IN THE ITAT CHANDIGARH BENCH ‘A’
Bhajan Singh
v/s.
Commissioner of Income-tax-II, Chandigarh
IT Appeal No. 574 (Chd.) of 2012
[Assessment year 2002-03]
July 31, 2012
ORDER
T.R. Sood, Accountant Member
In this appeal the assessee has raised the following effective grounds:
“1. The Ld. Commissioner has erred in invoking the jurisdiction for revision u/s 263 of the Income-tax Act, 1961 and in cancelling the assessment order passed u/s 147 r.w.s. 148 of the Act, without establishing the error in the assessment order or its prejudicial interest to the revenue. The revision order be cancelled and the assessment order be restored.
2. The order of the ld. Commissioner is barred by period of limitation and deserves cancellation.”
2. After hearing both the parties we find that examination of assessment order passed u/s 143(3) r.w.s. 147, ld. Commissioner was of the view that the order is erroneous as well as prejudicial to the interest of the revenue because the Assessing Officer has failed to gather the facts and carry out proper investigation on the following issues (as extracted by the Commissioner in his order u/s 263):
“(i) The assessee had made investment in purchase of land to the tune of Rs. 43,11,250/- during the previous year relevant to A.Y 2002-03.
(ii) The assessment was completed at an income of Rs. 16,10,500/-. A perusal of the assessment record reveals that the assessee had entered into an agreement with Smt. Kailashwati on 14.12.2001 for purchase of land measuring 9 kanals situated in village Manimajra, Chandigarh. The purchase price was fixed as per the agreement at Rs. 72,00,000/-. A sum of Rs. 4,00,000/- was paid as earnest money and the balance amount was to be paid at the time of finalization i.e. on the bargain date which was fixed on or before 30.12.2002. The sale deed in respect of the land showed that the assessee had paid a sale consideration of Rs. 2,62,500/- which was adjusted against the earnest money of Rs. 4,00,000/-.
(iii) As per agreement to sell dated 14.12.2001 the sale price of 9 kanals of land was fixed at Rs. 72,00,000/- and the actual price of 2 kanal 2 marla land worked out to Rs. 16,80,000/- instead of Rs. 2,62,500/- shown in the sale deed. It is evident that the assessee had paid balance amounts of Rs. 14,17,500/- (Rs. 16,80,000/- minus Rs. 2,62,500/-) out of undisclosed sources and this amount needed to be added back to the returned income..”
3. A show cause notice was accordingly issued in response to the notice, written submissions were made in which it was stated as under :-
“This is in response to your notice dated 15.3.2012, proposing to make addition of Rs. 14,17,500/- on the basis that the assessee has entered into agreement to sell dated 14.12.2001 for the purchase of 9 kanals land in village Manimajra, Chandigarh with one Smt. Kailashwati for a sum of Rs. 72 lacs, which gives the average rate of 8 lacs per kanal. Against this agreement, the assessee paid Rs. 4 lacs as advance money and was required to finalise the agreement by 31.12.2002.
This agreement could not be acted upon and only 2 kanal 2 marla land was purchased for consideration of Rs. 2,62,500/- in July 2002 for intervening circumstances, viz the Chandigarh Administration had notified the land for acquisition under the Land Acquisition Act, 1894 u/s 4 of the Land Acquisition Act, 1894 vide notification No. 43/3/143-1(5)/8368 dated 1.10.2002 for the development of Information Technology Park. As a consequence the entire agreement became unfeasible and executable. The Chandigarh Administration announced the Award vide Award No. 574 (Land, Trees, Tubewell) dated 15.12.2004, (copy of award is enclosed) acquiring the land for Rs. 1,31,260/- per kanal. The only alternative left was to somehow adjust the money advanced to the seller and under the then prevailing circumstances, the seller parted with only 2 kanal 2 marla of the agricultural land.
In the light of the circumstances explained above the assessee has disclosed the actual and correct value of the transaction, and hence the present proceedings are not called for and so may kindly be vacated.”
4. A supplementary reply dated 26.3.2012 was also furnished which is also reproduced as under:-
“The assessee, by way of Preliminary Objection to the present proceedings, ha to submit that the original return of income was filed on 20.12.2012 and assessed vide order dated 21.2.2003 and reassessment proceedings were initiated vide notice u/s 147 r.w.s. 148 dated 26.3.2009 hence the present proceedings are barred by period of limitation u/s 263(2) from dated 21.2.2003. Reference CIT v. M/s Distillers Co. Ltd. (SC-TIOL-49-ITC) dated 5.4.2007 (copy of order enclosed).
The Hon’ble Supreme Court has held, that u/s 263(2) – Clock of limitation starts ticking from the date of assessment order and not from reassessment order.
In the light of the circumstances explained above the present proceedings are not called for and so may kindly be vacated.”
5. Ld. Commissioner, after examining the submissions that the agreement to sell has clearly stated that 9 kanals of land was to be purchased for a sum of Rs. 72.00 lakhs giving an average rate of Rs. 8.00 lakhs per kanal. Therefore, for purchasing 2 kanals the assessee was required to spend Rs. 16,80,000/-and since the Assessing Officer has not made proper enquiry in this respect, therefore, the order was erroneous and prejudicial to the interest of the revenue. He also observed that case laws cited by the assessee regarding limitation is not relevant because the same was not for reassessment. In the light of these observations he set aside the assessment order of the Assessing Officer which was passed by Assessing Officer on 13.12.2009 u/s 143(3) and directed to make fresh assessment after proper investigation in these issues.
6. Before us, the ld. counsel of the assessee submitted that the Department has issued a notice u/s 148 because it seems that the Department was in possession of certain sale agreement pertaining to the assessee. The assessee has filed return in pursuance to notice u/s 148 declaring the same income and copies of the same is placed at page 5 to 7 of the paper book. He argued that the assessee had filed copies of statement of affairs explaining the investment in land during re-assessment proceedings in pursuance of notice issued u/s 143(1) and 143(2). He contended that re-assessment was done on the basis of these replies and certain additions amounting to Rs. 15,21,067/-were made and therefore, the assessment could not be called erroneous and prejudicial to the interest of the revenue. In any case since the copies of statement of affairs and detailed submissions were filed before the ld. Commissioner who has passed the order without considering the same in detail therefore, revision order passed by the Commissioner was not justified. In this regard he strongly relied on the decision of Smt. Lila Choudhury v. CIT [2007] 289 ITR 226.
7. On the other hand, the ld. DR for the revenue submitted that the reasons given for issuing notice u/s 148 copy which is enclosed at page 8 & 9 of paper book clearly shows that various agreements to sell showing purchase of land by the assessee were there and the Assessing Officer has never even bothered to ask for these agreements during re-assessment proceedings. Therefore, re-assessment has been completed without making proper enquiries and on this count itself the assessment order is erroneous as well as prejudicial to the interest of the revenue. He also contended that the decision of Hon’ble Gauhati High Court in case of Smt. Lila Choudhury (supra) is totally distinguishable on facts.
8. In the rejoinder the ld. counsel of the assessee submitted that the Department already had the information that the assessee had purchased certain lands which means so called agreement to sell were already in the possession of the Assessing Officer. There was no need to requisite the same again.
9. We have heard the rival submissions carefully and find force in the submissions of the ld. DR for the revenue. The reasons given for issuing of notice u/s 148 reads as under:-
“The assessee has filed the return of income for A.Y 2002-03 on 20.12.2002 at the total income of Rs. 89,429/- and agricultural income at Rs. 3,20,000/-. This office has received the TEP from the O/O Commissioner-II, Chandigarh and the O/O Director of Income-tax (Investment) Panchkula enclosing therein a list of transactions entered into by the assessee (alongwith his brother Shri Kulwinder Singh) during the F.Y 2001-02 relevant to A.Y 2002-03. The above said list is further supported by the documentary evidences in the form of agreement to s ell and sale deeds. From the perusal of the above said records and documents, it has transpired that the assessee has not declared these transactions in his return of income for A.Y 2002-03 and as such the undersigned has reasons to believe that the transactions whose details are enumerated below have escaped assessment and notice u/s 148 of the Income-tax Act, 1961 is required to be issued. Necessary approval as per the provisions of the Income-tax Act, 1961 has been obtained from the Addl Commissioner of Income -tax-V, Chandigarh and has been taken on record.
