SHRI AVINASH CHANDER BHALLA, JALANDHAR V. INCOME TAX OFFIER WARD 3(1), JALANDHAR

ITA 527/ASR/2017

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 5601 (ITAT-AMRITSAR)
• Duration Of Justice: 4 year(s) 4 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2004-2005
• Appeal Filed On: 09-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Tangible material; Assessment record; Reason to believe; Set aside
• Section: 147; 148; 143(3); 50C; 54F; 133A

Judgement Text

Page | 1 IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR. BEFORE SH. RAVISH SOOD, JUDICIAL MEMBER AND DR. M. L. MEENA, ACCOUNTANT MEMBER I.T.A. No. 527/ASR/2017 (Assessment Year: 2004-05) Shri Avinash Chander Bhalla, C/o. Bhalla Cycle Works, Garha Road, Opp. New Bus Stand, Jalandhar, PAN: AAOPB0835G Vs. Income Tax Officer, Ward-3(1), Jalandhar (Appellant) (Respondent) Assessee by : Shri Nirmal Mahajan, CA Revenue by: Shri Rohit Mehra, DR Date of Hearing 20/12/2021 Date of pronouncement 24/12/2021 O R D E R PER RAVISH SOOD, JM The present appeal filed by the assessee is directed against the order passed by the ld CIT(Appeals)-2, Jalandhar dated 19.06.2017, which in turn arises from the assessment order passed by the A.O u/s 143(3) of the Income Tax Act, 1961 (for short “the Act”), dated 16.11.2011 for Assessment Year 2004-05. The assessee has assailed the impugned order on the following grounds before us: “1. (a) That the learned Commissioner of Income Tax (A) fell into grave error by holding that the Assessing Officer has applied his mind while reopening the assessment and has recorded the reasons consulting the tangible material available with him. (b) That the learned Commissioner of Income Tax (A) fell into grave error by holding that action of the Assessing Officer under section 148 is justified. 2. That the learned Commissioner of Income Tax (A) fell into grave error by referring the matter to Valuation Officer to justify the illegal action of the Assessing Officer. 3. That the learned Commissioner of Income Tax (A) fell into grave error by passing a non-speaking order on the objections raised by the appellant on the action of the Valuation Officer. It is trite law that a non-speaking order is nothing but nullity. Page | 2 4. That the learned Commissioner of Income Tax (A) fell into grave error by justifying the application of provisions of section 50C of the Income Tax Act, 1961 and confirming the addition of Rs. 4,70,000/- made by the AO. 5. Any other ground which may be raised at the time of hearing.” 2. Controversy involved in the present appeal lies in a narrow compass i.e. as to whether or not the AO was justified in reopening the case of the assessee u/s 147 of the Act? 3. Shorn of unnecessary details, a survey u/s 133A of the Act was carried out at the business premises of M/s. Bhalla Cycles Works, i.e. a firm in which the assessee was a partner. During the course of survey proceedings, it was deposed by the assessee in his statement recorded during the course of said proceedings that he had sold a plot of land admeasuring 24 marlas situated in Aman Nagar for a consideration of Rs. 9 lakh and had deposited the entire sale consideration in the Capital Gain Account Scheme (“CGAS” account, for short), which thereafter was withdrawn by him in May/June 2003 for purchase of a plot No. 146, Green Park, Jalandhar. Observing, that the assessee had not furnished any documents till date to ascertain the year in which the land in question had came to his share at the time of division of the assets of M/s. Spiderman Rubber Industries i.e. the firm in which he was one of the partner, the AO reopened his case u/s 147 of the Act. On a perusal of the records, we find that the AO had reopened the case of the assessee on the basis of the following “reasons to believe”:- “Reasons:- The Deputy Commissioner of Income-tax, Circle-IV, Jalandhar vide his office letter No. 1044 dated 19.3.2010 has intimated that Survey u/s I33A of the Income-tax Act, 1961 was conducted in the case of M/s Bhalla Cycle Industries, Jalandhar on 11.3.2010. As per statement recorded of Shri Avinash Chander Bhalla one of the partner of this firm he stated that 24 marlas of land in Aman nagar came to his share at the time of division of asset in M/s Spiderman Rubber Industries and the same was sold to Shri Manohar Lal for about 9 lakhs in 2000. Proceeds of the sale was deposited in the capital gain tax account with P& Sind Bank, Mota Singh Nagar, Jalandhar. He further stated that he withdrew the amount and purchased plot No. 146, Green Park, Jalandhar in May/June 2003. The assessee has not furnished any documents till date to ascertain the year of division and purchase of plot. The issue of taxation of capital gain involves in this case. In view of the facts narrated above, I have reasons to believe that assessee has escaped income within the meaning of section 147 of the Income-tax Act, 1961. Page | 3 In the light of foregoing, proposal is being submitted to obtain the approval for the issue of Notice U/s 148 of the Income-tax Act to tax the income that escaped assessment as mentioned and any other income chargeable to tax which has escaped assessment and which may come to notice during the course of assessment proceedings.” 5. Assessment was thereafter framed by the AO vide his order passed u/s 143(3) r.w.s 147 of the Act, dated 16.11.2011 wherein the income of the assessee under the head “long term capital gain” (LTCG) was determined after applying the provisions of section 50C of the Act at Rs. 14.20 lakh. As the assessee had deposited an amount of Rs. 9.50 lakhs in his CGAS account held with Punjab and Sind Bank, therefore, the AO after allowing his claim for deduction u/s 54F of Rs. 9.50 lakh determined the net amount of LTCG at Rs. 4.70 lakh. 6. Aggrieved, the assessee carried the matter before the ld CIT(A). However, the CIT(A) not finding any infirmity in the view taken by the AO, upheld his order and dismissed the appeal. 7. The assessee being aggrieved with the order of the ld CIT(A) has carried the matter in appeal before us. 8. It was submitted by the ld Authorized Representative (for short “ld AR”) for the assessee that the AO had wrongly assumed jurisdiction and reopened the case of the assessee u/s 147 of the Act. Elaborating his aforesaid contention, it was submitted by the Ld. AR that a perusal of the “reasons to believe” revealed that the case of the assessee was reopened without any application of mind and consulting the assessment records by the AO. In order to buttress his aforesaid claim, it was submitted by the ld AR that though the assessee in his return of income for the year under consideration i.e. A.Y. 2004-05 had duly disclosed the complete details as regards the purchase/sale of the properly in question, however, the AO in the impugned reasons had wrongly observed that there was failure on the part of the assessee to furnish documents for ascertaining the year of division or purchase of the plot under consideration. Our attention was drawn by the Ld AR to the copy of the computation of the income wherein there was a clear disclosure qua the transaction of purchase and sale of property under consideration. Apart from that, it was submitted by the Ld AR that now when the assessee had deposited the entire amount of sale consideration of Rs. 9.50 lakhs in his Capital Gain Account No. 12299 held with Punjab and Sind Bank, Mota Singh Nagar, Jalandhar, therefore, there was no justification on the part of the AO Page | 4 to have drawn a belief that the income of the assessee on the sale of the property under consideration i.e. LTCG arising there from had escaped assessment. Backed by his aforesaid contention, it was submitted by the ld AR that as the AO had wrongly assumed jurisdiction and reopened the case of the assessee, therefore, the assessment so framed by him being devoid and bereft of any force of law was liable to be vacated. 9. Per contra, the ld Departmental Representative ( for short the ld D.R.) relied on the orders of the lower authorities. 10. We have heard the ld authorised representatives for both the parties, perused the orders of the lower authorities and the material available on record. As observed by us hereinabove, the assessee during the year under consideration had sold 24 marlas of land that had fallen to his share at the time of division of the assets of M/s. Spiderman Rubber Industries, a partnership firm in which the assessee was a partner. Admittedly, the entire sale proceeds of the aforesaid property had been deposited by the assessee in his CGAS Account No. 12299 with Punjab and Sind Bank, Branch: Jalandhar. In the backdrop of the fact that the assessee had deposited the entire sale proceeds in the aforesaid CGAS account, we are unable to comprehend as to how it could be held that he had suppressed the LTCG arising from the aforesaid transaction of sale of property. In sum and substance, now when the entire sale proceeds had been parked by the assessee in his aforementioned bank account, then, the entire amount of LTCG arising qua the sale of the property in question would be eligible for deduction u/s 54F of the Act. At this stage, we may herein observe, that it is only if the assessee in the succeeding years failed to utilize the amount for the specified purpose within the time limit prescribed in the “proviso” to section 54F of the Act, or flouted the conditions in the forthcoming period, which rendered him ineligible qua the claim for deduction under the aforesaid statutory provision viz. section 54F, it was only in the said later year that his entitlement for the aforesaid deduction would be withdrawn. In sum and substance, the deposit of the entire sale proceeds of the assessee in his CGAS account in so far the year under consideration is concerned, therein clearly rendered him eligible to claim deduction of the entire amount of LTCG arising on the sale of the property in question. At this stage, we may herein observe, that though the AO had applied the deeming provision of section 50C of the Act for computing the LTCG in the hands of the assessee, but in our Page | 5 considered view, the entitlement of the assessee for claim of deduction u/s 54F of the Act continues to remain dependent on the amount of the “net consideration” that was received by him on the transfer of the property in question. Backed by the aforesaid facts, we are of the considered view, that as stated by the ld AR, and rightly so, the AO without applying his mind had in a mechanical manner reopened the case of the assessee u/s 147 of the Act. Although, we are not oblivious of the fact that an AO at the time of reopening of the case of assessee is not required to conclusively prove that the income of the assessee chargeable to tax had escaped assessment, and is only required to have with him a bonafide reason to believe that the income of the assessee chargeable to tax had escaped assessment, but then, where in the totality of the facts of the case before him it can safely be gathered that no income of the assessee chargeable to tax had escaped assessment, there would be no justification on his part in reopening the case of the assessee by taking recourse to the provisions of section 147 of the Act. In the backdrop of our aforesaid observations, we not being able to persuade ourselves to uphold the very basis on which the case of the assessee had been reopened u/s 147 of the Act, thus, set aside the assessment framed by him u/s 143(3) r.w.s. 147 of the Act, dated 16.11.2011. The Grounds of appeal Nos. 1 to 4 are allowed in terms in terms of our aforesaid observations. 11. The Ground No. 5 being general is dismissed as not pressed. 12. Resultantly, the appeal filed by the assessee is allowed in terms of our aforesaid observations. Order pronounced in the open court on 24/12/2021. Sd/- Sd/- (Dr. M. L. MEENA) (RAVISH SOOD) Accountant Member Judicial Member Dated: 24/12/2021 A K Keot Copy forwarded to 1. Applicant 2. Respondent 3. CIT 4. CIT (A) 5. DR:ITAT Page | 6 TRUE COPY BY ORDER