M/s. Sun Developers, Indore v. The CIT - I, Indore

ITA 362/IND/2013 | 2008-2009
Pronouncement Date: 10-10-2013 | Result: Dismissed

Appeal Details

RSA Number 36222714 RSA 2013
Assessee PAN ABHFS9215M
Bench Indore
Appeal Number ITA 362/IND/2013
Duration Of Justice 4 month(s) 17 day(s)
Appellant M/s. Sun Developers, Indore
Respondent The CIT - I, Indore
Appeal Type Income Tax Appeal
Pronouncement Date 10-10-2013
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 10-10-2013
Assessment Year 2008-2009
Appeal Filed On 24-05-2013
Judgment Text
1 INCOME TAX APPELLATE TRIBUNAL INDORE BENCH INDORE BEFORE SHRI JOGINDER SINGH JUDICIAL MEMBER AND SHRI R.C. SHARMA ACCOUNTANT MEMBER ITA NO. 362/IND/2013 A.Y. 2008-09 M/S. SUN DEVELOPERS INDORE PAN ABHFS 9215 M :: APPELLANT VS CIT-I INDORE :: RESPONDENT ASSESSEE BY SHRI K.C.AGRAWAL CA REVENUE BY SMT. MRIDULA BAJPAI CIT DR DATE OF HEARING 10.10.2013 DATE OF PRONOUNCEMENT 10.10.2013 O R D E R PER JOGINDER SINGH JUDICIAL MEMBER THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER DATED 22.3.2013 OF THE LEARNED CIT-INDORE BROADLY O N THE ISSUE OF INVOKING THE PROVISIONS OF SECTION 263 OF THE ACT. 2 2. DURING HEARING SHRI K.C.AGRAWAL LEARNED COUNSE L FOR THE ASSESSEE CONTENDED THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE ASSESSMENT ORDER PAS SED BY THE LD. ASSESSING OFFICER WAS FRAMED AFTER DUE APPLICATION OF MIND AND INQUIRY THEREFORE THE LD. CIT IS NOT JUSTIFIED IN INVOKING THE PROVISIONS OF SEC. 26 3 OF THE ACT. IT WAS ALSO CONTENDED THAT THE ASSESSMENT ORDE R IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST O F THE REVENUE. ON THE OTHER HAND THE LD. CIT/DR SMT MRID ULA BAJPAI DEFENDED THE IMPUGNED ORDER BY INVITING OUR ATTENTION TO THE FINDING CONTAINED IN THE IMPUGNED ORDER ALONG WITH A NON SPEAKING ASSESSMENT ORDER PASSED B Y THE ASSESSING OFFICER. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS IN BRIEF ARE THAT THE ASSESSEE ELECTRONICALLY FILED I TS RETURN ON 30.09.2008 DECLARING NIL INCOME WHICH WAS PROCESSED U/S 143(1) OF THE ACT. THE CASE OF THE AS SESSEE 3 WAS SELECTED FOR SCRUTINY THEREFORE NOTICE U/S 143 (2) WAS ISSUED TO THE ASSESSEE. THE ASSESSEE DERIVES INCOME FROM THE PROPERTY DEVELOPMENT. THE TOTAL INCOME WAS ASSE SSED AT NIL VIDE ORDER 8 TH APRIL 2010 U/S 143(3) OF THE ACT. BEFORE COMING TO ANY CONCLUSION WE ARE REPRODUCING HEREUNDER THE ASSESSMENT ORDER PASSED BY THE ASSESS ING OFFICER :- RETURN OF INCOME WAS FILED ELECTRONICALLY