Smt. Asha Sushil Agarwal, Pune V. Principal Commissioner of Income-tax : 5,

ITA 1149/PUN/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 8679 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 10 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-04-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 08-04-2019
• Assessment Year: 2011-2012
• Appeal Filed On: 30-05-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Capital asset; Business income; Assessment record
• Section: 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER . / ITA NO.1149/PUN/16 / ASSESSMENT YEAR : 2011-12 SMT. ASHA SUSHIL AGARWAL, BASERA, PLOT NO.46, SECTOR 25, PCNTDA, NIGDI, PUNE 411 044 PAN : AARPA0352Q VS. THE PR. CIT-5, PUNE (APPELLANT) (RESPONDENT) / ORDER PER R.S.SYAL, VP : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 30-03-2016 PASSED BY THE PR.CIT-5, PUNE U/S.263 OF THE INCOME-TAX ACT, 1961 (HEREINAFTER ALSO CALLED THE ACT) IN RELATION TO THE ASSESSMENT YEAR 2011-12. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSM ENT IN THIS CASE WAS COMPLETED U/S.143(3) OF THE ACT ON 20-03- 2014 ACCEPTING THE DECLARED INCOME AT RS. 3,02,48,100/-. THE LD. PR. CIT, ON SCRUTINY OF ASSESSMENT RECORDS, OBSERVED THAT THE APPELLANT BY SHRI VIPIN GUJARATHI RESPONDENT BY MS. NANDITA KANCHAN DATE OF HEARING 08-04-2019 DATE OF PRONOUNCEMENT 09-04-2019 ITA NO.1149/PUN/2016 SMT. ASHA SUSHIL AGARWAL 2 ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER (AO) W AS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE ON THE GROUND THAT THE ASSESSEE CLAIMED LONG TERM CAPITAL GAIN IN RESPECT OF CERTAIN COMMERCIAL SHOPS TRANSFERRED TO THIRD PERSONS, WHICH WERE EARLIER TRANSFERRED BY HER PROPRIE TORSHIP CONCERN TO SELF, AND THE SAME OUGHT TO HAVE BEEN TAXED A S `BUSINESS INCOME. APART FROM THAT, THE LD. PR. CIT ALSO HELD THE ASSESSMENT ORDER TO BE ERRONEOUS ON ACCOUNT OF NON - CHARGING OF INTEREST. THE ASSESSEES SUBMISSIONS DID NOT F IND FAVOUR WITH THE LD. PR. CIT, WHO CONCLUDED THE ASSESSMEN T ORDER TO BE ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST O F THE REVENUE. THE ASSESSMENT ORDER WAS SET-ASIDE AND THE M ATTER WAS RESTORED TO THE FILE OF AO FOR FRAMING THE ASSESSMENT A FRESH AFTER ALLOWING OPPORTUNITY OF HEARING TO THE ASSESSEE. 3. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE ASSESSEE IS A PROPRIETOR OF GOY AL DEVELOPERS. A DEVELOPMENT AGREEMENT WAS SIGNED BETWEEN PIMPRI CHINCHWAD MUNICIPAL CORPORATION (PCMC) AND GOYAL DEVELOPERS ON 13-09-2002, UNDER WHICH THE ASSESSEE GOT THE RIGHT TO DEVELOP COMMERCIAL PROPERTIES ON A CERTAIN PIECE OF LAND ALLOTTED TO HER. THE ASSESSEE WAS LIABLE TO PAY CERTAIN ITA NO.1149/PUN/2016 SMT. ASHA SUSHIL AGARWAL 3 AMOUNT AT A SPECIFIED RATE ON PER SQ.FT. BASIS TO PCMC AND 4000 SQ.FT. OF BUILT UP AREA. IN LIEU OF THAT, THE ASSESSEE WAS TO GET POSSESSION OF THE DEVELOPED COMPLEX. THE ASSESSEE PURC HASED AND EXECUTED A SALE DEED BETWEEN GOYAL DEVELOPERS (HER O WN PROPRIETORSHIP CONCERN) AND HERSELF ON 06-03-2007 FOR 11 SHOPS IN THE COMMERCIAL COMPLEX DEVELOPED ON THE PCMC LAND FOR A SUM OF RS.1.30 CRORE, WHICH AMOUNT WAS CREDITED TO THE P ROFIT AND LOSS ACCOUNT. DURING THE YEAR UNDER CONSIDERATION, TH E ASSESSEE SOLD SUCH 11 SHOPS FOR A SUM OF RS.5.35 CRO RE. IN THE RETURN FILED FOR THE YEAR UNDER CONSIDERATION, THE ASSESSE E COMPUTED LONG TERM CAPITAL GAIN ON TRANSFER OF SUCH SHOPS, AFTER APPLYING INDEXATION, AT RS.2,72,53,656/-. THESE SHOPS W HICH WOULD OTHERWISE HAVE BEEN TRANSFERRED AS STOCK IN TRADE BY THE ASSESSEE RESULTING INTO GENERATION OF BUSINESS INCOME, WERE SHOWN TO HAVE BEEN SOLD AS CAPITAL ASSET. WE ARE UNABLE TO COMPREHEND AS TO HOW A PERSON CAN SELL CERTAIN PROPERTY TO HIMSELF/HERSELF. IN ORDER TO CARRY OUT A SALE, IT IS NECESS ARY THAT THERE SHOULD BE TWO PARTIES VIZ, ONE THE BUYER AND THE OTHE R SELLER. UNDER NO SUCH CIRCUMSTANCES, BOTH THE BUYER AND THE SELLER CAN BE ONE AND THE SAME PERSON. HERE IS A CASE IN WHICH THE PROPRIETORSHIP CONCERN OF MRS. ASHA SUSHIL AGARWAL (ASSESSEE), TRANSFERRED SUCH SHOPS TO HERSELF, NAMELY , MRS. ASHA ITA NO.1149/PUN/2016 SMT. ASHA SUSHIL AGARWAL 4 SUSHIL AGARWAL. IN OUR CONSIDERED OPINION, THE EXECUTION OF SUCH A REGISTERED SALE DEED BETWEEN THE SAME PERSONS IS ILLEGAL AND THE RESULTANT SHOWING RS.1.30 CRORE TO THE CREDIT SIDE O F THE PROFIT AND LOSS ACCOUNT FOR THE A.Y. 2007-08 IS INCONSEQUE NTIAL. FURTHER, THE LD. AR COULD NOT POINT OUT THAT THE CREDIT TO THE PROFIT AND LOSS ACCOUNT FOR THE A.Y. 2007-08 WAS ON MARK ET PRICE BASIS. IN THIS EXERCISE, THE FULL SALE VALUE OF RS.5.35 CRORE WHICH WOULD HAVE OTHERWISE BEEN SHOWN AS BUSINESS INCOME IN THE INSTANT YEAR GOT SQUEEZED TO A MERE LONG TERM CAPITAL OF RS.2.72 CRORE. THE AO OUGHT TO HAVE EXAMINED THE TRANS ACTION, WHICH HE MISERABLY FAILED TO DO. THERE IS NO REFERENCE WHATSOEVER OF THIS TRANSACTION IN THE ASSESSMENT ORDER. TH E HONBLE SUPREME COURT IN MALABAR INDUSTRIAL COMPANY LTD. VS. CIT (2000) 243 ITR 83 (SC) HAS HELD THAT WHERE AO DOES NOT APPLY HIS MIND BEFORE COMPLETING THE ASSESSMENT, THE REVISIONAL ORDER PASSED U/S.263 HAS TO BE HELD AS VALID. 4. AT THIS STAGE, IT IS PERTINENT TO MENTION THAT THE FINANCE ACT, 2015 W.E.F. 01-06-2015 HAS INSERTED EXPLANATION (2) TO S ECTION 263 DEEMING THE ASSESSMENT ORDER TO BE ERRONEOUS IN SO F AR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE, IF IN THE OPINION OF THE PR. CIT, INTER ALIA, : ` THE ORDER IS PASSED WITHOUT MAKING ITA NO.1149/PUN/2016 SMT. ASHA SUSHIL AGARWAL 5 INQUIRIES OR VERIFICATION WHICH SHOULD HAVE BEEN MADE OR ` THE ORDER IS PASSED ALLOWING ANY RELIEF WITHOUT INQUIRING INTO THE CLAIM. IN THE HUE OF THE ABOVE MANDATORY STATUTORY PRESCRIPTION, WHICH IS APPLICABLE TO THE FACTS AND CIRCUMSTANCE S OF THE INSTANT CASE, WE HAVE NO HESITATION IN RULING THAT THE LD. PR. CIT WAS FULLY JUSTIFIED IN HOLDING THE ASSESSMENT ORDER TO BE ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENU E THEREBY SETTING ASIDE THE SAME. WE, THEREFORE, UPHOLD THE IMPUGNED ORDER. 5. IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 09 TH APRIL 2019. SD/- SD/- (VIKAS AWASTHY) (R.S.SYAL) JUDICIAL MEMBER VICE PRESID ENT PUNE; DATED : 09 TH APRIL, 2019 ITA NO.1149/PUN/2016 SMT. ASHA SUSHIL AGARWAL 6 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. , , B / DR B, ITAT, PUNE; 4. / GUARD FILE. // TRUE COPY // / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE DATE 1. DRAFT DICTATED ON 08-04-2019 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 08-04-2019 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. DATE OF UPLOADING ORDER SR.PS 8. FILE SENT TO THE BENCH CLERK SR.PS 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK 10. DATE ON WHICH FILE GOES TO THE A.R. 11. DATE OF DISPATCH OF ORDER. *