SIDHARTH CHAUDHARY,KARNAL vs. ITO, WARD-4, KARNAL
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Income Tax Appellate Tribunal, DELHI BENCH “SMC”: NEW DELHI
Before: SHRI KUL BHARAT
1 ITA no. 890/Del/2020 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “SMC”: NEW DELHI
BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER
ITA No. _890/DEL/2020 [Assessment Year: 2014-15
Sidharth Chaudhary, Vs Income-tax Officer, 796, Sector-13, U.E. Karnal, Ward-4, Karnal. Kamal State, Haryana-132001.
PAN- AFMPC0210M APPELLANT RESPONDENT
Assessee represented by Shri Rakesh Jain, Advocate Department represented by Shri Om parkash, Sr. DR
Date of hearing 17.01.2023 Date of pronouncement 19.01.2023
O R D E R PER KUL BHARAT, JM:
This appeal, by the assessee, is directed against the order of the learned
Commissioner of Income-tax (Appeals), Karnal, dated 25.06.2018, pertaining to
the assessment year 2014-15. The assessee has raised following grounds of appeal:
“1. That the Ld. A.O has erred in law and on facts in treating the declared Business Income from Sale & Purchase of Land & Plots as Income under the head Capital Gains and the Ld. CIT (Appeals) has further erred in confirming the same.
2 ITA no. 890/Del/2020 2. That the Ld. A.O has erred in treating Rs. 32,67,930/- as Income under the "Capital Gains" as Income of the assessee in respect of assets which were never owned by the assessee and the Ld. CIT(Appeals) has further erred in confirming the same.
That the appellant craves to add, amend or delete any ground(s) of appeal before or during the hearing of the Appeal.”
The facts giving rise to the present appeal are that in this case the assessment
was reopened u/s 147 of the Income-tax Act, 1961 (in short “the Act”) on the basis
of chargeability of capital gains arising out of sale of property. Thereafter the
Assessing Officer framed the assessment u/s 143(3) read with Section 147 of the
Act, thereby computing capital gain at Rs. 32,67,930/-. Thus, assessing the income
at Rs. 35,52,980/-. Aggrieved against this, the assessee preferred appeal before the
learned CIT(Appeals), who also sustained the addition and dismissed the appeal of
the assessee. Now the assessee is in appeal before this Tribunal.
Apropos to the grounds of appeal, learned counsel for the assessee submitted
that the authorities below have not appreciated the facts in right perspective and
have grossly erred in computing the capital gain in the hands of the assessee. He
submitted that the action of the Assessing officer is unjustified and patently illegal.
On the other hand, learned DR opposed the submissions and supported the
orders of the authorities below.
3 ITA no. 890/Del/2020 5. I have heard the rival contentions and perused the material available on
record. I find that the Assessing Officer had made addition by observing as under:
“Further, the assesses has given in writing vide letter dated 08.11.2016 that he has not sold any property during the year. In fact, he was having power of attorney of his mother in respect of land measuring 1288 Sq yards in Shaheed Melkhan Singh Colony, Gharaunda. As the entire sale proceeds of sale of plots have been credited in the Bank Accounts of the assessee maintained with HDFC Bank, Karnal. He is the ultimate beneficiary of the sale consideration of Biana received transaction which were got registered during the year under consideration. The assessee has failed to produce any proof of transfer of sale consideration to his mother's account. Whereas the assesses has already furnished copy of Cash Book during the assessment proceedings which is placed on record. In view of these facts, the entire sale consideration amounting to Rs 55.76,000 /- for 11 regd, deeds of area, measuring 1806 Sq yards is to be considered in hands of the assesses. As the land is situated within municipal limits, long term capital gain arises on transfer of capital asset u/s 45 of I.T, Act, 1961. The assessee has shown purchase rate of property @ Rs 247/- Sq yard but has failed to produce any documentary, proof in this regard. As the property is claimed to be purchased before 01.04.1981, the cost of acquisition is to be adopted of 01.04.1981 which is hereby adopted @ 150 Sq yard for want of documentary proof and in the interest of natural justice and the capital gain is computed as under.:-
Sale consideration of plots at Shaheed Malkhan Singh Colony, Gharaunda : 55,76.000/- Less:- Indexed cost of acquisition. (As on 01 04.1981) Rate adopted as Rs 150/- sq yard
i.e. 1806x150 =270900 x 852 = 23,08,070/- 23,08,070/- 100 Capital Gain : 32,67,930/-
4 ITA no. 890/Del/2020 Keeping in view the fact and circumstances of the case as narrated above income of the assesses is computed as under Income as per Return 2,85,050/- Add: Capital Gain discussed above 32,67,930/- Total assessed income 35,52,980
The assessee had carried the matter before the learned CIT(Appeals), who
sustained the aforesaid finding of the Assessing Officer by observing as under:
“I have examined the facts on ecod and the submissions made by the assessee. The assessee holds that sale receipts in consideration of the plots at Gharaunda do not relate to him wholly. Before the AO, no evidence in support of this claim was submitted. Even at this stage, the assessee has not been able to submit the details pertaining to the ownership of the said plots viz. eleven registered deeds which he states do not belong to him. In the absence of any corroborative evidence, I am of the opinion that the addition has been correctly made and I confirm the same.”
A bare reading of the finding of the learned CIT(Appeals) goes to prove that
the learned CIT(Appeals) has passed a non-speaking order without considering the
facts in right perspective. The assessing authority computed capital gain purely on
the basis of conjectures. The Assessing officer has recorded that assessee vide
letter dated 8.11.2016 intimated that he had not sold any property. He was having
power of attorney of his mother in respect of land admeasuring 1288 sq. yards in
Shaheed Malkhan Singh Colony, Gharaunda. However, the Assessing Officer
made addition on the basis that the entire sale proceeds amounting to Rs.
55,76,000/- had been credited in the account of the assessee, therefore, being the
5 ITA no. 890/Del/2020 actual beneficiary, addition was made in his hand. I am unable to affirm the view
of the Assessing Officer as the law is clear regarding taxability of capital gain
arising out of transfer of immovable property. As per section 45 of the Act, any
profits or gains arising from the transfer of a capital asset effected in the previous
year shall, save as otherwise provided in section 54, be chargeable to income-tax
under the head “capital gains”, and shall be deemed to be the income of the
previous year in which the transfer took place. Section 48 of the Act speaks about
computation of capital gain. Now the question arises whether capital gain can be
charged from the person who sold property as attorney of the owner. In my
considered view, there is no ambiguity under the law for chargeability of capital
gain in respect of transfer of any capital asset. It is the owner of capital asset who
would be liable for capital gain. In case the sale consideration is credited into the
account of third party or the attorney of such owner, in that event also the money
which has been credited in the account of the third party or the power of attorney
cannot be subjected to tax under the head ‘capital gains’. Therefore, the action of
the authorities below is contrary to the statutory provisions. The money credited to
the account of the assessee could not have been subjected to tax as a capital gain
earned by the assessee. Under these facts, the addition made by the Assessing
officer under the head of ‘capital gain’ is not justified. Hence, the Assessing
Officer is directed to delete the addition. However, it is clarified that the Assessing
6 ITA no. 890/Del/2020 Officer would be at liberty to tax the capital gains/business receipts in correct hands. Grounds of appeal raised in this appeal are allowed. 8. Appeal of the assessee is allowed. Order pronounced in open court on 19th January, 2023.
Sd/- (KUL BHARAT) JUDICIAL MEMBER *MP* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI
