PANMATI DEVI (LATE) L/H INDAL NISHAD,GORAKHPUR V. ACIT, CIRCLE - 2, GORAKHPUR

ITA 123/VNS/2024

AI Insights

The case involves an appeal by Smt. Panmati Devi, the legal heir of Late Shri Mithai Lal, against the order of the Assistant Commissioner of Income Tax, which had assessed long-term capital gains on the sale of a plot of land. The land was originally purchased by Late Shri Mithai Lal and his wife, Smt. Panmati Devi, but the entire investment and the sale proceeds were handled by Late Shri Mithai Lal. After his death, the income tax department issued a notice under section 148 of the Income Tax Act to Smt. Panmati Devi and assessed the capital gains in her name. The Tribunal found that the assessment should have been made in the hands of Late Shri Mithai Lal, as he was the actual investor and recipient of the sale proceeds, leading to the quashing of the assessment order.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 26033 (ITAT-VARANASI)
• Duration Of Justice: 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-11-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Next Hearing Date: 11-09-2024
• Assessment Year: 2012-2013
• Appeal Filed On: 03-07-2024
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KAVITA MEENA
• Assessee Lawyers: PANKAJ SHUKLA
• Keywords: Sale consideration of property below Jantri Value; Cost of acquisition; Capital Gains
• Section: 148; 144; 142(1)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL, CIRCUIT BENCH, VARANASI BEFORE: SHRI AMIT SHUKLA, JUDICIAL MEMBER ITA No.123/VNS/2024 (Assessment Year :2012-13) Panmati Devi (Late) W/o. Late Mithai Lal H.No.81, Jungle Belwar Raiganj Khorabar, Gorakhpur- 273010 Vs. Asst. Commissioner of Income Tax Circle-2 Gorakhpur PAN/GIR No.AROPP2206J (Appellant) .. (Respondent) Assessee by Shri Pankaj Shukla Revenue by Smt. Kavita Meena Date of Hearing 11/09/2024 Date of Pronouncement 29/11/2024 आदेश / O R D E R PER AMIT SHUKLA (J.M): The aforesaid appeal has been filed by the assessee against order dated 29/02/2024 passed by Addl/JCIT-A(2), Ludhiana for the quantum of assessment passed u/s.143(3) r.w.s. 147 for the A.Y.2012-13. 2. In various grounds of appeals assessee has challenged the addition on account of long term capital gain and exparte order by the ld. CIT(A). ITA No.123/VNS/2024 Panmati Devi (Late L/H. Indal Nishad) 2 3. The brief facts are that assessee’s husband Shri Mithailal purchased flats in various places. He was allotted a plot of land admeasuring 3643 sq. mtrs by Gorakhpur Development Authority on 17/05/2005 at a cost of Rs.15,00,000/-. The entire investment was made by her husband Late Shri Mithai Lal, when he was alive. The plot was allotted and sale deed was made in the joint name of Shri Mithai Lal and second name was his wife Smt. Panmati Devi. It was stated that allotment made in the joint name was for the sake of administrative convenience. The entire investment otherwise was made by her husband Late Mithai Lal who was alive at that time. During the F.Y. 2011-12, part of the said land admeasuring 464.68 sq. mtrs out of land area of 3643.50 sq. mtrs was sold for consideration of Rs.5,00,000/- whereas the circle rate was Rs.49.38 lakhs. The net consideration was received by Shri Mithai Lal in his bank account. After the death of Shri Mithai Lal on 07/2017, notice u/s.148 was issued on 28/03/2019 in the name of Smt. Panmathi Devi. In the re-assessment order, ld. AO held that since Circle rate of the land sold was Rs.49.38 Lakhs which has to be taken as ‘sale value’ u/s.50C and accordingly, he worked out the capital gain of Rs.40,81,727/- after observing as under:- “3. Sale of immovable property. As per sale deed it has been found that the assessee has sold immovable property situated at Transport Nagar, Gorakhpur vide deed dt. 12.09.2011 The sale consideration is Rs. 5,00,000/- and the circle rate of the property is Rs. 49,38,000/-. The assessee has neither filed return in response to notice u/s 148 dt. 28.03.2019 nor make any compliance of notice u/s 148 dated 28.03.2019, notice u/s 142(1) dated 11.11.2019 and letter 22.11.2019 In absence of return and any reply 1 have no option left but to complete the assessment ex- ITA No.123/VNS/2024 Panmati Devi (Late L/H. Indal Nishad) 3 parte u/s 144 of the IT Act, 1961 on the basis of facts and material available on record. 4. Circle rate i.c. Rs. 49,38,000/- is taken as sale value of the property u/s 50C. In absence of any reply the purchase cost of the property is taken per sqr mir @1000/- and value of construction per sqr, mtr. is taken @3000/- The area of the property is 464.68 sq. mtrs. The capital gains is computed as under: Sale consideration: 49,38,000/- Less: Index cost of land in F.Y. 2011-12 1000 x 464.68 x785 - 8,56,273/- 426 Capital gain = 40,81,727/- From the perusal of deed it has been found that the property has been sold by the assessee and her husband Shri Mithai Lal jointly. Therefore, the capital gains of the assessee comes to Rs. 20,40,863/- (being 1/2 of the total capital gains)”. 4. The ld. CIT (A) in its exparte order has confirmed the said addition. 5. I have heard both the parties at length and also perused the various materials placed before us. It has been stated that Smt. Panmati Devi had also expired during the pendency of the appeal before the ld. CIT (A) on 24/12/2021 and therefore, the present appeal has been filed by her legal heir. From the perusal of the records it is seen that the plot of land was allotted by Gorakhpur Development Authority in the name of Shri Mithai Lal in the year 2005 (who was then alive) and the entire investment was made by assessee’s late husband Shri Mithai Lal. The sale deed for sale of this land was executed on 19/04/2011 and the entire sale ITA No.123/VNS/2024 Panmati Devi (Late L/H. Indal Nishad) 4 proceeds was also credited to the bank account of Shri Mithai Lal in his individual name which is evident from the bank account placed before us and which was also there before the ld. AO also, showing that sale proceed of Rs. 5,00,000/- received from sale was credited in the account of Shri Mithai Lal on 26/04/2011. If the investment was made by late Shri Mithai Lal and the sale proceeds was also received in the bank account of late Shri Mithai Lal who was then alive, then source of any investment or long term capital given should have been examined in the case of Shri Mithai Lal, because by the time notice was issued almost fag end of six years, he had expired. Then the proper course would have been to issue notice in the name of the legal heir and assessment should have been made in the hands of legal heir. Apart from that, once the investment has been made by Shri Mithai Lal and sales proceeds has also been received by him then we do not find any reason to tax the same amount as long term capital gain in the hands of Smt. Panmati Devi (since deceased). Even if both the orders have been passed exparte however, this fact should have been ascertained before the issuance of notice u/s.148. Thus, initiating proceeding u/s.148 in the hands of late Smt. Panmati Devi and also taxing the long term capital gain in her hands cannot be sustained, because neither she had made investment nor she has received amount in her name. Long term capital gain if at all should have been taxed or examined in the hands of the late Shri Mithai Lal. On this ground alone, the entire assessment order is quashed. ITA No.123/VNS/2024 Panmati Devi (Late L/H. Indal Nishad) 5 6. In the result, appeal of the assessee is allowed. Order pronounced on 29/11/2024. Sd/- (AMIT SHUKLA) JUDICIAL MEMBER Varanasi; Dated 29/11/2024 KARUNA, sr.ps Copy of the Order forwarded to : BY ORDER, (Asstt. Registrar) ITAT, Varanasi 1. The Appellant 2. The Respondent. 3. The CIT(A), Varanasi. 4. CIT 5. DR, ITAT, Varanasi 6. Guard file. //True Copy// "