SH. PREM CHAND,FATEHABAD vs. ITO, FATEHABAD

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ITA 5402/DEL/2016Status: DisposedITAT Delhi21 January 2020AY 2009-1035 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal noted that the facts and circumstances of the present appeal were identical to those in the cases of Sh. Karam Chand vs. ITO, Sh. Dharam Chand vs. ITO, Ms. Kaushalya Devi vs. ITO, and Ms. Maya Devi vs. ITO, decided by a co-ordinate bench of the ITAT, Delhi. In those identical cases, the co-ordinate bench had admitted additional evidence and set aside the disputed issues to the Assessing Officer (AO) for passing a fresh assessment order in light of the additional evidence and other materials on record. Both the assessee's counsel and the Departmental Representative agreed that the issues were covered by these precedents and consented to the admission of additional evidence and setting aside the matter to the AO. Consequently, the Tribunal admitted the additional evidence filed by the assessee and set aside all disputed issues to the file of the AO with a direction to pass a fresh assessment order in accordance with law, considering the additional evidence and other materials on record. For statistical purposes, the appeal was partly allowed.

What were the facts?

The assessee, Sh. Prem Chand, filed an appeal before the Income Tax Appellate Tribunal (ITAT) against an order dated 08.08.2016 passed by the CIT(Appeals)-Hisar for Assessment Year 2009-10. The original assessment order dated 10.12.2014 was passed under Section 143(3) read with Section 147 of the Income Tax Act, 1961, assessing total income at Rs. 1,23,25,450/- against a returned income of Rs. 1,27,560/-. The assessee had declared a long-term capital loss of Rs. 13,01,339/- from the sale of land, but claimed no exemption under Sections 54, 54B, 54D, 54EC, 54ED, and 54F. The assessment order noted that the assessee had substituted the Fair Market Value (FMV) of the land as on 01.04.1981 for the cost of acquisition. The assessee raised multiple grounds of appeal challenging the legality of the notice under Section 148, the assessment order, the AO's recording of reasons to believe, the arbitrary conclusion regarding capital asset classification, and the computation of capital gains and fair market value.

What were the issues?

1. Whether the notice issued under Section 148 and the assessment order passed pursuant to it are illegal, bad in law, and without jurisdiction, considering the AO's 'Reasons to believe' were subjective and recorded without proper application of mind, and whether the reopening under Section 147 is illegal due to the absence of tangible material to conclude the land was a capital asset as per Section 2(14)? (Mixed law and fact) 2. Whether the CIT(A) erred in upholding the AO's actions, including the arbitrary assessment order, violation of natural justice, and illegal additions, and whether the agricultural land was correctly considered a capital asset under Section 2(14) by assuming it was within municipal limits? 3. Whether the CIT(A) and AO erred in arbitrarily adopting the Fair Market Value (FMV) as on 01.04.1981 at Rs. 5,760/- for the land, ignoring assessee's evidence, and whether the land value of an earlier deal relied upon by the AO was appropriate for estimating the FMV of the assessee's land? 4. Whether the CIT(A) erred in upholding additions on account of capital gains from the sale of agricultural land, and whether the assessee was wrongly denied exemption/deduction under Sections 54B and 54F because it was not claimed in the return, despite a note regarding investments in the computation of income? Assessee's contentions: The notice and assessment order are illegal. The 'Reasons to believe' were subjective and lacked application of mind. Reopening under Section 147 is illegal due to no tangible material. The FMV as on 01.04.1981 was arbitrarily fixed, ignoring evidence. The land value of prior deals cannot be the basis for FMV. Additions on account of capital gains are illegal. Exemption under Sections 54B and 54F should have been allowed, as a claim was made in the computation of income, and the capital loss prevented claiming it earlier. Material used by the AO was not confronted, violating natural justice. Capital gains were wrongly computed. Observations were factually incorrect, illegal, and based on guesswork. Additions are unjust, unlawful, excessive, and not supported by material. Interest under Sections 234A, 234B, and 234C is wrongly charged. Revenue's contentions: Not recorded in the judgment.

Which sections of the Income-tax Act were involved?

Section 148,Section 147,Section 2(14),Section 55(2)(b)(i),Section 54,Section 54B,Section 54D,Section 54EC,Section 54ED,Section 54F,Section 234A,Section 234B,Section 234C

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH: ‘F’ NEW DELHI

Before: SHRI H.S.SIDHU & SHRI ANADEE NATH MISSHRA

(A) This appeal filed by the assessee is against impugned appellate order dated 08.08.2016 passed by the Ld. CIT (Appeals)-Hisar for assessment year 2009-10. Following grounds of appeal have been raised as under :

1.

“That the notice issued u/s 148 and the assessment order passed in pursuance to said notice are illegal, bad in law and without jurisdiction.

2.

That in view of facts and circumstances of the case and in law the CIT(A) failed to appreciate that the “Reasons to believe” provided by the AO are absolutely subjective, based on suspicion and have been recorded without exercise of mind over information received by the AO.

3.

That in the “Reasons to believe” the AO has arbitrarily concluded that the land which has been sold is a capital asset within the meaning of section 2(14) and in the absence of any tangible material. Therefore, reopening of the assessment u/s 147 is illegal, unjust and void ab initio at the very threshold.

4. That in view of facts and circumstances of the case and in law, the CIT(A) grossly erred in upholding the actions of AO as re-assessment order passed by AO is arbitrary, without application of mind and in gross violation of principles of natural justice. The additions made are illegal and bad in Law.

5. That the CIT(A) and AO have erred in assuming that the said agricultural land is situated within the municipal limits and hence a capital asset within the meaning of capital asset within the meaning of sub section 14 of section 2 of the income tax act.

6. That without prejudice in view of facts and circumstances of the case and in law, the CIT(A) & AO have grossly erred in adopting the FMV as on 1.04.1981 of the said land at Rs. 5,760/- arbitrarily and ignoring all other evidences and material available and placed on record by the assessee in this regard. 7. That without prejudice the facts and circumstances of the land deal relied by the AO are completely different from the assessee’s case and thus the land value of the earlier deal, as relied by the AO cannot be made basis for estimating the fair market value of the assesse’s land.

8.

That in view of facts and circumstances of the case and in law, the CIT(A) have grossly erred in upholding the additions made AO on account of capital gains arising from sale of the agricultural land owned by the assessee.

9.

That in view of the facts and circumstances of the case and in law , the CIT(A) and AO have grossly erred in not allowing exemption/deduction u/s 54B and 54F on the ground that it was not claimed in the return.

10.

That the AO has erred in not allowing the deduction u/s 54F for amount of consideration applied towards purchase of residential house property by the assesee.

11.

That without prejudice to the above the CIT (A) & AO have erred in the view of the facts and circumstances by ignoring the fact that the claim of exemption/deduction u/s 54B and 54F could not have been made by the assessee at the time of filing the return as there was a capital loss in computation of Long term. However a claim was made and a note regarding the investments made was mentioned in the computation of income which is wrongly and illegally ignored by the lower authorities.

12.

That the material used by the AO has not been confronted to the assessee and reasonable opportunity to place the document and evidence in support of his case is not given to assessee. Hence the additions made are against the natural principles of justice.

13.

That without prejudice to the above the capital gains have been wrongly computed and wrongly worked out by the AO.

14.

That in view of the facts and circumstances of the case and in law , the various observations made by the AO and CIT(A) are factually incorrect, illegal , bad in law and contrary to facts on record and based on mere guesswork and surmises and conjectures .

15.

The additions made and the observations made are unjust, unlawful and based on mere surmises and conjunctures. The additions made cannot be justified by any material on record and additions are also excessive. 16. The explanations given, the evidence produced and material placed has not been properly considered and judicially interpreted and the same do not justify the additions/allowances made. 17. That the interest u/s 234A, 234B and 234C has been wrongly and illegally charged and is wrongly worked out. 18. That the assessee reserves the right to add, amend, alter the grounds of appeal.”

(B) Assessment order dated10.12.2014 was passed u/s 143(3) read with Section 147 of Income Tax Act wherein total income was assessed at Rs. 1,23,25,450/- (rounded of) as against returned income of Rs. 1,27,560/-. Relevant portion of the assessment order is reproduced as under :-

(C) ssessee filed appeal before Ld. Counsel of Income Tax (Appeals) vide impugned appellate order dated 08.08.2016 the Ld. Commissioner of Income Tax (Appeals) allowed the appeal of the assessee. The relevant portion of the aforesaid impugned appellate order dated 08.08.2016 of the Ld. CIT(A) is reproduced as under :-

(D) This present appeal has been filed by Revenue against the aforesaid impugned appellate order dated 08.08.2016 of the Ld. CIT(A). In the course of appellate proceedings in ITAT, a paper book containing the following particulars was filed from the assessee’s side :- Sr. Particulars 1. Written Submission 2. Written Submission of computation of income, showing the details of investments made by the appellant u/s 54B and 54F which was available before the Ld. A.O. during the course of assessment proceedings.

