The Income Tax Officer -II, Kapurthala V. Sh. Raghbir Singh, S/o. Sh. Amar Singh, Kapurthala

ITA 35/ASR/2016

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0693 (ITAT-AMRITSAR)
• Duration Of Justice: 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-06-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 20-06-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 05-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SH A N MISHRA
• Keywords: Capital asset; Salary income; Reassessment proceedings
• Section: 143(3); 54F; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. (CAMP AT JALANDHAR) BEFORE SH. A.D. JAIN, JUDICIAL MEMBER AND SH. T.S. KAPOOR, ACCOUNTANT MEMBER ITA NO.35(ASR)/2016 ASSESSMENT YEAR:2007-08 PAN: AKCPS1436Q INCOME TAX OFFICER, VS. SH. RAGHBIR SINGH KAPURTHALA-II, S/O SG. AMAR SINGH, KAPURTHALA. VILL. HOTIAN, P.O. NURPUR LUBANA, DISTT. KAPURTHALA. (APPELLANT) (RESPONDENT) APPELLANT BY: SH.SH.A.N.MISHRA, DR RESPONDENT BY: NONE DATE OF HEARING: 20/06/2016 DATE OF PRONOUNCEMENT: 21/06/2016 ORDER PER A.D. JAIN, JM; THIS IS THE ASSESSEES APPEAL FOR THE ASSESSMENT YE AR 2007-08, AGAINST THE ORDER DATED 26.10.2015, PASSED BY THE LD. CIT( A), JALANDHAR. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FAC TS OF THE CASE IN DELETING THE PENALTY U/S 271(1)(C) OF THE INCOME TA X ACT ON GROUNDS THAT THE QUANTUM OF CAPITAL GAINS AMOUNTING TO RS.1,77,65,846/- HAS BEEN DELETED BY THE HONBLE PU NJAB & HARYANA HIGH COURT IGNORING THE FACT THAT THE ORDER OF THE HONBLE P & H COURT HAS BEEN CHALLENGED BY THE DEPTT. BEFO RE HONBLE SUPREME COURT AND THUS IT HAS NOT ATTAINED FINALITY AND FURTHER SECTION 275(1A) OF THE ACT, ITSELF TAKES CARE OF S UCH SITUATIONS. 2. THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON THE FACTS OF THE CASE DELETING THE PENALTY ON CAPITAL GAIN OF RS.34,15,65 3/- IMPOSED BY THE AO ON MERITS OF THE CASE, HOLDING THAT ALL THE MATERIAL FACTS 2 ITA NO.35(ASR)/2016 A.Y. 2007-08 REQUIRED TO COMPUTED THE CAPITAL GAIN HAD BEEN FURN ISHED BY ASSESSEE IN HIS RETURN FILED. 3. THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN HOLDING BONAFIE OF ASSESSEES BELIEF THAT LONG TER M CAPITAL GAIN WHICH WAS YET TO BE RECEIVED WAS NOT PAYABLE IN THE YEAR UNDER CONSIDERATION, EVEN THOUGH THE ASSESSEE HAD NOT SHO WN TRUE AND ACTUAL CAPITAL GAIN IN HIS RETURN OF INCOME. 2. NONE HAS APPEARED ON BEHALF OF THE ASSESSEE DESP ITE ISSUANCE OF NOTICE THROUGH THE DEPARTMENT. HOWEVER, FINDING THAT THE M ATTER CAN BE PROCEEDED WITH IN THE ABSENCE OF THE ASSESSEE, WE ARE DOING S O. 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE WAS A MEMBER OF A HOUSING SOCIETY OF MLAS AND EX MLAS, NAMED AS THE PUNJABI C O-OPERATIVE HOUSE BUILDING SOCIETY LTD, MOHALI, WHICH WAS THE OWNER OF 21.2 ACRES OF LAND IN VILAGE KANSAL, DISTRICT MOHALI. THIS SOCIETY ENTERE D INTO A TRIPARTITE JOINT DEVELOPMENT AGREEMENT ON 25.02.2007 WITH M/S. HASH BUILERS (PVT) LTD. CHANDIGARH AND M/S. TATA HOUSING DEVELOPMENT COMPAN Y LIMITED, MUMBAI, BY VIRTUE OF WHICH THE SOCIETY WOULD TRANSFER ITS LAND FOR DEVELOPMENT IN LIEU OF MONETARY CONSIDERATION AND ALSO CONSIDERATION IN KI ND TO THE MEMBERS OF THE SOCIETY. THE ASSESSEE AS A MEMBER OF THE SAID SOCIE TY, OWNED 500 SQ. YDS LAND. THE TOTAL CONSIDERATION WAS SETTLED AT RS.82,50,000 /- PLUS ALLOTMENT OF ONE FLAT OF 22550 SQ. FEET TO THE ASSESSEE (VALUING AT RS.1 ,01,25,000/-), OUT OF WHICH, THE ASSESSEE HAD RECEIVED RS.15,00,000/- ON 27.02.2 007 AND R.18,00,000/- ON 27.04.2007, I.E., IN THE NEXT FINANCIAL YEAR. THE A SSESSEE, WHO HAD DERIVED HIS INCOME FROM SALARY/PENSION AS MEMBER OF PUNJAB LEGI SLATIVE ASSEMBLY, HAD FURNISHED HIS RETURN OF INCOME FOR THE YEAR UNDER C ONSIDERATION ON 20.11.2009, 3 ITA NO.35(ASR)/2016 A.Y. 2007-08 DECLARING THEREIN AN INCOME OF RS.8,32,560/- WHICH INCLUDED INCOME FROM SALARY/PENSION AT RS.1,44,900/-, LONG TERM CAPITAL GAINS AT RS.6,87,583/- AND INTEREST INCOME OF RS.74/-. IN THE RETURN FILED BY THE ASSESSEE ON 22.11.2009, THE ASSESSEE HAD SHOWN LONG TERM CAPITAL GAINS FROM THE SALE OF PLOT MEASURING 500 SQ. YDS AT R.6,87,583/- DURING THE YE AR UNDER CONSIDERATION TO M/S. HASH BUILDERS (PVT.) LTD., CHANDIGARH AND M/S. TATA HOUSING DEVELOPMENT COMPANY LIMITED, MUMBAI ON A PROPORTION ATE BASIS BY TAKING INTO ACCOUNT AN AMOUNT OF RS.15,00,000/-, WHICH HAD BEEN RECEIVED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION. SIMIL ARLY, PROPORTIONATE LTCG HAD ALSO BEEN DECLARED IN AY 2008-09 BY TAKING INT O ACCOUNT PART OF SALE CONSIDERATION OF RS.18,00,000/- WHICH THE ASSESSEE RECEIVED DURING F.Y. 2007- 08. IN THE OPINION OF THE AO, THE ASSESSEE SHOULD H AVE DECLARED THE ENTIRE VALUE OF LONG TERM CAPITAL GAINS DURING THE YEAR UNDER CO NSIDERATION BY TAKING INTO ACCOUNT THE ENTIRE VALUE OF SALE CONSIDERATION WHIC H, ACCORDING TO HIM, CAME TO RS.1,82,75,000/-. AS THE ENTIRE LTCG ON THE SALE OF PLOT TO M/S. HASH BUILDERS (PVT.) LTD., CHANDIGARH AND M/S. TATA HOUSING DEVEL OPMENT COMPANY LIMITED, MUMBAI HAD NOT BEEN DECLARED IN THE RETURN FILED ON 20.11.1999, THE ASSESSMENT IN THE CASE OF THE ASSESSEE WAS REOPENED BY THE A.O. U/S 147 OF THE ACT BY ISSUANCE OF NOTICE U/S 148 OF THE ACT ON 29.023.2011. DURING THE COURSE OF REASSESSMENT PROCEEDINGS, THE AO NOTICE D THAT AS PER THE AGREEMENT DATED 25.02.2007, EACH OF THE MEMBERS OF THE SOCIET Y, INCLUDING THE ASSESSEE, OWNING PLOT OF 500 SQ. YDS, WERE TO RECEIVE RS.82,5 0,000/- IN CASH AND ONE FURNISHED FLAT MEASURING 2250 SQ. FEET, WITH MARKET VALUE OF RS.1,01,25,000/-, 4 ITA NO.35(ASR)/2016 A.Y. 2007-08 CALCULATED AT THE RATE OF RS.4,500/- PER SQ. FEET. THUS, THE TOTAL CONSIDERATION FOR TRANSFER OF PLOT CAME TO RS.1,83,75,000/-. THE REASSESSMENT IN THE CASE OF THE ASSESSEE WAS COMPLETED BY THE AO VIDE ORDER U/S 143(3) OF THE ACT R.W.S. 147 OF THE ACT DATED 9.12.2011, AT AN ASSESSED INCO ME OF RS.1,79,10,650/-, WHICH INCLUDED UNDISCLOSED LTCG AT RS.1,77,65,846/- . WHILE COMPLETING THE ASSESSMENT, THE A.O. MADE AN ADDITION OF RS1,77,65 ,846/- TO THE PENSION INCOME DISCLOSED BY THE ASSESSEE AT R.1,44,900/-, W HICH REPRESENTED ALLEGED UNDISCLOSED LONG TEM CAPITAL GAINS ON THE SALE OF P LOT BY TAKING INTO ACCOUNT THE FULL VALUE OF SALE CONSIDERATION OF THE PLOT, A T RS.1,83,75,000/-. PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT FOR CONCEALIN G AND FILING INACCURATE PARTICULARS OF INCOME TO THE EXTENT OF THE ADDITION MADE, WHICH REPRESENTED ALLEGED UNDISCLOSED LONG TERM CAPITAL GAINS, WERE A LSO INITIATED. 2.1. AGGRIEVED WITH THE ORDER OF THE AO, THE ASSESS EE PREFERRED APPEAL BEFORE THE CIT(A), WHO, VIDE ORDER DATED 25.03.2013, DISMI SSED THE APPEAL. THE ASSESSEE, AGGRIEVED WITH THE ORDER OF THE LD. CIT(A ), FILED AN APPEAL BEFORE THE ITAT, AMRITSAR BENCH, WHO, VIDE ORDER IN ITA NO.404 (ASR)/2013, DATED 11.09.2013 DISMISSED THE APPEAL AND CONFIRMED THE ACTION OF THE A.O. AGAINST THE SAID ORDER OF THE TRIBUNAL, THE ASSESSEE WENT I N APPEAL BEFORE THE HONBLE PUNJAB & HARYANA HIGH COURT AND THE HONBLE HIGH C OURT, JUDGMENT DATED 22.07.2013, PASSED IN ITA NO.200 OF 2013 (O&M) IN THE CASE OF CHARANJIT SINGH ATWAL & OTHERS, INCLUDING THE ASSESSEE, HAS VIRTUALLY ALLOWED THE APPEAL OF THE ASSESSEE AGAINST THE QUANTUM ADDITION OF RS .1,77, 65,846/-, BY HOLDING INTER-ALIA, AS UNDER: 5 ITA NO.35(ASR)/2016 A.Y. 2007-08 46. WE SUMMARISE OUR CONCLUSION AS UNDER: 1. PERUSAL OF JDA DATED 25.02.2007 READ WITH SALE DEED S DATED 02.03.2007 AND 25.04.2007 IN RESPECT OF 3.08 ACRES AND 4.68 ACRES RESPECTIVELY WOULD REVEAL THAT THE PARTIES HA D AGREED FOR PRO-RATA TRANSFER OF LAND. 2. NO POSSESSION HAD BEEN GIVEN BY THE TRANSFEROR TO T HE TRANSFEREE OF THE ENTIRE LAND IN PART PERFORMANCE OF JDA DATED 25.02.2007 SO AS TO FALL WITHIN THE DOMAIN OF SECTION 53A OF 1 882 ACT. 3. THE POSSESSION DELIVERED, IF AT ALL, WAS A LICENSE FOR THE DEVELOPMENT OF THE PROPERTY AND NOT IN THE CAPACIT Y OF A TRANSFEREE. 4. FURTHER, SECTION 53 OF 1882 ACT, BY INCORPORATION, STOOD EMBODIED IN SECTION 2(47)(V) OF THE ACT AND ALL THE ESSENTIA L INGREDIENTS OF SECTION 53A OF 1882 WERE REQUIRED TO BE FULFILLED. IN THE ABSENCE OF REGISTRATION OF JDA DATED 25.2.2007 HAVING BEEN EXECUTED AFTER 24.9.2001, THE AGREEMENT DOES NOT FALL U/S 53 A OF 1882 ACT AND CONSEQUENTLY SECTION 2(47)(V) OF THE ACT DOES N OT APPLY. 5. IT WAS SUBMITTED BY LD. COUNSEL FOR THE ASSESSEE TH AT WHATEVER AMOUNT WAS RECEIVED FROM THE DEVELOPER, CAPITAL GAI NS 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 AMOUNT HAS BEEN RECEIVED AND NO ACTION THER EON HAS TAKEN IT WAS ARGUED THAT AS AND WHEN ANY AMOUNT IS RECEIVED, CAPITAL GAIN TAX SHALL BE DISCHARGED THEREON IN ACC ORDANCE WITH LAW. IN VIEW OF THE AFORESAID STAND, WHILE DISPOSI NG OF THE APPEAL, WE OBSERVED THAT THE ASSESSEE SHALL REMAIN BOUND BY THEIR SAID STAND. 6. THE ISSUE OF ELIGIBILITY TO CAPITAL GAINS TAX HAVIN G BEEN DECIDED IN FAVOUR OF THE ASSESSEE, THE QUESTION OF EXEMPTION U /S 54F OF THE ACT WOULD NOT SURVIVE ANY LONGER AND HAS BEEN RENDE RED ACADEMIC. 7. THE TRIBUNAL AND AUTHORITIES BELOW WERE NOT RIGHT I N HOLDING THE ASSESSEE TO BE LIABLE TO CAPITAL GAINS TAX IN RESPE CT OF REMAINING LAND MEASURING 13.5 ACRES FOR WHICH NO CONSIDERATI ON HAD BEEN RECEIVED AND WHICH STOOD CANCELLED AND INCAPABLE OF PERFORMANCE AT PRESENT DUE TO VARIOUS ORDERS PASSED BY THE SUPREME COURT AND THE HIGH COURT IN PILS. THEREFORE , THE APPEALS ARE ALLOWED. 6 ITA NO.35(ASR)/2016 A.Y. 2007-08 3. THUS, THE HONBLE PUNJAB & HARYANA HIGH COURT HA S DELETED THE QUANTUM ADDITION ON ACCOUNT OF CAPITAL GAIN AMOUNTI NG TO R.1,77,65,846/-. THIS STANDS ACCEPTED EVEN BY THE DEPARTMENT IN GROU ND NO.1 RAISED BEFORE US. 4. THE CONCEALMENT PENALTY OF RS.34,15,653/- WAS L EVIED VIDE ORDER DATED 04.03.2014 ON THE ABOVE QUANTUM CAPITAL GAIN ADDITI ON. SINCE THE QUANTUM WAS DELETED BY THE HONBLE HIGH COURT, THE LD. CIT( A) DELETED THE CONSEQUENT PENALTY BY VIRTUE OF THE IMPUGNED ORDER. 5. THE DEPARTMENT SAYS THAT IT IS IN APPEAL AGAINST THE ORDER OF THE HONBLE HIGH COURT BEFORE THE HONBLE SUPREME COURT. THAT, HOWEVER, BY ITSELF, IS NOT ESTOPPLE ENOUGH AGAINST THE DELETION OF THE PENALT Y. AS ON TODAY, THE QUANTUM STANDS DELETED. THIS QUANTUM ADDITION WAS THE BASI S OF THE LEVY OF PENALTY IN QUESTION. NOW, SINCE THE QUANTUM HAS BEEN DELETED, THE RESULTANT PENALTY CAN ALSO NO LONGER SURVIVE. THEREFORE, THIS GRIEVANCE OF THE DEPARTMENT IS FOUND TO BE SHORN OF MERIT AND IS REJECTED AS SUCH. 6. IN THE RESULT, THE APPEAL OF THE DEPARTMENT IS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21/06/ 2016 . SD/- SD/- (T.S. KAPOOR) (A.D. JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER /SKR/ DATED: 21/06/2016 COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:RAGHBIR SINGH, KAPURTHALA 2. THE ITO II KAPURTHALA. 3. THE CIT(A), JLR 4. THE CIT, JLR 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER 7 ITA NO.35(ASR)/2016 A.Y. 2007-08 INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.