IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH `SMC', NEW DELHI
Before Sh. N. K. Saini, Hon'ble Vice President
ITA No. 3337/Del/2018 : Asstt. Year : 2007-08
Ranjana Sen Gupta Raghavan, Vs Income Tax Officer,
H-1592, Chittaranjan Park, Ward-71(2),
New Delhi-110019 New Delhi
(APPELLANT) (RESPONDENT)
PAN No. ADVPR4425Q
Assessee by : Sh. V. Raja Kumar, Adv.
Revenue by : Sh. Pradeep Kumar Meel, Sr. DR
Date of Hearing : 23.10.2018 Date of Pronouncement: 12.11.2018
ORDER
This is an appeal by the assessee against the order dated
17.01.2018 of ld. CIT(A)-32, New Delhi.
2. Following grounds have been raised in this appeal:
" 1. Assuming jurisdiction u/s 148 of the Income-tax Act,
1961 and rejecting the objections filed there being no
reason to believe that income has escaped assessment;
2. Determining taxable income at Rs.6,29,130/- against the
returned income in a sum of Rs.1,44,191/-;
3. Invoking the provision of Section 50C of the Income-tax
Act, 1961 in a transaction entered into by the assessee with
government undertaking;
4. Adopting the value determined by the DVO and rejecting
the assessee's valuation and doing all that without
providing due and adequate opportunity of hearing;
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5. Confirming addition of Rs.4,84,939/- to the returned
income on account of Long Term Capital Gain even after
the CIT(A) holding that the actual consideration received
by the assessee was indeed less than the stamp duty
valuation.
All the above actions being arbitrary, erroneous and
unlawful must be quashed with directions for appropriate
relief. "
3. Facts of the case in brief are that the case of the assessee was
reopened on the basis of information received fro m ITO, Ward-7(1),
Jaipur regarding sale of triangular shape land situated at NH-11, at the
crossing of Ajmer Road and the road leading to Chand Pole, Opposite
Old Government Hostel, Jaipur, measuring 523.53 sq. m. was sold o n
10.04.2006 by six persons for a sale consideration of Rs.50,00,000/- as
per sale deed dated 10.04.2006. However, the registering authorit y
adopted the value at Rs.3,38,81,872/-. The assessee sold 1/12 t h share
in the said property. The AO issued the notice u/s 148 of the Inco me
Tax Act, 1961 (hereinafter referred to as the Act). However, there was
no response fro m the assessee ' s side. The AO increased the value o f
sale consideration as per valuation report and made the addition of
Rs.4,84,942/-.
4. Being aggrieved the assessee carried the matter to the ld. CIT(A) who
sustained the addition by observing as under:
"Accordingly, taking the contents of the above sub-paras (5.3 to 5.3b)
into consideration, I refuse to interfere with the reopening of the
assessment in the present case vide the notice u/s 148 dated 26/03/2014
and hold the reopening valid. The ground at (b) is dismissed.
5.4 As regards the grounds at (c), (d) and (e) that relates to the adoption
of the sale consideration as per that given by DVO and the assessment
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Ranjana Sen Gupta Raghavan
made thereby adding the increase in value of the property in question it
is gathered from the appellant's submissions as well as the facts and
arguments put forth by the AR of the appellant during the course of the
appellate proceedings that the sale consideration received by the
appellant (towards her share of the property) on sale of the property in
question from M/s. Hindustan Petroleum (a PSU)was Rs.50,00,000/-. It
is observed from the impugned order that there is no allegation of
transfer of unaccounted money/any adverse comments on the sale of the
property in question. However, it is also established that the actual
consideration received was less than the stamp duty valuation.
5.4a In view of the above fact, the provisions of Section 50C are
triggered. However, as per 50C(2), the valuation of DVO is to be
mandatorily accepted by the AO and that is exactly what he has done as
is observed from the impugned order.
Accordingly, I am in agreement with the sale consideration adopted by
the AO in the impugned order as per the provision of Section 50C(2) of
the Act and the LTCG worked out in arriving at the LTCG and the
difference is added as the appellant's income for the relevant AY on this
point. Hence, the grounds at (c) through (e) above are dismissed."
5. Now the assessee is in appeal. The ld. Counsel for the assessee at the very
outset stated that this issue is covered in favour of the assessee vide order dated
01.08.2017 in ITA No. 286/Del/2017 for the assessment year 2007-08 in the case
of Lipika Sen Vs DCIT(Intl. Taxation), Circle-3(2)(1), New Delhi by the ITAT
Delhi Bench `SMC', New Delhi (copy of the said order was furnished which is
placed on record). It was further submitted that the said assessee was also a co-
owner in the same property and the facts in the said case are identical to the facts
of the assessee's case.
6. In his rival submission, the ld. Sr. DR although supported the orders of the
authorities below but could not controvert the aforesaid contention of the ld.
Counsel for the assessee.
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7. I have considered the submissions of both the parties and perused the
material available on the record. In the present case, it is noticed that an identical
issue having similar facts was a subject matter of the assessee's appeal in the
aforesaid referred to case of Lipika Sen Vs DCIT(Intl. Taxation), Circle-3(2)(1),
New Delhi in ITA No. 286/Del/2017 for the assessment year 2007-08 wherein vide
order dated 01.08.2017, the issue has been decided in favour of the assessee and
the relevant findings have been given in paras 17 to 20 which read as under:
"17. I have considered the facts of the case as emerging from the
reassessment order, the impugned order of the CIT(A) and the other
related documents as contained in the paper book filed by the assessee I
have also perused the case laws as cited before me. The ITO, Jaipur vide
his note informed the ADIT, Circle 1(2), International Taxation, New
Delhi of the sale by six persons of a triangular shaped land situated at
NH-11 admeasuring 523.53 sq. m. for a sale consideration of Rs.50
Lakhs as pet-sale deed dated 10.04.2006. The registering authority had
adopted the value at Rs.3,38,81,872/- for the sale. Finding that Lipika
Sen was one of the sellers of the land properly, it was suggested the
resultant capital gain on the sale consideration received by Lipika Sen
had to be looked into.
18. The satisfaction note acknowledges that the assessee had filed her
return of income at Rs.1,50,755/- only. It is further stated by the
Assessing Officer in that note that the capital gain has not been declared
by the assessee and further that she has not disclosed her income
properly in her return of income. It is on this background that the
Assessing Officer records the need for certification of these facts for
quantifying the amount of tax evaded. It is in that context that the
Assessing officer records that he has reasons to believe that income
chargeable to tax in excess of Rs. One Lakh has escaped assessment
within the meaning of section 147/148 of the I.T. Act, 1961.
19. A reading this note reveals that in terms of the report of the ITO-
Jaipur the basic facts relating to the sale of the plot at Jaipur has been
informed and in that connection the resultant capital gain was advised to
be looked into. Clearly, therefore, such a narrative cannot be construed
as information about any escapement of income. At any rate the capital
gain had been duly returned for assessment b the assessee in the regular
return filed on 31.03.2008 (Page 1 of the Paper Book). Thus, there is no
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Ranjana Sen Gupta Raghavan
conceivable way for construing any escapement of income on this basis
of the ITO - Jaipur's message. It was merely a contrary note. The
endorsement of the Assessing Officer in the satisfaction note that the
capital gain had not been returned by the assessee is contrary, to the
material on record and so cannot be taken as conferring any validity to a
flawed belief as to escapement of income. The further mention in the
satisfaction note that the assessee has not disclosed her income properly
in her return of income has only to be read in the context of the
preceding mention of the capital gain itself not having been disclosed for
assessment in the return. So to that extent the satisfaction note cannot be
held to be conferring a valid jurisdiction for a Sec. 147 action for there
is no rational connection with any relevant material to form a prim a
facie belief as to escapement of any income. Further, the satisfaction
note even while proposing verification of facts assumes the need to
quantify the tax evaded. That approach, I am afraid, is not in conformity
with fairness. The question of quantification can arise only where after
conducting the verification some escaped income is established.
Understandly to verify only with a view to establish the quantum of tax
evaded would be to proceed on a foregone conclusion of tax having been
evaded even before the verification. That will be defeating the very
purpose of verification. To hold even before the completion of
verification (hat income has escaped assessment would be admittedly to
be doing so without any material on record. In my view the rejection of
the objections raised by the assessee on the premises of the apex court
decision ratios in ACIT v. Rajesh Jhaveri Stock Brokers Pvt. Ltd. (2007)
291 ITR 500 and ITO v. Biju Patnaik (1991) 188 ITR 247 is also wrong.
In Rajesh Jhaveri's case supra the point at issue was whether initiating
of the reassessment proceedings on the basis of the subjective
satisfaction of the Assessing Officer was sustainable. The Court ruled in
favour of the Revenue. It did not because there was a satisfaction on
record unlike the present case which is conspicuous by the absence of
any material to indicate any satisfaction as to escapement of income. In
the case of Biju Patnaik supra the controversy was with reference to the
year of taxability of capital gains. It was not in the context of any
inadequacy or infirmity in the Assessing Officer's recording of
satisfaction as to the escapement of income. The dismissal of the
assessee's objections on the basis of these two cited decisions was thus
erroneous. I further find that the Assessing Officer has simply adopted
the contents of the communication as information leading the belief of
escapement of income without any verification. The absence of any
application of mind by the Assessing Officer for arriving at a prima facie
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Ranjana Sen Gupta Raghavan
belief as to escapement of income is clear on a perusal of the satisfaction
note as reproduced in the assessment order. For all these reasons, and
agreeing with the submissions made on behalf of the assessee, 1 hold
that the jurisdiction assumed by the Assessing Officer to initiate
reassessment proceedings is improper and invalid in the several lacunae
in the recording of the satisfaction of the belief of escapement of income
in the subject case. I allow the first ground of the assessee on jurisdiction
by holding it is flawed and so illegal.
20. Having done so it is not necessary to deal with the second ground
which impugns on the quantum of income assessed. The rest of the
grounds taken are academic."
8. So, respectfully following the aforesaid referred to order dated 01.08.2017 in
the case of Lipika Sen Vs DCIT(Intl. Taxation), Circle-3(2)(1), New Delhi in ITA
NO. 286/Del/2017, the issue is decided in favour of the assessee and the impugned
addition made by the AO and sustained by the ld. CIT(A) is deleted.
9. In the result, the appeal of the assessee is allowed.
(Order Pronounced in the Court on 12/11/2018).
Sd/-
(N. K. Saini)
VICE PRESIDENT
Dated: 12 /11/2018
*Subodh*
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5.DR: ITAT
ASSISTANT REGISTRAR
7 ITA No. 3337/Del/2018
Ranjana Sen Gupta Raghavan
Date Initial
1. Draft dictated on 05.11.2018 PS
2. Draft placed before author 06.11.2018 PS
3. Draft proposed & placed before the JM/AM
second member
4. Draft discussed/approved by Second JM/AM
Member.
5. Approved Draft comes to the Sr.PS/PS PS/PS
6. Kept for pronouncement on PS
7. File sent to the Bench Clerk PS
8. Date on which file goes to the AR
9. Date on which file goes to the Head Clerk.
10. Date of dispatch of Order.
11. Date of uploading 12.11.2018
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