land in question, the assessment for A.Y. 2011-2012 is sought to be reopened on the ground that in the case of co-owner Munir Ismail Vorajee [petitioner of Special Civil Application No. 20021 of 2016], the Valuation Officer has assessed the fair market value as on 1st April 1981 at Rs. 65/- per sq.m. The reopening in the case of co- owner viz., Salim Ismail Vorajee is the subject matter of Special Civil Application No. 21143 of 2016.
4. Shri Manish J Shah, learned advocate has appeared on behalf of the respective petitioners and Shri Sudhir Mehta, learned advocate has appeared on behalf of the Revenue.
4.1 Shri MJ Shah, learned advocate appearing on behalf of the respective petitioners has vehemently submitted that the impugned notices issued under Section 148 of the Act are bad in law and illegal. It is Page 11 of 25 HC-NIC Page 11 of 25 Created On Sun Aug 13 10:33:51 IST 2017 C/SCA/20021/2016 CAV JUDGMENT further submitted by Shri Shah, learned for the petitioners that the impugned reopening of assessment for A.Y 2011-2012 is based on borrowed satisfaction and at the instance of another ITO. It is further submitted by Shri MJ Shah, learned advocate for the petitioners that in fact, solely based upon DVO's report, reopening of the assessment is not permissible. 4.2 It is submitted by Mr. Shah, learned advocate for the petitioners that the reopening of assessment for A.Y 2011-2012 is absolutely bad in law and illegal, and therefore, deserves to be quashed and set-aside. It is further submitted by Shri Shah, learned advocate for the petitioners that from the reasons recorded to reopen the assessment for A.Y 2011-2012, it appears that the respondent had issued a notice to make addition only on the ground that the fair market value as on 1st April 1981 of the land sold by the respective petitioners is valued by the DVO on the lower side, compared to the value determined by the registered Valuer and this difference in the fair market value has Page 12 of 25 HC-NIC Page 12 of 25 Created On Sun Aug 13 10:33:51 IST 2017 C/SCA/20021/2016 CAV JUDGMENT increased the indexed cost of the asset of the petitioners leading to lesser capital gain, and hence, such indexed cost of the asset needs to be reduced resulting into higher capital gain which needs to be added to the income of the assessee. It is submitted that the aforesaid reason recorded to reopen the assessment is ex facie bad, illegal and erroneous. It is submitted that no reopening of assessment is permissible/possible based solely on the report of Valuation Officer.
4.3 It is further submitted that solely on the basis of and/or solely relying upon the report of DVO, the reopening of the assessment is not permissible in as much as the report of DVO can be said to be an estimate and it cannot be used to draw an inference that the income has escaped the assessment. It is submitted that as such there is no independent subjective satisfaction of the Assessing Officer to form an opinion that the income chargeable to tax has escaped assessment; more particularly on the ground Page 13 of 25 HC-NIC Page 13 of 25 Created On Sun Aug 13 10:33:51 IST 2017 C/SCA/20021/2016 CAV JUDGMENT stated in the reasons recorded to reopen the assessment. In support of his above submissions, Shri Manish J Shah, learned advocate has relied upon the decisions of the Hon'ble Supreme Court in the case of ACIT v. Thariya Construction Company, [2010] 328 ITR 515 [SC] and in the case of Principal Commissioner of Income-tax-2 vs. J.Upendra Construction (P) Limited, [2015] 377 ITR 383 [Gujarat]. Shri Shah, learned advocate for the assesses has also placed reliance upon a decision of Division Bench of this Court in the case of Aavkar Infrastructure Company v. Deputy Commissioner of Income-tax, Circle-9, reported in [2016] 67 Taxmann.com 39 [Gujarat].
4.4 It is further submitted by Shri Shah, learned advocate for the petitioners that in the present case, as such, the reference to DVO is possible only in the circumstances where in the opinion of the respondent- A.O, the value of the asset is lesser reported and not over reported. It is further submitted by learned Page 14 of 25 HC-NIC Page 14 of 25 Created On Sun Aug 13 10:33:51 IST 2017 C/SCA/20021/2016 CAV JUDGMENT advocate for the petitioners that in the present set of cases, the petitioners have adopted the value determined by the registered Valuation Officer, and as such, the Assessing Officer has not pointed out any error in such report and merely proceeded on the value arrived at by the DVO. It is further submitted by Shri Shah, learned advocate appearing for the petitioners that as held by the Division Bench of Bombay High Court in the case of Commissioner of Income-tax v. Puja Prints, reported in [2014] 360 ITR 697 [Bombay], reference to the DVO can be made only when the value adopted by the assessee is less than the fair market value, and if the value of the asset shown by the assessee is much more than the fair market value, reference to the Valuation Officer could not be made. It is submitted that therefore also, when the reference to the DVO itself was not permissible, considering the pre- amended Section 55A of the Income-tax Act, the Assessing Officer ought not to have reopened the assessment, relying solely upon the valuation of DVO Page 15 of 25 HC-NIC Page 15 of 25 Created On Sun Aug 13 10:33:51 IST 2017 C/SCA/20021/2016 CAV JUDGMENT and that too without application of independent mind. 4.5 It is further submitted by Shri MJ Shah that as such in the present case, even the reference to DVO was itself bad in law, as no assessment proceedings were pending before the Assessing Officer. It is submitted that as such, reference to DVO was made on the basis of instructions/information supplied by the Income-tax Officer [I&CI], Surat. It is further submitted by Shri Shah, learned advocate for the petitioners that even otherwise, the DVO's report, on which reliance is placed by the assessing Officer, as such cannot be said to be a valid report, as the DVO has not discussed anything as to why he has arrived at the fair market value at Rs. 65/- per sq.m as on 1st April 1981. It is submitted that solely on the basis of the rate adopted in other two cases of properties situated in the same Town Planning Scheme, the DVO has mechanically and without applying any mind to the aspect of location of the land, etc., has adopted the fair market value as on 1st April 1981 at Rs. 65/- per sqm. It is submitted that therefore, Page 16 of 25 HC-NIC Page 16 of 25 Created On Sun Aug 13 10:33:51 IST 2017 C/SCA/20021/2016 CAV JUDGMENT even the fair market value determined by the DVO, upon which reliance is placed by the assessing officer, cannot be said to be a report disclosing the true fair market value. It is submitted that in any case, solely on the basis of DVO's report and without any further inquiry having been made by the Assessing Officer for his subjective satisfaction to determine the fair market value as on 1st April 1981, the reopening of assessment, solely on the basis of such DVO's report, which may be said to be his opinion, is not permissible. Making above submission, it is requested to allow the present petitions.
5. Both these petitions are vehemently opposed by learned advocate Mr. Sudhir Mehta appearing on behalf of the Revenue. In the facts and circumstances of the case, the impugned notices under Section 148 of the Act for reopening of assessment for A.Y. 2011-2012 are absolutely just and proper. It is submitted by Shri Sudhir Mehta, learned advocate for the Revenue that in the present case, there was an information from the Page 17 of 25 HC-NIC Page 17 of 25 Created On Sun Aug 13 10:33:51 IST 2017 C/SCA/20021/2016 CAV JUDGMENT Income-tax Officer [I&CI], Surat that the assessee has sold his immovable property ie., non agricultural land in question along with co-owners for a sale consideration of Rs. 3,81,73,500/-. That, the Income-tax Officer [I&CI], Surat further informed that the assessee has taken the fair market value as on 1st April, 1981 at Rs. 400/- per sqm. On the basis of valuation report dated 24th March 2011 of the approved valuer - Shri PK Desai and also suggested to refer the matter to the departmental Valuation Officer to determine the correct value as on 1st April 1981. That, the Assessing Officer applied the fair market value taken by the assessee with the sale instances of that area as on 1st April 1981, which were obtained from the office of the Sub-Registrar and came to the conclusion that the valuation taken by the assessee as on 1st April, 1981 at Rs. 400/- per sqm is on the higher side, and hence, the matter was referred to the DVO for valuation under Section 55A of the Act for ascertaining the fair market value of the property in question [as on 1st April, 1981]. That, the Assessing Page 18 of 25 HC-NIC Page 18 of 25 Created On Sun Aug 13 10:33:51 IST 2017 C/SCA/20021/2016 CAV JUDGMENT Officer initiated Section 147 proceedings, however, the same came to be dropped on 15th March 2016, since the sale proceeds of the land were found to be equivalent to the circle rate, and hence, the question of deemed capital gain as per the provisions of Section 50C of the Act does not arise at all. It is submitted that in the meanwhile, the valuation report from the DVO was received in which the fair market value of the aforesaid property as on 1st April, 1981 was valued at Rs. 65/- per sqm on the basis of available data with him and adopted in other cases. It is submitted that on the basis of DVO's report, the taxable Long Term Capital Gain comes to Rs. 43,39,370/- instead of Rs. 2,19,551/- as disclosed in the return of income. It is submitted that therefore, the then Assessing Officer has a reason to believe that the income of Rs. 41,19,819/- which is chargeable to tax has escaped assessment for A.Y. 2011-2012. It is submitted that therefore, the impugned notices are absolutely just and legal. 5.1 It is further submitted that the DVO has taken the Page 19 of 25 HC-NIC Page 19 of 25 Created On Sun Aug 13 10:33:51 IST 2017 C/SCA/20021/2016 CAV JUDGMENT land rate at Rs. 65/- per sqm as on 1st April, 1981 by considering the rate adopted in other two properties of the same Town Planning Scheme. It is submitted that therefore, from the report, it is clear that the petitioners did not disclose/declare true and correct value and thereby have adopted the value of the land at Rs. 400/- per sqm on the basis of approved Valuer, which is on the higher side ie., more than 6 times of the actual value. It is further submitted that the Assessing Officer has a valid reason to believe that the income chargeable has escaped assessment by not declaring true Capital Gain. It is further submitted that the original return was accepted under Section 143(1) of the Act, and therefore, the Assessing Officer, while accepting the return, has no occasion to consider the true Capital Gain. Making above submissions, it is requested to dismiss the present petitions.
