ITO, New Delhi V. Sh. Harish Chander Khullar, New Delhi

ITA 3758/DEL/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 4169 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-10-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 02-05-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 27-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Question of law; Tangible material; Difference of opinion; Change of opinion
• Section: 143(3); 54B; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO. 3758 /DEL/201 4 A.Y. : 20 0 6 - 07 INCOME TAX OFFICER, WARD 27(2), ROOM NO. 1909, E-2 BLOCK, CIVIC CENTRE, MINTO ROAD, NEW DELHI 110 001 VS. SH. HARISH CHANDER KHULLAR, E-88-B, MANSAROVER GARDEN, NEW DELHI 110 015 (PAN: AAFPK8788A) (APPELLANT) (RESPONDENT) DEPARTMENT BY : SH. ARUN KUMAR, SR. DR ASSESSEE BY : NONE ORDER PER H.S. SIDHU, JM: THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST THE IMPUGNED ORDER DATED 28/4/2014 PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-XXIV, NEW DELH I ON THE FOLLOWING GROUNDS:- ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN 2 I) DELETING THE DISALLOWANCE OF DEDUCTION U/S. 54B OF I.T. ACT AMOUNTING TO RS. 69,30,8000/- MADE BY THE AO. II) THE APPELLANT CRAVES THE RIGHT TO ADD, ALTER OR AMEND ANY GROUND OF APPEAL. 2. THE FACTS IN BRIEF ARE THAT THE ASSESSEE FILED HI S RETURN OF INCOME FOR THE RELEVANT ASSESSMENT YEAR 2006-07 ON 30.3.200 7 DECLARING TOTAL INCOME OF RS. 1,95,030/-. THE CASE OF THE ASS ESSEE WAS SELECTED FOR SCRUTINY AND NOTICE U/S. 143(2) OF THE I NCOME TAX ACT, 1961 (HEREINAFTER REFERRED AS THE ACT) WAS SERVED ON THE ASSESSEE. DURING THE RELEVANT ASSESSMENT YEAR, THE ASSESSEE H AD CLAIMED TO HAVE EARNED CAPITAL GAIN OF RS. 1,62,36,847/- ON SAL E OF AGRICULTURAL LAND AT SONEPAT, HARYANA ON 22.3.2006 AND INVESTED THE SAME IN THE PURCHASE OF ANOTHER AGRICULTURAL LAND AT RAJASTHAN WORTH OF RS. 1,73,84,870/-(IN 37 TRANSACTIONS) AND CLAIMED EX EMPTION U/S 54B OF THE INCOME TAX ACT. A COMPLETE LIST OF 37 TRAN SACTIONS OF PURCHASE INDICATING DATE OF PURCHASE ALONG WITH PHOTO C OPIES OF ALL THE DEEDS EVIDENCING PURCHASE OF LAND WERE FILED BEF ORE THE ASSESSING AUTHORITY DURING THE ASSESSMENT PROCEEDINGS . THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE INCOME TAX ACT, ON 19.12.2008 AT THE DECLARED INCOME OF THE APPELLANT. S UBSEQUENTLY, THE ASSESSING OFFICER NOTED THAT OUT OF THE CAPITAL GAINS OF RS. 3 1,62,36,847/-, THE ASSESSEE HAD PURCHASED ANOTHER AGR ICULTURAL LAND FOR RS. 1,34,19,780/- ONLY BEFORE THE DUE DATE OF FURNISHING HIS RETURN OF INCOME U/S 139(1) OF THE INCOME TAX ACT, AN D LAND WORTH OF RS. 39,30,800/- WERE PURCHASED AFTER THE DUE DATE OF FILING OF RETURN OF INCOME U/S 139(1) OF THE INCOME TAX ACT. THE AO FURTHER NOTED THAT INVESTMENT UNDER THE CAPITAL GAIN SCHEME AMO UNTING TO RS 30,00,000/- WAS ALSO MADE AFTER THE DUE DATE OF S UBMISSION OF RETURN. THEREFORE, THE ASSESSING OFFICER ISSUED A NOT ICE U/S 154/155 OF THE INCOME TAX ACT WITH A PROPOSAL TO RECTIFY THE M ISTAKE OF ALLOWING EXEMPTION U/S 54B OF THE INCOME TAX ACT, ON THE LONG TERM CAPITAL GAINS THE AMOUNT OF RS. 1,34,19,780/- ONLY I NSTEAD OF RS. 1,62,36,847/-. THIS NOTICE WAS COMPLIED BY THE ASSES SEE AND A REPLY WAS GIVEN VIDE LETTER DATED 14.12.2010 WHEREIN THE ASSESSEE SUBMITTED THAT THERE WAS NO MISTAKE IN THE ORIGINAL ASSE SSMENT ORDER U/S 143(3) OF THE INCOME TAX ACT. IT WAS CLARIF IED THAT THE APPELLANT DEPOSITED A SUM OF RS 62 LACS IN FIXED DEP OSITS WITH STATE BANK OF INDIA VIDE FDR NO. 053481 ON 12.10.2006. TH IS FD WAS ENCASHED PREMATURELY ON 10.11.2006 AND FURTHER LAND OF RS.39,30,800/- WAS PURCHASED. AFTER THIS, ANOTHER F D FOR RS 30 LACS WAS MADE FROM STATE 8ANK OF INDIA BEARING NO. 53500 DATED 17.02.2007. THE BALANCE LAND WAS PURCHASED AFTER GET TING THIS FD ENCASHED ON 19.12.2007. IT WAS POINTED OUT THAT THE AO MISSED THE 4 FDR OF RS 62 LACS PREPARED ON 12.10.2006 WHILE ISSU ING THE SAID NOTICE. NOTHING HAPPENED ON THIS NOTICE THEREAFTER WHICH GAVE A PRESUMPTION THAT THE ASSESSING OFFICER WAS SATISFIED ABO UT THE AMOUNT HAVING BEEN INVESTED IN FDRS BEFORE THE DATE OF FILING OF RETURNS. LATER ON, THE ASSESSING OFFICER ISSUED A NO TICE U/S 147/148 OF THE INCOME TAX ACT DATED 26.03.2012 AND WITHDREW THE EXEMPTION U/S 54B OF THE INCOME TAX ACT, OF RS. 69,3 0,800/- AND COMPLETED THE ASSESSMENT U/S. 143(3)/147 OF THE INCOME TAX ACT, 1961 VIDE ORDER DATED 28.3.2013. 3. AGGRIEVED WITH THE AFORESAID ASSESSMENT ORDER, ASS ESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHO VIDE HIS IMPUGNED ORDER DATED 28.4.2014 HAS ALLOWED THE APPEAL OF THE ASSESSEE QUASHING THE REASSESSMENT ORDER DATED 28.3.2013 AND ALSO DECIDED THE APPEAL ON MERITS AS WELL. 4. NOW THE REVENUE IS AGGRIEVED AGAINST THE IMPUGNED ORDER AND FILED THE PRESENT APPEAL BEFORE THE TRIBUNAL AND CON TESTED ONLY THE APPEAL ON MERIT. 5. LD. DR RELIED UPON THE ORDER OF THE AO AND REITERA TED THE CONTENTIONS RAISED IN THE GROUNDS OF APPEAL. 6. IN THIS CASE, NOTICE OF HEARING TO THE ASSESSEE W AS SENT BY THE REGISTERED AD POST, IN SPITE OF THE SAME, ASSESSEE, NOR HIS 5 AUTHORIZED REPRESENTATIVE APPEARED TO PROSECUTE THE MATTE R IN DISPUTE, NOR FILED ANY APPLICATION FOR ADJOURNMENT. KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE AND T HE ISSUE INVOLVED IN THE PRESENT APPEAL, WE ARE OF THE VIEW THA T NO USEFUL PURPOSE WOULD BE SERVED TO ISSUE NOTICE AGAIN AND A GAIN TO THE ASSESSEE, THEREFORE, WE ARE DECIDING THE PRESENT AP PEAL EXPARTE QUA ASSESSEE, AFTER HEARING THE LD. DR AND PERUSING THE RECORDS. 7. WE HAVE HEARD THE LD. DR AND PERUSED THE RECOR DS, ESPECIALLY THE IMPUGNED ORDER PASSED BY THE LD. CIT(A). WE FIND THAT ON LEGAL ISSUE I.E. QUASHING OF REASSESSMENT, THE LD. FIRST AP PELLATE AUTHORITY HAS OBSERVED THAT AO HAS REOPENED THE ASSESSMENT AND NO NEW OR TANGENT MATERIAL HAS BEEN BROUGHT ON RECORD TO SHOW TH AT ANY INCOME HAS ESCAPED ASSESSMENT BY REASON OF THE FAILU RE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATE RIALS FACTS NECESSARY FOR HIS ASSESSMENT FOR THE RELEVANT ASSESSME NT YEAR. THE REASONS RECORDED BY THE AO DO NOT INDICATE THAT HIS R EASON TO BELIEVE WAS ON GROUND OF FAILURE OF THE ASSESSEE T O DISCLOSE MATERIAL PARTICULARS TRULY AND CORRECTLY. THE NOTICE WA S ISSUED BEYOND 4 YEARS. THE REASONS DO NOT SAY THAT THE ASSE SSEE DOES NOT SHOW ANY TANGIBLE MATERIAL THAT CREATED THE REASON TO B ELIEVE THAT INCOME HAD ESCAPED. RATHER, THE REASSESSMENT PROCEED INGS ACCOUNTED TO A REVIEW OR CHANGE OF OPINION CARR IED 6 OUT EARLIER. THEREFORE, ON THIS ACCOUNT ALSO, THE RE ASSESSMENT PROCEEDINGS IN THE CASE OF ASSESSEE WAS NOT VALID. RE LIANCE IN THIS REGARD WAS PLACED ON THE DECISION OF THE HONBLE DELH I HIGH COURT IN THE CASE OF CIT VS. KELVINATOR OF INDIA LTD. (2002 25 6 ITR 1 (DEL.). THEREFORE, THE LD. CIT(A) HAS RIGHTLY QUASHED THE RE ASSESSMENT ORDER DATED 28.3.2013. HOWEVER, WE NOTE THAT THE REVEN UE HAS NOT CHALLENGED THIS LEGAL GROUND OF APPEAL BEFORE THE TR IBUNAL, AS A RESULT THEREOF, THE REVENUES APPEAL STANDS DISMISSED ON THE LEGAL GROUND ITSELF. EVEN OTHERWISE, ON MERIT ALSO, IT I S NOTED THAT DURING THE RELEVANT ASSESSMENT YEAR THE ASSESSEE HAS SOLD AG RICULTURAL LAND AT VILLAGE RATHDANA, TEHSIL SONEPAT, HARYANA FOR RS. 1,78,62,500/- AND AFTER DEDUCTING THE PURCHASE VALUE OF LAND OF RS. 13, 35, 097/- DECLARED LONG TERM CAPITAL GAIN OF RS. 1,65,27,403/ -. THEREAFTER, THE ASSESSEE PURCHASED ANOTHER AGRICULTURAL LAND BETWEEN THE PERIOD 07.04.2006 TO 26.06.2006 OF RS. 1,87,92,759/- JOINT LY WITH SH. BRAHAM SINGH (50:50 RATIO). THE ASSESSEES SHARE OF INVESTMENT IN THE AGRICULTURAL LAND WAS OF RS. 93,96,380/-. LAT ER ON, BETWEEN THE PERIOD 17.11.2006 TO 19.12.2007, THE APPELLANT FURT HER PURCHASED AGRICULTURAL LAND OF RS.75,45,930/-. THUS, BETWEEN THE PERIOD 07.04.2006 TO 19.12.2007, THE ASSESSEE PURCHAS ED AGRICULTURAL