Yashwant kanoria, Kolkata V. ITO, Ward 32(2)/ Kolkata, Kolkata

ITA 35/KOL/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0710 (ITAT-KOLKATA)
• Duration Of Justice: 11 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-12-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 12-06-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 09-01-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MD USMAN CIT LD
• Assessee Lawyers: K M ROY FCA LD
• Keywords: Revision of order; Rectification of order; Assessment record
• Section: 143(3); 54B; 142(1); 10B; 54; 263; 63; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL : B BE NCH, KOLKATA BEFORE : SHRI P.M. JAGTAP, ACCOUNTANT MEMB ER AND SHRI S.S.VISWANETHRA RAVI, JUDICIAL MEMBER ITA NO. 35/KOL/2017 A.Y 2012-13 YASHWANT KANORIA VS. INCOME-TAX OFFICER PAN: AFQPK 5663J WARD 32(2), KOLKATA [APPELLANT ] [RESPONDENT ] APPELLANT BY : SHRI K.M.ROY, FCA, LD.AR RESPONDENT BY : MD. USMAN,CIT, LD.DR DATE OF HEARING : 09-10-2017 DATE OF PRONOUNCEMENT : 13-12-2017 ORDER SHRI S.S.VISWANETHRA RAVI, JM: THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER DT. 09-11-2016 OF THE CIT-11, KOLKATA FOR THE A.Y 2012-13 PASSED U/S . 263 OF THE ACT. 2. THE CIT WHILE EXAMINING THE RECORDS RELATING TO THE PRESENT APPEAL AND ON PERUSAL OF SALE DEED ALONG WITH REPORT OF IN COME-TAX INSPECTORS REPORT FOUND THAT TWO PLOTS OF LAND BEARING NOS. 13 8 (CONTAINING 21 DECIMALS OF LAND) AND 139 (CONTAINING 18 DECIMALS O F LAND) ARE NOT AGRICULTURAL LAND AND THE SAME ARE BASTU LAND [R ESIDENTIAL LAND] AND EXISTING A 13 YEAR OLD CEMENTED FLOORED TIN SHED SI NGLE STORIED RESIDENTIAL HOUSE MEASURING 3000 SQ.FT STANDING THEREUPON AND HE WAS OF THE OPINION THAT RESIDENTIAL LAND AND HOUSE DOES NOT QU ALIFY FOR EXEMPTION U/S. 54B OF THE ACT. ACCORDINGLY, A SHOW CAUSE NOTI CE DT. 7-4-2016 U/S. 263 OF THE ACT WAS ISSUED TO ASSESSEE REQUIRING HIM TO EXPLAIN HOW THE ENTIRE AMOUNT OF RS.67,45,086/- CLAIMED AS EXEMPTIO N UNDER THE HEAD SALE OF AGRICULTURAL LAND U/S. 54B OF THE ACT. I N RESPONSE TO WHICH, THE ASSESSEE CONTENDED THAT THE COPY OF THE INSPECTOR R EPORT WAS NOT CONFRONTED TO THE ASSESSEE AND THE PLOT BEARING NOS . 138 & 139 THOUGH CLASSIFIED AS BASTU LAND, BUT DO NOT HAVE ANY IND EPENDENT EXISTENCE. THE ITA NO. 35/KOL/2017 YASHWANT KANORIA 2 SAME WAS USED FOR AGRICULTURAL PURPOSE AND SAID PL OTS WERE SURROUNDED BY AGRICULTURAL LAND ON BOTH SIDES. THERE CANNOT BE ANY SEPARATE USAGE OF THESE TWO PLOTS. FURTHER, SUBMITTED THAT THE DETAI LS OF AGRICULTURAL LAND WAS SUBMITTED BEFORE THE AO AND ON EXAMINATION OF W HOLE SKETCH OF AGRICULTURAL LAND AND SATISFIED, THEREBY EXEMPTED T HE ENTIRE PROFIT ON SALE OF LAND U/SEC. 54B OF THE ACT. THE ASSESSEE ALSO CO NTENDED THAT THE SAID 3000 SQ.FT SINGLE STORIED TIN SHED WAS USED AS GODO WN FOR STORING AGRICULTURAL PRODUCE, I.E. FERTILIZER ETC. IT HAS N O FIXED ROOF AND IT CAN BE TERMED AS TEMPORARY SHED AS IT DOES NOT CONTAIN OTH ER FACILITIES I.E. ROOMS, ELECTRICITY, WATER ETC. 3. CONSIDERING THE ABOVE SUBMISSIONS THE CIT HAS OP INED THAT THE ISSUE RAISED IN THE SHOW CAUSE NOTICE REQUIRES ENQ UIRIES REGARDING NATURE AND USE OF BASTU LAND, AND, THEREFORE, DIRECTED THE AO TO INITIATE FRESH ASSESSMENT PROCEEDINGS AND TO CARRY OUT NECESSARY E NQUIRIES AND VERIFICATION AND PASS A FRESH ORDER IN ACCORDANCE W ITH LAW. RELEVANT FINDINGS OF CIT GIVEN AT PARAS 5 & 6 ARE REPRODUCED HEREIN BELOW:- 5. THE POWER OF REVISION BY THE CIT U/S 263 OF TH E ACT IS VERY WIDE AND IT IS IN THE NATURE OF SUPERVISORY JURISDICTION. THE POWER U/S 2 63 CAN BE EXERCISED EVEN IN CASES WHERE THE ISSUE IS DEBATABLE AND SUCH POWER IS NOT COMPARABLE WITH THE POWER OF RECTIFICATION OF MISTAKE U/S 154 OF THE INCOME TAX ACT. IT IS WELL SETTLED THAT INCORRECT ASSUMPTION OF FACTS OR APPLICATION OF LAW SATISFIES THE REQUIREMENT OF LAW I.E. ORDER BEING ERRONEOUS & PREJUDICIAL TO THE INTEREST OF REVENUE. THE ORDER PASSED BY THE A.O. WITHOUT APPLICATION OF MIND OR ORDER SHOWING APPARENT ERROR OF REASONING OR THE ORDER WHERE THE A.O. SIMPLY ACCEPTS WHERE THE ASSESSEE STATED IN HI S RETURN OF INCOME AND FAILS TO MAKE THE ENQUIRIES WHICH ARE CALLED FOR IN THE FACTS AND CIRCUMSTANCES OF THE CASE WILL ALSO CALL FOR INTERVENTION U/S 263 OF THE ACT BY THE CIT/PR. CIT. IT IS A TRITE LAW THAT THE DISCLOSURE OF FACTS BY THE ASSESSEE IN THE RETURN OF INCOME AND F OR IN THE COURSE OF ASSESSMENT PROCEEDINGS CANNOT GIVE IMMUNITY FROM REVISIONAL JU RISDICTION OF THE CIT/PR. CIT U/S 263. THE ABOVE POSITION OF THE LAW HAS BEEN REITERATED B Y THE HON 'BLE SUPREME COURT IN VARIOUS DECISIONS INCLUDING THAT OF RAMPYARI DEVI S ARAOGI VS. CIT (1968) 67 ITR 84 (SC), TARA DEVI AGARWAL VS. CIT (1973) 88 ITR 323 (SC), M ALABAR INDUSTRIES CO.LTD VS. CIT (1991) 198 ITR 611 (KERALA) WHICH WAS AFFIRMED BY S UPREME COURT IN 243 ITR 83. 6. I HAVE CAREFULLY CONSIDERED THE SUBMISSION MADE ON BEHALF OF THE ASSESSEE AND PERUSED THE MATERIAL ON RECORD. THE SUPPORTING EVID ENCES HAVE ALSO BEEN EXAMINED. AFTER HAVING CONSIDERED THE POSITION OF LAW AND FACTS AND CIRCUMSTANCES OF THE INSTANT CASE, THE ASSESSMENT ORDER PASSED BY THE A.O IS FOUND TO BE E RRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE AND HENCE THE ASSESSMENT ORDER PASSED BY THE AO IS SET ASIDE IN RESPECT OF THE POINT STATED IN PARA-2 ABOVE. I AM O F THE CONSIDERED VIEW THAT THE ISSUE REQUIRES A THOROUGH AND COMPREHENSIVE PHYSICAL ENQU IRY REGARDING THE NATURE OF USE OF THE BASTU PLOTS. THE AO IS ACCORDINGLY DIRECTED T O INITIATE FRESH ASSESSMENT PROCEEDINGS AND CARRY OUT NECESSARY ENQUIRIES/VERIFICATION AND THEREAFTER A FRESH ASSESSMENT ORDER IS TO BE PASSED IN ACCORDANCE WITH THE RELEVANT PROVIS IONS OF LAW. 4. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 5. THE LD.AR SUBMITS THAT THE AO EXAMINED ALL THE DETAILS CAREFULLY REGARDING THE SALE CONSIDERATION AND CLASSIFICATION OF LAND THEREIN AND ITA NO. 35/KOL/2017 YASHWANT KANORIA 3 FOUND THAT THE CLAIM OF THE ASSESSEE IS ACCEPTABLE AND ACCORDINGLY, GRANTED ALLOWANCE OF EXEMPTION U/S. 54B OF THE ACT. THE CIT DID NOT DECIDE THE ISSUE ON MERITS AND TREATED THAT THE ORD ER OF THE AO IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE IS BAD UNDER LAW. THE CIT SIMPLY DIRECTED THE AO TO CONDUCT THOROUGH AND COMPREHENSIVE PHYSICAL ENQUIRY, WHICH IS NOT IN ACCORDANCE WITH T HE LAW. THE LD.AR REITERATED HIS SAME SUBMISSIONS AS MADE BEFORE THE CIT IN RESPONSE TO SHOW CAUSE NOTICE ISSUED AND REFERRED TO ADOPT THE SAME IN SUPPORT OF GROUNDS RAISED BY THE ASSESSEE BEFORE THIS TRIBUNAL . THE LD.AR OF THE ASSESSEE ALSO REFERRED TO PAGE 10 OF THE PAPER BOOK AND ARGUED THAT THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS ISSU ED NOTICE DT. 25-06- 2014 REQUIRING ALL THE DETAILS AND ACCORDINGLY, TH E ASSESSEE SUBMITTED THE SAME AND IN RESPECT OF DETAILS OF AGRICULTURAL INCO ME AT S.NO. 7 OF THE SAID NOTICE AND CONSIDERING THE SAME, THE AO ALLOWED EX EMPTION U/SEC. 54B OF THE ACT, WHICH CANNOT BE HELD AS ERRONEOUS AND P REJUDICIAL TO THE INTEREST OF THE REVENUE. 6. THE LD. DR SUBMITS THAT THE AO DID NOT LOOK INTO THE CONCERNED ISSUE RAISED BY THE CIT AND THE ORDER PASSED BY THE AO DO ES NOT CONTAIN ANY THING IN THIS REGARD. THE LD.DR ALSO SUBMITS THAT THE AO DID NOT BRING ON RECORD ANYTHING REGARDING ENQUIRIES MADE IN RESPECT OF NATURE OF LAND AND SIMPLY GRANTED ALLOWANCE OF EXEMPTION U/S. 54B OF T HE ACT, WHICH IS NOT AT ALL PERMISSIBLE IN VIEW OF THE FACTS AND CIRCUMSTAN CES DECIDED BY THE CIT. THE ASSESSEE DID NOT EXPLAIN THE SAID ISSUE BEFORE THE AO AND THE AO CONDUCTED NO ENQUIRY, WHICH IS CLEAR FROM THE ORDER OF THE AO AND THERE CANNOT BE ANY PRESUMPTION THAT THE ASSESSEE SUBMITT ED THE DETAILS AND AO CONDUCTED PROPER ENQUIRY. THE CIT WHILE EXAMINI NG THE ASSESSMENT RECORDS ALONG WITH INSPECTORS REPORT FOUND THAT TH E AO DID NOT EXAMINE THE ISSUE AND GRANTED ALLOWANCE BASING ON THE ASSES SEES CONTENTION WITHOUT ANY ENQUIRY. IN SUPPORT OF HIS CONTENTION, HE RELIED ON THE ORDER OF THE AO. ITA NO. 35/KOL/2017 YASHWANT KANORIA 4 7. HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE LD.DR HAS RIGHTLY POINTED OUT THAT THERE WAS NO DISCUSSION AT ALL BY THE AO IN RESPECT OF GRANTING OF EXEMPTION U/S. 54 B OF THE ACT. BUT, HOWEVER, IT IS OBSERVED THAT THE AO S OUGHT INFORMATION REGARDING 7 ITEMS MENTIONED IN THE SAID NOTICE, WH ICH IS PLACED IN THE PAPER BOOK. ON PERUSAL OF THE SAME, IT IS CLEAR THA T THE AO SOUGHT DETAILS OF AGRICULTURAL INCOME. IN RESPONSE TO WHICH, THE A SSESSEE SUBMITTED A LETTER DT. 14-07-2014 STATING THAT THE SAID DOCUMEN TS HAVE ALREADY BEEN SUBMITTED ON 22-11-2013 AND ACCORDINGLY REQUESTED T HE AO TO REFER THE SAME. ADMITTEDLY, THE SAID DETAILS WERE SUBMITTED PRIOR TO THE ISSUANCE OF NOTICE DT. 25-06-2014 U/S. 142(1) OF THE ACT AND IT CLEARLY RAISES A DOUBT WHETHER THE ASSESSEE SUBMITTED THE SAME IN RESPECT OF AGRICULTURAL INCOME OR NOT. IT IS ALSO NOTICED THAT THE INCOME-T AX INSPECTORS REPORT DT. 21-01-2015 WAS SUBMITTED PRIOR TO THE ASSESSMEN T ORDER PASSED U/S. 143(3) OF THE ACT I.E ON 26-02-2015. BUT, HOWEVER, WE COULD NOT FIND ANY REFERENCE TO THE SAID INSPECTORS REPORT REGARDING NATURE OF PLOT BEARING NOS. 138 & 139 ARE BASTU LAND IN A.OS ORDER. IT APPEARS THAT THE AO DID NOT LOOK INTO AT ALL THE SAID REPORT OF THE INCOME- TAX INSPECTOR, WHICH WAS MADE AVAILABLE BEFORE THE AO PRIOR TO THE DATE OF T HE ASSESSMENT ORDER. IMPUGNED FINDING OF THE CIT IN DIRECTING THE AO IS CORRECT IN INITIATING FRESH ASSESSMENT PROCEEDING AND TO CARRY OUT NECESS ARY ENQUIRIES IN THIS REGARD. 8. FURTHER, WE ARE OF THE VIEW THAT, EXERCISE OF JU RISDICTION U/S 263 OF THE ACT WAS FULLY JUSTIFIED. THE DECISION OF THE H ONBLE HIGH COURT OF CALCUTTA IN THE CASE OF CIT VS. MAITHEN INTERNATION AL 375 ITR 123 (CAL), ITA NO. 445/KOL/2015 DT. 26-08-2016 DEALT WITH THIS ASPECT OF LACK OF ENQUIRY WITH EVEN MORE STRINGENT CONDITIONS. THE ASSESSEE IN THAT CASE OBTAINED LOANS AGGREGATING TO RS.1.60 CRORE FROM SIX PRIVATE LIMITED COMPANIES RANGING BETWEEN RS.7 LAC TO RS.1. 10 CRORE. THESE COMPANIES HAVE FILED THEIR RETURNS WITH NOMINAL INCOME. THE AO ME NTIONED IN THE ASSESSMENT ORDER THAT THE INSPECTOR WAS DEPUTED TO VERIFY THE FRESH LOANS RECEIVED DURING THE YEARS, WHO VERIFIED SUCH LOANS AND GAVE A POSITIVE REPORT. KE EPING SUCH REPORT ON RECORD, THE AO ACCEPTED THE GENUINENESS OF THE TRANSACTIONS. THE CIT INVOKED THE POWERS U/S 263 IN WHICH IT WAS OBSERVED THAT THE REPORT GIVEN BY THE INSPECTOR WAS VERY ELEMENTARY AND SIMPLY MENTIONED THAT HE HAD VERIFIED BANK PASSBOOK S, PROFIT & LOSS ACCOUNT AND BALANCE SHEETS OF THESE COMPANIES. IN NONE OF THE REPORTS HE HAD COMMENTED ON THE ISSUE OF CREDIT WORTHINESS OF THE PARTIES. THE CIT OPINED T HAT THE AO WAS REQUIRED TO MAKE PROPER INVESTIGATION TO DETERMINE WHETHER THE LOAN WAS REALLY MADE BY THE THIRD PARTY OR IT HAD COME OUT OF THE RESOURCES OF THE ASSESSEE HI MSELF. WHEN THE MATTER CAME UP ITA NO. 35/KOL/2017 YASHWANT KANORIA 5 BEFORE THE TRIBUNAL, THE ORDER U/S 263 WAS SET ASID E BY OBSERVING THAT THE AO DID CONDUCT ENQUIRY AND: IF THERE IS AN ENQUIRY, EVEN INADEQUATE, THAT WOULD NOT BY ITSELF GIVE OCCASION TO THE LD. CIT TO PASS ORDER U/S 263 OF THE ACT. SETTING ASIDE THE ORDER PASSED BY THE TRIBUNAL, THE HONBLE JURISDICTIONAL HIGH COURT HAS LAID DOWN THAT : CIT HAD REASONS TO HOLD THAT CREDIT WORTHINESS OF THE A LLEGED LENDERS WAS NOT ENQUIRED INTO. IT FURTHER WENT ON TO HOLD THAT A MERE EXAMINATION OF THE BANK PASSBOOK, PROFIT & LOSS ACCOUNT AND BALANCE SHEET IS NOT ENOUGH. WHEN THE REQUISITE ENQUIRY WAS NOT MADE, THE HONBLE HIGH COURT HELD THAT THE ORDER WAS TO BE CO NSIDERED AS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IT SET ASIDE THE VIEW OF THE TRIBUNAL ON INADEQUATE ENQUIRY BY HOLDING THAT: IF THE RELEVANT ENQUIRY W AS NOT MADE, IT MAY IN APPROPRIATE CASES AMOUNT TO NO ENQUIRY AND MAY ALSO BE A CASE O F NON-APPLICATION OF MIND. IT FURTHER OBSERVED THAT THE QUESTION OF INADEQUATE EN QUIRY SHOULD BE UNDERSTOOD IN ITS PROPER PERSPECTIVE AND: IF IT CAN BE SHOWN THAT TH E INADEQUATE ENQUIRY LED THE AO OR MAY HAVE LED INTO ASSUMPTION OF INCORRECT FACTS, TH AT COULD MAKE THE ORDER ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. SETTING A BAD TREND IS ALSO PREJUDICIAL TO THE REVENUE. 9. THE HONBLE HIGH COURT OF CALCUTTA IN THE CASE O F SUPRA HELD IF IT CAN BE SHOWN THAT THE INADEQUATE ENQUIRY LED THE AO OR MAY HAVE LED INTO ASSUMPTION OF INCORRECT FACTS, THAT COULD MAKE THE ORDER ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IN VI EW OF THE SAME, WE FIND NO IRREGULARITY IN THE IMPUGNED ORDER PASSED BY THE CIT AND IT DOES NOT REQUIRE ANY INTERFERENCE FROM THIS TRIBUNAL, ACCORD INGLY, THE APPEAL FILED BY THE ASSESSEE FAILS AND THEREFORE, GROUNDS RAISED THEREON IN SUPPORT OF THE APPEAL ARE DISMISSED. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSE SSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 3-12-2017 SD/- SD/- P.M.JAGTAP S.S. VISWANETHRA RAVI ACCOUNTANT MEMBER JUDICIAL MEMBER DATED :13-12-2017 PP(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT/ASSESSEE: YASHWANT KANORIA 105 PARK STREE T, FLAT NO. 37, KOHINOOR BUILDING, KOLKATA-16. 2 RESPONDENT THE ITO, WARD 32(2), KOL. 10B MIDDLETON ROW, KOLKATA-71. 3 . THE CIT(A), KOLKATA 4. 5. CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA TRUE COPY BY ORDER SE NIOR P.S HEAD OF OFFICE, ITAT KOLKATA