KUNWAR AYUB ALI, GHAZIABAD V. ITO, WARD- 1(3), GHAZIABAD

ITA 3137/DEL/2018

AI Insights

The case involves Kunwar Ayub Ali, a civil/criminal lawyer, who appealed against the order of the Commissioner of Income Tax (Appeals) -II, Noida, which arose from an assessment order passed under Section 147/148 of the Income Tax Act, 1961. The primary contention was the lack of jurisdiction under Section 147 and the legitimacy of the addition/disallowance on merits. The Assessing Officer had reopened the assessment alleging escapement of income from the sale of agricultural land, which was contested by the assessee on the grounds of incorrect facts being used to assume jurisdiction.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 121563 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 11 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-04-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 15-01-2023
• Assessment Year: 2009-2010
• Appeal Filed On: 02-05-2018
• Other Referred Cases: Mumtaz Hazi Mohmad Menon (2018) 408 ITR 268 (Guj), Sagar Enterprises vs. ACIT (2001) 257 ITR 335 (Guj), Dr. Ajit Gupta vs. ACIT 383 ITR 361 (Del)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 147; 148; 144; 143(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “C” DELHI BEFORE SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER & SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER I.T.A No.3137/DEL/2018 Assessment Year 2009-10 Kunwar Ayub Ali, H. No. 301, D-86-89 Kaushambi, Ghaziabad. v. ITO, Ward-1(3), Ghaziabad. TAN/PAN: AEIPK0492A (Appellant) (Respondent) Appellant by: Shri Akhilesh Kumar, Adv. Respondent by: Shri Anuj Garg, Sr.DR Date of hearing: 16 01 2023 Date of pronouncement: 17 04 2023 O R D E R PER PRADIP KUMAR KEDIA, A.M.: The captioned appeal has been filed by the Assessee against the order o f the Co mmissioner o f In co me Tax (Appeals) -II, No ida (‘CIT(A) ’ in short) dated 27.02. 2018 arising fro m the assess ment order dated 27. 03.2015 passed by the Assessing Office r (A O) under Section 147/148 of the Inco me Tax Act, 1961 (the Act) concerning AY 2009-10. 2. As pe r the grounds o f appeal, the a ssessee has challe nged the order of ld. CIT(A) on twin grounds. (i) Lack of jurisdiction under Section 147 of the Act I.T.A No.3137/Del/2018 2 (ii) Legiti macy o f addition /disallowance on me rits. 3. Briefly stated, the asses see is a civil / criminal lawyer who filed the return of income fo r Assess ment Ye ar 2009-10 on 31. 03.2009 declaring total inco me at Rs.2, 39, 651/- fo r which inti mation was is sued under Section 143(1) of the Act. During the year, the assessee sold agricultural land with constructed area for actual cons ideration of Rs. 24,69,000/- which repre sents 1/4 t h o f total consideration of Rs. 98, 76,000/- where 3/4 t h share belongs to one Shri Ma shroof Ali. The Assessing Officer reopened the assess ment by i ssui ng notice under Section 148 of the Act dated 26.03. 2014 alleging escapement o f inco me with the allegation that the asses see sold residential/ agricultural land of Village Dasana fo r Rs. 98, 76, 000/- as against the circle rate o f Rs. 1, 56,99, 500/-. It was alleged that capital gain was derived fro m the said transaction but ITR was not filed resulting in escapement. The inco me was asse ssed at Rs. 72,11,880/- by an ex-parte order under Section 144 r. w. Section 147 of the Act. 4. Aggrieved, the assessee prefe rred appeal before the CIT(A). The CIT(A) however u pheld the assumption o f jurisdiction assumed under Section 147 but however granted partial relief on merits. 5. Further aggrieved, the assessee p refe rred appeal before the Tribunal. 6. We have carefully considered the rival sub missions on I.T.A No.3137/Del/2018 3 the point in issue and perused the assess ment order as well as the first appellate order. We have also perused the material referred to and relied upon in the course o f hearing as per Rule 18(6) of Inco me Tax (Appellate Tribunal) Rule, 1963. 7. As pe r the grounds o f appeal, the assessee has questi oned the validity of assu mption o f jurisdiction together with correctness o f ad dition on merits. The issue o f ju risdiction goes to the very root of the matter and thus assu mes primacy fo r adjudication purposes. We shall thus delve the validity of assu mption to begin with. 8. The reasons recorded under Section 148(2) which is the bedrock for assu mption o f jurisdiction under Section 147 is reproduced herein for ready referen ce: R e a s o n s f o r i s s u e n o t i c e w / s 1 4 8 o f t h e I n c o m e t a x A c t , 1 9 6 1 S h r i K u n w a r A v v u b A l i s / o S h r i M a s r o o f A l i , V i l l . Ma s o o r i , G h a z i a b a d P A N A E I P K 0 4 9 2 A A s s e s s m e n t v e a r 2 0 0 9 - 1 0 2 6 . 0 3 . 2 0 1 4 A s p e r A I R i n f o r m a t i o n t h e a s s e s s e e h a s s o l d r e s i d e n t i a l / a g r i c u l t u r a l l a n d s i t u a t e d a t V i l l a g e Da n a D i s t t . G h a z i a b a d a s p e r d e t a i l s b e l o w : 1 . K h a t a N o . 2 1 8 K h a s r a N o . 1 6 0 7 a n d 1 7 1 2 m e a s u r i n g a b o u t 5 4 3 5 S q . M e t e r t o t a l c o v e r e d a r e a 2 2 8 . 8 4 S q . M e t e r f o r Rs . 9 8 , 7 6 , 0 0 0 / - b u t t h e c i r c l e r a t e w a s R s . 1 , 5 6 , 9 9 , 5 0 0 / - o n w h i c h s t a mp d u t y w a s p a i d . T h e a s s e s s e e h a s e a r n e d c a p i t a l g a i n o n t h e s a l e c on s i d e r a t i o n o f I.T.A No.3137/Del/2018 4 r e s i d e n t i a l / a g r i c u l t u r a l l a n d b u t t h e a s s e s s e e h a s n o t f i l e d R e t u r n o f I n c o m e f o r t h e a s s e s s m e n t y e a r 2 0 0 9 - 1 0 . I h a v e r e a s o n s t o b e l i e v e t h a t t h e a s s e s s e e h a s i n co m e f r o m c a p i t a l g a i n w h i c h i s c h a r g e a b l e t o t a x f o r t h e a s s e s s m e n t y e a r 2 0 0 9 - 1 0 h a s e s c a p e d a s s e s s m e n t w i t h i n t h e m e a n i n g o f s e c t i o n 1 47 o f t h e I n c o m e T a x A c t , 1 9 6 1 . I s s u e n o t i c e u s 1 4 8 o f t h e I . T . A c t , 1 9 6 1 . ” 9. With reference to the reasons recorded as noted above, the ld. counsel for the assessee sub mits at the outset that the belief towards escape ment has been entertained by the Assessing O fficer on the basis that the assessee has not filed the return o f inco me for A ssess ment Year 2009-10 which is grossly contrary to facts on record. The assessee had duly filed retu rn of in co me on 31. 03. 2009 thereby the most basic reason itsel f is wholly incorrect and not existed and noticeably PA N o f the ass essee wa s duly mentioned in sale deed. Secondly, the sale consideration of Rs. 98, 76, 000/- was giving rise to allegation of escape ment to wards the sale consideration fo r the purposes of escapement o f capital gain whereas actual share o f sale consideration relatable to the assessee stands at Rs. 24, 69, 000/- only and therefore, the basic infor ma tion is yet again wrong and mentioned in reasons without application of mind. 10. We find that the issue is squarel y covered in fav our of the assessee by the judgments rendered in the case of Mu mtaz Hazi Mohmad Menon (2018) 408 ITR 268 (Guj). As per the ratio o f the judgment, the as su mption of ju risdiction on the I.T.A No.3137/Del/2018 5 basis o f wholly incorrect facts cannot be conferred in law. In this case also, the reasons cited were that the assessee did not file return and the capital gain on sale consideration was not brought to tax which reasons w ere found to be factually incorrect. The assessee had return of inco me which was not noticed by the Assessing Officer. Consequently, the notice issued under Section 148 for reopening the assessment was quashed for assu mption o f jurisdiction on factually incorrect premise. In the si milar fact situ ation, the Hon’ble Gujarat High Court also quashed the re-assess ment proceedings in Sagar Enterprises vs. ACIT, (2001) 257 ITR 335 (Guj.) where reasons were recorded dehors the fact, i. e. , return not filed when the return was actually filed. Similarly, Hon’ble Delhi High Court in Dr. Ajit Gupta vs. ACIT, 383 ITR 361 (Del) has observed that reason for reopening of asses s ment based on mistaken factual premise is unsustainable in law. 11. In the light of the afo resaid judg ments declarin g the position of law, we find merit in the plea of the assessee towards inherent lack of jurisdiction under Section 147 of the Act. In the instant case also, the assessee had filed return o f inco me and declared the transaction arising on sale of property which fact was not taken cognizance by the Assessing Officer while reopening the assessment. 12. The reopening proceedings itself being not permis sible on the basis of inherently wrong facts, we do not consider it necessary to delve the me rits o f the addition. We thus set I.T.A No.3137/Del/2018 6 aside the action of the CIT(A) a nd quash the re-assess ment proceedings giving rise to the present appeal. 13. In the result, the appeal of the assessee is allowed. Order pronounced in the open Court on 17/04/2023. Sd/- Sd/- [CHANDRA MOHAN GARG] [PRADIP KUMAR KEDIA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: /04/2023 Prabhat