Sh. Kanwardeep Singh, Ludhiana V. The Asstt. Commissioner of Income-tax, Ludhiana

ITA 201/ASR/2012

• Counselvise Citation: 20120914 RSA 2012
• Duration Of Justice: 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-11-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 08-11-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 22-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R L CHHANALIA
• Keywords: Difference of opinion; Change of opinion
• Section: 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO.201 (ASR)/2012 ASSESSMENT YEAR:2005-06 PAN :AYWPS8316B SH. KANWARDEEP SINGH VS. ASSTT. COMMR. OF INCOME-T AX, 2641, PHASE-I, URBAN ESTATE, CENTRAL CIRCLE-1, DOGRI, LUDHIANA. LUDHIANA. (APPELLANT) (RESPONDENT) APPELLANT BY:SH. SURINDER MAHAJAN, CA RESPONDENT BY:SH. R.L. CHHANALIA, DR DATE OF HEARING:08/11/2012 DATE OF PRONOUNCEMENT:22/11/2012 ORDER PER BENCH ; THIS APPEAL OF THE ASSESSEE ARISES FROM THE ORDER O F THE LD. CIT (CENTRAL), LUDHIANA, DATED 28.03.2012 FOR THE ASSES SMENT YEAR 2005-06 AGAINST THE ORDER PASSED UNDER SECTION 263 OF THE I NCOME TAX AC, 1961 ( IN SHORT, THE ACT). THE ASSESSEE HAS RAISED FOLLOWIN G GROUNDS OF APPEAL: 1. THAT ORDER U/S 263 OF THE ACT, PASSED BY LD. CI T(CENTRAL), IS ILLEGAL & WITHOUT JURISDICTION. 2. THAT LD. CIT HAS GROSSLY ERRED IN HOLDING THAT A SSESSMENT ORDER PASSED BY THE AO WAS ERRONEOUS AND PREJUDICIAL TO T HE INTEREST ITA NO.201(ASR)/2012 ASSESSMENT YEAR 2005-06 2 OF REVENUE. ACTION OF THE LD. CIT IN INVOKING THE P ROVISIONS OF SECTION 263 OF THE ACT IS ILLEGAL & BAD IN LAW. 3. (A) THAT THE LD. CIT HAS GROSSLY ERRED IN HOLDIN G THAT PURCHASE OF SHARE IN JYOTI CINEMA BUILDING HAS NOT BEEN EXAM INED DURING THE COURSE OF ASSESSMENT PROCEEDINGS WHEREAS VARIOU S QUERIES OF JYOTI CINEMA WERE RAISED DURING THE COURSE OF AS SESSMENT PROCEEDINGS & REPLIES TO THE SAME WERE FILED. B) THAT DIRECTIONS OF THE LD. CIT ARE AGAINST PRO VISIONS OF SECTION 263 OF THE ACT SINCE JYOTI CINEMA BUILDING PURCHASED STOOD DECLARED & ASSESSED IN THE HANDS OF ASSESSEE. 4. THAT THE ORDER OF THE LD. CIT(CENTRAL) U/S 263 I S ARBITRARY, UNJUST, IS BASED ON ASSUMPTIONS & PRESUMPTIONS AND THAT NO ERROR EXISTED OR PREJUDICE WAS CAUSED TO REVENUE, T HEREFORE, THE ORDER OF THE CIT(CENTRAL) LUDHIANA PASSED U/S 263 D ESERVES TO BE QUASHED. 5. THAT LD. CIT HAS GROSSLY ERRED IN SETTING ASIDE THE ASSESSMENT FRAMED WITH THE DIRECTIONS TO MAKE FRESH ASSESSMENT DE-NOVO AFTER PROPERTY EXAMINING THE ISSUES. NON ISSUANCE O F SPECIFIC DIRECTIONS FOR ASSESSMENT TO BE FRAMED CLEARLY PROV ES THAT IT IS A CASE OF ONLY CHANGE OF OPINION AND THE ASSESSMENT F RAMED IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST O F THE REVENUE. 6. THAT THE DIRECTIONS OF THE LD. CIT ARE ILLEGAL A ND BAD IN LAW SINCE FOR THE SAME TRANSACTION, PROVISIONS OF SECT ION 263 OF THE ACT HAVE BEEN INVOKED IN THE CASE OF SH. PARMINDER SINGH. 7. THAT THE DIRECTIONS OF THE LD. CIT ARE CONTRARY TO JUDGMENT OF HONBLE GUJRAT HIGH COURT & HONBLE MADRAS HIGH COU RT IN THE CASE OF CIT VS. SMT. MINALBEN S. PARIKH 215 ITR 81 (GUJ) AND VENKATA KRISHNA RICE CO. VS. CIT 163 ITR 129 (M AD) RESPECTIVELY WHEREIN IT HAS BEEN HELD THAT ACTION U /S 263 WHICH RESULT IN DOUBLE TAXATION IS NOT PERMITTED UNDER TH E LAW. 8. THAT THE ASSESSEE REQUESTS FOR LEAVE TO ADD OR A MEND THE GROUNDS OF APPEAL BEFORE THE APPEAL IS HEARD OR DIS POSED OFF. ITA NO.201(ASR)/2012 ASSESSMENT YEAR 2005-06 3 2. THE BRIEF FACTS ARE THAT ASSESSMENT IN THE PRES ENT CASE WAS COMPLETED UNDER SECTION 143(3)/153A OF THE ACT, BY THE AO VID E ORDER DATED 29.12.2009. THE LD. CIT (CENTRAL) LUDHIANA ISSUED A NOTICE TO THE ASSESSEE STATING THAT SHARE OF INVESTMENT OF THE ASSESSEE CO MES TO RS.1.67 CRORE AS AGAINST INVESTMENT OF RS.50 LACS SHOWN AS INVESTMEN T IN JYOTI CINEMA. IN THE SAID SHOW CAUSE NOTICE, THE LD. CIT(A) FURTHER STATED THAT PAYMENT OF RS.1.71 CORE HAS BEEN MADE BY THE BUYER TO THE SEL LER BY 19 DEMAND DRAFTS EACH VALUING RS.9 LAC AND PREPARED ON THE SAME DATE I.E. 08.04.2008 DRAWN ON CANARA BANK, PAHAR GANJ, NEW DELHI. THIS MODE O F PAYMENT THROUGH VARIOUS DEMAND DRAFTS IS QUITE SUSPICIOUS AND REFLE CTED THAT UNACCOUNTED MONEY MUST HAVE BEEN CHANALIZED BY MAKING THIS INVE STMENT BY THE BUYER. THE ASSESSEE SUBMITTED THE EXPLANATION, WHICH WAS N OT FOUND SATISFACTORY AND ACCORDINGLY THE LD. CIT(A) SET-ASIDE THE MATTER TO THE FILE OF THE AO WITH THE DIRECTION TO MAKE ASSESSMENT DE-NOVO. 3. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. IT WAS SUBMITTED BY THE LD. COUNSEL FOR THE ASSESSE E, MR. SURINDER MAHAJAN, CA THAT DURING ASSESSMENT PROCEEDINGS VARIOUS QUERI ES WERE RAISED BY THE AO ON THE PURCHASE OF JYOTI CINEMA BUILDING, WHICH REPLIES AND EXPLANATIONS WERE FILED, WHICH ARE PLACED AT PAGES 8 & 9 OF THE PAPER BOOK. ALONGWITH THIS REPLY, THE ASSESSEE HAD FILED COPY O F REGISTRATION DEED, COPY ITA NO.201(ASR)/2012 ASSESSMENT YEAR 2005-06 4 OF ACCOUNT OF ASSESSEE IN THE BOOKS OF M/S. KAPURTH ALA ESTATES PVT. LTD; COPY OF PURCHASE ACCOUNT OF M/S. JYOTI CINEMA BUILD ING, COPY OF SALE DEED OF JYOTI CINEMA BUILDING AND COPY OF BALANCE SHEET FOR THE YEAR ENDING 31 ST MARCH,2005 WHEREIN SALE HAS BEEN REFLECTED AND CERT IFICATE OF SH. SHAM SUNDER AGGARWAL, MUNICIPAL COUNSULAR ( AT PB 10 TO 26). THE ASSESSEE HAS EXPLAINED THAT HE ENTERED INTO AN ORAL AGREEMENT W ITH SH. SUKHJINDER SINGH S/O SH. JARNAIL SINGH, SANTOKH SINGH S/O SH. JARNAI L SINGH AND BALWINDER SINGH S/O SH. AMAR SINGH FOR MAKING COMMERCIAL COMP LEX. IT WAS AGREED BETWEEN THE PARTIES THAT SH. KANWARDEEP SINGH WILL BE WORKING PARTNER SINCE ALL OTHER PERSONS ARE NON-RESIDENTS AND VISIT ONCE IN A WHILE THIS COUNTRY. IN CONSIDERATION OF ABOVE, IT WAS AGREED B ETWEEN THE PARTIES THAT SINCE SH. KANWARDEEP SINGH WILL BE LOOKING AFTER TH E WHOLE BUSINESS AND HE WILL GET 1/3 RD IN THE PROPERTY BY PAYING RS.50 LACS AND ACCORDING LY IN THE REGISTRATION DEED SHARE OF KANWARDEEP SINGH WAS MEN TIONED AS 1/3 RD AGAINST PAYMENT OF RS.50 LACS. THE LD. COUNSEL SUBMITTED TH AT AFTER A SHORT PERIOD, DISPUTE AROSE AND IT WAS DECIDED THAT KANWARDEEP SI NGH WILL BE PAID RS. 65 LACS IN FULL AND FINAL SETTLEMENT OF HIS SHARE AND ACCORDINGLY SALE DEED WAS EXECUTED BY KANWARDEEP SINGH IN FAVOUR OF OTHER CO- OWNER, SH.SUKHJINDER SINGH S/O SH.JARNAIL SINGH, SANTOKH SINGH S/O SH. J ARNAIL SINGH AND BALWINDER SINGH S/O SH. AMAR SINGH, WHO WERE THE OR IGINAL BUYERS WITH ITA NO.201(ASR)/2012 ASSESSMENT YEAR 2005-06 5 HIM. IF IT IS ASSUMED THAT HIS SHARE OF INVESTMENT SHOULD HAVE BEEN RS.1.67 CRORES AS AGAINST RS. 50 LAC REFLECTED BY HIM THEN SALE OF HIS SHARE SHOULD NOT HAD BEEN FOR RS.65 LAC. IT WAS EXPLAINED THAT PAYME NT MADE BY 19 DEMAND DRAFTS OF RS. 9 LAC EACH ON THE SAME DAY, DRAWN ON CANARA BANK, HAD BEEN MADE BY OTHER CO-OWNERS, WHICH GETS SUPPORT FROM TH E FACT THAT WHEN SH. KANWARDEEP SINGH DISPOSED HIS SHARE, HE ALSO GOT PA YMENT IN THE SHAPE OF DEMAND DRAFT OF RS.9 LAC EACH DRAWN ON CANARA BANK, NEW DELHI. 4. ON THE BASIS OF FACTS ON RECORD AND SUBMISSIONS MADE BY BOTH THE PARTIES, WE ARE OF THE VIEW THAT TO INVOKE THE PROV ISIONS OF SECTION 263 OF THE ACT, THE ORDER OF THE AO SHOULD BE ERRONEOUS AND PR EJUDICIAL TO THE INTEREST OF REVENUE AND THE TWIN CONDITIONS SHOULD CO-EXIST. WE ARE CONVINCED WITH THE SUBMISSIONS OF THE LD. COUNSEL FOR THE ASSESSEE THAT ORDER PASSED AFTER CONDUCTING ENQUIRIES IN ALL THE MATTERS CANNOT BE H ELD TO BE ERRONEOUS OR PREJUDICIAL BECAUSE EVERY LOSS OF REVENUE AS A CONS EQUENCE OF AN ORDER OF AO CANNOT BE TREATED AS PREJUDICIAL TO THE INTEREST OF REVENUE. FROM THE PERUSAL OF THE ORDER PASSED U/S 263 OF THE ACT IN T HE CASE OF THE ASSESSEE AND SUBMISSIONS OF THE LD. COUNSEL FOR THE ASSESSEE AND THE ARGUMENTS OF THE LD. DR, WE ARE OF THE CONSIDERED VIEW THAT THE AO OF TH E ASSESSEE HAS MADE ALL THE ENQUIRIES OF TRANSACTIONS OF PROPERTY CARRIED O UT BY THE ASSESSEE. OUR ITA NO.201(ASR)/2012 ASSESSMENT YEAR 2005-06 6 VIEWS ARE ALSO FORTIFIED BY THE FOLLOWING CASE LAWS RELIED UPON BY THE LD. COUNSEL FOR THE ASSESSEE: I) MALABAR INDUSTRIAL CO. LTD. VS. CIT (2000) 243 ITR 83 (SC) II) CIT VS. ARVIND JEWELLERS (2003) 259 ITR 502 ( GUJ) III) CIT VS. SUNBEAM AUTO LTD. (2011) 332 ITR 167 IV) CIT VS. VINOD KUMAR GUPTA (2007) 165 TAXMAN 225 (P &H) 5. IN VIEW OF OUR FINDINGS HEREINABOVE, WE ALLOW AL L THE GROUNDS OF THE ASSESSEE. THUS, THE APPEAL OF THE ASSESSEE IS ALLOW ED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN ITA NO.201(ASR)/2012 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22ND NOVEMBER, 2012. SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 22ND NOVEMBER, 2012 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:SH. KANWARDEEP SINGH, LUDHIANA 2. THE ACIT, CC-1, JALANDHAR. 3. THE CIT(A) 4. THE CIT 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) ITA NO.201(ASR)/2012 ASSESSMENT YEAR 2005-06 7 INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.