DCIT, Jaipur V. MAHENDRA SINGH, Jaipur

ITA 554/JPR/2013

• Counselvise Citation: 55423114 RSA 2013
• Duration Of Justice: 2 year(s) 5 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 24-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJENDRA SINGH
• Assessee Lawyers: N S VYAS
• Keywords: Sale consideration of property below Jantri Value; Business income; Depreciation; Opportunity of being heard; Tangible material; Difference of opinion; Reason to believe; Change of opinion
• Section: 143(3); 50C; 147; 148

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH VH-VKJ-EHUK] YS[KK LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM VK;DJ VIHY LA- @ ITA NO. 554/JP/2013 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2006-07 DY. COMMISSIONER OF INCOME TAX, CIRCLE-2, JAIPUR. CUKE VS. MAHENDRA SINGH, 6-HARI BHAWAN, JEKOB ROAD, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ L A-@ PAN/GIR NO.: AGCPS 3348 H VIHYKFKHZ @ APPELLANT IZR;FKHZ @ RESPONDENT JKTLO DH VKSJ LS @ REVENUE BY : SHRI RAJENDRA SINGH (JCIT) FU/KZKFJRH DH VKSJ LS @ ASSESSEE BY : SHRI N.S. VYAS (CA) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 15/10/2015 MN?KKS'K .KK DH RKJH[ K @ DATE OF PRONOUNCEMENT : 30/10/2015 VKNS'K @ ORDER PER: T.R. MEENA, A.M. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER DATED 11/03/2013 PASSED BY THE LEARNED CIT (A)-I, JAIPUR FOR A.Y. 2006-07. THE SOLE GROUND OF APPEAL IS AS UNDER:- WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) WAS JUSTIFIED IN HOLDI NG THE INITIATION OF PROCEEDINGS U/S 147 AS BAD IN LAW IGNORING THE FACT THAT THE PROCEEDINGS WERE INITIAT ED AS THE ASSESSEE HAS NOT COMPUTED THE CAPITAL GAIN BY ITA 554/JP/2013_ DCIT VS. MAHENDRA SINGH 2 TAKING SALE CONSIDERATION U/S 50C AND NOT ON THE GR OUND OF LEASE AGREEMENT AS HELD BY THE LD CIT(A). 2. IN THIS CASE, ORIGINAL STATEMENT WAS COMPLETED U/ S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED AS THE AC T) ON 27/07/2008, THEREAFTER, NOTICE U/S 148 OF THE ACT WAS ISSUED AFT ER RECORDING THE REASONS ON TWO GROUNDS. (I) RENTAL INCOME IS TO BE TREATED AS BUSINESS INC OME & (II) CAPITAL GAIN HAS NOT COMPUTED ON THE BASIS OF SALE CONSIDERATION AS PER SECTION 50C. THE LD ASSESSING OFFICER AFTER PROVIDING A REASONABL E OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND CONSIDERED THE VARI OUS CASE LAWS ON BUSINESS INCOME AND HELD RENTAL INCOME AS INCOME FR OM BUSINESS AND PROFESSION, ACCORDINGLY, ADDITION OF RS. 4,77,750/- WAS MADE BY THE ASSESSING OFFICER. HOWEVER, NO ADDITION WAS MADE BY T HE ASSESSING OFFICER UNDER THE HEAD LONG TERM CAPITAL GAIN BY CO NSIDERING THE SALE VALUE U/S 50C AT RS. 31,15,803/- MINUS INDEXED COST AT RS. 16.50 LACS AND NET CAPITAL GAIN AT RS. 14,65,603/-. THE ASSESSE E ALREADY CLAIMED EXEMPTION U/S 54EC BY INVESTING IN SPECIFIED POINTS AT RS. 26.50 LACS. THUS NO ADDITION UNDER THE HEAD LONG TERM CAPITAL GA IN WAS MADE. ITA 554/JP/2013_ DCIT VS. MAHENDRA SINGH 3 3. BEING AGGRIEVED BY THE ORDER OF THE LEARNED ASSE SSING OFFICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LEARNED CIT( A), WHO HAD HELD THE REOPENING OF THE CASE U/S 147 OF THE ACT AS BAD IN LAW BY OBSERVING AS UNDER:- 4.3 I HAVE CAREFULLY PERUSED THE ORDER OF THE A.O. AND THE SUBMISSIONS OF THE AR ALONGWITH ORDER PASSED BY THE ACIT U/S 143(3) DATED 29/07/2008. THE A.O. OBSERVED I N THIS ORDER AS FOLLOWS:- DURING THE YEAR UNDER CONSIDERATION, ASSESSEE HAS S HOWN RENTAL INCOME, SHARE OF PROFIT, INTEREST FROM BANK AND INCOME FROM SHORT TERM CAPITAL GAIN ON IMMOVABLE PROPERTY AND INTEREST ON FDRS. NECESSARY INFORMATION/DETAILS HAV E BEEN FILED AND PLACED ON RECORD. BOOKS OF ACCOUNTS, BANK STATEMENT AND OTHER DETAILS WERE PRODUCED WHICH HAV E BEEN EXAMINED ON TEST CHECK BASIS. AFTER EXAMINATION OF THE INFORMATION AND DISCUSSION WITH THE AR, RETURNED IN COME AT RS. 24,14,279/- AND INCOME EXEMPT U/S 10 OF RS. 9,9 4,067/- IS ACCEPTED. THUS, IT IS SEEN THAT THE A.O. CONSIDERED THE INCOME FROM LEASE AS RENTAL INCOME AND HAS GIVEN A SPECIFIC FIN DING THAT HE ACCEPTED IT AS RENTAL INCOME. IN VIEW OF THE SAME THE SUBSEQUENT PROCEEDINGS INITIATED U/S 147 ARE BA D IN LAW AS LAID DOWN BY THE HONBLE APEX COURT IN THE CAS E OF CIT VS KELVINATOR OF INDIA LTD. (2010) 320 ITR 561 (S C) WHEREIN THE HON'BLE SUPREME COURT HAS HELD THAT THE CONCEPT OF CHANGE OF OPINION ON THE PART OF THE A .O. TO REOPEN AN ASSESSMENT DOES NOT STAND OBLITERATED AFT ER ITA 554/JP/2013_ DCIT VS. MAHENDRA SINGH 4 THE SUBSTITUTION OF SECTION 147 BY THE DIRECT TAX (AMENDMENT) ACTS, 1987 & 1989. THE A.O. HAS TO HAVE REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMEN T BUT THIS DOES NOT IMPLY THAT THE A.O. CAN REOPEN AN ASSESSMENT ON MERE CHANGE OF OPINION. THE CONCEPT OF CHANGE OF OPINION MUST BE TREATED AS AN INBUILT T EST TO CHECK THE ABUSE OF POWER. HENCE, AFTER 1 ST APRIL, 1989, THE A.O. HAS POWER TO REOPEN AN ASSESSMENT PROVIDED THERE IS TANGIBLE MATERIAL TO COME TO THE CONCLUS ION THAT THERE WAS ESCAPEMENT OF INCOME FROM ASSESSMENT. REASON MUST HAVE LINK WITH THE FORMATION OF BELIEF. THE DECISIONS OF THE DELHI H.C. IN THE CASES OF CIT VS. KELVINATOR OF INDIA LTD. (2002) 174 CTR (DEL)(FB) 6 17: (2002) 256 ITR 1 (DEL) (FB) AND CIT VS. EICHER LTD. (2007) 213 CTR (DEL) 57: (2007) 294 ITR 310 (DEL) WERE AFFIRMED BY THE S.C. BY THE ABOVE MENTIONED JUDGMEN T. IN A RECENT JUDGMENT THE HON'BLE GUJARAT HIGH COURT HAS ADJUDICATED ON SIMILAR FACTS IN THE CASE OF M/S GAN ESH HOUSING CORPORATION LTD. VS. DCIT (2013) 350 ITR 131 (GUJ). WHILE ADJUDICATING IN FAVOUR OF THE ASSESSEE IT HELD THAT THE ASSESSEE HAD DISCLOSED ALL THE MATERIALS R ELEVANT FOR THE PURPOSE OF GETTING THE BENEFIT UNDER SECTIO N 80-IB OF THE INCOME TAX ACT, 1961, AND THERE WAS NO SUPPRESSION OF MATERIALS. IN SPITE OF FULL DISCLOSU RE, THE ASSESSING OFFICER GAVE THE BENEFIT OF THE PROVISION BY ITA 554/JP/2013_ DCIT VS. MAHENDRA SINGH 5 CONSIDERING THE MATERIALS ON RECORD AND THUS, IT CO ULD NOT BE SAID THAT ANY INCOME ESCAPED ASSESSMENT. THE CONDITION PRECEDENT FOR EXERCISING POWER OF REOPENIN G THE ASSESSMENT AS PROVIDED IN SECTION 147 OF THE ACT WAS ABSENT AND THE ASSESSING OFFICER ACTED ILLEGALLY IN ISSUING NOTICE OF REASSESSMENT BY FORMING A SECOND OPINION ON THE SELF SAME MATERIALS WITHOUT HAVING ANY TANGIBLE MATERIAL TO EXERCISE JURISDICTION. IN VIEW OF THE ABOVE FINDINGS, IT IS SEEN THAT THE L EASE AGREEMENT HAD ALREADY BEEN CONSIDERED BY THE A.O. WH ILE PASSING THE ORDER U/S 143(3) ON 29/07/2008 WHEREIN T HE A.O. HAS GIVEN A SPECIFIC FINDING THAT THE ASSESSEE HAS SHOWN RENTAL INCOME WHICH WAS THEN ACCEPTED. IN VIEW OF THIS FINDING, IT IS HELD THAT WHILE REOPENING THE CA SE THE A.O. DID NOT HAVE ANY NEW TANGIBLE MATERIAL, WHICH H AD NOT BEEN CONSIDERED EARLIER BY THE A.O. WHILE PASSIN G AN ORDER U/S 143(30. THEREFORE, THE REOPENING OF THE C ASE TANTAMOUNT TO REVIEW OF THE PREVIOUS ORDER PASSED U/ S 143(3) WHICH IS BEYOND THE SCOPE OF THE PROVISIONS OF SECTION 147 AS ENUNCIATED BY THE APEX COURT IN THE CASE OF CIT VS. KELVINATOR OF INDIA LTD., SUPRA. THEREFORE , THE REOPENING OF THE CASE U/S 147 AND SUBSEQUENT ORDER IS HELD TO BE BAD IN LAW AND NOT SUSTAINABLE. SINCE, TH E ORDER PASSED U/S 147/143(3) HAS BEEN HELD TO BE BAD IN LAW AND QUASHED THE ADDITIONS MADE IN THIS ORDER ARE NO ITA 554/JP/2013_ DCIT VS. MAHENDRA SINGH 6 LONGER SUSTAINABLE. THE INCOME ASCERTAINABLE VIDE OR DER U/S 143(3) DATED 29/07/2008 IS HELD TO BE THE FINAL INCOME FOR THIS ASSESSMENT YEAR. 4. NOW THE REVENUE IS IN APPEAL BEFORE US. THE LD. DR VEHEMENTLY SUPPORTED THE ORDER OF THE LD. ASSESSING OFFICER. A T THE OUTSET, THE LD AR OF THE ASSESSEE REITERATED THE ARGUMENTS MADE BEFOR E THE LD CIT(A) AND FURTHER ARGUED THAT IN THIS CASE SCRUTINY ALREADY M ADE U/S 143(3) ON 29/07/2008. THE CASE WAS REOPENED U/S 147/148 BY THE ASSESSING OFFICER VIDE NOTICE DATED 23/3/2010. THE REASONS FOR REOPENING WERE SUPPLIED BY THE ASSESSING OFFICER. THE REASONS FOR REOPENING OF THE CASE WAS THAT THE DLC PRICE SHOWN IN THE SALE DEED FOR WHIC H STAMP DUTIES WERE PAID WAS MORE THAN THE SALE PRICE ACTUALLY DECL ARED BY THE ASSESSEE. THE ASSESSEE HAS EXPLAINED VIDE LETTER DAT ED 21/7/2010 TO THE ASSESSING OFFICER THAT EVEN SALE CONSIDERATION TAKE N AS PER SECTION 50C, THERE WOULD BE NO LONG TERM CAPITAL GAIN ON THE BASI S OF WORKING GIVEN BY THE ASSESSEE. ON RENTAL INCOME, IT WAS SUBMITTED THAT THERE WAS A DEDUCTION U/S 24(A) @ 30% AS A STANDARD DEDUCTION FR OM THE RENTAL INCOME. NOW THE LD ASSESSING OFFICER WANTS TO TAX THE SAME INCOME UNDER THE HEAD BUSINESS AND PROFESSION. HE FURTHER ARGUED THAT THE ASSESSEE HAS NO OBJECTION BUT DEPRECIATION ON BUILD ING AT RS. ITA 554/JP/2013_ DCIT VS. MAHENDRA SINGH 7 19,08,310/-, REPAIR AND MAINTENANCE EXPENSES AT RS. 68,291/- IS TO BE ALLOWED. THE INCOME WOULD BE ASSESSED LESS AS COMPARED SHOWN BY THE ASSESSEE, THEREFORE, HE FURTHER STATED THAT THESE F ACTS WERE GIVEN AT THE TIME OF FIRST ASSESSMENT PROCEEDING, WHICH IS CHANGE OF OPINION AND ON SAME FACTS AND CIRCUMSTANCES. THE OTHER VIEW TAKEN BY THE SUBSEQUENT ASSESSING OFFICER IS NOT PERMITTED UNDER THE LAW. TH EREFORE, THE ORDER OF THE LD CIT(A) MAY PLEASE BE UPHELD. 5. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. THERE IS NO ADDITION HAS BEEN MADE BY THE ASSESSING OFFICER EVEN AFTER CONSI DERING THE SALE VALUE OF IMMOVABLE PROPERTY AS PER SECTION 50C. EVE N THE REOPENING IS FORMED ON THE BASIS OF INCOME IS TO BE TREATED AS B USINESS AND PROFESSION. THE ASSESSEE HAS RIGHT TO CLAIM DEPRECI ATION ON PREMISES AND REPAIR AND MAINTENANCE IS TO BE ALLOWED AS PER LAW. TH ERE IS NO GAIN OF THE REVENUE BY REOPENING THE CASE U/S 148 AND THE F ACTS AND CIRCUMSTANCES SHOWS THAT THE ASSESSING OFFICER HAS C HANGE OF OPINION ON THE SAME FACTS AND INCOME DETERMINED BY HIM, WHICH I S NOT PERMISSIBLE UNDER THE LAW. THE CASE LAWS CITED BY THE LD CIT(A) ARE SQUARELY ITA 554/JP/2013_ DCIT VS. MAHENDRA SINGH 8 APPLICABLE, WHICH HAS NOT BEEN CONTROVERTED BY THE L D DR, THEREFORE, WE UPHOLD THE ORDER OF THE LD CIT(A). 6. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 30/10/2015. SD/- SD/- VKJ-IH-RKSYKUH VH-VKJ-EHUK (R.P.TOLANI) (T.R. MEENA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ @ JAIPUR FNUKAD @ DATED:- 30 TH OCTOBER, 2015 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- THE DCIT, CIRCLE-2, JAIPUR 2. IZR;FKHZ @ THE RESPONDENT- SHRI MAHENDRA SINGH, JAIPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 554/JP/2013) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR