SHRI PURSHOTTAM KHATRI , BHOPAL vs. ITO 3(3), BHOPAL, BHOPAL

आदेश / O R D E R

This is an appeal filed by the Assessee against the order of Commissioner of Income Tax(Appeals)-2, Bhopaldated 27/06/2018 pertaining to assessment year 2009-10.The Assessee has raised following grounds of appeal: “1.That on the facts and in the circumstances of the case, the Learned CIT(A) erred in confirming that the issue of notice u/s 148 by re-opening the case u/s 147 is valid even when the assessee is regularly assessed to tax and has shown the impugned capital gain which is the basis for re- opening the case, in the regular return filed by him. 2. That on the facts and in the circumstances of the case, the Learned

ITA No.741/Ind/2018 Shri Purshottam Khatri, Bhopal CIT(A) erred in confirming that the notice dated 18.03.2016 issued u/s 148 served on the assessee on 01.04.2016 is a valid notice and not barred by limitation as provided u/s 149 of the Act. 3. That on the facts and in the circumstances of the case, the Learned CIT(A) erred in confirming the addition of Rs.2,40,000/- being the difference between the income of Rs.5,75,000/- as determined u/s 50C and Rs.3,35,000/- as shown by the assesse without considering the explanation offered during appellate proceedings. 4.That on the facts and in the circumstances of the case, the Ld. CIT(A() erred in confirming the disallowance of Rs.130,493/- claimed u/s 48 of the Act being index cost of expenditure incurred for acquiring capital asset stating that it has already been considered by the AO while computing capital gains through no such deduction was allowed in the assessment. 5.That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the order of the AO for not giving the benefit of Rs.52,500/- being brought forward long term capital loos which is claimed by the appellant u/s 74 of the Act stating that it has already been considered by the AO while computing capital gains through no such deduction was allowed in the assessment. 6. That on the facts and in the circumstances of the case, charging of interest of u/s 234A of Rs.1,128/- and u/s 234B of Rs.41,064/- is not justified. 7. That on the facts and in the circumstances of the case, initiation of penalty proceedings u/s 271(1)(c) is not justified.

ITA No.741/Ind/2018 Shri Purshottam Khatri, Bhopal Thereafter, the assessing office proceeded to make assessment. The assessing officer observed that the property sold along with the other co-owners the capital gain arising there from pertain to the assessee was Rs.5,75,000/- as against the Rs.1,50,007/- the difference thereof amounting to Rs.4,22,993/- was added to the income of the assessee. 3. Aggrieved by this the assessee preferred an appeal before the Ld. CIT(A) who after considering the submissions dismissed the appeal. 4. Now, the assessee is in present appeal. 5. Ground Nos. 1 & 2 are against the validity of reopening of the assessment. 6. Apropos ground No.1 Ld. counsel for the assessee reiterated the submissions as made in the written submissions. It is contended that as per the AIR information assessee had sold immovable property valued at Rs.30,00,000/- and more during the A.Y. 2008- 09 for A.Y. 2009-10. It is a material fact that assessee had requested that the original return filed earlier may be treated as filed in response to the notice u/s 148 of the Act. Assessing officer accepted the fact and issued notice u/s143(2) of the Act. This fact goes to establish that the basis of assessment u/s 147/143(3) of the Act was the original return. Hence it is proved that the original return is not an invalid return. It is contended that the decision of the Ld. CIT(A) holding that original return was filed to wrong AO is contrary to the decision of Hon'ble High Court of Karnataka in the case of CIT vs. Topline Credits Ltd. [2014] 42 taxmann.com 256. Further reliance was placed on the judgment of the Hon'ble High

ITA No.741/Ind/2018 Shri Purshottam Khatri, Bhopal Court of Calcutta rendered in the case of Mohindra Mohan Sarkar vs. ITO [1978] 112 ITR 47. 7. On the contrary, Ld. DR opposed the submissions and supported the order of the Authorities below. Ld. D.R. submitted that the facts of the present case are distinguishable from the facts of the judicial pronouncements as relied upon by the assessee. 8. I have heard the rival submissions, perused the materials available on records and gone through the orders of the authorities below. In the ground Nos.1 & 2, the assessee has challenged the legality and validity of the reopening of the assessment on the ground that the basis of reopening of the assessment is ex-facie illegal and contrary to the settled position of law. He submitted that the reopening was made purely on wrong assumption of facts that the assessee did not file his return of income. He submitted that the assessee had in fact filed the return of income. He further pointed out that the A.O. himself reassessed the income by making additions into the income disclosed in the original return of income. This fact itself is sufficient to prove that reopening of assessment was patently on wrong appreciation of facts. Further, Ld. Counsel for the assessee submitted that the notice dated 18.3.2016, which was served upon the assessee on 1.4.2016 was not a valid notice and barred by limitation as prescribed u/s 149 of the Act. He vehemently argued that under these undisputed facts, the Ld. CIT(A) ought not to have held the notice u/s 148 of the Act as a valid notice. I find that the Ld. CIT(A) has decided both these objections against the assessee in para No.9.1, 10.1, 10.3 and 10.4.

ITA No.741/Ind/2018 Shri Purshottam Khatri, Bhopal For the sake of clarity, the finding of the Ld. CIT(A) is reproduced as under: 9.1 It is observed that the A.O. had received information about this transaction through Annual Information Return. The A.O. issued a letter to the appellant for verification of the said transaction. However, the appellant did not respond to the A.O. In the circumstances, the A.O. was left with no alternative but to issue notice u/s 148 after recording of reasons. Further, the appellant had filed his return with ITO-3(2), Bhopal whereas the jurisdiction of the case was with the ITO-3(3), Bhopal. Therefore, the A.O. cannot be said to be in fault in issuing notice u/s 148. In the facts and circumstances, the inference drawn by the A.O. that the income had escaped assessment was reasonable and based on tangible material. The case laws cited by the appellant are distinguishable on facts. The notice u/s 148 is therefore, upheld.

…………

10.1 The appellant has claimed that notice dated 18.3.2016 was received by him on 1.4.2016 whereas as per section 149 the notice should have been served before 31.3.2016.

10.2 Section 149 is reproduced below: “Section 149(1) No notice under section 148 shall be issued for the relevant assessment year; (a) If four years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b) [or clause (c)] (b) If four years, but not more than six years, have elapsed from the end of the relevant assessment year unless the income chargeable to tax which has escaped assessment amounts to or is likely to amount to one lakh rupees or more for that year;”

10.3 From the bare reading of the section 149, it is clear that the requirement of law applied for “issue” of notice and not to the “service” of notice. It is settled law that the word ‘issued’ in section 149 should be given its natural meaning and not the strained wider meaning of ‘served’. Consequently, where the notice was issued within time but was served on the assessee after the expiry of the time-limit, it could not be held to be invalid. Reliance in this regard is placed on decisions in the cases R.K. Upadhyaya V. Shanabhai P. Patel (1987) 166 ITR 163 (SC); CIT Vs. Sheo Kumari Debi (1986) 157

ITA No.741/Ind/2018 Shri Purshottam Khatri, Bhopal ITR 13 (Pat.) (FB) and Jai Hanuman Trading Co. (P) Ltd. V. CIT (1977) 110 ITR 36 (Punj. Har.) (FB).”

10.4 As the notice was undisputedly issued on 18.3.2016, the notice is held to be legally valid and within the time allowed under law.

“As per AIR information available in the case of the assessee, Sold immovable property valued at Rs.30,00,000 or more during the F.Y. 2008-09 relevant to A.Y. 2009-10. The assessee has not filed his/her return of income for the A.Y. 2009-10. On the verification of the above transaction a letter issued to the assessee on 18.2.2016, but the assessee has not given any written submission for the above mentioned transaction. In view of the above facts, I have the reason to believe that the assessee’s income amounting to Rs.46,00,000/- chargeable to tax for the A.Y. 2009-10 has escaped assessment within the meaning of section 147 of Income Tax Act, 1961.” 10. The basis of the reopening from the aforesaid reasons is that the assessee entered into a transaction of sale of property. Admittedly, the assessee had filed its return of income in a wrong jurisdiction. It is not the case where the assessment is reopened purely on the basis of non-filing of return of income. The A.O. was having information regarding sale of immovable property at Rs.30 lakhs or more. Therefore, in my considered view, the A.O. had a valid reason to reopen the assessment. Now coming to the question of limitation, the assessee has not brought to my notice any contrary binding precedent other than the judicial pronouncements as relied by the Ld. CIT(A). I, therefore, do not see any reason to

ITA No.741/Ind/2018 Shri Purshottam Khatri, Bhopal interfere in the finding of the Ld. CIT(A). Same is hereby affirmed. Ground Nos.1 & 2 are dismissed.

ITA No.741/Ind/2018 Shri Purshottam Khatri, Bhopal

orders of the authorities below. The Ld. CIT(A) dismissed the

grounds of appeal by observing as under:

ITA No.741/Ind/2018 Shri Purshottam Khatri, Bhopal

ITA No.741/Ind/2018 Shri Purshottam Khatri, Bhopal

ITA No.741/Ind/2018 Shri Purshottam Khatri, Bhopal forward long term capital loss of Rs.52,500/-. It was stated that property was purchased by purchase deed dated 25.9.1992. It is stated that the facts were not correctly appreciated. The property was purchased vide purchase deed dated 25.9.1992. This fact is not controverted by the revenue. I, therefore, set aside the orders of the authorities below on the issue of valuation as well as the computation of indexed cost of acquisition to the file of the A.O. to decide it afresh. The A.O. would refer the issue of valuation to the DVO and also verify the claim of correct indexation. Needless to say, A.O. would afford reasonable opportunity to the assessee.

Order was pronounced in the open court on 05.08.2019.

Sd/- (KUL BHARAT) JUDICIALMEMBER

Indore; �दनांक Dated : 05/08/2019 V.G./SPS

Copy to: Assessee/AO/Pr. CIT/ CIT (A)/ITAT (DR)/Guard file. By order

Assistant Registrar, Indore