Smt Shakuntalabai V Gugale, Solapur V. DCIT CEN, Pune

ITA 345/PUN/2012

• Counselvise Citation: 34524514 RSA 2012
• Duration Of Justice: 1 year(s) 3 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 1998-1999
• Appeal Filed On: 21-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S PRAVEENA
• Keywords: Cost of acquisition; Difference of opinion; Block assessment; Revised return; Change of opinion
• Section: 143(3); 54F; 148; 54; 132

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO. 345/PN/2012 (ASSTT.YEAR : 1998-99) SHAKUNTALABAI V. GUGALE, 3853, BHAVANI PETH, BARSHI, SOLAPUR - 413401 PAN NO. ABBPG 8023D .. APPELLANT VS. DCIT CENTRAL CIRCLE-III, PUNE .. RESPONDENT APPELLANT BY : SRI NIKHIL PATHAK RESPONDENT BY : SMT. S. PRAVEENA DATE OF HEARING : 30-05-2013 DATE OF PRONOUNCEMENT : 31-05-2013 ORDER PER R.K.PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER DATED 31-10-2011 OF THE CIT(A) CENTRAL, PUNE RELATING TO ASSESSMENT YEAR 1998- 99. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER : THE FOLLOWING GROUNDS ARE TAKEN WITHOUT PREJUDICE T O EACH OTHER ON FACTS AND IN LAW, 1) THE LEARNED CIT(A) ERRED IN HOLDING THAT T HE REOPENING OF ASST. U/S 148 WAS VALID AND CONSEQUENTLY, THE REASST. ORDER PASSE D U/S. 147 WAS JUSTIFIED IN LAW. 2) THE ASSESSEE SUBMITS THAT THE REOPENING IS BAD IN LAW ON ACCOUNT OF THE FOLLOWING REASONS - A. THE ASST. U/S 143(3) WAS COMPLETED AND THE REOPENING IS BEYOND 4 YEARS FROM THE END OF THE RELEVANT ASST. YEAR AND S INCE ALL THE MATERIAL FACTS WERE DULY SUBMITTED BY THE ASSESSEE IN THE CO URSE OF ORIGINAL ASST. PROCEEDINGS, THE REOPENING IS NOT VALID SINCE THERE IS NO FAILURE ON THE PART OF THE ASSESSEE TO FURNISH THE MATERIAL FACTS. 2 B. THE REOPENING IS MADE ON A MERE CHANGE OF OPINION AND HENCE, THE SAME WAS NOT JUSTIFIED AT ALL. 3) THE LEARNED CIT(A) ERRED IN CONFIRMING TH E DISALLOWANCE OF EXEMPTION U/S.54F ON THE GROUND THAT THE APPELLANT HAD NOT SA TISFIED THE CONDITIONS LAID DOWN U/S 54F. 4) THE LEARNED CIT(A) ERRED IN HOLDING THAT TH E APPELLANT WAS NOT ENTITLED TO CLAIM EXEMPTION U/S 54F ON THE GROUND THAT THE APPE LLANT HAD NOT BEEN ABLE TO PURCHASE A RESIDENTIAL HOUSE WITHIN A PERIOD OF TWO YEARS FROM THE DATE OF SALE OF THE ORIGINAL ASSET AND ACCORDINGLY, THE APP ELLANT WAS NOT ELIGIBLE TO CLAIM THE EXEMPTION U/S 54F. 5) THE LEARNED CIT(A) FAILED TO APPRECIATE THAT TH E APPELLANT HAD PURCHASED A RESIDENTIAL HOUSE WITHIN A PERIOD OF TWO YEARS AS PRESCRIBED U/S 54F AND HENCE, THE EXEMPTION U/S 54F OUGHT TO HAVE BEEN ALL OWED TO THE APPELLANT. 6) THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED T HAT THE APPELLANT HAD PAID THE ENTIRE CONSIDERATION OF THE RESIDENTIAL H OUSE PURCHASED AND HAD ACQUIRED SUBSTANTIAL DOMAIN OVER THE SAID RESIDENTI AL HOUSE AND SIMPLY BECAUSE THE BUILDER FAILED TO GIVE THE POSSESSION O F THE RESIDENTIAL HOUSE WITHIN TWO YEARS OF THE DATE OF SALE OF THE ORIGINAL ASSET WAS NOT A VALID REASON FOR DISALLOWING THE CLAIM OF THE APPELLANT. 7) THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR DELETE ANY OF THE ABOVE GROUNDS OF APPEAL. 3. THE LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET S UBMITTED THAT THE ASSESSEE IS ONE OF THE CO-OWNERS OUT OF THE 9 CO-OW NERS MENTIONED AT PARA 7 OF THE ORDER OF THE LD. CIT(A) AT PAGE NO.5 UNDE R IDENTICAL FACTS AND CIRCUMSTANCES THE TRIBUNAL IN THE CASE OF THE OTHER CO-OWNERS HAS HELD THAT THE ISSUE OF NOTICE U/S.147/148 IS FLAWED AND VOID AB-INITIO. THEREFORE, THIS BEING A COVERED MATTER THE GROUNDS RAISED BY THE AS SESSEE HAVE TO BE ALLOWED. 4. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHE R HAND FAIRLY CONCEDED THAT THE ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE TRIBUNAL IN THE CASE OF OTHER CO-OWNER S. 3 5. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A). WE FIND UNDER IDENTICAL FACTS AND CIRCUMSTANCES THE TRIBUNAL IN T HE CASE OF OTHER CO- OWNERS HAS HELD THE ISSUE OF NOTICE U/S.147 AS FLAW ED AND VOID AB-INITIO. THE RELEVANT OBSERVATIONS OF THE TRIBUNAL READS AS UNDER : 5. AT THE TIME OF HEARING, LD. COUNSEL FOR THE APP ELLANT HAS ASSAILED THE ACTION OF THE ASSESSING OFFICER IN INITIATING PROCE EDINGS U/S. 147/148 OF THE ACT, BY POINTING OUT THAT THE SAME ARE BAD IN LAW, IN AS MUCH AS SUCH PROCEEDINGS COULD NOT BE INITIATED IN RESPECT OF AN INCOME WHIC H HAD ALREADY BEEN SUBJECT TO AN ASSESSMENT FRAMED U/S. 158 BC/158BD OF THE ACT. ON THIS ASPECT, THE PLEA ADVANCED IS THAT ONCE THE ASSESSING OFFICER HAS PRO CEEDED TO MAKE BLOCK ASSESSMENT U/S. 158BC OR 158BD OF THE ACT CONSEQUEN T TO A SEARCH ACTION U/S. 132(1) OF THE ACT, THE ASSESSING OFFICER CANNOT, BA SED ON THE SAME MATERIAL, PROCEED TO INITIATE RE-ASSESSMENT PROCEEDINGS U/S. 147 OF THE ACT AND THAT TOO AFTER THE ASSESSMENT FRAMED U/S. 158BC R.W.S. 158BD OF THE ACT HAS BEEN SET ASIDE/QUASHED IN APPELLATE PROCEEDINGS. FOR THIS P ROPOSITION, RELIANCE HAS BEEN PLACED ON VARIOUS JUDGMENTS VIZ. 1) SMT. MIRA ANANTA NAIK VS. DY CIT, 15 DTR 8 (BO M ) 2) CARGO CLEARING AGENCY (GUJ) VS. JCIT, 307 ITR 1 (GUJ) 3) CIT VS. C. SIVANANDAN, 52 DTR 428 (KER.) 6. IN ORDER TO APPRECIATE THE AFORESAID FACET OF AN INVALID INVOKING OF SEC. 147 OF THE ACT AS CANVASSED BY THE APPELLANT, IT W OULD BE APPROPRIATE TO REFER TO THE BRIEF BACKGROUND OF THE CASE, WHICH IS AS FO LLOWS. THE APPELLANT HUF WAS A CO-OWNER OF A PIECE OF ANCESTRAL AGRICULTURAL LAN D AT VADGAON SHERI, PUNE. IT TRANSPIRES THAT THE ASSESSEE ALONG WITH OTHER CO-OW NERS TRANSFERRED THE RIGHT, TITLE AND INTEREST IN THE AFORESAID PROPERTIES TO M/S. MARIGOLD PREMISES PVT. LTD. (IN SHORT MPPL) THROUGH SEPARATE, BUT SIMILAR LY WORDED AGREEMENTS DATED 31.3.1998. IT ALSO EMERGES THAT AS MPPL COULD NOT MAKE THE PAYMENTS READILY, IT OFFERED RESIDENTIAL HOUSE AGAINST SALE CONSIDERA TION. IN THIS MANNER, THE APPELLANT FILED A RETURN OF INCOME FOR THE ASSESSME NT YEAR 1998-99 ON 2.11.1998, WHICH INTER ALIA, INCLUDED THE NET LONG TERM CAPITAL GAIN AT RS. 14,45,000/- ON SUCH TRANSFER. SUBSEQUENTLY, ON 30. 11.1998, THE ASSESSEE FILED A REVISED RETURN WHICH, INTER ALIA, DECLARED REVISED LONG TERM CAPITAL GAIN AT RS. 28,49,780/- WHICH WAS DETERMINED AS UNDER : INCOME FROM CAPITAL GAINS: RS. SALE OF RIGHTS OF LAND BEARING S.NO.15/1,15/2/1, 25,000,000 15/2/2, 15/3, 15/4, 15/5 AND 15/6 AT VADGAON SHERI , TAL. HAVELI, DIST. PUNE LESS: INDEXED COST OF ACQUISITION 1,655,000 LONG TERM CAPITAL GAINS : 23,345,000 LESS: INVESTMENT MADE IN HOUSE PROPERTY U/S. 54F(TA KEN 20,450,220 PROPORTIONATELY) 2,894,780 LESS: EXPENSES INCURRED IN CONNECTION WITH TRANSFE R 45,000 4 NET LONG TERM CAPITAL GAINS: 2,849,780 EVIDENTLY, THE DETERMINATION OF LONG TERM CAPITAL G AIN AT RS. 28,49,780/- INTER ALIA INCLUDED A CLAIM OF DEDUCTION U/S. 54F OF THE ACT AMOUNTING TO RS. 2,04,50,220/-. THE SAID RETURN OF INCOME WAS SUBJE CT TO SCRUTINY ASSESSMENT U/S. 143(3) OF THE ACT VIDE ORDER DATED 30.1.2001 . THE ASSESSING OFFICER EXAMINED THE COPY OF AGREEMENT DATED 31.3.1998 BETW EEN THE ASSESSEE AND MPPL. THE ASSESSING OFFICER EXAMINED ASSESSEES CL AIM OF DEDUCTION U/S. 54F OF THE ACT AND NOTICED THAT THE RESIDENTIAL HOUSE S OUGHT TO BE ACQUIRED BY THE ASSESSEE FROM MPPL IN LIEU OF THE SALE CONSIDERATI ON WAS NOT ONE HOUSE BUT FOUR SEPARABLE UNITS/BUNGALOWS. AS PER THE A.O, TH E ASSESSEE WAS TO BE ALLOWED DEDUCTION IN RESPECT OF THE PROPORTIONATE INVESTMENT IN ONE RESIDENTIAL UNIT ALONE AND HE ACCORDINGLY ALLOWED D EDUCTION U/S. 54F OF THE ACT ONLY TO THE EXTENT OF RS. 54.75 LAKHS. AS A RESULT , THE NET LONG TERM CAPITAL GAIN WAS DETERMINED AT RS. 1,81,97,300/-. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). THE CIT(A) AFFIRMED THE PROPORTIONATE DEDUCTION AS ALLOWED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER PASSED U/S. 143(3) OF THE ACT. INTERESTINGLY, IN THE COURSE OF SUCH APPE LLATE PROCEEDINGS, THE A.O CANVASSED BEFORE THE CIT(A) THAT EVEN THE PROPORTIO NATE DEDUCTION OF RS. 54,75,000/- ALLOWED IN THE ASSESSMENT ORDER WAS UNT ENABLE AND THE SAME BE DENIED SO AS TO RESULT IN AN ENHANCEMENT OF INCOME. THE ASSESSING OFFICER STATED SO, FOR THE REASON THAT THE ASSESSEE DID NOT OBTAIN DOMAIN OVER THE NEW RESIDENTIAL HOUSE WITHIN THE PERIOD SPECIFIED IN SE CTION 54F OF THE ACT INASMUCH AS SECTION 54F REQUIRED THAT THE NEW PROPERTY BE PU RCHASED WITHIN 2 YEARS OR CONSTRUCTED WITHIN 3 YEARS FROM THE DATE OF TRANSFE R OF ORIGINAL ASSET, AND SUCH PERIOD HAD LAPSED BY 17-4-1999 AND 17-4-2000 RESPEC TIVELY. THE CIT(A), HOWEVER, DID NOT ACCEPT THE PLEA OF THE ASSESSING O FFICER THAT THE ASSESSEE DID NOT ACQUIRE DOMAIN OVER THE NEW RESIDENTIAL UNIT SO AS TO DISENTITLE IT FROM EXEMPTION U/S. 54F OF THE ACT. THE CIT(A) VIDE HIS ORDER DATED 28.1.2002, HELD THAT THE ASSESSEE HAD ENTERED INTO AGREEMENT FOR P URCHASE OF THE NEW RESIDENTIAL UNIT ON 31.3.1998, WHICH WAS WITHIN TWO YEARS OF THE TRANSFER OF DEVELOPMENT RIGHTS IN LAND AND ENTIRE CONSIDERATIO N WAS ALSO PAID ON THE DATE OF AGREEMENT ITSELF BY ADJUSTMENT OUT OF SALE CONS IDERATION OF DEVELOPMENT RIGHTS. AS PER THE CIT(A), THE ASSESSEE ACQUIRED DOMAIN OVER THE NEW RESIDENTIAL UNIT AND THAT THE EXEMPTION COULD NOT BE DENIED U/S. 54F OF THE ACT MERELY BECAUSE THE PHYSICAL POSSESSION WAS NOT GIVE N TO THE ASSESSEE WITHIN THE STIPULATED PERIOD. PERTINENTLY, IN COMING TO SUCH CONCLUSION, THE CIT(A) RELIED UPON THE JUDGMENT AS HONBLE BOMBAY HIGH COURT IN T HE CASE OF MRS. HILLA JB WADIA, 216 ITR 376 (BOM). THE AFORESAID ORDER OF T HE CIT(A) IS STATED TO HAVE BECOME FINAL AS MENTIONED BY THE LD COUNSEL BEFORE US DURING THE COURSE OF HEARING AND THIS ASPECT HAS NOT BEEN CONTROVERTED B Y THE REVENUE BEFORE US. 7. FURTHER, IT APPEARS THAT A SEARCH ACTION U/S. 1 32(1) OF THE ACT WAS CONDUCTED ON 9-11-2000 AT THE RESIDENTIAL AND BUSIN ESS PREMISES OF THE MEMBERS OF VASCON GROUP. CONSEQUENTLY, A NOTICE U/ S. 158BD WAS ISSUED TO THE ASSESSEE ON 14.11.2002 IN ORDER TO ASSESS AN U NDISCLOSED INCOME FOR THE BLOCK PERIOD FROM 1-4-1990 TO 9-11-2000 AND AGAIN T HE ISSUE RELATING TO THE ACQUISITION OF DOMAIN BY THE APPELLANT OVER THE NEW RESIDENTIAL UNIT WITHIN THE STIPULATED PERIOD WAS RAISED. IN THE SUBSEQUENT AS SESSMENT FINALIZED U/S. 158BD OF THE ACT ON 30-11-2004, , THE ASSESSING O FFICER, INTER-ALIA, CONCLUDED THAT THE POSSESSION OF THE NEW RESIDENTIAL HOUSE WA S NOT TAKEN WITHIN THE PERIOD OF TWO YEARS FROM THE DATE OF TRANSFER OF DE VELOPMENT RIGHTS IN LAND. THOUGH THE ASSESSING OFFICER HELD DURING THE BLOCK ASSESSMENT PROCEEDINGS THAT THE CAPITAL GAIN WAS ASSESSABLE IN A.Y. 1997-9 8 AND NOT 1998-99 AS DECLARED BY THE ASSESSEE, BUT, ACCORDING TO HIM EVE N IF THE CAPITAL GAINS WAS TO BE CONSIDERED IN THE ASSESSMENT YEAR 1998-99, THE CLAIM OF EXEMPTION U/S. 54F OF THE ACT WAS NOT TENABLE FOR THE REASON THAT THE POSSESSION OF THE NEW 5 RESIDENTIAL UNITS WAS NOT GIVEN TO THE ASSESSEE WIT HIN THE PERIOD OF TWO YEARS. THE CLAIM WAS ACCORDINGLY DISREGARDED. THE ASSESS MENT SO MADE WAS CARRIED IN APPEAL BEFORE THE CIT(A), WHO VIDE ITS ORDER DAT ED 24.3.2005, HELD THAT THE STATED INCOME COULD NOT BE CONSTRUED AS AN UNDISCL OSED INCOME AND WAS OUTSIDE THE PURVIEW OF SEC. 158B(B) OF THE ACT. IT ALSO TRANSPIRES THAT THE AFORESAID ORDER OF THE CIT(A) DATED 24.3.2005 WAS A SUBJECT MATTER OF APPEAL BY THE REVENUE BEFORE THE TRIBUNAL AND THE APPEAL OF T HE REVENUE STANDS DISMISSED VIDE ITA NO. 1403/PN/05 AND OTHERS, DATED 26.10.2007. 8. MEANWHILE, THE A.O ON 29.3.2005, RECORDED REASO NS U/S 147 OF THE ACT TO THE EFFECT THAT CERTAIN INCOME HAD ESCAPED ASS ESSMENT IN AS MUCH AS THE DEDUCTION CLAIMED/ALLOWED U/S. 54F OF THE ACT WAS N OT IN ACCORDANCE WITH LAW. ACCORDINGLY, THE ASSESSING OFFICER ISSUED A NOTICE UNDER SECTION 148 OF THE ACT DATED 31-3-2005. AS PER THE A.O., THE ASSESSEE HA D NOT ACQUIRED THE DOMAIN OVER THE NEW RESIDENTIAL PROPERTY WITHIN THE STIPUL ATED PERIOD AND THEREFORE, THE INCOME TO THE EXTENT OF DEDUCTION ALLOWED U/S. 54F OF THE ACT OF RS.51,02,700/- WAS WRONG AND THE SAME WAS CHARGEABL E FOR THE A.Y. 1998-99. A COPY OF THE REASONS RECORDED HAS BEEN PLACED AT PAG E 58 OF THE PAPER BOOK , WHICH READS AS UNDER :- REASONS FOR THE BELIEF THAT INCOME HAS ESCAPED AS SESSMENT. THE ASSESSEE IS A CO-OWNER OF THE PROPERTY SITUATED AT VADGAON SHERI. S.NO. 15 ADMEASURING 45 ACRES AND 25 GUNTAS. THE O THER CO-OWNERS ARE NINE LEGAL HEIRS OF LATE SHRI. P.C. KHINVASARA INCLUDING THE ASSESSEE AND H.U. KHINVASARA HUF. THE NINE CO-OWNER INCLUDING THE AS SESSEE, NAMELY SHRI. MOTILAL P. KHINVASARA, SHRI. ANIL P. KHINVASARA, SM T. RATNAMAL & SHRI. MANOJ H. KHINVASARA, SMT. SUREKHABAI MUTHA, SMT. SHAKUNTALA GUGALE, SMT. NIRMALABAI GANDL SMT. SHANTABAI GANDHI, SMT. SARLABAI BORA, AN D SMT. KAMLABAI GUNDECHA HAVE SHOWN/RETURNED THE CAPITAL GAINS ON THE TRANSF ER OF THE RIGHTS OF THE AFORESAID PROPERTY IN ASSESSMENT YEAR 1998-99 (TOTA L SALE CONSIDERATION IS RS. 10.00 CRORES ) AND THEREFORE, THEY HAVE SHOWN CAPIT AL GAINS IN THE ASSESSMENT YEAR 1998-99. 2. THE ASSESSEE HAS NOT ACQUIRED THE DOMAIN OVER THE NEW RESIDENTIAL PROPERTY WITHIN THE STIPULATED TWO YEARS AS THE MAP FOR THE SAID PREMISES WERE NEITHER SANCTIONED NOR THE CONSTRUCTION HAS STARTED IN TWO YEARS FROM THE DATE OF TRANSFER OF THE ORIGINAL ASSET. 3. WHAT IS BEING TRIED TO BRING TO TAX HERE IS NOT UN-DISCLOSED INCOME, WITHIN THE MEANING OF 158B(B) OF THE INCOME-TAX ACT , FOR IT IS NOT AN INCOME WHICH HAS NOT BEEN OR WOULD NOT HAVE BEEN DISCLOSED FOR THE PURPOSES OF THE ACT,(AS ALSO BY THE CIT(A)-II, PUNE IN HIS ORDER DA TED 24-03-2005) BUT WHAT IS BEING BROUGHT TO HERE IS THE EXCESS DEDUCTION WHIC H HAS BEEN ALLOWED TO THE ASSESSEE IN A.Y. 1998-99, WHICH HAS ESCAPED ASSESSM ENT IN THAT PARTICULAR YEAR. I.E. ASSTT. YEAR 1988-99 WITH THE MEANING OF SECTIO N 147 OF THE INCOME-TAX ACT, AND THEREFORE, I AM SATISFIED AND HAVE REASON TO BE LIEVE THAT THE DEDUCTION CLAIMED/ALLOWED UNDER SECTION 54 F OF THE I.T. ACT, IN A.Y 1998-99 BY THE ASSESSEE IS NOT IN ACCORDANCE WITH THE LAW. 4. THEREFORE, I AM SATISFIED AND HAVE REASON TO BEL IEVE THE INCOME TO THE EXTENT DEDUCTION ALLOWED UNDER SECTION 54 F OF THE I.T. ACT, IN 1998-99, WHICH COMES TO RS. RS.51,03,700/- CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT IN A.Y. 1998-99. SD/- (P.W. ATHALYE) 6 DY. COMMISSIONER OF INCOME TAX, CENTRAL CIR 2(3), PUNE DATE: 29-03-2005 PUNE 9. THEREAFTER, THE ASSESSING OFFICER PASSED AN ORDE R U/S 143(3) R.W.S. 147 OF THE ACT DATED 30-3-2006 AND DISALLOWED THE CLAIM OF DEDUCTION MADE U/S 54F OF THE ACT. NOW IN THE AFORESAID BACKGROUND, IT IS ARG UED BY THE APPELLANT THAT BELIEF ENTERTAINED BY THE ASSESSING OFFICER THAT CE RTAIN INCOME HAS ESCAPED ASSESSMENT BY REASON OF INCORRECT ALLOWING OF DEDUC TION U/S 54F OF THE ACT FOR THE REASON THAT THE ASSESSEE HAD NOT ACQUIRED THE D OMAIN OVER THE NEW RESIDENTIAL PROPERTY WITHIN THE STIPULATED TWO YEAR S IS UNTENABLE. AS PER THE APPELLANT, THE SAID ISSUE WAS A SUBJECT MATTER OF C ONSIDERATION IN THE BLOCK ASSESSMENT FRAMED U/S. 158BC R.W.S. 158BD OF THE AC T DATED 30-11-2004 AND THE SAME POINT CANNOT BE NOW TAKEN UP BY THE ASSES SING OFFICER TO HOLD THAT ANY INCOME HAS ESCAPED ASSESSMENT WITHIN THE MEANIN G OF SEC. 147/148 OF THE ACT ESPECIALLY IN VIEW OF THE FACT THAT THE BLOCK A SSESSMENT HAS BEEN CONSIDERED UNTENABLE BY THE CIT(A) AND AS WELL AS BY THE TRIBU NAL,. 10. PER CONTRA, THE PLEA OF THE LD. DEPARTMENTAL RE PRESENTATIVE BEFORE US WAS TO THE EFFECT THAT THE SCOPE OF ASSESSMENT U/S. 158BC/158BD IS QUITE DIFFERENT IN AS MUCH AS, THE SAME SEEKS TO TAX ON LY UNDISCLOSED INCOME FOUND AS A RESULT OF SEARCH WHEREAS AN ASSESSMENT U/S. 14 7 IS TO CHARGE TAX ON AN INCOME WHICH HAD ESCAPED ASSESSMENT. WITH REFERENC E TO THE REASONS RECORDED BY THE ASSESSING OFFICER WHICH ARE REPRODUCED ABOVE , THE LD CIT DEPARTMENTAL REPRESENTATIVE POINTED OUT THAT IT IS ONLY THE EX CESSIVE DEDUCTION ALLOWED TO THE ASSESSEE IN THE ASSESSMENT YEAR 1998-99, WHICH IS SOUGHT TO BE RECTIFIED BY INITIATING PROCEEDINGS U/S. 147/148 OF THE ACT. IT WAS THUS CONTENDED THAT THE INITIATION OF PROCEEDINGS U/S. 147/148 OF THE ACT A RE VALID. 11. IN THE AFORESAID BACKGROUND, FACTUALLY IT IS E VIDENT THAT THE ENTIRE CONTROVERSY IS AS A CONSEQUENCE OF AN AGREEMENT EXE CUTED WITH MPPL WHEREBY THE ASSESSEE TRANSFERRED ITS SHARE OF THE DEVELOPME NT RIGHTS IN THE LAND AT VADGAON SHERI. THE ASSESSEE HAD DECLARED CAPITAL G AINS AS A CONSEQUENCE OF SUCH AGREEMENT IN THE RETURN OF INCOME FILED ORIGI NALLY U/S. 139(1) OF THE ACT WHICH WAS SUBSEQUENTLY REVISED MAKING A CLAIM FOR E XEMPTION U/S. 54F OF THE ACT. THE CLAIM OF EXEMPTION WAS WITH RESPECT TO AC QUISITION OF A RESIDENTIAL HOUSE FROM MPPL IN LIEU OF THE SALE CONSIDERATION. FACTUALLY, THESE ASPECTS WERE SUBJECT MATTER OF CONSIDERATION BY THE ASSESSI NG OFFICER WHILE FINALIZING THE ASSESSMENT U/S. 143(3) OF THE ACT ON 30-1-2001 WHEREIN PARTIAL DEDUCTION U/S. 54F WAS ALLOWED. THIS PARTIAL ALLOWANCE HAD SI NCE BEEN AFFIRMED BY THE CIT(A) IN AN APPEAL PREFERRED BY THE ASSESSEE VIDE HIS ORDER DATED 28-1-2002. SIMILARLY, EVEN CONSEQUENT TO SEARCH U/S. 132(1) OF THE ACT ON VASCON GROUP, ASSESSMENT PROCEEDINGS WERE INITIATED IN THE CASE O F THE ASSESSEE U/S. 158 BD OF THE ACT WHEREIN ALSO THE ENTIRE GAMUT OF THE CAP ITAL GAIN ARISING OUT OF THE AGREEMENT WITH MPPL AND THE ASSESSEES CLAIM FOR EX EMPTION U/S. 54F OF THE ACT WAS A SUBJECT MATTER OF CONSIDERATION. IN THE S AID PROCEEDINGS ALSO, THE ASSESSING OFFICER, INTER ALIA WAS OF THE VIEW THAT DEDUCTION UNDER SEC. 54F WAS NOT ALLOWABLE IN AS MUCH AS THE ASSESSEE DID NOT A CQUIRE DOMAIN OVER THE NEW RESIDENTIAL UNITS WITHIN THE STIPULATED PERIOD. S UCH BLOCK ASSESSMENTS HAVE BEEN FOUND LACKING IN JURISDICTION BY THE CIT(A) AN D THEREAFTER BY THE TRIBUNAL, AS NOTED EARLIER. IN SUM AND SUBSTANCE, FACTUALLY SPEAKING THE ISSUE RAISED BY THE ASSESSING OFFICER IN THE IMPUGNED PROCEEDINGS U/S. 147/148 OF THE ACT NAMELY, LACK OF ACQUIRING OF DOMAIN BY THE ASSESSE E OF THE NEW RESIDENTIAL UNIT WITHIN THE STIPULATED PERIOD WAS A SUBJECT MATTER O F CONSIDERATION IN THE 7 ASSESSMENT PROCEEDINGS U/S. 143(3) OF THE ACT AS WE LL AS DURING THE BLOCK ASSESSMENT PROCEEDINGS U/S. 158BD OF THE ACT. THER EFORE, IT IS IN THIS BACKGROUND, ONE HAS TO EXAMINE WHETHER THE ASSESSIN G OFFICER WAS JUSTIFIED IN VALIDLY FORMING A BELIEF THAT CERTAIN INCOME HAS ES CAPED ASSESSMENT BY WAY OF DEDUCTION HAVING BEEN ALLOWED U/S. 54 F IN THE ASS ESSMENT FRAMED U/S. 143(3) DATED 30-1-2001 WITHIN THE MEANING OF SEC. 147 OF THE ACT. 12. IN THE AFORESAID BACKGROUND, ONE HAS TO EXAMINE AS TO WHETHER THE PROCEEDINGS INITIATED BY THE ISSUANCE OF NOTICE U/S 148 OF THE ACT IS VALID OR NOT. THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CARGO CLEARING AGENCY (SUPRA) HAS OBSERVED THAT ONCE THE BLOCK ASSESSMENT U/S 158 BA IN RELATION TO THE UNDISCLOSED INCOME FROM THE BLOCK PERIOD AS A CONSE QUENCE OF SEARCH IS CARRIED OUT, THE ASSESSING OFFICER WOULD NOT BE JUSTIFIED I N ISSUING NOTICE U/S 148 OF THE ACT FOR REOPENING SUCH ASSESSMENT. IN THIS CONTEXT , REFERENCE WAS MADE TO THE FIRST PROVISO BELOW SEC. 158BC(A) OF THE ACT WHICH SPECIFICALLY CONTAINS A CAVEAT THAT NO NOTICE U/S 148 IS TO BE ISSUED FOR THE PURP OSES OF PROCEEDINGS UNDER CHAPTER XIV-B OF THE ACT. FURTHER, IT MAY ALSO BE NOTED THAT SO FAR AS THE INCOME ESCAPING ASSESSMENT IN THIS CASE I.E. ALLOWI NG OF DEDUCTION U/S 54F OF THE ACT IS CONCERNED, IT WAS ALREADY A SUBJECT MATT ER OF CONSIDERATION IN THE BLOCK ASSESSMENT. IN APPEAL, SUCH BLOCK ASSESSMENT HAS NOT BEEN HELD TO BE TENABLE. SO HOWEVER, IT WOULD NOT FOLLOW THAT SUCH INCOME CAN BE CONSTRUED AS ESCAPED INCOME CHARGEABLE TO TAX U/S 147 OF THE ACT . IN SIMILAR CIRCUMSTANCES, THE HONBLE HIGH COURT OF ALLAHABAD IN THE CASE OF VISHWANATH PRASAD ASHOK KUMAR SARAF VS. CIT & ORS. (2010) 235 CTR (ALL) 367 HAS HELD THAT ONCE A PARTICULAR AMOUNT HAS BEEN CONSIDERED IN THE BLOCK ASSESSMENT IT CANNOT BE THEREAFTER TREATED AS AN ESCAPED INCOME WITHIN THE MEANING OF SEC. 147/148 OF THE ACT. 13. FURTHER, IN THE CASE OF CIT VS. C. SIVANANDAN ( 2011) 52 DTR (KER) 428, HONBLE KERALA HIGH COURT WAS CONSIDERING A SITUATI ON WHERE THE ASSESSING OFFICER HAD INITIATED PROCEEDINGS U/S 147/148 OF TH E ACT, TO TAX CERTAIN INCOME WHICH ACCORDING TO THE REVENUE HAD ESCAPED ASSESSME NT. THE HONBLE KERALA HIGH COURT NOTICED THAT THE BLOCK ASSESSMENT WAS MA DE BY THE ASSESSING OFFICER BASED ON MATERIAL GATHERED DURING THE SEARC H U/S132 OF THE ACT AND ON THE BASIS OF THE SAME MATERIAL AFTER BLOCK ASSESSME NT WAS CANCELLED BY THE APPELLATE AUTHORITIES, THE ASSESSING OFFICER PROCEE DED TO MAKE THE RE- ASSESSMENT U/S 147 OF THE ACT. ACCORDING TO THE HO NBLE HIGH COURT, THE ASSESSING OFFICER HAD NO JURISDICTION TO ASSESS THE VERY SAME AMOUNT WHICH WAS CONSIDERED IN THE BLOCK ASSESSMENT. IN THIS REGARD , FOLLOWING OBSERVATIONS IN THE ORDER OF THE HONBLE HIGH COURT IS WORTHY OF NOTICE :- EVEN THOUGH BLOCK ASSESSMENT UNDER SECTION 158BC A ND INCOME ESCAPING ASSESSMENT UNDER SEC. 147 CAN PROBABLY BE MADE FOR THE SAME PERIOD ON DIFFERENT BASIS, WE DO NOT THINK ASSESSME NTS COULD BE SUCCESSIVELY MADE ONE AFTER ANOTHER FOR THE SAME PE RIOD UNDER THE PROVISIONS BASED ON THE SAME MATERIALS. ONCE MATERI ALS ARE GATHERED EITHER DURING SEARCH UNDER SEC. 132 OR DURING SURVE Y U/S 132A IT IS UPTO THE AO TO MAKE BLOCK ASSESSMENT U/S 158BC OR IF HE FEELS THAT INCOME ESCAPING ASSESSMENT IS CALLED FOR U/S 147, IT IS UP TO HIM TO ELECT BETWEEN THE TWO AND MAKE ASSESSMENT UNDER THE PROVISION HE FIND APPROPRIATE. HOWEVER, ONCE THE AO AFTER CONDUCTING SEARCH AND BA SED ON MATERIALS GATHERED DURING SEARCH U/S 132, PROCEEDS TO MAKE TH E ASSESSMENT UNDER SEC. 158BC, THEN HE CANNOT, BASED ON THE SAME MATER IALS WHICH IN THIS CASE IS DEPOSIT AMOUNTS FOUND DURING SEARCH ASSESSM ENT WAS CANCELLED BY THE FIRST APPELLATE AUTHORITY. THE AO OBVIOUSLY CANNOT GET OVER THE FINDINGS IN THE ORDER OF THE FIRST APPELLATE AUTHOR ITY AGAINST A BLOCK 8 ASSESSMENT BY INVOKING POWERS UNDER SEC. 147. DURI NG BLOCK ASSESSMENT, THE AO OBVIOUSLY CONSIDERED AS TO WHETH ER BANK DEPOSITS IN THE NAMES OF FAMILY MEMBERS OF THE ASSESSEE FOUND D URING SEARCH REPRESENT HIS UNDISCLOSED INCOME BUT ACCEPTED THE A SSESSEES CONTENTION THAT THE SAME BELONG TO HIS FAMILY MEMBERS. RIGHTL Y OR WRONGLY ONLY THE INTERESTS FROM THESE DEPOSITS WERE ASSESSED AS PART OF UNDISCLOSED INCOME OF THE ASSESSEE FOR THE BLOCK PERIOD. IN APP EAL, THE CIT(A) CANCELLED THE ASSESSMENT ON INTEREST INCOME. WE ARE OF THE VIEW THAT THE AO CANNOT AFTER CANCELLATION OF BLOCK ASSESSMEN T BY THE CIT(A) PROCEED TO MAKE AN INCOME ESCAPING ASSESSMENT FOR A SSESSING THE VERY SAME BANK DEPOSITS AS ESCAPED INCOME. WE DO NOT TH INK THE AO HAS JURISDICTION TO ASSESS THE VERY SAME AMOUNT, WHICH WAS CONSIDERED AND GIVEN UP WHILE MAKING BLOCK ASSESSMENT. EVEN THOUGH LEARNED COUNSEL SUBMITTED THAT DEPOSIT AMOUNTS WERE NOT CONSIDERED IN BLOCK ASSESSMENT, WE CANNOT ACCEPT IT BECAUSE WHEN INTERE ST FROM THE SAME DEPOSITS WERE ASSESSED AS UNDISCLOSED INCOME OF THE BLOCK PERIOD, IT CAN BE LEGITIMATELY ASSUMED THAT THE OFFICER CONSIDERED THE DEPOSIT AMOUNTS FOR ASSESSMENT BUT GAVE UP THE SAME. IN THIS CONTEX T, THE FINDINGS OF THE TRIBUNAL THAT REASSESSMENT UNDER SEC. 147 IS A RESU LT OF CHANGE OF OPINION OF THE AO CANNOT BE SAID TO BE ILLEGAL OR I NCORRECT BECAUSE WHAT WAS TREATED AS UNDISCLOSED INCOME IN BLOCK ASSESSME NT IS LATER TREATED ESCAPED INCOME IN ANOTHER ROUND OF ASSESSMENT UNDER A DIFFERENT PROVISIONS OF THE ACT (SEC. 147) WHICH IN OUR OPINI ON IS IMPERMISSIBLE. 14. THE AFORESAID LEGAL POSITION IS ALSO IN LINE WI TH THE JUDGMENT OF HONBLE BOMBAY HIGH COURT IN THE CASE OF SMT. MIRA ANANTA N ASIK VS. DY. CIT (I(INVESTIGATION) (2009) 183 TAXMAN 40 (BOM). THE FOLLOWING OBSERVATIONS OF THE HONBLE HIGH COURT ARE WORTHY OF NOTICE:- THERE IS MUCH SUBSTANCE IN THE CONTENTIONS OF SHRI NADKARNI THAT THE SEARCH HAVING RESULTED IN BLOCK ASSESSMENT. IN THESE PROC EEDINGS THE INCOME TAX ASSESSED AND TAXED AFTER IT WAS BROUGHT TO THE NOTI CE OF THE AO. MERELY BECAUSE THE BLOCK ASSESSMENT WAS NOT UPHELD BY THE AUTHORITIES UNDER THE INCOME-TAX ACT, IT CANNOT BE REASON ENOUGH IN THIS CASE TO INVOKE SEC. 147 OF THE SAME. 15. IN THE BACKGROUND OF THE AFORESAID LEGAL POSITI ON, IN THE PRESENT CASE, IT EMERGES THAT THE PROCEEDINGS U/S 147 OF THE ACT HAD BEEN INITIATED SOLELY WITH THE OBJECTIVE OF SOMEHOW TAXING INCOME WHICH THE RE VENUE COULD NOT SUCCESSFULLY DO AT THE TIME OF ASSESSMENT PROCEEDIN GS U./S 143(3) OR IN THE BLOCK ASSESSMENT PROCEEDINGS U/S 158BC OF THE ACT. THOUG H THE BLOCK ASSESSMENT U/S 158BC AND ASSESSMENT OF AN INCOME U/S 147 WHICH HAD ESCAPED ASSESSMENT EARLIER CAN BE MADE FOR THE SAME PERIOD, ON DIFFERE NT BASIS, SO HOWEVER, IT WOULD NOT BE APPROPRIATE THAT BOTH ASSESSMENTS CAN BE SUCCESSFULLY MADE ONE AFTER ANOTHER FOR THE SAME PERIOD UNDER THE RESPECT IVE PROVISIONS BASED ON THE SAME MATERIALS. ONCE THE MATERIAL GATHERED DURING THE COURSE OF SEARCH U/S 132 IS CONSIDERED IN THE BLOCK ASSESSMENT U/S 158BC OF THE ACT, THEREAFTER IT IS NOT OPEN FOR THE ASSESSING OFFICER TO INITIATE PROC EEDINGS U/S 147 OF THE ACT ON THE SAME ISSUE MERELY BECAUSE THE CONDITIONS IN THE BLOCK ASSESSMENT PROCEEDINGS WERE NOT FOUND SUSTAINABLE. IN THIS CO NTEXT, THE REASONS RECORDED BY THE ASSESSING OFFICER, REPRODUCED IN THE EARLIER PART OF THIS ORDER DO NOT SHOW ANY REASONABLE BASIS FOR THE ASSESSING OFFICER TO C ONCLUDE THAT THERE WAS ANY ESCAPEMENT OF INCOME. CLEARLY, THE INITIATION OF P ROCEEDINGS U/S 147 BASED ON SUCH REASONS RECORDED DID NOT MEET WITH THE REQUIRE MENT OF SEC. 147 OF THE ACT AS UNDERSTOOD IN THE AFORESAID JUDICIAL PRONOUNCEME NTS. IN THIS VIEW OF THE MATTER, HAVING REGARD TO THE AFORESAID LEGAL POSITI ON, THE INITIATION OF PROCEEDINGS BY ISSUANCE OF NOTICE U/S 147/148 IN TH E PRESENT CASE IS FLAWED AND VOID ABINITIO. THE PRELIMINARY GROUND ON THE POINT OF LAW SO RAISED BY THE 9 ASSESSEE IS UPHELD AND ACCORDINGLY, THE IMPUGNED AS SESSMENT IS HELD AS INVALID. SINCE THE POINT OF LAW CANVASSED BY THE ASSESSEE IS FOUND TO BE JUSTIFIED AND THE ASSESSMENTS HAVE BEEN HELD TO BE INVALID, THE SUBSE QUENT GROUND RELATING TO MERITS OF THE DISPUTE IS RENDERED ACADEMIC AND DOES NOT REQUIRE ADJUDICATION. 16. IN THE RESULT, THE APPEALS OF THE ASSESSEE IS A LLOWED. 6. FACTS BEING SIMILAR TO THAT OF THE FACTS IN THE CASE OF THE OTHER CO- OWNERS, THEREFORE, RESPECTFULLY FOLLOWING THE DECIS ION OF THE COORDINATE BENCH OF THE TRIBUNAL AND IN ABSENCE OF ANY CONTRAR Y MATERIAL BROUGHT TO OUR NOTICE WE ALLOW THE PRELIMINARY GROUND RAISED B Y THE ASSESSEE CHALLENGING THE VALIDITY OF RE-OPENING OF THE ASSES SMENT. SINCE THE ASSESSEE SUCCEEDS ON THIS PRELIMINARY GROUND, THERE FORE, THE OTHER GROUNDS BEING ACADEMIC IN NATURE ARE NOT BEING ADJUDICATED. THE APPEAL FILED BY THE ASSESSEE IS ACCORDINGLY ALLOWED. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS THE 31ST DAY OF MAY, 2013. SD/- SD/- (SHAILENDRA KUMAR YADAV) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED : 31 ST MAY 2013 SATISH COPY OF THE ORDER IS FORWARDED TO : 1. THE ASSESSEE 2. THE DEPARTMENT 3. THE CIT(A) CENTRAL, PUNE 4. THE CIT-IV, PUNE 5. D.R. B BENCH, PUNE 6. GUARD FILE BY ORDER // TRUE COPY // PRIVAT E SECRETARY, INCOME TAX APPELLATE TRIBUNAL, PUNE