Shri Navin Shantilal Patel(HUF), Anand V. The CIT-II, Baroda

ITA 1062/AHD/2013

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8912 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 11 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 15-03-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 16-04-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Business income; Assessment record
• Section: 143(3); 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD SMC/A BENCH AHMEDABAD BEFORE, SHRI S. S. GODARA, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO.1062/AHD/2013 (ASSESSMENT YEAR:2008-09) SHRI NAVIN SHANTILAL PATEL (HUF) PROP. D. NAVIN & CO., STATION ROAD, ANAND APP ELLANT VS. THE CIT-II, BARODA R ESPONDENT PAN: AACHP3277Q /BY ASSESSEE : SHRI TUSHAR P. HEMANI, A.R. /BY REVENUE : SHRI PARVEEN KUMAR, SR. D.R. /DATE OF HEARING : 15.03.2017 /DATE OF PRONOUNCEMENT : 20.03.2017 ORDER PER S. S. GODARA, JUDICIAL MEMBER THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2008-09 EMANATES AGAINST THE CIT-II, BARODAS ORDER DATED 08.03.2013 EXERCIS ING REVISION JURISDICTION IN DIRECTING THE ASSESSING OFFICER TO FRAME AFRESH ASSESSMENT AFTER ANNULLING THE EARLIER REGULAR ASSESSMENT DATED 07.12.2010, IN PROCEEDINGS U/S.263 OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. 2. THIS ASSESSEE IS AN HUF. IT DRAWS INTEREST INCO ME, AGRICULTURE INCOME AND PROFITS ON LANDS SETTLEMENT. THE ASSESSEE FILE D ITS RETURN ON 27.08.2008 DECLARING TOTAL INCOME OF RS.18,530/-. THE ASSESSI NG OFFICER APPEARS TO HAVE ITA NO. 1062/AHD/2013 [SHRI NAVIN S. PATEL (HUF) VS . CIT(A)-II] A.Y. 2008-09 - 2 - FRAMED A REGULAR ASSESSMENT IN QUESTION ON 07.12.20 10 ASSESSING TOTAL TAXABLE INCOME AS RS.37,34,130/-. THE SAME WAS ALLOWED TO BE REDUCED BY BROUGHT FORWARD LOSSES OF RS.37,34,130/- LEAVING BEHIND NIL INCOME. 3. THE INSTANT CASE FILE REVEALS THAT THE LEARNED C IT THEREAFTER ISSUED A SHOW CAUSE NOTICE ON 21.12.2012 SEEKING TO REVISE T HE ABOVE REGULAR ASSESSMENT BY TERMING IT AS ERRONEOUS CAUSING PREJU DICE TO INTEREST OF THE REVENUE FOR THE FOLLOWING REASONS: ON VERIFICATION OF THE PROFIT AND LOSS ACCOUNT, AN AMOUNT OF RS. 31,20,000/- WAS CREDITED UNDER THE HEAD 'OTHER INCOME' BEING PROFIT DERIVED ON ACCOUNT OF LAND. FROM THE RECORD, IT TRANSPIRES THAT RS. 31,20,000/- WAS PROFIT FROM LAND SOLD BY M/S. DHANVARSHA FINANCE AND LEASING CO. LTD. FOR WH ICH IT WAS CONFIRMATORY PARTY. THE ASSESSEE MR. NAVIN SHANTILAL PATEL (HUF) IS ENGAGED IN THE BUSINESS OF TRADING IN SHARES AND FINANCE ACTIVITY AS PROPRIETO R UNDER THE NAME AND STYLE OF M/S. D. NAVIN & CO. THE CHARTERED ACCOUNTANT IN FOR M NO. 3CD TOO HAD CERTIFIED THE NATURE OF BUSINESS AS 'SHARE TRADING AND FINANC E' AND HAD NOT REPORTED ANY CHANGE IN THE NATURE OF BUSINESS DURING THE PREVIOU S YEAR. NEITHER THE ASSESSEE WAS CARRYING ON THE BUSINESS OF REAL ESTATE AND ACC ORDINGLY, THE PROFIT DERIVED AS CONSIDERATION FOR CONFIRMING PARTY TO THE LAND SOLD WAS NOT OUT OF THE BUSINESS ACTIVITY. HENCE, THE INCOME SO DERIVED WAS NOT CHAR GEABLE TO TAX UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS OR PROFESSION'. THER EFORE THE ASSESSEE IS LAWFULLY LIABLE TO INCOME TAX ON RS. 31,20,000/- UNDER THE H EAD INCOME FROM OTHER SOURCES. CONSEQUENTLY SET OFF OF BROUGHT FORWARD BUSINESS LO SSES AGAINST INCOME FROM OTHER SOURCES WAS NEITHER IN ORDER NOR AS PER THE PROVISI ONS OF THE IT ACT 1961. IT WAS FURTHER NOTICED THAT ASSESSEE HAD BROUGHT FO RWARD BUSINESS LOSSES OF RS. 71,39,598/- PERTAINING TO ASSESSMENT YEAR 2001-2002 OF WHICH RS. 37,34,130/-WAS SET OFF AGAINST THE INCOME FOR ASSESSMENT YEAR 2008 -09 AND REMAINING RS. 34,05,468/- WAS CARRIED FORWARD TO SUBSEQUENT YEAR( S). HOWEVER, ON PERUSAL OF THE ASSESSMENT RECORDS, IT WAS OBSERVED THAT THE ASSESS MENTS COMPLETED UNDER SECTION 143(3) OF THE ACT FOR A.YRS 2006-2007 & 2007-2008 H AD RESULTED IN ADDITIONS OF RS. 7,70,889/-AND RS. 3,52,087/- RESPECTIVELY. THUS , THE BUSINESS LOSS ALLOWABLE FOR CARRY FORWARD AND SET OFF AS ON 1/4/2007 OF PREVIOU S YEAR 2007-08 RELEVANT TO AY 2008-09 IS RS. 58,89,987/- ONLY AS AGAINST RS. 71,3 9,598/- CLAIMED BY THE ASSESSEE. 4. IT IS EVIDENT THAT THE ASSESSEE STRONGLY CONTEST ED THE ABOVE REVISION PROPOSAL BY SUBMITTING THAT THE ASSESSING OFFICERS REGULAR ASSESSMENT IN QUESTION HAD BEEN FRAMED AFTER MAKING ALL DUE ENQUI RIES. THE ASSESSEE HIGHLIGHTED THE FACT THAT A SETTLEMENT AMOUNT OF RS .12LACS IN ASSESSMENT YEAR ITA NO. 1062/AHD/2013 [SHRI NAVIN S. PATEL (HUF) VS . CIT(A)-II] A.Y. 2008-09 - 3 - 2003-04 STATED AS BUSINESS INCOME HAD BEEN ACCEPTED . IT FURTHER PLEADED THAT THE IMPUGNED REGULAR ASSESSMENT WAS NEITHER A CASE OF BEING ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE CI T HOWEVER REJECTS THE SAME IN THE ORDER UNDER CHALLENGE BY OBSERVING THAT THE ASSESSING OFFICER HAD ALLOWED THE ABOVE SET OF CLAIM WITHOUT EXAMINING IT S CORRECTNESS THEREBY CONDUCTING A MECHANICAL VERIFICATION ONLY. HE THUS DIRECTS THE ASSESSING OFFICER TO FRAME AFRESH ASSESSMENT LEAVING BEHIND T HE ASSESSEE AGGRIEVED. 5. WE HAVE HEARD RIVAL SUBMISSIONS. RELEVANT FINDI NGS PERUSED. LEARNED AUTHORIZED REPRESENTATIVE STRONGLY ARGUES THAT THE ASSESSING OFFICER HAD FRAMED THE ASSESSMENT IN QUESTION AFTER ISSUING SCR UTINY NOTICES THEREBY CONSIDERING THE ISSUE IN QUESTION IN GREAT DETAIL. HE TAKES US TO PAGE 4 OF THE PAPER BOOK CONTAINING SECTION 142(1) NOTICE CUM QUE STIONNAIRE DATED 08.10.2010 SEEKING ALL SUPPORTIVE DOCUMENTS UNDER V ARIOUS HEADS OF INCOME ALONGWITH A LIST OF ALL ASSETS. THE ASSESSEE FILED ITS REPLY ON 21.10.2010. LEARNED COUNSELS CASE ACCORDINGLY IS THAT ALL THIS MATERIAL ALONGWITH ASSESSEES LEDGER ACCOUNT FORMING PART OF THE CASE FILE MAKES IT CRYSTAL CLEAR THAT THE REGULAR ASSESSMENT IN QUESTION STOOD COMPL ETED AFTER ALL FACTUAL VERIFICATIONS AS WELL AS EXAMINATION OF THE ISSUE I N QUESTION AT LENGTH. 6. WE SOUGHT TO KNOW FROM LEARNED COUNSEL ABOUT THE INCOME IN QUESTION DERIVED FROM ASSESSEES ACT AS A CONFIRMING PARTY R ECEIVING AN AMOUNT OF RS.32.45LACS. SHRI HEMANI SUBMITS THAT THE ASSESSE ES ROLE AS A CONFIRMING PARTY RESULTED IN THE INCOME IN QUESTION WHICH WAS SET OFF AGAINST BROUGHT FORWARD BUSINESS LOSSES. LEARNED COUNSEL CONTENDS THAT THE LEARNED CIT HAS FURTHER ERRED IN RESTORING THE ASSESSMENT BACK TO T HE ASSESSING OFFICER AS PER HONBLE DELHI HIGH COURTS DECISION IN DG HOUSING P ROJECT CASE [2012] 343 ITR 329. HE ACCORDINGLY PRAYS FOR REVERSING THE CI TS FINDINGS IN QUESTION. ITA NO. 1062/AHD/2013 [SHRI NAVIN S. PATEL (HUF) VS . CIT(A)-II] A.Y. 2008-09 - 4 - 7. LEARNED DEPARTMENTAL REPRESENTATIVE STRONGLY SUP PORTS THE CITS ACTION IN QUESTION. 8. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO RI VAL CONTENTIONS. THE ASSESSEE ADMITTEDLY ACTED AS A CONFIRMING PARTY IN A SALE DEED RESULTING IN THE INCOME IN QUESTION IN THE NATURE OF PROFITS OF RS.3 1.2LACS. IT SET OFF THE SAME AGAINST BROUGHT FORWARD LOSSES. THE CIT IS OF THE OPINION THAT THE ASSESSING OFFICER DID NOT CONDUCT ANY INQUIRY ON THIS ISSUE B EFORE ALLOWING THE SET OFF AS THE SAME WAS NOT IN THE NATURE OF BUSINESS INCOM E. WE FIRST COME TO ASSESSEES ARGUMENT THAT THE ASSESSING OFFICER HAD DULY APPLIED HIS MIND. PAGE 4 OF THE PAPER BOOK ADMITTEDLY CONTAINS A QUES TIONNAIRE ON ASSESSING OFFICERS PART ABOUT SUPPORTING DOCUMENTS FOR INCOM E SHOWN UNDER VARIOUS HEADS OF INCOME. HIS ASSESSMENT ORDER IN QUESTION DATED 07.12.2010 ALSO COMPRISES OF PARA NO.3 STATING DETAILS OF THE TRANS ACTION IN QUESTION. HE OBSERVES THAT COPY OF THE SAID DEED STOOD SUBMITTED WHICH WAS VERIFIED AND FOUND IN ORDER. WE OBSERVE IN THIS BACKDROP THAT T HERE IS NOT EVEN AN IOTA OF QUERY RAISED ON ASSESSING OFFICERS PART SEEKING TO KNOW ABOUT THE FACT AS TO HOW THE ASSESSEE WAS ENGAGED IN REAL ESTATE BUSINES S. WE WISH TO REPEAT HERE THAT PAGE 6 OF THE PAPER BOOK IS ASSESSEES REPLY D ATED 21.10.2010 SPECIFIES ITS NATURE OF ACTIVITIES TO BE SHARE TRADING, PROFE SSIONAL (DATA ENTRY) AND OTHER ACTIVITIES. WE FURTHER DO NOT FIND ANY EVIDENCE IN THE CASE FILE POINTING OUT THE ASSESSEE TO HAVE BEEN ENGAGED IN ANY ORGANIZED ACTIVITY IN THE NATURE OF TRADE OR BUSINESS DEALING IN LAND TRANSACTIONS. LE ARNED COUNSEL SEEKS TO PLACE RELIANCE UPON 2003-04 ASSESSMENT THAT SIMILAR CLAIM WAS ACCEPTED. THIS PLEA FAILS TO CONVINCE US SINCE THERE IS A LONG TIME GAP OF FIVE ASSESSMENT YEARS NOT INDICATING SUFFICIENT NUMBER OF LAND TRANSACTIONS W HICH COULD LEAD US TO AN INFERENCE THAT THE ASSESSEE IS ENGAGED IN LAND DEAL ING BUSINESS. SHRI HEMANI FURTHER FAILS TO REBUT THE CIT'S LATTER REASON OF C ORRECT COMPUTATION OF LOSS FIGURE AS TAKEN IN COURSE OF ASSESSMENT (SUPRA). W E ALSO DO NOT CONCUR WITH ASSESSEES LAST ARGUMENT THAT THE CIT COULD NOT HAV E SET ASIDE THE ASSESSMENT ITA NO. 1062/AHD/2013 [SHRI NAVIN S. PATEL (HUF) VS . CIT(A)-II] A.Y. 2008-09 - 5 - BACK TO THE ASSESSING OFFICER AS THE SAME IS VERY M UCH IN HIS JURISDICTION U/S.263(1) OF THE ACT. WE FURTHER NOTICE THAT HON BLE DELHI HIGH COURTS DECISION (SUPRA) DOES NOT APPLY IN FACTS OF THE INS TANT CASE SINCE THE PRESENT IS AN INSTANCE OF NO ENQUIRY. WE THEREFORE DO NOT SEE ANY REASON TO INTERFERE WITH LEARNED CITS WELL THOUGHT ORDER UNDER CHALLEN GE. THE SAME STANDS CONFIRMED. 9. THIS ASSESSEES APPEAL IS DISMISSED. [PRONOUNCED IN THE OPEN COURT ON THIS THE 20 TH DAY OF MARCH, 2017.] SD/- SD /- ( MANISH BORAD ) (S. S. GODARA) ACCOUNTANT MEMBER JUDICIAL ME MBER AHMEDABAD: DATED 20/03/2017 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE ! / CONCERNED CIT 4 !- / CIT (A) ( )*+ ,--. . /0 / DR, ITAT, AHMEDABAD 6 +23 45 / GUARD FILE. BY ORDER / . // . /0