Income Tax Appellate Tribunal - Delhi
Umrao Singh, Faridabad vs Assessee on 20 May, 2016
IN THE INCOME TAX APPELLATE TRIBUNAL
(DELHI BENCH 'H' : NEW DELHI)
BEFORE SHRI J.S. REDDY, ACCOUNTANT MEMBER
and
SHRI KULDIP SINGH, JUDICIAL MEMBER
ITA No.2442/Del./2012
(ASSESSMENT YEAR : 2007-08)
Shri Umrao Singh, vs. ITO, Ward 1 (5),
S/o Shri Radhey Lal Singh, Faridabad.
Duruv Farm House, Sec - 3,
Ballabhgarh, Faridabad.
(PAN : BJFPS4994A)
ITA No.2549/Del./2012
(ASSESSMENT YEAR : 2007-08)
ITO, Ward 1 (5), vs. Shri Umrao Singh,
Faridabad. S/o Shri Radhey Lal Singh,
Duruv Farm House, Sec - 3,
Ballabhgarh, Faridabad.
(PAN : BJFPS4994A)
(APPELLANT) (RESPONDENT)
ASSESSEE BY : Shri S.M. Mathur, CA
REVENUE BY : Shri V.R. Sonbhadra, Senior DR
Date of Hearing : 09.03.2016
Date of Order : 20.05.2016
ORDER
PER KULDIP SINGH, JUDICIAL MEMBER :
The aforesaid appeal filed by the assessee as well as cross appeal filed by the revenue are being disposed by way of consolidated order to avoid repetition of discussion. 2 ITA No.2442 & 2549/Del./2012
2. Appellant, Shri Umrao Singh (hereinafter referred to as 'the assessee'), by filing the present appeal sought to set aside the impugned order dated 07.03.2012 passed by the Commissioner of Income-tax (Appeals), Faridabad qua the assessment year 2007-08 on the grounds inter alia that :-
"1.0. That on the fact and in the circumstances of the case, the Ld. Commissioner of Income Tax (Appeals) [here in after referred to as CIT (A)] has grossly erred in dismissal of appeal by the appellant that the assessment proceedings ii] s 148 of the Act, initiated by the Ld. AO in relation to determination of capital gain and/ or imposition of tax and interest with reference thereto, the quantification of taxable income, the tax liability, including interest and penalty proceedings, under normal provisions of the Act is void-ab-initio, erroneous, unjustified, wholly arbitrary and bad in law, on the following grounds: (each grounds/facts is prejudice to each other):-
1.1 That the notice issued u/ s 148 of the Act was not served to the assessee.
1.2 That while supplying the reasons to believe to the counsel of the assessee, no time limit or due date was prescribed for filing return of income or for appearing before Ld. AO.
1.3. That Ld. AO has erred in ignoring the procedure of assessment by not taking the matter u/ s 143, instead of 147.
2.0. That on the facts and in the circumstances of the case and without prejudice to the above grounds, the Ld. CIT (A) was not justified in disallowing the appeal of the appellant that the order passed u/s 147/144 dated 18.12.2009 is not a speaking order and the Ld. AO has grossly erred in not considering the merits of the case.
3(a) That on the facts and in the circumstances of the case and without prejudice to the above grounds, the Ld. CIT (A) was not justified in dismissal the appeal of the appellant that when all the primary facts necessary for assessment were fully and truly disclosed in the income tax return, which was duly submitted with the department and there were also no new facts which came to the possession of the Ld. AO, then it is no open for the department to commence the assessment proceedings u/s 148 of the Act. 3 ITA No.2442 & 2549/Del./2012 3(b) That on the facts and in the circumstances of the case and without prejudice to the above grounds, the Ld. CIT (A) was not justified in dismissal the appeal of the appellant that that the assessment proceedings were completed without taking into consideration the information disclosed in the return filed with the Department.
4.0 That on the facts and in the circumstances of the case and without prejudice to the above grounds, the Ld. CIT (A) was not justified in disallowing the appeal of the appellant that the assessment proceedings was completed in haste without providing any reasonable opportunity of personal hearing to the appellant to explain its case before passing the ex-parte order. 5.0. That on the fact and circumstances of the case and without prejudice to the above grounds, the Ld. CIT (A) was not justified in disallowing the claim of the appellant on deduction on account of expenses on transfer of land amounting to Rs.8,50,000/-. 6.0 That on the fact and, circumstances of the case and without prejudice to the above grounds, the Ld. CIT (A) was not justified in disallowing the claim of the appellant on deduction on account of indexed cost of acquisition and improvement amounting to Rs.61,90,690/ - out of the total claim of the appellant of Rs.66,38,684/-.
7.0 That on the fact and circumstances of the case and without prejudice to the above grounds, the Ld. CIT (A) was not justified in disallowing the claim of the appellant on deduction on account of investment in construction of newly residential house amounting to Rs.31,72,879/- out of the total claim of the appellant of Rs.1,56,72,879/- u/ s 54F of the Act.
8.0 That the appellant craves leave, to add, to amend, to modify, to rescind, supplement or alter any ground stated herein above either before or at the time of hearing of the appeal." GROUNDS RAISED BY THE REVENUE IN THE CROSS APPEAL :
"1. "On the facts and in the circumstances of the case, the Ld. CIT(A) has erred on facts and in law in allowing the deduction of Rs.4,47,994/- for indexed cost of acquisition while computing the LTCG even when no claim was made by the assessee though more than sufficient opportunity was given and there is no provision in the Income Tax Act as to allow the deduction/exemption which was not claimed in the return of income as held by the Hon'ble Apex Court in the case of Goetze India Ltd vs CIT (284 ITR 323) (SC). Secondly, the land for which benefit of indexed cost -of 4 ITA No.2442 & 2549/Del./2012 acquisition has been claimed is not the same which has been sold as the murabba, khatoni and khewat nos are distinct."
2. "On the facts and in the circumstances of the ease, the Ld. CIT(A) has erred on facts and in law in allowing the deduction of Rs.48,78,450/- u/s 54B even when no claim was made by the assessee though more than sufficient opportunity was given and there is no provision in the Income Tax Act as to allow the deduction/ exemption which was not claimed in the return of income as held by the Hon'ble Apex Court in the case of Goetze India Ltd vs CIT (284 ITR 323) (SC)."
3. "That Ld. CIT(A) has allowed deduction of Rs.48,78,450/- u/s 54B of the Act on the ratio of the decision of Hon'ble P&H High Court in the case of Jagriti Aggarwal (2011) 15 Taxmann
146), 339 ITR 610. The facts in the present case are quite dissimilar to the facts of the case relied upon by the Ld. CIT(A) as in the case of Jagriti Aggarwal the return was filed by the assessee but in the present case the assessee never filed his return of income."
4. "That Ld. CIT(A) has allowed deduction u/s 54B of the Act on the investment made in purchase of residential land as the land measuring 960 Square Yards purchased for Rs.19,96,800/- (including registration charges) is residential land as certified by the Sub Registrar, Palwal on the registered sale deed and not agricultural land as claimed by the assessee and allowed by the Ld. CIT(A). Hence, deduction u/s 54B is not available for this investment."
5. "That Ld. CIT(A) has allowed deduction u/s 54B of the Act even when the said land has been purchased after the due date of filing of return as prescribed u/s 139(1) of the Act without depositing the sale consideration in Capital Gain Account Scheme as laid down u/s 54B(2) of the Act."
6. "That Ld. C!T(A) has allowed deduction u/s 54B of the Act even when the other investment in entire agricultural land has been made in the name of assessee's wife Smt. Bala Devi, therefore the assessee is not eligible to claim any deduction u/s 54B of the Act."
7. "On the facts and in the circumstances of the case, the Ld. CIT(A) has erred on facts and in law in allowing the deduction of Rs.1.25 crores u/s 54F on the basis of estimation only. Ld. CIT(A) has held that 'however, since the appellant has not furnished bills in support of entire investment and it cannot be inferred that the amount withdrawn from the bank account was invested in construction only, I deem it fair to estimate the investment of Rs.1.25 crores in the construction. This observation of Ld. CIT(A) is without any concrete evidence such as proof of ownership of the 5 ITA No.2442 & 2549/Del./2012 plot on which construction made, copy of approved construction map/plan of the new house, completion certificate, complete bills supporting the claim of investment in construction of new residential house etc. In absence of these, it is not verifiable as when the construction was completed and how much investment was made."
8. "That the valuation report on the basis of which Ld. CIT(A) has estimated the investment in construction is from a private architect and not from an approved architect. Further, the architect has certified that the constructed building is a farm house and not a residential house .. The intent of the legislature behind exemption u/s 54F is only to satisfy the housing needs of the general public and not for the farm houses for leisure of the assessee."
9. "That Ld. CIT(A) has allowed deduction u/s 54F of the Act even when there is no evidence as to verify whether it is only one house and not the second or third house of the assessee to verify the claim of the assessee as per provisions of section 54F of the Act."
10. "That the appellant craves for the permission to add, delete or amend the grounds of appeal before or at the time of hearing of appeal."
3. Briefly stated the facts of this case are : on the basis of information supplied by Director of Income-tax (Inv.), it is noticed that farmers of Faridabad has not paid capital gain tax on account of transfer of land to BPTP Limited and its group concern and as per Registration Certificate No.28/R.C. dated 13.02.1990 issued by Registrar, Ballabhgarh, assessee has received sale consideration of his land to the tune of Rs.2,24,87,500/- from M/s. Super Belts Pvt. Ltd., M-11, Middle Circle, Connaught Circle, New Delhi and has not declared his return of income declaring the said capital gain. So, the assessee has undisclosed income of Rs.2,24,87,500/- which 6 ITA No.2442 & 2549/Del./2012 has escaped assessment under section 147 of the Income-tax Act, 1961 (hereinafter 'the Act'). After recording the reasons, notice u/s 148 dated 13.03.2009 was sent through post to the assessee, but in response thereto, the assessee has not field his return of income. On request of the counsel for assessee, the copy of reasons for initiating proceedings u/s 148 was supplied to him. Shri Shyam Sunder Mangla, CA attended the proceedings who was issued show-cause notice as to why amount of Rs.2,24,87,500/- be not added to the total income of the assessee. The assessee was called upon to furnish necessary documents on 18.12.2009 but none appeared on behalf of him nor filed any written reply. Consequently, the AO came to the conclusion that the assessee has received the amount of Rs.2,24,87,500/- on account of sale of land to M/s. Green Valley Housing & Development Pvt. Ltd. M-11, Middle Circle, Connaught Circle, New Delhi. Hence, addition of Rs.2,24,87,500/- is made on account of long term capital gain.
4. The assessee carried the matter before the ld. CIT (A) who has partly allowed the appeal. Feeling aggrieved, the assessee has come up before the Tribunal by way of filing the present appeal.
5. At the same time, the revenue feeling aggrieved with the impugned order allowing deductions of Rs.4,47,994/- for index cost of acquisition while computing long term capital gain, 7 ITA No.2442 & 2549/Del./2012 allowing deduction of Rs.48,78,450/- u/s 54B and allowing the deduction of Rs.1.25 crores u/s 54F on the basis of estimation only, filed the present cross appeal.
6. We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case.
7. During the appellate proceedings before the Bench, the assessee has moved an application for admission of additional grounds to the following effect :-
"1) That neither intimation u/sec. 143(1) nor notice u/sec.
143(2) of the Income Tax Act, 1961 were issued by the learned Assessing Officer on the return of income filed by the appellant on 08.01.2009 which is a mandatory requirement in the law.' This return of income had been relied upon by the Hon'ble Commissioner of Income Tax (Appeals) in deciding the appeal of the appellant for the year under appeal. Thus order passed by the Hon'ble Commissioner of Income Tax (Appeals) based on this return in the absence of issuance and service of notice u/sec. 143(2) of the Act is non-est in law.
2) That the notice alleged to have been issued sec. 143(2) of the Act dated 14.12.2009 fixing the date of hearing for 18.12.2009 is not valid in law since:-
i) At the time of issuance of said notice, he had no return of income was available in the assessment record of the appellant.
ii) If the said notice is issued on the basis of return of income filed by the appellant on 08.01.2009, then as per the proviso to section 143(2) is barred by limitation.
8. In the face of the admitted fact that assessment order dated 18.12.2008 was passed in this case u/s 147/144 of the Act, no 8 ITA No.2442 & 2549/Del./2012 notice u/s 143(2) of the Act was required to be issued by the AO. So, in view of the matter, application seeking incorporation of the additional ground as to non-issuance/invalid notice u/s 143(2) of the Act by the AO is not maintainable, hence hereby dismissed.
9. The ld. AR for the assessee challenging the impugned order contended inter alia that ld. CIT (A) has erred in returning the findings that the return of income filed by the assessee with Income-tax Officer, Ward 2(4), Faridabad on 08.01.2009 is invalid as he has no jurisdiction to entertain the same; that the AO has erred in reopening the assessment u/s 148 without service of notice and without examining the return filed by the assessee on 08.01.2009; that notice u/s 148 of the Act was never served upon the assessee; that during the assessment proceedings, the assessee sought one month time to file the requisite documents but the AO without providing opportunity of being heard completed the assessment within four days by conducting the ex-parte proceedings.
10. First contention raised by ld. AR that CIT (A) has erred in returning findings that the return of income filed by the assessee with Income-tax Officer, Ward 2(4), Faridabad on 08.01.2009 is non-est and invalid as he has no jurisdiction to entertain the same, is sustainable when examined in the light of the findings returned 9 ITA No.2442 & 2549/Del./2012 by the ld. CIT (A) in para 6 at page 45 of the impugned order which is reproduced for ready reference as under :-
"......It is correct that the assessee filed his return of income but the said return was filed with Income Tax Officer, Ward 2 (4), Faridabad on 08.01.2009 whereas the jurisdiction over the case of assessee vested with Income Tax Officer, Ward 1 (5), Faridabad. Hence, the return filed with wrong jursidcition has to be treated as non-est, invalid in the eye of law and no cognizance of same can be taken. Consequently, the contentions raised that all primary facts necessary for assessment were fully and truly disclosed in the return....."
11. When undisputedly the assessee has filed the return of income qua the assessment year 2007-08 on 08.01.2009 with Income-tax Officer, Ward 2 (4), Faridabad, though it was required to be filed with ITO, Ward 1 (5), Faridabad, the CIT (A) was under legal obligation to provide an opportunity of being heard to the assessee by filing return of income with the competent revenue authority or he would have transferred the return of income dated 08.01.2009 to the competent revenue authority for further necessary action. AO in the assessment order has proceeded on the premise that no return of income was filed by the assessee and proceeded to reopen the assessment u/s 148 of the Act. So, the impugned order passed by the CIT(A) by treating the income-tax return filed by the assessee, though with ITO having no jurisdiction as non est 10 ITA No.2442 & 2549/Del./2012 and invalid is not sustainable in the eyes of law because CIT (A) being a quasi-judicial authority has the power to transfer the return of income wrongly filed due to jurisdictional error to the competent revenue authority having jurisdiction over the assessee to examine the same. So, in view of the matter, the impugned order is not sustainable in the eyes of law.
12. So far as, contention raised by the ld. AR for the assessee that no notice has been issued to the assessee by the AO u/s 143(1)/143(2) is concerned, the same is not sustainable because in case the assessment is completed u/s 144 of the Act, as in the instant case no notice is required to be issued u/ss 143(1)/ 143(2).
13. The next contention raised by the ld. AR for the assessee that during the assessment proceedings, the assessee sought one month time to file the requisite documents but the AO without providing opportunity of being heard completed the assessment within four days by conducting the ex-parte proceedings, is also sustainable because when the assessee has undisputedly taken specific grounds no.4(a) and 4 (b) before ld. CIT (A) that the assessee has not been provided with an adequate opportunity of being heard by bringing on record the requisite document specifically called for by the AO himself, the CIT (A) was required to provide adequate opportunity of being heard to the assessee. So, from the bare perusal of the 11 ITA No.2442 & 2549/Del./2012 assessment order and impugned order passed by ld. CIT (A), it stands proved that the entire exercise to complete the assessment u/s 147/144 has been made in haste without providing adequate opportunity of being heard to the assessee, thus the ld. CIT (A) has also failed to decide this issue judiciously.
14. Even otherwise, the AO has proceeded to complete the assessment in haste despite calling information from the assessee, for which he has sought one month period, within a period of four days, by treating the entire sale proceeds of Rs.2,24,87,500/- as income of the assessee, which is ex-facie not tenable and also proves the non-application of mind.
15. Moreover, had the assessee been provided with an opportunity to file the documents as required by the AO, he would have brought on record the factum of filing of the return of income wrongly with Income-tax Officer, Ward 2 (4), Faridabad on 08.01.2009 and other documents in his defence, the impugned assessment order would not have been passed;
16. So, in the backdrop of the aforesaid facts and circumstances of this case, we are of the considered view that without going into the merits of the case, proper opportunity of being heard is required to be provided to the assessee by the AO, who being a quasi judicial authority was under obligation to follow the rule of natural 12 ITA No.2442 & 2549/Del./2012 justice. Resultantly, cross appeal filed by the revenue is also not sustainable because when the assessment order is not sustainable in the eyes of law, the impugned order passed by the CIT (A) is also a nullity. Consequently, present appeal filed by the assessee is hereby allowed for statistical purposes and cross appeal filed by the revenue is hereby dismissed having been become infructuous. The file is ordered to be restored to the AO to decide afresh after providing adequate opportunity of being heard to the assessee. Order pronounced in open court on this 20th day of May, 2016.
Sd/- sd/-
(J.S. REDDY) (KULDIP SINGH)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated the 20th day of May, 2016
TS
Copy forwarded to:
1.Appellant
2.Respondent
3.CIT
4.CIT, Faridabad.
5.CIT(ITAT), New Delhi.
AR, ITAT
NEW DELHI.