ITO, W-1(4), Chandigarh V. Shri Rahul Mundrey, Chandigarh

ITA 118/CHANDI/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 4293 (ITAT-CHANDIGARH)
• Duration Of Justice: 11 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 30-01-2020
• Assessment Year: 2008-2009
• Appeal Filed On: 04-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G S PHANI KISHORE
• Assessee Lawyers: SHIVAM BHARADWAJ
• Keywords: Value adopted by valuation officer; Tangible material; Valuation report; Reason to believe; Set aside; Capital Gains
• Section: 147; 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, B CHANDIGARH , ! '# $ % & '# , () BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ./ ITA NO. 118/CHD/2019 / ASSESSMENT YEAR : 2008-09 THE ITO, WARD-1(4), CHANDIGARH SHRI RAHUL MUNDREY, H.NO. 3035, SECTOR 19-D, CHANDIGARH ./PAN NO: AAVPM8649J / APPELLANT /RESPONDENT ! /ASSESSEE BY : SHRI SHIVAM BHARADWAJ, ADVOCATE ' ! / REVENUE BY : SHRI G.S PHANI KISHORE, CIT DR # $ % /DATE OF HEARING : 30.01.2020 &'() % / DATE OF PRONOUNCEMENT : 30. 01. 2020 (*/ ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE REVENU E AGAINST THE ORDER DATED 15.11.2018 OF THE COMMISSIONER OF INCOM E TAX (APPEALS)-1, CHANDIGARH [HEREINAFTER REFERRED TO AS CIT (A)]. 2. THE REVENUE IN AGGRIEVED BY THE ACTION OF THE CI T(A) IN QUASHING THE ASSESSMENT ORDER PASSED U/S 147 / 148 OF THE IN COME TAX ACT, 1961 (IN SHORT 'THE ACT'). 3. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT REOPENING IN THIS CASE WAS DONE BY THE DEPARTMENT O N THE BASIS OF THE ITA NO. 118-CHD-2019 SHRI RAHUL MUNDREY, CHANDIGARH 2 VALUATION REPORT OF THE DVO IN RESPECT OF THE PROPE RTY SOLD BY THE ASSESSEE WITH OTHER CO-OWNERS. HE HAS FURTHER RELIE D UPON THE DECISION OF THE CHANDIGARH BENCH OF THE TRIBUNAL IN THE CASE OF ITO VS. MS. MALIKA MUNDREY SAINI , ITA NO. 967/CHD/2017 ORDER DATED 12.11.2017, IN THE CASE OF CO-OWNER OF THE PR OPERTY, WHO HAD SOLD HIS SHARE IN THE PROPERTY IN QUESTION THROUGH THE SAME TRANSACTIONS. THE TRIBUNAL WHILE RELYING UPON THE D ECISION IN THE CASE OF ANOTHER CO-OWNER NAMELY MS.RAJINDER KAUR V S. ACIT WHILE UPHOLDING THE ORDER OF THE CIT(A) HELD THAT THE REOPENING OF THE ASSESSMENT WAS BAD IN LAW. HE HAS FURTHER INVIT ED OUR ATTENTION TO THE DECISION OF THE TRIBUNAL IN THE CASE OF MS. RAJINDER KAUR VS. ACIT (ITA NO. 765/CHD/2015), WHEREIN, THE TRIB UNAL IN THE CASE OF CO-OWNER, WHILE RELYING ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF DHARIYA CONSTRUCTION CO. 328 ITR 515 (SC) HELD THAT THE REOPENING CANNOT BE MADE MER ELY ON THE BASIS OF THE VALUATION REPORT OF THE DVO. 4. A PERUSAL OF THE ORDER OF THE CIT(A) REVEALS TH AT THE LD. CIT(A) HAS QUASHED THE REOPENING OF THE ASSESSMENT BY FOL LOWING THE DECISION OF THE TRIBUNAL IN THE CASE OF CO-OWNER MS MALIK A MUNDREY IN ITA NO.967/CHD/2017 DATED 17.11.2017. THE RELEVANT PART OF THE ORDER OF THE CIT(A) IS REPRODUCED AS UNDER:- 6. I HAVE PERUSED THE ORDER OF THE ASSESSING OFFICER AND EXAMINED THE REPLY OF THE ASSESSEE. THE ITA NO. 118-CHD-2019 SHRI RAHUL MUNDREY, CHANDIGARH 3 BRIEF FACTS OF THE CASE ARE THAT DURING THE FINANCI AL 2007-08 RELEVANT TO THE ASSESSMENT YEAR 2008-09 ASSESSEE ALONG WITH OTHER CO-OWNERS SOLD PLOT NO.8. INDUSTRIAL AREA. CHANDIGARH FOR A TOTAL CONSIDERATI ON OF RS.22.00 CRORES. ASSESSEE WAS HAVING 9/48TH SHAR E IN THIS PROPERTY. ASSESSEE FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2008-09 ON 31.07.2008 AS CLAIME D BY THE APPELLANT. PROCEEDINGS UNDER SECTION 147/148 WERE INITIATED ON THE BASIS OF THE REASONS THAT DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS IN THE CASE OF MS. MALIKA MUNDREY, H.NO.2, SECTOR-10, CHANDIGARH, IT WAS FOUND THAT THE ASSESSEE WITH ABOVE MENTIONED ASSESSEE HAD SOLD HIS 9/48 TH SHARE IN PLOT NO.8, INDUSTRIAL AREA, PHASE-I, CHANDIGARH ON 10.03.2008 FOR A SUM OF RS.22 CRORES. THIS PROPERTY WAS ALLOTTED T O THE ASSESSEE ON 04.09.1952. WHILE COMPUTING LONG TERM CAPITAL GAIN, VALUE OF LAND WAS TAKEN AS ON 09.04.1 986 INSTEAD OF 01.04.1981 AS REQUIRED AS PER PROVISIONS OF THE ACT. THE COST OF LAND AND BUILDING AS ON 01.04. 1981 HAS NOT BEEN ADOPTED FOR THE PURPOSE OF INDEXATION. AS PER VALUATION REPORT RECEIVED FROM DISTRICT VALUATI ON OFFICER RATE OF LAND IS CONSIDERED AT RS.511.38 PER SQUARE YARD AS AGAINST RS.11,500/-TAKEN BY THE ASSESSEE. AO DURING ASSESSMENT PROCEEDINGS HAS GIVE N OPPORTUNITY TO THE ASSESSEE BY REFERRING HIS CASE T O THE DVO. THE ASSESSEE FAILED TO COOPERATE WITH THE DVO. HENCE, AO CONSIDERED THE DVO REPORT ALREADY AVAILABLE WITH HIM AND MADE ADDITION OF RS.3,19,40,193/- AS LONG TERM CAPITAL GAIN WHICH HA S ESCAPED FROM ASSESSMENT DURING AY 2008-09. 7. DURING APPELLATE PROCEEDINGS, AR OF THE APPELLA NT HAS BROUGHT TO MY NOTICE THAT THE HON'BLE ITAT, CHANDIGARH BENCH HAS DECIDED THE CASE OF MS. MALIKA MUNDREY SAINI IN ITA NO.967/CHD/2017 DATED 17.11.2017 AS UNDER: '..THE PRESENT APPEAL HAS BEEN FILED BY THE REVENUE ASSAILING THE CORRECTNESS OF THE ORDER DATED ITA NO. 118-CHD-2019 SHRI RAHUL MUNDREY, CHANDIGARH 4 27.01.2017 OF LD.CIT(APPEALS) CHANDIGARH PERTAINING TO 2008-09 ASSESSMENT YEAR ON THE FOLLOWING GROUNDS : 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT(A) HAS ERRED BY DELETING THE ADDITION OF RS. 1,83,90524/- AS ASSESSEE'S SHARE ON ACCOUNT OF PROFIT GENERATED FROM SALE OF PROPERTY AT INDUSTRIAL PLOT NO.8, PHASE-1, INDUSTRIAL AREA, CHANDIGARH HAVING L/6TH SHARE IN THE PROPERTY. 2. THE ID. AR SHRI ASHOK GOYAL APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE POINT AT ISSUE IS FULLY COVERED IN ASSESSEE'S FAVOUR BY VIRTUE OF THE FACT THAT THE SAID ISSUE HAD BEEN CONSIDERED BY THE ITAT VIDE ORDER DATED 21.12.2016 IN ITA 765/CHD/2015 IN THE CASE OF A COOWNER NAMELY RAJINDER KAUR V ACIT PERTAINING TO THE VERY SAME ASSESSMENT YEAR WHEREIN ON SIMILAR REASONING, RE-OPENING HAD BEEN RESORTED TO BY THE AO. THE SAID ORDER, IT WAS SUBMITTED, HAS BEEN FOLLOWED BY THE CIT(A) AND THE ITAT HAD QUASHED THE RE-OPENING. COPY OF THE SAID ORDER WAS FILED IN THE COURT. ITA 967/CHD/2017 A.Y. 2008-09 PAGE 2 OF 3 3. THE ID. DR SUBMITTED THAT THOUGH THE CIT(A) HAS FOLLOWED THE ORDER OF THE ITAT FOR THIS SPECIFIC PIECE OF LAND IN THE CASE OF A CO-OWNER, HOWEVER, RELIANCE IS PLACED UPON THE ASSESSMENT ORDER. 4. WE HAVE HEARD THE SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSESSEE IN THE FACTS OF THE PRESENT CASE, ALONGWITH OTHER CO-OWNERS HAD SOLD A PROPERTY AT INDUSTRIAL PLOT NO. 8, PHASE-I INDUSTRIAL AREA, CHANDIGARH FOR AN AMOUNT OF RS. 22,00,00,000/- IN WHICH SHE HAD 1/6TH SHARE. THE AO IN THE COURSE OF ASSESSMENT PROCEEDINGS ALSO IN THE PRESENT CASE ITA NO. 118-CHD-2019 SHRI RAHUL MUNDREY, CHANDIGARH 5 REFERRED THE MATTER TO THE DVO TO ASCERTAIN THE VALUE OF THE ASSET AS ON 01.04.1981. BASED UPON THE SAME, RATE OF LAND WAS TAKEN AT RS. 511.38 PER SQ. YARD AND THE COST OF CONSTRUCTION WAS TAKEN AT RS. 250/- FOR CALCULATING CAPITAL GAINS AFTER OVER-RULING THE OBJECTIONS OF THE ASSESSEE. 4.1 IN THE FACTS OF THE PRESENT CASE, THE ASSESSEE ALSO CHALLENGED THE RE-OPENING AND THE ADDITIONS ON MERIT BEFORE THE CIT(A) WHO PROCEEDED TO CONSIDER THE ISSUE IN THE FOLLOWING MANNER : '5.4 THE MATTER WAS HEARD, BY THE HON'BLE ITAT, CHANDIGARH AND THE APPEAL IN ONE OF THE CO-OWNER IN THE CASE OF SMT. RAJINDER KAUR WAS ALLOWED BY HON'BLE ITAT WITH THE FOLLOWING OBSERVATIONS: '13. CONSIDERING THE ABOVE DISCUSSION, IT IS CLEAR THAT THERE WAS NO BASIS OR MATERIAL ON RECORD TO CALCULATE THE VALUE OF LAND @RS, 1000/- PER SQ.YD AND OF THE COST OF CONSTRUCTION OF RS. 100/- PER SQ.FT. AS IS NOTED IN THE REASONS. THERE IS NO MATERIAL, WHAT TO SAY OF TANGIBLE MATERIAL AVAILABLE ON RECORD TO JUSTIFY RE-OPENING OF THE ASSESSMENT. THE ASSESSING OFFICER MERELY ON ASSUMPTION, PRESUMPTION, RECORDING VAGUE AND NON-EXISTING REASONS, RECORDED THE REASONS FOR RE-OPENING OF THE ASSESSMENT WHICH ARE NOT SUFFICIENT TO VALIDATE THE RE-OPENING OF THE ASSESSMENT IN THE MATTER. THUS, THERE IS NO REASON TO BELIEVE WITH THE ASSESSING OFFICER TO ASSUME THE JURISDICTION UNDER SECTION 148 OF THE INCOME TAX ACT 13(I). CONSIDERING THE ABOVE DISCUSSION, WE ARE OF THE VIEW THAT REASONS RECORDED UNDER SECTION 148 OF THE ACT REFLECT AS ARBITRARY USE OF POWER CONFERRED, UNDER SECTION 147 OF THE ACT. IN THIS VIEW OF THE MATTER, WE SET ASIDE THE ORDERS OF AUTHORITIES BELOW AND QUASH THE RE-OPENING OF THE ASSESSMENT UNDER SECTION 147/148 OF THE INCOME TAX ACT, THEREFORE, THERE IS NO NEED TO CONSIDER OTHER GROUNDS OF APPEAL ON MERIT ITA NO. 118-CHD-2019 SHRI RAHUL MUNDREY, CHANDIGARH 6 BECAUSE THEY ARE LEFT FOR ACADEMIC DISCUSSION ONLY. RESULTANTLY ALL ADDITIONS WOULD BE DELETED.' RESPECTFULLY FOLLOWING THE DECISION OF HON'BLE ITAT, CHANDIGARH IN THE APPEAL OF CO- OWNER CASE, IT IS EVIDENT THAT REOPENING IN SUCH A SITUATION, THE NOTICE U/S 148 AND ORDER OF REASSESSMENT U/S 147 IS LIABLE TO BE QUASHED. HENCE, THE ADDITIONAL GROUND OF APPEAL TAKEN BY THE APPELLANT IS ALLOWED. AS THE REASSESSMENT ORDER HAS BEEN QUASHED, THE OTHER GROUNDS OF APPEAL TAKEN BY THE APPELLANT BECOME INFRUCTUOUS.' 4.2 IN THE AFOREMENTIONED PECULIAR FACTS AND CIRCUMSTANCES IN THE ABSENCE OF ANY CHANGE IN THE MATERIAL FACTS, WE FIND NO GOOD REASON TO INTERFERE WITH THE CONCLUSION ARRIVED AT BEING SATISFIED WITH THE IT A 967/CHD/2017 A.Y. 2008-09 PAGE 3 OF 3 REASONS AND CONCLUSION, THE DEPARTMENTAL GROUND IS REJECTED AND APPEAL OF THE DEPARTMENT IS DISMISSED.'. 8. ON PERUSAL OF THE FACTS OF THE PRESENT CASE, IT IS CLEAR THAT THERE IS NO CHANGE IN ANY MATERIAL FACTS OF TH E CASE FROM THE CASE OF MS. MALIKA MUNDREY SAINI IN ITA NO.967/CHD/2017 DATED 17.11.2017 A COOWNER OF THE SAME PROPERTY. BY RESPECTFULLY FOLLOWING THIS BINDI NG ORDER OF THE JURISDICTIONAL ITAT, CHANDIGARH BENCH THAT TOO OF THE COOWNER OF THE SAME PROPERTY, THE REASON S RECORDED UNDER SECTION 148 OF THE ACT DO NOT SUSTAI N. IN THIS VIEW OF THE MATTER, THE RE-OPENING OF THE ASSE SSMENT UNDER SECTION 147/148 OF THE ACT IS HEREBY QUASHED. IN VIEW OF THIS THERE IS NO NEED TO CONSIDER OTHER GRO UNDS OF APPEAL ON MERIT BECAUSE THEY BECOME INFRUCTUOUS. RESULTANTLY ALL ADDITIONS WOULD BE DELETED. ALL GRO UNDS OF APPEAL ARE ALLOWED. 9. IN THE RESULT, THE APPEAL IS ALLOWED. ITA NO. 118-CHD-2019 SHRI RAHUL MUNDREY, CHANDIGARH 7 5. THE LD. DR COULD NOT POINT OUT ANY DISCREPANCY I N THE ORDER OF THE AFORESAID ORDER OF THE CIT(A). 6. A PERUSAL OF THE ABOVE ORDER REVEALS THAT THE LD . CIT(A) WHILE QUASHING THE ASSESSMENT U/S 147 OF THE ACT HAS FOLL OWED THE DECISION OF THE ITAT IN THE CASE OF CO-OWNER OF THE ASSESSEE IN ITO VS. MS. MALIKA MUNDREY SAINI (SUPRA) HAVING SIMILAR FACTS AND CIRCUMSTANCES. THE LD. DR COULD NOT BRING ANY DISTI NCTION IN THE FACTS AND LAW APPLICABLE FOR THIS CASE WHICH MAY JUSTIFY OUR INTERFERENCE IN THE ORDER OF THE CIT(A) . WE, THEREFORE, DO NOT FIND ANY MERIT IN THE APPEAL OF THE REVENUE AND THE SAME IS ACCORDINGLY DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30.01.2020. SD/- SD/- ( $ % & '# / ANNAPURNA GUPTA) () / ACCOUNTANT MEMBER ( / SANJAY GARG) / JUDICIAL MEMBER DATED : 30.01.2020 .. '+ ,-.- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. # / / CIT 4. # / ( )/ THE CIT(A) 5. -01 2 , %2 , 34516 / DR, ITAT, CHANDIGARH 6. 157$ / GUARD FILE