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Income Tax Appellate Tribunal, “C” BENCH, MUMBAI
Before: SHRI SHAMIM YAHYA, AM & SHRI AMARJIT SINGH, JM
O R D E R Per Shamim Yahya, A. M.: This appeal by the assessee is directed against the order by the Commissioner of Income Tax (Appeals) dated 02.03.2016 and pertains to the assessment year 2005- 06. 2. The grounds of appeal
read as under:
1. Ground No. 1 - Re: Reopening of assessment for assessment year 2005- 06 is invalid and the consequent re-assessment is illegal:
2 1.1 The learned Commissioner of Income Tax (Appeals)-l, Mumbai [hereafter referred as the ‘CIT(A)'] erred in confirming the action of the Dy. Director of Income Tax (Exemptions)-I(2), Mumbai [hereafter referred as the "A.O'] in re-opening the assessment u/s 147 of the Income Tax Act, 1961 (the 'Act') in total disregard of the fact that the sanction of the competent authority i.e. the Joint Commissioner of Income Tax for reopening the assessment was not obtained as mandated by Section 151(2) of the Act. 1.2 The learned C.I.T(A) erred in disregarding the binding judgment of the Hon'ble Bombay High Court in the case of Glwnshyam Khabrani v ACIT & Others [(2012) 346 ITR 443 (Bom)] wherein identical issue has been decided in favour of the assessee. 1.3 Without prejudice and in the alternative, the learned CIT(A) erred in law and facts in not appreciating that the A.O. did not observe the right procedure in dealing with the assessee's objections to the reasons recorded for reopening and failed to follow the law and procedure laid down by the Hon'ble Supreme Court and the Bombay High Court in this regard and hence the impugned assessment order passed by the A.O. is liable to be quashed. 1.4 The learned CIT(A) erred in law and facts in holding that the transfer of the capital asset has taken place in assessment year 2005-06 while the transaction of transfer of the capital asset was entered and concluded in the financial year ended on 31.03.2004 relevant to assessment year 2004-05. 1.5 The learned CIT(A) erred in not appreciating that the A.O. has recorded the reasons for re-opening the assessment mechanically, arbitrarily based on presumptions and surmises, and hence the Notice u/s 148 of the Act is illegal and invalid.
Ground No. 2 -Re: Denial of Exemptions u/s 11 of the Act: 2.1 The Learned CIT(A) erred in law and facts in denying the exemption u/s 11 of the Act suo moto on the basis of conjectures and surmises without having jurisdiction in the matter. 2.2 The Learned CIT(A) erred in disregarding the binding judgments of jurisdictional High Court and Tribunal which were brought to his notice in the matter of continuing the benefits of sec 11 of the Act to the appellant trust.
3. Ground No. 3 - Re: Invoking the deeming provisions of sec 50C of the Act in the case of the appellant: 3.1 The learned CIT(A) erred in law and facts in confirming the action of the A.O. in invoking the deeming provisions of section 50C of the Act for computing the alleged capital gains in the case of the appellant being a charitable trust registered u/s 12A of the Act.
3 3.2 The learned CIT{A) erred in not appreciating that the appellant being a charitable trust has invested the entire net consideration in acquiring another capital asset within the meaning of sec 11(1 A) of the Act and thus applied the net consideration for charitable purpose and hence there is no taxable income on the transfer of capital asset. 3.3 Without prejudice, the learned CIT(A) erred in not appreciating the fact that the A.O. has wrongly invoked the provisions of section 50C of the Act for assessment year 2005-06 in respect of a transaction of sale of property effected by the appellant in the financial year ended 31st March 2004 relevant to assessment year 2004-05.
4. Ground No. 4 - Re: Not following provisions of sec 50C(2) of the Act Without prejudice and in the alternative, the learned CIT(A) erred in not appreciating that the A.O. has adopted market the value determined by the Stamp Valuation Authority as the consideration received by the appellant without following the procedure laid down in sec 50C(2) of the Act and without obtaining the valuation report from the Departmental Valuation Officer.
5. Ground No. 5 - Re: Disallowing deduction u/s 11(2) of the Act in respect of income accumulated: 5.1 Without prejudice, the learned CIT(A) erred in not allowing deduction u/s 11(2) of the Act in respect of investments of accumulated income in approved securities while computing the income of the appellant trust having a valid registration u/s 12A of the Act. 5.2 The income of the appellant ought to have been computed as per the provisions of sec 11 of the Act by allowing the claim of the appellant u/s 11(2) of the Act.
Ground No. 6 - Re: Disallowance of set off of brought forward Deficit of earlier years against the income of current year: Without prejudice and in the alternative, the learned CIT(A) erred in law and facts in not allowing set off of brought forward balance of the excess of application over the income (i.e. deficit) of earlier years against the surplus arising on re-assessment as per the ratio laid down by the Hon'ble Bombay High Court in several cases including the case of Institute of Banking Personnel vs CIT [ 264 ITR110 (Bom)].
Ground No. 7 - Re: Assessment of sale proceeds of land as normal income is illegal:
4 7.1 Without prejudice and in the alternative, the Id. CIT(A) erred overlooking the fact that the A.O. has erred in assessing the gross sale proceeds of land as normal income of the appellant instead of computing the long term capital gains on transfer of the said capital asset. 7.2 Without prejudice, the learned CIT(A) ought to have directed the A.O. to compute the long term capital gains and to levy the long term capital gains tax as applicable.
Ground No. 8 - Re: Charging of interest u/s 234B of the Act is wrong: The learned CIT(A) ought to have directed the A.O. that interest u/s 234B, if any, is to be calculated as per sub-section (3) of sec 234B on the amount of long term capital gains tax for the period commencing on the day following the date of determination of total income u/s 143(1) and ending on the date of the re-assessment u/s 147 of the Act.
The above grounds are independent and without prejudice to each other.
At the outset in this case learned counsel of the assessee pressed for the ground number 1.1 of the grounds of appeal. Learned counsel of the assessee submitted that reopening for assessment is invalid inasmuch as the sanction of competent authority in this case, i.e., Joint Commissioner of Income Tax for reopening the assessment was not obtained as mandated by section 151(2) of the Act.
We find that there is no adjudication on this issue by the learned CIT-A.
Learned counsel of the assessee submitted that he has raised this issue before the learned CIT-A in the written submissions before him, but the learned CIT-A has not referred the same. Learned counsel of the assessee submitted that sanction of the competent authority has not been obtained in this case is also apparent from the notice sent for reopening wherein sanction has been said to have been obtained from DIT Exemption and not from the Joint Commissioner of Income Tax as per the mandate of 5 section 151(2) of the Act. Learned departmental representative in this regard submitted that the assessment records needs to be referred to for proper adjudication of the issue raised.
Upon careful consideration we are of the considered opinion that this is an important issue going to the root of the matter. Since the learned CIT-A has not adjudicated the issue and the issue needs reference to the records in this regard, we deem it appropriate to remit this issue to the file of learned CIT-A. Learned CIT-A directed to consider this issue and pass an order accordingly. Needless to add the assessee should be granted adequate opportunity of being heard. We make it clear that we have not adjudicated the other issues raised. Both the parties shall be at liberty to raise the necessary grounds as and if necessary, pursuant to other order passed after our remitting the issue as above.