M/s Ickon Projects , Bangalore V. Income Tax Officer ward-7(2)(3), Bangalore

ITA 772/BANG/2017

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 7138 (ITAT-BANGALORE)
• Duration Of Justice: 4 year(s) 7 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-12-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 30-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Invalid notice; Capital Gains
• Section: 147; 148; 143(3); 153A; 139(1); 153C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCHES “B”, BANGALORE Before Shri Chandra Poojari, AM & Shri George George K, JM ITA No.771/Bang/2017 : Asst.Year 2006-2007 ITA No.772/Bang/2017 : Asst.Year 2007-2008 M/s. Ickon Projects No.11/2, 2 nd Floor, New Jayadeva Hostel Commercial Complex 5 th Main, Gandhinagar Bangalore – 560 009. PAN : AABFI7099A. v. The Income Tax Officer Ward 4(3) / 7(2)(3) Bengaluru. (Appellant) (Respondent) Appellant by : Sri.Narendra Sharma, Advocate Respondent by : Sri.Chetan R. Addl.CIT-DR Date of Hearing : 01.12.2021 Date of Pronouncement : 02.12.2021 O R D E R Per George George K, JM These appeals at the instance of the assessee are directed against two orders of the CIT(A), both dated 30.01.2017. The relevant assessment years are 2006-2007 and 2007-2008. 2. Brief facts of the case are as follows: The assessee is a firm engaged in the business of property development. The assessee had purchased a piece of land measuring 52152 sq.ft. known as Minerva Mills Property from M/s.National Textile Corporation Limited (NTCL) for a consideration of Rs.8,90,00,000. The assessee firm entered into an agreement dated 16.03.2009 with M/s.Sobha Developers Limited (SDL) for the sale of the above property for a consideration of Rs.10,05,00,000 either to SDL ITA Nos.771 & 772/Bang/2017 M/s.Ickon Projects. 2 or its nominee. The assessee sold the said land by a registered sale deed dated 24.12.2009 to M/s.Vyshnavianand Projects Private Limited, the nominee of SDL for an agreed sum of Rs.10.50 crore. Based on the sale agreement dated 16.03.2009, the Assessing Officer was of the opinion that the assessee had transferred the land purchased from NTCL to SDL during the financial year relevant to assessment year 2006-2007 and earned capital gains of Rs.1.15 crore. The A.O. came to this conclusion as the assessee had collected substantial amount of consideration during the financial year relevant to assessment year 2006-2007 from SDL. Consequently, the assessee was served notice u/s 148 of the I.T.Act by the Assessing Officer. In response to the said notice, the assessee filed `NIL’ return on 19.05.2013. The assessee filed objections to the notice issued u/s 148 of the Act. It was submitted that the income of Rs.1.15 crore giving rise to capital gains concluded in the assessment year 2010- 2011, when assessee had duly registered the sale deed dated 24.12.2009. The Assessing Officer, however, rejected the objections raised by the assessee and brought to tax a sum of Rs.1.15 crore as income earning out of transaction in assessment year 2006-2007 itself vide order dated 28.03.2014 passed u/s 147 r.w.s. 143(3) of the I.T.Act. 3. As regards assessment year 2007-2008, the A.O. issued notice u/s 148 of the Act. The reasons recorded for reopening the assessment reads as follows:- “There was search in the case of M/s.Davanam Jewellers Pvt. Ltd. and its group on 02/09/2010. During the course of ITA Nos.771 & 772/Bang/2017 M/s.Ickon Projects. 3 search, it came to light that the assessee who is closely associated with the above group had purchased a piece of land measuring 52152 sq.ft. known as “Minerva Mills Property, Bangalore, from M/s.National Textile Corporation (APKK & M) Ltd., vide sale deed dated 03.01.2007 for a consideration of Rs.8,90,00,000/- in the course of the same search, an agreement dated 16.03.2009 for the sale of above property for a consideration of Rs. 10,05,00,000/- by the Appellant to M/s. Sobha Developers Ltd was also seized vide page no. 62 to 68 of seized material No.A/DJPL/06. As per v of the above agreement which is undated the above consideration has been paid as detailed under: Rs.5,87,50,000/- by cheque No.090884 dated 21.12.2005 drawn on UTI Bank, paid to M/s. NTC at the request of the assessee Rs.2,25,00,000/- by cheque No.25843 dated 29.3.2006 drawn on UTI Bank paid to M/s. Davanam Constructions at the request of the assessee. Rs.1,92,50,000/- by cheque No.076196 dated 06.01.2007 drawn on UTI Bank. This way the assessee" transferred the land purchased from M/s. National Textile Corporation to M/s. Sobha Developers Ltd. The profits! capital gains. from the above sale are as follows: Sale Consideration received by the assessee from M/s.Sobha Developers . Rs.10,05,00,000/- Less: Cost Rs. 8,90,00,000/- Profit or gains Rs. 1,15,00,000 /- The assessee has not filed its return as provided in u/s 139(1) of the Act. The above amount of Rs.1, 15,00,000/- represents the income of the assessee. Based on the above details and considering the fact that the payments for purchase as well as the sale were paid / received during the financial year 2005-06, assessment for the A. Y.2006-07 was reopened by the ACIT, Central 1(2) and they are in progress. However, since the purchase deed of this property was registered on 03.01.2007 and also the last payment of Rs. 1,92,50,000/ - received on 06.01.2007, the assessee may take a plea that the capital gains arise during the A. Y. 2007- 08 and there would not be any possibility for reopening the assessment for the A. Y. 2007-08, after 31.03.2014. The fact remains that the profit! gain was not offered to tax by the assessee. Hence, I have reason to believe that the above income chargeable to tax has escaped assessment as ITA Nos.771 & 772/Bang/2017 M/s.Ickon Projects. 4 envisaged u/s 147 of the Act for the A. Y. 2007-08. Accordingly notice u/s 148 is issued. " 4. The assessee raised objections to the notice issued u/s 148 of the Act. However, the A.O. passed assessment order for assessment year 2007-2008 by order dated 27.02.2014 by bring to tax Rs.1.15 crore on a protective basis. 5. Aggrieved by the assessment order completed for assessment years 2006-2007 and 2007-2008, the assessee preferred appeals to the first appellate authority. The CIT(A) confirmed the view taken by the Assessing Officer. The CIT(A) held that the assessee was paid a substantial amount by SDL during the relevant assessment year 2006-2007 and delivery of possession and registration was only a formality. Therefore, it was concluded that the sale of property crystallized in the assessment year 2006-2007. 6. As regards the assessment year 2007-2008 is concerned, the CIT(A) confirmed the A.O.’s order, where an identical figure was assessed on a protective basis. 7. Aggrieved by the orders of the CIT(A), the assessee has raised legal grounds that the impugned notice issued u/s 148 of the Act is bad in law for the reason that there is no failure on the part of the assessee to disclose fully and truly necessary facts for completion of the assessment. It was submitted that the reasons recorded are reason to suspect and not reason to believe. The assessee has also raised grounds on merits. The assessee vide its application dated ITA Nos.771 & 772/Bang/2017 M/s.Ickon Projects. 5 26.04.2017, has raised additional ground, which reads as follows:- “Assessment Year 2006-2007 1. The very notice issued under section 148 of the Act is not in accordance with law and proper procedure has not been followed and consequently the assessment framed on an invalid notice requires to be cancelled under the facts and circumstances of the case. 2. Whether the assessing officer was right in law and on facts in reopening the assessment u/s 147 as against initiating proceedings u/s 153C r.w.s. 153A of the Act and thereby rendering the entire proceedings void ab initio. 3. The appellant craves leave to add, alter, amend, substitute, change and delete any of the grounds of appeal. Assessment Year 2007-2008 1. The very notice issued under section 148 of the Act is not in accordance with law and proper procedure has not been followed and consequently the assessment framed on an invalid notice requires to be cancelled under the facts and circumstances of the case. 2. Whether the learned assessing officer was correct in reopening the assessment based on false statements in the reasons Recorded which are material for the purpose of reopening or otherwise. 3. Without prejudice, whether the learned assessing officer was right in law and on facts in reopening the assessment u/s 147 as against initiating proceedings u/s 153C r.w.s. 153A of the and Act and thereby rendering the entire proceeding void ab initio. 4. The appellant craves leave to add, alter, amend, substitute, change and delete any of the grounds of appeal. 5. For the above and other grounds that may be urged at the time of hearing of the appeal, the appellant prays that the appeal may be allowed and justice rendered.” 8. On query from the Bench whether the above additional grounds are to be decided if a decision on merits is taken, the ITA Nos.771 & 772/Bang/2017 M/s.Ickon Projects. 6 learned AR insisted for the adjudication of the additional grounds. 9. The learned Departmental Representative, on the other hand, submitted that the additional grounds raised are fresh issues not raised before the Income Tax Authorities and in the event, the same are admitted, the matter needs to be restored to the CIT(A) for adjudication of the same. 10. We have heard rival submissions and perused the material on record. The assessee has raised additional grounds for both the assessment years. The issue raised in the additional grounds is that the assessment completed u/.s 147 r.w.s. 143 of the Act is bad in law. The contention of the assessee is that there was a search in the premises of M/s.Davanam Jewellers Private Limited and during the course of search, there were certain material found pertaining to the assessee. Therefore, the assessment orders for A.Y. 2006-2007 and A.Y. 2007-2008 ought to have been completed u/s 153C r.w.s. 153A of the Act and not u/s 147 r.w.s. 143(3) of the Act. The additional grounds raised are pure legal issue, which does not require investigation of new facts. Hence, placing reliance on the judgment of the Hon’ble Apex Court in the case of National Thermal Power Co. Ltd. v. CIT (1998) 229 ITR 383 (SC), we admit the additional grounds. 10.1 The issue raised in the additional grounds, namely, whether the assessment is to be completed u/s 147 or 153C of the Act has not been raised before the Income Tax ITA Nos.771 & 772/Bang/2017 M/s.Ickon Projects. 7 Authorities. The issue raised in additional grounds is a jurisdictional issue, which goes to the root of the matter. Therefore, in the interests of justice and equity, we deem it appropriate, the same needs to be adjudicated first by the Income Tax Authorities. Accordingly, we restore the issue raised in the additional grounds to the files of CIT(A). At this point, we refrain from adjudicating the issue on merits. In the event, the CIT(A) decide the issue raised in additional grounds against the assessee, needless to state that the assessee is at liberty to file a fresh appeal raising all the issues raised in the original grounds and the additional grounds. It is ordered accordingly. 11. In the result, the appeals filed by the assessee for assessment years 2006-2007 and 2007-2008 are partly allowed for statistical purposes. Order pronounced on this 02 nd day of December, 2021. Sd/- (Chandra Poojari) Sd/- (George George K) ACCOUNTANT MEMBER JUDICIAL MEMBER Bangalore; Dated : 02 nd December, 2021. Devadas G* Copy to : 1. The Appellant. 2. The Respondent. 3. The CIT(A)-5, Bengaluru. 4. The Pr.CIT-5, Bengaluru. 5. The DR, ITAT, Bengaluru. 6. Guard File. Asst.Registrar/ITAT, Bangalore