Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, DELHI ‘G’ BENCH,
Before: SHRI H.S. SIDHU & SHRI N.S. SAINI
IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI ‘G’ BENCH, NEW DELHI
BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI N.S. SAINI, ACCOUNTANT MEMBER
ITA No. 2895/DEL/2017 [A.Y. 2012-13]
Shri Satish Kumar Tyagi, VS. ITO, WARD 3(3), S/o Sh. Ved Prakash, ] NOIDA 47, Bhangel Begumpur, Gegha, Phase-II, Noida District Gautambudh Nagar, UTTAR PRADESH PAN : AAXPT1416A)
[Appellant] [Respondent]
Assessee by : Shri K.P. Garg, CA Revenue by : Shri S.S. Rana, CIT(DR)
ORDER PER H.S. SIDHU, JM
This appeal of the assessee arises from the order of the ld. CIT(A)-
1, Noida vide order dated 24.02.2017 for assessment year 2012-13.
The assessee has raised the following grounds of appeal:
“1. That the learned Commissioner of Income tax (Appeals) has erred in confirming the order of the AO by treating the interest income of the (HUF) Satish Tyagi to that of the individual Satish Tyagi.
That Ld. CIT(A) has erred in confirming the action of the AO in not accepting the fact that on account of death of Sh. Ved Prakash in 1954 a new HUF came into existence that of his son Satish Kumar and the interest on delayed payment of compensation of Ved Prakash Tyagi (HUF) was released / distributed / paid to the
smaller HUF (Coparcenaries).
That the learned CIT(A) has erred in law and on facts in confirming the AO’s order to assess the benefit derived from the acquisition of ancestral land in the hands of Satish Kumar (Individual) and not in the hands of Satish Kumar (HUF) separately.
That the Learned Commissioner of Income tax (Appeals) has erred in law and on facts in dismissing the claim of HUF, merely on the ground that the Ved Prakash (HUF) in whose name the compensation on account of acquisition of family Agriculture land was released by the State Government has never filed its Income tax Return, ignoring the fact that the Agricultural Income was not liable to tax under section 10(37) of I.T. Act, 1961 and the family had no other income at that time.
That the learned CIT(A) has erred in law and on facts in confirming the AO’s order in not accepting that each and every member born in Joint Hindu Family acquires an interest in HUF - (Sunil Kumar v. Ram Prakash- AIR 1988 SC 576) and Property inherited by Hindu from his father, father’s father or father’s father’s father, is ancestral property- U.R.Virupakshaiah vs Sarvamma & Anr on Civil Appeal N0.7346 of 2008 (Arising out of SLP© N0.11785 of 2007)
That the learned Commissioner of Income tax (Appeals) has erred in law and on facts in not accepting that the impugned Agriculture land was ancestral coparcenary property passed on from Shri Ghisa to the joint family of Shri Fateh Singh(Son), Shri Ved Prakash (Grand Son) and Shri Satish Kumar (Great Grand son).
That the learned CIT(A) has erred in law and on facts in
considering that the interest income has been earned by the assessee (Individual) as per Form No.26AS on the record of the AO whereby TDS amounting to Rs4,40,595/- has been shown to have been deducted ignoring the submission of the assessee that since there was no PAN allotted in the name of Satish Kumar (HUF) the interest income was credited and TDS was deducted using the PAN of Satish Kumar (Individual), however, the interest income belonged to HUF and not to Individual.
That the Id. CIT (A) has erred in confirming the action of the AO in not considering the fact that after the death of the sole member so long as the original property of the Joint Family remains in the hands of widow of the members of the family and the same is not divided amongst them; the Joint Hindu family continues to exist. CIT vs. Veerapa Chettiar, 76 ITR 467 (SC)
That the learned CIT (A) has erred in confirming the action of the AO without appreciating the fact that the Bhumidhar rights created under section 18 of UP Zamindari Abolition and Land Reforms Act were the new rights of the deceased’s son in the agriculture land would depend upon whether he was born before the date on which the UP Zamindari Abolition and Land Reforms Act became applicable to the area where the concerned land was situated. Therefore, in case the son was born before the vesting, he being the son of the deceased would before that date acquires an interest by birth in the agriculture holding of the HUF, but in case he was born after that date, he could not acquire any interest in the bhumidhari land of the deceased by birth. (Controller of Estate Duty vs. Smt. Shiela Prasad (143 ITR 458)(All)
That the learned C1T (A) has erred in law and on facts in ignoring section 37 of UP Zamindari Abolition and Land Reforms Act
which clearly provides for treating the Joint Family as a separate unit.
That the learned CIT(A) has erred in law and on facts in ignoring that the order of partition of a joint Hindu Family can be passed by an Assessing Officer only where the HUF is assessed to Income tax, and where the family has only agriculture income and not liable to tax, no such order can be passed u/s 171 of the Act.”
The brief facts of the case are that assessee filed return of income
on 18.3.2013 declaring total income of Rs. 3,41,320/- showing income
under the head ‘income from house property’. The case was selected for
scrutiny through CASS. Notice under section 143(2) of the Act was issued
on 23.9.2013. In response to the same, the AR of the assessee attended
the proceedings and filed the replies. AO observed that assessee has
declared income from house property only, whereas per 26AS statement
the assessee was in receipt of interest amounting to Rs. 48,54,476.79
from Treasury, PNB and Syndicate Bank on which there was TDS of Rs.
4,86,990/-. Neither this income was shown in the return of income, nor
claimed credit of TDS. AO issued notices u/s. 142(1) of the Act on
29.12.2014 and 9.1.2015 requiring to furnish details of income from all
sources, and details of compensation and interest received thereon
during the relevant assessment year and also required to explain why the
interest income be not included towards assessee’s total income under
the head ‘income from other sources.’ The assessee vide his letter dated
8.1.2015 submitted that the ancestral agricultural land situated in village
Bhangel Noida was acquired by New Okhla Industrial Development
Authority (NOIDA) in 1989, and the compensation was awarded was
invested in various assets. It was further claimed that since the land was
ancestral which was acquired by the assessee as Karta of the HUF namely
Sh. Satish Kumar Tyagi & Others (HUF) after the death of his father Sh.
Ved Prakash Tyagi in 1954. The land belonged to the assessee’s HUF, and
therefore, the compensation and interest received on acquisition of land
by the Govt. belonged to the assessee’s HUF. The issue was adjudicated
by the Jt. Commissioner of Income Tax, Range-3, Noida during the course
of assessment under section 144A of the I.T. Act, 1961 by passing the
order dated 23.2.2015 and held that AO is directed to assess the benefits
derived from the acquisition of said ancestral land in the hands of Sh.
Satish Kumar Tyagi (Individual), and not in the hands of Shri Satish
Kumar Tyagi and others (HUF), as offered. After receipt of the order
dated 23.2.2015 the assessee was provided an opportunity of being heard
vide notice u/s. 143(3) of the Act and in response to the same, the
assessee filed his written submission vide letter dated 27.2.2015 and
after considering the same, the AO held that the receipt of interest
received is being considered and taxed in the hands of Sh. Satish Kumar
Tyagi (individual) under the head ‘income from other sources’ and interest
received on compensation at Rs. 70,37,239/- was added to the income of
the assessee under the head income from other sources and income
under the head ‘capital gains’ (long-term) works out at Rs. 15,41,886/-
and added to the income of the assessee and also interest from bank at
Rs. 5,65,142/- was added to the income of the assessee under the head
‘income from other sources’ thus, computed the income of the assessee
at Rs. 59,66,968/- u/s. 143(3) of the Act read with section 144A of the
Act vide order dated 10.3.2015.
Against the order of the Assessing Officer, assessee appealed before
the Ld. CIT(A), who vide his impugned order dated 24.2.2017 has
dismissed the appeal of the assessee by holding that that joint Hindu
Property does not devolve on HUF by succession as is being sought to be
made out on behalf of the appellant. The corpus of the HUF is to be
specifically created and only with the creation of corpus an HUF comes
into being. He further held that the assessee has not brought no
evidence to even suggest that the corpus of the Satish Kumar, HUF was
ever created nor any evidence has been brought on record to show that
the said Satish Kumar, HUF was in subsistence and had come to acquire
the land which was acquired by the State and which has been subjected
to tax by the AO in the impugned assessment order and finally held that
the claim of the assessee regarding creation of subsistence of the Satish
Kumar, HUF, is not maintainable and the same was rejected.
Aggrieved by the order of the ld. CIT(A), the present appeal is filed
by the assessee before this Tribunal.
Ld. counsel for the assessee has submitted that the ancestral
agricultural land situated at village Bhangel of Noida belonging to Shri Ved
Prakash Tyagi & Others (HUF) was acquired by the NOIDA in 1989 and
the compensation was awarded which was invested in various assets. In
the year 1954 Shri Ved Prakash Tyagi died and Shri Satish Kumar Tyagi
became the karta of the HUF namely Shri Satish Kumar Tyagi & others
(HUF) having the other co-parceners, namely Smt. Mithlesh Tyagi (wife)
and Shri Varun Tyagi (son). No income tax return was filed by Shri Ved
Prakash Tyagi and others (HUF) for the AY 1990-91 as the income, being
agricultural was exempt u/s 10(37) of the IT Act 1961. The above
smaller HUF namely Shri Satish Kumar Tyagi HUF received interest on
delayed payment of compensation payable to Shri Ved Prakash Tyagi &
others (HUF) amounting to Rs.65,96,644 + TDS Rs.4,40,595/-) =
70,37,239/-, along with two hufs of his brothers, Shri Navin Kumar Tyagi
and Shri Ashwani Kumar Tyagi. He submitted that there was a
misconception in the mind of the assessee (similar to that of his brothers)
who is a villager and illiterate that this interest on delayed payment of
compensation has been paid as a result of acquisition of agriculture land
on which no income tax is chargeable, hence neither income tax return
was filed nor any PAN was got allotted by the above three HUFs. It was
further submitted that later this misconception had been broken and it
has been realised that the HUFs should have filed their income tax returns
separately for the financial year relevant to the AY 2012-13. Accordingly
return of the HUF was filed under IDS and tax paid, which has been
accepted by the Id. Pr. CIT, Noida in all the three cases. (Evidence of the
current assessee enclosed herein). The interest granted on delayed
payment of compensation was released in the individual names as there
was no PAN available/allotted in the status of HUF having no other income
except agricultural income and also there was no bank account in HUF
status, as in the other two cases. He further submitted that the ITO
assessed this income in the hands of Shri Satish Kumar Tyagi, individual
as in the cases of his brothers Shri Navin Kumar Tyagi and Shri Ashwani
Kumar Tyagi. The assessee herein filed appeal before CIT(A)-1 Noida,
who dismissed the appeal on the same grounds as in the case of Shri
Navin Kumar Tyagi. Accordingly the assessee filed appeal with ITAT. It
was submitted that the only issue in all these three appeals is whether
the income of the HUF could be taxed in the hands of the individual,
which has been settled by ITAT in the case of Shri Ashwani Kumar Tyagi
and followed in the case of Navin Kumar Tyagi. It was further submitted
that the ITAT in appeal no.2745/DEL/2017, order dated 18-10-2017 in
the case of Shri Ashwani Kumar held: that this income is taxable in the
hands of respective HUF only and further confirming that the respective
HUFs have already paid the taxes under IDS, since it was not paid earlier.
The declaration under IDS has been accepted without dispute. Hence the
ITAT deleted the addition in the hands of the individual and upheld the
claim of the assessee that income from interest on delayed compensation
is taxable only in the hands of respective HUF. Hence, he stated that the
issue in dispute is squarely covered by the ITAT decision in the case of
Shri Ashwani Kumar Tyagi in appeal no.2745/DEL/2017 for AY 2012-13
(Supra) and requested to follow the same and appeal of the assessee may
be allowed.
6.1 The assessee filed the Paper Book containing pages 1 to 32 in which
he has attached the copy of PAN of Satish Kumar; Form 1 – declaration
u/s. 183 in respect of Income declaration Scheme 2016 of Satish Kumar
Tyagi HUF alongwith Annexure; Form 2 in respet of income declaration
scheme 2016, HUF, Form 4 in respet of income declaration scheme 2016,
HUF; copyo f challans for payment of tax under IDS by the HUF for AY
2017-18 for Rs. 3,96,000/- two nos. Rs. 4,00,000/- 1 no. and Rs.
3,92,000/-; ITAT E Bench New Delhi order dated 8.3.2018 in the case of
Sh. Naveen Kumar Tyagi for AY 2012-13; ITAT, New Delhi – SMC Bench
order dated 18.10.2017 in the case of Sh. Ashwani Kumar Tyagi for AY
2012-13 and the copy of written synopsis. He further submitted that the
issue involved in the present appeal is squarely covered by the decision of
the SMC Bench order dated 18.10.2017 in the case of Sh. Ashwani Kumar
Tyagi for AY 2012-13 and the ITAT E Bench New Delhi order dated
8.3.2018 in the case of Sh. Naveen Kumar Tyagi for AY 2012-13.
Ld. CIT(DR) relied upon the orders of the authorities below.
We have heard both the parties and perused the records,
especially the order of the authorities below as well as Paper Book
containing pages 1 to 32 and the decision of the ITAT E Bench New
Delhi order dated 8.3.2018 in the case of Sh. Naveen Kumar Tyagi
for AY 2012-13; ITAT, New Delhi and SMC Bench order dated
18.10.2017 in the case of Sh. Ashwani Kumar Tyagi for AY 2012-13.
We find that the issue in dispute is squarely covered by the decision
of the ITAT, SMC Bench dated 18.10.2017 in the case of Sh.
Ashwani Kumar Tyagi vs. ITO, Noida in ITA No. 2745/Del/2017 (AY
2012-13). For the sake of convenience, we are reproducing the
relevant finding of the Tribunal’s order dated 18.10.2017 as under:-
“6. I have heard both the sides and perused the
relevant material on record. The only issue involved in
this appeal is whether the impugned agricultural land was
ancestral coparcenary property passed on from Shri Ghisa to
the joint families of Fateh Singh (Son), Rameshwer Dayal
(Grand Son) and Naveen Kumar (Great Grand Son) by
survivorship to the HUF of Shri Naveen Kumar Tyagi,
incorrectly relying on S. 18 of the UP Zamidari Abolition and
Land Reforms Act, 1950, ignoring S.37, which clearly provides
for treating the Jt. Hindu Family as a separate unit. The
main crux of the case lay in the fact of non -payment of tax
by the HUF, which has now been paid under the IDS, leaving
no ground left for sustaining the addition on any account.
None of the HUFs, having only agricultural income was filing any return of income under the Income Tax Act and was
never assessed to tax, being not liable to tax. Thus the
question of any ITO passing any order u/s.171 of the Act does
not arise, nor is applicable to Agricultural families, having no
income under the Income Tax Act. Non filing of returns under
the Income Tax Act by the HUF was bonafide belief that
agricultural income was not liable to tax under the Income
Tax Act. What has been ignored/omitted is the fact that
interest on enhanced compensation was taxable and the HUF
should have filed its return of income for AY 2012-13,
showing income from interest on enhanced compensation.
The belief is bonafide and cannot in any manner be attributed
to any malafide, merely because the individuals having their
independent income from self acquired properties or other
activities, had not included the income of the HUF in their
return of income, which per se is contrary to law. No
individual/Karta is authorized to appropriate and show the
income of the HUF in his hands, debarring the other co-
parceners of their right claim to the share of HUF
properties/assets/income.
This fact is clear from the assessment order of the
individual assessee, para-2. The same is discussed by the
Id. CIT(A) in the case of Shri Naveen Kumar, brother of the
assessee, whose order has been followed in the case of the
assessee, vide para-3 at pages 24, para-5 page-25, para-8
page-26 of the paper book and his conclusion in para-9, 10
and 11. The crux of his arguments is that an HUF under the Income Tax Act could be created only by a gift of property
and not by inheritance/succession to the property of the
bigger HUF, which is contrary to Hindu Law as well as the
Income Tax Act. The background being the fact that none of
the claimed HUFs were ever assessed to tax, which is again
erroneous. According to him, if the HUF had filed its return
showing the income from interest on enhanced compensation,
would have rendered a fool proof evidence of existence of
HUF under the Income Tax Act and coparcenary property
under Hindu Law.
Now the question was how the HUF could now declare
its income and file the return, as the Act prohibits the same.
Effort was thus made by the assessee to tax the HUF
u/s.144A, but was declined by the Id. JCT. Luckily the IDS
came into operation and taking advantage of the same, the
two HUFs filed a declaration before the Commissioner of
Income Tax, Noida declaring the interest on enhanced
compensation and paid the tax as per pages 11-23 of the
paper book. Obviously this evidence being subsequent could
not be filed either before the AO or the Id. CITA, although the
fact of offer made before the JCIT u/s.144A has duly been
discussed by both. Thus the factual reason to disallow the
claim of the HUF is that no such return was filed and no such
tax had been paid by the HUF. The issue gets settled by the
payment of taxes by the HUF through the declaration made
before the Pr. CIT under IDS, which has been accepted, as all
taxes have been paid. Therefore, in such circumstances,
and facts of the case, since the HUF has already paid tax
due alongwith interest, etc and correct share had been
declared at Rs. 27,79,279/- as against lesser amount of
Rs. 22,50,413/- taken by both the authorities below, the
Assessing Officer is directed to delete the addition so
made. Thus, the grounds of appeal raised by the
assessee are allowed.
In the result, the appeal of the assessee is allowed.” 8.1 Keeping in view of the facts and circumstances of the case as well as the order passed by the Coordinate Bench dated 18.10.2017 in the case of Sh. Ashwani Kumar Tyagi vs. ITO, Noida in ITA No. 2745/Del/2017 (AY 2012-13) as reproduced above, we are of the view that the issue in dispute is squarely covered by the aforesaid decision dated 18.10.2017 in the case of Ashwani Kumar Tyagi (Supra) which has been decided in favour of the assessee. Therefore, respectfully following the order dated 18.10.2017 in the case of Sh. Ashwani Kumar Tyagi (Supra), we delete the addition in dispute and allow the appeal of the assessee. 9. In the result, the appeal of the assessee is allowed.
This Order is pronounced on 18-12-2018.
Sd/- Sd/-
(N.S. SAINI) (H.S. SIDHU) Accountant Member Judicial Member Dated: 18-12-2018. SRBHATNAGAR Copy forwarded to 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi