ACIT 19(3), MUMBAI v. HILL GLADE CO.OP. HSG. SO. LTD, MUMBAI

ITA 1484/MUM/2009 | 2003-2004
Pronouncement Date: 05-07-2013 | Result: Allowed

Appeal Details

RSA Number 148419914 RSA 2009
Assessee PAN AAAAH0520M
Bench Mumbai
Appeal Number ITA 1484/MUM/2009
Duration Of Justice 4 year(s) 4 month(s) 1 day(s)
Appellant ACIT 19(3), MUMBAI
Respondent HILL GLADE CO.OP. HSG. SO. LTD, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 05-07-2013
Appeal Filed By Department
Order Result Allowed
Bench Allotted H
Tribunal Order Date 05-07-2013
Date Of Final Hearing 19-02-2013
Next Hearing Date 19-02-2013
Assessment Year 2003-2004
Appeal Filed On 04-03-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH MUMBAI .. ! '#$ % % % % &'. '.(.. %) * '#$ '+ BEFORE SHRI P.M. JAGTAP AM AND DR. S.T.M. PAVALAN JM './ I.T.A. NO. 2013/MUM/2009 ( *) - %.- *) - %.- *) - %.- *) - %.- / / / / ASSESSMENT YEAR : 2003-04) M/S HILL GLADE CO-OP. HSG. SOC. LTD. PLOT NO. 7A TPS-III PALI ROAD BANDRA MUMBAI 400 050. ) ) ) ) / VS. DY. COMMISSIONER OF INCOME TAX- 19(3) AAYAKAR BHAVAN M. K. MARG MUMBAI 400 020. $/ ! './ PAN : AAAAH 0520M ( /0 / // / APPELLANT ) .. ( 12/0 / RESPONDENT ) './ I.T.A. NO. 1484/MUM/2009 ( *) - %.- *) - %.- *) - %.- *) - %.- / / / / ASSESSMENT YEAR : 2003-04) DY. COMMISSIONER OF INCOME TAX- 19(3) AAYAKAR BHAVAN M. K. MARG MUMBAI 400 020. ) ) ) ) / VS. M/S HILL GLADE CO-OP. HSG. SOC. LTD. PLOT NO. 7A TPS-III PALI ROAD BANDRA MUMBAI 400 050. $/ ! './ PAN : AAAAH 0520M ( /0 / // / APPELLANT ) .. ( 12/0 / RESPONDENT ) ASSESSEE BY : SHRI SANJAY R. PARIKH 12/0 3 4 ' / RESPONDENT BY : SHRI AJAY ')% 3 ! / // / DATE OF HEARING : 02-07-2013 56. 3 ! / DATE OF PRONOUNCEMENT : 05-07-2013 ITA 2013/MUM/2009 ITA 1484/MUM/2009 2 # 7 / O R D E R PER P.M. JAGTAP A.M . : .. ! '#$ THESE TWO APPEALS ONE FILED BY THE ASSESSEE BEING ITA NO. 3023/MUM/2009 AND THE OTHER FILED BY THE REVENUE BE ING ITA NO. 2484/MUM/2009 ARE CROSS APPEALS WHICH ARE DIRECTED AGAINST THE ORDER OF LD. CIT(A) XIX DATED 17-12-2008. 2. THE ASSESSEE IN THE PRESENT CASE IS A CO-OP. HOU SING SOCIETY. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION W AS FILED BY IT ON 22-8-2003 DECLARING TOTAL INCOME AT NIL. THE SAID RETURN W AS INITIALLY PROCESSED BY THE A.O. U/S 143(1) OF THE INCOME TAX ACT 1961 (THE AC T). SUBSEQUENTLY HE HOWEVER FOUND THAT THE ASSESSEE HAD ENTERED INTO A N AGREEMENT FOR SALE/TRANSFER OF TDR/FSI WITH M/S K. BHATIA ENTERPR ISES THE DEVELOPER FOR A CONSIDERATION OF RS. 1 40 12 700/- AND THE SAID TRA NSACTION WAS NOT DISCLOSED BY THE ASSESSEE IN THE RETURN OF INCOME FILED FOR T HE YEAR UNDER CONSIDERATION. HE THEREFORE REOPENED THE ASSESSMENT FOR THE YEAR UNDER CONSIDERATION AND ISSUED A NOTICE U/S 148 OF THE ACT IN RESPONSE TO W HICH THE COPY OF RETURN ORIGINALLY FILED WAS SUBMITTED BY THE ASSESSEE WITH A REQUEST THAT THE SAME MAY BE TREATED AS THE RETURN FILED IN RESPONSE TO N OTICE U/S 148 OF THE ACT. IN THE REASSESSMENT COMPLETED U/S 143(3) R.W.S. 147 OF THE ACT VIDE AN ORDER DTD. 15-12-2006 THE PROFIT ARISING FROM TRANSFER O F DEVELOPMENT RIGHTS WAS BROUGHT TO TAX BY THE A.O. IN THE HANDS OF THE ASSE SSEE UNDER THE HEAD CAPITAL GAINS TO THE EXTENT OF RS. 1 39 09 200/- AFTER DEDUCTING THE COST OF ACQUISITION OF THE DEVELOPMENT RIGHTS. 3. AGAINST THE ORDER PASSED BY THE A.O. U/S 143(3) R.W.S. 147 OF THE ACT APPEAL WAS PREFERRED BY THE ASSESSEE BEFORE THE LD. CIT(A) CHALLENGING THEREIN THE VALIDITY OF THE SAID ASSESSMENT AS WELL AS DISP UTING THE ADDITION MADE THEREIN ON ACCOUNT OF CAPITAL GAIN. THE LD. CIT(A) DID NOT FIND MERIT IN THE ITA 2013/MUM/2009 ITA 1484/MUM/2009 3 PRELIMINARY ISSUE RAISED BY THE ASSESSEE CHALLENGIN G THE VALIDITY OF REASSESSMENT MADE BY THE A.O. AND REJECTING THE SAM E HE UPHELD THE VALIDITY OF THE SAID ASSESSMENT. HE ALSO UPHELD THE DECISION OF THE A.O. THAT THE DEVELOPMENT RIGHTS BEING CAPITAL ASSET THE PROFIT ARISING FROM THE TRANSFER THEREOF WAS CHARGEABLE TO TAX UNDER THE HEAD CAPIT AL GAIN. HE HOWEVER ACCEPTED THE ALTERNATIVE CONTENTION OF THE ASSESSEE THAT THE ENTIRE CONSIDERATION FROM SALE OF DEVELOPMENT RIGHTS HAVIN G BEEN SHARED BY ALL THE 12 MEMBERS WHO WERE ACTUALLY THE OWNERS OF THE SAID RIGHTS AS PER THE BOARD CIRCULARS AND THE PROFIT ARISING FROM THE TRANSFER OF DEVELOPMENT RIGHTS HAVING BEEN ALREADY OFFERED BY THEM TO TAX NO ADDITION ON ACCOUNT OF CAPITAL GAIN FROM THE SALE OF DEVELOPMENT RIGHTS COULD BE MADE I N THE HANDS OF THE ASSESSEE. THE LD. CIT(A) ACCORDINGLY DELETED THE A DDITION MADE BY THE A.O. TO THE TOTAL INCOME OF THE ASSESSEE ON ACCOUNT OF CAPI TAL GAIN. AGGRIEVED BY THE ORDER OF THE LD. CIT(A) THE ASSESSEE AND THE REVEN UE BOTH ARE IN APPEAL BEFORE THE TRIBUNAL AND THE GROUNDS RAISED BY THEM IN THEI R RESPECTIVE APPEALS READ AS UNDER:- BY THE ASSESSEE :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED ASSESSING OFFICER HAS ERRED IN PASSING ORDE R U/S. 143(3) READ WITH SECTION 147 WITHOUT ISSUING NOTICE U/S. 143(2) WHICH RENDERS THE ASSESSMENT ORDERS PASSED UNDER SECTION 143(3) BAD I N LAW AND VOID AB INITIO. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN THE LAW THE ASSESSING OFFICER HAS ERRED IN TREATING AGGREGATE A MOUNT OF CONSIDERATION RECEIVED BY THE MEMBERS AMOUNTING TO RS.1 39 12 700/- TOGETHER WITH CONSIDERATION OF RS.1 00 000/- RECEIV ED BY THE SOCIETY FOR ALLOWING DEVELOPER TO CONSTRUCT ADDITIONAL FLOOR ON EXISTING STRUCTURE OF BUILDING AS INCOME CHARGEABLE TO TAX AS CAPITAL GAI N UNDER SECTION 45 WHEN THERE IS NO SPECIFIC EXPLANATION OF COMPUTING ACQUISITION COSTS OF ASSET TRANSFERRED AS HAS BEEN LAID DOWN IN CIT VS. B.C. SRINIVASA SETTY (1981) 128 ITR 294 (SC). 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN THE LAW THE LEARNED ASSESSING OFFICER HAS ERRED IN TREATING ACQ UISITION COST OF THE ASSET SURRENDERED AS RS.1 03 500/- BEING 50% OF LAN D COST AS STATED IN THE ORDER WHICH IS ILLOGICAL AND WITHOUT ANY BASE O F REASONING. ITA 2013/MUM/2009 ITA 1484/MUM/2009 4 BY THE REVENUE :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION OF RS.1 40 12 700/- BEING CAPITAL GAIN ON SALE OF TDR MADE BY THE ASSESSING OFFICER BY HOL DING THAT THE INCOME FROM TDR HAS ALREADY BEEN OFFERED BY 12 MEMBER AND THE ADDITIONS SO MADE AGAIN THE ASSESSEES CASE TANTAMOUNT TO DOUBLE TAXATION WITHOUT APPRECIATING THE FACT THAT THE SOCIETY IS THE OWNER OF THE LAND NOT BE MEMBER AND THE MEMBERS INDIVIDUALLY CANNOT TRANSFER FSI/TD R DIRECTLY TO DEVELOPER. 2. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE A.O. BE RESTORED. 4. IN GROUND NO. 1 OF THE APPEAL OF THE ASSESSEE A PRELIMINARY ISSUE HAS BEEN RAISED CHALLENGING THE VALIDITY OF THE REASSES SMENT MADE BY THE A.O. U/S 143(3) R.W.S. 147 OF THE ACT ON THE GROUND THAT THE SAID ASSESSMENT MADE BY THE A.O. WITHOUT ISSUING NOTICE U/S 143(2) OF THE A CT IS BAD IN LAW. IN THIS REGARD THE LD. D.R. WAS DIRECTED BY THE BENCH TO P RODUCE THE ASSESSMENT RECORDS TO SHOW WHETHER NOTICE U/S 143(2) WAS ISSUE D BY THE A.O. OR NOT BEFORE COMPLETING THE ASSESSMENT U/S 143(3) R.W.S. 147 OF THE ACT. AS PER THE DIRECTION OF THE BENCH THE LD. D.R. PRODUCED THE R ELEVANT ASSESSMENT RECORDS AND ADMITTED THAT THERE IS NOTHING AVAILABLE IN THE SAID RECORD TO SHOW THAT NOTICE U/S 143(2) WAS ISSUED BY THE A.O. BEFORE COM PLETING THE REASSESSMENT. IN THIS REGARD THE LD. COUNSEL FOR THE ASSESSEE HA S RELIED ON THE DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. M. CHELLAPPAN (2006) 281 ITR 444 WHEREIN THE A.O. HAD PROCEEDED TO REASSESS U/S 147 OF THE ACT AND COMPLETED THE ASSESSMENT WITHOUT ISSUING NOTICE U/S 143(2) OF THE ACT WITHIN THE TIME STIPULATED. THE ORDER OF REASSESSMENT WAS CONFIRMED BY THE LD. CIT(A) IN APPEAL BUT THE TRIBUNAL ON FURTHER APPEAL SET ASIDE THE ORDER OF THE A.O. ON THE GROUND THAT NOTICE U/S 143(2) WAS NOT S ERVED ON THE ASSESSEE WITHIN THE STIPULATED PERIOD. THE HONBLE MADRAS HI GH COURT UPHELD THE DECISION OF THE TRIBUNAL HOLDING THAT AS THE NOTICE U/S 143(2) WAS NOT SERVED WITHIN THE STIPULATED PERIOD THE PROCEDURE U/S 143 (3) CAME TO AN END AND THE MATTER ATTAINED FINALITY. IN THE CASE OF SMT. BANDANA GOGOI VS. CIT (2007) ITA 2013/MUM/2009 ITA 1484/MUM/2009 5 289 ITR 28 A SIMILAR VIEW WAS TAKEN BY THE HONBLE GAUHATI HIGH COURT HOLDING THAT IN THE ABSENCE OF NOTICE ISSUED U/S 14 3(2) OF THE ACT THE BLOCK ASSESSMENT MADE BY THE A.O. WAS NOT VALID. THE HON BLE GAUHATI HIGH COURT HELD THAT THE REQUIREMENT OF SECTION 143(2) COULD N OT BE DISPENSED WITH AS THE SAME WAS MANDATORY. IN THE CASE OF COMMISSIONE R OF WEALTH TAX VS. HUF OF H.H. LATE J.M. SCINDIA (2008) 300 ITR 193 (BOM.) CITED BY THE LD. COUNSEL FOR THE ASSESSEE A SIMILAR ISSUE AROSE FOR CONSIDE RATION OF THE HONBLE BOMBAY HIGH COURT IN THE CONTEXT OF REASSESSMENT MA DE UNDER THE WEALTH TAX ACT 1957 WITHOUT ISSUING NOTICE U/S 16(2) OF T HE WEALTH TAX ACT WITHIN THE PRESCRIBED TIME LIMIT AND AFTER REFERRING TO TH E DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE M. CHELLAPPAN (SUPRA) AND TH AT OF HONBLE GAUHATI HIGH COURT IN THE CASE OF SMT. BANDANA GOGOI (SUPRA ) THE HONBLE BOMBAY HIGH COURT FOUND THAT THE LANGUAGE USED IN SECTION 143(2) IS SIMILAR TO THE LANGUAGE USED IN SECTION 16(2) OF THE WEALTH TAX AC T. IN THIS CONTEXT IT WAS HELD BY THE HONBLE BOMBAY HIGH COURT THAT THE VIEW TAKEN BY THE TWO HIGH COURTS REFLECTED THE LANGUAGE OF 147 AND ACCORDINGL Y EVEN IN A CASE OF REOPENING OF ASSESSMENT U/S 147 THE A.O. IS BOUND TO COMPLY WITH THE REQUIREMENT OF SECTION 143(2) OF THE INCOME TAX ACT . THE HONBLE BOMBAY HIGH COURT ALSO PROCEEDED FURTHER TO EXAMINE THIS I SSUE INDEPENDENTLY IN THE LIGHT OF THE PROVISIONS OF SECTION 14 TO 16 OF THE WEALTH TAX ACT AND HELD ON SUCH EXAMINATION THAT WHILE INVOKING THE POWERS OF REASSESSMENT U/S 17 THE A.O. WAS BOUND BY THE MANDATE OF THE PROVISO TO SEC TION 16(2) AND ON FAILURE TO ISSUE NOTICE WITHIN THE PERIOD STIPULATED IN THE SAID PROVISO THE ORDER OF REASSESSMENT WOULD BE WITHOUT JURISDICTION WHICH IS LIABLE TO BE SET ASIDE. 5. KEEPING IN VIEW THE LEGAL PROVISION EMANATING FR OM THE JUDGMENTS AS DISCUSSED ABOVE INCLUDING THE DECISION OF HONBLE B OMBAY HIGH COURT IN THE CASE OF HUF OF H.H. LATE J.M. SCINDIA (SUPRA) AND H AVING REGARD TO THE RELEVANT FACTS OF THE CASE WE ARE OF THE VIEW THAT THE REASSESSMENT COMPLETED BY THE A.O. U/S 143(3) R.W.S. 147 WITHOUT ISSUING N OTICE U/S 143(2) OF THE ACT ITA 2013/MUM/2009 ITA 1484/MUM/2009 6 IS VOID AB INITIO AND THE SAME IS LIABLE TO BE CANC ELLED. WE ORDER ACCORDINGLY AND ALLOW GROUND NO. 1 OF ASSESSEES APPEAL. 6. AS A RESULT OF OUR DECISION RENDERED ABOVE ON TH E PRELIMINARY ISSUE CANCELING THE REASSESSMENT MADE BY THE A.O. U/S 143 (3) OF THE ACT THE OTHER ISSUES RAISED IN THE APPEAL OF THE ASSESSEE AS WELL AS IN THE APPEAL OF THE REVENUE HAVE BECOME INFRUCTUOUS AND WE DO NOT CONSI DER IT NECESSARY OR EXPEDIENT TO ADJUDICATE UPON THE SAME. 7. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED AND THE APPEAL OF THE REVENUE IS DISMISSED AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH JULY 2013. . # 7 3 56. ! 8#)9 5-7-2013 6 3 SD/- SD/- (DR. S.T.M. PAVALAN) (P.M. JAGTAP ) * '#$ JUDICIAL MEMBER ! '#$ / ACCOUNTANT MEMBER MUMBAI ; 8#) DATED 5-7-2013. %.*).'./ RK SR. PS # 7 3 1*:; < ;. # 7 3 1*:; < ;. # 7 3 1*:; < ;. # 7 3 1*:; < ;./ COPY OF THE ORDER FORWARDED TO : 1. /0 / THE APPELLANT 2. 12/0 / THE RESPONDENT. 3. = () / THE CIT(A)XIX MUMBAI. 4. = / CIT 19 MUMBAI 5. ;%@ 1**) / DR ITAT MUMBAI H BENCH 6. &- A / GUARD FILE. # 7)' # 7)' # 7)' # 7)' / BY ORDER '2; 1* //TRUE COPY// B B B B/ // /'C 'C 'C 'C ( DY./ASSTT. REGISTRAR) / ITAT MUMBAI