TaxTMI 
TaxTMI 
2022 (3) TMI 1541
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....e that Information was received by the Assessing Officer (AO) that the assessee along with his brothers Sh. Kanwar Lal, Sh. Manphool, Sh. Ram Avtar and several others (in total 21 persons called 'Owners' hereafter) had entered into a collaboration agreement on 14.12.2006 with "Bestech India Pvt. Ltd., Gurugram" (hereinafter called as 'Developer') for the acquisition of 253 kanals, 01 marla of land in the revenue village Nakhrola, Gurugram. That collaboration agreement, though not registered, stated that all the 21 Owners were not fully equipped to execute and complete the proposed work of group housing complex and so they had entered into the agreement with the Developer after due consideration of its reputation / experience / expertise and capability to obtain permission for the change of land use (CLU) and a license from the government for the development / construction of the housing complex. As per the collaboration agreement, it was agreed between the Developer and Owners as under:- (i) The developer will construct / develop the said project over the said piece of land at his own cost. (ii) The owner shall be entitled to 35% of the total saleable area along w....
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..../s Bestech India Pvt Ltd. and a nominee of the Developer for the purpose of representing before the Government Authorities to obtain sanction and permission for construction / development of the housing project on the said land for building and carrying out construction as per the other legal requirements. 4. The Owners through the Developer made an application on 04/01/2007 to the Government of Haryana to grant permission to construct a residential Project over the said land. The Government of Haryana through the Director, Town & Country Planning, had issued LOI and subsequently the license on 31/5/2008 to construct the Group complex on the said land. The license was granted in the names of the Owners who were in collaboration with the Developer subject to the condition that the licensee would not give any advertisement for the sale of space before the approval of layout/building plan. 5. On going through the copy of account of the assessee with the Developer the Assessing Officer noticed that the assessee has received a total payment of Rs. 2,41,70,000/-. Subsequently the assessee along with his brothers Sh. Kanwar Lal, Sh. Manphool & Sh. Ram Avtar had executed / registered....
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....Department of Haryana for Gurugram District, the collaboration agreement, the factum of commencement of construction in FY 2010-11, and the provisions of Section 2(47) of the Act governing transfers as also the alteration in the initial agreement to receive 35% of the built-up area and the ratio of the cases in Alapati Venkataramaiah v. CIT (1965) 57 ITR 185 (SC), CIT v. Podar Cements Pvt. Ltd. (1997) 226 ITR 625 (SC) and CIT v. Vishnu Trading & Investment Co (2003) 259 ITR 724 (Raj.), CIT vs. Geetadevi Pasari (2009) 17 DTC 2001(Bom). He thereupon concluded that the provisions of Section 45(2) were applicable to the sale of lands by the assessee and computed the total income inclusive of the capital gains and business profits thereon with the following observations:- "4. In view of these facts the assessee was asked to explain vide order sheet entry dated 12.10.2015 as to why income accrued/earned on this transaction should not be assessed as income under the head business/profession. In response to the same, there AR of the assessee has filed written submissions vide his letter dated 27.10.2015 as discussed above. In view of the detailed facts and reason as above....
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....red. Indexation of cost of acquisition and improvement, if required, will be done till the previous year in which such conversion, shall be deemed to be full value of the consideration of the asset. The sale price minus market value as on the date of conversion shall be treated as business income and taxed under the head 'profit and gain' of business and profession." Therefore, on the composite analysis of the facts it is clear that the assessee has entered into the transaction of converting his individual land parcel along with other owners collectibly into stock in trade to be developed/constructed as residential housing project to be sold in different units (as stock in trade) which is an adventure in the nature of trade. Therefore, income of the assessee on the transaction as accrued is assessed as income under the head income from capital gain and under the head income from business/profession. It is also worthwhile mentioning here that as per the report of SubRegistrar, Manesar, the said land is situated at a distance of mere 3 km from the notified distance from the MC limits of Gurgaon." In view of the above the income from capital gain and i....
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....e Assessing Officer: 1. initiating proceedings u/s 147/148 of the Income-tax Act, 1961 against the Appellant without any reasonable cause; 2. in sustaining and maintaining the proceedings u/s 147/148 of the Act in the subject year; 3. in completing the assessment on the basis of such wrong action u/s 143(3) of the Act; 4. in computing the income u/s 143(30 of the Act at Rs. 2,42,39,410/- against the returned income of Rs. 1,91,500/-; 5. in computing Long Term Capital Gain on transfer of agricultural land done in an earlier year but charged during the year by assuming the cost of acquisition and indexation cost without any material before him; 6. confirming the computation of Long Term Capital gain and additions made to the returned income to the extent of Rs. 2,40,47,914/-; 7. not allowing claim for deduction u/s 54B and 54F of the I.T. Act, 1961; 8. charging interest u/s 234A and 234B of the Income-tax Act, 1961. All the above actions being arbitrary, erroneous and unlawful must be quashed with directions for appropriate relief." 10.2 During the hearing of the appeal the Appellant has moved application for ....
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.... grounds form part of the discussion in the impugned order of the Ld. CIT(A). Lastly, it was pleaded that the facts pertaining to these three additional grounds being available in the impugned orders merit to be admitted for adjudication and orders. 12. Per contra the Ld. Sr. DR vehemently objected to the entertainment of the additional grounds filed at this late stage by the Appellant. According to her these grounds were not taken in appeal before the Ld. CIT (A) and so since they would involve fresh investigation into facts they should ought not be entertained at this late stage. 13. We have considered the rival contentions and have also gone through the material on record. As urged on behalf of the Appellant we find that the additional grounds as taken and canvassed for admission have been generally stated vide Ground Nos. 1 and 2 of the grounds of appeal as originally taken in the appeal. We also find that the issues regarding jurisdiction and the approval of the satisfaction note by the prescribed authority are dealt with by the Ld. CIT(A) in the Appellate order. Being so and as the additional grounds go to the root of the controversy we admit the same. 14. Since the ....
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....arisen was of the joint family of the assessee and not that of the individual. It was urged that the notice for reassessment issued in a wrong status is ab initio illegal and invalid as has been held by several Courts. The decisions in CIT vs. B.Ranga Reddy (1929) 118 ITR 897(AP), CIT vs. Ram Das Deoki Nandan Prasad (2005) 277 ITR 197(All) were cited in this context. 14.2 It was further submitted that the relevant assessment year for consideration of transfer could not be AY 2010-11. The transfer was occasioned due to the handing over of the possession of the agricultural lands on receipt of the partial sale consideration qua the Collaboration Agreement dated December 2006 to the Developer. With the registration of the sale deed for that act and deed which was carried out in November 2009, the transaction related back to AY 2007-08 as per Section 47 of the Registration Act, 1908 and so the reassessment as carried out for AY 2010-11 was per se erroneous and untenable. 14.3 Lastly, it was submitted that the agricultural lands as transferred were not capital assets because post 06.01.1994 no notification for urbanisation of those areas had been issued till November 2009. The lan....
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....he assessee was residing was the only available recourse to the ITO which could not be faulted. It was urged that since the assessee had never asserted his joint family status anytime before the issue of notice in his individual capacity. That was however subject to correction. Ld. Sr. DR cited the provisions of Section 124 of the Act in this regard governing transfer of cases from one AO to another. she submitted that after having participated in the assessment proceedings, the appellant could not now assail the assumption of jurisdiction by the ITO, Ward-3(5), Gurgaon. On the point of the reassessment having been completed for an incorrect assessment year, the Ld. Sr. DR urged that in view of the apex Court decision in Balbir Singh HUF (2017) 398 ITR 531(SC) it was the registration of the transfer documents that was material and with registration done in the subject year so AY 2010-11 that was the correct year for reassessment. As to the argument of the assessee of the agricultural land being located 8 km away from the nearest municipality Ld. Sr. DR stated that was not factually correct for as per the Registrar's finding that it was within 3 km of the municipal limits. She urged....
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....ed by the assessee was "S-34, GROUND FLOOR, UPPAL SOUTH END, SECTOR-49, GURGAON, HARYANA" and the address the assessee has not hanged even till the filing of latest ITR as per the information available on system. In the right of facts mentioned above, the notice u/s 148 of the Income Tax Act, 1961 dated 30.03.2015 was issued by the then AO well within his jurisdiction as he had the complete authority of law to assume charge over the case. It is also pertinent to mention that the assessee participated in the assessment proceedings till its completion but never challenged the jurisdiction for issuance of notice u/s 148 under consideration. B. Ram Kishan Assessment proceedings in the case were initiated u/s 147/148 on 30/03/2015 as a Non PAN case by the then AO i.e. Income Tax Officer, Ward-3(5), Gurgaon (now merged into Ward-3(1), Gurgaon) on the basis of certain information in his possession at that time of initiation of proceedings under consideration which did not contain the PAN of the assessee anywhere. Hence, the first notice u/s 148 was issued to the assessee as per his address available in the information i.e. "Sh. Ram Kishan S/o Sh. Late Sh. Ram Si....
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....e light of above facts, I place my reliance on Sec 124(1)(b) and 124(3) of the Income Tax Act, 1961. As per sec 124(1)(b), the AO (who completed the assessment) has jurisdiction over any other person residing within the area of Assessing Officer. Considering the facts that the assessee is accepting notices on jurisdictional address of Gurgaon, he is filing his ROI due in that year from Gurgaon address & he is not objection to the jurisdiction during assessment clearly shows that he is residing in the area of jurisdiction of Assessing Officer and thus AO has rightly assumed the jurisdiction. Further, as per 124(3)(a), the assessee can object with respect to jurisdiction of Assessing officer within one month of receipt of notice u/s 142(1) or 143(2) or before completion of assessment whichever is earlier. In the present case, the assessee never objected to jurisdiction during assessment nor at the first appellate stage. So, he is barred from taking this objection at this stage as per Sec 124(3) of the IT Act 1961. The appellant raised this objection for the first time before the Hon'ble bench after five and half years. 2. With respect to R....
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....: a) In that case, the assessee was challenging the jurisdiction from very beginning with AO which is not so in present case. b) Again in that case, the assessee challenged that AO was aware that the jurisdiction pertains to Delhi before issue of notice u/s 148 which is again not so in present case, as reopening of case was without PAN. c) Further, in that case, the assessee raised objections to notice u/s 148 and claimed that the AO had examined the ITR while disposing off the objections and thus had knowledge of lack of jurisdiction. In present case, no such objections were ever raised at any stage and thus the present case is not covered by the judgment of Hon'ble bench. 2. In the proceedings u/s 147/148 being endorsed and approved by the prescribed authorities without application of mind and in contravention as applicable thereto: The reasons in the case under consideration were recorded in detail by the AO after analyzing all the information / facts available with him at time of considering the case for initiation of proceedings u/s 147/148 of the Act and the facts had been mentioned in the reasons itself. Therefore, assessee's plea....
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....Store Depot, Ghatkopar, Maharashtra PAN as recorded therein is AMKPS2576R. That appears in the annexure w/s at page 9. For the AY 2010-11 he had submitted his return for assessment to the ITO, Naval Ward 26(1)-4 at Pune on 13.03.20121. That is where he was always being assessed. Also none other than the Pune ITO had authority or jurisdiction over him. 2. In the Ld. Sr. DR's submission under reply it is conceded that the reassessment proceedings which were initiated on 30.03.2015 by the ITO, Ward 2(5) Gurugram was as a non-PAN case on the basis of information in his possession. The notice is dated 30.03.2015 which is for the subject AY 2010-11. The notice does not define the status of the assessee as that of a family. It imputes escapement of income to the assessee individual where it says that after naming the individual as son of Late Sh. Ram Singh that "the income in respect of which you are assessable / chargeable to tax". This, therefore, is a clear case of wrongful imputation of income and also wrongful assumption of jurisdiction by the AO in Gurgaon on an assessee who was otherwise being assessed in a different state by another AO as a salaried employee. There is no ....
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....ct is noticed by the assessee. Further jurisdiction cannot be conferred even by consent. 3. As to the averments regarding Ram Kishan it needs notice that Sh. Ram Kishan was under the jurisdiction of the AO assessing the Army personnel and was having a PAN number as allotted to him for the salary income as derived by him from the Army. The Ld. DR has provided a copy of the acknowledgement of the return for AY 2011-12 filed on 31.07.2012 by Sh. Ram Kishan with the AO designated as Ward Circle R2-W4-Ranchi-W2(4). This acknowledgement is dated 31.07.2012 whereas the notice u/s 148 is issued on 30.03.2015. This clearly shows that despite being aware of the fact that Ram Kishan was being assessed by the AO at Ranchi, the Gurgaon AO arbitrarily assumed jurisdiction in the case to issue notice u/s 148 of the Act. In that circumstance, whatever is submitted above with regard to Manphool Ram Singh applies equally to Ram Kishan as well. 4. It is noteworthy that the objections as taken to the assumption of jurisdiction by the Gurgaon AO in the case of Kanwar Lal and Ram Avtar remain un-rebutted. So the delay in these two cases, on the basis of the fact situation that the Gurg....
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....he AO over an assessee is not the subject matter of dispute. Reading the above two provisions in the manner as done in the note under reply would only cause avoidable jeopardy and virtual anarchy in the administrative system. 5. The attempt in the note to distinguish the case of Attar Singh &Ors. is misconceived and misdirected. The Hon'ble Tribunal after an elaborate consideration of the facts of that case and the law bearing on the subject and the case laws as applicable had quashed the notices under section 148 and the consequents 147/143(3) re-assessments with the following observations. "32. In view of the above discussion and considering the fact that the assessee was employed with Delhi Police and was regularly filing his return of income at Delhi under ITO, Ward 64(3) {earlier ITO, Ward 40(3) and since this fact was known to the ITO at Gurgaon, therefore, in absence of any transfer of jurisdiction u/s 127, we hold that the ITO, Gurgaon has no jurisdiction over the assessee. Therefore, respectfully following the decision of the Hon'ble Punjab & Haryana High Court, which is the jurisdictional High Court in view of the assessment order being passed by the ITO....
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.... verify the fact of the land belonging to which particular entity. The endorsement at the bottom of the re-assessment orders of the land being ancestral as made by the Gurgaon AO brings out this stark omission in the re-assessment. 10. Further to the submissions made above. It is reiterated that the Gurgaon AO issuing the notice u/s 148 of the Act erred in so doing without making even a semblance of an enquiry as to the correctness of the information or even applying his mind to the facts of the case as to its authenticity and applicability to the Appellants as was conveyed to him by the stated source. The notices were issued to the above Appellants who were definitely not within his jurisdiction even as individuals. Besides the notices were issued in respect of transactions and the resultant incomes which did not belong to these individuals at all. No appropriate verification of the details of the case and the facts pertaining to the transaction was ever attempted before issuing the impugned notices. The impugned notices were issued mechanically and casually without adherence to the statutory norms and applicable standard verification procedures. The prescribed authority ....
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....een duly transferred to him. It is now well settled that it is only the AO holding charge over an assessee for assessment purposes who could issue a notice for reassessment. In other words, no AO, other than the assessee's own AO, could issue a notice for reassessment. The ITO Ward 3(5), Gurugram has issued the notice u/s 148 of the Act to the Appellant on 30.03.2015 after having recorded a satisfaction as to the alleged escapement of income of the Appellant. The ITO Ward 3(5) Gurugram does not seem to have made any inquiry on the relevant issues before issuing a notice u/s 148 of the Act to the Appellant. No material in this behalf has been brought before us by the Department. The High Court of Punjab & Haryana in Lt. Col. Paramjeet Singh vs. CIT (1996) 220 ITR 446 has ruled that if the assessment proceedings of an assessee is to be reopened or if the income for the relevant assessment year is to be reassessed, it is the Income-tax Officer who could assess the same in the first instance who has jurisdiction to proceed in the matter u/s 147 read with Section 148 of the Act, unless of course the case had been transferred by a competent authority to another AO u/s 127 of the Act. No ....
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....s sought to be taxed the notice issued under s. 148 of the Act should be specifically in the name of the HUF. As the notice under s. 148 has not even made a reference to the HUF, the assessment made on the HUF pursuant to such a notice is invalid." In a similar situation the Allahabad High Court ruled in CIT vs. Ram Das Deokinandan Prasad (HUF) supra as under:- "that notice was issued to the assessee in his individual capacity and the income sought to be reassessed was that of the Hindu undivided family of which the assessee was the karts. The notice to reassess the income of the Hindu undivided family was invalid". 19. On a perusal of the facts and the aforesaid judicial pronouncement, though we may agree with the aforesaid argument of the Ld. Counsel, however, there is nothing on record brought before us, whether, the above named assessees (4 brothers) have applied for any PAN for HUF or whether any account was opened in the name of HUF or earlier there was any existing PAN. Neither there is any mentioned in the deed that all the individuals had entered into the agreement as HUF or jointly representing HUF. At the time of issuance of notice, the AO could not have c....
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....nditions to restore the property back to the owners after completing the development. The grant of possession to the developer was for the limited purpose of development as envisaged by the joint development agreement. In that case the Supreme Court did not have the need to consider the effect and consequence of the registration of a transfer deed on a subsequent date on the initial agreement due to the collapse of the agreement. In the subject case, the Developer has initially been vested with the irrevocable possession of agricultural land on payment of significant refundable and non-refundable security deposits plus 35% share in the projected multi-story complex. By so doing, and acting on it, the conditions of part performance of a contract u/s 53A of the Transfer of Property Act as envisaged u/s 2(47)(v) of the Act stood fulfilled, causing a valid transfer. The Sale Deed confirms the factum of the Appellant giving the possession of the agricultural lands to the Developer soon after receipt of the partial sale consideration as defined in the Collaboration Agreement. Such a transfer got legally ratified on the registration of the sale deed in November 2009. The facts in the subj....
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.... for the AY 2010-11 shows his PAN as AECPL6421N (page 5 of the 15.09.2021). Accordingly, he was under the jurisdiction of Salary Circle ITO In-charge of Delhi Water Services Division. On page 6 of the same paper book the copy of the identity card of the Appellant issued by the Delhi Water Services Division is placed which describes him as a pensioner. He too, like his brother Ram Kishan, was the subject matter of a notice issued u/s 148 of the Act dated 30.03.2015 by the ITO, Ward 2(5), Gurugram. The copy of the notice as issued by the said ITO is placed at page 59 of the paper book filed in his case. That marks the status of the Appellant as individual. The satisfaction note of the AO is annexed at pages 60 to 62. Therein too, the AO refers to the collaboration agreement of December 2006 with Bestech India Private Ltd. for the development and construction of multi-storied complexes on the agricultural land of the Appellant and his brothers. For the reason that the records of the office of ITO, Ward 2(4), Gurugram did not show that the Appellant was filing any incometax return in his Ward at Gurugram. Income-tax Officer has simply opined that the amount of Rs. 2,41,69,500/- receive....
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.... stated more elaborately in the case of Ram Kishan. Accordingly, appeal of the appellant is allowed. ITA No. 3027/Del/17 Sri Ram Avtar vs. ITO, Ward 3(4), Gurugram: 29. The Appellant Ram Avtar is the brother of Ram Kishan, Kanwar Lal and Manphool Ram Singh. He was an employee of the Panchayati Raj Department of the Haryana Government. Form No. 26-AS pertaining to him for AY 2010-11 placed at page 8 of the 15.09.2021 paper book shows his PAN as APLPR4350L. He was subjected to deduction of TDS on salary u/s 192 of the Act. Accordingly he was under the jurisdiction of Salary Circle ITO In-charge of the Panchayati Raj Department, Gurugram of the Government of Haryana. He too like his brothers Ram Kishan, Kanwar Lal and Manphool Ram Singh was issued a notice issued u/s 148 of the Act 30.03.2015 by the ITO, Ward 3(5), Gurugram. That is placed at page 6 of the paper book filed in his case. Placed on pages 61 and 62 of the paper book is the copy of the reasons for reopening of the case u/s 147 of the I.T. Act as recorded by the ITO. That stands in the name of the individual and refers to the Collaboration Agreement with Bestech India Private Ltd. and to the Sale Deed of 18.11.2009 an....
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..../17 Sri Manphool Ram Singh vs. ITO, Gurugram: 34. The Appellant Manphool Ram Singh is the brother of Ram Kishan, Kanwar Lal and Ram Avtar. He was an employee of the Indian Navy. Form No. 26-AS as filed shows up his PAN AMKPS2596R. That is placed at page 9 of the paper book of 15.09.2021. Also placed at the same paper book page 10 is a copy of the acknowledgement of the return filed by the Appellant for the subject year with address: INS Shivaji, Lonavala, Pune. This return was filed on 13.03.2012 with ITO, Ward 26(1)-4 (NAVY). With this material on record his assessment with the ITO, Salary Circle, Navy is established. The Appellant, like his brothers Sri Ram Kishan, Sri Kanwar Lal and Sri Ram Avtar was visited with a notice u/s 148 dated 30.03.2015 issued by the Incometax Officer, Ward 2(5), Gurugram a copy of which is placed at page 62 of the paper book. The reasons for initiating the proceedings u/s 147 are filed at pages 63 and 64 of the paper book. The notice is issued to the individual assessee it refers to the Collaboration Agreement of December 2006 with Bestech India Private Ltd. to which the Appellant was a party. The note also refers to the Sale Deed dated 17.11.2009.....