PANKAJ BANSAL,GURGAON vs. PR,CIT (CENTRAL), GURGAON

//FIT FOR PUBLICATION// Sd/-OP Kant Sd/-BS A.M. J.M. IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES “A” : DELHI [THROUGH VIDEO CONFERENCING] BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI O.P.KANT, ACCOUNTANT MEMBER ITA.No.383/Del./2021 Assessment Year 2017-2018 Smt. Abha Bansal, The Pr. CIT (Central), 103B, The Aralias, DLF Gurgaon. Golf Link City Phase-V, vs. Gurgaon, Haryana. Haryana. PIN – 122 001 PIN – 122 001. PAN AANPB8695H (Appellant) (Respondent) ITA.No.384/Del./2021 Assessment Year 2017-2018 Shri Pankaj Bansal, The Pr. CIT (Central), C-13, Sushant Lok, Gurgaon. Phase-1, Gurgaon, vs. Haryana. Haryana. PIN – 122 002 PIN – 122 001. PAN ANHPB5602R (Appellant) (Respondent) ITA.No.385/Del./2021 Assessment Year 2017-2018 Shri Basant Bansal, The Pr. CIT (Central), 103B, The Aralias, DLF Gurgaon. Golf Link City Phase-V, vs. Gurgaon, Haryana. Haryana. PIN – 122 001 PIN – 122 001. PAN AHYPB1937A (Appellant) (Respondent)

2 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. ITA.No.386/Del./2021 Assessment Year 2017-2018 Shri Roop Kumar Bansal, The Pr. CIT (Central), C-13, Sushant Lok, Gurgaon. Phase-1, Gurgaon, vs. Haryana. PIN – 122 002 Haryana. PIN – 122 001. PAN AFJPK0250N (Appellant) (Respondent) Shri Gautam Jain, Advocate For Assessee : And Shri Lalit Mohan, C.A. For Revenue : Shri Satpal Gulati, CIT-DR Date of Hearing : 19.05.2021 Date of Pronouncement : 31.05.2021 ORDER PER BHAVNESH SAINI, J.M.

These appeals by the above Assessees are directed against the different Orders of Learned Pr. CIT (Central), Gurgaon, Dated 24.03.2021 for A.Ys. 2017-2018 under section 263 of the I.T. Act, 1961, challenging the Order under section 263 of the I.T. Act, 1961 on various grounds of appeals.

3 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. Abha Bansal and have submitted that Order in this case may be followed in other appeals as the issue is identical in the remaining appeals. In view of the above, we proceed to decide the appeal in the case of Smt. Abha Bansal as under:

ITA.No.383/Del./2021 – Smt. Abha Bansal – A.Y. 2017- 2018.

4 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. Sh. Pankaj Bansal are Directors of MIPL. MIHPL holds 93% shares of MIPL and the balance is held by various key management personnel (‘KMP’) of the group. Sh. Roop Kumar, Sh. Basant Bansal, Sh. Pankaj Bansal and Smt. Abha Bansal are, inter-alia, key management personnel and their relatives. In the case of assessee a notice under section 142(1) of the Act was issued and served upon the assessee on 05.01.2018 requiring to file her return of income in respect of assessment year under appeal in which search was conducted in this case. In response to the above, assessee filed its return under section 139(1) of the I.T. Act, 1961 on 29.01.2018 for assessment year under appeal. In this return of income, assessee has declared her income of Rs.7,49,79,780/-. Further statutory notices were also issued under section 143(2) and 142(1) along with the questionnaire which are served upon the assessee seeking explanation of the assessee. The assessee filed the requisite details and written submissions which have been perused by the A.O. The A.O. after completion of the assessment proceedings accepted the returned income at

5 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. Rs.7,49,79,780/- and passed the assessment order Dated 18.12.2018 under section 153B(1)(b) read with Section 143(3) of the I.T. Act, 1961.

3.1. Similarly, in the case of Sh Basant Bansal and Sh Pankaj Bansal assessments were framed on 18.12.2018 accepting the returned income. In the case of Roop Kumar assessment order was passed under section 153B(1)(b) read with section 143(3) of the I.T. Act, 1961 on Dated 18.12.2018 after making addition of the seized cash of Rs.35 lakhs to the returned income.

3.2. The Learned PCIT on perusal of the records found that assessment order passed by the A.O. is erroneous in so far as it is prejudicial to the interests of Revenue. Accordingly, show cause notice Dated 23.02.2021 was issued asking the assessee as to why the proceedings under section 263 of the I.T. Act, 1961 should not be initiated in this case. The relevant part of the show cause notice as reproduced in the impugned order is as under :

6 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon.

7 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon.

8 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon.

9 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon.

10 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon.

11 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon.

12 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon.

13 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon.

14 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon.

15 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon.

16 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon.

17 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon.

18 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon.

19 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon.

20 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon.

21 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon.

22 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon.

23 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon.

24 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon.

25 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon.

26 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon.

27 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon.

28 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon.

29 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon.

30 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon.

3.3. In response to the show cause notice, Learned Counsel for the Assessee appeared before the Learned PCIT and filed reply and Annexures in volumes to explain the issue. It was submitted that invocation of Section 263 of the I.T. Act, 1961 is without jurisdiction. The submissions of the assessee were summarized as under in the impugned order :

(i) That order u/s 153B(1)(b)/143(3) of the Act which has been passed with approval u/s 153D of the

31 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. Act cannot be subject matter of revision u/s 263 of the Act.

(ii) That without prejudice assuming for the sake of an argument that approval u/s 153D of the Act is not valid on account of allegations stated in the notice (though the same is seriously disputed) then the approval u/s 153D of the Act is not a valid approval and therefore order of assessment u/s 153B(1)(b)/143(3) of the Act is a vitiated order which cannot be subject matter of revision u/s 263 of the Act.

(iii) That the contention that order dated 18.12.2018 u/s 153B(1)(b)/143(3) of the Act is invalid can be raised even in collateral proceedings and ex- consequenti since the instant order is a vitiated order therefore the same cannot be subject matter of revision u/s 263 of the Act.

(iv) That notice dated 05.01.2018 u/s 142(1) of the Act was an invalid notice and therefore the impugned

32 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. order of assessment dated 18.12.2018 u/s 153B(1)(b)/143(3) of the Act pursuant to illegal notice is a vitiated order therefore the same cannot be subject matter of revision u/s 263 of the Act.

(v) That claim of the assessee that compensation received of Rs.91.33 crore by the assessee during the Financial Year 2016-17 relevant to Assessment Year 2017- 18 forms part of sale consideration for computation of long-term capital gain on cancellation of the builder buyer agreement dated 31.03.2010 between assessee and M/s M3M India Pvt. Ltd. has been accepted without application of mind is factually incorrect, legally misconceived and therefore unsustainable.

(vi) That the compensation received of Rs.91.33 crore under the arbitration award dated 16.3.2017 passed by sole arbitrator namely Justice Manmohan Singh Liberhan (Retd.) is undisputedly and solely on account of cancellation of the

33 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. agreement for allotment of villas by MIPL and therefore both logically and legally the same forms part of sale consideration for computation of Long- term Capital Gain u/s 45 of the Act read with section 48 of the Act. In fact, arbitration award is final and binding u/s 35 of the Arbitration and Conciliation Act, 1996 and thus any adverse observations thereon are factually incorrect, legally misconceived and wholly untenable.

(vii) Without prejudice and even otherwise it is submitted that adverse observations in respect of the arbitration award are misconceived.

(viii) That material relied upon in the instant notice is beyond the provisions of section 263 of the Act or based on factually misconceived assumption and thus untenable.

(ix) That material seized from the residence of Sh. Gaurav Jain, Ex VP Finance cannot be relied upon in any case cannot be made a basis to reject the

34 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. claim that compensation so received is not a part of the sale consideration.

(x) That various allegations and adverse observation in the notice are factually incorrect, legally misconceived, and wholly untenable.

(xi) That allegation that the payment of compensation of Rs.441 crore as expenses is nothing but a colorable device to reduce the profit and diversion of income by MIPL and the allegation that there is no doubt that the said transaction is colourable or artificial devise adopted by the assessee to evade the taxes, the transaction is neither legitimate nor bonafide nor undertaken in the ordinary course of business, such colourable devises cannot be part of tax planning and it is wrong to encourage or entertain the belief that it is honourable to avoid the payment of tax by dubious methods, revenue authorities are also supposed to consider the surrounding circumstances and apply the test of

35 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. human probability, in the present case also, in spite of being an apparent transaction, the same cannot be termed as “real” in view of the surrounding circumstances of this case is factually incorrect, legally misconceived and untenable.

(xii) That reference section 2(24)(vi) of the Act supports the claim of the assessee.

(xiii) That section 2(24)(i) of the Act is not applicable on the facts of the assessee.

(xiv) That without prejudice and in the alternative compensation so received is capital receipt.

(xv) That once the learned Assessing Officer on examination of the facts on record and after making all possible enquiries had accepted claim of the assessee then such an order of assessment could not be regarded as erroneous in as much as prejudicial to the interest of revenue merely because PCIT holds a different opinion and that too, without having established in any manner

36 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. that, view adopted by the learned Assessing Officer was an impossible view but on the contrary was a possible view.

(xvi) That for holding that the order passed by learned Assessing Officer is not only prejudicial to the interest of revenue but is also erroneous by PCIT has to be preceded by some “minimal” inquiry.

(xvii) That action u/s 263 of the Act is otherwise too inapplicable on the factual matrix of the facts of the instant case since admittedly, undisputedly and undeniably not a case of “lack of enquiry” or “lack of investigation” and perusal of the show cause notice itself would show that it has not been denied or disputed that all relevant information have been furnished/obtained in the course of assessment proceeding and therefore the invocation u/s 263 of the Act is not in accordance with law.

37 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. (xviii) That section 263 of the Act cannot be invoked to make deeper enquiry. In other words, allegation of proper enquiry or inadequate enquiry cannot be a valid basis to invoke section 263 of the Act.

(xix) Notice is based on surmises, conjecture and suspicion.

(xx) Explanation 2 to section 263 of the Act does not change the scope of section 263 of the Act.”

3.4. The Learned PCIT after considering the explanation of assessee and material on record did not accept the explanation of assessee and held that the impugned assessment order Dated 18.02.2018 is erroneous in so far as it is prejudicial to the interests of Revenue. The assessment order was set aside on the issue of taxability of compensation under the Head “Long term capital gains” at the reduced rate of 20%. The A.O. was directed to tax the amount of compensation as revenue receipts at normal tax rate applicable. The A.O. directed to modify the impugned assessment order in accordance with the directions contained in the impugned order. The findings of the Learned PCIT in Paras 3 to 18 of the impugned order are reproduced as under :

38 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon.

39 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon.

40 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon.

41 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon.

42 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon.

43 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon.

44 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon.

45 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon.

46 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon.

47 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon.

48 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon.

49 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon.

50 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon.

51 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon.

52 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon.

53 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon.

54 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon.

55 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon.

56 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon.

57 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon.

58 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon.

59 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon.

60 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon.

61 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon.

62 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon.

63 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon.

64 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon.

65 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon.

66 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. 4. It may be noted here that the dispute primarily in the present appeal is with regard to the taxability of the compensation received by the assessee for non-delivery of the Villa under Builder-Buyer Agreement [“BBA”] through the Arbitration Award. It is relevant to note certain facts that assessee is an individual. She is shareholder in M/s. M3M India Pvt. Ltd., [“MIPL”]. On 31.03.2010 an agreement was entered into between the Assessee and MIPL for an allotment of Villa located at M3M Golf Estate of the Group Housing Colony situated at Sector-65, Urban Estate, District Gurgaon, Haryana. Copy of the BBA is placed at Pages 220-273 of the PB. The assessee in terms of the aforesaid agreement had invested a sum of Rs.110.18 crores by making several remittances to MIPL. Copy of the receipts are filed at Pages 275 to 279 of the PB. On 21.07.2016 a search and seizure operation was conducted on assessee under section 132(1) of the I.T. Act, 1961. On 19.01.2017 Plaint was filed by the assessee before the Sole Arbitrator [Hon’ble Mr. Justice (Retired) Manmohan Singh Liberhan] for claiming compensation for non-delivery of the Villa under BBA. Copy

67 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. of the same is placed on record. On 16.03.2017 an Arbitration Award was passed by the Sole Arbitrator in respect of the aforesaid arbitration dispute between the assessee and MIPL. Copy of the same is filed at Pages 45 to 74 of the PB. As a consequence to the aforesaid, compensation was awarded at Rs.91.33 Crores in A.Y. 2017-2018 on cancellation of the BBA Dated 31.03.2010 in terms of the Award Dated 16.03.2017 by the Sole Arbitrator. That on 24.03.2017 assessee had received the aforesaid compensation. Copy of the Account of Ledger of MIPL in the books of the assessee is placed at Page 578 of the Paper Book in the case of Shri Basant Bansal and copy of the Bank A/c is placed at Page-581 of the said Paper Book. Accordingly, the assessee filed a return of income for the assessment year under appeal declaring long term capital gains of Rs.7,37,78,840/-. The A.O. on these facts proceeded to frame assessment under section 153B read with section 143(3) of the I.T. Act, 1961 Dated 18.12.2018 in the present case and has accepted the returned income after examining the issue in detail after calling for the

68 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. explanation of assessee by issuing statutory notices and questionnaire. The A.O. discussed the matter with the Joint Commissioner of Income Tax [“JCIT”]. The assessee also placed on record Arbitration Award and other details before A.O. for completion of the assessment along with BBA, Copy of the Plaint and Copy of the Civil Suit etc., The A.O. also discussed the draft Order with the JCIT and ultimately, obtained the approval of the JCIT in accordance with Section 153D of the I.T. Act, 1961 and after getting the approval of JCIT under section 153D of the I.T. Act, 1961, the A.O. framed the assessment order Dated 18.12.2018, which the Learned PCIT considered it to be erroneous in so far as it is prejudicial to the interests of Revenue. Copy of the Notice under section 263, explanation of assessee before Learned PCIT and findings of Learned PCIT under section 263 of the Act are reproduced above.

69 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. the I.T. Act could not have been initiated against the assessee on several grounds and on behalf of the Revenue. It is contended that the transaction of making investment in Villa is a ‘Sham Transaction’, therefore, Learned PCIT has rightly rejected the Arbitration Award and that proceedings under section 263 have been rightly initiated in the matter and that the compensation is revenue receipt in nature and as such was taxable in the hands of the assessee in assessment year under appeal on various grounds.

ISSUE No.1 – Whether assessment order under section 153B(1)(b) read with Section 143(3) of the I.T. Act, 1961, Dated 18.12.2018 which is approved by the JCIT under

70 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. section 153D of the I.T. Act, 1961, could be revised by the Learned PCIT under section 263 of the I.T. Act, 1961 ?

71 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. ITA.No.3226/Mum./2017 etc., Dated 14.02.2018 [PB-182 of Judgment Paper Book] in which the Tribunal following the decision of Hon’ble Allahabad High Court (supra) and other decisions of the Coordinate Benches of the Tribunal, had decided the issue in favour of the assessee. Learned Counsel for the Assessee submitted that same view have been taken by different Benches of the Tribunal that “once approval have been obtained under section 153D of the I.T. Act, then, CIT cannot exercise jurisdiction under section 263 of the I.T. Act.” The citation of the Orders of different Benches of the Tribunal are as under : 1. ITA.No.637 to 641/Pune/2018 Dated 14.11.2018 M/s. BU Bhandari Schemes vs., PCIT 2. ITA.Nos.596, 597 & 599/Pune/2015 Vishwa Infraways (P) Ltd., vs., CIT (Central). 3. ITA.Nos.1102 to 1107/Pune/2014 Rasi Kalal M. Dhariwal HUF vs., CIT. 4. ITA.Nos.967 & 968/Pune/2016 Shri Ramamoorthy Vasudevan vs., PCIT 5. 2017 (1) TMI 260 (Pune) Dhariwal Industries vs., CIT 6. ITA.Nos.1150-1151/Hyd./2015 Dated 09.08.2017 Smt. Nama Chinnamma vs., DCIT 7. ITA.Nos.584-589/Hyd/2015 Dated 04.12.2015 Trinity Infraventures Ltd., vs., DCIT 8. ITA.Nos.901/Hyd/2014 S. Satyanarayana vs., Mr. Syed Rasiuddin 9. ITA.No.288/LUCK/2014 Dated 18.11.2014 Mehtab Alam vs., DCIT 10. 48 taxmann.com 53 (JP) Dharmendra Kumar Bansal

72 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon.

7.1. Learned Counsel for the Assessee submitted that the Learned PCIT has not accepted the contention of assessee that the decisions relied upon in the impugned order did not apply to the facts of the case. He has submitted that the decisions relied upon by the Learned PCIT are not applicable to the approval under section 153D of the I.T. Act. He has further submitted that in the absence of Revision of Order of approval under section 153D of the I.T. Act, the action under section 263 of the I.T. Act, 1961 is not permissible. Learned Counsel for the Assessee relied upon Explanation-1 to Section 263(1) of the I.T. Act and submitted that the Order of assessment passed with the approval under section 153D of the I.T. Act could not have been revised under section 263 of the I.T. Act. He has submitted that it is well settled that the Judgment is a proposition what is actually decided and not what logically or remotely reduce therefrom as has been held in many cases and relied upon Judgments of Hon’ble Supreme Court in the cases of Goodyear India Ltd., vs., State of Haryana

73 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. [1991] 188 ITR 402 (SC) and CIT vs., Sun Engineering Works Pvt. Ltd., [1992] 198 ITR 297 (SC).

74 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. under section 153D of the I.T. Act. The Ld. D.R. also relied upon Judgment of the Hon’ble Chattisgarh High Court in the case of Param Transport Pvt. Ltd., 102 taxmann.com 327 (Chattisgarh-HC) in which it was held that “revisional powers can be exercised by the Commissioner in all cases where assessment is made and once he exercises his revisional powers, then the provision of Section 153(2A) of the I.T. Act will also apply. The Court did not agree with the view that revisional powers of 263 could not be applicable to assessments under search and seizure.” The Ld. D.R, therefore, submitted that Learned PCIT has rightly exercised the jurisdiction under section 263 of the I.T. Act.

75 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. after getting approval of the JCIT under section 153D of the I.T. Act passed the impugned assessment order Dated 18.12.2018. We may note that the Order under section 143(3) read with Section 153B of the I.T. Act cannot be revised without revising the approval of the JCIT. It is also an admitted fact that the Learned PCIT did not revise the approval of JCIT given under section 153D of the I.T. Act. The Hon’ble Allahabad High Court in the case of CIT vs., Dr. Ashok Kumar (supra) considered the identical issue and has reproduced the findings of the Tribunal in the Judgment as under :

“5.2. In the last it is also relevant fact that the AO was fully alive about the facts of the case and that is why he got necessary approval of Addl. Commissioner before completing the assessment orders for all the assessment years and once that is not disputed by the Revenue than the CIT would not be justified in interfering in the approval accorded by the Addl. CIT for framing the assessment order

76 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. and thus there was no case for setting aside the assessment orders for the assessment years in question. On the basis of facts and circumstances of the case I am of the opinion that the impugned order is liable to be quashed accordingly.”

9.1. The findings of the Hon’ble Allahabad High Court in Para-9 of its Order is reproduced as under :

“9. We find that the Tribunal has not committed any error of law in setting aside the order of CIT passed under Section 263 of Income Tax Act for the assessment year 1991-92 to 1995-96.”

9.2. The ITAT, Mumbai Bench, Mumbai in the case of Surendra L. Heera Nandani vs., PCIT (supra) [Page-182 of PB] considered the identical issue and following the Judgment of Hon’ble Allahabad High Court in the case of Dr. Ashok Kumar (supra) and other decisions of the Coordinate Benches of the Tribunal held as under :

77 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. “(II) CIT has revised the assessment order passed u/s 143(3) r.w.s. 153A of the Act without revising the approval granted by Addl. CIT

“25. We find that assessment order u/s. 143 r.w.s. 153A of the Act was passed after getting approval of ACIT as per provisions of section 153D of the Act. We find that the order U/S.143A r.w.s. 153 of the Act cannot revise without revising the approval of ACIT. We find that as per the decision of Hon’ble Allahabad High Court in the case of CIT Vs. Dr. Ashok Kumar in I.T. Appeal No. 192 of 2000 wherein it is held that the assessment order approved by the ACIT U/S.153D of the Act cannot subject to revision u/s.263 of the Act. The learned DR could not file any evidence to show that such permission was revised by ACIT in present case, therefore, CIT cannot revise the order passed by AO u/s. 153 of the Act. As per section 153A of the Act.

78 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. 26. Tribunal in case of Trinity Infra ventures Ltd v. DCIT CC 2(1) in ITA. Nos. 584-589/Hyd/2015 dated 04.12.2015 wherein, the Hon’ble Tribunal has held that the assessment order passed u/s 143(3) r.w.s. 153A of the Act cannot be revised without revising the approval of Addl. CIT :

5.4. The Ld. Counsel for the assessee has further submitted that the assessment under section 143(3) read with section 153C was passed after getting approval of Addl. CIT under section 153D of the I.T. Act and therefore such an assessment cannot be revised without revising the directions of the Addl. CIT under section 153D of the I.T. Act. The Ld. Counsel for the assessee, has relied upon the decisions of this Tribunal in the case of Ch. Krishna Murthy vs. ACIT, C.C. 3, Hyderabad in ITA No. 766/Hyd/2012 dated 13.02.2015 and also the decision of Lucknow Bench oflTAT in the case of MehtabAlam

79 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. 288/Luck/2014 dated 18.11.2014 in support of this contention. He has also placed reliance upon the decision of Hon’ble Allahabad High Court in the case of CIT vs. Dr. Ashok Kumar in I.T. Appeal No. 192 of 2000 wherein it has been held that the assessment order approved by the Addl. CIT under section 153D, cannot be subjected to revision under section 263 of the I.T. Act. In view of the above decision also, we hold that the revision order under section 263 of the I.T. Act is not sustainable. Accordingly, we allow the grounds of the assessee”.

80 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. of M/s. Trinity Infra Ventures Ltd. Vs. DCIT vide ITA Nos. 584 to 589/H/2015 order dated 04-12- 2015 for A.Yrs. 2005- 06 to 2010-11 he submitted that the Tribunal in the said decision, following various decisions including the decision of Hon ’ble Allahabad High Court in the case of CIT Vs. Dr. Ashok Kumar vide Income Tax Appeal No. 192/2000 order dated 06-08-2012, has held that assessment order approved by the Addl.CIT u/s,153D cannot be subjected to revise u/s.263 of the I.T. Act.

81 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. Tribunal in the case of MehtabAlam Vs. ACIT vide ITA Nos.288 to 294/Lkw/2014 order dated 18-11-2014 while deciding an identical issue has observed as under.

14.1. We find the Hyderabad Bench of the Tribunal in the case of CH. Krishna Murthy Vs. ACIT vide ITA No.766/Hyd/2012 order dated 13-02-2015following the decision of the Lucknow Bench of the Tribunal in the case of Mehtab Alam (Supra) held that CIT is not justified in assuming jurisdiction u/s.263 when the order has been passed in terms of section 153D of the Act.

14.2. We find the Hyderabad Bench of the Tribunal in the case of M/s. Trinity Infra Ventures Ltd. (Supra) had an occasion to decide an identical issue and it held that the assessment order approved by the Addl.CIT U/S.153D cannot be subject to revision

82 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. u/s.263 of the I.T. Act. The relevant observation of the Tribunal at Para 5.4 of the order reads as under.

83 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. 9.3. Since in the present case A.O. passed the impugned assessment order after getting approval from the JCIT under section 153D of the I.T. Act, therefore, following the above decisions, we are of the view that the Learned PCIT has no power to revised the Order under section 263 of the I.T. Act, without revising the approval of the JCIT under section 153D of the I.T. Act, 1961. Explanation-1 (a) (i) (ii) of Section 263(1) of the I.T. Act, 1961 is reproduced as under :

“(a) an order passed on or before or after the 1st day of June, 1988 by the Assessing Officer shall include—

(i) an order of assessment made by the Assistant Commissioner or Deputy Commissioner or the Income-tax Officer on the basis of the directions issued by the Joint Commissioner under section 144A;

(ii) an order made by the Joint Commissioner in exercise of the powers or in the performance of the functions of an Assessing Officer conferred on, or assigned to, him under the orders or

84 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. directions issued by the Board or by the Principal Chief Commissioner or Chief Commissioner or Principal Director General or Director General or Principal Commissioner or Commissioner authorised by the Board in this behalf under section 120;”

9.4. It is evident from the plain reading of the aforesaid Explanation that an Order passed on or before or after 1st Day of June, 1988 by the A.O. shall include (i) an order of assessment made by the Assistant Commissioner or Deputy Commissioner or the Income-tax Officer on the basis of the directions issued by the Joint Commissioner under section 144A; (ii) an order made by the Joint Commissioner in exercise of the powers or in the performance of the functions of an Assessing Officer conferred on, or assigned to, him under the orders or directions issued by the Board or by the Principal Chief Commissioner or Chief Commissioner or Principal Director General or Director General or Principal Commissioner or Commissioner authorised by the Board in this behalf

85 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. under section 120. It may be noted that Order of assessment passed with the approval of JCIT under section 153D of the I.T. Act, 1961 could not be revised under section 263 of the I.T. Act, 1961. The Ld. D.R. has, however, relied upon the Order of ITAT, Panaji Bench, but, has not explained whether the Judgment of Hon’ble Allahabad High Court in the case of CIT vs., Dr. Ashok Kumar (supra) or different Benches of the Tribunal have been considered in this case by the Panaji Bench. It is not decided in this case that assessment order cannot be revised without revising the approval under section 153D of the I.T. Act and Explanation-1 to Section 263 of the I.T. Act has also not been considered. Therefore, this decision relied upon by the Ld. D.R. would not apply to this case. Further the Judgment in the case of Param Transport Pvt. Ltd., of Hon’ble Chattisgarh High Court (supra) is not with regard to approval obtained under section 153D of the I.T. Act because in this case it was held that revisional power under section 263 of the I.T. Act is applicable to assessments under search and seizure. However, it is not explained by

86 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. the Ld. D.R. whether in this case the approval under section 153D have been revised by the Learned PCIT. It may also be noted that it is well settled Law that if two views are possible, then the view which is in favour of the assessee should be made applicable. We rely upon Judgment of Hon’ble Supreme Court in the case of CIT vs., Vegetable Products 88 ITR 192 (SC). It may also be noted here that the Hon’ble Allahabad High Court is one of the jurisdictional High Court of Delhi Bench, therefore, preference shall have to be given to the Judgment of the Hon’ble Allahabad High Court as reproduced above. In the totality of the facts and circumstances of the case and following the decisions referred to above, we are of the view that the Learned PCIT was not having jurisdiction to proceed under section 263 of the I.T. Act, 1961 in the matter in issue and as such the Order passed by the Learned PCIT is nullity and void abinitio. We therefore, decide this issue in favour of the assessee.

87 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. ISSUE No.2 – Whether the compensation received by the Assessee is capital receipt of revenue receipt ? And Whether such compensation is taxable under the Head “Capital Gains” ?

9.5. It is not in dispute that assessee entered into an agreement with MIPL for allotment of Villa on 31.03.2010 and assessee invested a sum of Rs.110.18 crores. It is not in dispute that possession of the property in reference could not be handed-over to the assessee for about 07 years. It is also not in dispute that assessee filed a Plaint before the Sole Arbitrator for claiming compensation for non-delivery of the Villa under Builder-Buyer Agreement. It is also not in dispute that the Arbitrator has passed the Arbitration Award on 16.03.2017 and assessee received a sum of Rs.91.33 crores in assessment year under appeal on cancellation of Builder-Buyer Agreement Dated 31.03.2010 in terms of Award Dated 16.03.2017. Section 2(47) of the Income Tax Act provides ‘transfer’; in relation to a capital asset, includes – (i) the sale, exchange or relinquishment of

88 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. the asset, sub-clause (ii) the extinguishment of any right thereon. It is clear from the material on record that the assessee invested the amount for specific purpose to acquire Villa i.e., capital asset. The assessee had acquired a legal right as per Builder-Buyer Agreement and so the amount received for giving-up that right would amount to capital receipt under section 2(47) of the Income Tax Act for relinquishment of the asset or extinguishment of any right therein. It is, therefore, clear that the compensation is inextricably linked to allotment of Villa and, therefore, determination of capital gains on cancellation of the agreement for allotment of Villa by the A.O. based on the claim of assessee is in accordance with Law. The Arbitration Award is final and binding and, therefore, any adverse observation thereon, which we would consider in detail in subsequent paras, apart from being factually incorrect, legally misconceived and without jurisdiction. The compensation did not arise in the course of any trading activity, but arises on cancellation of the agreement. It is not related to any stock-in-trade. It is, therefore, capital

89 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. receipt. The Arbitrator has dealt with the issue based on the material on record i.e., the Builder-Buyer Agreement, plan approved, payments made by assessee and the time being essence of the contract to deliver possession of the demised property to the assessee. The Arbitration Award dealt with contractual obligation and the time being essence for Builder-Buyer Agreement. The Arbitration Award in Para-9 specifically mentioned “it was earlier opined by me that although the claimants being in a position to influence the decision of the Respondent-Company, that would not absolve the Respondent-Company from its contractual obligations and as such the claimants were entitled to compensation on account of the non-delivery of the Villas booked by them.” The Arbitration Award also in para-13 find mentioned “In view of the same, there is no doubt that the claimants being the purchaser of the units [viz., Villas] in the Project to be developed by the Respondent-Company are legally and lawfully entitled to demand for and receive compensation on account of non-delivery of the Villas as booked by them as per the agreed time lines being an essence of the contract.”

90 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. The Arbitration Award in Para-16 also noted that the possession of the Villas was to be handed-over by the Respondent-Company to the claimants within the period of 24 months from the date of commencement of the construction as per the terms of the respective Villa Agreement with a further grace period of 06 months. However it is an admitted position that there has been an inordinate delay of almost 07 years which includes the period of the contract. Section 55 of the Indian Contract Act reads as under :

“55. Effect of failure to perform at fixed time in contract in which time is essential. – When a party to a contract promises to do a certain thing at or before a specified time, or certain things at or before specified times, and fails to do any such thing at or before the specified time the contract, or so much of it as has not been performed, becomes voidable at the option of the promisee, if the

91 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. intention of the parties was that time should be of the essence of the contract.”

9.6. Section 73 of the Indian Contract Act reads as under :

“73. Compensation for loss or damage caused by breach of contract. — When a contract has been broken, the party who suffers by such breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from such breach, or which the parties knew, when they made the contract, to be likely to result from the breach of it.

Such compensation is not to be given for any remote and indirect loss or damage sustained by reason of the breach.”

9.7. The above provisions contained in Sections 55 and 73 of the Indian Contract Act clearly specifies that if

92 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. time is essence of the contract and as such contract is not performed, the same is voidable at the option of the promise and the promisee would be entitled for compensation when contract has been broken. In our view, these provisions have been taken care by the Sole Arbitrator while passing the Arbitration Award and as such it is wrong to say that assessee is not entitled for compensation as per the observation of the Learned PCIT because no clause is mentioned in the agreement for payment of compensation. These provisions clearly provide for general compensation to be provided in case of breach of an obligation on the part of the promisor. It may also be noted here that Section 74 of the Indian Contract Act provides for ‘Breach of Contract’ where penalty is stipulated in the agreement. Therefore, these are different provisions under the Act which have been misconstrued by the Learned PCIT that there is no clause in the agreement for making compensation to the assessee because Section 74 of the Indian Contract Act may not apply in the case of the assessee, but, certainly provisions of Sections 55 and 73 of the Indian Contract Act

93 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. would apply which have been taken care by the Sole Arbitrator in the matter.

9.8. It may also be noted here that the Learned PCIT considered the transaction under agreement to be ‘sham’, but, he did not dispute execution of the Builder-Buyer Agreement, substantial payment made by assessee, delay in handing-over the possession of the demise property to the assessee and that the same issue have also been considered in preceding A.Ys. 2010-2011 and 2013-2014. The Builder- Buyer Agreement was correctly executed on 31.03.2010 as earlier licenses were granted on 16.10.2007 and 28.08.2009. The Hon’ble Supreme Court in the case of CIT, Mysore vs., Canara Bank Ltd., [1966] 62 ITR 328 (SC) held as under :

“Held, on the facts, that the appreciation of the money did not arise in the course of any trading operation. Assuming that the amount of Rs.3,97,221 was originally stock-in-trade, when it was blocked and sterilised and the bank was

94 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. unable to deal with that amount, it ceased to be its stock-in-trade and the increase in its value owing to exchange fluctuation was a capital receipt.

If by virtue of exchange operations profits are made during the course of business and in connection with business transactions, the excess receipts on account of conversion of one currency into another would be revenue receipts. But if the profit by exchange operations comes in, not by way of business of the assessee, the profit would be capital.”

9.9. The Hon’ble Delhi High Court in the case of PCIT vs., Aeren R Infrastructure Ltd., [2018] 404 ITR 318 (Del.) held as under :

“The assessee, engaged in the business of real estate, entered into a consortium agreement with its associates which defined the role, rights and responsibilities of the parties thereto. This

95 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. consortium entered into an agreement to sell with JMA, the seller, for purchase of 10 acres of land for a consideration of Rs.15 crores. The seller JMA defaulted in its commitment within the prescribed and extended time limit. Ultimately, upon the parties resorting to the arbitration, a settlement was arrived at and an award was made based upon the parties' eventual settlement. The amount received by the assessee as a part of its entitlement as consortium was credited in its books of account as a capital receipt. The Assessing Officer held that the amounts were revenue in nature as the land would have been part of the stock-in-trade. The Tribunal held that the amount which was intended to be ultimately used as stock-in-trade purposes was immobile and sterilised, rendered non-offerable and therefore when received as part of the arbitration award, fell into the capital stream. On appeal :

96 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. Held, dismissing the appeal, that the purpose of the ultimate use of the assessee's land when acquired was rendered irrelevant on account of the seller defaulting in its commitment. This rendered the amount expanded by the assessee immobile. The eventual receipt of the amounts determined as compensation or damages, therefore, fell into the capital stream.”

9.10. The Hon’ble Supreme Court in the case of CIT vs., D.P. Sandu Bros, Chembur P. Ltd., [2005] 273 ITR 1 (SC) held as under :

“Held, (i) that the tenancy right was a capital asset, surrender of the tenancy right was a “transfer” and the consideration received therefor was a capital receipt within the meaning of section 45.”

9.11. The Hon’ble Delhi High Court in the case of Saras Metals Pvt. Ltd., vs., CIT & Another [2017] 399 ITR 270 (Del.) held as under :

97 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. “The main object for which the assessee-company was incorporated was to carry on the business of manufacturing, processing, importing, exporting and dealing in all kinds of ferrous and non-ferrous material meant for industrial and non-industrial use and to carry on the business of casting, fabrication, cold or hot rolling, re-rolling, sheeting, stamping, pressing, etc., of all kinds of steel and other metals. According to the assessee by a resolution of its board of directors dated October 24, 2005 it decided to commence the business of dealing in immovable property in terms of clauses 45 and 46 of "Other objects" of the memorandum of association. It stated that in view of the above decision, the assessee purchased a plot in Noida. Another freehold plot in Vasundhara, Ghaziabad was purchased on March 3, 2006. The assessee maintained that it showed these plots as "inventories" under "current assets" and as "stock" in its balance-sheet and profit and loss accounts.

98 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. After a few months, the plot in Noida was sold and deducted from the stock. It was stated that the assessment for the assessment year 2008-09 during which the earlier transaction took place attained finality. The assessee stated that it showed the property, at Ghaziabad as its stock-in- trade in the subsequent year as well. Some time in December, 2008 and January, 2009, the assessee learnt that some unauthorised persons had illegally taken possession of the plot of land. The assessee stated that it lodged a complaint dated January 7, 2009 seeking help to regain peaceful possession of the property. It was claimed that since the property was in adverse possession, the assessee was compelled to sell it in March, 2009 for a value much below the market value. For the assessment year 2009-10 the assessee filed a nil return. The Assessing Officer rejected the stand that the property in question which was sold had been held by it as "stock-in-trade". Accordingly, the

99 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. plot of land was treated as investment of the assessee and section 50C of the Act was applied to arrive at a net short term capital gains of Rs.39,04,000, which was then added to the income of the assessee. This was upheld by the Commissioner (Appeals) and the Tribunal. On further appeal:

Held, dismissing the appeal, that there were only two properties shown as "stock-in-trade" by the assessee. The mere fact that the sale of the property in the earlier assessment year and the resultant reduction of the "stock-in-trade" was not questioned by the Assessing Officer would not relieve the assessee from having to demonstrate that the sale of the plot in question in the assessment year under consideration was not by way of an investment resulting in short-term capital gains. There was nothing perverse in the factual and concurrent determination of the

100 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. Assessing Officer, the Commissioner (Appeals) and the Appellate Tribunal that the plot in question was the investment of the assessee and not its "stock-in-trade". The assessment as short-term capital gains was justified.”

9.12. Learned Counsel for the Assessee also argued that the decision considered by the Learned PCIT of Madras High Court in the case of K.R. Sreenath vs., ACIT 268 ITR 436 (Mad.) is in favour of the assessee. We find the submissions of the Learned Counsel for the Assessee to be correct and it was wrongly considered in favour of the Revenue by the Learned PCIT because in this case the CIT took a view that assessee had acquired a legal right from the earlier agreement Dated 03.04.1986 and so the amount received for giving-up that right is liable to capital gain. The view of the CIT is confirmed by the ITAT and Hon’ble High Court considering the provisions of Section 2(47)(i)(ii) of the I.T. Act, 1961 and did not find any merit in the appeal and same were dismissed. This Judgment will support the claim of the assessee in the present appeal. Considering the

101 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. totality of the facts and circumstances of the case and discussion above, it is clear that the compensation received by the assessee on cancellation of the Builder-Buyer Agreement is capital receipt and taxable as capital gains. The view of the A.O. was, therefore, in accordance with Law and cannot be impeached by the Learned PCIT. In view of the above, we do not subscribe to the view of the Ld. D.R. that since no compensation is mentioned in the Builder- Buyer Agreement are to be payable as per agreement, then, the compensation is revenue in nature. It is devoid of merit as discussed above. We also do not agree with the submissions of the Ld. D.R. that payment of compensation was a colourable device to evade the taxes. The Ld. D.R. referred to the emails and other papers seized from the computer of Shri Gaurav Jain, Ex-Employee of the M3M Group to support the case of the Revenue. However, we do not agree with such view and discuss this issue separately about the admissibility of the documents found from the computer of Shri Gaurav Jain. In view of the above findings, we hold that the compensation received by the assessee on

102 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. account of cancellation of the Builder Buyer agreement is capital receipt and was rightly offered as capital gain in the return of income and correctly accepted by the A.O. in the impugned assessment order Dated 18.12.2018. Therefore, the Order of the assessment is in accordance with Law. This issue is decided in favour of the assessee.

ISSUE No.3 – Whether Arbitration Award is reasonable, based on material facts, final, binding and admissible in Income Tax proceedings ?

“Subject to this part an Arbitral Award shall be final and binding on the parties and persons claiming under them respectively.”

10.1. Section 36 of the Arbitration and Conciliation Act, 1936 provides Enforcement of the Award and provides that Award shall be enforced as if it were a Decree of Court.

103 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. Learned Counsel for the Assessee relied upon the Judgment of the Hon’ble Supreme Court in the case of Cheran Properties vs., Kasturi & Sons Ltd., in CA.No.10025- 10026/2017 Dated 24.04.2018 in which it was held that “it may be relied upon in a litigation between the parties relating to the same subject matter.” It was also held that “the Award under section 35 be enforced as Decree of Court and has attained finality.” Learned Counsel for the Assessee also relied upon the Order of the ITAT, Bangalore Bench in the case of Canara Housing Developing Company vs., JCIT 165 ITD 76 in which it was held that “Business loss consequent to Arbitration Award has been duly allowed as deduction.” It was also held that in the transaction of payment of compensation as per outcome of the Arbitration Award cannot be held as a colourable device. Learned Counsel for the Assessee submitted that Arbitration Award is admissible evidence in Income Tax proceedings and relied upon unreported decision of the Tribunal in the written submissions. Learned Counsel for the Assessee submitted that the Learned PCIT relied upon Judgment of the Hon’ble

104 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. Supreme Court in the case of Madhowji Dharamshi Manufacturing Co. Ltd., vs., CIT 78 ITR 62 in which the assessment year involved was 1951-1952 which was prior to enactment of Arbitration and Conciliation Act, 1996 which do not deal with Sections 35 and 36 of this Act. Thus, this Judgment would not support the case of the Revenue. He has submitted that investment made by assessee in A.Y. 2010-2011 is not disputed by the Learned PCIT and considered in that assessment year. Learned PCIT did not dispute the BBA, cancellation of agreement and Arbitration Award given by the Sole Arbitrator. The Learned PCIT has merely disputed the transaction to be coloured and sham without assigning any valid reasons. The issue of deduction under section 54F based on BBA has already been considered in preceding A.Y. 2010-2011 and later on in A.Y. 2013-2014 which have attained finality and could not be the subject matter in assessment year under appeal i.e., 2017-2018. He has filed complete details with regard to queries raised by the A.O. and reply submitted by assessee along with all documentary evidences in A.Ys. 2010-2011

105 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. and 2013-2014 in the written submissions to show that transaction has already been examined by the A.O. in preceding A.Ys. 2010-2011 and 2013-2014 in assessment orders under section 153A(1)(b) of the I.T. Act, 1961. Therefore, the transaction could not have been considered to be sham to evade taxes. Learned Counsel for the Assessee referring to Para-9.2 of the impugned order under section 263 of the I.T. Act submitted that Learned PCIT has noted that certain facts have not been considered in the Arbitration proceedings. Learned Counsel for the Assessee referred to the written submissions in which all these paras have been replied by the assessee as under.

“Para-9.2 of the impugned order under section 263 of the I.T. Act.” Execution of BBA on 31.03.2010 has not been disputed by the authorities below which have been (a) accepted in assessment order for the A.Y. 2010-2011 under section 153A of the I.T. Act, 1961 on account of deduction claimed under section 54F of the I.T. Act,

106 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. 1961 with the approval of JCIT under section 153D of the I.T. Act, 1961. So, it cannot be disputed now. Booking rates of MIPL cannot be determinative for the payment of compensation. The booking rates depends upon location and commercial consideration and as such rates were higher than the circle rates. Also (b) booking rates of assessee and other family was of Rs.19,000/- per sq. feet which is a matter of record and has not been disputed. The same have also been considered in A.Y. 2010-2011 which has attained finality. The BBA was produced before Arbitrator which have been considered and Arbitrator considered contractual (c) obligation of assessee and time being essence of the agreement. So, no motive could be attributed to the assessee and others post the Award. The assessee made investment in A.Y. 2010-2011 and (d) (e) claimed exemption under section 54F which have been & accepted. The assessee surrendered the exempt income (f)

107 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. under section 54F in A.Y. 2013-2014 which have been accepted in assessment order under section 153A of the I.T. Act, 1961 with the approval of JCIT under section 153D of the I.T. Act, 1961. The Investigation Wing got the report of M.N. Bhagat, Government Registered Valuer with regard to construction on Group Housing Scheme, M3M Golf Estate, Gurgaon and assessment have been framed for A.Y. 2013-2014. Therefore, no adverse inference should be drawn against the assessee. The assessee during the assessment proceedings for the A.Ys. 2010-2011 and 2013-2014 has filed detailed reply, all material before A.O. and assessments have been framed accordingly. All details of the cost incurred by the builder etc., were also produced which have been examined. The findings in these paras are not relevant. It was (g) submitted that nature of payment in the hands of & buyer is not deciding/relevant factor for deciding the (h) nature of receipt in the hands of assessee. Learned

108 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. Counsel for the Assessee relied upon Judgment of the Hon’ble Supreme Court in the case of Empire Jute Co. Ltd., vs., CIT 124 ITR 1 No adverse inference can be drawn with respect to (i) Arbitration Proceedings. The agreement was between the assessee and MIPL. (j) Therefore, Mangalam was not party to the Arbitration Proceedings is not relevant consideration. It is wrong to say that no compensation was ever paid to any allottee by MIPL. It was submitted that assessee (k) received the compensation in pursuance of Arbitration Award Dated 16.03.2017. Copies of the Ledger A/c and Bank A/cs are filed in support of the contention. The Orders for A.Ys. 2010-2011 and 2013-2014 have become final with respect to claim made under section (l) 54F and surrendered. Therefore, it cannot be the subject matter in the present appeal. (m) The Arbitration Award is based on report of M/s. Grant & Thornton India LLP which is based on comparison as (n)

109 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. to the increase in market rates, circle rate, location and compensation awarded to third party and judicial precedence which is in public domain as to the compensation ordered to be paid by builder/developer. Hence, it could not be said to be against the assessee. It is not in dispute that assessee made investment in Villas to be constructed by MIPL and Arbitration Award has granted compensation to the assessee. Learned Counsel for the Assessee, therefore, submitted that as (o) per allegation that there is a colourable device or artificial devise adopted by the assessee to evade taxes is without substance and merit. The claim of assessee is in accordance with Law.

110 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. Ld. D.R. submitted that agreement and transaction was coloured and sham to evade taxes. The Ld. D.R. relied upon Para-9.2 of the impugned order under section 263 of the I.T. Act and, therefore, submitted that Award can be challenged by the Learned PCIT.

111 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. and 2013-2014 and have been accepted in the assessment orders under section 153A of the I.T. Act, 1961. Therefore, same cannot be subject to dispute in the present proceedings merely because the date of 06.05.2010 have been mentioned in the BBA. The Learned PCIT cannot dispute the correctness of the assessment orders for the A.Ys. 2010-2011 and 2013-2014 in the present proceedings unless the same have been revised separately under section 263 of the I.T. Act, 1961. The rates are settled by the parties. It is well settled Law that inadequacy of consideration is not relevant for entering into an agreement. The assessee has also explained that for other family Members also the booking rate was same which have not been disputed. Merely because there was no provision for compensation provided in BBA, it would not preclude the assessee from claiming compensation for non-delivery of the Villas in question because assessee would be entitled to invoke provisions of Sections 55 and 73 of the Indian Contract Act against the Builder which we have already dealt in detail on issue No.2 and as such the Learned PCIT

112 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. cannot take any adverse view against the assessee. It is not in dispute that ultimately the BBA was cancelled on account of Arbitration Award and compensation received by the assessee. M/s. MIPL was not party to the civil litigation because it did not own the land. The land was owned by Mangalam. Merely because no efforts have been made to get the stay vacated, is no ground to have any adverse view against the assessee, who has an independent title of making investment in the Villas. As regards cost of construction of the builder, it may not be relevant in the case of assessee because assessee is an Investor who has made investment in the Villas. Merely because MIPL has offered the profit under Project Completion Method [“POCM”] in assessment year under appeal, it cannot be presumed that assessee tried to evade the taxes. The Learned PCIT has merely re-appreciated evidences on the same facts in the proceedings under section 263 of the I.T. Act, 1961, which is not permissible in Law. When the Civil Court has granted stay in respect of the property in question, it is binding on the parties and no construction

113 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. could have been raised. It is wrong to say that assessee did not receive any compensation from the Builder because the assessee has produced copy of the ledger A/c, Bank statement on record to show that ultimately amount of advance paid to the Builder have been refunded and compensation is also paid by the Builder to the assessee. The assessment orders for the A.Ys. 2010-2011 and 2013- 2014 have reached finality by passing the assessment orders under section 153A of the I.T. Act with respect to claim of assessee under section 54F of the I.T. Act, 1961. Therefore, those Orders have become final and cannot be challenged in the present proceedings by the Learned PCIT. Merely because report is given by M/s. Grant Thornton India LLP is no ground to challenge its finding because it is based on various factors like location, commercial viability etc., and based on the precedence in which compensation is paid by the Builders to the Buyers. No defect have been pointed-out in the report of this party. The rates of the construction are based on facts and advance booking rate for the assessee and other family Members were also the

114 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. same. The intention can be seen on facts which is not disputed by the Learned PCIT. Considering these facts on record, it is clear that all material facts and evidences have been considered by the Arbitrator before granting Award in the matter. The Learned PCIT did not dispute the above facts. The case Law relied upon by the Learned PCIT are based on finding of fact recorded by the Tribunal. All the facts were before A.O. as well as before the Arbitrator. The issue of documents seized from the residence of Shri Gaurav Jain from his computer will be considered separately. The Hon’le Allahabad High Court in the case of CIT vs., Ratan Lal [2006] 284 ITR 162 (All.) held as under :

“Section 293 of the Income-tax Act, 1961, applies when an action or order of the income-tax authority constituted under the Act is being sought to be challenged before the civil court. A dispute of partition inter partes vis-a-vis shares and eligibility entitlement can more appropriately be adjudicated upon by the civil court and not by the income-tax authorities and, therefore, the decree and the order

115 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. passed by the civil court is binding between the parties and consequential effect is to be given by the income-tax authority while passing the assessment order. A decree or order passed in a suit in which the parties do not contest or which is passed ex-parte is binding upon the parties in the same manner as a decree or order passed after contest unless it is set aside or modified in appeal or revision by a competent court of law.

The assessee owned land. The land was acquired by the State Government and compensation was awarded and paid. The assessee was also awarded interest under the Land Acquisition Act. The assessing authority taxed the interest so received in the assessment years 1983-84 to 1988-89. The respondent had claimed that he had only a l/5th right in the said agricultural land and in support of his claim he placed reliance on the order of the Civil Judge

116 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. made in a declaratory suit filed by the assessee's son. The Assessing Officer was of the view that the land revenue record showed the assessee as the owner and therefore, the interest was assessable in the hands of the assessee which order was upheld by the Deputy Commissioner (Appeals). However, in further appeal the Tribunal upheld the claim of the assessee. On a reference :

Held, that as under the decree of the civil court each of the parties had been given a l/5th share and it was a declaratory suit, the assessee had rightly been held to be taxable in respect of l/5th share of the interest income.”

12.1. The quantum of compensation is calculated in accordance with the Report Dated 28.02.2017 of M/s. Grant Thornton India LLP which is based on comparison as to the increase in the market rate, circle rate of the area in which the project of the MIPL is located, comparison with compensation awarded to the third parties, consumer and

117 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. precedence as in public domain, in which compensation is paid by the Builders to the Customers. Ultimately, it is a fact that there was a delay of 07 years in not handing-over possession of the Villas by the Builder to the Assessee. Therefore, the Arbitrator considering the entire material facts on record rightly considered that time was the essence of the agreement and that there is a contractual obligation of the Builder to pay compensation to the assessee on account of non-delivering of the Villas. Therefore, the Award is based on scientific examination of the relevant facts and as such the Learned PCIT was not justified in rejecting the Arbitration Award in the matter. It may be reiterated again that Arbitration Award is final and binding on the parties and enforceable as it were the Decree of the Court. Therefore, considering the facts and circumstances of the case, we do not find any justification for the Learned PCIT to reject the Arbitration Award or to hold that agreement and transaction was coloured and sham. We, therefore, hold that Arbitration Award is final, binding and is admissible in Income Tax proceedings in the case of the assessee and

118 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. compensation granted in the Award is reasonable which is ultimately paid to the assessee. Issue No.3 is, therefore, decided in favour of the assessee.

ISSUE No.4 – Whether copies of documents, emails and Power Presentations found from Computer of Shri Gaurav Jain, Ex-Employee of M3M Group seized in search from his residence on 21.07.2016 is admissible in evidence ?

119 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. submitted that the alleged material, if any, even otherwise and in the absence of corroborative evidence found from the possession of the assessee, cannot form the basis for making the addition. He has relied upon Judgments of Hon’ble Delhi High Court in the cases of CIT vs., D.K. Gupta [2009] 308 ITR 230 (Del.) and CIT vs., Kulwant Rai [2007] 291 ITR 36 (Del.). He has submitted that Section 65A of the Indian Evidence Act provides for special provisions as to evidence relating to electronic records. It provides that the contents of electronic records may be proved in accordance with the provisions of Section 65B of the Indian Evidence Act. Learned Counsel for the Assessee submitted that Section 65B (4) contemplates a Certificate, both regarding the information and device which is a Certificate signed by a duly Authorised Person [Occupying a responsible official position in relation to operation of the relevant device or the management of the relevant activities] certifying the specific details relating to the origin of the said record, the device, the manner in which it was produced etc., must be filed along with the electronic record. He has relied upon

120 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. Judgment of the Hon’ble Bombay High Court in the case of Ark Shipping Co. Ltd., vs., GRT Shipping Management Pvt. Ltd., 2008-(1) ARBLR-317 in which the petitioner has filed an Affidavit along with hard/printed copies of the print- outs/emails duly certified by the Concerned Officer/Employee and, therefore, it was held that the Affidavit is sufficient compliance of Section 65B of the Indian Evidence Act. He has also relied upon Judgment of the Hon’ble Supreme Court in the case of Anwar PV s., PK Basheer [2014] 10 SCC 473 (SC) in which it was held that “An electronic record by way of secondary evidence shall not be admitted in evidence unless the requirements under section 65B are satisfied. Thus, in the case of CDs, VCDs, Chip etc., - the same shall be accompanied by the Certificate in terms of Section 65B of the Indian Evidence Act obtained at the time of taking the documents, without which, the secondary evidence pertaining to that electronic record is inadmissible”. Learned Counsel for the Assessee submitted that in the case of the assessee the requirement of Section 65B(4) are not satisfied in the absence of the Certificate

121 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. required by Law. Therefore, the material found from the computer of Shri Gaura Jain is not admissible in evidence.

122 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. Evidence Act have been brought on record to prove the contents of copies of documents, emails and Power Presentation found from the Computer of Shri Gaurav Jain. Therefore, same is not admissible in evidence. The decisions relied upon by the Learned Counsel for the Assessee squarely apply to the facts and circumstances of the case. Thus, the Learned PCIT considered an inadmissible evidence in proceedings under section 263 of the I.T. Act, 1961. Therefore, the Order under section 263 is perverse. So, no planning is proved by the Revenue if at all for evading the taxes in the matter. Issue No.4 is decided in favour of the assessee.

ISSUE No.5 – Whether compensation received by assessee is taxable as income under section 2(24)(i)(vi) and (iv) of the Income Tax Act, 1961 OR under section 2(28A) of the Income Tax Act, 1961 ?

123 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. propose that compensation is taxable as revenue/income and ultimately taken aid of these Sections to hold that the compensation so received by assessee is revenue in nature and income. Section 2(24)(i) provides that income includes – “profits and gains”. It is, however, not explained as to how the assessee has earned profit and gains in the transaction of cancellation of BBA on account of non-delivery of possession of the property in question and ultimately, compensation received on account of Arbitration Award. Section 2(24) (vi) provides income includes – any capital gain chargeable under section 45 of the Income Tax Act which assessee has already declared in the return of income. Therefore, there is nothing wrong for the A.O. to accept that compensation received by assessee as capital receipt on account of which capital gain arises. Therefore, there is nothing wrong in the assessment order so as to exercise jurisdiction under section 263 of the Income Tax Act. It may further be noted that the Learned PCIT while giving findings at Pages-53 and 54 of the impugned order has mentioned that additionally compensation is taxable

124 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. under sections 2 (24) (iv) and 2 (28A) of the Income Tax Act on account of value of any benefit or perquisite or interest. The Learned PCIT has, however, not issued any show cause notice on these two items. Since no notices have been given under section 263 of the I.T. Act as to the taxability of the compensation under these Sections, the Learned PCIT was not justified in holding that the compensation is taxable under sections 2 (24) (iv) and (28A) of the Income Tax Act, 1961. Since no notice have been given to the assessee for applying these provisions, therefore, Learned PCIT cannot use these Sections to hold that income is taxable under sections 2 (24) (iv) and (28A) of the Income Tax Act, 1961. In support of our findings, we rely upon the following decisions:

16.1. Judgment of Hon’ble Delhi High Court in the case of CIT vs., Contimeters Electricals P. Ltd., [2009] 317 ITR 249 (Del.) in which it was held as under :

“Held dismissing the appeal, that the Tribunal had arrived at the correct conclusion that the

125 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. requirement of filing the audit report along with the return was not mandatory but directory and that if the audit report was filed at any time before the framing of the assessment, the requirement of section 80-IA(7) would be met. The Tribunal was also right in holding that the Commissioner did not even call for any explanation of the assessee and the issue of fulfillment of the conditions of section 80-IA had not been part of the show cause notice. Therefore, it could not form the basis for revision of the assessment order under section 263. No substantial question of law arose.”

16.2. Judgment of Hon’ble Delhi High Court in the case of PCIT vs., Krishak Bharati Co-operative Ltd., [2017] 395 ITR 572 (Delhi) in which it was held as under :

“Held, dismissing the appeals, (i) that the order under section 263 dealt with issues which were not covered by the show cause notice issued to the assessee. This was not permissible.”

126 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. 16.3. Since the Order under section 263 of the I.T. Act, 1961 dealt with these Sections which are not covered by the show cause notice issued to the assessee, therefore, it is not permissible to decide the issue against the assessee. It may also be noted that we have already held on Issue No.2 that the compensation received by the assessee is capital in nature on which assessee has correctly declared capital gains, therefore, it is not taxable in the hands of the assessee as income as is held by the Learned PCIT. Issue No.5 is decided in favour of the assessee.

ISSUE No.6 – Whether the Learned PCIT was justified in invoking the jurisdiction under section 263 of the Income Tax Act, 1961 ?

127 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. High Court in the case of CIT vs., DLF Ltd., [2013] 350 ITR 555 (Del.); Judgments of Hon’ble Supreme Court in the cases of CIT vs., Max India Ltd., [2007] 295 ITR 282 (SC) and Malabar Industrial Co. Ltd., vs., CIT [2000] 243 ITR 83 (SC). He has submitted that since compensation received by assessee is for non-delivery of the Villas and, therefore, determination of capital gain on cancellation of BBA for allotment of Villas by the A.O. based on the claim of assessee is in accordance with Law. Therefore, proceedings under section 263 of the I.T. Act, 1961 by the Learned PCIT are not valid. The Learned PCIT has to be proceeded by some minimal enquiry which has not been done in the present case and relied upon Judgment of the Hon’ble Delhi High Court in the case of PCIT s., Delhi Airport Metro Express Private Limited [2017] 398 ITR 8 (Del.). There is no lack of enquiry or lack of investigation on the part of the A.O. Mere allegation of wrong opinion cannot confer jurisdiction by the Learned PCIT. The A.O. passed the assessment order after taking into consideration submissions of the assessee and documentary evidences

128 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. produced before him. Therefore, the Learned PCIT should not have invoked the jurisdiction under section 263 of the I.T. Act. He has referred to the Order Sheet and the replies and documentary evidences filed before A.O. to show that A.O. has applied his mind to the material on record before accepting the claim of assessee made in the return of income.

“263. Revision of orders prejudicial to revenue :

(1) The [Principal Commissioner or] Commissioner may call for and examine the record of any

129 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. proceeding under this Act, and if he considers that any order passed therein by the [Assessing] Officer is erroneous in so far as it is prejudicial to the interests of the revenue, he, may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment.

[Explanation-1] For the removal of doubts, it is hereby declared that, for the purposes of this sub- section,

(a) an order passed [on or before or after the 1st day of June, 1988] by the Assessing Officer shall include- (i) an order of assessment made by the Assistant Commissioner [or Deputy

130 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. Commissioner] or the Income- tax Officer on the basis of the directions issued by the [Joint] Commissioner under section 144A;

(ii) an order made by the [Joint] Commissioner in exercise of the powers or in the performance of the functions of an Assessing Officer conferred on, or assigned to, him under the orders or directions issued by the Board or by the [Principal Chief Commissioner or] Chief Commissioner or [Principal Director General or] Director General or [Principal Commissioner or] Commissioner authorised by the Board in this behalf under section 120;

(b)" record" [shall include and shall be deemed always to have included] all records relating to any proceeding under this Act available at the time of examination by the [Principal Commissioner or] Commissioner;

131 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. (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 [Principal Commissioner or] 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.]

[Explanation-2] For the purpose of this section, it is hereby declared that an order passed by the Assessing officer shall be deemed to be erroneous in so far as it is prejudicial to the interests of the revenue, if, in the opinion of the Principal Commissioner or Commissioner, -

(a) The Order is passed without making inquiries or verification which should have been made;

(b) The order is passed allowing any relief without inquiring into the claim;

132 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. (c) The order has not been made in accordance with any order, direction or instruction issued by the Board under section 119; or

(d) The order has not been passed in accordance with any decision which is prejudicial to the assessee, rendered by the jurisdictional High Court or Supreme Court in the case of the assessee or any other person.]

[(2) No order shall be made under sub-section (1) after the expiry of two years from the end of the financial year in which the order sought to be revised was passed.]

(3) Notwithstanding anything contained in sub- section (2), an order in revision under this section may be passed at any time in the case of an order which has been passed in consequence of, or to give effect to, any finding or direction contained in an order of the

133 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. Appellate Tribunal, [National Tax Tribunal] the High Court or the Supreme Court.

Explanation. - In computing the period of limitation for the purposes of sub- section (2), the time taken in giving an opportunity to the assessee to be reheard under the proviso to section 129 and any period during which any proceeding under this section is stayed by an order or injunction of any court shall be excluded.”

19.1. The Hon’ble Punjab & Haryana High Court in the case of CIT vs., Deepak Mittal [2010] 324 ITR 411 (P&H) in which it was held as under :

“Change of opinion by reappraising the evidence is not within the parameters of revisional jurisdiction of the Commissioner under section 263 of the Income-tax Act, 1961.

134 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. Held, dismissing the appeal, that the Tribunal had found that the Assessing Officer had given a categorical finding that the assessee was engaged in the process of manufacturing of products and accordingly he had granted concession under section 80-IB. The claim of the assessee had been found to be genuine. The Assessing Officer had also examined the various workers of the assessee and then recorded the finding. The Assessing Officer was justified in granting the special deduction under section 80-IB. The order of revision disallowing the special deduction was not valid”

19.2. The Hon’ble Bombay High Court in the case of CIT vs., Fine Jewellery (India) Ltd., [2015] 372 ITR 303 (Bom.) in which it was held as under :

“Held dismissing the appeal, that the order of the Tribunal did record the fact that specific queries were made during the assessment proceedings

135 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. with regard to the details of expenditure claimed under the head "miscellaneous expenses" aggregating to Rs.2.94 crores. The assessee had responded to the queries and on consideration of its response, the Assessing Officer held that only an amount of Rs.17.98 lakhs incurred on account of repairs and maintenance out of Rs.2.94 crores was capital expenditure. This itself would be an indication of application of mind by the Assessing Officer while passing the order. The fact that the assessment order did not contain any discussion with regard to the balance amount of expenditure of Rs.1.76 crores, i.e., Rs.2.94 crores less Rs.17.98 lakhs claimed as revenue expenditure would not by itself indicate non-application of mind to this issue by the Assessing Officer in view of the specific queries made during the assessment proceedings and the assessee's response to it. Moreover, from the nature of expenditure as explained by the assessee to the Assessing Officer

136 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. during the assessment proceedings the view that the expenses were in the realm of revenue expenditure, was a possible view. Therefore, there was no fault in the order of the Tribunal having followed the binding decision of the Supreme Court while allowing the appeal before it.”

19.3. The Hon’ble Supreme Court in the case of Malabar Industrial Co. Ltd., vs., CIT [2000] 243 ITR 83 (SC) held as under :

“Every loss of revenue as a consequence of an Order of the Assessing Officer, cannot be treated as prejudicial to the interests of the Revenue, for example, when an Income-tax Officer adopted one of the courses permissible in law and it has resulted in loss of revenue or where two views are possible and the Income-tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the Revenue unless

137 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. the view taken by the Income-tax Officer is unsustainable in law.”

19.4. The Hon’ble Gujarat High Court in the case of CIT vs., Amit Corporation [2012] 21 taxmann.com 64 (Gujarat) held that “Where A.O. after detailed verification of record and making enquiries had framed assessment, the CIT cannot revise under section 263 of the Income Tax Act.” The Hon’ble Allahabad High Court in the case of Krishnacap Box (P) Ltd., [2015] 372 ITR 310 held that “when A.O. called for details and assessee responded, the A.O. however, did not discuss the same in the Order, no proceeding under section 263 lies.” The Hon’ble Gujarat High Court in the case of Ginger Properties (P) Ltd., [2017] 396 ITR 496 (Gujarat) held that “when specific queries raised by the A.O. and replied by the assessee, no proceedings under section 263 lies.” Learned Counsel for the Assessee has produced on record of Order-Sheet to show that A.O. has examined the issue of capital gain based on Arbitration Award and BBA and other material. The A.O. discussed the matter with the JCIT before passing of the assessment order and also

138 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. obtained his approval under section 153D of the Income Tax Act, 1961 after completion of the enquiry at the assessment stage. This issue is considered in detail based on all material evidences on record. Thus, the A.O. passed the assessment order after making enquiries and verification. The A.O. allowed relief to the assessee after making enquiry into the claim. The view of the A.O. that compensation received by assessee on account of cancellation of BBA is in accordance with Law and is sustainable in Law. Therefore, there is no failure on the part of the A.O. to examine the issue in detail. In A.Ys. 2010-2011 and 2013-2014 also, the A.O. examined the issue on merits based on BBA and other material with reference to the claim under section 54F of the Income Tax Act based on the identical facts. Those Orders have already become final and cannot be subject matter of Review in the present proceedings. It is well settled Law that even if two views are possible, one view of the A.O. cannot be revised under section 263 of the Income Tax Act, to which, the Learned PCIT did not agree. We have already held that view of the A.O. that compensation received by

139 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. assessee on cancellation of the BBA is capital receipt and liable for capital gain is in accordance with Law and is sustainable and if the Learned PCIT did not agree with the same view, the same is not revisable under section 263 of the Income Tax Act, 1961. The Learned PCIT is not entitled to re-appreciate the same evidences and material nor come to a different conclusion. The Learned PCIT did not make any independent enquiry as to how the assessment order is erroneous and prejudicial to the interests of Revenue. The Learned PCIT has not pointed-out as to how there is an incorrect application of Law or incorrect application of facts. It is also not explained as to how there was non-application of mind on the part of the A.O. and as to how the compensation is taxable as revenue receipt when it is inextricable link to the allotment of Villa. The Learned PCIT has referred to the rates of sales unofficially obtained from some broker in the notice. These are not relevant being unauthenticated and based on no evidence. Inadequacy of consideration in the agreement would not make the contract void or voidable under Indian Contract Act. In notice, report

140 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. of Registered Valuer Mr. M.N. Bhagat in October, 2012 to the Investigation Wing for change in area/construction etc., already on record and considered in A.Y. 2013-2014 which have become final. Considering the facts of the case above, it is clear that conditions of Section 263 of the Income Tax Act are not satisfied in the present case. Therefore, the Learned PCIT was not justified in invoking the jurisdiction under section 263 of the Income Tax Act, 1961 in the matter. Issue No.6 is decided in favour of the assessee.

ISSUE No.7 – Whether cryptic Order of the assessment can be revised under section 263 of the Income Tax Act ?.

141 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. 21. Learned Counsel for the Assessee, however, submitted that A.O. examined the issue in detail and passed the impugned assessment order in accordance with Law, therefore, same cannot be revised under section 263 of the I.T. Act, 1961.

“There is no finding by the Commissioner that the Income-tax Officer reached an erroneous conclusion and that, on the facts and circumstances of the case, the conclusion would have been different. The orders of the Income-tax Officer may be brief and cryptic, but that by itself is not sufficient reason to brand the assessment orders as erroneous and prejudicial to the interest of the Revenue. Writing an order in detail may be a legal requirement, but the order not fulfilling this

142 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. requirement, cannot be said to be erroneous and prejudicial to the interest of the Revenue. It was for the Commissioner to point out as to what error was committed by the Income-tax Officer in having reached the conclusion that the income of the trust was exempt in its hands and was assessable only in the hands of the beneficiaries. The Commissioner having failed to point out any error, no error can be inferred from the orders of the Income-tax Officer for the simple reason that they are bereft of details. If the order is not erroneous, then it cannot be prejudicial to the interest of the Revenue. There is nothing to show in the order of the Commissioner that the Income-tax Officer would have reached a different conclusion had he passed a detailed order. So, the conclusion of the Commissioner that the orders of the Income-tax Officer are erroneous and prejudicial to the interest of the Revenue are based merely on suspicion and

143 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. surmises in the absence of any enquiry having been made by him.”

22.1. The Hon’ble Bombay High Court in the case of CIT vs., Gabriel India Ltd., [1993] 203 ITR 108 (Bom.) held as under :

“Held, that the Income-tax Officer in this case had made enquiries in regard to the nature of the expenditure incurred by the assessee. The assessee had given a detailed explanation in that regard by a letter in writing. All these were part of the record of the case. Evidently, the claim was allowed by the Income-tax Officer on being satisfied with the explanation of the assessee. This decision of the Income-tax Officer could not be held to be “erroneous" simply because in his order he did not make an elaborate discussion in that regard. Moreover, in the instant case, the Commissioner himself, even after initiating proceedings for revision and hearing the assessee,

144 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. could not say that the allowance of the claim of the assessee was erroneous and that the expenditure was not revenue expenditure but an expenditure of capital nature. He simply asked the Income-tax Officer to re-examine the matter. That was not permissible. The Tribunal was justified in setting aside the order passed by the Commissioner of Income-tax under section 263.”

22.2. In the present case the issue based on BBA was coming-up from A.Y. 2010-2011 and with reference to Section 54F of the Income Tax Act, 1961, the issue have been examined by the Revenue Department in A.Ys. 2010- 2011 and 2013-2014 and assessment orders have been passed under section 153A of the Income Tax Act, 1961. Those Orders have become final and cannot be commented upon in the present proceedings. The copies of the show cause notice, Order-Sheets, replies submitted by the assessee along with documentary evidences in the proceedings for the assessment year under appeal are filed in the Paper Book which shows that A.O. examined the

145 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. issue in detail after conducting detailed enquiry. The A.O. also discussed the matter in issue with his Administrative Senior Officer i.e., JCIT. Since the compensation was received on account of cancellation of the BBA, therefore, A.O. accepted the claim of assessee of capital gains. The entire material on record clearly show that A.O. has applied his mind and even if the details of enquiry are not mentioned in the assessment order would not make the assessment order to be cryptic or liable for revision under section 263 of the Income Tax Act, 1961. The assessment order is also passed after getting approval under section 153D of the Income Tax Act, 1961, therefore, unless the same is also revised, the assessment order cannot be revised by the Learned PCIT. In view of the above, issue No.7 is decided in favour of the assessee.

ALTERNATE PLEA OF THE ASSESSEE

ISSUE No.8 – Whether where an approval under section 153D of the Income Tax Act, 1961 is not valid, then the assessment order under section 153B/143(3) of the Income

146 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. Tax Act, 1961 is vitiated, so same cannot be revised under section 263 of the Income Tax Act, 1961 ?

“6.5. Without prejudice to the above, since the A.O. and the JCIT both failed to consider the claim made by assessee in the return of income properly and framed the assessment order mechanically without application of mind itself, makes the assessment order erroneous in so far as it is prejudicial to the interest of the Revenue.”

23.1. He has submitted that on the face of these findings of the Learned PCIT no proceeding under section 263 of the I.T. Act, 1961 lie. He has relied upon the Orders

147 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. of ITAT, Delhi Bench in the cases of M/s. M3M India Holdings vs., DCIT 71 ITR 51 (Tribu.); Shri Sanjay Duggal vs., ACIT in ITA.No.1813/Del./2019 Dated 19.01.2021; Rishabh Buildwell P. Ltd., vs., DCIT in ITA.No.2122/Del./ 2018 etc., Dated 04.07.2019. Learned Counsel for the Assessee, therefore, submitted that since the approval is not valid as per Learned PCIT, therefore, assessment order is null and void and as such the same cannot be the subject matter of revision under section 263 of the I.T. Act, 1961. He has submitted that validity of the assessment proceedings can be raised in collateral proceedings and relied upon the Order of ITAT, Delhi Bench in the case of M/s. Supersonic Technologies (P) Ltd., vs., PCIT [2019] 69 ITR 585 (Tribu.-Del.) and Judgment of Hon’ble Bombay High Court in the case of PCIT vs., Smt. Shreelekha Damani [2019] 174 DTR 86 (Bom.).

148 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. W.P.(Civil) No.8482/2018 in which it was held that the word “Yes I am satisfied” is sufficient to show cause the application of mind. He has submitted that since no appeal is filed against the assessment order, therefore, this point cannot be raised in the present proceedings under section 263 of the Income Tax Act, 1961.

149 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. initiate the proceedings under section 263 of the Income Tax Act, 1961. Issue No.8 is also decided in favour of the assessee.

25.1. Considering the totality of the facts and circumstances of the case and discussion above, we are of the view that the A.O. was justified in passing the assessment order Dated 18.12.2018 accepting the returned income because his view was in accordance with Law that compensation received by assessee on account of cancellation of BBA through Arbitration Award is capital receipt and liable for tax as capital gain. Therefore, the Learned PCIT was not justified in invoking the jurisdiction under section 263 of the Income Tax Act, 1961. We, accordingly, set aside the impugned order of the Learned PCIT passed under section 263 of the Income Tax Act, 1961 and restore the assessment order. Appeal of the Assessee allowed.

150 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. ITA.No.384/Del./2021 – Shri Pankaj Bansal - A.Y. 2017-18

ITA.No.385/Del./2021 – Shri Basant Bansal - A.Y. 2017-18

ITA.No.386/Del./2021 – Shri Roop Kumar Bansal - A.Y. 2017-18

151 ITA.Nos.383, 384, 385 & 386/Del./2021 Smt. Abha Bansal, Sh Pankaj Bansal, Sh Basant Bansal And Sh Roop Kumar Bansal, Gurgaon. Order pronounced in the open Court.

Sd/- Sd/- (O.P. KANT) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER Delhi, Dated 31st May, 2021 VBP/- Copy to 1. The appellant 2. The respondent 3. CIT(A) concerned 4. CIT concerned 5. D.R. ITAT ‘A’ Bench, Delhi 6. Guard File. // BY Order //

Asst. Registrar : ITAT Delhi Benches : Delhi.