SAJID QAMRUZ ZAMAN, MUMBAI V. CIT 13, MUMBAI

ITA 4070/MUM/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3605 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 17-08-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 21-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJUNATHA SWAMY
• Assessee Lawyers: BABOOLAL M OSTWAL
• Keywords: Opportunity of being heard; Assessment record
• Section: 143(3); 54; 263

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI SHAILENDRA KUMAR YADAV , JM AND SHRI RAJESH KUMAR, AM ./ I.T.A. NO . 407 0 / MUM/20 13 ( / ASSESSMENT YEAR : 200 8 - 09 ) MR.SAJID QAMRUZ ZAMAN, 2 ND HASAN MANSION, DHOBI STREET, MUMBAI - 400003 / VS. COMMISSIONER OF INCOME TAX 13, AAYAKAR BHAVAN, M K ROAD, MUMBAI - 400020 ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN NO. : AAA PZ1753H / APPELLANT BY: SHRI BABOOLAL M OSTWAL / RESPONDENT BY SHRI MANJUNATHA SWAMY / DATE OF HEARING : 1 7. 8 . 201 6 / DATE OF PRONOUNCEMENT : 2 2 .08 . 2016 / O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE AND IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX , MUMBAI D ATED 25.3.2013 PERTAINING TO A.Y. 200 8 - 09 . 2. THE ISSUE RAISED IN THE VARIOUS GROUNDS OF APPEAL FROM GROUND NO.4 TO 5 IS AGAINST THE EXERCISE OF POWERS UNDER SECTION 263 OF THE INCOME TAX ACT, 1961(HEREINAFTER REFERRED TO AS THE ACT) BY THE LD. COMMISSIONER OF INCOME TAX AND SET ING ASIDE THE ORDER OF AO PASSED UNDER SECTION 143(3) OF THE ACT DATED 25.10.2010 WITH A LIMITED DIRECTION OF ASSESSING THE CAPITAL GAIN OF RS.21 LAKHS AS SHORT TERM CAPITAL GAIN S (STCG) IN STEA D OF LONG TERM ITA NO . 407 0 / M/1 3 2 CAPITAL GAINS (LTCG) AS ASSESSED BY THE AO IN THE ASSESSMENT FRAMED UNDER SECTIO N 143(3) OF THE ACT. 3 . FACTS OF THE CASE ARE THAT THE ASSESSMENT FOR THE ASSESSMENT YEAR 2008 - 09 WAS FRAMED VIDE ORDER DATED 25.10.2010 PASSED UNDER SECTION 143(3) BY ASSESSING THE INCOME AT NIL . ON VERIFICATION OF ASSESSMENT RECORDS AND COMPUTATION OF INCOME, IT IS SEEN THAT DURING THE YEAR UNDER CONSIDERATION, A FLAT WAS SOLD FOR RS.37,00,000 / - WHICH HA D RESULTED IN A CAPITAL GAIN OF RS.21,00,000/ - . THE SAID GAIN WAS CLAIMED BY THE ASSESSEE AS LTCG AND DEDUCTION WAS CLAIMED UNDER SECTION 54 OF THE A CT . THE SAID FLAT WAS PURCHASED ON 20.04.2004 AS EVIDENCED BY THE AGREEMENT OF EVEN DATE COUPLED WITH PAYMENT OF RS. 16,00,000/ - BY MEANS OF TWO CHEQUES AND THE POSSESSION WAS TAKEN SIMULTANEOUSLY. LATER ON THE THE AGREEMENT WAS EXECUTED ON NON JUDICIAL ST AMP PAPER ON 30.05.2004 UPON THE INSISTENCE OF THE ASSESSEE AS THE FIRST AGREEMENT WAS EXECUTED ON A PLAIN PAPER. THE SAID FLAT WAS TRANSFERRED ON 20.04.2007. THE CIT WAS OF THE VIEWS THAT FLAT SO PURCHASED WAS TRANSFERRED WITHIN A PERIOD OF THREE YEARS FROM THE DATE OF PURCHASE BY TAKING THE DATE OF PURCHASE FROM THE SECOND AGREEMENT WHICH WAS EXECUTED ON 30.05.2004 AND HOLDING THAT THE GAIN RESULTING THEREFROM WAS SHORT TERM CAPITAL GAIN AND THE EXEMPTION U/S 54 OF THE ACT WAS WRONGLY CLAIMED . ACCORDI NLY A SHOW CAUSE NOTICE U/S 263 OF THE ACT DATED 13.3.2010 OF THE A CT WAS ISSUED WHICH WAS REPLIED BY THE LD.AR OF THE ASSESSEE VIDE LETTER DATED 22.3.2013 ALONG WITH VARIOUS DOCUMENTS WHICH ITA NO . 407 0 / M/1 3 3 WERE FILED. HOWEVER THE CIT NOT CONVINCED WITH THE SUBMISSION O F THE ASSESSEE EXERCISED THE REVISIONARY POWERS AND PASSED ORDER U/S 263 SETTING ASIDE THE ASSESSMENT TO A LIMITED ISSUE. F OR THE SAKE OF CONVENIENCE AND READY REFERENCE THE SAME IS REPRODUCED BELOW: OFFICE OF THE. COMMISSIONER OF INCOME - TAX, CITY - 13' ROOM NO.416, 4TH FLOOR,AAYAKARBHAVAN, M.K. ROAD, MUMBAI - 400 020 NAME AND ADDRESS OF THE ASSESSEE : SHRI SAJID QAMRUZ ZAMAN, 2, HASAN MANSION, DHOBI ST. MUMBAI - 400003. STATUS : INDIVIDUAL PAN : AAAPZ1753H A.Y. : 2008 - 09 DATE OF ORDER : 25.03.2013. ORDER U/S. 263 OF THE 1.T. ACT, 1961 IN THIS CASE, THE ASSESSMENT RECORDS FOR A.Y. 2008 - 09 WERE CALLED FOR. IT WAS NOTICED THAT THE ASSESSMENT U / S 143(3) OF THE I.T. ACT WAS PASSED ON 25.10.2010 DETERMINING THE TOTAL INCOME AT RS. NIL. 2. ON VERIFICATION OF ASSESSME NT RECORDS AND COMPUTATION OF INCOME, IT IS SEEN THAT DURING THE YEAR UNDER CONSIDERATION, A FLAT WAS SOLD FOR R S. 37,00,000 / - WHICH HAS RESULTED IN A CAPITAL GAIN OF RS.21,00,000 / - . THE SAID CAPITAL GAIN CLAIMED BY THE ASSESSEE TO BE EXEMPT AS THE SALE PRO CEEDS HAVE BEEN INVESTED FOR PURCHASE OF NEW RESIDENTIAL FLAT. 3. ON VERIFICATION, IT IS FOUND THAT THE FLAT WAS TRANSFERRED WITHIN THREE YEARS OF PURCHASE AND THEREFORE THE GAIN ON SALE ON FLAT IS SHORT TERM CAPITAL GAIN AND NO DEDUCTION U / S 54 OF THE A CT IS AVAILABLE TO YOU. THIS HAS RESULTED INTO UNDERASSESSMENT OF RS.21,00,000 / - . 4. A NOTICE U/S.263 DT. 13.03.2013 OF THE I.T. ACT WAS ISSUED ON THIS ISSUE FIXING HEARING ON 19.03.2013. MR. ROHIT CHANDAN,CA, ASSESSEE'S ITA NO . 407 0 / M/1 3 4 REPRESENTATIVE ATTENDED AND T HE H EARING WAS ADJOURNED. ON 22.03.2013, CA. APPEARED AND FILED A WRITTEN STA TEMENT AND COPIES O F V ARIOUS DOCUMENTS. 4. I HAVE EXAMINED THE ASSESSMENT RECORDS AND THE DETAILS FILED BY THE ASSESSEE. ON VERIFICATION, IT IS SEEN THAT THESE DETAILS WERE NEITHER ASKED FOR NOR EXAMINED BY THE AO. THE ASSESSMENT ORDER IS THEREFORE SET ASIDE ON THIS LIMITED ISSUE. THE A.O. IS DIRECTED TO PASS AN APPROPRIATE ORDER AFTER EXAMINING ALL FACTS RELEVANT TO THE ISSUE. THE A.O. WILL GIVE OPPORTUNITY OF BEING HEARD TO THE ASS ESSEE AND IS ALSO DIRECTED TO COMPLETE PROCEEDINGS AS SOON AS POSSIBLE WITHOUT WAITING FOR STATUTORY TIME PERIOD. SD/ - (PRANAB KUMAR DAS ) ... COMMISSIONER OF INCOME - TAX - 13, MUMBAI. COPY TO: - 1) THE ASSESSEE. 2) THE ADDL.CIT - 13(1), MUMBAI 3) THE ITO - 13(1 )(3), MUMBAI. 4) THE MASTER FILE. SD/ - ( PADMAJA VENKATRAMAN ) INCOME - TAX OFFICER(HQ) - 13, MUMBAI. 4 . THE LD. AR DURING THE COURSE OF HEARING BEFORE US SUBMITTED THAT THE ASSESSEE SOLD FLAT AT 1 ST FLOOR, OF AL KHADIA APARTMENT AT 366, SANE GURUJI MARG, AGRIPADA ON 20.4.2007 WHICH WAS BOUGHT VIDE AGREEMENT DATED 20.4.2004 BY ENTER ED INTO WITH MR. RA FIQUE HABIB MOTORWALA . IT WAS ALSO SUBMITTED THAT FULL PAYMENT OF RS.16 LAKHS WAS MADE VIDE TWO CHEQUES ONE CHEQUE NO.218607, DATED 20.4.2004 FOR RS.1,00,000/ - AND SECOND CH. NO.218608 FOR RS.15,00,000/ - DATED 26.4.2004, BOTH CHEQUES WERE DRAWN AT HS BC BANK, M G ROAD, MUMBAI. THE POSSESSION OF THE FLAT WAS ALSO TAKEN ON 20.04.2004 BUT THE SALE AGREEMENT WAS EXECUTED ON THE PLAIN PAPER AND LATER ON THE SAME AGREEMENT WAS EXECUTED ON THE SECOND TIME ON 13.5.2004 ITA NO . 407 0 / M/1 3 5 ON THE NON - JUDICIAL STAMP PAPER AT THE INSISTENCE OF THE ASSESSEE . IT WAS SUBMITTED BY THE LD.AR THAT BOTH THE AGREEMENT S WERE PLACED BEFORE THE AO AS WELL AS TH E LD. CIT(A) . THE LD .AR SUBMITTED THAT THESE AGREEMENTS WERE CONSIDERED BY T HE AO AND THEREAFTER F RAMED THE ASSESSMENT ACCEPTING THE LTCG OF RS.21 LAKHS AND ALLOWING EXEMPTION UNDER SECTION 54 O F THE ACT. THE LD. AR FINALLY SUBMITTED THAT SINCE THE FIRST AGREEMENT DATED 20.04.2004 COUPLED WITH PAYMENT THROUGH CHEQUES AND ALSO T OOK THE PHYSICAL POSSESSION AND THUS EFFECTIVE D ATE OF PURCHASE OF FLAT WAS 20.04.2004 AND SUBSEQUENT DATE OF 30.05.2004 ON WHICH THE SAME AGREEMENT WAS EXECUTE ON THE NON - JUDICIAL STAMP PAPER . THE ASSESSEE HAS RIGHTLY CALCULATED THE GAIN AS LTCG AND NOT STCG AS HELD BY THE LD.CIT(A) BY TAKING THE DA T E OF PURCHASE FROM THE DA T E OF SECOND AGREEMENT I.E. 13. 0 5.2004 BY IGNORING T HE FACT S THAT THE PAYMENT WAS MADE ON 20.4.2004 BY MEANS OF TWO CHEQUES DATED 20.4.2004 AND DATED 26.4.2004 OF RS. 1,00,000/ - AND RS. 15,00,000/ - RESPECTIVELY WHEN THE FIRST AGREEMENT WAS EXECUTED WHICH WAS DULY CONSIDERED AND EXAMINED BY THE AO . THE LD. AR FINALLY SUBMITTED SINCE THE ISSUE HAS BEEN CONSIDERED BY THE AO AND TAKEN A POSSIBLE VIEW ON THE BASIS OF THE RECORDS BEFORE HIM AND CAME TO THE CONCLUSION THAT THE AS SESSEE HAS EARNED LTCG ON THE SALE OF PROPERTY AS THE DATE OF FIRST AGREEMENT AS THE DATE OF PURCHASE OF FLAT AND RIGHTLY ALLOWED THE EXEMPTION UNDER SECTION 54 OF THE ACT. THE LD AR ALSO RELIED UPON THE DECISION OF GUJARAT HIGH COURT IN THE CASE OF CIT VS ANILABEN UPENDRA SHAH (2003) 262 ITR 658 IN WHICH IT HAS BEEN HELD THAT THE DATE OF BOOKING SHALL BE TAKEN AS THE DATE OF PURCHASE ITA NO . 407 0 / M/1 3 6 AND ALL SUBSEQUENT EVENTS SUCH AS POSSESSION AND EXECUTION OF SALE DEED ARE IMMATERIAL AND WOULD RELATE BACK TO THE DATE OF FIRST EVENT I.E DATE OF BOOKING. THE LD AR FINALLY SUBMITTED THAT THE REVISIONARY POWERS AS EXERCISED BY THE COMMISSIONER U/S 263 FOR SETTING ASIDE THE ORDER OF AO WAS BAD IN LAW AND THEREFORE DESERVE D TO BE QUASHED. ON THE OTHER HAND, THE LD.DR STRO NGLY OBJECTED THE ARGUMENT OF THE LD.AR SUBMITT ING BEFORE US THAT THE DATE OF PURCHASE WAS 13.5.2004 AND NOT 20.4.2004 AS SUBMITTED BY THE LD.AR OF THE ASSESSEE. THE LD. DR SUBMITTED THAT THE AO COMPLETELY OVERLOOKED T HE FACTS AND FRAMED THE ASSESSMENT WH ICH WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE AND THEREFORE PROCEEDINGS UNDER SECTION 263 OF THE ACT WERE RIGHTLY INVOKED BY THE COMMISSIONER IN THE PRESENT CASE. 5 . WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE PARTIES, PERUSED TH E MATERIAL PLACED BEFORE US INCLUDING THE ORDERS OF AUTHORITIES BELOW AND CASE LAWS RELIED UPON BY THE PARTIES. THE ISSUE BEFORE US IS WHETHER THE REVISIONARY POWERS AS EXERCISED BY THE COMMISSIONER OF INCOME TAX WERE RIGHTLY EXERCISED OR THERE WAS NO REAS ON OR JUSTIFICATION TO RESORT TO THE PROVISIONS OF SECTION 263 OF THE ACT. WE FIND THAT THE ASSESSEE PURCHASED FLAT VIDE AGREEMENT DATED 20.4.2004 AFTER MAKING PAYMENT OF RS.16 LAKHS BEING PURCHASE CONSIDERATION BY MEANS OF TWO CHEQUE DRAWN ON H SBC BANK M G ROAD, MUMBAI T HE DETAILS WHEREOF H A VE ALREADY BEEN MENTIONED ABOVE AND ALSO TAK EN OVER THE PHYSICAL POSSESSION OF THE FLAT SIMULTANEOUSLY. WE FUR THER NOTED THAT THE FIRST AGREEMENT WHICH WAS EXECUTED ON THE PLAIN ITA NO . 407 0 / M/1 3 7 PAPER WAS REDUCED ON NON JUDICIAL STAMP PAPER ON 13.5.2004. T HE LETTER FILED BY THE AR AT PAGE 16 WHICH WAS ACKNOWLEDG ED BY THE OFFICE OF AO ON 25.10.2010 AND THE AO AFTER CONSIDERING THIS AGREEMENT CAME TO THE CONCLUSION THAT THE ASSESSEE HAS HELD THE FLAT FOR MORE THAN 36 MONTH S AND ACCORDINGLY RESULTANT CAPITAL GAIN ON SALE OF THE SAID FLAT BEING LTCG AS CLAIMED BY THE ASSESSEE AND ALLOWED THE EXEMPTION U/S 54 OF THE ACT . THEREAFTER WE NOTED THAT THE LD. CIT(A) BY EXERCISING THE REVISIONARY POWERS U/S 263 ISSUED SHOW NOT ICE DATED 13.3.2013 TO THE ASSESSEE ON THE GROUND THAT THE SALE OF FLAT H A D RESULTED INTO TO STCG AS IT WAS HELD FOR A PERIOD OF LESS THAN 36 MONTHS BY TAKING THE DATE OF PURCHASE OF THE FAT AS 13.5.2004 WHICH IS SECOND AGREEMENT WHICH WAS EXECUTED ON NON - JUDICIAL STAMP PAPER AND OBSERVED THAT DEDUCTION 54 OF THE ACT WAS WRONGLY ALLOWED TO THE A SSESSEE AND HELD THAT THIS HAS RESULTED INTO UNDER ASSESSMENT OF RS.21 LAKHS THEREBY PASSING AN ASSESSMENT ORDER BEING ERRONEOUS AND PREJUDICIAL TO THE INTERES T OF REVENUE AND SET ASIDE THE ORDER OF AO FOR LIMITED PURPOSES TO PASS APPROPRIATE ORDER AFTER EXAMINING ALL THE FACTS OF THE CASE . IN THIS CASE, WE FIND THAT THE BY CONSIDERING THE DATE OF PURCHASE OF THE FIRST AGREEMENT ON WHICH THE FLAT WAS SOLD AN D THE POSSESSION WAS TAKEN ,T HE AO HAS TAKEN THE POSSIBLE VIEW THAT THE FLAT WAS PURCHASED ON 20.4.2004 AS IS APPARENT FROM THE FACTS AS DISCUSSED ABOVE . T HE ASSESSEE HAS MADE LTCG OF RS.21 LAKHS ON THE SALE OF FLAT WHICH WAS CLAIMED EXEMPT U/S 54 OF THE ACT AND WAS ALLOWED BY THE AO AFTER CONSIDERING VARIOUS DOCUMENTS PLACED BEFORE HIM DURING THE COURSE OF ASSESSMENT PROCEEDINGS. ITA NO . 407 0 / M/1 3 8 IN THE CASE OF ANILABEN UPENDRA SHAH (2003) 262 ITR 658 IT HAS BEEN HELD BY THE HONBLE GUJRAT HIGH COURT THAT THE DATE OF B OOKING WILL BE THE DATE OF PURCHASE OF THE PROPERTY FOR THE PROPOSE OF CALCULATING THE CAPITAL GAIN AND THE SUBSEQUENT EVENTS OFF MAKING THE BALANCE CONSIDERATION , TAKING OF POSSESSION AND REGISTRATION ARE IMMATERIAL AND WOULD RELATE BACK TO THE FIRST EVE NT THAT IS DATE OF BOOKING. IN THIS CASE ALSO THE ASSESSEE HAS PURCHASED A FLAT AS EVIDENCED BY THE AGREEMENT DATED 20.04.2004 COUPLED WITH PAYMENT OF RS. 16,00,000/ - AND THEREFORE FOR ALL PRACTICAL PURPOSES THE DATE PURCHASE IS 20.04.2004 AND NOT THE D ATE OF SECOND AGREEMENT DATED 13.05.2004 WHICH IS THE RATIO LAID DOWN BY THE GUJARAT HIGH COURT IN THE CASE OF ANILABEN UPENDRA SHAH (SUPRA). IN OUR OPINION, NO PREJUDICE IS CALLED TO THE REVENUE AND THE ORDER PASSED BY THE AO IS NEITHER ERRONEOUS NOR PREJ UDICIAL TO THE INTEREST OF THE REVNEUE AS THE AO HAS TAKEN A CORRECT VIEW ON THE BASIS OF DOCUMENTS FURNISHED BY THE ASESEEE. ACCORDINGLY, WE SET ASIDE THE ORDER OF COMMISSIONER PASSED U/S 263 OF THE ACT BY ALLOWING THE APPEAL OF THE ASSESSEE. 6. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED . THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 22 ND AUG , 2016 . 22 ND AUG, 2016 SD/ - SD/ - ( SHAILENDRA KUMAR YADAV ) (RAJESH KUMAR) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI: TH AUG , 2016 . . . ./ SRL , SR. PS ITA NO . 407 0 / M/1 3 9 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - CONCERNED 4. / CIT CONCERNED 5. 6. , , / DR, ITAT, MU MBAI CONCERNED / GUARD FILE. / BY ORDER, / / TRUE COPY / / (ASSTT. REGISTRAR) , /ITAT, MUMBAI ITA NO . 407 0 / M/1 3 10 DATE INITIALS 1. DRAFT DICTATED ON 1 8 .8.2016 SPS 2. DRAFT PLACED BEFORE AUTHOR 1 8 .8.2016 SPS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM 4. D RAFT DISCUSSED/APPROVED BY SECOND MEMBER AM 5. APPROVED DRAFT COMES TO THE SR. PS SPS 6. KEPT FOR PRONOUNCEMENT ON SPS 7. FILE SENT TO THE BENCH CLERK SPS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE ON WHICH FILE GOES TO A.R. 1 0. DATE OF DISPATCH OF ORDER