DCIT 1(2), MUMBAI V. INARCO LTD, MUMBAI

ITA 4114/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 88086 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2015
• Appeal Filed By: Department
• Bench Allotted: I
• Next Hearing Date: 28-01-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 22-05-2013
• Court: TRIBUNAL
• Assessee Lawyers: VIVEK PERAMPURNA
• Keywords: Reopening of assessment; Sale consideration of property below Jantri Value; Audit objection; Tangible material; Fair market value; Difference of opinion; Change of opinion; Reassessment proceedings
• Section: 143(3); 50C; 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER ./I.T.A. NO. 4114/M/2013 ( AY: 2005 - 20 06 ) DCIT 1(2), 5 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 20 . / VS. M/S. INARCO LTD., M - 3, COURT CHAMBER, 35, NEW MARINE LINES, MUMBAI 400 020. ./ PAN : AAAC12897Q ( / APPELLANT) .. ( / RESPONDENT ) / ASSESSEE BY : SHRI VIVEK PERAMPURNA, DR / REVENUE BY : SHRI VIJAY MEHTA / DATE OF HEARING : 28 .1.2015 / DATE OF PRONOUNCEMENT :28 .1.2015 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE REVENUE ON 22.5.2013 IS AGAINST THE ORDER OF THE CIT (A) - 7, MUMBAI DATED 18.12.2012 FOR THE ASSESSMENT YEAR2005 - 2006. IN THIS APPEAL, REVENUE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) ERRED IN HOLDING THAT REOPENING OF ASSESSMENT WAS MERELY BASED ON CHANGE OF OPINION AS ALL THE RELEVANT FACTS IN RESPECT OF CAPITAL GAIN WERE BEFORE THE ASSESSING OFFICER AND HENCE, IN ANNULLING THE REOPENING OF ASSESSMENT. WHEREAS THE ASSESSEE HAD FAILED TO DISCLOSE FULL FACTS AND PARTICULARS INCLUDING THE SALE DEED REGARDING THE CAPITAL GAIN FROM SALE OF LAND EITHER IN THE RETURN OF INCOME OR DURING THE ASSESSMENT PROCEEDINGS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) ERRED IN NOT APPRECIATING THAT THE NOTICE US 148 WAS ISSUED WITHIN 4 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR AND SO THE PROVISO TO SECTION 147 IS NOT APPLICABLE IN THE PRESENT CASE. 2. THE ISSUE RAISED BY THE REVENUE IN THE ABOVE GROUNDS RELATES TO THE QUASHING OF THE REASSESSMENT PROCEEDINGS ON THE GROUND OF CHANGE OF OPINION. BRIEFLY STATED, THE ASSESSING OFFICER COMPLETED THE REGULAR ASSESSMENT U/S 143(3) OF THE ACT ON 26.12.2007. THE ASSESSING OFFICER CONSIDERED THE ISSUE OF LONG TERM CAPITAL GAINS EARNED IN RESPECT OF THE SALE OF LAND AT THANE IN THE SAID ASSESSMENT. SUBSEQUENTLY, ASSESSING OFFICER ISSUED NOTICE U/S 148 OF THE ACT ON 11.3.2010 ON THE GROUND THAT THE LONG TERM CAPITAL GAIN THAT AROSE ON THE SAID SALE OF LAND AT THANE IS 2 REQUIRED TO BE COMPUTED AS PER THE PROVISIONS OF SECTION 50C OF THE ACT. ASSESSING OFFICER ACCORDINGLY REASSESSED THE CAPITAL GAINS APPLYING THE PROVISIONS OF SECTION 50C OF THE ACT , ADOPTED THE FMV AS CONSIDERED BY THE SRO (SUB - REGISTRAR OFFI CE) AND BROUGHT IN ADDITIONAL CAPITAL GAINS AMOUNTING TO RS. 59,71,938/ - IN THE ASSESSMENT . MATTER TRAVELLED TO THE FIRST APPELLATE AUTHORITY. 3. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY, ASSESSEE RAISED THE LEGAL ISSUE ON REOPENING OF THE ASSESSMENT ON THE GROUND OF CHANGE OF OPINION. CIT (A) ALLOWED THIS GROUND OF APPEAL OF THE ASSESSEE AND ANNULLED THE RE - ASSESSMENT MADE U/S 143(3) R.W.S 147 OF THE ACT. THE CONTENTS OF PARA 5.3 OF THE CIT (A)S ORDER ARE RELEVANT IN THIS REGARD. A GGRIEVED WITH THE ABOVE DECISION OF THE CIT (A), REVENUE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING THE ABOVE MENTIONED GROUNDS. 4. DURING THE PROCEEDINGS BEFORE US, LD DR RELIED ON THE ORDER OF THE ASSESSING OFFICER AND MENTIONED THAT THE AO DID NOT APPL Y HIS MIND TO THE FIGURES AVAILABLE ON THE AGREEMENT OF THE SALE OF THE SAID LAND AND THEREFORE, THE REASSESSMENT IS VALID IN LAW. 5. ON THE OTHER HAND, LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUE RELATING TO THE CAPITAL GAINS ON THE SAID SALE OF LAND AT THANE WAS THE SUBJECT MATTER OF DEEP ENQUIRY BY THE ASSESSING OFFICER IN THE REGULAR ASSESSMENT. IN THIS REGARD, HE BROUGHT OUR ATTENTION TO PAGE 3 OF THE PAPER BOOK FOR DEMONSTRATING THE COMPUTATION OF CAPITAL GAINS ON THE SAID SALE OF LAND , PAGE NO . 10 & 11 IS THE LETTER DATED 10.12.2007 BY THE ASSESSEE TO THE ASSESSING OFFICER IN RESPONSE TO THE QUERY RELATING TO THE ISSUE OF CAPITAL GAINS , PAGE 12 OF THE PAPER BOOK I.E., A COPY OF THE DEVELOPMENT AGREEMENT WHICH IS THE SOURCE OF INFORMATION FOR ASSESSING OFFICER TO ISSUE NOTICE U/S 148 OF THE ACT AND THE COPY OF THE SAID AGREEMENT WAS ALREADY SUBMITTED DURING THE REGULAR ASSESSMENT PROCEEDINGS. LD COUNSEL FURTHER BROUGHT OUR ATTENTION TO PAGE 57 OF THE PAPER BOOK EVIDENCING THE REPLIES GIVEN BY THE ASSESSEE TO THE ASSESSING OFFICER IN CONNECTION WITH AN AUDIT OBJECTION RAISED BY THE AUDIT PARTY WHERE THE ABOVE REFERRED LETTER DATED 10.12 .2007 WAS REFERRED TO . REFERRING THE AFOREMENTIONED PAGES OF THE PAPER BOOK, LD COUNSEL MENTIONED THAT THESE P APERS WERE SUBMITTED BY THE ASSESSEE DURING THE REGULAR ASSESSMENT. ASSESSING OFFICER CONSIDERED THESE PAPERS AND ALLOWED THE CLAIM OF ASSESSESSEE DURING THE ORIGINAL ASSESSMENT. CONSIDERING THE ABOVE, PLENTY OF MATERIAL AND 3 CORRESPONDENCE, THE DEPARTMEN TAL ALLEGATION THAT THE ASSESSING OFFICER HAS NOT APPLIED HIS MIND IS NOT PROPER. FURTHER, LD COUNSEL BROUGHT OUR ATTENTION TO THE CONTENTS OF PARA 5.3 OF THE IMPUGNED ORDER WHERE THE CIT (A) CONSIDERED THE ABOVE MATERIAL AS WELL AS THE LEGAL PROPOSITIONS ON THE ISSUE AND GRANTED RELIEF TO THE ASSESSEE WHICH REQUIRES NO INTERFERENCE. 6. ON HEARING BOTH THE PARTIES AND ON PERUSAL OF THE ABOVE REFERRED MATERIAL PLACED ON THE PAPERS, WE FIND THE ISSUE OF COMPUTATION OF CAPITAL GAINS WAS THE SUBJECT MATTER OF SCRUTINY DURING THE REGULAR ASSESSMENT. OTHERWISE, IT IS AN ADMITTED POSITION THAT THE ASSESSING OFFICER DID NOT HAVE ANY TANGIBLE MATERIAL FOR INITIATING THE REOPENING PROCEEDINGS U/S 147 / 148 OF THE ACT. THE QUESTIONNAIRES AND THE REPLIES OF THE ASSESS EE DURING THE ASSESSMENT AS WELL AS THE AUDIT OBJECTION RELATED PROCEEDINGS EVIDENCE THE SAME. THE FIGURE ADOPTED BY THE ASSESSING OFFICER FOR THE PURPOSE OF THE APPLICATION OF THE PROVISIONS OF SECTION 50C WAS ALSO BEFORE THE ASSESSING OFFICER DURING THE REGULAR ASSESSMENT AND IT IS EVIDENT ON THE FRONT PAGE OF THE SAID SALE DEED. FURTHER, WE HAVE ALSO PERUSED VARIOUS DECISIONS PLACED BEFORE US IN THE CASE OF ASIAN PAINTS LTD VS. DCIT [308 ITR 195 (BOM)]; THE DECISION OF THE ITAT, MUMBAI IN THE CASE OF AR ONI CHEMICALS LTD VS. DCIT VIDE ITA NO.288/M/2012 (AY 2005 - 2006), DATED 21.2.2014 WHEREIN ONE OF US (AM) IS THE PARTY TO THE ORDER; ANOTHER DECISION OF THE TRIBUNAL IN THE CASE OF ROYAL CONSTRICTIONS CO VS. ACIT VIDE ITA NO.4717/M/2012 (AY 2004 - 2005) AND O THERS WHEREIN UNDER THE IDENTICAL CIRCUMSTANCES THE TRIBUNAL QUASHED THE REOPENING OF THE ASSESSMENT AND HELD THAT THE SAME IS BAD IN LAW. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND ALSO FOR THE SAKE OF CONSISTENCY AS WELL AS RESPECTFULLY FOL LOWING THE ORDERS OF THE TRIBUNAL, WE ARE OF THE OPINION THAT THE DECISION TAKEN BY THE CIT (A) VIDE 5.3 OF HIS ORDER IS FAIR AND REASONABLE. WE FIND NO INFIRMITY IN THE ORDER OF THE CIT (A) AND THEREFORE, IT DOES NOT CALL FOR ANY INTERFERENCE. ACCORDING LY, GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH JANUARY, 2015. S D / - S D / - (AMIT SHUKLA) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 28 .1 .2014 4 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI