Vikash Solvextracts Private Limited, Kolkata V. CIT, Kolkata - II, Kolkata, Kolkata

ITA 242/KOL/2011

• Counselvise Citation: 24223514 RSA 2011
• Duration Of Justice: 2 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-05-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 14-02-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S P CHOWDHURY
• Keywords: Set aside; Capital Gains
• Section: 143(3); 263

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : KOLKATA ( ) . . , , , , ) [BEFORE HONBLE SRI B.R. MITTAL, J.M. & HONBLE SRI AKBER BASHA, A.M.] ! ! ! ! / I.T.A NO. 242/KOL/2011 '# $% / ASSESSMENT YEAR : 2006-2007 VIKASH SOLVEXTRACTS PVT. LTD., KOLKATA -VS.- COMMISSIONER OF INCOME TAX, (PAN : AABCV 0840 P) KOLKATA-II, KOLKATA ( &' /APPELLANT ) ( ()&' / RESPONDENT ) FOR THE APPELLANT : SHRI SANJAY BHATTACHARYA, A.R . FOR THE RESPONDENT : SHRI S.P. CHOWDHURY, CIT, D.R. / ORDER PER SHRI B. R. MITTAL, JUDICIAL MEMBER/ . . , : THE ASSESSEE HAS FILED THIS APPEAL FOR ASSESSMENT YEAR 2006-07 AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX, KOLKATA-II, KOLKATA DAT ED 14.12.2010 PASSED UNDER SECTION 263 OF THE INCOME TAX ACT ON THE FOLLOWING GROUNDS :- (1) THAT THE COMMISSIONER OF INCOME TAX WAS WRONG I N SETTING ASIDE THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) WITH T HE DIRECTION TO THE ASSESSING OFFICER TO REFRAME THE SAME DE NOVO. (2) THAT WITHOUT PREJUDICE TO THE CONTENTION RAISED IN GROUND NO. 1 ABOVE, THE COMMISSIONER OF INCOME TAX WAS WRONG IN OBSERVING THAT THE ASSESSMENT ORDER FRAMED BY THE ASSESSING OFFICER HA D ALLEGEDLY BEEN ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENU E. (3) THAT WITHOUT PREJUDICE TO THE CONTENTIONS RAISE D IN GROUNDS NO. 1 & 2 ABOVE, THE COMMISSIONER OF INCOME TAX WAS WRONG I N STATING IN HER ORDER THAT THE APPELLANT WOULD ALLEGEDLY GET SELLIN G/ OWNERSHIP RIGHTS ON THE 50% OF THE BUILT-UP AREA. (4) THAT WITHOUT PREJUDICE TO THE CONTENTIONS RAISE D IN GROUNDS NO. 1 TO 3 ABOVE, THE COMMISSIONER OF INCOME TAX FAILED TO A PPRECIATE THAT THE SALE PROCEEDS OF 50% OF THE FLATS, THAT HAD BEEN RE CEIVED BY THE APPELLANT, HAD BEEN THE SALE CONSIDERATION FOR THE LAND TRANSFERRED BY THE APPELLANT TO THE PROMOTER AND THUS SHE ERRED IN OBSERVING THAT THERE HAD ALLEGEDLY ARISEN ANY INCOME FROM BUSINESS OR PR OFESSION IN THE HANDS OF THE APPELLANT. ITA NO. 242/KOL./2011 2 (5)THAT WITHOUT PREJUDICE TO THE CONTENTIONS RAISED IN GROUNDS NO. 1 TO 4 ABOVE, THE COMMISSIONER OF INCOME TAX FAILED TO A PPRECIATE THAT THE APPELLANT HAD BECOME A SIGNATORY IN THE AGREEMENTS FOR SALE OF FLATS ONLY AS A CONFIRMING PARTY IN THE CAPACITY OF THE OWNER OF THE LAND AND NOT AS ANY ALLEGED PROMOTER. (6) THAT WITHOUT PREJUDICE TO THE CONTENTIONS RAISE D IN GROUNDS NO. 1 TO 5 ABOVE, THE COMMISSIONER OF INCOME TAX FAILED TO A PPRECIATE THAT THERE HAD NOT OCCURRED ANY TRANSACTION ALLEGEDLY BETWEEN THE APPELLANT AND VARIOUS ALLOTTEES OF FLATS AND THUS SHE ERRED IN OB SERVING THAT THE ASSESSING OFFICER HAD ALLEGEDLY FAILED TO VERIFY AN Y SUCH TRANSACTION. (7)THAT WITHOUT PREJUDICE TO THE CONTENTIONS RAISED IN GROUNDS NO. 1 TO 6 ABOVE, THE COMMISSIONER OF INCOME TAX