IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI BENCHES " B ", MUMBAI
BEFORE SHRI B. R. JAIN, AM AND SHRI VIVEK VARMA, JM
ITA No. : 2374/Mum/2011
Assessment Year : 2006-07
Bhalchandra A. Rakvi (HUF) I.T.O. 20(1)(2)
C/o. Sanjay Rakvi, Mumbai
Flat No.704, Nisarg Co-Housing
Society Ltd., Dahisar (W),
Vs.
Mumbai-400 068
PAN NO: AADHS 9229 D
(Appellant) (Respondent)
Shri K. Shivaram &
Appellant by :
Shri Parag S. Sarla
Respondent by : Shri Mohit Jain
Date of hearing : 01.10.2012
Date of Pronouncement : 10.10.2012
ORDER
PER B. R. JAIN, A.M. :
This appeal by the assessee is against the order dated 27.12.2010
of Ld. CIT(A)-31, Mumbai by raising the following grounds in appeal :-
"Legal
1. The Ld. CIT(A) failed to appreciate the fact that the assessing
officer did not have jurisdiction to issue the notice u/s.148 and
hence reassessment order is bad in law.
2. Without prejudice to above, the Ld. CIT(A) failed to appreciate the
fact that no recorded reasons were furnished to the appellant and
hence reassessment order is bad in law.
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M/s. Bhalchandra A. Rakvi (HUF)
ON MERITS
3. The Ld. CIT(A) failed to appreciate the fact that the long term
capital gains were not at all taxable in the impugned assessment
year.
4. The Ld. CIT(A) erred in confirming the 1/4th long term capital gain
of 10 plots at `.75,19,012/- instead of `.28,07,693/-, without
considering the details filed during the course of assessment
proceedings.
a. The Ld. CIT(A) erred in taking the 1/5th sale consideration of
10 plots at `.1,10,00,000/- instead of `.66,50,000/- which
is as per the agreement. The CIT(A) failed to consider the
confirmation given by Mr. Sanjay Punamiya.
b. The Ld. CIT(A) Assessing Officer erred in taking the 1/5th
cost of acquisition as on 01.04.1981 at `.7,00,400/- (i.e.
200/- per sq. Mts) instead of `.7,73,100/- as per the
valuation report filed during the course of assessment
proceedings.
5. On merits the appellant denies its liability to the levy of penal
interest u/s.234A, 234B and 234C."
2. The assessee has also moved an application dated 02.03.2012 for
admission of additional grounds as under :-
"Legal Grounds
1. The Ld. CIT(A) failed to appreciate that the reasons were recorded
as 26.10.2007 i.e. after the issue of notice u/s.148 dt. 16.10.2007,
and hence the entire reassessment is bad in law and the order is
liable to be quashed.
2. Without prejudice to above, even the reasons recorded are without
application of mind and without following the due process of law.
3. Without prejudice to above, the Ld. CIT(A) failed to appreciate the
fact that the notice u/s.148 was issued by ITO, Ward 2(1), Thane,
whereas subsequently reassessment was made by ITO-20(1)(2),
Mumbai. As the Assessing Officer who issued notice u/s.148 did
not have jurisdiction the reassessment is bad in law and liable to
be quashed."
3. Having heard parties on the admission of additional grounds we find
that the ground no. 1 raised in the appeal memo covers the entire
controversy that is sought to be raised through the additional grounds by
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M/s. Bhalchandra A. Rakvi (HUF)
the assessee. The same being infructuous are, therefore, not required to
be admitted. Accordingly, the assessee's application for admission of
additional grounds in appeal stands dismissed.
4. On the legal ground no. 1 in appeal, the assessee's case is that a
notice u/s.148 of the Income Tax Act, 1961 hereinafter referred to as "the
Act" has been issued by the Assessing Officer on 16.10.2007 without
recording reasons thereto. The information sought through RTI
application has revealed that the reasons were recorded subsequently on
26.10.2007. Since the reasons were not recorded prior to issuance of
notice u/s.148 of the Act, the reassessment becomes invalid.
5. On the other hand, the Ld. Departmental Representative (DR)
produced the assessment record. He fairly admits the fact that the
assessee has obtained information under Right to Information Act with
respect to issuance of notice u/s.148 of the Act and recording of reasons
thereto. It is also correct that the Assessing Officer did not record the
reasons prior to issuance of notice u/s.148 of the Act in this case.
6. Heard parties with reference to material on record. The requirement
of mandate as contained u/s.148(2) of the Act is that the Assessing
Officer shall, before issuing any notice under this section, record his
reasons for doing so. The Assessing Officer thus is bound to record
reasons for issuance of notice u/s.148(2) of the Act. The language of
section 148(2) does not permit recording of reasons after the date of
issuance of notice. In the case at hand, admittedly the notice u/s.148 has
been issued on 16.10.2007, whereas the reasons have been recorded
subsequently on 26.10.2007, a date subsequent to issuance of notice on
16.10.2007. This fact has been verified from the assessment record
produced by the Ld. DR before us. Since the reasons have not been
recorded prior to issuance of notice u/s.148 of the Act, the notice so
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M/s. Bhalchandra A. Rakvi (HUF)
issued is hereby quashed and assessment so made becomes invalid. This
view finds support from the judgment rendered by the Hon'ble Gujarat
High Court in the case of Rajoo Engineers Ltd. Vs. Dy. CIT [2008] 218 CTR
(Guj) 53. Accordingly, the ground no. 1 raised in appeal by the assessee
stands allowed.
7. Since the reassessment has been held invalid whatever follows
thereafter shall also become invalid and accordingly it is not considered
necessary to render any decision on the merits of the other grounds raised
in appeal in the light of the judgment rendered by Hon'ble Calcutta High
Court in the case of Rawatmal Harakchand v. CIT [1981] 129
ITR 346 (Cal).
8. In the result, the assessee's appeal stands allowed.
Order pronounced in the open court on 10.10.2012.
Sd/- Sd/--
( VIVEK VARMA ) ( B. R. JAIN )
JUDICIAL MEMBER ACCOUNTANT MEMBER
MUMBAI, Dt: 10.10.2012
Copy forwarded to :
1. The Appellant,
2. The Respondent,
3. The C.I.T.
4. CIT (A)
5. The DR, - Bench, ITAT, Mumbai
//True Copy//
BY ORDER
ASSISTANT REGISTRAR
ITAT, Mumbai Benches, Mumbai
Roshani
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