Shashi Shekhar Saraf (L.R. of Late Shri Ram Awatar Saraf), Kolkata V. ACIT, Circle - 45, Kolkata , Kolkata

ITA 1411/KOL/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0275 (ITAT-KOLKATA)
• Duration Of Justice: 11 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 29-06-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C J SINGH
• Assessee Lawyers: M D SHAH
• Keywords: Reopening of assessment; Value adopted by valuation officer; Cost of acquisition; Tangible material; Assessment record; Reason to believe; Reassessment proceedings; Borrowed satisfaction
• Section: 143(3); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A, BENC H KOLKATA BEFORE SHRI A.T.VARKEY, JM &DR. A.L.SAINI, AM ./ITA NO.1411/KOL/2018 ( / ASSESSMENT YEAR:2008-09) SHASHI SHEKHAR SARAF (L.R. OF LATE SHRI RAM AWATAR SARAF) KALYAN BHAWAN, 2, ELGIN ROAD, KOLKATA-700020. VS. ACIT, CIRCLE-45, KOLKATA ./ ./PAN/GIR NO.: AVZPS 2888 N (ASSESSEE) .. (REVENUE) ASSESSEEBY : SHRI M. D. SHAH, FCA RESPONDENT BY :SHRI C.J. SINGH, JCIT SR. DR / DATE OF HEARING : 10/04/2019 /DATE OF PRONOUNCEMENT : 28/06/2019 / O R D E R PER DR. A. L. SAINI: THE CAPTIONED APPEAL FILED BY THE ASSESSEE, PERTA INING TO ASSESSMENT YEAR 2008- 09, IS DIRECTED AGAINST AN ORDER PASSED BY THE LE ARNED COMMISSIONER OF INCOME TAX (APPEALS)-13, KOLKATA (IN SHORT THE LD. CIT(A)], WHICH IN TURN ARISES OUT OF AN ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER U /S 143(3) /147 OF THE INCOME TAX ACT, 1961 ( IN SHORT THE ACT) DATED 23/12/2015. 2. THE SOLITARY GRIEVANCE OF THE ASSESSEE IN THIS A PPEAL IS THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE RE-OPENING OF ASSESSM ENT MADE BY ASSESSING OFFICER UNDER SECTION 147/148 OF THE I.T. ACT WAS WITHOUT A NY MATERIAL/WITHOUT ANY VALID REASON, THEREFORE, REASSESSMENT PROCEEDINGS ARE BAD IN LAW AND SHOULD BE QUASHED. SHASHI SHEKHAR SARAF(L.R. OF LATE SHRI RAM AWATAR S ARAF) ITA NO.1411/KOL/2018 ASSESSMENT YEAR:2008-09 P PP PA AA AG GG GE EE E | || | 2 22 2 3. BRIEF FACTS QUA THE ISSUE ARE THAT THE ASSESSEE IS AN INDIVIDUAL WHO FURNISHED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2008-09 ON 27.03.2009 DECLARING A TOTAL INCOME RS. 7,96,480/-. SUBSEQUENTLY, THE ASSESSEE`S CASE WAS RE-OPENED U/S 147/148 OF THE ACT ON 23.03.2015. THE REASONS RECOR DED BY THE ASSESSING OFFICER TO REOPEN THE ASSESSMENT UNDER SECTION 147/148 WERE AS FOLLOWS: ' THE ASSESSEE HAD ENTERED INTO AN AGREEMENT WITH A BUILDER M/S SARAF REAL ESTATE LTD. WITH A PROFIT SHARING RATIO OF 40:60 AND CONSTRUCTE D AND JOINTLY SOLD FLATS AT DIVINE BLISS, 213, JUDGES COURT ROAD, KOLKATA - 7000027 FORM A. Y . 2008-09 TO 2011-12 ALONG WITH OTHER CO-OWNERS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR A.Y . 2012-13 IN THE CASE OF SHRI SANJAY SARAF, ONE OF THE CO-OWNERS, THE MATTER WAS REFERRE D TO DISTRICT VALUATION OFFICER, INCOME TAX DEPARTMENT, FOR VALUATION OF COST OF ACQUISITIO N OF PROPERTY AS ON 01.04.1981 AND THE DVO IN HIS REPORT FILE NO. 40/CG/DVO/ITD/KOL/2014-1 5/499, DATED 16.03.2015 HAS DETERMINED THE COST OF ACQUISITION AS ON 01.04.1981 AT RS. 95,50,971/- OF 1,40,174 SQ. FT. AGAINST THE COST OF ACQUISITION AS ON 01.04.1981 TA KEN BY THE ASSESSEE AT RS.1,54,73,000/-. THEREFORE, THERE WOULD BE HUGE LTCG ON THE ACCOUNT OF VALUE OF COST OF ACQUISITION AS ON 01.04.1981 AS DETERMINED BY THE DVO.' IN RESPONSE TO THE AFORESAID NOTICE U/S 148 OF THE ACT THE ASSESSEE SUBMITTED A WRITTEN STATEMENT DATED 10.08.2015 WITH A REQUEST T O TREAT THE ORIGINAL RETURN FILED FOR THE A.Y. 2.008-09, ON 27.03.2009, AS RETURN FIL ED IN RESPONSE TO NOTICE U/S 148 OF THE ACT.BEFORE THE ASSESSING OFFICER, THE ASSESS EE DID NOT CHALLENGE THE REOPENING UNDER SECTION 147/148 OF THE ACT THEREFOR E, THE ASSESSING OFFICER WITHOUT ADJUDICATING THE TECHNICAL ISSUE OF REOPENING U/S 1 47/148 OF THE ACT, MADE ADDITION ON MERITS OF THE CASE. 4. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) WHO HAS DISMISSED T HE APPEAL OF THE ASSESSEE ON ACCOUNT OF NON-PROSECUTION. HOWEVER, THE LD CIT(A) HAS ALSO ADJUDICATED THE ISSUE ON MERITS TAKING INTO ACCOUNT ASSESSMENT RECORDS AN D ASSESSMENT ORDER FRAMED BY THE ASSESSING OFFICER. BEFORE THE LD CIT(A), THE ASSESSEE HAS RAISED THE T ECHNICAL GROUNDS CHALLENGING THE REOPENING OF ASSESSMENT UNDER SECTION 147/148 OF TH E ACT, HOWEVER, LD CIT(A) HAS NOT ADJUDICATED THIS TECHNICAL GROUND. AGGRIEVED BY THE ORDER OF LD CIT(A), THE ASSESSEE I S IN APPEAL BEFORE US. SHASHI SHEKHAR SARAF(L.R. OF LATE SHRI RAM AWATAR S ARAF) ITA NO.1411/KOL/2018 ASSESSMENT YEAR:2008-09 P PP PA AA AG GG GE EE E | || | 3 33 3 5. THE LD COUNSEL SUBMITTED BEFORE US THAT ASSESSIN G OFFICER HAS MAINLY REOPENED THE ASSESSEE`S ASSESSMENT AT THE INSTANCE OF SHRI S ANJAY SARAFS CASE OBSERVING THE FOLLOWING: DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR A.Y . 2012-13 IN THE CASE OF SHRI SANJAY SARAF, ONE OF THE CO-OWNERS, THE MATTER WAS REFERRED TO DISTRICT VALUATION OFFICER, INCOME TAX DEPARTMENT, FOR VALUATION OF COST OF ACQ UISITION OF PROPERTY AS ON 01.04.1981 AND THE DVO IN HIS REPORT FILE NO. 40/CG/DVO/ITD/KO L/2014-15/499, DATED 16.03.2015 HAS DETERMINED THE COST OF ACQUISITION AS ON 01.04. 1981 AT RS. 95,50,971/- OF 1,40,174 SQ. FT. AGAINST THE COST OF ACQUISITION AS ON 01.04.198 1 TAKEN BY THE ASSESSEE AT RS.1,54,73,000/-. THE ASSESSING OFFICER WAS OF THE VIEW THAT SINCE DU RING THE COURSE OF ASSESSMENT PROCEEDINGS FOR A.Y. 2012-13 IN THE CASE OF SHRI S ANJAY SARAF, ONE OF THE CO- OWNERS, THE MATTER WAS REFERRED TO DISTRICT VALUATI ON OFFICER (DVO), INCOME TAX DEPARTMENT, THEREFORE, THE ASSESSEE`S CASE SHOULD A LSO BE REFERRED TO DVO. THEREFORE, LD COUNSEL POINTED OUT THAT REOPENING OF THE ASSESSEES CASE U/S 147/148 OF THE ACT AT THE INSTANCE OF SHRI SANJAY S ARAFS CASE IS BAD IN LAW. THE CASE OF SHRI SANJAY SARAF IS ON DIFFERENT FOOTING/I SSUE AND THE SAME DOES NOT APPLY TO THE ASSESSEE UNDER CONSIDERATION. THEREFORE, LD COUNSEL SUBMITTED BEFORE THE BENCH THE REOPENING OF ASSESSMENT IS ITSELF BAD IN LAW AND IT SHOULD BE QUASHED. 6. HOWEVER THE LD. DR FOR THE REVENUE SUBMITTED BEF ORE THE BENCH THAT THE ASSESSING OFFICER HAS RECORDED VALID REASONS TO REO PEN THE ASSESSEES CASE THEREFORE REOPENING U/S 147 / 148 SHOULD BE SUSTAIN ED. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. WE NOTE THAT ASSESSEEHAS RAISED THIS TECHNICAL GR OUND, CHALLENGING THE REASSESSMENT PROCEEDINGS,FIRST TIME BEFORE THE LD CIT(A) BY FILING GROUNDS OF APPEAL, VIDE PAGE NO.2 OF THE ORDER OF LD CIT(A). T HE LD CIT(A) COULD NOT ADJUDICATE THIS TECHNICAL ISSUE, AS THE ASSESSEE NE ITHER FILED WRITTEN SUBMISSIONS NOR PLEADED THE CASE BEFORE THE LD CIT(A). DURING THE A PPELLATE PROCEEDINGS THE ASSESSEE APPEARED BEFORE THE LD CIT(A) AND SOUGHT A DJOURNMENT ON DIFFERENT DATE OF HEARINGS. BEFORE THE LD ASSESSING OFFICER THE AS SESSEE IN RESPONSE TO NOTICE UNDER SECTION 147/148 OF THE ACT, SUBMITTED A WRITTEN STA TEMENT DATED 10.08.2015 WITH A REQUEST TO TREAT THE ORIGINAL RETURN OF INCOME FIL ED BY THE ASSESSEE FOR A.Y. 2008- SHASHI SHEKHAR SARAF(L.R. OF LATE SHRI RAM AWATAR S ARAF) ITA NO.1411/KOL/2018 ASSESSMENT YEAR:2008-09 P PP PA AA AG GG GE EE E | || | 4 44 4 09 ON 27.03.2009, IN RESPONSE TO NOTICE UNDER SECTI ON 148 OF THE ACT. WE NOTE THAT REASONS RECORDED BY THE ASSESSING OFFICER IS AVAILA BLE IN HIS ASSESSMENT ORDER PAGE NO.2, HOWEVER, LD CIT(A) DID NOT EXAMINE WHETHER RE ASONS RECORDED BY THE ASSESSING OFFICER ARE SUSTAINABLE IN LAW OR NOT. 8. BEFORE US, LD COUNSEL FOR THE ASSESSEE HAS PRESS ED ONLY THIS TECHNICAL GROUND, CHALLENGING THE REASSESSMENT PROCEEDINGS, AND STATE D THAT REASONS RECORDED BY THE ASSESSING OFFICER IS BASED ON SUSPICION AND BORROWE D SATISFACTION THEREFORE BAD IN LAW. THE LD COUNSEL ALSO STATED THAT THIS IS A LEGA L ISSUE WHICH MAY BE ADJUDICATED BY THIS TRIBUNAL. HOWEVER, LD DR FOR THE REVENUE WA S OF THE OPINION THAT SINCE THE ASSESSEE DID NOT PLEAD THIS ISSUE DURING THE APPELL ATE PROCEEDINGS THEREFORE THIS ISSUE SHOULD BE REMITTED BACK TO THE FILE OF THE LD CIT(A). WE NOTE THAT THIS TECHNICAL ISSUE OF REOPENING WAS THERE BEFORE THE L D AO AS WELL AS BEFORE LD CIT(A) BUT BOTH THE LOWER AUTHORITIES DID NOT ADJUD ICATE THE SAID ISSUE. IT IS ABUNDANTLY CLEAR THAT LEGAL ISSUE CAN BE RAISED BY ANY PARTY OF THE APPEAL AT ANY STAGE. BEFORE WE ADJUDICATE THIS TECHNICAL ISSUE, L ET US FIRST EXAMINE THE REASONS RECORDED BY THE ASSESSING OFFICER. AT THE COST OF R EPETITION, WE REPRODUCE THE REASONS RECORDED BY THE ASSESSING OFFICER AS FOLLOW S: ' THE ASSESSEE HAD ENTERED INTO AN AGREEMENT WITH A BUILDER M/S SARAF REAL ESTATE LTD. WITH A PROFIT SHARING RATIO OF 40:60 AND CONSTRUCTE D AND JOINTLY SOLD FLATS AT DIVINE BLISS, 213, JUDGES COURT ROAD, KOLKATA - 7000027 FORM A. Y . 2008-09 TO 2011-12 ALONG WITH OTHER CO-OWNERS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR A.Y . 2012-13 IN THE CASE OF SHRI SANJAY SARAF, ONE OF THE CO-OWNERS, THE MATTER WAS REFERRE D TO DISTRICT VALUATION OFFICER, INCOME TAX DEPARTMENT, FOR VALUATION OF COST OF ACQUISITIO N OF PROPERTY AS ON 01.04.1981 AND THE DVO IN HIS REPORT FILE NO. 40/CG/DVO/ITD/KOL/2014-1 5/499, DATED 16.03.2015 HAS DETERMINED THE COST OF ACQUISITION AS ON 01.04.1981 AT RS. 95,50,971/- OF 1,40,174 SQ. FT. AGAINST THE COST OF ACQUISITION AS ON 01.04.1981 TA KEN BY THE ASSESSEE AT RS.1,54,73,000/-. THEREFORE, THERE WOULD BE HUGE LTCG ON THE ACCOUNT OF VALUE OF COST OF ACQUISITION AS ON 01.04.1981 AS DETERMINED BY THE DVO.' WE NOTE THE FOLLOWING DRAWBACK IN THE REASONS RECOR DED BY THE ASSESSING OFFICER: I)IT IS REOPENED AT THE INSTANCE OF SHRI SANJAY SAR AF CASE, ONE OF THE CO-OWNERS, WHOSE MATTER WAS REFERRED TO DISTRICT VALUATION OFF ICER, BY INCOME TAX DEPARTMENT, FOR VALUATION OF COST OF ACQUISITION OF PROPERTY AS ON 01.04.1981. THE SHASHI SHEKHAR SARAF(L.R. OF LATE SHRI RAM AWATAR S ARAF) ITA NO.1411/KOL/2018 ASSESSMENT YEAR:2008-09 P PP PA AA AG GG GE EE E | || | 5 55 5 ASSESSING OFFICER FAILED TO EXAMINE THAT HOW AND WH Y THE ASSESSEE`S CASE IS SIMILAR TO THE CASE OF SHRI SANJAY SARAF. II) HOW MUCH INCOME HAS ESCAPED ASSESSMENT HAS NOT BEEN MENTIONED BY ASSESSING OFFICER. III) IT IS A BORROWED SATISFACTION, THE LD AO HAS N OT APPLIED HIS MIND INDEPENDENTLY. IV) SHRI SANJAY SARAF CASE IS NOT A TANGIBLE MATERI AL. THE ASSESSING OFFICER SHOULD EXAMINE HIMSELF TAKING INTO ACCOUNT ASSESSEE`S CASE THAT THERE IS TANGIBLE MATERIAL WHICH HAS NOT BEEN CONSIDERED BY AO IN THE ORIGINAL ASSESSMENT AND THEREFORE INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT. V) THE AO HAS SIMPLY MENTIONED IN THE REASONS RECORDED THAT SINCE THE CASE OF CASE OF SHRI SANJAY SARAF, ONE OF THE CO-OWNERS, T HE MATTER WAS REFERRED TO DISTRICT VALUATION OFFICER OF INCOME TAX DEPARTMENT, THEREFO RE, ASSESSEE`S CASE SHOULD ALSO BE REFERRED TO DISTRICT VALUATION OFFICER OF I NCOME TAX DEPARTMENT. THIS ACTION OF THE ASSESSING OFFICER SHOWS THAT HE HAS J UST COMPARED THE ASSESSEE`S CASE WITH SHRI SANJAY SARAF CASE AND DOES NOT APPLY HIS MIND TO REACH ON THE LOGICAL CONCLUSION. VI) BASED ON THE REPORT OF THEDISTRICT VALUATION OFFICER (DVO), A CONCLUDED AS SESSMENT CAN NOT BE REOPENED. 9. BEFORE WE ADJUDICATE THIS TECHNICAL ISSUE, LET U S EXAMINE THE CONDITIONS LAID DOWN IN SECTION 147 OF THE ACT, WHICH ARE AS FOLLOW S : IF THE A.O. HAS REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR. - THERE MUST BE MATERIAL FOR THE BELIEF. - CIRCUMSTANCES MUST EXIST AND CANNOT BE DEEMED TO EX IST FOR ARRIVING AT AN OPINION; - REASONS TO BELIEVE MUST BE HONEST AND NOT BASED ON SUSPICION, GOSSIP, RUMOUR OR CONJECTURE; - REASONS REFERRED TO MUST DISCLOSE THE PROCESS OF RE ASONING BY WHICH THE AO HOLDS REASONS TO BELIEVE AND CHANGE OF OP INION DOES NOT CONFER JURISDICTION TO REASSESS; - THERE MUST BE NEXUS BETWEEN MATERIAL AND BELIEF; AN D SHASHI SHEKHAR SARAF(L.R. OF LATE SHRI RAM AWATAR S ARAF) ITA NO.1411/KOL/2018 ASSESSMENT YEAR:2008-09 P PP PA AA AG GG GE EE E | || | 6 66 6 - REASONS RECORDED MUST SHOW APPLICATION OF MIND BY T HE AO. IN THE ASSESSEE`S CASE UNDER CONSIDERATION, BEFORE THE ASSESSING OFFICER THERE WAS NO MATERIAL FOR THE BELIEF. REASONS TO BELIEVE IS N OT HONEST AND BASED ON SUSPICION, GOSSIP, RUMOUR OR CONJECTURE, THAT IS BASED ON DVO REPORT ONLY.THE PROCESS OF REASONING IS NOT CLEAR.THERE IS NO NEXUS BETWEEN MA TERIAL AND BELIEF AND REASONS RECORDED BY AO DOES NOT SHOW APPLICATION OF MIND BY THE AO. THEREFORE, REASONS RECORDED BY THE AO IS NOT IN ACCORDANCE WITH THE SP RIT OF SECTION 147 OF THE ACT, AS NARRATED ABOVE. HENCE THE REASONS RECORDED BY THE A O IS BAD IN LAW AND REASSESSMENT MADE BASED ON THESE REASONS SHOULD BE QUASHED. 10. WE NOTE THAT HON`BLE SUPREME COURT IN THE CASE OF ACIT VS. DHARIYA CONSTRUCTION CO. 328 ITR 51 HELD AS FOLLOWS: 1. HAVING EXAMINED THE RECORD, WE FIND THAT IN THIS C ASE, THE DEPARTMENT SOUGHT REOPENING OF THE ASSESSMENT BASED ON THE OPINION GIVEN BY THE DI STRICT VALUATION OFFICER (DVO). THE OPINION OF THE DVO PER SE IS NOT AN INFORMATION FOR THE PUR POSES OF REOPENING ASSESSMENT UNDER SECTION 147 OF THE INCOME-TAX ACT, 1961. THE ASSESSING OFFI CER HAS TO APPLY HIS MIND TO THE INFORMATION, IF ANY, COLLECTED AND MUST FORM A BELIEF THEREON. I N THE CIRCUMSTANCES, THERE IS NO MERIT IN THE CIVIL APPEAL. THE DEPARTMENT WAS NOT ENTITLED TO REOPEN T HE ASSESSMENT. 2. CIVIL APPEAL IS, ACCORDINGLY, DISMISSED. NO ORDER AS TO COSTS. RESPECTFULLY FOLLOWING THE JUDGMENT OF THE HON`BLE SUPREME COURT IN THE CASE OF DHARIYA CONSTRUCTION CO. (SUPRA), WE HOLD THAT REAS SESSMENT PROCEEDINGS ARE BAD IN LAW AS THE OPINION OF THE DVO PER SE IS NOT AN I NFORMATION FOR THE PURPOSES OF REOPENING ASSESSMENT UNDER SECTION 147 OF THE INCOM E-TAX ACT, 1961, THEREFORE, WE QUASH THE REASSESSMENT ORDER. SINCE WE HAVE ALLOWED THE APPEAL OF THE ASSESSEE ON TECHNICAL GROUNDS THEREFORE WE DO NOT ADJUDICATE THE OTHER GROUNDS RAISED BY TH E ASSESSEE ON MERITS. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE COURT ON 28.06.2019 SD/- ( A.T.VARKEY ) SD/- (A.L.SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / DATE: 28/06/2019 ( SB, SR.PS ) SHASHI SHEKHAR SARAF(L.R. OF LATE SHRI RAM AWATAR S ARAF) ITA NO.1411/KOL/2018 ASSESSMENT YEAR:2008-09 P PP PA AA AG GG GE EE E | || | 7 77 7 COPY OF THE ORDER FORWARDED TO: 1. SHASHI SHEKHAR SARAF(L.R. OF LATE SHRI RAM AWATA R SARAF) 2. ACIT, CIRCLE-45, KOLKATA 3. C.I.T(A)- 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. 6. GUARD FILE. TRUE COPY BY ORDER ASSIST ANT REGISTRAR ITAT, KOLKA TA BENCHES