Dy.C.I.T.,Circle-1, Agra v. Sh. Tej Singh, Agra

ITA 127/AGR/2010 | 2005-2006
Pronouncement Date: 30-03-2012 | Result: Partly Allowed

Appeal Details

RSA Number 12720314 RSA 2010
Assessee PAN BEOPS4267M
Bench Agra
Appeal Number ITA 127/AGR/2010
Duration Of Justice 1 year(s) 10 month(s) 27 day(s)
Appellant Dy.C.I.T.,Circle-1, Agra
Respondent Sh. Tej Singh, Agra
Appeal Type Income Tax Appeal
Pronouncement Date 30-03-2012
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted DB
Tribunal Order Date 30-03-2012
Date Of Final Hearing 27-03-2012
Next Hearing Date 27-03-2012
Assessment Year 2005-2006
Appeal Filed On 03-05-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH AGRA BEFORE : SHRI BHAVNESH SAINI JUDICIAL MEMBER & SHRI A. L. GEHLOT ACCOUNTANT MEMBER ITA NO. 127/AGRA/2010 ASST. YEAR : 2005-06 D.C.I.T. CIRCLE -1 VS. SH. TEJ SINGH S/O SH. MURLI AGRA. VILLAGE-DEHTORA AGRA. (PAN : BEOPS 4267 M) C.O. NO. 47/AGRA/2010 (IN ITA NO. 127/AGRA/2010) ASST. YEAR : 2005-06 SH. TEJ SINGH S/O SH. MURLI VS. D.C.I.T. CIRCLE -1 VILLAGE-DEHTORA AGRA. AGRA. (APPELLANT) (RESPONDENT) REVENUE BY : SHRI SOHAIL AKHTAR JR. D.R. ASSESSEE BY : SHRI RAJESH MALHOTRA C.A. DATE OF HEARING : 27.03.2012 DATE OF PRONOUNCEMENT OF ORDER : 30.03.2012 ORDER PER BHAVNESH SAINI J.M. : THE DEPARTMENTAL APPEAL AS WELL AS THE CROSS OBJEC TION BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF LD. CIT(A)-I AGRA DA TED 10.02.2010 FOR THE ASSESSMENT YEAR 2005-06. THE REVENUE HAS RAISED TWO EFFECTIVE GROUNDS OF APPEAL WHICH READ AS UNDER : 2 1. THAT THE CIT(A)-1 AGRA HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN DELETING THE ADDITION OF RS.26 31 467/- MADE ON ACCOUNT OF LONG TERM CAPITAL GAIN WITHOUT APPRECIAT ING THE FACTS THAT THE LAND WAS ACQUIRED BY THE ADA ON 25.08.2000 WHILE THE ASSESSEE HAS ENTERED INTO AGREEMENT TO SALE IN A.Y. 2005-06 AND HAS OBTAINED THE ADVANCE AGAINST THE TRANSFER O F THE SAID LAND WHICH IS THE SUBJECT MATTER OF LONG TERM CAPIT AL GAIN ASSESSED BY THE A.O. 2. THAT THE CIT(A)-1 AGRA HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN DELETING THE ADDITION OF RS.2 50 000/- MADE ON ACCOUNT OF INCOME FROM OTHER SOURCES WITHOUT APPREC IATING THE FACTS THAT THE ASSESSEE WAS UNABLE TO EXPLAIN THE S OURCE OF DEPOSIT OF RS.7 84 000/- IN HIS BANK ACCOUNT. 1.1 THE ASSESSEE IN THE CROSS OBJECTION RAISED THE FOLLOWING GROUND : 1. THAT THE LD. CIT(A)-1 AGRA HAS ERRED IN LAW AN D IN FACTS IN CONFIRMING ADDITION OF RS.5 34 000/- BEING UNEXPLAI NED DEPOSIT IGNORING THE CASH FLOW STATEMENT SUBMITTED BY THE A PPELLANT. 2. THE FACTS OF THE CASE ARE THAT THE AO RECEIVED I NFORMATION FROM AIR THAT THE ASSESSEE HAS DEPOSITED RS.10 00 000/- IN HIS SAVING BANK ACCOUNT WITH INDIAN OVERSEAS BANK. PROCEEDINGS U/S. 147 OF THE IT ACT W ERE INITIATED IN RESPECT OF SUCH UNEXPLAINED DEPOSITS IN THE BANK ACCOUNT. THE AO RE CORDED THE STATEMENT OF THE ASSESSEE IN WHICH IT IS STATED THAT THE ASSESSEE I S NOT ASSESSED TO TAX AND HE IS A FARMER/FARM LABOURER. THE ASSESSEE ALONG WITH HIS T WO BROTHERS OWNED 12 BIGHAS OF LAND. THIS LAND WAS SOLD FOR RS.70 00 000/- THROUGH THE AGREEMENT IN WHICH THE ASSESSEE HAS 1/3 RD SHARE AMOUNTING TO RS.24 00 000/-. THE LAND WAS AG RICULTURAL LAND AND WHEAT BAJRA AND VEGETABLES WERE GROWN IN THE SAID LAND. THE ASSESSEE 3 MAINTAINED TWO BANK ACCOUNTS WITH INDIAN OVERSEAS B ANK AND ORIENTAL BANK OF COMMERCE. THE LAND HAS NEITHER BEEN REGISTERED IN T HE NAME OF THE BUILDER NOR POSSESSION HAS BEEN HANDED OVER TO THE BUILDER. THE IMPUGNED LAND HAS BEEN ACQUIRED BY THE AGRA DEVELOPMENT AUTHORITY AND IS I N ITS POSSESSION. THE ASSESSEE HAS CONTESTED THE ACQUISITION OF THE PROPERTY BEFOR E THE HONBLE ALLAHABAD HIGH COURT SEEKING ITS RELEASE FROM THE AGRA DEVELOPMEN T AUTHORITY. THE MONEY RECEIVED FROM THE BUILDER HAS BEEN UTILIZED IN PURC HASE OF THE AGRICULTURAL LAND IN THE NAME OF ASSESSEES SON. THE INVESTMENT IN SUCH AGRICULTURAL LAND IS OF ABOUT RS.15 00 000/- AND SOME AMOUNT HAS BEEN INVESTED IN RESIDENTIAL HOUSE AND THE BALANCE AMOUNT HAS BEEN GIVEN AS A GIFT TO THE CHIL DREN AND SPENT ON MARRIAGES ETC. APPROXIMATELY RS.10 00 000/- TO 20 00 000/- HAVE BE EN INVESTED IN RESIDENTIAL HOUSE. 2.1 IN RESPONSE TO THE REQUISITION U/S. 133(6) THE BUILDER M/S. DREAM SHELTERS PVT. LTD. FILED A LETTER BEFORE THE AO DATED 26.12. 2008 AND EXPLAINED THAT THE ASSESSEE AND HIS BROTHERS ENTERED INTO AN AGREEMENT TO SALE OF THE SAME PROPERTY ON 20.11.2004 AND ENTIRE CONSIDERATION OF RS.70 00 000 /- HAS BEEN PAID. THE DETAILS HAVE BEEN NOTED IN THE IMPUGNED ORDER AND THE SAME AMOUNT HAS BEEN SHOWN BY THE BUILDER AS STOCK-IN-TRADE IN THEIR BALANCE SHEE T. HOWEVER PHYSICAL POSSESSION HAS STILL NOT BEEN RECEIVED BY THE BUILDER. WITH RE GARD TO DEPOSIT OF RS.10 00 000/- 4 IN THE BANK ACCOUNT OF THE ASSESSEE THE ASSESSEE E XPLAINED THAT RS.2 16 000/- HAS BEEN RECEIVED FROM THE BUILDER IN CASH AND SIMILARL Y RS.2 17 000/- AND RS.2 67 000/- IN CASH HAVE BEEN RECEIVED BY BROTHER S OF THE ASSESSEE NAMELY RADHEY SHYAM AND SHRI SUKH SINGH. 2.3 THE AO HOWEVER DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND MADE ADDITION OF RS.26 31 467/- ON ACCOUNT OF CAPITAL GA INS ON SALE OF LAND IN QUESTION AND ALSO MADE ADDITION OF RS.7 84 000/- ON ACCOUNT OF UNEXPLAINED DEPOSIT IN THE BANK ACCOUNT TREATING THE SAME AS INCOME FROM OTHE R SOURCES. THE AO OBSERVED IN THE ASSESSMENT ORDER THAT THE ASSESSEE AND HIS TWO BROTHERS ENTERED INTO AN AGREEMENT TO SALE IN RESPECT OF THE LAND IN QUESTIO N AND RECEIVED A SALE CONSIDERATION AND THE ASSESSEE HAS NOT SHOWN ANY LO NG-TERM CAPITAL GAINS IN THE RETURN OF INCOME. THE AO FURTHER OBSERVED THAT CHIE F DEVELOPMENT OFFICER CONFIRMED THAT THE LAND IN QUESTION FALLS WITHIN 8 KILOMETERS OF THE MUNICIPAL LIMIT. THEREFORE THE ASSESSEE IS LIABLE TO TAX ON CAPITAL GAINS ARISING ON ACCOUNT