Siddharth Galada, CHENNAI V. ITO, CHENNAI

ITA 1536/CHNY/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9478 (ITAT-CHENNAI)
• Duration Of Justice: 9 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-04-2016
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 05-04-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 02-07-2015
• Court: TRIBUNAL
• Department Lawyers: PATHLAVATH PEERYACIT
• Assessee Lawyers: D ANAND
• Keywords: Capital asset; Corroborative evidences

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI , ! . ' #$ BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G.PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A.NO.1536 /MDS./2015 ( / ASSESSMENT YEAR :2011-12) MR.SIDDHARTH GALADA , PLOT NO.85/16,SRIRANGAM AVENUE,EGMORE, CHENNAI 600 008. VS. INCOME TAX OFFICER, BUSINESS WARD VII(1), CHENNAI. PAN AADPG 9035 A ( %& / APPELLANT ) ( '(%& / RESPONDENT ) / APPELLANT BY : MR.D.ANAND, ADVOCATE / RESPONDENT BY : MR.PATHLAVATH PEERYA,CIT, D.R / DATE OF HEARING : 05.04.2016 !' /DATE OF PRONOUNCEMENT : 22 .04.2016 ) / O R D E R PER G.PAVAN KUMAR, JUDICIAL MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGA INST THE ORDER OF THE COMMISSIONER OF INCOME TAX, CHENNAI-9 IN ITA NO.1536/MDS/2015 2 C. NO.12/263(SG)/CIT-9/15-16, DATED 29.05.2015 PA SSED REVISION ORDER U/S.263 OF THE ACT FOR THE ASSESSMENT YEAR 20 11-12. 2.1 THE ASSESSEE HAS RAISED THE GROUNDS CHALLENGIN G THE VALIDITY OF JURISDICTION OF COMMISSIONER OF INCOME TAX IN PASSI NG THE REVISION ORDER AND THE ADDITION BY THE AO. 2.2. BEFORE WE GO INTO THE MERITS OF THE CASE, WE FIND IT APPROPRIATE TO FIRST CLARIFY ON THE JURISDICTIONAL ASPECTS ON W HICH THE ASSESSEE HAS RAISED THE GROUND NOS.2 &3 AS FOLLOWS:- 2. THE LD. CIT-9 ERRED IN PASSING REVISIONARY ORDE R U/S.263 OF THE INCOME TAX ACT AGAINST THE APPELLANT WHO DOES NOT FALL UND ER HIS JURISDICTION. THE SAID ORDER IS ILLEGAL, NON-EST IN LAW AND LACKS JURISDICTION. 3. THE LD. CIT-9 OUGHT TO HAVE SEEN THAT THE ORDER OF ASSESSMENT IS NOT ERRONEOUS AND THAT THE LD. CIT CAN ASSUME JURISDICT ION U/S.263 ONLY IF THE TWIN CONDITION OF THE ASSESSMENT ORDER BEING ER RONEOUS AND PRE- JUDICIAL TO THE INTEREST OF THE REVENUE IS SATISFIE D. ITA NO.1536/MDS/2015 3 3.1 THE BRIEF FACTS OF THE CASE ARE THAT THE ASSES SEE IS AN INDIVIDUAL, ENGAGED IN THE BUSINESS OF PHARMACEUTIC AL TRADING AND FILED RETURN OF INCOME ON 30.09.2011 FOR ASSESSMEN T YEAR 2011-12 DISCLOSING TOTAL INCOME OF ` 9,60,580/-. SUBSEQUENTLY, THE RETURN OF INCOME WAS SELECTED FOR SCRUTINY AND NOTICE U/S.143 (2) WAS ISSUED TO THE ASSESSEE. IN COMPLIANCE TO THE NOTICE, THE AUTH ORISED REPRESENTATIVE OF ASSESSEE APPEARED FROM TIME TO TI ME AND FURNISHED THE DETAILS CALLED FOR DURING ASSESSMENT PROCEEDINGS. AS THE ASSESSEE IS IN PHARMACEUTICAL BUSINESS, THE LD. AO CALLED FOR THE DETAILS OF EXPENDITURE FOR VERIFICATION AND DISALLO WED SALARY AND WAGES ` 75,100/- & PETROL AND KEROSENE EXPENSES ` 25,300/- AND ASSESSED INCOME ` 10,60,980/-. THE ASSESSMENT U/S.143(3) OF THE ACT WAS COMPLETED BY THE ITO, BUSINESS WARD NO.VII( 1),CHENNAI. SUBSEQUENTLY, THE LD.CIT-9,CHENNAI ISSUED SHOW CAUS E NOTICE BEARING NO.12/CIT-9/263/14-15, DATED 10.03.2015 ST ATING THAT THE ORDER PASSED BY THE AO IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. BASED ON THE ASSESSEES ASSESSMENT PR OCEEDINGS FOR ASSESSMENT YEAR 2012-13, LD.CIT FOUND THAT THE ASSE SSEE AS A CO- OWNER ALONG WITH SMT.INDRA GALADA HAD SOLD PROPERTY FOR ` 21.34 ITA NO.1536/MDS/2015 4 CRORES AND ASSESSEES SHARE BEING ` 10.67 CRORES. THE LAND WAS SOLD ALONG WITH BUILDING AND THE LD. CIT REFERRED THE TR ANSACTION AT PAGE-2 OF HIS ORDER. THE PURCHASER OF THE PROPERTY M/S.PR INCE FOUNDATION LTD., ACQUIRES RIGHT IN THE PROPERTY ON EXECUTION O F REGISTERED SPECIAL POWER OF ATTORNEY DATED 03.03.2011, BUT FOR THE PRO PERTY AT JAIPUR, THE SPECIAL POWER OF ATTORNEY IS NOT REGISTERED AND UNREGISTERED AGREEMENT OF SALE WAS ENTERED ON 04.04.2011, FALLS IN THE FINANCIAL YEAR 2011-12. 3.2 THE LD. CIT CONSIDERING THE SPECIFIC CLAUSE IN THE SPECIAL POWER OF ATTORNEY DATED 03.03.2011, FOUND THAT THER E IS A TRANSFER OF CAPITAL ASSET BEING A LAND IN TERM OF PROVISIONS OF THE SECTION 2(47) OF THE INCOME TAX ACT READ WITH SECTION 53A OF TRANSFE R OF PROPERTY ACT AND DUE TO AGREEMENTS, THE PROPERTIES WERE TRANSFER RED IN THE RELEVANT PREVIOUS YEAR 2010-11 AND CAPITAL GAINS AR OSE IN THE ASSESSMENT YEAR 2011-12 WHEREAS THE ASSESSEE HAS O FFERED THE LONG TERM CAPITAL GAINS ON TRANSFER OF PROPERTIES I N THE ASSESSMENT YEAR 2012-13. THE LD. CIT BASED ON THE SPECIAL POW ER OF ATTORNEY REGISTERED ON 03.03.2011 IS OF THE OPINION THAT ASS ESSMENT ORDER ITA NO.1536/MDS/2015 5 PASSED U/S.143(3) OF THE ACT FOR ASSESSMENT YEAR 20 11-12 DATED 26.03.2014 BY THE ITO, BUSINESS WARD VIII(1) IS ER RONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE LD . COUNSEL FOR THE ASSESSEE APPEARED AND FILED THE SUBMISSIONS AND GAV E ELABORATE EXPLANATIONS AND FURTHER, CHALLENGED THE JURISDICTI ON OF THE CASE AND ARGUED THAT THE ASSESSEE IS REGULARLY ASSESSED TO T AX IN NON- CORPORATE RANGE-9 UNDER JURISDICTION OF COMMISSIONE R OF INCOME TAX, CHENNAI-7. APART FROM DISPUTING JURISDICTIONA L ASPECT, THE LD.A.R ALSO FURNISHED EXPLANATIONS ON POWER OF ATTORNEY, S ALE AGREEMENTS, AND ITS DISCLOSURE AS LONG TERM CAPITAL GAINS FALLI NG IN ASSESSMENT YEAR 2012-13. THE LD. CIT CONSIDERED THE SUBMISSION S, DECISIONS RELIED BY THE ASSESSEE AND ALSO PERUSED THE CLAUSES OF SALE AGREEMENTS IS OF THE OPINION THAT THE ASSESSMENT HAS TO BE FRAMED IN THE ASSESSMENT YEAR 2011-12 AND BEFORE HE DECID ES ON THE ASSESSMENT JURISDICTION, TREATED THE ASSESSMENT OR DER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE AND OBSERVED AT PAGE - 4 OF HIS ORDER AS UNDER:- 4. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE C ASE AND THE SUBMISSIONS MADE BY THE ASSESSEE. LET US FIRST DEC IDE THE ISSUE OF ITA NO.1536/MDS/2015 6 JURISDICTION RAISED BY THE ASSESSEE THAT THE UNDERS IGNED HAS NO JURISDICTION OVER THE CASE OF THE AS.E THE OBJECTI ON OF THE ASSESSEE IS NOT ALL SUSTAINABLE FOR THE FOLLOWING REASONS: THE SHOW CAUSE NOTICE U/S.263 WAS ISSUED ON 10.03.2015. THE ASSESSMENT OR DER U/S.143(3) FOR ASSESSMENT YEAR 2012-13 WAS PASSED BY THE ACIT, NON-CORPORATE CIRCLE-6,CHENNAI THEREAFTER ON 23.3.15. BUT, THE AS SESSEE HAS NOT RAISED ANY OBJECTION BEFORE THE AO AND HAS DULY COM PLIED WITH VARIOUS NOTICES ISSUED BY THE ACIT, NON-CORPORATE CIRCLE-6. HE HAS ALSO NOTRAISED ANY OBJECTION WHEN FRESH NOTICE U/S.143(2 ) WAS ISSUED BY THE AO AFTER THE ISSUE OF NOTIFICATION AND CHANGE OF JU RISDICTION BY THE CBDT WEF 15.11.2014 AND CONSEQUENTIAL ORDERS PASSED BY THE PR.CCIT, PR.CIT AND THE ADDITIONAL.CIT. THE PAN OF THE ASSESSEE ALSO COMES UNDER JURISDICTION OF ACIT,NON CORPORATE CIRC LE-6. HAVING NOT RAISED ANY OBJECTION IN THE LAST PROCEEDINGS, HE CA NNOT NOW RAISE AN OBJECTION REGARDING JURISDICTION OF THE UNDERSIGNED . THE JURISDICTION CANNOT BE CHANGED AT THE WHIM OF THE ASSESSEE TO SU IT HIS CONVENIENCE AND HELD HIM AVOID PAYMENT OF LEGITIMATE TAX TO THE EXCHEQUER. PROVISIONS OF THE SECTION 292BB INSERTED BY THE FIN ANCE ACT, 2008 WEF 01.4.2008 IS ALSO DIRECTLY ON THE ISSUE AND NEGATES THE CONTENTION OF THE ASSESSEE. HENCE THE OBJECTION IS REJECTED. 3.3 APART FROM THE JURISDICTION, THE LD. CIT RELIE D ON THE FINDINGS OF THE AO AND THE CLAUSES OF SALE AGREEMENTS AND POWER OF ATTORNEY, ITA NO.1536/MDS/2015 7 AND CONSIDERATION RECEIVED FROM THE PURCHASER AND R ELIED ON THE TRIBUNAL DECISIONS AND CONCLUDED THE ASSESSMENT U /S.143(3) OF THE ACT DATED 26.03.2014 IS SET ASIDE AND DIRECTED THE AO TO LEVY TAX ON CAPITAL GAINS ON TRANSFER OF PROPERTIES AT CHENNAI AND JAIPUR IN THE ASSESSMENT YEAR 2011-12, THOUGH ASSESSEE HAS OFFERE D IN ASSESSMENT YEAR 2012-13 AND PASSED THE REVISION ORD ER U/S.263 OF THE ACT ON 29.05.2015. AGGRIEVED WITH THE ORDER OF LD. CIT, THE ASSESSEE HAS PREFERRED AN APPEAL BEFORE THE TRIBUNA L. 4. BEFORE US, LD.A.R REITERATED THE SUBMISSIONS MAD E IN THE ASSESSMENT PROCEEDINGS AND THE REVISIONAL PROCEEDIN GS WITH SUPPORTING EVIDENCE AND JUDICIAL DECISIONS. LD.A.R ARGUED THE ORDER PASSED U/S.263 OF THE ACT BY CIT CHENNAI-9 IS INVAL ID AND OPPOSED TO LAW AND FACTS. THE LD. CIT-9 PASSED ORDER U/S.263 A GAINST THE APPELLANT AND THE SAID APPELLANT DOES NOT FALL IN H IS JURISDICTION. THEREFORE,, THE ORDER IS NON-EST IN THE EYES OF LAW AND LACKS JURISDICTION. THE ASSESSMENT ORDER U/S.143(3) OF T HE ACT DATED 26.03.2014 WAS PASSED BY THE ITO, BUSINESS WARD VII I(1),CHENNAI FALLS IN THE JURISDICTION OF CIT-7 AS PER THE JURI SDICTIONAL LIST EFFECTIVE ITA NO.1536/MDS/2015 8 FROM 15.11.2014 AND THE ASSESSEE HAS OFFERED CAPIT AL GAINS IN THE ASSESSMENT YEAR 2012-13 BASED ON THE SALE AGREEMENT S WHICH IS IN ORDER AND VALID IN THE EYES OF LAW. THE LD. COUNSE L FOR THE ASSESSEE SUBSTANTIATE HIS ARGUMENTS ON THE JURISDICTIONAL AS PECTS AND REFERRED TO PAPER BOOK EXPLAINING THE CIRCUMSTANCES AND POWE R OF ATTORNEY AND AGREEMENT OF SALE EXECUTED AND DREW ATTENTION TO PAGE-81 OF THE PAPER BOOK WHERE THE JURISDICTION OF AO WAS CLE ARLY MENTIONED AND RELIED ON THE PROVISIONS OF THE SECTION 120(1) OF THE ACT WHICH READS AS UNDER:- INCOME-TAX AUTHORITIES SHALL EXERCISE ALL OR ANY OF THE POWERS AND PERFORM ALL OR ANY OF THE FUNCTIONS CONFERRED ON, O R, AS THE CASE MAY BE, ASSIGNED TO SUCH AUTHORITIES BY OR UNDER THIS A CT IN ACCORDANCE WITH SUCH DIRECTIONS AS THE BOARD MAY ISSUE FOR THE EXERCISE OF THE POWERS AND PERFORMANCE OF THE FUNCTIONS BY ALL OR A NY OF THOSE AUTHORITIES. EXPLANATION FOR THE REMOVAL OF DOUBTS, IT IS HEREBY DECLARED T HAT ANY INCOME-TAX AUTHORITY, BEING AN AUTHORITY HIGHER IN RANK, MAY, IF SO DIRECTED BY THE BOARD, EXERCISE THE POWE RS AND ITA NO.1536/MDS/2015 9 PERFORM THE FUNCTIONS OF THE INCOME-TAX AUTHORITY L OWER IN RANK AND ANY SUCH DIRECTION ISSUED BY THE BOARD SHALL BE DEEMED TO BE A DIRECTION ISSUED UNDER SUB-SECTION (1). THE LD.A.R PRAYED THE ORDER PASSED BY THE LD. CIT-9 IS INVALID AND PRAYED FOR QUASHING THE ORDER. 5. CONTRA, THE LD.D.R VEHEMENTLY ARGUED AND RELIED ON THE FINDINGS OF THE CIT AND REFERRED TO THE PAGE-6 OF THE CITS ORDER AND ARGUED THAT THE ASSESSEE HAS NOT RAISED ANY OBJECTION BEFO RE THE ASSESSING AUTHORITY IN RESPECT OF ASSESSMENT ORDER U/S.143 (3) OF THE ACT FOR ASSESSMENT YEAR 2012-13 PASSED BY THE ACIT, NON-CO RPORATE CIRCLE- 3, CHENNAI. HAVING ACCEPTED THE JURISDICTION IN TH E SUBSEQUENT YEAR, THE ASSESSEE CANNOT NOW CLAIM THE ORDER OF ASSESSME NT FOR THE YEAR 2011-12 LACK JURISDICTION. AND RELIED ON THE PROVIS IONS OF THE SECTION 292BB OF THE ACT AND FILED COPY OF NOTIFICATION NO. 1/2014-15 ISSUED ON 15.11.2014 EXPLAINING THE JURISDICTION OF THE A SSESSEE FALLING UNDER COMMISSIONER OF INCOME TAX CHENNAI-7 AND RELI ED ON THE ORDER OF CIT. ITA NO.1536/MDS/2015 10 6. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED TH E MATERIAL ON RECORD AND JUDICIAL DECISION CITED. WE HAVE LIMITED OUR ADJUDICATION ON THE JURISDICTIONAL ASPECTS. THE LD.A.R ARGUED THAT THE ORDER PASSED BY THE CIT-9 LACKS JURISDICTION AS THE ASSESSMENT FOR ASSESSMENT YEAR 2011-12 WAS PASSED BY THE ITO,WARD NO.VIII(1),CHENN AI, WHICH FALLS IN THE JURISDICTION OF CIT-7 AND NOT IN CIT-9. THE LD.A.R DREW ATTENTION TO THE JURISDICTIONAL CHART AND EXPLAINED THAT THE CHANGE IN JURISDICTION HAS OCCURRED ONLY FROM 15.11.2014, WHI CH IS AFTER PASSING OF ASSESSMENT ORDER BY THE AO ON 24.03.2014. THE L D.A.R FURTHER SUBSTANTIATES HIS ARGUMENTS ON MERITS BY REFERRING TO THE PAPER BOOK AND ASSESSEE HAS OFFERED TO THE INCOME FROM CAPITAL GAINS IN THE ASSESSMENT YEAR 2012-13. 7. ON THE OTHER HAND, LD.D.R REPLIED THAT THE ASS ESSEE HAS CO- OPERATED IN THE ASSESSMENT PROCEEDINGS FOR ASSESSME NT YEAR 2012- 13 AND ORDER PASSED FALLING IN THE NEW JURISDICTION AND THERE CANNOT BE A CHANGE IN JURISDICTION AS PER THE WHIMS AND FA NCIES OF THE ASSESSEE. ON PERUSAL OF NOTIFICATION, WE FOUND THA T THE CHANGE IN ITA NO.1536/MDS/2015 11 JURISDICTIONAL ASPECTS IS EFFECTIVE FROM 15.11.2014 AND THE LD.A.R ALSO AGREED TO APPLICABILITY. WHEN THE BENCH QUESTIONED THE LD.D.R, WHETHER THIS NOTIFICATION IS A PROSPECTIVE OR RETRO SPECTIVE? THERE WAS NO CONVINCING ANSWER, AND THE NOTIFICATIONS ARE PRO SPECTIVE AND SHALL BE EFFECTIVELY IMPLEMENTED FROM THE DATE OF NOTIFIC ATION. 8. IN THE PRESENT CASE, THE NOTIFICATION IS DATED 15.11.2014 AND THE ASSESSMENT ORDER U/S.143(3) OF THE ACT WAS PASSED O N 24.03.2014 FALLS IN THE JURISDICTION OF THE CIT-7 AND NOT IN O THER JURISDICTION. WE ARE CONVINCED WITH THE ARGUMENTS OF THE LD.A.R AND PERUSED THE FINDINGS AND SUBMISSIONS OF LD.D.R ON THE ISSUE OF JURISDICTION. CONSIDERING THE APPARENT FACTS, WE ARE OF THE OPINI ON THAT THE LD.CIT- 9 PASSED THE REVISION ORDER U/S.263 OF THE ACT WIT HOUT JURISDICTION AS PER THE PROVISIONS OF THE ACT. THEREFORE, WE ARE I NCLINED TO QUASH THE REVISION ORDER PASSED U/S.263 OF THE ACT ON THE GRO UND OF LACK OF JURISDICTION AND RESTORE THE ORDER U/S.143(3) OF TH E ACT BY THE AO PASSED ON 24.03.2014. ITA NO.1536/MDS/2015 12 9. IN THE RESULT, THE APPEAL OF ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON FRIDAY , THE 22 ND OF APRIL,2016 AT CHENNAI. SD/- SD/- ( #$ % ) & CHANDRA POOJARI ' ( . ) (G.PAVAN KUMAR) ( ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED THE 22 ND APRIL,2016. K S SUNDARAM. )*((+,(-, /COPY TO: ( 1. /APPELLANT 2. /RESPONDENT 3. ( .(&' /CIT(A) 4. ( . /CIT 5. ,/0 (1 /DR 6. 02(3 /GF