ON 30-09 -2008 VIDE ACK.NO. 45912920300908 DECLARING TOTAL INCOME AT NI L. AUDIT REPORT IN FORM NO.3CD HAS BEEN FILED. THE RETURN HA S BEEN PROCESSED U/S 143(1) OF THE I.T.ACT 1961. THEREAFTE R THE CASE HAS BEEN SELECTED FOR SCRUTINY THROUGH CASS. NOTICE U/S 143(2) WAS ISSUED AND DULY SERVED. SHRI SANDEEP GARG CA ATTENDED AND FILED REQUIRED DETAILS. THE ASSESSEE DERIVES IN COME FROM PROPERTY DEVELOPMENT. BOOKS OF ACCOUNTANT VIZ CASH BOOK AND LEDGER PRODUCED HAVE BEEN TEST CHECKED. THE CASE HA S BEEN DISCUSSED. TOTAL INCOME IS ASSESSED AT RS.NI L. 4. THE LD. CIT ON PERUSAL OF ASSESSMENT ORDER/RECO RD FOUND THAT THE ASSESSEE FIRM WAS FORMED ON 12.01.20 07 WHICH SOLD 2.836 HECTARES OF LAND ON 2 ND JANUARY 2008 TO ANOTHER FIRM M/S S.T.ASSOCIATES FOR A SALE CONSIDERATION OF RS. 48 LACS AGAINST THE FAIR MARKE T VALUE OF RS. 85.08 LACS. THE ASSESSEE SHOWED THE LAND UND ER 4 THE HEAD LONG TERM INVESTMENT AND LATER ON CONVERTE D INTO STOCK-IN-TRADE DURING THE ASSESSMENT YEAR 2008 -09. HOWEVER NO CAPITAL GAIN WAS SHOWN BY THE FIRM BUT THE ASSESSING OFFICER ACCEPTED THE SAME WHILE FRAMING T HE ASSESSMENT. THE LD. CIT WAS OF THE VIEW THAT THE ASSESSMENT ORDER 8.4.2010 IS ERRONEOUS AS ALSO PREJUDICIAL TO THE INTEREST OF REVENUE WHICH LED TO ISSUANCE OF SHOW CAUSE NOTICE ON 9 TH JANUARY 2013. THE ASSESSEE ATTENDED THE PROCEEDINGS AND MADE SUBMISSIONS WHICH HAVE BEEN MENTIONED IN THE ORDER U/S 263 OF THE ACT. AFTER CONSIDERING THE SUBMISSIO N OF THE ASSESSEE THE LD. CIT CONCLUDED AS UNDER : I HAVE CAREFULLY GONE THROUGH THE SUBMISSIONS P UT FORTH BY THE ASSESSEE AS ALSO FACTS AND CIRCUMSTANCES OF THE CASE. THE FACTS ARE THAT THE ASSESSEE PURCHASED THE AGRICULTURAL LAND AND SOLD IT WITHOUT ANY DEVELOPME NT. THIS SHOWS THAT THE ASSESSEE HAD PURCHASED THE LAND WITH THE INTENTION OF INVESTMENT AND WHILE FILING THE RETURN HE HAD SHOWN IT IN INVESTMENT COLUMN IN THE INCOME TAX RETURN FOR THE AY 2007-08. THE ASSERTION OF THE ASSESSEE THAT THE LAND WAS WRONGLY SHOWN IN THE INVESTMENT COLUMN INSTEAD OF ASSET COLUMN HAS N O FORCE PRIMARILY FOR THE FACT THAT THE SAME COULD N OT BE SUBSTANTIATED BY THE ASSESSEE AND ALSO FOR THE RE ASON THAT IF ANY MISTAKE HAD CREPT IN IT WAS OPEN FOR T HE ASSESSEE TO REVISE THE RETURN. FURTHER THE ASSESSE E ALSO KEPT MUM DURING THE ASSESSMENT PROCEEDINGS FOR AY 5 2008-09 AND DID NOT BRING ON RECORD THE ORIGIN OF THE OPENING STOCK OF LAND SHOWN IN AY 2008-09.IF THE ASSESSEE WAS HONEST ENOUGH IT CERTAINLY SHOULD HAV E DONE THAT. THE ASSESSEE BROKE HIS CHOSEN SILENCE ON LY WHEN THE PROCEEDINGS U/S 263 CAME TO ITS KNOWLEDGE. THEN IT CAME WITH THIS ETHEREAL THEORY WHICH HAS NO LEGS ON THE GROUND. THEREFORE IT IS ESTABLISHED THE LAN D UNDER QUESTION WAS INDEED AN INVESTMENT DURING THE PERIOD RELEVANT TO THE AY 2007-08. IT WAS LATER CONVERTED TO STOCK-IN-TRADE AND WAS SOLD DURING THE PERIOD RELEV ANT TO THE AY 2008-09. FURTHER AS PER PURCHASE DEED DATED 18.01.2007 AND THE SALE DEED DATED 02.02.2008 THE LAND WAS PURCHA SED AND WAS SOLD JOINTLY BY THE ASSESSEE AND M/S SAGAR DEVELOPERS. HOWEVER IT STRANGE THAT THE ENTIRE SAL E PROCEED IS SHOWN BY THE ASSESSEE IN ITS OWN HAND. I T IS ALSO A FACT THAT THE LAND WAS SOLD TO M/S S.T.ASSOC IATES IN WHICH SHRI JAGDISH PRASAD AGRAWAL [ONE OF THE PA RTNER OF THE ASSESSEE-FIRM] IS ALSO A PARTNER OF 25%. THE SE FACTS AND CIRCUMSTANCES SUGGEST THAT THE TRANSACTIONS DON E BY THE ASSESSEE WERE NOT GENUINE AND THE ASSESSING OF FICER SHOULD HAVE LIFTED THE VEIL. DURING THE PROCEEDINGS T HE ASSESSEE WAS ASKED FOR PRODUCING THE COPY OF RETURN FOR THE AYS 2009-10 & 2010- 11 AND THE ASSESSEE VIDE LETTER DATED 07.02.2013 INFORMED THAT NO INCOME TAX RETURNS HAVE BEEN FILLE D FROM AY 2009-10 AND ONWARDS AS THE FIRM WAS DISSOLVED O N 01.04.2008. THEN VIDE THIS OFFICE LETTER DATED 27. 02.2013 THE DISSOLUTION DEED WAS CALLED FROM THE ASSESSEE. HOWEVER THE ASSESSEE DID NOT SUBMIT THE SAME STAT ING VIDE REPLY DATED 05.03.2013 THAT THE SAME IS NOT TRACEABLE. THESE THINGS AGAIN NECESSITATE THAT THE FACTS OF THE CASE SHOULD NOT HAVE BEEN ACCEPTED ON FACE VALU E AND SHOULD HAVE BEEN ENQUIRED. VIDE PARA 3.5 OF REPLY DA TED 28.01.2013 THE ASSESSE HAS CONTENDED THAT EVEN IF IT IS ASSUMED THAT THE S AID LAND WAS CONVERTED INTO STOCK-IN-TRADE THERE WOULD BE NO REVENUE LOSS SINCE VALUE OF STOCK-IN-TRADE WOULD BE INCREASED FROM 54.31 LACS TO RS.80.08 LACS RESULTI NG IN BUSINESS LOSS OF RS.37.08 LACS. THE CONTENTION OF A SSESSEE IS INCORRECT AND HAS NO LEGAL FOOTING. SECTION 45 ( 2) IS UNAMBIGUOUS IN ITS TERMS THAT THE FAIR MARKET VALUE WOULD BE ADOPTED FOR THE PURPOSE OF SECTION 48 ( MO DE OF COMPUTATION OF CAPITAL GAIN). IT CANNOT BE ADOPTED FOR THE PURPOSE OF COMPUTING BUSINESS PROFIT. 6 THE AO WHILE COMPLETING TH E ASSESSMENT PASSED AN ORDER WHICH ON THE FACE OF IT IS NOT ONLY ERRONEOUS BUT ALSO PREJUDICIAL TO THE INTEREST OF REVENUE. ALL TH E FACTS THEREFORE REQUIRES RELOOK TO REACH TO THE LOGICAL C ONCLUSION AND IT CAN ONLY BE DONE BY SENDING THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER FOR DE-NOVO CONSIDERA TION IN THE LIGHT OF THE FACTUAL DETAILS INCORPORATED ABOVE . ACCORDINGLY THE ASSESSMENT ORDER FOR THE RELEVANT AY IS SET ASIDE TO BE REFRAMED AFRESH. 4.1 IF THE ASSESSMENT ORDER SO PASSED CONCLUS ION DRAWN IN THE IMPUGNED ORDER AND THE ASSERTION MADE BY THE LD. RESPECTIVE COUNSEL ARE KEPT IN JUXTAPOSITIO N AND ANALYSED WE FIND THAT THE ASSESSMENT ORDER IS IN FE W LINES IN WHICH EVEN THERE IS A NO WHISPER ABOUT THE SALE PROCEEDS AND THE OBSERVATIONS MADE BY THE LD. CIT. EVEN ON ASKING BY THE LD. CIT THE ASSESSEE DID SUBMIT TH E DISSOLUTION DEED. THE TOTALITY OF FACTS ARE CLEARLY INDICATING THAT THE ASSESSMENT ORDER IS NOT ONLY ERRONEOUS BUT ALSO PREJUDICIAL TO THE INTEREST OF T HE REVENUE. WE ARE SATISFIED THAT THE LACUNA RAISED BY THE LD. COMMISSIONER IS NOT BASED ON SUSPICION RATHER INDICATES LAPSES ON THE PART OF THE ASSESSING OFFIC ER AT LEAST TO THE EXTENT THAT THE ASSESSMENT ORDER SO FRAMED 7 IS ERRONEOUS SO FAR AS PREJUDICIAL TO THE INTEREST OF THE REVENUE AS MENTIONED IN THE IMPUGNED ORDER. OUR VIE W IS FORTIFIED BY THE RATIO LAID DOWN IN INDIAN TEXTI LES VS. CIT; 157 ITR 112 (MAD) CIT VS. PUSHPA DEVI; 164 IT R 639 (PAT) GEE VEE ENTERPRISES; 99 ITR 375 (DEL) C IT VS. G.K. KABRA; 211 ITR 366 (AP) CIT VS. SESHASAYEE PA PER & BOARD LTD.; 242 ITR 490 (MAD). BROADLY AN INCORR ECT ASSUMPTION OF FACT OR AN INCORRECT APPLICATION OF L AW WOULD SATISFY THE REQUIREMENT OF ORDER BEING ERRONE OUS U/S 263 OF THE ACT. THE PHRASE PREJUDICIAL TO THE INTEREST OF THE REVENUE U/S 263 HAS TO BE READ IN CONJUNCTI ON WITH THE EXPRESSION ERRONEOUS ORDER PASSED BY THE ASSESSING OFFICER. THE HONBLE PATNA HIGH COURT IN THE CASE OF PUSHPA DEVI (SUPRA) CONCLUDED THAT IF PROCE DURE ADOPTED HAS BROUGHT LESSER REVENUE THE ORDER IS PREJUDICIAL. EVEN OTHERWISE WE ARE OF THE OPINION THAT NO PREJUDICE SHOULD BE CAUSED TO EITHER SIDE AND CORRE CT TAX IS TO BE CALCULATED/COLLECTED. THE LD. CIT HAS REMA NDED THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICE R FOR DE- 8 NOVO CONSIDERATION THEREFORE NO GRIEVANCE IS CAUSED TO EITHER SIDE AND MORE SPECIFICALLY THE ASSESSEE. FINALLY THE APPEAL OF THE ASSESSEE IS DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 10.10.2013. SD SD (R.C.SHARMA) (JOGINDER S INGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 10.10.2013 COPY TO: APPELLANT RESPONDENT CIT CIT(A) DR GU ARD FILE KONGE