ABDUL AZIZ LOKHANDWALA, MUMBAI V. ITO 5(1), MUMBAI

ITA 7658/MUM/2014

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8769 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 24-12-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR YADAV
• Keywords: Gift; Recovery proceedings; Opportunity of being heard; Cost of acquisition; Tangible material; Difference of opinion; Reason to believe; Change of opinion
• Section: 147; 145; 148; 6; 154; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A , MUMBAI BEFORE S HRI G.S. PANNU (AM) AND SHRI RAM LAL NEGI (JM) ITA NO. 7658 /MUM/20 1 4 ASSESSMENT YEAR: 2009 - 20 10 & ITA NO. 7659 /MUM/201 4 ASSESSMENT YEAR: 2009 - 2010 SHRI ABDUL AZIZ LOKHANDWALA, B - 210 2, LADY RATAN TOWER, DAINIK SHIVNER ROAD, GANDHI NAGAR, WORLI, MUMBAI 400018 PAN: AABPL6611P VS. THE ITO 5 (1) (1), AAYKAR BHAVAN, 5 TH FLOOR, ROOM NO. 570, MAHARSHI KARVE ROAD, MUMBAI - 400020 (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE REVENUE BY : SHRI RAJESH KUMAR YADAV (DR) DATE OF HEARING: 26/10 /201 7 DATE OF PRONOUNCEMENT: 31 / 10 /201 7 O R D E R PER RAM LAL NEGI, JM THESE APPEAL S HAVE BEE N FILED BY THE ASSESSEE AGAINS T TWO ORDER S DATED 01/09/2014 PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 9 , MUMBAI , FOR THE ASSESSMENT YEAR 2009 - 10 , WHEREBY THE LD. CIT (A) HAS DISMISSED THE APPEAL FILED BY THE ASSESSEE AGAINST ASSESSMENT ORDER PASSED U/ S 143 (3) READ WITH SE CTION 147 AND ORDER PASSED U/S 154 OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT) , RESPECTIVELY. SINCE, BOTH THESE CASES PERTAIN TO THE SAME ASSESSEE FOR THE ASSESSMENT YEAR 2009 - 10, BOTH THE APPEALS WERE CLUBBED FOR THE PURPOSE OF HEARING 2 ITA NO S . 7658 & 7659/MUM/2014 ASSESSMENT YEAR S 2009 - 2010 TOGETHER AN D ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE . ITA NO. 7658/MUM/2014 (ASSESSMENT YEAR: 2009 - 2010 ) BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE AN INDIVIDUAL FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2009 - 10 DECLARING THE TOTAL INCOME OF RS. 4,71,900/ - . THE RETURN WAS PROCESSED U/S 143 (1) OF THE ACT. LATER ON, THE CASE WAS SELECTED FOR SCRUTINY AND ACCORDINGLY NOTICE U/S 143 (2) AND 142 (1) OF THE ACT WERE ISSUED. THE ASSESSEE HAD PURCHASED IMMOVABLE PROPERTY I.E. LA ND MEASURING 600 SQ. YARDS FOR A TOTAL COST OF RS. 1,23,000/ - . THE ASSESSEE ON BEHALF OF THE COMPANY RAKHI ISPAT ALLOYS LTD. APPROACHED CENTRAL BANK OF INDIA FOR A LOAN OF RS. 2,52,00,000/ - . THE BANK GRANTED LOAN OF RS. 2,52,00,000/ - AGAINST THE EQUITABLE MORTGAGE OF THE SAID PROPERTY IN THE NAME OF THE ASSESSEE. SINCE , THE ASSESSEE FAILED TO REPAY THE LOAN AS PER THE TERMS AND CONDITIONS OF THE BANK , THE BANK STARTED RECOVERY PROCEEDINGS AND ACCORDINGLY THE DEBT RECOVERY TRIBUNAL (DRT) PASSED AN ORDER ENA BLING THE RECOVERY OFFICER TO REALIZE THE AMOUNT UNDER T HE PROVISIONS OF THE LAW . 2. T HE CENTRAL BANK OF INDIA VIDE LETTER DATED 27/10/2008 ASKED THE ASSESSEE TO HANDOVER THE POSSESSION OF THE PROPERTY. WHEN THE RECOVERY PROCEEDINGS WERE GOING ON THE ASS ESSEE MADE A GIFT OF THE MORTGAGE PROPERTY IN FAVOUR OF HIS MOTHER SMT. FATIMA ABDUL MAJ ID . AS PER THE ANNUAL INFORMATION REPORT THE GIFT DEED WAS REGISTERED AT THE VALUE OF RS. 72,27,000/ - . THE ASSESSEE WAS ACCORDINGLY ASKED TO PROVIDE THE DETAIL AND EXP LAIN THE SAME . H OWEVER, THE ASSESSEE EXPRESSES HIS I NABILITY TO PROVIDE ANY DETAIL . 3. IN RESPONSE TO THE NOTICE U/S 133 (6) OF THE ACT, THE CENTRAL BANK OF INDIA FURNISHED THE DETAILS. FROM THE SAID DETAILS IT REVEALED THAT THE GIFT DEED WAS HELD VOID AB INITIO BY THE DRT. THE ASSESSEE WAS AGAIN ASKED TO FURNISH THE 3 ITA NO S . 7658 & 7659/MUM/2014 ASSESSMENT YEAR S 2009 - 2010 DETAILS BUT THE ASSESSEE NEITHER APPEARED NOR FILED ANY EXPLANATION . ACCORDINGLY, THE AO REJECTED THE ASSESSEES CLAIM OF DEDUCTION UNDER CHAPTER VIA AND SET OFF THE LOSSES CLAIMED IN T HE RETURN OF INCOME AND ASSESSE D THE INCOME OF THE ASSESSEE AT RS. 5,87,900/ - . 4. THE ASSESSEE CHALLENGED THE ASSESSMENT ORDER BEFORE THE LD. CIT (A). THE LD. CIT (A). THE LD. CIT(A) AFTER HEARING THE ASSESSEE DISMISSED THE APPEAL OF THE ASSESSEE. THE ASSE SSEE HAS PREFERRED THIS APPEAL AGAINST THE IMPUGNED ORDER PASSED BY THE LD. CIT(A). 5. THE ASSESSEE HAS RAISED THE FOLLOWING EFFECTIVE GROUND S OF APPEAL AGAINST THE IMPUGNED ORDER PASSED BY THE LD. CIT (A): - A) THE LD. CIT APPEALS HAS ERRED IN LAW AND IN F ACTS THAT THIS MATERIAL FACTS WHICH HAS BEEN RELIED UPON BY THE LD. A.O. WAS ALREADY DISCLOSED AND GONE TO THE ASSESSING OFFICER IN THE LAST ASSESSMENT YEAR I.E. 2009 - 10. B) THE LD. CIT APPEALS HAS ERRED IN LAW AND IN FACTS AND HAS NOT BROUGHT ANY TANGIBLE M ATERIAL ON RECORD TO DO THE RE - ASSESSMENT U/S 147 & 148 OF THE I.T. ACT, 1961. C) THE LD. CIT APPEALS HAS ERRED IN LAW AND IN FACTS THAT THE LD. A.O. WAS WELL AWARE OF THIS MATERIAL FACTS LAST YEAR AND HAS NOT BROUGHT IT TO TAX DURING THE LAST A.Y. THIS TANT AMOUNT TO THE CHANGE OF OPINION ONLY AND THIS CANNOT BE GROUND FOR OPENING FOR RE - OPENING THE ASSESSMENT. D) THE LD. CIT APPEALS HAS ERRED IN LAW AND IN FACTS AND HAS NOT PASSED THE JUDICIAL REASONED ORDER BY A.O. E) THE LD. CIT APPEALS HAS ERRED IN IN LAW AN D IN FACTS THAT THE SAID TRANSFER DOES NOT COME UNDER THE DEFINITION OF TRANSFER U/S 2 (47) OF THE INCOME TAX ACT. 4 ITA NO S . 7658 & 7659/MUM/2014 ASSESSMENT YEAR S 2009 - 2010 F) THE LD. CIT APPEALS HAS ERRED IN LAW AND IN FACTS THAT IT WAS THE TRANSFER TO COURT ACTION THE RECIPIENT OF THE CONSIDERATION IS THE CENTRAL BANK OF INDIA AND IT IS NOT THE ACT OF THE PARTIES AND THE TRANSFER IS BY THE OPERATION OF THE LAW AS DEFINED U/S 2 (D) OF THE TRANSFER OF THE PROPERTY ACT. G) THE LD. CIT APPEALS HAS ERRED IN LAW AND IN FACTS AFTER RECEIPT OF THE REASONS BY THE APPELLANT H AS RAISED FRESH OBJECTIONS WHICH IS NOT BEEN ANSWERED BY THE LD. A.O. THUS THE MANDATORY PROVISIONS OF SECTION 147 & 148 IS NOT SATISFIED. RELIEF CLAIM: A) THE IMPUGNED ORDER DATED 05.03.2013 MAY PLEASE BE SET ASIDE AND THE ADDITIONS MADE FOR LONG TERM CA PITAL GAIN FOR RS. 2,32,22,640/ - U/S 45 R/W/S 143 (3) AND 147. B) PENDING THE HEARING AND FINAL DISPOSAL OF THIS APPEAL. STAY ORDER MAY PLEASE BE GRANTED ON THE RECOVERY PROCEEDINGS ARISING OUT OF THE IMPUGNED ORDER OF THE LD. CIT APPEALS. C) AD - INTERIM RELIE FS SO AS TO PRAYER 1 & 2 AS STATED ABOVE. D) ANY OTHER RELIEFS SO AS TO THE FACTS THE CIRCUMSTANCES THE CASE IS CONCERNED. YOUR APPELLANT DISPUTES THE COMPLETE TAX LIABILITY AS DETERMINED IN HIS ASSESSMENT ORDER AND NOTHING IS BEEN ADMITTED. 6. THIS CASE WAS FIXED FOR HEARING ON 26.10.2017. HOWEVER, WHEN THE CASE WAS CALLED FOR HEARING, NONE APPEARED ON BEHALF OF THE ASSESSEE. WE NOTICED THAT FOR THE LAST THREE SUCCESSIVE HEARINGS THIS CASE HAS BEEN ADJOURNED EITHER AT THE REQUEST OF THE ASSESSEE OR DUE T O NON APPEARANCE OF THE ASSESSEE. FROM THE CONDUCT OF THE ASSESSEE WE ARE SATISFIED THAT THE APPELLANT/ASSESSEE IS NO LONGER INTERESTED IN PURSUING ITS APPEAL. HENCE, WE DECIDED TO PROCEED FURTHER 5 ITA NO S . 7658 & 7659/MUM/2014 ASSESSMENT YEAR S 2009 - 2010 TO DISPOSE OF THESE APPEALS ON THE BASIS OF MATERIAL ON REC ORD, AFTER HEARING THE DEPARTMENTAL REPRESENTATIVE (DR). 7. THE LD. DR RELYING ON THE CONCURRENT FINDINGS OF THE AUTHORITY BELOW SUBMITTED THAT THE ORDER PASSED BY THE LD. CIT(A) DOES NOT SUFFER FROM ANY INFIRMITY TO INTERFERE WITH. THE ASSESSEE WAS GIVEN SUFFICIENT OPPORTUNITY TO SUBSTANTIATE HIS CLAIM AND DESPITE THAT THE ASSESSEE FAILED TO JUSTIFY HIS CLAIM. SINCE, THE ORDER UNDER CHALLENGE IS IN ACCORDANCE WITH THE LAW LAID DOWN BY THE HONBLE SUPREME COURT, THERE IS NO MERIT IN THE APPEAL OF THE ASSES SEE. HENCE, THE SAME IS LIABLE TO BE DISMISSED. 8. WE HAVE PERUSED THE ORDERS PASSED BY THE AUTHORITIES BELOW AND ALSO GONE THROUGH THE CASES RELIED UPON BY THE LD. CIT(A). THE ASSESSEE HAS CHALLENGED ORDER OF THE LD. CIT(A) ON THE GROUND THAT THE REOPENI NG OF ASSESSMENT IS BAD IN LAW AND THE C IT (A) HAS WRONGLY UPHELD THE ACTION OF THE AO IN COMPUTING THE CAPITAL GAIN IN THE HANDS OF THE ASSESSEE. SO FAR AS THE FIRST ISSUE IS CONCERNED WE NOTICE THAT THE LD. CIT(A) HAS UPHELD THE ACTION OF THE AO ON THE GR OUND THE AFTER RECEIVING INFORMATION FROM THE CENTRAL BANK OF INDIA THAT THE APPELLANTS PROPERTY WHICH WAS MORTGAGED WITH THE BANK HAD BEEN SOLD IN AUCTION DURING THE FINANCIAL YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION, THE AO HAD REASON TO BELIEVE THAT TAXABLE INCOME HAS ESCAPED ASSESSMENT. SINCE, THE AO HAD REASON TO BELIEVE THAT TAXABLE INCOME HAS ESCAPED ASSESSMENT THE AO HAS RIGHTLY REOPENED THE ASSESSMENT AFTER RECORDING THE REASONS. SO WE DO NOT FIND ANY INFIRMITY IN THE FINDINGS OF T HE LD CIT(A) TO INTERFERE WITH THE SAME. WE, THEREFORE, UPHOLD THE FINDINGS OF THE LD. CIT(A) AND DISMISS THIS ISSUE RAISED BY THE ASSESSEE . 9. THE SECOND ISSUE INVOLVED IN THIS CASE IS REGARDING TAXABILITY OF CAPITAL GAINS ON THE SALE OF ASSESSEES PROPE RTY. THE ISSUES BEFORE THE LD. CIT(A) FOR ADJUDICATION WERE WHETHER SALE BY AUCTION OF THE PROPERTY OF THE ASSESSEE BY 6 ITA NO S . 7658 & 7659/MUM/2014 ASSESSMENT YEAR S 2009 - 2010 THE BANK IS A TRANSFER TO ATTRACT THE PROVISIONS OF THE CAPITAL GAINS AND WHETHER THE ASSESSEE IS ENTITLED FOR DEDUCTION OF THE LIABILITY OF THE BANK LOAN AGAINST WHICH THE PROPERTY WAS MORTGAGED. THE LD. CIT(A) HAS REJECTED THE CONTENTION OF THE ASSESSEE AND HELD THAT THE ASSESSEE IS THE REAL OWNER OF THE PROPERTY SOLD BY THE BANK, THEREFORE THE ASSESSEE IS LIABLE TO PAY TAX ON THE CAPITAL GAINS ON TRANSFER OF THE SAME. SINCE, THE ASSESSEE HAD FAILED TO REPAY THE LOAN, RECOVERY PROCEEDINGS WERE INITIATED AND THE PROPERTY IN QUESTION WAS SOLD TO RECOVER THE LOAN AMOUNT DUE FROM THE ASSESSEE. HENCE IN OUR CONSIDERED OPINION THE LD CIT(A) HAS RIGHTLY UPHELD THE FINDINGS OF THE AO. SO FAR AS THE ALTERNATIVE CLAIM OF THE ASSESSEE REGARDING DEDUCTION OF LOAN LIABILITY IS CONCERNED THE LD. CIT(A) HAS HELD THAT THE ASSESSEE IS ONLY ENTITLED TO INDEXATION COST OF ACQUISITION AND IMPROVEMENT IF ANY. A S POINTED OUT BY THE LD. CIT(A), AO HAS WORKED OUT THE QUANTUM OF CAPITAL GAINS BY ALLOWING THE STATUTORY DEDUCTIONS. WE FURTHER NOTICE THAT THE LD. CIT(A) HAS RELIED UPON THE JUDGMENT OF HONBLE SUPREME COURT DELIVERED IN CIT VS. ATTILI N. RAO, 252 ITR 88 0. . HENCE, IN OUR CONSIDERED OPINION, THERE IS NO INFIRMITY IN THE ORDER OF THE LD. CIT (A). WE THEREFORE, UPHOLD THE FINDINGS OF THE LD. CIT (A) ON THIS ISSUE. ITA NO. 7659/MUM/2014 (ASSE SSMENT Y EAR: 2009 - 20 10 ) SINCE, THE ASSESSEE HAD FILED APPLICATION U/S 145 OF THE ACT AGAINS T THE SAME ASSESSMENT ORDER I.E. FOR THE ASSESSMENT YEAR 2009 - 10, WE DO NOT CONSIDER IT NECESSARY TO REPEAT THE FACTS OF THE CASE AGAIN IN THIS CASE. THE ASSESSEE HAS RAISED THE FOLLOWING EFFECTIVE GROUNDS OF APPEAL AGAINST THE I MPUGNED ORDER PASSED BY THE LD. CIT (A): - A) THE LD. CIT APPEALS HAS ERRED IN LAW AND IN FACTS THAT NEITHER THE NOTICE WAS ISSUED NOR OPPORTUNITY OF BEING HEARD WAS PROVIDED. 7 ITA NO S . 7658 & 7659/MUM/2014 ASSESSMENT YEAR S 2009 - 2010 B) THE LD. CIT APPEALS HAS ERRED IN LAW AND IN FACTS THAT THIS MATERIAL FACTS WHICH HAS BEEN RELIED UPON BY THE LD. A.O. WAS ALREADY DISCLOSED AND GONE TO THE ASSESSING OFFICER IN THE LAST ASSESSMENT YEAR I.E. 2009 - 10. C) THE LD. CIT APPEALS HAS ERRED IN LAW AND IN FACTS AND HAS NOT BROUGHT ANY TANGIBLE MATERIAL ON RECORD TO DO THE RE - ASSES SMENT U/S 147 & 148 OF THE I.T. ACT, 1961. D) THE LD. CIT APPEALS HAS ERRED IN LAW AND IN FACTS THAT THE LD. A.O. WAS WELL AWARE OF THIS MATERIAL FACTS LAST YEAR AND HAS NOT BROUGHT IT TO TAX DURING THE LAST A.Y. AND HAS BROUGHT TO TAX DURING THIS A.Y. THIS TANTAMOUNT TO THE CHANGE OF OPINION ONLY AND THIS CANNOT BE GROUND FOR OPENING FOR RE - OPENING THE ASSESSMENT. E) THE LD. CIT APPEALS HAS ERRED IN IN LAW AND IN FACTS AND HAS NOT PASSED THE JUDICIAL REASONED ORDER BY A.O. F) THE LD. CIT APPEALS HAS ERRED IN LAW AND IN FACTS THAT THE SAID TRANSFER DOES NOT COME UNDER THE DEFINITION OF TRANSFER U/S 2 (47) OF THE INCOME TAX ACT. G) THE LD. CIT APPEALS HAS ERRED IN LAW AND IN FACTS THAT IT WAS THE TRANSFER TO COURT ACTION THE RECEIPIENT OF THE CONSIDERATION IS THE CEN TRAL BANK OF INDIA AND IT IS NOT THE ACT OF THE PARTIES AND THE TRANSFER IS BY THE OPERATION OF THE LAW AS DEFINED U/S 2 (D) OF THE TRANSFER OF THE PROPERTY ACT. H) THE LD. CIT APPEALS HAS ERRED IN LAW AND IN FACTS AFTER RECEIPT OF THE REASON BY THE APPELLA NT HAS RAISED FRESH OBJECTIONS WHICH IS NOT BEEN ANSWERED BY THE LD. A.O. THUS THE MANDATORY PROVISIONS OF SECTION 147 & 148 IS NOT SATISFIED. RELIEF CLAIM: 8 ITA NO S . 7658 & 7659/MUM/2014 ASSESSMENT YEAR S 2009 - 2010 E) THE IMPUGNED ORDER DATED 05.03.2013 MAY PLEASE BE SET ASIDE AND THE ADDITIONS MADE FOR LONG TER M CAPITAL GAIN FOR RS. 2,32,22,640/ - U/S 45 R/W/S 143 (3) AND 147. F) PENDING THE HEARING AND FINAL DISPOSAL OF THIS APPEAL. STAY ORDER MAY PLEASE BE GRANTED ON THE RECOVERY PROCEEDINGS ARISING OUT OF THE IMPUGNED ORDER OF THE LD. CIT APPEALS. G) AD - INTERIM R ELIEFS SO AS TO PRAYER 1 & 2 AS STATED ABOVE. H) ANY OTHER RELIEFS SO AS TO THE FACTS THE CIRCUMSTANCES THE CASE IS CONCERNED. YOUR APPELLANT DISPUTES THE COMPLETE TAX LIABILITY AS DETERMINED IN HIS ASSESSMENT ORDER AND NOTHING IS BEEN ADMITTED. 2. BEFOR E US, THE LD. DR SUBMITTED THAT SINCE THE LD. CIT (A) HAS DISMISSED THE ISSUE PERTAINING TO ADDITION OF RS. 2,32,22,640/ - ON MERITS. T HE LD. CIT (A) HAS RIGHTLY DISMISSED THE APPEAL FILED BY THE ASSESSEE AS INFRUCTUOUS. . HENCE, THERE IS NO MERIT IN THE APP EAL OF THE ASSESSEE. 3. WE HAVE HEARD THE LD. DR AND ALSO GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE ASSESSEE HAS CHALLENGED THE ASSESSMENT ORDER BEFORE THE LD. CIT (A) AND ALSO FILED AN APPEAL AGAINST DISMISSAL OF RECTIFICATION APPLICATION BY THE AO . THE LD. CIT (A) HAS POINTED OUT THAT SINCE ALL THE ISSUES INCLUDING THE ISSUE RAISED IN THIS APPEAL HAS BEEN DECIDED ON MERIT S IN THE APPEAL FILED AGAINST THE ASSESSMENT ORDER, T HE APPEAL AGAINST THE ORDER PASSED U/S 154 HAS BECOME INFRUCTUOUS. 4. SINCE, WE HAVE ALSO DEALT WITH THE ISSUE INVOLVED IN THE PRESENT APPEAL IN THE ASSESSEES APPEAL ITA NO 7658/MUM/2014 FILED AGAINST THE ASSESSMENT ORDER AND DECIDED THE ISSUE AGAINST THE ASSESSEE AND IN 9 ITA NO S . 7658 & 7659/MUM/2014 ASSESSMENT YEAR S 2009 - 2010 FAVOUR OF THE REVENUE, THE PRESENT APPEAL OF THE A SSESSEE HAS BECOME INFRUCTUOUS. HENCE, WE DISMISS THIS APPEAL AS INFRUCTUOUS. IN THE RESULT, BOTH THE APPEALS FILED BY THE ASSESSEE FOR ASSESSMENT YEAR 2009 - 10 ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST . OCTOBER , 2017 . SD/ - SD/ - ( G.S. PANNU ) ( RAM LAL NEGI ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; DATED: 31 / 10 / 2017 ALINDRA PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4 . / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI