Shilpa D.Mehtha, Nashik V. Income-tax Officer, Ward - 1, Malegaon

ITA 355/PUN/2019

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 4968 (ITAT-PUNE)
• Duration Of Justice: 8 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-11-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 03-09-2019
• Assessment Year: 2014-2015
• Appeal Filed On: 28-02-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ABHIJIT CHAUDHURI
• Assessee Lawyers: K SRINIVASAN
• Keywords: Principle of natural justice; Competent authority; Set aside
• Section: 56(2)(vii)(b)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC, PUNE BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER . / ITA NO.355/PUN/2019 / ASSESSMENT YEAR : 2014-15 SH ILPA D MEHTHA, PLOT NO.67, S.NO.747/748, MEHTHA BUNGLOW LAWATE NAGAR, NASHIK 5. PAN : ALTPM4468L. . / APPELLANT V/S THE INCOME TAX OFFICER, WARD 1, MALEGAON. . / RESPONDENT ASSESSEE BY : SHRI K. SRINIVASAN. REVENUE BY : SHRI ABHIJIT CHAUDHURI / ORDER PER D. KARUNAKARA RAO, AM : THIS APPEAL FILED BY ASSESSEE IS AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) 1, NASHIK DATED 01.01.2019 FOR A.Y. 2014-15. 2. THE GROUNDS FILED BY THE ASSESSEE READS AS UNDER : 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW ASSESSMENT MAY BE HELD AS BAD IN LAW AND ASSESSMENT ORDER QUASHED AND SET ASIDE. 2. THE CASE HAS BEEN SELECTED FOR SCRUTINY UNDER CASS FRAMED BY CBDT CIRCULAR AND ASSESSING OFFICER HAS TRAVELLED BEYOND ITS SCOPE AND NOT FOLLOWING PROCEDURE ASSESSMENT ORDER MAY BE HELD AS AB- INITIO VOID. WITHOUT PREJUDICE ON MERITS. / DATE OF HEARING : 11.11.2019 / DATE OF PRONOUNCEMENT: 15.11.2019 2 3. ASSESSING OFFICERS ACTION IN TAXING RS.12,49,992/- INVOKING PROVISIONS OF SECTION 56(2)(VII)(B) WHEN CONDITIONS REQUISITE ARE NOT FULFILLED MAY BE CANCELLED AS BAD IN LAW. 4. ASSESSING OFFICER ERRED IN DISALLOWING INTEREST OF 1,41,370/- WITHOUT APPRECIATING FACTS OF THE CASE AND SAME MAY BE DELETED. 3. REFERRING TO THE LEGAL ISSUE RAISED, AT THE OUTSET, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE GROUNDS NO.1 AND 2 RELATE TO THE LEGAL ISSUE I.E. COMPLETION OF THE ASSESSMENT DEEMING IT AS THE CASE OF COMPLETE SCRUTINY IGNORING THE FACT THAT THE CASE IS PICKED UP UNDER CASS SCHEME FOR EXAMINING A SINGLE ISSUE RELATING TO LARGE INVESTMENT IN PROPERTY (AIR) AS COMPARED TO THE TOTAL INCOME. THE AO DID NOT TAKE REQUISITE APPROVAL OF THE COMPETENT AUTHORITY BEFORE DEEMING IT AS A CASE OF COMPLETE SCRUTINY. IN THIS REGARD, THE LEARNED COUNSEL FILED VARIOUS DECISION IN THE CASE OF NAZARE VIKAS KARYAKARI SEVA SAHAKARI SOCIETY LTD., AND 9 OTHERS VIDE ITA NO.1518/PUN/2018 AND 9 OTHERS DATED 08.02.2019, WHERE SUCH ADDITIONS WERE NOT APPROVED BY THE ITAT AND THE UNDERSIGNED IS THE PARTY TO THE SAID DECISIONS. 4. CONSIDERING THE SAID SETTLED NATURE OF THE LEGAL ISSUE, I AM OF THE OPINION THAT GROUND NOS.1 AND 2 WITH REFERENCE TO THE ADDITION OF RS.1,41,370/- RAISED IN GROUND NO.4 STANDS ALLOWED IN FAVOUR OF THE ASSESSEE. FOR THE SAKE OF COMPLETENESS, PARAS 4 AND 5 OF THE SAID ORDER OF THE TRIBUNAL ARE EXTRACTED HEREUNDER: 4. FROM THE ABOVE, IT IS SETTLED LEGAL ISSUE AT THE LEVEL OF THE TRIBUNAL, PUNE BENCH, IN THE CASES, SELECTED UNDER CASS, THE ADDITIONS ON THE NON- CASS ISSUES CAN ONLY BE MADE AFTER OBTAINING DUE PERMISSION FROM THE SUPERIOR AUTHORITIES AND THE SAID APPROVAL OF THE SUPERIOR AUTHORITIES IN WRITING SHOULD BE AVAILABLE ON RECORDS. IN ALL THESE TEN APPEALS UNDER CONSIDERATION, WE FIND THERE IS NO WHISPER ABOUT THE OBTAINING OF SUCH APPROVAL FROM THE SUPERIOR AUTHORITIES BEFORE THE SCRUTINY SCOPE IS EXTENDED TO NON-CASS ISSUES. IN ANY CASE, THE ASSESSING OFFICER DID NOT MAKE ANY ADDITION ON ACCOUNT OF THE ISSUES SELECTED UNDER CASS. 3 THEREFORE, IN OUR CONSIDERED VIEW, THE SAID ORDER OF THE TRIBUNAL COVERS THE COMMON SOLITARY PRELIMINARY ISSUE RAISED BEFORE US IN ALL THE TEN APPEALS. ACCORDINGLY, THE PRELIMINARY ISSUE RAISED BY THE ASSESSEE IN ALL THESE TEN APPEALS IS ALLOWED . 5. CONSIDERING THE ABOVE RELIEF GRANTED TO THE ASSESSEES ON THE PRELIMINARY ISSUE, WE ARE OF THE OPINION, THE ADJUDICATION OF OTHER GROUNDS ON MERIT BECOME ACADEMIC EXERCISE. THEREFORE, THEY ARE DISMISSED AS ACADEMIC. ACCORDINGLY, GROUND NOS.1, 2 AND 4 ARE ALLOWED PRO-TANTO. THAT LEAVES THE GROUND NO.3 FOR ADJUDICATION WHICH IS TAKEN UP IN THE FOLLOWING PARAGRAPHS. 5. GROUND NO.3 READ WITH GROUND NOS.1 AND 2 HAS BOTH LEGAL AS WELL AS MERITS RELATED LIMBS FOR ADJUDICATION. LEGAL LIMB ASPECT IT IS THE PRAYER OF THE LEARNED COUNSEL OF THE ASSESSEE THAT THE AO TOOK UP THE CASE FOR LIMITED SCRUTINY FOR EXAMINING THE LEGAL ISSUE I.E., LARGE INVESTMENT IN THE PROPERTY QUA THE DISPROPORTIONATELY LESS TOTAL INCOME OF THE ASSESSEE. THE SAID ISSUE WAS EXAMINED AND THE ADDITION OF RS.12,49,992/- WAS ADDED BY THE AO IN THE ASSESSMENT. ON THIS ISSUE, LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE WHOLE ASSESSMENT IS REQUIRED TO BE QUASHED WHEN THE AO HAS COMPLETED THE ASSESSMENT IN A MANNER OF FULL SCRUTINY WITHOUT OBTAINING THE APPROVAL OF THE COMPETENT AUTHORITY. 6. ON HEARING BOTH SIDES ON THIS ISSUE, I FIND THE ORDER OF TRIBUNAL IN THE CASE OF NAZARE VIKAS KARYAKARI SEVA SAHAKARI SOCIETY LTD., AND 9 OTHERS (SUPRA) IS DISTINGUISHABLE ON THE FACTS THAT NO ADDITION WAS MADE IN THE ASSESSMENT AT ALL ON THE ISSUE WHICH IS CONSIDERED FOR SCRUTINY 4 UNDER THE CASS SCHEME. WHEREAS IN THE PRESENT CASE, AO MADE ADDITION OF RS.12,49,992/- ON THE GROUND WHICH IS SUBJECT MATTER OF CASS SCRUTINY. THEREFORE, AFTER CONSIDERING THE LEGAL ASPECT AND ARGUMENTS, THE RELEVANT GROUND STANDS DISMISSED. ON THE MERITS OF THE ADDITION OF RS.12,49,992/- 7. REGARDING THE MERITS OF ADDITION OF RS.12,49,992/-, IT IS THE PRAYER OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE ASSESSEES LAND HAS GOVERNMENT VALUATION OF RS.1,30,70,000/- FOR THE STAMP DUTY PURPOSES, WHEREAS, ITS VALUE AS PER THE COLLECTORS ORDER IS RS.61,25,500/-. ASSESSEE CONSIDERED THE LATER WHILE FILING THE RETURN OF INCOME. THE DIFFERENCE WORKS OUT TO RS.69,49,400/- (RS.1,30,70,000/- MINUS RS.61,25,500/-) AND THE ASSESSEES SHARE @ 18% OUT OF THE COLLECTORS VALUE WORKS OUT TO RS.12,49,992/- ONLY. IN SUPPORT OF THE VALUE OF RS.69,44,400/-, LEARNED COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE CONTENTS OF PARA 37 OF THE ORDER OF THE COLLECTOR. 8. FURTHER BRINGING OUR ATTENTION TO THE WAY THE COMMISSIONER OF INCOME TAX (APPEALS) PASSED AN ORDER WITHOUT ATTENDING TO THE ARGUMENTS OF THE ASSESSEE, THE LEARNED COUNSEL BROUGHT OUR ATTENTION TO THE CONTENTS OF PARA 5.1 AND 5.2 OF THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) AND SUBMITTED THAT, AS AND WHEN THERE IS A DISPUTE ABOUT THE VALUATION OF THE PROPERTY, IT IS THE REQUIREMENT OF THE LAW, THAT THE PROPERTY SHOULD BE REFERRED TO THE VALUATION BY THE DISTRICT VALUATION OFFICER (DVO). UNFORTUNATELY, CIT(A) DENIED THE SAID REQUEST MAINLY ON THE GROUND THAT THERE IS NO FORMAL REQUEST ON THE ASSESSEES SIDE FOR REFERRAL TO THE VALUATION. IN MY VIEW, DECIDING OF THE ISSUE IN 5 THIS WAY BY THE CIT(A), IS NOT IN ACCORDANCE WITH THE LAW. THE PRINCIPLE OF NATURAL JUSTICE IS VIOLATED. 9. IN MY CONSIDERED VIEW, THE AUTHORITIES MUST BE SENSITIVE TO THE OBJECTION OF THE ASSESSEE AND THE REQUIREMENT OF REFERRAL TO THE DVO IS AN AUTOMATIC RESPONSE WHEN A DISPUTE ON THE VALUE OF LAND IS RAISED. THEREFORE, SUBJECTED TO THE OTHER CONDITION OF THE STATURE, I AM OF THE CONSIDERED OPINION THAT THE PROPERTY MAY BE REFERRED TO THE VALUATION BY THE DVO AS PER THE DUE PROCESS OF LAW. ACCORDINGLY, ON OBTAINING THE REPORT OF THE SPECIALIST ON VALUATION, THE AO IS DIRECTED TO PASS A SPEAKING ORDER ON THIS ISSUE. WITH THESE DIRECTIONS, THE ISSUE RAISED IN GROUND NOS.1 TO 3 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 10. IN THE RESULT, THE APPEAL OF ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 15 TH DAY OF NOVEMBER, 2019. SD/- ( D. KARUNAKARA RAO ) / ACCOUNTANT MEMBER PUNE; DATED : 15 TH NOVEMBER, 2019. YAMINI/SUJEET / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4. 5 6. CIT(A)-1, NASHIK. PR. CIT-1, NASHIK. , , / DR, ITAT, SMC PUNE; / GUARD FILE. / BY ORDER // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE.