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Income Tax Appellate Tribunal, HYDERABAD “A” BENCH: HYDERABAD
Before: SHRI MANJUNATHA G & SHRI RAVISH SOOD
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD “A” BENCH: HYDERABAD BEFORE SHRI MANJUNATHA G, ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, JUDICIAL MEMBER ITA.No.323/Hyd./2024 Assessment Year 2016-2017 Sri Naveen Kumar Musinipally, USA, Resident of 133/4, R.P. The ADIT [INT-TAXN]-1, vs. Road, SECUNDERABAD. Hyderabad. PIN 500 003. Telangana. PAN APEPM4130Q (Appellant) (Respondent) For Assessee : CA, K C Devdas For Revenue : Sri Posu Babu Alli, Sr. AR Date of Hearing : 20.08.2025 Date of Pronouncement : 15.10.2025 ORDER PER MANJUNATHA, G.
This appeal has been filed by the assessee against the Order dated 09.02.2024 of the learned Commissioner of Income Tax (Appeals)-10, Hyderabad, relating to assessment year 2016-2017.
The assessee has raised the following grounds in the instant appeal :
2 ITA.No.323/Hyd./2024 “Under the facts and circumstances of the case, 1. The order of the Commissioner of Income Tax Appeals -10, Hyderabad (The Ld.CIT(A)') in confirming the taxation of long term capital gains arising on the development agreement under section 153C r.w.s 144C(3) of the Income Tax Act 1961 ('the Act') in the subject AY is unsustainable both on facts and in law. A. LEGAL GROUNDS 2. The learned CIT(A) failed to appreciate that the Ld.AO under section 153C r.w.s 144C(3) of the Act is without jurisdiction and invalid as the transfer of the case was made without complying with the provisions of section 127 of the Act. Therefore erred in confirming the assumption of the jurisdiction by the Assistant Director of Income Tax (International Taxation)-1, Hyderabad ('the Ld.AO") u/s section 153C r.w.s144C(3) of the Act.
3. The assessment framed by the Ld.AO is without complying with the procedures prescribed u/s. 153C of the Act. Therefore, assessment is bad in law deserves to be quashed. B. FACTUAL GROUNDS 4. Without prejudice to the above legal grounds, the Ld.CIT (A) and the Ld.AQ failed to appreciate that there was no "Transfer" within the meaning of section 2(47) (v) of the Act since the possession of the land on the date of development agreement still vests with the Assessee. Therefore erred in taxing the capital gain on development agreement in the subject AY. 3 ITA.No.323/Hyd./2024 5. Without prejudice to ground no.4, that there is no transfer within the meaning of section 2(47)(v) of the Act during the subject AY, the Ld.CIT(A) failed to appreciate that the value of the land as per the Sub Registrar Office (SRO) is merely a guideline value for the purpose of the levy of stamp duty under the stamp Act and does not represent the Fair Market Value. Therefore, erred in confirming the SRO value of the land as on 01.04.2001.
6. The learned CIT(A) erred in holding that the assessee is liable to interest under section 234A of the Act as it is consequential in nature.
7. The Appellant craves to add, modify or amend the above grounds anytime during the course of appeal”.
Brief facts of the case are that, the assessee is an individual and non-resident, has not filed return of income for the assessment year 2016-2017. A search and seizure operation u/sec.132 of the Income Tax Act, 1961 [in short “the Act”] was conducted on 26.04.2018 in the case Sri K. Indra Sena Reddy, Hyderabad, wherein some incriminating material pertaining to the assessee was found and seized in the residential premises of the Sri K. IndraSena Reddy. Subsequently, the seized material along with Panchanama was forwarded to the O/o. Assessing Officer i.e., Assistant
4 ITA.No.323/Hyd./2024 Commissioner of Income Tax, Central Circle-1(1), Hyderabad. Based on the information received, the Assessing Officer satisfied that, provisions of the section 153C of the Income Tax Act, 1961 were attracted in the case of the assessee as the satisfaction note recorded u/sec.153C of the Income Tax Act, 1961 [in short “the Act”] had bearing on the total income of the assessee for the assessment year 2016-2017. Subsequently, notice u/sec.153C of the Act was issued to the assessee by recording the reasons for reopen of the assessment. Subsequently, notices u/sec.142(1) and 143(2) of the Income Tax Act, 1961, were issued to the assessee and assessee also submitted information from time to time. The Assessing Officer on the basis of information available with the Department, observed that, during the financial year 2015-2016, relevant to the assessment year 2016-2017, the assessee had entered into a Development Agreement -cum- General Power of Attorney [in short “GPA”] with M/s Giridhari Homes Private Limited vide Doc.No.2319/2015 dated 30.12.2015, registered at Sub- Registrar Office [in short “SRO”], Secunderabad and agreed
5 ITA.No.323/Hyd./2024 to share developed area in the ratio of 47:53. As per the said Development Agreement, assessee was entitled to 36,440 sq. feet and as per the SRO value, the market value of the proposed project was at Rs.10,22,88,000/-. Therefore, the Assessing Officer issued show cause notice and called-upon the assessee to explain as to why addition shall not be made towards capital gains derived in pursuance to Development Agreement –cum- GPA. The Assessing Officer had also rejected the objection raised by the assessee on the jurisdiction of the Assessing Officer issuing notice u/sec.153C in light of provisions of sec.127 of the Income Tax Act, 1961. In response, the assessee vide submissions dated 08.03.2022 stated that, the Joint Development Agreement [in short “JDA”] entered is not a capital asset u/sec.2(14) of the Income Tax Act, 1961 and transfer is not a transfer u/sec.2(47) of the Income Tax Act, 1961 because, as per the development agreement, the possession of the property has not been handed-over to the builder in terms of sec.2(47) of the Income Tax Act, 1961 r.w.s.53A of Transfer of Property Act, 1882.
6 ITA.No.323/Hyd./2024 4. The Assessing Officer, after considering the relevant submissions of the assessee and also taking note of decision of Hon’ble Jurisdictional High Court of Andhra Pradesh in the case of Potla Nageswara Rao vs., DCIT [2014] 365 ITR 249 (A.P.) observed that, in terms of Development Agreement –cum- GPA dated 30.12.2015 and subsequent Supplementary Agreement dated 29.04.2016, the assessee has handed-over the possession of the property in exchange of built-up area to the builder which satisfies the conditions provided u/sec.2(47) r.w.s.53A of the Transfer of Property Act, 1882 and thus, capital gains arising on account of development agreement shall be computed for the assessment year 2016-2017. The Assessing Officer further noted that, while computing the capital gains, the assessee has adopted fair market value of the property as on 01.04.2001 at Rs.7000/- per sq. yard, whereas, the fair market value of the property as per the SRO vide letter dated 22.02.2022 was at Rs.5000/- per sq. yard. Therefore, by taking note of all relevant facts, the Assessing Officer re- computed the capital gains by adopting the deemed sale
7 ITA.No.323/Hyd./2024 consideration as declared by the assessee at Rs.7,83,46,000/- after reducing the cost of acquisition of the property of Rs.82,47,675/- and computed long term capital gains of Rs.5,73,96,907/-. The Assessing Officer had also rejected the exemption claimed by the assessee for Rs.29,85,987/- u/sec.54F of the Income Tax Act, 1961 in respect of one flat received in consequent to Development Agreement –cum- GPA. Thus, the Assessing Officer has made addition of Rs.5,73,96,907/- towards capital gains derived from transfer of property to the total income of the assessee vide order dated 06.05.2022 passed u/sec.153C r.w.s.144C(3) of the Income Tax Act, 1961.
Aggrieved by the assessment order, the assessee preferred an appeal before the learned CIT(A). Before the learned CIT(A), the assessee challenged the jurisdiction of the Assessing Officer i.e., Addl. Director of Income Tax- [INT-TAXN]-1, Hyderabad, who has passed the assessment order and argued that, in absence of Order passed u/sec.127 of the Act, transfer of a case from ACIT, [INTL- TAXN]-1(1)(1), New Delhi is bad in law and consequent
8 ITA.No.323/Hyd./2024 assessment order passed by the Assessing Officer cannot be sustained. The assessee had also challenged the addition made by the Assessing Officer towards computation of capital gain from transfer of property in pursuance to Joint Development Agreement [in short “JDA”] with M/s. Giridhari Homes Pvt. Ltd., on the ground that, Development Agreement with the builder M/s. Giridhari Homes Pvt. Ltd., is only for the purpose of entering into the property and development, but, not allowing the developer to enjoy the right and interest in the property and, therefore, provisions of sec.2(47) r.w.s.53A of Transfer of Property Act, 1882 cannot be applied.
The learned CIT(A) after considering the relevant submissions of the assessee and also taking note of certain judicial precedents held that, the jurisdiction of the appellant lies with ADIT-[INT-TAXN]-1, Hyderabad. Although, the ACIT, [INTL-TAXN]-1(1)(1), New Delhi, issued notice u/sec.148 of the Act, but, the said notice was on the basis of PAN data base of the assessee because, the assessee was a non-resident at the relevant point of time
9 ITA.No.323/Hyd./2024 and was not filing any return of income in India before the jurisdictional Assessing Officer. Further, upon noticing the fact that, jurisdiction of the assessee lies with the current Assessing Officer, the case has been transferred for the purpose of continuation of the proceedings. The assessee had complied with all the notices issued by the Assessing Officer and also participated in the re-assessment proceedings. Therefore, challenging the jurisdiction of the Assessing Officer at the later stage is contrary to sec.124(3)(a) of the Act because, as per the said section, the jurisdiction of the Assessing Officer cannot be questioned beyond 30 days of receipt of the notice. Since the assessee has questioned the jurisdiction contrary to sec.124(3) of the Act, the ground raised by the assessee cannot be entertained. Thus, rejected the grounds taken by the assessee.
In so far as addition made by the Assessing Officer towards computation of long term capital gains arising out of transfer of property in pursuance to JDA, the learned CIT(A) held that going by the JDA with M/s.
10 ITA.No.323/Hyd./2024 Giridhari Homes Pvt. Ltd., and it’s terms and conditions, the appellant has surrendered their rights in the property to a developer to obtain necessary permission from the Government Authorities for developing the land and for construction of the agreed project. The developer cannot proceed with the property until he receives possession of the property. Possession is essential for the developer to comply with approvals, sanctions etc., Since the developer got possession of the property in pursuance to JDA, the conditions precedent for invoking provisions of sec.2(47) r.w.s.53A of the Transfer of Property Act, 1892 are satisfied for the assessment year 2016-2017 and thus, the Assessing Officer has rightly computed long term capital gains arising from transfer of property in pursuance to JDA for the year under consideration. Therefore, the learned CIT(A) rejected the grounds taken by the assessee on this issue.
Further, in so far as computation of cost of acquisition etc., and deduction claimed u/sec.54F of the Act on account of investment in residential house, the learned CIT(A) dismissed the claim of the assessee towards Fair
11 ITA.No.323/Hyd./2024 Market Value [in short “FMV"] of the property at Rs.7000/- per sq. yard as on 01.04.2001 on the ground that, as per the information collected by the Assessing Officer from the Sub-Registrar’s Office and based on the available documents on record, the value of the land as on 01.01.2001 was at Rs.5,000/- per sq. yard. In so far as sec.54F deduction, the learned CIT(A) has allowed deduction towards one house received by the assessee in pursuance to JDA of the property as deduction u/sec.54F of the Act.
Aggrieved by the order of the learned CIT(A), the assessee is now, in appeal before the Tribunal.
CA, KC Devdas, Learned Counsel for the Assessee referring to the notice issued by the ACIT, [INTL-TAXN]- 1(1)(1), New Delhi and subsequent assessment order passed by the Assessing Officer i.e., ADIT [INT-TAXN]-1, Hyderabad submitted that, the Assessing Officer who passed the assessment order does not have jurisdiction over the assessee, in absence of relevant Order passed u/sec.127 of the Act. Learned Counsel for the Assessee further submitted that, the assessee was assessed at ACIT, [INTL-TAXN]-1(1)
12 ITA.No.323/Hyd./2024 (1), New Delhi, because, the assessee is a non-resident and does not filed his return of income in India. Further, the ACIT, [INTL-TAXN]-1(1)(1), New Delhi, issued notice dated 18.02.2020 for non-filing of income tax returns for the assessment year 2013-2014, for which, the assessee has filed his reply on 22.07.2020 and submitted that, “I am a non-resident and citizen of USA and does not have any income taxable in India and thus, the question of filing of return of income for the assessment year 2013-2014 does not arise”. The Assessing Officer after considering the relevant submissions of the assessee has not proceeded with assessment. Therefore, from the above, it is very clear that, the jurisdiction of the assessee lies with ACIT, [INTL-TAXN]- 1(1)(1), New Delhi and thus, the transfer of case to the ADIT [INT-TAXN]-1, Hyderabad, without formal Order u/sec.127 of the Act is illegal, void abinitio and liable to be quashed. In this regard, he relied upon various judicial precedents including decision of ITAT, Delhi Bench, Delhi in the case of Navita Gupta, New Delhi vs., ITO, Ward-5(2)(3), Noida, Uttar
13 ITA.No.323/Hyd./2024 Pradesh in ITA.No.351/Del./2024, for the assessment year 2017-2018, Order dated 30.04.2025.
Learned Counsel for the Assessee further referring to additions made by the Assessing Officer towards computation of capital gain arising on account of transfer of property in pursuance to JDA with M/s. Giridhari Homes Pvt. Ltd., submitted that, the appellant had entered into JDA with M/s. Giridhari Homes Pvt. Ltd., on 30.12.2015 vide Document No.2319/2015 for development of land admeasuring 3112.33 sq. yards and agreed to share the super built-up area in the ratio of 47% for the appellant being land owner and 53% for the developer. The appellant had also entered into Supplementary Agreement dated 29.04.2016 for sharing super built-up area as agreed between the parties in the JDA dated 30.12.2015. As per the JDA between the parties, the possession of the property has been handed-over to the builder for the limited purpose of entering into the property and obtain necessary permissions and complete the construction of the proposed building, but, said permissions given to the builder cannot
14 ITA.No.323/Hyd./2024 be construed as possession of the property given to the transferee to invoke provisions of sec.2(47) r.w.s.53A of the Transfer of Property Act, 1882. Further, as per the JDA between the parties, no consideration has been paid including any goodwill or refundable deposit. Therefore, the allegation of the Assessing Officer that, the appellant has handed-over possession of the property to the builder, which satisfied the conditions of sec.2(47) r.w.s.53A of the Transfer of Property Act, 1882 is incorrect and cannot be accepted.
Learned Counsel for the Assessee further submitted that, the developer has completed the construction of the building and handed-over possession of super built-up area to the appellant in the financial year 2018-2019 relevant to assessment year 2019-2020 and the appellant has declared the capital gain arising out of transfer of property in pursuance to JDA for the assessment year 2019-2020 and paid relevant taxes. Therefore, once again addition towards capital gain on very same transaction for the year under consideration amounts to 15 ITA.No.323/Hyd./2024 double taxation, which is not permissible in law. Therefore, he submitted that, the Assessing Officer is erred in making addition towards capital gains for the assessment year under consideration and the learned CIT(A) without appreciating the relevant submissions, has simply sustained the addition made by the Assessing Officer. He, therefore, submitted that, the Order of the learned CIT(A) should be set-aside and the additions made by the Assessing Officer should be deleted.
Sri Posu Babu Alli, learned Sr. AR for the Revenue, on the other hand, supporting the order of the learned CIT(A) submitted that, there is no merit in the legal ground taken by the assessee challenging the jurisdiction of the Assessing Officer in light of provisions of sec.127 of the Act because, as per sec.124(3)(a), the appellant cannot call in question the jurisdiction of the Assessing Officer beyond 30 days from the date of issue of notice and in the present case, going by the facts available on record, based on PAN data base, the Assessing Officer has issued notice u/sec.148 because, the assessee was a non-resident and all
16 ITA.No.323/Hyd./2024 non-resident cases are by default are assessable at ITO, Income Tax Department, New Delhi. Further, upon noticing the fact that the jurisdiction of the assessee lies with ADIT- [INT-TAXN]-1, Hyderabad, the assessment record has been transferred to the Assessing Officer for further action. Since the appellant has not raised any objection in terms of sec.124(3)(a) of the Act and further, has responded to the assessment proceedings before the Assessing Officer, the ground taken by the assessee challenging the jurisdiction of the Assessing Officer cannot be entertained.
Learned Sr. AR for the Revenue, further submitted that, in so far as computation of capital gains arising out of transfer of property in pursuance to JDA, it is an admitted fact that, the appellant had entered into JDA on 30.12.2015 with M/s. Giridhari Homes Pvt. Ltd., and the said Development Agreement was registered in the financial year 2015-2016 relevant to assessment year 2016- 2017. As per the Clauses of the JDA, the possession of the property has been handed-over to the developer and thus, the conditions precedent for invoking provisions of sec.2(47)
17 ITA.No.323/Hyd./2024 r.w.s.53A of the Transfer of Property Act, 1882 is satisfied and thus, the Assessing Officer has rightly computed the capital gains for the assessment year 2016-2017. Therefore, he submitted that, there is no error in the reasons given by the learned CIT(A) to sustain the additions made by the Assessing Officer and thus, the Order of the learned CIT(A) should be upheld.
We have heard both the parties, perused the material on record and the orders of the authorities below. There is no dispute with regard to the fact that the appellant had entered into a Development Agreement –cum- General Power of Attorney [in short “GPA”] on 30.12.2015 with M/s. Giridhari Homes Pvt. Ltd., and registered vide Document No.2319/2015 for development of 3112.33 sq. yards of land and agreed to share the built-up area in the ratio of 47% for the appellant being the land owner and 53% for the developer. In pursuance to the said JDA, the appellant had entered into a Supplementary Agreement dated 29.04.2016 vide Document No.860/2016 for allocation of respective shares of the developed area. The 18 ITA.No.323/Hyd./2024 appellant had computed the long term capital gains derived from transfer of property in pursuance to JDA for the assessment year 2019-2020 on the ground that, the builder has completed the construction of the building and handed over the possession to the appellant in the financial year 2018-2019 relevant to assessment year 2019-2020. The appellant has computed long term capital gains arising out of transfer of property and paid relevant taxes for the assessment year 2019-2020. These are undisputed facts. Neither the Assessing Officer nor the assessee has disputed these facts. Therefore, it is necessary for us to examine the reasons given by the Assessing Officer to compute long term capital gains for the assessment year 2016-2017 in light of relevant Development Agreement –cum- GPA dated 30.12.2015 and subsequent Supplementary Agreement dated 29.04.2016 and as per the admission of the assessee towards capital gain for the assessment year 2019-2020. The Assessing Officer has invoked the provisions of sec.2(47) of the of the Income Tax Act, 1961 r.w.s.53A of Transfer of Property Act, 1882 and claimed that, the 19 ITA.No.323/Hyd./2024 conditions precedent for computing capital gain for assessment year 2016-2017 are satisfied going by the Development Agreement –cum- GPA between the parties. According to the Assessing Officer, the clauses of the Development Agreement provides for possession of the property to the builder and unless the assessee handed-over the possession of the property to the builder, the builder cannot obtain necessary permissions from the Authorities for construction of building and, therefore, the Assessing Officer opined that, the possession of the property has been handed-over as on the date of Development Agreement i.e., on 30.12.2015.
We have gone through the relevant Development Agreement between the appellant and M/s. Giridhari Homes Pvt. Ltd., and as per the relevant Clauses of the JDA, we find that, the appellant has allowed the conditional possession of the property to the builder for the limited purpose of entering into the property and complete the construction after obtaining necessary approvals from the concerned authorities. The Development Agreement -cum-
20 ITA.No.323/Hyd./2024 GPA further stated that, the above conditional possession cannot be construed as possession of the property in terms of sec.2(47) r.w.s.53A of Transfer of Property Act, 1882. We further note that, as per the Development Agreement –cum- GPA, there is no consideration received by the assessee either in the form of goodwill or refundable deposit. Once there is a conditional possession of the property for the limited purpose of entering the premises for construction of the building and further, there is no consideration received by the appellant, in our considered view, the provisions of sec.2(47)(v) r.w.s.53A of Transfer of Property Act, 1882 cannot be invoked because, as per the said provision, any transaction involving allowing of the possession of any immovable property to be taken or retained in part- performance of a contract of the nature referred to in sec.53A of Transfer of Property Act, 1882, shall be treated as ‘transfer’ within the meaning of sec.2(47) of the Act. On a plain reading of sec.2(47) r.w.s.53A of Transfer of Property Act, 1882, in our considered view, sec.53A of Transfer of Property Act, 1882, has been clearly transpires into
21 ITA.No.323/Hyd./2024 sec.2(47)(v) of the Income Tax Act, 1961 and the effect of it would be that, sec.53A of Transfer of Property Act, 1882 shall be taken to be an integral part of sec.2(47)(v) of the Act. In otherwords, the legal requirement of sec.53A of Transfer of Property Act, 1882 are required to be fulfilled so as to attract the provisions of sec.2(47)(v) of the Act. Further, as per sec.53A of Transfer of Property Act, 1882, in order to attract the above section, there should be a contract for consideration in writing for transfer of an immovable property and further the transferee himself in part-performance of contract, take possession of the property or any part thereof and lastly, transferee should be ready and willing to perform the contract. A conjoint reading of sec.2(47)(v) r.w.s.53A of Transfer of Property Act, 1882 would show that, in order to attract the said provisions, one of the necessary pre-conditions is the possession of the property which includes the transferee to enjoy the property as a purported owner. In the present case, on perusal of the Development Agreement, it is clear that, the agreement neither convey any possession of the property nor does it
22 ITA.No.323/Hyd./2024 give any right of possession enabling the developer to enjoy the property as a purported owner. In absence of possession clause in the Development Agreement, the gains arising on transfer of land through JDA, cannot be chargeable to tax for the assessment year 2016-2017 as the conditions required for invoking sec.2(47)(v) r.w.s.53A of Transfer of Property Act, 1882, are not satisfied.
At this stage, it is necessary to refer to the decision of Hon’ble Supreme Court in the case of CIT vs., Balbir Singh Maini [2018] 398 ITR 531 (SC) and Seshasayee Steels P. Ltd., vs., ACIT [2020] 421 ITR 46 (SC) wherein it has been held that, in order to qualify as a transfer of a capital asset u/sec.2(47)(v) of the Act, there must be a contract which could be enforceable in law u/sec.53A of Transfer of Property Act, 1882. It is settled proposition of law that, possession is a sine qua non for a contract to come within the purview of sec.53A of Transfer of Property Act, 1882 and in absence of possession, the provisions of sec.2(47)(v) of the Act would not be attracted. In the present case, the appellant had given possession of the property for 23 ITA.No.323/Hyd./2024 limited purpose of development and said possession would not tantamount to allowing the transferee to take possession of the property or any part thereof in part- performance of contract referred to u/sec.53A of Transfer of Property Act, 1882. We also take note of the decision of Hon’ble jurisdictional High Court for the State of Telangana in the case of Smt. Shantha Vidyasagar Annam vs., ITO [2025] 303 Taxman 348 (Telangana-HC) wherein it has been clearly held that, where assessee a non-resident Indian entered into a Development Agreement with builder for construction of flats on the sharing basis, since possession was handed-over solely for development and no consideration was paid apart from a refundable performance guarantee, arrangement did not constitute ‘transfer’ u/sec.2(47) of the Income Tax Act, 1961. Further, the Hon’ble jurisdictional High Court for the State of Telangana while deciding the issue had also considered it’s earlier decision in the case of Potla Nageswara Rao vs., DCIT [2014] 365 ITR 249 and distinguished the above case and held that, the above case is an authority for the proposition
24 ITA.No.323/Hyd./2024 that, element of factual possession and agreement are contemplated for transfer within the meaning of sec.2(47) of the Income Tax Act, 1961. The sum and substance of the ratio laid down by the Hon’ble Supreme Court and Hon’ble High Court for the State of Telangana is that, in order to invoke provisions of sec.2(47)(v) of the Income Tax Act, 1961 r.w.s.53A of Transfer of Property Act, 1882, there must be a contract in writing for transfer of immovable property for consideration and the transferee must in part-performance of the contract take possession of the property, or of any part thereof. In the present case, going by the facts available on record including relevant Development Agreement –cum- GPA, absolutely there is no reason to invoke provisions of sec.2(47)(v) of the Income Tax Act, 1961 because, the possession given to the builder is only for the limited purpose of entering into the property for the purpose of construction and only upon completion of construction of the property, the developer has got absolute right and interest over the property in the manner referred to u/sec.53A of the Transfer of Property Act, 1882. Since, the 25 ITA.No.323/Hyd./2024 appellant itself has offered the capital gains to tax for the assessment year 2019-2020 when the developer has handed-over the constructed building to the appellant in the financial year 2017-2018, in our considered view, invoking provisions of sec.2(47)(v) of the Income Tax Act, 1961 for the assessment year under consideration is incorrect. Therefore, we are of the considered view that the Assessing Officer and the learned CIT(A) are erred in computing capital gains arising on account of transfer of property in pursuance to JDA for the assessment year 2016-2017. Therefore, we direct the Assessing Officer to delete the addition made towards computation of capital gains in pursuance to Development Agreement for the assessment year 2016- 2017.
Coming back to legal ground taken by the assessee challenging the jurisdiction of the Assessing Officer who passed the assessment order. Admittedly, notice u/sec.148 of the Income Tax Act, 1961 has been issued by the ACIT, [INTL-TAXN]-1(1)(1), New Delhi and said notice has been issued on the basis of the address available in the 26 ITA.No.323/Hyd./2024 PAN Data base of the assessee because the assessee was non-resident and resident of USA during relevant financial year and further, the assessee has not filed his return of income in India for the assessment year under consideration. Further, upon noticing the fact that, the jurisdiction of the assessee lies with the ADIT-[INT-TAXN]-1, Hyderabad, the assessment records has been transferred to the Assessing Officer who passed the assessment order and then, who had proceeded with completing the assessment proceedings in accordance with law. The assessee had received all notices and also participated in the assessment proceedings without raising any objections in terms of sec.124(3)(a) of the Income Tax Act, 1961. Therefore, it is necessary for us to consider the grounds taken by the assessee challenging the jurisdiction of the Assessing Officer in light of provisions of sec.127 of the Income Tax Act, 1961.
The provisions of sec.127 of the Income Tax Act, 1961 deals with transfer of a case from one Assessing Officer to another Assessing Officer. As per the said provisions, the Pr. Chief Commissioner or Pr. Commissioner
27 ITA.No.323/Hyd./2024 of Income Tax or Commissioner of Income Tax can transfer a case from one Assessing Officer to another Assessing Officer by passing a formal order with reasons. The assessee contended that, the appellant’s case has been transferred from ACIT, [INTL-TAXN]-1(1)(1), New Delhi, without formal Order passed u/sec.127 of the Income Tax Act, 1961. In our considered view, there is no merit in the legal ground taken by the assessee challenging the jurisdiction of the Assessing Officer for the simple reason that, the assessee is a non- resident Indian and resident of USA and did not file his return of income for the assessment year under consideration with the Assessing Officer who is having jurisdiction over the assessee in the normal circumstances. Since there was no regular return of income filed by the assessee with the Assessing Officer who is having jurisdiction over the assessee, based on the information available with the Department, the Assessing Officer-ACIT, [INTL-TAXN]-1(1)(1), New Delhi, had issued notice u/sec.148 of the Act on the basis of address available in the PAN Data base because, the jurisdiction of all non-residents
28 ITA.No.323/Hyd./2024 lies with the Assessing Officer- ACIT, [INTL-TAXN]-1(1)(1), New Delhi. Since the assessee did not file regular return of income and the Assessing Officer issued notice u/sec.148 of the Act on the basis of PAN Data base, in our considered view, the argument of the Counsel for the Assessee that, jurisdiction of the assessee has been transferred from ACIT, [INTL-TAXN]-1(1)(1), New Delhi to ADIT-[INT-TAXN]-1, Hyderabad is incorrect because, it is not a case of transfer of case from one Assessing Officer to another Assessing Officer, but, it is a case of transfer of assessment records to the Assessing Officer who is having correct jurisdiction over the assessee. Although, the assessee referred to the notice issued by the ACIT, [INTL-TAXN]-1(1)(1), New Delhi, dated 18.02.2020 and subsequent reply of the assessee dated 22.07.2020 and argued that, the assessee’s jurisdiction was always lies with the Assessing Officer, New Delhi is incorrect because, the assessee never filed his return of income for any of the assessment year with the Assessing Officer, New Delhi. Therefore, in our considered view, the arguments of the Counsel for the Assessee that, transfer of case from 29 ITA.No.323/Hyd./2024 ACIT, [INTL-TAXN]-1(1)(1), New Delhi, to ADIT-[INT-TAXN]-1, Hyderabad, without any formal Order u/sec.127 of the Income Tax Act, 1961 is illegal, devoid of merit and cannot be accepted. In so far as various case law relied upon by the assessee including the decision of ITAT, Delhi Bench, Delhi in the case of Navita Gupta, New Delhi vs., ITO, Ward- 5(20(3), Noida, Uttar Pradesh in ITA.No.351/Del./2024, Dated 30.04.2025, in our considered view, the facts of the above case are entirely different from the facts of the appellant’s case and thus, the above case law are not applicable and thus, rejected. Accordingly, legal grounds taken by the assessee are rejected.
In the result, appeal of the Assessee partly allowed.
Order pronounced in the open Court on 15.10.2025.