Income Tax Officer, Jabalpur V. Shri Vijay Khare, Jabalpur

ITA 141/JAB/2013

• Counselvise Citation: 14122914 RSA 2013
• Duration Of Justice: 1 year(s) 10 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 13-02-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 13-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHISHEK SHUKLA
• Assessee Lawyers: SANJAY MISHRA
• Keywords: Reopening of assessment; Fair market value; Reassessment proceedings
• Section: 143(3)

Judgement Text

I.T.A. NOS.88 & 141/JAB/2013 ASSESSMENT YEAR 2006-07 PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL JABALPUR BENCH, JABALPUR [CORAM: I C SUDHIR JM AND PRAMOD KUMAR AM] I.T.A. NO.88/JAB/2013 ASSESSMENT YEAR: 2006-07 VIJAY KUMAR KHARE, .APPELLANT 331, UPARENGANJ, JABALPUR. [PAN: AJHPK 5121 E] VS. INCOME TAX OFFICER, WARD 1(1) .RESPONDENT JABALPUR I.T.A. NO.141/JAB/2013 ASSESSMENT YEAR: 2006-07 INCOME TAX OFFICER, WARD 1(1) .APPELLANT JABALPUR VS. VIJAY KUMAR KHARE, .RESPONDENT 331, UPARENGANJ, JABALPUR. [PAN: AJHPK 5121 E] APPEARANCES BY: SANJAY MISHRA, FOR THE ASSESSEE ABHISHEK SHUKLA, FOR THE REVENUE DATE OF CONCLUDING THE HEARING: 11 TH FEBRUARY, 2015 DATE OF PRONOUNCING THE ORDER: 31 ST MARCH, 2015 O R D E R PER PRAMOD KUMAR: 1. THESE CROSS APPEALS ARE DIRECTED AGAINST LEARNE D CIT(A)S ORDER DATED 30 TH OCTOBER, 2012, IN THE MATTER OF ASSESSMENT UNDER S ECTION 143(3) OF THE I.T.A. NOS.88 & 141/JAB/2013 ASSESSMENT YEAR 2006-07 PAGE 2 OF 5 INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT), FOR THE ASSESSMENT YEAR 2006-07. 2. AS APPEAL FILED BY THE ASSESSEE CALLS INTO QUEST ION, INTER ALIA, CORRECTNESS OF LEARNED CIT(A)S UPHOLDING THE VERY INITIATION O F REASSESSMENT PROCEEDINGS AND THUS GOES TO THE ROOT OF THE MATTER, WE WILL TA KE IT UP FIRST. 3. IN GROUND NOS.1, 2 AND 3, THE ASSESSEE HAS CHALL ENGED LEARNED CIT(A)S UPHOLDING THE VALIDITY OF REASSESSMENT PROCEEDINGS . 4. TO ADJUDICATE ON THIS GRIEVANCE, ONLY FEW MATERI AL FACTS NEED TO BE TAKEN NOTE OF. THE ASSESSEE BEFORE US IS AN INDIVIDUAL, AND HE WAS HOLDING A POWER OF ATTORNEY IN RESPECT OF A PROPERTY. IT WAS IN THIS BACKDROP THAT THE ASSESSMENT OF THIS ASSESSEE WAS REOPENED, AND, WHILE SO REOPENING THE REASSESSMENT, THE ASSESSING OFFICER RECORDED THE FOLLOWING REASONS:- AS PER THE INFORMATION RECEIVED FROM CIT, CIB, BHO PAL, IT IS NOTICED THAT SHRI VIJAY KHARE, 331 UPRENGANJ, JABAL PAUR HAS SOLD/TRANSFERRED THE FOLLOWING PROPERTY TO SMT. KAL PANA, W/O. VIJAY KHARE, 331, UPRENGANJ, JABALPUR FOR RS.4,90,000/- W HEREAS THE STAMP DUTY HAS BEEN PAID AT A SALE CONSIDERATION OF RS.14 ,95,000/- WHICH IS THE FAIR MARKET VALUE OF THE PROPERTY ASSESSED BY S TAMP AUTHORITIES FOR STAMP DUTY PURPOSE. THUS THERE IS A DIFFERENCE OF RS.10,05,000/- IN THE SALE CONSIDERATION. PROPERTY AT BAITALA, 22/7, KHASRA NO.167/1 0.25 HEC TARE IN VIEW OF THE ABOVE FACTS, I HAVE REASON TO BELIEV E THAT THE ASSESSEE HAS SUPPRESSED HIS SALE CONSIDERATION. PRIMA FACIE , THEREFORE, PROVISIONS OF SECTION 50 ARE ATTRACTED. I ACCORDIN GLY HOLD THAT THIS IS A FIT CASE FOR ISSUE NOTICE U/S 148. ISSUE NOTICE U/S 148. I.T.A. NOS.88 & 141/JAB/2013 ASSESSMENT YEAR 2006-07 PAGE 3 OF 5 5. IN THE ASSESSMENT SO REOPENED, THE ASSESSING OFF ICER, EVEN AS ACKNOWLEDGING THAT THE ASSESSEE WAS ONLY IN POWER O F ATTORNEY HOLDER IN RESPECT OF THE PROPERTY SOLD, THE CAPITAL GAINS ON SALE OF PROPERTY WERE TAXED IN THE HANDS OF THE ASSESSEE. ON APPEAL, LEARNED CIT(A) R EVERSED THE ACTION OF THE A.O. AND , WHILE DOING SO, OBSERVED AS FOLLOWS :- DECISION (GROUND NO.5): ON CAREFUL PERUSAL OF THE MATERIAL ON RECORD AND THE SUBMISSIONS OF THE COUNSEL, I FIN D THAT THE CONTENTION OF THE APPELLANT IS FOUND TO BE CORRECT. THE AO WAS FORWARDED THE WRITTEN SUBMISSION ALONG WITH THE ENC LOSURES WHICH WERE COPIES OF REGISTERED SALE DEEDS OF SHRI RAJESH SHRIVASTAVA AND THE POWER OF ATTORNEY GIVEN BY SHRI RAJESH SHRIVAST AVA TO THE APPELLANT. THE AO HAS NOT REBUTTED THE EVIDENCES O R THE ARGUMENT OF THE APPELLANT. ACCORDINGLY, I AM LEFT WITH NO OPTI ON, BUT TO ACCEPT THE AUTHENTICITY OF THE EVIDENCE PRODUCED. THE APP ELLANT HELD THE POWER OF ATTORNEY OF SHRI RAJESH SHRIVASTAVA AND SO LD THE PLOT TO HIS WIFE IN HIS CAPACITY AS A POWER OF ATTORNEY HOLDER AND NOT AS AN OWNER. THE AO HAS NOTED IN THE ASSESSMENT ORDER TH AT SHRI VIJAY KHARE WAS GIVEN THE POWER OF ATTORNEY BY SHRI RAJES H SHRIVASTAVA ON 03.01.2005. THE ARGUMENT AND INTERPRETATION OF SEC TION 45 AND SECTION 2(47) ARE NOT ACCEPTABLE. THE AO HAS HELD THAT SHRI VIJAY KHARE HAD SIGNED ON THE SALE DEED, THE APPELLANTS ARGUMENT THAT HE WAS SIMPLY ACTING ON BEHALF OF SHRI RAJESH SHRIVAST AVA WOULD NOT ABSOLVE HIMSELF FROM HIS LEGAL LIABILITY OF PAYMENT OF TAXES CONSEQUENT TO THE TRANSFER OF THE SAID LAND. THIS INTERPRETATION BY THE AO IN THE INSTANT CASE IS ERRONEOUS. AS THE AP PELLANT DID NOT SELL THE PLOT OF LAND IN HIS CAPACITY AS AN OWNER, THE Q UESTION OF THE LIABILITY OF CAPITAL GAINS DOES NOT ARISE. CAPITAL GAINS LIABILITY WILL ARISE ON THE OWNER OF THE LAND WHO IN THIS CASE, IS SHRI RAJESH SHRIVASTAVA. IN VIEW OF THIS, THE ADDITION MADE BY THE AO UNDER THE HEAD LONG TERM CAPITAL GAINS BY APPLYING SECTION 50 C OF RS.14,35,740/-, IS HEREBY DELETED. THE AO IS DIREC TED TO TAX THE CAPITAL GAINS IN THE RIGHT YEAR AND IN THE RIGHT HA NDS. THIS GROUND OF APPEAL IS ALLOWED. 6. WHILE THE ASSESSING OFFICER IS AGGRIEVED OF THE RELIEF SO GRANTED BY THE LEARNED CIT(A) ON MERITS, THE GRIEVANCE OF THE ASSE SSEE IS THAT, ON THESE FACTS, EVEN THE REOPENING OF ASSESSMENT WAS UNSUSTAINABLE IN LAW. I.T.A. NOS.88 & 141/JAB/2013 ASSESSMENT YEAR 2006-07 PAGE 4 OF 5 7. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF A PPLICABLE LEGAL POSITION. 8. WE FIND THAT THE SALE DEED WAS EXECUTED BY THE A SSESSEE, IN REPRESENTATIVE CAPACITY, ON BEHALF OF SHRI RAJESH S HRIVASTAVA AND THIS FACT IS NOWHERE IN DISPUTE. THE CAPITAL GAINS, ON EXECUTIO N OF SUCH A SALE DEED, WOULD ARISE TO THE OWNER AND NOT THE POWER OF ATTORNEY HO LDER. AS SUCH, THE VERY FOUNDATION OF STAND ADOPTED BY THE ASSESSING OFFICE R IS UNSUSTAINABLE IN LAW. WE MAY ALSO REITERATE, AS HAS BEEN SO STATED BY HIG HER JUDICIAL FORUMS, THAT REASONS FOR REOPENING THE ASSESSMENT ARE TO BE EXAM INED ON STANDALONE BASIS AND SUCH REASONS MUST STAND THE LEGAL SCRUTINY AS S UCH, WHICH IS CLEARLY NOT THE CASE HERE. IN SUPPORT OF THIS LEGAL POSITION, WE M AY REFER TO THE FOLLOWING OBSERVATIONS MADE BY A CO-ORDINATE BENCH IN THE CAS E OF PHIROJSHA GODREJ FOUNTAIN VS. ADIT (133 TTJ 194) :- HONBLE BOMBAY HIGH COURT, IN THE CASE OF HINDUSTA N LEVER LTD. VS. R.B. WADKAR (2004) 190 CTR (BOM) 166 : (2004) 268 I TR 332 (BOM), HAS, INTER ALIA, OBSERVED THAT '.IT IS NEEDLESS TO ME NTION THAT THE REASONS ARE REQUIRED TO BE READ AS THEY WERE RECORDED BY TH E AO. NO SUBSTITUTION OR DELETION IS PERMISSIBLE. NO ADDITIONS CAN BE MAD E TO THOSE REASONS. NO INFERENCE CAN BE ALLOWED TO BE DRAWN ON THE BASIS O F REASONS NOT RECORDED. IT IS FOR THE AO TO DISCLOSE AND OPEN HIS MIND THROUGH THE REASONS RECORDED BY HIM. HE HAS TO SPEAK THROUGH TH E REASONS.' THEIR LORDSHIPS ADDED THAT 'THE REASONS RECORDED SHOULD B E SELF-EXPLANATORY AND SHOULD NOT KEEP THE ASSESSEE GUESSING FOR REASO NS. REASONS PROVIDE LINK BETWEEN CONCLUSION AND THE EVIDENCE.'. HONBL E SUPREME COURT, IN THE CASE OF CIT VS. KELVINATOR OF INDIA LTD.(2010) 320 ITR 561 (SC), HAS OBSERVED THAT 'REASONS MUST HAVE A LIVE LINK WITH F ORMATION OF BELIEF'. HONBLE BOMBAY HIGH COURT, IN THE CASE OF PRASHANT S. JOSHI VS. ITO [(2010) 230 CTR (BOM)] HAS OBSERVED : 'THE AO MUST HAVE REASONS TO BELIEVE THAT SUCH IS THE CASE (I.E. ANY INCOME CHAR GEABLE TO TAX HAS ESCAPED ASSESSMENT FOR A PARTICULAR YEAR) BEFORE HE PROCEED S TO ISSUE NOTICE UNDER S. 147' AND THAT 'THE REASONS WHICH ARE RECORDED BY THE AO ARE THE ONLY REASONS WHICH CAN BE CONSIDERED WHEN FORMATION OF B ELIEF IS IMPUGNED'. I.T.A. NOS.88 & 141/JAB/2013 ASSESSMENT YEAR 2006-07 PAGE 5 OF 5 9. FOR THE REASONS SET OUT ABOVE, AND AS THE REASON S RECORDED FOR REOPENING THE ASSESSMENT WERE INCORRECT IN AS MUCH AS SUCH RE ASONS COULD NOT HAVE RESULTED IN ADDITION BEING MADE IN THE HANDS OF ASS ESSEE, WE QUASH THE REASSESSMENT PROCEEDINGS. 10. AS THE REASSESSMENT ITSELF STANDS QUASHED, WE S EE NO NEED TO ADDRESS OURSELVES TO THE ADDITIONS MADE ON MERITS AS THAT A SPECT OF THE MATTER IS ACADEMIC. 11. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED IN THE TERMS INDICATED ABOVE AND THE APPEAL FILED BY THE REVENUE IS DISMISSED AS INFRUCTUOUS. PRONOUNCED IN THE OPEN COURT TODAY ON 31 ST MARCH, 2015. SD/- SD/- I C SUDHIR PRAMOD KUMAR (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) DATED: THE 31 ST DAY OF MARCH, 2015 COPIES TO : (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL JABALPUR BENCH, JABALPUR