Ramesh Kumar Mittal, Secunderabad V. ITO., Ward-4(4), Hyderabad, Hyderabad

ITA 1721/HYD/2014

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 3541 (ITAT-HYDERABAD)
• Duration Of Justice: 6 year(s) 6 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-06-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-A
• Next Hearing Date: 22-04-2021
• Assessment Year: 2004-2005
• Appeal Filed On: 10-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R DIPAK
• Assessee Lawyers: M V ANIL KUMAR
• Keywords: Reason to believe; Capital Gains
• Section: 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD (THROUGH VIDEO CONFERENCE) BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER I.T.A. NO. 1721/HYD/2014 ASSESSMENT YEAR: 2004-05 RAMESH KUMAR MITTAL, HYDERABAD [PAN: AHMPM6347F] VS INCOME TAX OFFICER, WARD-4(4), HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI M.V.ANIL KUMAR, AR FOR REVENUE : SHRI R.DIPAK, DR DATE OF HEARING : 22-04-2021 DATE OF PRONOUNCEMENT : 08-06-2021 O R D E R PER S.S.GODARA, J.M. : THIS ASSESSEES APPEAL FOR AY.2004-05 ARISES FROM TH E CIT(A)-V, HYDERABADS ORDER DATED 11-06-2014 PASSED IN CASE NO.0397 / ITO4(4) / CIT(A)-V / 2011-12, IN PROCEEDI NGS U/S.143(3) R.W.S.147 OF THE INCOME TAX ACT, 1961 [IN SHORT, THE ACT]. HEARD BOTH THE PARTIES. CASE FILE PERUSED. 2. IT EMERGES AT THE OUTSET THAT WE NEED NOT DELVE DEEPER I N THE RELEVANT FACTUAL MATRIX OF THE INSTANT CASE. SUFFICE TO SAY, WE PROCEED TO DEAL WITH THE ISSUE OF VALIDITY OF RE-O PENING MECHANISM TAKEN RECOURSE TO BY THE ASSESSING OFFICER. ITA NO. 1721/HYD/2014 :- 2 -: 3. LEARNED AUTHORISED REPRESENTATIVE VEHEMENTLY CONTEND ED THAT THE ASSESSING OFFICER AS WELL AS THE CIT(A) HAVE A SSESSED THE ASSESSEES ALLEGED TRANSFER U/S.2(47) INVOLVING T HE AGREEMENT OF SALE EXECUTED IN THE RELEVANT PREVIOUS YEA R. HE TOOK US TO THE ASSESSING OFFICERS RE-OPENING REASONS READING AS UNDER: THE ASSESSEE ENTERED INTO AN AGREEMENT FOR SALE OF SOMAJIGUDA LAND ADMEASURING 19.014 SQ YDS AT THE RATE OF RS.28,100/ - PER SQ YD TO SHRI K.V.V.PRASED AND AND SMT.S.CHINATALLI. SUBSEQU ENTLY THE ASSESSEE ALONG WITH THE ABOVE TWO PERSONS ENTERED I NTO A TRIPARTITE AGREEMENT IN NOVEMBER 2007 WITH M/S. FORTUNA INFRAS TRUCTURE INDIA P LTD FOR SALE OF ABOVE SAID LAND ACCORDING TO WHIC H HE HAD TO RECEIVE AN AMOUNT OF RS.53,42,65,300/- AS CONSIDERATION. TH E ASSESSEE RECEIVED RS.4.50 CRORES FROM SHRI K.V.V.PRSAD AND S MT. S.CHINATALLI IN 2007 AND ALSO A CHEQUE FOR RS.24 CRORES FROM M/S . FORTUNA INFRASTRUCTURE INDIA P LTD., WHICH WAS BOUNCED AND CIVIL CASES ARE PENDING ON THE ISSUE. THE ASSESSEE HAS NOT OFFERED ANY CAPITAL GAINS TILL DATE FROM THE ABOVE SAID TRANSACTION. THE ASSESSEE WAS EXAMINED PURSUANT TO COMMISSION IS SUED BY THE INCOME TAX OFFICER, WARD-1, PALAKOL TO THE UNDERSIG NED IN DECEMBER 2010. EVENTHOUGH THE SALE AGREEMENT WAS DATED 10.10 .2002, THERE IS A MENTION ABOUT WITHDRAWING OF OBJECTIONS IN THE COURT VIDE MEMO DATED 20.6.2003 IN PAGE 3 OF THE AGREEMENT. WHEN TH IS WAS POINTED OUT, THE ASSESSEE IN HIS SWORN STATEMENT RECORDED O N 09.12.2010 STATED THAT EVEN THOUGH THE AGREEMENT WAS DATED 10. 10.2002, IT WAS CONCLUDED AND SIGNED DURING THE FESTIVAL DAYS OF 20 03 I.E.. AFTER JUNE 2003. HENCE THE AGREEMENT CARNE INTO EXISTENCE IN T HE FINANCIAL YEAR 2003-04 RELEVANT TO THE AY 2004-05. SINCE THE ASSESSEE RECEIVED PAYMENT PURSUANT TO THE SALE AGREEMENT, THE CAPITAL GAINS SHOULD BE BROUGHT TO TAX IN THE A Y 2004-05. HENCE, I HAVE REASON TO BELIEVE THAT INCOME CHARGEABLE TO TA X IN RESPECT OF CAPITAL GAINS HAD ESCAPED ASSESSMENT FOR THE AY 200 4-05. THEREFORE, SANCTION FOR ISSUE OF A NOTICE U/S. 148 MAY BE ACCO RDED AS PER THE PROVISIONS OF 151(2) OF THE INCOME TAX ACT. RECORD IN VOLUME IS ENCLOSED. 4. LEARNED DEPARTMENTAL REPRESENTATIVE STRONGLY SUP PORTED THE ASSESSING OFFICERS RE-OPENING REASONS BASED ON THE ASSESSING OFFICERS SATISFACTION TREATING THE ASSESSEE S ITA NO. 1721/HYD/2014 :- 3 -: AGREEMENT ITSELF AS AMOUNTING TO A VALID TRANSFER U/S.2( 47) OF THE ACT. 5. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO THE INSTANT LEGAL ISSUE ON VALIDITY OF THE IMPUGNED RE-OPE NING. THE ASSESSING OFFICER HAD ADMITTEDLY RECORDED HIS REASON THAT SINCE THE ASSESSEE HAD RECEIVED PAYMENT PURSUANT TO HIS SALE AGREEMENT, CAPITAL GAINS ARISING THEREFROM OUGHT TO BE B ROUGHT TO TAX IN THE IMPUGNED ASSESSMENT YEAR. AND MORE PARTICU LARLY IN VIEW OF THE FACT THAT THE SAME HAD ESCAPED ASSESSMENT. WHAT WE NOTICE AT THIS STAGE IS THAT ALTHOUGH THE ASSESS ING OFFICER HAS RECORDED HIS REASONS FOR TAXING THE ASSES SEES ALLEGED SALE CONSIDERATION ARISING FROM THE AGREEMENT , IT IS A CLEAR CUT CASE OF FAILURE ON HIS PART IN NOT EVEN OBSE RVING THAT THE ASSESSEES CORRESPONDING AGREEMENT(S) IN FACT AMO UNTED TO TRANSFER U/S.2(47) OF THE ACT GIVING RISE TO CAPITAL GA INS ESCAPEMENT FROM ASSESSMENT. THIS CRUCIAL OMISSION ON THE ASSESSING OFFICERS PART; WHILST RECORDING REASONS, S EALS THE OUTCOME OF THE INSTANT LIS IN OUR CONSIDERED OPINION. W E WISH TO QUOTE M/S.HINDUSTAN LEVER LTD. VS. R.B.WADKAR [268 I TR 332] (BOM) THAT THE RE-OPENING REASONS ARE REQUIRED TO BE READ AS THEY WERE RECORDED BY THE ASSESSING OFFICER. NO SUBSTITUTION OR DELETION IS PERMISSIBLE. NO ADDITION CAN BE MADE TO THOSE REASONS. NO INFERENCE CAN BE ALLOWED TO BE DRAWN ON THE BASIS OF REASONS NOT RECORDED. IT IS FO R THE ASSESSING OFFICER TO DISCLOSE AND OPEN HIS MIND THRO UGH THE REASONS RECORDED BY HIM. HE HAS TO SPEAK THROUGH THE REASONS. THEIR LORDSHIPS FURTHER ADDED THAT REASONS RECORDED SHOULD BE EXPLANATORY AND SHOULDNT KEEP THE ASSESSEE GUESSING FOR REASONS. WHEN WE APPLY THE SAID REASON ING ON ITA NO. 1721/HYD/2014 :- 4 -: THE RE-OPENING REASONS BEFORE US, IT IS NOTICED THAT THE ASSESSING OFFICER HAD NOWHERE RECORDED THAT THE ASSES SEES AGREEMENT(S) TRANSFERRING ALL THE RIGHTS AND LIABILITIE S TO THE VENDEE(S) DESERVED TO BE TREATED AS A TRANSFER U/S.2(47 )(V) OF THE ACT. WE THUS QUASH THE IMPUGNED RE-OPENING FOR THIS PRECISE REASON OF OMISSION ALONE. ALL OTHER PLEADINGS ON MERITS ARE RENDERED INFRUCTUO US THEREFORE. 6. THIS ASSESSEES APPEAL IS ALLOWED IN ABOVE TERMS. ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH JUNE, 2021 SD/- SD/- (LAXMI PRASAD SAHU) (S.S.G ODARA) ACCOUNTANT MEMBER JUDICIAL MEM BER HYDERABAD, DATED: 08-06-2021 TNMM ITA NO. 1721/HYD/2014 :- 5 -: COPY TO : 1.RAMESH KUMAR MITTAL, C/O. M.ANANDAM & CO., CHARTERED ACCOUNTANTS, 7A, SURYA TOWERS, S.P.ROAD, SECUNDERABAD. 2.THE INCOME TAX OFFICER, WARD-4(4), HYDERABAD. 3.CIT(APPEALS)-V, HYDERABAD. 4.CIT-IV, HYDERABAD. 5.D.R. ITAT, HYDERABAD. 6.GUARD FILE.