DEVANATHAN GOVINDRAJAN, MUMBAI V. ASST CIT RG 21(2), MUMBAI

ITA 2612/MUM/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 101007 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 06-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAYANT KUMAR
• Assessee Lawyers: V G GINDE
• Keywords: Revised return
• Section: 143(3); 54; 263

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE S/SHRI B.R.BASKARAN , AM AND AMARJIT SINGH , JM ./ I.T.A. NO . 2612 / MUM/20 1 5 ( / ASSESSMENT YEA R : 20 10 - 11 ) SHRI DEVANATHAN GOVINDRAJAN, D1 - 253, KARMAKSHETRA, FLANT ROAD, SION, (E), MUMBAI - 400037 / VS. ASSTT. COMMISSIONER OF INCOME TAX RANGE 21(2), C - 1 0 , 6TH FLOOR, PRATYAKSHAKAR BHAVAN, BANDRA - KURLA COMPLEX, BANDRA (E), MUMBAI - 400051. ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN. : ABQPG2455E / APPELLANT S BY SHRI V G GINDE / R EVENUE BY SHRI JAYANT KUMAR / DATE OF HEARING : 0 3 .9 . 201 5 / DATE OF PRONOUNCEMENT: 11 . 9. 201 5 / O R D E R P ER B R BASKARAN, AM : THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE REVISION ORDER DATED 27 - 02 - 2015 PASSED BY LD CIT - 26, MUMBAI U/S 263 OF THE ACT FOR ASSESSMENT YEAR 2010 - 11. 2. THE LD COUNSEL APPEARING FOR THE ASSESSEE SUBMITTED THAT THE ASSESSMENT IN THE HANDS OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION WAS COMPLETED U/S 143(3) OF THE ACT ON 31.12.2012. THE ASSESSEE HAD SOLD ONE HOUSE PROPERTY AND INVESTED THE CAPITAL GAINS IN PURCHASE OF TWO ADJACENT FLATS. ACCORDINGLY, THE ENTIRE CAPITAL GAIN BECAME EXEMPT IN VIEW OF SEC. 54 OF THE ACT. IN THE RETURN OF INCOME, THE ASSESSEE DID NOT ITA NO. 2612 / MUM/20 1 5 2 DISCLOSE THE CAPITAL GAIN, AS THE SAME WAS NIL DUE TO INVESTMENT MADE IN NEW FLATS IN VIEW OF THE PROVISIONS OF SEC. 54 OF THE ACT. THE LD A.R SUBMITTED THAT THE ASSESSING OFFICER DID MAKE ENQUIRIES ABOUT THE SALE OF RESIDENTIAL HOUSE, CAPITAL GAINS ETC. DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND THE ASSESSEE ALSO FURNISHED REPLY, VIDE HIS LETTER DATED 28 - 12 - 2012, WITH REGARD TO THE CAPITAL GAINS AND ALSO ABOUT EXEMPTION CLAIMED U/S 54 OF THE ACT. HE SUBMITTED THAT THE ASSESSEE ALSO FURNISHED REVISED COMPUTATION OF TOTAL INCOME. ACCORDINGLY, THE AO ACCEPTED THE CLAIM FOR DE DUCTION U/S 54 OF THE ACT AND ALSO THE FACT THAT THE ASSESSEE IS NOT LIABLE TO PAY ANY TAX ON CAPITAL GAIN. ACCORDINGLY, THE AO PASSED THE ASSESSMENT ORDER, HOWEVER, HE FAILED TO DISCUSS ANYTHING ABOUT THE CAPITAL GAINS THEREIN. 3. THE LD A.R SUBMITT ED THAT THE LD CIT INITIATED REVISION PROCEEDINGS U/S 263 OF THE ACT. THE LD A.R, INVITING OUR ATTENTION TO THE NOTICE ISSUED BY LD CIT, SUBMITTED THAT THE LD CIT HAS EXPRESSED THE VIEW THAT THE EXEMPTION ALLOWED BY THE AO U/S 54 OF THE ACT BY ACCEPTING R EVISED COMPUTATION OF INCOME IS NOT ALLOWABLE IN VIEW OF THE DECISION OF HONBLE SUPREME COURT RENDERED IN THE CASE OF GOETZ INDIA LTD VS. CIT (284 ITR 323), SINCE NO REVISED RETURN OF INCOME WAS FILED. HE HAS FURTHER OBSERVED THAT THE ASSESSEE HAS PURCHA SED TWO RESIDENTIAL HOUSES AND HENCE THE BASIC CONDITION REQUIRED FOR EXEMPTION U/S 54 OF THE ACT WAS NOT FULFILLED. 4. THE LD. A.R CONTENDED THAT THE LD CIT WAS NOT JUSTIFIED IN INITIATING THE REVISION PROCEEDINGS, SINCE THE ASSESSING OFFICER HAS E XAMINED THE CLAIM OF THE ASSESSEE AND, ON BEING SATISFIED WITH THE CLAIM, DID NOT MAKE ANY ADDITION. ACCORDINGLY, THE LD A.R SUBMITTED THAT THE REVISION PROCEEDINGS WILL NOT BE VALID, IF THE ASSESSING OFFICER HAS TAKEN A PLAUSIBLE VIEW. THE LD A.R FURTHE R SUBMITTED THAT THE ASSESSEE HAS, EVEN THOUGH PURCHASED TWO ADJACENT FLATS, YET THE ENTIRE CAPITAL GAIN WOULD BE EXEMPT ITA NO. 2612 / MUM/20 1 5 3 EVEN IF THE CLAIM U/S 54 OF THE ACT IS RESTRICTED TO ONE FLAT. THE LD A.R FURTHER SUBMITTED THAT, EVEN OTHERWISE THE ADJACENT FLATS JO INED TOGETHER SHALL BE CONSTRUED AS A SINGLE RESIDENTIAL HOUSE, IN VIEW OF THE DECISION RENDERED BY HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. DEVDAS NAIK (366 ITR 12). THE LD A.R FURTHER SUBMITTED THAT THE LD CIT HAS NOTICED THAT THE NEW FLATS WERE PURCHASED IN THE JOINT NAME OF ASSESSEE AND HIS SPOUSE AND THE SAID JOINT PURCHASE WAS ALSO FOUND FAULT WITH BY THE LD CIT IN THE REVISION ORDER. THE LD A.R SUBMITTED THAT THE VIEW SO ENTERTAINED IS ALSO NOT CORRECT IN VIEW OF THE DECISION RENDERED BY TH E CO - ORDINATE BENCH OF TRIBUNAL IN THE CASE OF SHRI VASUDEO PANDURANG GINDE (ITA NO.4285 & 4540/MUM/2009 DATED 06 - 06 - 2012), WHEREIN THE TRIBUNAL HAS HELD THAT THE PURCHASE OF PROPERTY IN INCLUDING THE NAME OF WIFE WILL NOT DISENTITLE THE ASSESSEE TO CLAIM DEDUCTION U/S 54 OF THE ACT, IF THE PURCHASE CONSIDERATION WAS CONTRIBUTED BY THE ASSESSEE. THE LD A.R SUBMITTED THAT THE CO - ORDINATE BENCH HAS RELIED UPON THE DECISION RENDERED BY THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. MRS. JENNIFER BHID E (2011)(15 TAXMANN.COM 82) AND ALSO OTHER DECISIONS RENDERED BY THE TRIBUNAL. 5. ACCORDINGLY, THE LD A.R CONTENDED THAT THE IMPUGNED REVISION ORDER IS LIABLE TO SET ASIDE. 6. ON THE CONTRARY, THE LD D.R SUBMITTED THAT THE ASSESSING OFFICER DID N OT DISCUSS ANYTHING ABOUT THE DEDUCTION ALLOWED U/S 54 OF THE ACT. HE FURTHER SUBMITTED THAT THE ASSESSING OFFICER USUALLY ATTACHES AN OFFICE NOTE DISCUSSING ABOUT THE IMPORTANT POINTS RELATING TO ASSESSMENTS. THE LD D.R SUBMITTED THAT THE ASSESSING OFFI CER DID NOT RECORD ANYTHING ABOUT THE DEDUCTION ALLOWED U/S 54 OF THE ACT. ACCORDINGLY THE LD D.R SUBMITTED THAT IT IS NOT CLEAR AS TO WHETHER THE AO APPLIED HIS MIND ON THE IMPUGNED ITA NO. 2612 / MUM/20 1 5 4 ISSUE AND HENCE THE LD CIT WAS JUSTIFIED IN INITIATING THE PRESENT REVIS ION PROCEEDINGS. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ADMITTED FACTS ARE THAT THE ASSESSEE DID NOT DISCLOSE THE DETAILS RELATING TO CAPITAL GAINS IN THE RETURN OF INCOME ORIGINALLY FILED BY HIM. HE HAS FILED REVISED COMPUT ATION OF INCOME DURING THE COURSE OF ASSESSMENT PROCEEDINGS, WHEREIN THE CAPITAL GAINS WORKINGS WAS GIVEN BY THE ASSESSEE. IT APPEARS THAT THE AO ASKED ABOUT THE DEDUCTION CLAIMED U/S 54 OF THE ACT DURING THE HEARING HELD ON 20 - 12 - 2012 AND THE ASSESSEE HA S GIVEN HIS REPLY IN HIS LETTER DATED 28 - 12 - 2012. IT HAS BEEN FURTHER SUBMITTED THAT THE ASSESSEE DID NOT FILE REVISED RETURN OF INCOME, SINCE THE TOTAL INCOME SHALL REMAIN THE SAME EVEN AFTER INCLUDING THE DETAILS RELATING TO CAPITAL GAINS IN THE REVISED RETURN. ACCORDINGLY IT WAS SUBMITTED THAT THE ASSESSEE FILED REVISED COMPUTATION OF INCOME. 8. FROM THE REVISION ORDER PASSED BY LD CIT, WE NOTICE THAT THE LD CIT HAS POINTED OUT FOLLOWING TWO DEFECTS, VIZ., (A) THE ASSESSEE HAS PURCHASED THE NEW FLA TS IN THE JOINT NAMES, I.E., IN HIS NAME AND IN THE NAME OF HIS SPOUSE. (B) THE ASSESSEE HAS PURCHASED TWO FLATS, THUS VIOLATING THE BASIC CONDITION OF SEC. 54 OF THE ACT. EVEN THOUGH THE LD CIT DID STATE IN THE NOTICE THAT THE AO SHOULD NOT HAVE ENTERTAI NED THE CLAIM U/S 54 OF THE ACT WITHOUT A REVISED RETURN OF INCOME, YET THE LD CIT DID NOT POINT OUT THE SAME IN THE REVISION ORDER PASSED BY HIM. HENCE, IN OUR VIEW, THE IMPUGNED REVISION ORDER HAS BEEN PASSED ONLY ON ACCOUNT TWO DEFICIENCIES LISTED OUT ABOVE. 9. WE NOTICE THAT THE ASSESSEE HAD SOLD THE RESIDENTIAL FLAT FOR RS.1.40 CRORES AND COMPUTED CAPITAL GAIN AT RS.92,82,338/ - AND THE PURCHASE OF NEW FLATS STOOD AT RS.2.59 CRORES. THE HOUSE WAS SOLD ON 1.9. 200 9 AND ITA NO. 2612 / MUM/20 1 5 5 THE NEW FLATS WERE PURCHASED , VI DE AGREEMENT DATED 6.10.2008 . ACCORDING TO LD A.R, THE ENTIRE CAPITAL GAINS WOULD BE EXEMPT, EVEN IF THE COST OF ONE FLAT WAS ALLOWED AS DEDUCTION U/S 54 OF THE ACT. THE LD A.R HAS RELIED UPON THE DECISION RENDERED BY THE CO - ORDINATE BENCH IN THE CASE O F SHRI VASUDEO PANDURANG GINDE (SUPRA) TO SUBMIT THAT THE PURCHASE OF NEW HOUSE IS PERMISSIBLE U/S 54 OF THE ACT, PROVIDED THAT THE CONSIDERATION WAS CONTRIBUTED BY THE ASSESSEE. WITH REGARD TO THE PURCHASE OF TWO ADJACENT FLATS, THE ASSESSEE RELIED UPON THE DECISION OF JURISDICTIONAL HIGH COURT RENDERED IN THE CASE OF DEVDAS NAIK (SUPRA). THUS, WE NOTICE THAT BOTH THE DEFICIENCIES POINTED OUT BY LD CIT HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE DECISIONS OF HONBLE HIGH COURTS AND TRIBUNAL. 1 0. THE LD A.R HAS ALSO CONTENDED THAT THE ASSESSING OFFICER DID EXAMINE ABOUT THE CAPITAL GAINS DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND HENCE THE DECISION TAKEN BY HIM TO ALLOW THE DEDUCTION U/S 54 OF THE ACT IS ONE OF THE POSSIBLE VIEWS AND HENCE THE IMPUGNED REVISION ORDER WAS NOT JUSTIFIED. THE REPLY DATED 28.12.2012 FURNISHED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER WOULD SHOW THAT THERE WAS A QUERY FROM THE AO AND THERE WAS A REPLY FROM THE SIDE OF THE ASSESSEE. HOWEVER, IT IS PERTINENT TO NOTE THAT THERE IS NO REFERENCE IN THE ASSESSMENT ORDER ABOUT THE LETTER DATED 28.12.2012, REFERRED ABOVE. 11. BE THAT AS IT MAY, THERE SHOULD NOT BE ANY DISPUTE THAT THE REVISION ORDER PASSED BY LD CIT COULD BE JUSTIFIED ONLY IF BOTH THE CONDITIONS PRESCRIBED IN SEC. 263 ARE SATISFIED VIZ., (A) THE ASSESSMENT ORDER IS ERRONEOUS AND (B) IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE ARE SATISFIED. IT IS SO HELD BY HONBLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIAL COMPANY (243 ITR 83). IN THE INSTANT CASE, THE LD CIT HAS POINTED OUT THAT THE CLAIM FOR DEDUCTION U/S 54 OF THE ACT WAS ERRONEOUS AND ALSO PREJUDICIAL TO THE INTERESTS OF REVENUE IN VIEW OF THE TWO ITA NO. 2612 / MUM/20 1 5 6 DEFICIENCIES POINTED OUT BY HIM. WE HAVE EARLIER NOTICED THAT THE ISSUES RELATING TO THE ERRORS OR DEFICIENCIES POINTED OUT BY THE LD CIT HAVE BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL AND HIGH COURTS, MEANING THEREBY, THE ASSESSMENT ORDER CANNOT BE CONSIDERED TO BE ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE IN VIEW OF THE SAID DEFICIENCIES. THUS, WE NOTICE THAT BOTH THE DEFICIENCIES POINTED OUT BY LD CIT ARE HIS OWN VIEWS, WHICH COULD BE CONSIDERED AS ONLY POSSIBLE VIEW. 12. IN VIEW OF THE FOREGOING DISCUSSIONS, WE ARE OF THE VIEW THAT THE IMPUGNED REVIS ION ORDER CANNOT BE UPHELD. ACCORDINGLY, WE SET ASIDE THE ORDER PASSED BY LD CIT. 13. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. PRONOUNCED ACCORDINGLY ON 03 RD SEPT, 2015. 11 TH SEPT , 2015 S D SD ( AMARJIT SINGH ) ( B.R. BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI: 11TH SEPT , 2015 . . . ./ SRL , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - CONCERNED 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI CONCERNED 6. / GUARD FILE. / BY ORDER, T RUE COPY (ASSTT. REGISTRAR) , /ITAT, MUMBAI