WAS WRONG IN STATING IN HER ORDER THAT THE ASSESSING OFFICER HAD ALLEGEDLY FAIL ED TO PERFORM HIS DUTY SO FAR AS THE VERIFICATION OF CLAIM OF THE APPELLAN T TOWARDS CAPITAL GAINS WHICH HAD ALLEGEDLY RESULTED IN UNDER-ASSESSMENT OF INCOME AND CONSEQUENTIAL ALLEGED UNDER-CHARGE OF TAX. (8) THAT WITHOUT PREJUDICE TO THE CONTENTIONS RAISE D IN GROUNDS NO. 1 TO 7 ABOVE, THE COMMISSIONER OF INCOME TAX WAS WRONG I N OBSERVING IN HER ORDER THAT THE SUBMISSIONS MADE BY THE APPELLAN T BEFORE HER, HAD ALLEGEDLY NOT BEEN SUPPORTED BY THE APPELLANTS OWN COMPUTATION SUBMITTED DURING THE ASSESSMENT. 2. WE OBSERVE THAT THE ASSESSING OFFICER COMPLETED THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT ON 27.11.2008 AND ACCEPTED THE TOTAL INC OME AS DECLARED BY THE ASSESSEE. IT IS RELEVANT TO STATE THAT THE ASSESSEE IN THE COMPUTAT ION FILED, INTER ALIA, DECLARED LONG-TERM CAPITAL GAIN ON SALE OF FLATS. THE LD. CIT IN EXERCISE OF H IS POWERS UNDER SECTION 263 OF THE ACT HAS STATED THAT THE ASSESESE ENTERED INTO A DEVELOPMENT AGREEMENT WITH M/S. NAVIN HOUSING & PROPERTIES (P) LTD. TO DEVELOP A PIECE OF LAND INT O A RESIDENTIAL COMPLEX. IN TERMS OF AGREEMENT ENTERED INTO, THE ASSESSEE GOT SELLING/ OWNERSHIP R IGHTS ON THE 50% OF BUILT-UP AREA. THE ASSESSEE CLAIMED THE SALE PROCEEDS AS LONG-TERM CAP ITAL GAIN, WHICH WAS ACCEPTED BY THE ASSESSING OFFICER. THE LD. CIT OBSERVED THAT THERE WAS NO DISCUSSION IN THE ASSESSMENT ORDER, THE LD. CIT ISSUED NOTICE UNDER SECTION 263 OF THE INCOME TAX ACT, A COPY OF WHICH IS PLACED AT PAGE 12 OF THE PAPER BOOK. IN THE SAID NOTICE, THE LD. CIT STATED THAT THERE WAS AN UNDER- ASSESSMENT OF INCOME TO THE TUNE OF RS.5,96,56,580/ - WITH CONSEQUENT UNDERCHARGE OF TAX OF RS.2,00,80,404/-. THE ASSESSEE FILED A REPLY TO THE SAID NOTICE, A COPY OF WHICH IS PLACED AT PAGES 7-11 OF THE PAPER BOOK. THE LD. CIT AFTER CON SIDERING THE REPLY OF THE ASSESSEE AND THE AGREEMENT ENTERED INTO, THE COPIES OF WHICH WERE FI LED BEFORE HIM, HAS STATED THAT THE WRONG ITA NO. 242/KOL./2011 3 CLAIM OF THE ASSESSEE HAD BEEN ALLOWED BY THE ASSES SING OFFICER AS THE TOTAL SALE PROCEEDS WERE NOT DISCLOSED BY THE ASSESSEE. THAT THE ASSESSING O FFICER WAS SUPPOSED TO VERIFY THE DETAILS OF THE EXPENSES, SUCH AS BROKERAGE AND REIMBURSEMENT O F MARKETING EXPENSES, WHICH HE FAILED TO VERIFY. THE LD. CIT SET ASIDE THE ASSESSMENT ORDER WITH THE DIRECTION TO REFRAME THE SAME DE NOVO AND ALSO AFTER GIVING DUE OPPORTUNITY OF HEARI NG TO THE ASSESSEE. IT IS RELEVANT TO STATE THAT THE LD. CIT IN THE IMPUGNED ORDER ALSO STATED THAT THE ASSESSING OFFICER WILL ALSO CONSIDER THAT THE DIFFERENCE OF SALE PROCEEDS OF THE FLATS AND AP PRECIATED VALUE OF LAND IN THE HANDS OF THE ASSESSEE WILL CONSTITUTE PROFIT FROM BUSINESS AND W ILL BE TREATED AS INCOME FROM BUSINESS OR PROFESSION. 3. AT THE TIME OF HEARING, LD. A.R. FAIRLY CONCEDED THAT THE ASSESSEE COULD NOT FILE COPIES OF ALL THE DOCUMENTS/ AGREEMENTS, WHICH ARE PLACED IN THE PAPER BOOK, BEFORE THE ASSESSING OFFICER WHEN THE ASSESSMENT WAS COMPLETED BY HIM UN DER SECTION 143(3) OF THE ACT VIDE ORDER DATED 27.11.2008. THE LD. A.R. FAIRLY CONCEDED AT T HE TIME OF HEARING THAT THE ASSESSMENT ORDER IS NOT A SPEAKING ORDER AND IT COULD NOT BE RELIEVE D THEREFROM THAT HE CONSIDERED THE DETAILS OF THE SALE TRANSACTIONS OF THE FLATS AND THE DETAILS OF THE EXPENSES AS STATED BY THE ASSESSEE IN THE COMPUTATION OF INCOME, A COPY OF WHICH IS PLACED AT PAGES 15-16 OF THE PAPER BOOK. LD. A.R. SUBMITTED THAT HE HAS NO OBJECTION IF ASSESSING OF FICER MAKES THE ASSESSMENT ORDER AFRESH AFTER GIVING DUE OPPORTUNITY OF HEARING TO THE ASSESSEE A ND ALSO CONSIDERING SUCH EVIDENCES AS MAY BE PLACED BEFORE HIM AS PER LAW, BUT WITHOUT BEING INFLUENCED BY THE OBSERVATION OF THE LD. CIT MADE IN THE IMPUGNED ORDER PASSED UNDER SECTION 263 THAT THE SALE TRANSACTIONS OF FLATS BE CONSIDERED AS INCOME FROM BUSINESS. 4. LD. D.R. HAS NOT OBJECTED TO THE ABOVE SUBMISSIO N OF THE ASSESSEE. HE SUBMITTED THAT THE LD. CIT HAS SET ASIDE THE ASSESSMENT ORDER WITH A D IRECTION TO REFRAME THE ASSESSMENT DE NOVO AFTER GIVING DUE OPPORTUNITY OF HEARING TO THE ASSE SSEE. 5. WE, AFTER CONSIDERING THE SUBMISSIONS OF THE LD. REPRESENTATIVES OF THE PARTIES AND CONSIDERING THE ORDERS OF THE AUTHORITIES BELOW, HO LD THAT THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER IS NOT A SPEAKING ORDER. IT IS NO T REVEALED FROM THE SAID ASSESSMENT ORDER THAT HE CONSIDERED THE FULL FACTS TO ARRIVE AT WHETHER T HE LONG-TERM CAPITAL GAIN DECLARED BY THE ASSESSEE IS TO BE ASSESSED AS LONG-TERM CAPITAL GAI N OR AS INCOME FROM BUSINESS. NOR IT IS ITA NO. 242/KOL./2011 4 REVEALED FROM THE ASSESSMENT ORDER AND THE DOCUMENT PLACED ON RECORD THAT AS TO WHETHER ASSESSING OFFICER EXAMINED THE DETAILS OF THE EXPEN SES CLAIMED BY THE ASSESSEE. CONSIDERING THE ABOVE FACTS, WE HOLD THAT THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER IS NOT ONLY ERRONEOUS BUT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. THEREFORE, WE HOLD THAT THE LD. CIT HAS RIGHTLY EXERCISED HIS JURISDICTION UNDER SECTIO N 263 OF THE ACT TO SET ASIDE THE ASSESSMENT ORDER AFTER GIVING A FINDING THAT THE ASSESSMENT OR DER PASSED BY THE ASSESSING OFFICER IS NOT ONLY ERRONEOUS BUT IS PREJUDICIAL TO THE INTEREST O F THE REVENUE. HOWEVER, WE HOLD THAT THE ASSESSING OFFICER WHILE FRAMING THE FRESH ASSESSMEN T ORDER, HE WILL CONSIDER SUCH DOCUMENT AS MAY BE PRODUCED BY THE ASSESSEE AND ALSO WILL ACCOR D FULL OPPORTUNITY OF HEARING TO THE ASSESSEE WITHOUT BEING INFLUENCED BY THE OBSERVATIO N OF THE LD. CIT. 6. SUBJECT TO ABOVE OBSERVATION, WE DISMISS THE APP EAL OF THE ASSESSEE BY CONFIRMING THE ORDER OF LD. CIT. 7 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISM ISSED SUBJECT TO ABOVE OBSERVATION. ORDER PRONOUNCED IN THE OPEN COURT ON 09.05.2011 IN THE PRESENCE OF LD. REPRESENTATIVES OF BOTH THE PARTIES. SD/- SD/- [AKBER BASHA/ ] [ B.R. MITTAL / . . ] ACCOUNTANT MEMBER/ JUDICIAL MEMBER/ DATED : 09/ 05/ 2011 COPY OF THE ORDER FORWARDED TO: 1. M/S. VIKASH SOLVEXTRACTS, PVT. LTD., 135, BIPLABI R ASHBEHARI BASU ROAD, KOLKATA-1, 2 CIT, KOLKATA-II, AAYAKAR BHAWA,. 3 RD FLOOR, P-7, CHOWRINGHEE SQUARE, KOLKATA-69, 3. CIT, KOLKATA- 4. DR, KOLKATA BENCHES, KOLKATA (TRUE COPY) BY ORDER ASSIS TANT REGISTRAR, I.T.A.T., KOLKATA LAHA, SR. P.S.