Sri.Sanjith Sadasivan, Trivandrum V. The ITO, Trivandrum

ITA 205/COCH/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 3657 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 2 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 26-07-2018
• Assessment Year: 2012-2013
• Appeal Filed On: 16-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A DHANARAJ
• Section: 143(3); 54B; 54F; 263

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI CHANDRA POOJARI, AM & GEORGE GEORGE K., JM I .T . A. NO. 205 / COCH/ 2017 ASSESSMENT YEAR : 2012 - 13 SHRI S ANJITH SADASIVAN, SUKRATHAM C 2/1947(17) GOWREESHAPATTOM, PATTOM P.O., THIRUVANANTHAPURAM-695 004. [PAN:BGXPS 2552R] VS. INCOME TAX OFFICER, WARD - 1(3), THIRUVANANTHAPURAM. (ASSESSEE - A PPELLANT) (REVENUE - RESPONDENT) A SSESSEE BY SHRI MATHEW JOSEPH, CA REVENUE BY SHRI A. DHANARAJ, SR. DR D ATE OF HEARING 26/07/ 2018 DATE OF PRONOUNCEMENT 14 /0 8 /2018 O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE PR. COMMISSIONER OF INCOME TAX, TRIVANDRUM DATED 30/03/2017 PASSED U/S. 263 OF THE I.T. ACT. AND PERTAINS TO THE ASSESSMENT YEAR 2012-13. 2. THE FACTS OF THE CASE ARE THAT THE LATE ASSESSEE WAS DERIVING INCOME FROM LONG TERM CAPITAL GAINS OF SALE OF LAND FILED RETURN OF INCOME FOR THE ASSESSMENT YEAR 2012-13 ON 31/07/2012 DECLARING AN INCOME OF RS.66,31,050/- WHICH WAS REVISED ON 31/03/2014 DECLARING TOTAL INCOME OF RS.64,54,740/-. THE I.T.A. NO.205/C/2017 2 ASSESSMENT WAS COMPLETED AFTER SCRUTINY IN JUNE 2014 DETERMINING THE TOTAL INCOME AT RS.1,12,99,439/- AND AGRICULTURAL INCOME OF RS.12,500/-. THE TOTAL INCOME ASSESSED INCLUDED LONG TERM CAPITAL GAIN THAT ARISEN FROM TRANSFER OF AGRICULTURAL LAND. IN COMPUTING THE LONG TERM CAPITAL GAIN, EXEMPTION U/S. 54B TOWARDS INVESTMENT IN PURCHASE OF NEW AGRICULTURAL LAND AND EXEMPTION UNDER SECTION 54B TOWARDS INVESTMENT IN PURCHASE OF NEW AGRICULTURAL LAND AND EXEMPTION U/S. 54F TOWARDS PURCHASE OF RESIDENTIAL HOUSE WERE ALLOWED. 3. THE CIT NOTICED THAT THE ASSESSEE HAD PURCHASED 3.85 ACRES OF LAND IN ATTIPRA VILLAGE, TRIVANDRUM DURING THE PREVIOUS YEAR 2011-12 RELEVANT TO THE ASSESSMENT YEAR 2012-13, FOR A CONSIDERATION OF RS.76,14,302/- (VIDE DOCUMENT NO.3960/11) WHICH WAS CLAIMED AS AGRICULTURAL LAND AND ACCEPTED AS SUCH IN THE ASSESSMENT COMPLETED ON 19/06/2014 AND CLAIMED DEDUCTION U/S. 54F. ON VERIFICATION OF RECORDS AND ASSESSEES SUBMISSIONS AT THE TIME OF ASSESSMENT, IT WAS NOTICED THAT DEDUCTION U/S. 54F WAS CLAIMED ON PURCHASE OF LAND ALONE. THOUGH IT WAS CLAIMED THAT THE DEDUCTION FOR PURCHASE OF LAND WITH HOUSE, AS PER PAGE 24 OF THE DOCUMENT NO.3960/11 PLACED ON RECORD, THE BUILDING IS SAID TO BE DEMOLISHED BEFORE TRANSFER. THUS, IT WAS NOTICED THAT WITHOUT PROPER VERIFICATION, AN INELIGIBLE DEDUCTION WAS ALLOWED BY THE AO AT THE TIME OF ASSESSMENT. IN RESPECT OF THE CLAIM U/S. 54B, IN ADDITION TO THE AMOUNT OF RS.1,64,49,052/- INVESTED IN PURCHASE OF 79.11 ARE OF LAND AND RS.1,25,00,000/- IN CAPITAL GAIN ACCOUNT SCHEME, A LUMPSUM AMOUNT OF RS.2,25,90,288/- WAS ALSO CLAIMED I.T.A. NO.205/C/2017 3 TOWARDS IMPROVEMENT DONE IN ALL THE PURCHASED LAND PROPERTIES. AS PER THE PROVISIONS OF INCOME TAX ACT, EXEMPTION U/S. 54B WAS AVAILABLE ONLY FOR PURCHASE OF A LAND BEING USED FOR AGRICULTURAL PURPOSE WITHIN TWO YEARS FROM THE TRANSFER OF THE ORIGINAL ASSET. THE EXEMPTION IS NOT ALLOWABLE FOR IMPROVING A LAND PURCHASED TO MAKE IT USEFUL FOR AGRICULTURAL PURPOSE. HENCE, THE CIT HELD THAT ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION OF IMPROVEMENTS TO THE TUNE OF RS.2,25,90,288/-. 3.1 IT WAS FURTHER NOTICED THAT AS PER THE FAIR VALUE REGISTER OF THE GOVT. OF KERALA, THE LAND CLAIMED TO BE AGRICULTURAL IS SHOWN AS RESIDENTIAL PROPERTY. AS INFERRED FROM THE DOCUMENT NO.2047/1, THE ASSET WAS SOLD AFTER PROPERTY DEVELOPMENT AND CONSTRUCTION OF COMPOUND WALL BY THE SELLER. THE ASSESSEES CLAIM ON HAVING MADE SUBSTANTIAL IMPROVEMENTS MAINLY EARTH FILLING TO THE LAND ALSO CONFIRMED THE SAME. MOREOVER, ACCORDING TO THE CIT, THE LAND WAS SOLD TO M/S. NIKUNJAM CONSTRUCTIONS (P) LTD., A PROMINENT BUILDER. 3.2 THE CIT OBSERVED THAT THE AO FAILED TO VERIFY THE ABOVE IN RESPECT OF THE ASSET SOLD/PURCHASED, FROM THE DETAILS READILY AVAILABLE ON RECORD AND ALSO TO EXAMINE AS TO WHETHER ANY AGRICULTURAL ACTIVITY HAS BEEN CARRIED OUT IN THE LAND CLASSIFIED AS AGRICULTURAL. ACCORDING TO THE CIT, ABSENCE OF EXAMINATION OF THE ASPECTS ABOVE DURING THE COURSE OF ASSESSMENT PROCEEDINGS HAS RENDERED THE ASSESSMENT ORDER PASSED ON 19/06/2014 ERRONEOUS AND PREJUDICIAL TO THE I.T.A. NO.205/C/2017 4 INTERESTS OF THE REVENUE. A NOTICE WAS THEREFORE ISSUED TO THE ASSESSEE ON 17/03/2017 PROPOSING TO REVISE THE SAID ASSESSMENT BY INVOKING THE PROVISIONS OF SECTION 263 OF THE ACT. THE CASE WAS POSTED FOR HEARING ON 24/03/2017 AND LATER TO 27/03/2017. 3.3 THE LATTER NOTICE WAS RECEIVED BY DR. RANDHEER, SON-IN-LAW OF THE ASSESSEE ON 27/03/2017, HE FILED A REPLY TO NOTICE BUT ALSO INFORMED THE UNFORTUNATE DEMISE OF THE ASSESSEE ON 06/03/2017. HOWEVER, THE DUE DATE FOR COMPLETION OF REVISION PROCEEDINGS WAS 31/03/2017 AND THE MATTER NEEDED TO BE SPEEDED UP. THE LEGAL HEIRS WERE NOT AWARE THAT THE SAME NOTICE WAS SENT BY SPEED POST TO SMT. DHARMAJA SANJITH (WIFE) AND DAUGHTERS, ARCHANA SANJITH AND ATHIRA SANJITH. IT WAS SUBMITTED BY DR. RANDHEER THAT THE LETTER DATED 17/03/2017 WAS NOT SERVED AND THE POSTMAN INFORMED THAT THE SAME WAS RETURNED UNSERVED. IT WAS ALSO POINTED OUT THAT IN THE NOTICE, THE DATE OF COMPLETION OF ASSESSMENT WAS 19/06/2014 AND NOT 30/12/2014 AS GIVEN IN THE LETTER. IT WAS ALSO STATED THAT IN PLACE OF SOLD IN LINE 1 OF PARAGRAPH 2 OF NOTICE IT WAS PURCHASED. THE ERROR WAS CORRECTED WHEN NOTICES WERE ISSUED TO WIFE AND DAUGHTERS OF THE LATE ASSESSEE. 3.4 IN VIEW OF THE FOREGOING, THE CIT HELD THAT THE NECESSARY REQUIREMENTS FOR REVISION U/S. 263 OF THE ACT EXISTED IN THE CASE AND THE FINDINGS REVEAL THAT THE ASSESSMENT WAS ERRONEOUS IN SO FAR AS IT WAS PREJUDICIAL TO THE INTEREST OF THE I.T.A. NO.205/C/2017 5 REVENUE. IN ADDITION, ACCORDING TO THE CIT, TO MEET ENDS OF JUSTICE, LEGAL HEIRS NEED TIME TO RESPOND TO THE ISSUES INVOLVED. HENCE, THE CIT SET ASIDE THE ASSESSMENT FOR THE LIMITED PURPOSE OF RECOMPUTING CAPITAL GAINS INCLUDING ELIGIBILITY AND QUANTUM OF DEDUCTION U/S. 54B AND 54F AFTER EXAMINING ALL RELEVANT EVIDENCES AND COMPLIANCE TO STATUTORY REQUIREMENTS AND DIRECTED THE AO TO PASS NECESSARY ORDER GIVING EFFECT TO THIS ORDER AFTER GIVING THE LEGAL HEIRS OPPORTUNITY TO PRODUCE RELEVANT EVIDENCES AND OF BEING HEARD. 4. AGAINST THIS, THE LEGAL HEIR OF THE ASSESSEE IS IN APPEAL BEFORE US BY RAISING THE FOLLOWING GROUNDS OF APPEAL: I ) FOR THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT. ERRED IN SETTING ASIDE THE ASSESSMENT FOR THE LIMITED PURPOSE OF RECOMPUTING THE CAPITAL GAINS WITHOUT CONSIDERING THE ACTUAL FACTS OF THE CASE THE DETAILS OF WHICH WERE ALREADY EXAMINED BY THE ASSESSING OFFICER. THE ACTION OF THE LD. CIT WAS WHOLLY UNREASONABLE, UNCALLED FOR AND BAD IN LAW II) THE LEARNED CIT ERRED IN SETTING ASIDE THE ASSESSMENT FOR VERIFICATION OF THE RECORDS AND DOCUMENTS WHICH WERE ALREADY EXAMINED BY THE ASSESSING OFFICER. III) FOR THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER U/S 263 IS MERELY 'CHANGE IN OPINION'. THE ORDER U/S 143(3) PASSED BY THE LD. AO DOES NOT IN ANY WAY REPRESENT ERRONEOUS ORDER. THE ACTION OF THE LD. CIT WAS WHOLLY UNREASONABLE, UNCALLED FOR AND BAD IN LAW. IV) THAT THE ORDER U/S 263 PASSED IN THE NAME OF DECEASED ASSESSEE VERY BELATEDLY AFTER THE DEATH OF THE ASSESSEE WAS NOT IN ORDER AND AGAINST THE LEGALLY SETTLED POSITION BY VARIOUS HON'BLE TRIBUNAL AND HON'LE HIGH COURT. THE LEARNED CIT INITIATED THE PROCEEDINGS U/S 263, VERY BELATEDLY, WHEN IT REACHED TIME BAR ON 31.03.20I7. THAT THE PROPOSAL U/S 263 DATED 17/03/2017 ISSUED IN THE NAME OF THE APPELLANT WAS RETURNED BY THE POSTMAN FOLLOWING THE DEATH OF ADDRESSEE (APPELLANT) ON 06/03/2017. THE I.T.A. NO.205/C/2017 6 PROPOSAL RESENT TO THE LEGAL HEIRS WAS RECEIVED ONLY ON 31/03/2017, THEREBY THE LEGAL REPRESENTATIVES DID NOT GET ADEQUATE TIME TO RESPOND TO THE ISSUES INVOLVED BEFORE CIT. THE ACTION OF THE CIT SETTING ASIDE THE ASSESSMENT AND TO PROCEED AGAINST LEGAL HEIRS WAS WHOLLY UNREASONABLE AND BAD IN LAW, THEREBY END OF JUSTICE WAS NOT MET V) ANY OTHER GROUNDS THAT MAY BE ALLOWED AT TIME OF HEARING 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RECORD. IN THIS CASE, THE ASSESSEE EXPIRED ON 06/03/2017. THE CASE WAS INITIALLY POSTED FOR HEARING BY CIT ON 