Smt. Abha Bansal Vs. Pr. CIT (Central) (ITAT Delhi)
Taxability of the compensation received by the assessee for non-delivery of the Villa under Builder-Buyer Agreement
The compensation received by the assessee on cancellation of the Builder-Buyer Agreement is capital receipt and taxable as capital gains. The view of the A.O. was, therefore, in accordance with Law and cannot be impeached by the Learned PCIT. In view of the above, we do not subscribe to the view of the Ld. D.R. that since no compensation is mentioned in the Builder Buyer Agreement are to be payable as per agreement, then, the compensation is revenue in nature. It is devoid of merit as discussed above. We also do not agree with the submissions of the Ld. D.R. that payment of compensation was a colourable device to evade the taxes. The Ld. D.R. referred to the emails and other papers seized from the computer of Shri Gaurav Jain, Ex-Employee of the M3M Group to support the case of the Revenue. However, we do not agree with such view and discuss this issue separately about the admissibility of the documents found from the computer of Shri Gaurav Jain. In view of the above findings, we hold that the compensation received by the assessee on account of cancellation of the Builder Buyer agreement is capital receipt and was rightly offered as capital gain in the return of income and correctly accepted by the A.O. in the impugned assessment order Dated 18.12.2018. Therefore, the Order of the assessment is in accordance with Law. This issue is decided in favour of the assessee.
FULL TEXT OF THE ORDER OF ITAT DELHI
These appeals by the above Assessees are directed against the different Orders of Learned Pr. CIT (Central), Gurgaon, Dated 24.03.2021 for A.Ys. 2017-2018 under section 263 of the I.T. Act, 1961, challenging the Order under section 263 of the I.T. Act, 1961 on various grounds of appeals.
2. The Learned Representatives of both the parties mainly argued in ITA.No.383/Del./2021 in the case of Smt. Abha Bansal and have submitted that Order in this case may be followed in other appeals as the issue is identical in the remaining appeals. In view of the above, we proceed to decide the appeal in the case of Smt. Abha Bansal as under:
ITA.No.383/Del./2021 – Smt. Abha Bansal – A.Y. 2017-2018.
3. Briefly the facts of the case are that a search and seizure operation under section 132 of the Income Tax Act, 1961 was conducted at the premises of M3M group on 21.07.2016. The group is controlled by two brothers, namely Sh. Roop Kumar and Sh. Basant Bansal. The Bansal family, their close relatives and associates are involved in the affairs of M3M group of companies. Sh. Pankaj Bansal is son of Sh. Basant Bansal and Smt. Abha Bansal is wife of Sh. Basant Bansal. Two main companies of the group, inter-alia, are M/s M3M India Holding Pvt. Ltd. (‘MIHPL’) and M/s M3M India Pvt. Ltd. (‘MIPL’). Sh. Roop Kumar and Sh. Pankaj Bansal are Directors of MIHPL and hold 50% shares each in the company. Sh. Roop Kumar and Sh. Pankaj Bansal are Directors of MIPL. MIHPL holds 93% shares of MIPL and the balance is held by various key management personnel (‘KMP’) of the group. Sh. Roop Kumar, Sh. Basant Bansal, Sh. Pankaj Bansal and Smt. Abha Bansal are, inter-alia, key management personnel and their relatives. In the case of assessee a notice under section 142(1) of the Act was issued and served upon the assessee on 05.01.2018 requiring to file her return of income in respect of assessment year under appeal in which search was conducted in this case. In response to the above, assessee filed its return under section 139(1) of the I.T. Act, 1961 on 29.01.2018 for assessment year under appeal. In this return of income, assessee has declared her income of Rs.7,49,79,780/-. Further statutory notices were also issued under section 143(2) and 142(1) along with the questionnaire which are served upon the assessee seeking explanation of the assessee. The assessee filed the requisite details and written submissions which have been perused by the A.O. The A.O. after completion of the assessment proceedings accepted the returned income at Rs.7,49,79,780/- and passed the assessment order Dated 18.12.2018 under section 153B(1)(b) read with Section 143(3) of the I.T. Act, 1961.
3.1. Similarly, in the case of Sh Basant Bansal and Sh Pankaj Bansal assessments were framed on 18.12.2018 accepting the returned income. In the case of Roop Kumar assessment order was passed under section 153B(1)(b) read with section 143(3) of the I.T. Act, 1961 on Dated 18.12.2018 after making addition of the seized cash of Rs.35 lakhs to the returned income.
3.2. The Learned PCIT on perusal of the records found that assessment order passed by the A.O. is erroneous in so far as it is prejudicial to the interests of Revenue. Accordingly, show cause notice Dated 23.02.2021 was issued asking the assessee as to why the proceedings under section 263 of the I.T. Act, 1961 should not be initiated in this case. The relevant part of the show cause notice as reproduced in the impugned order is as under :
“2.1 On perusal of the computation of the total income, it is seen that the KMPs of the group have declared long term capital gain on account of cancellation of Builder Agreement dated 31.03.2017 which is as under –
