ITO, NEW DELHI vs. SH. HARISH CHANDER KHULLAR, NEW DELHI

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “C”, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER

ITA No. 3758/Del/2014 A.Y. : 2006-07 INCOME TAX OFFICER, SH. HARISH CHANDER KHULLAR, WARD 27(2), VS. E-88-B, MANSAROVER GARDEN, ROOM NO. 1909, NEW DELHI – 110 015 E-2 BLOCK, CIVIC CENTRE, (PAN: AAFPK8788A) MINTO ROAD, NEW DELHI – 110 001 (APPELLANT) (RESPONDENT)

Department by : Sh. Arun Kumar, Sr. DR

Assessee by : None

ORDER PER H.S. SIDHU, JM:

The Revenue has filed the present appeal against

the impugned order dated 28/4/2014 passed by the Ld.

Commissioner of Income Tax (Appeals)-XXIV, New Delhi on the

following grounds:-

“On the facts and circumstances of the case, the Ld.

CIT(A) erred in

i) Deleting the disallowance of deduction u/s. 54B of

I.T. Act amounting to Rs. 69,30,8000/- made by

the AO.

ii) The appellant craves the right to add, alter or

amend any ground of appeal.

for the relevant assessment year 2006-07 on 30.3.2007 declaring

total income of Rs. 1,95,030/-. The case of the assessee was

selected for scrutiny and notice u/s. 143(2) of the Income Tax Act,

1961 (hereinafter referred as the Act) was served on the assessee.

During the relevant assessment year, the assessee had claimed to

have earned capital gain of Rs. 1,62,36,847/- on sale of agricultural

land at Sonepat, Haryana on 22.3.2006 and invested the same in

the purchase of another agricultural land at Rajasthan worth of

Rs. 1,73,84,870/-(in 37 transactions) and claimed exemption u/s

54B of the Income Tax Act. A complete list of 37 transactions of

purchase indicating date of purchase along with photo copies of all

the deeds evidencing purchase of land were filed before the

Assessing Authority during the assessment proceedings. The

assessment was completed u/s 143(3) of the Income Tax Act, on

19.12.2008 at the declared income of the appellant. Subsequently,

the Assessing Officer noted that out of the capital gains of Rs.

1,62,36,847/-, the assessee had purchased another agricultural

land for Rs. 1,34,19,780/- only before the due date of furnishing his

return of income u/s 139(1) of the Income Tax Act, and land worth

of Rs. 39,30,800/- were purchased after the due date of filing of

return of income u/s 139(1) of the Income Tax Act. The AO further

noted that investment under the capital gain scheme amounting to

Rs 30,00,000/- was also made after the due date of submission of

return. Therefore, the Assessing Officer issued a notice u/s 154/155

of the Income Tax Act with a proposal to rectify the mistake of

allowing exemption u/s 54B of the Income Tax Act, on the long term

capital gains the amount of Rs. 1,34,19,780/- only instead of RS.

1,62,36,847/-. This notice was complied by the assessee and a

reply was given vide letter dated 14.12.2010 wherein the assessee

submitted that there was no mistake in the original assessment

order u/s 143(3) of the Income Tax Act. It was clarified that the

appellant deposited a sum of Rs 62 lacs in fixed deposits with State

Bank of India vide FDR No. 053481 on 12.10.2006. This FD was

encashed prematurely on 10.11.2006 and further land of

Rs.39,30,800/- was purchased. After this, another FD for Rs 30 lacs

was made from State 8ank of India bearing No. 53500 dated

17.02.2007. The balance land was purchased after getting this FD

encashed on 19.12.2007. It was pointed out that the AO missed the

FDR of Rs 62 lacs prepared on 12.10.2006 while issuing the said

notice. Nothing happened on this notice thereafter which gave a

presumption that the assessing officer was satisfied about the

amount having been invested in FDRs before the date of filing of

returns. Later on, the Assessing Officer issued a notice u/s 147/148

of the Income Tax Act dated 26.03.2012 and withdrew the

exemption u/s 54B of the Income Tax Act, of Rs. 69,30,800/- and

completed the assessment u/s. 143(3)/147 of the Income Tax Act,

1961 vide order dated 28.3.2013.

preferred an appeal before the Ld. CIT(A), who vide his impugned

order dated 28.4.2014 has allowed the appeal of the assessee

quashing the reassessment order dated 28.3.2013 and also decided

the appeal on merits as well.

filed the present appeal before the Tribunal and contested only the

appeal on merit.

contentions raised in the grounds of appeal.

Registered AD post, in spite of the same, assessee, nor his

authorized representative appeared to prosecute the matter in

dispute, nor filed any application for adjournment. Keeping in view

the facts and circumstances of the present case and the issue

involved in the present Appeal, we are of the view that no useful

purpose would be served to issue notice again and again to the

assessee, therefore, we are deciding the present appeal exparte

qua assessee, after hearing the Ld. DR and perusing the records.

the impugned order passed by the Ld. CIT(A). We find that on legal

issue i.e. quashing of reassessment, the Ld. First Appellate Authority

has observed that AO has reopened the assessment and no new or

tangent material has been brought on record to show that any

income has escaped assessment by reason of the failure on the part

of the assessee to disclose fully and truly all materials facts

necessary for his assessment for the relevant assessment year. The

reasons recorded by the AO do not indicate that his reason to

believe was on ground of failure of the assessee to disclose

material particulars truly and correctly. The notice was issued

beyond 4 years. The reasons do not say that the assessee does not

show any tangible material that created the reason to believe that

income had escaped. Rather, the reassessment proceedings

accounted to a “review” or “change of opinion” carried

out earlier. Therefore, on this account also, the reassessment

proceedings in the case of assessee was not valid. Reliance in this

regard was placed on the decision of the Hon’ble Delhi High Court in

the case of CIT vs. Kelvinator of India Ltd. (2002 256 ITR 1 (Del.).

Therefore, the Ld. CIT(A) has rightly quashed the reassessment

order dated 28.3.2013. However, we note that the Revenue has not

challenged this legal ground of appeal before the Tribunal, as a

result thereof, the Revenue’s Appeal stands dismissed on the legal

ground itself. Even otherwise, on merit also, it is noted that during

the relevant assessment year the assessee has sold agricultural land

at Village Rathdana, Tehsil Sonepat, Haryana for Rs. 1,78,62,500/-

and after deducting the purchase value of land of Rs. 13, 35, 097/-

declared long term capital gain of Rs. 1,65,27,403/-. Thereafter, the

assessee purchased another agricultural land between the period

07.04.2006 to 26.06.2006 of Rs. 1,87,92,759/- jointly with

Sh. Braham Singh (50:50 ratio). The assessee’s share of investment

in the agricultural land was of Rs. 93,96,380/-. Later on, between

the period 17.11.2006 to 19.12.2007, the appellant further

purchased agricultural land of Rs.75,45,930/-. Thus, between the

period 07.04.2006 to 19.12.2007, the assessee purchased

agricultural land worth of Rs. 1,69,42,310/- and also incurred

expenses for the purchase of land on account of commission and

other expenses of Rs. 4,42,560/-. Thus, the aggregate amount of

investment in the purchase of land by the appellant was of Rs.

1,73,84,870/-. From the above, it is clear that the assessee has

invested in the purchase of agricultural land within the period of two

year i.e. before 21.03.2008 the whole amount of long term capital

gain earned on the sale of agricultural land. As per Section 54B,

capital gain on transfer of land used for agricultural purposes are

not to be charged if the capital gains arises from the transfer of the

capital asset being agricultural land has been invested within a

period of two year after the date of sale of capital asset being land

for income tax purposes. In this case, there is no dispute that the

impugned agricultural land was sold by the appellant on 22.03.2006

and the whole amount was invested in the purchase of another

agricultural land by 19.12.2007 i.e. within the two years of the

impugned sale of agricultural land. It is further observed that the

Assessing Officer has disallowed the exemption uls 54B of

Rs.69,30,800/- only on the ground that the investments in purchase

of agricultural land for claiming the benefit of exemption u/s 54B

was made by the assessee after the due date of filing of return uls

139(1) of the IT Act i.e. 31.10.2006. The assessee in this case has

filed his original return of income for the relevant assessment year

on 30.03.2007 uls 139(4) of the Income Tax Act. It is worthwhile to

mention here that sub section 4 of Section 139 is an extension of

sub section 1 of Section 139. As per Section 54B of the I.T. Act, a

return has to be filed uls 139 only for availing the benefit of Section

54B. There is no mention of any sub section of Section 139 in

Section 54B such as sub section 1, 2, 3 or 4 etc. There is no dispute

about the fact that the return of income has been filed by the

appellant within sub section 4 of 139 of the I T Act. The Assessing

Officer has erred in disallowing the exemption on the long term

capital gain of the appellant uls 548 of the I.T. Act of Rs.

69,80,300/-. There is no dispute about the fact that the whole of

long term capital gain of Rs. 1,65,27,403/- has been invested by the

appellant in the purchase of another agricultural land within two

year from the sale of the capital asset i.e. agricultural land.

Therefore, the Ld. CIT(A) was of the opinion that the exemption uls

54B of the I.T. Act has to be allowed on the amount of

Rs. 69,80,300/-. In a similar case namely CIT vs. Jagriti Aggarwal,

15 Taxmann.com 146(2011), the Hon'ble High Court of Punjab and

Haryana has held "Sub-section (4) of section 139 is, in fact, a

proviso to sub-section (1) of section 139. Section 139 fixes the

different dates for filing the returns for different assessees. In the

case of assessee, it is 31st day of July of the assessment year in

terms of clause (e) of the Explanation 2 to sub-section (1) of section

139, whereas sub-section (4) of section 139 provides for extension

in period of due date in certain circumstances. [Para 10]

Thus, if a person had not furnished the return of the previous year

within the time allowed under sub-section (1), i.e., before 31st day

of July of the assessment year, the assessee could file return before

the expiry of one year from the end of the relevant assessment

year. [Para 11]

The sale of the asset having been taken place on 13-1-2006, falling in the previous year 2006-07, the return could be filed before the end of relevant assessment year 2007-08, i.e., 31-3-2007. Thus, sub-section (4) of section 139 provides extended period of limitation as an exception to sub-section (1) of section 139. Sub-section (4) is in relation to the time allowed to an assessee under sub-section (1) to file return. Therefore, such provision is not an independent provision, but relates to time contemplated under sub-section (1) of section 139. Therefore, such sub-section (4) has to be read along with sub-section (1). Similar was the view taken by the Division Bench of the Karnataka and Gauhati High Courts in Fathima Bai v. ITO [2009] 32 DTR 243 and CIT v. Rajesh Kumar Jalan [2006] 286 ITR 274/157 Taxman 398 respectively. [Para 12]

Thus, due date for furnishing the return of income as per section 139(1) is subject to the extended period provided under sub-section (4) of section 139. [Para 13]

Consequently, the question of law was to be answered against the

revenue and in favour of the assessee. Thus, the present appeal

was to be dismissed.

7.1 Therefore, relying upon the aforesaid decision, Ld. CIT(A) was of the considered opinion that the amount of Rs.69,80,300/- has to be exempted uls 54B of the I T Act and therefore the Assessing Officer was rightly directed to delete the addition of Rs. 69,80,300/-., which does not need any interference on our part, hence, we uphold the same.

Order pronounced in the Open Court on 04/10/2017.

Sd/- Sd/-

[L.P. SAHU] [H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER

Date 04/10/2017

“SRBHATNAGAR” Copy forwarded to: - 1. Appellant - 2. Respondent - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY By Order,

Assistant Registrar, ITAT, Delhi Benches