ITO, CHENNAI V. A.J.Jallalluddin, CHENNAI

ITA 874/CHNY/2011

• Counselvise Citation: 87421714 RSA 2011
• Duration Of Justice: 1 year(s) 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-06-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 27-06-2012
• Assessment Year: 1998-1999
• Appeal Filed On: 12-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K E B RENGARAJAN JR
• Assessee Lawyers: KARUNAKARAN
• Keywords: Question of law
• Section: 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH D CHENNAI BEFORE DR. O.K. NARAYANAN, VICE PRESIDENT AND SHRI S.S. GODARA, JUDICIAL MEMBER .. I.T.A. NO. 874/MDS/2011 ASSESSMENT YEAR :1998-99 THE INCOME TAX OFFICER, BUSINESS WARD-XIII(2), CHENNAI V. A.J. JALLALLUDDIN BLOCK NO.R, 7/75, 13 TH STREET ANNA NAGAR EAST CHENNAI 600 040. PAN: ABFPJ3111R (APPELLANT) (RESPONDENT) C.O. NO.99/MDS/2011 ( IN I.T.A. NO. 874/MDS/2011) ASSESSMENT YEAR :1998-99 A.J. JALLALLUDDIN BLOCK NO.R, 7/75, 13 TH STREET ANNA NAGAR EAST CHENNAI 600 040. V. THE INCOME TAX OFFICER, BUSINESS WARD-XIII(2), CHENNAI PAN: ABFPJ3111R CROSS OBJECTOR (RESPONDENT) DEPARTMENT BY : SHRI KEB RENGARAJAN, JR. STANDING COUNSEL ASSESSEE BY : SHRI KARUNAKARAN, ADVOCATE DATE OF HEARING : 27 JUNE 2012 DATE OF PRONOUNCEMENT : 10 JULY 2012 I.T.A. NO.874/MDS/2011 & CO NO.99/MDS/2011 2 O R D E R PER S.S.GODARA, JUDICIAL MEMBER : THIS APPEAL BY THE REVENUE AND THE CROSS OBJECTIO N BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE CIT( APPEALS)XII, CHENNAI, DATED 02.2.2011. THE RELEVANT ASST. YEAR IS 1998-99. TH E PROCEEDINGS ARE UNDER SEC.143(3) OF THE I.T. ACT, 1961. 2. THE BRIEF FACTS OF THE CASE ARE THAT ON 31.12. 1997, THE ASSESSEE FILED A DECLARATION UNDER VOLUNTARY DISCLOSURE SCHE ME, 1997 (HEREINAFTER REFERRED TO AS VDIS) AND DECLARED AN INCOME OF RS.32,45,215/ - IN THE ASSESSMENT YEAR 1994-95 WITHOUT PAYING ANY TAX WHILST MAKING THE D ECLARATION. 3. THE ASSESSING OFFICER ON BEING INTIMATED OF THE DECLARATION, ISSUED NOTICE TO THE ASSESSEE UNDER SEC.148 READ WITH SEC. 147 OF THE I.T.ACT. THE ASSESSEE FILED RETURN OF INCOME IN RESPONSE TO THE NOTICE, DECLARING NIL INCOME. THEREAFTER THE ASSESSING OFFICER PASSED BEST JUDGM ENT ORDER ON 30.3.2006 RAISING A DEMAND OF RS.33,15,230/-. 4. THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(AP PEALS) WHICH WAS DISMISSED VIDE ORDER DATED 22.12.2006, HOLDING THE REIN THAT IN IS DISCLOSURE THE ASSESSEE DID NOT MENTION CAPITAL GAINS AND FURTH ER HELD THAT SEC.69/69A/69B OF THE I.T.ACT WERE APPLICABLE BECAUSE THE UNDISCLOSE D INCOME HAD COME TO THE I.T.A. NO.874/MDS/2011 & CO NO.99/MDS/2011 3 NOTICE OF THE DEPARTMENT IN THE FINANCIAL YEAR RELE VANT TO THE ASSESSMENT YEAR 1998-99. 5. THE ASSESSEE THEREAFTER FILED APPEAL BEFORE THI S TRIBUNAL. THE CO- ORDINATE BENCH OF THIS TRIBUNAL RESTORED THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO AFFORD OPPORT UNITY OF HEARING TO THE ASSESSEE. IT IS IN THIS BACK-GROUND THAT THE ASSES SMENT STOOD REVIVED BEFORE THE ASSESSING AUTHORITY. 6. IN PROCEEDINGS AFRESH, THE ASSESSEE SUBMITTED W ORKING OF CAPITAL GAINS IN ASSESSEES HANDS AS UNDER :- SALE PROCEEDS RS.55,00,000/- LESS INDEXED COST RS. 4,70,920/- COMPENSATION PAID TO STOCKHOLDERS RS.20,46,096/- BROKERAGE RS. 82,374/- RS.29,00,610/- BESIDES THIS, INTER-ALIA, HE ALSO CONTENDED THAT H E HAD ALREADY FILED RETURN OF INCOME BEFORE THE ASSESSING OFFICER FOR THE ASSESSM ENT YEAR 1994-95. NOT ONLY THIS, THE ASSESSEE ALSO FILED WRITTEN SUBMISSIONS C HALLENGING THE VALIDITY OF THE ASSESSMENT PROCEEDINGS ON THE GROUND THAT NO VALID NOTICE UNDER SEC.143(2) OF THE I.T.ACT WAS ISSUED WITHIN ONE YEAR OF FILING O F THE RETURN OF INCOME. THE ASSESSEE ALSO RAISED A CONTENTION THAT SINCE THE AM OUNT IN QUESTION BELONGS TO THE ASSESSMENT YEAR 19994-95 AS THE CAPITAL GAINS H AD ARISEN BECAUSE OF A SALE DEED EXECUTED ON 13.3.1994, THE SAME COULD NOT BE C OMPUTED IN THE ASSESSMENT YEAR 1997-98. I.T.A. NO.874/MDS/2011 & CO NO.99/MDS/2011 4 7. THE ASSESSING OFFICER DID NOT ACCEPT THE ARGUME NTS OF THE ASSESSEE. BY NEGATING VARIOUS PLEAS, THE ASSESSING AUTHORITY OBSERVED THAT IN SO FAR AS THE LEGAL PLEA REGARDING VALIDITY OF NOTICE UNDER SEC.143(2) WAS CONCERNED, THE ASSESSEE WAS ESTOPPED FROM RAISING THE SAME, MO RE SO, WHEN THE SAME WAS NOT RAISED BEFORE THE TRIBUNAL IN THE RELEVANT REMA ND ORDER. IN THIS MANNER, THE ASSESSING OFFICER TREATED THE AMOUNT OF RS.32,45,21 5/- AS UNDISCLOSED INCOME AVAILABLE WITH THE ASSESSEE FOR THE ASSESSMENT YEAR 1998-99, BECAUSE IN HIS OPINION, PROVISIONS IN SEC.69/69A/69B OF THE ACT WE RE SQUARELY APPLICABLE TO THE FACTS OF THE CASE. 8. IN APPEAL, THE CIT(APPEALS) HAS ACCEPTED THE CO NTENTIONS OF THE ASSESSEE ON MERITS BY HOLDING THAT SINCE THE CAPITA L GAIN INCOME PERTAINED TO THE ASSESSMENT YEAR 1994-95 WHEREAS THE ASSESSMENT YEAR IN HAND IS 1997-98, THE INCOME IN THE EARLIER ASSESSMENT YEAR COULD NOT BE TAKEN INTO CONSIDERATION. ON MERITS, THE CIT(APPEALS) HAS RETURNED A FINDING T HAT THE INTEREST OF THE REVENUE HAD BEEN PARTIALLY TAKEN CARE OF BY THE PURCHASE OF THE PROPERTY VIZ., M/S. BALMER LAWRIE & CO. LTD., A GOVT OF INDIA ENTERPRISE AS CAPITAL GAINS ON RS.6,05,505/- HAD BEEN PAID ON 31.3.1994 AS INTIMAT ED TO THE APPELLANT BY THE SAID COMPANY THROUGH LETTER DATED 07.7.1994. IN TH IS MANNER, THE ASSESSEES APPEAL HAS BEEN ALLOWED BY THE LOWER APPELLATE AUT HORITY. THE REVENUE, THEREFORE, HAS FILED THE INSTANT APPEAL RAISING ITS GRIEVANCES ON MERIT WHEREAS THE ASSESSEE HAS PREFERRED THE CROSS OBJECTION CHALLENG ING THE VERY VALIDITY OF THE I.T.A. NO.874/MDS/2011 & CO NO.99/MDS/2011 5 ASSESSMENT. SINCE OUTCOME OF THE MERITS OF THE CAS E DEPENDS ON THE FATE OF THE CROSS OBJECTION FILED, WE ARE TAKING UP THE GROUNDS RAISED IN CROSS OBJECTIONS FIRSTLY. 9. ARGUING IN SUPPORT OF THE OBJECTIONS, THE LEARN ED COUNSEL FOR THE ASSESSEE BEFORE US HAS SUBMITTED THAT ON FACTS, THE ASSESSING OFFICER HAS NO WHERE NEGATED HIS PLEA OF VALIDITY OF THE NOTICE UN DER SEC.143(2) OF THE OF THE I.T.ACT. AS PER LEARNED A.R., THE ONLY REASON GIVE N BY THE ASSESSING OFFICER IS THAT THE ASSESSEES RIGHT TO RAISE THE PLEA HAS BEE N WAIVED OFF SINCE THE SAME WAS NOT RAISED IN THE EARLIER ASSESSMENT PROCEEDING S BEFORE THE ITAT., WHICH CULMINATED IN REMAND ORDER DATED 07.8.2007. IT HAS BEEN FURTHER CONTENDED THAT IN THE CROSS OBJECTIONS, HE HAS RAISED A SUBS TANTIAL LEGAL PLEA WHICH DOES NOT REQUIRE EITHER ANY NEW FACTS OR EVIDENCE. SINC E IN THE OPINION OF THE ASSESSEE, THERE IS NO MATERIAL TO REBUT HIS CONTENT ION THE ASSESSMENT ITSELF IS AGAINST THE LAW AND SQUARELY COVERED BY THE DECISI ON OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V C. PALANIAPPAN (284 ITR 247). 10. THE LD. DEPARTMENTAL REPRESENTATIVE, ON THE OT HER HAND, HAS STRONGLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER IN THI S REGARD BY SUBMITTING THAT THE CROSS OBJECTIONS ARE NOT MAINTAINABLE AT THIS STAGE . 11. WE HAVE HEARD BOTH PARTIES AT CONSIDERABLE LEN GTH AND ALSO PERUSED THE RELEVANT FINDINGS AND CASE LAW REFERRED TO HEREIN ABOVE. IT TRANSPIRES THAT THE ASSESSING OFFICER HAD PASSED TH E ORDER UNDER SEC.144 OF THE OF THE I.T.ACT WHICH WAS CONFIRMED BY CIT(A). THE REFORE, THE MATTER WAS I.T.A. NO.874/MDS/2011 & CO NO.99/MDS/2011 6 RESTORED BACK TO THE ASSESSING OFFICER BY THE CO-OR DINATE BENCH ON 07.8.2007. IN THE REMAND PROCEEDINGS, THE ASSESSEE HAD RAISED THE LEGAL PLEA UNDER SEC.143(2) OF THE ACT. WITHOUT EVEN DEALING WITH THE FACTUAL ASPECT OF THE PLEA, THE ASSESSING OFFICER HAS DECLINED IT BY CITING P RINCIPLE OF ESTOPPLE. IN OUR OPINION, THE SAME IS NOT SUSTAINABLE BECAUSE THE PL EA CHALLENGING THE VALIDITY OF THE ASSESSMENT GOES TO THE ROOT OF THE CASE AND IF THE ASSESSMENT ITSELF IS HELD TO BE BAD IN THE EYES OF LAW NOTHING FURTHER SURVIV ES. WE ALSO FIND SUPPORT FROM THE JUDGMENT OF THE HON'BLE MADRAS HIGH COURT AS RE FERRED TO HEREIN ABOVE, WHICH READS AS UNDER :- IN RESPECT OF QUESTION NO.1, WE FIND THAT ON A SI MILAR ISSUE WHICH CAME UP FOR CONSIDERATION IN CIT V. M. CHELLAPPAN [2006] 281 ITR 444, DIVISION BENCH OF THIS COURT, IN WHICH ONE O F US WAS A PARTY (P.D. DINAKARAN I) APPLYING THE RATIO LAID DOWN B Y THE PUNBJAB AND HARYANA HIGH COURT IN VIPAN KHANNA V. CIT[200 2] 255 ITR 220 (P&H), HELD AS FOLLOWS (PAGE 115) : ADMITTEDLY, NO NOTICES UNDER SECTION 143(2) OF TH E ACT WERE SERVED ON THE ASSESSEES WITHIN THE STIPULATED PERIOD O F TWELVE MONTHS AND, THEREFORE, THE PROCEEDINGS UNDER SECTION 143 OF T HE ACT COME TO AN END AND THE MATTER BECOMES FINAL IN VIEW OF THE ABOVE THE FIRST QUESTION NOW RAISED , THEREFORE, STANDS CONCLUDED IN FAVOUR OF THE ASSESSEE. IN VIEW OF THE ABOVE CONCLUSION IN RESPECT OF QUE STION NO.1, THE QUESTION OF NON-FURNISHING OF COPIES OF THE RE ASONS BY THE ASSESSING OFFICER FOR REOPENING THE ASSESSMENT DOE S NOT ARISE AT ALL. I.T.A. NO.874/MDS/2011 & CO NO.99/MDS/2011 7 ACCORDINGLY, WE FIND NO ERROR OR ILLEGALITY IN TH E ORDER OF THE APPELLATE TRIBUNAL AND THEE IS NO QUESTION OF LAW, MUCH LESS A SUBSTANTIAL QUESTION OF LAW THAT ARISES OUT OF THE ORDER OF THE APPELLATE TRIBUNAL FOR OUR CONSIDERATION. THE APP EAL STANDS DISMISSED. NO COSTS. 12. CONSEQUENTLY, DRAWING SUPPORT FROM THE JUDGMEN T OF THE HON'BLE MADRAS HIGH COURT(SUPRA) WE HOLD THAT IN THE INSTAN T CASE AS WELL, NO VALID NOTICE HAD BEEN ISSUED UNDER SEC.143(2) OF THE ACT . RESULTANTLY, IN OUR OPINION, THE ASSESSMENT ITSELF IS CONTRARY TO THE PROVISIONS OF THE ACT. 13. SINCE WE HAVE ALREADY DECIDED THE ISSUE RAISED IN THE CROSS OBJECTION IN FAVOUR OF THE ASSESSEE REGARDING VALID ITY OF THE ASSESSMENT, WE ARE NOT ADJUDICATING ON MERITS OF THE CASE. IN VIEW OF OUR ABOVE DISCUSSION, THE CO FILED BY THE ASSESSEE IS ACCEPTED AND THE APPEAL FI LED BY THE REVENUE IS DISMISSED. 14. ORDER PRONOUNCED ON TUESDAY, THE 10 TH OF JULY 2012 AT CHENNAI. SD/- X X X SD/- X X X ( DR. O.K. NARAYANAN) (S.S. GODARA) VICE PRESIDENT JUDICIA L MEMBER CHENNAI, DATED : 10 TH JULY 2012 JLS. COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE I.T.A. NO.874/MDS/2011 & CO NO.99/MDS/2011 8