Lawrence Rebello, Indore V. ITO-1 (3), Indore

ITA 132/Ind/2020

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 4933 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 6 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-09-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 02-03-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Cost of acquisition; Capital receipt; Reassessment proceedings; Capital Gains
• Section: 72; 147

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI C.M.GARG, JM & SHRI MANISH BORAD, AM ITA NO.132/IND/2020 ( / ASSESSMENT YEAR : 2011-2012) SHRI LAWRENCE REBELLO, 3, NATH MANDIR COLONY, SOUTH TUKOGANJ, INDORE VS ITO-1(3), INDORE PAN NO. : A BEPR 2143 L ( /APPELLANT ) .. ( / RESPONDENT ) /ASSESSEE BY : SHRI PANKAJ SHAH, CA /REVENUE BY : SHRI P.K.SINGH, SR.DR / DATE OF HEARING : 28/07/2021 /DATE OF PRONOUNCEMENT : 29 /09 /2021 / O R D E R PER C.M.GARG, JM : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 08.01.2020, PASSED BY THE CIT(A)-I, INDORE FOR THE ASSESSMENT YEAR 2011- 2012 ON THE FOLLOWING GROUNDS :- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-I ('CI T(A)') ERRED IN CONFIRMING THE ACTION OF ASSESSING OFFICER IN REOPENING THE CASE AND MAKING REASSESSMENT UNDER SECTION 147 OF THE ACT WHICH IS PRAYED TO BE QUASHED AND HELD AS UNWAR RANTED, ILLEGAL AND BAD-IN LAW. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) ERRED IN CONFIRMING THE ACTION OF AS SESSING OFFICER DETERMINING TOTAL INCOME AT RS.34,01,150/- AS AGAINST DECLARED INCOME OF RS.6,28,040/- WHICH IS BAD IN LA W AND EXCESSIVE. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) ERRED IN CONFIRMING THE ACTION OF AS SESSING OFFICER IN MAKING ADDITION OF RS.27,73,108/- ON ACC OUNT OF HARDSHIP COMPENSATION RECEIVED BY TREATING IT REVEN UE RECEIPT INSTEAD OF CAPITAL RECEIPT. THE APPELLANT PRAYS THA T THE ADDITION BE DELETED. ITA NO.132/IND/2020 2 4. THE APPELLANT CRAVES LEAVE TO ADD TO, ALTER AND /OR AMEND ALL OR ANY OF THE FOREGOING GROUNDS OF APPEAL. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND FILED HIS RETURN OF INCOME MANUALLY ON 28.07.2011, DECLARING INCOME OF RS.6,28,040/-. ON THE BASIS OF INFORMATION RECEIVED FROM ITO-23(2)(3), MUMBAI, REGARDING RECEIPT OF RS.27,73,108/-, THE AO RECORDED THE SATISFACTION FOR REOPENING THE CASE OF THE ASSESSEE FOR A.Y.2011-2012 U/S.148 OF THE ACT. IN PURSUANCE TO NOTICE U/S.148 OF THE ACT, THE ASSESSEE FILED HIS RETURN OF INCOME DECLARING THE INCOME AS DECLARED IN THE ORIGINAL RETURN. THE AO ASKED THE ASSESSEE REGARDING RECEIPT OF HARDSHIP COMPENSATION OF RS.27,73,108/- FROM M/S DB MIG REAL TORS AND BUILDERS PVT. LTD. IN THIS REGARD, THE ASSESSEE SUBMITTED TH AT HE HAS NOT OFFERED MONEY RECEIPT AS HARDSHIP COMPENSATION FOR TAXATION FOR THE RELEVANT ASSESSMENT YEAR AS HARDSHIP COMPENSATION FOR TAXATI ON IS NOT A REVENUE RECEIPT BUT A CAPITAL RECEIPT. HOWEVER, THE AO DID NOT ACCEPT THE ABOVE CONTENTION OF THE ASSESSEE AND TREATED THAT THE COM PENSATION RECEIVED BY THE ASSESSEE DURING THE PERIOD UNDER CONSIDERATION AS INCOME OF THE ASSESSEE FROM OTHER SOURCES AND CHARGED TO TAX ACCO RDINGLY. 3. AGAINST THE ORDER OF AO, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A) AND THE CIT(A) DISMISSED THE APPEAL OF THE A SSESSEE. 4. FURTHER AGGRIEVED BY THE ORDER OF CIT(A), THE AS SESSEE IS IN APPEAL BEFORE THE TRIBUNAL ON THE GROUNDS AS MENTIONED ABO VE. GROUND NO.1 5. LEARNED ASSESSEES REPRESENTATIVE (AR) SUBMITTED THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF AO IN REOPENING THE CASE AND ITA NO.132/IND/2020 3 MAKING REASSESSMENT U/S.147 OF THE ACT, WHICH DESER VES TO BE QUASHED BEING UNWARRANTED, ILLEGAL AND BAD-IN-LAW. LD. AR A LSO SUBMITTED THAT THE LD. FIRST APPELLATE AUTHORITY (FAA) HAS ALSO ERRED IN CONFIRMING THE ACTION OF THE AO IN INITIATING REASSESSMENT PROCEEDINGS U/ S.147 OF THE ACT AND ISSUING NOTICE U/S.147 OF THE ACT BEYOND SIX YEARS WITHOUT ANY LEGAL AND JUSTIFIED BASIS. THEREFORE, THE ENTIRE REOPENING PR OCEEDINGS, NOTICE AND ALL CONSEQUENT PROCEEDINGS AND ORDERS DESERVE TO BE QUA SHED BEING UNSUSTAINABLE AND BAD IN LAW. 6. REPLYING TO THE ABOVE, SHRI P.K.SINGH, LD. SR. D EPARTMENTAL REPRESENTATIVE(DR) DREW OUR ATTENTION TOWARDS PAGE NO.6 OF ASSESSEES PAPER BOOK AND VEHEMENTLY CONTENDED THAT THE AO HAS INITIATED REASSESSMENT PROCEEDINGS U/S.147 OF THE ACT AND HAS ISSUED NOTICE U/S.148 OF THE ACT BY FOLLOWING ALL LEGAL PROCEDURE , REQUIRED APPROVAL AND BY PRESSING INTO SERVICE THE PROVISION OF CLAUSE(B) OF EXPLANATION 2 TO SECTION 147 OF THE ACT AND IN PARA 4 OF THE REASONS RECORDED, THE AO HAS EXPRESSLY MENTIONED THAT THE ASSESSEE HAS NOT DECLA RED FULLY AND TRULY INCOME CHARGEABLE TO TAX FOR THE F.Y.2010-2011 RELA TING TO THE ASSESSMENT YEAR 2011-2012, THEREFORE, NO ALLEGATION CAN BE LEVELLED AGAINST THE AO REGARDING INITIATION OF REASSESSMENT PROCEEDINGS AND ISSUANCE OF NOTICE. THUS, THE LD. SR.DR SUBMITTED T HAT THE INITIATION OF REASSESSMENT PROCEEDINGS, ISSUANCE OF NOTICE AND CO NSEQUENT PROCEEDINGS AND ORDERS MAY KINDLY BE UPHELD. 7. ON CAREFUL CONSIDERATION OF ABOVE RIVAL SUBMISSI ONS, WE ARE OF THE CONSIDERED VIEW THAT FROM THE COPY OF REASONS RECOR DED BY THE AO VIDE ITA NO.132/IND/2020 4 DATED 13.03.2018 AVAILABLE AT PAGE 6 OF ASSESSEES PAPER BOOK, IT IS AMPLY CLEAR THAT DURING THE COURSE OF ASSESSMENT PR OCEEDINGS IN THE CASE OF M/S MIG COOPERATIVE SOCIETY LTD. FOR A.Y.2011-20 12, IT WAS NOTICED THAT THE SAID SOCIETY WAS ENTERED INTO THE DEVELOPM ENT AGREEMENT WITH M/S DB MIG REALTORS AND BUILDERS PVT. LTD. ON 31.10 .2010 AND PAYMENTS WERE MADE TO FLAT OWNERS SHOWN AS HARDSHIP ALLOWANC E DURING THE F.Y.2010-2011 AND FLAT OWNERS WERE ELIGIBLE FOR A N EW FLAT IN THE NEWLY DEVELOPED BUILDING IN LIEU OF THEIR OLD FLATS. THE ASSESSEE HAS ALSO RECEIVED FLAT OF 1536 SQ.FT. IN LIEU OF OLD FLAT OF 645 SQ.FT. IN ADDITION TO SAID HARDSHIP ALLOWANCE. IT HAS NOT BEEN CONTROVERTED TH AT THE SAID AGREEMENT WAS UNDERTAKEN BETWEEN THE SAID TWO PARTIES AND ASS ESSEE WAS ALSO ONE OF THE BENEFICIARY/FLAT OWNER IN THE SAID SOCIETY. THE LD. AR OF THE ASSESSEE HAS NOT POINTED OUT ANY FACT THAT THE ASSE SSEE HAS DECLARED THE SAID TRANSACTION BEFORE THE DEPARTMENT, THEREFORE, THE ALLEGATION LEVELLED BY THE AO THAT THE ASSESSEE HAS NOT DECLARED FULLY AND TRULY THE INCOME CHARGEABLE TO TAX FOR A.Y. 2010-2011 RELEVANT TO A. Y.2011-2012. WE MAY ALSO POINT OUT THAT AT THE TIME OF INITIATION OF PR OCEEDINGS, THE ASSESSEE HAS TO DRAW A PRIMA FACIE INFERENCE AND SATISFACTIO N THAT THE INCOME HAS ESCAPED ASSESSMENT BUT THE AO HAS NOT DEBARRED OR S TOPPED FROM GRANTING RELIEF TO THE ASSESSEE BY DROPPING THE REA SSESSMENT PROCEEDINGS IF DURING THE COURSE OF REASSESSMENT PROCEEDINGS TH E ASSESSEE EXCLUSIVELY ESTABLISHED AND SUBSTANTIATE THAT THERE WAS NO INCOME CHARGEABLE TO TAX HAS ESCAPED. WITHOUT COMMENTING O N MERITS OF THE CASE, WE ARE OF VIEW THAT THE INITIATION OF REASSES SMENT PROCEEDINGS AND ITA NO.132/IND/2020 5 PROCEEDINGS U/S.147 OF THE ACT BY PRESSING INTO SER VICE CLAUSE (B) OF EXPLANATION 2 TO SECTION 147 OF THE ACT AND ISSUANC E OF NOTICE U/S.148 OF THE ACT IS VALID AND HAS BEEN BASED ON SOUND LEGAL PRINCIPLE AND PROVISIONS OF THE ACT. THEREFORE, WE DECLINE TO GRA NT ANY RELIEF TO THE ASSESSEE ON GROUND NO.1 RAISED BY THE ASSESSEE. CON SEQUENTLY, GROUND NO.1, BEING LEGAL, IS HEREBY DISMISSED. GROUND NOS.2 & 3: 8. LD. AR SUBMITTED THAT ON THE FACTS AND CIRCUMSTA NCES OF THE CASE AND IN LAW THE LEARNED CIT(A) ERRED IN CONFIRMING T HE ACTION OF ASSESSING OFFICER DETERMINING TOTAL INCOME AT RS.34,01,150/- AS AGAINST DECLARED INCOME OF RS.6,28,040/- WHICH IS BAD IN LAW AND EXC ESSIVE. LD. AR VEHEMENTLY CONTENDED THAT THE LD. CIT(A) ERRED IN C ONFIRMING THE ACTION OF ASSESSING OFFICER IN MAKING ADDITION OF RS.27,73,10 8/- ON ACCOUNT OF HARDSHIP COMPENSATION RECEIVED BY TREATING IT REVEN UE RECEIPT INSTEAD OF CAPITAL RECEIPT FLOUTING ALL PRINCIPLE OF TAX JURIS PRUDENCE AND ACCOUNTING. DRAWING OUR ATTENTION TO THE ORDER OF ITAT MUMBAI B ENCH IN THE CASE OF JITENDRA KUMAR SONEJA VS. ITO, [2016] 72 TAXMANN.CO M 318 (MUM-TRIB), LD. AR SUBMITTED THAT WHERE THE ASSESSEE WAS A FLAT OWNER IN HOUSING SOCIETY AND HE RECEIVED CERTAIN SUM FROM THE DEVELO PER AS CORPUS FUND TOWARDS HARDSHIP CAUSED TO FLAT OWNERS ON REDEVELOP MENT, IMPUGNED AMOUNT WOULD BE IN NATURE OF CAPITAL RECEIPT SIMPLI CITOR NOT INCLUDIBLE IN INCOME AS PER SECTION 2(24)(VI) OF THE ACT. LD. AR ALSO SUBMITTED THAT THE ITAT MUMBAI BENCH IN THE CASE OF SMT. DELILAH RAJ M ANSUKHANI VS. ITO, ITA NO.3526/MUM/2017, ORDER DATED 29.01.2021 BY FOL LOWING THE ORDER OF ITA NO.132/IND/2020 6 COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF SHR I DEVSHI LAKHAMSHI DEDHIA VS. ACIT IN ITA NO.5350/MUM/2012 CONCLUDED T HAT THE AMOUNT RECEIVED BY THE ASSESSEE AS HARDSHIP COMPENSATION, REHABILITATION COMPENSATION AND FOR SHIFTING ARE NOT LIABLE TO TAX AND, THEREFORE, THE BENCH DIRECTED TO DELETE THE ADDITION. 9. REPLYING TO THE ABOVE, LD. SR. DR SUPPORTED THE REASSESSMENT AS WELL AS FIRST APPELLATE ORDER AND SUBMITTED THAT TH E ASSESSEE HAS NOT COME WITH CLEAN HANDS AND HAS NOT DECLARED THE IMPU GNED AMOUNT RECEIVED BY IT BEFORE THE TAXATION AUTHORITIES. LD. SR.DR ALSO SUBMITTED THAT IN ABSENCE OF REQUIRED DETAILS IT CANNOT BE CO NSIDERED AS CAPITAL RECEIPT, THEREFORE, THE ORDERS OF AUTHORITIES BELOW MAY KINDLY BE UPHELD. 10. PLACING REJOINDER TO THE ABOVE, LD. AR DREW OU R ATTENTION TO THE PAGE NO.6 OF THE ASSESSEES PAPER BOOK AND SUBMITTE D THAT IN PARA 3 OF THE REASONS, THE AO HIMSELF NOTED THAT THE ASSESSEE WAS TO RECEIVE A FLAT OF 1536 SQ.FT. IN LIEU OF OLD FLAT OF 615 SQ.FT., I N ADDITION TO THAT HE WAS ALSO TO RECEIVE TOTAL HARDSHIP ALLOWANCE DUE TO MEMBERS AS PER DA IN THE PERIOD BETWEEN 01.04.2010 TO 31.03.2011 OF RS.9,243 ,693/-, THEREFORE, IT CANNOT BE ALLEGED AGAINST THE ASSESSEE THAT THE ASS ESSEE COULD NOT ESTABLISH THE FACT THAT IT WAS CAPITAL RECEIPT. 11. ON CAREFUL CONSIDERATION OF ABOVE RIVAL SUBMISS IONS, WE ARE OF THE CONSIDERED VIEW THAT IN THE REASONS RECORDED THE AO HIMSELF NOTED THAT THE BENEFITS RECEIVED BY THE ASSESSEE FROM A BIGGER SIZE OF FLAT AND IMPUGNED AMOUNT HAS BEEN GIVEN IN PURSUANCE TO AGRE EMENT BETWEEN THE SOCIETY AND THE DEVELOPER AND IT WAS HARDSHIP C OMPENSATION, ITA NO.132/IND/2020 7 REHABILITATION COMPENSATION KIND OF BENEFIT. THE OR DERS PASSED BY THE ITAT MUMBAI BENCH IN CASE OF SMT. DELILAH RAJ MANSU KHANI (SUPRA), JITENDRA KUMAR SONEJA (SUPRA) AND KUSHAL K BANGIA(S UPRA) INCLUDING THE ORDER PASSED BY THE MUMBAI BENCH IN THE CASE OF SH RI DEVSHI LAKHAMSHI DEDHIA (SUPRA), IT IS AMPLY CLEAR THAT WHERE THE AS SESSEE BEING A FLAT OWNER IN A HOUSING SOCIETY RECEIVES CERTAIN SUM FRO M DEVELOPER AS CORPUS FUND TOWARDS HARDSHIP CAUSED TO FLAT OWNERS ON REDE VELOPMENT, IMPUGNED AMOUNT HAS TO BE TREATED AS CAPITAL RECEIPT SIMPLIC ITOR WHICH AS PER SECTION 2(24)(VI) OF THE ACT IS NOT TAXABLE AS INCO ME OF THE ASSESSEE. IN THIS REGARD, WE FIND IT PROFITABLE TO REPRODUCE PAR A 3.2 OF THE ORDER OF ITAT MUMBAI BENCH IN THE CASE OF JITENDRA KUMAR SONEJA ( SUPRA), WHICH READS AS UNDER :- 3.2 NOTHING CONTRARY WAS BROUGHT TO MY KNOWLEDGE O N BEHALF OF REVENUE. FACTS BEING SIMILAR, SO FOLLOWING SAME REA SONING, I FIND THAT CONSIDERATION FOR WHICH THE AMOUNT HAS BEEN PA ID BY THE DEVELOPER ARE, THEREFORE, NOT RELEVANT IN DETERMINI NG THE NATURE OF RECEIPT IN THE HANDS OF THE ASSESSEE. IN VIEW OF TH ESE DISCUSSION, IN MY CONSIDERED VIEW, ASSESSEE COULD NOT BE SAID TO B E OF REVENUE NATURE, AND, ACCORDINGLY, THE SAME IS OUTSIDE THE A MBIT OF INCOME UNDER SECTION 2(24) OF THE ACT. THE IMPUGNED RECEIP T ENDS UP REDUCING THE COST OF ACQUISITION OF THE ASSET, I.E. FLAT, AND, THEREFORE, THE SAME WILL BE TAKEN INTO ACCOUNT AS SUCH, AS AND WHEN OCCASION ARISES FOR COMPUTING CAPITAL GAINS IN RESPECT OF TH E SAID ASSET. SUBJECT TO THESE OBSERVATIONS, THE APPEAL OF ASSESS EE IS ALLOWED. RESPECTFULLY FOLLOWING THE ABOVE OBSERVATIONS OF TH E ITAT MUMBAI BENCH AS WELL AS THE ORDERS CITED SUPRA, WE ARE COMPELLED TO HOLD THAT THE BENEFIT RECEIVED BY THE ASSESSEE IN THE FORM OF BIG GER SIZE OF FLAT AND AMOUNT RECEIVED AS HARDSHIP ALLOWANCE FROM THE DEVE LOPER IS A CAPITAL RECEIPT, WHICH CANNOT BE TREATED AS REVENUE RECEIPT FOR TAXING AS INCOME. ITA NO.132/IND/2020 8 ACCORDINGLY, GROUND NOS.2 & 3 ARE ALLOWED AND THE A O IS DIRECTED TO DELETE THE ADDITION. 12. GROUND NO.4 IS GENERAL IN NATURE, WHICH REQUIRE S NO SEPARATE ADJUDICATION. 13. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 /09/202 1. SD/ - ( !' ( MANISH BORAD ) SD/ - ( .!'. $$ ) (C.M.GARG) #$ / ACCOUNTANT MEMBER $ / JUDICIAL MEMBER %& ' DATED 29 / 09 /2021 PRAKASH KUMAR MISHRA, SR.P.S. %&'( )(& / COPY OF THE ORDER FORWARDED TO : * / BY ORDER, ( ASSISTANT REGISTRAR ) , /ITAT, INDORE 1. / THE APPELLANT- SHRI LAWRENCE REBELLO, 3, NATH MANDIR COLONY, SOUTH TUKOGANJ, INDORE 2. / THE RESPONDENT- ITO-1(3), INDORE 3. ( ( ) ( ) / THE CIT(A), 4. ( ( ) / CIT 5. *+$ , , ( , , /DR, ITAT, INDORE 6. $- . / GUARD FILE. * //TRUE COPY//