NANU LAL SHARMA, Jaipur V. ITO, Jaipur

ITA 619/JPR/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 5129 (ITAT-JAIPUR)
• Duration Of Justice: 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 03-06-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S L CHANDEL CIT DHK
• Assessee Lawyers: G M MEHTA
• Keywords: Capital asset; Cost of acquisition; Reasonable cause; Fair market value
• Section: 54B; 147; 144

Judgement Text

ITA NO. 619/JP/16 NANU LAL SHARMA VS. ITO, JAIPUR 1 VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH DQY HKKJR] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS [KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT,JM & SHRI VIKRAM SINGH YADA V, AM VK;DJ VIHY LA-@ ITA. NO. 619/JP/16 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2009-10 NANU LAL SHARMA, KOTOTYA KI DHANI, VILLAGE NINDAR, TEHSIL-AMER, JAIPUR. CUKE VS. THE I.T.O. WARD - 7(4), JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AXVPN8478P VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI G.M.MEHTA (C.A.) JKTLO DH VKSJ LS@ REVENUE BY : SHRI S.L CHANDEL (ADDL. CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 07/ 07/2017 ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT: 11/07/2017 VKNS'K@ ORDER PER SHRI VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A)- III, JAIPUR DATED 21.03.2016 FOR A.Y. 2009-10 WHERE IN THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL IS AS UNDER.:- (1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS: (A) IN SUSTAINING ADDITION IN INDIVIDUAL STATUS OF THE ASSESSEE AMOUNTING TO RS. 97,50,000/-, BEING SALE PRICE OF 2/5 TH SHARE IN ANCESTRAL AGRICULTURAL LAND OF HUF OF THE ASSESSEE. (B) IN NOT ALLOWING BENEFIT OF SECTION 54B OF IT AC T FOR RS. 78,36,640/- ( RS. 75,11,000+RS. 3,25,640/-) ON ACCOUNT OF PURCHAS E OF NEW AGRICULTURAL LAND IN NAME OF FEMALE COPARCENER OF H UF. ITA NO. 619/JP/16 NANU LAL SHARMA VS. ITO, JAIPUR 2 (C) IN NOT ALLOWING BENEFIT OF COST INFLATION INDE X AS PROVIDED UNDER SECTION 48 OF IT ACT IN CALCULATING CAPITAL GAINS O N SALE OF AGRICULTURAL LAND. (2) WITHOUT PREJUDICE TO GROUND NO. (1), LD CIT(A) WAS NOT JUSTIFIED IN SUSTAINING ADDITION OF RS. 97,50,000/- BEING SALE V ALUE OF AGRICULTURAL LAND, THE COST OF ACQUISITION OF WHICH WAS TAKEN BY LD. AO AT NIL AND THEREFORE, NO CAPITAL GAIN ARISES ON THE ASSET, THE COST OF ACQUISITION OF WHICH IS ZERO. 2. THE APPEAL WAS DECIDED EX-PARTE BY THE ORDER OF THE COORDINATE BENCH DATED 16.09.2016 AND THEREAFTER, IT WAS RECALLED BY THE ORDER OF THE COORDINATE BENCH DATED 12.01.2017. 3. BRIEFLY THE FACTS OF THE CASE ARE THAT THE AO OB SERVED THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE SOLD AN AGRIC ULTURAL LAND FOR RS. 97,50,000/- WHICH IS SITUATED WITHIN THE MUNICIPAL LIMITS OF JAIPUR, THEREFORE AS PER DEFINITION OF CAPITAL ASSETS GIVEN IN SECTI ON 2(14)(III) OF INCOME TAX ACT, 1961 THE SAME IS CAPITAL ASSET OF THE ASSESSEE AND GAIN ARISING FROM SALE OF LAND IS TAXABLE AS LONG TERM CAPITAL GAIN. ACCOR DINGLY, THE AO TAXED THE ENTIRE SALES CONSIDERATION OF RS. 97,50,000/- AS LO NG TERM CAPITAL GAIN IN THE HANDS OF THE ASSESSEE AND NO DEDUCTION OF COST OF A CQUISITION WAS ALLOWED ON THE GROUND THAT THE SAME WAS NOT KNOWN/DETERMINABLE AT THE END OF THE AO VIDE ORDER PASSED UNDER SECTION 144 R/W SECTION 147 OF THE ACT. . 4. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) AND CHALLENGED THE ACTION OF THE ASSESS ING OFFICER IN MAKING ADDITION OF RS. 97,50,000/- UNDER THE HEAD LONG TE RM CAPITAL GAINS ON ACCOUNT OF SALE OF AGRICULTURAL LAND, STATING THAT THE CAPITAL GAINS SO AROSE ON SALE OF AGRICULTURAL LAND WAS EXEMPT AS PER PROVISI ONS OF SECTION 54B OF THE ACT. THE LD. CIT(A) AFTER TAKING INTO CONSIDERATION THE SUBMISSION OF THE ASSESSEE AND REMAND REPORT CALLED FROM THE AO HELD THAT THE NEW AGRICULTURAL ITA NO. 619/JP/16 NANU LAL SHARMA VS. ITO, JAIPUR 3 LAND SO PURCHASED WAS NOT IN THE NAME OF THE ASSESS EE BUT WAS IN NAME OF HIS WIFE, THEREFORE, DEDUCTION U/S 54B CANNOT BE AL LOWED THE ASSESSEE. FURTHER, THE LD CIT(A) HELD THAT THE SALE CONSIDERA TION WAS NOT DEPOSITED IN THE SPECIFIED ACCOUNT WITH THE STIPULATED TIME FRAM E. AGAINST THE SAID FINDING OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. 5. DURING THE COURSE OF HEARING, THE LD. AR CONTEND ED THAT ASSESSEE INHERITED HIS SHARE IN THE ANCESTRAL AGRICULTURAL L AND WHICH WAS SOLD BY THE ASSESSEE IN THE CAPACITY OF KARTA OF THE HUF AND TH E NEW AGRICULTURAL LAND WAS PURCHASED IN NAME OF FEMALE COPARCENER OF THE H UF WITHIN THE TIME ALLOWED U/S 139(4) OF THE ACT AND ACCORDINGLY SUBMI TTED THAT THERE IS NO LIABILITY TOWARDS LEVY OF CAPITAL GAINS TAX IN THE INSTANT CASE. THE LD. AR FURTHER RELIED ON THE WRITTEN SUBMISSIONS WHICH ARE REPRODUCED AS UNDER:- GROUND NO. (1)(A): ON COMPLETE PARTITION OF BIGGER HUF PROPERTIES, THE ASSESSEE RECEIVED HIS 2/5 TH SHARE ON FULL PORTION IN ANCESTRAL AGRICULTURAL LA ND. IN THE CAPACITY AS KARTA OF HUF, HE HAD SOLD HIS SH ARE RECEIVED ON TOTAL PARTITION OF HUF VIDE SALE DEED DATED 29 TH MAY 2008 (REGISTERED WITH SUB- REGISTRAR ON 02.06.2008). WHILE ADMITTING ANCESTRAL STATUS OF SOLD AGRICULTURAL LAND (AT PAGE (4) FIRST PARA OF ORDER OF LD. AO), T HE TOTAL SALE VALUE OF RS. 97,50,000/- WAS ASSESSED AS LONG TERM CAPITAL GAINS IN THE INDIVIDUAL STATUS OF THE ASSESSEE. LD. CIT(A) DID NOT CONSIDER THIS ISSU E AND DISMISSED THE APPEAL. GROUND NO. (1)(B): OUT OF SALE CONSIDERATION OF ANC ESTRAL AGRICULTURAL LAND, NEW AGRICULTURAL LAND FOR RS. 78,36,640/- ( RS. 75, 11,000+ RS. 3,25,640/- FOR REGISTRATION AND STAMPS0 WAS PURCHASED BY HUF 12.08 .2009 (REGISTERED ON 13.08.2009) IN NAME OF FEMALE COPARCENER USING THE SAME MONEY. IN THIS RESPECT WE FURTHER SUBMIT AS UNDER: ITA NO. 619/JP/16 NANU LAL SHARMA VS. ITO, JAIPUR 4 (A) HUF OF THE ASSESSEE NEVER ASSESSED TO TAX EARLI ER, WAS UNABLE TO PURCHASE NEW AGRICULTURAL LAND IN F.Y. 2008-09 NOR COULD DEP OSIT THE SAME IN CAPITAL GAIN ACCOUNT FOR THE REASON THAT MAJOR CHEQUES OF S ALE CONSIDERATION WERE RETURNED UNPAID IN THAT YEAR AND WERE RECEIVED IN F .Y. 2009-10 AS PER COPY OF HIS BANK ACCOUNT. (B) NEW AGRICULTURAL LAND IN NAME OF FEMALE COPARCE NER WAS PURCHASED BY HUF WITHIN TIME ALLOWED U/S 139(4) OF IT ACT. IN CA SE OF CIT VS. JAGRITI AGGARWAL (2011) 339 ITR 610 (P&H), HONBLE PUNJAB & HARYANA HIGH COURT HAD HELD THAT GAIN IS TO BE USED FOR PURCHASE OF NE W PROPERTY OR TO BE DEPOSITED IN SPECIFIED ACCOUNT BEFORE DUE DATE FOR FURNISHING RETURN. DATE FOR FURNISHING RETURN COULD BE DATE U/S 139(4)-THIS ISS UE WAS ALSO FOLLOWED IN CASE OF MOHAN SINGH VS. ACIT(2015 173 TTJ (CHAND) 634. (C) ALTERNATIVELY, FOR PURCHASE OF NEW AGRICULTURAL LAND IN SUBSEQUENT FINANCIAL YEAR, DEDUCTION U/S 54B OF IT ACT SHOULD HAVE BEEN ALLOWED BY THE LOWER AUTHORITIES SINCE HUF WAS TOTALLY IGNORANT ABOUT CA PITAL GAIN TAX LAW UNDER THE INCOME TAX ACT. IN CASE OF CIT VS. SCHELL INTERNATI ONAL (2005) 278 ITR 630 (BOM), IT WAS HELD THAT IT CANNOT BE SAID THAT IGNO RANCE OF LAW IS NOT A REASONABLE CAUSE. THERE IS NO PRESUMPTION THAT EVER YBODY KNOWS THE LAW. GROUND NO. (10(C): HUF OF ASSESSEE BECAME OWNER OF THE AGRICULTURAL LAND UNDER SECTION 49(1) (I) OF IT ACT AFTER TOTAL PARTI TION OF BIGGER HUF IT IS ENTITLED FOR DETERMINATION OF FAIR MARKET VALUE OF THE ASSET ON 1 ST APRIL 1981 SO ALSO THE BENEFIT OF COST INFLATION INDEX. BOTH BENEFITS ARE ALLOWABLE UNDER THE STATUTE. IN THIS CASE NEITHER VALUE OF SOLD PROPERT Y WAS ADOPTED WHICH WAS PREVAILING AS ON 01.04.1981 NOR ANY BENEFIT OF INDE XATION WAS ALLOWED BY BOTH THE LOWER AUTHORITIES, THOUGH LD. AO HAD TAKEN COST AT NIL. ITA NO. 619/JP/16 NANU LAL SHARMA VS. ITO, JAIPUR 5 WITHOUT PREJUDICE TO GROUND NO. (1), LD. AO AT PAGE (4) HIMSELF HAD TAKEN COST OF THE SOLD AGRICULTURAL LAND AT NIL. IF THE COST O F SOLD AGRICULTURAL LAND IS TAKEN AT NIL NO CAPITAL GAIN TAX IS LEVIABLE AS HELD IN N UMBER OF JUDICIAL PRONOUNCEMENTS. 6. THE LD. DR IS HEARD WHO HAS RELIED ON THE ORDER OF THE LOWER AUTHORITIES. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LD AR HAS TAKEN THE PLEA THAT THE S ALE OF THE ANCESTRAL AGRICULTURAL LAND BY THE ASSESSEE WAS IN HIS CAPACI TY AS KARTA OF THE HUF AND NOT IN HIS INDIVIDUAL CAPACITY AND SECONDLY, NEW AG RICULTURAL LAND WAS PURCHASED IN THE NAME OF HIS WIFE WHO IS FEMALE CO PARCENER OF THE HUF WITHIN THE TIME LIMITS PRESCRIBE UNDER SECTION 139( 4) OF THE ACT. IN OUR VIEW, THIS CONTENTION GOES TO THE VERY CORE OF THE ISSUE AT HAND IN TERMS OF DETERMINING WHETHER THE HUF OR THE INDIVIDUAL IS TH E ASSESSABLE UNIT IN THE INSTANT CASE AND THEN, HOW THE SAME SHOULD BE TREAT ED FOR DETERMINING THE CAPITAL GAINS TAX LIABILITY TAKING INTO CONSIDERATI ON THE INVESTMENT IN THE NEW AGRICULTURAL LAND. AT THE SAME TIME, WE FIND THAT THERE IS NO FINDING OF THE LD CIT(A) IN THIS REGARD AND APPARENTLY, THE ASSESSEE HAS NOT RAISED SUCH PLEA BEFORE THE LD CIT(A). FURTHER, WE NOTED FROM THE A SSESSMENT RECORDS THAT THAT THE AO HAS ISSUED SHOW-CAUSE TO THE ASSESSEE, HOWEVER THE ASSESSEE HAS FAILED TO RESPOND TO THE SHOW-CAUSE AND THE ASS ESSMENT HAS BEEN DONE U/S 144 READ WITH 147 OF THE ACT. THE LD AR HAS SUB MITTED THAT THE ASSESSEE WILL FULLY COOPERATE IN THE PROCEEDINGS WHERE THE B ENCH SO DECIDE TO REMAND THE MATTER BACK TO THE AO. AFTER HEARING BOTH THE PARTIES AND GIVEN THAT THE GROUNDS RAISED AND THE CONTENTION ADVANCED BY THE L D AR GOES TO THE CORE OF THE ISSUE OF DETERMINING THE ASSESSABLE PERSON, WE ARE SETTING ASIDE THE MATTER TO THE FILE BY THE LD. CIT(A) TO EXAMINE THE SAME TAKING INTO CONSIDERATION THE VARIOUS CONTENTIONS RAISED BY THE AR AND DECIDE AS PER LAW. NEEDLESS TO SAY, THE ASSESSEE SHALL FULLY COOPERATE IN THE PROCEEDINGS AND ITA NO. 619/JP/16 NANU LAL SHARMA VS. ITO, JAIPUR 6 SHALL SUBMIT NECESSARY INFORMATION/DOCUMENTS AS SO DESIRED BY THE LD CIT(A) SO THAT THE PROCEEDINGS CAN BE COMPLETED IN A TIME- BOUND MANNER. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 11/07/2017. SD/- SD/- DQY HKKJR FOE FLAG ;KNO (KUL BHARAT) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 11/07/2017 * SANTOSH. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- NANU LAL SHARMA, KOTOTYA KI DHANI, VILLAGE - NINDAR, TEHSIL-AMER, JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT- ITO, WARD-7(4), JAIPUR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDRVIHY@ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, 6. XKMZ QKBZY@ GUARD FILE (ITA NO.619/JP/2016) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT REGISTRAR.