The Income Tax Officer, Bathinda V. Sh. Nirmal singh Kahlon, Bathinda

ITA 556/ASR/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7795 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-10-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 30-05-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 27-10-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ADARSH PAUL GUPTA LD
• Keywords: Capital asset; Revised return
• Section: 54F; 139(5); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR BEFORE SH.T.S. KAPOOR, ACCOUNTANT MEMBER AND SH.N.K.CHOUDHRY, JUDICIAL MEMBER I.T.A. NO.556(ASR)/2015 ASSESSMENT YEAR: 2007-08 INCOME TAX OFFICER, WARD-I(I), BATHINDA. VS. SH. NIRMAL SINGH KAHLON, S/O SH. KARAN SINGH KAHLON, B-5, CIVIL LINES, BATHINDA. PAN: AEHPK-8331F (APPELLANT) (RESPONDENT) APPELLANT BY: SH. CHARAN DASS, (LD. DR) RESPONDENT BY: SH. ADARSH PAUL GUPTA, (LD. ADV.) DATE OF HEARING: 27/09/2017 DATE OF PRONOUNCEMENT: 04/10/2017 ORDER PER N.K.CHOUDHRY, JM: THIS IS AN APPEAL FILED BY REVENUE AGAINST THE ORDE R OF LD. CIT(A), BATHINDA, DT.31.08.2015 FOR ASST. YEAR: 2007-08. 2. THE APPEAL WAS EARLIER HEARD ON 28.11.2016, HOWE VER THE ORDER COULD NOT BE PASSED WITHIN STIPULATED PERIOD AND TH EREFORE THE APPEAL WAS REFIXED FOR FRESH HEARING. THE REVENUE HAD FILE D APPLICATION FOR ADJOURNMENT BUT AFTER GOING THROUGH THE MATERIAL ON RECORD IT WAS OBSERVED THAT MATTER CAN BE DISPOSED OFF AS IT WAS A COVERED ISSUE. THEREFORE, ADJOURNMENT APPLICATION WAS REJECTED AND CASE WAS HEARD. ITA NO.556/ASR/2015 ASST. YEAR: 2007- 08 2 3. THE REVENUE HAS TAKEN VARIOUS GROUNDS OF APPEAL, HOWEVER, THE CRUX OF GROUNDS OF APPEAL IS THE ACTION OF LD. CIT( A), BY WHICH HE HAS DELETED THE PENALTY IMPOSED BY ASSESSING OFFICER U/ S 271(1)(C) OF THE ACT. 4. THE BRIEF FACTS OF THE CASE AS NOTED IN ASSESSME NT ORDER ARE THAT THE ASSESSEE IS A MEMBER OF THE PUNJABI CO-OPERATIV E HOUSE BUILDING SOCIETY AND OWNS 1000/- SQ. YDS. OF LAND IN THAT SO CIETY. THE ASSESSEE HAD SOLD HIS PIECE OF LAND THROUGH TRIPARTITE JOINT DEVELOPMENT AGREEMENT WITH M/S HASH BUILDERS (P) LTD., CHANDIGA RH AND M/S TATA HOUSING DEVELOPMENT COMPANY LTD., MUMBAI ON 25.02.2 007 FOR A TOTAL CONSIDERATION OF RS.1,65,00,000/-. BESIDES THE ABOV E CONSIDERATION, THE ASSESSEE WAS ALSO TO GET TWO FLATS OF 2250 SQ. FT. EACH AND THE VALUE OF THE TWO FLATS WAS TO THE TUNE OF RS.2,02,50,000/-. THEREFORE, FULL VALUE OF CONSIDERATION WORKED OUT TO BE RS.3,67,50,000/-. DU RING THE YEAR UNDER CONSIDERATION, THE ASSESSEE RECEIVED PART OF SALE C ONSIDERATION AND DID NOT RECEIVE FULL CONSIDERATION. THE ASSESSEE DID NOT DECLARE CAPITAL GAIN ON SALE OF SUCH LAND IN THE ORIGINAL RETURN OF INCO ME FILED ON 31.03.2008. THE NOTICE U/S 148 WAS ISSUED TO ASSESSEE ON 04.01. 2010, HOWEVER, BEFORE THE ISSUE OF NOTICE U/S 148 THE ASSESSEE AT HIS OWN HAD FILED REVISED RETURN OF INCOME ON 09.11.2009 DECLARING TH EREIN THE CAPITAL GAINS CALCULATED ON THE BASIS OF PROPORTIONATE AMOU NT OF SALE CONSIDERATION RECEIVED DURING THE YEAR. THE ASSESSM ENT OF THE ASSESSEE WAS COMPLETED ON 24.12.2010 AND AN ADDITION OF RS.3 ,54,20,685/- WAS MADE ON ACCOUNT OF LONG TERM CAPITAL GAINS ON ACCOU NT OF SALE OF LAND MEASURING 1000 SQ YARDS. THE SAID ADDITION WAS MAD E BY ASSESSING ITA NO.556/ASR/2015 ASST. YEAR: 2007- 08 3 OFFICER AFTER TAKING INTO ACCOUNT THE ENTIRE SALE C ONSIDERATION INCLUDING RECEIVABLE SALE CONSIDERATION. 4.1 THE ASSESSEE FILED APPEAL BEFORE LD. CIT(A), W HO CONFIRMED THE ADDITION AND ON FURTHER APPEAL THE HONBLE ITAT ALS O CONFIRMED THE ADDITION. THE ASSESSEE WAS SHOW CAUSED AS TO WHY TH E PENALTY U/S 271(1)(C) BE NOT IMPOSED. THE ASSESSEE IN RESPONSE FILED CERTAIN OBJECTIONS BUT THE ASSESSING OFFICER HELD THAT SINC E A PART OF SALE CONSIDERATION WAS RECEIVED BY ASSESSEE ON 24.02.200 7 AND THE AGREEMENT OF THE LAND DEVELOPMENT HAD ALREADY BEEN SIGNED ON 25.02.2007, THEREFORE, THE RECEIPT OF THIS SALE CON SIDERATION WAS PART PERFORMANCE OF THE CONTRACT, AND HELD THE SAME TO BE TRANSFER AS PER PROVISIONS OF SEC.2(47)(V) OF THE ACT AND HELD THA T ASSESSEE HAD NOT DECLARED FULL VALUE OF SALE CONSIDERATION. IN VIEW OF THE ABOVE, THE ASSESSING OFFICER IMPOSED A PENALTY TO THE TUNE OF RS.79,45,267/- BEING MINIMUM PENALTY @100% OF THE TAX SOUGHT TO BE EVADE D U/S.271(1)(C) OF THE ACT. 5. AGGRIEVED THE ASSESSEE FILED APPEAL BEFORE LD. CIT(A), AND SUBMITTED THAT LD. ASSESSING OFFICER HAD FAILED TO APPRECIATE THAT THE ASSESSEE HAD DECLARED CAPITAL GAINS CALCULATED ON P ROPORTIONATE BASIS IN THE REVISED RETURN FILED ON 09.11.2009 AND THERE FORE, THERE WAS NO CONCEALMENT OF INCOME. BASED UPON THE SUBMISSIONS, THE LD. CIT(A) DELETED THE PENALTY IMPOSED BY ASSESSING OFFICER. ITA NO.556/ASR/2015 ASST. YEAR: 2007- 08 4 6. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US. 7. AT THE OUTSET, LD. DR, HEAVILY PLACED HIS RELIAN CE ON THE ORDER OF ASSESSING OFFICER, WHEREAS THE LD. AR SUBMITTED THA T ASSESSEE HAD DECLARED CAPITAL GAIN IN RESPECT OF AMOUNT RECEIVED FROM TATA HOUSING DEVELOPMENT COMPANY IN THE RETURN FILED ON 9.11.200 9 AND SUBMITTED THAT NOTICE U/S 148 WAS ISSUED ON 04.01.2010 AND IN RESPONSE TO NOTICE U/S 148 THE RETURN FILED ON 9.11.2009 WAS REQUESTED TO BE TREATED AS RETURN FILED AND THEREFORE, THE LD. CIT(A) HAS RIGH TLY HELD THAT THIS WAS NOT A CASE OF FURNISHING OF WRONG PARTICULARS OF IN COME OR CONCEALMENT OF INCOME. THE LD. AR ALSO RELIED ON THE DECISION OF D ELHI BENCH OF ITAT, IN ITA NO. 2970/DEL/2012, WHEREIN THE HONBLE TRIBUNAL VIDE ORDER DATED 31.08.2012 HAD HELD THAT IF THE CORRECT INCOME IS D ECLARED IN A BELATED REVISED RETURN, PENALTY PROVISIONS OF SEC.271(1)(C ) WERE NOT ATTRACTED. 8. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GON E THROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT IN THE ORIGINAL RETU RN FILED BY ASSESSEE, THE ASSESSEE HAD NOT DECLARED CAPITAL GAIN ON PROPORTIO NATE AMOUNT RECEIVED BY HIM. HOWEVER, THE ASSESSEE DECLARED CAPITAL GAIN CALCULATED ON THE BASIS OF PROPORTIONATE AMOUNT RECEIVED DURING THE Y EAR IN REVISED RETURN FILED ON 9.11.2009 I.E. BEFORE THE ISSUE OF NOTICE U/S 148 WHICH WAS SERVED ON 04.01.2010. THOUGH THE REVISED RETURN FIL ED BY ASSESSEE DECLARING CAPITAL GAIN ON PROPORTIONATE BASIS WAS B ELATED ONE BUT IT IS A FACT THAT THE SAME WAS FILED BEFORE THE ISSUE OF NO TICE U/S 148. THE HONBLE DELHI BENCH IN THE CASE OF ACIT, PANIPAT VS . ASHOK RAJ NATH IN ITS ORDER DATED 31.08.2012 HAS HELD THAT WHERE A RE VISED RETURN WAS ITA NO.556/ASR/2015 ASST. YEAR: 2007- 08 5 FOUND TO BE INVALID BUT THE EXPLANATION MADE BY ASS ESSEE IN HIS REVISED RETURN WAS BONAFIDE, NO PENALTY U/S 271(1)(C) CAN B E MADE. IN THE PRESENT CASE, THE ASSESSEE HAD DISCLOSED ALL MATERI AL FACTS RELATING TO TRANSFER OF CAPITAL GAIN THROUGH HIS REVISED RETURN . THIS FACT IS VERIFIABLE FROM PAGE 3 OF LD. CIT(A)S ORDER VIDE PARA 6 HE HA S NOTED AS UNDER: ORIGINAL RETURN OF INCOME OF THE APPELLANT FOR ASS T.YEAR:.2007-08 WAS FILED ON 31.03.2008 DECLARING AN INCOME OF RS.1,71,400/- WHICH DID NOT INCLUDE ANY PART OF THE CONSIDERATION RECEIVED OR ACCRUED O N ACCOUNT OF THE PURPORTED TRANSFER OF THE APPELLANTS PIECE OF LAND IN THE SOCIETY. SUBSEQUENTLY, A REVISED RETURN WAS FIELD ON 09.11.2 009 DECLARING INCOME AT RS.20,39,308/-, WHICH WAS NOT CONSIDERED A VALID LY REVISED RETURN AS A BELATED RETURN COULD NOT HAVE BEEN REVISED UNDER TH E PROVISIONS OF SECTION 139(5) OF THE ACT. THE ASSESSING OFFICER HAD IMPOSED PENALTY TREATING THE WHOLE AMOUNT OF SALE CONSIDERATION TO BE RECEIVED BY ASSESSEE. THE HONBLE PUNJAB & HARAYANA HIGH COURT IN THE CASE OF C.S. ATWAL VS. C IT, LUDHIANA, ITA NO.200 OF 2013(O&M) DATED 22.07.2015 HAD DELETED TH E SIMILAR ADDITION CONFIRMED BY THE HONBLE ITAT AND HAS HELD THAT CAP ITAL GAIN UNDER THESE CIRCUMSTANCES CAN BE WORKED OUT ONLY ON THE BASIS O F SALE CONSIDERATION RECEIVED BY ASSESSEE. THE FINDINGS OF THE HONBLE C OURT ARE REPRODUCED BELOW. 1. PERUSAL OF THE JDA DATED 25.02.2007 READ WITH SALE DEEDS DATED 02.03.2007 AND 25.04.2007 IN RESPECT OF 3.08 ACRES AND 4.62 ACRES RESPECTIVELY WOULD REVEAL THAT THE PARTIES HAD AGRE ED FOR PRO-RATA TRANSFER OF LAND. 2. NO. POSSESSION HAD BEEN GIVEN BY THE TRANSFEROR TO THE TRANSFEREE OF THE ENTIRE LAND IN PART PERFORMANCE OF JDA DATED 25 .02.2007 SO AS TO FALL WITHIN THE DOMAIN OF SECTION 53A OF 1882 AC T. 3. THE POSSESSION DELIVERED, IF AT ALL, WAS AS A LI CENSE FOR THE DEVELOPMENT OF THE PROPERTY AND NOT IN THE CAPACITY OF A TRANSFEREE. 4. FURTHER SECTION 53A OF 1882 ACT, BY INCORPORATIO N, STOOD EMBODIED IN SECTION 2(47)(V) OF THE ACT AND ALL THE ESSENTIA L INGREDIENTS OF SECTION 53A OF 1882 ACT WERE REQUIRED TO BE FULFILL ED. IN THE ABSENCE ITA NO.556/ASR/2015 ASST. YEAR: 2007- 08 6 OF REGISTRATION OF JDA DATED 25.02.2007 HAVING BEEN EXECUTED AFTER 24.09.2001, THE AGREEMENT DOES NOT FALL UNDER SECTI ON 53A OF 1882 ACT AND CONSEQUENTLY SECTION 2(47)(V) OF THE ACT DO ES NOT APPLY. 5. IT WAS SUBMITTED BY LEARNED COUNSEL FOR THE ASSE SSEE- APPELLANT THAT WHATEVER AMOUNT WAS RECEIVED FROM THE DEVELOPE R, CAPITAL GAINS TAX HAS ALREADY BEEN PAID ON THAT AND SALE DE EDS HAVE ALSO BEEN EXECUTED. IN VIEW OF CANCELLATION OF JDA DATED 25.02.2007, NO FURTHER AMOUNT HAS BEEN RECEIVED AND NO ACTION THER EON HAS BEEN TAKEN. IT WAS URGED THAT AS AND WHEN ANY AMOUNT IS RECEIVED, CAPITAL GAINS TAX SHALL BE DISCHARGED THEREON IN AC CORDANCE WITH LAW. IN VIEW OF THE AFORESAID STAND, WHILE DISPOSIN G OF THE APPEALS, WE OBSERVE THAT THE ASSESSEE APPELLANTS SHALL REMAI N BOUND BY THEIR SAID STAND. 6. THE ISSUE OF ELIGIBILITY TO CAPITAL GAINS TAX HA VING BEEN DECIDED IN FAVOUR OF THE ASSESSEE, THE QUESTION OF EXEMPTION U NDER SECTION 54F OF THE ACT WOULD NOT SURVIVE ANY LONGER AND HAS BEE N RENDERED ACADEMIC. 7. THE TRIBUNAL AND THE AUTHORITIES BELOW WERE NOT RIGHT IN HOLDING THE ASSESSEE-APPELLANT TO BE LIABLE TO CAPITAL GAINS TA X IN RESPECT OF REMAINING LAND MEASURING 13.5 ACRES FOR WHICH O CON SIDERATION HAD BEEN RECEIVED AND WHICH STOOD CANCELLED AND INCAPAB LE OF PERFORMANCE AT PRESENT DUE TO VARIOUS ORDERS PASSED BY THE SUPREME COURT AND THE HIGH COURT IN PILS. THEREFORE , THE APPEALS ARE ALLOWED. FROM THE ABOVE OBSERVATIONS OF THE HONBLE PUNJAB & HARYANA HIGH COURT REPRODUCED BY LD. CIT(A), WE FIND THAT THE JD A AGREEMENT WAS NOT COMPLETED AND ASSESSEE HAD NOT RECEIVED THE BALANCE PAYMENTS AND HAD ALSO NOT RECEIVED THE FLAT AS PROMISED IN THE AGREE MENT. THE LD. CIT(A) HAS ALSO HELD THAT THE BELIEF OF THE ASSESSEE THAT THE CAPITAL GAINS ON WHICH HE HAD TO PAY TAX HAS TO BE COMPUTED ONLY ON THE BASIS OF THE AMOUNT WHICH HE HAD ACTUALLY RECEIVED, CANNOT BE CO NSIDERED TO BE TOTALLY UNREASONABLE. IT IS UNDISPUTED FACT THAT IN THE PRESENT CASE THE ASSESSEE HAD DECLARED CAPITAL GAINS ON PROPORTIONAT E BASIS IN THE REVISED RETURN WHICH WAS FILED BEFORE THE ISSUE OF NOTICE U /S 148. THOUGH THE ABOVE SAID RETURN WAS BELATED YET, KEEPING IN VIEW THE RATIO OF DECISION OF ITA NO.556/ASR/2015 ASST. YEAR: 2007- 08 7 DELHI BENCH OF ITAT IN THE CASE OF ACIT VS. ASHOK R AJ NATH (SUPRA) THE PENALTY U/S 271(1)(C) IS NOT IMPOSABLE AS THE ASSES SEE HAD DECLARED THE FULL PARTICULARS OF HIS CAPITAL GAIN IN THE REVISED RETURN. FURTHER, WE FIND THAT HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF SH. RANJIT SINGH BRAHAMPURA, IN ITA NO.250 OF 2017 VIDE ITS ORDER DATED 18.07.2017, UNDER SIMILAR FACTS AND CIR CUMSTANCES HAS DELETED THE PENALTY BY HOLDING AS UNDER: 3. WE HAVE HEARD LEARNED COUNSEL FOR THE APPELLANT . 4. THE MATTER IS NO LONGER RES INTEGRA. IN C.S. ATWAL S CASE (SUPRA) IN ITA NO. 200 OF 2013 DECIDED ON JULY 22, 2015, THE I SSUE INVOLVED IN THIS APPEAL STANDS DECIDED BY THIS COURT. IN THE SA ID CASE, THE FOLLOWING ISSUES EMERGED FOR CONSIDERATION:- (I) SCOPE AND LEGISLATIVE INTENT OF SECTION 2(47)(II), (V) AND (VI) OF THE ACT; (II) THE ESSENTIAL INGREDIENTS FOR APPLICABILITY OF SECT ION 53A OF 1882 ACT; (III) MEANING TO BE ASSIGNED TO THE TERM POSSESSION? (IV) WHETHER IN THE FACTS AND CIRCUMSTANCES, ANY TAXABLE CAPITAL GAINS ARISES FROM THE TRANSACTION ENTERED BY THE AS SESSEE? AFTER CONSIDERING THE RELEVANT STATUTORY PROVISIONS AND THE CASE LAW, THE FOLLOWING CONCLUSIONS WERE DRAWN:- (1) PERUSAL OF THE JDA DATED 25.02.2007 READ WITH SALE DEEDS DATED 2.03.2007 AND 25.04.2007 IN RESPECT OF 3.08 A CRES AND 4.62 ACRES RESPECTIVELY WOULD REVEAL THAT THE PARTIES HA D AGREED FOR PRO- RATA TRANSFER OF LAND. (2) NO POSSESSION HAD BEEN GIVEN BY THE TRANSFEROR TO THE TRANSFEREE OF THE ENTIRE LAND IN PART PERFORMANCE OF JDA DATED 25.02.2007 SO AS TO FALL WITHIN THE DOMAIN OF SECTION 53A OF 1882 ACT. (3) THE POSSESSION DELIVERED, IF AT ALL, WAS AS A L ICENSEE FOR THE DEVELOPMENT OF THE PROPERTY AND NOT IN THE CAPACITY OF A TRANSFEREE. (4) FURTHER SECTION 53A OF 1882 ACT, BY INCORPORATI ON, STOOD EMBODIED IN SECTION 2(47)(V) OF THE ACT AND ALL THE ESSENTIAL INGREDIENTS OF SECTION 53A OF 1882 ACT WERE REQUIRE D TO BE FULFILLED. IN THE ABSENCE OF REGISTRATION OF JDA DATED 25.02.2 007 HAVING BEEN EXECUTED AFTER 24.09.2001, THE AGREEMENT DOES NOT F ALL UNDER SECTION 53A OF 1882 ACT AND CONSEQUENTLY SECTION 2( 47)(V) OF THE ACT DOES NOT APPLY. ITA NO.556/ASR/2015 ASST. YEAR: 2007- 08 8 (5) IT WAS SUBMITTED BY LEARNED COUNSEL FOR THE ASS ESSEE-APPELLANT THAT WHATEVER AMOUNT WAS RECEIVED FROM THE DEVELOPE R, CAPITAL GAINS TAX HAS ALREADY BEEN PAID ON THAT AND SALE DE EDS HAVE ALSO BEEN EXECUTED. IN VIEW OF CANCELLATION OF JDA DATED 25.02.2007, NO FURTHER AMOUNT HAS BEEN RECEIVED AND NO ACTION THER EON HAS BEEN TAKEN. IT WAS URGED THAT AS AND WHEN ANY AMOUNT IS RECEIVED CAPITAL GAINS TAX SHALL BE DISCHARGED THEREON IN AC CORDANCE WITH LAW. IN VIEW OF THE AFORESAID STAND, WHILE DISPOSIN G OF THE APPEALS, WE OBSERVE THAT THE ASSESSEE APPELLANTS SHALL REMAI N BOUND BY THEIR SAID STAND. (6) THE ISSUE OF EXIGIBILITY TO CAPITAL GAINS TAX HAVING BEEN DECIDED IN FAVOUR OF THE ASSESSEE, THE QUESTION OF EXEMPTIO N UNDER SECTION 54F OF THE ACT WOULD NOT SURVIVE ANY LONGER AND HAS BEEN RENDERED ACADEMIC. (7) THE TRIBUNAL AND THE AUTHORITIES BELOW WERE NOT RIGHT IN HOLDING THE ASSESSEE-APPELLANT TO BE LIABLE TO CAPITAL GAIN S TAX IN RESPECT OF REMAINING LAND MEASURING 13.5 ACRES FOR WHICH NO CO NSIDERATION HAD BEEN RECEIVED AND WHICH STOOD CANCELLED AND INC APABLE OF PERFORMANCE AT PRESENT DUE TO VARIOUS ORDERS PASSED BY THE SUPREME COURT AND THE HIGH COURT IN PILS. THEREFORE , THE APPEALS ARE ALLOWED. 5. LEARNED COUNSEL FOR THE APPELLANT HAS NOT BEEN A BLE TO CONTROVERT THE APPLICABILITY OF THE DECISION RENDERED IN C.S. ATWALS CASE (SUPRA) AND THAT NO CAPITAL GAINS ON UNREALIZED AMOUNT WOULD AC CRUE OR ARISE TO THE ASSESSEE. ONCE THAT IS SO, NO PENALTY UNDER SECTION 271(1) (C) OF THE ACT WOULD BE EXIGIBLE. THE SUBSTANTIAL QUESTIONS OF LAW CLAIMED IN THIS APPEAL ARE ANSWERED ACCORDINGLY. CONSEQUENTLY, THE APPEAL STANDS DISMISSED. 9. IN VIEW OF THE ABOVE, THE APPEAL FILED BY THE RE VENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 04/10/2017 . SD/- SD/- (T.S.KAPOOR) (N.K.CHOUDHRY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 04/10/2017 /PK/PS COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE: 2. THE 3. THE CIT(A), 4. THE CIT, 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER