Sri. Y. C. Satish Kumar, Bangalore V. Principal Commissioner of Income Tax (Central), Bangalore

ITA 1146/BANG/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 7980 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 24-06-2020
• Assessment Year: 2011-2012
• Appeal Filed On: 22-05-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A SRINIVASA RAO
• Assessee Lawyers: MOHAMMED MUJASSIM
• Keywords: Business income; Assessment record; Set aside; Capital Gains
• Section: 40A(3); 143(3); 142(1); 153A; 201; 143(2); 139(1); 13; 119; 6; 263; 132; 12; 10; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCHES C BENCH: BANGALORE BEFORE SHRI A.K. GARODIA , ACCOUNTANT MEMBER AND SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO S . 1146 TO 1150/BANG/2019 (ASSESSMENT YEAR S : 201 1 - 12 TO 2015 - 16 ) SHRI Y.C. S ATISH KUMAR, NO.1228, NAGARATHPET, DEVANAHALLI, BANGALORE - 56 2 110 .APPELLANT PAN ACGPS 0967E VS. PRIN . COMMISSIONER OF INCOME TAX (CENTRAL) , BANGALORE. RESPONDENT. ASSESSEE BY: SHRI MOHAMMED MUJASSIM, C.A. REVENUE BY: SHRI A. SRINIVASA RAO, CIT (D.R) DATE OF HEARING : 24.06 .20 20 DATE OF PRONOUNCEMENT : .07 .20 20 O R D E R PER SHRI P AVAN KUMAR GADALE, JM : THESE ARE THE APPEALS FILED B Y THE ASSESSEE AGAINST SEPARATE ORDERS OF PRIN. COMMISSIONER OF INCOME TAX (CENTRAL) , BANGALORE PASSED UNDER SECTION 263 OF THE INCO ME TAX ACT, 1961 ('THE ACT'). SINCE ALL THE APPEALS HAVE COMMON ISSUES AND IDENTICAL TO THE FACTS OF THE CASE, ACCORDINGLY ARE CLUBB ED AND HEARD TOGETHER 2 ITA N O S . 1146 TO 1150/BANG/2019 AND CONSOLIDATED ORDER IS PASSED. FOR THE SAKE OF CONVENIENCE, WE SHAL L TAKE UP THE ITA NO.1 146 /BANG/2019 AND THE GROUNDS OF APPEAL RAISED BY THE ASSESSE E ARE AS UNDER : 3 ITA N O S . 1146 TO 1150/BANG/2019 2. THE BRIEF FACTS OF THE CASE A RE T HAT THERE WAS A SEARCH UNDER SECTION 132 OF THE ACT ON THE ASSESSEE ON 9.10.2014 AND CONSEQUENT TO SEARCH , NOTICE UNDER SECTION 4 ITA N O S . 1146 TO 1150/BANG/2019 153A OF THE ACT WAS ISSUED. IN COMPLIANCE, THE ASSESSEE HAS FIL ED A LETTER DT.24.10.2016 TO TREAT THE INCOME AS DISCLOSED IN THE RETURN OF INCOME UND ER SECTION 139(1) OF THE ACT. FURTHER, NOTICE UNDER SECTION 143(2) AND 142(1) OF THE ACT WERE ISSUED ALONG WITH QUESTIONNAI RE AND SERVED ON THE ASSESSEE. THE LEARNED AUT HORIZED REPRESENTATIVE OF THE ASSESSEE APPEARED AND FURNISHED THE DETAILS AND THE CASE WAS DISCUSSED. THE ASSESSING OFFICER HAS ASSESSED THE TOTAL INCOME OF RS.1 , 31, 83,310 / - AND PASSED THE ORDER UNDER SECTION 143(3) R.W.S. 153A OF THE ACT DT.30.11.2016. SUBSEQUENTLY, REVISION NOTICE UNDER SECTION 263 WAS ISSUED AS THE ASSESSEE H AS PURCHASED MORE THAN 16 ACRES OF CONVERTED NON - AGRICULTURAL LAND ALONG WITH SHRI MUTHA PPA RAI IN GUTTAHALLI VILLAGE, KASABA HOBLI, DEVANAHALLI TALUK AND APPLIED FOR ISSUE OF LAYOUT PLAN TO BANGALORE INTERNATIONAL AIRPORT PLANNING AUTHORITY AND FORMATION OF RESIDENTIAL LAY OUT AND ALSO PERMISSION FOR SALE AND REGISTRATION OF SITES . AND ALSO THE ASSESSEE ALONG WITH HIS CO - OWNER ENTERED INTO JDA WITH M/S RANI CIRCLE PROJECTS PVT L TD. T O DEVELOP THE RESIDENTIAL LAYOUT OF DIFFERENT D IMENSIONS ON THE SAID LAND AND NAMED AS H ERITAGE CITY. THE ASSESSEE HAS SOLD THE SITES IN THE LAYOUT OF H ERITAGE CITY AND ADMITTED THE INCOME AS LONG TERM CAPITAL GAINS (LTCG) OF RS.97,35,942 / - AND SH ORT TERM CAPITAL GAINS (STCG) OF RS.24,53,425 / - WHEREAS IT HAS TO BE TAXED AS INCOME FROM BUSINESS AND ALSO EXPENDITURE UNDER SECTION 40A(3) OF THE ACT FOR PURCHASE OF LAND FOR RS.27,50,000 / - IN CASH AND IS NOT ALLOWABLE AS THE ASSESSEE IS ENGAGED IN THE 5 ITA N O S . 1146 TO 1150/BANG/2019 B USINESS OF BUYING AND DEVELOPING OF THE LAND AND SELLING THE SITES . FURTHER THE ASSESSING OFFICER HAS NEITHER EXAMINED THE ABOVE DISPUTED ISSUES NOR WAS ANY I NQUIRY WAS CONDUCTED DURING THE AS SESSMENT PROCEEDINGS. HENCE , THE ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. IN THE REVISION PROCEEDINGS , THE ASSESSE E HAS FILED SUBMISSIONS ON 12 - 02 - 2019 IN COMPLIANCE TO THE NOTICE. THE LEARNED AUTHORIZED REPRESENTATIVE OF THE ASSESSEE APPEARED AND EXPLAINED THE D ETAILS REFERRED AT PARA 5 OF THE REVISION ORDER AND EMPHASIZED THAT THE ASSESSING OFFICER IN THE ASSESSMENT PROCEEDINGS HAS TAKEN A POSSIBLE VIEW , WHICH HAS TO BE ACCEPTED AND I NQUIRIES WERE CONDUCTED. WHEREAS, A FTER CONSIDERING THE FINDINGS OF THE ASSE SSING OFFICER IN THE ASSESSMENT ORDER AND THE ASSESSMENT RECORD AND SUBMISS IONS OF THE ASSESSEE, THE LD PRIN. CIT FOUND THAT THE ASSESSING OFFICER HAS NEVER EXAMINED THE MATERIAL ON RECORD FOR ASSESSING THE INCOME UNDER INCOME FROM BUSINESS NOR CONDUCTED INQUIRY, INSTEAD ACCEPTED THE ASSESSEE INCOME AS LTCG AND STCG, FURTHER THE ASSESSING OFFICER HAS NOT EXAMINED THE APPLICABILITY OF PROVISIONS OF SECTION 40A(3) OF THE ACT IN RESPECT OF PURCHASE OF LA ND AND THE PASSED THE ASSESSMENT ORDER WITHOUT APPLICAT ION OF MIND AND INCORRECT ASSUMPTION OF FACTS AND ALLOWED THE CLAIM OF ASS ESSEE.HENCE, THE ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDIC IAL TO THE INTEREST OF REVENUE, WITH THESE OBSERVATIONS, THE PRIN. CIT HAS SET ASIDE THE ORDER OF THE ASSESSING OFFICER WITH A DIRECTION TO MAKE PROPER VERIFICATION IN RESPECT OF THE 6 ITA N O S . 1146 TO 1150/BANG/2019 DISPUTED ISSUES DISCUSSED ABOVE AND RED O ASSESSMENT DE NOVO AND PASSED THE REVISION ORDER UNDER SECTION 263 OF THE ACT DT.11.3.2019. AGGRIEVED BY THE ORDER OF PRIN. CIT, THE ASSESSEE HAS FILED AN APPEAL WITH THE TRIBUNAL. 3. AT THE TIME OF HEARING, THE LEARNED AUTHORIZED REPRESENTATIVE SUBMITTED THAT THE PRIN. CIT HAS IGNORED VARIOUS FACTS IN RESPECT OF THE CLAIM MADE BY THE ASSESSEE SUPPORTED WITH EVIDENCES IN THE AS SESSMENT PROCEEDINGS, WHICH WERE EXAMINED BY THE ASSESSING OFFICER AND I NQUIRIES WERE CONDUCTED AND THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) R.W.S 153A OF THE ACT IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF REVENUE AND SUPPORTED HIS ARG UMENT S WIT H WRITTEN SUBMISSIONS AND PRAYED FOR ALLOWING THE APPEAL. CONTRA, THE LEARNED DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDERS OF THE P RIN. CIT AND FURTHER SUBMITTED THAT N O ENQUIRY WAS CONDUCTED BY THE A SSESSING OFFICER AS PER THE PROVISIONS OF SECTI O N 263 OF THE ACT. WHEREAS THE LD PRIN. CIT HAS ONLY DIRECTED ASSESSING OFFICER FOR FRESH EXAMINATION AND PROPER VERIFICATION OF FACTS . 4. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. PRIMA FACIE, T HE CONTENTION S OF THE LEARNE D AUTHORIZED REPRESENTATIVE ARE THAT THE REVISION ORDER PASSED BY THE LD PRIN.CIT IS BAD IN LAW AND DOES NOT SATISFY THE TWIN CONDITIONS BEING ERRONEOUS AND PREJUDIC IAL TO THE INTEREST OF REVENUE AND EMPHASIZED THAT THE ASSESSING OFFICER HAS TAKEN A POSSI BLE VIEW AND ACCEPTED TH E CONTENTIONS OF THE ASSESSEE AND I N THE SCRUTINY PROCEEDINGS, THE ASSESSING O FFICER HAS CONDUCTED 7 ITA N O S . 1146 TO 1150/BANG/2019 I NQUIRIES ON THE CLAIM S OF THE ASSESSEE. ON PERUSAL OF THE ASSESSMENT ORDER, WE FIND THAT THE ASSESSING OFFICER HAS ISSUED NOTICE UND ER SECTION 142(1) OF THE ACT ALONG WITH QUESTIONNAIRE BUT THERE ARE NO FINDINGS OR OBSERVATIONS OF THE ASSESSING OFFICER THAT HE HAS CONDUCTED I NQUIRIES IN RESPECT OF THE DISCLOSUR ES OR CLAIMS/DETAILS, WERE T HE ASSESSEE HAS FILED THE DETAILS IN THE ASSESSM ENT PROCEEDINGS REFERED AT P AGE 16 TO 29 OF THE PAPER BOOK. WE HAVE CONSIDERED THE JUDICIAL DECISIONS RELIED AND THE LD. AR COULD NOT SUBSTANTIATE WITH EVIDENCE THAT I NQUIRY WAS CONDUCTED ON THE MATERIAL /DETAILS FILED BY THE ASSESSEE. THE CONTENTION OF THE LD.AR IS THAT THE ORDER WAS PASSED WITH THE APPROVAL OF JT.CIT , THEREFORE, THERE IS AN APPLICATION OF MI ND BY THE AO. FURTHER THE ASSESSEE IS ALSO ENGAGED IN OTHER BUSINESSES AND IS NOT EXCLUSIVELY ENGAGED IN THE REAL ESTATE AND HAS ACCEPTED THE A SSESSMEN T ORDER PASSED BY THE A.O AND HAS NOT CONTESTED BEFORE HIGHER FORUM . WE FIND THAT THE SUBMISSIONS OF THE LD. AR ARE ONLY JUSTIFYING THE POSSIBLE VIEW TAKEN BY THE ASSESSING OFFICER BUT NO EVIDENCE WAS FILED OR SUBSTANTIATED THAT I NQUIRY WAS CONDUCTED BY THE ASSESSING OFFICER. THE LD PRIN. CIT HAS OBSERVED THAT ASSESSING O FFICER HAS NEVER CONDUCTED ANY INQUIRY ON THE DISPUTED ISSUE S AND ALSO THERE IS NO OFFICE NOTE OR ANY ORDER SHEET NOTING OR INTER NAL DISCUSSION WITH ANY HIGH AUTHORITY ON T HE ISSUE. WE CONSID ER IT APPROPRIATE TO REFER THE OBSERVATIONS OF THE LD PRIN. CIT IN THE REVISION ORDER AT PAGE 7 PARA 8 WHICH IS READ AS UNDER : 8 ITA N O S . 1146 TO 1150/BANG/2019 8. ON EXAMINATION OF RECORDS, IT IS NOTED THAT THESE FACTS ARE EMANATED FROM THE ANALYSIS OF THE MATERIALS PLACED ON RECORD IN THE FORM SALE DEEDS AND OTHER DOCUMENTS. IN FACT, THE A.O. HAS NEVER EXAMINED THE MATERIAL FROM THE ANGLE OF ASSESSING THE INCOME UNDER THE HEAD BUSINESS. THE A.O. HAS MERELY CALLED FOR THE BREAK UP OF THE CAPITAL GAINS INCOME OFFERED TO TAX BY THE AS SESSEE IN HIS RETURN IN RESPONSE TO WHICH THE ASSESSEE HAD FILED THE CAPITAL GAINS WORKING ENCLOSED BY COPIES OF SALE DEEDS. MERE FILING OF INFORMATION / PLACING A CLAIM BEFORE THE A.O. DOES NOT AMOUNT THAT SUCH CLAIM IS EXAMINED AND ACCEPTED. IT IS FURTH ER NOTED FROM THE P & L ACCOUNT AND BALANCE SHEET AS ON 31.03.2011 PLACED ON RECORD THAT THE ASSESSEE HAS OFFERED BUSINESS INCOME BEING PROFIT FROM LAND DEALING AND COMMISSION OF RS.6,76,415 AND FURTHER ACCEPTED ADVANCES FROM OUTSIDE PARTIES FOR LAND PROCU REMENT TO THE TUNE OF RS.7,40,00,000 AND IN TURN ADVANCED AMOUNTS TO VARIOUS PERSONS TO THE TUNE OF RS.3,42,08,595. THUS THE MAJOR ACTIVITY OF THE ASSESSEE APPEARS TO BE DEALING IN LANDS AND IN THIS BACKGROUND IT REQUIRES EXAMINATION AS TO HOW THE SOLITAR Y TRANSACTION OF DEVELOPMENT OF LANDS UNDER THE NAME HERITAGE CITY, DISCUSSED EARLIER WOULD ALONE CONSTITUTES INVESTMENT RESULTING IN LTCG. IN MY OPINION, THE A.O. OUGHT TO HAVE LOOKED AT THIS ISSUE ON A LARGER PERSPECTIVE BY A THOROUGH VERIFICATION OF T HE ASSESSEE'S CLAIM. THE A.O. HAS NEVER CONDUCTED ANY ENQUIRY ON THIS ISSUE, LEA V E ALONE AN INADEQUATE ENQUIRY. THEREFORE, THE AVERMENT THAT THE A.O. HAS EXAMINED THE ISSUE DURING ASSESSMENT PROCEEDINGS IS NOT BORNE BY RECORDS THAT THERE IS NO OFFICE NOT E OR ANY ORDER SHEET NOTING OR INTERNAL DISCUSSION WITH ANY HIGHER AUTHORITIES ON THIS ISSUE. THEREFORE, NOT CONDUCTING AN ENQUIRY ON THE DESIRED LINES TO ARRIVE AT A PROPER CONCLUSION AND NOT ANALYZING AND EXAMINING THE AVAILABLE DOCUMENTS TO BRING THE PROPER FACTS INTO THE ASSESSMENT ORDER BEFORE ASSESSING THE INCOME IS AN ERROR ON THE PART OF THE ASSESSING OFFICER AND SUCH ERROR IS PREJUDICIAL TO THE INTEREST OF THE REVENUE THAT THE TAX WOULD HAVE BEEN CHARGED AT A HIGHER AMOUNT IN CASE THE IMPUGNED IN COME CONSTITUTES BUSINESS INCOME. FURTHER, WHEN THE ASSESSING OFFICER HAS NOT EXAMINED THE ISSUE AND HAS NOT FORMED AN OPINION, IT IS FARFETCHED TO SAY THAT THERE EXIST TWO OPINIONS ON RECORD IN REGARD TO THE ISSUE UNDER CONSIDERATION. SECONDLY, THIS IS NOT A CASE OF INTERPRETATION OF STATUTE WITH REFERENCE TO A PARTICULAR PROVISION THEREOF WHERE TWO VIEWS ARE EXISTING, RATHER IT IS A CASE WHERE FACTS ARE REQUIRED TO BE COLLECTED, ANALYSED AND THEREAFTER THE CORRECT LAW TO BE APPLIED THEREON. THEREFORE, THE CASE LAWS RELIED UPON BY THE ASSESSEE ARE EITHER NOT APPLICABLE TO THE FACTS OF THE CASE OR RELEVANT AT THIS STAGE. THE LD. AR SUBMISSIONS ARE WITHOUT PROPER EVIDENCE S TO SUBSTANTIATE THE CLAIM THAT ENQUIRY WAS CONDUCTED BY THE ASSESSING OFFICER . WE FOUND PRIMA FACIE, THE 9 ITA N O S . 1146 TO 1150/BANG/2019 ASSESSEEMENT ORDER IS NOT CL EAR ON CONDUCTING OF INQUIRY. THE ASSESSING OFFICER HAS ISSUED THE NOTICE UNDER SECTION 143(2) OF THE ACT ON 25.10.2016 AND ALSO NOTICE U/SEC142 ( 1) OF THE ACT ALONG WITH QUESTIONNAIRE ON 25.10.2016, WHIC H IS NOT DISPUTED. FURTHER, THE LEARNED A U THORIZED R EPRESENTATIVE OF THE ASSESSEE IN THE ASSESSMENT PROCEEDINGS HAS APPEARED ON TWO DAYS I.E. 22.11.2016 AND 25.11.2016 AND FURNISHED THE DETAILS AND THE ASSESSING OFFICER HAS PASSED THE ASSESSMENT ORDER ON 30.11.2016. WE FIND THAT THE ASSESSING OFFICER COULD NOT CONDUCT I NQUIRY INTO INCOME AND CLAIMS MADE BY THE ASSESSEE NOR THE ASSESSEE COULD DEMONSTRATE WITH EVIDENCES THAT THE ASSESSING OFFICER HAS CONDUCT ED THE INQUIRY. WE CONSIDER THE PROVISIONS OF SEC TION 263 O F THE ACT EXPLN.2 W.E.F 1.6.2015 WHICH ARE READ AS UNDER - SECTION 263 (1) EXPLANATION 1 . EXPLANATION 2. FOR THE PURPOSES OF THIS SECTION, IT IS HEREBY DECLARED THAT AN ORDER PASSED BY THE ASSESSING OFFICER SHALL BE DEEMED TO BE ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, IF, IN THE OPINION OF THE PRINCIPAL COMMISSIONER OR COMMISSIONER, ( A ) THE ORDER IS PASSED WITHOUT MAKING INQUIRIES OR VERIFICATION WHICH SHOULD HAVE BEEN MADE; ( B ) THE ORDER IS PASSED ALLO WING ANY RELIEF WITHOUT INQUIRING INTO THE CLAIM; ( C ) THE ORDER HAS NOT BEEN MADE IN ACCORDANCE WITH ANY ORDER, DIRECTION OR INSTRUCTION ISSUED BY THE BOARD UNDER SEC TION 119 ; OR ( D ) THE ORDER HAS NOT BEEN PASSED IN ACCORDANCE WITH ANY DECISION WHICH IS PREJUDICIAL TO THE ASSESSEE, RENDERED BY THE JURISDICTIONAL HIGH COURT OR SUPREME COURT IN THE CASE OF THE ASSESSEE OR ANY OTHER PERSON. CONSIDERING THE FACTS AND CIRCUMSTANCES, PROVISIONS OF LAW , WE ARE OF THE OPINION THAT THE ASSESSING OFFICER HAS PASSED THE ORDER WITHOUT CONDUCTING I NQUIR IES OR VERIFICATION OF FACTS . THE LD PRIN .CIT HAS OBSERVED THAT THE ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND PRE JUDICIAL TO THE INTEREST OF THE REVENUE AND HE 10 ITA N O S . 1146 TO 1150/BANG/2019 HAS SET ASIDE THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) R.W.S153A OF THE ACT AND DIRECTED THE A.O TO MAKE REQUISITE INQUIRES AND VERIFICATION AND REDO THE ASSESSMENT DE NOVA WITH DUE CONSIDERATION OF FA CTS AND LAW . ACCORDINGLY , WE ARE NOT INCLINED TO INTERFERE WITH TH E REVISION ORDER AND OF THE VIEW THAT THERE IS NO INFIRMIT Y IN THE REVISION ORDER PASSED BY THE LD PR .CIT AND UPHELD THE SAME AND DISMISSED THE GROUNDS OF APPEAL OF ASSESSEE 5. SIMILARL Y, THE ASSESSEE HA S FILED APPEALS IN ITA NOS.1147 TO 1150 /BAN G/2019 FOR THE A.YS. 2012 - 13 TO 2015 - 16 WHERE THE ISSUES ARE SIMILAR AND IDENTICAL , AND THE DECISI ON IN ITA NO.1146 /BANG/2019 SHALL EQUALLY APPLY. ACCORDINGLY, WE ARE NOT INCLINED TO INTERFERE W ITH THE ORDER OF PRIN. CIT AND OF THE VIEW THAT THERE IS NO INFIRMITY IN THE ORDER PASSED BY THE LD PRIN.CIT AND UPHELD THE SAME AND DISMISSED THE GROUNDS OF APPEAL OF ASSESSEE. 6. IN THE RESULT, APPEAL S OF THE ASSESSEE FOR THE A.YS 2011 - 12 TO 2015 - 16 ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE. SD/ - SD/ - ( A.K. GARODIA ) (PAVAN KUMAR GADALE) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 31 .07 . 20 20 . *REDDY GP COPY TO 1. THE APPELLANT 2. THE RESPONDENT 11 ITA N O S . 1146 TO 1150/BANG/2019 3. CIT (APPEALS) 4. PRIN. CIT 5. DR, ITAT 6. GUARD FILE. BY ORDER ASSISTANT REGISTRAR INCOME - TAX APPELLATE TRIBUNAL BANGALORE