M/s. Madhusudan Fiber Goods (P) Ltd., Ghaziabad V. ACIT, New Delhi

ITA 3815/DEL/2014

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6594 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 7 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 23-02-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 01-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIRUPAMA KATRU
• Keywords: Capital asset; Opportunity of being heard; Principle of natural justice
• Section: 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E, NEW DELHI BEFORE SMT. BEENA A. PILLAI, JUDICIAL MEMBER AND SH. PRASHANT MAHARISHI, ACCOUNTANT MEMBER I.T.A. NO. 3815/DEL/2014 (ASSESSMENT YEAR 2007-08) & I.T.A. NO. 3816/DEL/2014 (ASSESSMENT YEAR 2008-09) ASSESSEE BY : SH. AKHILESH KUMAR, ADV. DEPARTMENT BY : MS.NIRUPAMA KATRU, CIT, DR. DATE OF HEARING : 23.02.2017 DATE OF PRONOUNCEMENT: 28.02.2017 ORDER PER BEENA A. PILLAI, JM: 1. T HE PRESENT APPEALS HAVE BEEN FILED BY THE ASSESSEE AGAINST THE ORDER DATED 01.05.2014 AND 02.05.2014 P ASSED BY LD. CIT(A), NEW DELHI FOR ASSESSMENT YEARS 2007- 08 AND 2008-09 ON THE FOLLOWING GROUNDS OF APPEAL: MADHUSUDAN FIBER GOODS (P) LTD. C/O AKHILESH KUMAR, ADVOCATE CHAMBER NO. 206-07, ANSAL SATYAM RDC RAJ NAGAR GHAZIABAD, UP GIR/PAN: AAECM0840R VS. C CIT, CENTRAL CIRCLE-17 NEW DELHI (APPELLANT) (RESPONDENT) ITA NO. 3815 & 3816/DEL/2014 (AY2007-08 & AY2008-0 9) PAGE 2 OF 7 ITA NO. 3815/DEL/2014 1. THAT THE EX-PARTY ORDER OF LD, LOWER AUTHORITY IS BAD IN LAW AS WELL AS IS AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THAT LEARNED CIT (A) ERRED IN FRAMING AN EX- PARTY ORDER WITHOUT PROVIDING ANY PROPER OPPORTUNITY OF BEING HEARD IN THE PECULIAR CIRCUMSTANCES OF THE CASE, ESPECIALLY WHEN REGULAR AR HAS VISITED ON THE LAST DATE ON 24.04.14 WITH WS/POA TO SEEK ADJOURNMENT TILL 15 TH MAY BUT APPLICATION WAS NOT ENTERTAINED AND INSTEAD ASKED TO COME BEFORE 10 TH MAY / 2014 BUT WHEN AR VISITED AROUND 6 TH MAY WITH FOR HEARING OF ALL THE APPEALS THAN IT WAS COMMUNICATED THAT EX-PARTY ORDER IS PASSED IN APRIL,2014. HENCE PROVISIONS OF NATURAL JUSTICE HAS BEEN DEFEATED. 3. THAT, LD. CIT(A) GROSSLY ERRED IS SUSTAINING THE REJECTION OF CLAIM OF COMPENSATION PAID IN TERMS OF' CANCELLATION OF AGREEMENT' AS PART OF COST OF PROPERTY BY HOLDING THAT, ASSESSEE FAILED TO ESTABLISH HOW ITS PAYMENT OF RS. 60,13,319/- WAS RELATED TO THE ACQUISITION OF THE CAPITAL ASSET UNDER CONSIDERATION, THOUGH ON THE CONTRARY IT IS HELD THAT ASSESSEE REPURCHASED THE PROPERTY UNDER SAID 'CANCELLATION OF AGREEMENT' WHICH IS CONTRADICTORY. HENCE ORDER REJECTING SAID CLAIM IS ARBITRARY. 4. THAT, IN ADDITION TO ABOVE, CIT(A) FURTHER ERRED IS SUSTAINING THE REJECTION OF ABOVE AGAINST THE SETTLED LAW AS PER WHICH BETTERMENT CHARGES/PAYMENT FOR PERFECTION OF TITLE IS PART OF COST OF ASSET, HENCE REJECTION OF CLAIM IS AGAINST ITA NO. 3815 & 3816/DEL/2014 (AY2007-08 & AY2008-0 9) PAGE 3 OF 7 THE SETTLED LAW ON THE ISSUE MORE SO WHEN PAYMENT OF COMPENSATION IS NOT DOUBTED. 5. THAT, LD. CIT(A) GROSSLY ERRED IN NOT ALLOWING CLAIM OF RS. 35,83,912/- AS PART OF COST OF PROPERTY FOR ASSESSEE BUT FOR OTHER PARTY WHILE HE HIMSELF FIRST UPHELD THE PRESUMED NOTIONAL SALE TO SAID PARTY AND FURTHER UPHELD NOTIONAL REPURCHASE FROM THE SAME PARTY HENCE SUCH REJECTION OF CLAIM IS CONTRADICTORY AND UNFAIR. ITA NO. 3816/DEL/2014 1. THAT THE EX-PARTY ORDER OF LD. LOWER AUTHORITY IS BAD IN LAW AS WELL AS IS AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THAT LEARNED CIT (A) ERRED IN FRAMING AN EX- PARTY ORDER WITHOUT PROVIDING ANY PROPER OPPORTUNITY OF BEING HEARD IN THE PECULIAR CIRCUMSTANCES OF THE CASE , ESPECIALLY WHEN REGULAR AR HAS VISITED ON THE LAST DATE ON 24.04.14 WITH WS/POA TO SEEK ADJOURNMENT TILL 15 TH MAY BUT APPLICATION WAS NOT ENTERTAINED AND INSTEAD ASKED TO COME BEFORE 10 TH MAY,2014 BUT WHEN AR VISITED AROUND 6 TH MAY WITH FOR HEARING OF ALL THE APPEALS THAN IT WAS COMMUNICATED THAT EX-PARTY ORDER IS PASSED IN APRIL 2014. HENCE PROVISIONS OF NATURAL JUSTICE HAVE BEEN DEFEATED. 3. THAT, LD. CIT(A) GROSSLY ERRED IS NOT ALLOWING THE CLAIM OF RS. 60,13,919/- INCURRED IN THE EARLIER YEAR BEING COMPENSATION PAID IN TERMS OF* CANCELLATION OF AGREEMENT' AGAINST THE SETTLED LAW ON THE ISSUE AND AGAINST THE MATERIAL ON THE RECORD. HENCE ADDITION TO CAPITAL GAIN BY SAID AMOUNT IS ARBITRARY. 4. THAT, LD. CIT(A) GROSSLY ERRED IN NOT ALLOWING CLAIM OF RS.3583912/- AS PART OF COST OF PROPERTY ITA NO. 3815 & 3816/DEL/2014 (AY2007-08 & AY2008-0 9) PAGE 4 OF 7 FOR ASSESSEE BUT FOR OTHER PARTY WHILE HE HIMSELF FIRST UPHELD THE PRESUMED NOTIONAL SALE TO SAID PARTY AND FURTHER UPHELD NOTIONAL REPURCHASE FROM THE SAME PARTY HENCE SUCH REJECTION OF CLAIM IS CONTRADICTORY AND UNFAIR. 5. THAT, LD. CIT(A) GROSSLY ERRED IN NOT ALLOWING PAYMENT OF COMPOUNDING CHARGES RS. 60550/-. 2. BRIEF FACTS OF THE CASE ARE AS UNDER: A SEARCH WAS CONDUCTED AT THE PREMISES OF ASSESSEE ON 20.10.2008 AND NOTICE UNDER SECTION 153A WAS ISSUED , REQUIRING ASSESSEE TO FURNISH RETURN OF INCOME. ASS ESSEE FURNISHED ITS RETURN OF INCOME DECLARING NIL INCO ME ON 23.09.2010 FOR THE ASSESSMENT YEARS UNDER CONSIDERA TION. 3. DURING THE ASSESSMENT PROCEEDINGS, ASSESSEE WAS AS KED TO EXPLAIN EXISTENCE OF PLOT NO. 2, VASANTH KUNJ TH AT HAS BEEN ALLEGED TO HAVE BEEN SOLD IN THE PREVIOUS FINANCIAL YEAR BEING 2006-07. LD. AO HAS OBSERVED THAT ASSESSEE HAD TRAN SFERRED THE SAID PLOT AND SHORT TERM CAPITAL GAIN TAX WAS I MPOSED ON ASSESSEE IN THE IMMEDIATE PREVIOUS ASSESSMENT YEAR. FOR THE YEARS UNDER CONSIDERATION ASSESSING OFFICER HAS ALL EGED THAT ASSESSEE HAS REPURCHASED THE SAME COMMERCIAL BUILDI NG AT PLOT NO. 2, VASANT KUNJ. 4. LD. AO ACCORDINGLY MADE ADDITION IN THE HANDS OF ASSESSEE, BEING COST OF CONSTRUCTION OF COMMERCIAL BUILDING, FOR ASSESSMENT YEAR 2007-08 AND COST OF REPURCHASE OF THE ITA NO. 3815 & 3816/DEL/2014 (AY2007-08 & AY2008-0 9) PAGE 5 OF 7 SAME PLOT FOR ASSESSMENT YEAR 2008-09 AS SHORT TERM CAPITAL GAIN. 5. AGGRIEVED BY ORDER OF LD. AO ASSESSEE PREFERRED AP PEAL BEFORE LD. CIT(A), WHO GAVE PARTIAL RELIEF TO ASSES SEE. 6. AGGRIEVED BY ORDER OF LD. CIT(A), ASSESSEE IS IN A PPEAL BEFORE US NOW IN RESPECT OF BOTH THE ASSESSMENT YEA RS. 7. LD. AR AT THE OUTSET SUBMITTED THAT PROPER OPPORTU NITY WAS NOT GIVEN TO ASSESSEE BEFORE LD.CIT(A). IT HAS BEEN FURTHER SUBMITTED THAT ASSESSMENT YEAR 2006-07 BEIN G THE PRIME YEAR, IN RESPECT OF AGREEMENTS ENTERED INTO B Y ASSESSEE, WHICH HAS BEEN SET ASIDE TO LD. CIT(A) FOR FRESH AD JUDICATION. HE THUS, REQUESTED THAT ISSUE IN DISPUTE MAY BE SET ASIDE TO THE FILE OF LD. CIT(A), TO DECIDE THE SAME AFRESH. 8. LD. DR DID NOT OBJECT THE REQUEST MADE BY LD. AR. 9. WE HAVE PERUSED THE RECORDS PLACED BEFORE US AND T HE ORDER PASSED BY THIS TRIBUNAL IN ASSESSEES OWN CAS E FOR ASSESSMENT YEAR 2006-07. THE ENTIRE ISSUE REVOLVES AROUND WHETHER COMMERCIAL PROPERTY BEING PLOT NO. 2 SITUAT ED AT LOCAL SHOPPING CENTRE IN SECTOR B, POCKET 1, VASANT H KUNJ, DELHI AT MEASURING 112.88 SQUARE METERS. LD. AO WHI LE PASSING THE ASSESSMENT ORDER FOR ASSESSMENT YEAR 20 06-07 HELD THAT, ASSESSEE SOLD THE PROPERTY VIDE COLLABOR ATION AGREEMENT DATED 31.03.2006 TO NCJ INTERNATIONAL LTD ., AND SHACHDEVA BUILDCON PVT. LTD., AND WHETHER SUBSEQUEN TLY THE ITA NO. 3815 & 3816/DEL/2014 (AY2007-08 & AY2008-0 9) PAGE 6 OF 7 PROPERTY WAS AGAIN ACQUIRED VIDE AGREEMENT DATED 27.03.2007 AND THEREAFTER, SOLD ON 02.11.2007, RESU LTING AGAIN IN SHORT TERM CAPITAL GAIN IN THE YEAR 2008-0 9. 10. IT HAS BEEN ALLEGED BY LD. AR THAT ASSESSING OFFIC ER, WHILE PASSING ASSESSMENT ORDER FOR A.Y: 2006-07, HE LD THAT CRUCIAL AND RELEVANT FACTS HAD NOT BEEN DECLARED FU LLY AND TRULY BY ASSESSEE, REFERRING TO VARIOUS EVENTS THAT HAD TAKEN PLACE IN CONNECTION WITH PROPERTY UNDER CONSIDERATI ON BETWEEN YEAR 2004 TO 2007 INCLUDING THE COLLABORATI ON DEED DATED 31.03.2006, AGREEMENT OF CANCELLATION DATED 27.03.2007 AND SALE DEED DATED 02.11.2007. LD. AR SUBMITTED THAT ASSESSEE HAD NEVER SOLD THIS PROPERT Y BEFORE 02.11.2007 AND ASSESSING OFFICER HAS MADE ADDITION ON ASSUMPTION OF FACTS. 11. ON PERUSAL OF ORDER OF THIS TRIBUNAL DATED 15.06.2 016 PASSED IN ASSESSEES OWN CASE IN ITA NO. 3814/DEL/2 014 FOR ASSESSMENT YEAR 2006-07, IT IS OBSERVED THAT THE IS SUE HAS BEEN SET ASIDE TO LD. CIT(A) FOR FRESH CONSIDERATIO N. WE ARE, THEREFORE, OF THE CONSIDERED OPINION THAT TO SERVE THE ENDS OF JUSTICE IT WOULD BE PROPER TO SET ASIDE ASSESSMENT YEARS UNDER CONSIDERATION BEFORE US ALSO TO FILE OF LD. C IT(A) FOR FRESH CONSIDERATION OF FACTS. ACCORDINGLY GROUNDS RAISED BY THE ASSESSEE FOR THE ASSESSMENT YEARS UNDER CONSIDERATION STANDS ALLOWED FOR STATISTICAL PURPOSES ITA NO. 3815 & 3816/DEL/2014 (AY2007-08 & AY2008-0 9) PAGE 7 OF 7 IN THE RESULT APPEAL IS FILED BY THE ASSESSEE FOR ASSESSMENT YEAR 2007-08 AND 2008-09 STANDS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH FEBRUARY, 2017. SD/- SD/- ( PRASHANT MAHARISHI ) (BEENA A. PILLAI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE:28.02.2017 @M!T