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Income Tax Appellate Tribunal, AHMEDABAD - BENCH ‘B’
Before: SHRI RAJPAL YADAV & SHRI AMARJIT SINGHSmt. Darshiniben M. Adani
PER RAJPAL YADAV, JUDICIAL MEMBER:
Revenue is in appeal before the Tribunal against order of the ld.CIT(A)-5, Ahmedabad dated 11.12.2017 passed for the Asstt.Year 2011- 12.
Revenue has taken eleven grounds of appeal. In ground no.1 to 8, it has raised one issue, i.e. whether capital gain on sale of land deserves to be assessed in the Asstt.Year 2011-12 or not.
Brief facts of the case are that the assessee entered into an agreement for sale of non-agriculture land on 15.5.2006. The assessment for the A.Y. 2011-12 was framed under section 143(3) on 28.2.2014 determining total
2 income at Rs.16,96,560/-. The AO accepted the transfer of agriculture land in the Asstt.Year 2006-07 and not taxed the capital gain in the present assessment year. Therefore, an action under section 263 was taken by the ld.Commissioner who has set aside the assessment order vide order dated 29.3.2016. In pursuance of 263-order, the impugned assessment order was passed on 28.12.2016 under section 143 (3) r.w.s. 263 of the Income Tax Act. Dissatisfied with the order passed under section 263, the assessee filed an appeal before the Tribunal bearing ITA No.1348/Ahd/2016. The ITAT has allowed the appeal of the assessee and vacated the order of the CIT passed under section 263 on this issue, which is again pleaded by the Revenue in ground no.1 to 8 of the present appeal. The ld.CIT(A) has observed that since the order of the CIT passed under section 263 was vacated, therefore, there is no jurisdiction with the AO to make an inquiry on the issue of assessability of capital gain on sale of agriculture land. The finding of the ld.CIT(A) reads as under: “Decision:
3.3. In this case, assessment u/s. 143(3) of the Act was completed on 28.02.2014 on a total income of Rs.16,96,560/-. Thereafter the Pr. CIT-5, Ahmedabad set-aside the said order vide order u/s.263 dtd. 29.3.2016 holding that the assessment passed vide order dtd. 28.2.2014 was erroneous and prejudicial to the interest of revenue on certain issues. In consequence to that order, the AO has issued notice to the assessee calling for the details and explanation.' The assessee is an individual and derives income from business carried on by her under the name and style of Auto Craft. The AO has passed order u/s. 143(3) r.w.s. 263 of the Act after making following adjustments to the returned income of the assessee.
Particulars Amount Income as per the Return of income 16,96,560/- Additions: Long term capital gains 1 0,49,84,1 50/-
3 Deemed income under section 50C 1,89,250/- Addition of difference between job work 27,43,663/- income and income reported in ITS statement Income Assessed 1 0,96,1 3,620/-
The AO has observed that the appellant has sold immovable properties in A.Y. 2007-08 by executing agreement to sale and after completing the formalities the sale deed was executed in A.Y .2011- H. The AO has further held that capital gain from the above transaction is related to A.Y .2011-12 and not in A.Y. 2007-08. The contention of the appellant during the assessment, proceedings was that the properties were transferred in F.Y. 2006-07 as per the provisions of Section 53A of the Transfer of Property Act r.w.s. 2(47)(v)of the I.T. Act. The AO has verified the agreement of sale and observed certain points as stated in para-3.3 of the assessment order. On the basis of these observations the AO has held that the basic requisite of Section 53A of the Transfer of Property Act has not been fulfilled and hence the said transaction cannot be constituted as transfer as per Section 2(47) of the I.T. Act. The AO has further observed that neither the said properties are exempt from taxation as they do not quality to be agricultural land u/s.2(14)(iii) of the I.T. Act nor the transfer has been executed, in F.Y. 2006-07 as claimed by the assessee as per the Provisions of. Section 2(47)(v) r.w.s. 53A of Transfer of Property Act. The assessee has entered into an agreement of' sale in F.Y. 2006-07 and received full advance in the same year. The assessee has claimed to have sold agricultural land in F.Y. 2006-07 at the market rate on non-agricultural land prevalent in 2010-11 which the AO has found complete by unreasonable. The AO was of the opinion that the assessee has transferred non-agricultural lands in F.Y. 2010-11 only when the sale deed was registered after obtaining permission from Competent Authority for changing the nature land from agricultural to non- agricultural. In view of the above, the AO has computed the long term capital gain arising to the assessee in A.Y. 2011-12 at Rs. 10,49,84,150/-.
3.4. During the appellate proceedings the appellant has contended that the appellant has filed an appeal before the Hon'ble ITAT, Ahmedabad against the order passed by the PCIT-5, Ahmedabad u/s.263 of the Act dtd. 29.3.2016. It is further contended that the 4 Hon'ble ITAT has passed order dtd. 3.8.2017 vide order No.l348/Ahd/2016. The addition made on account of long term capital gain in the A.Y. under consideration has been dealt by the Hon'ble ITAT in the said order as under:-
"12. We observe in these peculiar facts that the Revenue's latter plea that the above agreement to sell as well as the one handing over position are not valid since not registered documents does not deserve acceptance. We are of the opinion that the present is a case wherein the assessee could not have got the above documents registered in view of the statutory bar imposed, by the legislation hereinabove that a non agriculturist is not permitted to purchase agricultural lands. The assessee could at the best take recourse to unregistered agreements only so as to enter into part performance of the contract till the time she got Collector's approval. We find that above decision of hon'ble Punjab & Haryana High Court did not contain such a statutory bar. Their lordships therefore decided in the said case that Section 2(47)(v) bodily transposes into itself Section 53A of the Transfer of Property Act r.w. corresponding Section 17(1) of the Indian Registration Act. We therefore observe that such facts cannot lead us to an inference that a vendor cannot enter into a part performance of a transfer agreement in favour of a non agriculturist in Gujarat state without getting the same registered as per above decision. Our inference rather is that a registration authority exercising statutory powers cannot register such a document in view of Section 63 of the abovestated agricultural land transfer law applicable in Gujarat state. Such a non registration as in facts of the instant case would not otherwise invalidate an unregistered document in case it satisfies all other components of part performance involving handing over of possession, We reiterate that the assessee has already placed* on record overwhelming evidence demonstrating her to have handed over possession of her land to the original vendee followed by latter's all steps in executing MO Us with the state government as well as AUDA. We therefore distinguish hon'ble Punjab & Haryana high court's decision to be applicable only in case when such a registration of agreement to sell or part performance is registered without any specific bar as in present case only. We
5 further find that yet another decision of Chandra Prakash Jain vs. ACIT (2014) 46 taxmann.com 268 (Allahabad) applies in instant facts wherein the vendee took over possession, re-sold the property m question to purchasers after carrying out necessary developments. Their lordships hold that such initial transaction amounts to "transfer" within the meaning of Section 2(47) of the Act in tune with landmark decision of Chaturbhuj Dwarkadas Kapadia vs. C1T (2003) 260 1TR 491 (Bombay). We thus decline the Revenue's instant latter plea on registration aspect as well in view of the fact that there is no similarity between the agricultural land transfer law in Gujarat state with that applicable in Punjab. We therefore conclude that the assessee had transferred her lands to the vendee concerned in assessment year 2007-08 itself than in the year of execution of sale deed i.e. the impugned assessment year 2011-12. The CIT's order under challenge treating the latter assessment year to be the year of transfer is accordingly held to be not sustainable.
We further find before parting that the CIT has also not acted in accordance with law in passing a non reasoned remand order in exercising revisionary jurisdiction u/s. 263 of the Act. It has already come on record that he himself absented in the show cause notice that the Assessing Officer had accepted assesee's claim of having transferred the land in assessment year 2007-08 (supra). He therefore seems to have treated it as a case wherein the Assessing Officer fell in error in agreeing with assessee's transfer claim. We thus reiterate hon'ble Delhi high court's decision (supra) holding^ that it is not open for the CIT to pass a blanket remand order without dealing with merits of the issue such a backdrop of facts. We therefore hold that the CIT's remand directions to the Assessing Officer for framing a fresh assessment are not liable to be affirmed. We take into account our above detailed discussion to reverse the CIT's order under challenge qua the former issue of computation of capital gains arising from transfer of assessee's lands. The assessee succeeds in her corresponding former substantive ground (s). " •f The Hon'ble ITAT in its order has clearly held that the assessee had transferred her land to the vendee concerned in 6 A.Y. 2007-08 itself not in the year of execution of sale deed i.e. impugned assessment year 2011-12. The Hon'ble ITAT has reverse the order of the Pr.CIT passed u/s.263 of the Act. As the; issue has been decided by the Hon'ble ITAT vide order in appeal No.1348/Ahd/2016 dtd. 3.8.2017 that the income on sale of immovable property is pertains to A.Y. 2007-08 and not to A.Y. 2011-12 the year under consideration, the addition made by the AO with regard to the long term capital gain is deleted. Accordingly, the grounds of appeal are allowed.
Further as the income on sale of immovable property pertains to A.Y. 2007-08 there is no question of applying provisions of Section 50G of the Act in the year under consideration arises.”
With the assistance of the ld.representatives, we have gone through the record carefully. Jurisdiction in the AO for passing the impugned order on the present issue was being infused by the order of the ld.Commissioner passed under section 263. Once that order was set side, then there is no issue remained to be inquired at the end of the AO. In other words, power to pass fresh assessment order under section 143(3) r.w.s. 263 with the AO on this issue has been extinguished. Therefore, we do not find any merit in ground no.1 to 8 of the Revenue; they are rejected.
Next ground for adjudication is ground no.9, wherein the Revenue is aggrieved by the action of the ld.CIT(A) in deleting addition of Rs.27,43,663/- on account of difference in job work income shown in the profit & loss account and income as per form no.26AS.
Brief facts in this regard are that the assessee is engaged in the business of job work of corrugated boxes. During the assessment proceedings, it was noticed by the AO that the assessee has shown job work income of Rs.2,32,77,111/- in the profit and loss account, whereas as 7 per the Form No.26AS it was shown at Rs.2,60,20,774/-. The ld.AO doubted the differential amount of Rs.27,43,663/- to be unaccounted receipts and sought explanation from the assessee. It was explained by the assessee that the amount of job work receipts reflected in the profit & loss statement was net of purchases effected on such receipts. It was submitted by the assessee that this differential amount reflected total purchases made from Santosh Starch products of Rs.13,12,315/-, Shri Ambica Dye Chem of Rs.13,90,515/- and binding cloth of Rs.40,833/-, which were also reflected in the books of accounts. However, the ld.AO did not accept the explanation of the assessee. He observed that the assessee has claimed purchases separately, and there was no conclusive evidence to prove purchase expenditure. He accordingly made addition to this effect. Matter went in appeal before the ld.CIT, who allowed the claim of the assessee. Aggrieved Revenue is before the Tribunal.
Before us, both the parties supported orders of respective authorities, and reiterated submissions made before the lower authorities.
After having heard both the parties and considering material available on record, we do not find any justification to interfere in the order of the ld.CIT(A) on this issue, because, for the differential amount shown in the ITS statement and the profit and loss account, the assessee has furnished all details before the AO, viz. copy of sales and purchase accounts, ledger account of all three parties, copy of job work. The AO simply ignored all these details, and without issuing show cause notice on this issue, or even without making any inquiries with the vendors, made the impugned addition. From the impugned order, it emerges out that the assessee has explained with supporting evidences the reason for difference
8 in two statements as netting of income from the job work; and that the entire job work income shown in ITS was reflected in the books of accounts. There is nothing before the AO to make the addition and he simply proceeded on the premise that the assessee failed to provide complete details relating to purchases. It is settled position of the law that no addition can be made on the basis of receipts shown in the ITS alone, unless the AO is able to show with evidence that such income forms part of the income of the assessee. The assessee cannot be expected to prove negative, rather, it is for the Revenue to prove that the assessee has understated its income, and for that matter, received undisclosed income. The ld.CIT(A) has considered the issue in right perspective, and rightly deleted the impugned addition. We uphold his order on this issue, and reject this ground of appeal.
9. The last issue in this appeal is that the ld.CIT(A) has erred in deleting the addition of Rs.1,89,250/- under section 50C of the Act.
10. In view of our finding recorded in para-4 and 5 (supra), we do not find any merit in this ground. Accordingly, this ground stands rejected.
In the result, appeal of the Revenue is dismissed. Order pronounced in the Court on 15th October, 2019 at Ahmedabad.