Income Tax Appellate Tribunal - Mumbai
Hill Glade Co.Op. Hsg. So. Ltd, Mumbai vs Department Of Income Tax on 2 July, 2013
आयकर अपील य अ धकरण "एच " यायपीठ मंब
ु ई म।
IN THE INCOME TAX APPELLATE TRIBUNAL "H" BENCH, MUMBAI
ी पी.एम. जगताप, लेखा सद य एवं डॉ. एस.ट .एम. पवलन या यक सद य के सम ।
BEFORE SHRI P.M. JAGTAP, AM AND Dr. S.T.M. PAVALAN, JM
आयकर अपील सं./I.T.A. No. 2013/Mum/2009
( नधारण वष / Assessment Year : 2003-04)
M/s Hill Glade Co-Op. बनाम/
बनाम Dy. Commissioner of
Hsg. Soc. Ltd., Income Tax- 19(3),
Vs.
Plot No. 7A, Aayakar Bhavan,
TPS-III, M. K. Marg,
Pali Road, Bandra, Mumbai - 400 020.
Mumbai - 400 050.
थायी ले खा सं . /PAN : AAAAH 0520M
(अपीलाथ /Appellant) .. ( यथ / Respondent)
आयकर अपील सं./I.T.A. No. 1484/Mum/2009
( नधारण वष / Assessment Year : 2003-04)
Dy. Commissioner of बनाम/
बनाम M/s Hill Glade Co-Op.
Income Tax- 19(3), Hsg. Soc. Ltd.,
Vs.
Aayakar Bhavan, Plot No. 7A,
M. K. Marg, TPS-III,
Mumbai - 400 020. Pali Road, Bandra,
Mumbai - 400 050.
थायी ले खा सं . /PAN : AAAAH 0520M
(अपीलाथ /Appellant) .. ( यथ / Respondent)
Assessee by : Shri Sanjay R. Parikh
यथ क ओर से/ Respondent by : Shri Ajay
सनवाई
ु क तार ख / Date of Hearing : 02-07-2013
घोषणा क तार ख /Date of Pronouncement : 05-07-2013
2 ITA 2013/Mum/2009
ITA 1484/Mum/2009
आदे श / O R D E R
PER P.M. JAGTAP, A.M. :
पी.एम. जगताप, लेखा सद य These two appeals, one filed by the assessee being ITA No. 3023/Mum/2009 and the other filed by the Revenue being ITA No. 2484/Mum/2009, are cross appeals which are directed against the order of ld. CIT(A) - XIX dated 17-12-2008.
2. The assessee in the present case is a Co-Op. Housing Society. The return of income for the year under consideration was filed by it on 22-8-2003 declaring total income at "nil". The said return was initially processed by the A.O. u/s 143(1) of the Income Tax Act, 1961 (the Act). Subsequently, he, however, found that the assessee had entered into an agreement for sale/transfer of TDR/FSI with M/s K. Bhatia Enterprises, the Developer, for a consideration of Rs. 1,40,12,700/- and the said transaction was not disclosed by the assessee in the return of income filed for the year under consideration. He, therefore, reopened the assessment for the year under consideration and issued a notice u/s 148 of the Act in response to which the copy of return originally filed was submitted by the assessee with a request that the same may be treated as the return filed in response to notice u/s 148 of the Act. In the reassessment completed u/s 143(3) r.w.s. 147 of the Act vide an order dtd. 15-12-2006, the profit arising from transfer of development rights was brought to tax by the A.O. in the hands of the assessee under the head "capital gains" to the extent of Rs. 1,39,09,200/- after deducting the cost of acquisition of the development rights.
3. Against the order passed by the A.O. u/s 143(3) r.w.s. 147 of the Act, appeal was preferred by the assessee before the ld. CIT(A) challenging therein the validity of the said assessment as well as disputing the addition made therein on account of capital gain. The ld. CIT(A) did not find merit in the 3 ITA 2013/Mum/2009 ITA 1484/Mum/2009 preliminary issue raised by the assessee challenging the validity of reassessment made by the A.O. and rejecting the same, he upheld the validity of the said assessment. He also upheld the decision of the A.O. that the development rights being capital asset, the profit arising from the transfer thereof was chargeable to tax under the head "capital gain". He, however, accepted the alternative contention of the assessee that the entire consideration from sale of development rights having been shared by all the 12 members who were actually the owners of the said rights as per the Board Circulars and the profit arising from the transfer of development rights having been already offered by them to tax, no addition on account of capital gain from the sale of development rights could be made in the hands of the assessee. The ld. CIT(A) accordingly deleted the addition made by the A.O. to the total income of the assessee on account of capital gain. Aggrieved by the order of the ld. CIT(A), the assessee and the Revenue both are in appeal before the Tribunal and the grounds raised by them in their respective appeals read as under:-
By the Assessee:-
1. "On the facts and in the circumstances of the case and in law the Learned Assessing Officer has erred in passing order u/s. 143(3) read with section 147 without issuing notice u/s. 143(2) which renders the assessment orders passed under section 143(3) bad in law and void ab initio.
2. On the facts and in the circumstances of the case and in the law the Assessing Officer has erred in treating aggregate amount of consideration received by the members amounting to Rs.1,39,12,700/-
together with consideration of Rs.1,00,000/- received by the society for allowing developer to construct additional floor on existing structure of building as income chargeable to tax as capital gain under section 45 when there is no specific explanation of computing acquisition costs of asset transferred as has been laid down in CIT Vs. B.C. Srinivasa Setty (1981) 128 ITR 294 (SC).
3. On the facts and in the circumstances of the case and in the law the learned Assessing Officer has erred in treating acquisition cost of the asset surrendered as Rs.1,03,500/- being 50% of land cost as stated in the order which is illogical and without any base of reasoning."
4 ITA 2013/Mum/2009 ITA 1484/Mum/2009 By the Revenue:-
1. "On the facts and in the circumstances of the case and in law, the Learned CIT(A) erred in deleting the addition of Rs.1,40,12,700/- being capital gain on sale of TDR made by the Assessing Officer by holding that the income from TDR has already been offered by 12 member and the additions so made again the assessee's case tantamount to double taxation without appreciating the fact that the society is the owner of the land not be member and the members individually cannot transfer FSI/TDR directly to developer.
2. The appellant prays that the order of the CIT(A) on the above grounds be set aside and that of the A.O. be restored."
4. In ground No. 1 of the appeal of the assessee, a preliminary issue has been raised challenging the validity of the reassessment made by the A.O. u/s 143(3) r.w.s. 147 of the Act on the ground that the said assessment made by the A.O. without issuing notice u/s 143(2) of the Act is bad in law. In this regard, the ld. D.R. was directed by the Bench to produce the assessment records to show whether notice u/s 143(2) was issued by the A.O. or not before completing the assessment u/s 143(3) r.w.s. 147 of the Act. As per the direction of the Bench, the ld. D.R. produced the relevant assessment records and admitted that there is nothing available in the said record to show that notice u/s 143(2) was issued by the A.O. before completing the reassessment.
In this regard, the ld. counsel for the assessee has relied on the decision of Hon'ble Madras High Court in the case of CIT vs. M. Chellappan (2006) 281 ITR 444 wherein the A.O. had proceeded to reassess u/s 147 of the Act and completed the assessment without issuing notice u/s 143(2) of the Act within the time stipulated. The order of reassessment was confirmed by the ld. CIT(A) in appeal but the Tribunal on further appeal set aside the order of the A.O. on the ground that notice u/s 143(2) was not served on the assessee within the stipulated period. The Hon'ble Madras High Court upheld the decision of the Tribunal holding that as the notice u/s 143(2) was not served within the stipulated period, the procedure u/s 143(3) came to an end and the matter attained finality. In the case of Smt. Bandana Gogoi vs. CIT (2007) 5 ITA 2013/Mum/2009 ITA 1484/Mum/2009 289 ITR 28, a similar view was taken by the Hon'ble Gauhati High Court holding that in the absence of notice issued u/s 143(2) of the Act, the block assessment made by the A.O. was not valid. The Hon'ble Gauhati High Court held that the requirement of section 143(2) could not be dispensed with as the same was mandatory. In the case of Commissioner of Wealth Tax vs. HUF of H.H. Late J.M. Scindia (2008) 300 ITR 193 (Bom.) cited by the ld. counsel for the assessee, a similar issue arose for consideration of the Hon'ble Bombay High Court in the context of reassessment made under the Wealth Tax Act, 1957 without issuing notice u/s 16(2) of the Wealth Tax Act within the prescribed time limit and after referring to the decision of Hon'ble Madras High Court in the case M. Chellappan (supra) and that of Hon'ble Gauhati High Court in the case of Smt. Bandana Gogoi (supra), the Hon'ble Bombay High Court found that the language used in section 143(2) is similar to the language used in section 16(2) of the Wealth Tax Act. In this context, it was held by the Hon'ble Bombay High Court that the view taken by the two High Courts reflected the language of 147 and accordingly even in a case of reopening of assessment u/s 147, the A.O. is bound to comply with the requirement of section 143(2) of the income Tax Act. The Hon'ble Bombay High Court also proceeded further to examine this issue independently in the light of the provisions of section 14 to 16 of the Wealth tax Act and held on such examination that while invoking the powers of reassessment u/s 17, the A.O. was bound by the mandate of the proviso to section 16(2) and on failure to issue notice within the period stipulated in the said proviso, the order of reassessment would be without jurisdiction which is liable to be set aside.
5. Keeping in view the legal provision emanating from the judgments as discussed above including the decision of Hon'ble Bombay High Court in the case of HUF of H.H. Late J.M. Scindia (supra) and having regard to the relevant facts of the case, we are of the view that the reassessment completed by the A.O. u/s 143(3) r.w.s. 147 without issuing notice u/s 143(2) of the Act 6 ITA 2013/Mum/2009 ITA 1484/Mum/2009 is void ab initio and the same is liable to be cancelled. We order accordingly and allow ground No. 1 of assessee's appeal.
6. As a result of our decision rendered above on the preliminary issue canceling the reassessment made by the A.O. u/s 143(3) of the Act, the other issues raised in the appeal of the assessee as well as in the appeal of the Revenue have become infructuous and we do not consider it necessary or expedient to adjudicate upon the same.
7. In the result, appeal of the assessee is allowed and the appeal of the Revenue is dismissed as indicated above.
Order pronounced in the open court on 5th July, 2013.
.
आदे श क घोषणा खले
ु यायालय म दनांकः 5-7-2013 को क गई ।
Sd/- sd/-
(Dr. S.T.M. PAVALAN) (P.M. JAGTAP)
या यक सद य JUDICIAL MEMBER लेखा सद य / ACCOUNTANT MEMBER
मंुबई Mumbai; दनांक Dated 5-7-2013.
व. न.स./ RK , Sr. PS
आदे श क त ल प अ े षत/Copy
षत of the Order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent.
3. आयकर आयु (अपील) / The CIT(A)--XIX, Mumbai.
4. आयकर आयु / CIT - 19, Mumbai
5. वभागीय त न ध, आयकर अपील य अ धकरण, मंुबई / DR, ITAT, Mumbai H Bench
6. गाड फाईल / Guard file.
ु / BY ORDER,
आदे शानसार
स या पत त //True Copy//
उप/सहायक पंजीकार (Dy./Asstt.
उप/ Registrar)
आयकर अपील य अ धकरण,
धकरण, मंुबई / ITAT, Mumbai