ITO, New Delhi V. Shri Raghubir Singh, New Delhi

ITA 1787/DEL/2009

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0015 (ITAT-DELHI)
• Duration Of Justice: 6 year(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-05-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 22-04-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 01-05-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIKRAM SAHAY
• Assessee Lawyers: B D SHARMA
• Keywords: Reopening of assessment; Invalid notice; Cost of acquisition; Onus to prove
• Section: 54B; 142(1); 144

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: F : NEW DELHI BEFORE SHRI G.C. GUPTA, VICE PRESIDENT AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ITA NO. 1787 /DEL / 2009 ASSESSMENT YEAR: 2005 - 06 INCOME TAX OFFICER, VS. LEGAL HEIR OF SHRI RAGHUBIR WARD - 27(3), ROOM NO. D - 1, SINGH, S/O - LATE SH. CHANDGI RAM VIKAS BHAWAN, I.P. ESTATE, VILL. & PO - SAMALKA, NEW DELHI (PAN: ALXPS7164H ) (APPELLANT) (RESPONDENT) APPELLANT BY : SH. VIKRAM SAHAY, SR.DR RESPONDEN T BY : SH. B.D . SHARMA, ADV. DATE OF HEARING: 22.04.2015 DATE OF PRONOUNCEMENT: 0 6 . 0 5 . 2 0 1 5 ORDER PER SHRI INTURI RAMA RAO, A.M. : THIS IS AN APPEAL FILED BY THE REVENUE FOR THE ASSESSMENT YEAR 2005 - 06 IMPUGNING THE ORDER OF LEARNED CIT(A), DATED 16.02.2009 RAISING THE FOLLOWING GROUNDS OF APPEAL: ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN ACCEPTING THAT THE LAND WAS SOLD IN F.Y. 2004 - 0 5 BY THREE DIFFERENT SALE DEEDS FOR A TOTAL CONSIDERATION OF RS. 2,38,41,000/ - IN ASH OUT OF WHICH RS. 10,50,000/ - WAS DEPOSITED IN BANK IN CASH AND THE BALANCE CASH WAS UTILIZED FOR PURCHASE OF AGRICULTURAL LAND IN CASH CLAIMING DEDUCTION U/S 54B OF THE A CT WITHOUT GIVING PROPER OPPORTUNITY TO THE A.O. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL. HE HAS NOT FILED RETURN OF INCOME FOR THE ASSESSMENT YEAR 2005 - 06. HOWEVER, ON RECEIPT OF 2 AIR INFORMATION FROM CIT(CIB), DELHI REGAR DING DEPOSITS OF RS. 10,50,000/ - IN THE SAVING BANK ACCOUNT OF THE ASSESSEE MAINTAINED WITH THE UNION BANK OF INDIA, A NOTICE UNDER SECTION 142(1) OF THE INCOME - TAX ACT, 1961 (FOR SHORT THE ACT ) WAS ISSUED REQUIRED THE ASSESSEE TO FILE RETURN OF INCOME. HOWEVER, NO RETURN WAS FILED AND THE ASSESSEE HAD ALSO NOT REPRESENTED THE MATTER BEFORE THE ASSESSING OFFICER AND CONSEQUENTLY THE ASSESSING OFFICER COMPLETED THE ASSESSMENT UNDER SECTION 144 OF THE ACT VIDE ORDER DATED 24.12.2007 BRINGING THE CASH DEPOSI TS OF RS. 10,50,000/ - TO TAX. BEING AGGRIEVED, AN APPEAL WAS FILED BY THE LEGAL HEIRS OF THE ASSESSEE SINCE THE ASSESSEE DIED ON 15.04.2006 BEFORE THE LEARNED CIT(A) WHO VIDE IMPUGNED ORDER DATED 16.02.2009 ANNULLED THE ASSESSMENT ON THE GROUND THAT THE AS SESSMENT WAS MADE ON A DEAD PERSON. EVEN ON THE MERITS OF THE CASE ALSO, THE LEARNED CIT(A) HAS ACCEPTED THE EXPLANATION FILED DURING THE COURSE OF APPELLATE PROCEEDINGS THAT THE SAID CASH DEPOSIT WAS MADE OUT OF THE SALE PROCEEDS OF THE AGRICULTURAL LAND FOR SUM OF RS. 2,38,41,000/ - AND DELETED THE ADDITION. AGGRIEVED BY THIS ORDER OF LEARNED CIT(A), THE REVENUE HAS COME UP WITH THE PRESENT APPEAL. 3. IT WAS ARGUED BY LEARNED DR THAT THE CASH DEPOSITS OF RS. 10,50,000/ - SHOULD NOT BE TREATED AS EXPLAINE D, INASMUCH AS, THE SALE PROCEEDS OF THE LAND WAS AGAIN INVESTED IN PURCHASE OF AGRICULTURAL LANDS. 4. ON THE OTHER HAND, THE LEARNED AUTHORIZED REPRESENTATIVE ARGUED THAT THE VERY ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER IS NULL AND VOID, INASMUC H AS, IT WAS PASSED AGAINST A DEAD PERSON. 3 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE ARE OF THE CONSIDERED OPINION THAT THE REASONING GIVEN BY THE LEARNED CIT(A) IS PROPER WHICH IS EXTRACTED BELOW: 7. I HA VE CAREFULLY CONSIDERED THE WRITTEN SUBMISSION AS WELL AS THE ARGUMENTS PUT FORWARD ON BEHALF OF THE APPELLANT AND THE FACTS AND CIRCUMSTANCES UNDER WHICH THE IMPUGNED ADDITION WAS MADE. THE VIEW THAT THE ASSESSMENT ON A DEAD PERSON IS A NULLITY, IS LAW, A S WAS SETTLED BY THE SUPREME COURT IN CIT V. AMARCHAND N. SHROFF [1963] 48 ITR 59 AND ITO V. RAM PRASAD [1972] 86 ITR 145 (SC). IN THE FORMER CASE, THE INCOME OF THE DECEASED AFTER HIS DEATH, IT WAS FOUND, COULD BE ASSESSED IN THE HANDS OF THE LEGAL REPRES ENTATIVES ONLY FOLLOWING REQUIREMENT OF LAW, WHILE IN THE LATTER, IT WAS' FOUND THAT A NOTICE OF REOPENING OF ASSESSMENT COULD NOT BE ISSUED ON A HINDU UNDIVIDED FAMILY AFTER ITS DISRUPTION FOR THE PURPOSE OF EXCESS PROFIT TAX, WHICH, DID NOT HAVE A SIMILA R ENABLING POWER AS UNDER THE INCOME - TAX ACT. WHERE THE ASSESSING OFFICER BECOMES AWARE OF THE DEATH OF THE ASSESSEE BEFORE COMPLETION OF THE ASSESSMENT, IT IS HIS DUTY TO BRING THE LEGAL REPRESENTATIVES ON RECORD BEFORE PROCEEDING FURTHER IN THE MATTER. T HIS SOUND PRINCIPLE WAS FOLLOWED BY THE HIGH COURT IN CIT VS. J. DALUMAL SHYAMUMAL [2005] 276 ITR 62 (MP) UPHOLDING THE ORDER OF THE TRIBUNAL, THAT THE ASSESSMENT WAS A NULLITY. 7.1 THE LAW PROVIDES FOR ASSESSMENT OF THE INCOME OF A DECEASED PERSON UND ER SECTION 159 OF THE INCOME - TAX ACT IN THE HANDS OF A LEGAL REPRESENTATIVE. WHERE THE ASSESSING OFFICER ISSUES NOTICE IN THE NAME OF THE DECEASED, EVEN AFTER INFORMATION TO HIM THAT THE ASSESSEE IS NO LONGER ALIVE, THE ASSESSMENT MADE IN PURSUANCE OF SUC H NOTICE WOULD NOT BE VALID IN LAW. IT IS NOTICED THAT SHRI RAGHUVIR SINGH HAD DIED ON 15.04.2006 WHICH WAS ABOUT 17(SEVENTEEN) MONTHS BEFORE THE ITO,WARD - 19(4)/DAO - 41 ISSUED THE FIRST NOTICE U/S 142(1) OF THE ACT ON 19 - 09 - 2007 AND THAT NO ACTION WAS TAKEN ON THE SAME BY BRINGING THE LEGAL HEIRS ON RECORD. EVEN THE ASSESSMENT WAS COMPLETED WITHOUT AFFORDING OPPORTUNITY TO THE LEGAL REPRESENTATIVE. RELIANCE IS LACED ON THE DECISION OF HON'BLE DELHI HIGH COURT IN R.C. JAIN (DECD.) (THROUGH HIS LEGAL HEIR R.K. JAIN) JAIN) V. CIT [2005] 273 ITR 384 (DELHI). THE APPELLANT HAS REASONS TO SUCCEED ON TECHNICAL GROUND ITSELF ON THE BASIS OF THE WELL - SETTLED PROPOSITION THAT NOTICE U/S 142(1) ISSUED IN THE NAME OF THE DECEASED PERSON IS AN INVALID NOTICE. 7.2 AS FAR AS THE MERITS OF THE ADDITION OF RS. 10,50,000/ - ARE CONCERNED, IT IS OBSERVED THAT THE FOLLOWING AMOUNTS WERE DEPOSITED IN THE BANK ACCOUNT IN THE NAME OF THE APPELLANT I.E. LATE SH. RAGHUBIR SINGH MAINTAINED WITH UNION BANK OF INDIA, SAMALKHA, BRANCH, D ELHI - 37 ON THE DATE MENTIONED BELOW : - 19.11.2004 RS. 6,00,000/ - 19.11.2004 RS. 4,00,000/ - 4 11 .12.2004 RS. 50,000/ - RS. 10,50,000/ - IT HAS BEEN EXPLAINED ON BEHALF OF THE APPELLANT THAT HE HAD SOLD ANCESTRAL AGRICULTURAL LAND FOR A SUM OF RS. 2,66,66,667/ - IN THE F.Y. 1999 - 2000. OUT OF THE ABOVE SALE PROCEEDS, HE HAD PURCHASED AGRICULTURAL LAND FOR A SUM OF RS. 1,91,75,937/ - AND THE LO NG TERM CAPITAL GAINS ARISING ON SALE OF AGRICULTURAL LAND WAS CLAIMED AS EXEMPT U/S 54B OF THE ACT IN THE RETURNED FILED FOR A.Y. 2000 - 01. IT WAS FURTHER EXPLAINED THAT THE AGRICULTURAL LAND PURCHASED IN THE F. Y. 1999 - 2000 WAS SOLD BY HIM DURING F.Y. 200 4 - 05, RELEVANT TO A.Y. 2005 - 06 VIDE THREE DIFFERENT SALE DEEDS FOR TOTAL CONSIDERATION OF RS. 2,38,41,000/ - AND IT IS OUT OF THE AFORESAID SALE CONSIDERATION THE AMOUNT OF RS. 10,50,000/ - WAS DEPOSITED IN THE SAVINGS BANK ACCOUNT NO. 40474 MAINTAINED WITH UNION BANK OF INDIA, SAMALKHA, BRANCH DELHI. SINCE THE LAND IN QUESTION PURCHASED IN . F.Y. 1999 - 2000 WAS SOLD IN F.Y. 2004 - 05 HE WAS LIABLE TO LONG TERM CAPITAL GAINS ON THE SALE OF THIS AGRICULTURAL URBAN LAND. THE INDEXED COST OF ACQUISITION OF AGRICULT URAL LAND PURCHASED IN F.Y. 1999 - 2000 WORKS OUT AS UNDER: - RS. 1,91,75,937 X 480 =RS.2,36,61,825/ - 389 LONG TERM CAPITAL GAIN(LTCG) IS AS UNDER: - SALE CONSIDERATION VIDE THREE DIFFERENT SALE DEED RS. 2,38,41,000/ - LES S: INDEXED COST OF ACQUISITION RS. 2,36,61,825/ - LTCG RS. 1,79,125/ - OUT OF THE ABOVE SALE CONSIDERATION OF RS. 2,38,41,0001 - HE HAS AGAIN PURCHASED AGRICULTURAL LAND AT VILLAGE - SAMALKHA FOR A C ONSIDERATION OF RS. 1,02,00,000/ - . THUS, THE ENT IRE LONG TERM CAPITAL GAINS OF RS. 1,79,125/ - HAS AGAIN BEEN CLAIMED TO BE EXEMPT U/S 54B OF THE ACT. THEREFORE, TH E SOURCE OF THE DEPOSIT OF RS.10,50,000/ - IN HIS BANK ACCOUNT MAINTAINED WITH UNION BANK OF INDIA, SAMALKHA BRANCH, DELHI HAS BEEN SATISFACTO RILY EXPLAINED BY THE APPELLANT. 7.3 IN VIEW OF THE FACTS AND CIRCUMSTANCES STATED ABOVE, I AM OF THE CONSIDERED VIEW THAT THE APPELLANT HAS DISCHARGED HIS BURDEN OF PROOF IN ACCORDANCE WITH THE PROVISIONS OF SECTION 68/69 OF THE ACT. ACCORDINGLY, IT IS HELD THAT THE A.O. WAS NOT JUSTIFIED IN MAKING ADDITION OF RS. 10,50,000/ - U/S 68/69 OF THE ACT AND T HE ADDITION MADE BY THE A.O. IS NOT SUSTAINABLE IN LAW AND THE SAME IS DELETED. AS A RESULT, ALL THE GROUNDS OF APPEAL AR E TREATED TO HAVE BEEN ALLOWED. 6. IN VIEW OF THE ABOVE FINDINGS, WE TOTALLY AGREE WITH THE REASONING GIVEN BY THE LEARNED CIT(A) AND DO NOT INTEND TO INTERFERE WITH THE ORDER PASSED BY THE LEARNED CIT(A). HENCE, THE APPEAL FILED BY THE REVENUE IS DISMISSED. 5 7. IN THE RESULT, THE APP EAL IS DISMISSED. THE DECISION IS PRONOUNCED IN THE OPEN COURT ON 6 T H M A Y , 2015. S D / - S D / - (G.C. GUPTA) (INTURI RAMA RAO) VICE PRESIDENT ACCOUNTANT MEMBER DATED: 6 T H M A Y , 2015. RK/ - COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI