SHRI ANURAG CHANDEL, CHITRAKOOT V. INCOME TAX OFFICER, WARD-5(4), BANDA, BANDA

ITA 255/ALLD/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 2800 (ITAT-ALLAHABAD)
• Duration Of Justice: 2 year(s) 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-11-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2015-2016
• Appeal Filed On: 14-06-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: PRAVEEN GODWALE
• Keywords: Unexplained investment; Principle of natural justice; Fair market value; Set aside
• Section: 147; 69; 148; 56; 56(2)(vii)(b)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, ALLAHABAD BENCH, ALLAHABAD ( THROUGH VIRTUAL COURT) BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER ITA NO.255/ALLD/2018 ASSESSMENT YEAR: 2015 - 16 SHRI ANURAG CHANDEL, CHITRAKOOT PATEL NAGAR, MISSION ROAD, KARWI, CHITRAKOOT. V. ITO, WARD - 5 (4 ), BANDA TAN/PAN: BDAPC4938H (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI SHRI PRAVEEN GODWALE, CA RESPONDENT BY: SHRI A. K. SINGH, SR. DR DATE OF HEARING: 24 . 11 . 2020 DATE OF PRONOUNCEMENT: 25 . 11 . 2020 O R D E R PER VIJAY PAL RAO , JUDICIAL MEMBER : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 20.03.2018 PASSED BY COMMIS SIONER OF INCOME TAX (APPEALS ) - II, KANPUR FOR ASSESSMENT Y EAR 2015 - 16. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. THAT IN ANY VIEW OF THE MATTER ASSESSMENT MADE ON INCOME OF RS. 19,91,320/ - BY ORDER DATED 04.12.2017 PASSED U/S 147/143(3) IS BAD BOTH ON THE FACTS AND IN LAW. 2. THAT IN ANY VIEW OF THE MATTER THE PROCEEDING INITIATED U/S 148 IS NOT CORRECT AND THE LEGA L PROCEDURE WAS NOT FOLLOWED NOR THE REASONS PROPERLY RECORDED HENCE THE ENTIRE ASSESSMENT FRAMED IS AN ILL LEGAL ASSESSMENT AND LIABLE TO BE DECLARED ANNULLED. 3. THAT IN ANY VIEW OF THE MATTER THE LD CIT(A) WAS WRONG IN DECIDING THE APPEAL EXPARTE WITHO UT PROVIDING REASONABLE OPPORTUNITY TO THE ASSESSEE HENCE THE ORDER IS NOT SPEAKING ORDER. ITA NO.255/ALLD/2018 ASSESSMENT YEAR: 2015 - 16 SH RI ANURAG CHANDEL, CHITRAKOOT 2 4. THAT IN ANY VIEW OF THE MATTER ADDITION OF RS. 11,66,250/ - AS MADE BY THE ASSESSING OFFICER U/S 56(2)(VII) (B)(I) OF THE IT ACT BY ADDING THE DIFFERENCE BETWEEN THE STAMP VALUE AND THE ACTUAL SALE CONSIDERATION AND HIS ACTION AS CONFIRMED BY CIT(A)IS HIGHLY UNJUSTIFIED. 5. THAT IN ANY VIEW OF THE MATTER THE ASSESSING OFFICER WAS WRONG IN ADDING RS. 11,66,250/ - BEING ONE - FOURTH OF THE TOTAL MARKET VALUE U/S 56(2)(VI) (B)(II) WITHOUT CONSIDERING THE DEED, THE LOCATION OF THE PLOT, THE DEFECTS IN THE SAID PLOT WHICH WAS ALTOGETHER IGNORED AND SIMPLY BY TAKING NOTIONAL VALUE ADDITION MADE WHICH ACTION IS HIGHLY UNJUSTIFIED. 6. THAT IN ANY VIE W OF THE MATTER ADD ITION OF RS. 5,85,730/ - BY ALLEGING UNEXPLAINED INVESTMENT IN PURCHASE OF PROPERTY ADDED U/S 69 OF THE IT ACT BY THE ASSESSING OFFICER AND HIS ACTION AS CONFIRMED BY LD CIT(A) IS HIGHLY UNJUSTIFIED. 7. THAT IN ANY VIEW OF THE MATTER FINDING AND OBSERVATION OF BOTH THE TWO LOWER AUTHORITIES WITH REGARD TO ADDITION OF RS.11,66,250/ - AND RS. 5,85,730/ - ARE TOTALLY INCORRECT AND CONTRARY TO THE FACT OF THE CASE . 8. THAT IN ANY VIEW OF THE MATTER THE APPELLANT RESERVES HIS RIGHTS TO TAKE ANY FRESH GROUND OF THE APPEAL BEFORE HEARING OF THE APPEAL . IT IS THEREFORE PRAYED THAT A SUITABLE ORDER MAY KINDLY BE PASSED AND RELIEF MAY PLEASE BE ALLOWED ACCORDINGLY. 2. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE HAS STATED THAT GROUND NO.3 OF THE ASSESSEES APPEAL MAY BE TAKEN UP FIRST REGARDING THE EX PARTE ORDER PASSED BY THE CIT(A) WITHOUT PROVIDING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. THE ASSESSEE IS AN INDIVIDUAL AND DERIVED INCOME FROM BUSINESS AS DECLARED IN THE RETURN OF INCOME FILED ON 17.03.2017. THEREAFTER, ON THE BASIS OF INFORMATION OF PURCHASE OF PROPERTY BY THE ASSESSEE FOR A CONSIDERATION OF RS.18,75,000/ - AS AGAINST THE STAMP DUTY VALUATION OF RS.65,40,000/ - , THE AO REOPENED THE ASSESSMENT BY ISSUING NOTICE U/S 148 ON 10.08.2017. IN THE REASSESSMENT ORDER PASSED U/S 147 R.W.S 143(3), THE AO MADE ADDITION OF RS.11,66,250/ - U/S 56(2)(VII)(B)(II) OF THE INCOME TAX ACT BEING THE DIFFERENCE BETWEEN THE PURCHASE CONTRIBUTION AND STAMP DUTY VALUATION. 3. THE LD. AR OF THE ASSESSEE HAS SUBMITTED THAT THE AO HAS MADE THE ADDITION WITHOUT CONSIDERING THE OBJECTIONS RAISED BY THE ASSESSEE AS WELL AS THE SALE INSTANCE OF THE LAND IN THE VICINITY OF THE PROPERTY IN QUESTION. HE HAS FURTHER SUBMITTED THAT THE CIT(A) HAS CONFI RMED THE ADDITION MADE BY THE AO WITHOUT DECIDING THE APPEAL OF THE ITA NO.255/ALLD/2018 ASSESSMENT YEAR: 2015 - 16 SH RI ANURAG CHANDEL, CHITRAKOOT 3 ASSESSEE ON MERITS. THUS THE LD. AR HAS PLEADED THAT THE ASSESSEE MAY BE GIVEN ONE MORE OPPORTUNITY OF HEARING TO PRESENT ITS CASE BEFORE THE CIT(A). ON THE OTHER HAND, THE LD. DR HAS OBJE CTED TO THE GRANT OF ONE MORE OPPORTUNITY OF HEARING TO THE ASSE SSEE AND SUBMITTED THAT DESPITE SUFFICIENT OPPORTUNITIES GRANTED BY THE AO AS WELL AS THE CIT(A), THE ASSESSEE HAS NOT PRODUCED SATISFACTORY REPLY AS TO WHY THE PROVISIONS OF SECTION 56(2)(VII )(B)(II) OF THE INCOME TAX ACT SHOULD NOT APPLICABLE IN THE CASE OF THE ASSESSEE. 4. HAVING CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIALS ON RECORD, IT IS MANIFEST FROM THE ASSESSMENT ORDER THAT THE ASSESSEE FILED HIS REPLY DATED 29 .11.2017 IN RESPONSE TO THE NOTICE ISSUED BY THE AO ON 16.11.2017. IN THE SAID REPLY AS REPRODUCED BY THE AO, THE ASSESSEE HAS CLAIMED THAT THE ACTUAL SALE PRICE OF THE PROPERTY IN QUESTION IS AS SHOWN IN THE SALE DEED AND IS ALSO SUPPORTED BY THE COMPARAB LE SALE INSTANCE OF THE LANDS IN THE VICINITY OF THE LAND IN QUESTION . T HOUGH THESE OBJECTIONS WERE RECORDED BY THE AO IN THE ASSESSMENT ORDER H OWEVER , THE SAME WE RE FOUND TO BE NOT CONVINCING WHILE MAKING THE ADDITION U/S 56(2)(VII)(B) (II) OF THE INCOME T AX ACT. IT IS PERTINENT TO NOTE THAT ONCE THE ASSESSEE HAS RAISED THE OBJECTION AGAINST ADOPTING STAMP DUTY VALUATION FOR THE PURPOSE OF ADDITION U/S 56(2)(VII)(B) (II) OF THE INCOME TAX ACT AS PROVIDED IN THE 3 RD PROVISO TO CLAUSE (VII) OF SUB - SECTION 2 OF SECTION 56 T HEN THE AO IS BOUND TO REFER THE VALUATION OF SUCH PROPERTY TO VALUATION OFFICER AS PER THE PROVISION OF SECTION 50 C(2) OF THE INCOME TAX ACT. THE AO HAS NEITHER GIVEN ANY REASON FOR NOT REFERRING TO VALUATION OFFICER NOR CITED ANY SALE INSTANCE IN SUPPORT OF ADOPTING THE STAMP DUTY VALUATION AS FAIR MARKET VALUE WHILE MAKING THE ADDITION U/S 56(2)(VII)(B)(II) OF THE ACT. FURTHER THE CIT(A) HAS REFERRED THE NOTICE IS SENT THROUGH E - MAIL AT THE E - MAIL - ID GIVEN AT THE TIME OF FILING THE APPEAL ELECTRONICALLY AND ON NON - COMPLIANCE OF THE SAID NOTICE SENT THROUGH E - MAIL, THE APPEAL OF THE ASSESSEE IS DISMISSED EX PARTE. THE IMPUGNED ORDER OF THE CIT(A) HAS NOT DISCUSSED ANYTHING REGARDING THE OBJECTIONS RA ISED BY THE ASSESSEE FOR ADOPTING FAIR MARKET VALUE BY THE AO. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN THE INTEREST OF NATURAL JUSTICE, THE IMPUGNED ORDER OF THE CIT(A) IS SET ASIDE AND THE MATTER IS REMANDED TO THE RECORD OF THE CIT(A) FOR GRANT ING ONE MORE ITA NO.255/ALLD/2018 ASSESSMENT YEAR: 2015 - 16 SH RI ANURAG CHANDEL, CHITRAKOOT 4 OPPORTUNITY OF HEARING TO THE ASSESSEE AND PASS A SPEAKING ORDER AFTER CONSIDERING THE OBJECTIONS OF THE ASSESSEE. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PR ONOUNCED IN THE OPEN COURT ON 25 /11 / 2020. SD/ - [ VIJAY PAL RAO ] JUDICIAL MEMBER DATED: 25 /11 /2020 RS COPY FORWARDED TO: 1. APPELLANT - SHRI ANURAG CHANDEL, CHITRAKOOT 2. RESPONDENT - ITO, WARD - 5(4 ), BANDA 3. CIT(A) - 4. CIT 5. DR - BY ORDER ASSISTANT REGISTRAR