EXECUTOR OF THE ESTATE OF THE LATE SHRI RAMLUBHUYA BODHRAJ SURI, MUMBAI V. ITO 11(1)(3), MUMBAI

ITA 1640/MUM/2010

• Counselvise Citation: 164019914 RSA 2010
• Duration Of Justice: 4 year(s) 1 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-04-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 17-02-2014
• Assessment Year: 2000-2001
• Appeal Filed On: 03-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: DR K SHIVRAM
• Keywords: Capital asset; Period of limitation
• Section: 234B; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH D, MUMBAI BEFORE SHRI RAJENDRA, ACCOUNTANT MEMBER AND DR. S.T.M. PAVALAN, JUDICIAL MEMBER ITA NO. 1640/MUM/2010 ASSESSMENT YEAR: 2000-01 SHRI ANIL SURI EXECUTOR OF THE ESTATE OF LATE SHRI RAMLUBHUYA BODHRAJ SURI, 7 TH FLOOR, RITA BLDG, 15 GOLF LINK NEAR UNION PARK KHAR (W) MUMBAI- 400 052 VS. ITO 11(1)(3) MUMBAI. (APPELLANT) (RESPONDENT) PERMANENT ACCOUNT NO. :- ASIPS 2874 G ASSESSEE BY : SHRI DR.K. SHIVRAM REVENUE BY : SHRI SANJEEV JAIN DATE OF HEARING : 17.02.2014 DATE OF PRONOUNCEMENT : 16.04.2014 O R D E R PER DR. S.T.M. PAVALAN, JM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD.CIT(A)-3, MUMBAI DATED 11.01.2010 FOR THE ASSESSMENT YEAR 20 00-01. 2. IN GROUNDS NO. 1, 2 & 3, THE ASSESSEE HAS AGITAT ED THE DECISION OF THE LD.CIT(A) IN CONFIRMING THE REOPENING OF THE ASSESS MENT U/S 148 AS A VALID ONE. 2.1 BRIEFLY STATED, THE TRIBUNAL, VIDE ITS ORDER DA TED 28.03.2011 IN THE ASSESSEES CASE IN ITA NO. 7482/MUM/2005 FOR ASSESSMENT YEAR 2 002-03 OBSERVED THAT SINCE THE ASSESSEE RECEIVED CONSIDERATION IN PART AND THE GRANTED DEVELOPER THE RIGHT TO ENTER THE PLOT TO CARRY OUT CONSTRUCTION WORK OF AD DITIONAL BUILT UP AREA ON 09.02.2000 ITSELF, BY VIRTUE OF DEEMING PROVISIONS OF SECTION 45(1), THE CAPITAL GAIN WAS TO BE BROUGHT TO TAX FOR ASSESSMENT YEAR 2000-0 1 AND THE NOT IN THE YEAR 2002- 03. ON THIS BASIS OF THE SAID OBSERVATION OF THE TR IBUNAL, THE AO ISSUED THE NOTICE TO THE ASSESSEE ON 24.08.2007 U/S 148 READ WITH SECTIO N 150 AND THE SAME WAS SERVED ON THE ASSESSEE ON 27.08.2007 ALONG WITH COPY OF TH E REASONS FOR INITIATING ITA NO. 1640/MUM/2010 SHRI ANIL SURI ASSESSMENT YEAR: 2000-01 2 PROCEEDINGS U/S 147 OF THE INCOME TAX ACT. IN RESPO NSE, THE ASSESSEE FILED A RETURN OF INCOME ON 27.09.2007 DECLARING A TOTAL INCOME AT RS.35,32,927/- WITH REMARKS FILED UNDER PROTEST. THE ASSESSEE ALSO FILED THE OBJECTIONS TO REASONS RECORDED FOR ISSUE OF NOTICE U/S 148 WHICH WERE REJECTED BY THE AO BY HIS LETTER DATED 15.11.2007. ACCORDING TO THE ASSESSEE, THE ORDER OF THE TRIBUNAL AFOREMENTIONED HAD NOT GIVEN ANY FINDING OR DIRECTION ENABLING THE AO TO SEEK RECOURSE TO SECTION 150 FOR REOPENING BEYOND SIX YEARS. ON APPEAL, THE LD.CIT(A) HAD CONFIRMED THE ACTION OF THE AO AND HELD THAT RECOURSE BY THE AO T O PROVISIONS OF SECTION 150 READ WITH SECTION 148 FOR REOPENING THE ASSESSMENT WAS V ALID. AGGRIEVED BY THE IMPUGNED DECISION, THE ASSESSEE HAS RAISED THESE GR OUNDS IN THE APPEAL BEFORE US. 2.2 BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE HAS STATED THAT THE ORDER OF THE TRIBUNAL DATED 28.03.2007 DOES NOT RECORD ANY F INDING OR DIRECTION TO THE EFFECT OF REOPENING AND THE HENCE THE REOPENING OF THE ASS ESSMENT BEYOND SIX YEARS IS BAD- IN-LAW AND THE SAME IS TO BE QUASHED. IN THIS CONNECTION, THE LEARNED COUNSEL HAS RELIED ON THE DECISION OF THE HONBLE APEX COUR T IN THE CASE OF ITO VS. MURLIDHAR BHAGWAN DAS (1964) 52 ITR 335 (SC), THE DECISIONS OF TRIBUNAL IN THE CASES OF SUNIL MALIK VS. ASST CIT (2009) 123 TTJ 208 (DEL) AND SMT.NEELAM GUPTA VS. ITO (2007) 110 TTJ 714, THE DECISION OF THE BOMBAY HIGH COURT IN THE CASE OF RAKESH N. DUTT VS. ASST. CIT (2009) 311 ITR 247 AND THE DECISION OF THE HONBLE APEX COURT CIT VS. GREEN WORLD CORPORATION 314 ITR 81 (SC) TO SUPPORT THE PROPOSITION THAT THE OBSERVATION OF THE TRIBUNAL IN THE ASSESSEES CASE FOR THE ASSESSMENT YEAR 2002-03 IS NEITHER A FINDING NOR A DIRECTION AS REGARDS THE AY 2000-01 IS CONCERNED FOR THE PURPOSE OF SECTION 150 OF THE ACT. ON THE OTHER HAN D, THE LD.DR HAS RELIED ON THE DECISION OF THE PUNJAB & HARYANA HIGH COURT OF IN T HE CASE OF PARVEEN KUMARI VS. CIT AND ANOTHER (1999) 237 ITR 339 (P&H) TO SUPPORT CASE OF THE REVENUE. 2.3 WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MA TERIAL ON THESE GROUNDS OF APPEAL. IT IS PERTINENT TO MENTION THAT THE ASSESSE E, IN ITA NO. 7482/MUM/2005 FOR THE AY 2002-03, HAS DISPUTED THE ASSESSMENT OF LONG TERM CAPITAL GAIN AMOUNTING TO RS.1,35,50,000/-. WHILE ADJUDICATING THE SAID APPEA L OF THE ASSESSEE, THE TRIBUNAL, VIDE ITS ORDER DATED 28.03.2007 HAS DELETED THE IMP UGNED ADDITION MADE/CONFIRMED BY THE AO/CIT(A). THE TRIBUNAL, IN PARA 4 OF THE SA ID ORDER, HAS OBSERVED AS FOLLOWS: ITA NO. 1640/MUM/2010 SHRI ANIL SURI ASSESSMENT YEAR: 2000-01 3 IN THIS CASE THE DISPUTE ESSENTIALLY PERTAINS TO TH E YEAR OF ASSESSABILITY OF CAPITAL GAINS ARISING TO THE ASSESSEE ON TRANSFER O F A PART OF THIS PROPRIETARY RIGHTS OVER THE BUILDING KNOWN AS RITA IN KHAR (W ).. FROM A BARE READING OF THE PROVISIONS OF SECTION 45(1) IT IS APPARENT T O US THAT IT IS THE YEAR IN WHICH TRANSFER TOOK PLACE THAT IS RELEVANT AND THE YEAR IN WHICH THE VALUE OF CONSIDERATION IS RECEIVED BY THE TRANSFEROR IS NOT RELEVANT. IN PARA 6 OF THE SAID ORDER, THE TRIBUNAL HAS FURTH ER OBSERVED AS FOLLOWS: WE THEREFORE HOLD THAT TRANSFER OF CAPITAL ASSET T OOK PLACE ON 09.02.2000 AND THEREFORE, BY VIRTUE OF DEEMING PROVISIONS OF S ECTION 45(1) THE CAPITAL GAINS IN THE CASE OF THE ASSESSEE IS TO BE BROUGHT TO TAX FOR ASSESSMENT YEAR 2000-01 AND NOT ASSESSMENT 2002-03 AS DONE BY THE A SSESSING OFFICER. AS REGARDS THE REOPENING OF THE ASSESSMENT BEYOND S IX YEARS, SECTION 150(1) OF THE ACT PERMITS REOPENING OF THE ASSESSMENT BEYOND SIX YEARS IN ORDER TO GIVE EFFECT TO ANY FINDING OR DIRECTION OF THE APPELLATE AUTHORI TY. NOW, THE ONLY ISSUE TO BE DECIDED ON THESE GROUNDS IS WHETHER THE ABOVE SAID OBSERVATION OF THE TRIBUNAL CAN BE TREATED TO BE A FINDING OR DIRECTION FOR THE P URPOSES OF SECTION 150(1) OF THE ACT. 2.3.1 IN THE CASE OF ITO VS. MURLIDHAR BHAGWAN DAS (SUPRA), THE HONBLE APEX COURT HAS HELD THAT THE WORD FINDING CAN BE ONLY THAT WHICH IS NECESSARY FOR THE DISPOSAL OF AN APPEAL IN RESPECT OF AN ASSESSMENT O F A PARTICULAR YEAR AND HAS FURTHER BEEN HELD THAT THE APPELLATE AUTHORITY MAY INCIDENTALLY FIND THAT THE INCOME BELONGS TO ANOTHER YEAR, BUT THAT IS NOT FINDING FO R THE DISPOSAL OF AN APPEAL IN RESPECT OF THE ASSESSMENT YEAR IN QUESTION. SIMILAR LY, THE DIRECTION HAS BEEN CONSTRUED TO MEAN A DIRECTION WHICH THE APPELLATE O R REVISIONAL AUTHORITY AS THE CASE MAY BE IS EMPOWERED TO GIVE UNDER THE SECTIONS MENT IONED THEREIN. THE TRIBUNAL IN THE CASE OF SMT. NEELAM GUPTA VS. ITO (SUPRA) QUASHED THE NOTICE U/S 148 BY HOLDING THAT THE OBSERVATION MADE BY THE LD.CIT(A) TO THE EFFECT THAT THE AO IS HOWEVER FREE TO TAKE ACTION IN ASSESSMENT YEAR 1997 -98 COULD NOT BE CONSTRUED AS A DIRECTION TO THE AO TO INITIATE REASSESSMENT PROCEE DINGS FOR ASSESSMENT YEAR 1997- 98 AND THEREFORE, THE SAID NOTICE U/S 148 FOR THE A SSESSMENT YEAR 1997 ISSUED ON 16 TH NOVEMBER, 2004 IS TIME BARRED. MOREOVER, IN THE CA SE OF CIT VS. GREEN WORLD CORPORATION (SUPRA), THE HONBLE APEX COURT HAS HELD THAT THE PROVISIONS OF SECTION 150, ALTHOUGH APPEARS TO BE OF A VERY VIDE AMPLITUD E, BUT WOULD NOT MEAN THAT RECOURSE TO THE REOPENING OF THE PROCEEDINGS IN TER MS OF 147 AND 148 CAN BE INITIATED AT ANY POINT OF TIME WHATSOEVER. SUCH PRO CEEDING CAN BE INITIATED ONLY ITA NO. 1640/MUM/2010 SHRI ANIL SURI ASSESSMENT YEAR: 2000-01 4 WITHIN THE PERIOD OF LIMITATION PRESCRIBED AS CONTA INED IN SECTION 149. SECTION 150(1) IS AN EXCEPTION TO THE AFOREMENTIONED PROVISIONS. I T BRINGS WITHIN ITS AMBIT ONLY SUCH CASES WHERE REOPENING OF THE PROCEEDINGS MAY BE NEC ESSARY TO COMPLY WITH AN ORDER OF THE HIGHER AUTHORITY. FOR THE SAID PURPOSE , THE RECORDS OF THE PROCEEDINGS MUST BE BEFORE THE APPROPRIATE AUTHORITY. IT MUST E XAMINE THE RECORDS OF THE PROCEEDINGS. IF THERE IS NO PROCEEDING BEFORE IT OR IF THE ASSESSMENT YEAR IN QUESTION IS ALSO NOT A MATTER WHICH WOULD FALL FOR CONSIDERA TION BEFORE THE HIGHER AUTHORITY, SECTION 150 WILL HAVE NO APPLICATION. IT IS ALSO PE RTINENT TO MENTION THAT THE TRIBUNAL DOES NOT HAVE POWER TO GIVE ANY FINDING OR DIRECTIO N IN RESPECT OF ANOTHER YEAR/PERIOD WHICH IS NOT BEFORE THE AUTHORITY AS HE LD BY THE VARIOUS JUDICIAL FORUMS. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF SMT.SABITA BHAGWANDAS SHAH VS. ITO (1996) 59 ITR 652, WHILE INTERPRETING THE SECTIONS 31, 34 (1) & (2) OF THE INCOME TAX ACT 1922, (CORRESPONDING TO THE PROVISIONS OF S ECTIONS 148, 153 AND 253 OF 1961 ACT) HAS HELD THAT FINDING MEANS THE FINDING NECE SSARY FOR GIVING RELIEF IN RESPECT OF THE ASSESSMENT YEAR IN QUESTION AND THE PROVISO TO SECTION 34(3) OF THE 1922 ACT DOES NOT SAVE TIME PRESCRIBED UNDER SECTION 34(1) I N RESPECT OF ESCAPED ASSESSMENT OF ANY YEAR OTHER THAN THAT WHICH HAS BEEN THE SUBJ ECT MATTER OF APPEAL OR REVISION. THE SAID DECISION OF THE JURISDICTIONAL HIGH COURT HAS BEEN RENDERED AFTER CONSIDERING THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF ITO VS. MURLIDHAR BHAGWAN DAS (SUPRA). 2.3.2 AFTER CONSIDERING THE LEGAL POSITION AFOREMEN TIONED, IT IS PERTINENT TO MENTION THAT THE DECISION OF THE TRIBUNAL ON THE BASIS OF W HICH THE ASSESSMENT FOR YEAR UNDER CONSIDERATION REOPENED IS RELATED TO THE ASSESSMENT YEAR 2002-03. THE OBSERVATION OF THE TRIBUNAL FOR THE PURPOSE OF DELETING THE ADD ITION IN RESPECT OF THE ASSESSMENT YEAR 2002-03 CANNOT BE TREATED TO BE A FINDING FO R REOPENING THE AY 2001-02 AS THE APPEAL FOR SAID ASSESSMENT YEAR HAS NOT BEEN BEFORE THE TRIBUNAL FOR ADJUDICATION. THE OBSERVATION OF THE TRIBUNAL THAT THE CASE OF T HE ASSESSEE IS TO BE BROUGHT TO TAX FOR ASSESSMENT YEAR 2000-01 AND NOT ASSESSMENT 2002 -03 AS DONE BY THE ASSESSING OFFICER IS INCIDENTAL FOR HOLDING THE ADDITION MAD E IN THE YEAR 2002-03 IS NOT JUSTIFIABLE AND THE SAME CANNOT BE THE BASIS FOR HA VING RECOURSE TO SECTION 150 OF THE ACT BY HOLDING IT AS FINDING OR DIRECTION. SE CTION 150(1) IS AN EXCEPTION WHICH ITA NO. 1640/MUM/2010 SHRI ANIL SURI ASSESSMENT YEAR: 2000-01 5 BRINGS WITHIN ITS AMBIT ONLY SUCH CASES WHERE REOPE NING OF THE PROCEEDINGS MAY BE NECESSARY TO COMPLY WITH AN ORDER OF THE HIGHER AUT HORITY. SINCE THE OBSERVATION OF THE TRIBUNAL THAT THE CASE OF THE ASSESSEE IS TO B E BROUGHT TO TAX FOR ASSESSMENT YEAR 2000-01, DOES NOT REQUIRE COMPLIANCE BY THE A UTHORITIES BELOW SO FAR AS THE ASSESSMENT YEAR 2000-01 IS CONCERNED, TAKING RECOUR SE TO SECTION 150 OF THE ACT BY HOLDING THE SAME AS FINDING OF THE TRIBUNAL IS NO T LEGALLY TENABLE. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF RAKESH N. DUTT VS. ACIT (SUPRA) HAS HELD THAT ONCE SECTION 150 OF THE ACT IS NOT APPLICABLE TO TH E CASE OF THE ASSESSEE, THE REOPENING OF THE ASSESSMENT BEYOND THE PERIOD OF SI X YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR WOULD BE TIME BARRED. IN V IEW OF THE AFOREMENTIONED DISCUSSION, WE DO NOT FIND FORCE IN THE ARGUMENTS O F THE LD.DR BY PLACING RELIANCE ON THE DECISION OF THE PUNJAB & HARYANA HIGH COURT IN THE CASE OF PARVEEN KUMARI VS. CIT (SUPRA). THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE LD.CIT(A) IS NOT JUSTIFIED IN CONFIRMING THE VALIDITY OF THE NOTICE ISSUED U/S 148(1) AND HENCE THE IMPUGNED NOTICE, THE CONSEQUENT REOPENING PROCEEDIN GS AND THE REASSESSMENT ORDER STAND QUASHED. RESULTANTLY, GROUNDS NO. 1 TO 3 ARE ALLOWED. 3. IN GROUNDS NO. 4 TO 6, THE ASSESSEE HAS AGITATED THE ACTION OF THE LD.CIT(A) IN CONFIRMING THE ADOPTION OF THE VALUE OF THE TWO FLATS BASED ON DVOS REPORT BY THE AO FOR THE PURPOSE OF CALCULATING THE CAPITAL GAINS . IN VIEW OF THE FACT THAT THE SAID ISSUE ARISES OUT OF THE REOPENING OF THE ASSESSMENT /REASSESSMENT ORDER WHICH HAS BEEN QUASHED IN THE ADJUDICATION OF THE PRECEDING G ROUNDS OF APPEAL, THE ADJUDICATION OF THE ISSUE RAISED IN GROUNDS NO 4, 5 & 6 IS NOT REQUIRED. 4. IN GROUND NO. 7, THE ASSESSEE HAS AGITATED THE A CTION OF THE LEVYING OF INTEREST U/S 234A, 234B AND 234C OF THE ACT WHICH I S ALSO CONSEQUENTIAL AND THE SAME ALSO DOES NOT REQUIRE ANY ADJUDICATION. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS TREATED AS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 1 6 TH DAY OF APRIL, 2014. SD/- SD/- (RAJENDRA) (DR. S.T.M. PAVALAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 16.04.2014. *SRIVASTAVA ITA NO. 1640/MUM/2010 SHRI ANIL SURI ASSESSMENT YEAR: 2000-01 6 COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR D BENCH //TRUE COPY// BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.