I.T.O. WARD -2(2), Nagpur V. SMT. SAMYUKTA ASHWIN SABNANI NEE SAMYUKTA SHIVJIT MORYA, Nagpur

ITA 38/NAG/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 7694 (ITAT-NAGPUR)
• Duration Of Justice: 10 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-01-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 26-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NRENDRA KANE
• Keywords: Fair market value; Difference of opinion; Change of opinion
• Section: 143(3); 147; 148

Judgement Text

1 ITA NO. 38/NAG/2016. IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI, JUDICIAL MEMBER.. I.T.A. NO. 38/NAG/2016 ASSESSMENT YEAR : 2008 - 09. THE INCOME - TAX OFFICER, SMT. SAMUKTA ASHWIN SABNANI NEE WARD - 2(2), NAGPUR. VS. SAMYKTA SHIVJEET MORAY, NAGPUR. APPELLANT. RESPONDENT. APPELLANT BY : SHRI NRENDRA KANE. RESPONDENT BY : SHRI RAJESH LOYA. DATE OF HEARING : 22 - 11 - 2016 DATE OF PRONOUNCEMENT : 9 TH JAN., 2017. O R D E R. PER SHAMIM YAHYA, A.M. : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(APPEALS) AND PERTAINS TO ASSESSMENT YEAR 2008 - 09. THE GROUNDS OF APPEAL READ AS UNDER : 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, TH LD. CIT(A) WAS JUSTIFIED IN HOLDING THE REOPENING AS INVALID HOLDING THAT THE REOPENING WAS MADE ON THE BASIS OF CHANGE OF OPINION ON SAME SET OF FACTS, WHEREAS THE ORIGINAL ASSESSMENT WAS MADE ON THE BASIS OF VALUE AS ON 01.04.1981 DETERMINED BY ASSESSEES VALUER AND REOPENING WAS M ADE ON THE BASIS OF VALUE AS ON 01.04.1981 DETERMINED BY THE DVO AND HENCE THE REOPENING WAS NOT MADE ON SAME SET OF FACTS. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS CORRECT IN HOLDING THAT THE A.O. HAS NO POWER TO MAKE REFERENCE TO DVO U/S 55A OF THE ACT, SINCE THE CONSIDERATION ON 01.04.1981 SHOWN BY ASSESSEE WAS MORE THAN VALUE DETERMINED BY DVO. 2. THE ONLY ISSUE INVOLVED IS THE COMPUTATION OF CAPITAL GAIN ON LONG TERM CAPITAL GAIN ARISING ON SALE OF T W O PROPERTIES VIZ. CRYSTAL HOUSE AND 2 ITA NO. 38/NAG/2016. DHANWATEY HOUSE, WORLI, MUMBAI IN WHICH THE ASSESSEE HELD UNDIVIDED SHARES OF 1.56% AND 6.25% RESPECTIVELY ALONG WITH OTHER CO - OWNERS. THE ASSESSEE HAD COMPUTED THE LONG TERM CAPITAL LOSS AT RS.66,20,439/ - AND THE SAID C LAIM OF LOSS WAS BASED ON THE VALUATION OF THE PROPERTY BY THE GOVERNMENT APPROVED VALUER AND RELYING UPON THE FAIR MARKET VALUE OF THE PROPERTY AS ON 01 - 04 - 1981 . 3. THE AO, HOWEVER, ISSUED A NOTICE U/S 148 RELYING UPON THE REPORT OF THE DVO IN THE CASE OF ANOTHER CO - OWNER OF THE SAME PROPERTIES. THE ASSESSEE OBJECTED TO THE SAID REFERENCE U/S 55A OF THE I.T. ACT TO THE DVO STATING THAT SUCH A REFERENCE TO THE DVO CAN BE MADE ONLY IN A CASE WHERE VALUE OF THE ASSET AS CLAIMED BY THE ASSESSEE IS IN ACCORDAN CE WITH THE ESTIMATE MADE BY THE REGISTERED VALUER IF THE AO IS OF THE OPINION THAT THE VALUE SO CLAIMED IS LESS THAN THE FAIR MARKET VALUE. THE AO PLACED HIS RELIANCE UPON THE CASE OF VIJAY P. KARNIK VS. ITO 37 TAXMANN.COM 48 (MUMBAI) AND COMPUTED THE LON G TERM CAPITAL GAIN AT RS.49,10,740/ - 4. UPON ASSESSEES APPEAL, LEARNED CIT(APPEALS) DEALT WITH THE ISSUE OF CHALLENGE OF JURISDICTION FOR REOPENING IN FAVOUR OF THE ASSESSEE, BY OBSERVING AS UNDER : 3.2 I HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMIS SIONS OF THE APPELLANT. I FIND SUBSTANTIAL MERIT IN THE SUBMISSIONS MADE. THE VARIOUS CASE LAWS RELIED UPON ARE DIRECTLY APPLICABLE TO THE FACTS OF THE CASE UNDER CONSIDERATION. ALSO THE ABOVE ISSUE WAS A MATTER OF APPEAL BEFORE THE CIT(A) - I IN THE CASE OF ANOTHER CO - OWNER BY THE NAME OF KUMARI RADHIKA AMRUT DHANWATEY WHEREIN THE CIT(A) - I, VIDE HIS ORDER NO. CIT(A) - 1/48/2014 - 15, DATED 05 - 10 - 2015 HAS DECIDED THE MATTER IN FAVOUR OF THE APPELLANT ON MERIT AS WELL AS ON THE LEGALITY OF ASSUMING OF JURISDICTION U/S 148. THE ONLY DIFFERENCE WAS THAT THE SAID CASE HAD BEEN PROCESSED U/S 143(1) AND SCRUTINY ASSESSMENT WAS NOT MADE. IN THE SAID ORDER, WITH REGARD TO ASSUMING OF JURISDICTION U/S 148 THE FOLLOWING FINDINGS HAVE BEEN GIVEN BY THE LD. CIT(A) - 1, NAGPUR, ...8.0 IN GROUND NO. 1 & 2, THE APPELLANT HAS CHALLENGED THE VALIDITY OF REOPENING OF THE ASSESSMENT WITHIN THE MEANING OF 3 ITA NO. 38/NAG/2016. SECION 147 OF THE I.T. ACT , 1961. IN THIS REGARD THE AR OF THE APPEL L A N T HAS CONTENDED THAT THE REOPENING OF THE ASSESSMENT U / S . 148 WITH I N THE MEANING OF SECTION 14 7 ON THE BAS I S OF THE O VO REPORT RELATING TO THE THIRD PARTY DOES NOT AMOUNT AN INFOR MA TIO N IN THE CASE OF THE APPELLANT IN AS MUCH AS THAT FIRSTLY THE APPE L LA N T WAS NOT A PARTY TO THE VALUATION P ROCEEDINGS BEFORE THE D VO , SECONDLY, THAT TH E APPE LL ANT HAD NOT BEEN GRANTED AN OPPORTUNITY FOR REBUTTAL OF T HE FACTS AVAILABLE BEFORE THE D VO DURING THE VALUATION PROCEEDINGS. THE APPE LL A N T I N THIS REGARD HAS RELIED ON THE DECISION OF THE HON ' BLE SUPREME COURT IN THE CASE OF ACIT VS DHARIYA CONSTRUCTION COMPANY (2010) 328 ITR 0515 (SC), WHEREIN THE HON ' BLE APE X COURT HAS HE L D AS UNDER : 'HAVING EXAMINED THE RECORD, WE FIND THAT IN T HIS CASE, THE DEPARTMENT SOUGHT REOPENING OF THE ASSESSMENT BASED ON THE OPINION GIVEN BY THE DVO . THE OPINION OF THE DVO PER SE I S NOT INFORMATION FOR THE PURPOSE OF REOPENING ASSESSMENT U/ S 147 OF THE I. T.ACT.1961 . THE AO HAS TO APPLY HIS MIND TO THE INFORMATION , IF ANY , COLLECTED AND MUST FORM A BELIEF THEREON . IN THE CIRCUMSTANCES, THERE IS NO MERIT IN THE C IVIL APPEAL . THE DEPARTMENT WAS NOT ENTITLED TO REOPEN THE A S SESSMENT. CIVIL APPEAL IS, ACCORDINGLY, DISMISSED . NO ORDER AS TO COSTS. HENCE THE AO HAS NO BASIS FOR HIS BELIEF AND T HE NO T I C E ISSUED U / S 148 IS ILLEGAL AND WITHOUT JURISDICTION .' 8.1 TH E RATIO OF THE DECISION OF THE HON'B L E APE X COURT IS SQUARELY A P P L IC ABL E TO T H E FACTS OF THE CASE OF THE APPELLANT . THEREFORE, THE ADDITION MADE B Y T H E A O IS DIRECTED TO BE DELETED BOTH ON MERITS AND LEGALITY . .. ' 3.3 I A M IN A G REE M ENT WITH THE ABOVE FINDINGS OF THE L D. CN (A) - L . AS A MATTER OF F ACT THE C ASE O F T HE APPEL L ANT UNDER CONSIDERATION I S ON A MUCH STRONGER FO O TING AS THE O RI G I N A L A SSESS M E NT IN T HI S CASE WAS FINALISED U / S , 143(3) AND THE LD. AO HA D CARRIED OUT VA RI O US EN QU IRIES W ITH R E G A R D TO THE CORRECTNESS OF COMPUTATION OF LONG TERM C A PITAL GAIN D URI NG T H E C OURSE OF O R IGI NA L A SSESSMENT PROCEEDING S AND SUBSEQ U ENTLY TOOK A CONTRARY VIEW ON THE SA M E SE T OF F A C TS WHICH IS T H ERE F ORE A CLEAR CASE OF CHANGE OF OPINION. IN VIEW OF THE ABOVE , I T IS H E REB Y H EL D THA T T H E RE - O P E N ING OF ASSESSMENT WAS ITSELF INVA L ID AND IS REQUIRED T O BE C A N C E L LED. 5. AGAINST TH E ABOVE ORDER, THE REVENUE IS IN APPEAL BEFORE US. 4 ITA NO. 38/NAG/2016. 6. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. WE FIND THAT ASSESSMENT IN THIS CASE HAD BEEN COMPLETED U/S 143(3) OF THE I.T. ACT. THE REOPENING HAS BEEN SOLELY DONE ON THE BASIS OF DVOS REPORT IN THE CASE OF A THIRD PARTY. NO OTHER MATERIAL HAS COME INTO THE POSSE SSION OF THE AO. IN SUCH CIRCUMSTANCES, THE CASE LAW FROM THE HONBLE SUPREME COURT REFERRED ABOVE IS APPLICABLE. HENCE IN OUR CONSIDERED OPINION THE ORDER OF THE LEARNED CIT(APPEALS) IN THIS REGARD IS QUITE CORRECT. ACCORDINGLY WE UPHOLD THE VIEW THAT THE REOPENING IN THIS CASE IS INVALID AND DESERVES TO BE CANCELLED. WE UPHOLD THE ORDER OF LEARNED CIT(APPEALS) IN THIS REGARD. 7. AS REGARDS THE MERITS OF THE ISSUE, THE LEARNED CIT(APPEALS) REFERRED TO THE DECISION OF ANOTHER CO - OWNER OF THE SAME PROPERTY A ND HELD THAT FOLLOWING THE SAME HE WAS OF THE VIEW THAT THE ADDITION MADE BY THE AO WAS NOT SUSTAINABLE ON MERIT S ALSO. 8. AGAINST THIS ORDER THE REVENUE IS IN APPEAL BEFORE US. 9. UPON CAREFUL CONSIDERATION WE FIND THAT WE HAVE ALREADY UPHELD THE ORDER OF LEARNED CIT(APPEALS) QUASHING THE ASSESSMENT ON JURISDICTION ITSELF. IN SUCH CIRCUMSTANCES, IN OUR CONSIDERED OPINION, ADJUDICATING UPON THE MERITS OF THE CASE IS ONLY OF ACADEMIC INTEREST. HENCE WE ARE NOT ENGAGING INTO THE SAME. 10. IN THE RESULT THIS APPEAL FILED BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 9 TH DAY OF JANUARY,2017. SD/ - SD/ - (RAM LAL NEGI) ( SHAMIM YAHYA) JUDICIAL MEMBER. ACOUNTANT MEMBER. NAGPUR, DATED: 9 T H JAN., 2017. 5 ITA NO. 38/NAG/2016. COPY FORWARDED TO : 1. SMT. SAMUKTA ASHWIN SABNANI NEE SAMYKTA SHIVJEET MORAY, 520, SUNDER JEEVAN APARTMENTS, CLARK TOWN, NAGPUR. 2. I.T.O., WARD - 2(2), NAGPUR. 3. PR. C.I.T. - I I , NAGPUR. 4. CIT(APPEALS) - I I , NAGPUR. 5. D.R., ITAT, NAGPUR. 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR. WAKODE.