Income Tax Appellate Tribunal - Panji
The Asstt. Commissioner Of Income Tax, ... vs Sh. Manoranjan Kalia, Jalandhar on 24 October, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
AMRITSAR BENCH; AMRITSAR.
BEFORE SH. T. S. KAPOOR, ACCOUNTANT MEMBER
AND SH. N. K. CHOUDHRY, JUDICIAL MEMBER
I.T.A. No.565(Asr)/2015
Assessment Year: 2007-08
Asst. C. I. T., Vs. Sh. Manoranjan Kalia,
Circle-3, Jalandhar. 158/4, Central Town,
Jalandhar.
PAN:ACUPK8414C
(Appellant) (Respondent)
Appellant by: Sh. S. S. Kanwal (D.R.)
Respondent by: Sh. J. S. Bhasin ( Adv.)
Date of hearing: 11/10/2017
Date of pronouncement: 24/10/2017
ORDER
PER T.S. KAPOOR, AM:
This is an appeal filed by Revenue against the order of ld. CIT(A), Amritsar, dt.14.08.2015 for Asst. Year: 2007-08.
2. The Revenue has taken various grounds of appeal, however, the crux of grounds of appeal is the action of ld. CIT(A), by which he has deleted the penalty imposed by Assessing Officer u/s 271(1)(c) of the Act.
3. The brief facts of the case as noted in assessment order are that the assessee is a member of the Punjabi Co-operative House Building Society and owns 1000/- sq. yds. of land in that society. The assessee had sold his piece of land through tripartite Joint Development Agreement with M/s Hash Builders (P) Ltd., Chandigarh and M/s Tata 2 ITA No.565/Asr/2015 Asst.Year. 2007-08 Housing Development Company Ltd., Mumbai on 25.02.2007 for a total consideration of Rs.1,65,00,000/-. Besides the above consideration, the assessee was also to get two flats of 2250 sq. ft. each and the value of the two flats was to the tune of Rs.2,02,50,000/-. Therefore, full value of consideration worked out to be Rs.3,67,50,000/-. During the year under consideration the assessee had received an amount of Rs.66,00,000/- as part of sale consideration and had deposited this amount in SBI Sector- 17, Chandigarh under the Capital Gain Scheme and therefore, did not declare any capital gain. The assessment of the assessee was completed on 29.12.2011 and an addition of Rs.2,91,12,574/- was made on account of long term capital gains on account of sale of land measuring 1000 sq yards. The above long term capital gain was calculated taking into account the full sale consideration including receivable and after giving exemption under section 54F of the Act.
3.1 The assessee filed appeal before ld. CIT(A), who confirmed the addition and on further appeal the Hon'ble ITAT also confirmed the addition. The assessee was show caused as to why the penalty u/s 271(1)(c) be not imposed. The assessee in response submitted that out of sale consideration of Rs.1,65,00,000/- he had received only Rs,66,00,000/- and that too he had deposited under the Capital Gain Scheme. However, the Assessing Officer held that since a part of sale consideration was received by assessee on 24.02.2007 and the agreement of the land development had already been signed on 3 ITA No.565/Asr/2015 Asst.Year. 2007-08 25.02.2007, therefore, the receipt of this sale consideration was 'Part Performance' of the contract, and held the same to be transfer as per provisions of Sec.2(47)(v) of the Act and held that assessee had not declared full value of sale consideration. In view of the above, the Assessing Officer imposed a penalty to the tune of Rs.65,41,310/- being minimum penalty @100% of the tax sought to be evaded u/s.271(1)(c) of the Act.
4. Aggrieved the assessee filed appeal before ld. CIT(A), and submitted that ld. Assessing Officer had failed to appreciate that the amount of Rs.66,00,000/- received against the sale of portion of the said land was duly shown in the return of income for Asst. Years: 2007-08 and there was no other transfer of land or receipt of money other than this during the Asst. Years:2007-08. It was further submitted that assessee had deposited the entire amount of Rs.66,00,000/- in the capital gain account. It was submitted that assessee was under a bonafide belief that the balance amount would be chargeable to tax in the year of receipt and not when agreement was signed for development of land and likewise value of flats will be taxable only on getting the allotment letters/start of construction. Based upon the submissions, the ld. CIT(A) deleted the penalty imposed by Assessing Officer.
5. Aggrieved the Revenue is in appeal before us.
4 ITA No.565/Asr/2015
Asst.Year. 2007-08
6. At the outset, ld. DR, heavily placed his reliance on the order of Assessing Officer and submitted that assessee had not declared capital gain even on the amount which he had received as part of sale consideration and therefore had concealed the particulars of income and therefore Assessing Officer has rightly imposed the penalty.
On the other hand, the ld. AR submitted that assessee had declared capital gain in respect of Rs.66,00,000/- received from Tata Housing Development Company in the return in the form of a note. The assessee had declared full particulars with respect to the transaction and he was not sure about the quantum of capital gain and therefore he did not conceal the particulars of income as he had furnished all the particulars and from the particulars furnished by assessee, the Assessing Officer came to know about the alleged capital gain. Further it was submitted that assessee had deposited the amount u/s 54F of the Act and therefore no capital gain was taxable on the basis of actual receipts also.
In rejoinder the Ld. DR submitted that assessee should have calculated capital gain on the entire sale consideration and should have included the same under the head income from capital gains.
7. We have heard the rival parties and have gone through the material placed on record. We find that in the original return filed by assessee, the assessee had at his own submitted full particulars of 5 ITA No.565/Asr/2015 Asst.Year. 2007-08 transaction and had stated that he had received Rs.66 Lacs and had also claimed deduction u/s 54 of the Act. This fact is verifiable from the assessment order itself wherein the Assessing Officer has noted this fact. For the sake of completeness para-16 of assessment order is reproduced below.
16. It is held that long term capital gains (which is subject to rectification as discussed above) of Rs.3,54,68,276/- has arisen to the assessee on account of transfer of capital asset in the previous year 2006- 07 relevant to the A.Y. 2007-08. Further the assessee has submitted to have invested Rs.66 Lacs in capital gain account scheme. Therefore, deduction u/s 54F comes to Rs.63,55,702/- [on proportionate basis as per section 54F(1)(b)]. Thus, total taxable capital gain comes to Rs.2,91,12,574/- which shall be added to the total income of the assessee. Since the assessee has failed to disclose the profits or gains arising from the transfer of capital assets in the return of income for the A.Y. 2007-08 penalty proceedings U/s 271(1)(c) are initiated for furnishing inaccurate particulars of said income.
The Assessing Officer in his findings has allowed benefit of deduction u/s 54F of the Act. However, he held that entire sale consideration was to be declared and therefore, imposed penalty treating the whole of sale consideration to be received by assessee as accruing during the year. The Hon'ble Punjab & Haryana High Court in the case of C.S. Atwal Vs. CIT, Ludhiana, ITA No.200 of 2013(O&M) dated 22.07.2015 had deleted the similar addition confirmed by the Hon'ble ITAT and has held that capital gain under these circumstances can be worked out only on the basis of sale consideration received by assessee. The findings of the Hon'ble Court are reproduced below.
"1. Perusal of the JDA dated 25.02.2007 read with sale deeds dated 02.03.2007 and 25.04.2007 in respect of 3.08 acres and 4.62 acres 6 ITA No.565/Asr/2015 Asst.Year. 2007-08 respectively would reveal that the parties had agreed for pro-rata transfer of land.
2. No. possession had been given by the transferor to the transferee of the entire land in part performance of JDA dated 25.02.2007 so as to fall within the domain of Section 53A of 1882 Act.
3. The possession delivered, if at all, was as a license for the development of the property and not in the capacity of a transferee.
4. Further Section 53A of 1882 Act, by incorporation, stood embodied in section 2(47)(v) of the Act and all the essential ingredients of Section 53A of 1882 Act were required to be fulfilled. In the absence of registration of JDA dated 25.02.2007 having been executed after 24.09.2001, the agreement does not fall under Section 53A of 1882 Act and consequently Section 2(47)(v) of the Act does not apply.
