Kamla Goil, JODHPUR V. CIT-I, JODHPUR

ITA 342/JODH/2013

• Counselvise Citation: 34223314 RSA 2013
• Duration Of Justice: 4 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-09-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 19-09-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 23-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR DEEPAK SEHGALCIT
• Assessee Lawyers: U C JAIN
• Keywords: Capital asset
• Section: 143(3); 147; 263

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL: JODHPUR BENCH : JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO. 342/JODH/2013 (A.Y. 2007-08) SMT. KAMLA GOIL VS CIT-1, C/O. SHRI U.C. JAIN, ADVOCATE JODHPUR. SHATRUNJAY HARI SINGH NAGAR PALI ROAD, JODHPUR. PAN NO. AAZPG3105F (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. U.C. JAIN. DEPARTMENT BY : DR. DEEPAK SEHGAL-CIT- DR. DATE OF HEARING : 18/09/2013. DATE OF PRONOUNCEMENT : 25/09/2013. O R D E R PER HARI OM MARATHA, J.M. : THIS APPEAL OF THE ASSESSEE FOR A.Y. 2007-08 IS DI RECTED AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (ADMN), JODHPUR, DATED 26/03/2013 PASSED U/S 263 OF THE INCOME TAX ACT, 1 961 (THE ACT FOR SHORT). 2 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT I N THIS ASSESSEES CASE ASSESSMENT ORDER FOR A.Y. 2007-08 WAS FRAMED U /S 147 R.W.S. 143(3) OF THE ACT ON 15/09/2010 AT A TOTAL INCOME O F RS, 97,84,280/- BY DISALLOWING LUMP SUM AMOUNT OF RS. 5 LAKHS. THE LD. COMMISSIONER HAS CALLED FOR THE RECORDS OF THIS CASE U/S 263 OF THE ACT AND FOUND THAT THIS ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE AS THE AO HAS NOT PROPERLY INVESTIGATED THE ITEMS OF INCOME AND HAS MADE IT IN HASTE. THE LD. COMMISSIONER HAS SHOW CAUSED THE ASSESSEE ON THE FOLLOWING GROUNDS:- (I) THE ASSESSING OFFICER HAD NOT ENQUIRED INTO WHE THER THE CONVERSION OF AGRICULTURAL LAND INTO RESIDENTIAL PL OTS AND ITS SALE TANTAMOUNT TO INDULGE IN TRADING OF PLOTS AND THEREFORE, IT WAS AN ADVENTURE OF TRADE AND INCOME WAS ASSESSABLE UNDER THE HEAD BUSINESS INSTEAD OF LONG TERM CAPITAL GAIN, (II) THERE WAS A FAILURE ON THE PART OF THE ASSESS ING OFFICER TO INQUIRE IN RESPECT OF SOURCE OF PAYMENT OF DEVELOPMENT CHARGES/EXPENSES OF THE PLOTS, SOURCE O F PAYMENT OF CONVERSION CHARGES PAID TO UIT. (III) THERE WAS A FAILURE TO ENQUIRY IN RESPECT OF TOTAL RECEIPTS ON ACCOUNT OF SALE OF PLOTS, MODE OF RECEI PT EITHER BY WAY OF CHEQUE/DD OR BY CASH AND TOTAL DEPOSIT 3 APPEARING IN ALL THE BANK ACCOUNTS MAINTAINED BY TH E ASSESSEE. (IV) THERE WAS A FAILURE TO CONSIDER CORRECT INTERE ST INCOME FROM THE BANK ACCOUNTS IN WHICH SALE PROCEEDS WERE DEPOSITED AND ALSO THERE WAS A FAILURE TO CONSIDER INTEREST INCOME FROM THE FDRS INHERITED FROM SH. GORDHAN B. GOIL, THROUGH 'WILL' DATED 7TH FEBRUARY, 1995. WHEN THE T HREE FDRS WERE MATURED/RENEWED/INTEREST ACCRUED ETC? (V) NO ENQUIRY FOR COST OF RS. 9,00,000/- TAKEN AS ON 18TH APRIL, 1995 BY THE ASSESSEE, WHEN PARTICULARLY, SH. GORDHAN B. GOIL HAD PURCHASED LAND UNDER QUESTION O N 22ND MARCH, 1984 FOR TOTAL PRICE OF RS. 46,500/- AN D HE EXPIRED ON 18LH APRIL, 1995. (VI) NO ENQUIRY FOR APPLICABILITY OF WEALTH TAX PRO VISIONS FOR THE UN-SOLD URBAN LAND WAS MADE. 2.1 TO THE ABOVE SHOW CAUSE THE ASSESSEE REPLIED TH US :- (I) THE ASSESSEE WAS A RETRIED GOVERNMENT OFFICER A ND RETIRED FROM THE POST OF SENIOR MEDICAL OFFICER, GOVERNMENT OF RAJASTHAN IN THE YEAR 2000. AFTER RETIREMENT, SHE HAS SOURCE OF INCOME FROM PENSION, INTEREST ON DEPOSITS AND AGRICULTURAL, HENCE, NO RE TURN OF INCOME AFTER A.Y. 2002-03 WAS FILED BEING INCOME WA S BELOW TAXABLE LIMIT. 4 (II) THE ASSESSEE HAD RECEIVED IMMOVABLE PROPERTY A S PER 'WILL' EXECUTED BY HER UNCLE, SH. GOWARDHAN B GOIL, *BEING AGRICULTURAL LAND MEASURING 7.5 BIGAS LOCATED AT VI LLAGE- PAL, DISTRICT-JODHPUR, CASH AND THREE FDRS. (III) DUE TO OLD AGE, IT WAS BECOME DIFFICULT TO CU LTIVATE AGRICULTURAL LAND, THEREFORE, SHE DECIDED TO SALE T HE LAND WITH A VIEW TO GET BETTER PRICE BY DIVIDING AGRICUL TURAL LAND INTO PLOTS OF DIFFERENT SIZES AND SOME OF THE PLOTS WERE SOLD IN THE YEAR UNDER CONSIDERATION AFTER CON VERTING THE SAME INTO ABADI LAND. (IV) THE ASSESSING OFFICER HAD EXAMINED DOCUMENTS P LACED OR) RECORD AND ASSESSED GAIN ON SALE OF PLOTS UNDER THE HEAD OF LONG TERM CAPITAL GAIN. (V) THE ASSESSEE HAD ACQUIRED RIGHT/TITLE OVER THE LAND ON 18TH APRIL, 1995, THE DATE ON WHICH HER UNCLE EXPIR ED. HER UNCLE HAS PURCHASED THE LAND IN THE YEAR 1984 AND CONSTRUCTED A FARM HOUSE THERE ON AND WAS RESIDING IN THE HOUSE. IT IS FURTHER SUBMITTED THAT THE ASSESSEE HA D INCURRED EXPENDITURE ON BOUNDARY WALL AND RENOVATIO N OF FARM HOUSE WITHOUT ANY INTENTION TO SALE THE LAND. THE CONVERSION OF THE LAND FROM AGRICULTURAL TO RESIDEN TIAL WAS MADE ONLY IN YEAR 2005. THE AGRICULTURAL LAND WAS ESSENTIALLY A CAPITAL ASSET AND WAS NOT A TRADING A SSET. IT IS FURTHER SUBMITTED THAT THE ASSESSEE HAD NEVER INDUL GED IN PURCHASES AND SALES OF ANY IMMOVABLE PROPERTY AND S UCH 5 SALE OF PLOTS WAS CORRECTLY ASSESSABLE AS LONG TERM CAPITAL GAIN AND THERE WAS NO INTENTION OF, CARRYING OF BUS INESS OF PROPERTY. THE CONVERSION OF THE LAND FROM AGRICULTU RAL TO RESIDENTIAL WAS MADE ONLY IN THE YEAR 2005 WITH THE INTENTION TO SALE THE LAND AND THE PLOTTING WAS DON E TO FETCH THE BETTER VALUE OF THE LAND. 3. HOWEVER, THE LD. CIT HAS REVISED THE ORDER ON AN ENTIRELY DIFFERENT ISSUE. THE LAW U/S 263 OF THE ACT CAN BE ANALYZED A S UNDER. IT IS TRITE THAT AN ORDER CAN BE REVISED ONLY AND ONLY IF TWIN CONDITIONS OF ERROR IN THE ORDER AND PREJUDICE CAUSED TO THE REVENUE CO-EXIST. THE SUBJECT OF REVISION UNDER SECTION 263 HAS BEEN VA STLY EXAMINED AND ANALYZED BY VARIOUS COURTS INCLUDING THAT OF HONBL E APEX COURT. THE REVISIONAL POWER CONFERRED ON THE CIT VIDE SECTION 263 IS OF VIDE AMPLITUDE. IT ENABLES THE CIT TO CALL FOR AND EXAM INE THE RECORDS OF ANY PROCEEDING UNDER THE ACT. IT EMPOWERS THE CIT TO MAKE OR CAUSE TO BE MADE SUCH AN ENQUIRY AS HE DEEMS NECESSARY IN ORDER TO FIND OUT IF ANY ORDER PASSED BY ASSESSING OFFICER IS ERRONEO US IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE O NLY LIMITATION ON HIS POWERS IS THAT HE MUST HAVE SOME MATERIAL(S) WHICH WOULD ENABLE HIM TO FORM A PRIMA FACIE OPINION THAT THE ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. ONCE HE COMES TO THE ABOVE CONCLUSION ON THE BASIS OF THE 6 MATERIAL THAT THE ORDER OF THE ASSESSING OFFICER IS ERRONEOUS AND ALSO PREJUDICIAL TO THE INTERESTS OF THE REVENUE, THE CI T IS EMPOWERED TO PASS AN ORDER AS THE CIRCUMSTANCES OF THE CASE MAY WARRANT. HE MAY PASS AN ORDER ENHANCING THE ASSESSMENT OR HE MAY MO DIFY THE ASSESSMENT. HE IS ALSO EMPOWERED TO CANCEL THE ASS ESSMENT AND DIRECT TO FRAME A FRESH ASSESSMENT. HE IS EMPOWERED TO TA KE RECOURSE TO ANY OF THE THREE COURSES INDICATED IN SECTION 263. SO, IT IS CLEAR THAT THE CIT DOES NOT HAVE UNFETTERED AND UNCHEQUERED DISCRE TION TO REVISE AN ORDER. THE CIT IS REQUIRED TO EXERCISE REVISIONAL POWER WITHIN THE BOUNDS OF THE LAW AND HAS TO SATISFY THE NEED OF FA IRNESS IN ADMINISTRATIVE ACTION AND FAIR PLAY WITH DUE RESPEC T TO THE PRINCIPLE OF AUDI ALTERAM PARTEM AS ENVISAGED IN THE CONSTITUTIO N OF INDIA AS WELL AS IN SECTION 263. AN ORDER CAN BE TREATED AS ERR ONEOUS IF IT WAS PASSED IN UTTER IGNORANCE OR IN VIOLATION OF ANY LA W; OR PASSED WITHOUT TAKING INTO CONSIDERATION ALL THE RELEVANT FACTS OR BY TAKING INTO CONSIDERATION IRRELEVANT FACTS. THE PREJUDICE TH AT IS CONTEMPLATED UNDER SECTION 263 IS THE PREJUDICE TO THE INCOME TA X ADMINISTRATION AS A WHOLE. THE REVISION HAS TO BE DONE FOR THE PURPO SE OF SETTING RIGHT DISTORTIONS AND PREJUDICES CAUSED TO THE REVENUE IN THE ABOVE CONTEXT. THE FUNDAMENTAL PRINCIPLES, WHICH EMERGE FROM THE S EVERAL CASES 7 REGARDING THE POWERS OF THE CIT UNDER SECTION 263 M AY BE SUMMARIZED BELOW: (I) THE CIT MUST RECORD SATISFACTION THAT THE ORDER OF THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. BOTH THE CONDITIONS MUST BE FULFILLED. (II) SECTION 263 CANNOT BE INVOKED TO CORRECT EAC H AND EVERY TYPE OF MISTAKE OR ERROR COMMITTED BY THE ASSESSING OFFICER AND IT IS ONLY WHEN AN ORDER IS ERRONEOUS, THAT THE SECTION WILL BE ATTRACTED. (III) AN INCORRECT ASSUMPTION OF FACTS OR AN INCORRECT APPLICATION OF LAW WILL SUFFICE FOR THE REQUIREMENT OR ORDER BEING ERRONEOUS. (IV) IF THE ORDER IS PASSED WITHOUT APPLICATION OF MIND, SUCH ORDER WILL FALL UNDER THE CATEGORY OF ERRONEOUS ORDER. (V) EVERY LOSS OF REVENUE CANNOT BE TREATED AS PREJUDICIAL TO THE INTEREST OF THE REVENUE AND IF THE ASSESSING OFFICER HAS ADOPTED ONE OF THE COURSES PERMISSIBLE UNDER LAW OR WHERE TWO VIEWS ARE POSSIBLE AND THE ASSESSING OFFICER HAS TAKEN ONE VIEW UNDER WITH WHICH THE CIT DOES NOT AGREE, IT CANNOT BE TREATED AS AN 8 ERRONEOUS ORDER, UNLESS THE VIEW TAKEN BY THE ASSESSING OFFICER IS UNSUSTAINABLE UNDER THE LAW. (VI) IF WHILE MAKING THE ASSESSMENT, THE ASSE SSING OFFICER EXAMINES THE ACCOUNTS, MAKES ENQUIRIES, APPLIES HIS MIND TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND DETERMINES THE INCOME, THE CIT, WHILE EXERCISING HIS POWER UNDER SECTION 263, IS NOT PERMITTED TO SUBSTITUTE HIS ESTIMATE OF INCOME IN PLACE OF THE INCOME ESTIMATED BY THE ASSESSING OFFICER. (VII) THE ASSESSING OFFICER EXERCISE QUASI-JUDICIA L POWER VESTED IN HIM AND IF HE EXERCISES SUCH POWER IN ACCORDANCE WITH LAW AND ARRIVES AS A CONCLUSION, SUCH CONCLUSION CANNOT BE TERMED TO BE ERRONEOUS SIMPLY BECAUSE THE CIT DOES NOT FEEL SATISFIED WITH THE CONCLUSION. (VIII) THE CIT, BEFORE EXERCISING HIS JURISDICTION UNDER SECTION 263, MUST HAVE MATERIAL ON RECORD TO ARRIVE AT A SATISFACTION. (IX) IF THE ASSESSING OFFICER HAS MADE ENQUIRIES DURING THE COURSE OF ASSESSMENT PROCEEDINGS ON THE RELEVANT ISSUES AND THE ASSESSEE HAS 9 GIVEN DETAILED EXPLANATION BE A LETTER IN WRITING AND THE ASSESSING OFFICER ALLOWED THE CLAIM ON BEING SATISFIED WITH THE EXPLANATION OF THE ASSESSEE, THE DECISION OF THE ASSESSING OFFICER CANNOT BE HELD TO BE ERRONEOUS SIMPLY BECAUSE IN HIS ORDER HE DOES NOT MAKE AN ELABORATE DISCUSSION IN THAT REGARD. 3. REVERTING TO THE FACTS OF THIS CASE WE ARE OF THE CONSIDERED OPINION THAT IN VIEW OF THE AFORE STATED LEGAL POSI TION ON REVISIONARY JURISDICTION OF THE COMMISSIONER OF INC OME TAX, THE ASSESSMENT ORDER DATED 15/09/2010, IN THIS ASSESSEE S CASE HAS BEEN WRONGLY MADE. THE AO CANNOT REVISE AN ORDER ON GROUNDS REGARDING WHICH THE ASSESSEE WAS NOT SHOW CAUSE OTH ERWISE ALSO THE ASSESSMENT ORDER WAS MADE U/S 147/148 R.W.S. 14 3(3) OF THE ACT AND THE AO HAS COMPUTED ASSESSEES INCOME AFTER MAKING REASONABLE AND DUE INQUIRIES. THE ASSESSEE IS NOT F OUND TO HAVE BEEN INDULGING IN THE PURCHASE AND SALES OF ANY IMM OVABLE PROPERTY. THEREFORE, WE ARE OF THE CONSIDERED OPINI ON THAT TWIN CONDITION OF SECTION 263 ARE NOT FULFILLED AND, THU S, THE ORDER CANNOT BE REVISED. RESULTANTLY, WE SET ASIDE THE AP PELLATE ORDER DATED 26/03/2013 AND RESTORE THE ASSESSMENT ORDER. 10 4. IN THE RESULT, THIS APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE COURT ON 25 TH SEPTEMBER, 2013. SD/- SD/- (N.K.SAINI) [HARI OM MARAT HA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 25 TH SEPTEMBER, 2013. VL/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT BY ORDER 4. THE CIT(A) 5. THE DR ASSISTANT REGISTRAR ITAT, JODHPUR