Bina Satapathy, Bhubaneswar V. ITO, Ward-2(3), Bhubaneswar

ITA 27/CTK/2020

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 1541 (ITAT-CUTTACK)
• Duration Of Justice: 10 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-12-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 15-01-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SIDHARTHA K RAY
• Keywords: Search and seizure; Tangible material; Difference of opinion; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 54F; 13; 147; 154

Judgement Text

P A G E 1 | 7 IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE SHRI CHANDRA MOHAN GARG , JUDICIAL MEMBER AND LAXMI PRASAD SAHU, ACCOUNTANT MEMBER ITA NO . 27 /CTK/20 20 ASSESSMENT YEAR : 2012 - 13 BINA SATPATHY, PLOT NO.3, TANKAPANI ROAD, BADAGADA, BHUBANESWAR. VS. ITO, WARD 2(3), BHUBANESWAR. PAN/GIR NO. BZAPS 4267 D (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI SIDHARTHA K. RAY , AR REVENUE BY : SHRI SUBHENDU DUTTA, SR DR DATE OF HEARING : 10 / 1 2 / 20 20 DATE OF PRONOUNCEMENT : 14 / 1 2 /20 20 O R D E R PER C.M.GARG,JM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A),1, BHUBANESWAR DATED 21.11.2019 FOR THE ASSESSMENT YEAR 2012 - 13 . 2. IN GROUND NOS.1 & 2, THE ASSESSEE HAS CHALLENGED THE JURISDICTION OF THE AO AND INVOCATION OF REASSESSMENT PROCEEDINGS U/S.147 OF THE ACT ON MERE CHANGE OF OPINION AND SAME MATERIALS FACTS. 3. LD A.R. OF THE ASSESSEE SUBMITTED THAT IN THIS CASE, THE ORIGINAL ASSESSMENT WAS COMPLETED U/S.143(3) OF THE ACT ON 23.2.2015 DETERMINING THE TOTAL INCOME AT RS.10,31,050/ - . THEREAFTER, THE AO ISSUED NOTICE ITA NO.27/CTK/2020 ASSESSMENT YEAR : 2012 - 13 P A G E 2 | 7 U/S.148 OF THE ACT DATED 14.7.2016 FOR REOPENING THE ASSESSMENT U/S.147 OF THE ACT AFTER RECORDING THE FOLLOWING REASONS: THE ASSESSEE PURCHASED A P IECE OF LAND IN PLOT NO.514/2140, BHUBANESWAR DURING 1984 FOR A TOTAL COST OF RS.11,500/ - AND CLAIMED TO HAVE DEVELOPED THE SAME LIKE SAND FILLING, CONSTRUCTING BOUND A RY WALL ETC AND DURING THE YEAR 2002, THE PROPERTY WAS PUT FOR JOINT DEVELOPMENT WITH M/S . RSM INFRASTRUCTURE PVT LTD., AFTER COMPLETION OF CONSTRUCTION , THE ASSESSEE RECEIVED TWO FLATS MEASURING 3342 SQ.FT BESIDES PART OF A FLAT MEASURING 579 SQ.FT. THE TWO FLATS WERE M - 504 AND N - 505 IN 5 TH FLOOR OF KANAN TOWERS, PATIA BUILT BY M/S. RSM . THE MARKET VALUE OF THESE TWO FLATS AND PART OF FLAT RECEIVED BY THE ASSESSEE WAS CLAIMED AT RS.93,41,197/ - . OUT OF THESE, THE ASSESSEE SOLD PART FLAT MEASURING 579 SQ.FT AND RETAINED THE OTHER TWO FLATS TOTALLING MEASURING 3342 SQ.FT AND CLAIMED DEDUCTI ON U/S.54F ON THE VALUE OF THE TWO FLATS RETAINED AMOUNTING TO RS.79,61,816/ - . THE AO HAS ACCEPTED THE CLAIM. HOWEVER, ON FURTHER PERUSAL OF THE CASE IT WAS OBSERVED THAT U/S.54F OF THE ACT, EXEMPTION IS ALLOWABLE IN RESPECT OF ONE RESIDENTIAL PROPERTY O NLY. ACCORDINGLY, AFTER RECORDING REASONS FOR REOPENING THE CASE WAS REOPEN E D U/S.147 OF THE ACT WITH APPROVAL OF THE JCIT, R - 2, BBSR VIDE LETTER IN F.NO.JCIT/R - 2/BBSR/151/2016 - 17/1808 DT.8.7.2016. A NOTICE U/S.148 OF THE ACT DT.14.7.2016 WAS ISSUED TO THE ASSESSEE & SERVED ON THE ASSESSEE ON FOR FILING OF RETURN OF INCOME WITHIN 30 DAYS. IN RESPONSE, THE ASSESSEE FURNISHED A WRITTEN COMMUNICATION ON 5.8.2016 REQUESTING TO TREAT THE ORIGINAL RETURN AS RETURN OF INCOME FURNISHED IN RESPONSE TO NOTICE ISS UED U/S.148 OF THE ACT. THEREAFTER, A NOTICE U/S.143(2) WAS ISSUED TO THE ASSESSEE ON 10.2.2017 FOR COMPLIANCE ON 24.2.2017. ON THE BASIS OF THE ABOVE INFORMATION AND AFTER JOINING THE POST OF ITO, W - 2(3), BBSR, THE CASE IS FIXED FOR COMPLIANCE U/S.129 OF THE ACT ON OR BEFORE 11.5.2017. 4. ON THE BASIS OF ABOVE, IT WAS SUBMITTED THAT THERE WAS NO FRESH MATERIAL AVAILABLE WITH THE ASSESSING OFFICER WHICH COULD HAVE TRIGGERED THE REASSESSMENT PROCEEDINGS BY ISSUING NOTICE U/S. 148. IT WAS SUBMITTED THAT ITA NO.27/CTK/2020 ASSESSMENT YEAR : 2012 - 13 P A G E 3 | 7 THE ASSESSING OFFICER IN THE REASSESSMEN T PROCEEDINGS, HAS NOT BEEN ABLE TO ESTABLISH OR BRING ON RECORD ANY EVIDENCE SUBSTANTIATING THE FAILURE ON THE PART OF THE ASSESSEE IN DISCLOSING FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. LD A.R. SUBMITTED THAT FORE REOPENING THE ASSES SMENT, THE JURISDICTIONAL FOUNDATION IS THAT THE AO MUST HAVE REASON TO BELIEVE THAT THE INCOME HAS ESCAPED ASSESSMENT AND THE SAME MUST BE RECORDED IN WRITING. 5. FURTHER, LD A.R. SUBMITTED THAT THE ASSESSING OFFICER VIDE NOTICE DATED 26.5.2017 ISSUED A SHOW CAUSE DIRECTING THE ASSESSEE TO SHOW CAUSE AS TO WHY A SUM OF RS.89,78,158/ - SHALL NOT BE ADDED TO THE TOTAL INCOME ON THE GROUND THAT THE CLAIM OF DEDUCTION U/S.54F IS NOT AVAILABLE TO THE ASSESSEE BECAUSE AS PER THE AO EXEMPTION IS ALLOWABLE ONLY F OR ONE RESIDENTIAL HOUSE. LD A.R. SUBMITTED WRITTEN EXPLANATION ON 22.6.2017 IN WHICH, IT WAS SUBMITTED THAT THE WORD A APPEARS IN SECTION 54F SHOULD NOT BE CONSTRUCTED AS SINGULAR BUT AS PLURAL AND ALSO BROUGHT TO THE NOTICE OF THE AO TO THE DECISION O F HONBLE DELHI HIGH COURT DATED 21.2.2013 DELIVERED IN THE CASE OF CIT VS GITA DUGGAL IN ITA NO.1237/2011. BUT THE AO DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE . 6. LD A.R. REFERRED TO THE REASSESSMENT PROCEEDINGS PAGE 4 WHEREIN, THE AO HAS STATED THAT AT THE TIME OF ASSESSMENT DEDUCTION U/S.54F WAS ALLOWED FOR TWO FLATS ONLY MEASURING 3342 SQ.FT AMOUNTING TO RS.79,61,816/ - . SUBSEQUENTLY, IT HAS COME TO THE NOTICE OF THE AO THAT DEDUCTION WAS ALLOWED U/S 54F INADVERTENTLY TO TWO RESIDENTIAL UNITS INSTEAD ITA NO.27/CTK/2020 ASSESSMENT YEAR : 2012 - 13 P A G E 4 | 7 OF ONE AS PROVIDED U/S.54F OF THE ACT. HE SUBMITTED THAT IF THERE WAS SOME INADVERTENT MISTAKE, AO COULD HAVE RECTIFIED THE MISTAKE U/S.154 OF THE ACT AND NOT REOPEN ING THE ASSESSMENT. IT WAS SUBMITTED THAT ONCE THE ISSUE HAS BEEN EXAMINED BY THE ASSESSING OFFICER IN THE ORIGINAL ASSESSMENT PROCEEDINGS, THEN IT IS NOT OPEN FOR THE ASSESSING OFFICER TO CHANGE HIS VIEW. FOR THIS PROPOSITION, THE LD. AR HAS RELIED ON THE DECISION OF HON'BLE SUPREME COURT IN THE MATTER OF CIT VS. KELVINATOR OF INDIA , 320 ITR 561 (SC) AND OTHER SEVERAL JUDGMENTS ON THIS ISSUE . 7. LD A.R. FURTHER SUBMITTED THAT ALL PROCEDURE FOR COMPLETI NG THE ASSESSMENT FU/S.143(3) OF THE ACT HAS BEEN DONE IN ONE SHEET, AS IS PRODUCED BY LD D.R. DURING THE COURSE OF ASSESSMENT. HE FURTHER SUBMITTED THAT I T IS CLEARLY EVIDENT FROM THE REASONS RECORDED THAT NO NEW TANGIBLE INFORMATION/MATERIAL CAME TO THE KNOWLEDGE OF THE ASSESSING OFFICER SUBSEQUENT TO THE CONCLUSION OF THE ORIGINAL ASSESSMENT. THE REASONS RECORDED BY THE ASSESSING OFFICER DO NOT EVEN INDICATE OR ALLEGE THAT ANY FRESH INFORMATION CAME TO THE KNOWLEDGE OF THE ASSESSING OFFICER WARRANTING E XERCISE OF JURISDICTION UNDER SECTION 147/148 OF THE ACT. 8. REPLYING TO ABOVE, LD SR DR SUPPORTED THE REASSESSMENT ORDER U/S.147 R.W.S. 143(3) OF THE ACT AS WELL AS THE FIRST APPELLATE ORDER. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RECORD OF THE CASE. A S MENTIONED HEREIN ABOVE, THE REASONING FOR REOPENING AS MENTIONED IN THE ORDER SHEET CLEARLY SHOWS THAT THE SAME MATERIAL WHICH ITA NO.27/CTK/2020 ASSESSMENT YEAR : 2012 - 13 P A G E 5 | 7 WAS CONSIDERED BY THE ASSESSING OFFICER IN THE ORIGINAL ASSESSMENT ORDER WAS AGAIN CONSIDERED BY THE ASSES SING OFFICER IN THE RE - ASSESSMENT ORDER AND BASED ON THAT, THE REASSESSMENT PROCEEDINGS WERE FINALIZED AND INCOME OF THE ASSESSEE WAS COMPUTED AT RS. 50,91,110/ - DENYING EXCESS ALLOWANCE OF DEDUCTION CLAIMED U/S. 54F OF THE ACT. WE ALSO OBSERVE THAT THE G ROUND THAT INADVERTENTLY DEDUCTION WAS ALLOWED U/S.54 OF THE ACT, I N OUR CONSIDERED OPINION, CANNOT BE A GROUND TO REOPEN THE ASSESSMENT, WHICH WAS COMPLETED U/S.143(3) OF THE ACT AND AS IT APPEARS FROM THE ORDER SHEET, THE ASSESSEE HAS APPEARED TIME TO TI ME AND PRODUCED THE DOCUMENTS AS DIRECTED BY THE AO. IF THERE IS ANY ADVERTENT MISTAKE POINTED OUT BY THE AO, THE SAME COULD HAVE BEEN RECTIFIED UNDER SECTION 154 OF THE ACT AND NOT REOPENING THE ASSESSMENT. THEREFORE, ON READING OF THE ORDER SHEET, WE FIND THAT THE REOPENING OF THE ASSESSMENT HAS NO JURISDICTIONAL FOUNDATION AND, THEREFORE, THE REASSESSMENT ORDER IS LIABLE TO BE ANNULLED. WE MAY FRUITFULLY RELY UPON THE DECISION OF KELVINATOR OF INDIA (SUPRA) RELIED UPON BY THE ASSESSEE, WHEREIN, IT HAS BEEN OBSERVED AS UNDER: 'ON GOING THROUGH THE CHANGES, QUOTED ABOVE, MADE TO SECTION 147 OF THE ACT, WE FIND THAT, PRIOR TO DIRECT TAX LAWS (AMENDMENT) ACT, 1987, RE - OPENING COULD BE DONE UNDER ABOVE TWO CONDITIONS AND FULFILLMENT OF THE SAID CONDITION S ALONE CONFERRED JURISDICTION ON THE ASSESSING OFFICER TO MAKE A BACK ASSESSMENT, BUT IN SECTION 147 OF THE - ACT [WITH EFFECT FROM 1 ST APRIL, 1989], THEY ARE GIVEN A GO - BY AND ONLY ONE CONDITION HAS REMAINED, VIZ., THAT WHERE THE ASSESSING OFFICER HAS REA SON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT, CONFERS JURISDICTION TO RE - OPEN THE ASSESSMENT. THEREFORE, POST - L ST APRIL, 1989, POWER TO RE - OPEN IS MUCH WIDER. HOWEVER, ONE NEEDS TO ITA NO.27/CTK/2020 ASSESSMENT YEAR : 2012 - 13 P A G E 6 | 7 GIVE A SCHEMATIC INTERPRETATION TO THE WORDS 'REASON TO BELIEVE' FAILI NG WHICH, WE ARE AFRAID, SECTION 147 WOULD GIVE ARBITRARY POWERS TO THE ASSESSING OFFICER TO RE - OPEN ASSESSMENTS ON THE BASIS OF 'MERE CHANGE OF OPINION', WHICH CANNOT BE PER SE REASON TO RE - OPEN. WE MUST ALSO KEEP IN MIND THE CONCEPTUAL DIFFERENCE BETWEEN POWER TO REVIEW AND POWER TO RE - ASSESS. THE ASSESSING OFFICER HAS NO POWER TO REVIEW; HE HAS THE POWER TO RE ASSESS. BUT RE - ASSESSMENT HAS TO BE BASED ON FULFILLMENT OF CERTAIN PRE CONDITION AND IF THE CONCEPT OF 'CHANGE OF OPINION' IS REMOVED, AS CONTEND ED ON BEHALF OF THE DEPARTMENT, THEN, IN THE GARB OF RE - OPENING THE ASSESSMENT, REVIEW WOULD TAKE PLACE. ONE MUST TREAT THE CONCEPT OF 'CHANGE OF OPINION' AS AN IN - BUILT TEST TO CHECK ABUSE OF POWER BY THE ASSESSING OFFICER. HENCE, AFTER 1 ST APRIL, 1989, A SSESSING OFFICER HAS POWER TO RE - OPEN, PROVIDED THERE IS 'TANGIBLE MATERIAL' TO COME TO THE CONCLUSION THAT THERE IS ESCAPEMENT OF INCOME FROM ASSESSMENT. REASONS MUST HAVE A LIVE LINK WITH THE FORMATION OF THE BELIEF.' THEREFORE, THE REOPENING OF THE A SSESSMENT BY THE AO WAS BAD IN LAW AS IT WAS BASED MERELY ON A CHANGE OF OPINION AND THE ASSESSMENT IN PURSUANCE THEREOF WAS INVALID AND LIABLE TO BE QUASHED. ACCORDINGLY, WE QUASH THE REASSESSMENT ORDER WE QUASH THE REASSESSMENT PROCEEDINGS AND CONSEQUENT FIRST APPELLATE ORDER . 10. SINCE, WE HAVE QUASHED THE REASSESSMENT ORDER DATED 27.6.2017 PASSED U/S.147/143(3) OF THE ACT, THEREFORE, OTHER GROUNDS TAKEN BY THE ASSESSEE HAVE BECOME INFRUCTUOUS. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 14 /1 2 /20 20 . SD/ - SD/ - (LAXMI PRASAD SAHU) ( CHANDRA MOHAN GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER CUTTACK; DATED 14 / 1 2 /20 20 ITA NO.27/CTK/2020 ASSESSMENT YEAR : 2012 - 13 P A G E 7 | 7 B.K.PARIDA, SPS (OS) COPY OF THE ORDER FORWARDED TO : BY ORDER SR . PVT. S ECRETARY ITAT, CUTTACK 1. THE APPELLANT : BINA SATPATHY, PLOT NO.3, TANKAPANI ROAD, BADAGADA, BHUBANESWAR 2. THE RESPONDENT. ITO, WARD 2(3), BHUBANESWAR 3. THE CIT(A) - 1 , BHUBANESWAR 4. PR.CIT - 1 , BHUBANESWAR 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//