Income Tax Appellate Tribunal - Delhi
Kiran Kumar Huf, Rewari vs Ito, Ward- 1, Rewari on 3 March, 2021
IN THE INCOME TAX APPELLATE TRIBUNAL
(DELHI BENCH 'D' : NEW DELHI)
BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER
and
SHRI KULDIP SINGH, JUDICIAL MEMBER
(THROUGH VIDEO CONFERENCE)
ITA No.3934/Del./2017
(ASSESSMENT YEAR : 2009-10)
Kiran Kumar HUF, vs. ITO, Ward - 1,
C/o Naresh Singh Chauhan, Advocate Rewari.
1035 - P, Sector 3, Part - II,
Near Ganeshi Lal Dharmshala,
Rewari - 123 401.
(PAN : AALHK3682R)
(APPELLANT) (RESPONDENT)
ASSESSEE BY : Shri Lalit Mohan, CA
REVENUE BY : Shri Sanjay Kumar, Senior DR
Date of Hearing : 21.01.2021
Date of Order : 03.03.2021
ORDER
PER KULDIP SINGH, JUDICIAL MEMBER :
Appellant, Kiran Kumar HUF (hereinafter referred to as 'the assessee') by filing the present appeal sought to set aside the impugned order dated 13.04.2017 passed by the Commissioner of Income-tax (Appeals), Rohtak qua the assessment year 2009-10 on the grounds inter alia that :-
2 ITA No.3934/Del./2017
"1. That the learned Commissioner of Income Tax (Appeals), Rohtak has erred both in law and on facts in sustaining the initiation of proceedings u/s 147 of the Act and, completion of assessment u/s 147/143(3) of the Act which were without jurisdiction and deserved to be quashed as such.
1.1 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that there was no tangible and relevant material on record on the basis of which it could be held that, there was any "reasons to believe" with the learned Income Tax Officer the income of the appellant had escaped assessment and, in view thereof, the proceedings initiated were illegal, untenable and therefore, unsustainable.
1.2 That the learned Commissioner of Income Tax (Appeals) has further erred both in law and on facts in failure to appreciate that, issuance of notice u/s 148 merely amounted to change of opinion as original assessment was completed u/s 143(3) and, no tangible material surfaced after the completion of assessment and, therefore notice was illegal and, without jurisdiction.
1.3 That the basis adopted in the reasons recorded that action u/s 148 of the Act in compliance of order of Hon'ble Tribunal dated 26.9.2014 in ITA No. 1801/D/2013 is based on misinterpretation and misconstruction of the findings of the Hon'ble Tribunal and hence the action is without jurisdiction.
2. That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in sustaining an addition of Rs.1,38,39,317/- representing alleged long term capital gain on sale of agricultural land located at village Kapriwas PO Dharuhera Distt. Rewari.
2.1 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that the alleged long term capital gain was not taxable in the hands of the appellant since addition made in the hands of the individual had been though deleted by the Hon'ble Income Tax Appellate Tribunal but since the aforesaid order was challenged in appeal before the Hon'ble High Court by revenue and as such it is a case of double taxation which is not permissible.
2.2 That even otherwise that since the land sold was an agricultural land no addition was tenable in the hands of the appellant u/s 45 read with section 2(14) of the Act. 3 That without prejudice to the above, the learned Commissioner of Income Tax (Appeals) has also erred both in law and on facts in confirming the incorrect computation of 3 ITA No.3934/Del./2017 long term capital gain by restricting the indexed cost of acquisition to Rs.1,25,892/- as against claimed indexed cost of acquisition of Rs.1,39,68,698/- and thus even otherwise the addition sustained is invalid.
4 That the learned Commissioner of Income Tax (Appeals) has further erred both in law and on facts In sustaining the denial of exemption claimed u/s 54F/54B of the Act.
4.1 That various adverse findings and conclusion recorded by the learned Commissioner of Income Tax (Appeals) while upholding the denial of exemption are also factually incorrect, contrary to record, legally misconceived and untenable. 5 That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in upholding the levy of interest of Rs.25,79,728/- under section 234B of the Act which is not leviable on the facts and circumstances of the case of the appellant.
It is therefore, prayed that, it be held that assessment made by the learned Income Tax Officer and sustained by the learned Commissioner of Income Tax (Appeals) be quashed and, further addition so upheld by the learned Commissioner of Income Tax (Appeals) alongwith interest levied be deleted and appeal of the appellant be allowed."
2. Briefly stated the facts necessary for adjudication of the controversy at hand are : Pursuant to the order dated 26.09.2014 passed by the Tribunal in appeal bearing ITA No.1801/Del/2013 for AY 2009-10 in assessee's case in individual status, assessee had submitted before the Tribunal that the capital gains on the land in question has already been brought to tax in the hands of HUF and consequently, the Tribunal had directed the ITO to verify the issue. During the assessment proceedings u/s 143 (3) of the Income-tax Act, 1961 (for short 'the Act') dated 14.12.2011 in the assessee's individual case, cost of acquisition was taken at Rs.97/- 4 ITA No.3934/Del./2017 per marla @ Rs.15,520/- per acre as on 01.04.1981 on the basis of sale instance and the total cost of acquisition of the land i.e. 11 canal 3 marla (223 marla) was determined at Rs.21,631/- and the indexed cost of acquisition of land in question was determined at Rs.1,25,892/- (21,631 * 582/100 = 1,25,892) and the long term capital gain was calculated at Rs.1,38,39,317/-. AO sought to charge the capital gain in compliance to the order passed by the Tribunal to tax in HUF status of assessee by applying the same cost of acquisition of the land in question. Finding reason to believe that the income of the assessee from long term capital gain of Rs.1,38,55,806/- and any other income which subsequently comes to the notice of the AO has escaped assessment within the meaning of section 147 of the Act and thereby given notice u/s 148 to the assessee. AO disposed off the objections filed by the assessee. In response to the notice u/s 148, the assessee filed return of income on 27.04.2015 showing claim of deduction under sections 44/44B/54/54B/54D/54EC/54F/54G/54GA as nil. AO held that capital gains of Rs.1,38,39,317/- calculated and charged in the individual case by the AO made chargeable in the hands of HUF and thereby made an addition of Rs.1,38,39,317/-.
3. Assessee carried the matter before the ld. CIT (A) by way of filing the appeal who has confirmed the addition by dismissing the 5 ITA No.3934/Del./2017 appeal. Feeling aggrieved by the order passed by the ld. CIT (A), the assessee has come up before the Tribunal by way of filing the present appeal.
4. We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case.
5. Ld. AR for the assessee challenging the impugned order contended inter alia that when capital gain has already been assessed in the hands of HUF then reopening by the AO is bad in law; that assessee has truly and fully declared the sale of entire agricultural land at the time of reopening of HUF assessment, the AO was well aware that in individual capacity, fair market is taken as on 01.04.1981 by the then AO; that AO/CIT (A) have erred in rejecting the exemption u/s 54F of the Act. However, on the other hand, ld. DR for the Revenue relied upon the order passed by the AO as well as ld. CIT (A).
6. Undisputedly, the land in question qua which the capital gains to the tune of Rs.1,38,39,317/- have been assessed and added to the income of the assessee by the AO belongs to Kiran Kumar HUF. It is also not in dispute that first time assessment was reopened in HUF case u/s 147/148 of the Act vide notice dated 6 ITA No.3934/Del./2017 28.03.2013 after order passed by the ld. CIT (A) wherein it was decided that sale proceeds of the agricultural land belongs to HUF. It is also not in dispute that second time assessment has been reopened by the Revenue Department pursuant to the order dated 26.09.2014 passed in ITA No.1801/Del/2013 in assessee's case in individual status for AY 2009-10.
7. In the backdrop of the aforesaid undisputed fact the only question arises for determination in this case is :-
"as to whether capital gains qua the land in question have been taxed in the hands of HUF vide assessment order dated 26.03.2014 as contended by the ld. AR for the assessee?"
8. Bare perusal of the order dated 26.09.2014 passed by the Tribunal in ITA No.1801/Del/2013 in ITO vs. Kiran Kumar, shows that the Tribunal held that :-
"while setting aside the order of the ld. CIT (A) remitted the matter back to the file of AO and directed him to verify whether the HUF has been taxed on the capital gain qua the land in question and if so, the addition made on the individual assessee needs to be deleted."
9. To comply with the order passed by the Tribunal (supra), the first step for the AO to take in this case was to verify whether capital gain qua the land in question has been taxed in the name of Kiran Kumar HUF and if so, the addition made in the name of Kiran Kumar in the individual status needs to be deleted. 7 ITA No.3934/Del./2017
10. AO has reopened the assessment second time in this case pursuant to the order dated 26.09.2014 passed by the Tribunal in ITA No.1801/Del/2013 in ITO vs. Kiran Kumar by recording reasons u/s 148 (2) of the Act as under :-
"Assessment u/s 147/143(3) of the Act was made vide order dated 26.03.2014 at an income of Rs.26,840/- + agriculture income of Rs.5,000/- wherein the capital loss on sale of land was determined at Rs.16,489/- by adopting the cost of acquisition of land at Rs.24,00,120/- as on 01.04.1981 as per calculation given below :-
Sale consideration of agriculture land sold On 23.07.2008 Rs.1,39,52,209 Less Indexed cost of acquisition 24,00,120/100*582= Rs.1,39,68,698 Capital Loss = Rs.(-)16,489/-"
11, Bare perusal of the order passed by the Tribunal dated 26.09.2014 (supra) on the basis of which assessment has been reopened second time goes to prove that the Tribunal has merely directed the AO to verify the claim of the assessee that capital gains qua the land in question have already been brought to tax in the hands of HUF. Instead of verifying the facts, the AO has jumped to the conclusion to reopen the assessment which is bad in law.
12. We have perused the assessment order dated 26.03.2014 passed in case of Kiran Kumar HUF u/s 143 (3)/148 of the Act for AY 2009-10 wherein capital gains of Rs.16,489/- has been claimed and accepted by the Revenue. It is strange that instead of verifying 8 ITA No.3934/Del./2017 the facts if capital gains have already been brought to tax in this case vide assessment order dated 26.03.2014, AO again reopened the assessment second time.
13. Identical issue in case of Narayan Singh HUF reported in (2020) 82 ITR (Trib) 0018 (Delhi) has already been decided by the coordinate Bench of the Tribunal in favour of the assessee which is qua the land in question, wherein it is held that when capital gains have already been brought to tax in the hands of Kiran Kumar HUF while framing the assessment order dated 26.03.2014 (supra), subsequent reopening is not sustainable and was accordingly quashed by returning following findings :-
"5. It appears that the Assessing Officer totally misinterpreted the directions of the Tribunal. Notice issued once again u/s 148 of the Act and reasons for issuance of notice are as under:
"Assessment u/s 147/143(3) of the Act was made vide Order dated 26.03.2014 at an income of Rs. 3,13,660/- wherein the capital loss on sale of land was determined at RS 42,918/- by adopting the cost of acquisition of land at Rs 33,84,880/-as on 01.04.1981 as per calculation given below Sale Consideration of land Rs. 1,96,57,084/-
Less: Indexed cost of
acquisition as on 01.04.1981
33,84,880/100*582 = Rs.1.97,00,002/-
Capital Loss = Rs. (-) 42,918/-
Later on, perusal of the Hon'ble I.T.A.T, New Delhi's Order dated 26.09.2014 in appeal No. ITA No. 1802/Del/2013 in assessee's case in Individual Status for A.Y. 2009-2010 it is revealed that the assessee has submitted before the I.T.A.T that the Capital Gains on the land in question has been brought to tax in the hands of HUF and the Hon'ble ITAT has directed the undersigned to verify the issue. The assessee has not challenged the cost of acquisition of the 9 ITA No.3934/Del./2017 land in question as on 01.04.1981 and calculation of Capital gains at Rs 1,94,86,593/- in individual status before the Hon'ble ITAT. During assessment proceedings u/s 143(3) dated 14.12.2011 in the assessee's individual case the cost of acquisition was determined at Rs 97/- per Marla at the rate of Rs 15,520/- per acre as on 01,04.1981 on the basis of sale instance and the total cost of acquisition of the land 15 Kanal 2 Marla (302 Marla ) was determined at Rs 29,294/- (302*97/-) and the indexed cost of acquisition of the land in question was determined at Rs 1,70,491/- (29294*582/100= 1,70,491/-). The Long-term Capital Gain was worked out at Rs. 1,94,86,593/-(1,96,57,084/- 1,70,494/- =1,94,86,593/-). Therefore, in compliance of Hon'ble ITAT's Order the Capital Gains is to be charged to tax in HUF Status of the assessee by applying the same cost of acquisition of the land in question as determined in the case of Individual Status for the same assessment year. Thus, by taking the cost of acquisition of the land as on 01.04.1981 as, that determined in the Individual Status of the assessee vide Order u/s 143(3) dated 19.12.2011 the "Long-term Capital Gains in HU Sale Consideration of land 15 Kanal 2 Maria (302 Marla) Rs. 1,96,57,084/-
Less: Cost of Acquisition 29294/-(30297=29294/-) Indexed Cost = 170491/-
(29294*582/100=170491/-) Rs. 1,70,491/-
Long Term Capital Gains Rs.1,94,86,593/-
As the Long-term Capital Gain has been shown at Capital Loss of Rs 42,918/- , therefore, Long-term Capital gain to the extent of Rs. 1,95,29,511/- (1,94,86,593 + 42,918/-= 1,95,29,511/-) has escaped assessment.
I, therefore, have reason to believe that income of the assessee from long term Capital gain to the extent of Rs.1,95,29,511/- as discussed above and any other income which subsequently comes to the notice of the undersigned has escaped assessment within the meaning of section 147 of the I.T. Act, 1961."
6. As mentioned elsewhere, earlier also, a notice u/s 148 was issued and served upon the assessee and assessment was completed vide order dated 26.03.2014. The order of the Tribunal is 26.09.2014 and the directions of the Tribunal are very clear that the Assessing Officer had to verify whether the capital gains have been taxed in the hands of the HUF or not and assessment order dated 26,03,2014 clearly shows that assessment has been completed in the hands of the HUF.
7. In our considered opinion, once assessment has been reopened to tax capital gain in the hands of the HUF, to avoid 10 ITA No.3934/Del./2017 double taxation the Tribunal in the hands of the individual has simply directed the Assessing Officer to very whether the HUF has been assessed or not. The Tribunal nowhere directed the Assessing Officer to reopen the assessment and make the impugned additions. In our humble opinion, the Assessing Officer has totally misinterpreted the directions of the Tribunal and grossly erred in once again reopening the assessment on the same set of facts which have already been considered while framing assessment order dated 26.03.2014 in the hands of the HUF. Therefore, we have no hesitation to set aside the notice u/s 148 of the Act, thereby quashing the assessment order framed pursuant to the said notice. Accordingly, Ground Nos. 1 to 1.3 taken together are allowed."
14. In view of what has been discussed above, we are of the considered view that it is a case of completely misunderstanding the order passed by the Tribunal in ITA No.1801/Del/2013 (supra) on the basis of which assessment has been reopened second time without verifying the facts if capital gains qua the land in question have already been brought to tax in the hands of HUF.
15. Consequently, reopening in this case by way of issuance of notice issued u/s 148 of the Act is not sustainable and is liable to be quashed. Hence, question framed in this case is answered in affirmative. Accordingly, assessment framed in this case is ordered to be quashed without going into the merits of the case and the appeal filed by the assessee is hereby allowed. Order pronounced in open court on this 3rd day of March, 2021.
Sd/- sd/-
(ANIL CHATURVEDI) (KULDIP SINGH)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated the 3rd day of March, 2021/TS
11 ITA No.3934/Del./2017
Copy forwarded to:
1.Appellant
2.Respondent
3.CIT
4.CIT(A), Rohtak.
5.CIT(ITAT), New Delhi. AR, ITAT
NEW DELHI.