The Pr. Commissioner Of Income Tax, Gurgaon v. Shri Amit Gupta

a IN THE HIGH COURT OF PUNJAB AND HARYANAAT CHANDIGARH 229TTA-511-2017Date of Decision : 20.8.2019 The Pr. Commissioner of Income Tax, Gurgaon .-- Appellant Versus Shri Amit Gupta ee RESpondent CORAM : HON'BLE MR.JUSTICE AJAY TEWARI* HON'BLE MR. JUSTICK HARNARESH SINGH GILL Present ;Mr.T.K.Joshi, Senior Standing Counselfor the appellant.for the appellant. Mr. Pankaj Jain, Senior Advocate with| Mr. Sachin Bhardwaj, Advocate for the respondent. 666 AJAY TEWARI, J. (Oral) inThis appeal has been filed by the Revenue against thejudgment and order dated 10.3.2017 passed by the Income Tax AppellateTribunal, (Delhi Benches: 'F’ New Delhi) in ITA No. 190/Del/2016whereby the appeal filed by the assessee was allowed on the preliminaryground of maintainability (without touching issue on merits), ?DBrief facts are that the respondent sold the property called‘Gupta House’ situated at Kherki Daula, NH-8, Gurgaon on 24.2.2009. Hefiled his return on 12.10.2012 tor A.Y 2009-10 declaring income ofRs.56,74,539/- under the heads ‘income from _ house_ property’Rs.2,93,704/- as ‘Income from other sources’ and Rs.10,67,16,676/- as ‘long term capital gain’ totaling Rs.11,26,84,919/- . He claimed to have TTA-511-2017 sold an immovable property for a consideration of Rs. 21.5 crores andfurther claimed that the cost of acquisition and cost of improvement afterindexation came to Rs. 5,99,74,218/-. Thus, he claimed deduction of Rs,4,83,09,106/- under Section 54 of the Income Tax Act, 1961 (for the short‘the Act’) on the pretext that it was a residential building and after the salethereof, the proceeds were reinvested in residential building andconsequently, he was entitled to set off the capital gain. The return wasprocessed under Section 143 (1) of the Act and subsequently, it came tothe notice of the Assessing Officer that in fact the property which wasnamed as ‘Gupta House’ was actually an ‘industrial plot' and not a‘residential house’ and consequently, the Assessing Officer issued noticeunder Section 147 (1) of the Act bringing to the notice of the respondentthat deduction under Section 54 of the Act was not allowable andrecorded the reasons to believe that income chargeable to tax had escapedassessment for AY 2009-10. 3.The respondent filed an appeal before the CIT(Commissioner of Income Tax) in which the following grounds wereraised :- 7 |That the appellant denies his liability to be assessed attotal income of Rs. 16,09,94,025/- and accordingly denies hisliability to pay tax interest, surcharge and education cessdemanded thereon. ? That having regard to the facts and circumstances ofthe case, Ld. A.O, has erred in law and on facts in framing theimpugned order without assumingJurisdiction as per law. 3.That having regard to the facts and circumstances ofthe case, Ld. A.O. has erred in law and on facts in framing theimpugned assessment order and that too without complying themandatory conditions Sections 147 to 151 of the Income Tax Act 196I and reasons recorded are invalid in the eyes of law andreopening of the case andframing the impugned assessment orderis bad in law and beyond thejurisdiction. 4.That in my case and in any view of the matter, the action ofLd. AO in framing the impugned assessment order us 14” and thattoo without complying with mandatory conditions ofSection 147 to151 1s had to law and against the facts and circumstances of theCdSE2 4That having regard to the facts and circumstances of thecase. Ld. A.O. has erred in law and on facts. In denying thebenefit deduction ofRs. 4,83,09, 106/- u/s 54 of the Income Tax Act1961 and that too by recording incorrect facts and findings andwithout giving adequate opportunity to the assessee. 196I and reasons recorded are invalid in the eyes of law andreopening of the case andframing the impugned assessment orderis bad in law and beyond thejurisdiction. 4.That in my case and in any view of the matter, the action ofLd. AO in framing the impugned assessment order us 14” and thattoo without complying with mandatory conditions ofSection 147 to151 1s had to law and against the facts and circumstances of theCdSE2 4That having regard to the facts and circumstances of thecase. Ld. A.O. has erred in law and on facts. In denying thebenefit deduction ofRs. 4,83,09, 106/- u/s 54 of the Income Tax Act1961 and that too by recording incorrect facts and findings andwithout giving adequate opportunity to the assessee. 6.That in any case and in any view of the matter, the action ofLd. A.O. in denying the benefit of deduction of Rs.4,53,09,16/- u/s54 and in framing the impugned assessment order 1s illegal, bad inlaw, contrary to law and facts and beyond jurisdiction, byrecording incorrect facts and findings and the same are notsustainable on various legal andfactual grounds. 7 That having regard to the facts and circumstances of thecase, Ld. A.O, has erred in law and on facts in charging interestu/S 234B and 2134C ofIncome Tax Act, 1961. é.That the appellant craves the leave to add, modify, amend ordelete any of the grounds of appeal at the time or hearing and allthe above grounds are without prejudice to each other. 4The CIT dismissed the appeal and thereafter, the respondent filed the second appeal before the Income Tax Appellate Tribunal (forShort ‘the Tribunal’). The Tribunal allowed the appeal on the preliminaryground that the proceedings under Section 147 (1) of the Act werewrongly initiated since as per the Tribunal the Assessing Officer did nothave ‘reasons to believe’ that income chargeable to tax had escapedassessment and remand back the case to CIT for fresh adjudication. The TTA-511-2017 Tribunal has recorded the following reasons of the Assessing Officer :- ?Perusal of records of the assessee revealed lireassessee had sold an industrial property consisting of propertynamed - ‘Gupta House’ at 42 Rri Milestone, Village Kherki Daula,for Rs.21.5 crores. The indexed cost of acquisition of this propertywas claimed at Rs.5,99,74,218/-. Net capital gain for the yearunder consideration as per the return of the assessee is Rs.15.50Crore. The assessee is also holding & flats in his name, out ofwhich, 7 are in DLF Park Place. DLF City, Phase-V, Golf CourseRoad; Gurgaon and I flat in The Belaire, DLF City Phase-V, GolfCourse Road, Gurgaon. Further, the assessee has claimed deduction u/s 54 ofthe I.T. Act, 1961 on the basis of amount invested in two flats, vizFlat No.D-153. DLF City and Flat No.B-1916, DLF City, Gurgaon,total investment amounting to Rs.4,85,16,233/-. However perusalof records has revealed that the Flat No.D-155, DLF City,Gurgaon is in the name ofSmt. Nirmala Gupta, mother of assessee.|Hence claim u/s 54 regarding Flat No.D-153, DLF City cannot beallowed. Further, the deduction claimed u/s 54 of the Act by theassessee on the property named ‘Gupta House’ situated at KherkiDaula, N.H. &, Gurgaon is not permissible as the same was anIndustrial property. Therefore, the assessee’'s claim as tentitlementfor benefit ofdeduction u/s 54 needs to be examined. Therefore, capital gain amounting to Rs.15.50 croreschargeable to tax has escaped assessment for the AY 2009-10 byreasons offailure on the part of the assessee to disclose fully andtruly all materialfacts necessaryfor his assessment. ” 5It is apposite to mention here that the Assessing officerfurther found that in the sale deed of ‘Gupta House’ it was mentioned asfollows :- “After purchasing the aforesaid piece of land thevendor had applied to the state govt, for seeking necessary TTA-511-2017 Therefore, capital gain amounting to Rs.15.50 croreschargeable to tax has escaped assessment for the AY 2009-10 byreasons offailure on the part of the assessee to disclose fully andtruly all materialfacts necessaryfor his assessment. ” 5It is apposite to mention here that the Assessing officerfurther found that in the sale deed of ‘Gupta House’ it was mentioned asfollows :- “After purchasing the aforesaid piece of land thevendor had applied to the state govt, for seeking necessary TTA-511-2017 permission to set up an industry over the said piece of land. TheDirector Town and Country planning, Haryana, Chandigarh,granted the required permission vide his letter Memo No. G-1239LODP-99/9666 on I18.7.1999...After obtaining the necessarypermission of change of land use, the vendor constructed anindustrial building consisting of Ground, First, Second, Third,Fourth floors, Mumty and machine room on the terrace havingtotal covered area 1988.948 sq. meters. The industrial land andbuilding known as “Gupta House”.” onLearned Senior counsel appearing for the respondent is not ina position to deny the extract from the same. TiIn this view of the matter, it is clear that an illegal set off wassought to be claimed by the respondent (which probably succeededbecause of the misleading appellation of the property in the dispute viz.‘Gupta House’). We set aside the finding of the Tribunal that there wereno reasons for Assessing Officer to believe that income chargeable to taxhad escaped assessment. 8 Facing this, learned Senior counsel for the respondent hasargued that in the penultimate paragraph of the impugned order, theTribunal had noticed that it was deciding appeal on the preliminaryquestions and had consequently, not decided other questions and hasprayed that the matter should be remanded back to the Tribunal so thatthe other questions can be urged. Q In our considered opinion, once the recitals made in the sale deed are not disputed, the other questions do not arise. | 10.In these circumstances, the appeal stands allowed and thejudgment of the Tribunal is set aside and the orders of the Commissionerand the Assessing Officer are upheld. TTA-511-2017 ll.Since the main case has been decided, the pending CM., if any, also stands disposed of. (AJAY TEWARI)JUDGE (HARNARESH SINGH GILL)JUDGE 20.8.2019anuradhaWhether speaking/reasoned8Yes/NoWhether reportable8Yes/No