R.Surya Narayna, Visakhapatnam V. THE ITO , WARD - 5(2), Visakhapatnam

ITA 3/VIZ/2014

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8813 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 4 year(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 03-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T SATYANANDAM
• Keywords: Sale consideration of property below Jantri Value; Valuation report; Assessment record
• Section: 143(3); 5(2)

Judgement Text

ITA NO.3/VIZAG/2014 R. SURYANARAYANA, VSKP 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . . ' , % BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ./I.T.A.NO.3/VIZAG/2014 ( / ASSESSMENT YEAR: 2009-10) R. SURYANARAYANA VISAKHAPATNAM ITO, WARD - 5(2) VISAKHAPATNAM [PAN NO. AANPR1729C ] ( ' / APPELLANT) ( ()' / RESPONDENT) / APPELLANT BY : SHRI G.V.N. HARI, AR / RESPONDENT BY : SHRI T. SATYANANDAM, DR / DATE OF HEARING : 04.01.2018 / DATE OF PRONOUNCEMENT : 10.01.2018 / O R D E R PER D.S. SUNDER SINGH, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) {CIT(A)}, VISA KHAPATNAM DATED 27.9.2013 FOR THE ASSESSMENT YEAR 2009-10. 2. THERE WAS A DELAY IN FILING THE APPEAL OVER 28 D AYS FOR WHICH THE ASSESSEE HAS FILED A PETITION FOR CONDONATION OF DE LAY ASSIGNING HEALTH ITA NO.3/VIZAG/2014 R. SURYANARAYANA, VSKP 2 REASONS AND TYPHOID FEVER. AFTER HEARING BOTH THE PARTIES, THE DELAY IS CONDONED AND THE APPEAL IS ADMITTED. 3. THE ASSESSEE FILED RETURN OF INCOME DECLARING TO TAL INCOME OF RS.1,90,920/- AND THE AGRICULTURAL INCOME OF RS.2, 60,000/- ON 5.3.2010. THE CASE WAS SELECTED FOR SCRUTINY AND THE ASSESSME NT WAS COMPLETED ON TOTAL INCOME OF RS.1,06,68,785/-. IN THE ASSESS MENT PROCEEDINGS, THE ASSESSING OFFICER MADE THE ADDITION OF RS.1,04, 29,785/- RELATING TO THE SALE OF PROPERTY. DURING THE PREVIOUS YEAR REL EVANT TO THE ASSESSMENT YEAR, THE ASSESSEE HAS SOLD THE PROPERTY CONSISTING OF LAND AND BUILDINGS IN PLOT NO.162/B, 161 & 161/A SITUATE D AT APIIC PEDAGANTYADA IN SURVEY NO.156 FOR A CONSIDERATION O F RS.1,22,77,850/- AND CLAIMED THE COST OF CONSTRUCTION AT RS.97,88,00 0/- ALONG WITH THE RCC BUILDINGS IN TWO STORIES HAVING BUILT UP AREA O F 1300 SFT.IN GROUND FLOOR 1420 SFT., IN FIRST FLOOR AND STAFF QUARTERS IN 8 NOS OF RCC BUILDINGS EACH OF 660 SFT WITH SINGLE FLOOR, ENGINEERING STOR ES SHED 30X40 FT. AC SHEET SHED AND BLOOM CUTTING UNIT. THE ABOVE STRUCT URES ARE EVIDENCED BY THE BALANCE SHEET AND THE VALUATION REPORT OF TH E APPROVED VALUER. THE ASSESSEE CLAIMED THE COST OF CONSTRUCTION AT RS .97 LAKHS AS DEDUCTION. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER FOUND THAT AS PER THE SALE DEEDS, THE ASSESSEE HAS TRANSFERRED THE PLOTS WITH COMPOUND WALLS AND SHEDS WITH AC SHEETS, BUT N OT THE BUILDINGS, ITA NO.3/VIZAG/2014 R. SURYANARAYANA, VSKP 3 HENCE THE A.O. DID NOT ALLOW THE COST OF CONSTRUCTI ON CLAIMED FOR THE BUILDINGS AND ONLY ALLOWED THE INDEXED COST OF ACUI SITION IN RESPECT OF PLOTS IN 161, 162/A, 162/B AND THE COST OF SHEDS AN D COMPOUND WALLS COSTING AROUND RS.8,62,500/- AND BROUGHT THE DIFFER ENCE AMOUNT OF RS.1,04,24,785/- AS LONG TERM CAPITAL GAINS. 4. AGGRIEVED BY THE ORDER OF THE A.O., THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) AND RAISED THE GROUNDS WITH REGAR D TO NON SERVICE OF NOTICE U/S 143(2) OF THE INCOME TAX ACT (HEREINAFTE R CALLED AS THE ACT) AND ALSO RAISED GROUNDS WITH REGARD TO DISALLOWANCE OF COST OF CONSTRUCTION OF THE BUILDING SOLD BY THE ASSESSEE. THE LD. CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE ON THE GROUND OF NON SERVICE OF NOTICE AND CONFIRMED THE ADDITION MADE BY THE A.O. WITH REGARD TO THE SALE CONSIDERATION THE CIT(A) ENHANCED THE SALE CON SIDERATION BY RS.25,67,980/- APPLYING THE PROVISIONS OF SECTION 5 0C OF THE ACT. AGAINST THE SALE CONSIDERATION ADMITTED BY THE ASSE SSEE AMOUNTING TO RS.1,22,77,850/-, THE CIT(A) DIRECTED THE A.O. TO A DOPT THE SALE CONSIDERATION AS DETERMINED BY THE STAMP VALUATION AUTHORITIES AT RS.1,48,45,850/-. 5. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSESS EE IS IN APPEAL BEFORE THIS TRIBUNAL AND RAISED THE FOLLOWING GROUN DS OF APPEAL: ITA NO.3/VIZAG/2014 R. SURYANARAYANA, VSKP 4 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS CONTRARY TO THE FACTS AND ALSO THE LAW APPLICABLE T O THE FACTS. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE HELD THAT THE NOTICE ISSUED U/S 143(2) IS LIABLE TO BE QUASHED AS ILLEGAL AND CONSEQUENTLY THE ENTIRE ASSESSMENT PROCEEDINGS ARE LIABLE TO BE HELD AS VOID-AB-INITIO. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE HELD THAT THE ASSESSMENT U/S 143(3) OF THE ACT IS B ARRED BY TIME. 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) NOT JUSTIFIED IN DISALLOWING THE DEDUCTION OF RS.97,00,000/- CLAIMED BY THE APPELLANT TOWARDS COST OF CONSTRUCTION AND RESTRICTING THE SA ME TO RS.8,62,500/- AS ALLOWED BY THE ASSESSING OFFICER. 5. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS NOT JUSTIFIED IN INVOKING THE PROVISIONS OF S.50C AND ADOPTING TH E GUIDELINES VALUE OF SUB-REGISTRAR AS THE DEEMED CONSIDERATION. 6. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE REFERRED THE MATTER TO DVO WHEN THE APPELLANT OBJEC TED TO ADOPTION OF GUIDELINE VALUE AS DEEMED CONSIDERATION. 7. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME O F APPEAL HEARING. 6. GROUND NO.1 & 7 ARE GENERAL IN NATURE WHICH DOES NOT REQUIRE SPECIFIC ADJUDICATION. 7. GROUND NO.2 IS RELATED TO THE NON SERVICE OF THE NOTICE U/S 143(2) OF THE ACT. DURING THE APPEAL HEARING, THE LD. A.R . OF THE ASSESSEE ARGUED THAT THE ASSESSING OFFICER HAS NOT SERVED TH E NOTICE U/S 143(2) OF THE ACT TO THE ASSESSEE. THE ASSESSEE ALSO FILED A N AFFIDAVIT STATING AS UNDER: I, R.SURYANARAYANA S/O ADIRANARAYANA, AGED 59 YEARS , RESIDENT OF 2-228, SRINAGAR, GAJUWAKA, VISAKHAPATNAM-26 DO HERE BY SOLEMNLY AFFIRM AND STATE AS UNDER: ITA NO.3/VIZAG/2014 R. SURYANARAYANA, VSKP 5 1. MY ASSESSMENT FOR A.Y.2009-10 WAS COMPLETED U/S 143 (3) OF THE INCOME TAX, 1961 VIDE ORDER DT.30-12-2011. 2. IN THE APPEAL PREFERRED AGAINST THIS ORDER, AMONG O THER GROUNDS OF APPEAL IT WAS CONTENDED THAT ASSESSMENT WAS FRAM ED U/S 143(3) OF THE ACT WITHOUT SERVICE OF NOTICE U/S 143 (2) IN TIME AND HENCE THE ASSESSMENT IS LIABLE TO BE QUASHED. 3. THE LEARNED CIT (A) REJECTED THE ABOVE CONTENTION B Y REFERRING TO NOTICE STATED TO HAVE BEEN ISSUED ON 20.08.2010, DISPATCHED ON 26.08.2010 AND SERVED ON 13.09.2010. 4. SUBSEQUENT TO RECEIPT OF THE ORDER OF THE LEARNED C IT (A), I HAVE APPLIED FOR A COPY OF THE NOTICE REFERRED TO BY THE LEARNED CIT (A) AND ALSO THE PROOF OF SERVICE. 5. VIDE LETTER DT.15-12-2015, THE ASSESSING OFFICER PR OVIDED ME A COPY OF THE NOTICE DT.20-08-2010 AND ALSO A COPY OF ACKNOWL EDGEMENT IN PROOF OF SERVICE OF THE NOTICE ON 13.09.2010. 6. ON A PERUSAL OF THE SAID ACKNOWLEDGEMENT, I FOUND T HAT THE SIGNATURE OF ADDRESSEE IN THE ACKNOWLEDGEMENT IS NOT THAT OF MINE. FURTHER, I FOUND THAT THE DATE OF HEARING AS PER ACKNOWLEDGEME NT IS 17.09.2010 WHEREAS THE DATE OF HEARING AS PER THE NOTICE IS 13.09.2010. ALSO, I FOUND THAT THE NOTICE DT.20.08. 2010 IS SIGNED BY SRI P. MADHU AND TWO STAMPS WERE AFFIXED ONE IN THE CAPACITY OF ITO, WARD-5(2), VISAKHAPATNAM AND O NE IN THE CAPACITY OF TRO, WARD-5(2), VISAKHAPATNAM. 7. ON THE BASIS OF THE ABOVE FACTS, I ONCE AGAIN REITE RATE MY CONTENTION THAT THE NOTICE DATED 20.8.2010 WAS NOT SERVED ON ME AND THE SIGNATURE ON THE ACKNOWLEDGEMENT IS NOT THAT OF MINE. 8. THE LD. A.R. ARGUED THAT NON SERVICE OF NOTICE R ENDERS THE ASSESSMENT ORDER INVALID AND THE CONSEQUENT ASSESSM ENT MADE U/S 143(3) OF THE ACT REQUIRED TO BE QUASHED. 9. ON THE OTHER HAND, THE LD. D.R. ARGUED THAT THE A.O. HAS GENERATED THE NOTICE U/S 143(2) OF THE ACT AND SERV ED THE NOTICE IN THE GIVEN ADDRESS MENTIONED IN THE RETURN OF INCOME ON 13.9.2010. THE ITA NO.3/VIZAG/2014 R. SURYANARAYANA, VSKP 6 COPY OF THE ACKNOWLEDGEMENT ALSO PLACED IN THE PAPE R BOOK OF THE ASSESSE IN PAGE NO.30 WHEREIN THE DATE OF HEARING W AS MENTIONED AS 17/09/2010 AS AGAINST THE 13/09/2010 AND SERVED ON MR. RAGHU THE BROTHER OF THE ASSESSEE. THE LD. DR ARGUED THAT MER ELY BECAUSE OF THE INCORRECT DATE MENTIONED IN THE ACKNOWLEDGEMENT AND THE NOTICE WAS SERVED ON MR. RAGHU, THE BROTHER OF THE ASSESSEE, T HE SAME CANNOT BE TREATED AS INVALID SERVICE. SINCE THE NOTICE DATED 20.8.2010 WAS SERVED ON THE ASSESSEES BROTHER MR. RAGHU, THE SAME SHOUL D BE TREATED AS VALID SERVICE AND THE ASSESSMENT REQUIRED TO BE UPH ELD. 10. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATE RIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. THE A.O. HAS ISSUED THE NOTICE U/S 143(2) OF THE ACT ON 20.8.2010 AND DISPATCHED THE SAME ON 26.8.2010 FIXING THE DATE OF HEARING ON 13.9.2010. THE ASSESSEE HAS PLACED THE COPY OF ACK NOWLEDGEMENT HAVING SERVED THE NOTICE ON MR. RAGHU, THE BROTHER OF THE ASSESSEE ON 13.9.2010. AS PER THE ACKNOWLEDGEMENT, THE DATE OF HEARING WAS FIXED ON 17.9.2010 AND THERE WAS A MISMATCH WITH REGARD T O THE DATE OF HEARING IN THE NOTICE ISSUED U/S 143(2) AND THE ACK NOWLEDGEMENT DATED 17.9.2010. FURTHER, THE NOTICE WAS NOT SERVED ON T HE ASSESSEE BUT IT WAS STATED TO BE SERVED ON MR. RAGHU, THE BROTHER O F THE ASSESSEE. WE HAVE CALLED FOR THE ASSESSMENT RECORDS AND VERIFIED AND IT IS FOUND THAT ITA NO.3/VIZAG/2014 R. SURYANARAYANA, VSKP 7 THE ASSESSING OFFICER HAS ISSUED THE NOTICE DATED 2 0.8.2010 FIXING THE DATE OF HEARING ON 13.9.2010 AND THE DATE OF HEARIN G WAS NOT ALTERED AS MENTIONED IN THE TEAR OF ACKNOWLEDGEMENT SLIP TO 17 .9.2010. THERE WAS NO CHANGE IN THE ORDER SHEET NOTING ALSO WITH REGAR D TO THE DATE OF HEARING. THEREFORE, WE ARE UNABLE TO ACCEPT THE CON TENTION OF THE LD. D.R. THAT THE NOTICE MENTIONED IN THE TEAR OF ACKNO WLEDGEMENT SLIP AND THE OFFICE COPY OF THE NOTICE AVAILABLE IN THE OFFI CE RECORDS IS ONE AND THE SAME DUE TO MISMATCH OF THE DATE OF HEARING. FURTH ER, THE REVENUE ALSO DID NOT PRODUCE ANY EVIDENCE TO SHOW THAT THE NOTIC E WAS SERVED ON THE PERSON WHO IS RESIDING IN THE ADDRESS GIVEN IN THE NOTICE I.E. 2-228, APIIC LAYOUT, SRINAGAR, GAJUWAKA, VISAKHAPATNAM. T HE REVENUE ALSO DID NOT PLACE ANY CONFIRMATION FROM THE BROTHER OF THE ASSESSEE MR. RAGHU THAT THE NOTICE DATED 20.8.2010 WAS IN FACT S ERVED TO THE ASSESSEE. DURING THE APPEAL HEARING, THE LD. D.R. STATED THAT THE A.O. HAS INITIATED PROCEEDINGS U/S 271(1)(B) OF THE ACT FOR ASSESSEES FAILURE TO COMPLY WITH THE NOTICE ISSUED U/S 143(2) OF THE ACT ON 20.8.2010. ON VERIFICATION OF THE PENALTY NOTICE ISSUED U/S 271(1 )(B) OF THE ACT, THE A.O. HAS NOT MENTIONED THE NOTICE DATED 20.8.2010 A ND NO ACTION WAS TAKEN FOR THE ASSESSEES FAILURE TO COMPLY WITH THE NOTICE DATED 20.8.2010. THE ABOVE FACTS I.E. INCONSISTENCY OF T HE DATE OF HEARING IN THE NOTICE AND NOT CHANGING THE DATE OF HEARING IN ORDER SHEET NOTING ITA NO.3/VIZAG/2014 R. SURYANARAYANA, VSKP 8 AND THE SERVICE OF NOTICE TO MR. RAGHU ESTABLISH TH AT THE NOTICE DATED 20.8.2010 WAS NOT SERVED TO THE ASSESSEE. THE REVE NUE HAS NOT ESTABLISHED THE FACT THAT THE NOTICE DATED 20.8.201 0 WAS REACHED TO THE ASSESSEE AND SERVED ON THE CORRECT ADDRESS. THEREF ORE, WE ARE UNABLE TO ACCEPT THE CONTENTION OF THE REVENUE THAT THE NO TICE WAS SERVED TO THE ASSESSEE. AS PER THE PROVISIONS OF INCOME TAX ACT, NON SERVICE OF NOTICE U/S 143(2) OF THE ACT RENDER THE ASSESSMENT MADE INVALID AND REQUIRED TO BE QUASHED. THIS VIEW IS UPHELD BY THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. CEBON IND IA LIMITED REPORTED IN 347 ITR 0583. SIMILAR VIEW WAS EXPRESSED BY THE HONBLE GUJARAT HIGH COURT IN THE CASE OF DCIT VS. MAHI VALLEY HOTE LS & RESORTS REPORTED IN 287 ITR 0360. SINCE THE REVENUE HAS FAILED TO E STABLISH THAT THE NOTICE WAS SERVED ON THE ASSESSEE, WE HOLD THAT THE ASSESSEES CASE IS SQUARELY COVERED BY THE CASE LAWS RELIED UPON BY TH E ASSESSEE. ACCORDINGLY, THE ASSESSMENT MADE U/S 143(3) OF THE ACT IS HEREBY QUASHED. 11. SINCE WE HAVE QUASHED THE ASSESSMENT MADE U/S 1 43(3) OF THE ACT, WE CONSIDER IT IS NOT NECESSARY TO ADJUDICATE THE REMAINING GROUNDS OF APPEAL. ITA NO.3/VIZAG/2014 R. SURYANARAYANA, VSKP 9 12. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT O N 10 TH JAN18. SD/- SD/- ( . ) ( . . ' ) (V. DURGA RAO) (D.S. SUNDER SINGH) /JUDICIAL MEMBER /ACCOUNTANT MEMBER # /VISAKHAPATNAM: ' /DATED : 10.01.2018 VG/SPS )# *# /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT SHRI R. SURYANARAYANA, APIIC LAYO UT, GAJUWAKA, VISAKHAPATNAM 2. / THE RESPONDENT THE ITO, WARD-5(2), VISAKHAPATN AM 3. + / THE CIT, VISAKHAPATNAM 4. + ( ) / THE CIT (A), VISAKHAPATNAM 5. # . , . , # / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM