Income Tax Appellate Tribunal - Mumbai
Ashok Ganpat Thakur As Son & Legal Heir Of ... vs Acit Cir 1, Thane on 11 January, 2019
IN THE INCOME-TAX APPELLATE TRIBUNAL "A" BENCH MUMBAI
BEFORE SHRI G.S. PANNU, VICE-PRESIDENT AND
SHRI PAWAN SINGH, JUDICIAL MEMBER
ITA No. 296/Mum/2016 (Assessment Year 2006-07)
Ashok Ganpat Thakur as son & ACIT, Circle-1,
Legal Heir of Late Bamibai 6th Floor, Ashar I.T. Park,
Ganpat Thakur, New Shivaji Road No.16Z, Wagale
Nagar, Thakur Pada, Kalwa
Vs. Industrial Estate,
(East), Thane-400605.
PAN: AERPT0798K Thane (W)-400604.
Appellant Respondent
Appellant by : Shri Subodh Ratnaparkhi (AR)
Respondent by : Shri Rajesh Kumar Yadav (DR)
Date of Hearing : 16.11.2018
Date of Pronouncement : 11.01.2019
ORDER UNDER SECTION 254(1)OF INCOME TAX ACT
PER PAWAN SINGH, JUDICIAL MEMBER;
1. This appeal by assessee arises out of the of ld. CIT(A)-1, Thane dated 15.10.2015, which in turn arises from the assessment order passed under section 143(3) r.w.s 147 of the I.T. Act dated 21.03.2013 for Assessment Year 2006-07. The assessee has raised the following grounds of appeal:
1. On the facts and in law, the notice u/s 148 dt.23.09.2011 issued by the ld. AO is bad-in-law and the assessment framed in pursuance thereof is required to be quashed on that account as
(i) The ld. AO failed to comply with the condition prescribed by see 151 (2) of the I.T Act, 1961 and ITA No. 296 Mum 2016-Ashok Ganpat Thakur.
(ii) The notice u/s 148 is issued without any valid reason on the part of the ld. AO to believe that any income chargeable to tax had escaped assessment.
2. On the facts and in law, the Hon. CIT (A) erred in confirming the addition of Rs. 75,00,000/- as unaccounted cash consideration allegedly received by the appellant on sale of land at village Parsik, Tal. & Dist. Thane from M/s. Shree Tirupati Greenfield Developers, not appreciating that the appellant had not received any amount over and above the actual sale consideration recorded in the agreement for transfer of development rights dt. 28.02.2006.
3. On the facts and in law, the Hon. CIT (A) erred in confirming the addition of Rs. 75,00,000/- as unaccounted cash consideration allegedly received by the appellant on sale of land at village Parsik, Tal. & Dist. Thane without granting the appellant the opportunity to cross examine the person giving adverse information inspite of specific request for the same.
2. Brief facts of the case are that the assessee filed its return of income for Assessment Year 2006-07 on 20.07.2006 declaring total income at Rs. 47,77,120/-. Subsequently, the assessment was re-opened under section 147 of the Act. The assessment was re-opened on the basis of information received from the Investigation Wing, Kalyan, that during the search action on residential premises of one Shri Sunil Gupta, certain documents were found and seized. These documents consist of a pocket diary numbered as bunder No. 9. On page number 4 of this diary there was reference of TDR (Kalwa) of "40000 sq.ft. x 375 = 75,00,000". The entry is hand written pertains to development right by Tirupati Greenfield Developers, one of the Firm of Shri Tirupati Group, from Smt. Bombai Ganpat Thakur (deceased 2 ITA No. 296 Mum 2016-Ashok Ganpat Thakur.
assessee). As per the books of Shri Tirupati Greenfield Developer, this TDR was purchased in February 2006 in respect of plot no. 116, Parsik, Kalwa, from the owner Smt. Bombai Ganpat Thakur (assessee). The alleged consideration was Rs. 75,00,000/- from total TDR admeasuring 40,000 sq.ft. The documentary evidences shows that the value of TDR was Rs. 1.50 Crores, i.e. "40,000 sq.ft. x 375 sq.ft. = 1.50 Crore". The said seized documents contained cash receipt and payments. On the basis of said information, the assessment was re-opened. Notice under section 148 dated 23.09.2011 was issued to the assessee. The assessee contested the reopening of the assessment.
3. During the re-assessment proceeding, the assessee was confronted as to why the amount of Rs. 75 Lakhs should not be treated as income as per the office report investigation wing dated 13.03.2013. The assessee filed her reply dated 18.03.2013. In the reply, the assessee has denied having receipt of any amount. The assessee contended that as per Clause-4 of the agreement dated 28.02.2006, she had sold the property and not the TDR. The assessee contended that she had sold plot area of 3920 sq.mtr. and not TDR of 40,000 sq.ft.. The assessee also contended that in the entire agreement, there is no reference of TDR. The assessee sold plot at a price of Rs. 80,00,000/- lakhs. Thus, there is no link with alleged price of Rs. 75,00,000/- or link with the 3 ITA No. 296 Mum 2016-Ashok Ganpat Thakur.
said TDR. The explanation of assessee was not accepted by Assessing Officer. The Assessing Officer concluded that the assessee has accepted the fact in paragraph-7 of her reply that she has the said TDR has been transferred to Shree Tirupati Greenfield Developers. The Assessing Officer on the basis of report of ITO (Inv), Kalyan made addition of Rs. 75,00,000/- while passing the assessment order under section 143(3) r.w.s 147 of the Act on 21.03.2013. Aggrieved by the action of Assessing Officer in making the addition as well as of re-opening, filed appeal before the ld. CIT(A). The ld. CIT(A) upheld the re-opening as well as addition of Rs. 75,00,000/-. Thus, further aggrieved by the order of ld. CIT(A), the assessee has filed the present appeal before this Tribunal.
4. We have heard the submission of ld. AR of the assessee and ld. DR for the Revenue and perused the material available on record. The ld. AR of the assessee submits that the assessee has challenged the validity of re-opening as well as notice under section 148 issued by Assessing Officer, which is bad-in-law as Assessing Officer failed to comply with the condition prescribed under section 151(2) of the Act. Further, the notice was issued without any valid reason to make a belief that any income chargeable to tax had escaped assessment. The ld. AR of the assessee submits that ground no.1 of the appeal is purely legal in nature and goes to the root of the case and in 4 ITA No. 296 Mum 2016-Ashok Ganpat Thakur.
case his contention is accepted that the reopening is without proper approval and the notice under section 148 dated 23.09.2011 is held bad-in-law, the entire action of the assessing officer would be void ab initio. And the assessment order passed in pursuance thereof is liable to be quashed. The ld. AR of the assessee submits that the Assessing Officer on the basis of certain information received from ITO (Inv.), Kalyan issued notice under section 148 on 23.09.2011 by assuming that the income of the assessee for the year under consideration has escaped assessment. The Assessing Officer while issuing notice under section 148 failed to bring that information received by him pertains to the assessee and therefore, re-opening of the assessment was not justified. The ld. AR of the assessee further submits that the assessment was re-opened after four years from the end of relevant Assessment Year and no necessary approval as mandated in terms of section 151(2) was obtained by assessing officer. In the reasons recorded, the Assessing Officer has mentioned that approval was obtained under section 151(1) of the Act. The ld. AR of the assessee submits that no proper approval as mandated under section 151(2) was obtained by Assessing Officer, therefore, the notice under section 148 is bad-in-law and the assessment order is liable to be quashed. In support of his submission, the ld. AR of the assessee relied upon the decision of Hon'ble Bombay High Court in Ghanshyan K. 5 ITA No. 296 Mum 2016-Ashok Ganpat Thakur.
Khabrani vs. ACIT [346 ITR 443 (Bom)]. The ld. AR submits that the assessee has good case on validity of reasons recorded by the assessing officer merit as well as merits of the case. The ld AR for the assessee furnished written submissions on the merit of the case.
5. On the other hand, the ld. DR for the revenue supported the order of Assessing Officer. The ld. DR submits that the assessee was reopened after following the due process of law. The assessee has not raised such objection during the re-assessment stage. The assessee is now precluded for raising such objection.
6. On the rival contention of ld. representative of the parties, this bench vide order-sheet dated 01.05.2018 directed the ld. DR for the revenue to obtain factual report regarding obtaining necessary approval of Joint Commissioner. On the directions of this court, the ld. DR for the revenue furnished the report of Assessing Officer dated 12.06.2018. The ld DR also furnished the copy of application dated 10.08.2011, moved by Assessing Officer to Joint CIT, Range-1, Thane, along with the report of Assessing Officer, the copy of reasons recorded dated 27.07.2011. In the report, the Assessing Officer has mentioned the following material facts:
01) As regards, the Grounds of Appeal No.1, it is submitted that the AO has recorded the reasons for re-opening of the case. The copy of the same is 6 ITA No. 296 Mum 2016-Ashok Ganpat Thakur.
submitted herewith. The issue of validity of notice u/s 148 has been dealt in the order of the Hon'ble CIT(A) & this office is relied upon the same. As regards, the condition prescribed by Sec. 151(2) of the I.T. Act, it is submitted that the appeal in this case, for issue of notice u/s 148 was accorded by the CIT-1, Thane vide letter dated 10/08/2011. The copy of the same is submitted herewith. On verification of the said approval letter, it is seen that the said approval is granted with reference to Jt. CITRange-1, Thane's letter dated 02/08/2011 and the letter is addressed to Jt. CIT Range- 1, Thane. These facts show that the CIT-1, Thane has given approval for issue of notice u/s 148 only after the satisfaction & approval of Jt. CIT for re- opening of assessment. Thus, the conditions prescribed by sec. 151(2) of the Act have been duly complied. The only mistake occurred is that, in the reasons recorded, the section has been inadvertently quoted as 151(1) instead of section 151(2).
02) ........
03) ........
(SACHIN JAWALE) Dy. Commissioner of Income Tax Circle-1, Thane
7. The Assessing Officer in its report pleaded the inadvertent mistake in quoting the section 151(1) instead of section 151(2). The Assessing Officer was asked to appear in person vide order dated 31.03.2018. The Assessing Officer appeared on 12.10.2018. On his appearance the assessing officer was directed to file proforma approval for obtaining the approval of competent authority under section 148. The Assessing Officer vide his report dated 22.10.2018 furnished copy of proforma along with his report dated 16.10.2018. The Assessing Officer in its report contended that the reasons of 7 ITA No. 296 Mum 2016-Ashok Ganpat Thakur.
re-opening were recorded on 27.07.2011. The Assessing Officer forwarded his proposal to ld. CIT through JCIT vide letter dated 28.07.2011 copy of which is filed as Annexure-2, along with proforma of approval for initiating proceeding under section 148. The said proposal was submitted to office of JCIT on 29.07.2011. The JCIT submitted proposal to CIT vide office letter dated 02.08.2011. It was submitted that the copy of letter dated 02.08.2011 is not traceable. Further, the evidence regarding satisfaction of JCIT for re- opening of assessment is also not traceable. The assessing officer also submits that necessary enquiries were made in the office of ACIT, Range-1, Thane and PCIT-1, Thane. However, the said record is not traceable. It is mentioned in the report that CIT vide letter dated 10.08.2011 addressed to JCIT accorded approval for issue of notice under section 148. Copy of which is annexed as Annexure-3.
8. We have further perused the proforma attached with Annexure-2. The perusal of proforma attached with Annexure-2 reveals that it is neither signed by competent person/ Assessing Officer nor any approval was accorded. The column no.12 of this proforma is also blank.
9. On obtaining these factual reports, we further heard the submission of ld. representative of the parties. The ld. AR of the assessee reiterated his submission and contended that no proper approval from competent person as 8 ITA No. 296 Mum 2016-Ashok Ganpat Thakur.
required under section 151(2) is obtained by Assessing Officer, therefore, the re-opening under section 147 and the issuance of notice under section 148 is bad-in-law and the assessment order made in pursuance of notice under section 148 is liable to be quashed. The ld. AR of the assessee further relied upon the decision of CIT vs. Aquatic Remedies Pvt. Ltd., 96 taxmann.com 609 (Bom) (2018), Ghanshyam K. Khabrani vs. ACIT, 346 ITR 443 (Bom) (2012) and Anil Jaggi vs. ACIT, 89 taxmann.com 266 (Mum) (2018).
10.Per contra, the ld. DR supported the order of lower authorities and would submit that re-assessment proceeding cannot be quashed just because the Assessing Officer had obtained prior approval from higher authorities. In support of his submission, the ld. DR relied upon the decision of Ahmedabad Tribunal in Mayurbhai Mangaldas Patel vs. ITO [2017] (88 taxmann.com 289), which was approved by Hon'ble Gujarat High Court in Tax Appeal No. 29 of 2018. In rejoinder submission, the ld. DR submits that the reliance of ld. DR in Mayurbhai Mangaldas Patel (supra) is misplaced. The decisions of jurisdictional High Court alone have binding precedent. Though, the ratio in Mayurbhai Mangaldas Patel is not applicable, the Hon'ble Gujarat High Court has clearly held that the papers for obtaining approval were erroneously placed before Commissioner, who recorded 9 ITA No. 296 Mum 2016-Ashok Ganpat Thakur.
similar approval. However, in the present case, there is no approval either or JCIT or CIT as evident from the various report furnished by Assessing Officer.
11.We have considered the rival submissions of the parties and have gone through the orders of authorities below. The assessing officer recorded the following reasons of reopening:
148 Notice Reason:
27th July 2011:
A search action was conducted in the case of Shree Tirupati Group of cases on 25/03/2011, wherein at the residential premises of Shri Sunil Gupta one of the partner of the Group certain documents were stated to have been seized.
The ITO (Inv.), Kalyan vide his letter dated 26/07/2011 received in closed cover has sent relevant copies of the documents showing that TDR was purchased in respect of Plot No. 116, Parsik, Kalwa from the owner who in the instant case is the assessee itself. As per the seized documents sent a cash deposit of Rs. 75,00,000/- was paid by Shree Tirupati Greenfield Developers, one of the firms of Shree Tirupati Group to Smt Bamibhai Ganpat Thakur for obtaining the TDS. The report of the ITO(Inv.) further states that the cost of the TDR is Rs. 1,50,00,000/- (one Crore Fifty Lakh). On the basis of the information received from the Kalyan Investigation wing. I have reason to believe that income chargeable to tax has escaped assessment for AY 2006-07 within the meaning of Sec. 147.
Concluding the above facts and in view of sec. 151(1) the approval of the CIT-I, Thane has been obtained prior to issue of notice u/s 148. Since the AY in question is 2006-07.
(C.T.Mathews) Asstt. Commissioner of Income-Tax Circle-I, Thane
12.The Hon'ble Bombay High Court in Ghanshyam K. Khabrani vs. ACIT (supra) held that section 151(2) mandates satisfaction of Joint Commissioner 10 ITA No. 296 Mum 2016-Ashok Ganpat Thakur.
for issuance of notice under section 148 in certain cases, reopening of assessment with approval of Commissioner is unsustainable. For proper appreciation of legal position, the relevant part of the decision is reproduced below:
"6. The second ground upon which the reopening is sought to be challenged is that the mandatory requirement of election 151(2) has not been fulfilled. Section 151 requires a sanction to be taken for the issuance of a notice under Section 148 in certain cases. In the present case, an assessment had not been made under Section 143(3) or Section 147 for A.Y. 2004-05. Hence, under sub-section 2 of Section 151, no notice can be issued under Section 148 by an Assessing officer who is below the rank of Joint Commissioner after the expiry of 4 years from the end of the relevant Assessment Year unless the Joint Commissioner is satisfied, on the reasons recorded by such Assessing Officer, that it is a fit case for the issue of such notice. The expression "Joint Commissioner" is defined in Section 2(28C) to mean a person appointed to be a Joint Commissioner of Income Tax or an Additional Commissioner of Income Tax under section 117(1). In the present case, the record before the Court indicate that the Assessing Officer submitted a proposal on 28 March 2011 to the CIT(1) Thane through the Additional Commissioner of Income-Tax Range (1) Thane. On 28 March 2011, the Additional CIT forwarded the proposal to the CIT and after recording a gist of the communication of the Assessing Officer stated that :
"As requested by the A.O. Necessary approval for issue of notice u/s. 148 may kindly be granted in case, if approved."
On this a communication was issued on 29 March 2011 from the office of the CIT(1) conveying approval to the proposal submitted by the Assessing officer. There is merit in the contention raised on behalf of the Assessee that the requirement of Section 151(2) could have only been fulfilled by the satisfaction of the Joint Commissioner that this is a fit case for the issuance of a notice under Section 148. Section 151(2) mandates that the satisfaction has to be of the Joint Commissioner. That expression has a distinct meaning by virtue of the definition infection 2(28C). The Commissioner-of Income Tax is not a Joint Commissioner within the meaning of Section 2(28C). In the present case, the Additional Commissioner of Income Tax forwarded the proposal submitted by the Assessing Officer to the Commissioner of Income Tax approval which has been granted is not by the Additional Commissioner of Income Tax but by the Commissioner of 11 ITA No. 296 Mum 2016-Ashok Ganpat Thakur.
Income Tax. 'There is no statutory provision hereunder which a power to be exercised by an officer can be exercised by a superior officer. When the statute mandates the satisfaction of a particular functionary for the exercise of a power, the satisfaction must be of that authority. Where a statute requires something to be done in a particular manner, it has to be done in that manner. In a similar situation the Delhi High Court in CIT v. SPL'S Siddhartha Ltd. [2012] 204 Taxman 115 / 17 taxmann.com 138 (Delhi) held that powers which are conferred upon a particular authority have to be exercised by that authority and the satisfaction which the statute mandates of a distinct authority cannot be substituted by the satisfaction of another. We are in respectful agreement with the judgment of the Delhi High Court.
7. In view of the findings which we have recorded on submissions (i), (ii) and (iv), it is not necessary for the Court to consider submission (iii) which has been urged on behalf of the Assessee. Once the Court has come to the conclusion that there was no compliance of the mandatory requirements of Section 147 and 151(2), the notice reopening the assessment cannot be sustained in law."
13. Further, the Hon'ble Bombay High Court in CIT vs. Aquatic Remedies Pvt. Ltd. (supra) while referring the decision of Ghanshyan K. Khabrani held that it is undisputed position that in terms of section 151(2), the sanctioning/permission to issue notice under section 148 has to be issued by the Additional Commissioner. The Assessing Officer has not sought the approval of the Designated Officer but of the Commissioner. This is clear from the Form used to obtain the sanction. In any case, from the approval/satisfaction recorded in the form submitted for sanction of the Commissioner by the Assessing Officer, it is clear that the Additional Commissioner had not granted permission to initiate re-opening proceedings against the respondent-assessee. The view of the Additional Commissioner was subject to the approval of his superior - the Commissioner. Thus, there 12 ITA No. 296 Mum 2016-Ashok Ganpat Thakur.
was no final sanction granted by the Additional Commissioner for issuing the notice to re-open the assessment. Further, it is the Commissioner who directed the issuance of the notice under section 148 to the Assessing Officer. Thus, it is very clear that the final sanction/approval was that of the Commissioner as indicated in the Form.
14.The case in hand relates to Assessment Year 2006-07. The notice under section 148 was issued on 23.09.2011. Admittedly, the assessment was re- opened after four year from the end of relevant Assessment Year. As per sub-section (2) of section 151, no notice can be issued under section 148 by Assessing Officer who is below the rank of JCIT after the expiry of four year from the end of relevant Assessment Year unless the JCIT is satisfied, on the reasons recorded by Assessing Officer that it is a fit case for issuance of such notice. As we have noted earlier there is no approval of CIT as claimed by Assessing Officer while issuing notice under section 148 dated 23.09.2011. Further, there is no material on record to show that approval was obtained from JCIT, this fact has been admitted by assessing officer in his report furnished before us. Thus, considering the decision of jurisdictional High Court in Ghanshyam K. Khabrani and Aquatic Remedies Pvt. Ltd. (supra), the Assessing Officer failed to comply the condition prescribed under section 151(2). Therefore, the notice under section 148 is 13 ITA No. 296 Mum 2016-Ashok Ganpat Thakur.
invalid and subsequent action of Assessing Officer is void ab initio. The case law relied by ld. DR in Mayurbhai Mangaldas Patel (supra) is not applicable on the facts of present case as there is clear finding of Hon'ble High Court that necessary paper for approval was erroneously placed before CIT. Moreover, the decision of jurisdictional High Court is a binding precedent on this Tribunal. In the result, ground no.1 of the appeal raised by assessee is allowed.
15.As we have allowed the ground no.1 which is jurisdictional issue. Therefore, the discussion on ground no.2 & 3 which relates to merit of the case have become academic.
16.In the result, appeal of the assessee is allowed.
Order pronounced in the open court on 11/01/2019.
Sd/ Sd/-
G.S. PANNU PAWAN SINGH
VICE-PRESIDENT JUDICIAL MEMBER
Mumbai, Date: 11.01.2019
SK
Copy of the Order forwarded to :
1. Assessee
2. Respondent
3. The concerned CIT(A)
4. The concerned CIT
5. DR "A" Bench, ITAT, Mumbai
6. Guard File
BY ORDER,
Dy./Asst. Registrar
ITAT, Mumbai
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