The Dy. Commissioner of Income Tax, Amritsar. V. Sh. Ranjit Singh Brahampura, Amritsar.

ITA 603/ASR/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9514 (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
• Keywords: Capital asset; Bonafide belief
• Section: 54F; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNA AMRITSAR BENCH; AMRITSAR BEFORE SH.T.S. KAPOOR, ACCOUNTANT MEMBER AND SH.SANJAY GARG, JUDICIAL MEMBER I.T.A. NO.603(ASR)/2015 ASSESSMENT YEA R: 2007-08 DY. CIT, CIRCLE-3, AMRITSAR. VS. SH. RANJIT SINGH BRAHAMPURA, 30, GURU HAR RAI AVENUE, OPP. KHALSA COLLEGE, AMRITSAR. PAN:AAUPB5573H (APPELLANT) (RESPONDENT) APPELLANT BY: SH. VEDPAL SINGH, DR RESPONDENT BY: SH. VIPUL ARORA, 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 1000/- SQ. YDS. OF LAND IN THAT SO CIETY. THE ASSESSEE ITA NO.603/ASR/2015 A.Y. 2007-08 2 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/-. TH E ASSESSMENT OF THE ASSESSEE WAS COMPLETED ON 30.12.2011 AND AN ADDITIO N OF RS.3,59,52,559/- WAS MADE ON ACCOUNT OF LONG TERM C APITAL GAINS ON ACCOUNT OF SALE OF LAND MEASURING 1000 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 ON 24.02.2007 AND THE AGREEMEN T OF THE LAND DEVELOPMENT HAD ALREADY BEEN SIGNED ON 25.02.2007, THEREFORE, THE RECEIPT OF THIS SALE CONSIDERATION WAS PART PERFOR MANCE OF THE CONTRACT, AND HELD THE SAME TO BE TRANSFER AS PER PROVISIONS OF SEC.2(47)(V) OF THE ACT. IN VIEW OF THE ABOVE, THE ASSESSING OFFICER I MPOSED A PENALTY TO THE ITA NO.603/ASR/2015 A.Y. 2007-08 3 TUNE OF RS.75,55,249/- BEING MINIMUM PENALTY @100% OF THE TAX SOUGHT TO BE EVADED 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.24,00,000/- AND RS.36,00,000/- RECEIVED AGAINST THE SALE OF PORTION OF THE SAID LAND WAS DULY SHOWN IN THE RETURN OF IN COME FOR ASST. YEARS: 2007-08 & 2008-09 RESPECTIVELY, AND THERE WAS NO OT HER TRANSFER OF LAND OR RECEIPT OF MONEY OTHER THAN THIS DURING THE ASST .YEARS:2007-08 & 2008-09. IT WAS SUBMITTED THAT ASSESSEE WAS UNDER A BONAFIDE BELIEF THAT THE BALANCE AMOUNT OF RS.105 LACS WOULD BE CHARGEAB LE TO TAX IN THE YEAR OF RECEIPT AND NOT WHEN AGREEMENT WAS SIGNED FOR DE VELOPMENT OF LAND AND LIKEWISE VALUE OF FLATS WILL BE TAXABLE ONLY ON GETTING THE ALLOTMENT LETTERS/START OF CONSTRUCTION. BASED UPON THE SUBMI SSIONS, 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.24,00,000/- RECEIVED FROM TATA HOUSING DEVELOPMENT COMPANY IN THE RETURN FILED ON 31.03.2008 AND SUBMITTED THAT NOTICE U/S 148 WAS ISSUED ON 26.04.2 010 AND IN RESPONSE TO NOTICE U/S 148 THE ORIGINAL RETURN WAS REQUESTED TO BE ITA NO.603/ASR/2015 A.Y. 2007-08 4 TREATED AS RETURN FILED AND THEREFORE, THE LD. CIT (A) HAS RIGHTLY HELD THAT THIS WAS NOT A CASE OF FURNISHING OF WRONG PARTICUL ARS 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 IN THE ORIG INAL RETURN FILED BY ASSESSEE, THE ASSESSEE HAD AT HIS OWN DECLARED CAPI TAL GAIN ON PROPORTIONATE AMOUNT OF RS.24,00,000. THE ASSESSEE HAD DECLARED CAPITAL GAIN OF RS.22,83,893. THIS FACT IS VERIFIABLE FROM THE ASSESSMENT ORDER ITSELF WHEREIN THE ASSESSING OFFICER HAS NOTED THIS FACT. THE ASSESSING OFFICER HAD IMPOSED PENALTY TREATING THE WHOLE AMOU NT OF SALE CONSIDERATION TO BE RECEIVED BY ASSESSEE AS ACCRUIN G DURING THE YEAR. THE HONBLE PUNJAB & HARAYANA 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 CONFIRMED BY THE HONBLE ITAT AND HAS HELD THAT CAPITAL GAIN UNDER THESE CIRCUMSTANCES CAN BE WORKED OUT ON LY ON THE BASIS OF SALE CONSIDERATION RECEIVED BY ASSESSEE. THE FINDIN GS OF THE HONBLE COURT 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. ITA NO.603/ASR/2015 A.Y. 2007-08 5 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 TWO FLATS AS PROMISED IN THE AGREEMENT. THE LD. CIT(A) HAS ALSO HELD THAT THE BELIEF OF THE ASSESSE E 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 ITA NO.603/ASR/2015 A.Y. 2007-08 6 TOTALLY UNREASONABLE. IT IS UNDISPUTED FACT THAT IN THE PRESENT CASE THE ASSESSEE HAD DECLARED CAPITAL GAINS ON PROPORTIONAT E BASIS AND THEREFORE, CANNOT BE SAID TO HAVE FURNISHED WRONG PARTICULARS OF INCOME OR CONCEALMENT OF INCOME. 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