5. It was submitted by learned counsel for the assessee- appellant that whatever amount was received from the developer, capital gains tax has already been paid on that and sale deeds have also been executed. In view of cancellation of JDA dated 25.02.2007, no further amount has been received and no action thereon has been taken. It was urged that as and when any amount is received, capital gains tax shall be discharged thereon in accordance with law. In view of the aforesaid stand, while disposing of the appeals, we observe that the assessee appellants shall remain bound by their said stand.
6. The issue of eligibility to capital gains tax having been decided in favour of the assessee, the question of exemption under Section 54F of the Act would not survive any longer and has been rendered academic.
7. The Tribunal and the authorities below were not right in holding the assessee-appellant to be liable to capital gains tax in respect of remaining land measuring 13.5 acres for which o consideration had been received and which stood cancelled and incapable of performance at present due to various orders passed by the Supreme Court and the High Court in PILs. Therefore, the appeals are allowed. "
From the above observations of the Hon'ble Punjab & Haryana High Court reproduced by ld. CIT(A), we find that the JDA agreement was not completed and assessee had not received the balance payments and had also not received the flat as promised in the agreement. The ld. CIT(A) has also held that the belief of the assessee that the capital gains 7 ITA No.565/Asr/2015 Asst.Year. 2007-08 on which he had to pay tax has to be computed only on the basis of the amount which he had actually received, cannot be considered to be totally unreasonable. It is undisputed fact that in the present case the assessee had declared the particulars of entire transaction including amount received during the year in the form of a note which fact is verifiable from the order of Assessing Officer itself where he has stated as under:
"In the return dated 27,3.2008, the assessee mentioned as under:
(1). During this year a joint Development Agreement was executed on 25.02.2007 between the Punjabi Co. Op. House Building society Ltd., Mohali and Hash Builders Pvt. Ltd., Chandigarh and T.H.D.C. Ltd.
Bombay.
(2) I was a bonafide and registered member of the Punjabi Co. Op. House Building society Ltd. Mohali.
(3) The society had allotted me one plot of land measuring 1000 sq. yard (Plot no. 54) in vill. Kansal Teh. Kharar through allotment letter dated 09.01.2004.
(4) The society entered into an agreement on 25.02.2007 as mentioned above for development of complete land. As per agreement I would receive Rs.1,65,00,000 in cash to be received in 4 instalments and two built up flats in lieu of consideration against surrender of my right of allotment in plot no. 54 to the society.
(5) Since the flats to be allotted to me have not come in to existence, so exact calculation of Capital Gain cannot be made. (6) Secondly I have received only Rs. 66 lacs out of Rs. 165 Lacs. I have deposited the same in SBI Sector 17 Chandigarh under the Capital gain scheme as under:
Date Amount
01.05.2007 Rs.36,00,000/-
28.09.2007 Rs.30,00,000/-
(7) No capital Gain is being shown in view of facts stated above, As and when flats will come into existence and full value of consideration will be received, this return will be revised accordingly." 8 ITA No.565/Asr/2015
Asst.Year. 2007-08 Therefore the assessee cannot be said to have concealed the particulars of income and rather he had declared the complete particulars of transaction and from that particulars of transaction only the Assessing Officer came to the conclusion that capital gain had arisen to the assessee. Moreover he had deposited the entire amount under Capital Gain Tax Scheme and therefore, no capital gain tax was payable. The Hon'ble Amritsar Tribunal vide its order dated 30.08.2017 in the case of Hari Singh has already decided similar issue in favour of assessee. The argument of Ld. DR that Assessee should have declared the capital gain at least on receipt basis in the columns provided in the return does not hold any force as assessee had not received full sale consideration and therefore, by way of a note he furnished the entire particulars and discharged his onus of furnishing details about transaction.
In view of the above the assessee cannot be said to have furnished wrong particulars of income or had concealed the income.
8. In view of the above, the appeal filed by the Revenue is dismissed.
Order pronounced in the open court on 24/10/2017.
Sd/- Sd/-
(N. K. CHOUDHRY) (T.S. KAPOOR)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated:24/10/2017
/GP/Sr. Ps.
Copy of the order forwarded to:
1. The Assessee:
2. The
3. The CIT(A),
9 ITA No.565/Asr/2015
Asst.Year. 2007-08
4. The CIT,
5. The SR DR, ITAT, Amritsar.
True copy
By order