RAJES KUMAR, J. - (1.) HEARD Sri D.D. Chopra, learned standing counsel appearing on behalf of IT Department.
(2.) THIS is an appeal under the GT Act (hereinafter referred to as "the Act"). Following substantial questions of law have been involved : " 1. Whether on the fact and circumstances of the case, Tribunal was justified in law in holding that the reassessment proceedings under s. 16(1) of the GT Act have not been validly initiated on the ground that nothing was brought on record to show that the shares had been transferred at a value less than the fair market value especially when the AO had valid reason to believe under s. 16(1) of the GT Act that on transfer unquoted shares was to be valued as per r. 1D of the Act and not at face value. 2. Whether on the facts and circumstances of the case, the finding of the Tribunal while confirming the order passed by CIT(A) that no material or evidence has been brought on record by the AO while recording the reasons was not perverse."
(3.) THE brief facts of the case are that the AO has framed the assessment under s. 16(1)/15(3) of the GT Act (hereinafter 11,972 shares to various companies. The AO found that the company had sold shares on the face value of Rs. 100 each and he was of the view that the shares in question had been transferred at a value less than the fair market value. The AO recorded the reasons for initiation of proceedings under s. 16(1) of the Gift Act as follows : The assessing authority after hearing the assessee completed the assessment taking the value of the taxable gift at Rs. 65,88,190. Being aggrieved by the order, assessee filed appeal before the CIT(A). The CIT(A) allowed the appeal and set aside the assessment order. Being aggrieved by the order of the CIT (A), Revenue filed appeal C before the "The reasons recorded by the AO only indicate a suspicion in the mind of the AO, no material has been brought on record to show that shares have been transferred at a value less than the fair market value. There is nothing on record to show what was the fair market value as on the date of transaction. In the case of H. Noronha vs. ITO (1982) 26 CTR (Kar) 157 : (l982) 133 ITR 199 (Kar), the Karnataka High Court observed that when an ITO is required to form an opinion on the basis of information and is required to record his reasons before proceeding to issue notice under s. 148, at that point he should record in full details, source of information on the basis of which he had formed his belief reasonably which has led to the conclusion that there has been escapement of income from being assessed. In the instant case, the reasons recorded by the AO do not disclose any material or information on the basis of which the AO has formed his belief, it is merely an opinion/suspicion, which do not confer jurisdiction on the AO to reopen proceedings. It would also be relevant to state that the AO has not given any indication as to what was the nature of information on the basis of which he has reasons to believe. In the instant case, no material or evidence has been brought on record by the AO while recording the reasons in view of the above, we fully agree with this observation of CIT(A) that the proceedings under s. 16(1) of the GT Act have not been validly initiated in this case. Accordingly, we uphold the order of CIT(A). In the result, the appeal filed by the Department is dismissed." ;