Shri Channansingh S. Gill, Ahmedabad V. The Income Tax Officer, Ward-8(1), Ahmedabad

ITA 311/AHD/2015

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 2905 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2008-2009
• Appeal Filed On: 11-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LALIT P JAIN
• Assessee Lawyers: P M MEHTA; GM THAKORE
• Keywords: Capital asset; Deemed to accrue or arise in india; Difference of opinion; Change of opinion; Reassessment proceedings; Set aside; Capital Gains
• Section: 143(3); 54F; 143(2); 139(1); 148; 139

Judgement Text

ITA NO. 311/AHD/2015 CHANNANSINGH S GILL VS. ITO ASSESSMENT YEAR: 2008-09 PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL, AHMEDABAD BENCH D , AHMEDABAD [CORAM: JUSTICE P P BHATT, PRESIDENT, AND PRAMOD KU MAR, VICE PRESIDENT] ITA NO: 311/ AHD/2015 ASSESSMENT YEAR: 2008-09 MAJOR CHANNASINGH S GILL .....APPELLANT 467 GIDC ESTATE, ODHAV ROAD, ODHAV AHMEDABAD 382 415 [PAN: ADXPG6389E] VS INCOME TAX OFFICER WARD 8(1)(1), AHMEDABAD ..........RESPOND ENT APPEARANCES BY PM MEHTA AND GM THAKORE, FOR THE APPELLANT LALIT P JAIN FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : DECEMBER 5, 2018 DATE OF PRONOUNCEMENT : MARCH 04, 2019 O R D E R PER PRAMOD KUMAR VP: 1. BY WAY OF THIS APPEAL, THE ASSESSEE APPELLANT HA S CHALLENGED CORRECTNESS OF THE ORDER DATED 24 TH DECEMBER 2014 PASSED BY THE LEARNED CIT(A) IN THE MATTER OF ASSESSMENT UNDER SECTION 143(3) R.W.S. 147 OF THE I NCOME TAX ACT, 1961, FOR THE ASSESSMENT YEAR 2008-09. 2. GRIEVANCES RAISED BY THE APPELLANT ARE AS FOLLOW S: 1. IN LAW AND IN FACTS AND CIRCUMSTANCES OF THE A PPELLANT'S CASE, THE LEARNED CIT(A) HAS ERRED IN UPHOLDING THE VALIDITY OF REASS ESSMENT NOTICE AS WELL AS REASSESSMENT ORDER WHEN SUCH NOTICE ITSELF IS BAD I N LAW AND DESERVES TO BE QUASHED. 1.1 IN LAW AND IN FACTS AND CIRCUMSTANCES OF THE A PPELLANT'S CASE, THE LEARNED CIT(A) HAS ERRED IN UPHOLDING THE VALIDITY OF REASSESSMENT NOTICE AS WELL AS REASSESSMENT ORDER WHEN LD. AO HAS NO JURIS DICTION OVER APPELLANT IN VIEW OF TRANSFER OF RECORDS TO ITO, WARD 5(2), CHAN DIGARH FROM AY 2009-10. 1.2 IN LAW AND IN FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE, THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED THE RECORD S OF DEPARTMENT OBTAINED FROM INCOMETAXFILING.GOV.IN ON PERUSAL OF WHICH IT IS CLEARLY SEEN THAT THE JURISDICTION OF THE APPELLANT LIES WITH IT O, WARD 5(2), CHANDIGARH; ITA NO. 311/AHD/2015 CHANNANSINGH S GILL VS. ITO ASSESSMENT YEAR: 2008-09 PAGE 2 OF 4 2.1 IN LAW AND IN FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE, THE LD. A.O. HAS ERRED IN HOLDING THAT APPELLANT CANNOT CHA LLENGE HIS JURISDICTION AS HE HAD NOT OBJECTED IT WITHIN 30 DAYS OF ISSUANCE O F NOTICE U/S 143(2) OF THE ACT AS STATED IN SECTION 124(3)(A) OF THE ACT. 2.2 IN LAW AND IN FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE, THE LD. A.O. HAS ENTIRELY MISPLACED THE RELIANCE ON PROVISI ONS OF SECTION 124(3)(A) OF THE ACT AS THE SAME IS NOT APPLICABLE TO THE PRESEN T CASE AS SAME IS REOPENED BY ISSUANCE OF NOTICE U/S 148 OF THE ACT. 2.3 IN LAW AND IN FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE, THE LD. A.O. HAS ENTIRELY MISPLACED THE RELIANCE ON PROVISI ONS OF SECTION 124(3)(B) OF THE ACT AS SAID CLAUSE IS APPLICABLE ONLY IF RETURN U/S 139 OF THE RELEVANT ASSESSMENT YEAR IS NOT FILED AND THEREAFTER NOTICE U/S 148 OF THE ACT IS ISSUED. THE LEARNED ASSESSING OFFICER OUGHT TO HAVE APPRECI ATED THAT APPELLANT HAS FILED THE RETURN U/S 139(1) FOR THE YEAR UNDER CONS IDERATION HENCE HE HAS THE RIGHT TO CHALLENGE THE JURISDICTION OF NOTICE ISSUE D U/S 148 OF THE ACT IRRESPECTIVE OF THE DATE ON WHICH RETURN HAS BEEN F ILED IN RESPONSE TO NOTICE U/S 148 OF THE ACT. 3.1 IN LAW AND ON FACTS AND CIRCUMSTANCES OF THE AP PELLANT'S CASE, THE LD. CIT(A) HAS FAILED TO APPRECIATE THE FACT THAT REASS ESSMENT PROCEEDINGS INITIATED BY LD. A.O. IN THE PRESENT CASE IS MERELY ON CHANGE OF OPINION AS THERE IS NO NEW COGENT MATERIAL AVAILABLE ON RECORD WHICH WOULD OTHERWISE SUGGEST THAT INCOME CHARGEABLE TO TAX HAS ESCAPED A SSESSMENT. 3.2 IN LAW AND IN FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE, THE LD. A.O. HAS VERIFIED THE CLAIM OF DEDUCTION U/S 54F OF THE ACT DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS AND HAS ALSO MAD E PART DISALLOWANCE FOR THE SAME HENCE RE-ASSESSMENT NOTICE ISSUED IN THE P RESENT CASE IS MERE CHANGE OF OPINION ON PART OF SUBSEQUENT ASSESSING O FFICER AND REQUIRES TO BE QUASHED. 4(A) IN LAW AND ON THE FACTS AND IN THE CIRCUMSTANC ES OF THE APPELLANT'S CASE, THE LD. CIT(A) HAS GROSSLY ERRED BY SUSTAINING THE ADDITION MADE BY LEARNED ASSESSING OFFICER U/S 54F(2) OF THE ACT FOR RS.44,4 9,206 WHEN NO SUCH ADDITION IS CALLED FOR. IT MAY BE DELETED. 4(B) WITHOUT PREJUDICE TO ABOVE, THE SAID LONG TERM CAPITAL GAIN IS NOT CHARGEABLE TO TAX DURING THE YEAR UNDER CONSIDERATI ON. 3. TO ADJUDICATE ON THIS APPEAL, ONLY A FEW MATERIA L FACTS NEED TO BE TAKEN NOTE OF. IT IS A CASE OF REOPENED ASSESSMENT. ON 14 TH FEBRUARY, 2013, THE ASSESSING OFFICER RECORDED THE FOLLOWING REASONS RECORDED FOR REOPENING THE ASSESSMENT: THE ASSESSEE HAD FILED ITS RETURN OF INCOME DECLAR ING INCOME AT RS.11,22,980/- ON 18.07.2008 ITA NO. 311/AHD/2015 CHANNANSINGH S GILL VS. ITO ASSESSMENT YEAR: 2008-09 PAGE 3 OF 4 2. THE ASSESSEE HAD PURCHASED A NEW RESID ENTIAL HOUSE (AT SECTOR 70) ON 04.06.2008 ON WHICH EXEMPTION U/S 54F WAS CLAI MED AND THEREAFTER, HE FURTHER PURCHASED A NEW RESIDENTIAL HOUSE AN 0 9.06.2008 AT MOHALI (CONSTRUCTION ON PLOT NO. 3656, SECTOR-69, SAS NA GAR) WITHIN A PERIOD OF ONE YEAR. AS THE ASSESSEE HAD PURCHASED A NEW RE SIDENTIAL HOUSE ( I.E. IN SECTOR 69) WITHIN A YEAR I.E. FROM 04.07.2008 TO 03 .07.2008, THE ASSESSEE WAS NOT ELIGIBLE FOR EXEMPTION U/S 54F TO THE TUNE OF R S.44,49,206/- AND THE SAME IS REQUIRED TO BE WITHDRAWN. THEREFORE, I HAVE REAS ON TO BELIEVE THAT THE INCOME OF THE ASSESSEE HISS ESCAPED ASSESSMENT. 4. YET, WHEN THE ASSESSING OFFICER ACTUALLY DEALT W ITH THE ISSUE HE AGREED THAT THE INCOME IN QUESTION, DUE TO DISALLOWANCE UNDER S ECTION 54F, SHOULD BE BROUGHT TO TAX IN THE ASSESSMENT YEAR 2009-10, EVEN THOUGH HE PROCEED TO BRING THE SAID INCOME TO TAX IN THE PRESENT ASSESSMENT YEAR ON PROTECTIVE BASIS AS WELL. WHILE DOING SO, THE ASSESSING OFFICER OBSERVED AS FOLLOWS: 5.3. HOWEVER, AS PER SECTION 54F(2) OF THE I.T. ACT, THE DEDUCTION CLAIMED U/S.54F SHOULD BE TAXED IN THE YEAR IN WHICH SECOND HOUSE, OTHER THAN THE NEW ASSET, IS PURCHASED. THE SECTION 54F(2) IS REPRODUC ED AS UNDER: '(2) WHERE THE ASSESSEE PURCHASES, WITHIN THE PERIO D OF [TWO YEARS] AFTER THE DATE OF THE TRANSFER OF THE ORIGINAL ASSE T, OR CONSTRUCTS, WITHIN THE PERIOD OF THREE YEARS AFTER SUCH DATE, ANY RESI DENTIAL HOUSE, THE INCOME FROM WHICH IS CHARGEABLE UNDER THE HEAD 'INC OME FROM HOUSE PROPERTY', OTHER THAN THE NEW ASSET, THE AMOUNT OF CAPITAL GAIN ARISING FROM THE TRANSFER OF THE ORIGINAL ASSET NOT CHARGED UNDER SECTION 45 ON THE BASIS OF THE COST OF SUCH NEW ASSET AS PROVIDED IN CLAUSE (A), OR, AS THE CASE MAY BE, CLAUSE (B), OF SUB-SECTION (1), SH ALL BE DEEMED TO BE INCOME CHARGEABLE UNDER THE HEAD 'CAPITAL GAINS' RE LATING TO LONG- TERM CAPITAL ASSETS OF THE PREVIOUS YEAR IN WHICH S UCH RESIDENTIAL HOUSE IS PURCHASED OR CONSTRUCTED.' IN THIS CASE, THE ASSESSEE HAS PURCHASED THE SECOND HOUSE ON 09/06/2008, THEREFORE, THIS TRANSACTION HAS BEEN MADE IN THE F. Y. 2008-09 RELEVANT TO THE A.Y. 2009-10. HENCE, AS PER SECTION 54F(2), THE DED UCTION FROM CAPITAL GAIN U/S.54F AMOUNTING TO RS.44,49,206/- SHOULD BE TAXED IN THE A.Y. 2009-10 AS DEEMED INCOME UNDER THE HEAD 'CAPITAL GAIN' FOR THE A.Y. 2009-10. 