Sarlabai Z. Bora, Pune V. Dy. Comm. of Income-tax, Pune

ITA 1673/PUN/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4304 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-06-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 1998-1999
• Appeal Filed On: 27-12-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ANN KAPTHUAMA
• Keywords: Reopening of assessment; Difference of opinion; Block assessment; Change of opinion
• Section: 143(3); 54F; 147; 148; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV JM AND SHRI R.K. PANDA, AM I.T.A. NO. 1673/PN/2011: A.Y. 1998-99 SARLABAI Z. BORA 4/236 SUDARSHAN NAGAR NR. DISHA HOSPITAL, AKURDI ROAD MORE WASTI, CHIKHALI PUNE-412 114 PAN AFQPB 8698 J APPELLANT VS. DY CIT CC-2(3) PUNE RESPONDENT APPELLANT BY : SHRI SUHAS BORA RESPONDENT BY: SMT. ANN KAPTHUA MA DATE OF HEARING: 20-6-2013 DATE OF PRONOUNCEMENT: 26-6-2013 ORDER PER SHAILENDRA KUMAR YADAV JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE CIT(A) CENTRAL, PUNE, DATED 31-10-2011 FOR A .Y. 1998- 99 ON THE FOLLOWING GROUNDS: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE :- 1. THE LEARNED CIT(A) ERRED IN CONFIRMING THE ACTION O F THE AO REGARDING REOPENING THE ASSESSMENT FOR A.Y. 1998-99 U/S 147 OF THE ACT AND HOLDING THAT REOPENING OF ASSESSMENT IS VALID AND NOT BAD IN LAW . 2. THE LEARNED CIT(A) ERRED IN HOLDING THAT THERE IS N O CHANGE IN OPINION BY THE A.O WHILE PASSING THE ASSESSMENT ORDER U/S 143(3) R.W.S. 147. 3. THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE AO WHILE PASSING ORDER U/S 158BD HELD THAT THE CAPITAL GAIN WAS CHARGEABLE TO TAX FOR A.Y. 997-98 AND IN THE ASSESSMENT U/S 143(3) R.W.S. 147 AO HELD THAT THE CAPITAL GAIN IS CHARGEABLE TO TAX FOR A.Y. 1998 - 99 WHICH CLEARLY AMOUNTS TO CHANGE OF OPINION. 4. THE LEARNED CIT(A) FAILS TO APPRECIATE THAT THE ORD ER PASSED BY THE AO U/S 143(3) R.W.S. 147 IS NOT VALID SINCE THE AO HAS NOT CONSIDERED THE OBJECTION RAISED BY THE APPELLANT REGARDING ASSUMPTION OF ITA 1673/PN/2011 SARLABAI Z. BORA A.Y. 1998-99 2 JURISDICTION U/S 147 AND NOT PASSED THE SPEAKING ORDER FOR THE SAKE. 5. THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE AO OF NOT GRANTING THE DEDUCTION U/S 54F IN THE COMPUTATION OF CAPITAL GAINS IN THE HANDS OF THE APPELLANT. 6. THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE MATERIAL TEST FOR CLAIMING THE EXEMPTION U/S 54F OF THE ACT IS DOMAIN OVER THE RESIDENTIAL PROPERTY AND INVESTMENT IN IT. IN THE CASE OF THE APPELLANT, UNDISPUTEDLY BOTH THE CONDITIONS ARE SATISFIED, SIN CE THE APPELLANT HAS PAID THE ENTIRE CONSIDERATION FOR THE SAME WITHIN PERIOD OF 2 YEARS FROM THE DATE OF TRANSFER OF RIGHT IN THE PROPERTY AND ALSO ACQUIRED THE POSSESSION OF BUNGALOW 2. THE ASSESSEE WAS A CO-OWNER OF A PIECE OF ANCEST RAL AGRICULTURAL LAND AT S. NO. 15, VADGAON SHERI, ADME ASURING 45 ACRES AND 25 GUNTHAS. THE ASSESSEE IS ONE OF THE L EGAL HEIRS OF LATE SHRI P.C. KHINVASARA WHO WAS KARTA OF SHRI P.C . KHINVSARA HUF WHICH OWNED THE AFORESAID PROPERTY AS AN ANCESTRAL PROPERTY. THE TOTAL CONSIDERATION FOR TH E SALE OF THE AFORESAID PROPERTY WAS RS. 10 CRORES WHICH WAS DIVI DED AMONGST THE LEGAL HEIRS OF LATE SHRI P.C. KHINVASAR A. THE RIGHT, TITLE AND INTEREST IN THE AFORESAID PROPERTY WERE TRANSFERRED TO M/S MERIGOLD PREMISES PVT. LTD., (H EREINAFTER REFERRED TO AS THE SAID COMPANY). HOWEVER, THE S AID COMPANY COULD NOT MAKE THE PAYMENT READILY TO THE A SSESSEE BUT OFFERED RESIDENTIAL HOUSE AGAINST THE SALE CONS IDERATION VIDE SEPARATE AGREEMENTS DATED 31-3-1998 BETWEEN TH E SAID COMPANY AND THE LEGAL HEIRS INCLUDING THE ASSESSEE. AS A RESULT, THE ASSESSEE CLAIMED DEDUCTION U/S 54F OF T HE ACT AGAINST THE CAPITAL GAINS CHARGEABLE IN THE HANDS O F THE ASSESSEE AND CLAIMED EXEMPTION IN RESPECT OF THE CA PITAL GAINS LIABLE TO TAX. ITA 1673/PN/2011 SARLABAI Z. BORA A.Y. 1998-99 3 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E FILED A RETURN FOR A.Y. 1998-99 WHICH WAS ACCEPTED U/S 143( 1) OF THE ACT. THEREAFTER, A BLOCK ASSESSMENT FOR THE BLOCK PERIOD FROM 1-4-1990 TO 9-11-2000 WAS PASSED U/S 158BD OF THE A CT ON 30-11-2004 AGAINST WHICH, ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) WHICH CAME TO BE DECIDED IN FAVOUR OF THE AS SESSEE. NOT BEING SATISFIED WITH THE ORDER OF THE CIT(A), THE D EPARTMENT FILED AN APPEAL BEFORE THE TRIBUNAL WHICH WAS ALSO DISMISSED VIDE ITS ORDER DATED 26-10-2007. IN THE MEANTIME, THE ASSESSING OFFICER ISSUED A NOTICE U/S 148 OF THE AC T AND PASSED RE-ASSESSMENT ORDER U/S 143(3) R.W.S. 147 OF THE ACT WHICH WAS CHALLENGED IN APPEAL BEFORE THE CIT(A). THE CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER HOLDI NG THAT THE REOPENING OF ASSESSMENT WAS VALID AND NOT BAD IN LA W. THE SAME HAS BEEN OPPOSED BY THE ASSESSEE BEFORE US. 4. IT IS COMMON GROUND THAT SIMILAR ISSUE CAME UP F OR CONSIDERATION BEFORE CO-ORDINATE BENCH OF THIS TRIB UNAL IN THE CASE OF SHRI MOTILAL P. KHINVASARA HUF AND OTHERS A ND THE TRIBUNAL VIDE ITS ORDER DATED 28-2-2013 IN ITA NO. 88 TO 91/PN/2012 FOR A.Y. 1998-99 HAS DECIDED THE ISSUE I N FAVOUR OF THE ASSESSEE BY OBSERVING AS UNDER:- 15. IN THE BACKGROUND OF THE AFORESAID LEGAL POSIT ION, IN THE PRESENT CASE, IT EMERGES THAT THE PROCEEDINGS U /S 147 OF THE ACT HAD BEEN INITIATED SOLELY WITH THE OBJEC TIVE OF SOMEHOW TAXING INCOME WHICH THE REVENUE COULD NOT SUCCESSFULLY DO AT THE TIME OF ASSESSMENT PROCEEDIN GS U./S 143(3) OR IN THE BLOCK ASSESSMENT PROCEEDINGS U/S 158BC OF THE ACT. THOUGH THE BLOCK ASSESSMENT U/S ITA 1673/PN/2011 SARLABAI Z. BORA A.Y. 1998-99 4 158BC AND ASSESSMENT OF AN INCOME U/S 147 WHICH HAD ESCAPED ASSESSMENT EARLIER CAN BE MADE FOR THE SAME PERIOD, ON DIFFERENT BASIS, SO HOWEVER, IT WOULD NO T BE APPROPRIATE THAT BOTH ASSESSMENTS CAN BE SUCCESSFUL LY MADE ONE AFTER ANOTHER FOR THE SAME PERIOD UNDER TH E RESPECTIVE PROVISIONS BASED ON THE SAME MATERIALS. ONCE THE MATERIAL GATHERED DURING THE COURSE OF SEARCH U /S 132 IS CONSIDERED IN THE BLOCK ASSESSMENT U/S 158BC OF THE ACT, THEREAFTER IT IS NOT OPEN FOR THE ASSESSIN G OFFICER TO INITIATE PROCEEDINGS U/S 147 OF THE ACT ON THE S AME ISSUE MERELY BECAUSE THE CONDITIONS IN THE BLOCK ASSESSMENT PROCEEDINGS WERE NOT FOUND SUSTAINABLE. IN THIS CONTEXT, THE REASONS RECORDED BY THE ASSESSING OFFICER, REPRODUCED IN THE EARLIER PART OF THIS ORD ER DO NOT SHOW ANY REASONABLE BASIS FOR THE ASSESSING OFFICER TO CONCLUDE THAT THERE WAS ANY ESCAPEMENT OF INCOME. CLEARLY, THE INITIATION OF PROCEEDINGS U/S 147 BASE D ON SUCH REASONS RECORDED DID NOT MEET WITH THE REQUIRE MENT OF SEC. 147 OF THE ACT AS UNDERSTOOD IN THE AFORESA ID JUDICIAL PRONOUNCEMENTS. IN THIS VIEW OF THE MATTE R, HAVING REGARD TO THE AFORESAID LEGAL POSITION, THE INITIATION OF PROCEEDINGS BY ISSUANCE OF NOTICE U/S 147/148 IN THE PRESENT CASE IS FLAWED AND VOID ABIN ITIO. THE PRELIMINARY GROUND ON THE POINT OF LAW SO RAISE D BY THE ASSESSEE IS UPHELD AND ACCORDINGLY, THE IMPUGNE D ASSESSMENT IS HELD AS INVALID. SINCE THE POINT OF LAW CANVASSED BY THE ASSESSEE IS FOUND TO BE JUSTIFIED AND THE ASSESSMENTS HAVE BEEN HELD TO BE INVALID, THE SUBSEQUENT GROUND RELATING TO MERITS OF THE DISPUTE IS RENDERED ACADEMIC AND DOES NOT REQUIRE ADJUDICATION . FACTS BEING SIMILAR, SO FOLLOWING THE REASONING GIV EN BY THE TRIBUNAL IN THE CASE OF MOTILAL KHINVSARA HUF (SUPR A), WE HOLD THAT THE INITIATION OF PROCEEDINGS BY ISSUANCE OF N OTICE U/S 147/148 IS FLAWED AND VOID ABINITIO AND THEREFORE, THE IMPUGNED ASSESSMENT IS INVALID. SINCE ASSESSMENT H AS BEEN HELD TO BE INVALID, THE SUBSEQUENT GROUND RELATING TO MERITS OF THE DISPUTE IS RENDERED ACADEMIC AND DOES NOT REQUI RE ADJUDICATION. IN THIS VIEW OF THE MATTER, THE APPE AL OF THE ASSESSEE IS ALLOWED. ITA 1673/PN/2011 SARLABAI Z. BORA A.Y. 1998-99 5 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. PRONOUNCED IN THE OPEN COURT ON 26 TH JUNE 2013. SD/- SD/- (R.K. PANDA) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED THE 26 TH JUNE 2013 ANKAM COPY FORWARDED TO: (1) ASSESSEE (2) DEPARTMENT (3) CIT(A) CENTRAL PUNE (4) CIT- CENTRAL PUNE (5) THE D.R. PUNE BENCH A PUNE BY ORDER SENIOR PRIVATE SECRETARY INCOME-TAX APPELLATE TRIBUNAL, PUNE BENCHES, PUNE