V. Munikrishnappa, Bangalore v. DCIT, Bangalore

ITA 632/BANG/2011 | 2006-2007
Pronouncement Date: 30-03-2012 | Result: Allowed

Appeal Details

RSA Number 63221114 RSA 2011
Assessee PAN AIMPM8048G
Bench Bangalore
Appeal Number ITA 632/BANG/2011
Duration Of Justice 9 month(s) 27 day(s)
Appellant V. Munikrishnappa, Bangalore
Respondent DCIT, Bangalore
Appeal Type Income Tax Appeal
Pronouncement Date 30-03-2012
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 30-03-2012
Assessment Year 2006-2007
Appeal Filed On 02-06-2011
Judgment Text
IN THE INCOME-TAX APPELLATE TRIBUNAL BANGALORE BENCH A BANGALORE BEFORE SMT P. MADHAVI DEVI JUDICIAL MEMBER AND SHRI JASON P BOAZ ACCOUNTANT MEMBER I.T.A. NO.632(BANG.)/2011 (ASSESSMENT YEARS : 2006-07) SHRI V. MUNIKRISHNAPPA NO.82 6 TH CROSS SARJAPURA ROAD BANGALORE-560 034. PAN NO.AIMPM8048G APPELLANT VS THE DEPUTY COMMISSIONER OF INCOME-TAX CIRCLE-11(2) BANGALORE RESPONDENT ASSESSEE BY : SHRI H.N.KHINCHA CA REVENUE BY : SHRI SARAVANAN JCIT DATE OF HEARING : 08-03-2012 DATE OF PRONOUNCEMENT : 30-03-2012 O R D E R PER SMT. P. MADHAVI DEVI JM; THIS IS ASSESSEES APPEAL FOR THE ASSESSMENT YEAR 2 006-07. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL ; 1. THE IMPUGNED ORDER AS PASSED BY THE LD . CIT IS BAD IN LAW AND IS LIABLE TO BE QUASHED. 2. IN ANY CASE THE ORDER IS BEYOND THE DUE DATE AND IS LIABLE TO BE QUASHED. 3. IN ANY CASE AND WITHOUT PREJUDICE THE LD.CIT HAS ERRED IN ASSUMING THE JURISDICTION U/S 263 OF T HE IT ACT. ITA NO.632(B)2011 2 4. THE CONDITION PRECEDENT FOR THE PROCEEDINGS U/S 263 OF THE IT ACT NOT BEING PRESENT THE NOTICE ISS UED IS BAD IN LAW AND CONSEQUENTLY EVEN THE ORDER PASS ED IS BAD IN LAW AND HENCE THE ORDER IS LIABLE TO BE QUASHED. 5. WITHOUT PREJUDICE THE APPELLANT SUBMITS THAT THE PROFIT ON SALE OF PROPERTY WAS CORRECTLY OFFERE D AS INCOME FROM BUSINESS AND SAME WAS CORRECTLY ACCEPTED AS SUCH AFTER DUE CONSIDERATION HENCE THE RE IS NO ERROR AT ALL IN THE ORDER DATED 26-12-2008. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE AN INDIVIDUAL FILED HIS RETURN OF INCOME ON 06-07-2006 DECLARING AN INCOME OF RS.20 58 718/- INCLUSIVE OF SHORT TERM CAPITAL GAIN S OF RS.19 97 860/-. THE RETURN WAS INITIALLY PROCESSED U/S 143(1) OF TH E IT ACT. HOWEVER THEREAFTER THE AO NOTICED THAT THE PROPERTY WAS SO LD ON 06-01-2005 AND THE SALE CONSIDERATION WAS SHOWN AT RS.2 25 00 000/ - AS AGAINST THE GUIDANCE VALUE OF RS.2 50 25 000/- AND THE STAMP DU TY AND THE REGISTRATION FEES HAD BEEN PAID IN ACCORDANCE WITH THE GUIDANCE VALUE. HE OBSERVED THAT THE PROPERTY IS OWNED BY THREE PER SONS AND THE ASSESSEES SHARE IS SHOWN AT 1/3 RD SHARE OF THE SALE PROCEEDS ON THE SALE CONSIDERATION OF RS.2 25 00 000/- WHEREAS IT SHOUL D HAVE BEEN ON RS.2 50 25 000/-. IN VIEW OF THE SAME THE AO BELI EVED THAT THE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT AND ACCORD INGLY ISSUED NOTICE U/S 148 OF THE IT ACT. DURING THE ASSESSMENT PROCE EDINGS U/S 143(3) R.W.S.147 OF THE IT ACT THE AO COMPLETED THE ASSES SMENT TREATING THE ITA NO.632(B)2011 3 INCOME FROM CAPITAL GAINS AS INCOME FROM BUSINESS W ITHOUT INVOKING SEC.50C OF THE IT ACT. THE CIT U/S 263 OF THE ACT OBSERVED THAT THE AO HAS NOT CONSIDERED THE DIFFERENTIAL SALE PROCEEDS O F THE PROPERTY. WHILE ACCEPTING THE INCOME FROM BUSINESS AND THEREFORE T HE ORDER PASSED BY THE AO IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. IN VIEW OF THE SAME THE CIT ISSUED NOTICE U/S 263 PROPOSING T O CANCEL THE ASSESSMENT ORDER. AS THE ASSESSEE DID NOT FILE ANY DETAILS OR OFFERED ANY EXPLANATION HE SET ASIDE THE ASSESSMENT ORDER AND DIRECTED THE AO TO RE- DO THE ASSESSMENT. AGGRIEVED BY THE ORDER OF THE C IT PASSED U/S 263 THE ASSESSEE IS IN APPEAL BEFORE US. 3. THE LEARNED COUNSEL FOR THE ASSESSEE SHRI H.N.K HINCHA SUBMITTED THAT THE ASSESSEE HAD INITIALLY OFFERED T HE INCOME FROM SALE OF PROPERTY AS CAPITAL GAINS WHEREAS DURING THE RE-AS SESSMENT PROCEEDINGS THE ASSESSEE HAS OFFERED THE INCOME AS INCOME FROM BUSINESS AND THEREFORE INVOKING THE PROVISION OF SEC.50C OF THE IT ACT DOES NOT ARISE AT ALL. HE SUBMITTED THAT THE CIT HAS REVISED THE ORDER U/S 263 OF THE IT ACT ON THE GROUND THAT THE AO HAS NOT CONSIDERED TH E PROVISIONS OF SEC.50C OF THE IT ACT AND ALSO DIFFERENTIAL SALE PR OCEEDS OF THE PROPERTY. HE SUBMITTED THAT THE AO HAVING ACCEPTED THE INCOME AS INCOME FROM BUSINESS THE QUESTION OF APPLYING THE PROVISIONS OF SEC.50C DOES NOT ARISE AT ALL AND THEREFORE THE ASSESSMENT ORDER IS NOT ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE AND CANNOT B E REVISED U/S 263 OF THE IT ACT. IN SUPPORT OF HIS CONTENTIONS THAT TH E ASSESSMENT HAS BEEN ITA NO.632(B)2011 4 REVISED ON THE GROUND THAT THE SHORT TERM CAPITAL G AINS SHOULD HAVE BEEN OFFERED ON THE ENTIRE SALE CONSIDERATION OF RS.2 50 25 000/- AND NOT ON RS.2.25 00 000/- HE HAS FILED COPY OF THE NOTICE I SSUED U/S 263 OF THE IT ACT. 4. THE LEARNED DR ON THE OTHER HAND SUPPORTED THE ORDER OF THE CIT U/S 263 OF THE IT ACT AND ALSO PLACED RELIANCE UPON THE DECISION OF CALCUTTA BENCH OF ITAT IN THE CASE OF M/S HOOGHLY M ILLS CO. LTD. VS ACIT REPORTED IN 71 ITD 264(CAL)(2000) 66 TTJ(CAL)3 3. IN SUPPORT OF HIS CONTENTIONS THAT THE SPIRIT OF THE ORDER OF THE CIT IS REQUIRED TO BE TAKEN INTO CONSIDERATION TO COME TO THE CONCLUSION AS TO WHETHER THE ORDER OF AO IS ERRONEOUS AND PREJUDICIAL TO THE INT EREST OF REVENUE OR NOT. HE ALSO PLACED RELIANCE UPON THE DECISION OF THE KA RNATAKA HIGH COURT IN THE CASE OF THALIBAL F JAIN VS ITO REPORTED IN 101 ITR 1(KAR.) FOR THE PREPOSITION THAT WHERE THE ITO HAS NOT MADE ANY ENQ UIRY AND HAS ACCEPTED THE RETURNS OF THE ASSESSEE THE ASSESSMEN T MUST BE HELD TO BE PREJUDICIAL TO THE INTEREST OF REVENUE AND ALSO ERR ONEOUS. THE OTHER DECISION RELIED UPON BY HIM IS IN THE CASE OF M/S A SHOK LEYLAND LTD. VS CIT REPORTED IN 181 CTR 332 (MAD.) FOR THE ABOVE SA ID PROPOSITION. 5. HAVING HEARD BOTH THE PARTIES AND HAVING CONSID ERED THE RIVAL CONTENTIONS WE FIND THAT TO REVISE AN ORDER U/S 26 3 OF THE IT ACT THE ESSENTIAL CONDITIONS ARE THAT THE ASSESSMENT ORDER SHOULD BE BOTH ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENU E. AS PER THE NOTICE ISSUED U/S 263 OF THE IT ACT IT IS SEEN THAT THE C IT WAS OF THE OPINION ITA NO.632(B)2011 5 THAT THE ASSESSEE WHILE COMPUTING THE CAPITAL GAIN S HAS TAKEN THE SALE CONSIDERATION VALUE AS RS.2 25 00 000/- AS AGAINST THE GUIDANCE VALUE OF RS.2 50 25 000/-. THE ASSESSEE HAS FILED BEFORE US THE NOTICE ISSUED U/S 263 OF THE IT ACT IN EVIDENCE OF THE ABOVE FACT. HOWEVER IT IS SEEN FROM THE ORDER U/S 263 THAT IN THE RE-ASSESSMENT PROCEED INGS THE ASSESSEE HAS OFFERED THE INCOME AS INCOME FROM BUSINESS AN D THE SAME HAS BEEN ACCEPTED BY THE ASSESSING AUTHORITY. THE CIT IN HI S ORDER U/S 263 STATES THAT THE AO HAS NOT INVOKED THE PROVISIONS O F SEC.50C OF THE IT ACT. THIS FINDING IS BOTH MISPLACED AND MISCONCEIV ED. THE INVOCATION OF PROVISIONS OF SEC.50C WOULD ARISE ONLY IN THE CASE OF COMPUTATION OF INCOME UNDER THE HEAD CAPITAL GAINS. THE OTHER O BSERVATION OF THE CIT IS THAT THE AO HAS NOT CONSIDERED THE DIFFERENTIAL SALE CONSIDERATION. HOWEVER THE CIT IS NOT CLEAR AS TO THE DIFFERENTIA L SALE CONSIDERATION IN THE COMPUTATION OF INCOME UNDER THE HEAD CAPITAL G AINS OR INCOME FROM BUSINESS. THE CIT WHILE PASSING THE ORDER U/S 263 OF THE IT ACT HAS TO BE CLEAR IN HIS MIND AS TO HOW THE ORDER OF ASSESS ING AUTHORITY IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENU E. FROM THE ORDER OF CIT U/S 263 IT IS NOT CLEAR AS TO HOW THE ASSESSME NT ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. THE CI T SEEMS TO HAVE PROCEEDED ON THE PRESUMPTION THAT THE ASSESSEE WHIL E COMPUTING THE CAPITAL GAINS OUGHT TO HAVE TAKEN THE GUIDANCE VAL UE AS SALE CONSIDERATION AND NOT THE ACTUAL SALE CONSIDERATION . WHEN THE ASSESSING AUTHORITY HAS ACCEPTED THE INCOME AS INCOME FROM B USINESS THEN THE ITA NO.632(B)2011 6 QUESTION OF ERRONEOUS COMPUTATION OF CAPITAL GAINS WOULD NOT ARISE AT ALL. IN VIEW OF THE SAME WE ARE OF THE OPINION THAT TH E ORDER U/S 263 IS MISCONCEIVED AND WITHOUT ANY SUBSTANCE. 6. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 30 TH MARCH 2012. SD/- SD/- ( JASON P BOAZ) (SMT . P. MADHAVI DEVI) ACCOUNTANT MEMBER JUD ICIAL MEMBER PLACE: BANGALORE DATED: 30-03-2012 AM* COPY TO : 1. THE ASSESSEE 2. THE REVENUE 3. CIT(A) 4. CIT 5. DR 6. GF(BLORE) BY ORDER AR ITAT BANGALORE