The Asstt. Commissioner of Income Tax, Jalandhar V. Sh. Manoranjan Kalia, Jalandhar

ITA 565/ASR/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7757 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 11 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-10-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 30-05-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 02-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S KANWAL
• Assessee Lawyers: J S BHASIN
• Keywords: Capital asset; Bonafide belief
• Section: 54F; 54

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.565(ASR)/2015 ASSESSMENT YEA R: 2007-08 ASST. C. I. T., CIRCLE-3, JALANDHAR. VS. SH. MANORANJAN KALIA, 158/4, CENTRAL TOWN, JALANDHAR. PAN:ACUPK8414C (APPELLANT) (RESPONDENT) APPELLANT BY: SH. S. S. KANWAL (D .R.) RESPONDENT BY: SH. J. S. BHASIN ( A DV.) DATE OF HEARING: 11/10/2017 DATE OF PRONOUNCEMENT: 24/10/2017 ORDER PER T.S. KAPOOR, AM: THIS IS AN APPEAL FILED BY REVENUE AGAINST THE ORD ER OF LD. CIT(A), AMRITSAR, DT.14.08.2015 FOR ASST. YEAR: 2007-08. 2. 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. 3. 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 ITA NO.565/ASR/2015 ASST.YEAR. 2007-0 8 2 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 HAD RECEIVED AN AMOUNT O F RS.66,00,000/- AS PART OF SALE CONSIDERATION AND HAD DEPOSITED THIS A MOUNT IN SBI SECTOR- 17, CHANDIGARH UNDER THE CAPITAL GAIN SCHEME AND TH EREFORE, DID NOT DECLARE ANY CAPITAL GAIN. THE ASSESSMENT OF THE ASS ESSEE WAS COMPLETED ON 29.12.2011 AND AN ADDITION OF RS.2,91,12,574/- W AS MADE ON ACCOUNT OF LONG TERM CAPITAL GAINS ON ACCOUNT OF SA LE OF LAND MEASURING 1000 SQ YARDS. THE ABOVE LONG TERM CAPITAL GAIN WA S CALCULATED TAKING INTO ACCOUNT THE FULL SALE CONSIDERATION INCLUDING RECEIVABLE AND AFTER GIVING EXEMPTION UNDER SECTION 54F OF THE ACT. 3.1 THE ASSESSEE FILED APPEAL BEFORE LD. CIT(A), WH O 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 SUBMITTED THAT OUT OF SALE CONSIDERATION OF RS.1,65,00,000/- HE HAD RECEI VED ONLY RS,66,00,000/- AND THAT TOO HE HAD DEPOSITED UNDER THE CAPITAL GAIN SCHEME. HOWEVER, THE ASSESSING OFFICER HELD THAT SINCE 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 ITA NO.565/ASR/2015 ASST.YEAR. 2007-0 8 3 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.65,41,310/- BEING MINIMUM PENALTY @100% OF THE TAX SOUGHT TO BE EVADE D U/S.271(1)(C) OF THE ACT. 4. AGGRIEVED THE ASSESSEE FILED APPEAL BEFORE LD. C IT(A), AND SUBMITTED THAT LD. ASSESSING OFFICER HAD FAILED TO APPRECIATE THAT THE AMOUNT OF RS.66,00,000/- RECEIVED AGAINST THE SALE OF PORTION OF THE SAID LAND WAS DULY SHOWN IN THE RETURN OF INCOME FOR ASST. YEARS: 2007-08 AND THERE WAS NO OTHER TRANSFER OF LAND OR RECEIPT OF MONEY OTHER THAN THIS DURING THE ASST. YEARS:2007-08. IT WAS FURTHER SUBMITTED T HAT ASSESSEE HAD DEPOSITED THE ENTIRE AMOUNT OF RS.66,00,000/- IN TH E CAPITAL GAIN ACCOUNT. IT WAS SUBMITTED THAT ASSESSEE WAS UNDER A BONAFIDE BELIEF THAT THE BALANCE AMOUNT WOULD BE CHARGEABLE TO TAX IN TH E YEAR OF RECEIPT AND NOT WHEN AGREEMENT WAS SIGNED FOR DEVELOPMENT OF LA ND AND LIKEWISE VALUE OF FLATS WILL BE TAXABLE ONLY ON GETTING THE ALLOTMENT LETTERS/START OF CONSTRUCTION. BASED UPON THE SUBMISSIONS, THE LD. C IT(A) DELETED THE PENALTY IMPOSED BY ASSESSING OFFICER. 5. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US. ITA NO.565/ASR/2015 ASST.YEAR. 2007-0 8 4 6. AT THE OUTSET, LD. DR, HEAVILY PLACED HIS RELIAN CE ON THE ORDER OF ASSESSING OFFICER AND SUBMITTED THAT ASSESSEE HAD N OT DECLARED CAPITAL GAIN EVEN ON THE AMOUNT WHICH HE HAD RECEIVED AS PA RT OF SALE CONSIDERATION AND THEREFORE HAD CONCEALED THE PARTI CULARS OF INCOME AND THEREFORE ASSESSING OFFICER HAS RIGHTLY IMPOSED THE PENALTY. ON THE OTHER HAND, THE LD. AR SUBMITTED THAT ASSESS EE HAD DECLARED CAPITAL GAIN IN RESPECT OF RS.66,00,000/- RECEIVED FROM TATA HOUSING DEVELOPMENT COMPANY IN THE RETURN IN THE FO RM OF A NOTE. THE ASSESSEE HAD DECLARED FULL PARTICULARS WITH RESPECT TO THE TRANSACTION AND HE WAS NOT SURE ABOUT THE QUANTUM OF CAPITAL GAIN A ND THEREFORE HE DID NOT CONCEAL THE PARTICULARS OF INCOME AS HE HAD FUR NISHED ALL THE PARTICULARS AND FROM THE PARTICULARS FURNISHED BY A SSESSEE, THE ASSESSING OFFICER CAME TO KNOW ABOUT THE ALLEGED CA PITAL GAIN. FURTHER IT WAS SUBMITTED THAT ASSESSEE HAD DEPOSITED THE AMOUN T U/S 54F OF THE ACT AND THEREFORE NO CAPITAL GAIN WAS TAXABLE ON TH E BASIS OF ACTUAL RECEIPTS ALSO. IN REJOINDER THE LD. DR SUBMITTED THAT ASSESSEE SH OULD HAVE CALCULATED CAPITAL GAIN ON THE ENTIRE SALE CONSIDER ATION AND SHOULD HAVE INCLUDED THE SAME UNDER THE HEAD INCOME FROM CAPITA L GAINS. 7. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE TH ROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT IN THE ORIG INAL RETURN FILED BY ASSESSEE, THE ASSESSEE HAD AT HIS OWN SUBMITTED FUL L PARTICULARS OF ITA NO.565/ASR/2015 ASST.YEAR. 2007-0 8 5 TRANSACTION AND HAD STATED THAT HE HAD RECEIVED RS. 66 LACS AND HAD ALSO CLAIMED DEDUCTION U/S 54 OF THE ACT. THIS FACT IS V ERIFIABLE FROM THE ASSESSMENT ORDER ITSELF WHEREIN THE ASSESSING OFFIC ER HAS NOTED THIS FACT. FOR THE SAKE OF COMPLETENESS PARA-16 OF ASSESSMENT ORDER IS REPRODUCED BELOW. 16. IT IS HELD THAT LONG TERM CAPITAL GAINS (WHICH IS SUBJECT TO RECTIFICATION AS DISCUSSED ABOVE) OF RS.3,54,68,276 /- HAS ARISEN TO THE ASSESSEE ON ACCOUNT OF TRANSFER OF CAPITAL ASSET IN THE PREVIOUS YEAR 2006- 07 RELEVANT TO THE A.Y. 2007-08. FURTHER THE ASSESS EE HAS SUBMITTED TO HAVE INVESTED RS.66 LACS IN CAPITAL GAIN ACCOUNT SC HEME. THEREFORE, DEDUCTION U/S 54F COMES TO RS.63,55,702/- [ON PROPO RTIONATE BASIS AS PER SECTION 54F(1)(B)]. THUS, TOTAL TAXABLE CAPITAL GAI N COMES TO RS.2,91,12,574/- WHICH SHALL BE ADDED TO THE TOTAL INCOME OF THE ASSESSEE. SINCE THE ASSESSEE HAS FAILED TO DISCLOSE THE PROFI TS OR GAINS ARISING FROM THE TRANSFER OF CAPITAL ASSETS IN THE RETURN OF INC OME FOR THE A.Y. 2007-08 PENALTY PROCEEDINGS U/S 271(1)(C) ARE INITIATED FOR FURNISHING INACCURATE PARTICULARS OF SAID INCOME. THE ASSESSING OFFICER IN HIS FINDINGS HAS ALLOWED B ENEFIT OF DEDUCTION U/S 54F OF THE ACT. HOWEVER, HE HELD THAT ENTIRE SALE CONSIDERATION WAS TO BE DECLARED AND THEREFORE, IMP OSED PENALTY TREATING THE WHOLE OF SALE CONSIDERATION TO BE RECEIVED BY A SSESSEE AS ACCRUING DURING THE YEAR. THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF C.S. ATWAL VS. CIT, LUDHIANA, ITA NO.200 OF 2013(O& M) DATED 22.07.2015 HAD DELETED THE SIMILAR ADDITION CONFIRM ED BY THE HONBLE ITAT AND HAS HELD THAT CAPITAL GAIN UNDER THESE CIR CUMSTANCES CAN BE WORKED OUT ONLY ON THE BASIS OF SALE CONSIDERATION RECEIVED BY ASSESSEE. THE FINDINGS OF THE HONBLE COURT ARE REPRODUCED BE LOW. 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 ITA NO.565/ASR/2015 ASST.YEAR. 2007-0 8 6 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 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 T HE JDA AGREEMENT WAS NOT COMPLETED AND ASSESSEE HAD NOT RECEIVED THE BAL ANCE PAYMENTS AND HAD ALSO NOT RECEIVED THE FLAT AS PROMISED IN THE A GREEMENT. THE LD. CIT(A) HAS ALSO HELD THAT THE BELIEF OF THE ASSESSE E THAT THE CAPITAL GAINS ITA NO.565/ASR/2015 ASST.YEAR. 2007-0 8 7 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 THE PARTICULARS OF ENTIRE TRA NSACTION INCLUDING AMOUNT RECEIVED DURING THE YEAR IN THE FORM OF A NO TE WHICH FACT IS VERIFIABLE FROM THE ORDER OF ASSESSING OFFICER ITSE LF WHERE HE HAS STATED AS UNDER: IN THE RETURN DATED 27,3.2008, THE ASSESSEE MENTIO NED AS UNDER: (1). DURING THIS YEAR A JOINT DEVELOPMENT AGREEMENT WAS EXECUTED ON 25.02.2007 BETWEEN THE PUNJABI CO. OP. HOUSE BUILDI NG SOCIETY LTD., MOHALI AND HASH BUILDERS PVT. LTD., CHANDIGARH AND T.H.D.C. LTD. BOMBAY. (2) I WAS A BONAFIDE AND REGISTERED MEMBER OF THE PUNJABI CO. OP. HOUSE BUILDING SOCIETY LTD. MOHALI. (3) THE SOCIETY HAD ALLOTTED ME ONE PLOT OF LAND MEASURING 1000 SQ. YARD (PLOT NO. 54) IN VILL. KANSAL TEH. KHARAR THROUGH A LLOTMENT LETTER DATED 09.01.2004. (4) THE SOCIETY ENTERED INTO AN AGREEMENT ON 25.02 .2007 AS MENTIONED ABOVE FOR DEVELOPMENT OF COMPLETE LAND. AS PER AGRE EMENT I WOULD RECEIVE RS.1,65,00,000 IN CASH TO BE RECEIVED IN 4 INSTALME NTS AND TWO BUILT UP FLATS IN LIEU OF CONSIDERATION AGAINST SURRENDER OF MY RIGHT OF ALLOTMENT IN PLOT NO. 54 TO THE SOCIETY. (5) SINCE THE FLATS TO BE ALLOTTED TO ME HAVE NOT COME IN TO EXISTENCE, SO EXACT CALCULATION OF CAPITAL GAIN CANNOT BE MADE. (6) SECONDLY I HAVE RECEIVED ONLY RS. 66 LACS OUT O F RS. 165 LACS. I HAVE DEPOSITED THE SAME IN SBI SECTOR 17 CHANDIGARH UNDE R THE CAPITAL GAIN SCHEME AS UNDER: DATE AMOUNT 01.05.2007 RS.36,00,000/- 28.09.2007 RS .30,00,000/- (7) NO CAPITAL GAIN IS BEING SHOWN IN VIEW OF FAC TS STATED ABOVE, AS AND WHEN FLATS WILL COME INTO EXISTENCE AND FULL VALUE OF CONSIDERATION WILL BE RECEIVED, THIS RETURN WILL BE REVISED ACCORDINGLY. ITA NO.565/ASR/2015 ASST.YEAR. 2007-0 8 8 THEREFORE THE ASSESSEE CANNOT BE SAID TO HAVE CONC EALED THE PARTICULARS OF INCOME AND RATHER HE HAD DECLARED TH E COMPLETE PARTICULARS OF TRANSACTION AND FROM THAT PARTICULAR S OF TRANSACTION ONLY THE ASSESSING OFFICER CAME TO THE CONCLUSION THAT C APITAL GAIN HAD ARISEN TO THE ASSESSEE. MOREOVER HE HAD DEPOSITED THE ENTI RE AMOUNT UNDER CAPITAL GAIN TAX SCHEME AND THEREFORE, NO CAPITAL G AIN TAX WAS PAYABLE. THE HON'BLE AMRITSAR TRIBUNAL VIDE ITS ORDER DATED 30.08.2017 IN THE CASE OF HARI SINGH HAS ALREADY DECIDED SIMILAR ISSU E IN FAVOUR OF ASSESSEE. THE ARGUMENT OF LD. DR THAT ASSESSEE SHOU LD HAVE DECLARED THE CAPITAL GAIN AT LEAST ON RECEIPT BASIS IN THE C OLUMNS PROVIDED IN THE RETURN DOES NOT HOLD ANY FORCE AS ASSESSEE HAD NOT RECEIVED FULL SALE CONSIDERATION AND THEREFORE, BY WAY OF A NOTE HE FU RNISHED THE ENTIRE PARTICULARS AND DISCHARGED HIS ONUS OF FURNISHING D ETAILS ABOUT TRANSACTION. IN VIEW OF THE ABOVE THE ASSESSEE CANNOT BE SAID TO HAVE FURNISHED WRONG PARTICULARS OF INCOME OR HAD CONCEALED THE IN COME. 8. IN VIEW OF THE ABOVE, THE APPEAL FILED BY THE RE VENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 24/10 /2017. SD/- SD/- (N. K. CHOUDHRY) (T.S. KA POOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED:24/10/2017 /GP/SR. PS . COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE: 2. THE 3. THE CIT(A), ITA NO.565/ASR/2015 ASST.YEAR. 2007-0 8 9 4. THE CIT, 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER