M/s. Rock Enterprieses, Pune V. Income-tax Officer,

ITA 1280/PUN/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1154 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 1 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 13-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: AJAY R SINGH
• Keywords: Sale consideration of property below Jantri Value; Reassessment proceedings
• Section: 143(3); 133A; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E , , !'#'' $ , % & BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM / ITA NO. 1280/PN/2014 %' ( ')( / ASSESSMENT YEAR : 2005-06 M/S. ROCK ENTERPRISES, A-6, HERMES CO-OP. SOCIETY, BUND GARDEN, PUNE-411001 PAN : AAHFR0525J ....... / APPELLANT ' / V/S. ITO, WARD 2(3), PUNE / RESPONDENT ASSESSEE BY : SHRI AJAY R. SINGH REVENUE BY : SHRI ACHAL SHARMA / DATE OF HEARING : 13-06-2016 / DATE OF PRONOUNCEMENT : 05-08-2016 * / ORDER PER VIKAS AWASTHY, JM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDE R OF COMMISSIONER OF INCOME TAX (APPEALS)-II, PUNE DATED 27-01 -2014 FOR THE ASSESSMENT YEAR 2005-06. 2 ITA NO. 1280/PN/2014, A.Y. 2005-06 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RECORD S ARE: THE ASSESSEE FIRM IS A REAL ESTATE DEVELOPER. THE ASSESSEE FILE D ITS RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR ON 05-12-2005 DECLARING TOTAL INCOME AS NIL. THE RETURN FILED BY THE ASSESSEE WAS PROCESSED U/S. 143(1) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRE D TO AS THE ACT). THEREAFTER A SURVEY ACTION U/S. 133A OF THE ACT W AS CARRIED OUT AT THE OFFICE PREMISES OF THE ASSESSEE ON 12-02-2009. DURING THE COURSE OF SURVEY STATEMENT OF MR. ANTHONY PAUL, PARTNER OF THE ASSES SEE FIRM WAS RECORDED. IN HIS STATEMENT MR. ANTHONY PAUL STA TED THAT THE ASSESSEE FIRM HAD ENTERED INTO JOINT VENTURE WITH M/S. JU ST HOME ON 15-06-2004 AND STATUS WAS CHANGED TO AOP. BEFORE ENT ERING INTO AN AGREEMENT WITH M/S. JUST HOME, THE FIRM HAD INTRODUCED LAN D ADMEASURING 36124 SQ. MTRS. AS CAPITAL IN THE AOP. THE F.S .I. OF THE SAID LAND AS PER STAMP DUTY VALUATION WAS ` 1,56,27,120/- ON WHICH THE FIRM HAD NOT PAID THE TAX. THE ASSESSEE OFFERED CAPITAL G AIN OF ` 1,56,27,120/- AS ADDITIONAL INCOME IN THE HANDS OF THE ASSES SEE FIRM IN THE ASSESSMENT YEAR 2005-06. A NOTICE DATED 30-0 3-2011 U/S. 148 WAS SERVED ON THE ASSESSEE ON 31-03-2011. IN RESPON SE TO THE NOTICE U/S. 148, THE ASSESSEE SUBMITTED THAT RETURN OF INCOME FILE D ON 05-12-2005 FOR THE IMPUGNED ASSESSMENT YEAR MAY BE TR EATED AS RETURN OF INCOME. FURTHER, THE ASSESSEE REQUESTED THE COPY OF REASONS RECORDED FOR ISSUING NOTICE U/S. 148 OF THE ACT. ON REC EIPT OF REASONS, THE ASSESSEE FILED OBJECTIONS FOR INITIATING REASSESSMENT P ROCEEDINGS. THE ASSESSING OFFICER WITHOUT DISPOSING OF THE OBJECTIONS FILE D BY ASSESSEE, PASSED ASSESSMENT ORDER U/S. 143(3) R.W.S. 147 ON 26-12- 2011 AND MADE ADDITION OF ` 1,39,11,850/- ON ACCOUNT OF LONG TERM CAPITAL GAINS. 3 ITA NO. 1280/PN/2014, A.Y. 2005-06 2.1 AGGRIEVED BY THE ASSESSMENT ORDER DATED 26-12-201 1, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE COMMISSIONER OF I NCOME TAX (APPEALS). IN FIRST APPELLATE PROCEEDINGS, APART FROM ASSAILIN G THE ADDITION MADE IN THE REASSESSMENT PROCEEDINGS ON MERITS, THE ASSESSEE CHALLENGED THE VALIDITY OF NOTICE ISSUED U/S. 148 AND THE PR OCEEDINGS ARISING THERE FROM. THE COMMISSIONER OF INCOME TAX (APPEALS ) DISMISSED THE APPEAL OF THE ASSESSEE HOLDING REASSESSMEN T PROCEEDINGS TO BE VALIDLY INITIATED AND IN COMPLIANCE OF ALL THE PROVISIONS OF THE ACT. THE COMMISSIONER OF INCOME TAX (APPEALS) FURTHER DISMISSED T HE APPEAL OF THE ASSESSEE ON MERITS. AGAINST THE FINDINGS OF C OMMISSIONER OF INCOME TAX (APPEALS), THE ASSESSEE IS IN SECOND APPEAL BEFORE THE TRIBUNAL. 2.2 THE ASSESSEE IN APPEAL HAS IMPUGNED THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) IN REJECTING THE GROU NDS OF ASSESSEE CHALLENGING THE VALIDITY OF PROCEEDINGS INITIATED U/ S. 147/148 OF THE ACT, AS WELL AS THE ADDITIONS CONFIRMED ON MERITS. 3. SHRI AJAY R. SINGH APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT REASSESSMENT PROCEEDINGS INITIATED AGAINST THE ASSE SSEE ARE BAD IN LAW AND ARE BARRED BY LIMITATION. THE LD. AR OF THE ASSESS EE SUBMITTED THAT THE NOTICE U/S. 148 WAS ISSUED TO THE ASSESSEE ON 30-03-2011 WHICH WAS SERVED ON THE ASSESSEE ON 31-03-2011. THE ASSESSEE FILED REPLY TO THE NOTICE ON 05-04-2011 SEEKING REASONS FOR INITIATING REASSESSMENT PROCEEDINGS. REASONS FOR REOPENING WERE P ROVIDED TO THE ASSESSEE ON 12-10-2011 I.E. AFTER ELAPSE OF SIX MONTHS. N OTICE U/S. 143(2) WAS ISSUED TO THE ASSESSEE ON 12-10-2011 CALLING FOR INFORMATIO N 4 ITA NO. 1280/PN/2014, A.Y. 2005-06 AND DETAILS. THE ASSESSEE FILED OBJECTIONS ON THE REASONS PROVIDED FOR REOPENING ON 08-11-2011. NO SPEAKING ORDER WAS PASSED ON THE OBJECTIONS RAISED BY THE ASSESSEE. THE ASSESSING OFFICER PROCEEDE D WITH THE ASSESSMENT AND PASSED ASSESSMENT ORDER U/S. 143(3 ) R.W.S. 147 ON 26-12-2011. THE ASSESSEE INTER ALIA RAISED THE ISSUE OF N ON-DISPOSAL OF OBJECTIONS FILED BY THE ASSESSEE BEFORE THE COMMISSIONER O F INCOME TAX (APPEALS). THE COMMISSIONER OF INCOME TAX (APPEALS) CALLED FOR FACTUAL REPORT FROM THE ASSESSING OFFICER. THE ASSESSING OFFICER FURN ISHED THE FACTUAL REPORT DATED 30-11-2012. IN THE SAID REPORT TH E ASSESSING OFFICER REMAINED SILENT, WHETHER THE OBJECTIONS FILED BY THE A SSESSEE FOR INITIATING REASSESSMENT PROCEEDINGS WERE DECIDED OR NOT. THE ASSESSEE VIDE COMMUNICATION DATED 18-01-2013 AGAIN BROUGHT THIS FA CT TO THE NOTICE OF COMMISSIONER OF INCOME TAX (APPEALS), BUT THE COM MISSIONER OF INCOME TAX (APPEALS) CONVENIENTLY IGNORED THE SAME AND HELD THAT THE REASSESSMENT PROCEEDINGS WERE VALIDLY INITIATED. THE LD. AR POINTED THAT THE ASSESSEE HAD BROUGHT TO THE NOTICE OF FIRST A PPELLATE AUTHORITY THAT IN THE REASONS RECORDED, THERE IS NO MENTION THAT THE ASSESSEE HAS CONCEALED OR FURNISHED INACCURATE PARTICULARS WHICH ARE RE LEVANT FOR MAKING THE ASSESSMENT. 4. THE LD. AR CONTENDED THAT HON'BLE SUPREME COURT OF INDIA IN THE CASE OF GKN DRIVESHAFTS (INDIA) LTD. VS. INCOME TAX OFFICER REPORTED AS 259 ITR 19 (SC) HAS HELD THAT DECIDING OF OBJECTIONS FILED BY THE ASSESSEE WITHIN THE REASONABLE PERIOD OF TIME IS MANDATORY BEFORE PROCEEDING TO MAKE ASSESSMENT ORDERS. THE AUTHORITIES BELOW HAVE VIOLATED THE LAW LAID DOWN BY THE HON'BLE APEX COURT. TH E LD. AR FURTHER REFERRED TO THE DECISION OF HON'BLE BOMBAY HIGH CO URT IN THE 5 ITA NO. 1280/PN/2014, A.Y. 2005-06 CASE OF ALLANA COLD STORAGE LTD. VS. INCOME TAX OFFICER REPO RTED AS 287 ITR 1 (BOM) WHERE THE ASSESSMENT PROCEEDINGS WERE CONC LUDED WITHOUT DECIDING THE OBJECTIONS OF THE ASSESSEE AND THE HON'BLE HIGH COURT QUASHED THE ASSESSMENT ORDER PASSED IN VIOLATION OF MAND ATE GIVEN BY THE HON'BLE SUPREME COURT OF INDIA. THE LD. AR ALSO REFERR ED TO THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF M /S. BAYER MATERIAL SCIENCE PVT. LTD. VS. THE DEPUTY COMMISSIONER OF IN COME TAX IN WRIT PETITION NO. 2502 OF 2015 DECIDED ON 27-01-2016, W HEREIN THE HON'BLE HIGH COURT SET ASIDE THE DRAFT ASSESSMENT ORDER WHICH WAS PASSED WITHOUT DISPOSING OF THE OBJECTIONS FILED BY THE ASSESSEE. 5. ON THE OTHER HAND SHRI ACHAL SHARMA REPRESENTING THE DEPARTMENT SUBMITTED THAT WHERE THE OBJECTIONS ARE NO T DISPOSED OFF, THE MATTER CAN BE REMITTED BACK TO THE ASSESSING OFFICER FOR FIRST DECIDING THE OBJECTIONS OF THE ASSESSEE, BEFORE PROCEEDIN G WITH THE ASSESSMENT ORDER. THE LD. DR IN SUPPORT OF HIS SUBMISSIONS REFERRED TO THE DECISION OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF V .M. SALGAONCAR SALES INTERNATIONAL VS. ASSISTANT COMMISSIONER OF INCOME TAX REPORTED AS 59 TAXMANN.COM 291 (BOMBAY). 6. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESENT ATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIE S BELOW. THE UNDISPUTED FACTS WHICH HAVE EMERGED FROM THE DOCUMENTS ON RECORD ARE, THAT THE SURVEY ACTION U/S. 133A OF THE ACT WAS CA RRIED OUT AT THE BUSINESS PREMISES OF THE ASSESSEE ON 12-02-2009. THERE AFTER, REASSESSMENT PROCEEDINGS WERE INITIATED AND NOTICE U/S. 1 48 WAS ISSUED TO THE ASSESSEE ON 30-03-3011. THE ASSESSEE S OUGHT REASONS FOR 6 ITA NO. 1280/PN/2014, A.Y. 2005-06 REOPENING THE ASSESSMENT VIDE LETTER DATED 05-04-2011. THE REASONS FOR REOPENING WERE PROVIDED TO THE ASSESSEE ALMOST AFTER THE PERIOD OF SIX MONTHS ON 12-10-2011. THE ASSESSEE FILED OBJECTIONS AGAINST THE INITIATION OF REASSESSMENT PROCEEDINGS ON 08-11-2011. THE ASSESSING OFFICER WITHOUT DISPOSING THE OBJECTIONS RAISED BY THE ASSE SSEE AGAINST REOPENING PROCEEDED ON TO PASS ASSESSMENT ORDER. A PERUSAL OF THE IMPUGNED ORDER SHOWS THAT THE ASSESSE E HAD RAISED THE ISSUE BEFORE THE COMMISSIONER OF INCOME TAX (AP PEALS) REGARDING NON-DISPOSAL OF OBJECTIONS FILED BY THE ASSESSEE AGAINST REOPENING OF THE ASSESSMENT. THE COMMISSIONER OF INCOME TAX (APPEALS) SOUGHT FACTUAL REPORT FROM THE ASSESSING OFFICER. T HE ASSESSING OFFICER FURNISHED THE REPORT ON 30-11-2012. THE RELEVANT EXTRACT OF THE INFORMATION CALLED FOR BY THE COMMISSIONER OF INCOME TAX (APPEALS) AND THE REPORT OF ASSESSING OFFICER AS NOTED IN T HE IMPUGNED ORDER IS REPRODUCED HERE-IN-UNDER : 3.2.1 FURTHER, VIDE FOLLOWING LETTER DATED 08.11.2 012 A FACTUAL REPORT WAS CALLED FOR FROM THE A.O. IN RESPECT OF THE APPE LLANT'S GROUND REGARDING THE OBJECTION TO ISSUE NOTICE U/S. 148. 2. DURING THE COURSE OF APPELLANT PROCEEDINGS, THE AR OF THE APPELLANT HAS RAISED THE GROUND OF APPEAL THAT THE OBJECTION TO ISSUE THE NOTICE U/S. 148 OF THE IT ACT 1961 WAS NOT DISPOSED OF BY THE LD. ASSESSING OFFICER BEFORE PROCEEDING AND COMPLETING THE ASSESSMENT AND PASSING THE ASSESSMENT ORDER. 3. THE ASSESSING OFFICER IS DIRECTED TO SUBMIT A FA CTUAL REPORT AFTER EXAMINING THE RECORDS IN THE LIGHT OF THE GROUND OF APPEAL RAISED BY THE APPELLANT AND SUBMIT THE COMMENTS ON THE SAME ON OR BEFORE 30TH NOVEMBER 2012. 3.3.2 THE FACTUAL REPORT OF THE A.O. DATED 30.11.20 12 IS REPRODUCED HEREIN BELOW : THE FACTUAL REPORT IS SUBMITTED AS UNDER: 7 ITA NO. 1280/PN/2014, A.Y. 2005-06 IN THIS CASE A SURVEY WAS CONDUCTED ON 12.02.2009 B Y THE DCIT CIR. 2, PUNE. DURING THE SURVEY THE STATEMENT OF ME. ANTHO NY PAL WAS RECORDED WHO WAS PARTNER OF THE FIRM. IN HIS STATEMENT HE HA S STATED THAT THE FIRM MIS. ROCK ENTERPRISES ENTERED WITH M/S. JUST HOME A S JOINT VENTURE ON 15.06.2004 AND STABS WAS CHANGED AS AOP. BEFORE ENT ERING AN AGREEMENT WITH M/S. JUST HOME THIS FIRM (M/S. ROCK ENTERPRISES) HAD INTRODUCED THE IMMOVABLE PROPERTY AS CAPITAL AND TR ANSFERRED IN THE HANDS OF AOP. THIS LAND ADMEASURING OF 36124 SQ. MT S. THE FSI OF THE SAID LAND AS PER STAMP DUTY VALUATION WAS RS.1,56,2 7,120/-. THE SAME WAS OFFERED AS ADDITIONAL INCOME IN THE HANDS OF TH E FIRM M/S. ROCK ENTERPRISES FOR THE FY 2004-05 I.E. FOR A.Y. 2005-0 6. 3. UNDER THESE CIRCUMSTANCES THE THEN A.O. ISSUED N OTICE U/S.148 FOR THE ASSTT. YEAR 2005-06 DATED 30/03/2011. IN RE SPONSE TO THE SAID NOTICE THE ASSESSEE VIDE ITS LETTER DATED 05/04/201 1 FILED A COPY OF THE RETURN SHOWING NIL INCOME WHICH WAS FILED ON 05/12/ 2005. THEREAFTER THE CASE WAS TRANSFERRED TO THE UNDERSIGNED ON 12/1 0/2011 FOR COMPLETING THE SCRUTINY ASSESSMENT. 4. THEREFORE A NOTICE U/S. 143(2) DATED 1211012011 WAS SERVED ON THE ASSESSEE ON 13/10/11. IN RESPONSE TO THE SAID N OTICE THE ASSESSEE FILED HIS OBJECTION ON 08/11/2011. THE ASSESSEE HA S STATED THAT THE AO HAS APPLIED HIS MIND AND ACCEPTED THE CONTENTION OF THE ASSESSEE AND COMPLETED THE SCRUTINY ASSESSMENT U/S. 143(3) FOR T HE A.Y. 2008-09 ON 28/12/2010. THEREFORE THE ASSESSEE WAS OF THE OPINI ON THAT THERE WAS NO REASON TO ISSUE NOTICE U/S.148 DATED 30/03/2011. 5. THE OBJECTION RAISED BY THE ASSESSEE HAS BEEN DU LY CONSIDERED. IT CAN BE SEEN THAT THE ADDITIONAL INCOME DECLARED AN ACCOUNT OF SURVEY ACTION FOR THE FY 2004-05 RELATED TO THE A.Y. 2005- 06. THEREFORE THE SCRUTINY ASSESSMENT IS TO BE COMPLETED FOR THE A. Y 2005-06. IN VIEW OF THIS, THE NOTICE ISSUED U/S.148 FOR THE A. Y2005-06 IS IN ORDER. THE LONG TERM CAPITAL GAIN ON TRANSFER OF THE LAND IS TAXED BY INVOKING THE PROVISIONS OF SEC.50C OF THE IT ACT, 1961. THE SAME MAY BE CONFIRMED.' 7. A BARE PERUSAL OF THE FACTUAL REPORT SHOWS THAT THE A SSESSING OFFICER HAS NOT GIVEN SPECIFIC ANSWER TO THE QUERY WITH RES PECT TO DISPOSAL OF OBJECTIONS ON ISSUE OF NOTICE U/S. 148 OF THE AC T. THE LD. DR 8 ITA NO. 1280/PN/2014, A.Y. 2005-06 HAS ALSO NOT BEEN ABLE TO PLACE ON RECORD ANY ORDER VID E WHICH THE OBJECTIONS RAISED BY THE ASSESSEE AGAINST REOPENING WERE DISPOS ED OF. 8. THE HON'BLE SUPREME COURT OF INDIA IN THE CASE OF GKN DRIVESHAFTS (INDIA) LTD. VS. INCOME TAX OFFICER (SUPRA) HAS HELD THAT THE ASSESSING OFFICER IS BOUND TO FURNISH REASONS WITHIN A REASO NABLE TIME. ON RECEIPT OF REASONS, THE NOTICEE IS ENTITLED TO FILE OBJECT IONS TO ISSUANCE OF NOTICE AND THE ASSESSING OFFICER IS BOUND TO D ISPOSE OF THE SAME BY PASSING A SPEAKING ORDER. THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF ALLANA COLD STORAGE LTD. VS. INCOME TAX OFFICER (SUPRA) AND IN THE CASE OF M/S. BAYER MATERIAL SCIENCE PVT. LTD. VS. THE DEPUTY COMMISSIONER OF INCOME TAX (SUPRA) HAS REITERATED THE LAW LAID DOWN BY THE HON'BLE APEX COURT. THE HON'BLE HIGH COURT HELD THAT THE REASONS FOR ISSUING NOTICE MUST BE GIVEN AND THE OBJECT IONS OF THE ASSESSEE MUST BE CONSIDERED. THE ASSESSMENT ORDER PA SSED IN DEFIANCE OF THE DECISION OF HON'BLE SUPREME COURT OF INDIA IS NOT SU STAINABLE AND IS THUS LIABLE TO BE QUASHED. IN THE PRESENT CASE, WE OBSERVE THAT THE ASSESSING O FFICER HAS FLOUTED THE LAW LAID DOWN BY THE HON'BLE SUPREME COURT OF INDIA. THE ASSESSMENT ORDER AND THE SUBSEQUENT PROCEEDINGS ARISIN G THERE FROM ARE THUS LIABLE TO BE SET ASIDE. IN THE LIGHT OF THE JUDGM ENTS OF HON'BLE JURISDICTIONAL HIGH COURT RENDERED IN THE CASE OF ALLANA CO LD STORAGE LTD. VS. INCOME TAX OFFICER (SUPRA) AND IN THE CASE OF V.M. S ALGAONCAR SALES INTERNATIONAL VS. ASSISTANT COMMISSIONER OF INCOME T AX, WE REMIT THE FILE BACK TO ASSESSING OFFICER TO FIRST DISPOSE OF TH E OBJECTIONS FILED BY THE ASSESSEE BY PASSING A SEPARATE SPEAKING ORDER. IN THE EVENT 9 ITA NO. 1280/PN/2014, A.Y. 2005-06 THE OBJECTIONS ARE REJECTED, THE ASSESSING OFFICER SHALL GIV E FOUR WEEKS TIME TO THE ASSESSEE BEFORE PROCEEDING WITH THE ASSESSM ENT, IN ACCORDANCE WITH LAW. SINCE, WE HAVE SET ASIDE THE IMPUGNE D ORDER ON THE ISSUE OF VALIDITY OF REASSESSMENT PROCEEDINGS THE OTHE R GROUNDS RAISED BY THE ASSESSEE IN THE APPEAL HAVE BECOME ACAD EMIC AND THEREFORE, THEY ARE NOT DELIBERATED UPON. 9. IN THE RESULT, THE IMPUGNED ORDER IS SET ASIDE AND TH E APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON FRIDAY, THE 05 TH DAY OF AUGUST, 2016. SD/- SD/- ( . . / R.K. PANDA) ( ! ' / VIKAS AWASTHY) #' / ACCOUNTANT MEMBER $ % #' / JUDICIAL MEMBER / PUNE; &# / DATED : 05 TH AUGUST, 2016 RK *+,%-.#/#)- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ' () / THE CIT(A)-II, PUNE 4. ' / THE CIT-II, PUNE 5. !*+ %%,- , ,- , . ./0 , / DR, ITAT, B BENCH, PUNE. 6. + 1 23 / GUARD FILE. // ! % // TRUE COPY// #4 / BY ORDER, %5 ,0 / PRIVATE SECRETARY, ,- , / ITAT, PUNE