ACIT 23(3), MUMBAI V. M/s THE SALSETTE CATHOLIC CO-OP. HOUSING LTD., MUMBAI

ITA 3869/MUM/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 3504 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2008-2009
• Appeal Filed On: 31-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T S KHALSA
• Keywords: Reopening of assessment; Sale consideration of property below Jantri Value; Capital asset; Depreciation; Tangible material; Fair market value; Valuation report; Validity of assessment; Reassessment proceedings; Set aside
• Section: 143(3); 50C; 143(1); 153; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH G, MUMBAI BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER AND SHRI AMARJIT SINGH, JUDICIAL MEMBER ITA NO.3869/M/2019 ASSESSMENT YEAR: 2008-09 ACIT 23(3), ROOM NO.104, 1 ST FLOOR, MATRU MANDIR, J.D. ROAD, TARDEO, MUMBAI 400 007 VS. M/S. THE SALSETTE CATHOLIC CO-OP. HOUSING LTD., THE BANDRA GYMKHANA, 42 ST. ANDREWS ROAD, BANDRA (W), MUMBAI 400 050 PAN: AAAT0195N (APPELLANT) (R ESPONDENT) CO NO.67/M/2020 (ARISING OUT OF ITA NO.3869/M/2019) ASSESSMENT YEAR: 2008-09 M/S. THE SALSETTE CATHOLIC CO-OP. HOUSING LTD., THE BANDRA GYMKHANA, 42 ST. ANDREWS ROAD, BANDRA (W), MUMBAI 400 050 PAN: AAAT0195N VS. ACIT 23(3), ROOM NO.104, 1 ST FLOOR, MATRU MANDIR, J.D. ROAD, TARDEO, MUMBAI 400 007 (APPELLANT) (R ESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI VIJAY MEHTA, A.R. REVENUE BY : SHRI T.S. KHALSA, D.R. DATE OF HEARING : 05.07.2021 DATE OF PRONOUNCEMENT : 12.10.2021 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL BY THE REVENUE AND THE CROSS OB JECTION BY THE ASSESSEE HAVE BEEN PREFERRED AGAINST THE ORD ER DATED 27.03.2019 OF THE COMMISSIONER OF INCOME TAX (APPEA LS) [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO ASSESSMENT ITA NO.3869/M/2019 & CO NO.67/M/2020 M/S. THE SALSETTE CATHOLIC CO-OP. HOUSING LTD. 2 YEAR 2008-09. THE ASSESSE HAS RAISED LEGAL ISSUE OF WRONG RE- OPENING U/S 147 OF THE ACT IN THE CROSS OBJECTION A ND THEREFORE WE WOULD TAKE UP THE CROSS OBJECTION FIRST FOR ADJ UDICATION. CO NO.67/M/2020 2. BY VIRTUE OF CROSS OBJECTION THE ASSESSEE HAS CH ALLENGED THE ORDER OF LD. CIT(A) UPHOLDING THE REOPENING OF ASSE SSMENT UNDER SECTION 147 OF THE ACT WHICH THE ASSESSEE CHALLENGE D TO BE ILLEGAL AND BAD IN LAW AND IN GROUND NO.2 THE ASSESSEE HAS CHALLENGED THE ORDER OF LD. CIT(A) UPHOLDING THE ASSESSMENT OR DER PASSED UNDER SECTION 143(3) READ WITH SECTION 147 OF THE A CT WHICH IS OTHERWISE ILLEGAL AND BAD IN LAW IN VIEW OF THE WRO NG REOPENING OF THE ASSESSMENT. 3. THE FACTS IN BRIEF ARE THAT THE ASSESSEE FILED T HE RETURN OF INCOME ON 02.01.2009 DECLARING TOTAL INCOME OF RS.2 1,74,000/- WHICH WAS PROCESSED UNDER SECTION 143(1) OF THE ACT . THEREAFTER, THE CASE OF THE ASSESSEE IS REOPENED UN DER SECTION 147 OF THE ACT AFTER THE AO RECEIVED INFORMATION TH AT THE ASSESSEE HAS TRANSFERRED A LAND IN VILLAGE VALAHI T O M/S. TRANSCON PROPERTIES PVT. LTD. VIDE TRANSFER DEED DA TED 09.05.2007 FOR A CONSIDERATION OF RS.12 CRORES WHER EAS THE VALUE AS PER THE ASSISTANT DIRECTOR TOWN PLANNING VA LUATION, MAHARASHTRA, PUNE, THE VALUE WAS RS.50,12,17,552/-. ACCORDINGLY, A NOTICE UNDER SECTION 148 OF THE ACT DATED 30.03.2015 WAS ISSUED AND FINALLY ASSESSMENT UNDER SECTION 147 OF THE ACT WAS FRAMED BY MAKING AN ADDITION OF RS.44,55,14,722/- UNDER SECTION 143(3) READ WITH SE CTION 147 OF THE ACT DATED 31.03.2016. ITA NO.3869/M/2019 & CO NO.67/M/2020 M/S. THE SALSETTE CATHOLIC CO-OP. HOUSING LTD. 3 4. THE ASSESSEE CHALLENGED THE ORDER OF AO BEFORE LD. CIT(A) ON THE JURISDICTION OF THE AO TO REOPEN THE ASSESSM ENT, HOWEVER, THE SAME WAS DISMISSED BY OBSERVING AND HOLDING AS UNDER: 4.2.1 FROM THE REASONS RECORDED, I FIND THAT THE AO HAS R ECEIVED INFORMATION FROM THE INVESTIGATION WING OF THE INCOME TAX DEPARTMENT THAT THE STAMP VALUE OF THE SALE/ CONVEYANCE DEED, IN RESPECT OF THE TRANSFER O F LAND BY THE APPELLANT TO M/S. TRANSCON PROPERTIES PVT. LTD., EXECUTED ON 09.05.20 07 WAS RS.50.12 CRONES AS DETERMINED BY ASST. DIRECTOR TOWN PLANNING VALUATIO N, MAHARASHTRA, RUNE, AS AGAINST THE VALUE SHOWN IN THE CONVEYANCE DEED AT R S.12 CRORES. THE ABOVE SAID INFORMATION, WHICH SHOWS SUBSTANTIAL DIFFERENCE BET WEEN THE SALE VALUE OF THE PROPERTY IN THE CONVEYANCE DEED AND THE VALUATION A RRIVED AT BY THE ASST. DIRECTOR TOWN PLANNING VALUATION, MAHARASHTRA, CONSTITUTES A TANGIBLE MATERIAL THAT GIVES RISE TO AN INFERENCE OF ESCAPEMENT OF INCOME IN VIE W OF THE PROVISIONS OF SECTION 50C WHICH REQUIRE THAT THE VALUE OF CONSIDERATION R ECEIVED OR ACCRUING AS A RESULT OF TRANSFER OF A CAPITAL ASSET IS TO BE ADOPTED AT THE RATE ASSESSED OR ASSESSABLE BY THE STAMP VALUATION AUTHORITY. IT IS A SETTLED LAW THAT AT THE TIME OF INITIATION OF, REASSESSMENT PROCEEDINGS, WHAT IS IMPORTANT IS THAT THERE SHOULD BE INFORMATION FROM CREDIBLE SOURCE WHICH GIVE 'RISE TO BELIEF REG ARDING THE ESCAPEMENT OF INCOME AND THE UNDER ASSESSMENT OR ESCAPEMENT OF INCOME IS NOT REQUIRED TO BE .PROVED TO THE HILT AT THIS STAGE. 4.2.2 THE APPELLANT HAS SUBMITTED THAT THE REOPENIN G WAS NOT VALID SINCE THE VALUE WAS DETERMINED BY ASSISTANT DIRECTOR TOWN PLANNING VALUATION, MAHARASHTRA WHICH IS IN THE NATURE OF AN OPINION AND SUBJECT TO ADJUS TMENTS WHICH WERE REQUIRED TO BE DONE. THE VALUATION REPORT OF THE PROPERTY AT A HIG HER FIGURE DOES NOT NECESSARILY MEAN THAT INCOME HAS ESCAPED THE ASSESSMENT. IN THIS REGARD, I FIND THAT THE APPELLANT HAS RELIE D ON VARIOUS DECISIONS WHEREIN IT WAS HELD THAT THE REOPENING OF ASSESSMENT ON THE BA SIS1 OF A REPORT OF DVO (DISTRICT VALUATION OFFICER) IS NOT LEGALLY TENABLE WHERE THE DVO'S REPORT MENTIONED FAIR MARKET VALUE AT A HIGHER FIGURE THAN THE SALE PRICE DISCLOSED BY THE ASSESSEE. I FIND THAT IN THE PRESENT FACTS OF THE CASE THE VALU ATION REPORT' PERTAINS TO THE STAMP DUTY VALUATION, WHICH HAS BEEN PREPARED BY ASST. DI RECTOR TOWN PLANNING VALUATION, MAHARASHTRA, PUNE ON A REFERENCE FROM THE STAMP VAL UATION AUTHORITY AND IS A NODAL AUTHORITY FOR SUCH 'VALUATION. SUCH DIFFERENC E IN THE VALUATION IS TO BE TREATED AS INCOME BY THE EXPRESS PROVISIONS OF SECTION SOC, WHICH IS NOT THE CASE WITH THE DIFFERENCE IN VALUATION AS PER A REPORT OF THE DVO. THUS, THE DECISIONS CITED ARE BASED ON DIFFERENT FACTS AND NOT RELEVANT TO THE PR ESENT CASE. THEREFORE,; I AM OF THE CONSIDERED OPINION THAT THE REASSESSMENT PROCEE DING HAS BEEN INITIATED IN A VALID MANNER, ON THE BASIS OF A REPORT OF GOVERNMEN T AUTHORITY ENTRUSTED WITH THE TASK OF DOING THE STAMP VALUATION, FOR THE STAMP VA LUATION AUTHORITY. THE EXACT QUANTUM OF INCOME, WHICH IS TO BE ADDED ON THE BASI S OF SUCH REPORT HAS TO BE EXAMINED IN THE ASSESSMENT PROCEEDINGS AFTER GIVING OPPORTUNITY TO THE ASSESSEE WHICH HAS BEEN DONE BY THE AO. THEREFORE, GROUND NO .7, CHALLENGING THE VALIDITY OF INITIATION OF REASSESSMENT PROCEEDINGS, IS FOUND TO BE WITHOUT MERIT AND IS DISMISSED. I FIND THAT THE ASSESSMENT ORDER HAS BEE N PASSED IN THE TIME ALLOWED ITA NO.3869/M/2019 & CO NO.67/M/2020 M/S. THE SALSETTE CATHOLIC CO-OP. HOUSING LTD. 4 U/S. 153 OF THE ACT AND GROUND NO.1 CHALLENGING TH E VALIDITY OF ASSESSMENT ON THE GROUND OF LIMITATION IS ALSO DISMISSED. 5. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD, WE FIND THAT IN THIS CASE THE ASSESSMENT WA S REOPENED THE ASSESSMENT ON THE BASIS OF INFORMATION RECEIVED BY THE AO THAT THE PLOT SOLD AND REGISTERED VIDE CONVEYANCE D EED DATED 09.05.2007 FOR A CONSIDERATION OF RS.12 CRORES WAS IN FACT HAD MARKET VALUE OF RS.50,12,17,552/- ACCORDING TO THE VALUATION DONE BY ASSISTANT DIRECTOR TOWN PLANNING VALUATION, MAHARASHTRA, PUNE ON A REFERENCE FROM THE STAMP COL LECTOR, BORIVALI TO BE ADJUDICATED UNDER SECTION 31 OF THE MUMBAI STAMP ACT. THE LD. COUNSEL OF THE ASSESSEE VEHEMEN TLY SUBMITTED BEFORE US THAT THE REOPENING OF ASSESSMEN T UNDER SECTION 147 OF THE ACT READ WITH SECTION 148 OF THE ACT HAS BEEN DONE INVALIDLY WITHOUT VALID JURISDICTION AS THE A O HAS NO MATERIAL BEFORE HIM TO REOPEN THE ASSESSMENT. THE LD. A.R. SUBMITTED BEFORE US THAT THE REOPENING WAS MADE ON THE BASIS OF VALUATION DONE BY ASSISTANT DIRECTOR TOWN PLANNING VALUATION, MAHARASHTRA, PUNE WHICH IN ITS REPORT ITSELF SUBMIT TED THAT DEPRECIATION HAS NOT BEEN GIVEN OR CONSIDERED ON AC COUNT OF VARIOUS LEGAL SUITS PENDING IN DIFFERENT COURTS. W E NOTE THAT THERE ARE 47 CIVIL SUITS PENDING AGAINST THE SAID P ROPERTY IN THE VARIOUS COURTS AND THE PROPERTY WAS OCCUPIED BY THE ENCROACHERS AND TENANTS. THEREFORE, WE FIND MERIT IN THE CONTENTION OF THE LD. A.R. THAT THE VALUATION DONE BY THE ASSISTANT DIRECTOR TOWN PLANNING VALUATION, MAHARASH TRA, PUNE WAS NOT A RELIABLE INFORMATION TO REOPEN THE ASSESS MENT WHICH WAS MERE AN OPINION AND HAS NO AUTHENTICITY AS THE SIGNIFICANT FACTORS LIKE PENDING SUITS, ENCROACHMENTS AND TENAN TS ON THE LAND HAVE NOT BEEN CONSIDERED WHILE VALUING THE PRO PERTY. WE ITA NO.3869/M/2019 & CO NO.67/M/2020 M/S. THE SALSETTE CATHOLIC CO-OP. HOUSING LTD. 5 ALSO FIND THAT THE HONBLE BOMBAY HIGH COURT IN THE CASE OF MRS. RUHI MARY THOMAS & ORS. VS. SALSETTE CATHOLIC CO-OP ERATIVE HOUSING SOCIETY LTD. AND OTHER IN CIVIL SUIT NO.237 OF 2010 VIDE ORDER DATED 02.02.2015 HAS ALSO REJECTED THE VALUAT ION DONE BY THE ASSISTANT DIRECTOR TOWN PLANNING VALUATION, MAHA RASHTRA, PUNE IN PARA 15, 16, 17 FOR THE SAME REASON. MOREOV ER, THE CASE OF THE ASSESSEE IS ALSO SQUARELY COVERED BY THE DE CISION OF HONBLE SUPREME COURT IN THE CASE OF ACIT VS. DHARI YA CONSTRUCTION CO. (2011) 197 TAXMAN 202 (SC) WHEREIN IT HAS BEEN HELD THAT OPINION OF DISTRICT VALUATION OFFICER PER-SE IS NOT AN INFORMATION FOR THE PURPOSE OF REOPENING OF ASSE SSMENT UNDER SECTION 147 OF THE ACT AND AO HAS TO APPLY HI S MIND TO THE INFORMATION IF ANY COLLECTED AND MUST FORM A BE LIEF THEREON OTHERWISE THE REVENUE IS NOT ENTITLED TO REOPEN THE ASSESSMENT. WE NOTE THAT IN THIS CASE ALSO THE AO HAS NOT APPLI ED HIS MIND TO THE VALUATION RECEIVED FROM ASSISTANT DIRECTOR T OWN PLANNING VALUATION, MAHARASHTRA, PUNE AS THE AO HAS COMPLETEL Y FAILED TO TAKE INTO ACCOUNT THE ENCUMBRANCES IN THE SAID LAN D AS THERE 47 PENDING CIVIL LITIGATIONS, ENCROACHMENTS AND OCC UPATION BY TENANTS. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE OPENING HAS BEEN DONE ON THE BASIS OF VALUATION REP ORT OF ASSISTANT DIRECTOR TOWN PLANNING VALUATION, MAHARASH TRA, PUNE IS WRONG AND WITHOUT JURISDICTION. ACCORDINGLY, WE SET ASIDE THE ORDER OF LD. CIT(A) REQUESTING THE REOPENING OF THE ASSESSMENT UNDER SECTION 147 OF THE ACT. 6. SINCE WE HAVE ALLOWED THE GROUND RAISED IN THE C ROSS OBJECTION OF THE ASSESSEE THE REVENUES APPEAL BECO MES INFRUCTUOUS AND IS ACCORDINGLY DISMISSED. ITA NO.3869/M/2019 & CO NO.67/M/2020 M/S. THE SALSETTE CATHOLIC CO-OP. HOUSING LTD. 6 7. IN THE RESULT, THE CROSS OBJECTION OF THE ASSESS EE IS ALLOWED AND THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 12.10.2021. SD/- SD/- ( AMARJIT SINGH) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 12.10.2021. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORDER DY/ASS TT. REGISTRAR, ITAT, MUMBAI.