Mr. Bhogaonkar Umesh Gajananrao, Kolhapur V. DCIT, Cir.-3(1), Kolhapur

ITA 865/PUN/2011

• Counselvise Citation: 86524514 RSA 2011
• Duration Of Justice: 3 year(s) 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 29-11-2012
• Assessment Year: 1990-1991
• Appeal Filed On: 15-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L PATHADE
• Keywords: Opportunity of being heard
• Section: 143(3); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NO.865/PN/2011 (ASSESSMENT YEAR : 1990-91) MR. BHOGAONKAR UMESH GAJANANRAO, 227/1, E WARD, TARABAI PARK, KOLHAPUR. PAN : AYFPB5403K . APPELLANT VS. DY. COMMISSIONER INCOME TAX, CIRCLE 3(1), KOLHAPUR. . RESPONDENT ASSESSEE BY : MR. M. K. KULKARNI DEPARTMENT BY : MR. P. L. PATHADE ORDER PER G. S. PANNU, AM THE CAPTIONED APPEAL BY THE ASSESSEE IS DIRECTED AG AINST AN ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), KOLHAPUR DATED 24.01.2011 WHICH, IN TURN, HAS ARISEN FROM AN ORDER DATED 31.1 2.2000 PASSED BY THE ASSESSING OFFICER U/S 143(3) R.W.S. 147 OF THE INCO ME-TAX ACT, 1961 (IN SHORT THE ACT) PERTAINING TO THE ASSESSMENT YEAR 1990-9 1. 2. IN THIS CASE, THE IMPUGNED ASSESSMENT HAS BEEN F INALIZED BY THE ASSESSING OFFICER ON 31.12.2000 U/S 143(3) R.W.S. 1 47 OF THE ACT. AS PER THE DISCUSSION IN ASSESSMENT ORDER, A NOTICE U/S 147/14 8 OF THE ACT WAS ISSUED TO THE ASSESSEE ON 02.12.1998 IN TERMS OF WHICH ASSESS EE WAS REQUIRED TO FILE HIS RETURN OF INCOME WITHIN 30 DAYS OF RECEIPT OF N OTICE, WHICH WAS RECEIVED BY THE ASSESSEE ON 11.12.1998. IT IS FURTHER NOTED BY THE ASSESSING OFFICER THAT NO RETURN OF INCOME WAS FILED BY THE ASSESSEE AND T HEREFORE A FRESH NOTICE WAS ISSUED ON 21.09.2000 AND SUBSEQUENTLY ASSESSEE FILED HIS RETURN OF INCOME IN RESPONSE TO THE NOTICE U/S 148 OF THE ACT ON 19.10.2000. 3. IN THE RETURN OF INCOME SO FILED IT IS STATED BY THE ASSESSING OFFICER THAT NO INCOME FROM ANY SOURCE WAS DECLARED. HOWEVER, A COMPUTATION OF LONG ITA NO.865/PN/2011 A.Y. : 1990-91 TERM CAPITAL GAINS IN RESPECT OF SALE OF A PLOT AT KOLHAPUR WAS ANNEXED TO THE RETURN OF INCOME. AS PER THE SAID COMPUTATION, THE TOTAL SALE CONSIDERATION WAS DECLARED AT RS.6,00,000/- AND CERTAIN DEDUCTION S VIZ. RS.3,10,000/-, RS.1,05,000/- AND RS.46,200/- ON ACCOUNT OF PURCHAS E COST, COST OF IMPROVEMENT OF LAND AND STAMP DUTY, ETC. RESPECTIVE LY WERE CLAIMED. HOWEVER, THE ASSESSING OFFICER COMPUTED THE LONG TE RM CAPITAL GAIN AS FOLLOWS :- SALE PRICE OF PLOT AT 227/4, E WARD, TARABAI PARK, KOLHAPUR, ADMEASURING 1092.6 SQ.MT. ON 21.04.1998 6,00,000 LESS : STAMP DUTY, REGISTRATION CHARGES AND COMMISSION 24,000 5,76,000 LESS : 1. COST OF PLOT : A. PURCHASE PRICE OF THE PLOT ON 27.01.1982 35,280 2. STAMP & REG. CHARGES 2,130 37,410 5,38,590 LESS : EXEMPTION U/S. 48(2) 1. BASIC 10,000 2. 50% OF RS.5,38,590 2,64,295 2,74,295 LONG TERM CAPITAL GAIN: 2,64,295 4. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). IN THE APPEAL BEFORE THE CIT(A), ASSESSEE ASSAILED THE ORD ER OF THE ASSESSING OFFICER IN LAW AND ON FACTS. THE ASSESSEE RAISED A PRELIMINARY ISSUE THAT THE IMPUGNED ASSESSMENT PROCEEDINGS WERE BARRED BY LIMI TATION AND IT WAS FURTHER CONTENDED THAT THE ASSESSING OFFICER UNJUST LY DENIED THE CLAIM OF DEDUCTION OF EXPENDITURE RELATING TO COST OF ACQUIS ITION, ETC. THE CIT(A) HAS SINCE DISMISSED THE PRELIMINARILY PLEA OF THE ASSES SEE RELATING TO THE VALIDITY OF THE ASSESSMENT PROCEEDINGS AND WITH REGARD TO THE C OMPUTATION OF LONG TERM CAPITAL GAIN, HE ALLOWED PARTIAL RELIEF RELATING TO THE EXPENDITURE CLAIMED OF RS.22,200/- ON ACCOUNT OF REGISTRATION EXPENSES. N OT BEING SATISFIED WITH THE ORDER OF THE CIT(A), ASSESSEE IS IN FURTHER APPEAL BEFORE US. ITA NO.865/PN/2011 A.Y. : 1990-91 5. THE FIRST AND FOREMOST PLEA RAISED BY THE ASSESS EE BEFORE US IS THAT THE CIT(A) UNJUSTLY REJECTED HIS PLEA THAT THE PURPORTE D NOTICE ISSUED U/S 148 OF THE ACT ON 02.12.1998 WAS NOT VALIDLY SERVED ON THE ASS ESSEE. IN THIS CONTEXT, THE CIT(A) CAME TO CONCLUDE IN PARA 6.1 OF HIS ORDER TH AT THE ASSESSEE HAVING PARTICIPATED THROUGHOUT IN ASSESSMENT PROCEEDINGS B EFORE THE ASSESSING OFFICER, THE AFORESAID PLEA OF THE ASSESSEE WAS NOT JUSTIFIED. IN-FACT, THE CIT(A) IN PARA 6.1 OF HIS ORDER HAS REPRODUCED A SC ANNED IMPRESSION OF THE ORDER-SHEET ENTRIES IN THE ASSESSMENT FOLDER AND HE LD THAT THE APPELLANT PARTICIPATED THROUGHOUT IN THE ASSESSMENT PROCEEDIN GS BEFORE THE A.O. WITHOUT ANY DEMUR OR WITHOUT RAISING ANY OBJECTION AS IS EV IDENT FROM THE FOLLOWING SCANNED IMPRESSION OF ONE OF THE PAGES OF RELEVANT ORDER SHEET FORWARDED BY THE A.O. . 6. A PERUSAL OF THE ORDER OF CIT(A) REVEALS THAT IT IS BASED ON A REPORT OF THE ASSESSING OFFICER DATED 05.04.2010, OPERATIVE P ORTION OF WHICH HAS BEEN EXTRACTED BY THE CIT(A) IN PARA 5 OF HIS ORDER. IN TERMS OF THE SAID REPORT, IT HAS BEEN ASSERTED BY THE ASSESSING OFFICER THAT THE NOTICE U/S 148 OF THE ACT DATED 02.12.1998 WAS SERVED ON ONE MRS. R.V. BHOGAO NKAR, WIFE OF ASSESSEES BROTHER. 7. IN THE AFORESAID CONTEXT, A COMMUNICATION HAS BE EN FURNISHED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE DATED 15.03.201 3 FURNISHING A LETTER OF THE ASSESSING OFFICER DATED 03.10.2010 ENCLOSING A REPORT OF THE INSPECTOR WITH RESPECT TO THE SERVICE OF NOTICE ON MRS. R.V. BHOGAONKAR. FROM THE SAID COMMUNICATION OF THE ASSESSING OFFICER, IT IS EMERG ING THAT THE REPORT OF THE INSPECTOR WAS CALLED FOR BY THE CIT(A) VIDE HIS COM MUNICATION DATED 07.04.2003, COPY OF WHICH IS ALSO ANNEXED THERETO. AS PER THE COMMUNICATION OF THE CIT(A) DATED 07.04.2003, ASSESSEE ASSERTED B EFORE HIM THAT THE NOTICE DATED 02.12.1998 PURPORTED TO HAVE BEEN SERVED ON O NE, MRS. R.V. BHOGAONKAR, WIFE OF HIS BROTHER, WAS NOT HANDED-OVE R TO HIM AT ALL AS RELATIONS ITA NO.865/PN/2011 A.Y. : 1990-91 BETWEEN HIM AND HIS BROTHER WERE NOT GOOD ON ACCOUN T OF SOME ONGOING PROPERTY LITIGATION. IN ORDER TO VERIFY SUCH CLAIM , THE CIT(A) REQUIRED THE ASSESSING OFFICER TO DEPUTE HIS INSPECTOR TO VERIFY FROM MRS. R.V. BHOGAONKAR WHETHER ASSESSEES CLAIM WAS CORRECT. THE REPORT O F THE ASSESSING OFFICER DATED 03.10.2010 ENCLOSING THE ENQUIRY REPORT OF TH E INSPECTOR IS IN CONTEXT OF THE SAID COMMUNICATION OF THE CIT(A). 8. HOWEVER, WE FIND THAT THE AFORESAID COMMUNICATIO N OF THE ASSESSING OFFICER AND THE REPORT OF THE INSPECTOR ENCLOSED TH EREIN, AS CALLED FOR BY THE CIT(A) VIDE HIS LETTER DATED 07.04.2003 HAS NOT BEI NG CONSIDERED BY HIM WHILE ADJUDICATING ASSESSEES PLEA OF NOT HAVING BEEN SER VED WITH THE NOTICE U/S 148 OF THE ACT DATED 02.12.1998. 9. THE STAND OF THE CIT(A) THAT ASSESSEE DID NOT RA ISE ANY SUCH OBJECTION IN THE ASSESSMENT PROCEEDINGS BEFORE THE ASSESSING OFFICER, IN OUR VIEW, IS ALSO MISPLACED. WE SAY SO FOR THE REASON THAT IN T HE GROUNDS OF APPEAL RAISED BY THE ASSESSEE BEFORE THE CIT(A), WHICH REA D AS UNDER, 1. THE LEARNED DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-3(1), KOLHAPUR IS NOT LEGALLY JUSTIFIED IN MAKING THE ASS ESSMENT IGNORING OUR OBJECTION THAT THE PROCEEDINGS FOR CONCERNED ASSESS MENT YEAR ARE BARRED BY LIMITATION ON LEGAL GROUNDS TAKEN BY THE ASSESSEE V IDE HIS LETTER DATED 06.10.2000, ATTACHED WITH THE RETURN OF INCOME. ASSESSEE POINTED OUT THAT BY WAY OF A LETTER DATED 06.10.2000 ATTACHED WITH THE RETURN OF INCOME IT WAS ASSERTED BEFORE TH E ASSESSING OFFICER THAT THE PROCEEDINGS WERE BARRED BY LIMITATION. THERE IS NO NEGATION TO THE AFORESAID ASSERTIONS OF THE ASSESSEE AND IT SHOWS THAT ASSESS EE DID RAISE THE PLEA OF THE PROCEEDINGS BEING BARRED BY LIMITATION BEFORE THE A SSESSING OFFICER. 10. SO HOWEVER, WHETHER OR NOT THE NOTICE U/S 148 O F THE ACT DATED 02.12.1998 HAS BEEN VALIDLY SERVED IS AN ISSUE WHIC H HAS TO BE ADJUDICATED HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE. THEREFORE, IN OUR ITA NO.865/PN/2011 A.Y. : 1990-91 CONSIDERED OPINION, IT WOULD BE APPROPRIATE THAT TH E CIT(A) REVISITS THE AFORESAID CONTROVERSY IN THE LIGHT OF THE MATERIAL ON RECORD, WHICH HAS BEEN REFERRED TO BY US IN THE EARLIER PART OF THIS ORDER AND WHICH APPEARS TO HAVE ESCAPED HIS ATTENTION. THE ISSUE RELATING TO THE V ALIDITY OF INITIATION OF ASSESSMENT PROCEEDINGS IS A LEGAL ISSUE, WHICH GOES TO THE ROOT OF THE MATTER AND THUS, THE SAME IS REQUIRED TO BE ADJUDICATED AT THE THRESHOLD. IN THIS CONTEXT, WE THEREFORE, SET-ASIDE THE IMPUGNED ORDER OF THE CIT(A) AND RESTORE THE APPEAL BACK TO HIS FILE TO ADJUDICATE AFRESH TH E PLEA OF THE ASSESSEE REGARDING THE VALIDITY OF INITIATION OF PROCEEDINGS U/S 147/148 OF THE ACT IN THE PRESENT CASE. SINCE THE APPEAL IS BEING SET-ASIDE ON THE PRELIMINARILY ISSUE, THE OTHER PART OF THE ORDER OF THE CIT(A) RELATING TO THE MERITS OF THE ADDITION IS ALSO BEING SET-ASIDE AND THE SAME SHALL TO BE DECID ED AFRESH AS PER LAW. NEEDLESS TO MENTION, THE CIT(A) SHALL ALLOW THE ASS ESSEE A REASONABLE OPPORTUNITY OF BEING HEARD BEFORE DECIDING THE APPE AL OF THE ASSESSEE AFRESH IN ACCORDANCE WITH LAW. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED, AS ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH AUGUST, 2014. SD/- SD/- (SHAILENDRA KUMAR YADAV) (G . S. PANNU) JUDICIAL MEMBER ACCOUNT ANT MEMBER PUNE, DATED : 28 TH AUGUST, 2014. SUJEET COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A), KOLHAPUR; 4) THE CIT, KOLHAPUR; 5) THE DR A BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// SR. PRIVATE SECRETARY I.T.A.T., PUNE