RAMA GOYAL, Jaipur V. ITO, BHARATPUR

ITA 465/JPR/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6198 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 11 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-04-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 03-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J C KULHARI JCIT DHK
• Assessee Lawyers: SATISH KUMAR GUPTA
• Keywords: Reopening of assessment; Sale consideration of property below Jantri Value; Audit objection; Tangible material; Difference of opinion; Valuation report; Change of opinion; Reassessment proceedings
• Section: 143(3); 50C; 147; 148

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH HKKXPAN] YS[KK LNL; ,OA JH DQY HKKJR ] U;KF;D LNL; DS LE{K BEFORE: SHRI BHAGCHAND, AM & SHRI KUL BHARAT, JM VK;DJ VIHY LA-@ ITA NO. 465/JP/2016 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2008-09 SMT. RAMA GOYAL, B-329, JANTA COLONY, JAIPUR. CUKE VS. INCOME TAX OFFICER, WARD- 3, BHARATPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: ACIPG 1400 G VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI SATISH KUMAR GUPTA, (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI J.C. KULHARI (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 09/04/2018 MN?KKS'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 12/04/2018 VKNS'K@ ORDER PER: KUL BHARAT, J.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 01/02/2016 PASSED BY THE LD. CIT(A), ALWAR FOR THE A .Y. 2008-09. THE GROUNDS TAKEN BY THE ASSESSEE IN APPEAL ARE AS UNDE R:- 1. ON THE FACTS & CIRCUMSTANCES OF THE CASE AND IN LAW ALSO LD. LOWER AUTHORITIES GROSSLY ERRED IN INITIATING REASS ESSMENT PROCEEDINGS U/S 147 OF THE INCOME TAX ACT, 1961. 2. ON THE FACTS & CIRCUMSTANCES OF THE CASE LD. A.O. GROSSLY ERRED IN ISSUING THE NOTICE U/S 148 OF THE ACT WITHOUT RECOR DING THE INDEPENDENT REASONS AND WITHOUT APPLYING INDEPENDEN T MIND. ITA 465/JP/2016_ SMT. RAMA GOYAL VS ITO 2 3. ON THE FACTS & CIRCUMSTANCES OF THE CASE LD. A.O. GROSSLY ERRED IN INITIATING REASSESSMENT PROCEEDINGS ON THE SAME ISS UE WHICH WAS DISCUSSED & ASSESSED AT THE TIME OF ORIGINAL ASSESS MENT MADE U/S 143(3) OF THE ACT. 4. ON THE FACTS & CIRCUMSTANCES OF THE CASE LD. A.O. GROSSLY ERRED IN INITIATING REASSESSMENT PROCEEDINGS WITHOUT HAVING ANY FRESH INFORMATION FORMING THE BELIEF OF ESCAPEMENT OF INC OME CHARGEABLE TO TAX AS THE LD A.O. WAS HAVING THE DLC RATE AT THE TIME OF ORIGINAL ASSESSMENT. THIS FACT IS COMING OU T FROM THE AUDIT OBJECTION ITSELF. 5. ON THE FACTS & CIRCUMSTANCES OF THE CASE AND IN LA W ALSO LD. A.O. GROSSLY ERRED IN ISSUING THE NOTICE U/S 148 OF THE ACT AS NO SANCTION IN REGARDS TO SATISFACTION OF INITIATION O F REASSESSMENT PROCEEDINGS WAS OBTAINED FROM THE SUPERIOR AUTHORIT Y. 6. THAT LD A.O. GROSSLY ERRED IN NOT REFERRING THE MA TTER FOR VALUATION U/S 50C(2) OF THE ACT. 7. ON THE FACTS & CIRCUMSTANCES OF THE CASE LD. A.O. GROSSLY ERRED IN NOT CONSIDERING THE FACT THAT THE ALLEGED PROPERTY IS SUBJECT TO ACQUISITION AND THEREFORE THE DLC RATE SHOULD HAVE BEEN APPLIED OF THE DATE OF NOTIFICATION AND THAT TOO FOR ONLY 1 5% OF LAND. 8. ON THE FACTS & CIRCUMSTANCES OF THE CASE LD. A.O. GROSSLY ERRED IN MAKING ADDITIONS UNDER THE HEAD LONG TERM CAPITAL G AINS FOR RS 7,90,500/- BY INVOKING THE PROVISIONS OF SECTION 50 C OF THE ACT. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE CA SE OF THE ASSESSEE WAS REOPENED FOR ASSESSMENT AND THE ASSESSMENT U/S 1 47 READ WITH SECTION 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAF TER REFERRED AS THE ACT) WAS FRAMED VIDE ORDER DATED 18/10/2013. WHILE F RAMING THE ASSESSMENT, THE A.O. ADOPTED THE DLC RATE OF THE PR OPERTY SOLD DURING ITA 465/JP/2016_ SMT. RAMA GOYAL VS ITO 3 THE YEAR AND TAXED ACCORDINGLY. THUS, THE ASSESSING OFFICER MADE ADDITION OF RS. 7,90,500/- AGAINST THE CAPITAL GAIN. 3. BEING AGGRIEVED BY THE ORDER OF THE ASSESSING OF FICER, THE ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A), WHO AFTER CON SIDERING THE SUBMISSIONS, DISMISSED THE APPEAL OF THE ASSESSEE. 4. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE ASS ESSEE IS IN APPEAL BEFORE THE ITAT. GROUNDS NO. 1 TO 5 OF THE APPEAL AR E AGAINST THE LEGALITY OF REOPENING OF THE ASSESSMENT. LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS AS MADE IN THE WRITTEN SUBMISSIONS. THE SUBMISSIONS OF THE ASSESSEE ARE REPRODUCED AS UNDER: 1 . NO FRESH INFORMATION. REASSESSMENT IS BASED ON CH ANGE OF OPINION :- YOUR HONOURS IN THIS CASE THE REASSESSMENT PROCEEDI NGS HAS BEEN INITIATED ON THE BASIS OF MATERIAL WHICH WAS ON THE RECORD AT TH E TIME OF ORIGINAL ASSESSMENT PROCEEDINGS. NO NEW FRESH MATERIAL COME TO THE KNOWLEDGE OF LD AO AT THE TIME OF RECORDING OF REASONS FOR INVOKING PROVISIONS OF SECTION 147 OF THE ACT. THE REASSESSMENT PROCEEDINGS HAVE BEEN INI TIATED ON THE SOLE BASIS OF INTERNAL AUDIT REPORT. FACTS MENTIONED IN THE ALLEG ED INTERNAL AUDIT REPORT CLEARLY SPEAKS THAT THE ASSESSING OFFICER WAS HAVIN G ALL MATERIAL INFORMATION AT THE TIME OF ORIGINAL ASSESSMENT. THEREFORE INITIATI ON OF REASSESSMENT PROCEEDINGS ON THE BASIS OF OLD MATERIAL, WHICH HAS BEEN CONSIDERED AT THE TIME OF ORIGINAL ASSESSMENT IS UNLAWFUL AND AB INIT IO VOID. LD AO DURING THE COURSE OF ORIGINAL ASSESSMENT PROC EEDINGS CONSIDERED THE ISSUE OF ASSESSMENT OF INCOME FROM LONG TERM CAPITA L GAIN OF ALLEGED LAND. ITA 465/JP/2016_ SMT. RAMA GOYAL VS ITO 4 AFTER CONSIDERING ALL THE MATERIAL ON THE RECORD LI KE COMPUTATION OF INCOME, COPY OF AGREEMENT TO SALE, COPY OF VALUATION REPORT OF APPROVED VALUER AND INFORMATION RECEIVED FROM SUB REGISTRAR SANGANER II IN RESPECT OF DLC RATE ACCEPTED THE LONG TERM CAPITAL GAIN DECLARED BY THE ASSESSEE U/S 143 (3) OF THE INCOME TAX ACT, 1961. THEREAFTER SIMPLY ON THE BASIS OF AUDIT REPORT, LD ASSESSING OFFICER INITIATED THE REASSESSMENT PROCEEDING WHICH IS ON THE BASIS OF CH ANGE OF OPINION AND WITHOUT BRINGING ANY FRESH AND NEW MATERIAL ON RECO RD. THEREFORE THE ACTION OF LD ASSESSING OFFICER TO INITIATE REASSESSMENT PROCE EDINGS IS TOTALLY UNLAWFUL. WE HUMBLY RELY ON THE DECISION OF HON'BLE SUPREME C OURT OF INDIA IN THE CASE OF CIT V/S KELVINDATOR OF INDIA LTD. 320 ITR 561 (2 010) WHERE HON'BLE APEX COURT HAS HELD THAT 'ONE MUST TREAT THE CONCEPT OF CHANGE OF OPINION AS AN INBUILT TEST TO CHECK ABUSE OF POWER BY THE ASSESSI NG OFFICER'. HENCE AFTER 1 ST APRIL 1989, ASSESSING OFFICER HAS POWER TO REOPEN, PROVIDED THERE IS TANGIBLE MATERIAL TO COME TO THE CONCLUSION THAT THERE IS ES CAPEMENT OF INCOME. IT IS ALSO SETTLED LAW THAT THE REPORT OF REVENUE A UDIT PARTY ONLY GIVES AN OPINION AND THERE BEING NO NEW OR FRESH MATERIAL BE FORE THE AO, CHANGE OF OPINION CANNOT FORM THE BASIS FOR REOPENING OF ASSE SSMENT. RELIANCE IS PLACED ON THE DECISION OF HON'BLE HIGH COURT OF DELHI IN T HE CASE OF CARLTON OVERSEAS PVT. LTD V/S ITO 318 ITR 0295 (2009). HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF SMT. JY OTI DEVI 218 CTR 0264 HAS HELD THAT IN ABSENCE OF ANY INFORMATION OR MATERIAL WHICH HAD SUBSEQUENTLY COME TO THE NOTICE OF THE AO TO ENABLE HIM TO FORM THE REQUISITE BELIEF OF ESCAPEMENT OF INCOME. IT WAS RIGHTLY HELD THAT THE REOPENING WAS BASED MERELY ON A CHANGE OF OPINION AND WAS NOT HELD VALI D. ITA 465/JP/2016_ SMT. RAMA GOYAL VS ITO 5 HON'BLE HIGH COURT OF BOMBAY IN THE CASE OF NDT SYS TEMS V/S ITO 363 ITR 0603 (2014) HAS HELD THAT REOPENING OF ASSESSMENT ON THE BASIS OF MERE REVERIFICATION OF MATERIAL AND PRIMARY FACTS WHICH ARE ALREADY ON RECORD & DULY CONSIDERED BY AO WHILE PASSING ORIGINAL ASSESSMENT ORDER IS BAD IN LAW. HON'BLE HIGH COURT OF GUJARAT IN THE CASE OF JAGAT JAYANTI LAI PAREEK V/S DCIT 355 ITR 0400 (2013) HAS HELD THAT REASONS FOR REOPE NING WERE ALMOST IDENTICALLY WORDED AS THAT OF AUDIT REPORT. NO MATE RIAL EMERGED TO INDICATE ANY INDEPENDENT APPLICATION OF MIND. IT WAS HELD THAT A O HAS NOT FORMED HIS INDEPENDENT BELIEF. INITIATING REASSESSMENT PROCEED INGS ON INVOKING SECTION 50C IS UNLAWFUL. NO SANCTION FROM SUPERIOR AUTHORITY U/S 151 OF THE INCOME TAX ACT. 1961. YOURHONOUR, IN THIS CASE THE ORIGINAL ASSESSMENT WA S MADE U/S 143 (3) OF THE INCOME TAX ACT 1961 BY LD ITO WARD 3, BHARATPUR ON DATED 20-12-2010. THE NOTICE U/S 148 WAS ISSUED BY THE ITO WARD 3, BHARAT PUR ON DATED 22-03-2013. IT IS CLEAR FROM THE REASSESSMENT NOTICE ITSELF THA T NO SATISFACTION ON THE REASONS RECORDED HAS BEEN RECORDED BY JOINT COMMISS IONER OF INCOME TAX. THEREFORE AS PER THE PROVISIONS OF SECTION 151 (1). IT IS UNLAWFUL TO ISSUE NOTICE BY THE ITO WARD 3, BHARATPUR, AS NO SANCTION FOR IS SUE OF NOTICE WAS OBTAINED FROM JCIT AND THEREFORE THE PROCEEDING ARE AB INITI O VOID. NO INDEPENDENT APPLICATION OF MIND BY THE ASSESSING OFFICER. YOUR HONOUR, IT IS THE BASIC CONDITION OF SECTION 1 47 THAT THE BELIEF SHOULD BE OF ASSESSING OFFICER ONLY. IN THIS CASE ASSESSING OFFI CER HAS NOT APPLIED HIS MIND INDEPENDENTLY AND HAS RELIED UPON ONLY ON THE AUDIT PARTY REPORT. THEREFORE ALSO THE INITIATION IS UNLAWFUL. IT IS ALSO UNLAWFU L ON THE PART OF LD AO BY NOT PROVIDING THE COPY OF ORIGINAL REASONS RECORDED BY HIM. WE HUMBLY RELY ON HIGH COURT OF BOMBAY IN THE CASE OF CIT V/S VSNL 34 0 ITR 0066 (BOMBAY). ITA 465/JP/2016_ SMT. RAMA GOYAL VS ITO 6 5. ON THE CONTRARY, THE LD DR HAS OPPOSED THE SUBMI SSIONS OF THE ASSESSEE AND VEHEMENTLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES, PERUSED THE MATERIAL AVAILABLE ON THE RECORD AND ALSO GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. UNDISPUTEDLY, THE ASSESSMENT WAS REOPENED BY ISSUING NOTICE U/S 148 OF THE ACT ON 22/3/2013. IN THIS CASE, THE ORIGINAL ASSESSMENT U/S 143(3) OF THE ACT WAS FRAMED ON 20/12 /2010 AND THE ASSESSMENT YEAR INVOLVED IS 2008-09. THE REOPENING OF THE ASSESSMENT IS CHALLENGED ON TH E GROUND THAT (I) IT IS REOPENED ON THE BASIS OF BORROWED SATISFAC TION I.E. ON THE BASIS OF AUDIT OBJECTION, (II) THE REOPENING IS BASED ON CHA NGE OF OPINION, (III) THE REQUISITE APPROVAL AS CONTEMPLATED U/S 151 OF THE A CT WAS NOT OBTAINED AND (IV) THE ADDITION IS MADE ON THE BASIS OF ADOPT ING THE VALUATION AS PER THE STAMP VALUATION AUTHORITY, WHICH IS EX FACIE ERR ONEOUS IN VIEW OF THE FACT THAT SECTION 50C OF THE ACT CAME ON STATUTE BO OK W.E.F. 01/10/2009, HENCE IS NOT APPLICABLE ON THE FACTS OF THE PRESENT CASE. WE FIND THAT THESE OBJECTIONS ARE NOT ADVERTED BY THE LD. CIT(A). THE REVENUE COULD NOT CONTROVERT THE FACT THAT THE REOPENING HAS BEEN MADE TO MEET THE OBJECTIONS RAISED BY THE AUDIT PARTY. IT IS ALSO NO T DISPUTED THAT THE ASSESSMENT WAS REOPENED AFTER FOUR YEARS FROM THE EN D OF THE RELEVANT ITA 465/JP/2016_ SMT. RAMA GOYAL VS ITO 7 ASSESSMENT YEAR AND NO APPROVAL U/S 151 OF THE ACT IS PLACED ON RECORD. MOREOVER, THE ASSESSEE HAS PLACED BEFORE THE ASSESS ING OFFICER ALL RELEVANT MATERIAL DURING THE ORIGINAL ASSESSMENT PR OCEEDINGS. UNDER THESE UNDISPUTED FACTS, WE ARE OF THE VIEW THAT THE ACTION OF THE ASSESSING OFFICER IS CONTRARY TO THE SETTLED LAW, WHICH DEMONST RATES THAT THE ASSESSING OFFICER HAS NOT APPLIED HIS MIND INDEPEND ENTLY. HENCE, WE FIND FORCE INTO THE SUBMISSION MADE BY THE ASSESSEE. THE IMPUGNED ASSESSMENT ORDER IS HEREBY QUASHED BEING CONTRARY T O THE LAW. 7. SINCE THE ASSESSMENT ORDER IS QUASHED THEN THERE IS NO NEED TO ADJUDICATE THE OTHER GROUNDS OF APPEAL BEING ACADEM IC IN NATURE. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 12/04/2018. SD/- SD/- HKKXPAN DQY HKKJR (BHAGCHAND) (KUL BHARAT) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 12 TH APRIL, 2018 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- SMT. RAMA GOYAL, JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT- THE ITO, WARD-3, BHARATPUR. ITA 465/JP/2016_ SMT. RAMA GOYAL VS ITO 8 3. VK;DJ VK;QDR @ CIT - 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 465/JP/2016) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR