ZAHID HASAN KHAN,YAMUNA NAGAR vs. ITO, WARD -5, YAMUNA NAGAR

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ITA 122/CHANDI/2023Status: DisposedITAT Chandigarh03 December 2024AY 2007-08Bench: SHRI. VIKRAM SINGH YADAV (Accountant Member), SHRI. PARESH M. JOSHI (Judicial Member)20 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal addressed the issues as follows: Regarding the cost of acquisition (Issue 2): The Tribunal noted the assessee's argument that the AO's reliance on sale deeds from Village Jaroda was flawed and that the purchase by the Ministry of Defence was more credible. It also noted the CIT(A)-3 Gurgaon's favorable view in a similar case for the assessee's son. However, the judgment excerpt provided does not contain the Tribunal's final decision on this specific aspect of FMV determination. It appears the Tribunal focused more on the Section 54B claim in the provided text. Regarding the deduction under Section 54B (Issue 3): The Tribunal, relying on the consistent view of the jurisdictional Punjab & Haryana High Court in cases like Jai Narayan, Dinesh Verma, and Kamal Kant Kamboj, held that an assessee is not entitled to the benefit of Section 54B if the new agriculture land is purchased in the name of a third person, including a grandson or wife. However, the Tribunal directed the AO to allow the claim of deduction under Section 54B for the agriculture land purchased in the assessee's name (Rs. 1,12,82,000/-), but denied it for the land purchased in the wife's name (Rs. 36,70,000/-). Thus, this ground was partly allowed. Regarding the reopening under Section 147 (Issue 1) and deduction under Section 54F (Issue 4): No arguments were advanced by the assessee during the hearing on these grounds, hence they were dismissed. Grounds 2, 6, 7, and 8 were considered general and did not require separate adjudication. The ratio for the Section 54B claim is that while funds from the sale of capital assets can be used to purchase new assets, the purchase must be in the assessee's own name to be eligible for the deduction under Section 54B, as per the Punjab & Haryana High Court's interpretation.

What were the facts?

The assessee, Zahid Hasan Khan, is in appeal against the order of the CIT(A)/NFAC, Delhi, for Assessment Year 2007-08. The Assessing Officer (AO) reopened the assessment under Section 147 and completed it under Section 144, bringing to tax long-term capital gains (LTCG) of Rs. 2,49,21,043/- on the sale of agriculture land. The AO issued two notices under Section 148 based on the sale of two plots of land in Village Kansapur. The AO determined the Fair Market Value (FMV) as on 01.04.1981 based on sale deeds from Village Jaroda. The assessee did not comply with the notices. The CIT(A) sustained the AO's findings on capital gains but denied exemptions under Sections 54B and 54F claimed for the first time during appellate proceedings.

What were the issues?

1. Whether the learned CIT(A) erred in law and facts by confirming the AO's action in reopening the assessment under Section 147, and whether the AO's reliance on third-party evidence without providing it to the assessee was legally valid? 2. Whether the learned CIT(A) erred in law and facts by confirming the AO's computation of the indexed cost of acquisition of land at Rs. 6,41,457/- as against Rs. 1,10,14,333/- claimed by the assessee, particularly concerning the determination of FMV as on 01.04.1981? 3. Whether the learned CIT(A) erred in law and facts by not allowing the deduction under Section 54B of Rs. 1,49,52,000/- claimed by the assessee? 4. Whether the learned CIT(A) erred in law and facts by not allowing the deduction under Section 54F of Rs. 35,00,000/- claimed by the assessee? Assessee's Contentions: - The AO's reliance on sale deeds from Village Jaroda to determine the FMV of land in Village Kansapur was incorrect and lacked proper explanation. The copy of the sale deed or communication from the Sub-Registrar was not provided, making the reliance on third-party evidence bad in law (Relied on CIT Vs. Sham Lal and Kishinchand Chellaram Vs. CIT). - The assessee's reliance on a purchase transaction by the Ministry of Defence in an open auction in a nearby village for determining FMV is more credible (Relied on Manjit Singh Vs. DCIT). - The FMV determination in a similar case for the assessee's son was accepted by the CIT(A)-3 Gurgaon based on the Ministry of Defence purchase. - The assessee claimed deduction under Section 54B for purchasing agriculture land. Revenue's Contentions: - No specific contentions are recorded for the revenue regarding the reopening or the computation of capital gains. For Section 54B, the revenue's position is implicitly supported by the AO and CIT(A)'s denial of the claim.

Which sections of the Income-tax Act were involved?

Section 147,Section 144,Section 148,Section 2(14),Section 54B,Section 54F,Section 250

AI-generated summary — verify with the full judgment below

Order PER VIKRAM SINGH YADAV, A.M. : This is an appeal filed by the Assessee against the order of the Ld. CIT(A)/ NFAC, Delhi dt. 03/01/2023 pertaining to Assessment Year 2007-08. 2. In the present appeal, the Assessee has raised the following grounds of appeal:

1.

1. That the learned CIT(A) has erred in law and on facts in confirming the actions of learned AO in reopening of assessment u/s 147.

2. That the learned CIT(A) has erred in law and on facts in confirming the actions of Ld. AO of making additions of Rs. 2,49,21,043/- on account of long term capital gain from sale of agriculture land. 3. That the learned CIT(A) has erred in law and on facts in confirming the actions of Ld AO of computing indexed cost of acquisition of the land at Rs. 6,41,457/- as against Rs. 1,10,14,333/- claimed by the assessee. 4. That the learned CIT(A) has erred in law and on facts in not allowing deduction u/s 54B of Rs. 1,49,52,000/- claimed by assessee. 5. That the learned CIT(A) has erred in law and on facts in not allowing deduction u/s 54F of Rs. 35,00,000/- claimed by assessee.

6. That the learned CIT(A) has erred on facts in confirming the additions of Rs. 2,49,21,043/- made by the AO by observing that assessee had not filed any details during appellate proceedings.

7.

That the learned CIT(A) has erred in law and on facts in passing the order u/s 250 without adherence to principles of natural justice. 8. That the appellant craves leave to add, alter, amend or to substitute the above grounds of appeal

either before or at the time of hearing of case.”

3. Briefly the facts of the case are that the assessment in this case was completed under section 144 r.w.s 147 of the Act vide order dt. 13/03/2015 wherein the AO brought to tax long term capital gains on sale of land amounting to Rs. 2,49,21,043/- in the hands of the assessee. In this case, it is noted that the AO had issued two notices under section 148 of the Act. In terms of reasons recorded before issuance of the first notice under section 148 on 21/23.03.2014, the AO noted that the assessee has sold his 42 Kanal 0 marla land situated at Village Kansapur to M/s Anchor Realters Pvt. Ltd. New Delhi for Rs. 2,14,72,500/- on 18/04/2006. In terms of the reasons recorded before the issuance of second notice under section 148 on 21/25.03.2014, the AO noted that the assessee has sold another piece of his agriculture land situated at Vilage Kansapur measuring 8 Kanal 0 Marla to M/s Som Build Well Pvt. Ltd. New Delhi for Rs. 40,90,000/- on 22.05.2006. As per the AO, the assessee’s land is covered within the ambit of capital asset as per the provision of Section 2(14) as the distance of land sold by the assessee in Village Kansapur falls within 8 Km from the municipal limit of Jagadhri. Further, for the purpose of determining the value of land as on 01.04.1981, the AO stated that the information has been sought regarding Fair Market Value (FMV) of land during the year 1981-82 from Sub

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