Shri M.J. Sheik Dawood, CHENNAI V. ITO, CHENNAI

ITA 2844/CHNY/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7609 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 17-01-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 03-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R CLEMENT RAMESH KUMAR
• Assessee Lawyers: A S SRIRAMAN
• Keywords: Sale consideration of property below Jantri Value; Depreciation; Tangible material; Difference of opinion; Reason to believe; Change of opinion
• Section: 50C; 147; 148; 139

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C (SMC) BENCH : CHENNAI . , [BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT M EMBER ] ./I.T.A. NO. 2844/MDS/2016 / ASSESSMENT YEAR : 2008-2009 SHRI. M.J. SHEIK DAWOOD, NO.91, G.A. ROAD, OLD WASHERMANPET, CHENNAI 600 021. [PAN AUMPS 8594D] VS. THE INCOME TAX OFFICER, NON CORPORATE WARD 6(2) CHENNAI. ( !' / APPELLANT) ( #$!' /RESPONDENT) / APPELLANT BY : SHRI. A.S. SRIRAMAN, ADVOCATE /RESPONDENT BY : SHRI. R. CLEMENT RAMESH KUMAR, JCIT. /DATE OF HEARING : 02-03-2017 ! /DATE OF PRONOUNCEMENT : 07-03-2017 % / O R D E R THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST AN ORDER DATED 16.09.2016 OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-5, CHENNAI. THE ASSESSEE HAS TAKEN ALTOGETHER RAISED 11 GROUNDS OF ITA NO.2844/MDS/2016 :- 2 -: WHICH GROUNDS NO.1, 10 & 11 ARE GENERAL IN NATURE N EEDING NO SPECIFIC ADJUDICATION. 2. VIDE ITS GROUNDS 2 & 3, ASSESSEE ASSAILS THE VALIDI TY OF REASSESSMENT. 3. FACTS APROPOS ARE THAT ASSESSEE EARNING INCOME FROM COMMISSION, HOUSE PROPERTY AND ALSO HAVING INCOME F ROM OTHER SOURCES HAD FILED RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR DISCLOSING INCOME OF E4,66,965/-. DURING THE COURS E OF THE ORIGINAL ASSESSMENT PROCEDURE, LD. ASSESSING OFFICER BASED O N INFORMATION FROM AIR THAT ASSESSEE HAD SOLD PROPERTY OF VALUE OF E40 ,00,000/- DURING THE RELEVANT PREVIOUS YEAR, REQUIRED THE ASSESSEE T O FURNISH THE SALE DEEDS. IT SEEMS ASSESSEE COULD NOT PRODUCE THE SALE DEED OF THE PROPERTY AT THIRUVARUR SOLD BY THE ASSESSEE. LD. A SSESSING OFFICER SENT LETTERS TO THE BUYER AND THE SUB-REGISTRAR, THIRUVA RUR. IT WAS REPLIED BY SUB-REGISTRAR, THIRUVARUR AND A COPY OF THE SALE DEED WAS SUBMITTED TO THE LD. ASSESSING OFFICER. IT WAS EX PLAINED BY THE ASSESSEE THAT THE PROPERTY WAS SOLD FOR A CONSIDERA TION OF E40,00,000/- ALONGWITH FOUR OTHER PERSONS. AS PER ASSESSEE HIS SHARE WAS 1/5 TH CAME TO E8,00,000/-. ASSESSEE ALSO STATED THAT MO NEY WAS DEPOSITED IN HIS ACCOUNT WITH M/S. KARUR VYSYA BANK . EVIDENCE WAS ALSO SUBMITTED FOR PURCHASE OF THE SAID PROPERTY. ASSESSMENT WAS ITA NO.2844/MDS/2016 :- 3 -: THEREAFTER COMPLETED U/S.143(3) OF THE INCOME TAX A CT, 1961 (IN SHORT THE ACT). 4. ON 31.03.2015 A NOTICE U/S.148 OF THE ACT WAS ISSUE D TO THE ASSESSEE. THE REASON FOR ISSUING NOTICE WAS THAT A SSESSEE HAD SOLD IMMOVABLE PROPERTY AT THIRUVARUR ON 25.02.2008 FOR A SALE CONSIDERATION OF E10,00,000/-, BUT THE VALUE FOR T HE PURPOSE OF STAMP DUTY WAS E28,89,800/-. AS PER LD. ASSESSING OFFICE R THE SALE CONSIDERATION MENTIONED IN SALE DEED WAS E10,00,000 /- AND SEC. 50C OF THE ACT REQUIRED ADOPTION OF THE VALUE FIXED FO R THE PURPOSE OF LEVY OF STAMP DUTY FOR COMPUTING LONG TERM CAPITAL GAINS . ASSESSEE OBJECTED TO THE REOPENING STATING THAT LD. ASSESSIN G OFFICER HAD CONSIDERED ALL MATERIAL FACTS RELATING TO THE COMPU TATION OF CAPITAL GAINS IN THE ORIGINAL ASSESSMENT AND THERE WERE NO FRESH MATERIALS JUSTIFYING A REOPENING. HOWEVER, LD. ASSESSING OFFI CER WAS OF THE OPINION THAT DURING THE ORIGINAL SCRUTINY ASSESSMEN T, THOUGH LD. ASSESSING OFFICER HAD OBTAINED A COPY OF THE SALE D EED FROM THE SUB- REGISTRAR, APPLICABILITY OF SEC. 50C OF THE ACT WA S NOT DISCUSSED. THUS ACCORDING TO HIM, THERE WAS ESCAPEMENT OF INCOME. HE PROCEEDED WITH THE RE-ASSESSMENT AND COMPLETED IT BY APPLYIN G SEC. 50C OF THE ACT AND RECOMPUTED THE LONG TERM CAPITAL GAINS. ITA NO.2844/MDS/2016 :- 4 -: 5. AGGRIEVED, ASSESSEE MOVED IN APPEAL BEFORE LD. COMMISSIONER OF INCOME TAX (APPEALS). ASSESSEE CHAL LENGED THE REOPENING STATING THAT SUCH REOPENING WAS DONE AFTE R FOUR YEARS FROM THE END OF THE IMPUGNED ASSESSMENT YEAR. ACCORDING TO HIM, LD. ASSESSING OFFICER HAVING CONSIDERED COMPUTATION OF LONG TERM CAPITAL GAINS ARISING FROM THE SALE OF PROPERTY IN THE ORIG INAL PROCEEDINGS, THE RE-ASSESSMENT WAS BAD IN LAW. LD. COMMISSIONER OF INCOME TAX (APPEALS) WAS NOT IMPRESSED. ACCORDING TO HIM, SEC . 50C OF THE ACT WHICH WAS REQUIRED TO BE APPLIED WAS NOT APPLIED BY THE ASSESSING OFFICER IN THE ORIGINAL PROCEEDINGS. THUS ACCORDING TO HIM, THE REOPENING DONE WAS VALID. 6. NOW BEFORE ME, LD. AUTHORISED REPRESENTATIVE SUBMIT TED THAT BY VIRTUE OF JUDGMENT OF HONBLE APEX COURT IN THE CASE OF CIT VS. KELVINATOR INDIA LTD 320 ITR 561 , UNLESS AND UNTIL, CONDITIONS SET OUT IN FIRST PROVISO TO SEC. 147 WERE SATISFIED, A REOPENI NG DONE AFTER FOUR YEAR WOULD NOT BE VALID. 7. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE STRONG LY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 8. I HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE ORDERS OF THE AUTHORITIES BELOW. FOR DECIDING ON TH E VALIDITY OF ITA NO.2844/MDS/2016 :- 5 -: REOPENING, IT WOULD BE APPOSITE TO REFER TO SEC. 14 7 ALONGWITH ITS FIRST PROVISO. IF THE ASSESSING OFFICER, HAS REASON TO BELIEVE T HAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR, HE MAY, SUBJECT TO THE PROVISIONS OF SECTIONS 148 TO 153, ASSESS OR REASSESS SUCH INCOME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS E SCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENT LY IN THE COURSE OF THE PROCEEDINGS UNDER THIS SECTION, O R RECOMPUTE THE LOSS OR THE DEPRECIATION ALLOWANCE OR ANY OTHER ALLOWANCE, AS THE CASE MAY BE, FOR THE ASSESS MENT YEAR CONCERNED (HEREAFTER IN THIS SECTION AND IN SE CTIONS 148 TO 153 REFERRED TO AS THE RELEVANT ASSESSMENT Y EAR): PROVIDED THAT WHERE AN ASSESSMENT UNDER SUB- SECTION (3) OF SECTION 143 OR THIS SECTION HAS BEEN MADE FOR THE RELEVANT ASSESSMENT YEAR, NO ACTION SHALL BE TAKEN UNDER THIS SECTION AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF THE FAILURE ON THE PART OF THE ASSESSEE T O MAKE A RETURN UNDER SECTION 139 OR IN RESPONSE TO A NOTICE ISSUED UNDER SUB-SECTION (1) OF SECTION 142 OR SECTION 148 OR TO DISCLOSE FULLY AND TRULY A LL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THAT ASSESSMENT YEAR. FOR A REOPENING AFTER FOUR YEARS, NECESSARY REQUIRE MENT IS THAT THERE SHOULD BE A FAILURE ON THE PART OF THE ASSESSEE TO FULLY AND TRULY DISCLOSE ALL MATERIAL FACTS NECESSARY FOR THE ASSE SSMENT. DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS, LD. ASSE SSING OFFICER WAS HAVING WITH HIM A COPY OF THE SALE DEED NO.733/2008 , FOR THE THIRUVARUR PROPERTY SOLD BY THE ASSESSEE, BASED ON WHICH CAPITAL ITA NO.2844/MDS/2016 :- 6 -: GAINS WAS COMPUTED. THIS HAS BEEN SPECIFICALLY MENT IONED BY LD. COMMISSIONER OF INCOME TAX (APPEALS) AT PARA 2 OF H IS ORDER. LD. ASSESSING OFFICER HAD OBTAINED IT FROM THE SUB-REG ISTRAR. LD. ASSESSING OFFICER HAD THEREAFTER CONSIDERED THE E XPLANATIONS OF THE ASSESSEE AND COMPLETED ASSESSMENT. THIS IS SPECIFI CALLY MENTIONED BY THE LD. ASSESSING OFFICER IN THE ORIGINAL ASSESSMEN T ORDER DATED 29.10.2010. I CANNOT SAY THAT OMISSION OF THE LD. ASSESSING OFFICER TO APPLY SEC. 50C OF THE ACT WAS ON ACCOUNT OF ANY FAI LURE ON THE PART OF THE ASSESSEE. WHEN COPY OF THE REGISTERED SALE DE ED WAS ALREADY WITH THE LD. ASSESSING OFFICER, AND LD. ASSESSING O FFICER HAD CONSIDERED IT IN THE ORIGINAL ASSESSMENT, THE VERY SAME DEED C ANNOT BE CONSTRUED AS FRESH MATERIAL WITH LD. ASSESSING OFFICER. IN M Y OPINION, THE REOPENING COULD NOT HAVE RESORTED FOR APPLYING SEC. 50C OF THE ACT, SINCE IT WAS BASED ON A CHANGE OF OPINION. JUDGMEN T OF HONBLE APEX COURT IN THE CASE OF KELVINATOR INDIA LTD (SUPRA) CLEARLY LAY DOWN THAT AVAILABILITY OF FRESH TANGIBLE MATERIAL IS A FUNDA MENTAL REQUIREMENT WHEN A REOPENING IS DONE AFTER FOUR YEARS FROM THE END OF ASSESSMENT YEAR. I AM OF THE OPINION THAT REOPENING DONE FOR THE IMPUGNED ASSESSMENT YEAR WAS INVALID. THE RE-ASSESSMENT STA NDS SETASIDE. SINCE APPEAL OF THE ASSESSEE IS ALLOWED ON LEGAL G ROUNDS, OTHER ITA NO.2844/MDS/2016 :- 7 -: GROUNDS RELATING TO MERITS OF THE ADDITION ARE NOT ADJUDICATED. 9. IN THE RESULT, APPEAL OF THE ASSESSEE STANDS ALLOWE D. ORDER PRONOUNCED ON TUESDAY, THE 7TH DAY OF MARCH , 2017, AT CHENNAI. SD/- ( . ) (ABRAHAM P. GEORGE) / ACCOUNTANT MEMBER '# / CHENNAI $% / DATED: 7TH MARCH, 2017 KV %& '()( / COPY TO: 1 . / APPELLANT 3. *+, / CIT(A) 5. (-. / / DR 2. / RESPONDENT 4. * / CIT 6. .01 / GF