Kusumben Sumant Bhai Patel, Ranga Reddy V. Income Tax Officer, Ward-11(2), Hyderabad

ITA 795/Hyd/2018

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 5402 (ITAT-HYDERABAD)
• Duration Of Justice: 3 year(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-05-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB-A
• Assessment Year: 2009-2010
• Appeal Filed On: 01-05-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: SIDDHARTH TOSHNIWALA
• Keywords: Sale consideration of property below Jantri Value; Validity of assessment; Assessment record; Reason to believe; Reassessment proceedings; Set aside; Capital Gains
• Section: 143(3); 50C; 54F; 54EC; 147; 148

Judgement Text

ITA NO 795 OF 2018 KUSUMBEN SUMANT BHAI PATEL RR DIST PAGE 1 OF 8 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD (THROUGH VIDEO CONFERENCING) BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NO.795/HYD/2018 ASSESSMENT YEAR: 2009-10 SMT. KUSUMBEN SUMANT BHAI PATEL, MEDCHAL, RR DIST PAN:AECPP6074R VS. INCOME TAX OFFICER WARD 11(2) HYDERABAD (APPELLANT) (RESPONDENT) ASSESSEE BY: SRI SIDDHARTH TOSHNIWALA REVENUE BY : SRI SUNIL KUMAR PANDEY, DR DATE OF HEARING: 17/03/2021 DATE OF PRONOUNCEMENT: 05/05/2021 ORDER PER SMT. P. MADHAVI DEVI, J.M. THIS IS ASSESSEES APPEAL FOR THE A.Y 2009-10 AGAIN ST THE ORDER OF THE CIT (A)-5, HYDERABAD, DATED 12.03. 2018. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IN DIVIDUAL, FILED HER RETURN OF INCOME FOR THE A.Y 2009-10 ON 1 7.8.2009 ADMITTING INCOME OF RS.2,27,890/-. AO RECEIVED INFO RMATION THAT THE ASSESSEE, ALONG WITH 4 OTHERS, HAD SOLD AN IMMO VABLE PROPERTY ADMEASURING 243 SQ.YARDS AT GADWAL COMPOUN D, NAMPALLY, HYDERABAD VIDE DOCUMENT NO.464/2009, DATE D 19.02.2009 DURING THE FINANCIAL YEAR 2008-09 RELEVA NT TO THE A.Y 2009-10 FOR A CONSIDERATION OF RS.58,00,000/- WHICH WAS REGISTERED IN SRO, HYDERABAD. IT WAS ALSO LEARNT TH AT THE MARKET VALUE OF THE PROPERTY IS RS.1,14,09,000/- AS PER SU B-REGISTRAR ON ITA NO 795 OF 2018 KUSUMBEN SUMANT BHAI PATEL RR DIST PAGE 2 OF 8 WHICH STAMP DUTY AND THE REGISTRATION CHARGES WERE PAID. THE AO OBSERVED THAT AS PER THE PROVISIONS OF SECTION 50C( 1) OF THE ACT, THE SRO VALUE SHOULD HAVE BEEN ADOPTED WHILE COMPUT ING THE CAPITAL GAIN. THEREFORE, OBSERVING THAT THE INCOME CHARGEABLE TO TAX UNDER THE HEAD LONG TERM CAPITAL GAIN HAS ESC APED THE ASSESSMENT WITHIN THE MEANING OF SECTION 147 OF THE ACT, THE AO ISSUED NOTICE U/S 148 OF THE ACT DATED 31.03.2016. THE NOTICE WHICH WAS SENT BY REGISTERED POST WAS SENT TO THE A DDRESS GIVEN IN THE SALE DEED BUT THE SAME WAS RETURNED BACK SAYING NO SUCH PERSON WITH THIS ADDRESS RESIDING. THE ASSESSING O FFICER, THEREFORE, SERVED NOTICE TO THE ASSESSEE BY AFFIXTU RE ON 25.05.2016 ON THE ADDRESS GIVEN BY THE INSPECTOR OF INCOME TAX . IN RESPONSE TO THE SAID NOTICE, THE ASSESSEE FILED A LETTER DAT ED 13.5.2016 STATING AS UNDER: 5. YOUR ABOVE REFERRED LETTER WAS SERVED ON ME ON 06.12.2016. THOUGH THE LETTER WAS SERVED ON ME AT M Y RESIDENCE AT 69, PRESTIGE PARK, GUNDALA POCHAMPALLY , MEDCHAL BUT MY ADDRESS MENTIONED IN THE LETTER IS 5 -8- 5618, GADWAL COMPOUND, NAMPALLY, HYDERABAD WHICH IS INCORRECT. IN THE LETTER YOU HAVE REQUIRED ME TO FILE MY RETUR N OF INCOME IN COMPLIANCE TO THE NOTICE DATED 31.03.2016 ISSUED U/S 148. IN THIS CONNECTION, I STATE THAT I HAVE NOT RECEIVED THE NOTICE U/S 148. I ALSO STATE THAT MY A DDRESS COMES IN JURISDICTION OF INCOME TAX OFFICER WARD-11 (4) AND I HAVE FILED MY RETURN OF INCOME FOR ASSESSMENT YEAR 2009-10 IN WARD-11 (4). THEREFORE, THE NOTICE ISSUED BY YOU U/S 148 IS WITHOUT JURISDICTION.' 3. AO, HOWEVER, OBSERVED THAT THE NOTICE U/S 148 WA S ISSUED AFTER TAKING PRIOR APPROVAL OF THE PR. CIT-4 , HYDERABAD AND THE NOTICE WAS SENT BY REGISTERED POST WELL WITHIN THE TIME PERIOD I.E. 31.03.2016 AS PER THE ADDRESS AVAILABLE IN THE SALE DEED. THEREFORE, HE DID NOT ACCEPT THE CLAIM OF THE ASSES SEE AND THEREAFTER PROCEEDED TO CONSIDER THE COMPUTATION OF CAPITAL GAINS BY THE ASSESSEE AT RS.40,71,460/- AND THE CLAIM OF DEDUCTION OF ITA NO 795 OF 2018 KUSUMBEN SUMANT BHAI PATEL RR DIST PAGE 3 OF 8 RS.34,30,000/- U/S 54F AND ALSO DEDUCTION OF RS.4,3 0,000/- U/S 54EC OF THE ACT. THE AO OBSERVED THAT AS PER SECTIO N 50C OF THE ACT, THE MARKET VALUE OF THE PROPERTY IS RS.1,14,09 ,000 AND THEREFORE, THE LONG TERM CAPITAL GAIN SHOULD BE AT RS.96,80,460/- AND AFTER ALLOWING DEDUCTION U/S 54F AND 54EC, HE W ORKED OUT THE LONG TERM CAPITAL GAIN AT RS.62,50,460/- AND BR OUGHT IT TO TAX. 4. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFO RE THE CIT (A) CHALLENGING THE VALIDITY OF THE REOPENING O F THE ASSESSMENT AND ALSO THE ADDITIONS MADE BY THE AO. AS FAR AS TH E VALIDITY OF THE RE-ASSESSMENT IS CONCERNED, THE ASSESSEES CONT ENTION IS THAT SHE HAS FILED HER RETURN OF INCOME TO THE ITO WARD 11(3), WHEREAS THE OFFICER WHO HAS INITIATED 148 PROCEEDINGS WAS I TO WARD 5(3) AND THEREFORE, THE NOTICE U/S 148 IS NOT VALID. HE SUBMITTED THAT THOUGH THE FINAL ASSESSMENT ORDER WAS PASSED BY THE ITO WARD 11(4), HE IS NOT THE OFFICER WHO HAS RECORDED THE R EASONS FOR REOPENING. THUS, ACCORDING TO HIM, SINCE THE REASON S WERE NOT RECORDED BY THE ITO HAVING JURISDICTION OVER THE AS SESSEE, THE RE- ASSESSMENT IS NOT VALID. THE CIT (A) HOWEVER, HELD THAT THE ORIGINAL RESIDENCE OF THE ASSESSEE WAS AT A PLACE W HOSE TERRITORIAL JURISDICTION WAS VESTED WITH ITO WARD 5(3) WHO ISSU ED NOTICE U/S 148 AND THE ORIGINAL RESIDENCE HAD BEEN SOLD BY THE ASSESSEE AND THEREAFTER, THE RETURN WAS FILED WITH ITO WARD 11(4 ) BUT THE ASSESSEE HAD NOT INFORMED THE CHANGE OF ADDRESS TO THE DEPARTMENT. THEREFORE, HE HELD THAT SINCE THE ASSES SEE HAS NOT CHANGED THE PAN, AND HAS NOT INFORMED THE CHANGE OF ADDRESS TO THE DEPARTMENT, THE NOTICE ISSUED BY THE ITO WARD 5 (3) U/S 148 OF THE ACT WAS VALID. THEREAFTER, HE PROCEEDED TO C ONFIRM THE ADDITIONS MADE BY THE AO. AGGRIEVED, THE ASSESSEE I S IN SECOND ITA NO 795 OF 2018 KUSUMBEN SUMANT BHAI PATEL RR DIST PAGE 4 OF 8 APPEAL BEFORE THE TRIBUNAL BY RAISING THE FOLLOWING GROUNDS OF APPEAL: 1) THAT THE LEARNED COMMISSIONER (APPEALS) ERRED I N CONFIRMING THE VALIDITY OF REASSESSMENT ORDER PASSE D U/S 143(3) RWS 147 DESPITE THE FACT THAT THE ORDER SO PASSED IS WITHOUT JURISDICTION AS REASSESSMENT PROCEEDINGS WERE INITIATED BY NON JURISDICTIONAL OF FICER AND NOTICE U/S 148 WAS NOT SERVED. 2) THAT THE ADDRESS OF APPELLANT FALLS IN JURISDICT ION OF INCOME TAX OFFICER WARD 11 (2) AND ACCORDINGLY THE APPELLANT FILED THE RETURN OF INCOME FOR ASSESSMENT YEAR 2009-10 WITH INCOME TAX OFFICER WARD 11 (2) AN D HENCE THE INITIATION OF REASSESSMENT PROCEEDINGS BY ITO WARD 5(3) WHO DOES NOT HAVE JURISDICTION OVER THE APPELLANT, IS BAD IN LAW. 3) THAT LEARNED CIT(APPEALS) ERRED IN CONFIRMING TH E INITIATION OF REASSESSMENT PROCEEDINGS BY ITO WARD 5(3) ON THE GROUND THAT OLD ADDRESS OF APPELLANT FALLS I N JURISDICTION OF ITO WARD 5(3) AND CHANGE IN ADDRESS WAS NOT INTIMATED BY APPELLANT IGNORING THE FACT TH AT APPELLANT HAD FILED RETURN OF INCOME MENTIONING THE CORRECT ADDRESS AND THUS CHANGE IN ADDRESS WAS DULY INTIMATED TO DEPARTMENT AND FURTHER THE THIS ADDRES S WAS AVAILABLE WITH ITO WARD 5(3) AND HE SERVED LETTERS/NOTICES AT THIS ADDRESS. 4) THAT THE REASSESSMENT PROCEEDINGS PASSED ARE BAD IN LAW AS NOTICE U/S 148 WAS NOT SERVED AND LEARNED CIT(APPEALS) DESPITE ADMITTING THIS FACT ERRED IN UPHOLDING THE REASSESSMENT PROCEEDINGS. 5) THAT WITHOUT PREJUDICE TO ABOVE GROUNDS OF APPEA L, THE ALLEGED SERVICE OF NOTICE U/S 148 BY AFFIXTURE IS INVALID AS THE AFFIXTURE WAS NOT DONE ON APPELLANT' S ADDRESS AND FURTHER NONE OF THE CIRCUMSTANCES SPECI FIED UNDER RULE 17 OF ORDER V OF CODE OF CIVIL PROCEDURE , 1908 WHICH WARRANT SERVICE BY AFFIXTURE WERE EXISTI NG AND THIS RENDERS THE ALLEGED SERVICE BY AFFIXTURE I NVALID. 6) THAT THE REASSESSMENT ORDER PASSED U/S 143(3) RW S 147 BY INCOME TAX OFFICER WARD 11 (2) IS BAD IN LAW AS THERE WAS NO REASON TO BELIEVE THAT INCOME HAS ESCA PED ASSESSMENT AS ASSESSING OFFICER [ITO WARD 11 (2)] H AS TO FORM HIS OWN REASONS AND HE CANNOT PROCEED ON TH E BASIS OF REASONS RECORDED BY INCOME TAX OFFICER WAR D 5(3). 7) THAT THE REASSESSMENT ORDER PASSED BY INCOME TAX OFFICER WARD 11 (2) ARE BAD IN LAW AS THE OBJECTION S RAISED BY APPELLANT TO REASSESSMENT PROCEEDINGS WER E NOT DISPOSED BEFORE PASSING THE REASSESSMENT ORDER ITA NO 795 OF 2018 KUSUMBEN SUMANT BHAI PATEL RR DIST PAGE 5 OF 8 8) THAT THE ORDER PASSED U/S 143(3) RWS 147 IS BAD IN LAW AS NO RETURN OF INCOME WAS FILED IN RESPONSE TO THE ISSUE OF NOTICE U/S 148 AND IN THE CIRCUMSTANCES TH E PROVISIONS OF SECTION 143(3) ARE NOT AT ALL APPLICA BLE AND THEREFORE THE ORDER PASSED U/S. 143(3) RWS 147 IS WITHOUT JURISDICTION. 9. THAT THE LEARNED CIT(APPEALS) ERRED IN TOTALLY IGN ORING THE CASE LAWS RELIED UPON BY APPELLANT IN SUPPORT O F THE CONTENTIONS RAISED IN GROUNDS OF APPEAL. 10) THAT THE LEARNED CIT(APPEALS) ERRED IN CONFIRMI NG THE ACTION OF ASSESSING OFFICER IN NOT REFERRING TH E VALUATION OF THE PROPERTY TO VALUATION OFFICER IN T ERMS OF SECTION 50C(2) DESPITE CLAIM BY APPELLANT THAT VALU E ADOPTED FOR STAMP DUTY EXCEED THE FAIR MARKET OF TH E PROPERTY AND SALE CONSIDERATION RECEIVED BY APPELLA NT IS FULL VALUE OF CONSIDERATION RECEIVED. 11 )ANY OTHER GROUND OF APPEAL THAT MAY BE RAISED SUBSEQUENTLY. 5. THE LEARNED COUNSEL FOR THE ASSESSEE, WHILE REIT ERATING THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW S UBMITTED THAT THE PROPERTY WAS SOLD ON 19.02.2009 WHEREAS THE ASS ESSEE HAS FILED HER RETURN OF INCOME ON 17.8.2009 BEFORE THE ITO WARD 11(4) GIVING THE CORRECT ADDRESS IN THE RETURN OF INCOME. THEREFORE, ACCORDING TO HIM, THE ASSESSEES JURISDICTION LIES WITH THE ITO WARD 11(4) ONLY. HE SUBMITTED THAT THE ITO WARD 5(3 ), HAD INITIATED THE 148 PROCEEDINGS BY SENDING A NOTICE U /S 148 ON 31.3.2016 I.E. AFTER NEARLY 7 YEARS OF THE ASSESSEE TRANSFERRING THE PROPERTY AND ALSO FILING HER RETURN OF INCOME. HE S UBMITTED THAT THE PROPERTY WHICH WAS SOLD IS THE ADDRESS TO WHIC H THE NOTICE U/S 148 WAS SENT BY REGISTERED POST AND WAS LATER S ERVED BY AFFIXTURE. HE SUBMITTED THAT THE ASSESSEE HAS FILED A LETTER DATED 13.12.2016 BEFORE THE INCOME TAX OFFICER WARD 5(3) INTIMATING THE CORRECT ADDRESS OF THE ASSESSEE AND ALSO THAT SHE H AS NOT RECEIVED THE NOTICE U/S 148, AND IT WAS THEREAFTER THAT THE ASSESSEES FILES WERE TRANSFERRED FROM ITO WARD 5(3) TO ITO WARD 11( 4), BUT THE ITA NO 795 OF 2018 KUSUMBEN SUMANT BHAI PATEL RR DIST PAGE 6 OF 8 AO WHO HAS CORRECT JURISDICTION OVER THE ASSESSEE, NEVER ISSUED ANY NOTICE U/S 148 BUT HAS COMPLETED THE ASSESSMENT ON THE BASIS OF THE MATERIAL ON RECORD. HE SUBMITTED THAT THIS ASSESSMENT THEREFORE, HAS NO LEGS TO STAND, BECAUSE THE BASIS FOR INITIATING OR ASSUMING THE JURISDICTION U/S 148 HAVE NOT BEEN FUL FILLED. HE ARGUED THAT THE AO WHO ISSUED THE NOTICE U/S 148 OF THE ACT HAD NO JURISDICTION OVER THE ASSESSEE, BUT HAD RECORDED THE REASONS FOR REOPENING AND INITIATED THE RE-ASSESSMENT PROCEEDIN GS BY ISSUANCE OF NOTICE U/S 148, WHICH HAS NOT BEEN SERV ED ON THE ASSESSEE. THEREFORE, ACCORDING TO HIM, THE RE-ASSES SMENT PROCEEDINGS ARE INVALID AND HAVE TO BE SET ASIDE. I N SUPPORT OF HIS CONTENTIONS, HE PLACED RELIANCE UPON THE FOLLOWING DECISIONS: A) THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF SHIRISHBHAI HARGOVANDAS SANJANWALA VS. ACIT REPORTED IN (2017) 396 ITR 167 (GUJ.) DATED 19 TH JULY, 2016. B) THE HON'BLE DELHI HIGH COURT IN THE CASE OF DUSH YANT KUMAR JAIN VS. DY. CIT REPORTED IN (2016) 381 ITR 4 28 (DEL.) DATED 15 TH JANUARY, 2016. C) THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF PANKAJBHAI JAYSUKHLAL SHAH V. ACIT REPORTED IN (2020) 425 ITR 70 (GUJ.) DATED 9 TH APRIL, 2019. D) THE HON'BLE DELHI HIGH COURT IN THE CASE OF K.K. LOOMBA AND OTHERS VS. CIT REPORTED IN (2000) 241 IT R 152 (DEL) DATED NOV.30, 1998. E) ITAT AHMEDABAD BENCH IN THE CASE OF ACIT VS. RESHAM PETROTECH LTD REPORTED IN (2012) 136 ITD 185 (ITAT AHM) DATED 10.02.2012 6. THE LEARNED DR, ON THE OTHER HAND, SUBMITTED THA T THE NOTICE U/S 148 WAS VALIDLY SERVED ON THE ASSESSEE. IN SUPPORT OF HIS CONTENTION, HE PLACED RELIANCE UPON THE FINDING S OF THE AO AND THE CIT (A). ITA NO 795 OF 2018 KUSUMBEN SUMANT BHAI PATEL RR DIST PAGE 7 OF 8 7. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, WE FIND THAT UNDISPUTEDLY, THE RE-ASSESS MENT PROCEEDINGS WERE INITIATED BY THE ITO WARD 5(3), WH ILE THE ASSESSMENT WAS COMPLETED BY ITO WARD 11(4). IT IS A LSO UNDISPUTED FACT THAT THE ITO WARD 11(4) IS THE OFFI CER HAVING JURISDICTION OVER THE ASSESSEE AND THE ASSESSEE HAD FILED HER RETURN OF INCOME GIVING HER CORRECT ADDRESS. THEREF ORE, THE ITO WARD 5(3) WHO ISSUED NOTICE U/S 148 HAD NO JURISDIC TION OVER THE ASSESSEE. WHEN THIS FACT WAS BROUGHT TO THE NOTICE OF ITO WARD 5(3), BY THE ASSESSEE, THE ASSESSMENT RECORD WAS TR ANSFERRED TO THE ITO WARD 11(4). BUT EVEN AT THAT POINT OF TIME, THE ITO WARD 11(4) DID NOT CHOOSE TO RECORD THE REASONS FOR REOP ENING OR ISSUE NOTICE U/S 148 OF THE ACT TO THE ASSESSEE ON HER CO RRECT ADDRESS. HE CHOSE TO PROCEED FROM THE STAGE AT WHICH ITO WAR D 5(3), HAD TRANSFERRED THE FILES TO HIM. THEREFORE, IT IS CLEA RLY WITHOUT ANY JURISDICTION. THE AO GETS JURISDICTION TO REOPEN TH E ASSESSMENT ONLY AFTER HE RECORDS THE REASONS FOR REOPENING AND THEREAFTER, ISSUES NOTICE U/S 148 WITHIN THE PRESCRIBED TIME AN D ONLY ON FULFILMENT OF THE CONDITIONS PRESCRIBED THEREIN. NO NE OF THESE CONDITIONS HAVE BEEN FULFILLED BY THE AO. THEREFORE , WE HAVE NO HESITATION IN HOLDING THAT THE RE-ASSESSMENT PROCEE DINGS WERE NOT INITIATED VALIDLY AND THEREFORE, THE RE-ASSESSMENT ORDER DATED 30.12.2016 IS SET ASIDE. SINCE WE HAVE SET ASIDE TH E ASSESSMENT ORDER ON THE GROUND OF INVALIDITY, THE OTHER GROUND S OF APPEAL BECOME ACADEMIC AT THIS STAGE. THEY ARE ACCORDINGLY NOT ADJUDICATED. THEREFORE, THE ASSESSEES GROUNDS AGAI NST VALIDITY OF ASSESSMENT ARE ALLOWED AND THE OTHER GROUNDS ARE NO T ADJUDICATED. ITA NO 795 OF 2018 KUSUMBEN SUMANT BHAI PATEL RR DIST PAGE 8 OF 8 8. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOW ED. ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH MAY, 2021. SD/- SD/- (A. MOHAN ALANKAMONY) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 5 TH MAY, 2021. VINODAN/SPS COPY TO: 1 SRI SIDDHARTH TOSHNIVAL, ADVOCATE, O/ SHRI K.L. R ATHI, ADVOCATE, 3-5-144/5 EDEN GARDEN, HYDERABAD 500001 2 ITO WARD 11(2) HYDERABAD 3 CIT (A)-5 HYDERABAD 4 PR. CIT 5 HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER