Wp/2672/2005 Of M. J. Mansoori v. Income Tax Appellate Tribunal And 3 Ors

1 AGK IN THE HIGH COURT OF JUDICATURE AT BOMBAY AGK ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.106 OF 2006 Mohammed J. Mansoori ..Appellant. V/s. Income-tax Officer, Ward-12(2)(4) ..Respondent. WRIT PETITION NO.2672 OF 2005 Mohammed J. Mansoori ..Petitioner. V/s. I.T.A.T., Mumbai & Others ..Respondents Mr.Parag Pardiwala with Mr.A.K. Jasani for the Appellant / Petitioner. Mr.R.A. Vaishampayan for the respondents in appeal & respondent Nos.2 to 4 in W.P.. CORAM : D.K. DESHMUKH & J.P. DEVADHAR, JJ. DATED : 8TH OCTOBER, 2008. P.C. : 1. The facts and law involved in both these matters are similar and, therefore, both the matters can be conveniently disposed of by common order. By consent of both the parties, the Appeal is admit and taken up for final hearing. The writ petition has already been admitted. By consent of both the parties, heard finally. 2. In view of the order that we propose to 2 pass, following facts are relevant; the petitioner - assessee purchased property at Colaba for a consideration of Rs.2,21,07,750/-, a portion of the property was occupied by tenant and another portion was vacant. Subsequently, the vacant portion was sold to M/s.Tata for Rs.5,22,50,000/-. Before the Assessment Officer, the petitioner claimed that the cost of the portion of the property that remained with the petitioner - appellant on the basis of rent capitalisation method would be Rs.17,250/-. The A.O. did not agree with him and determined the value at Rs.37,24,166/-. Being aggrieved by this order, the petitioner approached Commissioner (A). The Commissioner (A) decided the appeal and modified the order passed by the A.O. and held that the cost of the portion retained by the petitioner would be Rs.16,00,000/- and not Rs.37,24,166/-. Against this order, both the revenue and the assessee filed appeals before the tribunal. Both the appeals were decided by the tribunal by a common order and the tribunal by its order dated 29-3-2005, which is impugned in the appeal, held that the cost of the portion retained by the petitioner / appellant would be Rs.1,31,37,092.80. The petitioner filed miscellaneous application before the tribunal on the ground that the tribunal was not justified in 3 holding the cost of the property at Rs.1,31,37,092.80 because the revenue has not raised any such ground in the appeal. That miscellaneous application was rejected by the tribunal by order dated 30-8-2005 holding that there is no error apparent on the face of record in the order. Against the order of the tribunal passed in miscellaneous application, writ petition No.2672 of 2005 has been filed. 3. We have heard the learned counsel appearing for both the sides. It is clear that according to the petitioner the cost of the portion retained by the petitioner / appellant is Rs.17,250/-. The A.O. did not agree with the petitioner and held that the cost was Rs.37,24,166/-. The petitioner felt aggrieved by the order. The petitioner, therefore, filed appeal against the order of the A.O. In the appeal filed by the assessee, the order was modified by the Commissioner (A) and he held that neither the petitioner is right in claiming that the value of the property is Rs.17,250/- nor the A.O. is right in holding that the value of the property is Rs.37,24,166/-, but the proper valuation of the property is Rs.16,00,000/-. Both the parties were aggrieved by this order. The petitioner / 4 appellant filed appeal challenging the findings of the Commissioner that the valuation of the property is Rs.16,00,000/- because according to the petitioner / appellant proper value of the property Rs.37,24,166/-. The petitioner felt aggrieved by the order. The petitioner, therefore, filed appeal against the order of the A.O. In the appeal filed by the assessee, the order was modified by the Commissioner (A) and he held that neither the petitioner is right in claiming that the value of the property is Rs.17,250/- nor the A.O. is right in holding that the value of the property is Rs.37,24,166/-, but the proper valuation of the property is Rs.16,00,000/-. Both the parties were aggrieved by this order. The petitioner / 4 appellant filed appeal challenging the findings of the Commissioner that the valuation of the property is Rs.16,00,000/- because according to the petitioner / appellant proper value of the property is Rs.17,250/-. So far as the appeal filed by the revenue is concerned, there are only four grounds raised in the appeal and they read as under : "1. On the facts and in the circumstances of the case, the Ld. CIT (A) erred in directing the A.O. to adopt the value of encumbered unsold portion of flat at Rs.16 lakhs instead of Rs.37,24,166/- adopted by the A.O. 2. While doing so, the Ld. CIT (A) has failed to appreciate that the A.O. had worked out the allocation of cost between sold and unsold portion on pro-rata basis of the consideration paid for acquiring the flat. 3. The appellant prays that the order of the CIT (A) on the above ground(s) be set aside and that of the Assessing Officer restored. 4. The appellant craves leave to amend or alter any ground or add a new ground which may be necessary". 4. Perusal of the grounds raised in the appeal filed by the revenue shows that their grievance against the appellate order passed by the Commissioner was that the Commissioner was not justified in reducing the valuation of the property made by the A.O. and that the appellate authority should have upheld the valuation made by the A.O. There was no grievance made against the valuation of the property made by the A.O. The revenue in 5 fact prayed for restoration of the order of the A.O. It is obvious, therefore, that the petitioner / appellant had no notice that he has to show cause before the appellate tribunal against enhancement of the valuation beyond Rs.37,24,166/-. In our opinion, therefore, minimum that was required of the tribunal before fixing the value of the property beyond Rs.37,24,166/- without there being a ground raised in the appeal filed by the revenue was to give notice to the appellant / petitioner of its intention to do so. We are not considering the question whether the tribunal has power to suo-moto increase the valuation in the absence of any appeal. 5. In our opinion, even assuming that the tribunal had jurisdiction to enhance the valuation, minimum that was required as per the principles of natural justice was for the tribunal to issue notice to the petitioner / appellant, so that the petitioner / appellant could have got an opportunity to raise its objections to the proposed action of the tribunal. In our opinion to say the least the order of the tribunal enhancing the valuation from Rs.37,24,166/- arrived at by the A.O. is wholly untenable for non compliance of the principles of natural justice. Really speaking, in 6 our opinion, it is error apparent on the face of record which should have been corrected by the tribunal in the miscellaneous application. 6. Taking overall view of the matter, therefore, in our opinion, following order would meet the ends of justice. 7. The order of the tribunal challenged in the appeal, holding that the proper valuation of the portion of the property retained by the petitioner / appellant is Rs.1,31,37,092.80 is set aside. Similarly, the order passed by the tribunal action of the tribunal. In our opinion to say the least the order of the tribunal enhancing the valuation from Rs.37,24,166/- arrived at by the A.O. is wholly untenable for non compliance of the principles of natural justice. Really speaking, in 6 our opinion, it is error apparent on the face of record which should have been corrected by the tribunal in the miscellaneous application. 6. Taking overall view of the matter, therefore, in our opinion, following order would meet the ends of justice. 7. The order of the tribunal challenged in the appeal, holding that the proper valuation of the portion of the property retained by the petitioner / appellant is Rs.1,31,37,092.80 is set aside. Similarly, the order passed by the tribunal on the miscellaneous application dated 30-8-2005 challenged in the writ petition is also set aside. 8. The appeal filed by the revenue as also the appeal filed by the appellant before the tribunal are remitted back to the tribunal for denovo consideration and decision in accordance with law. 9. The appeal stands disposed of in terms of this order. Rule is made absolute in writ petition. 10. Both the matters are disposed of. 7 D.K. DESHMUKH, J. J.P. DEVADHAR, J.