JUS TEXTILES LTD, THANE V. ASST CIT CIR 15(2)(1), MUMBAI

ITA 2985/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9091 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2008-2009
• Appeal Filed On: 26-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ALOK JOHRI
• Assessee Lawyers: VINITA SAHA
• Keywords: Tangible material; Difference of opinion; Change of opinion
• Section: 143(3); 147

Judgement Text

ITA NO.298 5/M/2017 JUST TEXTILE 1 IN THE INCOME TAX APPELLATE TRIBUNAL J, BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM& SHRI PAWAN S INGH, JM ITA NO.2985/MUM/2017 ( ASSESSMENT YEAR :2008-09 ) M/S.JUST TEXTILES LTD., K-5, ADDITIONAL MIDC ANAND NAGAR (E), AMBERNATH 421506 VS. ACIT15(2), MUMBAI - 400020 PAN/GIR NO. AAACJ1221D APPELLANT ) .. RESPONDENT ) ASSESSEE BY MS. VINITA SAHA -AR REVENUE BY SH. ALOK JOHRI CIT -DR DATE OF HEARING 09/10/2017 DATE OF PRONOUNCEMENT 09/10/2017 ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH JUDICIAL MEMBER; 1. THIS APPEAL UNDER SECTION 253 OF INCOME TAX ACT IS DIRECTED AGAINST THE ORDER OF COMMISSIONER (APPEALS) - 24 MUMBAI DATED 1 4.02. 2017. THE SOLE GROUND OF APPEAL RAISED BY ASSESSING IN THE PR ESENT APPEAL IS WHETHER COMMISSIONER (APPEALS) ERRED IN CONFIRMING THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSMENT FOR RELEVANT ASSESSMENT YEAR WAS COMPLETED UNDER SECTION 143(3) READ WITH SECTIO N 147 ON 20.02.2017 DETERMINING THE TOTAL INCOME AT RS. 7,40,25,253/- A GAINST THE RETURNED LOSS OF RS. 12,39,115/-. THE ASSESSING OFFICER WHILE FRA MING ASSESSMENT ORDER ITA NO.298 5/M/2017 JUST TEXTILE 2 MADE THE ADDITION RS. 7,52,64,368/-. THE ASSESSING OFFICER MADE THE ADDITION ON ACCOUNT OF LONG TERM CAPITAL GAIN ON SA LE OF LAND. THE ASSESSING OFFICER AFTER SERVICE OF NOTICE UNDER SEC TION 274 READ WITH SECTION 271(1)( C) AND GIVING PROPER OPPORTUNITY LE VIED THE PENALTY AT 100% OF TAX SOUGHT TO BE EVADED. THE ASSESSING OFFI CER LEVIED THE PENALTY OF RS. 85,27,453/-. ON APPEAL BEFORE COMMISSIONER ( APPEALS) THE ORDER OF PENALTY WAS CONFIRMED. THUS FURTHER AGGRIEVED BY THE ORDER OF COMMISSIONER (APPEALS) THE ASSESSEE HAS FILED PRES ENT APPEAL BEFORE US. 3. WE HAVE HEARD LEARNED AR OF THE ASSESSEE AND DR FOR THE REVENUE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LEARN ED AR OF THE ASSESSEE APPEARING ON BEHALF OF ASSESSEE ARGUED THAT THE ADD ITION ON THE BASIS OF WHICH PENALTY WAS LEVIED BY ASSESSING OFFICER HAS B EEN DELETED BY TRIBUNAL IN ASSESSEES APPEAL IN ITA NO.1907/M/201 5 VIDE ORDER DATED 21 MARCH 2017. THE LEARNED AR OF THE ASSESSEE FURTH ER FILED ORDER OF COORDINATE BENCH OF THE TRIBUNAL. THE LEARNED AR A RGUED THAT WHEN THE ADDITION HAS ALREADY BEEN DELETED BY THE TRIBUNAL T HE PENALTY ORDER IS NOT SUSTAINABLE. ON THE OTHER HAND THE LEARNED DR FOR T HE REVENUE NOT DISPUTED THE CONTENTION OF THE LEARNED AR OF THE AS SESSEE AND THE DECISION OF TRIBUNAL. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES AND HAVE GONE THROUGH THE ORDER OF AUTHORITIES BELOW. WE HAVE SEE N THE ORDER OF TRIBUNAL IN ASSESSEES APPEAL IN QUANTUM ASSESSMENT . THE COORDINATE ITA NO.298 5/M/2017 JUST TEXTILE 3 BENCH OF THE TRIBUNAL IN ASSESSEES APPEAL ON QUAN TUM ASSESSMENT IN ITA NO. 1907/M/2015, PASSED THE FOLLOWING ORDER; 14. WE HAVE CONSIDERED RIVAL CONTENTIONS AND CAREFU LLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE HAD ALSO DE LIBERATED ON THE JUDICIAL PRONOUNCEMENTS REFERRED BY LOWER AUTHORITI ES IN THEIR RESPECTIVE ORDERS AS WELL AS CITED BY LEARNED AR AND DR DURING THE COURSE OF HEARING BEFORE US. 15. FROM THE RECORD, WE FOUND THAT ORIGINAL ASSESSMENT WAS FRAMED U/S.143(3) IN THE A.Y.2007-08, WHEREIN CAPITAL GAIN SO OFFERED BY THE ASSESSEE WAS ACCEPTED BY THE AO. THEREAFTER WITHOUT ANY TANGIBLE MATERIAL, AO CHANGED HIS OPINION AND RECORDED A SAT ISFACTION THAT INCOME SHOULD BE TAXABLE IN THE A.Y.2008-09 AND NOT IN THE ASSESSMENT YEAR 2007-08. WE FOUND THAT EVEN WHEN THE COMPLETED ASSESSMENT U/S.143(3) FOR THE A.Y.2007-08 WAS REOPENED, ASSESS MENT WAS COMPLETED ON THE VERY SAME INCOME EVEN IN THE RE-AS SESSMENT PROCEEDINGS. THUS, THERE WAS CHANGE OF OPINION ON T HE VERY SAME SET OF FACTS AND CIRCUMSTANCES. THE ISSUE IS SQUARELY COVE RED BY THE DECISION OF SUPREME COURT IN CASE OF KELVINATOR INDIA WHEREI N HONBLE SUPREME COURT OBSERVED THAT MERE CHANGE OF OPINION IS NOT S UFFICIENT FOR REOPENING ASSESSMENT. ONE MUST KEEP IN MIND THE DIF FERENCE BETWEEN THE POWER TO REVIEW AND POWER TO RE-ASSESS AND HELD THAT RE- ASSESSMENT HAS TO BE BASED ON FULFILMENT OF CERTAIN PRE-CONDITION AND IF THE CONCEPT OF CHANGE OF OPINION IS REMOVED, THEN I N THE GARB OF RE- OPENING THE ASSESSMENT, REVIEW WOULD TAKE PLACE. IT WAS PRECISELY OBSERVED BY HONBLE SUPREME COURT THAT AFTER 01/04/ 1989 FOR EXERCISING POWER OF REOPENING PERMISSIBLE TANGIBLE MATERIAL TO COME TO THE CONCLUSION THAT THERE IS AN ESCAPEMENT OF INCOME. R EASONS MUST HAVE LIVE LINK WITH THE FORMULATION OF BELIEF. 16. AS PER OUR CONSIDERED OPINION R EASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX AS ESCAPED ASSESSMENT IS ONE OF T HE CONDITIONS PRECEDENT FOR INVOKING THE JURISDICTION OF THE AO T O REOPEN THE ASSESSMENT U/S.147. AO DOES NOT HAVE ANY JURISDICTI ON TO REVIEW HIS OWN ORDER. WHAT CANNOT BE DONE DIRECTLY CANNOT BE D ONE INDIRECTLY. ITA NO.298 5/M/2017 JUST TEXTILE 4 THUS, THE AO CANNOT INITIATE PROCEEDINGS FOR THE RE -ASSESSMENT ON THE BASIS OF MERE CHANGE OF OPINION. IN THE INSTANT CAS E BEFORE US ON THE BASIS OF MATERIAL AVAILABLE ON RECORD, AO HAS FRAME D SCRUTINY ASSESSMENT ORDER U/S.143(3), THEREAFTER, CASE WAS R EOPENED AND AGAIN ASSESSMENT WAS FRAMED U/S.143(3) R.W.S. 147 ON THE VERY SAME INCOME. THEREAFTER, THERE WAS NO TANGIBLE MATERIAL BEFORE THE AO TO COME TO THE CONCLUSION THAT THERE IS AN ESCAPEMENT OF INCOME FR OM ASSESSMENT. ACCORDINGLY, WE DO NOT FIND ANY MERIT FOR REOPENING THE ASSESSMENT BY THE AO IN THE A.Y 2008-09. 17. EVEN ON MERITS, WE FOUND THAT THE LD AO HAS WRONGLY APPLIED PROVISIONS OF SECTION 48 TO COMPUTE CAPITAL GAIN IN STEAD OF SECTION 50, APPLICABLE TO THE DEPRECIABLE ASSETS. IN THIS CASE SALE CONSIDERATION WAS CONSOLIDATED FOR LAND AS WELL AS BUILDING, HENCE AS SESSEE HAS COMPUTED CAPITAL GAIN U/S 50 AS THERE IS NO AUTHENTIC METHOD TO BIFURCATE THE SALE CONSIDERATION INTO LAND AND' BUILDING SEPARATELY. T HEREFORE THE ASSESSEE COMPUTED CAPITAL GAIN U/S. 50 THOUGH THE SAME WAS H AVING HIGHER BURDEN OF TAX AS RATE OF TAX ON SHORT TERM CAPITAL GAIN IS HIGHER THAN THE LONG TERM CAPITAL GAIN AND UNDER SECTION 50, BENEFI T OF INDEXATION IS ALSO NOT ALLOWABLE. HOWEVER LD AO IGNORED THE SAME AND A PPLIED SECTION 48 OF THE ACT WHICH WAS ALSO NOT FOLLOWING IN SPIRIT A S HE FAILED TO GRANT BENEFIT OF INDEXATION, NOT CONSIDERED COST OF BUILD ING ETC., WE ALSO FOUND THAT AO HAS NOT GIVEN INDEXATION FOR THE COST OF LA ND, WHICH WAS ACQUIRED BY THE ASSESSEE VIDE DEED OF PARTITION DAT ED 18/8/1990. THEREFORE THE INDEXED VALUE OF THIS LAND IN A Y 200 8-09 , WHICH WORKS OUT TO BE RS. 3,25,01,831/- (1,07,35,632/- X 551/18 2) SHOULD BE CONSIDERED FOR CALCULATING LONG TERM CAPITAL GAIN U /S 48 OF THE ACT. FURTHER THE SALE CONSIDERATION OF RS. 8,60,00,000/- IS BOTH FOR LAND AS WELL AS BUILDING, HOWEVER LD A 0 HAS NOT CONSIDERED SALE CONSIDERATION PERTAINING TO BUILDING PORTION ON THE PLEA THAT SIN CE THE LAND WAS TRANSFERRED FOR THE PURPOSE OF REDEVELOPMENT HENCE THE MAIN PURPOSE OF AGREEMENT IS TO TRANSFER THE LAND. THE LD AO FAILED TO APPRECIATE THE FACT THAT THE CONVEYANCE DEED AS WELL AS MOU CLEARLY STA TES THE FACTS THAT THE ASSESSEE COMPANY HAS TRANSFERRED BOTH LAND AS W ELL AS BUILDING THEREON. 18. IN VIEW OF THE ABOVE DISCUSSIO N, WE DO NOT FIND ANY MERIT FOR THE ADDITION SO MADE BY THE AO. IN THE INSTANT CASE BEF ORE US THE INCOME ITA NO.298 5/M/2017 JUST TEXTILE 5 FROM SALE OF LAND AND BUILDING HAS BEEN OFFERED BY THE ASSESSEE IN A Y 2007-08 AND THE SAME HAS BEEN ACCEPTED NOT ONLY IN ASSESSMENT U/S 143(3) BUT AGAIN THE REASSESSMENT PROCEEDING U/S 14 3(3) R.W.S. 147 OF THE ACT. EVEN OTHERWISE THE INCOME IS ASSESSABLE IN THE YEAR 2007-08 AS THE MOU CLEARLY STATES THAT ALL THE CONTROL OVER TH E PROPERTY TRANSFERRED TO THE BUYER ON EXECUTION OF MOU. HON'BLE BOMBAY HI GH COURT IN CASE OF CHATURBHUJ DWARKADAS KAPADIA VS CIT(260 ITR 491) (BOM) HELD THAT 'EVEN ARRANGEMENTS CONFIRMING PRIVILEGES OF OWNERSH IP WITHOUT TRANSFER OF TITLE COULD FALL UNDER SECTION2(47)(V) IF THE TR ANSFEREE IS READY AND WILLING TO ACT UPON THE ARRANGEMENTS. ' IN THE CASE OF ASSESSEE THE MOU HAS GIVEN DEEMED OWNERSHIP TO THE TRANSFEREE AND TH E SAID MOU HAS FINALLY ACTED UPON WITH 45 DAYS BY ENTERING INTO CO NVEYANCE DEED, HENCE THE CORRECT YEAR OF DETERMINATION OF CAPITAL GAIN I S A Y 2007-08. 19. IN THE RESULT, APPEAL OF THE A SSESSEE IS ALLOWED IN TERMS INDICATED HEREINABOVE. 5. CONSIDERING THE FACT THAT THE ADDITIONS HAVE BEEN D ELETED BY COORDINATE BENCH IN ASSESSEE ON THE BASIS OF WHICH THE PENALTY WAS LEVIED BY THE ASSESSING OFFICER. IN OUR VIEW, THE PENALTY ORDER PASSED BY ASSESSING OFFICER WOULD NOT SURVIVE. SIMILAR VIEW WAS TAKEN B Y HONBLE GUJARAT HIGH COURT IN CASE OF CIT VERSUS SHAH ALLOY LTD [2013] 35 TAXMANN.COM 532 (GUJARAT). HENCE THE GROUND OF APPE AL RAISED BY ASSESSEE IS ALLOWED. 6. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON T HIS 09TH DAY OF OCTOBER 21017 SD/- SD/- (R.C.SHARMA) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED 09/10/2017 ITA NO.298 5/M/2017 JUST TEXTILE 6 COPY OF THE ORDER FORWARDED TO : BY ORDER, ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE.