GAURAV MATHRAWALA, MUMBAI V. CIT 27, NAVI MUMBAI

ITA 2378/MUM/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4457 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 30-10-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 27-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revision of order; Salary income; Source of fund; Assessment record
• Section: 143(3); 54F; 142(1); 56; 263

Judgement Text

GAURAV MATHRAWALA ITA 2378 /M/201 5 1 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G , MUMBAI . , , BEFORE SHRI D. KARUNAKARA RAO , ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA , JUDICIAL MEMBER ITA NO. : 2378 /MUM/20 1 5 (ASSESSMENT YEAR :20 1 0 - 11 ) GAURAV MATHRAWALA , BUNGLOW NO. 1, GULAB VIEW, DR. C GIDWANI ROAD, CHEMBUR, MUMBAI - 400 074 .: PAN: AEWPM 7671 M VS COMMISSIONER OF INCOME TAX - 27 , 6 TH FLOOR, VASHI RAILWAY STATION, NAVI MUMBAI - 400 703 (APPELLANT (RESPONDENT) APPELLANT BY : SHRI PARESH SHA PARIA RESPONDENT BY : MS S PADMAJA SHRI SATTYAJIT MANDAL /DATE OF HEARING : 30 - 10 - 201 5 / DATE OF PRONOUNCEMENT : 06 - 01 - 201 6 ORDER , . . : PER AMIT SHUKLA, J M : THE A FORESAID APPEAL HA S BEEN FILED BY THE ASSESSEE AGAINST IMPUGNED ORDER DATED 16 . 02 . 201 5 , PASSED BY PRINCIPAL COMMISSIONER OF INCOME TAX - 27 MUMBAI , U/S 263 SETTING ASIDE THE ASSESSMENT ORDER PASSED U/S 143(3) DATED 18.03.2013 FOR THE ASSESSMENT YEAR 2010 - 11, ON THE GROUND THAT IT IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE . 2. THE BRIEF FACTS ARE THAT, ASSESSEE IS AN INDIVIDUAL WHO HAS SHOWN INCOME FROM SALARY, CAPITAL GAIN AND INCOME FROM OTHER SOURCES . THE RETURN OF INCOME WAS FILE D ON 19.07.2010 AND SUCH A GAURAV MATHRAWALA ITA 2378 /M/201 5 2 RETURN OF INCOME WAS SUBJECTED TO SCRUTINY PROCEEDINGS AND ASSESSME NT ORDER U/S 143(3) WAS PASSED ON 18.03.2013 , ACCEPTING THE RETURN OF INCOME OF RS. 19,17,408/ - . LATER ON, THE LD. CIT ON THE PERUSAL OF THE ASSESSMENT RECORDS FOUN D THAT ASSESSEE HAS CLAIMED EXEMPTION U/S 54/54F OF RS. 47,27,400/ - IN THE COMPUTATION OF LONG - TERM - CAPITAL - GAIN. HE NOTED THAT, DURING THE RELEVANT FINANCIAL YEAR 2009 - 10, THE ASSESSEE HAD SOLD 50,000 UNQUOTED SHARES ON 30.05.2009 RESULTING IN TO NET LONG - TERM - CAPITAL - GAIN OF RS. 29,75,004/ - . APART FROM THAT, THE ASSESSEE HA D ALSO SOLD A FLAT A T AIROLI ON 22.10.2009 ON WHICH THERE WAS A NET LONG - TERM - CAPITAL - GAIN OF RS. 17,52,396/ - . THE AGGREGATE OF SUCH LONG - TERM - CAPITAL - GAIN WAS AT RS. 47,27,401/ - WHICH WAS CLAIMED AS EXEMPT ON ACCOUNT OF INVESTMENT MADE IN PURCHASE OF A RESIDENTIAL PROPERTY. THE FACTS QUA THE ISSUE ARE THAT THE ASSESSEE HAD EXECUTED AN AGREEMENT FOR PURCHASE OF A RESIDENTIAL PROPERTY FROM DOSTI GROUP ON 06.05.2009 FOR A CONSIDERATION OF RS.1,09,25,395/ - WHICH WAS REGISTERED ON 18.05.2009. SIMILARLY, THE ASSESSEE HAD MADE ANOT HER AGREEMENT WHICH WAS EXECUTED ON 31.03.2010 FOR PURCHASE OF FLAT AT HIRANANDANI MAITRY PARK FOR A CONSIDERATION OF RS. 1,72,00,000/ - . THE LD. CIT IN THE SHOW CAUSE OBSERVED THAT, ASSESSEE HAS NOT SPECIFICALLY STATED THE NAME OF THE PROPERTY AGAINST WHIC H EXEMPTION U/S 54F HAS BEEN CLAIMED. IF IT IS PRESUMED THAT EXEMPTION IS CLAIMED FOR THE FLAT AT DOSTI, THEN LTCG ARISING FROM SALE OF SHARES WOULD NOT QUALIFY FOR EXEMPTION U/S 54F , AS THE ASSESSEE HAS PURCHASED ANOTHER FLAT AT MAITRY PARK WITHIN 2 YEARS I.E. ON 31.03.2010. IF IT IS ASSUMED THAT, EXEMPTION U/S 54F IS AVAILED FOR THE PURCHASE OF FLAT AT M AITRY PARK , THEN THE FACT REMAINS THAT ON THE DATE OF SALE OF SH ARES , I.E. MAY 2009, THE ASSESSEE HAD MORE THAN ONE RESIDENTIAL FLATS I.E. FLAT AT DOSTI A ND ANOTHER FLAT AT AIROLI WHICH WAS SOLD IN OCTOBER, 2009. THUS, DUE TO OWNERSHIP OF TWO FLATS ON THE DATE OF SALE OF SHARES, THE LONG - TERM - CAPITAL - GAIN FROM SALE OF SHARES IS NOT ELIGIBLE FOR EXEMPTION U/S 54F AGAINST HOUSE PROPERTY AT MAITRY GAURAV MATHRAWALA ITA 2378 /M/201 5 3 PARK AND TO THAT EXTENT , EXEMPTION U/S 54F AGAINST LTCG FROM SALE OF SHARES OF RS. 29,75,004/ - WAS NOT PROPER. 3. IN RESPONSE TO THE SHOW CAUSE NOTICE DATED 21.01.2014, THE ASSESSEE SUBMITTED THAT, DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE ASSESSEE VIDE V ARIOUS LETTERS HAD SUBMITTED ALL THE DETAILS OF SALE AND PURCHASE OF SHARES; PROOF OF PURCHASE AND SALE FOR AIROLI PROPERTY; PROPERTY DOCUMENTS FOR PURCHASE OF FLAT AT DOSTI ALONG WITH SOURCE T HEREOF; PROOF FOR ADVANCE GIVEN FOR THE PROPERTY AT HIRANANDANI MAITRY PARK ALONG WITH THE SOURCE THEREOF; BANK STATEMENT ; AND WORKING OF LTCG. THUS, IT WAS SUBMITTED THAT, ALL THESE DETAILS WERE BEFORE THE AO AND THAT TO BE IN RESPONSE TO THE VARIOUS QUERIES RAISED DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS FROM TIME TO TIME . APART FROM THAT, THE ASSESSEE HAD ALSO ANNEXED ALL THE DOCUMENTS WHEREBY, THE ASSESSEE HAD SUBMITTED THE DETAILS ALONG WITH THE REPLY RELATING TO THE CAPITAL GAINS WHICH HAS BEEN TABULATED BY THE ASSESSEE IN THE FOLLOWING MANNER: - 4. THUS, IT WAS SUBMITTED THAT, THERE HAS BEEN PROPER APPLICATION OF MIND BY THE AO AND, THEREFORE, IT CANNOT BE HELD THAT IMPUGNED ASSESSMENT ORDER PASSED BY THE AO IS WITHOUT ANY GAURAV MATHRAWALA ITA 2378 /M/201 5 4 APPLICATION OF MIND OR IS ERRONEOUS. IT WAS FURTHER SUBMITTED THAT, THE ASSESSEE HA D PURCHASED THE PROPERTY AT DOSTI ON 06.05.2009 WHICH WAS REGISTERED ON 18.05.2009 FOR A CONSIDERATION OF RS. 1,09,25,395/ - AGAINST WHICH EXEMPTION U/S 54/54F WAS CLAIMED. THE OTHER PROPERTY FOR WHICH ADVANCE PAYMENT WAS MADE I.E. FOR THE PROPERTY AT HIRAN ANDANI MAITRY PARK, THE ASSESSEE HAD ONLY MADE ADVANCE PAYMENT WHICH WAS IN THE JOINT NAME OF ASSESSEE AND HIS MOTHER , MRS. TORAL B. MATHRAWALA. THUS, THERE WAS NO VIOLATION OF ANY CONDITION LAID DOWN U/S 54F. AO ONLY AFTER VERIFYING THESE FACTS HA D ALLOWE D THE EXEMPTION U/ 54F ON THE LTCG. AFTER CLARIFYING THE FACTS, THE ASSESSEE REFERRED TO VARIOUS DECISIONS AND SUBMITTED THAT, THE ASSESSMENT ORDER IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF THE REVENUE . A SSESSEES DETAILED REPLY IN THIS REGAR D HAS BEEN PLACED IN THE PAPER BOOK FROM PAGES 19 TO 32. 5. HOWEVER, THE LD. CIT HELD THAT, THE AO HAS NOT VERIFIED THE FACTS IN DETAILS AND HAS PASSED THE ORDER WITHOUT MAKING ANY PROPER INVESTIGATION OR ENQUIRIES, THEREFORE, THE ASSESSMENT ORDER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE AND ACCORDINGLY, HE SET ASIDE THE ASSESSMENT ORDER AND DIRECTED THE AO TO EXAMINE THE SAID ISSUE IN DETAIL. 6. BEFORE US, THE LD. COUNSEL AFTER REITERATING THE ENTIRE FACTS, DREW OUR ATTENTION TO VARIOUS NOTICES AND QUERIES RAISED BY THE AO DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS WITH REGARD TO THE DETAILS OF LTCG EARNED AND THE PURCHASE OF THE PROPERTIES / FLATS WHILE EXAMINING THE CLAIM OF EXEMPTION U/S 54/54F. HE SUBMITTED T HAT ONCE , THE AO HAS SPECIFICALLY CALLED FOR THE DETAILS AND ASSESSEE HAS IN RESPONSE FILED ALL THE DOCUMENTARY EVIDENCES, THEN IT CANNOT BE SAID THAT IMPUGNED ASSESSMENT ORDER HAS BEEN PASSED WITHOUT APPLICATION OF MIND OR ENQUIRY . ON THIS GROUND ALONE, HE SUBMITTED THAT ORDER PASSED BY THE CIT U/S 263 CANNOT BE SUSTAINED. HE FURTHER SUBMITTED THAT, THE ASSESSEE HAS CLAIMED GAURAV MATHRAWALA ITA 2378 /M/201 5 5 EXEMPTION ONLY ON THE FLAT PURCHASE AT DOSTI WHICH WAS DONE IN THE MONTH OF MAY, 2009 AND THE OTHER PROPERTY TH E ASSESSEE HAD ONLY GIVEN ADVANCE IN WHICH HE HELD THE PROPERTY IN THE JOINT OWNERSHIP WITH HIS MOTHER, IN ANY CASE, THE SALE OF SHARES WAS DONE ON 30.05.2009 AND ASSESSEE HAD PURCHASED THE PROPERTY ON 18.05.2009 AND HENCE THE ASSESSEE WAS LIABLE FOR EXEMP TION U/S 54F. THUS, THE ASSESSEE HA D RIGHTLY CLAIMED THE EXEMPTION U/S 54F AND ACCORDINGLY , ORDER PASSED BY THE AO ALLOWING SUCH EXEMPTION CANNOT BE HELD TO BE PREJUDICIAL TO THE INTEREST OF THE REVENUE. IN SUPPORT OF HIS CONTENTIONS, HE HAS FILED CATENA O F CASE LAWS AND COMPILATION OF SEPARATE PAPER BOOK. 7. ON THE OTHER HAND, LD. DR SUBMITTED THAT, APPLICATION OF MIND BY THE AO HAS TO BE SHOWN EITHER IN THE ASSESSMENT ORDER OR FROM THE RECORDS. THERE IS NO SPECIFIC APPLICATION OF MIND ON SECTION 54F. TH E LD. CIT HAS MERELY DIRECTED THE AO TO EXAMINE THE ISSUE OF EXEMPTION OF CLAIM U/S 54F AFRESH AND IN ACCORDANCE WITH THE LAW AFTER GIVING DUE OPPORTUNITY TO THE ASSESSEE. THUS, THERE IS NO PREJUDICE CAUSED TO THE ASSESSEE. 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS, PERUSED THE RELEVANT FINDING GIVEN IN THE IMPUGNED ORDER AS WELL AS MATERIAL PLACED ON RECORD. THE LD. CIT HAS SET ASIDE THE ASSESSMENT ORDER PASSED U/S 143(3) DATED 18.03.2013 ON THE GROUND THAT ASSESSEES CLAIM FOR EXEMPTION U/S 5 4/54F NEED TO BE PROPERLY EXAMINED BY THE AO AS HE HAS NOT CARRIED OUT ANY PROPER ENQUIRY OR INVESTIGATION OF SUCH A CLAIM AND HAS NOT VERIFIED THE FACTS AND THE SOURCE OF FUNDS FOR MAKING THE INVESTMENTS IN NEW ASSETS. IT IS A TRITE LAW THAT THE PERQUISIT E CONDITION TO EXERCISE THE REVISIONARY JURISDICTION U/S 263, BY THE COMMISSIONER ARE THAT, F IRSTLY THE ORDER PASSED BY THE AO IS ERRONEOUS AND SECONDLY , IT SHOULD BE PREJUDICIAL TO THE INTEREST OF THE REVENUE. BOTH THE CONDITIONS SHOULD BE FULFILLED SIMUL TANEOUSLY. IN OTHER WORDS, IF EITHER OF THE CONDITIONS IS LACKING THEN LD. CIT CANNOT TAKE GAURAV MATHRAWALA ITA 2378 /M/201 5 6 RECOURSE TO SECTION 263. FIRST OF ALL WE WILL EXAMINED WHETHER THE ASSESSMENT ORDER WAS ERRONEOUS OR NOT. FROM THE PERUSAL OF THE RECORDS AS HAS BEEN PLACED BEFORE U S, IT IS SEEN THAT THE AO VIDE QUESTIONNAIRE ISSUED ON 13.07.2012 ALONG WITH THE NOTICE U/S 142(1) HAD REQUIRED THE ASSESSEE TO FIRST GIVE THE DETAILS OF COMPUTATION OF LONG TERM CAPITAL GAIN WITH ITEM - WISE AND DATE - WISE . SECONDLY, HE ASKED FOR DETAILS OF PURCHASES AND SALE OF INVESTMENTS MADE IN THE MOVEABLE AS WELL AS IN IMMOVABLE PROPERTIES. IN RESPONSE TO THE SAID NOTICE, THE ASSESSEE HAD FILED THE REQUISITE DETAILS OF LTCG AND ALSO THE DETAILS WHERE SUCH GAIN S W ERE IN VESTED. THEN AGAIN , VIDE NOTICE DATED 15.10.2011, THE AO FURTHER REQUIRED THE ASSESSEE TO SUBMIT THE DETAILS OF LTCG ALONG WITH DOCUMENTARY EVIDENCE AND ALSO SUBMIT PROOF OF EXEMPTION CLAIMED U/S 54. AGAIN IN RESPONSE TO SUCH ENQUIRY, THE ASSESSEE VIDE LET TER DATED 28 TH NOVEMBER, 2012 HAD SUBMITTED THE DETAILS ALONG WITH THE COPY OF PURCHASE AGREEMENT FOR THE RESIDENTIAL FLAT. LASTLY, AGAIN VIDE NOTICE DATED 28.12.2012, THE AO REQUIRED THE ASSESSEE TO FURNISH COPY OF SALE / PURCHASE AGREEMENTS TOWARDS LTCG CLAIMED ON THE RESIDENTIAL FLAT AT AIROLI; SUBMIT COPY OF PURCHASE AGREEMENT AT AT HIRANANDANI MAITRY PARK ; SOURCE OF INVESTMENT AND WHERE IT HAS BEEN SHOWN IN THE BALANCE SHEET ; COPY OF BANK STATEMENT OF ASSESSEE AS WELL AS THE OTHER CO - OWNER; TO SUBMIT P URCHASE AGREEMENT OF FLAT AT DOSTI ALONG WITH SOURCE OF INVESTMENT AND BANK STATEMENT; AND LASTLY, WORKING OF SALE PRICE ALONG WITH DOCUMENTARY EVIDENCE OF SALE OF SHARES. THUS, FOR THE THIRD TIME, THE AO HAS REQUIRED THE ASSESSEE TO SUBMIT ALL THE DETAILS OF LTCG AS WELL AS THE PURCHASE OF IMMOVABLE PROPERTY AND EXEMPTION CLAIMED BY THE ASSESSEE. IN RESPONSE TO THIS NOTICE, THE ASSESSEE VIDE LETTER DATED 17 TH JANUARY, 2013 HAD AGAIN FURNISHED ALL THE SAID DETAILS. AFTER EXAMINING ALL THESE DETAILS AND DOC UMENTARY EVIDENCES, THE ASSESSEES CLAIM FOR EXEMPTION U/S 54/54F ON THE LTCG HAS BEEN ACCEPTED BY THE AO. THUS, FROM THE RECORDS, IT CANNOT BE INFERRED AT ALL THAT AO HAS NOT APPLIED HIS MIND OR HAS SIMPLY ALLOWED THE CLAIM WITHOUT VERIFYING THE FACTS GAURAV MATHRAWALA ITA 2378 /M/201 5 7 AND DOCUMENTARY EVIDENCE. ALL THESE DETAILS AND EVIDENCE WHICH WERE FILED BEFORE THE AO HAVE ALSO BEEN PLACED IN THE PAPER BOOK. IF FROM THE RECORDS, IT IS FOUND THAT, THE AO HAS RAISED SPECIFIC QUERY, WHICH HAS BEEN RESPONDED TO BY THE ASSESSEE BY FURNISHING THE DETAILS AND DOCUMENTARY EVIDENCE, THEN PRESUMPTION IS THAT , AO HAS DULY APPLIED HIS MIND ON THE ISSUE INVOLVED AND EVEN IF SUCH AN ISSUE DOES NOT FIND MENTION IN THE ASSESSMENT ORDER , THEN ALSO IT CANNOT LEAD TO A CONCLUSION THAT ORDER HAS BEEN PASSED BY THE AO WITHOUT APPLICATION OF MIND. ON THESE FACTS, IT CANNOT BE HELD THAT THE ORDER PASSED BY THE AO ACCEPTING THE ASSESSEES CLAIM IS ERRONEOUS AT ALL . 9. NOW WHETHER IT IS PREJUDICIAL TO THE INTEREST OF REVENUE OR NOT. BEFORE THE LD. CIT AS WELL A S BEFORE US THE ASSESSEE HAD DULY DEMONSTRATED THAT THE ASSESSEE HAD CLAIMED EXEMPTION AGAINST PROPERTY PURCHASED AT DOSTI AND ANOTHER PROPERTY AT HIRANANDANI MAITRY PARK WAS UNDER CONSTRUCTION FOR WHICH ONLY ADVANCE WAS GIVEN AND ASSESSEE HAD NOT ACQUIRED ANY POSSESS ION OF THE SAID PROPERTY. OTHERWISE ALSO, THE SAID PROPERTY WAS JOINTLY HELD BY HIS MOTHER WHO WAS THE FIRST HOLDER AND THE ASSESSEE WAS THE SECOND HOLDER. ONCE THE ASSESSEE HAS INVESTED THE ENTIRE LTCG ARISING FROM THE SALE OF SHARES AND THE SAID GAIN HAS BEEN INVESTED ENTIRELY IN THE PURCHASE OF FLAT IN HIS NAME WITHIN THE TIME PERIOD GIVEN IN SECTION 54F , THEN ASSESSEE IS ELIGIBLE FOR EXEMPTION U/S 54F FROM SUCH LTCG. LD. CIT HAS NOT DISPUTED THIS CONTENTION OF THE ASSESSEE RAISED BEFORE HIM , BUT HAS SIM PLY SET ASIDE THE ASSESSMENT TO THE AO TO EXAMINE IT AFRESH. SUCH AN EXERCISE BY THE CIT CANNOT BE APPRECIATED, FIRSTLY , HE SHOULD GIVE SPECIFIC FINDING AS TO WHY SUCH A CONTENTION RAISED BY THE ASSESSEE IS NOT CORRECT OR DIVORCED FROM THE FACTS AND MATERI AL RECORDS AND SECONDLY , HOW ON THE FACTS THE ORDER OF THE AO IS ACTUALLY ERRONEOUS AND ALSO PREJUDICIAL TO THE INTEREST OF THE REVENUE. SIMPLY MENTIONING THE PHRASE IN THE ORDER THAT THE ASSESSMENT ORDER IS ERRONEOUS AND SO FAR AS IT IS PREJUDICIAL TO TH E INTEREST OF THE REVENUE IS NOT GAURAV MATHRAWALA ITA 2378 /M/201 5 8 SUFFICIENT. THE LD. CIT AFTER EXAMINING THE RECORDS AND THE CONTENTIONS OF THE ASSESSEE BEFORE HIM, H AS TO GIVE A SPECIFIC FINDING AND THEN HE CAN SET ASIDE THE ASSESSMENT ORDER, WHICH HERE IN THIS CASE HAS NOT BEEN DONE. THUS, WE HOLD THAT, THE IMPUGNED ORDER PASSED BY CIT IN THE SECTION 263 CANCELLING THE ASSESSMENT / SETTING ASIDE THE ASSESSMENT FOR EXAMINATION OF EXEMPTION U/S 54F CANNOT BE SUSTAINED AS THE AO HAS DULY EXAMINED THE ISSUE DURING THE COURSE OF THE ASSESSM ENT PROCEEDINGS AND LD. CIT UNDER THE SCOPE OF SECTION 263 CANNOT BE SAID TO BE SITTING AS A REVIEWING AUTHORITY AND CANCEL THE ASSESSMENT WITHOUT POINTING OUT HOW THE ASSESSMENT ORDER IS ERRONEOUS OR PREJUDICIAL TO THE INTEREST OF THE REVENUE. THUS, WE QU ASH THE IMPUGNED ORDER PASSED BY THE CIT AND ALLOW THE GROUNDS RAISED BY THE ASSESSEE. 10 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 6 TH JANUARY , 201 6 . SD/ - SD/ - ( . ) ( ) ( D. KARUNAKARA RAO ) ( AMIT SHUKLA ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE: 6 TH JANUARY , 201 6 / COPY TO: - 1 ) / THE APPELLANT. 2 ) / THE RESPONDENT. 3) THE CIT - 27 , MUMBAI. 4 ) THE CIT /JT. CIT RG. 27(1)/____CONCERNED , MUMBAI. 5 ) , , / THE D.R. G BENCH, MUMBAI. 6 ) \ COPY TO GUARD FILE. / BY ORDER / , DY. / ASSTT. REGISTRAR I.T.A.T., MUMBAI * . .