Sh. Sandeep Bhargava (HUF), Chandigarh V. DCIT, C-1(1), Chandigarh

ITA 43/CHANDI/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 9667 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-07-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 22-01-2020
• Assessment Year: 2012-2013
• Appeal Filed On: 10-01-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GEETINDER MANN ACIT
• Keywords: Capital asset; Rectification of order; Difference of opinion; Change of opinion; Set aside
• Section: 143(3); 54B; 54F; 254(2); 54; 154

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, B, CHANDIGARH . . , , BEFORE SHRI N.K. SAINI, VICE PRESIDENT & SHRI SANJAY GARG, JUDICIAL MEMBER ./ ITA NO.43/CHD/2019 / ASSESSMENT YEAR : 2012-13 SHRI SANDEEP BHARGAVA (''HUF') H. NO. 718, SECTOR 8B, CHANDIGARH ! THE DCIT, CIRCLE-1(1) CHANDIGARH ' # ./PAN NO: AAWHS9024A '$/ APPELLANT &''$ /RESPONDENT ()*+ /ASSESSEE BY : SHRI ASHWANI KUMAR, CA *+ / REVENUE BY : SMT. GEETINDER MANN, ACIT , -*) .# /DATE OF HEARING : 22.01.2020 /0 *) .# / DATE OF PRONOUNCEMENT : 2020 / ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER DATED 20.11.2018 OF THE COMMISSIONER OF INCO ME TAX (APPEALS)- 1, CHANDIGARH [HEREINAFTER REFERRED TO AS CIT (A) ]. 2. THE ASSESSEE IN THIS APPEAL HAS TAKEN FOLLOWING GROUNDS OF APPEAL: 1. THAT THE ORDER PASSED U/S 250(6) BY THE LD. CIT(A)- 1, CHANDIGARH IN APPEAL NO. 10098/17-18 DATED 20.11.2018 IS CONTRARY TO LAW AND FACTS OF THE CASE . ITA NO. 43-CDH-2019 SHRI SANDEEP BHARGAVA ('HUF'), CHANDIGARH 2 2. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E LD. CIT(A) GRAVELLY ERRED IN UPHOLDING THE ORDER PASSED BY THE LD. ASSESSING OFFICER U/S 154 OF THE INCOME TAX ACT, 1961 AS THE ISSUE OF ALLOWANCE OF BENEFIT UNDER SECTION 54B OF THE INCOME TAX ACT, 1961 WAS INVESTIGATED BY THE LD. ASSESSING OFFICER DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS AND HAS WRONGLY HELD THAT IT IS A MISTAKE APPARENT FORM THE RECORD. IT IS NOT COVERED U/S 54 OF THE INCOME TAX ACT, 1961. 3. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E LD. CIT(A) GRAVELLY ERRED IN UPHOLDING THE ACTION OF THE LD. ASSESSING OFFICER WHO DISALLOWED DEDUCTION OF RS. 2,58,80,697/- CLAIMED UNDER SECTION 54B OF THE INCOME TAX ACT, 1961 BY INVOKING THE PROVISIONS OF SECTION 154 OF THE INCOM E TAX ACT, 1961. 4. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E LD. CIT(A) GRAVELY ERRED IN UPHOLDING THE ACTION OF THE LD. ASSESSING OFFICER WHO HAS WITHDRAWN DEDUCTION U/S 54B OF THE INCOME TAX ACT, 1961. 5. THE APPELLANT CRAVES LEAVE TO ADD OR AMEND OR ALTER ANY GROUND OF APPEAL BEFORE OR AT THE TIME OF HEARING OF APPEAL, WITH THE PERMISSION OF THE HON'BLE INCOME TAX APPELLATE TRIBUNAL . 3. THE ASSESSEE IN THIS APPEAL IS AGGRIEVED BY THE ACTION OF THE ASSESSING OFFICER WHICH IS FURTHER CONFIRMED BY TH E CIT(A) IN DENYING DEDUCTION CLAIMED BY THE ASSESSEE U/S 54B OF THE I NCOME TAX ACT BY WAY OF RECTIFICATION ORDER PASSED U/S 154 OF THE IN COME TAX ACT, 1961 (IN SHORT 'THE ACT'). ITA NO. 43-CDH-2019 SHRI SANDEEP BHARGAVA ('HUF'), CHANDIGARH 3 4. THE BRIEF FACTS RELEVANT TO THE ISSUE ARE THAT T HE ASSESSEE, AN 'HUF'(HINDU UNDIVIDED FAMILY) FILED ITS RETURN OF I NCOME DECLARING TOTAL INCOME OF RS. 69,59,360/-, WHEREIN, DEDUCTI ONS U/S 54B AND 54F OF THE ACT HAVE BEEN CLAIMED BY THE ASSESSEE. SCRU TINY ASSESSMENT PROCEEDINGS WERE CARRIED OUT U/S 143(3) OF THE ACT. THE ASSESSING OFFICER DISALLOWED ADDITION TO AN EXTENT OF RS. 2,2 8,247/- OUT OF TRANSFER EXPENSES / IMPROVEMENT COST, HOWEVER, ACC EPTED THE CLAIM OF DEDUCTION U/S 54B OF THE INCOME TAX ACT. LATER ON , THE AO VIDE ORDER DATED 5.7.2017 PASSED U/S 154 OF THE ACT REJ ECTED THE CLAIM OF DEDUCTION OF THE ASSESSEE U/S 54B OF THE ACT OBSE RVING THAT THE ASSESSEE BEING 'HUF' WAS NOT ENTITLED TO CLAIM OF D EDUCTION U/S 54B OF THE ACT ON ACCOUNT OF REINVESTMENT MADE IN PURCHAS E OF AGRICULTURAL LAND AS THE SAME FOR THE ASSESSMENT YEAR UNDER CONS IDERATION I.E. ASSESSMENT YEAR 2012-13 WAS NOT AVAILABLE TO AN 'H UF'. AS PER THE PROVISIONS OF SECTION 54B OF THE ACT, AS APPLICABLE FOR A.Y. 2012-13, WHERE THE CAPITAL GAIN ARISES TO AN ASSESSEE FROM TRANSFER OF A CAPITAL ASSET BEING LAND, WHICH, IN T HE TWO YEARS IMMEDIATELY PRECEDING THE DATE ON WHICH TRANSFER TO OK PLACE, WAS BEING USED BY THE ASSESSEE OR A PARENT OF HIS FOR AGRIC ULTURAL PURPOSE AND THE ASSESSEE HAS, WITHIN A PERIOD OF TWO YEARS AFTE R THAT DATE, PURCHASED ANY OTHER LAND FOR BEING USED FOR AGRICULTURAL PURP OSES, THEN, THE DEDUCTION PROVIDED U/S 54B OF THE ACT IS AVAILABLE TO SUCH AN ASSESSEE. HOWEVER, FOR THE ASSESSMENT YEAR 2013-14 ONWARDS V IDE FINANCE ACT, ITA NO. 43-CDH-2019 SHRI SANDEEP BHARGAVA ('HUF'), CHANDIGARH 4 2012 W.E.F. 1.4.2013, THE 'HUF' HAS ALSO BEEN ADDE D AS ELIGIBLE FOR CLAIMING DEDUCTION. THE ASSESSING OFFICER IN THIS CASE OBSERVED THAT SI NCE THE ASSESSMENT YEAR UNDER CONSIDERATION WAS ASSESSMENT YEAR 2012-13, HENCE, SUCH DEDUCTION WAS AVAILABLE ONLY TO AN INDI VIDUAL ASSESSEE ON THE LAND USED FOR AGRICULTURAL PURPOSES BY HIM OR A PARENT OF HIS. ON THE OTHER HAND, THE CONTENTION OF THE LD. COUNSEL F OR THE ASSESSEE HAS BEEN THAT THE AMENDMENT CARRIED OUT TO SECTION 54B MAKING THE DEDUCTION AVAILABLE TO AN 'HUF' ALSO, IS CLARIFICAT ORY AND CURATIVE IN NATURE, HENCE, THE SAME IS TO BE APPLIED RETROSPECT IVELY. THE ASSESSING OFFICER, HOWEVER, OBSERVED THAT THE SAID AMENDMENT WAS PROSPECTIVE IN NATURE. HE, THEREFORE, OBSERVED THAT A MISTAKE APPA RENT ON RECORD HAS OCCURRED IN THE ASSESSMENT ORDER DATED 17.3.2015 PA SSED BY HIM U/S 143(3) OF THE ACT IN ALLOWING THE DEDUCTION U/S 54 B OF THE ACT. HE, ACCORDINGLY PASSED THE IMPUGNED RECTIFICATION ORDER WITHDRAWING THE DEDUCTION U/S 54B OF THE ACT TO THE ASSESSEE. 5. BEING AGGRIEVED BY THE ABOVE RECTIFICATION ORDER PASSED BY THE ASSESSING OFFICER, THE ASSESSEE PREFERRED APPEAL BE FORE THE LD. CIT(A) BUT REMAINED UNSUCCESSFUL, HENCE, THIS APPEAL BEFOR E THIS TRIBUNAL. 6. THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED T HAT DEDUCTION ALREADY ALLOWED TO THE ASSESSEE IN THE SCRUTINY ASS ESSMENT PROCEEDINGS ITA NO. 43-CDH-2019 SHRI SANDEEP BHARGAVA ('HUF'), CHANDIGARH 5 U/S 143(3) OF THE ACT COULD NOT HAVE BEEN TAKEN BA CK BY ASSESSING OFFICER BY WAY OF RECTIFICATION ORDER PASSED U/S 1 54 OF THE ACT. HE HAS SUBMITTED THAT THE POWERS OF THE ASSESSING OFFICER TO RECTIFY AN ORDER U/S 154 OF THE ACT ARE VERY LIMITED AND THAT THIS C AN BE EXERCISED ONLY IN CASE OF A MISTAKE APPARENT ON RECORD. THAT THE ORDER CANNOT BE AMENDED / RECALLED OR REVISED ON A DEBATABLE ISSUE MERELY BECAUSE OF CHANGE OF OPINION OF THE ASSESSING OFFICER ON SUCH AN ISSUE. 7. ON THE OTHER HAND, THE LD. DR HAS SUBMITTED THAT SINCE AS PER THE FINANCE ACT 2012, THE AMENDMENT IN QUESTION HAS BEE N MADE APPLICABLE PROSPECTIVELY FROM 1.4.2013, THEREFORE, THE ASSESS ING OFFICER HAS RIGHTLY EXERCISED HIS POWERS U/S 154 OF THE ACT AND THAT THERE WAS NO ERROR IN THE IMPUGNED ORDER PASSED BY THE ASSESSING OFFICER. 8. WE HAVE HEARD THE RIVAL CONTENTIONS OF THE LD. A UTHORIZED REPRESENTATIVES OF BOTH THE PARTIES AND HAVE GONE T HROUGH THE RECORD. ADMITTEDLY, THE ISSUE RELATING TO AVAILABILITY OF DEDUCTION U/S 54B OF THE ACT WAS DULY EXAMINED BY THE ASSESSING OFFICER IN THE SCRUTINY ASSESSMENT PROCEEDINGS CARRIED OUT U/S 143(3) OF TH E ACT AND HE AFTER CONSIDERING THE CLAIM OF THE ASSESSEE HAD ALLOWED T HE SAME MAKING SOME DISALLOWANCES OUT OF THE IMPUGNED EXPENSES ETC . IT IS NOT A CASE WHERE THE ASSESSING OFFICER HAD NOT APPLIED HIS MIN D TO THE ISSUE UNDER CONSIDERATION. HOWEVER, LATER ON, THE ASSESSING OF FICER CONFIRMED THE ITA NO. 43-CDH-2019 SHRI SANDEEP BHARGAVA ('HUF'), CHANDIGARH 6 VIEW THAT THE DEDUCTION WAS NOT ALLOWABLE TO AN 'HU F' FOR THE ASSESSMENT YEAR 2012-13 AS THE SAME HAS BEEN MADE A VAILABLE TO A 'HUF' BY FINANCE ACT 2012 W.E.F. 1.4.2013. HE, TH EREFORE, HELD THAT A MISTAKE APPARENT ON RECORD HAD OCCURRED IN THE ASSE SSMENT ORDER DATED 17.3.2015 PASSED U/S 143(3) OF THE ACT. HOWEVER, WE FIND FROM THE PROVISIONS OF SECTION 54 B OF THE ACT, AS APPLICABLE FOR ASSESSMENT YEAR 2012-13, THAT TH E SAME ARE LOOSELY WORDED. THE RELEVANT PART OF THE SAID PROVISIONS IS REPRODUCED AS UNDER:- CAPITAL GAIN ON TRANSFER OF LAND USED FOR AGRICULT URAL PURPOSES NOT TO BE CHARGED IN CERTAIN CASES. 54B. [(1)] [SUBJECT TO THE PROVISIONS OF SUB-SECTION ( 2), WHERE THE CAPITAL GAIN ARISES] FROM THE TRANSFER OF A CAPITAL ASSET BEING LAND WHICH, IN THE TWO YEARS IMMEDIATELY PRECEDING THE DATE ON WHICH THE TRANSFE R TOOK PLACE, WAS BEING USED BY THE ASSESSEE OR A PAR ENT OF HIS FOR AGRICULTURAL PURPOSES [(HEREINAFTER REFERR ED TO AS THE ORIGINAL ASSET)], AND THE ASSESSEE HAS, WITHIN A PERIOD OF TWO YEARS AFTER THAT DATE, PURCHASED ANY OTHER L AND FOR BEING USED FOR AGRICULTURAL PURPOSES, THEN, INSTEAD OF THE CAPITAL GAIN BEING CHARGED TO INCOME-TAX AS INCOME OF THE PREVIOUS YEAR IN WHICH THE TRANSFER TOOK PLACE, IT SHALL BE DEALT WITH IN ACCORDANCE WITH THE FOLLOWING PROVISI ONS OF THIS SECTION, THAT IS TO SAY, (I ) A PERUSAL OF THE ABOVE PROVISIONS REVEAL THAT DEDUC TION U/S 54B OF THE ACT IS AVAILABLE ITA NO. 43-CDH-2019 SHRI SANDEEP BHARGAVA ('HUF'), CHANDIGARH 7 (I) WHERE CAPITAL GAIN ARISES ON TRANSFER, OF A CAPITAL ASSET BEING THE LAND; (II) SUCH LAND WAS BEING USED FOR AGRICULTURAL PURPOSES BY THE ASSESSEE OR A PARENT OF HIS FOR THE LAST TWO YEARS, FROM THE DATE OF TRANSFER OF LAND ; (III) ASSESSEE HAS, WITHIN A PERIOD OF 2 YEARS AFTER THE DATE OF TRANSFER, PURCHASED ANY OTHER LAND FOR BEI NG USED FOR AGRICULTURAL PURPOSES. 9. A PERUSAL OF THE WORDING OF THE SECTION REVEALS THAT DEDUCTION U/S 54B IS AVAILABLE TO AN ASSESSEE IF THE LAND WAS USED FOR AGRICULTURAL PURPOSE BY THE ASSESSEE OR A PARENT OF HIS. OUR STR ESS IS ON THE WORD ASSESSEE WHICH HAS BEEN SUBSTITUTED WITH WORDS ASSESSEE BEING AN INDIVIDUAL IN THE AMENDED PROVISIONS. IN THE AMEN DED PROVISION W.E.F. 1.4.2013, THE RELEVANT WORDING IS IF THE CAPITAL A SSET BEING A LAND USED FOR AGRICULTURAL PURPOSES BY THE ASSESSEE BEING AN INDIVIDUAL OR PARENT OF HIS OR A HUF. IN THE AMENDED PROVISIONS, THE W ORD ASSESSEE HAS BEEN QUALIFIED WITH WORDS BEING AN INDIVIDUAL AND FURTHER 'HUF' HAS BEEN ADDED IN CATEGORY OF USERS OF THE LAND FOR AG RICULTURE PURPOSES FOR AN AS TO CLAIM DEDUCTION U/S 54B OF THE ACT. IN O UR VIEW, IT IS A HIGHLY DEBATABLE ISSUE WHETHER THE WORD ASSESSEE MEANS A N INDIVIDUAL ONLY OR IT INCLUDES AN 'HUF' ALSO IN THE PRE-AMENDMENT PRO VISIONS. IN THE AMENDED SECTION 54B OF THE ACT AS AMENDED BY FINANC E ACT 2012, IT HAS BEEN SPECIFICALLY MENTIONED THAT THE ASSESSEE BEIN G AN INDIVIDUAL OR HIS PARENT OR A HUF. HOWEVER, NO SUCH WORDS AS ASSES SEE BEING AN ITA NO. 43-CDH-2019 SHRI SANDEEP BHARGAVA ('HUF'), CHANDIGARH 8 INDIVIDUAL FINDS MENTION IN SECTION 54B PRIOR TO SUCH AMENDMENT, THE WORDING PRIOR TO AMENDMENT WAS, ASSESSEE OR A PAR ENT OF HIS. AS PER THE PROVISIONS OF THE INCOME TAX ACT, THE ASSESSEE INTER ALIA CAN BE AN INDIVIDUAL OR AN 'HUF' ALSO. MOREOVER, AS PER AMEND ED PROVISIONS DEDUCTION IS AVAILABLE TO THE ASSESSEE IF THE LAND IS USED FOR AGRICULTURAL PURPOSES BY THE ASSESSEE HIMSELF OR BY HIS PARENT OR AN 'HUF'. WHAT IS NOTED IS THAT AMENDMENT HAS BEEN C ARRIED OUT IN RESPECT OF USER OF THE LAND NOT IN RESPECT OF THE CLAIM ANT / ASSESSEE WHOSE INCOME IS ASSESSED. IT IS ALSO A WELL-KNOWN FACT TH AT IN THE LAND RECORD MAINTAINED BY THE LAND REVENUE DEPARTMENT, OWNERSHI P OF PROPERTY IS ENTERED IN THE NAME OF AN INDIVIDUAL AND NOT IN TH E NAME OF 'HUF' AND THAT THE 'HUF' CLAIM OF OWNERSHIP OVER SUCH A PROP ERTY BY VIRTUE OF THE PROPERTY BEING ANCESTRAL AND PUT INTO THE COMMON HO TCHPOTCH OF THE FAMILY. UNDER THE CIRCUMSTANCES, THE ISSUE BEING HI GHLY DEBATABLE AND REQUIRES LENGTHY ARGUMENTS. IT IS A SETTLED LAW THAT POWERS OF THE ASSESSING OF FICER TO RECTIFY AN ORDER U/S 154 ARE VERY LIMITED AND CAN BE EXERCI SED ONLY IN A CASE WHERE THE ASSESSING OFFICER FINDS THAT A MISTAKE AP PARENT ON RECORD HAD OCCURRED. HOWEVER, IN THE CASE OF A DEBATABLE ISSUE OR WHERE THE LENGTHY ARGUMENTS ARE NEEDED TO DECIDE THE ISSUE, P OWERS U/S 154 OF THE ACT CAN NOT BE EXERCISED TO AMEND AN ALREADY PASSED ORDER. IT HAS ALSO BEEN HELD TIME AND AGAIN THAT POWERS U/S 154 OF THE ACT CANNOT BE ITA NO. 43-CDH-2019 SHRI SANDEEP BHARGAVA ('HUF'), CHANDIGARH 9 EXERCISED ON CHANGE OF OPINION BY THE ASSESSING OFF ICER ON AN ISSUE RELATING TO ANY ADMISSIBILITY OF A CLAIM. 10. THE ASSESSING OFFICER, THUS, IN OUR VIEW WAS, N OT JUSTIFIED IN PASSING THE IMPUGNED ORDER U/S 154 OF THE ACT WITH LIMITED JURISDICTION OF RECTIFICATION OF ORDER IN THE CASE OF A MISTAKE APPARENT ON RECORD IN THE ORDER. THE HON'BLE BOMBAY HIGH COURT IN THE CA SE OF COMMISSIONER OF INCOME-TAX VS RAMESH ELECTRIC AND TRADING CO. (1993) 203 ITR 497 (BOM.), WHEREIN, THE HON'BLE HIG H COURT WHILE RELYING UPON THE DECISION OF THE HONBLE SUPREME CO URT IN THE CASE OF T. S. BALARAM, ITO V. VOLKART BROTHERS [1971] 82 ITR 50 AND FURTHER RELYING UPON THE DECISIONS OF THE VARIOUS HIGH COUR TS HAS CATEGORICALLY HELD THAT THE POWER OF RECTIFICATION UNDER SECTION 254(2) OF THE INCOME- TAX ACT CAN BE EXERCISED ONLY WHEN THE MISTAKE WHIC H IS SOUGHT TO BE RECTIFIED IS AN OBVIOUS AND PATENT; MISTAKE WHICH IS APPARENT FROM THE RECORD, AND NOT A MISTAKE WHICH REQUIRES TO BE ESTA BLISHED BY ARGUMENTS AND A LONG DRAWN PROCESS OF REASONING ON POINTS ON WHICH THERE MAY CONCEIVABLY BE TWO OPINIONS. THE SAID PROPOSITION CAN BE RIGHTLY APPLIED TO IDENTICAL PROVISIONS OF SECTION 154 OF T HE ACT DEALING WITH THE RECTIFICATION POWERS OF THE INCOME TAX AUTHORIT IES. 11. IN VIEW OF THIS, THE RECTIFICATION ORDER PASSED BY THE ASSESSING OFFICER AND FURTHER CONFIRMED BY THE CIT(A) CANNOT BE HELD TO BE JUSTIFIED. THEREFORE, THE IMPUGNED ORDERS OF THE CI T(A) AND THE ITA NO. 43-CDH-2019 SHRI SANDEEP BHARGAVA ('HUF'), CHANDIGARH 10 ASSESSING OFFICER ARE HEREBY SET ASIDE AND THE ORIG INAL ORDER PASSED BY THE ASSESSING OFFICER DATED 17.3.2015 U/S 143(3) OF THE ACT IS HEREBY RESTORED. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS AL LOWED. ORDER COULD NOT BE PRONOUNCED EARLIER DUE TO NON-FU NCTIONING OF THE BENCH ON ACCOUNT OF CURFEW / LOCKDOWN IN THE WA KE OF COVID-19 PANDEMIC. ORDER PRONOUNCED ON 06.07.2020. SD/- SD/- ( . . / N.K. SAINI) ( ! ' / SANJAY GARG) #$% / VICE PRESIDENT &' / JUDICIAL MEMBER DATED : 06.07.2020 .. 2*&)34 54) / COPY OF THE ORDER FORWARDED TO : 1. '$ / THE APPELLANT 2. &''$ / THE RESPONDENT 3. , 6) / CIT 4. , 6) ( )/ THE CIT(A) 5. 47 &)8 , .8 , 9:;< / DR, ITAT, CHANDIGARH 6. ;= - / GUARD FILE 2 , / BY ORDER, > / ASSISTANT REGISTRAR