ITO, Jagraon V. Sh. Bhag Singh, Jagraon

ITA 921/CHANDI/2015

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7973 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 year(s) 3 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-04-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2007-2008
• Appeal Filed On: 28-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHANDRA KANTA
• Keywords: Capital asset; Bonafide belief; Revised return
• Section: 271(1)(c); 147; 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, A, CHANDIGARH , . '.., # $, %& BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND DR. B.R.R. KUMAR, ACCOUNTANT MEMBER ./ ITA NO. 921/CHD/2015 / ASSESSMENT YEAR : 2007-08 THE ITO, WARD-1, JAGRAON SHRI BHAG SINGH SIDHU, C/O M/S SIDHU TRADING COMPANY, ANAJ MANDI, JAGRAON ./PAN NO: ASIPS0143C / APPELLANT /RESPONDENT ./ ITA NO. 625/CHD/2015 / ASSESSMENT YEAR : 2007-08 SHRI BHAG SINGH SIDHU, C/O M/S SIDHU TRADING COMPANY, ANAJ MANDI, JAGRAON THE ITO, WARD-3, MOGA ./PAN NO: ASIPS0143C / APPELLANT /RESPONDENT ! /ASSESSEE BY : SHRI SUDHIR SEHGAL, ADVOCATE ' ! / REVENUE BY : SMT. CHANDRAKANTA, SR. DR # $ % /DATE OF HEARING : 28.02.2019 &'() % / DATE OF PRONOUNCEMENT : 16.04 .2019 %'/ ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE CAPTIONED CROSS APPEALS ONE BY THE ASSESSEE AND OTHER BY THE REVENUE HAVE BEEN PREFERRED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX-3, LUDHIANA [HEREIN REFERRED TO AS CIT( A)] DATED 29.10.2015. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S A MEMBER OF THE PUNJABI CO-OP. HOUSING BUILDING SOCIETY (SOCIETY) OWING 21.2 ACRES OF LAND THROUGH ITS MEMBERS. THE SOCIETY ENTERED INTO THE TRIPARTITE JOINT ITA NOS. 921 & 625/CHD/2015- SH. BHAG SINGH SIDHU, JAGRAON 2 DEVELOPMENT AGREEMENT (JDA) DATED 25.2.2007 WITH M/S HASH BUILDERS (P) LTD (HASH) AND M/S TATA HOUSING DEVELOPMENT C OMPANY LTD. (THDC), MUMBAI ACCORDING TO WHICH HASH WAS REQUIR ED TO MAKE MONETARY PAYMENT TO THE ASSESSEE AND THDC WAS REQUI RED TO CONSTRUCT FURNISHED FLAT FOR THE ASSESSEE BY OBTAINING THE LA ND OWNED BY THE ASSESSEE. AS PER THE JDA THE MEMBER OWING 500 SQ. YARDS WOULD RECEIVE 82,50,0000/- IN MONETARY CONSIDERATION IN 4 INSTALL MENTS, FROM HASH AND WILL RECEIVE ONE FURNISHED FLAT MEASURING 2250 SQ. FT. TO BE CONSTRUCTED BY THDC, THE COST OF WHICH WAS ESTIMATED TO BE 4500 PER SQ. FT. CONSEQUENTIAL TO THE ABOVE AGREEMENT THE ASSESSEE O WNING 1000 SQ. YARDS OF LAND WAS ENTITLED TO RECEIVE THE DOUBLE OF THE A BOVE CONSIDERATION. HOWEVER, THE ASSESSEE RECEIVED ONLY 66 LAKHS IN TWO INSTALLMENTS I.E. 30 LAKHS IN ASSESSMENT YEAR 2007-08 AND 36 LAKHS IN ASSESSMENT YEAR 2008-09. HOWEVER, THE ASSESSEE DID NOT DECLARE TH E AFORESAID CAPITAL GAINS EARNED / ACCRUED IN HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. THE ASSESSEE LATER ON DEPOSIT ED THE SELF-ASSESSMENT TAX ON THE AMOUNT ACTUALLY RECEIVED BY THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION. THE ASSESSING OFFICER THEREAFTER ISS UED NOTICE U/S 148 OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT') AND C OMPLETED THE ASSESSMENT U/S 147 READ WITH SECITON143(3) OF THE ACT AND ASSE SSED THE GROSS TOTAL INCOME OF THE ASSESSEE AT 3,58,55,045/- BY TAKING INTO CONSIDERATION THE AMOUNT RECEIVABLE AS PER AGREEMENT FROM HASH AND NOTIONAL VALUE OF THE, TO BE CONSTRUCTED FLATS . APART FROM THAT, THE ASSESSING OFFICER ALSO INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT AND LEVIED THE IMPUGNED PENALTY AMOUNTING TO 79,59,960/-. ITA NOS. 921 & 625/CHD/2015- SH. BHAG SINGH SIDHU, JAGRAON 3 THE MATTER IN THE QUANTUM PROCEEDINGS TRAVELLED TO THE HON'BLE PUNJAB & HARYANA HIGH COURT HIGH COURT AND THE HON' BLE HIGH COURT VIDE COMMON ORDER WITH THE LEAD CASE TITLED AS C.S. AT AWL VS. CIT, LUDHIANA IN ITA NO. 200 OF 2013 (O&M) & ORS. VIDE ORDER DATE D 22.7.2015 HELD THAT ONLY THE AMOUNT ACTUALLY RECEIVED BY THE ASSES SEE WAS TAXABLE AND NOT THE ENTIRE SALE CONSIDERATION AGREED TO BY THE PART IES TO THE TRANSACTION. 3. THE LD. CIT(A) IN VIEW OF THE ABOVE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT OF PUNJAB & HARYANA HI GH COURT IN THE CASE OF C.S. ATWAL VS. CIT (SUPRA) DELETED THE PENALTY IN RESPECT OF NON-PAYMENT OF CAPITAL GAINS TAX ASSESSED ON ACCRUAL BASIS . THE LD. CIT(A), HOWEVER, CONFIRMED THE PENALTY IN RESPECT OF THE CAPITAL GA INS EARNED BY THE ASSESSEE ON THE ACTUAL AMOUNT OF 30 LAKHS RECEIVED BY THE ASSESSEE DURING THE ASSESSMENT YEAR UNDER CONSIDERATION. THE REVENUE, THEREFORE, HAS COME IN APPEAL AGITATIN G THE ACTION OF THE CIT(A) IN DELETING THE PENALTY LEVIED BY THE A SSESSING OFFICER IN RESPECT OF CAPITAL GAINS ASSESSED ON ACCRUAL BASIS, WHEREAS, THE ASSESSEE HAS COME IN APPEAL AGITATING THE CONFIRMATION OF P ENALTY ON ACCOUNT OF CONCEALMENT OF INCOME RELATABLE TO THE AMOUNT ACTUA LLY RECEIVED BY THE ASSESSEE DURING THE ASSESSMENT YEAR UNDER CONSIDERA TION. 4. WE HAVE HEARD THE RIVAL CONTENTIONS. IT HAS BEEN SUBMITTED THAT THE DECISION OF THE HON'BLE PUNJAB & HARYANA HIGH COUR T IN THE CASE OF C.S.ATWAL VS. CIT (SUPRA) HAS BEEN FURTHER UPHELD BY THE HON'BLE SUPREME COURT IN THE IN THE CASE OF CIT VS. BALBIR SINGH MAINI (2017) 86 TAXMAN. 94 (SC) / 398 ITR 531, WHEREIN, THE HON' BLE SUPREME COURT HAS AFFIRMED THE DECISION OF THE HONBLE PUNJAB & HARYA NA HIGH COURT RELATING ITA NOS. 921 & 625/CHD/2015- SH. BHAG SINGH SIDHU, JAGRAON 4 TO THE IDENTICAL ISSUE IN THE CASE OF OTHER ASSESSE E RELATING TO THE SAME TRANSACTION, HOLDING THAT SINCE THE DEVELOPMENT SCH EME DID NOT MATURE AND THE AGREEMENT TO SELL WAS NOT REGISTERED WITH THE C OMPETENT AUTHORITY, HENCE, THE TRANSFER OF PROPERTY WAS NOT COMPLETE, T HE CAPITAL GAINS CANNOT BE ASSESSED ON ACCRUAL BASIS. THE HONBLE HIGH COU RT HAD HELD THAT WHATEVER THE AMOUNT WAS RECEIVED BY THE ASSESSEE ON LY THAT WAS TO BE TAXED. CONFIRMING THE ABOVE FINDING OF THE HON'BLE HIGH COURT, THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. BALBIR SINGH MAINI (SUPRA) HAS HELD THAT THE ENTIRE ADDITION WAS HYPOTHETICALL Y MADE. SINCE AS THE AGREEMENT DID NOT FELL THROUGH, NO TRANSFER OF PROP ERTY HAD TAKEN PLACE, AS SUCH, THE ADDITION ON ASSUMING THE ACCRUAL OF THE I NCOME WAS NOT SUSTAINABLE