J.Raijiniganth, Theni V. ITO, Theni

ITA 620/CHNY/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 7798 (ITAT-CHENNAI)
• Duration Of Justice: 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 20-01-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 30-03-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Assessee Lawyers: T VASUDEVAN
• Keywords: Reopening of assessment; Cost of acquisition; Fair market value
• Section: 143(3); 148; 139

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , C B ENCH, CHENNAI . . . , . , % BEFORE SHRI N.R.S.GANESAN, JUDICIAL MEMBER AND SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NO.620/MDS/2015 ( / ASSESSMENT YEAR:2006-07) MR. J.RAJINIGANTH, 25/12-2, MIDDLE STREET, C.PUDUPATTI, UTHAMAPALAYAM TK THENI DISTRICT VS THE INCOME TAX OFFICER, WARD-I(2), THENI. PAN:AIWPR3069G ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. T.VASUDEVAN, ADVOCATE /RESPONDENT BY : MR. A.V.SREEKANTH, JCIT /DATE OF HEARING : 20 TH JANUARY, 2016 /DATE OF PRONOUNCEMENT : 23 RD MARCH, 2016 / O R D E R PER A. MOHAN ALANKAMONY, AM:- THIS APPEAL IS FILED BY THE ASSESSEE AGGRIEVED BY T HE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS)- 1, MADURAI, DATED 02.02.2015 IN ITA NO.82/2013-14 P ASSED UNDER SECTION 143(3) R.W.S., 147 & 250 OF THE ACT. 2. THE ASSESSEE IN HIS APPEAL HAS RAISED SEVERAL GR OUNDS, HOWEVER, THE CRUXES OF THE ISSUES ARE AS FOLLOWS:- I) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED IN UPHOLDING THE VALIDITY OF REOPENING OF ASSESSMENT UNDER SECTION 147 OF THE ACT BY THE LEAR NED ASSESSING OFFICER FOR THE ASSESSMENT YEAR 2006-07, AS THE REOPENING WAS BARRED BY LIMITATION. 2 ITA NO.620 /MDS/2015 II) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE ORDER OF THE LEARNED ASSESSING OFFICER FOR ADOPTING THE MARKET V ALUE AT ` 32,87,000/- (INSTEAD OF THE ACTUAL SALE VALUE OF RS.25,50,000/-) BY DERIVING THE SAME FROM THE REGISTRATION AND STAMP DUTY PAID BY THE ASSESSEE BEFORE THE STAMP VALUING AUTHORITY. III) THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) HAS ERRED IN CONFIRMING THE DISALLOWANCE MADE BY TH E LEARNED ASSESSING OFFICER FOR THE FOLLOWING EXPENDI TURE IN RESPECT OF SALE OF PROPERTY:- A) RS.3,10,000/- FOR VACATING HUTMENT DWELLERS; B) RS.40,000/- PAID AS COMMISSION TOWARDS SALE OF PROPERTY. IV) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED IN CONFIRMING THE FAIR MARKET VALUE OF TH E LAND ADOPTED BY THE LEARNED ASSESSING OFFICER AT ` 1,12,000/- AS COST OF ACQUISITION WHILE COMPUTING THE CAPITAL GAINS. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL AGRICULTURIST FILED HIS RETURN OF INCOME ON 24.10.2008 FOR THE ASSESSMENT YEAR 2006-07 DECLARIN G LONG TERM CAPITAL LOSS OF ` 17,25,500/-. THEREAFTER THE LEARNED ASSESSING OFFICER REOPENED THE ASSESSMENT UNDER SEC TION 147 OF THE ACT ON 14.06.2011, AS THE FAIR MARKET VA LUE ADOPTED BY THE ASSESSEE AS ON 01.04.1981 WAS VERY H IGH. SUBSEQUENTLY THE ASSESSMENT WAS COMPLETED UNDER SEC TION 3 ITA NO.620 /MDS/2015 143(3) R.W.S.147 OF THE ACT ON 20.03.2013, WHEREIN VARIOUS ADDITIONS WERE MADE IN RESPECT TO SALE OF PROPERTY. GROUND NO.1 VALIDITY OF REOPENING OF ASSESSMENT U /S.147 OF THE ACT: 4. THE ASSESSEE HAS CHALLENGED THE VALIDITY OF REOP ENING OF ASSESSMENT UNDER SECTION 147 OF THE ACT. ON PER USING THE ORDER OF THE LEARNED ASSESSING OFFICER, WE FIND THA T THE REOPENING WAS MADE BEYOND THE PERIOD OF 4 YEARS FRO M THE END OF THE RELEVANT ASSESSMENT YEAR. THESE FACTS A RE EVIDENT FROM THE RELEVANT ASSESSMENT ORDER DATED 20 .03.2013 WHEREIN IT IS MENTIONED THAT NOTICE UNDER SECTION 1 48 WAS ISSUED ON 14.06.2011. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) BASED ON THE REMAND REPORT FURNISHED BY THE LEARNED ASSESSING OFFICER VIDE LETTER DATED 25.08.2 014 UPHELD THE REOPENING MADE UNDER SECTION 147 OF THE ACT BECAUSE THE ASSESSEE HAS NOT DISCLOSED ALL THE FACT S AT THE TIME OF ORIGINAL ASSESSMENT UNDER SECTION 143(3) OF THE ACT. 5. BEFORE US THE LEARNED AUTHORIZED REPRESENTATIVE REITERATED HIS ARGUMENTS MADE BEFORE THE LEARNED 4 ITA NO.620 /MDS/2015 COMMISSIONER OF INCOME TAX (APPEALS) BY STATING AS FOLLOWS:- A) THE ORIGINAL ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) R.W.S 147 OF THE ACT AFTER REOPENING THE ASSESSMENT ON 16.9.2009. IN THE SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSESSEE HAD FILED COPY OF SALE DE ED, COMPUTATION OF CAPITAL GAIN ETC., WITH ALL RELEVANT FACTS. THE LEARNED ASSESSING OFFICER AFTER EXAMINING THE RETURN OF INCOME HAS ACCEPTED THE SAME. B) SUBSEQUENTLY IT WAS NOTICED BY THE LEARNED ASSESSING OFFICER THAT THE FAIR MARKET VALUE ADOPTE D BY THE ASSESSEE AS ON 01.04.1981 WAS VERY HIGH AND HENCE, THE ASSESSMENT WAS ONCE AGAIN REOPENED UNDER SECTION 147 R.W.S 148 OF THE ACT VIDE ISSUANC E OF NOTICE DATED 14.06.2011 FOR THE RELEVANT ASSESSMENT YEAR 2006-07. C) THUS THE ASSESSMENT WAS ONCE AGAIN REOPENED BY THE LEARNED ASSESSING OFFICER BEYOND THE PERIOD OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. 5 ITA NO.620 /MDS/2015 D) IN THE CASE OF THE ASSESSEE, THERE WAS NO FAILUR E ON THE PART OF THE ASSESSEE TO DISCLOSE ANY MATERIAL F ACTS THAT IS NECESSARY FOR ASSESSMENT BECAUSE ALL THE FA CTS WERE PRESENTED BEFORE THE LEARNED ASSESSING OFFICER AT THE TIME OF ORIGINAL ASSESSMENT UNDER SECTION 143(3 ) OF THE ACT. FOR THE ABOVE STATED REASONS, THE LEARNED AUTHORIZE D REPRESENTATIVE ARGUED BY STATING THAT REOPENING IS BAD IN LAW AND FURTHER PLACED RELIANCE IN THE DECISIONS OF I) GENERAL MOTORS INDIA P.LTD. VS. DCIT REPORTED I N 46 TAXMANN.COM 399 (GUJ) II) KANAK FABRICS VS. ITO REPORTED IN 359 ITR 447 ( GUJ) III) GUJARAT LEASE FINANCING LTD. VS. DCIT (360 ITR 496) 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE O THER HAND, ARGUED IN SUPPORT OF THE ORDERS OF THE REVENU E BY STATING THAT SUBSEQUENTLY IT CAME TO THE KNOWLEDGE OF THE REVENUE THAT THE FAIR MARKET VALUE ADOPTED BY THE A SSESSEE AS ON 01.04.1981 IS VERY HIGH COMPARED TO THE GUIDE LINE VALUE MAINTAINED BY THE OFFICE OF THE SUB-REGISTRAR , 6 ITA NO.620 /MDS/2015 THALLAKULAM, MADURAI. IT WAS THEREFORE PLEADED THAT THE ORDERS OF THE REVENUE MAY BE UPHELD ON THIS ISSUE. 7. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY PER USED THE MATERIALS AVAILABLE ON RECORD. FROM THE FACTS O F THE CASE IT IS APPARENT THAT THE ORIGINAL ASSESSMENT IN THE CASE OF THE ASSESSEE WAS COMPLETED UNDER SECTION 143(3) R.W.S 1 47 OF THE ACT ON 16.9.2009 WHERE IN ALL THE FACTS WERE BE FORE THE LEARNED ASSESSING OFFICER AND EXAMINED. THE REVENUE STATES THAT SUBSEQUENTLY DURING THE ASSESSMENT YEAR 2010- 11, IT CAME TO THE NOTICE OF THE LEARNED ASSESSING OFFICER THAT THE ASSESSEE HAS WRONGLY ADOPTED THE FAIR MARKET VA LUE AS ON 01.04.1981 AT RS.8,50,000/-. WE FAIL TO UNDERSTA ND AS TO IN WHAT MANNER THE REVENUE RECEIVED THIS INFORMATION A ND UNDER WHICH OCCASION WHEN THE ASSESSMENT WAS COMPLE TED ON 16.09.2009 ITSELF. AT THE TIME OF ORIGINAL ASSES SMENT, IT IS EVIDENT THAT THE ASSESSEE HAS FURNISHED ALL THE MAT ERIALS REQUIRED FOR COMPLETING THE ASSESSMENT AND ACCORDIN GLY THE REVENUE HAS FINALIZED THE ASSESSMENT BY ACCEPTING T HE LOSS RETURNED. MOREOVER BY ISSUING NOTICE UNDER SECTION 148 READ WITH SECTION 147A OF THE ACT ON 14.06.2011 CLEARLY SHOWS THAT 7 ITA NO.620 /MDS/2015 THE ASSESSMENT IS REOPENED AFTER THE PERIOD OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. PROVI SIONS OF SECTION 147 CLEARLY STIPULATE THAT THE ASSESSMENT C ANNOT BE REOPENED BEYOND THE PERIOD OF FOUR YEARS UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT BY THE REA SON OF FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETUR N UNDER SECTION 139 OF THE ACT OR TO DISCLOSE FULLY AND TRU LY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT. IN THE CASE OF THE ASSESSEE, THE ASSESSEE HAD DISCLOSED ALL THE MATERI AL FACTS AVAILABLE WITH HIM THAT IS NECESSARY FOR HIS ASSESS MENT AND THE SAME WAS EXAMINED AND FOUND TO BE IN ORDER BY T HE LEARNED ASSESSING OFFICER AT THE TIME OF ORIGINAL A SSESSMENT UNDER SECTION 143(3) R.W.S.147 OF THE ACT. FURTHER, THERE WAS NO OCCASION FOR THE LEARNED ASSESSING OFFICER TO CO NDUCT A FRESH ENQUIRY ON THE COMPUTATION OF INCOME IN THE C ASE OF THE ASSESSEE BASED ON NEW FACTS. IN THESE CIRCUMSTANCES , WE DO NOT UNDERSTAND AS TO WHAT PROMPTED THE REVENUE TO O BTAIN INFORMATION FROM THE SUB-REGISTRARS OFFICE WITH RE SPECT TO THE GUIDELINE VALUE OF THE PROPERTY SOLD BY THE ASSESSE E. IT IS PERTINENT TO MENTION HERE THAT, THE HONBLE HIGH CO URT OF GUJARAT IN THE CASE OF GUJARAT LEASE FINANCING LTD VS. DCIT 8 ITA NO.620 /MDS/2015 (SUPRA) HAS HELD THAT WHEN THE ASSESSING OFFICER FA ILS TO POINT OUT AS TO IN WHAT MANNER THERE HAD BEEN NON-DISCLOS URE ON THE PART OF THE ASSESSEE, REOPENING IS LIABLE TO BE QUASHED. IN THE RELEVANT CASE BEFORE US, NO FRESH MATERIAL HAS SURFACED TO ESTABLISH THAT INCOME HAS ESCAPED ASSESSMENT. IT I S EVIDENT THAT AT THE TIME OF ORIGINAL ASSESSMENT THE REVENUE HAS EXAMINED THE RETURN OF INCOME OF THE ASSESSEE AND F INALLY ACCEPTED THE RETURN FILED BY HIM. CONSIDERING ALL T HESE FACTS AND CIRCUMSTANCES OF THE CASE AND THE DECISION RELI ED BY THE LEARNED AUTHORIZED REPRESENTATIVE, WE ARE OF THE CO NSIDERED VIEW THAT THE REVENUE LACKS JURISDICTION IN REOPENI NG THE ASSESSMENT FOR THE SECOND TIME BY INVOKING THE PROV ISIONS OF SECTION 147 READ WITH SECTION 148 OF THE ACT. THERE FORE, WE HEREBY QUASH THE ORDER PASSED BY THE LEARNED ASSESS ING OFFICER WHICH WAS SUBSEQUENTLY UPHELD BY THE LEARNE D COMMISSIONER OF INCOME TAX (APPEALS). 8. SINCE WE HAVE HELD THE ISSUE OF REOPENING IN FAV OUR OF THE ASSESSEE, WE DO NOT FIND IT NECESSARY TO GO INT O THE MERITS OF THE CASE. ACCORDINGLY, GROUND NO.1 IS ALL OWED IN FAVOUR OF THE ASSESSEE WHILE AS ALL THE OTHER GROUN DS ARE DISMISSED AS INFRUCTUOUS. 9 ITA NO.620 /MDS/2015 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED AS INDICATED HEREIN ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON THE 23 RD MARCH, 2016 SD/- SD/- ( . . . ) ( . ) (N.R.S.GANESAN) ( A.M OHAN ALANKAMONY ) # % / JUDICIAL MEMBER % / ACCOUNTANT MEMBER # /CHENNAI, ( /DATED 23 RD MARCH, 2016 SOMU *+ ,+ /COPY TO: 1. APPELLANT 2. RESPONDENT 3. - () /CIT(A) 4. - /CIT 5. + 1 /DR 6. /