SURESH GOYAL,PUNE vs. INCOME-TAX OFFICER WARD 9(3), PUNE

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ITA 26/PUN/2021Status: DisposedITAT Pune23 November 2022AY 2011-125 pages

In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal rejected the assessee's contention that the capital gain was assessable in the hands of the company, citing the principle that income must be assessed in the right person's hands. The Tribunal also rejected the assessee's request for a remand.

What were the facts?

The assessee appealed against the CIT(A)'s order confirming an addition of Rs. 47,89,850/- as Capital Gain on sale of land. The assessee contended that the land was owned by a company where he was a director, and the profit was already offered to tax by the company.

What were the issues?

Whether capital gains on sale of land are taxable in the hands of an individual director or the company, and whether the profit was already offered to tax by the company.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 147

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, PUNE BENCH “B”, PUNE

Before: SHRI S.S. GODARA & DR. DIPAK P. RIPOTE

For Appellant: Shri Dinesh Machile
For Respondent: Shri M. G. Jasnani

PER S.S. GODARA, JM :

1.

This assessee’s appeal for AY 2011-12 arises against the CIT(A), Pune-13’s order dated 31.10.2019, passed in case No. PN/CIT(A)-12/ITO Ward-9(3), Pune/540/2016-17, involving proceedings under 143(3) r.w.s.147 of the Income Tax Act, 1961 in short the Act.

Heard both the parties. Case file perused. 2. The assessee raises the following substantive grounds in the instant appeal :-

“1. On the facts and in the circumstances of the case and in law, the honourable CIT(A) erred and is not justified in confirming the addition of Rs. 47,89,850/- as Capital Gain on sale of land without appreciating the facts of the case. The appellant hereby prays that the addition may please be deleted.

2.

On the facts and circumstances of the case and in law, the Honourable CIT(A) erred in confirming the addition of Rs. 47,89,850/- as Capital Gain on sale of land in the hands of the appellant without considering the fact that: (a) The said land was owned by the company Smart Foundry Pvt. Ltd. in which the appellant is one of the Directors and the appellant is holding the said land in the capacity of the Director of the Company. The profit on the sale of land is not taxable in the hands of the appellant. (b) The profit on sale of the land is already offered to tax in the hands of the company Smart Foundry Pvt. Ltd. and the addition of Capital Gain in the hands of the appellant amounts to double taxation.

3.

Without prejudice to Ground of Appeal

No. 1 & 2 above, the appellant requests your honour that the Capital Gain on the sale of said land if liable to be taxed in the hands of the appellant, then the appellant requests your honour to kindly direct the learned assessing officer to allow the credit of income tax paid by the company on the capital gain on sale of land against the income tax payable by the appellant on the capital gain arises from the sale of said land.

4. The appellant hereby reserves the right to add, amend, alter, delete or raise any additional grounds on or before the date of hearing.”

3. It next emerges with the able assistance of both the parties that not only the CIT(A)’s order has been passed ex-parte but also he has confirmed the Assessing Officer’s action assessing the corresponding short term capital gains of Rs.4,78,89,850/- in his lower appellate order. We make it clear that both the lower authorities have rejected the assessee’s contention that the foregoing short term capital gains are assessable in M/s. Smart Foundry Pvt. Ltd. i.e. his private limited company.

4.

Mr. Machile vehemently reiterated above narrated factual position and sought to get the matter remanded to the CIT(A) for the reason that the latter’s order has been passed ex-parte. It, however, emerges from a perusal of paragraphs 1.3 onwards that the lower appellate hearing notices had been duly served on the assessee. This is indeed coupled with the fact that the assessee herein has not placed any documentary evidence on record that the company concerned (supra) had declared the corresponding capital assets in its name in the balance sheet maintained; if any. Learned counsel at this stage submitted that the said company has already assessed as it was an assessee’s case before the CIT(A) in his ground of appeal no.1 in the lower appellate proceedings. We hardly see any reason to accept the assessee’s instant latter argument in light of hon’ble apex court’s landmark decision in CIT vs., Ch Atchaiah [1996] 218 ITR 239 (SC) that the correct amount of income has to be assessed in right person’s hands only. Faced with this situation, we hardly see any reason to entertain the assessee’s instant remand request seeking credit of the alleged taxes payment by the company in this appellant’s hands. Rejected accordingly.

5. Delay of 408 days in filing of the instant appeal stands condoned in light of assessee’s contention/averments made in affidavit dated 22.01.2021 as per hon’ble apex court’s yet another landmark decision in Collector Land Acquisition V/s. Mst. Katiji & Others (1987) 167 ITR 471 (SC) setting the law long back that all such technical aspects must make way for the cause of substantial justice. This is indeed in addition to the fact that the assessee has instituted his instant appeal on 10.02.2021 i.e. during Covid-19 Pandemic outbreak period only. The impugned delay of 408 days stands condoned therefore.

6.

This assessee’s appeal is dismissed in above terms. Order pronounced in the Open Court on 23rd November, 2022.

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