Mrs Kamalabai P Gundecha, Pune V. DCIT cir,2(3), Pune

ITA 190/PUN/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 66879 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 1998-1999
• Appeal Filed On: 01-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANN KAPTHUAMA
• Assessee Lawyers: S N DOSHI
• Keywords: Block assessment
• Section: 143(3); 54F; 148; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER , AND SHRI G.S.PANNU, ACCOUNTANT MEMBER. ITA.NO.190/PN/2012 (ASSTT. YEAR : 1998-99) SMT.KAMLABAI B.GUNDECHA, A-6, PLOT NO.44, SURVEY NO.49/2, CHANDAN NAGAR, NAGAR ROAD, PUNE. .. APPELLANT PAN: AATPG0283C VS. DCIT, CENTRAL CIRCLE-2(3), PUNE. .. RESPONDENT ASSESSEE BY : SHRI S.N.DOSHI DEPARTMENT BY : MS.ANN KAPTHUAMA DATE OF HEARING : 23.04.2013 DATE OF PRONOUNCEMENT : 29.04.2013 ORDER PER G.S.PANNU, AM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-CENTRAL, PUNE, DATED 31.10.2011 WHICH, IN T URN, HAS ARISEN FROM THE ASSESSMENT ORDER DATED 31.03.2006 PASSED B Y THE ASSESSING OFFICER U/S.143(3) R.W.S. 147 OF THE INCO ME TAX ACT, 1961 (IN SHORT THE ACT) PERTAINING TO THE A.Y. 1998-99 . 2. THE APPELLANT IS AN INDIVIDUAL WHO IS CO-OWNER O F AN AGRICULTURAL LAND SITUATED AT S.NO.15, VADGAON SHER I, ADMEASURING 45 ACRES AND 25 GUNTAS. THE APPELLANT SOLD HER POR TION IN THIS LAND TO M/S.MARIGOLD PREMISES PVT. LTD. (IN SHORT MPPL) FOR RS.72,00,000/-. FOR THE ASSESSMENT YEAR UNDER CONS IDERATION, SHE FILED A RETURN OF INCOME ON 02.11.1998 DECLARING LO NG TERM CAPITAL GAINS ON SALE OF HER SHARE OF LAND AT RS.15,23,360/ -. THE RETURN 2 WAS REVISED ON 13.05.1999 SHOWING THE LONG TERM CAP ITAL GAINS AT RS.18,67,600/- AND DEDUCTION U/S.54F OF THE ACT WAS CLAIMED FOR RS.48,55,760/-. THE ASSESSEES CLAIM FOR DEDUCTION U/S.54F OF THE ACT HAS BEEN DENIED BY THE ASSESSING OFFICER IN THE IMPUGNED ASSESSMENT FINALISED U/S.143(3) R.W.S. 147 OF THE A CT DATED 31.03.2006. THE SUM AND SUBSTANCE OF THE DISPUTE I N THE PRESENT APPEAL IS ARISING OUT OF THE AFORESAID ASSESSMENT E NTAILING DENIAL OF DEDUCTION CLAIMED U/S.54F OF THE ACT. THE ACTION O F THE ASSESSING OFFICER HAS BEEN UPHELD BY THE CIT(A) AND ACCORDING LY THE ASSESSEE IS IN APPEAL BEFORE US. 3. IN THE GROUNDS OF APPEAL RAISED, THE ASSESSEE HA S MADE TWO-FOLD GRIEVANCE. FIRSTLY, IT IS CANVASSED THAT THE REOPENING OF THE ASSESSMENT BY INVOKING SECTIONS 147/148 OF THE ACT WAS UNJUSTIFIED AND ACCORDINGLY THE ASSESSMENT ORDER IS BAD IN LAW. SECONDLY IT IS CANVASSED THAT EVEN ON MERITS THE INCOME-TAX AUTHOR ITIES HAVE UNJUSTLY DENIED ASSESSEES CLAIM FOR EXEMPTION U/S. 54F OF THE ACT. 4. AT THE TIME OF HEARING IT WAS A COMMON POINT BET WEEN THE PARTIES THAT SIMILAR DISPUTE RELATING TO THE SALE O F LAND IN THE CASE OF THE CO-OWNERS NAMELY, SHRI MOTILAL P.KHINVASARA (HU F) AND OTHERS (ITA.NO.88-91/PN/2012) WAS A SUBJECT MATTER OF CONS IDERATION OF THE TRIBUNAL AND VIDE ITS ORDER DATED 28.02.2013, T HE INVOKING OF SECTION 147/148 BY THE ASSESSING OFFICER HAS BEEN H ELD TO BE INVALID AND THE ASSESSMENT HAS SINCE BEEN DECLARED NULL AND VOID. 5. IT WAS POINTED OUT THAT THE REASONS RECORDED BY THE ASSESSING OFFICER ARE PARI MATERIA TO THOSE RECORDED IN THE CASE OF THE CO-OWNER WHOSE CASE HAS BEEN ADJUDICATED BY THE TRI BUNAL VIDE ITS ORDER DATED 28.02.2013 (SUPRA), AND THEREFORE, THE CONTROVERSY IS FULLY COVERED BY THE AFORESAID PRECEDENT. 6. IN THE ABOVE BACKGROUND, WE FIND THAT THE ISSUE RAISED IS NO LONGER RES INTEGRA BUT HAS BEEN SUBJECT MATTER OF CONSIDERATION BY 3 THE TRIBUNAL IN THE CASE OF THE CO-OWNERS IN SHRI M OTILAL P.KHINVASARA (HUF) & OTHERS (SUPRA). IN ORDER TO I MPART COMPLETENESS TO THIS ORDER, THE RELEVANT PORTION OF THE ORDER OF THE TRIBUNAL DATED 28.02.2013 (SUPRA) IS REPRODUCED AS UNDER: 11. IN THE AFORESAID BACKGROUND, FACTUALLY IT IS EV IDENT THAT THE ENTIRE CONTROVERSY IS AS A CONSEQUENCE OF AN AGREEM ENT EXECUTED WITH MPPL WHEREBY THE ASSESSEE TRANSFERRED ITS SHARE OF THE DEVELOPMENT RIGHTS IN THE LAND AT VADGAON SH ERI. THE ASSESSEE HAD DECLARED CAPITAL GAINS AS A CONSEQUENC E OF SUCH AGREEMENT IN THE RETURN OF INCOME FILED ORIGINALLY U/S. 139(1) OF THE ACT WHICH WAS SUBSEQUENTLY REVISED MAKING A CLA IM FOR EXEMPTION U/S. 54F OF THE ACT. THE CLAIM OF EXEMPT ION WAS WITH RESPECT TO ACQUISITION OF A RESIDENTIAL HOUSE FROM MPPL IN LIEU OF THE SALE CONSIDERATION. FACTUALLY, THESE ASPECTS W ERE SUBJECT MATTER OF CONSIDERATION BY THE ASSESSING OFFICER WH ILE FINALIZING THE ASSESSMENT U/S. 143(3) OF THE ACT ON 30-1-2001 WHEREIN PARTIAL DEDUCTION U/S. 54F WAS ALLOWED. THIS PARTIA L ALLOWANCE HAD SINCE BEEN AFFIRMED BY THE CIT(A) IN AN APPEAL PREFERRED BY THE ASSESSEE VIDE HIS ORDER DATED 28-1-2002. SI MILARLY, EVEN CONSEQUENT TO SEARCH U/S. 132(1) OF THE ACT ON VASCON GROUP, ASSESSMENT PROCEEDINGS WERE INITIATED IN THE CASE OF THE ASSESSEE U/S. 158 BD OF THE ACT WHEREIN ALSO THE EN TIRE GAMUT OF THE CAPITAL GAIN ARISING OUT OF THE AGREEMENT WI TH MPPL AND THE ASSESSEES CLAIM FOR EXEMPTION U/S. 54F OF THE ACT WAS A SUBJECT MATTER OF CONSIDERATION. IN THE SAID PROCE EDINGS ALSO, THE ASSESSING OFFICER, INTER ALIA WAS OF THE VIEW T HAT DEDUCTION UNDER SEC. 54F WAS NOT ALLOWABLE IN AS MUCH AS THE ASSESSEE DID NOT ACQUIRE DOMAIN OVER THE NEW RESIDENTIAL UN ITS WITHIN THE STIPULATED PERIOD. SUCH BLOCK ASSESSMENTS HAV E BEEN FOUND LACKING IN JURISDICTION BY THE CIT(A) AND THE REAFTER BY THE TRIBUNAL, AS NOTED EARLIER. IN SUM AND SUBSTANCE, FACTUALLY SPEAKING THE ISSUE RAISED BY THE ASSESSING OFFICER IN THE IMPUGNED PROCEEDINGS U/S. 147/148 OF THE ACT NAMELY , LACK OF ACQUIRING OF DOMAIN BY THE ASSESSEE OF THE NEW RES IDENTIAL UNIT WITHIN THE STIPULATED PERIOD WAS A SUBJECT MATTER O F CONSIDERATION IN THE ASSESSMENT PROCEEDINGS U/S. 1 43(3) OF THE ACT AS WELL AS DURING THE BLOCK ASSESSMENT PROCEEDI NGS U/S. 158BD OF THE ACT. THEREFORE, IT IS IN THIS BACKGRO UND, ONE HAS TO EXAMINE WHETHER THE ASSESSING OFFICER WAS JUSTIFIED IN VALIDLY FORMING A BELIEF THAT CERTAIN INCOME HAS ESCAPED AS SESSMENT BY WAY OF DEDUCTION HAVING BEEN ALLOWED U/S. 54 F IN THE ASSESSMENT FRAMED U/S. 143(3) DATED 30-1-2001 WITH IN THE MEANING OF SEC. 147 OF THE ACT. 12. IN THE AFORESAID BACKGROUND, ONE HAS TO EXAMINE AS TO WHETHER THE PROCEEDINGS INITIATED BY THE ISSUANCE O F NOTICE U/S 148 OF THE ACT IS VALID OR NOT. THE HONBLE GUJARA T HIGH COURT IN 4 THE CASE OF CARGO CLEARING AGENCY (SUPRA) HAS OBSE RVED THAT ONCE THE BLOCK ASSESSMENT U/S 158BA IN RELATION TO THE UNDISCLOSED INCOME FROM THE BLOCK PERIOD AS A CONSE QUENCE OF SEARCH IS CARRIED OUT, THE ASSESSING OFFICER WOULD NOT BE JUSTIFIED IN ISSUING NOTICE U/S 148 OF THE ACT FOR REOPENING SUCH ASSESSMENT. IN THIS CONTEXT, REFERENCE WAS MADE TO THE FIRST PROVISO BELOW SEC. 158BC(A) OF THE ACT WHICH SPECIF ICALLY CONTAINS A CAVEAT THAT NO NOTICE U/S 148 IS TO BE I SSUED FOR THE PURPOSES OF PROCEEDINGS UNDER CHAPTER XIV-B OF THE ACT. FURTHER, IT MAY ALSO BE NOTED THAT SO FAR AS THE IN COME ESCAPING ASSESSMENT IN THIS CASE I.E. ALLOWING OF DEDUCTION U/S 54F OF THE ACT IS CONCERNED, IT WAS ALREADY A SUBJECT MATT ER OF CONSIDERATION IN THE BLOCK ASSESSMENT. IN APPEAL, SUCH BLOCK ASSESSMENT HAS NOT BEEN HELD TO BE TENABLE. SO HOW EVER, IT WOULD NOT FOLLOW THAT SUCH INCOME CAN BE CONSTRUED AS ESCAPED INCOME CHARGEABLE TO TAX U/S 147 OF THE ACT. IN SI MILAR CIRCUMSTANCES, THE HONBLE HIGH COURT OF ALLAHABAD IN THE CASE OF VISHWANATH PRASAD ASHOK KUMAR SARAF VS. CIT & OR S. (2010) 235 CTR (ALL) 367 HAS HELD THAT ONCE A PARTI CULAR AMOUNT HAS BEEN CONSIDERED IN THE BLOCK ASSESSMENT IT CANN OT BE THEREAFTER TREATED AS AN ESCAPED INCOME WITHIN THE MEANING OF SEC. 147/148 OF THE ACT. 13. FURTHER, IN THE CASE OF CIT VS. C. SIVANANDAN ( 2011) 52 DTR (KER) 428, HONBLE KERALA HIGH COURT WAS CONSID ERING A SITUATION WHERE THE ASSESSING OFFICER HAD INITIATED PROCEEDINGS U/S 147/148 OF THE ACT, TO TAX CERTAIN INCOME WHICH ACCORDING TO THE REVENUE HAD ESCAPED ASSESSMENT. THE HONBLE KERALA HIGH COURT NOTICED THAT THE BLOCK ASSESSMENT WAS MA DE BY THE ASSESSING OFFICER BASED ON MATERIAL GATHERED DURING THE SEARCH U/S132 OF THE ACT AND ON THE BASIS OF THE SAME MATE RIAL AFTER BLOCK ASSESSMENT WAS CANCELLED BY THE APPELLATE AUT HORITIES, THE ASSESSING OFFICER PROCEEDED TO MAKE THE RE-ASSE SSMENT U/S 147 OF THE ACT. ACCORDING TO THE HONBLE HIGH COUR T, THE ASSESSING OFFICER HAD NO JURISDICTION TO ASSESS THE VERY SAME AMOUNT WHICH WAS CONSIDERED IN THE BLOCK ASSESSMENT . IN THIS REGARD, FOLLOWING OBSERVATIONS IN THE ORDER OF THE HONBLE HIGH COURT IS WORTHY OF NOTICE:- EVEN THOUGH BLOCK ASSESSMENT UNDER SECTION 158BC A ND INCOME ESCAPING ASSESSMENT UNDER SEC. 147 CAN PROBA BLY BE MADE FOR THE SAME PERIOD ON DIFFERENT BASIS, WE DO NOT THINK ASSESSMENTS COULD BE SUCCESSIVELY MADE ONE AF TER ANOTHER FOR THE SAME PERIOD UNDER THE PROVISIONS BA SED ON THE SAME MATERIALS. ONCE MATERIALS ARE GATHERED EIT HER DURING SEARCH UNDER SEC. 132 OR DURING SURVEY U/S 1 32A IT IS UPTO THE AO TO MAKE BLOCK ASSESSMENT U/S 158BC O R IF HE FEELS THAT INCOME ESCAPING ASSESSMENT IS CALLED FOR U/S 147, IT IS UPTO HIM TO ELECT BETWEEN THE TWO AND MA KE ASSESSMENT UNDER THE PROVISION HE FIND APPROPRIATE. HOWEVER, ONCE THE AO AFTER CONDUCTING SEARCH AND BA SED 5 ON MATERIALS GATHERED DURING SEARCH U/S 132, PROCEE DS TO MAKE THE ASSESSMENT UNDER SEC. 158BC, THEN HE CANNO T, BASED ON THE SAME MATERIALS WHICH IN THIS CASE IS D EPOSIT AMOUNTS FOUND DURING SEARCH ASSESSMENT WAS CANCELL ED BY THE FIRST APPELLATE AUTHORITY. THE AO OBVIOUSLY CANNOT GET OVER THE FINDINGS IN THE ORDER OF THE FIRST APP ELLATE AUTHORITY AGAINST A BLOCK ASSESSMENT BY INVOKING PO WERS UNDER SEC. 147. DURING BLOCK ASSESSMENT, THE AO OBVIOUSLY CONSIDERED AS TO WHETHER BANK DEPOSITS IN THE NAMES OF FAMILY MEMBERS OF THE ASSESSEE FOUND DURIN G SEARCH REPRESENT HIS UNDISCLOSED INCOME BUT ACCEPTE D THE ASSESSEES CONTENTION THAT THE SAME BELONG TO HIS F AMILY MEMBERS. RIGHTLY OR WRONGLY ONLY THE INTERESTS FRO M THESE DEPOSITS WERE ASSESSED AS PART OF UNDISCLOSED INCOM E OF THE ASSESSEE FOR THE BLOCK PERIOD. IN APPEAL, THE C IT(A) CANCELLED THE ASSESSMENT ON INTEREST INCOME. WE ARE OF THE VIEW THAT THE AO CANNOT AFTER CANCELLATION OF B LOCK ASSESSMENT BY THE CIT(A) PROCEED TO MAKE AN INCOME ESCAPING ASSESSMENT FOR ASSESSING THE VERY SAME BAN K DEPOSITS AS ESCAPED INCOME. WE DO NOT THINK THE AO HAS JURISDICTION TO ASSESS THE VERY SAME AMOUNT, WHICH WAS CONSIDERED AND GIVEN UP WHILE MAKING BLOCK ASSESSME NT. EVEN THOUGH LEARNED COUNSEL SUBMITTED THAT DEPOSIT AMOUNTS WERE NOT CONSIDERED IN BLOCK ASSESSMENT, WE CANNOT ACCEPT IT BECAUSE WHEN INTEREST FROM THE SAM E DEPOSITS WERE ASSESSED AS UNDISCLOSED INCOME OF THE BLOCK PERIOD, IT CAN BE LEGITIMATELY ASSUMED THAT T HE OFFICER CONSIDERED THE DEPOSIT AMOUNTS FOR ASSESSMENT BUT G AVE UP THE SAME. IN THIS CONTEXT, THE FINDINGS OF THE T RIBUNAL THAT REASSESSMENT UNDER SEC. 147 IS A RESULT OF CHA NGE OF OPINION OF THE AO CANNOT BE SAID TO BE ILLEGAL OR I NCORRECT BECAUSE WHAT WAS TREATED AS UNDISCLOSED INCOME IN B LOCK ASSESSMENT IS LATER TREATED ESCAPED INCOME IN ANOTH ER ROUND OF ASSESSMENT UNDER A DIFFERENT PROVISIONS OF THE ACT (SEC. 147) WHICH IN OUR OPINION IS IMPERMISSIBL E. 14. THE AFORESAID LEGAL POSITION IS ALSO IN LINE WI TH THE JUDGMENT OF HONBLE BOMBAY HIGH COURT IN THE CASE O F SMT. MIRA ANANTA NASIK VS. DY. CIT (I(INVESTIGATION) (20 09) 183 TAXMAN 40 (BOM). THE FOLLOWING OBSERVATIONS OF THE HONBLE HIGH COURT ARE WORTHY OF NOTICE:- THERE IS MUCH SUBSTANCE IN THE CONTENTIONS OF SHRI NADKARNI THAT THE SEARCH HAVING RESULTED IN BLOCK ASSESSMENT. IN THESE PROCEEDINGS THE INCOME TAX ASSESSED AND TAXED AFTER IT WAS BROUGHT TO THE NOTI CE OF THE AO. MERELY BECAUSE THE BLOCK ASSESSMENT WAS NO T UPHELD BY THE AUTHORITIES UNDER THE INCOME-TAX ACT, IT CANNOT BE REASON ENOUGH IN THIS CASE TO INVOKE SEC. 147 OF THE SAME. 6 15. IN THE BACKGROUND OF THE AFORESAID LEGAL POSITI ON, IN THE PRESENT CASE, IT EMERGES THAT THE PROCEEDINGS U/S 1 47 OF THE ACT HAD BEEN INITIATED SOLELY WITH THE OBJECTIVE OF SOM EHOW TAXING INCOME WHICH THE REVENUE COULD NOT SUCCESSFULLY DO AT THE TIME OF ASSESSMENT PROCEEDINGS U./S 143(3) OR IN THE BLO CK ASSESSMENT PROCEEDINGS U/S 158BC OF THE ACT. THOUG H THE BLOCK ASSESSMENT U/S 158BC AND ASSESSMENT OF AN INC OME U/S 147 WHICH HAD ESCAPED ASSESSMENT EARLIER CAN BE MAD E FOR THE SAME PERIOD, ON DIFFERENT BASIS, SO HOWEVER, IT WOU LD NOT BE APPROPRIATE THAT BOTH ASSESSMENTS CAN BE SUCCESSFUL LY MADE ONE AFTER ANOTHER FOR THE SAME PERIOD UNDER THE RES PECTIVE PROVISIONS BASED ON THE SAME MATERIALS. ONCE THE M ATERIAL GATHERED DURING THE COURSE OF SEARCH U/S 132 IS CON SIDERED IN THE BLOCK ASSESSMENT U/S 158BC OF THE ACT, THEREAFT ER IT IS NOT OPEN FOR THE ASSESSING OFFICER TO INITIATE PROCEEDI NGS U/S 147 OF THE ACT ON THE SAME ISSUE MERELY BECAUSE THE CONDIT IONS IN THE BLOCK ASSESSMENT PROCEEDINGS WERE NOT FOUND SUSTAIN ABLE. IN THIS CONTEXT, THE REASONS RECORDED BY THE ASSESSING OFFICER, REPRODUCED IN THE EARLIER PART OF THIS ORDER DO NOT SHOW ANY REASONABLE BASIS FOR THE ASSESSING OFFICER TO CONCL UDE THAT THERE WAS ANY ESCAPEMENT OF INCOME. CLEARLY, THE INITIAT ION OF PROCEEDINGS U/S 147 BASED ON SUCH REASONS RECORDED DID NOT MEET WITH THE REQUIREMENT OF SEC. 147 OF THE ACT AS UNDERSTOOD IN THE AFORESAID JUDICIAL PRONOUNCEMENTS. IN THIS VIEW OF THE MATTER, HAVING REGARD TO THE AFORESAID LEGAL POSITI ON, THE INITIATION OF PROCEEDINGS BY ISSUANCE OF NOTICE U/S 147/148 IN THE PRESENT CASE IS FLAWED AND VOID ABINITIO. THE PRELIMINARY GROUND ON THE POINT OF LAW SO RAISED BY THE ASSESSE E IS UPHELD AND ACCORDINGLY, THE IMPUGNED 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. 16. IN THE RESULT, THE APPEALS OF THE ASSESSEE IS A LLOWED. 7. SINCE THE FACTS AND CIRCUMSTANCES IN THE INSTANT CASE ARE IDENTICAL, FOLLOWING THE ABOVE PRECEDENT, THE INITI ATION OF PROCEEDINGS BY ISSUANCE OF NOTICE U/S 147/148 IN TH E PRESENT CASE IS FLAWED AND VOID ABINITIO. THE FIRST PLEA OF THE ASSESSEE IS HEREBY UPHELD AND THE IMPUGNED ASSESSMENT IS HELD TO BE IN VALID. SINCE THE POINT OF LAW CANVASSED BY THE ASSESSEE IS UPHEL D AND THE INITIATION OF ASSESSMENT HAS BEEN HELD TO BE INVALI D, THE SUBSEQUENT GROUND RELATING TO MERITS OF THE ADDITION IS RENDER ED ACADEMIC AND DOES NOT REQUIRE ANY ADJUDICATION FOR THE PRESENT. 7 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. PRONOUNCED IN THE OPEN COURT ON THIS THE 29 TH DAY OF APRIL, 2013. SD/- SD/- ( SHAILENDRA KUMAR YADAV ) ( G.S.PANNU ) JUDICIAL MEMBER ACCOUNTANT MEMBER GSPS PUNE, DATED THE 29 TH APRIL, 2013 COPY OF THE ORDER IS FORWARDED TO: 1. THE ASSESSEE 2. THE DCIT, CENTRAL CIRCLE-2(3), PUNE. 3. THE CIT(A)-CENTRAL, PUNE. 4. THE CIT-II, PUNE. 5. THE DR A BENCH, PUNE. 6. GUARD FILE. BY ORDER //TRUE COPY// PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, PUNE.