SURESH VASUDEO GORE, AMGPG3139G v. ITO (HQ) (CIB),PUNE, PUNE

ITA 1197/MUM/2009 | 2005-2006
Pronouncement Date: 28-01-2011 | Result: Allowed

Appeal Details

RSA Number 119719914 RSA 2009
Assessee PAN ACTOF1894I
Bench Mumbai
Appeal Number ITA 1197/MUM/2009
Duration Of Justice 1 year(s) 11 month(s) 7 day(s)
Appellant SURESH VASUDEO GORE, AMGPG3139G
Respondent ITO (HQ) (CIB),PUNE, PUNE
Appeal Type Income Tax Appeal
Pronouncement Date 28-01-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted E
Tribunal Order Date 28-01-2011
Date Of Final Hearing 05-01-2011
Next Hearing Date 05-01-2011
Assessment Year 2005-2006
Appeal Filed On 20-02-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E MUMBAI BEFORE SHRI R.K. PANDA(AM) AND SMT ASHA VIJAYARAGH AVAN (JM) ITA NO.1197/MUM/2009 (ASSESSMENT YEAR-2005-06) SHRI SURESH VASUDEO GORE ROOM NO. 5 2 ND FLOOR INDIRA SADAN MAHAGIRI RETIBANDAR THANE(W) PAN-AMGPG 3139G VS. THE ITO (HQ)(CIB) PUNE 60/61 PRAPTIKAR SADAN ERANDWANE KARVE ROAD PUNE-411 004 (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI SUBODH L. RATNAPARKHI RESPONDENT BY: SHRI SONGATE O R D E R PER SMT. ASHA VIJAYARAGHAVAN (JM) THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE LD.CIT(A)-I THANE DATED 28.11.2008 FOR THE A.Y.200 5-06. 2. THE ASSESSEE IS AN INDIVIDUAL HAVING INCOME BELO W THE MINIMUM TAXABLE LIMIT. THE ASSESSEE HAD NOT FILED ANY RETUR N OF INCOME FOR THE YEAR UNDER APPEAL. 3. THE AO PASSED ASSESSMENT ORDER DT. 28.12.2007 BY ITO (HQ)(CIB) PUNE U/S. 144 OF THE I.T. ACT. 4. AGGRIEVED ASSESSEE PREFERRED AN APPEAL BEFORE T HE LD. CIT(A) AND SUBMITTED AS FOLLOWS: ITA NO. 1197/M/09 2 THE ASSESSEE HAD RECEIVED NOTICE U/S. 142(1) DT. 2 3.8.2007 FROM THE ITO (HQ)(CIB) PUNE IN THE NAME OF SURESH VASUDEO MORE. THE APPELLANT VIDE HIS LETTER DT. 4. 9.07 SENT BY RPAD INFORMED THE AO THAT HIS NAME WAS NOT SURE SH VASUDEO MORE AND THAT IT APPEARED THAT THE NOTICE M IGHT HAVE BEEN WRONGLY SENT TO THE APPELLANT. THE APPELLANT WAS SHOCKED WHEN ON 3.1.08 HE RECEIVED THE ORDER U/S. 144 FRAMED BY THE ITO PUNE AGAIN IN THE NAME OF SURESH VASUDEO MORE. THE APPELLANT IS PROCEEDING WITH A VIEW THAT AS THE ORDER WAS SENT T O HIS ADDRESS AND HIS FIRST NAME AND THAT OF HIS FATHER A RE CORRECT THE ORDER MIGHT BE INTENDED FOR HIM ONLY. THE NAME OF THE APPELLANT IS SURESH VASUDEO GORE. THE ORDER U/S. 144 DT. 28.12.07 HAS BEEN FRAMED IN THE NAME OF SURESH VASUDEO MORE. THE APPELLANT HUMBLY SUBMITS THAT THE NAME ITSELF BEING SO GROSSLY INCOR RECT THE ORDER SUFFERS FROM A INCURABLE DEFECT AND ACCORDING LY IS INVALID AND BAD IN LAW. THE APPELLANT PRAYS THAT T HE ORDER U/S. 144 DT. 28.12.07 MAY PLEASE BE QUASHED ON THAT ACCOUNT ONLY. THE ASSESSEE SUBMITTED BEFORE THE AO THAT THE TERRITORIAL JURISDICTION OF HIS CASE LIES WITH THE AO AT INCOME TAX OFFICE THANE UNDER THE CHARGE OF CHIEF COMMISS IONER OF INCOME TAX THANE THE ORDER U/S. 144 HAS BEEN FRA MED BY THE ITO (HQ) (CIB) PUNE WITHOUT HAVING PROPER L EGAL JURISDICTION OVER THE APPELLANTS CASE AND THEREFOR E IT IS THE PRAYER OF THE APPELLANT THAT THE SAID ORDER IS BAD IN LAW BEING VOID-AB-INITIO. THE APPELLANT FURTHER SUBMITTED BEFORE THE AO THAT THE AO HAS NOT GRANTED THE APPELLANT SUITABLE OPPORTUNI TY TO SUBMIT THE DETAILS REQUIRED FOR THE PURPOSE OF ASSE SSMENT AND TO ATTEND AND EXPLAIN HIS CASE. ACCORDINGLY T HE SALIENT PRINCIPLES OF EQUITY FAIRPLAY AND NATURAL JUSTICE HAVE BEEN BREACHED. THE ORDER FRAMED IN BREACH OF THE PRINCI PLES OF NATURAL JUSTICE IS BAD IN LAW BEING VOID-AB-INTIO. THE APPELLANT FURTHER SUBMITTED THAT THE AO HAS FA ILED TO ISSUE VALID NOTICES U/S. 142(1)/143(2) OF THE I. T. ACT ON THE APPELLANT BEFORE FRAMING THE ORDER U/S. 144. T HE ASSESSMENT FRAMED WITHOUT ISSUE OF VALID NOTICE U/S . ITA NO. 1197/M/09 3 142(1)/143(2) IS BAD IN LAW AND THEREFORE THE ORDER FRAMED U/S. 144 IS NULL AND VALID-AB-INITO. 5. THE ASSESSEE SUBMITTED BEFORE THE LD. CIT(A) THA T HE HAD ALREADY BROUGHT FORTH THE FOLLOWING FACTS BEFORE THE AO. THE APPELLANT ALONGWITH HIS BROTHER AND SISTER WAS OWNING AGRICULTURAL LAND AT VILLAGE SHAHABAJ DIST. THANE. THE APPELLANT ALONGWITH THE OTHER CO-OWNERS WAS CARRYIN G ON AGRICULTURAL OPERATIONS ON THE SAID LAND. THE AGRI CULTURAL LAND WAS ACQUIRED UNDER THE LAND ACQUISITION ACT OF 1894 IN AND AROUND 1979 VIDE AWARDS DECLARED BY THE LAND ACQUISITION OFFICER. THE AGRICULTURAL LAND ACQUIRE D UNDER COMPULSORY ACQUISITION WAS NOT A CAPITAL ASSET BEIN G COVERED UNDER THE EXEMPTION PROVIDED U/S. 2(14)(III ) OF THE I.T. ACT AND ACCORDINGLY THE CONSIDERATION RECEIVED ON COMPULSORY ACQUISITION DID NOT ATTRACT ANY LIABILIT Y TO CAPITAL GAINS. SUBSEQUENTLY THE APPELLANT ALONGWITH THE O THER CO- OWNERS WAS FURTHER GRANTED A PLOT OF LAND ADMEASURI NG 353.47 SQ. MTRS. AT SECTOR 50 NERUL NAVI MUMBAI A S ADDITIONAL COMPENSATION. THE POSSESSION OF THE S AID PLOT OF LAND WAS RECEIVED ON 15.6.2004. AS THE ORIGINAL LAND ACQUIRED WAS NOT A CAPITAL ASSET THE ADDITIONAL COMPENSATION RECEIVED ON ACQUISITION OF THE SAME WA S ALSO NOT ATTRACTING ANY TAX. THE SAID INCOME WAS EVEN O THERWISE EXEMPT U/S. 10(37) OF THE I.T. ACT THE APPELLANT AND HIS TWO CO-OWNERS TRANSFERRED TH E SAID PLOT OF LAND IN FAVOUR OF ONE M/S. SARASWATI D EVELOPERS VIDE AGREEMENT DT. 22.2.2005 FOR THE CONSIDERATION OOF RS. 12 00 000/-. THE MARKET VALUE AS PER SUB-REGISTR AR ON THE DATE OF EXECUTION OF THE AGREEMENT WAS RS. 34 47 00 0/-. AS THE LAND WAS TRANSFERRED IN THE YEAR OF ACQUISITION ITSEGF THE GAINS ARISING ON TRANSFER OF THE SAID LAND WAS NIL AS THE SALE PRICE WAS EQUIVALENT TO THE COST OF ACQUISITI ON . THE AO HAS ERRED IN WORKING OUT THE GAINS FROM SALE OF THE SAID LAND AT RS. 34 47 000/- IN THE HANDS OF THE APPELLANT IG NORING THE COST OF ACQUISITION AND FURTHER IGNORING THAT THE A PPELLANT HAD ONLY 1/3 RD SHARE IN THE PLOT OF LAND SOLD. 6. THE LEARNED. CIT(A) HELD AS FOLLOWS: I HAVE MINUTELY GONE THROUGH THE VARIOUS TERMS & CONDITIONS OF THE AGREEMENT TO LEASE DT. 28.9.2004. IN THIS DOCUMENT THERE IS NO MENTION OF LAND BEING GIVEN T O THE ITA NO. 1197/M/09 4 APPELLANT AND OTHER CO-OWNERS AS ADDITIONAL COMPENS ATION AND HENCE THIS CONTENTION OF THE APPELLANT IS TOTAL LY BESIDES THE POINT. THE PLOT OF LAND ALLOTTED TO THE APPELL ANT AND OTHER CO-OWNERS WAS A CAPITAL ASSET FOR WHICH THE APPELLA NT HAD TO PAY A PREMIUM OF RS. 39 250/-. THE FACTS OF THI S CASE ARE DIFFERENT FROM THE FACTS OF THE CASES RELIED UPON B Y THE APPELLANT VIZ ACIT VS SHRI NIRMAL BHOGILAL DECIDED BY LD. ITAT G BENCH MUMBAI IN ITA NO. 2942/M/2002 AND T HE CASE OF SMT. SUSHILADEVI KANTILAL SHAH VS CIT 208 ITR 912 (GUJ). IN THE PRESENT CASE THE LAND UNDER CONSIDE RATION HAS BEEN OBTAINED AFTER PAYING A PREMIUM OF RS. 39 250/ - WHICH CAN BE CONSIDERED AS THE COST OF ACQUISITION OF THE LAND. IN THE PRESENT CASE THE LAND WAS ALLOTTED TO THE APPELLANT AND OTHER CO-OWNERS VIDE LEASE AGREEMENT DT. 28.9.2004 AND THE DEVELOPMENT RIGHTS OF THIS LAND W AS TRANSFERRED TO M/S. SARASWATI ENTERPRISES ON 22.2.2 005 I.E. WITHIN A PERIOD OF LESS THAN FIVE MONTHS. THUS ON TRANSFER OF THE DEVELOPMENT RIGHTS OF THE PLOT THE APPELLAN T AND OTHER CO-OWNERS WERE LIABLE TO BE TAXED FOR SHORT TERM CA PITAL GAINS ARISING ON THIS TRANSFER. THE SHORT TERM CAP ITAL GAINS ARISING ON THIS TRANSFER MAY BE COMPUTED AS UNDER: FULL VALUE OF CONSIDERATION RS. 34 47 000/- (AS TAKEN U/S. 50C OF THE I.T.ACT) LESS:COST OF ACQUISITION AS DISCUSSED ABOVE RS. 39 250/- ------------------------ SHORT TERM CAPITAL GAINS RS.34 07 750/- ============= THE APPELLANT HAD 1/3 RD RIGHT TITLE AND INTEREST IN THE PROPERTY TRANSFERRED DURING THE PREVIOUS YEAR UNDER CONSIDERATION. HE IS LIABLE TO BE TAXED ON 1/3 RD OF THE SHORT TERM CAPITAL GAINS ARISING ON THIS TRANSFER. HENCE THE SHORT TERM CAPITAL GAINS OF RS. 11 35 916/- BEING 1/3 RD OF RS 34 07 750/- IS TAXABLE IN THE HANDS OF THE APPELLAN T. THUS THE ADDITION OF RS. 34 47 000/- MADE BY THE AO IN T HE HANDS OF THE APPELLANT IS RESTRICTED TO RS. 11 35 9 16/-. THE AO IS DIRECTED TO MODIFY THE ASSESSMENT ORDER ACCOR DINGLY. THE GROUNDS OF APPEAL NO. 2A 2B AND 2C ARE THEREFO RE PARTLY ALLOWED. 7. AGGRIEVED ASSESSEE PREFERRED AN APPEAL BEFORE U S. ITA NO. 1197/M/09 5 8. WE HEARD BOTH THE PARTIES. THE ASSESSMENT UNDER SECTION 144 HAS BEEN FRAMED IN THE NAME OF SURESH VASUDEV MORE INSTEAD OF SURESH VASUDEV GORE. SIMILARLY NOTICE U/S. 142( 1) HAS ALSO BEEN ISSUED IN THE NAME OF SURESH VASUDEV MORE. THE L EARNED COUNSEL FOR THE ASSESSEE HAS BROUGHT TO OUR NOTICE TO THE F OLLOWING CASE LAWS: I)CIT VS KURBAN HUSSAIN IBRAHIMJI MITHIBORWALA 82 ITR 821(SC) II)SRINATH SURESH CHAND RAMNARESH VS CIT 280 ITR 396 (ALL.) III)P.N. SASIKUMAR & ORS VS CIT 170 ITR 80 (KER) IV)CIT VS BIBHUTI BHUSHAN MALLICK & ORS. 165 ITR 1 07 (CAL) V)MRS. S.W. CHAUDHARI & ANR VS ITO 82 ITD 725 (PU NE) 9. IT HAS BEEN HELD THAT ITOS JURISDICTION DEPENDS UPON ISSUANCE OF VALID NOTICE AND WHEN THE NOTICE IS ISSUED ON A NON EXISTING PERSON THE NOTICE AS WELL AS CONSEQUENT PROCEEDINGS ARE NU LL AND VOID. 10. SECONDLY IT IS UNDISPUTED BY THE DEPARTMENT TH AT NOTICE U/S. 143(2) HAS NOT BEEN VALIDLY ISSUED BEFORE COMPLETIO N OF ASSESSMENT. 11. THIRDLY U/S 127(1) AN OPPORTUNITY IS TO BE GIVE N TO THE ASSESSEE BEFORE TRANSFER OF HIS CASE OUT OF REGULAR JURISDIC TION. THE JURISDICTION OF THE ASSESSEE LIES AT THANE WHEREAS THE APPEAL HA S BEEN FRAMED BY ITO (HQ)CIB (PUNE). THOUGH THE LEARNED CIT(A) HAS STATED THAT THE AO AT PUNE WAS THE DESIGNATED AO NO OPPORTUNITY HA D BEEN GIVEN TO THE ASSESSEE TO ADDRESS ON THE ISSUE OF CHANGE OF J URISDICTION. 12. WITH RESPECT TO MERITS THE ASSESSEE AND HIS CO -OWNERS OF THE PLOT ALLOTTED BY CIDCO UNDER THE 12.5% SCHEME HAD S OLD AND TRANSFERRED ALL THE RIGHTS TITLE AND INTEREST THER EIN TO M/S. SARASWATI ENTERPRISES UNDER AGREEMENT DT. 9.2.2003 AND ACCORD INGLY TRANSFER GIVING RISE TO CAPITAL GAINS TOOK PLACE ON THAT DAT E FALLING IN A.Y. 2003- ITA NO. 1197/M/09 6 04 AND NOT IN THE YEAR UNDER APPEAL. THE CAPITAL G AINS THEREFORE AROSE IN THE HANDS OF THE ASSESSEE IN A.Y. 2003-04 AND NO T IN A.Y. 2005-06 WHICH IS NOT IN THE YEAR UNDER APPEAL. 13. THE ALLOTMENT OF PLOT DOES NOT RESULT IN INCOM E IN AS MUCH AS THE ASSESSEE AND OTHER CO-OWNERS SOLD ALL THE RIGH TS TITLE AND INTEREST ACQUIRED UNDER CIDCO ALLOTMENT LETTER DT. 17.10.200 2 TO M/S. SARASWATI ENTERPRISES UNDER AGREEMENT DT. 9.2.2003. SUBSEQUENT AGREEMENTS ENTERED INTO ARE ONLY TO GIVE EFFECT TO THE AGREEMENT DT. 9.2.2003. THIS IS ACCEPTED AND LAID DOWN IN THE AGR EEMENT DT. 9.2.2003. THE ASSESSEE AND OTHER CO-OWNERS WERE ALL OTTED PLOT BY CIDCO ON 17.10.2002. THE SAID RIGHTS WERE SOLD UND ER AGREEMENT DT. 9.2.2003 FOR THE LUMPSUM CONSIDERATION OF RS. 12 LA KHS. AS THE TIME GAP BETWEEN THE TWO DATES IS NOT SIGNIFICANT IT CA N BE PRESUMED THAT THE VALUE OF LAND PLOT ALLOTTED ON 17.1.2002 WOULD BE THE SAME AS ON 9.2.2003 ON WHICH DATE THE SAME WAS SOLD. THE PLOT TRANSFERRED FOR 12 LAKHS ON 9.2.2003 WOULD HAVE THE SAME VALUE AS O N 17.10.2002 I.E. THE DATE OF ALLOTMENT. ACCORDINGLY NO CAPITAL GAI NS WILL ARISE ON SALE OF ALLOTMENT ON 9.2.2003 AS THE DIFFERENCE BETWEEN THE PURCHASE VALUE AND SALE VALUE IS NIL. RELIANCE PLACED ON THE DECI SION IN THE CASE OF ACIT RANGE 16(2) VS SHRI NIRMAL BHOGILAL ITA NO. 2942/MUM/02 (MUM). 14. FURTHER THE ASSESSEE HAS NOT BEEN PROVIDED AN O PPORTUNITY TO CHALLENGE U/S. 50C. IN THE CASE OF AJMAL FRAGRANCE S AND FASHIONS (P) LTD VS ACIT 34 SOT 57 (MUM) IT HAS BEEN HELD THAT SUB SEC (2) OF S. 50C MAKES IT VERY CLEAR THAT WHENEVER ASSESSEE CLAI MS BEFORE THE AO THAT HE HAS NOT CHALLENGED THE STAMP DUTY VALUATION AND SALE CONSIDERATION IS DIFFERENT BECAUSE OF VALID REASON THEN THE AO IS REQUIRED TO REFER THE MATTER TO VALUATION OFFICER ONCE THE ASSESSEE RAISES OBJECTION AS REGARDS VALUATION ADOPTED AS PE R S. 50C NO HARM ITA NO. 1197/M/09 7 WOULD CAUSED TO THE REVENUE IF THE MATTER IS REFERR E D TO THE VALUATION OFFICER FOR THE PROPER VALUATION OF THE PROPERTY. 15. THE DEPARTMENT HAS SUBSTITUTED ACTUAL SALE CONS IDERATION BY VALUE AS PER STAMP DUTY AUTHORITIES AS PROVIDED U/S / 50C. SINCE NO OPPORTUNITY HAS BEEN GIVEN TO THE ASSESSEE U/S. 50C (2)(A) TO DISPUTE THE SAID VALUATION BEFORE THE AO THE ORDER OF THE AO IS BAD IN LAW. 16. LASTLY THE LEARNED CIT(A) ERRED IN HOLDING THA T ONLY PREMIUM PAID TO CIDCO TOWARDS ALLOTMENT OF PLOT IS THE COST FOR WHICH DEDUCTION IS TO BE GRANTED IN WORKING OF CAPITAL GA IN AND THAT THERE IS NO OTHER COST OF ACQUISITION OF THE PLOT AND HELD T HAT THE INCOME IS TO BE IN THE NATURE OF SHORT TERM CAPITAL GAIN. THE LEARNED CIT(A) IS WRONG IN THE APPRECIATION OF THE FACTS OF THE CASE AND THEREFORE FOR ALL THE REASONS STATED ABOVE WE FEEL THAT THE ASSESSEE S APPEAL IS TO SUCCEED. 17. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THIS 28 TH DAY OF JANUARY 2011. SD/- SD/- ( R.K. PANDA) ( ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI DATED 28 TH JANUARY 2011. RJ COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-CONCERNED 4. THE CIT(A)-CENTRAL - I CONCERNED 5. THE DR E BENCH TRUE COPY BY ORDER ASST. REGISTRAR I.T.A.T MUMBAI ITA NO. 1197/M/09 8 DATE INITIALS 1 DRAFT DICTATED ON: 21.01.2011 SR. PS/PS 2. DRAFT PLACED BEFORE AUTHOR: 25.01.2011 ______ SR. PS/PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER: ______ JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER: ______ JM/AM 5. APPROVED DRAFT COMES TO THE SR. PS/PS: ______ SR. PS/PS 6. KEPT FOR PRONOUNCEMENT ON: ______ SR. PS/PS 7. FILE SENT TO THE BENCH CLERK: ______ SR. PS/PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK: ______ 9. DATE ON WHICH FILE GOES TO AR ______ 10. DATE OF DESPATCH OF ORDER: