Kadir Usman Shaikh, Lonavala V. ITO Cen.II, Pune, Pune

ITA 477/PUN/2012

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 8924 (ITAT-PUNE)
• Duration Of Justice: 6 year(s) 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-10-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 01-10-2018
• Assessment Year: 2007-2008
• Appeal Filed On: 09-03-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: ARUN SINGHAVI
• Keywords: Capital asset; Business income; Period of limitation; Time period of passing order
• Section: 40A(3); 143(3); 153A; 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E . , , ! ' , # $ BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AW ASTHY, JM . / ITA NOS. 476 & 477/PUN/2012 #& ' (' / ASSESSMENT YEARS : 2006-07 & 2007-08 SHRI KADIR USMAN SHAIKH, BUNGALOW NO.1, VIJAY NAGAR, VARDHAMAN SOCIETY, LONAVALA, DIST. PUNE. PAN : ABXPS8262Q .... / APPELLANT & / V/S. THE INCOME TAX OFFICER, CENTRAL-II, PUNE. / RESPONDENT ASSESSEE BY : SHRI NIKHIL PATHAK & SHRI ARUN SINGHAVI REVENUE BY : SHRI SUDHENDU DAS / DATE OF HEARING : 03.10.2018 / DATE OF PRONOUNCEMENT : 05.10.2018 ) / ORDER PER D. KARUNAKARA RAO, AM : THESE ARE THE TWO APPEALS FILED BY THE SAME ASSESSEE A GAINST THE SEPARATE ORDERS OF CIT(APPEALS), CENTRAL, PUNE COMMONLY DA TED 24.11.2011 FOR THE ASSESSMENT YEARS 2006-07 & 2007-08. 2 ITA NOS.476 & 477/PUN/2012 A.Y.2006-07 & 2007-08 ITA NO.476/PUN/2012 A.Y.2006-07 2. GROUNDS RAISED BY ASSESSEE IN ITA NO.476/PUN/2012 FO R A.Y.2006- 07 READS AS UNDER: 1) THE LEARNED CIT(A) ERRED IN HOLDING THAT THE ASST. MADE BY THE LEARNED A.O. U/S.153A R.W.S. 143(3) WAS VALID WITHO UT APPRECIATING THAT NO NOTICE U/S.143(2) WAS ISSUED BY THE LEARNED A.O. WITHIN THE TIME LIMIT PRESCRIBED AND HENCE, THE SAID ASST. ORD ER PASSED BY THE LEARNED A.D. WAS NULL AND VOID. 1.1) THE LEARNED CIT(A) ERRED IN HOLDING THAT NO N OTICE U/S.143(2) WAS REQUIRED TO BE SERVED ON THE APPELLANT FOR THE PURP OSE OF COMPLETING THE ASST. U/S 153A AND HENCE, JUST BECAUSE THE NOTI CE U/S.143(2) WAS NOT ISSUED WITHIN THE TIME LIMIT PRESCRIBED DID NOT MEAN THAT THE ASST. ORDER PASSED BY THE A.O. WAS NULL AND VOID. 1.2) THE LEARNED CIT(A) FAILED TO APPRECIATE THAT I SSUE OF NOTICE U/S. 143(2) WAS THE BASIC REQUIREMENT FOR STARTING THE A SST. PROCEEDINGS U/S.153A AND ONCE, THE NOTICE U/S.143(2) WAS NOT IS SUED WITHIN THE PRESCRIBED TIME LIMIT, THE ASST. OUGHT TO HAVE BEEN HELD AS NULL AND VOID. 2) THE LEARNED CIT(A) ERRED IN NOT APPRECIATING THA T THE ASST. WAS BARRED BY LIMITATION AND WITHOUT JURISDICTION SINCE THE ASST. ORDER WAS SERVED ON THE APPELLANT ON 11.01.2010 WHICH WAS BEY OND THE LIMITATION PERIOD PRESCRIBED U/S.153B AND THEREFORE, THE ASST. ORDER OUGHT TO HAVE BEEN DECLARED NULL AND VOID. 3) THE LEARNED CIT(A) ERRED IN NOT ADMITTING THE AD DITIONAL GROUND OF APPEAL RELATING TO THE ISSUE OF WARRANT OF AUTHORIZ ATION WITHOUT APPRECIATING THAT THE 'ISSUE RAISED WAS PURELY LEGA L ISSUE AND SINCE ALL THE FACTS WERE ON RECORD, THE SAME OUGHT TO HAVE BE EN ADMITTED. 3.1) THE LEARNED CIT(A) FURTHER FAILED TO APPRECIAT E THAT SINCE THE WARRANT OF AUTHORIZATION WAS ISSUED IN THE NAME OF MORE THAN ONE PERSON, THE SAME WAS NOT VALID AND ACCORDINGLY, THE ASST. COMPLETED U/S.153A WAS ILLEGAL AND WITHOUT JURISDICTION AND H ENCE, THE SAME SHOULD HAVE BEEN HELD NULL AND VOID. 4) THE LEARNED CIT(A) ERRED IN CONFIRMING THE DISAL LOWANCE MADE U/S 40A(3) OF RS.3 , 33 , 866/ - WITHOUT APPRECIATING THAT IN THE COURSE OF SEARCH , NO INCRIMINATING EVIDENCE WAS FOUND PERTAINING TO T HIS ISSUE AND HENCE, NO ADDITION COULD BE MADE IN THE ASST. O RDER PASSED U/S 153A. 4.1) THE LEARNED CIT(A) FAILED TO APPRECIATE THAT T HE LAND PURCHASED BY THE APPELLANT WAS HIS CAPITAL ASSET AND NOT A TRADI NG ASSET AND THEREFORE, THE PROVISIONS OF SECTION 40A(3) WERE NO T APPLICABLE AND HENCE, THE DISALLOWANCE MADE U/S 40A(3) OUGHT TO HA VE BEEN DELETED . 5) THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDIT ION OF RS.5,23,176/- BY TREATING THE GAIN ON SALE OF AGRICULTURAL LAND A S BUSINESS INCOME AS AGAINST THE CLAIM OF THE ASSESSEE THAT THE SAID GAI N WAS EXEMPT FROM TAX AND WITHOUT APPRECIATING THAT NO SUCH ADDITION COULD BE MADE IN THE ASST . U/S 153A PARTICULARLY BECAUSE NO INCRIMINATING EVID ENCE WAS FOUND IN THE COURSE OF SEARCH PERTAINING TO THI S ISSUE. 3 ITA NOS.476 & 477/PUN/2012 A.Y.2006-07 & 2007-08 5.1) THE LEARNED CIT(A) ERRED IN HOLDING THAT THE G AIN ARISING ON SALE OF LAND OF RS . 5 , 23 , 176/- WAS TAXABLE AS BUSINESS INCOME ON THE GROUND THAT THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF TR ADING IN LANDS AND HENCE, THE GAIN WAS TAXABLE AS BUSINESS INCOME . 5.2) THE LEARNED CIT(A) FAILED TO APPRECIATE THAT T HE ASSESSEE HAD HELD THE LANDS AS AN INVESTMENT AND THE ASSESSEE WAS NOT ENGAGING IN THE BUSINESS OF TRADING IN LANDS AND THEREFORE, THE GAI N ARISING ON SALE OF THE LANDS WAS NOT TAXABLE AS BUSINESS INCOME OF THE ASSESSEE . 5.3) THE LEARNED CIT(A) ERRED IN NOT APPRECIATING T HAT THE LANDS SOLD BY THE ASSESSEE WERE AGRICULTURAL LANDS AND SINCE THOS E LANDS WERE HELD AS AN INVESTMENT, THE GAIN ARISING ON SALE OF SUCH LANDS WAS EXEMPT FROM TAX. 6) THE LEARNED CIT(A) ERRED IN NOT DECIDING THE GRO UND RELATING TO THE ADDITION OF NEGATIVE CASH BALANCE OF RS . 1 , 63,474/-. 6.1) THE LEARNED CIT(A) FAILED TO APPRECIATE THAT T HE ADDITION MADE ON ACCOUNT OF NEGAT I VE CASH BALANCE OF RS.1,63,474/- WAS NOT WARRANTED AND THE SAME OUGHT TO HAVE BEEN DELETED . 7) THE LEARNED CIT(A) ERRED IN NOT APPRECIATING THA T THE LEARNED A.O . HAD EARNED IN CHARGING INTEREST U/S 234A, 234B & 234C AND THE SAME OUGHT TO BE DELETED . 8) THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR DELETE ANY OF THE ABOVE GROUNDS OF APPEAL. IDENTICAL GROUNDS HAVE BEEN RAISED BY ASSESSEE IN ASSE SSMENT YEAR 2007-08. CONSIDERING IDENTICAL GROUNDS, BOTH THE APPEALS AR E HEARD TOGETHER AND BEING ADJUDICATED VIDE THIS COMMON ORDER. H OWEVER, REFERENCE IS BEING MADE TO THE FACTS OF ITA NO.476/PUN/2012 FOR TH E PURPOSE OF STANDARD ONE. 3. BRIEFLY STATED RELEVANT FACTS INCLUDE THAT ASSESSEE FILED RETURN OF INCOME ON 24.03.2008 DECLARING TOTAL INCOME OF RS.3,33,090/- IN RESPONSE TO THE NOTICE U/S.153A OF THE INCOME TAX ACT, 1961 (HERE INAFTER REFERRED TO AS THE ACT). DURING ASSESSMENT PROCEEDINGS, ASSESSING O FFICER ASSESSED TOTAL INCOME OF ASSESSEE AT RS.13,03,600/- (ROUNDED OFF) AND MADE FOLLOWING ADDITIONS I) ADDITION OF RS.3,33,866/- MADE U/S. 40A(3) OF THE ACT. 4 ITA NOS.476 & 477/PUN/2012 A.Y.2006-07 & 2007-08 II) ADDITION OF RS.5,23,176/- ON ACCOUNT OF GAIN ON SALE OF AGRICULTURAL LAND. 4. AGGRIEVED WITH THE ASSESSMENT ORDER, ASSESSEE FILED AP PEAL BEFORE THE CIT(A). DURING FIRST APPELLATE PROCEEDINGS, THE CIT(A) CONFIRME D THE ADDITION MADE BY ASSESSING OFFICER BY HOLDING AS UNDER : 3.1 THE APPELLANT HAS TAKEN GROUNDS OF APPEAL WHICH ARE IDENTICAL IN SUBSTANCE IN HIS APPEAL FOR OTHER ASSESSMENT YEA RS INCLUDING A.Y.2003-04. FACTUAL AND LEGAL POSITION OF THE APPE LLANT IN THE PERIOD RELEVANT FOR CURRENT ASSESSMENT YEAR (2006-07) ARE SUBSTANTIVELY SIMILAR TO THE PERIOD RELEVANT FOR A.Y.2003-04. THE REFORE, DECISION IN THE APPEAL ORDER FOR A.Y.2003-04 IN RESPECT OF THES E GROUNDS OF APPEAL IS EQUALLY APPLICABLE FOR THE PRESENT APPEAL. IN VI EW OF THE DECISION GIVEN IN THE APPEAL ORDER FOR A.Y.2003-04, ALL GROU NDS OF APPEAL FOR THE PRESENT APPEAL ( OF A.Y.2006-07) ARE DISMISSED. 5. AGGRIEVED WITH THE ORDER OF CIT(A), ASSESSEE FILED APPEAL BEFORE THE TRIBUNAL BY RAISING GROUNDS AS EXTRACTED ABOVE. BEFORE THE TRIBUNAL 6. BEFORE US, LD. COUNSEL FOR THE ASSESSEE BROUGHT OUR A TTENTION TO THE ELABORATE ARGUMENTATIVE GROUNDS AND SUB-GROUNDS RAISED IN APPEAL AND SUBMITTED THAT GROUND NOS.1, 1.1 AND 1.2 RELATES TO THE REQUIREMENT OF ISSUING NOTICE U/S.143(2) OF THE ACT IN THE MATTER OF ASSESS MENT MADE U/S. 153A OF THE ACT. HE FURTHER MENTIONED THAT THE ISSUE STA NDS COVERED BY VIRTUE OF ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FO R THE ASSESSMENT YEARS 2002-03 TO 2005-06 IN ITA NOS.472 TO 475/PUN/2 012 DATED 03.08.2018. BRINGING OUR ATTENTION TO THE CONTENTS OF PARA 3 OF THE SAID ORDER, LD. COUNSEL FAIRLY SUBMITTED THAT THE ISSUE WAS DEC IDED AGAINST ASSESSEE BY RELYING ON THE JUDGMENT OF HON'BLE DELHI HIG H COURT IN THE CASE OF ASHOK CHADDHA VS. ITO REPORTED IN 337 ITR 399 (DEL.). THE SAID JUDGMENT IS RELEVANT FOR THE PROPOSITION THAT THE ISSUE O F NOTICE U/S. 143(2) OF THE ACT IS NOT MANDATORY IN A CASE OF THE ASSESSMEN T MADE U/S.153A OF 5 ITA NOS.476 & 477/PUN/2012 A.Y.2006-07 & 2007-08 THE ACT. FOR THE SAKE OF COMPLETENESS, THE RELEVANT PAR A IS EXTRACTED AS UNDER: 3. REFERRING TO THE ABOVE SAID GROUNDS, LD. AR FOR THE ASSESSEE BROUGHT OUR ATTENTION TO GROUND NOS.1, 1.1 AND 1.2 AND SUBMITTED THAT THE SAID GROUNDS HAVE TO BE DECIDED AGAINST THE ASS ESSEE IN VIEW OF THE BINDING HIGH COURT JUDGMENT IN THE CASE OF ASHO K CHADDHA VS. ITO REPORTED IN 337 ITR 399 (DEL.) WHICH IS RELEVAN T FOR THE PROPOSITION THAT THE ISSUE OF NOTICE U/S. 143(2) OF THE ACT IS NOT MANDATORY IN A CASE OF THE ASSESSMENT MADE U/S.153A OF THE ACT. LD . AR FILED THE WRITTEN NOTE RELYING ON THE SAID PROPOSITION. 7. ON HEARING BOTH THE PARTIES ON THIS ISSUE, WE PROCEED TO DISMISS THE GROUND NO.1, 1.1 AND 1.2. ACCORDINGLY, GROUND NOS. 1, 1.1 AND 1.2 RAISED IN APPEAL BY ASSESSEE ARE DISMISSED . 8. FURTHER, LD. COUNSEL FOR THE ASSESSEE BROUGHT OUR AT TENTION TO GROUND NOS. 2, 3, 3.1, 6 AND 6.1 AND SUBMITTED THE SAID GR OUNDS ARE NOT BEING PRESSED. ON HEARING THE PARTIES, THE GROUND NO.2, 3, 3.1, 6 AND 6.1 ARE DISMISSED AS NOT PRESSED . 9. FURTHER ALSO, LD. COUNSEL FOR THE ASSESSEE SUBMITTED T HAT GROUND NOS. 7 AND 8 ARE CONSEQUENTIAL AND GENERAL IN NATURE AND HENCE, REQUIRES NO ADJUDICATION. ACCORDINGLY, GROUND NO. 7 AND 8 ARE DISMISSED AS SUCH . ACCORDINGLY, WE ORDER. THAT LEAVES GROUND NOS. 4 AND 5 AND ITS SUB GROUNDS FOR ADJUDICATION . 10. WITH REGARD TO GROUND NOS. 4, 4.1, 5, 5.1, 5.2 AND 5.3, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THESE GROUNDS RELATE T O THE NATURE OF BUSINESS OF THE ASSESSEE IN THE MATTER OF LAND TRANSACTIO N. LD. COUNSEL BROUGHT OUR ATTENTION TO THE PAGE 15 OF THE PAPER BOO K AND SUBMITTED THAT ASSESSEE HAS LAND AT PIMPRI LAND, DEOGHAR JAMBHULANE, AUN DHE LAND AND 6 ITA NOS.476 & 477/PUN/2012 A.Y.2006-07 & 2007-08 BHUSHI PLOT AND THEY WERE SOLD BY ASSESSEE AT DIFFERENT P ERIOD AND EARNED PROFITS. LAND AT BHUSHI PLOT WAS SOLD BY ASSESSEE AFTER HO LDING THE PLOT FOR LONG YEARS AND OTHER THREE LANDS WERE SOLD IN A PERIOD LE SSER THAN THREE YEARS. LAND AT AUNDHE WAS SOLD IN THE SAME MONTH. IT IS A LIMITED PRAYER OF LD. COUNSEL FOR THE ASSESSEE THAT TRANSACTIONS IN THE BH USHI LAND MAY BE CONSIDERED AS CAPITAL ASSET HAVING REGARD TO PERIOD O F HOLDING. WITH RESPECT TO OTHER TRANSACTIONS, LD. COUNSEL SUBMITTED THA T IT IS OFFERED AS CONCESSION AND THEY CANNOT BE BUSINESS TRANSACTIONS. 11. LD. DR FOR THE REVENUE PLACED RELIANCE ON THE ORDERS OF ASSESSING OFFICER AND CIT(A). LD. DR FURTHER SUBMITTED THAT THE ASSESS EE IS ENGAGED IN THE BUSINESS OF PURCHASE AND SALE OF LAND AND THE SAM E IS UNDISPUTED BY THE ASSESSEE. IN SUCH CIRCUMSTANCES, PROFITS EARNED ON SALE OF LAND MUST BE CONSIDERED AS BUSINESS PROFIT TAXABLE U/S. 52(8) OF THE ACT. 12. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE O RDER OF CIT(A) IN GENERAL AND CONTENTS OF PARA 3.1 IN PARTICULAR. THE CIT(A) EXAMINED THE ISSUE AND STATUS OF THE ASSESSEE AS WELL AS APPLICABILITY O F PROVISIONS TO SECTION 40A(3) OF THE ACT. THE CIT(A) DISMISSED THE APPEAL OF ASSESSEE RELYING ON HIS EARLIER ORDER RELATING TO A.Y. 2003-04. CONT ENTS OF PARA 3.1 IS RELEVANT AND SAME IS EXTRACTED ABOVE. CONSIDERING THE FAC TUAL MATRIX OF THE CASE ON ONE SIDE AND LEGAL POSITION ON THE OTHER, WE ARE OF THE OPINION THAT ORDER OF THE CIT(A) IS FAIR AND REASONABLE AND THE SAME DOE S NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, GROUND NOS.4, 4.1, 5, 5.1, 5.2 AND 5.3 ARE DISMISSED. 13. IN THE RESULT, APPEAL OF THE ASSESSEE IN ITA NO.476/P UN/2012 FOR ASSESSMENT YEAR 2006-07 IS DISMISSED. 7 ITA NOS.476 & 477/PUN/2012 A.Y.2006-07 & 2007-08 ITA NO. 477/PUN/2012 A.Y.2007-08 14. THE FACTS, ISSUES, DECISION OF ASSESSING OFFICER/CIT(A), AR GUMENTS OF BOTH THE PARTIES ARE COMMON AS THAT OF APPEAL FOR ASSE SSMENT YEAR 2006- 07. THEREFORE, FOLLOWING THE SAME REASONING, WE DISMISS ALL THE GROUNDS RAISED BY THE ASSESSEE AS NOT PRESSED/DISMISSED, AS THE CASE MAY B E. 15. TO SUM UP, BOTH THE APPEALS OF THE ASSESSEE FOR A.Y . 2006-07 AND 2007-08 ARE DISMISSED. ORDER PRONOUNCED ON 05TH DAY OF OCTOBER, 2018. SD/- SD/- ( ! ' /VIKAS AWASTHY) ( . / D. KARUNAKARA RAO ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / PUNE; !' / DATED : 05 TH OCTOBER, 2018. SB ) * +#,-! .!(, / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT (APPEALS), CENTRAL PUNE. 4. THE CIT, CENTRAL, PUNE. 5. %&' () , * () , + +,- , / DR, ITAT, B BENCH, PUNE. 6. './ 01 / GUARD FILE. // TRUE COPY // * 2 / BY ORDER, 3 (- /PRIVATE SECRETARY * () , / ITAT, PUNE.