ACIT, CHENNAI V. Vatsala Santhosh Kamat, CHENNAI

ITA 174/CHNY/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4776 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 18-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MURALI MOHAN IRS
• Keywords: Gift; Audit objection; Tangible material; Difference of opinion; Change of opinion
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B (SMC) BENCH : CHENNAI . , [BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT M EMBER ] ./I.T.A. NO. 174/MDS/2017 / ASSESSMENT YEAR : 2008-2009 THE ASSISTANT COMMISSIONER OF INCOME TAX, NON CORPORATE CIRCLE 15(1) CHENNAI. VS. SMT. VATSALA SANTOSH KAMAT, FLAT 1B-4, SRIMAYAM, 1 ST SEAWARD ROAD, VALMIKI NAGAR, THIRUVANMIYUR, CHENNAI 600 041. [PAN AAKPK 5000G] ( !' / APPELLANT) ( #$!' /RESPONDENT) / APPELLANT BY : SHRI. MURALI MOHAN, IRS, JCIT. /RESPONDENT BY : NONE /DATE OF HEARING : 25-04-2017 !' /DATE OF PRONOUNCEMENT : 26-04-2017 % / O R D E R REVENUE IN THIS APPEAL IS AGGRIEVED THAT LD. COMMI SSIONER OF INCOME TAX (APPEALS) HAD HELD THE REOPENING DONE F OR THE IMPUGNED ASSESSMENT YEAR INVALID. ITA NO.174/MDS/2017. :- 2 -: 2. LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT REO PENING WAS DONE BASED ON A REVENUE AUDIT OBJECTION AND BY VI RTUE OF BOARD CIRCULAR NO.21/2015, DATED 10 TH DECEMBER, 2015 SUCH A REOPENING WAS VALID. ACCORDING TO LD. DEPARTMENTAL REPRESENTATIV E THE REOPENING WAS NOT BASED ON A CHANGE OF OPINION. AS PER THE L D. DEPARTMENTAL REPRESENTATIVE, IN THE ORIGINAL ASSESSMENT PROCEED INGS, LD. ASSESSING OFFICER HAD FAILED TO APPLY SECTION 56(2)(V) OF THE ACT, AND ALSO FAILED TO VERIFY THE INVESTMENTS MADE BY THE ASSESSEE. LD . DEPARTMENTAL REPRESENTATIVE PLACED RELIANCE ON THE JUDGMENT OF HONBLE APEX COURT IN THE CASE OF CIT VS P.V.S. BEEDIES PVT LTD, 237 ITR 13. 3. NOBODY APPEARED ON BEHALF OF THE ASSESSEE. 4. I HAVE CONSIDERED THE SUBMISSIONS OF THE LD. DEPAR TMENTAL REPRESENTATIVE AND PERUSED THE ORDERS OF THE AUTH ORITIES BELOW. ORIGINAL ASSESSMENT IN THIS CASE WAS COMPLETED U/S . 143(3) OF THE ACT. DURING THE COURSE OF SUCH ORIGINAL ASSESSMENT PROC EEDINGS, LD. ASSESSING OFFICER HAD DEPUTED INSPECTOR OF INCOME TAX, TO CONDUCT A VERIFICATION OF THE CLAIM OF THE ASSESSEE THAT T HE LAND SOLD WAS AGRICULTURAL LAND, SITUATED OUTSIDE URBAN LIMITS. REPORT DATED 08.10.2009 OF THE INSPECTOR WHICH HAS BEEN REPRO DUCED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IN HIS ORDER, IS ONCE AGAIN EXTRACTED HEREUNDER FOR BREVITY. ITA NO.174/MDS/2017. :- 3 -: 'THE JOINT COMMISSIONER OF INCOME-TAX, SALARY RANGE - VI, HAS DIRECTED TO VERIFY THE LAND SITUATED AT IN SIRUTHA OOOR VILLAGE IN THE CASE OF SMT. VATCHALA SANTHOSH KAMAI (PAN:AAKPK5000 G). WE VISITED TO THE ABOVE PLACED ON 22.12.2010 AND ID ENTIFY THE LAND AN EXTENT OF 1 ACRE BY DESIGNATED AS FIELD-ILL, GREEN PIECE COMPRISED ON OLD SURVEY NO.421/10 (PART), 421/5 (P ART), 421/2 (PART) & 424/4 (PART). NEW SURVEY NO.421/143 AS PE R PATTA 352, SITUATED AT 124, SIRUTHAOOOR VILLAGE, CHINGLEPUT TALUK, KANCHEEPURAM DISTRICT. DURING OUR VISIT ON 22/12/2010 THE SAID LAND IS VAC ANT POSITION ONLY AND NOTHING CULTIVATED IN THIS LAND. THE LAND IS NO T SITUATED WITHIN THE THIRUPORUR TOWN PANCHAYAT OR MAHUBALIPURAM TOWN PANCHAYAT. FURTHER, THIRUPORUR IS NOT NOTIFIED BY THE CBDT AS AN URBAN LAND. AS PER ADANGAL COPY ISSUED BY VAO OF THE VILLAGE, W HICH IS AVAILABLE IN THE MR, THE LAND WERE USED FOR AGRICUL TURE PURPOSE DURING THE PERIOD 01.04.2007 TO 31.03.2008. SUBMITTED FOR JCL'T'S PERUSAL.' OBJECTIONS OF THE AUDIT PARTY WHICH WAS THE BASIS F OR THE REOPENING READ AS UNDER:- THE ASSESSEE HAD DECLARED THAT HE HAD SOLD ONE AC RE OF LAND AT FIELD-ILL, GREEN PIECE, SIRATHAVUR KANCHI DISTRICT. HE CLAIMED EXEMPTION ON THE GROUND THAT THIS LAND, BEING AGRIC ULITIRAT WAS SITUATED OUTSIDE URBAN LIMITS AND WAS ALLOWED EXEM PTION. THE EXEMPTED CAPITAL GAIN WORKED OUT TO RS.28,89,670/- (RS.35,00,000 - RS.6,16,327). THE ASSESSEE CLAI MED TO HAVE PURCHASED ANOTHER PLOT OF 5,784 SQFT. AT KRISHNAN KARANAI VILLAGE FOR RS.34,88,000/- OUT OF CONSIDERATION OF RS.35 LA KHS RECEIVED. IT IS NOTICED THAT THE COST INCLUDED COST OF DEVELOPMENT OF LAND FOR RS.1,94,545/- SPENT FOR FORMING ROADS AND FENCING. UNDER THE CIRCUMSTANCE OF EXEMPTION OF RS.28,83,670/- FOR CAP ITAL GAIN REQUIRES TO BE CONSIDERED AND CLARIFIED SUBJECT TO CLASSIFICATION, ADDITION DEMAND OF RS.9.17 LAKHS WOULD ARISE. ITA NO.174/MDS/2017. :- 4 -: INCIDENTALLY, THE DOCUMENT FOR SALE OF SIRUTHAOUR L AND REVEALS RECEIPT OF RS.25 LAKHS FROM THE PURCHASER FOR THE S ALE OF THIS LAND . . THE BALANCE RS.10 LAKHS ATTRACTS PROVISION OF SECTION S6(2)(V) OF THE ACT (DEEMED GIFT FROM NON-RELATIVE). THE ASS ESSMENT OF RS.10 LAKHS WOULD RESULT IN ADDITIONAL DEMAND OF RS .3.18 LAKHS EXCLUDING INTEREST AND PENALTY. IN ADDITION THOUGH THE ASSESSEE CLAIMED TO HAVE SPE NT RS.34,88,000/- OUT OF RS.35 LAKHS FOR PURCHASE OF N EW PLOT THE ACTUAL INVESTMENT IS RS.3,84,470/- (RS.3,47,040 X 109%+5,199). THE DETAILS OF INVESTMENT OF BALANCE OF ABOUT RS.31 LAKHS MAY BE LOOKED INTO AND INCOME THERE FRO M BROUGHT TO TAX. TENTATIVELY RS.1.20 IAKHS (AT THE RATE OF 4%) IS ASSESSABLE AND ADDITIONAL DEMAND OF RS.38,190/- WOULD ARISE.' LD. ASSESSING OFFICER HAD REBUTTED THE AUDIT OBJECT IONS OBSERVING AS UNDER:- 'ASSESSEE'S RETURN OF INCOME FOR AY 2008-09 WAS FILED ON 26.07.2009 VIDE ACKNOWLEDGEMENT NO.14077, ADMITTING A TOTAL INCOME OF RS.4,68,860/-. AMOUNT OTHER THINGS, THE ASSESSEE HAD ENCLOSED A DETAILED WORKING OF CAPITAL GAIN RES ULTING FROM SALE OF AGRICULTURAL LAND AS SIRUDHAUOOR VILLAGE, CHINGLEPUT TALUK, KANCHEEPURAM DISTRICT. THE CASE WAS PICKED UP FOR SCRUTINY BY THE JCIT, SA LARY RANGE- VI, CHENNAI IN NOVEMBER 2010. DETAILS REQUIRED WERE FILED BY TH E ASSESSEE. ON 21.12.2010, THE ASSESSEE HAD FURNISHED TO THE DEPARTMENT, A COPY OF THE DOCUMENT RELATING TO THE SALE OF AGRICULTURAL LAND WHICH SHOWED THAT 10,00,000/- WAS PAID TO THE ASSESSEE AS DEVELOPMEN T CHARGES. THE ADDL. COMMISSIONER THEREAFTER DEPUTED AN INSPECTOR TO INSPECT THE PROPERTY TO CONFIRM IF THE LAND IN QUESTION WAS AGRICULTURAL IAND. THE PROPERTY WAS INSPECTED ON 22.12.2010 (WEDNESDAY) . THE LAND IS SITUATED 50 KMS. FROM CHENNAI, 6 KIIOMETERS FROM THE TIRUPORUR SUB-REGISTRAR'S OFFICE AND 24 KMS FROM TH E CHINGLEUT MUNICIPALITY. THE INSPECTOR LATER VISITED THE VAO'S OFFICE AT TIRUPORUR TO VERIFY THE CHITTA AND ADANGAL TO GATHE R SOME INFORMATION ON THE NATURE OF CROP GROWN. THE LAND I S LOCATED APPROXIMATELY 1 KILOMETER FROM THE MAIN ROAD AND FALLS WELL OUTSIDE MUNICIPAL LIMITS. THE ADANGAL ISSUED BY THE VAO SHOWED THAT PADDY WAS CULTIVATED ON THIS LAND DURING THE R ELEVANT ITA NO.174/MDS/2017. :- 5 -: PERIOD (PASALI 1416). A COPY OF THE ADANGAL WAS FURNISHED TO THE DEPARTMENT ON 27.12.2010. THE DEVELOPMENT CHARGES INCLUDED INTER-ALIA PLANTING OF COCONUT SAPLINGS, PUTTING UP BARBED WIRE FENCE, SPRINKLES, BUILDING A ROAD LEADING INTO THE SITE FROM THE MAIN ROAD. IT IS CLEAR FROM THE ABOVE THAT THE ORIGINAL ASSESS MENT WAS COMPLETED AFTER CONSIDERING ALL THE FACTS AND CIRCUMSTANCES RELATING TO THE CLAIM OF THE ASSESSEE. THE INITIATION OF RE-ASSESSMENT PROCEEDINGS WAS BASED ON A CHANGE OF OPINION AND NOT ON ANY FRESH OR TANGIBLE MATERIALS OR ON ACCOUNT OF FAILURE OF ASSESSEE. HO NBLE APEX COURT IN THE CASE OF CIT VS. KELVINATOR OF INDIA LTD 320 ITR 561 HAS CLEARLY HELD THAT NO REOPENING COULD BE MADE WITHOUT TANGIBLE MA TERIALS SHOWING ESCAPEMENT OF INCOME, WHERE ORIGINAL ASSESSMENT WAS COMPLETED U/S.143(3) OF THE ACT. COMING TO THE JUDGMENT OF H ONBLE APEX COURT IN THE CASE OF P .V.S. BEEDIES PVT LTD (S UPRA) RELIED ON BY THE LD. DEPARTMENTAL REPRESENTATIVE IT WAS A CASE, WHEN DED UCTION CLAIMED U/S.80G OF THE ACT WAS GIVEN EVEN THOUGH RECOGNIT ION GRANTED TO THE DONEE INSTITUTION U/S.80G(5) OF THE ACT HAD EXPIRE D. IN MY OPINION, THIS CASE WOULD NOT HELP THE REVENUE WHERE THE REOP ENING IS BASED ON A CHANGE OF OPINION ONLY. THE CIRCULAR RELIED ON BY THE DEPARTMENT IS ON MONETARY LIMITS FOR FILING APPEALS AND HAS NOTHI NG TO DO WITH A REOPENING. THUS THE IMPUGNED REASSESSMENT PROCEED ING WAS RIGHTLY HELD BY THE LD.CIT(A) TO BE INVALID. I DO NOT FIND ANY REASON TO ITA NO.174/MDS/2017. :- 6 -: INTERFERE WITH THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS). 5. IN THE RESULT, APPEAL OF THE REVENUE STANDS DISMI SSED. ORDER PRONOUNCED ON WEDNESDAY, THE 26TH DAY OF A PRIL, 2017, AT CHENNAI SD/- ( . ) (ABRAHAM P. GEORGE) / ACCOUNTANT MEMBER #$ / CHENNAI %& / DATED:26TH APRIL, 2017 KV &' ()*) / COPY TO: 1 . / APPELLANT 3. +,- / CIT(A) 5. )./ 0 / DR 2. / RESPONDENT 4. + / CIT 6. /12 / GF