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Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI
Before: SHRI MAHAVIR SINGHAND SHRI G. MANJUNATHA
आयकर अपीलीय अिधकरण, ‘ए’ �यायपीठ,चे�ई IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH, CHENNAI �ी महावीर �सह, उपा�य� एवं �ी जी. मंजुनाथ, लेखा सद�य के सम� BEFORE SHRI MAHAVIR SINGH, VICE PRESIDENTAND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER आयकर अपीलसं./ITA No.: 14/CHNY/2021 िनधा�रण वष�/Assessment Year: 2013 - 14 The DCIT, M/s. Ratna Café, Non Corporate Circle 7(1), vs. No.255, Triplicane High Road, Chennai. Triplicane, Chennai – 600 005. PAN: AAAFR 0842B (अपीलाथ�/Appellant) (��यथ�/Respondent) अपीलाथ� क� ओर से/Appellant by : Shri AR.V. Sreenivasan, Addl.CIT ��यथ� क� ओर से/Respondent by : Shri S. Sridhar, Advocate & Shri N. Arjunraj, CA सुनवाई क� तार�ख/Date of Hearing : 14.11.2022 घोषणा क� तार�ख/Date of Pronouncement : 16.11.2022 आदेश /O R D E R PER MAHAVIR SINGH, VICE PRESIDENT:
This appeal by the Revenue is arising out of order of the Commissioner of Income Tax (Appeals)-10, Chennai in dated 27.08.2020. The re-assessment was framed by the ACIT, Non-Corporate Circle 9(1), Chennai for the assessment year 2013-14 u/s.143(3) r.w.s. 147 of the Income Tax Act, 1961 (hereinafter the ‘Act’) vide order dated 07.12.2019. The AO to verify the ‘large other deduction claimed in schedule BP resulting in loss’ u/s.143(3) of the Act vide order dated 24.03.2016.
At the outset, it is noticed that this appeal filed by Revenue is delayed by limitation by 54 days. Smt. E. Kalaiselvi, D/o.K. Elaiyan, ACIT has filed affidavit stating the fact that the order passed by CIT(A) dated 27.08.2020 was received in the office of CIT on 06.10.2020 and appeal before the Tribunal was to be filed on or before 05.12.2020 but it was filed only on 28.01.2021 and thereby, there is a delay of 54 days. But, it was contended that the delay was due to the spread of Covid-19 pandemic. The ld.DR also stated that the Hon’ble Supreme Court in Miscellaneous Application No.665 of 2021 vide order dated 23.03.2020 has given directions that the delay are to be condoned during this period 15.03.2020 to 14.03.2021 and they have condoned the delay up to 28.02.2022 in Miscellaneous Application No.21 of 2022 vide order dated 10.01.2022. In term of the directions of Hon’ble Supreme Court, we condone the delay in filing of this appeal by Revenue and admit the appeal for adjudication.
The only issue in this appeal of Revenue is against the order of CIT(A) in quashing the reassessment / reopening of assessment and invocation of provisions of section 147 of the Act and holding the same as bad in law.
Brief facts are that the assessee filed its return of income for the assessment year 2013-14 originally on 30.09.2013, which was processed u/s.143(1) of the Act on 19.02.2015. Subsequently, the AO in view of audit objection reopened the assessment by issuing notice u/s.148 of the Act vide notice No.ITBA/AST/S/148/2018- 19/1015384877(1) dated 22.03.2019. The assessee filed its return of income in response to notice u/s.148 of the Act for relevant assessment year 2013-14 on 13.04.2019. The assessee filed objections against reopening of assessment vide letter dated 01.11.2019 which was disposed off by the AO and reassessment was framed by assessing net long term capital gain at Rs.1,81,67,335/- by making addition of long term capital gain at Rs.73,32,665/-. Aggrieved, assessee preferred appeal before CIT(A).
The CIT(A) allowed the appeal of assessee by quashing the reopening of assessment on many facets but one of the facet was that there was no failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment for the relevant assessment year 2013-14 and the original assessment was completed u/s.143(3) of the Act and 4 years have elapsed from the relevant assessment year for reopening of assessment by issuing notice u/s.148 of the Act. The CIT(A) recorded his finding in para 7.6 and quashed the assessment by observing as under:- “7.6 The A.O has examined the issue of long term capital gain during the original assessment proceedings by a specific query in the notice u/s.142(1) and thereafter the appellant filed the requisite details and documentary evidence, based on which the A.0 formed an opinion of accepting the contention of the appellant, by accepting the total income in the scrutiny assessment u/s 143(3). Based on the same material facts available on record, the audit party has raised an objection and subsequently the A.O went ahead to issue a notice u/s 148. After examining the documents on record, it is held that there was no failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment and hence I have no hesitation in stating that this amounts to change of opinion'. The A.O has no power to review, whereas he has only power to reassess and in this case as the reopening has been done merely based on change of opinion', the action of the A.O amounts to the power of review. In view of the above factual and legal position as well as various documentary evidence which are on record and also respectfully following the decisions of the Hon'ble Courts stated supra, I am in agreement with the appellant that the reopening of assessment beyond four years, based on audit objection, which was originally completed u/s 143(3) and when there is no failure on the part of the appellant to disclose truly and fully all material facts and in the absence of any fresh information, the notice u/s 148 issued is not valid. Therefore, in view of the settled legal position, it is held that the re-assessment proceedings are not as per law and hence the proceedings initiated u/s 148 and the consequent re-assessment proceedings u/s 143(3) r.w.s 147 are held to be not as per law and therefore annulled. Therefore, these grounds of appeals are allowed.
We have heard rival contentions and gone through facts and circumstances of the case. Admitted facts are that the relevant assessment year involved is assessment year 2013-14. The assessee filed its return of income for the relevant assessment year 2013-14 on 30.09.2013 and assessee’s case was selected for scrutiny assessment to verify the large other deduction claimed in schedule BP resulting in loss and assessment was made accordingly on 24.03.2016 u/s.143(3) of the Act. Subsequently, notice u/s.148 of the Act was issued on 22.03.2019. It means, the notice issued u/s.148 of the Act dated 22.03.2019 is after the expiry of 4 years from the end of the assessment year and original assessment was completed u/s.143(3) of the Act. Now, we have to go through the reasons recorded by the AO for issuance of notice u/s.148 of the Act and the relevant reasons recorded by AO for issuance of notice u/s.148 of the Act and as reproduced by CIT(A) in his order reads as under:- 1. Name of the assesse :M/s Rathna cafe 2. PAN AAAFR 0842B 3. Status ::Firm 4. Nature of business : Hotel 5. Assessment year :2013 - 14 6. Date of filing of return :30.9.13 7. Income returned/assessed :NIL/NIL 8. Date of assessment order :24.3.2016 9. Order under section :143(3) 10. Name of the CA : 11. Membership no. of the CA :
Report of the CA : 13. Audit Objection u/s : 14. Whether IAP seen : 15. Tax effect : The case was selected in CASS for scrutiny and the assessment was completed on acceptance of ROI. On a test-check of ITMR made available to the audit, it is seen that the assesse has sold a capital asset on 16.7.2012 for a sale consideration of Rs.25500000/- and shown capital gain of Rs.16757143. In this connection the following points are noted.
i) The property sold was purchased by the assesse on 22.8.2005 vide registered sale deed no.995 of 2005 of SRO, Triplicane. ii) The property was 1716 sqft of land and three floors of superstructure admeasuring 3000 sqft.(GF:1250+FF:1250+SF:500). ii) The value of the building was valued by the stamp valuation authorities has Rs. 1920538/- and the deficit stamp duty and registration fee of Rs.103820/- was paid by the asessee. iv) The property was transferred without supersturucture, the assessee has demolished the superstructure and used the vacant site as car parking for his hotel business for a period of time. The vacant site only was transferred to the purchaser vide sale agreement dated 16.7.2012. v) The assesse has not shown any income from the materials of demolished building. In view of the above, the value of the building could not be taken into consideration for indexation. Based on these, LTCG is worked out as under.
Sale consideration : 2,55,00,000/- Cost of Acquisition : Purchase cost : 45,00,000 Stamp duty : 3,25,000 Registration fee : 45180 Addl.duty and fee : 103820 Total : 4974000 Less Building value : 1920538 Remaining : 3053462 Indexed cost of Acquisition : 5234506 (3053462*852/497)
Net LTCG : 20265494 LTCG offered by the assesse : 16757143 Escaped LTCG : 3508351
In reply, it was stated that the objection would be looked into.
From the above reason, it is clear that the AO has nowhere pointed out in the reasons recorded for issuance of notice u/s.148 of the Act, that there is any failure on the part of assessee to disclose fully and truly all material facts necessary for its assessment for relevant assessment year 2013-14. Even, it is noted that the assessee during the course of original assessment proceedings vide notice issued u/s.142(1) of the Act dated 23.10.2015, assessee has filed complete detail of long term capital gain and the relevant is given as under:- ANNEXURE - A 1) As per Schedule of Capital Gain fle with ITR of AY: 2013-14, Capital Gain is being shown as Rs. 1,67,57,143 -. In this regard, Please furnish the following details: a) Copy of sale deed and Purchase deed. b) Proof for improvements made, if any, and the cost there on. 2) Please furnish Details of Additions made during the year and depreciation claimed thereon along with proof for purchase viz. Bills/vouchers/bank details for cheque payment. 3) An amount of Rs.2,06,80,811/- has been claimed as deduction under the head "any other amount allowable as deduction". Please submit details there on alongwith proof for the same. 4) Please furnish details of cash deposits made during the year 2012-13 and Source of income for the same. 5) Please submit copy of partnership deed.
The above is being reproduced from the order of CIT(A). Once the above factual position is clear and admittedly, the assessment year involved is 2013-14 and notice u/s.148 of the Act was issued on 22.03.2019, which is beyond 4 years from the end of the relevant year and there is no failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment for the relevant assessment year, the issue is squarely covered in favour of the assessee by the decision of Hon’ble Supreme Court in the case of CIT vs. Foramer France, (2003) 264 ITR 566. In view of the above, we find no infirmity in the order of CIT(A) and hence, we confirm the order of CIT(A) quashing the reassessment.
In the result, the appeal filed by the Revenue is dismissed.
Order pronounced in the open court on 16th November, 2022 at Chennai.