Commissioner Of Income Tax, Hisar v. Dr. R.s. Sangwan

ITA No. 352 of 2015 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 352 of 2015 (O&M) Date of Decision: 3.12.2015 Commissioner of Income Tax, Hisar Versus ....Appellant. Dr. R.S. Sangwan ...Respondent. 1.Whether the Reporters of the local papers may be allowed to see the judgment?the judgment? 2.To be referred to the Reporters or not? Yes 3.Whether the judgment should be reported in the Digest? CORAM:-HON'BLE MR. JUSTICE AJAY KUMAR MITTAL.HON'BLE MR. JUSTICE RAMENDRA JAIN. PRESENT: Mr. Tajender K. Joshi, Advocate for the appellant. AJAY KUMAR MITTAL, J. 1.This appeal has been preferred by the revenue underSection 260A of the Income Tax Act, 1961 (in short “the Act”) against theorder dated 30.4.2013 (Annexure A-III) passed by the Income TaxAppellate Tribunal, Chandigarh Bench “B”, Chandigarh (hereinafterreferred to as “the Tribunal”) in ITA No. 458/CHD/2011, for theassessment year 2006-07, claiming the following substantial questions of law:- i)Whether on the facts and in the circumstancesof the case, the Hon'ble ITAT is right in law in holding that twin conditions of order beingerroneous and prejudicial to the interest ofrevenue did not exist? ii) Whether on the facts and in the circumstancesof the case, the Hon'ble ITAT is right in law inignoring the position of law that incorrectassumption of facts by the Assessing Officerthat five other claimed co-owners had legalrights in the property and these legal rightswere transferred by the subject sale of flat,renders order of AO as erroneous? iii) Whether on the facts and in the circumstancesof the case, the Hon'ble ITAT is right in law inignoring the position that Assessing Officerignored correct position of law that the entiretransfer in terms of section 2(47) of the IncomeTax Act was in respect of the Respondentassessee and the other five claimed co-ownersdid not have any legal rights in the said flat andthe omission of this position of law by theAssessing Officer renders the assessmentorder as erroneous as well as prejudicial to theinterest of revenue? 2.Briefly stated, the facts necessary for adjudication of theinstant appeal as narrated therein may be noticed. The assessee filedhis return of income on 28.11.2006 for the assessment year 2006-07declaring the total income at ` 7,07,090/-. The return was processed iii) Whether on the facts and in the circumstancesof the case, the Hon'ble ITAT is right in law inignoring the position that Assessing Officerignored correct position of law that the entiretransfer in terms of section 2(47) of the IncomeTax Act was in respect of the Respondentassessee and the other five claimed co-ownersdid not have any legal rights in the said flat andthe omission of this position of law by theAssessing Officer renders the assessmentorder as erroneous as well as prejudicial to theinterest of revenue? 2.Briefly stated, the facts necessary for adjudication of theinstant appeal as narrated therein may be noticed. The assessee filedhis return of income on 28.11.2006 for the assessment year 2006-07declaring the total income at ` 7,07,090/-. The return was processed under Section 143(1) of the Act on 12.2.2007. Later on, the case wastaken up for scrutiny and notice under Section 143(2) of the Act wasissued on 28.3.2007. The Assessing Officer framed the assessmentvide order dated 21.10.2008 (Annexure A-I) under Section 143(3) of theAct at a total income of ` 7,51,120/-. The assessee sold a house locatedat Vasant Vihar, New Delhi for a sale consideration of ` 4,51,00,000/-vide sale deed dated 11.11.2005 (Annexure A-V) during the previousyear relevant to the assessment year 2006-07 which was purchased byhim as sole buyer on 24.12.1974. The assessee had declared capitalgains corresponding to 1/6[th] share of the property and as such theAssessing Officer accepted the capital gains so declared. The thenCommissioner of Income Tax (for brevity “the CIT”) on examining theassessment record found the assessment order dated 21.10.2008passed by the Assessing Officer under Section 143(3) of the Act aserroneous as well as prejudicial to the interest of the revenue. The CITvide order dated 7.3.2011 (Annexure A-II) passed under Section 263(1)of the Act set aside the aforesaid order of the Assessing Officer holdingthat the property in question was solely owned by the assessee and hasto be assessed in his hands alone. Further, the CIT had held the order ofthe Assessing Officer to be erroneous and prejudicial to the interest ofthe revenue and directed the Assessing Officer to make freshassessment on all the issues after affording due opportunity of hearingto the assessee. Feeling aggrieved, the assessee filed an appeal beforethe Tribunal who vide order dated 30.4.2013 (Annexure A-I) set aside therevisional order passed under Section 263 of the Act and restored theassessment order dated 21.10.2008 passed by the Assessing Officer.Hence, the present appeal by the revenue. 3.After hearing learned counsel for the appellant-revenue, we do not find any merit in the appeal. 3.After hearing learned counsel for the appellant-revenue, we do not find any merit in the appeal. 4.The assessee has been pursuing his profession of medicalpractitioner and filed his return of income on 28.11.2006 for the year inquestion declaring the total income at ` 7,07,090/-. He had shown hisincome from long term capital gains and professional income. Theassessee had sold a flat situated at Vasant Vihar, New Delhi for a saleconsideration of ` 4,51,00,000/- purchased on 24.12.1974. According tothe assessee the said property was jointly owned by him with otherfamily members and his HUF and he was having only 1/6[th] share in thesaid property. The assessee in his computation of income furnishedalong with the return of income had shown his share in profit from sale ofthe property at ` 41,76,828/- after reducing indexed cost of acquisitionetc. The Tribunal had noticed that all the co-owners have signed on thesale deed and they had been showing rental income arising out of aboveflat in their respective returns of income and share had also been shownby the co-owners in their respective returns of wealth. Accordingly, theassessee had only 1/6[th] share in the sale consideration which had beenproperly taxed in the hands of the assessee by the Assessing Officer.Further, the finding of the CIT that the entire capital gains arising out ofsale was required to be assessed in the hands of the assessee alonewas not accepted by the Tribunal and the view taken by the AssessingOfficer was accepted as correct. The findings recorded by the Tribunalread thus:- “5.Reverting to the facts of this case, we havefound that the assessee filed his return of income forthe year under consideration declaring total income of Rs.7,07,090/- on 28.11.2006. The assessee hasbeen pursuing his profession of medical practitioneras proprietor of M/s Sangwan Nursing Home. Theassessee has shown income from long term capitalgains besides professional income. Assessment wascompleted u/s 143(3) vide order dated 21.10.2008. Itis found that the assessee had sold a flat bearing No.E-1/9, Vasant Vihar, New Delhi for a consideration ofRs.4,51,00,000/-. This house was purchased by theassessee on 24.12.1974 from one Shri S.N. Sharmaand thereafter made some construction thereon. Thecase of the assessee is that this property was jointlyowned by him with other family members and his HUFand he was not the sole owner but having only 1/6[th]share in this property. The assessee, in hiscomputation of income furnished along with the returnof income for the year under consideration has shownhis share in profit from sale of the property atRs.41,76,828/- after reducing indexed cost ofacquisition etc. As per the ld. CIT, this properly wassolely owned by the assessee and has to beassessed in his hands alone. The assessee hasclaimed that in this property himself and his HUFalong with Shri R.S. Sangwan, HUF, Smt. SavitriSangwan, Shri Yogesh Sangwan and Shri AmarSangwan are having beneficial interests in the saidproperty as they had also contributed/invested towards the cost of acquisition, construction andmade other payments for acquisition of the saidproperty. Photocopy of the written reply submitted byhim before the then A.O. during the course ofassessment proceedings in his case for A.Y. 1983-84vide which the source of investment in purchase ofthe property was explained as under was produced: i.R.S. Sangwan HUF Bank Draft No. 530788dated 10.1.1983 from S.B. A/c No. 17107 ofPNB: Rs.34,000/-dated 10.1.1983 from S.B. A/c No. 17107 ofPNB: Rs.34,000/- ii.R.S. Sangwan Bank Draft No. 98996 dated10.1.1983 from S.B. A/c No. 4900 of PNB10.1.1983 from S.B. A/c No. 4900 of PNB : Rs.20,000/- iii.Smt. Savitri Sangwan HUF Bank Draft No.98997 from S.B. A/c No. 5203 of PNB98997 from S.B. A/c No. 5203 of PNB : Rs.10,000/- towards the cost of acquisition, construction andmade other payments for acquisition of the saidproperty. Photocopy of the written reply submitted byhim before the then A.O. during the course ofassessment proceedings in his case for A.Y. 1983-84vide which the source of investment in purchase ofthe property was explained as under was produced: i.R.S. Sangwan HUF Bank Draft No. 530788dated 10.1.1983 from S.B. A/c No. 17107 ofPNB: Rs.34,000/-dated 10.1.1983 from S.B. A/c No. 17107 ofPNB: Rs.34,000/- ii.R.S. Sangwan Bank Draft No. 98996 dated10.1.1983 from S.B. A/c No. 4900 of PNB10.1.1983 from S.B. A/c No. 4900 of PNB : Rs.20,000/- iii.Smt. Savitri Sangwan HUF Bank Draft No.98997 from S.B. A/c No. 5203 of PNB98997 from S.B. A/c No. 5203 of PNB : Rs.10,000/- iv.Shri Amar Sangwan Bank Draft No. 98995dated 10.1.1983 from S.B. A/c No. 10063 ofPNB: Rs.15,000/-dated 10.1.1983 from S.B. A/c No. 10063 ofPNB: Rs.15,000/- v.Cap. Karen Singh Sangwan Bank Draft No.5176710 dated 10.1.1983 from New Bank A/cNo. 12228 of PNB : Rs.10,000/-5176710 dated 10.1.1983 from New Bank A/cNo. 12228 of PNB : Rs.10,000/- vi.Rent from Ghana Embassy for fitting and fixturefor the quarter Jan to March, 1983 through Mrs.Savitri Sangwan dated 12.1.1983 : Rs.12,000/- for the quarter Jan to March, 1983 through Mrs.Savitri Sangwan dated 12.1.1983 : Rs.12,000/- All the co-owners have signed on the sale deed. Allthese co-owners had been showing rental income arising out of above flats in their respective returns ofincome and share in above property had been shownby the co-owners in respective returns of wealth.From this, it has been proved beyond doubt that theassessee is only 1/6[th] share holder in the saleconsideration which has been property taxed in thehands of the assessee to that extent. It was found fora fact that in the hands of all other co-owners 1/6[th] ofthe profit from sale of this house have been acceptedby the same A.O. and the ld. CIT has not revised theiraccepted assessment orders. It is also found that onthe basis of very same facts the A.O. has takenpossible which has to be accepted as correct and,therefore, we do not find any error in this finding of theA.O. We are not in agreement with the ld. CIT'sfinding that entire capital gain out of sale is required tobe assessed in the hands of the assessee alone.” 5.The aforesaid finding of fact recorded by the Tribunal wasnot shown to be erroneous or perverse in any manner. It is a plausibleview taken by the Tribunal. Therefore, the Tribunal was justified incancelling the revisional order passed by the CIT under Section 263 ofthe Act. Accordingly, no substantial question of law arises in this appeal.The instant appeal is dismissed. 6. 6.There is a delay of 531 days in refiling the appeal. CM No.20235-CII of 2015 has been filed for condonation of 531 days' delay inrefiling the appeal. Since the appeal has been dismissed on merits, nofurther orders are required to be passed in the application for ITA No. 352 of 2015 -8- condonation of delay in refiling the appeal and the same is disposed ofas such. (AJAY KUMAR MITTAL)JUDGE December 3, 2015gbs (RAMENDRA JAIN)JUDGE