M/s. Gayatri Enterprise, Vadodara V. Income Tax Officer,Ward-1(2)(4), Vadodara

ITA 825/AHD/2016

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 6667 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 04-04-2016
• Court: TRIBUNAL

Judgement Text

, C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER ./ I.T.A. NO. 825/AHD/2016 ( ASSESSMENT YEAR : 2011-12) M/S. GAYATRI ENTERPRISE 2, SHILP APARTMENT, MANE NAGAR, MUNJ MAHUDA, AKOTA, VADODARA / VS. THE INCOME TAX OFFICER WARD 1(2)(4), BARODA AAYKAR BHAVAN, RACE COURSE, VADODARA - 390007 ./ ./ PAN/GIR NO. : AAHFG1662R ( APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI BHAVIN MARFATIA, A.R. / RESPONDENT BY : APARNA M. AGARWAL, CIT.D.R. DATE OF HEARING 27/02/2019 !'# / DATE OF PRONOUNCEMENT 28/02/2019 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE ORDER OF THE PRINCIPAL COMMISS IONER OF INCOME TAX-1, VADODARA (PR.CIT IN SHORT), DATED 15.02.20 16 ARISING IN THE ASSESSMENT ORDER DATED 28.11.2013 PASSED BY THE ASS ESSING OFFICER (AO) UNDER S. 143(3) OF THE INCOME TAX ACT, 1961 (T HE ACT) CONCERNING AY 2011-12. ITA NO.825/AHD/16 [M/S. GAYATRI ENTERPRISE VS. ITO] A.Y. 2011-12 - 2 - 2. THE ASSESSEE IN THE PRESENT APPEAL HAS CHALLENGE D REVISIONAL JURISDICTION OF THE PR.CIT INVOKED UNDER S.263 OF T HE ACT WHEREBY ORDER OF THE AO UNDER S. 143(3) OF THE ACT DATED 28 .11.2013 IS SOUGHT TO BE SET ASIDE BY THE PR.CIT FOR FRESH ASSESSMENT ON THE GROUND OF LACK OF INQUIRY INTO CERTAIN VITAL ASPECTS. 3. BRIEFLY STATED, THE ASSESSEE, A PARTNERSHIP FIRM , IS ENGAGED IN THE BUSINESS OF CONSTRUCTION. THE RETURN OF INCOME OF THE ASSESSEE FOR AY 2011-12 WAS SUBJECTED TO SCRUTINY ASSESSMENT AND CO NSEQUENTLY, ASSESSMENT ORDER WAS FRAMED UNDER S.143(3) OF THE A CT. THE AO MERELY ACCEPTED THE RETURN OF INCOME OF RS.31,450/- AS ASSESSED INCOME WITHOUT ANY ADJUSTMENT. ON VERIFICATION OF ASSESSMENT RECORDS, THE PR.CIT FOUND THAT THE ASSESSMENT ORDER PASSED BY THE AO IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE PR.CIT ACCORDINGLY INVOKED REVISIONAL JURISDICTION CONFERRED UNDER S.263 OF THE ACT TO SHOW CAUSE THE ASSESSEE ON THE INFIRMITY IN THE ASSESSMENT ORDER WHICH IS BROADLY NARRATED HEREUNDE R: WITH REFERENCE TO THE ASSESSMENT ORDER U/S 143(3) OF THE IT ACT, PASSED BY THE ASSESSING OFFICER ON 28.11.2013 FOR A .Y. 2011-12, IT IS TO BE NOTED THAT THE SAME WAS ERRONEOUS IS SO FAR A S IT WAS PREJUDICIAL TO THE INTEREST OF REVENUE ON ACCOUNT O F THE FOLLOWING: ON VERIFICATION OF P&L ACCOUNT, BALANCE SHEET, COMP UTATION OF INCOME & SUBMISSIONS IN RESPECT OF CONSTRUCTION BUS INESS, IT IS REVEALED THAT INVESTMENT OF RS.1,17,93,542/- IS MAD E IN THE LAND SITUATED AT SURVEY NO. 183 & 184 AT VILLAGE TA NDALJA. THE BREAK-UP OF THE SAID INVESTMENT AS SHOWN IN THE BOOKS COMPRISES OF: PARTICULARS AMOUNTS IN RS. COST OF LAND 45,61,000/- COST OF CONSTRUCTION & LEVELING EXPENSES 42,47,332/ - ELECTRIC EXPENSES 86,760/- FENCING EXPENSES 1,49,600/- NA EXPENSES 1,33,540/- RAJA CHITTHI EXPENSES 2,79,010/- DOCUMENT REGISTRATION EXPENSES 23,36,300/- TOTAL 1,17,93,542/- ITA NO.825/AHD/16 [M/S. GAYATRI ENTERPRISE VS. ITO] A.Y. 2011-12 - 3 - FROM THE REGISTERED DOCUMENT TO THIS EFFECT (BEARIN G NO. 4153/2011 (BRA-3/ATA), DATED 29.03.2011), IT IS NOT ICED THAT AGAINST THE CONSIDERATION OF RS.45,61,000/- DECLARE D/SHOWN, RS.22,90,300/- IS PAID AS STAMP DUTY. THE PREVAILI NG STAMP DUTY RATE IN GUAJRAT IS @ 4.90% AD-VOLREM ON CONSID ERATION OR MARKET VALUE AS PER JANTRI RATE. ACCORDINGLY, T HE VALUE OF THE ALLEGED PROPERTY COMES TO RS.4,67,40,816/- (22,90,300*100/4.90), AS AGAINST RS.45,61,000/- DECLARED/SHOWN. IT MAY THEREFORE BE PRESUMED THAT RS.4,21,79,800/- (4,67,40,800 45,61,000) IS UNDIS CLOSED INVESTMENT. 2. IN VIEW OF ABOVE, YOU ARE BEING GRANTED AN OPPOR TUNITY OF BEING HEARD AND TO SHOW CAUSE AS TO WHY THE AFORESA ID ASSESSMENT MADE BY THE ASSESSING OFFICER FOR A.Y. 2011-12 SHOULD NOT BE ENHANCED OR CACELLED WITH A DIRECTION TO MAKE FRESH ASSESSMENT IN ACCORDANCE WITH THE PROVISIONS OF LAW IN THIS REGAR D. FOR THIS PURPOSE, YOU MAY APPEAR BEFORE THE UNDERSIGNED, IN PERSON OR THROUGH YOUR AUTHORIZED REPRESENTATIVE OR FILE WRIT TEN SUBMISSION ON 29.01.2016 AT 11:00 A.M ./P.M. IN CASE OF NON COMPLIANCE, THE MATTER WILL BE DECIDED ON MERITS. 4. THE PR.CIT, IN ESSENCE, ALLEGED THAT AGAINST THE COST OF LAND SHOWN TO BE PURCHASED BY THE ASSESSEE AT RS.45,61,0 00/-, THE ASSESSEE HAS PAID WHOPPING STAMP DUTY OF RS.22,90,300/- WHER EAS THE STAMP DUTY RATE IS ABOUT 4.9% AD-VOLREM ON SALE CONSIDERA TION FOR MARKET VALUE AS PER CIRCLE/JANTRI RATE. BASED ON THE STAM P DUTY PAID, THE PR.CIT FOUND THAT THE COST OF THE LAND COMES TO RS. 4,67,40,816/- AS AGAINST THE PURCHASE PRICE DECLARED AT RS.45,61,000 /-. IT WAS THUS ALLEGED THAT THE AO COMMITTED ERROR IN NOT ASSESSIN G UNDISCLOSED INCOME OF RS.4,21,71,800/- ON BEING AFORESAID LAND. IT IS THUS ESSENTIALLY THE CASE OF THE PR.CIT THAT THE AO HAS WRONGLY ACCEPTED THE GROSSLY UNDERSTATED COST OF LAND PURCHASE WITHO UT MAKING ANY REQUISITE INQUIRY IN THIS REGARD. THE PR.CIT ACCOR DINGLY PASSED ORDER UNDER S.263 OF THE ACT AND SET ASIDE THE ASSESSMENT PASSED UNDER S.143(3) OF THE ACT WITH DIRECTION TO THE AO TO MAK E REQUISITE INQUIRIES AND VERIFICATIONS IN THIS REGARD. ITA NO.825/AHD/16 [M/S. GAYATRI ENTERPRISE VS. ITO] A.Y. 2011-12 - 4 - 5. AGGRIEVED BY THE ACTION OF THE PR.CIT, CANCELLIN G THE ASSESSMENT EARLIER MADE, THE ASSESSEE PREFERRED APPEAL BEFORE THE TRIBUNAL AND CHALLENGED THE USURPATION OF REVISIONAL JURISDICTIO N BY THE PR.CIT. 6. THE LEARNED AR FOR THE ASSESSEE SUBMITTED AT THE OUTSET THAT THE NECESSARY BACKGROUND FOR EXERCISE OF REVISIONAL POW ER OF PR.CIT DOES NOT EXIST. THE LEARNED AR REFERRED TO A NOTICE ISS UED BY THE AO UNDER S.142(1) OF THE ACT DATED 18.10.2013 TO SUBMIT THAT THE AO HAD INITIATED INQUIRY ON INVESTMENTS OF RS.1.17 CRORE A S APPEARING IN THE BALANCE SHEET ON 31.03.2011 WITH SOURCE THEREOF. T HE LEARNED AR THEREAFTER REFERRED TO MOU (MEMORANDUM OF UNDERSTAN DING) / BANAKHAT DATED 31.08.2007 TO POINT OUT THAT THE AGR EEMENT FOR PURCHASE OF LAND MADE WAY BACK IN AUGUST 2007. A F ORMAL AGREEMENT FOR PURCHASE OF THE LAND WAS ULTIMATELY MADE ON 29 TH MARCH, 2011 TO GIVE EFFECT EARLIER BANAKHAT. IT WAS SUBMITTED THA T THE LAND WAS ORIGINALLY AGRICULTURAL LAND WHICH WAS CONVERTED IN TO NON-AGRICULTURAL LAND BY THE ASSESSEE AND THEREAFTER THE ACTUAL REGI STRATION WAS CARRIED OUT IN THE FY 2010-11 CONCERNING AY 2011-12 IN QUES TION. THE LEARNED AR FURTHER EMPHASIZED THAT THE PAYMENT OF S ALE CONSIDERATION OF RS.45,61,000/- WAS MADE IN FY 2007-08 AND POSSES SION OF THE LAND WAS TAKEN. ONLY REMAINING AMOUNT OF RS.99,000/- WA S PAID TO THE SELLER IN FY 2010-11 (AY 2011-12) ON 26.02.2011. I N THESE CIRCUMSTANCES, IT WAS CONTENDED THAT THE TRANSACTIO N DO NOT RELATE TO FY 2010-11 IN QUESTION AND THEREFORE, THE APPLICATI ON OF PROVISION OF SECTION 69B OF THE ACT IN AY 2011-12 IS FARFETCHED AND CANNOT BE SUBJECT MATTER OF REVIEW UNDER S.263 OF THE ACT. T HE LEARNED AR ALSO POINTED OUT THAT NO MATERIAL WAS FOUND BY THE PR.CI T TO ENABLE HIM TO ALLEGE ANY ELEMENT OF UNDISCLOSED INVESTMENT IN THE LAND PURCHASED. THE LEARNED AR ACCORDINGLY SUBMITTED THAT THE PR.CI T HAS OVER- REACHED ITS POWER OF REVIEW AND CONSEQUENT ORDER PA SSED UNDER S.263 OF THE ACT IS BAD IN LAW. TO SUPPORT ITS CONTENTIO N TOWARDS NON- ITA NO.825/AHD/16 [M/S. GAYATRI ENTERPRISE VS. ITO] A.Y. 2011-12 - 5 - APPLICABILITY OF SECTION 263 OF THE ACT, THE LEARNE D AR FOR THE ASSESSEE REFERRED TO THE AND RELIED UPON AND THE DE CISION OF THE CO- ORDINATE BENCH IN DILSHAD TRADING CO. (P) LTD. VS. ITO (1994) 49 ITD 348 (BOM.) AND CIT VS. AMIT CORPORATION (2012) 21 T AXMANN.COM 64 (GUJ); CIT VS. ARVIND JEWELLERS (2003) 259 ITR 502 (GUJ) & (2015) CIT VS. FINE JEWELLERY (INDIA) LTD. (2015) 372 ITR 303 (BOM). 7. THE LEARNED CIT-DR, ON THE OTHER HAND, SUPPORTED THE REVISIONAL ORDER OF THE PR.CIT AND SUBMITTED THAT THE PR.CIT W AS WELL WITHIN ITS POWER TO EXERCISE SUPERVISORY JURISDICTION OF REVIE W AGAINST THE PALPABLY WRONG ORDER PASSED BY THE AO WITHOUT CONSI DERING A GLARING AND OBVIOUS PAYMENT OF STAMP DUTY TOTALLY DISPROPOR TIONATE QUA THE COST OF PURCHASE OF LAND AS DECLARED BY THE ASSESSE E. IT WAS SUBMITTED THAT THE AO HAS NOT MADE ANY INQUIRY INTO CLAIM OF THE ASSESSEE TOWARDS BONAFIDES OF COST OF PURCHASE DECLARED AND ASSESSMENT ORDER HAS BEEN PASSED IN A CRYPTIC & NON-DESCRIPT MANNER. THE AGREEMENT HAS BEEN REGISTERED AND THEREFORE THE STAMP DUTY WA S PAID DURING THE YEAR. THEREFORE, IT WAS THUS CONTENDED THAT THE CA USE OF ACTION AGAINST THE ASSESSEE DID ARISE IN THE FY 2010-11 TO THE CON CERNING AY 2011- 12. THE LEARNED CIT-DR REFERRED TO THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. VS. CIT (2000) 243 ITR 83 (SC) TO CONTEND THAT THE PR.CIT WAS ENTITLED TO CANCEL THE ORDER OF THE AO WHERE THE REVENUE IS LOO SING ITS LAWFUL SHARE OF TAXES OWING TO AN APPARENTLY ERRONEOUS ORD ER PASSED BY THE AO. THE LEARNED DR CONTENDED THAT OWING TO LACK OF INQUIRY ON THE VITAL ASPECT OF COST OF PURCHASE DECLARED VIS--VIS NOTIF IED JANTRI RATE (AS REVEALED FROM THE STAMP DUTY PAID BY THE ASSESSEE) WITHOUT DEMUR, THE ASSESSMENT ORDER SUFFERED FROM ERROR WHICH WAS PRE- JUDICIAL TO INTEREST OF REVENUE. THE LEARNED CIT-DR SUBMITTED THAT THE PR.CIT HAS ME RELY SET ASIDE THE ORDER OF THE AO FOR MAKING REQUISITE INQUIRY ON THE DISTINCT POSSIBILITY OF REVENUE LEAKAGE IN THE BACKDROP OF T HE FACT THAT ONUS IS ITA NO.825/AHD/16 [M/S. GAYATRI ENTERPRISE VS. ITO] A.Y. 2011-12 - 6 - SQUARELY ON THE ASSESSEE TO JUSTIFY THE CORRECTNESS OF DECLARED COST OF PURCHASE ON THE FACE OF SUBSTANTIALLY HIGHER JANTRI VALUE. THE LEARNED DR ACCORDINGLY SUBMITTED THAT NO INTERFERENCE WITH THE ORDER OF THE PR.CIT IS CALLED FOR IN THE PECULIAR FACTS AND THE CIRCUMSTANCES OF THE CASE. 8. WE HAVE EXAMINED THE ISSUE AND PERUSED THE REVIS IONAL ORDER OF THE PR.CIT PASSED UNDER S.263 OF THE ACT AS WELL AS THE CASE LAWS CITED. FROM THE AMOUNT OF STAMP DUTY PAID (RS.22.9 0 LAKSH) AND COST OF LAND DECLARED AT THE RATE OF (RS.45.61 LAKHS), T HE PR.CIT FOUND IT SELF-EVIDENT THAT THE VALUE DECLARED TOWARDS THE CO NSIDERATION OF PURCHASE IS ABYSMALLY LOW. THE PR.CIT RE-COMPUTED THE JANTRI VALUE OF THE LAND AT RS.467.40 LAKHS AS AGAINST RS.45.61 LAKHS DECLARED BY THE ASSESSEE. ON THESE FACTS, THE PR.CIT WAS OF TH E PRIMA FACIE VIEW THAT ELEMENT OF UNDISCLOSED INCOME OVERTLY EXISTS I N THE PURCHASE OF LAND. THE QUESTION THAT ARISES IS WHETHER THE PR.C IT WAS JUSTIFIED IN SETTING ASIDE THE ASSESSMENT ORDER WHERE THE COST O F PURCHASE OF LAND HAS BEEN ACCEPTED SUMMARILY WITHOUT ANY TANGIBLE IN QUIRY IN THIS REGARD ON THE FACT OF SUCH DOCUMENTS. A PERUSAL OF THE QUESTIONNAIRES ISSUED AND REPLY MADE BY THE ASSESSEE THEREON CLEAR LY SHOWS THAT NO RELEVANT MEANINGFUL INQUIRY WAS CONDUCTED IN RESPEC T TO CORRECTNESS OF THE COST OF PURCHASE OF LAND. WHAT WAS INQUIRED WA S SOURCE OF COST OF PURCHASE DECLARED. THE ISSUE RAISED BY THE PR.CIT IS ALTOGETHER DIFFERENT AND QUITE VALID FOR THAT MATTER. A BARE LOOK AT THE ASSESSMENT ORDER ALSO GIVES THE INFALLIBLE IMPRESSI ON THAT THE ASSESSMENT ORDER WAS PASSED IN A ROUTINE AND PERFUN CTORY MANNER WITHOUT ANY DISCUSSION ON ANY ASPECT OF THE ASSESSM ENT WHATSOEVER. THE PREPONDERANCE OF EVIDENCE CLEARLY INDICATES UNR EALISTICALLY LOWER COSTS OF PURCHASES DECLARED FORMALLY WHICH WOULD WA RRANT AN INQUIRY WITH THE COMPETENT REGISTERING AUTHORITY AS WELL AS WITH OTHER COMPARABLE CASES AND BY OTHER REALISTIC MEANS. THE PR.CIT IN ITA NO.825/AHD/16 [M/S. GAYATRI ENTERPRISE VS. ITO] A.Y. 2011-12 - 7 - DISCHARGE OF ITS SOLEMN DUTY UNDER S.263 OF THE ACT COULD NOT REMAIN OBLIVIOUS OF THE FACTS OBJECTIVELY DRAWN. THERE IS AN APPARENT PLAUSIBILITY IN THE ACTION OF THE PR.CIT BY RESORTI NG TO POWERS UNDER S.263 OF THE ACT WHICH IS OF WIDE AMPLITUDE. THE C IRCUMSTANCES CLEARLY EXIST WHICH DEMANDS INQUIRY WHICH WAS NOT D ONE BY THE AO WHILE DISCHARGING OF STATUTORY FUNCTION. THUS, ARM ED WITH FAIRLY EXTENSIVE POWERS, THE PR.CIT, IN OUR VIEW, HAS TAKE N ACTION COMPATIBLE WITH CIRCUMSTANCES. WHILE HOLDING SO, WE ARE ALIVE TO THE PLEA ON BEHALF OF THE ASSESSEE THAT REASONABLE INQUIRY WAS MADE INTO VARIOUS ASPECTS CONCERNING COST OF LAND AND ALSO THE PURCHA SE WAS MADE IN THE PRECEDING YEARS EXCEPT FOR MERE REGISTRATION OF THE DOCUMENT IN THE CURRENT YEAR. WE ARE NOT IMPRESSED BY SUCH LINE O F ARGUMENTS WHEN TESTED ON THE TOUCH STONE OF SECTION 263 OF THE ACT . THE PURCHASE TRANSACTION CULMINATED AND STOOD CONSUMMATED DURING THE YEAR UNDER REVIEW. THEREFORE, THE CAUSE OF ACTION DID EXIST I N RELATION TO THE ASSESSMENT ORDER IN QUESTION. HENCE, THE PR.CIT WA S FULLY JUSTIFIED IN INVOKING ITS POWER UNDER S.263 OF THE ACT TO SET AS IDE THE ASSESSMENT FRAMED WITHOUT ANY APPLICATION OF MIND ON THE CRUCI AL ASPECT WHICH IS SELF-REVEALING FROM THE STAMP DUTY PAYMENT ITSELF. 9. THE JUDICIAL PRECEDENTS RELIED UPON ON BEHALF OF THE ASSESSEE ARE NOT FOUND TO BE OF ANY ASSISTANCE. THE DECISIONS R EFERRED TOO ARE BROADLY BASED ON THE CIRCUMSTANCES WHERE EITHER REL EVANT MATERIAL WAS NOT FOUND OR WHERE IT WAS FOUND IS A MATTER OF FACT THAT THERE WAS NO FAILURE ON THE PART OF THE AO IS TO MAKE INQUIRIES. NEEDLESS TO SAY, THE SCOPE OF SECTION 263 OF THE ACT IS QUITE DIFFER ENT. IN ORDER TO INVOKE SECTION 263 OF THE ACT, THE COMPETENT AUTHOR ITY IS REQUIRED TO FIND THAT ORDER SOUGHT TO BE REVISED IS ERRONEOUS A ND CAUSED PREJUDICE TO THE REVENUE. A LACK OF INQUIRY ON A PERTINENT P OINT WHICH DEMONSTRATES POSSIBLE REVENUE LEAKAGE OF STAGGERING AMOUNT WOULD DEFINITELY TANTAMOUNT TO THE ORDER BEING BOTH ERRON EOUS AS WELL AS ITA NO.825/AHD/16 [M/S. GAYATRI ENTERPRISE VS. ITO] A.Y. 2011-12 - 8 - PREJUDICIAL TO THE INTEREST OF THE REVENUE. CONSEQ UENT UPON THE ACTION OF PR.CIT, THE ASSESSMENT ORDER IS MERELY CANCELLED AND SET ASIDE TO THE FILE OF THE AO FOR MAKING RELEVANT INQUIRIES AS SPECIFIED FOR WHICH OBJECTIVE MATERIAL IS AVAILABLE AT THE THRESHOLD. THE ASSESSEE HAS NOT ESTOPPED IN ANY MANNER FROM DEALING WITH THE INQUIR Y AS SPECIFIED TO THE AO AND TO REBUT THE PERCEPTION THAT THE PRIMA FACIE BELIEF ON ERROR IN THE ORIGINAL ORDER IS NOT CORRECT. THE ASSESSEE IS NOT PREVENTED FROM SUPPORTING ITS CASE IN ANY MANNER BEFORE THE AO IN THE PROCEEDINGS PURSUANT TO SECTION 263 OF THE ACT. WE THUS DO NOT SEE ANY JUSTIFIABLE REASON TO INTERFERE WITH THE REVISIONAL ACTION OF T HE PR.CIT. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DI SMISSED. SD/- SD/- (MAHAVIR PRASAD) (PRADIP KUMA R KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED 28/02/2019 TRUE COPY S. K. SINHA !'#' / COPY OF ORDER FORWARDED TO:- &. / REVENUE 2. / ASSESSEE (. )*+ , / CONCERNED CIT 4. ,- / CIT (A) /. 012 33*+4 *+#4 56) / DR, ITAT, AHMEDABAD 7. 289 : / GUARD FILE. BY ORDER / 4 /5 *+#4 56) THIS ORDER PRONOUNCED IN OPEN COURT ON 28/02/2 019