Shri Pankaj J. Patel, Ahmedabad V. The Pr. CIT-7, Ahmedabad

ITA 1062/AHD/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 2406 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 27-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIKRAM C S SHARMA
• Assessee Lawyers: T P HEMANI
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Principle of natural justice; Revised return
• Section: 143(3); 54B; 50C; 54F; 139(5); 263

Judgement Text

, SMC IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND MS. MADHUMITA ROY, JUDICIAL MEMBER ITA NO. 1062/AHD/2015 / ASSESSMENT YEAR: 2010-11 PANKAJ J. PATEL, 35, RAJDHANI BUNGALOW, OPP. SAHJANAND BUNGALOW, NIKOL ROAD, NIKOL, AHMEDABAD PAN : AUXPP 5457 B VS. PRINCIPAL COMMISSIONER OF INCOME-TAX-7, AHMEDABAD / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI T.P. HEMANI, AR REVENUE BY : SHRI VIKRAM C.S. SHARMA, SR DR ! / DATE OF HEARING : 29.08.2018 / DATE OF PRONOUNCEMENT : 30.08.2018 / O R D E R PER MS. MADHUMITA ROY, JUDICIAL MEMBER: THE INSTANT APPEAL HAS BEEN FILED BY THE ASSESSEE A GAINST THE ORDER DATED 02.03.2015 PASSED BY THE PR. COMMISSIONER OF INCOME -TAX-7, AHMEDABAD UNDER SECTION 263 OF THE INCOME-TAX ACT, 1961(HEREINAFTER REFERRED TO AS 'THE ACT') FOR THE ASSESSMENT YEAR 2010-11. 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE AS FOLLOWS:- 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS O F THE CASE IN PASSING AN EX- PARTE ORDER WITHOUT GIVING PROPER OPPORTUNITY OF HE ARING TO THE APPELLANT. THIS ACTION OF LD. CIT IS IN GROSS VIOLATION OF NATURAL JUSTICE AND THEREFORE DESERVES TO BE QUASHED. 2. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN CONSIDERING THE ASSESSMENT ORDER PASSED BY THE ID. AO U/S. 143(3) O F THE ACT TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE AND THER EBY ERRED IN INVOKING THE PROVISIONS OF SECTION 263 OF THE ACT AND ENHANCED T OTAL INCOME TO AN EXTENT OF RS.23,10,152/-. 3. LD. CIT GROSSLY ERRED IN NOT APPRECIATING THAT I N ORDER TO INVOKE S. 263, TWO CONDITIONS MUST BE FULFILLED VIZ. THE IMPUGNED ASSE SSMENT ORDER MUST BE 2 ITA NO. 1062/AHD/2015 PANKAJ J PATEL VS. PR CIT AY : 2010-11 ERRONEOUS AND THAT ERROR MUST BE PREJUDICIAL TO THE INTEREST OF THE REVENUE. IN THE PRESENT CASE, LD. AO HAS PASSED THE REASONED ASSESS MENT ORDER AFTER ANALYZING ALL DETAILS AND THEREFORE THERE WAS NO ERROR IN THE IMP UGNED ASSESSMENT ORDER SO AS TO JUSTIFY ACTION U/S 263 OF THE ACT. UNDER THE CIR CUMSTANCES, THE VERY ASSUMPTION OF POWER U/S 263 OF THE ACT IS UNJUSTIFI ED AND BAD IN LAW AND THEREFORE, ORDER U/S 263 OF THE ACT DESERVED TO BE QUASHED. 4. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN PASSING AN ORDER U/S. 263 OF THE ACT WITHOUT GIVING ADEQUATE OPPORTU NITY TO THE APPELLANT FOR BEING HEARD WHICH IS AGAINST THE PRINCIPLE OF NATUR AL JUSTICE & EQUITY. 5. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN WITHDRAWING THE EXEMPTION U/S. 54B AND 54F OF THE ACT AMOUNTING TO RS.23,10,152/-CLAIMED BY THE APPELLANT FOR A.Y. 2010-11 AGAINST THE SALE OF AGRICULTURAL LAND. ' 6. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN HOLDING THAT THE AGRICULTURE LANDS WERE PURCHASED 18 MONTHS PRIOR TO THE DATE OF TRANSFER OF ORIGINAL ASSET ON ACCOUNT OF WHICH NO EXEMPTION U/S . 54B OF THE ACT CAN BE ALLOWED TO THE APPELLANT . 7. THE ID. CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN HOLDING THAT THE APPELLANT POSSESSED MORE THAN ONE RESIDENTIAL HOUSE AT THE TIME OF THE TRANSFER OF ORIGINAL ASSET FOR CLAIMING EXEMPTION U/S. 54F OF T HE ACT AND FURTHER ERRED IN ALSO HOLDING THAT THE CONSTRUCTION OF RESIDENTIAL P ROPERTY CLAIMED AS EXEMPTION U/S. 54F OF THE ACT WAS COMMENCED PRIOR TO THE DATE OF TRANSFER OF ORIGINAL ASSET ON ACCOUNT OF WHICH NO EXEMPTION U/S. 54F OF THE AC T CAN BE ALLOWED TO THE APPELLANT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE RETURN OF INCOME WAS FILED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2010-11 ON 03.01.2 011 DECLARING TOTAL INCOME OF THE ASSESSEE AT RS.1,75,020/- AFTER CLAIMING DED UCTION UNDER CHAPTER VIA OF RS.1,00,000/-. UPON SCRUTINY, A NOTICE UNDER SECTI ON 143(2) OF THE ACT WAS ISSUED ON 30.08.2011 AND ULTIMATELY, THE PROCEEDING S UNDER SECTION 143(3) OF THE ACT WERE FINALIZED ON 03.01.2013 DETERMINING THE TO TAL INCOME AT RS.10,29,273/-, AFTER MAKING ADDITION OF RS.8,54,253/- U/S 50C OF T HE ACT. 4. AFTER ISSUANCE OF THE NOTICE U/S 143(2) OF THE A CT, THE ASSESSEE FILED REVISED RETURN ON 23.12.2011. IT WAS NOTICED THAT DURING THE FY 2009-10, RELEVANT TO ASSESSMENT YEAR 2010-11, ON 30.09.2009, THE ASSESSEE ALONG WITH FIVE OTHER CO-OWNERS SOLD LAND BEARING SURVEY NO.271/3 I N TP SCHEME NO.103 (NIKOL) ADMEASURING 2371 SQ. MTRS. FOR A CONSIDERAT ION OF RS.90,10,000/-. IN 3 ITA NO. 1062/AHD/2015 PANKAJ J PATEL VS. PR CIT AY : 2010-11 TERMS OF THE SALE DEED, THE ASSESSEE RECEIVED AN AM OUNT OF RS.46,10,000/- ON THIS TRANSACTION AS HIS SHARE. IT APPEARS FROM THE REC ORD THAT THE ASSESSEE HAS NOT DISCLOSED THE CAPITAL GAINS ARISING OUT OF THE SAID TRANSACTION IN THE ORIGINAL RETURN OF INCOME FILED ON 03.01.2011. ULTIMATELY, THE ASSESSEE WAS GIVEN NOTICES TO ATTEND THE HEARING FIXED BY THE DEPARTMENT FOLLO WED BY SHOW-CAUSE NOTICES WHEN ADJOURNMENTS WERE SOUGHT FOR ON A NUMBER OF OC CASIONS. HAVING NO OTHER ALTERNATIVE, THE PR. CIT ULTIMATELY PASSED AN ORDER UNDER SECTION 263 OF THE ACT AS FOLLOWS:- 10. AS DISCUSSED IN PRECEDING PARAS, THE ASSESSEE HAD SOLD LAND BEARING SURVEY NO.271/3 IN TP SCHEME NO.103 (NIKOL) ADMEASURING 23 71 SQ. MTRS. ON 30.09.2009 FOR A CONSIDERATION OF RS.90,10,000/-, O UT OF WHICH THE ASSESSEE HAS RECEIVED AN AMOUNT RS.46,10,000/- AS HIS SHARE. IT IS ALSO AN UNDISPUTED FACT THAT THE ASSESSEE DID NOT DISCLOSE THE CAPITAL GAIN ARIS ING OUT OF THIS TRANSACTION IN THE RETURN OF INCOME FILED ON 03.01.2011. IT IS ALSO A FACT THAT THE RETURN FILED ON 03.01.2011 WAS NOT WITHIN THE DUE DATE PRESCRIBED U /S 139(1) OF THE ACT. THE ASSESSEE HAS ALSO FILED A REVISED RETURN OF INCOME ON 23.12.2011 AFTER RECEIPT OF NOTICE U/S 143(2) OF THE ACT. IN THE SAID REVISED R ETURN OF INCOME, THE ASSESSEE HAS WORKED OUT THE LONG TERM CAPITAL GAIN AT RS.23,10,1 52/- AFTER CLAIMING BENEFIT OF INDEXATION, AGAINST WHICH THE ASSESSEE HAS CLAIMED EXEMPTION U/S 54B AND 54F OF THE ACT. AS ELABORATED IN PRECEDING PARAS, THE CLAI M OF THE ASSESSEE WAS FOUND TO BE INCORRECT AND ILLEGAL FOR THE REASONS RE-SUMMARI ZED AS UNDER. (A) CLAIM OF EXEMPTION U/S 54B: EXEMPTION U/S 54B OF THE ACT IS AVAILABLE IF THE AS SESSEE HAS PURCHASED ANOTHER LAND FOR AGRICULTURAL PURPOSES WITHIN A PER IOD OF TWO YEARS FROM THE DATE TRANSFER OF ORIGINAL ASSET. IN THIS CASE, THE LANDS IN RESPECT OF WHICH THE ASSESSEE CLAIMED EXEMPTION U/S 54B OF THE ACT WERE PURCHASED BY THE ASSESSEE ON 29.03.2008 I.E. BEFORE 1 1/2 YE AR OF TRANSFER OF ORIGINAL ASSET ON 30.09.2009. THEREFORE, THE EXEMPTION U/S 5 4B OF THE ACT IS NOT AVAILABLE IN THE CASE OF ASSESSEE. (B) CLAIM OF EXEMPTION U/S 54F: TO CLAIM EXEMPTION U/S 54F OF THE ACT, THE ASSESSEE WILL HAVE TO PURCHASE A RESIDENTIAL HOUSE PROPERTY WITHIN ONE YEAR BEFORE , OR WITHIN 2 YEARS AFTER, THE DATE OF TRANSFER OF THE ORIGINAL ASSET O R CONSTRUCT A RESIDENTIAL HOUSE PROPERTY WITHIN THREE YEARS FROM THE DATE OF TRANSFER OF ORIGINAL ASSET. FURTHER, AS PER PROVISO (A) SECTION 54F(1) O F THE ACT, EXEMPTION IS AVAILABLE ONLY IF ON THE DATE OF TRANSFER OF THE OR IGINAL ASSET, THE TAXPAYER DOES NOT OWN MORE THAN ONE RESIDENTIAL HOUSE PROPER TY OTHER THAN THE NEW ASSET. IN THIS CASE, THE ASSESSEE HAS PURCHASED A P LOT OF LAND ON 10.04.2009 AS PER AGREEMENT EXECUTED ON 16.04.2009 (PAYMENTS W ERE MADE ON 03.03.2008 & 20.09.2008) AND CONSTRUCTED HOUSE ON T HE SAID LAND AS PER 4 ITA NO. 1062/AHD/2015 PANKAJ J PATEL VS. PR CIT AY : 2010-11 CONSTRUCTION AGREEMENT DATED 13.09.2008 ENTERED WIT H ARTH DEVELOPERS. FURTHER, AS STATED BY THE ASSESSEE HIMSELF, ON THE DATE OF SALE/TRANSFER OF ORIGINAL CAPITAL ASSET, THE ASSESSEE OWNED TWO RESI DENTIAL HOUSES OTHER THAN THE NEW PROPERTY. FOR THESE REASONS CLAIM OF E XEMPTION U/S 54F OF THE ACT IS NOT ALLOWABLE. 11. FROM THE ABOVE FACTS, IT IS CLEAR THAT THE ASS ESSEE'S CLAIM OF EXEMPTION U/S 54B AND 54F OF THE ACT AGAINST LONG TERM CAPITAL GA IN ON SALE OF LAND HAVE BEEN ERRONEOUSLY AND WITHOUT PROPER VERIFICATION AL LOWED BY THE ASSESSING OFFICER RESULTING IN PREJUDICE TO THE REVENUE. THER EFORE, IT IS HELD THAT THE ASSESSMENT ORDER PASSED ON 03.01.2013 PASSED U/S 14 3(3) OF THE ACT BY THE ASSESSING OFFICER IS ERRONEOUS INSOFAR AS IT IS PRE JUDICIAL TO INTEREST OF REVENUE. 12. WITHOUT PREJUDICE TO THE ABOVE, IT IS ALSO NOTICED THAT THE RETURN OF INCOME FILED BY THE ASSESSEE ON 03.01.2011 WAS NOT WITHIN THE DATE FOR FILING OF RETURN FOR A.Y. 2010-11. THEREFORE, THE REVISED RETURN OF INCO ME, FILED ON 23.12.2011, WHEREIN EXEMPTIONS U/S 54B AND 54F OF THE ACT WERE CLAIMED FOR THE FIRST TIME, WAS NOT A VALID REVISED RETURN OF INCOME AS PER THE PROVISIONS OF SECTION 139(5) OF THE ACT. THE REVISED RETURN WAS FILED BY THE ASSESS EE FOR THE PURPOSE OF CLAIMING EXEMPTION U/S 54B AND 54F OF THE ACT. SINCE THE ASS ESSING OFFICER TREATED THE INVALID REVISED RETURN AS VALID AND ALLOWED THE CLA IM OF EXEMPTION U/S 54B AND 54F OF THE ACT CLAIMED IN SUCH INVALID RETURN, THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO T HE INTEREST OF THE REVENUE ON THAT COUNT ALSO. 13. IN VIEW OF THE ABOVE, THE TOTAL INCOME DET ERMINED VIDE ORDER U/S 143(3) OF THE ACT DATED 03.01.2013 IS RECOMPUTED AND ENHANCED AS UNDER: TOTAL INCOME DETERMINED AS PER ORDER U/S 143(3) OF THE ACT DATED 03.01.2013 RS.10,29 ,273/- ADD: DISALLOWANCE OF EXEMPTIONS CLAIMED U/S 54B&54F RS.23,10,152/- TOTAL INCOME RS.33,39,425/- AGRICULTURAL INCOME FOR RATE PURPOSE RS. 80, 630/- 5. IT APPEARS THAT THE IMPUGNED ORDER WAS PASSED EX-PARTE AS HAS BEEN POINTED OUT BY THE LEARNED COUNSEL FOR THE ASSESSEE AT THE TIME OF HEARING OF THE INSTANT APPEAL BEFORE US. HE FURTHER PRAYS BEF ORE US TO REMIT THE CASE TO THE FILE OF THE LEARNED CIT FOR PASSING FRESH ORDERS UP ON GIVING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. HOWEVER, L EARNED DEPARTMENTAL REPRESENTATIVE RELIES UPON THE ORDERS PASSED BY THE AUTHORITIES BELOW. 6. HAVING HEARD THE LEARNED REPRESENTATIVES OF THE PARTIES AND HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, PARTICULARLY CONSIDERING THE IMPUGNED EX-PARTE ORDER PASSED BY THE LD. PR. CIT, WE FIND THAT, IN T HE LARGER 5 ITA NO. 1062/AHD/2015 PANKAJ J PATEL VS. PR CIT AY : 2010-11 INTERESTS OF JUSTICE, THE MATTER BE REMITTED TO THE FILE OF THE LEARNED PR. CIT. WE, THEREFORE, CONSIDER IT FAIR AND PROPER, IN THE INTE RESTS OF JUSTICE, TO SET ASIDE THE ORDER PASSED BY THE LEARNED PR. CIT FURTHER DIRECTI NG HIM TO DECIDE THE ISSUE AFRESH UPON GIVING REASONABLE OPPORTUNITY OF HEARIN G TO THE ASSESSEE AFTER TAKING INTO CONSIDERATION THE ENTIRE EVIDENCES AVAI LABLE ON RECORD AND ALSO THE EVIDENCES WHICH THE ASSESSEE MAY CHOOSE TO RELY UPO N. WE, HOWEVER, MAKE IT CLEAR THAT THE ASSESSEE SHOULD CO-OPERATE WITH THE AUTHORITIES BELOW, AS AND WHEN REQUIRED, WITHOUT ASKING FOR ADJOURNMENT. WE THUS ALLOW THE APPEAL OF THE ASSESSEE FOR STATISTICAL PURPOSES. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 30 TH AUGUST, 2018 AT AHMEDABAD. SD/- SD/- ( WASEEM AHMED ) ACCOUNTANT MEMBER ( MS. MADHUMITA ROY) JUDICIAL MEMBER AHMEDABAD; DATED 30/08/2018 **BT ! &'( )(/ COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. , / CONCERNED CIT 4. , ) ( / THE CIT(A)- 5. ( && , , /DR,ITAT, AHMEDABAD, 6. 5 / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR) ITAT, AHMEDABAD 1. DATE OF DICTATION 29.08.2018.. 1. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER : .. 29.08.2018 2. OTHER MEMBER30.08.2018.. 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S30.08.2018. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT30.08.2018.. 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S30.08.2018 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK30.0 8.2018 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER 9. DATE OF DESPATCH OF THE ORDER