Sh. Khusro Irshad, New Delhi V. ITO, Baghpat

ITA 2115/DEL/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 4722 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 23-05-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 18-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T VASANTHAN
• Keywords: Reopening of assessment; Sale consideration of property below Jantri Value; Capital asset; Principle of natural justice; Fair market value; Reason to believe
• Section: 50C; 142(1); 147; 148; 139

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER I.T.A.NO. 2115 /DEL/20 16 AY: 2007 - 08 SH. KHUSRO IRSHAD C/O SH. SANKALP ANIL SHARMA, G-8, JAIN BHAWAN, 18/12, PUSA LANE, WEA KAROL BAGH, NEW DELHI 5 (PAN: AAAP19934P) VS. ITO, WARD - BARAUT BAGHPAT (APPELLANT) (APPELLANT) (APPELLANT) (APPELLANT) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) ASSESSEE BY : SH. SALIL AGGARWAL, ADV. DEPARTMENT BY : SH. T. VASANTHAN, SR. DR ORDER ORDER ORDER ORDER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 16.2.2016 OF THE LD. CIT(A), MEERUT PERTAINING TO A SSESSMENT YEAR 2007-08 ON THE FOLLOWING GROUNDS:- 1. THAT THE ID COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED IN LAW AND ON FACTS IN UPHOLDING THE ASSESSMENT FRA MED BY THE LD. ITO, WARD - BARAUT (BAGHPAT) U/S 143(3)/147 OF THE L.T. ACT, 1961 IN MAKING AN ADDITION OF RS. 24,57,627/- BY TAKING REC OURSE TO THE PROVISIONS OF SECTION 147 R/W SEC.148 OF THE I.T. A CT, 1961. 2 1.1 THAT THE REASSESSMENT AS FRAMED U/S 143(3)/147 OF THE LT. ACT IS WHOLLY ILLEGAL AND WITHOUT JURISDICTION AS T HE CONDITIONS LAID DOWN UNDER PROVISO TO SECTION 147 FOR A VALID ASSUM PTION OF JURISDICTION HAVE NOT BEEN FULFILLED. THE ID AO HAS FAILED TO BRING ANY MATERIAL ON RECORD THAT THE ALLEGED ESCAPEMENT OF I NCOME WAS BY REASON OF THE FAILURE ON THE PART OF THE ASSESSEE T O MAKE A RETURN U/S 139 OR IN RESPONSE TO A NOTICE ISSUED U/S 142(1) OR SECTION 148 OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSA RY FOR HIS ASSESSMENT. 1.2 THAT THE REASSESSMENT AS FRAMED BY THE ID AO I S WHOLLY ILLEGAL AND UNSUSTAINABLE IN AS MUCH AS NO VALID MA TERIAL OR BASIS EXISTED ON RECORD ON THE DATE OF ISSUE OF NOTICE U/ S 148 TO FORM A REASON TO BELIEVE THAT ASSESSEE'S INCOME FOR THE AS SESSMENT YEAR UNDER CONSIDERATION ESCAPED ASSESSMENT AND THAT TO BY REASON OF THE ASSESSEE NOT TO DISCLOSE FULLY AND TRULY ALL MA TERIAL FACTS. 1.3 THAT THE ID AO HAS GROSSLY ERRED IN NOT APPLYI NG HIS MIND AND MAKING NECESSARY ENQUIRIES BEFORE FORMING A REASON TO BELIEVE THAT THE TRANSFER OF LAND WOULD ATTRACT PROVISIONS OF SE CTION 50C OF THE IT ACT WITHOUT APPRECIATING THE FACT THAT THE FULL VAL UE OF CONSIDERATION 3 CANNOT BE CONSTRUED AS THE MARKET VALUE BUT AS THE PRICE SETTLED BY THE PARTIES TO THE SALE. 1.4 THAT THE REASSESSMENT AS FRAMED OTHERWISE TOO IS WHOLLY ILLEGAL AND UNSUSTAINABLE AS NO VALID APPROVAL HAS BEEN OBTAINED AS PROVIDED U/S 151(2) OF THE LT. ACT, 1961 2. THAT THE LD. CIT(A) HAS FAILED TO ACKNOWLEDGE AS SESSEE'S SUBMISSIONS PRESENTED BEFORE HIS GOODSELF AND THE L D. AO REGARDING SEEKING AN APPROVAL FROM THE RELEVANT JUR ISDICTION. 2.1 THAT NO SUCH ADVERSE FINDING HAS BEEN NOTED BY THE LD. CIT(A) ABOUT THE OBJECTION RAISED BY THE ASSESSEE I N HIS REJOINDER TO THE REMAND REPORT FOR THE APPROVAL OF ISSUING THE N OTICE U/S 147/148 OF THE LT. ACT, 1961 BY ACIT, RANGE - 2, WH EN THE ASSESSEE'S CASE WAS LYING WITH ACIT, RANGE -1. 3. THAT IN ANY CASE AND WITHOUT PREJUDICE TO THE AB OVE, THE ID CIT(A) HAS GROSSLY ERRED IN LAW AND ON FACTS BY ACC EPTING THE FAIR MARKET VALUE OF THE PROPERTY AS ON 01.04.1981 AS AP PLIED BY THE LD. AO. 3.1 THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FA CTS BY NOT CONSIDERING THE VALUATION ADOPTED BY THE GOVERNMENT APPROVED 4 VALUER AND REJECTING THE DOCUMENTS AS BROUGHT ON RE CORD BY THE ASSESSEE, WITH NO APPLICATION OF HIS MINE AND WITHO UT ASSIGNING ANY RATIONALE BEHIND DOING SO. 4. THAT THE LD CIT(A) HAS FAILED TO ACKNOWLEDGE THA T THE SAID LAND WAS NOT COVERED WITHIN THE PURVIEW OF SECTION 2(14)(III)(B) OF THE I.T. ACT, 1961 BY MERELY NOTING THAT THE LAND IS SI TUATED WITHIN THE MUNICIPAL LIMITS OF BAGHPAT. 4.1 THAT LD. CIT(A) HAS FAILED TO ACKNOWLEDGE ASSES SEE'S SUBMISSIONS, THE CASE LAWS HE RELIED ON AND THE DOC UMENTARY EVIDENCES AND HAS BARRED OF BEING GIVEN REASONABLE OPPORTUNITY BEFORE RESORTING TO THE BELIEF FOR UPHOLDING THE AD DITION OF RS. 24,57,627/- BY APPLYING THE PROVISIONS OF SECTION 5 0C OF THE I.T. ACT,1961. 4.2 THAT THE LD. CIT{A} HAS FAILED TO APPRECIATE TH E FACT THAT BAGHPAT WAS NOT UNDER THE NOTIFIED AREA AS PER CBDT NOTIFICATION 9447 DATED 06.01.1994 WHICH FOSTERS THE BELIEF THAT THE SAID LAND IN QUESTION IS BEYOND THE LIMIT AS PRESCRIBED U/S 2 (14)(III}(A} OF THE I.T. ACT, 1961, AS IT CEASES TO BE A CAPITAL ASSET. 5 5. THAT THE LD. CIT{A} ERRED IN ACCEPTING THE LONG TERM CAPITAL GAIN AS COMPUTED BY THE ASSESSEE BY REJECTING THE L ITIGATION EXPENSES AND OTHER DOCUMENTARY EVIDENCES AS SHOWN B Y THE ASSESSEE RIGHTFULLY CLAIMING THE PROPERTY TO BE DIS PUTED. IT IS, THEREFORE, PRAYED THAT THE REASSESSMENT PROC EEDINGS AS INITIATED AND COMPLETED BE HELD ILLEGAL AND WITHOUT JURISDICTION. THAT IF IT MAY, AT THE LEAST, THE FILE BE RESTORED BACK TO THE AO AND A PROPER REASONABLE OPPORTUNITY BE GIVEN TO MAKE THE ENDS OF NATURAL JUSTICE MEET. THE IMPUGNED ORDER PASSED BE SET ASID E BEING BAD IN LAW AND IN ANY CASE, THE ADDITION OF RS.24,57,627/- BE DELETED. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E SOLD A LAND MEASURING 0.695 HECTARES FOR A SALE CONSIDERATION OF RS. 8,00 , 000/- ON 12.03.2007 AND ON THE BASIS OF INFORMATION THAT THE CIRCLE RATE OF PROPERTY SOLD BY ASSESSEE AS PER STAMPING AUTHORITY WAS RS. 27,00,000/-, THE AO ISSU ED NOTICES DATED 26.06.2008, 04.07.2008, 11.02.2013, 23.05.2013 AND 04,06.2013 AND REPLIES THEREOF WERE ALSO FILED BY ASSESSEE DATED 1 0.06.2008, 04.08.2008, 28.08.2013, 30.05.2013 AND 06.11.2913. THEREAFTER, THE AO ISSUED NOTICE UNDER SECTION 148 OF THE INCOME TAX ACT, 1961 (HERE INAFTER REFERRED AS THE ACT) DATED 20.12.2013 AND REASONS RECORDED WERE PROVIDED TO ASSESSEE ON 23.01.2014, WHEREIN, ASSESSEE FILED OBJECTIONS TO R EOPENING OF ASSESSMENT 6 DATED 16.04.2014 AND 26.05.2014. HOWEVER, THE AO F AILED TO DISPOSE OF THE OBJECTIONS VIDE A SPEAKING ORDER, HOWEVER, AO MEREL Y REJECTS THE OBJECTIONS SO RAISED BY ASSESSEE IN FINAL ASSESSMENT ORDER DATED 15.11.2014 MAKING AN ADDITION OF RS. 24,57,627/- PASSED U/S. 143(3)/147 OF THE I.T. ACT, 1961 ON ACCOUNT OF DEEMED LONG TERM CAPITAL GAIN UNDER SECT ION 50C OF THE ACT. AGAINST THE ASSESSMENT ORDER, THE ASSESSEE APPEALED BEFORE THE LD. CIT(A), WHO VIDE HIS IMPUGNED ORDER DATED 16.2.2016 HAS DISMISS ED THE APPEAL OF THE ASSESSEE ON THE LEGAL GROUND AND ON OTHER GROUND ON MERITS AS WELL. AGGRIEVED WITH THE IMPUGNED ORDER, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 3. DURING THE HEARING, LEARNED COUNSEL OF ASSESSEE SH. SALIL AGGARWAL, ADVOCATE, APPEARED AND ARGUED THAT NON DISPOSAL OF OBJECTIONS THROUGH A SPEAKING ORDER IS AN ILLEGALITY IN LAW AND IS AGAIN ST THE MANDATE OF JUDGMENT OF HON'BLE APEX COURT IN THE CASE OF GKN DRIVESHAFTS V S ITO REPORTED IN 259 ITR 19 AND FOR THE AFORESAID PROPOSITION HE SOUGHT RELIANC E ON FOLLOWING JUDGMENTS BY FOLLOWING THE COPIES OF THE DECISIONS/JUDGMENTS. (I) PCLT VS M/S TUPPERWARE INDIA (P) LTD. (DELHI H IGH COURT) REPORTED IN 284 CTR 68. (II) ARVIND MILLS VS LTD. VS ACW (GUJARAT HIGH COU RT) REPORTED IN 270 ITR 469. 7 (III) GARDEN FINANCE LTD. VS ACIT (GUJARAT HIGH CO URT) REPORTED IN 268 ITR 48. (IV) ITO VS M/S M.L. CREATIONS (ITAT DELHI) IN IT A NO. 4009/DEI/2016. 4. ON THE CONTRARY, THE LEARNED SR. DR, SH. T. VA SANTHA, OBJECTED TO THE ABOVE ARGUMENT OF ASSESSEE AND SUBMITTED THAT NON D ISPOSAL OF OBJECTIONS VIDE A SPEAKING ORDER UNDER SECTION 147 OF THE ACT IS A MERE IRREGULARITY AND CAN BE CURED BY REFERRING THE MATTER BACK TO THE FILE OF L EARNED AO. 5. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORDS ESPECIALLY THE ORDERS OF THE AUTHORITIES BELOW. I FIND THAT ASSESS EE VIDE GROUND NOS. 1 TO 1.4 HAS SPECIFICALLY CHALLENGED THE PROCEEDINGS SO INITIATE D UNDER SECTION 147 OF THE ACT AND MORE SO, THE NON DISPOSAL OF OBJECTIONS BY THE AO THROUGH A SEPARATE SPEAKING ORDER. SINCE THE SAID GROUND IS A LEGAL IN NATURE, THEREFORE, THE SAME SHOULD BE DECIDED FIRST. 5.1 THAT AFTER GOING THROUGH THE PAPER BOOK FILED BY ASSESSEE AND ASSESSMENT ORDER PASSED BY AO, IT IS APPARENT THAT ASSESSEE F ILED OBJECTIONS TO REOPENING OF ASSESSMENT VIDE REPLIES DATED 16.04.2014 AND 26. 05.2014 (AT PAGES 27 AND 28-30 OF PAPER BOOK FILED BY ASSESSEE) AND ADMITTED LY AO HAS NOT PASSED ANY SPEAKING ORDER AGAINST THE SAID OBJECTIONS SO FILED BY ASSESSEE, WHICH IS A MANDATORY REQUIREMENT AS HAS BEEN HELD BY HON'BLE APEX COURT IN THE CASE OF 8 M/S GKN DRIVESHAFTS (INDIA) LTD VS ITO REPORTED IN 259 ITR 19. I FURTHER FIND THAT THE SAID LEGAL ISSUE IN DISPUTE IS NO MORE RES IN TEGRA, AS THE ITAT, SMC-3, NEW DELHI IN THE CASE OF ITO VS M/S M.L. CREATIONS HAS QUASHED THE REOPENING OF ASSESSEE ON ACCOUNT OF NON DISPOSAL OF OBJECTIONS B Y AO AND IN THE PROCESS THE ITAT HAS CONSIDERED ALL THE JUDGMENTS SO CITED BY T HE LEARNED COUNSEL OF ASSESSEE. THE RELEVANT FINDINGS RECORDED BY ITAT IN THE AFORESAID CASE IS AS UNDER: '6.1 ON GOING THROUGH THE AFORESAID FINDING OF THE LD. CIT(A) ON THE LEGAL ISSUE. I FIND THAT LD. CLT(A) BY RESPECTFULLY FOLLOWING THE JUDGMENT OF THE HON'BLE SUPREME COURT I.E. IN THE C ASE OF GKN DRIVESHAFTS INDIA LTD. 259 ITR 19 (SC) AND FURTHER FOLLOWING THE DECISION OF THE HON'BLE GUJARAT HIGH COURT IN THE C ASE OF ARVIND MILLS LTD. VS. ACWT (2004) 270 ITR 469 (GUJ.) AND H AS RIGHTLY OBSERVED THAT AO HAS NOT PASSED THE SPEAKING ORDER IN DISPOSING OF THE ASSESSEE'S OBJECTIONS AGAINST THE NOTICE ULS. 1 48 OF THE I. T. ACT, BEFORE PROCEEDING WITH THE ASSESSMENT, HENCE, HE HE LD THAT THE SUBSEQUENT ASSESSMENT ORDER IS BAD IN LAW AND DESER VING OF BEING QUASHED. 5.2 ON GOING THROUGH THE AFORESAID DECISIONS, I A M OF THE CONSIDERED VIEW THAT THE LEGAL ISSUE IN DISPUTE IS SQUARELY COVERED BY T HE AFORESAID 9 DECISIONS/JUDGMENTS, HENCE, RESPECTFULLY FOLLOWING THE JUDGMENTS OF HON'BLE SUPREME COURT IN THE CASE OF GKN DRIVESHAFTS INDIA LTD REPORTED IN 259 ITR 19 AND PCLT VS TUPPERWARE INDIA LTD. (DELHI HIGH COURT ) REPORTED IN 284 CTR 68 AND OF ITAT DELHI IN THE CASE OF ITO VS M/S M.L. C REATIONS (ITAT DELHI) IN ITA NO. 4009/DEI/2016, I QUASH THE ASSESSMENT ORDER DAT ED 15.1L2014 PASSED BY AO ON ACCOUNT OF NON DISPOSAL OF OBJECTION UNDER SE CTION 147 OF THE ACT. SINCE I HAVE ALREADY QUASHED THE ASSESSMENT ORDER, AS AFORE SAID, HENCE, IT IS NOT NECESSARY TO ADJUDICATE UPON THE GROUNDS ON MERITS. 6. IN RESULT, THE APPEAL FILED BY ASSESSEE IS ALLOW ED. ORDER PRONOUNCED IN THE OPEN COURT ON 31/08/2017. S SS SD DD D/ // /- -- - [ [[ [H.S. SIDHU H.S. SIDHU H.S. SIDHU H.S. SIDHU] ]] ] JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER DATE: 31/08/2017 SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES