Sh. Ajit Singh Kohar, Jalandhar V. The Dy. Commissioner of Income Tax, Phagwara

ITA 650/ASR/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9602 (ITAT-AMRITSAR)
• Duration Of Justice: 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 17-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A N MISHRA
• Assessee Lawyers: J S BHASIN
• Keywords: Salary income; Revised return
• Section: 143(3); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. (CAMP AT JALANDHAR) BEFORE SH. A.D. JAIN, JUDICIAL MEMBER AND SH. T.S. KAPOOR, ACCOUNTANT MEMBER ITA NO. 650(ASR)/2015 ASSESSMENT YEAR:2007-08 PAN: ABOPK0167F SH. AJIT SINGH KOHAR VS. DY. COMMR. OF INCOME TAX, S/O SH. CHANAN SINGH KOHAR, PHAGWARA. TALWANDI BHOOTIAN, SHAHKOT, DISTT. JALANDHAR. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. J.S. BHASIN, ADV. RESPONDENT BY: SH. A.N. MISHRA, DR DATE OF HEARING: 24/06/2016 DATE OF PRONOUNCEMENT: 24/06/2016 ORDER PER A.D. JAIN, JM; THIS IS THE ASSESSEES APPEAL FOR THE ASSESSMENT YE AR 2007-08, AGAINST THE ORDER, DATED 19.08.2014, PASSED BY THE ID. CIT(A)-1, JALANDHAR. THE ASSESSEE HAS RAISED THE FOLLOWING GR OUNDS OF APPEAL: 1. THAT IN THE GIVEN FACTS AND CIRCUMSTANCES OF T HE CASE, THE ID. CIT(A) GROSSLY ERRED IN CONFIRMING THAT LTCG ON REC EIPT OF RS. 6 LACS FROM TATA WAS NOT DECLARED BY ASSESSEE A ND, THEREFORE, LEVY OF PENALTY U/S 271(L)(C) ON THE SAI D GAIN, WAS LIABLE TO BE CONFIRMED. 2. THAT BY RECKONING, THE ISSUE BEING HIGHLY DEBAT ABLE, AND THE ASSESSEES BONAFIDE NOT IN DOUBT, NOR HIS EXPLANATI ON HELD TO BE FALSE, THE LEVY OF IMPUGNED PENALTY WAS WHOLLY I LLEGAL AND HENCE NOT SUSTAINABLE. ITA NO.650(ASR)/2015 A.Y. 2007-08 2 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE WAS A MEMBER OF A HOUSING SOCIETY OF MLAS AND EX MLAS, NAMED AS PUN JABI CO-OPERATIVE HOUSE BUILDING SOCIETY LTD., MOHALI, WHICH WAS THE OWNER OF 21.2 ACRES OF LAND IN VILLAGE KANSAL, DISTT. MOHALI. THE SOCIE TY ENTERED INTO A TRIPARTITE JOINT DEVELOPMENT AGREEMENT ON 25.02.200 7 WITH M/S. HASH BUILDERS (PVT.) LIMITED, CHANDIGARH AND M/S. TATA H OUSING DEVELOPMENT COMPANY LTD., MUMBAI, BY VIRTUE OF WHICH, THE SOCIE TY WOULD TRANSFER ITS LAND FOR DEVELOPMENT IN LIEU OF MONETARY CONSIDERAT ION AND ALSO CONSIDERATION IN KIND TO THE MEMBERS OF THE SOCIETY . THE ASSESSEE, AS A MEMBER OF THE SAID SOCIETY, OWNINED1,000 SQ. YARDS LAND. THE TOTAL CONSIDERATION WAS SETTLED AT RS. 1,65,00,000/- PLUS ALLOTMENT OF TWO FLATS OF 2250 SQ. FEET EACH TO THE ASSESSEE (BOTH VALUING AT RS.2,02,50,000/-), OUT OF WHICH THE ASSESSEE HAD RECEIVED RS.30,00,000 /- ON 27.02.2007, RS.36,00,000/- ON 27.04.2007. THE ASSESSEE DERIVED HIS INCOME FROM SALARY, PENSION