Rameshwar Ramgopal Goud, Nashik V. Pr. Commissioner of Income-tax,-1, Nashik

ITA 903/PUN/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 3106 (ITAT-PUNE)
• Duration Of Justice: 9 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 05-03-2019
• Assessment Year: 2013-2014
• Appeal Filed On: 18-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Benefit of exemption
• Section: 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER . / ITA NO.903/PUN/2018 / ASSESSMENT YEAR : 2013-14 RAMESHWAR RAMGOPAL GOUD, A-WING, UMIYA APARTMENT, CANADA CORNER, NASHIK PAN : AAUPG2994D VS. PR.CIT-1, NASHIK (APPELLANT) (RESPONDENT) / ORDER PER R.S.SYAL, VP : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE O RDER DATED 19-03-2018 PASSED BY THE PRINCIPAL COMMISSIONER OF INCOME-TAX-1, NASHIK U/S. 263 OF THE INCOME-TAX ACT, 1961 (HEREINAFTER ALSO CALLED THE ACT) IN RELATION TO THE ASSESSMEN T YEAR 2013-14. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSE E FILED HIS ORIGINAL RETURN DECLARING TOTAL INCOME AT RS.1,95,670/-. DU RING THE YEAR UNDER CONSIDERATION, THE ASSESSEE SOLD AGRICULTURAL LAND AT APPELLANT BY SHRI PRAMOD SHINGTE RESPONDENT BY MS. NANDITA KANCHAN DATE OF HEARING 05-03-2019 DATE OF PRONOUNCEMENT 06 -03-2019 ITA NO.903/PUN/2018 RAMESHWAR RAMGOPAL GOUD 2 GUT NO.901, ANJANERI SHIVAR, NASHIK. SALE CONSIDERATION, AS P ER SALE DEED, WAS DECLARED AT RS.80.00 LAKH. AS AGAINST THA T, THE ASSESSEE CLAIMED THAT HE ACTUALLY RECEIVED A SUM OF RS.3 .00 CRORE AGAINST THE SALE OF AGRICULTURAL LAND, VIZ., RS.80.00 LAKH THRO UGH CHEQUE; RS.1.20 CRORE WAS RETAINED BY THE BUILDER AGAINST BOOKING OF TWO FLATS BY THE ASSESSEE; AND THE REMAINING RS.1.00 C RORE WAS GIVEN TO HIS FRIEND SHRI DALVI. THE ASSESSING OFFICER (AO) FINALIZED THE ASSESSMENT BY COMPUTING LONG TERM CAPITAL GAIN CHARGEABLE TO TAX AT RS.16,78,378/- WITH REFERENCE TO THE F ULL VALUE OF CONSIDERATION ON TRANSFER OF LAND TAKEN AT RS.80.00 LAKH . REMAINING AMOUNT OF RS.2,20,00,000/- WAS TAXED AS UNEXP LAINED CASH CREDIT U/S.68 OF THE ACT. THIS RESULTED INTO COMPUTATION O F TOTAL INCOME AT RS.2.38 CRORE. THE LD. PR. CIT INVOKED HIS JURISDICTION U/S.263 OF THE ACT BY HOLDING THE ASSESSMENT ORD ER TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. IT WAS CONCLUDED IN THE REVISIONARY ORDER THAT THE ENTIRE SALE CONS IDERATION WAS LIABLE TO BE CONSIDERED FOR THE PURPOSE OF COMPUTATION O F CAPITAL GAIN AND FURTHER EXEMPTION U/S.54F WAS TO BE GIVEN IN RESPECT OF INVESTMENT IN ONE FLAT. THE ASSESSEE IS AGGRIEV ED BY THE REVISIONARY ORDER PASSED BY THE LD PR. CIT. ITA NO.903/PUN/2018 RAMESHWAR RAMGOPAL GOUD 3 3. WE HAVE HEARD BOTH THE SIDES AND GONE THROUGH THE RELE VANT MATERIAL ON RECORD. IT IS SEEN THAT THE ASSESSMENT ORDER U/S .143(3) WAS PASSED ON 23-03-2016 DETERMINING TOTAL INCOME AT RS.2 38.74 CRORE. THIS WAS FOLLOWED BY THE NOTICE OF DEMAND U/S.156 DETERMINING TOTAL TAX PAYABLE BY THE ASSESSEE AT RS.95,57,390 /-. PURSUANT TO THE REVISIONARY ORDER, THE AO COMPLETED THE ASSESSMENT ON 22-11-2018 DETERMINING TOTAL INCOME AT RS.2,96,55,130/- FOLLOWED BY NOTICE OF DEMAND U/S.156 DETERMINING THE TOTAL AMOUNT OF TAX PAYABLE BY THE ASSESSEE A T RS.84,26,510/-. IN SUCH A CONCLUDED ASSESSMENT, THE A O DID NOT GRANT ANY BENEFIT OF EXEMPTION U/S.54F AS AGAINST THE DIRECTION OF THE CIT FOR GRANTING SUCH BENEFIT IN RESPECT OF ONE FLAT PU RCHASED BY THE ASSESSEE. NOTWITHSTANDING THAT, IT IS SEEN THAT THE AMOUN T OF TAX DETERMINED PURSUANT TO THE REVISIONARY ORDER HAS BEEN COMPUTED AT RS.84.26 LAKH, WHICH IS LOWER THAN THE AMOUNT OF TAX COMPUTED PURSUANT TO THE ORIGINAL ASSESSMENT U/S.143(3) AT RS.95.57 LAKH. 4. SECTION 263 EMPOWERS THE COMMISSIONER OF INCOME-TAX TO REVISE AN ASSESSMENT ORDER WHICH IS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. IT IS TRITE LAW THAT THE REVISIONARY POWER CAN BE EXERCISED ONLY WHEN THE ASSESSM ENT ORDER PASSED BY THE AO IS BOTH ERRONEOUS AS WELL AS PREJU DICIAL TO ITA NO.903/PUN/2018 RAMESHWAR RAMGOPAL GOUD 4 THE INTEREST OF THE REVENUE. IF ONE OF THE TWO CONDITIONS IS NOT SATISFIED, THE POWER TO REVISE IS OUSTED. HERE IS A CASE I N WHICH THE ASSESSMENT ORDER PASSED PURSUANT TO THE REVISIONARY ORDE R HAS RESULTED IN TOTAL TAX LIABILITY OF THE ASSESSEE AT RS.84.26 LAKH, WHICH IS LESS THAN THE AMOUNT OF TAX ORIGINALLY DETERMINED AS PAYABLE AT RS.95.57 LAKH, WHICH ORDER BECAME SUBJECT MATTER OF REVISIO N BY THE LD. PR. CIT. IN SUCH CIRCUMSTANCES, A QUESTION ARISES AS TO WHETHER THE ORIGINAL ASSESSMENT ORDER CAN BE CONSIDERED A S NOT PREJUDICIAL TO THE INTEREST OF THE REVENUE? 5. IN THIS REGARD, THE LD. DR HAS RELIED ON THE JUDGMENT OF HONBLE SUPREME COURT IN MALABAR INDUSTRIAL COMPANY LTD. VS. CIT (2000) 243 ITR 83 . SHE EMPHASIZED ON THE MEANING OF THE TERM PREJUDICIAL TO THE INTEREST OF THE REVENUE. SHE ACCENTUATED ON THE OBSERVATIONS OF THE HONBLE SUPREME COURT TO THE EFFECT TH AT EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF AO CANNOT BE TREATED AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. I N OUR CONSIDERED OPINION, RELIANCE ON ONE LINE OF THE JUDGMENT, TAKEN OUT OF CONTEXT, CANNOT BRING THE CASE OF THE REVENUE ANY FUR THER. AN ORDER CAN BE SAID TO BE PREJUDICIAL TO THE INTEREST OF THE REVENUE WHEN IT SUFFERS LOSS IN TERMS OF TAX AMOUNT. THE HONBLE JURISDICTIONAL HIGH COURT IN CIT VS. HINDUSTAN LEVER LTD. (2012) 343 ITR 161 (BOM.) CONSIDERED THIS ISSUE, AFTER TAKING NOTE OF THE ITA NO.903/PUN/2018 RAMESHWAR RAMGOPAL GOUD 5 JUDGMENT IN THE CASE OF MALABAR INDUSTRIAL COMPANY LTD. (SUPRA) . THEIR LORDSHIPS IN HINDUSTAN LEVER LTD. ( SUPRA) HELD AS UNDER :- AS REGARDS THE ORDER BEING PREJUDICIAL TO THE INTE RESTS OF THE REVENUE, THE JUDGMENT IN MALABAR INDUSTRIAL COMPANY ADVERTS TO THE DECISIONS OF THE KARNATAKA AND GUJARAT HIGH COU RTS AND OF THE VIEW OF THE DIVISION BENCH IN GABRIEL INDIA, ACCORD ING TO WHICH, A LOSS OF TAX HAS BEEN REGARDED AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE SUPREME COURT HAS HELD THAT IF DUE TO AN ERRONEOUS ORDER OF THE INCOME TAX OFFICER, THE REVENUE IS LOS ING TAX LAWFULLY PAYABLE BY A PERSON, IT WOULD CERTAINLY BE PREJUDIC IAL TO THE INTERESTS OF THE REVENUE. EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF THE ASSESSING OFFICER, CANNOT BE TREATE D AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. FOR INSTANCE, WHERE T HE ASSESSING OFFICER ADOPTED ONE OF SEVERAL COURSES PERMISSIBLE IN LAW OR WHERE TWO VIEWS ARE POSSIBLE AND THE ASSESSING OFFICER HA S ADOPTED ONE VIEW WITH WHICH THE COMMISSIONER DOES NOT AGREE, IT HAS BEEN HELD THAT IT CANNOT BE TREATED AS AN ERRONEOUS ORDER PRE JUDICIAL TO THE INTERESTS OF THE REVENUE UNLESS THE VIEW TAKEN IS U NSUSTAINABLE IN LAW. 6. IN THIS CASE, THE HONBLE BOMBAY HIGH COURT HAS HELD TH AT IF DUE TO ERRONEOUS ORDER OF THE INCOME-TAX OFFICER, THE R EVENUE IS LOSING TAX LAWFULLY PAYABLE BY A PERSON, IT WOULD BE CERTAINLY PREJUDICIAL TO THE INTEREST OF THE REVENUE . A PART OF THE JUDGMENT IN MALABAR INDUSTRIAL COMPANY LTD. (SUPRA) RELIED ON BY THE LD. DR HAS ALSO BEEN CONSIDERED BY THE HONBLE JURISDICTIONAL HIGH COURT IN WHICH IT WAS SEEN THAT EVERY LOSS OF REVENUE AS A CONSEQUENCE OF THE ORDER OF THE AO CANNOT BE TREATED AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. THIS WAS FURTHER EXPLAINE D WITH THE HELP OF AN EXAMPLE THAT WHERE THE AO ADOPTED ONE OF SEVERAL COURSES PERMISSIBLE IN LAW OR WHERE TWO VIEWS ARE POSSIBLE AND THE ITA NO.903/PUN/2018 RAMESHWAR RAMGOPAL GOUD 6 AO HAS ADOPTED ONE WITH WHICH THE CIT DOES NOT AGREE, THE ORDER CANNOT BE TREATED AS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE UNLESS A VIEW TAKEN IS UNSUSTAINABLE IN LAW. 7. ADVERTING TO THE FACTS OF THE INSTANT CASE, WE FIND THAT THE DEPARTMENT, BY VIRTUE OF THE REVISIONARY ORDER, IS LOSING TAX LAWFULLY PAYABLE BY THE ASSESSEE. THAT BEING THE POSITION, THE ASSESSMENT ORDER CANNOT BE CONSIDERED AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. SINCE THE ASSESSMENT ORDER DOES NOT SUFFER FROM THE SECOND INFIRMITY NAMELY PREJUDICIAL TO THE INTEREST OF THE REVENUE, WE HOLD THAT THE REVISIONARY POWER U/S.263 CANNOT BE EXERCISED AS BOTH THE LIMBS OF AN ORDER, BEING, ERRON EOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE ARE NOT CUMULATIVELY SATISFIED. WE, THEREFORE, SET-ASIDE THE IMPUGNED ORDER. 8. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 06 TH MARCH, 2019. SD/- SD/- (PARTHA SARATHI CHAUDHURY) (R.S.SYAL) JUDICIAL MEMBER VI CE PRESIDENT PUNE; DATED : 06 TH MARCH, 2019 ITA NO.903/PUN/2018 RAMESHWAR RAMGOPAL GOUD 7 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. THE ACIT, RANGE-1 NASHIK 4. 5. , , / DR B, ITAT, PUNE; / GUARD FILE. / TRUE COPY // / BY ORDER, // TRUE COPY // SENIOR P RIVATE SECRETARY , / ITAT, PUNE DATE 1. DRAFT DICTATED ON 05-03-2019 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 05-03-2019 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. DATE OF UPLOADING ORDER SR.PS 8. FILE SENT TO THE BENCH CLERK SR.PS 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK 10. DATE ON WHICH FILE GOES TO THE A.R. 11. DATE OF DISPATCH OF ORDER. *