Chaganlal Lalji Aswin, Coimbatore V. ITO, Coimbatore

ITA 1054/CHNY/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1124 (ITAT-CHENNAI)
• Duration Of Justice: 10 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 26-02-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 14-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PATHLAVATH PEERYA
• Assessee Lawyers: K RAGHU
• Keywords: Capital asset
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI BEFORE SHRI ABRAHAM P.GEORGE , ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER ITA NO.1054/MDS/2012 (ASSESSMENT YEAR : 2007-08) MR. CHAGANLAL LALJI ASWIN, NO.3, SYRIAN CHURCH ROAD, COIMBATORE-641 001. PAN : ACLPA 5362L VS. INCOME TAX OFFICER, WARD-III(3), COIMBATORE. (APPELLANT) (RESPONDENT) APPELLANT BY : MR. K.RAGHU, CA., RESPONDENT BY : MR . PATHLAVATH PEERYA, CIT DR DATE OF HEARING : 26 TH FEBRUARY, 2013 DATE OF PRONOUNCEMENT : 18 TH MARCH, 2013 O R D E R PER VIKAS AWASTHY, JM: THE APPEAL HAS BEEN FILED BY THE ASSESSEE IMPUGNIN G THE ORDER OF THE CIT-I, COIMBATORE DATED 27.03.2012 PASSED UNDER SECTION 263 OF THE INCOME TAX ACT, 1961. THE CIT INVOKED THE PROVISIONS OF SECTION 263 OF THE ACT T O ASSESS THE SALE PROCEEDS OF THE AGRICULTURAL LAND UNDER THE HE AD PROFITS AND GAINS FROM BUSINESS. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A CHARTERED ACCOUNTANT BY PROFESSION. HE FILED HIS R ETURN OF ITA NO.1054/MDS/2012 2 INCOME FOR THE ASSESSMENT YEAR 2007-08 ON 30.03.200 9 ADMITTING INCOME OF ` 86,470/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND NOTICE UNDER SECTION 143 (2) WAS ISSUED TO HIM ON 3.9.2009. THE ASSESSEE HAD PURCHAS ED LAND ON 11.9.2006 FOR ` 39,74.914/- (INCLUDING STAMP DUTY AND SALE COMMISSION). THE SAME LAND WAS SOLD BY THE ASSESSEE ON 22.12.2006 FOR A SALE CONSIDERATION OF ` 1,82,49,000/-. THE ASSESSEE CONTENDED THAT THE LAND IS AN AGRICULTURA L LAND, THE LAND IS SITUATED MORE THAN 8 KMS FROM THE MUNICIPAL LIMITS OF COIMBATORE, THEREFORE THE SALE CONSIDERATION IS EXE MPT FROM TAX UNDER THE PROVISIONS OF THE INCOME TAX ACT. TH E ASSESSING OFFICER VIDE ASSESSMENT ORDER DATED 30.12 .2009 HELD THAT THE GAIN ARISING OUT OF SALE OF THE LAND IN QUESTION IS SHORT TERM CAPITAL GAIN. THE ASSESSING OFFICER FURT HER HELD THAT THE ASSESSEE HAS NOT GIVEN ANY PROOF OF PAYMENT OF SALE COMMISSION AMOUNTING TO ` 17,38,000/- THEREFORE THE SAME IS NOT ALLOWABLE. HENCE, ADDITION WAS MADE TO THE TUNE OF ` 1,62,74,232/- IN THE INCOME RETURNED BY THE ASSESSE E. AGGRIEVED AGAINST THE ASSESSMENT ORDER, THE ASSESS EE CARRIED APPEAL TO THE CIT(A). THE CIT(A) VIDE ORDER DATED ITA NO.1054/MDS/2012 3 28.02.2011 ALLOWED THE APPEAL OF THE ASSESSEE HOLDI NG THAT, SINCE THE PROPERTY IN QUESTION IS SITUATED MORE THA N 8 KMS FROM THE OUTER LIMITS OF COIMBATORE CORPORATION, IT CANNOT BE TREATED AS A CAPITAL ASSET UNDER SECTION 2(14)(III) (B) OF THE INCOME TAX ACT AND DIRECTED THE ASSESSING OFFICER T O DELETE THE ADDITION. 3. THE REVENUE ASSAILED THE ORDER OF THE CIT(A) BEF ORE THE TRIBUNAL VIDE ITA NO.856/MDS/2011. THE TRIBUNAL VIDE ORDER DATED 21 ST OCTOBER, 2011 DISMISSED THE APPEAL OF THE REVENUE BY UPHOLDING THE OBSERVATIONS OF THE CIT(A) . THE CIT INITIATED PROCEEDINGS UNDER SECTION 263 OF THE ACT ON THE SAME ISSUE WHICH WAS SUB JUDICE BEFORE THE TRIBUNAL . SHOW CAUSE NOTICE DATED 14.11.2011 WAS SERVED ON THE ASS ESSEE TO ASSESS THE ENTIRE SALE CONSIDERATION UNDER THE H EAD PROFITS AND GAINS FROM BUSINESS. THE ASSESSEE VIDE LETTER D ATED 19.11.2011 GAVE REPLY TO THE SHOW CAUSE NOTICE. TH EREAFTER, THE CIT VIDE IMPUGNED ORDER DATED 27.3.2012 DIRECTE D THE ASSESSING OFFICER TO REDO THE ASSESSMENT AFRESH. T HE CIT FURTHER DIRECTED THE ASSESSING OFFICER TO THOROUGHL Y VERIFY THE SOURCES OF INVESTMENT IN LAND AND ASSESS THE UNEXP LAINED ITA NO.1054/MDS/2012 4 INVESTMENT IF ANY, IN THE HANDS OF THE ASSESSEE AS INCOME FROM BUSINESS. THE CONSIDERATION RECEIVED ON TRAN SFER/SALE OF THE LAND IS TO BE ASSESSED AS INCOME FROM BUSINE SS AFTER ALLOWING ONLY EXPENSES VIZ. STAMP-DUTY AND REGISTRA TION CHARGES, SUBJECT TO THE EVIDENCE PRODUCED BY THE AS SESSEE. THE ASSESSEE HAS COME IN APPEAL ASSAILING THE ORDER OF THE CIT. 3. SHRI K.RAGHU APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE ORDER PASSED BY THE CIT IS WITHO UT JURISDICTION AS THE ISSUE HAD ALREADY BEEN DECIDED BY THE TRIBUNAL IN FAVOUR OF THE ASSESSEE. THE AR CONTENDE D THAT THE CIT HAS EXCEEDED HIS JURISDICTION IN REOPENING THE ISSUE WHICH HAS ALREADY BEEN ADJUDICATED BY THE HIGHER FO RUM. THE ORDER OF THE ASSESSING OFFICER MERGED WITH THE ORDE R OF THE CIT(A). THE DEPARTMENT HAD FILED AN APPEAL AGAINST THE ORDER OF THE CIT(A). THE ORDER OF THE CIT(A) HAS NOW BEEN MERGED WITH THE ORDER OF THE TRIBUNAL DATED 21.10.2011. TH EREFORE, THE CIT HAS NO POWER TO INITIATE PROCEEDINGS UNDER SECTION 263 OF THE ACT AND RAKE UP THE ISSUE AGAIN WHICH HA S ALREADY BEEN ADJUDICATED. THE AR POINTED OUT THAT THE CIT W AS VERY ITA NO.1054/MDS/2012 5 MUCH AWARE OF THE FACT THAT APPEAL OF THE REVENUE I S PENDING BEFORE THE TRIBUNAL. THIS FACT HAS BEEN NOTICED IN THE SHOW CAUSE NOTICE DATED 14.11.2011 WHICH IS AT PAGE 32 T O 34 OF THE PAPER BOOK, WHEREIN THE CIT HAS SPECIFICALLY ST ATED : THE ISSUE HAS BEEN TAKEN BY THE DEPARTMENT BEFORE ITAT. , CHENNAI, WHICH IS TO BE DISPOSED OFF, AS ON DATE. WHEREAS THE TRIBUNAL HAD ALREADY PRONOUNCED THE ORDER IN T HE APPEAL OF THE REVENUE ON 21.10.2011 I.E. PRIOR TO THE ISSU ANCE OF SHOW CAUSE NOTICE UNDER SECTION 263 OF THE ACT. TH E AR SUBMITTED THAT EVEN OTHERWISE THE LAND IN QUESTION IS BEYOND 8 KMS. FROM THE OUTER LIMITS OF THE CITY OF COIMBAT ORE. 4. ON THE OTHER HAND, THE DR SUBMITTED THAT THE ORD ER OF THE CIT UNDER SECTION 263 IS A WELL-REASONED ORDER. THE ASSESSMENT ORDER IS ERRONEOUS AND IS DETRIMENTAL T O THE INTEREST OF THE REVENUE. HE FURTHER CONTENDED THAT THE INTENTION IS TO BE SEEN AND NOT THE NATURE OF THE LAND. IN THE PRESENT CASE, THE INTENTION OF THE ASSESSEE WAS CLE ARLY TO EARN GAIN BY SALE OF LAND WITHIN A SHORT PERIOD OF TIME. 5. WE HAVE HEARD THE SUBMISSIONS MADE BY BOTH THE PARTIES. WE HAVE ALSO PERUSED THE ORDER OF THE LOW ER ITA NO.1054/MDS/2012 6 AUTHORITIES AND THE JUDGEMENTS/ORDERS REFERRED TO B Y THE AR. WE FIND THAT THE CIT HAS INITIATED THE PROCEEDINGS UNDER SECTION 263 OF THE ACT ON THE GROUND WHICH HAS ALRE ADY BEEN DECIDED BY THE TRIBUNAL IN THE APPEAL OF THE REVENU E. IT IS AN ADMITTED FACT THAT THE ASSESSEE HAD PURCHASED LAND ON 11.9.2006 AND SOLD THE SAME WITHIN A SHORT SPAN OF 3 MONTHS ON 22.12.2006. THE CIT(A) HAD ALLOWED THE A PPEAL OF ASSESSEE ON THE GROUND THAT THE LAND IN QUESTION I S SITUATED MORE THAN 8 KMS FROM THE OUTER LIMITS OF COIMBATORE CORPORATION THEREFORE, IT CANNOT BE TREATED AS CAP ITAL ASSET UNDER SECTION 2(14)(III) (B) OF THE INCOME TAX ACT, 1961. THE TRIBUNAL VIDE ITS ORDER DATED 21.10.2011 IN ITA NO.857/MDS/2011 IN ASSESSEES CASE FOR THE ASSESSME NT YEAR 2007-08 UPHELD THE FINDINGS OF THE CIT(A) AND DISM ISSED THE APPEAL OF THE REVENUE. THE CIT IN ORDER TO TAX THE INCOME EARNED BY THE ASSESSEE FROM THE SALE OF AGRICULTURE LAND INVOKED THE PROVISIONS OF SECTION 263 OF THE ACT AN D DIRECTED THE ASSESSING OFFICER TO TREAT THE SAME AS BUSINES S INCOME. WE FIND THAT THE CIT HAS CLEARLY EXCEEDED HIS JURIS DICTION IN RAKING UP THE ISSUE AGAIN, WHEREAS THE ISSUE HAS AL READY ITA NO.1054/MDS/2012 7 BEEN DECIDED BY THE HIGHER FORUM. THE CIT FELL IN ERROR IN SETTING ASIDE THE ASSESSMENT ORDER DATED 30.12.2009 PASSED UNDER SECTION 143(3) OF THE ACT. EVEN IF THE VIEW O F CIT IS ONE OF THE POSSIBLE VIEWS, ONCE AN APPEAL IS FILED AGAI NST THE ASSESSMENT ORDER AND THE APPEAL HAS BEEN DECIDED BY A HIGHER FORUM, THE ORDER OF THE ASSESSING OFFICER IS MERGED WITH THE ORDER OF THE APPELLATE AUTHORITY. ON THE A PPEAL OF THE REVENUE, THE ORDER OF THE CIT(A) HAS MERGED WITH TH E ORDER OF THE TRIBUNAL. ONCE THE ORDER OF THE LOWER AUTHOR ITY HAS BEEN MERGED WITH THE ORDER OF THE APPELLATE AUTHORI TY, THE CIT HAS NO POWER TO SET ASIDE THE ASSESSMENT ORDER. THE AR HAS RELIED ON THE JUDGEMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF RANKA JEWELLERS VS. ADDL. CIT REPORTED AS 328 ITR 148(BOM), WHEREIN THE HONBLE HIGH COURT HAS HE LD THAT THE POWER OF THE CIT TO INVOKE HIS JURISDICTION CAN ONLY BE EXTENDED TO SUCH MATTERS WHICH HAVE NOT BEEN CONSID ERED AND DECIDED IN THE APPEAL. IN THE INSTANT CASE THE CIT MISSES THE OPPORTUNITY TO INVOKE THE PROVISIONS OF SECTION 263 AFTER THE ORDER OF THE APPELLATE AUTHORITY. THE ISSUE TAK EN UP IN PROCEEDINGS U/S.263 HAS ALREADY BEEN CONSIDERED AND ITA NO.1054/MDS/2012 8 ADJUDICATED BY THE TWO APPELLATE AUTHORITIES, THERE FORE, THE ORDER OF CIT IS BAD IN LAW. 6. IN VIEW OF THE ABOVE STATED FACTS AND CIRCUMSTAN CES OF THE CASE, WE SET ASIDE THE ORDER OF THE CIT AND ALL OW THE APPEAL OF THE ASSESSEE. ORDER PRONOUNCED IN THE OPEN COURT ON MONDAY, T HE 18 TH DAY OF MARCH, 2013 AT CHENNAI. SD/- SD/- (ABRAHAM P.GEORGE ) (VIKAS AWASTHY) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED THE 18 TH MARCH, 2013. SOMU COPY TO: (1) APPELLANT (4) CIT(A) (2) RESPONDENT (5) D.R. (3) CIT (6) G.F.