6. Heard learned advocates appearing on behalf of the respective parties at length.
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7. At the outset, it is required to be noted that in the present case, the impugned notices under Section 148 of the Act and the assessment for A.Y 2011-2012 are sought to be reopened solely on the basis of DVO's report. Nothing is on the record that thereafter, any further inquiry is held/conducted by the Assessing Officer to form an opinion that the income chargeable to tax has escaped assessment with respect to the Capital gain. No further inquiry has been held/conducted to find out the fair market value as on 1st April 1981. It is required to be noted that at the time of filing of original return, the assessee concerned has relied upon the report of the approved Valuer, considering the fair market value of the land in question as on 1st April 1981 at Rs. 400/- per sqm. It appears that thereafter, on the basis of information given by another officer ie., Income Tax Officer [I&CI] Surat, the Assessing Officer made a reference to the Departmental Valuation Officer and thereafter, solely relying upon DVO's report, assessed the fair market Page 21 of 25 HC-NIC Page 21 of 25 Created On Sun Aug 13 10:33:51 IST 2017 C/SCA/20021/2016 CAV JUDGMENT value of the land at Rs. 65/- per sqm., the Assessing Officer has sought to reopen the assessment for A.Y.2011-2012. Therefore, the question posed before this Court for consideration is whether solely relying upon and based upon DVO's report and without holding any further inquiry thereafter with respect to the fair market value of the land as on 1st April, 1981, is it open for the Assessing Officer to reopen the assessment ? 7.1 In the case of Asstt. CIT v. Dhariya Construction [2010] 328 ITR 515 [SC], the opinion of DVO per se is not an information for the purpose of reopening of the assessment under section 147 of the Act. The Assessing Officer has to apply his mind as to the information; if any, collected and thereby form a belief thereon.
7.2 A similar view has been expressed by the Division Bench of this Court in case of Principal Commissioner of Income-tax-2 v. J. Upendra Construction [P] Limited, reported in 377 ITR 383 [Gujarat] as well as in the case of Aavkar Page 22 of 25 HC-NIC Page 22 of 25 Created On Sun Aug 13 10:33:51 IST 2017 C/SCA/20021/2016 CAV JUDGMENT Infrastructure Company vs. Deputy Commissioner of Income-tax Circle-9, reported in [2016] 67 Taxmann.com 39 in which, the Division Bench of this court has followed the decision of Supreme Court in the case of Asstt. CIT v. Dhariya Construction [Supra] and held that solely on the basis of DVO's report and without there being any further inquiry by the Assessing Officer to form an opinion that income chargeable to tax has escaped assessment and/or without applying mind to the information in the form of DVO's report, the Assessing Officer is not justified in reopening the assessment. From the material available on the record; except the report of DVO, there was no tangible material available with the Assessing Officer to form a believe that the income chargeable to tax has escaped the assessment.
7.3 Even otherwise, it appears from the DVO's report that the Assessing Officer has erred in relying upon DVO's report to form an opinion that the income chargeable to tax has escaped assessment. The DVO Page 23 of 25 HC-NIC Page 23 of 25 Created On Sun Aug 13 10:33:51 IST 2017 C/SCA/20021/2016 CAV JUDGMENT has mechanically and on the basis of rate in the case of other two properties situated in the same Town Planning Scheme has determined the fair market value of the land as on 1st April 1981 at Rs. 65/- per sqm. However, from the report, it does not appear that the DVO has applied his mind with respect to the location etc., of the land in question. As observed hereinabove, there is no further application of mind by the Assessing Officer on the basis of the information received by him in the form of DVO's report and has mechanically and solely relied upon the DVO's report, formed an opinion that the income chargeable to tax has escaped. Thus, there was no tangible material available with the assessing officer to form an opinion that the income chargeable to tax has escaped assessment.
8. Under the circumstances, on the aforesaid ground alone, the impugned Notices deserve to be quashed and set-aside. Consequently, the impugned reopening of the assessment for AY 2011-2012 deserves to be quashed and set-aside.
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9. In view of the above and for the reasons aforestated, both these petitions succeed. The impugned Notices under Section 148 of the Income-tax Act, 1961 and the reopening of the assessment for A.Y 2011-2012 in the case of present petitioners are hereby quashed and set-aside. Rule nisi issued in each case is made absolute to the aforestated extent. However, there shall be no order as to costs.
{M.R Shah, J.} {B.N Karia, J.} Prakash Page 25 of 25 HC-NIC Page 25 of 25 Created On Sun Aug 13 10:33:51 IST 2017