Sri Balasubramania Mills Ltd., Coimbatore V. DCIT, Coimbatore

CO 84/CHNY/2015

• Counselvise Citation: [2015] 123 COUNSELVISE.COM (IT) 1155 (ITAT-CHENNAI)
• Duration Of Justice: 1 month(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 28-08-2015
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 28-07-2015
• Court: TRIBUNAL
• Department Lawyers: K BALASUBRAMANIAM
• Assessee Lawyers: P RADHAKRISHNAN
• Keywords: Reopening of assessment; Sale consideration of property below Jantri Value; Business income; Tangible material
• Section: 50C; 147; 148; 139

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . . . , ! , ' #$ BEFORE SHRI N.R.S.GANESAN, JUDICIAL MMBER AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER ./ ITA NO. 1397/MDS/2015 AND CO NO. 84/MDS/2015 (IN ITA NO.1397/MDS/2015) / ASSESSMENT YEAR : 2007-08 THE DEPUTY COMMISSIONER OF INCOME-TAX, CORPORATE CIRCLE-1, COIMBATORE. APPELLANT) V. M/S. SRI BALASUBRAMANIA MILLS LTD., P.B.NO.3303, UPPILIPALAYAM POST, COIMBATORE-641 015. PAN AADCS1887K RESPONDENT/CROSS OBJECTOR) / APPELLANT BY : SHRI P. RADHAKRISHNAN, JCIT / RESPONDENT BY : SHRI K. BALASUBRAMANIAM, CA ! / DATE OF HEARING : 03.08.2015 '# ! / DATE OF PRONOUNCEMENT: 28.08.2015 / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THE APPEAL BY THE REVENUE AND THE CROSS OBJECTIO N BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS) DATED 20.3.2015 FOR THE ASSE SSMENT YEAR 2007-08. - - ITA 1397 & CO 84/15 2 2. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PUBLIC LIMITED COMPANY. IN THIS CASE, SCRUTINY ASSESSMENT U/S.143(3) OF THE ACT WAS COMPLETED ON 9.12.2009 DETERMINING THE TOTAL INCOME AT ` 1,31,27,880/-. SUBSEQUENTLY, IT WAS NOTICED THAT THE ASSESSEE COMPANY HAD DECLARED LONG TERM CAPITAL GAI N AT ` 1,30,64,224/- AS AGAINST THE MARKET VALUE AS PER RE GISTERING AUTHORITY AT ` 1,91,19,000/-. THE DIFFERENCE OF ` 56,58,180/- REQUIRED TO BE ASSESSED WITH THE TOTAL INCOME. ACC ORDINGLY, THE ASSESSING OFFICER REOPENED THE ASSESSMENT AND COMPU TED THE CAPITAL GAIN BY ADOPTING THE REGISTRATION VALUE OF THE PROPERTY AND MADE AN ADDITION OF ` 56,58,180/-. THE ASSESSEE CARRIED THE MATTER BEFORE THE COMMISSIONER OF INCOME-TAX(APPEAL S) CHALLENGING THE REOPENING OF THE ASSESSMENT. THE COMMISSIONER OF INCOME-TAX(APPEALS) QUASHED THE ORD ER OF THE ASSESSING OFFICER U/S.147 OF THE ACT AS BAD IN LAW BY OBSERVING THAT THE RE-ASSESSMENT WAS MADE ONLY ON CHANGE OF O PINION AND NO TANGIBLE MATERIAL WAS AVAILABLE WITH THE ASSESSI NG OFFICER TO REOPEN THE ASSESSMENT. AGAINST THIS, THE REVENUE IS IN APPEAL BEFORE US. 3. THE CROSS OBJECTION IS FILED BY THE ASSESSEE IN SUPPORT OF THE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS ). - - ITA 1397 & CO 84/15 3 4. THE LD. DR SUBMITTED THAT THOUGH REASSESSMENT WA S COMPLETED AFTER 4 YEARS AT THE END OF THE RELEVANT ASSESSMENT YEAR AND PRODUCTION BEFORE THE ASSESSING OFFICER OF BOOKS OR OTHER EVIDENCE FROM WHICH MATERIAL EVIDENCE COULD W ITH DUE DILIGENCE HAVE BEEN DISCOVERED BY THE ASSESSING OFF ICER WILL NOT NECESSARILY AMOUNT TO DISCLOSURE WITHIN THE MEANING OF THE PROVISO TO SEC.147 OF THE ACT. ACCORDING TO THE LD . DR, THOUGH THE ASSESSING OFFICER COMPUTED THE CAPITAL GAINS, H E HAS NOT APPLIED BY THE PROVISIONS OF SEC.50C. HENCE, REOPE NING IS WARRANTED. 5. ON THE OTHER HAND, THE LD. AR RELIED ON THE ORDE R OF THE CIT(APPEALS) AND CROSS OBJECTION FILED BY THE ASSES SEE. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL ON RECORD. IN THIS CASE, THE ORIGINAL ASSESSMENT W AS COMPLETED UNDER SEC.143(3) OF THE ACT ON 9.12.2009. A NOTICE FOR REOPENING OF ASSESSMENT WAS ISSUED TO THE ASSESSEE U/S.148 O F THE ACT ON 28.3.2013, WHICH WAS AFTER FOUR YEARS AT THE END OF THE RELEVANT A.Y. I.E. 31.3.2008. IT IS TO BE NOTED THAT AT THE TIME OF ORIGINAL ASSESSMENT, THE ASSESSING OFFICER DISCUSSED ABOUT T HE SALE OF PROPERTY AND THE INCOME OFFERED BY THE ASSESSEE ON THE SALE OF PROPERTY AS BUSINESS INCOME TREATED AS CAPITAL GAIN S. IN THE - - ITA 1397 & CO 84/15 4 CASE OF THE ASSESSEE, THE ASSESSMENT WAS RE-OPENED AFTER A PERIOD OF FOUR YEARS. IN THE ORIGINAL ASSESSMENT O RDER PASSED ON 9.12.2009, THE AO DISCUSSED ABOUT THE SALE OF THE P ROPERTY IN THE ASSESSMENT ORDER AND TREATED THE BUSINESS INCOM E OFFERED ON THE SALE OF PROPERTY AS INCOME FROM CAPITAL GAIN S. THERE IS A DISCUSSION IN THE ASSESSMENT ORDER REGARDING THE VA LUE OF THE LAND AS ON 1.4.1981. THE CAPITAL GAINS WAS WORKED O UT BY ADOPTING THE GUIDELINE VALUE AS GIVEN BY THE SUB-RE GISTRAR, SINGANALLUR, COIMBATORE. IT IS SEEN FROM THE ASSESS MENT FOLDER ON 11.9.2009, THE ACIT, COMPANY CIRCLE-I(1), COIMBA TORE HAS ADDRESSED A LETTER TO THE SUB-REGISTRAR SINGANALLUR , COIMBATORE REQUESTING HIM FOR GUIDELINE VALUE FOR THE PROPERTY SITUATED AT S.F.NO.391, UPPILIPALAYAM VILLAGE, KAMARAJ ROAD, CO IMBATORE. ON THE SAME DAY, A LETTER WAS ADDRESSED BY THE ASSE SSING OFFICER TO THE PRINCIPAL OFFICER, M/S.TEEYEESN ESTA TE (P) LTD., ANNASALAI, CHENNAI, ASKING FOR COPY OF REGISTERED D EED BOTH FRONT AND BACK PAGE, SEAL, SIGNATURE BY THE PARTIES AND THE REGISTERING AUTHORITY REGARDING THE PROPERTY AT S.F .NO.391, UPPILIPALAYAM VILLAGE, COIMBATORE. ON 27.10.2009, SUMMONS U/S.131 WERE ISSUED TO SHRI P. RAMAMURTHY AND SHRI P. BALASUBRAMANIAM TO PRODUCE COPY OF THE REGISTERED P URCHASE - - ITA 1397 & CO 84/15 5 DEED OF THE SAME PROPERTY. EVEN DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE FILED THE SALE DEED SHOWING THE FEES PAID TO THE SUB-REGISTRAR WITH DET AILS OF DEFICIT STAMP DUTY. THE ASSESSMENT WAS COMPLETED ON 9.12.2 009. THE DOCUMENT WAS FILED BY THE ASSESSEE ON 8.10.2009 BEF ORE THE ASSESSING OFFICER. IN THE ORDER SHEET ON 19.4.2010 A NOTE WAS PUT UP TO THE ASSESSING OFFICER STATING THAT : IN COMPLETING THE ASSESSMENT U/S. 143(3), A COPY O F THE DOCUMENT OF SALE OF PROPERTY WAS PRODUCED. ALTHOUGH THE VALUE FOR GOVT. STAMP DUTY IS STATED A S ` 1,34,60,820/-, THE STAMP DUTY PAID BY THE PURCHASER IS ` 12,79,520/- + ` 2,50,000/-. SO STAMP DUTY PAID IS 8% OF THE GOVERNMENT VALUE. IF THIS VALUE IS TAKEN , THE MARKET VALUE AS PER GOVERNMENT RECORD I.E., AS PER REGISTERING AUTHORITY WORKS OUT TO ` 1,91,19,000/-. SO DIFFERENCE OF ` 56,58,180/- IS TO BE ASSESSED TO LONG TERM CAPITAL GAINS AS PER PROVISIONS OF SECTION 50C . THIS WAS BY MISTAKE NOT CONSIDERED. ISSUE 154 NOTICE. 6.1 O N 26.05.2010, NOTICE U/S 154 WAS PUT-UP. THERE APPEARS TO BE NO ACTION TAKEN ON THE 154 NOTICE. NO TICE U/S 154 WAS ISSUED BY THE THEN ASSESSING OFFICER ON 15.11.2 012 ON THE SAME ISSUE OF RECTIFICATION. THE ASSESSING OFFICER ON 19.12.2012 WROTE TO THE SUB REGISTRAR REQUESTING FOR COPY OF T HE REGISTERED SALE DEED OF S.F.NO.391, UPPILIPALAYAM VILLAGE, KAM ARAJ ROAD, COIMBATORE SOLD BY THE ASSESSEE TO SHRI P. BALASUBR AMANIAM - - ITA 1397 & CO 84/15 6 AND SHRI P. RAMAMURTHY. FROM THE DETAILS DISCUSSE D ABOVE, IT IS SEEN THAT THE SALE DEED WAS AVAILABLE WITH THE A SSESSING OFFICER AT THE TIME OF COMPLETION OF THE ASSESSMENT PROCEEDINGS. EVEN INFORMATION WAS SOUGHT FROM SHRI P. BALASUBRAM ANIAM AND SHRI P. RAMAMURTHY. THE ASSESSEE FILED THE REGISTER ED DOCUMENT ON 08.10.2009. THE ASSESSMENT WAS COMPLETE D ON 09.12.2009. THE ASSESSING OFFICER WHILE CALCULATIN G CAPITAL GAINS HAS NOT CONSIDERED THE SALE CONSIDERATION AS PER THE PROVISIONS OF SECTION 5 OC OF THE INCOME TAX ACT, 1961. IN ALL THE ISSUES DISCUSSED REGARDING THE SALE OF THE PROPERTY WHICH WAS VERIFIED AND CAPITAL GAINS COMPUTED IN THE ORIGINAL ASSESSMENT ORDER, THERE IS NO TANGIBLE MATERIAL AVAILABLE WITH THE ASSESSING OFFICER TO RE-OPEN THE ASSESSMENT U/S 147 OF THE IN COME TAX ACT, 1961, AFTER A PERIOD OF FOUR YEARS. THERE IS A CONCEPTUAL DIFFERENCE BETWEEN POWER TO REVIEW AND POWER TO RE- ASSESS. THE ASSESSING OFFICER HAS NO POWER TO REVIEW. HE HAS T HE POWER TO RE-ASSESS. THE ASSESSING OFFICER HAS POWER TO RE- OPEN PROVIDED THAT THERE IS TANGIBLE MATERIAL TO CO ME TO CONCLUSION THAT THERE IS ESCAPEMENT OF INCOME FROM ASSESSMENT. THE NOTICE PROPOSING TO RE-OPEN THE ASSESSMENT HAS BEEN ISSUED AFTER A PERIOD OF FOUR YEARS FROM THE END OF THE RELEVANT - - ITA 1397 & CO 84/15 7 YEAR. THE PROVISO TO SECTION 147 STIPULATES A REQUI REMENT THAT THERE MUST BE A FAILURE ON THE PART OF THE ASSESSE E TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR TH E ASSESSMENT FOR THAT YEAR. HENCE, IT IS VERY CLEAR THAT ALL THE DET AILS REGARDING THE REGISTERED DOCUMENT WERE AVAILABLE WITH THE ASSESSI NG OFFICER DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDING S. HENCE, IT CANNOT BE STATED THAT THERE WAS ANY FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN U/S 139 OR IN RESPONSE TO A NOTICE ISSUED UNDER SUB SECTION (1) OF SECTION 142 OR SECTION 148 OR TO DISCLOSE FULLY AND TRULY ALL THE MATERIAL FACTS NECESSARY FOR ITS ASSESSMENT, FOR THAT ASSESSMENT YEAR. ACCO RDINGLY, THE PROCEEDINGS U/S 148 ARE AGAINST THE LAW AND THE ASS ESSMENT ORDER IS AB INITIO VOID. 6.2 FURTHER, THERE IS NO FINDING NEITHER IN THE ASSESSMENT ORDER NOR IN THE REASONS RECORDED BY THE ASSESSING OFFICER THAT THERE WAS FAILURE ON THE PART OF THE ASSESSEE TO DI SCLOSE FULLY AND TRULY ALL MATERIAL FACTS, FOR THE PURPOSE OF ASSESS MENT AND ALL THE MATERIAL FACTS, WHICH IS NECESSARY FOR THE ASSESSME NT, WERE AVAILABLE AT THE TIME OF ORIGINAL ASSESSMENT, WHICH IS COMPLETED UNDER SEC.143(3) OF THE ACT. IN A CASE WHERE THE A SSESSMENT IS COMPLETED UNDER SEC.143(3) OF THE ACT, THE REOPENIN G OF THE - - ITA 1397 & CO 84/15 8 ASSESSMENT UNDER SEC.148 BEYOND THE PERIOD OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR CAN BE SUST AINED ONLY IF IT IS ESTABLISHED THAT THERE WAS A FAILURE ON THE P ART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS. IN THIS CASE, THERE IS NO FINDING BY THE ASSESSING OFFICER THAT THERE IS FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FUL LY AND TRULY ALL MATERIAL FACTS. FURTHER, IT IS AN ADMITTED FACT TH AT ALL MATERIAL FACTS WERE AVAILABLE AT THE TIME OF ORIGINAL ASSESS MENT. BEING SO, AS ENUNCIATED BY THE SUPREME COURT IN THE CASE OF CIT V. FORAMER FRANCE (264 ITR 566) AS WELL AS BY THE JURI SDICTIONAL HIGH COURT IN THE CASES OF CIT V. ELGI FINANCE LTD. (286 ITR 674), CIT V. ELGI ULTRA INDUSTRIES LTD.( 296 ITR 57 3-MAD) AND ALSO CIT V. TVS MOTOR CO. LTD. (319 ITR 192-MAD), W E FIND THAT IN THE PRESENT CASE, THERE IS NO FAILURE ON THE PAR T OF THE ASSESSEE TO DISCLOSE MATERIAL FACTS AND HENCE REASS ESSMENT PROCEEDINGS AFTER THE EXPIRY OF FOUR YEARS IS NOT P OSSIBLE IN VIEW OF THE PROVISIONS OF SEC.147 OF THE ACT. ACCORDING LY, WE ARE INCLINED TO UPHOLD THE ORDER OF THE CIT(APPEALS) AN D DISMISS THE APPEAL OF THE REVENUE. - - ITA 1397 & CO 84/15 9 7. SINCE, WE HAVE DISMISSED THE APPEAL OF THE REVEN UE, THE CROSS OBJECTION, WHICH IS IN SUPPORT OF THE ORDER O F THE CIT(APPEALS), HAS BECOME INFRUCTUOUS. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED AND THE CROSS OBJECTION OF THE ASSESSEE IS ALSO DISMISS ED AS INFRUCTUOUS. ORDER PRONOUNCED ON FRIDAY, THE 28 TH OF AUGUST, 2015 AT CHENNAI. SD/- SD/- ( $ . . $ . %& ) ( ' ( ) * ) N.R.S.GANESAN + ,-./01.2334.15+ 6 78 /JUDICIAL MEMBER ! 789::3;/<./<=>?@>1 '6 /CHENNAI, A7 /DATED, THE 28 TH AUGUST, 2015. MPO* 7& BCDC /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. E+ /CIT(A) 4. E /CIT 5. CF% G /DR 6. %HI /GF.