Varsha Shrikant Paranjape, Mumbai V. Asstt. Commissioner of Income tax - 25(3) , Mumbai

ITA 3252/MUM/2023

• Counselvise Citation: [2023] 100 COUNSELVISE.COM (IT) 6278 (ITAT-MUMBAI)
• Duration Of Justice: 1 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-10-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 04-10-2023
• Assessment Year: 2011-2012
• Appeal Filed On: 12-09-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VITHAL MACHINDRA BHOSALE
• Keywords: Sale consideration of property below Jantri Value; Tangible material; Capital receipt; Reassessment proceedings; Set aside; Capital Gains
• Section: 147; 148; 143(3); 50C; 142(1); 143(2); 13

Judgement Text

P a g e | 1 ITA No.3252/Mum/2023 Varsha Shrikant Paranjape Vs. ACIT, Circle 25(3) IN THE INCOME TAX APPELLATE TRIBUNAL “F” BENCH, MUMBAI BEFORE SHRI ABY T VARKEY, JUDICIAL MEMBER & SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ITA No.3252/Mum/2023 (A.Y. 2011-12) Varsha Shrikant Paranjape, Paranjape Bungalow, 2 nd Floor, 34, MG Road, Vile Parle (East), Mumbai – 400057 Vs. ACIT, Circle 25(3) C-10, 6 th Floor, Room No. 601, Pratyaksha Kar Bhavan, Bandra Kurla Complex, Bandra (E) Mumbai – 51 स्थायी लेखा सं./जीआइआर सं./PAN/GIR No:AAAPP6199H Appellant .. Respondent [ Appellant by : Ronak Doshi, Chaitanya Doshi & Karan Jain Respondent by : Vithal Machindra Bhosale Date of Hearing 05.10.2023 Date of Pronouncement 20.10.2023 आदेश / O R D E R Per Amarjit Singh (AM): This appeal filed by the assesse is directed against the order passed by the ld. CIT(A) NFAC dated 21.08.2023 for A.Y. 2011-12. The assessee has raised the following grounds before us: “GROUND NO. 1: RE-ASSESSMENT U/S. 147 IS BAD IN LAW: 1.1 On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in upholding the action of Id. AO in reopening the assessment u/s 147 of the Act. 1.2 The Appellant prays that the notice u/s 148 of the Act as well as consequent order be quashed. P a g e | 2 ITA No.3252/Mum/2023 Varsha Shrikant Paranjape Vs. ACIT, Circle 25(3) WITHOUT PREJUDICE TO GROUND NO. 1: GROUND NO. 2: NON-ADJUDICATION OF GROUNDS ON MERITS IS BAD IN LAW: 2.1 On the facts and in the circumstances of the case and in law, the Id CIT(A) erred in not adjudicating the grounds on merits as contained in Ground No II to IV filed before the Id. CIT(A) and thereby simply dismissing the entire appeal solely upon upholding the reassessment proceedings. 2.2 The Appellant prays that the Id. CIT(A) be directed to adjudicate the grounds on merits WITHOUT PREJUDICE TO GROUND NO. 1 and 2: GROUND NO. 3: NOTIONAL CAPITAL GAIN CANNOT BE TAXED: 3.1 On the facts and in the circumstances of the case and in law, the ld. AO erred in substituting full value of consideration declared by the Appellant of Rs.8,61,04,750/- with Rs.13,72,13,911/- and thereby making an addition of Rs. 5,11,09,161/- 3.2 Ld. AO failed to appreciate and ought to have held that: 3.2.1 full value of consideration can never be substituted unless and until there is credible evidence available with the revenue which determines that the Appellant has received more consideration than what has been declared, 3.2.2 full value of consideration can only be substituted in the cases falling u/s 45(4), 50C and 50D of the Act Admittedly, the case of Appellant does not fall in the above sections. 3.3 The Appellant, therefore, prays that the addition made by the ld. AO be deleted. WITHOUT PREJUDICE TO GROUND NO. 1, 2 and 3: GROUND NO. 4: DOUBLE TAXATION OF SAME INCOME IS ABSURD AND ILLOGICAL: 4.1 On the facts and in the circumstances of the case and in law, the ld. AO erred in taxing the sales consideration of Rs.5,11,09,161/- in the hands of Appellant, despite the same income being offered to tax in the hands of other co-owners. 4.2 The Id. AO failed to appreciate and ought to have held that since the said amount of Rs.5,11,09,161/- has already been offered to tax in the hands of other co-owners, the addition made amounts to double taxation of the same income. 4.3 The Appellant prays that the additional income so brought to tax in the hands of the Appellant be deleted. P a g e | 3 ITA No.3252/Mum/2023 Varsha Shrikant Paranjape Vs. ACIT, Circle 25(3) WITHOUT PREJUDICE TO GROUND NO. 1, 2, 3 and 4: GROUND NO. 5: THE ALLEGED DIFFERENCE IN SALES CONSIDERATION AMOUNTING TO RS. 5,11,09,161/- CANNOT BE TAXED UNDER THE HEAD INCOME FROM OTHER SOURCES: 5.1 On the facts and in the circumstances of the case and in law, the Id. AO erred in bringing to tax, the alleged difference in sales consideration amounting to Rs.5,11,09,161 under the head Income from Other Sources and thereby levying tax at the rate of 30% on the same, without giving any basis thereof in the assessment order. 5.2 The Id AO failed to appreciate and ought to have held that 5.2.1 there is not even a whisper in the body of the assessment order as to the fact that the said amount would tantamount to Income from Other Sources of the Appellant, 5.2.2 no opportunity of being heard was afforded to the Appellant to show cause as to why, the alleged difference should not be added as Income from Other Sources, 5.2.3 capital receipt cannot be brought to tax under Income from other sources, 5.2.4 income can be brought to tax only under a specific heads of income, if for any reason, the same could not be brought to tax under the said specific head, then it would not fall under any other head of income. 5.3 The Appellant prays that the alleged amount Rs.5,11,09,161/- brought to tax under Income from Other Source be hereby deleted GROUND NO. 6: INTEREST U/S. 234B, 234C and 234D OF THE ACT CANNOT BE LEVIED: 6.1 On the facts and in the circumstances of the case and in law, the Id CIT(A) erred in upholding the action of Id AO in charging interest u/s 2348, 234C and 234D of the Act 6.2 The Appellant prays that the levy of interest u/s 234B, 234C and 234D of the Act be deleted/appropriately reduced GROUND NO. 7:- GENERAL: The Appellant craves leaves to add to, alter, amend and / or delete the above grounds of appeal.” 2. Fact in brief is that return of income declaring total income of Rs.281,95,740/- was filed on 30.07.2011. The assessment u/s 143(3) of the Act was finalised on 24.03.2014. Subsequently, the assessing P a g e | 4 ITA No.3252/Mum/2023 Varsha Shrikant Paranjape Vs. ACIT, Circle 25(3) officer has reopened the case by issuing of notice u/s 148 of the Act on 14.09.2016. The case was reopened on the basis of information received from the Joint CIT-3 Nanded that the assessee jointly with other two persons namely Shri Shashank P. Paranjpe and Mrs. Samudri D. Deshmukh purchased land located at village Bhugaon (Pune) from Mr. Sanjay Ramchandra Kulkarni and 13 other purchase for an amount of Rs.15,66,46,000/- in 2007. The aforesaid land were sold jointly by the assessee along with two others on 25.03.2011 and 28.07.2010 for consideration of Rs.51,25,80,000/-. In the reason recorded the AO further stated that in the total investment made in purchasing of the property jointly the assessee’s contribution comes to 25%, however, the assesse has shown capital gain of Rs.407,93,652/- but @ 25% share on sale consideration in the case of the assesse comes to Rs.12,81,25,000/-. Therefore, AO was of the view that income chargeable to tax amounting to Rs.4,20,20,250/- has escaped assessment due to failure on the part of the assesse to disclose truly and fully of material facts necessary for her assessment. During the course of assessment proceedings the assessee submitted that the sale consideration has been distributed amongst the co-owner as set out in sale agreement. The assessee further submitted that there was no loss to revenue as each of the co-owners has offered the sale consideration to tax to the extent of amount allocated as per the agreement and have paid the due taxes thereon. The AO has not agreed with the submission of the assesse and observed that assesse has sold the land to M/s Matrix Developers Pvt. Ltd. which was ultimately controlled by her and her family and she wanted to avoid paying the capital gain tax. Therefore, according to the contribution of the assessee the assessing officer has determined the sales consideration to the amount of Rs. 13,72,13, 911/- as share of assessee and made addition of Rs.511,09,161/- to the total income of the assessee. P a g e | 5 ITA No.3252/Mum/2023 Varsha Shrikant Paranjape Vs. ACIT, Circle 25(3) 3. The assessee filed the appeal before the ld. CIT(A). The ld. CIT(A) has dismissed the appeal of the assessee. 4. During the course of appellate proceedings before us the ld. Counsel submitted that assessment u/s 143(3) of the Act has been made in the case of the assessee and the long term capital gain earned on the share of the sold land was duly offered to tax. He further submitted that after 4 years from the end of relevant assessment year without any new tangible material the assessing officer has reopened the assessment without any valid reason. The ld. Counsel also referred the copy of computation of income filed with the original return of income wherein long term capital gain on sale of land was duly disclosed in the hand of the assessee as per the copy of the computation placed at page no. 5 of the paper book. The ld. Counsel also referred copy of notice u/s 143(2) of the Act issued by the assessing officer on 30.08.2013 at the time of original assessment proceedings wherein as per serial no. 5 of the notice the assessing officer has called for details of long term and short term capital gains. The ld. Counsel also referred copy of notice issued u/s 142(1) of the Act on 03.10.2013 during the course of original assessment proceedings wherein as per serial no. 3 and 4 the assessing officer has called for copy of sale deeds in respect of all transactions and note of applicability of Sec. 50C in respect of immovable property transactions. Similarly, the ld. Counsel referred the other notices issued u/s 142(1) of the Act on 12.12.2013 by the assessing officer during the course of original assessment wherein specific detail of sale of land and consideration received etc. along with long term capital gain were asked. He also referred the detail of compliance made by the assessee during the course of original assessment proceedings as per copies of such compliance placed at page no. 12-13 of the paper book filed by the assessee. The ld. Counsel also referred the copy of sale agreement placed at page no. 677 of the P a g e | 6 ITA No.3252/Mum/2023 Varsha Shrikant Paranjape Vs. ACIT, Circle 25(3) paper book wherein annexure 1 to the sale agreement showing total amount of sale consideration payable to the each co-owners along with other details of payments. By referring the various detail placed in the paper book the ld. Counsel submitted that the reopening of the case of the assesse is bad in law and even on merit the assessing officer could not establish that there is any escapement of the income. On the other hand, the ld. D.R supported the order of lower authorities. 5. Heard both the sides and perused the material on record. The assessment in the case of the assesseee u/s 143(3) of the Act was completed on 24.03.2014. Subsequently, the case of the assessee was reopened by issuing of notice u/s 148 of the Act dated 14.09.2016 on the ground that income chargeable to tax has escaped assessment within the meaning of Sec. 147 of the Act. Regarding reopening u/s 147 of the Act beyond a period of 4 years from the end of the relevant assessment year, the assessee claimed that all the detail pertaining to sale of land transactions were available on the record which were considered by the assessing officer at the stage of original assessment proceedings completed u/s 143(3) of the Act on 24.03.2014. The assessee also submitted that AO had failed to prove that there was an escapement of income by failure on the part of the assessee to disclose fully and truly on material facts necessary for her assessment. We have perused the copy of notices issued u/s 142(1) and 143(2) by the assessing officer during the course of original assessment proceedings as referred in the submission of the ld. Counsel and placed in the factual paper book filed on 28.09.2023. Vide notice dated 30.08.2013 the assessing officer asked the assessee to furnish the details of long term and short term capital gains and further vide notice dated 03.10.2013 u/s 142(1), the assessing officer directed the assesse to P a g e | 7 ITA No.3252/Mum/2023 Varsha Shrikant Paranjape Vs. ACIT, Circle 25(3) furnish copy of sale deed in respect of all transactions of immovable assets during the year along with copies of balance sheet. Thereafter on 12.12.2013 vide notice u/s 142(1) of the Act the assessing officer asked the assessee to furnish the details of sale of lands with name and address of parties, method of payment received and detail of bank account with statement showing whether the consideration received was deposited and how the same was utilised. Vide submission dated 16.09.2013 the assessee submitted copy of purchase and sale deeds of document of land and other detail placed in the paper book. Vide submission dated 20.11.2013 the assessee submitted detail of property purchased, copy of possession letter, confirmation of sale from M/s Matrix Developers Pvt. Ltd. etc. Further vide letter dated 24.12.2013 the assesse has submitted during the course of original assessment proceedings before the assessing officer the details of sale of land with other required details and detail of payment received etc. In the computation of total income the assessee has also given the complete details of sale of land and working capital gain on the sale of land. The complete record of sale transactions and copies of agreement were available before the assessing officer during the course of original assessment proceedings. In this regard, on perusal of the reason recorded for reopening of the assessment we find that the assessing officer has not brought on record any new tangible material to reopen the concluded assessment beyond period of 4 years from the end of the relevant assessment years to establish that there was any failure on the part of the assessee to disclose fully and truly facts of the case before the assessing officer. Therefore, we consider that reopening of the completed assessment in the case of the assesse after 4 year of the relevant assessment is not valid. Further, the assessing officer could not establish that in the case of the assessee that how there is escapement of income as the same amount has already been assessed P a g e | 8 ITA No.3252/Mum/2023 Varsha Shrikant Paranjape Vs. ACIT, Circle 25(3) in the case of the co-owners. The co-owner has offered the sale consideration to tax to the extent of the consideration allocated to them as per the agreement and have paid the taxes due thereon. The AO has also not contrary disproved the undisputed fact that the three co-owner have already offered the entire sale consideration of Rs.51,25,00,000/- for the year under consideration under the head capital gain we consider that the AO has not brought any evidences on record to demonstrate that there was any escapement of income, therefore, assessing the sale consideration in the hands of the assessee without disturbing the sale consideration already assessed in the hands of the co-owners is not justified. In view of the above facts and finding we consider that issuing of notice u/s 148 is not valid, therefore, ground no. 1 & 2 of the assessee are allowed and the assessment is set aside. 6. Since, we have quashed the notice issued u/s 148 of the Act, therefore, other ground of appeal of the assessee on merit not required any adjudication and the same left open. 7. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 20.10.2023 Sd/- Sd/- (Aby T Varkey) (Amarjit Singh) Judicial Member Accountant Member Place: Mumbai Date 20.10.2023 Rohit: PS P a g e | 9 ITA No.3252/Mum/2023 Varsha Shrikant Paranjape Vs. ACIT, Circle 25(3) आदेश की प्रतितिति अग्रेतिि/Copy of the Order forwarded to : 1. अपीलाथी / The Appellant 2. प्रत्यथी / The Respondent. 3. आयकर आयुक्त / CIT 4. विभागीय प्रविविवि, आयकर अपीलीय अविकरण DR, ITAT, Mumbai 5. गार्ड फाईल / Guard file. सत्यावपि प्रवि //True Copy// आदेशानुसार/ BY ORDER, उि/सहायक िंजीकार (Dy./Asstt. Registrar) आयकर अिीिीय अतिकरण/ ITAT, Bench, Mumbai.