Pushpa Aggarwal, V. ITO, Ward 25(3),

ITA 767/DEL/2007

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 53354 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 9 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 19-09-2011
• Assessment Year: 1997-1998
• Appeal Filed On: 13-02-2007
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PRATIMA KAUSHIK
• Assessee Lawyers: K P GARG
• Keywords: Reopening of assessment; Unexplained investment; Capital asset; Share purchase agreement; Opportunity of being heard; Principle of natural justice; Retrospective amendment; Additional evidence; Cost of acquisition; Corroborative evidences; Accommodation entries; Onus to prove
• Section: 143(3); 54F; 234B; 133(6); 147; 148; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH F NEW DELHI) BEFORE SHRI U.B.S. BEDI, JUDICIAL MEMBER AND SHRI B.K. HALDAR, ACCOUNTANT MEMBER I.T.A. NO.767/DEL/2007 ASSESSMENT YEAR : 1997-98 SMT. PUSHPA AGARWAL, ITO, 3/167, SUNDER VIHAR, WARD-25 (3), NEW DELHI. V. NEW DELHI. (APPELLANT) (RESPONDENT) PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO.AACPA AACPA AACPA AACPA- -- -1755 1755 1755 1755- -- -A AA A APPELLANT BY : SHRI K.P. GARG, C.A. RESPONDENT BY : SMT. PRATIMA KAUSHIK,. SR. DR. ORDER PER B.K. HALDAR, AM: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD CIT(A)-XXIV, NEW DELHI DATED 13.11.2006 FOR ASSESSMENT YEAR 1997- 98 ON AN ORDER PASSED BY THE AL U/S 143(3)/147 OF THE INCOME TAX ACT, 1961. THE ASSESSEE HAS TAKEN FOLLOWING GROUNDS OF APPEALS: - 1. THE ORDER PASSED BY THE ASSESSING OFFICER U/S 143(3) /1 47 OF THE INCOME TAX ACT, 1961 IS BAD IN LAW AND ON FACTS BEYOND JURISDICTION, ILLEGAL AND VOID AB INITIO. 1.1.THAT NO NOTICE U/S 148 OF THE IT ACT, 1961 HAVIN G BEEN SERVED ON THE ASSESSEE BEFORE COMPLETION OF ASSESSMENT U/S 147, THE ASSESSMENT IS NULL AND VOID FOR LACK OF NECESSARY JURISDICT ION. ITA NO767/DEL/07 2 1.2.THAT ASSESSING OFFICER ERRED ON FACTS AND IN LAW IN INITIATING THE PROCEEDINGS U/S 147 SOLELY ON THE BASIS OF INFORMATI ON GIVEN BY DY. DIRECTOR OF INCOME TAX (INV.) GURGAON AND TH E REASONS RECORDED FOR INITIATING THE PROCEEDINGS ARE NOT BASE D ON EVIDENCE BUT ON MERE SUSPICION. 2.THE LD CIT(A)-XXIX, NEW DELHI ERRED ON FACTS AND C IRCUMSTANCES OF THE CASE AND IN LAW IN HOLDING THAT SERVICE OF NO TICE BY AFFIXTURE IS A VALID SERVICE WITHOUT SATISFYING THE PRIMARY CONDI TIONS PRECEDENT THERETO. 3.THE LD CIT(A)ERRED ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, IN COMPLETING THE ASSESSMENT U/S 147/143(3) BY DISALLOWING EXEMPTION U/S 54F CONTRARY TO THE FACTS OF THE CASE AS VERIFIED AND CONFIRMED BY THE ASSESSING OFFICER. 4.THE LD CIT(A) ERRED ON FACTS AND CIRCUMSTANCES OF TH E CASE IN LAW IN COMPLETING THE ASSESSMENT U/S 147/143(3) BY DISALL OWING EXEMPTION U/S 54F CONTRARY TO THE FACT THAT SUCH ACT ION DOES NOT HAVE ANY LIVE OR DIRECT NEXUS WITH THE INFORMATION I N POSSESSION OF THE ASSESSING OFFICER, THE VERY BASIS ON WHICH THE PRIMAR Y REOPENING WAS UNDERTAKEN. 5.WITHOUT PREJUDICE TO OUR MAIN CONTENTION ABOVE, I NTEREST U/S 234B, IF ANY OUGHT TO BE CHARGED UPTO THE DATE OF D ETERMINATION OF TOTAL INCOME U/S 143(1). 2. THE ASSESSEE FURNISHED RETURN OF INCOME FOR ASSESSMENT YE AR 1997-98 DISCLOSING TOTAL INCOME OF `.56,400/- ON 30.3 .1998. SUBSEQUENTLY, INFORMATION WAS RECEIVED FROM DEPUTY DI RECTOR OF INCOME TAX (INV.), GURGAON THAT POST SEARCH ENQUIRY IN THE CASE OF M/S R.K. AGARWAL & CO. REVEALED THAT THE ASSESSEE RECEIVED ACCOMMODATION ENTRY AMOUNTING TO `.1,71,587/- PLUS ` .1,50,000/- FROM THE SAID PARTY DURING THE RELEVANT PREVIOUS YEAR. IT WAS FURTHER NOTED ITA NO767/DEL/07 3 THAT THE ACCOMMODATION ENTRIES WERE DISCLOSED BY THE A SSESSEE AS TRANSACTION RELATING TO PURCHASE AND SALE OF SHARES GIV ING RISE TO LONG TERM CAPITAL GAIN. ON SUCH LONG TERM CAPITAL GAIN, THE ASSESSEE CLAIMED EXEMPTION U/S 54F OF THE ACT. THE ASSESSING OFF ICER, THEREFORE, ISSUED NOTICE U/.S 148 OF THE ACT AFTER HOL DING THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. SUCH NOTICE WA S ISSUED BY REGISTERED POST ON 8.9.2003. THE SAID NOTICE CAME BACK WITH THE POSTAL REMARKS LEFT WITHOUT ADDRESS. THE NOTICE U/S 148 WAS SE RVED BY AFFIXTURE ON 1.10.2003. THE ASSESSEE VIDE LETTER DATED 28.2.2004 CONTENDED THAT THE RETURN FILED VIDE RECEIPT NO.439 9 DATED 31.3.1998 MAY BE CONSIDERED AS THE RETURN FILED IN COMPLIANCE T O NOTICE U/S 148 OF THE ACT. 3. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE VIDE LETT ER DATED 28.9.2004 CONTENDED THAT THE NOTICE ISSUED U/S 1 48 WAS BEYOND THE STIPULATED TIME. THE ABOVE CONTENTION OF THE AS SESSEE WAS REJECTED BY THE ASSESSING OFFICER AS SUCH NOTICE COULD BE ISSUED WITHIN SIX YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR I. E. TILL 31.3.2004. 4. AS REGARDS THE TRANSACTIONS WHICH WERE SHOWN BY THE A SSESSEE ON ACCOUNT OF SALE AND PURCHASE OF SHARES BUT REPORTED AS ACCOMMODATION ENTRIES BY INV. WING, THE ASSESSING OFFICE R REQUIRED THE ASSESSEE TO FURNISH THE FOLLOWING DETAILS:- 1. NATURE OF TRANSACTIONS WITH M/S RK AGARWAL & CO. PROP. SHRI SATISH GOYAL, 1748/55, NAIWALA KAROL BAGH, NEW DELHI AGAINST WHICH CHEQUE DRAFT BEARING NO.926217 AMOUNTING TO ` . 321587/- WERE RECEIVED BY YOU. ITA NO767/DEL/07 4 2. DATE WISE BREAK UP OF INVESTMENT IN SHARE IN SOURCES OF PURCHASE OF SHARE WITH DOCUMENTARY EVIDENCE. 3. EVIDENCE REGARDING RATE OF SHARE PURCHASE BY YOU DURI NG THE PERIOD. 4. CONFIRMATION FROM THE COMPANY ALONG WITH COPY OF AC COUNT SHOWING TRANSFER OF SHARE IN YOUR NAME. 5. EVIDENCE REGARDING RATE OF SHARE SOLD BY YOU DURING T HE PERIOD. 6. CONFIRMATION FROM M/S R.K. AGGARWAL & CO. PROP. SHRI SATISH GOYAL, 1748/55, NAIWALA, KAROL BAGH, NEW DELHI REGA RDING NATURE OF TRANSACTION ALONG WITH COPY OF ACCOUNT. 7. DETAILS OF TOTAL AMOUNTS INVESTED IN SHARE, TOTAL VALU E OF SHARE SOLD BY YOU PROFIT EARNED ON ACCOUNT OF TRANSACTION O F SHARE AND BREAK UP OF UTILIZATION OF TOTAL RECEIPT FROM SALE O F ALONG WITH DOCUMENTARY EVIDENCE. 5. THOUGH VARIOUS OPPORTUNITIES WERE ALLOWED BY THE A SSESSING OFFICER, THE ASSESSEE DID NOT FURNISH ANY DETAILS OTHER T HAN THE DETAIL OF SALE OF SHARES THROUGH M/S RK AGARWAL & CO. IN THE ABOV E CIRCUMSTANCES, THE AMOUNT OF CAPITAL GAIN WHICH WAS SHO WN AS `.3,21,587/- BY THE ASSESSEE AND CLAIMED TO HAVE BEEN I NVESTED IN CONSTRUCTION OF HOUSE PROPERTY WAS ADDED BY THE ASSESSING OFFICER AS UNEXPLAINED INVESTMENT. THE CLAIM OF EXEMPTION U/S 54 F OF THE ACT WAS ALSO NOT ALLOWED. AGGRIEVED, THE ASSESSEE FILED APPE AL BEFORE THE LD CIT(A). 6. BEFORE THE LD CIT(A), THE ASSESSEE CHALLENGED BOTH T HE VALIDITY OF THE OPENING OF ASSESSMENT AS WELL AS THE ADDITION OF `.3 ,21,587/- ON MERIT. ITA NO767/DEL/07 5 7. WITH REFERENCE TO THE ISSUE OF REOPENING OF ASSESSMENT , THE ASSESSEE CONSIDERED AS UNDER:- 1. THE NOTICE US 148 OF THE IT ACT WAS SENT TO 1A-1B/3A , LIG FLATS,. PACHIM VIHAR, NEW DELHI. THIS PREMISES OF THE ASSESSEE WAS ON RENT. THE CHANGED ADDRESS OF THE ASSESSEE WAS 3/167, SUND ER VIHAR, NEW DELHI-110087. THE RETURN FOR ASSESSMENT YEA R 1997- 98 ONWARDS WERE FILED MENTIONING ABOVE ADDRESS ONLY. THE ASSESSING OFFICER, THEREFORE, SENT NOTICE U/S 148 OF THE ACT TO THE WRONG ADDRESS. THE SAME WAS ALSO AFFIXED AT THE WRONG A DDRESS. THUS, THE ABOVE ACTION CANNOT BE CONSIDERED AS A VALID SERVICE OF NOTICE U/S 148 OF THE ACT. RELIANCE WAS PLACED ON TH E FOLLOWING CASE LAWS:- 1. RK UPADHAYAYA V. SHANABHAI P. PATEL. 62 ITR 17. 2. CIOT V. MINTU KAKALITA 170 CTR 149 (GAUHATI). THE LD CIT(A) OBTAINED REMAND REPORT DATED 10.7.200 6 AND 25.10.2006 FROM THE ASSESSING OFFICER AND AFTER CONSIDER ING THE SAME TOGETHER WITH THE SUBMISSIONS MADE BY THE ASSESSEE HELD AS UNDER:- THE ONLY KNOWN ADDRESS OF THE ASSESSEE AVAILABLE WITH TH E ASSESSING OFFICER WAS A-1B/3A, LIG FLATS., PACHIM VIHAR, NEW DELHI. THE ASSESSEE FILED A RETURN FOR ASSESSMENT YEAR 1996 -97 AND 1997-98 WITH ITO, WARD-021(1), NEW DELHI. HOWE VER, THE ASSESSING OFFICER HAVING JURISDICTION AT THE RELEVANT PO INT OF TIME WAS ITO, WARD-25 (3), NEW DELHI. THUS, THE ITO, WARD- 25 (3) COULD NOT HAVE ISSUED NOTICES U/S 148 OF THE ACT ON A NY ADDRESS OTHER THE ADDRESS WHICH WAS AVAILABLE ON RECORD. ITA NO767/DEL/07 6 2. JURISDICTION OF ASSESSING OFFICER CHANGED DUE TO RECONST RUCTION OF IT DEPARTMENT W.E.F. 1.8.2001 AND THE SAME WAS PUBLI SHED IN THE OFFICIAL GAZETTE. ALL TAX PAYERS WERE MADE AWARE OF THE REVISED JURISDICTION. HOWEVER, THE ASSESSEE DID NOT INTIMATE THE ASSESSING OFFICER HAVING CURRENT JURISDICTION OVER HER, HER PRESENT ADDRESS. 3. THE ASSESSING OFFICER MADE ENQUIRY FROM STATE BANK OF I NDIA, PACHIM VIHAR BRANCH, NEW DELHI. A LETTER WAS RECEIVE D FROM THE SAID BANK ON 9.7.2004/10.7.2004 FROM WHICH THE ASSESSIN G OFFICER CAME TO KNOW THE CHANGED ADDRESS OF THE ASSESSEE AND THEREAFTER THE NOTICES WERE ISSUED TO THE PRESENT ADDRE SS OF THE ASSESSEE. THE ASSESSEE OF HER OWN INTIMATED THE CORRECT AD DRESS TO THE ASSESSING OFFICER ONLY ON 28.9.2004. 4. FROM THE WRITTEN SUBMISSIONS OF THE ASSESSEE DATED 28,.9.2 004, IT COULD BE SEEN THAT AT THE LAST KNOWN ADDRESS OF THE APPELLANT ON WHICH NOTICE U/S 148 OF THE ACT WAS SERVED THROUG H AFFIXTURE WAS USED BY M/S MUNGIPA ELECTRONICS, PROP. RP AGARWAL, WHO IS THE HUSBAND OF THE APPELLANT. 5. AS PER THE EVIDENCE ON RECORD IT COULD BE CONCLUSIVEL Y PROVED THAT AT THE TIME WHEN THE ASSESSEE FILED RETURN OF INCO ME FOR ASSESSMENT YEAR 1996-97 AND 1997-98, THE ASSESSEE WAS NOT RESIDING AT 3/167, SUNDER VIHAR, NEW DELHI AS CLAIMED IN SUCH RETURNS OF INCOME. COPY OF RETURN OF INCOME FOR ASSESSM ENT YEAR 1997-98 DISCLOSED THAT THE ADDRESS OF THE ASSESSEE WAS CHANG ED BY USING WHITE INK ON RETURN OF INCOME. 6. AS PER SECTION 282 OF THE ACT, THE NOTICE U/S 148 OF T HE ACT WAS THEREFORE, CORRECTLY SERVED BY THE ASSESSING OFFICER. ITA NO767/DEL/07 7 8. THE ASSESSEE ALSO RAISED FOLLOWING CONTENTIONS ON VALID ITY OF INITIATION OF PROCEEDINGS U/S 148 OF THE ACT. THAT APPELLANT HAD DISCLOSED ALL THE MATERIAL RELATI NG TO ASSESSMENT PROCEEDINGS FULLY AND TRULY AND THERE WAS NO B ASIS FOR FORMING REASON TO BELIEF; THAT APPELLANT PLACED RELIANCE ON JUDGMENT OF HON'B LE SUPREME COURT IN THE CASE OF CALCUTTA DISCOUNT CO LTD. V. ITO (1961) 41 ITR 191; NO EFFORT WAS MADE BY THE ASSESSING OFFICER TO FIND OUT WHAT IS INCOME WHICH WAS DECLARED BY THE APPELLANT ON WHAT B ASIS THE ASSESSING OFFICER ASSUMED THAT ANY INCOME HAD ESCAPED ASSESSMENT; THAT ASSESSING OFFICER HAD FAILED TO ESTABLISH THAT THERE WERE MATERIAL FROM WHICH HE COULD FORM A BELIEF; THAT ASSESSING OFFICER HAS INITIATED THE PROCEEDINGS ON T HE BASIS OF SUSPICION AND IN CONSEQUENCE OF THE INFORMATION RE CEIVED FROM HIGHER AUTHORITIES; THAT AS PER JUDGMENT OF HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT V. T. R. RAJKUMARI (1974) 96 ITR 78 TC 51 R 430 , RE- ASSESSMENT PROCEEDING INITIATED ON THE DIRECTION GIVEN BY THE CIT COULD BE INVALID. 9. THE LD CIT(A) CONSIDERED THE FACTS OF THE PRESENT C ASE AND THEREAFTER HELD THAT SUCH CONTENTIONS RAISED BY THE A SSESSEE WERE WITHOUT ANY BASIS. THE INFORMATION RECEIVED FROM THE INV. WING WAS VALID INFORMATION ON THE BASIS OF WHICH THE ASSESSING OFF ICER COULD REOPEN THE ASSESSMENT AS PER THE PROVISIONS OF THE SECTION 147 OF THE ACT ESPECIALLY WHEN THE ORIGINAL RETURN FILED, IN TH E CASE OF THE ASSESSEE, WAS ONLY PROCESSED U/S 143(1) OF THE ACT. WHILE COMING TO ITA NO767/DEL/07 8 THE ABOVE CONCLUSION THE LD CIT(A) RELIED ON THE CA SE LAWS AS DISCUSSED BY HIM IN PAGES 7 TO 17 OF HIS ORDER. 10. ON MERIT, THE ASSESSEE CONTENDED BEFORE THE LD CIT( A) AS UNDER:- -THAT APPELLANT FILED ALL THE SUPPORTING EVIDENCES O F SALE OF SHARE. FOR EXAMPLE - CONTRACT NOTE FOR SALE OF SHARE, COPY OF ACCOUNT O F BROKER, COPY OF SHARE CERTIFICATE WHICH WAS IN THE NAME OF APPELLA NT AS EVIDENT FROM ENDORSEMENT ON THE SHARE CERTIFICATE; THAT TRANSACTION WAS CARRIED OUT THROUGH A PERSON WHO IS A REGISTERED MEMBER OF STOCK EXCHANGE; THAT ASSESSING OFFICER HAD IGNORED A FACT THAT ABOVE RE FERRED TO SALE PROCEED WAS RECEIVED THROUGH ACCOUNT PAYEE CHEQU E AND THE SAME IS CREDITED TO THE BANK ACCOUNT OF THE APPEL LANT; THAT ASSESSING OFFICER FRAMED ASSESSMENT WITHOUT CONFRONTI NG APPELLANT WITH AN EVIDENCE LIKE SEIZED DOCUMENT OF M /S R. K. AGGARWAL & CO. OR COPY OF STATEMENT OF SHRI SATISH GO YAL; THAT FRAMING OF ASSESSMENT ORDER WITHOUT CONFRONTING A PPELLANT WITH RELEVANT EVIDENCE IS IN VIOLATION OF BASIC PRINC IPLE OF NATURAL JUSTICE AND SUCH ASSESSMENT CANNOT BE A VALID ASSESSMENT AND IS LIABLE TO BE STRUCK DOWN; EVEN ON SPECIFIC REQUEST, NO OPPORTUNITY TO THE APPEL LANT TO CROSS EXAMINE SHRI SATISH GOYAL WHOSE STATEMENT WAS USED AGAI NST APPELLANT WAS GRANTED; THAT ASSESSING OFFICER HAD FAILED TO PROVE IF SHRI SATI SH GOEL HAD DIRECTLY IMPLICATED THE APPELLANT; THAT ALLEGATION OF BOGUS TRANSACTION WAS WITHOUT ANY B ASIS AND WAS CONTRARY TO THE EVIDENCE ON RECORD; ITA NO767/DEL/07 9 THAT SINCE THE ASSESSING OFFICER HAD MADE ALLEGATION OF ACCOMMODATION ENTRY, IT WAS DUTY OF THE ASSESSING OFFICE R TO DISCHARGE HIS BURDEN OF PROOF THAT GENUINE SALE TRANSA CTION ACTUALLY REPRESENTS THE ACCOMMODATION ENTRY, HOWEVER, ASSESSING OFFICER HAS NOT CARED TO DISCHARGE ITS ONUS. THE LD. AUTHORISED REPRESENTATIVE HAS PLEADED THAT HON 'BLE DELHI ITAT HAS EXAMINED IDENTICAL ISSUES IN CASES OF ANOTHER ASSE SSEES WHERE ASSESSING OFFICER HAD MADE IDENTICAL ADDITION ON ACCOUNT OF ALLEGED BOGUS SALE OF SHARE ON THE BASIS OF REPORT OF DDIT AND HAS DECIDED ISSUED IN FAVOUR OF APPELLANT AS PER FOLLOW ING DETAILS:- SMT. SNEH GUPTA ITA NO. 44/DEL/01 ORDER DATED 24.5. 04 SMT. SUNITA GUPTA ITA NO. 881/DEL/04 ORDER DATED 28.5.04 SHRI RAJIV AGGARWAL ITA NO. 960/DEL/04 ORDER DATED 4.6.04 SHRI SANJAY KUMAR BANSAL ITA NO. 1476/DEL/04 ORDER D ATED 29.10.04 SMT. CHANDAN BALA JAIN ITA NO.5220/DEL/04 ORDER DATED 8.5.05 SMT. JAI MALA JA{N ITA NO. 3478/DEL/04 ORDER DATED 6.7.05 IT HAS BEEN PLEADED THAT FOLLOWING THE ABOVE CITED J UDGMENT OF HON'BLE DELHI ITA T NO ADDITION COULD BE MADE ON AC COUNT OF BOGUS SALE OF SHARE IN THE CASE OF APPELLANT. LD. AUTHORISED REPRESENTATIVE FOR APPELLANT HAS ALSO P LACED RELIANCE ON ORDER OF MY PREDECESSOR IN APPEAL NO.211/ 04-05 DATED 15.12.05 WHERE IDENTICAL ADDITION ON THE BASIS OF DDLT REPORT WAS DELETED. 11. THE LD CIT(A) ACCEPTED THE SUBMISSIONS OF THE ASSESSEE AND HELD THAT PROFIT ARISING OUT OF THE AMOUNT OF `.3,21,587/ - SHOULD BE CONSIDERED AS INCOME UNDER THE HEAD LONG TERM CAPITAL GAIN. HOWEVER, THE LD CIT(A) HELD THAT THE ASSESSEE WAS NOT ENTITLED TO EXEMPTION U/S ITA NO767/DEL/07 10 54F OF THE ACT. THE ASSESSEE WAS ENTITLED TO EXEMPTION U/S 54F ONLY WHEN IT COULD BE SHOWN THAT THE HOUSE PROPERTY WAS C ONSTRUCTED BY DECEMBER, 1996. THE ASSESSEE FURNISHED FOLLOWING EVIDEN CE BEFORE THE LD CIT(A):_ '1. COPY OF AGREEMENT TO SELL DATED 25.4.1994 2. COPY OF RECEIPT NO.3856 DT. 27.3.98 IN RESPECT O F INCOME TAX RETURN OF MR. R. P. AGGARWAL, HUSBAND OF THE AP PELLANT (OWNER OF M/S MUNGIPA ELECTRONICS) REGARDING FILING OF RETUR N OF INCOME AT HIS BUSINESS ADDRESS IN PEERAGARHI. 3. COPY OF LETTER FILED ON 20.1.98 WITH LTO, WARD 2 1 (1) FILED BY MR. R. P. AGGARWAL FOR SHIFTING OF ADDRESS FROM PASCHIM VIHAR TO SUNDER VIHAR (I.E. ADDRESS OF NEW RESIDENTIAL HOUSE). 4. COPY OF RATION CARD DATED 28.4.03 OF THE APPELL ANT EVIDENCING THAT A RESIDENTIAL HOUSE HAD BEEN CONSTRUCT ED BY THE APPELLANT ON THE PLOT PURCHASED. ' 12. THE LD CIT(A) REQUIRED THE ASSESSING OFFICER TO MAK E FURTHER ENQUIRY FROM THE MCD. THE EXECUTIVE ENGINEER (BLDG. ), MCD VIDE HIS LETTER DATED 25.10.2006 CERTIFIED THAT APPELLANT DI D NOT CONSTRUCT ANY PROPERTY AT 3/167, SUNDER VIHAR, NEW DELHI. THE REL EVANT EXTRACT OF THE LETTER OF THE EXECUTIVE ENGINEER READS AS UNDER:- 'WITH REFERENCE TO YOUR OFFICE LETTER NO. LTO/WARD 25(3)/06- 07/666 DATED 23.10.06, VIDE WHICH YOU HAVE REQUISITE SOME INFORMATION U/S 133(6) OF THE INCOME TAX ACT,1961 IN THE CASE OF MRS. PUSHPA AGGARWAL, OWNER OF PROPERTY NO. 3/167, SU NDER VIHAR. . IN THIS REGARD. IT IS INFORMED THAT NEITHER ANY BUILD ING PLAN NOR COMPLETION CERTIFICATE ARE ISSUED BY THIS OFFICE IN RE SPECT OF ITA NO767/DEL/07 11 PROPERTY BEARING NO. 3/ 167, SUNDER VIHAR, PASCHIM V IHAR, AS PER THE RECORD AVAILABLE IN THIS OFFICE SINCE 1.4.1996 TO 31.3.2004. ' 13. WHEN CONFRONTED WITH THE ABOVE, THE ASSESSEE MADE T HE FOLLOWING SUBMISSIONS:- 'THE APPELLANT IS IN APPEAL BEFORE YOUR HONOUR ON AC COUNT OF THE ADDITIONS MADE BY THE ASSESSING OFFICER FOR UNEXPLAINED INCOME INVESTED IN HOUSE PROPERTY. MOREOVER THE PROCEEDINGS HAVE BEEN INITIATED BY THE ASSESSING OFFICER U/ 147. FROM THE ASSESSMENT ORDER IT WILL BE CL EAR THAT IT IS THE INVESTMENT IN THE HOUSE PROPERTY WHICH IS ALLEGE D TO BE UNEXPLAINED, FOR WHICH THE ADDITION HAS BEEN MADE. NO CASE HAS BEEN MADE OUT BY THE ASSESSING OFFICER FOR DISALLOWANCE OF THE CLAIM U/S 54F. THERE IS NO ADVERSE OBSERVATION OF THE ASSESSING OFFICER IN THE ASSESSMENT ORDER REGARDING THE INVESTMENT MADE IN THE NEW HOUSE PROPER TY. IT IS A TRITE LAW THAT THE APPELLANT AUTHORITY CANNO T TRAVEL BEYOND THE SUBJECT MATTER OF THE ASSESSMENT ORDER ITSELF IT MAY ALSO BE BROUGHT TO YOUR HONOUR'S ATTENTION THA T THE JURISDICTION OF THE ITO TO DEAL WITH THE MATTER IS IT SELF UNDER APPEAL. IN CASE THE ISSUE OF JURISDICTION TO FRAME THE ORDER IS DECIDED IN OUR FAVOUR, THE ORDER OF THE ASSESSING OFFIC ER WOULD BE VOID AB INITIO AND NO FURTHER ACTION CAN BE INITIAT ED ON A NULL ORDER. WITHOUT PREJUDICE TO OUR GROUNDS OF APPEAL, EARLIER CONTENTIONS AND OBJECTIONS AS STATED ABOVE, WE CLARIFY THE ISSUES RA ISED BY YOUR HONOUR VIDE YOUR LETTER DATED 26.10.06, AS UNDE R. ITA NO767/DEL/07 12 1. AT THE VERY ONSET IT MAY BE BROUGHT TO YOUR HONOR ATTENTION THAT THE INFORMATION BEING PRESENTED BY THE LD. ASSESSIN G OFFICER ARE PART TRUTHS AND BEING FORWARDED IN A PARTIAL MA NNER. HE IS TRYING TO RAKE UP NEW ISSUES AND DEVIATING FROM THE ISSU ES RAISED IN THE GROUND OF APPEAL. NO FIRM REPLY ON THE GROUN DS RAISED REGARDING SERVICE OF NOTICE AND OTHER JURISDICTION ISSU ES HAVE BEEN ADDRESSED BY HIM IN THE REPORT. 2.THE ASSESSING OFFICER IS TRYING TO TRAVEL BEYOND THE O RIGINAL ASSESSMENT ORDER ITSELF AND HENCE THE ACTION OF THE ASSESSI NG OFFICER IS BEYOND THE JURISDICTION AND SCOPE AS DEFINED UNDER THE LAW. 3. AS REGARDS THE ISSUE OF BUILDING PLAN, IT IS SUBMITTED THAT NECESSARY PERMISSION FROM THE RELEVANT AUTHORITY WAS O BTAINED ON 24.8.94 FOR THE CONSTRUCTION ON THE PROPERTY BEAR ING NO. 167, SUNDER VIHAR, NEW DELHI. PHOTOCOPY OF THE SAID LETTE R BEARING NO. 351/BIWZ/94F563 DATED 24.8.94 IS ENCLOSED AT PAGE NO. 4 FOR YOUR KIND REFERENCE. 4. AS REGARDS THE PURCHASE OF THE PROPERTY IT MAY BE SU BMITTED THAT THE NECESSARY CONVEYANCE DEED HAS ALSO BEEN REGISTE RED IN FAVOUR OF THE ASSESSEE ON 10.1.97 BY DDA. PHOTOCOPY OF THE SAID CONVEYANCE DEED DATED. 10. 1.97 IS ENCLOSED AT PAGE NO. 5-12 FOR YOUR KIND REFERENCE. 5. PROPERTY TAX ON THE SAID PROPERTY FOR THE YEAR 19 98-99 HAS ALSO BEEN PAID ON THE BASIS OF THE BUILT UP AREA. PHOT OCOPY OF THE PROPERTY TAX BILL AS WELL AS THE PROOF OF PAYMENT, IS ALSO ENCLOSED AT PAGE NO. 19 TO 20 FOR YOUR KIND REFERENCE. 6. DOCUMENTARY EVIDENCES AND WITHDRAWAL OF FUNDS DULY SUPPORT THE TOTAL COST OF ACQUISITION AND CONSTRUCTION ON THE HOUSE PROPERTY AMOUNTING TO RS.3, 21,588. ALL THE EVIDENC ES REGARDING THE TRANSACTION WERE BEFORE THE ASSESSING OFFICER AND DU LY ITA NO767/DEL/07 13 VERIFIED BY HIM. HE IN THIS REGARD HAS MADE NO ADVERSE OBSERVATION IN THE ASSESSMENT ORDER. 7. IT IS ALSO SUBMITTED THAT IN ORDER TO CLAIM DEDUCTI ON UFS 54F THERE IS NO REQUIREMENT UNDER THE LAW FOR SUBMISSION OF BUILDING PLAN! COMPLETION CERTIFICATE. THE REQUIREMENT IS OF INVESTMENT IN RESIDENTIAL HOUSE PROPERTY WITHIN THE SPECIFIED TIME L IMIT. 14. THE LD CIT(A) CONSIDERING THE FACTS AND CIRCUMSTA NCES OF THE CASE AND SUBMISSIONS MADE BY THE ASSESSEE OBSERVED AS UNDER:- 1. THE AGREEMENT TO SELL DATED 25.4.1994 WAS NOT SIGNED B Y BOTH THE PARTIES AND WAS NOT REGISTERED. IT HAD ONLY SIGNA TURE OF SHRI CHANDAN SINGH DHALIWAL WHO HAD THE LEASE-HOLD RIGHTS. THE MODE OF PAYMENT OF THE AMOUNT OF `.1,85,000/- WAS AL SO LEFT BLANK ON THE RECEIPT. THERE WAS NO OTHER EVIDENCE I N SUPPORT OF THE CLAIM OF THE ASSESSEE THAT THE POSSESSION OF THE LAND WAS TAKEN ON 25.4.1994. THE LETTER OF THE MCD DATED 24 .8.1994 ISSUED TO SHRI CHANDEN SINGH DHALIWAL PROVED THE CLAI M OF THE ASSESSEE THAT THE POSSESSION OF THE SAID LAND WAS TAKEN OVER BY HER ON 25.4.1994 AS FALSE. AS SUCH THE LEASE HOLD RIGHT S OF SHRI CHANDER SINGH DHALIWAL WAS TRANSFERRED TO THE ASSESSEE BY A REGISTERED DEED ONLY ON 10.3.1998. THE PROPERTY TAX RECEIPT DATED 27.8.1998 FURTHER PROVES THAT THE SAID PROPERTY WAS CONSTRUCTED BY SHRI CHANDAN SINGH DHALIWAL. 15. THE LD CIT(A), THEREFORE, HELD THAT THERE WAS NO EVIDENCE TO SHOW THAT A RESIDENTIAL HOUSE PROPERTY WAS CONSTRUCTED B Y THE ASSESSEE BY MAKING INVESTMENT AT `.4,35,000/- WITHIN THE STIPULATED PERIOD AS PER THE PROVISIONS OF SECTION 54F OF THE ACT. HE, THEREFORE ITA NO767/DEL/07 14 DENIED THE ASSESSEE EXEMPTION U/S 54F OF THE ACT. AGGRI EVED THE ASSESSEE HAS FILED APPEAL BEFORE THE TRIBUNAL. 16. BEFORE US THE LD AR FOR THE ASSESSEE RELIED ON THE SU BMISSIONS MADE BEFORE THE AUTHORITIES BELOW WITH REFERENCE TO VALIDITY OF REOPENING OF ASSESSMENT U/S 147 OF THE ACT. IT WAS CON TENDED BY HIMR THAT NO VALID NOTICE U/S 148 WAS SERVED ON THE ASSESSEE WI THIN SIX YEARS FROM THE END OF THE ASSESSMENT YEAR. FOR THE ABOV E PURPOSE, HE REFERRED TO VARIOUS PAGES OF THE PAPER BOOK. IT WAS AL SO CONTENDED THAT INFORMATION RECEIVED FROM INVESTIGATION WING WOULD N OT ENTITLE THE ASSESSING OFFICER TO REOPEN THE ASSESSMENT BY ISSUE OF NOTICE U/S 148 OF THE ACT. 17. THE LD DR, ON THE OTHER HAND, RELIED ON THE ORD ERS OF THE AUTHORITIES BELOW. IT WAS CONTENDED BY HER THAT REOPE NING OF ASSESSMENT U/S 147 WAS VALIDLY DONE. IT WAS FURTHER CONTE NDED BY HER THAT THE INFORMATION RECEIVED FROM THE INVESTIGATION WING WAS SPECIFIC ON THE BASIS OF WHICH THE ASSESSING OFFICER COULD HAVE F ORMED A PRIMA FACIE SATISFACTION THAT INCOME HAD ESCAPED ASSESSMENT. RE LIANCE WAS PLACED BY HER ON THE ORDER OF COORDINATE BENCH OF T HE ITAT IN I.T.A. NO.273/DEL/2010 IN THE CASE OF MS. ABHA GARG. IT WAS CONTENDED BY HER THAT IN SIMILAR FACTS AND CIRCUMSTANCES AS OBTAINED IN THE PRESENT CASE, THE ITAT, DELHI BENCH A, NEW DELHI IN THE AB OVE CASE HAS UPHELD THE REOPENING OF ASSESSMENT U/S 147 OF THE ACT. FURTHER RELIANCE WAS PLACED ON THE FOLLOWING CASE LAW:- 1. AGR INVESTMENT LTD. V. ADDL. CIT 333 ITR 146 (D EL.). 18. IN THE REJOINDER, IT WAS SUBMITTED BY THE LD AR F OR THE ASSESSEE THAT EVEN RETURN OF SUBSEQUENT YEARS WERE FILED SHOWIN G THE SAME ITA NO767/DEL/07 15 PRESENT ADDRESS. HOWEVER, NO EVIDENCE IN SUPPORT OF TH E SAME COULD BE PRODUCED BY HIM. IT WAS FURTHER CONTENDED BY HIM THAT VALID SERVICE OF NOTICE IS REQUIRED. KNOWLEDGE OF SUCH NOTI CE BEING ISSUED IS NOT MATERIAL. THE LD AR FOR THE ASSESSEE FURTHER CONTE NDED THAT FACTS OF THE PRESENT CASE ARE NOT IDENTICAL TO THE CASE OF T HE ITAT ON WHICH RELIANCE HAS BEEN PLACED BY THE LD DR. IT WAS ALSO SUB MITTED THAT THE HON'BLE DELHI HIGH COURTS DECISION IN THE CASE OF SIG NATURE HOTELS (SUPRA) IS APPLICABLE IN THE FACTS OF THE PRESENT CASE A ND NOT THE DECISION IN THE CASE OF AGR INVESTMENT LTD. (SUPRA) ON WHICH RELIANCE HAS BEEN PLACED BY THE LD DR. 19. WE HAVE HEARD THE PARTIES AND PERUSED THE RECORD . WE HAVE ALSO GONE THROUGH THE CASE LAWS RELIED ON BY BOTH THE PARTIES. WE FIND THAT IN PARA 1 OF ASSESSMENT ORDER, THE ASSESSING OFFICER H AS STATED AS UNDER:- IN COMPLIANCE THERETO THE LD AR OF THE ASSESSEE VIDE H IS LETTER DATED 28.2.2004 SUBMITTED THAT THE RETURN ALREADY FI LED VIDE RECEIPT NO.4399 DATED 31.3.1998 MAY BE CONSIDERED AS A COMPLIANCE TO YOUR REQUISITION. 20. THE ASSESSEE ALSO HAS NOT REBUTTED THE FINDING OF THE LD CIT(A) THAT ON THE DATE WHEN NOTICE U/S 148 WAS ISSUED, THE O NLY KNOWN ADDRESS WITH THE ASSESSING OFFICER WAS THAT TO WHICH SUCH NOTICE WAS ADDRESSED AND SUBSEQUENTLY SERVED BY AFFIXTURE. IN THE ABOVE FACTS AND TAKING INTO CONSIDERATION THE DETAILED DISCUSSION O N THE ISSUE BY THE LD CIT(A), WE ARE OF THE CONSIDERED OPINION THAT THE NOTICE U/S 148 WAS VALIDLY SERVED ON THE ASSESSEE WITHIN SIX YEARS FROM TH E END OF THE ASSESSMENT YEAR UNDER CONSIDERATION. ITA NO767/DEL/07 16 21. AS REGARDS THE ISSUE AS TO WHETHER THE INFORMATION R ECEIVED FROM INVESTIGATION WING COULD FORM VALID BASIS FOR REOPENIN G OF ASSESSMENT U/S 148 OF THE ACT, WE FIND THAT THE ASSESSEE DID NOT BR ING ON RECORD ANY MATERIAL TO SHOW THAT THE FACTS OF THE PRESENT CASE WERE IDENTICAL WITH THOSE OF SIGNATURE HOTELS (SUPRA). PRIMA FACIE T HE FACTS OF THE PRESENT CASE ARE SIMILAR TO THAT OF THE HON'BLE TRIBUN ALS ORDER IN THE CASE OF MS. ABHA GARG (SUPRA) AND THAT OF THE HON'BLE JURISDICTIONAL HIGH COURTS DECISION IN THE CASE OF AGR INVESTMENT LTD . (SUPRA). IN THIS VIEW OF THE MATTER, WE HOLD THAT THE INFORMATIO N RECEIVED FROM THE INVESTIGATION WING WAS VALID INFORMATION ON THE BASIS OF WHICH THE CASE WAS REOPENED BY ISSUE OF NOTICE U/S 148 OF THE ACT. TH US, GROUND NO. 1 & 2 TAKEN BY THE ASSESSEE IS REJECTED. 22. AS REGARDS THE ISSUE AS TO WHETHER THE ASSESSING OFFICE R COULD HAVE DISALLOWED EXEMPTION U/S 54F OF THE ACT WHILE CO MPLETING THE ASSESSMENT U/S 147/143(3) OF THE ACT, NO SPECIFIC ARGUMEN T WAS ADVANCED BY THE LD AR FOR THE ASSESSEE. HOWEVER, WE FI ND THAT EXPLANATION-3 TO SECTION 147 OF THE ACT WHICH IS APP LICABLE WITH RETROSPECTIVE EFFECT FROM 1.4.1989 TAKES CARE OF THE SAME. THUS, GROUND NO.3 TAKEN BY THE ASSESSEE IS REJECTED. 23. THE LD AR FOR THE ASSESSEE CONTENDED BEFORE US THAT LD CIT(A) COULD NOT HAVE GONE INTO THE WHOLE ISSUE OF CAPITAL G AIN AND ALLOWABILITY OF EXEMPTION U/S 54F OF THE ACT. IT WAS SUBMITTED BY HIM THAT AS SUCH THE CLAIM OF THE ASSESSEE U/S 54F OF THE ACT AS MADE IN THE RETURN OF INCOME WAS ACCEPTED BY THE ASSESSING OFFIC ER. IT WAS CONTENDED THAT THE LD CIT(A) DID NOT HAVE JURISDICTI ON TO CONSIDER THE ALLOWABILITY OF OTHERWISE THE CLAIM OF EXEMPTION U/S 54F OF THE ACT. RELIANCE WAS PLACED BY HIM ON THE FOLLOWING CASE LAWS: - ITA NO767/DEL/07 17 1. CIT V. UNION TYRES 240 ITR 566 (DEL.). HE ALSO REITERATED THE SUBMISSIONS MADE BEFORE THE LD CI T(A). 24. ON MERIT, THE DISALLOWANCE OF EXEMPTION U/S 54F, IN ADDITION TO SUBMISSION MADE BEFORE THE LD CIT(A), THE LD AR FOR TH E ASSESSEE SUBMITTED THAT THE PROPERTY IN QUESTION WAS CONSTRUCTED BY SHRI DHALIWAL ON BEHALF OF THE ASSESSEE. HE ALSO REFERRED TO VARIOUS PAGES OF THE PAPER BOOK IN SUPPORT OF THE CLAIM THAT THE SA ID PROPERTY WAS IN PHYSICAL POSSESSION OF THE ASSESSEE AT THE RELEVANT PERIOD O F TIME. THIS INCLUDED COPY OF RELEVANT PAGES OF S.B. ACCOUNT NO., 660, CONVEYANCE DEED IN FAVOUR OF SMT. PUSHPA AGARWAL DAT ED 10.9.1997, WATER AND SEWERAGE CONNECTION, ELECTRICITY RECEIPT E TC. (APB 3-13; APB 7-13) BEING NEW DOCUMENTS). IT WAS, THEREFORE, CONTEN DED BY HIM THAT THE ASSESSEE WAS ENTITLED TO DEDUCTION U/S 54F OF THE ACT . 25. THE LD DR, ON THE OTHER HAND, RELIED ON THE ORD ER OF LD CIT(A). 26. THE JURISDICTION OF CIT(A) IS CO-TERMINUS WITH THA T OF THE ASSESSING OFFICER. THIS IS A SETTLED PROPOSITION OF LAW. THUS, THE LD AR FOR THE ASSESSEES CONTENTION THAT THE CIT(A) COULD NOT HAVE DEALT WITH THE ISSUE OF ALLOWABILITY OF EXEMPTION U/S 54F IS NOT A CCEPTED BY US. 27. WE HAVE HEARD THE PARTIES AND PERUSED THE RECORD. THE RELEVANT INFORMATION FOR ALLOWABILITY OF EXEMPTION U/S 54F AR E THE FOLLOWING:- 1. DATE OF TRANSFER OF LONG TERM CAPITAL ASSET; 2. PURCHASE/CONSTRUCTION OF A RESIDENTIAL HOUSE; 3. DATE OF PURCHASE OF RESIDENTIAL HOUSE/PERIOD OF CONSTRU CTION OF RESIDENTIAL HOUSE. ITA NO767/DEL/07 18 28. IN THE PRESENT CASE, THE TRANSACTIONS GIVING RISE TO LONG TERM CAPITAL GAIN TOOK PLACE ON 22.4.1996. THE ASSESSEE CONT ENDED THAT WHOLE OF THE CAPITAL GAIN I.E. `.2,98,222/- WAS INVE STED FOR CONSTRUCTION OF RESIDENTIAL HOUSE AT 3/167, SUNDER VIHAR, NEW DELH I-110087. RENT RECEIPT FOR FEBRUARY & MARCH, 1997 FROM RENTED PORT ION OF SUCH PREMISES WAS DISCLOSED AT `.5600/-. THE DEPARTMENT HAS N OT DISPUTED THE RENT RECEIPT. THE LD DR HAS ALSO NOT OBJECTED T O THE FILING OF ADDITIONAL EVIDENCE BY THE ASSESSEE BEFORE US. THE LD C IT(A) HAS ALSO NOT CONSIDERED ALL THE ASPECTS OF SECTION 54F OF THE A CT. THE REVENUE HAS ALSO NOT DISPUTED THE LD CIT(A)S FINDING THAT INC OME ARISING OUT OF THE TRANSACTIONS IN SHARES WOULD GIVE RISE TO LONG TERM CAPITAL GAIN. IN THIS VIEW OF THE MATTER, WE ARE OF THE CONSIDERED OP INION THAT THE ORDERS OF THE AUTHORITIES BELOW ON THE ISSUE OF ALLOWAB ILITY OF EXEMPTION U/S 54F IS REQUIRED TO BE SET ASIDE AND THE M ATTER REMANDED BACK TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTION THAT A FRESH ORDER BE PASSED AS PER LAW ON THIS ISSUE AFTE R GIVING THE ASSESSEE ADEQUATE OPPORTUNITY OF BEING HEARD. IF IT IS F OUND THAT THE ASSESSEE WITHIN A PERIOD OF ONE YEAR BEFORE OR TWO YEAR S AFTER THE DATE ON WHICH THE TRANSFER TOOK PLACE PURCHASED OR HAS WIT HIN A PERIOD OF THREE YEARS AFTER THAT DATE, CONSTRUCTED A RESIDENTIAL HOUSE AND ALL OTHER CONDITIONS MENTIONED IN SECTION 54F ARE SATISFIED , THE ASSESSEE SHOULD BE ALLOWED EXEMPTION U/S 54F OF THE ACT. WE HO LD ACCORDINGLY. THUS, GROUND NO.4 TAKEN BY THE ASSESSEE IS ALLOWED FOR ST ATISTICAL PURPOSES. 29. GROUND NO.5 REGARDING INTEREST U/S 234B IS CONSEQUE NTIAL. 30. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS AL LOWED IN PART FOR STATISTICAL PURPOSES. ITA NO767/DEL/07 19 31. ORDER PRONOUNCED IN THE OPEN COURT ON THE 30 TH DAY OF NOVEMBER, 2011. SD/- SD/- (U.B.S. BEDI) (B.K. HAL DAR) JUDICIAL MEMBER ACCOUNTANT MEMBER DT. 30.11.2011. HMS COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI).