9911796707
TMI Blog2021 (9) TMI 329X X X X Extracts X X X X X X X X Extracts X X X X ..... arate orders each dated 26/02/2019 of the Ld. CIT(A), Bathinda. 2. Since the issues involved are common and the appeals were heard together so these are being disposed off by this consolidated order for the sake of convenience and brevity. 3. At the first instance we will deal with the appeal in ITA No. 306/ASR/2019 in case of Shri Tralochan Singh Vs. ITO, Ward1(4), Mansa. 4. Following grounds have been raised in this appeal: 1. The Ld. CIT(A) erred on facts law in confirming the action of the AO of assessing the income at ₹ 3,87,73,310/- + Agriculture income at ₹ 11,56,169/- vide order u/s 143(3)1147 dated 20.12.2017. 2. The Ld. CIT(A) erred on facts law in confirming the validity of the proceedings u/s 1471148 because the Joint Commissioner of Income Tax did not record the satisfaction on the reasons recorded by the AO, as prescribed u/s 151, that the case of the assessee was fit for issue of notice u/s 148. 3. The Ld. CIT(A) erred on facts S law in confirming the validity of the proceedings u/s 1471148 because the ownership of land introduced as capital in the firm was ancestral belonging to the HUF while the reasons have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 48 of the Act on the basis that the assessee had introduced capital in the firm M/s G.S. Chahal Associates by way of transfer of his ancestral land measuring 46 Kanals 15 marla for ₹ 4,09,06,250/- and that the entire land transferred to the firm was situated in the municipal limit of Mansa. Hence the entire land was capital asset. The A.O. mentioned in the assessment order dt. 20/12/2017 that the proceedings were initiated after taking prior approval of the JCIT, Range-I, Bathinda. 5.1 The assessee raised the objections before the A.O. for issuance of notice under section 148 of the Act as under: I have to very humbly submit that the notice u/s 148 has been issued and the copy of live reasons to issue notice u/s 148 has been provided. The objections against the same for which the assessee is entitled as per the binding precedent of the Apex Court in the case of GKN Driveshafts (India) Ltd. V. ITO(2002) 125 Taxman 963 (SC) are as under because the return of income in respect to notice u/s 148 has already been filed:- (i) The notice u/s 148 has not been served in accordance with the provisions of Section 282 of the Income Tax Act, 1961. (ii) The sati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (3) is not applicable to the case of the assessee is also not acceptable. The assessee has become a partner in the firm dealing with real estate and introduced capital by way of transfer of his land. It is not only a fiction to the fix the year of transfer as the land was actually transferred to the firm as his capital. It is stated as if the land was not transferred then becoming a partner, the assessee should have money. In this case, the assessee has transfer of his land instead of introduction of capital by cash or otherwise. Therefore, there was no fiction but the land was actually transferred to the firm. As per provisions of Section 48, the amount recorded in the books of account of the firm, as the value of the capital asset shall be deemed to be the full value of the consideration received or accruing as a result of the transfer of the capital asset. iv. The plea regarding ancestral land taken in individual status is not acceptable although the land was ancestral yet the assessee has become a partner in the firm in the capacity of individual and not in HUF capacity. Thus, this plea is also not acceptable. 5.3 The A.O. framed the assessment by making the additi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee has become a partner in the firm in the capacity of individual and not in HUF capacity. Thus, this plea is also not acceptable The above stated findings of the AO are wrong because once the AO has stated himself that the land which was contributed as capital by the assessee is ancestral in nature, the notice u/s 148 issued in the status of individual is a illegal proceedings u/s 147/148 becomes void ab initio. 6.1 The Ld. CIT(A) after considering the aforesaid submissions of the assessee upheld the action of the A.O. in reopening the assessment by observing in para 4.2 of the impugned order as under: 4.2 I have given careful consideration to the contentions above and find that exactly identical objections were filed before the Assessing Officer in the assessment proceedings as has been mentioned in paragraph 2.1 of the assessment order. The objections of the appellant were met by the Assessing Officer vide order dated 15/11/2017 which has been extracted in paragraph 3 of assessment order. The service of notice in this case has been made on 27/03/2017 through notice server, therefore the contention is not acceptable. The appellant is making bald aver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e course of assessment proceedings by the A.O. 4. The Ld. CIT(A) also while deciding the appeal vide appellate order dated 26.02.2019 did not appreciate the fact that the sale deed dated 15/07/1981 relied upon by the A.O. for the purpose of computing the FMV of the subject land was never confronted to the assessee for the purpose of rebuttal. The subject sale deed was not confronted to the assessee by the CIT(A) also. 5. Thereafter the assessee made the application to the A.O. on 07/08/2019 thereby requesting him to provide the copy of the said sale deed on which the A.O. has relied while computing the capital gain [Refer Page No. 10 of the paper book] and thereafter the department provided the copy of sale deed to the assessee. [Refer Page No. 4 to 7 of the paper book] 6. That during the course of assessment proceedings the assesse filed certificate from Tehsildar Valuation Report of the registered Valuer with regard to FMV of the subject land as on 01.04.1981 but these were rejected arbitrarily. [Refer Para 5(ii) on Page No. 5 6 of the assessment order] 7. That the Ld. CIT(A) also rejected the certificate of Tehsildar Valuation Report by the reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me deserves to be admitted. (iii) Decision of Delhi High Court in the case of CIT Vs. Text Hundred India (P.) Ltd. [2011] 197 Taxman 128 (Delhi) in which it has been held that .It is well-settled that the procedure is handmade of justice and justice should not be allowed to be choked only because of some inadvertent error or omission on the part of one of the parties to lead evidence at the appropriate stage. Once it is found that the party intending to lead evidence before the Tribunal for the first time was prevented by sufficient cause to lead such an evidence and that this evidence would have material bearing on the issue which needs to be decided by the Tribunal and ends of justice demand admission of such an evidence, the Tribunal can pass an order to that effect. The Hon'ble Delhi High Court relied upon the following case while deciding the above said case:- Analkar Trades and Estates (P.) Ltd. (No. 2) Vs. CIT [1990] 186 ITR 313 (Mad.) R. Dalmia Vs. CIt [1978] 113 ITR 522 (Delhi) R.S.S.. Shanmugam Pillai and Sons V. CIT [1974] 95 ITR 109 (Mad.) ITO V. B.N. Bhattachayra [ 1978] 112 ITR 423 (Cal.) (iv) Decision of ITAT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. 9. As regards to the validity of the proceedings initiated under section 147 r.w.s 148 of the Act the Ld. Counsel for the assessee submitted that the satisfaction of the JCIT on the reasons recorded by the A.O. is mandatory in accordance with the provisions of Section 151(2) of the Act and the said satisfaction of the JCIT ought to have been positive satisfaction with the reasons to arrive at the satisfaction and the approval given in a mechanical manner may not be considered to be proper satisfaction in the eyes of the law. 9.1 Ld. Counsel for the assessee drew our attention towards page no. 3 of the assessee s paper book wherein JCIT, Range-1, Bathinda gave the approval to issue the notice under section 148 of the Act. It was submitted that in the said approval the Ld. JCIT, Range-1, Bathinda simply mentioned that this is a fit case to issue notice under section 148 of the Act and no satisfaction has been recorded therefore the satisfaction so recorded was not valid in the eyes of law for issuing the notice under section 148 of the Act. The reliance was placed on the decision of the ITAT Chandigarh Bench B in the case of Shri Tek Chand, Karnal Vs. ITO Ward-2, Kai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1, Bathinda 12.1 From the aforesaid approval given by the JCIT, Range-1, Bathinda, it is clear that the satisfaction has been recorded in a mechanical manner, without applying the mind, for issuing the notice under section 148 of the Act. 13. An identical issue having similar facts has been adjudicated by this Bench of the ITAT in case of Shri Satnam Singh, Jalandhar Vs. ITO, Ward-1(4), Jalandhar in ITA No. 579/ASR/2019 for the A.Y. 2013-14 vide order dt. 29/06/2021 wherein by following the order dated 15/03/2021 in ITA No. 215/Chd/2020 for the A.Y. 2009-10 in the case of Shri Tek Chand, Karnal Vs. ITO, Ward-2, Kaithal, the issue has been decided in favour of the assessee and the relevant findings have been given in para 14 to 14.4 which read as under: 14. We have considered the submissions of both the parties and perused the material available on the record. In the present case it is noticed that the A.O. obtained the approval of the JCIT before issuing the notice under section 148 of the Act, performa copy of which is placed at page no. 1 of the assessee s paper book, in the said Performa for recording the reasons for initiating the proceedings under section 147 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as under: The form like the one which is being used containing an endorsement merely saying Yes would justifiably cause apprehension that the act of the Commissioner is a mechanical act. In order to obviate this impression and to infuse more confidence in the assessee, it would be proper if the Commissioner also briefly slates why he has given his sanction to the proceedings under Section 147, thus avoiding all arguments in courts of law whether he applied his mind or he would have been satisfied in the circumstances of the case or not. 14.3 On an identical issue the ITAT Chandigarh Bench B Chandigarh vide order dt. 15/03/2021 in ITA No. 215/Chd/2020 for the A.Y. 2009-10 in the case of Shri Tek Chand Vs ITO, Ward-2, Kaithal held as under: 14.1 The A.O. obtained the approval of the PR. CIT before issuing the notice under section 148 of the Act. The proposal dt. 11/03/2016 seeking the approval for issuance of notice under section 148 of the Act, by the A.O. is placed at page no. 2 3 of the assessee s paper book. While giving the approval the Ld. PR. CIT, Karnal recorded as under: Yes, satisfied, it is a fit case for issue of notice under section 14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Department and affirmed the order of the Hon'ble M.P. High Court in the case of CIT Vs. S. Goyanka Lime Chemicals Ltd. (supra) held as under: that where Joint Commissioner recorded satisfaction in mechanical manner and without application of mind to accord sanction for issuing notice under section 148, reopening of assessment was invalid. 15. We therefore by following the ratio laid down by the Hon'ble Apex Court in the aforesaid referred to case, are of the view that the reopening under section 148 of the Act on the basis of mechanical approval without applying the mind by the Ld. Pr.CIT was not valid. Therefore, in the present case, the reopening of the assessment on the basis of notice under section 148 of the Act is quashed. 14.4 In the present case also since the A.O. reopened the assessment under section 147 of the Act by issuing the notice under section 148 of the Act, on the basis of mechanical approval, without applying his mind, therefore the said approval was not valid and consequently the reopening of the assessment on the basis of said approval was not valid. We therefore quash the same. Since, we have decided the legal issue in favour ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
