ITO WD-8(4), KOLKATA, Kolkata V. M/s Subarnarekha Properties Pvt. Ltd., Kolkata

ITA 1532/KOL/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75108 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-03-2014
• Appeal Filed By: Department
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 23-10-2012
• Court: TRIBUNAL
• Department Lawyers: S K DAS
• Assessee Lawyers: P DAM KANUNJNA
• Keywords: Business income; Difference of opinion; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 147; 148

Judgement Text

, B , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA () BEFORE , /AND , ! ) [BEFORE SHRI MAHAVIR SINGH, JM & SHRI SHAMIM YAHYA, AM] ' / I.T.A NO.1532/KOL/2012 #$ %&/ ASSESSMENT YEAR: 2006-07 INCOME-TAX OFFICE, WD-8(4), KOLKATA. VS. M/S. SUB ARNAREKHA PROPERTIES PVT. LTD. (PAN: AAHCS9421R) (() /APPELLANT ) (*+()/ RESPONDENT ) DATE OF HEARING: 26.03.2014 DATE OF PRONOUNCEMENT: 26.03.2014 FOR THE ASSESSEE: SHRI P. DAM KANUNJNA, JCIT, SR. D R FOR THE REVENUE : SHRI S. K. DAS, ADVOCATE / ORDER PER SHRI MAHAVIR SINGH, JM : THIS APPEAL BY REVENUE IS ARISING OUT OF ORDER OF C IT(A)-VIII, KOLKATA IN APPEAL NO. 227/CIT(A)-VIII/KOL/2011-12 DATED 16.07.2012. ASSE SSMENT WAS FRAMED BY ITO, WARD-8(4), KOLKATA U/S. 143(3)/147 OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2006-07 VIDE HIS ORDER DATED 13.07. 2012. 2. THE FIRST LEGAL ISSUE RAISED BY REVENUE AGAINST THE ORDER OF CIT(A) IS IN QUASHING THE REASSESSMENT PROCEEDINGS INITIATED U/S. 147 OF THE ACT AS AB INITIO VOID. FOR THIS, REVENUE HAS RAISED FOLLOWING THREE GROUNDS: 1. THAT ON THE FACTS AND IN CIRCUMSTANCES OF THE C ASE AND IN IAW, THE LD. CIT(A) HAS ERRED IN HOLDING AND QUASHING THE REASSESSMENT PROC EEDINGS U/S 147 OF THE INCOME-TAX ACT, 1 961 AS AB INITIO VOID WITHOUT HAVING REGARD TO THE FACT THAT THERE WAS ESCAPEMENT IN UNDER-ASSESSMENT OF INCOME CHARGEABLE TO TAX FOR WHICH, AS PER THE EXPLANATION 2(C) TO SECTION 147 OF THE INCOME-TAX ACT, 1961, REASSES SRNENT WAS VALIDLY DONE. 2. THAT ON THE FACTS AND IN CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) HAS ERRED IN HOLDING THAT ASSESSMENT WAS REOPENED ON MERE CHA NGE OF OPINION WHEREAS, THE A O WAS CORRECT TO ISSUE NOTICE U/S 148 OF INCOME-TAX, ACT, 1961 FOR ESCAPEMENT OF INCOME DUE TO UNDER-ASSESSMENT OF INCOME CHARGEABLE TO TAX . 3. THAT ON THE FACTS AND IN CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) HAS ERRED IN QUASHING THE REASSESSMENT PROCEEDINGS HOLDING TH AT IT WAS INITIATED ON MERE CHANGE OF OPINION, WHEREAS, SUCH FINDING OF THE CIT(APPEALS) IS NOT RELEVANT IN THIS CASE AS THE REASSESSMENT PROCEEDINGS WAS INITIATED WITHIN FOUR YEARS FROM THE ASSESSMENT YEAR UNDER CONSIDERATION AS PER THE PROVISIONS OF SECTION 147 OF THE INCOME TAX ACT, 1961. 