Shashikala Agarwalla, Kolkata vs Assessee

आयकर अपील य अधीकरण, यायपीठ - "C" कोलकाता, IN THE INCOME TAX APPELLATE TRIBUNAL "C" BENCH: KOLKATA (सम )Before ी महावीर संह, यायीक सद य एवं/and ी शामीम याहया, लेखा सद य) [Before Shri Mahavir Singh, JM & Shri Shamim Yahya, AM]

आयकर अपील सं या / I.T.A No.1751/Kol/2010 नधॉरण वषॅ/Assessment Year: 2003-04

Assistant Commissioner of Income-tax, Vs. Smt. Shashikala Agarwala Circle-31, Kolkata. (PAN:AEWPA8198P) (अपीलाथ /Appellant) ( यथ /Respondent) & C.O. No.168/Kol/2010 In आयकर अपील सं या / I.T.A No.1751/Kol/2010 नधॉरण वषॅ/Assessment Year: 2003-04

Smt. Shashikala Agarwala Vs. Deputy Commissioner of Income-tax, Circle-31, Kolkata. (Cross Objector) (Respondent)

Date of hearing: 07.01.2015 Date of pronouncement: 07.01.2015

For the Appellant: Shri Dipankar Mukhopadhyay, JCIT, Sr. DR For the Respondent: Shri S. Jhajharia, CA

आदेश /ORDER

Per Shri Mahavir Singh, JM :

This appeal by revenue and C.O. by assessee are arising out of order of CIT(A)-XIX, Kolkata in appeal No. 88/CIT(A)-XIX/ACIT,Cir-31/09-10 dated 25.06.2010. Assessment was framed by ACIT, Circle-31, Kolkata u/s. 147 r.w.s. 143(3) of the Income-tax Act, 1961 (hereinafter referred to as "the Act") for Assessment Year 2003-04 vide his order dated 15.12.2009.

2. The only issue in this appeal of revenue is against the order of CIT(A) quashing the reassessment framed by AO u/s. 147 r.w.s. 143(3) of the Act. For this, revenue has raised following two grounds:

"1. For that on the facts and circumstances of the case, the Ld. CIT(A) erred in law as well as in fact for not taking into cognizance the entire facts and 2 ITA No.1751/K/2010 & CO No.168/K/2010 Shashikala Agarwala AY 2003-04

circumstances of the case and deciding in favour of the assessee by holding that the order u/s. 147 dated 15.12.2009 was ab initio void.

2. for that on the facts and circumstances of the case, the documentary evidence on record not having clearly established that the assessee had fully disclosed the material facts at the time of assessment u/s. 143(3), order of which was passed on 10.11.2005."

3. Brief facts are that assessee was one of the directors of Falakata Industries Ltd. She filed her return of income for A.Y.2003-04 on 30-01-2004 and original assessment was completed on 10-11-2015 u/s.143(3) of the Act accepting the claim of the assessee that no capital gain arises out of the transfer of the property in question, the facts are that the assessee entered into an agreement dated 07.04.1988 with Falakata Industries Ltd. wherein it was agreed that the company would construct a residential building on land owned by the assessee and assessee would incur expenditure of Rs.11,00,000/- as per agreement for her share of cost of construction and balance cost would be borne by the company. It was agreed that a two storied building would be constructed and entire ground floor and roof would be allocated to the assessee and first floor would be allocated to the Company as residential accommodation for its directors. Pursuant to the above agreement dated 07-04-1988 the company invested a sum of Rs.28,94,000/- for construction of the building and has been using the building i.e. first floor for the residence of its directors since then. The total cost of construction of the said residential building was certified by a chartered engineers at Rs.40,55,000/-. As per this agreement assessee shall take back possession of first floor, within a period of ten years, on making payment of construction cost incurred by the company. But due to paucity of funds the assessee could not pay the amount of Rs.28,94,000/- to the company, even though, more than 10 years have passed. Therefore, the assessee entered into another agreement with the company on 01-04-2002 wherein she agreed to sell the residential building along with land to the company for a consideration of Rs.66,40,000/-. As the company was unable to pay the said sum of Rs.66,40,000/- immediately and have the land transferred in its name, the company proposes to pay the total consideration of Rs.66,40,000/- in monthly instalments of Rs.83,000/-

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per month spreading over 80 months. It was agreed that as and when the total sum of Rs.66,40,000/- is received in full by the assessee from the company, she will transfer the land along with all constructions thereon in favour of the company. It was also agreed that in case the company fails to pay three consecutive instalments, the assessee shall be entitled to cancel the agreement dated 0l-04-2002 without any reference to the company and amount received by her shall be refundable along with interest to the company. Similarly, the company shall be deemed to have become the absolute owner of the land along with construction thereon, on which residential accommodation has been constructed on the date of completion of payment of Rs.66,40,000/- even if no conveyance for land and building has been made by the owner.

4. Subsequently, notice u/s.148 of the Act dated 26-08-2008 was issued. By a letter dated 24-10-2008, the assessee made a request for communicating the reasons recorded for initiating proceeding u/s.l47 of the Act. Such reasons were communicated in 2009. From the perusal of which it appears that the proceeding u/s.147 of the Act have been initiated by the AO for the reasons that it is found that during the relevant previous year, the assessee transferred, by way of sale, plots of land at a price of Rs.66.40 lacs, but this transfer was not considered at the time of assessment proceedings and that income is chargeable to tax under the head capital gains. But it was explained that in respect to sale of property the AO while making the assessment u/s.l43(3) of the Act originally had made detailed enquiries and had obtained all the necessary details and particulars including copies of agreement dated 07-04-1988 (wrongly mentioned by the AO as 07-04-1998 in original assessment order and also wrongly mentioned by CIT(A) also) and agreement dated 01-04-02 together with copies of Deed of sale and balance sheet and also copy of ledger account of Falakata Industries Ltd. etc, as is evident from 2 nd para of page-2 of the assessment order dated l0-11-2005. Before completion of assessment u/s. l43(3) of the Act, the AO made necessary enquiries and in this connection a detailed reply was submitted before him vide letter dated18-l0-2005. From this letter dated 18-10-2005 it is clear that AO had obtained a detailed reply together with copies of agreements.

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The assessee's letter dated 10.10.2005 is being reproduced as under:

"Sub: Your notice u/s. 142(1) of I. T. Act, 1961 for AY 2003-04

With reference to above and further to the discussions and our earlier submission of documents we submit the following:

1) Bank reconciliation statement for current deposit account maintained at Central bank of India Calcutta is given herein below:

Balance as per books of accounts Rs.72,158.31 Add: Cheq. Issued but not presented for payment Date Cheque no. Particulars 31.3.03 117689 IDBI Flexi bond Rs.30,000.00 Less: Chq. Deposited but not credited 31.3.03 interest from UTI Rs.69,920.00 Balance as per bank statement as on 31.3.03 Rs.32,238.29

2) Total interest received from UTI is Rs.1`0,78,125.04 which has been shown in

the computation of income and as per ledger copy of the books of accounts.

3) Loan confirmation statement from A.K. Agarwaala (HUF) Rs.55,OOO/- which is a very old balance is enclosed herewith.

4) Cash flow statement for various investments separately is enclosed herewith.

5) I am receiving Rs.83,000/- per month from Falakata Inds. Ltd (hereinafter referred to as FIL) against an agreement for sale of land owned by me in terms of an agreement for sale dt.0l-04-2002. A copy of the agreement is enclosed herewith. In terms of the agreement the following salient points may kindly be noted.

i) I was the owner of a piece of land containing 9 plots of 13 katha each at 2 nd Mile Sevoke Road, Siliguri. Out of the total 9 pieces of land I sold 5 pieces of land containing 13 katha each to FIL in the year 1988 for which adequate disclosures were shown in my return in the relevant year. On this five pieces of land FIL constructed factory building for setting up a Flour Mill having a total capacity of 40,000 MT per annum. '-

ii) On the balance 4 pieces of land, FIL and myself constructed residential house for the residence of the directors of FIL. Full details of this 4 pieces of lands are enclosed herewith for your verification. Your honour will appreciate that the said land is adequately shown in my balance sheer filed along with the return.

iii) By virtue and agreement dt.07 -04-1988 with M/s. Falakata Industries Ltd I allowed the said company to construct a double storied residential building on the land owned by me. The salient features of the agreement are also described in the agreement dt.0l-04-02 with Mls. Falakata Industries Ltd. A copy of the said agreement dt.07 -04-1988 is also enclosed herewith.

iv) As I was one 'of the Directors of FIL only till 10-02-02. Since I could not pay the dues of Rs.28.94 lacs to FIL, I had to sell two plots of land owned by me to FIL on which FIL had already constructed factory building and directors residential accommodation.

v) Accordingly, I entered into an agreement with FIL for sale of 2 plots of land containing 13 katha each totalling to 26 katha.

vi) In terms of the agreement the total consideration was Rs.66.40 lacs i.e. 5 ITA No.1751/K/2010 & CO No.168/K/2010 Shashikala Agarwala AY 2003-04

Rs.l1.61 lacs towards cost of construction and Rs.54.79 lacs towards cost of 26 katha and 11 chattak land. Since, FIL is not having any other income due to closure of its flour mill it approached me for payment of sale consideration in instalments.

vii) I agreed for the receipt of the consideration at Rs.83,000/- per month to be payable in 80 monthly instalments. Upon receipt of full consideration the conveyance in favour of FIL was to be made subject to fulfilment of other terms and conditions.

viii) In the event of non-receipt of full payment or non-receipt of instalment from FIL, I was entitled to cancel the said agreement and in which case I will be liable to return the instalments received along with interest payable at 15% per annum."

Further, on the issue involved, the AO had mentioned in the order u/s. 143(3) dated 10.11.05 as under;

"the AR of the assessee also submitted copies of the agreement dt. 07.04.88 and 01.04.02 entered into with M/s. Falakata Industries Ltd. For sale of land at 2nd mile, Sevoke Road, siliguri, for which the assessee is getting payment of Rs.83,000/- per month since 2002. Copies of the deed of land as per balance sheet also submitted."

From the above details, it is clear that complete detail regarding this transaction was available before the AO at the time of framing of original assessment u/s. 143(3) of the act. Now question arises whether in such situation reopening u/s. 147 of the Act beyond four years is possible or not.

5. We find that at the time of original assessment, all the details and particulars in connection with the sale of such land has been made available to the AO and since all the material facts in this regard were available with the AO while completing original assessment u/s.143(3) on 10-11-2005 and since it is not the case of the AO that the details regarding such sale of land had not been made available to the AO at the time of original assessment nor it is the case of the AO that petitioner had failed to disclose fully and truly all material facts necessary for his original assessment and or that after completion of original assessment any new information or materials had been received by him and which had not been disclosed by the assessee at the time of original assessment and since the proceedings u/s.147 had been initiated on the basis of same set of materials and papers which were available to the AO at the time of original assessment and only from the records of assessee with revenue filed at the time of original assessment u/s.143(3) of the Act and since it is not the case of the AO 6 ITA No.1751/K/2010 & CO No.168/K/2010 Shashikala Agarwala AY 2003-04

that assessee had not furnished all the details and particulars in this regard at the time of assessment and since the proceedings in this case u/s.l47 of the Act have been initiated after a lapse of more than four years from the end of the assessment year on the basis of same set of materials made available to the AO at the time of original assessment, no valid proceedings u/s.147 were initiated in this case. Accordingly, we are of the view that the CIT(A) has rightly quashed the reassessment proceedings initiated u/s. 147 read with section 148 of the Act, we confirm the same. The appeal of revenue is dismissed.

6. In respect to CO. No. 168/Kol/2010 of the assessee, who wants to contest the issue on merits, we are of the view that once the reassessment proceedings initiated by AO u/s. 147 r.w.s. 148 of the Act is quashed, the issue on merits became academic. Hence, the CO of the assessee is also dismissed as infructuous.

7. In the result, both the appeal of revenue and that of CO of assessee are dismissed.

8. Order is pronounced in the open court.

Sd/- Sd/- शामीम याहया, लेखा सद य महावीर संह, यायीक सद य (Shamim Yahya) (Mahavir Singh) Accountant Member Judicial Member

Dated : 7th January, 2015 व र ठ निज स चव Jd.(Sr.P.S.) आदेश क त ल प अ े षतः- Copy of the order forwarded to:

1. अपीलाथ /APPELLANT - Smt. Shashikala Agarwalla, 5, Lower Rowdon Street, Kolkata-20 2 यथ /Respondent - ACIT/DCIT, Central-31, Kolkata.

3. आयकर क मशनर (अपील)/ The CIT(A), Kolkata

4. आयकर क मशनर/ CIT Kolkata

5. वभा गय तनीधी / DR, Kolkata Benches, Kolkata स या पत त/True Copy, आदेशानुसार/ By order,

सहायक पंजीकार/Asstt. Registrar.