SH. RAMESH KUMAR L/H LATE SH. KUNWAR SINGH,HARYANA vs. ITO, HARYANA

IN THE INCOME TAX APPELLATE TRIBUNAL [ DELHI BENCH “F”, NEW DELHI ] BEFORE SMT. BEENA A. PILLAI, JUDICIAL MEMBER A N D DR. B.R.R. KUMAR, ACCOUNTANT MEMBER

ITA No. 1023/Del/2015 Assessment Year: 2007-08 Ramesh Kumar L/H Late Sh. ITO Kunwar Singh Ward- 2 S/o. Mohan Lal Vill. Namaul Padiawas, Haryana Vs. P.O. Gurdaspur, Majra, Tehsil & Distt. Rewari Haryana

PAN: BBHPK5926Q (Appellant) (Respondent)

Assessee by : Shri Kapil Goel, Advocate

Department by : Shri Surender Pal, Sr. DR Date of hearing : 31-12-2018

Date of pronouncement : 03-01-2019

O R D E R PER Dr.B.R.R. Kumar, AM: GROUNDS OF APPEAL 1. The Ld. CIT (A) erred in not considering that in absence of necessary sanctions/approvals from the CIT (A) /Chief CIT (A), the Learned Assessing Officer (Ld. AO) could not have initiated reassessment proceedings under

sections 147. The Ld. CIT (A) ought to have held that in absence of necessary sanction the notice was bad in law and ought to have quashed the notice issued by the Ld. AO. 2. The Ld. CIT (A) erred in not considering that the requirement of prior sanction before initiating notice under section 147 in view of the transaction being more than 4 years old, was a strict condition of law and could not have been ignored by the Ld. AO. The Ld. CIT (A), in view of the strict provision of law ought to have held that the initiation proceedings, as aforesaid, was bad in law and ought to have quashed the same. 3. The Ld. CIT (A) erred in not appreciating the violation of the settled principles of law, as settled by the various High Courts as well as the Hon'ble Supreme Court that interpretation and application of penal provisions are strict in nature and in the event of violation/non-adherence of any of the conditions laid down by law in regard thereto, the same is liable to be quashed. In view of the said stated position of law the Ld. CIT (A) ought to have quashed the demand on this ground alone. 4. The Ld. CIT (A) also erred in not considering the fact that the notice could not have been acted upon by the Ld. AO in view of the fact that the notice was not served in accordance with settled principles oflaw. The error of the Ld. CIT (A) is all the more glaring in view of the admitted position that the notice was not served in accordance with the settled principles of law as the Department of Income Tax allegedly had no information about the demise of appellant which is contrary to documents on record. 5. The Ld. CIT (A) erred to ignore the settle principle of law that, notice under section 147 being statutory in nature ought to be served upon the Assessee in accordance with law, as provided in the Indian Income Tax Act, 1961 (“IT Act"), in absence whereof the notice was bad in law and could not be acted upon by the Ld. AO. 6. The Ld. CIT (A) erred in not considering the fact that on account of the defective service of notice the entire proceeding before the Ld. AO was illegal and ought to have set aside the order passed by the Ld. AO on this ground alone. 7. That the order passed by the Ld. CIT (A) is also bad in law and is liable to be set aside as the Ld. CIT (A) erred in not appreciating the fact that despite the fact the Ld. AO was duly intimated that the Assessee had already expired on 17.09.2012 and whereas the notice was served on 23.11.2012 even before service of any notice under section 147 and the name of all the legal heirs of the Assesse was also duly intimated to the Department, however, the Ld. AO, erroneously proceeded only against the Appellant. The order of the

Ld. AO as well as the Ld. CIT (A) are in complete violation of the principles of natural justice , contrary to settled principles of law and are thus liable to be set aside. 8. The Ld. CIT(A) failed to appreciate that details of legal heirs of the Appellant were brought to the notice of the Department inter-alia vide letter dated 16/01/2013 as well as via details mentioned in the return filed on 07/12/2012. 9. The Ld. CIT(Aj erred in not appreciating that recording of reasons for passing order u/s. 143(3) and 147 and communication thereof to the assessee before passing the order is mandatory and thus proceedings of AO are liable to be quashed on this ground alone. 10. The Ld. CIT(A) wrongly held that the Appellant allegedly never asked for a copy of the reasons all through the assessment proceedings, hence the AO cannot be faulted for non issue of the same. 11. On the facts and circumstances of the case and in law, the Ld. CIT (A) erred in holding that the reopening of the assessment u/s 148/147 by the Ld. AO is valid as per the law. 12. On the facts and circumstances of the case and in law, the Ld. CIT (A) erred in holding the reopening of the assessment u/s 148/147 by the Ld. AO is valid since the reasons recorded for issuance of notice were different with the reasons on the basis of which additions were made by the Ld. AO. 13. On the facts and in the circumstances of the case and in law, the Ld. CIT (A) erred in not recognising the fact that reasons recorded by the Ld. AO while passing the order under section 147/143(3) were not communicated to the Appellant before passing the order during the assessment proceedings. 14. On the facts and in the circumstances of the case and in law, the Ld. CIT (A) erred in not recognising the fact that the notice issued by the Ld. AO is invalid since the necessary approvals required prior to the issuance of notices have not been taken by the Ld. AO. 15. On the facts and circumstances of the case and in law, the Ld. CIT (A) erred in not recognising the fact that the notice issued under section 148. 142(1) and 143(2) are invalid since the same were not properly served upon the Appellant/legal heir(s). 16. On the facts and circumstances of the case and in law' the Ld. CIT (A) erred in not recognising the fact that the: a. notice u/s 271(1) (c) issued by the Ld. AO against undisclosed income recording reasons is wrong and against law and principles of natural justice. b. rectification application under section 154 filed by the Appellant have not been taken into consideration by the Ld. AO.

At the outset, the Ld. AR has taken up arguments on ground no. 11 and 12

pertaining to the reopening of the case u/s 148 of the Income Tax Act 1961 . He has

brought to our attention the satisfaction recorded by the Assessing Officer while issuing

the notice as per the provisions of the act

are as under:

“ As per AIR information for F.Y. 2006-07 received in this office, the assessee has sold his share in the immovable property valued at Rs. 27500000/- on 5/31/2006 at DHARUHERA. The query letter in this regard has been issued and the assesse was asked to furnish the copy of sale deed and distance certificate from municipality’s limit of Rewari/Dharuhera. The assessee has reply the query; on perusal of his reply, it is noticed that the land in question is situated within 5 k.m. from municipality’s limit of Rewari/Dharuhera Municipality. Thus, the land sold by the assessee is covered in the definition of Capital Assets in view of the notification issued by the CBDT on 06.01.1994.F.No. 164/03/87 ITAT dated 06.01.94. I, therefore, have reason to believe that the assesse has not disclosed its/his/her income from Long Term Capital Gain and any other income which subsequently comes to the notice of the undersigned has escaped assessment within the meaning of section 147 of the I.T. Act 1961. Issue notice u/s 148 of the I.T. Act, 1961 for the assessment year 2007-08.”

amount of income that has escaped assessment as per the provisions of Section 148. It

was argued that the Assessing Officer was in know of the details regarding the sale of

the agricultural land and subsequent investment of those proceeds in purchases of the

agricultural land by the different coparcenaries of the family who were the owners of

the property and argued that the Assessing Officer has not rebutted the submissions of

the assessee but went on reopening the case without forming a tangible opinion

regarding the escapement of income.

objections raised before him regarding the reopening of the case. He argued relying on

various orders of the courts wherein the reopening was quashed as the reasons do

not indicate the quantum of escapement. The Ld. AR has also argued invoking the

judgment in the case of G.K.N. Driveshafts and pleaded that since reasons have not

been furnished to the assessee, the reassessment done by the Assessing Officer is Void

abinito .

the Assessing Officer regarding the sale of agricultural land and since the agricultural

land falls within the area situated in 5 K.M.s from municipality limit of Rewari/Dharuhera

and the Assessing Officer has rightly brought the amounts to taxation. He argued that

the Assessee has never asked for the copy of the reasons all through the assessment

proceedings hence, the AO cannot be held to be faulted for none issue of the reasons

to the assessee.

AO has called for information from the assesee pertaining to the sale of land for which

the Assessee has replied that the assessee and the coparcenaries have purchased the

agricultural land from the period 08.06.2006 to 19.10.2011. The assessee has not

submitted the details regarding the cost of acquisition of the property before the AO.

whereas the AO is in know of the fact that the assessee has sold the agricultural land

for Rs. 2,75,00,000 on 31.05.2006. The AO did not have the details of the cost of

acquisition. The reply given by the assessee only pertains to the purchase of the

agricultural land in the name of other coparcenaries and the claim that the assessee

had no absolute right to purchase the agricultural land in his name as it belongs to the

entire family. From the perusal of the documents we find that the exact amount of the

capital gains or taxable income could not be determined by the AO at the time of issue

of the notice as the cost of acquisition has not been submitted before the AO. Further

we notice that assessee has not filed his regular return of income for the year in

question and further matter even for the earlier or subsequent years. Hence, there is no

way of determining the exact amount before issue of the notice. The AO has issued the

notice based on information available with him and the assessee could not furnish the

complete details regarding the sale of the agricultural land, keeping in view the

provisions of the section 148, we hereby uphold the action of the AO in issuing the

notice u/s 148.

the assessment proceedings at Rs. 84 per merla on the basis of a sale deed made in a

nearby village where the said land was situated. The Ld. AR argued that such

determination of the value of the land as on 01.04.1981 on the basis of the cost at

nearby village cannot be accepted and argued that a minimal condition of reference to

the DVO for determination of the value and subsequent taxation of Capital Gains can

only be a healthy way of collection of taxes. The Ld. DR has submitted that given an

opportunity exact capital gains would be computed after referring the matter to the

DVO for valuation. The Ld.AR has also agreed for the said preposition.

acquisition at Rs. 84 per marla which is not the technical capability of the AO and also

by not bringing reasonable minimum number of comparable cases.the cost of land in

the adjoining village cannot be taken as a thumb rule. The AO has ignored the basic

requirement of referring the matter to the valuation by DVO for determination of the

market value. Hence, the matter is being referred back to the file of AO to give

reasonable opportunity to the assessee and also to refer the matter to the DVO for

valuation of the agricultural land in question and take action in accordance with the

Income Tax Act 1961.

The order pronounced on the open court on 03.01.2019.

Sd/- Sd/- (BEENA A. PILLAI) (B.R.R. KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 03.01.2019 Bidhan