Appell v. Sh. Sewa Singh Sekhwan

Gurbax SinghIN THE HIGH COURT OF PUNJAB AND HARY AWAVAdS 94 4-592017.09.12 11:52 CHANDIGARH. ITA No. 298 of 2017Date of decision: 29.8.2017| The Pr. Commissioner of Income Tax-I, Amritsar ..... Appell Vs. Sh. Sewa Singh Sekhwan S/o Sh. Ujagar Singh, R/o Guru Ram Dass,Colony, Jalandhar Road, Batala. ..-.Respondent CORAM: HON’BLE MR. JUSTICK AJAY KUMAR MITTALHON’ BLE MR. JUSTICE AMIT RAWAL, Present: Mr. Arun Biriwal, Advocate for Mr. Denesh Goyal, SeniorStanding Counsel for the appellant.Standing Counsel for the appellant. Ajay Kumar Mittal,J. 1,The appellant-revenue has filed the present appeal under)Section 260A of the Income Tax Act, 1961 (in short, “the Act”) against theorder dated 02.12.2016, Annexure-3, passed by the Income Tax AppellateTribunal, Amritsar Bench, Amritsar (in short, “the Tribunal’) in ITA No.602(ASR)/2015, for the assessment year 2007-08, claiming following|substantial questions of law:-. (i)“Whether on the facts and in the circumstances of the case andin law, the Hon’ble ITAT was right in deleting the penalty|when the assessee had not fully disclosed the accrued capital|gain and addition on this account had been upheld by ITAT|and the Hon’ble High Court and the appeal was pending before|the Hon’ble Supreme Court?in law, the Hon’ble ITAT was right in deleting the penalty|when the assessee had not fully disclosed the accrued capital|gain and addition on this account had been upheld by ITAT|and the Hon’ble High Court and the appeal was pending before|the Hon’ble Supreme Court? (11)Whether on the facts of the case and in law, the Hon’ble ITATwas right in deleting the penalty when the assessee had not)was right in deleting the penalty when the assessee had not) fully disclosed the accrued capital gain and thereby furnishing|inaccurate particulars of income? (111)Whether on the facts of the case and in law, the Hon’ble ITATwas right in deleting the whole amount of penalty of|d35,85,888/- levied by the AO in respect of addition made on|account of Long Term Capital Gain by relying on the order ofHon’ble Punjab and Haryana High Court dated 22.07.2015 in|the case ofC.S. Atwal Vs. Commissioner of Income TaxWhereas the Hon’ble High Court has held that the sale|consideration to the extent of amount received are exigible to tax in the instant year and the assessee is bound to pay tax on|receipt of further amounts? |Briefly, the facts as narrated in the appeal, necessary foradjudication of the controversy involved may be noticed. Return declaring,income ofe95,100/- was filed by the assessee on 31.03.2008. The assesseebeing Member of Punjabi Co-operative House Building Society owned oneplot of land measuring 500 square yards in that society. The society enteredinto Tripartite Joint Development Agreement dated 25.02.2007, with M/s|Harsh Builders Private Limited, Chandigarh (HASH) and M/s Tata HousingDevelopment Company Limited, Mumbai (THDC). Through irrevocableSpecial Power of Attorney dated 26.02.2007, the society transferred theentire land, measuring 21.2 acres to the purchaser/developer party. As perthe agreement, the assessee was to be given one flat measuring 2250 square yards each, valued atY1,01,25,000/- and monetary consideration ofd82,50,000/-. The total consideration for transfer of his share in the capitalasset of the society was to the tune of<1,83,75,000/-. As the Joint)development agreement was dated 25.02.2007 and transfer of capital asset|under Section 2(47) of the Act, had taken place in the assessment year|2007-08, the entire amount ofd1,83,75,000/- accruing on account of transfer of asset was chargeable to long term capital gain tax under Section|45 of the Act. In the return filed by the assessee, capital gain was declared|only in respect of the sale consideration ofe17,65,000/-. The Assessing|Officer calculated capital gain on total consideration of<1,60,79,890/- andmade addition otd1,59,82,147/- vide order dated 27.12.2010 under Section143(3)/147 of the Act holding that the case fell within the ambit of Section|2(47) of the Act. Total consideration of<1,60,79,890/- was held to have.accrued to the assessee during the assessment year 2007-08 and chargeableto long term capital gain as provided under Section 45 of the Act read with|Section 48 of the Act. Aggrieved by the order, the assessee filed appeal|before the Commissioner of Income Tax (Appeals) [CIT(A)], but the samewas dismissed. The assessee challenged the order passed by the CIT(A) as.well as Assessing Officer before the Tribunal. This appeal was also.dismissed. Vide order dated 27.03.2014, the Assessing Officer imposed.penalty ofY35,85,838/- upon the assessee under Section 271(1)(c) of theAct. Against the penalty order, the assessee filed appeal before the CIT(A).Vide order dated 18.08.2015, the CIT(A) deleted the penalty. Not satisfied|with the order, the Department filed an appeal before the Tribunal. Videorder dated 02.12.2016, Annexure-3, the appeal was dismissed by theTribunal. Hence, the instant appeal by the appellant-revenue. onWe have heard learned counsel for the appellant-revenue. _ 4 The matter is no longer res integra regarding taxability ofcapital gains arising from the transaction entered by the assessee in the|present facts and circumstances. InC.S. Atwal’scase (supra)in ITA No.)200 Of 2013 decided on July 22, 2015, the issue involved in this appealstands decided by this Court. In the said case, the following issues emergedfor consideration:- | (1)Scope and legislative intent of Section 2(47)(1i1), (v) and (v1)of the Act;of the Act; (11)The essential ingredients for applicability of Section 53A of|1882 Act;1882 Act; (111)Meaning to be assigned to the term “possession”? (iv)Whether in the facts and circumstances, any taxable capital gains arises from the transaction entered by the assessee>? After considering the relevant statutory provisions and the case law, the following conclusions were drawn:- “(1) Perusal of the JDA dated 25.02.2007 read with sale deeds|dated 2.03.2007 and 25.04.2007 in respect of 3.08 acres and4.62 acres respectively would reveal that the parties hadagreed for pro-rata transfer of land.dated 2.03.2007 and 25.04.2007 in respect of 3.08 acres and4.62 acres respectively would reveal that the parties hadagreed for pro-rata transfer of land. *#-No possession had been given by the transferor to thetransferee of the entire land in part performance of JDA dated25.02.2007 so as to fall within the domain of Section 53A of.1882 Act.transferee of the entire land in part performance of JDA dated25.02.2007 so as to fall within the domain of Section 53A of.1882 Act. *.-The possession delivered, if at all, was as a licencee for thedevelopment of the property and not in the capacity of atransferee.development of the property and not in the capacity of atransferee. *?-Further Section 53A of 1882 Act, by incorporation, stoodembodied in section 2(47)(v) of the Act and all the essentialingredients of Section 53A of 1882 Act were required to befulfilled. In the absence of registration of JDA dated25.02.2007 having been executed after 24.09.2001, theagreement does not fall under Section 53A of 1882 Act andconsequently Section 2(47)(v) of the Act does not apply.embodied in section 2(47)(v) of the Act and all the essentialingredients of Section 53A of 1882 Act were required to befulfilled. In the absence of registration of JDA dated25.02.2007 having been executed after 24.09.2001, theagreement does not fall under Section 53A of 1882 Act andconsequently Section 2(47)(v) of the Act does not apply. *?-Further Section 53A of 1882 Act, by incorporation, stoodembodied in section 2(47)(v) of the Act and all the essentialingredients of Section 53A of 1882 Act were required to befulfilled. In the absence of registration of JDA dated25.02.2007 having been executed after 24.09.2001, theagreement does not fall under Section 53A of 1882 Act andconsequently Section 2(47)(v) of the Act does not apply.embodied in section 2(47)(v) of the Act and all the essentialingredients of Section 53A of 1882 Act were required to befulfilled. In the absence of registration of JDA dated25.02.2007 having been executed after 24.09.2001, theagreement does not fall under Section 53A of 1882 Act andconsequently Section 2(47)(v) of the Act does not apply. *3-It was submitted by learned counsel for the assessee-appellantthat whatever amount was received from the developer,capital gains tax has already been paid on that and sale deedshave also been executed. In view of cancellation of JDA dated25.02.2007, no further amount has been received and noaction thereon has been taken. It was urged that as and whenany amount is received capital gains tax shall be dischargedthat whatever amount was received from the developer,capital gains tax has already been paid on that and sale deedshave also been executed. In view of cancellation of JDA dated25.02.2007, no further amount has been received and noaction thereon has been taken. It was urged that as and whenany amount is received capital gains tax shall be discharged 5 thereon 1n accordance with law. [In view of the aforesaidStand, while disposing of the appeals, we observe that the|assessee appellants shall remain bound by their said stand.Stand, while disposing of the appeals, we observe that the|assessee appellants shall remain bound by their said stand. *$-The issue of exigibility to capital gains tax having been|decided in favour of the assessee, the question of exemption|under Section 54F of the Act would not survive any longer|and has been rendered academic.decided in favour of the assessee, the question of exemption|under Section 54F of the Act would not survive any longer|and has been rendered academic. *4-The Tribunal and the authorities below were not right in|holding the assessee-appellant to be liable to capital gains tax|in respect of remaining land measuring 13.5 acres for which|no consideration had been received and which stood!cancelled and incapable of performance at present due to|various orders passed by the Supreme Court and the High|Court in PILs. Therefore, the appeals are allowed.” |holding the assessee-appellant to be liable to capital gains tax|in respect of remaining land measuring 13.5 acres for which|no consideration had been received and which stood!cancelled and incapable of performance at present due to|various orders passed by the Supreme Court and the High|Court in PILs. Therefore, the appeals are allowed.” | Learned counsel for the appellant has not been able to| controvert the applicability of the decision rendered in|C.S. Atwal’sCase.(supra) that no capital gains on unrealized amount would accrue or arise to.the assessee. Once that is so, no penalty under Section 271(1) (c) of the Act|would be exigible. No substantial question of law as claimed in this appeal|arises. Consequently, the appeal stands dismissed. (Ajay Kumar Mittal) Judge August 29, 2017(Amit Rawal)Whether speaking/reasonedYesWhether reportableYes Judge