The Income Tax Officer, Ferozepur V. S. Hari Singh, Ex. MLA, Zira

ITA 609/ASR/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7854 (ITAT-AMRITSAR)
• Duration Of Justice: 2 year(s) 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 29-06-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 27-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P N ARORA
• Keywords: Cost of acquisition
• 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. 609/(ASR)/2015 ASSESSMENT YEAR: 2007-08 PAN: AYOPS9612C INCOME TAX OFFICER WARD- 3(5), ZIRA AT FEROZEPUR. VS. SH. HARI SINGH, EX. MLA AMRITSAR ROAD, ZIRA. (APPELLANT) (RESPONDENT) APPELLANT BY : SH. RAHUL DHAWAN (D. R.) RESPONDENT BY: SH. P. N. ARORA (ADV.) DATE OF HEARING: 10.08.2017 DATE OF PRONOUNCEMENT: 30.08.201 7 ORDER PER T. S. KAPOOR (AM): THIS IS AN APPEAL FILED BY REVENUE AGAINST THE ORDE R OF LD. CIT(A), BHATINDA DATED 18.09.2015 FOR ASST. YEAR: 2007-08. 2. THE GROUNDS OF APPEAL TAKEN BY REVENUE ARE REPRO DUCED BELOW: 1. THE LD. CIT(A) HAS ERRED IN DELETING PENALTY IM POSED U/S 271(L)(C) IN THE CASE, IGNORING THE FACT THAT THE A SSESSEE FAILED TO DISCLOSE THE AMOUNT OF SALE CONSIDERATION RECEIVED BY HIM DURING THE YEAR ON ACTUAL TRANSFER OF PROPORTIONATE SHARE OF THE LAND TO THE DEVELOPER. 2. THE CIT(A) HAS ERRED IN FAILING TO TAKE INTO ACC OUNT THAT PENALTY U/S 271(1)(C) HAS BEEN HELD TO BE A CIVIL LIABILITY BY THE HONBLE SUPREME COURT IN UNION OF INDIA VS. DHARMENDRA TEXT ILE PROCESSORS AND ORS. (166 TAXMAN 65) AND THIS BEING THE CASE, THE AO HAS DISCHARGED THE BURDEN ON HIM OF ESTABLIS HING ITA NO. 609(ASR)/2015 ASSESSMENT YEAR: 2007-08 2 NECESSARY INGREDIENTS OF SECTION 271(1) (C) AND HAS CORRECTLY LEVIED PENALTY. 3. THE CIT (A) HAS ERRED IN FAILING TO CONSIDER THAT T HE ADDITION MADE BY THE A.O. ON THE ISSUE STANDS CONFIRMED UP T O ITAT AND ALSO BY HONBLE HIGH COURT TO THE EXTENT OF PROPORT IONATE SALE CONSIDERATION ACCRUING TO THE ASSESSEE ON ACTUAL TR ANSFER OF LAND DURING THE YEAR. 4. THE CIT (A) HAS ERRED ON FAILING TO CONSIDER THAT T HE PUNJAB AND HARYANA HIGH COURT WHILE DECIDING THE CASE OF C.S. ATWAL VS. CIT, LUDHIANA & ANOTHERS WITH WHICH ASSESSEES CASE WAS LINKED HAS NOTED THE ADMISSION MADE ON BEHALF OF TH E ASSESSEES THAT CAPITAL GAIN WAS EXIGIBLE ON PROPORTIONATE SAL E CONSIDERATION AND ALSO RECORDED THEIR UNDERTAKING T O PAY BALANCE CAPITAL GAIN TAX AND IN THE LIGHT OF SUCH A DMISSION IT WAS A CLEAR CASE OF CONCEALMENT OF INCOME AND PENAL TY HAS BEEN RIGHTLY IMPOSED. 5. THE CIT (A) HAS ERRED IN HOLDING THAT THE ISSUE INV OLVED WAS DEBATABLE AND SUBJECTED TO LITIGATION WITH VARIED R ESULTS AND, THEREFORE, NO PENALTY COULD BE LEVIED AND IN SO HOL DING FAILED TO APPRECIATE THAT EVERY ISSUE IS DEBATABLE AND MERELY BECAUSE ASSESSEE CHOOSES TO LITIGATE AND LITIGATION HAS VAR IED RESULTS WOULD NOT DETRACT FROM PENAL PROVISIONS OF THE STAT UTE PROVIDED THE NECESSARY INGREDIENTS FOR INVOKING SUCH PROVISI ON WERE ESTABLISHED AS THESE WERE IN THE INSTANT CASE. 3. AT THE OUTSET, THE LD. DR SUBMITTED THAT LD. CI T(A) HAS DELETED THE PENALTY WHICH WAS IMPOSED BY ASSESSING OFFICER U/S 271(1)(C) FOR FAILURE ON THE PART OF THE ASSESSEE TO DECLARE CAPI TAL GAIN IN THE RETURN OF INCOME WHEREAS THE HON'BLE PUNJAB & HARYANA HIGH CO URT WHILE DECIDING THE CASE OF C.S. ATWAL VS. CIT, LUDHIANA & ANOTHERS WITH WHICH ASSESSEES CASE WAS LINKED HAS OBSERVED THE CAPITAL GAIN WAS LEVIABLE ON PROPORTIONATE SALE CONSIDERATION. THE LD. DR SUBMIT TED THAT THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE ISSUE INVOLVED WAS DEBATABLE AND SUBJECTED TO LITIGATION WITH VARIED RESULTS. THE LD . DR SUBMITTED IN HOLDING SO THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT EVERY ISSUE IS ITA NO. 609(ASR)/2015 ASSESSMENT YEAR: 2007-08 3 DEBATABLE AND MERELY BECAUSE ASSESSEE CHOOSES TO LI TIGATE AND LITIGATION HAS VARIED RESULTS WOULD NOT DETRACT FROM PENAL PRO VISIONS OF THE STATUTE. 4. THE LD. AR ON THE OTHER HAND SUBMITTED THAT THE ASSESSEE HAD FILED ORIGINAL RETURN OF INCOME ON 31.03.2008 DECLA RING AN INCOME OR RS.2,52,170/- AND HAD ALSO CLAIMED DEDUCTION OF RS. 66,00,000/- UNDER THE PROVISIONS OF SECTION 54F OF THE ACT. THE LD. A R SUBMITTED THAT ASSESSEE HAD RECEIVED A TOTAL AMOUNT OF RS.66,00,00 0/- ON ACCOUNT OF PART PROCEEDS OF THE SALE CONSIDERATION WHICH HE HA D INVESTED IN THE CONSTRUCTION OF RESIDENTIAL HOUSE AND THEREFORE NO CAPITAL GAIN TAX WAS PAYABLE BY THE ASSESSEE AND THEREFORE THE ASSESSEE WAS NOT LIABLE FOR ANY PENALTY U/S 271(1)(C) OF THE ACT. 5. THE LD. AR SUBMITTED THAT THOUGH LD. CIT(A) HAD DELETED PENALTY HOLDING THAT THE ISSUE WAS DEBATABLE BUT THE FACT R EMAINS THAT ASSESSEE HAD INVESTED THE AMOUNT OF RS.66,00,000/- U/S 54F O F THE ACT, AND THEREFORE ON RECEIPT BASIS THE ASSESSEE HAD DECLARE D CAPITAL GAIN AND HAD INVESTED THE AMOUNT IN THE CONSTRUCTION OF RESIDENT IAL HOUSE. [[ 6. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE THOUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT ASSESSEE WAS HAVING A PLOT MEASURING 1,000 SQ. YARDS IN THE PUNJABI CO-OPERATIVE HOUSING BUILDING SOCIETY LTD. THE PLOT WAS AGREED TO BE TRANSFERRED TO TATA HOUSI NG DEVELOPMENT COMPANY VIDE TRIPARTITE AGREEMENT WITH TATA HOUSING DEVELOPMENT COMPANY AND HASH BUILDERS PRIVATE LTD. THE TOTAL PR OCEEDS AGREED TO BE RECEIVED FROM THE ASSESSEE WERE RS.1,65,00,000/- AN D TWO BUILT UP FLATS ITA NO. 609(ASR)/2015 ASSESSMENT YEAR: 2007-08 4 MEASURING 2250 SQ. FT. EACH. AS PART CONSIDERATION THE ASSESSEE RECEIVED RS.66,00,000/- ONLY WHICH WAS INVESTED IN THE CONST RUCTION OF RESIDENTIAL HOUSE AND ASSESSEE CLAIMED DEDUCTION U/ S 54F OF THE ACT. THIS FACT IS APPARENT FROM THE ORDER OF ASSESSING O FFICER ITSELF WHERE HE HAS ALLOWED THE CLAIM OF RS.66,00,000/- AS DEDUCTIO N U/S 54F OF THE ACT. IN VIEW OF THESE FACTS NOTHING WAS DUE TO BE DECLAR ED AS CAPITAL GAIN TAX AS HE HAD ALREADY DECLARED CAPITAL GAIN ON RECEIPT BASIS. 7. THE CASE LAW DECIDED BY HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF C.S. ATWAL AND OTHERS ALSO HOLDS THAT U NDER THESE CIRCUMSTANCES, THE ASSESSEE WAS LIABLE TO BE TAXED FOR CAPITAL GAIN ON THE BASIS OF PROPORTIONATE AMOUNT OF SALE CONSIDERATION RECEIVED BY HIM. THE ASSESSEE HAD DECLARED THE RECEIPT OF PART CONSIDERA TION WHICH IS APPARENT FROM THE ASSESSMENT ORDER ITSELF. RELEVANT PARAGRAPH OF ASSESSMENT ORDER AS CONTAINE D IN PARA 9.7 IS REPRODUCED BELOW: 9.7 IN VIEW OF THE DISCUSSION MADE SUPRA, THE LONG TERM CAPITAL GAINS, ACCRUED TO THE ASSESSEE, IS BEING WORKED OUT AS UNDER SALE CONSIDERATION RS.1,6,00,000/-+ TW O FLATS OF 2250 SQ.FT. EACH @ RS.4,500/- RS.2,2,50,000/- RS.3,7,75,000/- LESS COST OF ACQUISITION RS.0,00,000/- NET LONG TERM CAPITAL GAINS: RS.3,7,50,000/- LESS: CONSIDERATION STATED TO HAVE BEEN INVESTED IN CONSTRUCTION OF THE RS.66,00,000 /- RESIDENTIAL HOUSE AS DISCUSSED IN PARA 7. BALANCE LONG TERM CAPITAL GAINS: RS.21,50,000/- ITA NO. 609(ASR)/2015 ASSESSMENT YEAR: 2007-08 5 8. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES AND IN VIEW OF THE JUDGMENT OF HON'BLE PUNJAB & HARYANA HIGH COURT, IN THE CASE OF C.S. ATWAL AND OTHERS, THE ASSESSEE WAS NOT LIABLE FOR P ENALTY U/S 271(1)(C) OF THE ACT. 9. IN VIEW OF THE ABOVE, THE APPEAL FILED BY THE RE VENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30.08.2017. SD/- SD/- (N. K. CHOUDHRY) (T. S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 30.08.2017. /GP/SR. PS . COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE: (2) THE (3) THE CIT(A), (4) THE CIT, (5) THE SR DR, I.T.A.T., TRUE COPY BY ORDER