ITO, CHENNAI V. V.P.Safiya, CHENNAI

ITA 565/CHNY/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9281 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-05-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 10-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: B SURESH
• Keywords: Revision of order; Fair market value; Assessment record
• Section: 143(3); 142(1); 54; 63

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI , . ! ' , #'$ BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A. NO.565/MDS/2016 # % &% / ASSESSMENT YEAR : 2008-2009 THE INCOME TAX OFFICER, NON CORPORATE WARD 15(4) CHENNAI 600 034. VS. SMT. V.P. SAFIYA, 5/25, 5 TH STREET, APMS MARAKKAYAR NAGAR, NEELANKARAI, CHENNAI 600 041. [PAN AWNPS 6909D] ( / APPELLANT) ( /RESPONDENT) '( ) * / APPELLANT BY : NONE +,'( ) * /RESPONDENT BY : SHRI. B. SURESH, CA ! ) - / DATE OF HEARING : 11-05-2016 ./& ) - / DATE OF PRONOUNCEMENT : 26-05-2016 / O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER : THE APPEAL FILED BY THE REVENUE IS DIRECTED AGA INST ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-15, CHE NNAI IN ITA NO.147/CIT(A)-15/14-15, DATED 15.12.2015 FOR THE AS SESSMENT YEAR ITA NO. 565/MDS/2016 :- 2 -: 2008-2009 PASSED U/S.143(3) AND 250 OF THE INCOME TAX ACT, 1961 (HEREIN AFTER REFERRED TO AS THE ACT). 2. THE REVENUE HAS RAISED THE GROUNDS CHALLENGING THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN AL LOWING THE APPEAL BASED ON THE ORDER OF ITAT QUASHING THE ORDER U/S.2 63 OF THE ACT. FURTHER REVENUE HAS NOT ACCEPTED THE ITAT DECISION AND APPEAL U/S.260A OF THE ACT WAS FILED IN HIGH COURT AND I S PENDING. THE COMMISSIONER OF INCOME TAX (APPEALS) ALSO ERRED IN DELETING THE ADDITION. 3. THE BRIEF FACTS OF THE CASE THE ASSESSEE IS AN INDI VIDUAL HAVING INCOME FROM CAPITAL GAINS AND OTHER SOURCES AND FILED INCOME TAX E-RETURN FOR THE ASSESSMENT YEAR 2008-09 ON 02. 10.2009 WITH INCOME OF LONG TERM CAPITAL GAINS AT >2,05,11,296/ - AND BANK INTEREST. THE CASE WAS SELECTED FOR SCRUTINY AND THE ASSESSME NT WAS COMPLETED U/S.143(3) OF THE ACT ON 31.12.2010. SUBSEQUENTLY, THE COMMISSIONER OF INCOME TAX-VI, CHENNAI FOUND THE OR DER PASSED U/S.143(3) OF THE ACT DATED 31.12.2010 IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE AS THE LD. ASSESSING OFFICE R HAS NOT EXAMINED THE FACTS AND ALLOWED EXEMPTION AND DEDUCTION TO TH E ASSESSEE. WITH THESE OBSERVATIONS AND FINDINGS, THE L.D COMMISSI ONER OF INCOME TAX SET ASIDE THE ORDER U/SEC. 143(3) OF THE ACT AND P ASSED REVISION ORDER ITA NO. 565/MDS/2016 :- 3 -: U/S.263 OF THE ACT DATED 26.12.2012. SUBSEQUENT TO THE DIRECTIONS OF COMMISSIONER OF INCOME TAX, THE LD. ASSESSING OFFIC ER CALLED FOR THE INFORMATION AND DISCUSSED ELABORATELY AT PAGE NOS. 10 TO 16 OF THE ORDER ON DISALLOWANCES AND ASSESSED TOTAL INCOME OF >4,45,29,340/- UNDER SEC. 143(3) R.W.S 263 OF THE ACT. AGGRIEVED BY THE ORDER, THE ASSESSEE FILED AN APPEAL BEFORE COMMISSIONER OF INC OME TAX (APPEALS). 4. IN THE APPELLATE PROCEEDINGS, THE LD. AUTHORISED REPRESENTATIVE RAISED THE GROUNDS ON DISALLOWANCE A ND REITERATED THE SUBMISSIONS MADE BEFORE ASSESSING OFFICER. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) CONSIDERED ASSESSMENT RECORD, FINDINGS OF THE ASSESSING OFFICER, GROUNDS AND SUBMISSIONS OF THE A SSESSEE AND OBSERVED ON MERITS THAT THE ORDER PASSED U/S.263 OF THE ACT OF COMMISSIONER OF INCOME TAX DATED 26.12.2012 WAS QUA SHED BY TRIBUNAL IN ITA NO.367/MDS/2013 DATED 21.03.2014 AN D OBSERVED AT PARA 5.1 AND 5.1.1 OF HIS ORDER AS UNDER AND ALLOWE D THE APPEAL. 5.1 ALL THE GROUNDS OF APPEAL RAISED BY THE APPEL LANT A RE AGAINST ADDITION ON ACCOUNT OF LONG TERM CAPITAL GAINS TO THE TUNE OF 4,43,91,141/-. THE AO THE ASSESSMENT ORDER HELD THAT THE ASSESSEE IS NOT ELIG IBLE FOR EXEMPTION U/S 54 FOR TWO PROPERTIES BECAUSE ACCORDING TO SEC.54 OF THE IT ACT, ASSESSEE IS ELIG IBLE FOR CLAIMING EXEMPTION IN RESPECT OF ONE RESIDENTIA L HOUSE ONLY. THE PROPERTY PURCHASED BY THE ASSESSEE IN 1979 & 1980 FOR AN AMOUNT OF RS.4.03 LAKHS WAS VALUED AT 46.47 LAKHS WHICH IS VERY HIGH I . E . WITHIN 1 OR 2 YEARS VALUE OF PROPERTY CANNOT APPRECIATE BY 1 2 ITA NO. 565/MDS/2016 :- 4 -: TIMES. THE ASSESSEE ALSO COULD NOT PROVE THE BASIS ON WHICH THIS FMV WAS ADOPTED AT SUCH A HIGHER FIGURE . AS THERE WAS ERROR IN CLAIM IN INDEXATION BY THE ASSESSEE, VALUE OF RS.18,97,829/- CANNOT BE ADOPTED . FOR THE 1/4TH SHARE OF PROPERTY WHICH SHE HAD INHER ITED FROM HER HUSBAND, SHE SHOULD HAVE ADOPTED COST INFLATION INDEX FOR THE YEAR 2003 - 04 WHICH WAS THE F I RST YEAR IN WHICH THE ASSET WAS HELD BY THE ASSESSEE. B UT THE ASSESSEE HAS NOT DONE SO WHICH HAS RESULTED IN EXCESS CLAIM IN THE FORM OF INDEXED COST OF ACQUISI TION. THE VALUE ASCERTAINED FROM THE DVO IS ADOPTED WHICH IS AS PER LAW. THE ASSESSEE HAS CLAIMED INDEXED COS T OF IM PROVEMENT AT RS. 72, 17,000/-. ASSESSEE'S 40/64 TH SHARE OUT OF RS.20,36,789/- WORKS OUT TO RS.12,72,993/-. IN THE COMPUTATION OF LONG TERM CAPITAL GAIN, ASSESSEE HAS CLAIMED EXPENDITURE TOWARDS TENANCY VACATION AT RS.1,81,56,250/-. SINC E THE ASSESSEE HAS NOT FURNISHED CONFIRMATION AND ADDRESS OF THE PARTIES, EFFORT WAS MADE TO CHECK TH E CREDITWORTHINESS OF THE TRANSACTION. THE AO REJECTE D THE PLEA OF THE AR OF THE ASESSEE BECAUSE ONCE CLAI M IS MADE BY THE ASSESSEE IN HER RETURN OF INCOME, IT IS HER DUTY TO PROVE THE CLAIM. THE ASSESSEE HAS ALSO CLAIMED EXPENDITURE TOWARDS BROKERAGE AT 38,03,125/-. SINCE THE PAYMENTS WERE CONFIRMED BY THE BANK, THEY ARE ALLOWED 5.1.1 I HAVE CONSIDERED THE FINDINGS GIVEN BY THE A O AND ALSO SUBMISSIONS MADE BY THE AR OF THE APPELLAN T. THE ITAT'B' BENCH, CHENNAI VIDE ITA NO.367/MDS 2013 FOR A.Y.2008-09 DATED 21.03.2014 IN THE CASE O F THE ASSESSEE HAS ALLOWED THE APPEAL OF THE ASSESSEE STATING THAT ' ... THE CIT CANNOT DIRECT AN ASSESSI NG OFFICER TO CONDUCT FURTHER ENQUIRY OR VERIFICATION. '' IN VIEW OF THE AFORESAID DECISION OF THE HON'BLE ITAT, THE ORDER PASSED BY THE ASSESSING OFFICER IN PURSUANCE OF DIRECTIONS GIVEN BY THE CIT IN ORDER U/S. 263 CANNO T BE SUSTAINED AND THE ADDITIONS MADE BY HIM ARE DELETED . AGGRIEVED BY THE COMMISSIONER OF INCOME TAX (APPEAL S) ORDER, THE REVENUE HAS ASSAILED AN APPEAL BEFORE TRIBUNAL. ITA NO. 565/MDS/2016 :- 5 -: 5. AT THE TIME OF HEARING, THE DEPARTMENT FILED ADJOUR NMENT PETITION AND THE SAME WAS REJECTED AND PROCEEDED TO DECIDE THE CASE ON MERITS. 6. THE LD. AUTHORISED REPRESENTATIVE RELIED ON FINDING S AND ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) A ND PRAYED FOR DISMISSING THE APPEAL. 7. WE HEARD THE LD. AUTHORISED REPRESENTATIVE AND PER USED THE MATERIAL ON RECORD. THE ONLY CONTENTION OF THE DEPA RTMENT BEFORE THE TRIBUNAL THAT THE REVENUE HAS NOT ACCEPTED THE ORDE R OF TRIBUNAL AND AN APPEAL HAS BEEN FILED IN MADRAS HIGH COURT. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT MERE FILING OF APPEAL IN HI GH COURT CANNOT BE A REASON TO TAKE A DIFFERENT VIEW. THE ORDER OF TRIBU NAL IS BINDING ON ALL THE AUTHORITIES IN THE STATE OF TAMIL NADU AND UNIO N TERRITORY OF PONDICHERRY. THEREFORE, THE COMMISSIONER OF INCOME TAX (APPEALS) HAS RIGHTLY ALLOWED THE CLAIM OF THE ASSESSEE BY FO LLOWING THE COORDINATE BENCH DECISION IN ASSESSEES OWN CASE IN ITA NO.367/MDS/2013, ASSESSMENT YEAR 2008-09, DATED 21. 03.2014 OBSERVED AT PARA 7 & 8 AS UNDER:- ITA NO. 565/MDS/2016 :- 6 -: 7. WE HAVE HEARD BOTH PARTIES AND GONE THROUGH TH E CASE FILE. AS STATED HEREINABOVE, THE ASSESSEES PLEA IS THAT THE ASSESSING OFFICER HAD EXAMINED ALL ISSUES AND CONDU CTED NECESSARY ENQUIRIES AT THE TIME OF FRAMING REGULAR ASSESSMENT. AGAINST THIS, THE REVENUES ARGUMENT IS THAT SINCE NO ENQUIRY OR VERIFICATION HAD BEEN CONDUCTED , THE CIT HAS RIGHTLY ASSUMED JURISDICTION U/S 263 OF THE ACT . PROCEEDING ON THIS QUESTION, WE NOTICE THAT DURING SCRUTINY AND IN PURSUANCE TO SECTION 142(1) NOTICE, THE ASSE SSEE HAD PLACED ON RECORD ALL NECESSARY PARTICULARS(SUPRA). IN OUR VIEW, WHEN AN ASSESSING OFFICER QUOTES ANY MATERIAL PLACED ON RECORD AFTER 142(1) NOTICE IN AN ASSESSMENT ORDE R PASSED U/S 143(3), A CONCLUSION CAN BE SAFELY DRAWN THAT H E HAS DULY APPLIED HIS MIND TO THE SAME. IN SUCH CASE, THE REV ENUE CANNOT ALLEGE THAT IT IS A CASE OF NO ENQUIRY AS IT BECOMES PART OF THE DECISION TAKEN. COMING TO SHOW CAUSE NO TICE U/S 263 DATED 5.10.2012, WE FIND THAT THE VERY REASON F OR ASSUMPTION OF JURISDICTION READS AS FOLLOWS: IN VIEW OF THE ABOVE MISTAKES COMMITTED BY THE AO WHILE COMPLETING SCRUTINY ASSESSMENT, PREJUDICE IS VERY MUCH CAUSED TO THE INTERESTS OF REVENUE AND SINCE THE TWIN CONDITIONS OF MISTAKES COMMITTED BY THE AO AND THESE MISTAKES CAUSED PREJUDICE TO THE INTERESTS OF REVENUE WERE FULFILLED, IT IS HEREBY DECIDED TO SET ASIDE THE ASSESSMENT U/S 263 OF THE IT ACT. IT IS A SETTLED LAW NOW THAT NOT CONDUCTING ENQUIRIES WHEREVER IT IS REQUIRED, IS A MISTAKE AND THIS MISTAKE CAUSES PREJUDICE TO THE INTERESTS OF REVENUE AND UNDER THESE CIRCUMSTANCES, THE REVISIONARY POWER OF CIT WERE UPHELD BY SUPREME COURT ALSO. YOUR OBJECTIONS, IF ANY, MAY REACH THE UNDERSIGNED BY 15TH OCTOBER, 2012, FAILING WHICH IT IS PRESUMED THAT THERE ARE NO OBJECTIONS FROM YOUR SIDE AND ACTION WILL BE TAKEN AS PER LAW. ITA NO. 565/MDS/2016 :- 7 -: THE PURPOSE OF OUR REPRODUCING HEREINABOVE THE CONT ENTS OF SECTION 142(1) NOTICE IS THAT THE ASSESSEES EVIDEN CE STANDS RECORDED IN ASSESSMENT ORDER IS TO SUBSTANTIATE OUR VIEW THAT THE PRESENT IS NOT A CASE OF NO ENQUIRY AS CONTEN DED BY THE REVENUE. WE OBSERVE THAT THIS SITUATION WOULD ARISE ONLY IN CASE THIS MATERIAL WOULD NOT HAVE AT ALL BEEN DISCU SSED IN THE ASSESSMENT ORDER. UNDISPUTEDLY, THIS IS NOT THE CAS E IN HAND. THE ASSESSMENT ORDER ONLY DISALLOWS A SUM OF 7 LAKHS. MEANING THEREBY THAT ALL OTHER CLAIMS(SUPRA) ARE DE EMED TO HAVE BEEN ACCEPTED BY THE ASSESSING AUTHORITY. IN T HAT CASE, THE NECESSARY PRESUMPTION IS THAT THE ASSESSING OFF ICER HAS TAKEN A CONSCIOUS DECISION TO ALLOW ASSESSEES CLAI M OF REINVESTMENT OF CAPITAL GAINS AND OTHER RELIEFS. IN DOING SO, WE REITERATE THAT PRESENT IS A CASE OF ASSUMPTION O F SECTION 263 JURISDICTION WHEREIN THE CIT ALLEGES NO ENQUIR Y OR VERIFICATION BY THE ASSESSING AUTHORITY. IT IS A TR ITE PROPOSITION THAT UNDER THE PROVISIONS OF THE ACT, POWERS OF THE CIT IN THIS REGARD HAVE TO BE LITERALLY CONSTRUED AND BENEFIT O F DOUBT GOES TO THE ASSESSEE. 8. NOW, THE QUESTION ARISES A S TO WHETHER IN SUCH A CASE OF DEEMED APPLICATION OF MIN D, DECISION AT THE HANDS OF THE ASSESSING OFFICER, COU LD IT BE HELD AS A CASE OF NO ENQUIRY OR NOT. IN OUR VIEW, THE QUESTION HAS TO BE ANSWERED IN ASSESSEES FAVOUR. WE FIND FR OM THE CASE LAW QUOTED (SUPRA) THAT THE HON'BLE DELHI HIGH COURT HAS DISTINGUISHED A CASE OF NO ENQUIRY AND A WRONG DECISION BY DRAWING A DISTINCTION BETWEEN THE TWO AS FOLLOWS: AS HELD ABOVE, A DISTINCTION MUST BE DRAWN IN THE CASES WHERE THE ASSESSING OFFICER DOES NOT CONDUCT AN ENQUIRY; AS LACK OF ENQUIRY BY ITSELF RENDERS THE ORDER BEING ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE AND CASES WHERE THE ASSESSING ITA NO. 565/MDS/2016 :- 8 -: OFFICER CONDUCTS ENQUIRY BUT FINDING RECORDED IS ERRONEOUS AND WHICH IS ALSO PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IN LATTER CASES, THE COMMISSIONER OF INCOMETAX HAS TO EXAMINE THE ORDER OF THE ASSESSING OFFICER ON THE MERITS OR THE DECISION TAKEN BY THE ASSESSING OFFICER ON THE MERITS AND THEN HOLD AND FORM AN OPINION ON THE MERITS THAT THE ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IN THE SECOND SET OF CASES, THE COMMISSIONER OF INCOME-TAX CANNOT DIRECT THE ASSESSING OFFICER TO CONDUCT FURTHER ENQUIRY TO VERIFY AND FIND OUT WHETHER THE ORDER PASSED IN ERRONEOUS OR NOT . IN THESE CIRCUMSTANCES AND TAKING CUE THEREFROM, WE HOLD THAT IN THE PRESENT CASE, THE ASSESSING OFFICER HAD FRAM ED REGULAR ASSESSMENT AFTER APPLYING HIS MIND TO THE MATERIAL PLACED ON RECORD BY THE ASSESSEE(SUPRA). THEREFORE, ASSUMPTIO N OF JURISDICTION IN 263 PROCEEDINGS FALLS UNDER THE LAT TER INSTANCE. SO, IT IS HIT BY THE PRINCIPLE THAT IN CASE OF A WR ONG DECISION, THE CIT CANNOT DIRECT AN ASSESSING OFFICER TO CONDU CT FURTHER ENQUIRY OR VERIFICATION. 9. THE ASSESSEES APPEAL IS ALLOWED. FURTHER, THE LD. COUNSEL OF THE ASSESSEE SUBMITTED COPY OF THE ORDER OF ITAT IN ITA NO.367/MDS/2013, FOR ASSESSMENT YEAR 20 08-2009 DATED 21.03.2014 AND WE FIND THE ORDER OF THE ITAT HAS BE EN DECIDED ON MERITS AND WE RESPECTFULLY FOLLOW THE ORDER OF CO-O RDINATE BENCH ITA NO. 565/MDS/2016 :- 9 -: DECISION AND DISMISS THE GROUNDS OF THE REVENUE. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IN ITA NO.565/MDS/2016 IS DISMISSED. ORDER PRONOUNCED ON THURSDAY, THE 26TH DAY OF MAY, 2016, AT CHENNAI. SD/- SD/- ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER ( . ! ' ) (G. PAVAN KUMAR) /JUDICIAL MEMBER / CHENNAI 0 / DATED:26.05.2016 KV 1 ) +#-23 43&- / COPY TO: 1 . '( / APPELLANT 3. ! 5- () / CIT(A) 5. 3 89 +#-# / DR 2. +,'( / RESPONDENT 4. ! 5- / CIT 6. 9:% ; / GF