24/03/2017 BY NOTICE ISSUED U/S. 263 OF THE ACT DATED 17/03/2017. LATER ON, IT WAS POSTED TO 27/03/2017. THE NOTICE U/S. 263 OF THE ACT WAS REPLIED BY DR. RANDHEER, THE SON-IN-LAW OF THE ASSESSEE ON 27/03/2017 WHEREIN IT WAS STATED THAT THE ASSESSEE EXPIRED ON 06/03/2017. ONE MORE NOTICE WAS SENT BY SPEED POST TO THE LEGAL HEIRS, NAMELY, SMT. DHARMAJA SANJITH, WIFE OF THE DECEASED ASSESSEE AND HIS DAUGHTERS ARCHANA SANJITH AND ATHIRA SANJITH. IT WAS INFORMED BY DR. RANDHEER THAT THE NOTICE DATED 17/03/2017 WAS NOT SERVED AS PER THE INFORMATION SENT AND THE POSTMAN ALSO INFORMED THAT THE SAME WAS RETURNED UNSERVED. FINALLY, THE CIT PASSED THE ORDER U/S. 263 OF THE ACT ON 30/03/2017 IN THE FOLLOWING NAME AND ADDRESS OF THE ASSESSEE: SHRI SANJITH SADASIVAN, SUKRATHAM, TC 2/1947(17), GOWREESHAPATTOM, PATTOM P.O., THIRUVANANTHAPURAM-695 004. (IT IS INFORMED THAT THE PERSON HAD A SAD DEMISE ON 06.03.2017) I.T.A. NO.205/C/2017 7 5.1 AS SEEN FROM THE FACTS RECORDED BY THE CIT, THE CIT HAD THE KNOWLEDGE OF THE DEATH OF THE ASSESSEE, NAMELY SHRI SANJITH SADASIVAN PRIOR TO THE PASSING OF THE IMPUGNED ORDER U/S. 263 OF THE I.T. ACT. IT IS ALSO NOT IN DISPUTE THAT NOTICE AS CONTEMPLATED U/S. 159 OF THE I.T. ACT WAS SENT TO NONE OF THE LEGAL HEIRS OF THE DECEASED ASSESSEE. THE CIT WAS NEVER BOTHERED TO BRING THE LEGAL HEIRS ON RECORD. IN SUCH CIRCUMSTANCES, THE ORDER PASSED BY CIT U/S. 263 OF THE ACT DATED 30/03/2017 HAS NO LEGS TO STAND. AS HELD BY THE SUPREME COURT IN THE CASE OF CIT VS. AMARCHAND N SHROFF (48 ITR 59), THE ORDER OF THE CIT BECOMES NULLITY HAVING BEEN PASSED AGAINST THE DEAD PERSON. SINCE THIS IS A CASE WHERE AN ASSESSEE DIES PENDING ANY PROCEEDINGS UNDER THE ACT, THE PROVISIONS OF SECTION 159(2) OF THE I.T. ACT GETS ATTRACTED. IT IS THE DUTY OF THE AO/CIT TO ENSURE COMPLIANCE OF SECTION 159(2) OF THE I.T. ACT BEFORE THE ORDERS ARE PASSED. 5.2 IN VIEW OF THE ABOVE, THE ENTIRE PROCEEDINGS BEFORE THE CIT BECOMES NULLITY AND ACCORDINGLY, WE QUASH THE ORDER PASSED BY THE CIT U/S. 263 OF THE I.T. ACT. SINCE THE ASSESSEE SUCCEEDS IN THIS LEGAL GROUND OF APPEAL, WE ARE NOT ADJUDICATING THE OTHER GROUNDS OF APPEAL RAISED BY THE ASSESSEE BEFORE US AS THESE GROUNDS ARE ONLY ACADEMIC IN NATURE. I.T.A. NO.205/C/2017 8 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 14 TH AUGUST, 2018. SD/- SD/- (GEORGE GEORGE K.) (CHANDRA POOJARI) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: DATED: 14 TH AUGUST, 2018 GJ COPY TO: 1. SMT. DHARMAJA SANJITH, LEGAL HEIR OF SHRI SANJITH SADASIVAN, SUKRATHAM TC 2/1947(17), GOWREESHAPATTOM, PATTOM P.O., THIRUVANANTHAPURAM-695 004. 2. THE INCOME TAX OFFICER, WARD-1(3), THIRUVANANTHAPURAM. 3. THE PR. COMMISSIONER OF INCOME-TAX, THIRVANANTHAPURAM. 4. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 5. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T., COCHIN