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Income Tax Appellate Tribunal, DELHI BENCH “A”: NEW DELHI
Before: SHRI N. K. BILLAIYA & SHRI ANUBHAV SHARMAShri Avdhesh Kumar,
O R D E R PER ANUBHAV SHARMA, J. M.:
1. 1. This appeal has been preferred by the Assessee against the order u/s 263 of the Income Tax Act, 1961 (hereinafter referred as „the Act‟) dated 26.03.2018 of Ld. Pr. Commissioner of Income Tax, Ghaziabad (hereinafter referred as Ld. Revisional Authority) in regard to an assessment order dated 19.08.2015 passed u/s 143(3) of the Act passed by the ld Assessing Officer, DCIT, Circle-1, Ghaziabad (hereinafter referred as the Ld. AO).
2. Facts in brief are that assessee filed its return of income on 30.11.2013 declaring income of Rs. 21,93,310/-. The case was selected for scrutiny through CASS. Accordingly, notice u/s 143(2) dated 09.09.2014 was issued. The assessee is an individual and retired from Indian Army in 1996. During the year under consideration, assessee has started a business of distributorship of Vestige Marketing Private Limited and farming on his paternal land. The assessee had also derived pension from Page | 1 Indian Army. During the course of assessment proceedings, it was found that assessee had sold an agricultural land at an amount of Rs. 96,30,000/- to M/s Omkar Nest Private Limited. The Ld AO Vide letter dated 25.05.2015, directed assessee to furnish the details of property sold alongwith date of acquisition of the property and date of sale of property. The assessee filed reply on 08.06.2015 stating that Assessee purchased an agriculture land for Rs. 20,43,000/- (with Stamp and Receipt value) on 20.05.2012. Due to some reasons this land was Sold within two months to M/s Omkar Nest Private Limited as Agriculture Land of Rs. 96,30,000/-. After this, he made an investment in another Agriculture Land of Rs. 55,36,078/- (with Stamp and Receipt). On above transaction, he was paid Capital Gain according to Income Tax Act, 1961. The Ld AO found that the property was sold at Rs. 96,30,000/- whereas the value of this property according to Circle rate, is at Rs. 1,16,13,000/-. Therefore, vide order sheet entry dated 20.07.2015, assessee was required to explain the reason why the computation be not taken at Rs. 1,16,13,000/- as cost of consideration which is Circle rate also as per deed?. The assessee vide reply dated 31.07.2015, stated that he has sold an agriculture land area 0.7590 Hectare of Rs. 96,30,000/- on 20.07.2012 situated at Makarmatpur Sikheda, Tehsil Modinagar Distt. Ghaziabad. Circle rate of this area, according to Circle Rate List (issue by Office from Sub registrar Modinagar) effective from 14.07.2012 is Rs. 35,00,000/- per Hectare. According to this list, value of this land is Rs. 26,56,500/-. But assessee sold this land of Rs. 96,30,000/- to M/s Omkar Nest Private Limited. This value is higher than Circle rate. Assess has paid Capital Gain on this sale consideration. The AO observed that according to sale deed, value of this land at Rs. 1,16,13,000/- was fictitious circle rate. This circle rate is not mentioned anywhere in the circle rate list issued by Office from Sub registrar Modinagar. Accordingly AO held that the asssessee had paid stamp duty at the value of Rs. 1,16,13,000/- not at Rs. 96,30,000/-, and hence the case falls within the purview of section 50C of the I.T.Act,1961.
The Ld. Pr. CIT issued show cause notice dated 05.03.2018 and exercised his Revisional jurisdiction u/s 263 of the Act as it found that the land was purchased on 20.05.2012 i.e. within two months of the sale of land on 20.07.2012. The Ld. Revisional Authority concluded that the gain on sale of property was short term capital gain hence, exemption u/s 54F of the Act was wrongly claimed by the Assessee and allowing exemption u/s 54F of the Act by the ld AO on incorrect assumption of the fact that profit earned on the sale on land in question was long term capital gain was erroneous assessment prejudicial to the interest of revenue. Therefore, it set aside the assessment order dated 19.08.2015 with a direction to the AO to pass a fresh order after examining the issue properly.
The Assessee is in appeal before the tribunal raising following grounds of appeal:- “1. That the order u/s 263 of I.T. Act dated 26-03-2018 passed by the Ld. Principal Commissioner of Income Tax is bad both on facts and in law and therefore deserves to be canceled.
2. That the subject land in question on the sale of which tax has been levied is agricultural in nature and not a capital asset liable for any capital gains tax (neither short term nor long term).
3. That enough evidence exists on record to hold that the said land is agricultural land in terms of section 2(14)(iii) of I.T. Act.
4. That merely because the assessee himself had shown in the return of income this as a capital asset does not in any way allow the revenue to hold it as such, the assessee is not debarred from agitating that it is not so but agricultural land and it deserve to be hold so by this Hon’ble Income Tax Appellate Tribunal. 4.1 That mere concession in the return does not amount to admission that asset is capital in nature when on facts and in law it is agricultural in nature.
5. That the Ld. Principal Commissioner of Income Tax erred in law, on facts and in surrounding circumstances in ignoring the Tehsil report as well as corresponding notification regarding distance, wherein agricultural land lying beyond 1 Km. is not capital asset, whereas the Ld. Principal Commissioner of Income Tax on wrong interpretation treated the land to be within 2 Kms. of his own. 5.1 That the conclusion and direction given by the Ld. Principal Commissioner of Income Tax u/s 263 of I.T. Act order is contrary both on facts and in law.”
Heard and perused the record.
On behalf of the Assessee primarily the contention was that when the Assessee had informed the Ld. Revisional Authority that the assessment order after being challenged before the ld CIT(A) had reached the ld Tribunal and the ld Tribunal restored the matter back to the file of the ld CIT(A) to decide afresh vide order dated 28.02.2018 then by passing the impugned order u/s 263 dated 26.03.2018 the ld Revisional Authority has fallen an error. He relied Hon‟ble Madras High Court judgment in Smt. Renuka Philip Vs ITO [2019] reported as 409 ITR 567 and Hon‟ble Allahabad High Court judgment in CIT Vs Vam Resorts and Hotels (P) Ltd reported as 418 ITR 723 to contend that if appeal is pending beofre Ld CIT(A) jursidiciton u/s 263 cannot be exercised. 7. On the other hand the ld DR supported the finding of the ld Revisional Authority submitting that there is no error in exercise of jurisdiction. 8. The grounds raised are all connected to aforesaid contention so are taken up together for determination. After taking into consideration the matter on record and submissions, the chronology of events of assessment, appellate proceedings and Revisional proceeding are narrated as below:-
“DATE-WISE SEQUENCE OF ASSESSMENT AND APPELLATE PROCEEDINGS Sl No. PARTICULARS DATE Ld. A.O. passed order u/s 143(3) of I.T. Act 19-08-2015 1) on The assessee filed appeal before Ld. CIT(A) 10-09-2015 2) on Ld. CIT(A) passed the order on 24-05-2017 3) The assessee filed 2nd appeal before 21-08-2017 4) Hon'ble ITAT on 28-02-2018 5) Hon'ble ITAT, set-aside the matter to Ld. CIT(A) to decide afresh on merits)o 08-01-2021 6) Ld. CIT(A), NFAC has issued notice for hearing on 05-03-2018 7) Show cause notice issued by Pr. Commissioner of Income Tax to revise/set- aside the assessment order u/s 263 of I.T. Act on 26-03-2018 8) Order passed by Ld. Pr. Commissioner of Income Tax u/s 263 of I.T. Act on 09-05-2018 9) The appellant, being aggrieved filed the appeal before Hon'ble ITAT on 16.12.2019 10) The Ld. A.O. revised the assessment order u/s 143(3) r.w.s. 263 of I.T. Act on 11-01-2020 11) Being aggrieved with the revised assessment order dated 16-12-2019, the assessee has filed appeal before Ld.CIT(A), NFAC on
Now what comes from the record is that before the ld Revisional authority the Assessee had informed of the fact that while challenging the original assessment order dated 19/8/15 before the ld CIT(A), the Assessee had taken a plea on the basis of additional evidence that the land was actually not a capital asset and it was of agricultural in nature and therefore, the addition made u/s 50C of the Act was sought to be deleted.
Then the matter of the fact is that the Ld. First Appellate Authority dismissed the appeal by vide order dated 24.05.2017 for want of prosecution as well as on merit, however, the Tribunal by order dated 28.02.2018 had restored the issue back to the file of the ld CIT(A) for deciding afresh on merit. 11. In regard to this controversy it is imperative to refer to provision of section 263 of the Act which provide; “Revision of orders prejudicial to revenue 263(1) … (a) to (b) Page | 5 (c) Where any order referred to in this sub-section and passed by the Assessing Officer had been the subject matter of any appeal [filed on or before or after the 1st day of June, 1988], the powers of the Commissioner under this Sub-section shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in such appeal.“ 12. A bare perusal of the section 263(1)(c) of the Act makes it clear that an issue can be subject matter of the Revisional jurisdiction, u/s.263 if the same is not subject matter of appeal before CIT(A). As for instance, if the AO has made additions of three heads and assessee preferred challenging only one addition then so far the remaining two issues remain unchallenged before CIT(A), only they are open for Revision u/s 263. In the judgment relied on behalf of assessee of Hon‟ble Madras High Court in the case of Smt. Renuka Philip Vs ITO [supra], Hon‟ble High Court was confronted with similar facts as the assessee in that case claimed deduction 54 which the AO ignored and gave relief u/s.54F. When the order of AO was under challenge before the CIT(A), revisionary proceedings u/s.263 was initiated by PCIT holding that the claim of 54F granted by AO is erroneous and prejudicial to the interest of revenue. The Hon‟ble High court while deciding the assumption of jurisdiction u/s.263 held that the same is not exercisable under certain circumstances and relied on clause (c) of Sec.263 and held as under; “22. The above explanation makes it clear that when the appeal is pending before the Commissioner, the exercise of jurisdiction under Section 263 of the Act is barred. The Commissioner in the order dated 14.03.2012 states that the appeal pertains to the claim made by the assessee under Section 54 of the Act and it has got nothing to do with the order passed by the Assessing Officer under Section 54F of the Act. The said finding rendered by the Commissioner is wholly unsustainable, since the assessee went on appeal against the re- assessment order dated 31.12.2009 stating that his claim for deduction under Section 54 of the Act should be accepted.
Therefore, in the process of considering as to what relief the assessee is entitled to, the Assessing Officer held that the assessee is entitled to claim deduction under Section 54F of the Act and assigned certain reasons for that. Therefore, the larger issue was pending before the Commissioner of Appeals, and in such circumstances, the Commissioner could not exercise power under Section 263 of the Act on account of the statutory bar. Therefore, on this ground also, the assumption of jurisdiction under Section 263 of the Act was wholly erroneous.” This decision of Hon‟ble Madras High court has been followed by the Hon‟ble Allahabad High Court in the case of CIT Vs Vam Resorts and Hotels (P) Ltd (supra), as relied by assessee.
As with regard to the case in hand the bench is of considered opinion that when the Assessee had claimed deduction which was examined by the ld AO then not only the question of quantum of deduction but also of eligibility has to be presumed to be under examination before the Ld. AO.
Further more, considering the grounds before the Ld CIT(A), even the question of applicability of Section 50 F or 50 C itself has come under challenge, as assessee claimed the land does not fall in category of Capital Assets. After the Tribunal‟s order dated 28.02.2018 this issue as a whole is pending before the ld CIT(A). Thus, when this issue stands restored to the file of the ld CIT(A) by order dated 28.02.2018, the exercise of jurisdiction u/s 263 by Revisional Authority by order dated 26.03.2018 was not called for as not only the question of quantum of deduction but even the liability and taxability of the consideration arising out of sale of agricultural land by the Assessee had not attained finality.
In any case now that the matter is with CIT(A) and if the ld CIT(A), decides the issue in favour of the Assessee then issues which the ld Revisional Authority has considered to be erroneous and prejudicial to the interest of revenue, are open to be agitated by the Revenue before the Tribunal, by challenging such, findings of the CIT(A). It appears from the para 6 of the impugned order that Ld Revisional authority was specifically informed of pendency of appeal being pending before the Tribunal but still without giving reasons in the light of section 263(1)(c) of the Act, decided the matter and thus committed an error which needs correction. 15. Thus, this bench is of firm view that grounds raised
by the Assessee in the present Revisional petition in the form of ground Nos. 2 to 5 are covered on facts and law, in ground raised and pending before the ld CIT(A), in appeal against the original assessment order dated 19.08.2015. However, the ground no 1 deserves to be sustained.
16. The appeal is allowed and the impugned order with it‟s consequential effects, is set aside. Order pronounced in the open court on 17/08/2022.