ITO, Vijayapur V. M/s Basavan Bagewadi Taluka Primary Teachers Co-Op Credit Society, Vijayapur

ITA 1191/BANG/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 95391 (ITAT-BANGALORE)
• Duration Of Justice: 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 31-08-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G R REDDY
• Assessee Lawyers: H VANI
• Keywords: Capital asset; Opportunity of being heard
• Section: 54F; 142(1); 148; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE A BENCH, BANGALORE BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ITA NO.1190(BNG)/2015 (ASSESSMENT YEAR : 2007-08) SRI M.G.SHANAKAR, NO.40/5, MOOKAMBIKA NILAYA, APPA REDDY PALAYA, INDIRANAGAR, BANGALORE-560 038 PAN NO.AYCPS2592K APPELLANT VS THE PRINCIPAL COMMISSIONER OF INCOME-TAX(A), BANGALORE RESPONDENT ASSESSEE BY : SMT H.VANI, ADVOCATE REVENUE BY : SHRI G.R.REDDY, CIT DATE OF HEARING : 02-12-201 5 DATE OF PRONOUNCEMENT : O R D E R PER SHRI INTURI RAMA RAO, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE LD. PRINCIPAL COMMISSIONER OF INCOME-TAX (APPEALS), BAN GALORE DATED 30-0-2013 PASSED U/S 263 OF THE IT ACT, 1961 FOR THE ASSESSME NT YEAR : 2009-10. 2. THE ASSESEE RAISED THE FOLLOWING GROUNDS IN ITS APPEAL; 1. THE LD.CIT, EXERCISING REVISION U/S263 OF THE A CT IS WITHOUT JURISDICTION, ILLEGAL AND ARBITRARY SINCE T HE ORDER OF THE ASSESSMENT IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF REVENUE. 2 ITA NO.1190 (B)/2015 . 2. IT IS FURTHER SUBMITTED THAT THE ORDER SHOULD BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE IN ORDER TO INVOKE REVISION JURISDICTION. THE SATISFACTION OF THE AFO RESAID TWIN CONDITIONS IS A PRE-REQUISITE TO JUSTIFY REVISION U /S 263 OF THE ACT. 3. IT IS SUBMITTED THAT THE ORDER OF THE ASSESSING AUTHORITY IN ALLOWING THE BENEFIT OF SEC.54F OF THE ACT IS SUPPO RTED WITH THE JUDGMENT OF THE JURISDICTIONAL HIGH COURT AND H ENCE IT IS NOTA ERRONEOUS 4. IT IS WELL SETTLED LA THAT WHERE THE AO HAD ADOP TED ONE OF THE COURSE PERMISSIBLE IN LAW WHEN TWO VIEWS ARE PO SSIBLE AND MERELY BECAUSE THE RESPONDENT DOES NOT AGREE WI TH THE VIEW, SUCH AN ORDER OF THE AO CANNOT BE TREATED AS ERRONEOUS AND THUS NOT PREJUDICIAL TO THE INTEREST OF REVENUE . 5. THE DECISION OF THE LD.ASSESSING AUTHORITY IN AL LOWING THE CLAIM OF SEC.54F I IN ACCORDANCE WITH LAW LAID DOWN BY THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS SAM BANDAM UDAY KUMAR REPORTED IN 345 ITR 389(KAR.) AND THT OF THE MADRAS HIGH COURT IN CIT VS SARDARMAL KOTHARI REPOR TED IN (2008) 302 ITR 286. THE DECISION OF MADRAS HIGH C OURT HAS ATTAINED FINALITY IN VIEW OF THE DISMISSAL OF THE S LP FILED BY THE DEPARTMENT. 3 ITA NO.1190 (B)/2015 6.THE LD. CIT(A) ERRED IN NOT APPRECIATING THE CASE LAW RELIED UPON BY THE ASSESSEE. 7. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING, THE ASSESSEE PRAYS THAT THE APPEAL BE A LLOWED. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL. THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2007-08 WA S FILED DECLARING AN INCOME OF RS.1,89,742/- ON 30-07-2007. AGAINST TH E SAID RETURN OF INCOME THERE WAS NO SCRUTINY ASSESSMENT PROCEEDINGS. SUB SEQUENTLY, WHEN THE AO CAME TO KNOW THAT THE ASSESSEE HAD ENTERED INTO JOI NT DEVELOPMENT AGREEMENT (JDA) WITH M/S TETRA GRAND CONSTRUCTIONS PVT.LTD. IN ORDER TO ASSESS THE CAPITAL GAINS ISSUED NOTICE U/S 148 OF T HE ACT, 1961 ON 20-01- 2012. IN RESPONSE TO THE SAID NOTICE, ASSESSEE HAD SUBMITTED A LETTER DATED 15-02-2012 WHERE THE COPY OF THE ORIGINAL RETURN OF INCOME WAS ENCLOSED. SUBSEQUENTLY, AFTER ISSUE OF NOTICE U/S 142(1) THE ASSESSMENT WAS COMPLETED AT A TOTAL INCOME OF RS.24,42,571/- AFTER MAKING SE VERAL DISALLOWANCES. AGAINST THE SAID ORDER AN APPEAL AS PREFERRED BEFOR E THE LD.CIT(A) WHICH IS PENDING FOR DISPOSAL. 4 ITA NO.1190 (B)/2015 4. WHILE THE MATTER STOOD THUS, A NOTICE U/S 263 OF THE ACT WAS ISSUED BY THE LD. PRL.CIT(A), BANGALORE PROPOSING TO REVIS E THE ASSESSMENT ORDER ON THE GROUND THAT THE AO HAD FAILED TO EXAMINE WHILE GRANTING EXEMPTION U/S 54F OF THE ACT OF RS.25,881,560/- WHETHER THE CONST RUCTION OF HOUSE WAS COMPLETED WITHIN THE PERIOD OF THREE YEARS FROM THE DATE OF ENTERING IN TO JOINT DEVELOPMENT AGREEMENT AND ALSO FAILED TO BRING IT T O TAX THE ADDITIONAL COMPENSATION OF RS.10,27,400/- RECEIVED FROM THE BU ILDER. IN RESPONSE TO THE SHOW CAUSE NOTICE ASSESSEE CONTENDED THAT FOR THE P URPOSE OF COMPUTING THE CAPITAL GAINS THE DATE OF JDA CANNOT BE TAKEN AS TH E DATE OF TRANSFER OF CAPITAL ASSET, BUT IS ONLY FROM DATE ON WHICH THE POSSESSIO N WAS HANDED OVER TO THE BUILDER I.E FROM THE FY 2007-08 AND PLACED RELIANCE ON THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS SAM BANDAM UDAY KUMAR (SUPRA) AND SUBMITTED THAT THE AO ADOPTED ONE OF TH E POSSIBLE VIEWS AND THEREFORE, THE ASSESSMENTS CANNOT BE REVISED U/S 26 3 BY THE CIT. THE LD.CIT BRUSHING ASIDE, THE CONTENTION OF THE ASSESSEE HELD THAT THE ASSESEE HAD 5 ITA NO.1190 (B)/2015 TRANSFERRED THE PROPERTY TO THE BUILDER ON THE DAY OF ENTERING INTO JDA I.E 30- 12-2006 AND IN THIS REGARD PLACED RELIANCE ON THE D ECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS DR.T.K.D AYALU (2011) 202 TAXMANN 531 (KAR.) AND DIRECTED THE AO TO MAKE FRES H ASSESSMENT AFTER GIVING THE ASSESSEE REASONABLE OPPORTUNITY OF BEING HEARD IN THIS REGARD. 4. THE LEARNED COUNSEL REITERATED THE SUBMISSIONS W HICH WERE ADVANCED BEFORE THE CIT DURING THE COURSE OF PROCEEDINGS U/S 263 OF THE ACT AND SUBMITTED THAT THE REVISION ORDER PASSED U/S 263 SH OULD BE SET ASIDE, AS THE AO TOOK ONE OF THE POSSIBLE VIEW AND PLACED RELIANC E IN THE CASE OF MALABAR IND.CO.243 ITR 83. 5. ON THE OTHER HAND, LEARNED SR.DR PLACED RELIANCE ON THE ORDER PASSED U/S 263 OF THE ACT. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. 6.1 IN THIS APPEAL THE ISSUE IS ABOUT THE VALIDITY OF ASSUMPTION OF JURISDICTION BY THE LEARNED CIT UNDER THE PROVISION S OF SEC.263 OF THE ACT. THE ORDER OF CIT PASSED U/S 263 OF THE ACT, MAKES I T EXPLICITLY CLEAR THAT THE 6 ITA NO.1190 (B)/2015 REVISION POWER WAS EXERCISED AS THE AO FAILED TO EX AMINE THE ISSUE WHETHER THE CONSTRUCTION OF HOUSE WAS COMPLETED WITHIN PERI OD OF THREE YEARS FROM THE DATE OF ENTERING INTO JDA AND FAILED TO BRING TO TA X ADDITIONAL COMPENSATION RS,10,27,400/- RECEIVED FROM THE BUILDER. THE LEAR NED COUNSEL FOR THE ASSESSEE COULD NOT DEMONSTRATE BEFORE US THAT THE A O HAD EXAMINED THESE ISSUES DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THEREFORE, THE IRRESISTIBLE CONCLUSION IS THAT THE AO HAD FAILED T O EXAMINE THESE ISSUES DURING THE COURSE OF ASSESSMENT PROCEEDINGS. NO DOU BT, THE ISSUE OF COMPLETION OF CONSTRUCTION OF HOUSE WITHIN THE SPEC IFIED PERIOD IS A MATERIAL ISSUE WHILE GRANTING EXEMPTION U/S 54F OF THE IT AC T, 1961. THE ISSUE AS TO WHETHER THE CAPITAL GAINS HAD ARISEN I.E ON THE DAT E OF ENTERING INTO JDA, AS IT IS NOT THE SUBJECT MATTER OF REVISION UNDER THE PRO VISIONS OF SEC.263 OF THE IT ACT. WHEN THE AO HAD FAILED TO EXAMINE THE ISSUES , IT CANNOT BE SAID THAT THE AO TOOK ONE OF THE POSSIBLE VIEWS AS HELD BY TH E HONBLE APEX COURT IN THE CASE OF MALABAR IND.CO. (SUPRA). THE FAILURE OF TH E AO TO EXAMINE CERTAIN ISSUES CONFERS VALID JURISDICTION ON THE CIT UNDER THE PROVISIONS OF SEC.263 AND THEREFORE, WE ARE OF THE CONSIDERED OPINION THA T THE CIT IS JUSTIFIED IN ASSUMING THE JURISDICTION U/S 263 OF THE IT ACT, 19 61. IN VIEW OF THE ABOVE, 7 ITA NO.1190 (B)/2015 WE SET ASIDE THE ORDER OF ASSESSMENT TO THE FILE OF THE AO FOR FRESH CONSIDERATION. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 13 TH JANUARY, 2016. SD/- (VIJAYPAL RAO) SD/- (INTURI RAMARAO) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: BANGALORE D A T E D : 13-01-2016 AM* COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A)-II BANGALORE 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FILE BY ORDER, AR,ITAT, BANGALORE