Sh. Bikramjit Singh Gill S/o. Jaggar Singh Gill, Bathinda V. The Asstt .Commissioner of Income Tax, Bathinda

ITA 181/ASR/2014

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 2449 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 9 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 04-01-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 20-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K SHARDA
• Keywords: Capital asset; Revised return
• Section: 143(3); 54F

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH; AMRITSAR BEFORE SH. A.D. JAIN, JUDICIAL MEMBER AND SH. T.S. KAPOOR, ACCOUNTANT MEMBER ITA NO.181(ASR)/2014 ASSESSMENT YEAR:2008-09 PAN: AHJPGO772D SH. BIKRAMJIT SINGH GILL VS. ASSTT. COMMR. OF INC OME TAX, S/O SH. JAGGAR SINGH GILL, CIRCLE-1, BATHINDA. BIBIWALA ROAD, BATHINDA. (APPELLANT) (RESPONDENT) APPELLANT BY:SH. ASHWANI KALIA, CA RESPONDENT BY:SH. R.K.SHARDA, DR DATE OF HEARING: 04/01/2016 DATE OF PRONOUNCEMENT: 07/01/2016 ORDER PER A.D. JAIN, JM; THIS IS THE ASSESSEES APPEAL FOR THE ASSESSMENT Y EAR 2008-09, AGAINST THE ACTION OF THE LD. CIT(A), IN CONFIRMING THE LEVY OF PENALTY OF RS.39,73,825/-, IMPOSED ON THE ASSESSEE U/S 271(1)( C) OF THE INCOME TAX ACT, ( IN SHORT, THE ACT), FOR ALLEGED CONCEA LMENT OF INCOME. 2. THE FACTS AS PER RECORD ARE THAT ON 27.04.2007, M/S. DEFENCE SERVICE CO-OP. HOUSE BUILDING SOCIETY LTD., MOHALI, OF WHICH THE ASSESSEE IS A MEMBER, ENTERED INTO A TRIPARTITE JOI NT DEVELOPMENT AGREEMENT WITH M/S. HASH BUILDERS PVT. LTD., CHANDI GARH AND M/S. TATA HOUSING DEVELOPMENT COMPANY LTD., MUMBAI. BY VIRTU E OF THE TRIPARTITE AGREEMENT, IT WAS AGREED UPON AMONGST THESE PARTIES THAT M/S. DEFENCE SERVICES CO-OP. HOUSE BUILDING SOCIETY., MOHALI, OW NER OF 27.3 ACRES OF LAND, SHALL TRANSFER ITS LAND TO M/S. TATA HOUSING DEVELOPMENT COMPANY ITA NO.181(ASR)/2014 ASSTT. YEAR : 2008-09 2 LTD., IN LIEU OF MONETARY CONSIDERATION AND CONSID ERATION IN KIND. THE ASSESSEE WAS TO RECEIVE RS.80 LAKHS AS MONETARY CON SIDERATION. IN ADDITION, AS CONSIDERATION IN KIND, ONE FURNISHED F LAT MEASURING 2250 SQ. FT. WORTH RS.1,01,25,000/- WAS TO BE RECEIVED B Y THE ASSESSEE, AS PER THE JOINT DEVELOPMENT AGREEMENT, OWNER WAS TO IN CLUDE THE MEMBERS. 3. IT WAS OBSERVED BY THE AO THAT THE JOINT DEVELOP MENT AGREEMENT WAS IN FACT A SALE AGREEMENT RESULTING INTO THE TRA NSFER OF CAPITAL ASSET. ALL THE FACTORS OF TRANSFER, I.E., CONSIDERATION, S CHEDULE OF PAYMENTS, RIGHTS AND LIABILITIES OF EACH OF THE THREE PARTIES AND TERMINATION, INDEMNITY AND ARBITRATION CLAUSES WERE VERY EXHAUST IVELY DETAILED IN THE JOINT DEVELOPMENT AGREEMENT. THE CAPITAL GAINS AROS E FROM THE FACT THAT IT WAS A CASE OF TRANSFER OF CAPITAL ASSET GENERALL Y AND ALSO IN VIEW OF SECTIONS 2(47)(II), 2(47)(V) AND 2(47)(VI) OF THE A CT. IN VIEW OF THE JOINT DEVELOPMENT AGREEMENT, THE OWNER HAD, AT THE TIME O F MAKING THE AGREEMENT, IRREVOCABLY AND UNEQUIVOCALLY GRANTED AN D ASSIGNED IN PERPETUITY ALL ITS RIGHTS TO DEVELOP, CONSTRUCT, MO RTGAGE, LEASE, LICENSE, SELL AND TRANSFER THE PROPERTY, I.E., 27.3 ACRES OF LAND ALONGWITH ALL CONSTRUCTIONS, TREES, ETC., IN FAVOUR OF THDC FOR T HE PURPOSE OF DEVELOPMENT, CONSTRUCTION, MORTGAGE, SALE, TRANSFER , LEASE, LICENSE AND/OR EXPLOITATION FOR FULL UTILIZATION OF THE PRO PERTY, AND TO EXECUTE ALL DOCUMENTS NECESSARY TO CARRY OUT, FACILITATE AND EN FORCE THE RIGHTS IN THE PROPERTY. THUS, IN FACT, THE OWNER HAD IRREVOCABLY AND UNEQUIVOCALLY GRANTED AND ASSIGNED IN PERPETUITY ALL THE RIGHTS W HICH AN OWNER COULD HAVE IN AN IMMOVABLY PROPERTY. THUS, THERE WAS EXTI NGUISHMENT OF THESE RIGHTS OF THE OWNER IN LIEU OF THE CONSIDERATION WH ICH INTER-ALIA INCLUDE IMMOVABLE PROPERTY, TERMED AS ENTIRE CONSIDERATION IN THE AGREEMENT. 4. AS SUCH, THE ASSESSEE WAS REQUIRED TO EXPLAIN AS TO WHY CAPITAL GAIN ARISING OUT OF THE TRANSACTION, BY VIRTUE OF W HICH HE HAS TRANSFERRED HIS SHARE IN THE PROPERTY OF M/S. DEFENCE SERVICES CO-OP. HOUSE BUILDING SOCIETY LTD., MOHALI TO M/S. HASH BUILDERS PVT. LTD ., CHANDIGARH AND ITA NO.181(ASR)/2014 ASSTT. YEAR : 2008-09 3 M/S. TATA HOUSING DEVELOPMENT COMPANY LTD., MUMBAI ON 27.04.2007 FOR A TOTAL CONSIDERATION OF RS.1,81,25,000/- INCLU DING THE VALUE OF FLAT, BE NOT CHARGED TO TAX U/S 45 READ WITH SECTION 48 OF THE ACT. 5. THE ASSESSEE RESPONDED BY STATING THAT AS PER TH E CONTRACT, THE ASSESSEE WAS SUPPOSED TO GET A BUILT UP FLAT HAVING SUPER AREA OF 2250 SQ. FT. APART FROM CASH; AS THE SALES CONSIDERATION IN THE CONTRACT OF THE ASSESSEE COULD NOT BE ASCERTAINED IN MONEY CERTAINL Y TILL THE DETERMINATION OF THE MARKET VALUE OF THE FLAT, AND THE SAME HAD NOT HITHERTO BEEN CONSTRUCTED BY THE TRANSFER, THE TRA NSACTION DID NOT FALL UNDER THE DEFINITION OF TRANSFER AS PER THE PROVI SIONS OF THE INCOME TAX ACT. 6. THE LONG TERM CAPITAL GAIN RELATING TO TRANSFER OF LAND BY M/S. DEFENCE SERVICES CO-OP. HOUSE BUILDING SOCIETY LTD. , MOHALI AND ARISING TO THE ASSESSEE WAS DISCLOSED BY THE ASSESSEE IN TH E REVISED RETURN OF INCOME FILED ON 07.01.2010. HOWEVER, VIDE ORDER DA TED 27.12.2010, PASSED U/S 143(3) OF THE ACT, THE AO ASSESSED THE L ONG TERM CAPITAL GAIN AT RS.1,75,36,744/-. BY VIRTUE OF ORDER DATED 07.03 .2013, THE LD. CIT(A) DISMISSED THE ASSESSEES APPEAL AGAINST THE AFORESA ID ASSESSMENT. THE TRIBUNAL VIDE ORDER DATED 11.09.2013, PASSED IN ITA NO.406(ASR)/2013, DISMISSED THE ASSESSEES APPEAL AGAINST THE CIT(A) S ORDER. 7. THE AO LEVIED THE PENALTY OF RS.39,73,825/- BEIN G 100% OF THE TAX SOUGHT TO BE EVADED ON THE ASSESSEE, VIDE ORDER DAT ED 29.06.2011, PASSED UNDER SECTION 271(1)(C) OF THE ACT. 8. BY VIRTUE OF THE IMPUGNED ORDER DATED 04.12.2013 , THE LD. CIT(A) CONFIRMED THE LEVY OF PENALTY ON THE ASSESSEE, OBSE RVING, INTER-ALIA, AS FOLLOWS: BRIEFLY NOTICED, THE FACTS OF THE CASE ARE THAT TH E LONG TERM CAPITAL GAIN RELATING TO TRANSFER OF LAND BY THE M/ S. DEFENCE SERVICES CO-OP. HOUSE BUILDING SOCIETY LTD., MOHALI (FACTS D ISCUSSED IN DETAIL ITA NO.181(ASR)/2014 ASSTT. YEAR : 2008-09 4 SUPRA) AND ARISING TO THE APPELLANT WAS DISCLOSED I N THE REVISED RETURN OF THE INCOME BY THE APPELLANT ON 07.01.2010 BUT VIDE ORDER U/S 143(3) THE ASSESSMENT OF LTCG HAS BEEN FRAMED A T RS.1,75,36,744/-. THE APPEAL FILED BY THE APPELLANT WAS DISMISSED BY ME IN APPEAL NO. 177-IT/11-12 VIDE ORDER DATED 0 7.03.2013 AND THE FURTHER APPEAL BEFORE THE INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH, AMRITSAR WAS ALSO DISMISSED IN ITA NO.406(ASR)/2013 VIDE ORDER DATED 07.03.2013. THE A PPELLANT HAS NOT BROUGHT ON RECORD THAT WHETHER THE APPEAL HAS B EEN FILED BEFORE THE HONBLE PUNJAB & HARYANA HIGH COURT. IN GROUNDS OF APPEAL NO. 1 & 2 IT HAS BEEN STATED BY THE APPELLANT THAT THE REVISED RETURN OF INCOME WAS FIL ED ON 07.08.2010 DECLARING LTCG AMOUNTING TO RS.32,00,000/- BUT THER E IS NO CONCEALMENT OF INCOME ON ACCOUNT OF THE FACT THAT T HE ENTIRE CAPITAL GAIN ARISING FROM THE SALE OF PLOT OF 500 SQ. YARDS AMOUNTING TO RS.1,75,36,744/- WAS NOT DECLARED. SINCE, IN THE PRESENT CASE THE ASSESSMENT OF LONG TERM CAPITAL GAIN HAS BEEN UPHELD BY THE JURISDICTIONAL BENCH OF THE HONBLE ITAT AND THE APPELLANT FILED BELATED REVISED RETURN OF I NCOME DECLARING LONG TERM CAPITAL GAIN, THE ACTION OF THE AO IN IM POSING PENALTY U/S 271(1)(C) ON ACCOUNT OF THE CONCEALMENT OF INCOME B Y THE APPELLANT IS UPHELD AND THE PENALTY AMOUNTING TO RS.39,73,825/- IS CONFIRMED. THE GROUNDS OF APPEAL NO.1 AND 2 IS DISMISSED. 10. THUS, THE FATE OF THE QUANTUM APPEAL IN THE MAT TER BEFORE THE HONBLE HIGH COURT WAS NOT AVAILABLE BEFORE THE LD. CIT(A). IN THIS REGARD, BEFORE US, A COPY OF HIGH COURT ORDER DATED 31.01.2 015, IN THE ASSESSEES CASE IN ITA NO.161 OF 2014, HAS BEEN FILED. THE L D. COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT THEREIN, THE HONBLE H IGH COURT HAS DELETED THE QUANTUM ADDITION MADE AND THAT, THEREFORE, THE LEVY OF PENALTY DOES NOT SURVIVE. 11. ON THE OTHER HAND, THE LD. DR HAS PLACED STRONG RELIANCE ON THE IMPUGNED ORDER. 12. IN THE AFORESAID ORDER, 31.07.2015, THE HONBLE HIGH COURT HAS OBSERVED AS FOLLOWS: 4. WE HAVE HEARD LEARNED COUNSEL FOR THE PARTIES . ITA NO.181(ASR)/2014 ASSTT. YEAR : 2008-09 5 5. THE TRIBUNAL HAD ADJUDICATED THE APPEALS OF THE ASSESSEES RELYING UPON THE ORDER DATED 29.7.2013 PASSED BY IT IN THE CASE OF CHARANJIT SINGH ATWAL VS. ITO,WARD NO.VI(I) LUDHIAN A IN ITA NO.448/CHD/2011 AGAINST WHICH ITA NO.200 OF 2013 WA S FILED IN THIS COURT. IN THE SAID APPEAL ALONGWITH CONNECTED APPEALS, THE FOLLOWING ISSUES EMERGED FOR CONSIDERATION AND ADJU DICATION:- (I) SCOPE AND LEGISLATIVE INTENT OF SECTION 2(47)(I I), (V) AND (VI) OF THE ACT; (II) THE ESSENTIAL INGREDIENTS FOR APPLICABILITY OF SECTION 53A OF1882 ACT; (III) MEANING TO BE ASSIGNED TO THE TERM POSSESSIO N? (IV) WHETHER IN THE FACTS AND CIRCUMSTANCES, ANY TA XABLE CAPITAL GAINS ARISES FROM THE TRANSACTION ENTERED B Y THE ASSESSEE? AFTER CONSIDERING THE RELEVANT STATUTORY PROVISIONS AND THE CASE LAW, THE CONCLUSIONS ARRIVED AT BY THIS COURT IN THE SAI D APPEALS VIDE JUDGMENT DATED 22.7.2015 READ THUS:- 1. PERUSAL OF THE JDA DATED 25.2.2007 READ WITH SAL E DEEDS DATED 2.3.007 AND 25.4.2007 IN RESPECT OF 3. 08 ACRES AND 4.62 ACRES RESPECTIVELY WOULD REVEAL THAT THE P ARTIES HAD AGREED FOR PRO-RATA TRANSFER OF LAND. 2. NO POSSESSION HAD BEEN GIVEN BY THE TRANSFEROR T O THE TRANSFEREE OF THE ENTIRE LAND IN PART PERFORMANCE O F JDA DATED 25.2.2007 SO AS TO FALL WITHIN THE DOMAIN OF SECTIO N 53A OF 1882 ACT. 3. THE POSSESSION DELIVERED, IF AT ALL, WAS AS A LI CENCEE FOR THE DEVELOPMENT OF THE PROPERTY AND NOT IN THE CAPACITY OF A TRANSFEREE. 4. FURTHER SECTION 53A OF 1882 ACT, BY INCORPORATIO N, STOOD EMBODIED IN SECTION 2(47)(V) OF THE ACT AND ALL THE ESSENTIAL INGREDIENTS OF SECTION 53A OF 1882 ACT WERE REQUIRE D TO BE FULFILLED. IN THE ABSENCE OF REGISTRATION OF JDA DA TED 5.2.2007 HAVING BEEN EXECUTED AFTER 24.9.2001, THE AGREEMENT DOES NOT FALL UNDER SECTION 53A OF 1882 ACT AND CONSEQUENTLY SECTION 2(47)(V) OF THE ACT DOES NOT APPLY. 5. IT WAS SUBMITTED BY LEARNED COUNSEL FOR THE ASSE SSEE- APPELLANT THAT WHATEVER AMOUNT WAS RECEIVED FROM TH E ITA NO.181(ASR)/2014 ASSTT. YEAR : 2008-09 6 DEVELOPER, CAPITAL GAINS TAX HAS ALREADY BEEN PAID ON THAT AND SALE DEEDS HAVE ALSO BEEN EXECUTED. IN VIEW OF CANCELLATION OF JDA DATED 25.2.2007, NO FURTHER AMO UNT HAS BEEN RECEIVED AND NO ACTION THEREON HAS BEEN TAKEN. IT WAS URGED THAT AS AND WHEN ANY AMOUNT IS RECEIVED, CAPI TAL GAINS TAX SHALL BE DISCHARGED THEREON IN ACCORDANCE WITH LAW. IN VIEW OF THE AFORESAID STAND, WHILE DISPOSING OF THE APPEALS, WE OBSERVE THAT THE ASSESSEE APPELLANTS SHALL REMAI N BOUND BY THEIR SAID STAND. 6. THE ISSUE OF EXIGIBILITY TO CAPITAL GAINS TAX HA VING BEEN DECIDED IN FAVOUR OF THE ASSESSEE, THE QUESTION OF EXEMPTION UNDER SECTION 54F OF THE ACT WOULD NOT SURVIVE ANY LONGER AND HAS BEEN RENDERED ACADEMIC. 7. THE TRIBUNAL AND THE AUTHORITIES BELOW WERE NO T RIGHT IN HOLDING THE ASSESSEE-APPELLANT TO BE LIABLE TO CAPI TAL GAINS TAX IN RESPECT OF REMAINING LAND MEASURING 13.5 ACRES F OR WHICH NO CONSIDERATION HAD BEEN RECEIVED AND WHICH STOOD CANCELLED AND INCAPABLE OF PERFORMANCE AT PRESENT DUE TO VARI OUS ORDERS PASSED BY THE SUPREME COURT AND THE HIGH COURT IN PILS. THEREFORE, THE APPEALS ARE ALLOWED. THE SUBSTANTIAL QUESTIONS OF LAW WERE ANSWERED AND APPEALS DISPOSED OF ACCORDINGLY. 6. IT WAS NOT DISPUTED BETWEEN THE LEARNED COUNSEL FOR THE PARTIES THAT THE ISSUE INVOLVED HEREIN IS SQUARELY COVERED BY THE AFORESAID JUDGMENT. ACCORDINGLY, THE PRESENT APPEALS ARE DISP OSED OF IN THE SAME TERMS. 13. FROM THE ABOVE, IT IS EVIDENT THAT THE HONBLE HIGH COURT HAS TAKEN THE APPEAL OF THE ASSESSEE AS DISPOSED OF IN TERMS OF THE DECISION OF THEIR LORDSHIPS IN THE CASE OF CHARANJIT SINGH ATWAL VS . CIT, VIDE ORDER, DATED 22.07.2015, PASSED IN ITA NO.200 OF 2013 (O& N), REPORTED AS 279 CTR 330 (P&H), WHEREIN, IT HAS BEEN HELD THAT SINCE NO POSSESSION HAD BEEN GIVEN BY THE TRANSFEROR TO THE TRANSFEREE OF T HE ENTIRE LAND IN PART PERFORMANCE OF JDA DATED 25.02.2007 SO AS TO FALL W ITHIN THE DOMAIN OF SECTION 53A OF THE TRANSFER ACT AND CONSEQUENTLY, SECTION 2(47)(V) OF THE I.T. ACT, DID NOT APPLY, THAT FURTHER, WILLINGNESS TO PERFORM THEIR PART OF THE CONTRACT WAS ABSENT ON THE PART OF THE DEVELOPE RS, OR IT COULD NOT BE ITA NO.181(ASR)/2014 ASSTT. YEAR : 2008-09 7 PERFORMED BY THEM, WHICH WAS ONE OF THE CONDITIONS PRECEDENT FOR APPLYING SECTION 53A OF THE TRANSFER ACT; THAT IN CLAUSE 26 OF THE JDA DATED 25.02.2007, THE PRINCIPLE OF FORCE MAJEURE H AD BEEN PROVIDED FOR, WHICH WOULD BE APPLICABLE WITH FULL VIGOUR IN THE CIRCUMSTANCES; THAT FROM THE CUMULATIVE EFFECT OF THE COVENANTS CONTAI NED IN THE JDA READ WITH THE REGISTERED SPECIAL POWER OF ATTORNEY DATE D 26.02.2007, IT COULD NOT BE HELD THAT THE MANDATORY REQUIREMENTS OF SECT ION 53A OF THE TRANSFER ACT WERE COMPLIED WITH, WHICH STOOD INCORP ORATED IN SECTION 2(47)(V) OF THE ACT; THAT ONCE THAT WAS SO, IT COU LD NOT BE SAID THAT THE ASSESSEES WERE LIABLE TO CAPITAL GAIN TAX IN RESPEC T OF THE REMAINING LAND WHICH WAS NOT TRANSFERRED BY THEM TO THE DEVELOPER/ BUILDER BECAUSE OF SUPERVISING EVENT AND NOT ON ACCOUNT OF ANY VOLITIO N ON THEIR PART; AND THAT VIEWED FROM ANOTHER ANGLE, IT COULD NOT BE SAI D THAT ANY INCOME CHARGEABLE TO CAPITAL GAINS TAX IN RESPECT OF THE R EMAINING LAND HAD ACCRUED OR ARISEN TO THE ASSESSEE IN THE FACTS OF T HE CASE. 14. IT IS IN VIEW OF THE ABOVE OBSERVATIONS OF THE IR LORDSHIPS IN C.S. ATWAL VS. CIT (SUPRA), THAT THE CASE OF THE PRESE NT ASSESSEE HAS BEEN DISPOSED OF. IT HAS BEEN CONTENDED ON BEHALF OF THE ASSESSEE THAT AS SUCH, THE QUANTUM ADDITION STANDS EFFECTIVELY DELET ED BY THE HONBLE HIGH COURT. THIS HAS NOT BEEN DISPUTED BEFORE US. 15. ONCE THE QUANTUM ADDITION STANDS DELETED BY TH E HONBLE HIGH COURT, THE VERY RAISON D CTRE OF THE PENALTY AT HAN D NO LONGER SURVIVES AND FOR THIS VERY REASON ITSELF, THE PENALTY MUST G O. IT IS ORDERED ACCORDINGLY. TO REITERATE, THE BENEFIT OF THE ORDER OF THE HONBLE HIGH COURT (SUPRA) WAS NOT AVAILABLE TO THE LD. CIT(A), AS OBSERVED BY HIM AND AS NOTED HEREINABOVE. 16. TO SUM UP, SINCE THE QUANTUM ADDITION LEADING T O IT STANDS DELETED, THE RESULTANT PENALTY IN QUESTION IS ALSO DELETED. ITA NO.181(ASR)/2014 ASSTT. YEAR : 2008-09 8 17. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 07/01/2 016. SD/- SD/- (T.S. KAPOOR) (A.D. JAIN) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: 07/01/2016 /SKR/ COPY OF ORDER FORWARDED TO: 1. THE ASSESSEE: 2. THE ITO 3. THE CIT(A), 4. THE CIT, 5. THE SR. DR, ITAT, ASR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH: AMRITSAR.