KRISHNA VILLA APARTMENTS, Jaipur V. ACIT, Jaipur

ITA 571/JPR/2013

• Counselvise Citation: 57123114 RSA 2013
• Duration Of Justice: 1 year(s) 6 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-12-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 29-05-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SUBHASH CHANDRA
• Keywords: Capital asset; Revision of order; Search and seizure; Opportunity of being heard; Difference of opinion; Assessment record; Change of opinion
• Section: 263; 144

Judgement Text

ITA NO. 571/JP/2013 M/S. KRISHNA VILLA APARTMENT VS. CIT , JAIPUR 1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH, JAIPUR (BEFORE SHRI R.P. TOLANI AND SHRI T.R. ME ENA) ITA NO. 571/JP/2013 ASSESSMENT YEAR: 2007-08 PAN : AAIFK 3348 R M/S. KRISHNA VILLA APARTMENT VS. THE CIT (CENTRAL ) THROUGH EX-PARTNER-ARUN BANSAL JAIPUR G-2, PARK VIEW SCHEME, 8 GANDHI PATH QUEENS ROAD, JAIPUR (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI P.C. PARWAL DEPARTMENT BY: SHRI SUBHASH CHANDRA DATE OF HEARING: 14-10-2014 DATE OF PRONOUNCEMENT: 12-12-2014 ORDER PER R.P. TOLANI, JM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE LD. CIT- (CENTRAL) JAIPUR, DATED 30-03-2013 U/S 263 OF THE A CT BY RAISING FOLLOWING GROUNDS, (1) THE ORDER PASSED BY LD. CIT U/S 263 SETTING ASI DE THE ORDER PASSED BY AO U/S 153C/143(3)/144 FOR MAKING D E-NOVO ASSESSMENT IS ILLEGAL AND BAD IN LAW. (2) DIRECTING THE AO TO ENSURE PROPER VERIFICATIO N OF THE SCHEME LAUNCHED BY THE FIRM, GENUINENESS OF THE BOO KING ADVANCES, EXPENSES INCURRED ON PROJECT, TAXABILITY OF THE REV ALUATION AMOUNT IN ITA NO. 571/JP/2013 M/S. KRISHNA VILLA APARTMENT VS. CIT , JAIPUR 2 THE HANDS OF THE FIRM WITHOUT PREJUDICE TO THE STAN D TAKEN IN THE CASE OF PARTNERS AND TO EXPLORE TAXABILITY OF REVALUATIO N AMOUNT UNDER THE HEAD INCOME FROM BUSINESS AS WELL AS UNDER THE HEAD INCOME FROM CAPITAL GAINS, PARTICULARLY WHEN ALL THESE ISSUES W ERE ALREADY EXAMINED BY THE AO WHILE PASSING THE ASSESSMENT ORDER IN THE CASE OF FIRM AND THE PARTNERS 2.1 BRIEF FACTS OF THE CASE ARE : THE ASSESSEE IS A PARTNERSHIP FIRM WHICH WAS RECONSTITUTED ON MULTIPLE TIMES. IN THE RECONST ITUTION PROCESS FROM TIME TO TIME SOME PARTNERS WERE INTRODUCED AND SOME RETI RED; THE PROCESS INVOLVED EITHER BRINGING IN LANDS; TAKING AWAY LAND RIGHTS; BRINGING IN OR TAKING AWAY CAPITAL. THUS THE GAMUT OF CONSTITUTION AND RECONSTITUTION WAS GUIDED BY LAND HOLDING OR FINANCING PARTNERS. SINCE THE ASSESSMENTS ARE FRAMED U/S 153C READ WITH SEC 144 I.E. BY WAY OF BE ST JUDGMENT ASSESSMENTS VERY SKETCHY ASSESSMENT IS AVAILABLE ON RECORD. HIS TORY ABOUT THE SEARCH ASSESSMENT IS SEARCH AND SEIZURE OPERATIONS WERE C ARRIED OUT IN LASHKARY GROUP OF ENTITIES ON 6-8-08 DURING THE COURSE THERE OF INCRIMINATING DOCUMENTS INDICATING UNDISCLOSED INCOME OF ASSESSEE WERE ALSO FOUND. ON THE BASIS THEREOF PROCEEDINGS U/S 153C WERE INITIAT ED QUA THE ASSESSEE BY SERVICE OF NOTICE TO FILE THE RETURN OF INCOME IN T HIS BEHALF ON 2-9-10, ACCORDING TO AO IT WAS NOT COMPLIED. THEREAFTER, AG AIN A NOTICE WAS SERVED ON ANOTHER PARTNER SHRI SHANKER JETHANI WHO SUBSEQU ENTLY FILED THE NIL RETURN IN OCT. 2010. IN FURTHERANCE OF ASSESSMENT PROCEEDI NGS AO ISSUED NOTICE U/S ITA NO. 571/JP/2013 M/S. KRISHNA VILLA APARTMENT VS. CIT , JAIPUR 3 143(2) WHICH WAS RETURNED AS REFUSED. LOOKING AT THE NON COOPERATIVE ATTITUDE OF THE ASSESSEE, LD. AO WAS CONSTRAINED TO FRAME A BEST JUDGMENT ASSESSMENT U/S 144 BASED ON THE MATERIAL AVAILABLE ON RECORD. AS PER AOS OBSERVATIONS CONTAINED ON VARIOUS PAGES OF ORDER IT APPEARS THAT THE FIRM UNDERWENT CONSTITUTION AND RECONSTITUTION ON 15-7-0 6; 19-7-06; 18-1-07; 19- 1-07 INDICATING AN UNUSUAL PATTERN. AFTER THE LAST TAKE OVER AGREEMENT A NEW FIRM M/S GOLD DREAM DEVELOPERS EMERGED. THE PATTERN OF TRANSFERS AND RETRANSFERS OF LAND AMONGST PARTNER IS EXPLAINED BY LD. AO. THEREAFTER HOLDING THAT THE REVALUATION PATTERN OF LAND WAS CA MOUFLAGED AND WAS IN BLATANT VIOLATION OF ACCOUNTING STANDARDS AND LEGAL PROVISION, LD. AO MADE ADDITION OF RS. 1,82,466/- BY FOLLOWING OBSERVATION S: FINDING OF FACT. IN A MATER OF 8 MONTHS FROM 19-0 7-06 TO 19.03.2007, THE SIROLI LAND HAS VIRTUALLY CHANGED O WNERSHIP FROM PAWAN LASHKARY AND JITENDRA AGARWAL (COOLECTIVELY M /S. KRISHNA VILLA APARTMENTS) TO SHAREHOLDERS. SHANKAR M JETHAN I, SHRI MIRAJ UN NABI KHAN AND SHRI NAVED SAIDI (COLLECTIVELY, M/S. GOLD DREAM DEVELOPER) FOR A CONSIDERATION OF RS.6.99 CRORES. T HE SAID STOCK (LAND IN THIS CASE) VIRTUALLY IS IN THE HANDS OF THE M/S. KRISHNA VILLA. AFTER ALL, AS SHAKESPEARE SANG, WHAT IS THERE IN A NAME? WHETHER IN THE NAME OF M/S. KRISHNA VILLA OR M/S GOLD DREAM DEVELO PERS, THROUGH A SERIES OF ALMOST CONSPIRATORIAL AND WELL ORCHESTRAT ED MOVES, SHANKAR M JETHANI, SHRI MIRAJ UN NABI KHAN AND SHRI NAVED S AIDI HAVE THE OWNERSHIP OF THE SIROLI LAND. 6. THAT THERE WERE TAKE OVER AGREEMENTS, REVALUATIO N OF STOCK, CREDITING THE DIFFERENCE BETWEEN BOOK VALUE AND REVALUED VALUE, RETIREMENT ONE BY ON AND ULTIMATELY THE WITHDRAWAL FROM THE CAPITAL ACCOUNT AND DECLARATION OF SUCH WITHDRAWAL AS PROFI T FROM FIRM ARE ITA NO. 571/JP/2013 M/S. KRISHNA VILLA APARTMENT VS. CIT , JAIPUR 4 THE OTHER DETAILS THAT QUALIFY THE ABOVE FINDING. T O QUOTE SHAKESPEARE AGAIN, JUST AS A ROSE BY ANY OTHER NAME SMELLS JUST AS SWEET, A SALE OF PROPERTY BY ANY MODE/ROUTE, HOWEVER CIRCUITIOUS IT MAY BE, ULTIMATELY CAN BE REDUCED TO EXCHANGE OF PROPERTY/STOCK FROM O NE HAND TO THE OTHER FOR A CONSIDERATION. AND IN THIS CASE THAT IS EXACTLY WHAT IT HAS HAPPENED AS HAS BEEN DISCUSSED IN THE PRECEDING PAR A. 7. IT IS SEEN FROM THE P&L ACCOUNT OF THE RELEVANT PERIOD THAT THE ASSESSEE HAS ADDED RS.69930590 INTO PURCHA SES. THUS, ON PURCHASES OF RS.20817394/-, THE FIRM HAS SOUGHT TO ADD THE EXPENSES ON THE PROJECT OF RS.11231406/- AND RS.69930590 AS REVALUATION. IN THE NOTES ON ACCOUNTS, IT IS WRITTEN THAT DURING T HE YEAR, THE CLOSING STOCK OF THE FIRM HAS BEEN ENHANCED TO BRING IT NEA R TO ITS CURRENT MARKET VALUE BY REVALUATION OF THE SAME AND DIFFERE NCE OF COST AND REVALUED PRICE OF RS.69930590/- HAS BEEN CREDITED T O THE CAPITAL ACCOUNT OF THE OLD PARTNERS OF THE FIRM IN THEIR OL D PROFIT SHARING RATIO. 8. THIS ACT OF THE ASSESSEE IS IN BLATANT VIOLATION OF THE PRINCIPLES OF ACCOUNTANCY. AS PER AS2, STOCK HAS TO BE VALUED AT COST OR NET REALIZABLE VALUE. WHICHEVER IS LOWER. BY REV ALUING STOCK AND ADDING THE DIFFERENCE BETWEEN REVALUED VALUE AND BO OK VALUE, THE ASSESSEE HAS VIOLATED ACCOUNTING PRINCIPLES. THE UN DERSIGNED IS THEREFORE NOT SATISFIED ABOUT THE CORRECTNESS OR CO MPLETENESS OF THE ACCOUNTS AND HENCE, THERE IS NO OPTION BUT TO REJEC T THE BOOKS OF ACCOUNTS AND RECAST THE P&L A/C. HOWEVER, AS THE AS SESSEE HAS NO SALES AT ALL THIS YEAR AND AS THE INTEREST INCOME I S TO BE CHARGED AS INCOME FROM OTHER SOURCES, THE NET EFFECT OF RECAST ING THE P&L A/C WILL BE NIL. IN TOTO, STOCK IS TO BE VALUED AT RS.2 ,08,17,394/- AND OTHER EXPENSES INCLUDING PROJECT EXPENSES (FOR WANT OF DE TAILS AND THE COMPLETE NON COOPERATION OF THE ASSESSEE) AND REVAL UATION ARE DISALLOWED/NOT ALLOWED TO BE CAPITALIZED ONTO THE I NVENTORY. THE CLOSING STOCK SHOULD BE VALUED AT RS.2,08,17,394/- ONLY IN CONSONANCE WITH THE ACCOUNTING STANDARDS. ITA NO. 571/JP/2013 M/S. KRISHNA VILLA APARTMENT VS. CIT , JAIPUR 5 2.2 LD. CIT CALLED FOR AND EXAMINED THE ASSESSMENT RECORDS AND WAS OF THE VIEW VARIOUS CRUCIAL ISSUES MATERIAL TO A PROPE R ASSESSMENT WERE NOT CONSIDERED AND HUGE CLAIMS OF EXPENDITURE WERE