Shri Pannalal Bhil, JAIPUR V. ITO, RAJSAMAND

ITA 453/JODH/2013

• Counselvise Citation: 45323314 RSA 2013
• Duration Of Justice: 9 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-06-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 21-05-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 10-09-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N A JOSHI
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Invalid notice; Opportunity of being heard; Principle of natural justice; Cost of acquisition; Non compliance; Reason to believe
• Section: 50C; 147; 148; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K.SAINI, ACCOUNTANT MEMBER ITA NO. 453/JU/2013 ASSESSMENT YEAR: 2004-05 SHRI PANNA LAL BHIL VS. THE I.T.O VILLAGE MADRI DEVASTHAN WARD - 2 RAJSAMMAND RAJSAMMAND PAN NO. BIFPB 9811 G (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SHRAWAN KUMAR GUPTA DEPARTMENT BY : SHRI N.A. JOSHI, DR DATE OF HEARING : 21.05.2014 DATE OF PRONOUNCEMENT : 11.06.2014 ORDER PER HARI OM MARATHA, J.M. THIS APPEAL HAS BEEN FILED BY THE ASSESSEE FOR A.Y 2004-05 AGAINST THE ORDER OF THE CIT(A), UDAIPUR, DATED 26.06.2013. 2 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT A S PER ANNUAL INFORMATION REPORT [AIR] RECEIVED BY THE A.O., IT W AS NOTICED THAT DURING THE PERIOD UNDER CONSIDERATION, THE ASSESSEE GOT REGISTERED A NO OBJECTION DEED FOR MINING LEASE FOR WHICH THE SU B-REGISTRAR, RAJSAMMAND HAS ESTIMATED THE DLC VALUE OF THE LAND AT RS. 9 LAKHS FOR LOADING AND UNLOADING OF WASTE MINING MATERIAL/ OVER BURDEN/SLURRY ON HIS AGRICULTURAL PIECE OF LAND SIT UATED IN THE REVENUE ESTATE OF VILLAGE BIKARANA, PATAWAR CIRCLE BORAJ, TEHSIL RAJSAMMAND IN FAVOUR OF DEVILAL, HEMRAJ AND BHOLIRA M S/O SHRI DALICHAND TELI. OBVIOUSLY, THIS DOCUMENT CANNOT BE TREATED AS DOCUMENT OF SALE OF LAND OR BUILDING ETC. THIS IS A SHEER NO OBJECTION CERTIFICATION ONLY VIDE WHICH MINING DEPA RTMENT WOULD PERMIT THE ASSESSEE TO LEASE THE LAND BY THOSE PERS ONS FOR CARRYING OUT MINING ACTIVITIES. BUT WHILE REGISTERING THE N OC, THE SUB- REGISTRAR HAS WORKED OUT DLC VALUE OF THAT LAND AT RS. 9 LAKHS AND HAS ALSO SENT AIR INFORMATION TO THE CONCERNED ITO. THIS REGISTRATION OF NOC HAS BEEN TREATED BY THE A.O. HAS TRANSFER OF IMMOVABLE PROPERTY GIVING RISE TO CAPITAL GAIN. THIS FACT HA S BEEN TREATED AS ESCAPEMENT OF INCOME FROM TAX AND BECAUSE THE ASSES SEE HAS NOT FILED ROI AND HAS NOT DECLARED ANY LTCG DURING THE YEAR, THE A.O. 3 ISSUED NOTICE U/S 148 OF THE ACT ON 15.3.2011 AFTER RECORDING REQUISITE REASONS. THE A.O. HAS IGNORED ALL THE AR GUMENTS RAISED AGAINST THE NOTICE INCLUDING THAT ACTION U/S 147 R. W.S 148 OF THE ACT CANNOT BE INVOKED AS THERE HAS BEEN NO ESCAPEMENT O F INCOME. ON MERITS, IT WAS REPEATEDLY ARGUED THAT THERE WAS NO SALE OF ANY PROPERTY [CAPITAL ASSET]. NO CAPITAL GAIN CAN BE S AID TO HAVE ARISEN TO THE ASSESSEE. BUT THE A.O. WAS NOT AGREEABLE AN D HAS ASSESSED THE LONG TERM CAPITAL GAINS AT RS. 9 LAKHS ON THE B ASIS OF DLC RATES AND HAS ADDED THE SAME IN THE HANDS OF THE ASSESSEE . IN APPEAL, THE LD. CIT(A) HAS HOWEVER CONFIRMED THIS ADDITION. AGGRIEVED, THE ASSESSEE HAS FILED THIS APPEAL BY RAISING THE FOLLO WING GROUNDS: THAT THE IMPUGNED ORDER OF THE LEARNED CIT (A) UDAIPUR IS OBJECTED ON THE FOLLOWING AMONGST OTHER GROUNDS:- 1.1 THE VERY ACTION TAKEN UNDER SECTION 147 R EAD WITH 148 IS BAD IN LAW WITHOUT JURISDICTION AND BEI NG VOID AB-INITIO, INVALID, THE SAME MAY KINDLY BE QUA SHED. SIMILARLY THE ORDER PASSED UNDER SECTION 144 WITHOU T ALLOWING PROPER OPPORTUNITY OF BEING HEARD IS BAD I N LAW AND AGAINST THE PRINCIPAL OF NATURAL JUSTICE MAY KI NDLY 4 BE QUASHED. CONSEQUENTLY THE IMPUGNED ASSESSMENT FRAMED UNDER SECTION 147/ 144 DATED 8/11/2011 MAY ALSO KINDLY BE QUASHED. 1.2 THE IMPUGNED ORDER UNDER SECTION 147 /144 DATED 8/11/2011 IS BAD IN LAW AND ON FACTS THE CASE , FOR WANT OF JURISDICTION AND VARIOUS OTHER REASONS AND HENCE THE SAME MAY KINDLY BE QUASHED. 2.1 RS.9,00,000/- THE LEARNED COMMISSIONER OF INC OME TAX (APPEALS) UDAIPUR, HAS GROSSLY ERRED IN LAW AS WELL AS ON THE FACTS OF THE CASE IN SUSTAINING THE ADDIT ION OF RS.9,00,000/- UNDER THE HEAD CAPITAL GAINS BY APPLY ING THE PROVISION OF SECTION 50C OF THE INCOME TAX ACT, 1961 WITHOUT APPRECIATING CORRECT FACTS AND ON WRONG CALCULATION OF CAPITAL GAIN. HENCE THE ADDITION S O MADE BY THE AO AND CONFIRMED BY THE CIT(A) IS CONTRARY T O THE PROVISIONS OF LAW AND FACTS AND HENCE THE SAME MAY KINDLY BE DELETED IN FULL. 2.2 THE LEARNED CIT(A) HAS ERRED AT LAW IN NOT APPRECIATING THE FACT THAT THERE WAS NO SALE OF LAN D BY THE ASSESSEE AND ACCORDINGLY THE PROVISIONS OF LONG TERM CAPITAL GAIN NOT APPLICABLE IN THIS CASE. 5 2.3 THE LEARNED CIT(A) ERRED AT LAW IN NOT ALLOWING ANY DEDUCTION ON ACCOUNT OF INDEXED COST OF ACQUISITION FROM SALE CONSIDERATION TO DETERMINED THE LONG TERM CAPITAL GAIN FROM THE ALLEGED SALE IF ANY. 3. RS.60,000/-. THE LEARNED CIT(A) ERRED AT LAW AND ON FACT IN CONFIRMING THE ARBITRARY ADDITION OF RS.60,000/- UNDER THE HEAD INCOME FROM OTHER SOURCE S MADE BY THE ASSESSING OFFICER ON ACCOUNT OF ALLEGED LOW HOUSE HOLD EXPENSES. THE ADDITION WAS BASED ON ASSUMPTION AND PRESUMPTIONS ONLY WHICH IS ILLEGAL, NOT IN CONFORMITY WITH THE LAW. 4. THE LEARNED AO ERRED IN LAW AS WELL AS ON THE FACTS OF THE CASE IN CHARGING OF INTEREST UNDER SEC TION 234A, B & C AS CONSEQUENTIAL IN NATURE. THE APPELLA NT TOTALLY DENIES IT LIABILITY OF CHARGING OF ANY SUCH INTEREST. HENCE THE INTEREST SO CHARGED, BEING CONT RARY TO THE PROVISIONS OF LAW AND FACTS, MAY KINDLY BE DELETED IN FULL. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE CAREFULLY PERUSED THE ENTIRE MATERIAL ON RECORD. T HE SUBMISSIONS OF THE LD. A.R. SHRI SHRAWAN GUPTA ARE IN THREE-FOLD: 6 1. THE ACTION U/S 147 R.W.S 148 OF THE ACT IS BAD I N LAW AND HENCE THE ASSESSMENT ORDER ITSELF BECOMES VOID AB INITIO BEING BASED ON INVALID NOTICE WHICH WAS NEVER SERVED ON THE ASSESSEE. 2. THAT THERE IS NO TRANSFER OF THE LAND, WHICH I N FACT IS A AGRICULTURAL PIECE, MEANING 15 BIGHAS AND COMPRISED IN AARAZI NO. 113/93 [BASANI] RECORDED AS AGRICULTURAL LAND IN THE REVENUE RECORDS; AND ONL Y NO OBJECTION CERTIFICATE HAS BEEN GIVEN WHICH HAS BEEN REGISTERED. SO, FIRSTLY, THERE IS NO TRANSFE R OF ANY CAPITAL ASSET RESULTING INTO CHARGING OF CAPI TAL GAINS; AND SECONDLY, IN ANY WORST CASE, THERE BEING NO CONSIDERATION CHARGED FOR THIS NOC, THE PROVISION S OF SECTION 50C DOES NOT APPLY TO THE FACTS OF THIS CASE. 3. THIRDLY, EVEN IF IT IS TREATED AS TRANSFER, IT I S A TRANSFER OF AGRICULTURAL LAND FOR THE TRANSFER OF W HICH NO CAPITAL GAIN IS CHARGEABLE. THIS LAND DOES NOT FALL 7 WITHIN THE DEFINITION OF CAPITAL GAIN AS PRESUMED I N SECTION 2(47) OF THE ACT. 4. PER CONTRA, THE LD. SR. D.R. SHRI JOSHI HAS HEAV ILY RELIED ON THE ORDERS OF THE AUTHORITIES BELOW AND H AS REITERATED ALL THE REASONS GIVEN BY THEM TO JUSTIFY ACTION U/S 147/148 AS WELL AS CHARGING CAPITAL GAINS. IT WAS ARGUED THAT THE ASSESSEE HAS RELINQUISHED ALL HIS R IGHTS OVER THIS LAND AND HAS TRANSFERRED IT TO SOME OTHER FORM BUT THE VERSION OF THE NOC AMOUNTS TO TRANSFER AS DEFINED UNDER THE ACT AND THE TRANSFER OF PROPERTY ACT. HE ASSERTED THAT SECTION 50C OF THE ACT APPLIES TO THE FACTS OF THIS CASE AND IN CASE OF NON COMPLIANCE, T HE ORDER FRAMED IS A VALID ONE. 5. AFTER COGITATING THE RIVAL STANDS, IN THE LIGHT OF THE OBTAINING FACTS OF HIS CASE AND ALSO THE LEGAL POSI TION APPLICABLE ON THE ISSUE, WE HAVE FOUND THAT THE ASS ESSEE HAS NOT EXECUTED A SALE DEED OF THE LAND IN QUESTIO N. BUT HE HAS EXECUTED A DEED OF NO OBJECTION REGARDING FR EE USE 8 OF THIS PIECE OF LAND BY THE ASSIGNEE BY STORING WA STE OF MINING MATERIAL AND ALSO TO GET EVEN APPROVAL FOR M INING ACTIVITY ON THIS LAND FROM THE CONCERNED DEPARTMENT OF THE GOVERNMENT. THIS FACT WAS BROUGHT TO THE NOTICE OF THE A.O. BY THE SUB-REGISTRAR WHO HAS EXECUTED THIS DEE D BY TAKING ESTIMATED DLC RATE OF THIS LAND U/S 50C OF T HE ACT AT RS. 9 LAKHS. ON THE BASIS OF THIS INFORMATION [ ANNUAL INFORMATION REPORT - AIR] THE A.O. HAS ISSUED A NOT ICE U/S 148 OF THE ACT AFTER HE ASCERTAINED FROM THE RECORD S THAT NO RETURN FOR HIS YEAR HAD BEEN FILED BY THE ASSESS EE. THE A.O. ISSUED NOTICE U/S 148 ON 15.3.2011 ON THE ADDR ESS GIVEN IN THE NOC. THE OBJECTION OF THE ASSESSEE AB OUT THE SERVICE OF HIS NOTICE DATED 15.3.2011 HAS BEEN THAT NO SUCH NOTICE WAS EVER RECEIVED BY HIM. THE SERVICE OF NOTICE ISSUED U/S 148 IS A SINE QUA NON FOR FURTHER PROCEEDING WITH THIS NOTICE. SECTION 148(1) MANDATE S THAT THE A.O. SHALL SERVE ON THIS ASSESSEE A NOTICE REQ UIRING HIM TO FURNISH WITHIN SUCH PERIOD.. DESPITE A.O S OBJECTION AGAINST SERVICE OF NOTICE ISSUED U/S 148 THE LD. CIT(A) HAS NOT GIVEN A CLEAR FINDING. HE HAS ONLY STATED 9 THAT THE NOTICE WAS ADDRESSED ON THE SAME ADDRESS AS IS GIVEN IN THE APPEAL BEFORE HIM AND MENTIONED IN THE NOC AS WELL. HE HAS NEITHER COMMENTED ON THIS FACT THA T THE NOTICE RETURNED UNSERVED OR THE A/D WAS RECEIVED BA CK [WITH PROOF] AFTER SERVICE. THE ACT PROVIDES A COM PLETE PROCEDURE FOR SERVICE IN SECTION 282A. IT SEEMS TH E LD. CIT(A) HAS DEALT WITH THIS VERY IMPORTANT LEGAL ISS UE IN A LIGHT MANNER. THE NOTICE U/S 148 OF THE ACT IS A JURISDICTIONAL NOTICE AND ITS SERVICE HAS TO BE AS PER LAW, FAILING WHICH THE ENTIRE EDIFICE BUILT ON THE BASIS OF THAT NOTICE WILL CRUMBLE DOWN AS A PACK OF CARDS FALLS. IN THIS CASE, IN OUR CONSIDERED OPINION, THE SERVICE OF NOT ICE WAS NOT EFFECTED. THE ASSESSEE HAS CLAIMED THAT, AT TH E GIVEN ADDRESS, NOBODY RESIDED AND THUS HOW THE NOTICE C OULD BE SERVED. THE SUBMISSION HAS NOT BEEN PROPERLY ADDRESSED BY THE LD. CIT(A). THIS SHOWS THAT EVEN AFTER HE EXAMINED THE RECORDS NO PROOF OF SERVICE OF NOTICE WAS AVAILABLE OTHERWISE HE COULD HAVE VERILY MENTIONED THAT IN THE ORDER. THE LD. CIT(A) HAS ONLY MENTIONED THAT THE A.O. HAD REASON TO BELIEVE THAT INCOME HAD ESCAPED 10 ASSESSMENT. THE LD. CIT(A) HAS MENTIONED IN LAST P ARA AT PAGE 8 OF HIS ORDER THAT AS PER THE ASSESSMENT ORDE R DUE NOTICE WAS SERVED ON THE ASSESSEE. HOWEVER, PARA 2 OF THE ASSESSMENT ORDER PAGE 1 NOWHERE MENTIONS ABOUT THE SERVICES OF THE NOTICE BUT IT MENTIONS ABOUT THE IS SUANCE OF THE NOTICE U/S 148 OF THE ACT DATED 15.3.2011. HENCE WE HAVE FOUND FORCE IN THIS SUBMISSION OF THE LD. A .R. THE MANDATORY REQUIREMENT OF SECTION 148 OF THE ACT, AS DISCUSSED ABOVE, HAS BEEN VIOLATED RESULTING INTO I NVALIDITY OF ASSUMPTION OF JURISDICTION, AS WELL AS MAKING AN INVALID ORDER WHICH BECAME AB INITIO VOID. THEREFORE, WE H OLD ACCORDINGLY AND QUASH THE ASSESSMENT ORDER DATED 8.11.2011 MADE U/S 147/144 OF THE ACT. HAVING HELD AS ABOVE, WE ARE NOT REQUIRED TO GO INTO THE ASPECTS O F THE GROUNDS RAISED BEFORE US AND THEY WOULD NOT BE OF ACADEMIC INTEREST ONLY. 11 6. IN THE RESULT, THE ASSESSMENT ORDER IS QUASHED A ND APPEAL OF THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 11 TH JUNE, 2014. SD/- SD/- (N.K.SAINI) [HARI OM MARATHA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 11 TH JUNE, 2014 VL/- COPY TO: THE APPELLANT THE RESPONDENT THE CIT THE CIT(A) THE DR