SMT. PADMAVATHI, TIRUNELVELI V. ITO, WARD 3, TIRUNELVELI

ITA 1306/CHNY/2019

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 3352 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-12-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 29-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R ANITHA IRS
• Assessee Lawyers: G BASKAR
• Keywords: Unexplained cash credit; Sale consideration of property below Jantri Value; Value adopted by valuation officer; Gift; Source of fund; Set aside
• Section: 50C; 56; 263

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : CHENNAI , , BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ./I.T.A. NO.1306/CHNY/2019 ! ' / ASSESSMENT YEAR : 2014-2015 SMT. PADMAVATHI, NO.36A/66, KEEZHAPALLIVASAL STREET, TISAYANVILAI, TIRUNELVELI DIST. 627 657 VS. THE INCOME TAX OFFICER, WARD -3, TIRUNELVELI. [PAN BSVPP 4320E] ( / APPELLANT) ( /RESPONDENT) # $ % / APPELLANT BY : SHRI. G. BASKAR, ADVOCATE & ' # $ % /RESPONDENT BY : MS. R. ANITHA, IRS, JCIT. ( ) $ * /DATE OF HEARING : 28-11-2019 +,'! $ * /DATE OF PRONOUNCEMENT : 02-12-2019 / O R D E R PER INTURI RAMA RAO , ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED AG AINST THE ORDER OF THE PRINCIPAL COMMISSIONER OF INCOME TAX-2, MADURAI, (PCIT FOR SHORT) DATED 18.03.2019 FOR THE ASSES SMENT YEAR (AY) 2014-2015 PASSED U/S.263 OF THE ACT. ITA NO.1306/2019 :- 2 -: 2. THE ASSESSEE RAISED THE FOLLOWING GROUNDS OF APPEAL : 1.1 THE IMPUGNED ORDER OF THE COMMISSIONER OF INC OME TAX U/S.263 OF THE INCOME TAX ACT IS WRONG, ILLEGAL AND OPPOSED TO FACTS. 1.2 THE CIT OUGHT TO HAVE SEEN THAT THE ORDER OF AS SESSMENT IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTERES T OF THE REVENUE WARRANTING REVISION. 1.3 THE CIT OUGHT TO HAVE SEEN THAT THE RETURN OF I NCOME HAD BEEN PICKED UP FOR LIMITED SCRUTINY FOR THE PURPOSE OF VERIFICATION OFSOURCES FOR THE PURCHASE OF IMMOVABL E PROPERTY, WHICH THE ASSESSING OFFICER DID; AND AS SUCH THE OR DER OF ASSESSMENT DOES NOT SUFFER FROM ANY ILLEGALITY. 1.4 THE CIT ERRED IN STATING THAT THERE WAS LACK OF ENQUIRY, WHEN THE SHOW CAUSE NOTICE AS WELL AS THE ORDER U/S 263 CLEARLY USE THE WORDS NOT PROPERLY ENQUIRED INTO. 2.1 THE CIT WENT WRONG IN INVOKING THE PROVISIONS O F SECTION 56(2)(VII)(B)(II) OF THE INCOME TAX ACT. THE CIT FA ILED TO NOTE THAT THE SAID PROVISION IS APPLICABLE ONLY W.E.F. 0 1.04.2014 FOR PURCHASES, AND CANNOT BE MADE APPLICABLE FOR THIS T RANSACTION. 2.2 THE CIT ERRED IN OBSERVING THAT IT IS NOT DISCE RNABLE FROM THE RECORDS THAT THE ASSESSEE HAD MADE A REQUEST FO R REFERENCE TO VALUATION OFFICER, WITHOUT CONSIDERING THAT SUCH REQUEST WILL BE MADE ONLY WHEN THE AO PROPOSES TO MAKE AN ADDITI ON. 2.3 THE CIT HAVING CANCELLED THE ASSESSMENT OUGHT N OT TO HAVE DIRECTED A FRESH ASSESSMENT. THE ASSESSMENT ONCE CA NCELLED CANNOT BE REVIVED BY DIRECTING HIM TO PASS A FRESH ORDER OF ASSESSMENT. 3. ANY OTHER GROUND THAT MAY BE ADDUCED AT THE TIME OF HEARING. ITA NO.1306/2019 :- 3 -: 3. THE BRIEF FACTS OF THE CASE ARE AS UNDER: THE APPELLANT IS AN INDIVIDUAL AND PARTNER IN SRI RAM ASSOCIATES. THE RETURN OF INCOME FOR THE A Y 2014-15 WAS FILED ON 27.10.2015 DISCLOSING TOTAL INCOME OF I2,58,110 /-. AGAINST THE SAID RETURN OF INCOME, THE CASE WAS SELECTED FOR L IMITED SCRUTINY IN ORDER TO VERIFY THE SOURCE OF FUNDS USED FOR PURCHA SE OF IMMOVABLE PROPERTY TO THE EXTENT OF I77,19,00/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESSEE HAD EXPLAINED THE SOURCE FOR ACQUISITION OF PROPERTY PURCHASE OF I41,50,000/- A ND REGISTRATION AND OTHER CHARGES OF I5,75,000/-. THE ASSESSING OFFICE R COMPLETED THE ASSESSMENT VIDE ORDER DATED 28.12.2016 PASSED U/S.1 43(3) OF THE ACT AFTER MAKING ADDITION OF I3,00,000/- DISBELIEVING T HE RECEIPT OF GIFT RECEIVED FROM HIS BROTHER SHRI. LAKSHMANAN AND ACC EPTING THE EXPLANATION FOR THE BALANCE SOURCES OF MONEY FOR PU RCHASE OF IMMOVABLE PROPERTY. 4. WHILE THE MATTER STOOD THUS, THE LD. PCIT, MADURA I-2 ON EXAMINATION OF THE RECORDS FOUND THAT THE ASSESSING OFFICER HAD NOT ENQUIRED INTO ISSUE OF APPLICABILITY OF SECTION 50C OF THE ACT IN THE HANDS OF THE ASSESSEE, AS THE ASSESSEE HAD PURCHASE D THE IMMOVABLE PROPERTY FOR A CONSIDERATION OF I41,50,000/- AGAINS T STAMP DUTY VALUE OF THE PROPERTY OF I77,19,000/-. ACCORDINGLY, ISSU ED SHOW CAUSE ITA NO.1306/2019 :- 4 -: NOTICE DATED 26.10.2018 U/S.263 OF THE ACT. IN RES PONSE TO THE SHOW CAUSE NOTICE, ASSESSEE HAD FILED DETAILED EXPLANATI ON CONTENDING THAT PROVISIONS OF SECTION 50C OF THE ACT HAS NO APPLICA TION IN THE HANDS OF THE PURCHASER OF THE PROPERTY AND THE PROVISIONS OF SECTION 56(2)(VII) (B) OF THE ACT HAS NO APPLICABILITY TO THE PRESENT CASE AND THE ISSUE WAS EXAMINED DURING THE COURSE OF ASSESSMENT PROCEE DINGS. HOWEVER, THE LD. PCIT CONSIDERING THE SUBMISSIONS MADE HELD THAT NO ENQUIRY WAS CONDUCTED BY THE ASSESSING OFFICER INT O THE DIFFERENCE OF I35,69,000/- BETWEEN THE VALUE ADOPTED FOR STAMP DUTY PURPOSE AND APPARENT CONSIDERATION HAD SET ASIDE THE ASSES SMENT VIDE ORDER DATED 18.03.2019. 5. BEING AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFOR E US. LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT ASSESS EES CASE FOR ASSESSMENT YEAR 2014-15 WAS TAKEN FOR LIMITED SCRUT INY ASSESSMENT TO VERIFY THE SOURCE FOR FUNDS FOR PURCHASE OF IM MOVABLE PROPERTY TO THE TUNE OF I77,19,000/-. CONSIDERING THE EVIDEN CE FILED BEFORE HIM, THE ASSESSING OFFICER PASSED THE ASSESSMENT ORDER. THEREFORE, IT CANNOT BE SAID THAT ASSESSING OFFICER HAD NOT MADE ANY ENQUIRY INTO THE ISSUE WHICH IS SOUGHT TO BE REVISED. FURTHER, IT IS SUBMITTED THAT WHEN THE CASE WAS TAKEN UP FOR LIMITED SCRUTINY, THE ASSESSING OFFICER IS BARRED TO LOOK INTO THE MATTER OTHER THA N THE ISSUE FOR WHICH THE CASE WAS TAKEN UP. IN SUPPORT OF THIS, HE PLAC ED RELIANCE ON CBDT ITA NO.1306/2019 :- 5 -: INSTRUCTION NO.20/2015, DATED 29 TH DECEMBER, 2015 AND THE FOLLOWING CASE LAWS. 01 ITO VS. PERICLES FOODS, 17 SOT 602. 02 GIFT LAND HANDICRAFT VS. CIT, 108 TTJ 0312. 03 NAYEK PAPER CONVERTERS VS. ACIT, 93 ITR 144. 04 AJIT GUPTA VS. ITO, 108 TTJ 301. 05 CIT VS. NARAYANA P. DEDHIA, 270 ITR 572 06 DCIT VS. SUNITA FINLEASE LTD, 330 ITR 491 07 KWALPRO EXPORTS VS. ACIT, 110 ITD 59 08 CIT VS. AMAL GENERATORS LTD 84 DTR 0045. 09 CIT VS. HOWRAH FLOUR MILLS LTD, 236 ITR 156. 10 CIT VS. PVP VENTURES 211 TAXMAN 554 11 JAI COMMERCIAL CO. LTD VS. JCIT, 76 ITR 65 AND 12 ANDHRA VALLEY POWER SUPPLY CO. LTD VS. DCIT, 55 ITD 24. THUS, THE LD. AUTHORISED REPRESENTATIVE SUBMITTED T HAT LD. PCIT OUGHT NOT HAVE EXERCISED THE POWER OF REVISION IN THE INS TANT CASE. 6. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTAT IVE SUBMITTED THAT THE ASSESSING OFFICER HAD NOT LOOKED INTO THE ISSUE OF APPLICABILITY OF PROVISIONS OF SECTION 56 (2) (VII) (B) OF THE ACT, THEREFORE THE LD. PCIT WAS JUSTIFIED IN EXERCISING THE POWER OF REVISION. 7. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATE RIAL ON RECORD. THE ONLY ISSUE IN THE PRESENT APPEAL RELATE S TO THE VALIDITY OF THE REVISION ORDER PASSED BY THE LD. PCIT, U/S.26 3 OF THE ACT. ADMITTEDLY, THE ASSESSMENT WAS TAKEN UP UNDER LIMIT ED SCRUTINY IN ORDER TO VERIFY THE SOURCE FOR PURCHASE OF PROPERTY TO THE TUNE OF 77,19,000/-. AFTER CONSIDERING THE MATERIALS PLA CED BEFORE HIM, THE ASSESSING OFFICER HAD COMPLETED THE ASSESSMENT AFTE R MAKING ADDITION ITA NO.1306/2019 :- 6 -: OF 3,00,000/- TREATING THE GIFT RECEIVED FROM HIS BRO THER AS UNEXPLAINED CASH CREDIT. BUT IT APPEARS THAT THE ASSESSING OFFICER HAD LOOKED INTO ISSUE OF SOURCE ONLY TO THE EXTENT OF 41,50,000/- WHICH IS APPARENT CONSIDERATION PAID FOR THE PURCH ASE OF PROPERTY. THE VALUE ADOPTED FOR STAMP DUTY PURPOSE IS TAKEN AS DEEMED CONSIDERATION U/S.56(2)(VII) (B) OF THE ACT AND THIS IS ONLY DEEMED PROVISION AND THERE IS NO OCCASION FOR THE ASSESSEE TO EXPLAIN THE SOURCE FOR DEEMED CONSIDERATION PAID. IT IS SETTL ED POSITION OF LAW THAT WHILE COMPLETING THE ASSESSMENT UNDER LIMITED SCR UTINY, THE ASSESSING OFFICER CANNOT LOOK BEYOND THE ISSUE FOR WHICH THE CASE WAS SELECTED FOR SCRUTINY. IT IS BEYOND THE POWER O F THE ASSESSING OFFICER TO LOOK INTO ANY OTHER ISSUE WHICH HAS COME TO HIS NOTICE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THEN THE ISSUE THAT COMES UP FOR OUR CONSIDERATION IS WHETHER THE LD. PCIT COULD EXERCISE THE POWER OF REVISION TO LOOK INTO ANY OTHER ISSUE WHICH THE ASSESSING OFFICER HIMSELF COULD NOT LOOK. IN OUR CONSIDERED OPINION, THE ANSWER IS AN EMPHATIC NO. IN THE CIRCUMSTANCES, THE I MPUGNED ORDER PASSED BY THE LD. PCIT CANNOT BE SUSTAINED IN THE E YES OF LAW. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE ST ANDS ALLOWED. ITA NO.1306/2019 :- 7 -: ORDER PRONOUNCED ON 2ND DAY OF DECEMBER 2019, A T CHENNAI. SD/- SD/- ( ) (GEORGE MATHAN) /JUDICIAL MEMBER ( ) (INTURI RAMA RAO) /ACCOUNTANT MEMBER -) / CHENNAI . / DATED:2ND DECEMBER, 2019. KV /0 $0& *12032'* / COPY TO: 0 1 . # / APPELLANT 3. 0 ( 4*056 / CIT(A) 5. 278 0& * 9 / DR 2. &' # / RESPONDENT 4. 0 ( 4* / CIT 6. 8:0;) / GF