SHANMUGAM RAMAMOORTHY,CHENNAI vs. ITO NON CORPORATE WARD 23(2), CHENNAI

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ITA 958/CHNY/2018Status: DisposedITAT Chennai17 July 2018AY 2011-125 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal found it improper for the AO to obtain a letter from the assessee waiving their right to appeal. Since the capital gain was already taxed for AY 2012-13 and the AO accepted it, reopening the assessment for AY 2011-12 was deemed incorrect.

What were the facts?

The assessee offered capital gains for AY 2012-13, which was accepted by the AO. Subsequently, the AO reopened the assessment for AY 2011-12, obtaining a letter from the assessee stating he would not appeal the AY 2012-13 order. The assessee argued this reopening was unjustified.

What were the issues?

Whether reopening of assessment for AY 2011-12 was justified when capital gains were already offered and accepted for AY 2012-13, and a letter was obtained from the assessee not to appeal that order.

Which sections of the Income-tax Act were involved?

Section 148

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘C’ BENCH, CHENNAI

Before: SHRI N.R.S. GANESAN & SHRI A. MOHAN ALANKAMONY

For Respondent: Smt. E. Pavuna Sundari, JCIT
Hearing: 28.06.2018Pronounced: 17.07.2018

आदेश /O R D E R

PER N.R.S. GANESAN, JUDICIAL MEMBER:

1.

This appeal of the assessee is directed against the order of the Commissioner of Income Tax (Appeals) -10, Chennai, dated 27.12.2017 and pertains to assessment year 2011-12.

2.

Ms. Sushma Harini, the Ld.counsel for the assessee, submitted that the assessee was running a departmental store in the name of Sri Kumaran Super Market at Door No.70/A/1, New Door No.8/70-A1, Srinivasa Perumal Koil Street, Cantonment, Pallavaram. According to the Ld. counsel, the assessee entered into an agreement with Smt. P. Tamilselvi on 14.10.2010 to sell the entire building with stock. The assessee admitted the transaction in the return of income. As per the agreement dated 14.10.2010, according to the Ld. counsel, the possession of the property was not given. Therefore, the capital gain was offered for the assessment year 2012-13. According to the Ld. counsel, the Assessing Officer, in fact, accepted the capital gain offered and taxed accordingly.

Subsequently, the Assessing Officer reopened the assessment by issuing notice under Section 148 of the Income-tax Act, 1961 (in short 'the Act') on 17.08.2015. According to the Ld. counsel, the Assessing Officer obtained a letter from the assessee saying that he would not prefer any appeal against the order of assessment for assessment year 2012-13 when the capital gain was subjected to tax. Having obtained a letter from the assessee that he will not go on appeal for assessment year 2012-13, according to the Ld. counsel, the Assessing Officer is not justified in reopening the assessment for assessment year 2011-12. The CIT(Appeals) in turn found that the transfer took place during the year under consideration. According to the Ld. counsel, there was transfer of property during the year under consideration and the actual transfer was only during the assessment year 2012-13. Therefore, according to the Ld. counsel, the CIT(Appeals) is not justified in confirming the order of the Assessing Officer.

3.

We heard Smt. E. Pavuna Sundari, the Ld. Departmental Representative also. The only issue arises for consideration is assessment of capital gain. The Revenue claims that the property was transferred during the assessment year 2011-12. However, the assessee claims that the property was transferred during the assessment year 2012-13. It is not in dispute that the assessee filed a letter before the Assessing Officer saying that he will not appeal for the assessment year 2012-13 wherein the capital gain was offered to tax. On a query from the Bench how the Assessing Officer could get such a kind of letter preventing the assessee to exercise his statutory right confirmed under Income-tax Act? The Ld. D.R. and the Assessing Officer, who was also present in the court, clarified that the assessee voluntarily filed the letter saying that he will not take up the matter on appeal for assessment year 2012-13.

4.

This Tribunal has a doubt in the clarification made by the Assessing Officer. There may not be any necessity for the assessee to file such a kind of letter before the Assessing Officer.

Why should an assessee file a letter before the Assessing Officer that he will not take up the matter on appeal for the assessment year 2012-13 unless it was insisted so by an officer of the Department. This Tribunal is of the considered opinion that every citizen of this country has a right to take up the matter on appeal or otherwise as per the statutory provisions enacted by the Parliament.

Therefore, obtaining a letter from any citizen that he will not go on appeal is contrary to the mandate of the Income-tax Act. We are confident that this kind of practice may not continue in future. Be that as it may, since the capital gain was already offered for taxation for the assessment year 2012-13 and the Assessing Officer also accepted the same, letter was also obtained from the assessee that he will not take up the matter on appeal, this Tribunal is of the considered opinion that reopening of assessment for assessment year 2011-12 is not correct. In those circumstances, we are unable to uphold the orders of the lower authorities. Accordingly, both the orders of the lower authorities are set aside and the addition made by the Assessing Officer for assessment year 2011-12 is deleted.

5.

In the result, the appeal filed by the assessee is allowed.

Order pronounced on 17th July, 2018 at Chennai.

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