Shri Purshottam Khatri , Bhopal V. ITO 3(3), Bhopal, Bhopal

ITA 741/Ind/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 6344 (ITAT-INDORE)
• Duration Of Justice: 10 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 10-09-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R P MOURYA
• Assessee Lawyers: N D PATVA ADVS
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Cost of acquisition; Initiation of penalty proceedings; Set aside
• Section: 271(1)(c); 143(3); 50C; 234B; 147; 148

Judgement Text

ITA NO.741/IND/2018 SHRI PURSHOTTAM KHATRI, BHOPAL 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL INDORE SMC BENCH, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER ITA NO.741/IND/2018 ASSESSMENT YEAR: 2009-10 SHRI PURSHOTTAM KHATRI 15-AB, RIDGE ROAD, IDGAH HILLS BHOPAL / VS. ITO - 3 ( 3 ) BHOPAL ( APPELLANT ) ( RE VENUE ) P.A. NO. ABGPK5982Q APPELLANT BY SHRI ASHISH GOYAL & SHRI N.D. PATVA, ADVS. RE VENUE BY SHRI R.P. MO U RYA SR. DR DATE OF HEARING: 27.06.2019 DATE OF PRONOUNCEMENT: 05.08.2019 / O R D E R THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX(APPEALS)-2, BHOPALDATED 27/06/2018 PERTAINING TO ASSESSMENT YEAR 2009-10.THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1.THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LEARNED CIT(A) ERRED IN CONFIRMING THAT THE ISSUE OF NOTICE U/S 148 BY RE-OPENING THE CASE U/S 147 IS VALID EVEN WHEN THE ASSESSEE IS REGULARLY ASSESSED TO TAX AND HAS SHOWN THE IMPUGNED CAPITAL GAIN WHICH I S THE BASIS FOR RE- OPENING THE CASE, IN THE REGULAR RETURN FILED BY HI M. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LEARNED ITA NO.741/IND/2018 SHRI PURSHOTTAM KHATRI, BHOPAL 2 CIT(A) ERRED IN CONFIRMING THAT THE NOTICE DATED 18 .03.2016 ISSUED U/S 148 SERVED ON THE ASSESSEE ON 01.04.2016 IS A VALID NOT ICE AND NOT BARRED BY LIMITATION AS PROVIDED U/S 149 OF THE ACT. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.2,40, 000/- BEING THE DIFFERENCE BETWEEN THE INCOME OF RS.5,75,000/- AS D ETERMINED U/S 50C AND RS.3,35,000/- AS SHOWN BY THE ASSESSE WITHOUT C ONSIDERING THE EXPLANATION OFFERED DURING APPELLATE PROCEEDINGS. 4.THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A() ERRED IN CONFIRMING THE DISALLOWANCE OF RS.130,493/ - CLAIMED U/S 48 OF THE ACT BEING INDEX COST OF EXPENDITURE INCURRED FO R ACQUIRING CAPITAL ASSET STATING THAT IT HAS ALREADY BEEN CONSIDERED BY THE AO WHILE COMPUTING CAPITAL GAINS THROUGH NO SUCH DEDUCTION WAS ALLOWED IN THE ASSESSMENT. 5.THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN CONFIRMING THE ORDER OF THE AO FOR NOT GIV ING THE BENEFIT OF RS.52,500/- BEING BROUGHT FORWARD LONG TERM CAPITAL LOOS WHICH IS CLAIMED BY THE APPELLANT U/S 74 OF THE ACT STATING THAT IT HAS ALREADY BEEN CONSIDERED BY THE AO WHILE COMPUTING CAPITAL GAINS THROUGH NO SUCH DEDUCTION WAS ALLOWED IN THE ASSESSMENT. 6. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, CHARGING OF INTEREST OF U/S 234A OF RS.1,128/- AND U/S 234B OF RS.41,064/- IS NOT JUSTIFIED. 7. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, INITIATION OF PENALTY PROCEEDINGS U/S 271(1)(C) IS NOT JUSTIFIED. 2. BRIEFLY STATED THE FACTS ARE THAT THE CASE OF TH E ASSESSEE WAS RE- OPENED FOR ASSESSMENT AND THE ASSESSMENT U/S 147 R. W.S 143(3) OF THE INCOME TAX ACT 1961(HEREINAFTER CALLED AS THE ACT) WAS FRAMED VIDE ORDER DATED 14.12.2016. THE ASSESSING OFFICER OBSERVED THAT DURING THE FINANCIAL YEAR 2008-09 RELEVANT TO THE A .Y. 2009-10 THE ASSESSEE HAD SOLD IMMOVABLE PROPERTY AT SALE CONSID ERATION OF RS.46,00,000/- FOR VERIFICATION OF THE SAME CASE OF THE ASSESSEE WAS REOPENED FOR ASSESSMENT. A NOTICE U/S 148 OF THE A CT WAS ISSUED, IN RESPONSE THERETO; THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE APPEARED AND REQUESTED THAT THE ORIGINAL RETURN FIL ED MAY BE TREATED AS RETURN FILED IN RESPONSE TO THE NOTICE U/S148 OF THE ACT. ITA NO.741/IND/2018 SHRI PURSHOTTAM KHATRI, BHOPAL 3 THEREAFTER, THE ASSESSING OFFICE PROCEEDED TO MAKE ASSESSMENT. THE ASSESSING OFFICER OBSERVED THAT THE PROPERTY SOLD A LONG WITH THE OTHER CO-OWNERS THE CAPITAL GAIN ARISING THERE FROM PERTAIN TO THE ASSESSEE WAS RS.5,75,000/- AS AGAINST THE RS.1,50,0 07/- THE DIFFERENCE THEREOF AMOUNTING TO RS.4,22,993/- WAS A DDED TO THE INCOME OF THE ASSESSEE. 3. AGGRIEVED BY THIS THE ASSESSEE PREFERRED AN APPE AL BEFORE THE LD. CIT(A) WHO AFTER CONSIDERING THE SUBMISSIONS DISMIS SED THE APPEAL. 4. NOW, THE ASSESSEE IS IN PRESENT APPEAL. 5. GROUND NOS. 1 & 2 ARE AGAINST THE VALIDITY OF RE OPENING OF THE ASSESSMENT. 6. APROPOS GROUND NO.1 LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS AS MADE IN THE WRITTEN SUBMISSIONS. IT IS CONTENDED THAT AS PER THE AIR INFORMATION ASSESSEE HAD SOLD I MMOVABLE PROPERTY VALUED AT RS.30,00,000/- AND MORE DURING T HE A.Y. 2008- 09 FOR A.Y. 2009-10. IT IS A MATERIAL FACT THAT ASS ESSEE HAD REQUESTED THAT THE ORIGINAL RETURN FILED EARLIER MA Y BE TREATED AS FILED IN RESPONSE TO THE NOTICE U/S 148 OF THE ACT. ASSESSING OFFICER ACCEPTED THE FACT AND ISSUED NOTICE U/S143(2) OF TH E ACT. THIS FACT GOES TO ESTABLISH THAT THE BASIS OF ASSESSMENT U/S 147/143(3) OF THE ACT WAS THE ORIGINAL RETURN. HENCE IT IS PROVED THAT THE ORIGINAL RETURN IS NOT AN INVALID RETURN. IT IS CONTENDED TH AT THE DECISION OF THE LD. CIT(A) HOLDING THAT ORIGINAL RETURN WAS FIL ED TO WRONG AO IS CONTRARY TO THE DECISION OF HON'BLE HIGH COURT OF K ARNATAKA IN THE CASE OF CIT VS. TOPLINE CREDITS LTD. [2014] 42 TAXM ANN.COM 256. FURTHER RELIANCE WAS PLACED ON THE JUDGMENT OF THE HON'BLE HIGH ITA NO.741/IND/2018 SHRI PURSHOTTAM KHATRI, BHOPAL 4 COURT OF CALCUTTA RENDERED IN THE CASE OF MOHINDRA MOHAN SARKAR VS. ITO [1978] 112 ITR 47. 7. ON THE CONTRARY, LD. DR OPPOSED THE SUBMISSIONS AND SUPPORTED THE ORDER OF THE AUTHORITIES BELOW. LD. D.R. SUBMIT TED THAT THE FACTS OF THE PRESENT CASE ARE DISTINGUISHABLE FROM THE FA CTS OF THE JUDICIAL PRONOUNCEMENTS AS RELIED UPON BY THE ASSESSEE. 8. I HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIALS AVAILABLE ON RECORDS AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. IN THE GROUND NOS.1 & 2, THE ASSESSEE HAS C HALLENGED THE LEGALITY AND VALIDITY OF THE REOPENING OF THE ASSES SMENT ON THE GROUND THAT THE BASIS OF REOPENING OF THE ASSESSMEN T IS EX-FACIE ILLEGAL AND CONTRARY TO THE SETTLED POSITION OF LAW . HE SUBMITTED THAT THE REOPENING WAS MADE PURELY ON WRONG ASSUMPT ION OF FACTS THAT THE ASSESSEE DID NOT FILE HIS RETURN OF INCOME . HE SUBMITTED THAT THE ASSESSEE HAD IN FACT FILED THE RETURN OF I NCOME. HE FURTHER POINTED OUT THAT THE A.O. HIMSELF REASSESSED THE IN COME BY MAKING ADDITIONS INTO THE INCOME DISCLOSED IN THE ORIGINAL RETURN OF INCOME. THIS FACT ITSELF IS SUFFICIENT TO PROVE THAT REOPEN ING OF ASSESSMENT WAS PATENTLY ON WRONG APPRECIATION OF FACTS. FURTH ER, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE NOTICE DATED 18 .3.2016, WHICH WAS SERVED UPON THE ASSESSEE ON 1.4.2016 WAS NOT A VALID NOTICE AND BARRED BY LIMITATION AS PRESCRIBED U/S 149 OF T HE ACT. HE VEHEMENTLY ARGUED THAT UNDER THESE UNDISPUTED FACTS , THE LD. CIT(A) OUGHT NOT TO HAVE HELD THE NOTICE U/S 148 OF THE ACT AS A VALID NOTICE. I FIND THAT THE LD. CIT(A) HAS DECID ED BOTH THESE OBJECTIONS AGAINST THE ASSESSEE IN PARA NO.9.1, 10. 1, 10.3 AND 10.4. ITA NO.741/IND/2018 SHRI PURSHOTTAM KHATRI, BHOPAL 5 FOR THE SAKE OF CLARITY, THE FINDING OF THE LD. CIT (A) IS REPRODUCED AS UNDER: 9.1 IT IS OBSERVED THAT THE A.O. HAD RECEIVED INFOR MATION ABOUT THIS TRANSACTION THROUGH ANNUAL INFORMATION RETURN. THE A.O. ISSUED A LETTER TO THE APPELLANT FOR VERIFICATION O F THE SAID TRANSACTION. HOWEVER, THE APPELLANT DID NOT RESPON D TO THE A.O. IN THE CIRCUMSTANCES, THE A.O. WAS LEFT WITH NO ALTERN ATIVE BUT TO ISSUE NOTICE U/S 148 AFTER RECORDING OF REASONS. FURTHER , THE APPELLANT HAD FILED HIS RETURN WITH ITO-3(2), BHOPAL WHEREAS THE JURISDICTION OF THE CASE WAS WITH THE ITO-3(3), BHOPAL. THEREFORE, THE A.O. CANNOT BE SAID TO BE IN FAULT IN ISSUING NOTICE U/S 148. IN THE FACTS AND CIRCUMSTANCES, THE INFERENCE DRAWN BY THE A.O. THAT THE INCOME HAD ESCAPED ASSESSMENT WAS REASONABLE AND BASED ON TANG IBLE MATERIAL. THE CASE LAWS CITED BY THE APPELLANT ARE DISTINGUISHABLE ON FACTS. THE NOTICE U/S 148 IS THEREFORE, UPHELD. 10.1 THE APPELLANT HAS CLAIMED THAT NOTICE DATED 18 .3.2016 WAS RECEIVED BY HIM ON 1.4.2016 WHEREAS AS PER SECTION 149 THE NOTICE SHOULD HAVE BEEN SERVED BEFORE 31.3.2016. 10.2 SECTION 149 IS REPRODUCED BELOW: SECTION 149(1) NO NOTICE UNDER SECTION 148 SHALL B E ISSUED FOR THE RELEVANT ASSESSMENT YEAR; (A) IF FOUR YEARS HAVE ELAPSED FROM THE END OF THE RELE VANT ASSESSMENT YEAR, UNLESS THE CASE FALLS UNDER CLAUSE (B) [OR CLAUSE (C)] (B) IF FOUR YEARS, BUT NOT MORE THAN SIX YEARS, HAVE EL APSED FROM THE END OF THE RELEVANT ASSESSMENT YEAR UNLESS THE INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AMOU NTS TO OR IS LIKELY TO AMOUNT TO ONE LAKH RUPEES OR MORE F OR THAT YEAR; 10.3 FROM THE BARE READING OF THE SECTION 149, IT I S CLEAR THAT THE REQUIREMENT OF LAW APPLIED FOR ISSUE OF NOTICE AN D NOT TO THE SERVICE OF NOTICE. IT IS SETTLED LAW THAT THE WO RD ISSUED IN SECTION 149 SHOULD BE GIVEN ITS NATURAL MEANING AND NOT THE STRAINED WIDER MEANING OF SERVED. CONSEQUENTLY, WHERE THE NOTIC E WAS ISSUED WITHIN TIME BUT WAS SERVED ON THE ASSESSEE AFTER TH E EXPIRY OF THE TIME-LIMIT, IT COULD NOT BE HELD TO BE INVALID. RE LIANCE IN THIS REGARD IS PLACED ON DECISIONS IN THE CASES R.K. UPADHYAYA V. SHANABHAI P. PATEL (1987) 166 ITR 163 (SC); CIT VS. SHEO KUMARI DEBI (1986) 157 ITA NO.741/IND/2018 SHRI PURSHOTTAM KHATRI, BHOPAL 6 ITR 13 (PAT.) (FB) AND JAI HANUMAN TRADING CO. (P) LTD. V. CIT (1977) 110 ITR 36 (PUNJ. HAR.) (FB). 10.4 AS THE NOTICE WAS UNDISPUTEDLY ISSUED ON 18.3. 2016, THE NOTICE IS HELD TO BE LEGALLY VALID AND WITHIN THE T IME ALLOWED UNDER LAW. 9. THE A.O. REOPENED THE ASSESSMENT ON THE BASIS OF THE FOLLOWING REASONS:- AS PER AIR INFORMATION AVAILABLE IN THE CASE OF TH E ASSESSEE, SOLD IMMOVABLE PROPERTY VALUED AT RS.30,00,000 OR M ORE DURING THE F.Y. 2008-09 RELEVANT TO A.Y. 2009-10. THE ASSESSE E HAS NOT FILED HIS/HER RETURN OF INCOME FOR THE A.Y. 2009-10. ON THE VERIFICATION OF THE ABOVE TRANSACTION A LETTER ISSUED TO THE ASSESS EE ON 18.2.2016, BUT THE ASSESSEE HAS NOT GIVEN ANY WRITTEN SUBMISSI ON FOR THE ABOVE MENTIONED TRANSACTION. IN VIEW OF THE ABOVE FACTS, I HAVE THE REASON TO B ELIEVE THAT THE ASSESSEES INCOME AMOUNTING TO RS.46,00,000/- CHARG EABLE TO TAX FOR THE A.Y. 2009-10 HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 147 OF INCOME TAX ACT, 1961. 10. THE BASIS OF THE REOPENING FROM THE AFORESAID R EASONS IS THAT THE ASSESSEE ENTERED INTO A TRANSACTION OF SALE OF PROPERTY. ADMITTEDLY, THE ASSESSEE HAD FILED ITS RETURN OF IN COME IN A WRONG JURISDICTION. IT IS NOT THE CASE WHERE THE ASSESSM ENT IS REOPENED PURELY ON THE BASIS OF NON-FILING OF RETURN OF INCO ME. THE A.O. WAS HAVING INFORMATION REGARDING SALE OF IMMOVABLE PROP ERTY AT RS.30 LAKHS OR MORE. THEREFORE, IN MY CONSIDERED VIEW, T HE A.O. HAD A VALID REASON TO REOPEN THE ASSESSMENT. NOW COMING TO THE QUESTION OF LIMITATION, THE ASSESSEE HAS NOT BROUGHT TO MY N OTICE ANY CONTRARY BINDING PRECEDENT OTHER THAN THE JUDICIAL PRONOUNCEMENTS AS RELIED BY THE LD. CIT(A). I, THEREFORE, DO NOT SEE ANY REASON TO ITA NO.741/IND/2018 SHRI PURSHOTTAM KHATRI, BHOPAL 7 INTERFERE IN THE FINDING OF THE LD. CIT(A). SAME I S HEREBY AFFIRMED. GROUND NOS.1 & 2 ARE DISMISSED. 11. APROPOS TO GROUND NOS.3 TO 5, LD. COUNSEL FOR T HE ASSESSEE REITERATED THE SUBMISSIONS AS MADE IN THE WRITTEN S UBMISSIONS. 12. LD. D.R. OPPOSED THESE SUBMISSIONS AND SUPPORTE D THE ORDERS OF THE AUTHORITIES BELOW. 13. I HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE ASSESSEE HAS MADE FOLLOWING SUBMISSIONS : ITA NO.741/IND/2018 SHRI PURSHOTTAM KHATRI, BHOPAL 8 14. I HAVE CONSIDERED THE SUBMISSIONS OF THE ASSESS EE AND THE ORDERS OF THE AUTHORITIES BELOW. THE LD. CIT(A) DI SMISSED THE GROUNDS OF APPEAL BY OBSERVING AS UNDER: ITA NO.741/IND/2018 SHRI PURSHOTTAM KHATRI, BHOPAL 9 ITA NO.741/IND/2018 SHRI PURSHOTTAM KHATRI, BHOPAL 10 15. APROPOS TO ADOPTION OF STAMP VALUATION VALUE, I T WAS SUBMITTED BEFORE THE LD. CIT(A) THAT REPORT OF THE DEPARTMENTAL VALUATION OFFICER MAY BE SOUGHT AS THE ASSESSEE DIS PUTED THE ADOPTION OF STAMP VALUATION AUTHORITY. FURTHER, IT WAS CONTENDED THAT BENEFIT OF INDEXED COST OF LAND I.E. RS.1,30,4 93/- AND BROUGHT ITA NO.741/IND/2018 SHRI PURSHOTTAM KHATRI, BHOPAL 11 FORWARD LONG TERM CAPITAL LOSS OF RS.52,500/-. IT WAS STATED THAT PROPERTY WAS PURCHASED BY PURCHASE DEED DATED 25.9. 1992. IT IS STATED THAT THE FACTS WERE NOT CORRECTLY APPRECIATE D. THE PROPERTY WAS PURCHASED VIDE PURCHASE DEED DATED 25.9.1992. THIS FACT IS NOT CONTROVERTED BY THE REVENUE. I, THEREFORE, SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW ON THE ISSUE OF VALUATION AS WELL AS THE COMPUTATION OF INDEXED COST OF ACQUISITION TO THE F ILE OF THE A.O. TO DECIDE IT AFRESH. THE A.O. WOULD REFER THE ISSUE O F VALUATION TO THE DVO AND ALSO VERIFY THE CLAIM OF CORRECT INDEXATION . NEEDLESS TO SAY, A.O. WOULD AFFORD REASONABLE OPPORTUNITY TO TH E ASSESSEE. 16. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IN ITA NO.741/IND/2018 FOR THE A.Y. 2009-10 IS PARTLY ALLO WED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 05.08 .2019. SD/- (KUL BHARAT) JUDICIALMEMBER INDORE; DATED : 05/08/2019 V.G./SPS COPY TO: ASSESSEE/AO/PR. CIT/ CIT (A)/ITAT (DR)/GUAR D FILE. BY ORDER ASSISTANT REGISTRAR, INDORE