K.Govindaraj, CHENNAI V. ITO, CHENNAI

ITA 1216/CHNY/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8178 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2016
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 16-12-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 21-05-2015
• Court: TRIBUNAL
• Department Lawyers: P RADHAKRISHNAN
• Assessee Lawyers: T BANUSEKAR
• Keywords: Capital asset; Principle of natural justice; Cost of acquisition; Revised return
• Section: 143(3); 54F; 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : CHENNAI , ! ' , # $% & [ BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD , JUDICIAL MEMBER ] ./ I.T.A.NO. 1216/MDS/2015 / ASSESSMENT YEAR : 2007-08 SHRI K GOVINDARAJ NO.72 HUZUR GARDEN MOOLAKKADAI CHENNAI 600 060 VS. THE INCOME TAX OFFIC ER BUSINESS WARD X(4) CHENNAI [PAN AFDPG 6637 F ] ( '( / APPELLANT) ( ')'( /RESPONDENT) / APPELLANT BY : SHRI T BANUSEKAR, CA /RESPONDENT BY : SHRI P RADHAKRISHNAN, JCIT / DATE OF HEARING : 16 - 12 - 2015 / DATE OF PRONOUNCEMENT : 22 - 01 - 2016 * / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-5, CHENNA I, DATED 19.3.2015 FOR ASSESSMENT YEAR 2007-08. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: ITA NO. 1216/15 :- 2 -: 1. FOR T HAT THE ORDER OF THE COMMISSIONER OF INCOME TAX (AP PEALS) IS CONTRARY TO LAW , FACTS AND CIRCUMSTANCES O F THE CASE TO THE EXTENT PREJUDICIAL TO THE INTEREST OF THE APPE LL ANT AND AT ANY RATE I S OPPOSED TO THE PRINCIPLE S OF EQUITY , NATURAL JUSTICE AND FAIR P L AY . 2. FOR THAT THE COMMISSIONER OF INCOME TAX (APPEALS ) FAILED TO APPRECIATE THAT THE ORDER OF THE ASSESSING OFFICER IS WITHOUT JURISDICTION. 3. FOR THAT THE COMMISSIONER OF INCOME TAX (APPEALS ) ERRED IN UPHOLDING THE LONG TERM CAPITAL GAINS OF RS.67,59,8 27/-, ASSESSED BY THE ASSESSING OFFICER. 4. FOR THAT THE COMMISSIONER OF INCOME TAX (APPEALS ) ERRED IN DENYING APPELLANT'S CLAIM OF THE INDEXED COST OF AC QUISITION OF RS.20,40,794/- AND DEDUCTION U/S.54F OF RS.35,00,00 0/-. 5. FOR THAT THE COMMISSIONER OF INCOME TAX (APPEAL S) FAILED TO APPRECIATE THAT THE APPELLANT HAD RIGHTFULLY CLAIME D THE ADDITIONAL INDEXED COST OF IMPROVEMENT AND ADDITIONAL INVESTME NTS IN PROPERTY WHILE CALCULATING CAPITAL GAINS. 6. FOR THAT THE COMMISSIONER OF INCOME TAX (APPEAL S) ERRED IN STATING THAT THE ADDITIONAL CLAIM AS AN AFTERTHOUGH T. 3. AT THE TIME OF HEARING, THE LD. A.R OF THE ASSESSEE DID NOT PRESS GROUND NOS.1 & 2. ACCORDINGLY, GROUND NOS. 1 & 2 ARE DISMISSED AS NOT PRESSED. 4. COMING TO THE FACTS OF THE CASE, THE ASSESSEE IS AN INDIVIDUAL DOING THE BUSINESS OF BODY BUILDING FOR TANKER LORRIES IN THE NAME AND STYLE OF M/S SRI GAJALAKSHMI INDUSTRIES. FOR THE ASSESSMENT YEAR 2007-08, THE ASSESSEE FILED THE RE TURN OF INCOME ON 31.3.2008 ADMITTING A TOTAL INCOME OF ` 99,040/-. THE RETURN WAS PROCESSED U/S 143(1) OF THE ACT. THE SCRUTINY ASSESS MENT WAS COMPLETED U/S 143(3) READ WITH SEC.147 OF THE ACT O N 19.12.2011 DETERMINING THE TOTAL INCOME AT ` 26,81,437/- WHICH ITA NO. 1216/15 :- 3 -: INCLUDES LONG TERM CAPITAL GAIN OF ` .26,82,399/-. CONSEQUENT TO THE COMPLETION OF ASSESSMENT PROCEEDI NGS/ PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT WERE IN ITIATED AND A SUM OF ` 6,01,714/- WAS LEVIED U/S 271(1)(C) OF THE ACT ON 22.06.2012. 4.1 SUBSEQUENTLY NOTICE U/S 148 OF THE ACT WAS ISSUED ON 31.10.2012. IN RESPONSE, THE ASSESSEE FILED A REVIS ED RETURN ON 14.03.2013 DECLARING A TOTAL INCOME OF ` 43,14,384/- WHICH INCLUDED CAPITAL GAIN OF ` 42,10,318/-. ACCORDINGLY NOTICE U/S 143(2) OF THE ACT WAS ISSUED. IN RESPONSE, SHRI P.S . PRABHAKAR, FCA APPEARED FROM TIME TO TIME. DETAILS CALLED FOR WERE FILED. AFTER CONSIDERING THE DETAILS FILED AND DISCUSSING THE CASE WITH THE AUTHORIZED REPRESENTATIVE, THE ASSESSMENT WAS CO MPLETED U/S 143(3) READ WITH SEC.147 OF THE ACT ON 20.09.20 13 DETERMINING THE TOTAL INCOME AT RS.68,63,890/-. 4.2 DURING THE COURSE OF ASSESSMENT PROCEEDI NGS, THE ASSESSING OFFICER FOUND THAT THE TOTAL CONSIDERATI ON RECEIVED BY THE ASSESSEE WAS RS.97,51,112/- AS COMPENSATION FOR COMPULSORY ACQUISITION OF HIS PROPERTY BY THE NATIO NAL HIGHWAYS AUTHORITY OF INDIA. IN THE REVISED RETURN FILED/ THE ASSESSEE WORKED OUT THE LONG TERM CAPITAL GAIN AT ITA NO. 1216/15 :- 4 -: RS.42,10,318/- AFTER DEDUCTING INDEXED COST OF ACQU ISITION OF RS.20,40,794/- AND CLAIMING DEDUCTION OF ` 35,00,000/- U/S 54F OF THE ACT AS AGAINST THE ORIGINAL CLAIM OF ` .12,34,770/- AND ` 18,50,000/- RESPECTIVELY AS INDEXED COST OF ACQUISITION AND DEDUCTION U/S 54F. WHEN QUESTIONED ABOUT IT, THE AR FURNISHED THE WORKING FOR INDEXED COST OF AC QUISITION AT RS.20,40,794/-. HE ALSO STATED THAT THE ASSESSEE CA RRIED OUT IMPROVEMENTS TO THE HOUSE PROPERTY DURING THE YEAR 1994, 1996 & 1999 AND ALSO FILED CERTIFICATE CUM RECEIPTS FOR TH E CIVIL WORK DONE. IN RESPECT OF DEDUCTION U/S 54F, THE ASS ESSEE PRODUCED SIMILAR CERTIFICATES FROM A CONTRACTOR TO THE EFFECT THAT CONSTRUCTION WORK WAS CARRIED OUT FROM MARCH 2006 T O OCTOBER 2007 FOR CONSTRUCTION OF 6000 SQ.FT. OF BUILDING. 4.3 NOT CONVINCED WITH THE REPLY OF THE ASSESSEE, THE ASSESSING OFFICER WAS OF THE OPINION THAT THE FRES H CLAIM OF DEDUCTION IS NOT ALLOWABLE AS THE PROCEEDINGS U/S 1 48 OF THE ACT CANNOT BE USED TO MAKE FRESH CLAIM OF EXPENDITURE/DEDUCTION. THE ASSESSING OFFICER IS ALSO OF THE VIEW THAT THE NEW CLAIMS ARE ONLY AN AFTERTHOUGHT WITH AN INTENT TO REDUCE LONG TERM CAPITAL GAIN. BUT THE AR CONTENDED T HAT THE ASSESSEE IS NOT LITERATE AND WAS MISGUIDED BY THE P REVIOUS TAX ITA NO. 1216/15 :- 5 -: CONSULTANT. WHEN HE WAS APPRISED OF THE ACTUAL POSIT ION, HE OFFERED THE ENTIRE RECEIPT OF COMPENSATION FOR TAX ATION. WHILE DOING SO, THE ASSESSEE CLAIMED PROPERLY THE CO ST OF IMPROVEMENT MADE SUBSEQUENTLY AND INVESTMENT MADE I N THE NEW ASSET. RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS IN SUPPORT OF ASSESSEE'S STAND. 1. CIT VS SUN ENGINEERING WORKS PVT. LIMITED 198 ITR 2 97 (SC). 2. CAIXA ECONOMICA DE GOA210 ITR 719(BOM). 3. CHETTINAD CEMENT CORPORATION PVT. LIMITED 147 ITR 5 7 (MAD) & 200 ITR 320(SC). THE ASSESSING OFFICER REJECTED THE ARGUMENTS OF THE ASSESSEE AND DISALLOWED THE CLAIM OF COST OF IMPROVEM ENTS AND ADDITIONAL INVESTMENT IN THE NEW PROPERTY. THUS THE ASSESSING OFFICER WORKED OUT THE LONG TERM CAPITAL GAIN AT ` 67,59,827/- AGAINST THE ADMITTED LTCG OF ` 42,10,318/-. ON APPEAL, THE CIT(A) CONFIRMED THE ACTION OF THE ASSES SING OFFICER AGAINST WHICH THE ASSESSEE IS IN APPEAL. 5. THE LD. AR SUBMITTED THAT INADVERTENTLY THE ASSES SEE DECLARED LOWER CAPITAL GAIN BY SHOWING LESS SALES C ONSIDERATION AND ALSO THE ASSESSEE OMITTED TO CLAIM COST OF IMPROVE MENT AS WELL AS EXACT AMOUNT OF DEDUCTION U/S 54F. WHEN HE CAME T O KNOW ABOUT ITA NO. 1216/15 :- 6 -: THE CORRECT POSITION REGARDING RECEIPT OF COMPENSAT ION, HE OFFERED THE SAME FOR TAXATION AND ALSO CLAIMED PROPERLY THE COS T OF IMPROVEMENT AND DEDUCTION U/S 54F IN RESPECT OF THE INVESTMENT MADE IN THE NEW ASSET. ACCORDING TO HIM, THE JUDGMENTS OF SUPREME COURT IN THE CASE OF CIT VS SUN ENGINEERING WORKS PVT. LTD, 198 ITR 2 97, CHETTINAD CEMENT CORPORATION PVT. LTD 200 ITR 320 ALSO SUPPOR T THE CLAIM OF THE ASSESSEE. 6. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTAT IVE STRONGLY OPPOSED THE CLAIM OF THE ASSESSEE BY STAT ING THAT THE PROVISIONS OF SEC. 148 IS FOR THE BENEFIT OF THE DE PARTMENT. WHENEVER THE ASSESSMENT IS REOPENED, THE INTENTION IS TO BRI NG THE ESCAPED INCOME FOR TAXATION AND NOT TO GIVE ANY RELIEF TO T HE ASSESSEE. HE RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATE RIAL AVAILABLE ON RECORD. AS HELD BY THE SUPREME COURT IN THE CASE OF SUN ENGINEERING WORKS P. LTD (SUPRA), THE RE-ASSESSMENT PROCEEDINGS IS FOR BRINGING TO TAX ITEM WHICH ARE ESCAPED ASSESSMENT, IT WOULD BE OPEN TO AN ASSESSEE TO PUT FORWARD CLAIMS FOR DEDUCTION OF ANY EXPENDITURE IN RESPECT OF THAT INCOME OR THE NON-TAXABILITY OF THE ITEMS AT ALL. KEEPING IN VIEW OF THE OBJECT AND PURPOSE OF THE P ROCEEDINGS U/S 147 OF THE ACT WHICH IS FOR THE BENEFIT OF THE REVENUE NOT AN ASSESSEE, AN ITA NO. 1216/15 :- 7 -: ASSESSEE CANNOT BE PERMITTED TO CONVERT THE RE-ASSE SSMENT PROCEEDINGS AS REVISION OR REVIEW. CLAIMS WHI CH HAVE BEEN DISALLOWED IN THE ORIGINAL ASSESSMENT PROCEEDINGS C ANNOT BE PERMITTED TO BE RE-AGITATED ON THE RE-ASSESSMENT PROCEEDINGS. A MATTER NOT AGITATED IN THE CONCLUDED ORIGINAL ASSESSMENT PROCE EDINGS ALSO CANNOT BE PERMITTED TO BE AGITATED IN THE RE-ASSESSMENT PR OCEEDINGS UNLESS RELATABLE TO THE ITEM SOUGHT TO BE TAXED HAS ESCAPE D ASSESSMENT. EVEN IN CASES, WHERE THE CLAIMS OF THE ASSESSEE D URING THE COURSE OF RE-ASSESSMENT PROCEEDINGS RELATING TO THE ESCAPED ASSESSMENT ARE ACCEPTED, STILL THE ALLOWANCE HAS TO BE LIMITED TO THE EXTENT TO WHICH THEY REDUCE THE INCOME TO THAT ORIGINALLY ASSESSED. THE INCOME FOR THE PURPOSE OF RE-ASSESSMENT CANNOT BE REDUCED FROM THE INCOME ORIGINALLY ASSESSED. BEING SO, IN OUR OPINION, THE CLAIM OF THE ASSESSEE WITH REGARD TO THE COST OF IMPROVEMENT AND DEDUCTION U/S 54F ARE RELATING TO THE CAPITAL ASSET WHICH IS SUBJ ECT TO TAX IN THE RE- ASSESSMENT PROCEEDINGS IS JUSTIFIED. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO CONSIDER THE PLEA OF THE ASSE SSEE IN THE LIGHT OF THE JUDGMENT OF THE SUPREME COURT IN THE CASE OF SU N ENGINEERING WORKS P. LTD. (SUPRA) AND DECIDE AFRESH. ITA NO. 1216/15 :- 8 -: 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PART LY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND JANUARY, 2016, AT CHENNAI. SD/- SD/- ( ! ' ) ( CHALLA NAGENDRA RASAD) # / JUDICIAL MEMBER ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER !' / CHENNAI #$ / DATED: 22 ND JANUARY, 2016 RD $%&& '(&)( / COPY TO: & 1 . / APPELLANT 4. & * / CIT 2. / RESPONDENT 5. (+,& - / DR 3. & *&./ / CIT(A) 6. ,0&1 / GF