Late Smt. Shanta Bai Birla L/r by Sri Radha Kishan Birla , Hyderabad V. Income Tax Officer, Ward-4(4), Hyderabad

ITA 528/Hyd/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 3933 (ITAT-HYDERABAD)
• Duration Of Justice: 10 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB-A
• Next Hearing Date: 27-01-2020
• Assessment Year: 2010-2011
• Appeal Filed On: 15-04-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Tax effect; Reason to believe; Reassessment proceedings; Set aside
• Section: 50C; 142(1); 147; 148; 54; 144

Judgement Text

ITA NO 528 OF 2019 LATE S MT. SHANTA BAI BIRLA HYDERABAD. PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A SMC BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER ITA NO.528/HYD/2019 ASSESSMENT YEAR: 2010-11 LATE SMT.SHANTA BAI BIRLA L/R BY SRI RADHA KISHAN BIRLA, HYDERABAD PAN:ADIPB2163Q VS. INCOME TAX OFFICER, WARD 4(4) HYDERABAD (APPELLANT) (RESPONDENT) ASSESSEE BY: SRI SIDDHARTH TOSHNIWAL REVENUE BY : SRI SOLGY JOSE T. KOTTARAM, DR DATE OF HEARING: 27/01/2020 DATE OF PRONOUNCEMENT: 28/02/2020 ORDER THIS IS ASSESSEES APPEAL FOR THE A.Y 2010-11 AGAIN ST THE ORDER OF THE CIT (A)-1, HYDERABAD, DATED 29-12- 2017. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, A N INDIVIDUAL, FILED HER RETURN OF INCOME FOR THE A.Y 2010-11 ON 30.07.2010 ADMITTING TOTAL INCOME OF RS.7,94,120/-. THE AO RECEIVED INFORMATION THAT THE ASSESSEE HAS SOLD A P ROPERTY AT SULTAN BAZAR ON 28.10.2009 FOR A SALE CONSIDERATION OF RS.70,00,000/- WHEREAS ITS VALUE AS PER THE STAMP V ALUATION AUTHORITY WAS RS.1,01,90,981/-. AS THERE WAS ESCAPE MENT OF INCOME OF CAPITAL GAIN WITHIN THE MEANING OF SECTIO N 147 OF THE I.T. ACT, THE AO REOPENED THE ASSESSMENT BY ISSUING A NOTICE U/S 148 OF THE ACT DATED 31.03.2017. THE NOTICE WAS SER VED BY AFFIXTURE. THEREAFTER, A NOTICE U/S 142(1) WAS ALSO ISSUED TO THE ASSESSEE. IN RESPONSE TO THE SAID NOTICE, THE ASSES SEE SUBMITTED ITA NO 528 OF 2019 LATE S MT. SHANTA BAI BIRLA HYDERABAD. PAGE 2 OF 6 THAT SHE HAS RECEIVED THE NOTICE U/S 142(1) IN CONN ECTION WITH THE ASSESSMENT PROCEEDINGS FOR THE A.Y 2010-11 BUT THER E WAS NO ASSESSMENT PROCEEDING PENDING FOR THE A.Y 2010-11. IT WAS SUBMITTED THAT THE ASSESSMENT FOR A.Y 2010-11 HAS B ECOME FINAL AND CONCLUSIVE AND IS NOW BARRED BY LIMITATION. THE ASSESSEE ALSO SUBMITTED THAT SHE HAS BEEN FILING HER RETURN OF IN COME IN WARD 4(4) HYDERABAD, AS PER HER PLACE OF RESIDENCE. THE AO TRANSFERRED THE CASE TO WARD 4(4) HYDERABAD. THE AO OF THE ASSE SSEE REJECTED THE ASSESSEES OBJECTION ON NON-SERVICE OF NOTICE U /S 148 AND PROCEEDED TO APPLY THE PROVISIONS OF SECTION 50C. H E ACCORDINGLY APPLIED THE SAME FOR COMPUTATION OF CAPITAL GAIN AN D AFTER ALLOWING DEDUCTIONS U/S 54 AND 54EC, HE ASSESSED TH E LONG TERM CAPITAL GAIN AT RS.45,97,895/- AND BROUGHT IT TO TA X. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT (A) WHO CONFIRMED THE ORDER OF THE AO ON THE VALIDITY OF RE-ASSESSMEN T PROCEEDINGS. AS FAR AS THE APPLICATION OF SECTION 50C IS CONCERN ED, THE CIT (A) OBSERVED THAT THE AO HAS ALREADY REFERRED THE MATTE R OF THE VALUATION OF THE PROPERTY TO THE VALUATION OFFICER. THUS, SHE DIRECTED THE AO TO ADOPT THE VALUE ARRIVED AT BY TH E VALUATION OFFICER. THUS, SHE GRANTED PARTIAL RELIEF TO THE AS SESSEE AND THE ASSESSEE IS IN SECOND APPEAL BEFORE THE TRIBUNAL BY RAISING THE FOLLOWING GROUNDS OF APPEAL: ON VALIDITY OF REASSESSMENT ORDER: TAX EFFECT 7,83 ,588/- 1) THAT THE LEARNED CIT(APPEALS) ERRED IN HOLDING T HAT THE REASSESSMENT ORDER PASSED U/S 144 RWS 147 WITHOUT SERVING NOTICE U/S 148 IS A VALID ORDER. 2) THAT SERVICE OF NOTICE U/S 148 IS A CONDITION PR ECEDENT TO THE VALIDITY OF REASSESSMENT ORDER AND IN THE ABSEN CE OF THE SERVICE OF NOTICE U/S 148 THE REASSESSMENT ORDER SO PASSED IS VOID 3) THAT THE LEARNED CIT(APPEALS) ERRED IN HOLDING T HAT THE NOTICE U/S 148 WAS SERVED BY AFFIXTURE IGNORING THE FACT THAT THE ADDRESS WHERE THE NOTICE WAS PURPORTEDLY AFFIXE D IS NOT ITA NO 528 OF 2019 LATE S MT. SHANTA BAI BIRLA HYDERABAD. PAGE 3 OF 6 THE CORRECT ADDRESS OF APPELLANT AND IN SUCH CIRCUM STANCES THERE WAS NO SERVICE OF NOTICE U/S 148 4) THAT WITHOUT PREJUDICE TO ABOVE, THE LEARNED CIT (APPEALS) ERRED IN IGNORING APPELLANT'S CONTENTION THAT EVEN OTHERWISE THE ALLEGED SERVICE BY AFFIXTURE IS ILLEGAL AS STAT UTORY PROCESS WAS NOT FOLLOWED BEFORE AFFIXING THE NOTICE AND NON E OF THE CIRCUMSTANCES THAT WARRANT SERVICE BY AFFIXTURE UND ER RULE 17 OF ORDER V OF CODE OF CIVIL PROCEDURE, 1908 WERE EXISTING. 5) THAT THE LEARNED CIT(APPEALS) ERRED IN HOLDING T HAT THE APPELLANT HAS NOT FURNISHED LATEST ADDRESS AND NOT FILED THE RETURN OF INCOME, IGNORING THE FACT THAT INCOME TAX OFFICER ISSUING NOTICE U/S 148 WAS HAVING KNOWLEDGE OF THE CORRECT ADDRESS AS HE SERVED THE NOTICE U/S 142(1) ON THE C ORRECT ADDRESS AND RETURN OF INCOME WAS DULY FILED WITH TH E JURISDICTIONAL OFFICER. 6) THAT WITHOUT PREJUDICE TO ABOVE THE LEARNED CIT( APPEALS) ERRED IN IGNORING THE CONTENTION OF APPELLANT THAT REASSESSMENT PROCEEDINGS WERE INITIATED BY INCOME T AX OFFICER WARD 5(1) WHO DID NOT HAVE JURISDICTION OVE R APPELLANT AND THIS RENDERS THE REASSESSMENT PROCEED INGS VOID AS THE SAME WERE NOT INITIATED BY ASSESSING OF FICER HAVING JURISDICTION OVER APPELLANT. 7) THAT WITHOUT PREJUDICE TO ABOVE, LEARNED CIT(APP EALS) ERRED IN IGNORING THE CONTENTION OF APPELLANT THAT ORDER PASSED U/ 144 RWS 147 IS BAD IN LAW AS THERE WAS NO REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMEN T AND ASSESSING OFFICER [ITO WARD 4(4)] HAS TO FORM HIS O WN REASONS AND CANNOT PROCEED ON THE BASIS OF REASONS RECORDED BY A DIFFERENT INCOME TAX OFFICER [ITO WARD 5(1)]. ON VALUATION OF IMMOVABLE PROPERTY: TAX EFFECT: 7,8 3,588/- 8) THAT THE LEARNED CIT(APPEALS) ERRED IN CONFIRMIN G THE VALUE OF PROPERTY AS PER REPORT OF VALUATION OFFICER. 9) THAT THE REASONS ASSIGNED BY THE LEARNED CIT(APP EALS) ARE WRONG, INSUFFICIENT AND ILLEGAL. 10) ANY OTHER GROUND THAT MAY ARISE IN THE COURSE O F HEARING OF THE APPEAL. 3. THE FIRST AND FOREMOST OF THE GROUND OF THE ASSE SSEE IS THAT THE RE-ASSESSMENT ORDER PASSED U/S 144 R.W.S. 147 IS WITHOUT SERVICE OF NOTICE U/S 148 OF THE ACT ON THE ASSESSEE. THE LEARNED COUNSEL FOR THE ASSESSEE BROUGHT OUT THAT T HE ASSESSEES ADDRESS IS HOUSE NO.3-5-170/1/8/1 F.NO.201, ASHISH ORCHIED, ITA NO 528 OF 2019 LATE S MT. SHANTA BAI BIRLA HYDERABAD. PAGE 4 OF 6 NARAYANGUDA, HYDERABAD WHEREAS THE NOTICE U/S 148 IS ALLEGEDLY SERVED ON HOUSE NO.4-2-64 AND 4-2-65/A BADI CHOWDI , SULTAN BAZAR, HYDERABAD. HE SUBMITTED THAT THIS IS THE AD DRESS OF THE PROPERTY WHICH HAS BEEN SOLD BY THE ASSESSEE IN 200 9; WHEREAS THE NOTICE HAS BEEN SERVED BY AFFIXTURE WHILE THERE WAS NO SUCH PERSON. THEREFORE, ACCORDING TO THE LEARNED COUNSEL FOR THE ASSESSEE, THE NOTICE HAS NOT BEEN VALIDLY ISSUED AN D SERVED ON THE ASSESSEE AND THEREFORE, THE RE-ASSESSMENT PROCEEDIN GS ARE NOT VALIDLY INITIATED AND HAVE TO BE SET ASIDE ACCORDIN GLY. 4. THE LEARNED DR, ON THE OTHER HAND, SUPPORTED THE ORDERS OF THE AUTHORITIES OF THE AO AND THE CIT (A) AND SUBMITTED THAT THE SUBSEQUENT NOTICE U/S 142(1) HAS BEEN SERV ED ON THE ASSESSEE ON THE CORRECT ADDRESS AND THEREFORE, THE ASSESSEE HAS PARTICIPATED IN THE RE-ASSESSMENT PROCEEDINGS AND H ENCE THERE WAS NO PREJUDICE CAUSED TO THE ASSESSEE AND AS RIGH TLY HELD BY THE AO AND THE CIT (A), THE RE-ASSESSMENT PROCEEDIN GS ARE VALID. 5. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, I FIND THAT THE RELEVANT A.Y IS 2010-11 AND THE SIX-YEAR PERIOD WITHIN WHICH AN ASSESSMENT COULD BE REOPENED WOULD END ON 31.03.2017. I FIND THAT THE NOTICE U/S 148 IS DA TED 31.3.2017 AND THEREFORE, THE CONDITION FOR ISSUANCE OF NOTICE WITHIN THE TIME LIMIT, IS SATISFIED BUT THE NOTICE ISSUED IS AT A W RONG ADDRESS OR NON-EXISTENT ADDRESS. WHETHER, IN SUCH CIRCUMSTANCE S CAN THE NOTICE BE HELD TO BE A VALID NOTICE?. ADMITTEDLY AN D AS REFERRED TO BY THE AO IN THE ASSESSMENT ORDER, IT IS THE PROPER TY WHICH IS SOLD, AT WHICH THE NOTICE IS SERVED BY AFFIXTURE. T HE PROPERTY WAS SOLD BY THE ASSESSEE IN THE YEAR 2009. THUS U/S 148 , IT IS CLEAR THAT THE ASSESSEE IS NO LONGER THE OWNER OF THE PRO PERTY NOR IS SHE ITA NO 528 OF 2019 LATE S MT. SHANTA BAI BIRLA HYDERABAD. PAGE 5 OF 6 EXPECTED TO BE LIVING IN THE PROPERTY AFTER A PERIO D OF 7 YEARS AFTER THE SALE OF THE PROPERTY. ANOTHER FACT TO BE NOTED IS THAT THE ASSESSEE HAS BEEN FILING HER RETURNS OF INCOME WITH THE NEW ADDRESS AND THE AO COULD HAVE VERIFIED AND CORRECTE D THE ADDRESS OF THE ASSESSEE BEFORE ISSUANCE OF NOTICE U/S 148 O F THE ACT. BY MERELY ISSUING A NOTICE IN THE NAME OF THE ASSESSEE AT THE ADDRESS GIVEN IN THE SALE DEED IS A MERE EYEWASH, TO SATISF Y THE PROVISIONS OF THE ACT. IT IS NOT SUBJECTIVE SATISFACTION. I DI D NOT FIND THAT ANY EFFORTS HAVE BEEN MADE BY THE AO TO FIND OUT THE CO RRECT ADDRESS OF THE ASSESSEE. HE COULD HAVE ATLEAST VERIFIED THE RETURNS OF INCOME FILED BY THE ASSESSEE OR EVEN THE ADDRESS GI VEN IN THE PAN CARD. FURTHER, ON PAGE 28 OF THE PAPER BOOK, I FIND THAT THERE IS A REPORT OF THE INCOME TAX INSPECTOR WHO WAS SENT TO SERVE THE NOTICE BY AFFIXTURE AND THE DETAILS OF THE SAME ARE AS UNDER: SERVICE OF NOTICE BY AFFIXTURE AS DIRECTED BY THE ITO, WARD-5(L), HYDERABAD, I HAV E VISITED THE PREMISES OF THE ASSESSEE, VIZ., SMT.SHA NTA BAI BIRLA, SITUATED AT H.NOA-264/65A, BADI CHOWDI, S.ULTAN BAZAR, HYDERABAD ON 31.03.2017, FOR SERVICE OF NOTICE U/S.148 OF THE I.T.ACT, 1961, DT.31.03.2017. AT THE TIME OF MY VISIT, IT IS NOTICED THAT IT IS A VACANT LAND IN THE ABOVE SAID ADDRESS. ON ENQUIRY, IT REVE ALED THAT THE EXISTING BUILDING/PREMISES WAS DISMANTLED FOR CONSTRUCTION OF NEW BUILDING. IN THE ABOVE CIRCUMSTANCES, I HAVE TRIED TO CONTACT THE RESPONSIBLE PERSON OR ANY FAMILY MEMBERS OF THE ASSESSEE. I HAVE ALSO TRIED TO CONTACT THE NEIGHBOU RS, BUT NOBODY RESPONDED PROPERLY, FOR THE ABOVE SAID REASO NS, I HAVE NO OTHER OPTION EXCEPT TO SERVE THE NOTICE U /S 148 BY AFFIXTURE. THEREFORE, THE NOTICE U/S.148, DT.31. 03.2017 IS SERVED BY AFFIXTURE ON 31.03.2017 AT CONSPICUOUS PLACE OF THE ASSESSEE'S PREMISES I.E, ON TOP OF THE BLUE SHEET WHICH IS COVERING THE PREMISES, FACED ON THE MAIN ROAD OF BADI CHOWDI. AS A TOKEN OF AFFIXTURE ON THE ABOVE SAID PREMISES, THE SIGNATURES OF THE FOLLOWING WITNESSES ARE OBTAINED. AFFIXED IN OUR PRESENCE: WITNESS 1. SD/- ITA NO 528 OF 2019 LATE S MT. SHANTA BAI BIRLA HYDERABAD. PAGE 6 OF 6 WITNESS 2. SD/- AFFIXED BY ME SD/- (G.MURALI KRISHNA) INCOME TAX INSPECTOR O/O ITO WARD 5(1) HYDERABAD 6. THIS CLEARLY SHOWS THE NON-APPLICATION OF MIND B Y THE DEPARTMENT PERSONNEL. HAVING RECORDED THAT IT IS A VACANT LAND AND NON EXISTENCE OF ANY BUILDING OR PREMISES, HOW HE COULD COME TO THE CONCLUSION THAT THE NOTICE IS SERVED BY POSTING THE NOTICE ON THE BLUE SHEET WHICH IS COVERING THE PREM ISES IS UN- UNDERSTANDABLE. I AM SATISFIED THAT THE NOTICE HAS NOT BEEN VALIDLY ISSUED BY THE AO FOR REOPENING OF THE ASSESSMENT AN D THEREFORE, THE RE-ASSESSMENT PROCEEDINGS ARE SET ASIDE. SINCE THE RE- ASSESSMENT PROCEEDINGS ARE HELD TO BE INVALID, THE OTHER GROUNDS OF APPEAL ON MERITS OF THE ADDITION ARE NOT ADJUDIC ATED. ASSESSEES APPEAL IS THUS PARTLY ALLOWED. 7. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOW ED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH FEBRUARY, 2020. SD/- (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 28 TH FEBRUARY, 2020. VINODAN/SPS COPY TO: 1 LATE SMT.SHANTA BAI BIRLA L/R BY SRI RADHA KISHAN BIRLA,C/O SIDDHARTH TOSHNIVAL, ADVOCATE, 3-5-144/5 EDEN GARDEN, HYDERABAD 2 ITO WARD 4(4) ROOM NO.746, 7 TH FLOOR, D BLOCK, IT TOWERS, AC GUARDS, HYDERABAD 500057 3 CIT (A)-1 HYDERABAD 4 PR. CIT 1 HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER