The Income Tax Officer, Abohar V. Sh Surjeet Kumar Jayani, Fazilka

ITA 593/ASR/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7784 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 10 month(s) 22 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: 12-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ADARSH PAUL GUPTA
• Keywords: Capital asset; Bonafide belief; Deemed to accrue or arise in india
• Section: 54F

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.593(ASR)/2015 ASSESSMENT YEAR: 2007-08 INCOME TAX OFFICER, WARD-II (4), ABOHAR VS. SH. SURJEET KUMAR JAYANI S/O SH. SOPAT RAM VILL:- KATHERA, TEH: FAZIKA. PAN:AAOPJ5345H (APPELLANT) (RESPONDENT) APPELLANT BY: SH. CHARAN DASS, (D.R.) RESPONDENT BY: SH. ADARSH PAUL GUPTA (ADV.) DATE OF HEARING: 27/09/2017 DATE OF PRONOUNCEMENT: 04/10/2017 ORDER PER T.S. KAPOOR, AM: THIS IS AN APPEAL FILED BY REVENUE AGAINST THE ORD ER OF LD. CIT(A), BATHINDA, DATED 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.593/ASR/2015 ASST. YEAR. 2007-08 2 3. THE REVENUE HAS TAKEN VARIOUS GROUNDS OF APPEAL, HOWEVER, THE CRUX OF GRIEVANCES 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 APPEAL FILED BY REVENUE IS DELAYED BY EIGHT DAYS AND REVENUE HAS FILED APPLICATION FOR CONDONATION OF DELAY. THE DELAY OCCURRED DUE TO ILLNESS OF INSPECTION AND REVENUE HAS FILED AFFIDAV IT OF THE ASSESSING OFFICER IN THIS RESPECT. THE DELAY WAS CONDONED AND APPEAL WAS HEARD ON MERITS. 5. 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 JOINT DEVELOPMENT OF HOUSE M/S TATA HOUSING DEVELOPMENT COMPANY LTD., MUMBAI ON 25.02.2007 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/-. TH E ASSESSMENT OF THE ASSESSEE WAS COMPLETED ON 08.12.2010 AND AN ADDITIO N OF RS.3,23,88,210,/- WAS MADE ON ACCOUNT OF NET LONG T ERM CAPITAL GAINS ON ACCOUNT OF SALE OF LAND MEASURING 1000 SQ YARDS. TH E ABOVE SAID ADDITION WAS MADE AS THE ASSESSING OFFICER CALCULATED THE CA PITAL GAIN AFTER TAKING ITA NO.593/ASR/2015 ASST. YEAR. 2007-08 3 INTO ACCOUNT THE ENTIRE SALE CONSIDERATION INCLUDIN G RECEIVABLE CONSIDERATION. THE ASSESSING OFFICER ALSO ALLOWED E XEMPTION U/S 54EC FOR AN AMOUNT OF RS.30 LACS. 5.1 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 ASSESSING OFFICER HEL D THAT SINCE A PART OF THE TOTAL CONSIDERATION WAS RECEIVED BY THE ASSESSE E AND THE AGREEMENT OF THE LAND DEVELOPMENT HAD ALREADY BEEN SIGNED, TH EREFORE, THE RECEIPT OF THIS SALE CONSIDERATION WAS PART PERFORMANCE OF T HE CONTRACT, AND THEREFORE, HE TREATED THE SAME AS TRANSFER WITHIN T HE MEANING OF SEC. 2(47)(V) OF THE ACT. IN VIEW OF THE ABOVE, WHOLE OF THE CAPITAL ACCRUAL FROM THE LAND INCLUDING THE DEEMED INCOME FROM FLATS STA NDS EARNED INCOME IN THE HANDS OF ASSESSEE IN THE SAID YEAR. IN VIEW OF THE ABOVE, THE ASSESSING OFFICER IMPOSED A PENALTY TO THE TUNE OF RS.72,67,914/- BEING MINIMUM PENALTY @100% OF THE TAX SOUGHT TO BE EVADE D U/S.271(1)(C) OF THE ACT. 6. AGGRIEVED THE ASSESSEE FILED APPEAL BEFORE LD. C IT(A), AND SUBMITTED THAT ASSESSEE HAD RECEIVED IN ALL AMOUNT OF RS.66,0 0,000/- BEING RS.30,00,000/- ON 25.02.2007 AND RS.36,00,000/- ON 25.04.2007 AND HAD NOT RECEIVED ANYTHING IN ASST. YEAR: 2007-08 E XCEPT THE AMOUNT OF RS.30,00,000/-. IT WAS FURTHER SUBMITTED THAT SINCE ONLY PART OF THE TOTAL CONSIDERATION WAS RECEIVED AND THERE WAS NO CERTAIN TY ABOUT RECEIPT OF ITA NO.593/ASR/2015 ASST. YEAR. 2007-08 4 FURTHER CONSIDERATION INCLUDING FLATS, THEREFORE, A SSESSEE WAS UNDER A BONAFIDE BELIEF THAT CAPITAL GAIN HAD NOT ACCRUED. IT WAS FURTHER SUBMITTED THAT PURSUANCE TO PUBLIC INTEREST LITIGAT ION, THE HONBLE PUNJAB & HARYANA HIGH COURT IN CWP NO.20425/2010 ST AYED CONSTRUCTION/DEVELOPMENT OF THE PROJECT VIDE ORDER DATED 20.01.2011. IT WAS SUBMITTED THAT STAYED JDA AGREEMENT WAS TERMINA TED. IT WAS ALSO SUBMITTED THAT THE HONBLE PUNJAB & HARYANA HIGH CO URT HAD DELETED THE ADDITION WHICH ITSELF MADE THE ISSUE DEBATABLE AND THEREFORE, ALSO PENALTY WAS NOT IMPOSABLE. THE LD. CIT(A) AFTER CON SIDERING THE SUBMISSIONS OF ASSESSEE AND AFTER TAKING INTO ACCOU NT ENTIRE FACTS AND CIRCUMSTANCES HELD THAT THE MATTER WAS DEBATABLE AN D DELETED THE PENALTY. 7. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US. 8. AT THE OUTSET, LD. DR, HEAVILY PLACED HIS RELIAN CE ON THE ORDER OF ASSESSING OFFICER, WHEREAS THE LD. AR SUBMITTED THA T THE MATTER WAS DEBATABLE AS THE DECISION OF HONBLE TRIBUNAL WAS O VER TURNED BY THE JUDGMENT OF HONBLE HIGH COURT AND THEREFORE, APPEL LANT CANNOT BE SAID TO HAVE BEEN GIVEN AND OFFERED AN EXPLANATION FOR N OT INCLUDING THE PURPORTED CAPITAL GAIN IN HIS RETURN OF INCOME. IT WAS FURTHER SUBMITTED THAT ASSESSEE HAD RECEIVED ONLY RS.30,00,000/- DURI NG THE YEAR AND SAME WAS INVESTED IN THE BANKS U/S 54EC OF THE ACT AND THEREFORE NO CAPITAL GAIN THAT WAS PAYABLE AND THEREFORE NO PENA LTY WAS LEVIABLE. ITA NO.593/ASR/2015 ASST. YEAR. 2007-08 5 9. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE TH ROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT IT IS A FAC T THAT ASSESSEE DURING ASSESSMENT YEAR UNDER CONSIDERATION HAD RECEIVED ON LY AN AMOUNT OF RS.30,00,000/- AND THAT HE HAD INVESTED RS.30,00,00 0/- IN THE BONDS FOR WHICH THE ASSESSING OFFICER HIMSELF HAS ALLOWED EXEMPTION U/S 54EC OF THE ACT. THIS FACT IS VERIFIABLE FROM THE ASSESS MENT ORDER ITSELF WHERE THE ASSESSING OFFICER HAS COMPUTED THE NET CAPITAL GAIN TO BE TAXED AFTER GIVING EXEMPTION U/S 54EC OF THE ACT. THE ASSESSEE HAD NOT DECLARED THE ENTIRE ACCRUED CAPITAL GAIN UNDER A BONAFIDE BELIEF THAT SINCE HE HAD NOT RECEIVED THE BALANCE AMOUNT INCLUDING THE FLATS, TH EREFORE, THE ENTIRE CAPITAL GAIN WAS NOT LIABLE TO BE INCLUDED. THE HO NBLE 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 HELD THAT UNDER THESE CIRCUMSTANCES THE CAPITAL GAIN WAS TO BE LEVIED ONL Y ON PROPORTIONATE BASIS TO BE CALCULATED ON THE BASIS OF PROPORTIONAT E AMOUNT OF SALE CONSIDERATION RECEIVED BY ASSESSEE. IN THE PRESENT CASE, THE ASSESSEE HAS RECEIVED ON RS.30,00,000/- AND THAT HE HAS INVESTE D U/S 54EC OF THE ACT AND THEREFORE, THE ASSESSEE WAS NOT LIABLE TO C APITAL GAIN TAX TO THE EXTENT OF AMOUNT OF RS.30,00,000/-. BEYOND THIS THE ASSESSEE HAS NOT RECEIVED ANYTHING IN THE YEAR. THE ADDITION MADE BY ASSESSING OFFICER ON THE ACCRUED VALUE OF ENTIRE SALE CONSIDERATION HAS ALREADY BEEN DELETED BY HONBLE PUNJAB & HARYANA HIGH COURT WHICH ITSELF MAKES IT A DEBATABLE ISSUE AS UP TO HONBLE ITAT LEVEL THE ADD ITION WAS CONFIRMED ITA NO.593/ASR/2015 ASST. YEAR. 2007-08 6 WHEREAS HOHBLE PUNJAB & HARYAAN HIGH COURT HAS REV ERSED THE ORDER OF TRIBUNAL, THEREFORE, ALSO THE PENALTY IS NOT IMPOSA BLE IN THE PRESENT CASE. 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 18.07.2017, UNDER SIMILAR FACTS AND CIRCUMSTA NCES 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.593/ASR/2015 ASST. YEAR. 2007-08 7 (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. THEREFORE KEEPING IN VIEW THE FACTS AND CIRCUMSTANC ES OF THE CASE AND FOLLOWING THE JUDICIAL PRECEDENTS, WE DO NOT FI ND ANY INFIRMITY IN THE ORDER OF LD. CIT(A). 10. IN VIEW OF THE ABOVE, THE APPEAL FILED BY REVEN UE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 04/10 /2017. SD/- SD/- (N. K. CHOUDHRY) (T. S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 04.10.2017. /GP/SR. PS . COPY OF THE ORDER FORWARDED TO: ITA NO.593/ASR/2015 ASST. YEAR. 2007-08 8 1. THE ASSESSEE: 2. THE 3. THE CIT(A), 4. THE CIT, 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER