Rajendra L. Agarwal, Pune V. ACIT, Pune

ITA 953/PUN/2010

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2785 (ITAT-PUNE)
• Duration Of Justice: 5 year(s) 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 10-09-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 28-06-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B C MALAKAR; DIVYA BAJPAYEE
• Assessee Lawyers: NILESH KHANDELWAL
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Business income; Audit objection; Period of limitation; Question of law; Tangible material; Fair market value; Wrong claim; Difference of opinion; Corroborative evidences; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 50C; 147; 148; 263; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E , , !'#'' $ , % & BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM / ITA NOS. 952 & 953/PN/2010 %' ( ')( / ASSESSMENT YEARS : 2003-04 & 2006-07 RAJENDRA L. AGARWAL, C/O SHAH KHANDELWAL JAIN & ASSOCIATES, CHARTERED ACCOUNTANTS, 1 ST FLOOR, ALANKAR CINEMA BUILDING, PUNE 411001 PAN : AAPPA6210P ....... / APPELLANT ' / V/S. ACIT, CIRCLE-4, PUNE / RESPONDENT / ITA NO. 305/PN/2012 %' ( ')( / ASSESSMENT YEAR : 2008-09 SHRI RAJENDRA LALITKUMAR AGARWAL, SHAH KHANDELWAL JAIN & ASSOCIATES, CHARTERED ACCOUNTANTS, LEVEL 3, BUSINESS BAY, PLOT NO. 84, WELLESLEY ROAD, NEAR RTO, PUNE 411001 PAN : AAPPA6210P ....... / APPELLANT ' / V/S. DY. COMMISSIONER OF INCOME TAX, CIRCLE-4, PUNE / RESPONDENT 2 ITA NOS. 952 & 953/PN/2010, 305/PN/2012 AND 146 & 147/PN/2013 / ITA NOS. 146 & 147/PN/2013 %' ( ')( / ASSESSMENT YEARS : 2005-06 & 2007-08 SHRI RAJENDRA LALITKUMAR AGARWAL, MZSK & ASSOCIATES, CHARTERED ACCOUNTANTS, LEVEL 3, BUSINESS BAY, PLOT NO. 84, WELLESLEY ROAD, NEAR RTO, PUNE 411001 PAN : AAPPA6210P ....... / APPELLANT ' / V/S. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-4, PUNE / RESPONDENT ASSESSEE BY : SHRI NILESH KHANDELWAL REVENUE BY : SMT. DIVYA BAJPAYEE & SHRI B.C. MALAKAR / DATE OF HEARING : 01-12-2015 / DATE OF PRONOUNCEMENT : 29-01-2016 * / ORDER PER VIKAS AWASTHY, JM : THESE SET OF FIVE APPEALS HAVE BEEN FILED BY THE ASSESSEE. SINCE, ALL THESE APPEALS ARE ARISING FROM COMMON SET OF FACTS THES E APPEALS ARE TAKEN UP TOGETHER FOR ADJUDICATION AND ARE DECIDED VIDE THIS COMMON ORDER. 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM THE REC ORD ARE: THE ASSESSEE IS AN INDIVIDUAL AND IS ENGAGED IN THE BUSINESS OF CONSTRUCTION OF DAMS, CANALS, AIRPORTS AND ROADS. THE ASS ESSEE IS ALSO HAVING STUD FARM FOR BREEDING OF RACE HORSES. ALL THE BU SINESS TRANSACTIONS ARE ACCOUNTED FOR IN THE BOOKS OF ACCOUNT SEPARATELY WITH 3 ITA NOS. 952 & 953/PN/2010, 305/PN/2012 AND 146 & 147/PN/2013 RESPECT TO EACH BUSINESS ACTIVITY. HOWEVER, A COMMON BO OKS OF ACCOUNT ARE PREPARED WHEREIN INCOME AND EXPENDITURE WIT H RESPECT TO EACH ACTIVITY CARRIED OUT BY THE ASSESSEE IS CONSOLIDATED . IN THE IMPUGNED ASSESSMENT YEARS REASSESSMENT PROCEEDINGS WE RE INITIATED AGAINST THE ASSESSEE EXCEPT ASSESSMENT YEAR 2008-09. IN THE RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER APPEAL THE ASSESS EE HAD CLAIMED BUSINESS LOSSES FROM THE ACTIVITY OF BREEDING AND OWNING RA CE HORSES AND HAS CLAIMED SET OFF OF THE SAME FROM PROFITS AND GAINS O F THE OTHER BUSINESS ACTIVITIES. THE REASSESSMENT PROCEEDINGS WERE IN ITIATED AGAINST THE ASSESSEE ON THE GROUND THAT THE EXPENSES RELATING TO THE ACTIVITY OF OWNING AND MAINTAINING OF RACE HORSES WERE DEBIT ED BY THE ASSESSEE IN THE PROFIT AND LOSS ACCOUNT AND WERE NOT S HOWN SEPARATELY. THE SET OFF OF LOSSES FROM SUCH ACTIVITY AGAINST THE INCOME FROM BUSINESS IS IN CONTRAVENTION TO THE PROVISION OF THE INCOM E TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) AND THUS, IT HAS RESULTED IN ESCAPEMENT OF INCOME. THE ACTIVITY OF OWNING AND MAINTAININ G RACE HORSES FALL WITHIN THE PURVIEW OF SECTION 74A OF THE ACT. NO TICE U/S. 148 WAS ISSUED TO THE ASSESSEE FOR THE ASSESSMENT YEA RS 2003-04 TO 2007-08. THE ASSESSEE IN THE PRESENT SET OF APPEALS HA S CHALLENGED THE ACTION OF ASSESSING OFFICER IN INVOKING THE JURISDICTION U/S. 14 7 R.W.S. 148 OF THE ACT. ON MERITS THE ASSESSEE HAS ASSAILED TH E FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) IN CONFIRMING THE DISALLOW ANCE OF EXCESS EXPENDITURE OVER INCOME RELATING TO HORSE BREE DING BUSINESS. THE ASSESSEE HAS ALSO IMPUGNED THE ACTION OF ASSESSING O FFICER AND COMMISSIONER OF INCOME TAX (APPEALS) IN HOLDING THAT HORSE B REEDING BUSINESS OF THE ASSESSEE FALLS WITHIN THE PURVIEW OF SECTION 74A(3) OF THE ACT. FOR THE SAKE OF CONVENIENCE THE APPEAL OF THE ASSESSEE FOR EACH ASSESSMENT YEAR IS TAKEN UP SEPARATELY. 4 ITA NOS. 952 & 953/PN/2010, 305/PN/2012 AND 146 & 147/PN/2013 ITA NO. 952/PN/2010 (A.Y. 2003-04) 3. SHRI NILESH KHANDELWAL APPEARING ON BEHALF OF THE ASSESS EE SUBMITTED THAT THE ASSESSING OFFICER HAS ERRED IN INVOKING THE JURISDICTION U/S. 147 OF THE ACT IN THE ASSESSMENT YEAR 2 003-04. THE NOTICE U/S. 148 OF THE ACT FOR REOPENING OF THE ASSESSMEN T HAS BEEN ISSUED BEYOND THE PERIOD OF 4 YEARS. THE ORIGINAL ASSESS MENT ORDER WAS PASSED BY THE ASSESSING OFFICER U/S. 143(3) OF THE ACT ON 2 0-02-2006. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESS EE HAD PLACED ON RECORD ENTIRE SET OF BOOKS OF ACCOUNT, BILLS, VOUCHERS ETC. BEFORE THE ASSESSING OFFICER. IN SUPPORT OF HIS SUBMISSIONS, THE LD. AR REFERRED TO NOTINGS RECORDED AT THE TIME OF ORIGINAL ASSESSMENT PROC EEDINGS. THE LD. AR POINTED OUT ON 03-01-2006 THE ASSESSING OFFICER HAS RECORDED THAT THE LD. AR OF THE ASSESSEE HAS PRODUCED BOOKS OF ACCOUNT, BILLS AND VOUCHERS IN RESPECT OF EXPENSES DEBITED TO PROFIT AND LOS S ACCOUNT FOR VERIFICATION. A COPY OF PROCEEDING SHEETS IS PLACED ON REC ORD AT PAGES 49 & 50 OF THE PAPER BOOK. THE LD. AR FURTHER REFERRED TO PAGE 60 OF THE PAPER BOOK TO SHOW THAT THE ASSESSEE VIDE LETTER DAT ED 12-01-2006 HAD SUBMITTED THE INFORMATION/DETAILS AS REQUIRED BY THE ASSES SING OFFICER. THE LD. AR POINTED OUT THAT IN THE SAID REPLY THE ASSES SEE HAD SPECIFICALLY MENTIONED THAT THE ASSESSEE IS ALSO ENGAGED IN BREEDING OF HORSES FOR RACING PURPOSES. THE LD. AR REFERRING TO THE INTER- DEPARTMENT COMMUNICATION DATED 25-09-2008 (AT PAGE 59 OF THE PAPER BOOK) SUBMITTED THAT THE REVENUE AUTHORITIES HAVE ERRED IN RECORDING THAT THE ASSESSING OFFICER HAS FAILED TO EXAMINE THE FACT TH AT THE ASSESSEE HAS SUBMITTED CONSOLIDATED ACCOUNTS WHICH INCLU DE BUSINESS ACTIVITY OF MAINTAINING RACE HORSES. THE REASSESSMENT PRO CEEDINGS HAVE BEEN INITIATED AGAINST THE ASSESSEE ONLY ON THE BA SIS OF AUDIT OBJECTION. THE LD. AR PLACED ON RECORD A COPY OF NOTE FOR APPROVAL OF 5 ITA NOS. 952 & 953/PN/2010, 305/PN/2012 AND 146 & 147/PN/2013 AUDIT OBJECTION AT PAGES 51 AND 52 OF THE PAPER BOOK. IT IS A WELL SETTLED LAW THAT REASSESSMENT PROCEEDINGS CANNOT BE INIT IATED MERELY ON THE OBJECTION RAISED BY THE AUDIT PARTIES. NO INCRIMINA TING MATERIAL WAS FOUND BY THE DEPARTMENT AT ANY STAGE. IT IS A CAS E OF MERE CHANGE OF OPINION AND REOPENING IS NOT PERMISSIBLE ON CHANGE OF OP INION. IN SUPPORT OF HIS SUBMISSIONS, THE LD. AR PLACED RELIANCE ON THE FOLLOWING DECISIONS: I. CIT VS. KELVINATOR OF INDIA LTD., 320 ITR 561 (SC); II. IPCA LABORATORIES VS. DCIT & ORS., 251 ITR 416 (BOM); III. SHRIRAM FOUNDARY LTD. VS. DCIT & ORS., 250 CTR 116 (BOM); IV. LEGATO SYSTEMS (INDIA) PVT. LTD. VS. DCIT, 231 CTR 526 (DELHI); V. CARLTON OVERSEAS PVT. LTD. VS. ITO, 318 ITR 295 (DEL); VI. COMMISSIONER OF INCOME TAX VS. SIMBHAOLI SUGAR MILLS LTD., 333 ITR 470 (DEL). 3.1 ON MERITS THE LD. AR SUBMITTED THAT THE ASSESSEE IS E NGAGED IN BREEDING OF HORSES AND OTHER ALLIED ACTIVITIES SINCE1995-96. THE HORSE BREEDING ACTIVITY IS NOT COVERED BY THE PROVISIONS OF SECT ION 74A(3) OF THE ACT. SECTION 74A DEALS WITH THE LOSSES ARISING FROM MA INTENANCE OF RACE HORSES. MAINTAINING HORSES FOR RACING AND BREEDING OF HORSES FOR RACING ARE DISTINCT AND SEPARATE ACTIVITIES. THE LD. AR SUB MITTED THAT THE BUSINESS OF STUD FARMING INVOLVES PRODUCING HORSES MEA NT TO BE SOLD IN THE MARKET SOMETIMES LATER. SUCH HORSES PRODUCE D GENERALLY ARE MEANT FOR RACES AND COMMAND HIGH VALUE AND FETCH VE RY GOOD PRICE. FOR BREEDING OF HORSES, MARES AND STALLIONS ARE PROCURED BASED ON BLOOD LINES AND PERFORMANCE. HOWEVER, THE HORSE DOES NOT BECOME ELIGIBLE AS RACE HORSE TILL CERTAIN PERIOD OF ITS AGE. NEW BOR N HORSES ARE GENERALLY SOLD AT THE AGE OF 2 YEARS EITHER PRIVATELY OR BY AUCTION TO 6 ITA NOS. 952 & 953/PN/2010, 305/PN/2012 AND 146 & 147/PN/2013 INTERESTED RACE HORSE OWNERS. THE MAIN CRITERIA WHICH D ETERMINE THE PRICE OF A HORSE IS BLOOD LINES AND PERFORMANCE OF PARENT H ORSES. FURTHER, ALL HORSES SO PRODUCED DO NOT BECOME AND GET CONVERTED INTO THE CATEGORY OF RACE HORSE FOR SEVERAL REASONS. WHEREAS, IN THE ACTIVITY OF OWNING AND MAINTAINING RACE HOR SES, ONE HAS TO SIMPLY PURCHASE A RACE HORSE FROM REPUTED STUD FARMS, INCUR EXPENDITURE ON MAINTENANCE AND EARN STAKE MONEY/ BETTING MONEY BY RUNNING THE HORSES IN RACES. THE PROVISIONS O F SECTION 74A(3) USE THE WORD ACTIVITY AND NOT BUSINESS. THE WINNINGS AT HORS E RACES BY THE OWNER WHO MAINTAINS THE RACE HORSES IS OF A CHAR ACTER WHICH IS CASUAL IN NATURE. THEREFORE, THE WINNINGS FROM HORSE RACE S IS TAXED UNDER THE HEAD INCOME FROM OTHER SOURCES. WHETHER A HORSE WINS IN THE RACE OR NOT THE PERSON HAS TO INCUR EXPENDITURE IN MAINTAINING THE RACE HORSE. THEREFORE, THE LEGISLATURE HAS CARVED OUT A SEPARATE SECTION TO DEAL WITH SITUATIONS WHERE THE ASSESSEE INCURS LOSS IN OWNING AND MAINTAINING RACE HORSES. THE ASSESSEE IS HAVING BUSINESS INCOME FROM BREEDING OF HORSES AND NOT FROM BETTING AND WINNING FROM H ORSE RACES. THUS, THE PROVISIONS OF SECTION 74A(3) CANNOT BE APPLIED ON THE ACTIVITY OF BREEDING HORSES. IN SUPPORT OF HIS SUBMISSIONS THE LD. AR PLACED RELIANCE ON THE DECISION OF MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF FIVE STARS SHIPPING CO. PVT. LTD. VS. DY. COMMISSIONER OF INCOME TAX IN I TA NO. 2151/MUM/2012 FOR ASSESSMENT YEAR 2007-08 DECIDED ON 11-06-2015. TO EMPHASIZE THAT THE ASSESSEE IS ENGAGED IN THE BUSINE SS, THE LD. AR PLACED RELIANCE ON THE DECISION OF HON'BLE SUPREME COURT O F INDIA IN THE CASE OF STATE OF PUNJAB & ANR VS. M/S. BAJAJ ELECTRIC ALS LTD. REPORTED AS 1978 AIR 739 (SC). 7 ITA NOS. 952 & 953/PN/2010, 305/PN/2012 AND 146 & 147/PN/2013 4. ON THE OTHER HAND SMT. DIVYA BAJPAYEE REPRESENTING THE DEPARTMENT VEHEMENTLY SUPPORTED THE FINDINGS OF COMMISSIO NER OF INCOME TAX (APPEALS) IN HOLDING THE ACTION OF ASSESSING OFFICER IN INVOKING THE PROVISIONS OF SECTION 147 R.W.S. 148 OF THE ACT . THE LD. DR SUBMITTED THAT THE ASSESSEE HAS NOT SPECIFICALLY SHOWN IN THE BOOKS OF ACCOUNT SEPARATE INFORMATION REGARDING BREEDING OF HORSES . THE ASSESSEE IS MAINTAINING MIXED ACCOUNTING FOR BREEDING OF H ORSES AND FROM BETTING AND WINNING FROM HORSE RACE. THE LD. DR SUB MITTED THAT THERE IS NO INFIRMITY IN ISSUING NOTICE U/S. 148 ON THE BASIS OF AUDIT OBJECTIONS. IN SUPPORT OF HER SUBMISSIONS, THE LD. DR PLAC ED RELIANCE ON THE FOLLOWING DECISIONS: I. COMMISSIONER OF INCOME TAX VS. P.V.S. BEEDIES PVT. LTD., 237 ITR 13 (SC) II. INDIAN AND EASTERN NEWSPAPER SOCIETY VS. COMMISSIONER OF INCOME TAX, 119 ITR 996 (SC); AND III. COMMISSIONER OF INCOME TAX VS. FIRST LEASING CO. OF INDIA LT D., 241 ITR 248 (MAD.). 4.1 THE LD. DR FURTHER SUBMITTED THAT REASSESSMENT PROC EEDINGS CAN BE INITIATED ON AUDIT OBJECTION IF INFORMATION IS BASED ON FACT S AND NOT ON LAW. TO SUPPORT HER SUBMISSIONS, THE LD. DR DRAWS STR ENGTH FROM THE DECISION OF HON'BLE SUPREME COURT OF INDIA IN THE CASE OF KALYANJI MAVJI AND CO. VS. COMMISSIONER OF INCOME TAX REPORTED AS 102 ITR 287 (SC) AND FROM THE DECISION OF HON'BLE KARNATAKA HIGH C OURT IN THE CASE OF CIT VS. RINKU REPORTED AS 56 DTR 227. ON MERITS , THE LD. DR VEHEMENTLY SUPPORTED THE FINDINGS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THERE IS NO EVIDENCE THAT INCOME EARNED BY THE ASSESSEE IS FROM THE BUSINESS OF BREEDING HORSES AND NOT FROM OWNIN G AND 8 ITA NOS. 952 & 953/PN/2010, 305/PN/2012 AND 146 & 147/PN/2013 MAINTAINING RACE HORSES. THE LD. DR PRAYED FOR DISMISSING TH E APPEAL OF THE ASSESSEE. 5. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESEN TATIVES OF BOTH THE SIDES AND HAVE PERUSED THE ORDERS OF THE AUT HORITIES BELOW. WE HAVE ALSO CONSIDERED THE DOCUMENTS PLACED ON RECORD BY THE ASSESSEE IN THE FORM OF PAPER BOOK, AS WELL AS THE DECISION S ON WHICH THE RIVAL SIDES HAVE PLACED RELIANCE. IT IS AN UNDISPUTED FACT THAT THE ORIGINAL ASSESSMENT ORDER FOR ASSESSMENT YEAR 2003-04 W AS PASSED U/S. 143(3) OF THE ACT ON 20-02-2006. NOTICE U/S. 148 WA S ISSUED TO THE ASSESSEE ON 08-10-2008. THUS, THE REASSESSMENT P ROCEEDINGS HAVE BEEN INITIATED FOR ASSESSMENT YEAR 2003-04 BEYOND THE P ERIOD OF 4 YEARS. THE LD. AR HAS POINTED THAT THE REASSESSMENT P ROCEEDINGS IN ASSESSMENT YEAR 2003-04 HAVE BEEN INITIATED ON THE BAS IS OF AUDIT OBJECTION. THIS FACT IS EVIDENT BY THE NOTE FOR APPROVAL DATED 18-09-2009 PLACED ON RECORD AT PAGES 51 AND 52 OF THE PAPER BOOK. THE RELEVANT EXTRACT OF THE NOTE IS REPRODUCED HERE-IN-UNDER: NOTE FOR THE APPROVAL OF THE CIT IN VIEW OF AUDIT OBJECTION RAISED BY THE REVENUE AUDIT 18.09.2008 THE ASSESSEE IS AN INDIVIDUAL HE IS A PROPRIETOR OF AGARWAL STONE UDYOG, YESHWANT BUSINESS CENTER AND ENGAGED IN VARI OUS ACTIVITIES SUCH AS ROAD, CONSTRUCTION, RUNNING OF BUSINESS CEN TRE, ETC. THE ASSESSEE FILED HIS RETURN OF INCOME OF 29.11.2003 R ETURNING INCOME AT RS.40,58,868/-. THE CASE WAS ASSESSED U/S. 143(3) ON 20.02.2006 ASSESSING INCOME AT RS.41, 08,870/-. THE CASE WAS TAKEN FOR AUDIT BY THE REVENUE AUDIT. THE AUDIT REVENUE PARTY VIDE ITRA/LAP XXI/ITO 4(6) PUNE/AQ 10 DATED 18.07.2007 HAS RAISED THE AUDIT OBJECTION THAT THE ASSESSEE HAS SET OFF LOSS FROM THE ACTIVITY OF OWNING AND MAINTAINING OF RACE HORSES AGAINST THE INCOME FROM CONSTRUCTION AND OTHER BUSINESS ACT IVITIES IN CONTRAVENTION TO THE PROVISIONS OF SECTION 74A(3) O F THE INCOME TAX ACT, 1961. AS PER THE PROVISIONS OF SECTION 74A(3), THE LOSS FROM THE ACTIVITY OF OWNING AND MAINTAINING OF RACE HORSES CAN BE SET OFF AGAINST THE INCOME FROM THE ACTIVITY OF OWNING AND MAINTAINING OF RACE HORSES, ITSELF AND NONE OTHER HEAD. IF THE LOSS COULD NOT BE OF SE T OF IN THIS MANNER IT CAN BE CARRIED FORWARD FOR SUBSEQUENT ASSESSMENT YE ARS. THE DETAILS OF INCOME AND EXPENSES RELATING TO THE ACTIVITY OF OWN ING AND MAINTAINING OF RACE HORSES ARE AS UNDER 9 ITA NOS. 952 & 953/PN/2010, 305/PN/2012 AND 146 & 147/PN/2013 INCOME RECEIPT FROM HORSE WINNING RS.15,30,812/- CREDITED TO AND STAKE MONEY P & L A/C LESS : EXPENSES I) HORSE MAINTENANCE RS.58 ,71,028/- DEBITED TO EXPENSES P & L A/C II) HORSES WRITTEN OFF/DEAD RS.11,27,194/- III) LOSS ON SALE OF HORSE RS.1,07,000/ - RS.71,05,222/- LOSS FROM THE ACTIVITY OF RS.55,74,410/- OWNING AND MAINTAINING OF RACE HORSES OMISSION TO DO SO, RESULTED IN UNDER ASSESSMENT OF INCOME OF RS.55,74,410/- WITH THE CONSEQUENT SHORT LEVY OF TA X OF RS.17,55 939/- (INCLUDING SURCHARGE OF RS.83,616/-) + INTEREST U/S 204B OF RS.5 R 80,821/- (ON RS.15,448,858/- [RS.17,55,939 - RS.2,0 7,081/-) FROM 01.04.2003 TO 20.02.2006. THE OBJECTION RAISED BY THE REVENUE AUDIT IS ACCEPT ABLE ON FACTS AND MERITS. THE ISSUE INVOLVED RELATES TO CORRECT APPLICATION O F LAW TO THE FACTS OF THE CASE, THEREFORE RECOURSE CANNOT BE TAKEN TO U/S 154 OF THE INCOME TAX ACT. 1961. THE LIMITATION DATE FOR POSSIBLE ACTION U/S. 263 HAS EXPIRED ON 31.03.2008. IT IS THEREFORE PROPOSED THAT REMEDIAL ACTION U/S. 148 MAY BE TAKEN IN THIS CASE AS THE ISSUE HAS NOT BEEN EXAMIN ED DURING ASSESSMENT PROCEEDINGS U/S 143(3) DATED 20.02.2006, RESULTING IN UNDER ASSESSMENT. PUT UP FOR KIND APPROVAL OF THE CIT-II, PUNE SD/- ACIT, CIR-4, PUNE I AGREE SD/- 18/9/08 ADDL. CIT, RANGE-4, PUNE COMMISSIONER OF INCOME TAX-II, PUNE APPROVED SD/- 18/9 6. A PERUSAL OF REASONS FOR REOPENING AT PAGES 57 TO 58 OF THE PAPER BOOK WOULD SHOW THAT THEY ARE IDENTICAL IF NOT VERBATIM T O THE NOTE APPROVED BY THE COMMISSIONER OF INCOME TAX (APPEALS) IN RE SPECT OF AUDIT OBJECTION RAISED BY THE REVENUE AUDIT. NO NEW MATERIAL HAD COME INTO THE POSSESSION OF THE DEPARTMENT SO AS TO GIVE HAN DLE FOR INITIATING REASSESSMENT PROCEEDINGS BEYOND THE PERIOD OF 4 YEARS. THERE ARE 10 ITA NOS. 952 & 953/PN/2010, 305/PN/2012 AND 146 & 147/PN/2013 PLETHORA OF JUDGMENTS WHEREIN IT HAS BEEN EXPLICITLY HELD T HAT REASSESSMENT PROCEEDINGS BEYOND 4 YEARS CANNOT BE INIT IATED WHERE NO NEW MATERIAL HAS COME TO THE POSSESSION OF REVENUE AUT HORITIES TO SHOW THAT THE ASSESSEE HAS FAILED TO DISCLOSE FULLY AND TR ULY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT. THE FULL BENCH OF HO N'BLE DELHI HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. K ELVINATOR OF INDIA LTD. REPORTED AS 256 ITR 1 (DEL) (FB) HAS HELD THAT T WO CONDITIONS MUST BE SATISFIED TO INVOKE THE JURISDICTION U/S. 147 OF THE ACT : (I) THE ASSESSING OFFICER MUST HAVE REASON TO BELIEVE THAT INCOME CHARGEAB LE TO TAX HAS ESCAPED ASSESSMENT ; AND (II) HE MUST ALSO HAVE A REASON TO BELIEVE THAT SUCH ESCAPEMENT OCCURRED BY REASON OF EITH ER, (A) OMISSION OR FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN OF HIS INCOME UNDER SECTION 139; OR (B) OMISSION OR FAILURE ON THE PART O F THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THAT YEAR. IN THE PRESENT CASE IT IS E VIDENT FROM RECORDS THAT BOTH THESE CONDITIONS ARE MISSING. IN THE INSTANT CASE REASSESSMENT PROCEEDINGS HAVE BEEN INITIATED NOT ON TH E ASSESSING OFFICERS BELIEF OR REASONING BUT ON THE OBJECTION RAISED BY AUDIT PARTY. THERE IS NO INDEPENDENT REASON FORMULATED BY ASSESSING O FFICER THAT THERE IS OMISSION OR FAILURE ON THE PART OF THE ASSESSEE T O DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. TH E HON'BLE DELHI HIGH COURT HAS FURTHER HELD THAT WHEN A REGULAR ASS ESSMENT ORDER IS PASSED U/S. 143(3), A PRESUMPTION CAN BE RAISE D THAT SUCH AN ORDER HAS BEEN PASSED ON APPLICATION OF MIND. THE ASSES SING OFFICER CANNOT BE ALLOWED TO TAKE BENEFIT OF HIS OWN WRONG IF HE FAILS TO PASS ASSESSMENT ORDER WITHOUT EXAMINING THE ENTIRE FACTS WHICH ARE BEFORE HIM. THE RELEVANT EXTRACT OF THE OBSERVATIONS OF THE HON 'BLE HIGH COURT ARE REPRODUCED HERE-IN-UNDER: . WHEN A REGULAR ORDER OF ASSESSMENT IS PASSED IN TERMS OF THE 11 ITA NOS. 952 & 953/PN/2010, 305/PN/2012 AND 146 & 147/PN/2013 SAID SUB-SECTION (3) OF SECTION 143 A PRESUMPTION C AN BE RAISED THAT SUCH AN ORDER HAS BEEN PASSED ON APPLICATION OF MIND. IT IS WELL KNOWN THAT A PRESUMPTION CAN ALSO BE RAISED TO THE EFFECT THAT I N TERMS OF CLAUSE (E) OF SECTION 114 OF THE INDIAN EVIDENCE ACT JUDICIAL AND OFFICIAL ACTS HAVE BEEN REGULARLY PERFORMED. IF IT BE HELD THAT AN ORD ER WHICH HAS BEEN PASSED PURPORTEDLY WITHOUT APPLICATION OF MIND WOUL D ITSELF CONFER JURISDICTION UPON THE ASSESSING OFFICER TO REOPEN T HE PROCEEDING WITHOUT ANYTHING FURTHER, THE SAME WOULD AMOUNT TO GIVING A PREMIUM TO AN AUTHORITY EXERCISING QUASI-JUDICIAL FUNCTION TO TAK E BENEFIT OF ITS OWN WRONG. 7. THE HON'BLE SUPREME COURT OF INDIA IN THE CASE OF CI T VS. KELVINATOR OF INDIA LTD. (SUPRA) HAS AFFIRMED THE FINDINGS OF FU LL BENCH OF HON'BLE DELHI HIGH COURT IN THE CASE OF COMMISSIONER OF IN COME TAX VS. KELVINATOR OF INDIA LTD. (SUPRA). THE HON'BLE APEX COURT HAS FURTHER HELD THAT THE ASSESSING OFFICER HAS POWER TO REOP EN ASSESSMENT U/S. 147 PROVIDED THAT THE ASSESSING OFFICER HAS REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT AND THERE IS TANGIBLE MAT ERIAL TO COME TO THE CONCLUSION THAT THERE IS ESCAPEMENT OF INCOME, M ERE CHANGE OF OPINION CANNOT PER SE CANNOT BE A REASON TO REOPEN. THE ASSESSING OFFICER HAS POWER TO REASSESS BUT THE LEGISLATURE HAS NOT GIVEN HIM POWER TO REVIEW HIS OWN ORDER. 8. THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF SHRIRAM FOUNDARY LTD. VS. DCIT & ORS. (SUPRA) HAS HELD THAT REOPENING BEYO ND THE PERIOD OF 4 YEARS IS UNSUSTAINABLE WHERE THE ORIGINAL ASSESSMENT WAS COMPLETED U/S. 143(3) AND THERE IS NO ALLEGATION IN THE RE ASONS STATING FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND T RULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. THE RELEVANT EXTRACT O F THE FINDINGS OF THE HON'BLE HIGH COURT ARE AS UNDER: 7. THE ORIGINAL ASSESSMENT WAS COMPLETED UNDER SEC TION 143(3). THE ASSESSMENT IS SOUGHT TO BE REOPENED BEYOND A PERIOD OF FOUR YEARS FROM 12 ITA NOS. 952 & 953/PN/2010, 305/PN/2012 AND 146 & 147/PN/2013 THE END OF THE RELEVANT ASSESSMENT YEAR. THE JURISD ICTIONAL CONDITION IS THAT IN SUCH CASE BEFORE AN ASSESSMENT CAN BE VALID LY REOPENED, THERE MUST BE A FAILURE ON THE PART OF THE ASSESSEE TO ST ATE FULLY AND TRULY ALL THE MATERIAL FACTS NECESSARY FOR THE ASSESSMENT. TH ERE IS NO SUCH ALLEGATION IN THE REASONS WHICH HAVE BEEN DISCLOSED TO THE ASSESSEE. THE ASSESSING OFFICER HAS PURPORTED TO REOPEN THE ASSES SMENT ONLY RECORDING THAT ACCORDING TO HIM THE MELTING LOSS OF 7.24% WHI CH WAS CLAIMED BY THE ASSESSEE IS HIGHER THAN WHAT IS FOUND IN A SIMILAR LINE OF BUSINESS. THIS EX FACIE WOULD AMOUNT MERELY TO A CHANGE OF OPINION . AS REGARDS THE CONTENTION OF THE COUNSEL APPEARING FOR THE REVENUE THAT THERE WAS NO DISCUSSION IN THE ORIGINAL ORDER OF ASSESSMENT UNDE R SECTION 143(3) ON THE ASPECT OF MELTING LOSS, IT IS EVIDENT THAT WHEN THE CLAIM OF THE ASSESSEE WAS ACCEPTED DURING THE COURSE OF THE ASSE SSMENT PROCEEDINGS, THE ASSESSING OFFICER, AS IS NORMAL IN SUCH CASES, HAD NOT ADVERTED TO THE MELTING LOSS CLAIMED BY THE ASSESSE E OR THE REASONABLENESS THEREOF. THE CLAIM OF THE ASSESSEE W AS NONETHELESS ACCEPTED BY THE ASSESSING OFFICER IN THE COURSE OF THE ORDER OF ASSESSMENT UNDER SECTION 143(3). THE ORDER WHICH HA S BEEN PASSED BY THE ASSESSING OFFICER WHILE DISPOSING OF THE OBJECT IONS OF THE ASSESSEE WOULD IN FACT INDICATE THAT IT WAS ON A VERIFICATIO N OF THE RECORDS OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION THAT THE ASSESSING OFFICER CAME TO THE CONCLUSION THAT THE MELTING LOSS WAS FO UND TO BE ON A HIGHER SIDE. THE DECISION OF THE TRIBUNAL IN THE CASE OF S AROJ CASTINGS, WHICH HAS BEEN ADVERTED TO IN THE ORDER OF THE ASSESSING OFFICER DATED 9 DECEMBER 2011, WAS RENDERED ON 30 MAY 2008. THE ASS ESSING OFFICER COULD NOT HAVE REOPENED THE ASSESSMENT ON THE BASIS OF THIS SUBSEQUENT DECISION OF THE TRIBUNAL UNLESS THE JURISDICTIONAL REQUIREMENTS IN THE PROVISO TO SECTION 147 WERE FULFILLED. MOREOVER, TH E ORDER OF THE TRIBUNAL IN SAROJ CASTINGS, A COPY OF WHICH HAS BEEN PRODUCE D ON RECORD BY THE COUNSEL FOR THE ASSESSEE, DOES NOT INDICATE THAT AN Y GENERAL PRINCIPLE OF LAW WAS LAID DOWN IN THAT CASE BY THE TRIBUNAL. ALL THAT THE TRIBUNAL HELD THERE WAS THAT THE COMMISSIONER (APPEALS) HAD PROPERLY WORKED OUT THE REASONABLE WASTAGE PERCENTAGE AS 5.5 % AS AGAIN ST 6.6 % SHOWN BY THE ASSESSEE IN THAT CASE. AS A MATTER OF FACT, THE ORDER OF THE TRIBUNAL WOULD ALSO INDICATE THAT IT WAS ONLY THE REVENUE WH ICH WAS IN APPEAL AGAINST THE DETERMINATION MADE BY THE COMMISSIONER ( APPEALS) WHICH WAS NOT CHALLENGED BY THE ASSESSEE. HENCE, LOOKED A T FROM EVERY PERSPECTIVE, IT IS EVIDENT THAT THE ASSESSING OFFIC ER HAS TRANSGRESSED THE LIMITS ON HIS JURISDICTION FOR SEEKING TO REOPEN AN ASSESSMENT BEYOND A PERIOD OF FOUR YEARS FROM THE END OF THE RELEVANT A SSESSMENT YEAR. COUNSEL APPEARING ON BEHALF OF THE ASSESSEE HAS DRA WN THE ATTENTION OF 13 ITA NOS. 952 & 953/PN/2010, 305/PN/2012 AND 146 & 147/PN/2013 THE COURT TO THE FACT THAT ON 21 DECEMBER 2011, THI S COURT WHILE ISSUING NOTICE TO THE RESPONDENTS HAD PASSED AN AD-INTERIM ORDER IN TERMS OF PRAYER CLAUSE (C) RESTRAINING THE RESPONDENTS FROM ACTING ON THE IMPUGNED NOTICE OR PROCEEDING FURTHER BY WAY OF RE- ASSESSMENT FOR A.Y. 2004-05. A COMMUNICATION WAS ADDRESSED TO THE ASSES SING OFFICER ON 27 DECEMBER 2011 DRAWING THE ATTENTION OF THE OFFICER TO THE ORDER PASSED BY THIS COURT. THE ASSESSING OFFICER PASSED AN ORDE R OF ASSESSMENT ON 30 DECEMBER 2011 SINCE THE PERIOD OF LIMITATION WAS TO EXPIRE. THE ASSESSEE HAS FILED AN APPLICATION DATED 10 FEBRUARY 2012 BEFORE THE ASSESSING OFFICER. SINCE THE REOPENING OF THE ASSES SMENT UNDER SECTION 148 IS NOT VALID, THE CONSEQUENTIAL ASSESSMENT ORDE R DATED 30 DECEMBER 2011 WOULD HAVE TO BE QUASHED AND SET ASIDE. THE HON'BLE DELHI HIGH COURT IN THE CASE OF LEGATO SYSTEM S (INDIA) PVT. LTD. VS. DCIT (SUPRA) AND THE HON'BLE BOMBAY HIG H COURT IN THE CASE OF IPCA LABORATORIES VS. DCIT & ORS. (SUPRA) HAS HELD THAT ASSESSMENT CANNOT BE REOPENED ON A MERE CHANGE OF OP INION BY RE- EXAMINING OR RE-APPRECIATING FACTS AND MATERIAL WHICH ARE A LREADY ON RECORD. THE ASSESSING OFFICER HAS POWER TO REASSESS BU T HAS NO POWER TO REVIEW. 9. IN THE CASE OF CARLTON OVERSEAS PVT. LTD. VS. ITO (SU PRA) THE HON'BLE DELHI HIGH COURT HAS HELD THAT REASSESSMENT PROC EEDINGS INITIATED ON THE BASIS OF AUDIT REPORT WITHOUT ANY NEW OR FRESH MATERIAL AMOUNTS TO CHANGE OF OPINION. A MERE OPINION GIVEN BY RE VENUE AUDIT IN ITS REPORT CANNOT FORM THE BASIS FOR REOPENING OF THE A SSESSMENT. IN THE CASE OF COMMISSIONER OF INCOME TAX VS. SIMBHAOLI SUGAR MILLS LTD. (SUPRA) THE HON'BLE DELHI HIGH COURT HELD THAT REASSESSMEN T PROCEEDINGS U/S. 147 CANNOT BE INITIATED BEYOND THE PERIO D OF 4 YEARS MERELY ON THE BASIS OF INTERNAL AUDIT REPORT. THE RELEVAN T EXTRACT OF THE ORDER OF HON'BLE DELHI HIGH COURT READS AS UNDER: 14 ITA NOS. 952 & 953/PN/2010, 305/PN/2012 AND 146 & 147/PN/2013 11. THERE IS ALSO CATENA OF JUDGMENTS TO THE EFFEC T THAT INITIATION OF REASSESSMENT PROCEEDINGS ON THE BASIS OF AUDIT REPO RT OBJECTIONS IS BAD IN LAW. A REFERENCE IN THIS REGARD CAN BE MADE TO J UDGMENT OF OUR HIGH COURT TITLED TRANSWORLD INTERNATIONAL INC. V. JOINT COMMISSIONER OF INCOME TAX, (2005) 273 ITR 242 AND ALSO JUDGMENTS O F SUPREME COURT IN INDIAN AND EASTERN NEWSPAPER SOCIETY V. COMMISSI ONER OF INCOME TAX, NEW DELHI, (1979) 119 ITR 996 ANDCOMMISSIONER O F INCOME TAX V. LUCAS T.V.S. LTD., (2001) 249 ITR 306. 12. THE SUM AND SUBSTANCE OF DISCUSSION IS THAT REA SSESSMENT PROCEEDINGS UNDER SECTION 147 READ WITH 148 OF THE ACT CANNOT BE INITIATED MERELY BASED ON THE AUDIT REPORT . AN AUD IT IS PRINCIPALLY INTENDED FOR THE PURPOSE OF SATISFYING THE AUDITOR WITH REGARD TO SUFFICIENCY OF RULES AND PROCEDURES PRESCRIBED FOR THE PURPOSE OF SECURING AN EFFECTIVE CHECK ON THE ASSESSMENT, COLLECTION AN D PROPER ALLOCATION OF REVENUE. AS PER PARA (3) OF THE CIRCULAR ISSUED BY THE BOARD ON JULY 28, 1960, ALSO AN AUDIT DEPARTMENT SHOULD NOT IN ANY WA Y SUBSTITUTE ITSELF FOR THE REVENUE AUTHORITIES IN THE PERFORMANCE OF T HEIR STATUTORY DUTIES. 13. IN VIEW OF OUR FOREGOING DISCUSSION, WE ARE IN COMPLETE AGREEMENT WITH THE CONCLUSION ARRIVED AT BY THE TRIBUNAL IN T HE IMPUGNED ORDERS. 14. AS WE DO NOT FIND ANY INFIRMITY IN THE AFORESAI D IMPUGNED ORDERS, NO SUBSTANTIAL QUESTION OF LAW ARISES. CONSEQUENTLY, A LL THE APPEALS ARE DISMISSED. 10. THE LD. DR HAS PLACED RELIANCE ON VARIOUS DECISIONS OF THE HON'BLE APEX COURT TO BUTTRESS HER SUBMISSIONS AND SUP PORT THE ACTION OF ASSESSING OFFICER IN REOPENING THE ASSESSMENT. WE ARE O F THE CONSIDERED VIEW THAT THE SAID JUDGMENTS WILL NOT APPLY IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. THE HON'BLE APEX CO URT IN THE CASE OF INDIAN AND EASTERN NEWSPAPER SOCIETY VS. COMMISSIONER OF INCOME TAX (SUPRA) HAS POINTED THAT THE DECISION IN KALYANJI MAVJ I AND CO. VS. COMMISSIONER OF INCOME TAX (SUPRA), WHICH HAD TAKEN A VIEW THAT ESCAPEMENT OF INCOME DUE TO OVERSIGHT, INADVERTENCE OR M ISTAKE ON THE PART OF THE ASSESSING OFFICER WILL JUSTIFY REASSESSMENT IS A PROPOSITION 15 ITA NOS. 952 & 953/PN/2010, 305/PN/2012 AND 146 & 147/PN/2013 TOO WIDELY STATED AND TRAVELS FURTHER THAN THE STATUTE WARRANTS. REAPPRAISAL IS NOT PERMITTED FOR REASSESSMENT. THE HON'B LE SUPREME COURT OF INDIA IN THE CASE OF COMMISSIONER OF INCOME TAX VS. LUCAS T.V.S. LTD. REPORTED AS 249 ITR 306 (SC) AFTER CONSIDERING T HE JUDGMENT IN THE CASE OF INDIAN AND EASTERN NEWSPAPER SOCIETY VS. COMMISSIONER OF INCOME TAX (SUPRA) HAS AFFIRMED THE FINDINGS OF HON'BLE MA DRAS HIGH COURT IN THE CASE OF LUCAS TVS LTD. REPORTED AS 234 IT R 296. THE HON'BLE HIGH COURT HAS HELD THAT REASSESSMENT BASED ON OPINION OF AUDIT PARTY IS NOT VALID. IN THE PRESENT CASE UNDISPUTEDLY REOPENING HAS BEEN DONE BEYOND THE PERIOD OF FOUR YEARS. IN THE CASE OF CIT VS. KELVINATOR OF INDIA LTD. (SUPRA) IT HAS BEEN HELD THAT REASSESSMENT JUR ISDICTION U/S. 147 CAN BE VALIDLY INVOKED ONLY IF TWIN CONDITIONS (ALREADY MENTIONED HEREINABOVE) ARE SATISFIED. THE HON'BLE COURT FURTHER HELD THAT A MERE CHANGE OF OPINION WOULD NOT CONFER JURISDICTION UPON THE AS SESSING OFFICER TO INITIATE PROCEEDING U/S. 147 OF THE ACT. THE HON 'BLE FULL BENCH WHILE HOLDING SO HAS CONSIDERED CATENA OF JUDGMENTS INCLUDING THE JUDGMENT IN THE CASE OF INDIAN AND EASTERN NEWSPAP ER SOCIETY VS. COMMISSIONER OF INCOME TAX (SUPRA). THUS, IN THE FACTS OF THE CASE AND THE WELL SETTLED LAW, WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSING OFFICER HAS ERR ED IN INITIATING REASSESSMENT PROCEEDINGS FOR THE IMPUGNED ASSESSMENT Y EAR, BEYOND THE PERIOD OF 4 YEARS. FOR THE REASONS RECORDED ABOVE , THE ASSESSEE SUCCEEDS ON THE FIRST GROUND OF APPEAL RAISED IN THE ASS ESSMENT YEAR 2003-04. 11. IN THE SECOND GROUND OF APPEAL THE ASSESSEE HAS AS SAILED THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) IN DISALLOWING TH E 16 ITA NOS. 952 & 953/PN/2010, 305/PN/2012 AND 146 & 147/PN/2013 EXPENDITURE OF ` 55,74,410/- BEING EXCESS OVER INCOME FROM HORSE BREEDING BUSINESS. ACCORDING TO THE REVENUE, HORSE BREED ING ACTIVITY OF THE ASSESSEE FALLS WITHIN THE MISCHIEF OF PROVISIONS OF SECTIO N 74A OF THE ACT. THE CONTENTION OF THE ASSESSEE IS THAT THE HORSE BREEDING ACTIVITY IS DISTINCT AND DIFFERENT FROM MAINTAINING HORSE FOR RACE. T HUS, THE INCOME ARISING FROM BREEDING OF HORSE CANNOT BE EQUATED W ITH INCOME FROM WINNING FROM HORSE RACES. BEFORE WE PROCEED TO DECID E THIS ISSUE IT WOULD BE RELEVANT TO REFER TO THE PROVISIONS OF SECTION 74A(3) OF THE ACT. 74A(3) IN THE CASE OF AN ASSESSEE, BEING THE OWNER OF HORSES MAINTAINED BY HIM FOR RUNNING IN HORSE RACES (SUCH HORSES BEIN G HEREAFTER IN THIS SUB-SECTION REFERRED TO AS RACE HORSES), [THE AMOUN T OF LOSS INCURRED BY THE ASSESSEE IN THE ACTIVITY OF OWNING AND MAINTAIN ING RACE HORSES IN ANY ASSESSMENT YEAR SHALL NOT BE SET OFF AGAINST IN COME, IF ANY, FROM ANY SOURCE OTHER THAN THE ACTIVITY OF OWNING AND MA INTAINING RACE HORSES IN THAT YEAR AND] SHALL, SUBJECT TO THE OTHER PROVI SIONS OF THIS CHAPTER, BE CARRIED FORWARD TO THE FOLLOWING ASSESSMENT YEAR AN D (A) IT SHALL BE SET OFF AGAINST THE INCOME, IF ANY, [FR OM THE ACTIVITY OF OWNING AND MAINTAINING RACE HORSES] ASSESSABLE F OR THAT ASSESSMENT YEAR : PROVIDED THAT THE ACTIVITY OF OWNING AND MAINTAINING RACE HORSES IS CARRIED ON BY HIM IN THE PREVIOUS YEAR RE LEVANT FOR THAT ASSESSMENT YEAR; AND (B) IF THE LOSS CANNOT BE WHOLLY SO SET OFF, THE AMOUNT OF LOSS NOT SO SET OFF SHALL BE CARRIED FORWARD TO THE FOLLOWIN G ASSESSMENT YEAR AND SO ON; SO, HOWEVER, THAT NO PORTION OF THE LOSS SHALL BE CARRIED FORWARD FOR MORE THAN FOUR ASSESSMENT YE ARS IMMEDIATELY SUCCEEDING THE ASSESSMENT YEAR FOR WHICH THE LOSS WAS FIRST COMPUTED. 12. A BARE PERUSAL OF THE PROVISIONS OF SUB-SECTION (3) OF SE CTION 74A WOULD SHOW THAT IT DEALS WITH THE LOSSES INCURRED BY THE ASSESSEE IN THE ACTIVITY OF OWNING AND MAINTAINING OF RACE HORSES. THERE IS NO REFERE NCE TO THE ACTIVITY OF BREEDING OF HORSE IN THE SUB-SECTION. OWNING AND MAINTAINING HORSES FOR RUNNING THEM IN RACE IS ABSOLUTELY D IFFERENT AND 17 ITA NOS. 952 & 953/PN/2010, 305/PN/2012 AND 146 & 147/PN/2013 DISTINCT ACTIVITY FROM BREEDING OF HORSES. THE ACTIVITY OF BR EEDING HORSE REFERS TO PROPAGATING HORSES ON THE BASIS OF THEIR LINE AGE AND PERFORMANCE, FOR RUNNING THEM IN RACE. IN THE BUSINESS O F BREEDING OF HORSES THE MARES AND STALLIONS ARE PROCURED BASED ON B LOOD LINES AND PERFORMANCE TO BREED INTO A NEW BORN GOOD SPECIMENS. T HEREAFTER, THESE HORSES ARE SOLD EITHER PRIVATELY OR BY AUCTION TO THE PEOPLE WHO OWN AND MAINTAIN HORSES FOR RUNNING IN HORSE RACES. THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF FIVE STAR SHIPPING CO. PVT. LTD. VS. DY. COMMISSIONER OF INCOME TAX (SUPRA) HAS DEALT WITH THE S IMILAR ISSUE. THE RELEVANT EXTRACT OF THE ORDER OF TRIBUNAL IS RE PRODUCES HERE- IN-BELOW: 20. THE GRIEVANCE OF THE ASSESSEE AND REVENUE RELA TES TO THE DISALLOWANCE OF LOSSES FROM ACTIVITY OF OWNING AND MAINTAINING RACE HORSES AMOUNTING TO RS. 3,08,56,448/-, WE FOUND THA T LIVESTOCK BREEDING INDUSTRY WHEREIN THE ASSESSEE HAS INCURRED EXPENDIT URE AND ALSO EARNED REVENUE. THE ASSESSEE IS MAINTAINING A STUD FARM. I TS BUSINESS IS THAT OF BREEDING AND ONLY 15% OF ITS HORSES TAKE PART IN TH E RACING ACTIVITY. OVER ALL, IT INCURRED A LOSS OF RS. 3,08,56,448/-. IT HA S SET OFF OF THIS LOSS AGAINST THE INCOME FROM SHIPPING BUSINESS AS PER TH E P&L ACCOUNT. THE A.O. HELD THAT BREEDING AND RACING ACTIVITIES CONST ITUTE ONE ACTIVITY U/S 74A THE LOSS FROM THE ACTIVITY OF OWNING AND MAINTA INING RACE HORSES CANNOT BE SET OFF AGAINST ANY OTHER INCOME AND IT C AN BE CARRIED FORWARD AND SET OFF ONLY AGAINST THE INCOME FROM THE ACTIVI TY OF OWNING AND MAINTAINING THE RACE HORSES IN THE FUTURE YEARS. AC CORDINGLY, THE A.O. DISALLOWED THE SET OFF OF LOSS FROM THE STUD FARM A GAINST THE PROFITS FROM THE SHIP MANAGEMENT ACTIVITY. THE CIT(A) OBSERVED T HAT 15% OF THE ASSESSEE'S HORSES TAKE PART IN RACING. THE BREEDING AND RACING ACTIVITIES ARE SEPARATE. THE MAJOR ACTIVITY IS THAT OF BREEDIN G. THE ASSESSEE HAS ON AN AVERAGE AROUND 300 HORSES AND ONLY 40 HORSES RUN IN THE RACES. HE DID NOT ACCEPT THE ASSESSEE'S CONTENTION THAT ENTIR E LOSS IS FROM BREEDING ACTIVITY AS RACING ACTIVITY IS ONLY INCIDENTAL TO T HE BREEDING ACTIVITY. IT WAS ALSO OBSERVED THAT ASSESSEE SUBMITTED A COLUMNE R PROFIT AND LOSS ACCOUNT OF THE RACE HORSES OWNING AND MAINTENANCE A CTIVITY AND BREEDING HORSES OWNING AND MAINTENANCE ACTIVITY FOR THE YEAR ENDED 31ST MARCH 2007. THIS BIFURCATION WAS DONE ON THE B ASIS OF SEPARATE COST CODE AND LEDGER ACCOUNTS MAINTAINED IN THE BOO KS OF ACCOUNTS TO 18 ITA NOS. 952 & 953/PN/2010, 305/PN/2012 AND 146 & 147/PN/2013 RECORD THE RECEIPTS AND EXPENDITURE IN RESPECT OF R ACE HORSES AND BREEDING HORSES. IN THE REMAND REPORT, THE A.O. HAS AGREED THAT THE BIFURCATION IS IN CONSONANCE WITH THE P & L ACCOUNT . ACCORDINGLY, THE CIT(A) HAS HELD THAT THE LOSS OF RS. L,18,63,894/- IS FROM RACING ACTIVITY AND HE DID NOT ALLOW THE SET OFF OF THIS LOSS AGAIN ST THE BUSINESS INCOME FROM SHIP MANAGEMENT ACTIVITY. WHILE HE HELD THAT T HE LOSS OF RS. L,89,92,554/- IS FROM BREEDING ACTIVITY AND HE ALLO WED THE SET OFF OF THIS LOSS AGAINST THE INCOME. THE REVENUES GROUND IS TH AT THE ENTIRE LOSS SHOULD BE DISALLOWED FOR SET OFF AS IT IS FROM THE RACING ACTIVITY WHILE THE ASSESSEE'S APPEAL IS ON THE ISSUE THAT THE ENTIRE L OSS SHOULD BE ALLOWED FOR SET OFF. THE ASSESSEE HAS ALSO SHOWN THE BIFURC ATION OF ITS RECEIPTS FROM STUD FARM AND IT IS TO BE NOTED THAT OUT OF TH E TOTAL RECEIPTS OF RS.4,75,70,112/- FROM THIS ACTIVITY, STAKES WON IN THE RACES ARE AMOUNTING TO RS. 69,51,746/- ONLY AND HENCE, THIS I NDICATES THAT RACING INCOME IS JUST 15% OF TOTAL INCOME AND BREEDING IS THE MAIN ACTIVITY. THE ASSESSEE HAS GIVEN ITS OBJECT IN THE MEMORANDUM OF ASSOCIATION WHICH IS THE BREEDING ACTIVITY. AS PER TURF CLUB REGULATIONS RACING AND BREEDING ARE TWO BRANCHES AND ADMINISTRATION OF THESE BRANCHES C OME FROM SEPARATE BODIES. THUS, A.O. WAS NOT JUSTIFIED IN HOLDING THA T THE ENTIRE ACTIVITY IS OF MAINTAINING HORSES FOR RUNNING IN RACES. THE CIT (A) HAS CORRECTLY APPRECIATED THAT THE LOSS FROM RACING ACTIVITY SHOU LD BE BIFURCATED FROM THE BREEDING ACTIVITY AND THAT LOSS SHOULD ONLY BE DISALLOWED FOR SET OFF AGAINST BUSINESS INCOME. ACCORDINGLY, ON THE BASIS OF FACTS AND FIGURES, HE HAS CORRECTLY HELD THE LOSS OF RS.1,18,63,894/- PERTAINS TO RACING ACTIVITY AND THE SAME IS TO BE DISALLOWED FOR SET O FF WHILE THE BALANCE LOSS OF RS.1,89,92,554/- IS FROM BREEDING ACTIVITY AND IT IS ALLOWED TO BE SET OFF AGAINST THE INCOME FROM SHIP MANAGEMENT BUS INESS AS SECTION 74A CANNOT BE APPLIED TO THE LOSS FROM BREEDING BUS INESS. THE LD. CIT(A) HAS RECORDED A CATEGORICAL FINDING TO THE EFFECT TH AT THE COMPANY HAD ON AN AVERAGE 300 HORSES OWNED BY IT AT THE FARM AND H ORSES OF THE CLIENTS AT THE FARMS OUT OF WHICH ONLY 15% PARTICIPATED IN THE RACES, THEREFORE, THE LOSS INCURRED TO THE ACTIVITIES ATTRIBUTABLE TO RACE HORSES CANNOT BE ALLOWED TO BE SET OF AGAINST OTHER INCOME IN VIEW O F PROVISIONS OF SECTION 74A OF THE ACT. THE DETAILS FILED BY THE ASSESSEE W AS SENT BY THE LD. CIT(A) TO THE A.O. FOR REMAND REPORT. THE A.O. HAS VERIFIED THE INCOME AND EXPENDITURE OF COMPOSITE LIVESTOCK BUSINESS AS WELL AS RACING ACTIVITY WITH BOOKS OF ACCOUNT AND FOUND THE SAME I N CONSONANCE WITH THE BOOKS OF ACCOUNT SUBMITTED BY THE ASSESSEE COMP ANY. AFTER CONSIDERING THE REMAND REPORT AND CORROBORATIVE EVI DENCES, THE LD. CIT(A) RECORDED A CATEGORICAL FINDING TO THE EFFECT THAT I T CONSTITUTES ONLY AROUND 15% OF THE GROSS RECEIPT, THEREFORE, ONLY LOSS INCU RRED THEREON IS LIABLE TO 19 ITA NOS. 952 & 953/PN/2010, 305/PN/2012 AND 146 & 147/PN/2013 BE DISALLOWED U/S 74A TO BE SET OFF AGAINST OTHER I NCOME. SECTION 74A IS NOT APPLICABLE FOR THE ACTIVITY OF BREEDING OF HORS ES SINCE THESE HORSES ARE MAINTAINED FOR BREEDING AND SELLING AND NOT FOR RUN NING HORSE RACES. THE ACTIVITY OF BREEDING OF HORSES IS SIMILAR TO THAT O F POULTRY OR PIGGERIES ETC. WHERE THE ANIMALS ARE BRED FOR THE PURPOSE OF SELLI NG. SECTION 74A IS NOT APPLICABLE FOR SUCH BREEDING ACTIVITY. THE LD. CIT( A) ALSO FOUND THAT DURING THE REMAND PROCEEDINGS, THE A.O. REPORTED TH AT INCOME AND EXPENDITURE PERTAINING TO BREEDING ACTIVITY AND RAC ING ACTIVITY WERE FOUND TO BE CAPTURED UNDER TWO DIFFERENT ACCOUNTING CODES IN RESPECT OF BOTH THE ASSESSMENT YEARS. THE LD. CIT (A) ALSO FOU ND THAT AN AMOUNT OF RS. 1.94 CRORES IS RECOVERED ON ACCOUNT OF LIVERY E XPENSES FROM OTHER HORSE OWNERS, WHO HAVE UTILIZED THE STABLES AND OTH ER SERVICES OF THE STUD FARM OF THE ASSESSEE. AFTER CONSIDERING THE RE MAND REPORT AND CORROBORATIVE EVIDENCES FILED BEFORE HIM, THE LD. C IT(A) REACHED TO THE CONCLUSION THAT ONLY THE BUSINESS LOSS IN RESPECT O F HORSE BREEDING ACTIVITY AMOUNTING TO RS. 1,89,92,554/- WAS LIABLE TO BE SET OFF AGAINST BUSINESS INCOME WHEREAS LOSS OF RS. 1,18,63,894/- I S FROM HORSE RACING ACTIVITY NOT ELIGIBLE FOR SET OFF AGAINST BUSINESS INCOME IN VIEW OF PROVISIONS OF SECTION 74A OF THE ACT. THE FINDINGS RECORDED BY THE LD. CIT(A) ARE AS PER MATERIAL ON RECORD, THUS WE DO NO T FIND ANY REASON TO INTERFERE IN THE FINDINGS OF LD. CIT(A) AND ACCORDI NGLY WE CONFIRM THE SAME. SINCE, THE ISSUE RAISED IN THE PRESENT APPEAL IS SIMILAR TO THE ISSUE ADJUDICATED BY THE CO-ORDINATE BENCH, WE ALLOW THIS SECOND GROUND OF APPEAL OF THE ASSESSEE IN SAME TERMS. HERE WE WOULD LIKE TO MAKE IT CLEAR THAT IF THE ASSESSEE IS HAVING ANY INCOME FR OM RUNNING HORSES IN RACES, EVEN IF IT IS INCIDENTAL TO BREEDING OF HORS ES, THE SAME SHALL NOT CONSTITUTE INCOME FROM BREEDING BUSINESS AND SHA LL BE TAXABLE ACCORDING TO THE RELEVANT PROVISIONS OF THE ACT. 13. WE FIND THAT THE ASSESSEE HAS GIVEN THE DETAILS OF EXP ENDITURE ON THE MAINTENANCE OF HORSES BEFORE THE ASSESSING OFFICER AT THE TIME OF ASSESSMENT. THE LD. DR HAS NOT CONTROVERTED THIS FACT. THE ASSESSEE HAS ALSO EXPLAINED IN DETAIL THE NATURE OF BUSINESS ACTIVITY CARRIED ON 20 ITA NOS. 952 & 953/PN/2010, 305/PN/2012 AND 146 & 147/PN/2013 BY HIM IN RESPECT OF HORSE BREEDING, BEFORE THE AUTHORIT IES BELOW. THE ASSESSEE IS BREEDING RACE HORSES FOR SALE TO THE PERSON S WHO OWN AND MAINTAIN HORSES FOR RACING. THE ASSESSEE PROCURES BROOD MARES AND STALLIONS FOR BREEDING AND NOT RUNNING THEM IN RACE. THUS, BREEDING OF HORSES IS A SEPARATE AND DISTINCT BUSINESS ACTIVITY AND IS NOT AKIN TO OWNING AND MAINTAIN HORSES FOR RACING. THUS, IN VIEW OF THE FACTS OF THE CASE WE ARE OF THE CONSIDERED OPINION THAT THE LOSSES INC URRED BY THE ASSESSEE IN THE BUSINESS OF BREEDING OF HORSES ARE BUSIN ESS LOSS THAT CAN BE SET OFF AGAINST THE PROFITS OF THE BUSINESS ACTIVITY. THE ACTIVITY OF HORSE BREEDING DOES NOT ATTRACT THE PROVISIONS OF SECTIO N 74A OF THE ACT. IN VIEW OF OUR ABOVE FINDINGS THE GROUND NO. 3 RAISED IN T HE APPEAL OF THE ASSESSEE IS ALLOWED. 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE FOR THE ASS ESSMENT YEAR 2003-04 IS ALLOWED. ITA NO. 146/PN/2013 (A.Y. 2005-06) 15. IN THE APPEAL FOR ASSESSMENT YEAR 2005-06 THE ASSE SSEE HAS ASSAILED THE FINDINGS OF ASSESSING OFFICER ON TWO GROUNDS: 1. CHALLENGING THE ACTION OF ASSESSING OFFICER IN INITIATING REASSESSMENT PROCEEDINGS AGAINST THE ASSESSEE. 2. CONFIRMING DISALLOWANCE OF ` 31,41,744/- BEING EXCESS OF EXPENDITURE OVER INCOME RELATING TO HORSE BREEDING BUSIN ESS. 16. THE LD. AR APPEARING ON BEHALF OF THE ASSESSEE SUBMITT ED THAT REASSESSMENT PROCEEDINGS HAVE BEEN INITIATED WITHOUT THE RE BEING ANY NEW TANGIBLE MATERIAL OR INFORMATION AGAINST THE ASSESSEE. THERE WAS NO MATERIAL BEFORE THE ASSESSING OFFICER TO INVOKE THE PROV ISIONS OF SECTION 147 R.W.S. 148 OF THE ACT. THE ASSESSEE HAD FILED ALL THE 21 ITA NOS. 952 & 953/PN/2010, 305/PN/2012 AND 146 & 147/PN/2013 RELEVANT DOCUMENTS ALONG WITH THE RETURN OF INCOME. REAS SESSMENT PROCEEDINGS HAVE BEEN INITIATED MERELY ON THE BASIS OF C HANGE OF OPINION. IN THE REASSESSMENT PROCEEDINGS THE DEPARTME NT HAS NOT ALLEGED THAT THE ASSESSEE HAS MADE ANY WRONG CLAIM. THE ASSESSMENT HAS BEEN REOPENED ON THE BASIS OF REASONS RECORDED FOR ASSESSMENT YEAR 2003-04. THE LD. AR FURTHER SUBMITTED THAT WHERE AUDIT OBJECTION IS ON LAW POINT REASSESSMENT CANNOT BE MADE. IN SUPPOR T OF HIS SUBMISSIONS, THE LD. AR PLACED RELIANCE ON THE FOLLOWING DECISIONS: I. TITANOR COMPONENTS LTD. VS. ACIT, 343 ITR 183 (BOM); II. HINDUSTAN LEVER LTD. VS. R.B. WADKAR, 268 ITR 332 (BOM); III. HABICHT (H.) (DR.) VS. MAKHIJA, 154 ITR 552 (BOM). 17. ON THE OTHER HAND THE LD. DR REPRESENTING THE DEPAR TMENT VEHEMENTLY SUPPORTED THE FINDINGS OF THE COMMISSIONER OF I NCOME TAX (APPEALS). THE LD. DR SUBMITTED THAT IN THE ASSESSMENT YE ARS 2005-06, 2006-07 AND 2007-08 THE ASSESSMENTS WERE MADE U/S. 1 43(1) OF THE ACT. THEREFORE, NO OPINION WAS FORMED BY THE ASSESSING OFFIC ER AT THE TIME OF ASSESSMENT. SINCE, THERE WAS NO OCCASION FOR THE ASSESSING OFFICER TO FORM AN OPINION THERE CAN BE NO CHANGE OF OPINION . THE LD. DR SUBMITTED THAT IN THE ASSESSMENT YEARS 2005-06 TO 2007-08 THE PROVISO TO SECTION 147 WILL NOT APPLY AS REASSESSMENT PR OCEEDINGS WERE STARTED WITHIN FOUR YEARS. 18. BOTH SIDES HEARD. IN THE ASSESSMENT YEAR 2005-06 IT IS AN ADMITTED FACT THAT THE ASSESSMENT WAS MADE U/S. 143(1) O F THE ACT. THUS, THERE WAS NO OCCASION FOR THE ASSESSING OFFICER TO FO RM ANY OPINION ON THE INFORMATION AND DOCUMENTS FURNISHED BY THE ASSESSEE ALONG WITH RETURN OF INCOME. THE CONTENTION OF THE LD. AR IS THAT AT THE 22 ITA NOS. 952 & 953/PN/2010, 305/PN/2012 AND 146 & 147/PN/2013 TIME OF INITIATING REASSESSMENT PROCEEDINGS IT IS NOT ALLEGED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS MADE WRONG CLAIM AND THERE IS NO NEW TANGIBLE MATERIAL ON RECORD FOR INITIATING REASSESSME NT PROCEEDINGS U/S. 147 OF THE ACT. THE ARGUMENTS RAISED BY THE LD. AR OF THE ASSESSEE WOULD BE QUITE RELEVANT IF THE ASSESSMENT W OULD HAVE BEEN MADE UNDER THE PROVISIONS OF SECTION 143(3) OF THE ACT. IN ASSESSMENT YEARS 2005-06 TO 2007-08 THE ASSESSMENTS HAS BEEN FR AMED U/S. 143(1). THEREFORE, THE OBJECTIONS RAISED BY THE ASSESSEE ARE NOT SUSTAINABLE. 19. TO SUPPORT HIS SUBMISSIONS, THE LD. AR HAS PLACED RELIANCE ON THE DECISION IN THE CASE OF TITANOR COMPONENTS LTD. VS. ACIT (S UPRA). WE FIND THAT THE FACTS OF THE SAID CASE ARE AT VARIANCE. IN THE SAID CASE THE ASSESSMENT ORDER WAS PASSED U/S. 143(3) AND REASSESSME NT PROCEEDINGS WERE INITIATED AFTER THE EXPIRY OF 4 YEARS. THE HON'BLE HIGH COURT IN SUCH CIRCUMSTANCES HAS HELD THAT THE REASSES SMENT PROCEEDINGS ARE NOT SUSTAINABLE AND ARE LIABLE TO BE QUAS HED. SIMILARLY, IN THE CASE OF HINDUSTAN LEVER LTD. VS. R.B. WADKAR (SUPRA), THE HON'BLE HIGH COURT QUASHED THE REASSESSMENT PROCE EDINGS WHERE THE INITIAL ASSESSMENT WAS MADE U/S. 143(3) AND THE REASSE SSMENT PROCEEDINGS WERE INITIATED AFTER EXPIRY OF 4 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. FURTHER, TO BUTTRESS HIS ARGUMENTS THAT REOPENING OF AS SESSMENT ON THE BASIS OF AUDIT OBJECTION IS NOT VALID, THE LD. AR HAS REFERRED TO THE DECISION OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF HABICHT (H.) (DR.) VS. MAKHIJA (SUPRA). IN THE SAID CASE REASONS FOR REO PENING WERE NEITHER RECORDED IN NOTICE ISSUED U/S. 148 NOR THEY WERE SUPPLIED TO THE ASSESSEE SUBSEQUENTLY. MOREVOER, THE ASSESSING OFFIC ER HAD 23 ITA NOS. 952 & 953/PN/2010, 305/PN/2012 AND 146 & 147/PN/2013 INITIATED REASSESSMENT PROCEEDINGS IN IGNORANCE OF CBDT CIR CULAR DATED MAY 8, 1977 WHICH WAS RELEVANT TO THE ASSESSMENT YEAR AT THAT TIME. WE FIND THAT THE HON'BLE HIGH COURT IN THE PECULIAR F ACTS OF THE ABOVE SAID CASE HAD ACCEPTED THE CONTENTIONS OF THE AS SESSEE THAT MERE FACT THAT THE ITO WAS NOT AWARE OF THE BOARD CIRCULAR IS NOT SUFFICIENT TO REOPEN ASSESSMENT. THEREFORE, ALL THE DECISIONS ON WHICH LD . AR HAS PLACED RELIANCE ARE DISTINGUISHABLE AND WILL NOT APPLY IN THE FACTS OF THE PRESENT CASE. 20. WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSING OFFICE R HAS RIGHTLY INITIATED REASSESSMENT PROCEEDINGS IN ASSESSMENT YEAR 2005-06. THERE IS NO CHANGE OF OPINION AS NO OPINION WAS FORMED BY ASSESSING OFFICER IN ASSESSMENT MADE U/S. 143(1). WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) IN REJE CTING THIS GROUND OF APPEAL OF THE ASSESSEE. ACCORDINGLY, THE FIRST G ROUND OF APPEAL OF THE ASSESSEE IS DISMISSED BEING DEVOID OF ANY MERIT. 21. IN THE SECOND GROUND OF APPEAL THE ASSESSEE HAS AS SAILED THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) IN CONFIRMING TH E DISALLOWANCE OF ` 31,41,744/- BEING EXCESS OF EXPENDITURE OVER INCOME RELATING TO HORSE BREEDING BUSINESS AND BY BRINGING THE S AME INTO THE PURVIEW OF SECTION 74A(3) OF THE ACT. THIS ISSUE WE HAVE A LREADY ADJUDICATED IN THE APPEAL OF THE ASSESSEE IN ITA NO. 952/ PN/2010 FOR THE ASSESSMENT YEAR 2003-04 IN THE PRECEDING PARAGRAP HS. FOR THE SIMILAR REASONS, WE DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE. 22. IN THE RESULT, THE APPEAL OF THE ASSESSEE FOR ASSESSM ENT YEAR 2005-06 IS PARTLY ALLOWED. 24 ITA NOS. 952 & 953/PN/2010, 305/PN/2012 AND 146 & 147/PN/2013 ITA NO. 953/PN/2010 (A.Y. 2006-07) 23. IN THE APPEAL FOR THE ASSESSMENT YEAR 2006-07, THE ASSESSEE HAS ASSAILED THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) PRIMARILY ON THREE GROUNDS: 1. CHALLENGING THE ACTION OF ASSESSING OFFICER IN INITIATING REASSESSMENT PROCEEDINGS AGAINST THE ASSESSEE. 2. CHALLENGING THE VALIDITY OF THE ORDER PASSED BUT SERVED O N THE ASSESSEE BEYOND THE PRESCRIBED TIME LIMIT. 3. DISALLOWANCE OF ` 22,50,407/- BEING EXCESS OF EXPENDITURE OVER INCOME RELATING TO HORSE BREEDING BUSINESS. 24. THE FIRST GROUND OF APPEAL IS IDENTICAL TO THE GROUND RA ISED IN THE ASSESSMENT YEAR 2005-06. FOR THE DETAILED REASONS GIVE N IN PARAGRAPHS 18 TO 20, THIS GROUND OF APPEAL IS DISMISSED. 25. IN THE SECOND GROUND OF APPEAL THE ASSESSEE HAS CH ALLENGED THE VALIDITY OF THE ORDER PASSED BUT SERVED ON THE ASSESSEE BEYOND THE PRESCRIBED TIME LIMIT. THE LD. AR OF THE ASSESSEE STATED AT THE BAR THAT HE IS NOT PRESSING THIS GROUND OF APPEAL. ACCORDINGLY, THE SAME IS DISMISSED AS NOT PRESSED. 26. IN GROUND NO. 3 THE ASSESSEE HAS ASSAILED THE DISALLOW ANCE OF ` 22,50,407/- BEING EXCESS OF EXPENDITURE OVER INCOME RELATI NG TO HORSE BREEDING BUSINESS BY INVOKING THE PROVISIONS OF SECTION 74A (3) OF THE ACT. SINCE, WE HAVE DECIDED THIS ISSUE IN FAVOUR OF THE ASS ESSEE BY HOLDING THAT THE PROVISIONS OF SECTION 74A(3) ARE NOT APPLICA BLE ON THE HORSE BREEDING BUSINESS. THE HORSE BREEDING ACTIVITY IS S EPARATE AND DISTINCT FROM MAINTAINING AND OWNING HORSE FOR RACES. THIS G ROUND OF 25 ITA NOS. 952 & 953/PN/2010, 305/PN/2012 AND 146 & 147/PN/2013 APPEAL OF THE ASSESSEE IS ALLOWED FOR DETAILED REASONS GIVEN IN FOREGONE PARAGRAPHS. ACCORDINGLY, THIS GROUND NO. 3 RAISED IN THE APPEAL OF THE ASSESSEE IS ALLOWED. 27. IN THE RESULT, THE APPEAL OF THE ASSESSEE FOR ASSESSM ENT YEAR 2006-07 IS PARTLY ALLOWED. ITA NO. 147/PN/2013 (A.Y. 2007-08) 28. IN APPEAL FOR ASSESSMENT YEAR 2007-08 THE ASSESSEE HAS IMPUGNED THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEA LS) ON FOLLOWING THREE GROUNDS: 1. CHALLENGING THE ACTION OF ASSESSING OFFICER IN INITIATING REASSESSMENT PROCEEDINGS AGAINST THE ASSESSEE. 2. CONFIRMING DISALLOWANCE OF ` 36,13,051/- BEING EXCESS OF EXPENDITURE OVER INCOME RELATING TO HORSE BREEDING BUSINESS. 3. DISALLOWANCE OF ` 1,50,000/- BEING INTEREST ON HOUSING LOAN CLAIMED U/S. 24 OF THE ACT. 29. THE GROUND NOS. 1 AND 2 RAISED IN THE APPEAL ARE IDEN TICAL TO THE GROUNDS RAISED IN ITA NO. 146/PN/2013 FOR ASSESSMENT YE AR 2005-06. FOR THE DETAILED REASONS GIVEN THEREIN, THE GROUND NO. 1 IS DISMISSED AND GROUND NO. 2 IS ALLOWED. 30. THE GROUND NO. 3 RELATES TO ALLOWABILITY OF INTEREST PAID ON HOUSE LOAN. THE ASSESSEE HAS CLAIMED ` 1,50,000/- TOWARDS PAYMENT OF INTEREST ON LOAN IN RESPECT OF HOUSE AT OXFORD VILLAGE, KOND HWA. THE ASSESSING OFFICER DISALLOWED THE SAME ON THE GROUND THAT T HE ASSESSEE IS NOT RESIDING IN THAT HOUSE, THEREFORE, INTEREST PAID IN RE SPECT OF SUCH HOUSE IS NOT ALLOWABLE UNDER THE PROVISIONS OF SECTION 24 O F THE ACT. IN 26 ITA NOS. 952 & 953/PN/2010, 305/PN/2012 AND 146 & 147/PN/2013 FIRST APPEAL THE COMMISSIONER OF INCOME TAX (APPEALS) HAS UP HELD THE FINDINGS OF ASSESSING OFFICER. 31. THE LD. AR SUBMITTED THAT IN THE HOUSE LOCATED AT OXFO RD VILLAGE, KONDHWA, THE ASSESSEE WAS STAYING WITH HIS FAMILY. ON ACC OUNT OF DIFFERENCES WITH HIS WIFE A DIVORCE PETITION WAS FILED IN THE YE AR 2007 WHICH WAS DECREED IN 2009. ACCORDING TO THE TERMS AND CONDITIONS OF THE DIVORCE DECREE THE RESIDENTIAL HOUSE AT OXFORD VILLAGE, KONDHWA WAS TRANSFERRED BY THE ASSESSEE IN THE NAME OF HIS WIFE. THEREAFTER, THE ASSESSEE SHIFTED TO AUNDH AND THE HOUSE AT OXFORD VILLAG E, KONDHWA IS OCCUPIED BY HIS DIVORCED WIFE AND SON. 32. ON THE OTHER HAND THE LD. DR SUBMITTED THAT THE ASS ESSEE IS NOT ELIGIBLE TO CLAIM DEDUCTION OF INTEREST PAYMENT FOR HOUSE LOAN UNDER THE PROVISIONS OF SECTION 24 OF THE ACT. A PERUSAL OF SECTION 2 4 R.W.S. 23(2) WOULD MAKE IT CLEAR THAT FOR CLAIMING INTEREST AS DEDUCTION THE HOUSE SHOULD BE OCCUPIED BY THE OWNER. THE ONLY EXCEPTION WH ERE BENEFIT OF DEDUCTION CAN BE GRANTED EVEN IF THE OWNER IS NOT IN OCC UPATION OF THE HOUSE IS, IF BY REASON OF HIS EMPLOYMENT, BUSINESS, OR PROFES SION CARRIED ON AT ANY PLACE AND HE RESIDES AT THE OTHER P LACE IN A BUILDING NOT BELONGING TO HIM. THE EXCEPTION PROVIDED UNDER THE PROVISIONS OF THE ACT IS NOT APPLICABLE IN THE FACTS AND CIRCUMSTANCES O F THE PRESENT CASE. THEREFORE, DISALLOWANCE OF INTEREST HAS BEEN RIGHTLY CONFIRMED BY THE COMMISSIONER OF INCOME TAX (APPEALS). 33. BOTH SIDES HEARD. THE CONTENTION OF THE LD. AR IS THA T THE ASSESSEE WAS RESIDING WITH HIS WIFE AND SON AT OXFORD VILLAGE , KONDHWA. DUE TO ESTRANGED RELATIONS BETWEEN THE ASSES SEE AND HIS 27 ITA NOS. 952 & 953/PN/2010, 305/PN/2012 AND 146 & 147/PN/2013 WIFE, A DIVORCE PETITION WAS FILED IN THE YEAR 2007 WHICH WAS DECREED IN THE YEAR 2009. IN TERMS OF THE DECREE OF DIVORCE THE H OUSE IN QUESTION WAS TRANSFERRED BY THE ASSESSEE IN THE NAME OF HIS WIFE. DURING THE COURSE OF ASSESSMENT PROCEEDING THE ASSESSEE HAS ADMIT TED THAT THE ASSESSEE HAS MOVED TO AUNDH. HOWEVER, IT IS NOT EVIDENT FROM THE RECORDS AS TO WHEN THE ASSESSEE LEFT THE HOUSE AT OXF ORD VILLAGE, KONDHWA AND SHIFTED TO AUNDH. THE ASSESSEE HAS ADMITTE D THAT THE DIVORCE PETITION WAS FILED IN THE YEAR 2007. SO IT CAN BE W ELL PRESUMED THAT THE ASSESSEE WAS STAYING WITH HIS WIFE AND SON AT O XFORD VILLAGE, KONDHWA TILL THE FILING OF DIVORCE PETITION IN 2007. THE ASS ESSMENT YEAR UNDER APPEAL RELATES TO THE FINANCIAL YEAR 2006-07, ACCORD INGLY, WE ARE OF THE CONSIDERED VIEW THAT THE BENEFIT OF DEDUCTION U/S. 2 4 ON PAYMENT OF INTEREST ON HOUSE LOAN IN RESPECT OF HOUSE AT OXFORD V ILLAGE, KONDHWA CAN BE EXTENDED TO THE ASSESSEE IN ASSESSMEN T YEAR 2007-08. ACCORDINGLY, THIS GROUND OF APPEAL OF THE ASSESSEE IS ACCEPTED. 34. IN THE RESULT, THE APPEAL OF THE ASSESSEE FOR ASSESSM ENT YEAR 2007-08 IS PARTLY ALLOWED. ITA NO. 305/PN/2012 (A.Y. 2008-09) 35. IN THE APPEAL FOR THE ASSESSMENT YEAR 2008-09 THE ASSESSEE HAS CHALLENGED THE FINDINGS OF THE COMMISSIONER OF INCOME TAX (A PPEALS) ON FOLLOWING GROUNDS: 1. ON FACTS AND CIRCUMSTANCES PREVAILING IN THE CASE A ND AS PER PROVISIONS OF THE ACT IT BE HELD THAT, THE ORDER PASSED BY THE AO ON 30/12/2010 AND COMMUNICATED TO THE APPELLANT AFTER 31 ST DEC, 2010 IS NOT TENABLE IN LAW AND IS NOT EFFECTIVE. THE ORDER BE HELD AS NON EFFECTIVE IN THE EYES OF LAW AS PER PROVISIONS OF THE ACT AND FACTS PREVAILI NG IN THE CASE. THE ORDER PASSED BY THE AO BE CANCELLED. 28 ITA NOS. 952 & 953/PN/2010, 305/PN/2012 AND 146 & 147/PN/2013 2. WITHOUT PREJUDICE GROUND NO. 1 IN THE ALTERNATIVE, ON FACTS AND CIRCUMSTANCES PREVAILING IN THE CASE AND AS PER PRO VISIONS OF THE ACT IT BE HELD THAT:- A) THE ADDITION OF RS.1,01,903/- MADE BY THE AO AND TH AT CONFIRMED BY THE 1 ST APPELLATE AUTHORITY IS UNWARRANTED, UNJUSTIFIED CO NTRARY TO THE SCHEME AND PROVISIONS OF THE ACT AND FACTS PREVAILI NG IN THE CASE. THE ADDITION MADE BY THE AO AND THAT CONFIRMED BY THE 1 ST APPELLATE AUTHORITY BE DELETED. THE APPELLANT BE GRANTED JUST AND PROPER RELIEF IN THIS RESPECT. B) THE ADDITION OF RS.4,40,526/-MADE BY THE AO AND THA T CONFIRMED BY THE 1 ST APPELLATE AUTHORITY UNDER THE HEAD INCOME FROM BUS INESS AND PROFESSION IS UNWARRANTED, UNJUSTIFIED AND CONTRARY TO THE SCHEME AND PROVISIONS OF THE ACT AND FACTS PREVAILING IN T HE CASE. THE ADDITION SO MADE BY THE AO AND THAT CONFIRMED BY TH E 1 ST APPELLATE AUTHORITY AMOUNTS TO DOUBLE TAXATION OF THE SAME AM OUNT WHICH IS ERRONEOUS AND IS REQUIRED TO BE DELETED. THE APPELL ANT BE GRANTED JUST AND PROPER RELIEF IN THIS RESPECT. C) THE AO HAS ERRED IN NOT ALLOWING THE LOSS OF RS.4,4 0,526/- AS A SET OFF ALTHOUGH THE SAME HAS REMAINED TO BE CLAIMED BY THE APPELLANT IN THE RETURN OF INCOME. THE APPELLANT BE GRANTED JUST AND PROPER RELIEF IN THIS RESPECT. D) THE ADDITION OF RS.35,54,775/- MADE BY THE AO AND T HAT CONFIRMED BY THE 1 ST APPELLATE AUTHORITY UNDER THE HEAD CAPITAL GAIN IS IMPROPER, UNJUSTIFIED CONTRARY TO THE SCHEME AND PR OVISIONS OF THE ACT AND FACTS PREVAILING IN THE CASE. IT FURTHER BE HEL D THAT NO ADDITION IN THIS RESPECT IS WARRANTED AS IS HELD BY THE AO. IT FURTHER BE HELD THAT ADDITION MADE BY THE AO WITHOUT REFERRING THE ISSUE TO THE VALUATION OFFICER AS PER THE PROVISIONS AND SCHEME OF THE ACT IS ARBITRARY AND VITIATED IN LAW. THE ADDITION MADE BY THE AO AND TH AT CONFIRMED BY THE 1 ST APPELLATE AUTHORITY BE DELETED. THE APPELLANT BE G RANTED JUST AND PROPER RELIEF IN THIS RESPECT. 36. THE LD. AR OF THE ASSESSEE STATED AT BAR THAT HE IS NOT PRESSING GROUND NO. 1. ACCORDINGLY, GROUND NO. 1 RAISED IN THE APP EAL BY ASSESSEE IS DISMISSED AS NOT PRESSED. 29 ITA NOS. 952 & 953/PN/2010, 305/PN/2012 AND 146 & 147/PN/2013 37. IN GROUND NO. 2(A) THE ASSESSEE HAS ASSAILED THE FINDIN GS OF COMMISSIONER OF INCOME TAX (APPEALS) IN CONFIRMING THE DISALLOW ANCE OF ` 1,01,903/- TOWARDS THE PAYMENT OF INTEREST ON LOAN IN RE SPECT OF HOUSE AT OXFORD VILLAGE, KONDHWA. THIS GROUND WAS RAISED BY THE ASSESSEE IN HIS APPEAL FOR THE ASSESSMENT YEAR 2007-08, AS WELL. IT IS AN ADMITTED FACT THAT THE ASSESSEE IS NOT RESIDING IN THE HOUSE AT OXFORD VILLAGE, KONDHWA. THE ASSESSING OFFICER HAS DISALLOWED T HE INTEREST ON LOAN ON THE GROUND THAT THE ASSESSEE IS NO T RESIDING IN THE HOUSE. IT IS NOT EVIDENT FROM THE RECORDS AS TO WHEN THE ASSESSEE HAS SHIFTED FROM OXFORD VILLAGE, KONDHWA. HOWEVER, AS PER THE LD. AR OF THE ASSESSEE, THE ASSESSEE WAS HAVING ESTRANGED RELATIO NSHIP WITH HIS WIFE. A DIVORCE PETITION WAS FILED IN THE YEAR 2007 WHICH WA S DECREED ON 2009. WHILE DECIDING THIS ISSUE IN THE APPEAL FOR ASSESS MENT YEAR 2007-08 IT HAS BEEN PRESUMED THAT THE ASSESSEE SHIFTED TO AUNDH AFTER FILING OF THE DIVORCE PETITION IN THE YEAR 2007. HOWEVER, NO DATE OF FILING SUCH PETITION IS FORTHCOMING FROM RECORDS BEFORE US. SINCE, THE ASSESSMENT YEAR UNDER APPEAL RELATES TO THE FINANCIAL YEA R 2007-08, WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSEE HAS SHIFT ED FROM THE HOUSE DURING THE RELEVANT PERIOD. WE DEEM IT APPROPRIAT E TO REMIT THIS ISSUE BACK TO THE FILE OF ASSESSING OFFICER FOR LIMITED PURPOSE OF DETERMINING THE DATE OF FILING OF THE DIVORCE PETITION AND THE REAFTER ALLOW PRORATA DEDUCTION OF INTEREST ON HOUSING LOAN, I.E. FOR THE P ERIOD ASSESSEE WAS IN OCCUPATION OF THE HOUSE. THIS ISSUE IS AC CORDINGLY ALLOWED FOR STATISTICAL PURPOSE. 38. IN GROUND NO. 2(B) THE ASSESSEE HAS ASSAILED THE FINDING S OF COMMISSIONER OF INCOME TAX (APPEALS) IN CONFIRMING THE ADDITIO N OF ` 4,40,526/- TOWARDS THE EXCESS OF EXPENDITURE OVER INCOM E FROM THE 30 ITA NOS. 952 & 953/PN/2010, 305/PN/2012 AND 146 & 147/PN/2013 BUSINESS OF HORSE BREEDING. THE LD. AR SUBMITTED THAT THE ASSESSEE H AS NOT CLAIMED THE SAID LOSS IN HIS BOOKS OF ACCOUNT. THIS FAC T WAS BROUGHT TO THE NOTICE BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) AT THE TIME OF FIRST APPEAL. THE LD. AR REFERRED TO THE WRIT TEN SUBMISSIONS DATED 01-11-2011 FILED BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). THE LD. AR SUBMITTED THAT IT WAS CLEARLY BR OUGHT TO NOTICE THAT THE COMMISSIONER OF INCOME TAX (APPEALS) THAT LOSS OF ` 4,40,526/- WAS REMAINED TO BE CLAIMED AND NO SET OFF AGAINS T THE BUSINESS INCOME WAS CLAIMED. THE ADDITION CONFIRMED BY THE COMMISSIONER OF INCOME TAX (APPEALS) IN RESPECT OF SAID LOSS WOULD RESULT IN DOUBLE TAXATION OF THE SAME AMOUNT. 39. ON THE OTHER HAND THE LD. DR SUBMITTED THAT A PERUS AL OF THE ASSESSMENT ORDER AND THE ORDER OF THE COMMISSIONER OF I NCOME TAX (APPEALS) WOULD SHOW THAT THIS FACT WAS NEVER BROUGHT TO THE NOTICE OF THE ASSESSING OFFICER. RATHER THE CONSISTENT STAND OF TH E ASSESSEE IS THAT THE LOSS FROM BREEDING OF HORSES IS LIABLE TO BE SET O FF AGAINST THE BUSINESS INCOME OF THE ASSESSEE. 40. BOTH SIDES HEARD. IN THE APPEALS OF THE ASSESSEE FO R ASSESSMENT YEARS 2003-04 AND 2005-06 TO 2007-08, WE HAVE DEALT W ITH THIS ISSUE IN DETAIL. WE HAVE HELD THAT THE LOSS FROM THE BUSINESS OF BREEDING OF HORSE IS ALLOWABLE AGAINST THE BUSINESS INCOME OF THE ASSES SEE. IN THE PRESENT ASSESSMENT YEAR, THE ASSESSEE HAS POINTED THA T THE LOSS WAS NOT CLAIMED AND WAS NOT SET OFF AGAINST BUSINESS INCOME. IN SUPPORT OF HIS SUBMISSIONS, THE LD. AR HAS REFERRED TO THE WRITTEN SUB MISSIONS DATED 01-11-2011 FILED BEFORE THE COMMISSIONER OF INCOME T AX (APPEALS) AND THE SAME ARE PLACED AT PAGES 32 TO 35 OF T HE PAPER BOOK. 31 ITA NOS. 952 & 953/PN/2010, 305/PN/2012 AND 146 & 147/PN/2013 THIS FACT NEEDS TO BE VERIFIED. ACCORDINGLY, WE DEEM IT APP ROPRIATE TO REMIT THIS ISSUE BACK TO THE FILE OF ASSESSING OFFICER FOR REDE TERMINATION AND THEREAFTER DECIDE THIS ISSUE IN THE LIGHT OF OUR FINDINGS GIVEN IN ITA NO. 952/PN/2010 FOR ASSESSMENT YEAR 2003-04. ACCORDING LY, THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. 41. THE GROUND NO. 2(D) RELATES TO THE ADDITION OF ` 35,54,775/- ON ACCOUNT OF LONG TERM CAPITAL GAIN ARISING FROM SALE OF PROPE RTY. THE LD. AR SUBMITTED THAT THE ASSESSEE HAD SOLD THE PROPERTY AT AURORA TOWERS, PUNE FOR A CONSIDERATION OF ` 35,00,000/-. THE VALUE OF THE PROPERTY AS PER STAMP VALUATION RATE WAS ` 70,54,775/-. THE APPROVED VALUER DETERMINED THE VALUE OF PROPERTY AT ` 43,40,000/-. EVEN AT MARKET VALUE OF ` 43,40,000/-, THERE WAS NO BUYER. THE ASSESSEE HAD TO MADE DISTRESS SALE OF THE PROPERTY TO HIS TENANT WHO HA D OFFERED TO BUY THE PROPERTY AT ` 35,00,000/-. SINCE, THE STAMP DUTY ON THE SALE DEED WAS PAID BY THE BUYER THE ASSESSEE DID NOT DISPUTE THE STAMP DUTY VALUATION BEFORE THE CONCERNED AUTHORITIES. THE STAMP DU TY VALUE ADOPTED BY THE STAMP DUTY AUTHORITY IN RESPECT OF THE PROPERTY EXCEEDED THE FAIR MARKET VALUE OF THE PROPERTY ON THE D ATE OF TRANSFER. THE LD. AR SUBMITTED THAT THIS FACT WAS BROUGHT TO THE N OTICE OF ASSESSING OFFICER. THE LD. AR REFERRED TO THE WRITTEN SUBMIS SIONS DATED 07-12-2010 FILED BY THE ASSESSEE BEFORE THE ASSESSING OFF ICER. THE SAME ARE PLACED AT PAGES 13 TO 17 OF THE PAPER BOOK. HOWEVER, THE ASSESSING OFFICER DID NOT REFER THE VALUATION TO THE DVO I N TERMS OF SECTION 50C OF THE ACT. IN FIST APPEAL THE COMMISSIONER OF INCOME TAX (APPEALS) ALSO IGNORED THE OBJECTION RAISED BY THE ASSESS EE IN THIS REGARD. 32 ITA NOS. 952 & 953/PN/2010, 305/PN/2012 AND 146 & 147/PN/2013 42. ON THE OTHER HAND THE LD. DR SUBMITTED THAT NO REQU EST WAS MADE BY THE ASSESSEE TO REFER THE MATTER TO DVO. EVE N BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) NO SPECIFIC GROUND WAS TAKEN BY THE ASSESSEE THAT A REQUEST WAS MADE TO REFER THE MA TTER TO DVO WHICH WAS NOT CONSIDERED BY THE ASSESSING OFFICER. THE LD. DR SU BMITTED THAT THE ASSESSEE HAD NOT FILED ANY APPEAL AGAINST THE VALUE DETERMINED FOR STAMP PURPOSES. THE ASSESSEE HAS FURTHER NOT BEEN AB LE TO PROVE THE SO CALLED DISTRESS SALE. THE LD. DR PRAYED FOR DISMISSING T HIS GROUND OF APPEAL OF THE ASSESSEE. 43. AFTER HEARING THE SUBMISSIONS MADE BY THE REPRESENTA TIVES OF RIVAL SIDES IT HAS EMERGED THAT THE VALUE OF THE PROPERT Y SITUATED AT AURORA TOWERS, PUNE AS PER THE STAMP VALUATION RATE WA S ` 70,54,775/- WHICH IS MORE THAN TWICE THE RATE ON WHICH THE PROPERTY HAS BEEN ALLEGEDLY SOLD BY THE ASSESSEE. THE VALUE OF THE PROPERT Y DETERMINED BY THE GOVERNMENT APPROVED VALUER IS ` 43,40,000/-. OSTENSIBLY, THE MARKET VALUE OF THE PROPERTY IS FAR LESS THAN THE STAMP VALUATION RATE OF THE PROPERTY. AS PER THE PROVISIONS OF SECTION 50C(2), WH ERE THE ASSESSEE CLAIMS BEFORE THE ASSESSING OFFICER THAT THE VALUE ADOPTED BY THE STAMP VALUATION AUTHORITY EXCEEDS THE FAIR MARKET VA LUE OF THE PROPERTY AS ON THE DATE OF TRANSFER, THE ASSESSING OFFICER MAY REFER THE VALUATION OF THE CAPITAL ASSET BEFORE THE VALUATION OFFICER, PR OVIDED THE VALUE ADOPTED BY THE STAMP VALUATION AUTHORITY HAS NOT BEEN DISPUTED IN ANY APPEAL OR REVISION OR REFERENCE BEFORE ANY OTHER A UTHORITIES OR COURT. IN THE PRESENT CASE UNDISPUTEDLY NO APPEAL, RE VISION OR REFERENCE WAS MADE TO ANY AUTHORITY OR COURT AGAINST THE VALUE ADOPTED BY THE STAMP VALUATION OFFICER. ALTHOUGH, THE ASSESSEE HAD NOT MADE ANY SPECIFIC REQUEST FOR REFERRING THE MATTER TO THE DVO, THE OBJECTION 33 ITA NOS. 952 & 953/PN/2010, 305/PN/2012 AND 146 & 147/PN/2013 WAS RAISED DURING ASSESSMENT PROCEEDINGS CATEGORICALLY S TATING THAT THE MARKET VALUE OF THE PROPERTY IS LESS THAN THE VALUE ADOP TED FOR STAMP VALUATION. IN SUCH CIRCUMSTANCES THE ASSESSING OFFICER OUG HT TO HAVE REFERRED THE MATTER TO THE DVO. WE ARE OF THE CONSIDER ED VIEW THAT THIS ISSUE NEEDS A REVISIT TO THE FILE OF ASSESSING OFFICER FOR FRES H ADJUDICATION. THE ASSESSING OFFICER SHALL REFER THE MATTER T O THE DVO AND THEREAFTER DECIDE THIS ISSUE, IN ACCORDANCE WITH LAW. 44. IN THE RESULT THE APPEAL OF THE ASSESSEE FOR ASSESSM ENT YEAR 2008-09 IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON FRIDAY, THE 29 TH DAY OF JANUARY, 2016. SD/- SD/- ( . . / R.K. PANDA) ( ! ' / VIKAS AWASTHY) #' / ACCOUNTANT MEMBER $ % #' / JUDICIAL MEMBER / PUNE; &# / DATED : 29 TH JANUARY, 2016 RK *+,%-.#/#)- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ' () / THE CIT(A)-II, PUNE 4. ' / THE CIT-II, PUNE 5. !*+ %%,- , ,- , . ./0 , / DR, ITAT, B BENCH, PUNE. 6. + 1 23 / GUARD FILE. // ! % // TRUE COPY// #4 / BY ORDER, %5 ,0 / PRIVATE SECRETARY, ,- , / ITAT, PUNE