3. Certified copy of Sale Deed.

4.

Certified copy of the valuation report of registered valuer regarding fair market value as on 01.04.1981.

5.

Certified copy of the certificate issued by the Sub- registrar, Fatehabad regarding fair market value as on 01.04.1981.

6.

Copy of the order of CIT(Appeals) Rohtak in the case of Mr. Parveen Kumar S/o. Sh. Bhim Sain R/o. Fatehabad 7. Copy of the order made by the DCIT, Sirsa in the case of Smt. Rajender Mehtani W/o. Sh. Chiranjiv Mehtanin R/o H. No. 220, Model Town, Fatehabad 8. Certified copy of the reasons recorded u/s 147 of the Income Tax Act, 9. Certified copy of the judgment of the Hon’ble of the Hon’ble Supreme Court of India regarding compensation for acquisition of agriculture aldn @ 350/- per sq. yard i.e. Rs. 1694000/- per acre 10. Certified copy of Form No. ITR-2 11. Certified copy of the valuation report got prepared by the Ld. A.O. regarding investment in residential house 12. Copy of judgment of the Hon’ble Supreme Court of India in the case of Hindustan Steel Ltd. vs. State of Orisa reported at [1972] 83 ITR 26 (SC) 13. Copy of the judgment of the Hon’ble Delhi High Court in the case of Bharat Aluminum (decided on 24 May 2007 after the judgment of Goetze India decided o 24 March 2006) 163 Taxman 430 14. Copy of judgment of the Hon’ble Allahabad High Court in the case of Dhampur Sugar Mills 90 ITR 236 15. Copy of the judgment of the Hon’ble Mumbai ITAT in the case of Chicago Pneumatic India Limited 15 SOT 252

16.

Copy of the judgment of the Hon’ble Delhi ITAT in Moser Baer Further 295 ITR 148 17. Copy of the judgment of the Hon’ble Kolkata Tribunal in the case of Van Oord Altanata B.V. 112 TTJ 229 18. Copy of Jamabandi furd and Khasra Girdawari 19. Copy of account of the assessee as appearing in the books of his commission agent M/s Chanan Dass Om Parkash, Fatehabad.

(D.1) Moreover, additional evidences were also filed from the assessee’s side, details of which are as under :-

Sl. No. Particulars 1. Application for admission of additional evidence. 2. Affidavit of Prem Chand 3. Certificate from the Tehsildar dated 05.02.2018. 4. Certificate from the Tehsildar dated 19.04.2017 & 07.09.2017. 5. PWD Letters dated 31.10.2017, 10.11.2017 & 06.11.2017. 6. Certificate from Tehsildar, dated 16.01.2018. 7. Notification u/s 2(1A)(C), proviso, clause (II) (B) and section (2)(III)(B) of IT Act, dated 06.01.1994. 8. Area Map dated 05.02.2018. 9. Google Map.

(D.1.1) An application for admission of the additional evidences, vide letter dated 16.08.2019 was also filed from the assessee’s side requesting admission of aforesaid additional evidence referred to in the foregoing paragraph (D.1) of this order.

(D.2) In addition, orders of co-ordinate Bench of ITAT, Delhi in the cases of related parties were also filed from assessee’s side during the appellate proceedings in ITAT, including (i) order dated 15.10.2019 in the case of Sh. Karam Chand vs. ITO vide for A.Y. 2009-10 (ii) order dated 09/09/2019 in the case of Sh. Dharam Chand vs. ITO vide ITA No. 5400/Del/2016 for A.Y. 2009-10 (iii) consolidated order dated 16/03/2018 in the cases of Ms. Kaushalya Devi vs. ITO vide ITA No. 5399/Del/2016, for A.Y. 2009-10 and Ms. Maya Devi vs. ITO vide ITA No. 5403/Del/2016 for A.Y. 2009-10.

(E) At the time of hearing before us, the Ld. Counsel for the assessee submitted at the outset that the issues in dispute in the present appeal are squarely covered by orders of co-ordinate Bench of ITAT, Delhi in identical facts and circumstances, in the cases of Sh. Karam Chand vs. ITO (supra), Sh. Dharam Chand vs. ITO (supra), Ms. Kaushalya Devi vs. ITO (supra) and Ms. Maya Devi vs. ITO (supra). It was brought to our attention that in the aforesaid cases of related parties, in identical facts and circumstances, co-ordinate Bench of ITAT, Delhi has admitted the additional evidences and has set aside the disputed issues to the file of the Assessing Officer with direction to pass fresh assessment order in the light of additional evidences and other materials on record. It was further brought to our attention that the additional evidences admitted by co-ordinate Bench of ITAT, Delhi in the aforesaid cases of Sh. Karam Chand vs. ITO (supra), Sh. Dharam Chand vs. ITO (supra), Ms. Kaushalya Devi vs. ITO (supra) and Ms. Maya Devi vs. ITO (supra) are the same evidences which have been filed in the present appeal from the assessee’s side. In view of above Ld. Counsel for the assessee submitted that the additional evidences be admitted in the present appeal also and the disputed issues may be set aside to the file of the Assessing Officer for fresh assessment order in the light of the additional evidences.

(E.1) The Ld. Departmental Representative agreed that the issues in dispute in the present appeal are squarely covered by orders of co-ordinate Bench of ITAT, Delhi in the cases of Sh. Karam Chand vs. ITO (supra), Sh. Dharam Chand vs. ITO (supra), Ms. Kaushalya Devi vs. ITO (supra) and Ms. Maya Devi vs. ITO (supra). He further agreed that the additional evidences admitted by co-ordinate Bench of ITAT, Delhi in the aforesaid cases of Sh. Karam Chand vs. ITO (supra), Sh. Dharam Chand vs. ITO (supra), Ms. Kaushalya Devi vs. ITO (supra) and Ms. Maya Devi vs. ITO (supra) are the same which are now being also presented for admission from the assessee’s side in the present appeal. He was agreeable to the prayer of the Ld. Counsel of the assessee seeking admission of additional evidences [which are already admitted by co-ordinate Bench of ITAT, Delhi in the aforesaid cases of Sh. Karam Chand vs. ITO (supra), Sh. Dharam Chand vs. ITO (supra), Ms. Kaushalya Devi vs. ITO (supra) and Ms. Maya Devi vs. ITO (supra)] and to the submission of the Ld. Counsel of the assessee that issues in dispute be set aside to the file of the Assessing Officer for fresh assessment order in the light of the additional evidences; and expressed no objection to the aforesaid prayer of the Ld. Counsel of the assessee.

(F) We have heard both sides. We have perused materials on record. We have considered the precedents brought to our attention, or referred to in the records. There is no dispute that facts and circumstances of the present appeal before us are identical to the facts and circumstances of related parties in the aforesaid cases of Sh. Karam Chand vs. ITO (supra), Sh. Dharam Chand vs. ITO (supra), Ms. Kaushalya Devi vs. ITO (supra) and Ms. Maya Devi vs. ITO (supra). There is also no dispute that the additional evidences presented from assessee’s side for admission in the present appeal are the same as were presented by the respective assessees in the aforesaid cases of Sh. Karam Chand vs. ITO (supra), Sh. Dharam Chand vs. ITO (supra), Ms. Kaushalya Devi vs. ITO (supra) and Ms. Maya Devi vs. ITO (supra). Neither side has brought any material facts and circumstances to our attention to persuade us to take a view different from the view already taken by co-ordinate Bench of ITAT, Delhi the aforesaid cases of Sh. Karam Chand vs. ITO (supra), Sh. Dharam Chand vs. ITO (supra), Ms. Kaushalya Devi vs. ITO (supra) and Ms. Maya Devi vs. ITO (supra). Respectfully following the aforesaid precedents in the cases of Sh. Karam Chand vs. ITO (supra), Sh. Dharam Chand vs. ITO (supra), Ms. Kaushalya Devi vs. ITO (supra) and Ms. Maya Devi vs. ITO (supra); and as both sides have agreed to this at the time of hearing before us; we also admit the additional evidences filed from the assessee’s side in the present appeal before us and we set aside all the issues in dispute to the file of the Assessing Officer with the direction to pass fresh assessment order in accordance with law in the light of the additional evidences and other materials on record. For statistical purposes the appeal is partly allowed. Order pronounced in Open Court on 21/01/2020.

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