Shri Babubhai Kurjibhai Patel, Surat V. The Income Tax Officer, Surat

ITA 749/AHD/2014

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 2318 (ITAT-SURAT)
• Duration Of Justice: 4 year(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-04-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 06-03-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 13-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B P K
• Assessee Lawyers: MANALI JAIN
• Keywords: Opportunity of being heard; Principle of natural justice

Judgement Text

SHRI BABUBHAI KURJIBHAI PATEL V. ITO 2(3) SURAT /I.T.A. NO.749/AHD/2014/A.Y.:08-09 PAGE 1 OF 7 , , IN THE INCOME TAX APPELLATE TRIBUNAL SURAT BENCH, SURAT . . , . . , BEFORE SHRI C.M.GARG, JUDICIAL MEMBER AND SHRI O.P.MEENA, ACCOUNTANT MEMBER . . ./ I.T.A NO. 749/AHD/2014 / A.Y.:2008-09 SHRI BABUBHAI KU RJIBHAI PATEL, PARAMGURU PALACE, JASHUBHAI WADI, JAWAHAR NAGAR UMARWADA SURAT 395010 PAN: ABAPP0307Q V S . INCOME TAX OFFICER, WARD - 2(3) SURAT APPELLANT /RESPONDENT /ASSESSEE BY MS. MANALI JAIN, CA /REVENUE BY SHRI B. P. K. PANDA, SR. D.R. / DATE OF HEARING: 11.04.2018 /PRONOUNCEMENT ON 18.04.2018 /O R D E R PER O. P. MEENA, ACCOUTANT MEMBER: 1. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-II, SURAT [IN SHORT THE CIT(A)] DATED 05.12.2013 PERTAINING TO ASSESSMENT YEAR 2008-09, WHICH IN TURN HAS ARISEN FROM THE ORDER DATED 31.12.2010 PASSED BY THE DCIT CIRCLE -2, SURAT (IN SHORT SHRI BABUBHAI KURJIBHAI PATEL V. ITO 2(3) SURAT /I.T.A. NO.749/AHD/2014/A.Y.:08-09 PAGE 2 OF 7 THE AO ) UNDER SECTION 143 (3) OF INCOME TAX ACT,1961 ( IN SHORT THE ACT). 2. GROUND NO. 1 STATES THAT ON THE FACTS AND IN LAW, THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) GRIEVOUSLY ERRED REJECTING THE ASSESSEE GROUND REGARDING ISSUANCE OF DIRECTION U/S.144A. 3. SUCCINCTLY, FACTS AS CULLED OUT FROM THE ORDERS OF LOWER AUTHORITIES ARE THAT THE ASSESSEE IS EARNING INCOME FROM INTEREST, RENT AND OTHER SOURCE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ON THE BASIS OF AIR INFORMATION, IT WAS NOTICED THAT THE ASSESSEE WITH CO-OWNER M/S. BALAJI BUILDERS HAS SOLD AN IMMOVABLE PROPERTY FOR RS.4.23 CRORES IN WHICH ASSESSEE`S SHARE COMES TO 5.52% AS PER INVESTMENT OF RS. 11.50 LACS MADE BY HIM. HOWEVER, THE AO NOTICED THAT THE ASSESSEE HAS RECEIVED A SUM OF RS. 25 LAKHS AS SALE CONSIDERATION, HENCE, THE AO CONSIDERED THE SALE CONSIDERATION AT RS. 25 LAKH AS AGAINST THE SALE CONSIDERATION OF RS. 12 LAKH OFFERED BY THE ASSESSEE WHICH RESULTED IN ADDITION OF RS. 11.50 LAKHS. HOWEVER, DURING THE SHRI BABUBHAI KURJIBHAI PATEL V. ITO 2(3) SURAT /I.T.A. NO.749/AHD/2014/A.Y.:08-09 PAGE 3 OF 7 COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS MADE AN APPLICATION UNDER SECTION 144A DATED 13.12.2010 BEFORE THE JCIT/ADDL. CIT RANGE-2 (PAPER BOOK PAGE NO. 32). HOWEVER, THE ADDL. CIT RANGE-2 VIDE LETTER DATED 15.12.2010 ISSUED DIRECTION TO THE AO (PB-36 TO 37) WITHOUT AFFORDING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE ASSESSEE HAS CHALLENGED THIS BEFORE THE CIT (A) THAT THE ORDER PASSED WITHOUT GIVING ASSESSEE AN OPPORTUNITY OF BEING HEARD ON THE DIRECTION OF ADDL. CIT, IS BAD- IN-LAW. HOWEVER, THE CIT (A) WAS OF THE VIEW THAT THE ASSESSEE HAS NOT FILED COPY OF APPLICATION UNDER SECTION 144A WITH THE AO, THEREFORE, THE AO WAS NOT AWARE OF THE DIRECTION. THEREFORE, THE ASSESSMENT ORDER PASSED BY THE AO DOES NOT SUFFER ANY INFIRMITY, AS THE AO WAS NOT INFORMED BY THE APPELLANT. WITH REGARD TO OPPORTUNITY NOT BEING ALLOWED TO THE ASSESSEE BEFORE ISSUING DIRECTION, THE CIT (A) OPINIONED IT IS NOT SECTION 144A DOES NOT MAKE IT OBLIGATORY FOR JCIT/ ADDL. CIT TO AFFORD OPPORTUNITY OF SHRI BABUBHAI KURJIBHAI PATEL V. ITO 2(3) SURAT /I.T.A. NO.749/AHD/2014/A.Y.:08-09 PAGE 4 OF 7 BEING HEARD BEFORE ISSUING DIRECTION, AS THE WORD USED IN SECTION 144A IS MAY AND NOT SHALL. 4. BEING AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT (A). THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AO HAD PASSED AN ORDER WITHOUT MAKING ANY REFERENCE OF DIRECTION ISSUED UNDER SECTION 144A OF THE ACT, HENCE, ORDER SO PASSED IS BAD-IN-LAW. FURTHER, THE ADDL. CIT RANGE-2 SURAT HAD ERRED IN LAW IN GIVING OPPORTUNITY OF BEING HEARD AS REQUESTED BY THE ASSESSEE IN HIS REFERENCE APPLICATION MADE UNDER SECTION 144A OF THE ACT. THE ORDER PASSED BY THE AO IN VIOLATION OF PRINCIPLE OF NATURAL JUSTICE, DESERVE TO BE QUASHED. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO PLACED RELIANCE IN THE CASE OF ITO V. MISHRILAL GORDHANLAL [1986] 17 ITD 958(JP) WHEREIN IT WAS LAID DOWN THAT SECTION 144A CLEARLY PROVIDES THAT NO DIRECTION PREJUDICIAL TO THE ASSESSEE SHOULD BE ISSUED WITHOUT GIVING AN OPPORTUNITY OF BEING HEARD. THEREFORE, THE ORDER PASSED ON ILLEGAL DIRECTION WAS TO BE SET-ASIDE FROM THE STAGE FROM WHERE SHRI BABUBHAI KURJIBHAI PATEL V. ITO 2(3) SURAT /I.T.A. NO.749/AHD/2014/A.Y.:08-09 PAGE 5 OF 7 THE ILLEGALITY WAS CROPPED IN. THEREFORE, WE ARE URGED UPON TO SET-ASIDE THE CASE TO THE FILE OF THE AO AND THE ADDL. CIT, RANGE BE DIRECTED TO AFFORD AN OPPORTUNITY OF BEING HEARD BEFORE ISSUING DIRECTION. 5. PER CONTRA, THE LD. SR. DR SUBMITTED THAT THE ASSESSEE HAS NOT INFORMED THE AO ABOUT APPLICATION MADE FOR DIRECTION UNDER SECTION 144A NOR THE DIRECTION ISSUED BY THE ADDL. CIT ARE PREJUDICIAL TO THE ASSESSEE AS SAME WERE ISSUED WITH REFERENCE TO ENQUIRIES TO BE CONDUCTED. HENCE, ORDER OF CIT (A) IS IN ORDER. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE HAVE ALSO GONE THROUGH THE PROVISION OF SECTION 144A AND FIND THAT AS PER EXPLANATION TO SECTION 144A, NO DIRECTION SHOULD BE ISSUED WHICH ARE PREJUDICIAL TO THE ASSESSEE WITHOUT AFFORDING AN OPPORTUNITY OF BEING HEARD TO THE PARTY WHO HAS MADE AN APPLICATION UNDER SECTION 144A OF THE ACT. WE FIND THAT DIRECTION UNDER SECTION 144A WERE ISSUED BY THE ADDL. CIT, RANGE -2 SURAT, VIDE LETTER DATED 15.12.2010 SHRI BABUBHAI KURJIBHAI PATEL V. ITO 2(3) SURAT /I.T.A. NO.749/AHD/2014/A.Y.:08-09 PAGE 6 OF 7 AND THERE WAS SUFFICIENT TIME TO AFFORD OPPORTUNITY OF BEING HEARD AS THE ASSESSMENT WAS GETTING TIME BARRING BY 31.12.2010. THEREFORE, SUCH DIRECTION WHICH ARE PREJUDICIAL TO THE ASSESSEE, THE ADDL. CIT SHOULD HAVE AFFORDED AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE HAVE GONE THROUGH THE DIRECTION PLACED AT PAPER BOOK PAGE NO. 36-37 AND FIND THAT THE ADDL. CIT HAS DIRECTED THE AO TO CONDUCT THE ENQUIRIES OF SHARE HOLDING IN THE LAND TRANSACTION AND MAY ASCERTAINED AFTER GETTING DOCUMENT FROM M/S. BALAJI BUILDERS AND EXAMINED THE SOURCE OF PAYMENT OF RS. 11.50 LAKHS FOR PURCHASE OF PROPERTY. IN VIEW OF THESE FACTS AND CIRCUMSTANCES, WE ARE OF THE CONSIDERED OPINION THE ADDL. CIT, RANGE -2 SURAT HAS FAILED TO OBSERVE THE PROCEDURE AS LAID DOWN IN SECTION 144A READ WITH EXPLANATION THERETO. THEREFORE, WE DEEM IF FIT TO SET-ASIDE THE ASSESSMENT TO BE MADE DE-NOVA, AFRESH AFTER AFFORDING AN REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE BY THE AO AS WELL AS BY ADDL. CIT BEFORE ISSUING DIRECTION UNDER SECTION 144A OF THE ACT. SHRI BABUBHAI KURJIBHAI PATEL V. ITO 2(3) SURAT /I.T.A. NO.749/AHD/2014/A.Y.:08-09 PAGE 7 OF 7 7. SINCE WE HAVE SET-ASIDE THE ASSESSMENT ORDER TO BE AFRESH, HENCE, THE OTHER GROUND RELATED TO ADDITION OF RS. 12,93,089 SHORT-TERM CAPITAL GAINS IS NOT BEING ADJUDICATED AS THE SAME IS TO BE DECIDE AFRESH AFTER OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 8. IN THE RESULT, APPEAL IS SET-ASIDE FROM STATISTICAL PURPOSES. 9. THE ORDER PRONOUNCED IN THE OPEN COURT ON 18-04-2018. SD/ - ( . . ) SD/ - ( . . ) ( C.M. GARG) (O.P.MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER / SURAT: / DATED : APRIL, 2018/OPM COPY SENT TO- ASSESSEE/AO/PR. CIT/ CIT (A)/ ITAT (DR)/GUARD FILE OF ITAT. BY ORDER / / TRUE COPY / / ASSISTANT REGISTRAR, SURAT