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.
|
