Rashmin Madhumar Mali, Nashik V. Income-tax Officer,

ITA 1933/PUN/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1006 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 10 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 21-07-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 30-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L KUREEL
• Keywords: Capital asset; Business income; Principle of natural justice; Deemed to accrue or arise in india; Additional evidence; Fair market value; Valuation report
• Section: 143(3)

Judgement Text

] ]] ] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE ! ' , # $ BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM ITA NO.1933/PN/2014 ASSESSMENT YEAR : 2010-11 SHRI RASHMIN MADHUMAR MALI, C/O SHRI R. M. MALI, MALI BUNGALOW, MALI FARM, AURANGABAD ROAD, PANCHWATI, NASHIK 422 003. PAN: AGYPM1238Q .. APPELLANT VS. THE INCOME TAX OFFICER, WARD 1(4), NASHIK. ... RESPONDENT / APPELLANT BY : SHRI NIKHIL PATHAK / DEPARTMENT BY : SHRI P. L. KUREEL / DATE OF HEARING : 31.08.2016 / DATE OF PRONOUNCEMENT: 31.08.2016 % / ORDER PER VIKAS AWASTHY, JM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-I, NASHIK DATED 22.08.2014 FOR THE ASSESSMENT YEAR 2010-11. 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RE CORDS ARE: THE ASSESSEE IS ENGAGED IN THE BUSINESS OF POULTRY FARMING. THE AS SESSEE FILED HIS RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR ON 31.03.20 11 DECLARING TOTAL INCOME OF RS.89,057/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY UNDER CASS AND 2 ITA NO.1933/PN/2014 ACCORDINGLY THE FIRST NOTICE UNDER SECTION 143(2) O F THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) ISSUED TO TH E ASSESSEE ON 24.08.2011. DURING THE COURSE OF SCRUTINY ASSESSMENT, THE ASSESSEE DIS CLOSED THE INCOME FROM SALE OF ANCESTRAL PROPERTY. THE ASSESSEE HAD SOLD LAND COM PRISING IN SURVEY NO.285/2 AT VILLAGE- NASHIK WITHIN THE MUNICIPAL LIMITS OF NASH IK CITY MEASURING 84R VIDE SALE DEED DATED 25.03.2010 TO 17 PERSONS FOR A CONSIDERA TION OF RS.98,00,000/-. THE ASSESSEE HAD NOT DISCLOSED THE PROFIT/ GAIN FROM SA LE OF SAID LAND IN THE RETURN OF INCOME. THE ASSESSING OFFICER TREATED THE SALE OF LAND AS ADVENTURE IN THE NATURE OF TRADE AND ASSESSED THE PROFIT FROM SALE OF LAND AS BUSINESS INCOME OF THE ASSESSEE. THE ASSESSING OFFICER MADE AN ADDITION O F RS.93,71,548/- AS BUSINESS INCOME ON SALE OF LAND. APART FROM ABOVE, THE ASSE SSING OFFICER MADE AN ADDITION OF RS.10,00,000/- ON ACCOUNT OF UNEXPLAINED SOURCE OF INCOME AND RS.5,00,000/- DEPOSITED IN THE BANK ACCOUNT OF ASSESSEE AS UNEXPL AINED MONEY AND DEEMED INCOME UNDER SECTION 69A OF THE ACT. AGGRIEVED BY THE ASSESSMENT ORDER DATED 26.03.2013 , THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). THE CIT(A) VIDE IMPUGNED ORDER CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER AND DISM ISSED THE APPEAL OF THE ASSESSEE. AGAINST THE FINDINGS OF CIT(A), THE ASSE SSEE IS IN SECOND APPEAL BEFORE THE TRIBUNAL. 3. SHRI NIKHIL PATHAK APPEARING ON BEHALF OF THE AS SESSEE SUBMITTED THAT THE CIT(A) PASSED THE IMPUGNED ORDER AT THE BACK OF THE ASSESSEE WITHOUT AFFORDING SUFFICIENT OPPORTUNITY OF HEARING. THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE HAD FILED AN APPLICATION FOR ADJOURNMENT IN THE MON TH OF APRIL BEFORE THE CIT(A) STATING THAT THE ASSESSEE WOULD NOT BE AVAILABLE FO R TWO MONTHS AS HE HAS GONE ON PILGRIMAGE. HOWEVER, THE CIT(A) FIXED THE APPEAL O F THE ASSESSEE IN QUICK SUCCESSION BY GRANTING SHORT ADJOURNMENTS. THE AD JOURNMENT LETTER WAS FILED ON 3 ITA NO.1933/PN/2014 BEHALF OF THE ASSESSEE, HOWEVER, THE CIT(A) DECIDED THE APPEAL OF THE ASSESSEE BY GIVING FINAL OPPORTUNITY OF HEARING ON 06.06.2014. 4. ON MERITS, THE LD. AR SUBMITTED THAT THE ASSESSE E HAD INHERITED LAND MEASURING 84R COMPRISING IN SURVEY NO.285/2 AT NASH IK. THE ASSESSEE SOLD THE LAND VIDE SALE DEED DATED 23 RD MARCH, 2010 TO 17 PERSONS FOR A CONSIDERATION OF RS.98,00,000/-. ADMITTEDLY, THE ASSESSEE DID NOT O FFER ANY TAX ON THE SALE OF LAND. DURING THE SCRUTINY ASSESSMENT PROCEEDINGS, THE ASS ESSING OFFICER TREATED THE GAIN ON SALE OF LAND AS BUSINESS INCOME. THE LD. AR POI NTED OUT THAT IN PARA 5.3 AND 5.5 OF THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS HELD THAT THE SALE OF LAND IS ADVENTURE IN THE NATURE OF TRADE. AT THE SAME TI ME, IN PARA 5.4 AND 5.5 OF THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS ALSO OB SERVED THAT THE LAND SOLD IS CAPITAL ASSET. THUS, THE ASSESSING OFFICER IS NO T SURE AS TO THE NATURE OF TRANSACTION ENTERED INTO BY THE ASSESSEE. HOWEVER, WHILE CONCLUDING HIS FINDING THE ASSESSING OFFICER ASSESSED THE GAIN ON SALE OF LAND WITHOUT GIVING THE BENEFIT OF INDEXATION. THUS, THE ASSESSING OFFICER ASSESSED T HE INCOME FROM SALE OF LAND AS BUSINESS INCOME. 5. THE LD. AR CONTENDED THAT THE LAND IN QUESTION W AS ACQUIRED BY THE FATHER OF THE ASSESSEE SHRI MADHUKAR BAPURAO MALI ON A FAMILY PARTITION OF THE ANCESTRAL PROPERTY AND HIS NAME WAS ENTERED INTO THE REVENUE RECORDS ON 24.06.1970. THE FATHER OF THE ASSESSEE THEREAFTER CONVERTED PART OF THE PROPERTY FOR NON-AGRICULTURAL PURPOSE TO BE USED FOR POULTRY FARM BUSINESS. THER EAFTER, ON THE APPLICATION FILED BY THE FATHER OF THE ASSESSEE, ANOTHER PARTITION WA S ORDERED BY THE TEHSILDAR, NASHIK. ACCORDING TO THE PARTITION, THE ASSESSEE G OT LAND COMPRISING IN SURVEY NO.285/2 MEASURING 84R. THE ASSESSEE SOLD THE LAND TO 17 PERSONS VIDE SINGLE SALE DEED DATED 23 RD MARCH, 2010 WITHOUT BIFURCATING OR PLOTTING THE PR OPERTY. THE ASSESSEE HAD NO INTENTION OF DEALING IN THE PROPERT Y. THE ASSESSEE PURCHASED 4 ITA NO.1933/PN/2014 ANOTHER PARCEL OF LAND WHICH IS CONTIGUOUS TO THE L AND SOLD BY THE ASSESSEE FROM HIS FATHER COMPRISING IN SURVEY NO.285/6 FOR A CONSIDER ATION OF RS.90,00,000/- VIDE SALE DEED DATED 23 RD MARCH, 2010. THE AREA OF LAND PURCHASED BY THE AS SESSEE FROM HIS FATHER IS 84R. THUS, THE AREA OF LAND SOL D AND PURCHASED BY THE ASSESSEE IS SAME. THE ASSESSING OFFICER WHILE FINALIZING TH E ASSESSMENT ORDER IN THE CASE OF THE ASSESSEES FATHER HAS ASSESSED THE INCOME FROM SALE OF LAND AS LONG TERM CAPITAL GAIN. THE LD. AR REFERRED TO THE ASSESSMEN T ORDER DATED 08.01.2015 PASSED UNDER SECTION 143(3) R.W.S. 147 OF THE ACT I N THE CASE OF SHRI MADHUKAR BAPURAO MALI (FATHER OF THE ASSESSEE) AT PAGES 59 T O 61 OF THE PAPER BOOK. THE LD. AR FILED APPLICATION FOR FURNISHING ADDITIO NAL EVIDENCE: (I) ASSESSMENT ORDER IN THE CASE OF SHRI MADHUKAR B APURAO MALI FOR ASSESSMENT YEAR 2010-11 DATED 08.01.2015, AND (II) VALUATION R EPORT FROM THE GOVERNMENT APPROVED VALUER DATED 15.07.2016. THE LD. AR STATE D THAT THE ASSESSEE HAS OBTAINED VALUATION REPORT IN RESPECT OF THE LAND SO LD AFTER THE PASSING OF THE IMPUGNED ORDER. THE ASSESSEE COULD NOT OBTAIN THE VALUATION REPORT DURING THE FIRST APPELLATE PROCEEDINGS, AS THE ORDER WAS PASSED AT T HE BACK OF THE ASSESSEE. THE LD. AR MADE TWO-FOLD SUBMISSIONS : (I) THE GAIN FROM SALE OF LAND SHOULD BE TREATED AS LONG TERM CAPITAL GAIN. (II) THE BENEFIT OF INDEXATION SHOULD BE GIVEN FOR DETERMINING THE CORRECT FAIR MARKET VALUE OF THE LAND. 6. PER CONTRA , SHRI P. L. KUREEL REPRESENTING THE DEPARTMENT VEH EMENTLY SUPPORTED THE FINDINGS OF CIT(A). THE LD. DR CONTE NDED THAT THE CIT(A) HAD GIVEN SUFFICIENT OPPORTUNITY OF HEARING TO THE ASSESSEE. HOWEVER, NEITHER THE ASSESSEE NOR HIS AUTHORIZED REPRESENTATIVE APPEARED BEFORE T HE CIT(A). THE LD. DR SUBMITTED THAT THE ASSESSEE IN HIS RETURN OF INCOME HAS NOT DISCLOSED INCOME FROM 5 ITA NO.1933/PN/2014 SALE OF LAND. THE AUTHORITIES BELOW AFTER ANALYZIN G THE FACTS OF THE CASE HAVE RIGHTLY HELD THE INCOME FROM SALE OF LAND AS BUSINESS INCOM E. THE LD. DR PRAYED FOR DISMISSING THE APPEAL OF THE ASSESSEE AND SUSTAININ G THE IMPUGNED ORDER. 7. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRES ENTATIVES OF THE RIVAL SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIE S BELOW. IT IS AN ADMITTED FACT THAT THE ASSESSEE HAS NOT DISCLOSED INCOME FROM SAL E OF LAND IN HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2010-11, WHEREAS THE ASSESSEE HAD SOLD THE LAND ON 23 RD MARCH, 2010 I.E. IN THE PERIOD RELEVANT TO ASSESSM ENT YEAR 2010-11. THE CONTENTION OF THE ASSESSEE IS THAT THE AUTHORITIES BELOW HAVE HELD THE INCOME FROM SALE OF LAND AS BUSINESS INCOME BY HOLDING THE SALE TRANSACTION AS ADVENTURE IN THE NATURE OF TRADE, WHEREAS IN THE CASE OF THE FATHER OF THE ASSESSEE, THE INCOME FROM SALE OF LAND HAS BEEN HELD TO BE LONG TERM CAPITAL GAIN. THE ASSESSEE HAS SOLD THE LAND TO THIRD PARTIES AND ON THE SAME DATE HAS PURC HASED THE LAND COMPRISING IN SURVEY NO.285/2 FROM HIS FATHER. THE ASSESSEE HAS DRAWN OUR ATTENTION TO THE ASSESSMENT ORDER PASSED IN THE CASE OF SHRI MADHUKA R BAPURAO MALI. WE OBSERVE THAT THE ASSESSMENT ORDER WAS PASSED IN THE CASE SH RI MADHUKAR BAPURAO MALI, FATHER OF THE ASSESSEE, AFTER THE PASSING OF THE IM PUGNED ORDER. THEREFORE, THE ASSESSEE COULD NOT TAKE THE BENEFIT OF SAME AT THE TIME OF ASSESSMENT PROCEEDINGS OR EVEN AT THE FIRST APPELLATE STAGE. FURTHER THE ASSESSEE HAS OBTAINED VALUATION REPORT OF THE LAND IN QUESTION FROM THE GOVERNMENT APPROVED VALUER SUBSEQUENT TO THE ORDER OF THE CIT(A). THE ASSESSEE HAS FILED A COPY OF ASSESSMENT ORDER IN THE CASE OF SHRI MADHUKAR BAPURAO MALI AND VALUATION RE PORT FROM APPROVED VALUER AS ADDITIONAL EVIDENCE. WE ARE OF THE CONSIDERED OPIN ION THAT BOTH THESE DOCUMENTS ARE RELEVANT FOR PROPER ADJUDICATION OF THE CASE. 8. A PERUSAL OF THE IMPUGNED ORDER SHOWS THAT THE O RDER HAS BEEN PASSED BY THE CIT(A) IN UNDUE HASTE BY FIXING THE DATE OF HEA RINGS IN QUICK SUCCESSION. THE 6 ITA NO.1933/PN/2014 APPEAL WAS FIRST LISTED FOR HEARING ON 08.04.2014. ON THE WRITTEN REQUEST MADE BY THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE, THE APPEAL WAS ADJOURNED TO 10.04.2014 AND THEREAFTER TO 16.04.2016. THE AUTHO RIZED REPRESENTATIVE OF THE ASSESSEE IN HIS LETTER REQUESTING FOR ADJOURNMENT H AD CATEGORICALLY STATED THAT THE ASSESSEE WOULD RETURN FROM PILGRIMAGE AFTER TWO MON THS. THE CIT(A) GRANTED FINAL OPPORTUNITY OF HEARING TO THE ASSESSEE ON 07.05.201 4, 15.05.2014 AND 06.06.2014 AND THEREAFTER PASSED THE IMPUGNED ORDER. IT IS AP PARENT THAT THE CIT(A) WHO IS A QUASI JUDICIAL AUTHORITY HAS VIOLATED THE PRINCIPLE S OF NATURAL JUSTICE IN DISPOSING OF THE APPEAL OF THE ASSESSEE IN A HURRIEDLY MANNER, W ITHIN A PERIOD OF TWO MONTHS FROM THE DATE OF FIRST HEARING. THE CIT(A) IN A HA STE TO DISPOSE OF THE APPEAL HAS VIOLATED THE RULE OF AUDI ALTERAM PARTEM (NO ONE SHOULD BE CONDEMNED UNHEARD). EARLY, DISPOSAL OF APPEALS IS APPRECIATED BUT NOT A T THE COST OF VIOLATING PRINCIPLES OF NATURAL JUSTICE. 9. IN THE FACTS AND CIRCUMSTANCES DISCUSSED ABOVE, WE ARE OF THE CONSIDERED VIEW THAT THIS APPEAL NEEDS RE-VISIT TO THE CIT(A). THE CIT(A) AFTER CONSIDERING THE FACTS OF THE CASE, DOCUMENTS ON RECORD, ADDITIONAL DOCUMENTS FILED BY THE ASSESSEE AND AFTER AFFORDING REASONABLE OPPORTUNITY OF HEARI NG TO THE ASSESSEE SHALL RE- ADJUDICATE THE APPEAL, IN ACCORDANCE WITH LAW. THE IMPUGNED ORDER IS SET-ASIDE AND THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATI STICAL PURPOSES. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON WEDNESDAY, THE 31 ST DAY OF AUGUST, 2016. SD/- SD/- ( R.K. PANDA ) ( VIKAS AWASTHY ) / ACCOUNTANT MEMBER # / JUDICIAL MEMBER PUNE ; DATED : 31 ST AUGUST, 2016. 7 ITA NO.1933/PN/2014 %&'#()!*!+( / COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-I, NASHIK; 4) THE CIT-I, NASHIK; 5) THE DR B BENCH, I.T.A.T., PUNE; 6) GUARD FILE. %, / BY ORDER , ' # //TRUE COPY// $ %& # '( / SR. PRIVATE SECRETARY ) '* , / ITAT, PUNE