SMT. ANURADHA MAHAJAN,,JAMMU vs. ASSISTANT COMMISSIONER OF INCOME TAX, JAMMU

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH: AMRITSAR. BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER AND SH. ANIKESH BANERJEE, JUDICIAL MEMBER

I.T.A. No. 75/Asr/2006 Assessment Years.: 1988-89 Smt. Dhanwanti Devi (Deceasd) Vs. Asstt. Commissioner of L/R /Sh. Sunil Gupta, 101-A/D Income Tax, Circle-2. Gandhi Nagar, Jammu. Jammu. [PAN:ADDPG4150D] (Respondent) (Appellant)

I.T.A. No. 76/Asr/2006 Assessment Years.: 1988-89 Smt. Anuradha Mahajan, Vs. Asstt. Commissioner of Jammu. Income Tax, Circle-2. [PAN: ] Jammu. (Appellant) (Respondent)

I.T.A. No. 77/Asr/2006 Assessment Years.: 1988-89 Sh. Sunil Gupta, 101-A/D Vs. Asstt. Commissioner of Gandhi Nagar, Jammu. Income Tax, Circle-2. [PAN:-ADDPG4150D] Jammu. (Appellant) (Respondent) Appellant by None. (Written Submission) Respondent by Sh. Prashant Singh, Sr. DR Date of Hearing 21.11.2023 Date of Pronouncement 06.12.2023

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ORDER Per: Bench.:

A batch of three (03) appeals of the different assessees are filed against the

order of the ld. Commissioner of Income Tax (Appeals) Bathinda, [in brevity ‘the

CIT (A)’] order passed u/s 250 (6) of the Income Tax Act 1961, [in brevity ‘the

Act’] for A.Ys. 1988-89. The impugned orders are emanated from the order of the

ld. ACIT, Range-2, Jammu, (in brevity the AO) order passed u/s 144/148 of the

Act.

22/06/2009 and ex parte order was passed by the ITAT, Amritsar Bench. Later on,

the appeals are recalled by the order of ITAT Amritsar bench bearingMA Nos. 95

to 97/Asr/2009 date of order 04/03/2010.

issue and same nature of fact. Accordingly, we have taken all the appeals together,

heard together and disposed of together for the sake of convenience.ITA No.

75/Asr/2006 is taken as lead case.

ITA No. 75/Asr/2006

I.T.A. Nos. 75 to 77/Asr/2006 Assessment Year.: 1988-89 3

assessee. Considering the issue asthe matters in limbo we proceed to dispose of the

appeal on ex parte qua for the assessee after hearing the ld. DR. Brief fact of the case is that the assessee has died on 4th September 1995. 6.

The notice u/s 148 was issued on dated 06.06.1991. The stay on reassessment

proceedings were given by the Hon’ble J & K High Court on dated 05.08.1991.

This stay was vacated on dated 23.02.2000. Then the assessment order was passed

on 26.03.2002. During assessment proceeding, the ld. AO has taken the legal heir

Mr. Sunil Gupta. The grievance of the legal heir of the assessee is that Mr. Sunil

I.T.A. Nos. 75 to 77/Asr/2006 Assessment Year.: 1988-89 4

Gupta is not the legal heir as per Hindu Succession Act,1956 section 6. Mr. Sunil

Gupta is only power of attorney holder on the assessee. After the death of the

assessee, the power of attorney is automatically revoked. So, the claim of the legal

heir is that the entire assessment is nullity. The assessee was holding the

agricultural land which was duly on requisitions and acquisitions by the Indian

Army, Government of India. The assessee received the enhanced compensation

and entire enhanced compensation was added back with the total income of the

assessee by the ld. AO. Aggrieved assessee filed an appeal before the ld. CIT(A).

The ld. CIT(A) after considering the section 45(5) had reduced the enhanced

compensation and restricted only related to the enhanced compensation received

during the impugned F.Y. which is amount to Rs.92,954.50. But the grievance of

the assessee is that when the property was acquisitions the property was in nature

of agricultural land i.e. in the year 01.04.1968. The grievance of the assessee was

that the revenue has not considered the nature of land during the time of

acquisition which was requisitions u/s 7(3) of J & K Requisitions and Acquisition

of Immovable Property Act, 1968. Being aggrieved, the assessee filed an appeal

before us.

I.T.A. Nos. 75 to 77/Asr/2006 Assessment Year.: 1988-89 5

substantiate its claim and as per the verification from Patwari, the land was treated

as non-agricultural. The relevant paragraph of the appeal order is duly reproduced

as below:-

“Ld. AO has admitted in the assessment order that Smt. Dhanwanti devi died in 1995 and he impleaded Sh. Sunil Gupta as legal heir which was illegal because he could not under law be called L/H. The legal heirs of a deceased Hindu are listed in section 6 of Hindu cession Act. Shri Sunil Gupta is not a relative as contemplated under section 6 of Hindu Succession Act. Similarly he could not be legal heir in terms of general power of attorney granted to him by the assessee during her life time because this GPA was only in connection with land acquisition proceedings and compensation thereunder. It conferred no power on him to attend to any other matter relating to her including Income tax. (GPA photostat enclosed as Annex-B). These arguments are supplemented further in written submissions dated 21.01.2003 already r laced on file (refer to para 6 and 6.1 of that letter). RE: RECEIPT OF COMPENSATION I am enclosing herewith certificate of Sh. Mohinder Singh, Arbitrator and Member of Special Tribunal J&K certifying

I.T.A. Nos. 75 to 77/Asr/2006 Assessment Year.: 1988-89 6

that compensation of Rs. 92954.50 was received by assessee during the previous year relevant to Asstt. Year 1988-89. Now the onus proving the receipt of assessed compensation is on the Ld. AO.”

the record. The assessee explained the details about the nature of the land duly

acquisitions by the Government of India. The relevant paragraph is reproduced as

below:

“GROUND OF APPEAL NO. 5 IN CASE OF LATE SMT DHANWANTI DEVI, GROUND OF APPEAL NO. 3 IN CASE OF SMT ANURADHA MAHAJAN AND GROUND OF APPEAL NO. 3 IN CASE OF SUNIL GUPTA GROUND OF APPEAL Without prejudice to above ground of appeal no capital gain is chargeable in respect of additional compensation of Rs.92944/- in case of Late Smt. Dhanwanti Devi, Rs. 180510/- in case of Smt Anuradha Mahajan And Rs. 175956/- in case of Sh. Sunil Gupta added by Worthy CIT (A) because the land was agriculture land on the date of requisition/ acquisition by the Indian Army and the government. SUBMISSION/WRITTEN ARGUMENTS FOR ABOVE GROUND 1. The common issue in all these appeals is that no capital gain is chargeable on the compulsory acquisition of these lands because these are agricultural land situated outside the municipal limits of Rajouri Town. All these lands are situated in villages near around Rajouri.

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(CIT(A) has erroneously picked up the date of acquisition as 31.08.1984 from notice of -J notification Home Deptt u/s 7(1) J&K Requisition and Acquisition of Immoveable Property Act, 1968 on page 45 of Paper Book No: 1.

I. Lands in Village Rampur were requisitioned on 1/03/1949 as confirmed in para 2 of the acquisition report of the Army Authorities which is onpage 28 of the Paper Book No.1. II. Lands in village Talwal were requisitioned on 1/04/1968 as confirmed para 3 of the acquisition report of the Army Authorities which is on page 28 of the Paper Book No.1. III. Lands in village Goverdhanpai were requisitioned on 10/09/1965 as confirmed para 3 of the acquisition report of the Army Authorities which is on page 28 of the Paper Book No.1.

I.T.A. Nos. 75 to 77/Asr/2006 Assessment Year.: 1988-89 8

The reasons for acquisition of these lands have been given in para 6 of Report of the Board of Army Officers where they have stated that militarily strategic building involving big investments have been constructed on these lands. (Page 28 of paper book no. 1)

FINDINGS RECORDED BY CIT (A) ABOUT NONAGRICULTURAL NATURE OFTHESE LANDS.

In case of Anuradha Mahajan:

In case of Sunil Gupta:

CIT(A) order: page 6 para 2 "SAME FINDING AS ABOVE"

In case of Dhanwanti Devi (Deceased)

I.T.A. Nos. 75 to 77/Asr/2006 Assessment Year.: 1988-89 9

CIT(A) order: page 5 para 2 "SAME FINDING AS ABOVE"

Page 29 of my paper book No. 1 at para 9 in which the Army authority had denied the version of DC, Rajaouri that lands in Village Rampur is within notified area committee.

Page 37 of my paper book No. 1 in which the letter dated: 10/02/1986 written by Deputy Commissioner Rajouri to Army authority in which DC has stated that sale of land in these villages in banned in view of Agrarian Reform Act, 1972 which proves that these lands are agricultural lands.

Page 42 of my paper book No.1 in which the Tehsildar also signed and participate in the proceeding with Army Authority as per Army report. And has concurred about agricultural nature of these lands

Page 46 of my paper book No.1 in which all the notices of Home Department are reproduced with regard to Acquisition of requisitioned land of the village Talwal Rampur and Goverdhanpai.

Further Relaince is placed on following judicial precedents

a) Lavleen Singhal Vs. Dy. CIT cited at 111 TTJ 326 (Delhi "B" Tribunal), the assessee was owner of an agricultural land which was recorded as such in revenue records. However, the assessee could not cultivate it for fourteen years as he was an athlete and due to taking part in Olympics, remained out of country most of

I.T.A. Nos. 75 to 77/Asr/2006 Assessment Year.: 1988-89 10

time and thus could not devote time for cultivation of land. The land was shown as agricultural as situated beyond 8 KM from committee area. The revenue authorities treated the land as non-agricultural and computed capital gains arising from sale of such land taking the land as capital asset. It was held that the tax authorities below were not justified in treating the land in question as non- agricultural land merely because the assessee had not cultivated the land for a period of fourteen years, i.e. from the date of purchase till the date of its sale, ignoring the explanation given by the assessee why he could not cultivate the land for a period of fourteen years and also ignoring the other evidence placed on record by the assessee clearly indicating that from the date of purchase till the date of its sale the land remained an agricultural land in the revenue record and the assessee did not convert the user of the land as non-agricultural either temporarily or permanently.

b) DLF Universal Ltd., Vs. CIT cited at 161 ITR 714 (Delhi) head notes are being reproduced as under-

BUSINESS PROFIT - CAPITAL GAIN - AGRICULTURAL LAND PURCHASED BY ASSESSEE FOR CONVERSION INTO BUILDING PLOTS – GOVERNMENT ACQUIRING LAND BEFORE CONVERSION - LAND REMAINING AGRICULTURAL TILL ACQUISITION AND PAYMENT OF COMPENSION PROFIT ON SALE OF LANDS NOT ASSESSABLE AS - BUSINESS PROFIT - AGRICULTURAL LANDS NOT "CAPITAL ASSET" – TAX ON CAPITAL GAINS NOT LEVIABLE- INCOME TAX ACT, 1961, ss 2(14), 45

8.1 The ld.AR for the assessee placed that the assessment of the deceased person

is invalid and nullity. The ld. AO has made mistake not to consider the legal heir

during proceeding of the assessment. The power of attorney holder Mr. Sunil

Gupta was taken as legal heir which is contravening the Section 6 of Hindu

Succession Act, 1956. The relevant paragraph of the submission is duly reproduced

as below:

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“GROUND OF APPEAL NO. 2 IN CASE OF LATE SMT DHANWANTI DEVI That the assessment / re-assessment order has been passed beyond the limitation and the Ld. Assessing Officer and the worthy CIT (A) have erred in rejecting this contention.

SUBMISSION/WRITTEN ARGUMENTS FOR ABOVE GROUND In the case of Asstt. Order of Smt. Dhanwanti (deceased) (the ld. A.0. has admitted that Smt. Dhanwanti Devi died in September 1995. Therefore, as per mandate of section 159 of IT Act, it was mandatory for 1d. A.0. to implead the legal heirs of the deceased and then serve a notice on them for processing the asstt. proceedings. It has been admittedly not been done and Sh. Sunil Gupta who held only power of Attorney from the deceased in- respect of land acquisition proceedings has been impleaded. Sections 15 & 16 of Hindu Succession Act clearly mention that the legal heirs of Hindu female dying intestate shall be the following persons on whom her property will devalve:-

a) Firstly, upon the sons and daughters and the husband; b) Secondly. on the heirs of the husband; c ) Thirdly, upon mother and father; d) Fourthly, upon the heirs of the father; e) Lastly, upon the heirs of the mother.

The perusal of the Asstt. Order passed by the ld. A.0. in the case of the deceased would reveal that he made no effort to find out the legal heirs of Smt. Dhanwanti Devi and impleaded Sh. Sunil Gupta as legal heir inspite of his protests. It is also a settled proposition of law that in case of asstt. in the case deceased assessee, the legal heirs should be impleaded and notices should be served on all of them. This is a fundamental lapse which makes the asstt. order illegal and nonest 1. GROUND OF APPEAL NO. 3IN CASE OF LATE SMT DHANWANTI DEVI That the assessment is legal nullity because assessment has been framed on a dead per non without bringing on record of the legal heirs of the deceased and without represented the character of Sh. Sunil Gupta and Worthy CIT (A) rejecting this legal position. SUBMISSION/WRITTEN ARGUMENTS FOR ABOVE GROUND

I.T.A. Nos. 75 to 77/Asr/2006 Assessment Year.: 1988-89 12

I.T.A. Nos. 75 to 77/Asr/2006 Assessment Year.: 1988-89 13

is he that is taxed in his own name and hence, his name and identity should be clearly specified in the order of assessment (CIT v Amarchand N. Shroff (1963) 48 ITR 59 SC)

record. The land of the assessee at Talwal was duly requisitioned on dated

01.04.1968, the land of Mr. Sunil Gupta at Rampur was requisitionedon

01/03/1949 and the land of Smt. Anuradha Mahajan at Goverdhanpai was

requisitioned on 10/09/1965. The land was compulsory acquired by notification

U/s 7(3) of J & K Requisitions and Acquisition of Immovable Property Act, 1968

on dated29/01/1986. Copy of the Circular No. APB-2 pages 1 & 2. The land was

duly acquired by notification on 29/01/1986. As per the revenue the statement of

patwari, Sh. Mohammad Nawaj was taken in consideration on 1991 and as per his

report the said land was not agricultural. The ld. AR had made a grievance that the

nature of land on1949, 1968 or 1986 was changed which cannot be compared in

the year of 1991. The ld. AR further placed that u/s 2(14) (iii) of the Act. The

recording urbanisation of area up to 8 KM from Municipal limit. The land is more

than 8 KM then urban area ABP-2.

9.1 The ld. AR relied on the order of Lovely Singhal (supra) and DLF

Universal (supra). We respectfully relied on those orders and accept the

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submission of the ld. AR. The nature of land is agricultural at the time of

acquisition of land. The Indian Army had requisitioned the land on 1949, 1965 &

1968 and had acquired of 1986. The assessee was not able to continue farming on

the said land. So, the transfer of land was agricultural in nature and not liable to be

taxed. Accordingly, the addition made by the revenue is quashed.

In case of assessment of deceased person is legally valid or not. The ld. AR relied

on the order of the Hon’ble Supreme Court of India case Commissioner of

Income-tax vs. Amarchand N. Shroff[1963] 48ITR59 (SC). The relevant

paragraphs are reproduced as below:-

“In the present case the amounts which are sought to be taxed and which have been held not to be liable to tax are those which were not received in the previous year and are therefore not liable to tax in the several years of assessment. It cannot be said that they were income which may be deemed by fiction to have been received by the dead person and therefore they are not liable to be taxed as income of the deceased, Amarchand, and are not liable to be taxed in the hands of the heirs and legal representatives who cannot be deemed to be asses- sees for the purpose of assessment in regard to those years. In our view the High Court rightly answered the question in the negative and against the Commissioner of Income-tax. The appeals, therefore, fail and are dismissed with costs.”

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9.2 We respectfully relied on the order on Amarchand N. Shroff(supra) and the

ground of the assessee is succeeded. The assessment order of the assessee is

quashed.

Accordingly, the appeal of assessee ITA No. 75/Asr/2006 is allowed.

9.3 As all the appeals are same nature and fact. So, ITA No 75/Asr/2006 is

mutatis mutandis applicable to the ITA No. 76/Asr/2006 and ITA 77/Asr/2006

followed accordingly.

77/Asr/2006 are allowed.

Order pronounced in open court on 06.12.2023

Sd/- Sd/-

(Dr. M. L. Meena) (ANIKESH BANERJEE) Accountant Member Judicial Member

Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The DR, I.T.A.T.