M/s Hindustan Properties, Pune V. Dy. CIT Cir- 2 Pune, Pune

ITA 1435/PUN/2012

• Counselvise Citation: 143524514 RSA 2012
• Duration Of Justice: 9 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-04-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2003-2004
• Appeal Filed On: 27-06-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: FAIYAZ KHAN
• Keywords: Opportunity of being heard; Revised return
• Section: 142(1); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER , AND SHRI R.K. PANDA, ACCOUNTANT MEMBER. ITA.NO.1435/PN/2012 (ASSESSMENT YEAR 2003-04) M/S.HINDUSTAN PROPERTIES, PARVEEN ASLAM KHAN, C/O. HINDUSTAN PROP. 109, GERA JUNCTION, LULLA NAGAR, PUNE 411 040 .. APPELLANT PAN NO.AACFH 5376C VS. DCIT, CIRCLE-2, PUNE. .. RESPONDENT ASSESSEE BY : SHRI FAIYAZ KHAN REVENUE BY : SHRI SHAILJA RAI DATE OF HEARING : 03-04-2013 DATE OF PRONOUNCEMENT : 03-04-2013 ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER DATED 19-03-2012 OF THE CIT(A)-II, PUNE RELATING TO ASSES SMENT YEAR 2003-04. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF BUILDERS AND DEVELOPERS. THE ORIGINAL RETURN OF INCOME IN THE INSTANT CASE WAS FILED ON 29-09-2003 DECLARING TOTAL LOSS OF RS.2,30,549/- WHICH WAS PROCESSED U/S.143(1). SUBS EQUENTLY, THE ASSESSING OFFICER ISSUED NOTICE U/S.148 ON 30-03-20 10 AFTER SEEKING APPROVAL OF THE ADDL. CIT, RANGE-2, PUNE VIDE LETTE R DATED 30-03-2010 (WHICH WAS SERVED ON THE ASSESSEE ON 31-03-2010). IN RESPONSE TO THE NOTICE U/S.148 THE ASSESSEE FILED A REVISED RETURN OF INCOME ON 30-04-2010 AND ASKED FOR THE REASONS FOR THE REOPENING OF THE CASE BY ISSUING THE NOTICE U/S.148. 2 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTED THAT DURING THE COURSE OF SEARCH U/S.132 IN T HE PREMISES OF ONE MR.CHANDAN PARWANI THE DOCUMENTS RELATING TO M/S.H INDUSTAN PROPERTIES WERE FOUND AND SEIZED. ONE OF THE DOCUMENT WAS AN MOU DATED 10-08- 2002 EXECUTED BETWEEN ONE SRI WALTER H. MARSHAL AND M/S.HINDUSTAN PROPERTIES, I.E. THE ASSESSEE FOR A LAND BEARING SU RVEY.NO.22, HISSA NO.2A/3/1 ADMEASURING 4000 SQ.MTRS. AT KONDWA KHURD , PUNE WITHIN THE LIMITS OF PUNE MUNICIPAL CORPORATION. THE AGREED PR ICE AS PER THE SAID MOU WAS AT 1,32,00,000/-. LATER ON, ANOTHER ARTICL E OF AGREEMENT WAS ALSO MADE BETWEEN THE SAME PARTIES FOR THE SAME LAND ON 23-05-2003 FOR AN AMOUNT OF RS.66 LAKHS. THE ASSESSING OFFICER ASKED THE ASSESSEE TO CLARIFY THE 2 MOUS MADE WITH THE SAME PARTY. 4. IT WAS SUBMITTED THAT THE ASSESSEE FIRM HAD ENTE RED INTO AN MOU WITH M/S. WALTER H. MARSHAL ON 10-07-2002 FOR PURCHASE O F THE MENTIONED LAND FOR A CONSIDERATION OF RS.1,32,00,000/-. THIS MOU WAS ENTERED INTO AS A TOKEN OF PUTTING DOWN IN WRITING THE TENTATIVE TERM S OF THE DEAL. IT WAS DECIDED THAT AFTER THOROUGH SCRUTINY OF THE LAND SI TE AND THE TITLE DEEDS AND OTHER DOCUMENTS A FINAL AGREEMENT WOULD BE ENTERED INTO INCORPORATING ALL THE TERMS AND CONDITIONS AND THE FINAL PURCHASE PRI CE. LATER ON, WHILE INSPECTING THE ACTUAL LAND AND ITS SURROUNDINGS IT WAS REVEALED THAT ALTHOUGH THE LAND WAS SUITABLE FOR DEVELOPMENT, HOWEVER, THE RE WAS ENCROACHMENT FROM THE BORDERS OF THE LAND AND WAS SURROUNDED BY SLUMS AND THEREFORE THE PURCHASE CONSIDERATION OF RS.1,32,00,000/- WAS CONS IDERED TO BE OVER PRICED AND HIGHLY EXCESSIVE. THEREFORE, THE ASSESS EE FIRM REFUSED TO PAY THE AGREED PRICE AND AFTER DETAILED SURVEY OF THE SITE AND SCRUTINY OF THE PREVAILING MARKET CONDITION THE ASSESSEE FIRM OFFER ED RS.66 LAKHS TO 3 MR.WALTER H. MARSHAL WHICH WAS NOT AGREED BY MR. MA RSHAL. SUBSEQUENTLY, MR. MARSHAL, IN ABSENCE OF FINDING A BETTER BUYER, ACCEPTED THE OFFERED PRICE OF RS.66 LAKHS AND ACCORDINGLY TH E ASSESSEE FIRM AGREED TO BUY THE LAND AT RS.66 LAKHS. THE AGREEMENT FOR PURC HASE OF LAND WAS ENTERED INTO ON 23-05-2003 BY DULY REGISTERING THE SAME. IT WAS SUBMITTED THAT SINCE NOTHING MORE HAS BEEN PAID BY THE ASSESS EE FIRM TO MR. WALTER H. MARSHAL AND OTHERS, THEREFORE, NO ADVERSE VIEW SHOU LD BE TAKEN. IT WAS FURTHER SUBMITTED THAT THE DEAL WAS MADE BY THE HUS BAND OF THE ASSESSEE AND THE ASSESSEE WAS NOWHERE INVOLVED IN THE BUSINESS A CTIVITIES AND WAS SIMPLY SIGNING THE DEAL PAPERS AS DIRECTED BY HER HUSBAND WHO HAS SUBSEQUENTLY EXPIRED. 5. HOWEVER, THE ASSESSING OFFICER WAS NOT CONVINCED WITH THE EXPLANATION GIVEN BY THE ASSESSEE. HE NOTED THAT A SSESSEE PAID STAMP DUTY OF RS.1,37,600/-. NO PROPER EXPLANATION WAS GIVEN BY THE ASSESSEE AS TO HOW AN AMOUNT OF RS.66 LAKHS HAS BEEN PAID WHEN THE VALUE AS PER MOU WAS RS.1,32,00,000/- AND THE MARKET VALUE OF THE SA ID LAND WAS RS.1,37,35,000/-. THEREFORE, HE CAME TO THE CONCLU SION THAT THE ASSESSEE HAD PAID THE BALANCE AMOUNT IN CASH WHICH HAS NOT B EEN ACCOUNTED FOR ANYWHERE. HE, THEREFORE, MADE ADDITION OF RS.71,35 ,000/- TO THE TOTAL INCOME OF THE ASSESSEE. 6. BEFORE THE CIT(A) THE ASSESSEE CHALLENGED THE VA LIDITY OF THE REOPENING OF THE ASSESSMENT AS WELL AS THE ISSUE OF NOTICE OF DEMAND U/S.143(3) R.W.S.147 WHICH WAS ISSUED AFTER EXPIRY OF 6 MONTHS. IT WAS SUBMITTED THAT AFTER EXPIRY OF 4 YEARS FROM THE END OF THE ASSESSMENT YEAR, PRIOR SANCTION OF CCIT OR CIT HAS TO BE OBTAINED F OR THE ASSESSMENT FRAMED 4 U/S.143(3) R.W.S.147. HOWEVER, IN THE INSTANT CASE NO SUCH SANCTION HAS BEEN OBTAINED FROM THE CIT, THEREFORE, THE SAME IS DEFECTIVE IN VIEW OF THE REQUIREMENT OF SECTION 151 OF THE INCOME TAX ACT. F OR THIS PROPOSITION, THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F CHHUGSMAL RAJPAT VS. S.P. CHALIA AND OTHERS REPORTED IN (1971) 79 IT R 603 WAS RELIED UPON. IT WAS FURTHER SUBMITTED THAT NO NOTICE OF DEMAND C OULD BE ISSUED AFTER EXPIRY OF 6 MONTHS AND THE NOTICE ISSUED U/S.141(1) OF THE INCOME TAX ACT IS ALSO NOT CORRECT AS THE SAME WAS OMITTED BY TAXA TION LAW AMENDMENT ACT, 1970 W.E.F., 01-04-1971. SO FAR AS THE MERIT OF THE CASE IS CONCERNED THE ASSESSEE REITERATED THE SAME SUBMISSIONS AS MAD E BEFORE THE ASSESSING OFFICER. 6.1 HOWEVER, THE LD. CIT(A) DID NOT ACCEPT THE ARGU MENTS ADVANCED BY THE ASSESSEE. SO FAR AS THE GROUND CHALLENGING THE VALIDITY OF NOTICE ISSUED U/S.148 AFTER EXPIRY OF 4 YEARS WITHOUT SANCTION OF PRIOR APPROVAL OF CIT/CCIT IS CONCERNED HE NOTED THAT IN VIEW OF THE CLEAR AND UNAMBIGUOUS WORDINGS OF THE STATUTE AFTER THE VARIOUS AMENDMENT S THE NOTICE ISSUED U/S.148 AND THE SUBSEQUENT ASSESSMENT COMPLETED U/S .143(3) R.W.S. 147 IS PERFECTLY IN ORDER AND IS VALID. HE NOTED THAT THE ASSESSING OFFICER, PRIOR TO ISSUE OF NOTICE U/S.148, HAS DULY TAKEN THE APPROVA L OF THE ADDL.CIT ON 30-03-2010 AND THE NOTICE HAS BEEN DULY SERVED ON T HE ASSESSEE ON 31-03- 2010. THE DECISION RELIED ON BY THE ASSESSEE PERTA INS TO PRE-AMENDMENT PERIOD, I.E. PROVISION OF SECTION 151 AS IT STOOD P RIOR TO 01-04-1989 AND THEREFORE THE SAME IS NOT APPLICABLE. HE ACCORDING LY UPHELD THE NOTICE ISSUED U/S.148 AND THE SUBSEQUENT ASSESSMENT FRAMED BY THE ASSESSING OFFICER WAS HELD TO BE VALID. 5 7. SO FAR AS THE GROUND CHALLENGING THE ISSUE OF DE MAND NOTICE AFTER EXPIRY OF 6 MONTHS AND THE ISSUE OF NOTICE U/S.141( 1) OF THE INCOME TAX ACT IS CONCERNED HE HELD THAT AFTER THE NOTICE ISSUED U /S.148 THE ASSESSEE FILED THE RETURN IN RESPONSE TO THE SAME ON 30-04-2010. THEREAFTER, NOTICE U/S.143(2) AND 142(1) WERE ISSUED BY THE ASSESSING OFFICER AND IN RESPONSE TO THE SAME AUTHORISED REPRESENTATIVE OF THE ASSESS EE ATTENDED BEFORE THE ASSESSING OFFICER FROM TIME TO TIME. THE ASSESSING OFFICER HAS MENTIONED U/S.141(1) A SECTION WHICH HAS BEEN OMITTED NEARL Y 40 YEARS BEFORE AND THEREFORE, THE SAME CANNOT BE TREATED AS INTENTIONA L AND PRIMA-FACIE THE SAME APPEARS TO BE A TYPOGRAPHICAL ERROR WHICH IS C OVERED U/S.292B OF THE ACT. 8. SO FAR AS THE MERIT OF THE CASE IS CONCERNED HE UPHELD THE ACTION OF THE ASSESSING OFFICER IN ABSENCE OF ANY CREDIBLE EV IDENCE BEFORE HIM. HE NOTED THAT THE MOU WHICH WAS SEIZED DURING THE SEAR CH ACTION U/S.132 IS NOT JUST A PIECE OF PAPER AND ITS CONTENTS NOT MEAN INGLESS AS THE CONTENT HAS ALMOST IN ENTIRETY BEEN ACTED UPON IN THE FINAL AGR EEMENT FOR PURCHASE ENTERED INTO BY THE ASSESSEE EXCEPT FOR THE FIGURES . 8.1 AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASS ESSEE IS IN APPEAL BEFORE US. 9. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES, PERUSED THE ORDERS OF THE AO AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED TH E VARIOUS DECISIONS CITED BEFORE US. THERE IS NO DISPUTE TO THE FACT THAT IN THE INSTANT CASE THE ORIGINAL RETURN OF INCOME FOR A.Y. 2003-04 WAS FILED ON 29-0 9-2003 DECLARING TOTAL LOSS OF RS.2,30,549/- WHICH WAS PROCESSED U/S.143(1 ) AND THERE WAS NO 6 SCRUTINY ASSESSMENT U/S.143(3) AS APPEARS FROM THE RECORDS. THE AO ISSUED NOTICE U/S.148 ON 30-03-2010 AFTER OBTAINING APPROV AL FROM THE ADDL.CIT, RANGE-1, PUNE AND THE NOTICE WAS SERVED ON THE ASSE SSEE ON 31-03-2010. IT IS THE SUBMISSION OF THE LEARNED COUNSEL FOR THE ASSES SEE THAT PRIOR APPROVAL OF CIT/CCIT SHOULD HAVE BEEN TAKEN SINCE NOTICE HAS BE EN ISSUED AFTER A PERIOD OF 4 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. PROVISIONS OF SECTION 151 DEALS WITH SANCTION FOR ISSUE OF NOTICE WHICH R EADS AS UNDER : 151. (1) IN A CASE WHERE AN ASSESSMENT UNDER SUB-SECTIO N (3) OF SECTION 143 OR SECTION 147 HAS BEEN MADE FOR THE RELEVANT ASSESSMENT YEAR, NO NOTICE SHALL BE ISSUED UNDER SECTION 148 [BY AN ASSESSING OFFICER, WHO IS BELOW THE RANK OF ASSISTANT COMMISSIONER [OR DEPUTY COMMISSIONER], UN LESS THE [JOINT] COMMISSIONER IS SATISFIED ON THE REASONS RECORDED B Y SUCH ASSESSING OFFICER THAT IT IS A FIT CASE FOR THE ISSUE OF SUCH NOTICE] : PROVIDED THAT, AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, NO SUCH NOTICE SHALL BE ISSUED UNL ESS THE CHIEF COMMISSIONER OR COMMISSIONER IS SATISFIED, ON THE REASONS RECORD ED BY THE ASSESSING OFFICER AFORESAID, THAT IT IS A FIT CASE FOR THE ISSUE OF S UCH NOTICE. (2) IN A CASE OTHER THAN A CASE FALLING UNDER SUB-S ECTION (1), NO NOTICE SHALL BE ISSUED UNDER SECTION 148 BY AN ASSESSING OFFICER, WHO IS BELOW THE RANK OF [JOINT] COMMISSIONER, AFTER THE EXPIRY OF FOUR YEAR S FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS THE [JOINT] COMMISSIONER IS SATISFIED, ON THE REASONS RECORDED BY SUCH ASSESSING OFFICER, THAT IT IS A FI T CASE FOR THE ISSUE OF SUCH NOTICE.] [EXPLANATION.FOR THE REMOVAL OF DOUBTS, IT IS HERE BY DECLARED THAT THE JOINT COMMISSIONER, THE COMMISSIONER OR THE CHIEF COMMISS IONER, AS THE CASE MAY BE, BEING SATISFIED ON THE REASONS RECORDED BY THE ASSESSING OFFICER ABOUT FITNESS OF A CASE FOR THE ISSUE OF NOTICE UNDER SECTION 148 , NEED NOT ISSUE SUCH NOTICE HIMSELF.] SINCE IN THE INSTANT CASE THE ASSESSMENT WAS NOT MA DE U/S.143(3), THEREFORE, THE NOTICE ISSUED U/S.148 AFTER THE EXPIRY OF 4 YEARS H AS TO BE ISSUED AFTER OBTAINING THE PRIOR APPROVAL OF THE JCIT/ADDL.CIT SINCE THE A O IS BELOW THE RANK OF JCIT. SINCE THE AO HAS OBTAINED THE PRIOR APPROVAL OF THE ADDL.CIT, THEREFORE, THE GROUND RELATING TO ISSUE OF NOTICE I N VIOLATION OF PROVISIONS OF SECTION 151 BEING DEVOID OF MERIT IS DISMISSED. 7 10. SO FAR AS THE GROUND RELATING TO ISSUE OF DEMAN D NOTICE AFTER 6 MONTHS AND THE NOTICE ISSUED U/S.141(1) OF THE ACT INSTEAD OF SECTION 142(1) IS CONCERNED WE FIND THE PROVISIONS OF SECTION 141 HAS BEEN OMITTED BY THE TAXATION LAWS AMENDMENT ACT 1970 W.E.F., 01-04-1971 AND THEREFORE NOTICE ISSUED U/S.141(1) INSTEAD OF 142(1) IS A TYPOGRAPHI CAL ERROR AND THE SAME IS COVERED AGAINST THE ASSESSEE BY THE PROVISIONS OF S ECTION 292B WHICH READS AS UNDER : 292B. NO RETURN OF INCOME, ASSESSMENT, NOTICE, SUMMONS O R OTHER PROCEEDING, FURNISHED OR MADE OR ISSUED OR TAKEN OR PURPORTED T O HAVE BEEN FURNISHED OR MADE OR ISSUED OR TAKEN IN PURSUANCE OF ANY OF THE PROVISIONS OF THIS ACT SHALL BE INVALID OR SHALL BE DEEMED TO BE INVALID MERELY BY REASON OF ANY MISTAKE, DEFECT OR OMISSION IN SUCH RETURN OF INCOME, ASSESSMENT, N OTICE, SUMMONS OR OTHER PROCEEDING IF SUCH RETURN OF INCOME, ASSESSMENT, NO TICE, SUMMONS OR OTHER PROCEEDING IS IN SUBSTANCE AND EFFECT IN CONFORMITY WITH OR ACCORDING TO THE INTENT AND PURPOSE OF THIS ACT. 11. NOW COMING TO THE MERIT OF THE CASE WE FIND THE AO MADE THE ADDITION OF RS.71,35,000/- ON THE GROUND THAT THE AGREED PR ICE AS PER THE ORIGINAL MOU WAS RS.1,32,00,000/- AND THE STAMP DUTY WAS ALSO PA ID ON THAT PRICE WHEREAS THE SALE DEED SHOWS THE AMOUNT AT RS.66 LAKHS AND T HEREFORE THE ASSESSEE HAS PAID THE BALANCE AMOUNT IN CASH WHICH HAS NOT BEEN ACCOUNTED FOR ANYWHERE. THE ADDITION MADE BY THE AO HAS BEEN SUSTAINED BY T HE LD. CIT(A). IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE BEF ORE THE AO AS WELL AS THE CIT(A) THAT DUE TO ENCROACHMENT OF THE BOUNDARIES A ND THE SURROUNDING SLUM AREAS THE PRICE AGREED EARLIER APPEARED TO BE ON TH E HIGHER SIDE FOR WHICH THE ASSESSEE BACKED OUT FROM THE ORIGINAL AGREEMENT AND SUBSEQUENTLY OFFERED AN AMOUNT OF RS.66 LAKHS WHICH WAS ACCEPTED BY THE SEL LER. WE FIND THERE WAS NEITHER A FIELD ENQUIRY BY THE AO TO VERIFY THE VER ACITY OF THE ABOVE CONTENTION OF THE ASSESSEE NOR ANY EXAMINATION OF THE SELLERS WAS MADE TO FIND OUT AS TO WHETHER THEY HAVE RECEIVED ANY EXTRA CASH OVER AND ABOVE THE SALE CONSIDERATION OF RS.66 LAKHS AS AGAINST THE ORIGINA L MOU OF RS.1,32,00,000/-. 8 NO ATTEMPT HAS BEEN MADE BY THE AO TO GO DEEP INTO THE MATTER TO VERIFY THE AUTHENTICITY OF THE 2 DOCUMENTS AND THE ACTUAL AMOU NT PAID BY THE ASSESSEE TO SELLERS AND THE ASSESSMENT IN THE HANDS OF THE SELL ERS. CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE, WE DEEM IT PROPER TO REST ORE THE ISSUE TO THE FILE OF THE AO WITH A DIRECTION TO FRAME THE ASSESSMENT DENOVO AS PER LAW AFTER CONSIDERING ALL RELEVANT FACTS AND AFTER GIVING DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE HOLD AND DIRECT ACCORDINGLY. 12. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARI NG ITSELF, I.E., ON 03-04-2013. SD/- SD/- (SHAILENDRA KUMAR YADAV ) ( R.K. PANDA ) JUDICIAL MEMBER ACCOUNTANT MEMBER SATISH PUNE, DATED THE 3 RD APRIL 2013. COPY OF THE ORDER IS FORWARDED TO: 1. THE ASSESSEE 2. THE DEPARTMENT 3. THE CIT(A)-II, PUNE 4. THE CIT-II, PUNE 5. THE DR B BENCH, PUNE. 6. GUARD FILE BY ORDER // TRUE COPY // PRIVATE SECRETARY, INCOME TAX APPELLATE T RIBUNAL, PUNE.