Income Tax Appellate Tribunal - Delhi
Sangeeta Jain, Gurgaon vs Pr.Cit-11, New Delhi on 15 February, 2018
IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI 'G' BENCH,
NEW DELHI
BEFORE SHRI B.P. JAIN, ACCOUNTANT MEMBER, AND
SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER
ITA No. 3888/DEL/2017
[Assessment Year: 2013-14]
Smt. Sangeeta Jain Vs. The Pr. C.I.T-II
Fashion Club Global, New Delhi
Plot No. 42, Sector 18
Gurgaon, Haryana
PAN : AAGPJ 4535 P
[Appellant] [Respondent]
Date of Hearing : 20.12.2017
Date of Pronouncement : 15.02.2018
Assessee by : Shri Rakesh Gupta, Adv
Shri Samir Agarwal, Adv
Revenue by : Shri S.S. Rana, CIT- DR
ORDER
PER B.P. JAIN, ACCOUNTANT MEMBER,
This appeal filed by the assessee is directed against the order dated 21.04.2017 of Principal Commissioner of Income Tax - II, New Delhi and relates to assessment year 2013-14.
2ITA No. 7296/DEL/2017
2. The assessee has raised the following grounds of appeal:
1. That having regard to facts and circumstances of the case, Ld. Pr. Cit has erred in law an on facts in assuming jurisdiction u/s 263 and further erred in holding the assessment order dated 7/12/2015 erroneous in so far as it is prejudicial to the interest of revenue.
2. That in any case and in any8 view of the matter, action of Ld. Pr. CIT in assuming jurisdiction u/s 263 and passing the impugned order under this section is bad in law and against these facts and circumstances of the case.
3. That having regard to facts and circumstances of the case, Ld. Pr. CIT has erred in law and on facts in holding that appellant is liable to be taxed on capital gain on the transfer of subject agricultural land by holding the same as 'capital asset.'
4. That in any case and in any view of the matter, action of Ld. Pr. CIT in holding that subject agricultural land as capital asset and holding the appellant is leviable to be taxed on short term capital gain on the transfer of subject agricultural land is bad in law and against the facts and circumstances of the case.
3. Appellant filed paper book consisting 159 pages, case law compilation consisting 262 pages apart from the synopsis running into 3 ITA No. 7296/DEL/2017 14 pages.
4. On the other hand, the ld. CIT(DR) filed a synopsis running into 3 pages. Main thrust of the counsel of the assessee was that jurisdiction assumed u/s 263 of the Act was bad in law as assessment order cannot be said to erroneous and prejudicial to the revenue and the issue of exemption from capital gain was considered in assessment and a view was taken by the Assessing Officer on the basis of facts that the subject land was agricultural land situated beyond prescribed distance from Sohna. It was the further contention of the assessee that though the ld. CIT issued notice u/s 263 and sought a response from the assessee and once the replies were filed, the ld. CIT did not hold that assessment order was erroneous and prejudicial to the revenue and unless such twin findings are recorded by ld. CIT after the receipt of replies a valid order u/s 263 of the Act could not be passed. The ld counsel relied upon the brief synopsis and the case laws referred therein. On the other hand, the ld. CIT-DR also placed reliance on the order passed u/s 263 of the Act and brief written submissions filed by him and relied upon explanation 2 to section 263 of the Act reported in 243 ITR 83 and the decision in the case of Surya Jyoti Software, ITAT Delhi.
4ITA No. 7296/DEL/2017
5. Before we consider the submissions made by both the sides, it is mentioned that assessee earned capital gain of Rs. 10,72,76,180/- on sale of agricultural land claimed to be beyond prescribed units of Sohna which claim was accepted in assessment by the Assessing Officer after considering the reply and evidences filed. The ld. CIT passed impugned order u/s 263 of the Act on 21.02.2017 by rejecting the objections of the assessee and by holding that the capital gain was taxable.
