DCIT 2(1), MUMBAI V. BINANI METALS LTD, MUMBAI

ITA 4189/MUM/2013

• Counselvise Citation: 418919914 RSA 2013
• Duration Of Justice: 1 year(s) 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2004-2005
• Appeal Filed On: 24-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHWINI K SINHA
• Assessee Lawyers: VIJAY MEHTA
• Keywords: Sale consideration of property below Jantri Value; Tangible material; Fair market value; Difference of opinion; Reason to believe; Change of opinion
• Section: 147; 148; 139; 143(3); 50C

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI . . , , , BEFORE SHRI R.C. SHARMA, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMB ER . / ITA NO. 4 1 89 /MUM./ 2013 ( / ASSESSMENT YEAR : 2004 05 ) DY. COMMISSIONER OF INCOME TAX 2(1) AAYAKAR BHAVAN, ROOM NO.561 5 TH FLOOR, 101, M.K. ROAD MUMBAI 400 020 .. / APPELLANT V/S BI NANI METALS LIMITED MERCANTILE CHAMBERS 2 ND FLOOR, 12, J.N. HARDIA MARG BALLARD ESTATE, MUMBAI 400 001 .... / RESPONDENT ./ PERMANENT ACCOUNT NUMBER AAACB2901J . / C.O. NO. 25/MUM./2014 ( . 418 9 /MUM./20 0 3 ) ( ARISING OUT OF ITA NO. 4189 /MUM./20 13 ( / ASSESSMENT YEAR : 2004 05 ) BINANI METALS LIMITED MERCANTILE CHAMBERS 2 ND FLOOR, 12, J.N. HARDIA MARG BALLARD ESTATE, MUMBAI 400 001 .. / CROSS OBJECTOR V/S DY. COMMISSIONER OF INCOME TAX 2(1) AAYAKAR BHAVAN, ROOM NO.561 5 TH FLOOR, 101, M.K. ROAD MUMBAI 400 020 .... / RESPONDENT ./ PERMANENT ACCOUNT NUMBER AAACB2901J / ASSESSEE BY : SHR I V IJAY MEHTA / REVENUE BY : SHRI ASHWINI K. SINHA / DATE OF HEARING 04.09.2014 / DATE OF ORDE R 12.09.2014 BINANI METALS LIMITED 2 / ORDER , / PER AMIT SHUKLA , J.M. THE PRES ENT APPEAL HAS BEEN PREFERRED BY THE REVENUE AND THE CROSS OBJECTION BY THE ASSESSEE CHALLENGING THE IMPUGNED ORDER DATED 12 TH MARCH 2013, PASSED BY THE LEARNED COMMISSIONER (APPEALS), MUMBAI, FOR THE QUANTUM OF ASSESSMENT PASSED UNDER SECTION 143(3) R/W S ECTION 147 OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT ) FOR THE ASSESSMENT YEAR 2004 08. 2. BEFORE US, THE LEARNED COUNSEL, SHRI VIJAY MEHTA, ON BEHALF OF THE ASSESSEE, SUBMITTED THAT IN THE CROSS OBJECTION FILED BY THE ASSESSEE, THE VALIDITY OF THE ASS ESSMENT AND THE PROCEEDINGS UNDER SECTION 147, HAS BEEN CHALLENGED WHICH GOES TO THE VERY ROOT OF THE MATTER AND, THEREFORE, THE SAME SHOULD BE TAKEN UP FIRST. 3. BRIEF FACTS, QUA THE LEGAL ISSUE RAISED IN THE CROSS OBJECTION, ARE THAT THE ASSESSEE IS A COMP ANY ENGAGED IN THE BUSINESS OF NON FERROUS METALS, TRADING IN SHARES / STOCKS, CONSUMER PRODUCTS AND FINANCING. FOR THE RELEVANT ASSESSMENT YEAR 2004 05, THE ASSESSEE HAS FILED ITS RETURN OF INCOME UNDER SECTION 139(1) ON 30 TH OCTOBER 2004, DECLARING LOSS OF ` 78,29,529. AS AGAINST THIS, THE ASSESSMENT UNDER SECTION 143(3), WAS COMPLETED VIDE ORDER DATED 22 ND DECEMBER 2006, AT AN INCOME OF ` 80,35,870. AFTER COMPLETING THE ASSESSMENT BINANI METALS LIMITED 3 IN THE AFORESAID MANNER, NOTICE UNDER SECTION 148, WAS ISSUED ON 2 ND MARCH 2011, AFTER RECORDING THE FOLLOWING REASONS: REASONS FOR RE OPENING THE ASSESSMENT IN THE CASE OF M/S. BINANI METALS LIMITED ASSESSMENT YEAR 2004 05 IN THIS CASE, RETURN OF INCOME WAS FILED ON 30 TH OCTOBER 2004, DECLARING LOSS OF ` 78,29,530. ASSESSM ENT WAS COMPLETED U/S 143(3) OF THE I.T. ACT, ON 22.12.2006, DETERMINING TOTAL INCOME AT ` 80,35,870. ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A) AND AFTER PASSING ORDER GIVING EFFECT TO LEARNED CIT(A)S ORDER (DATED 08.02.2010), THE TOTAL INCOME REVISED T O ` 11,70,469 AND LONG TERM CAPITAL STOOD LOSS ALLOWED TO BE CARRIED FORWARD AS PER DIRECTIONS OF LD. CIT( A) STOOD AT ` 98,03,404. FOR THE RELEVANT ASSESSMENT YEAR, ASSESSEE HAS SOLD ONE FLAT IN GIRIRAJ BUILDING, ALTAMOUNT ROAD. THE SALE CONSIDERATION OF THE FLAT WAS SHOWN AT ` 1,17,00,000 AND AFTER REDUCING THE COST OF TRANSFER FO ` 1,75,800, NET SALE CONSIDERATION STOOD AT ` 1,15,24,200. APART FROM THE ABOVE, DURING THE RELEVANT ASSESSMENT YEAR, ASSESSEE DERIVED SHORT TERM CAPITAL GAIN OF ` 2,65,426 ON PLANT AND MACHINERY AND LOSS OF ` 5,95,200 ON SALE OF MOTOR CAR. THUS, THE AGGREGATE NET SHORT TERM CAPITAL GAIN ON SALE OF ASSETS WAS SHOWN AT ` 95,81,614 AS COMPUTED IN SCHEDULE IV OF COMPUTATION OF INCOME ATTACHED WITH THE RETURN OF INCOME. SUBSEQUEN TLY, AN INTIMATION WAS RECEIVED FROM THE ITO 5(2)(4), MUMBAI, VIDE LETTER NO.ITO 5(2)(4)/INTIMATION/2010 11 DT. 14.02.2011 THAT ASSESSEES COMPANY HAS SOLD PROPERTY FOR ` 1,17,00,000 WHEREAS THE MARKET VALUE OF THE PROPERTY AS PER DEED OF AGREEMENT REGISTER ED ON 01.01.2004 VALUED AT ` 1,44,55,000. THUS, APPARENTLY, THE PROVISIONS OF SECTION 50C ARE APPLICABLE IN ASSESSEES CASE. THE SHORT TERM CAPITAL GAIN HAS BEEN UNDER ASSESSED TO THE EXTENT OF ` 2756 LACS. IN VIEW OF THE ABOVE, I HAVE REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR A.Y. 2004 05 BY REASON OF THE FAILURE ON PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT AND ALSO BY THE REASON OF UNDERSTATEMENT OF INCOME. HENCE, NECE SSARY APPROVAL TO ISSUE NOTICE U/S 148 AS PER PROVISION OF SECTION 1 51 (2) IS OBTAINED FROM THE HONBLE COMMISSIONER OF INCOME TAX II, MUMBAI, VIDE LETTER NO.CIT 2/147/2010 11 DT. 02.03.2011. THEREFORE, NOTICE U/S 148 IS ISSUED. BINANI METALS LIMITED 4 4. THE ASSESSEE OBJECTED TO THE RE OPENING OF THE ASSESSMENT UNDER SECTION 147, VIDE LETTER DATED 9 TH DECEMBER 2011, ON THE GROUND THAT THE ENTIRE DETAILS OF SALE CONSIDERATION AS WELL AS THE MARKET VALUE OF THE FLAT AS PER THE STAMP VALUATION WAS GIVEN BEFORE THE ASSESSING OFFICER IN THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS. THE ASSESSING OFFICER, AFTER DUE VERIFICATION, HAS ACCEPTED THE ASSESSEES WORKING OF CAPITAL GAIN. THUS, THE RE OPENING BEYOND THE PERIOD OF FOUR YEARS AMOUNTS TO CHANGE OF OPINION AND IS ALSO BARRED BY THE PROVISO T O SECTION 147. THE ASSESSING OFFICER , HOWEVER, REJECTED THE ASSESSEES OBJECTION. DURING THE COURSE OF RE ASSESSMENT PROCEEDINGS, HE REFERRED THE MATTER TO THE DEPARTMENT VALUATION OFFICER (DVO) FOR THE VALUATION OF THE FLAT WHICH WAS SOLD BY THE ASSESSEE FOR ` 1.17 CRORES. HOWEVER, TILL THE PASSING OF THE ASSESSMENT ORDER, THE DVOS REPORT COULD NOT BE OBTAINED, THEREFORE, HE ADOPTED THE VALUE OF THE SALE OF FLAT AT ` 1,44,55,000, AS TAKEN BY THE STAMP DUTY AUTHORITIES IN VIEW OF SECTION 50C. ACCORDINGLY, THE DIFFERENCE OF ` 27,55,000, WAS TREATED AS SHORT TERM CAPITAL GAIN. 5. THE LEARNED COMMISSIONER (APPEALS), ON THE ISSUE OF VALIDITY OF RE OPENING UNDER SECTION 147, REJECTED THE ASSESSEES CONTENTION. HOWEVER, ON MERITS, HE GAVE THE RELIEF ON THE GROUND THAT THE DVOS REPORT WHICH WAS MADE AVAILABLE AT THE STAGE OF FIRST APPELLATE PROCEEDINGS, THE VALUE ADOPTED WAS ` 1,31,06,400 , AND THE DVO HIMSELF IN HIS REPORT HAS GIVEN THE COMPARABLE RATES OF THE NEARBY FLATS BINANI METALS LIMITED 5 AND ON THE SAME COMPARISON, HE FOUND THAT IF THE LOWER RATE IS APPLIED, THEN WHAT THE ASSESSEE HAS SHOWN AS SALE CONSIDERATION IS ON HIGHER SIDE. THEREFORE, HE HELD THAT THE SALE CONSIDERATION SHOWN BY THE ASSESSEE IS AT THE FAIR MARKET VALUE. 6. BEFORE US, THE LEARNED COUNSEL FOR THE AS SESSEE SUBMITTED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAD FURNISHED THE COPY OF AGREEMENT FOR SALE OF FLAT , WHICH ALSO CONTAINS THE DETAILS OF STAMP DUTY PAID. HE DREW OUR ATTENTION TO THE SALE AGREEMENT DATED 31 ST DECEMBER 2013, WHEREIN HE POINTED OUT THAT THE SALE CONSIDERATION WAS ` 1.17 CRORES. APART FROM THAT, HE SUBMITTED THAT IN THE SAID AGREEMENT ITSELF, AT THE LAST PAGE, THERE WAS A WORKING OF MARKET VALUE BY THE STAMP AUTHORITIES , WHEREIN IT WAS DULY MENTIONED THAT THE MA RKET VALUE FOR THE PURPOSE OF STAMP VALUATION WAS AT ` 1,44,55,000. THUS, ALL THESE DETAILS WERE THERE BEFORE THE ASSESSING OFFICER. NOT ONLY THIS, THE ASSESSING OFFICER IN PARA 7/PAGE 5 OF THE ASSESSMENT ORDER, HAS ALSO TAKEN NOTE OF THE SALE CONSIDERATIO N FROM THE SAID AGREEMENT ITSELF AND HAS ALSO MADE THE ADDITION AFTER TREATING IT TO BE SHORT TERM CAPITAL GAIN. THUS, NOT ONLY THE ASSESSEE HAS DISCLOSED FULLY AND TRULY ALL MATERIAL FACTS BUT THE SAME HAS ALSO BEEN EXAMINED AND LOOKED UPON BY THE ASSESSI NG OFFICER. IN SUCH A CASE, RE OPENING BEYOND THE PERIOD OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, IS CLEARLY BARRED IN VIEW OF THE EMBARGO LAID DOWN IN PROVISO TO SECTION 147. THUS, THERE WAS BINANI METALS LIMITED 6 NO FAILURE ON THE PART OF THE ASSESSEE TO DIS CLOSE FULLY AND TRULY ALL MATERIAL FACTS AND, THEREFORE, RE OPENING BEYOND THE PERIOD OF FOUR YEAR IN THE CASE OF THE ASSESSEE CANNOT BE LEGALLY MADE. 7. THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, SUBMITTED THAT EVEN THOUGH THE SALE AGREEMEN T WAS FILED BEFORE THE ASSESSING OFFICER, THE FAIR MARKET VALUE AS DETERMINED BY THE STAMP VALUATION AUTHORITY MIGHT HAVE ESCAPED THE ATTENTION OF THE ASSESSING OFFICER. UNDER THE EXPLANATION TO SECTION 147, SUCH A RE OPENING CAN BE DONE. 8. WE HAVE HEARD TH E RIVAL CONTENTIONS AND PERUSED THE RELEVANT FINDINGS OF THE LEARNED COMMISSIONER (APPEALS) ON THE ISSUE OF RE OPENING UNDER SECTION 147. FROM THE RECORDS OF THE ORIGINAL ASSESSMENT PROCEEDINGS, IT IS SEEN THAT THE ASSESSEE, VIDE LETTER DATED 19 TH DECEMBER 2006, HAD FILED COPY OF SALE AGREEMENT TO THE ASSESSING OFFICER. THE SAID SALE AGREEMENT CLEARLY PROVIDES DETAILS OF SALE CONSIDERATION OF THE FLAT WHICH WAS AT ` 1.17 CRORES AND A PART FROM THAT THERE WAS A WORKING DONE BY THE STAMP VALUATION AUTHORITIES AT THE LAST PAGE WHEREBY THEY HAVE VALUED THE FLAT FOR THE PURPOSE OF STAMP DUTY AT ` 1,44,55,400. ALL THESE INFORMATION WERE THERE BEFORE THE ASSESSING OFFICER. THE ASSESSING OFFICER HAS DULY TAKEN NOTE OF THE SALE AGREEMENT IN THE SAID ASSESSMENT ORDER. THUS, INSOFAR AS ASSESSEE IS CONCERNED, IT HAS FULLY AND TRULY DISCLOSED ALL THE MATERIAL FACTS NECESSARY FOR ITS ASSESSMENT. FROM THE PERUSAL OF THE REASONS BINANI METALS LIMITED 7 RECORD , IT IS SEEN THAT T HE CASE HAS BEEN RE OPENED BEYOND THE PERIOD OF FOUR YEARS FROM TH E END OF THE RELEVANT ASSESSMENT YEAR ON THE BASIS OF THE INFORMATION RECEIVED FROM THE INCOME TAX OFFICER 5(2)(4), THAT THE ASSESSEE COMPANY HAS SOLD THE PROPERTY WORTH ` 1.17 CRORES, WHEREAS THE MARKET VALUE OF THE PROPERTY IS AT ` 1,44,55,000. BASED ON THIS INFORMATION, THE ASSESSING OFFICER, IN THE REASONS RECORDED HAS HELD THAT HE HAS REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR THE REASONS OF FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS. THUS, FOR ACQUIRING THE JURISDICTION UNDER SECTION 147, THE ASSESSING OFFICER HAS TAKEN NOTE OF SOME INFORMATION RECEIVED FROM THE INCOME TAX OFFICER THAT THE MARKET VALUE OF FLAT IS HIGHER THAN THE SALE CONSIDERATION AND, THEREAFTER, HE HAS ASCRIB ED FAILURE ON THE PART OF THE ASSESSEE. AS STATED ABOVE, THE INFORMATION ABOUT THE MARKET VALUE OF THE PROPERTY WA S AT ` 1,44,55,000, WAS ALREADY THERE IN THE RECORD DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, AS MENTIONED IN THE SALE DEED ITSELF. ONC E THE INFORMATION WAS ALREADY THERE IN THE RECORD, THEN RECEIVING OF INFORMATION ON THE SAME POINT CANNOT BE HELD TO BE NEW INFORMATION OR ANY TANGIBLE MATERIAL COMING INTO RECORD . MERELY MENTIONING THAT THE ASSESSEE HAS FAILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS IS NOT SUFFICIENT TO ACQUIRE JURISDICTION WITHIN THE AMBIT OF PROVISO TO SECTION 147, BUT THE ASSESSING OFFICER HAS TO ASCRIBE SPECIFICALLY , WHAT IS THE FAILURE ON THE PART OF THE ASSESSEE. IN THE PRESENT CASE, ONCE THE ENTIRE FACT S HAS BEEN DISCLOSED DURING THE BINANI METALS LIMITED 8 COURSE OF ASSESSMENT PROCEEDINGS, ( AS BROUGHT OUT HEREIN ABOVE ) , THEN IT CANNOT BE HEL D THAT THERE WAS FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. THE ASSESSEE IS ON LY REQUIRED TO DISCLOSE THE ENTIRE FACTS AND MATERIAL AND THEN IT IS UPON THE ASSESSING OFFICER TO DRAW THE LEGAL INFERENCE FOR THE PURPOSE OF ASSESSMENT . IT IS A TRITE LAW THAT IN CASE WHERE THE ASSESSMENT HAS BEEN COMPLETED UNDER SECTION 143(3), THEN NO ACTION CAN BE TAKEN FOR RE OP E NING THE CASE UNDER SECTION 147, AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR , UNLESS TWIN CONDITIONS ARE FULFILLED I.E., THE ASSESSEE HAS FAILED TO FURNISH THE RETURN OF INCOME UNDER SECTION 139 OR FAILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FAC TS NECESSARY FOR THE ASSESSMENT. HERE IN THIS CASE AS HELD EARLIER , THERE IS NO FAILURE ON THE PART OF THE ASSESSEE. THUS, UNDER FIRST PROVISO TO SECTION 147, THE RE OPENING OF THE ASSESSMENT UNDER SEC TION 147, IS BAD IN LAW AND THE ENTIRE PROCEEDINGS INITIATED VIDE NOTICE ISSUED UNDER SECTION 148, IS VOID AB INITIO BEING WITHOUT JURISDICTION. THUS, ON THE VALIDITY OF RE OPENING OF UNDER SECTION 147, THE ASSESSMENT ORDER DATED 30 TH DECEMBER 2011, IS HER EBY QUASHED AND, ACCORDINGLY, THE GROUND RAISED BY THE ASSESSEE IN THE CROSS OBJECTION IS ALLOWED. 9. SINCE WE HAVE ALREADY QUASHED THE ASSESSMENT, THEREFORE, THE GROUNDS RAISED BY THE DEPARTMENT ON MERITS, HAS BECOME PURELY ACADEMIC, THEREFORE, THE SAME ARE NOT BEING ADJUDICATED UPON. BINANI METALS LIMITED 9 ACCORDINGLY, THE GROUNDS RAISED BY THE DEPARTMENT ARE DISMISSED AS INFRUCTUOUS. 10. 10 . IN THE RESULT, ASSESS EES CROSS OBJECTION IS ALL OWED AND REVENUES APPEAL IS DISMISSED 12 TH SEPTEMBE R 2014 ORDER PRONOUNCED IN THE OPEN COURT O N 12 TH SEPTEMBE R 2014 SD/ - . . R.S. SHARMA ACCOUNTANT MEMBER SD/ - AMIT SHUKLA JUDICI AL MEMBER MUMBAI, DATED : 12 TH SEPTEMBE R 2014 / COPY OF THE ORDER FORWARDED TO : (1) / THE ASSESSEE ; (2) / THE REVENUE; (3) ( ) / THE CIT(A ) ; (4) / THE CIT, MUMBAI CITY CONCERNED ; (5) , , / THE DR, ITAT, MUMBAI ; (6) / GUARD FILE . / TRUE COPY / BY ORDER . / PRADEEP J. CHOWDHURY / SR. PRIVATE SECRETARY / / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI