ITO Ward 1(4), Salem V. M.Seenivasan, Salem

ITA 874/CHNY/2018

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 5879 (ITAT-CHENNAI)
• Duration Of Justice: 3 year(s) 9 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 11-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Tangible material; Reason to believe; Reassessment proceedings
• Section: 148; 143(3); 133A; 44AB

Judgement Text

आयकर अपीलीय अिधकरण, ‘ए’ Ɋायपीठ, चेɄई IN THE INCOME-TAX APPELLATE TRIBUNAL ‘A’ BENCH, CHENNAI ŵी वी. दुगाŊ राव, Ɋाियक सद˟ एवं ŵी जी. मऺजुनाथा, लेखा सद˟ के समƗ । Before Shri V. Durga Rao, Judicial Member & Shri G. Manjunatha, Accountant Member आयकर अपील सं./I.T.A. No.874/Chny/2018 िनधाŊरण वषŊ/Assessment Years: 2008-09 The Income Tax Officer, Ward 1(4), Salem. Vs. Shri M. Seenivasan, No. 2-12-1, Yercaud Main Road, Kannankurichi, Salem 636 008. [PAN: AYUPS1767J] (अपीलाथŎ /Appellant) (ŮȑथŎ/Respondent) अपीलाथŎ की ओर से / Appellant by : Shri AR.V. Sreenivasan, Addl. CIT ŮȑथŎ की ओर से/Respondent by : Shri T. Vasudevan, Advocate सुनवाई की तारीख/ Date of hearing : 14.12.2021 घोषणा की तारीख /Date of Pronouncement : 22.12.2021 आदेश /O R D E R PER V. DURGA RAO, JUDICIAL MEMBER: This appeal filed by the Revenue is directed against the order of the ld. Commissioner of Income Tax (Appeals), Salem, dated 29.12.2017 relevant to the assessment year 2008-09 passed under section 152 and 143(3) r.w.s. 147 of the Income Tax Act, 1961 [“Act” in short]. 2. Facts of the case are, in brief, that the assessee is an individual and is engaged in buying and selling of plots after effecting I.T.A. No. 874/Chny/18 2 improvements on it. There was a survey conducted under section 133A of the Act in the premises of the assessee on 30.10.2008. A statement was recorded in the course of survey from Shri M. Seenivasan, the assessee. Subsequently, the assessee filed return of income on 25.03.2010 admitting total income of ₹.13,88,530/-, in which, he adopted the sale value of plot at ₹.125/- per sq. ft. The Assessing Officer completed the assessment under section 143(3) of the Act on 31.12.2010 determining the total income at ₹.47,01,260/- by adopting the sale value at ₹.175/- per sq.ft. and added the difference of ₹.33,12,725/- to the returned income. The assessee carried the matter in appeal before the ld. CIT(A). The ld. CIT(A) has considered the value of two plots at ₹.175/- per sq.ft. and the remaining plots value at ₹.150/- per sq.ft. As against the order passed by the ld. CIT(A), the assessee as well as the Department carried the matter in appeal before the Tribunal. The Tribunal, vide its common order dated20.09.2013 in I.T.A. No. 481 & 482/Mds/2013, allowed the assessee’s appeal and dismissed the appeal of the Department, wherein, the Tribunal upheld the value of plots at ₹.125/- per sq.ft. I.T.A. No. 874/Chny/18 3 3. Subsequently, after recording the reasons for reopening of assessment dated 04.03.2015 on the ground that there is an income escaped from assessment and the reasons furnished to the assessee by the Assessing Officer are reproduced as under: “This office is in receipt of your reply dated 15.04.2013 for the notice issued u/s 148 of the I.T. Act, 1961 for the AY 2008-09. As requested by you through your authorized representative, the reasons for reopening of the assessment u/s 147 of the I.T. Act, 1961 in your case for the AY 2008-09 are furnished as under: “The assessment was completed u/s 143(3) of the I.T. Act, 1961 based on the finding that the assessee has sold 66557 sq.ft. of land during the Financial Year 2007-08 (A.Y. 2008-09). But during the proceedings for AY 2009-10m it is seen that the assessee has sold 71,173 sq.ft. of land during F.Y. 2007-08 and hence there is omission of 4616 sq.ft. of land to be assessed for the A.Y. 2008-09. Thus, there is reason to believe that income has escaped from assessment according to section 147”. From the above, the Assessing Officer came to a conclusion that the assessee has sold 71,173 sq.ft. of land during the financial year 2007- 08 and the Assessing Officer has taken only the extent of 66,557 sq.ft. and therefore, there is omission of 4616 sq.ft. of land to be assessed for the assessment year 2008-09. This is the basis for the Assessing Officer to reopen the assessment. 4. During the course of reassessment proceedings, the Assessing Officer has collected the information from the Sub-Registrar Office and the same was extracted at page No. 8 and came to a conclusion that I.T.A. No. 874/Chny/18 4 the total extent of land sold by the assessee of 72,173 sq.ft. Accordingly, he has calculated the sale consideration by considering the sale value per sq.ft. at ₹.175/- and according to him, the sale consideration is of ₹.1,26,30,275/- [72,173 sq.ft. x ₹.175] and completed the reassessment order dated 30.03.2015. 5. The assessee carried the matter in appeal before the ld. CIT(A). Before the ld. CIT(A), the assessee has submitted that as per the report under section 44AB in Form No. 3CD sub-clause (iii), the sale during the previous year was 71,173 sq.ft. and the price offered by the assessee as per trading account is ₹.89,11,875/-. It is also submitted by letter dated 27.03.2015 of the assessee that while filing the return, the assessee has stated that the quantity sold during the year as 71,173 sq.ft. instead of 72,173 sq.ft. and the above mistake crept in due to typographical error and it was submitted that there is no change in the sale value admitted. By considering the same, the ld. CIT(A) has quashed the reopening of assessment on the ground that there is no escapement of income. 6. The Department carried the matter in appeal before the Tribunal. The ld. DR has submitted that in the assessment order, the Assessing I.T.A. No. 874/Chny/18 5 Officer has taken total sq.ft. area shown by the assessee at 66,557 sq.ft. instead of 72,173 sq.ft. Therefore, there is omission of 4616 sq.ft. of land to be assessed. Therefore, there is escapement of income and submitted that the Assessing Officer has rightly reopened the assessment. 7. On the other hand, the ld. Counsel for the assessee has submitted that the Assessing Officer reopened the assessment on the ground that there is escapement of income by considering the land sold by the assessee at 175/- per sq.ft., in fact, the land sold by the assessee was ₹.125/- per sq.ft., which was finally accepted by the ITAT and therefore, there is no escapement of income. 8. We have heard both the sides, perused the materials available on record and gone through the orders of authorities below. In this case, as per audit report under section 44AB of the Act, the extent of plots sold by the assessee was 71173 sq.ft. for a consideration of ₹.89,11,875/-. In the original assessment order dated 31.12.2010, the Assessing Officer has taken the total extent of land sold by the assessee as 66,557 sq.ft. and adopted the sale value at ₹.175/- per sq.ft. Subsequently, the Assessing Officer reopened the assessment I.T.A. No. 874/Chny/18 6 on the ground that the land sold by the assessee is 71,173 sq.ft. and the Assessing Officer has taken the land sold only to the extent of 66,557 sq.ft. and therefore, there is omission of 4616 sq.ft. of land to be assessed. We find that the very basis for reopening of assessment by the Assessing Officer is the material filed by the assessee i.e., the audit report filed under section 44AB of the Act in Form No. 3CD. It is not a new material found by the Assessing Officer. The Assessing Officer also not made any enquiry. As per the reasons recorded, there is escapement of income in respect of land sold by the assessee to the extent of 4616 sq.ft. Ultimately, in the assessment order, the Assessing Officer has recorded that there is only escapement of 1000 sq.ft. and for that the Assessing Officer came to a conclusion that the quantity of plots sold as per audit report under section 44AB of the Act in Form 3CD at 71,173 sq.ft., whereas, as per the information obtained from the Sub-Registrar Office, the total extent of plots sold by the assessee was 72,173 sq.ft. 9. From the above, we find that the Assessing Officer has reopened the assessment as income escaped assessment only on the basis of the tax audit report in Form No. 3CD filed under section 44AB of the Act, which was filed by the assessee before the Assessing Officer I.T.A. No. 874/Chny/18 7 during the course of original assessment proceedings. The Assessing Officer originally came to a conclusion that there is escapement of income from assessment as there is omission of 4616 sq.ft. of land to be assessed. Subsequently, he came to a conclusion that the escapement of income was only for 1000 sq.ft. of land sold. Accordingly, the Assessing Officer has value the land sold by the assessee to the extent of 72173 sq.ft. at the rate of ₹.175/- per sq.ft. instead of the rate of ₹.125/- per sq.ft. adopted by the ITAT. Even assuming a moment that there is escapement of income to the extent of 1000 sq.ft., the value adopted by the Assessing Officer was at ₹.175/- per sq.ft. for the extent of land sold of 71,173/- sq.ft., which is much lower than the rate admitted by the assessee and adopted by the ITAT at ₹.125/- per sq.ft. for the land sold to the extent of 72173 sq.ft. According to the assessee, the land sold is ₹.125/- per sq.ft. and the same was finally upheld by the ITAT. In view of the above, the ld. CIT(A) came to a conclusion that there is no escapement of income and the reopening of assessment is not valid. For the sake of convenience, the relevant portion of the CIT(A)’s order is reproduced as under: I.T.A. No. 874/Chny/18 8 “9. A copy of the Remand Report of the Assessing Officer was provided to the appellant for his comments, rebuttal, if any. The appellant, through his Authorized Representative filed their comments dated 20.11.2017 which is as under: QUOTE The ITO in his report is justifying the reopening of assessment u/s 147 by stating that there was understatement of the sale area of plots. According to the ITO, the assessee has wrongly stated the sale area to be 66557 sq. ft. whereas the actual area of sale of land was 72173 sq.ft. So, according to ITO, there is omission of 4616 sq.ft. of area to be assessed for which he says the reopening is correct. In this regard, the assessee submits that the case of assessee had always been that he had sold 72173 sq. ft. of land. This was so stated in the tax audit report, profit & loss account and also the computation of income by the assessee were all based on this much area of lands sold. It is an undisputed fact that the total consideration received by assessee on the sale of lands was Rs. 89,11,875/- and it was also accepted by officer that the rate adopted by assessee was Rs. 125/- per sq.ft. Keeping these undisputed figures as the basis, it can be seen that the land area sold works out to 71295 sq. ft. Hence, at no point of time, the assessee had stated that it had sold 66557 sq.ft. The ITO in his Remand Report is merely clinging on to a sentence in the statement of facts filed before the CIT(A) in the appeal. This sentence is only a narration of the facts that was wrongly put forth by the officer in the assessment order and it is not the statement of facts as available in the records of the assessee. Hence, the ITO is totally on a misconception as to the actual area of lands sold by the assessee. The mistake committed by the officer in the original assessment has been taken as sacrosanct for the purpose of justifying the reopening the assessment under sec. 147. Whereas, the issue has travelled till the ITAT and the ITAT in its order has held that the rate of Rs.125/- per sq. ft. shown by assessee as correct. There being no dispute as to the total consideration received by assessee, i.e. Rs. 89,11,875/- which is the registered document value, the only plausible sale area of land can be 72173 sq.ft. It is submitted that the reasoning of the ITO to reopen the assessment is not in consonance with the proceedings before various authorities thus far and is clearly based on surmises and not on any material available on record. It is further submitted that when the I.T.A. No. 874/Chny/18 9 reopening of assessment is factually incorrect, then the entire proceedings fail for want of jurisdiction. It is therefore submitted that the Learned Commissioner of Income Tax (Appeals) may be pleased to consider the above submissions and hold that the reopening of assessment is not based on any tangible material and further the entire issue having been considered in the earlier proceedings, the impugned proceedings under sec. 147 needs to be cancelled and thus render justice. UNQUOTE 10. I have carefully considered the submissions made by the appellant, the assessment order, Remand Report and the objections to the Remand Report. It is very clear that there is no dispute about the total consideration of Rs.89,11,875/-. The discrepancy is only with regard to the area in sq.ft. being offered. A detailed analysis shows that the assessee had indicated clearly the total area to be 72173 sq.ft. However, during the course of original assessment, the Assessing Officer has adopted an area of 66557 sq.ft, which is 4616 sq.ft. less than the total area, although, the sale consideration is the same. This issue has been raised by the assessee time and again even before the Assessing Officer during the course of re-opening as well as during the assessment proceedings and also during his reply to the Remand Report/ Remand Proceedings. 10.1. Hence it is very clear that there is no lapse on the part of the assessee in so far as furnishing the correct details both with respect to the area involved as well as total consideration. The Authorized Representative has very vehemently opposed re-opening before me and has stated a catena of cases wherein such a re-opening has been held to be null and void. 10.2. After examining the facts of the case in the light of the above discussion, I am convinced that the re-opening is not valid, hence the other grounds of appeal are not being dealt with.” In this case, we find that there is mistake in calculation of number of plots sold in the statement and price. Ultimately, the ITAT adopted sale price of plots sold at ₹.125/-, which was adopted by the assessee. I.T.A. No. 874/Chny/18 10 Moreover, the assessee has filed tax audit report under section 44AB of the Act in Form No. 3CD along with return of income and all the details were furnished during the course of assessment proceedings under section 143(3) of the Act. The Assessing Officer has no new material other than the materials furnished by the assessee during 143(3) assessment and thus, we are of the considered opinion that reopening under section 147 of the Act with the existing materials is nothing but mere change of opinion, which cannot be sustained. In view of the above facts and circumstances, the ld. CIT(A) has rightly quashed the assessment order passed under section 143(3) r.w.s. 147 of the Act and, we find no infirmity in the order passed by the ld. CIT(A). Accordingly, the appeal filed by the Revenue stands dismissed. 10. In the result, the appeal filed by the Revenue is dismissed. Order pronounced on the 22 nd December, 2021 at Chennai. Sd/- Sd/- (G. MANJUNATHA) ACCOUNTANT MEMBER (V. DURGA RAO) JUDICIAL MEMBER Chennai, Dated, the 22.12.2021 Vm/- आदेश की Ůितिलिप अŤेिषत/Copy to: 1. अपीलाथŎ/Appellant, 2.ŮȑथŎ/ Respondent, 3. आयकर आयुƅ (अपील)/CIT(A), 4. आयकर आयुƅ/CIT, 5. िवभागीय Ůितिनिध/DR & 6. गाडŊ फाईल/GF.