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Income Tax Appellate Tribunal, RAIPUR BENCH, RAIPUR
Before: SHRI RAVISH SOOD & SHRI ARUN KHODPIA
आदेश / ORDER
PER RAVISH SOOD, JM:
The present appeal filed by the assessee is directed against the order passed by the CIT (Appeals), National Faceless Appeal Centre (NFAC), Delhi, dated 12.11.2021, which arises from the order passed by the A.O. u/ss.144 r.w.s. 147 of the Income-tax Act, 1961 (for short, ‘Act’), dated 31.10.2018 for A.Y.2013-14. The assessee has assailed the impugned order on the following grounds of appeal before us:
“1. The Income Tax Officer, Ward-3(1), has been erred for passing an ex-parte order u/s.144 r.w.s.147 as the notice u/s.148 was itself bad in law and order passed in response to such notice is also null and void. 2. The Income Tax Officer, Ward-3(1) has been erred for disallowing Rs.32,18,238/- under the head long term capital gain without any fact and circumstances.”
Succinctly stated, based on information, that the assessee, during the year under consideration, had sold an immovable property situated at Shankar Nagar Main Road, Raipur, for Rs.85 lacs but had not disclosed capital gain arising from the said sale transaction in his return of income for A.Y.2013-14, the A.O issued notice u/s. 148 of the Act dated 29.03.2018.
During the course of assessment proceedings, it was observed by the A.O that the assessee had sold the aforesaid immovable property ad- measuring 2420 Sq. ft., situated at Near Vidya Hospital, Shankar Nagar Main
3 Shri Vijay Tondon Vs. ITO, Ward-3(1), Raipur Road, Raipur, on 13.09.2012 for a consideration of Rs.87,15,500/-. Referring to the original return of income that was filed on 08.10.2014, it was observed by the A.O. that the assessee had failed to disclose the capital gain arising on the said sale transaction in the said return.
The A.O further observed that the assessee had thereafter, in response to the notice issued u/s.148 of the Act, filed a return of income on 22.09.2018, wherein long-term capital gain (LTCG) of Rs.32,29,238/- was disclosed by him after claiming deduction towards indexed cost of acquisition, indexed cost of improvement, expenditure on transfer and deduction u/ss.54/54B/ 54D/54EC /54F of the Act. As the assessee, despite sufficient opportunities, failed to substantiate his claim regarding the cost of improvement, expenditure on transfer, and deduction u/s 54/54B/54D/54EC/54F; therefore, the A.O calculated the LTCG on transfer of the property mentioned above at Rs. 64,47,476/-. Considering the fact that the assessee had disclosed LTCG of Rs.32,29,238/- in his return of income filed in response to notice u/s 148, dated 29.03.2018, the A.O made an addition of the balance amount of LTCG Rs.32,18,238/- [Rs. 64,47,476/- (-) Rs. 32,29,238/-] and assessed the assessee's income vide his order passed u/ss.144 r.w.s. 147 of the Act dated 31.10.2018 at Rs.66,97,258/-.
4 Shri Vijay Tondon Vs. ITO, Ward-3(1), Raipur
Aggrieved the assessee assailed the order passed by the A.O u/s.144 r.w.s. 147 of the Act dated 31.10.2018 in appeal before the CIT(Appeals), who, after deliberating on the contentions advanced by the assessee, did not find favor with the same and dismissed the appeal observing as under:
“6. The appellant has taken two grounds of appeal. The first ground of appeal relates to the re-opening of assessment u/s 147 of the Act and it is contended that notice issued u/s 148 of the Income Tax Act,1961 is bad in law. The appellant has taken the plea that he has already been assessed u/s 143(3) of the Act and u/s 147 of the Act and that all facts material to the assessment have been disclosed, hence issue of notice u/s 148 four year from the end of the relevant assessment year is bad is law. 6.2 The appellant during the course of appellate proceedings has never submitted any reply or furnished the copies of the orders claimed to be passed u/s 143(3) or 147 for the relevant years. Hence in the absence of any material evidence or copy of orders being furnished the claim of the appellant that capital gains was verified in earlier assessments remains unsubstantiated. On the other hand, I find that the Assessing Officer in para 4 of the assessment order has clearly recorded as under: "During the financial year 201213, assessee had sold an immovable property in a form of a piece of plot admeasuring area of 2420 sq ft, situated at Near Vidya Hospital, Shankar Nagar, Main Road, Raipur on 13.09.2012 for a sum of Rs 87,15,500/-. However, in the return of income filed originally on 8.10.2014 assessee had not shown any details regarding this sale and no capital gains have been shown/offered. However, in response to the notice u/s 148 of the Income Tax Act, 1961 assessee has filed his return of income for A.Y 2013-14 on 22.09.2018. In this return of income assessee has calculated long term capital gains to the tune of Rs 32,29,238/- after claiming indexed cost of acquisition of Rs 22,68,024/-, indexed cost of improvement of Rs 17,06,743/-, expenditure on transfer of Rs 1,75,000/- and deduction u/s 54/548/54D/54EC/54F of Rs 13,36,495/- ." From the above, it is clear that the appellant had not shown the sale of property in the original return and it is only in response to the notice issued u/s 148 of the Act that the appellant has filed the return showing the capital gains. The appellant has not attended before Assessing Officer and pointed out any assessments done earlier. Thus facts on record show that the facts pertaining to sale of immoveable property were not truly and fully disclosed hence there was reason to believe that income has escaped assessment and the issue of notice u/s 148 of the Act is found to be in accordance with income
5 Shri Vijay Tondon Vs. ITO, Ward-3(1), Raipur tax law and procedure. Therefore the re-opening of assessment is upheld and grounds of appeal are dismissed.
7. Ground of appeal no. 2 relates to the disallowance of Rs.32,18,238/- under the head capital gains. The appellant has in the return of income filed in response to the notice u/s 148 of the Act calculated long term capital gains of Rs 32,29,238/- after claiming indexed cost of acquisition of Rs 22,68,024/- , indexed cost of improvement of Rs 17,06,743/-, expenditure on transfer of Rs 1,75,000/- and deduction u/s 54/54B/54D/54EC/54F of Rs 13,36,495/-. During the course of hearing in assessment and even in appellate proceedings the appellant has not furnished any supporting material to establish the claim for improvement in property or deductions claimed in return filed in response to the notice u/s 148 of the Act. The onus of proving the correctness of expenditure or deduction claimed in the return of income lies on the assessee. In the given case the burden/onus has not been discharged by appellant to establish the genuineness and admissibility of deductions/expenditure claimed. Under the circumstances, the action of the Assessing Officer is justified in disallowing the same and action of Assessing Officer is hereby upheld. The ground of appeal is hereby dismissed.
8. Accordingly, for statistical purposes, the appeal is treated as dismissed.”
6. The assessee, being aggrieved with the order of the CIT(Appeals), has carried the matter in appeal before us.
We have heard the Ld. Authorized representatives for both parties, perused the orders of the lower authorities and the material available on record, and considered the judicial pronouncements that have been pressed into service by the Ld. AR to drive home his contentions.
Admittedly, it is a matter of fact borne from the record that the assessee, in his original return of income that was filed on 08.10.2014, had not disclosed the LTCG on the sale transaction of the property mentioned above, i.e., plot admeasuring 2420 Sq. ft. situated at Near Vidya Hospital, Shankar Nagar
6 Shri Vijay Tondon Vs. ITO, Ward-3(1), Raipur Main Road, Raipur. Interestingly, the A.O during the pendency of the assessment proceedings that he had initiated vide notice issued u/s 143(2) of the Act, dated 03.09.2014, had issued notice u/s.148 of the Act dated 14.01.2016, Page 47 of APB. Although, as per law, no notice u/s.148 of the Act could have validly been issued by the A.O during the pendency of the assessment proceedings, the assessee, in compliance with the said notice, filed his return of income on 15.02.2016, wherein LTCG, on the transfer of the property mentioned above, was disclosed by him at Rs. 32,29,238/- (supra), Page 48-51 of APB.
For the sake of a better understanding of the issue involved in the present appeal, the facts therein involved are tabulated as follows:
Sr. No. Date Particulars Original return of income filed by the assessee declaring an 1. 08.10.2014 income of Rs.2,49,780/-. 2. 03.09.2014 Notice u/s. 143(2) of the Act was issued by the ITO-1(2), Raipur. 3. 14.01.2016 Notice u/s.148 of the Act was issued by the Dy. CIT-1(1), Raipur. 4. 15.02.2016 Return of income filed by the assessee in compliance with the notice issued u/s.148 of the Act dated 14.01.2016 (LTCG of Rs.32,29,238/- on transfer of the property under consideration was disclosed by the assessee). 5. 31/03/2016 Original assessment order passed by the A.O u/s 143(3) of the Act, dated 31/03/2016 assessing the income at Rs. 34,79,020/- .
7 Shri Vijay Tondon Vs. ITO, Ward-3(1), Raipur
Neither any order of assessment was passed in response to the return of income filed by the assessee in compliance to the - notice issued u/s.148 of the Act dated 14.01.2016; nor any order vacating the aforesaid proceedings initiated in the course of pendency of the original assessment proceedings that were initiated u/s.143(2) of the Act has been brought to our notice. In fact, we find that the A.O had merged the assessment proceedings initiated by the A.O vide notice u/s 143(2), dated 03.09.2014 AND those initiated on the basis of notice u/s 148, 14.01.2016, and passed a common order u/s 143(3), dated 31/03/2016. Reference of the return of income filed by the assessee in response to notice u/s 148, dated 14.01.2016 is mentioned in the order passed by the A.O u/s 143(3), dated 31/03/2016. 7. 29.03.2018 Notice u/s 148 of the Act, dated 29/03/2018 issued by ITO- Ward 1(2), Raipur. 8. 22.09.2018 Return of income filed by the assessee disclosing income of Rs. 34,79,020/- (i.e as originally assessed by A.O vide order passed u/s 143(3), dated 31/03/2016). 9. 31.03.2010 Assessment order u/s. 144/147 was passed wherein LTCG of Rs.64,47,476/- on transfer of the property was brought to tax. As the assessee had already disclosed the LTCG of Rs.32,29,238/- in his return of income filed in response to the notice u/s.148 of the Act dated 14.01.2016, and the same had been assessed by the A.O while framing the original assessment vide order passed u/s 143(3), dated 31/03/2016, therefore, the A.O made an addition of the balance amount of LTCG of Rs.32,18,238/-.
Considering the facts above, the A.O., taking cognizance of the LTCG, which the assessee had disclosed, assessed his income vide order passed u/s. 143(3), dated 31.03.2016 at Rs.34,79,020/- (wherein LTCG of Rs.32,29,238/- that was disclosed by the assessee in his return of income filed in response to the notice issued u/s.148 of the Act dated 14.01.2016 was included). We may herein observe that the assessment framed by the A.O u/s. 8 Shri Vijay Tondon Vs. ITO, Ward-3(1), Raipur 143(3) of the Act dated 31.03.2016, after considering the disclosure made by the assessee in his return of income filed in response to notice u/s.148 of the Act dated 14.01.2016, is not as per the mandate of law.
Be that as it may, it is the matter of fact discernible from the record that the sale transaction of the property mentioned above for consideration of Rs.87,15,500/- and the consequential LTCG arising from the same was duly considered by the A.O while framing the original assessment vide his order passed u/s.143(3) dated 31.03.2016, Page 114-115 of APB.
Considering the aforesaid factual position, we find substance in the claim of the Ld. AR that now when the sale transaction of the property under consideration and also LTCG arising therefrom had duly been disclosed by the assessee in his return of income filed in response to the notice u/s.148 dated 15.02.2016, which, thereafter, had duly been considered by the A.O while framing assessment u/s. 143(3) dated 31.03.2016; therefore, there could have been no justification for him to have reopened the concluded assessment of the assessee because the LTCG arising from the sale of the property above had escaped assessment. For the sake of clarity, we deem it fit to cull out the “reasons to believe” based on which the case of the assessee was reopened, as follows:
“Reasons for issue of notice u/s.148
9 Shri Vijay Tondon Vs. ITO, Ward-3(1), Raipur
Name and address of the Vijay Tondon 34, Sector-1, Assessee Geetanjali Nagar, Raipur PAN/GIR No. ABUPT1550H Status Ind. District/Circle/Range Raipur/Wd 3(1)/Range-3 Assessment year in respect of 2013-14 which it is proposed to issue notice u/s.148
There is credible information in possession that assessee Shri Vijay Tandon has sold a piece of plot admeasuring area of 2420 sq ft, situated at Near Vidya Hospital, Shenker Nagar Main Road, Raipur on 13.09.2012 to Smt Beena Manghani & Smt Mahak Menghani for Rs 85 lacs. This sale must have attracted capital gains. However, assessee has filed his return of income for AY13-14 showing income of Rs. 2,54,513/- On perusal of the return so filed, it has been found that he has neither shown any income from capital gains nor he has claimed any exemption u/s 54 or any other relevant section from the income from Capital gains. Therefore, I have reason to believe that the above sum of Rs.85,00,000/-, chargeable to tax, has escaped assessment for A.Y 2013-14 by reason of the failure on the part of assessee to disclose fully and truly all material facts necessary for its assessment for AY 2013-14. Sd/- Raipur (Amrit Kumar) Dated 16.03.2018 ITO-3(1), Raipur
On a careful perusal of the aforesaid “reasons to believe” based on which concluded assessment of the assessee was reopened, it transpires that the A.O had remained ignorant of the fact that his predecessor had already framed the assessment in the case of the assessee vide his order passed u/s.143(3) dated 31.03.2016. Apart from that, the fact that LTCG on the transaction of sale of the property under consideration i.e., Rs.32,29,238/- had 10 Shri Vijay Tondon Vs. ITO, Ward-3(1), Raipur duly been disclosed by the assessee in his return of income filed in response to the notice u/s.148 of the Act, dated 14.01.2016, and the same was considered by his predecessor while framing the original assessment vide order u/s. 143(3) of the Act, dated 31.03.2016, was also completely lost sight of by the A.O. at the stage of reopening the concluded assessment of the assessee.
Be that as it may, there can be no escape from the fact that the concluded assessment of the assessee had been reopened not only based on misconceived facts but has as its foundation facts that had not only been considered, deliberated upon, and formed the basis of the original assessment framed by the A.O vide his order passed u/s 143(3) of the Act, dated 31/03/2016. Based on our observations above, we are of the considered view that the reopening of the assessee’s case has to fail for the very reason that the same is not based on any new material that had come to the notice of the A.O after the culmination of the original assessment by him vide his order passed u/s 143(3) of the Act, dated 31.03.2016, but is a clear case of assumption of jurisdiction u/s 147 of the Act based on a mere “Change of opinion.” As an assumption of jurisdiction by the A.O for disturbing a concluded assessment of an assessee based on a “change of opinion” is not permitted under law, we, thus, are unable to subscribe to the jurisdiction
11 Shri Vijay Tondon Vs. ITO, Ward-3(1), Raipur assumed by the A.O in the present case u/s 147 of the Act. Our view above is fortified by the landmark judgment of the Hon’ble Supreme Court in the case of CIT, Delhi Vs. Kelvinator of India Ltd. (2010) 320 ITR 561 (SC). We, thus, in terms of our observations above vacate the assessment framed by the A.O u/s 144 r.w.s 147 of the Act, dated 31/10/2018, for two fold reasons, viz. (i). the belief arrived at by the A.O for reopening the assessee’s case is based on misconceived and incomplete facts; and (ii). the reopening of the concluded assessment based on a mere “change of opinion” is prohibited under law.
We, thus, based on our observations above, quash the assessment framed by the A.O u/s. 144 r.w.s 147 of the Act dated 31.10.2018 after reopening the concluded assessment of the assessee.
As we have quashed the assessment framed by the A.O u/s. 144 r.w.s 147 of the Act dated 31.10.2018 for want of valid assumption of jurisdiction on his part; therefore, we refrain from adverting to and therein adjudicating the other contentions advanced by the Ld. AR qua merits of the case, which, thus, are left open.
12 Shri Vijay Tondon Vs. ITO, Ward-3(1), Raipur
In the result, the assessee's appeal is allowed in terms of our observations above.
Order pronounced in open court on 24th day of August, 2023.