I.T.O.-2(1), Agra V. Sh.. Haresh Chand Agrawal, HUF, Agra

ITA 282/AGR/2013

• Counselvise Citation: 28220314 RSA 2013
• Duration Of Justice: 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 17-12-2013
• Assessment Year: 2004-2005
• Appeal Filed On: 07-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KK MISHRA
• Assessee Lawyers: DEEPENDRA MOHAN
• Keywords: Reopening of assessment; Sale consideration of property below Jantri Value; Depreciation; Cost of acquisition; Tangible material; Difference of opinion; Change of opinion; Reassessment proceedings
• Section: 143(3); 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER ITA NO.282/AGRA/2013 ASSTT. YEAR : 2004-05 INCOME-TAX OFFICER, VS. SHRI HARESH CHAND AGARWA L, HUF, 2(1), AGRA. 19-A, KESHAV KUNJ, PRATAP NAGAR, AGRA(PAN: AAAHH 9390 G) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.K. MISHRA, JR. D.R. RESPONDENT BY : SHRI DEEPENDRA MOHAN, C.A. DATE OF HEARING : 17.12.2013 DATE OF PRONOUNCEMENT OF ORDER : 20.12.2013 ORDER PER BHAVNESH SAINI, J.M.: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LD. CIT(A)-I, AGRA DATED 06.03.2013 FOR THE ASSESSMENT YEAR 2004- 05, CHALLENGING THE QUASHING OF THE RE-ASSESSMENT PROCEEDINGS U/S. 147/148 OF TH E IT ACT. 2. BRIEFLY, THE FACTS OF THE CASE ARE THAT IN THIS CASE, ASSESSMENT ORDER UNDER APPEAL HAS BEEN PASSED U/S.147 READ WITH SECTION 14 3(3) VIDE ORDER DATED 03.12.2009. THE ASSESSMENT PROCEEDING WAS REOPENED U/S. 147 AFTER IT HAS BEEN FOUND BY THE AO THAT THE ASSESSEE HAD SOLD A PROPER TY NO.21/35, FREEGANJ, HARIPARWAT, AGRA FOR RS.6 LAC AGAINST THE STAMP VAL UATION OF THE PROPERTY AT, ITA NO. 282/AGRA/2013 2 RS.25,89,000/-. THE AO FOUND THAT IN THE ORIGINAL A SSESSMENT ORDER, THE LONG TERM CAPITAL LOSS OR SALE OF THIS PROPERTY WAS WORKED OU T AT RS.42,668/- TAKING INTO CONSIDERATION THE 'ACTUAL SALE VALUE OF THE PROPERT Y AMOUNTING TO RS.6 LAC AND THE AO HAS NOT APPLIED THE PROVISION OF SECTION 50C OF THE ACT WHILE PASSING THE ORIGINA1 ASSESSMENT ORDER. THE ASSESSMENT PROCEEDIN GS HAS BEEN OPENED BY THE AO AFTER CONSIDERING THE FACT THAT WHILE COMPUTING THE CAPITAL GAIN SALE VALUE OF THE PROPERTY SHOULD HAVE BEEN CONSIDERED AS STAMP V ALUATION OF THE PROPERTY AT RS.25,89,000/-. HE HAS ALSO DISCUSSED THAT IN THE O RIGINAL ASSESSMENT ORDER ITSELF, THE BASIC FACTS AS TO CAPITAL GAIN AROSE TO THE ASS ESSEE, AS A RESULT OF TRANSFER OF PROPERTY, HAS BEEN DISCUSSED BUT THE APPLICABILITY OF PROVISION OF SECTION 50C HAS BEEN LOST A SIGHT AND THEREFORE, THE AO RECORDED TH E REASONS TO BELIEVE THAT THERE WAS AN INCOME ESCAPING ASSESSMENT AND ACCORDINGLY, THE ASSESSMENT PROCEEDING U/S.147 WAS REOPENED AND NOTICE U/S. 148 WAS DATED 08.07.2008 WAS ISSUED TO THE ASSESSEE (APPELLANT) WITH PRIOR APPROVAL OF ADDL. C IT, RANGE-2, AGRA. DURING THE COURSE OF RE-ASSESSMENT PROCEEDING, THE AO DID NOT ACCEPT THE SUBMISSION OF THE ASSESSEE THAT THE PROPERTY WAS RENTED AND THE ASSES SEE WAS IN NEED OF FUNDS AND THEREFORE, HE HAD TO SELL THE PROPERTY TO ITS TENAN TS AND HE HAS HELD THAT THE PROVISION OF SECTION 50C ARE CLEARLY ATTRACTED IN C ASE OF THE ASSESSEE. THE AO HAS ALSO NOT ACCEPTED THE COST OF CONSTRUCTION DECLARED BY THE ASSESSEE AT RS.6,42;558/- FOR COMPUTATION OF CAPITAL GAIN. HE HAS STATED IN T HE ASSESSMENT ORDER THAT THE ITA NO. 282/AGRA/2013 3 ASSESSEE CLAIMED AN AMOUNT OF RS.1, 08,760/- WAS IN VESTED UP TO 31.03.2009 IN THE PROPERTY BUT NO EVIDENCE OF MAKING OF THIS INVESTME NT IN THE PROPERTY HAS BEEN GIVEN BY THE ASSESSEE EITHER DURING THE ORIGINAL AS SESSMENT PROCEEDING OR DURING THE RE-ASSESSMENT PROCEEDING INITIATED BY THE AO. T HEREFORE, HE REJECTED THE INVESTMENT OF RS.1,08,760/- CLAIMED TO HAVE BEEN MA DE BY THE ASSESSEE IN THE HOUSE PROPERTY AND THE COST OF INVESTMENT IN THE PR OPERTY HAS BEEN TAKEN ONLY AT RS.30,000/-, FOR WHICH THE INDEXED COST OF ACQUISIT ION HAS BEEN COMPUTED AT RS.1,38,900/-. AFTER DEDUCTING THE INDEXED COST OF ACQUISITION COMPUTED AT RS.1,38,900/- FROM THE STAMP VALUATION OF THE PROPE RTY TAKEN AT RS.25,89,000/-, THE' AO HAS DETERMINED THE LONG TERM CAPITAL GAIN AT RS. 24,50,100/- WHICH HAS BEEN ADDED IN THE INCOME OF THE ASSESSEE ASSESSED IN THE ORIGINAL ASSESSMENT ORDER U/S.143(3) DATED 19.12.2005 AT RS. 51,475/- AND THU S, THE TOTA1 ASSESSED INCOME HAS BEEN DETERMINED IN THE ASSESSMENT ORDER DATED 03.12 .2009 PASSED U/S 147/143(3) AT RS.25,01 ,570/- WHICH IS UNDER APPEAL. 3. THE ASSESSEE CHALLENGED THE REOPENING OF ASSESSM ENT AND ADDITION ON MERITS BEFORE THE LD. CIT(A) AND IT WAS MAINLY CONTENDED T HAT THE ORIGINAL ASSESSMENT ORDER WAS PASSED U/S. 143(3) AND THE AO CONSIDERED ALL THE MATERIAL AND EVIDENCE WITH REGARD TO CAPITAL GAINS AND ACCEPTED THE EXPLA NATION OF THE ASSESSEE. THEREFORE, ON MERE CHANGE OF OPINION, REOPENING OF ASSESSMENT IS BAD IN LAW. ITA NO. 282/AGRA/2013 4 CERTAIN DECISIONS IN SUPPORT OF THE SAME WERE ALSO RELIED UPON. THE LD. CIT(A) ACCEPTED THE CONTENTION OF THE ASSESSEE REGARDING C HANGE OF OPINION INVOLVED FOR REOPENING OF ASSESSMENT. THE LD. CIT(A) FOUND THAT THE AO HAS CONSIDERED THE SAME SALE DEED WHICH HE HAD CONSIDERED AT THE ORIGI NAL ASSESSMENT AND ACCEPTED THE SALE CONSIDERATION DECLARED BY THE ASSESSEE. FO R REOPENING OF ASSESSMENT PROCEEDINGS U/S. 147, THERE IS NO OUTSIDE MATERIAL WHICH COULD BE SAID TO HAVE COME TO THE KNOWLEDGE OF THE AO AFTER THE ORIGINAL ASSES SMENT ORDER WAS PASSED. IT WAS, THEREFORE, FOUND THAT IT IS A CASE OF MERE CHANGE O F OPINION. THE ASSESSEE ALSO RELIED UPON CERTAIN DECISIONS OF THE TRIBUNAL, IN WHICH ID ENTICAL ISSUE WAS CONSIDERED AND THE ACTION OF THE AO FOR REOPENING OF ASSESSMENT WA S NOT FOUND JUSTIFIED. THE LD. CIT(A) HELD THAT AO HAD DISCUSSED THE ISSUE OF CAPI TAL LOSS IN THE ORIGINAL ASSESSMENT ORDER AND ACCEPTED THE CAPITAL LOSS DECL ARED BY THE ASSESSEE AFTER CALLING THE DETAILS FROM THE ASSESSEE. MERE NON-DIS CUSSING OF PROVISIONS OF SECTION 50C WOULD NOT AMOUNT TO PRESUME THAT THE AO HAS NOT APPLIED HIS MIND WHILE ACCEPTING THE SALE CONSIDERATION SHOWN BY THE ASSES SEE. SINCE THE AO DID NOT HAVE ANY TANGIBLE MATERIAL IN ITS POSSESSION EXCEPT THE SALE DEED, WHICH HAS ALREADY BEEN PRODUCED BEFORE THE AO AT THE STAGE OF ORIGINAL ASS ESSMENT PROCEEDINGS, THEREFORE, REOPENING OF ASSESSMENT ON MERE CHANGE OF OPINION W AS HELD TO BE NON- PERMISSIBLE IN VIEW OF THE DECISIONS OF HONBLE DEL HI HIGH COURT IN THE CASE OF ITA NO. 282/AGRA/2013 5 KELVINATOR INDIA LTD., 256 ITR 1 (DEL) AND USHA INT ERNATIONAL LTD., 210 TAXMAN 188. THE REASSESSMENT PROCEEDINGS WERE ACCORDINGLY QUASHED. 4. THE LD. DR RELIED UPON THE ORDER OF THE AO. ON T HE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LD. CIT(A) AND REFERRED TO PAPER BOOK, IN WHICH COMPUTATION OF INC OME, ORIGINAL ASSESSMENT ORDER AND COPY OF REASONS FOR REOPENING OF ASSESSMENT HAV E BEEN FILED. 5. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND MATERIA L AVAILABLE ON RECORD. HONBLE FULL BENCH OF DELHI HIGH COURT IN THE CASE OF KELVINATOR OF INDIA LTD. , 256 ITR 1 BY FOLLOWING CIRCULAR NO.549 OF CBDT HELD THAT ON MERE CHANGE OF OPINION OF AO CANNOT BE A GROUND FOR RE-ASSESSMENT AND THAT AMENDMENT OF SEC. 147 W.E.F. 1.4.89 HAS NOT ALTERED THE POSITION. HON BLE GUJRAT HIGH COURT IN THE CASE OF GARDEN SILK MILLS P. LTD., 237 ITR 668 HELD THAT HOWEVER WIDE THE SCOPE OF TAKING ACTION U/S 148 OF IT ACT, IT DOES NOT CON FIRM JURISDICTION ON CHANGE OF THE INTERPRETATION OF A PARTICULAR PROVISION EARLIER AD OPTED BY THE ASSESSING AUTHORITY. FOR COMING TO THE CONCLUSION THAT THERE HAS BEEN EX CESSIVE LOSS OR DEPRECIATION ALLOWANCE OR THAT THERE HAS BEEN UNDER ASSESSMENT O R ASSESSMENT AT A LOWER RATE OR FOR APPLYING OTHER PROVISIONS OF EXPLANATION 2 TO S EC. 147, IT MUST BE ON MATERIAL AND IT SHOULD HAVE NEXUS FOR HOLDING SUCH OPINION C ONTRARY TO WHAT HAS BEEN ITA NO. 282/AGRA/2013 6 EXPRESSED EARLIER. EVEN AFTER THE AMENDMENT OF SEC. 147, MERE CHANGE OF OPINION DOES NOT CONFIRM JURISDICTION ON THE ITO TO INITIAT E PROCEEDING FOR REASSESSMENT MERELY BY RESORTING TO EXPLANATION 1 TO SEC. 147. HONBLE CALCUTTA HIGH COURT IN THE CASE OF BERGER PAINTS INDIA LTD., 245 ITR 648 H ELD WHEN ANY PARTICULAR ISSUE HAS BEEN CONSIDERED BY THE ITO AND CIT(A) AND WHEN THERE IS NO FAILURE TO DISCLOSE THE FACTS, THE REASSESSMENT PROCEEDINGS AR E NOT VALID. HON'BLE SUPREME COURT IN THE CASE OF CIT VS. FORANER FRANCE, 264 IT R 566 HELD REASSESSMENT NOT ON BASIS OF MERE CHANGE OF OPINION LAW SAME BEFOR E AND AFTER AMENDMENT BY DIRECT TAX LAWS. HON'BLE SUPREME COURT IN THE CASE OF INDIAN OIL CORPORATION, 159 ITR 956 HELD THAT NO CASE U/S 148 IS MADE OUT WHEN THE FACTS WERE KNOWN ALL ALONG WITH TO THE REVENUE WHILE MAKING THE ORIGINAL ASSES SMENT. HON'BLE SUPREME COURT IN THE CASE OF ASSOCIATED STONE INDUSTRY LTD., 224 ITR 560 HELD THAT THE ASSESSEE SHALL HAVE TO DISCLOSE ONLY THE PRIMARY FACTS. CONS IDERING THE ABOVE LEGAL PROPOSITIONS DECIDED IN THE ABOVE CASES, IT IS CLEA R THAT AO IS NOT JUSTIFIED IN REOPENING THE ASSESSMENT ON MERE CHANGE OF OPINION. IT IS ADMITTED FACT THAT THERE IS NO MATERIAL AVAILABLE WITH THE AO TO FORM HIS OP INION THAT INCOME HAS ESCAPED ASSESSMENT. ALL MATERIAL EVIDENCES WERE AVAILABLE A T THE STAGE OF ORIGINAL ASSESSMENT PROCEEDINGS AND THE AO MERELY FOLLOWING THE PROVISIONS OF SECTION 50C, AS WAS NOT CONSIDERED IN THE ORIGINAL ASSESSME NT PROCEEDINGS, REOPENED THE ASSESSMENT ORDER. THE ASSESSEE HAS DISCLOSED ALL TH E FACTS WHICH WERE KNOWN ALL ITA NO. 282/AGRA/2013 7 ALONG TO THE REVENUE. SECTION 50C IS NOT FINAL DETE RMINATION TO PROVE THAT IT IS A CASE OF ESCAPEMENT OF INCOME. THE REPORT OF APPROVE D VALUER MAY GIVE ESTIMATED FIGURE ON THE BASIS OF FACTS OF EACH CASE. THEREFOR E, ON MERE APPLICABILITY OF SECTION 50C WOULD NOT DISCLOSE ANY ESCAPEMENT OF INCOME IN THE FACTS AND CIRCUMSTANCES OF THE CASE. THE AO AT THE ORIGINAL ASSESSMENT STAG E CONSIDERED ALL THE DOCUMENTS AND MATERIAL PRODUCED BEFORE HIM AND HAS ACCEPTED T HE COST OF PROPERTY AS WAS DECLARED BY THE ASSESSEE. THEREFORE, ON MERE CHANGE OF OPINION, THE AO WAS NOT JUSTIFIED IN REOPENING THE ASSESSMENT. THE LD. CIT( A) ON PROPER APPRECIATION OF FACTS AND LAW CORRECTLY QUASHED THE REASSESSMENT PR OCEEDINGS. THE DEPARTMENTAL APPEAL HAS NO MERITS AND IS ACCORDINGLY DISMISSED. 6. IN THE RESULT, THE DEPARTMENTAL APPEAL IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (PRAMOD KUMAR) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A), CONCERNED BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. GUARD FILE SR. PRIVATE SECRETARY TRUE COPY