Sunil Barry, Pune V. Income-tax Officer, Pune

ITA 905/PUN/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 2334 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 13-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M K VERMA
• Assessee Lawyers: JAYANT G PENDSE
• Keywords: Reopening of assessment; Reason to believe; Set aside
• Section: 143(3); 148

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO.905/PUN/2017 / ASSESSMENT YEAR : 2008-09 SHRI SUNIL BARRY, D1/701, LUNKAD GOLD COAST, VIMAN NAGAR, PUNE 411014. PAN : ANMPB6566F. . / APPELLANT V/S THE INCOME TAX OFFICER, INTERNATIONAL TAXATION 1, PUNE. . / RESPONDENT ASSESSEE BY : SHRI JAYANT G. PENDSE. REVENUE BY : SHRI M.K. VERMA. / ORDER PER ANIL CHATURVEDI, AM : 1. THIS APPEAL FILED BY THE ASSESSEE IS EMANATING OUT OF THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) 13, PUNE DATED 08.0 2.2017 FOR THE ASSESSMENT YEAR 2008-09. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON R ECORD ARE AS UNDER :- ASSESSEE IS A NON-RESIDENT OF INDIA, WHO FILED HIS RETURN OF INCOME FOR A.Y. 2008-09 ON 25.07.2008 DECLARING TOTAL INCOME AT RS . NIL. ON THE BASIS OF INFORMATION FROM THE DDIT, INVESTIGATION UNIT, MU MBAI, IT WAS NOTICED THAT ASSESSEE HAD SOLD PROPERTY FOR RS.1 CR ORE AND HAD DEPOSITED RS.95.25 LAKHS IN CAPITAL GAIN ACCOUNT SCHEME. O N THE BASIS / DATE OF HEARING : 13.06.2019 / DATE OF PRONOUNCEMENT: 20.06.2019 2 ITA NO.905/PUN/2017 OF THE AFORESAID INFORMATION, NOTICE U/S 148 OF THE ACT WAS ISSUED TO ASSESSEE ON 19.03.2015. THEREAFTER THE CASE WAS TAKEN U P FOR SCRUTINY AND ASSESSMENT WAS FRAMED U/S 143(3) R.W.S. 147 OF THE ACT VIDE ORDER DATED 31.03.2016 AND THE CAPITAL GAIN CHARGEABLE TO TAX W AS DETERMINED AT RS.1,18,52,850/-. AGGRIEVED BY THE ORDER OF AO, ASSES SEE CARRIED THE MATTER BEFORE LD.CIT(A), WHO VIDE ORDER DATED 08.02.2017 (IN APPEAL NO.PN/CIT(A)-13/TRO (IT-TP), PUNE/04-2016-17) DISMISSED TH E APPEAL OF ASSESSEE. AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSESSE E IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS : 1. THE REOPENING OF ASSESSMENT IS BAD IN LAW AS TH E REASONS RECORDED FOR REOPENING ARE FACTUALLY INCORRECT. 2. THE LD. D.R. CIT(A) ERRED IN HOLDING THAT THE RE LINQUISHMENT DEED WAS A INVENTED THEORY POST ASSESSMENT ORDER. IT MAY KIN DLY BE HELD THAT APPELLANT HAD NO INTEREST IN INHERITED PROPERTY CON SEQUENT, UPON EXECUTION OF RELINQUISHMENT DEED ON 17TH OCTOBER 20 05. 3. IN ALTERNATE AND WITHOUT PREJUDICE, THE AMOUNT R ECEIVED OF RS. 1 CR. ACCORDING TO FAMILY SETTLEMENT BE HELD AS CONSIDERA TION RECEIVED FOR PROPERTY BY THE APPELLANT, AND THE EXCESS AMOUNT RE TAINED BY TONY BARRY BE HELD AS COST OF SALE OF PROPERTY. 4. WITHOUT PREJUDICE TO GROUND NO 2, THE LD CIT(A) ERRED IN CONFIRMING VALUATION OF PROPERTY AS ON 01-04-1981 AT RS. 72 PE R SQ.FT WHICH WAS CIRCLE RATE FOR UNDEVELOPED LAND EVEN THOUGH THE LA ND WAS DECLARED AS SLUM ON 31-10-1977. 5. WITHOUT PREJUDICE TO GROUND NO. 2, THE AMOUNT OF RS. 75 LAKHS BE HELD AS COST OF SALE OF THE LAND BEING EXPENDITURE INCUR RED BY POWER OF ATTORNEY HOLDER MR. TONY BARRY. 3. ALL THE GROUNDS BEING INTER-CONNECTED ARE CONSIDERED TOGETH ER. 4. BEFORE US, LD.A.R. POINTING TO THE REASONS FOR RE-OPENING WHICH IS STATED IN THE ASSESSMENT ORDER SUBMITTED THAT THE REA SONS RECORDED BY THE AO STATES THAT IN THE RETURN OF INCOME ASSESSEE HA D NOT DISCLOSED THE SALE OF PROPERTY AND THUS IT HAS ESCAPED ASSESSMEN T. HE SUBMITTED THAT THE FORMATION OF BELIEF WAS ON THE BASIS OF THE FACT T HAT ASSESSEE 3 ITA NO.905/PUN/2017 HAD NOT DISCLOSED THE SALE OF PROPERTY IN THE RETURN OF IN COME FILED BY THE ASSESSEE AND THUS THERE WAS AN ESCAPEMENT OF INCO ME WITHIN THE MEANING OF SEC.147 OF THE ACT. LD.A.R. SUBMITTED THAT THE AFORESAID REASONS RECORDED BY THE AO ARE FACTUALLY INCORRECT AN D IN SUPPORT OF WHICH HE POINTED TO THE COPY OF RETURN OF INCOME THAT W AS FILED BY THE ASSESSEE WHICH IS PLACED AT PAGES NOS. 41 TO 43 OF THE P APER BOOK. FROM THE AFORESAID RETURN, HE POINTED TO THE FACT OF DISCLO SURE OF LONG TERM CAPITAL GAINS WHICH IS DISCLOSED BY THE ASSESSEE. HE T HEREFORE SUBMITTED THAT SINCE THE VERY FOUNDATION ON WHICH THE RE -OPENING IS BASED BEING ON INCORRECT PREMISE, THE RE-OPENING OF THE A SSESSMENT DOES NOT SURVIVE AND IN SUPPORT OF WHICH HE PLACED RELIANCE ON THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF VIJAY HARICHA NDRA PATEL VS. ITO REPORTED IN (2018) 400 ITR 167. HE THEREFORE RELY ING ON THE AFORESAID DECISION SUBMITTED THAT WHEN THE VERY BASIS FOR RE-OPENING OF ASSESSMENT WAS ON WRONG FACTUAL PREMISE, THE ASSUMPTION OF JURISDICTION BY THE AO WAS WITHOUT THE AUTHORITY OF LAW A ND THEREFORE RE-ASSESSMENT BE SET ASIDE. LD. D.R. ON THE OTHER HAND DID NOT CONTROVERT THE SUBMISSIONS MADE BY LD.A.R. BUT HOWEVER SUPPORTED THE ORDER OF LOWER AUTHORITIES. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE M ATERIAL ON RECORD. THE ISSUE IN THE PRESENT GROUND IS WITH RESPEC T TO RE-OPENING THE ASSESSMENT U/S 148 OF THE ACT. THE PERUSAL OF THE REASONS FOR RE- OPENING OF THE ASSESSMENT ORDER PASSED U/S 143(3) R.W.S. 147 OF THE A CT REVEALS THAT THE CASE WAS RE-OPENED FOR THE REASON T HAT THE SALE OF THE PROPERTY WAS NOT DISCLOSED BY THE ASSESSEE IN THE RETU RN OF INCOME THAT WAS FILED BY THE ASSESSEE. THE AFORESAID REASON FOR RE-OP ENING IS FACTUALLY INCORRECT IN VIEW OF THE FACT THAT IN THE RETURN OF INCOME FOR 4 ITA NO.905/PUN/2017 A.Y. 2008-09 WHICH HAS BEEN FILED BY THE ASSESSEE AND WHIC H IS PLACED ON RECORD BY THE ASSESSEE IT CAN BE SEEN THAT THE LO NG TERM CAPITAL GAINS HAS BEEN DISCLOSED BY THE ASSESSEE. IT HAS THUS SEEN THAT THE AO HAD FORMED THE BELIEF OF ESCAPING ASSESSMENT ON FACTUALLY INCORRECT PREMISE. A NOTICE U/S 148 OF THE ACT IS A JURISDICTIONAL NOTICE AND EXISTENCE OF A VALID NOTICE U/S 148 OF THE ACT IS A CONDITIO N PRECEDENT FOR EXERCISE OF JURISDICTION BY THE AO TO ASSESS OR RE-ASSES S U/S 147 OF THE ACT. IT IS A SETTLED POSITION OF LAW AS HELD BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF ANITHA A. CHOKSY VS. ITO REPORTED IN (2019) 411 ITR 207 THAT THE AO ACQUIRES JURISDICTION TO ISSUE A RE -OPENING NOTICE ONLY WHEN HE HAS REASON TO BELIEVE THAT INCOME CHARGEA BLE TO TAX HAS ESCAPED ASSESSMENT. THE REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT MUST BE ON CORRECT FACTS. THE CONDITION PRECEDENT OF REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ES CAPED ASSESSMENT ON CORRECT FACTS MUST BE SATISFIED BY THE AO SO AS TO HAVE THE JURISDICTION TO ISSUE THE REOPENING NOTICE. IN THE PR ESENT CASE, THE REASONS RECORDED BY THE AO FOR ISSUING NOTICE FOR RE-OPE NING THAT THE ASSESSEE HAD NOT DISCLOSED CAPITAL GAINS IN THE RETURN OF INCOME THAT WAS FILED BY THE ASSESSEE IS FACTUALLY INCORRECT AND THERE FORE THE REASONS LACKS VALIDITY. IN SUCH CIRCUMSTANCES, WE ARE OF THE VIEW THAT AO WAS NOT JUSTIFIED IN PROCEEDING TO RE-ISSUE THE RE-ASSESSMENT NOTICE AND FOR WHICH WE ALSO DRAW SUPPORT FROM THE DECISION OF HONBLE GU JARAT HIGH COURT IN THE CASE OF VIJAY HARICHANDRA PATEL VS. ITO (SUP RA) WHEREIN THE HONBLE HIGH COURT HAS HELD THAT WHEN THE VERY FOUND ATION ON WHICH REOPENING WAS BASED ON THE REASONS RECORDED BY AO FOR RE-OPENING ASSESSMENT COLLAPSES AND WAS FORMED ON FACTUALLY INCORREC T PREMISE, THE ASSUMPTION OF JURISDICTION U/S 147 OF THE ACT BY THE AO BY ISSUING 5 ITA NO.905/PUN/2017 NOTICE U/S 148 OF THE ACT WAS WITHOUT THE AUTHORITY OF LA W AND COULD NOT BE SUSTAINED. 6. BEFORE US, REVENUE HAS NOT CONTROVERTED THE SUBMISSIO NS MADE BY LD.A.R. NOR HAS PLACED ANY CONTRARY BINDING DECISION IN IT S SUPPORT. CONSIDERING THE TOTALITY OF THE AFORESAID FACTS AND RELYING ON THE DECISIONS CITED HEREIN ABOVE, WE HOLD THAT THE ASSESSME NT ORDER PASSED BY THE AO TO BE BAD IN LAW AND THUS SET IT ASIDE. SINCE WE HAVE SET ASIDE THE ASSESSMENT ORDER PASSED BY THE AO, THE GROU NDS RAISED BY THE ASSESSEE ON MERITS REQUIRES NO ADJUDICATION AS THEY HAV E BEEN RENDERED ACADEMIC. THUS, THE APPEAL OF THE ASSESSEE IS ALLOWED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED ON 20 TH DAY OF JUNE, 2019. SD/- SD/- ( SUSHMA CHOWLA ) ( ANIL CHATURVEDI ) ! / JUDICIAL MEMBER '! / ACCOUNTANT MEMBER PUNE; DATED : 20 TH JUNE, 2019. YAMINI #$%&'('% / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4. 5 6. CIT(A)-13, PUNE. THE CIT (IT/TP), PUNE. '#$ %%&',) &', / DR, ITAT, B PUNE; $*+,/ GUARD FILE. / BY ORDER // TRUE COPY // -./%0&1 / SR. PRIVATE SECRETARY ) &', / ITAT, PUNE.