Ramesh Shroff, CHENNAI V. ACIT Non Corporate Circle 3, CHENNAI

ITA 2710/CHNY/2017

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 9071 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 10-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AR V SREENIVASANJCITD R
• Assessee Lawyers: D ANAND
• Keywords: Reopening of assessment; Capital asset; Tangible material; Difference of opinion; Competent authority; Change of opinion
• Section: 143(3); 54F; 2(14); 147

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : CHENNAI , . , BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER & SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NO.2710/CHNY/2017 / ASSESSMENT YEAR :2011-12 SMT.RAMESH SHROFF, NO.2-C GEE GEE MINAR, 23,COLLEGE ROAD, CHENNAI 600 006. VS. ACIT, NON CORPORATE CIRCLE 3, CHENNAI. [PAN AAMPS 8479 F] ( / APPELLANT) ( /RESPONDENT) ! ' # / APPELLANT BY : MR.D.ANAND,ADVOCATE $% ! ' # /RESPONDENT BY : MR.AR.V.SREENIVASAN,JCIT,D.R & ' ' () / DATE OF HEARING : 11 - 12 - 201 8 * ' () / DATE OF PRONOUNCEMENT : 13 - 12 - 201 8 / O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-4, CHENNAI IN ITA NO.263/2016-17/A.Y 2011-12/CIT(A)-4 DATED 21.09.201 7 FOR THE ASSESSMENT YEAR 2011-12. ITA NO.2710/CHNY/2017 :- 2 -: 2. MR.D.ANAND REPRESENTED ON BEHALF OF THE ASSESSE E AND MR.AR.V.SREENIVASAN REPRESENTED ON BEHALF T OF THE REVENUE. 3. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOL LOWING GROUNDS:- 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME (APPEALS)-4, IS WRONG, ILLEGAL AND IS OPPOSED TO LAW. 2. THE LEARNED CIT(A) OUGHT TO HAVE THAT THE LEARNE D ASSESSING OFFICER ERRED IN RE-OPENING THE ASSESSMENT WHICH WA S COMPLETED UNDER SCRUTINY. THE SAID RE-OPENING IS WRONG, ILLEG AL AND IS OPPOSED TO LAW AND FACTS OF THE CASE. 3. THE LEARNED ASSESSING OFFICER ERRED IN RE-OPENIN G THE ASSESSMENT BEYOND WITHOUT ANY ADDITIONAL TANGIBLE MATERIAL TO SHOW THAT INCOME HAS ESCAPED ASSESSMENT. 4. THE LEARNED CIT(A) OUGHT TO HAVE SEEN THAT WHILE FILING THE RETURN FOR THE A.Y.2011-12 THE APPELLANT HAD DISCLOSED ITS SALE OF AGRICULTURAL LAND AND ALSO DISCLOSED THAT THE SALE PROCEEDS OF THE SAME WERE UTILIZED BY THE APPELLANT ALONG WITH HIS WIFE TO PURCHASE A BUILDING AT KHADER NAWAZ KHAN ROAD, NUNGAMBAKKAM WHICH WAS CLASSIFIED BY THE CHENNAI CORPORATION, IN ITS PLAN APPROVAL, AS RESIDENTIAL PROPERTY. 5. THE LEARNED ASSESSING OFFICER ERRED IN LAW IN RE -OPENING THE ASSESSMENT WHICH WAS SUBJECTED TO SCRUTINY AND COMP LETED UNDER SECTION 143(3) WITHOUT ANY FRESH TANGIBLE MATERIAL EVIDENCE. THE LEARNED CIT (A) OUGHT TO HAVE SEEN THAT IT IS A SET TLED PROPOSITION OF LAW THAT THE ASSESSMENTS CANNOT BE RE-OPENED MERELY BASED ON CHANGE OF OPINION. 6. THE LEARNED ASSESSING OFFICER OUGHT TO HAVE SEEN THAT THE ASSESSEE HAS FURNISHED FULL AND TRUE PARTICULARS OF ITS INCOME AT THE TIME OF ORIGINAL ASSESSMENT WITH REFERENCE TO INCOM E ALLEGED TO HAVE ESCAPED ASSESSMENT AND THAT THE ASSESSMENT CAN NOT BE VALIDLY REOPENED UNDER SECTION 147 OF THE ACT, EVEN WITHIN FOUR YEAR MERELY ON THE BASIS OFCHANGE OF OPINION. ITA NO.2710/CHNY/2017 :- 3 -: 7. THE LEARNED CIT(A) ERRED IN LAW IN CONFIRMING TH E LEVY OF CAPITAL GAINS TAX ON SALE OF LAND AT UTTANDI WHICH IS CLASS IFIED AS AGRICULTURAL LAND BY THE REVENUE DEPARTMENT AND AS PER THE DEED OF PURCHASE MADE BY THE APPELLANT. 8. THE LEARNED CIT(A) OUGHT TO HAVE SEEN THAT THE I MPUGNED LAND AT UTTANDI IS CLASSIFIED AS AGRICULTURAL LANDS AS PER REVENUE RECORDS AND IS LOCATED 8 KMS AWAY FROM THE NEAREST MUNICIPAL LI MITS OR CORPORATION AND THAT THE APPELLANT HAS ALSO CARRIED ON AGRICULTURAL ACTIVITY . THE LEARNED CIT(A) FAILED TO SEE THAT TH E APPELLANT HAD CLAIMED THE INCOME FROM THE SALE OF SAID LAND AS EX EMPT SINCE THE SAME IS NOT A CAPITAL ASSET AS PER THE PROVISIONS O F SECTION 2(14) (III) OF THE INCOME TAX ACT. 9. THE LEARNED CIT(A) ERRED IN LAW IN DISALLOWING T HE ALTERNATE CLAIM MADE BY THE APPELLANT UNDER SECTION 54F OF THE INCO ME TAX ACT. THE LEARNED CIT(A) OUGHT TO HAVE SEEN THAT THE APPE LLANT HAD INVESTED THE ENTIRE SALE PROCEEDS FOR PURCHASE AS R ESIDENTIAL FLATS WHICH WAS CLASSIFIED BY THE DEVELOPMENT CONTROL AUT HORITY AND BY THE COMPETENT AUTHORITY AS RESIDENTIAL FLATS. 4. IT WAS SUBMITTED BY LD.A.R THAT GROUND NOS.2 TO 6 OF ASSESSEES APPEAL WAS AGAINST REOPENING OF ASSESSME NT. IT WAS SUBMITTED THAT GROUND NOS.7 & 8 WAS AGAINST THE ACT ION OF THE LD.CIT(A) IN CONFIRMING THE LEVY OF CAPITAL GAINS I N RESPECT OF SALE OF LAND AT UTHANDI VILLAGE, WHICH IS CLASSIFIED AS AGR ICULTURAL LAND BY THE REVENUE DEPARTMENT OF TAMILNADU AND AS PER THE DEED OF PURCHASE. GROUND NO.9 WAS AGAINST THE ACTION OF THE LD.CIT(A) IN DENYING THE ASSESSEE BENEFIT OF DEDUCTION U/S.54F OF THE ACT. I T WAS SUBMITTED BY THE LD.A.R THAT THE ORIGINAL ASSESSMENT HAD BEEN C OMPLETED U/S.143(3) OF THE ACT ON 21.01.2014 WHEREIN THE ISS UE OF THE ASSESSEES CLAIM OF TREATING THE SALE OF 100 CENTS OF LAND BY THE ITA NO.2710/CHNY/2017 :- 4 -: ASSESSEE AND HIS WIFE IS LIABLE TO BE TREATED AS AG RICULTURAL LAND, HAS BEEN CONSIDERED AND ACCEPTED BY THE LD. ASSESSING O FFICER. THE LD.A.R DREW OUR ATTENTION TO THE PAPER BOOK AT PAGE NO.89, WHICH IS THE COPY OF ASSESSMENT ORDER U/S.143(3) OF THE ACT. FURTHER , LD.A.R DREW OUR ATTENTION TO PAPER BOOK AT PAGE NO.87-88, WHICH WAS THE REPLY TO THE QUERY REGARDING THE PROPERTY AT UTHANDI VILLAGE, WH ICH HAD BEEN FILED BEFORE THE LD. ASSESSING OFFICER ON 06.01.2014 IN T HE COURSE OF ORIGINAL ASSESSMENT . IT WAS A SUBMISSION THAT RETURN OF IN COME FILED BY THE ASSESSEE ON 30.07.2011 WAS SHOWN AT PAGE NOS.1 TO 7 OF THE PAPER BOOK WHEREIN AT PAGE-5 OF PAPER BOOK, THE COMPUTATI ON OF LONG TERM CAPITAL GAINS HAS BEEN SHOWN AS EXEMPT ON ACCOUNT O F THE SALE OF AGRICULTURAL LAND. IT WAS A SUBMISSION THAT THE SAI D LAND WAS PURCHASED ON TWO DATES BEING 05.06.1992 & 29.03.1994 AND COP IES OF THE PURCHASE DEEDS WERE SHOWN FROM PAGE NO.9 TO 44 OF PAPER BOOK. IT WAS A SUBMISSION THAT THE PROPERTIES WERE PURCHASED AS AGRICULTURAL LAND. IT WAS A SUBMISSION THAT ON 18.01.2011, 50 C ENTS OF THE LAND WAS SOLD THROUGH SALE DEED AND THE BALANCE 50 CENTS WAS TRANSFERRED BY A POWER OF ATTORNEY. COPIES OF SALE DEED AND POW ER OF ATTORNEY FOR SALE OF UTHANDI LAND WERE SHOWN AT PAGES 45 TO 85 OF THE PAPER BOOK. IT WAS A SUBMISSION THAT IN THE SALE DEED ALSO, THE PROPERTY HAS BEEN SHOWN ONLY AS AGRICULTURAL LAND. IT WAS A FURTHER S UBMISSION THAT THE ASSESSMENT ORDER IN THE CASE OF ASSESSEES WIFE, SM T. SEEMA SHROFF, ITA NO.2710/CHNY/2017 :- 5 -: HAS ALSO BEEN COMPLETED ON 14.03.2014 WHEREIN THE C LAIM OF AGRICULTURAL LAND HAD BEEN ACCEPTED. THE LD.A.R DRE W OUR ATTENTION TO PAGES 101 TO103 OF PAPER BOOK RELATING TO ASSESSMEN T ORDER OF SEEMA SHROFF. IT WAS A SUBMISSION THAT THE CLAIM IN RESP ECT OF SALE OF AGRICULTURAL LAND IN THE ASSESSEES WIFE CASE HAD N OT BEEN DISTURBED. IT WAS A SUBMISSION THAT ON THE BASIS OF GAZETTEE NOTI FICATION SHOWN AT PAGES 105 TO 115 OF THE PAPER BOOK, THE LD. ASSESSI NG OFFICER HAD DRAWN A CONCLUSION THAT THE PROPERTY SOLD WAS WITHI N THE CHENNAI CITY MUNICIPALITY CORPORATION AND CONSEQUENTLY, IT WOULD NOT BE TREATED AS AGRICULTURAL LAND. LD.A.R DREW OUR ATTENTION TO PAG E NO.105 TO SUBMIT THAT THE SAID GAZETTEE NOTIFICATION WAS IN RESPECT OF THE PROPOSAL FOR INCLUSION OF CERTAIN AREAS WITHIN THE CHENNAI CITY LIMITS AND THE TERRITORIAL DIVISION WAS TO BE DONE FOR NEXT ORDINA RY ELECTION TO BE HELD. IT WAS A SUBMISSION THAT THE ACTUAL NOTIFICATION CA ME ONLY ON 19.07.2011 MUCH AFTER THE SALE BY THE ASSESSEE. TH E LD.A.R ALSO PLACED BEFORE US COPY OF THE DECISION OF THE CO-ORD INATE BENCH OF THIS TRIBUNAL IN THE CASE OF SHRI N.K.V.KRISHNA,CHENNAI IN ITA NO.1642 & 1615/MDS./2012 FOR ASSESSMENT YEAR 2009-10 VIDE ORD ER DATED 26.09.2013 WHEREIN THE CO-ORDINATE BENCH OF THIS TR IBUNAL HAS IN RESPECT OF UTHANDI VILLAGE GIVEN A FINDING AT PARA- 11 OF PAGE-10, RELEVANT PORTION AS FOLLOWS:- ITA NO.2710/CHNY/2017 :- 6 -: UTHANDI VILLAGE CAME WITHIN THE CORPORATION LIMITS BY VIRTUE OF GOVERNMENT ORDER NO.97 DATED 19.07.2011 AND THIS WA S BROUGHT TO THE NOTICE OF THE A.O BY THE ASSESSEE IN HIS LETTER DATED 30.12.2011( PLACED AT PAPER-BOOK PAGE 10) . REVENUE HAS ALSO NOT DISPUTED THE FINDING OF THE LD.CIT(A) THAT LAND SOLD WAS LOC ATED AT A DISTANCE OF MORE THAN 18 KMS AWAY FROM THE OUTER LI MITS OF NEAREST MUNICIPALITY, WHICH WAS TAMBARAM MUNICIPALI TY. IT WAS ALSO LOCATED MORE THAN 8 KMS AWAY FROM THE OUTER LI MITS OF CHENNAI CORPORATION. IT WAS A SUBMISSION THAT REOPENING OF ASSESSMENT O N THE BASIS OF GAZETTEE NOTIFICATION WAS CLEARLY A CHANGE OF OPINI ON AND IS LIABLE TO BE STRUCK DOWN. 5. IT WAS A SUBMISSION THAT ON MERITS, THE ASSESSE E HAS SOLD ONLY AGRICULTURAL LAND AND THE SALE OF THE AGRICULT URAL LAND CANNOT BE TREATED AS GIVING RISE TO CAPITAL GAINS ASSESSABLE U/S.45 OF THE ACT. IT WAS A SUBMISSION THAT EVEN OTHERWISE THE ASSESSEE H AS INVESTED THE SALE CONSIDERATION IN CONSTRUCTING A RESIDENTIAL PR OPERTY. THE LD.A.R PLACED BEFORE US A COPY OF THE LETTER FROM THE EXEC UTIVE ENGINEER, ZONAL OFFICE, GREATER CHENNAI CORPORATION WHEREIN I T HAS BEEN CLARIFIED THAT BUILDING PLAN IN RESPECT OF DOOR NO.20B/58,KHA DER NAWAZ KHAN ROAD, NUNGAMBAKKAM, CHENNAI WAS SANCTIONED DURING T HE YEAR 1995 FOR BASEMENT, GROUND FLOOR, MEZZANINE FLOOR AND FIR ST FLOOR IN R.S.NO.58/51,BLOCK NO.12,NUNGAMBAKKAM VILLAGE FOR R ESIDENTIAL PURPOSE AND 393.70 SQ.FT. FOR OFFICE BUILDING IN TH E GROUND FLOOR AND ITA NO.2710/CHNY/2017 :- 7 -: THE SAID LOCATION FALLS IN THE PRIMARY RESIDENTIAL ZONE AS PER CMDA LAND USE MAP. IT WAS A SUBMISSION THAT THE ASSESSEE HAVI NG INVESTED IN THE PURCHASE OF A RESIDENTIAL PROPERTY, THE SAME WAS LI ABLE TO BE ALLOWED IN RESPECT OF THE CLAIM OF DEDUCTION U/S.54F AS AN ALTERNATE PRAYER. IT WAS A SUBMISSION THAT LD.CIT(A) HAD HELD THAT THE S AID PREMISES WAS BEING USED FOR COMMERCIAL PURPOSES. IT WAS A SUBMI SSION THAT WHEN THE PROPERTY WAS CONSTRUCTED AS A RESIDENTIAL HOUSE , AND ONLY 393.70 SQ.FT. OF THE SAME WAS FOR OFFICE PURPOSE OR COMMER CIAL PORTION, THE ASSESSEE SHOULD NOT BE DENIED THE BENEFIT OF DEDUCT ION U/S.54F, AT LEAST IN RESPECT OF INVESTMENT MADE IN RESIDENTIAL PROPERTY. THE LD.A.R DREW OUR ATTENTION TO THE PURCHASE DEED DATED 03.02 .2011 IN RESPECT OF THE HOUSE PROPERTY AT PAGES 117 TO 139 OF THE PA PER BOOK. IT WAS THE SUBMISSION THAT THE PURCHASE DOCUMENT ALSO SPEC IFIED THE PROPERTY AS HOUSE IN THE SCHEDULE. IT WAS A SUBMISSION THAT JUST BECAUSE PROPERTY HAS BEEN SUBSEQUENTLY USED FOR COMMERCIAL PURPOSE, WOULD NOT DISENTITLE THE ASSESSEE TO THE CLAIM OF DEDUCTI ON U/S.54F OF THE ACT. 5. IN REPLY, THE LD.D.R VEHEMENTLY SUPPORTED THE L D.CIT(A). IT WAS SUBMITTED BY LD.D.R THAT GAZETTEE NOTIFICATION CLEARLY SHOWED THE LAND SOLD TO FALL WITHIN THE CITY CORPORATION LIMIT AS ON 09.11.2010. IT WAS A SUBMISSION THAT THE SALE HAVING TAKEN PLACED ON 18.01.2011, THE PROPERTY SOLD CANNOT BE TREATED AS AGRICULTURAL LAND. IT WAS A SUBMISSION THAT THE TRIBUNAL HAD WRONGLY INTERPRETE D THE GAZETTEE ITA NO.2710/CHNY/2017 :- 8 -: NOTIFICATION IN THE CASE OF SHRI N.K.V.KRISHNA REFE RRED TO SUPRA. IT WAS A SUBMISSION THAT BENEFIT OF DEDUCTION U/S.54F CANNOT BE GRANTED TO THE ASSESSEE IN SO FAR AS THE PROPERTY WAS A COMMERCIAL PROPERTY. IT WAS A SUBMISSION THAT THE ORDER OF THE CIT(APPEALS) WAS LIABLE TO BE UPHELD. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PE RUSAL OF THE LETTER OF ASSESSEE ADDRESSED TO LD. ASSESSING OFFIC ER DATED 06.01.2014 EXPLAINING THE SALE OF THE PROPERTY AT UTHANDI VILL AGE IN THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS, WHICH CULMINATED IN THE ASSESSMENT ORDER DATED 21.01.2014 CLEARLY SHOW THAT THE ISSUE HAS BEEN CONSIDERED BY THE LD. ASSESSING OFFICER IN THE COUR SE OF ORIGINAL ASSESSMENT PROCEEDINGS. THE RE-OPENING OF THE SAM E DONE BY THE LD. ASSESSING OFFICER BY ISSUE OF NOTICE U/S.148 OF THE ACT DATED 27.11.2015 ON THE BASIS OF THE GAZETTEE NOTIFICATIO N DATED 09.11.2010, IS NOTHING BUT A CHANGE OF OPINION. IN FACT, THE G AZETTEE NOTIFICATION DATED 09.11.2010 WAS VERY MUCH AVAILABLE WHEN THE O RIGINAL ASSESSMENT ORDER WAS PASSED U/S.143(3) OF THE ACT O N 21.01.2014. THEREFORE, THIS IS NOT NEW EVIDENCE, WHICH HAS COME TO LIGHT. THE BENEFIT AVAILABLE TO THE DEPARTMENT UNDER EXPLANATI ON -2 TO SECTION 147 OF THE ACT ALSO WOULD NOT HELP TO THE DEPARTMEN T IN SO FAR AS THE CLAIM OF AGRICULTURAL LAND IS NOT FALLING UNDER ANY EXEMPTIONS PROVIDED IN THE SAID EXPLANATIONS. FURTHER, PERUSAL OF THE D ECISION OF CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE SHRI N. K. V. KRI SHNA REFERRED TO ITA NO.2710/CHNY/2017 :- 9 -: SUPRA CLEARLY SHOWS THAT THE CO-ORDINATE BENCH OF T HIS TRIBUNAL HAS CATEGORICALLY HELD THAT UTHANDI VILLAGE CAME WITHIN THE CORPORATION LIMIT BY VIRTUE OF GOVERNMENT ORDER NO.97 DATED 19. 07.2011 AND NOT BEFORE. THIS ORDER OF TRIBUNAL STILL SURVIVES. FURT HER, THE ASSESSMENT ORDER IN THE CASE OF ASSESSEES WIFE SMT SEEMA SHRO FF AND THE CO- OWNER PASSED U/S.143(3) OF THE ACT ON 14.03.2014 AC CEPTING THE CLAIM ON SALE OF AGRICULTURAL LAND REMAINS UNDISTURBED. T HIS BEING SO, CLEARLY THE REOPENING BEING ON CHANGE OF OPINION, THE SAME IS UNSUSTAINABLE AND CONSEQUENTLY QUASHED. 8. EVEN ON MERITS, WHAT HAS BEEN SOLD BY ASSESSEE IS ONLY AGRICULTURAL LAND IN SO FAR AS THE SALE DEED WAS EX ECUTED ON 18.01.2011 WHEREAS THE SAID UTHANDI VILLAGE HAS COM E WITHIN THE CORPORATION LIMIT BY VIRTUE OF THE GOVERNMENT ORDER NO.97 DATED 19.07.2011 AS HAS ALREADY BEEN HELD BY THE CO-ORDIN ATE BENCH OF THE TRIBUNAL IN THE CASE SHRI N. K. V. KRISHNA REFERRED TO SUPRA. IN RESPECT OF AN ALTERNATE CLAIM OF ASSESSEE THAT THE ASSESSEE HAS ALSO ALTERNATIVELY ELIGIBLE OF DEDUCTION U/S.54F. ADMITT EDLY, THE CERTIFICATE ISSUED BY EXECUTIVE ENGINEER, GREATER CHENNAI CORPO RATION CLEARLY SHOWS THAT THE LOCATION OF THE BUILDING IS IN PRIMA RY RESIDENTIAL ZONE AS PER CMDA LAND USE MAP AND THE BUILDING PLAN HAS BEE N SANCTIONED FOR RESIDENTIAL PURPOSE ONLY. OBVIOUSLY, THE EXECUTIVE ENGINEER, ZONAL OFFICE, GREATER CHENNAI CORPORATION IS A COMPETENT PERSON TO DECIDE ITA NO.2710/CHNY/2017 :- 10 - : ON THE LOCATION MAP IN RESPECT OF THE BUILDING AS A LSO THE PLAN APPROVAL AND THE EXECUTIVE ENGINEER HAVING GIVEN A FINDING A ND BEING THE COMPETENT AUTHORITY, OBVIOUSLY ASSESSEE WOULD BE EN TITLED TO CLAIM OF DEDUCTION U/S.54F, THOUGH THE SAME IS LIABLE TO BE RESTRICTED TO THE RESIDENTIAL PORTION ONLY. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH DECEMBER, 2018, AT CHENNAI. SD/ - SD/ - ( . ) (A.MOHAN ALANKAMONY) ! '# / ACCOUNTANT MEMBER ( ) (GEORGE MATHAN) $ '# / JUDICIAL MEMBER - ' / CHENNAI . / DATED: 13 TH DECEMBER, 2018. K S SUNDARAM / ' $(01 2 1( / COPY TO: 1 . ! / APPELLANT 3. & 3( () / CIT(A) 5. 145 $(6 / DR 2. $% ! / RESPONDENT 4. & 3( / CIT 6. 57 8' / GF