SRI ISHWAR SADAN COOPERATIVE HOUSING SOC. LTD., MUMBAI V. D.C.I.T.19(3), MUMBAI

ITA 2441/MUM/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83624 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 4 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-08-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 11-08-2014
• Assessment Year: 2001-2002
• Appeal Filed On: 28-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAY KUMAR SAMI
• Assessee Lawyers: H N MOTIWALLA
• Keywords: Block assessment
• Section: 143(3); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUM BAI . . , , BEFORE SHRI N. K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER ! ./ I.T.A. NO. 2441/MUM/2011 ( / ASSESSMENT YEAR: 2001-02) SRI ISHWAR SADAN CO-OPERATIVE HOUSING SOCIETY LTD. PLOT NO. 601, 6 TH ROAD, TPS-III, BANDRA (W), MUMBAI-400 050 / VS. DY. CIT-19(3) MUMBAI # ./$ ./PAN/GIR NO. AABAS 0012 N ( ! #% /APPELLANT ) : ( &'#% / RESPONDENT ) ! #% ( ) / APPELLANT BY : SHRI H. N. MOTIWALLA & SHRI PIYUSH CHHAJED &'#% ( ) / RESPONDENT BY : SHRI VIJAY KUMAR SAMI * +, ( -. / DATE OF HEARING : 14.08.2014 /012 ( -. / DATE OF PRONOUNCEMENT : 27.08.2014 3 / O R D E R PER SANJAY GARG, JUDICIAL MEMBER : THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-30, MUMBAI (C IT(A) FOR SHORT) DATED 28.01.2011. THE ASSESSEE HAS RAISED AS MANY AS FOUR GROUNDS OF APPEAL, WHICH READS AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE ASSESSING OFFICER ERRED IN PASSING ORDER U/S 143(3) R.W.S 147 WITHOUT ISSUANCE OF NOTICE U/S.143(2) AND THEREFORE THE ORDER PASSED BY THE LEARNED ASSESSING OFFICER IS BAD IN LAW AND VOID AB INITIO. 2 ITA NO. 2441/MUM/2011 (A.Y. 2001-02) SRI ISHWAR SADAN CO-OPERATIVE HOUSING SOCIETY LTD. VS. DY. CIT 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN UPHOL DING THE RE-OPENING OF ASSESSMENT U/S. 148 OF THE INCOME-TAX ACT. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN CONFI RMING THE ORDER OF THE LEARNED ASSESSING OFFICER IN RESPECT OF CHARGING RS .55 LACS TO BE RECEIVED FROM THE DEVELOPER UNDER THE HEAD CAPITAL GAINS, WH EN THE DEVELOPER HAS NOT FULFILLED THE CONDITIONS STATED IN THE AGREEMENT FO R DEVELOPMENT DATED 17-1- 2000 AND HAS ONLY PAID RS.18,50,000/- AND THUS NOT COMPLIED WITH THE REQUIREMENTS OF SECTION 53A OF TRANSFER OF PROPERTY ACT, AND THEREFORE, IS NOT COVERED BY SECTION 2(47)(V) OF THE INCOME-TAX A CT. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN UPHOL DING THE CAPITAL GAINS AT RS. 55 LACS, TREATING THE SAME AS SALE OF TDR, W ITHOUT APPRECIATING THE FACT THAT THERE WAS NO SALE OF TDR AND THERE WAS NO TAXABLE GAINS, IN VIEW OF THE HON. SUPREME COURT JUDGEMENT IN CASE OF B.C. SRINIVASA SHETTY, 28 ITR 294 AND VARIOUS OTHER JUDICIAL RULINGS DIRECTLY APPLICABLE TO THE FACTS OF THE CASE. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A REGISTERED CO-OPERATIVE HOUSING SOCIETY. THE RETURN OF INCOME WAS FILED ON 22.08.2002 DECLARING THE TOTAL INCOME AT RS.NIL. THE SAME WAS PROCESSED U/S. 143(1 ) OF THE I. T. ACT. SUBSEQUENTLY, IT WAS LEARNT THAT THE ASSESSEE HAD ENTERED INTO AN AG REEMENT FOR SALE/TRANSFER OF TDR/FSI WITH NARANG DEVELOPERS PVT. LTD., FOR A CONSIDERATI ON OF RS.55,00,000/-. SINCE THIS TRANSACTION WAS NOT DISCLOSED IN THE RETURN OF INCO ME FILED, THE ASSESSMENT WAS REOPENED U/S.147 OF THE I.T. ACT BY ISSUE OF NOTICE U/S.148 OF THE I.T. ACT. 3. THROUGH GROUNDS NO. 1 & 2, THE ASSESSEE HAS RAIS ED THE CONTENTION THAT NO NOTICE U/S.143(2) WAS ISSUED TO THE ASSESSEE UNDER THE REO PENED ASSESSMENT PROCEEDINGS U/S.147 R.W.S. 143(3) OF THE ACT. THE LD. AR HAS SUBMITTED THAT THE ISSUANCE OF NOTICE BEFORE REOPENING OF THE ASSESSMENT WAS MANDATORY. HE HAS R ELIED UPON A DECISION OF HON'BLE SUPREME COURT STYLED AS CIT & ANOTHER VS. HOTEL BL UE MOON (2010) 229 CTR (SC) 362, WHEREIN HON'BLE SUPREME COURT, WHILE ADJUDICAT ING UPON THE CASE OF BLOCK ASSESSMENT UNDER THE INCOME TAX ACT, HAS OBSERVED T HAT IF THE A.O., FOR ANY REASON, 3 ITA NO. 2441/MUM/2011 (A.Y. 2001-02) SRI ISHWAR SADAN CO-OPERATIVE HOUSING SOCIETY LTD. VS. DY. CIT REPUDIATES THE RETURN FILED BY THE ASSESSEE IN RESP ONSE TO A NOTICE UNDER SECTION 158BC(A), HE MUST NECESSARILY ISSUE NOTICE UNDER SECTION 143( 2) WITHIN THE TIME PRESCRIBED IN THE PROVISO TO SECTION 143(2); OMISSION ON THE PART OF THE ASSESSING AUTHORITY TO ISSUE NOTICE UNDER SECTION 143(2) CANNOT BE SAID TO BE A MERE PR OCEDURAL IRREGULARITY AND, THAT THE SAME IS NOT CURABLE. 4. ON THE OTHER HAND, LEARNED DR HAS SUBMITTED THAT VIDE FINANCE ACT 2008, W.E.F. 1.4.2008 SECTION 292-BB IN THE INCOME TAX ACT HAS B EEN INSERTED. HE HAS FURTHER SUBMITTED THAT ANY RIGHT WHICH HAS BEEN ACCRUING TO THE ASSESSEE FOR NON-SERVICE OF NOTICE U/S. 143(2) OF THE INCOME TAX ACT HAS BEEN TAKEN AW AY WITH THE INSERTION OF SECTION 292BB IN THE I.T. ACT. 5. WE MAY OBSERVE THAT THE ISSUE RELATING TO THE IN TRODUCTION AND OPERATION OF SECTION 292BB CAME INTO CONSIDERATION BEFORE THE SPECIAL BE NCH OF THE TRIBUNAL AT DELHI IN THE CASE OF KUBER TOBACCO PRODUCTS (P) LTD. VS. DCIT IN IT(SS)A NO. 261/DEL/2001. THE SPECIAL BENCH OF THE HONBLE DELHI TRIBUNAL IN THE CASE OF KUBER TOBACCO PRODUCTS (P) LTD. (SUPRA) HAS SUMMARIZED THE LEGAL POSITION AS U NDER: (I) SECTION 292-BB EVEN IF IT IS PROCEDURAL IT IS CREATING A NEW DISABILITY AS IT PRECLUDES THE ASSESSEE FROM TAKING A PLEA WHI CH COULD BE TAKEN A RIGHT, CANNOT BE CONSTRUED RETROSPECTIVELY AS THE SAME IS MADE APPLICABLE BY THE STATUTE W.E.F 1.4.2008. (II) SECTION 292-BB IS APPLICABLE TO THE ASSESSMEN T YEAR 2008-09 AND SUBSEQUENT ASSESSMENT YEARS. FURTHER, THE HON'BLE JURISDICTIONAL HIGH COURT OF BOMBAY IN THE CASE OF CIT VS. MR. SALMAN KHAN IN INCOME TAX APPEAL (L) NO. 2362 OF 2009 DATED 1.12.2009 HAS CATEGORICALLY HELD THAT SECTIONS 292-BB & 292-B OF THE INCOME TAX ACT HAVE BEEN AMENDED FROM 1.4.2008 AND THUS HAVE COME INTO OPERA TION PROSPECTIVELY FOR THE A.Y. 2009-10. FURTHER, THIS VIEW HAS BEEN AGAIN REITERAT ED BY HONBLE BOMBAY HIGH COURT IN ANOTHER CASE STYLED AS CIT VS. VIRENDRA KUMAR AGAR WAL INCOME TAX APPEAL NO. 2429 OF 2009 DATED 7.1.2010. 4 ITA NO. 2441/MUM/2011 (A.Y. 2001-02) SRI ISHWAR SADAN CO-OPERATIVE HOUSING SOCIETY LTD. VS. DY. CIT SINCE THE ASSESSMENT YEAR INVOLVED IN THIS CASE IS 2001-02, HENCE, THE NEWLY INSERTED PROVISION OF SECTION 292BB IS NOT APPLICAB LE TO THIS YEAR. IN VIEW OF THE SAID LEGAL POSITION AS DISCUSSED ABOVE, THE ASSESSMENT P ROCEEDINGS IN CONSEQUENCE OF REOPENING U/S.147 WERE BAD IN LAW AND CANNOT BE SUS TAINED AND ARE ACCORDINGLY SET ASIDE. 6. SINCE, WHILE DECIDING THE ABOVE GROUND NOS. 1 AN D 2, WE HAVE SET ASIDE THE REOPENED ASSESSMENT PROCEEDINGS ITSELF, HENCE, THE CONSEQUENTIAL OTHER GROUNDS OF APPEAL (I.E., GROUND NOS. 3 & 4) HAVE BECOME INFRUCTUOUS A ND RENDERED ACADEMIC IN NATURE AND AS SUCH DO NOT REQUIRE ANY ADJUDICATION AT THIS STAGE. IN VIEW OF OUR ABOVE FINDINGS, THE ADDITIONS MADE/CONFIRMED BY THE LOWER AUTHORITIES A RE ACCORDINGLY SET ASIDE. 7. IN THE RESULT, THE ASSESSEES APPEAL IS HEREBY A LLOWED. !42-5 64- ( ! + 7 - ( - 8 ORDER PRONOUNCED IN THE OPEN COURT ON AUGUST 27, 20 14 SD/- SD/- (N. K. BILLAIYA) (SANJAY GARG) / ACCOUNTANT MEMBER / JUDICIAL MEMBER * , MUMBAI; 9 DATED : 27.08.2014 +.../ ROSHANI , SR. PS ! ' #$%& ' &$ / COPY OF THE ORDER FORWARDED TO : 1. ! #% / THE APPELLANT 2. &'#% / THE RESPONDENT 3. * :- ( ! ) / THE CIT(A) 4. * :- / CIT - CONCERNED 5. =+> &-?6 , ! . ?62 , * , / DR, ITAT, MUMBAI 6. @ A, / GUARD FILE ! ( / BY ORDER, )/(* + (DY./ASSTT. REGISTRAR) , * , / ITAT, MUMBAI