R.Jayaselvi, Pondcherry V. ITO Ward 1, Pondicherry

ITA 927/CHNY/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 5885 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 10 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 19-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A SUNDARARAJAN CIT
• Assessee Lawyers: T VASUDEVAN
• Keywords: Reopening of assessment; Tangible material; Fair market value; Difference of opinion; Reason to believe; Change of opinion; Capital Gains
• Section: 54B

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, B BENCH : CHENNAI , . , [BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY , JUDICIAL MEMBER ] !' ./I.T.A. NO.927/CHNY/2018. #$% &$ / ASSESSMENT YEAR : 2012-2013. R. JAYASELVI, NO.27, MARIAMMAN KOIL STREET, EDAYARAPALAYAM, PONDICHERRY 605 007. VS. THE INCOME TAX OFFICER, WARD-1, PONDICHERRY. [PAN AWAPJ 1581D] ( / APPELLANT) ( /RESPONDENT) !' '( ) * / APPELLANT BY : SHRI. T. VASUDEVAN, ADV +,'( ) * /RESPONDENT BY : SHRI. A. SUNDARARAJAN, ADDL. CIT. # - ) . /DATE OF HEARING : 23-01-2020 /0&% ) . /DATE OF PRONOUNCEMENT : 12-02-2020 / O R D E R PER INTURI RAMA RAO, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED AG AINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEAL S)-PUDUCHERRY, (CIT(A) FOR SHORT) DATED 10.01.2018 FOR THE ASS ESSMENT YEAR (AY) 2012-2013. ITA NO.927 /2018 :- 2 -: 2. THE ASSESSEE RAISED THE FOLLOWING GROUNDS OF APPEAL : 1. THE ORDER OF THE COMMISSIONER OF LNCOME TAX ( APPEALS) DISMISSED THE APPEAL IS CONTRARY TO LAW, ERRONEOUS AND UNSUSTAINABLE ON THE FACTS OF THE CASE. 2. THE CIT(A) ERRED IN UPHOLDING THE REOPENING OF A SSESSMENT UNDER SEC.147OFTHEACT. 3. THE CIT(A) FAILED TO APPRECIATE THAT THE REOPENI NG WAS BASED ONLY ON CHANGE OF OPINION BY THE OFFICER SINC E THE IDENTICAL ISSUE OF LONG TERM CAPITAL GAINS COMPUTAT ION WAS CONSIDERED BY THE OFFICER IN THE ASSESSMENT U/S.143 (3) DATED 4.9.14, WHEREIN THE CLAIM FOR EXEMPTION WAS CONSIDE RED AND HENCE THE REOPENING FOR THE SAME REASON IS UNTENABL E IN LAW. 4. THE CIT(A) FURTHER FAILED TO APPRECIATE THAT THE RE WAS NO REASON TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMEN T, SINCE THE RETURN OF INCOME FILED BY ASSESSEE WAS THE BASI S FOR ISSUING NOTICE U/S.148 ON 7.11.15 AND THE REOPENING IS NOT IN ACCORDANCE WITH LAW AND NEEDS TO BE ANNULLED. 5. THE CIT(A), IN ANY EVENT, OUGHT TO HAVE SEEN THA T AFTER THE ORDER U/S.143(3), THE ONUS RESTS HEAVILY ON THE OFF ICER TO BRING ON RECORD FRESH MATERIAL THAT HAD NOT BEEN CONSIDER ED EARLIER, WHICH REMAINS UNSUBSTANTIATED AND HENCE THE REOPENI NG OF ASSESSMENT IS UNTENABLE IN LAW. 6. THE CIT(A) ERRED IN CONFIRMING THE DENIAL OF EXE MPTION U/S.54B OF RS.14,00,000 TO THE ASSESSEE. 7. THE CIT(A) FAILED TO APPRECIATE THAT THE ASSESSE E HAD REINVESTED THE SALE PROCEEDS IN AGRICULTURAL LANDS AND RIGHTLY CLAIMED EXEMPTION UNDER SEC.54B AND THE DENIAL OF T HE SAME WAS INCORRECT AND BASED ONLY ON SURMISES AND CONJEC TURES. 8. THE CIT(A) FURTHER FAILED TO APPRECIATE THAT THE LANDS DISPOSED OFF ARE ANCESTRAL IN CHARACTER AND HENCE T HE REINVESTMENT OF THE SALE PROCEEDS IN THE HANDS OF T HE FAMILY MEMBERS IS ENTITLED TO EXEMPTION U/S.54. 9. THE CIT(A) FURTHER FAILED TO APPRECIATE THAT THE DENIAL OF EXEMPTION WAS MERELY ON SURMISES AND THE LANDS BEIN G PART OF A LARGER EXTENT OF LANDS HELD BY ASSESSEE RECEIVED THROUGH FAMILY SETTLEMENT, AND HENCE OUGHT TO HAVE DIRECTED GRANT OF EXEMPTION U/S.54B OF THE ACT. ITA NO.927 /2018 :- 3 -: 10. THE CIT(A) IN ANY EVENT, OUGHT TO HAVE SEEN THA T THE ASSESSEE HAD MADE THE RE-INVESTMENT AND DULY COMPLI ED WITH THE STATUTORY REQUIREMENTS FOR RE-INVESTMENT IN ACC ORDANCE WITH THE PROVISIONS OF THE ACT AND HENCE ON A DUE CONSIDERATION OF THE SAME, OUGHT TO HAVE ALLOWED EX EMPTION U/S.54B AND THUS ALLOWED THE APPEAL. 3. THE BRIEF FACTS OF THE CASE ARE AS UNDER: THE APPELLANT IS AN INDIVIDUAL. THE ASSESSEE HAS NOT FILED ORIGINAL RETURN OF INCOME VOLUNTARILY U/S.139 OF TH E INCOME TAX ACT, 1961 (IN SHORT THE ACT). SUBSEQUENTLY, ON RECE IPT OF INFORMATION THAT ASSESSEE SOLD PROPERTY FOR D1,64,48,000/-, NOTICE U/S.148 OF THE ACT WAS ISSUED. IN RESPONSE TO WHICH ASSESSEE FILED RE TURN OF INCOME DISCLOSING INCOME OF D21,12,020/. AGAINST THE SAID RETURN OF INCOME THE ASSESSMENT WAS COMPLETED VIDE ORDER DATED 04.0 9.2014 AT TOTAL INCOME OF D41,47,210/-. WHILE DOING SO, THE ASSESS ING OFFICER MADE AN ADDITION ON ACCOUNT OF LONG TERM CAPITAL GAINS O F D41,47,210/- AND ASSESSED CAPITAL GAINS ARISING ON SALE OF PROPERTY MEASURING 32894 SQ.FT. IN PONDY CUDDALORE ECR ROAD, EDAIYARPALAYAM VILLAGE THAVALAKUPPAM REVENUE VILLAGE. THE DIFFERENCE IS ON ACCOUNT OF ADOPTION OF LOWER VALUE OF FAIR MARKET VALUE AS ON 01.04.1981. ACCORDINGLY, THE ASSESSMENT WAS COMPLETED BY THE I NCOME TAX OFFICER, WARD I(1), PONDICHERRY (HEREIN AFTER REFE RRED AS THE ASSESSING OFFICER) VIDE ORDER DATED 07.09.2014. THE ASSESSING OFFICER ALLOWED EXEMPTION UNDER THE PROVISIONS OF S ECTION 54B OF THE ITA NO.927 /2018 :- 4 -: ACT OF D14,00,000/- AS CLAIMED BY THE ASSESSEE. SU BSEQUENTLY, BASED ON THE INFORMATION ON RECORD, THE ASSESSING OFFICER FORMED AN OPINION THAT ASSESSEE IS NOT ENTITLED FOR EXEMPTION U/S.54B OF THE ACT. ACCORDINGLY, NOTICE U/S.148 OF THE ACT WAS ISSUED O N 07.11.2015. IN RESPONSE TO WHICH THE ASSESSEE SUBMITTED THAT THE R ETURN OF INCOME FILED ON 07.05.2014 BE TREATED AS RETURN IN RESPON SE TO NOTICE ISSUED U/S.148 OF THE ACT. SUBSEQUENTLY, THE ASSESSMENT CA ME TO BE COMPLETED VIDE ORDER DATED 15.07.2016 WITHDRAWING T HE EXEMPTION GRANTED U/S.54B OF THE ACT ON THE GROUND THAT THE P ROPERTY WAS BROUGHT NOT IN THE NAME OF THE ASSESSEE BUT IN T HE NAME OF DIFFERENT PERSONS. 4. BEING AGGRIEVED, AN APPEAL WAS PREFERRED BEFORE THE LD. CIT(A) CONTENDING THAT THERE WAS NO REASON TO BELI EVE THAT INCOME ESCAPED ASSESSMENT AND THERE WAS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE ALL MATERIAL FACTS WHICH ARE N ECESSARY FOR THE PURPOSE OF THE ASSESSMENT. LD. CIT(A) CONFIRMED TH E VALIDITY OF THE REASSESSMENT VIDE IMPUGNED ORDER AS WELL AS DISMIS SED THE APPEAL ON MERITS. 5. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A), TH E APPELLANT IS IN APPEAL BEFORE US IN THE PRESENT APPEAL. IT IS CONTENDED THAT THERE ARE NO REASONS TO BELIEVE THAT INCOME ESCAPED ASSES SMENT. IN THE ABSENCE OF FRESH TANGIBLE MATERIAL, THE ASSESSING OFFICER REOPENED THE ITA NO.927 /2018 :- 5 -: ASSESSMENT ON THE SAME SET OF FACTS WHICH ARE AVAIL ABLE WITH HIM AT THE TIME OF PASSING THE ORIGINAL ORDER. HE FURTHER CONTENDED THAT THERE IS NO AVERMENTS IN THE REASONS RECORDED THAT THERE IS FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE ALL MATERIAL F ACTS NECESSARY FOR THE PURPOSE OF MAKING ASSESSMENT. IN SUPPORT OF THIS, HE PLACED RELIANCE ON THE JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF SHRI. SANJEEV GHEI VS. ITO, 2018 (8) TMI-1785 , THE SPECIAL LEAVE PETITION AGAINST THE SAID DECISION WAS DISMISSED BY THE HO NBLE SUPREME COURT REPORTED IN (2019) 3 TMI 741. 6. ON THE OTHER HAND, THE LD. SR. DEPARTMENTAL REPRESE NTATIVE PLACED RELIANCE ON THE ORDERS OF LOWER AUTHORITIES. 7. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATE RIAL ON RECORD. THE ONLY ISSUE IN THE PRESENT APPEAL RELATE S TO VALIDITY OF THE REOPENING. FROM THE PERUSAL OF THE ASSESSMENT, IT IS CLEAR THAT THE ASSESSING OFFICER RECORDED A FINDING THAT SECOND A SSESSMENT WAS BASED ON THE SAME FACT OF MATERIALS AVAILABLE ON R ECORD. THERE IS NO REFERENCE TO ANY FRESH TANGIBLE MATERIAL BROUGHT ON RECORD. IT IS AMPLY CLEAR FROM THE ASSESSMENT ORDER THAT THE ASSESSING OFFICER HAD MADE OBSERVATION SUBSEQUENTLY ON PERUSAL OF THE RECORD S SHOWED THAT THE ASSESSEE HAD CLAIMED AN EXEMPTION OF D14,00,000/- U /S.54B TOWARDS PURCHASE OF AGRICULTURAL LAND UNDER DIFFERENT NAME S. THIS GOES TO SHOW THAT REOPENING IS BASED ON THE SAME SET OF FAC TS WHICH ARE ITA NO.927 /2018 :- 6 -: AVAILABLE WITH THE ASSESSING OFFICER AT THE TIME OF MAKING ORIGINAL ASSESSMENT. IN THE ORIGINAL ASSESSMENT ORDER, THE A SSESSING OFFICER ALLOWED EXEMPTION U/S.54B OF THE ACT AFTER CONSIDER ING THE MATERIAL AVAILABLE ON RECORD AND TOOK PLAUSIBLE VIEW. THER EFORE WE CAN SAFELY CONCLUDE THAT REOPENING OF ASSESSMENT IS ONLY BASED ON CHANGE OF OPINION ON THE SAME SET OF FACTS WHICH ARE AVAILABL E WITH THE ASSESSING OFFICER AT THE TIME OF FRAMING THE ORIGINAL ASSESSM ENT ORDER. KEEPING IN VIEW THE RATIO DECISION OF HONBLE SUPREME COURT IN THE CASE OF KELVINATOR OF INDIA LTD (2010) 320 ITR 561 , WE HOLD THAT REOPENING THE ASSESSMENT IS BAD IN LAW. ACCORDINGLY, WE SQU ASH THE RE- ASSESSMENT PROCEEDINGS AND ALLOW THE APPEAL OF THE ASSESSEE. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IN ITA NO.927/CHNY/2018 FOR ASSESSMENT YEAR 2012-2013 STAN DS ALLOWED. ORDER PRONOUNCED ON 12TH DAY OF FEBRUARY, 2020, AT CHENNAI. SD/- SD/- ( . ! ) (DUVVURU RL REDDY) ' #$ /JUDICIAL MEMBER ( ) (INTURI RAMA RAO) /ACCOUNTANT MEMBER 1 #- / CHENNAI 2# / DATED:12TH FEBRUARY, 2020. KV 3 ) +.4 5' !6 5&. / COPY TO: 1 . !' '( / APPELLANT 3. 7. (!' ) / CIT(A) 5. 5 :; +.#< / DR 2. +,'( / RESPONDENT 4. 7. / CIT 6. ;$ =- / GF