M/S KANDHARI INFRASTRUCTURES PRIVATE LIMITED,CHANDIGARH vs. ASSITANT COMMISSIONER OF INCOME TAX-CIRCLE-2(1), CHANDIGARH

आदेश/Order Per Bench : The present appeals have been preferred by the assessee against the order dated 27.12.2019 of the Commissioner of Income Tax (Appeals)-1, Chandigarh [hereinafter referred to as ‘CIT (A)’]. Alongwith the present appeals, the assessee has also filed applications

4. The Assessing Officer observed that the assessee was possessed of two properties, one property No.13 at Lajpat Nagar, New Delhi and the other Property No. 73 situated at Ring Road, Lajpat Nagar-III, New Delhi, as per the details given below.

Status of property Particulars Property No . 73 Property No. 13 Ownership KIPL KIPL Vacant Possession KIPL, had vacant Stay order of the granted by possession Hon'ble High Court, Delhi on 28.09.2006 in CS (OS) No. 1863/2006 directing that till the above order was vacated or modified, defendant No. 2 shall be restrained from transferring, alienating or encumbering

SA-13 to 16-Chd-2020 & to 197/Chd/2020 M/s Khandhari Infrastructure Pvt ‘Limited. property bearing No. 73, Ring Road, Lajpat Nagar-III, New Delhi remained in force. Whether the property could No. Yes be let out

5. The Assessing Officer issued notice to the assessee as to why the ALV of one of the property i.e Property No. 13 be not determined as per the provisions of Sections 22 & 23 of the Income Tax Act, 1961 (in short 'the Act'). In reply, the assessee could not furnish the sufficient reasons for not determining the ALV of property No.13 as per the provisions of the Income Tax Act. The Assessing Officer, therefore, determined the ALV of Property No. 13 as per market rate and accordingly made the impugned additions after giving the benefit to the assessee of statutory deductions.

purchased the property in the year 2005, wherein, the said tenant M/s Ishvakoo Grand Plaza had taken the plea that he had preemption right and that he should be given first offer to purchase the property at the rate at which the same was sold to the assessee. Secondly, the assessee also preferred a Civil Suit against the said M/s Ishvakoo Grand Plaza for vacation of the property for non-payment of rent in Suit No.CS(OS)

No. 101/2007.

“06.08.2007 Present : Mr Abhinav Vashist, Advocate for the Plantiff Mr. R.S. Endlawa, Advocate for the Defendant + IA No.647/200 (u/O 39 R 10 of CPC) and IA No.649/2007 (u/O 39 Rs 1 & 2 of CPC) in CS (OS) No. 101/2007 * On hearing learned counsel for the parties, it is agreed as under without prejudice to the rights and contentions of the parties in the suit:

1. 1. Interim orders dated 19.01.2007 to continue till the disposal of the suit.

2. The defendant agreed to surrender possession of the suit premises to the plaintiff.

3. The plaintiff will take necessary steps with the MCD for getting the premises de-sealed.

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However, there was no restriction for the self-occupation of the property after getting it de-sealed from the MCD. The Ld. Counsel, therefore, has relied upon the paper book pages 10 to 13 to submit that the property, in fact, was desealed in the year 2010 by the MCD. That prior to that, the property was sealed by the MCD, hence, the assessee was not able to rent out the property. The assessee could not use if for SA-13 to 16-Chd-2020 & to 197/Chd/2020 M/s Khandhari Infrastructure Pvt ‘Limited. self-occupation also. It has been submitted that the property No.13 was, in fact, self-occupied by the assessee.

However, the Ld. CIT(A) has not given any findings on any of the plea taken by the assessee before him. The order of the CIT(A) is silent relating to all these aspects. The plea taken by the assessee is based on documentary evidence which should have been required to be looked into by the CIT(A) as the powers of the CIT(A) are co-terminus with that of the Assessing Officer. It has been held time and again by the Hon'ble Apex Court and Hon'ble High Court of the County that even if a plea has not been made before the AO, it can be made before the appellate authorities. The jurisdiction of the appellate authorities to entertain such a claim is not barred.

This issue has been decided by the Coordinate Bench of the Tribunal vide order dated 31.8.2017 in ‘M/s JSW Holdings Ltd.,Vs.

DCIT’ for Assessment Year 2011-12’, wherein it has been held as under:-

“10. We have considered the rival contentions. The question as to whether the assessee can take an additional ground at appellate stage even when the same has not been raised before the lower authorities has been thoroughly discussed by Co-ordinate Mumbai Bench of the Tribunal in the case of “Pandoo P. Naig” in decided on 24.06.2016 [2016 (9) TMI 1062]. The Tribunal, while relying upon the decision of the Hon’ble

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Supreme Court in the case of “National Thermal Power Company Ltd. vs. CIT” 229 ITR 383, Full Bench of the Hon’ble High Court in the case of “Ahmedabad Electricity Co. Ltd. vs. CIT” (1993) 199 ITR 351, another decision of the Hon’ble Bombay High Court in the case of “CIT vs. “CIT vs. Pruthvi Brokers and Shareholders Pvt. Ltd.” (2012) 349 ITR 336 (Bom.) has held that the appellate authorities have jurisdiction to deal not merely with additional ground which became available on account of change of circumstances or law, but with additional grounds which were available when the return was filed. The relevant part of the order of the Tribunal in the case of “Pandoo P. Naig” for the purpose of reference is reproduced as under: “19. Now coming to the point, whether, the claim put by the assessee Shri Pandoo P. Naig by way of additional ground before the Ld. CIT(A) regarding the deletion of addition of Rs.4 crore offered during the survey action and thereby offered in the return of income can be allowed at this stage? The Ld. Counsel for the assessee in this respect has placed reliance on the decision of the Hon’ble Supreme Court in the case of “National Thermal Power Co. Ltd.” vs. CIT” 229 ITR 383. The facts before the Hon’ble Supreme Court were that the assessee in that case offered the interest amount for taxation and the assessment was completed on that basis. Before the Ld. CIT(A), the assessee though had taken a number of grounds of appeal, however, the inclusion of the said amount of interest was not challenged. The inclusion of the said amount of interest was not objected to even in the grounds of appeal as originally filed before the Tribunal. However, the assessee by way of subsequent letter raised the additional ground in relation to the said inclusion of interest into the income of the assessee. In the above circumstances, the question before the Hon’ble Supreme Court was “Where on the facts found by the authorities below a question of law arises (though not raised before the authorities) which bears on the tax liability of the assessee, whether the Tribunal has SA-13 to 16-Chd-2020 & to 197/Chd/2020 M/s Khandhari Infrastructure Pvt ‘Limited. jurisdiction to examine the same?” The Hon’ble Supreme Court while answering the said question observed that under section 254 of the Income Tax Act, the power of the Tribunal in dealing with the appeals is expressed in the widest possible terms; the power of the Tribunal under section 254 is not restricted only to decide the grounds which arise from the order of the Commissioner of Income Tax (Appeals); that both the assessee as well as the department have a right to file an appeal/cross objection before the Tribunal and the Tribunal is not prevented from considering questions of law arising in assessment proceedings although not raised earlier. While answering the question in affirmative, the Hon’ble Supreme Court concluded that the Tribunal has jurisdiction to examine a question of law which arises from the facts as found by the authorities below and having a bearing on the tax liability of the assessee.

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Act. The Hon’ble full bench of the Bombay High Court observed that apart from the above, there was nothing in section 254 or section 251 which would indicate that the appellate authorities are confined to considering only the objections raised before them or allowed to be raised before them either by the assessee or by the department, as the case may be. They can consider the entire proceedings to determine the tax liability of the assessee. The Hon’ble Bombay High Court in the case of “CIT vs. Pruthvi Brokers and Shareholders Pvt. Ltd.” (2012) 349 ITR 336 (Bom.) has observed that the assessee is entitled to raise not merely additional legal submissions before the appellate authorities, but is also entitled to raise additional clams before them. The appellate authorities have jurisdiction to deal not merely with additional grounds, which became available on account of change of circumstances or law, but with additional grounds which were available when the return was filed. The words ‘could not have been raised’ must be construed liberally and not strictly. There may be several factors justifying the raising of a new plea in an appeal and each case must be considered on its own facts. The co-ordinate bench of the Tribunal in the case of “Shri Chandrashekhar Bahirwani” and 6599/M/2011 vide order dated 17.06.2015 while deciding the question as to whether the income cannot be assessed less than the returned income has observed as under: “5. Now coming to the finding of the Ld. CIT(A), that income cannot be assessed less than the returned income, the Ld. A.R. of the assessee has submitted before us that the action of the Ld. CIT(A) in rejecting the claim of the assessee on this ground was not justified. He has further relied upon the decision of the Hon’ble Gujarat High Court in the case of “Gujarat Gas Ltd. vs. JCIT” (2000) 245 ITR 84. In the said case, the words of the Circular No.549, para 5.12, dt. 31st October, 1989, providing that the assessed income under section 143(3) shall not be less than the returned income was considered by the Hon’ble High Court and it was held that as per proviso to section 119 of SA-13 to 16-Chd-2020 & to 197/Chd/2020 M/s Khandhari Infrastructure Pvt ‘Limited. the Act, the Board cannot issue instructions to the Income Tax Authority to make a particular assessment or to dispose of a particular case in a particular manner as well as not to interfere with the discretion of the Commissioner in exercise of his appellate functions. It was further held that the AO, while exercising his quasi judicial powers, was not bound by the said circular and should have exercised his powers independently. The Hon’ble High Court, therefore, directed the AO to make the assessment without keeping in mind the said circular. It may be further observed that the Hon’ble Bombay High Court in the case of ‘Pruthvi Brokers & Shareholders Pvt. Ltd.’ of 2010 decided on 21.06.12, while relying upon the various decisions of the Hon’ble Supreme Court and other Hon’ble High Courts has held that even if a claim is not made before the AO, it can be made before the appellate authorities. The jurisdiction of the appellate authorities to entertain such a claim is not barred. The Hon’ble High Court has further observed that the decision of the Hon’ble Supreme Court in the case of ‘Goetze (India) Limited v. CIT’ (2006) 157 Taxman 1, relating to the restriction of making the claim through a revised return was limited to the powers of the Assessing Authority and the said judgment does not impinge on the power or negate the powers of the appellate authorities to entertain such claim by way of additional ground. Even otherwise, the Ld. CIT(A) ought to have considered the claim of the assessee in exercise of his appellate jurisdiction under section 250 of the Act. Moreover, if the assessee is, otherwise, entitled to a claim of deduction but due to his ignorance or for some other reason could not claim the same in the return of income, but has raised his claim before the appellate authority, the appellate authority should have looked into the same. The assessee cannot be burdened with the taxes which he otherwise is not liable to pay under the law. Even a duty has also been cast upon the Income Tax Authorities to charge the legitimate tax from the tax payers. They are not there to punish the tax payers for their bonafide

SA-13 to 16-Chd-2020 & to 197/Chd/2020 M/s Khandhari Infrastructure Pvt ‘Limited. mistakes. In view of our above observations, it is held that the assessee is not liable to pay Capital Gains Tax, though originally he had subjected himself to the said tax as per his return of income. The AO is directed to process the claim of refund in this respect as per provisions of the law.”

In view of this, the impugned orders of the CIT(A) which have been passed without considering the pleas taken by the assessee are not sustainable in the eye of law. However, the issue is required to be SA-13 to 16-Chd-2020 & to 197/Chd/2020 M/s Khandhari Infrastructure Pvt ‘Limited. restored to the file of the CIT(A) for decision afresh. We order accordingly.

All the appeals of the assessee are treated as allowed for statistical purposes.

In the result, the appeals are of the assessee are treated as allowed, whereas, the Stay Applications filed by the assessee have become infructuous and are accordingly dismissed. .

Order pronounced in the Open Court on 06.05.2020.