Income Tax Appellate Tribunal - Chandigarh
Ito, Chandigarh vs Sh. Sikander Singh Maluka, Chandigarh on 17 May, 2018
IN THE INCOME TAX APPELLATE TRIBUNAL
DIVISION BENCH 'B', CHANDIGARH
BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER
AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER
ITA No.552/Chd/2017
(Assessment Year : 2007-08)
The I.T.O., Vs. Sh.Sikandar Singh Maluka,
Ward 5(1), # 1370, Sector 40-B,
Chandigarh. Chandigarh
PAN: ABZPM7206N
&
ITA No.633/Chd/2017
(Assessment Year : 2007-08)
Sh.Sikandar Singh Maluka, Vs. The I.T.O.,
# 1370, Sector 40-B, Ward 5(2),
Chandigarh. Chandigarh
PAN: ABZPM7206N
(Appellant) (Respondent)
Department by : Shri Manjit Singh
Assessee by : Shri T.N. Singla, CA
Date of hearing : 14.05.2018
Date of Pronouncement : 17.05.2018
O RDE R
PER ANNAPURNA GUPTA, A.M.:
The captioned cross appeals, by the Revenue and the assessee, have been filed against the order of learned Commissioner of Income Tax (Appeals)-2, Chandigarh dated 23.01.2017, relating to assessment year 2007-08.
2. B r i e f l y s t at e d , as s e s s m e n t fo r t he i m p u g n e d y e ar w a s f r a m e d o n t h e a s s e s s e e u / s 1 47 o f t h e I n c o me Ta x A c t , 1 9 6 1 ( i n s h o r t ' th e A c t ' ) a n d a d di t i o n m a d e o n ac c o u n t o f L o n g Te r m C a pi t a l G a i n s e ar n ed o n s al e of p l ot s o f l a n d o w n e d b y t he as s e s s e e a mo u n t i n g t o R s . 3 .6 5 cr o r e s . A n 2 a p p e a l a g a i ns t th e a f o r e s a i d as se s s m e n t o r d er wa s f i l e d t o the CI T( A p p e a l s ) , c h a l l e ng i n g both the va l i d i t y of a s s e s s m e nt f r a me d u / s 1 4 7 o f th e A c t a n d a l s o m e r i t s o f t h e c a s e . Th e L d . CI T( A p p e a l s ) up h e l d t h e v a l i d i t y o f t h e o r d e r p a s se d u /s 1 4 7 o f t h e Act w h i l e h e re s t ri c t e d t h e a d d i t i o n m a d e on a c c o u n t o f L on g Te r m C a p i t a l G a i n s to the extent of capital gain e ar n e d on plots actually t r a n s f e r re d d ur i n g t h e y e a r f o l l o w i n g th e d ec i s i o n o f t h e H o n ' b l e Ju r i s d i ct i o n a l Hi g h C ou rt i n t h e c a s e o f C h a r a n j i t S i n g h A t wa l V s . I TO ( 2 0 1 3 ) 1 4 4 I TD 5 2 8 .
3. A g g r i e v e d b y t he s a m e , t h e a s s es s e e h a s c o m e u p i n a p p e a l b e f o r e u s i n I TA No . 6 3 3 /C h d / 2 0 1 7 c h a l l en g i n g th e a c t i o n of t h e L d. CI T( A p p e a l s ) i n u p h o l d i ng t h e v a l i d i t y o f t h e a s se s s m e n t f r a m e d u / s 1 47 o f t h e Ac t , ra i s i n g t he f o l l o w i ng g r o u nds b e f o r e u s :
""1. That the order passed by the Learned CIT(A) is bad, against the Law & facts.
2. That the Learned CIT(A) has wrongly upheld the issue of notice u/s 148.
3. That the Learned CIT(A) has wrongly upheld misuse of provision of Section 148 to re-assess the time barring assessment.
4. That the Learned CIT(A) has wrongly upheld issue of notice u/s 148 merely on change of opinion.
5. That the Learned CIT(A) has wrongly set aside the issue of disallowance of long term capital gain of Rs. 3,65,71,210/-.
6. That the Learned CIT(A) has wrongly rejected the additional evidence filed for claim u/s 54 EC on investment in REC Bonds.
7. That the Learned CIT(A) has wrongly upheld disallowance of deduction claimed u/s 54 EC amounting to Rs.16,00,000/-."3
While the R e v en u e has ch a l l en g e d the a c t i on of t he L d . CI T( A p p e a l s ) , in its appeal filed in I TA N o . 5 5 2 / C hd / 2 0 17 , in r e s t ri c t i ng the addition made on c a p i t a l g a i ns e a rn e d o n s a l e o f p l o t s , r a i s i ng t h e f o l l o w i n g grounds:
"1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in holding that the parties had agreed for pro-rata transfer of land whereas by virtue of executing the Joint Development Agreement (JDA) read with possession letter and duly registered irrevocable special power of attorney, there was a grant and assignment of all rights in the entire property in favour of Tata Housing Development Company Limited (THDC) and so 'transfer' for the purposes of section 2(47)(v) of the Income Tax Act 1961 read with Section 2(47)(ii), 2(47)(vi), and explanation below 2(47) and Section 2691)A had taken place.
2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in holding that that no possession had been given by the transferor to the transferee of the entire land in part performance of the JDA read with possession letter and irrevocable special power of attorney so as to fall within the domain of Section 53A of the Transfer of Property Act 1882, completely disregarding the facts that as per the JDA there was a grant and assignment of all rights in the entire property in favour of THDC along with handing over of physical and vacant possession.
3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in holding that that no possession had been given by the transferor to the transferee of the entire land in part performance of the JDA so as to fall within the domain of Section 53A of the Transfer of Property Act 1882 whereas by virtue of the duly registered irrevocable special power of attorney, the developer was in complete control of the property and was in possession thereof including all rights of a defacto owner.
4. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in holding that the essential ingredients of Section 53A of the Transfer of Property Act 1882 were not fulfilled on the mere ground that the JDA was not registered whereas section 2(47)(v) of the Income Tax Act 1961 only refers to the contract of the nature referred to in section 53A of the Transfer of Property Act and the requirement 4 of registration of agreement under section 53A of the Transfer of Property Act cannot be read into section 2(47)(v) of the Income Tax Act 1961 read with Section 2(47)(ii), 2(47)(vi), and explanation below 2(47) and Section 269UA,
5. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in holding that the possession delivered, if at all, was as a licencee for the development of the property and not in the capacity of the transferee whereas all possible rights in the property including the right to sell etc. had been given to the builder.
6. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in bifurcating the agreement into different portions and allowing the assessee to pay capital gains tax only when cash or money is received whereas section 45 of the Income Tax Act,1961 is a deeming provision where capital gain is liable to be taxed in the year in which transfer takes place and there is no provision under the law to allow the assessee to pay capital gains tax beyond the year in which the capital gain has accrued.
7. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in not adjudicating on the crucial issue of applicability of section 2(47)(ii) and 2(47)(vi) of the Income Tax Act 1961 in the case of the assessee as the provisions of section 2(47)(ii) and 2{47)(vi) also make the assessee liable for capital gains under the Income Tax Act 1961.
8. On the facts and in the circumstances of the case and law, the Ld. CIT(A) has erred in holding that the provisions of section 2(47)(vi) of the Income Tax Act were not applicable in absence of registered conveyance deed disregarding the decision of the Supreme Court in Podar Cement ltd. holding that the principle of Common law, transfer of property Act and Registration Act were not conclusive for interpretation of provisions of Income Tax Act.
9. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in holding that the provisions of section 2(47)(ii) are not applicable whereas all the members of society surrendered their individual rights in the plots together with original purchase deeds in favour of society to be subsequently transferred to Tata Housing Development Company Limited (THDC) leading to extinguishment of rights in the plots."5
4. We shall f i r st be dealing with the a p pe a l of the a s s e s s e e i n I TA N o . 6 3 3 / C hd / 2 0 17 c h a l l e n gi n g t he v a l i d i t y o f a s s e s sm e n t fra m e d u / s 1 4 7 o f t h e A c t .
5. D u r i n g t h e co u rs e o f h e a r i ng be f o r e us t h e p r i m a r y a r g u m e n t r a i s e d b y t h e a ss e s s e e a g a i n s t th e v a l i d i t y o f th e a s s e s s m e nt f r a me d u / s 1 47 o f the A c t w er e t w o f ol d ;
i ) t h a t i t w a s b as e d o n m e r e c h an g e o f o p i n i o n o f t h e A s s e s s i n g O f f i ce r;
b) t h a t t h e n o t i c e u / s 1 4 8 w a s i s s u e d w i t h o ut p r o p e r s a n c t i o n , a s p re sc r i b e d u /s 1 5 1 of t h e A c t.
6. To s u b s t a n t i a t e i t s c o nt e n t i on s, t h e L d. c o u nse l f o r a s s e s s e e d re w ou r a t t e n t i on t o th e c h r o n o l og y o f e v e n t s i n t h e p r e s en t c a se a s u n d e r :
30.8.2007 - Original return filed b y t h e a ss e s s e e showing t a xa b l e i nc o m e of R s . 2 , 0 1 , 70 7 / -
15.1.2010 - Revised r et u r n filed i n cl u d i ng Long Te r m C a p i t a l Ga i n s o f R s . 2 2 , 21 , 2 1 0 /-
w h i c h i n t u r n we r e c l a i m e d as e x e m p t u / s 5 4 E C /5 4 F o f t h e A c t .
2 4 . 1 2 . 2 0 10 - F i r s t n o ti c e i ss ue d u / s 1 4 8 o f t he A c t ,
i n r e s p on s e to w h i c h a ss e s s e e stated
that revised r e tu r n f i l e d b e t r e at e d a s
r e t u r n f i l e d i n re s p o n s e t o n o t i ce u / s
1 4 8 a n d s u b s e qu e n t l y n o a c t i on w a s
taken by t he Assessing O f fi ce r ( . P . B
6&7)
0 9 . 0 2 . 2 0 12 - S e c o n d n ot i c e i ss u e d u / s 1 4 8 . ( P.B - 8 )
6
1 2 . 0 3 . 2 0 12 - Th e assessee submitted that revised
r e t u r n f i l e d o n 15 . 1 . 2 0 1 0 be t r e at e d a s
r e t u r n f i l e d i n re s p o n s e t o n o t i ce u / s
1 4 8 o f t he A c t . ( P . B - 9 )
3 1 . 0 3 . 2 0 12 - A ss e s s m e n t pr o c e ed i n g s i n l i e u o f n o t i ce
issued on 2 4 .1 2 . 1 0 b e co m e s time
barred
1 8 . 0 2 . 2 0 13 - O r d e r p as s e d by t h e A s se s s i n g O f f i c er
d r o p p i n g t h e p ro c e e d i n g s i ni t i a te d u / s
1 4 8 v i d e 2 n d no t i c e i s s u e d u /s 1 4 8 ,
s t a t i n g t h a t t h e i n c o m e o n t h e ba s i s o f
which n ot i c e u/s 148 was issued
p e r t a i n e d t o as se s s m e n t y e a r 200 8 - 0 9
. ( P . B - 1 1)
26.3.2014 - Th i r d notice issued u /s 148
c o n s e q u e nt to which the impugned
a s s e s s m e nt o r d er w a s f ra m e d . ( P .B - 1 2 )
7. R e f e r r i n g t o t he a b o v e , L d. c o u nse l f o r a ss e s s e e st a t e d that all the present r e -a s s es s m e n t p r o ce e d i n g s were i n i t i a t ed f o r t h e s a m e r e a s o n t ha t t h e i n c o me f ro m c a p i t al g a i n h a d e s c a ped a s s e s sm e n t , as t h e p ar t i c ul a r s f u r n i s he d i n t h e r et u r n o f i n c o m e w er e n o t a v a i l a b l e t o t he A s s e s s i ng O f f i c e r . O ur a t t en t i o n w a s d r a wn t o t h e c o p y o f r ea s o n s f o r r e o p e n i n g vi d e th e n o t i c e u / s 1 48 d a t e d 0 9 - 0 2- 12 a n d t h a t d a t e d 2 6- 0 3 - 1 4 p l a c e d at P a p er B o o k p a ge s 1 0 & 1 4 t o 1 6 r e s p e c t i ve l y ) . L d. C o u n s e l f o r t he a s s e s s e e t h e r e af te r s t a t e d s i n c e t h e a s s e s sm e n t p r o ce e d i n g i n l i e u to t h e fi r s t n o t i ce i s s u e d u / s 1 4 8 ha d b e c o m e t i m e b a r r e d , w h i l e i n l i e u o f t h e second notice an order had b ee n passed d r o pp i n g the p r o c e e d i ng s , t h e p r e s e n t r e o p e ni n g f o r t h e s a me r e a s o n s 7 t a n t a m o u nt e d to c h a n g e o f o p i n i o n o n t h e s am e s e t o f facts. Vis-à-vis the c o n t en t i o n of the Ld. c ou n s e l for assessee th a t the notice was issued w i th o ut proper s a n c t i o n a s p e r s e c t i o n 14 8 o f th e A c t , i t w a s st a t e d t h at s i n c e a n o r d e r w a s p a s s e d i n p u r s u a n c e t o s e co n d n o t i ce i s s u e d u /s 1 4 8 a n d t h e i m p u gn e d n o t i ce l e ad i n g t o t he p r e s e n t o r d e r p as s e d u / s 1 4 8 h av i n g b e en i s su e d a f t e r t h e e x p i r y of f o ur ye a r s f r om t h e en d o f th e a ss e s sm e n t y e ar , the permission of the Ch i e f Commissioner of I n c o me Ta x ( C C I T) o r C om m i s s i o n er o f I nc o m e Ta x ( CI T) w a s r e q u i r ed f o r i s s u i n g s u c h n o t i c e a s p e r t h e p r o v i s i o n s o f s ec t i o n 1 5 1 o f t h e A c t , w hi c h w a s a b s e n t i n th e p r e s e n t c as e a n d h e n c e t h e n o t i c e w a s i s s u e d w i t h o ut p r o p e r s a n c t i o n . F o r t h e aforesaid r e a son s the L d . C ou n s e l f or the a s s e s s ee c o n t e n d e d t h at t h e a s s e s s m e n t fr a m e d i n t h e p re s e n t c a s e u / s 1 4 7 wa s i n va l i d .
8. Th e L d . D R , o n th e o t h e r h a n d rel i e d u p o n t h e ord e r o f t h e L d . CI T( A p p ea l s ) s t at i n g th a t i n p u r su a n c e to t h e f i r s t and the second notices issued u/s 148 of the Act, no e n q u i r y h a d b e en c o n d u c t e d b y t h e A s s e s si n g O ff i c e r w h o had merely d r op p e d the p r o c ee d i n g s and, t her e f o r e , it c a n n o t be s a i d th a t t h e A s s e ss i ng O f f i ce r h ad f or m e d a n y o p i n i o n o n t h e i s s u e s o a s to c o n s t i t u te t h e re - o p e n i n g r e s o r t e d t o i n t he t h i r d c a s e , f o r i d e n t i c a l r ea s o n s a s i n t h e f i r s t a n d s e c on d n o t i c e s u / s 1 4 8, t o b e o n t h e s a m e s e t o f f a c t s . Th e L d . D R a l s o c o n t e n d ed t h a t f o r t h e s a m e r e a s on the order passed in the second round could not be said to 8 b e a n y o r d e r p a ss e d u / s 1 4 3 ( 3 ) /1 4 7 o f t h e A c t , si n c e t he r e w a s n o di s c u s si o n o n t h e m e r i ts o f t h e c a s e , a nd t h e r e f or e t h e r e w a s n o r e qu i r e m e n t f or o b ta i n i n g s a n ct i o n o f t h e CI T o r C CI T b e f or e i s s u i n g t h e t h i rd i m p u g ne d n oti c e i n t h e p r e s e n t a s s e s se e. Th e L d . D R h eav i l y r el i e d o n the f i n d i n g s o f t h e CI T( A ) d i sm i s s i n g th e a s s es s e e ' s c o nt e n t i on v i s - à - v i s l e g a l i t y o f t h e a ss e s s m e n t fr a m e d u / s 1 4 7 o f th e A c t i n t h i s regard at paras 5.3 and 5.3.1 of his order which are as under:
" 5.3 Submission of the appellant, the assessment order and relevant material on the record have been carefully considered. I have discussed the issue with the A.O and perused the assessment record for the relevant assessment year. It is correct that for assessing long term capital gains on sale of plots assessee being member of Punjabi Co-operative House Building Society, Mohali, which has escaped assessment, assessing officer issued original notice on 24.12.2010 against which no order was passed. Subsequently A.O issued notice u/s 148 dated 16.02.2012 after recording reasons and objections of the assessee were duly considered. These re- assessment proceedings initiated by issue of notice dated 16.02.2012 were dropped by assessing officer by passing a simple order dated 18.02.2013 stating that the capital gains actually pertains to financial year 2007-08 and assessable in assessment year 2008-09 only and therefore the notice issued for A.Y. 2007-08 has no relevance, the same is filed. It is clear that the assessing officer remained confused with regard to the assessability of capital gains with respect to the assessment year and therefore, he initiated re-assessment proceedings which on the first occasion were not concluded and on the second time the notice issued was filed. It is also clear that the assessing officer has not dealt the issue of capital gains on merits in response to notices dated 24.12.2010 and 16.02.2012 and therefore, it cannot be said that any order u/s 143(3) or u/s 147 has been passed in response to these notices. Assessing Officer therefore issued notice u/s 148 on 21.03.2014 after duly recording reasons to believe and after taking sanction for issue of notice from joint commissioner of income tax as per section 151 of the Act. The sanction for issue of notice u/s 148 has been correctly obtained u/s 151 of the Act. and as there was no order passed by the Assessing Officer u/s 143 or 147 and therefore the issue of capital gains was not considered and dealt on merits. Therefore, the issue of notice for the relevant assessment year u/s 147 dated 26.03.2014 after recording reasons cannot be said change of 9 opinion. The decision relied upon by the appellant are distinguishable on facts in the case of the appellant. The reliance is placed on the decision of ITAT, Kolkata, Bench in the case of Som Dutt Buildurs 98 ITD 78 wherein it has been held that change of opinion comes to rescue of assessee only when assessing officer has taken one of permissible views at the time of original proceeding and held that re-opening is valid. ITAT, Chennai Bench in the case of Srinivasa Computers Ltd. 107 ITD 357 held that "There is no bar in issuing a second notice u/s 148 when the parameters for issue of such notice are fulfilled and is within statutory time limits - When the second notice u/s 148 was issued, the time limit for completion of assessment on the basis of first notice u/s 148 has expired and hence it cannot be treated as pendency of any proceedings -Fresh notice u/s 148 backed by reasons, is valid."
5.3.1 In view of the above discussion it is held that there is no illegality in the issue of notices and there is no change of opinion in the issue of last notice u/s 148 dated 26.03.2014. Therefore, the additional grounds taken by the appellant are liable to be dismissed.
9. Th e L d . D R f u r t h e r s t a t e d t h a t t h e c o n t e n t i o n s n o w r a i s e d b y t h e ass e s s e e w er e a l so r a i s e d as o b j ec ti o n s t o t h e A s s e s s i n g O f f i ce r i n r e s p o ns e t o th e i m p u g n ed n o ti c e i s s u ed u/s 148 d a t ed 2 6 . 3 . 20 1 4 , in p u r s u a nc e to which re- a s s e s s m e nt p r oce e d i n g s t o o k p l ac e . Th e L d . D R s t a t e d th a t a l l t h e o b j e c t i ons o f t h e a s s e s s ee h a d b e e n d u l y m e t w i t h b y t h e A s s e s s i n g O f f i c e r . C o p y o f t h e o r d e r p a s s ed b y t h e Assessing O f fi ce r dealing wi th the ob j e c ti on s of the a s s e s s e e t o t he i n i t i a t i o n of p r o ce e d i n g s u / s 1 47 o f t h e A c t w a s p l a c e d be f or e u s . R e f e rr i n g t o t h e s a m e t he L d . D R pointed out t ha t it was c a te g o r i c a l l y s t a t ed by the Assessing O f f i c er , a f t er g o i ng through the mat e r i a l on record, t h at t he first notice issued u/s 148 was not p r o c e e d e d w i th o n a c c o un t of di s c o v e r y b y t h e A s s e s s i n g O f f i c e r o f h i s l ac k o f j u r i sd i c t i on s i n c e w h i l e t he a s s e s s e e w a s a s s e s sa b l e b y t h e A s s es s i n g O f f i c e r of W a r d 5 ( 2 ) w h i l e t h e n o t i c e a s su mi n g j u r i s d i c t i o n u / s 1 4 8 w a s i ssu e d b y th e 10 I TO W a rd 5 ( 3) . Th e L d . D R f u r th e r p o i nt e d ou t t h a t e v e n the second n ot i c e issued u/s 148 was i s s u ed by the A s s e s s i n g O f f i c er o f Wa r d 5 ( 3 ) , w h o w a s n o t t h e A s s e s s i n g O f f i c e r o f t he a ss e s s e e , a n d on b e c o m i n g a w ar e of t h e s a m e had t r a ns f e r r ed the file to th e c o r r ec t j ur i s d i c t i o n al Assessing O ff i ce r of Ward 5(2), who had t h e r e a f t er p r o c e e d e d w i t h t h e c a s e a n d ha d f i l e d t he p ro c e e d i n g s n o t i n g th a t th e i n c o m e w hi c h was b e l i ev e d t o h a ve e s c a p ed a s s e s s m e nt p er ta i n e d to a ss e s sm e n t y ea r 20 0 8 -0 9 a n d n o t t h e i m p u g ne d y ea r . Th e L d . D R p o i n t e d o ut f r o m t h e o r d e r o f t h e A s s es s i n g O f f i c e r t ha t i t w a s c a t e g or i c a l l y p o i n t ed o u t t o t h e as s e ss e e t h a t f i r st t wo n o t i c es i s su e d u / s 1 48 w e r e e i t h e r no t v a l i d b e i n g i s s u ed w i t h o u t j u ri s d i c t i o n a n d o r w e r e fi l e d o n r e c e i v i ng t h e ob j e c t i o n f r o m t he a s s e s s ee w h i c h m e a nt t ha t n o v a l i d as se s s m e n t w as c om p l e t e d i n c o n s e q u e nc e o f s u c h p r o c ee d i n gs . Th e L d . D R , t h e r e f o r e, stated t h a t i n v i e w o f t h e sa me , t h e pr e s e n t as s e s s m e n t p r o c e e d i ng s c a nn o t b e s a i d t o h a v e b e e n i n i ti at e d o n t h e b a s i s o f c h a ng e o f o p i n i o n w i th o u t h a vi n g o bta i n e d t he a p p r o v a l o f t h e c o m p e te n t a u th o r i t y . O u r a t t en t i o n wa s d r a w n t o t h e con t e n t s o f t he o rd e r o f t h e A s se ss i n g O f f i ce r a s r e f e r re d t o a bo v e a s u nd e r :
"2. It is matter of record that the proceedings within the meaning of section 147 of the I.T. Act, were initiated as per notice u/s 148 of the I.T. Act 24.12.2010 by Sh. B.S. Yadav the then ITO Ward 5(3), Chandigarh apparently without jurisdiction. As per the reasons recorded, the proceedings u/s 147 of the Act were initiated on the ground that the income from capital gain which is liable for capital gain has escaped assessment as the particulars furnished in the return of income were not available to the then Assessing Officer. On receipt of notice u/s 148 of the Act dated 24- 11 12-12010, the assessee submitted return on 15-01-2010 vide acknowledgment No. 418150110004669 and informed as per letter dated 21-01-2011 explaining the rationale for the same. It appears that the proceedings were closed. Otherwise also the proceedings automatically came to an end by the close of calendar year 2011 i.e. by 31-12-2011.
Subsequently proceedings u/s 147 were again initiated by issue of notice u/s 148 of the I.T. Act, dated 16.2.2012 by the then ITO Ward 5(3), Chandigarh. The assessee in response to said notice dated 16.2.2012 stated as per its letter dated 12.3.2012 received on 19.3.2012 as under:
This is with reference to your notice dated 22.2.2012.
"The assessee had voluntarily revised the income tax. return for the A.Y. 2007-08 on 15.01.2010 vide acknowledgment no, 418150110004669 dated 15.01.2010 with a detailed note explaining the rationale for the same. Kindly treat the revised return so filed vide acknowledgement no.418150110004669 dated 15.01.2010 as return filed in response to your above said notice.
As per facts, on record the assessee as per its letter dated 23.3.2012 made a request to ITO W-5(3], Chandigarh for supply of reasons recorded for issuance of notice u/s 148 of the I.T. Act so as to enable it to file its objection. The copy of the reasons recorded was provided to the assessee. In the meantime it appears that the ITO W-5(3), Chandigarh having came to know that it is not having the jurisdiction over the case and had inadvertently issued the notice without jurisdiction. It accordingly transferred the case record to the undersigned predecessor. The assessee filed its objection to the initiation of proceedings u/s 148 as per above letter dated 7.01.2013. The proceedings were accordingly filed by the undersigned predecessor as per order dated 18.2.2013 while deposing of the assessee's objections as per its letter dated 7.1.2013. It is a matter of record that the order dated 18.2.2013 was accepted by the assesse.
The proceedings in this case were again initiated within the meaning of section 147 of the I.T. Act, after recording reasons thereof and accordingly a notice u/s 148 dated 26/28.3.2014 was issued after obtaining the necessary satisfaction of the Joint Commissioner of Income Tax, as granted vide letter No. 11920 dated 21.3.2014. A copy of reasons recorded was also supplied to the assessee. The assessee has again filed its .objection as per its letter dated 2.8.2014 which is a subject matter for consideration.
3. From the facts adduced above, it is evident the proceedings initiated u/s 147 of the Act vide notices dated 24-12-2010 and 16-02-2012 were either not valid being issued without jurisdiction and /or were filed on 12 receiving the objections from the assessee. Otherwise mean that no valid assessment was completed in consequence of such proceedings. The proceeding within the meanings of section 147 of the Act has now been initiated as per the provisions of the Act after obtaining the approval from the competent Authority.
4. In the light of facts adduced above, it is therefore evident that notice u/s 148 of the I.T. Act, dated 26/28.3.2014 was issued after obtaining mandatory sanction from appropriate authority i.e. JCIT, Range-V, Chandigarh as granted vide letter No. 11920 dated 21.3.2014. Since the notice has been issued after due sanction from the appropriate authority it is a valid notice."
10. W e h a v e h e a rd t h e c o n t e n ti o n s o f b o t h t h e p ar t i e s, p e r u s e d t h e o r de r o f t h e a u t h o ri t i e s b e l o w a nd h a v e a l so c a r e f u l l y g o n e t hr o u g h t h e do c u me n t s p l a c ed b e f o re u s . Th e c o n t e n t i on o f t he L d . c o u n s el f o r a s s e s s ee b ef o r e u s i s t h at t h e p r e se n t pr oc e e d i n g s i n i ti a t ed u / s 1 4 8 a re i n v a l i d f o r t h e r e a so n t h at t h e y a r e b a s e d on m e r e ch a n g e of o p i n i on a n d h a d b ee n i n i t i a t e d w i t h o u t ob t a i n i n g t h e p r i or a p p r o v al o f t h e p re s c r i b ed a u t h o r i t y u / s 15 1 o f t h e A c t . Th e g e n e s i s o f t h i s c on t e n t i on o f t h e L d. c o u ns e l f o r a ss e s s e e i s t h e f a c t t h a t o n t w o e a rl i e r o c c a s i o n s re - a s s e s s me n t p ro c e e d i n g s w e r e i n i t i at e d by i s s u i n g n o t i ces u / s 1 4 8 o f t h e A c t f o r i d e n t i c a l r e a s o ns w h i c h w e r e e i t he r n o t p r o ce e d e d w i t h a n d h a d b e co m e ti me b a r r ed o r w e re d r o p pe d b y pa s s i n g a n order. Th e a r g um e n t o f t h e L d . co u n s e l fo r a ss e ss e e i s t h a t s i n c e t he r e -a s se s s m e n t p r o c e edi n g s i n t h e p r es e n t c a se h a v e b e e n i n i t i at e d f o r th e s a me r e a s o n a s i n th e e a r l i er t w o n o t i c e s i s s ue d , i t t a n t a mo u nt e d t o r e - o p en i ng the case o n t h e s a m e s et o f f a c t s w hi c h i s n o t p e r m i s si b l e u n d e r t h e p r o v i s i o ns o f t he A c t . A l so s i n c e t h e o r d e r h a d b ee n p a s s e d earlier, the r e -a s s e s s m e nt p r oc e e d i n g s could have b e en i n i t i a t ed n o w , a ft e r e x p i r y o f f o ur y e a r s f r o m t h e e n d o f t h e 13 r e l e v a n t a s s es sm e n t y e a r , o n l y a f t e r o b t a i n i n g a p p r o v a l o f t h e C o m m i s si o n er o r C h i e f C o m mi s s i o n e r o f I nc om e Ta x , a s p r e s c r i b ed u / s 15 1 o f t h e A ct wh i c h h a s n ot b ee n d o n e i n the p r e se n t c ase and t hu s t he p r o c e ed i n g s have been i n i t i a t ed w i t ho u t t h e s t a tu t o r y a pp r o v a l .
11. W e f i n d n o m er i t i n t h e a b o ve co n t e n t i o ns o f t he L d . counsel for a s se s s e e . On going through the do c u m e n ts p l a c e d b e f o re u s w e f i n d t h a t j u r i s d i c ti o n t o a s s e s s t h e assessee wa s with A s s es s i n g O f f i c er , Wa r d 5(2), C h a n d i g a rh . Th e i m p u g n e d a s s es s m e n t o rd e r pa s s e d u / s 1 4 7 / 1 4 8 h a s b ee n p a s s e d b y th e s a i d A s s e ss i n g O f f i c e r, w h o s e j u r i s di c t i o n h a s n o t c h a l l e n g e d b e f o r e u s . Further t h i s f a c t w a s al s o p o i n te d o u t b y t h e As s e s s i n g O f f i cer w h i l e d e a l i n g w i t h t h e o b j e c t i ons o f t h e a s s e s se e i n h i s o r d e r d a te d 1 7 . 11 . 2 0 1 4 r ep r o d u ce d a b o v e . Th e r e f o r e i t is a n u n c o n t r o ve r te d a n d u n d i s p u te d f a c t t h a t t h e A s s e s s i ng O f f i c e r o f t he a s s e s s e e w a s I TO , W a r d 5 ( 2 ) ,Ch a n d i g a r h. F u r t h e r , w e f i n d, t h a t t h e f i r s t t w o n o t i c e s i s su ed u / s 1 4 8 d a t e d 24 . 1 2 . 2 010 a n d 9 . 2 . 2 01 2 w e r e i ss u e d b y th e I n c om e Ta x O f f i c e r W a rd - 5 ( 3 ) , C ha n d i ga r h . Th i s f a c t i s e v i d e n t f r o m t h e c o p i e s o f t h e n o t i c e s p l a c e d b e f o re u s a t P a p e r B o o k p a g e s 6 a nd 8 r e s p e c t i v el y . This fact, we find, was also pointed out to the assessee in the order passed by the Assessing Officer while dealing with the objections of the assessee dated 17.11.2014 which have not been controverted by the assessee. Thus clearly the first two notices issued u/s 148 were invalid, issued without valid jurisdiction, having not 14 b e e n i ss u e d b y t h e As s e s s i n g O f f i c e r o f t h e as s e s s e e . C l e a r l y , t h er e f o re , t h e p r o c e e d i ng s , w h a t s o e ve r t o o k p l a ce i n c o n s e q u e nc e th e r e o f , w e re a l s o i n v a l i d a n d w e re n u l l a n d v o i d . Th i s f a c t , w e f i n d , w a s b ro u g h t t o t h e n o ti c e o f t h e a s s e s s e e b y t h e A O i n h i s o r d e r p a s s e d w hi l e d i sm i s s i n g the o b j e c t i o ns o f t h e a s s e s s e e t o t h e r e a s s e s s me n t p ro c e e d i n g s i n i t i a t ed v i d e n ot i c e d a te d 2 6 -0 3- 1 4 , a n d t h e s ame h a v e no t b e e n c o n t r ov e r t ed b e f o r e u s . Th e r e f o r e , w h a t f o l l o w s i s t h a t , p r i o r t o t he n o t i c e i s s u e d u / s 1 4 8 o n 2 6 . 3 . 2 0 1 4 , i n c o n s e q u e nc e o f w h i c h t h e p re s en t a s s e s s me n t u/ s 1 4 7 w a s f r a m e d o n t h e as s e s s e e , n o pr o ce e d i n g w h i ch w as v a l i d i n t h e e y e s o f l a w, h a d t a k e n p l a ce o n t h e a s s e s s ee . Th e r e f o r e , t h e c o n t e n ti o n o f t h e a s s e s s e e tha t t h e p r e s e nt p ro c e e d i n g s w e r e b a se d o n ch a n g e o f o p i n i o n, s i n c e f o r si m i l a r r e a s on p r o c e e d i ng s h a d b e e n i n i t i a te d e ar l i e r a l s o a n d d ro p p e d , o r t h a t p r e s e n t n ot i c e u / s 1 4 8 w a s i s s u e d w i t h o ut s an c t i o n o f t h e p r e s cr i b e d s ta t u t o r y au t h o r i t y u / s 1 5 1 o f th e A c t s i nc e a n o r d e r w a s f r am e d e a r l i e r o n ac c o u n t o f t h e s e co n d n o t i ce issued to the assessee, all falls flat a nd merit no c o n s i d e r at i o n . Since the a f or e s t a t e d w er e the only a r g u m e n t s o f t he L d . C o u n se l f o r t h e a s s e s se e a ga i n s t t he v a l i d i t y o f th e a s s e s s m e nt o r der p a s s e d u / s 14 7 i n th e p r e s e n t c a se , a nd t h e s a m e h a v i n g b e e n r e j e ct e d b y u s a s a f o r e s a i d , t he r e r e m a i n s n o f u r t he r c h a l l e n g e t o th e v a l i d i t y o f t h e o rd e r p as se d i n t h e p r e s en t c a s e .
12. In view of the above, we h ol d that the p re s e n t p r o c e e d i ng s h a d b e e n v a l i d l y i n i t i a t e d u / s 14 8 o f t h e A c t 15 a n d w e r e n o t b a se d o n a n y c h a n ge o f o p i n i o n o r wi t h o u t t h e s a n c t i o n o f a n y s t a t u t o r y a ut h o ri t y a s p r e s c r i bed u / s 1 5 1 o f t h e A c t . Th e v a l i d i t y of t h e p r e s e n t p r oc e ed i n g s a r e , t h e r e f o r e u p he l d a n d t h e gr o u n ds r a i s ed b y t h e as s e s s e e i n t h i s r e g ar d i n G ro u n d N o . 1- 4 a r e a c c o r d i n gl y d i smi s s e d .
13. G r o u n d N o s . 5 to 7 r a i s e d b y t h e a s s e s s e e r e l at e t o m e r i t s of t h e c a se a n d a r e w i t h re g a r d t o t h e a dd i t i o n m a d e b y t h e A ss e s s i ng O f f i c er o n a cco u n t o f Lo n g Te r m C a p i t al Gains earned by the assessee on transfer of land owned by i t . Th e R e v e n u e h a s a l s o c o m e u p i n a p p e a l b e f o r e u s a g a i n s t t h e o r d er p a s s ed b y t h e C I T( A p p e al s ) o n t h i s i ss u e . S i n c e t h e i s s ue v i s - à - v i s gr o u n d N o s . 5 t o 7 r a i se d b y t h e a s s e s s e e a n d t he g r o u n d s r a i s ed b y t h e R e v e n u e i n i t s appeal in I TA No.552 are i n t e r l i n k ed , we shall be a d j u d i c a ti n g t he s a m e t o g et h e r .
14. B e g i n n i n g w i t h t h e f a c t s r e l a ti n g t o t h e c a s e , t h e s a m e a r e th a t a H o u s i n g So c i e t y , n a m e d as Th e P u n j a b i Cooperative Ho u s e Building Society L t d. Mohali. ( h e r e i n a ft e r re fe r r e d to as 'S o c i e t y ' ) was fo r m e d . In financial year 2001-02, the society p u r ch a s e d l a nd m e a s u r i n g 2 1 .2 a c r e s i n V i l l a ge K a n s a l , D i s t r i c t M o h a l i . Th i s S o c i e t y e nt e r e d i n t o a t ri p a r t i t e j oi n t d ev e l o p m e n t agreement ( h e r ei n a f t e r r e f e r re d to as 'a g r e em e n t ' ) on 2 5 . 0 2 . 2 0 07 w i t h M / s H a s h B u i l d e r s P v t . L t d . , C h a n d i g a rh ( h e r e i n a ft e r r e f er r e d t o a s ' H a s h ' ) a n d M / s Ta t a H o u s i ng D e v e l o p m en t C om p a n y L t d. , M um b a i ( h e re i n a f ter r e f e r r ed t o a s ' TH D C ' ) , b y v i r t u e o f w h i c h t h e s o c i e t y w o ul d t ra n s f e r i t s 16 l a n d f or d ev e l o pm e n t i n l i eu o f m o n e t a r y c o n si de r a t i o n a n d a l s o c on s i d e ra t i o n i n k i n d t o t he m e m b er s of t he s o c i et y . Th e a s s e s s e e w a s a l s o a m e m b e r o f t h e s a i d s o c i e t y o w n i n g 1000 sq. ya r d s plot of land. Th e total c o n s i d e r at i o n was s e t tl e d at R s . 1 , 65 , 0 0 , 00 0 / - p l us a l l o t m e n t o f t wo f l a t s o f 2 2 5 0 sq . f e e t to t h e ass e s s e e . As t h e a s s e s se e f a i l e d t o s h o w ca p i ta l G a i n s o n t h e e n t i r e s a l e c o n s i d e r at i o n , pr o c e e d i n gs u/s 147 were initiated and n o t i c e u / s 1 4 8 w a s i s s u e d t o t he a s s e s s e e o n 26 . 0 3 . 2 0 1 4. I n r e s p on s e to no t i c e u /s 1 4 8 t he a s s e s se e s ub mi t t e d th a t t h e r e v i s e d r et ur n f i l e d b y h i m 1 5 . 0 1 . 2 0 1 0 b e t r e a t e d a s return in response notice u/s 148 of t h e A c t . I n t h e r e v i s e d r e t ur n f i l e d a s s e s s e e h ad d e c l a r e d l o n g t e r m c a p i ta l g a i n s o f R s .22 , 2 1 , 2 1 0 /- w h i ch i n t u r n h a d b e e n cl a i m ed e x e m p t u/ s 54 E C / 5 4 F of t he A c t . N o s u p p o r t i ng d o c um e n t r e l at i n g to t h e s a m e w a s f i l e d b e f o re t h e a s s e s s i n g o f fi c e r . Th e A O , t he r e a f t e r a ss e s s ed t h e L o n g term capital gains e a r n ed by the assessee at R s . 3 , 6 5 , 71 , 2 1 0 /- on the entire sale c o n si d e r a t i o n r e c e i v e d /r e c e i vab l e i n c a s h an d k i n d a n d di s al l o w e d th e assessees c l ai m of exemption u/s 5 4 E C / 5 4F of the Act.
15. Th e m a t t e r w a s c a r r i e d i n a ppe a l b e f o r e th e C I T( A ) w h o f o u n d t h a t i d e n t i c a l i s s u e ha d b e e n d ea l t wi t h b y t h e H o n ' b l e J ur i s d i ct i o n a l H i gh C o u rt i n t h e c a se o f C . S . A t w a l V s . I TO ( 2 0 1 3 ) 14 4 I TD 5 2 8 , w h er e i n i t w as h e l d t h a t only L o n g Te r m C a p i t a l G a i n s e a r n ed o n t h e a m o un t o f s a l e 17 c o n s i d e r at i o n ac t u a l l y r ec e i v e d by the a s s e s se e was to b r o u g h t t o t a x . Th e C I T( A ) a cc o rd i n g l y di r e c t ed th e A O to r e c o m p u t ed t h e c a p i t a l g a i n s o n t h e s a l e c on s i d e r a t i o n a c t u a l l y r e c e i ved i n p u r su a n c e t o t h e a gr e e m e nt . F u r t h er t h e L d . CI T( A p p ea l s ) d i s mi s s e d th e g r o u n d ra i s ed b y t he a s s e s s e e f or a l l o w i n g e x e m pt i on f r o m c a p i t a l g a i n s u / s 5 4 E C f o r i n v e stm e n t s i n R E C b on d s h o l d i n g t ha t a s p e r t h e r a t i o o f t h e d e c i s i o n o f t h e Ho n ' b l e J u r i s di c t i o n a l H i g h C o u r t th e as s e s se e w a s n o t e n t i t l e d t o t h e s a m e an d f u r t h e r a l s o f or t he r ea s o n t ha t no ev i d e n c e i n s u p po r t o f t he e x e m p t i o n c l a i me d w a s f i l e d b e f or e t h e A s s e ss i n g O f f i c e r . I t w a s a l s o n o t e d b y t h e L d . CI T( A p p e a l s ) t h a t th o u g h t h e n e c e s s a r y e v i de nc e s o f t h e i nv e s tm e n t s m ad e i n RE C b o n d s were filed during appellate pr o c e e d i n gs but since no r e q u e s t u /s 4 6A o f t h e I n co me Ta x R u l e s w as f i l e d f or admitting the same, t he L d .C I T( A p p e al s ) i gn o r e d t he a d d i t i o n al e v i d en c e s f i l e d a nd th u s d i s m i s se d th e g r o u n d s r a i s e d b y t h e as se s s e e i n t h i s re ga r d .
16. A g g r i e v e d b y the s a m e , t h e a s se s s e e h a s c h a l l en g e d t h e a c t i o n o f t h e L d . CI T( A p p e a l s ) i n s e tt i n g a s i d e t h e i ss u e of d i s al l o w a nce of Lo n g Te r m C a pi t a l Gains of R s . 3 3 , 6 5 ,7 1 , 2 1 0/ - t o t h e f i l e o f t h e A s s e s s i n g O f f i c e r a s a l s o t h e d e n i a l o f t h e c l a i m o f e x e m p t i o n u / s 5 4E C o f t h e A c t b y n o t e n t e r ta i n i n g t h e a d d i ti o n a l e v i d e n ce s a d d u c e d b y t h e a s s e s se e I n g r o u n d N o .5 - 7 r ep r o d u c e d i n e a r l i e r p a r t of o u r o r d e r.
18
17. Th e R e v e n u e h a s a l s o c h a l l e n g ed t h e a c t i o n o f t h e L d . CI T( A p p e a l s ) in d i r ec t i n g the A s s e ss i n g Officer to r e c o m p u t e t he c a p i t a l g a i n s o nl y o n t h e g r o u n d o f t h e s a l e c o n s i d e r at i o n ac t u a l l y r e c ei v e d as against the same c a l c u l a t ed o n t he a m o u n t r ec e i v ab l e b y t h e as s e ss e e a s p er t h e s a i d a gr e em e n t a t R s .3 . 65 c r o r es b y t he A s s e ss i n g O f f i c e r i n t h e g ro u n d s r a i s e d b y i t a s re p r o d uc ed a b o v e i n t h e e a r l i e r p a rt of o u r o r de r .
18. During th e c our s e of h e a r i ng before us, t he Ld. c o u n s e l f o r a ss es s e e d r e w o u r a tt e n t i o n t o t he f ac t t h a t t h e d e c i s i o n o f t he H o n ' b l e J u r i s di ct i o n a l Hi g h Co ur t i n th e c a s e o f C . S . A t wa l ( s u p ra ) h ad be e n u p h el d b y th e H o n ' bl e S u p r e m e C o u rt i n t h e c a s e o f CI T V s . B a l b i r S i n g h M a n i & O t h e r s r e p o rt e d i n 1 5 6 D TR 2 7 3 . Th e L d . D R f a i r l y a g r e e d with the above.
19. I n vi e w o f t h e ab o v e a n d c o n si de r i n g t h e f ac t t ha t t h e L d . CI T( A p p e a l s ) h a s f o l l o w e d th e r a t i o of t h e H on ' b l e H i g h C o u r t i n t h e c a se o f C .S . A t wa l ( s u p r a ) , t h e f ac t s o f w h i c h a d m i t t e d l y a r e i d e n t i c a l t o th a t o f t h e a s s e s s ee , a n d n o d i s t i n g u i s h i n g fa c t s w e r e b r oug h t t o o u r n o t i c e b y t h e Ld.DR, we f i n d n o r e a s o n t o i nt e r f e r e i n t h e o rd e r o f t h e C I T( A p p e al s ) i n d i r e c t i n g t h e A ss e s s i n g O ff i c e r to c o m p u te t h e L o n g Te r m Ca p i t a l Ga i n s as pe r t h e or d e r of th e H o n ' b l e H i g h C o u r t i n t he s a i d c a s e . I n vi e w o f t h e a b o v e, g r o u n d s o f a p p e a l r ai s e d b y t h e R e v e nu e a r e d i s m i ss e d as a l s o t h e g r o u n d o f a p p e al N o . 5 r ai s e d b y th e a s s e s se e i n i ts a p p e a l . 19
20. V i s - à - v i s t h e i ssu e o f c l a i m o f e x e m p t i o n u / s 5 4 EC o f i n v e s t m e nt i n R E C b o n d s t h e a ss e s s e e h a d f i l e d t h e s a m e b e f o r e u s a s a dd i t i o n a l e vi d e n ce a l o n g w i t h an a p p l i c a t i on r e q u e s t i ng t ha t t h e s a i d c er t i f i ca t e s w er e i n t h e f i l e o f t he A s s e s s i n g O f f i c er d u r i n g a ss e s sm e n t p r o c ee d i n gs a l s o b ut d i d n o t ta k e c og n i z a n c e o f t h e s a m e . I t w a s , t h e r e f o r e, r e q u e s t e d t h a t t h e s a m e b e acc e p t e d i n t h e i n t e r e s t o f justice.
21. Th e L d . D R d i d n o t r e f u t e t h e ab o v e c o n t e n ti o n o f t h e assessee that th e s a m e f or m e d p a r t of th e as s e s s m e n t record.
22. I n v i e w o f t h e sa m e , w e h o l d tha t t h e ev i d e n ce s n o w f i l e d by t he a ss es s e e b y w a y o f bo n d c e rt i f i c at e of R E C a r e n o t b y w a y o f a dd i t i o n a l e v i d e nc es s i n c e th e y w e re a l r e a d y on the r e c or d of the A s s es s i ng O f f i c e r, the same are, t h e r e f o r e, b e i n g c o n s i d e r ed f o r th e p u r p o s e o f a dj u d i c a t i ng t h e g r o u n d N o . 7 r a i s e d b y t h e a s s e s s e e . E ve n o t h e r w i s e, we find, that the said documents are r el e v a n t for determining the eligibility of the a s se s s e e to c l a im e x e m p t i o n o f c ap i t a l g a i n s u / s 5 4 E C o f t h e A c t , w h i ch allows e x e mp t i on if i n v e s t m e nts are made in specified B o n d s b y t h e a ss e s s e e . Th e r e f o re a l s o t h e s a i d d o c u m e n t s a r e a d m i t t e d f o r a d j u d i c a t i o n. G r o u n d N o . 6 r a i se d b y t h e a s s e s s e e i s t h er ef o r e a l l o w e d .
23. V i s - à - v i s t he c l a i m o f d e d u c t i on u / s 5 4 E C , t he L d . c o u n s e l fo r a s se s s e e c o nt e n d e d t h a t t h e L d . CI T( A p p e a l s) had m i s - i n t er pr e t e d / m i sa p p r e ci a t e d the order of the 20 H o n ' b l e H i g h C ou r t i n t h e c a se of C . S . A t w al ( s u pr a ) t o h o l d t h a t t h e H o n 'b l e H i g h Co u r t i n th e s a i d c a s e h a d h e l d th a t t h e a s s e s se e w ou l d n o t b e e n t i tl e d f o r a ny e x em p t i o n o r d e d u c t i o n u / s 54 F / E C o f th e A ct o n t h e L on g Te r m C a p i t al G a i n s t a x a b l e i n t h e i m p u g n e d y e a r . Th e L d . c o u n s e l f or a s s e s s e e d re w ou r a t t e n t i o n t o th e f i n d i n g s o f th e H o n ' b l e H i g h C o u r t i n th i s r e g a r d r e p rod u c e d i n t h e o rd e r o f t h e L d . CI T( A p p e a l s ) a t p a r a 7. 3 w h er e i n t h e c o n c l u si o n o f t he H o n ' b l e Hi g h C ou r t w a s re p r o d uc e d a n d ou r a t ten t i o n w a s d r a w n t o p o i n t N o . 6 o f t h e s a m e w h i c h r e p ro d u c e d a s under:
" 6 . T h e is s u e o f e l i g ib il i ty to c ap i t al g ai n s t ax h av in g b e e n d e c i d e d in f av o u r o f th e as s e s s e e , th e q u e s ti o n o f e x e mp tio n u / s 5 4 F o f th e A c t wo u l d n o t s u r v iv e an y l o n g e r an d h as b e e n r e n de r ed ac ad e mi c . "
24. Th e L d . c o u n s el f o r as s e s s ee s t a t e d th a t th e s a i d f i n d i n g o f t h e H o n ' b l e H i g h C ou r t w a s v i s- à - v i s d e c i s i o n rendered by t he H o n ' bl e Hi g h Court in f a v ou r of the a s s e s s e e t h a t no L o n g Te r m C a pi t a l G a i ns w a s t o b e t r e a te d a s e a r n ed o n l an d s w h i ch h a d no t b e e n t r a n s fe rr e d b y th e a s s e s s e e d u ri n g t h e i m p u g n e d y e a r . Th e L d . c o u n s e l f o r a s s e s s e e po i n t e d o u t t h a t i t wa s v i s - à - v i s t h i s re l i e f g i v en to the assessee that the Hon'ble High Court had held that n o q u e s ti o n of e x e m p t i o n u / s 5 4F o f t he A c t w o ul d s u r v i v e o n t h e s am e . I t w a s f u r t he r p o i n t e d o u t t h a t i n a n y c a s e t h e a s s e s se e w as e n t i t l ed t o c l ai m e x e m p t i on u /s 5 4 E C o f L o n g Te r m C a p i ta l G a i n s ea r n e d b y i t i n ac c o r da n c e w i t h t h e p r o v i s i o n s o f l a w i n t h i s re g a rd .
21
25. Th e L d . D R , o n t h e o t h e r h a n d , r e l i e d u po n t h e o r d er o f t h e L d. CI T( A pp e a l s ) .
26. W e h a v e h e a r d th e c o n t e n t i on s an d o n g o i n g t h ro u g h the order of the L d . CI T( A p p e a l s ) and th e Hon'ble J u r i s d i c ti o n a l H i g h C o u r t i n t h e c a s e o f C . S . A t wa l ( s u p ra ) w e f i n d m e r i t i n t h e c o n t e n t i on o f t h e L d . c o u n s e l f or a s s e s s e e . We a gr e e w i t h t h e L d. c o u n s e l f o r a s se s s e e t h a t t h e f i n d i n g s o f th e H o n ' b l e H i g h C o u r t r e g a r d i ng d e n i a l o f e x e m p t i o n u / s 54 F w a s i n th e co n t e x t o f t h e r e l i e f w h i c h h a d b e e n gr a n t ed t o t h e as s e s se e t o t h e e x t e nt o f L o ng Te r m C a p i t a l G ai n s , n o t he l d t o h a v e b e e n e a r ne d d u r i ng the year by the Hon'ble High Court since the purported l a n d s h a d n ot be e n t r a n s fe r r e d d u r i n g t h e ye a r . I t wa s i n t h i s c o n t e x t t h at t h e H o n ' b l e H i gh C o u r t h a d h e l d t h a t , v i s - à-vis the re l i e f granted on the said capital gains, no e x e m p t i o n u / s 5 4 F / 5 4 E C of t he A c t w a s a l l o wa b l e . Th e s a m e s t a n d s t o r e a s o n a l s o s i n c e i n t h e a b s en c e o f a n y Long Te r m C a pi t a l Gains the assessee is l o gi c a l l y n ot e n t i t l e d t o cl a i m a n y e x e m p t i o n o n a c c o u n t o f i n v e s t m e n t m a d e a s p e r l a w . W e , t h e re f o r e, h o l d t h a t vi s -à - v i s L o n g Te r m C a p i t a l G ai n s s u b je c t e d t o t a x i n t h e i m p u gn e d y e a r, a s p e r t h e d e c i si o n o f t h e H o n 'b l e H i g h C o u r t w h i c h h a s b e e n u p h e l d b y t h e H o n ' b l e A p e x C o u r t a l s o , t he a s s e s s e e i s e n t i t l e d t o cl a i m d e d u c t i o n u / s 5 4 E C / 5 4 F o f t he A c t . W e, t h e r e f o r e, r e s t or e the issue to the AO to verify t he d o c u m e n t s p l a c ed o n r e c or d a n d t h e r e a f t er a l l o w t h e c l a i m o f t h e a ss e s s e e i n a c c o r d an c e w i th l a w .
22
Ground of a p p ea l No.7 raised by the a ss e s s e e is, t h e r e f o r e, a l l o w ed f o r s t at i s t i c a l p u r p o s e s .
27. I n t h e r e s u l t , the a p p e al o f t h e as s e s s e e i s al l o w ed f o r statistical p u r po s e s and the appeal of t he Revenue is d i s m i s s e d.
O r d e r p r on o u n c ed i n t h e o p e n cou r t .
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(SANJAY GARG) (ANNAPURNA GUPTA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated : 17 t h May, 2018
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Copy to:
1. The Appellant
2. The Respondent
3. The CIT(A)
4. The CIT
5. The DR
Assistant Registrar,
ITAT, Chandigarh