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Income Tax Appellate Tribunal, “B” BENCH, PUNE
Before: SHRI INTURI RAMA RAO, AM & SHRI SONJOY SARMA, JM
आदेश/ ORDER
PER: SHRI SONJOY SARMA, J.M.
This appeal by the Assessee arises out of the order passed by the ld.
Commissioner of Income Tax (Appeals)-9, Pune, (in short, the CIT(A) in
relation to the Assessment order dated 28/03/2014 passed by ITO, Ward
8(2), Pune for the Assessment Year 2007-08. The grounds of appeal raised
by the assessee are as follows:
“1 On the facts and in the circumstances of the case and in law, the proceedings initiated U/s 148 were contrary to law as the information in this case came to the hands of the A.O. in view of search and seizure action conducted against the Developers. The law provides that the assessment should have been complete U/s 153C r.w.s. 143(3) of the Act. The ld. CIT(A) was not justified, therefore, to confirm the assessment made by the A.O. U/s 147 r.w.s. 143(3) of the Act. The order of the ld. CIT(A) be set aside resultantly cancelling the assessment. 2. On the facts and in the circumstances of the case and in law the assessment u/s 143(3) r.w.s. 147 is also not sustainable for want of issue of notice u/s 143(3) which is mandatory. The order of the ld. CIT(A) be set aside resultantly cancelling the assessment.
ITA 1202/PUN/2017 for A.Y. 2007-08 Sh. Chandrakant Laxman Jadhav Vs ITO
On the facts and in the circumstances of the case and in law the ld. CIT(A) was not justified in not accepting the claim made by the assessee u/s 54 re-investment towards a new residential property within 2 years of Rs. 1,21,65,740/-. The same be allowed as the same has been taxed as income.
The appellant craves to leave, add/amend or alter any of the above grounds of appeal.”
In this appeal, the assessee has also raised additional grounds of
appeal which are as under:
“1. On the facts and in the circumstances of the case and in law the close scrutiny of the assessment order would reveal that no reasons were recorded prior to issue of notice u/s 148 of the Act no any statutory sanction was obtained as required by S. 151(2) of the Jt.CIT of the Range after five years period was elapsed. The assessment order suffers from jurisdictional latches and draw backs. The assessment order as confirmed by ld. CIT(A) be quashed and set aside.
On the facts and in the circumstances of the case and in law the ld. CIT(A) was also not justified in not accepting the additional evidence going to the root of the mater produced before him on the basis of Remand Report submitted by the A.O. dt. 23/05/2018.
On the facts and in the circumstances of the case and in law and once the notices U/s 143(2) and 142(1) of the Act have been issued, it was the statutory duty of the A.O. to furnish reasons for reopening the assessment u/s 147 to the assesesee and the A.O. could not furnish such reasons as they were never recorded. The assessment order and the order of the ld. CIT(A) confirming the assessment were vitiated in law. They be quashed and set aside.
On the facts and in the circumstances of the case and in law and while ignoring to follow the statutory requirements, filing objections and hearing, impugned assessment and demand orders have been passed which in turn would suggest that the A.O. has not only breached the principles of natural justice but also breached the procedure which was required to be followed for decision especially in the circumstances when assessee was living as ‘brain-dead person’. The orders being illegal and without jurisdiction be not sustained.
On the facts and in the circumstances of the case and in law the fact-situation of the land is to be considered as it was on 06/01/1994 when Govt. Notification was issued for counting distance as provided in S. 2(14)(iii)(b) of the Act which decides the status of ‘agricultural’ or ‘non-agricultural’ land. The distance if
ITA 1202/PUN/2017 for A.Y. 2007-08 Sh. Chandrakant Laxman Jadhav Vs ITO
considered as on 06/01/1994 from the Municipal Corporation/Municipal etc. it was far more than provided in that Section. Then it has to be considered as sale of agricultural land and not of capital asset being exempt under the Act. It be held accordingly.
On the facts and in the circumstances of the case and in law and on the specific fact that the assessee is a ‘brain dead person’ not understanding anything as a ‘living person’ and also not capable to understand anything, the additional grounds raised concerning ‘jurisdictional’ issues be admitted for adjudication with a view to give complete justice to a brain dead person who is alive in the eyes of this world.
On the facts and in the circumstances of the case and in law the brain dead person (assessee-appellant in this case) whose death then is said to ‘biological death’ who is unable to show any response to ‘external stimuli’ cannot directly face any assessment proceedings/legal actions as he is medically not considered as a ‘living person’. The assessment made directly on him is not sustainable in the eyes of law. It be quashed.
The appellant craves to leave, add/amend or alter any of the above g rounds of appeal.”
Since the additional grounds raised by the assessee are legal in
nature, therefore, these additional grounds No. 1 to 7 are interrelated and
interconnected and mainly relates to challenging the order of the ld.
CIT(A) in upholding the validity of reopening of reassessment proceedings
as well as issuance of notice U/s 148 of the Act.
On the other hand, the ld. DR has not raised any objection if the
additional grounds are admitted for hearing because the additional
grounds raised by the assessee are legal in nature.
Having considered the rival contentions and carefully perused the
material placed on record. From perusal of record, we observe that the
issue raised in the additional grounds are purely legal in nature, therefore,
considering the totality of facts and circumstances and prayer of the
ITA 1202/PUN/2017 for A.Y. 2007-08 Sh. Chandrakant Laxman Jadhav Vs ITO
assessee, we admit the additional grounds raised by the assessee for
adjudication.
Brief facts of the case are that on the information of the office of
Income Tax Officer (Inv.) Unit-1 & A/U, Pune that search and seizure
operation was carried out in Naiknaware group on 07/09/2011, it was
observed that Naiknaware Housing Development Pvt. Ltd., Pune had land
transaction with the assessee. It was also informed that the assessee is a
land owner and has received cash components of Rs. 31,12,500/- over and
above the agreement value in respect of land deal for land at Mhaulunge,
Tal : Khed, district- Pune. The total consideration of land sold was of Rs.
2,07,50,000/-. On the basis of said information, notice U/s 148 of the
Income Tax Act, 1961 (in short, the Act) was issued to the assessee for
the A.Y. 2008-09. In reply, the assessee submitted that the said
transactions have been carried out on 24/03/2007 which pertains for
Finance Year 2006-07 and not F.Y. 2007-08. Therefore, the A.O. dropped
the proceedings U/s 148 for the A.Y. 2008-09. However, after verification
of records, it was found that the assessee has not filed the return of
income for A.Y. 2007-08 relevant to the F.Y. 2006-07 and failed to disclose
the capital gains arising out of sale of land, income arsing therefrom has
termed as escaped assessment and notice u/s 148 issued to the assessee
on 20/03/2013 but in turn, no compliance was made by the assessee nor
filed any return of income within the time framed stipulated in the notice
U/s 148 of the Act. However, the assessee filed copy of agreement dated
24/03/2007 M/s Naiknaware Housing Development Pvt. Ltd. and copy of
the bank statement with S/B with SBI, Chakan branch and consequent
upon change of incumbent, fresh notice U/s 142(1) was issued upon the
ITA 1202/PUN/2017 for A.Y. 2007-08 Sh. Chandrakant Laxman Jadhav Vs ITO
assessee on 30/08/2013 and no compliance from the assessee and
ultimately the A.O. issued a final show cause notice u/s 142(1) on
07/03/2014 asking the assessee that is why the assessment be not
finalized on the basis of material available on the records u/s 144 of the
Act.
Therefore, the assessee filed return of income for A.Y. 2007-08 on
19/03/2014 in response to the show cause notice dated 07/03/2014 and
submitted that the return filed on 19/03/2014 may be treated as return
filed in response to notice u/s 148 and enclosing the copies of purchase
deeds of immovable properties.
That on the basis of return filed on 19/03/2014, the assessee had
shown the computation of long term capital gains as NIL and A.O. issued
notice U/s 143(2) on 19/03/2014 in connection with return of income filed
on 19/03/2014 and another notice u/s 142(1) issued to the assessee
calling the various details.
That while perusing of the documents by A.O., the agreement dated
24/03/2007 between M/s Naiknaware Housing Development Pvt. Ltd. and
the assessee and his family members, it is seen that the said land is
situated at Mouje Malunge, Gat No. 128, Hissa No. 2, admeasuring 1
Hector 66 Aar. As per Para 13 of the said Agreement, the consideration is
Rs. 1,76,37,500/-. As per para 14 of the said Agreement, the assessee has
given possession to /s Naiknaware Housing Development Pvt. Ltd. on the
date of agreement. As per Para 26 of the said Agreement, the said land is
shown in the Residential Zone. The A.O. during the course of re-
assessment proceedings for A.Y. 2008-09 has called for information u/s
ITA 1202/PUN/2017 for A.Y. 2007-08 Sh. Chandrakant Laxman Jadhav Vs ITO
133(6) of the Act from the Town Planning & Valuation Department, Pune
Branch. As per letter dated 14/03/2013 from the Assistant Director of
Town Planning, Pune Branch, the distance of the said Gat No. from Pimpri-
Chinchwad Municipal Corporation limits according to their Office Drawing
record is roughly around 5000 mtrs. Thus the above land is a capital assets
within the meaning of Section 2(17) of the Act and is transferred as per
Section 2(47) of the Act and therefore, the assessee is liable to Capital
Gains in view of the above Agreement.
The consideration received as per the said Agreement is Rs.
1,76,37,500/- and the amount received in cash as per the information
received from the ITO (Inv) Unit-1 & AIU Pune is Rs. 31,12,500/-. This
totals Rs. 2,07,50,000/- which the assessee has shown as full value of
consideration in return of income filed. Thus the assessee has accepted
that he has received Rs. 31,12,500/- in cash over and above the
agreement value of Rs. 1,76,37,500/-. The sale consideration received by
the assessee are as per agreement was deposited in his saving account
with State Bank of India, Branch Chakan.
The assessee alongwith his letter dated 19/03/2014 filed copies of
following documents:
Sr. Documents Property details Name of the Consideration Remarks No. details Purchaser 1) Purchase Agri. Land at Mr. 8,50,000/- The assessee has sold deed dtd. Warale, Gat No. Chandrakant his land in Residential 31/07/2008 18(7)/1, Laxman Jadhav zone and purchased admeasuring (Assessee & Agri. Land. Hence the 0.57 Aar Mr. Uttam deduction against this Laxman Jadhav investment is not allowed. Also the assessee has not opened bank account under LTCG Scheme. 2) Purchase Agri.Land at Mr. 5,25,000/- The assessee has sold deed dtd. Warale Gat No. Chandrakant his land in Residential 23/10/2007 45, Laxman Jadhav Zone and purchased admeasuring Agri land. Hence the 0.H 40 Aar deduction against this investment is not
ITA 1202/PUN/2017 for A.Y. 2007-08 Sh. Chandrakant Laxman Jadhav Vs ITO
allowed. Also the assessee has not opened bank account under LTCG Scheme. 3) Purchase Agri. Land at Mr. 15,00,000/- The assessee has sold deed dtd. Warale, Gat No. Chandrakant his land in Residential 05/07/2007 18(7)/, Laxman Jadhav zone and purchased admeasuring (Assessee & Agri. Land. Hence the 0.50 Aar Mr. Uttam deduction against this Laxman Jadhav investment is not allowed. Also the assessee has not opened bank account under LTCG Scheme. 4) Purchase Shop No. G-8 & Mr. 11,00,000/- Investment in shop is deed dtd. 9, in “Shraddha Chandrakant not allowed as 04/03/2009 Complex”, Laxman Jadhav exemption under any Chakan Pune section against capital gains. 5) Purchase Flat at Diwarka Mr. 11,30,500/- No deduction in deed dtd. visha Hsg. Chandrakant respect of this 04/05/2006 Society, Laxman Jadhav investment was filed Indrayaninagar, & Mrs. Nirmala alongwith letter dtd. Bhosari, Pune Chandrakant 19/03/2014. However, (Flat No. A-14) Jadhav the A.R. filed copy of Index II thereafter. The assessee has not filed ROI u/s 139(1) claiming such deduction. Also no Return of Income was filed in response to notice u/s 148 within 30 days. The ROI filed on 19/03/2014 is not revised return. Hence relying on the Hon’ble Supreme Court decision in the case of Goetz (India) Ltd. Vs CIT (284 ITR 323) no deduction against this investment is allowed. 6) Residential Mr. - No document such as house at, Post: Chandrakant commencement Malunge Ingle Laxman Jadhav certificate, completion certificate, copy of plan, copy of purchase bills in respect of construction material purchased etc. is filed. The assessee has not filed ROI u/s 139(1) claiming such deduction. Also no Return of Income was filed in response to notice u/s 148 within 30 days. The ROI filed on 19/03/2014 is not revised return. Hence relying on the Hon’ble Supreme Court decision in the case of Goetz (India) Ltd. Vs CIT (284 ITR 323) no deduction against this investment is allowed.
ITA 1202/PUN/2017 for A.Y. 2007-08 Sh. Chandrakant Laxman Jadhav Vs ITO
The AR filed copy of valuation report dtd. 19/03/2014 in respect of
the land sold to M/s Naiknaware Housing Development Pvt. Ltd. No
supporting in respect of cost of improvement is filed and hence the claim is
rejected. No details about how the claim of deduction against the gross
LTCG is worked out is filed by the assessee except the copies of
documents filed referred to above. In view of the same and also as
discussed above, no deduction for investment in Agricultural Land, Shops
or Residential Flat/House are allowed.
After discussion and subject to the above remarks, the long term
capital gain of the assessee is computed as under:
Sr. No. Particulars Amount 1 Full value of consideration 2,07,50,000/- 2. Deduction under section 48 iii) Cost of Acquisition after indexation 85,84,260/- iv) Cost of improvement after indexation (not allowed NIL as discussed above) 3. Total Deduction (i+ii) 85,84,260/- 4. Balance 1,21,65,740/- 5. Deduction claimed for Re-Investments in Purchase of NIL Agri Land, Shops, Flat/Residential house [not allowed as discussed above] 6. Net Taxable Long Term Capital Gain 1,21,65,740/- 7. Aggrieved by the order passed by the A.O. on 28/03/2014, the
assessee preferred an appeal before the CIT(A)-9 Pune and CIT(A)
considering the facts of the case, dismissed the appeal of the assessee.
At the outset, we would like to mention here that at the time of
hearing, the ld. Counsel for the assessee is not pressed the other grounds
of appeal except the additional ground raised in the appeal i.e. ground No.
5 and the same is as hereunder:
“5. On the facts and in the circumstances of the case and in law the fact-situation of the land is to be considered as it was on 06/01/1994 when Govt. Notification was issued for counting distance as provided in S. 2(14)(iii)(b) of the Act which decides the status of ‘agricultural’ or ‘non-agricultural’ land. The distance if
ITA 1202/PUN/2017 for A.Y. 2007-08 Sh. Chandrakant Laxman Jadhav Vs ITO
considered as on 06/01/1994 from the Municipal Corporation/Municipal etc. it was far more than provided in that Section. Then it has to be considered as sale of agricultural land and not of capital asset being exempt under the Act. It be held accordingly.”
Therefore, there is no need to decide the other grounds of appeal
except the additional ground No. 5 raised as above.
The ld. AR submits that the fact situation of the land is to be
determined as it was on 06/01/1994 when the notification was issued for
counting distance as provided in section 2(14)(ii)(b) of the Act which
decides the status of “agricultural” or non-agricultural” land and if distance
is considered as on 06/01/1994 from the municipal corporation/municipal
etc. it was far more than provided in that Section. Therefore, the land has
to be considered as sale of Agricultural land and not of capital asset,
accordingly, it is held to be exempt from tax and the issue was not dealt
by the ld. CIT(A) while dismissing appeal of the assessee and on the other
hand, the ld. DR relied on the decision of the ld. CIT(A) and A.O.
We have heard the rival submissions of both the parties and perused
the material available on record. While hearing this appeal, limited issue is
to be decided that the land sold being a capital asset or an agricultural
land. At the time of hearing before ld. CIT(A), the assessee filed a letter
dated 26/02/2016 from grampanchayat Shriskeshtra Mhalunge, Tal: Khed,
Distt.-Pune, stating therein that the distance of land in the name of the
assessee, situated at Gat No. 128, Mhalunge, Tal: Khed, district-Pune is
located at following distances:
i) Mhalunge to Pimpri-Chinchwad Municipal Corporation-14 KM.
ii) Mhalunge to Dehuroad Cantonment board- 11 KM
ITA 1202/PUN/2017 for A.Y. 2007-08 Sh. Chandrakant Laxman Jadhav Vs ITO
iii) Mhalunge to Telegaon Dabhade Municipal Corporation- 12KM
In response to that, a remand report dated 23/05/2016 was called from
the A.O.. However, the appellant has not filed any rejoinder on the remand
report despite of several opportunities provided to him on several times
and on the material available on the record, the order was passed against
the assessee. Since the issue goes to the roots of the case, it is restored
back to the file of the ld. CIT(A) with a direction to decide the issue afresh
after giving an opportunity to the assessee to file necessary documents to
prove the fact that the land sold being a capital asset or an agricultural
land.
In the result, this appeal of the assessee is allowed for statistical
purposes only. Order pronounced in the open Court on March 30th, 2022.
Sd/-/- Sd/- /- (INTURI RAMA RAO) (SONJOY SARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER
पुणे / Pune; �दनांक / Dated :March 30th, 2022 *Ranjan आदेश क� �ितिलिप अ�ेिषत / Copy of the Order forwarded to : अपीलाथ� / The Appellant. 1. 2. ��यथ� / The Respondent. 3. The CIT 4. The CIT(A) िवभागीय �ितिनिध,आयकर अपीलीय अिधकरण, “बी” ब�च, 5. पुणे / DR, ITAT, “B” Bench, Pune. गाड�फ़ाइल / Guard File. 6. आदेशानुसार / BY ORDER, // TRUE COPY // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे/ITAT, Pune.