IN INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: G NEW DELHI BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. O.P. KANT, ACCOUNTANT MEMBER ITA No. 3450/Del/2013 Assessment Year: 2007-08 ACIT, Circle-46(1), Room No. Vs. Sh. Sunil Saigal, R/o. D- 305, Civic Centre, D Block, 8/8, Vasant Vihar, New 3rd Floor, New Delhi Delhi PAN : ABXPS0893F (Appellant) (Respondent) And C.O. No. 217/Del/2013 [In ITA No. 3450/Del/2013] Assessment Year: 2007-08 Sh. Sunil Saigal, R/o. D-8/8, Vs. ACIT, Circle-46(1), Room Vasant Vihar, New Delhi No. 305, Civic Centre, D Block, 3rd Floor, New Delhi PAN : ABXPS0893F (Appellant) (Respondent) Department by Smt. Anima Barnwal, Sr.DR Assessee by Sh. C.S. Anand, Adv. Date of hearing 11.07.2016 Date of pronouncement 20.09.2016 ORDER PER O.P. KANT, A.M.: present appeal and cross objection filed by Revenue and assessee respectively are directed against 2 ITA No. 3450/Del/2013 & C.O. 217/Del/2013 AY: 2007-08 order of learned Commissioner of Income Tax(Appeals)-XXX, New Delhi, dated 28.03.2013 passed for assessment year 2007-08. 2. Revenue raised following grounds of appeal: i. Deleting addition of Rs. 22652640/- as rightly made by Assessing Officer on account of Long Term Capital Gain on sale of land which was wrongly claimed as exempt u/s 2(14)(iii) of I.T. Act. ii. In accepting assessee s claim of transfer of agricultural land in F.Y. 2011-12 whereas assessee has himself claimed sale of land in F.Y. 2006-07. iii. order of learned Commissioner of Income Tax (Appeals) is perverse in nature as order is in total disregard to fact of case as much as complete disregard to cannon of natural justice and due opportunity. iv. In not allowing opportunity under rule 46A of I.T. Act, to Assessing Officer to examine and rebut evidences produced before learned Commissioner of Income Tax (Appeals) despite repeated requests made by Assessing Officer during appellate proceedings. v. In recording his findings that Assessing Officer did not attend appeal proceedings alongwith assessment folder whereas Assessing Officer had duly complied with all requisitions and attended proceedings alongwith assessment record. vi. appellant craves right to alter, amend, add or substitute grounds of appeal. 3. cross-objections raised by assessee are as under: 1. That reassessment proceedings/reassessment order dated 29.12.2011 passed u/s 147 r.w.s. 143(3) deserves to be quashed on various factual & legal grounds because: (i) it is case of difference of opinion; (ii) learned Assessing Officer had proceeded with assessment proceedings, without supplying copy of Reasons Recorded , to assessee; 3 ITA No. 3450/Del/2013 & C.O. 217/Del/2013 AY: 2007-08 (iii) learned Assessing Officer had taken unreasonable time of 16 months to supply copy of Reasons Recorded , to assessee; and (iv) learned Assessing Officer had not effectively disposed off assessee s objections apropos Reasons Recorded while initiating proceedings u/s 147. 2. That assessee craves leave to amend/modify Ground of Cross Objection raised by him and/or to raise additional grounds of cross objection, at any time prior to disposal of matter. 4. brief facts of case, as narrated by learned Commissioner of Income Tax (Appeals), in his appeal, are as under: 1. During first round of assessment, assessee furnished all desired details, documents, information, explanation etc. to A.O. On getting certificate dt. 14.09.2006 issued by Tehsildar Dehradun with respect to assessee s agricultural land situated at village Gunial, Dehradun, A.O. issued notices u/s 133(6) of Income-tax Act, 1961 (for short Act ) dt. 10.11.2009 and 27.11.2009, to Tehsildar Dehradun, thereby making certain enquiries regarding said agricultural land. Thereafter, A.O. deputed his I.T.I. to visit actual site to ascertain facts personally. I.T.I. submitted his report to A.O., stating therein that village Gunial is within prescribed limit of 8 kms from local municipal limit of Dehradun. Based on I.T.I. s report, A.O. issued notice u/s 142(1) of Act to assessee. In response to which, assessee filed letter dt. 15.12.2009, thereby claiming that said agricultural land was not Capital Asset within definition of section 2(14) and stating that enquiries have been made after around gap of 3 years. A.O. passed assessment order u/s 143(3) on 16.12.2009, thereby accepting income returned by appellant. 4 ITA No. 3450/Del/2013 & C.O. 217/Del/2013 AY: 2007-08 2. A.O. issued notice dt. 25.06.2010 u/s 148 to appellant, in response to which assessee informed A.O. that ACIT, Circie-48(1) already passed assessment order u/s 143(3). At same time, appellant requested A.O. to treat return of income already filed, as return filed in response to notice u/s 148 and also to furnish reasons recorded for reopening case. A.O. supplied photocopy of undated sheet containing reasons recorded for reopening of case, to appellant after gap of 16 months from date of specific request made by appellant vide letter dt.23.07.2010. On getting said undated sheet containing reasons recorded, appellant raised objections with respect to reasons for reopening of case, vide letter dt. 20.12.2011 alongwith its enclosures. 3. A.O. issued show cause notice dt. 22.12.2011, thereby requiring appellant to explain as to why profit arising out of transfer of said land be not treated as capital gains u/s 45 and added back to income of appellant. In compliance to said show cause notice dt. 22.12.2011, appellant submitted letter dt.26.12.2011 alongwith photocopy of letter dt.14.12.2009 sent by Tehsildar, Dehradun to A.O. 4. appellant, vide his letter dt. 28.12.2011, requested A.O. to kindly make reply dt. 14.12.2009 sent by Tehsildar, Dehradun basis of reassessment proceedings and accordingly do not treat his said agricultural land as capital asset . As soon as appellant could be telephonically contacted by his A.R., appellant had informed his A.R. that: (i) he had received amount of Rs. 2.40 crores from M/s MaaVaishno Devi Buildhome Pvt. Ltd, during previous year relevant to A.Y. 2007-08 in terms of Agreement to Sell; 5 ITA No. 3450/Del/2013 & C.O. 217/Del/2013 AY: 2007-08 (ii) transfer of said agricultural land had not taken place during previous year relevant to A..Y. 2007-08; and (iii) during previous year, relevant to A.Y. 2012-13, he had executed sale deed on 29.08.2011 in favour of another party, namely M/s Nature Travels Adventure Holidays Pvt. Ltd. 5. In turn, A.R. of appellant, vide letter dt. 28.12.2011, communicated such facts to A.O. photocopy of sale deed dt. 29.08.2011 was also provided to A.O., vide letter dt.28.12.2011 such letter and photocopy of Sale Deed dt. 29.08.2011 was filed on dak-counter of A.O. 6. A.O. concluded second round of assessment proceedings, vide assessment order dt. 29.12.2011 passed u/s 147/143(3) of I T. Act 1961. This time A.O. had made addition of Rs. 2,26,52.640/- on account of Long Term Capital Gains. 5. Aggrieved from above findings, assessee filed appeal before learned Commissioner of Income Tax (Appeals), who partly allowed appeal of assessee by observing as under: I therefore hold that transfer in respect of agricultural land situated in Village Gunial, Dehradun, Uttranchal did not take place in F.Y. 2006-07 (A.Y. 2007-08) and hence addition of rs. 2,26,52,640/- made on account of Long Term Capital Gain cannot be sustained. At same time, I hold that transfer in respect of agricultural land situated in Village Gunial, Dehradun, Uttranchal actually took place in F.Y. 2011-12 (A.Y. 2012-13), for which appellant has already filed his revised return of income voluntarily. I therefore direct A.O. to work out refund due to appellant for A.Y. 2007-08 and adjust same against tax liability for A.Y. 2012-13. 6 ITA No. 3450/Del/2013 & C.O. 217/Del/2013 AY: 2007-08 6. Aggrieved from above findings of learned Commissioner of Income Tax (Appeals), Revenue and assessee filed appeal and cross objections respectively before ITAT. 7. First we take up cross objections filed by assessee, as cross objections goes to root of matter. In Cross Objections, assessee has challenged jurisdiction in reopening of assessment. 7.1 At outset, learned Sr. Departmental Representative submitted that grounds involved in Cross Objections have not been adjudicated by learned Commissioner of Income Tax (Appeals). issue may be restored to learned Commissioner of Income Tax (Appeals) for fresh adjudication. 7.2 Learned Authorized Representative of assessee could not controvert submission of learned Departmental Representative. 7.3 We have heard rival submissions and perused material on record. We find from impugned order that following grounds were taken by assessee before learned Commissioner of Income Tax(Appeals): 1. That on facts of case and under law, Ld. A.O. has erred in initiating proceedings U/s 147 of I.T. Act 1961, issuing notice U/s 148 of I.T. Act 1961 and refraining assessment order U/s 147 r.w.s. 143(3) of I.T. Act 1961. 2. That reassessment proceedings/reassessment order dt. 29.12.2011 deserves to be quashed, because in spite of 7 ITA No. 3450/Del/2013 & C.O. 217/Del/2013 AY: 2007-08 specific request for supply of reasons recorded (as made by assessee vide his A.R. s letter dt. 23.07.2010), Ld. A.O. had proceeded with reassessment proceedings, without supplying reason recorded to assessee. [The Ld. A.O. had supplied photocopy of sheet containing reasons recorded to assessee after gap of 16 months, on 16.12.2011] 3. That reassessment proceedings/reassessment order deserves to be quashed, because Ld. A.O. has not effectively disposed of objections w.r.t. Reasons Recorded , as raised by assessee vide his A.R. s letter dt. 20.12.2011. 4. That reassessment order deserves to be quashed, because Ld. A.O. had not effectively confronted assessee with material, on basis of which Ld. A.O. had rejected assessee s claim that said agricultural land was not Capital Asset , as per definition provided U/s 2(14)(iii) of I.T. Act, 1961. 5. That assessee denies his liability to be taxed on account of alleged transfer of said agricultural land, which was not Capital Asset , as per definition provided U/s 2(14)(iii) of I.T. Act 1961. Various observations of Ld. A.O. are either factually incorrect or legally untenable. 6. That reassessment order deserves to be quashed, because Ld. A.O. had ignored few very important/crucial documentary evidences, including assessee s letters dt. 28.12.2011 as well as copy of Sale Deed dt. 29.08.2011, in respect of agricultural land situated in Village Gunial Gaon, Distt. Dehradun, executed by assessee in favour of M/s Nature Trails Adventure Holidays (P) Ltd. [The assessee, vide letter dt. 28.12.2011, had claimed that transfer had not been effected during 8 ITA No. 3450/Del/2013 & C.O. 217/Del/2013 AY: 2007-08 previous year relevant to A.Y. 2007-08, but had been effected during previous year relevant to A.Y. 2012- 13]. 7. That assessee denies his liability to be taxed for year under consideration, on account of amount received from M/s Maa Vaishno Devi Buildhome (P) Ltd. and Shri Dhirendra Kumar Shimal against sale of said agricultural land, because transfer had not been effected during previous year, relevant for A.Y. 2007- 08. Various observations of Ld. A.O. are either factually incorrect or legally untenable. 8. That on facts of case and under law, Ld. A.O. has erred in making addition of Rs. 2,26,52,640/-, on a/c of alleged capital gains, towards returned income/originally assessed income. Various observations of Ld. A.O. are either factually incorrect or legally untenable. 9. That on facts of case and under law Ld. A.O. has erred in charging interest U/s 234B of I.T. Act 1961. 7.4 learned Commissioner of Income Tax (Appeals) has decided issue on merit and directed Assessing Officer to assess long term capital gain for assessment year 2012-13, however, learned Commissioner of Income Tax (Appeals) has not decided other grounds challenging jurisdiction of Assessing Officer in reopening of assessment. As issue of jurisdiction goes to root of matter, in interest of justice, we direct to restore Cross 9 ITA No. 3450/Del/2013 & C.O. 217/Del/2013 AY: 2007-08 Objections of assessee to learned Commissioner of Income Tax (Appeal) for adjudication of issue in question. 7.5 We find from ground of appeal taken by Revenue that Revenue is aggrieved for not allowing opportunity under Rule 46 of Income Tax Rules, 1962 to Assessing Officer to examine and rebut evidence produced before learned Commissioner of Income Tax (Appeals). We further find from impugned order that Assessing Officer objected to additional evidence, however, learned Commissioner of Income Tax (Appeals) admitted additional evidence but after admission, same were not sent to Assessing Officer for his comment. learned Commissioner of Income Tax (Appeals) has noted that it directed Assessing Officer to attend his office and produce assessment folder, however, Assessing Officer did not produce assessment folder and, therefore, he proceeded to decide appeal on basis of documents made available by assessee. In view of facts, in interest of justice, learned Commissioner of Income Tax (Appeals) is directed to provide sufficient opportunity or being heard to both parties. 8. Since we have already restored Cross Objection of assessee to learned Commissioner of Income Tax (Appeals), appeal is also restored to learned Commissioner of Income Tax (Appeals) for fresh adjudication, after providing sufficient opportunity of being heard to both parties. 10 ITA No. 3450/Del/2013 & C.O. 217/Del/2013 AY: 2007-08 12. In result, appeal of Revenue and Cross Objection of assessee are allowed for statistical purposes. decision is pronounced in open court on 20th Sept., 2016. Sd/- Sd/- (H.S. SIDHU) (O.P. KANT) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 20th September, 2016. Rk/- Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi ACIT, Circle-46(1), New Delhi v. Sunil Saigal