Shri Ambalal Nanabhai Patel, Ahmedabad V. The ITO, Ward-4(2)(1), Ahmedabad

ITA 2283/AHD/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 4770 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 20-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R R MAKWANA
• Keywords: Reopening of assessment; Fair market value; Valuation report
• Section: 143(3); 250; 64; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD (CONDUCTING THROUGH VIRTUAL COURT) BEFORE SHRI AMARJIT SINGH, ACCOUNTANT MEMBER & MS. MADHUMITA ROY, JUDICIAL MEMBER ITA NO.2283/AHD/2018 (ASSESSMENT YEARS: 2010-11) AMBALAL NANABHAI PATEL 40, SWAMI AKHANDANAND SOCIETY, NILKANTH MAHADEV ROAD, RANNA PARK, GHATLODIYA, AHMEDABAD- 380061 VS. ITO WARD-4(2)(1) AHMEDABAD [PAN NO. ACHPP0125C] ( APPELLANT ) .. ( RESPONDENT ) APPELLANT BY : SHRI PRITESH SHAH, AR RESPONDENT BY : SHRI R. R. MAKWANA , SR. DR DATE OF HEARING: 28/09/2021 DATE OF PRONOUNCEMENT: 30/09/2021 O R D E R PER MS. MADHUMITA ROY - JM: THE INSTANT APPEAL FILED BY THE ASSESSEE IS DIRECT ED AGAINST THE ORDER DATED 25.10.2018 PASSED BY THE LD. CIT(A)-4, AHMEDABAD AR ISING OUT OF THE ORDER DATED 08.09.2017 PASSED BY THE ITO, WARD-4(2)(1), AHMEDAB AD UNDER SECTION 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERR ED AS TO THE ACT) FOR A.Y. 2010- 11. 2. THE ADDITION OF RS. 28,65,935/- ON THE BASIS OF VALUATION REPORT OF DISTRICT VALUATION OFFICER (DVO) AFTER REOPENING THE CASE UN DER SECTION 148 OF THE ACT IS THE SUBJECT MATTER BEFORE US. 3. THE LD. COUNSEL APPEARING FOR THE ASSESSEE DURIN G THE COURSE OF HEARING RAISED OBJECTION ON THE MAINTAINABILITY POINT OF REOPENING OF THE CASE UNDER SECTION 147 OF THE ACT. ON THIS ASPECT HE HAS ARGUED THAT THE REO PENING OF ASSESSMENT WAS BEYOND - 2 - ITA NO.2283/AHD/2017 AMBALAL NANABHAI PA TELVS. ITO A.Y. 2010-11 FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. IN THAT VIEW OF THE MATTER THE REOPENING IS NOT VALID AND LIABLE TO BE QUASHED AS ALSO ARGUED BY HIM. HIS FURTHER ARGUMENT IS THIS THAT THE REOPENING ON THE BASIS OF THE DVOS REPORT IS NOT JUSTIFIED ON THIS ASPECT HE HAS CITED SEVERAL JUDGMENTS COPY WHE REOF WERE ALSO ANNEXED TO THE PAPER BOOK FILED BEFORE US. THE ABOVE TWO GROUNDS WERE THE ADDITIONAL GROUNDS TAKEN BEFORE US. HE HAS MADE HIS FURTHER ARGUMENT ON ADMISSION OF ADDITIONAL GROUNDS AT THIS STAGE AND RELIED UPON THE JUDGMENT PASSED BY THE HONBLE APEX COURT IN THE CASE OF NATIONAL THERMAL POWER CO. LTD. VS. CIT REPORTED IN 64 CCH 1401; 157 CTR 249; 229 ITR 383. RESPECTFULLY RELYING UPO N THE RATION LAID DOWN IN THE SAID JUDGMENT OF NATIONAL THERMAL POWER CO. LTD. VS . CIT (SUPRA) WE ADMIT THOSE TWO ADDITIONAL GROUNDS MENTIONED ABOVE. APART FROM THAT THE DVOS REPORT WITHOUT REJECTION OF BOOKS IS NOT ACCEPTABLE, NEITHER CAN BE RELIED UPON WHILE MAKING ADDITION BY REVENUE HAS ALSO THE REGULAR GROUND RAISED BY THE APPELLANT BEFORE US THROUGH HI S LD. COUNSEL. HOWEVER, WE WOULD LIKE TO CONSIDER THE ISSUE OF MAINTAINABILITY OF THE REOPENING AT THE VERY THRESHOLD OF THE MATTER. 5. THE BRIEF FACTS LEADING TO THE CASE IS THIS THAT THE ASSESSEE FILED HIS RETURN OF INCOME ON 28.09.2010 SHOWING TOTAL INCOME AT RS. 4, 29,270/- AFTER CLAIMING DEDUCTION UNDER SECTION 80IB(10) OF THE ACT AMOUNTI NG TO RS. 2,01,72,958/-. BUT THE ASSESSEE DECLARED THE COST OF INVESTMENT IN PROPERT Y OF RS. 3,02,97,041/- WHEREAS THE DISTRICT VALUATION OFFICER (DVO) HAS ESTIMATED THE COST OF SUCH INVESTMENT AT RS. 3,31,62,976/-. SUCH COST OF INVESTMENT THOSE HAS B EEN UNDERESTIMATED TO THE TUNE OF RS. 28,65,935/- FOR THE YEAR UNDER CONSIDERATION. CONSIDERING SUCH FACT THE ASSESSMENT WAS REOPENED UNDER SECTION 147 OF THE AC T BY ISSUING NOTICE UNDER SECTION 148 ON 26.03.2017 AFTER RECORDING THE FOLLO WING REASONS UPON TAKING NECESSARY APPROVAL UNDER SECTION 151(1) OF THE ACT: - - 3 - ITA NO.2283/AHD/2017 AMBALAL NANABHAI PA TELVS. ITO A.Y. 2010-11 REASONS FOR THE BELIEF THAT THE INCOME HAS ESCAPED ASSESSMENT FOR RE-OPENING THE CASE U/S. 147 OF THE INCOME TAX ACT, 1961. IN THIS CASE, THE ASSESSEE DERIVES INCOME FROM THE BUSINESS OF CONSTRUCTION OF RESIDENTIAL FLATS/HOUSES, FILED HIS RETURN OF INCOME FOR THE A. Y. 2010-11 ON 28/9/2010 DECLARING INCOME OF RS.4,29,270/-, ASSESSMENT AS FINALIZED U/S.143(3) O N 15/3/2013 BY ACCEPTING THE RETURN OF INCOME AS ASSESSED INCOME OF RS.4,29,270/-. 2. ON VERIFICATION OF THE VALUATION REPORT, IT IS F OUND THAT THE DISTRICT VALUATION OFFICER HAS ESTIMATED THE COST OF INVESTMENT IN PROPERTY FOR A. Y.2010-11 AT DECLARED COST OF INVESTMENT BY THE ASSESSEE AT RS.3,02,97,041/-. THUS, THE ASSESSEE HA S UNDERESTIMATED THE COST OF INVESTMENT AT RS.28,65,935/- FOR A.Y. 2010-11. 3. IN VIEW OF THE ABOVE FACTS, I HAVE REASONS TO BE LIEVE THAT IN THIS CASE, THE ASSESSEE HAS UNDERESTIMATED THE COST OF INVESTMENT AT RS.28,65,9 35/- FOR A.Y. 2010-11, HENCE, AN AMOUNT OF RS.28,65,935/- HAS ESCAPED ASSESSMENT WITHIN THE ME ANING OF SECTION 147 OF THE IT. ACT, 1961 FOR THE A.Y. 2010-11. 4. I AM SATISFIED THAT THE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT AND THIS IS A FIT CASE FOR THE PROCEEDINGS U/S. 147 OF THE I.T. ACT, 1961. 6. THE ASSESSEES CASE IS THIS THAT WHEN FOUR YEARS FOR REOPENING OF SUCH ASSESSMENT FROM THE END OF SUCH RELEVANT ASSESSMENT YEAR 2010-11 COMPLETED ON 31.03.2015 THE CASE WAS REOPENED ON 26.03.2017 BY I SSUING OF NOTICE UNDER SECTION 148 OF THE ACT. IT IS RELEVANT TO MENTION THAT THE ORIGINAL SCRUTINY ASSESSMENT ORDER WAS PASSED ON 15.03.2013. SINCE THE AO HAS REOPENE D THE ASSESSMENT BEYOND FOUR YEARS FROM THE END OF RELEVANT ASSESSMENT YEAR 2010 -11 THE CONDITION PRECEDENT FOR RESORTING TO REOPENING OF THE ASSESSMENT UNDER SECT ION 147 OF THE ACT ARE NOT SATISFIED AND, THEREFORE, THE ENTIRE PROCEEDING IS VITIATED A ND, THUS, LIABLE TO BE QUASHED. 7. THE LD. DR SUBMITTED BEFORE US THAT THE REOPENIN G CAN BE MADE UNDER SECTION 149(1)(B) OF THE ACT WHEN HE HAS ESCAPED INCOME MOR E THAN 1 LAKH RUPEES. 8. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE PARTIES BUT WE FIND THAT SINCE THE ALLEGATION OF ESCAPEMENT OF INCOME IS MOR E THAN RS. 1 LAKH, THE REOPENING CANNOT BE SAID TO BE INVALID IN VIEW OF THE PROVISI ON OF SECTION 149(1)(B) OF THE ACT. THUS, THE GROUND OF MAINTAINABILITY OF THE REASSESS MENT PROCEEDING AS RAISED BY THE ASSESSEE FAILS. - 4 - ITA NO.2283/AHD/2017 AMBALAL NANABHAI PA TELVS. ITO A.Y. 2010-11 9. THE LD. COUNSEL APPEARING FOR THE ASSESSEE SUBMI TTED BEFORE US THAT ON THE BASIS OF THE DVOS REPORT THE REOPENING AS MADE BY THE REVENUE IS NOT JUSTIFIED. ON THIS ASPECT HE HAS RELIED UPON THE RESPECTIVE JUDGM ENT: GUJARAT HIGH COURT AAVKAR INFRASTRUCTURE COMPANY V.DCIT 67 TAXMANN.COM 39 ; 218 TAXMANN 644 ; 290 CTR 413. AKSHAR INFRASTRUCTURE (P) LTD. V. ITO 79 TAXMANN.COM 239 ; 246 TAXMAN 353 ; 393 ITR 658; 299 CTR 501. KISAN PROTEINS (P) LTD. V. ACIT 74 TAXMANN.COM ; 243 TAXMAN 1 1 : 292 CTR 345. MUNIR ISMAIL VORAJI V. ITO 82 TAXMANN.COM 92 ; 404 ITR 696. VINAYAK BUILDERS V. BD GARSAR (OR) SUCCESSOR 27 TAXMANN.COM 116 ; 346 ITR 39. DELHI HIGH COURT MAHASHAY CHUNNILAL V. DCIT 44 TAXMANN.COM 321 ; 225 TAXMAN 250 ; 362 ITR 314; 267 CTR 334. PRABHU DAYAL RANGWALA V. CIT 56 TAXMANN.COM 427 ; 231 TAXMANN 790 ; 373 ITR 596 ; 283 CTR 58. PUNJAB & HARYANA HIGH COURT CIT V. FREEDON BOARD & PAPER MILLS 57 TAXMANN.COM 383 ; 231 TAXMANN 719. CIT V. DEVKI DEVI 33 TAXMANN.COM 631 ; 344 ITR 721. ALLAHABAD HIGH COURT CIT V. VRINDABAN REAL ESTATE (P) LTD. 31 TAXMAN.COM 12 : 213 TAXMAN 92: 254 CTR 10. FUSION ELECTRONICS (P) LTD. V. CHIEF CIT 9 TAXMAN.COM 189. 10. FURTHER THAT THE DVOS REPORT WITHOUT REJECTION OF BOOKS OF ACCOUNT HAS WRONGLY BEEN RELIED UPON BY THE REVENUE WHILE MAKIN G ADDITION AS ALSO THE SUBMISSIONS MADE BY THE LD. COUNSEL FOR THE ASSESSE E. ON THIS ISSUE HE HAS RELIED UPON THE FOLLOWING JUDGMENTS: SUPREME COURT SARGAM CINEMA VS. CIT 197 TAXAMAN 203 ; 328 ITR 513; 241 CTR 179 GUJARAT HIGH COURT ME & MUMMY HOSPITAL VS. ACIT 45 TAXMANN.COM 248; 224 TAXMAN 65; 272 CTR 1. GUJARAT HIGH COURT GOODLUCK AUTOMOBILES (P) LTD. VS. ACIT 82 CCH 0331; 78 