LAND WORTH OF RS. 1,69,42,310/- AND A LSO INCURRED EXPENSES FOR THE PURCHASE OF LAND ON ACCOUNT OF COM MISSION AND 7 OTHER EXPENSES OF RS. 4,42,560/-. THUS, THE AGGREGATE AMOUNT OF INVESTMENT IN THE PURCHASE OF LAND BY THE APPELLANT WA S OF RS. 1,73,84,870/-. FROM THE ABOVE, IT IS CLEAR THAT THE ASSESSEE HAS INVESTED IN THE PURCHASE OF AGRICULTURAL LAND WITHI N THE PERIOD OF TWO YEAR I.E. BEFORE 21.03.2008 THE WHOLE AMOUNT OF LONG TERM CAPITAL GAIN EARNED ON THE SALE OF AGRICULTURAL LAND. AS PER SECTION 54B, CAPITAL GAIN ON TRANSFER OF LAND USED FOR AGRICULTUR AL PURPOSES ARE NOT TO BE CHARGED IF THE CAPITAL GAINS ARISES FROM THE TRANSFER OF THE CAPITAL ASSET BEING AGRICULTURAL LAND HAS BEEN INVES TED WITHIN A PERIOD OF TWO YEAR AFTER THE DATE OF SALE OF CAPITAL A SSET BEING LAND FOR INCOME TAX PURPOSES. IN THIS CASE, THERE IS NO DI SPUTE THAT THE IMPUGNED AGRICULTURAL LAND WAS SOLD BY THE APPELLANT ON 22.03.2006 AND THE WHOLE AMOUNT WAS INVESTED IN THE PURCHASE OF A NOTHER AGRICULTURAL LAND BY 19.12.2007 I.E. WITHIN THE TWO Y EARS OF THE IMPUGNED SALE OF AGRICULTURAL LAND. IT IS FURTHER O BSERVED THAT THE ASSESSING OFFICER HAS DISALLOWED THE EXEMPTION ULS 54B OF RS.69,30,800/- ONLY ON THE GROUND THAT THE INVESTMENTS IN PURCHASE OF AGRICULTURAL LAND FOR CLAIMING THE BENEFIT OF EXEM PTION U/S 54B WAS MADE BY THE ASSESSEE AFTER THE DUE DATE OF FILING OF RETURN ULS 139(1) OF THE IT ACT I.E. 31.10.2006. THE ASSESSEE I N THIS CASE HAS FILED HIS ORIGINAL RETURN OF INCOME FOR THE RELEVANT ASSESSMENT YEAR ON 30.03.2007 ULS 139(4) OF THE INCOME TAX ACT. IT IS WORTHWHILE TO 8 MENTION HERE THAT SUB SECTION 4 OF SECTION 139 IS AN E XTENSION OF SUB SECTION 1 OF SECTION 139. AS PER SECTION 54B OF THE I.T. ACT, A RETURN HAS TO BE FILED ULS 139 ONLY FOR AVAILING THE BENEFIT OF SECTION 54B. THERE IS NO MENTION OF ANY SUB SECTION OF SECTIO N 139 IN SECTION 54B SUCH AS SUB SECTION 1, 2, 3 OR 4 ETC. THE RE IS NO DISPUTE ABOUT THE FACT THAT THE RETURN OF INCOME HAS BEEN FILED BY THE APPELLANT WITHIN SUB SECTION 4 OF 139 OF THE I T ACT. T HE ASSESSING OFFICER HAS ERRED IN DISALLOWING THE EXEMPTION ON THE LONG TERM CAPITAL GAIN OF THE APPELLANT ULS 548 OF THE I.T. ACT OF RS. 69,80,300/-. THERE IS NO DISPUTE ABOUT THE FACT THAT THE WHOLE OF LONG TERM CAPITAL GAIN OF RS. 1,65,27,403/- HAS BEEN INVESTED BY THE APPELLANT IN THE PURCHASE OF ANOTHER AGRICULTURAL LAND WITHIN TWO YEAR FROM THE SALE OF THE CAPITAL ASSET I.E. AGRICULTUR AL LAND. THEREFORE, THE LD. CIT(A) WAS OF THE OPINION THAT THE EXEMPTION ULS 54B OF THE I.T. ACT HAS TO BE ALLOWED ON THE AMOUNT OF RS. 69,80,300/-. IN A SIMILAR CASE NAMELY CIT VS. JAGRITI AGGARWAL, 15 TAXMANN.COM 146(2011), THE HON'BLE HIGH COURT OF PUNJAB AND HARYANA HAS HELD 'SUB-SECTION (4) OF SECTION 139 IS, IN FACT, A PROVISO TO SUB-SECTION (1) OF SECTION 139. SECTION 1 39 FIXES THE DIFFERENT DATES FOR FILING THE RETURNS FOR DIFFERENT AS SESSEES. IN THE CASE OF ASSESSEE, IT IS 31ST DAY OF JULY OF THE ASSES SMENT YEAR IN TERMS OF CLAUSE (E) OF THE EXPLANATION 2 TO SUB-SECTI ON (1) OF SECTION 9 139, WHEREAS SUB-SECTION (4) OF SECTION 139 PROVIDES FOR EXTENSION IN PERIOD OF DUE DATE IN CERTAIN CIRCUMSTANCES. [PARA 10] THUS, IF A PERSON HAD NOT FURNISHED THE RETURN OF THE PREVIOUS YEAR WITHIN THE TIME ALLOWED UNDER SUB-SECTION (1), I.E., BE FORE 31ST DAY OF JULY OF THE ASSESSMENT YEAR, THE ASSESSEE COULD FIL E RETURN BEFORE THE EXPIRY OF ONE YEAR FROM THE END OF THE RELEVANT AS SESSMENT YEAR. [PARA 11] THE SALE OF THE ASSET HAVING BEEN TAKEN PLACE ON 13-1- 2006, FALLING IN THE PREVIOUS YEAR 2006-07, THE RETURN COULD BE FI LED BEFORE THE END OF RELEVANT ASSESSMENT YEAR 2007-08, I.E., 31-3 -2007. THUS, SUB-SECTION (4) OF SECTION 139 PROVIDES EXTENDED PERI OD OF LIMITATION AS AN EXCEPTION TO SUB-SECTION (1) OF SECTION 139. SU B-SECTION (4) IS IN RELATION TO THE TIME ALLOWED TO AN ASSESSEE UNDER SU B-SECTION (1) TO FILE RETURN. THEREFORE, SUCH PROVISION IS NOT AN I NDEPENDENT PROVISION, BUT RELATES TO TIME CONTEMPLATED UNDER SUB- SECTION (1) OF SECTION 139. THEREFORE, SUCH SUB-SECTION (4) HAS TO BE READ ALONG WITH SUB-SECTION (1). SIMILAR WAS THE VIEW TAKEN BY T HE DIVISION BENCH OF THE KARNATAKA AND GAUHATI HIGH COURTS IN FA THIMA BAI V. ITO [2009] 32 DTR 243 AND CIT V. RAJESH KUMAR JALA N [2006] 286 ITR 274/157 TAXMAN 398 RESPECTIVELY. [PARA 12] THUS, DUE DATE FOR FURNISHING THE RETURN OF INCOME AS PER SECTION 139(1) IS SUBJECT TO THE EXTENDED PERIOD PROVIDED UNDE R SUB-SECTION (4) OF SECTION 139. [PARA 13] 10 CONSEQUENTLY, THE QUESTION OF LAW WAS TO BE ANSWERED A GAINST THE REVENUE AND IN FAVOUR OF THE ASSESSEE. THUS, THE PRES ENT APPEAL WAS TO BE DISMISSED. 7.1 THEREFORE, RELYING UPON THE AFORESAID DECISION, LD. CIT(A) WAS OF THE CONSIDERED OPINION THAT THE AMOUNT OF RS.69,8 0,300/- HAS TO BE EXEMPTED ULS 54B OF THE I T ACT AND THEREFORE THE ASS ESSING OFFICER WAS RIGHTLY DIRECTED TO DELETE THE ADDITION OF RS. 69,80,300/-., WHICH DOES NOT NEED ANY INTERFERENCE O N OUR PART, HENCE, WE UPHOLD THE SAME. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 04/10/2017. SD/- SD/- [L.P. SAHU] [H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE 04/10/2017 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES