Max Value Promoters, CHENNAI V. ITO, CHENNAI

ITA 3100/CHNY/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4268 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-06-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 07-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PAVUNA SUNDARI
• Assessee Lawyers: D ANAND
• Keywords: Reopening of assessment
• Section: 143(3); 147; 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . . . , , ' # BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ ITA NO.3099 & 3100/MDS/2016 & '& / ASSESSMENT YEAR : 2007-08 & 2008-09 M/S MAX VALUE PROMOTERS, NO.9, PADMANAVA NAGAR 4 TH STREET, ADYAR, CHENNAI - 600 020. PAN : AANFM 1317 K V. THE INCOME TAX OFFICER, NON CORPORATE WARD 3(4), CHENNAI - 600 034. ()*/ APPELLANT) (+,)*/ RESPONDENT) )* - . / APPELLANT BY : SHRI D. ANAND, ADVOCATE +,)* - . / RESPONDENT BY : SMT. PAVUNA SUNDARI, JCIT / - 0' / DATE OF HEARING : 01.06.2017 12' - 0' / DATE OF PRONOUNCEMENT : 22.06.2017 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: BOTH THE APPEALS OF THE ASSESSEE ARE DIRECTED AG AINST THE COMMON ORDER PASSED BY THE COMMISSIONER OF INCOME T AX (APPEALS) -4, CHENNAI, DATED 24.08.2016 AND PERTAIN TO ASSESSMENT YEARS 2007-08 AND 2008-09. SINCE COMMON ISSUE ARIS ES FOR CONSIDERATION IN THESE APPEALS, WE HEARD BOTH THE A PPEALS TOGETHER AND DISPOSING OF THE SAME BY THIS COMMON ORDER. 2 I.T.A. NOS.3099 & 3100/MDS/16 2. SHRI D. ANAND, THE LD.COUNSEL FOR THE ASSESSEE, SUBMITTED THAT THE ASSESSMENTS WERE COMPLETED FOR BOTH THE AS SESSMENT YEARS UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1 961 (IN SHORT 'THE ACT'). AFTER EXPIRY OF FOUR YEARS, FROM THE E ND OF THE RELEVANT ASSESSMENT YEAR, THE ASSESSING OFFICER AGAIN REOPEN ED THE ASSESSMENTS AS THE ASSESSEE HAS LAID FOUNDATION STO NE AND RAISED PILLARS IN THE AREA EARMARKED FOR COMMERCIAL SPACE. ACCORDING TO THE LD. COUNSEL, IN THE ORIGINAL ASSESSMENT UNDER S ECTION 143(3) OF THE ACT, THE ASSESSING OFFICER CALLED FOR ALL THE D ETAILS AND ALLOWED THE CLAIM OF THE ASSESSEE UNDER SECTION 80-IB OF TH E ACT. ADMITTEDLY, DURING THE YEARS UNDER CONSIDERATION, T HE ASSESSEE HAS NOT CONSTRUCTED ANYTHING IN THE AREA WHICH WAS SAID TO BE EARMARKED FOR COMMERCIAL PURPOSE. IN FACT, THE SO- CALLED COMMERCIAL AREA WAS NOT PART OF THE ASSESSEES PROJ ECT. THEREFORE, ACCORDING TO THE LD. COUNSEL, THE ASSESSING OFFICER HAS RIGHTLY ALLOWED THE CLAIM OF THE ASSESSEE IN THE ORIGINAL A SSESSMENT. SUBSEQUENTLY, THE ASSESSEE TRANSFERRED THE COMMERCI AL SPACE BY A SALE DEED DATED 03.10.2010 TO ONE SHRI V. KUMAR, A COPY OF WHICH WAS PRODUCED BEFORE THE LOWER AUTHORITIES. HENCE A S ON 19.03.2014, THE ASSESSEE WAS NOT THE OWNER OF THE S O-CALLED AREA 3 I.T.A. NOS.3099 & 3100/MDS/16 SAID TO BE EARMARKED FOR COMMERCIAL SPACE. IN OTHE R WORDS, ON 19.03.2014, WHEN THE ASSESSING OFFICER ISSUED NOTIC E UNDER SECTION 148 OF THE ACT FOR REOPENING THE ASSESSMENT , THE ASSESSEE WAS NOT THE OWNER OF THE LAND EARMARKED FOR COMMERC IAL SPACE. THEREFORE, THERE WAS NO REASON FOR REOPENING THE AS SESSMENTS EVEN FOR ASSUMING THAT THE PURCHASER HAS LAID FOUND ATION STONE AND RAISED PILLARS IN THE SPACE EARMARKED FOR COMMERCIA L PURPOSE. ACCORDING TO THE LD. COUNSEL, THE ASSESSEE IS CLAIM ING DEDUCTION UNDER SECTION 80-IB OF THE ACT IN RESPECT OF RESIDE NTIAL UNITS CONSTRUCTED BY THE ASSESSEE AND THE SAME WAS ALLOWE D BY THE ASSESSING OFFICER AFTER CONSIDERING ALL THE MATERIA L AVAILABLE ON RECORD. EVEN ASSUMING FOR ARGUMENT SAKE THE COMM ERCIAL SPACE WHICH WAS SHOWN AS CONVENIENT SHOPPING AREA IS PART OF THE PROJECT, STILL THE ENTIRE MATERIAL IS AVAILABLE BEFORE THE A SSESSING OFFICER AT THE TIME OF ORIGINAL ASSESSMENT. 3. PLACING RELIANCE ON THE UNREPORTED JUDGMENT OF M ADRAS HIGH COURT IN TANMAC INDIA V. DCIT IN TAX CASE (APPEAL) NO.1426 OF 2007 DATED 19.12.2016, A COPY OF WHICH IS FILED BEF ORE THIS TRIBUNAL, THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT EVEN IN CASE WHERE INTIMATION WAS ISSUED UNDER SECTION 143(1) OF THE A CT, THE 4 I.T.A. NOS.3099 & 3100/MDS/16 ASSESSING OFFICER CANNOT RESORT TO REOPEN THE ASSES SMENT UNDER SECTION 147 OF THE ACT IN THE ABSENCE OF ANY NEW OR FRESH MATERIAL INDICATING THE ESCAPEMENT OF INCOME. IN THE CASE B EFORE US, ACCORDING TO THE LD. COUNSEL, THERE WAS NO NEGLIGEN CE ON THE PART OF THE ASSESSEE IN FURNISHING THE PARTICULARS OF INCOM E AT THE TIME OF ASSESSMENT PROCEEDING. THE LD.COUNSEL HAS ALSO PLA CED HIS RELIANCE ON THE JUDGMENT OF MADRAS HIGH COURT IN CI T V. BAER SHOES (INDIA) PVT. LTD. IN TAX CASE (APPEAL) NO.706 OF 2010 DATED 03.08.2010, A COPY OF WHICH IS FILED BY THE ASSESSE E, AND SUBMITTED THAT WHEN THE ASSESSEE HAS FURNISHED ALL THE MATERI AL FACTS, REOPENING OF ASSESSMENT IS NOT CALLED FOR. 4. ON THE CONTRARY, SMT. PAVANA SUNDARI, THE LD. DE PARTMENTAL REPRESENTATIVE, SUBMITTED THAT THE ASSESSMENT PROCE EDINGS WERE ORIGINALLY COMPLETED UNDER SECTION 143(3) OF THE AC T. SUBSEQUENTLY, THE INSPECTOR OF INCOME TAX INSPECTED THE PREMISES AND FOUND THAT FOUNDATION STONE WAS LAID AND PILLARS WERE RAISED I N THE AREA EARMARKED AS COMMERCIAL SPACE. IN THE ORIGINAL ASS ESSMENT PROCEEDINGS, THE ASSESSEE SUBMITTED THAT NO CONSTRU CTION ACTIVITY WAS CARRIED ON IN THE AREA EARMARKED FOR COMMERCIAL SPACE. SINCE THERE WAS CHANGE IN CIRCUMSTANCES, THE ASSESSING OF FICER FOUND 5 I.T.A. NOS.3099 & 3100/MDS/16 THAT THE INCOME OTHERWISE TAXABLE HAS ESCAPED ASSES SMENT. THEREFORE, ACCORDING TO THE LD. D.R., THE ASSESSING OFFICER HAS RIGHTLY REOPENED THE ASSESSMENTS. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IN THE ORIGINAL ASSESSMENT UNDER SECTION 143(3) OF THE ACT, THE ASS ESSING OFFICER AFTER CONSIDERING THE LAYOUT PLAN APPROVED BY ST. T HOMAS MOUNT PANCHAYAT UNION, FOUND THAT ALL THE RESIDENTIAL UNI TS CONSTRUCTED BY THE ASSESSEE ARE WITHIN 1500 SQ.FT. AND ALSO CONSID ERING THE CLAIM OF THE ASSESSEE THAT NO CONSTRUCTION WAS MADE IN TH E COMMERCIAL AREA, ALLOWED THE CLAIM OF THE ASSESSEE. IN FACT, THE INSPECTOR OF INCOME TAX INSPECTED THE PREMISES DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDING AND HE FILED A REPORT ALONG W ITH PHOTOGRAPHS. THAT REPORT CLEARLY INDICATES THAT TH ERE WAS NO COMMERCIAL ESTABLISHMENT EMBEDDED IN THE PROJECT ON THE DATE OF INSPECTION. THEREFORE, IT IS OBVIOUS THAT DURING T HE YEARS UNDER CONSIDERATION, THE ASSESSMENT PROCEEDINGS WERE COMP LETED AND THERE WAS NO CONSTRUCTION ACTIVITY IN THE AREA EARM ARKED FOR COMMERCIAL PURPOSE. THIS FACT IS NOT IN DISPUTE. 6 I.T.A. NOS.3099 & 3100/MDS/16 6. NOW THE ASSESSING OFFICER CLAIMS THAT THE INSPEC TOR OF INCOME-TAX INSPECTED THE PREMISES ON 17.02.2012 AND IT WAS FOUND THAT FOUNDATION WAS LAID AND PILLARS WERE RAISED IN THE AREA EARMARKED FOR COMMERCIAL SPACE. IT IS NOT IN DISPU TE THAT THE ASSESSEE SOLD THE PROPERTY BY WAY OF SALE DEED DATE D 03.10.2010. THE QUESTION ARISES FOR CONSIDERATION IS WHETHER TH ERE WAS ANY NEGLIGENCE ON THE PART OF THE ASSESSEE IN FURNISHIN G THE REQUIRED PARTICULARS AT THE TIME OF COMPLETING THE ASSESSMEN T UNDER SECTION 143(3) OF THE ACT. THE ASSESSEE ADMITTEDLY FURNISH ED ALL THE PARTICULARS INCLUDING THE APPROVED PLAN. THEREFORE , THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THERE WAS NO NEGLIGE NCE ON THE PART OF THE ASSESSEE IN FURNISHING PARTICULARS WHICH WER E IN EXISTENCE AT THE RELEVANT POINT OF TIME. IN VIEW OF THE ABOVE, REOPENING OF ASSESSMENT AFTER EXPIRY OF FOUR YEARS IS NOT JUSTIF IED. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT UNLESS AND UNTIL THE ASSESSING OFFICER ESTABLISHES THAT THERE WAS NEGLIGENCE ON TH E PART OF THE ASSESSEE IN FURNISHING PARTICULARS REQUIRED FOR COM PLETING THE ASSESSMENT, THE COMPLETED ASSESSMENT CANNOT BE REOP ENED IN VIEW OF PROVISO TO SECTION 147 OF THE ACT AFTER EXP IRY OF FOUR YEARS. IN THIS CASE, IT IS NOT THE CASE OF THE ASSESSING O FFICER THAT THE ASSESSEE HAS NOT FURNISHED ANY PARTICULARS OR THERE WAS ANY 7 I.T.A. NOS.3099 & 3100/MDS/16 NEGLIGENCE ON THE PART OF THE ASSESSEE. THEREFORE, REOPENING OF ASSESSMENT AFTER EXPIRY OF FOUR YEARS IS NOT JUSTIF IED. A SIMILAR VIEW WAS TAKEN BY MADRAS HIGH COURT IN TANMAC INDIA (SUP RA). HENCE, THIS TRIBUNAL IS UNABLE TO UPHOLD THE ORDERS OF THE LOWER AUTHORITIES AND THEREFORE, THE ORDERS OF BOTH THE LOWER AUTHORI TIES ARE QUASHED. 7. IN THE RESULT, BOTH THE APPEALS FILED BY THE ASS ESSEE STAND ALLOWED. ORDER PRONOUNCED ON 22 ND JUNE, 2017 AT CHENNAI. SD/- SD/- ( ) ( . . . ) (S. JAYARAMAN) (N.R.S. GANESAN) ' / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 4 /DATED, THE 22 ND JUNE, 2017. KRI. - +056 76'0 /COPY TO: 1. )* /APPELLANT 2. +,)* /RESPONDENT 3. / 80 () /CIT(A)-4, CHENNAI-34 4. PRINCIPAL CIT-5, CHENNAI 5. 69 +0 /DR 6. :& ; /GF.