ITO, Ward-1(3), V. Noothi Singh,

ITA 3945/DEL/2001

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69202 (ITAT-DELHI)
• Duration Of Justice: 11 year(s) 9 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 01-08-2013
• Assessment Year: 1998-1999
• Appeal Filed On: 01-11-2001
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Valuation report
• Section: 54B; 54F; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D NEW DELHI BEFORE SHRI R.P. TOLANI AND SHRI SHAMIM YAHYA ITA NO. 3944/DEL/2001 ASSTT. YR: 1998-99 INCOME-TAX OFFICER, VS. SMT. CHHOTTAN W/O SH. KI SHAN SINGH WARD 1(3), FARIDABAD. VILL. JHARSAINTLY, FARIDABA D. APPELLANT BY : SHRI SUNIL GAUTAM DR RESPONDENT BY : NONE AND ITA NO. 3945/DEL/2001 ASSTT. YR: 1998-99 INCOME-TAX OFFICER, VS. SH. NATHI SINGH S/O SH. JAGAN NATH WARD 1(3), FARIDABAD. VILL. JHARSAINTLY, FARIDABA D. ( APPELLANT ) ( RESPONDENT ) APPELLANT BY : SHRI SUNIL GAUTAM DR RESPONDENT BY : SHRI NATHI SINGH (ASSESSEE) O R D E R PER R.P. TOLANI, J.M : THESE ARE TWO REVENUES APPEALS IN THE CASES OF DIF FERENT ASSESSEES. ISSUE BEING COMMON BOTH THE APPEALS ARE HEARD TOGET HER AND DISPOSED OF BY THIS CONSOLIDATED ORDER. NONE PUT IN APPEARANCE ON BEHALF OF THE ASSESSEE SMT. CHHOTTAN, CONSEQUENTLY, WE PROCEED TO DISPOSE OF THE APPEAL IN HER CASE, EX PARTE, QUA THE ASSESSEE AFTHER HEARING THE LD. DR AND PERUSAL OF RECORD. 2. COMMON GROUNDS RAISED IN BOTH THE APPEALS ARE AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE :- ITA 3944 & 3945/DEL/2001 SMT. CHHOTTAN & NATHI SINGH 2 (I) THE CIT(A) HAS ERRED IN HOLDING THAT EVEN THE I NTEREST AMOUNT RECEIVED ON ENHANCED COMPENSATION, WHICH IS COVERED BY SECURITY, SHOULD NOT BE TAXED IN THE YEAR OF ACT UAL RECEIPT EVEN WHEN THE ASSESSEE HAS ADOPTED RECEIPT METHOD O F ACCOUNT. (II) THE CIT(A) HAS ERRED IN HOLDING THAT AMOUNT OF ENHANCED COMPENSATION IN RESPECT OF WHICH SECURITY HAS BEEN OFFERED IS NOT TO BE TAXED IN THE YEAR OF RECEIPT. (III) THE CIT(A) HAS ERRED IN HOLDING THAT DEDUCTIO N U/S 54F BE ALLOWED AGAINST THE INCOME WHICH HAS BEEN CHARGE D TO TAX AFTER EXCLUDING THAT PART OF INCOME FOR WHICH SECUR ITY HAS BEEN OFFERED. 3. BRIEF FACTS ARE: BOTH THE ASSESSEES ARE AGRICULT URISTS AND RECEIVED ADDITIONAL COMPENSATION IN A DISPUTE FOR LAND ACQUI RED EARLIER BY HUDA. AS PER THE ORDER OF HONBLE PUNJAB & HARYANA HIGH COUR T, IF MORE THAN 50% OF THE COMPENSATION OR INTEREST WAS AWARDED TO THE PAR TY THEN AN UNDERTAKING WAS TAKEN FROM THE RECIPIENTS BY THE HUDA THAT IF ANY HIGHER COURT ALTERS THE ADDITIONAL COMPENSATION ORDER, THE CONSEQUENT R EDUCTION OF COMPENSATION WAS TO BE REFUNDED IMMEDIATELY TO GOVT . TILL THE FINAL VERDICT OF THE HIGH COURT WAS RENDERED. THE AMOUNT OF ADDIT IONAL COMPENSATION WAS THUS GIVEN ONLY AFTER FURNISHING 50% OF THE SEC URITY BY WAY OF DEPOSITING IT IN THE COURT BY THE RECIPIENTS. THUS, IN EFFECT THE ASSESSEE RECEIVED 50% OF THE ADDITIONAL COMPENSATION AS ORDE RED BY THE COURT, WHICH WAS FURTHER CHALLENGED BY HUDA IN APPEAL. THE ASSE SSEE OFFERED THE CAPITAL GAINS ACCORDING TO ACTUAL RECEIPTS I.E. MINUS SECUR ITY DEPOSIT. ASSESSING ITA 3944 & 3945/DEL/2001 SMT. CHHOTTAN & NATHI SINGH 3 OFFICER PROPOSED TO TAX THE ENTIRE CAPITAL GAINS. A SSESSEE REPLIED THAT AS CAPITAL GAINS AWARDED TO ASSESSEE HAD NOT BECOME FI NAL, THEY WERE CONTINGENT AND THE AWARD COULD BECOME FINAL ONLY ON THE FINAL DECISION OF HONBLE PUNJAB & HARYANA HIGH COURT. 4. THE ASSESSEE FURTHER PLEADED THAT SUCH COMPENSAT ION WAS NEITHER A CAPITAL NOR RECEIVE RECEIPT AND THE AMOUNT WAS GIVE N TO ASSESSEE AS AMANAT, THEREFORE, IT WAS NOT LIABLE TO TAX. . RE LIANCE WAS PLACED ON THE RATIO OF DECISIONS IN THE CASES OF CIT UP VS. HIRA LAL MITTAL & SONS 86 ITR 463; AND CIT WEST BENGAL VS. HINDUSTAN HOUSING & DE VELOPMENT TRUST 161 ITR 524. ASSESSING OFFICER, HOWEVER, HELD THE E NTIRE AMOUNT OF ADDITIONAL COMPENSATION TO BE LIABLE FOR CAPITAL G AINS AND ASSESSEES CLAIM OF EXEMPTION U/S 54F WAS ALSO DENIED BY FOLLOWING O BSERVATIONS: SECTION 54F FURTHER PROVIDES THAT NO OTHER HOUSE S HOULD BE OWNED BY THE ASSESSEE IF EXEMPTION UNDER THIS SECTI ON IS CLAIMED. IN THIS REGARD THE ASSESSEE HAS FAILED TO FURNISH ANY DOCUMENTARY EVIDENCE REGARDING THE SINGLE HOUSE AND IT IS HIGHLY IMPOSSIBLE THAT THE ASSESSEE WAS NOT HAVING ANY HOUSE BEFORE THE CONSTRUCTION OF THIS HOUSE AND IF ANY RE NOVATION HAS BEEN CARRIED ON THIS HOUSE IT WAS VERY VITAL FOR TH E ASSESSEE TO HAVE FURNISHED THE DOCUMENTARY EVIDENCES WITH COPIE S OF BILLS SO THAT THE NAMES AND ADDRESSES OF THE PARTIES COUL D HAVE BEEN VERIFIED. THE HOUSE WHICH HAS BEEN CLAIMED AS CONST RUCTED ON WHICH EXEMPTION HAS BEEN CLAIMED. FOR THIS THE ASSE SSEE OPTED TO FURNISH ONLY A COPY OF VALUATION REPORT WITHOUT FURNISHING ANY OTHER DETAILS WHICH HAVE BEEN CALLED FOR FROM T IME TO TIME AS IS EVIDENT FROM ORDER SHEET ENTRY DATED 24-1-200 1. MOREOVER UNDER SECTION 54F BENEFIT COULD HAVE BEEN CLAIMED B Y THE ITA 3944 & 3945/DEL/2001 SMT. CHHOTTAN & NATHI SINGH 4 ASSESSEE HAD HE CONSTRUCTED THE CLAIMED CONSTRUCTED HOUSE, ON THE RECEIPT OF ORIGINAL COMPENSATION WHICH WAS RECE IVED BY HIM LONG BACK, AS THE SECTION 54F SPEAKS SPECIFICALLY O F COMPENSATION AND NOT ADDITIONAL COMPENSATION. THE EXAMINATION OF THE CLAIMED VALUATION REPORT SHOWS T HAT THE CONSTRUCTION OF THE CLAIMED HOUSE HAS TAKEN PLACE D URING THE PERIOD WHICH FALLS UNDER THE PERIOD OF RECEIPT OF A DDITIONAL COMPENSATION. MOREOVER THE UTILIZATION OF THE COMPE NSATION PERIOD WISE IN DETAIL HAS NOT BEEN FURNISHED BY THE ASSESSEE., DESPITE REQUIREMENTS AS IS CLEAR FROM ORDER SHEET E NTRY DATED 24-01-2001. IN VIEW OF THE ABOVE ASSESSEE HAS FAILE D TO SUBSTANTIATE HIS CLAIM IN VIEW OF CONDITIONS LAID D OWN IN SUB SECTION 1 OF SECTION 54F OF THE I.T. ACT. ACCORDING LY, THE CLAIM OF THE ASSESSEE U/S 54F IS NOT ALLOWED. WITH REGARD TO THE ASSESSEES PLEA THAT THE ASSTT. PROCEEDINGS BE STOPPED TILL THE DECISION OF HONBLE HIGH COURT, I MAY STATE THAT INCOME TAX ASSESSMENT CANNOT BE HELD UP OR POS TPONED MERELY BECAUSE AN EXISTENCE OF A DISPUTE REGARDING TITLE OF INCOME. IN OTHER WORDS, RIVAL CLAIM OR A THREAT OF LITIGATION CANNOT BE REGARDED AS REDUCING THE INTEREST OF THE RECIPIENT TO A CONTINGENT BASIS. THE RECEIPT IS THEREFORE, CHARGEA BLE TO TAX THOUGH THERE MAY BE RIVAL CLAIM TO THE SOURCE OF IN COME (FRANKLIN VS. IRC 15 TC 464). AS THESE PROCEEDINGS ARE TIME BOUND AND THE LAW DOES NOT PERMIT OPEN ENDED STAY E XTENDING TO YEARS TILL THE MATTER SETTLED BY THE HIGH COURT. FURTHER REGARDING THE SUBMISSIONS OF THE ASSESSEE THAT HE IS AN ILLITERATE ASSESSEE, IT MAY PLEASE BE NOTED THAT TH ERE IS NO PROVISION IN THE LAW PROVIDING FOR SUCH EVENTUALITI ES. 5. AGGRIEVED, ASSESSEE PREFERRED FIRST APPEAL, WHER E CIT(A) HELD THAT SIMILAR ISSUE WAS DECIDED BY HIM IN ANOTHER CASE OF SHRI GAJAI SINGH S/O SHRI KHASAY RAM AND IN VIEW THEREOF DIRECTED THE A SSESSING OFFICER TO RECOMPUTED THE TAXABLE INCOME BY FOLLOWING OBSERVAT IONS: ITA 3944 & 3945/DEL/2001 SMT. CHHOTTAN & NATHI SINGH 5 3. THE LD. COUNSEL HAS RELIED AS PER GROUND NO. 4 ON THE FINDINGS GIVEN IN CIT(APPEALS) FARIDABADS ORDER DATED 27- 12-2000 IN A. NO. 466 TO 470/2000-01 IN THE CASE OF SHRI GAJAI SINGH S/O SHRI KHASAY RAM (HUF),JHARSAINTLY. BALLAB GARH FOR ASSESSMENT YEARS 1994-95 TO 1998-99. ON SIMILAR FAC TS AND CIRCUMSTANCES, SINCE IN THE PRESENT CASE ALSO THE A MOUNT OF COMPENSATION WAS GRANTED ON FURNISHING OF 50% SECUR ITY BY THE APPELLANT, PARA 7.4 OF THE SAID CIT(APPEALS) FARID ABADS ORDER IS FULLY APPLICABLE AND IS REPRODUCED BELOW:- (I) THE INCOME FROM CAPITAL GAINS AND INTEREST SHOULD BE CHARGED IN THE YEAR OF RECEIPT. (II) THE PERCENTAGE OF CAPITAL GAIN ARISING OUT OF PAYMENT WHICH IS COVERED BY SECURITY SHOULD NOT BE TREATED AS INCOME FOR THE YEAR BUT THE REMAINING BALANCE WHICH HAS BEEN UNCONDITIONALLY RELEASED SHOULD BE CHARGED TO INCOME FROM CAPITAL GAIN. SIMILAR WILL BE THE AMOUNT OF INTEREST PAID T O BE CHARGED TO TAX. (III) THE DEDUCTION U/S 54B & 54F OF I.T. ACT, 1961 SHOULD BE ALLOWED FROM THE DATE OF ACTUAL RECEIPT OF ENHANCED COMPENSATION TO THE APPELLANT AS PER LAW AGAINST THE INCOME WHICH HAS BEEN CHARGED TO TAX AS ABOVE. (IV) THE CREDIT OF TDS MADE MUST BE GIVEN TO THE APPELLANT AFTER NECESSARY VERIFICATION. (V) THE INTEREST UNDER SECTION 234A,234B & 234C SHOULD BE RECOMPUTED WHICH IS PURELY CONSEQUENTIAL. (VI) THE STATUS AS SHOWN BY THE APPELLANT SHOULD NOT BE CHANGED. (VII) TO AVOID DOUBLE TAXATION AND IN VIEW OF THE LEGAL POSITION, THE ASSESSMENTS FRAMED U/S 148 OF I.T. ACT 1961 FOR ASSESSMENT YEARS OTHER THAN ITA 3944 & 3945/DEL/2001 SMT. CHHOTTAN & NATHI SINGH 6 ASSESSMENT YEAR DURING WHICH PAYMENTS HAVE BEEN ACTUALLY RECEIVED ARE HEREBY CANCELLED. 4. THEREFORE, THE AO IS DIRECTED TO RECOMPUTED THE TAXABLE INCOME AND CHARGEABLE INTEREST ACCORDING TO LAW AS DISALLOWANCE ABOVE. 6. THE ASSESSEE SHRI NATHI SINGH APPEARED IN PERSON AND NONE PUT IN APPEARANCE ON BEHALF OF SMT. CHHOTAN DESPITE SEVERA L NOTICES. ACCORDINGLY, WE PROCEED TO DISPOSE OF THE APPEAL IN HER CASE, E X PARTE, QUA THE ASSESSEE. 7. LD. DR RELIED ON THE ORDER OF ASSESSING OFFICER AND CONTENDS THAT THE ADDITIONAL COMPENSATION AWARDED WAS GIVEN IN FAVOUR OF THE ASSESSEE, WHICH MEANS THAT THE CAPITAL GAINS HAD ACCRUED TO HIM AND MERE DEPOSITING OF SECURITY AMOUNT CANNOT REDUCE THE TAXABLE CAPITAL GAINS. 8. ON THE OTHER HAND, SHRI NATHI SINGH, THE ASSESSE E, IN VERNACULAR CONTENDS THAT HE IS NOT WELL VERSED WITH THE LAW BU T THE 50% OF AMOUNT HAS BEEN RETAINED BACK BY THE HIGH COURT. THEREFORE, IT WILL AMOUNT TO INJUSTICE TO TAX HIM ON THE AMOUNT WHICH HAS NOT BEEN RECEIVE D BY HIM. IT IS PLEADED THAT HE DOES NOT MAINTAIN ANY BOOKS OF ACCOUNTS. OR DER OF CIT(A) IS RELIED. 9. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LD. CIT(A) WHILE DIRECTING THE ASSESSIN G OFFICER FOR RECOMPUTATION OF CAPITAL GAINS HAS RELIED ON HIS PR EDECESSORS ORDER IN THE CASE OF SHRI GAJAI SINGH S/O SHRI KHASAY RAM (HUF). LD. DR COULD NOT ITA 3944 & 3945/DEL/2001 SMT. CHHOTTAN & NATHI SINGH 7 EXPLAIN WHETHER THE ORDER IN THE CASE OF GAJAI SING H HAS BEEN CHALLENGED BY THE REVENUE IN APPEAL OR NOT. IN VIEW THEREOF WE AR E INCLINED TO SET ASIDE THE ISSUE BACK TO THE FILE OF ASSESSING OFFICER TO VER IFY WHETHER THE CIT(A)S ORDER DATED 27-12-2000 REFERRED TO ABOVE IN THE CAS E OF GAJAI SINGH WAS CHALLENGED BY THE REVENUE BEFORE THE ITAT OR NOT. I F THERE IS ANY SUCH ORDER, THE ISSUE IN QUESTION MAY BE DECIDED ACCORDINGLY. I F THERE IS NO SUCH ORDER, IT INDICATES THAT THE REVENUE HAS ACCEPTED THIS DECISI ON AND THEN THE ISSUE MAY BE DECIDED AS DIRECTED BY THE CIT(A). WITH THESE OB SERVATIONS, THE REVENUES APPEALS ARE ALLOWED FOR STATISTICAL PURPOSES. 10. IN THE RESULT, REVENUES APPEALS ARE ALLOWED FO R STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 08-08-2013. SD/- SD/- ( SHAMIM YAHYA ) ( R.P. TOLANI ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 8 TH AUGUST 2013. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR