Shri Krishan Gopal, New Delhi V. ITO, New Delhi

ITA 3249/DEL/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3148 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 11 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-05-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 03-05-2017
• Assessment Year: 2005-2006
• Appeal Filed On: 22-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Competent authority; Reassessment proceedings
• Section: 147; 148

Judgement Text

PAGE 1 OF 8 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH - SMC NEW DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER ITA NO. 3249/DEL/20 15 ASSESSMENT YEAR : 2005-06 SHRI KRISHAN GOPAL PROP. M/S. KAY PEE LOCK INDUSTRIES C/O M/S. RRA TAXINDIA, D-28, SOUTH EXTENSION PART-1, NEW DELHI 110 049 PAN ADIPG062IN VS. ITO WARD-39(1) NEW DELHI. (APPELLANT) (RESPONDENT) PER BHAVNESH SAINI, JUDICIAL MEMBER ORDER THIS APPEAL BY ASSESSEE HAS BEEN DIRECTED AGA INST THE ORDER OF LD. CIT(A) XX NEW DELHI DATED 30 TH MARCH, 2015 FOR ASSTT. YEAR 2005-06. IN THE PRESENT APPEAL THE ASSESSEE CHALLENGED THE REOP ENING OF THE ASSESSMENT U/S 147 OF THE I.T. ACT AND ADDITION MAD E TO CAPITAL GAINS BY TAKING THE SALE CONSIDERATION OF THE LAND AT RS. 40 LACS INSTEAD OF ACTUAL SALE CONSIDERATION OF RS. 6 LACS. ASSESSEE BY : DR. RAKESH GUPTA & SHRI SOMIL AGGARWAL, ADVOCATE DEPARTMENT BY: MS.BEDOBANI, SR. DR DATE OF HEARING 03/05/2017 DATE OF PRONOUNCEMENT 16 /05/2017 ITA NO. 3249/DEL/2015 SHRI KRISHAN GOPAL VS. ITO 2 2. BRIEFLY THE FACTS OF THE CASE ARE THAT ASSESSEE FILED RETURN OF INCOME DECLARING INCOME OF RS. 61,288/-. THE AO REO PENED THE ASSESSMENT U/S 148 OF THE I.T. ACT. DURING THE YEAR , THE ASSESSEE HAS CLAIMED TO HAVE SOLD A PLOT SITUATED AT 65/69 NEW R OHTAK ROAD, NEW DELHI FOR A TOTAL CONSIDERATION OF RS. 6 LACS. THE SAID PLOT WAS PURCHASED IN THE YEAR 1991 AND AFTER INDEXATION NIL CAPITAL GAIN WAS DECLARED ON THE SAID TRANSACTION. THE AO RECEIVED INFORMATION T HAT THE SAID PLOT WAS ACTUALLY SOLD FOR RS. 40 LACS WHEREAS ASSESSEE HAS DECLARED SALE CONSIDERATION OF RS. 6 LACS ONLY. THE AO NOTED THAT THERE IS NO DENYING THE FACT THAT DEPARTMENT IS HAVING ONLY PHOTOCOPY O F THE BAYANA RECEIPT. HOWEVER THE EXPLANATION OF ASSESSEE IS NOT ACCEPTAB LE BECAUSE SIGNATURES OF THE ASSESSEE ARE SIMILAR ON THE BAYAN A RECEIPT AND SALE DEED. THE TRANSACTION IS OF THE SAME DATE AND SIGNA TURE OF ONE OF THE WITNESS IS SAME ON THE BAYANA RECEIPT AND THE SALE DEED. THE LOCAL INQUIRIES MADE BY THE INSPECTOR ALSO REVEALED THAT THE CONSIDERATION IN THE TRANSACTION IS AROUND RS. 40 LACS. THE AO THERE FORE TAKEN THE SALE CONSIDERATION OF THE PROPERTY ON RS. 40 LACS FOR T HE PURPOSE OF CAPITAL GAIN AND ACCORDINGLY MADE THE ADDITION OF RS. 35,44 ,121/-. 3. THE ASSESSEE CHALLENGED THE REOPENING OF THE AS SESSMENT BEFORE LD. CIT(A) AS WELL AS ADDITION ON MERIT. THE ASSESS EE CONTENDED THAT AO HAS NOT PROVIDED PHOTO COPY DOCUMENT OF BAYANA RECE IPT AT THE ASSESSMENT STAGE. SAME WAS ALSO NOT CONFRONTED TO T HE ASSESSEE. THE LOCAL INQUIRY BY THE INSPECTOR WAS ALSO NOT CONFRON TED TO THE ASSESSEE. IT ITA NO. 3249/DEL/2015 SHRI KRISHAN GOPAL VS. ITO 3 WAS STATED THAT REOPENING IS WHOLLY UNJUSTIFIED AS WELL AS ADDITION ON MERIT CANNOT BE SUSTAINED. LD. CIT(A) HOWEVER DISMI SSED THE APPEAL OF ASSESSEE. 4. I HAVE CONSIDERED RIVAL SUBMISSIONS. IT IS WELL SETTLED LAW THAT VALIDITY OF THE REASSESSMENT U/S 147/148 TO BE CONS IDERED WITH REFERENCE TO THE REASONS RECORDED BY THE AO. THE ASSESSEE HAS FILED COPY OF THE REASONS RECORDED U/S 147 OF THE I.T. ACT AT PAGE 11 6 OF THE PAPER BOOK. THE SAME IS REPRODUCED AS UNDER :- REASONS FOR ACTION UNDER SECTION 147 OF THE I.T. A CT, 1961 FOR THE A.Y. 2005-06 IN THE CASE OF SHRI KRISHAN GOPAL PROP. M/S. KAY PEE LOCK IND. 221 TELIWARI, DELHI 110 006. DATE : 21.3.2012 THE ASSESSEE FILED A RETURN OF INCOME ON 2005 DECLARING TOTAL INCOME OF RS. 61,288/-. AS PER INFORMATION RECEIVED THE ASSESSEE HAS ENTERE D INTO AN AGREEMENT TO SELL A PROPERTY BEARING NO. 65/59, NEW ROHTAK ROAD FOR A CONSIDERATION OF RS. 40,00,000/- WHEREAS THE SALE DEED FOR THE SAID PROPERTY WAS EXECUTED FOR RS. 6,0 0,000/- THEREFORE THERE IS AN ESCAPEMENT OF CAPITAL GAIN OF RS. 34,00,000/- FOR THE ASSESSMENT YEAR 2005-06. THIS CAPITAL GAIN HAS BEEN CALCULATED WITH REFERENC E TO RS. 6,00,000/- AS SALE PRICE INSTEAD OF AGREEMENT VALUE OF RS. 40,00,000/- IS TAKEN IN THE RETURN OF THE ASSESSEE FOR THE A.Y. 2005-06. THEREFORE, I HAVE REASON TO BELIEF THAT TH E ASSESSEE HAS ESCAPEMENT OF CAPITAL GAIN AMOUNTING TO RS. 34,00,0 00/- WHICH HAS NOT BEEN DISCLOSED IN THE TURN OF INCOME AND TH E PROVISIONS OF SECTION 147 OF THE ACT ARE ATTRACTED IN THIS CASE. IN THE LIGHT OF THE ABOVE FACTS, PROPOSAL IS SENT T O THE JCIT, RANGE 39, NEW DELHI FOR ACCORDING APPROVAL FOR ISSU E OF NOTICE UNDER SECTION 148 OF THE I.T. ACT, 1961 IN THIS CAS E. SD/- (SOBHANA RAJ AN) INCOME-TAX OFFICER, WARD 39 (1), NEW DELHI. ITA NO. 3249/DEL/2015 SHRI KRISHAN GOPAL VS. ITO 4 5. THE AO IN THE REASONS MERELY MENTIONED THAT INFO RMATION HAS BEEN RECEIVED THAT ASSESSEE ENTERED INTO AN AGREEME NT TO SALE OF PROPERTY IN QUESTION FOR A CONSIDERATION OF RS. 40 LACS WHEREAS IN THE SALE DEED RS. 6 LACS HAVE BEEN MENTIONED . THE APPR OVAL OF THE ADCIT IS OBTAINED WHICH IS IN PROFORMA IN WHICH COLUMN NO. 12, IT IS MENTIONED I AM SATISFIED. THE AO HAS NOT MENTIONED ANY SOURC E OF INFORMATION IN THE REASONS RECORDED. HOWEVER IN THE ASSESSMENT ORD ER, AO HAS MENTIONED THAT DEPARTMENT IS HAVING ONLY PHOTOCOPY OF THE BAYANA RECEIPT AS IS MENTIONED ABOVE. LD. COUNSEL FOR AS SESSEE RELIED UPON DECISION OF THE PUNJAB & HARYANA HIGH COURT IN THE CASE OF SURJIT RAI VS. PREM KR. KHERA & AMP; OTHER PUNJAB LAW REPORTER VOL. EX-1995(2) PLR P.40 (P&H) IN WHICH IT WAS HELD THAT SIGNATURE CANNOT BE COMPARED FROM THE PHOTOCOPY OF THE AGREEMENT. HE HAS ALSO RE LIED UPON DECISION OF DELHI HIGH COURT IN THE CASE OF MS. ARATI BHARGA VA VS. KAVI KUMAR BHARGAVA 1991 (3) CIVIL COURT CASES P. 377 (DELHI HIGH COURT) IN WHICH IT WAS HELD THAT FURTHER DOCUMENTS SOUGHT TO BE PRODUCED WAS PHOTO COPY OF ORIGINAL DOCUMENT AND SAME CANNOT BE ADMITTED IN EVIDENCE . LD. COUNSEL FOR ASSESSEE ALSO RELIED UP ON THE DECISION OF THE SUPREME COURT IN THE CASE OF MOOSA S MADHA & AZAM S . MADHA VS. CIT (1973) 89 ITR 0065 (SUPREME COURT) IN WHICH IT WAS HELD THAT PHOTO COPIES HAVE VERY LITTLE EVIDENTIARY VALUE. HE HAS A LSO RELIED UPON DECISION OF KERELA HIGH COURT IN THE CASE OF CIT VS. SMT. K. C. AGNES (2003) 262 ITR 354 IN WHICH IT WAS HELD THAT UNLESS IT IS PRO VED THAT THE AGREEMENT WAS ACTED UPON AND UNLESS THE AMOUNT STATED IN THE AGREEMENT WAS ITA NO. 3249/DEL/2015 SHRI KRISHAN GOPAL VS. ITO 5 PAID FOR THE SALE, ONE CAN NOT COME TO THE CONCLUSI ON THAT THE PRICE MENTIONED IN THE SALE DEED IS NOT CORRECT. ON THE OTHER HAND LD. DR SUBMITTED THAT ON THE BASIS OF THE PHOTO COPY OF TH E RECEIPT, PRIMA FACIE CASE WAS MADE OUT FOR REOPENING OF THE ASSESSMENT. ASSESSEE DID NOT RAISE OBJECTION TO REASSESSMENT PROCEEDINGS AND THA T THE PHOTOCOPY OF DOCUMENTS WHICH IS ADMISSIBLE AS SECONDARY EVIDENCE . 6. AFTER CONSIDERING RIVAL SUBMISSIONS, IT IS CL EAR THAT THE REVENUE DEPARTMENT WAS HAVING ONLY ONE PHOTO COPY OF THE BA YANA RECEIPT AND ON THAT BASIS THE REASSESSMENT OF THE ASSESSEE HAVE BEEN MADE. HOWEVER IN THE REASONS RECORDED, THE AO HAS NOT EX PLAINED THE SOURCE OF THE INFORMATION RECEIVED FOR ENTERING INTO AN AG REEMENT TO SELL FOR A SUM OF RS. 40 LACS AND THE AO HAS NOT VERIFIED THE PHOTO COPY OF THE RECEIPT BEFORE RECORDING REASONS AND IT IS NOT CLAR IFIED AS TO WHERE IS THE ORIGINAL RECEIPT AND NO PERSONS MENTIONED IN THE P HOTOCOPY RECEIPT HAVE BEEN EXAMINED. THUS BEFORE RECORDING THE REASO NS FOR THE REASSESSMENT, THE AO DID NOT VERIFY THE INFORMATION SO RECEIVED FOR THE PURPOSE OF REOPENING OF THE ASSESSMENT. IN ABSENCE OF EXISTENCE OF ANY PRIMARY EVIDENCE, THERE IS NO QUESTION OF CONSIDERI NG THE PHOTO COPY AS SECONDARY EVIDENCE. THUS THE AO HAS NOT APPLIED HIS MIND TO THE PHOTO COPY OF THE RECEIPT WHICH HAS LITTLE EVIDENTIARY VA LUE. THE AO THEREFORE ACTED IN HASTE AND IN MECHANICAL MANNER TO REOPEN T HE ASSESSMENT. THE REASONS SHOULD HAVE LIVE LINK BETWEEN THE MATERIAL PLACED ON RECORD AND CONCLUSION DRAWN BY THE AO BEFORE ISSUING THE NOTI CE U/S 148 OF THE ITA NO. 3249/DEL/2015 SHRI KRISHAN GOPAL VS. ITO 6 ACT. THE AO IS NOT COMPETENT PERSON TO COMPARE THE SIGNATURE FROM THE PHOTOCOPY COPY WITH THE ORIGINAL SIGNATURE ON THE S ALE DEED. THUS IT WAS A MERE SUSPICION ON THE PART OF THE AO THAT ASSESSE E RECEIVED HIGHER SALE CONSIDERATION. THEREFORE THERE CANNOT BE A REA SON TO BELIEVE WITH THE AO TO REOPEN ASSESSMENT IN THE MATTER ON VAGUE INFORMATION CONSIDERING INADMISSIBLE DOCUMENT FOR FORMING THE B ELIEF TO REOPEN THE ASSESSMENT. 7. LD. COUNSEL FOR ASSESSEE FURTHER SUBMITTED THAT SINCE NO SPECIFIC MATERIAL WAS AVAILABLE WITH THE AO FOR REOPENING OF THE ASSESSMENT THEREFORE THE ADCIT ALSO GRANTED APPROVAL FOR REOPE NING OF THE ASSESSMENT IN A MECHANICAL MANNER. HE HAS NOT SATIS FIED HIMSELF ABOUT THE REOPENING OF THE ASSESSMENT IN ACCORDANCE WITH LAW. HE HAS ALSO NOT APPLIED HIS MIND TO THE FACT OF THE CASE THAT T HERE WERE NO MATERIAL ON RECORD TO JUSTIFY REOPENING OF THE ASSESSMENT. H E HAS RELIED UPON JUDGMENT OF MP HIGH COURT IN THE CASE OF CIT VS. S. GOYANKA LIME AND CHEMICALS LTD. 231 TAXMAN 73 IN WHICH IT WAS HELD AS UNDER : WHILE ACCORDING SANCTION, THE JOINT COMMISSIONER, INCOME TAX HAS ONLY RECORDED SO YES, I AM SATISFIED IF THE C ASE IN HAND IS ANALYSED ON THE BASIS OF THE AFORESAID PRINCIPLE, T HE MECHANICAL WAY OF RECORDING SATISFACTION BY THE JOINT COMMISSI ONER, WHICH ACCORDS SANCTION FOR ISSUING NOTICE UNDER SECTION 1 47, IS CLEARLY UNSUSTAINABLE AND WE FIND THAT ON SUCH CONSIDERATI ON BOTH THE APPELLATE AUTHORITIES HAVE INTERFERED INTO THE MATT ER. IN DOING SO, NO ERROR HAS BEEN COMMITTED WARRANTING RECONSIDERAT ION. 8. THE AFORESAID JUDGMENT IS CONFIRMED BY THE HON BLE SUPREME COURT BY DISMISSING THE SLP OF THE DEPARTMENT IN TH E MATTER OF CIT VS. ITA NO. 3249/DEL/2015 SHRI KRISHAN GOPAL VS. ITO 7 S. GOYANKA LIME & CHEMICAL LTD. 64 TAXMANN.COM 313. LD. COUNSEL FOR ASSESSEE ALSO RELIED UPON DECISION OF THE DELHI HIG H COURT IN THE CASE OF PR. CIT VS. M/S. N.C. CABLES LTD. IN ITA NO. 335/1 5 DATED 11 TH JANUARY, 2017 IN WHICH IN PARA 11 IT WAS HELD AS UNDER :- SECTION 151 OF THE ACT CLEARLY STIPULATES THAT THE CIT(A), WHO IS THE COMPETENT AUTHORITY TO AUTHORIZE THE REASSESSME NT NOTICE, HAS TO APPLY HIS MIND AND FORM AN OPINION. THE MERE APPENDING OF THE EXPRESSION APPROVED SAYS NOTHING. IT IS NO T AS IF THE CIT(A) HAS TO RECORD ELABORATE REASONS FOR AGREEING WITH THE NOTHING PUT UP. AT THE SAME TIME, SATISFACTION HAS TO BE RECORDED OF THE GIVEN CASE WHICH CAN BE REFLECTED IN THE BRI EFEST POSSIBLE MANNER. IN THE PRESENT CASE, THE EXERCISE APPEARS T O HAVE BEEN RITUALISTIC AND FORMAL RATHER THAN MEANINGFUL, WHIC H IS THE RATIONALE FOR THE SAFEGUARD OF AN APPROVAL BY A HIG HER RANKING OFFICER. FOR THESE REASONS, THE COURT IS SATISFIED THAT THE FINDINGS BY THE ITAT CANNOT BE DISTURBED. 9. ON THE OTHER HAND LD. DR SUBMITTED THAT ADDITION AL COMMISSIONER HAS APPLIED HIS MIND TO THE FACT OF THE CASE BEFORE GRANTING APPROVAL TO THE REOPENING OF THE ASSESSMENT. 10. CONSIDERING THE FACTS OF THE CASE, IT IS CLEAR THAT THERE WAS ONLY A PHOTO COPY RECEIPT WHICH WAS MADE BASIS FOR REOPENI NG OF THE ASSESSMENT WHICH HAS NO EVIDENTIARY VALUE. THEREFOR E ADCIT SHOULD HAVE VERIFY THE FACTS AND APPLIED HIS MIND BEFORE G RANTING APPROVAL TO THE REOPENING OF THE ASSESSMENT. HE HAS MERELY QUOT ED IN COLUMN 12 I AM SATISFIED . IT WOULD BE THEREFORE CLEAR FROM TH E FACT OF THE CASE AND ON THE BASIS OF THE AFORESAID DECISIONS RELIED UPON BY LD. COUNSEL FOR ASSESSEE THAT THE ADCIT HAS ACCORDED HIS SATISFACTI ON IN A MECHANICAL WAY AND AS SUCH THE REOPENING OF THE ASSESSMENT IS WHOLLY UNJUSTIFIED. ITA NO. 3249/DEL/2015 SHRI KRISHAN GOPAL VS. ITO 8 IN VIEW OF THE ABOVE DISCUSSION IT IS CLEAR THAT RE OPENING OF THE ASSESSMENT IN THE MATTER IS WHOLLY UNJUSTIFIED. 11. IN VIEW OF THE ABOVE DISCUSSIONS I SET ASIDE TH E ORDERS OF AUTHORITIES BELOW AND QUASH THE REOPENING OF ASSESS MENT IN THE MATTER. RESULTANTLY ADDITIONS MADE IN THE REASSESSMENT ORDE R STAND DELETED. THERE IS NO NEED TO DECIDE THE OTHER CONTENTIONS RA ISED BY LD. COUNSEL FOR ASSESSEE ON MERITS. 12. IN THE RESULT APPEAL OF ASSESSEE IS ALLOWED. PRONOUNCED IN THE OPEN COURT. SD/- ( BHAVNESH SAINI ) JUDICIAL MEMBER DATED: 16 /5/2017 *VEENA* COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. PRINCIPAL CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR