TaxTMI 
TaxTMI 
2023 (3) TMI 475
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....oring the judgement of jurisdictional Hon'ble Delhi High Court in the case of CIT v Kabul Chawla [2016] 380 ITR 573 (Delhi) whereby it was held that completed assessments can be interfered with by the Ld. AO while making addition u/s 153A only on the basis of some incriminating material found during search. 3. That the Ld. CIT(A) has erred in sustaining the addition of Rs. 2,00,000/-on account of agricultural income which is otherwise treated as exempt income under the Income Tax Act. 3.1 That the addition was sustained despite the fact that numerous submissions were filed and sufficient evidences in form of certified Khasra Girdawari and certificate of farmer were provided to establish that the impugned agricultural income was earned. 3.2 That the Ld. AO as well as Ld. CIT (A) overlooked the fact that the appellant was disclosing the agricultural income in her returns from past years. 3.3 That no show cause notice was issued by the ld. AO before making aforesaid addition. 4. That the Id. CIT(A) has erred in directing the ld. AO to make enhancement of the income of the appellant by an amount of Rs. 7,32,79,132/- being long term capit....
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....ricultural activities. Further, the ld CIT(A) enhanced the income of the assessee by Rs. 7.32 crores by disallowing the deduction claimed u/s 54B of the Act on the grounds that the land purchased by the assessee was hitherto a non-agricultural land. During the year 5. The provision of section 54B is as under:- "54B. (1) Subject to the provisions of sub-section (2), where the capital gain arises from the transfer of a capital asset being land which, in the two years immediately preceding the date on which the transfer took place, was being used by the assessee being an individual or his parent, or a Hindu undivided family for agricultural purposes (hereinafter referred to as the original asset), and the assessee has, within a period of two years after that date, purchased any other land for being used for agricultural purposes, then, instead of the capital gain being charged to income-tax as income of the previous year in which the transfer took place, it shall be dealt with in accordance with the following provisions of this section, that is to say,- (i) if the amount of the capital gain is greater than the cost of the land so purchased (hereinafter referred to....
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....79,132/-. The gains are found to have arisen on sale of land at Punjab Khor. Delhi (acquired by the appellant through gift from her brother in 2001). It was also seen that the appellant filed a revised Computation of income during the assessment proceedings on 16.03.2016, including therein agricultural income from said Punjab Khor land which she said to have omitted while filing the original return of income. 5.1.1 The aforesaid land at Punjab Knor, was sold by her resulting in the capital gains as narrated and the sale consideration is said to have been invested in purchasing a land at Village Anangpur, District Faridabad (through agreement to sale) for a sum of Rs.10.35 crores. The appellant averred before the Id. AO that since the land was purchased within the statutory period of 2 years, exemption u's 54B was claimed on the LTCG on sale of said land at Punjab Khor in December, 2009 5.2. In order to verify as to whether the impugned lands were agricultural land and as to whether the land was actually purchased and if so, exactly on which date and when it got transferred to the appellant, the AO directed the appellant inter alia, to file a copy of the Sale/P....
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.... of funds with the buyer In other words, Id. AO has accepted the claim of the appellant without peeping into as to whether the buyer had explained sources of income or not. 5.5 In exercise of powers vested us 251, to enhance the assessment by withdrawing the exemption u/s 549 erroneously allowed by the AO, the appellant was, vide notice for enhancement dated 24.04.2017, called upon to file submissions showing as to how the conditions as stipulated u/s 548 get satisfied in her case. The said notice is reproduced as under: "This is in connection with the aforesaid appeal for the AY 2010-11 filed by you against the assessment order dated 31.03.2016 passed by the ACIT, CC-26, New Delhi u/s 153A/143(3) 2 In this regard, please refer to the additional ground (relating to the addition of agricultural income) taken you e. "That the assessment made u/s 153A of the Act is bad in law as no incriminating evidences were found during the course of search concerning the addition of Rs.2,00,000/- made for the impugned AY" and also the evidences filed (including the additional evidences requested to be admitted w/r 46A) thereon. 3 In the context of the aforesaid issue, th....
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....ot disallowing the claim for deduction u/s 548 especially when she had not accepted the very agricultural income which was germane to the allowance of such deduction. 5 Under the circumstances, in exercise of powers vested in me u/s 251. I propose to enhance the assessment by withdrawing the deduction u/s 548 inadvertently allowed by the AO, You are hereby given the opportunity to file submissions showing as to how the conditions as stipulated u/s 548 get satisfied in ne your your case 6 Your reply, if any, should reach to the undersigned on or before. 17.05 2017 at 11.00AM Failing the above, it shall be presumed that you have no objection to the proposed enhancement." 5.6 In response to the above said show cause notice, the Id. AR appeared and filed written submissions as under "We have filed our reply on 17 05 2017 to the show cause notice dated 24.04.2017 issued by Your Honour in respect of enhancement of income by withdrawal of exemption of Rs. 7,32.79,132/- u/s 548 of the Income Tax Act, 1961 claimed by the assessee on capital gain on sale of land at Punjab Khor, Delhi during the year under consideration is During the hearing. Your Honour has raised ....
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....uch arrangements confer the privileges of ownership without transfer of title in the building and are a common mode of acquiring flats particularly in multi-storeyed constructions in big cities. The definition also does cover cases where possession is allowed to be taken or retained in part performance of a contract, of the nature referred in section 53A of the Transfer of Property Act, 1882 New sub clauses (v) and (vi) have been inserted in section 2(47) to prevent avoidance of the capital gain liability by recourse to transfer of rights in the manner referred to above. The newly inserted sub-clause (vi) of section 2(47) has brought into the ambit of "transfer, the practice of enjoyment of property nights through what is commonly known as power of attorney arrangements. The practice in such cases is adopted normally where transfer of ownership is legally not permitted A person holding the power of attorney is authorized the power of owner, including that of making construction. The legal ownership in such cases continues to be with the transferor II. Whether Gift deed signed by Mr. Rajender Prakash Chaudhary, brother in law of the assessee in favour of assessee was regist....
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....e the assessment by withdrawing exemption u/s 548 of Rs 7,32,79,132/- inadvertently allowed by the Ld. AO on capital gain on sale of land at Punjab Khor. Your Honour will appreciate that sec 251 of the Act cannot be praised into the service to substitute the view/decision of the assessing officer 3 At para 32 of the notice dated 24.04.2017, your goodsell has stated that on the directions of the Id. AO, copy of sale/purchase deed of Anangpur land was not filed during assessment proceedings. Respectfully submitting, this is not correct The Id AO vide letter dated 18.03.2016 asked to substantiate the claim of exemption u/s 548 In response thereto, the assessee filed her reply dated 28.03.2016 (copy of which was furnished vide letter dated 17.05.2017). Copy of purchase deed/Agreement to sell of Anangpur land was also furnished to prove the title. (Kindly) refer page no. 26 to 36 of reply dated 17.05.2017) 4 The Ld AO was satisfied with the explanation and granted claim u/s 54B. This clearly shows that she correctly applied her mind by perusing the deeds of Punjab Khor Land and Agreement to Sell of purchase of Anangpur land 5. Agreement to sell coupled with po....
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....allowed the said deduction, thus committing a patent error 5.8 Before concluding the issue, it is considered relevant and important to note that the entire sale consideration (towards the purchase of agricultural land at Faridabad) is found paid by the appellant in cash. Another important aspect in purchase of the above said land at Faridabad to be taken note of is that despite having paid entire purchase consideration, the appellant does not take care to get the property registered in her name despite knowing full well that as per law (e.g. under the Registration Act etc.) for getting the legal ownership, registration is must. Entire conduct of the appellant is incomprehensible and against the prudence and human probabilities. Therefore, the impugned transaction fails to qualify as a genuine transaction when tested on the anvil of the test of 'human probability as propounded by the Supreme Court judgment in Sumati Dayal (214 ITR 801) When these important aspects are taken into account, it becomes very obvious that entire attempt on appellant's part was to somehow get exemption u/s 548 and that the transaction of land purchase was more of accommodation in nature. O....
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....ailed to satisfy the mandatory condition of 'purchase of any other land for being used for agricultural purposes' as enunciated u/s 54B of the Act. 5.8.4 Accordingly, I hold that the appellant is not entitled for the deduction claimed and direct enhancement of the income of the appellant by an amount of Rs.7,32,79,132/-. The AO is accordingly, directed to give effect to the above findings and raise the additional demand. Penalty proceedings u/s 271(1)(c) are separately initiated for furnishing inaccurate particulars of income to the extent of Rs.7,32,79,132/-as mentioned supra." 7. The submission of the assessee before the Tribunal are as under:- "7. Nowhere in the assessment order, there was any reference or mention about the exemption claimed by the assessee u/s 54B. However, the Ld CIT (A) had made enhancement by disallowing exemption claimed u/s 54B. 8. Since the Ld CIT (A) had refused to admit the Girdawari as an additional evidence, he had made up his mind to upheld the addition made by the Ld AO and also to disallow the exemption claimed u/s 54B (which was allowed by the Ld AO). 9. In Para 5.4 of the appeal order, the Ld CIT (A)....