ITO, Bijapur V. Shri. R.D. Mahindrakar, Bijapur

ITA 1347/BANG/2008

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 0604 (ITAT-BANGALORE)
• Duration Of Justice: 11 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 1996-1997
• Appeal Filed On: 06-11-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V SREELEKHA
• Assessee Lawyers: V SRINIVASAN PAGE OF
• Keywords: Unexplained investment; Valuation report; Revised return; Set aside
• Section: 143(3); 234B; 260A; 143(1); 69; 148

Judgement Text

PAGE 1 OF 8 ITA NOS.1347 & 1348/BANG/2008 1 IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH B' BEFORE SHRI K P T THANGAL, VICE PRESIDENT AND SHRI N L KALRA, A.M. ITA NOS.1347/BANG/2008 (ASST. YEAR 1996-97) THE INCOME TAX OFFICER, WARD-1, BIJAPUR. - APPELLANT VS SHRI R D MAHINDRAKAR & SHRI S D MAHINDRAKAR, L/HEIRS OF LATE SRI DASHRAT B MAHINDRAKAR, STATION ROAD, BIJAPUR. - RESPONDENT ITA NO.1348/BANG/2008 (ASST. YEAR 1996-97) THE INCOME TAX OFFICER, WARD-1, BIJAPUR. - APPELLANT VS SMT. SULOCHANA D MAHINDRAKAR & SMT. SUMAN R. KHAMITKAR, SMT. SHOBHA V JOIJODE, SMT. SUNITA S VAIKUNTHE, L/HEIRS OF LATE SRI DASHRAT B MAHINDRAKAR, STATION ROAD, BIJAPUR. - RESPONDENT APPELLANT BY : SMT. V SREELEKHA RESPONDENT BY : SHRI V SRINIVASAN PAGE 2 OF 8 ITA NOS.1347 & 1348/BANG/2008 2 O R D E R PER N L KALRA : THE REVENUE HAS FILED APPEALS AGAINST THE ORDER O F LEARNED CIT(A), BELGAUM DATED 13TH AUGUST, 2008. 2. ONE OF THE GROUNDS OF APPEAL RAISED BY THE REVENUE FOR BOTH THE ASST. YEARS IS THAT THE LEARNED CIT(A) HAS ERRED IN QUASHING THE SET ASIDE ASSESSMENT MADE BY A SSESSING OFFICER IN ACCORDANCE WITH DIRECTIONS OF ITAT ON TH E GROUND THAT THE HIGH COURT HAD REMANDED THE ISSUE OF GETTI NG THE PROPERTY VALUED BY DVO AND RE-DO THE ASSESSMENT. 3. SHRI DASHRATH B MAHINDRAKAR EXPIRED ON 4TH APRI L, 1996. IN THE CAPACITY OF LEGAL REPRESENTATIVE, SHRI RAMAKANT DASHRAT MAHINDRAKAR, SON OF THE DECEASED ASSESSEE F ILED THE ASSESSEE'S ORIGINAL RETURN OF INCOME FOR THE ASST. YEAR 1996-97 ON 21ST AUGUST, 1996 DECLARING TOTAL INCOME OF RS.6 5,990/-. THE RETURN OF INCOME WAS ACCEPTED U/S 143(1) ON 28T H NOVEMBER, 1996. SUBSEQUENTLY, INCOME TAX APPELLATE TRIBUNAL DISPOSED OFF THE APPEALS OF SHRI R D MAHINDRAKAR AN D SHRI S D MAHINDRAKAR FOR THE ASST. YEAR 1997-98 ON 27TH JANUA RY, 2003. THE TRIBUNAL VIDE THAT ORDER HELD THAT PROPERTY WAS PURCHASED BY THE ASSESSEE'S SONS FOR RS.55 LAKHS AS AGAINST RS .11.25 LAKHS SHOWN BY THEM. SINCE THE ASSESSEE HAD INITIALLY PAID RS.15 LAKHS PRIOR TO HIS DEATH FOR THE SAME PROPERTY AS EVIDENT FROM THE PAGE 3 OF 8 ITA NOS.1347 & 1348/BANG/2008 3 DOCUMENTS IN THE POSSESSION OF THE DEPARTMENT, THER EFORE, THE ITAT DIRECTED THE AO TO EXAMINE WHETHER THE FATHER I.E. THE ASSESSEE HAD DISCLOSED THE AMOUNT OF RS.15 LAKHS. THE TRIBUNAL FURTHER HELD THAT NECESSARY ACTION AS PER LAW BE TA KEN TO DETERMINE THE TAXABILITY OR OTHERWISE OF RS.15 LAKHS IN THE ASSESSEE'S HANDS AND DELETED THE ADDITION IN THE HA NDS OF THE SONS TO THIS EXTENT. SINCE THE ASSESSEE DID NOT DI SCLOSE THE PAYMENT OF RS.15 LAKHS IN THE ORIGINAL RETURN OF INC OME AND THEREFORE, PROCEEDINGS WERE INITIATED U/S 148 OF TH E I T ACT. ASSESSMENT WAS COMPLETED U/S 143(3) ON 4TH AUGUST, 2003. THE TRIBUNAL, BANGALORE VIDE ORDER DATED 8TH DECEMB ER, 2006 DIRECTED THE ASSESSING OFFICER TO PROCEED IN ACCORD ANCE WITH LAW AGAINST ALL THE LEGAL HEIRS. ON THE BASIS OF S UCH ORDER, THE AO ISSUED NOTICES U/S 148 TO ALL THE LEGAL HEIRS ON 20TH AUGUST, 2007. 4. SHRI R D MAHINDRAKAR AND S D MAHINDRAKAR JOINTL Y PURCHASED A PROPERTY AND DURING THE COURSE OF SURVEY, DOCUMENT WAS FOUND WHICH SHOWED THAT THE PROPERTY WA S PURCHASED FOR RS.55 LAKHS. SALE CONSIDERATION RECO RDED IN THE SALE DEED WAS RS.11.25 LAKHS. RETURNS WERE FILED B Y THE MAHINDRAKAR BROTHERS IN WHICH PURCHASE CONSIDERATIO N OF RS.35 LAKHS WAS ADMITTED. SUBSEQUENTLY, REVISED RETURNS W ERE FILED VIDE WHICH IT WAS STATED THAT THE CONSIDERATION WAS RS.11.25 LAKHS. THE INVESTMENT IN THE PROPERTY WAS HELD BY TH E ITAT AT RS.55 LAKHS. SINCE RS.15 LAKHS WAS PAID BY THE DECE ASED, PAGE 4 OF 8 ITA NOS.1347 & 1348/BANG/2008 4 THEREFORE, THE ITAT HELD THAT ONLY RS.28,75,000/- I. E. DIFFERENCE OF RS.55 LAKHS MINUS RS.15 LAKHS MINUS R S.11.28 LAKHS BEING THE SALE CONSIDERATION AFTER SALE DEED AS UNEXPLAINED INVESTMENT OF THE BROTHERS TO BE ASSESS ED IN THEIR HANDS. THEREFORE, THE ONUS WAS ON THE ASSESSEE TO EXPLAIN THE SOURCE OF INVESTMENT OF RS.15 LAKHS. SINCE THIS AM OUNT HAS NOT BEEN EXPLAINED, THEREFORE, THE AO ADDED THE SAME TO THE INCOME OF THE ASSESSEE U/S 69 OF THE I T ACT. THE INCOME WAS HELD IN THE CASE OF SHRI DASHRATH B MAHINDRAKAR AND THE ASSESSMENT HAS BEEN MADE ON INDIVIDUAL HEIRS. 5. THE REVENUE FILED AN APPEAL AGAINST THE ORDER O F THE ITAT FOR THE ASST. YEAR 1997-98. THE FOLLOWING QUESTIONS OF LAW WERE RAISED BEFORE THE HON'BLE JURISDICTIONA L HIGH COURT:- 1. WHETHER UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE FINDINGS OF THE TRIBUNAL, THE SALE CONSIDERATION OF THE PROPERTY PURCHASED BY THE APPELLANT IS RS.55 LAKHS IS PERSE PERVERSE? 2. WHETHER UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE TRIBUNAL IS JUSTIFIED IN HOLDING THAT THE STATEMENTS MADE IN THE AFFIDAVIT WHICH BY CONDUCT OF THE APPELLANT STANDS RETRACTED AMOUNTS TO ADMISSION AND CAN BE RELIED UPON? 3. WHETHER UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE TRIBUNAL IS JUSTIFIED IN RELYING UPON THE SO-CALLED EVIDENCE IN FORM OF THE AFFIDAVIT, ROI'S ETC. WITHOUT CONSIDERING THE APPELLANT'S PLEA FOR CROSS- PAGE 5 OF 8 ITA NOS.1347 & 1348/BANG/2008 5 EXAMINATION OF THE VENDOR AND WITNESSES EVEN FROM THE EARLIEST STAGE? 4. WHETHER HAVING REGARD TO SECTION 31 OF THE EVIDENCE ACT THE AFFIDAVIT RELIED UPON BY THE REVENUE COULD BE CONSIDERED AS CONCLUSIVE PROOF IN THE LIGHT OF THE EXPLANATION GIVEN BY THE APPELLANTS AND ALSO THE AFFIDAVIT SWORN BY DINESH CHANDRA SAHAH ON 15.11.1996? 5. WHETHER UNDER THE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE, AND ADDITION UNDER SECTION 69 OF THE ACT CAN BE MADE WHEN THE INVESTMENT ITSELF IS IN DISPUTE? 6. WHETHER UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANT'S CASE, INTEREST UNDER SECTION 234B OF THE ACT CAN BE LEVIED? 7. IT IS SUBMITTED THAT IN TERMS OF SUB-SECTION (6) OF SECTION 260A OF THE ACT, THIS HON'BLE COURT MAY BE PLEASED TO FORMULATE SUCH OTHER QUESTIONS OF LAW FOR ITS DECISION OF THE ACT? 6. THE HON'BLE HIGH COURT NOTICED THAT AS PER THE GUIDELINES ISSUED IN THE YEAR 1996, THE MARKET VALUE OF THE LAND FOR THAT PARTICULAR AREA FIXED BY COLLECTOR AT RS.28 0 PER SQ FT FOR COMMERCIAL AREA AND RS.160 PER SQ FT FOR RESIDE NTIAL AREA. IF THE PRICE IS TAKEN AT RS.55 LAKHS FOR THE WHOLE AREA THEN THE RATE WILL COME TO RS.3,816/- PER SQ FT. IF THE AMO UNT IS TAKEN AS PER THE SALE CONSIDERATION, THE RATE WILL COME T O RS.779/- PER SQ FT. AFTER CONSIDERING THE FACTUAL SITUATION, TH E HON'BLE HIGH COURT GAVE THE FINDING IN PARA 14 OF THE ORDER, WHI CH IS REPRODUCED AS UNDER:- PAGE 6 OF 8 ITA NOS.1347 & 1348/BANG/2008 6 '14. THUS, CONSIDERING THE MATTER FROM ALL ANGLES, WE ARE OF THE CONSIDERED OPINION THAT THE MATTER DESERVES TO BE REMANDED TO THE AO WITH A DIRECTION THAT HE WILL GET THE PROPERTY VALUED THROUGH THE HELP OF DEPARTMENTAL VALUATION OFFICER AND GET THE MARKET VALUE OF THE PROPERTY FIXED AS IT EXISTED IN THE YEAR 1996. AFTER SUBMISSION OF THE VALUATION REPORT BY THE DEPARTMENTAL VALUATION OFFICER, IT WILL BE OPEN TO THE AO TO PROCEED FURTHER IN THE MATTER IN ACCORDANCE WITH LAW, AFTER GIVING OPPORTUNITY OF HEARING TO BOTH SIDES. IN THE LIGHT OF THE AFORESAID DISCUSSIONS, IMPUGNED ORDER PASSED BY THE TRIBUNAL, COMMISSIONER OF INCOME TAX (APPEAL) AND AO ARE HEREBY SET ASIDE AND QUASHED'. 7. ONCE THE ORDER OF THE TRIBUNAL HAS BEEN SET ASI DE AND QUASHED BY THE HON'BLE HIGH COURT THEN THE PROCE EDINGS INITIATED ON THE BASIS OF SUCH ORDER CANNOT BE SUST AINED. THE BANGALORE TRIBUNAL WHILE DECIDING THE APPEAL FOR TH E ASST. YEAR 1996-97 HAS MENTIONED THAT THEIR ORDER IS SUBJECT T O THE ORDER OF THE HIGH COURT. ASSESSMENT IS TO BE FRAMED WITH IN THE TIME PERIOD AVAILABLE U/S 153 AND IF DURING THAT ORDER, THE ORDER OF THE HIGH COURT IS MADE AVAILABLE, THE ASSESSING OFF ICER WILL BE DUTY BOUND TO CONSIDER THE SAME. IT IS CLEAR THEREF ORE THAT THE TRIBUNAL WAS AWARE THAT THE MATTER IS PENDING BEFOR E THE HIGH COURT. NOW THE HON'BLE HIGH COURT HAS DECIDED THE ISSUE FOR THE ASST. YEAR 1997-98 AND HAS DIRECTED THE AO TO GE T THE REPORT FROM THE DEPARTMENTAL VALUATION OFFICER. CO PY OF VALUATION REPORT BY VALUATION CELL, HUBLI SHOWS THAT THE PAGE 7 OF 8 ITA NOS.1347 & 1348/BANG/2008 7 VALUATION HAS BEEN MADE AT RS.11,63,600/-. SINCE T HE SUM OF RS,.11,25,000/- SHOWN IN THE SALE CONSIDERATION WAS NOT TREATED AS UNEXPLAINED INVESTMENT BY THE TRIBUNAL AND THE IS SUE WAS OF ASSESSMENT OF RS.15 LAKHS FOR THE ASST. YEAR 1996-97 , NOW THE ASSESSING OFFICER WILL BE REQUIRED TO COMPLETE THE ASSESSMENT FOR THE ASST. YEAR 1997-98 AS PER THE DIRECTIONS OF THE HON'BLE JURISDICTIONAL HIGH COURT. IN CASE, THE FAIR MARKE T VALUE OF THAT PROPERTY IS ACCEPTED AS SHOWN IN THE SALE DEED THEN THERE IS NO QUESTION OF ANY ADDITION OF RS.15 LAKHS TOWARDS UNEX PLAINED INVESTMENT IN THE PROPERTY. THE LEARNED CIT(A) HAS THEREFORE RIGHTLY QUASHED THE ASSESSMENT ORDER. THE ASSESSING OFFICER IS DUTY BOUND TO COMPLETE THE ASSESSMENT FOR THE ASS T. YEAR 1997-98 AS PER THE DIRECTIONS OF THE HON'BLE JURISD ICTIONAL HIGH COURT. THEREAFTER, IF CONSIDERED NECESSARY, HE CAN TAKE REMEDIAL ACTION AS PER LAW. SINCE THE FACTS IN ALL THE THREE CASES ARE THE SAME, THEREFORE, THE APPEALS FILED IN RESPECT OF THREE ASSESSEES BY THE REVENUE ARE DISMISSED. 8. IN THE RESULT, THE APPEALS FILED BY THE REVENUE ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON 9TH OCTOBER, 2009. SD/- SD/- (K P T THANGAL) (N L KALRA) VICE PRESIDENT ACCOUNTANT MEMBER BANGALORE, DTD.09/10/2009 PAGE 8 OF 8 ITA NOS.1347 & 1348/BANG/2008 8 COPY TO : 1. THE ASSESSEE 2.THE REVENUE 3. THE CIT( A) CONCERNED.4. THE CIT CONCERNED. 5. THE DR 6. GUAR D FILE. 7. GF, ITAT, NEW DELHI. MSP/07.10. BY ORDER ASST. REGISTRAR, ITAT, BANGALORE.