Prabha Garg, Chennai V. ITO, Non Corp Ward -2(5), Chennai

ITA 153/CHNY/2019

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 8717 (ITAT-CHENNAI)
• Duration Of Justice: 9 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-11-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 21-01-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: G D JAYANTHI ANGAYARKANNI
• Assessee Lawyers: D ANAND
• Keywords: Principle of natural justice; Assessment record; Set aside
• Section: 143(3); 263

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , B BENCH, CHENNAI . . . , , BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ ITA NO.153/CHNY/2019 [ [ /ASSESSMENT YEAR: 2014-15 SMT. PRABHA GARG, NO.22, SIVASAILAM STREET, T.NAGAR, CHENNAI 600 017. VS. THE INCOME TAX OFFICER, NON CORPORATE WARD 2(5), CHENNAI. PAN: AA CPG 4474C ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : SHRI D. ANAND, ADVOCATE /RESPONDENT BY : SHRI G.D. JAYANTHI ANGAYARKANNI, JCIT /DATE OF HEARING : 22.08.2019 /DATE OF PRONOUNCEMENT : 19.11.2019 / O R D E R PER SHRI S. JAYARAMAN, ACCOUNTANT MEMBER : THE ASSESSEE FILED THIS APPEAL AGAINST THE ORDER OF THE PRINCIPAL COMMISSIONER OF INCOME TAX, CHENNAI IN C.NO.218/PROPOSALS 263/PCIT-1/2018-19 PASSED U/S.263 DATED 19.11.2018 FOR THE ASSESSMENT YEAR 2014-15. ITA NO.153/CHNY/2019 :- 2 -: 2. SMT. PRABHA GARG, THE ASSESSEE, AN INDIVIDUAL WHOSE ASSESSMENT WAS COMPLETED U/S. 143(3) ON 17.06.2016 ACCEPTING THE TOTAL INCOME RETURNED. ON EXAMINATION OF THE ASSESSMENT RECORD, THE PCIT FOUND THAT THE ASSESSEE HAS PURCHASED A HOUSE PROPERTY ON 27.02.1991, SOLD IT FOR RS.1,78,00,000/- ON 10.06.2008. IN COMPUTING THE CAPITAL GAIN, THE ASSESSEE HAD DEDUCTED RS.13,00,000/- TOWARDS EXPENSES ON STAMP DUTY WHICH IS NOT AN ALLOWABLE EXPENSES, AS THE STAMP DUTY IS TO BORNE BY THE PURCHASER. FURTHER, THE ASSESSEE HAD ALSO CLAIMED INDEXED COST OF IMPROVEMENT AT RS.95,000/- DURING THE YEAR 1992-93 AND CONSTRUCTION COST OF RS.4,75,000/- DURING THE YEAR 1990-91. AS PER THE PURCHASE DEED, THE COVERED AREA OF THE PROPERTY BEING 2684 SQ.FT., CONSISTING BED ROOMS, DINING HALL, BATH & TOILET AND KITCHEN CUM STORE ROOM ETC. AS PER THE SALE DEED , THE COVERED AREA WAS 236.34 SQ.MT. I.E. 2543.72 SQ.FT. THUS, THERE IS NO DIFFERENCE IN THE COVERED AREA AT THE TIME OF PURCHASE AND ALSO AT THE TIME OF SALE. HENCE, THE CLAIM OF COST OF CONSTRUCTION OF RS.4,75,000/- DURING THE YEAR 1990-91 IS NOT SUPPORTED BY PROPER EVIDENCES. SIMILARLY, THE COST OF IMPROVEMENT OF RS.95,000/- DURING THE YEAR 1991-92 ALSO NEEDS RE- EXAMINATION. THE ASSESSEE HAD ALSO CLAIMED THAT SHE HAD SOLD FURNITURE FOR RS.18,00,000/- AND JEWELLERY FOR RS.20,00,000/-. VIDE HER SUBMISSION DATED 03.05.2017, THE ASSESSEE HAS SUBMITTED THAT SHE ITA NO.153/CHNY/2019 :- 3 -: HAD SOLD HER PERSONAL JEWELLERY RECEIVED AS STRI DHAN AT THE TIME OF HER MARRIAGE. THE SOURCES FOR THE ABOVE CLAIM WAS ALSO NOT EXPLAINED BY THE ASSESSEE. THUS, ON AN OVERALL EXAMINATION OF THE RECORDS, THE PCIT CONSIDERED THAT PROPER EXAMINATION / VERIFICATION WAS NOT DONE BY THE A O WHILE PASSING THE ORDER U/S.143(3) AND IT IS AMPLY EVIDENT THAT THE ASSESSING OFFICER HAS NOT APPLIED HIS MIND TO VARIOUS ASPECTS OF THE TAXATION OF THE TRANSACTIONS AND HAD JUST CONCLUDED THE ASSESSMENT BY ACCEPTING THE EXPLANATION OF THE ASSESSEE. THEREFORE, THE PCIT CONSIDERED THAT THE ORDER PASSED U/S.143(3) ON 17.06.2016 IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE WITHIN THE MEANING OF SECTION 263 AND ACCORDINGLY ISSUED A SHOW CAUSE NOTICE U/S 263. AFTER CONSIDERING THE ASSESSEES REPLY, MATERIAL ETC., AND ON DUE DELIBERATIONS OF VARIOUS CASE LAWS VIZ., MALABAR INDUSTRIES CO. LTD., VS. CIT, 109 TAXMAN 66 (SC) AND THE ITAT, MUMBAI DECISION IN THE CASE OF MRS. KHATIZA S OOMERBHOY VS. ITO W17(3)(3) REPORTED IN 100 ITD 173 (MUM), THE PCIT FOUND THAT THE ASSESSING OFFICER HAS ACCEPTED THE ASSESSEES CLAIM WITHOUT MAKING DUE VERIFICATION AND WITHOUT CONDUCTING NECESSARY ENQUIRIES. THUS, THERE IS LACK OF APPLICATION OF MIND ON THE PART OF THE ASSESSING OFFICER. THEREFORE, THE PCIT HELD THAT THE ASSESSMENT ORDER IS BOTH ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE AND HENCE SET ASIDE THE ITA NO.153/CHNY/2019 :- 4 -: ORDER, DIRECTED THE ASSESSING OFFICER TO EXAMINE THOSE ASPECTS AND PASS A FRESH ORDER AFTER GRANTING OPPORTUNITY TO THE ASSESSEE. AGGRIEVED, THE ASSESSEE FILED THIS APPEAL WITH THE FOLLOWING GROUNDS:- 1. THE ORDER OF THE LEARNED PRINCIPAL COMMISSIONER OF INCOME TAX, CHENNAI-1 IS WRONG, ILLEGAL AND IS OPPOSED TO LAW AND FACTS OF THE CASE. 2. THE LEARNED PRINCIPAL COMMISSIONER OF INCOME TAX OUGHT TO HAVE SEEN THAT THE ORDER OF ASSESSMENT IS NEITHER ERRONEOUS OR PREJUDICIAL TO THE INTEREST OF THE REVENUE AND THAT THE LEARNED CIT CAN ASSUME JURISDICTION UNDER SECTION 263 ONLY IF THE TWIN CONDITION OF THE ASSESSMENT ORDER BEING ERRONEOUS AND PRE-JUDICIAL TO THE INTEREST OF THE REVENUE IS SATISFIED. 3. THE LEARNED PRINCIPAL COMMISSIONER ERRED IN OBSERVING THAT THE ASSESSMENT ORDER IS ERRONEOUS UNDER THE PRETEXT THAT THE ASSESSING OFFICER HAS NOT APPLIED HIS MIND. 3. THE LD. AR PRESENTED THE CASE ON THE LINES OF GROUNDS OF APPEAL, SUPRA. PER CONTRA, THE LD. DR SUPPORTED THE ORDERS OF THE PCIT TAKING US THROUGH THE ORDERS OF THE LOWER AUTHORITIES. 4. WE HEARD THE RIVAL SUBMISSIONS AND GONE THROUGH THE RELEVANT MATERIAL. WE HAVE GONE THROUGH THE IMPUGNED ASSESSMENT ORDER, IN WHICH THE A O WITHOUT ANY DISCUSSION ON THE ISSUES BROUGHT OUT BY THE PCIT, AS EXTRACTED IN PARA 2, SUPRA, HAS PASSED THE IMPUGNED ORDER ACCEPTING THE RETURNED INCOME. TIME AND AGAIN THE ITA NO.153/CHNY/2019 :- 5 -: COURTS HAVE HELD THAT THE NEED FOR DELIVERING A REASONED ORDER IS A REQUIREMENT OF LAW WHICH HAS TO BE COMPLIED WITH IN ALL APPEALABLE ORDERS. ANY ORDER DEHORS OF SUCH REASONS SUFFERS FROM NON- APPLICATION OF MIND. ONE OF THE SALUTARY REQUIREMENTS OF NATURAL JUSTICE IS SPELLING OUT REASONS FOR THE ORDER MADE, IN OTHER WORDS, A SPEAKING OUT. THE INSCRUTABLE FACE OF A SPHINX IS ORDINARILY INCONGRUOUS WITH A JUDICIAL OR QUASI-JUDICIAL PERFORMANCE. THE DELHI HIGH COURT IN THE CASE OF CIT VS TOYOTA MOTOR CORPORATION IN 306 ITR 49 HELD THAT THERE IS NO DOUBT THAT THE PROCEEDINGS BEFORE THE AO ARE QUASI JUDICIAL PROCEEDINGS AND A DECISION TAKEN BY THE AO IN THIS REGARD MUST BE SUPPORTED BY REASONS. OTHERWISE, EVERY ORDER, SUCH AS THE ONE PASSED BY THE AO, COULD RESULT IN A THEORETICAL POSSIBILITY THAT IT MAY BE REVISED BY THE CIT UNDER SECTION 263 OF THE ACT. SUCH A SITUATION IS CLEARLY IMPERMISSIBLE. IT IS ALSO NECESSARY FOR THE PARTIES TO KNOW THE REASONS THAT HAVE WEIGHED WITH THE ADJUDICATING AUTHORITY IN COMING TO A CONCLUSION. THE ORDER PASSED BY THE AO SHOULD BE A SELF-CONTAINED ORDER GIVING THE RELEVANT FACTS AND REASONS FOR COMING TO THE CONCLUSION BASED ON THOSE FACTS AND LAW. WE FIND THAT THE ORDER PASSED BY THE AO IS CRYPTIC, TO SAY THE LEAST, AND IT CANNOT BE SUSTAINED. THE TRIBUNAL CANNOT SUBSTITUTE ITS OWN REASONING TO JUSTIFY THE ORDER PASSED BY THE AO WHEN THE AO HIMSELF DID NOT GIVE ANY REASON IN THE ORDER PASSED BY HIM. ITA NO.153/CHNY/2019 :- 6 -: UNDER THE CIRCUMSTANCES, WE ANSWER THE QUESTION IN THE AFFIRMATIVE, IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE AND REMAND THE MATTER BACK TO THE FILE OF THE AO TO DECIDE THE ISSUE AFRESH IN TERMS OF THE ORDER PASSED BY THE CIT UNDER SECTION 263 OF THE ACT. 4.1 THE SUPREME COURT DISMISSED AN APPEAL AGAINST THE ABOVE ORDER IN M/S TOYOTA MOTOR CORPORATION VS COMMR. OF INCOME TAX IN CIVIL APPEAL NO. 5313 OF 2008 (ARISING OUT OF SLP(C) NO.21772/2008 (CC NO.11258/2008) ON 25 TH AUGUST, 2008, INTER ALIA, HOLDING THAT IT GOES WITHOUT SAYING THAT WHEN THE MATTER BE TAKEN UP BY THE ASSESSING OFFICER ON REMAND, IT SHALL BE HIS DUTY TO TAKE INTO ACCOUNT ALL THE RELEVANT ASPECTS INCLUDING THE MATERIALS, IF ANY, ALREADY PLACED BY THE ASSESSEE, AND PASS A REASONED ORDER. THE APPEAL IS DISMISSED WITH THE AFORESAID OBSERVATIONS. 4.2 IN THIS CASE ALSO, THE AOS ORDER IS CRYPTIC. IT IS NOT A SELF- CONTAINED ORDER GIVING THE RELEVANT FACTS AND REASONS FOR COMING TO THE CONCLUSION BASED ON THOSE FACTS AND LAW. THUS, IT DOES NOT REVEAL APPLICATION OF MIND ON THE IMPUGNED ISSUES AND HENCE THE PCIT HAS CORRECTLY INVOKED THE JURISDICTION U/S 263. SINCE THE PCIT HAS DIRECTED ITA NO.153/CHNY/2019 :- 7 -: THE AO TO RE-DO THE ASSESSMENT, AFRESH, AFTER VERIFYING THE ASSESSEES CLAIM AS PER LAW, AFTER GRANTING OPPORTUNITY TO THE ASSESSEE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER AND HENCE THE ASSESSEES APPEAL IS DISMISSED. 5. IN THE RESULT, THE ASSESSEES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 19 TH NOVEMBER, 2019 IN CHENNAI. SD/- SD/- /CHENNAI, /DATED 19 TH NOVEMBER, 2019 RSR /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. ( ) /CIT(A) 4. /CIT 5. /DR 6. /GF ( . . . ) (N.R.S. GANESAN) / JUDICIAL MEMBER ( ) (S. JAYARAMAN) /ACCOUNTANT MEMBER