AS MEMBER OF PUNJAB LEGISLATIVE ASS EMBLY. HE FURNISHED HIS RETURN FOR THE YEAR UNDER CONSIDERATION 30.07.2008, DECLARING AN INCOME OF RS. 1,62,690/- PLUS AGRICULTURAL INCOME O F RS.2,95,930/- ONLY. THE ASSESSEE ALSO FILED A REVISED RETURN ON 11.11.2 009 SUO MOTO, IN WHICH, LTCG OF RS.22,21,208/- HAD BEEN DECLARED, WH ICH WAS STATED TO BE CALCULATED BY THE ASSESSEE ONPRO-RATA BASIS BY TAKING RS.24,00,000/- AS PRO-RATA SALE CONSIDERATION OF TH E PLOT. THE SELF ASSESSMENT TAX OF RS.5,16,600/- WHILE REVISING THE RETURN WAS STATED TO BE PAID BY THE ASSESSEE. AS THE ASSESSEE HAD NOT DE CLARED ENTIRE LTCG ITA NO.650(ASR)/2015 A.Y. 2007-08 3 ON THE SALE OF HIS PLOT EVEN IN THE REVISED RETURN FOR THE A.Y. 2007-08, THE CASE OF THE ASSESSEE WAS REOPENED U/S 147 OF THE AC T. 2.1. THE AO NOTICED THAT AS PER THE AGREEMENT DATED 25.02.2007, EACH OF THE MEMBERS OF THE SOCIETY INCLUDING THE ASSESSEE, OWNING PLOTS OF 1000 SQ. YARDS WERE TO RECEIVE RS. 1,65,00,000/- IN CASH AND TWO FURNISHED FLATS MEASURING 2250 SQ. FEET EACH, WITH MARKET VAL UE OF RS.2,02,50,000/-, CALCULATED AT THE RATE OF RS.4,50 0/- PER SQ. FOOT. THUS, THE TOTAL CONSIDERATION FOR TRANSFER OF PLOT CAME T O RS.3,67,40,000/. HOWEVER, THE AO ASSESSED THE INCOME AT RS. 1,66,28, 869/- PLUS AGRICULTURAL INCOME OF RS.2,95,930/- U/S 143(3) R.W .S. 147 OF THE ACT ON 26.12.2011, WHICH INCLUDED LTCG OF RS. 1,63,21,208/ - ON THE SALE OF PLOT, AS AGAINST LTCG DECLARED BY THE ASSESSEE AT R S.22,21,208/-. WHILE COMPLETING THE ASSESSMENT, THE AO MADE AN ADDITION OF RS. 1,41,000 TO THE REVISED RETURNED INCOME OF THE ASSESSEE, WHICH REPRESENTED ALLEGED UNDECLARED LONG TERM CAPITAL GAIN ON THE SALE OF PL OT, BY TAKING THE SALE CONSIDERATION OF PLOT AT RS. 1,65,00,000/- ONLY. TH EREAFTER, THE AO INITIATED PENALTY PROCEEDINGS U/S 271 (L)(C) OF THE ACT FOR CONCEALING THE PARTICULARS OF HIS INCOME AND FOR FILING INACCURATE PARTICULARS OF INCOME TO THE EXTENT OF THE ADDITION MADE, I.E., RS. 1,41, 00,000/-, WHICH REPRESENTED ALLEGED UNDISCLOSED LONG TERM CAPITAL GAINS. 3. THE AO LEVIED THE PENALTY OF RS.31,77,976/- BEIN G 100% OF THE TAX SOUGHT TO BE EVADED ON THE ASSESSEE, VIDE ORDER DAT ED 21.03.2014, PASSED UNDER SECTION 271(L)(C) OF THE ACT. ITA NO.650(ASR)/2015 A.Y. 2007-08 4 4. ON APPEAL, THE ID. CIT(A) PARTLY ALLOWED THE REL IEF AND UPHELD THE PENALTY ON THE AMOUNT OF RS. 6 LACS. 5. THE ID. COUNSEL OF THE ASSESSEE HAS CONTENDED TH AT THE ID. CIT(A) GROSSLY ERRED IN CONFIRMING THAT LTCG OF RS. 6 LACS FROM TATA WAS NOT DECLARED BY THE ASSESSEE AND, THEREFORE, THE LEVY O F PENALTY ON THE SAID GAIN WAS LIABLE TO BE DELETED. HE FURTHER SUBMITTED THAT THE ISSUE IS HIGHLY DEBATABLE AND HENCE, THE PENALTY IMPOSED IS ILLEGAL AND NOT SUSTAINABLE. THE LD. COUNSEL FOR THE ASSESSEE FURTH ER INVITED OUR ATTENTION TO THE TERMS AND CONDITIONS OF JOINT DEVELOPMENT AG REEMENT (IN SHORT, JDA). OUR SPECIFIC ATTENTION WAS DRAWN TO THE FIR ST CONDITION MARKED AS (I) WHEREIN IT HAS BEEN MENTIONED THAT RS. 6 LACS W ILL BE GIVEN PER PLOT HOLDER OF 1000 SQ. YARDS AND WHICH WAS ADJUSTABLE A GAINST UPON THE PERFORMANCE OF ALL THE OBLIGATIONS BY THE OWNER TO THE FULL SATISFACTION OF THE DEVELOPERS. THE LD. COUNSEL FOR THE ASSESSEE SU BMITTED THAT SINCE THE AGREEMENT ITSELF CANNOT BE EXECUTED AND THEREFORE, THE ASSESSEE HAD NOT FULFILLED ALL THE CONDITIONS OF THE JDA AND THEREF ORE, HE HAD NOT DECLARED THE AMOUNT OF RS.6 LACS, AS PART OF SALE CONSIDERAT ION, ASSUMING THE SAME TO BE DECLARED AT THE TIME OF COMPLETION OF EN TIRE TRANSACTION.. 6. THE ID. DR, ON THE OTHER HAND, RELIED ON THE IMPUG NED ORDER. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE PER USED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT IT IS A FACT THA T RS.6 LACS PER PLOT HOLDER OF 1000 SQ. YDS WAS RECEIVED BY THE ASSESSEE IN VIE W OF CONDITION NO.(I) OF JDA, WHICH IS REPRODUCED AS UNDER: ITA NO.650(ASR)/2015 A.Y. 2007-08 5 (I) A SUM OF RS.3.87 CRORES, CALCULATED @ RS.300,000/- PER PLOT HOLD OF 500 SQ. YDS AND RS.6 LACS PER PLOT HOLDER O F 1000 SQ. YARDS IS BEING PAID ON THE EXECUTION OF THE AGREEME NT TO THE OWNER AND/OR THE RESPECTIVE MEMBERS OF THE OWNER ( AS ADVANCE/EARNEST MONEY) UPON THE PERFORMANCE OF ALL THE OBLIGATIONS BY THE OWNER TO THE FULL SATISFACTION O F THE DEVELOPERS. 8. AS PER THIS CLAUSE, THE AMOUNT OF RS.6 LACS WAS TO BE ADJUSTED AGAINST THE FINAL COMPLETION AND UPON THE PERFORMAN CE OF ALL THE OBLIGATIONS BY THE OWNER TO THE FULL SATISFACTION O F THE DEVELOPERS. THIS IS UNDISPUTED THAT THE JDA WAS TERMINATED AND THE ENT IRE TRANSACTION COULD NOT BE COMPLETED. THEREFORE, NOT DECLARING RS . 6 LACS, AS PART OF SALE CONSIDERATION WAS A HIGHLY DEBATABLE POINT ON WHICH PENALTY COULD NOT HAVE BEEN LEVIED. THE LD. CIT(A) IN HIS ORDER, HAS HIMSELF NOTED THAT VARIOUS ISSUES WERE STILL NOT RESORTED AND THEREFO RE, HE HAS HELD THAT THE TRANSACTION WAS NOT COMPLETED. IN VIEW OF THE ABOVE , WE HOLD THAT THE PENALTY WAS NOT IMPOSABLE AND, THEREFORE, WE DELETE THE PENALTY. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 24/0 8 / 2016. SD/- SD/- (T.S. KAPOOR) (A.D.JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER /SKR/ DATED: 24/08 /2016 COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:SH. AJIT SINGH KOHAR, SHAHKOT 2. THE DCIT, PHAGWARA 3. THE CIT(A), JLR 4. THE CIT, JLR 5. THE SR DR, ITAT, AMRITSAR.