6. We have considered the rival arguments made by both the sides, perused the orders of the A.O and the ld. CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions relied upon by both the sides. Assessment order in this case was passed u/s 143(3) of the Act on 07.12.2015 which mentions that the ld. counsel for the assessee appeared on behalf of the assessee and explained the case and submitted all the details as called for during the proceedings. It is evident from the assessment order that the assessee was provided ample opportunities and the ld. counsel for the assessee appeared over various dates of hearing i.e. 21.07.2015, 19.10.2015, 05.11.2015 and on other dates as per the order sheet. 5 ITA No. 7296/DEL/2017 The Assessing Officer further mentioned in the assessment order that details were provided on behalf of the assessee which were checked and verified on test check basis and were placed on record. It is further noticed that a letter was filed by the assessee in the assessment proceedings giving explanation about the non taxability of the capital gain of Rs. 2,10,72,76,180/- arising on the sale of subject land. It was explained in the letter placed at page 54 and 55 of the paper books that the subject agricultural land was situated beyond prescribed limits of Sohna and that it was not a capital asset as the land was situated beyond the prescribed limit of concerned municipal limit and thus capital gain arising on the sale of such agricultural land is exempt. It is also noticed that assessee filed purchase deed of this land which is at pages 56 to 62 of the paper book and at page 56 it is specifically mentioned 'Kisan -Chahi [Krishi Bhoomi]. Assessee also filed copy of sale deed which is at page 78 to 87 which also mentions the type of land as agricultural land and 'Chahi'. Copy of certificate from Tehsildar was also placed certifying the distance from the municipality. Paper book page 108 to 110 also copy of Jamabandi which show the subject land as Chahi [irrigated]. Thus, it is evident that during the course of assessment proceedings issue about the taxability of capital gain was considered in assessment and a view was 6 ITA No. 7296/DEL/2017 taken by the Assessing Officer as to the non taxability of such gain. Therefore, when the claim of the assessee was accepted in assessment order after due consideration of the facts, it cannot be said that the assessment order was erroneous as assessment was passed after application of mind. It has been held in the case of CIT Vs. Nirav Modi 390 ITR 292 [Bom] that the Assessing Officer having raised queries and perused evidences and having been satisfied with the claim a revision by the CIT was not justified. Hon'ble Delhi High Court in the case of Oracle Systems Corporation Vs. ADIT 380 ITR 232 have held that when assessment order is passed u/s 143(3) of the Act, there is presumption that assessment order has been passed after application of mind. Reliance is also placed on CIT Vs. LIC Housing Finance Ltd 367 ITR 458 [Bom]; CIT Vs. Kelvinator of India Ltd 332 ITR 231 [Del]; CIT Vs. DLF Power Ltd 329 ITR 289 [Del] which hold that an order cannot be said to be erroneous and prejudicial if Assessing Officer takes a possible view and Assessing Officer taking one of the two possible views, assessment order cannot be treated as erroneous. In this case, as mentioned above, Assessing Officer after considering the submissions of the assessee and considering the evidence reached to the conclusion that capital gain was exempt. Therefore, in view of the above decisions, and in view of the Hon'ble Supreme Court decision in the case of 7 ITA No. 7296/DEL/2017 Malabar Industrial Co. Ltd vs CIT reported in 243 ITR 83, the action of the ld. CIT in passing the order u/s 263 of the Act cannot be said to be in accordance with law and the order passed u/s 263, thus is bad. Moreover, it is seen that the ld. CIT in first 15 pages of the order has mentioned about the show cause notices, replies given on behalf of the assessee and then in paras 18 to 20 of the order u/s 263, CIT held that the objections raised by the assessee as regards the invocation of section 263 of the Act are not tenable. There is no finding recorded by the ld. CIT(A) after the receipt of the replies from the assessee that the assessment order was erroneous and prejudicial to the interest of the revenue. Therefore, absence of such finding is also fatal to the validity of the order u/s 263 and we are fortified by Guwahati High Court decision in the case of Smt. Lila Choudhary Vs. CIT 289 ITR 226, Hon'ble Bombay High Court in the case of Jewel of India Vs. CIT 325 ITR 92, Hon'ble Delhi High Court in CIT Vs. International Travel House Ltd reported in 344 ITR 554, Hon'ble Delhi High Court in CIT Vs. Bharat Aluminum Co. Ltd 303m ITR 256, therefore, from this stand point also, order passed u/s 263 is not sustainable and is therefore, quashed.
7. Appellant's counsel Dr. Rakesh Gupta raised one more issue that CIT could not have taken upon himself to deny the exemption and best 8 ITA No. 7296/DEL/2017 power of CIT could have to set aside the order. The decisions relied upon were ACIT Vs Manas Salt Iodization Industries Pvt. Ltd 169 TTJ 172 [Guwahati] and Bharat petroleum 350 ITR 44 [Mumbai]. Since we have quashed the order u/s 263, we do not thin to deal with this contention raised.
8. The ld. CIT [DR] relied upon the Hon'ble Supreme Court decision reported in 243 ITR 83 and ITAT Delhi decision in the case of Surya Jyoti Software which were distinguished by the ld. counsel for the assessee on facts. Explanation 2 to section 263 inserted by Finance Act 2015 cannot be interpreted in a manner which would make the enquiries unending. If Explanation 2 to section 263 is invoked by the Commissioner in such a manner as applied in the present case, in our considered opinion, the process of enquiry would be unending and no assessment order can be said to be final as all the assessment order can be found fault on the ground that enquiries should have been made more elaborate. Certificate issued by Tehsildar in the instant could not be disbelieved by the Assessing Officer inter alia for the reason that the Tehsildar is also a public officer. Certificates issued by the public officers are generally believed by the other officers as public duty unless there is some material, which suggest that such 9 ITA No. 7296/DEL/2017 certificate has been obtained under fraud etc. Therefore, we do not agree with the contention of the ld. CIT in the order u/s 263 of the Act that Tehsildar's certificate should have been corroborated with other evidence. Accordingly, the order passed by the ld. CIT u/s 263 of the Act for the above stated reasons is hereby set aside and quashed. Since we have quashed the order u/s 263 of the Act, we do not deal with the merit of the claim of the assessee.
9. In the result, the appeal of the assessee in ITA No. 3888/DEL/2017 is allowed.
The order is pronounced in the open court on 15. 02.2018.
Sd/- Sd/-
[SUDHANSHU SRIVASTAVA] [B.P. JAIN]
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated: 15th February, 2018
VL/
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(A)
5. DR
Asst. Registrar,
ITAT, New Delhi