2 ITA NO. 1532/K/2012 M/S. SUBARNAREKHA PROPERTIES PVT. LTD., AY 2006-07 3. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FA CTS AND CIRCUMSTANCES OF THE CASE. THE RELEVANT ASSESSMENT YEAR INVOLVED IS 2006-07. THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE RELEVANT ASSESSMENT YEAR ON 20.12.2006 WITHIN T HE DUE DATE OF FILING OF RETURN U/S. 139(1) OF THE ACT. SUBSEQUENTLY, AFTER ISSUING NOTICE U/S . 143(2) OF THE ACT, ASSESSMENT WAS FRAMED BY THE AO U/S. 143(3) OF THE ACT ON 30.12.2008. IN TH IS ASSESSMENT, ASSESSEE HAS DECLARED LTCG OF RS.1,44,26,871/- AND AVAILED EXEMPTION U/S. 54EC OF THE ACT FOR AN AMOUNT OF RS.1.45 CR. THEREBY THE LTCG BECAME NIL. SUBSEQUENTLY, THE AO ISSUED NOTICE U/S. 148 OF THE ACT DATED 16.03.2011 REQUIRING THE ASSESSEE TO FILE RETURN OF INCOME AS THE INCOME HAS ESCAPED ASSESSMENT IN TERM OF SECTION 147 OF THE ACT. ADMI TTEDLY, REOPENING IS DONE WITHIN FOUR YEARS BUT AFTER COMPLETION OF ASSESSMENT U/S. 143(3) OF T HE ACT. THE NOTICE U/S. 148 OF THE ACT WAS ISSUED AND FOR THAT REASONS RECORDED WAS TO REASSES S THE INCOME OF THE ASSESSEE UNDER THE HEAD BUSINESS INCOME INSTEAD OF INCOME DECLARED AND ORIG INALLY ASSESSED AS LTCG. THEREAFTER, THE AO ISSUED NOTICE U/S. 143(2) OF THE ACT AND COMPLET ED ASSESSMENT U/S. 143(3) READ WITH SECTION 147 OF THE ACT BY TREATING THE LTCG ON SALE OF PROP ERTY DECLARED BY THE ASSESSEE AS BUSINESS INCOME. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFOR E CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND ALSO CONSIDERING CL AUSE (C) OF EXPLANATION (2) TO SECTION 147 OF THE ACT AND THE DECISION OF HONBLE SUPREME COURT I N THE CASE OF CIT VS. KELVINATOR INDIA LTD. (200) 320 ITR 561 (SC) QUASHED THE REASSESSMENT PRO CEEDINGS BY OBSERVING AS UNDER: IN THE LIGHT OF THE ABOVE OBSERVATION AND DISCUSSIO N , CAREFULLY CONSIDERING SUBMISSON OF THE APPELLANT ALONG WITH THE CASE LAWS RELIED UP ON, PERUSING THE ENTIRE FACTS OF THE CASE INCLUDING THE IMPUGNED REASSSMENT ORDER AND OT HER MATERIALS BROUGHT ON RECORD AND HAVING REGARD THE RATIO LAID DOWN BY THE HONB LE SUPREME COURT IN THE CASE OF CIT V. KELVINATOR OF INDIA LTD. AND OTHER CASES(SUPRA), I AM OF THE CONSIDERED VIEW THAT THE REASSESSMENT PROCEEDINGS INITIATED UNDER SEC. 147 A ND ISSUE OF NOTICE UNDER SEC. 148 OF THE ACT ARE, AB INITIO ILLEGAL AND VOID. ACCORDINGL Y, I HOLD THAT THE REASSESSMENT SO FRAMED IS BAD-IN-LAW AND HENCE THE SAME DESERVES TO BE QUASHED. THUS, THE REASSESSMENT SO FRAMED IS BAD-IN-LAW AND IS ACCORDI NGLY QUASHED. 