KIRAN KUMAR HUF,REWARI vs. ITO, WARD- 1, REWARI

PER KULDIP SINGH, JUDICIAL MEMBER : Appellant, Kiran Kumar HUF (hereinafter referred to as ‘the assessee’) by filing the present appeal sought to set aside the

impugned order dated 13.04.2017 passed by the Commissioner of Income-tax (Appeals), Rohtak qua the assessment year 2009-10 on the grounds inter alia that :-

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“1. That the learned Commissioner of Income Tax (Appeals), Rohtak has erred both in law and on facts in sustaining the initiation of proceedings u/s 147 of the Act and, completion of assessment u/s 147/143(3) of the Act which were without jurisdiction and deserved to be quashed as such. 1.1 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that there was no tangible and relevant material on record on the basis of which it could be held that, there was any "reasons to believe" with the learned Income Tax Officer the income of the appellant had escaped assessment and, in view thereof, the proceedings initiated were illegal, untenable and therefore, unsustainable. 1.2 That the learned Commissioner of Income Tax (Appeals) has further erred both in law and on facts in failure to appreciate that, issuance of notice u/s 148 merely amounted to change of opinion as original assessment was completed u/s 143(3) and, no tangible material surfaced after the completion of assessment and, therefore notice was illegal and, without jurisdiction. 1.3 That the basis adopted in the reasons recorded that action u/s 148 of the Act in compliance of order of Hon'ble Tribunal dated 26.9.2014 in ITA No. 1801/D/2013 is based on misinterpretation and misconstruction of the findings of the Hon'ble Tribunal and hence the action is without jurisdiction. 2. That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in sustaining an addition of Rs.1,38,39,317/- representing alleged long term capital gain on sale of agricultural land located at village Kapriwas PO Dharuhera Distt. Rewari. 2.1 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that the alleged long term capital gain was not taxable in the hands of the appellant since addition made in the hands of the individual had been though deleted by the Hon'ble Income Tax Appellate Tribunal but since the aforesaid order was challenged in appeal before the Hon'ble High Court by revenue and as such it is a case of double taxation which is not permissible. 2.2 That even otherwise that since the land sold was an agricultural land no addition was tenable in the hands of the appellant u/s 45 read with section 2(14) of the Act. 3 That without prejudice to the above, the learned Commissioner of Income Tax (Appeals) has also erred both in law and on facts in confirming the incorrect computation of

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long term capital gain by restricting the indexed cost of acquisition to Rs.1,25,892/- as against claimed indexed cost of acquisition of Rs.1,39,68,698/- and thus even otherwise the addition sustained is invalid. 4 That the learned Commissioner of Income Tax (Appeals) has further erred both in law and on facts In sustaining the denial of exemption claimed u/s 54F/54B of the Act. 4.1 That various adverse findings and conclusion recorded by the learned Commissioner of Income Tax (Appeals) while upholding the denial of exemption are also factually incorrect, contrary to record, legally misconceived and untenable. 5 That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in upholding the levy of interest of Rs.25,79,728/- under section 234B of the Act which is not leviable on the facts and circumstances of the case of the appellant. It is therefore, prayed that, it be held that assessment made by the learned Income Tax Officer and sustained by the learned Commissioner of Income Tax (Appeals) be quashed and, further addition so upheld by the learned Commissioner of Income Tax (Appeals) alongwith interest levied be deleted and appeal of the appellant be allowed.”

controversy at hand are : Pursuant to the order dated 26.09.2014

passed by the Tribunal in appeal bearing ITA No.1801/Del/2013

for AY 2009-10 in assessee’s case in individual status, assessee

had submitted before the Tribunal that the capital gains on the land

in question has already been brought to tax in the hands of HUF

and consequently, the Tribunal had directed the ITO to verify the

issue. During the assessment proceedings u/s 143 (3) of the

Income-tax Act, 1961 (for short ‘the Act’) dated 14.12.2011 in the

assessee’s individual case, cost of acquisition was taken at Rs.97/-

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per marla @ Rs.15,520/- per acre as on 01.04.1981 on the basis of

sale instance and the total cost of acquisition of the land i.e. 11

canal 3 marla (223 marla) was determined at Rs.21,631/- and the indexed cost of acquisition of land in question was determined at

Rs.1,25,892/- (21,631 * 582/100 = 1,25,892) and the long term

capital gain was calculated at Rs.1,38,39,317/-. AO sought to

charge the capital gain in compliance to the order passed by the

Tribunal to tax in HUF status of assessee by applying the same cost

of acquisition of the land in question. Finding reason to believe

that the income of the assessee from long term capital gain of

Rs.1,38,55,806/- and any other income which subsequently comes

to the notice of the AO has escaped assessment within the meaning

of section 147 of the Act and thereby given notice u/s 148 to the assessee. AO disposed off the objections filed by the assessee. In

response to the notice u/s 148, the assessee filed return of income

on 27.04.2015 showing claim of deduction under sections

44/44B/54/54B/54D/54EC/54F/54G/54GA as nil. AO held that

capital gains of Rs.1,38,39,317/- calculated and charged in the

individual case by the AO made chargeable in the hands of HUF

and thereby made an addition of Rs.1,38,39,317/-.

filing the appeal who has confirmed the addition by dismissing the

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appeal. Feeling aggrieved by the order passed by the ld. CIT (A),

the assessee has come up before the Tribunal by way of filing the

present appeal. 4. We have heard the ld. Authorized Representatives of the

parties to the appeal, gone through the documents relied upon and

orders passed by the revenue authorities below in the light of the

facts and circumstances of the case.

contended inter alia that when capital gain has already been

assessed in the hands of HUF then reopening by the AO is bad in

law; that assessee has truly and fully declared the sale of entire

agricultural land at the time of reopening of HUF assessment, the

AO was well aware that in individual capacity, fair market is taken as on 01.04.1981 by the then AO; that AO/CIT (A) have erred in

rejecting the exemption u/s 54F of the Act. However, on the other

hand, ld. DR for the Revenue relied upon the order passed by the

AO as well as ld. CIT (A).

gains to the tune of Rs.1,38,39,317/- have been assessed and added

to the income of the assessee by the AO belongs to Kiran Kumar

HUF. It is also not in dispute that first time assessment was

reopened in HUF case u/s 147/148 of the Act vide notice dated

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28.03.2013 after order passed by the ld. CIT (A) wherein it was

decided that sale proceeds of the agricultural land belongs to HUF.

It is also not in dispute that second time assessment has been

reopened by the Revenue Department pursuant to the order dated

26.09.2014 passed in ITA No.1801/Del/2013 in assessee’s case in

individual status for AY 2009-10.

question arises for determination in this case is :-

“as to whether capital gains qua the land in question have been taxed in the hands of HUF vide assessment order dated 26.03.2014 as contended by the ld. AR for the assessee?”

Tribunal in ITA No.1801/Del/2013 in ITO vs. Kiran Kumar, shows

that the Tribunal held that :-

“while setting aside the order of the ld. CIT (A) remitted the matter back to the file of AO and directed him to verify whether the HUF has been taxed on the capital gain qua the land in question and if so, the addition made on the individual assessee needs to be deleted.” 9. To comply with the order passed by the Tribunal (supra), the

first step for the AO to take in this case was to verify whether

capital gain qua the land in question has been taxed in the name of

Kiran Kumar HUF and if so, the addition made in the name of

Kiran Kumar in the individual status needs to be deleted.

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pursuant to the order dated 26.09.2014 passed by the Tribunal

in ITA No.1801/Del/2013 in ITO vs. Kiran Kumar by recording

reasons u/s 148 (2) of the Act as under :-

“Assessment u/s 147/143(3) of the Act was made vide order dated 26.03.2014 at an income of Rs.26,840/- + agriculture income of Rs.5,000/- wherein the capital loss on sale of land was determined at Rs.16,489/- by adopting the cost of acquisition of land at Rs.24,00,120/- as on 01.04.1981 as per calculation given below :- Sale consideration of agriculture land sold On 23.07.2008 Rs.1,39,52,209 Less Indexed cost of acquisition 24,00,120/100*582= Rs.1,39,68,698 Capital Loss = Rs.(-)16,489/-”

11, Bare perusal of the order passed by the Tribunal dated

26.09.2014 (supra) on the basis of which assessment has been

reopened second time goes to prove that the Tribunal has merely

directed the AO to verify the claim of the assessee that capital

gains qua the land in question have already been brought to tax in

the hands of HUF. Instead of verifying the facts, the AO has

jumped to the conclusion to reopen the assessment which is bad in

law.

passed in case of Kiran Kumar HUF u/s 143 (3)/148 of the Act for

AY 2009-10 wherein capital gains of Rs.16,489/- has been claimed

and accepted by the Revenue. It is strange that instead of verifying

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the facts if capital gains have already been brought to tax in this

case vide assessment order dated 26.03.2014, AO again reopened

the assessment second time.

(2020) 82 ITR (Trib) 0018 (Delhi) has already been decided by

the coordinate Bench of the Tribunal in favour of the assessee

which is qua the land in question, wherein it is held that when

capital gains have already been brought to tax in the hands of Kiran

Kumar HUF while framing the assessment order dated 26.03.2014

(supra), subsequent reopening is not sustainable and was

accordingly quashed by returning following findings :-

“5. It appears that the Assessing Officer totally misinterpreted the directions of the Tribunal. Notice issued once again u/s 148 of the Act and reasons for issuance of notice are as under: "Assessment u/s 147/143(3) of the Act was made vide Order dated 26.03.2014 at an income of Rs. 3,13,660/- wherein the capital loss on sale of land was determined at RS 42,918/- by adopting the cost of acquisition of land at Rs 33,84,880/-as on 01.04.1981 as per calculation given below Sale Consideration of land Rs. 1,96,57,084/- Less: Indexed cost of acquisition as on 01.04.1981 33,84,880/100*582 = Rs.1.97,00,002/- Capital Loss = Rs. (-) 42,918/- Later on, perusal of the Hon'ble I.T.A.T, New Delhi's Order dated 26.09.2014 in appeal No. ITA No. 1802/Del/2013 in assessee's case in Individual Status for A.Y. 2009-2010 it is revealed that the assessee has submitted before the I.T.A.T that the Capital Gains on the land in question has been brought to tax in the hands of HUF and the Hon'ble ITAT has directed the undersigned to verify the issue. The assessee has not challenged the cost of acquisition of the

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land in question as on 01.04.1981 and calculation of Capital gains at Rs 1,94,86,593/- in individual status before the Hon'ble ITAT. During assessment proceedings u/s 143(3) dated 14.12.2011 in the assessee's individual case the cost of acquisition was determined at Rs 97/- per Marla at the rate of Rs 15,520/- per acre as on 01,04.1981 on the basis of sale instance and the total cost of acquisition of the land 15 Kanal 2 Marla (302 Marla ) was determined at Rs 29,294/- (302*97/-) and the indexed cost of acquisition of the land in question was determined at Rs 1,70,491/- (29294*582/100= 1,70,491/-). The Long-term Capital Gain was worked out at Rs. 1,94,86,593/-(1,96,57,084/- 1,70,494/- =1,94,86,593/-). Therefore, in compliance of Hon'ble ITAT's Order the Capital Gains is to be charged to tax in HUF Status of the assessee by applying the same cost of acquisition of the land in question as determined in the case of Individual Status for the same assessment year. Thus, by taking the cost of acquisition of the land as on 01.04.1981 as, that determined in the Individual Status of the assessee vide Order u/s 143(3) dated 19.12.2011 the “Long-term Capital Gains in HU Sale Consideration of land 15 Kanal 2 Maria (302 Marla) Rs. 1,96,57,084/- Less: Cost of Acquisition 29294/-(30297=29294/-) Indexed Cost = 170491/- (29294*582/100=170491/-) Rs. 1,70,491/- Long Term Capital Gains Rs.1,94,86,593/-

As the Long-term Capital Gain has been shown at Capital Loss of Rs 42,918/- , therefore, Long-term Capital gain to the extent of Rs. 1,95,29,511/- (1,94,86,593 + 42,918/-= 1,95,29,511/-) has escaped assessment.

I, therefore, have reason to believe that income of the assessee from long term Capital gain to the extent of Rs.1,95,29,511/- as discussed above and any other income which subsequently comes to the notice of the undersigned has escaped assessment within the meaning of section 147 of the I.T. Act, 1961."

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double taxation the Tribunal in the hands of the individual has simply directed the Assessing Officer to very whether the HUF has been assessed or not. The Tribunal nowhere directed the Assessing Officer to reopen the assessment and make the impugned additions. In our humble opinion, the Assessing Officer has totally misinterpreted the directions of the Tribunal and grossly erred in once again reopening the assessment on the same set of facts which have already been considered while framing assessment order dated 26.03.2014 in the hands of the HUF. Therefore, we have no hesitation to set aside the notice u/s 148 of the Act, thereby quashing the assessment order framed pursuant to the said notice. Accordingly, Ground Nos. 1 to 1.3 taken together are allowed.” 14. In view of what has been discussed above, we are of the

considered view that it is a case of completely misunderstanding

the order passed by the Tribunal in ITA No.1801/Del/2013 (supra)

on the basis of which assessment has been reopened second time

without verifying the facts if capital gains qua the land in question

have already been brought to tax in the hands of HUF.

notice issued u/s 148 of the Act is not sustainable and is liable to be

quashed. Hence, question framed in this case is answered in

affirmative. Accordingly, assessment framed in this case is ordered

to be quashed without going into the merits of the case and the

appeal filed by the assessee is hereby allowed. Order pronounced in open court on this 3rd day of March, 2021.

Sd/- sd/- (ANIL CHATURVEDI) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated the 3rd day of March, 2021/TS

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