Kamal Kishore Mukati Vs PCIT (ITAT Indore)
The facts in brief are that the assessee entered into an agreement in March 2006 for sale of agricultural land used for agricultural purpose. He received sale consideration in parts through banking channels. Sale deed was finally registered between March 2006 and April 2008. Before registering the sale deed assessee purchased other agricultural land from the sale consideration so received and claimed it as deduction u/s 54B of the Act against the capital gain earned from transferring of the capital asset being land used for agricultural purpose in two years immediately preceding the dates on which the transfer took the place.
Ld. AO allowed the claim during the assessment proceedings. Ld. Pr. CIT during the course of proceedings u/s 263 of the Act observed that the assessee had not complied with the provision of section 54B of the Act since this benefit was available only if the assessee had made the investments in other agricultural land after the date registered sale deed. As per the Ld. Pr. CIT this aspect was not examined by the Ld. AO and thus needed to be set aside for reexamining the issue of computing capital gain at the end of ld. AO.
We, however, note that the agreement for sale of agricultural land was made on 31.03.2006 but finaly registry was executed on 11.04.2008. Respective assessees received their shares of sale consideration through banking channels within few months of entering the sale agreement. The amount so released was utilized by the assessee towards purchase of new agricultural land. Though the sale agreement was registered on 11.04.2008 but the nexus of investment in new agricultural land is from the sale consideration received from sale of land.
In light of the above decisions we observe that in the instant case also the agreement to sale was not cancelled and the same was acted upon on at the same sale consideration and finally executed the registered sale deed with the same person though acting on behalf of the company as its director and since the assessee has utilized the same sale consideration for purchasing new agricultural land he should be allowed the benefit of section 54F of the Act, so as to fulfill the very object of section 54B of the Act for which it has been created in the act. This view was adopted by the Ld. AO to allow the deduction u/s 54B of the Act which is legally permissible view and thus, cannot be taken as a basis to assume jurisdiction u/s 263 of the Act and holding the orders of Ld. AO as erronous. In view of this the grounds of appeal raised in the case of Subhash Mukati (ITANo.425/Ind/2018) also deserves to be allowed and proceedings u/s 263 of the Act are directed to be quashed.
FULL TEXT OF THE ITAT JUDGEMENT
The above captioned appeals filed at the instance of the assessee(s) for Assessment Year 2009-10 are directed against the separate orders of Ld. Pr. Commissioner of Income Tax(Appeals)-I (in short ‘Ld. PCIT], Indore dated 15.03.2018 and 27.02.2019.
2. Registry has informed that there is a delay of 122 days in filing of the appeals in ITANos.870 to 874/Ind/2019 and delay of 54 days in the remaining appeals captioned above. Respective assessee(s) have filed an affidavit for condonation of delay. All the assessee(s) in instant appeals are relatives and are engaged in agricultural activities. In the condonation applications common reason is death of one of the family members and lack of necessary advice to file the appeals and time limit. We have given thoughtful consideration and in the larger interest of justice and the reasons mentioned by the respective assessees, condone the delay in filing of instant appeals and admit them for adjudication.
3. Assessee(s) has raised following common grounds of appeal in ITANos.870 to 874/Ind/2019:-
GROUND I:
1.On the facts and circumstances of the case and in law, the Learned Principal Commissioner of Income tax -I, Indore [“the PCIT”] erred in invoking provisions of section 263 of the Income Tax Act, 1961 (“the Act”) and directing revision of the assessment order passed u/s. 143 (3)/147 of the Act by the Income Tax Officer-1(4), Indore (“the AO”) for examination of capital gains and deductions on the alleged ground that the assessment order was erroneous and prejudicial to the interest of the revenue.
2.The Appellant prays that since the assessment order passed by the AO was after making specific and full enquiries therefore the assessment order cannot be regarded as erroneous and accordingly the action of the CIT in invoking provisions of section 263 and revising assessment order be held ab-initio and / or otherwise void and bad- in-law.
3. He further failed to appreciate that no revision can be made when two views exist on a debatable issue.
4. The Appellant further prays that order passed u/s. 263 of the Act ought to be, in the facts and circumstances, struck down as null and void ab initio.
GROUND II:
Without prejudice to Ground I:
1.On the facts and circumstances of the case and in law, the CIT erred in observing that the conditions of section 54B and section 54F are not satisfied in respect of claim allowed by the AO.
2.The Appellant prays that the order passed u/s. 263 of the Act be struck down as null and void and assessment order of the AO be restored and it be held that on the facts and circumstances, no revision or interference is called for.
GROUND III:
The Appellant craves leave to add, amend, alter and/or delete any/all of the above grounds of appeal.
Assessee(s) has raised following common grounds of appeal in ITANos.433,434,436 & 442/Ind/2018:-
1.1 That on the facts and in the circumstances of the case and in law the Ld. CIT erred in set aside the order as passed by the assessing officer u/s 143(3) r.w.s. 147 of the Act by invoking the provision of section 263 of the Act even when the order as passed by the assessing officer was neither erroneous prejudicial to the interest of the revenue.
1.2 That on the facts and in the circumstances of the case and in law the Ld. CIT erred in set aside the order as passed by the assessing officer by invoking the provision of section 263 of the Act even when the order was passed by the assessing officer u/s 143(3) r.w.s. 147 of the Act after full application of mind.
2. That on the facts and in the circumstances of the case and in law the Ld. CIT erred in set aside the order as passed by the assessing officer by invoking the provision of section 263 of the Act merely for applying the sale consideration as per provision of section 50C of the Income Tax Act even when consideration was received by the assessee in previous years as per guidelines as applicable in that year.
3. That the appellant reserves its right to add, alter and modify the grounds of appeal as taken.
Assessee(s) has raised following common grounds of appeal in ITA Nos. 435,437 & 438/Ind/2018:-
1.1 That on the facts and in the circumstances of the case and in law the Ld. CIT erred in set aside the order as passed by the assessing officer u/s 143(3) r.w.s. 147 of the Act by invoking the provision of section 263 of the Act even when the order as passed by the assessing officer was neither erroneous prejudicial to the interest of the revenue.
1.2 That on the facts and in the circumstances of the case and in law the Ld. CIT erred in set aside the order as passed by the assessing officer by invoking the provision of section 263 of the Act even when the order was passed by the assessing officer u/s 143(3) r.w.s. 147 of the Act after full application of mind.
2. That on the facts and in the circumstances of the case and in law the Ld. CIT erred in set aside the order as passed by the assessing officer by invoking the provision of section 263 of the Act merely for applying the sale consideration as per provision of section 50C of the Income Tax Act even when consideration was received by the assessee in previous years as per guidelines as applicable in that year.
3. That the appellant reserves its right to add, alter and modify the grounds of appeal as taken.
Assessee(s) has raised following common grounds of appeal in ITANo.425/Ind/2018:-
1.1 That on the facts and in the circumstances of the case and in law the Ld. CIT erred in set aside the order as passed by the assessing officer u/s 143(3) r.w.s. 147 of the Act by invoking the provision of section 263 of the Act even when the order as passed by the assessing officer was neither erroneous prejudicial to the interest of the revenue.
1.2 That on the facts and in the circumstances of the case and in law the Ld. CIT erred in set aside the order as passed by the assessing officer by invoking the provision of section 263 of the Act even when the order was passed by the assessing officer u/s 143(3) r.w.s. 147 of the Act after full application of mind.
2. That on the facts and in the circumstances of the case and in law the Ld. CIT erred in set aside the order as passed by the assessing officer by invoking the provision of section 263 of the Act merely for applying the sale consideration as per provision of section 50C of the Income Tax Act even when consideration was received by the assessee in previous years as per guidelines as applicable in that year.
3. That the appellant reserves its right to add, alter and modify the grounds of appeal as taken.
4. From perusal of the above grounds we find that most of issues raised are common, therefore as accepted by all the parties concerned, we have taken up all these appeals together for adjudication and the same are being disposed of by way of this common order for sake of convenience and brevity.
5. In all these instant appeals assessees have challenged the action of Ld. Pr. CIT-1 Indore, invoking the provisions of section 263 of the Act and directing for the revision of the assessment orders passed u/s 143(3) r.w.s.147 of the Act. The grounds of appeals further indicate that following three issues are involved in the impugned order framed u/s 263 of the Act:-
a. Value of sale consideration to be adopted for computing the capital gain
b. Allowability of deduction u/s 54B of the Act
c. Allowability of deduction u/s 54F of the Act.
For adjudication of these common issues as a lead case we are taking the facts of the case of Kamal Kishore Mukati ITANo.870/Ind/2019 to which consent was given by Ld. Counsel(s) for the assessee and the Ld. Departmental Representative(DR).
6. Brief facts of the case are that the assessee is an individual and source of income is from agricultural operation, capital gain and income from other sources. The assessee along with family members entered into an understanding for sale of his agricultural land admeasuring 3.522 hectares with Shri Vijay Mirchandani Ji who acted on behalf of M/s Global Developers for sale consideration of Rs.1,91,48,000/- out of which Mr. Kamal Kishore Mukati had to received 1/5th share i.e. Rs.38,29,600/-. This sale agreement was executed on 31.03.2016 and the consideration was received through banking channels in the respective bank accounts of the sellers on different dates soon after entering the agreement. The sale deed was finally registered on 02.04.2008 between the assessee and M/s. Global Developers. Through annual information return Ld. AO received information about the transaction of sale of immovable property registered on 02.04.2008. In order to initiate the assessment proceedings u/s 147 of the Act, notice u/s 148 of the Act was duly served upon the assessee and in compliance thereto return of income for A.Y.2009-10 was filed on 18.04.2016, showing income at Rs.1,72,999/- and agricultural income of Rs.1,37,500/-. Detailed computation of income along with calculations of capital gain and the claim of deduction u/s 54 were filed by the assessee as required by the Assessing Officer. Ld. AO made addition of Rs.25,000/- and assessed the income at Rs.1,98,000/- and agricultural income at Rs.1,37,500/-.
7. Similar type of proceedings were also carried out in the case of remaining assessees wherein also immovable property was sold by the members of Mukati family and agreements were entered with Vijay Mirchandani on behalf of the M/s Global Developers. The sale consideration mentioned in the sale agreements were more than the value as per the Stamp Valuation Authority provided u/s 50C of the Act. Payments were received through banking channels much before the final date of entering to the registered sale deed during the assessment year 2009-10. The sale considerations were received by the respective assessees as per their shares in the immovable property. All the assessments were filed u/s 147 r.w.s. 143(3) of the Act on receiving specific information on the basis of AIR. Assessee wise details of appeals, share of sale consideration, registry value and date of assessment u/s 143(3) r.w.s. 147 of the Act are provided in the chart below:
