BHALCHANDRA A RAKVI (HUF), MUMBAI V. ITO 20(1)(2), MUMBAI

ITA 2374/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8658 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-10-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 01-10-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 24-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: K SHIVARAM; PARAG S SARLA
• Keywords: Cost of acquisition; Valuation report; Assessment record
• Section: 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B , MUMBAI BEFORE SHRI B. R. JAIN, AM AND SHRI VIVEK VARMA, JM ITA NO. : 2374/MUM/2011 ASSESSMENT YEAR : 2006-07 BHALCHANDRA A. RAKVI (HUF) C/O. SANJAY RAKVI, FLAT NO.704, NISARG CO-HOUSING SOCIETY LTD., DAHISAR (W), MUMBAI-400 068 PAN NO: AADHS 9229 D VS. I.T.O. 20(1)(2) MUMBAI (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K. SHIVARAM & SHRI PARAG S. SARLA RESPONDENT BY : SHRI MOHIT JAIN DATE OF HEARING : 01.10.2012 DATE OF PRONOUNCEMENT : 10.10.2012 ORDER PER B. R. JAIN, A.M. : THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER D ATED 27.12.2010 OF LD. CIT(A)-31, MUMBAI BY RAISING THE FOLLOWING G ROUNDS IN APPEAL :- LEGAL 1. THE LD. CIT(A) FAILED TO APPRECIATE THE FACT THAT T HE ASSESSING OFFICER DID NOT HAVE JURISDICTION TO ISSUE THE NOTI CE U/S.148 AND HENCE REASSESSMENT ORDER IS BAD IN LAW. 2. WITHOUT PREJUDICE TO ABOVE, THE LD. CIT(A) FAILED T O APPRECIATE THE FACT THAT NO RECORDED REASONS WERE FURNISHED TO THE APPELLANT AND HENCE REASSESSMENT ORDER IS BAD IN LAW. ITA NO :2374/MUM/2011 M/S. BHALCHANDRA A. RAKVI (HUF) 2 ON MERITS 3. THE LD. CIT(A) FAILED TO APPRECIATE THE FACT THAT T HE LONG TERM CAPITAL GAINS WERE NOT AT ALL TAXABLE IN THE IMPUGN ED ASSESSMENT YEAR. 4. THE LD. CIT(A) ERRED IN CONFIRMING THE 1/4 TH LONG TERM CAPITAL GAIN OF 10 PLOTS AT `. 75,19,012/- INSTEAD OF `. 28,07,693/-, WITHOUT CONSIDERING THE DETAILS FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. A. THE LD. CIT(A) ERRED IN TAKING THE 1/5 TH SALE CONSIDERATION OF 10 PLOTS AT `. 1,10,00,000/- INSTEAD OF `. 66,50,000/- WHICH IS AS PER THE AGREEMENT. THE CIT(A) FAILED TO CONS IDER THE CONFIRMATION GIVEN BY MR. SANJAY PUNAMIYA. B. THE LD. CIT(A) ASSESSING OFFICER ERRED IN TAKING TH E 1/5 TH COST OF ACQUISITION AS ON 01.04.1981 AT `. 7,00,400/- (I.E. 200/- PER SQ. MTS) INSTEAD OF `. 7,73,100/- AS PER THE VALUATION REPORT FILED DURING THE COURSE OF ASSESSM ENT PROCEEDINGS. 5. ON MERITS THE APPELLANT DENIES ITS LIABILITY TO THE LEVY OF PENAL INTEREST U/S.234A, 234B AND 234C. 2. THE ASSESSEE HAS ALSO MOVED AN APPLICATION DATED 02.03.2012 FOR ADMISSION OF ADDITIONAL GROUNDS AS UNDER :- LEGAL GROUNDS 1. THE LD. CIT(A) FAILED TO APPRECIATE THAT THE REASON S WERE RECORDED AS 26.10.2007 I.E. AFTER THE ISSUE OF NOTICE U/S.14 8 DT. 16.10.2007, AND HENCE THE ENTIRE REASSESSMENT IS BAD IN LAW AND THE ORDER IS LIABLE TO BE QUASHED. 2. WITHOUT PREJUDICE TO ABOVE, EVEN THE REASONS RECORD ED ARE WITHOUT APPLICATION OF MIND AND WITHOUT FOLLOWING THE DUE P ROCESS OF LAW. 3. WITHOUT PREJUDICE TO ABOVE, THE LD. CIT(A) FAILED T O APPRECIATE THE FACT THAT THE NOTICE U/S.148 WAS ISSUED BY ITO, WAR D 2(1), THANE, WHEREAS SUBSEQUENTLY REASSESSMENT WAS MADE BY ITO-2 0(1)(2), MUMBAI. AS THE ASSESSING OFFICER WHO ISSUED NOTICE U/S.148 DID NOT HAVE JURISDICTION THE REASSESSMENT IS BAD IN LA W AND LIABLE TO BE QUASHED. 3. HAVING HEARD PARTIES ON THE ADMISSION OF ADDITIO NAL GROUNDS WE FIND THAT THE GROUND NO. 1 RAISED IN THE APPEAL MEMO COV ERS THE ENTIRE CONTROVERSY THAT IS SOUGHT TO BE RAISED THROUGH THE ADDITIONAL GROUNDS BY ITA NO :2374/MUM/2011 M/S. BHALCHANDRA A. RAKVI (HUF) 3 THE ASSESSEE. THE SAME BEING INFRUCTUOUS ARE, THER EFORE, NOT REQUIRED TO BE ADMITTED. ACCORDINGLY, THE ASSESSEES APPLICATI ON FOR ADMISSION OF ADDITIONAL GROUNDS IN APPEAL STANDS DISMISSED. 4. ON THE LEGAL GROUND NO. 1 IN APPEAL, THE ASSESSE ES CASE IS THAT A NOTICE U/S.148 OF THE INCOME TAX ACT, 1961 HEREINAF TER REFERRED TO AS THE ACT HAS BEEN ISSUED BY THE ASSESSING OFFICER ON 16 .10.2007 WITHOUT RECORDING REASONS THERETO. THE INFORMATION SOUGHT THROUGH RTI APPLICATION HAS REVEALED THAT THE REASONS WERE RECO RDED SUBSEQUENTLY ON 26.10.2007. SINCE THE REASONS WERE NOT RECORDED PR IOR TO ISSUANCE OF NOTICE U/S.148 OF THE ACT, THE REASSESSMENT BECOMES INVALID. 5. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESEN TATIVE (DR) PRODUCED THE ASSESSMENT RECORD. HE FAIRLY ADMITS TH E FACT THAT THE ASSESSEE HAS OBTAINED INFORMATION UNDER RIGHT TO IN FORMATION ACT WITH RESPECT TO ISSUANCE OF NOTICE U/S.148 OF THE ACT AN D RECORDING OF REASONS THERETO. IT IS ALSO CORRECT THAT THE ASSESSING OFF ICER DID NOT RECORD THE REASONS PRIOR TO ISSUANCE OF NOTICE U/S.148 OF THE ACT IN THIS CASE. 6. HEARD PARTIES WITH REFERENCE TO MATERIAL ON RECO RD. THE REQUIREMENT OF MANDATE AS CONTAINED U/S.148(2) OF THE ACT IS T HAT THE ASSESSING OFFICER SHALL, BEFORE ISSUING ANY NOTICE UNDER THIS SECTION, RECORD HIS REASONS FOR DOING SO. THE ASSESSING OFFICER THUS I S BOUND TO RECORD REASONS FOR ISSUANCE OF NOTICE U/S.148(2) OF THE AC T. THE LANGUAGE OF SECTION 148(2) DOES NOT PERMIT RECORDING OF REASONS AFTER THE DATE OF ISSUANCE OF NOTICE. IN THE CASE AT HAND, ADMITTEDL Y THE NOTICE U/S.148 HAS BEEN ISSUED ON 16.10.2007, WHEREAS THE REASONS HAVE BEEN RECORDED SUBSEQUENTLY ON 26.10.2007, A DATE SUBSEQUENT TO IS SUANCE OF NOTICE ON 16.10.2007. THIS FACT HAS BEEN VERIFIED FROM THE A SSESSMENT RECORD PRODUCED BY THE LD. DR BEFORE US. SINCE THE REASON S HAVE NOT BEEN RECORDED PRIOR TO ISSUANCE OF NOTICE U/S.148 OF THE ACT, THE NOTICE SO ITA NO :2374/MUM/2011 M/S. BHALCHANDRA A. RAKVI (HUF) 4 ISSUED IS HEREBY QUASHED AND ASSESSMENT SO MADE BEC OMES INVALID. THIS VIEW FINDS SUPPORT FROM THE JUDGMENT RENDERED BY TH E HON'BLE GUJARAT HIGH COURT IN THE CASE OF RAJOO ENGINEERS LTD. VS. DY. CIT [2008] 218 CTR (GUJ) 53. ACCORDINGLY, THE GROUND NO. 1 RAISED IN APPEAL BY THE ASSESSEE STANDS ALLOWED. 7. SINCE THE REASSESSMENT HAS BEEN HELD INVALID WHA TEVER FOLLOWS THEREAFTER SHALL ALSO BECOME INVALID AND ACCORDINGL Y IT IS NOT CONSIDERED NECESSARY TO RENDER ANY DECISION ON THE MERITS OF T HE OTHER GROUNDS RAISED IN APPEAL IN THE LIGHT OF THE JUDGMENT RENDERED BY HON'BLE CALCUTTA HIGH COURT IN THE CASE OF RAWATMAL HARAKCHAND V. CIT [19 81] 129 ITR 346 (CAL). 8. IN THE RESULT, THE ASSESSEES APPEAL STANDS ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON 10.10.2012. SD/- SD/- - ( VIVEK VARMA ) ( B. R. JAIN ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT: 10.10.2012 COPY FORWARDED TO : 1. THE APPELLANT, 2. THE RESPONDENT, 3. THE C.I.T. 4. CIT (A) 5. THE DR, - BENCH, ITAT, MUMBAI //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI ROSHANI