SHRI HARDIP SINGH BADWAL, HOSHIARPUR V. INCOME TAX OFFICER WARD-2, HOSHIARPUR

ITA 554/ASR/2019

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 5339 (ITAT-AMRITSAR)
• Duration Of Justice: 3 year(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 21-08-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASSESSEE ADDITION OF REDEEMED
• Keywords: Capital Gains
• Section: 148; 133(6); 250

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR. BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER AND SH. ANIKESH BANERJEE, JUDICIAL MEMBER I.T.A. No.554/Asr/2019A ssessment Years: 2011-12 Sh. Hardip Singh Badwal, S/o Sh Ajit Singh, Hoshiarpur. [PAN:-BGAPB6180R] (Appellant) Vs. Income Tax Officer, Ward-2, Hoshiarpur. (Respondent) Appellant by Sh. J. S. Bhasin, Adv. Respondent by Sh.Ghansham Sharma, Sr. DR. Date of Hearing 13.09.2022 Date of Pronouncement 20.09.2022 ORDER Per:Anikesh Banerjee, JM: The instant appeal of the assessee is directed against the order of the ld. Commissioner of Income Tax (Appeals)-1, Jalandhar, [in brevity the ld. CIT(A)] bearing appeal no. CIT(A)-1/JAL/10228/18-19,date of order 20.06.2019, the order passed u/s 250 (6) of the Income Tax Act 1961, [in brevity the Act] for A.Y. 2011- 12.The impugned orderswas originated from the order of the Income Tax Officer, I.T.A. No. 554/Asr/2019 2 Ward-2, Hoshiarpur, (in brevity the AO) order passed u/s 143 (3) /148of the Act date of order 19.12.2018 for A.Y. 2011-12. 2. The brief fact of the case is that the assessee’s case was reopened u/s 148 with recorded reason that the premature surrendered of policy amount Rs.34,64,715/- deposited in assessee’s bank account. The information was received from the DIT (Intelligence & Criminal Investigation). The assessee invested in Bajaj Insurance as premium Rs.10 lac and premature amount was received during the F.Y.2010-11. As per section 80CCB to the ld. AO added back the amount with the total income of the assessee. Being aggrieved assessee filed an appeal before the ld. CIT(A), by challenging both the legal and factual issues. The ld. CIT(A) upheld the order of the ld. AO. 3. Being aggrieved assessee filed an appeal before us. 4. The ld. Counsel for the assessee filed a written submission which is containing page nos. 1 to 8 which is kept in the record. Ld. Counsel argued that the assessee invested Rs.10 lac in Bajaj Insurance as premium on F.Y. 2006-07on dated 19.03.2007 in Bajaj Allianz Equity Growth Pension Fund. And switch out all these funds on 18.05.2007 with a sum of Rs.10,61,000/- and re-invested the enhanced amount in Bajaj Allianz Liquid Pension Fund. Finally he I.T.A. No. 554/Asr/2019 3 redeem/surrendered the fund and received the amount Rs.34,64,715/- on dated 23.07.2010. He further argued that the ld. AO wrongly treated the section 80CCB(2) and brought entire amount in the tax. The assessee was agriculturist and had not got any benefit of deduction u/s 80CCB(1) for the A.Y. 2007-08 because the assessee had not filed any return of income during the assessment year. So, the section 80CCB(2) will not be applicable for assessee for addition of redeemed amount. 4.1 The ld. Counsel further argued on the legal issue related to proceeding u/s 148 of the Act. He explained that merely because there was a credit in bank account and the information had travelled from DIT( I. & C. I.) as noted in the very opening para of the impugned order, the reopening U/s 148 is uncalled for. The first para of the assessment order is extracted as below:- “The information in the case of assessee Sh. Hardip Singh Badyal S/o Sh. Ajit Singh, Vill. Brahmjit P.O. Hardokhanpur that was receieved from from the DIT (Intelligence &Criminal Investigation) that during the FY 2010-11, the assessee Sh. Hardeep Singh Badwal had carried out huge financial transaction by way of making payment to Bajaj Insurance as premium of Rs. 10,00,000/- and also surrender premature I.T.A. No. 554/Asr/2019 4 policy and received Rs. 34,64,715/-. Since the assessee has not filed his return of income for the A.Y. 2011-12, so it could not be gathered that these investments / transactions have been from his disclosed sources and offered for taxation. The enquiry letter was issued to assessee for verification vide this office letter dated 16.03.2018 as the approval was already obtained u/s 133(6) of The Income Tax Act 1961 by ITO (I&CI) Ludhiana. This letter remained un-complied with. Subsequently a notice under section 148 of the Income Tax Act 1961 was issued to assessee on 27.03.2018 with prior approval of worthy Pr. Commissioner of Income Tax-1, Jalandhar, which was conveyed vide his office letter no. Pr.CIT-l/JAL/Tech./2017- 18/5240 dated 27.03.2018. The letter remains uncompiled with. Neither the assessee nor any his authorised representative filed any return of his income in response to the notice.” 4.2 So, the recorded reason is borrowed satisfaction and in that case the entire recorded reasons is bad in law and the assessment is erroneous. 5. The ld. Sr. DR relied on the order of the revenue authorities and argued that section 80CCB(2) is applicable for surrendering the Insurance Pension Fund in the I.T.A. No. 554/Asr/2019 5 year which it is received. But the ld. Sr. DR has not made any strong argument against the legal point of the assessee. 6. We have heard both the parties, perused material available on record. In the factual matrix we are in the opinion that the assessee is under perview of section 80CCB(2) after receiving the surrendered amount. As per the ld. Council, section 80CCB(2) will be in action when the assessee will avail the benefit of Section 80CCB(1) of the Act. The deduction can be vailed automatic. That cannot be the reason for non-application of Section 80CCB(2) as the assessee had not filed the return of income for AY 2007-08 & had not availed the benefit. But the revenue had wrongly determined the tax on 80CCB(2) without giving effect of section 45(6) of the Act. On repurchase or redemption, the principal amount which had been allowed as a deduction under section80CCB was exigible to tax as income by virtue of section80CCB(2). The premium on repurchase or redemption of such units is deemed to be a capital gain under section 45(6). Section 45(6) provides that the difference between the repurchase price of the units and the amount invested therein shall be deemed to be the capital gains arising to the assessee in the previous year in which such repurchase takes place, etc. and taxed accordingly. It is a trite law. By virtue of section 45(6) difference between the repurchase price of I.T.A. No. 554/Asr/2019 6 the units and the amount invested therein is deemed to be a capital gain. Once it is deemed to be a capital gain, all the provisions relatable to the computation of capital gain to be applied for ascertaining the true capital gain or loss. If other sub- sections of section 45 are analysed, it is seen that they are merely charging sections. From this it appears that section 45 lays down the tenets for the charge of capital gains tax. The computation of that tax is to be done in accordance with the modus prescribed under section 48. The benefit of indexation of cost of such units should thus be made available on repurchase or redemption of such units. In fact the entire amount was received u/s 80CCB(2) is not liable to be taxed in the hands of the assessee. The ld. Counsel for the assessee argued the legal issue & pointed out that the information was received from AIR Data base and the issue was agitated before the appellate authority. But the CIT(A) had not passed any speaking order against the assessee’s submissions. The fact related application section 45(6) was also had not discussed by any of the revenue authorities. Considering the veracity of the legal position& application of charging section related calculation of tax, the matter is setting aside to ld. CIT(A) for speaking order. Accordingly, the matter is setting aside to the ld. CIT(A) for further adjudication and is directed to pass a speaking order related to the legal point for I.T.A. No. 554/Asr/2019 7 reopening of u/s 148 on basis of the AIR Information& calculation of income under perview of section 45(6) of the Act. Needless to say, the assessee should get a reasonable opportunity for substantiate his claim and the revenue should accept and adjudicate the documents which will be filed by the assessee during the proceeding. 7. In the result, the appeal bearing ITA 554/Asr/2019 is allowed for statistical purposes. Order pronounced in the open court on 20 .09.2022 Sd/- Sd/ (Dr. M. L. Meena) (ANIKESH BANERJEE) Accountant Member Judicial Member AKV Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T. True Copy By Order