V.Rammohan, CHENNAI V. ACIT, CHENNAI

ITA 288/CHNY/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8192 (ITAT-CHENNAI)
• Duration Of Justice: 10 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-01-2017
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 28-11-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 12-02-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHIVA SRINIVAS
• Keywords: Reopening of assessment; Capital asset; Advance ruling; Set aside; Capital Gains
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92

Judgement Text

, C/SMC , IN THE INCOME TAX APPELLATE TRIBUNAL C/SMC BENCH, CHENNAI . , BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER ./I.T.A.NO.288/MDS/2016 ( / ASSESSMENT YEAR :2005-06) SHRI V. RAMMOHAN, NEW NO.25, ARATHOON ROAD, ROYAPURAM, CHENNAI 600 013. VS. THE ASST. COMMSSR. OF INCOME TAX, NON-CORPORATE CIRCLE 6, CHENNAI 600 006. PAN:AAAPR6060K ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : MR. GOWTHAMAN , CA / RESPONDENT BY : MR. SHIVA SRINIVAS , JCIT ! ' #$ / DATE OF HEARING : 28 . 11 .201 6 %& #$ /DATE OF PRONOUNCEMENT : 09 . 0 1 .201 7 / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THIS APPEAL IS FILED BY THE ASSESSEE, AGGRIEVED B Y THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(A)-5, CHENNA I, DATED 19.01.2016 IN ITA NO.76/CIT(A)-5/14-15. ITA NO. 288/MDS/2016 :-2-: 2. THE ASSESSEE RAISED THE FOLLOWING GROUNDS FOR A DJUDICATION. 1. THE COMMISSIONER OF INCOME-TAX (APPEALS) ERRED B OTH IN LAW AND ON THE FACTS OF THE CASE IN HOLDING THAT THE ASSESSMEN T ORDER DATED 27.12.20 10 WAS VALID IN LAW AND SUSTAINING THE ADD ITION OF RS.25,00,000/-. 2. HE FAILED TO APPRECIATE THAT INSPITE OF SEVERAL REQUESTS MADE BY THE APPELLANT, THE ORIGINAL ORDER WAS NOT SERVED AND TH AT, THE COPY OF ORDER ALLEGED TO HAVE BEEN PASSED ON 27.10.2010 WAS SERVED ONLY ON SEPTEMBER 2014 AND THAT, INSPITE OF SEVERAL REQU ESTS, THE REASONS FOR SERVING THE ORDER AFTER 4 YEARS WERE NO T FURNISHED TO THE APPELLANT AND THAT, THEREFORE, THE ASSESSMENT W AS NOT VALID.. 3. HE ALSO FAILED TO APPRECIATE THAT, THE ORIGINAL ORDER PASSED BY AO, NOT HAVING BEEN SERVED, THE RE-ASSESSMENT IS NOT VALID. 4. WITHOUT PREJUDICE TO THE ABOVE, THE APPELLANT SU BMITS THAT THE SUM OF RS.25,00,000/- RECEIVED BY THE APPELLANT WAS ONLY A REFUNDABLE ADVANCE AND THAT, THEREFORE, IT COULD NOT BE ASSESS ED AS CAPITAL GAINS. 5. THE APPELLANT SUBMITS THE ADDITION, IN ANY CASE, IS EXCESSIVE AND UNREASONABLE. 6. THE APPELLANT, THEREFORE, PRAYS THAT THE ASSESSM ENT MAY BE ANNULLED AND THAT THE ADDITION OF RS.25,00,000/- MAY BE DELE TED. 2.1. IN THIS APPEAL, THE ASSESSEE HAS TAKEN ALTOG ETHER 6 GROUNDS OF WHICH GROUND NO.4 IS ONLY TAKEN BEFORE ME FOR ADJUD ICATION. THE OTHER GROUNDS ARE NOT PRESSED BY LD.A.R AT THE TIME OF HEARING. ACCORDINGLY, THE OTHER GROUNDS ARE DISMISSED AS NOT PRESSED. ITA NO. 288/MDS/2016 :-3-: 2.2. THE GROUND NO.4 IS WITH REGARD TO ` 25 LAKHS RECEIVED BY THE ASSESSEE WAS ONLY A REFUNDABLE ADVANCE AND THAT, TH EREFORE, IT COULD NOT BE ASSESSED AS CAPITAL GAINS. 3. LD.A.R SUBMITTED THAT THE ASSESSEE ENTERED INTO JOINT DEVELOPMENT AGREEMENT (JDA) ON 29 TH MAY, 2004 FOR DEVELOPMENT AND CONSTRUCTION OF THE PROPERTIES AT OLD SURVEY NO .2428 AND RE- SURVEY NO.503/6 AT WEST MADA CHURCH STREET, ROYAP URAM, MADRAS WHEREIN THE ASSESSEE IS GOING TO HAVE 42.5% OF THE SUPER BUILT UP AREA FOR TRANSFERRING 57.5% OF UNDIVIDED SHARE OF T HE SAID PROPERTY OF LAND OF SCHEDULED PROPERTY. IN THE COURSE OF THIS TRANSACTION, THE ASSESSEE RECEIVED ` 25 LAKHS, REFUNDABLE ADVANCE ADJUSTABLE FROM / OUT OF SALE REALIZATION EQUIVALENT TO ` 2,000/- PER. SQ. FT AT THE END OF COMPLETION OF ENTIRE CONSTRUCTION OF 42.5% OF BU ILT UP AREA. THE AO REOPENED THE COMPLETED THE ASSESSMENT FOR BRING ING THIS ` 25 LAKHS AS TAXABLE IN THE HANDS OF ASSESSEE. ACCORDI NGLY, HE REOPENED THE ASSESSMENT BY ISSUING A NOTICE U/S.148 OF THE A CT AFTER DULY RECORDING THE REASON FOR REOPENING OF ASSESSMENT. NOW, THE SAME WAS CONFIRMED BY THE LD.CIT(A). ITA NO. 288/MDS/2016 :-4-: 4. NOW, THE CONTENTION OF THE LD.A.R IS THAT THIS IS ONLY A REFUNDABLE DEPOSIT AND THERE WAS NO TRANSFER U/S.2( 47)(V) OF THE ACT AND THIS AMOUNT CANNOT BE CONSIDERED AS SALE CONSID ERATION SO AS TO BRING IT AS INCOME OF ASSESSEE. FURTHER, HE SUBMIT TED THAT ASSESSMENT WAS REOPENED SO AS TO CONSIDER THE AGREE MENT DT. 29.05.2004 AS A TRANSFER U/S.2(47)(V) OF THE ACT. BEING SO, THE AO CANNOT CONSIDER THIS AMOUNT AS INCOME OF ASSESSEE. 5. ON THE OTHER HAND, LD.D.R SUBMITTED THAT IN VIE W OF THE JUDGMENT OF BOMBAY HIGH COURT IN THE CASE OF CHATUR BHUJ DWARKADAS KAPADIA VS. CIT IN [2003] 260 ITR 491 (BO M) AND THE AUTHORITY FOR ADVANCE RULINGS IN THE CASE OF JASBIR SINGH SARKARIA, IN RE IN [2007] 294 ITR 196 (AAR), THERE IS A TRANSFE R AND IT IS TO BE TAXED IN THE HANDS OF ASSESSEE. 6. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL ON RECORD. THERE IS NO DISPUTE THAT FOR THE SAME ASSE SSMENT YEAR, THERE WAS A REOPENING OF THE ASSESSMENT VIDE NOTICE DATED 28.08.2014 TO CONSIDER THE SAME JDA AS A TRANSFER U/S.2(47)(V) OF THE ACT AFTER THE ORDER OF TRIBUNAL FOR ASSESSMENT YEAR 2007-08 VIDE ORDER DATED ITA NO. 288/MDS/2016 :-5-: 04.04.2013 AND IT WAS SUBMITTED BEFORE ME THAT IT WAS PENDING BEFORE THE LOWER AUTHORITIES FOR ADJUDICATION. ACCO RDINGLY, WE ARE INCLINED TO SET ASIDE THIS ISSUE TO THE FILE OF AO TO CONSIDER THIS ALONG WITH RE-OPENED ASSESSMENT VIDE NOTICE U/S.148 DATED 28.08.2014 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 09 TH JANUARY, 2017 AT CHENNAI. SD/- ( ) ( CHANDRA POOJARI ) /ACCOUNTANT MEMBER CHENNAI, DATED THE 09 TH JANUARY, 2017 . K S SUNDARAM. ' #)* +*# / COPY TO: 1 . / APPELLANT 3. ! ,# () / CIT(A) 5. */0 #1 / DR 2. / RESPONDENT 4. ! ,# / CIT 6. 02 3' / GF