The Income Tax Officer, Faridkot V. Sh. Mantar singh Brar, MLA, Faridkot

ITA 615/ASR/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7789 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 10 month(s) 4 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: 30-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S K KATARIA
• Keywords: Capital asset
• 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.615/(ASR)/2015 ASSESSMENT YEA R: 2007-08 INCOME-TAX OFFICER, WARD-3(3), FARIDKOT. VS. S. MANTAR SINGH BRAR, MLA V. SANDHWAN, DIST:- FARIDKOT. PAN:AGQPB8281J (APPELLANT) (RESPONDENT) APPELLANT BY: SH. CHARAN DASS, (D.R.) RESPONDENT BY: SH. S. K. KATARIA (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), AMRITSAR, DT.18.09.2015 FOR ASST. YEAR: 2007-08. 2. THE APPEAL WAS EARLIER HEARD ON 30.11.2016, 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. 3. 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. ITA NO.615/ASR/2015 ASST. YEAR. 2007-0 8 2 4. 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 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.1,78,75,000/- WAS MADE ON ACCOUNT OF LONG TERM CAPITAL GAINS ON ACCOUNT OF SALE OF LAND MEASURING 500 SQ YARDS. WHILE MAKING THIS ADDITION THE ASSESSING OFF ICER HELD THE ENTIRE SALE CONSIDERATION INCLUDING RECEIVABLE FOR CALCULA TION OF CAPITAL GAIN TAX WHEREAS THE ASSESSEE HAD DECLARED CAPITAL GAIN ON T HE BASIS OF PROPORTIONATE AMOUNT RECEIVED DURING THE YEAR. 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 ASSESSING OFFICER HEL D THAT SINCE A PART OF SALE 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 CO NTRACT, AND HELD THE ITA NO.615/ASR/2015 ASST. YEAR. 2007-0 8 3 SAME 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.37,00,670/- BEING MINIMUM PENALTY @100% OF THE T AX SOUGHT TO BE EVADED U/S.271(1)(C) OF THE ACT. 5. AGGRIEVED THE ASSESSEE FILED APPEAL BEFORE LD. C IT(A), AND LD. CIT(A) NOTED IN HIS ORDER THAT THE AMOUNT OF RS.15,00,000/- WAS RECEIVED AGAINST THE SALE OF PORTION OF THE SAID LAND AND CA PITAL GAIN WAS DULY DECLARED IN THE RETURN OF INCOME FOR ASST. YEARS: 2 007-08, AND THERE WAS NO OTHER TRANSFER OF LAND OR RECEIPT OF MONEY OTHE R THAN THIS DURING THE ASST.YEARS:2007-08. THE LD. CIT(A) FURTHER HELD THA T MATTER WAS CLEARLY DEBATABLE IN AS MUCH AS THE DECISION OF TRIBUNAL WA S OVERTURNED BY THE HONBLE HIGH COURT. THEREFORE, HE HELD THAT THE EXP LANATION FOR NOT INCLUDING THE ENTIRE CAPITAL GAIN IN THE RETURN OF INCOME WAS BONAFIDE AND THEREFORE, HE HAD DELETED THE PENALTY IMPOSED B Y ASSESSING OFFICER. 6. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US. 7. 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, THEREFORE, THERE WAS N O CONCEALMENT OF INCOME AND, LD. CIT (A) HAS RIGHTLY HELD THAT THIS WAS NOT A CASE OF FURNISHING OF WRONG PARTICULARS OF INCOME OR CONCEA LMENT OF INCOME. ITA NO.615/ASR/2015 ASST. YEAR. 2007-0 8 4 8. 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 DECLARED THE CAPI TAL GAIN TO THE EXTENT OF RS.13,83,788/- IN HIS ORIGINAL RETURN OF INCOME AND WHICH AMOUNT HAS BEEN CALCULATED ON THE RECEIVED AMOUNT OF RS.15,00, 000/-. THIS FACT IS VERIFIABLE FROM THE ASSESSMENT ORDERS ITSELF WHEREI N THE ASSESSING OFFICER HAS NOTED THIS FACT ON PAGE 1 TO 3 OF HIS ORDER. TH E ASSESSING OFFICER HAD IMPOSED PENALTY TREATING THE WHOLE AMOUNT OF SALE C ONSIDERATION TO BE RECEIVED BY ASSESSEE. 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 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 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 ITA NO.615/ASR/2015 ASST. YEAR. 2007-0 8 5 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 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. THEREFORE, KEEPING IN VIEW OF THE DECISION OF HONBLE PUNJAB & HARYANA HIGH COURT THE ASSESSEE WAS REQUIR ED TO PAY CAPITAL GAIN TAX ONLY ON THE AMOUNT RECEIVED WHICH IN THE P RESENT CASE IS ITA NO.615/ASR/2015 ASST. YEAR. 2007-0 8 6 RS.15,00,000/-. THEREFORE, NO FURTHER CAPITAL GAINS TAX WAS PAYABLE DURING THE YEAR AS PER THE DECISION OF HON,BLE PUNJ AB & HARYANA HIGH COURT, THEREFORE, THE QUESTION OF PENALTY DOES NOT ARISE. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES THE ASSESSEE CANNOT B E SAID TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME. 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. ITA NO.615/ASR/2015 ASST. YEAR. 2007-0 8 7 (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. (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. 9. IN VIEW OF THE ABOVE, THE APPEAL FILED BY THE RE VENUE 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.615/ASR/2015 ASST. YEAR. 2007-0 8 8 1. THE ASSESSEE: 2. THE 3. THE CIT(A), 4. THE CIT, 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER