ITO,Wd.8(3), V. Mrs. Sayali S. Patil, Pune

ITA 32/PUN/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 49993 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 6 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 22-07-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 07-01-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUNIL PATHAK
• Assessee Lawyers: HARESHWAR SHARMA
• Keywords: Additional evidence; Cost of acquisition
• Section: 143(3); 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE BEFORE SHRI I.C. SUDHIR (JM) AND SHRI G.S. PANNU (AM) ITA NO. 32/PN/2009 (ASSTT. YEAR : 2005-06) MR S . SAYALI (APARNA) S. PATIL ... APPELLANT AT POST - MAHALUNGE, TAL AMBEGAON, PADVAL, DIST PUNE PAN : NOT AVAILABLE V. INCOME TAX OFFICER RESPONDENT WARD 8(3), PUNE APPELLANT BY : S/SHRI SUNIL PATHAK & NIKHIL PAT HAK RESPONDENT BY : SHRI. HARESHWAR SHARMA ORDER PER I.C. SUDHIR, JM THE REVENUE HAS QUESTIONED FIRST APPELLATE ORDER O N THE FOLLOWING GROUNDS : 1. ON THE FACTS & CIRCUMSTANCES OF THE CASE THE L EARNED CIT(A)-I, THANE, ERRED IN DELETING THE ADDITION MAD E BY THE A.O ON ACCOUNT OF LONG TERM CAPITAL GAIN AT RS.2,02,16,667/-. 2. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) DELETED THE ADDITION MADE BY THE A.O. RELYING ON THE ADDITI ONAL EVIDENCE PRODUCED BEFORE HIM BY THE ASSESSEE WITHOU T CALLING FOR REMAND REPORT FROM THE ASSESSING OFFICER. THE ASSESSING OFFICER WAS NOT GIVEN THE OPPORTUNITY TO VERIFY THE ADDITIONAL EVIDENCE PRODUCED BY THE ASSESSEE BEFORE THE LEARNE D CIT(A). 2. THE RELEVANT FACTS ARE THAT ON THE BASIS OF ANNU AL INFORMATION REPORT FURNISHED U/S. 285BA OF THE ACT, THE ITO (HQ )(CIB) COMPUTED THE LONG TERM CAPITAL GAIN IN THE HANDS OF THE ASSESSEE AT RS.2,02,16,667/-. THE ITO(HQ)(CIB) NOTED THAT THE ASSESSEE HAD SOLD L ANDED PROPERTY FOR A ITA . NO 32/PN/2009 MRS. SAYALI (APARNA) S. PATIL A.Y 2005-06 PAGE OF 8 2 CONSIDERATION OF RS.2,02,16,667/- DURING THE F.Y. 2 004-05 I.E. RELEVANT TO THE A.Y. 2005-06 UNDER CONSIDERATION. SINCE THE AS SESSEE DID NOT RESPOND THE NOTICES ISSUED BY THE ITO (HQ)(CIB), TO FURNISH REQUISITE DETAILS OF THE TRANSACTION, THE ITO(HQ)(CIB) COMPUT ED THE LONG TERM CAPITAL GAIN BY TAKING THE COST OF ACQUISITION OF THE LAND AT RS. NIL. THE ADDITION WAS QUESTIONED BY THE ASSESSEE BEFORE THE LD CIT(A) ON SEVERAL GROUNDS INCLUDING THE VALIDITY OF THE SAID ORDER PA SSED BY THE ITO (HQ)(CIB). IT WAS SUBMITTED THAT THE ASSESSEE HAD ALREADY FILED HER RETURN OF INCOME FOR THE YEAR ON 31 ST JUNE 2006 WITH ITO 8(3), NIGDI, PUNE, WITH WHOSE JURISDICTION THE CASE OF THE ASSES SEE WAS LYING UNDER CHARGE OF CHIEF COMMISSIONER OF INCOME TAX, PUNE. IT WAS CONTENDED THAT ORDER U/S. 144 HAS BEEN FRAMED BY THE ITO(HQ)( CIB), PUNE, WITHOUT HAVING PROPER LEGAL JURISDICTION OVER THE APPELLANT S CASE. ON MERITS, IT WAS CONTENDED THAT THE PROPERTY IN QUESTION WAS NEV ER TRANSFERRED TO THE DEVELOPER WITH WHOM, THE ASSESSEE HAD ENTERED I NTO DEVELOPMENT AGREEMENT. THE LD CIT(A) HAS DELETED THE ADDITION WITH THIS FINDING THAT THE ASSESSEES ENTERING INTO A DEVELOPMENT AGREEMEN T WITH THE DEVELOPER CANNOT BE CONSIDERED AS DEEMED TRANSFER OF THE PROP ERTY UNDER THE PROVISIONS OF SECTION 2(47)(V) OF THE I.T. ACT R.W .S. 53A OF THE TRANSFER OF PROPERTY ACT. THE LD. CIT(A) HAS DISCUSSED THE ISS UE OF TRANSFER IN DETAIL. AGAINST THE RELIEF GIVEN BY THE LD CIT(A), THE REVE NUE IS IN APPEAL BEFORE US. 3. IN SUPPORT OF THE GROUNDS, THE LD. D.R. SUBMITTE D THAT DESPITE SEVERAL OPPORTUNITIES, THE ASSESSEE DID NOT CO-OPER ATE WITH THE ITO(HQ)(CIB) DURING THE COURSE OF ASSESSMENT PROCEE DINGS, THE ASSESSEE DID NOT FILE DETAILS OF THE TRANSACTIONS NOR RESPON DED TO THE NOTICES ISSUED BY THE I.T.O, THUS THE ITO WAS JUSTIFIED IN COMPUTI NG THE LONG TERM CAPITAL GAIN AT RS.2,02,16,667/-. THE LD. D.R. CON TENDED FURTHER THAT ITA . NO 32/PN/2009 MRS. SAYALI (APARNA) S. PATIL A.Y 2005-06 PAGE OF 8 3 THE LD CIT(A) HAS EVEN ENTERTAINED THE ADDITIONAL E VIDENCE PRODUCED BEFORE HIM BY THE ASSESSEE WITHOUT CALLING FOR REMA ND REPORT FROM THE ITO WHICH IS AGAINST THE RULES LAID DOWN UNDER RULE 46A OF THE I.T. RULES. THE LD. D.R., ALSO FURNISHED ORDER PASSED BY THE L D. CHIEF COMMISSIONER OF INCOME TAX, PUNE ON 1.8.2007 U/S. 120 OF THE INC OME TAX ACT 1961 TO SUPPORT HIS CONTENTION THAT ITO (HQ)(CIB) WAS HAVIN G JURISDICTION OVER THE ASSESSEE TO MAKE THE ASSESSMENT. 4. THE LD. A.R., ON THE OTHER HAND, TRIED TO JUSTIF Y THE FIRST APPELLATE ORDER. HE REITERATED THAT THE ITO (HQ)(CIB) WAS HA VING NO JURISDICTION TO FRAME ASSESSMENT IN QUESTION, HENCE HE WAS NOT AUTH ORIZED TO ISSUE NOTICES TO THE ASSESSEE FOR MAKING THE ASSESSMENT F RAMED U/S. 144 OF THE ACT. HE SUBMITTED THAT THE ORDER DT. 1.8.2007 ISS UED BY THE LD CHIEF CIT OF PUNE U/S. 120 OF THE ACT REGARDING JURISDICTION OF THE A.O FOR THE ASSESSMENT IS NOT HELPFUL TO THE REVENUE IN THE APP EAL, SINCE IN PARA NO. 2 OF THE SAID ORDER, THE LD CHIEF CIT HAS MADE IT CLEAR THAT DAO SHALL HAVE CONCURRENT JURISDICTION OVER THE CASES FOR ISS UE OF NOTICES U/S. 142(1) IN CASE OF NON-EXISTING ASSESSEES WHO HAVE N EVER FILED A RETURN OF INCOME EARLIER. IN OTHER CASES, THE DAO SHALL TRAN SFER THE ANNUAL INFORMATION REPORT TO THE JURISDICTIONAL A.O. IN T HE PRESENT CASE, ADMITTEDLY, THE ASSESSEE HAD FILED RETURN OF INCOM E BEFORE THE A.O HAVING JURISDICTION UPON THE ASSESSEE IN REGULAR C OURSE. THUS, THE TRIBUNAL ORDER DT. 1.8.2007 IS NOT APPLICABLE IN TH E PRESENT CASE OF THE ASSESSEE. THE LD. A.R. ALSO CITED THE DECISION OF MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF PRAVIN BALUBHAI ZALA V/S. ITO, (2010) 129 TTJ (MUM) 373 HOLDING THAT ASSESSMENT COMPLETED U/S. 14 4 BY THE ITO AFTER ISSUANCE OF NOTICE U/S. 142(1) HAVING NO JURISDICTI ON OVER THE ASSESSEE IS NULL AND VOID. THE LD A.R. POINTED OUT THAT IN THA T CASE BEFORE MUMBAI BENCH, THE NOTICE U/S. 142(1) CALLING FOR THE RETUR N OF INCOME WAS ISSUED ITA . NO 32/PN/2009 MRS. SAYALI (APARNA) S. PATIL A.Y 2005-06 PAGE OF 8 4 TO THE ASSESSEE BY THE ITO (HQ)(CIB), PUNE, HAVING NO JURISDICTION OVER THE ASSESSEE. THE LD. A.R. SUBMITTED THAT THE LD C IT(A) HAS PASSED ORDER ON ISSUE AFTER DETAILED DISCUSSION. HE POIN TED FURTHER THAT IN CASE OF NITIN B. POTE, THE JOINT OWNER OF THE PROPERTY I N QUESTION, UNDER THE SIMILAR FACTS AND CIRCUMSTANCES FOR THE A.Y. 2005-0 6, THE LD CIT(A) HAD DELETED THE SIMILAR ADDITION AGAINST WHICH THE REVE NUE DID NOT PREFER APPEAL BEFORE THE TRIBUNAL. THUS, THE REVENUE HAS ACCEPTED THE FIRST APPELLATE ORDER ON THE ISSUE AS JUSTIFIED. ON MERI TS OF THE CASE, THE LD. A.R. SUBMITTED THAT THE POSSESSION OF THE PROPERTY IS STILL WITH THE ASSESSEE AS THE SAME WAS NEVER TRANSFERRED TO THE D EVELOPER UNDER THE DEVELOPMENT AGREEMENT. THE CONSIDERATION WAS ALSO N OT AGREED UPON NOR PAID BUT ONLY THE MODE OF PAYMENT OF CONSIDERATION WAS AGREED UPON, WHICH WAS ON THE BASIS OF APPROVAL OF FSI AREA BY T HE LOCAL AUTHORITY. THUS, NO TRANSFER OF PROPERTY WAS OCCURRED WITHIN T HE MEANINING OF SECTION 2(47)(V) OF THE INCOME TAX ACT R.W.S. 53A OF THE TRANSFER OF PROPERTY ACT TO ATTRACT THE CAPITAL GAIN PROVISION. HE PLACED RELIANCE ON THE FOLLOWING DECISION : I) CIT V/S BISAULI TRACTORS,299 ITR 219 (ALL) THE LD A.R. ALSO REFERRED THE DOCUMENTS FILED IN S UPPORT OF THE ABOVE ARGUMENT. THESE ARE COPIES OF ACKNOWLEDGEMENT FOR F ILING OF RETURN OF INCOME BY THE ASSESSEE FOR THE A.Y. (PAGE NO. 11 OF THE PAPER BOOK), DEVELOPMENT AGREEMENT DT. 23.2.2005 FOR SALE OF DEV ELOPMENT RIGHT TO M/S. RAMJI DEVELOPERS (PAGE NOS. 12 TO 40), AGREEME NT FOR PURCHASE OF LAND DT. 31 ST DECEMBER 96 FROM RAMJI DEVSTHAN TRUST (PAGE NOS. 4 1 TO 57), 7/12 EXTRACTS IN RESPECT OF THE LAND (PAGE NOS . 58 TO 61), PART PLAN OF THE CONCERNED LAND AREA AS PER THE SANCTIONED D EVELOPMENT PLAN FOR KALYAN CITY (PAGE NO. 62), AREA STATEMENT OF LAND P LOT BEING THE SUBJECT ITA . NO 32/PN/2009 MRS. SAYALI (APARNA) S. PATIL A.Y 2005-06 PAGE OF 8 5 MATTER OF DEVELOPMENT AGREEMENT DT. 23.2.2005 (PAGE NO. 63), LETTER DT. 21 ST MARCH 2005 ADDRESSED TO BY THE LAND OWNERS BY SHRE E RAMJI DEVELOPERS (PAGE NO. 64), CERTIFICATE DT. 20.8.08 ISSUED BY ASSTT. DIRECTOR, TOWN PLANNING, KALYAN DOMBIVLI MUNICIPAL CORPORATION, KALYAN, PAGE NO. 65 AND 66 AND FAMILY CHART OF POTE-KUTE F AMILY (PAGE NO. 67). THE LD. A.R. SUBMITTED FURTHER THAT NO ADDITIONAL E VIDENCE ON THE ALLEGED ORDER BY THE DEPARTMENT WAS EVER FILED BY THE ASSES SEE BEFORE THE LD CIT(A). ALL THE RELEVANT DOCUMENTS WERE ALREADY F ILED BEFORE THE AO HAVING JURISDICTION OVER THE ASSESSEE. 5. THE LD. D.R. IN RE-JOINDER SUBMITTED THAT THE F IRST APPELLATE AUTHORITY WAS DIFFERENT IN THE CASE OF NITIN B. POT TE, THAN THE FIRST APPELLATE AUTHORITY WHO HAS DECIDED THE FIRST APPE AL IN THE CASE OF THE ASSESSEE. THE ASSESSEE NEVER BOTHERED TO RESPOND T HE NOTICES ISSUED BEFORE THE ITO (CIB), THUS, THERE WAS NO OCCASION F OR THE ITO(CIB) TO KNOW THAT THE ASSESSEE IS ASSESSED BY THE REGULAR A .O HAVING JURISDICTION OVER THE ASSESSEE. 6. CONSIDERING THE ABOVE SUBMISSIONS, WE FIND THAT EVEN AS PER THE ORDER DT. 1.8.2007 OF THE LD. CHIEF CIT (PUNE) P ASSED U/S. 120 OF THE I.T. ACT REFERRED BY LD. D.R, THE ITO (HQ)(CIB) WAS HAVING NO JURISDICTION OVER THE ASSESSEE FOR FRAMING THE ASSESSMENT IN QUE STION, SINCE UNDISPUTEDLY, THE ASSESSEE HAD ALREADY FILED RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION ON 31 ST MARCH 2006 WITH THE AO HAVING REGULAR JURISDICTION OVER THE ASSESSEE. THE SAID ORDER DT. 1.8.2007 OF THE LD. CHIEF CIT VIDE PARA NO. 2 HAS MADE IT CLEAR AS FOLL OWS : 2. THE DAOS SHALL HAVE CONCURRENT JURISDICTION OVE R THE CASES FOR ISSUING NOTICES U/S 142(1). IN CASE OF NON EXISTIN G ASSESSEES (WHO ITA . NO 32/PN/2009 MRS. SAYALI (APARNA) S. PATIL A.Y 2005-06 PAGE OF 8 6 HAVE NEVER FILED A RETURN OF INCOME EARLIER) THE DA O SHALL ASSESS THE CASE U/S. 143(3) OR 144, AS THE CASE MAY BE. IN ALL OTHER CASES THE DAOS SHALL TRANSFER THE AIR INFORMATION TO THE JURISDICTIONAL ASSESSING OFFICERS (JAO). WE THUS FIND SUBSTANCE IN THE OBJECTION OF THE LD. A.R. THAT THE ITO (HQ)(CIB) WAS HAVING NO JURISDICTION TO FRAME ASSES SMENT U/S. 144 OF THE ACT IN THE CASE OF THE ASSESSEE OR TO ISSUE NOT ICES U/S. 142(1) OF THE ACT OR OTHER TO THE ASSESSEE. THUS, THE ASSESSMENT FRAMED BY HIM IN ABSENCE OF HAVING JURISDICTION IS NULL AND VOID. IT IS HELD AS SUCH. 7. EVEN WE DO NOT FIND THE CASE IN FAVOUR OF THE RE VENUE ON MERITS AS THE LD CIT(A) WAS JUSTIFIED IN COMING TO THE CONCLU SION THAT THE ACTION DUE TO ASSESSEE ENTERING INTO A DEVELOPMENT AGREEME NT WITH THE DEVELOPER, CANNOT BE CONSIDERED AS DEEMED TRANSFER OF PROPERTY UNDER THE PROVISIONS OF SECTIN 2(47)(V) OF THE ACT R.W.S. 53A OF THE TRANSFER OF PROPERTY ACT. THE LD. CIT(A) HAS NOTED FOLLOWING M ATERIAL FACTS IN PARA NO. 12 OF THE FIRST APPELLATE ORDER, REPRODUCED HER EUNDER TO JUSTIFY HIS ABOVE CONCLUSION ABOUT THE ALLEGED TRANSFER : 12. AN OBJECTIVE SCRUTINY OF THE FACTS OF THIS CAS E CLEARLY INDICATE : (A) IN THIS CASE SALE CONSIDERATION HAS NOT BEEN QUANTI FIED. NO PART OF SALE CONSIDERATION HAS BEEN RECEIVED BY THE APPELLANT & OTHER CO-OWNERS OF THE PROPERTY. (B) POSSESSION OF PROPERTY HAS NOT BEEN GIVEN TO THE DEVELOPER. THE DEVELOPER WAS ALLOWED TO ENTER THE PROPERTY ONLY FOR MEASUREMENT PURPOSES WHICH WAS ALSO NOT DONE BY THE DEVELOPER DUE TO OPPOSITION OF THE UNAUTHORIZED OCCUPANTS OF THE LAND. (C) NO BUILDING PLAN HAS BEEN SUBMITTED TO KDMC. TILL DATE KDMC HAS NOT APPROVED ANY BUILDING PLAN FOR THE LAN D UNDER CONSIDERATION. ITA . NO 32/PN/2009 MRS. SAYALI (APARNA) S. PATIL A.Y 2005-06 PAGE OF 8 7 (D) MAJOR PORTION OF THE LAND HAS EITHER BEEN UNDER RESERVATION OR UNDER UNAUTHORIZED OCCUPATION. THE ELIGIBLE FSI FOR THE LAND IS IN NEGATIVE. (E) DEVELOPER HAS NOT INITIATED ANY ACTION TOWARDS FURTHERANCE OF THE PROJECT. WE THUS HOLD THAT THE A.O WAS NOT JUSTIFIED TO ASSE SS THE LONG TERM CAPITAL GAIN IN THE HANDS OF THE ASSESSEE AT RS.2,0 2,16,667/- (BEING 1/3 RD OF RS.6,06,50,000/-) IN THE A.Y. UNDER CONSIDERATIO N, ON THE BASIS OF THE DEVELOPMENT AGREEMENT BETWEEN THE ASSESSEE AND OTHE R JOINT OWNERS AS ONE PART AND THE DEVELOPER UNDER THE ABOVE NOTE D CIRCUMSTANCES. THE FIRST APPELLATE ORDER ON THE ISSUE IS THUS UPHE LD. THE GROUND NO. 1 IS ACCORDINGLY REJECTED. 8. SO FAR AS GROUND NO. 2 CONTENDING THAT THE LD C IT(A) HAD ERRED IN ENTERTAINING ADDITIONAL EVIDENCE IS CONCERNED, THER E IS NO SUBSTANCE THEREIN SINCE NO ADDITIONAL EVIDENCE WAS FILED BY T HE ASSESSEE BEFORE THE LD CIT(A) AND THE DOCUMENTS WERE ACTUALLY FILED BEF ORE THE A.O HAVING JURISDICTION IN THE CASE OF THE ASSESSEE. THE FILI NG OR REFERENCE OF SUCH DOCUMENT BEFORE THE LD CIT(A) CANNOT BE TREATED AS ADDITIONAL EVIDENCE. THE GROUND NO. 2 IS ACCORDINGLY REJECTED. 9. IN RESULT, APPEAL IS DISMISSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 29TH JULY, 2011. SD/- SD/- ( G.S.PANNU ) ACCOUNTANT MEMBER ( I.C. SUDHIR ) JUDICIAL MEMBER PUNE, DATED THE 29TH JULY, 2011 ITA . NO 32/PN/2009 MRS. SAYALI (APARNA) S. PATIL A.Y 2005-06 PAGE OF 8 8 US COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-I, THANE 4. THE CIT(A)- I, THANE 5. THE D.R. A BENCH, PUNE 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL PUNE