Kiran J Shah, Cuttack V. ACIT, Cuttack

ITA 166/CTK/2012

• Counselvise Citation: 16622114 RSA 2012
• Duration Of Justice: 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-04-2012
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 28-02-2012
• Court: TRIBUNAL
• Department Lawyers: PARAMITA TRIPATHY
• Assessee Lawyers: D K SETHK SETH ARS
• Keywords: Opportunity of being heard; Principle of natural justice; Assessment record

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE : SHRI K.K.GUPTA, AM, AND SHRI K.S.S.PRASAD RAO, JM ITA NO. 166/CTK/2012 (ASSESSMENT YEAR 2007 - 08) KIRAN J SHAH, C/O. SHAH ELECTRICAL & MACHINERY MART, BUXI BAZAR, CUTTACK 753 001 PAN : ACRPS 1391 M VERSUS ASST.COMMISSIONER OF INCOME - TAX, CIRCLE 2(2), CUTTACK. (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI D.K.SETH/K.SETH, ARS FOR THE RESPONDENT SMT. PARAMITA TRIPATHY, CIT - DR DATE OF HEARING : 15.3.2012 DATE OF PRONOUNCEMENT : 02.04.2012 ORDER SHRI K.S.S.PRASAD RAO, JM : THIS APPEAL IS FILED BY THE ASSESSEE HAVING BEEN AGGRIEVED BY THE ORDER OF THE COMMISSIONER OF INCOME - TAX (APPEALS) DT.20.1.2012 FOR THE ASSESSMENT YEAR 2007 - 08 IN THE CASE OF THE ASSESSE E. 2. THE ASSESSEE HAS RAISED THE FOLLOWING ISSUES IN THE GROUNDS OF APPEAL. 1. FOR THAT THE ORDER OF ASSESSMENT IS BARRED BY LIMITATION AND IS THEREFORE ILLEGAL. THE LEARNED COMMISSIONER IS NOT JUSTIFIED TO REJECT THE CONTENTIONS OF THE APPELLANT. 2. FOR THAT THE COMPUTATION OF INCOME UNDER HEAD CAPITAL GAINS AT 76,19,117 AS AGAINST INCOME RETURNED AT 5,86,513 IS IMPROPER AND UNJUSTIFIED. THE LEARNED A.O. ESTIMATED THE SALE PRICE AND COMPUTED THE INCOME WHICH IS NOT PROPER. THE LEARNED COMMISSIONER SHOULD NOT HAVE UPHELD THE SAME. 3. FOR THAT EXEMPTION AS CLAIMED U/S.54F SHOULD NOT HAVE BEEN REFUSED BY LEARNED A.O. AND THE LEARNED COMMISSIONER SHOULD NOT HAVE SUSTAINED THE ACTION OF THE LEARNED A.O. 3. BOTH THE PARTIES WERE HEARD REGARDING THE IS SUES RAISED IN THE APPEAL AND THEIR LEGAL IMPLICATIONS. ITA NO.166/CTK/2012 2 4. ON CAREFUL CONSIDERATION OF THE MATERIAL MADE AVAILABLE TO THE TRIBUNAL AND ANALYZING THE SAME IN THE LIGHT OF THE SUBMISSIONS OF BOTH THE PARTIES, THE UNDISPUTED FACTS RELATING TO THE ISSUES ARE T HAT THE AS SESSEE IS DERIVING INCOME FROM INTEREST FROM FIXED DEPOSITS AND LONG TERM CAPITAL GAINS. RETURN OF INCOME WAS FILED ON 17.3.2008 SHOWING TOTAL INCOME AT 13,44,870. THIS RETURN WAS TAKEN UP FOR SCRUTINY ASSESSMENT BY ISSUING NECESSARY STATUTORY NOTICES. DU RING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS NOT AGREED THAT THE CAPITAL GAIN RETURNED BY THE ASSESSEE AND STARTED RE - COMPUT I NG THE SAME BASING ON THE COPIES OF SALE DEED FILED BY THE ASSESSEE OBSERVING THAT THE ASSESSEE COULD NOT P RODUCE ANY OTHER EVIDENCE OF SALE OF FLAT AS DEPICTED IN THE COMPUTATION SHEET FURNISHED ALONG WITH THE RETURN AMOUNTING TO 67,16,000. THEREFORE, HE DOUBTED THE VERACITY OF THE SALE AND CONSIDERATION ALLEGEDLY RECEIVED ON ACCOUNT OF SALES. HENCE, HE TOOK THE SALE PRICE OF THE FLATS AT GOVERNMENT RATE AND ACCORDINGLY CALCULATED THE LONG TERM CAPITAL GAINS AT 76,19,117. THEREAF TER HE CONSIDERED THE CLAIM OF EXEMPTION U/S.54F OF THE I.T.ACT AND HE CAME TO CONCLUSION THAT SINCE THE ASSESSEE HAD BEEN IN POSSESSION OF MORE THAN ONE ACCOMMODATION, THE CLAIM OF EXEMPTION U/S.54F IS NOT AVAILABLE TO THE ASSESSEE. HENCE, HE REJECTED THE SAME BY PASSING THE ASSESSMENT ORDER DETERMINING THE TAXABLE INCOME AT 83,77,470. THE ASSESSING OFFICER HAS ALSO INITIATED PENALTY PROCEEDINGS U/S.271(1)(C) OF THE I.T.ACT,1961. 5. AGGRIEVED WITH THE ASSESSMENT ORDER, THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A), THE ASSESSEE HAS RAISED THE FIRST ISSUE S TATING THAT THE ASSESSMENT HAS BEEN MADE BACK - DATED AND HENCE, IS BARRED BY LIMITATION AND THEREFORE ILLEGAL APART FROM OTHER ISSUES. WHILE ADJUDICATING THIS ISSUE, THE LEARNED CIT(A) HAS OBSERVED IN PARA 4.1 OF HIS ORDER THAT THE LEARNED AR OF THE ASSESSE E COULD NOT PRODUCE EVIDENCE REGARDING THIS ITA NO.166/CTK/2012 3 CONTENTION THAT THE ORDER OF ASSESSMENT HAS BEEN BACK - DATED AND HENCE, BARRED BY LIMITATION AND ACCORDINGLY, HE REJECTED THE SAME. THEREAFTER THE LEARNED CIT(A) CONSIDERING THE ISSUE OF CAPITAL GAINS AND CLAIM OF EXEMPTION U/S.54F OF THE ACT , ULTIMATELY CAME TO THE CONCLUSION THAT THE ASSESSING OFFICERS FINDING IS CORRECT. THUS OBSERVING THE LEARNED CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE. 6. AGGRIEVED BY THIS ORDER OF THE LEARNED CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 7. THE ASSESSEE HAS RAISED THE SAME FIRST ISSUE AS WAS RAISED BEFORE THE LEARNED CIT(A) I.E., REGARDING THE ASSESSMENT ORDER AS TIME BARRED BEING BACK - DATED. 8. ON CAREFUL CONSIDERATION OF THE MATERIAL MADE AVAILABLE TO THE TRIB UNAL ESPECIALLY THE FORM NO.35 WHEREIN IN COL.7, THE ASSESSEE HAS CLEARLY MENTIONED THE DATE OF SERVICE OF ASSESSMENT ORDER AS 4.2.2010 WHEREAS THE ASSESSMENT ORDER IS DATED 31.12.2009 ND ASSESSMENT YEAR IS 2007 - 08. ACCORDING TO THE PROVISIONS OF THE ACT, TH ASSESSMENT ORDER HAS TO BE PASSED ON OR BEFORE 31.12.2009. IN THE IMPUGNED ORDER, THERE IS NO OBSERVATION BY THE LEARNED CIT(A) THAT THE APPEAL FILED BY THE ASSESSEE BEFORE HIM IS TIME BARRED IN VIEW OF APPARENT DATE OF 31.12.2009 APPEARING IN THE ASSES SMENT ORDER AS THE DATE OF PASSING OF THE ASSESSMENT ORDER AND WHEREAS THE ASSESSEE HAS SHOWN SERVICE OF THE SAID ORDER ON 4.5.2010. THIS CLEARLY INDICATES THAT THE SERVICE OF ORDER IS 4.5.2010 THOUGH APPEARS TO HAVE BEEN PASSED ON 31.12.2009. THE LEARNED CIT(A) HAS NOT VERIFIED THE ASSESSMENT RECORD AS TO THE DATE OF SERVICE OF THE ASSESSMENT ORDER ON THE ASSESSEE OR AT LEAST ASKED THE ASSESSING OFFICER ABOUT THE CORRECT DATE OF SERVICE OF THE ASSESSMENT ORDER. THE LEARNED AR OF THE ASSESSEE HAS PLACED BEF ORE THE TRIBUNAL, THE COPIES OF THE PENALTY NOTICE INITIATING PENALTY U/S.271(1)(C) AS ITA NO.166/CTK/2012 4 WELL AS THE DEMAND NOTICE ISSUED U/S.156. IN THE DEMAND NOTICE IN PARA 6 IT WAS STATED THAT IF THE ASSESSEE INTEND TO APPEAL AGAI NST THE ASSESSMENT, HE MAY FILE APPEAL UNDER PART - A OF CHAPTER XX OF THE I.T.ACT TO THE COMMISSIONER OF INCOME - TAX (APPEALS), CUTTACK WITHIN THIRTY DAYS OF THE RECEIPT OF THE SAID NOTICE IN FORM NO.35 DULY STAMPED AND VERIFIED AS LAID DOWN IN THAT FORM. THIS DEMAND NOTICE IS ALSO DATED 31.12.20 09. AS A FOOT NOTE IT IS FURTHER STATED IN THE DEMAND NOTICE THAT THE ASSESSMENT ORDER PASSED U/S.143(3) DT.31.12.2009 IS ENCLOSED TO THE DEMAND NOTICE FOR DETAILS OF COMPUTATION OF DEMAND PAYABLE BY THE ASSESSEE. UNDER THESE FACTS AND CIRCUMSTANCES OF THE CASE, THE PRESUMPTION U/S.115 ILLUSTRATION (G) OF THE EVIDENCE ACT COMES INTO PLAY WHICH CLEARLY MANDATE THAT A PARTY IN POSSESSION OF DOCUMENT FAILED TO PRODUCE THE SAME BEFORE THE AUTHORITIES, IT IS TO BE INFERRED THAT IF THE SAID DOCUMENT IS PRODUCED I T GOES AGAINST THE PERSON WHO IS IN POSSESSION OF THE SAID DOCUMENT WITHHOLDING IT. EVEN BEFORE THE TRIBUNAL ALSO THE DEPARTMENT IS NOT ABLE TO SHOW ANYTHING ESTABLISHING THE FACT OF PASSING THE ASSESSMENT ORDER ON 31.12.2009 BY SHOWING THE SERVICE OF THE SAID ORDER WITHIN A REASONABLE TIME AS REQUIRED UNDER THE LAW. AS PER THE DECISION OF HONBLE APEX COURT RENDERED IN THE CASE OF B.J.SHELAT V. STATE OF GUJARAT, REPORTED IN AIR 1978 SC 1109, HONBLE KERALA HIGH COURT RENDERED IN THE CASE OF COMMISSIONER OF AGRICULTURAL INCOME TAX V.KAPPUMALAI ESTATE (234 ITR 187) AND K.JOSEPH JACOB V. AGRICULTURAL INCOME TAX OFFICER & ANOTHER (1991) 190 ITR 464 (KER), AND THE DECISION OF ITAT, JODHPUR BENCH IN THE CASE OF SHANTI LAL GODAWAT AND OTHERS V. ACIT (126 TTJ (JD) 135) WHILE INTERPRETING THE WORD ASSESSMENT ORDER IS TO BE MADE IMPLIES THAT BY PASSING THE ORDER AND KEEPING IN FILE WILL NOT JUSTIFY AND THE ASSESSMENT ORDER MADE IS TO BE COMMUNICATED WITHIN A REASONABLE TIME FROM THE DATE OF PASSING OF THE SAME TO TH E ASSESSEE. THE DATE OF ITA NO.166/CTK/2012 5 PASSING OF ASSESSMENT ORDER IN THE PRESENT CASE IS 31.12.2009 AND THE ASSESSEES CONTENTION IS THAT THE SAID ORDER WAS RECEIVED ON 4.5.2010 JUST ABOUT 110 DAYS AWAY FROM THE ALLEGED DATE OF ASSESSMENT ORDER. THIS SUPPORTS THE CONTEN TION OF THE ASSESSEE THAT THE ASSESSMENT ORDER IS BACK - DATED IN ORDER TO GIVE A PICTURE THAT THE ASSESSMENT ORDER IS PASSED WITHIN TIME LIMIT AS PROVIDED UNDER LAW. BUT WHEN THE ASSESSEE HAS STRONGLY OBJECTING WITH THE SPECIFIC CONTENTION THAT THE ASSESSME NT ORDER IS BACK - DATED, IT IS FOR THE DEPARTMENT TO ESTABLISH BY COGENT EVIDENCE, SUCH AS, ACKNOWLEDGEMENT BY THE ASSESSEE IN TOKEN OF SERVICE OF ASSESSMENT ORDER OR OTHER THINGS AVAILABLE IN THE ASSESSMENT RECORD. BUT THEY HAVE NOT DONE SO EVEN BEFORE THE TRIBUNAL. THEREFORE, ON THESE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE CONSIDERED VIEW THAT IT IS A FIT CASE WHERE IT IS TO BE PRESUMED THAT THE DOCUMENT NAMELY ACKNOWLEDGEMENT OF THE ASSESSEE IN TOKEN OF RECEIPT OF THE ASSESSMENT ORDER MUST NEC ESSARILY BE IN THE DEPARTMENT BUT ITS NON - PRODUCTION BEFORE THE LEARNED CIT(A) OR THIS TRIBUNAL, GOES TO SAY THAT THE ASSESSMENT IS BACK - DATED AS THE SERVICE OF THE SAID ORDER IS 4.5.2010 WHICH IS NOT DISPUTED BY THE LEARNED CIT(A) IN THE IMPUGNED ORDER OR BY THE ASSESSING OFFICER BEFORE THE TRIBUNAL. HENCE, SUCH AN ORDER PASSED MUST BE HELD TO HAVE BEEN PASSED BACK - DATED IN ORDER TO GIVE A COLOUR THAT THE ASSESSMENT OR DER WAS PASSED WITHIN TIME LIMIT PROVIDED UNDER THE LAW. HENCE, THE SAID ASSESSMENT ORDER IS CLEARLY BARRED BY LIMITATION HAVING BEEN PASSED BACK - DATED AND HENCE, IT IS NON - EST AND UNENFORCEABLE. IN THAT VIEW OF THE MATTER, WE ARE OF THE CONSIDERED VIEW THAT WHEN THE ASSESSMENT ORDER IS NON - EST AND UNENFORCEABLE, THE APPELLATE ORDER PASSED BY THE LEARNED CIT(A) UPHOLDING SUCH AN ORDER IS NOT SUSTAINABLE FOR LEGAL SCRUTINY. ITA NO.166/CTK/2012 6 9. ON EXAMINATION OF THE OTHER ISSUES PLEADED BY THE ASSESSEE, IT IS FOUND THAT THE ASSESSING OFFICER WHILE RESORTING TO CALCULATION OF THE CAPITAL GAINS OBSERVED IN PAGE 3 O F ASSESSMENT ORDER THAT HE HAS TAKEN THE SALE PRICE OF FLATS AT GOVERNMENT RATE BUT HE IS NOT ABLE TO SHOW THE SOURCE OF SUCH RATE. NOT ONLY THAT THERE IS NO OBSERVATION IN THE ORDER THAT THAT WAS PUT TO THE ASSESSEE AND INVITED ASSESSEES COMMENT ON THAT. THIS ACT OF THE ASSESSING OFFICER IS IN VIOLATION OF PRINCIPLES OF NATURAL JUSTICE , BEING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WHILE EXAMINING THE EXEMPTION CLAIMED U/S.54F OF THE I.T.ACT, IN PARA 2 OF THE ASSESSMENT ORDER, THE ASSESSING OFFICER HA S OBSERVED THAT AS HAVE ALREADY BEEN MENTIONED SUPRA, THE ASSESSEE HAD BEEN IN POSSESSION OF MORE THAN ONE ACCOMMODATION (FLATS) AND THUS DID NOT ACCEPT THE CLAIM OF EXEMPTION OF THE ASSESSEE U/S.54F. BUT ON PERUSAL OF THE ENTIRE ASSESSMENT ORDER, NOWHERE IT HAS BEEN MENTIONED IN THE ASSESSMENT ORDER THAT THE ASSESSEE IS HAVING IN POSSESSION OF MORE THAN ONE RESIDENTIAL ACCOMMODATION. THAT APART THE ASSESSING OFFICERS VIEW IN THAT ASPECT IS ALSO NOT CONFRONTED TO THE ASSESSEE . THIS ALSO AMOUNTS TO VIOLATI ON OF THE PRINCIPLES OF NATURAL JUSTICE OF BEING HEARD TO THE ASSESSEE. IN THAT VIEW OF THE MATTER ALSO THE FINDINGS OF THE ASSESSING OFFICER ON THE TWO ISSUES OF COMPUTING THE CAPITAL GAINS AND DISALLOWANCE OF THE CLAIM OF EXEMPTION U/S.54F ARE NOT SUSTAI NABLE FOR LEGAL SCRUTINY. SUCH FINDINGS WERE UPHELD BY THE LEARNED CIT(A) . IN THAT VIEW OF THE MATTER, THE IMPUGNED ORDER OF THE LEARNED CIT(A) IS NOT SUSTAINABLE FOR LEGAL SCRUTINY. ACCORDINGLY, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEES APPEAL IS MERITORIOUS AND THEREFORE, IT IS ALLOWED BY HOLDING THAT THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER DT.31.12.2009 IS TIME BARRED IN VIEW OF THE SERVICE OF SUCH ORDER ON 4.5.2010 WHICH IS 110 DAYS AFTER BACK THE ASSESSMENT ORDER IN THE LIGHT OF ITA NO.166/CTK/2012 7 J UDICIAL PRONOUNCEMENTS OF HONBLE APEX COURT, HONBLE KERALA HIGH COURT AND ALSO THE DECISION OF THE ITAT, JODHPUR BENCH, REFERRED TO EARLIER. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. SD/ - SD/ - (K.K.GUPTA) ACCOUNTANT MEMBER (K.S.S.PRASAD RAO) JUDICIAL MEMBER DATE: 02.04.2012 H.K.PADHEE, SENIOR PRIVATE SECRETARY. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT: KIRAN J SHAH, C/O. SHAH ELECTRICAL & MACHINERY MART , BUXI BAZAR, CUTTACK 753 001 2. THE RESPONDENT: ASST.COMMISSIONER OF INCOME - TAX, CIRCLE 2(2), CUTTACK. 3. THE CIT, 4. THE CIT(A), 5. THE DR, CUTTACK 6. GUARD FILE (IN DUPLICATE) TRUE COPY, BY ORDER, SENIOR PRIVATE SECRETARY.