Principal Commissioner Of Income Tax, Jaipur-2, Jaipur v. M/S. Vinayak Developers, B

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH ATJAIPUR D.B. Income Tax Appeal No. 16 / 2017 Principal Commissioner of Income Tax, Jaipur-2, Jaipur ----Appellant Versus M/s. Vinayak Developers, B-123, Model Town, Jagatpura Road, Malviya Nagar, Jaipur PAN: AAFFV 1348 D ----Respondent _____________________________________________________For Appellant(s) : Mr. K.D. Mathur for Mr. R.B. MathurFor Respondent(s) : _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE INDERJEET SINGH Order 25/07/2017 1.By way of this appeal, the appellant has assailed thejudgment and order of the Tribunal whereby the Tribunal hasallowed the appeal preferred by the assessee. 2.Counsel for the appellant has framed the following substantial question of law:- “Whether on the facts and in the circumstance ofthe case and in law the ITAT was justified in law inallowing the appeal of the assessee and in settingaside the order of CIT(A) passed u/s 263 of the ITAct, ignoring the fact that in original return theassessee has not declared he capital gain but onlyduring the assessment proceeding it revised itsreturn of income which was not valid in terms ofsection 139 (5) of the Act.” CIT(A) where while issuing notice, the authority has clearly statedwhat is prejudicial to the interest of the assessee. 4.Taking into consideration, the order passed by the SDM andrefund amount which is on record, the Tribunal observed asunder:- “4.2. We have heard rival contentions, perused thematerial available on record and gone through theorders of the authorities below. The basis of revisingthe original assessment order in this case is that theld. CIT has accepted the audit objection and treatedthe two transactions separately. There is no disputewith regard to the fact that powers under section263 can be exercised if twin conditions are satisfied.The order sought to be revised is erroneous andprejudicial to the interests of the revenue. In thecase in hand, the assessee during the assessmentproceedings finding that the land which wastransferred was not agricultural land, therefore, itoffered the capital gains arising out of such transferfor taxation. This offer of the assessee was acceptedby the AO. It is also not the case of the ld. CIT thatthe entire sale consideration was an undisclosedamount. The ld. CIT has himself taken it as a saleconsideration and directed the AO to recompute thelong term capital gain on the basis of saleconsideration of Rs. 3,61,58,999/- without givingset off of the amount refunded by the assessee. Theld. CIT has taken two transactions differently.However, the AO has taken the two transactions asa single transaction. We find that ld. CIT has notconsidered the terms of the original sale deed. Asper one of the conditions of the Sale Deed, in casethe buyer losses the possession or does not getentire land or part of the land, in that event thebuyer was entitled to recover the fair market valuealong with cost thereon from the seller. It isdemonstrated by the assessee that there was adispute with regard to possession of the land.Subsequently, a compromise deed was executedbetween the assessee and the buyer on 07.07.2008wherein it had expressly been agreed between theparties that in case the assessee fails to provide thephysical possession of the entire land transferred, arefund of the sale consideration to the extent of theland not physically handed over will be made by theassessee. Accordingly in terms of this agreement,theassesseerefundedanamountofRs.1,21,79,000/- to the buyer for not giving physical possession of a portion of the land and titleto land was regained back by assessee vide SaleDeed dated 14.07.2009. This action of the assesseefinds support from the order dated 19.05.2009 ofHon’ble Court of SDM passed on the civil suit filedby M/s. Renaissance Builders, wherein it is held thatout of the 3.02 hectares land initially sold to thebuyer, the possession of the portion of landmeasuring 0.77 hectares could not be taken bybuyer and, therefore, the assessee was legallybound to refund the sale consideration amount inrespect of the land, possession of which could notbe handed over to the buyer in terms of the saledeeds. In this regard, the ld. CIT has failed toappreciate the relevant clause of the sale deeds andalso consider the order of Hon’ble Court of SDM onthe civil suit filed by the buyer. At the time ofhearing, the ld. D/R could not controvert theseaspects of the matter, therefore, we find no force inthe argument of ld. D/R. In view of the above, theorder of ld. CIT is hereby set aside. The claim of theassessee is allowed. 5.In view of the observations made above, we see no reasonto interfere with the matter, no substantial question of law arise. 6.The appeal being devoid of merit deserves to be dismissed. The same is dismissed. (INDERJEET SINGH),J. (K.S. JHAVERI),J. A.Sharma/29