M/s. Onkareshwar Properties (P) Ltd., New Delhi V. DCIT, New Delhi

ITA 2144/DEL/2017

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 1143 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 8 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2011-2012
• Appeal Filed On: 10-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PARAMILA M BISWAS
• Keywords: Capital asset; Business income; Capital Gains
• Section: 271B; 44AB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI ANADEE NATH MISSHRA, ACCOUNTANT MEMBER I.T.A. NO.2144/DEL/2017 ASSESSMENT YEAR: 2011-12 M/S. ONKARESHWAR PROPERTIES P. LTD., FLAT NO. B-14/C, FIRST FLOOR, FREEDOM FIGHTERS ENCLAVE, NEB SARAI, NEW DELHI. VS. DY.CIT, CIRCLE-19(1), NEW DELHI. TAN/PAN: AAACO7076M (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI NEELESH KUMAR JAIN, CA RESPONDENT BY: SMT. PARAMILA M. BISWAS, CIT-DR DATE OF HEARING: 1 10 2019 DATE OF PRONOUNCEMENT: 16 12 2019 O R D E R PER AMIT SHUKLA, JM THE AFORESAID APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE IMPUGNED ORDER DATED 03.12.2017, PASSED BY COMMI SSIONER OF INCOME TAX (APPEALS)-VII, NEW DELHI, IN RELATION TO PENALTY PROCEEDINGS INITIATED U/S. 271B FOR THE ASSESSMENT YEA R 2011-12. THE ASSESSEE IS MAINLY AGGRIEVED BY LEVY OF PENALTY AT RS.1,50,000/- U/S.271B. 2. THE FACTS IN BRIEF ARE THAT THE ASSESSEE COMPANY HAS SHOWN LONG TERM CAPITAL GAIN OF RS. 117,67,97,883/- IN ITS RETURN OF INCOME. THE ASSESSEE HAD PURCHASED LAND WAY BACK IN THE YEAR 2006 AND HAD TREATED THE SAID LAND AS INVESTMENTS/FIXED ASSETS IN I.T.A. NO.2144/DEL/2017 2 THE BOOKS OF ACCOUNT. UPON THE SALE OF THE SAID INVESTM ENT ASSESSEE HAD OFFERED THE GAINS TO BE TAXED UNDER THE H EAD INCOME FROM LONG TERM CAPITAL GAIN. THE ASSESSING OFFICER AFTER DETAILED DISCUSSION HAD HELD THAT THE SALE OF LAND IS INCOME F ROM BUSINESS OR PROFESSION. HE FURTHER HELD THAT, SINCE ASSESSEE H AS NOT OBTAINED TAX AUDIT REPORT U/S.44AB DESPITE ITS RECEIPTS EXCEEDED BENCHMARK LIMIT OF 60 LACS, THEREFORE, PENALTY PROCEE DINGS U/S.271B IS TO BE LEVIED. IN THE PENALTY PROCEEDINGS , IN RESPONSE TO THE SHOW CAUSE NOTICE, THE ASSESSEE SUBMITTED THAT THE PROV ISION OF SECTION 44AB ARE NOT APPLICABLE TO THE FACTS OF THE CA SE, BECAUSE ASSESSEE HAS DERIVED ITS INCOME FROM CAPITAL GAINS WH ICH HAS BEEN DECLARED IN THE INCOME TAX RETURN NOT IN THIS YEAR BUT AL SO IN THE EARLIER YEARS. HOWEVER, THE LD. ASSESSING OFFICER LE VIED THE PENALTY OF RS.1,50,000/- BEING OF THE TOTAL SALES/GROSS RECE IPTS. THE PENALTY ORDER LEVIED BY THE ASSESSING OFFICER IS CON FIRMED BY THE LD. CIT (A), DESPITE THE FACT THAT THE ITAT IN THE ASSESS MENT YEAR 2009-10 HAS HELD THAT INCOME ARISING FROM SALE OF LA ND IS TO BE ASSESSED AS LONG TERM CAPITAL GAIN AND NOT BUSINESS I NCOME. 3. BEFORE US, LD. COUNSEL SUBMITTED THAT THE TRIBUNAL FO R THE SAME ASSESSMENT YEAR 2011-12 VIDE ORDER DATED 21.01. 2019 PASSED IN ITA NO.1823/DEL/2015 HAS HELD THAT THE SALE OF LAND HELD AS INVESTMENT/FIXED ASSET IS TAXABLE UNDER THE HEAD CAPITAL GAIN AND IT CANNOT BE TREATED AS BUSINESS INCOME, THE REFORE, THERE WAS NO QUESTION OF OBTAINING THE AUDIT REPORT U/ 44AB. 4. LD. DR ON THE OTHER HAND STRONGLY RELIED UPON THE ORDER OF THE LD. CIT (A). 5. AFTER CONSIDERING THE MATERIAL PLACED ON RECORD AN D THE RELEVANT FINDINGS GIVEN IN THE IMPUGNED ORDER, WE FIN D THAT IN THE I.T.A. NO.2144/DEL/2017 3 CASE OF THE ASSESSEE, THE TRIBUNAL HAS GIVEN A CATEGOR ICAL FINDING THAT ASSESSEE COMPANY ALL THROUGHOUT HAS BEEN SHOWING L AND AS AN INVESTMENT RIGHT FROM THE ASSESSMENT YEAR 2006-07 TILL THIS YEAR, I.E., 2011-12. THE LAND IN QUESTION WHICH WAS PURCHASED IN ASSESSMENT YEAR 2006-07 WAS SHOWN AS FIXED ASSETS IN THE BOOKS OF ACCOUNT. IN THE ASSESSMENT YEAR 2009-10, ON SIMILA R SET OF FACTS, THE TRIBUNAL HAS HELD THAT THE SALE OF LAND IN THE CASE OF THE ASSESSEE WHICH HAS BEEN HELD AS CAPITAL ASSET IS TAXAB LE UNDER THE HEAD LONG TERM CAPITAL GAIN AND THIS DECISION OF THE TRIBUNAL HAVE ALSO BEEN UPHELD BY THE HONBLE DELHI HIGH COUR T. THE RELEVANT OBSERVATION AND THE FINDING OF THE TRIBUNAL AN D HONBLE HIGH COURT HAVE BEEN INCORPORATED IN THE TRIBUNAL ORDE R IN THE QUANTUM PROCEEDINGS. THE RELEVANT CONCLUSION IN THIS REGARD READS AS UNDER: 10. THUS, WHEN SAME ISSUE ON SIMILAR SET OF FACTS AND REASONING HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE T RIBUNAL WHICH HAS ALSO BEEN UPHELD BY THE HONBLE DELHI HIGH COUR T, THEN THIS ISSUE BECOMES A BINDING JUDICIAL PRECEDENT AND NO C ONTRARY VIEW CAN BE TAKEN IN THIS YEAR. MOREOVER WHEN IN ALL THE YEARS, THE ASSESSEE HAS BEEN SHOWING THE LAND WHICH IS IN DISP UTE AS A PART OF FIXED ASSETS WHICH STOOD ACCEPTED YEAR AFTER YEA R AS AN INVESTMENT / FIXED ASSETS, THEN SALE OF SUCH LAND W ILL ONLY GIVE RISE TO CAPITAL GAIN CHARGEABLE U/S 45(2). THUS, THE ORD ER OF THE AO AND LD. CIT (A) IN TREATING IT AS A BUSINESS INCOME IS REVERSED AND THE ASSESSEES CLAIM FOR TAXABILITY OF SUCH GAIN ON SAL E OF LAND UNDER THE HEAD CAPITAL GAIN IS AFFIRMED. IN THE RESULT, G ROUNDS RAISED BY THE ASSESSEE ON THIS SCORE IS ALLOWED. 6. SINCE IN THE QUANTUM PROCEEDINGS IT HAS BEEN HELD TH AT ASSESSEE IS NOT DERIVING ANY BUSINESS INCOME FROM SA LE OF LAND, AND THEREFORE, PROVISION OF SECTION 44AB ARE NOT APPLI CABLE. I.T.A. NO.2144/DEL/2017 4 CONSEQUENTLY, THE PENALTY LEVIED U/S. 271B ON FAILURE OF THE ASSESSEE TO GET ITS BOOKS OF ACCOUNT AUDITED U/S. 44AB CANNOT BE LEVIED. ACCORDINGLY, THE PENALTY LEVIED U/S.271B OF RS.1,50,000/- IS DIRECTED TO BE DELETED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH DECEMBER, 2019. SD/- SD/- [ANADEE NATH MISSHRA] [AMIT SHUKLA] [ACCOUNTANT MEMBER] JUDICIAL MEMBER DATED: 16 TH DECEMBER, 2019 PKK: