Smt. Shanti Devi, Gurgaon V. ITO, Rewari

ITA 2641/DEL/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 2719 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 1 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-06-2019
• 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 SENIOR
• Keywords: Capital asset; Non passing of speaking order; Reason to believe; Reassessment proceedings; Set aside
• Section: 54F; 142(1); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH F : NEW DELHI) BEFORE HONBLE VICE PRESIDENT, SHRI G.D. AGRAWAL AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.2641/DEL./2016 (ASSESSMENT YEAR : 2006-07) SMT. SHANTI DEVI, VS. ITO, WARD 2, W/O SHRI MOOL CHAND, REWARI. C/O SHRI MAHAVIR SINGH, ADVOCATE 1078, SECTOR 15, PART 2, GURGAON 122 001. (PAN : ARNPD8936G) ITA NO.2643/DEL./2016 (ASSESSMENT YEAR : 2006-07) SMT. SHASHI, VS. ITO, WARD 2, D/O SHRI MOOL CHAND, REWARI. C/O SHRI MAHAVIR SINGH, ADVOCATE 1078, SECTOR 15, PART 2, GURGAON 122 001. (PAN : ARNPD8936G) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI MAHAVIR SINGH, ADVOCATE REVENUE BY : SHRI SURENDER PAL, SENIOR DR DATE OF HEARING : 12.06.2019 DATE OF ORDER : 14.06.2019 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : ITA NO.2641 & 2643/DEL./2016 2 SINCE COMMON QUESTIONS OF FACTS AND LAW HAVE BEEN R AISED IN BOTH THE AFORESAID APPEALS, THE SAME ARE BEING D ISPOSED OFF BY WAY OF COMPOSITE ORDER TO AVOID REPETITION OF DISCU SSION. 2. APPELLANTS, SMT. SHANTI DEVI AND SMT. SHASHI (HE REINAFTER REFERRED TO AS THE ASSESSEES) BY FILING THE PRESE NT APPEALS SOUGHT TO SET ASIDE THE IMPUGNED ORDERS BOTH DATED 09.02.2 016 PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-2, GURGAON QUA THE ASSESSMENT YEAR 2006-07 ON THE IDENTICAL GROUNDS IN TER ALIA THAT :- 1. THE LD. COMMISSIONER OF INCOME TAX (A) HAS ERR ED IN LAW AND IN FACTS IN DECIDING FIRST GROUND OF APPEAL REGARDING PROPER SERVICE OF NOTICE UNDER SECTION 148 WITHOUT LOOKING IN TO THE RECORD AND WITHOUT CALLING FOR ANY EVIDENCE OF SERVICE FROM THE AD ON WHOM THE BURDEN OF SERVICE LIES AT THE FI RST INSTANCE BY PASSING ALMOST NON SPEAKING ORDER IN JUST 8 WORDS ' THERE IS NO EVIDENCE OF NON-SERVICE OF NOTICE'. IT IS PRAYED TH AT IN THE ABSENCE OF PROPER SERVICE OF NOTICE U/S 148, THE AS SESSMENT PROCEEDINGS MAY KINDLY BE QUASHED AB INITIO. 2. THE LD. CIT (A) HAS ALSO ERRED IN FACT AND IN L AW BY UPHOLDING THE ISSUE OF NOTICE U/S 148 OF THE ACT ON MERITS WITHOUT GIVING JUST A CURSORY LOOK TO THE REASONS RECORDED AND ALSO QUOTED IN THE ASSESSMENT AS WELL AS APPELLATE ORDER . THE ACTION OF THE CIT(A) IS ILLEGAL, ARBITRARY, UNJUSTIFIED AND A GAINST THE BARE FACTS OF THE CASE. IT IS PRAYED THAT IN VIEW OF ABO VE FACTS AND CIRCUMSTANCES OF THE CASE, THE ASSESSMENT PROCEEDIN GS MAY BE NOT ONLY QUASHED ALONE BUT WITH FURTHER DIRECTIONS AS PER DISCRETION OF THE HONORABLE COURT. 3. THE LD. CIT (A) HAS ERRED IN LAW AND IN FACTS BY ASSUMING THAT THE LAND IN QUESTION IS COVERED IN TH E DEFINITION OF CAPITAL ASSET IN VIEW OF THE NOTIFICATION ISSUED BY CBDT VIDE F.NO.164/03/87 ITAI DATED 06-01-1994 BY RELYING ON THE TEXT FROM TAXMANN WHILE IGNORING THE OFFICIAL GAZETTE NO TIFICATION PRODUCED BY THE ASSESSEE DURING APPELLATE PROCEEDIN GS AND ALSO ADMITTED BY THE AO IN HIS REMAND REPORT THAT THERE IS MISTAKE IN THE NAME OF THE PLACE WHICH IS DHANTERA IN THE NOTI FICATION WHERE AS LAND IN QUESTION WAS IN DHARUHERA. IT IS P RAYED THAT DUE TO ABOVE FACTS AND CIRCUMSTANCES OF THE CASE TH E PROPERTY ITA NO.2641 & 2643/DEL./2016 3 SOLD IN 2005 IN DHARUHERA MAY NOT BE ALLOWED TO BE TREATED AS CAPITAL ASSETS. 4. THAT THE LD. CIT (A) HAS ALSO ERRED IN LAW AND I N FACTS BY CONFIRMING THE TAXING OF TOTAL RECEIPTS OF SALE OF LAND IN PLACE OF TAXING THE CAPITAL GAIN ONLY COMPUTED AS PER PROVIS IONS OF LAW AFTER DEDUCTING THE INDEXED VALUE OF THE PROPERTY F ROM THE TOTAL RECEIPTS BY HOLDING THAT THIS CONTENTION DOES NOT F IND PLACE SEPARATELY IN GROUNDS OF APPEAL THOUGH CONTESTED ST RONGLY DURING APPELLATE PROCEEDINGS. IT IS PRAYED THAT INDEXED VA LUE OF THE PROPERTY BY TAKING THE VALUE OF THE LAND AS 6400 PE R KANAL AS ON 01/04/1980 MAY BE ALLOWED FOR COMPUTATION OF CAPITA L GAIN. 5. THE LD. CIT (A) HAS ERRED IN LAW AND IN FACTS IN REJECTING THE CLAIM OF THE ASSESSEE U/S 54F OF THE LT. ACT. I T IS PRAYED THAT EXEMPTION AS CLAIMED U/S 54F DURING APPELLATE PROCE EDINGS MAY BE ALLOWED. 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE CONTROVERSY AT HAND IN BOTH THE AFORESAID APPEALS A RE : ON THE BASIS OF INFORMATION AVAILABLE IN CASE OF M/S. MOOL CHAND HUF, NOTICE DATED 26.03.2013 UNDER SECTION 148 OF THE INCOME-TA X ACT, 1961 (FOR SHORT THE ACT) WAS ISSUED AFTER RECORDING RE ASONS THAT, IN THE CASE OF M/S MOOL CHAND HUF THAT SAID HUF HAD SOLD A LAND AT DHARUHERA FOR A CONSIDERATION OF RS.8,89,12,500/- I N THE F.Y.2005- 06 FOR AY 2006-07 WHICH WAS A CAPITAL ASSETS, THERE FORE, NOTICE U/S 148 FOR AY 2006-07 WAS ISSUED TO M/S MOOL CHAND HUF . DURING THE COURSE ASSESSMENT PROCEEDINGS SMT. SHANTI DEVI WIFE, AJIT SINGH & SUNIL SON AND SMT. SAVITA & SHASHI BALA DAU GHTER OF LATE SH. MOOL CHAND FILED A REPLY STATING 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 DEVI WIFE, AJIT S INGH & SUNIL SON ITA NO.2641 & 2643/DEL./2016 4 AND SMT. SAVITA & SHASHI BALA DAUGHTER OF THE LATE SH. MOOL CHAND ON 29.12.2005 WAS IN THEIR INDIVIDUAL CAPACIT Y, KEEPING IN VIEW THE FACTS, SUBSTANTIVE ASSESSMENT WAS MADE VID E ORDER DATED 28.03.2013 IN THE HANDS OF M/S MOOL CHAND HUF AND T O PROTECT THE INTEREST OF REVENUE, ASSESSMENT PROCEEDING ARE BEING INITIATED IN THE INDIVIDUAL CAPACITY BEING T.B. MATTER INVOLVED. THE SHARE OF THE ASSESSEE WAS CALCULATED AT RS.1,78,73,561/- IN THE LAND IN QUESTION. THE LAND SOLD BY THE ASSESSEE IS SITUATED AT DHARUHERA AND THEREFORE IS SITUATED WITHIN THE LIMITS OF NOTIFIED AREA OF DHARUHERA, THUS, THE LAND IN QUESTION IS COVERED IN THE DEFINI TION OF CAPITAL ASSETS IN VIEW OF THE NOTIFICATION ISSUED BY THE CB DT ON 06.01.1994 F.NO. 164103187 ITAI DATED 06.01.94. TH E ASSESSEE'S SHARE OF RS.1,78,73,561/- IN THE LAND IN QUESTION I S LIABLE FOR LTCG. IN THIS REGARD, THE ASSESSEE HAS NOT FILED HI S RETURN OF INCOME FOR THE A. Y. 2006-07 RELEVANT TO F. Y. 2005 -06. 3. AO, HAVING REASON TO BELIEVE THAT THE ASSESSEE HAS NOT DISCLOSED HIS INCOME FROM CAPITAL GAIN AND FROM OTH ER INCOME, WHICH SUBSEQUENTLY COMES TO THE NOTICE OF THE AO AN D THE SAME HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTIO N 147 OF THE ACT. AO STATED TO HAVE PROVIDED NUMEROUS OPPORTUNI TIES TO THE ASSESSEE BY WAY OF ISSUANCE OF NOTICE U/S 142(1) OF THE ACT AND ON FAILURE OF THE ASSESSEE TO APPEAR, PROCEEDED TO MAK E ADDITION OF ITA NO.2641 & 2643/DEL./2016 5 RS.1,78,73,561/- AND RS.1,77,55,511/- IN CASE OF SM T. SHANTI DEVI AND SMT. SHASHI RESPECTIVELY ON ACCOUNT OF LONG TER M CAPITAL GAIN (LTCG) ON PROTECTIVE BASIS. 4. ASSESSEES CARRIED THE MATTER BY WAY OF APPEALS B EFORE THE LD. CIT (A) WHO HAS CONFIRMED THE ADDITIONS BY DISMISSI NG THE APPEALS IN BOTH THE CASES. FEELING AGGRIEVED, BOTH THE ASS ESSEES HAVE COME UP BEFORE THE TRIBUNAL BY WAY OF FILING THE PRESENT SEPARATE APPEALS. 5. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 6. UNDISPUTEDLY, BOTH THE ASSESSEES ALONG WITH OTHE R CO-SHARER, TOTAL 5 IN NUMBERS, HAD SOLD AGRICULTURAL LAND SITU ATED AT DHARUHERA, DISTRICT REWARI FOR A SALE CONSIDERATION OF RS.8,89 ,12,500/- ON 29.12.2005. IT IS ALSO NOT IN DISPUTE THAT ASSESSI NG OFFICER VIDE ORDER DATED 28.03.2013 MADE SUBSTANTIVE ASSESSMENT IN THE NAME OF M/S. MOOL CHAND HUF BUT UNDER THE GARB OF PROTEC TING THE INTEREST OF REVENUE, AO MADE ASSESSMENT IN THE NAME OF ASSESSEES IN THEIR INDIVIDUAL CAPACITY BY WAY OF INITIATING T HE PROCEEDINGS U/S 148/147 OF THE ACT. ITA NO.2641 & 2643/DEL./2016 6 7. LD. AR FOR THE ASSESSEE CHALLENGING THE IMPUGNED ORDER CONTENDED INTER ALIA THAT THE ISSUE IN CONTROVERSY IS COVERED VIDE ORDER DATED 28.12.2018 IN CASE OF ONE OF THE CO-SHA RERS WHO HAD ALSO SOLD LAND AND IN WHOSE CASE, ASSESSMENT PROCEE DINGS WERE ALSO INITIATED IN INDIVIDUAL CAPACITY; THAT WHEN SUBSTAN TIVE ASSESSMENT IN THE HANDS OF M/S. MOOL CHAND HUF HAS ALREADY BEE N MADE, PROTECTIVE ASSESSMENT AGAINST THE ASSESSEES IN THEI R INDIVIDUAL CAPACITY, IS NOT SUSTAINABLE AND AS SUCH, IS LIABLE TO BE QUASHED. HOWEVER, ON THE OTHER HAND, LD. DR FOR THE REVENUE, RELIED UPON THE ORDER PASSED BY THE AO/LD.CIT (A). 8. WHEN WE EXAMINE THE VERY BASIS OF INITIATING THE REASSESSMENT PROCEEDINGS FROM THE REASONS RECORDED BY THE AO WHICH ARE EXTRACTED IN THE PRECEDING PARAS, IT GOES TO PROVE THAT SUBSTANTIVE ASSESSMENT ON THE BASIS OF SAME SUBJECT MATTER OF THIS CASE HAS ALREADY BEEN MADE VIDE ORDER DATED 28.03.2 013 IN THE HANDS OF M/S. MOOL CHAND HUF, BUT ONLY UNDER THE GA RB OF PROTECTING THE INTEREST OF REVENUE, ASSESSMENT PROC EEDINGS HAVE BEEN INITIATED AGAINST BOTH THE ASSESSEES IN THESE CASES IN THEIR INDIVIDUAL CAPACITY. 9. FIRST OF ALL, WHEN BOTH THE ASSESSEES BEING PART NERS OF M/S. MOOL CHAND HUF HAVE ALREADY FACED WITH THE SUBSTANT IVE ADDITION IN THEIR HANDS ON THE SAME SUBJECT MATTER, IT IS VE RY SURPRISING AS TO ITA NO.2641 & 2643/DEL./2016 7 HOW THEY HAVE BEEN PUT TO ANOTHER ROUND OF ASSESSME NT PROCEEDINGS IN THEIR INDIVIDUAL CAPACITY. 10. EVEN OTHERWISE, THE ENTIRE EXERCISE OF RECORDIN G THE REASONS DATED 26.03.2013 BY THE AO IS PROVED TO BE ANTI-DAT ED ONE BECAUSE WHEN SUBSTANTIVE ASSESSMENT IN THE HANDS OF M/S. MO OL CHAND HUF HAS BEEN MADE ON ACCOUNT OF LTCG ON 28.03.2013 , WHICH FACT HAS BEEN RECORDED IN THE REASONS ITSELF, THEN HOW AND UNDER WHAT CIRCUMSTANCES, THE AO HAS RECORDED ALL THESE F ACTS IN REASONS RECORDED ON 26.03.2013. IN THESE CIRCUMSTANCES, WE ARE OF THE CONSIDERED VIEW THAT NOTICE U/S 148 OF THE ACT HAS NOT BEEN ISSUED IN THE TRUE SPIRIT RATHER A MALAFIDE EXERCISE HAS B EEN MADE BY ISSUING THE NOTICE ON THE BASIS OF ANTI-DATED REASO NS RECORDED BY THE AO, WHICH MAKES THE NOTICE INVALID NOR THE AO WAS H AVING ANY REASON AT THAT POINT OF TIME THAT THE ASSESSEE HAS NOT DISCLOSED HIS INCOME FROM CAPITAL GAIN AND ANY OTHER INCOME AND T HE SAME HAS ESCAPED ASSESSMENT. WE ARE CONSTRAINED TO RECORD T HAT THIS IS AN EXERCISE CARRIED OUT BY THE AO AS WELL AS BY THE LD . CIT (A) TO GENERATE UNNECESSARY LITIGATION. 11. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, WE AR E OF THE CONSIDERED VIEW THAT IN THE ABSENCE OF VALID ISSUAN CE/SERVICE OF NOTICE U/S 148 OF THE ACT, NO VALID REASSESSMENT CA N BE INITIATED. WHEN THE NOTICE ISSUED U/S 148 OF THE ACT IS PREPAR ED ANTI-DATED, ITA NO.2641 & 2643/DEL./2016 8 CONSEQUENT ASSESSMENT ORDER IS LIABLE TO BE QUASHED ON THIS SCORE ONLY. EVEN OTHERWISE, WHEN SUBSTANTIVE ASSESSMENT HAS ALREADY BEEN MADE IN THE HANDS OF M/S. MOOL CHAND HUF OF WH ICH BOTH THE ASSESSEES ARE PARTNERS, INITIATION OF ASSESSMEN T PROCEEDINGS U/S 147/148 OF THE ACT IS MISUSE OF PROCESS OF LAW. SO , THE LD. CIT (A) HAS ERRED IN CONFIRMING THE ADDITION MADE BY THE AO BY LOSING SIGHT OF ALL THE MATERIAL PERVERSITY AND ILLEGALITY OF THE ASSESSMENT ORDER. CONSEQUENTLY, BOTH THE ASSESSMENT ORDERS PA SSED IN CASE OF BOTH THE ASSESSEES FOR AY 2006-07 ARE ORDERED TO BE QUASHED, HENCE BOTH THE APPEALS FILED BY THE ASSESSEES ARE A LLOWED. ORDER PRONOUNCED IN OPEN COURT ON THIS 14 TH DAY OF JUNE, 2019. SD/- SD/- (G.D. AGRAWAL) (KULDIP SINGH) VICE PRESIDENT JUDICIAL MEMBER DATED THE 14 TH DAY OF JUNE, 2019 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-2, GURGAON. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.