5.4. WITHOUT PREJUDICE TO THE ABOVE, IN THIS CAS E, THE VIOLATION OF SECTION 54F(1) WAS MADE BY THE ASSESSEE BEFORE THE FILING O F ORIGINAL RETURN OF INCOME. THE ASSESSEE HAS FILED THE ORIGINAL RETURN ON 18/07/2008 IN THIS WARD AND VIOLATION OF SECTION 54F WAS OCCURRED ON 09/06/ 2008 WHICH IS BEFORE DATE OF THE FILING OF ORIGINAL RETURN OF INCOME. THER EFORE, IN THE INTEREST OF REVENUE, DEDUCTION CLAIMED U/S.54F OF RS.44,49,206/ - ALLOWED IN THE ASSESSMENT ORDER U/S.143(3) DATED 30/09/2010, IS WI THDRAWN AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE ON 'PROTECTIVE BASIS'. ITA NO. 311/AHD/2015 CHANNANSINGH S GILL VS. ITO ASSESSMENT YEAR: 2008-09 PAGE 4 OF 4 5. THE CHALLENGE TO THE REASSESSMENT PROCEEDINGS WA S REJECTED BY THE CIT(A). THE ASSESSEE, NOT SATISFIED INTER ALIA WITH THAT DECISION, IS IN FURTHER APPEAL BEFORE US. 6. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE AP PLICABLE LEGAL POSITION. 7. AS EVIDENT FROM THE OBSERVATIONS MADE BY THE ASS ESSING OFFICER IN THE IMPUGNED ASSESSMENT ORDER, WHICH HAVE BEEN REPRODUC ED ABOVE, THE ASSESSING OFFICER WAS OF THE VIEW THAT THE INCOME WHICH HAD E SCAPED THE ASSESSMENT, AS A RESULT OF DISALLOWANCE UNDER SECTION 54F, WAS IN FA CT IN THE ASSESSMENT YEAR 2009-10, AND NOT IN THE ASSESSMENT YEAR 2008-09. THE IMPUGNE D ADDITION WAS ADMITTEDLY ON PROTECTIVE BASIS. THESE FINDINGS OF THE ASSESSING O FFICER CLEARLY INDICATE THAT THE ASSESSING OFFICER WAS OF THE OPINION THAT NO INCOME HAD ESCAPED THE ASSESSMENT FOR THE PRESENT ASSESSMENT YEAR. HIS ACTION WAS PURELY ON PRECAUTIONARY BASIS EX ABUNDANTE CAUTELA. THE SCHEME OF SECTION 147 DOES NOT PERMIT REOPENIN G OF ASSESSMENT IN SUCH A SITUATION TO, AS LEARNED ASSES SING OFFICER PUTS IT, PROTECT THE INTERESTS OF THE REVENUE. IN ANY EVENT, THE ADDITIO N ON SUBSTANTIVE BASIS HAS BEEN MADE IN THE ASSESSMENT YEAR 2009-10 AS WELL, AND TH AT MATTER IS ALSO SEPARATELY IN APPEAL AS NOW. IN THE LIGHT OF THESE DISCUSSIONS, A S ALSO BEARING IN MIND ENTIRETY OF CASE, WE SET ASIDE THE REASSESSMENT PROCEEDINGS AS UNSUSTAINABLE IN LAW AND ON THE FACTS OF THIS CASE. 8. AS THE REASSESSMENT PROCEEDINGS ARE SET ASIDE, A LL OTHER ISSUES RAISED IN THE APPEAL ARE RENDERED ACADEMIC AND INFRUCTUOUS. NO AD JUDICATION IS CALLED FOR ON THESE ISSUES. 9. IN THE RESULT, THE APPEAL IS ALLOWED IN THE TERM S INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT TODAY ON THE 4 TH DAY OF MARCH, 2019. SD/- SD/- JUSTICE P P BHATT PRAMOD KUMAR (PRESIDENT) (VICE PRESIDENT) AHMEDABAD, DATED 4 TH DAY OF MARCH, 2019 COPIES TO: (1) THE APPELLANT (2) THE RESPOND ENT (3) CIT (4) CIT(A) (5) DR (6) GUARD FILE BY ORDER ETC TRUE COPY ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD