RAGHUBIR SINGH vs. INCOME TAX OFFICER AND ANR

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CWP/9831/2013HC Punjab & HaryanaPHHC01097897201321 April 2014Author: MR. JUSTICE SURINDER GUPTA,MR. JUSTICE RAJAN GUPTA3 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that both the Assessing Officer and the Commissioner of Income Tax erred in treating the sale as pertaining to only 1 kanal of land, when the sale deed was for 7 kanals 8 marlas. This fundamental factual error rendered their orders legally unsustainable. The Court noted that the revenue's counsel did not dispute the extent of land sold. Consequently, the impugned orders dated 30.12.2011 and 4.3.2013 were set aside. The matter was remitted back to the Assessing Officer to pass a fresh order after affording the petitioner an opportunity of hearing, in accordance with law. The petition was allowed.

What were the facts?

The petitioner, an agriculturist, sold land measuring 7 kanals 8 marlas on 13.5.2003 for ` 4,00,000/-. The cost of acquisition was ` 2,10,000/- with additional expenses of ` 4,70,000/-. The indexed cost was calculated at ` 12,79,417/-. The stamp duty valuation was ` 13,87,500/-. The petitioner's return was below taxable limit, but his case was reopened under Section 147. The Assessing Officer (AO) framed an assessment order dated 30.12.2011, treating the sale as 1 kanal only, resulting in a taxable capital gain of ` 13,34,842/-. A total demand of ` 5,39,275/- was raised, including interest under Sections 234-B and 234-A. The petitioner's revision petition under Section 264 before the Commissioner of Income Tax (CIT) was dismissed on 4.3.2013. The petitioner filed a writ petition challenging these orders.

What were the issues?

1. Whether the impugned orders dated 30.12.2011 and 4.3.2013, passed by the Assessing Officer and the Commissioner of Income Tax respectively, are legally sustainable, considering they were based on the erroneous assumption that only 1 kanal of land was sold instead of 7 kanals 8 marlas. Assessee's Contention: The petitioner argued that the sale deed pertained to the entire 7 kanals 8 marlas of land, not just 1 kanal as assumed by the revenue authorities. The stamp duty valuation also reflected the value of the entire land. The AO and CIT erred in calculating the capital gain by considering only 1 kanal. The principles of natural justice were also allegedly violated. Revenue's Contention: The revenue, through its counsel, did not dispute that the sale deed was for 7 kanals 8 marlas of land.

Which sections of the Income-tax Act were involved?

Section 147,Section 234-B,Section 234-A,Section 264

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT Date of decision: 21.4.2014 Raghubir Singh -----Petitioner Vs. Income Tax Officer, Ward 4(3), Amritsar and another ----Respondents CORAM:- HON’BLE MR. JUSTICE AJAY KUMAR MITTAL HON'BLE MR. JUSTICE JASPAL SINGH Present:- Mr. Sandeep Goyal, Advocate for the petitioner. Mr. Denesh Goyal, Advocate for the respondents.

Ajay Kumar Mittal,J.

1.

Prayer in this petition filed under Articles 226/227 of the Constitution of India is for quashing the orders dated 30.12.2011 and 4.3.2013, Annexures P.5 and P.8 passed by respondents No.1 and 2 respectively raising a demand of ` 5,39,275/- including interest of ` 2,48,280/- under Section 234-B of the Income Tax Act, 1961 (in short, “the Act”) for 93 months against the petitioner.

2.

A few facts relevant for the decision of the controversy involved, as narrated in the petition, may be noticed. The petitioner is an agriculturist. The dispute in this present case relates to the sale of land measuring 7 kanals 8 marlas by the petitioner, which was purchased by him on 21.7.1995. The cost of acquisition at the time of purchase of the said land was ` 2,10,000/-. The petitioner had also incurred expenses relating to earthwork and fencing etc. to the tune of ` 4,70,000/-. According to the petitioner, taking the indexed cost as per the index for the impugned year, the total cost of acquisition worked out to be ` 12,79,417/-. On 13.5.2013, Singh Gurbax 2014.05.06 17:21 I attest to the accuracy and integrity of this document High Court Chandigarh the said land was sold for ` 4 lacs by the petitioner vide registered sale deed dated 13.5.2003, Annexure P.

2.

The value of land for the purpose of stamp duty was worked out at `13,87,500/- and stamp duty of ` 83,250/- was affixed on the same. The petitioner filed his return for the year in question which was below the taxable limit. However, his case was reopened under Section 147 of the Act and notice dated 24.3.2011 was issued to the petitioner. The petitioner appeared and pleaded that he had sold the entire land of 7 kanals 8 marlas and not 1 kanal as alleged. It was also urged that the cost of acquisition for the entire land worked out to be ` 12,79,417/- and, therefore, the proceedings should be finalised accordingly. The Assessing Officer vide order dated 30.12.2011, Annexure P.5 framed the assessment and calculated the taxable capital gain on `13,34,842/- by taking the land sold to be 1 kanal only. After determining the tax at `2,66,968/- and interest under Section 234-B of the Act to the tune of `2,48,280/- and under Section 234-A of the Act for ` 24,027/-, the total tax demand was raised to the tune of ` 5,39,275/-. Aggrieved by the order, the petitioner filed revision petition under Section 264 of the Act before the Commissioner of Income Tax, Amritsar (in short, “the CIT”), inter alia, pleading that he had sold his entire land and not only 1 kanal. It was further averred that principles of natural justice had not been followed while passing the assessment order. Vide order dated 4.3.2013, Annexure P.8, the revisional authority dismissed the revision petition. Hence the present petition by the petitioner.

3.

Mr. Gurmeet Singh, Income Tax Officer (Tech.), Amritrsar is present in person in pursuance to the order passed by this Court on 24.3.2014. Singh Gurbax 2014.05.06 17:21 I attest to the accuracy and integrity of this document High Court Chandigarh

4.

We have heard learned counsel for the parties and perused the record.

5.

Learned counsel for the petitioner submitted that the sale deed was relating to 7 kanals 8 marlas of land of which the value was estimated by the Registrar for stamp duty purposes at ` 13,87,500/- whereas the Assessing Officer had taken the land sold to be measuring 1 kanal only.

6.

It was not disputed by the learned counsel for the revenue that the sale deed was for 7 kanals 8 marlas of land.

7.

The Assessing Officer as well as the CIT had taken the land sold to be measuring 1 kanal instead of 7 kanals 8 marlas. In such circumstances, the orders passed by the Assessing Officer and the CIT cannot be legally sustained.

8.

Accordingly, while setting aside the impugned orders dated 30.12.2011 and 4.3.2013, Annexures P.5 and P.8 respectively, the matter is remitted back to the Assessing Officer to pass fresh order after affording an opportunity of hearing to the petitioner in accordance with law. The petition stands allowed. (Ajay Kumar Mittal) Judge April 21, 2014 (Jaspal Singh) 'gs' Judge Singh Gurbax 2014.05.06 17:21 I attest to the accuracy and integrity of this document High Court Chandigarh

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