ASST CIT 14(2), MUMBAI V. ANURADHA B. ACHREKAR, MUMBAI

ITA 5602/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1913 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2016
• Appeal Filed By: Department
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 05-09-2014
• Court: TRIBUNAL
• Department Lawyers: A RAMACHANDRAN
• Keywords: Sale consideration of property below Jantri Value; Business income; Share purchase agreement; Difference of opinion; Change of opinion
• Section: 142(1); 133(6); 147; 145; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI RAVISH SOOD , JM ITA NO. 5602 / MUM/20 1 4 ( ASSESSMENT YEAR : 2005 - 2006 ) ACIT 14(2), MUMBAI VS. SMT. ANURADHA B. ACHREKAR 2 - C, OISTER APARTMENT, COLABA, MUMBAI - 05 PAN/GIR NO. AANPA2938C APPELLANT ) .. RESPONDENT ) REVENUE BY SHRI A. RAMACHANDRAN ASSESSEE BY SHRI K.GOPAL DATE OF HEARING 01/11 /2016 DATE OF PRONOUNCEME NT 23 / 11 /2016 / O R D E R PER R.C.SHARMA (A.M) : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A) FOR THE ASSESSMENT YEAR 2005 - 2006, IN THE MATTER OF ORDER PASSED U/S.144 READ WITH SECTION 147 OF THE IT ACT. 2. IN THIS APPEAL, REVENUE IS AGGRIEV ED FOR DELETING ADDITION O F RS.1,07,69,930/ - BEING PROFIT ON SALE OF FLATS. REVENUE HAS ALSO TAKEN LEGAL GROUND TO THE EFFECT THAT CIT(A) HAS WRONGLY QUASHED THE REOPENING. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. FACTS IN BRIEF ARE THAT TH E ASSESSEE IS A NON - FILER. THE ASSESSEE HAS NOT FILED THE RETURN OF INCOME FOR A.Y.2005 - 06. THERE WAS INFORMATION FROM ITS DETAILS OF AIR TRANSACTIONS THAT THE ASSESSEE HAS PURCHASED IMMOVABLE PROPERTY ON 21/10/2004 AT RS.35,000/ - . IN VIEW OF THE SAID INFO RMATION , NOTICE U/S. 148 ITA NO.5602 - 2014 SMT. ANURADHA B.ACHREKAR 2 DATED 27/03/2012 WAS ISSUED AND SERVED ON THE ASSESSEE. THERE WAS NO RESPONSE. SUBSEQUENTLY NOTICE U/S. 142(1) DATED 8/10/2012 WAS ISSUED AND SERVED UPON THE ASSE SSEE. 5. AS PER AIR TRANSACTIONS, THE ASSESSEE HAD PURCHASED IMMOVAB LE PROPERTY (FLAT) ON 21.10.2004 AT RS.35,00,000/ - AT 2 - C, OISTER APARTMENT, COLABA. THE ASSESSEE VIDE LETTER DATED 2.10.2012 DENIED ANY SUCH TRANSACTION; AND STATED TH AT SHE IS A WIDOW AGED 80 YEARS HAVING LOST HER HUSBAND ON 24.07.2010, WHO MANAGED HER I NCOME TAX MATTERS AND SHE HAD NO KNOWLEDGE ABOUT INCOME TAX MATTERS. THE ASSESSEE FURTHER STATED THAT THE SAID FLAT WAS PURCHASED BY HER DECEASED HUSBAND IN YEAR 1965, WH ICH SHE SUPPORTED BY SHARE CERTIFICATE/ SOCIETY RECEIPT ETC. ON ENQUIRY WITH JOINT SUB - REGISTRAR U/S 133(6) TO VERIFY THE SAID REPORTED TRANSACTION, IT WAS REVEALED THAT THE A SSESSEE HAD SOLD SO ME OTHER IMMOVABLE PROPERTY (FLAT NO. 502 WITH 2 CAR PARKINGS) AT RADHAKRISHNA N IWAS, VILE PARLE (E). HENCE, THE ASSESSEE WAS ISSUED A SHOW CAUSE NO TICE ASKING WHY THE CAPITAL GAIN SHOULD NOT BE COMPUTED AND ADDED TO HER TOTAL INCOME, HOWEVER THE ASSESSEE DID NOT REPLY. SUBSEQUENTLY, ON ENQUIRY FROM PURCHASERS OF SAID FLAT AT RADHAKRISHNA NIWAS, IT WAS REVEALED THAT THE ASSESSEE HAD SOLD THE SAID FLAT A S BUILDER/ PROMOTER. HENCE, FUR T HER NOTICES U/S 133(6) WERE ISSUED TO OTHER PURCHASERS IN RADHAKRISHNA NIWAS. ON THE BASIS OF INFORMATION RECEIVED FROM SUCH BUYERS OF FLATS, THE AO OBSERVED THAT THE ASSESSEE HAD MADE SALE OF TOTAL 9 FLATS + 2 CAR PARKING S, HAVING A GGREGATE AGREEMENT VALUE AT RS.1,21 ,61,600 / - WHEREAS THE AGGREGATE STAMP DUTY VALUE OF SAID PROPERTIES WAS AT RS.L,68,50,727/ - ITA NO.5602 - 2014 SMT. ANURADHA B.ACHREKAR 3 RESULTING IN DIFFERENCE OF RS.46,89,127/ - AS THE BUILDING RADHAKRISHNA NIWAS WAS CONSTRUCTED BY DEMOLISHING OLD BUILDI NG, THE ASSESSEE WAS CONSIDERED AS A 'BUILDER & DEVELOPER' OF LAND DURING F. Y. 2004 - 05, AND THUS THE PROFIT EARNED ON SALE OF ABOVE FLATS WAS CONSIDERED BY AO AS BUSINESS INCOME. 6. HOWEVER, AO HAS FINALISED THE ASSESSMENT ASSESSING BUSINESS PROFIT OF RS. 60,80,800/ - AND ADDITION ON ACCOUNT OF UNACCOUNTED SALES OF RS.46,89,127/ - . THUS, THE INCOME OF ASSESSEE WAS ASSESSED AT RS.1,07,69,927/ - . BEFORE THE CIT(A), IT WAS PLEADED THAT NO ADDITION HAS BEEN MADE BY AO WITH RESPECT TO THE REASONS FOR WHICH ASSESSME NT WAS REOPENED. IT WAS ALSO SUBMITTED THAT THE REASON FOR REOPENING WAS RECORDED FOR COLABA FLAT, HOWEVER THE AO HAS NOT DISPUTED THE CONTENTION OF ASSESSEE WITH RESPECT OF COLABA FLAT AND THEREFORE IT IS NOT OPEN FOR HIM TO ASSESS ANY OTHER INCOME, AND T HEREFORE, HE HAD ACTED BEYOND HIS JURISDICTION, AND THE NOTICE U/S 148 AND REASSESSMENT NEED TO BE QUASHED AS BAD IN LAW. THE APPELLANT RELIED UPON THE CASE OF JET AIRWAYS (I) LTD. [2011] 331 ITR 236 (BOM.). 7. BY THE IMPUGNED ORDER CIT(A) QUASHED THE REO PENING AFTER OBSERVING AS UNDER: - I FIND THE AFORESAID DECISION OF JURISDICTIONAL HIGH COURT SQUARELY COVERS THE PRESENT CASE OF APPELLANT, AS IT , IS UNDISPUTED FACT THAT NO ADDITIONS HAVE BEEN MADE IN RESPECT OF INCOME FROM COLABA FLAT, WHICH WAS THE B ASI S OF FORMATION OF BELIEF IN THAT INCOME HAD ESCAPED ASSESSMENT IN T HE REASONS RECORDED FOR RE - OPENING THE ASSESSMENT. THEREFORE, FOLLOWING THE AFORESAID DECISION, THE ADDITIONS MADE ON OTHER ISSUES, BEING INCOME IN RES PECT OF RADHAKRISHNA NIWAS, DOES NOT S EEM TO BE SUSTAINABLE. IN ABOVE BACKGROUND, I FIND MERIT ITA NO.5602 - 2014 SMT. ANURADHA B.ACHREKAR 4 IN THE CONTENTION OF APPELLANT THAT THE RIGHT APPROACH OF THE AO SHOULD HAVE BEEN TO D ROP THE RE - ASSESSMENT PROCEEDINGS IN RESPECT OF COLABA FLAT, AS IT SU FFERS 'FACTUAL VALIDITY [360 ITR 427] AND I NITIATE FRESH RE - ASSESSMENT PROCEEDINGS I N RESPECT OF RADHAKR ISHNA NIWAS, BY ISSUE OF A FRESH NOTICE U / S 148.[362 ITR 530]. SINCE NO SUCH FRESH NOTICE U/S 148 HAS BEEN ISSUED, THE ADDI TIONS BASED ON EARLIER NOTICE U/ S 148 AT THE STRENGTH OF FACTUALLY INCOR RECT REASONS RECORDED CANNOT BE SUSTAINED. 4. 8. I HAVE ALSO GONE THROUGH THE VARIOUS CASE LAWS RELIED UPON BY THE AO IN THE REMAND REPORT, AND FIND THAT NONE OF THEM ARE DIRECTLY APPLICABLE TO APPELLANT'S CASE. THE RATIO OF SAID DECISIONS VIS - A - VIS THE A PPELLANT'S CASE ARE BRIEFLY DISCUSSED HEREUNDER: (I) CALCUTTA DISCOUNT CO. LTD. V. ITO 41 ITR 191 (SC): IT IS THE DUTY OF ASSESSEE TO DISCLOSE FULLY AND TRULY ALL PRIMARY FACTS. IF THERE ARE SOME REASONABLE GROUNDS FOR THINKING THAT THERE HAD BEEN ANY NO N - DISCLOSURE AS REGARDS ANY PRIMARY FACTS, WHICH COULD HAVE A MATERIAL BEARING ON QUESTION OF 'UNDER - ASSESSMENT' THAT WOULD BE SUFFICIENT TO GIVE JURISDICTION TO ITO TO RE - OPEN THE ASSESSMENT. IN THE PRESENT CASE, THE APPELLANT HAD NOT DISCLOSED THE INCOME IN RESPECT OF RADHAKRISHNA NIWAS, WHICH COULD HAVE BEEN CONSIDERED AS NON - DISCLOSURE OF PRIMARY FACT; HOWEVER, SUCH NON - DISCLOSURE BY THE APPELLANT WAS NOT MENTIONED IN THE REASONS RECORDED BY AO BEFORE ISSUE OF NOTICE U / S 148. FOR ASSUMING JURISDICTION O VER SUCH CASE, THE AO WAS REQUIRED TO DROP THE ORIGINAL NO TICE AND ISSUE A FRESH NOTICE U/ S 148 AFTER RECORDING PROPER REASONS. (II) PHOOL CHAND BAJRANG LAL V. ITO 203 ITR 456 (SC): IT WAS HELD THAT WHERE TRANSACTION ITSELF ON THE BASIS OF SUBSEQUENT INF ORMATION IS F OUND TO BE A BOGUS TRANSACTION, MERE DISCLOSURE OF THAT TRANSACTION AT THE TIME OF ORIGINAL ASSESSMENT PROCEEDINGS, CANNOT BE SAID TO BE DISCLOSURE OF 'TRUE' AND 'FULL' FACTS, AND ITO WOULD HAVE JURISDICTION TO REOPEN CONCLUDED ASSESSMENT IN S UCH CASE. IN THE PRESENT CASE OF APPELLANT, NO RETURN WAS FILED, AND NO ORIGINAL ASSESSMENT WAS DONE, HENCE QUESTION OF DISCLOSURE AT THAT TIME DOES NOT ARISE. THEREFORE, THE FACTS OF THIS CASE ARE DIFFERENT FROM APPELLANT'S CASE. (III) ALA FIRM V. CIT 1 89 ITR 285 (SC): IT WAS HELD THAT WHERE AN ITO ACCEPTS PLEA OF AN ASSESSEE THAT A PARTICULAR RECEIPT IS NOT INCOME LIABLE TO TAX, BUT, ON FURTHER RESEARCH INTO LAW HE FINDS THAT THERE WAS DIRECT DECISION HOLDING THAT CATEGORY OF RECEIPT TO BE AN INCOME REC EIPT, REASSESSMENT WOULD BE VALID. ITA NO.5602 - 2014 SMT. ANURADHA B.ACHREKAR 5 THE FACTS OF THIS CASE ARE ENTIRELY DIFFERENT FROM APPELLANT'S CASE. (IV) INDIAN AND EASTERN NEWSPAPER SOCIETY V. CIT 119 ITR 996 (SC): THE QUESTION UNDER REFERENCE WAS WHETHER VIEW EXPRESSED BY INTERNAL AUDIT PARTY ON A POINT OF LAW COULD BE REGARDED AS 'INFORMATION' FOR PURPOSES OF INITIATING PROCEEDINGS UNDER SECTION 147, WHICH WAS HELD IN NEGATIVE. THE APPELLANT'S CASE IS NOT ON ANY SUCH SUBJECT MATTER. (V) ITO V. LAKHMANI MEWAL DAS 103 ITR 437 (SC): IT WAS HELD T HAT DUTY WAS CAST UPON ASSESSEE TO MAKE TRUE AND FULL DISCLOSURE OF PRIMARY FACTS AT THE TIME OF ORIGINAL ASSESSMENT, AND IT IS FOR INCOME TAX OFFICER TO DRAW CORRECT INFERENCE FROM PRIMARY FACTS. IT WAS FURTHER HELD THAT IF ITO DRAWS INFERENCE WHICH APPE ARS SUBSEQUENTLY TO BE ERRONE OUS, MERE CHANGE OF OPINION IN REGARD TO T HAT INFERENCE WOULD NOT JUSTIFY INI TIATION OF ACTION FOR REOPENI NG ASSESSMENT. I FIND THE S AID CASE TO BE IN RESPECT OF RE - OPE NI NG THE ASSESSMENT BASED ON 'CHANGE OF OPINION', WHICH IS NOT THE SUBJECT MATTER OF APPELLANTS CASE. 4.9. IN VIEW OF THE ABOVE, THE APPELLANT'S CASE IS SQUARELY COVERED BY THE DECISION OF HON'BLE HIGH COURT OF BOMBAY IN THE CASE OF JET AIRWAYS (I) LTD. (SUPRA), AND THE SAID DECISION IS FROM THE JURISDICTIONAL H IGH COURT, IT HAS TO BE RESPECTFULLY FOLLOWED. ACCORDINGLY, THE RE - OPENING OF ASSESSMENT IN APPELLANT'S CASE IS NOT CONSIDERED TO BE ON VALID GROUNDS ON TWO ACCOUNTS (A) FIRSTLY, THE A.O. HAS NOT DISPOSED OFF THE OBJECTIONS RAISED BY THE APPELLANT VIDE .LE TTE R DATED 12/10/2012 DURING THE RE - ASSESSMENT PROCEEDINGS IN VIEW OF THE DECISION IN THE CAE OF GKN DRIVESHAFTS, 179 CT R 1 1( C), AND NOT ISSUING FRES H NOTICE U/S. 1 48 AS PER THE DECISION IN THE CASE OF KUNAL ORGANIC PVT. LTD. VS DCIT, 362 ITR 5 30(GUJ.); AN D (B) SECONDLY, THE A O FAILED TO FOLLOW THE JURISDICTIONAL HIGH COURT'S DECISION IN THE CA SE OF JET AIRWAYS (I) LTD., 331 ITR 236 (BOM.), THE AO FAILED ON BOTH ACCOUNTS AND HENCE QUASHED, AND THE ADDITIONS MADE OF RS.1,07,69,927/ - CONSEQUENT TO SUCH REOPEN ING OF ASSESSMENT ARE DELETED WITHOUT DISCUS SING THE SAME' ON MERITS. THE AO IS HOWEVER FREE TO ISSUE FRESH NOTICE U / S 148 IF SATISFIED ABOUT ANY ESCAPED INCOME FROM RADHAKRISHNA NI WAS SUBJECT TO APPLICABLE PROVISIONS OF I T. ACT, 1961. THEREFORE, THE GROUN D S NOS. 1 TO 3 O F APPEAL ARE ALLOWED ACCORDINGLY. ITA NO.5602 - 2014 SMT. ANURADHA B.ACHREKAR 6 8. REVENUE IS IN FURTHER APPEAL BEFORE US AGAINST THE ABOVE ORDER OF CIT(A). 9. WE HAVE CONSIDERED RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND FROM RECORD THA T NO ADDITION WAS MADE BY AO IN RESPECT OF INCOME FROM COLABA FLAT WHICH WAS THE BASIS OF FORMATION OF BELIEF THAT INCOME HAD ESCAPED ASSESSMENT AS PER THE REASONS RECORDED FOR REOPENING THE ASSESSMENT. 10 IN VIEW OF THE DECISION OF JURISDICTIONAL HIGH CO URT IN CASE OF JET AIRWAYS (SUPRA) WHICH WAS FOLLOWED BY THE CIT(A), WE DO NOT FIND ANY INFIRMITY IN HIS ORDER FOR QUASHING THE REOPENING AND DELETING THE ADDITION MADE ON ACCOUNT OF INCOME IN RESPECT OF RADHAKRISHNA NIWAS, IN SO FAR AS CIT(A) HAS CLEARLY MENTIONED IN HIS ORDER THAT AO IS FREE TO ISSUE FRESH NOTICE U/S. 145 IF SATISFIED ABOUT ANY ESCAPED INCOME FROM RADHAKRISHNA NIWAS SUBJECT TO APPLICABLE PROVISIONS OF IT. ACT, 1961 . 11 . IN THE RESULT, APP EAL OF THE REVENUE IS DISMISSED, IN TERMS INDICATED HEREINABOVE. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 23 / 11 /2016 S D/ - ( RAVISH SOOD ) S D/ - ( R.C.SHARMA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 23 / 11 / 201 6 KARUNA SR. PS ITA NO.5602 - 2014 SMT. ANURADHA B.ACHREKAR 7 COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//