TaxTMI 
TaxTMI 
2019 (8) TMI 767
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....2682/Del/2018 (by the assessee) & ITA No.2913/Del/2018 (by the Revenue) 3. Facts of the case, in brief, are that the assessee is an individual and derives income from 'Salary' and 'Income from other sources.' He filed his return of income on 5th March, 2013, declaring the total income at Rs. 1,94,860/- which was revised to Rs. 3,81,630/- on 6th March, 2013. On the basis of the information received that the assessee has entered into a transaction of sale of immovable property during the F.Y. 2010-11 for Rs. 46,85,30,000/- to different parties and the land sold is situated at a distance of less than 8 kms. from the Municipal Corporation limit of Gurgaon for which the land is qualified to be a capital asset u/s 2(14) of the IT Act, 1961 and as the assessee has not shown any capital gain tax in his income-tax return, the Assessing Officer reopened the assessment by recording reasons and issued notice u/s 148 of the IT Act on 25th March, 2015. The notice was duly served on the assessee. In compliance of the said notice u/s 148, the assessee submitted that the return filed on 6th February, 2013, vide acknowledgement No.5697256900603 should be considered as return filed in response ....
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....on agreement as the owners were desirous of developing Group Housing complex or commercial/cyber over the said land. As owners were not fully equipped to execute and complete the proposed work of Group housing complex, they entered into this agreement with the developer due to his reputation/ experience /expertise and capability to obtain permission for change of land use and to obtain license from the Government for the development/construction of the said housing complex. The Assessing Officer analysed the various clauses of the collaboration agreement. He noted that the owners issued a special power of attorney in 2006 in favour of one Shri Sunil Satija and Shri Dharmendra Bhandari, Directors of Bestech India Pvt. Ltd., nominees of the company for the purpose of representing before the Government Authorities to get the change of land use, sanction, LOI and permission for construction/development of the housing project on the said land for building, carrying out construction and other legal requirements. The owners through M/s Bestech India Pvt. Ltd., made an application on 04.01.2007 to the Government of Haryana to grant permission to construct a residential project over the sai....
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....ession. In response of the same, there was no submission made the assessee or the AR. In view of the detailed facts and reason as above, it is clear that the land owners including the assessee converted their land holding collectibly with the help of developer to develop the same as constructed space (Units/Apartments) where the cost/market of each unit depends on various parameters as discussed above. The land owners were facing the risk and rewards involved w.r.t. the market condition in respect of potential sale consideration of the units (reward in case of appreciation and risk if there is depression in the rates of apartments depending upon market conditions). The owners including the assessee have taken a series of activities like: * Entering into collaboration with a reputed builder. * Putting the sale consideration in terms of 35% share in the space. * Getting licence in their names for CLU to construct/develop a residential housing project on the said land. * Intent of maximization of profit by intention of selling the space as units. * By putting various conditions in the collaboration agreement upon the developer for ....
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....hallenged the validity of reopening of the assessment on account of jurisdiction. However, the ld.CIT(A) was not fully satisfied with the arguments advance by the assessee. So far as the treatment of the income as adventure in the nature of trade is concerned, the ld.CIT(A) held that the profits arisen to the assessee on account of transfer of land, vide sale deed dated 28th February, 2011 are taxable as longterm capital gain. He, however, rejected the arguments advanced by the assessee challenging the validity of reopening as well as the validity of jurisdiction by the Assessing Officer. 10. So far as the issue relating to validity of jurisdiction is concerned, it was argued before the CIT(A) that the assessee was filing his return with the ITO, Ward 40(3), New Delhi and has never requested for transfer of jurisdiction to Gurgaon. A copy of the submissions of the assessee was forwarded to the Assessing Officer. The Assessing Officer, vide his report dated 12th September, 2016, submitted that the assessee himself had mentioned the address in the ITR as Village-Nakhraula, Tehsil Manesar, Gurgaon. The Assessing Officer reported that this address falls under the territorial juri....
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.... which each of the brothers had received consideration of Rs. 16,10,57,231/-. The Assessing Officer had verified this information with the assessment records and noted that no income from these transactions had been shown by the assessee in the return of income filed. The information received by the Assessing Officer was specific and precise and there was no ambiguity about the information received. Further, the Assessing Officer had applied his mind to the information received by verifying the assessment records and observing that no income from sale transaction had been shown by the assessee in the return of income filed by him. Relying on various decisions, the ld.CIT(A) upheld the action of the Assessing Officer in reopening of the assessment. He also rejected the ground raised by the assessee challenging the completion of the assessment u/s 143(3) without service of notice u/s 148 and without providing sufficient opportunity to the assessee. So far as the addition on merit is concerned, the ld.CIT(A) upheld the addition made by the Assessing Officer. He, however, treated the entire sale consideration as long-term capital gain after considering the cost of acquisition as comput....
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....bly transferred development, sale and third party encumbrance rights to the developer and in spite of the fact that the aforesaid agreement was never repudiated by either of the party and the final sale agreement was culmination of the same agreement. 5. The Ld. CIT (A) has erred on facts and in law in holding that the land transferred was a capital asset and not an agriculture land ignoring the fact that it was an ancestral land on which agricultural activities were done by the appellant/ancestors for ages, it was shown as agriculture land in revenue records and stamp duty was charged on the transfer of this land treating it to be an agriculture land. 6. Without prejudice to the other grounds of appeal the Ld. CIT (A) has erred on facts and in law in assuming value of the land at the rate of Rs. 25,000/- per acre as on 01.04.1981 as taken by the AO. 7. Without prejudice to the other grounds of appeal the Ld. CIT (A) has erred on facts and in law in denying the benefit of deduction u/s 54B and 54F of the Income Tax Act, 1961 on account of investments made in the agricultural land/residential house eligible for the aforesaid deductions. 8. The app....
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....ge 133 of the paper book, he submitted that the assessee, vide letter dated 25th February, 2013 and vide another letter dated 14th March, 2013, copy of which is placed at page 135 of the paper book, submitted that the ITO (Intelligence) sought to verify from the assessee about the transaction of sale of immovable property. He was intimated, vide letter dated 15th March, 2013 that the assessee had filed income-tax return for the concerned year. Referring to page 141 and 142 of the paper book, he submitted that the Assessing Officer, Gurgaon, was intimated in response to notice u/s 148 issued by him on 25th March, 2015 that the original return was filed on 6th March, 2013 vide acknowledgement No.569725690060313. He submitted that the PAN of the assessee was available with the Assessing Officer of Gurgaon who could have verified as to the place where PAN is linked. He submitted that as per the information received under RTI, the PAN of the assessee was transferred on 22nd April, 2016. Similarly, in the case of Shri Devender Kumar, it was transferred on 11th September, 2017 and in case of Shri Parvinder Kumar, it was transferred on 19th March, 2015. However, the notice u/s 148 in....
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....d u/s 124(3) although the assessee is not legally required to do so, the assumption of jurisdiction by the Assessing Officer without taking recourse to section 124(2) and, thereafter, issuance of notice u/s 148 is bad in law. 19. So far as the allegation of the Revenue that the assessee has not raised an objection u/s 124(3) is concerned, he submitted that the said section is applicable for voluntary returns u/s 139(1) or u/s 115WD filed by the assessee and section 124(3)(b) is applicable when such return is not filed by the assessee. It is not applicable in respect of the return to be filed in response to notice u/s 148. For the above proposition, he relied on the decision of the Hon'ble Bombay High Court in the case of CIT vs. Lalitkumar Bardia (2017) 84 taxmann.com 213 (Bombay). In any case, he submitted that Shri Attar Singh has objected the above jurisdiction vide his letter dated 30.11.2015, copy placed at page 146 of the paper book and which was disposed of by the Assessing Officer vide his order dated 30.11.2015, copy of which is placed at pages 148 and 149 of the paper book. So far as the allegation of the CIT(A) that the assessee has not raised objection about the ....
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....ed that notice u/s 148 can be issued by the Assessing Officer having jurisdiction over the assessee who is regularly assessed to tax. For the above proposition, he relied on the following decisions:- (i) Lt. Col. Paramjit Singh v. CIT (1996) 89 taxman 536 (P&H); (ii) Dushyant Kumar Jain vs. DCIT (2016) 66 taxmann.com 126 (Delhi); (iii) M.I. Builders (P) Ltd. vs. ITO (2008) 115 ITD 419 (Lucknow); and (iv) Jindal Photo Films Ltd. vs. DCIT (1998) 234 ITR 170 (Del). 21. Referring to the various decisions relied on by the CIT(A) he submitted that all those decisions are distinguishable and not applicable to the facts of the present case. He submitted that on the facts of the present case the decision of the Hon'ble Punjab & Haryana High Court in the case of Lt. Col. Paramjit Singh (supra) which is the jurisdictional High Court will be applicable. In this case, the facts were that the assessee's original assessment was completed at Pune. Thereafter, he shifted to Jalandhar, but his assessment records were not transferred to the Assessing Officer of Jalandhar by passing an order u/s 127. On the basis of a complaint received from assessee's rel....
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....ed notice u/s 148 sent at Gurgaon address. This establishes the fact that he was residing at the address provided in the notices u/s 148 issued by the Assessing Officer and, therefore, the claim of the assessee that he was not the resident of Gurgaon, but, Delhi alone is without any basis. He submitted that the assessee was very much a resident of Gurgaon not only on the basis of address shown by him in the ITR, but, he has duly received the notice sent by the Assessing Officer at the Gurgaon address. Similarly, there is no illegality caused by the Assessing Officer by issuing the second notice and, at the most, the second notice may be treated as infructuous. Referring to the provisions of section 124(3), he submitted that no person can challenge the jurisdiction of the Assessing Officer after one month from the date of service of notice u/s 143(2) and 142(1). Further, the assessee, during the course of assessment proceedings regularly appeared before the Assessing Officer and till the completion of the assessment, the jurisdiction was never challenged. 23. Referring to the decision of the Hon'ble Delhi High Court in the case of Abhishek Jain vs. ITO (2018) 94 taxmann.com 3....
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....does not arise. The ld. DR, apart from supporting the order of the CIT(A) and the various decisions relied by him therein also relied on the following decisions:- i) Raymonds Woollen Mills Ltd. vs. ITO & Ors., 236 ITR 34; ii) Vasudev Fatandas Vaswani v. ITO,, 2018-TIOL-2305-HC-AHM-IT; iii) PCIT v. Paramount Communication (P) Ltd., 2017-TIOL-253-SC-IT; iv) PCIT vs. Paramount Communication (P) Ltd. (2017) 79 taxmann.com 409 (Delhi), 392 ITR 444 (Delhi); v) Krishna Developers & Co. v. DCIT (2018) 91 taxmann.com 306 (SC); vi) Vasudev Fatandas Vaswani v. ITO (2018-TIOL-2305-HC-AHM-IT); vii) Mohammedally Noorbhoy Bandukwala Trust vs. ITO (2017-TIOL- 341-HC-MUM-IT); viii) Aravali Infrapower Ltd. vs. DCIT (2017-TIOL-42-SC-IT), ix) Aravali Infrapower Ltd. vs. DCIT (2017) 390 ITR 456 (Del); x) Dr. Chhangur Rai vs. CIT (2017-TIOL-660-HC-ALL-IT); xi) Amsa India Pvt. Ltd. vs. CIT (2017-TIOL-603-HC-DEL-IT); 24. The ld. counsel, in his rejoinder, submitted that the decisions relied on by the ld. DR in the case of Abhishek Jain (supra) and in the case of S.S. Ahluwalia (supra) are not applicable. ....
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....ssed with the ITO, Delhi and after knowing that he had transferred the case to ITO, Delhi. However, in the present case, even after knowing that the assessee is regularly assessed with the Assessing Officer of Delhi, the Assessing Officer Gurgaon chose to issue notice u/s 148 and also completed the assessment even though the time period for issuing notice u/s 148 by the Assessing Officer of Delhi had not expired. 25. Similarly, so far as the reliance on the case of S.S. Ahluwalia (supra) is concerned, he submitted that here the assessee was an IAS officer of Nagaland cadre who was compulsorily retired in 1993. During the period 1971-72 to 1978- 79, he was filing his return of income at Dimapur, Nagaland. In July 1978 he was posted to Delhi on deputation in the Ministry of Home Affairs, a position which he continued to hold till 1984. The income-tax returns for the assessment years 1980-81 to 1983-84 were filed at Delhi with the ITO, Salary Circle. The return for the assessment year 1984-85 was filed by the Respondent at Dimapur, Nagaland on 8th August, 1985. The return was processed on 31st March, 1987 u/s 143(1) of the IT Act. A search by the CBI took place on 27th March, 1987 ....
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....y beginning was challenging the assumption of jurisdiction by the Assessing Officer. Even before the CIT(A), the assessee has challenged the assumption of jurisdiction by the Assessing Officer. However, the ld.CIT(A) rejected the same on the ground that the order u/s 120/127 are not appealable u/s 246A. Further, the assessee has not raised any objection u/s 124(3)(a) to the transfer within one month from the date of service of notice u/s 143(2)/142(1). While doing so, he has relied on the decision of the Punjab & Haryana High Court in the case of Smt. Jaswinder Kaur Kooner vs. CIT (A) (2007) 291 ITR 80 and in the case of Subhash Chander v. CIT (2008) 166 Taxman 307 and the decision of the Hon'ble Allahabad High Court in the case of CIT vs. Sohal Lal Sewa Ram Jaggi (2009) 222 CTR 412 and various other decisions. He further held that where the jurisdiction has irregularly been exercised and the assessee participated in the proceedings, the assessee can be said to have waived the objection regarding jurisdiction. Further, the assessee has mentioned his address of Gurgaon in the return of income. The ld. CIT(A) accordingly held that the Assessing Officer has rightly assumed jurisdi....
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.... assessed the same in the first instance alone has the jurisdiction to proceed in the matter under Section 147 read with Section 148 of the Act unless the case has been transferred by a competent authority to another Assessing Officer under Section 127 of the Act and in that event the latter will have jurisdiction to proceed. Section 127 of the Act which is relevant for our purpose is reproduced hereunder for facility of reference : "127. Power to transfer cases.--(1) The Director-General or Chief Commissioner or Commissioner may, after giving, the assessee a reasonable opportunity of being heard in the matter, wherever it is possible to do so, and after recording, his reasons for doing so, transfer any case from one or more Assessing Officers subordinate to him (whether with or without concurrent jurisdiction) to any other Assessing Officer or Assessing Officers (whether with or without concurrent jurisdiction) also subordinate to him. (2) Where the Assessing Officer or Assessing Officers from whom the case is to be transferred and the Assessing Officer or Assessing Officers to whom the case is to be transferred are not subordinate to the same Director-General or....
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....ve Directors-General or Chief Commissioners or Commissioners agreeing and in the event of disagreement, by the Board or any such Director- General or Chief Commissioner or Commissioner authorised by it. The section expressly provides that on such a transfer it is not necessary to reissue any notice when the same has already been issued by the Assessing Officer from whom the case is transferred and the Assessing Officer to whom the case is transferred is entitled to proceed from the stage at which he receives the case from his predecessor. It is also provided that wherever it is possible to do so, the assessee shall be given a reasonable opportunity of being heard before an order of transfer is passed and that the competent authority will record his reasons for the transfer. The Explanation to Section 127, makes it clear that once an order of transfer is made under the section, all pending proceedings for different years are transferred and the Assessing Officer to whom the case is transferred would be in a position to continue all the pending proceedings and to institute further proceedings against the assessee in respect of any year, past or future, and even to reopen the assessme....
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....e ITO Ward 39(2) was not the AO of the Assessee. That single fact in itself vitiates the reopening of the assessment. What is also evident is that, perhaps realising the error, a subsequent notice dated 23rd June 2014 under Section 148 was issued by the AO of the Assessee. However, it was beyond the deadline of 31st March, 2014 under Section 149(1)(b) of the Act. 16. The reasons given by the Department in its counter affidavit do not in any way explain the patent illegality in invoking the powers under Section 148 of the Act for reopening the assessment of the Assessee for AY 2007-08. The mere fact that the definition of an AO in terms of Section 2(7-A) of the Act also includes a DCIT and other superior officers or an ITO of some other ward who may be vested with the relevant jurisdiction by virtue of orders issued under Section 120 (1) or Section 120 (2) of the Act will not make a difference to the above legal position. The reason is not far to seek. It is only the AO who has issued the original assessment order dated 13th April 2009 for AY 2007-08 under Section 143 (3) of the Act who is empowered to exercise powers under Section 147/148 to re-open the assessment. This is....
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....the settled legal proposition that conferment of jurisdiction is a legislative function and it can neither be conferred with the consent of the party nor by a superior court. 31. So far as the argument of the Revenue that the assessee has not raised any objection to the jurisdiction within the prescribed time period is concerned, we find merit in the argument of the ld. counsel that the issue to lack of jurisdiction can be raised at any stage in a case where the return has been filed in response to notice u/s 148/158BC/153A. We find the Hon'ble Bombay High Court in the case of Mavany Brothers vs. CIT (supra) while adjudicating an identical issue has observed as under:- "13. We have considered the rival contentions. The jurisdiction under Section 147/148 of the Act is an extra ordinary jurisdiction and can only be exercised when condition precedent as provided in Sections 147/148 of the Act are satisfied. It is the appellant's case that the aforesaid conditions are not satisfied inasmuch as in the absence of the Assessing Officer having the original return of income available it would not be possible for him to have a reasonable belief that income chargeable to tax h....
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....t jurisdiction is a nullity and that its invalidity could be set up whenever and wherever it is sought to be enforced or relied upon, even at the stage of execution and even in collateral proceedings. A defect of jurisdiction, whether it is pecuniary or territorial, or whether it is in respect of the subject-matter of the action, strikes at the very authority of the court to pass any decree, and such a defect cannot be cured even by consent of parties. If the question now under consideration fell to be determined only on the application of general principles governing the matter, there can be no doubt that the District Court of Monghyr was coram non judice, and that its judgment and decree would be nullities.' (Kiran Singh case [AIR 1954 SC 340 : (1955) 1 SCR 117] , AIR p. 342, para 6)" Thus, it is open to the petitioner to raise the issue of jurisdiction before the appellate authorities." 32. In view of the above discussion and considering the fact that the assessee was employed with Delhi Police and was regularly filing his return of income at Delhi under ITO, Ward 64(3) [earlier ITO, Ward 40(3)] and since this fact was known to the ITO at Gurgaon, therefore, in absen....
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....nt assessee. 34. Similarly, in the case of S.S. Ahluwalia (supra) is concerned, in that case also the respondent assessee was assessed at Delhi from 1980-81 to 1983-84. From the assessment year 1984-85 to 1987-88, he was filing the return at Dimapur. The case of the assessee was reopened u/s 148 by the ACIT, Investigation, Delhi, on the basis of certain CBI search. When the question of jurisdiction issue came before the Hon'ble High Court, the Hon'ble High Court held that in case the assessee shifts his residence or place of business or work, etc., the Assessing Officer of the place where the assessee has shifted or otherwise will have jurisdiction and it is not necessary that in such case an order u/s 127 is required to be passed. While going through para 51 of the order, it shows that at clause 8 of para 51, there was exchange of correspondence between the ITO of Delhi and ITO of Dimapur and ITO Dimapur considered and accepted that for assessment year 1984-85 to 1987-88, the Assessing Officer at Delhi had jurisdiction to initiate and complete the assessment proceedings. Similarly, order u/s 127 of the Act was passed and the case was transferred to ITO, Ward 20, New ....