NARAYAN SINGH HUF, REWARI V. ITO, WARD- 1, REWARI

ITA 3935/DEL/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 0605 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 11 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-06-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2009-2010
• Appeal Filed On: 16-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Cost of acquisition; Tangible material; Reason to believe; Set aside; Capital Gains
• Section: 143(3); 147; 148

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI E BEN CH, NEW DELHI [THROUGH VIDEO CONFERENCE] BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER, AND MS. SUCHITRA KAMBLE, JUDICIAL M EMBER ITA NO. 3935/DEL/2017 [ASSESSMENT YEAR: 2009-10] SHRI NARAYAN SINGH[HUF] VS. THE INCOME TAX OFFI CER C/O NARESH SINGH CHAUHAN WARD 1 1035-P-SECTOR 3, PART II, REWARI NEAR GANESHI LAL DHARAMSHALA REWARI PAN: AAFHN 9504 B [APPELLANT] [RESPONDENT] DATE OF HEARING : 10.06.2020 DATE OF PRONOUNCEMENT : 11.06.2020 ASSESSEE BY : SHRI GAUTAM JAIN, ADV REVENUE BY : MS. RAKHI VIMAL, SR. DR ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER, THIS APPEAL BY THE ASSESSEE IS PREFERRED AGAINST T HE ORDER OF THE CIT(A), ROHTAK DATED 13.04.2017 PERTAINING TO ASSES SMENT YEAR 2009- 10. 2 2. THE GRIEVANCE OF THE ASSESSEE IS TWO-FOLD - FIR STLY, THE ASSESSEE IS AGGRIEVED BY THE INITIATION OF PROCEEDINGS U/S 147 OF THE INCOME TAX ACT, 1961 [HEREINAFTER REFERRED TO AS 'THE ACT' FOR SHORT] BY WAY OF ISSUANCE OF NOTICE U/S 148 OF THE ACT AND SECONDLY, THE ASSESSEE IS AGGRIEVED BY THE ADDITIONS MADE BY THE ASSESSING OF FICER IN RESPECT OF LONG TERM CAPITAL GAIN ON SALE OF AGRICULTURAL LAND . 3. THE GROUNDS CHALLENGING THE REOPENING OF ASSESSM ENT AND VALIDITY OF NOTICE U/S 148 OF THE ACT READ AS UNDER: 1. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS ), ROHTAK HAS ERRED BOTH IN LAW AND ON FACTS IN SUSTAINING THE IN ITIATION OF PROCEEDINGS U/S 147 OF THE ACT AND, COMPLETION OF A SSESSMENT U/S 147/143(3) OF THE ACT WHICH WERE WITHOUT JURISDICTI ON AND DESERVED TO BE QUASHED AS SUCH. 1.1 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) HAS FAILED TO APPRECIATE THAT THERE WAS NO TANGIBLE AND RELEVA NT MATERIAL ON RECORD ON THE BASIS OF WHICH IT COULD BE HELD THAT, THERE WAS ANY REASONS TO BELIEVE WITH THE LEARNED INCOME TAX OF FICER THE INCOME OF THE APPELLANT HAD ESCAPED ASSESSMENT AND, IN VIEW THEREOF, THE PROCEEDINGS INITIATED WERE ILLEGAL, UN TENABLE AND THEREFORE, UNSUSTAINABLE. 3 1.2 THAT THE LEARNED COMMISSIONER OF INCOME TAX (A PPEALS) HAS FURTHER ERRED BOTH IN LAW AND ON FACTS IN FAILURE T O APPRECIATE THAT, ISSUANCE OF NOTICE U/S 148 MERELY AMOUNTED TO CHANG E OF OPINION AS ORIGINAL ASSESSMENT WAS COMPLETED U/S 143(3) AND, N O TANGIBLE MATERIAL SURFACED AFTER THE COMPLETION OF ASSESSMEN T AND, NOTICE WAS ILLEGAL AND, WITHOUT JURISDICTION. 1..3 THAT THE BASIS ADOPTED IN THE REASONS RECORDED THAT ACTION U/S 148 OF THE ACT IN COMPLIANCE OF ORDER OF HONBLE TR IBUNAL DATED 26.9.2014 IN ITA NO. 1082/D/2013 IS BASED ON MISINT ERPRETATION AND MISCONSTRUCTION OF THE FINDINGS OF THE HONBLE TRIBUNAL AND HENCE THE ACTION IS WITHOUT JURISDICTION. 4. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT A NOTICE U/S 148 OF THE ACT DATED 28.03.2013 WAS ISSUED AND SERVED UPON THE ASSESSEE IN RESPONSE TO WHICH THE ASSESSEE FILED RETURN OF INCO ME DECLARING TOTAL INCOME OF RS. 3,13,660/- ON 10.10.2013. THE ASSESS MENT WAS COMPLETED U/S 143(3)/148 OF THE ACT VIDE ORDER DATE D 26.03.2014. 5. THE REASONS FOR REOPENING THE ASSESSMENT AND QUA RREL RELATE TO THE SALE OF AN AGRICULTURAL LAND SITUATED IN THE MU NICIPAL LIMITS OF DHARUHERA IN THE CASE OF SHRI NARAYAN SINGH [IND]. THIS QUARREL TRAVELLED UPTO THE TRIBUNAL IN ITA NO. 1802/DEL/201 3 AND THE TRIBUNAL WAS OF THE OPINION THAT THE IMPUGNED LAND BELONGED TO THE HUF AND 4 THE TRIBUNAL WAS PLEASED TO SET ASIDE THE ORDER OF THE FIRST APPELLATE AUTHORITY AND REMIT THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO VERIFY WHETHER THE HUF HAS BEEN ASSESSED ON THE CAPITAL GAIN ON THE LAND IN QUESTION AND IF SO MADE ON THE INDIVIDUAL ASSESSEE, NEEDS TO BE DELETED. 6. IT APPEARS THAT THE ASSESSING OFFICER TOTALLY MI SINTERPRETED THE DIRECTIONS OF THE TRIBUNAL. NOTICE ISSUED ONCE AGAI N U/S 148 OF THE ACT AND REASONS FOR ISSUANCE OF NOTICE ARE AS UNDER: ASSESSMENT U/S 147/143(3) OF THE ACT WAS MADE VIDE ORDER DATED 26.03.2014 AT AN INCOME OF RS. 3,13,660/- WHEREIN T HE CAPITAL LOSS ON SALE OF LAND WAS DETERMINED AT RS 42,918/- BY AD OPTING THE COST OF ACQUISITION OF LAND AT RS 33,84,880/-AS ON 01.04 .1981 AS PER CALCULATION GIVEN BELOW SALE CONSIDERATION OF LAND RS. 1,96,57,084/- LESS: INDEXED COST OF ACQUISITION AS ON 01.04.198133,84,8 80/100*582 = RS.1.97.00.002/- CAPITAL LOSS = RS. (-) 42,918/- LATER ON, PERUSAL OF THE HON'BLE I.T.A.T, NEW DELHI 'S ORDER DATED 26.09.2014 IN APPEAL NO. ITA NO. 1802/DEL/201 3 IN ASSESSEE'S CASE IN INDIVIDUAL STATUS FOR A.Y. 2009- 2010 IT IS REVEALED THAT THE ASSESSEE HAS SUBMITTED BEFORE THE I.T.A.T THAT 5 THE CAPITAL GAINS ON THE LAND IN QUESTION HAS BEEN BROUGHT TO TAX IN THE HANDS OF HUF AND THE HON'BLE ITAT HAS DIRECTED THE UNDERSIGNED TO VERIFY THE ISSUE. THE ASSESSEE HAS N OT CHALLENGED THE COST OF ACQUISITION OF THE LAND IN QUESTION AS ON 01.04.1981 AND CALCULATION OF CAPITAL GAINS AT RS 1,94,86,593/- IN INDIVIDUAL STATUS BEFORE THE HON'BLE ITAT. DURING ASSESSMENT PROCEEDI NGS U/S 143(3) DATED 14.12.2011 IN THE ASSESSEE'S INDIVIDUA L CASE THE COST OF ACQUISITION WAS DETERMINED AT RS 97/- PER MARLA AT THE RATE OF RS 15,520/- PER ACRE AS ON 01,04.1981 ON THE BASIS OF SALE INSTANCE AND THE TOTAL COST OF ACQUISITION OF THE LAND 15 KA NAL 2 MARLA (302 MARLA ) WAS DETERMINED AT RS 29,294/- (302*97/-) AN D THE INDEXED COST OF ACQUISITION OF THE LAND IN QUESTION WAS DET ERMINED AT RS 1,70,491/- (29294*582/100= 1,70,491/-). THE LONG-TE RM CAPITAL GAIN WAS WORKED OUT AT RS. 1,94,86,593/-(1,96,57,08 4/- 1,70,494/- =1,94,86,593/-). THEREFORE, IN COMPLIANCE OF HON'BL E ITAT'S ORDER THE CAPITAL GAINS IS TO BE CHARGED TO TAX IN HUF STATUS OF THE ASSESSEE BY APPLYING THE SAME COST OF ACQUISITI ON OF THE LAND IN QUESTION AS DETERMINED IN TFJE CASE OF INDIVIDUAL S TATUS FOR THE SAME ASSESSMENT YEAR. THUS, BY TAKING THE COST OF A CQUISITION OF THE LAND AS ON 01.04.1981 AS,THAT DETERMINED IN THE INDIVIDUAL STATUS OF THE ASSESSEE VIDE ORDER U/S 143(3) DATED 19.12.2011 THE'LPNG-TERM CAPITAL GAINS IN HU SALE CONSIDERATION OF LAND 15 KANAL 2 MARIA (302 MA RLA) RS. 1,96,57,084/- LESS: COST OF ACQUISITION 29294/-(30297=29294/-) INDEXED COST = 170491/-(29294*582/100=170491/-) 6 RS. 1,70,491/- LONG TERM CAPITAL GAINS RS.1,94,86,593/- AS THE LONG-TERM CAPITAL GAIN HAS BEEN SHOWN AT CAP ITAL LOSS OF RS 42,918/- , THEREFORE, LONG-TERM CAPITAL GAIN TO THE EXTENT OF RS. 1,95,29,511/- (1,94,86,593 + 42,918/-= 1,95,29,511/ -) HAS ESCAPED ASSESSMENT. I, THEREFORE, HAVE REASON TO BELIEVE THAT INCOME OF THE ASSESSEE FROM LONG TERM CAPITAL GAIN TO THE EXTENT OF RS 1,9 5,29,511/- AS DISCUSSED ABOVE AND ANY OTHER INCOME WHICH SUBSEQUE NTLY COMES TO THE NOTICE OF THE UNDERSIGNED HAS ESCAPED ASSESSMEN T WITHIN THE MEANING OF SECTION 147 OF THE I.T. ACT, 1961. 7. AS MENTIONED ELSEWHERE, EARLIER ALSO, A NOTICE U /S 148 WAS ISSUED AND SERVED UPON THE ASSESSEE AND ASSESSMENT WAS COM PLETED VIDE ORDER DATED 26.03.2014. THE ORDER OF THE TRIBUNAL IS 26.09.2014 AND THE DIRECTIONS OF THE TRIBUNAL ARE VERY CLEAR THAT THE ASSESSING OFFICER HAD TO VERIFY WHETHER THE CAPITAL GAINS HAVE BEEN T AXED IN THE HANDS OF THE HUF OR NOT AND ASSESSMENT ORDER DATED 26,03,201 4 CLEARLY SHOWS THAT ASSESSMENT HAS BEEN COMPLETED IN THE HANDS OF THE HUF. 7 8. IN OUR CONSIDERED OPINION, ONCE ASSESSMENT HAS B EEN REOPENED TO TAX CAPITAL GAIN IN THE HANDS OF THE HUF, TO AVOID DOUBLE TAXATION THE TRIBUNAL IN THE HANDS OF THE INDIVIDUAL HAS SIMPLY DIRECTED THE ASSESSING OFFICER TO VERY WHETHER THE HUF HAS BEEN ASSESSED OR NOT. THE TRIBUNAL NOWHERE DIRECTED THE ASSESSING OFFICER TO REOPEN THE ASSESSMENT AND MAKE THE IMPUGNED ADDITIONS. IN OUR HUMBLE OPINION, THE ASSESSING OFFICER HAS TOTALLY MISINTERPRETED TH E DIRECTIONS OF THE TRIBUNAL AND GROSSLY ERRED IN ONCE AGAIN REOPENING THE ASSESSMENT ON THE SAME SET OF FACTS WHICH HAVE ALREADY BEEN CONSI DERED WHILE FRAMING ASSESSMENT ORDER DATED 26.03.2014 IN THE HA NDS OF THE HUF. THEREFORE, WE HAVE NO HESITATION TO SET ASIDE THE N OTICE U/S 148 OF THE ACT, THEREBY QUASHING THE ASSESSMENT ORDER FRAMED P URSUANT TO THE SAID NOTICE. ACCORDINGLY, GROUND NOS. 1 TO 1.3 T AKEN TOGETHER ARE ALLOWED. 9. SINCE WE HAVE QUASHED THE ASSESSMENT ORDER ITSEL F, WE DO NOT FIND IT NECESSARY TO DWELL INTO THE MERITS OF THE C ASE. 8 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN IT A NO. 3935/DEL/2017 IS ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 11.06 .2020. SD/- SD/-/- [SUCHITRA KAMBLE ] [N.K. BILLAIYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 11 TH JUNE, 2020. VL/ COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT ASST. REGISTRAR 4. CIT(A) ITAT, NEW DELHI 5. DR 9 DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.PS/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER