Shri Kunverjibhai Jivrajbhai Patel, Ahmedabad V. The Dy.CIT, Circle-11, Ahmedabad

ITA 784/AHD/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 5821 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 11 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2008-2009
• Appeal Filed On: 31-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAURABH SINGH
• Keywords: Cost of acquisition; Reason to believe
• Section: 147

Judgement Text

, . . IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD , , BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER ./ I.T.A. NO.784/AHD/2016 ( / ASSESSMENT YEAR : 2008-09) SHRI KUNVERJIBHAI JIVRAJBHAI PATEL PANCHAMRUT VASTUVILLA BUNGALOWS OPP. SOHAM BUNGALOWS SCIENCE CITY ROAD, AHMEDABAD-380 063 / VS. THE DCIT CIRCLE-11 AHMEDABAD # ./ ./ PAN/GIR NO. : ABJPP 8566 C ( #& / APPELLANT ) .. ( '#& / RESPONDENT ) #&( / APPELLANT BY : SHRI MANISH SHAH, AR '#&)( / RESPONDENT BY : SHRI SAURABH SINGH, SR.DR *+), / DATE OF HEARING 20/03/2018 -./0), / DATE OF PRONOUNCEMENT 20/ 03 /2018 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTAN CE OF THE ASSESSEE AGAINST THE APPELLATE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-5, AHMEDABAD [CIT(A) IN SHORT] DATED 15/02/2016 ARISING IN THE ASSESSMENT ORDER DATED 31/10/2014 PASSED BY THE ITA NO.784/AHD/ 2016 SHRI KUNVARJIBHAI JIVRAJBHAI PATEL VS. DCIT ASST.YEAR 2008-09 - 2 - ASSESSING OFFICER (AO) UNDER S.143(3) R.W.S.147 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'THE ACT') RELEVA NT TO ASSESSMENT YEAR (AY) 2008-09. 2. THE ASSESSEE HAS RAISED CERTAIN GROUNDS OF APP EAL WHICH INTER ALIA INCLUDES THE CHALLENGE TO THE ASSUMPTION OF JURISD ICTION UNDER S.147 OF THE ACT. 3. WHEN THE MATTER WAS CALLED FOR HEARING, THE LD .AR FOR THE ASSESSEE AT THE OUTSET SUBMITTED THAT THE NOTICE IS SUED UNDER S.148 OF THE ACT IS VITIATED BY THE LACK OF JURISDICTION AND TH US BAD IN LAW. THE LD.AR REFERRED TO THE REASONS RECORDED BY THE AO UN DER S.148(2) OF THE ACT AND CONTENDED THAT REOPENING HAS BEEN MADE TO M ERELY VERIFY THE CORRECTNESS OF THE LONG TERM CAPITAL GAIN (LTCG) CA LCULATION WHICH IS NOT INCONSONANCE WITH THE MANDATE OF SECTION 147 OF THE ACT. THE LD.AR SUBMITTED THAT SECTION 147 CONTEMPLATES EXIST ENCE OF REASON TO BELIEVE THAT CHARGEABLE INCOME HAS ESCAPED ASSESSM ENT. THE AO HAS REOPENED THE COMPLETED ASSESSMENT TO MAKE SUITABLE VERIFICATION WITH REFERENCE TO LTCG CALCULATION. SUCH COURSE IS NOT PERMISSIBLE WITHOUT ANY DEFINITE PRIMA FACIE BELIEVE TOWARDS SOME ESCAPEMENT. 4. THE LD.AR NEXT CONTENDED THAT IN THE INSTANT CA SE, THE ASSESSMENT FOR AY 2008-09 WAS EARLIER FRAMED UNDER S.143(3) VIDE A SSESSMENT ORDER DATED 26/11/2010. THE ISSUE WAS DULY EXAMINED IN T HE COURSE OF THE ITA NO.784/AHD/ 2016 SHRI KUNVARJIBHAI JIVRAJBHAI PATEL VS. DCIT ASST.YEAR 2008-09 - 3 - ORIGINAL ASSESSMENT UNDER S.143(3) OF THE ACT. THE NOTICE UNDER S.148 SEEKING TO REOPEN THE COMPLETED ASSESSMENT WAS ISSU ED ON 21/03/2014 WHICH IS BEYOND FOUR YEARS FROM THE END OF THE AY 2 008-09 AND CONSEQUENTIALLY EMBARGO PLACED UNDER THE FIRST PROV ISO TO SECTION 147 OF THE ACT WOULD COME INTO PLAY. THE LD.AR SUBMITTED THAT A BARE READING OF THE REASONS RECORDED WOULD SHOW THAT THE AO SEEK S TO VERIFY THE MATERIAL ALREADY AVAILABLE ON RECORD DURING SCRUTIN Y ASSESSMENT WITHOUT POINTING OUT ANY OMISSION ON THE PART OF ASSESSEE TOWARDS DISCLOSURE OF MATERIAL FACTS FULLY AND TRULY. THE LD.AR THUS REF ERRED TO THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF PATEL ALLOY STEEL (P) LTD. VS. ACIT (2013) 35 TAXMANN.COM 353 (GUJ.) AND CONTE NDED THAT IN THE ABSENCE OF FULFILLMENT OF ADDITIONAL CONDITIONS PRO VIDED IN THE FIRST PROVISO, THE JURISDICTION ASSUMED UNDER S.147 OF TH E ACT IS ILLEGAL AND VOID AB INITIO . THE LD.AR ACCORDINGLY CONTENDED THAT THE REASSES SMENT NOTICE ISSUED UNDER S.148 IS BAD IN LAW AND THEREFO RE CONSEQUENT REASSESSMENT ORDER PASSED UNDER S.147 OF THE ACT IS A NULLITY AND THUS REQUIRES TO BE QUASHED. 5. THE LD.DR RELIED UPON THE ORDER OF THE CIT(A). 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. WE HAVE ALSO PERUSED THE REASONS RECORDED FOR ISSUANCE OF NOTICE UNDER S.148 OF THE ACT AND CONSEQUENT REASSESSMENT ORDER WHICH IS UNDE R CHALLENGE. IT WILL ITA NO.784/AHD/ 2016 SHRI KUNVARJIBHAI JIVRAJBHAI PATEL VS. DCIT ASST.YEAR 2008-09 - 4 - BE APT TO REPRODUCE THE REASONS RECORDED TO APPRECI ATE THE ISSUE IN PERSPECTIVE. REASONS FOR RE-OPENING THE ASSESSMENT IN THIS CASE ASSESSMENT U/S.143(3) WAS FINALIZED ON 16/11/2010 ASSESSING INCOME AT RS.19,24,156/-. IT IS SEEN THA T THE ASSESSEE HAS SHOWN LONG TERM CAPITAL GAIN AT RS.17,96,645/- OUT OF SALE OF AGRICULTURAL LAND IT IS ALSO SEEN THAT AS PER REGIS TERED DEED AGAINST SALE CONSIDERATION OF RS.30,38,750/- THE ASSESSEE HAS SH OWN SALE CONSIDERATION OF RS.29,45,250/-. MOREOVER, IT IS S EEN THAT THESE LANDS WERE PURCHASED IN THE F.Y. 2001-02 FOR TOTAL AMOUNT OF RS.5,12,435/- WHEREAS COST OF ACQUISITION IS SHOWN AT RS.5,78,425 /- WITHOUT ANY DETAILS OF ENHANCED COST. THE ASSESSEE HAS INCURRE D EXPENDITURE FOR N.A. PERMISSION WHICH ARE NOT VERIFIABLE FROM THE R ECORDS. THE LONG TERM CAPITAL GAIN CALCULATION ON THE COST OF ACQUIS ITION AND THE COST REFLECTED BY THE ASSESSEE ALSO NEEDS VERIFICATION. THE DETAILS OF N.A. PERMISSION ARE TO BE LOOKED INTO AND HENCE I HAVE R EASON TO BELIEVE THAT THE ASSESSEE HAS COMMITTED DEFAULT BY NOT REFLECTIN G THE CORRECT AMOUNTS AND HAS NOT WORKED OUT LONG TERM CAPITAL GAIN CORRE CTLY IN A.Y. 2008- 09. THIS IS A FIT CASE FOR ISSUE OF NOTICE U/S.148 OF THE I.T.ACT, 1961. 7. A BARE GLANCE OF REASONS RECORDED GIVES AN UNMIS TAKABLE IMPRESSION THAT THE ACTION UNDER S.147 OF THE ACT W AS TAKEN FOR DETAILED VERIFICATION OF CERTAIN ASPECTS TO DETERMINE THE CO RRECTNESS OF LTCGS OFFERED BY THE ASSESSEE. THUS, IT IS SELF EVIDENT THAT DEFINITE FORMATION OF BELIEF TOWARDS ESCAPEMENT OF INCOME WAS ABSENT AT T HE TIME OF ISSUANCE OF NOTICE. THEREFORE, THE PREREQUISITES FOR REOPEN ING THE ASSESSMENT ARE CLEARLY NOT FULFILLED. APPARENTLY, THE AO HAS MERE LY INTENDED TO MAKE OBJECTIVE ENQUIRY INTO THE CORRECTNESS OF THE LTCG OFFERED TO FIND OUT IF THERE IS ANY ESCAPEMENT OF INCOME. THE AO MERELY S EEKS TO CONCLUDE ITA NO.784/AHD/ 2016 SHRI KUNVARJIBHAI JIVRAJBHAI PATEL VS. DCIT ASST.YEAR 2008-09 - 5 - THAT THERE IS A CASE FOR INVESTIGATION TOWARDS THE CORRECTNESS OF LTCG OFFERED. THIS IS NOT THE SAME THING AS SAYING THAT THERE ARE REASONS TO BELIEVE THAT SOME CHARGEABLE INCOME HAS ESCAPED ASS ESSMENT. OSTENSIBLY, THE AO AT BEST MADE OUT A CASE OF PROB ABLE ESCAPEMENT IN DISTINCTION TO A DEFINITE CONCLUSION OF ESCAPEMENT OF INCOME. THUS, THE REQUIREMENT OF SECTION 147 IS CLEARLY NOT FULFILLED . 8. NEEDLESS TO SAY, THE PROVISIONS OF SECTION 147 O F THE ACT WHICH GIVES POWER TO REOPEN A COMPLETED ASSESSMENT CAN BE INVOKED ONLY WHEN THE CONDITIONS PRECEDENT FOR EXERCISING THE JURISDI CTION EXISTS. EXERCISE OF POWERS UNDER S.147 OF THE ACT CANNOT BE MADE ON THE BASIS OF MERE IPSE DIXIT OF REVENUE. IT IS WELL SETTLED BY PLETHORA OF JUD ICIAL PRECEDENTS THAT REOPENING IS NOT PERMISSIBLE TO MERELY SEEK TO INVESTIGATE THE FACTS COLLECTED WITHOUT HOLDING ATLEAST PRIMA FACIE BELIEF BSED ON RELEVANT MATERIAL TOWARDS ESCAPEMENT OF INCOME. THE CONDITI ONS SET OUT UNDER THE MAIN PROVISIONS OF SECTION 147 ARE THUS NOT MET. H ENCE, THE NOTICE ISSUED UNDER S.147 OF THE ACT IS NOT BACKED BY AUTHORITY O F LAW AND CONSEQUENTLY BAD IN LAW. THE ASSESSMENT AS A SEQUE L TO SUCH ILLEGAL NOTICE IS THEREFORE NULL AND VOID AND REQUIRES TO B E QUASHED. 9. THIS APART, WE ALSO LOOK AT THE ISSUE FROM A DIF FERENT ANGLE. A PLAIN READING OF THE REASONS RECORDED ALSO GIVES AN IMPRESSION THAT THE ITA NO.784/AHD/ 2016 SHRI KUNVARJIBHAI JIVRAJBHAI PATEL VS. DCIT ASST.YEAR 2008-09 - 6 - RELEVANT MATERIAL PLACED IN THE COURSE OF THE ORIGI NAL ASSESSMENT MADE UNDER S.143(3) OF THE ACT IS REVISITED AND CONSEQUE NTIALLY THE AO SEEKS TO REVIEW THE SAME MATERIAL IN THE GARB OF RE-ASSESSME NT PROCEEDINGS WITHOUT MAKING ANY REFERENCE TO ANY FACT TO ALLEGE ANY FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE MATERIAL FACTS IN POSSE SSION OF THE ASSESSEE FULLY AND TRULY AT THE TIME OF ORIGINAL ASSESSEMNT. THEREFORE, THE ADDITIONAL BURDEN CAST UPON THE AO IN TERMS OF THE FIRST PROVISO TO SECTION 147 IS ALSO NOT MET. IN THESE CIRCUMSTANCES, THE A UTHORITY VESTED UNDER S.147 COULD NOT BE EXERCISED. 10. THE ASSESSMENT AS A SEQUEL TO ILLEGAL NOTICE IS THEREFORE NULL AND VOID AND REQUIRES TO BE QUASHED. 11. IN THE RESULT, THE ASSESSEE SUCCEEDS ON LEGAL G ROUND TOWARDS VALIDITY OF JURISDICTION UNDER S.147 OF THE ACT. H ENCE, WE DO NOT CONSIDER IT NECESSARY TO DWELL UPON THE MERITS OF THE CASE. 12. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOW ED. THIS ORDER PRONOUNCED IN OPEN COURT ON 20 / 0 3 /201 8 SD/- SD/- ( ) ( ) ( MAHAVIR PRASAD ) ( PRADIP KUMAR KEDIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 20/ 03 /2018 4 ..*,.*../ T.C. NAIR, SR. PS ITA NO.784/AHD/ 2016 SHRI KUNVARJIBHAI JIVRAJBHAI PATEL VS. DCIT ASST.YEAR 2008-09 - 7 - !'#$#! / COPY OF THE ORDER FORWARDED TO : 1. #& / THE APPELLANT 2. '#& / THE RESPONDENT. 3. 567, 8, / CONCERNED CIT 4. 8, ( ) / THE CIT(A)-5, AHMEDABAD 5. 9:;,*67 , 670 , 5 / DR, ITAT, AHMEDABAD 6. ; + / GUARD FILE. / BY ORDER, '9 ,, //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 20.3.18 (DICTATION-PAD 14-P AGES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 20.3.18 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.20.3.18 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 20.3.18 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER