Uday Kumar Sharma, Hyderabad V. Income Tax Officer, Ward-15(2), Hyderabad

ITA 1325/Hyd/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1396 (ITAT-HYDERABAD)
• Duration Of Justice: 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 01-11-2018
• Assessment Year: 2010-2011
• Appeal Filed On: 21-06-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NILANJAN DEY
• Assessee Lawyers: LAXMINIWAS SHAR MA
• Keywords: Reopening of assessment; Sale consideration of property below Jantri Value
• Section: 50C; 142(1); 5(2); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A , HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER I.T.A. NO. 13 2 5 /HYD/201 8 ASSESSMENT YEAR: 20 1 0 - 1 1 UDAY KUMAR SHARMA, HYDER ABAD [PAN: A G XPK5019N ] VS INCOME TAX OFFICER , WARD - 1 5(2) , HYDER A BAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI LAXMINIWAS SHARMA , AR FOR REVENUE : S HRI NILANJAN DEY , DR DATE OF HEARING : 01 - 1 1 - 201 8 DATE OF PRONOUNCEMENT : 29 - 1 1 - 201 8 O R D E R PER S. RIFAUR RAHMAN, A.M. : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) 7 , HYDERABAD , DATED 25 - 0 4 - 201 8 , FOR THE AY . 20 1 0 - 1 1 . 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED H IS RETURN OF INCOME FOR THE AY. 20 1 0 - 1 1 ON 28 - 0 5 - 201 0 , DECLARING TOTAL INCOME OF RS. 2 , 78 , 30 0/ - . SUBSEQUENTLY, THE ASSESSING OFFICER RECEIVED INFORMATION THAT ASSESSEE HAS SOLD IMMOVEABLE PROPERTY OF THE MIDDLE INCOME GROUP (OVER GARAGE), BLOCK NO . 1, FLAT NO. 4, SECOND FLOOR, BEARING MUNICIPAL NO. 1 - 8 - 1/B - ITA NO. 13 2 5 /HYD/ 201 8 : - 2 - : 1/F - 4, HAVING PLINTH AREA OF 631.31 SQ. FT., ALONG WITH UNDIVIDED SHARE OF LAND OF 43.50 SQ. YDS., SITUATED AT BAGHLINGAPALLY, HYDERABAD VIDE DOCUMENT NO. 1068/2009, DT. 02 - 05 - 2009 FOR A TOTAL SA LE CONSIDERATION OF RS. 11,00,000/ - AS AGAINST THE MARKET VALUE OF RS. 15,65,221/ - . AS THE ASSESSEE DID NOT OFFER THE ABOVE LONG TERM CAPITAL GAIN IN HIS RETURN OF INCOME, NOTICE U/S. 148 OF THE INCOME TAX ACT [ACT] WAS ISSUED ON 30 - 03 - 2017, WHICH WAS DUL Y SERVED ON ASSESSEE. SUBSEQUENTLY, NOTICE U/S. 142(1) OF THE ACT WAS ISSUED. AS PER THE INFORMATION FILED BY ASSESSEE, THE ABOVE PROPERTY WAS PURCHASED BY THE ASSESSEE ON 07 - 05 - 1997 VIDE SALE DEED NO. 734/97 FOR A CONSIDERATION OF RS. 72,500/ - , AFTER PA YING STAMP DUTY OF RS. 10,061/ - . FURTHER, ASSESSEE CLAIMED COST OF IMPROVEMENT WORTH OF RS. 3,85,000/ - IN SUPPORT OF THE ABOVE IMPROVEMENT ON THE PROPERTY . ASSESSEE FILED TWO HAND MADE BILLS OF TEJAVATH RAJU NAIK DT. 20 - 08 - 1997 AND BUKYA SHANKAR NAYAK DT. 20 - 08 - 1997 FOR AN AMOUNT OF RS. 3,85,800/ - . SINCE THE BILL IS HAND MADE AND DID NOT CONTAIN THE DETAILS OF WORK DONE AND CERTAIN DISCREPANCIES NOTED BY THE ASSESSING OFFICER, ASSESSING OFFICER DISALLOWED 60% OF THE ABOVE COST OF IMPROVEMENT AND THE SAME W AS DISCUSSED BY HIM IN HIS ORDER THAT THE ABOVE DISALLOWANCE WAS MADE AS THE SAME WAS DULY AGREED BY ASSESSEE. ACCORDINGLY, LONG TERM CAPITAL GAIN WAS CALCULATED AND THE SAME WAS CHARGED TO TAX. 3. AGGRIEVED WITH THE ABOVE ORDER, ASSESSEE PREFERRED AN AP PEAL BEFORE THE CIT(A), RAISING VARIOUS GROUNDS OBJECTIN G RE - OPENING OF THE ASSESSMENT BEYOND T HE SIX YEARS AND REASONS ITA NO. 13 2 5 /HYD/ 201 8 : - 3 - : FOR REOPENING OF ASSESSMENT WAS NOT PROVIDED TO THE ASSESSEE EVEN AFTER WRITING TO THE ASSESSING OFFICER, ADOPTING SECTION 5 0C VALUATION AND OBJECTING TO DISALLOWANCE OF 60% OF THE COST OF IMPROVEMENT. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, LD.CIT(A) DISMISSED THE APPEAL OF ASSESSEE. AGGRIEVED WITH THE ABOVE ORDER, ASSESSEE PREFERRED AN APPEAL BEFORE US, RAISING TH E FOLLOWING GROUNDS OF APPEAL: 1. THE LEARNED CIT(A) ERRED IN TREATING THE ASSESSMENT AS VALID, I GNORING THAT THE NOTICE WAS ISSUED BEYOND 6 YEARS I.E. BEYOND TIME LIMIT PRESCRIBED UNDER SECTION 149 OF I NCOME TAX ACT, 1961. 2. THE LEARNED CIT(A) ERRED IN IGNORING THE FACT THAT THE ASSESSING OFFICER HAS NOT PROVIDED THE REASONS FOR REOPENING THE ASSESSMENT. HENCE, THE ASSESSMENT IS INVALID. 3. THE LEARNED CIT(A) ERRED IN REJECTING THE GROUND ON PROVISIONS OF 50 C OF INCOME TAX ACT, 1961, IGNORING THAT T HE FLAT WAS A PROPERTY ALLOTTE D BY ANDHRA PRADESH HOUSING BOARD UNDER ANDHRA PRADESH HOUSING SELF FINANCING SCHEME REGULATIONS 1975 WAS IN A DILAPIDATED CONDITION AND WAS 20 YEARS OLD PROPERTY. 4. THE LEARNED C I T(A) ERRED IN IGNORING THE REQUEST FOR REFE RENCE TO THE VALUATION OFFICER . 5. THE LEARNED CIT(A) ERRED IN DISALLOWING 60% OF THE COST OF IMPROVEMENT ON ADHOC BASIS, WHICH WAS ACTUALLY INCURRED BY THE ASSESSEE, IGNORING THE SAME WAS INCURRED IN THE A.Y 1997 - 98 AND PROOF OF THE SAME WERE SUBMITTED. 6. FOR THESE AND ANY OTHER GROUNDS WHICH MAY BE RAISED ON OR BEFORE HEARING OF THE APPEAL . 3.1. BEFORE US, ASSESSEE HAS NOT PRESSED THE GROUND NOS. 1, 3 AND GROUND NO. 6 (GENERAL IN NATURE). ITA NO. 13 2 5 /HYD/ 201 8 : - 4 - : 4. LD.AR SUBMITTED THAT ASSESSEE HAS RECEIVED NOTICE U/S . 148 AND SUBMITTED THE RELEVA NT INFORMATION VIDE LETTER DT. NIL TO THE ASSESSING OFFICER, WHICH IS PLACED ON RECORD IN PAGE NO. 12 OF THE PAPER BOOK. LD.AR SUBMITTED THAT ALONG WITH THE INFORMATION CALLED FOR BY THE ASSESSING OFFICER RELATING TO REOPENIN G OF THE ASSESSMENT, ASSESSEE HAS ASKED REASONS FOR REOPENING OF THE CASE U/S. 148 OF THE ACT . THE SAME WAS NEVER PROVIDED BY THE ASSESSING OFFICER. SUBSEQUENTLY, ASSESSEE HAS WRITTEN THE SAME TO ASSESSING OFFICER DT. NIL, OBJECTING TO THE ADOPTION OF VA LUE AS PER SECTION 50C OF THE ACT DUE TO THE CONDITION OF THE BUILDING. ASSESSING OFFICER ISSUED NOTICE CALLING FOR FURTHER INFORMATION , BASED ON THE INFORMATION SUBMITTED BY ASSESSEE. ON 25 - 09 - 2017 IN THE ABOVE NOTICE, ASSESSING OFFICER IS RELYING ON THE SALE DE ED AND PURCHASE DEED WHICH WAS SUB MITTED BY THE ASSESSEE IN THE FIRST LETTER, WHICH IS PLACED ON PAGE NO. 12 OF THE PAPER BOOK. IN THE SAME LETTER, ASSESSEE HAS REQUESTED FOR SUPPLY OF THE REASONS FOR REOPENING OF THE CASE U/S. 148 OF THE ACT. IT CLEARLY SHOWS THAT ASSE SSING OFFICER HAS RELIED O N THE IN FORMATION FILED BY THE ASSESSEE FOR COMPLETING THE ASSESSMENT BUT FAILED OR IGNORED TO SUPPLY THE REASONS FOR REOPENING OF THE ASSESSMENT. THIS IS AGAINST THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF GKN DRIVE SHAFTS (INDIA) LTD., VS. ITO [ 259 ITR 19 ] ( S C ) . 4.1. FURTHER, HE BROUGHT TO OUR NOTICE THAT ASSESSEE WAS FORCED TO ACCEPT 40% OF THE COST OF IMPROVEMENT AS DISALLOWANCE DURING THE ASSESSMENT PROCEEDINGS AND ALSO NOT TO INITIATE ANY PENALTY PROCEEDINGS. BU T ASSESSEE WAS ITA NO. 13 2 5 /HYD/ 201 8 : - 5 - : SURPRISED TO RECEIV E IN THE ASSESSMENT 60% OF THE COST OF IMPROVEMENT WAS DISALLOWED AND ALSO ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS. HE SUBMITTED THAT ASSESSING OFFICER SHOULD HAVE VERIFIED THE GENUINENESS OF THE COST OF IMPROVEMEN T AND THE INFORMATION SUPPLIED BY ASSESSEE INSTEAD HE FORCED THE ASSESSEE TO ACCEPT CERTAIN PERCENTAGE OF EXPENDITURE TO BE DISALLOWED. HE PRAYED THAT THE ABOVE ASSESSMENT WAS COMPLETED WITH HIGHHANDEDNESS NEEDS TO BE QUASHED. 5. LD.DR SUPPORTED THE ORDER S OF THE REVENUE AUTHORITIES AND S UBMITTED THAT THE A SSESSMENT WAS COMPLETED ONLY BECAUSE OF ASSESSEE ACCEPTED DISALLOWANCE VOLUNTARILY AND STOPPED FURTHER INVESTIGATION. 6 . CONSIDERED THE RIVAL SUBMISSIONS AND MATERIAL ON RECORD. WE NOTICED THAT ASSESS EE HAS SUPPLIED ALL THE INFORMATIO N RELEVANT FOR COMP LETION OF THE ASSESSMENT VIDE TWO LETTERS DT. NIL BEFORE THE ASSESSING OFFICER WHICH IS PLACED ON PAGE NO. 12 & 13 OF THE PAPER BOOK. IN THE ABOVE LETTERS, ASSESSEE HAS SUBMITTED THE DETAILS OF THE TRAN SACTIONS AND DETAILS OF RETURNS OF INCOME FILED BY TH E ASSESSEE ON 28 - 05 - 2010 AND IN THE SAME LETTER, ASSESSEE REQUESTED THE REASONS FOR REOPENING OF THE CASE U/S. 148 OF THE ACT. EVEN THOUGH ASSESSING OFFICER HAS UTILISED THE INFORMATION FILED BY ASSESSEE TO COMPLETE THE ASSESSMENT BUT FA ILED TO SUPPLY THE REASONS FOR REOPENING OF ASSESSMENT. THE NON - SUPPLY OF REASONS FOR REOPENING ITSELF LEADS TO THE CONCLUSION THAT THE REOPENING IS BAD IN LAW. AS PER THE ITA NO. 13 2 5 /HYD/ 201 8 : - 6 - : DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF GKN DRIVE SHAFTS (INDIA) LTD., V S. ITO [ 259 ITR 19 ] ( S C ) . S INCE THE ASSESSING OFFICER HAS NOT SUPPLIED ANY REASON FOR REOPENING OF THE ASSESSMENT, EVEN THOUGH IT IS MANDATORY ON HIS PART TO SUPPLY THE REASONS, LD.CIT(A) HAS ADJUDICATED THAT THE SAME WAS NOT ASKED BY ASSESSEE EVEN THOUGH ASSESSEE HAS BROUGHT ON RECORD THE LETTER SH OWING THAT HE HAS ASKED FOR THE REASONS. IN OUR CONSIDERED VIEW, THE RULE SET OUT BY THE HON'BLE SUPREME COURT FOR REOPENING IS EQUALLY APPLICABLE TO THE ASSESSING OFFICER ALSO. IT IS MANDATORY ON THE PART OF THE ASSESSING OFFICER TO SUPPLY THE REASONS WHE N THE SAME WAS ASKED BY THE ASSESSEE. THEREFORE, ASSESSING OFFICER HAS PROCEEDED TO COMPLETE THE ASSESSMENT WITHOUT SUPPLYING THE REASONS FOR REOPENING. THEREFORE, THE RE - ASSESSM ENT IS NOT SUSTAINABLE . HENCE, WE REMIT THIS ISSUE BACK TO THE FILE OF AO WITH A DIRECTION TO SUPPLY THE REASONS FOR REOPENING AND AFTER ADDRESSING THE OBJECTIONS OF THE ASSESSEE, HE MAY PASS THE RE - ASSESSMENT ORDER AFRESH. IT IS NEEDLESS TO SAY , ASSESSEE MAY BE GIVEN O PPORTUNITY OF BE ING HEARD. ACCORDI NGLY, GROUND NO. 2 RAISED BY ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. AND THE OTHER GROUNDS RAISED BY ASSESSEE BECOME INFRUCTUOUS. ITA NO. 13 2 5 /HYD/ 201 8 : - 7 - : 7 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN C OURT ON 2 9 TH NOVEM B ER , 201 8 SD/ - SD/ - (P. MADHAVI DEVI) (S. RIFAUR RAHMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED 29 TH NOVEM BER , 2018 TNMM C O P Y T O : 1. SHRI UDAY KUMAR S HARMA, A.V. APARTMENT, FLAT NO. 105, SN EHA NAGAR COLONY, STREET NO. 8, HABSIGUDA, HYDERABA D. 2. THE INCOME TAX OFFICER , WARD - 1 5(2) , HYDER ABAD. 3 . CIT(APPEALS) - 7 , HYDERABAD . 4 . PR. CIT - 7 , HYDERABAD . 5 . D.R. ITAT, HYDERABA D. 6 . GUARD FILE.