AMARJYOT SINGH JASWANTSINGH JAGGI , AMRAVATI V. CIT-1, NAGPUR

ITA 121/NAG/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 2417 (ITAT-NAGPUR)
• Duration Of Justice: 3 year(s) 4 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2013-2014
• Appeal Filed On: 28-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Revision of order; Set aside; Capital Gains
• Section: 143(3); 50C; 2(A); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR BEFORE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER ITA NO.121/NAG/2018 ASSESSMENT YEAR: 201314 SH. AMARJYOT SINGH JASWANTSINGH JAGGI, PROP. OF SIMRAN COMMUNICATION, OPP. RAJAPETH POLICE STATION, AMRAVATI VS. COMMISSIONER OF INCOME TAX I, NAGPUR PAN :ADGPJ7110H (APPELLANT) (RESPONDENT) ORDER PER O.P. KANT, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 27 TH MARCH, 2018 PASSED BY THE LEARNED PR. COMMISSIONER OF INCOME TAX, NAGPUR1 [IN SHORT LEARNED PCIT] IN TERMS OF SECTION 263 OF THE INCOMETAX ACT, 1961 (IN SHORT THE ACT) HOLDING THE ORDER, UNDER SECTION 143(3) OF THE ACT PASSED BY THE ASSESSING OFFICER, AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF APPELLANT BY SH. MAHAVIR ATAL, CA RESPONDENT BY SH. PRADEEP HEDAOO, CIT(DR) DATE OF HEARING 27.10.2021 DATE OF PRONOUNCEMENT 27.10.2021 ITA NO. 121/NAG/2018 AMARJYOT SINGH JASWANTSINGH JAGGI 2 THE REVENUE. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE REPRODUCED AS UNDER: 1. THAT KEEPING IN VIEW FACTS OF THE CASE, THE HONBLE CIT ERRED IN HOLDING IN THE PROCEEDINGS U/S 263 THAT THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS & PREJUDICIAL TO THE INTEREST OF THE REVENUE. 2. THE HONBLE CIT ERRED IN INITIATED THE PROCEEDINGS U/S 263 AND DIRECTED ASSESSING OFFICER TO PASS FRESH ASSESSMENT ORDER. THE ORDER PASSED U/S 263 DESERVES TO BE SET ASIDE. 3. THAT ANY ORDER GROUND(S) THAT MAY BE RAISED AT THE TIME OF HEARING. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSESSEE WAS ENGAGED IN TRADING OF MOBILE HANDSET AND RECHARGE COUPON ETC. IN THE NAME PROPRIETOR CONCERN, NAMELY, SIMRAN COMMUNICATION. FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE FILED RETURN OF INCOME, DECLARING TOTAL INCOME OF ` 2,93,860/ ON 28 TH MARCH, 2014. THE RETURN OF INCOME FILED BY THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT AND STATUTORY NOTICES UNDER THE ACT WERE ISSUED AND COMPLIED WITH. THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT WAS COMPLETED ON 9 TH MARCH, 2016 BY THE ASSESSING OFFICER AFTER ACCEPTING THE RETURNED INCOME. 2.1 FURTHER, THE LEARNED PCIT CALLED FOR THE RECORD OF THE ASSESSEE AND AFTER EXAMINATION OF SAME, ISSUED NOTICE UNDER SECTION 263 OF THE ACT ON THE GROUND THAT THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. AFTER CONSIDERING SUBMISSION OF THE ASSESSEE, THE LEARNED PCIT OBSERVED THAT NO ADEQUATE INQUIRY WAS CONDUCTED BY THE ASSESSING OFFICER WITH REGARD TO THE ITA NO. 121/NAG/2018 AMARJYOT SINGH JASWANTSINGH JAGGI 3 NATURE OF LAND AS AGRICULTURAL LAND AND THE APPLICABILITY OF SECTION 50C OF THE ACT WAS ALSO IGNORED. ACCORDINGLY, THE LEARNED PCIT VIDE IMPUGNED ORDER U/S 263 OF THE ACT SET ASIDE THE ORDER OF THE ASSESSING OFFICER AND DIRECTED HIM TO MAKE NECESSARY INQUIRY AND PASS A FRESH ASSESSMENT ORDER. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL, RAISING THE GROUNDS AS REPRODUCED ABOVE. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTIES AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ASSESSEE HAS FILED A PAPER BOOK, CONTAINING PAGES 1 TO 112. THE RELEVANT PORTION OF THE NOTICE, DATED 21 ST MARCH, 2018, ISSUED UNDER SECTION 263 OF THE ACT BY THE PCIT, READ AS UNDER: 3. YOU HAVE SOLD 05 ACRES AND 29 GUNTHAS OF THE LAND SITUATED IN SURVEY NO. 116/1,116/3 AND 116/4 AT MAUJE RAHATGAON., PARGANE NANDGAON PETH, TAL & DISTRICT AMRAVATI TO ONE MS. JANHVI MANOJ SABNIS ON 13.03.2013. THIS TRANSACTION OF SALE WAS REGISTERED AT A STAMP DUTY VALUE OF RS. 1,61,00,000/-. AS PER RECORD THE LAND UNDER CONSIDERATION IS NOT AN AGRICULTURAL LAND. THE DISTANCE OF RAHATGAON FROM AMRAVATI IS 4 KMS. AS SUCH LAND UNDER CONSIDERATION IS A CAPITAL ASSET. THUS, THE SALE OF THE PROPERTY ATTRACTS CAPITAL GAIN AS PER THE I.T. ACT. THE A.O. HAS MERELY VERIFIED THE ISSUE FROM THE PERSPECTIVE THAT STAMP DUTY FOR ACQUISITION OF PROPERTY WAS BORNE BY THE ASSESSEE AMONG SIX PERSONS. THE AO HOWEVER IGNORED THE FACT THAT THERE WAS TRANSFER OF A CAPITAL ASSET AND THE SAME WAS LIABLE TO BE TAXED AS CAPITAL GAIN AND FURTHER THAT PROVISIONS OF SECTION 50C WERE ALSO ATTRACTED. THE AO HAS ERRED IN HIS INFERENCE THAT THE TRANSACTION WAS NOT LIABLE TO CAPITAL GAINS ON A COMPLETELY ERRONEOUS UNDERSTANDING OF THE FACTS. 3.1 IN RESPONSE TO THE ABOVE NOTICE, THE ASSESSEE SUBMITTED AS UNDER: (I) THE MATTER OF PURCHASE AND SALE OF LAND WAS UNDER LITIGATION FOR A CONSIDERABLE TIME BEFORE THE COURTS AND THE TRANSFER OF LAND WAS EFFECTED ON ACCOUNT OF A ITA NO. 121/NAG/2018 AMARJYOT SINGH JASWANTSINGH JAGGI 4 COMPROMISE REACHED BETWEEN THE SELLERS AND THE PURCHASERS WHICH WAS APPROVED BY THE COURT. (II) NO CONSIDERATION WAS PASSED AMONGST THE SELLER AND THE PURCHASER. (III) THE ASSESSING OFFICER LOOKED INTO THE ISSUE AND DECIDED THE MATTER THEREAFTER. (IV) THE ORDER PASSED WAS NOT ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. 3.2 THE LEARNED PCIT HAS HELD THE ASSESSMENT ORDER UNDER SECTION 143(3) OF THE ACT AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE, OBSERVING AS UNDER: 6. THE ABOVE POINTS MADE ARE DISCUSSED AS FOLLOWS. IT IS UNDISPUTED FACT AFTER THE ABOVE SUBMISSION THAT THE ASSET TRANSFERRED WAS A CAPITAL ASSET. IT IS AGREED TO BY THE ASSESSEE THAT THE SAME WAS TRANSFERRED AS PER THE COMPROMISE REACHED BETWEEN THE SELLERS AND THE PURCHASERS. IT IS ALSO TO BE NOTED THAT PASSAGE OF CONSIDERATION IN CASH OR NOT DOES NOT MAKE ANY DIFFERENCE TO THE TAXABILITY OF THE TRANSACTION. 'TRANSFER' IN RELATION TO A CAPITAL ASSET, AS PER SECTION 2(47) OF THE INCOME TAX ACT, HAS VERY WIDE AMBIT. 'TRANSFER' INCLUDES SALE, EXCHANGE, RELINQUISHMENT OF AN ASSET OR EXTINGUISHMENT OF ANY RIGHTS IN AN ASSET. THIS BEING SO, THE ASSESSING OFFICER OUGHT TO HAVE LOOKED INTO THE ISSUE FROM THIS PERSPECTIVE. IT IS HOWEVER SEEN THAT IN HIS NOTICE DATED 29.01.2016 THE ASSESSING OFFICER HAS MERELY INQUIRED WHETHER THE ASSESSEE PAID THE STAMP DUTY FOR THE TRANSACTION AND WHETHER CAPITAL GAIN TAX WAS PAID AFTER THE TRANSACTION. THE ASSESSING OFFICER DID NOT LOOK INTO THE ISSUE OF TAXABILITY AT ALL. VERY PRELIMINARY QUESTIONS AS ABOVE WERE ASKED. IN FACT, THERE IS NO EFFORT ON THE PART OF THE ASSESSING OFFICER TO UNDERSTAND THE TRANSACTION ITSELF. FOR THIS REASON IT CANNOT BE SAID THAT THE ASSESSING OFFICER LOOKED INTO THE ISSUE AND DECIDED THE SAME THEREAFTER. EVIDENTLY, THIS IS AN ORDER PASSED WITHOUT LOOKING INTO THE ISSUE AT ALL. THEREFORE, THE SAME IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. I AM THEREFORE SATISFIED THAT THE ORDER NEEDS REVISION BY THE UNDERSIGNED IN TERMS OF PROVISIONS OF SECTION 263 OF THE I.T. ACT, 1961. HOWEVER, THE AMOUNT OF CONSIDERATION U/S 50C HAS TO BE SEEN BY THE ASSESSING OFFICER. ITA NO. 121/NAG/2018 AMARJYOT SINGH JASWANTSINGH JAGGI 5 3.3 WE FIND THAT THE LEARNED PCIT HAS HELD THE ASSESSMENT ORDER ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE IN VIEW OF EXPLANATION 2 TO SECTION 263 OF THE ACT AND THE INQUIRES HAVE NOT BEEN CONDUCTED ON FOLLOWING TWO POINTS: (I) WHETHER THE SUBJECT MATTER OF AGRICULTURAL LAND SOLD WAS A CAPITAL ASSET. (II) APPLICABILITY OF PROVISION OF SECTION 50C OF THE ACT ON SALE TRANSACTION 3.4 BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER HAS CONDUCTED SUFFICIENT INQUIRY ON BOTH THE ISSUES AND AFTER COMPLETE VERIFICATION, HE HAS PASSED THE ASSESSMENT ORDER. LEARNED COUNSEL SUBMITTED THAT ALL THE DETAILS IN RESPECT OF THE PURCHASE OF AGRICULTURAL LAND IN QUESTION, ADMEASURING 11 ACRES AND TRANSFER OF 5 ACRES OUT OF THAT TO SELLER BY SIX PERSONS JOINTLY, INCLUDING THE ASSESSEE, WERE FILED BEFORE THE ASSESSING OFFICER. HE SUBMITTED THAT THE LAND WAS INITIALLY AGREED TO BE PURCHASED IN THE YEAR 2003, HOWEVER, THE SELLER DID NOT EXECUTE THE REGISTERED SALE DEED, AND THEREAFTER, A PROTRACTED OF LITIGATION BETWEEN THE SELLER AND BUYER, A MUTUAL COMPROMISE DEED WAS ENTERED INTO, AND ACCORDING TO WHICH, REGISTERED LEASE DEED WAS ENTERED INTO FOR 11 ACRES OF LAND AND THEREAFTER, 5 ACRES OF LAND WAS RETURNED/TRANSFERRED BACK BY WAY OF REGISTERED DEED TO THE SELLER ITSELF. THUS, THERE WAS NO SHORT TERM OR LONG TERM CAPITAL GAIN ON THE SALE OF THE LAND, EVEN IF THE LAND IS TREATED AS CAPITAL ASSET. THE PROVISIONS OF SECTION 50C WERE ALSO NOT APPLICABLE IN VIEW OF THE SALE AGREEMENT ENTERED INTO IN THE YEAR 31.03.2013 ITA NO. 121/NAG/2018 AMARJYOT SINGH JASWANTSINGH JAGGI 6 AT THE CIRCLE RATES AND THE SECTION 50C CAME INTO OPERATION W.E.F. 01.04.2013. THE ASSESSEE HAS FILED ALL THE DOCUMENTARY EVIDENCES IN SUPPORT OF ITS CLAIM. 3.5 THE LEARNED CIT(DR) DID NOT CONTROVERT THIS FACTUAL SUBMISSION OF THE LEARNED COUNSEL AND RELIED ON THE ORDER OF THE PCIT. 3.6 IN OUR OPINION THE ACTION OF LEARNED CIT(A) IS NOT JUSTIFIED DUE TO THE FOLLOWING REASONS: (I) THE ASSESSING OFFICER VIDE QUERY NO. 4 OF THE QUESTIONNAIRE DATED 29.01.2016 (COPY PLACED ON APB 15) HAS RAISED THE TAXABILITY OF SALE TRANSACTION UNDER CAPITAL GAIN. THE ASSESSEE ALSO REPLIED THE ABOVE QUERY BY WAY OF REPLY AT CLAUSE NO. 4 OF LETTER DATED 10.09.2016 (COPY PLACED ON APB 12 AND 13) ALONGWITH COPY OF SALE DEEDS. IT WAS SUBMITTED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER THAT 5 ACRES LAND WAS TRANSFERRED TO SELLER PARTIES AS PER COURTS ORDER. THE ASSESSING OFFICER AFTER PERUSAL OF DOCUMENTS, DID NOT FIND TAXABILITY OF THE TRANSACTION. THUS, THE FINDING OF THE PCIT THAT NO INQUIRIES HAVE BEEN CARRIED OUT IN RESPECT OF SALE TRANSACTION IS FACTUALLY INCORRECT. (II) THE ASSESSEE GOT REGISTERED 11 ACRES 9 GUNTHAS AGRICULTURAL LAND ON 11.03.2013 ALONG WITH 5 OTHER PERSONS JOINTLY IN THEIR FAVOUR AND ON SAME DATE, 5 ACRES AND 29 GUNTHAS OF LAND TRANSFERRED BACK TO THE SELLER PARTY. IN THIS TRANSACTION, EVEN THE LAND IS TREATED AS CAPITAL ASSET, THERE WILL NOT BE ANY CAPITAL GAIN, THE ITA NO. 121/NAG/2018 AMARJYOT SINGH JASWANTSINGH JAGGI 7 STAMP DUTY VALUE OF PURCHASE AND SALE BEING SAME ON THE DAY OF TRANSACTION. (III) AS FAR AS INVOKING OF SECTION 50C OF THE ACT IS CONCERNED, THE RELEVANT PROVISION HAS BEEN MADE EFFECTIVE FROM 01.04.2003, WHEREAS AGREEMENT FOR PURCHASE OF LAND WAS ENTERED INTO IN THE YEAR 1984 (01.10.84) AS PER PARAB OF THE COMPROMISE DEAD (ENGLISH TRANSLATE COPY). THE COMPROMISE DEED WAS ENTERED INTO ON 13.03.2013 AND THE LAND HAS BEEN RETURNED BACK TO THE SELLER, WHICH HAS BEEN REGISTERED BY WAYS OF SALE DEED. HENCE, PROVISIONS OF SECTION 50C ARE NOT APPLICABLE OVER THE FACTS OF THE CASE. 3.7 IN VIEW OF ABOVE, WE ARE OF THE OPINION THAT THE REQUIRED CONDITIONS FOR INVOKING THE SECTION 263 READ WITH EXPLANATION 2(A) OF THE ACT ARE NOT SATISFIED. IN VIEW OF THE FOREGOING DISCUSSION, WE CANCEL THE ORDER DATED 27 TH MARCH, 2018 PASSED UNDER SECTION 263 OF THE ACT BY THE PR. COMMISSION OF INCOME TAX, NAGPUR1. 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH OCTOBER, 2021 SD/ SD/ (SANDEEP GOSAIN) (O.P. KANT) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 27 TH OCTOBER, 2021. RK/ ITA NO. 121/NAG/2018 AMARJYOT SINGH JASWANTSINGH JAGGI 8 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, NAGPUR CITY CONCERNED; (5) THE DR, ITAT, NAGPUR; (6) GUARD FILE. TRUE COPY BY ORDER (A.R./SR. P.S./P.S.) ITAT, NAGPUR