Tribunal upholds Lok Adalat award, deems sale deeds void.

The Tribunal allowed the appeals of the assessees for statistical purposes, directing them to produce a certified copy of the Lok Adalat Award before the Assessing Officer for verification. The Tribunal emphasized the binding nature of the Lok Adalat award, declaring the sale deeds null and void due to violation of the land reform act. The petitions for stay were dismissed as the appeals had been disposed of, underscoring the importance of the award in determining the tax implications of the canceled transaction.

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Issues:
Appeal against assessment orders for the assessment year 2009-10 regarding computation of Long Term Capital Gains based on sale of properties in violation of land reform act. Dismissal of appeals by Commissioner of Income Tax (Appeals) due to lack of cancellation documents for sale deeds. Interpretation of Lok Adalat award declaring sale deeds null and void.

Analysis:
The assessees, a husband and wife, filed appeals against the assessment orders for the assessment year 2009-10 related to the sale of properties to a trust. The Assessing Officer rejected the sale consideration disclosed by the assessees for calculating Long Term Capital Gains and adopted the value as per section 50C of the Income Tax Act, 1961. The assessees argued before the Commissioner of Income Tax (Appeals) that the properties were sold in violation of the Tamil Nadu Reforms Act and were declared null and void by the Lok Adalat through an award. However, the appeals were dismissed by the Commissioner of Income Tax (Appeals) due to the absence of cancellation documents for the sale deeds.

The assessees contended that since the sale transaction was canceled by the Lok Adalat award, there should be no Capital Gains and section 50C should not apply to the canceled transaction. They mentioned that they had applied for cancellation deeds and produced a photocopy of the Lok Adalat Award. On the other hand, the department representative argued that since no cancellation documents were provided, the assessees should still be liable for Long Term Capital Gains as the trust was enjoying the properties transferred to it.

After considering both sides and the Lok Adalat Award, the Tribunal found that the sale deeds were executed in violation of the land reform act and were declared null and void by the Lok Adalat award. The Tribunal noted that an award of Lok Adalat is considered final and binding, and as per the Legal Services Authorities Act, 1987, it is deemed to be a decree of a Civil Court. Therefore, the Tribunal directed the assessees to produce a certified copy of the Lok Adalat Award before the Assessing Officer for further verification and necessary action.

In conclusion, the appeals of the assessees were allowed for statistical purposes, and their petitions for stay were dismissed as the appeals had been disposed of. The Tribunal's decision highlighted the significance of the Lok Adalat award in declaring the sale deeds null and void, emphasizing the need for further verification by the Assessing Officer based on the award.

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