HAR CHAND,NEW DELHI V. DCIT, WARD- 43(3), DELHI

ITA 6369/DEL/2019

AI Insights

The case involves Har Chand, the appellant, who contested the assessment order for the Assessment Year 2015-16, which significantly increased his declared income from Rs. 2,20,060 to Rs. 2,55,61,102. The primary contention was regarding the sale of agricultural land, which the AO classified as a capital asset, thus taxable under capital gains. The AO also denied exemptions claimed under sections 54B and 54F, which the appellant argued were applicable. The Tribunal found procedural and substantive errors in the AO's assessment, particularly in the valuation of the land and the handling of the exemptions under sections 54B and 54F.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 314332 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2015-2016
• Other Referred Cases: Goetze India vs. CIT
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASSESSEE HEREIN; RAJESH KUMAR DHANESTA
• Assessee Lawyers: ROHIT TIWARI
• Keywords: Capital asset; Corroborative evidences; Cost of acquisition; Capital Gains; Principle of natural justice; Valuation report
• Section: 143(3); 54; 54B; 54F; 234B; 2(14)

Judgement Text

"Page | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “B”: NEW DELHI BEFORE SHRI M. BALAGANESH, ACCOUNTANT MEMBER AND SHRI VIMAL KUMAR, JUDICIAL MEMBER ITA No. 6369/Del/2019 (Assessment Year: 2015-16) Har Chand, Village- Kharkhari Jatmal, PO Khaira, Najafgarh, New Delhi Vs. DCIT, Ward-43(3), Delhi (Appellant) (Respondent) PAN: BBOPC7125E Assessee by : Shri Rohit Tiwari, Adv Ms. Tanya, Adv Ms. Shivani, Adv Revenue by: Shri Rajesh Kumar Dhanesta, Sr DR Date of Hearing 06/03/2025 Date of pronouncement 07/05/2025 O R D E R PER M. BALAGANESH, A. M.: 1. The appeal in ITA No.6369/Del/20190 for AY 2015-16, arises out of the order of the Commissioner of Income Tax (Appeals)-8, New Delhi [hereinafter referred to as „ld. CIT(A)‟, in short] in Appeal No. 294/17- 18/CIT(A)-15 dated 05.03.2019 against the order of assessment passed u/s 143(3) of the Income-tax Act, 1961 (hereinafter referred to as „the Act‟) dated 28.12.2017 by the Assessing Officer, ITO, Ward-43(3), New Delhi (hereinafter referred to as „ld. AO‟). 2. The assessee has raised the following grounds of appeal:- “1. That the learned Commissioner of Income Tax (Appeals)-15, Delhi has erred both in law and, on facts in upholding the determination of ITA No. 6369/Del/2019 Har Chand Page | 2 income made by the learned of Income Tax officer, Ward-43(3), Delhi of the appellant at Rs. 2,55,61,102/- as against declared income of Rs. 2,20,060/- by the appellant in an order of assessment dated 28.12.2017 u/s 143(3) of the Act. 2. That the learned Commissioner of Income Tax (Appeals)-15, Delhi has erred both in law and, on facts in upholding while computing the long term capital gain in adopting the sale consideration at Rs. 2,53,41,042/- invoking section 54 of the Act. 2.1 That the learned CIT (A) has further erred in holding that investment made by the appellant in the property represents învestments as against the claim of the appellant that such transaction not materialized due to incompetency of builder. 2.3 That while sustaining the aforesaid addition the learned Commissioner of Income Tax (Appeals) has completely overlooked that there was no adverse material brought on record by the learned Assessing Officer to assume. 2.4 That while sustaining the aforesaid disallowance, the learned Commissioner of Income Tax (Appeals) has failed to appreciate that, the explanation tendered by the appellant duly supported by necessary evidence. Infact, addition has been confirmed in an arbitrary and subjective manner, which is contrary to law. 2.5 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that affidavit of the husband of the appellant was valid evidence and, in absence, of any rebuttal by the learned officer, the addition sustained is not tenable. 2.6 That the learned CIT(A) has erred both in law and on facts in failing to appreciate that material evidence in shape of cancellation agreement which has been given a complete go by the Assessing Officer which supported the stand of assessee that no consideration other what was stated in sale deed was paid. Infact, it clearly demonstrated that, receipt cum agreement stood cancelled and, the original cheque of Rs. appellant also stood returned. issued by the 2.7 That further more the learned Commissioner of Income Tax (Appeals) has proceeded to confirm the addition on mere speculation, generalized statements, theoretical assumptions and allegations and assertions, without there being any supporting evidence and is therefore not in accordance with law. 2.8 That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in recording various adverse inferences which ITA No. 6369/Del/2019 Har Chand Page | 3 are contrary to the facts on record, material placed on record and, are otherwise unsustainable in law and therefore, addition so sustained is absolutely unwarranted. 2.9 That no enquiries conducted by the income tax authorities and without granting any fair, meaningful and proper opportunity and thus, could not be made a basis in law to sustain the addition. 3. That both the authorities below have framed the impugned order without granting sufficient proper opportunity to the appellant and therefore the same are contrary to principle of natural justice and hence vitiated. 4. That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in upholding the levy of interest u/s 234B of the Act and, interest u/s 234C of the Act which are not leviable on the facts and circumstances of the case of the appellant company.” 3. We have heard the rival submissions and perused the material available on record. The return of income for AY 2015-16 filed by the assessee on 30.08.2015 declaring total income of Rs. 2,20,060/-. The assessee sold a land during the year under consideration. This land was situated at village Kharkhari Jatmal, Tehsil Kapashera, New Delhi on 06.08.2014 for a consideration of Rs. 3 crores to M/s. Suparshva Developers Ltd. The assessee claimed that the said land is agricultural land and hence, the sale of such land would be exempt from the definition of capital asset u/s 2(14) of the Act and accordingly did not disclose the same in the return of income. The ld AO observed that from the perusal of the sale deed which is placed on record, it is clear that the land is situated within the municipal corporation limits and thereby becomes a capital asset. The ld AO observed that the assessee has claimed that the cost of acquisition of the land is unascertainable in view of the fact that land is ancestral land. The matter was referred to ld District Valuation Officer (DVO) u/s 55A of the Act for determining the cost of acquisition as on 01.04.1981. The report of the ld DVO was not ITA No. 6369/Del/2019 Har Chand Page | 4 received till the date of completion of assessment. However, reference was also made to ld DVO in the case of Manjeet Singh for arriving at the cost of acquisition of the land as on 01.04.1981 in respect of land situated at Chhawala Village as on 01.04.1981 wherein, the rate of Rs. 3,32,150/- per acre was determined. The assessee was show caused as to why the valuation adopted in the case of Manjeet Singh be not adopted as cost of acquisition in the case of the assessee. The assessee submitted a valuation report from the private valuer who determined the cost of acquisition as on 01.04.1981 at Rs. 16,50,000/- per acre. The ld AO observed that Chhawala village is nearby village of Kharkhari Jatmal and there was no difference in the rate of land in both the villages. Accordingly, the ld AO adopted the valuation in the case of Manjeet Singh as the cost of acquisition as on 01.04.1981 in the cased of the assessee. The ld AO treated the sale consideration of land of Rs. 3 crores as eligible to be levied under the head income from capital gains and granted deduction of indexed cost of acquisition and taxed Rs. 2,53,41,042/- and completed the assessment. The ld AO also observed that assessee had not claimed any exemption u/s 54B or 54F of the Act in the return. The ld AO observed that the said claim was made only during the course of assessment proceedings by the assessee. The ld AO noted that the exemption u/s 54B would be allowed only when reinvested property is purchased in assessee‟s own name. Further, assessee‟s wife has purchased a plot for which exemption u/s 54F of the Act was claimed. No construction activity has been shown by the assessee. The period of 3 years have already elapsed. Hence, the exemption u/s 54F of the Act was also denied by the ld AO. The action of the ld AO was upheld by the ld CIT(A). ITA No. 6369/Del/2019 Har Chand Page | 5 4. Before us, the ld AR only prayed for restoration of appeal to the file of the ld AO to examine the claim of exemption u/s 54B and 54F of the Act and for redetermination cost of acquisition as on 01.04.1981. The ld DR relied on decision of Hon'ble Supreme Court in the case of Goetze India reported in 284 ITR 323 stating that since no claim was made by the assessee in this regard in the return, the same cannot be granted to the assessee. 5. We hold that the determination of cost of acquisition as on 01.04.1981 based on the valuation report of ld DVO in the case of Manjeet Singh is not correct. The ld AO had indeed noted that the case was referred to ld DVO u/s 55A of the Act in the case of assessee itself for determination of cost of acquisition as on 01.04.1981. The ld AO is directed to adopt the said valuation report for the purpose of determination of cost of acquisition as on 1.4.1981 for assessee herein. On perusal of the decision of Hon'ble Supreme Court in the case of Goetze India referred by ld DR, we find that the appellate authority can always entertain a claim even though the same is not made in the return. Hence, we direct the ld AO to examine the claim of exemption u/s 54B and 54F of the Act afresh in accordance with law and uninfluenced by earlier observationx made in the order. The assessee is at liberty to furnish fresh evidences, if any, in support of his contentions. With these directions, grounds raised by the assessee on merits are allowed for statistical purposes. 6. With regard to chargeability of interest u/s 234C of the Act, the law is very well settled that the same could be charged only on the returned income and not on the assessed income. Levy of interest u/s 234B of the Act is consequential in nature. ITA No. 6369/Del/2019 Har Chand Page | 6 7. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 07/05/2025. -Sd/- -Sd/- (VIMAL KUMAR) (M. BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 07/05/2025 A K Keot Copy forwarded to 1. Applicant 2. Respondent 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, New Delhi "