IN THE EYES OF LAW. 5. IN VIEW OF THIS, SINCE THE ADDITIONS MADE ON ACC RUAL BASIS HAVE NOT BEEN HELD TO BE JUSTIFIED BY THE HON'BLE HIGH COURT IN THE CASE OF C.S.ATWAL VS. CIT (SUPRA) AND FURTHER AFFIRMED B Y THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. BALBIR SINGH MAINI (SUPRA), HENCE, THE PENALTY LEVIED IN RESPECT OF CAPITAL GAINS ASSESSE D IN RESPECT OF AMOUNT NOT RECEIVED HAS NO LEGS TO STAND. THE LD. CIT(A), THE REFORE, RIGHTLY DELETED THE PENALTY IN RESPECT OF THE SAID AMOUNT. IN VIEW OF THIS, THERE IS NO MERIT IN THE APPEAL I. E. ITA NO. 921/CHD/2015 OF THE REVENUE AND THE SAME IS ACCORDI NGLY DISMISSED. 6. NOW COMING TO THE APPEAL OF THE ASSESSEE IN ITA NO. 625/CHD/2015, THE ASSESSEE ADMITTEDLY HAS HIMSELF VOLUNTARILY DEP OSITED THE TAX BEFORE THE ISSUE OF NOTICE U/S 148 OF THE ACT, HOWEVER, BY THA T TIME THE LIMITATION TO FILE THE REVISED RETURN HAD EXPIRED. ITA NOS. 921 & 625/CHD/2015- SH. BHAG SINGH SIDHU, JAGRAON 5 7. THE FACTS AND ISSUE ARE SQUARELY COVERED BY THE DECISION PASSED BY THE TRIBUNAL IN IDENTICAL FACTS AND CIRCUMSTANCES I N THE CASE OF SH. C.S.ATWAL VS. ITO, LUDHIANA IN ITA NO. 66/CHD/2 016 FOR ASSESSMENT YEAR 2007-08 VIDE ORDER DATED 20.4.2018. THE RELEVA NT PART OF THE ORDER IS REPRODUCED AS UNDER:- 13. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAVE ALSO GONE THROUGH THE RECORDS. IN OUR VIEW, AS THE FACTS NARRATED ABOVE SUGGESTS, IT WAS NOT A SIMPLE CASE OF TRANSFER OF LAND. THE LAND WAS OWNED BY THE SOCI ETY CONSTITUTING 95 MEMBERS INCLUDING THE ASSESSEE. THE CONSIDERATION SETTLED FOR THE TRANSFER WAS IN CASH AS WELL AS IN KIND I.E IN THE SHAPE OF FLATS TO BE GIV EN TO THE MEMBERS AS PER THEIR PROPORTIONATE SHARE IN THE PROPERTY. AS DISCUSSED ABOVE, THOUGH THE ASSESSEE HAD RECEIVED THE CASH COMPONENT BY WAY OF FIRST TWO INSTALLMENTS AS PER THE PROPORTIONATE SHARE IN THE LAND ON THE PRO-RATA TRANSFER OF THE LAND BY SOCIETY, HOWEVER, THE CONSIDERATION IN KIND I.E. FLATS WAS NOT RECEIVED BY THE ASSESSEE AS THE JDA COULD NOT MATUR E. HENCE, THERE SEEMS FORCE IN THE CONTENTION OF THE ASSESSEE THAT HE WAS OF THE BONAFIDE BELIEF THAT TH E TRANSFER IN THIS CASE WOULD BE COMPLETED ONLY WHEN THE JDA WOULD MATURE OR SUCCEED. AS OBSERVED ABOVE, TH E HON'BLE SUPREME COURT HAS ALREADY HELD THAT THE TRANSFER IN RESPECT OF THE REMAINING PART OF THE LA ND WOULD NOT FALL IN THE DEFINITION OF THE TRANSFER AS PROVIDED U/S 2(47) OF THE I.T. ACT AND THERE WAS NO CERTAINTY OF THE TRANSACTIONS GETTING SUCCESSFUL. THE ASSESSEE SUO MOTO REVISED THE RETURN THOUGH BELATEDLY ON 7.10.2009 WHEN THE REGULAR ASSESSMENT PROCEEDINGS WERE UNDER PROGRESS AND OFFERED THE CAPITAL GAINS TAX IN RESPECT OF AMOUNT RECEIVED BY HIM AS PER HIS SHARE OUT OF THE FIRST TWO INSTALLMENTS RECEIVED BY THE SOCIETY ON PRORATE TRANSFER OF LA ND. TILL THE FILING OF THE REVISED RETURN, THE ASSESSEE WAS NEVER CONFRONTED BY THE ASSESSING OFFICER ON THIS I SSUE. THE ASSESSEE THUS SUO MOTO / VOLUNTARILY OFFERED CA PITAL GAINS ON THE AMOUNT ACTUALLY RECEIVED BY HIM. ITA NOS. 921 & 625/CHD/2015- SH. BHAG SINGH SIDHU, JAGRAON 6 THE ISSUE WAS HIGHLY DEBATABLE. EVEN THE LAND WAS TRANSFERRED BY THE SOCIETY. IN THE JDA, SOCIETY HAS BEEN REFERRED TO AS OWNER. IF THE SOCIETY WAS TH E OWNER THEN THE CAPITAL GAINS APPARENTLY WOULD ALS O BE TAXABLE IN THE HANDS OF THE SOCIETY. THE ASSESSI NG OFFICER OF THE SOCIETY HAS ALSO TAXED THE CAPITAL G AINS IN THE HANDS OF THE SOCIETY ON PROTECTIVE BASIS. HENCE , IT WAS A DEBATABLE ISSUE WHETHER THE CAPITAL GAINS WIL L BE TAXED IN THE HANDS OF THE SOCIETY OR IN THE HANDS O F THE ASSESSEE. NOT ONLY THE ISSUE REGARDING THE NATURE O F THE TRANSACTIONS BUT ALSO ABOUT THE DATE ON WHICH THE TRANSFER CAN BE SAID TO HAVE COMPLETED, WAS DEBATAB LE. FURTHER, IN THE SIMILAR FACTS AND CIRCUMSTANCES IN THE CASE OF ANOTHER ASSESSEE NAMELY SHRI BALWINDER SINGH DHILLON, THE COORDINATE CHANDIGARH BENCH OF THE TRIBUNAL FOR THE ASSESSMENT YEAR 2008-09 IN ITA NO. 1140/CHD/2014 VIDE ORDER DATED 3.8.2015 HAS UPHELD THE ORDER OF THE CIT(A) DELETING THE PENALTY SO LEVIED BY THE ASSESSING OFFICER U/S 271(1)(C) OF THE ACT. THE SAID DECISION HAS BEEN FURTHER FOLLOWED BY THE CHANDIGARH BENCH OF THE TRIBUNAL IN THE CASE O F ITO VS. SMT. NEENA CHAUDHARY IN ITA NO. 1096/CHD/2014 FOR ASSESSMENT YEAR 2008-09 WHEREIN ALSO THE DEPARTMENTAL APPEAL CHALLENGING THE DELETI ON OF PENALTY LEVIED U/S 271(1)(C) HAS BEEN DISMISSED . THE SAID DECISION HAVE ALSO BEEN FOLLOWED BY THE AMRITSAR BENCH OF THE TRIBUNAL IN SHRI RAGHUNATH SAHAI PURI VS. DCIT ORDER DATED 13.6.2016 IN ITA NO. 633/ASR/2014 FOR ASSESSMENT YEAR 2007-08. CONSIDERING THE OVERALL FACTS AND CIRCUMSTANCES OF THE CASE, AND IN VIEW OF THE DECISIONS OF THE COORDINAT E BENCHES OF THE TRIBUNAL, IN RESPECT OF INCOME EARN ED BY THE OTHER MEMBERS OF THE SOCIETY FROM THE SAME TRANSACTIONS, WHEREBY, UPHOLDING THE ORDER OF THE CIT(A) IN CANCELLING PENALTY U/S 271(1)(C) OF THE A CT, WE ARE OF THE VIEW THAT THIS IS NOT A CASE OF FURNI SHING OF INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME SO AS TO ATTRACT THE PENAL PROVISIONS OF SEC TION 271(1)(C) OF THE ACT. THE PENALTY SO LEVIED BY THE LOWER AUTHORITIES IN THIS CASE IS HEREBY ORDERED TO BE DELETED. ITA NOS. 921 & 625/CHD/2015- SH. BHAG SINGH SIDHU, JAGRAON 7 8. SINCE THE FACTS AND ISSUE INVOLVED ARE IDENTICAL IN NATURE AND THE ISSUE IS SQUARELY COVERED BY THE DECISION IN THE CA SE OF SH. C.S. ATWAL VS. ITO LUDHIANA (SUPRA), WHEREIN, THE DECISION OF THE TRIBUNAL IN THE CASE OF ITO VS. SMT. NEENA CHAUDHARY (SUPRA) AND IN THE C ASE OF SHRI RAGHUNATH SAHAI PURI VS. DCIT (SUPRA) HAVE BEEN FO LLOWED. FOLLOWING THE SAME LINES AND FOR THE SAKE OF CONSISTENCY, TH E PENALTY CONFIRMED BY THE LD. CIT(A) IS ORDERED TO BE DELETED. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS HEREBY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 16.04.2019. SD/- SD/- ( ' . . , # $ / B.R.R. KUMAR) %& / ACCOUNTANT MEMBER ( / SANJAY GARG ) / JUDICIAL MEMBER DATED : 16.04.2019 .. '+ ,- .- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. # / / CIT 4. # / ( )/ THE CIT(A) 5. -01 2 , % 2 , 34516 / DR, ITAT, CHANDIGARH 6. 15 7$ / GUARD FILE '+ # / BY ORDER, 8 ' / ASSISTANT REGISTRAR