DURGA DASS SINGHAL,DARYA GANJ V. INCOME TAX OFFICER, CIVIC CENTRE

ITA 2937/DEL/2024

AI Insights

The case involves an appeal by Durga Dass Singhal against the reassessment order for the assessment year 2012-13, which added a substantial amount to his declared short-term capital gains based on information received about a property sale. The primary legal contention was the improper procedure followed by the AO in passing the reassessment order without adhering to the mandatory waiting period after disposing of the assessee's objections. The Tribunal admitted additional legal grounds raised by the assessee, focusing on the jurisdictional and procedural improprieties in the reassessment process.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 313992 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Other Referred Cases: National Thermal Power Ltd. Vs. CIT, Jute Corporation of India Ltd. vs. CIT, Asian Paints Ltd. vs DCIT, Pradyot K. Misra vs ACIT, Samsung India Electronics (P.) Ltd. vs. CIT, ITO vs Smt. Nirmala Vijay Sanklecha, KN Driveshafts (India) Ltd. Vs. Income Tax Officer & Ors., KSS Petron Private Ltd. Vs. The Assistant Commissioner of Income Tax
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR DHANESTA
• Assessee Lawyers: R.S. SINGHVI; RAJAT
• Keywords: Reassessment proceedings; Sale consideration of property below Jantri Value; Cost of acquisition; Reopening of assessment; Valuation report; Borrowed satisfaction
• Section: 147; 148; 143(3); 90; 50C

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “B”, NEW DELHI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER, AND SHRI SUDHIR PAREEK, JUDICIAL MEMBER ITA NO. 2937/Del/2024 A.YR. : 2012-13 DURGA DASS SINGHAL, 309, THIRD FLOOR, VARDAAN HOUSE, 7/28, STREET NO. 7, ANSARI ROAD, MAHAVIR STREET, DARYA GANJ, CENTRAL DELHI, NEW DELHI – 110 002 (PAN: AANPS5233J) VS. INCOME TAX OFFICER, CIVIC CENTRE, WARD 61(1), NEW DELHI (APPELLANT) (RESPONDENT) Appellant by : Sh. R.S. Singhvi, CA & Sh. Rajat Garg, CA Respondent by : Sh. Rajesh Kumar Dhanesta, Sr. DR. Date of hearing : 06.05.2025 Date of pronouncement : 06.05.2025 ORDER PER SHAMIM YAHYA, AM : This appeal by the assessee has been directed against the order of the NFAC, Delhi dated 19.05.2024 pertaining to assessment year 2012-13 on the following grounds of appeal:- 2 | P a g e 1(i) That on facts and circumstances of the case, the reasons being recorded merely on the basis of AIR information without conducting any independent application of mind or investigation, the reopening u/s 148 is illegal and a classic case of borrowed satisfaction. (ii) That in absence of proper approval in terms of provisions of section 151 of the Act, the notice u/s 148 is illegal and without jurisdiction. 2(i) That on the facts and circumstances of the case, the action of the CIT(A) in confirming the addition of Rs. 53,24,077/- made u/s 50C of the Income Tax Act, 1961 by adopting Stamp Duty Value as \"Full Value of Consideration\" without appreciating the actual consideration received for sale of property rights is misconceived and contrary to the settled legal position. (ii) That the lower authorities have even failed to take notice that the provisions of Section 50C are not applicable as this is neither a case of sale of land nor building. (iii) That even otherwise, the claim of sales consideration being supported from valuation report filed by the appellant, the impugned addition made by the Assessing officer in terms of provisions of section 50C without making reference to DVO is illegal and not sustainable under law. 3(i) That in any case, working of Capital Gain is highly arbitrary and unjustifiable as A.O. has totally disregarded cost of acquisition of rights in property duly supported by purchase deed. (ii) That there being no dispute with regard to claim of cost of acquisition and same being not the subject matter of dispute or part of reasons, the impugned disallowance of cost of acquisition 3 | P a g e of property rights is highly arbitrary and in total disregard to documentary evidences on record. 4. That the appellant craves leave to add, amend, alter or forgo any or all of the grounds as may be necessary and in the interest of justice. 2. The Ld. Counsel for the assessee submits that assessee has filed additional legal grounds of appeal with a prayer to admit the additional grounds. He placed reliance on the decision of the Hon’ble Supreme Court in the case of National Thermal Power Ltd. Vs. CIT (229 ITR 383 and Jute Corporation of India Ltd. vs. CIT 187 ITR 688 (SC). 3. Heard rival contentions. The assessee has raised the following additional grounds in the appeal: 1.1 That on the facts and circumstances of the case, the action of the AO in passing the reassessment order without following the proper procedure is illegal and without jurisdiction. 1.2 That the objections having being disposed off the AO on 25.11.2019 and as such reassessment order passed on 30.11.2019 without allowing the mandatory period of four weeks is liable to be quashed. 4. The additional grounds raised by the assessee are purely legal grounds and goes to the root of the matter, thus, respectfully following the decisions of the Hon’ble Supreme Court in the cases of NTPC Vs. CIT and Jute Corporation of India Ltd. Vs. CIT (supra) the additional grounds filed by the assessee are admitted. 5. Brief facts of the case are that during the year under consideration, the assessee was having income under the head income from business and profession, short term capital gain and income from other sources. On analysis of return of income filed for the AY 2012-13, it was noticed by the AO that the Assessee has 4 | P a g e calculated Short Term Capital of Rs. 55,923/-. Computation of Capital Gain as per the computation is reproduced as under:- Short Term Capital Gain a. Full value of consideration 32,71,780/- Less: Cost of Acquisition 29,78,302/- Less: Cost of improvement 1,80,000/- Less: Expenditure on transfer 57,555/- Total 32,15,857/- Short term capital gain 55,923/- Further, in this case, information was received from the ITO, Ward 1(2), Ghaziabad that assesse has sold property to the tune of Rs. 53,80,000/- on 28.07.2021 and the assessee has not taken the correct value of the property as per provisions of section 50C of the I.T. Act. AO has proceeded to add a sum of Rs. 53,24,077/- (Rs.53,80,000 – Rs. 55,923 already shown). Upon assessee’s appeal Ld. CIT(A) confirmed the same. 6. Against this order, assessee is in appeal before us. 7. At the outset, ld. Counsel for the asssessee pressed the additional grounds. He submitted that “Additional ground has been raised for challenging the jurisdiction of the Assessing Officer in passing the Re-assessment Order u/s 147 of the Income Tax Act, 1961 without following the mandatory procedure for disposing-off the objections raised by the Assessee. It is a settled legal position that the Assessing officer shall allow a period of four weeks to the Assessee from the date of the objection disposing- off Order before proceedings with the finalization of the Assessment. Reference in this regard may be made to the following direct judgments: i. Asian Paints Ltd. vs DCIT 2008] 296 ITR 90 (Bombay HC) Section 148 of the Income-tax Act, 1961 - Income escaping assessment - Issue of notice for - If Assessing Officer does not accept objections filed to notice under section 148, he shall not proceed further in matter to pass assessment order within a very short period e.g. four weeks or so from date of receipt of service of said order on objections on assessee. ii. Pradyot K. Misra vs ACIT [2023] 157 taxmann.com 253 (Delhi HC) 5 | P a g e 17. We may note that in a later judgment of a coordinate bench of this court rendered in titled Samsung India Electronics (P.) Ltd. (supra), this court categorically held that if objections of the assessee are rejected, then the AO should accord at least three weeks to the assessee to enable him to approach the court before taking up reassessment proceedings. This judgment was passed on 8-11-2013, which was a date well before the date when the objections preferred by the petitioner were dismissed. Therefore, clearly even this court by the time the objections were rejected in the instant case, had provided a minimum hiatus of three weeks between the date when the objections are rejected and an assessment order is passed. 18. We may however note that it is accepted by Mr Das and Ms Jha that the judgment rendered by this court in Samsung India Electronics (P.) Ltd. case (supra) was perhaps not cited before the AO. But according to us that by itself would not be a sufficient cause to side step to principle of hiatus which was declared by the other High Courts, and judgments of those High Courts were concededly cited before the AO. iii. ITO vs Smt. Nirmala Vijay Sanklecha ITA No.1937/PUN/2016 [Dt. 23/02/2018] 11. The Hon'ble Apex Court in unequivocal terms has held that the Assessing Officer is bound to dispose of objections by passing a speaking order. A perusal of the above ordersheet entry dated 24-02-2014 shows that the Assessing Officer in a single line dismissed the objections without giving any reason. Thus, the aforesaid order by Assessing Officer in the ordersheet cannot be said to be speaking order as has been envisaged by the Hon'ble Apex Court in the case of KN Driveshafts (India) Ltd. Vs. Income Tax Officer & Ors. (supra). 12. Be that as it may, the Assessing Officer on the immediately next day i.e. 25-02-2014 proceeded on to pass the assessment order u/s. 143(3) r.w.s. 147 of the Act, without affording opportunity to the assessee to exhaust remedy, if any available for assailing said order before appropriate forum. 13. The Hon'ble Jurisdictional High Court in the case of Asian Paints Ltd. Vs. Deputy Commissioner of Income Tax (supra) has held that where the Assessing Officer rejects the objections filed by the assessee with regard to re-opening of assessment, the Assessing Officer shall not proceed further with the same for a period of four weeks 6 | P a g e from the date of service of order on rejections. Thus, the Assessing Officer violated the conditions laid down by Hon'ble Jurisdictional High Court in accelerating finalization. 14. The procedure that has emerged from judgments discussed above is, that the Assessing Officer is duty bound to decide the objections of the assessee against initiation of reassessment proceedings by passing a separate speaking order. Thereafter, the Assessing Officer shall give four weeks time to the assessee from the date of service of the said order before proceeding with the finalization of assessment. The Hon'ble Jurisdictional High Court in the case of KSS Petron Private Ltd. Vs. The Assistant Commissioner of Income Tax (supra) has reassessment proceedings were the Assessing Officer has not followed the proper procedure as mandated for disposing of the objections of the assessee on reopening.” 8. Per contra, the Ld. DR relied upon the orders of the authorities below. But he could not controvert the submissions of the assessee that in this case AO has passed the order without giving adequate opportunity after disposing of the objections. 9. Upon careful consideration, we note that in this case objections were filed by the assessee against the reasons for reopening. The same were disposed of by the AO on 25.11.2019, but the reassessment order was passed by the AO on 30.11.2019 within the period of 5 days. This short period is against the principle laid down by the Hon’ble High Court in the case of Asian Paints Ltd. vs. DCIT [2008] 296 ITR 90 wherein it has been held that AO shall allow a period of 4 weeks to assessee from the date of the objection disposing-off before proceedings with the finalization of assessment. In this view of the matter, the case laws of the Hon’ble High Court in the case of Asian Paints (supra); Hon’ble Jurisdictional High Court decision in the case of Pradyot K. Misra vs. ACIT (2023) 57 taxmann.com 253 (Delhi High Court) and ITAT, Pune Bench decision in the case of ITO vs. Smt. Nirmala Vijay Sanklecha ITA No. 1937/Pun/2016 dated 23.2.2018 are squarely applicable. Since the AO has not given adequate time before finalizing of the assessment, after disposing of the objection, the assessment is liable to be quashed. Accordingly, we quash the assessment and allow the additional grounds of appeal. Since we have already 7 | P a g e quashed the assessment while adjudicating the additional grounds of appeal, as aforesaid, hence, other issues have become academic thus need not be adjudicated. 10. In the result, the appeal of the assessee is allowed. Order pronounced on 06.05.2025. Sd/- (SUDHIR PAREEK) Sd/- (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER SRBHATNAGAR Copy forwarded to:- 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR, ITAT Assistant Registrar "