SHRI RAGHVENDRA B. DESHMUKH, Pune V. INCOME TAX OFFICER WARD-3(1), Nagpur

ITA 439/NAG/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1333 (ITAT-NAGPUR)
• Duration Of Justice: 1 year(s) 10 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 08-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AGNESH P THOMAS
• Assessee Lawyers: A G PIMPERKHEDE
• Keywords: Sale consideration of property below Jantri Value; Fair market value; Difference of opinion; Valuation report; Assessment record; Change of opinion
• Section: 143(3); 50C; 54F; 147; 148

Judgement Text

1 ITA NO. 439/NAG/2014. IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. (S.M.C.) I.T.A. NO.439 /NAG/201 4 . ASSESSMENT YEAR : 2006 - 07. SHRI RAGHVENDRA B. DESHMUKH, THE INCOME - TAX OFFICER, PUNE. VS. WARD - 3(1), NAGPUR. PAN ABHPD2428H. APPELLANT. RESPONDEN T. APPELLANT BY : SHRI A.G. PIMPERKHEDE. RESPONDENT BY : S MT. AGNESH P. THOMAS. DATE OF HEARING : 24 - 08 - 2016 DATE OF PRONOUNCEMENT : 24 TH AUGUST, 2016 O R D E R THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(APPEALS) - I, NAGPUR DATED 11 - 09 - 2014 AND PERTAINS TO ASSESSMENT YEAR 2006 - 07. THE GROUNDS OF APPEAL READ AS UNDER : 1. THE LD. ASSESSING OFFICER (AO) IS NOT JUSTIFIED IN FACTS AND LAW IN RE - OPENING THE CASE U/S 148 OF I.T. ACT AFTER THE LAPSED OF 4 YEARS FROM THE ORIGINAL ASSESSMENT ORDER AND THE LD. CIT APPEALS IS NOT JUSTIFIED IN CONFIRMING THE ACTION OF LD. AO HAS VALID UNDER THE PROVISIONS OF I.T. ACT. 2. THE LD. AO IS NOT JUSTIFIED IN FACT AND LAW IN REJECTING THE OB JECTIONS OF THE ASSESSEE FOR RE - OPENING OF THE CASE U/S 148 OF I.T. ACT. THE LD. AO HAS NOT PASSED ANY SPEAKING ORDER ON OBJECTIONS OF THE ASSESSEE ON RE - OPENING OF THE CASE AND HENCE THE ORDER PASSED BY LD. AO IS TOTALLY BAD IN LAW. 3. THE LD. CIT APPEAL HAS CONFIRMED THE RE - OPENING U/S 148 STATING THAT THE AO HAS OBTAINED PRIOR APPROVAL FROM COMMISSIONER OF INCOME TAX U/S 151 OF I.T. ACT. HOWEVER THE ASSESSEE HAS NOT BEEN GIVEN AN OPPORTUNITY OF HEARING BY THE COMMISSIONER OF INCOME TAX BEFORE RE - 2 ITA NO. 439/NAG/2014. OPENING OF THE CASE. THE RE - OPENING IS DONE INSPITE OF THE FACT THAT ALL THE FACTS ARE VERIFIED IN ORIGINAL ASSESSMENTS BY THE ASSESSING OFFICER. THE PRIOR APPROVAL OF COMMISSIONER OF INCOME TAX IS SAID TO BE OBTAINED U/S 151 AND NOT U/S 148 OF I.T. ACT WHICH IS MAND ATORY WHEN THE CASE IS REOPENED AFTER THE COMPLETION OF 4 YEARS FROM THE ASSESSMENT ORDER. 4. THE LD. AO IS NOT JUSTIFIED IN REJECTING THE DEDUCTION U/S 54F OF RS.27.00 LAKHS TO THE ASSESSEE AND THE LD. CIT APPEAL IS NOT JUSTIFIED IN FACT AND LAW IN CONFIRMIN G THE ORDER OF LD. AO WHEN ASSESSEE HAS INVESTED THE SALE PROCEEDS OF PLOT IN RESIDENTIAL FLATS AS PER THE PROVISIONS OF LAW. 2. IN THIS CASE THE ASSESSMENT WAS COMPLETED U/S 143 (3) ON 18 - 12 - 2008. SUBSEQUENTLY REOPENING WAS DONE ON THE PREMISE THAT THE ASSESSEE HAS SOLD THE PROPERTY AT THE VALUE BELOW THE PRICE DETERMINED BY THE STAMP VALUATION AUTHORITY. THEREFORE, ASSESSMENT PROCEEDINGS U/S 147 WERE INITIATED BY ISSUE OF NOTICE U/S 148 ON 30 - 08 - 2011. ASSESSME NT WAS COMPLETED ON 25 - 03 - 2013 DETERMINING THE TOTAL INCOME AT RS.30,29,852/ - . 3. THE ASSESSEE HAS CHALLENGED THE VALIDITY OF NOTICE U/S 148, BUT THE AO HAS REJECTED THE SAME HOLDING AS UNDER : THE COUNSEL OF THE ASSESSEE VIDE HIS LETTER FILED ON 06 - 03 - 2 013 HAS CHALLENGED THE VALIDITY OF NOTICE U/S 148 ON THE BASIS OF NUMBER OF JUDICIAL RULINGS WHICH HAVE BEEN PERUSED AND FOUND TO BE NOT APPLICABLE TO THE FACTS OF THIS CASE. MOREOVER, THE ASSESSEE HAS RAISED THE QUESTION OF VALIDITY OF NOTICE U/S 148 AFTE R COMPLYING WITH THE LETTERS OF THE SAID NOTICE DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS. IT IS ONLY WHEN THE ASSESSEE FOUND THAT THINGS WERE NOT GOING HIS WAY, HE STARTED TO CHALLENGE THE VALIDITY OF THE NOTICE U/S 148. IN THIS MATTER ONCE THE ASSE SSEE HAS COMPLIED WITH THE NOTICE U/S 148, HE IS PREVENTED FROM CHALLENGING THE SAME SUBSEQUENTLY AS PER THE DOCTRINE OF RESJUDICATE. HENCE THE ACTION OF THE ASSESSEE IN CHALLENGING THE VALIDITY OF NOTICE U/S 148 AT THE FAG END OF THE ASSESSMENT PROCEEDI NGS IS VOID ABINITIO AND IS NOT TENABLE. 4. LEARNED CIT(APPEALS) HAS ALSO REJECTED THE ASSESSEES CHALLENGE OF JURISDICTION BY HOLDING AS UNDER : 3 ITA NO. 439/NAG/2014. FURTHER THAT THE AO HAS FORMED HIS BELIEF BASED ON THE MATERIAL EVIDENCE IN THE FORM OF VALUATION REPORT WH EREIN THE VALUATION OF THE PROPERTY IN QUESTION WAS VALUED AT HIGHER PRICE THAN THE PRICE DECLARED BY THE APPELLANT ON WHICH CAPITAL GAINS HAS BEEN DECLARED. THE AO HAS ACCORDINGLY RECORDED THE REASONS BEFORE ISSUE OF NOTICE U/S 148 OF THE ACT AND THE REAS ONS RECORDED WERE DULY COMMUNICATED TO THE ASSESSEE VIDE LETTER DATED 25.02.2013. THE ASSESSEE HAS FAITHFULLY COMPLIED WITH THE STATUTORY NOTICES ISSUED BY THE AO FOR THE PURPOSE OF COMPLETION OF THE RE - ASSESSMENT PROCEEDINGS. THE RATIO - DECIDENDI RELIED UP ON BY THE APPELLANT IN HIS SUBMISSIONS IS NOT RELEVANT TO THE FACTS AND CIRCUMSTANCES OF THE CASE. IN THE LIGHT OF THESE FACTS, I DO NOT FIND ANY DEFICIENCY IN THE REASONS RECORDED BY THE AO BY INVOKING THE PROVISIONS OF SECTION 50C OF THE ACT WITH A VIEW TO RE - ASSESS THE INCOME U/S 147 OF THE ACT. THEREFORE, THIS GROUND TAKEN BY THE APPELLANT STANDS DISMISSED, BEING DEVOID OF MERITS. 4. AGAINST THE ABOVE ORDER, THE ASSESSEE IS IN APPEAL BEFORE THE ITAT. 5. LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT TH E ASSESSEE HAS DULY DISCLOSED THE CAPITAL GAIN ARISING FROM THE SALE OF LAND IN THE COMPUTATION SUBMITTED ORIGINALLY. HE FURTHER SUBMITTED THAT THE AO HAS ISSUED A LETTER DATED 15 - 12 - 2008 RAISING THE ISSUE THAT THE ASSESSEE HAS TAKEN ACTUAL SALE DEED CONSI DERATION BUT THE STAMP VALUATION AUTHORITY HAVE TAKEN HIGHER AMOUNT AS CONSIDERATION OF SALE OF THE PROPERTY. THE ASSESSEE HAS DULY RESPONDED VIDE LETTER DATED 18 - 12 - 2008 EXPLAINING AS UNDER : SIR, THIS HAS REFERENCE TO YOUR LETTER NO. F.NO. ITO WARD(1)/SCRUTINY/08 - 09 DATED 15 - 12 - 08. THE EXPLANATION REGARDING SECTION 50C OF THE INCOME TAX ACT, 1961 IS GIVEN BELOW. (I) FOR CAPITAL GAIN PURPOSE I HAVE TAKEN ACTUAL SALE - DEED CONSIDERATION BECAUSE I HAVE RECEIVED THAT MUCH AMOUNT ALONG WITH OTHER 13 MEMBERS OF THE SOCIETY AS STATED IN THE SALE - DEED. (II) THE STAMP VALUATION AUTHORITY HAD ADOPTED A HIGHER VALUE THAN FAIR MARKET VALUE. THE REASON FOR THAT IS NOT KNOWN, PROBABLY MARKET VALUE OF SOME OTHER PLACE ON AMRAVATI ROAD AT NAGPUR, MIGHT HAVE BEEN ADOP TED. 4 ITA NO. 439/NAG/2014. (III) THE REAL MARKET VALUE OF THE SAID PROPERTY AT SEVEN KM. ON AMRAVATI ROAD AT NAGPUR WAS NOT MORE THAN WHAT IS CONSIDERED IN ACTUAL SALE - DEED DURING THE PERIOD OF 2004 - 06. (IV) HOWEVER, THE FACTUAL REASONS FOR HIGHER VALUE ADOPTED BY SAV CAN BE EXPLAINED BY VENDOR SOCIETY AND PURCHASER SOCIETY. (V) THE SAID SALE - DEED WAS DONE BETWEEN TWO CO - OPERATIVE HOUSING SOCIETIES AND THE AMOUNT OF SALE - DEED EQUALLY DISTRIBUTED AMONGST THE 14 MEMBERS OF THE SOCIETY EQUALLY. I WAS ONE OF THE PLOT - HOLDER MEMBERS AMONGST THEM. 6. CONSIDERING THE REPLY OF THE ASSESSEE, THE AO PASSED ASSESSMENT ORDER ON 18 - 12 - 2008 WITHOUT MAKING ANY ADDITION ON ACCOUNT OF CAPITAL GAIN DISCLOSED IN THE RETURN OF INCOME. THEREAFTER THE AO REOPENED THE ASSESSMENT RECORDING THE FOLLOWING REASONS: IN THIS CASE, SCRUTINY ASSESSMENT U/S 143(3) WAS COMPLETED ON 18 - 12 - 2008. THE ASSESSEE HAS SHOWN LCGC FROM SALE OF LAND. THE VENDORS SOCIETY HAD SOLD THE LAND IN A COMBINED SALE DEED FOR RS.2,58,52,630/ - AND THE SALE PROCEED HAD BEEN DIVIDED AMONG 14 MEMBER S INCLUDING THE ASSESSEE. THE ASSESSEES SHARE IS RS.19,88,664/ - . THE ASSESSEE ADOPTED IT AS FULL VALUE OF CONSIDERATION RECEIVED AND WORKED OUT LTCG . THE COMBINED LAND PROPERTY HAS BEEN VALUED AT RS. 6,93,61,630/ - FOR STAMP DUTY VALUATION AND PROPORTIONAT E SHARE OF ASSESSEE COMES TO RS. 52,55,021/ - . THIS HAS BEEN RESULTED IN UNDER ASSESSMENT OF INCOME OF RS.32,03,873/ - . IN VIEW OF THE ABOVE, THE A.O. HAS REASONS TO BELIEVE THAT INCOME AT RS.32,03,873/ - CHARGEABLE TO TAX FOR THE A.Y. 2006 - 07 HAS BEEN ESCAPE D ASSESSMENT. HENCE NOTICE U/S 148 OF THE I.T. ACT 1961 HAVE ISSUED FOR THE A.Y. 2006 - 07. 7. I FIND THAT THE EXAMINATION OF THE ABOVE MAKES IT CLEAR THAT THIS IS A CASE OF CHANGE OF OPINION WHICH IS NOT PERMISSIBLE IN THE GARB OF REOPENING. THE AO HAS DUL Y ENQUIRED THE ISSUE OF SALE OF LAND, THAT THE SALE CONSIDERATION WAS BELOW THE STAMP VALUE CONSIDERATION. THEREAFTER THE ASSESSEE HAS GIVEN EXPLANATION. SUBSEQUENTLY, THE AO HAS PASSED THE ASSESSMENT ORDER WITHOUT MAKING ANY ADDITION ON ACCOUNT OF SALE OF LAND. IN THESE CIRCUMSTANCES, THE REOPENING ON THE GROUND OF SALE DECLARED BEING BELOW THE STAMP VALUATION AMOUNT IS A CLEAR CASE OF CHANGE OF OPINION WHICH IS NOT PERMISSIBLE UNDER LAW. THE ASSESSEE HAS DULY RAISED THIS OBJECTION AT THE TIME OF ASSESSMEN T ITSELF . THE AO HAS REJECTED THIS 5 ITA NO. 439/NAG/2014. CONTENTION WITHOUT ANY COGENT REASON. THE LEARNED D.R. IN THIS REGARD HAS PLACED RELIANCE ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF M/S AMAYA INFRASTRUCTURE PVT. LTD. IN WRIT PETITION NO. 787 OF 2016 VIDE ORDER DATED 20 - 04 - 2016 FOR THE PROPOSITION THAT WHEN THE ASSESSEE HAS PARTICIPATED IN THE ASSESSMENT PROCEEDINGS HE CANN OT SUBSEQUENTLY CHALLENGE THE VALIDITY OF REOPENING. 8. IN THIS REGARD I FIND THAT THE RELIANCE OF THE REVENUE ON THE SAID CASE LAW IS NOT AT ALL APPLICABLE ON THE FACTS OF THIS CASE . FIRSTLY THE SAID DECISION OF THE HONBLE HIGH COURT WAS IN A WRIT JURIS DICTION. FURTHER MORE IT WAS A CASE WHERE THE ASSESSEE HAS PARTICIPATED IN ASSESSMENT PROCEEDINGS BEFORE THE AO AND THEREAFTER FILED A WRIT PETITION ON THE GROUND THAT THE AUTHORITY HAS NO JURISDICTION. HENCE THE PRESENT CASE IS QUITE DISTINCT FROM THE ABO VE AS THE ISSUE OF VALIDITY OF JURISDICTION HAS BEEN RAISED BEFORE THE AO HIMSELF. 9. FOR THIS PROPOSITION THAT CHANGE OF OPINION IS NOT PERMISSIBLE, I PLACE RELIANCE UPON THE DECISION OF HONBLE APEX COURT IN THE CASE OF FORMER FRANCE 264 ITR 566 WHERE IN IT WAS HELD THAT EVEN AFTER THE AMENDMENT IN THE ACT, REOPENING BY CHANGE OF OPINION IS NOT PERMISSIBLE. ACCORDINGLY I QUASH THE REASSESSMENT INASMUCH AS THE SAME IS BEREFT OF VALID JURISDICTION. 10 . SINCE THE ASSESSMENT HAS BEEN QUASHED ON THE ISSUE OF VALIDITY OF JURISDICTION, THE ADJUDICATION ON MERITS OF THE CASE IS ONLY OF ACADEMIC INTEREST. HENCE I DO NOT ENGAGE INTO THE SAME. 1 1 . IN THE RESULT, THIS APPEAL BY THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 24 TH DAY OF AUG UST,2016. SD/ - ( SHAMIM YAHYA) ACCOUNTANT MEMBER. NAGPUR, DATED: 24 TH AUGUST, 2016. 6 ITA NO. 439/NAG/2014. COPY FORWARDED TO : 1. SHRI RAGHVENDRA B. DESHMUKH , PLOT NO.10, NEAR S - 5, OPP. SUDHARSHAN HEIGHT, MADINA MASJID AREA, VIMAN DARSHAN, SANJAY PARK, PUNE - 411032. 2. I.T.O. WARD - 3(1), NAGPUR. 3. C.I.T. - II, NAGPUR. 4. CIT(APPEALS), - I, NAGPUR. 5. D.R., ITAT, NAGPUR. 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, N AGPUR. WAKODE.