DTR 0104; 254 CTR 0001; 359 ITR 0306 PUNJAB & HARYANA HIGH COURT CIT VS. CHOHAN RESORTS 33 TAXMANN.COM 644; 359 ITR 394; 253 CTR 106 - 5 - ITA NO.2283/AHD/2017 AMBALAL NANABHAI PA TELVS. ITO A.Y. 2010-11 AGRA ITAT PRAHALAD KUMAR JINDAL VS. ACIT ITA NO. 137/AGR/2012 11. AS REGARDS THE ASPECT OF REOPENING OF ASSESSMEN T ON DVOS REPORT IS CONCERNED WE CONCLUDE THAT WHERE THE AO COMPLETED ASSESSMENT UNDER SECTION 143(3) MAKING CERTAIN ADDITION IN RESPECT OF UNEXPLAINED INVESTME NT HE COULD NOT REOPEN THE SAID ASSESSMENT FOR ENHANCEMENT OF SAID ADDITION MERELY ON THE BASIS OF THE REPORT OF THE DVO. IN THIS REGARD, WE ARE ENLIGHTENED BY THE RAT IO LAID DOWN IN THE MATTER DECIDED BY THE HONBLE JURISDICTIONAL HIGH COURT IN AKSHAR INFRASTRUCTURE PVT. LTD. VS. ITO, WARD-1(1) REPORTED IN (2017) 79 TAXMANN.COM 239 (GU JARAT). WE HAVE FURTHER CONSIDERED THE JUDGMENT PASSED BY THE HONBLE JURIS DICTIONAL HIGH COURT IN THE CASE OF MUNIR ISMAIL VORAJI VS. ITO, REPORTED IN (2017) 82 TAXMANN.COM 92 (GUJARAT) WHERE ON THE BASIS OF DVOS REPORT REOPENING NOTICE WAS ISSUED AND CHALLENGED BEFORE THE COURT. IT WAS FURTHER FOUND THAT NO FUR THER ENQUIRY WAS CONDUCTED TO FIND OUT FAIR MARKET VALUE, NEITHER WAS THERE ANY TANGIB LE MATERIAL AVAILABLE TO THE AO TO FORM AN OPINION THAT INCOME CHARGEABLE TO TAX HAS E SCAPED ASSESSMENT. ULTIMATELY SUCH REOPENING OF ASSESSMENT MERELY ON THE BASIS OF THE DVOS REPORT WAS HELD TO BE UNJUSTIFIED. WE FIND SIMILAR FACT IN THE CASE IN H AND WHICH HAS BEEN FAILED TO BE CONTROVERTED BY THE LD. DR BEFORE US. THEREFORE, R ESPECTFULLY RELYING UPON THE SAME WE FIND NO MERIT IN THE REOPENING THE ASSESSMENT UN DER SECTION 147 OF THE ACT MERELY ON THE BASIS OF THE DVOS REPORT. HENCE, THE SAME IS NOT MAINTAINABLE IN THE EYE OF LAW AND, THUS, HEREBY QUASHED. SINCE THE ASSESSEE S APPEAL IS ALLOWED BY US, ADDRESSING THE OTHER GROUNDS RAISED BY THE APPELLAN T BECOMES ACADEMIC. 12. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 30/09/2021 SD/- SD/- (AMARJIT SINGH) (MS. MADHUMITA ROY) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 30/09/2021 TANMAY - 6 - ITA NO.2283/AHD/2017 AMBALAL NANABHAI PA TELVS. ITO A.Y. 2010-11 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE PCIT- AHMEDABAD. 5. , ! ' , #$%% / DR, ITAT, AHMEDABAD 6. &' () / GUARD FILE. / BY ORDER, //TRUE COPY// / ( DY./ASSTT. REGISTRAR) !, #$ / ITAT, AHMEDABAD 1. DATE OF DICTATION 28.09.2021 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 28.09.2021 3. OTHER MEMBER. 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S 29.09.2021 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 30.09.2021 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER