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Judgment
PER VIMAL KUMAR, JM:
The appeal filed by the Assessee is against order dated 23.05.2017 of the Learned Commissioner of Income Tax (Appeals)-18, New Delhi [hereinafter referred to as ‘the Ld. CIT(A)’] passed u/s 250 of the Income Tax Act, 1961, [hereinafter referred to as ‘the Act’] arising out of assessment order dated 17.03.2015 of the Assessing Officer/ Deputy Commissioner of Income Tax, Circle 10(1), New Delhi passed u/s 147/143(3) of the I.T Act, 1961 for Assessment Year 2007-08.
Brief facts of the case are that the assessee filed return of income of Rs.4,61,182/- on 14.03.2008. The assessment was completed u/s 143(3) of the Act on 09.12.2009 at total income of Rs.4,61,182/-. The case of assessee was reopened. Notice u/s 148 of the Act dated 31.03.2014 was issued. Assessee vide letter dated 19.11.2014 submitted original return of income. Reasons for reopening of assessment were provided to the assessee. Notice u/s 143(2) of the Act dated 17.02.2015 was issued. Sh. P.K Taparia, CA/Authorized Representative of the assessee attended the proceedings from time to time and filed written submissions. On completion of proceedings, Ld. AO vide order dated 17.03.2015 made additions of Rs.21,14,556/, and Rs.34,71,865/-. Against order dated 17.03.2015 of Ld. AO, the assessee filed appeal before the Ld. CIT(A) which was partly allowed vide order dated 23.05.2017.
Being aggrieved, the appellant assessee preferred present appeal on following grounds:
“1.That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in assuming jurisdiction and in framing the impugned reassessment order and that too without complying the mandatory conditions of section 147 to 151 of the Income Tax Act, 1961.
2.That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in assuming jurisdiction and in framing the impugned reassessment order and that too without complying the mandatory conditions of section 147 to 151 is bad in law and against the facts and circumstances of the case.
3.That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in not allowing the exemption u/s 54F amounting to Rs.21,14,556/- as claimed by the assessee and that too on the ground that claim was not made in the return of income.
4.That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in not allowing the exemption u/s 54F amounting to Rs.21,14,556/-and directing the AO to reopen the assessment for AY 2011-12, is bad in law and against the facts and circumstances of the case.
5.That having regard to the facts and circumstances of the case, Ld. CTT(A) has erred in law and on facts in not deleting the addition of Rs.34,71,865/-fully as made by Ld. AO by treating the same as 'income from other sources and further erred in treating the rent received from agricultural land as income from other sources and that too by recording incorrect facts and findings and by disregarding the principles of natural justice.
6.That in any case and in any view of the matter, action of Ld. CIT(A) in not deleting the addition of Rs.34,71,865/- and treating the rental income as income from other sources is bad in law and against the facts and circumstances of the case.
7.That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in dismissing the appeal of assessee on the ground of alleged suppression of information, more so when all the information regarding all the appeals of assessee are available on record.
8.That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in not reversing the action of Ld. AO in charging interest u/s 234B and 234C of the Income Tax Act, 1961.
9.That the appellant craves the leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other”
The Ld. Authorized Representative submitted that reopening is bad in law for following reasons:
The original assessment proceedings u/s 143(3) (PB 100) were made and the reopening is done after 4 years from the end of the relevant assessment year (PB 12), however, the conditions of first proviso to section 147 are not met as the reasons recorded (PB 13) do not spill out as to what particulars of income has not been disclosed by the assessee truly and fully.
a. PB 100 is the copy of assessment order dated 31.03.2007 passed u/s 143(3) in the case of assessee for AY 2007-08.
b. PB 12 is the copy of notice u/s 148 dated 31.03.2014 which shows that reopening has been made after the 4 years from the end of relevant assessment year.
c. PB 13 is the copy of reasons recorded which shows that it has no where been spelt out as what particulars income has not been disclosed by the truly and fully.
d. PB 118-119 is the detailed submission made before Ld. CIT(A) on this count which has also been captured by Ld. CIT(A) at Page 3 of his order.
e. Reliance is placed on the following judicial decisions:
Shabrawal Properties Industrial Pvt. Ltd. vs. ITO, (2016) 382 ITR 0547 (Del.)
Himson textile Engineering Industries Ltd (2013) 83 DVTR 132 (Guj.)
Bombay Stock Exchange Ltd. vs. DDIT(E), (2014) 361 ITR 160 (Bom.)
E.1 Dupont India (P.) Ltd vs. DCIT, (2013) 351 ITR 299 (Del.)
Reasons are based on incorrect fact and premises that assessee has claimed exemption u/s 54, however, the fact of the matter is that the exemption has been claimed by the assessee u/s 54F details of which were also submitted during the original course of hearing.
a. PB 1-3 is the copy of return of income of assessee along with computation of income which duly shows that assessee has claimed the exemption u/s 54F.
b. PB 10-11 is the copy of reply dated 27.11.2009 filed by assessee before Ld. AO during the course of original assessment proceedings wherein the above-mentioned computation of income was duly submitted showing claim of exemption u/s 54F.
c. PB 119-120 is the detailed submission filed before Ld. CIT(A) on this count which has also been captured by Ld. CIT(A) at Page 3-4 of his order.
d. Reliance was placed on following order:
Bhavmeet Singh Bhatia vs. ACIT, ITA No. 6545/Del/2019 dated 21.09.2022, ITAT Delhi Bench.
Ajendra Pal Singh vs. ITO, ITA No. 4013/Del/2018, dated 10.06.2022, ITAT Delhi Bench.
Raj Kumar Dugar (HUF) vs. ITO, (2008) 12 DTR 0016, ITAT Delhi Bench.
CIT vs. Atlas Cycle, (1989) 180 ITR 319 (P&H HC).
The reopening is not based on any fresh tangible material and has been made merely on the basis of reappraisal of existing case record which is also evident from the reasons recorded (PB 13) which mentions from the perusal of the case records it is revealed that........".
a. PB 13 is the copy of reasons recorded which shows that is it merely based on stale information and not on any fresh tangible material.
b. PB 121-129 is the detailed submission on this count made before Ld. CIT(A) which has also been captured by Ld. CIT(A) at Page 4-6 of his order.
c. Reliance is placed on the following judicial decisions:
Rasalika Trading & Investment Co. (P.) Ltd. vs. DCIT, (2014) 365 ITR 0447 (Del.).
Reliance is also placed on various judicial decision mentioned in written submissions filed before Ld. CIT(A) which is enclosed at PB 121-129.
The impugned reopening is based on change of opinion on the same set of facts which is bad-in-law. The issue of capital gain and exemption u/s 54F was exhaustively considered during the original assessment proceedings.
a. PB 2-3 is the copy of computation of income where it is evidence that assessee has claimed exemption u/s 54F.
b. PB 4 is the copy of balance sheet as on 31.03.2007 of the assessee which would show that assessee sold plot at South City - I and a plot at Chhatarpur.
c. PB 8-9(9) is the copy of notice u/s 142(1) dated 12.05.2009 filed by assessee before Ld. AO during the course of the original assessment proceedings wherein a specific question was asked to provide details of income from capital gains with evidences.
d. PB 10-11 is the copy of reply filed by assessee before Ld. AO during the course of original assessment proceedings provided details of capital gain along with the above-mentioned computation of income and balance sheet and purchase and sale deeds were also provided.
e. PB 129-133 is the detailed submission on this count made before Ld. CIT(A) which has also been captured by Ld. CIT(A) at Page 7-8 of his order.
f. Reliance is placed on the following judicial decisions:
CIT vs. Kelvinator India Ltd. (2010) 320 ITR 561 (SC)
CIT vs. Munjal Showa Ltd. ITA No. 149-150/2011 dated 03.02.2012 (Del.)
Ritu Investments (P.) Ltd. vs. DCIT, 345 ITR 214 (Del.)
Godrej Agrovet Ltd. vs. DCIT & Anr. (2010) 323 ITR 97 (Bom.)
Cartini India Ltd. vs. ACIT & Ors. (2009) 314 ITR 275 (Bom.)
Satisfaction of CIT accorded u/s 151 is without any application of mind and is mechanical in nature.
a. PB 12 is the copy of notice u/s 148 dated 31.03.2014.
b. PB 13 is the copy of reasons recorded.
c. PB 14-15 is the copy of approval accorded u/s 151 which would show that approval given by Ld. CIT is mechanical in nature.
d. PB 133-135 is the copy of written submissions filed by the assessee before Ld. CIT(A) on this ground.
Reopening was made on the issue of exemption claimed u/s 54 whereas the addition made by Ld. AO is on account of exemption u/s 54F. Therefore, the basis of re-opening and the addition made are different which is not permissible in law as held in the following judicial decisions;
Ranbaxy Laboratories Ltd. vs. CIT, (2011) 366 ITR 0136 (Del.)
CIT vs. Jet Airways (I) Ltd., (2011) 331 ITR 0236 (Del.)
Learned Authorized Representative submitted that the action of Ld. AO in disallowing the exemption u/s 54F of Rs. 21,14,556/- is bad in law as-
The assessee has sold two plots; - (i) situated at Chhatarpur for Rs. 8,81,000/-and (ii) situated at South City -1 Gurgaon for Rs. 22,00,000/- and earned a long-term capital gain of Rs. 21,14,556/-. Against the said capital gain, assessee claimed exemption u/s 54F on account of a residential property purchased by assessee for Rs, 1,00,87,942/-within the period of one year before the transfer of the above-mentioned plots. Therefore, the NIL capital gain was shown by assessee in her return of income.
The assessee has sold two plots and purchased a residential house property i.e., Flat-Parsvnath Exotica within the time stipulated in section 54F and therefore, the assessee was eligible to claim deduction u/s 54F. Thus, the said deduction was claimed by the assessee during the course of original assessment proceedings by filing a computation of income showing deduction u/s SAF (PB 3) vide her reply dated 27.11.2009 (PB 10) which was accepted by Ld. AO at that time and the income of the assessee was assessed at the income shown in the said computation of income. This claim was also made by the assessee during the course of reassessment proceedings.
PB 2-3 is the copy of computation of income where it is evidence that assessee has claimed exemption u/s 541 and the total income was shown at Rs. 4,61,182/-.
PB 4 is the copy of balance sheet as on 31.03.2007 of the assessee which would show that assessee sold plot at South City I and a plot at Chhatarpur.
PB 8-9(9) is the copy of notice u/s 142(1) dated 12.05.2009 filed by assessee before Ld. AO during the course of the original assessment proceedings wherein a specific question was asked to provide details of income from capital gains with evidences.
PB 10-11 is the copy of reply filed by assessee before Ld. AO during the course of original assessment proceedings provided details of capital gain along with the above-mentioned computation of income and balance sheet and purchase and sale deeds were also provided.
PB 100 is the copy of assessment order passed u/s 143(3) dated 09.12.2009 in the case of assessee for AY 2007-08 wherein Ld. AO duly records that assessee has shown income from salary, rental income, interest income, capital gain and agricultural income and after discussion and scrutiny of details the income of assessee accepted at Rs. 4,61,182/-.
PB 17 is the copy of assessee’s reply dated 24.11.2014 filed by assessee before Ld. AO during the course of re-assessment proceedings submitting that assessee has claimed deduction u/s 541 vide computation of income filed during the course of original assessment proceedings.
PB 89 is the copy of assessee's reply dated 26.02.2015 filed by assessee before Ld. AO during the course of re-assessment proceedings submitting that the details of capital gain and deduction u/s 54F have been filed and the same details were also filed during the course of original assessment proceedings.
PB 136-138 is the copy written submissions filed before Ld. CIT(A) submitting that as per Goetze India Ltd. (supra) nothing precludes the Id. CIT(A) from entertaining the claim of the assessee.
Reliance is placed on the following judicial decisions wherein it has been held that Ld. CIT(A)'s powers are coterminous with that of the Ld. AO and also that judicial authorities can allow the deduction which assessee is entitled to but has not claimed the same in the return of income:
National Thermal Power Company Ltd. vs. CIT, (1998) 229 ITR 383 (SC)
Jute Corporation of India Ltd. v. CIT (1991) 187 ITR 0688, (SC)
CIT vs. Jai Parabolic Springs Ltd., (2008) 306 ITR 0042 (Del.)
CIT vs. Pruthvi Brokers & Shareholders (2012) 349 ITR 0336 (Bom.)
Reliance is also placed on the following judicial decisions wherein it has been held that when an assessee, under a mistake, misconception or on not being properly instructed, is over-assessed, the authorities under the Act are required to assist him and ensure that only legitimate taxes due are collected:
S.R. Koshti vs. CIT, (2005) 276 ITR 0165 (Guj.)
Vinay Chandulal Satia vs. CIT, Spl. Civil Application No. 622 of1981 dated 20-8-1981 (Guj.).
Kalindee Rail Nirman (Engineers) Ltd. Vs. CIT, (2017) 394 ITR 684, (Raj.)
CIT v. Vali Brothers (2005) 149 Taxman 233/282 ITR 149 (All.)
CIT v. Bharat General Reinsurance Co. Ltd. (1971) 81 ITR 303 (Del.)
CIT vs. Bakelite Hylam Ltd., (1999) 237 ITR 392, (AP)
CIT vs. H.P Forest Corporations Ltd., 320 ITR 54, (HP)
Gujarat Gas Co. Ltd. vs. JCIT, (2000) 254 ITR 0084, (Guj.).
Ld. Departmental Representative relied on the order of Ld. CIT(A).
From examination of record in light of aforesaid rival contention, it is crystal clear that Ld. CIT(A) vide order dated 23.05.2017 confirmed the action of Ld. AO not allowing exemption u/s 54F amounting to Rs.21,14,556/- as claimed by assessee and confirmed addition of Rs.34,71,865/- income from other sources and not treating income as rent received from agricultural land.
PB 214-224 (216) is the copy of purchase deed of the said property a Millenium Plaza purchased by assessee in AY 2003-04 which describes the said property as "Unit No. 510B, in tower "B" having Super built up Area 689 Sq. Ft. (64.01 Sq. Meters) of office space comprises in 5th floor, MILLENNIUM PLAZA.... Further, this deed thereafter referred this property as "office space". This clearly shows that this property is not a residential property but a commercial one.
PB 144 is the copy of letter dated 14.02.2017 filed by assessee before Ld. AO stating that assessee had only one house property.
PB 181 is the copy of letter dated 06.04.2017 filed by assessee before Ld. AO stating that the property at Millennium Plaza is a commercial property.
PB 211-212 is the copy of letter dated 09.05.2017 filed by assessee before Ld. AO again reiterating that the property at Millennium Plaza is a commercial property and further submitting the purchase deed of the Millennium Plaza.
Ld. CIT(A) incorrectly said property i.e., Villa Palm Spring was acquired by the assessee vide registered deed dated 29.08.2012. The payments for the said property was made between the period 01.08.2006 to 11.04.2012 and for this reason the said property was appearing in the balance sheet of assessee as on 31.03.2008 but the fact remains that this property was purchased vide registered sale deed only on 29.08.2012.
Ld. CIT(A) has mentioned in paragraph 5.3.10(b) at page 33 has mentioned that the new asset i.e., Flat at Parsvanath Exotica has been transferred by assessee in AY 2009-10 and therefore assessee is in violation of provisions of section 54F(3). Further, assessee has not offered any capital gain in AY 2009-10 which craves remedial action. The assessee has transferred the property in AY 2009-10, even then, the exemption u/s 54F cannot be disallowed in the impugned year for the reason that plain reading of section 54F(3) shows that capital gain claimed as exempt u/s 54F would be taxable in the year of transfer of new asset and therefore, the exemption is allowable in the impugned year. In view of the above pleadings and evidences the disallowance of exemption claimed by assessee u/s 54F is without any basis, evidence or material.
Ld. AO alleged that the agricultural income shown by the assessee is in the nature of suspicious transaction as assessee has shown a profit of 75% which is beyond human conduct and therefore, the agricultural income shown by assessee at Rs. 34,71,864/- was treated as undisclosed income of assessee introduced as agricultural income. Ld. CIT(A) alleged that profit shown by the assessee on its agricultural sales is excessive. Ld. CIT(A) estimated the profit of assessee on the sale of agriculture produce to be Rs. 7,35,647 i.e., 25% of 29,42,588 and further held that income earned on account rent on lease of agricultural produce is taxable under the head other source. Therefore, Ld. CIT(A) confirmed the addition to the extent of Rs.27,36,217 (Rs. D 34,71,864 less Rs. 7,35,647/-).
PB 138-142 is the copy of written submissions filed before Ld. CIT(A) on this issue where it has been submitted that assessee is active engaged in agricultural activities and her educational education qualification is M.Sc. (agriculture).
PB 143 is the copy of reply dated 14.07.2017 filed by assessee before Ld. CIT(A) submitting that agricultural income of assessee includes rent received on lease of agricultural land to M/s Garden View Escape (P.) Ltd. for the purpose of growing of sapling and plantations.
PB 145-146 is the copy of reply dated 20.03.2017 filed by the assessee before Ld. CIT(A) submitting that purchase bill for material purchased by the assessee for carrying on agricultural activities and further provided evidence to show that M/s Garden View Escape (P.) Ltd. is engaged in produce of agricultural products in form of their return of income, audited financial statements and tax audit report.
PB 180 is the copy of letter dated 06.04.2017 filed by the assessee before Ld. CIT(A) submitting that assessee is showing rental income for agricultural land and other agricultural in earlier years as well as in subsequent years which was duly accepted by the department in the assessment proceedings of those years. Details of the same are enclosed at PB 98 and PB 184-200.
A similar addition was made by Ld. AO in assessee's own case for AY 2011-12 vide assessment order dated 28.02.2014 which was deleted Ld. CIT(A) vide order dated 02.02.2017 after given detailed finding on the agricultural activities of the assessee. In this appeal, during the remand proceedings, Ld. AO also deputed an inspector for physical verification of the assessee's agricultural activities and it was reported by the inspector that assessee is carrying on the agricultural activities in a very systematic and scientific manner.
Reliance is placed on the order of Hon'ble ITAT Delhi Bench in the case of assessee's husband, Sh. Adesh Kumar Tyagi in ITA No. 4437/Del/2107 dated 20.08.2019 for the impugned year i.e., AY 2007-08 wherein the issue involved was identical with same set of facts and the agricultural income including the rental income from lease of agricultural land was duly accepted by the Hon'ble ITAT and addition made by Ld. AO was deleted.
In view of the above material facts by following the judicial precedent the impugned orders dated 23.05.2015 of Ld. CIT(A) and 17.03.2015 of Ld. AO being unsustainable are set aside. Grounds of appeal No.1 to 9 are accepted.
In the result, the appeal filed by the Assessee is allowed.