DEEPAK KHANDELWAL, BILASPUR V. JOINT COMMISSIONER OF INCOME TAX, RANGE-I, BILASPUR

ITA 216/RPR/2018

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 9672 (ITAT-RAIPUR)
• Duration Of Justice: 3 year(s) 5 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-06-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 20-12-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Business income; Fair market value; Valuation report; Reassessment proceedings; Capital Gains
• Section: 147; 139; 54B; 50C

Judgement Text

आयकरअपीलȣयअͬधकरणÛयायपीठरायप ु रमɅ। IN THE INCOME TAX APPELLATE TRIBUNAL, RAIPUR BENCH, RAIPUR (Through Virtual Court) BEFORE SHRI RAVISH SOOD, JUDICIAL MEMBER AND SHRI RATHOD KAMLESH JAYANTBHAI, ACCOUNTANT MEMBER आयकर अपील सं. / ITA No. 216/RPR/2018 Ǔनधा[रण वष[ / Assessment Year : 2012-13 Deepak Khandelwal C-9, Ward-01, Minocha Colony, Bilaspur (C.G.)-495 001. PAN : AKDPK1552A .......अपीलाथȸ / Appellant बनाम / V/s. The Joint Commissioner of Income Tax, Range-1, Bilaspur (C.G.) ......Ĥ×यथȸ / Respondent Assessee by : None Revenue by : Shri G.N Singh, DR स ु नवाई कȧ तारȣख / Date of Hearing :27.05.2022 घोषणा कȧ तारȣख / Date of Pronouncement : 07.06.2022 2 Deepak Khandelwal Vs. JCIT, Range-1 ITA No.216/RPR/2018 आदेश / ORDER PER RAVISH SOOD, JM: The present appeal filed by the assessee is directed against the order passed by the CIT(Appeals), Bilaspur, dated 08.10.2018, which in turn arises from the order passed by the A.O under Sec.147/143(3) of the Income-tax Act, 1961 (in short ‘the Act’) dated 30.12.2016 for assessment year 2012-13. Before us the assessee has assailed the impugned order on the following grounds of appeal: “1.Honourable CIT(A) failed to recognize that Assessee has corrected error commission in ROI filed u/s.139(1) by furnishing u/s.147 and also that ROI furnished u/s.147 has same effect as ROI filed u/s.139. When Honourable CIT(A) and AO too has made no adverse finding on income as PGBP so flawed to treat such transaction as capital gain by restoring return of income filed u/s.139(1).” 2. Succinctly stated, the assessee had e-filed his return of income for the assessment year 2012-13 on 30.09.2012, declaring an income of Rs.7,05,250/-. As is discernible from the assessment order the assessee had thereafter revised his return of income on 01.01.2012, disclosing an income of Rs. 7,07,900/-. 3. On the basis of information that was gathered in the course of the assessment proceedings of the assessee for A.Y.2013-14, it was observed by the A.O that the assessee during the year under consideration i.e. A.Y. 3 Deepak Khandelwal Vs. JCIT, Range-1 ITA No.216/RPR/2018 2012-13 had sold lands at Village : Sakri for a sale consideration which was substantially lower than its market value, as under: Sl. No. Description of property Sale Value Market value 1. Land at Sakri 26,55,000/- 23,08,200/- 2. Land at Sakri 55,99,000/- 1,52,62,900/- Observing that the assessee had in his return of income adopted the amount of actual sale consideration and not the market value for the purpose of computing capital gain on sale of the aforesaid lands, the A.O reopened his case u/s.147 of the Act. In compliance to the notice issued u/s.148 of the Act the assessee filed his return of income on 09.09.2016, declaring an income of Rs. 37,80,900/-. On a perusal of the aforesaid return of income it was observed by the A.O that the assessee had two streams of income from real estate transactions, viz. (i) income that was derived by the assessee as a partner in various partnership firms which were engaged in the business of real estate development; and (ii) income that was derived by the assessee from developing of a colony in his individual capacity. It was the claim of the assessee that the lands in question i.e at Village: Sakri that were sold during the year under consideration were held by him as stock-in-trade in the course of his real estate business and the income arising therefrom was erroneously disclosed by him in his return of income filed u/s 139 under the head 4 Deepak Khandelwal Vs. JCIT, Range-1 ITA No.216/RPR/2018 “capital gain” instead of “business income”. It was further submitted by the assessee that the aforesaid mistake was corrected by him in his return of income that was filed on 09.09.2016 in compliance to notice issued u/s.148 of the Act. In order to support his aforesaid claim, it was submitted by the assessee that in the consolidated financial statements the lands in question i.e, the lands situated at Village-Sakri that were sold during the year under consideration were shown under the head “current asset”. Apropos the query of the A.O as to why the sale transaction in question may not be subjected to the rigors of Section 50C of the Act by adopting the Fair Market Value (FMV) of the land in question as the deemed sale consideration, it was the claim of the assessee that as the aforesaid lands were held by him as stock-in-trade, therefore, the provisions of Section 50C would not come in play. Alternatively, it was submitted by the assessee that even if the provisions of section 50C were to be made applicable, then, the fact that the value adopted by Stamp Valuation Authority for the aforesaid lands was in excess of its FMV could not be lost sight of. 4. Apropos the claim of the assessee that he had in his return of income filed u/s 139 of the Act erroneously shown the surplus/accretion arising from the sale of the lands in question which were held by him as stock-in-trade under the head “capital gains”, the A.O did not find favour 5 Deepak Khandelwal Vs. JCIT, Range-1 ITA No.216/RPR/2018 with the same. Observing, that the assessee had in his return of income raised a specific claim for deduction u/s.54B of the Act, the A.O was of the view that the said conduct of the assessee in itself revealed beyond doubt that the income from the sale of the lands in question was rightly disclosed by him under the head “capital gains”. As regards the claim of the assessee that the value adopted by the Stamp Valuation Authority was in excess as in comparison to its FMV, the A.O referred the matter to the Valuation Officer who as per his valuation report dated 28.11.2016 estimated the value of the properties sold at Rs.75,40,600/- and Rs.29,01,800/-. Adverting to the assessee’s claim of deduction u/s. 54B of the Act, it was observed by the A.O that though the assessee in support of his aforesaid claim had placed on record copies of certain purchase deeds of land, however, no documentary evidence to support his claim of having purchased land at Village: Duraghat was filed before him. Accordingly, the A.O on the basis of the aforesaid facts disallowed the assessee’s claim for deduction u/s.54B of the Act to the tune of Rs.18 lac i.e to the extent the same was claimed qua the purchase of land at Village: Duraghat. 5. On the basis of his aforesaid deliberations, viz. (i). assessing of the income/surplus arising from sale of lands at Village: Sakri under the head capital gains; and (ii) declining of the assessee’s unsubstantiated claim for deduction u/s.54B of the Act of Rs.18 lac, the A.O vide his order passed 6 Deepak Khandelwal Vs. JCIT, Range-1 ITA No.216/RPR/2018 u/s.147/143(3) of the Act re-worked out the “capital gains” arising from the sale of the lands in question at Rs.44,14,251/- and assessed the income of the assessee at Rs.47,63,614/-. 6. Aggrieved the assessee carried the matter in appeal before the CIT(Appeals). However, the CIT(Appeals) was not persuaded to accept the contentions of the assessee. It was observed by the CIT(Appeals) that the assessee pursuant to the re-opening of his case u/s.147 of the Act had re- characterized the sale of the lands in question as a sale of stock-in-trade as against that disclosed by him as sale of capital asset in his original return of income. Observing, that the reassessment proceedings could not have been converted by the assessee as his appeal or revision in disguise for seeking relief in respect of items earlier rejected or accepted, the CIT(Appeals) declined the aforesaid claim of re-characterization of the sale transactions in question as was sought by the assessee. Accordingly, the CIT(Appeals) rejected the claim of the assessee that the gain/accretion on sale of land in question was liable to be assessed as his business income i.e as was claimed by him in his return of income filed in response to the notice u/s.148 of the Act. On the basis of his aforesaid deliberations the CIT(Appeals) finding no infirmity in the view taken by the A.O upheld his order and dismissed the appeal. 7 Deepak Khandelwal Vs. JCIT, Range-1 ITA No.216/RPR/2018 7. The assessee being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before us. As the assessee appellant despite having been intimated about the hearing of the appeal has failed to put up an appearance before us, therefore, we are constrained to proceed with and dispose off the appeal as per Rule 24 of the Appellate Tribunal Rules, 1963 i.e, after hearing the respondent revenue and perusing the orders of the lower authorities. 8. Controversy involved in the present appeal hinges around three aspects, viz. (a) as to whether or not, the lower authorities are right in law and on facts in declining the claim of the assessee that the gain/accretion on sale of the lands in question was to be assessed under the head “Profit and Gain of Business or Profession” as claimed by him in his return filed u/s.148 of the Act; (b) that as to whether or not, the lower authorities had rightly declined the assessee’s claim for deduction u/s.54B of Rs.18 lac qua his claim of purchase of land at Village-Duraghat; and (iii) that as to whether or not the lower authorities have rightly triggered the provisions of section 50C of the Act for re-computing the capital gains on sale of land in question in the hands of the assessee. 9. As observed by us hereinabove, it is a matter of fact borne from record that the assessee had in his original return of income that was filed on 30.09.2012, which, thereafter, was revised on 01.10.2012, disclosed the 8 Deepak Khandelwal Vs. JCIT, Range-1 ITA No.216/RPR/2018 income from sale of land at Village: Sakri under the head “capital gain”. Admittedly, the case of the assessee was reopened by the A.O u/s.147 of the Act, inter alia, for the reason that the sale value adopted by the assessee for computing his income under the head “capital gains” on sale of the lands in question was substantially lower than the FMV of the said lands. Also, as is discernible from the records, the assessee in his return of income filed u/s.148 of the Act had re-characterized the transaction of sale of lands at Village: Sakri as a sale of stock-in-trade as against that shown by him as a sale of capital asset in his original return of income. Accordingly, it was the claim of the assessee that the surplus/accretion on the sale of the lands in question which were held by him as stock-in-trade of his real estate business was liable to be taxed as his business income and was wrongly disclosed under the head “capital gains” in his return of income filed u/s.139 of the Act. Observing, that the aforesaid claim of the assessee was not only unsubstantiated but was also beyond comprehension as he had in his original return of income in order to partly off-set the capital gain arising from sale of the lands in question claimed deduction u/s.54B of the Act, the A.O did not accept the same. Also, the claim of the assessee for deduction u/s.54B of the Act of Rs.18 lac was disallowed by the A.O in absence of any supporting documentary evidence. Backed by the aforesaid facts, the A.O after triggering the provisions of section 50C of the Act recomputed the capital gains on the sale of land in 9 Deepak Khandelwal Vs. JCIT, Range-1 ITA No.216/RPR/2018 question in the hands of the assessee. On appeal, the CIT(Appeals) holding a conviction that the assessee in the garb of the reassessment proceedings which were initiated by the A.O u/s.147 of the Act had tried to seek relief in respect of items which had earlier been rejected or accepted by the A.O, thus, declined to accept the same and upheld the order of the A.O. 10. After having given a thoughtful consideration, we are unable to find any infirmity in the view taken by the lower authorities. As held by the Hon’ble Supreme Court in the case of CIT Vs. Sun Engineering Works P. Ltd. (1992) 198 ITR 297 (SC), an assessee in the course of reassessment proceedings is not vested with any right to re-agitate any issue which had already attained finality. Relying on the aforesaid judgment of the Hon’ble Apex Court in the case of Sun Engineering Works P. Ltd. (supra), the Hon’ble Karnataka High Court in the case of CIT Vs. Sangeetha Granites Ltd. (2010) 326 ITR 324 (Kar), had held, that an assessee cannot be permitted to convert the reassessment proceedings as his appeal or revision and in guise of the same seek relief in respect of items earlier rejected or accepted. On a similar footing, the Hon’ble High Court of Bombay in the case of CIT Vs. Jai Hind Cooperative Society Ltd. (2012) 349 ITR 537 (Bom), had observed, that as the object and purpose of the reassessment is for the benefit of the Revenue and not for the benefit of the 10 Deepak Khandelwal Vs. JCIT, Range-1 ITA No.216/RPR/2018 assessee, therefore, the assessee cannot be permitted to convert the same as his appeal or revision in disguise. 11. In the backdrop of the aforesaid settled position of law, we find that the assessee in the case before us had in the garb of the reassessment proceedings initiated in his case u/s.147 of the Act tried to seek relief on issues which had already attained finality. As observed by the Hon’ble Supreme Court in the case of CIT Vs. Sun Engineering Works P. Ltd. (1992) 198 ITR 297 (SC), the jurisdiction of the A.O in the course of reassessment proceedings initiated u/s.147 of the Act is confined to only such income which has escaped tax or has been under-assessed and does not extend to revising, reopening or reconsidering the whole assessment; or permitting the assessee to re-agitate questions which had been decided in the original assessment proceedings. Also, as observed by the Hon’ble Apex Court the proceedings under Section 147 of the Act is for the benefit of the revenue and an assessee cannot be permitted to convert the reassessment proceedings as his appeal or revision, in disguise, and seek relief in respect of items earlier rejected or claim relief in respect of items not claimed in the original assessment proceedings, unless the same was relatable to 'escaped income'. Apart from that, it was observed by the Hon’ble Apex Court that even in cases where the claims of the assessee during the course of reassessment proceedings relating to the escaped 11 Deepak Khandelwal Vs. JCIT, Range-1 ITA No.216/RPR/2018 assessment are accepted, still the allowance of such claims has to be limited to the extent to which they reduce the income to that originally assessed and the income for the purposes of 'reassessment' cannot be reduced beyond that originally assessed. 12. As in the case before us the assessee in the garb of reassessment proceedings which were initiated by the AO for assessing his escaped income u/s.147 of the Act, had tried to seek re-characterizing the sale of the land in question as transaction of sale of stock-in-trade as against that claimed by him as sale of a capital asset in his original return of income, therefore, raising of the aforesaid claim of the assessee clearly falls beyond the realm of Section 147 of the Act, and thus, had rightly been rejected by the lower authorities. We, thus, finding no infirmity in the view taken by the lower authorities who had rightly rejected the assessee’s claim for assessing the gain/surplus arising from sale of the lands in question as his business income, uphold the view taken by them. 13. As we have upheld the view taken by the lower authorities that the income of the sale of land in question was to be brought to tax under the head “capital gains”, therefore, the claim of the assessee that the provisions of section 50C would not stand triggered qua the lands in question which were held by him as stock-in-trade fails on the said count itself. Also, finding no infirmity in the declining of the assessee’s claim for 12 Deepak Khandelwal Vs. JCIT, Range-1 ITA No.216/RPR/2018 deduction of Rs. 18 lac u/s.54B of the Act by the A.O, for the reason that the same was not substantiated on the basis of any supporting documentary evidence, we uphold the order of the CIT(Appeals) to the extent he had concurred with the view taken by the AO. Thus, finding no merit in the appeal filed by the assessee before us, we dismiss the same. 14. In the result, appeal filed by the assessee is dismissed in terms of our aforesaid observations. Order pronounced in open court on 7 th day of June, 2022. Sd/ Sd/- RATHOD KAMLESH JAYANTBHAI RAVISH SOOD (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) रायप ु र/ RAIPUR ; Ǒदनांक / Dated : 7 th June, 2022 SB आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of the Order forwarded to : 1. अपीलाथȸ / The Appellant. 2. Ĥ×यथȸ / The Respondent. 3. The CIT(Appeals), Bilaspur (C.G) 4. The Pr. CIT, Bilaspur (C.G) 5.ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय अͬधकरण,रायप ु रबɅच, रायप ु र / DR, ITAT, Raipur Bench, Raipur. 6. गाड[ फ़ाइल / Guard File. आदेशान ु सार / BY ORDER, Ǔनजी सͬचव / Private Secretary आयकरअपीलȣयअͬधकरण, रायप ु र / ITAT, Raipur.