Income Tax Appellate Tribunal - Delhi
Ito, New Delhi vs Sh. Harish Chander Khullar, New Delhi on 4 October, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH "C", NEW DELHI
BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER
AND
SHRI L.P. SAHU, ACCOUNTANT MEMBER
ITA No. 3758/Del/2014
A.Y. : 2006-07
INCOME TAX OFFICER, SH. HARISH CHANDER KHULLAR,
WARD 27(2), VS. E-88-B, MANSAROVER GARDEN,
ROOM NO. 1909, NEW DELHI - 110 015
E-2 BLOCK, CIVIC CENTRE, (PAN: AAFPK8788A)
MINTO ROAD,
NEW DELHI - 110 001
(APPELLANT) (RESPONDENT)
Department by : Sh. Arun Kumar, Sr. DR
Assessee by : None
ORDER
PER H.S. SIDHU, JM:
The Revenue has filed the present appeal against the impugned order dated 28/4/2014 passed by the Ld. Commissioner of Income Tax (Appeals)-XXIV, New Delhi on the following grounds:-
"On the facts and circumstances of the case, the Ld. CIT(A) erred in
i) Deleting the disallowance of deduction u/s. 54B of I.T. Act amounting to Rs. 69,30,8000/- made by the AO.
ii) The appellant craves the right to add, alter or amend any ground of appeal.
2. The facts in brief are that the assessee filed his return of income for the relevant assessment year 2006-07 on 30.3.2007 declaring total income of Rs. 1,95,030/-. The case of the assessee was selected for scrutiny and notice u/s. 143(2) of the Income Tax Act, 1961 (hereinafter referred as the Act) was served on the assessee. During the relevant assessment year, the assessee had claimed to have earned capital gain of Rs. 1,62,36,847/- on sale of agricultural land at Sonepat, Haryana on 22.3.2006 and invested the same in the purchase of another agricultural land at Rajasthan worth of Rs. 1,73,84,870/-(in 37 transactions) and claimed exemption u/s 54B of the Income Tax Act. A complete list of 37 transactions of purchase indicating date of purchase along with photo copies of all the deeds evidencing purchase of land were filed before the Assessing Authority during the assessment proceedings. The assessment was completed u/s 143(3) of the Income Tax Act, on 19.12.2008 at the declared income of the appellant. Subsequently, the Assessing Officer noted that out of the capital gains of Rs. 2 1,62,36,847/-, the assessee had purchased another agricultural land for Rs. 1,34,19,780/- only before the due date of furnishing his return of income u/s 139(1) of the Income Tax Act, and land worth of Rs. 39,30,800/- were purchased after the due date of filing of return of income u/s 139(1) of the Income Tax Act. The AO further noted that investment under the capital gain scheme amounting to Rs 30,00,000/- was also made after the due date of submission of return. Therefore, the Assessing Officer issued a notice u/s 154/155 of the Income Tax Act with a proposal to rectify the mistake of allowing exemption u/s 54B of the Income Tax Act, on the long term capital gains the amount of Rs. 1,34,19,780/- only instead of RS. 1,62,36,847/-. This notice was complied by the assessee and a reply was given vide letter dated 14.12.2010 wherein the assessee submitted that there was no mistake in the original assessment order u/s 143(3) of the Income Tax Act. It was clarified that the appellant deposited a sum of Rs 62 lacs in fixed deposits with State Bank of India vide FDR No. 053481 on 12.10.2006. This FD was encashed prematurely on 10.11.2006 and further land of Rs.39,30,800/- was purchased. After this, another FD for Rs 30 lacs was made from State 8ank of India bearing No. 53500 dated 17.02.2007. The balance land was purchased after getting this FD encashed on 19.12.2007. It was pointed out that the AO missed the 3 FDR of Rs 62 lacs prepared on 12.10.2006 while issuing the said notice. Nothing happened on this notice thereafter which gave a presumption that the assessing officer was satisfied about the amount having been invested in FDRs before the date of filing of returns. Later on, the Assessing Officer issued a notice u/s 147/148 of the Income Tax Act dated 26.03.2012 and withdrew the exemption u/s 54B of the Income Tax Act, of Rs. 69,30,800/- and completed the assessment u/s. 143(3)/147 of the Income Tax Act, 1961 vide order dated 28.3.2013.
3. Aggrieved with the aforesaid assessment order, assessee preferred an appeal before the Ld. CIT(A), who vide his impugned order dated 28.4.2014 has allowed the appeal of the assessee quashing the reassessment order dated 28.3.2013 and also decided the appeal on merits as well.
4. Now the Revenue is aggrieved against the impugned order and filed the present appeal before the Tribunal and contested only the appeal on merit.
5. Ld. DR relied upon the order of the AO and reiterated the contentions raised in the grounds of appeal.
6. In this case, Notice of hearing to the assessee was sent by the Registered AD post, in spite of the same, assessee, nor his 4 authorized representative appeared to prosecute the matter in dispute, nor filed any application for adjournment. Keeping in view the facts and circumstances of the present case and the issue involved in the present Appeal, we are of the view that no useful purpose would be served to issue notice again and again to the assessee, therefore, we are deciding the present appeal exparte qua assessee, after hearing the Ld. DR and perusing the records.
7. We have heard the Ld. DR and perused the records, especially the impugned order passed by the Ld. CIT(A). We find that on legal issue i.e. quashing of reassessment, the Ld. First Appellate Authority has observed that AO has reopened the assessment and no new or tangent material has been brought on record to show that any income has escaped assessment by reason of the failure on the part of the assessee to disclose fully and truly all materials facts necessary for his assessment for the relevant assessment year. The reasons recorded by the AO do not indicate that his reason to believe was on ground of failure of the assessee to disclose material particulars truly and correctly. The notice was issued beyond 4 years. The reasons do not say that the assessee does not show any tangible material that created the reason to believe that income had escaped. Rather, the reassessment proceedings accounted to a "review" or "change of opinion" carried 5 out earlier. Therefore, on this account also, the reassessment proceedings in the case of assessee was not valid. Reliance in this regard was placed on the decision of the Hon'ble Delhi High Court in the case of CIT vs. Kelvinator of India Ltd. (2002 256 ITR 1 (Del.). Therefore, the Ld. CIT(A) has rightly quashed the reassessment order dated 28.3.2013. However, we note that the Revenue has not challenged this legal ground of appeal before the Tribunal, as a result thereof, the Revenue's Appeal stands dismissed on the legal ground itself. Even otherwise, on merit also, it is noted that during the relevant assessment year the assessee has sold agricultural land at Village Rathdana, Tehsil Sonepat, Haryana for Rs. 1,78,62,500/- and after deducting the purchase value of land of Rs. 13, 35, 097/- declared long term capital gain of Rs. 1,65,27,403/-. Thereafter, the assessee purchased another agricultural land between the period 07.04.2006 to 26.06.2006 of Rs. 1,87,92,759/- jointly with Sh. Braham Singh (50:50 ratio). The assessee's share of investment in the agricultural land was of Rs. 93,96,380/-. Later on, between the period 17.11.2006 to 19.12.2007, the appellant further purchased agricultural land of Rs.75,45,930/-. Thus, between the period 07.04.2006 to 19.12.2007, the assessee purchased agricultural land worth of Rs. 1,69,42,310/- and also incurred expenses for the purchase of land on account of commission and 6 other expenses of Rs. 4,42,560/-. Thus, the aggregate amount of investment in the purchase of land by the appellant was of Rs. 1,73,84,870/-. From the above, it is clear that the assessee has invested in the purchase of agricultural land within the period of two year i.e. before 21.03.2008 the whole amount of long term capital gain earned on the sale of agricultural land. As per Section 54B, capital gain on transfer of land used for agricultural purposes are not to be charged if the capital gains arises from the transfer of the capital asset being agricultural land has been invested within a period of two year after the date of sale of capital asset being land for income tax purposes. In this case, there is no dispute that the impugned agricultural land was sold by the appellant on 22.03.2006 and the whole amount was invested in the purchase of another agricultural land by 19.12.2007 i.e. within the two years of the impugned sale of agricultural land. It is further observed that the Assessing Officer has disallowed the exemption uls 54B of Rs.69,30,800/- only on the ground that the investments in purchase of agricultural land for claiming the benefit of exemption u/s 54B was made by the assessee after the due date of filing of return uls 139(1) of the IT Act i.e. 31.10.2006. The assessee in this case has filed his original return of income for the relevant assessment year on 30.03.2007 uls 139(4) of the Income Tax Act. It is worthwhile to 7 mention here that sub section 4 of Section 139 is an extension of sub section 1 of Section 139. As per Section 54B of the I.T. Act, a return has to be filed uls 139 only for availing the benefit of Section 54B. There is no mention of any sub section of Section 139 in Section 54B such as sub section 1, 2, 3 or 4 etc. There is no dispute about the fact that the return of income has been filed by the appellant within sub section 4 of 139 of the I T Act. The Assessing Officer has erred in disallowing the exemption on the long term capital gain of the appellant uls 548 of the I.T. Act of Rs. 69,80,300/-. There is no dispute about the fact that the whole of long term capital gain of Rs. 1,65,27,403/- has been invested by the appellant in the purchase of another agricultural land within two year from the sale of the capital asset i.e. agricultural land. Therefore, the Ld. CIT(A) was of the opinion that the exemption uls 54B of the I.T. Act has to be allowed on the amount of Rs. 69,80,300/-. In a similar case namely CIT vs. Jagriti Aggarwal, 15 Taxmann.com 146(2011), the Hon'ble High Court of Punjab and Haryana has held "Sub-section (4) of section 139 is, in fact, a proviso to sub-section (1) of section 139. Section 139 fixes the different dates for filing the returns for different assessees. In the case of assessee, it is 31st day of July of the assessment year in terms of clause (e) of the Explanation 2 to sub-section (1) of section 8 139, whereas sub-section (4) of section 139 provides for extension in period of due date in certain circumstances. [Para 10] Thus, if a person had not furnished the return of the previous year within the time allowed under sub-section (1), i.e., before 31st day of July of the assessment year, the assessee could file return before the expiry of one year from the end of the relevant assessment year. [Para 11] The sale of the asset having been taken place on 13-1-2006, falling in the previous year 2006-07, the return could be filed before the end of relevant assessment year 2007-08, i.e., 31-3-2007. Thus, sub-section (4) of section 139 provides extended period of limitation as an exception to sub-section (1) of section 139. Sub-section (4) is in relation to the time allowed to an assessee under sub-section (1) to file return. Therefore, such provision is not an independent provision, but relates to time contemplated under sub-section (1) of section 139. Therefore, such sub-section (4) has to be read along with sub-section (1). Similar was the view taken by the Division Bench of the Karnataka and Gauhati High Courts in Fathima Bai v. ITO [2009] 32 DTR 243 and CIT v. Rajesh Kumar Jalan [2006] 286 ITR 274/157 Taxman 398 respectively. [Para 12] Thus, due date for furnishing the return of income as per section 139(1) is subject to the extended period provided under sub-section (4) of section 139. [Para 13] 9 Consequently, the question of law was to be answered against the revenue and in favour of the assessee. Thus, the present appeal was to be dismissed.
7.1 Therefore, relying upon the aforesaid decision, Ld. CIT(A) was of the considered opinion that the amount of Rs.69,80,300/- has to be exempted uls 54B of the I T Act and therefore the Assessing Officer was rightly directed to delete the addition of Rs. 69,80,300/-., which does not need any interference on our part, hence, we uphold the same.
8. In the result, the appeal of the Revenue is dismissed.
Order pronounced in the Open Court on 04/10/2017.
Sd/- Sd/-
[L.P. SAHU] [H.S. SIDHU]
ACCOUNTANT MEMBER JUDICIAL MEMBER
Date 04/10/2017
"SRBHATNAGAR"
Copy forwarded to: -
1. Appellant -
2. Respondent -
3. CIT
4. CIT (A)
5. DR, ITAT TRUE COPY
By Order,
Assistant Registrar, ITAT, Delhi Benches
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