Income Tax Appellate Tribunal - Patna
Mohammad Sikander Raja,Patna vs Income Tax Department (Nfac), Delhi on 19 March, 2026
IN THE INCOME TAX APPELLATE TRIBUNAL
PATNA 'DB' BENCH AT KOLKATA
[Virtual Court]
Before
SHRI DUVVURU RL REDDY, VICE PRESIDENT
&
SHRI RAKESH MISHRA, ACCOUNTANT MEMBER
ITA No(s). 56/PAT/2025
Assessment Year(s) 2011-12
Mohammad Sikander Raja Income Tax Department
Vs. (NFAC)
(Appellant) (Respondent)
PAN: ADYPR0434Q
Appearances:
Assessee represented by : Manish Rastogi, Adv.
Department represented by : Manab Adak, JCIT.
Date of concluding the hearing : 26-February-2026
Date of pronouncing the order : 19-March-2026
ORDER
PER RAKESH MISHRA, ACCOUNTANT MEMBER:
This appeal filed by the assessee is against the order of the Commissioner of Income Tax (Appeals)-NFAC, Delhi [hereinafter referred to as Ld. 'CIT(A)'] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') for AY 2011-12 dated 17.12.2024.
2. The assessee is in appeal before the Tribunal raising the following grounds of appeal:
"1. That this appeal is filed for relief from the assessment order passed on 17/12/2024 vide DIN & order no. ITBA/NFAC/S/250/2024- 25/1071295849 (1) by Commissioner of Income Tax (Appeals) Income Tax Department, National Faceless Appeal Centre (NFAC) Delhi, under section 250 of Income Tax Act 1961 for the A.Y. 2011-2012.
2. That the applicant has not moved before this Tribunal for relief in this matter earlier to this.
Page | 2 ITA No(s). 56/PAT/2025 Assessment Year(s) 2011-12 Mohammad Sikander Raja.
3. For that the assessee has not filed any return whereas the learned Income- tax officer assessed the assessee under the head long term capital gain on a total long term capital gain amounting to Rs. 22,75,500/- calculating tax of Rs. 468650/- which was dismissed by the learned income tax officer asper order no ITBA/NFAC/S/250/2024-25/1071295668(l) dated 17/12/2024 and showing no tax interest and penalty in this order under section 147 r.w.sl44 but a penalty amounting to Rs. 4,68,650/- u/s 271(1)(c) towards for concealment of income against DIN & Order No. ITBA/NFAC/S/250/2024- 25/1071295849(1) dated 17/12/2024 under section 250 of Income Tax 1961
4. For that long term capital gain has been made on assumption & presumption. In addition to above appellant has not received any amount during agreement but the learned income tax office assumed the receipt of Rs. 512500/- as token money. The learned Income-tax officer ought to have appreciated that land development agreement has been made on 19/11/2010 between the developer & assessee. As per term and conditions the developer would be completed the project within the period of two years & six months plus further six months. The period will count after approval of the project.
5. For that in this case question long term capital gain does not arise, as because land development agreement has been made on 19.11.2010 between the developer & assessee and as per terms and conditions the developer would complete the project within the period of two year & six month plus further six months and agreed to hand over the possession latest by thirty six months (3 years). In continuation the period will count after approval of the project.
6. For that the assessee executed on 19.11.2010, as per agreement, developer has agreed to hand over the possession latest by the thirty six month (3years) the agreement was made on 19.11.2010 only 134 days was left to close of the financial year. How could it be possible to build such a big project within 134 days. No a prudent person can image. But the assessing officer thinks so.
7. For that the learned Income-tax officer must know to get the map sanctioned takes about three to six months, time at least
8. For that during the financial year 2010-11 neither flats were constructed nor was the possession handed over, then question of capital gain does arise. Imposition Capital Gain Tax is premature.
9. For that the learned Income-tax officer ought to have appreciated that section 45 is the charging section of Capital Gain tax in which there is essential condition for taxing Capital Gain once, there must be profit or gain on such transfer, which will be known as Capital Gain during the year only. But the development agreement was executed after the end of the financial Page | 3 ITA No(s). 56/PAT/2025 Assessment Year(s) 2011-12 Mohammad Sikander Raja.
year. During the year under appeal the assessee did not earn any profit or gain. So question of Capital Gain does not arise.
10. For that the assessee is liable for Capital Gain Tax only in the year when he get possession or Possession letter. Besides the assessee has right to get exemption u/s 54 for personal dwelling. For that the assessee does not fall under the mischief of section 45 the Income-tax act which attract Capital Gain Tax. The development agreement was executed on 19.11.2010 with developer who has not provided assessee's share of constructed area till date. In view of the judgment hold by Honorable Supreme Court in the case of CIT (A) vs Balvir Singh Maini (2017) that income may accrue to an assessee without actual receipt of the same If the assessee acquires a right to receive the income can be said to have accrued to him though it may be received later on its being ascertained. It is clear that no Capital Gain in fact arises or accrued to the assessee.
11. For that under section 45 read with section 48 of the Income-tax Act profit and Gains should arise from the transfer of Capital assets and Incomes should be computed after of full value of the consideration has been received or accrued. The total addition of Rs 22,75,500/- under the head Capital Gain should be deleted.
12. For that the assessment is otherwise bad in law as well as in fact and it is fit to be declared the assessment null and void.
13. For that the section 53A in "The transfer of Property Act ,1982 in part performance in which it says that where any person contract to transfer for consideration any immovable property by writing signed by him on his behalf from which the terms necessary to constitute the transfer can be ascertained with reasonable certainty." But in this case immediate consideration was not there but it was promised to give consideration. In such a situation capital was not there under section 45 of the Income Tax. Act.
14. For that the assessee has not filed return due to less income under Income Act 1961 and there was no concealment of Income showing on his behalf.
15. Additional ground if any will be urged as and when requires."
3. Brief facts of the case are that the assessment was completed u/s 144 of the Act on 22.12.2018 at the total income of ₹22,75,500/-. The case was reopened u/s 147 of the Act on the basis of the information received from the office of the Registrar of Properties u/s 133(6) of the Act that in terms of copies of land development agreement, it was found that the assessee had entered into a land development agreement with M/s Emart Real State India Pvt. Ltd. in the F.Y. 2010-11. The assessee Page | 4 ITA No(s). 56/PAT/2025 Assessment Year(s) 2011-12 Mohammad Sikander Raja.
and the builder had agreed to have the share in the ratio of 40:60. The assessee had one-fourth share in the total area of land admeasuring 9,100 sq. ft. and the total value of the land was ₹51,25,000/-. During the assessment proceedings, it was observed that the assessee had earned the capital gains of ₹22,75,500/- during the AY 2011-12; however, the assessee did not file the return/disclose the capital gains in his return of income. Therefore, the amount of ₹22,75,500/- was assessed as the income for the AY 2011-12. Subsequently, a show cause notice u/s 274 r.w.s. 271 of the Act dated 31.12.2018 was issued to the assessee for the penalty. However, the assessee failed to make any compliance on the due date. Further, in response to another show cause notice was issued on 29.05.2019, again no compliance was made. The Assessing Officer (hereinafter referred to as Ld. 'AO') was of the view that the income of ₹22,75,500/- assessed under the head 'capital gains' was earned by the assessee and the assessee had concealed the same during the AY 2011-
12. Accordingly, minimum penalty being 100% of the tax sought to be evaded at ₹4,68,650/- was imposed.
3.1 Aggrieved with the penalty order, the assessee filed an appeal before the Ld. CIT(A), who held that the assessee had filed the appeal against the assessment order passed by the Ld. AO u/s 144 r.w.s. 147 of the Act dated 22.12.2018 in relation with the quantum addition of ₹22,75,500/- made on account of long-term capital gains and the said appeal had been dismissed by the Ld. CIT(A) vide order dated 17.12.2024 and the addition of ₹22,75,500/- on account of long-term capital gains was confirmed by the Ld. CIT(A). Since the quantum addition was confirmed vide the aforesaid appellate order dated 17.12.2024, the penalty levied u/s 271(1)(c) of the Act was also upheld and the penalty of ₹4,68,650/- was confirmed and the assessee's appeal was dismissed.
Page | 5 ITA No(s). 56/PAT/2025 Assessment Year(s) 2011-12 Mohammad Sikander Raja.
4. Aggrieved with the order of the Ld. CIT(A), the assessee has filed the appeal before the Tribunal.
5. Rival contentions were heard and the submissions made have been examined. It was submitted by the Ld. AR that no appeal was filed against the quantum addition confirmed by the Ld. CIT(A). Our attention was also drawn to page 21 of the paper book filed being the penalty order in which the penalty being 100% of the tax sought to be evaded was imposed. As per para 2 of the joint development agreement, the share was in the ration of 40:60 and 1/4th share of the total area of the land was of the assessee and the capital gains was not disclosed in the return of income. It was stated by the Ld. AR that merely an entry in the joint development agreement does not amount to transfer and our attention was drawn to a decision of the Hon'ble Patna High Court in this regard. It was also submitted that as per the recent amendment, the capital gains are chargeable at the time of receipt of the proceeds and merely entering into a joint development agreement does not amount to transfer. It was also submitted that when two views are possible, no penalty could be levied. The Ld. AR relied upon the decisions of Dr. Mahaveer Prasad, and also of Principal Commissioner of Income Tax vs. Modipon Ltd. [2018] 100 taxmann.com 58 (SC)/[2018] 259 Taxman 425 (SC)[22- 10-2018] and Durga Kamal Rice Mills vs. Commissioner of Income- tax [2003] 130 Taxman 553 (Calcutta)/[2004] 265 ITR 25 (Calcutta)/[2003] 183 CTR 223 (Calcutta)[09-04-2003]. However, the Ld. DR rebutted by stating that the decision of DR. Mahaveer Prasad relates to the exemption u/s 54F of the Act and no exemption u/s 54F of the Act was claimed in the income tax return filed by the assessee. It was also stated that as per the decision of the Hon'ble Madras High Court in the case of Commissioner of Income-tax, Non Corporate Ward-10(2), Page | 6 ITA No(s). 56/PAT/2025 Assessment Year(s) 2011-12 Mohammad Sikander Raja.
Chennai vs. Gumanmal Jain [2017] 80 taxmann.com 21 (Madras)/[2017] 394 ITR 666 (Madras)[03-03-2017] prior to 01.04.2015, the deduction u/s 54F of the Act was not allowable as the assessee had more than one house. It was stated that the Ld. AO at page 24 of the paper book being the assessment order has mentioned the details of registered land development agreement which was registered in the FY 2010-11 and an extract from the assessment order in this regard is as under:
"2. On receipt of information under section 133(6) in terms of copies of land development agreement it was found that the assessee Md. Sikandar Raja, has entered into and registered a Land development agreement with M/s M/s Emart Real State India Pvt. Ltd. in the financial year 2010-11 relevant to the assessment year 2011-12. On perusal of the land development agreement entered into by the assessee on 19.11.2010, it is noted that the assessee and the developer have agreed to the development arrangement where Forth of 40% of the total land area of 9100 sft owned by the assessee will be constructed upon by the land developer. In terms of the land development agreement the share of constructed building to be owned by the assessee is 22750 sq ft encompassing total floor area of 22750 square feet. The developer will be entitled to ownership of 40% of total constructed area of 22750 square feet. As per land development agreement registered the total value of Land is Rs. 51,25,000/- and the value of share owned by the assessee at One Forth of 40% of land owned by the assessee stands at Rs3,500 As a bundle of ownership rights over his share of land was relinquished by the assessee in terms of the land development agreement and as the terms of the land development agreement as well as the facts of the case attracted provisions of section 53A of the Transfer of Property Act, the capital gains arising out of such transfer attracted provisions of sections 2(47)(v), 45 and 48 of the Income Tax Act, 1961."
6. Subsequently, the constructed property was handed over to the assessee. The agreement is also available at page 36 of the paper book dated 19.11.2010 in which the share of the assessee is mentioned at 40%. As per page 43 of the paper book, the full rights were transferred to the developer for construction of the property. The Bench raised a query to the Ld. AR as to whether the assessee had ever shown the capital Page | 7 ITA No(s). 56/PAT/2025 Assessment Year(s) 2011-12 Mohammad Sikander Raja.
gains in any of the assessment years to which the Ld. AR replied in the negative.
7. The Ld. DR submitted that on facts the penalty was rightly imposed and the order of the Ld. CIT(A) may be confirmed.
8. We have considered the facts of the case, the submissions made and the documents filed. The transfer took place through a registered land development agreement and the case law relied upon relates to section 54F of the Act relied upon by the assessee for the impugned assessment year and other cases are not relevant to the facts of the case of the assessee. Since the assessee had not shown the capital gains in any of the years, therefore, the assessment order had rightly been upheld as the joint development agreement was a registered document and as per the terms & conditions, full rights had been transferred to the developer for construction of the property as per the plan and the agreement and the assessee had also received the sale consideration as per the agreement. Therefore, the Bench was of the view that there is no merit in the appeal of the assessee and the grounds of appeal raised by the assessee were liable to be hereby dismissed, which are dismissed and the order of the Ld. CIT(A) is hereby confirmed.
9. In the result, the appeal filed by the assessee is dismissed.
Order pronounced in the open Court on 19th March, 2026.
Sd/- Sd/-
[Duvvuru RL Reddy] [Rakesh Mishra]
Vice President Accountant Member
Dated: 19.03.2026
Bidhan (Sr. P.S.)
Page | 8
ITA No(s). 56/PAT/2025
Assessment Year(s) 2011-12
Mohammad Sikander Raja.
Copy of the order forwarded to:
1. Mohammad Sikander Raja, Khajpura Near Shiv Mandir, Bailey Road Khajpura, Patna, Bihar, 800014.
2. Income Tax Department (NFAC).
3. CIT(A)-NFAC, Delhi.
4. CIT-
5. CIT(DR), Patna Benches, Patna.
6. Guard File.
//True copy // By order Assistant Registrar ITAT, Kolkata Benches Kolkata