Mr. Juginder Singh Khurana, Lucknow V. Income Tax Officer-6(2), Lucknow

ITA 829/LKW/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4769 (ITAT-LUCKNOW)
• Duration Of Justice: 1 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 11-01-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 18-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: A P SINGH
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Opportunity of being heard
• Section: 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A , LUCKNOW BEFORE SHRI S UNIL KUMAR YADAV , JUDICIAL MEMBER AND SHRI. A. K. GARODIA , ACCOUNTANT MEMBER ITA NO. 829/LKW/2014 ASSESSMENT YEAR: 2006 - 07 MR JUGINDER SINGH KHURANA 49 - C, SINGAR NAGAR AL AMBAGH, LUCKNOW V. INCOME TAX OFFICER 6(2) LUCKNOW T AN /PAN : ABSPK8919M (APP ELL ANT) (RESPONDENT) ITA NO. 860/LKW/2014 ASSESSMENT YEAR: 2006 - 07 INCOME TAX OFFICER 6(2) LUCKNOW V. MR JUGINDER SINGH KHURANA 49 - C, SINGAR NAGAR ALAMBAGH, LUCKNOW T AN /PAN : ABSPK8919M (APP ELL ANT) (RESPONDENT) ASSESSEE BY: SHRI. A. P. SINGH, ADVOCATE DEPARTMENT BY: SHRI. AMIT NIGAM, D.R. DATE OF HEARING: 11 01 201 6 DATE OF PRONOUNCEMENT: 03 02 201 6 O R D E R PER SUNIL KUMAR YADAV: THESE CROSS APPEALS ARE PRE FERRED BY THE ASSESSEE AS WELL AS THE REVENUE AGAINST THE ORDER OF THE LD. CIT(A) PERTAINING TO ASSESSMENT YEAR 2006 - 07. : - 2 - : 2 . SINCE THESE APPEALS WERE HEARD TOGETHER, THESE ARE BEING DISPOSED OF THROUGH THIS CONSOLIDATED ORDER. FOR THE SAKE OF REFERENCE, WE EX TRACT THE GROUNDS RAISED IN THESE APPEALS AS UNDER: - 1 . THE LEARNED C.I.T., (APPEALS), LUCKNOW ERRED WHILE SUSTAINING THE CHARGING OF CAPITAL GAIN ON THE APPELLANT. GROUNDS RAISED BY THE ASSESSEE: 1 . (A)THE LEARNED C.I.T., (APPEALS), LUCKNOW ERRED WHILE NOT CON SIDERING THAT THE APPELLANT IS NOT THE LEGAL OWNER OF THE LAND. 1 . (B) THE LEARNED C.I.T., (APPEALS), LUCKNOW ERRED WHILE NOT CONSIDERING THAT THE PERSON FROM WHOM THE APPELLANT HAD PURCHASED THE PROPERTY WAS NOT THE LEGAL OWNER OF LAND, AS SUCH CHARGING OF C APITAL GAIN IS BAD IN THE EYES OF LAW. 1 . (C) THE LEARNED C.I.T., (APPEALS), LUCKNOW ERRED WHILE NOT CONSIDERING THAT THE TILTE OF THE APPELLANT IS BAD CONSEQUENTLY HE IS BOUND TO RETURN THE SALE CONSIDERATION TO THE PURCHASER OF PLOT. 1 . THE COMMISSIONER OF INCOME - TAX (APPEALS), LUCKNOW HAS ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION OF RS. 72,58,724 / - MADE ON ACCOUNT OF LONG TERM CAPITAL GAIN IN AS MUCH AS THE FINDINGS OF CIT(A) THAT THE WIFE OF SHRI JOGINDER SI NGH KHURANA IS HAVING SHARE OF 50% ON THE LAND IN QUESTION, ARE NOT SUPPORTED BY ANY DOCUMENTARY EVIDENCE. GROUNDS RAISED BY THE REVENUE: 2 . THE COMMISSIONER OF INCOME - TAX (APPEALS), LUCKNOW HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN REDUCING BY 15 LAKHS, THE VALUE OF PROPERTY VALUED AT RS. 82,41,800 / - BY THE DVO, ARBITRARILY AND WITHOUT ANY JUSTIFICATION. : - 3 - : 3 . THE SOLE CONTROVERSY RAISED IN THESE APPEALS IS WITH REGARD TO THE COMPUTATION OF LONG TERM CAPITAL GAIN ON SALE OF IMMOVEABLE LAND BEARING KHASRA NO.1583 K A, RAKBA 1.986 HECTARE AN D THE OTHER KHASRA NO.1584 KHA, RAKBA 0.101 HECTARE, TOTALING 2.087 HECTARE SITUATED AT VILLAGE AURANGABAD KHALSA, TEHSIL AND ZILA LUCKNOW. 4 . ON THE BASIS OF AIR INFORMATION, THE ASSESSMENT WAS REOPENED AND DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSING OFFICER HAS NOTED THAT THE SAID IMMOVEABLE PROPERTY WAS SOLD FOR RS.43,17,500/ - AND THE MARKET VALUE OF THE SAID PROPERTY WAS AT RS.1,04,35,000/ - . ACCORDINGLY PROVISIONS OF SECTION 50C OF THE INCOME - TAX ACT, 1961 (HEREINAFTER CALLED IN SHORT THE ACT') WAS INVOKED AND THE MATTER WAS REFERRED TO THE DVO , WHO VALUED THE PROPERTY AT RS.82,41,800/ - AND THE ASSESSING OFFICER ACCORDINGLY COMPUTED THE LONG TERM CAPITAL GAIN AT RS.72,58,724/ - IN THE HANDS OF THE ASSESSEE. 5 . THE ASSESSEE HAS RAISED A PLEA BEF ORE THE ASSESSING OFFICER THAT THE OWNERSHIP OF THIS LAND WAS DISPUTED BY THE COURT AND THE ASSESSEE WAS NOT HELD TO BE OWNER OF THE LAND . T HEREFORE, HE HAS NO RIGHT TO SELL THE LAND AND THE CAPITAL GAIN CANNOT BE COMPUTED IN THE HANDS OF THE ASSESSEE . B UT THIS CONTENTION OF THE ASSESSEE WAS NOT RATHER CONSIDERED BY THE ASSESSING OFFICER AND HE COMPUTED THE LONG TERM CAPITAL GAIN IN HIS HANDS. 6 . THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) AND RAISED SIMILAR ARGUMENTS, BUT THE LD. CIT(A) HAS TAKEN INTO ACCOUNT THE FACT THAT THE LAND WAS SOLD BY THE ASSESSEE AS WELL AS HIS WIFE, SMT. PARAMJEET KAUR AND HE ACCORDINGLY HELD THAT 50% CAPITAL GAIN IS TO BE TAXED IN THE HANDS OF THE ASSESSEE. : - 4 - : 7 . NOW THE ASSESSEE AS WELL AS THE REVENUE ARE IN APPEAL BEFORE U S AND DURING THE COURSE OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE HAS INVITED OUR ATTENTION TO ONE AGREEMENT EXECUTED BY MANIK RADHEY LAL S/O JAGROOP , ATTORNEY OF RAJ KUMAR, PURUSHOTTAM DAS AND RAJENDRA KUMAR S ONS OF LATE SHRI. PARGANAND TULANI IN FAVOU R OF THE ASSESSEE AND HIS BROTHER, SURENDRA SINGH. ON THE BASIS OF THIS AGREEMENT, THE LD. COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT THIS LAND WAS PURCHASED FROM RAJ KUMAR AND LATER ON RAJ KUMAR WAS NOT HELD TO BE THE OWNER OF THIS LAND BY VIRTUE OF THE ORDER OF THE TEHSILDAR, TEHSIL SADAR, LUCKNOW APPEARING AT PAGE 126 OF THE COMPILATION OF THE ASSESSEE . ONCE RAJ KUMAR IS NOT HELD TO BE THE OWNER OF THE LAND, THE ASSESSEE DID NOT ACQUIRE A BETTER TITLE THAN THE SELLER. IN THE LIGHT OF THESE FACTS, THE ASSESSEE IS NOT THE OWNER OF THE LAND. THEREFORE, PROVISIONS OF SECTION 50C OF THE ACT CANNOT BE INVOKED AND WHATEVER AMOUNT WAS RECEIVED BY THE ASSESSEE ON ALLEGED SALE TO M/S SANSKAR FOUNDATION , IS REQUIRED TO BE REFUNDED BACK. THEREFORE, THE ASSESSEE HAS NOT EARNED ANY CAPITAL GAIN ON WHICH HE IS LIABLE TO PAY TAX. IN SUPPORT OF HIS CONTENTION, THE LD. COUNSEL FOR THE ASSESSEE HAS PLACED RELIANCE UPON THE ORDER OF THE TRIBUNAL IN THE CASE OF G EE TA DEVI VS. INCOME TAX OFFICER IN I.T.A. NO. 496/LUC/200 6 AND ALSO THE JUDGMENT OF HON'BLE HIGH COURT IN THE CASE OF M/S AGARWAL BROTHERS AND OTHERS VS. M/S VINIYOG VYAPAR AND OTHERS IN WRIT PETITION NO.29 (LA) OF 1998. 8 . THE LD. D.R., ON THE OTHER HAND, HAS SUBMITTED THAT IF THE CONTENTION OF THE ASSESSEE THAT H E WAS NOT THE OWNER OF THE LAND AND THEREFORE, NO CAPITAL GAIN ACCRUED TO IT IS ACCEPTED, THEN WHATEVER MONEY HAS BEEN EARNED BY THE ASSESSEE IN SUCH TRANSACTION WOULD BE THE INCOME FROM OTHER SOURCES, IF NOT CAPITAL GAIN. AS PER SALE DOCUMENT, THE ASSESS EE HAS SOLD THIS LAND FOR RS.45,17,500/ - AND ACCORDING TO THE ASSESSEE , THE LAND WAS ACQUIRED BY HIM FOR RS.3.60 : - 5 - : LAKHS, THEREFORE, THE DIFFERENCE OF THE AMOUNT IS AN INCOME FROM OTHER SOURCES IN THE HANDS OF THE ASSESSEE. UNDER THE GARB OF HIS ARGUMENT, H E CANNOT BE ESCAPED FROM THE TAX LIABILITIES. THE ASSESSEE HAS RECEIVED THE AFORESAID AMOUNT FROM THE SO CALLED BUYER ON 3.2.2006 AND TILL DATE THE SO CALLED BUYER HAS NOT RAISED ANY CLAIM FOR REFUND OF THE SAID AMOUNT PAID TO THE ASSESSEE , MEANING THEREB Y THE POSSESSION OF THE LAND HAS BEEN HANDED OVER TO THE PROPOSED BUYER AND HE IS ENJOYING THE POSSESSION . THE CLAIM RAISED BY THE ASSESSEE IS F RIVOLOUS AND RAISED IN ORDER TO AVOID TAX LIABILITY. 9 . HAVING CAREFULLY EXAMINED THE ORDERS OF THE LOWER AUTHORIT IES AND THE DOCUMENTS FILED BEFORE US IN THE LIGHT OF THE RIVAL SUBMISSIONS, WE FIND THAT THE AGREEMENT FOR SALE EXECUTED BETWEEN MANIK RADHEY LAL S/O JAGROOP , ATTORNEY OF RAJ KUMAR, PURUSHOTTAM DAS AND RAJENDRA KUMAR S ONS OF LATE SHRI. PARGANAND TULANI IN FAVOUR OF THE ASSESSEE AND HIS BROTHER, SURENDRA SINGH WHICH IS APPEARING AT PAGES 1 AND 2 OF THE COMPILATION OF THE ASSESSEE AND ON ITS PERUSAL WE FIND THAT THIS AGREEMENT WAS EXECUTED IN RESPECT OF LAND BEARING KHASRA NO.1607 FOR 3 BIGHA AND 11 BISWA AND KHASRA NO.1650 FOR 4 BIGHA AND 17 BISWA AND KHASRA NO.1504 FOR 9 BISWAS , WHEREAS THE LAND INVOLVED BEARS KHASRA NO.1584 M EASURING LAND AREA OF 1.985 HECTARE AND KHASRA NO.1584 MEASURING LAND AREA OF 0 . 101 HECTARE . THEREFORE, THIS AGREEMENT DOES NOT REFLECT ANY RELATION WITH THE IMPUGNED LAND SOLD BY THE ASSESSEE. HENCE , NO INFERENCE CAN BE DRAWN FROM THIS AG REEMENT IN ORDER TO ADJUDICATE THE ISSUE W HETHER THE IM PUGNED LAND WAS PURCHASED BY THE ASSESSEE AND HIS B ROT HER FROM SHRI. RAJ KUMAR. BUT FROM PERUSAL OF THE ORDER OF THE TEHSILDAR APPEARING AT PAGES 3 TO 6 OF THE COMPILATION OF THE ASSESSEE, WE FIND THAT THIS ORDER WAS PASSED WITH RESPECT TO LAND BEARING KHASRA NO.1584 FOR LAND MEASURING 1.986 : - 6 - : HECTARE AND THE OTHER KHASRA NO.1607 FOR LAND MEASURING 0.5310 HECTARE . THEREFORE, WITH RESPECT TO LAND BEARING KHASRA NO.1584 MEASURING LAND 1.986 HECTARE, THE ASSESSEE CANNOT BE CALLED TO BE THE OWNER OF THE LAND, AS THE L AND WAS MUTATED IN THE NAME OF VIJAY KUMAR MEHRA S/O PANNALAL MEHRA VIDE ORDER DATED 5.3.2010 PURSUANT TO THE DIRECTION OF THE HON'BLE HIGH COURT IN WRIT PETITION NO.6105 OF 2005. 10 . NOTHING IS PLACED BEFORE US AS TO WHETHER THIS ORDER OF THE TEHSILDAR WAS EITHER CHALLENGED BY ANY OF THE PARTIES. IN THE LIGHT OF THIS ORDER OF THE TEHSILDAR, THE ASSESSEE CANNOT BE CALLED TO BE THE OWNER OF THE LAND WITH RESPECT TO KHASRA NO.1584 FOR LAND MEASURING 1.986 HECTARE. BUT FOR THE REMAINING LAND BEARING KHASRA NO.1584 FOR LAND MEASURING 0.101 HECTARE, THE ASSESSEE IS THE OWNER OF THE LAND AS CONT AIN ED IN SALE DEED DATED 3.2.2006 ALONG WITH HIS WIFE EXECUTED IN FAVOUR OF M/S SANSKAR FOUNDATION. THOUGH THE ASSESSEE HAS CLAIMED IN ITS RETURN OF INCOME THAT HE HAS PURCHASED LAND FOR RS.3.60 LAKHS, BUT ONCE THIS AGREEMENT DOES NOT REFLECT THE IMPUGNED LAND IN ITS CONTENTS, THIS CONTENTION OF THE ASSESSEE IS REQUIRED TO BE VERIFIED. ALL THESE ASPECTS WERE NOT EXAMINED EITHER BY THE ASSESSING OFFICER OR BY THE LD. CIT(A). THEY HAVE STRAIGHT AWAY GONE UNDER PRESUMPTION THAT CAPITAL GAIN HAS ACCRUED TO THE ASSESSEE ON SALE OF AGRICULTURAL LAND. OUR ATTENTION WAS ALSO INVITED TO THE ORDER O F THE TRIBUNAL IN THE CASE OF GEETA DEVI VS. INCOME TAX OFFICER (SUPRA) AND ALSO THE DECISION OF THE HON'BLE HIGH COURT IN THE CASE OF M/S AGARWAL BROTHERS AND OTHERS VS. M/S VINIYOG VYAPAR AND OTHERS (SUPRA) IN SUPPORT OF HIS CONTENTION THAT IN SUCH CIRCU MSTANCES , BEFORE CHARGING CAPITAL GAIN THE ASSESSEE SHOULD BE OWNER OF THE PROPERTY. THOUGH IT HAS NOT BEEN SPECIFICALLY HELD IN THESE CASES, BUT WE FIND FORCE IN THE CONTENT I ON OF THE ASSESSEE IN THIS REGARD. BUT IN THE INSTANT CASE , FROM THE DOCUMENTS AVAILABLE ON : - 7 - : RECORD, IT IS NOT CLEAR WHETHER THE IMPUGNED LAND BEARING KHASRA NO.1584 MEASURING 1.986 HECTARE AND KHASRA NO.1584 MEASURING 0.101 HECTARE LAND W ERE PURCHASED BY THE ASSESSEE AND HIS WIFE, SMT. PARAMJEET KAUR. 11 . THE ONUS IS UPON THE ASSES SEE TO ESTAB LISH THROUGH DOCUMENTS THAT THE IM PUGNED LAND WAS PURCHASED BY THE ASSESSEE AND HIS WIFE. THE , ONUS IS ALSO UPON THE ASSESSEE TO ESTABLISH THAT THE OTHER LAND BEARING KHASRA NO.1584 FOR LAND MEASURING 0.101 HECTARE IS STILL OWNED BY THEM OR IT WAS ALSO DISPUTED BY SOME OTHER PARTY AS THE ORDER OF THE TEHSILDAR TALKS ABOUT THE LAND BEARING KHASRA NO.1584 FOR THE LAND MEASURING 1.986 HECTARE. IT IS ALSO FOR THE ASSESSEE TO ESTABLISH AS TO WHETHER HE HAS REFUNDED THE ENTIRE AMOUNT TO M/S SANS KAR FOUNDATION TO WHOM HE SOLD THE LAND. IF NOT, IS THERE ANY CLAIM RAISED BY THEM FOR REFUND OF THE SA LE CONSIDERATION ON THE GROUND THAT THE ASSESSEE DID NOT OWN THE LAND , PENDING BEFORE ANY OF THE JUDICIAL FORUM. IF NO CLAIM IN THIS REGARD IS RAISED B Y M/S SANSKAR FOUNDATION AND THE ASSESSEE HAS NOT REFUNDED THE SALE CONSIDERATION TO M/S SANSKAR FOUNDATION, HAVING REALIZED THAT HE IS NOT THE OWNER OF THE LAND , T HE ASSESSEE WOULD BE RESPONSIBLE TO PAY TAX ON THE INCOME REALIZED ON THIS ALLEGED T RANSFER. ACCORDING TO US, IF PROVISIONS OF SECTION 50C OF THE ACT CANNOT BE INVOKED ON ACCOUNT OF ILLEGAL TRANSFER OF LAND FOR WANT OF LEGAL OWNERSHIP OF THE LAND, THE DIFFERENCE IN INVESTMENT AND SALE CONSIDERATION WOULD BE TREATED AS INCOME FROM OTHER S OURCES OF THE ASSESSEE. AS PER THE SALE DEED, THE ASSESSEE HAS RECEIVED SALE CONSIDERATION ON 3.2.2006 AND TILL DATE , ACCORDING TO THE LD. COUNSEL FOR THE ASSESSEE, NO CLAIM IS RAISED BY M/S SANSKAR FOUNDATION, THEREFORE, THE DIFFERENCE IN INVESTMENT AND SALE CONSIDERATION WOULD BE THE INCOME : - 8 - : FROM OTHER SOURCES , AS THE SO CALLED BUYER, M/S SANSKAR FOUNDATION CANNOT RECOVER THE SAID AMOUNT , AS IT HAS ALREADY BARRED BY LIMITATION. 12 . ALL THESE ASPECTS WERE NEITHER EXAMINED BY THE ASSESSING OFFICER N OR BY THE LD . CIT(A). THEREFORE, WE ARE OF THE VIEW THAT THESE ASPECTS SHOULD BE EXAMINED BY THE ASSESSING OFFICER AFTER AFFORDING PROPER OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE THE MATTER TO THE ASSESSING OFFICER TO RE - ADJUDICATE THE ISSUE IN TERMS INDICATED ABOVE. 13 . IN THE RESULT, APPEAL OF THE ASSESSEE AS WELL AS THE REVENUE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENT I ONED ON THE CAPTION ED PAGE. SD/ - SD/ - [ A. K. GARODIA ] [ S UNIL KUMAR Y ADAV ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 3 RD 1 . APPELLANT FEBRUARY , 2016 JJ: 1101 COPY FORWARDED TO: 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR ASSISTANT REGISTRAR