Manan Jaiswal, Jamshepur V. ACIT, Jamshepur

ITA 25/RAN/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4359 (ITAT-RANCHI)
• Duration Of Justice: 1 year(s) 5 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2004-2005
• Appeal Filed On: 21-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DEEPAK ROSHAN SR S C
• Assessee Lawyers: R S KHEMKA
• Keywords: Cost of acquisition; Fair market value; Valuation report
• Section: 142(1); 147; 148; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, RANCHI CIRCUI T BENCH, RANCHI (BEFORE SHRI P.K.BANSAL, HONBLE A.M.& SHR I D,T. GARASIA, HONBLE J.M.) I.T.A. NO. 25/RAN/2011 : ASSESSMENT YEAR 2004 -05 MANAN JAISWAL, JAMSHEDPUR -VS- ACIT, CIRCLE-2, JAMSHEDPUR (APPELLANT) PAN: AEZPJ 1976M (RESPONDENT) APPELLANT BY : SHRI R. S. KHEMKA, ADVOCATE RESPONDENT BY : SHRI DEEPAK ROSHAN, SR.S.C. DATE OF CONCLUDING THE HEARING : 30.04.2013 DATE OF PRONOUNCING THE ORDER : 30.04.2013 O R D E R PER BENCH : THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A), JAMSHEDPUR DATED 30.09.2011 FOR THE ASSESSMENT YEAR 2004-05 CHALLENGING THE ORDER BOTH ON LEGALITY OR MERIT. THE GROUNDS OF APPEAL TA KEN BY THE ASSESSEE ARE GIVEN AS UNDER: 1. ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE , THE LD. A.O. ERRED IN ASSUMING JURISDICTION U/S 147 WITHOUT HAVING LIVE L INKED MATERIAL TO FORM A BELIEF ABOUT THE ESCAPEMENT OF INCOME HENCE THE IMPUGNED O RDER PASSED U/S 144 R.W. SECTION 147 IS BAD IN LAW AND THE LD. CIT(A) GROSSL Y ERRED IN CONFIRMING THE SAME. IT IS PRAYED TO ANNUL THE ORDER PASSED U/S 144 R. W. 147. 2. ALTERNATIVELY . A. ON THE FACTS & IN THE CIRCUMSTANCES OF THE CA SE, THE LD. A.O. ERRED IN ESTIMATING FAIR MARKET VALUE OF LAND AT RS.500/- PE R KATHA AS ON 1.4.1981 AS AGAINST RS.20,000/- ESTIMATED BY APPELLANT FOR PURP OSE OF COMPUTATION OF LONG TERM CAPITAL GAINS U/S 45(3) THUS ERRED IN MAKING A N ADDITION OF RS.16,62,590/- U/S 45(3) WHICH IS ARBITRARY, EXCESSIVE & UNREASONABLE & THE LD. CIT[A] FURTHER ERRED IN CONFIRMING THE SAME. IT IS PRAYED THAT THE UNWARRNTED ADDITION OF RS.16, 62,590/- BEING ARBITRARY BE DELETED. B. ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE , THE LD. A.O. ERRED IN MAKING AN ADDITION OF RS.2,00,000/- U/S 68 & THE LEARNED C IT[A] ERRED IN CONFIRMING THE SAME WITHOUT APPRECIATING THE EVIDENCES PLACED ON R ECORD IN ITS RIGHT PERSPECTIVE BUT MERELY ON ILLOGICAL INFERENCES DRAWN EVEN ON TH E GENUINE TRANSACTIONS. YOUR PETITIONER PRAYS THAT THE IMPUGNED ADDITION O F RS.2,00,000/- MADE U/S 68 DESERVES TO BE DELETED. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FI LED THE INCOME-TAX RETURN ON 02.08.2004 DECLARING THE INCOME OF RS.3,28,140/- UN DER THE HEAD LONG TERM CAPITAL GAINS, SOURCE BEING THE SALE CONSIDERATION FROM THE SALE OF THE LAND AT RS.20 LAKHS ON WHICH THE INDEXED COST OF ACQUISITION WAS CLAIMED A MOUNTING TO RS.16,71,860/-. THE RETURN WAS PROCESSED UNDER SECTION 143(1) ON 20.03. 2006. A NOTICE WAS ISSUED UNDER SECTION 03.04.2006 BY THE ASSESSING OFFICER BY RECO RDING THE FOLLOWING REASONS. 03.04.2006 : THE ASSESSEE HAS FILED HIS RETURN IN T HE STATUS OF INDIVIDUAL ON 02.08.2004 DECLARING INCOME OF RS.3,28,140/- BEING LONG TERM CAPITAL GAIN OF RS.3,28,140/- DECLARING SALE OF LAND AT RS.20,00 ,000/- AND INDEXED COST OF ACQUISITION AT RS.16,71,860/-. NO DOCUMENTS IN S UPPORT OF SALE OF LAND IS ENCLOSED WITH THE RETURN. THE COST OF RS.16,71,860/ - AS INDEXED BY ADOPTING THE SAME @RS.20,000/- PER COTTAH AS ON 01.04.1981 A T A PLACE NEAR DIMMA ROAD IS HIGHLY OVERRATE. THE ASSESSEE HAS A TTEMPTED TO DEDUCT A SUBSTANTIALLY HIGHER COST OF LAND IN ORDER TO MINIM IZE THE TAXABLE CAPITAL GAIN. FURTHER THE DEPOSIT OF SELF-REASSESSMENT TAX OF RS.52,886/- ON 28.07.2004 INDICATES THAT THE ASSESSEE HAS ATTEMPTE D TO REDUCE THE TAX LIABILITY TAKING TO RECOURSE TO AFTER THOUGHT, ELSE TAX SHOULD HAVE BEEN PAID IN THE F.Y. 2003-04. IT IS NECESSARY AND EXPEDIENT TO INVESTIGATE THE A CTUAL VALUE OF SALE PROCEEDS BY ENQUIRING INTO THE BANK ACCOUNTS AND TH E WHEREABOUTS OF THE PURCHASER OF LAND AS WELL AS INTO THE COST FACTORS AS PREVAILING AS FAR BACK AS 01.04.1981. TAXABLE INCOME HAS ESCAPED ASSESSMENT WITHIN THE ME ANING OF SEC. 147. EXPLANATION 2(C)(I) OF THE ACT. ISSUE NOTICE U /S 148 ACCORDINGLY. IN RESPONSE TO THE NOTICE RECEIVED UNDER SECTION 14 8, THE ASSESSEE DID NOT FILE ANY RETURN. THE ASSESSING OFFICER, AFTER PERSUING THE NOTICE UN DER SECTION 142(1) ON 15.06.2007, WHICH WAS RECEIVED BY THE ASSESSEE ON 22.06.2007, C OMPLETED ASSESSMENT UNDER SECTION 144 READ WITH SECTION 147. IN RESPONSE TO THE SAID NOTICE, THE A.R. OF THE ASSESSEE APPEARED AND FILED THE DOCUMENTARY EVIDENCE BUT THE ASSESSMENT WAS COMPLETED UNDER SECTION 144 READ WITH SECTION 147 TAKING THE COST O F THE LAND SOLD BY THE ASSESSEE @500/- PER COTTAH AS ON 01.04.1981. THE ASSESSEE WENT IN A PPEAL BEFORE THE CIT(A). THE CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE BOTH ON MERITS AS WELL AS ON LEGALITY. 3. ON LEGALITY, THE LD. A.R. BEFORE US VEHEMENTLY C ONTENDED THAT THE REASONS ARE NOT BONA FIDE . THERE WAS NO MATERIAL AVAILABLE WITH THE ASSESSIN G OFFICER TO TREAT THE FAIR MARKET VALUE TAKEN BY THE ASSESSEE AS ON 01.04.1981 TO BE HIGHER. THE REASONS ARE BASED JUST ON SUSPICION. SUSPICION CANNOT TAKE THE PLACE OF ACTUALITY HOWSOEVER STRONG IT MAY BE. RELIANCE WAS PLACED IN THIS REGARD ON THE DECIS ION OF THE HONBLE SUPREME COURT IN THE CASE OF DHAKESWARI 26 ITR 775 (SC). THE LAND IN RESPECT OF WHICH THE CAPITAL GAIN HAS BEEN SHOWN BY THE ASSESSEE IN THE ORIGINAL RETU RN SITUATED NEAR DIMMA ROAD, JAMSHEDPUR. IT WAS PURCHASED BY LATE SHRI JAISWAL, GRAND FATHER OF THE ASSESSEE ON 02.06.1978 FOR CONSIDERATION OF RS.8,000/-. THE ASS ESSEE RECEIVED THE SAID LAND UNDER THE FAMILY SETTLEMENT TOOK PLACE ON 19.05.2002 UNDER TH E GUARDIANSHIP OF SHRI J.K.JAISWAL, FATHER OF THE ASSESSEE. THE ASSESSEE ADOPTED THE RA TE OF THE LAND @RS.20,000/- PER COTTAH AS FAIR MARKET VALUE AS ON 01.04.1981 AND GOT IT VA LUED BY THE REGISTERED VALUER VIDE VALUATION REPORT DATED 04.01.2007. THE ASSESSING OF FICER MADE THE SUSPICION AND ESTIMATED THE FAIR MARKET VALUE AT RS.500/- PER COT TAH WITHOUT ANY BASIS BUT MERELY ON SUSPICION. THE REASONS TO BELIEF MUST BE BONA FIDE . OUR ATTENTION WAS DRAWN TOWARDS PAGE 52 WHICH CONTAINS A LETTER WRITTEN BY THE DIST RICT SUB REGISTRAR TO THE ASSISTANT COMMISSIONER OF INCOME-TAX. IN THE LETTER, DISTRICT AVAR HAS CLEARLY STATED THAT IN THEIR OFFICE, THERE IS NO DOCUMENT WHICH MAY PROVE THE MARKET VALUE IN THE YEAR 1981. THE LD. A.R. VEHEMENTLY CONTENDED IF IN THE REASONS ARE NOT BONA FIDE, THE PROCEEDINGS UNDER SECTION 147 ARE ILLEGALLY INITIATED AND THERE FORE, IT MUST BE STRUCK DOWN. ON A QUERY FROM THE BENCH HAVE YOU FILED ANY RETURN IN RESPONSE TO NOTICE UNDER SECTION 147 AND THEREAFTER ASKED FOR THE COPY OF THE REASONS TO BELIEF HE SAID NEITHER THE ASSESSEE HAS FILED THE RETURN NOR HE HAS ASKED FOR THE COPY OF THE REASONS. THE REASONS TO BELIEVE WAS RECEIVED BY THE ASSESSEE SUBSEQUENTLY. THE LD. D.R., ON THE OTHER HAND, CONTENDED THAT THE ASSESSEE HAS NOT DISCHARGED ITS OBLIGATION AS HE IS REQUIRED TO DO, AFTER RECEIPT OF THE NOTICE UNDER SECTION 148 I.E. FILING OF THE RET URN AND ASKING OF THE COPY OF THE REASONS TO BELIEVE. THE ASSESSING OFFICER DID NOT ACCEPT AN D COMPLETED THE ASSESSMENT UNDER SECTION 144. THE FACT THAT THE ASSESSEE SOLD LAND I S AVAILABLE IN THE ORIGINAL RETURN. REASONS ARE NOT BASED ON SUSPICION BUT ARE BASED ON THE INFORMATION. THIS COURT DOES NOT HAVE ANY JURISDICTION TO LOOK INTO THE SUFFICIE NCY OF THE REASONS. THE ONLY JURISDICTION IS LIMITED WHETHER THERE IS A PRIMA FACIE MATERIAL WITH THE ASSESSING OFFICER TO RECORD THE REASONS THAT THERE IS ESCAPEMENT OF THE INCOME. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y CONSIDERED THE SAME ALONG WITH THE ORDERS OF THE TAX AUTHORITIES BELOW. IN THIS CA SE, WE NOTED THAT IN RESPONSE TO NOTICE UNDER SECTION 148, THE ASSESSEE DID NOT FILE THE RE TURN AND DID NOT ASK FOR THE COPY OF THE REASONS. EVEN NO OBJECTION WAS FILED BEFORE THE ASS ESSING OFFICER. THE HONBLE SUPREME COURT IN THE CASE OF G.K.N. DRIVESHAFT INDI A LTD. VS- ITO 259 ITR 19 IN WHICH THE HONBLE SUPREME COURT AT PAGE 20, LAID DO WN THE PROCEDURE, IN CASE THE NOTICE IS ISSUED UNDER SECTION 147 AS UNDER: HOWEVER, WE CLARIFY WHEN A NOTICE UNDER SECTION 148 OF THE INCOME-TAX IS ISSUED, THE PROPER COURSE OF ACTION FOR THE ASSESSEE IS TO FILE A RETURN AND IF HE SHOULD DESIRE, TO SEEK REASONS FOR ISSUING NOTICE . THE ASSESSING OFFICER IS BOUND TO FURNISH REASONS WITHIN A REASONABLE TIME . ON RECEIPT OF REASONS , THE NOTICEE IS ENTITLED TO FILE OBJECTION TO ISSUANCE OF NOTIC E AND THE ASSESSING OFFICER IS BOUND TO DISPOSE OF THE SAME BY PASSING A SPEAKI NG ORDER. 4.1 IN VIEW OF THE ABOVE CLEAR-CUT MANDATE OF THE H ONBLE SUPREME COURT, WHICH IS BINDING ON US AS WELL AS ON THE ASSESSEE, THE ASSES SEE WAS UNDER OBLIGATION TO FILE THE RETURN IN RESPONSE TO THE NOTICE UNDER SECTION 148 BEFORE THE ASSESSING OFFICER. THE ASSESSEE IN THIS CASE HAS NOT FILED ANY RETURN BEFO RE THE ASSESSING OFFICER. WE, THEREFORE, IN THE INTEREST OF JUSTICE AND FAIR PLAY TO BOTH TH E PARTIES, SET ASIDE THE ORDER OF THE ASSESSING OFFICER AND RESTORE THE ISSUE TO THE ASSE SSING OFFICER WITH THE DIRECTION THAT THE ASSESSEE AND THE ASSESSING OFFICER SHALL FOLLOW THE PROCEDURE AS HAS BEEN LAID DOWN BY THE SUPREME COURT AND THE ASSESSEE SHALL TAKE AL L THE OBJECTIONS AS TO THE VALIDITY OF THE INITIATION OF THE PROCEEDINGS BEFORE THE ASSESS ING OFFICER. THE ASSESSING OFFICER SHALL FIRST DISPOSE OF THE OBJECTIONS TAKEN BY THE ASSESSEE AND THEN ONLY PROCEED WITH THE ASSESSMENT. WE ARE NOT DEALING WITH THE MERIT OF TH E CASE SINCE WE HAVE ALREADY SET ASIDE THE ASSESSMENT AND RESTORED IT TO THE FILE OF THE A SSESSING OFFICER TO MAKE A FRESH ASSESSMENT. THE OTHER GROUND TAKEN BY THE ASSESSEE, IN OUR OPINION, DOES NOT REQUIRE ANY ADJUDICATION AND THE ASSESSING OFFICER SHALL FRAME THE ASSESSMENT, AFTER CONSIDERING THE OBJECTIONS OF THE ASSESSEE, IN ACCORDANCE WITH LAW. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 30 TH APRIL, 2013. SD/- [D.T.GARASIA] [P.K.BANSAL] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 30 TH APRIL, 2013 COPY OF ORDER FORWARDED TO : 1. MANAN JAISWAL, JAMSHEDPUR 2. ACIT, CIRCLE-2, JAMSHEDPUR 3. C.I.T.(A), 4. THE .C.I.T., 5. THE D.R., I.T.A.T., TRUE COPY, BY ORDER, [MST, SR.PS] SR. PRIVATE SECRETARY (ON T OUR) ITAT, RANCHI