Smt. Pushpa Shukla L/Hr. Late Rajeshwari Devi, Faizabad V. Income Tax Officer- II, Faizabad

ITA 572/LKW/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 1301 (ITAT-LUCKNOW)
• Duration Of Justice: 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 16-05-2019
• Assessment Year: 2010-2011
• Appeal Filed On: 31-07-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SHAILENDRA MISHRA
• Keywords: Fair market value; Difference of opinion; Reason to believe; Change of opinion
• Section: 143(3); 201; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH SMC , LUCKNOW BEFORE SHRI. A. D. JAIN, VICE PRESIDENT ITA NO. 572/LKW/2018 ASSESSMENT YEAR: 2010 - 11 SMT. PUSHPA SHUKLA L/H LATE RAJESHWARI DEVI M.NO.7/5/33, LAL BAGH FAIZABAD V. INCOME TAX OFFICE R - II FAIZABAD T AN /PAN : BWSPS3567D (APP ELL ANT) (RESPONDENT) APPELLANT BY: SHRI SHAILENDRA MISHRA, ADVOCATE RESPONDENT BY: SMT. ALKA SINGH, D.R. DATE OF HEARING: 04 0 6 201 9 DATE OF PRONOUNCEMENT: 04 0 6 201 9 O R D E R THIS IS ASSESSEES APPEAL AGA INST THE ORDER OF THE LD. CIT(A) - 1, LUCKNOW, DATED 22/3/2018 FOR THE ASSESSMENT YEAR 2010 - 11, TAKING THE FOLLOWING GROUNDS OF APPEAL: 1 . THAT THE LEARNED COMMISSIONER OF INCOME - TAX ( APPEALS) HAS ERRED IN LAW AS WELL AS ON FACTS IN SUMMARI LY REJECTING GROUNDS OF APPEAL NO.1 AND FAILING TO APPRECIATE THAT THE CONSIDERATION OF RS.7,00,000/ - WHICH WAS ACCEPTED BY THE INCOME TAX DEPARTMENT IN CASE OF PURCHASER SHOULD HAVE BEEN ACCEPTED IN CASE OF THE ASSESSEE - APPELLANT (THE SELLER) AND IN ARBITRARILY CONFIRMING THE ILLEGAL ASSESSMENT ORDER WHICH WAS PASSED IN CONSEQUENCE OF THE ACTION U/S 147/148 OF TH E I.T. ACT,1961, TAKEN ON THE BASIS OF MERE CHANGE OF OPINION AND CONFIRMATION OF THE IMPUGNED ASSESSMENT ORDER PASSED U/S 143(3) READ WITH SECTION 147 OF THE I.T. AC T,1961, IS ILLEGAL . IT A NO.729/LKW/2017 PAGE 2 OF 7 2 . THAT THE LEARNED COMMISSIONER OF INCOME - TAX ( APPEALS) HAS ERRED IN LAW AS WELL AS ON FACTS IN SUMMARILY REJECTING GROUNDS OF APPEAL NO. 2 AND FAILING TO APPRECIATE THAT THE A.O. HAD INVOKED SECTION 147 OF THE I.T. ACT, 1961, WITHOUT HAVING ANY REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT AND THE ASSESSMENT P ROCEEDINGS WERE VOID AB INITIO . 3. THAT THE LEARNED COMMISSIONER OF INCOME - TAX ( APPEALS) HAS ERRED IN LAW AS WELL AS ON FACTS IN SUMMARILY REJECTING GROUNDS OF APPEAL NO. 3 AND IN FAILING TO OBSERVE THAT THE ASSUMPTION OF JURISDICTION U/S 147 OF THE I.T. ACT,1961, WITHOUT SPECIFYING IN THE REASON RECORDED AS TO WHAT AND HOW MUCH INCOME HAS ESCAPED ASSESSMENT AND THE I MPUGNED APPELLATE ORDER IS BASED ON PRESUMPTION AND SURMISES. 4. THAT THE LEARNED COMMISSIONER OF INCOME - TAX ( APPEALS) HAS ERRED IN LAW AS WELL AS ON FACTS IN ARBITRARILY IGNORING THE FACT THAT THE VALUE ADOPTED B Y STAMP VALUATION AUTHORITY EXCEEDED THE FAIR MARKET VALUE OF THE HUNDRED YEAR OLD HOUSE PROPERTY AS ON DATE OF TRANSFER AND THE A.O.S FAILURE TO REFER THE VALUATION OF THE PROPERTY TO THE DEPARTMENTAL VALUATION OFFICER, IS VIOLATION OF EXPRESSED PROVISION OF LAW. 5. WITHOUT PREJUDICE TO THE GROUNDS OF APPEAL NOS. 1 TO 4 , IT IS CONTENDED THAT THE LEARNED CIT (A) IS NOT JUSTIFIED IN ARBITRARILY IGNORING THE FACT THAT IN CASE OF TH E PURCHASER OF THE PROPERTY ( SMT. ANJU GUPTA ), LD. ITO - I , FAIZABAD , HAS ACCEPTED THAT THE FAIR MARKET VALUE OF THE PROPERTY WAS RS.7,00,000/ - , (AS APPARENT FROM THE RELEVANT ASSESSMENT ORDER U/S 143(3)/147, DATED 16 - 10 - 2014, WHICH WAS FURNISHED BEFORE THE A.O. ) AND IN ARBITRARILY CONFIRMING THE COMPUTATION OF CAPITAL GAIN AT RS.28,95,410/ - BY THE A.O. ON THE BASIS OF PRESUMPTION , SURMISES AND CONJECTURES. 2 . THE BRIEF FACTS OF THE CASE ARE THA T THE A.O HAD AIR INFORMATION REGARDING THE SALE OF IMMOVABLE PROPERTY FOR RS.30 LAKHS OR IT A NO.729/LKW/2017 PAGE 3 OF 7 MORE , ON THE BASIS OF WHICH , THE A.O HAD REASON TO BELIEVE THAT THE INCOME TO THE EXTENT OF RS.30 LAKHS OR MORE HAS ESCAPED ASSESSMENT. AFTER RECORDING THE REASONS, NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED ON 30/3/2015. DURING THE FIRST APPELLATE PROCEEDINGS, THE ASSESSEE SUBMI TTED THAT ISSUANCE OF NOTICE UNDER SECTION 148 WA S A MERE CHANGE OF OPINION ; THAT THE PROPERTY WAS OWNED BY RAJESHWARI DEVI AND WAS SOLD FOR RS.7 LA KHS TO SMT. ANJU DEVI GUPTA ; THAT THE INCOME TAX OFFICER - 1, FAIZABAD , VIDE ORDER DATED 16/10/2014 , HA D ACCEPTED THE SALE CONSIDERATION PAID BY THE PURCHASER , SMT. ANJU GUPTA IN HER ASSESSMENT ; THAT TAKING ACTION UNDER SECTION 14 7 OF THE ACT O N THE SAME ISSUE WAS A MERE CHANGE OF OPI NION ; AND THAT THE A.O. HAD NOT SPECIFIED IN THE REASONS RECORDED , AS TO WHAT AND HOW MUCH INCOME HAD ESCAPED ASSE S SMENT . CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HELD THAT THE A.O WAS RIGH T IN REOPENING THE CASE UNDER SECTION 147 OF THE ACT, AS THIS CASE WAS NEVER COMPLETED U/S 143(3) AND IN THE CASE OF SMT. ANJU DEVI GUPTA (PURCHASER) , WHERE THE SALE CONSIDERATION WAS ACCEPTED BY THE INCOME TAX OFFICER - 4, FAIZABAD, SOME POINTS WERE NOT DEC IDED AT THE TIME OF A SSESSMENT PROCEEDINGS AND NEEDED A THOROUGH EXAMINATION ; THAT I N VIEW OF THE ABOVE, THE A.O. HAD REASON TO BELIEVE THAT THE INCOME TO THE EXTENT OF RS.30 LA KH S OR MORE HAD ESCAPED ASSESSMENT AND THE A.O ISSUED NOTICE UNDER SECTION 148 OF THE I. T ACT ; THAT I T WA S NOT A MERE CHANGE OF OPINION, BUT SOME ISSUES RELATED TO THE TRANSACTION OF ALLEGED P ROPERTY REMAINED TO BE EXAMINED ; THAT T HE A.O , THEREFORE, HAD REASON TO BELIEVE AND ISSUED NOTICE U/S 148 ; AND THAT THE R EOPENING OF THE ASSESS MENT UNDER SECTION 147 WA S VALID. ACCORDINGLY, THE LD. CIT(A) UPHELD THE INITIATION OF PROCEEDINGS UNDER SECTION 147 OF THE ACT, AS UNDERTAKEN BY THE A.O. REGARDING RECORDING OF THE REASONS, THE LD. CIT(A) HELD THAT THE A.O. HA D CLEARLY MENTIONED THAT IMM OVABLE PROPERTY WAS SOLD FOR RS.30 LAKHS IT A NO.729/LKW/2017 PAGE 4 OF 7 OR MORE AND NO RETURN HA D BEEN FILED . T HEREFORE, THE REOPENING WAS HELD VALID AND ASSESSEES GROUND WAS DISMISSED. 3 . HEARD. THE F OLLOWING ARE THE REASONS RECORDED FOR INITIATION OF PROCEEDINGS UNDER SECTION 147 OF T HE ACT: AS PER ONLINE AIR INFORMATION AVAILABLE IN THE OFFI CE IT IS NOTICED THAT DURING THE YEAR RELEVANT TO THE ASSESSMENT YEAR 2010 - 11 ASSESSEE HAS SOLD A IMMOVABLE PROPERTY VALUED AT RS.30 LAKHS OR MORE BY THE TRANSACTION AMOUNTING TO RS.38,00,000/ - . ACCORDINGLY, A QUERY LETTER DATED 20.10.2014 HAS BEEN ISSUED TO THE ASSESSEE. IN VIEW OF THE ABOVE, NATURE AND DETAILS ABOUT HIS INCOME AND RECEIPT OF SUCH HEAVY SUM, EXTENT OF BUSINESS CARRIED ON BY THE ASSESSEE NEEDS VERIFICATION AND EXAMINATION. I HAVE , THEREFORE, REASON TO BELIEVE THAT INCOME TO THE TUNE OF RS.38,00,000/ - HAS ESCAPED ASSESSMENT FOR THE YEAR UNDER CONSIDERATION WITHIN THE MEANING OF SECTION 147 OF THE ACT. THEREFORE, PROCEEDINGS UND 147 OF THE ACT ARE BEING INITIATED. 4 . THUS, THE REASO NS RECORDED FOR INITIATION OF PROCEEDINGS UNDER SECTION 147 OF THE ACT WERE THE AIR INFORMATION REGARDING THE SALE OF IMMOVABLE PROPERTY , VALUED AT RS.30 LAKHS OR MORE, AMOUNTING TO RS.38 LAKHS. AS BEFORE THE AUTHORITIES BELOW, THE STAND OF THE ASSESSEE I S THAT IN THE CASE OF THE PURCHASER OF THE IMMOVABLE PROPERTY (HOUSE) , I.E., SMT. ANJU GUPTA, THE SALE CONSIDERATION OF RS.7 LAKHS STOOD ACCEPTED, VIDE ORDER (COPY AT APB: 6 TO 8) DATED 16/10/2014 PASSED UNDER SECTION S 143(3)/147 OF THE ACT ; THAT DESPITE T HIS ASSESSMENT, THE PROCEEDINGS UNDER SECTION 147 WERE ARBITRARILY INITIATED IN THE CASE OF THE PRESENT ASSESSEE, AMOUNTING TO A MERE CHANGE OF OPINION OF THE A.O; THAT IN FACT, IT WAS THE MOTHER OF THE ASSESSEE, NAMELY, SMT. RAJESHWARI DEVI, WHO WAS THE SOLE OWNER OF THE IMMOVABLE PROPERTY, I.E., THE HOUSE, WHICH WAS SOLD ON 11/6/2007, FOR AN AMOUNT OF RS. 7 LAKHS; THAT THE SALE CONSIDERATION OF RS.7 LAKHS HAD BEEN RECEIVED BY THE IT A NO.729/LKW/2017 PAGE 5 OF 7 ASSESSEE THROUGH BANKER S CHEQUE AND THE AMOUNT WAS DEPOSITED IN THE BANK AC COUNT; THAT NO FRESH INFORMATION HAD COME TO THE KNOWLEDGE OF THE A.O , SO AS TO ENABLE THE A.O TO INVOKE THE PROVISIONS OF SECTION 147 OF THE ACT ; AND THAT THE LD. CIT(A) HAS ERRED IN NOT DECIDING THIS ISSUE, THOUGH IT WAS SPECIFICALLY RAISED BEFORE HER BY THE ASSESSEE, BY VIRTUE OF GROUND NO.1. 5 . THE LD. D.R. HAS PLACED STRONG RELIANCE ON THE IMPUGNED ORDER, CONTENDING THAT THE LD. CIT(A) HAS RIGHTLY OBSERVED THAT IN THE CASE OF SMT. ANJU GUPTA, THE PURCHASER, S OME POINTS REMAINED NOT DECIDED AT THE TIME OF ASSESSMENT AND THEY NEEDED A THOROUGH EXAMINATION, FOR WHICH REASON, THE PROCEEDINGS UNDER SECTION 147 OF THE ACT WERE CORRECTLY INITIATED IN THE CASE OF THE PRESENT ASSESSEE. 6 . APB: 6 TO 8 IS A COPY OF THE ORDER DATED 16/10/2014 PASSED UNDER SECTION 143(3) / 147 OF THE ACT, IN THE CASE OF SMT. ANJU GUPTA, THE PURCHASER, FOR ASSESSMENT YEAR 2010 - 11, I.E., THE YEAR UNDER CONSIDERATION. THE RELEVANT OBSERVATIONS OF THE A.O, AS MADE THEREIN, ARE EXTRACTED AS UNDER: ASSESSEE VIDE HER REPLIES DATED 19.09.2014 AN D 22.09.2014 HAD SUBMITTED THAT THE PAY MENT FOR THE PROPERTY WAS MADE THROUGH BANKERS CHEQUE DATED 10.06.2009 FOR RS.7,00,000/ - . IN REPLY OF SOURCE OF INVESTMENT IT WAS SUBMITTED THAT RS. 3,00,000/ - WAS RECEIVED BY HER HUSBAND SHRI. SATISH CHANDRA GUPTA, WH O IS ALSO CO - SHARERS IN THE PROPE RTY, THROU GH ACCOUNT PAYEE CHEQUE AND RS. 5,00,000/ WAS RECEIVED GI FT FROM HER FATHER - IN - LAW, SHRI. LAVKUSH KUMAR R/O TIKAIT NAGAR, BARABANKI . REST AMOUNT OF' RS. 1,66,030/ - WAS INVESTED BY HER FROM THE WITHDRAWAL OF BANK OF BARODA ACCOUNT. THE COPY OF THE ACCOUNT WAS ALREADY SUBMITTED. THESE FACTS WERE EXAM INED AND FOUND SATISFACTORY. 7 . FROM THE ABOVE, IT IS AMPLY CLEAR THAT IN THE CASE OF THE PURCHASER OF THE PROPERTY SOLD BY THE PRESENT ASSESSEE, THE DEPARTMENT ITSELF ACCEP TED THE FACT THAT THE PROPERTY UNDER CONSIDERAT ION WAS IT A NO.729/LKW/2017 PAGE 6 OF 7 PURCHASED BY SMT. ANJU G UPTA FOR A CONSIDERATION OF RS.7 LAKHS, THROUGH A BANKER S CHEQUE DATED 10/6/2009. THE A.O OBSERVES THAT THESE FACTS ARE EXAMINED AND FOUND TO BE SATISFACTORY. IN VIEW OF TH E ABOVE ASSESSMENT ORDER IN THE CASE OF SMT. ANJU GUPTA, PURCHASER, THE LD. CIT(A) HAS ERRED IN OBSERVING THAT SOME POINTS WERE NOT DECIDED AT THE TIME OF ASSESSMENT PROCEEDINGS AND NEEDED THOROUGH EXAMINATION. A BARE PERUSAL OF THE REASONS RECORDED FOR THE INITIATION OF PROCEEDINGS UNDER SECTION 147 OF THE ACT IN THE CASE OF THE ASSESSEE CLEARLY SHOWS THAT THIS WAS NOT THE REASON RECORDED BY THE A.O AND IT WAS MERELY THE AIR INFORMATION OF THE PROPERTY TRANSACTION WHICH PROMPTED THE A.O TO ENTERTAIN THE BELIEF OF ESCAPEMENT OF INCOME. THE OBSERVATION OF THE LD. CIT(A) IS, THUS, FOUND TO BE EXTRANEOUS TO SUCH REASONS RECORDED. THE LD. CIT(A), HENCE, HAS GONE WRONG IN HOLDING THAT IT WAS NOT A CASE OF MERE CHANGE OF OPINION, BUT SOME ISSUES RELATE TO TH E TRANSACTION OF ALLEGED PROPERTY REMAINED TO BE EXAMINED AND THAT DUE TO THE ABOVE, THE A.O HAD REASON TO BELIEVE AND ISSUED NOTICE UNDER SECTION 148. 8 . SINCE T HE AMOUNT OF RS.7 LAKHS , AS SALE CONSIDERATION , HAS BEEN ACCEPTED BY THE DEPARTMENT ITSELF IN THE CASE OF THE PURCHASER, SMT. ANJU GUPTA, NO CASE IS MADE OUT IN INITIATING PROCEEDINGS UNDER SECTION 147 OF THE ACT IN THE CASE OF THE PRESENT ASSESSEE, THE SELLER OF THE PROPERTY. THIS AMOUNTS TO APPROBATION AND REPROBATION, WHICH IS NOT PERMISSIBLE UNDER THE LAW. THE DEPARTMENT CANNOT BLOW HOT AND COLD IN THE SAME BREATH, ACCEPTING THE POSITION IN THE CASE OF THE PURCHASER, WHILE CALLING IT IN QUESTION IN THE CASE OF THE SELLER, I.E., THE ASSESSEE. 9 . IN VIEW OF THE ABOVE, FINDING THE GRIEVANCE OF THE ASSESSEE IN THIS REGARD TO BE CORRECT, GROUND NO.1 RAISED BY THE ASSESSEE IS ACCEPTED. HOLDING IT TO BE A MERE CHANGE OF OPINION, THE INITIATION OF PROCEEDINGS UNDER SECTION 147 OF THE ACT IN THE CASE OF THE ASSESSEE IS HELD TO BE NULL AND VOID. ACCORDIN GLY , THE INITIATION OF PROCEEDINGS UNDER IT A NO.729/LKW/2017 PAGE 7 OF 7 SECTION 147 OF THE ACT , AND EVERYTHING PURSUANT TO SUCH INITIATION, CULMINATING IN THE ORDER UNDER APPEAL, ARE QUASHED. NOTHING FURTHER SURVIVES FOR ADJUDICATION, NOR WAS ANYTHING ELSE ARGUED. 10 . IN THE RESULT, THE AP PEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 04 / 0 6 /201 9 . SD/ - [ A. D. JAIN ] VICE PRESIDENT DATED: 04 / 0 6 / 201 9 JJ: 0406 COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR BY ORDER ASSISTANT REGISTRAR