Shri Chirag Ramniklal Patel, Ahmedabad V. The Income Tax Officer, Ward-11(1), Ahmedabad

ITA 2122/AHD/2016

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 7579 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-11-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2006-2007
• Appeal Filed On: 15-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Depreciation; Charitable institution; Period of limitation; Cost of acquisition; Reasonable cause; Fair market value; Condonation of delay; Reason to believe; Reassessment proceedings; Set aside; Capital Gains
• Section: 32; 147; 148; 263; 143(3); 143(1); 207; 264; 139(1); 54EC; 48; 153; 88E

Judgement Text

आयकर अपीलीय अिधकरण, अहमदाबाद ᭠यायपीठ IN THE INCOME TAX APPELLATE TRIBUNAL, ‘’ D’’ BENCH, AHMEDABAD (CONDUCTED THROUGH VIRTUAL COURT AT AHMEDABAD) BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER And SHRI WASEEM AHMED, ACCOUNTANT MEMBER Sl. No(s) ITA No(s) Asset. Year(s) Appeal(s) by Appellant vs. Respondent Appellant Respondent 1-2. 1338 & 2120/Ahd/2016 2006-07 Ramniklal Nathabhai Patel, HUF 172, Patel Vas, Kocharab Paldi, Ahmedabad. PAN: AGPPP9977N Pr.C.I.T., Ahmedabad. 3-4 654/Ahd/2014 & 2121/Ahd/2016 2006-07 Mallika Chirag Patel, 172, Patel Vas, Kocharab Paldi, Ahmedabad. PAN: AGZPP0248C Income Tax officer, Ward 11(1), Ahmedabad. 5. 2118/Ahd/2016 2006-07 Shefali S. Patel, 172, Patel Vas, Kocharab Paldi, Ahmedabad. PAN: APVPP7364N Income Tax officer, Ward 11(2), Ahmedabad. 6. 2119/Ahd/2016 2006-07 Niruben Ramniklal Patel, 172, Patel Vas, Kocharab Paldi, Ahmedabad. PAN: AGPPP9979C Income Tax Officer, Ward-11(2), Ahmedabad. 7. 2122/Ahd/2016 2006-07 Chirag Ramniklal Patel, 172, Patel Vas, Kocharab Paldi, Ahmedabad. PAN: AFXPP6626H Income Tax officer, Ward 11(1), Ahmedabad. ITA nos. 1338/AHD/2016 & 6 others Asstt. Year 2006-07 2 सुनवाई कᳱ तारीख/Date of Hearing : 20/10/2021 & 02/11/2021 घोषणा कᳱ तारीख /Date of Pronouncement: 26/11/2021 आदेश/O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: The captioned appeals have been filed at the instance of different Assessee against the separate orders of the Learned Commissioner of Income Tax(Appeals) Ahmedabad arising in the matter of assessment order passed under s. 143(3) r.w.s 147 of the Income Tax Act, 1961 (here-in-after referred to as "the Act") relevant to the Assessment Year 2006-2007. First we take up ITA No.1338/Ahd/2016 for A.Y. 2006-07 2. The present issue raised by the assessee involves different assessee for the same assessment year under consideration. The impugned issue is arising from single transaction of sale of land property. For the purpose of adjudication, we are taking the facts of the case of Ramnikbhai N Patel (HUF) bearing ITA No. 1338/AHD/2016. 3. The fact goes like this. There were three chunks of land bearing survey nos. 182, 183 & 185 admeasuring 56050 Sq. Meters which were sold by Shri Ramnikbhai N. Patel to the extent of his interest of 1/4 th for consideration of Rs. 3.5 crores vide sale deed dated 29 th October 2005. In the sale deed, the son, wife, daughter and daughter in-law of Shri Shri Ramnikbhai N. Patel were confirming party as part of (Applicant) (Respondent) Assessee by : Shri S.N. Divetia, A.R Revenue by : Shri Mohd. Usman, CIT. D.R with Shri Puroshottam Kumar, Sr.D.R ITA nos. 1338/AHD/2016 & 6 others Asstt. Year 2006-07 3 third part of the sale deed. Accordingly, all the 5 members of the family of Shri Ramnikbhai N Patel divided sales consideration among themselves in equal proportion of Rs. 70 lakh each and declared long term capital gain of Rs. Nil after claiming indexed cost of acquisition at Rs. 48,74,974/- each and deduction under section 54EC of the Act for Rs. 21,30,000/- each. The returns filed by Shri Ramnikbhai N Patel, his son Shri Chirag R. Patel and daughter Shefali R. Patel were processed and accepted under section 143(1) of the Act. On the contrary, the returns of his wife Smt. Niruben R. Patel and daughter in-law Smt. Mallika Chirag Patel were selected for scrutiny and assessed accordingly under section 143(3) of the Act. 3.1 Subsequently, the AO of Smt. MalliKa Chirag Patel (Daughter in-law) realized that the property in question was acquired by Shri Ramnikbhai Patel as on 27 th March 1989 as per the order of Mamlatdar office Ahmadabad after paying consideration of Rs. 528/- only. But the assessee has claimed cost of acquisition at Rs. 9,80,880/- being fair market value as on 1 st April 1981 which was indexed to Rs. 48,74,974.00 for the computation of long term capital gain. Thus, the AO reopened the assessment of Smt. Mallica Chirag Patel vide notice u/s 148 dated 30-03-2011 and reworked the indexed cost of acquisition at Rs. 1629 instead of Rs. 48,74,974/- after taking the cost at Rs. 528 and base year being 1988-89 for the purpose of indexation. Thus, the AO assessed income at Rs. 48,68,371/- vide order dated 30- 12-2011. 3.2 Thereafter, Smt. Mallika Chirag Patel filed appeal before the ld. CIT (A)-XVI, Ahmadabad who confirmed the action of the AO vide order dated 15 th January 2013. However, the learned CIT (A) has written a letter to the CIT-V Ahmadabad bearing letter No. CIT(A)-XVI/Enhancment/2012-13 dated 22 nd January 2013 highlighting the fact that property was purchased in 1943 by one Shri Ranchoddas, forefather of Shri Ramnikbhai N Patel. Thus the same became the property of Ramnikbhai HUF in which Smt. MalliKa Chirag Patel has no right of whatsoever neither she has acquired the property at any time. Thus, the provisions of capital gain will not be ITA nos. 1338/AHD/2016 & 6 others Asstt. Year 2006-07 4 applicable in her case. As such the proceeds of Rs. 70 lakh in her hand is taxable under the head income from other sources. 3.3 In view of the above letter written by the ld. CIT (A)-XVI Ahmedabad to CIT- V, Ahmedabad, the AO recorded the reasons to believe that sale consideration received by the family members for Rs. 70 lacs on transfer of family property is assessable under the head income from other source and not as income under the head capital gain. Thus, the AO reopened the assessments of all the family members namely Shri Ramnikbhai Patel being seller and Shri Chirag R Patel, Niruben R Patel, Shefali R. Patel and Mallika Chiurag Patel being confirming party by issuing notice under section 148 of the Act. Subsequently, the AO finalized the assessment by assessing the receipt of Rs. 70 lacs in the hands of all the members as income from other sources. 3.4 Simultaneously, based on above letter from ld. CIT (A)-XVI Ahmadabad to CIT-V, Ahmadabad recorded reason to believe that sale consideration of Rs. 3.5 crores on transfer of land is taxable in the hand of Ramnikbhai N Patel HUF. Thus, the notice under section 148 of the Act dated 22-03-2013 was issued in the name of Ramnikbhai N Patel (HUF) for escapement of capital gain on sale of property for Rs. 3.5 crores. During the proceedings under section 147 of the Act, it was submitted that there was no HUF in existence in the name of ‘Ramnikbhai N Patel HUF’ or assessed any time under the Act. Further it was also contended that the notice under section 148 was without jurisdiction on the reasoning that there was no material on record with AO to form reason to believe for the escapement of income. Thus, the AO in view of the submission of the assessee dropped the proceeding of assessment/reassessment under section 147 of the Act vide order dated 17 th February 2014. 3.5 Thereafter, the learned Pr. CIT issued notice under section 263 of the Act alleging that the order of the AO dropping the proceeding under section 147 of the Act is erroneous insofar prejudicial to the interest of Revenue for the reason that ITA nos. 1338/AHD/2016 & 6 others Asstt. Year 2006-07 5 property in question is an ancestral property inherited by the Shri Ramnikbahi Patel from his forefather. Thus, such ancestral property will be property of HUF of Shri Ramnikbhai, and such HUF will be liable to tax on account of income arose from the sale of such property. The learned Pr. CIT also observed that for the existence of HUF, it is not necessary that same should be registered or having PAN or assessed previously. As such HUF is formed automatically by virtue of male his wife and birth child in the family. Thus, the capital gain arising on transfer of such ancestral property is taxable in the hand of the HUF only. However, the AO without proper verification of the fact dropped the assessment proceeding under section 147 the Act. Thereafter the learned Pr. CIT in view of aforesaid reasoning set aside the order of the AO being erroneous insofar prejudicial to the interest of revenue under section 263 of the Act vide order dated 18 th March 2016. 3.6 Being aggrieved by the order learned Pr. CIT the assessee is in appeal before us. 3.7 The learned AR for the assessee before us filed 2 paper books running from pages 1 to 56 and 1 to 207 which are placed on record. The AR before us contended that the order of the AO dropping proceeding under section 147 of the Act is neither erroneous nor prejudicial to the interest of the Revenue. Finding of the AO that the there is no HUF in existence is correct. The ld. AR drew our attention on the point that the property was first time acquired by the Shri Ramnikbhai N Patel as owner and not by inheritance from his ancestral. The learned AR submitted that land in question was INAM property which was cultivated by the Shri Nathalal Patel father of the Shri Ramnikbhai N Patel being a permanent tenant from 1944. After death of Shri Nathalal Patel as on 20 th June 1964 his legal heir Shri Ramnikbhai Patel, Jayedra Patel, Ambalal Patel, and Champaben Patel applied for their name to register as tenant which was ultimately accepted as tenant in equal proportion by entry number 1290 in the records of 7/12 extract maintained by the Revenue. Thus they became permanent tenant in individual capacity. Subsequently, the Gujarat Govt. enacted ‘Gujarat Devasthan Inam Abolition Act 1969 w.e.f. 15 th November 1969. ITA nos. 1338/AHD/2016 & 6 others Asstt. Year 2006-07 6 3.8 Thus by virtue above said Act and section 32 read with section 88E of Bombay Tenancy and Agricultural Land Act 1948 all the tenant of Inam agricultural land became the deemed owner of such the lands. Therefore, after enactment of the Gujarat Devasthan Inam Abolition Act 1969 Shri Ramnikbhai Patel and other heir of Nathalal Patel whose names were recorded as tenant as per entry No. 1290 applied for occupancy right which was granted by the order of Mamlatdar dated 29 th March 1989 w.e.f. 15 th November 1969. Thus, the land was acquired by Shri Ramnikbhai Patel in his individual capacity and not as property of HUF. Thus, the proceeds from the transfer of such land is taxable as individual property of the Shri Ramnikbhai Patel. Therefore, the finding of the AO that there is no HUF in the case on hand is correct. Further, the AO also dropped the proceeding for the reason that the reason to believe was not proper. Hence, in such circumstances, the order of the learned Pr. CIT setting aside the order of the AO is not sustainable. 4. On the contrary, the learned DR before us vehemently supported the stand of the authorities below by reiterating the findings contained in the respective orders which we have already adverted to in the preceding paragraph. Therefore we are not repeating the same for the sake of brevity. The ld. DR also submitted that if the addition is sustained either in the hands of HUF or Karta in individual capacity, then additions made in the hands of the other party can be deleted. 5. We have heard the rival contentions of both the parties and perused the materials available on record. We have also perused the order of Hon’ble Mamlatdar and Kirshi Panch Court Taluka City Ahmadabad. We find that there were 3 properties bearing survey Nos. 182, 183 and 185 which were Inam Agricultural lands and the landlord of the same was Shah Alam Roza Trust. 5.1 These agricultural lands were held by the forefathers of Shri Ramnikbhai N Patel as permanent tenant. The exact date of awarding tenancy right is not available on record but same were cultivated by the forefather of Shri Ramnikbhai Patel as ITA nos. 1338/AHD/2016 & 6 others Asstt. Year 2006-07 7 permanent tenant from the period prior to 1943 and paying lease rental on the same. However name of Shri Nathabhai Patel was recorded as tenant from 1944 in 7/12 extract vide first mutation entry No. 614 in the records of the land Revenue. 5.2 Later on, on the demise of Shri Nathabhai Ranchodbhai dated 20 th June 1964, the legal heir of Shri Nathabhai being 3 sons and a daughter namely Ambalal N Patel, Jayendrakumar N Patel, Ramnikbhai N Patel and Champaben N Patel applied for the replacement of their names as tenant in equal proportion which was accepted by the concerned authority by way of entry number 1290 in the relevant records. 5.3 In between land reform bill was brought being the Bombay Tenancy and Agricultural Land Act 1948. As per the provisions of section 32 of the said Act every tenant w.e.f. 1 st April 1957 subject to other provision of Act shall be deemed to have purchased the land from the landowners free from all encumbrances. The provisions of section 32 of The Bombay Tenancy and Agricultural Land Act 1948 reads as under: [1] [(1)] On the first day of April 1957 (hereinafter referred to as "the tillers day") every tenant shall,[2] [subject to the other provisions of this section and the provisions of] the next succeeding sections, be deemed to have purchased from his landlord, free of all encumbrances subsisting thereon on the said day, the land held by him as tenant, if,- (a) Such tenant is a permanent tenant thereof and cultivates land personally; (b) Such tenant is not a permanent tenant but cultivates the land leased personally; and 5.4 However, the Inam land of trust and public religious worship places were exempted from the provision of The Bombay Tenancy and Agricultural Land Act 1948 vide section 88B of the said Act which reads as under: [1] [(1) Nothing in foregoing provisions except sections 3, 4B, 8, 9, 9A, 9B, 9C, 10, 10A, 11, 13 and 27 and the provisions of Chapters VI and VIII in so far as the provisions of the said Chapters are applicable to any of the matters referred to in the sections mentioned above shall apply, (a) to lands held or leased by a local authority, or University established by law in the [2] [Bombay area of the State of Maharashtra]; and ITA nos. 1338/AHD/2016 & 6 others Asstt. Year 2006-07 8 (b) to lands which are the property of a trust for an educational purpose, [3] [a hospital, Panjarapole, Gaushala] or an institution for public religious worship; 5.5 Admittedly the lands in question were of the religious trust namely Shah Alam Roza Trust. Therefore the provisions of section 32 of the said Act were not applicable on land held by Shri Nathalal as tenant. In other words, on the day of 1 st April 1957 Shri Nathabhai was still a tenant only and not the deemed owner of the impugned lands. 5.6 Subsequently, Inam property system was also abolished by the Gujarat Devasthan Inam Abolition Act 1969 effective from 15 November 1969. Due to enactment of Devathan Inam Abolition Act the exemption provided under section 88B of the Bombay Tenancy and Agricultural Land Act 1948 was nullified. Thus, w.e.f. 15 th November 1969 the tenant of the Inam land of trust or public religious worship places also became the deemed owner of the land by virtue of section 32 r.w.s. 88E of the Bombay Tenancy and Agricultural Act 1948. The provisions of section 88E of the said Act read as under: [88E. Cessor of exemption in respect of certain public trust lands. – (1) Notwithstanding anything contained in section 88B, with effect on and from the specified date, lands which are the property of an institution for public religious worship shall cease to be exempted from those provisions of the Act except sections 31 to 31D (both inclusive) from which they were exempted under section 88B and all certificates granted under that section in respect of such lands shall stand revoked. (2) Where any such land ceases to be so exempted, than in the case of a tenancy subsisting immediately before the specified date the tenant shall be deemed to have purchased the land on the specified date and the provisions of sections 32 to 32R (both inclusive) shall so as far may be applicable, apply. Exemption. - In this section "specified date" means the date of the commencement of the Gujarat Devasthan Inams Abolition Act, 1969 (Gujarat 16 of 1969).] 5.7 By virtue of the above enactment or amendment, properties owned by the religious institutions but held by the tenant for cultivation shall be deemed to be owned by the tenants. On the date of 15 th November 1969 Shri Ramnikbhai N Patel was tenant of the land bearing survey number 182, 183 and 185 for his 1/4 th Share in the lands. Thus, Shri Ramnikbhai become the deemed owner which was also ITA nos. 1338/AHD/2016 & 6 others Asstt. Year 2006-07 9 confirmed to him by the court of Mamlatdar and Krishi Panch Taluka City Ahmadabad vide order dated 17 th March 1989 under section 32G of the Bombay Tenancy and Agricultural Land Act 1948 w.e.f 15 th November 1969. Thus Shri Ramnik became the owner of the impugned land in his personal capacity and not as HUF. 5.8 At the time of dictation, a question also struck to our mind whether the impugned land was an ancestral land which was inherited by the assessee from his forefathers. On perusal of the above discussion, we find that there was the tenancy right held by the forefather of the assessee including Shri Nathabhai Patel. The same tenancy right was transferred on the demise of Nathabhai Patel to his legal heirs in their equal proportion i.e. 1/4 th to each as discussed above. Thus what was received by Shri Ramnikbhai Patel was the tenancy right that too to the extent of his share of 1/4 th which can also be deemed as partition. However, on a later date by virtue of the Gujarat Devasthan Inam Abolition Act 1969 and section 32 read with section 88E of Bombay Tenancy and Agricultural Act 1948 the assessee became the owner of the property which can be evident from the order of the Mamlatdar and Kirshi Panch (supra) where it was held as under: It is hereby resolved that in the above referred agricultural lands bearing Survey Nos.182, 183 and 185 the party tenant is entitled to become owner on the basis of the recognized permanent farmer from date 15/11/69 and it is also resolved that for that they should pay an amount of Rs.528/- as purchase price in one installment within one year from the date of this order. On payment of the Purchase Price he would be issued Purchase Certificate and he would be entitled to hold that disputed land as Old Tenure land on the basis of permanent farmer. 5.9 Thus, the tenancy right was converted into the ownership of the land by virtue of Gujarat Devasthan Inam Abolition Act 1969 and section 32 read with section 88E of Bombay Tenancy and Agricultural Act 1948 which was subsequently confirmed by the order of the Mamlatdar and Krishi Panch. Therefore, it was Shri Remnik bhai Patel who held the property for the 1 st time as owner. Thus, it is transpired that there was a change in the character of right in the land as far as tenancy and ownership of the land. ITA nos. 1338/AHD/2016 & 6 others Asstt. Year 2006-07 10 5.10 From the above fact it is inferred that the land bearing survey Nos. 182, 183 and 185 was acquired by Shri Ramnikbhai N Patel in his individual capacity for his 1/4 th interest and not as the family property. As such land was not devolved to him as per section 6 of the Hindu Succession Act 1956 as Mitakshra coparcenary as the same was not the property of his ancestor as they were only the tenant of land and not the owner. Therefore, in our considered view any income arising from the sale of such land is taxable in his individual capacity as he was the owner of the said land. 5.11 In view of the above, we find that order of the AO dropping the assessment proceeding under section 147 of the Act against the HUF is not prejudicial to the interest of the Revenue as the land in question is not the property of HUF. Hence, the HUF is not liable to capital gain on transfer of such land. Here, it is pertinent to note that in order to set aside the order of the AO under section 263 of the Act, it must be proved that the order of the AO is erroneous as well as prejudicial to the interest of the Revenue. For sake of understanding if an order of the AO is erroneous but not prejudicial to the interest of the Revenue or vise-versa then power under section 263 of the Act cannot be invoked. In holding so, we draw support and guidance from the judgment of Hon’ble Supreme Court in case Malabar Industrial Co. Ltd. vs. CIT reported in 243 ITR 83, wherein the Hon’ble court held as under: A bare reading of section 263(1) makes it clear that the pre-requisite to exercise of jurisdiction by the Commissioner suo motu under it, is that the order of the ITO is erroneous insofar as it is prejudicial to the interests of the revenue. The Commissioner has to be satisfied of twin conditions, namely, (i) the order of the Assessing Officer sought to be revised is erroneous; and (ii) it is prejudicial to the interests of the revenue. If one of them is absent - if the order of the ITO is erroneous but is not prejudicial to the revenue or if it is not erroneous but is prejudicial to the revenue - recourse cannot be had to section 263(1). 5.12 Thus, in view of the above discussion and following the judgment of the Hon’ble Supreme Court (supra) we set aside the order of the learned Pr. CIT passed under section 263 of the Act. Hence ground of appeal of the assessee is allowed. ITA nos. 1338/AHD/2016 & 6 others Asstt. Year 2006-07 11 Coming to the appeal of the Ramnik Bhai Patel in ITA No. 2120/Ahd/2016 6. The assessee has raised the following grounds of appeal: 1. The learned A.O. has erred in reopening the assessment u/s.147. The reopening may be declared bad in law and consequential order passed by the A.O be quashed. 2. The Learned A.O has erred in treating Rs.70 Lacs as income from other sources. The Learned A.O ought to have appreciated that amount has been received from a relative and so even if it is received without any consideration the same cannot be treated as income. The addition ought to be deleted and may be deleted now. 7. The brief facts of the case on hand have already been elaborated in the appeal filed by ‘Ramnikbhai N Patel HUF’ in the preceding paragraph. For the sake of repetition, it is submitted that the assessee filed his return of income declaring income under the head capital gain being 1/5 of the total sale consideration of the land in dispute which was accepted under section 143(1) of the Act. 7.1 However, on a later date, for the reasons as discussed in the appeal of the ‘Ramnikbhai N Patel HUF’, the proceedings were initiated against the assessee treating the income in his hand for Rs. 70 lacs as the income from other sources in place of the income from capital gain. However, in the appeal of ‘Ramnikbhai N Patel HUF’, we have already held that the transferred land was the assessee’s personal property and not the property of his family. Hence, the assessee is only subject to capital gain as detailed in the preceding paragraph. Accordingly, we are of the view that the proceedings against the assessee initiated under section 147 of the Act and treating the income declared by the assessee on the sale of property as the income under the head other sources is misunderstood. Thus, the addition made by the AO as income from other sources which was subsequently confirmed by the learned CIT (A) is not sustainable. Thus, the income declared by the assessee in the return filed under section 139(1) of the Act which was processed under section 143(1) of the Act was proper and in accordance with the law as far as head of ITA nos. 1338/AHD/2016 & 6 others Asstt. Year 2006-07 12 income is concern i.e. capital gain. Thus the same cannot be disturbed in the reassessment proceedings. 7.2 Before parting, it is also pertinent to note that we have given a finding that the impugned land belong to assessee. Thus, the whole of the consideration on transfer of land for Rs. 3.50 crores is income of the assessee. In other words, the sale consideration of ₹3.50 crore was not supposed to be divided and the entire amount should have been brought to tax in the hands of the assessee. Therefore, the division of income among the family members namely Niruben Patel, Chirag Patel, Shefali Ptael and Mallika Patel are not as per the provisions of law. However, the undoubted fact is that the Revenue has not disputed this datum either under the provisions of section 143(1) or under section 147 of the Act i.e. the entire amount of sale consideration of ₹ 3.50 crores has to be brought to tax in the hands of the assessee. Thus the question arises, whether we can improve the case of the revenue in the appeal before us. The answer stands in negative. It is also for the twin reasons being the Revenue is not aggrieved in the appeal before us and amount of dispute before us is only for Rs. 70 lakh. 7.3 The appeal was filed by the assessee for the limited consideration that the impugned amount of sale consideration of ₹70 Lacs represents the sale consideration of the property chargeable to tax under the head capital gain and not under the head other sources as alleged by the Revenue. The issue involved in the dispute before us has already been answered in the preceding paragraph. In other words, there was no dispute raised before us qua the sale consideration whether it is Rs 3.50 crores or Rs. 70 Lacs. Accordingly, we are of the view that we cannot improve the case filed by the assessee before us. In holding so we draw support and guidance from the judgment of Hon’ble Supreme Court MCorp Global (P) Ltd. vs. CIT reported in 309 ITR 434, where the Hon’ble Court held as under: It is well-settled that the Tribunal is not authorized to take back the benefit granted to the assessee by the Assessing Officer. It has no power to enhance the assessment. In the instant case, the Assessing Officer had granted depreciation in respect of 42,000 bottles out of the total number of 5,46,000 bottles. That benefit was sought to be taken away by the Tribunal, ITA nos. 1338/AHD/2016 & 6 others Asstt. Year 2006-07 13 which was not permissible in law. That was the infirmity in the impugned judgments of the High Court and the Tribunal. 7.4 Without prejudice to the above, let us also evaluate the case on hand for the purpose of understanding the determination of income under the head capital gain taking the sale consideration of ₹3.50 crores as taxable in the hands of the assessee. For computing the capital gain, the provisions of section 48 of the Act provides that the capital gain shall be computed by deducting from the full value of the consideration from the transfer of capital assets, inter-alia, cost of acquisition of the assets which was transferred. There is no dispute as far as the sale consideration is concerned i.e. ₹3.50 crores. The next question arises the determination of the amount of cost of acquisition. The assessee has taken the value determined by the registered valuer as on 1 April 1981 as the cost of acquisition whereas the AO has taken the cost of acquisition as ₹ 528 in pursuance to the order of the Mamlatdar & Krishi Panch dated 27 th March 1989. 7.5 First, we see whether the amount paid for ₹ 528/- in pursuance to the order of Mamlatdar, represents the cost of acquisition for the determination of capital gain as provided under the provisions of section 48 of the Act. In this connection we note that, the Hyedrabad Tribunal in the case of ITO vs. Uppal Venkata Rao reported in 83 ITD 273 involving identical facts and circumstances has held that the cost paid for ₹528 to the Revenue department does not represent the cost of acquisition of the assets. The relevant extract of the order is reproduced as under: After perusing the relevant provisions relating to the matter in dispute, it was to be held that the present appeal filed by the revenue deserved to be dismissed, because the assessee in the disputed land was protected tenant at the relevant time in pursuance of the A.P. (Telangana) Tenancy and Agricultural Lands Act, 1950, the assessee was declared as a protected tenant and ownership rights to the extent of 60 per cent of share in the land by virtue of the above enactment without payment of any consideration and in respect of the remaining 40 per cent share in the land, the ownership rights were conferred upon him by virtue of the A.P. (Telangana) Abolition of Inams Act, 1955 without payment of any consideration and the amount of Rs. 1,272 paid to the RDO in 1983 in terms of section 7(3) was to register the assessee as an occupant of the Inamland as a protected tenant. Therefore, there was no cost of acquisition of the land in dispute and the question of capital gains did not arise for the purpose of income-tax. The revenue authority had wrongly determined the capital gains on the sale of land in dispute without any basis, because there was no cost of acquisition of land in dispute. Hence, no interference was called for in the well-reasoned order passed by the Commissioner (Appeals). ITA nos. 1338/AHD/2016 & 6 others Asstt. Year 2006-07 14 7.6 In the light of the above order of the tribunal, we note that there was no cost incurred by the assessee in the acquisition of the impugned land in dispute. Thus, where no cost was incurred by the assessee, the question of computing the capital gain qua to such sale of asset does not arise. Accordingly we are of the view that the assessee is not chargeable to tax under the head capital gain. 7.7 Before parting, it is also important to note that the assessee has already declared and offered the capital gain taking the sale consideration as ₹70 Lacs which has not been disputed by the assessee before us. In other words the learned AR for the assessee before us agreed not to dispute the income already shown in the income tax return. Accordingly, the status quo with respect to the income by the assessee in the income tax return shall be maintained. Hence the ground of appeal of the assessee is allowed. Coming to the other appeals filed by different assessee in ITA numbers 654/Ahd/2014, 2121, 2118, 2119/Ahd/2016 and 2121/Ahd/2016 Delay in ITA 654/Ahd/2014 8. At the outset we note that there was a delay of 377 days in filing the appeal by the assessee. There was condonation petition filed by the assessee dated 4-2- 2014. In the application, it was pleaded that the appeal was filed by the assessee on the wrong advice of the tax consultant. The assessee has also filed the affidavit vide dated 4-3-2014 explaining the reasons for the delay. In view of above the Ld. AR for the assessee before us submitted that the delay in filing the appeal occurred due to unavoidable situation. Therefore the delay in filing the appeal should be condoned. 9. On the other hand the ld. DR opposed to condone such inordinate delay. ITA nos. 1338/AHD/2016 & 6 others Asstt. Year 2006-07 15 10. We have perused the records and heard the rival submissions of both the sides. There was a delay of 377 days in filing the appeal by the assessee before us. Now the controversy arises for our adjudication whether the wrong advice of the consultant to the assessee is reasonable and sufficient cause for condoning the delay. 10.1 In this regard we note that the Hon’ble Madras High Court in the case of Sreenivas Charitable Trust v. Dy. CIT reported in 280 ITR 357 has held that : “3. The Supreme Court in Vedabai v. Shantaram Baburao Patil [2002] 253 ITR 798held as under: "In exercising discretion under section 5 of the Limitation Act the Courts should adopt a pragmatic approach. A distinction must be made between a case where the delay is inordinate and a case where the delay is of a few days. Whereas in the former case the consideration of prejudice to the other side will be a relevant factor so the case calls for a more cautious approach but in the latter case no such consideration may arise and such a case deserves a liberal approach. No hard and fast rule can be laid down in this regard. The Court has to exercise the discretion on the facts of each case keeping in mind that in construing the expression ‘sufficient cause’, the principle of advancing substantial justice is of prime importance." (p. 799) 4. The Calcutta High Court in CIT v. Orissa Concrete & Allied Industries Ltd. [2003] 264 ITR 186 held as under : ". . .what is really indicated in the various decisions cited and in section 5 of the Limitation Act itself, is that a litigant would be required to explain why the appeal and/or application could not be filed within the period prescribed by limitation and explain the delay for such period for the purpose of linking up the circumstances which had caused the delay during the period of limitation and thereafter." (p. 192) 5. Recently, the Allahabad High Court in Ganga Sahai Ram Swarup v. ITAT [2004] 271 ITR 512 has taken the view that liberal view ought to have been taken by the authority as the delay was only of a very short period and the appellant was not going to gain anything from it. 6. Applying the ratio laid down by the Apex Court as well as various High Courts, we find, it is stated in the petition filed by the assessee for condonation of delay that the order copy was misplaced and thereafter it was found and sent to counsel for preparing the appeal and then, the appeal was prepared and filed before the Tribunal and in that process, the delay of 38 days occurred. As held by the Apex Court, no hard and fast rule can be laid down in the matter of condonation of delay and the Courts should adopt a pragmatic approach and the Courts should exercise their discretion on the facts of each case keeping in mind that in construing the expression "sufficient cause" the principle of advancing substantial justice is of prime importance and the expression "sufficient cause" should receive a liberal construction. We are, therefore, of the opinion that the Appellate Tribunal ought to have condoned the delay in filing the appeal, considering the reasons given by the assessee for the delay.” ITA nos. 1338/AHD/2016 & 6 others Asstt. Year 2006-07 16 10.2 From the above it is clear that the expression "sufficient cause" should be interpreted to advance substantial justice. Therefore, advancement of substantial justice is the prime factor while considering the reasons for condoning the delay. 10.3 We also note that the case on merit is in favour of the assessee. But there is a technical defect in the appeal since the appeal was not filed within the period of limitation. There was the affidavit filed by the assessee filed explaining the reasons for the delay in filing the appeal before us. However, the Revenue has not filed any counter-affidavit to deny the allegation made by the assessee. 10.4 It is also important to note that Hon’ble Supreme Court in the case of Collector, Land Acquisition v. Mst. Katiji and Ors. (167 ITR 471) laid down certain principles for considering the condonation petition for filing the appeal which are reproduced hereunder: (1) Ordinarily, a litigant does not stand to benefit by lodging an appeal late (2) Refusing to condone delay can result in a meritorious matter being thrown at the very threshold and cause of justice being defeated. As against this, when delay is condoned, the highest that can happen is that a cause would be decided on merits after hearing the parties. (3) 'Every day's delay must be explained' does not mean that a pedantic approach should be made. Why not every hour's delay, every second's delay? The doctrine must be applied in a rational, commonsense and pragmatic manner. (4) When substantial justice and technical consideration are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay. (5) There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact, he runs a serious risk. (6) It must be grasped that the judiciary is respected not on account of its power to legalise injustice on technical grounds but because it is capable of removing injustice and is expected to do so. 10.5 From the above judgment of the Hon’ble Apex Court, we note that the substantial justice deserves to be preferred rather than deciding the matter on the basis of technical defect. ITA nos. 1338/AHD/2016 & 6 others Asstt. Year 2006-07 17 10.6 We also note that there is no allegation from the Revenue that the appeal was not filed within the deliberately. Therefore, we are inclined to prefer substantial justice rather than technicality in deciding the issue. 10.7 We also find that if we reject the application of the assessee for condoning the delay then it would amount to legalise injustice on technical ground whereas the Tribunal is capable of removing injustice and to do justice. 10.8 If the delay is not condoned, it would amount to legalising an illegal order which would result in unjust enrichment on the part of the State by retaining the tax relatable thereto. Under the scheme of Constitution, the Government cannot retain even a single pie of the individual citizen as tax, when it is not authorised by an authority of law. Therefore, if we refuse to condone the delay, that would amount to legalise an illegal and unconstitutional order passed by the lower authority. Therefore, in our opinion, by preferring the substantial justice, the delay of 377 days has to be condoned. 11. The next controversy arises whether the delay of 377 days was excessive or inordinate. There is no question of any excessive or inordinate when there was reasonable cause which prevented that assessee in filing the appeal. As such we need to consider the cause for the delay and not the length of the delay. Accordingly in our considered view when there was a reasonable cause, the period of delay may not be relevant factor. We find support from the judgment of the Hon’ble Madras High Court in the case of CIT v. K.S.P. Shanmugavel Nadai and Ors reported in 153 ITR 596 wherein it was held as under : “Since in this case the assessee had been prosecuting other remedies, the time taken by those proceedings should naturally be taken while determining the question whether the assessee had sufficient cause for not presenting the appeal in time. Therefore, the revenue was not right in submitting that the appeal filed under section 17 was an appeal against the original order of assessment under the Act, which was passed about 20 years ago, as it was evident that the appeal was against an order of rejection of relief by the assessing authority. Thus, though the Tribunal's view that there was no question of limitation in such cases, was not correct yet the AAC was right in condoning the delay and entertaining the appeal.” ITA nos. 1338/AHD/2016 & 6 others Asstt. Year 2006-07 18 11.1 From the above we note that the Hon’ble Madras High Court in the above case was pleased to condone delay for 20 years approximately by holding that there was sufficient and reasonable cause on the part of the assessee for not filing the appeal within the period of limitation. 11.2 The delay in the instant case is just of 377 number of days which cannot be considered to be inordinate or excessive in comparison to the delay of 7330 days approximately. 11.3 In view of the above we are of the opinion that when there is sufficient cause for not filing the appeal within the period of limitation, the delay has to be condoned irrespective of the duration/period of the delay. In this case, the non-filing of an affidavit by the Revenue for opposing the condonation of delay itself is sufficient for condoning the delay of 377 number of days. Thus, we condone the delay of 377 days in filing the appeal and proceed to hear the appeal on merit for the adjudication. 12. Before we take up the issue raised by the different assessee in the appeal, it is pertinent to note the history of the facts involved therein. The sale consideration of the property, as narrated above, of ₹3.50 crores was divided in equal ratio among the following persons: 1. Shri Ramnikbhai Patel 2. Shri Chirag Patel 3. Smt. Niruben Patel 4. Smt. Shefali Patel 5. Smt. Mallika Patel 12.1 All the above persons are the family members of Shri Remnikbhai Patel. Accordingly, all of them have disclosed capital gain income in their respective hands. However, on a later date the proceedings under section 147 of the Act were initiated against all the persons. In the reassessment proceedings it was alleged that the ITA nos. 1338/AHD/2016 & 6 others Asstt. Year 2006-07 19 amount of capital gain shown by them represents the income from other sources. It is for the reason that none of them had any right in the property in their individual capacity as such the property belongs to HUF of Ramnikbhai. So, the income declared by this them under the capital gain is the income from other sources. There is no dispute to the fact that they have shown the income on the sale of the property of which they were not the owners. The revenue is also admitting this fact. 12.2 It is also pertinent to note that we have already given a finding in the previous Paragraph of this order that such property was the personal property of Shri Ramnikbhai Patel and therefore any gain arising in consequence to sale of the property has to be taxed in the hands of Shri Ramnikbhai only. In the light of this fact, if any addition is made in the hands of the other parties either as capital gain or income from other sources, it would lead to the double addition. Under the provisions of law, there is no concept of making the addition to the total income of the assessee twice for the purpose of the tax until and unless such addition falls in the exception categories. Accordingly, we are of the view that all the assessee is not subject to tax on the income which they have offered to tax under the bona fides believe. 12.3 We also note that the Hon’ble Supreme Court in the case of Maneklal Aggarwal vs. DCIT reported in 84 taxmann.com 116 has held that the income has to be taxed in the hands of the right person. The relevant extract is reproduced as under: 4. Going by the nature of transaction, a clear finding of fact is arrived at by the authorities below that a devise was made by the appellant herein to show lesser income at his hand and because of this reason only he purportedly entered into a lease agreement with his wife, son and daughter-in-law in respect of the aforesaid property of which he is paying by letting them at a very nominal rates and allowing his family members to sub-let the same at a much higher rents. In these circumstances, these findings of fact cannot be interfered with in the present appeals. It has been held by this Court in ITO v Ch. Atchaiah[1996] 218 ITR 239/84 Taxman 630, that the Assessing Authority has a right to tax the "rightperson". Once it is found that the income in fact belongs to the appellant he was the rightperson for taxing the said income, it was permissible for the IncomeTax Authorities to tax the said income at the hands of the assessee. 5. At the same time, we also find that the IncomeTax Authorities have read the same income at the hands of the wife, son and daughter-in-law of the assessee as well who, as per the department itself, "wrong person". There would be double taxation on the ITA nos. 1338/AHD/2016 & 6 others Asstt. Year 2006-07 20 same income at the hands of two persons. In these circumstances, it will always be open to the wife, son and daughter-in-law of the assessee to seek redressal of the taxation of income at their hands in appropriate proceedings. 12.4 In view of the above, we are of the opinion that there should not be any addition in the hands of the other assessee, treating the capital gain income under the head other sources. Before parting, it is also important to note that all the assessee have already declared and offered the capital gain taking the sale consideration as ₹70 Lacs which have not been disputed by any of the assessee before us. In other words the learned AR for all the assessee before us agreed not to dispute the income already shown in the income tax return. Accordingly, the status quo with respect to the income by the assessee in the income tax return shall be maintained. Hence the ground of appeal of all the assessee are allowed. 13. In the result, all the appeals of different assessee are allowed. Order pronounced in the Court on 26/11/2021 at Ahmedabad. Sd/- Sd/- (MAHAVIR PRASAD) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER True Copy) (True Copy) Ahmedabad; Dated 26/11/2021 Manish