DUSHYANT HARIDAS MAVANI, MUMBAI V. ACIT WD 13(2), MUMBAI

ITA 4815/MUM/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3453 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: J
• Assessment Year: 2008-2009
• Appeal Filed On: 18-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ADAGIRI ITA NO M A Y PER AM
• Assessee Lawyers: PRAVIN N SHAH
• Keywords: Capital asset; Salary income; Fair market value; Valuation report; Revised return
• Section: 142(1); 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL J BENCH, MUMBAI BEFORE S/SHRI R.C.SHARMA, ACCOUNTANT MEMBER AND AMARJIT SINGH, JUDICIAL MEMBER / I.T.A. NO.4814/M/14 ( / ASSESSMENT YEAR: 2008-09) SHRI JAGDISH HARIDAS MAVANI C/O.POPATLAL GHELABHAI & CO. 260, SAMUEL STREET, VADGADI, MUMBAI - 400003 / VS. ASST. COMMISSIONER OF INCOME TAX WARD 13(2) C.G.O. BLDG., M. KARVE ROAD, MUMBAI - 400020 ./ ./ PAN/GIR NO. : AAEPM4529Q / I.T.A. NO.4815/M/14 ( / ASSESSMENT YEAR: 2008-09) SHRI DUSHYANT HARIDAS MAVANI C/O.POPATLAL GHELABHAI & CO. 260, SAMUEL STREET, VADGADI, MUMBAI - 400003 / VS. ASST. COMMISSIONER OF INCOME TAX WARD 13(2) C.G.O. BLDG., M. KARVE ROAD, MUMBAI - 400020 ./ ./ PAN/GIR NO. : AAEPM4527A ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING: 02.02.2016 !' /DATE OF PRONOUNCEMENT: 18.03.2016 #$ / O R D E R ASSESSEE BY: SHRI PRAVIN N. SHAH DEPARTMENT BY: SHRI B. YADAGIRI ITA NO.4814&4815/M/14 A.Y. 2008-09 2 PER AMARJIT SINGH, JM: THE ASSESSEES HAVE FILED BOTH THE APPEALS AGAINST T HE ORDER DATED 21.03.2013 PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 24, MUMBAI [HEREINAFTER REFERRED TO A S THE LEARNED CIT(A)] RELEVANT TO THE A.Y. 2008-09. SINCE IN B OTH THE APPEALS THE MATTER OF CONTROVERSY ARE OF THE SAME IN NATURE THEREFORE THESE APPEALS ARE BEING TAKEN UP TOGETHER FOR ADJUDICATIO N FOR THE SAKE OF CONVENIENCE. 2. IN THE ABOVE SAID APPEALS THE ASSESSEES HAVE FIL ED THE RETURN OF INCOME ON 29.03.2010 BY DECLARING THEIR TOTAL IN COME TO THE TUNE OF RS.4,22,40,879/- & RS.3,74,04,854/- RESPECTIVELY FOR THE A.Y. 2008-09. THE RETURN WAS PROCESSED U/S. 143(1) OF T HE INCOME TAX ACT, 1961( IN SHORT THE ACT). THEREAFTER, NOTICE S U/S. 148 OF THE ACT ALONG WITH REASONS FOR REOPENING THE ASSESSMENT WERE ISSUED UPON THE ASSESSEES ON 25.08.2010 WHICH WERE DULY SE RVED UPON THE ASSESSEES ON 25.08.2010 & 30.08.2010 RESPECTIVELY. THEREAFTER, BOTH THE ASSESSEES FILED THEIR REVISED RETURN ON 31 .03.2008 AND ON 01.10.2010 RESPECTIVELY. SUBSEQUENTLY, NOTICES U/S . 142(1) DATED 11.07.2011 ALONGWITH A QUESTIONNAIRE WERE ISSUED TO THEM AND IN RESPONSE TO THE NOTICES, SHRI PRAVIN N. SHAH, C.A. AUTHORIZED REPRESENTATIVE APPEARED ON BEHALF OF THEM AND REPRE SENTED THE MATTER ON BEHALF OF THE ASSESSEES. THE ASSESSEES W ERE THE PARTNER IN ITA NO.4814&4815/M/14 A.Y. 2008-09 3 POPATLAL GHELABHAI & CO., CENTRAL CONSTRUCTION C., SCITECH SCIENTIFICS, DUSHYANT DEVELOPMENT CORPORATION AND S CITECH COMMERCIAL PVT. LTD. DURING THE PREVIOUS YEAR UNDE R CONSIDERATION, THE ASSESSEE DERIVES INTEREST INCOME , INCOME FROM SALARY, CAPITAL GAIN FROM SOLD LAND, CAPITAL GAIN & LOSS FROM TRADING IN SHARES. THE ASSESSEE FILED THE DETAILS OF IMMOV ABLE PROPERTY SOLD, DETAILS OF DEPOSITS LOANS 7 ADVANCES (DEBIT), DETAILS OF INTEREST RECEIVED AND OTHER DETAILS AS CALLED FOR. IN THE CASE OF SHRI JAGDISH HARIDAS MAVANI THE ASSESSMENT WAS REOPENED ON FOLLO WING GROUNDS:- I. THE ASSESSEE HAS SOLD SHARE OF 6 ACRE AND 25 * GUNTHAS EQUIPMENT TO 32/124.5 SQ. YARDS OF LAND BEARING NO.185, H. NO. 2 & 3, S. NO. 186 & 187 AT VILLAGE KEVESAR, THANE TO M/S. VELOCITY, 606, DEV MILAN, L.B.S. MARG, TEEN HATH NAKA, THANE (W) FOR A CONSIDERATION OF RS.7,50,50,000/-. THE ASSESSEE HA S SUBMITTED VALUATION REPORT BY SHRI RAJESH J. SHAH (VALUER) DATED 26.09.2007 TO JUSTIFY VALUATION TAKE N ON 01.04.1981. THE VALUER HAS STATED THAT HE IS TAKIN G FIGURES OF 1983-84 AND APPLY INFLATION RATE TO COMP UTE THE VALUE FOR 01.04.1981. HE HAS GIVEN INSTANCE OF SALE OF 1984 AT DIFFERENT LOCATION AND OF ANOTHER PROPERTY WITHOUT ADDRESS TO REACH A CONCLUSION THAT ITA NO.4814&4815/M/14 A.Y. 2008-09 4 RATE PER SQ. MT. WOULD BE RS.325/- WHICH IN THE PRE SENT CASE, HE HAS SHOWN VALUE OF LAND TO BE 302.31 SQ. M T. EVEN IN DECEMBER 1983. AS A RESULT OF ABOVE, THE VALUATION DONE ON 01.04.1981 HAS ITSELF BECOME SUSPECT AND PRESENCE OF CASH COMPONENT IN LAND DEAL CANNOT BE RULED OUT IN THE SALE PRICE. II. FURTHER, THE INDEXED COST OF IMPROVEMENT ON LAN D OF RS.70,74,513/- FOR 2002-03 TO 2007-08, WHICH NEEDS TO BE VERIFIED. III. ON VERIFICATION OF ROI FOR A.Y. 2002-03 ONWARD S, IT IS FOUND THAT THE ASSESSEE HAS NOT ATTACHED BALANCE SHEETS TO ROI FOR THOSE A.Y.S. HENCE, DRAWINGS US ED FOR CONSUMPTION OR IMPROVEMENT NEED TO BE VERIFIED. IN THE CASE OF SHRI DUSHYANT HARIDAS MAVANI THE ASS ESSMENT WAS REOPENED ON FOLLOWING GROUNDS:- I. THE ASSESSEE HAS SOLD SHARE OF 6 ACRE AND 25 * GUNTHAS EQUIPMENT TO 32/124.5 SQ. YARDS OF LAND BEARING NO.185, H. NO. 2 & 3, S. NO. 186 & 187 AT VILLAGE KEVESAR, THANE TO M/S. VELOCITY, 606, DEV MILAN, L.B.S. MARG, TEEN HATH NAKA, THANE (W) FOR A CONSIDERATION OF RS.7,50,50,000/-. THE ASSESSEE HA S ITA NO.4814&4815/M/14 A.Y. 2008-09 5 SUBMITTED VALUATION REPORT BY SHRI RAJESH J. SHAH (VALUER) DATED 26.09.2007 TO JUSTIFY VALUATION TAKE N ON 01.04.1981. THE VALUER HAS STATED THAT HE IS TAKIN G FIGURES OF 1983-84 AND APPLY INFLATION RATE TO COMP UTE THE VALUE FOR 01.04.1981. HE HAS GIVEN INSTANCE OF SALE OF 1984 AT DIFFERENT LOCATION AND OF ANOTHER PROPERTY WITHOUT ADDRESS TO REACH A CONCLUSION THAT RATE PER SQ. MT. WOULD BE RS.325/- WHICH IN THE PRE SENT CASE, HE HAS SHOWN VALUE OF LAND TO BE 302.31 SQ. M T. EVEN IN DECEMBER 1983. AS A RESULT OF ABOVE, THE VALUATION DONE ON 01.04.1981 HAS ITSELF BECOME SUSPECT AND PRESENCE OF CASH COMPONENT IN LAND DEAL CANNOT BE RULED OUT IN THE SALE PRICE. II. FURTHER, THE INDEXED COST OF IMPROVEMENT ON LAN D OF RS.70,74,513/- FOR 2002-03 TO 2007-08, WHICH NEEDS TO BE VERIFIED. III. ON VERIFICATION OF ROI FOR A.Y. 2002-03 ONWARD S, IT IS FOUND THAT THE ASSESSEE HAS NOT ATTACHED BALANCE SHEETS TO ROI FOR THOSE A.Y.S. HENCE, DRAWINGS US ED FOR CONSUMPTION OR IMPROVEMENT NEED TO BE VERIFIED. 2.1 THEREAFTER, THE ASSESSING OFFICER ASSESSED THE TOTAL INCOME TO THE TUNE OF RS.4,41,38,970/- IN CASE OF SHRI JAGDIS H HARIDAS MAVANI ITA NO.4814&4815/M/14 A.Y. 2008-09 6 AND TOTAL INCOME TO THE TUNE OF RS.3,90,71,660/- IN CASE OF SHRI DUSHYANT HARIDAS MANVANI. SINCE THE ASSESSEES WERE NOT SATISFIED WITH THE ORDER DATED 26.11.2011, THEREFORE THE ASSE SSEES FILED THE APPEAL BEFORE THE LEARNED CIT(A) AND THE LEARNED C IT(A) ARRIVED AT THIS CONCLUSION THAT THE REOPENING OF THE ASSESSMEN T BY THE ASSESSING OFFICER WAS NOT IN ACCORDANCE WITH THE PR OVISION OF THE ACT BUT DECIDED THE OTHER GROUNDS OF APPEAL WHICH HAS BEEN TAKEN BY THE ASSESSEE IN THEIR RESPECTIVE APPEALS. SINCE THE ASSESSEES WERE NOT SATISFIED WITH THE ORDER PASSED BY THE LEA RNED CIT(A), THEREFORE, THE ASSESSEES ARE BEFORE US. 3. THE ASSESSEE SHRI JAGDISH HARIDAS MAVANI HAS TA KEN THE FOLLOWING GROUNDS BEFORE US:- 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 24 (A) HAS ERRED IN LAW AND ON FACTS AND CIRCUMSTANCES OF THE CASE IN ADJUDICATING UPON GROU ND NOS. 3,6,7 AND 8 WHEN HE HAS ALREADY HELD (AS PER GROUND NOS. 1,2,4 AND 5) THAT THE ISSUE OF NOTICE U/S. 148 FOR REASSESSMENT WAS NOT AS PER THE PROVISIONS OF ACT AND BAD IN LAW . 2. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS AND CIRCUMSTANCES OF THE CASE IN CONFIRMING T HE ACTION OF THE ASSESSING OFFICER (A.O.) IN REFERRING THE VA LUATION OF LAND TO THE DEPT. VALUATION OFFICER (D.V.O.) U/S. 5 5A, WHEN ITA NO.4814&4815/M/14 A.Y. 2008-09 7 THE A.O. WAS OF THE OPINION THAT FAIR MARKET VALUE OF THE CAPITAL ASSET AS ON 1 ST APRIL, 1981 AS SHOWN BY THE ASSESSEE WAS MORE THAN ITS ACTUAL FAIR VALUE, IGNORING VARIO US DECISIONS ON THE SUBJECT BY HIGHER JUDICIAL AUTHORI TIES. 3. THE LEARNED C.I.T. (A) HAS ERRED IN LAW AND ON FACTS AND CIRCUMSTANCES OF THE CASE IN CONFIRMING T HE ADDITIONS OF RS.18,69,933/- MADE BY THE LEARNED A.O . BY MAKING REFERENCE TO THE D.V.O. U/S. 55A OF INCOME T AX ACT. 4. THE LEARNED C.I.T.(A) HAS ERRED IN LAW AND ON FACTS AND CIRCUMSTANCES OF THE CASE IN CONFIRMING T HE ACTION OF THE A.O. IN ISSUING NOTICE OF REASSESSMENT WHEN THE ASSESSMENT WAS PENDING AND THE TIME AVAILABLE FOR I SSUE OF NOTICE U/S. 143(2) HAD EXPIRED. 5. THE LEARNED C.I.T.(A) HAS ERRED IN LAW AND ON FACTS AND CIRCUMSTANCES OF THE CASE IN CONFIRMING T HE ACTION OF THE A.O. IN PASSING THE ASSESSMENT ORDER U/S. 14 3(3)/147 BEYOND TIME LIMIT PRESCRIBED U/S. 153(1). 6. THE LEARNED C.I.T.(A) HAS ERRED IN LAW AND ON FACTS AND CIRCUMSTANCES OF THE CASE IN CONFIRMING T HE ADDITION OF RS.28,157/- U/S. 14-A. ITA NO.4814&4815/M/14 A.Y. 2008-09 8 7. THE LEARNED C.I.T.(A) HAS ERRED IN LAW AND ON FACTS AND CIRCUMSTANCES OF THE CASE IS NOT DIRECTIN G THE A.O. TO RECTIFY THE ASSESSMENT AND RECALCULATE THE WORKI NG OF CHARGING INTEREST U/S. 234 A, 234 B AND 234 C . 4. THE ASSESSEE SHRI DUSHYANT HARIDAS MAVANI HAS T AKEN THE FOLLOWING GROUNDS BEFORE US:- 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 24 (A) HAS ERRED IN LAW AND ON FACTS AND CIRCUMSTANCES OF THE CASE IN ADJUDICATING UPON GROU ND NOS. 3,6,7 AND 8 WHEN HE HAS ALREADY HELD (AS PER GROUND NOS. 1,2,4 AND 5) THAT THE ISSUE OF NOTICE U/S. 148 FOR REASSESSMENT WAS NOT AS PER THE PROVISIONS OF ACT AND BAD IN LAW . 2. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS AND CIRCUMSTANCES OF THE CASE IN CONFIRMING T HE ACTION OF THE ASSESSING OFFICER (A.O.) IN REFERRING THE VA LUATION OF LAND TO THE DEPT. VALUATION OFFICER (D.V.O.) U/S. 5 5A, WHEN THE A.O. WAS OF THE OPINION THAT FAIR MARKET VALUE OF THE CAPITAL ASSET AS ON 1 ST APRIL, 1981 AS SHOWN BY THE ASSESSEE WAS MORE THAN ITS ACTUAL FAIR VALUE, IGNORING VARIO US DECISIONS ON THE SUBJECT BY HIGHER JUDICIAL AUTHORI TIES. ITA NO.4814&4815/M/14 A.Y. 2008-09 9 3. THE LEARNED C.I.T. (A) HAS ERRED IN LAW AND ON FACTS AND CIRCUMSTANCES OF THE CASE IN CONFIRMING T HE ADDITIONS OF RS.18,69,933/- MADE BY THE LEARNED A.O . BY MAKING REFERENCE TO THE D.V.O. U/S. 55A OF INCOME T AX ACT. 4. THE LEARNED C.I.T.(A) HAS ERRED IN LAW AND ON FACTS AND CIRCUMSTANCES OF THE CASE IN CONFIRMING T HE ACTION OF THE A.O. IN ISSUING NOTICE OF REASSESSMENT WHEN THE ASSESSMENT WAS PENDING AND THE TIME AVAILABLE FOR I SSUE OF NOTICE U/S. 143(2) HAD EXPIRED. 5. THE LEARNED C.I.T.(A) HAS ERRED IN LAW AND ON FACTS AND CIRCUMSTANCES OF THE CASE IN CONFIRMING T HE ACTION OF THE A.O. IN PASSING THE ASSESSMENT ORDER U/S. 14 3(3)/147 BEYOND TIME LIMIT PRESCRIBED U/S. 153(1). 6. THE LEARNED C.I.T.(A) HAS ERRED IN LAW AND ON FACTS AND CIRCUMSTANCES OF THE CASE IN CONFIRMING T HE ADDITION OF RS.27,370/- U/S. 14-A. 7. THE LEARNED C.I.T.(A) HAS ERRED IN LAW AND ON FACTS AND CIRCUMSTANCES OF THE CASE IS NOT DIRECTIN G THE A.O. TO RECTIFY THE ASSESSMENT AND RECALCULATE THE WORKI NG OF CHARGING INTEREST U/S. 234 A, 234 B AND 234 C . ITA NO.4814&4815/M/14 A.Y. 2008-09 10 5. WE HAVE HEARD THE ARGUMENTS ADVANCED BY THE LEAR NED REPRESENTATIVE OF THE PARTIES AND PERUSED THE RECOR D CAREFULLY. THE LEARNED REPRESENTATIVE OF THE ASSESSEE HAS ARGUED T HAT THE LEARNED CIT(A) HAS ARRIVED AT THIS CONCLUSION WHILE DECIDIN G THE ISSUE NO. 1,2,4,&5 THE NOTICES U/S. 148 OF THE ACT WERE BAD I N LAW, THEREFORE, NO REASSESSMENT COULD BE DONE IN VIEW OF THE PROVIS ION CONTAINED IN SECTION 148 OF THE ACT, HENCE THE ASSESSMENT UND ER THE SUCH SECTION ARE WRONG AND AGAINST THE LAW AND FACTS. IT IS ALSO SPECIFICALLY ARGUED THAT THE OTHER GROUNDS WHICH HA VE BEEN DECIDED BY LEARNED CIT(A) ARE BASED UPON THE MERITS OF THE CASES THEREFORE THE SAME HAVE NO FORCE IN THE EYES OF LAW AND ARE N OT REQUIRED TO BE IMPLEMENTED IN ACCORDANCE WITH LAW. ON THE OTHER H AND LEARNED DEPARTMENTAL REPRESENTATIVE DID NOT CONTROVERT THE FINDING OF THE CIT(A) AND ALSO VEHEMENTLY ADMITTED THIS FACT THAT THE DEPARTMENT DID NOT FILE THE APPEAL AGAINST THE DECISION UPON T HE ISSUE NO. 1,2,4 & 5. IN VIEW OF THE SAID CIRCUMSTANCES IT IS CLEAR THAT LEARNED CIT(A) HAS ARRIVED AT THIS CONCLUSION THAT THE NOTI CE U/S. 148 OF THE ACT ARE NOT IN ACCORDANCE WITH THE LAW THEREFORE IN THE SAID CIRCUMSTANCES THE SUBSEQUENT PROCEEDING HAS ALSO NO FORCE IN THE EYES OF LAW. IT IS ALSO APPARENT THAT WHEN THE LEAR NED CIT(A) HAS ARRIVED AT THE CONCLUSION THAT THE NOTICE U/S. 148 OF THE ACT FOR REASSESSMENT WAS NOT IN ACCORDANCE WITH LAW THEREFO RE, SUBSEQUENT FINDINGS ON MERITS EVEN THE ASSESSMENT ORDER U/S. 1 48 OF THE ACT ITA NO.4814&4815/M/14 A.Y. 2008-09 11 UNDER QUESTION HAVE NO VALUE IN THE EYES OF LAW. M OREOVER THE REVENUE IS NOT IN THE APPEAL BEFORE US AGAINST THIS ISSUE. THIS ISSUE HAS BECOME FINAL IN ACCORDANCE WITH THE FINDING OF THE LEARNED CIT(A) BY VIRTUE OF ORDER DATED 21.03.2013. ACCORD INGLY, WHEN THE LEARNED CIT(A) HAS ARRIVED AT THIS CONCLUSION T HAT THE REOPENING OF THE ASSESSMENT BY THE ASSESSING OFFICER BASED ON RECORDING REASONS WAS NOT FULLY AS PER THE PROVISION OF THE A CT THEREFORE THE FURTHER PROCEEDING HAS NO FORCE IN THE EYES OF LAW. ACCORDINGLY THE ISSUE NO. 1 IS DECIDED IN FAVOUR OF THE APPELLANT. SINCE FURTHER PROCEEDING HAS NO FORCE IN THE EYES OF LAW THEREFOR E THERE IS NO NEED TO DECIDE ALL THESE ISSUES BECAUSE THE SAME WO ULD BE AN ACADEMIC IN NATURE. 6. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE HEREBY ALLOWED ACCORDINGLY. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH MARCH, 2016 . SD/- SD/- (R.C.SHARMA) (AMARJIT SINGH) # / ACCOUNTANT MEMBER %& # /JUDICIAL MEMBER ' ( MUMBAI; )# DATED : 18 TH MARCH, 2016. MP MP MP MP ITA NO.4814&4815/M/14 A.Y. 2008-09 12 !'#$ %$' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. * ( ) / THE CIT(A)- 4. * / CIT 5. -./ &&01 , 01' , ' ( / DR, ITAT, MUMBAI 6. /34 5 / GUARD FILE. & / BY ORDER, - & //TRUE COPY// '/&( (DY./ASSTT. REGISTRAR) , ' ( / ITAT, MUMBAI