ACIT, Aurangabad V. Shri Vinaykumar Thirani, Aurangabad

ITA 641/PUN/2009

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 3122 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 6 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2003-2004
• Appeal Filed On: 27-05-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRI
• Assessee Lawyers: NILESH KHANDELWAL
• Keywords: Value adopted by valuation officer; Difference of opinion; Reason to believe; Change of opinion; Reassessment proceedings

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE BEFORE SHRI I.C. SUDHIR AND SHRI D. KARUNAKARA RAO ITA NO. 641/PN/09 (ASSTT. YEAR 2003-04) ACIT, CIRCLE-1, AURANGABAD .... APPELLANT VS. SHRI VINAYKUMAR THIRANI, GAT NO. 342, BEHIND NATH VALLEY SCHOOL, SATARA, AURANGABAD PAN NO. AAHPT7038C . RESPONDENT C.O NO. 05/PN/10 (ASSTT. YEAR 2003-04) (ARISING OUT OF ITA NO. 641/PN/09) SHRI VINAYKUMAR THIRANI, GAT NO. 342, BEHIND NATH VALLEY SCHOOL, SATARA, AURANGABAD PAN NO. AAHPT7038C .... APPELLANT VS. ACIT, CIRCLE-1, AURANGABAD . RESPONDENT ASSESSEE BY : SHRI NILESH KHANDELWAL DEPARTMENT BY : SHRI PANKA J GARG ORDER PER D. KARUNAKARA RAO AM THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A), AURANGABAD DATED 06-02-2009 FOR THE A.Y 2003-04. 2. AT THE VERY OUTSET LD. COUNSEL FOR THE ASSESSEE REF ERRED TO THE C.O FILED BY HIM. FURTHER, HE REFERRED TO THE ADDITIONAL GROUNDS AN D MENTIONED THAT IF THE SAID CO IS ADJUDICATED IN HIS FAVOUR, THERE IS NO NEE D FOR DECIDING THE ISSUE ON ITA NO. 641/PN/09 & C.O NO. 05/PN/10 (ARISING OUT OF ITA NO. 641/PN/09) A.Y: 2003-04 PAGE 2 OF 4 MERITS. ACCORDINGLY, WITH OUR PERMISSION, LD. COUNSEL RE AD OUT ADDITIONAL GROUNDS WHICH READS AS FOLLOWS:- 1. ON FACTS AND CIRCUMSTANCES PREVAILING IN THE C ASE AND AS PER PROVISIONS OF LAW IT BE HELD THAT THE PROCEEDINGS INITIATED U/S. 147 ARE BAD IN LAW . IT FURTHER BE HELD THAT THE REOPENING OF COMPLETE REGULAR ASSESSMENT HAS BEEN RESORTED WITHOUT COMPLYING WITH THE REQUIRED CONDITIONS JUSTIFYING SUCH REOPENING AND WITHOUT AS SUMING VALID JURISDICTION IN TERMS OF THE SECTION 147. THE ORDER PASSED IN PURSUANCE OF NOTICE ISSUED U/S. 148 BE QUASHED . JUST AND PROPER RELIEF BE GRANTED TO THE APPELLANT IN THIS RESPECT. 3. REFERRING TO THE ASSESSMENT PROCEEDINGS INITIATED U /S. 147 OF THE ACT, LD. COUNSEL MENTIONED THAT THE REOPENING IS BAD IN LAW. TO SUBSTANTIATE THE SAME LD. COUNSEL TOOK US THROUGH THE REASONS RECORDED AND ST ATED THAT THE COUPLE OF REASONS WERE MENTIONED BY THE A.O AT THE TIME OF ISSU E OF NOTICE U/S. 148 OF THE INCOME TAX ACT. BRIEFLY THEY ARE AS FOLLOWS:- 1. THE COPY OF THE REPORT OF DVO HAS BEEN RECEIVED ON 17/4/2006 AS PER WHICH THE VALUE OF THE PROPERTY AS ON 1/4/81 IS LO WER THAN THE ONE ADOPTED BY THE APPELLANT DUE TO WHICH THERE IS AN ES CAPEMENT OF INCOME BY WAY OF CLAIM OF HIGHER DEDUCTION FOR COMPUTING CAP ITAL GAINS. 2. THE CLAIM OF DEDUCTION U/S. 54 IS WRONG AS THE APPELLANT HAS PURCHASED 2 PROPERTIES WHEREAS THE SAID DEDUCTION IS AV AILABLE ONLY FOR 1 PROPERTY. 4. ELABORATING ON THE FIRST REASON, THE LD. COUNSEL MENTIONED THAT DISTRICT VALUATION OFFICER (DVO) VALUATION IS MERE AN ESTIMATE AND THEREFORE IT CANNOT BE THE BASIS FOR FORMATION OF REASON TO BELIEVE IN T HE MIND OF THE AO AND THEREFORE , ON THIS BASIS PROCEEDINGS U/S. 147 CANNOT BE INITIATED. TO SUPPORT THIS LINE OF ARGUMENT LD. COUNSEL RELIED ON REPORTED JUDGEM ENT OF THE SUPREME COURT IN THE CASE OF DHARIYA CONSTRUCTION CO. 328 ITR 515 ( SC) FOR THE PROPOSITION THAT THE OPINION GIVEN BY THE DVO PER SE IS NOT INFORMATIO N FOR THE PURPOSES OF REOPENING ASSESSMENT UNDER SECTION 147 OF THE INCOME TAX ACT, 1961. WE FIND MERIT IN THE ARGUMENTS OF THE LD. COUNSEL AND FIND FA ULT WITH REOPENING THE ASSESSMENT ON THE BASIS OF DVO REPORT. THUS, WE ARE OF THE OPINION, ON THIS BASIS, THE AO HAS WRONGLY ASSUMED JURISDICTION. 5. REFERRING TO THE SECOND REASON BASED ON WHICH REOPENING OF COMPLETED REGULAR ASSESSMENT WAS REOPENED, LD. COUNSEL MENTIONED THAT DURING THE REGULAR ASSESSMENT PROCEEDINGS, THE ISSUE WAS EXAMINED IN DEPTH ON THIS ISSUE ITA NO. 641/PN/09 & C.O NO. 05/PN/10 (ARISING OUT OF ITA NO. 641/PN/09) A.Y: 2003-04 PAGE 3 OF 4 OF GRANTING OF DEDUCTION U/S. 54 IN RESPECT OF CAPITA L GAINS INVESTED IN THE IMPUGNED FLAT. ON FACTS THE LD. COUNSEL MENTIONED T HAT A.O ERRONEOUSLY CONSIDERED THE FLAT , SO PURCHASED AS TWO RESIDENTIAL HOUSES IGNORING THE FACT THAT THE IMPUGNED FLAT WAS PURCHASED BY VIRTUE OF A S INGLE REGISTRATION DEED ALTHOUGH, THE SAID FLAT WAS SUBSEQUENTLY LET OFF TO A COUPLE OF TENANT, AFTER MAKING A PARTITION. 6. WE HAVE EXAMINED THE FACTS AND PERUSED THE ORDERS O F THE REVENUE AND ALSO REASONS RECORDED BY THE A.O FOR REOPENING. IT IS A FACT THAT THIS ISSUE WAS A MATTER DURING THE ASSESSMENT PROCEEDINGS IN THE FIRST ROUND. THE SAME WAS EVIDENT FROM THE REASONS RECORDED BY THE A.O. THE CLAI M U/S. 54 WAS THE ISSUE DURING THE FIRST ROUND OF ASSESSMENT PROCEEDINGS BEFORE THE AO. AS ARGUED BY THE LD. COUNSEL IN OUR OPINION, THE REOPENING OF THE ASSESSMENT ON THIS BASIS IN OUR OPINION CONSTITUTES CHANGE OF OPINION OF THE AO AS THE AO ALREADY FORMED AN OPINION WHILE GRANTING THE RELIEF DURING THE FIRST ROUND OF THE PROCEEDINGS. WE HAVE ALSO PERUSED THE ORIGINAL ASSESSMENT ORDER WHICH I S PLACED IN THE PAPER BOOK AND CONFIRMED THE EXISTENCE OF AN OPINION BY TH E AO ON THIS ISSUE OF GRANTING DEDUCTION U/S 54 OF THE ACT. THEREFORE, IT IS SETTLED LAW AS HELD BY THE MUMBAI HIGH COURT IN THE CASE OF ASIAN PAINTS LTD. 308 ITR 195(BOM), THE CHANGE OF OPINION OF THE A.O IS NO GROUND FOR INITIAT ION OF REASSESSMENT PROCEEDINGS. HELD PORTION IS AS UNDER:- HELD, ALLOWING THE PETITION, THAT INITIATION OF RE ASSESSMENT PROCEEDINGS WOULD AMOUNT TO CHANGE OF OPINION OF THE ASSESSING OFFICER AS IT WAS MERELY A FRESH APPLICATION OF MIND BY THE ASSESSING OFFICER TO THE SAME SET OF FACTS. SINCE THE ASSESSING OFFICER HAD FAILE D TO APPLY HIS MIND TO THE RELEVANT MATERIAL WHILE FRAMING THE ASSESSMENT ORDE R, HE COULD NOT TAKE ADVANTAGE OF HIS OWN WRONG AND REOPEN THE ASSESSMEN T UNDER SECTION 147 OF THE ACT. 7. THE ABOVE VIEW WAS TAKEN BY CONSIDERING THE FULL BENCH DECISION OF DELHI HIGH COURT IN THE CASE OF KELVINATOR OF INDIA LTD. 25 6 ITR 1 (DELHI) WHICH WAS SUBSEQUENTLY CONFIRMED BY THE SUPREME COURT BY ITS ORDE R REPORTED IN 320 ITR 561. THUS, THIS REASON BASED ON WHICH REASSESSMENT WA S INITIATED ALSO IS NOT A VALID ONE FOR REOPENING. THEREFORE WE ARE OF THE OPINION THAT THE REASSESSMENT PROCEEDINGS INITIATED BY THE A.O BASED ON THE REASONI NG CANNOT BE HELD VALID IN VIEW OF OUT DETAILED DISCUSSION MENTIONED ABOVE. AC CORDINGLY, ADDITIONAL GROUNDS RAISED BY THE ASSESSEE IN C.O ARE ALLOWED. CONSEQUENT LY, WE FIND NO REASON TO ITA NO. 641/PN/09 & C.O NO. 05/PN/10 (ARISING OUT OF ITA NO. 641/PN/09) A.Y: 2003-04 PAGE 4 OF 4 GO INTO THE MERITS OF THE ADDITIONS. AS A RESULT GROUN DS RAISED BY THE REVENUE ARE HAVE TO BE DISMISSED. 8. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED AND THE C.O IS ALLOWED. ORDER PRONOUNCED ON 30 TH NOVEMBER, 2010. SD/- SD/- (I.C. SUDHIR) (D.KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBE R PUNE DATED THE 30 TH NOVEMBER, 2010 R COPY OF THE ORDER IS FORWARDED TO : 1. ACIT, CIRCLE-1, AURANGABAD 2. ASSESSEE 3. CIT(A), AURANGABAD 3. CIT, AURANGABAD 5. D.R. ITAT B BENCH BY ORDER ASSISTANT REGISTRAR I.T.A.T PUNE