Chandrakant Laxman Jadhav, Pune V. Income-tax Officer, Pune

ITA 1202/PUN/2017

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 5695 (ITAT-PUNE)
• Duration Of Justice: 4 year(s) 10 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 14-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M JASNANI THROUGH
• Assessee Lawyers: MK KULKARNI THROUGH
• Keywords: Capital asset; Cost of acquisition; Valuation report; Reassessment proceedings; Set aside; Capital Gains
• Section: 147; 148; 54; 144; 143(3); 142(1); 143(2); 139(1); 48; 13

Judgement Text

आयकरअपीलीयअिधकरण “बी” ायपीठ पुणे म । IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, PUNE BEFORE SHRI INTURI RAMA RAO, AM AND SHRI SONJOY SARMA, JM आयकर अपील सं . / ITA No. 1202/PUN/2017 िनधा रणवष / Assessment Year : 2007-08 Shri Chandrakant Laxman Jadhav, A/P Mahalunge, Chakan Talegaon Road, Tal, Khed, Pune-410501. PAN No. ACJPJ 0442 Q Vs The A.C.I.T., Circle-10, Pune. Appellant/ Assessee Respondent /Revenue Assessee by Shri MK Kulkarni-AR (Through Physical) Revenue by Shri M Jasnani-DR (Through Physical) Date of hearing 25/03/2022 Date of pronouncement 30/03/2022 आदेश / ORDER PER: SHRI SONJOY SARMA, J.M. This appeal by the Assessee arises out of the order passed by the ld. Commissioner of Income Tax (Appeals)-9, Pune, (in short, the CIT(A) in relation to the Assessment order dated 28/03/2014 passed by ITO, Ward 8(2), Pune for the Assessment Year 2007-08. The grounds of appeal raised by the assessee are as follows: “1 On the facts and in the circumstances of the case and in law, the proceedings initiated U/s 148 were contrary to law as the information in this case came to the hands of the A.O. in view of search and seizure action conducted against the Developers. The law provides that the assessment should have been complete U/s 153C r.w.s. 143(3) of the Act. The ld. CIT(A) was not justified, therefore, to confirm the assessment made by the A.O. U/s 147 r.w.s. 143(3) of the Act. The order of the ld. CIT(A) be set aside resultantly cancelling the assessment. 2. On the facts and in the circumstances of the case and in law the assessment u/s 143(3) r.w.s. 147 is also not sustainable for want of issue of notice u/s 143(3) which is mandatory. The order of the ld. CIT(A) be set aside resultantly cancelling the assessment. ITA 1202/PUN/2017 for A.Y. 2007-08 Sh. Chandrakant Laxman Jadhav Vs ITO 2 3. On the facts and in the circumstances of the case and in law the ld. CIT(A) was not justified in not accepting the claim made by the assessee u/s 54 re-investment towards a new residential property within 2 years of Rs. 1,21,65,740/-. The same be allowed as the same has been taxed as income. 4. The appellant craves to leave, add/amend or alter any of the above grounds of appeal.” 2. In this appeal, the assessee has also raised additional grounds of appeal which are as under: “1. On the facts and in the circumstances of the case and in law the close scrutiny of the assessment order would reveal that no reasons were recorded prior to issue of notice u/s 148 of the Act no any statutory sanction was obtained as required by S. 151(2) of the Jt.CIT of the Range after five years period was elapsed. The assessment order suffers from jurisdictional latches and draw backs. The assessment order as confirmed by ld. CIT(A) be quashed and set aside. 2. On the facts and in the circumstances of the case and in law the ld. CIT(A) was also not justified in not accepting the additional evidence going to the root of the mater produced before him on the basis of Remand Report submitted by the A.O. dt. 23/05/2018. 3. On the facts and in the circumstances of the case and in law and once the notices U/s 143(2) and 142(1) of the Act have been issued, it was the statutory duty of the A.O. to furnish reasons for reopening the assessment u/s 147 to the assesesee and the A.O. could not furnish such reasons as they were never recorded. The assessment order and the order of the ld. CIT(A) confirming the assessment were vitiated in law. They be quashed and set aside. 4. On the facts and in the circumstances of the case and in law and while ignoring to follow the statutory requirements, filing objections and hearing, impugned assessment and demand orders have been passed which in turn would suggest that the A.O. has not only breached the principles of natural justice but also breached the procedure which was required to be followed for decision especially in the circumstances when assessee was living as ‘brain-dead person’. The orders being illegal and without jurisdiction be not sustained. 5. On the facts and in the circumstances of the case and in law the fact-situation of the land is to be considered as it was on 06/01/1994 when Govt. Notification was issued for counting distance as provided in S. 2(14)(iii)(b) of the Act which decides the status of ‘agricultural’ or ‘non-agricultural’ land. The distance if ITA 1202/PUN/2017 for A.Y. 2007-08 Sh. Chandrakant Laxman Jadhav Vs ITO 3 considered as on 06/01/1994 from the Municipal Corporation/Municipal etc. it was far more than provided in that Section. Then it has to be considered as sale of agricultural land and not of capital asset being exempt under the Act. It be held accordingly. 6. On the facts and in the circumstances of the case and in law and on the specific fact that the assessee is a ‘brain dead person’ not understanding anything as a ‘living person’ and also not capable to understand anything, the additional grounds raised concerning ‘jurisdictional’ issues be admitted for adjudication with a view to give complete justice to a brain dead person who is alive in the eyes of this world. 7. On the facts and in the circumstances of the case and in law the brain dead person (assessee-appellant in this case) whose death then is said to ‘biological death’ who is unable to show any response to ‘external stimuli’ cannot directly face any assessment proceedings/legal actions as he is medically not considered as a ‘living person’. The assessment made directly on him is not sustainable in the eyes of law. It be quashed. 8. The appellant craves to leave, add/amend or alter any of the above g rounds of appeal.” 3. Since the additional grounds raised by the assessee are legal in nature, therefore, these additional grounds No. 1 to 7 are interrelated and interconnected and mainly relates to challenging the order of the ld. CIT(A) in upholding the validity of reopening of reassessment proceedings as well as issuance of notice U/s 148 of the Act. 4. On the other hand, the ld. DR has not raised any objection if the additional grounds are admitted for hearing because the additional grounds raised by the assessee are legal in nature. 5. Having considered the rival contentions and carefully perused the material placed on record. From perusal of record, we observe that the issue raised in the additional grounds are purely legal in nature, therefore, considering the totality of facts and circumstances and prayer of the ITA 1202/PUN/2017 for A.Y. 2007-08 Sh. Chandrakant Laxman Jadhav Vs ITO 4 assessee, we admit the additional grounds raised by the assessee for adjudication. 6. Brief facts of the case are that on the information of the office of Income Tax Officer (Inv.) Unit-1 & A/U, Pune that search and seizure operation was carried out in Naiknaware group on 07/09/2011, it was observed that Naiknaware Housing Development Pvt. Ltd., Pune had land transaction with the assessee. It was also informed that the assessee is a land owner and has received cash components of Rs. 31,12,500/- over and above the agreement value in respect of land deal for land at Mhaulunge, Tal : Khed, district- Pune. The total consideration of land sold was of Rs. 2,07,50,000/-. On the basis of said information, notice U/s 148 of the Income Tax Act, 1961 (in short, the Act) was issued to the assessee for the A.Y. 2008-09. In reply, the assessee submitted that the said transactions have been carried out on 24/03/2007 which pertains for Finance Year 2006-07 and not F.Y. 2007-08. Therefore, the A.O. dropped the proceedings U/s 148 for the A.Y. 2008-09. However, after verification of records, it was found that the assessee has not filed the return of income for A.Y. 2007-08 relevant to the F.Y. 2006-07 and failed to disclose the capital gains arising out of sale of land, income arsing therefrom has termed as escaped assessment and notice u/s 148 issued to the assessee on 20/03/2013 but in turn, no compliance was made by the assessee nor filed any return of income within the time framed stipulated in the notice U/s 148 of the Act. However, the assessee filed copy of agreement dated 24/03/2007 M/s Naiknaware Housing Development Pvt. Ltd. and copy of the bank statement with S/B with SBI, Chakan branch and consequent upon change of incumbent, fresh notice U/s 142(1) was issued upon the ITA 1202/PUN/2017 for A.Y. 2007-08 Sh. Chandrakant Laxman Jadhav Vs ITO 5 assessee on 30/08/2013 and no compliance from the assessee and ultimately the A.O. issued a final show cause notice u/s 142(1) on 07/03/2014 asking the assessee that is why the assessment be not finalized on the basis of material available on the records u/s 144 of the Act. Therefore, the assessee filed return of income for A.Y. 2007-08 on 19/03/2014 in response to the show cause notice dated 07/03/2014 and submitted that the return filed on 19/03/2014 may be treated as return filed in response to notice u/s 148 and enclosing the copies of purchase deeds of immovable properties. That on the basis of return filed on 19/03/2014, the assessee had shown the computation of long term capital gains as NIL and A.O. issued notice U/s 143(2) on 19/03/2014 in connection with return of income filed on 19/03/2014 and another notice u/s 142(1) issued to the assessee calling the various details. That while perusing of the documents by A.O., the agreement dated 24/03/2007 between M/s Naiknaware Housing Development Pvt. Ltd. and the assessee and his family members, it is seen that the said land is situated at Mouje Malunge, Gat No. 128, Hissa No. 2, admeasuring 1 Hector 66 Aar. As per Para 13 of the said Agreement, the consideration is Rs. 1,76,37,500/-. As per para 14 of the said Agreement, the assessee has given possession to /s Naiknaware Housing Development Pvt. Ltd. on the date of agreement. As per Para 26 of the said Agreement, the said land is shown in the Residential Zone. The A.O. during the course of re- assessment proceedings for A.Y. 2008-09 has called for information u/s ITA 1202/PUN/2017 for A.Y. 2007-08 Sh. Chandrakant Laxman Jadhav Vs ITO 6 133(6) of the Act from the Town Planning & Valuation Department, Pune Branch. As per letter dated 14/03/2013 from the Assistant Director of Town Planning, Pune Branch, the distance of the said Gat No. from Pimpri- Chinchwad Municipal Corporation limits according to their Office Drawing record is roughly around 5000 mtrs. Thus the above land is a capital assets within the meaning of Section 2(17) of the Act and is transferred as per Section 2(47) of the Act and therefore, the assessee is liable to Capital Gains in view of the above Agreement. The consideration received as per the said Agreement is Rs. 1,76,37,500/- and the amount received in cash as per the information received from the ITO (Inv) Unit-1 & AIU Pune is Rs. 31,12,500/-. This totals Rs. 2,07,50,000/- which the assessee has shown as full value of consideration in return of income filed. Thus the assessee has accepted that he has received Rs. 31,12,500/- in cash over and above the agreement value of Rs. 1,76,37,500/-. The sale consideration received by the assessee are as per agreement was deposited in his saving account with State Bank of India, Branch Chakan. The assessee alongwith his letter dated 19/03/2014 filed copies of following documents: Sr. No. Documents details Property details Name of the Purchaser Consideration Remarks 1) Purchase deed dtd. 31/07/2008 Agri. Land at Warale, Gat No. 18(7)/1, admeasuring 0.57 Aar Mr. Chandrakant Laxman Jadhav (Assessee & Mr. Uttam Laxman Jadhav 8,50,000/- The assessee has sold his land in Residential zone and purchased Agri. Land. Hence the deduction against this investment is not allowed. Also the assessee has not opened bank account under LTCG Scheme. 2) Purchase deed dtd. 23/10/2007 Agri.Land at Warale Gat No. 45, admeasuring 0.H 40 Aar Mr. Chandrakant Laxman Jadhav 5,25,000/- The assessee has sold his land in Residential Zone and purchased Agri land. Hence the deduction against this investment is not ITA 1202/PUN/2017 for A.Y. 2007-08 Sh. Chandrakant Laxman Jadhav Vs ITO 7 allowed. Also the assessee has not opened bank account under LTCG Scheme. 3) Purchase deed dtd. 05/07/2007 Agri. Land at Warale, Gat No. 18(7)/, admeasuring 0.50 Aar Mr. Chandrakant Laxman Jadhav (Assessee & Mr. Uttam Laxman Jadhav 15,00,000/- The assessee has sold his land in Residential zone and purchased Agri. Land. Hence the deduction against this investment is not allowed. Also the assessee has not opened bank account under LTCG Scheme. 4) Purchase deed dtd. 04/03/2009 Shop No. G-8 & 9, in “Shraddha Complex”, Chakan Pune Mr. Chandrakant Laxman Jadhav 11,00,000/- Investment in shop is not allowed as exemption under any section against capital gains. 5) Purchase deed dtd. 04/05/2006 Flat at Diwarka visha Hsg. Society, Indrayaninagar, Bhosari, Pune (Flat No. A-14) Mr. Chandrakant Laxman Jadhav & Mrs. Nirmala Chandrakant Jadhav 11,30,500/- No deduction in respect of this investment was filed alongwith letter dtd. 19/03/2014. However, the A.R. filed copy of Index II thereafter. The assessee has not filed ROI u/s 139(1) claiming such deduction. Also no Return of Income was filed in response to notice u/s 148 within 30 days. The ROI filed on 19/03/2014 is not revised return. Hence relying on the Hon’ble Supreme Court decision in the case of Goetz (India) Ltd. Vs CIT (284 ITR 323) no deduction against this investment is allowed. 6) Residential house at, Post: Malunge Ingle Mr. Chandrakant Laxman Jadhav - No document such as commencement certificate, completion certificate, copy of plan, copy of purchase bills in respect of construction material purchased etc. is filed. The assessee has not filed ROI u/s 139(1) claiming such deduction. Also no Return of Income was filed in response to notice u/s 148 within 30 days. The ROI filed on 19/03/2014 is not revised return. Hence relying on the Hon’ble Supreme Court decision in the case of Goetz (India) Ltd. Vs CIT (284 ITR 323) no deduction against this investment is allowed. ITA 1202/PUN/2017 for A.Y. 2007-08 Sh. Chandrakant Laxman Jadhav Vs ITO 8 The AR filed copy of valuation report dtd. 19/03/2014 in respect of the land sold to M/s Naiknaware Housing Development Pvt. Ltd. No supporting in respect of cost of improvement is filed and hence the claim is rejected. No details about how the claim of deduction against the gross LTCG is worked out is filed by the assessee except the copies of documents filed referred to above. In view of the same and also as discussed above, no deduction for investment in Agricultural Land, Shops or Residential Flat/House are allowed. After discussion and subject to the above remarks, the long term capital gain of the assessee is computed as under: Sr. No. Particulars Amount 1 Full value of consideration 2,07,50,000/- 2. Deduction under section 48 iii) Cost of Acquisition after indexation iv) Cost of improvement after indexation (not allowed as discussed above) 85,84,260/- NIL 3. Total Deduction (i+ii) 85,84,260/- 4. Balance 1,21,65,740/- 5. Deduction claimed for Re-Investments in Purchase of Agri Land, Shops, Flat/Residential house [not allowed as discussed above] NIL 6. Net Taxable Long Term Capital Gain 1,21,65,740/- 7. Aggrieved by the order passed by the A.O. on 28/03/2014, the assessee preferred an appeal before the CIT(A)-9 Pune and CIT(A) considering the facts of the case, dismissed the appeal of the assessee. 8. At the outset, we would like to mention here that at the time of hearing, the ld. Counsel for the assessee is not pressed the other grounds of appeal except the additional ground raised in the appeal i.e. ground No. 5 and the same is as hereunder: “5. On the facts and in the circumstances of the case and in law the fact-situation of the land is to be considered as it was on 06/01/1994 when Govt. Notification was issued for counting distance as provided in S. 2(14)(iii)(b) of the Act which decides the status of ‘agricultural’ or ‘non-agricultural’ land. The distance if ITA 1202/PUN/2017 for A.Y. 2007-08 Sh. Chandrakant Laxman Jadhav Vs ITO 9 considered as on 06/01/1994 from the Municipal Corporation/Municipal etc. it was far more than provided in that Section. Then it has to be considered as sale of agricultural land and not of capital asset being exempt under the Act. It be held accordingly.” Therefore, there is no need to decide the other grounds of appeal except the additional ground No. 5 raised as above. 9. The ld. AR submits that the fact situation of the land is to be determined as it was on 06/01/1994 when the notification was issued for counting distance as provided in section 2(14)(ii)(b) of the Act which decides the status of “agricultural” or non-agricultural” land and if distance is considered as on 06/01/1994 from the municipal corporation/municipal etc. it was far more than provided in that Section. Therefore, the land has to be considered as sale of Agricultural land and not of capital asset, accordingly, it is held to be exempt from tax and the issue was not dealt by the ld. CIT(A) while dismissing appeal of the assessee and on the other hand, the ld. DR relied on the decision of the ld. CIT(A) and A.O. 10. We have heard the rival submissions of both the parties and perused the material available on record. While hearing this appeal, limited issue is to be decided that the land sold being a capital asset or an agricultural land. At the time of hearing before ld. CIT(A), the assessee filed a letter dated 26/02/2016 from grampanchayat Shriskeshtra Mhalunge, Tal: Khed, Distt.-Pune, stating therein that the distance of land in the name of the assessee, situated at Gat No. 128, Mhalunge, Tal: Khed, district-Pune is located at following distances: i) Mhalunge to Pimpri-Chinchwad Municipal Corporation-14 KM. ii) Mhalunge to Dehuroad Cantonment board- 11 KM ITA 1202/PUN/2017 for A.Y. 2007-08 Sh. Chandrakant Laxman Jadhav Vs ITO 10 iii) Mhalunge to Telegaon Dabhade Municipal Corporation- 12KM In response to that, a remand report dated 23/05/2016 was called from the A.O.. However, the appellant has not filed any rejoinder on the remand report despite of several opportunities provided to him on several times and on the material available on the record, the order was passed against the assessee. Since the issue goes to the roots of the case, it is restored back to the file of the ld. CIT(A) with a direction to decide the issue afresh after giving an opportunity to the assessee to file necessary documents to prove the fact that the land sold being a capital asset or an agricultural land. 11. In the result, this appeal of the assessee is allowed for statistical purposes only. Order pronounced in the open Court on March 30 th, 2022. Sd/-/- Sd/- /- (INTURI RAMA RAO) (SONJOY SARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER पुणे / Pune; दनांक / Dated :March 30 th, 2022 *Ranjan आदेश क ितिलिप अ ेिषत / Copy of the Order forwarded to : 1. अपीलाथ / The Appellant. 2. यथ / The Respondent. 3. The CIT 4. The CIT(A) 5. िवभागीय ितिनिध,आयकर अपीलीय अिधकरण, “बी” ब च, पुणे / DR, ITAT, “B” Bench, Pune. 6. गाड फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // TRUE COPY // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे/ITAT, Pune.