THE COMMR OF INCOME TAX V. SRI M.L.SRIDHAR

ITA/547/2007

AI Insights

This case involves an appeal by the Commissioner of Income-tax and the Income Tax Officer against the decision of the Income-tax Appellate Tribunal, Bangalore, which had set aside the orders of the First Appellate Authority and the Assessment Officer. The Tribunal's decision was based on the grounds that the assessment was reopened after a significant delay (16 years) using an outdated Government Circular. The High Court, however, found that the Tribunal should have considered the merits of the case, including the substantial difference between the guidance value and the value declared by the assessee for the property. The High Court directed the Tribunal to reassess the case on its merits.

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 745722 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 03-02-2014
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: M V JAVALI
• Assessee Lawyers: K V ARAVIND
• Keywords: Assessment Reopening; Guidance value; Income Tax; Property acquisition; Valuer's report
• Section: 147; 148; 143(1); 139; 260A

Judgement Text

"IN THE HIGH COURT OF KARNATAKA AT BANGALORE DATED THIS THE 3rd DAY OF FEBRUARY 2014 PRESENT THE HON’BLE MR. JUSTICE DILIP B.BHOSALE AND THE HON’BLE MR. JUSTICE B.MANOHAR I.T.A. No.547/2007 BETWEEN : 1. The Commissioner of Income-tax, Central Circle, C.R.Building, Queens Road, Bangalore. 2. The Income Tax Officer, Ward – 19(2), C.R.Building, Queens Road, Bangalore. …APPELLANTS (By Sri.K.V.Aravind, Adv.) AND : M.L.Sridhar, No.101, 8th Cross, RMV Extension, 9th Main, Sadasivanagar, Bangalore. …RESPONDENT (By Sri.M.V.Javali, Adv.[absent]) . . . . This I.T.A. is filed under Section 260A of the Income Tax Act, 1961 praying to (i) formulate the substantial questions of law stated therein, (ii) allow the appeal and set-aside the order passed by the Income Tax Appellate Tribunal, Bangalore in I.T.A. No.396/Bang/2006 dated 09.02.2007 and confirm the - 2 - order of the Appellate Commissioner confirming the order passed by the Income Tax Officer, Ward-19(2), Bangalore, in the interest of justice and equity. This I.T.A. coming on for hearing, this day, Dilip B.Bhosale, J., delivered the following: JUDGMENT This Income-tax appeal is directed against the order dated 09.02.2007 passed by the Income-tax Appellate Tribunal, Bangalore Bench `A’ (for short, `the Tribunal’) in I.T.A. No.396/2006 for the assessment year 1999-2000 whereby the Tribunal allowed the appeal and set-aside the orders passed by the First Appellate Authority dated 23.03.2006 and the Assessment Officer dated 22.03.2005. 2. It appears that the respondent-assessee had filed return under Section 139 of the Income-tax Act, 1961(for short `the Act’) on 23.06.1999 and the same was accepted under Section 143(1) of the Act vide intimation dated 22.11.1999. The assessment was thereafter re-opened under Section 147 of the Act. It was reopened solely on the ground that the cost of - 3 - acquisition, shown by the assessee, of the property in question was much more than the guidance value prescribed by the Government Circular bearing No.RB 329 EST 79 dated 10.11.1982. This Court while admitting the appeal vide order dated 14.06.2010 had formulated the two substantial questions of law for consideration. However, learned counsel for the parties state that the following substantial question of law only arise for our consideration: (i) Whether the Tribunal was justified in holding that the Government Circular prescribing the guidance value for stamp duty cannot be placed reliance by the Assessing Officer to reopen the assessments under Section 147 read with Section 148 of the Act? 3. None appears for the respondents, though served and hence, with the assistance of the learned counsel appearing for the Revenue, we have perused the order passed by the Tribunal and so also the orders passed by the Authorities below. From the facts of the case, it appears that the assessee had acquired land - 4 - measuring 7,987.50 sq. ft. prior to 01.04.1981. It is not clear whether he made construction of 600 sq. ft. over the said plot or he acquired the land with built up area. Be that as it may, the value of the land shown in the return filed in the year 1999-2000 was Rs.300/- per sq. ft. and the cost of construction was shown at Rs.100/- per sq. ft. As against this, the Circular dated 10.11.1982, on the basis of which, the assessment was reopened, shows the guidance value of the residential plot in the locality was around Rs.30.22 per sq. ft. and as per the Senior Registered Valuer, cost of the construction was Rs.70/- per sq. ft. In view thereof, the assessment was reopened by the Assessing Officer and he ultimately called upon the assessee to pay tax on the difference of the acquisition value of the property and the price received by him on sale of the property in the year 1999-2000. The order of the Assessing Officer was confirmed by the First Appellate Authority. The Tribunal did not go into merits of the case and allowed the appeal solely on the ground that the Assessing - 5 - Officer was wrong in re-opening the assessment after 16 years on the basis of the Circular dated 10.11.1982. 4. In our opinion, the view taken by the Tribunal was wrong. Though the Circular was issued 16 years ago, it was showing the guidance value prevailing at the relevant time. Having regard thereto and considering the difference between the guidance value and the value of land shown by the assessee in the return, the Tribunal ought to have recorded its finding on merits also. It is pertinent to note that the assessee did not and could not produce on record any authentic material to show the purchase price of the property in the year1981 or, when he actually purchased the said property. He quoted value of the land at Rs.300/- per sq. ft. on the basis of the Valuer’s report obtained by him. The Tribunal, therefore, ought to have considered the case on merits also to find out whether the Valuer’s Report was authentic and acceptable. In the circumstances, we are inclined to allow this appeal answering the substantial question of law formulated by - 6 - this Court, in their favour and against the assessee. Hence, the following order: (a) Appeal is allowed. (b) The appeal filed by the Tribunal, accordingly stands restored to file. (c) The Tribunal shall hear and decide the appeal afresh on merits in accordance with law and in the light of the observations made in this order. (d) All contentions of the parties are kept open. (e) It is needless to mention that the Tribunal shall issue notice to the assessee, who chose to remain absent before this Court, before dealing with the appeal afresh. Sd/- JUDGE Sd/- JUDGE SPS "