ITO 25(3)(2), MUMBAI V. VASANT B SHAH, MUMBAI

ITA 1728/MUM/2012

• Counselvise Citation: 172819914 RSA 2012
• Duration Of Justice: 2 year(s) 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-06-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 27-11-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 13-03-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PRADIP SHARYA ARYA
• Assessee Lawyers: B V JHAVERI

Judgement Text

, INCOME TAX APPELLATE TRIBUNAL,MUMBAI - F BENCH. . , !'# !'# !'# !'# !$%&' !$%&' !$%&' !$%&' , %! %! %! %! () () () () BEFORE S/SH.D.MANMOHAN, VICE-PRES IDENT & RAJENDRA,ACCOUNTANT MEMBER /. ITA NO.1728/MUM/2012, ! ! ! ! * * * * / ASSESSMENT YEAR-2008-09 I T O 25(3)(2), C-11,R.NO.306 PRATYAKSH K AR BHAVAN, BKC, BANDRA (EAST) MUMBAI-400051. V/S. VASANT B. SHAH, B-407, ARPIT ENCLAVE, MAHAVIRNAGAR, DAHANUKARWADI, KANDIVILI, MUMBAI-400067 PAN:AAHPS3563M ( !+, / APPELLANT) ( -.+, / RESPONDENT) !$) / 0 % / REVENUE BY : SHRI PRADIP SHARYA ARYA !12 !12 !12 !12 0 0 0 0 % %% % / ASSESSEE BY : SHRI B.V.JHAVERI ! ! ! ! / // / 2! 2! 2! 2! / DATE OF HEARING : 26-06-2014 3* ! / 2! / DATE OF PRONOUNCEMENT : 26-06-2014 , 1961 / // / !! !! !! !! 254 )1( % %% % &242 &242 &242 &242 (%5 (%5 (%5 (%5 ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA,AM %! %! %! %! () () () () !$%&' !$%&' !$%&' !$%&' % %% % ! ! ! ! : CHALLENGING THE ORDER DT.13.12.2011 OF THE CIT(A)-3 5,MUMBAI, ASSESSING OFFICER(AO)HAS RAISED FOLLOWING GROUNDS OF APPEAL : 1.ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, AND IN LAW, THE LD. CIT(A) ERRED IN DIRECTING THE ASSESSING OFFICER TO TREAT THE COMPENSATION REC EIVED ON CANCELLATION OF FLAT AS LONG AS LONG TERM CAPITAL GAINS BY SIMPLY ACCEPTING THE SUBMISSI ONS OF THE ASSESSEE AND WITHOUT CONSIDERING THE DETAILED FACTS MENTIONED IN THE ASSESSMENT ORDE R. 2.ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, AND IN LAW, THE LD.CIT(A) ERRED IN ACCEPTING THE JUDICIAL DECISIONS RELIED ON BY THE ASSESSEE WI THOUT CONSIDERING THE REMARKS MENTIONED IN THE ASSESSMENT ORDER THAT THE FACTS IN THE CASE LAWS ON WHICH THE ASSESSEE HAD RELIED ARE COMPLETELY DIFFERENT FROM THE FACTS AVAILABLE IN THE CASE OF T HE ASSESSEE. 3.ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW,THE LD.CIT(A) ERRED IN NOT CONSIDERING THE ALTERNATIVE CONTENTION MADE IN THE ASSESSMENT ORDER AT PARA NO 14 IE.THE COMPENSATION RECEIVED ON CANCELLATION OF FLAT SHALL BE TREATED AS SHORT TERM CAPITAL GAINS ONLY AS THE ASSESSEE HAS PAID THE SUBSTANTIAL CONSIDERATION ONLY DURING THE LAST THREE YEARS OF THE DATE OF CANCELLATION. 4.THE APPELLANT PRAYS THAT THE ORDER OF THE LD.CIT (A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE A.O BE RESTORED. 5.THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND. 2. EFFECTIVE GROUND OF APPEAL PERTAINS TO COMPENSATION RECEIVED ON CANCELLATION OF A FLAT AND TREATMENT TO BE GIVEN TO IT UNDER THE HEAD CAPITAL GAINS.DURING THE ASSESSMENT PROCEEDINGS,AO FOUND THAT THE ASSESSEE WAS;BY VIRTUE OF LETTER OF ALLOTMENT DATED 17.08.2004 ISSUED BY M/S KANAKIA SPACES;ALLOTTED A FLAT AT THANE FOR A CONS IDERATION OF RS 20,79,000/-,THAT SALE CONSIDERA - TION RS.16,54,000/-,PAID BY THE ASSESSEE,WAS DULY R EFLECTED IN THE BALANCE SHEET AS ON 31.03. 2007,THAT THE BALANCE CONSIDERATION OF RS 4,25,000/ - WAS PAID BY THE WIFE OF THE ASSESSEE,THAT ON 10TH DAY OF DECEMBER 2007,AFTER NEARLY 40 MONTHS OF ALLOTMENT, SAID ALLOTMENT WAS CANCELLED BY VIRTUE OF DEED OF CANCELLATION,THAT THE ASSESSEE WA S PAID RS 18,90,000/- OVER & ABOVE RS 20,79, 000/-BY KANAKIA SPACE,THAT THE ASSESSEE HAD CLAIMED THE SAME AS LTCG,THAT THE ASSESSEE HAD 2 ITA NO.1728/MUM/2012 VASANT B. SHAH FURTHER REINVESTED THE ABOVE LONG TERM CAPITAL GAIN IN NEW RESIDENTIAL PROPERTY,THAT HE HAD CLAIMED EXEMPTION U/S 54/54F OF THE ACT FOR THE INVESTMENT MADE IN NEW ASSET.CONSIDERING THE ABOVE FACTS,AO HELD THAT NO SALE AGREEMENT WAS ENTERED BE TWEEN THE ASSESSEE AND THE BUILDER, THAT ONLY ALLOTMENT WAS GIVEN WHICH WAS ALSO CANCELLED SUBSE QUENTLY,THAT NO RIGHTS WAS TRANSFERR -ED TO THE ASSESSEE,THAT NO CAPITAL GAIN ACCRUED TO HIM.HE TR EATED THE AMOUNT IN QUESTION I.E. RS. 15.82 LAKHS AS INCOME FROM OTHER SOURCES AND CONSEQUENTLY DENIE D THE ASSESSEE THE EXEMPTION CLAIMED U/S.54 OF THE ACT. 3. AGAINST THE ORDER OF THE AO,THE ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPEAL AUTHORITY (FAA).AFTER CONSIDERING THE SUBMISSIONS OF THE ASSE SSEE AND THE ASSESSMENT ORDER HE DECIDED THE ISSUE AS UNDER: 7.I HAVE CONSIDERED THE APPELLANTS SUBMISSION AND THE STAND TAKEN BY THE AO.THE APPELLANT HAS FORWARDED VARIOUS CASE LAWS AND CO-RELATED THEM WIT H THE FACTS OF THE PRESENT CASE. KEEPING IN VIEW OF THE SAME, IT IS FELT THAT THE SUBMISSION OF THE APPELLANT IS ACCEPTABLE. 4. BEFORE US,DEPARTMENTAL REPRESENTATIVE (DR) ARGUED T HAT THE PROPERTY IN QUESTION WAS NEVER TRANSFERRED TO THE ASSESSEE AND WAS NEVER OWNED BY THE ASSESSEE.AUTHORISED REPRESENTATIVE(AR) STATED THAT ISSUE WAS COVERED IN FAVOUR OF THE ASSE SSEE BY THE VARIOUS JUDGMENTS AND THE CIRCULARS ISSUED BY THE CBDT. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT WHILE PASSING HIS SIXTEEN PAGES ORDER THE FAA HAS EXTENSI VELY QUOTED THE CASES RELIED UPON BY THE ASSESSEE,BUT WHILE DECIDING THE APPEAL HE HAS PASSE D A FOUR LINER ORDER.HOW THE FACTS OF THE CASE UNDER CONSIDERATION WERE CORRELATED WITH THE FACTS OF THE CASES RELIED UPON BY THE ASSESSEE HAS NOT BEEN MENTIONED BY HIM.HE HAS NOT DEALT WITH ANY OF THE OBJECTIONS RAISED BY THE AO.WE FIND THAT IN THE SECOND GROUND OF APPEAL,THE AO HAS SPECIFICA LLY RAISED THE ISSUE OF ACCEPTANCE OF THE JUDICIAL DECISIONS,RELIED ON BY THE ASSESSEE,WITHOU T CONSIDERING THE REMARKS MENTIONED IN THE ASSESSMENT ORDER.BEING THE FAA,COMMISSIONER OF INCO ME-TAX(APPEAL)IS REQUIRED TO PASS A REASONED AND SPEAKING ORDER AS PER THE PROVISIONS O F SECTION 250(6)OF THE ACT.AN ORDER WITHOUT REASONS CAN EASILY BE COMPARED WITH A HOUSE WITHOUT THE FOUNDATION.THE ASSESSEE HAD RELIED UPON ABOUT A DOZEN CASES AND THE CIRCULARS ISSUED BY THE CBDT.BUT,FAA,WHILE DECIDING THE APPEAL HAS NOT DISCUSSED AS TO HOW THE JUDGMENTS OR THE CIRCUL ARS WERE APPLICABLE TO THE TRANSACTION IN QUESTION.A SPEAKING AND REASONED ORDER IS THE FIRST PRE-REQUISITE OF AN ACCEPTABLE ORDER.THERE MAY BE SO MANY THINGS IN THE MIND OF THE FAA,BUT IF SAM E DO NOT FIND PLACE IN THE ORDER THEM IT TANTAMOUNTS TO NON APPLICATION OF MIND.PROCESS OF R EACHING AT A PARTICULAR CONCLUSION HAS TO BE REVEALED IN THE ORDER BY EVERY ADJUDICATING AUTHORI TY-ESPECIALLY WHEN SUCH ORDERS CAN BE APPEALED AGAINST.TWO SENTENCES IN AN ORDER,JUSTIFYING THE CO NCLUSION ARRIVED AT,ARE FAR MORE WORTHY OF HUNDRED OF ARGUMENT THOUGHT BY THE ADJUDICATING AUT HORITIES IN THEIR MINDS AND NOT PUT IN BLACK AND WHITE. DECIDING THE MATTER OF BUILDWELL ASSAM (P.)LTD,HON BLE GAUHATI HIGH COURT(133ITR736)HAS HIGHLIGHTED THE NECESSITY OF PASSING A REASONED ORD ER AS UNDER: SECTION 250(6) OF THE I.T. ACT, 1961, PRESCRIBES T HE MANNER OF DISPOSAL OF AN APPEAL.AN ORDER MUST BE IN WRITING CONTAINING THE POINTS FOR DETERM INATION AND DECISION. THE OBJECT IS OBVIOUS. IT ENABLES A PARTY TO KNOW THE PRECISE POINTS DECIDED IN HIS FAVOUR OR AGAINST HIM. ABSENCE OF FORMULATION OF POINTS FOR DECISION OR WANT OF CLARI TY IN DECISION PUTS A PARTY IN A QUANDARY. A DECISION AGAINST A PARTY ENABLES HIM TO GO UP IN AP PEAL. A DECISION BY ITS VERY NATURE MUST BE FIRM AND SHOULD NOT BE VAGUE AND UNCLEAR. IF THERE IS A DIRECTION BY THE APPELLATE AUTHORITY TO THE ITO, THE LATTER IS BOUND TO CARRY OUT THE DIRECTION. REF USAL TO CARRY OUT A DIRECTION IS A DENIAL OF JUSTIC E AND DESTRUCTIVE OF ONE OF THE BASIC PRINCIPLES IN T HE ADMINISTRATION OF JUSTICE BASED ON THE HIERARCHY OF THE AUTHORITIES.THEREFORE, WHEN A SUBO RDINATE AUTHORITY IS DIRECTED TO CARRY OUT CERTAIN DIRECTIONS BY A SUPERIOR AUTHORITY, THE TENOR AND COLOUR OF THE ORDER OF THE SUPERIOR AUTHORITY MUST BE FIRM,CLEAR,CERTAIN,DEFINITE AND W ITHOUT ANY AMBIGUITY .(EMPHASIS ADDED). IN OUR OPINION,THE ORDER OF THE FAA, CHALLENGED BEF ORE US,IS NEITHER CLEAR NOR DEFINITE.THEREFORE, 3 ITA NO.1728/MUM/2012 VASANT B. SHAH IN THE INTEREST OF JUSTICE,WE ARE REMITTING BACK TH E MATTER TO THE FILE OF THE FAA FOR FRESH ADJUDICATION.HE WILL PASS A SPEAKING AND REASONED O RDER AFTER AFFORDING A REASONABLE OPPORTUNITY OF HEARING TO BOTH THE PARTIES.EFFECTIVE GROUND OF APPEAL,FILED BY THE AO IS ALLOWED,IN PART. AS A RESULT, APPEAL FILE D BY THE AO STANDS PARTLY ALLOWED. 26 !12 ! 8!! (!9 / 4 ):2 / $!2 ; . ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH ,JUNE, 2014 . (%5 / 3* ! % &!! < =(! 26 $> , 201 4 / 4 ? SD/- SD/- ( . / D.MANMOHAN) ( !$%&' !$%&' !$%&' !$%&' / RAJENDRA) !'# / VICE PRESIDENT %! %! %! %! () () () () /ACCOUNTANT MEMBER / MUMBAI, =(! /DATE:26.06.2014. SK (%5 (%5 (%5 (%5 / // / -2@ -2@ -2@ -2@ A%@*2 A%@*2 A%@*2 A%@*2 / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / !+, 2. RESPONDENT / -.+, 3. THE CONCERNED CIT(A)/ B C , 4. THE CONCERNED CIT / B C 5. DR F BENCH, ITAT, MUMBAI / @D!4 -2 , . . &!! . 6. GUARD FILE/ 4! ! .!@2 .!@2 .!@2 .!@2 -2 -2-2 -2 //TRUE COPY// (%5!! / BY ORDER, / ! $! DY./ASST. REGISTRAR , /ITAT, MUMBAI