4. ON MERITS ALSO, THE CIT(A) CONSIDERED THE ISSUE THAT THE AO OPINED THAT THE ASSESSEE WAS CARRYING ON BUSINESS ACTIVITY AND IN VIEW OF TH IS, THE INCOME OUGHT TO HAVE BEEN DETERMINED AS ASSESSABLE UNDER THE HEAD BUSINESS AN D NOT CAPITAL GAINS. THE CIT(A) FOUND THAT THE ASSESSEE IS NO WHERE CARRYING ON THE BUSINESS O F SALE AND PURCHASE OF PROPERTY OR LANDED PROPERTY. THE ASSESSEE BEFORE THE CIT(A) REFERRED TO AUDITED STATEMENT OF ACCOUNTS FROM AY 2001-02 UPTO AY 2010-11 WHICH WOULD REVEAL THAT THE RE IS NO TRADING OF ANY NATURE UNDERTAKEN BY ASSESSEE IN THE PROPERTIES OR LANDS. ACCORDING TO ASSESSEE, PROPERTY WAS MADE IN ACQUIRING PLOT OF LAND IN AY 2001-02 AND THIS PARTICULAR PROP ERTY I.E. THE PROPERTY BEARING NO. 4A, CAMAC STREET, KOLKATA WHICH WAS ACQUIRED FOR A TOTAL CONS IDERATION OF RS.1,26,36,617/- AS ON 3 ITA NO. 1532/K/2012 M/S. SUBARNAREKHA PROPERTIES PVT. LTD., AY 2006-07 07.03.2001 IS DULY APPEARING IN THE BALANCE SHEET. THIS SITUATION CONTINUES YEAR AFTER YEAR AS REPORTED IN THE AUDITED STATEMENT OF ACCOUNTS OF EA CH OF THE YEARS. THE ASSESSEE EXPLAINED THAT THERE IS NO PURCHASE OF ANY PROPERTY AND SINCE THE INVESTMENT WAS MADE BY ASSESSEE IN AY 2001-02 EXCEPT SOME OTHER ACQUISITION OF PLOT OF LA ND IN AY 2005-06 APART FROM THAT THE PROPERTY ACQUIRED IN AY 2006-07 WAS DISPOSED OF IN THE RELEVANT AY 2006-07 NO OTHER SALE/PURCHASE WAS UNDERTAKEN BY THE ASSESSEE EVEN U PTO AY 2010-11. THE ASSESSEE SOLD THIS PROPERTY FOR A TOTAL SUM OF RS.2,8,95,833/- AS ON 2 0.12.2005 RESULTING IN NET SURPLUS OF RS.1,72,59,216/- WAS DECLARED AS ASSESSABLE AS LTCG AS HAS BEEN ASSESSED ORIGINALLY U/S. 143(3) OF THE ACT. FROM THE FACTS, MATERIAL BROUGH T ON RECORD AND IN OUR OPINION THERE IS NO FACTUAL, LEGAL OR ON MERITS, THERE IS NO BASIS FOR THE REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. IN OUR OPINION, THE CA SE OF THE ASSESSEE DOES NOT FALL IN SUB-CLAUSE (C) OF EXPLANATION 2 TO SECTION 147 OF THE ACT. WE ARE IN FULL AGREEMENT WITH THE FINDINGS OF CIT(A) ON LEGAL ASPECT AS WELL AS ON MERITS THAT TH E ASSESSEES CASE IS FULLY COVERED BY THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF KE LVINATOR OF INDIA LTD. (SUPRA), WHEREIN HONBLE SUPREME COURT HAS HELD THAT REASSESSMENT CA NNOT BE DONE ON MERE CHANGE OF OPINION. HENCE, WE UPHOLD THE ORDER OF CIT(A) BOTH ON MERITS AS WELL AS ON JURISDICTION ISSUE. APPEAL OF REVENUE IS DISMISSED. 5. IN THE RESULT, APPEAL OF REVENUE IS DISMISSED. 6. ORDER IS PRONOUNCED IN THE OPEN COURT. SD/- SD/- , ! , (SHAMIM YAHYA ) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 26 TH MARCH, 2014 ./ #01 2 JD.(SR.P.S.) 3 *4 5 4%6- COPY OF THE ORDER FORWARDED TO: 1 . () / APPELLANT ITO, WARD-8(4), KOLKATA. 2 *+() / RESPONDENT M/S. SUBARNAREKHA PROPERTIES PVT. L TD., 97, PARK STREET, 4 TH FLOOR, KOLKATA-70 016.. 3 . # ( )/ THE CIT(A), KOLKATA 4. 5. # / CIT KOLKATA 4:; *# / DR, KOLKATA BENCHES, KOLKATA +4 */ TRUE COPY, #