Sunil S/o Mool Chand, Gurgaon V. ITO, Rewari

ITA 2640/DEL/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7319 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 11 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2006-2007
• Appeal Filed On: 10-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SURENDER PAL
• Keywords: Capital asset; Non passing of speaking order
• Section: 54F; 148

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL, DELHI BENCH F, NEW DELHI BEFORE : SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO. 2640/DEL/2016 ASSESSMENT YEAR: 2006-07 SH. SUNIL S/O MOOL CHAND, THROUGH LEGAL HEIR SMT. NIRMAL & SANSAR, C/O MAHAVIR SINGH, ADV., 1078, SECTOR-15 PART-2, GURGAON. PAN-AHEPY1328C (APPELLANT) VS. INCOME - TAX OFFICER, WARD-2, REWARI. (RESPONDENT) APPELLANT BY SH. MAHVIR SINGH, ADVOCATE RESPONDENT BY SH. SURENDER PAL, SR. DR ORDER PER L.P. SAHU, A.M.: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER DATED 09.02.2016 OF LD. CIT(A)-2, GURGAON FOR THE ASSESSM ENT YEAR 2006-07 ON THE FOLLOWING GROUNDS : 1 (A). THE LD. COMMISSIONER OF INCOME TAX (A) HAS ER RED IN LAW AND IN FACTS IN DECIDING FIRST GROUND OF APPEAL REGARDI NG PROPER SERVICE OF NOTICE UNDER SECTION 148 OF I.T. ACT WITHOUT LOOKING IN TO THE RECORD AND WITHOUT CALLING FOR ANY EVIDENCE OF SERVICE FROM TH E AO ON WHOM THE BURDEN OF SERVICE LIES AT THE FIRST INSTANCE BY PAS SING ALMOST NON SPEAKING ORDER IN JUST 8 WORDS 'THERE IS NO EVIDENCE OF NON-S ERVICE OF NOTICE'. IT IS PRAYED THAT DUE TO ABOVE FACTS AND CIRCUMSTANCES OF THE CASE THE ASSESSMENT PROCEEDINGS MAY BE QUASHED AB-INITIO. DATE OF HEARING 27.02.2019 DATE OF PRONOUNCEMENT 26.04.2019 ITA NO. 2640/DEL/2016 2 (B). THAT THE ID. CIT (A) AS WELL AS THE LD. AO FAIL ED TO SEE THE REPORT OF THE SERVER ON THE NOTICE U/S 148 ITSELF AND ALSO TH E APPEAL WHICH WAS FILED THROUGH LEGAL HEIR THAT THE ASSESSEE IS DEAD AND HE NCE NOT AVAILABLE. SH. SUNIL KUMAR HAD DIED ON 18/12/2007 MUCH BEFORE THE DATE OF ISSUE OF NOTICE. THE LD. CIT (A) HAS ERRED IN LAW BY CONFIRMIN G THE ASSESSMENT ON A DEAD PERSON. IT IS PRAYED THAT DUE TO ABOVE FACTS A ND CIRCUMSTANCES OF THE CASE THE INITIATION OF ASSESSMENT PROCEEDINGS MAY B E QUASHED. 2. THE LD. CIT (A) HAS ALSO ERRED IN FACT AND IN LAW BY UPHOLDING THE ISSUE OF NOTICE U/S 148 OF THE ACT ON MERITS WITHOU T GIVING JUST A CURSORY LOOK TO THE REASONS RECORDED AND ALSO QUOTED IN THE ASSESSMENT AS WELL AS APPELLATE ORDER. IN VIEW OF ABOVE FACTS, IT IS PRAY ED THE ASSESSMENT PROCEEDINGS MAY BE HELD AS NULL AND VOID . 3. THE LD. CIT (A) HAS ERRED IN LAW AND IN FACTS BY A SSUMING THAT THE LAND IN QUESTION IS COVERED IN THE DEFINITION OF CA PITAL ASSET IN VIEW OF THE NOTIFICATION ISSUED BY CBDT VIDE F.NO. 164/03/87 ITA I DATED 06-01-1994 BY RELYING ON THE TEXT FROM TAXMANN WHILE IGNORING THE OFFICIAL GAZETTE NOTIFICATION PRODUCED BY THE ASSESSEE DURING APPELL ATE PROCEEDINGS AND ALSO ADMITTED BY THE AO IN HIS REMAND REPORT THAT T HERE IS MISTAKE IN THE NAME OF THE PLACE WHICH IS DHANTERA DISST MOHINDERG ARH IN THE NOTIFICATION WHERE AS LAND IN QUESTION WAS IN DHARU HERA DISST REWARI. IT IS PRAYED THAT DUE TO ABOVE FACTS THE ABOVE PROPERTY M AY NOT BE HELD AS CAPITAL ASSET. 4. THAT THE LD. CIT (A) HAS ALSO ERRED IN LAW AND IN FACTS BY CONFIRMING THE TAXING OF TOTAL RECEIPTS FROM SALE OF LAND IN P LACE OF TAXING THE CAPITAL GAIN ONLY COMPUTED AS PER PROVISIONS OF LAW AFTER D EDUCTING THE INDEXED VALUE OF THE PROPERTY FROM THE TOTAL RECEIPTS BY HO LDING THAT THIS CONTENTION DOES NOT FIND PLACE SEPARATELY IN GROUND S OF APPEAL THOUGH CONTESTED STRONGLY DURING APPELLATE PROCEEDINGS. IT IS PRAYED THAT ACTION OF THE CIT(A) IN CONFIRMING THE ORDER OF THE AO IN T AXING THE TOTAL RECEIPTS BE QUASHED AND NECESSARY COMPUTATION OF CAPITAL GAI N AS PER LAW MAY KINDLY BE ALLOWED. ITA NO. 2640/DEL/2016 3 5. THE LD. CIT (A) HAS ERRED IN LAW AND IN FACTS IN R EJECTING THE CLAIM OF THE ASSESSEE U/S 54F OF THE I.T. ACT. IT IS PRAYED T HAT THE ASSESSEE MAY BE ALLOWED THE CLAIM MADE U/S 54F OF THE ACT. 2. FROM THE ABOVE GROUNDS OF APPEAL AND THE ATTENDI NG FACTS OF THE CASE, IT REVEALS THAT THE ASSESSEE HAS CHALLENGED THE IMPUGN ED ORDER ON VALIDITY OF NOTICE ISSUED U/S. 148 AND ASSESSMENT OF CAPITAL GA INS IN THE HANDS OF ASSESSEE ASSUMING THE LAND IN QUESTION AS CAPITAL ASSET. CHA LLENGE IS ALSO MADE WITH RESPECT TO DEDUCTION U/S. 54F OF THE IT ACT. 3. DURING THE COURSE OF HEARING, THE LD. AR OF THE ASSESSEE, INTER ALIA, SUBMITTED AT THE OUTSET THAT THE CORE ISSUE INVOLVE D IN THIS APPEAL REGARDING VALIDITY OF REOPENING U/S. 147/148 STANDS DECIDED B Y THE CO-ORDINATE BENCH IN THE CASE OF ONE OF CO-OWNERS OF THE SAME LAND WH ICH WAS SOLD, NAMELY, SMT. SAVITA D/O LATE MOOL CHAND (ITA NO. 2642/DEL/2016) VIDE ORDER DATED 04.12.2018 IN THE IDENTICAL FACTS AND CIRCUMSTANCES OF THE CASE. 4. THE LD. DR, ON THE OTHER HAND, RELIED ON THE ORD ERS OF THE AUTHORITIES BELOW. 5. HAVING HEARD BOTH THE PARTIES AND PERUSED THE MA TERIAL AVAILABLE ON RECORD, WE FIND SUBSTANCE IN THE CONTENTION OF ASSE SSEE THAT THE CORE ISSUE INVOLVED IN THIS APPEAL IS SQUARELY COVERED BY THE AFORESAID DECISION OF CO- ITA NO. 2640/DEL/2016 4 ORDINATE BENCH IN THE CASE OF ONE OF THE CO-OWNERS OF THE SAME LAND. THE RELEVANT PORTION OF THE ORDER OF CO-ORDINATE BENCH READS AS UNDER : 2. BRIEF FACTS OF THE CASE ARE THAT DURING THE ASS ESSMENT YEAR 2006-07, THE ASSESSEE SOLD AGRICULTURAL LAND SITUATED AT DHA RUHERA, DISTRICT REWARI FOR A CONSOLIDATED SUM OF RS.8,89,12,500/- WITH OTH ER CO-SHARER ON 29.12.2005. LEANED AO MADE SUBSTANTIVE ASSESSMENT I N THE NAME OF M/S MOOL CHAND HUF VIDE ORDER DATED 28.3.2013 AND TO PR OTECT THE INTEREST OF REVENUE, HE INITIATED ASSESSMENT PROCEEDINGS IN THE INDIVIDUAL CAPACITY OF THE ASSESSEE FOR WHICH NOTICE U/S 148 OF THE INCOME -TAX ACT, 1961 (THE ACT) ON 26.3.2003. LOOKING AT THE ABSENCE OF THE ASSESSEE, THE LEARNED AO CONCLUDED THE ASSESSMENT U/S 143/144 OF THE ACT. 3. APPEAL PREFERRED BY THE ASSESSEE BEFORE THE LEA RNED CIT(A) ON TWO GROUNDS, NAMELY, THAT THE ASSESSMENT IS BAD FOR WAN T OF ISSUANCE AND SERVICE OF PROPER NOTICE U/S 148 AND ALSO THAT WHEN THE AGRICULTURAL LAND WAS SOLD AND LONG TERM CAPITAL GAINS ARISES FROM SU CH TRANSFER, THE CAPITAL GAINS ARE EXEMPT BEING NOT A CAPITAL ASSET AS PER S ECTION 2(14)(III) (B) OF THE ACT.. HOWEVER, LEARNED CIT(A) DISMISSED THE APPE AL ON THESE TWO COUNTS. 4. ASSESSEE IS, THEREFORE, BEFORE US IN THIS APPEA L CHALLENGING THE VALIDITY OF THE NOTICES ISSUED U/S 148 STATING THAT THE LEARNED CIT(A) DISMISSED THE GROUND RELEVANT TO THIS ISSUE BY PASS ING A NON SPEAKING ORDER AND ALSO WITHOUT GIVING EVEN A CURSORY LOOK A T THE REASONS RECORDED AND ALSO QUOTED IN THE ASSESSMENT ORDER. IT IS FURT HER CONTENDED BY THE ASSESSEE THAT THE LEARNED CIT(A) ERRED IN ASSUMING T HAT THE LAND IN QUESTION IS COVERED BY THE DEFINITION OF THE CAPIT AL ASSET IN VIEW OF THE NOTIFICATION ISSUED BY THE CBDT VIDE F.NO.L64/03/87/ TA/ DATED 6.1.1994 BY RELYING ON THE TEXT FROM TAXMANN WHILE IGNORING THE OFFICIAL GAZETTE PRODUCED BY THE ASSESSEE DURING THE APPELLATE PROCE EDINGS AND ALSO ADMITTED BY THE AO IN HIS REMAND REPORT THAT THERE IS A MISTAKE IN THE NAME OF THE PLACE WHICH IS DHANTERA IN THE NOTIFICA TION WHILE THE LAND IN QUESTION NOW WAS IN DHARUHERA. ITA NO. 2640/DEL/2016 5 5. AT THE OUTSET, LEARNED AR BROUGHT TO OUR NOTICE THAT THE LEARNED CIT(A) EXTRACTED THE REASONS RECORDED BY THE LEARNED AO TO PROPOSE THE REOPENING OF THE CONCLUDED ASSESSMENT VIDE PARA 3.1 OF HIS ORDER. HE DEMONSTRATED TO US THAT THE NOTICE U/S 148 OF THE A CT WAS SAID TO HAVE BEEN ISSUED ON 26.3.2013 WITH THE PRIOR APPROVAL OF THE JOINT COMMISSIONER OF INCOME-TAX, REWARI, RANGE-REWARI AN D AFTER RECORDING THE REASONS. IN THE REASONS RECORDED IT WAS STATED THAT THE SUBSTANTIVE ASSESSMENT WAS MADE VIDE ORDER DATED 28.3.13 IN THE HANDS OF MOOL CHAND AND TO PROTECT THE INTEREST OF REVENUE, ASSESSMENT PROCEEDINGS ARE BEING INITIATED IN THE INDIVIDUAL CAPACITY BEING TB MATTER INVOLVED: LEARNED COUNSEL SUBMITTED THAT IT IS RATHER NOT POSSIBLE TO REFER THE SUBSTANTIVE ASSESSMENT ORDER DATED 28.3.2013 IN THE HANDS OF MO OL CHAND, HUF, IN THE REASONS RECORDED IN THIS MATTER ON 26.3.2013. BASIN G ON THIS, HE ARGUED THAT THERE IS NO PROPER ISSUANCE OR SERVICE OF NOTI CE U/S 148 AND THIS VITAL FACT WAS OVERLOOKED BY THE LEARNED CIT(A). 6. FOR THE SAKE OF CLARITY, WE DEEM IT JUST AND PRO PER TO EXTRACT PARA 3.1 OF THE ORDER OF THE LEARNED CIT(A) TO THE EXTENT IT IS RELEVANT: BRIEF FACTS AS RECORDED IN THE ASSESSMENT ORDER ON THIS ISSUE ARE AS UNDER:- ON THE BASIS OF INFORMATION AVAILABLE IN THE CASE OF M/S MOOL CHAND HUF, NOTICE U/S 148 OF THE INCOME TAX ACT1961 WAS ISSUED TO THE APPELLANT FOR A.Y. 2006-07 ON 26.03.2013 WIT H PRIOR APPROVAL FROM JOINT COMMISSIONER OF INCOME TAX, REWARI RANGE, REWARI AFTER RECORDING THE REASONS. THE EXTRACT OF THE REASONS IS AS FOLLOWS: 'ON THE BASIS OF AIR INFORMATION AVAILABLE IN THE C ASE OF M/S MOOL CHAND HUF THAT SAID HUF HAD SOLD A LAND AT DHARUHER A FOR A CONSIDERATION OF RS. 8,89,12,500/- IN THE F.Y. 2005 -06FOR A.Y. 2006- 07 WHICH WAS A CAPITAL ASSETS, THEREFORE, NOTICE U/ S 148FOR A.Y. 2006-0-7 WAS ISSUED TO M/S MOOL CHAND HUF. DURING T HE COURSE ASSESSMENT PROCEEDINGS SMT. SHANTI DEVI WIFE, AJIT SINGH & SUNIL SON AND SMT. SAVITA-SHASHI BALA DAUGHTER OF LATE SH. MO OL CHAND FILED A REPLY STATING THEREIN THAT M/S MOOL CHAND HUF WAS N OT IN EXISTENCE IN PAST NOR PRESENT. THEY FURTHER STATED THAT HE LAN D SOLD B SMT. SHANTI DEVI WIFE, AJIT SINGH & SUNIL SON AND SMT. S AVITA & SHASHI ITA NO. 2640/DEL/2016 6 BALA DAUGHTER OF THE LATE SH MOOL CHAND ON 29.12.20 05 WAS IN THEIR INDIVIDUAL CAPACITY. KEEPING IN VIEW THE FACTS, SUB STANTIVE ASSESSMENT WAS MADE VIDE ORDER DATED 28.3.13 IN THE HANDS' OF M/S MOOL CHAND HUF AND TO PROTECT THE INTEREST OF REVEN UE, ASSESSMENT PROCEEDING ARE BEING INITIATED IN THE INDIVIDUAL CA PACITY BEING TB MATTER INVOLVED. THE SHARE OF THE APPELLANT WAS CALC ULATED AT RS. 1,77,55,511/- IN THE LAND IN QUESTION. 7. IT IS, THEREFORE, CLEAR THAT EITHER THE NOTICE U/S 148 OF THE ACT WAS NOT ISSUED ON 26.3.2013 OR THE REASONS WOULD NOT HA VE BEEN RECORDED ON 26.3.2013 OR THE SUBSTANTIVE ASSESSMENT ORDER IN TH E CASE OF MOOL CHAND, HUF WAS NOT PASSED ON 28.3.2013. 8. THE ASSESSEE PRODUCED BEFORE US THE COPIES OF TH E DOCUMENTS OBTAINED U/S 7( 1) OF THE RTI ACT, 2005 FROM THE OFF ICE OF THE ASSESSING OFFICER AND SUCH DOCUMENT INCLUDE THE COPY OF THE N OTICE U/S 148 OF THE ACT ISSUED ON 26.3.2013 AND THE COPY OF THE ORDER DATED 28.3.13 IN THE CASE OF MOOL CHAND, HUF. IT IS INTERESTING TO NOTE THAT THE REASONS SUPPLIED UNDER THE RTI ACT ARE NOT IDENTICAL TO THE ONE THAT WERE EXTRACTED BY THE LEARNED CIT(A) IN HIS ORDER. THE RELEVANT PORTION OF THE REASONS FURNISHED UNDER RTI ACT READ AS FOLLOWS: AS PER AIR INFORMATION AVAILABLE, M/S MOOL CHAND H UF HAD SOLD A LAND AT DHARUHERA FOR A CONSIDERATION OF RS.8,89,12 ,500/-. THE LAND IN QUESTION WAS A CAPITAL ASSETS, THEREFORE, NOTICE US/ 148 FOR AY 2006-07 WAS ISSUED TO M/S MOOL CHAND HUF. DURING TH E COURSE OF ASSESSMENT PROCEEDINGS IN THE CASE OF M/S MOOL CHAN D HUF, SMT. SHANTI DEVI, WIFE AND AJIT SINGH-SUNIL SON AND SMT. SAVITA-SHASHI BALA DAUGHTER OF LATE MOOL CHAND FILED A REPLY STAT ING THEREIN THAT M/S MOOL CHAND HUF WAS NOT IN EXISTENCE IN PAST NOR PRESENT. THEY FURTHER STATED THAT THE LAND SOLD BY SMT. SHANTI DE VI WIFE AND AJIT SINGH-SUNIL SON AND SMT. SAVITA-SHASHI BALA DAUGHTE R OF THE LATE MOOL CHAND NEAR POLICE STATION DHARUHERA ON 29.12.2 005 WAS IN THEIR INDIVIDUAL CAPACITY. KEEPING IN VIW THE FACTS , SUBSTANTIVE ASSESSMENT WAS MADE IN THE HANDS OF M/S MOOL CHAND HUF AND TO PROTECT THE INTEREST OF REVENUE, ASSESSMENT PROCEED INGS ARE BEING INITIATED IN THE INDIVIDUAL CAPACITY BEING T.B. MATT ER INVOLVED. THE SHARE OF THE ASSESSEE WAS CALCULATED AT RS. 1,77,55 ,511/- IN THE LAND IN QUESTION. ITA NO. 2640/DEL/2016 7 [EMPHASIS SUPPLIED] 9. BE THAT AS IT MAY, THE FACT REMAINS THAT IN BOT H THE SETS OF REASONS, THERE IS A REFERENCE TO THE SUBSTANTIVE ASSESSMENT THAT WAS IN THE HANDS OF MOOL CHAND, HUF AND IT IS ONLY CONSEQUENT THERETO T HE PROTECTIVE ASSESSMENT WAS SAID TO BE MADE IN THE HANDS OF THE ASSESSEE. IT IS, THEREFORE, CLEAR THAT WHEN THE FACT DOES NOT ADMIT OF ANY DOUBT THAT THE SUBSTANTIVE ASSESSMENT IN THE HANDS OF MOOL CHAND, HUF ON 28.3.13, IT WOULD NOT HAVE BEEN POSSIBLE FOR THE AO TO RECORD T HE REASONS IN THIS CASE ON 26.3.13. IT SUGGESTS THAT THE REASONS AND THE NO TICE U/S 148 OF THE ACT ARE ANTE DATED OR AT THE LEASE THAT THEY ARE NOT PR OPERLY RECORDED. 10. IN THIS SET OF FACTS AND CIRCUMSTANCES, IT IS DIFFICULT TO SAY THAT THERE WAS PROPER ISSUANCE OR SERVICE OF NOTICE U/S 148 OF THE ACT AND NO RELIANCE COULD BE MADE ON THE REASONS RECORDED IN THIS MATTE R. WE, THEREFORE, HOLD THAT THERE IS NO PROPER ISSUANCE AND SERVICE OF NOT ICE U/S 148 IN THIS MATTER AND CONSEQUENTLY, THE ASSESSMENT ORDER IS LI ABLE TO BE QUASHED. APPEAL OF THE ASSESSEE IS ALLOWED ACCORDINGLY. 6. THERE BEING NO CHANGE IN THE FACTS, CIRCUMSTANCE S AND CONTENTIONS OF BOTH THE PARTIES, THE APPEAL OF THE ASSESSEE IS FOU ND TO HAVE MERITS AND THE REASSESSMENT ORDER DESERVES TO BE QUASHED ON LEGAL ASPECT OF THE CASE. ONCE, THE ASSESSMENT IS HELD INVALID, WE NEED NOT TO ENTE R OTHER GROUNDS OF APPEAL ON MERITS OF THE ADDITION OR EXEMPTION U/S. 54F OF THE ACT. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 26.04.2019. SD/- SD/- (AMIT SHUKLA) (L.P. S AHU) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 26.04.2019