Maya C, V. ITO,

ITA 106/BANG/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80651 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 6 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-08-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 12-08-2014
• Assessment Year: 1996-1997
• Appeal Filed On: 01-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M K BIJU J
• Assessee Lawyers: G S PARASHANTH
• Keywords: Capital asset; Principle of natural justice
• Section: 143(3); 54F; 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH C : BANGALORE BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI ABRAHAM P GEORGE , ACCOUNTANT MEMBER ITA NO. 106 / BANG/20 1 3 (ASSESSMENT YEAR: 1996 - 97 ) SMT. MAYA C FLAT NO.6, J BLOCK, 4 TH FLO OR, GOLDEN ORCHID APARTMENTS, 10/8, KASTURBA ROAD, BANGALORE - 560001. APPELLANT PAN : ACCPG6046Q VS. INCOME - TAX OFFICER, WARD 6(2), BANGALORE. RESPONDENT APPELLANT BY: SHRI G.S.PARASHANTH, CA RESPONDENT BY: SHRI M.K.B IJU, JCIT(DR) DATE OF HEARING : 12 - 08 - 2014 DATE OF PRONOUNCEMENT: 22 - 08 - 2014 O R D E R PER SMT. P.MADHAVI DEVI, JM : THIS IS AN APPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER OF THE CIT(A) - IV, BANGALORE, DATED 4 - 2 - 2004 FOR THE ASSESSMENT Y EAR 1996 - 97. THE ASSESSEE IS AGGRIEVED BY THE ORDER OF THE CIT(A) IN CONFIRMING THE DISALLOWANCE OF EXEMPTION ITA NO . 106/BANG/2013 SMT. MAYA C. PAGE 2 OF 7 U/S 54F OF THE INCOME - TAX ACT, 1961[HEREINAFTER REFERRED TO AS 'THE ACT']. 2. ONE OF THE GROUNDS RAISED BY THE ASSESSEE IS ALSO THAT THE CIT(A ) HAS NOT PROVIDED REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE AND THEREFORE IT IS IN VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, AN INDIVIDUAL, WHO IS IN THE BUSINESS OF MONEY LENDING, FILED HE R RETURN OF INCOME FOR THE RELEVANT ASSESSMENT YEAR DECLARING TOTAL INCOME OF RS.38,36,830/ - . DURING THE ASSESSMENT PROCEEDINGS U/S 143(3) OF THE ACT, THE ASSESSING OFFICER (AO) OBSERVED THAT THE ASSESSEE HAS SOLD SOME CONVERTED LAND FOR A TOTAL CONSIDERA TION OF RS.85,30,914/ - TO M/S.BANNER PHARMACAP INDIA PVT. LTD., NARIMAN POINT, MUMBAI AND SOME OTHER PARTY AND THAT THE LAND SOLD TO M/S.BANNER PHARMACAP INDIA PVT. LTD., WAS A MAJOR TRANSACTION FOR A TOTAL CONSIDERATION OF RS.82,85,000/ - . THE AO OBSERVED THAT THE ASSESSEE HAD OFFERED INCOME FROM SALE OF THE PROPERTY AS LONG TERM CAPITAL GAINS AND CLAIMED EXEMPTION U/S 54F OF THE ACT. HOWEVER, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE FILED A LETTER DATED 21 - 12 - 1998 STATING THAT THE LAND S OLD WAS AGRICULTURAL LAND AND THUS WAS NOT FALLING WITHIN THE MEANING OF THE CAPITAL ASSET AND CONSEQUENTLY NO CAPITAL GAINS TAX WAS LEVIABLE. THE AO REQUIRED THE ASSESSEE TO ITA NO . 106/BANG/2013 SMT. MAYA C. PAGE 3 OF 7 FURNISH NECESSARY DETAILS AND ALSO ISSUED A NOTICE U/S 133(6) OF THE ACT TO M/S. BANNER PHARMACAP INDIA PVT. LTD., AS REGARDS THE NATURE OF THE LAND PURCHASED BY THEM. M/S.BANNER PHARMACAP INDIA PVT. LTD., BY LETTER DATED 17 - 2 - 1999 , SUBMITTED THAT THE LAND PURCHASED HAD BEEN CONVERTED TO NON - AGRICULTURAL USE BY THE VENDOR HERSELF AND THAT IT WAS FURTHER CONVERTED FOR INDUSTRIAL PURPOSE S IN FAVOUR OF THE VENDOR WHICH WAS LATER ACQUIRED BY M/S.BANNER PHARMACAP INDIA PVT. LTD., BY SALE DEED DATED 7 - 7 - 1995. IT WAS ALSO SUBMITTED THAT M/S.BANNER PHARMACAP INDIA PVT. LTD., HAS SET UP A FACTORY ON THE SAID LAND WHICH HAS GONE INTO COMMERCIAL PRODUCTION FROM 1 - 1 - 1999. THIS LETTER WAS SUPPLIED TO THE ASSESSEE AND THE ASSESSEE S EXPLANATION WAS CALLED FOR. VIDE LETTER DATED 16 - 3 - 1999, THE ASSESSEE EXPLAINED THAT THE LAND IN QUESTION WAS AGRICULTURAL LAND AND SATISFIED ALL THE CONDITIONS OF AGRICULTURAL LAND. IT WAS SUBMITTED THAT THE ASSESSEE WAS ENCLOSING PHOTO COPIES OF RTC(PAHANI) ISSUED BY THE CONCERNED VILLAGE ASSISTANT , CATEGORICALLY CONFIRMING THE CHARACTERISTICS OF THE LAND AS RE VENUE IN NATURE. HOWEVER, THE ASSESSEE DID NOT FILE COPIES OF PAHANI AS STATED IN THE LETTER AND IN ORDER TO VERIFY THE EXACT NATURE OF THE LAND SOLD BY THE ASSESSEE, THE AO ISSUED LETTER U/S 133(6) OF THE ACT TO THE TAHSILDAR OF ANEKAL TALUQ OF BANGALORE RURAL DISTRICT UNDER WHOSE JURISDICTION THE LANDS OF THE ASSESSEE IN QUESTION WERE SITUATED. IN RESPONSE TO THE SAID NOTICE, THE TAHSILDAR OF ANEKAL TALUQ REPLIED VIDE LETTER DATED 2 - 3 - 1999 THAT THE LAND S IN QUESTION WERE ITA NO . 106/BANG/2013 SMT. MAYA C. PAGE 4 OF 7 CONVERTED INITIALLY IN 1988 AND DURING FINANCIAL YEAR 1990 - 91 TO NON - AGRICULTURAL USE AND THE SAID LANDS WERE LATER CONVERTED FOR INDUSTRIAL USE VIDE OFFICE MEMORANDUM ISSUED ON 30 - 6 - 1995 AND THAT THE ASSESSEE HAD SOLD THE LANDS IN QUESTION TO M/S.BANNER PHARMACAP INDIA PVT. LTD., ON 7 - 7 - 1995 AND SINCE THEN THE PROPERTY IS BEING USED FOR FACTORY/INDUSTRIAL PURPOSE. ON THE BASIS OF THE SAID LETTER OF THE TAHSILDAR, THE AO CAME TO THE CONCLUSION THAT THE LAND IS NOT AGRICULTURAL LAND BUT WAS CONVERTED FOR NON - AGRICULTURAL/INDUSTRIAL USE PR IOR TO SALE AND THEREFORE IT IS A CAPITAL ASSET AND THE SALE PROCEEDS THERE - FROM IS EXIGIBLE TO CAPITAL GAINS TAX. SUBSEQUENTLY, THE AO ALSO CONSIDERED THE ASSESSEE S CLAIM OF EXEMPTION U/S 54F OF THE ACT AND OBSERVED THAT THE ASSESSEE HAS NEITHER PURCHAS ED THE NEW ASSET NOR HAS SHE CONSTRUCTED A NEW HOUSE WITHIN THE STIPULATED PERIOD AND THEREFORE, SHE IS NOT ENTITLED TO THE EXEMPTION U/S 54F OF THE ACT. 4. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). THE CIT(A) HAS RECORDED THAT A NUM BER OF OPPORTUNITIES HAVE BEEN GIVEN TO THE ASSESSEE BUT SINCE THE ASSESSEE FAILED TO APPEAR AND PRODUCE ANY EVIDENCE BEFORE HIM, HE PROCEEDED TO DECIDE THE APPEAL ON THE BASIS OF THE RECORD AVAILABLE WITH HIM. THE CIT(A), ACCORDINGLY, CONFIRMED THE ORDER OF THE AO AND THE ASSESSEE IS IN SECOND APPEAL BEFORE US. ITA NO . 106/BANG/2013 SMT. MAYA C. PAGE 5 OF 7 5. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT BEFORE THE CIT(A) THE FIRST HEARING WAS FIXED ON 12 - 3 - 2002 WHICH NOTICE HAS BEEN SERVED UPON THE ASSESSEE AND THE ASSESSEE HAD SOUGHT AN ADJOURNM ENT WHICH WAS GRANTED BY THE AO. SUBSEQUENTLY, THERE WAS NO NOTICE OF HEARING EXCEPT FOR THE NOTICE DATED 3 - 2 - 2004 AND THE ASSESSEE HAD AGAIN ASKED FOR AN ADJOURNMENT ON THE SAID DATE. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT TH E CIT(A) HAS REFUSED TO TAKE THE ADJOURNMENT REQUEST INTO CONSIDERATION ON THE GROUND THAT THE VAKALATHNAMA OF THE CHARTERED ACCOUNTANT HAS NOT BEEN FILED. THEREAFTER, ON 4 - 2 - 2004, THE CIT(A) HAS PASSED THE APPELLATE ORDER THEREBY NOT AFFORDING SUFFICIEN T OPPORTUNITY TO THE ASSESSEE TO PRESENT HER CASE. ON MERITS ALSO, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE WAS NOT GIVEN AN OPPORTUNITY TO CROSS EXAMINE M/S.BANNER PHARMACAP INDIA PVT. LTD., NOR WAS THE ASSESSEE FURNISHED THE COPY OF THE LETTER OF THE TAHSILDAR STATING THAT THE LAND HAS BEEN CONVERTED TO NON - AGRICULTURAL AND INDUSTRIAL USE PRIOR TO SALE . FURTHER AS REGARDS THE CLAIM OF EXEMPTION U/S 54F OF THE ACT, HE SUBMITTED THAT THE AO HAS RELIED UPON THE LETTER OF THE VENDOR J.S.PATANKAR TO HOLD THAT THE ASSESSEE W AS NOT HANDED OVER POSSESSION OF THE PROPERTY AND THEREFORE THE ASSESSEE HAS NOT PURCHASED THE PROPERTY WITHOUT GIVING ANY OPPORTUNITY TO THE ASSESSEE TO REBUT THE SAME. HE FILED BEFORE US A COPY OF THE SALE DEED BE TWEEN THE VENDOR J.S.PATANKAR AND THE ASSESSEE WHEREIN IT IS MENTIONED THAT THE ITA NO . 106/BANG/2013 SMT. MAYA C. PAGE 6 OF 7 POSSESSION OF THE PROPERTY WAS GIVEN TO THE ASSESSEE W.E.F. JULY 1996. HOWEVER, HE SUBMITTED THAT THIS DOCUMENT HAS BEEN REGISTERED SUBSEQUENT TO THE PASSING OF THE ASSESSMENT ORDER AND THAT THE ASSESSEE HAS FILED A COPY OF THE SAME BEFORE THE CIT(A) AND HAS RAISED AN ARGUMENT BEFORE THE CIT(A) ABOUT THE POSSESSION BEING GIVEN TO THE ASSESSEE BUT THE CIT(A) HAS FAILED TO CONSIDER THE SAME. 6. HAVING HEARD BOTH THE PARTIES AND HAVING CONSIDERED THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT THE ASSESSEE S CLAIM OF THE LANDS BEING AGRICULTURAL LAND, GAIN FROM WHICH IS NOT EXIGIBLE TO CAPITAL GAINS TAX AS WELL AS THE CLAIM OF EXEMPTION U/S 54F HAS NEITHER BEEN CONS IDERED NOR DEALT WITH BY THE CIT(A) IN AN ELABORATE MANNER DULY TAKING NOTE OF THE CONTENTIONS OF THE ASSESSEE. AS SEEN FROM THE ORDER OF THE CIT(A), THE DATES OF HEARING WERE INITIALLY FIXED IN THE YEAR 2002 UPTO 19 - 9 - 2002 AND THEREAFTER THE NOTICE WAS I SSUED FOR HEARING ON 3 - 2 - 2004 ON WHICH DATE THE ASSESSEE HA D SOUGHT FOR AN ADJOURNMENT. BUT THE CIT(A), REFUSING TO GRANT ADJOURNMENT, HAS DISPOSED OF THE APPEAL ON 4 - 2 - 2004. THUS IT IS CLEAR THAT THE ASSESSEE WAS NOT GIVEN AMPLE OPPORTUNITY OF PRESENTING ITS CASE BEFORE THE CIT(A). THE EVIDENCE FILED BY THE ASSESSEE BEFORE THE CIT(A) HAS ALSO NOT BEEN CONSIDERED OR DISCUSSED BY THE CIT(A). THEREFORE, IN OUR OPINION, THE ISSUE NEEDS RE - CONSIDERATION BY THE CIT(A). FURTHER , THE SALE DEED , WHICH HAS BEEN EXECUTED AFTER ITA NO . 106/BANG/2013 SMT. MAYA C. PAGE 7 OF 7 PASSING OF THE ASSESSMENT ORDER , NEEDS VERIFICATION BY THE AO. IN VIEW OF THE SAME, WE DEEM IT FIT AND PROPER TO REMIT THE ISSUE TO THE FILE OF THE AO FOR DE NOVO CONSIDERATION BOTH ON THE ISSUE OF THE LANDS BEING AGRICULTURAL LAND AS WELL AS THE ELIGIBILITY OF THE ASSESSEE TO CLAIM EXEMPTION U/S 54F OF THE ACT. THE ASSESSEE SHALL FILE ALL THE RELEVANT DOCUMENTS BEFORE THE AO AND THE AO SHALL COMPLETE THE ASSESSMENT AFTER GIVING THE ASSESSEE DUE OPPORTUNITY OF HEARING. 7. IN THE RESULT, TH E ASSESSEE S APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. PRON OUNCED IN THE OPEN COURT ON 22 ND OF AUGUST , 201 4. SD/ - SD/ - ( ABRAHAM P GEORGE ) ( SMT. P.MADHAVI DEVI) ACCOUNTANT MEMB ER JUDICIAL MEMBER E KSRINIVASULU , S R.PS COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME - TAX APPELLATE TRIBUNAL BANGALORE