ALLO WED DESPITE CASTIGATING THE ASSESSEE, HUGE REVALUATION AMOUNTS HAVE BEEN AL LOWED AS EXEMPT U/S 10(2A) IN THE HANDS OF THE FIRM OR PARTNERS WHICH I N THE EVENT OF NON- COOPERATION OUGHT TO HAVE BEEN DISALLOWED. A SHOW C AUSE NOTICE U/S 263 WAS SERVED ON THE ASSESSEE IN THIS BEHALF. ASSESSEE FIL ED DETAILED REPLY CONTENDING THAT THE EX-PARTE ASSESSMENT ORDER OF LD AO WAS FRAMED AFTER DUE VERIFICATION AND CONSIDERATION OF RECORD; IT WAS NE ITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF REVENUE. LD. CIT AFT ER GIVING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE HELD THA T THE ORDER OF LD. AO PASSED U/S 144 R.W.S. 153C WAS ERRONEOUS AND PREJU DICIAL TO THE INTEREST OF REVENUE AND DIRECTED AO TO PASS DE NOVO ASSESSMENT PROPER ENQUIRIES AND CONSIDERING THE FOLLOWING:- (I) TO ENSURE PROPER VERIFICATION OF THE SCHEME LAU NCHED BY THE FIRM, GENUINENESS OF THE BOOKING ADVANCES RECEIVED ON BOOKING OF THE FLATS AND EXPENSES INCURRED IN RESPECT OF THE PROJECT. (II) THE TAXABILITY OF THE REVALUATION AMOUNT IN TH E HANDS OF THE FIRM WITHOUT PREJUDICE TO THE STAND TAKEN IN THE CA SE OF THE PARTNERS. HE MAY EXPLORE THE TAXABILITY OF ABOVE AMOUNT UNDER THE HE AD INCOME FROM BUSINESS AS WELL AS THE HEAD CAPITAL GAIN IN VIEW OF THE PRO VISIONS OF SEC 45(4). ITA NO. 571/JP/2013 M/S. KRISHNA VILLA APARTMENT VS. CIT , JAIPUR 6 2.3 AGGRIEVED ASSESSEE IS BEFORE US; LD COUNSEL CON TENDS THAT WHILE PASSING THE ORDER LD. CIT FAILED TO APPRECIATE THAT BOTH THE ISSUES HAVE BEEN EXAMINED BY THE AO WHILE FRAMING THE ASSESSMENT U/S 153C/144 AND THE ORDER IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE I NTEREST OF REVENUE AS CONTEMPLATED. IN THE WRITTEN SUBMISSION FILED BEFOR E US IT HAS BEEN MENTIONED THAT FROM AOS ORDER ONE CAN FIND THAT FOL LOWING FACTS EMERGE ABOUT THE TOTAL COST OF THE LAND PURCHASED BY THE A SSESSEE IS AS UNDER:- ACTUAL COST RS.2,08,17,394/- DEVELOPMENT EXPENDITURE ON PROJECT RS.1,12,61,406/- REVALUATION EXPENSES AT RS.6,99,30,590/- -------------------------------------------------- TOTAL COST OF THE LAND RS.10,20,09,390/- 2.4 LD. AO AFTER ADVERTING TO ABOVE FACTS AT PAGE 7 OF THE ORDER, DISALLOWED THE CLAIM OF DEVELOPMENT EXPENDITURE AS WELL AS THE REVALUATION EXPENSES AND TOOK THE VALUE OF THE CLOSING STOCK OF THE PROJECT AT ACTUAL COST OF LAND ONLY I.E. RS.2,08,17,394/-. IT IS CONTENDED THAT WHEN THE AO HIMSELF HAS DISALLOWED THESE PROJECT EXPENSES, ORDER CANNOT BE HELD TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE ON T HIS ISSUE. BESIDES THE BALANCE SHEET FILED BEFORE THE AO REFLECTS UNDER TH E HEAD CURRENT LIABILITIES AN AMOUNT OF RS.14,22,01,535/- AS BOOKING FOR FLATS . IN VIEW OF THESE FACTS ITA NO. 571/JP/2013 M/S. KRISHNA VILLA APARTMENT VS. CIT , JAIPUR 7 AO REJECTED BOOKS OF ACCOUNTS AND PROCEEDED TO MAKE THE BEST JUDGMENT ASSESSMENT AS PROVIDED U/S 144. 2.5 DURING THE COURSE OF PROCEEDINGS U/S 263 IT WAS EXPLAINED THAT THE BOOKING AMOUNTS WAS FINANCED BY HDFC BANK FOR BOOKI NG OF FLATS AND MOST OF THE FLAT ADVANCE AMOUNT WERE RECEIVED FROM HDFC BANK LOANS ADVANCED TO PURCHASERS. DUE TO SOME DISPUTES THE PROJECT COU LD NOT BE COMPLETED, CONSEQUENTLY HDFC BANK PURCHASER FILED CRIMINAL CAS ES AND HDFC BANK FILED WRIT PETITION BEFORE HONBLE RAJASTHAN HIGH C OURT, AGAINST THE ASSESSEE FIRM. THESE FACTS ARE CLAIMED BY THE ASSESSEE TO UN DISPUTED AND RELEVANT EVIDENCE IN THIS BEHALF IS ON THE RECORD FILED BEFO RE CIT. IT IS CONTENDED THAT THE GENUINENESS OF THE BOOKING ADVANCES IS OTHERWIS E ESTABLISHED BY THESE FACTS AND EVIDENCE ON RECORD. LD. CIT FAILED TO APP RECIATE GENUINENESS OF BOOKING ADVANCES STAND ESTABLISHED FROM RECORD. CON SEQUENTLY AOS ASSESSMENT ORDER FRAMED U/S 144 CANNOT BE TERMED AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE AND ITS SETT ING ASIDE U/S 263 FOR VERIFICATION OF GENUINENESS OF BOOKING ADVANCES AND EXPENSES IS UNTENABLE. 2.6 APROPOS THE SETTING DIRECTION OF LD. CIT TO AO TO EXPLORE THE TAXABILITY OF THAT AMOUNT UNDER THE HEAD INCOME FRO M BUSINESS AS WELL AS UNDER THE HEAD CAPITAL GAIN IS CONCERNED, THE SAME AMOUNTS TO CHANGE OF OPINION AND CANNOT BE HELD TO BE ERRONEOUS OR PREJU DICIAL TO THE INTEREST OF ITA NO. 571/JP/2013 M/S. KRISHNA VILLA APARTMENT VS. CIT , JAIPUR 8 THE REVENUE AS LD AO HAS DISCUSSED THESE ISSUES IN THE ORDER. THE CLAIM OF REVALUATION AMOUNT OF RS.6,99,30,590/- HAS BEEN DUL Y CONSIDERED AND THEN DISALLOWED BY AO IN PARA 5 & 6 OF HIS ORDER THIS IN COME HAS BEEN TAXED IN THE HANDS OF TWO RETIRING PARTNERS SHRI PAWAN LASH KARY AND SHRI JITENDRA. 2.7 IN CASE OF PAWAN LASHKARY, ADDITION WAS CONFIRM ED IN FIRST APPEAL BY CIT(A); IN ASSESSEES 2 ND APPEAL ITAT HAS DELETED THE ADDITION FOR THE REASO N STATED IN PARA 14 TO 15 OF THE ORDER U/S 263. AGAIN ST THIS ORDER OF THE ITAT, THE DEPARTMENT IS IN APPEAL BEFORE HIGH COURT. 2.8 IN CASE OF JITENDRA AGARWAL, ADDITION IS DELETE D BY CIT(A) AGAINST WHICH DEPARTMENT IS IN APPEAL BEFORE ITAT (ITA NO. 144/JP/13) WHICH IS PENDING. IT IS CONTENDED THAT GAMUT OF THESE FACTS AND CIRCUMSTANCES DEMONSTRATE THAT LD. AO HAS TAKEN A CONSIDERED VIEW THAT THE REVALUATION AMOUNT IS TAXABLE IN THE HANDS OF THE RETIRING PART NERS AND CLAIM HAS BEEN DISALLOWED IN THE HANDS OF THE FIRM. AOS IMPUGNED ORDER CANNOT BE HELD TO BE ERRONEOUS OR PREJUDICIAL TO THE INTEREST OF THE REVENUE MERELY BECAUSE LD. CIT HOLDS ANOTHER POSSIBLE VIEW ON THE ISSUE , MORE PARTICULARLY WHEN ISSUE IN THE CASE OF PAWAN LAKSHARY PENDING IN APPEAL BEF ORE THE HONBLE HIGH COURT. 2.9 SECTION 263 IS NOT MEANT FOR ISSUING DIRECTION S TO THE AO TO RECONSIDER THE ASSSESSEES TAXABILITY FOR AN AMOUNT WHICH HAS BEEN ASSESSED ITA NO. 571/JP/2013 M/S. KRISHNA VILLA APARTMENT VS. CIT , JAIPUR 9 IN THE HANDS OF THE OTHER PERSON. THE DIRECTION TO RECONSIDER THE ISSUES ITSELF SHOWS THAT LD. AO AFTER CONSIDERATION OF FACTS AND APPLICATION OF HIS MIND, HAS TAKEN ONE VIEW AND CIT INTENDS TO SUPERIMPOSE A NOTHER VIEW AFTER RECONSIDERATION. IT IS TRITE LAW THAT A PLAUSIBLE V IEW ADOPTED BY AO IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF THE RE VENUE. RELIANCE IS PLACED ON HONBLE BOMBAY HIGH COURT IN CASE OF DHFL VENTURE C APITAL FUND VS. ITO 217 TAXMAN 116 HOLDING THAT REOPENING FOR MAKIN G PROTECTIVE ASSESSMENT ON THE GROUND THAT A CONTINGENCY MAY ARI SE IN FUTURE RESULTING INTO ESCAPEMENT OF INCOME IS IMPERMISSIBLE U/S 263 AND AMOUNTS TO REWRITING OF STATUTORY PROVISIONS. THE DIRECTION OF LD. CIT TO REVENUE THE TAXABILITY OF REVALUATION AMOUNT IN THE HANDS OF TH E ASSESSEE AS A MEASURE OF SAFEGUARDING REVENUE IS OUTSIDE THE PURVIEW OF SECT ION 263. 2.10 IT IS FURTHER CONTENDED THAT WHEN THE LAND IN QUESTION IS ACCEPTED AS STOCK IN TRADE, REVALUING THE SAID LAND AND PAYING THAT AMOUNT TO THE RETIRING PARTNERS, CANNOT BE TAXED U/S 45(4) AS THE LAND HOL DS THE CHARACTER OF BUSINESS ASSET I.E. STOCK IN TRADE AND IS NOT A CAP ITAL ASSET. CONSEQUENTLY THE OBSERVATIONS MADE BY THE LD. CIT IN PARA 10 TO 10.4 .1 OF HIS ORDER AMOUNTS TO REVIEW OF A FINDING OF A QUASI JUDICIAL AUTHORIT Y AND IS BEYOND THE SCOPE OF SEC. 263. ITA NO. 571/JP/2013 M/S. KRISHNA VILLA APARTMENT VS. CIT , JAIPUR 10 2.11 LD. CIT IN PARA 12 OF HIS ORDER BY REVIEWING A OS ORDER HELD THE ARRANGEMENT TO BE A COLORABLE AND THEREFORE, DIRECT TO EXPLORE THE POSSIBILITY OF TAXING THE REVALUATION PROFITS. HE HAS FAILED TO APPRECIATE AO HAS ADOPTED A VIEW TO PROTECT THE INTEREST OF THE REVENUE IN CA SE OF THE FIRM BY REDUCING THE VALUE OF CLOSING STOCK HOLDING THE SAME TO TAXA BLE IN THE HANDS OF THE PARTNERS. THUS LD. CIT IN THE GUISE OF 263 POWERS H AS REVIEWED A JUSTIFIABLE VIEW TAKEN BY AO WHICH IS WITHOUT JURISDICTION AND BEYOND THE SCOPE OF REVERSIONARY POWERS . 2.12 RELIANCE IS PLACED ON FOLLOWING CASE LAWS:- SUDHAKAR M. SHETTY VS. ACIT 130 ITD 197 (MUM) SUPREME COURT IN CASE OF CIT VS MAXINDIA LTD. 295 I TR 292. CIT VS. CHAMBAL FERTILIZERS AND CHEMICALS LTD. (201 4) 360 ITR 225 (RAJ.) CIT VS. NEW DELHI TELEVISION LTD. (2013) 94 DTR 21 (DEL.)(HC) CIT VS. AMITCORPN. (2013) 213 TAXMAN 19 (GUJ.)(HC)( MAG.) CIT VS. LEISURE WEAR EXPORTS LTD. (2011) 341 ITR 16 6 (DELHI) (HC) PRADEEPBANDHU VS. CIT (2013) 81 DTR 289 (JD) (TRIB. ) MANISH KUMAR VS. CIT 134 ITD 27/ 17 ITR (TRIB.) 324 (INDORE)(TRIB.) IT IS CONTENDED THAT THERE BEING NEITHER ERROR IN T HE ORDER OF LD. AO NOR ANY PREJUDICE TO THE INTEREST OF REVENUE, 263 ORDER MAY BE QUASHED. ITA NO. 571/JP/2013 M/S. KRISHNA VILLA APARTMENT VS. CIT , JAIPUR 11 2.13 LD. DR ON THE OTHER HAND VEHEMENTLY CONTENDS T HAT THE NON- COOPERATION OF THE ASSESSEE IS WRIT LARGE ON THE RE CORD. THE IMPUGNED ASSESSMENT IS NOT A SIMPLE CASE AS IT HAS A HISTORY OF SEARCH AND IS CONSEQUENT THERETO. NOTICE U/S 153C FOR FILING STAT UTORY RETURN WAS FIRSTLY DELAYED TO GAIN TIME AND WAS FILED AFTER A CONSIDER ABLE GAP. NOTICE U/S 143(2) GIVEN BY LD. AO FOR OPPORTUNITY OF HEARING A ND SUBMITTING NECESSARY DOCUMENTS ALSO WAS REFUSED TO BE ACCEPTED BY THE AS SESSEE, WHICH IS NOT DISPUTED BEFORE CIT. AO HIMSELF HAS TAKEN ADVERSE V IEW ABOUT THE NON COOPERATION FROM THE SIDE OF THE ASSESSEE AND PROCE EDED TO FRAME EX PARTE ASSESSMENT. IN NORMAL CIRCUMSTANCES ASSESSES VEHEME NTLY CHALLENGE EX-PARTE ASSESSMENT CITING VARIOUS REASONS FOR NON COMPLIANC E, IN THIS CASE THERE IS TOTAL ACCEPTANCE OF THE ASSESSEE EVEN TO AN EX PART E ASSESSMENT. THIS UNUSUAL SET OF CIRCUMSTANCES HAS ITS OWN IMPLICATIONS. WHIL E FRAMING THE EX PARTE ASSESSMENT LD AO HAS NEITHER ISSUED ANY SUMMONS TO ASSESSES PARTNER TO ENFORCE THEIR ATTENDANCE NOR CONSULTED THE RECORD O F OTHER SEARCHED ENTITIES OF THE GROUP. THE PROJECTIONS ABOUT THE COST OF LAN D SUBMITTED BY ASSESSEE IN HIS WRITTEN SUBMISSION HAS NO WHERE BEEN MENTIONED BY AO. THIS WAS THE PRECISE REASONS FOR LD. CIT WHO ON VERIFICATION OF RECORD OBSERVED THAT THERE ARE VARIOUS FACETS TO THE ASSESSMENT WHICH HAVE NOT BEEN INQUIRED AT ALL. THUS IN SEVERAL RESPECTS THERE IS LACK OF INQUIRY A ND IN SOME CASES ILLOGICAL ITA NO. 571/JP/2013 M/S. KRISHNA VILLA APARTMENT VS. CIT , JAIPUR 12 CONCLUSIONS. SOME OF THESE ISSUES ARE PROJECT EXPEN SES; FLAT BOOKING ADVANCES; SELF REVALUATION OF STOCK AND CLAIMING OF THE DIFFERENCE AS EXPENSES. IT IS A SETTLED LAW THAT IN THESE CIRCUMS TANCES THE ORDER OF AO IS TO BE HELD AS ERRONEOUS AND PREJUDICIAL TO THE INTERES T OF REVENUE. LD. DR FURTHER CONTENDS THAT IT IS VERY SURPRISING ON THE PART OF ASSESSEE TO CHALLENGE LD. CITS ORDER AS IN REAL TERMS; IT GIVES A FAIR CH ANCE TO ASSESSEE TO BE HEARD ON AN ASSESSMENT WHICH IS DECIDED EX PARTE AGAINST HIM. IN CONTRADISTINCTION ASSESSEE IS CHALLENGING AN ORDER WHICH APPARENTLY G OES IN HIS FAVOR. ITS CHALLENGE RATHER INDICATES THAT EX PARTE ASSESSMENT IS ON FACTS WHICH DO NOT MEET THE EYES. RELIANCE IN SUPPORT OF LD. CIT ORDER IS PLACED ON:- I. SMT. TARA DEVI AGRAWAL V CIT 88 ITR 323 (SC) II. SMT RENU GUPTA V CIT 301 ITR 45 (RAJ) 2.14 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE MATERIAL AVAILABLE ON RECORD. THE ASSESSMENT IN QUESTION WAS CONSEQUENT TO A SEARCH; ASSESSES NON COOPERATION HAS BEEN ADVERSELY VIEWED BY AO AND AT THE END OF THE DAY SEARCH ASSESSMENT WAS FRAMED WITHOUT CO OPE RATION OF THE ASSESSEE. ASSESSMENT ORDER REFERS TO VARIOUS FREQUENT RECONST ITUTION OF THE FIRM AND TRANSFER OF LAND RIGHTS THEREIN; INSTANCES OF REVAL UATION OF LAND; CLAIM OF THEIR EXEMPTION FROM THE TAXATION ARE NOT ADDRESSED IN TH E EX PARTE SEARCH ASSESSMENT ORDER. THE ISSUES RAISED BY LD. CIT FOR NON INQUIRY ARE FOUND TO ITA NO. 571/JP/2013 M/S. KRISHNA VILLA APARTMENT VS. CIT , JAIPUR 13 VALIDLY RAISED AND OUGHT TO HAVE BEEN INQUIRED BY A O MORE PARTICULARLY WHEN ASSESSEE WAS NON COOPERATIVE. FOR THIS PURPOSE NECESSARY FIELD INQUIRIES WERE NECESSARY BESIDES CROSS VERIFICATION OF RECORD OF OTHER SEARCH ENTITIES. THIS EXERCISE WAS REQUIRED FROM THE AO TO HAVE BEEN CONDUCTED AS A SENSIBLE QUASI JUDICIAL OFFICER. THUS ALL THE DEF ICIENCIES REFERRED TO BY LD CIT MAKE THE IMPUGNED ASSESSMENT ORDER ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF REVENUE. THE RELIANCE ON THE JUDGME NTS OF SMT. TARADEVI AGRAWAL AND SMT. RENU GUPTA IS WELL PLACED BY LD CI T. WE UPHOLD THE ORDER PASSED U/S 263. 3.0 IN THE RESULT, ASSESSEES APPEAL IS DISMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 12 -1 2-2014. SD/- SD/- (T.R. MEENA) (R.P. TOLANI) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR DATED: 12 TH DEC 2014 *MISHRA COPY FORWARDED TO:- 1. M/S. KRISHNA VILLA APARTMENTS , JAIPUR 2. THE LD. CIT 3. THE LD. CIT BY ORDER 4..THE LD. DR 5.THE GUARD FILE (IT NO. 571/JP/2013) AR ITAT, JAIPUR