TaxTMI 
TaxTMI 
2020 (12) TMI 1070
X X X X Extracts X X X X
X X X X Extracts X X X X
....on of the reassessment proceedings and as such, the assessment so made is liable to be quashed. 2.1. That the learned CTT(A) has further erred both in law and on facts in upholding the validity of the notice u/s 148 of the Act when the said notice was issued to "Narendra Kumar Gill (HUF)'" having a different PAN, however, the assessment as frames was that of the "individual" bearing a different PAN as that mentioned on the notice u/s 148 of the Act. 2.2. The learned CIT(A) failed to quash the impugned order by overlooking that the learned Assessing Officer arbitrarily misused the powers given under the Act by further not providing the reasons recorded to the assessee bearing his PAN and thus, the learned Assessing Officer has grossly violated and misused the provisions of the statute and the assessment made thereto should be quashed, as such. 2.3. That the Learned CIT(A) has erred in law and on facts in invoking the provisions of Section 292B of the Act for rectifying the defects of the notice u/s 148 of the Act by wrongly interpreting the provisions and not considering the case laws assessee relied upon wherein the facts squarely covered assessee'....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ovt. Approved Valuer. 4.2. That the reference to the Valuation Officer can only be made when the learned assessing officer is of the opinion that the value as declared by the assessee is below the fair market value of the property. The reference of property which is located at "G.T. Road, Muzaffarnagar and commercial property" mentioning as the property situated in "Rampuri Mohalla, Muzaffarnagar" is borne out of mere suspicion and surmises. 4.3. That the learned CIT(A) has grossly erred both in law and on facts in relying on the DVO report believing that the same was on record, however, the assessment as framed by the learned Assessing Officer lacked the reliance on the same, as the impugned order was passed on 31.03.2015 and the report, a fact also affirmed by the learned CIT(A) was passed on 08.01.2016. The reliance on the4 same believing it to be brought on record is not only wrong but makes the impugned assessment as framed as void-ab-initio. 5. That the capital gain as computed by learned assessing officer is wrong and Learned CIT(A) has erred in re-computing the capital gain on the basis of valuation report of DVO, which amount to re-assessment, wh....
X X X X Extracts X X X X
X X X X Extracts X X X X
....issions summing of the arguments alongwith the case laws which have been duly perused in detail alongwith the paper book and record available before us. The crux of the arguments are as under: 1. The assessee is having PAN in two capacity one karta of HUF having PAN - AAAHN8408F and another in individual capacity having PAN - ACVPJ8013G. 2. The assessee received notice u/s 148 issued by ITO, Ward-1(2), Muzaffarnagar reflecting the PAN of the HUF of the assessee i.e. AAAHN8408F. 3. Thereafter, another notice dated 20.05.2014 was received by the assessee, issued by ITO Ward-1(2), Muzaffarnagar u/s 142(1) of the Act directing him to comply with the notice issued u/s 148. 4. Thereafter, another notice dated 05.01.2015 issued by ITO Ward-1(2), Muzaffarnagar u/s 142(1) was received by the assessee, directing him to furnish the details of income of family, purchase deed of property sold during FY 2008-09, details of movable and immovable properties held by the assessee or his family members as on 31.03.2009 and also the names of family members, their sources of income and copies of ITRs, if any. The assessee replied to the queries on 19.03.2015 and 20.0....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 15. The notice u/s 147 of the Act clearly reflected that the Assessing Officer was requiring the return containing details of the person in respect of which assessee was assessable or whose income was chargeable to tax in the hands of assessee. 16. The notice-dated 05.01.2015 also reflected that the assessee was directed to file the details of income of his family. 17. The issuance of valid notice u/s 147 is a jurisdictional aspect and any defect therein is not curable. It is not an irregularity but an illegality. 18. A valid notice u/s 147 confers jurisdiction on the Assessing Officer to assess / reassess the income of assessee or the income of person in respect of which assessee is assessable, which has escaped assessment. In the present case, assessment is framed in individual capacity but no notice u/s 148 had been issued to the assessee in individual capacity. 19. It is an undisputed fact that notice u/s 148 reflected PAN of HUF, it was admitted even by the Assessing Officer in his remand report stating that PAN of HUF was wrongly mentioned. 20. The Assessing Officer has also tried to save the notice by stating in the remand r....
X X X X Extracts X X X X
X X X X Extracts X X X X
....flects the PAN of HUF. 7. The ld. DR argued that having received information by the Assessing Officer that the assessee has sold immovable property namely Modern Service Station, the Assessing Officer has recorded the reasons to believe in the case of Shri Narendra Kumar Gill (Individual) for the instant assessment year and the same can be verified from the record. The Assessing Officer has issued notice validly and in the said notice it has been clearly mentioned that the status of the assessee as meaning thereby the notice has been issued to "Individual" in English. Further, the assessment was also completed in the name of the assessee in his individual capacity. Also the notice u/s 142(1) of the Act dated 05.01.2015 issued by the AO to the assessee is meant to assess the assessee in individual capacity. It has been argued that the notice was meant for assessing Shri Narendra Kumar Gill and it is a fact on record that only the PAN number was mistakenly quoted. It was argued that paras in the notice, have been ticked off which proves that the notice was not issued to Shri Narendra Kumar Gill (HUF). It was also argued that in the notice issued u/s 148, the status of the assessee....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ty in the joint name of 3 persons situated at Moh. Rampuri, Muzafarnagar area 689.70 sq. mtr. During the financial years A.y. 2008-09 at a sale consideration at Rs. 50,00,000/- whereas stamp duty has been paid on circle rate at Rs. 1,93,93,650/- which is the difference of consideration Rs. 1,93,93,650 - Rs. 50,00,000/- / ½ = Rs. 71,96,825/- taxable under the provisions of 50-C of the Income Tax Act, 1961. As per sale deed the share of the assessee is ½ share of the total property. Therefore, I have the reason to believe that the assessee has income chargeable to tax of Rs. 71,96,825/-. Therefore, it is necessary so issue notice u/s 148 of the Income Tax Act, 1961. Yours faithfully, Sd/- (A.K. Rajak), Income Tax Officer, Ward-1(2), Muzaffarnagar 11. We have also perused the notice issued u/s 148. In the notice dated 18.03.2014, there has been a clear mention of the word "ि " which means "Individual". For the sake of ready reference, the scanned version of notice u/s 148 is reproduced below: [Page no. 61 of the CIT(A)] Notice under Section 148 of the Income Tax Act, 1961 PAN AAAHN8408F Office of the Income Tax Officer, War....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Court wherein the Hon'ble High Court held that In reference, the High Court held that the first of the notices under s. 34 was not invalid in law and consequently the issue of the second notice was illegal and the assessment made in pursuance of it was illegal. 15.1 We have gone through above said judgment. In this case first notice was issued in the name of the "Individual" instead of "HUF" and the correct notice issued to the "HUF" is after a period of 8 years. Hence, the Hon'ble Court ruled that the second notice was invalid. Thus, the facts of this case are different set of facts, hence not applicable. 16. CIT vs Ram Das Deokinandan Prasad (HUF) (2005) 277 ITR 17 (ALL): The learned counsel for the Revenue has not advanced any argument that the finding of the Tribunal that notice under Section 148 of the Act was meant for the Karta of the HUF and not in his individual capacity. The only point urged by the learned counsel for the Revenue was that since the assessee has filed a return of HUF and the income sought to be reassessed was of HUF, the proceedings are valid, notwithstanding the fact that the notice was issued to the assessee in his individual capacity. Moreover, th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....016) 74 Taxmann.com 67 (Pune-Trib): In this case, "the PAN Number appearing in the Notice under section 148 pertains to individual (Karta) and not the Noticee HUF. He next contended that a bare perusal of recorded reasons under section 148(2) would show that the reasons have been recorded in the name of Individual i.e. 'Shri Dnyaneshwar Govind Kalbhor' whereas the assessment is framed in the hands of HUF and not the Individual". In this case, the notice issued to entity 'X' and assessment was made in the case of entity 'Y', hence these facts are not applicable to the instant case before us. 19.1 In the case before us, the land has been sold by the assessee, the satisfaction has been recorded by the AO in the case of the assessee, the notice has been issued in the case of the assessee, the notice has been addressed and served on the assessee, the notice clearly mentioned that the assessment is being made in his 'Individual' capacity. There was no mention of HUF either in the satisfaction recorded nor in the body of the notice that has been issued. 20. As established by this time, the action u/s 147 imposes certain obligations and amounts to disturbing the settled posit....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t on record. 21. In Sardar Harbindersingh Sehgal v CIT, (227 ITR 512 Gau), the Hon'ble Court held that the notice to be valid in view of section 292-B of the Act as it conformed to the substance of the Act and was to effectuate the purpose of the Act. Further it was held that defects or omissions, if any, in the notice did not cause any prejudice to the petitioners. The court went on to state that it can assume jurisdiction only when the notice on the face of it is illegal and that the court must not adopted a hypertechnical approach to quash a notice because it does not conform to all the niceties expected by an assessee in such a notice. The court has to adopt a broad and pragmatic view in construing such a notice in order to find out whether in substance and effect it is in conformity with or according to the intent and purpose of the Act. An inconsequential technicality must not be allowed to defeat justice. 22. The provisions of Section 292B reads as under: "292B - No return of income, assessment, notice, summons or other proceeding, furnished or made or issued or taken or purported to have been furnished or made or issued or taken in pursuance of any of the pro....
X X X X Extracts X X X X
X X X X Extracts X X X X
....th the intent and purpose of this Act. The rationale behind this section is that the return of income, assessment notice, summons or other proceedings should not be 'held to be invalid due to technical mistakes, which otherwise do not have much impact touching its legality provided such return, assessment notice, summons or other proceedings, etc., are otherwise in conformity with the purpose of the Act. The 'purpose of the Act is to charge income tax on the total income of the assessee. This 'purpose' is best fulfilled if the correct income is determined and tax is charged thereon. It involves the making of assessment by the AO in which the particulars at income as furnished by the assessee are scrutinized for determining the correct total income. There may be a case in which the assessee has intentionally or unintentionally claimed wrong deductions or exemptions etc., to which he is not entitled. In that case the AO makes the disallowances as per law. Still in another situation the assessee may have stated the correct income and no disallowance etc. are required. The 'purpose of the Act' is achieved when the correct total income is determined either by way of making adjustments b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e of Shrish M. Dalvi 287 ITR 242 (Mum), the Hon'ble Court observed that as long as the defect or mistake has not caused prejudice to the assessee, the mistake was protected under the umbrella of Section 292B of the Act. The procedural provision has to be examined from the stand point of substantial complaints. Where such violation has occasioned prejudice to the assessee then only the assessee is protected from the rigors of wrong exercise of jurisdiction. As long as, no prejudice is occasioned to the assessee, as in this case the notice issued is protected by the provisions of Section 292B. 25. We are not certainly supporting or holding that a notice issued to Shri XXXXX "HUF" or Shri XXXXX "Karta" or Shri XXXXX "Karta HUF" is a valid notice when the assessment proceedings are meant for Shri XXXXX "individual". In the instant case, the notice has been addressed to "Shri Narendra Kumar Gill" and also mentioned the word "ि " which makes it more clear and explicit to whom the notice is aimed at. It is the assessee whether individual, HUF, company, firm, AOP which owns the PAN. When the issue of primacy of the assessee over the PAN or primacy of the PAN over the assessee is t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d valuer, reflecting the value of property at Rs. 32,39,000/- as on 01.04.1981, share of the assessee was 24,29,060/-. Registered valuer had taken the value of property at Rs. 3,600/- per sq. mtr. on the basis of report of Tehsildar. The assessee also furnished the rate list of various period to stress the point that at all points of time, the value of commercial property and residential property was different. Since for the purposes of sale consideration, rate of commercial property was adopted therefore for the purposes of cost of acquisition also commercial rate was to be adopted. 29. The Assessing Officer was not convinced with the valuation claimed by the assessee sought the information from ADM Finance who stated the rate of the property at Rs. 100/- per sq. yd. as on 01.04.1981. Accordingly, Assessing Officer took the sale consideration at the circle rate which was Rs. 24,500/- per sq mtr at the relevant time and calculated the capital gain as under:- Full value of consideration: 24,500 x 689.70 sq mtr = 1,93,93,650/- Less : value of machinery = 2,00,000/- Net amount = 1,91,93,650/- Cost of acquisition: Rs. 120 per sq mtr x 689.70 sq mtr ....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... The arguments of the ld. DR are as under: "1. The Ld. CIT(A) has taken into cognizance the provisions of section 55(2)(b)(i) wherein the valuation by an approved valuer is to be taken as "Fair Market Value" for acquisition of property. 1.1 The provisions of section 55A(a) authorize the Assessing Officer to refer for valuation only when the value as claimed is less than its "Fair Market Value". The provision prior to amendment on 01.07.2012 is relevant to AY 2009-10. Authorities erred in holding that amended provisions will apply on the assessment which are pending on the date of amendment and section 55A of the Act lays down the procedure and erred in holding that amended provisions are applicable on the assessment proceedings for year 2009-10 in spite of amendment on 01.07.2012. 2 The Ld. CIT(A) wrongly held that reference is rightly made to DVO in provisions of section 55A without considering the words "is less than the fair market value" and erred in considering the reference under section 55A(b) which clearly states that it will apply in any other case i.e. a case not covered by section 55A(a) of the Act. 3 That the Ld. CIT(A) has without c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e provisions of sub-sections (2), (3), (4), (5) and (6) of section 16A, clauses (ha) and (i) of sub-section (1) and sub-sections (3A) and (4) of section 23, sub-section (5) of section 24, section 34AA, section 35 and section 37 of the Wealth-tax Act, 1957 (27 of 1957), shall with the necessary modifications, apply in relation to such reference as they apply in relation to a reference made by the Assessing Officer under sub-section (1) of section 16A of that Act. Explanation.-In this section, "Valuation Officer" has the same meaning, as in clause (r) of section 2 of the WealthTax Act, 1957 (27 of 1957)." 40. The amended provisions of Section 55A which came into force w.e.f. 01.07.2012 read as under: "55A. With a view to ascertaining the fair market value of a capital asset for the purposes of this Chapter, the Assessing Officer may refer the valuation of capital asset to a Valuation Officer- (a in a case where the value of the asset as claimed by the assessee is in accordance with the estimate made by a registered valuer, if the Assessing Officer is of opinion that the value so claimed [is at variance with its fair market value]; (b in any othe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the Valuation Officer. The valuation officer would then determine the fair market value of the property as on 1.4.1981. This amendment is applicable with effect from 1st July, 2012. 44. We have also examined whether the amendment brought w.e.f. 01.07.2012 is clarificatory or procedural or substantive or ratificatory or declaratory or retrospective or prospective. On going through the explanatory note to the Finance Bill 2012, we find that the amendment is substantive in nature and is prospective. The amendment is applicable to all the proceedings taken up after 01.07.2012. In the case of Dove Investments Pvt. Ltd. Vs Gujarat Industrial Investment Corporation (2006) 129 Comp Cases 929 (SC), the Hon'ble Apex Court has observed that regard must be had to the context, the subject matter and object of the statutory provision in question in determining whether the same is mandatory or directory. No universal principle of law could be laid down in that behalf as to whether a particular provision or enactment shall be considered mandatory or directory. It is the duty of the Court to try to get the real intention of the Legislature by carefully analyzing the whole scope of the statute or....
X X X X Extracts X X X X
X X X X Extracts X X X X
....imary condition of satisfying himself for reference to the DVO. From the record, we find that the property was known as Plot No. 3, Mohalla Rampuri, Roorkee Road, Muzaffarnagar and the same has been inspected by the Valuation Officer, Meerut on 07.10.2015 and the report has been finalized on 15.12.2015. Hence, there is no dispute about the property in question that is to be valued. The DVO has in his report mentioned that the property is at Mohalla Rampuri, Roorkee Road, Muzaffarnagar and determined the FMV of the land @ Rs. 100/- per sq. mtr. and adjusted with construction and determined an amount of Rs. 167.50 per sq. mtr. 49. Hence, the point of adjudication narrows down to the question if the value as determined by the registered valuer is correct or the value determined by the DVO is correct. 50. The registered valuer and the Valuation Officer both perform the same task one in a private capacity and the other is appointed by the department. Both authorities have to prepare the reports based on the circle rate, construction parameters, location, cost of materials and other established norms. 51. We find that the DVO has taken Rs. 100 per sq. mtr. based on the notified ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....reference to Valuation Officer is dismissed. The process and method of determining the FMV is set aside with directions. Order Pronounced in the Open Court on 22/12/2020. ============= Document 1 U 61 Appeal No.78/15-16/MZR Sh. Narendra Kumar Gill, MZR AY 2009-10 ANNEXURE - 1 सà¥à¤¥à¤¾à¤¯à¥€ लेखा स० आयकर अधिनियम 1961 की धारा 148 के अधीन सूचना • Notice under Section 148 of the Income Tax Act, 1961 PAN: AAA HN 8408F सेवा में, To, Sh. Narendra Kumar Guill 86%, Mangal Bhassan, shapa Rawal, Muzaffarnagar Office of the Income Tax Officer, Ward-1(2), Muzaffarnagar Dated:-18-03-2014 2009-10 के लिठकर चूंकि मेरे पास à¤à¤¸à¤¾ विशà¥à¤µà¤¾à¤¸ करने का कारण है कि नà¤....