2020 (1) TMI 219 - AT - Income Tax

Tribunal directs capital gains tax based on actual receipts, penalty deletion upheld

The Tribunal partly allowed the assessee's appeal, directing the Assessing Officer to compute capital gains tax based on actual receipts during the year. ... Capital gain computation of estate of the deceased - year of assessment - proportionate amount of sale consideration received during the year - assessment in the hands of the estate of Late Shri Jagir Singh whereas the segment of estate of Shri Jagir Singh which is subject matter of the impugned assessment order had already devolved on his three sons after his death on 12-04-2003 - HELD THAT:- Capital gain has to be restricted to the proportionate amount of sale consideration received during the year and the rest of the capital gain will be taxable in the year in which rest of the consideration is received. Therefore, the Assessing Officer is directed to compute capital gains tax on the basis of actual receipts during the year, as mentioned in the covered case (supra).As the issue is squarely covered in favour of the assessee by the decision of the coordinate bench, in the case of Shri Prem Singh Lalpura (deceased) through only local L/Hr. Mr. Daljit Singh-son [2017 (9) TMI 1861 - ITAT AMRITSAR] and there is no change in facts and law and the Revenue is unable to produce any material to controvert the aforesaid findings of the Division Bench (supra). We find no reason to interfere in the said order of the Division Bench, therefore, respectfully following the judgment of the Coordinate Bench (supra), the appeal filed by assessee is partly allowed. Penalty u/s 271(1) (c) - HELD THAT:- When quantum is deleted or dispute in respect of quantum has been decided in favour of assessee then penalty u/s 271(1) (c) does not survive. When the assessee furnishes accurate particulars of income and does not conceal particulars of income in that situation also the penalty should not be levied. The ld CIT(A) deleted the penalty u/s 271(1) (c ) of the Act taking into account all the material available before him, as noted above, therefore we do not find any infirmity in the order passed by the ld CIT(A).That being so, we decline to interfere with the order of Id. CIT(A) in deleting the penalty, his order on this issue is therefore upheld and the grounds of appeal of the Revenue are dismissed. Issues Involved:1. Condonation of delay in filing the appeal by the assessee.2. Legality of the assessment order under sections 143(3)/147.3. Assessment on the estate of the deceased vs. his heirs.4. Taxability of adjustable advance/earnest money.5. Applicability of Section 53A of the Transfer of Property Act.6. Treatment of future, uncertain, and unquantifiable benefits.7. Cancellation of the agreement with builders and its impact on capital gains.8. Double taxation concerns.9. Penalty under section 271(1)(c) of the Income Tax Act.Issue-wise Detailed Analysis:1. Condonation of Delay:The appeal by the assessee was delayed by 460 days due to the critical illness and subsequent death of the assessee’s advocate. The Tribunal, after considering the medical and death certificates and in the interest of justice, condoned the delay and admitted the appeal for adjudication.2. Legality of the Assessment Order:The assessee challenged the assessment order passed under sections 143(3)/147, arguing that there was no original assessment for the year, no invocation of section 263, and no order under section 263 by the CIT, Amritsar. The Tribunal noted that these grounds were not adequately addressed by the CIT(A) despite a remand report from the Assessing Officer.3. Assessment on the Estate of the Deceased:The assessee contended that the assessment was erroneously framed on the estate of the deceased, Shri Jagir Singh, instead of his heirs, as the estate had devolved on his three sons. The Tribunal observed that this issue was not properly addressed by the CIT(A).4. Taxability of Adjustable Advance/Earnest Money:The assessee argued that the adjustable advance/earnest money was received by the heirs as per their shares and not by the estate of the deceased. The Tribunal noted that this fact was recorded in the records of the Punjabi Coop Housing Society Ltd.5. Applicability of Section 53A of the Transfer of Property Act:The Tribunal referred to the order in the case of Shri Prem Singh Lalpura, where it was held that the receipt of adjustable advance/earnest money did not fall within the ambit of transfer under section 53A of the Transfer of Property Act. The Tribunal found this case to be analogous and decided in favor of the assessee.6. Treatment of Future, Uncertain, and Unquantifiable Benefits:The Tribunal noted that the Assessing Officer erred in treating future and uncertain benefits as consideration for alleged transfer and valuing non-existent property benefits for capital gains. This was in line with the findings in the case of Shri Prem Singh Lalpura.7. Cancellation of the Agreement with Builders:The assessee argued that the agreement with the builders was canceled, and the Punjab & Haryana High Court had granted a permanent injunction against the builders. The Tribunal observed that this issue was not adjudicated by the CIT(A).8. Double Taxation Concerns:The assessee raised concerns about double taxation as similar proceedings were initiated against the Punjabi Cooperative House Building Society Ltd. The Tribunal noted that this issue needed proper consideration.9. Penalty under Section 271(1)(c):The Tribunal upheld the CIT(A)’s decision to delete the penalty under section 271(1)(c) since the quantum addition was deleted, and the assessee had furnished accurate particulars of income without concealment. The appeal by the Revenue on this issue was dismissed.Conclusion:The Tribunal partly allowed the assessee’s appeal, directing the Assessing Officer to compute capital gains tax based on actual receipts during the year. The appeal by the Revenue was dismissed, upholding the deletion of the penalty under section 271(1)(c). The order was pronounced on 30.12.2019.