The Income Tax Officer, BATALA V. Sh. Sewa Singh Sekhwan, BATALA

ITA 602/ASR/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9513 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-12-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 28-11-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 19-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VEDPAL SINGH
• Assessee Lawyers: AVISH MAHAJAN
• Keywords: Capital asset; Bonafide belief
• Section: 54F

Judgement Text

IN THE INCOME TAX APPELLA TE TRIBUNA AMRITSAR BENCH; AMRITSAR BEFORE SH.T.S. KAPOOR, ACCOUNTANT MEMBER AND SH.SANJAY GARG, JUDICIAL MEMBER I.T.A. NO.602(ASR)/2015 ASSESSMENT YEA R: 2007-08 INCOME-TAX OFFICER, WARD-2, BATALA. VS. SH. SEWA SINGH SEKHWAN S/O SH. UJAGAR SINGH R/O GURU RAM DASS COLONY, BATALA. PAN:AQMPS9598R (APPELLANT) (RESPONDENT) APPELLANT BY: SH. VEDPAL SINGH, DR RESPONDENT BY: SH. AVISH MAHAJAN, CA DATE OF HEARING: 28/11/2016 DATE OF PRONOUNCEMENT: 02/12/2016 ORDER PER T.S. KAPOOR, AM: THIS IS AN APPEAL FILED BY REVENUE AGAINST THE ORD ER OF LD. CIT(A), AMRITSAR, DT.18.08.2015 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 500/- SQ. YDS. OF LAND IN THAT SOC IETY. THE ASSESSEE HAD ITA NO.602/ASR/2015 ASST. YEAR. 2007-0 8 2 SOLD HIS PIECE OF LAND THROUGH TRIPARTITE JOINT DEV ELOPMENT AGREEMENT WITH M/S HASH BUILDERS (P) LTD., CHANDIGARH AND M/S TATA HOUSING DEVELOPMENT COMPANY LTD., MUMBAI FOR A TOTAL CONSID ERATION OF RS.82,50,000/-. BESIDES THE ABOVE CONSIDERATION, TH E ASSESSEE WAS ALSO TO GET ONE FLAT OF 2250 SQ. FT. AND THE VALUE OF TH E FLATS WAS TO THE TUNE OF RS.1,01,25,000/-. THEREFORE, FULL VALUE OF CONSIDERATION WORKED OUT T O BE RS.1,83,75,000/-. THE ASSESSMENT OF THE ASSESSEE WA S COMPLETED ON 27.12.2010 AND AN ADDITION OF RS.1,59,82,147/- WAS MADE ON ACCOUNT OF LONG TERM CAPITAL GAINS ON ACCOUNT OF SALE OF LAND MEASURING 500 SQ YARDS. 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 FILED CERTAIN CASE LAWS BUT THE ASSESSING OFFICER HELD THAT THE CASE LAWS W ERE DISTINGUISHABLE. THE ASSESSING OFFICER HELD THAT SINCE A PART OF SAL E CONSIDERATION WAS RECEIVED BY ASSESSEE AND THE AGREEMENT OF THE LAND DEVELOPMENT HAD ALREADY BEEN SIGNED, THEREFORE, THE RECEIPT OF THIS SALE CONSIDERATION WAS PART PERFORMANCE OF THE CONTRACT, AND HELD THE SA ME TO BE TRANSFER AS PER PROVISIONS OF SEC.2(47)(V) OF THE ACT. IN VIEW OF THE ABOVE, THE ASSESSING OFFICER IMPOSED A PENALTY TO THE TUNE OF RS.35,05,887/- BEING ITA NO.602/ASR/2015 ASST. YEAR. 2007-0 8 3 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 RECEIVED AGAINST THE SALE OF PORTION OF THE SAID LA ND 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 TH IS DURING THE ASST.YEARS:2007-08. IT WAS SUBMITTED THAT ASSESSEE WAS UNDER A BONAFIDE BELIEF THAT THE BALANCE AMOUNT WOULD BE CH ARGEABLE TO TAX IN THE YEAR OF RECEIPT AND NOT WHEN AGREEMENT WAS SIGN ED FOR DEVELOPMENT OF LAND AND LIKEWISE VALUE OF FLAT WILL BE TAXABLE ONLY ON GETTING THE ALLOTMENT LETTERS/START OF CONSTRUCTION. BASED UPON THE SUBMISSIONS, THE LD. CIT(A) DELETED THE PENALTY IMPOSED BY ASSESSING OFFICER. 5. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US. 6. 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 RS.15,00,000/- RECEIVED FROM TATA HOUSING DEVELOPMENT COMPANY. HE FURTHER SUBMITTED THAT THE PART SALE CONSIDERATION AS RECEIVED BY ASSESSEE WAS INVESTED IN RESIDENTIAL HOUSE AND ASSESSEE HAD CLAIMED DEDUCTION U/S 54F OF THE A CT AND THEREFORE, NO ITA NO.602/ASR/2015 ASST. YEAR. 2007-0 8 4 CAPITAL GAIN TAX WAS PAYABLE BY THE ASSESSEE AND TH EREFORE, QUESTION OF CONCEALMENT OF INCOME DOES NOT ARISE AT ALL AND THE REFORE, THE LD. CIT(A) HAS RIGHTLY HELD THAT THIS WAS NOT A CASE OF FURNIS HING OF WRONG PARTICULARS OF INCOME OR CONCEALMENT OF INCOME. 7. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE TH ROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT IT IS AN UN DISPUTED FACT THAT THE ASSESSEE HAD RECEIVED ONLY RS.15 LACS DURING THE YE AR. IT IS ALSO AN UNDISPUTED FACT THAT ASSESSEE HAD INVESTED AN AMOUN T OF RS.17,65,000/- IN THE RESIDENTIAL HOUSE. THIS FACT IS VERIFIABLE F ROM THE ASSESSMENT ORDERS ITSELF WHEREIN THE ASSESSING OFFICER HAS NOT ED THIS FACT AND HAD ALLOWED DEDUCTION U/S 54F TO THE EXTENT OF RS.17,65 ,000/- WHICH IS MORE THAN THE AMOUNT OF RS.15,00,000/- RECEIVED DURING T HE YEAR. THE ASSESSING OFFICER HAD IMPOSED PENALTY TREATING THE WHOLE AMOUNT OF SALE CONSIDERATION TO BE RECEIVED BY ASSESSEE. THE HONB LE 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. ITA NO.602/ASR/2015 ASST. YEAR. 2007-0 8 5 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 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 ITA NO.602/ASR/2015 ASST. YEAR. 2007-0 8 6 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 INVESTED RS.17,65,000/- TOWARDS INVEST MENT IN RESIDENTIAL HOUSE AND HAD CLAIMED DEDUCTION TO THAT EXTENT AND ASSESSING OFFICER HAS ALSO ALLOWED DEDUCTION. THEREFORE, KEEPING IN V IEW OF THE DECISION OF HONBLE PUNJAB & HARYANA HIGH COURT THE ASSESSEE WA S REQUIRED TO PAY CAPITAL GAIN TAX ONLY ON THE AMOUNT RECEIVED WHICH IN THE PRESENT CASE IS RS.15,00,000/- AND FOR WHICH ASSESSEE HAS BEEN ALLO WED DEDUCTION U/S 54F. THEREFORE, NO CAPITAL GAINS TAX WAS PAYABLE DU RING THE YEAR AND IF THERE WAS NO CAPITAL GAIN TAX PAYABLE, THE QUESTION OF PENALTY DOES NOT ARISE. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES THE ASSESSEE CANNOT BE SAID TO HAVE CONCEALED THE PARTICULARS OF HIS IN COME. 8. IN VIEW OF THE ABOVE, THE APPEAL FILED BY THE RE VENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 02/12/2016 . SD/- SD/- (SANJAY GARG) (T.S. KAPOOR ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 02/12/2016 /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