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Smt. Shanti Devi, W/o Shri Mool Chand, C/o Shri Mahavir Singh, Advocate 1078, Sector 15, Part 2, vs. ITO, Ward 2, Rewari.
June, 17th 2019

Referred Sections:
section 148 of the Income-tax Act,
section 147 of the Act.

     IN THE INCOME TAX APPELLATE TRIBUNAL
          (DELHI BENCH `F' : NEW DELHI)

BEFORE HON'BLE VICE PRESIDENT, SHRI G.D. AGRAWAL
                      and
      SHRI KULDIP SINGH, JUDICIAL MEMBER

                  ITA No.2641/Del./2016
              (ASSESSMENT YEAR : 2006-07)

Smt. Shanti Devi,                    vs.   ITO, Ward 2,
W/o Shri Mool Chand,                       Rewari.
C/o Shri Mahavir Singh, Advocate
1078, Sector 15, Part 2,
Gurgaon ­ 122 001.
      (PAN : ARNPD8936G)

                  ITA No.2643/Del./2016
              (ASSESSMENT YEAR : 2006-07)

Smt. Shashi,                         vs.   ITO, Ward 2,
D/o Shri Mool Chand,                       Rewari.
C/o Shri Mahavir Singh, Advocate
1078, Sector 15, Part 2,
Gurgaon ­ 122 001.
      (PAN : ARNPD8936G)

     (APPELLANT)                           (RESPONDENT)

     ASSESSEE BY : Shri Mahavir Singh, Advocate
     REVENUE BY : Shri Surender Pal, Senior DR

                 Date of Hearing :    12.06.2019
                 Date of Order :      14.06.2019

                         ORDER

PER KULDIP SINGH, JUDICIAL MEMBER :
                                    2         ITA No.2641 & 2643/Del./2016


      Since common questions of facts and law have been raised

in both the aforesaid appeals, the same are being disposed off by

way of composite order to avoid repetition of discussion.

2.    Appellants, Smt. Shanti Devi and Smt. Shashi (hereinafter

referred to as the `assessees') by filing the present appeals sought

to set aside the impugned orders both dated 09.02.2016 passed by

the Commissioner of Income-tax (Appeals)-2, Gurgaon qua the

assessment year 2006-07 on the identical grounds inter alia that :-

       "1. The Ld. Commissioner of Income Tax (A) has erred in
      law and in facts in deciding first ground of appeal regarding
      proper service of notice under section 148 without looking in to
      the record and without calling for any evidence of service from
      the AD on whom the burden of service lies at the first instance by
      passing almost non speaking order in just 8 words "There is no
      evidence of non-service of notice". It is prayed that in the
      absence of proper service of notice u/s 148, the assessment
      proceedings may kindly be quashed ab initio.

      2.      The Ld. CIT (A) has also erred in fact and in law by
      upholding the issue of notice u/s 148 of the Act on merits without
      giving just a cursory look to the reasons recorded and also
      quoted in the assessment as well as appellate order. The action of
      the CIT(A) is illegal, arbitrary, unjustified and against the bare
      facts of the case. It is prayed that in view of above facts and
      circumstances of the case, the assessment proceedings may be
      not only quashed alone but with further directions as per
      discretion of the Honorable Court.

      3.     The Ld. CIT (A) has erred in law and in facts by
      assuming that the land in question is covered in the definition of
      capital asset in view of the notification issued by CBDT vide
      F.No.164/03/87 ITAI dated 06-01-1994 by relying on the text
      from TAXMANN while ignoring the official Gazette notification
      produced by the assessee during appellate proceedings and also
      admitted by the AO in his remand report that there is mistake in
      the name of the place which is Dhantera in the notification
      where as land in question was in Dharuhera. It is prayed that
      due to above facts and circumstances of the case the property
                                     3         ITA No.2641 & 2643/Del./2016


      sold in 2005 in Dharuhera may not be allowed to be treated as
      capital assets.

      4.      That the Ld. CIT (A) has also erred in law and in facts by
      confirming the taxing of total receipts of sale of land in place of
      taxing the capital gain only computed as per provisions of law
      after deducting the indexed value of the property from the total
      receipts by holding that this contention does not find place
      separately in grounds of appeal though contested strongly during
      appellate proceedings. It is prayed that indexed value of the
      property by taking the value of the land as 6400 per kanal as on
      01/04/1980 may be allowed for computation of capital gain.






      5.      The Ld. CIT (A) has erred in law and in facts in rejecting
      the claim of the assessee u/s 54F of the LT. Act. It is prayed that
      exemption as claimed u/s 54F during appellate proceedings may
      be allowed."

2.    Briefly stated the facts necessary for adjudication of the

controversy at hand in both the aforesaid appeals are : On the basis

of information available in case of M/s. Mool Chand HUF, notice

dated 26.03.2013 under section 148 of the Income-tax Act, 1961

(for short `the Act') was issued after recording reasons that, "In the

case of M/s Mool Chand HUF that said HUF had sold a land at

Dharuhera for a consideration of Rs.8,89,12,500/- in the F.Y.2005-

06 for AY 2006-07 which was a capital assets, therefore, notice u/s

148 for AY 2006-07 was issued to M/s Mool Chand HUF. During

the course assessment proceedings Smt. Shanti Devi wife, Ajit

Singh & Sunil son and Smt. Savita & Shashi Bala daughter of late

Sh. Mool Chand filed a reply stating therein that M/s Mool Chand

HUF was not in existence in past nor present. They further stated

that the land sold by Smt. Shanti Devi wife, Ajit Singh & Sunil son
                                  4        ITA No.2641 & 2643/Del./2016


and Smt. Savita & Shashi Bala daughter of the late Sh. Mool

Chand on 29.12.2005 was in their individual capacity, Keeping in

view the facts, substantive assessment was made vide order dated

28.03.2013 in the hands of M/s Mool Chand HUF and to protect

the interest of revenue, assessment proceeding are being initiated in

the individual capacity being T.B. matter involved. The share of

the assessee was calculated at Rs.1,78,73,561/- in the land in

question. The land sold by the assessee is situated at Dharuhera and

therefore is situated within the limits of notified area of Dharuhera,

thus, the land in question is covered in the definition of Capital

Assets in view of the notification issued by the CBDT on

06.01.1994 F.No. 164103187 ITAI dated 06.01.94. The assessee's

share of Rs.1,78,73,561/- in the land in question is liable for

LTCG. In this regard, the assessee has not filed his return of

income for the A. Y. 2006-07 relevant to F. Y. 2005-06."

3.     AO, having reason to believe that the assessee has not

disclosed his income from capital gain and from other income,

which subsequently comes to the notice of the AO and the same

has escaped assessment within the meaning of section 147 of the

Act. AO stated to have provided numerous opportunities to the

assessee by way of issuance of notice u/s 142(1) of the Act and on

failure of the assessee to appear, proceeded to make addition of
                                 5        ITA No.2641 & 2643/Del./2016


Rs.1,78,73,561/- and Rs.1,77,55,511/- in case of Smt. Shanti Devi

and Smt. Shashi respectively on account of Long Term Capital

Gain (LTCG) on protective basis.

4.    Assessees carried the matter by way of appeals before the ld.

CIT (A) who has confirmed the additions by dismissing the appeals

in both the cases. Feeling aggrieved, both the assessees have come

up before the Tribunal by way of filing the present separate

appeals.

5.    We have heard the ld. Authorized Representatives of the

parties to the appeal, gone through the documents relied upon and

orders passed by the revenue authorities below in the light of the

facts and circumstances of the case.

6.    Undisputedly, both the assessees along with other co-sharer,

total 5 in numbers, had sold agricultural land situated at Dharuhera,

District Rewari for a sale consideration of Rs.8,89,12,500/- on

29.12.2005. It is also not in dispute that Assessing Officer vide

order dated 28.03.2013 made substantive assessment in the name

of M/s. Mool Chand HUF but under the garb of protecting the

interest of Revenue, AO made assessment in the name of assessees

in their individual capacity by way of initiating the proceedings u/s

148/147 of the Act.
                                  6        ITA No.2641 & 2643/Del./2016







7.    Ld. AR for the assessee challenging the impugned order

contended inter alia that the issue in controversy is covered vide

order dated 28.12.2018 in case of one of the co-sharers who had

also sold land and in whose case, assessment proceedings were also

initiated in individual capacity; that when substantive assessment

in the hands of M/s. Mool Chand HUF has already been made,

protective assessment against the assessees in their individual

capacity, is not sustainable and as such, is liable to be quashed.

However, on the other hand, ld. DR for the Revenue, relied upon

the order passed by the AO/ld.CIT (A).

8.    When we examine the very basis of initiating the

reassessment proceedings from the "reasons recorded" by the AO

which are extracted in the preceding paras, it goes to prove that

substantive assessment on the basis of same subject matter of this

case has already been made vide order dated 28.03.2013 in the

hands of M/s. Mool Chand HUF, but only under the garb of

protecting the interest of Revenue, assessment proceedings have

been initiated against both the assessees in these cases in their

individual capacity.

9.    First of all, when both the assessees being partners of M/s.

Mool Chand HUF have already faced with the substantive addition

in their hands on the same subject matter, it is very surprising as to
                                   7        ITA No.2641 & 2643/Del./2016


how they have been put to another round of assessment

proceedings in their individual capacity.

10.   Even otherwise, the entire exercise of recording the reasons

dated 26.03.2013 by the AO is proved to be anti-dated one because

when substantive assessment in the hands of M/s. Mool Chand

HUF has been made on account of LTCG on 28.03.2013, which

fact has been recorded in the reasons itself, then how and under

what circumstances, the AO has recorded all these facts in reasons

recorded on 26.03.2013. In these circumstances, we are of the

considered view that notice u/s 148 of the Act has not been issued

in the true spirit rather a malafide exercise has been made by

issuing the notice on the basis of anti-dated reasons recorded by the

AO, which makes the notice invalid nor the AO was having any

reason at that point of time that the assessee has not disclosed his

income from capital gain and any other income and the same has

escaped assessment. We are constrained to record that this is an

exercise carried out by the AO as well as by the ld. CIT (A) to

generate unnecessary litigation.

11.   In view of what has been discussed above, we are of the

considered view that in the absence of valid issuance/service of

notice u/s 148 of the Act, no valid reassessment can be initiated.

When the notice issued u/s 148 of the Act is prepared anti-dated,
                                 8        ITA No.2641 & 2643/Del./2016


consequent assessment order is liable to be quashed on this score

only. Even otherwise, when substantive assessment has already

been made in the hands of M/s. Mool Chand HUF of which both

the assessees are partners, initiation of assessment proceedings u/s

147/148 of the Act is misuse of process of law. So, the ld. CIT (A)

has erred in confirming the addition made by the AO by losing

sight of all the material perversity and illegality of the assessment

order. Consequently, both the assessment orders passed in case of

both the assessees for AY 2006-07 are ordered to be quashed,

hence both the appeals filed by the assessees are allowed.

      Order pronounced in open court on this 14th day of June, 2019.


           Sd/-                                  sd/-
     (G.D. AGRAWAL)                         (KULDIP SINGH)
     VICE PRESIDENT                        JUDICIAL MEMBER

Dated the 14th day of June, 2019
TS




Copy forwarded to:
     1.Appellant
     2.Respondent
     3.CIT
     4.CIT(A)-2, Gurgaon.
     5.CIT(ITAT), New Delhi.
                                                        AR, ITAT
                                                      NEW DELHI.

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