DCIT 7(3), MUMBAI V. RASHNA N. TALATI, MUMBAI

ITA 5428/MUM/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0452 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 13-09-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 08-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: J D MISTRY; B V JAVERI
• Keywords: Sale consideration of property below Jantri Value; Source of fund; Tangible material; Difference of opinion; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 50C; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D MUMBAI BEFORE SHRI JOGINDER SINGH (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 5428 / MUM/20 13 ASSESSMENT YEAR: 2007 - 08 DCIT 7(3) VS. RASHNA N TALATI R. NO. 615, 6 TH FLOOR 96, D VILLA MORDEN, AAYAKAR BHAVEN, M.K. MARG WORLI SEA FACE, WORLI. MUMBAI 400020 MUMBAI - 400018 PAN NO. AACPT0859N (APPELLANT) (RESPONDENT) REVENUE BY : MR. PURUSHOTTAM KUMAR , DR ASSESSEE BY: MR. J.D. MISTRY & MR. B.V. JAVERI, AR DATE OF HEARING : 20/03 /2017 DATE OF PRONOUNCEMENT: 31/05/2017 ORDER PER N.K. PRADHAN, AM THIS IS AN APPEAL FILED BY THE REVENUE . THE RELEVANT ASSESSMENT YEAR IS 2007 - 08 . THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER (APPEALS) - 13 , MUMBAI AND ARISES OUT OF THE ORDER U/S 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 (THE ACT). 2. THE GROUND S RAISED IN THIS APPEAL ARE THAT (I) THE LEARNED CIT(A) HAS ERRED ON FACTS AND IN LAW IN EXTENDING THE SCOPE OF CHANGE OF OPINION TO A CASE WHERE NO OPINION WAS FORMED BY THE A.O. AND THEREFORE PRESUMED DEEMED FORMATION OF OPINION, (II) THE LEARNED CIT(A) HAS ERRED ON FACTS AND IN LAW IN NOT PROPERLY INTERPRETING THE LAW ON THE SUBJECT AND HIS DECISION IS CONTRARY TO THE RATIO OF DELHI ITA NO. 5428 /MUM/201 3 2 HIGH COURTS DECISION IN M/S. USHA ENGINEERING LTD ., (III) THE LEARNED CIT(A) HAS ERRED ON FACTS AND IN LAW IN DELETING THE ADDITION OF RS. 1,01,01,666/ - AS SHORT TERM CAPITAL GAINS AND RS. 1,77,91,629/ - AS LONG TERM CAPITAL GAINS, WITHOUT PROPERLY APPRECIATING THE FACTUAL AND LEGAL MATRIX OF THE CASE AS BROUGHT OUT BY THE A.O. IN THE ASSESSMENT ORDER AND (IV) T HE LEARNED CIT(A) HAS ERRED ON FACTS AND IN LAW IN DELETING THE ADDITION ON ACCOUNT OF CAPITAL GAIN HOLDING THAT THE ASSESSEE HAS COMPLIED WITH THE PROVISIONS OF SECTION 50C WITHOUT APPRECIATING THE F ACT THAT THE JT. SUB - R EGISTRAR, PUNE VALUED THE SAID LAN D AT RS. 18.75 CRORES AS AGAINST RS. 50 LACS MENTIONED IN LEASE TRANSFERRED AGREEMENT AND THEREFORE THE SALE CONSIDERATION WAS CORRECTLY TAKEN AT RS. 18.75 CRORES AS PER THE PROVISIONS OF SECTION 50C. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE A SSESSEE FILED HER RETURN OF INCOME FOR THE A.Y. 2007 - 08 ON 31.12.2007 DECLARING TOTAL INCOME OF RS. 5,27,22,438/ - . THEREAFTER, SHE REVISED HER RETURN OF INCOME ON 26.11.2008 DISCLOSING TOTAL INCOME OF RS. 5,49,76,923/ - . THE ASSESSING OFFICER (A.O.) COMPLET ED THE ASSESSMENT U/S 143(3) OF THE ACT ON 21.04.2009. THEREAFTER THE A.O. ISSUE NOTICE U/S 148 TO THE ASSESSEE ON 26.03.2012. THE REASON GIVEN BY THE A.O. FOR REOPENING THE ASSESSMENT IS GIVEN BELOW: IN THIS CASE, ORDER UNDER SECTION 143(3) OF THE INCOME - TAX ACT, 1961 WAS PASSED ON 21.04.2009. ON PERUSAL OF THE RETURN OF FOR A.Y. 2007 - 08 IN THE CASE OF SMT. RASHNA N. TALATI, IT IS SEEN THAT THE ASSESSEE HAS FOLLOWING INCOMES: * SALARY FROM BENREEZA TRAVEL SERVICES PVT. LTD. RS. 60,000/ - . * BUSINESS OF OWNING AND MAINTAINING OF RACE HORSES FROM WHERE SHE HAS REPORTED LOSS OF RS. 1,24,089/ - . ITA NO. 5428 /MUM/201 3 3 HOWEVER, PERUSAL OF THE RECORDS REVEAL THAT IN THE PERSONAL BALANCE SHEET OF THE A SSESSEE, THE FOLLOWING RECEIPTS ARE RECORDED AS LIABILITIES AS AT 31 ST MARCH, 2 007: *ADVANCES RECEIVED AGAINST SALE OF AGRICULTURAL / NON - AGRICULTURAL LAND RS. 64,00,000/ - *RAMJAL INDUSTRIES (ADVANCES RECEIVED AGAINST SALE OF SHARE IN BUNGLOW AT KOREGAON PARK, PUNE) RS. 10,50,000/ - *DEPOSIT RECEIVED AGAINST BOOKING OF PLOT : KWALITY FROZEN FOOD LTD. RS. 7,00,000/ - *TOTAL RECEIPTS OF ADVANCES RS. 81,50,000/ - FURTHER, THE BALANCE SHEET AS AT 31 ST MARCH, 20 0 7, SHOW THAT THE ASSESSEE HAS MADE INVESTMENTS OF RS. 2,88,62,425/ - IN SHARES/DEBENTURES. DETAILS ON RECORD RE VEAL THAT THE ASSESSEE HAS DERIVED A PALTRY SUM OF RS. 38/ - AS DIVIDEND DURING THE YEAR UNDER REVIEW. CONSIDERING THE HUGE AMOUNT OF INVESTMENTS AND DISPROPORTIONATE EARNING OF DIVIDED DURING THE YEAR, IT IS APPARENT THAT THESE INVESTMENTS WERE MADE DURING THE YEAR UNDER REVIEW. THE SOURCE AND FUNDING OF THESE INVESTMENTS REMAINED TO BE EXAMINED. IT IS SEEN FROM RECORDS, THAT THE ASSESSEE HAS GIVEN LOANS AND ADVANCES TO THE TUNE OF RS. 6,47,34,152/ - /. THESE EXORBITANT LOANS SHOULD BY ALL REASONABLE STANDAR DS, FETCH A GOOD AMOUNT OF INTEREST WHICH SHOULD BY ALL REASONABLE STANDARDS, FETCH A GOOD AMOUNT OF INTEREST WHICH SHOULD ADD UP TO THE ASSESSEES TAXABLE INCOME. TAKING A REASONABLE RATE OF EVEN 8% COULD FETCH THE ASSESSEE INTEREST INCOME OF RS. 51,78, 732/ - . ACCORDINGLY THERE IS AN UNDER ASSESSMENT OF RS. 51,78,732/ - . FURTHER, THE SOURCE OF FUNDS OF THESE LOANS AND ADVANCES, EXTENDED BY THE ASSESSESE REMAINED TO BE EXAMINED. A PERUSAL OF THE RECORDS, SHOW THAT THE ASSESSEE HAS TWO HOUSE PROPERTIES VIZ: *96D VILLA MODERN, WORLI SEA FACE, WORLI, MUMBAI 400018 *BUNGLOW AT KOREGAON PARK, PUNE THE ASSESSESE, HAS HOWEVER, NOT DECLARED ANY INCOME UNDER THE HEAD HOUSE PROPERTY. ON PERUSAL OF THE RETURN OF INCOME FOR A.Y. 2007 - 08, IT IS SEEN THAT HE ASSESSEE AL ONGWITH TWO OTHER ASSESSEES (BEING LESSORS) HAVE LEASED OUT 63 ACRES OF LAND AT PUNE TO M/S. WAVY CONSTRUCTION PVT. LTD. FOR 999 YEARS ON A LEASE RENT OF RS. 17/ - P.A. AND LEASE PREMIUM OF RS. 50 LACS VIDE AGREEMENT DATED 7.4.2005. AS PER SECTION 2(47), TH IS KIND OF LEASE AMOUNTS TO TRANSFER OF ASSET. HENCE, THE TRANSACTION ATTRACTS CAPITAL GAIN. THE VALUE OF LAND HAS BEEN DETERMINED AT RS. 18,75,56,000/ - BY THE SUB - REGISTRAR, PUNE VIDE ITA NO. 5428 /MUM/201 3 4 LETTER DATED 20.04.2009. ACCORDINGLY, THERE IS AN UNDER ASSESSMENT OF RS. 18,75,56,000/ - . IT IS CLEAR THAT THE ASSESSEE HAS UNDERSTATED THE INCOME. TH U S, IT IS A CASE WHERE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. THE ASSESSEE FAILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ITS ASSESSMENT FOR A.Y . 2007 - 08. I, THEREFORE, HAVE REASON TO BELIEVE THAT INCOME TO THE EXTENT OF RS. 18.76 CRORES HAS ESCAPED ASSESSMENT. 4. THE A.O. THEN ASSESS ED THE INCOME AT RS. 8,20,84,470/ - . AGGRIEVED BY THE ORDER OF THE, THE ASSESSEE FILED AN APPEAL BEFORE THE LEARNED CIT(A). WE FIND THAT THE LEARNED CIT(A) HAS HELD THAT THE REOPENING WAS INVALID AS IT WAS DONE ON THE BASIS OF CHANGE OF OPINION. 5. BEFORE US THE LEARNED DR SUPPORTS THE ORDER PASSED BY THE A.O. ON THE OTHER HAND THE LEARNED COUNSEL OF THE ASSESSEE RELIED ON (I) THE ORDER OF THE LEARNED CIT(A) DATED 29.05.2013 AND (II) THE ORDER OF THE ITAT B BENCH, MUMBAI IN THE CASE OF DCIT V S. NOSHIR D TALATI FOR THE A.Y. 2010 - 11 (ITA NO. 5423/MUM/2013). 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. AS DELINEATED AT PARA 3 HERE - IN - ABOVE, THE A.O. HAS BASED HIS REASONS FOR REOPENING THE ASSESSMENT ON (I) THE RETURN OF INCOME FILED ON 26.11.2008 AND (II) THE AUDITED ACCOUNTS AND OTHER DETAIL S FILED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS U/S 143(3) COMPLETED ON 21.04.2009. 6.1 THE BASIS OF THE REASONS RECORDED BY THE A.O. IS NOTHING BUT A MERE CHANGE OF OPINION. IN CALCUTTA DISCOUNT CO. LTD. V S. ITO (1961) 41 ITR 191 (SC) , THE HONBLE SUPREME COURT HAS HELD THAT THE ASSESSEE HAS RESPONSIBILITY OF DISCLOSING ALL PRIMARY FACTS, BUT ONCE HE HAS DISCLOSED ALL THE PRIMARY FACTS, HIS DUTY ENDS AND IT IS FOR THE ASSESSING AUTHORITY TO DRAW THE PROPER CONCLUSIONS FROM IT. IF THE WR ONG ITA NO. 5428 /MUM/201 3 5 CONCLUSION WAS DRAWN, THEN IT IS NO GROUND FOR REOPENING AN ASSESSMENT. BECAUSE THE ASSESSING AUTHORITY PREVIOUSLY HELD ANOTHER OPINION AS TO THE LEGAL EFFECT OF CERTAIN PRIMARY FACTS, AND THE ASSESSING AUTHORITY LATER ON TOOK A DIFFERENT VIEW, THERE D OES NOT EXIS T ANY GROUND FOR SUCH REOPENING. IT HAS BEEN HELD IN DIRECT INFORMATION PVT. LTD. VS. ITO (2011) 203 TAXMAN 70 (BOM) THAT U NLESS ASSESSING OFFICER HAS TANGIBLE MATERIAL BEFORE HIM ON BASIS OF WHICH HE COMES TO CONCLUSION THAT INCOME HAS ESCAPE D ASSESSMENT, REOPENING OF AN ASSESSMENT CANNOT BE PERMITTED MERELY ON GROUND THAT THERE IS A CHANGE IN VIEW OF ASSESSING OFFICER AND HE SUBSEQUENTLY BELIEVES THAT EARLIER VIEW WAS INCORRECT. IN CIT VS. KELVINATOR OF INDIA LTD . (2010) 320 ITR 561 (SC), I T IS HELD THAT T HERE IS A CONCEPTUAL DIFFERENCE BETWEEN POWER TO REVIEW AND POWER TO REASSESS. REVIEW MEANS TAKING SECOND VIEW IF TWO VIEWS ARE POSSIBLE. IF ASSESSING OFFICER HAS TAKEN A VIEW IN ASSESSMENT THEN HE CANNOT CHANGE HIS VIEW UNDER SECTION 147 O N THE BASIS OF HIS PERSONAL OPINIONS. IN BUSINESS INDIA VS. JCIT (2015) 54 TAXMANN.COM 70 (BOM), IT IS HELD THAT W HERE THE ASSESSING OFFICER HAD ALLOWED DEDUCTION IN RESPECT OF ASSESSEES CLAIM FOR PAYMENT OF INTEREST, HE, IN THE ABSENCE OF ANY FAILURE ON ASSESSEES PART TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT COULD NOT INITIATE REASSESSMENT PROCEEDINGS MERELY ON BASIS OF CHANGE OF OPINION THAT INTEREST EXPENDITURE IN QUESTION WAS CAPITAL IN NATURE . 6.2 SIMILAR ISSUE AROSE B EFORE THE ITAT B BENCH, MUMBAI IN A CASE RELATED TO THE ASSESSEE I.E. NOSHIR D. TALATI (SUPRA) . THE GROUNDS OF ITA NO. 5428 /MUM/201 3 6 APPEAL IN BOTH THE CASES ARE SAME. THE TRIBUNAL DISMISSED THE APPEAL FILED BY THE REVENUE ON THE BASIS THAT IT WAS A CASE OF CHANGE OF OPINION. 7. IN VIEW OF THE FOREGOING REASONS , WE HOLD THAT THE REOPENING DONE BY THE A.O. WAS A MERE CHANGE OF OPINION. THEREFORE, WE UPHOLD THE ORDER OF THE LEARNED CIT(A). 8. IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN C OURT ON 31/ 05/2017 . SD/ - SD/ - ( JOGINDER SINGH) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI : DATED: 31/05/2017 RAHUL SHARMA , SR. P.S. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI