Shri Atul Jeswani, Jabalpur V. Principal Commissioner of Income Tax-2, Jabalpur

ITA 23/JAB/2019

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 1705 (ITAT-JABALPUR)
• Duration Of Justice: 3 year(s) 3 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-07-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2014-2015
• Appeal Filed On: 17-04-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Capital asset; Assessment record; Set aside
• Section: 69; 54; 263; 143(3); 133(6); 250; 22

Judgement Text

1 | P a g e IN THE INCOME TAX APPELLATE TRIBUNAL JABALPUR BENCH, JABALPUR (through web-based video conferencing platform) BEFORE SHRI SANJAY ARORA, HON‟BLE ACCOUNTANT MEMBER & SHRI MANOMOHAN DAS, HON'BLE JUDICIAL MEMBER I.T.A. Nos. 22/JAB/2019 (Asst. Year: 2014-15) I.T.A. Nos. 23/JAB/2019 (Asst. Year: 2014-15) Appellant by : Shri G.N. Purohit, Sr. Advocate Respondent by : Smt. Neeraja Pradhan, CIT-DR Date of hearing : 19/07/2022 Date of pronouncement : 29/07/2022 O R D E R Per Bench: This is a set of two appeals by the two Assessees, being brothers, challenging the set aside of their assessments under section 143(3) of the Income Tax Act, 1961 („the Act‟ hereinafter) of even date (26/10/2016) for Assessment Year (AY) 2014-15 vide revision orders dated 27/12/2019 by the Principal Commissioner of Income Tax-1, Jabalpur („Pr. CIT‟ for short). Vishal Jeswani, 1425, Dr. Barat Compound, Napier Town, Jabalpur (MP) [PAN : ALPPJ 4882 M] vs. Principal Commissioner of Income Tax-2, Jabalpur. (Appellant) (Respondent) Atul Jeswani, 1425, Dr. Barat Compound, Napier Town, Jabalpur (MP) [PAN : AIAPJ 4848 D] vs. Pr.CIT-2, Jabalpur. (Appellant) (Respondent) ITA Nos. 22 & 23/JAB/2019 (AY: 2014-15) Vishal Jeswani & Anr. v. Pr. CIT 2 | P a g e 2. The relevant facts, identical for both the cases, are that the return/s of income was selected for scrutiny under CASS for examining “large investment in immovable property as compared to taxable income”, inasmuch as, as per the AIR information, the appellant-brothers had jointly purchased a property, being land situate at Ward No.3, C No.59, Swami Dayanand Saraswati Ward, Jabalpur, during the relevant year for a consideration of Rs. 50 lacs. The Assessing Officer (AO) verified the sources of investment for both the cases and, finding the same as satisfactorily explained, accepted the return/s of income. Subsequently, the Pr. CIT, examining the assessment record, found a substantial difference between the stated consideration (Rs. 50 lacs) and the stamp valuation (i.e., Rs. 127.56 lacs). Section 56(2)(vii)(b)(ii) deemed the same as the income of the purchaser, an aspect of the matter which the AO ought to have, in his view, examined, though had failed to. Though the assessee before him claimed that the property was in fact purchased and registered prior to 30/03/2013 upon making full payment, taking possession thereof, in view of the Pr. CIT the provision of Explanation-2(a) to s. 263(1) was clearly attracted as the AO had completely failed to make proper enquiry in the matter. He, accordingly, held as under: “8. As the provisions of section 56(2)(vii)(b)(ii) of the I.T. Act, 1961, was substituted by the finance Act 2013, which came into effect from 01/04/2014, and so also the case was selected on the basis of AIR information that assessee has made investment in property during the FY 2013-14 relevant to AY 2014-15, the Assessing Officer, ought to have examined the issue with regard to applicability of provisions of section 56(2)(vii)(b)(ii) of the I.T. Act, 1961 on the said transaction. Assessing Officer, should have made independent enquiry by calling for information u/s. 133(6) from the Registrar of properties. Thus, it is clear that the AO has neither made any enquiry nor applied his mind to properly examine the case, on the issue for which it was selected for scrutiny. The failure of the Assessing Officer to verify the above mentioned facts and non-application of mind for proper examination of the case has rendered the assessment order erroneous in so far as it is prejudicial to the interest of revenue. The intention of bringing this explanation in the statute was to clarify the expression "erroneous and prejudicial". Further, now the scope of exercising the power u/s 263 can legitimately be evolved if the AO has passed the ITA Nos. 22 & 23/JAB/2019 (AY: 2014-15) Vishal Jeswani & Anr. v. Pr. CIT 3 | P a g e assessment order without making inquiries or verification which should have been made. 9. I, therefore, am satisfied that the assessment order passed by the AO in this case is, erroneous in so far as it is prejudicial to the interest of the revenue because the AO had not conducted proper inquiry in the issues involved as laid down under Explanation-2 of section 263 of the Act. Thus, the same is set aside. The AO is directed to conduct proper inquiries, re-examine the issues and complete the assessment de-novo after affording adequate opportunity to the assessee of being heard. Aggrieved, the assessee/s is in appeal before the Tribunal. 3. Before us, Shri Purohit, the ld. counsel for the assessee, would take us through the sale deed to show that the sale was complete on 30/3/2013, i.e., the date on which it was presented for registration with the registering authority, being Sub-Registrar-1, Jabalpur. Its registration subsequently, i.e., on 07/6/2013, it was explained, was due to short payment of stamp duty at the time of presentation, though to no consequence. Though compulsorily registerable u/s. 17 of the Registration Act, 1908, so that the title to the property does not pass until the registration of the sale document has been effected, the same, upon registration, takes effect from the date of execution of the document and not from the time of registration, and for which he would read-out s. 47 of the Registration Act, forming part of the assessee‟s written submissions, even as explained by the Hon'ble Court in CIT vs. Mormasji Mancharji Vaid [2001] 250 ITR 542 (Guj) (FB). Further, full payment of consideration is not a condition precedent for the transfer of ownership under the Transfer of Property Act, 1982, toward which he would read out sec. 54 of the said Act. The sale is thus complete on 30/3/2013 itself, constituting transfer u/s. 2(47)(i) of the Act. The matter, he would continue, is squarely covered by the decision in Mormasji Mancharji Vaid (supra), which in fact stands relied upon by the Jabalpur Bench of the Tribunal in ITO vs. Rakhi Agrawal (in ITA No. 94/JAB/2018, dated 27/10/2020). He was, however, unable to answer a query by the Bench as to how could the AO be regarded as having ITA Nos. 22 & 23/JAB/2019 (AY: 2014-15) Vishal Jeswani & Anr. v. Pr. CIT 4 | P a g e verified the source/s of investment which, as per the sale deed, is vide cheques, three of which, aggregating to Rs. 30 lacs, were dated 20/04/2013, while the source of investment, as verified and confirmed by him, also include sources dated 01/01/2014 (for Rs. 10 lacs), and dated 28/05/2013 & 05/09/2013 (for Rs. 23.33 lacs), in the hands of Vishal Jeswani and Atul Jeswani respectively. The ld. DR would, on the other hand, rely on the impugned order, stating that the revisionary authority had taken a reasonable view in the matter considering a complete absence of inquiry by the AO in the matter, indicating non-application of mind. Shri Purohit would object, stating that the issue being legal, the enquiry, as stated for being made with the office of the Sub-Registrar, was, in view of admitted and proved facts, not required. The issue is primarily legal, covered by several judicial decisions, some of which stand cited, so that the ld. Pr. CIT ought to have, in any case, conducted the inquiry himself and arrived at a firm decision in the matter. We were accordingly pressed by him for doing so; the Tribunal having vast powers, with the issue being in fact covered by the order by it‟s Jabalpur Bench itself. 4. We have heard the parties, and perused the material on record. 4.1 Our first observation is that an enquiry into, and concomitant finding on, the applicability or otherwise of s. 56(2)(vii)(b)(ii) is within the scope of the limited scrutiny in the instant case. Any provision of law incident on the transaction under scrutiny, would fall to be considered, and the enquiry by the AO in the instant case, for example, could not be said to be limited to the applicability of s. 69 alone. Reference for the purpose may be made to the decisions by the Jabalpur Bench of the Tribunal in Vishal Sethi vs. ITO (in ITA No. 57/Jab/2019, dated 07/09/2020 and Nitin Sharma vs. Pr. CIT [2020] 60 CCH 415 (Jab). The assessee has fairly not contested this aspect. 4.2 Our second observation in the matter is that the arguments advanced and the case set up by Shri Purohit before us is de hors both the assessment as well as the ITA Nos. 22 & 23/JAB/2019 (AY: 2014-15) Vishal Jeswani & Anr. v. Pr. CIT 5 | P a g e impugned order. There has admittedly been no examination of the aspect of the applicability or otherwise of s. 56(2)(vii)(b)(ii) by the AO, whose order, in view of the apparent inconsistencies between the dates of the investment under reference and that of the stated source/s thereof, we find as wholly without application of mind. True, that aspect (i.e., source of investment) is no longer in issue. The same, however, while indicative of the AO‟s complete lack of application of mind, also points to the need to confirm if the two set of dates are in respect of the same property; there being no reference thereto (i.e., the details of the property) in the assessment order, so that the said and apparent inconsistency/s does raise a doubt in the mind. 4.3 As regards the revision order, the same cannot be regarded as infirm on account of remission of the matter for examination and adjudication by the AO considering that there has admittedly been no examination/consideration by him in the matter. It is trite law that the order becomes per se erroneous and prejudicial to the interests of the Revenue, liable for revision, in the absence or lack of enquiry, which ought to have been made in the facts and circumstances of the case, i.e., for non-application of mind (Malabar Industries Co. Ltd. vs. CIT [2000] 243 ITR 83 (SC); Gee Vee Enterprises vs. CIT (Addl.) [1975] 99 ITR 375 (Del), the latter rendered after a review of judicial precedents, including two by the Hon‟ble Apex Court itself. It is again trite law that once an order is found as liable for revision on that count, it is open for the revisionary authority to carry out the enquiry and arrive at a finding himself or cause the same to be done by the AO, i.e., pass an order, without fetter, as the facts and circumstances of the case justify; his power of revision being vast, case law on which is legion, also plain from the language of the statue. Remission for inquiry, as against doing it himself, is solely his preserve and prerogative, which we could not be called upon to interfere, much less exercise the said power itself. That would be in our view an excess of jurisdiction and transgression of power. The Hon‟ble Courts have, both in the context of 263, ITA Nos. 22 & 23/JAB/2019 (AY: 2014-15) Vishal Jeswani & Anr. v. Pr. CIT 6 | P a g e as in CIT v. Mahavar Traders [1996] 220 ITR 167 (MP)(where, in it‟s words, the Tribunal itself started making inquiries); CIT vs. Eastern Medikit Ltd. [201(1)] 337 ITR 56 (Del)(where the Tribunal proceeded to decide the issue on merits, converting itself into a court of first instance), as well as generally, disapproved such a course being adopted, being no more than a usurpation of power. In fact, even on merits, we find no case having been set-up or canvassed before the revisionary authority, for it to be contended, as was before us, that the revisionary authority ought to have under the circumstances decided the matter himself, even as the same would not extend to redoing the assessment himself (Shankar Construction Co. v. CIT (Addl.) [2001] 124 STC 265, 271 (Kar)). Toward this; the assessee having not placed any material on record, we have gone by his written submissions before the ld. Pr. CIT, which find reproduction in the impugned order. Even as observed during hearing, there is no whisper of s. 2(47) of the Act, much less the applicable sub-clause thereof, which is the starting point of the assessee‟s argument, therein. No case law stand cited before him. The argument assumed before us in the matter is thus without any factual basis. Sure, the matter is principally legal, but a legal issue could have several aspects to it. As we observe, though Shri Purohit would state that the matter at hand is covered by the decision in Mormasji Mancharji Vaid (supra), followed by the Tribunal in Rakhi Agrawal (supra), the latter does not follow the former. While the former is with reference to sec. 2(47)(i), the latter is with reference to 2(47)(vi), rendered after meeting the assessee‟s case u/s. 2(47)(i); the premise thereof being that the title does not pass until registration. Ownership of a property cannot, it needs to be appreciated, vest in two persons, i.e., the vendor/s and the vendee/s, at any given time. It is, for instance, on 30/3/2013 (or even 31/3/2013), either the assessee/s or the vendor who is the owner of the property. The actual reason for the delayed registration by the registering authority, and its legal implications, would also need to be determined. The provisions of the Stamp Act may have a bearing in the matter, i.e., with reference to the Registration Act. Further, the provisions of ITA Nos. 22 & 23/JAB/2019 (AY: 2014-15) Vishal Jeswani & Anr. v. Pr. CIT 7 | P a g e Registration and Other Relevant Laws (Amendment) Act, 2001 may also be relevant in the matter. Further still, the property under reference, as a perusal of the „sale deed‟, also read-out during hearing, shows, is a „lease‟, so that there can apparently be no „sale‟, which implies transfer of absolute rights, i.e., on freehold basis. That is, even on merits of the assessee‟s case before us, the matter has been, in the facts and circumstances of the case, rightly remitted by the ld. Pr. CIT to the file of the assessing authority for fresh consideration. Sure, the AO having not considered this aspect of the matter at all, there was no occasion for the assessee to clarify anything thereto, much less qua the date of transfer, which forms the fulcrum of his case/s. It does not, however, lie in the mouth of the assessee, who „explained‟ the source of the investment in property purchased during the year, to contend that the date of the said purchase falls in the immediately preceding year i.e., in the facts and circumstances of the case and the law in the matter. Even so, being admittedly germane, and an aspect not looked into, be not examined, which is what in effect the ld. Pr. CIT in exercise of his revisionary power requires the assessing authority to do. We may though, as a matter of abundant caution, clarify that it is not a case of approval of the impugned order on ground/s different from that assumed by the revisionary authority, which is impermissible, but merely explaining the untenability of the assessee‟s argument/case before us. 5. In view of the foregoing, we find no reason to interfere with the impugned order and, accordingly, decline to. We may though not be construed as having expressed any opinion in the matter. We decide accordingly. 6. In the result, the appeals by the assessees are dismissed. Order pronounced in open court on July 29 , 2022 Sd/- Sd/- (Manomohan Das) (Sanjay Arora) Judicial Member Accountant Member Dated: 29/07/2022 ITA Nos. 22 & 23/JAB/2019 (AY: 2014-15) Vishal Jeswani & Anr. v. Pr. CIT 8 | P a g e vr/- Copy to: 1. The Appellant: a) Vishal Jeswani; and b) Atul Jeswani, both r/o Dr. Barat Compound, Napier Town, Jabalpur 2. The Respondent: The Principal CI T-2, Jabalpur. 3. The CI T-D.R., I TAT, Jabalpur. 4. Guard File. By order (VUKKEM RAMBABU) Sr. Private Secretary, ITAT, Jabalpur.