Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, ‘B’ (SMC
Before: SHRI ABRAHAM P. GEORGE]
आदेश / O R D E R
This appeal filed by the assessee is directed against an order dated 29.02.2016 of ld. Commissioner of Income Tax (Appeals)- 13, Chennai, for the impugned assessment year.
Assessee has taken altogether seven grounds of which grounds No.1 & 7 are general in nature needing no specific adjudication. Vide ground No.2, assessee assails the legality of assessment done on him.
ITA No. 1667//Mds/2016 :- 2 -:
Facts apropos are that assessee had filed a return of income for the impugned assessment year in a status of HUF disclosing income of �1,82,089/-. Ld. Assessing Officer was having information regarding purchase of 2.89 acres of land by the assessee alongwith four other persons, from one Smt. K. Sathya on 21.05.2007. In the return of income filed by the assessee in the HUF status the investment in the above property was not disclosed. Hence notice u/s.148 of the Income Tax Act, 1961 (in short ‘’the Act’’) was issued to the assessee. Thereupon assessee requested the ld. Assessing Officer to treat the return originally filed as one filed in pursuance to such notice. Thereafter notice u/s.143(2) of the Act was also issued to the assessee. However, assessee did not enter appearance. Ld. Assessing Officer examined Smt. K. Sathya seller of the property under summons. It seems Smt. K.Sathya stated that she had sold two pieces of land to five persons including the assessee Shri. Deen Dayal Kothari. As per Smt. K. Sathya the details of the property sold were as under:-
Sl.No Land Area Sales Price Amount 1 S.No.146/4A, Nemili Village, 2.89 �60,04,000/- Sriperumpudur acres (Cheque No.5,04,000/- + Cash �55,00,000/-) 2 S.No.146/4B, Nemili Village, 4.03 �83,72,325/- Sriperumpudur acres (Cheque No.7,02,800/- + Cash �76,69,525/-)
ITA No. 1667//Mds/2016 :- 3 -:
Thereafter on 04.02.2013, assessee appeared before ld. Assessing Officer and a sworn statement was recorded. In such sworn statement he admitted that the purchase was made in his individual status though PA No. of HUF was given for registration of the document. It is to be noted that assessee had also filed a return in his individual status for the impugned assessment year disclosing total income of �1,65,784/-. In the said return assessee had disclosed purchase of the above mentioned property and the cost of acquisition was mentioned as �6,03,400/-, claimed to be 1/5th share of the consideration paid. Ld. Assessing Officer proceeded to complete the assessment in the individual status of the assessee based on the statements given by the assessee and Smt. K. Sathya before him. Ld. Assessing Officer also referred to an assessment done on one Shri. Dilli Raja, who was the mediator for the purchase of the above property.
Shri. Dilli Raja it seems had admitted that cash of �55,00,000/- pertaining to the first of the two properties was held by him in the safe custody and later transferred to the seller and her daughters. Though the assessee argued before ld. Assessing Officer that receipt of �55,00,000/- alone was acknowledged by Smt. K. Sathya to have been received in cash from the assessee, this was not accepted by the ld. Assessing Officer. According to him, Smt. K. Sathya had produced copies of receipts with regard to both properties and Shri. Dilli Raja the ITA No. 1667//Mds/2016 :- 4 -: mediator had accepted payment of on-money. He held that assessee had not disclosed investment for 1/5th share in both these properties.
Total amount not disclosed by the assessee was computed by the Assessing Officer as under:-
Actual purchase price 60,04,000 (1/5th share of assessee) �12,00,800 But offered by assessee in his return (�12,60,040 X 1/5) �2,52,000 Balance 9,48,800 Add Stamp duty (100808 X 1/5) 20,162 Total amount not disclosed by 9,68,962/- Assessee Actual purchase price 83,72,325 (1/5th share of assessee) �16,74,465 But offered by assessee in his return (�17,57,080 X 1/5) �3,51,416 Balance 13,23,049 Add Stamp duty (140568 X 1/5) 28,114 Total amount not disclosed by 13,51,163 Assessee Total amount not disclosed by the assessee �9,68,962/- + 13,51,163/ = �23,20,117/-
ITA No. 1667//Mds/2016 :- 5 -:
An addition of �23,20,117/- was made and assessment was completed on the assessee on the individual status
Assessee’s appeal before ld. Commissioner of Income Tax 5.
(Appeals) did not meet with any success. According to ld. Commissioner of Income Tax (Appeals) Smt. K.Satya had sold first property for �60,04,000/- though value as per sale deed was only �12,60,040/-. Further as per ld. Commissioner of Income Tax (Appeals) the second property which was adjacent to the first one was also sold by Smt. K. Satya for a sum of �83,72,325/- though actual amount shown in the registered deed was only �17,57,080/-. Ld. Commissioner of Income Tax (Appeals) noted that Shri. K.Dilli Raja who was the mediator had admitted payment of on-money. As per the ld. Commissioner of Income Tax (Appeals), Ld. Assessing Officer had successfully discharged his burden of proof by issuing summons to Smt. K. Sathya who had accepted receipt of on-money. He confirmed the additions made by the ld Assessing Officer.
Now before me, ld. Authorised Representative submitted that 6. the assessment was bad in law since it was initiated on a return filed by the assessee in HUF status. As per ld. Authorised Representative Assessing Officer if he found that the property was purchased in the ITA No. 1667//Mds/2016 :- 6 -: individual status of the assessee, ought have issued notice u/s.148 of the Act to the assessee in his individual status. This was never done.
Notice was admittedly issued in the status of HUF. Assessment having being done u/s.143(3) r.w.s. 147 of the Act, as per ld. Authorised Representative notice issue of notice u/s.148 of the Act was mandatory. As per the ld. Authorised Representative even the notice u/s.143(2) of the Act was issued to the assessee only in HUF status.
Thus, according to him assessment in the HUF status of the assessee was bad in law. Ld. Authorised Representative placed reliance on the third member decision of the Delhi Bench of the Tribunal in the case of Suraj Mal, HUF vs. ITO (2007) 109 ITD 327.
Per contra, ld. Departmental Representative submitted that 7.
the tax payer himself had started the confusion. Error was committed by the assessee and this was rectified by the ld. Assessing Officer by making the assessment in the correct status. According to him, the lacuna if any could be cured u/s.292BB of the Act.
I have considered the rival contentions and perused the orders of the authorities below. First two paragraphs in the impugned assessment order which was passed u/s.143(3) r.w.s.147 of the Act is very relevant and these are reproduced hereunder:-
ITA No. 1667//Mds/2016 :- 7 -:
‘’The assessee filed his return of income for the A.Y.200S- 09 in HUF status on 21.08.2008 declaring a total income of Rs..1,82,089/- The same was processed u/s 143(1). Information was received from the Incometax Officer, Ward I(1), Kanchipuram vide letter dt 04.02.2011 about the purchase of a land located at Survey No.146/4A, Nemili A Village, Sriperumpudur measuring to 2.89 acres by the assessee alongwith 4 co-owners from one Smt. K.Sathya on 21.05.2007 connected in the case of Shri. Dilli Raja who is assessed in his ward.
On examination of the Return of Income filed by the assessee Shri. Deen Dayal Kothari for the AY 2008-09 in HUF status, it is seen that the investment in the above property has not been disclosed. So, the undersigned has reason to believe that there is an escapement of income and the assessment was reopened. Notice u/s. 148 was issued on 07.07.2011. The assessee had written a letter stating that the return already filed may be treated as the return filed in response to the notice u/s.148’’.
The properties purchased by the assessee as per ld. Assessing Officer, was not disclosed in the return filed by the assessee in HUF status. It was only when assessee was examined by the ld. Assessing Officer on 04.02.2013, the ld. Assessing Officer recognized that properties were acquired by the assessee in his individual status and not in the HUF status. Relevant para of the assessment order which clearly bring out this is reproduced hereunder:-
‘’When Shri. Deen Dayal Kothari appeared on 04.02.2013 a sworn statement was recorded from him. In his statement he stated that the above property was purchased in his individual status but PAN no. of HUF status was quoted wrongly during the Registration. When the assessee’s return of income filed in his individual status for the concerned asst year declaring a total income
ITA No. 1667//Mds/2016 :- 8 -: of �1,65,784/- was verified, it is found that the assessee has disclosed the above purchase of property for an amount of �6,03,400/- (�2,52,000/- and �3,51,416/-) being 1/5th share. Hence, the assessment is being completed in assessee’s individual status.
What transpires from the above is that return though originally filed in the status of HUF, the assessment was finally completed in the status of individual. Both the notice u/s.148 of the Act which was issued on 07.07.2011 and notice u/s.143(2) of the Act which was issued on 10.10.2012 were much prior to recording of sworn statement from the assessee which happened on 04.02.2013. Thus, it can safely be concluded that there was no issue of notice on the assessee in his status as individual either u/s.148 nor 143(2) of the Act. For its contention that once assessment proceedings has been started in the status of HUF, it ought to have been concluded only in the status of HUF and not as an individual, ld. Authorised Representative has relied on the Third Member decision in the case of Suraj Mal, HUF(supra). In the said case, the original return was filed in the status of individual but final assessment was completed in the status of HUF. What was held by the Bench at para 16 of the order is very relevant, and this is reproduced hereunder:-
‘’16. In the case of AAC vs. Late B. Appaiah Naidu 1974 CTR (SC) 147: (1972) 84 ITR 259(SC), their Lordships held as under :
ITA No. 1667//Mds/2016 :- 9 -:
"Now coming to the second question as noticed earlier, the assessment was made in respect of the income of Appaiah Naidu on his legal representative, his son Sriramamurthy, in the status of an individual and not as the Karta of his HUF. The Department cannot now be permit-ted to change its case and contend that in reality the assessee is the HUF."
Thus once ld. Assessing Officer reached a opinion that assessment was to be done only in the status of ‘individual’ and not in the status of ‘HUF’, he was bound to issue a notice to the assessee in his individual status. An ‘individual’ and an ‘HUF’ are different persons under the Income Tax Act, and notice to one cannot be deemed as notice to the other. Section 2(31) clearly brings out this differentiation. In the case before us, there was a clear failure to issue notice to the assessee in his individual status. Sec. 292BB of the Act can cure only were a notice is claimed by a assessee not to have been served on him or served on him out of time or served in an improper manner. It cannot cure a situation were there was no issue of notices u/s.148 or u/s.143(2) of the Act. As for the contention of the ld. Departmental Representative that such a ground was not raised by the assessee before ld. Assessing Officer, it being a pure question of low with all relevant facts on record, I am of the opinion that Tribunal can consider it, though raised first time before it. I, therefore have no hesitation to set aside the assessment done on ITA No. 1667//Mds/2016 :- 10 -: assessee on impugned assessment year. Consequently, appeal of the assessee is allowed on legal ground. Question on merits on addition of the addition is therefore not adjudicated.
In the result, appeal of the assessee is allowed.
Order pronounced on Friday, the 3rd day of March , 2017, at Chennai.