C. Jayaram (HUF), Bangalore V. ITO, Bangalore

ITA 1287/BANG/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 95380 (ITAT-BANGALORE)
• Duration Of Justice: 1 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 19-10-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S VENKATESAN
• Section: 148

Judgement Text

ITA.1287/BANG/2015 & SP.130/BANG/2015 PAGE - 1 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH 'C', BANGALORE BEFORE SHRI. ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI. VIJAYPAL RAO, JUDICIAL MEMBER I.T.A NO.1287/BANG/2015 (ASSESSMENT YEAR : 2006-07) & STAY PEITION NO.130/BANG/2015 (IN I.T.A NO.1287/BANG/2015 (ASSESSMENT YEAR : 2006-07) SHRI. C. JAYARAM (HUF), NO.154, KARIYAMANA AGRAHARA VILLAGE, VARTHUR HOBLI, BELLANDUR POST, BANGALORE 560 103 .. APPELLANT PAN : AADHC7565F V. INCOME-TAX, OFFICER, WARD 7(2), BANGALORE .. RESPONDENT ASSESSEE BY : SHRI. S. VENKATESAN, CA REVENUE BY : SHRI. SUNIL KUMAR AGARWALA, JCIT HEARD ON : 17.11.2015 PRONOUNCED ON : 27.11.2015 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : IN THIS APPEAL FILED BY ASSESSEE, IT HAS ALTOGETHE R RAISED SIX GROUNDS, OF WHICH GROUND 2 ASSAILS THE ASSUMPTION OF JURISDI CTION U/S.148 OF THE ITA.1287/BANG/2015 & SP.130/BANG/2015 PAGE - 2 INCOME-TAX ACT, 1961 (THE ACT IN SHORT). SINCE TH IS GROUND GOES TO THE ROOT OF THE MATTER IT IS CONSIDERED FIRST. 02. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE IMPUGNED ASSESSMENT YEAR WAS THE FIRST ONE IN WHICH ASSESSEE WAS ASSESS ED IN THE STATUS OF HUF. ACCORDING TO THE LD. AR THE AO ISSUED NOTICE U/S.14 8, DT.25.03.2013. AS PER THE LD. AR PURSUANT TO SUCH NOTICE ASSESSEE HAD FILED A RETURN FOR THE IMPUGNED ASSESSMENT YEAR AND ALSO REQUESTED THE AO TO FURNISH HIM A COPY OF THE REASONS RECORDED FOR ISSUE OF NOTICE. AS PER THE LD. AR ASSESSEE HAD SPECIFICALLY STATED IN THE SAID LETTER DT.12.08.2013 PLACED AT PAPER BOOK PAGE 9 THAT THE REASONS WERE BEING SOUGH T BY VIRTUE OF THE JUDGMENT OF HONBLE APEX COURT IN THE CASE OF GKN D RIVESHAFTS (INDIA) LTD V. ITO [(2003) 259 ITR 19]. AS PER THE LD. AR, SUCH REASONS WERE NEVER SUPPLIED TO THE ASSESSEE. LD. AR SUBMITTED T HAT ASSESSEE MIGHT HAVE BEEN AWARE OF THE REASONS BUT STILL THE AO HAVING N OT FURNISHED THE REASONS TO THE ASSESSEE, ASSESSMENT WAS VOID-AB-INITIO. AC CORDINGLY, AS PER THE LD. AR, ASSUMPTION OF JURISDICTION WITHOUT SUPPLYING TH E REASONS, DESPITE A SPECIFIC REQUEST FROM THE ASSESSEE WAS VOID IN VIEW OF THE JUDGMENT OF HONBLE APEX COURT IN THE CASE OF GKN DRIVESHAFTS ( INDIA) LTD (SUPRA). ITA.1287/BANG/2015 & SP.130/BANG/2015 PAGE - 3 LD. AR SUBMITTED THAT THIS ISSUE WAS TAKEN BY THE A SSESSEE BEFORE THE CIT (A) IN FIRST APPEAL. HOWEVER, AS PER LD. AR, CIT ( A) HAD HELD THAT THE ISSUES ON WHICH REOPENING WAS RESORTED TO, WERE SQU ARELY CONFRONTED TO THE ASSESSEE AND ASSESSEE HAD ACTIVELY PARTICIPATED IN THE PROCEEDINGS BEFORE THE AO. CONTINUING HIS ARGUMENTS, LD. AR SUBMITTED THAT CIT (A) HAD TAKEN A STAND THAT ASSESSEE HAVING REVISED HIS RETU RN OF INCOME FOR A. Y. 2006-07 ON 21.03.2014 WHICH REFLECTED THE CORE ISSU E FOR WHICH THE ASSESSMENT WAS REOPENED FOR THE IMPUGNED ASSESSMENT YEAR, IT COULD NOT PLEAD IGNORANCE OF THE REASONS. AS PER THE LD. AR NONE OF THE OBSERVATION OF THE CIT (A) WOULD ADDRESS A SITUATION WHERE ASSE SSEE DESPITE HIS REQUEST HAS NOT BEEN SUPPLIED WITH THE REASONS FOR REOPENIN G. ACCORDING TO HIM FOR THIS REASON ALONE ASSESSMENT HAD TO BE QUASHED. RE LIANCE WAS PLACED ON THE JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CAS E OF PR.CIT V. SAMCOR GLASS LTD [ITA NOS.768 & 769/2014, DT.12.10.2015]; HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT V. TREND ELECTRONICS [ITA.1867 OF 2013, DT.16.09.2014 AND THAT OF HONBLE JURISDICTIONAL HI GH COURT IN THE CASE OF KOTHARI METAL [W. A. NO.218/2015 [IT] DT.14.08.2015 ]. 03. PER CONTRA, LD. DR SUBMITTED THAT ASSESSEE HAD ENTERED INTO A JOINT DEVELOPMENT AGREEMENT WITH VASWANI ESTATES DEVELOPE RS P. LTD, FOR ITA.1287/BANG/2015 & SP.130/BANG/2015 PAGE - 4 DEVELOPMENT OF LAND MEASURING 1 ACRE AND 21.58 GUNT AS. AS PER THE LD. DR, VIDE THIS JOINT DEVELOPMENT AGREEMENT ASSESSEE WAS ENTITLED TO 31% OF THE SUPER BUILT-UP AREA UPON COMPLETION OF THE PROJ ECT AND THIS 69% OF THE LAND STOOD CONVEYED TO THE BUILDER. CAPITAL GAINS ARISING TO THIS TRANSACTION WAS NOT REPORTED AND ASSESSEE HAD FAILED TO FILE A RETURN OF INCOME FOR IMPUGNED ASSESSMENT YEAR. IT WAS FOR THIS REASON T HAT THE ASSESSMENT WAS REOPENED. ASSESSEE HAD NEVER FILED A RETURN FOR TH E IMPUGNED ASSESSMENT YEAR. IN THE RETURN FILED PURSUANT TO THE NOTICE A SSESSEE HAD COMPUTED CAPITAL GAINS ON THE VERY SAME PROPERTY. THUS ACCO RDING TO THE LD. DR ASSESSEE WAS AWARE OF THE REASON FOR WHICH NOTICE U /S.148 OF THE ACT WAS ISSUED. ASSESSEE HAD ACTIVELY PARTICIPATED IN THE ASSESSMENT PROCEEDINGS ALSO. THUS ACCORDING TO HIM ASSESSEE ON THE ONE HA ND WAS ASKING FOR A COPY OF REASONS, BUT WHEREAS ON THE OTHER HAND IT H AD DECLARED INCOME ON ACCOUNT OF CAPITAL GAINS ON THE VERY SAME TRANSACTI ONS WHICH WAS THE CORE REASON WHY NOTICE U/S.148 OF THE ACT WAS ISSUED. 04. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL CONTENTIONS. NOTICE DATED.25.03.2013 ISSUED U/S.148 OF THE ACT HAS BEEN PLACED BY THE ASSESSEE AT PAPER BOOK PAGE.1. ASSESSEE HAD, BY VIRTUE OF I TS LETTER DT.12.08.2013, REQUIRED THE AO TO FURNISH THE REASONS FOR ISSUE OF SUCH NOTICE. SUCH LETTER ITA.1287/BANG/2015 & SP.130/BANG/2015 PAGE - 5 WAS SUBMITTED ALONG WITH THE RETURN OF INCOME FILED IN PURSUANCE TO NOTICE U/S.148 OF THE ACT. IT MIGHT BE TRUE THAT ASSESSEE IN SUCH RETURN HAD SHOWN CAPITAL GAINS ARISING OUT OF THE JOINT DEVELOPMENT AGREEMENT HE ENTERED WITH VASWANI ESTATES DEVELOPERS P. LTD. IT MIGHT ALSO BE TRUE THAT THIS MIGHT HAVE BEEN THE REASON FOR WHICH THE NOTICE U/S .148 OF THE ACT WAS ISSUED. HOWEVER, IT REMAINS AN UNCONTROVERTED FACT THAT AO HAD NOT COMPLIED WITH THE LAW LAID DOWN BY THE HONBLE APEX COURT IN THE CASE OF GKN DRIVESHAFTS (INDIA) LTD (SUPRA). AO HAD NOT GI VEN COPY OF THE REASONS FOR WHICH NOTICE U/S.148 OF THE ACT WAS ISS UED. IN OUR OPINION AWARENESS OF THE ASSESSEE AS TO THE REASON WHY NOTI CE U/S.148 OF THE ACT WAS ISSUED MAY NOT BE SUFFICIENT TO SATISFY THE REQ UIREMENT IN THIS REGARD. NO DOUBT LD. DR HAS RELIED ON A JUDGMENT OF HONBLE MADRAS HIGH COURT IN THE CASE OF CIT V. C. PALANIAPPAN [(2011) 241 CT R 207] WHERE IT WAS HELD THAT NON-FURNISHING OF REASONS WAS ONLY A SUPE RVENING ILLEGALITY AND WOULD NOT RENDER THE PROCEEDINGS VOID BY ITSELF. H OWEVER, WE FIND THAT HONBLE DELHI HIGH COURT IN THE CASE OF SAMCOR GLAS S LTD [SUPRA] AND HONBLE BOMBAY HIGH COURT IN THE CASE OF TREND ELEC TRONICS [SUPRA] HAD HELD THAT JURISDICTIONAL ISSUES SHOULD BE STRICTLY COMPLIED WITH BY THE AUTHORITIES CONCERNED AND NO QUESTION OF KNOWLEDGE BEING ATTRIBUTED ON THE BASIS OF IMPLICATION CAN ARISE. HONBLE JURISDICT IONAL HIGH COURT IN THE ITA.1287/BANG/2015 & SP.130/BANG/2015 PAGE - 6 CASE OF KOTHARI METALS (SUPRA), WHERE A REOPENING W AS ATTEMPTED ON A RETURN SUBJECT TO PROCESSING U/S.143(1) OF THE ACT, HAD HELD AS UNDER AT PARA 6 OF ITS JUDGMENT DT.14.08.2015 : 6. THE QUESTION OF NON-FURNISHING THE REASONS FOR RE-OPENING AN ALREADY CONCLUDED ASSESSMENT GOES TO THE VERY ROOT OF THE MATTER. AFTER FILING OF THE RETURN IN RESPONSE TO THE NOTICE ISSUED UNDER SECTION 148 OF THE ACT O R ON REQUEST OF THE ASESSEE REQUESTING THAT THE RETURN OF INCOME INITIALLY FILED BE TREATED AS A RETURN OF INCOME FILED IN RES PONSE TO SUCH NOTICE, THE ASSESSEE IS ENTITLED TO BE FURNISHED THE REASONS FOR SUCH RE-OPENING, WHICH CAN ALSO BE CHAL LENGED INDEPENDENTLY. SINCE SUCH REASONS HAD NOT BEEN FURN ISHED TO THE APPELLANT, EVEN THOUGH A REQUEST FOR THE SAME H AD BEEN MADE, WE ARE OF THE OPINION THAT PROCEEDINGS F OR THE RE-ASSESSMENT COULD NOT HAVE BEEN TAKEN FURTHER ON THIS GROUND ALONE. 05. ONCE A JURISDICTIONAL HIGH COURT DECISION IS TH ERE ON A PARTICULAR LEGAL ISSUE, THIS TRIBUNAL BEING AN INFERIOR FORUM TO JURISDICTIONAL HIGH COURT, IS BOUND TO FOLLOW THE SAID JUDGMENT. ACCO RDINGLY WE ARE CONSTRAINED TO QUASH THE ASSESSMENT DONE ON THE ASS ESSEE FOR THE IMPUGNED ASSESSMENT YEAR. APPEAL OF THE ASSESSEE HAVING BEE N ALLOWED ON LEGAL GROUND ITSELF, OTHER GROUNDS RELATING TO THE MERITS OF THE ISSUE ARE NOT DEALT WITH. ASSESSEES APPEAL IS ALLOWED. 06. SINCE THE APPEAL OF THE ASSESSEE HAS BEEN ALLOW ED, THE STAY PETITION FILED BY THE ASSESSEE HAS BECOME INFRUCTUOUS AND IT IS DISMISSED. ITA.1287/BANG/2015 & SP.130/BANG/2015 PAGE - 7 07. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D WHILE ITS STAY PETITION IS DISMISSED AS INFRUCTUOUS. ORDER PRONOUNCED IN THE OPEN COURT ON 27TH DAY OF N OVEMBER, 2015. SD/- SD/- (VIJAYPAL RAO) (ABRAH AM P GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER MCN COPY TO: 1. THE ASSESSEE 2. THE ASSESSING OFFICER 3. THE COMMISSIONER OF INCOME-TAX 4. COMMISSIONER OF INCOME-TAX(A) 5. DR 6. GF, ITAT, BANGALORE BY ORDER ASSISTANT REGISTRAR