OF TRANSFER OF IMPUGNED URBAN AGRICULTURAL LAND. THE A O ON EXAMINATION OF THE AGREEMENT TO SALE ENTERED INTO BETWEEN THE ASSESSEE AND THE BUILDER M/S. DREAM SHELTER PVT. LTD. OBSERVED THAT THE ASSESSEE HAS R ELINQUISHED HIS RIGHT IN THE IMPUGNED LAND WHICH AMOUNTS TO TRANSFER IN TERMS O F SECTION 2(47) OF THE IT ACT AND HENCE THERE WAS NO MERIT IN THE ASSESSEES CLA IM THAT THE IMPUGNED 5 AGRICULTURAL LAND HAS NOT BEEN CONVEYED BY A REGIST ERED DOCUMENT AND AS SUCH NO SALE CAN BE DEEMED TO HAVE TAKEN PLACE. THE AO ALSO OBSERVED FROM THE REPLY OF THE BUILDER THAT THE ENTIRE AMOUNT HAS BEEN PAID BY THEM TO THE ASSESSEE AND COPY OF THEIR BALANCE SHEET REFLECTS THE PAYMENT MADE TO THE ASSESSEE IN THE FORM OF STOCK-IN-TRADE AND NOT AS ADVANCE AGAINST THE PURCH ASE OF LAND. THE CAPITAL GAINS WAS ACCORDINGLY WORKED OUT TO RS.26 31 467/- AND TH E SAME WAS TAXED ACCORDINGLY. 2.4 WITH REGARD TO DEPOSIT OF RS.10 00 000/- IN THE BANK ACCOUNT OF THE ASSESSEE IN CASH THE ASSESSEE EXPLAINED THAT THE AMOUNT REC EIVED THROUGH AGREEMENT TO SALE IN CASH BY THE ASSESSEE WAS RS.2 16 000/- AND THE A MOUNTS RECEIVED BY HIS BROTHERS WAS RS.2 17 000/- AND RS.2 67 000/-. HOWEVER THE A O NOTED THAT NO EVIDENCE WAS PRODUCED WITH REGARD TO THE FACT THAT THE AMOUNTS B ELONGING TO HIS BROTHERS WERE DEPOSITED IN THE BANK ACCOUNT OF THE ASSESSEE. THE AO HOWEVER GAVE BENEFIT OF RS.2 16 000/- WHICH WAS RECEIVED BY THE ASSESSEE O F HIS SHARE IN CASH THROUGH AGREEMENT TO SALE AND CONFIRMED THE ADDITION OF RS. 7 84 000/-. 2.5 THE AO ALSO OBSERVED THAT NO CLAIM IS MADE IN T HE RETURN OF INCOME IF ANY AMOUNT WAS SPENT ON THE AGRICULTURAL LAND AND FURTH ER NO EVIDENCE WAS PRODUCED FOR CLAIMING RELIEF U/S. 54B AND 54F OF THE IT ACT. IT WAS FURTHER OBSERVED THAT SINCE THE MATTER REGARDING INVESTMENT IN THE PROPER TY WAS RAISED AND REFERRED TO THE 6 DEPARTMENTAL VALUATION OFFICER AND NO REPORT OF THE DVO HAS BEEN RECEIVED THEREFORE NO BENEFIT COULD BE GIVEN TO THE ASSESSE E. 3. BOTH THE ADDITIONS WERE CHALLENGED BEFORE THE LD . CIT(A) AND THE ASSESSEE MORE OR LESS REITERATED THE SAME SUBMISSIONS MADE BEFORE THE AUTHORITY BELOW AND IT WAS FURTHER EXPLAINED THAT ADDITION ON ACCOUNT O F CAPITAL GAIN WAS WRONGLY MADE WHICH WAS NOT IN ACCORDANCE WITH LAW. AGRA DEVELOPM ENT AUTHORITY HAS ALREADY NOTIFIED THE LAND IN QUESTION FOR ACQUISITION FOR I TS SHASHTRI PURAM YOJANA AND AN APPLICATION FOR RELEASE HAD BEEN FILED WITH THE STA TE GOVERNMENT WHICH IS PENDING. ACCORDING TO THE AGREEMENT TO SALE IT WAS CLEAR AT THE TIME OF ENTERING INTO THE AGREEMENT THAT THE LAND IN QUESTION WAS ALREADY ACQ UIRED BY THE ADA. THEREFORE SECTION 45(5) WOULD NOT BE APPLICABLE IN THIS CASE BECAUSE THE ASSESSEE HAS NOT RECEIVED ANY COMPENSATION FROM ADA. THEREFORE THE CAPITAL GAIN WILL ARISE ONLY WHEN COMPENSATION WILL BE RECEIVED BY THE ASSESSEE. THE AGREEMENT TO SALE ALSO CONTAINED FIRST CLAUSE THAT THE SECOND PARTY I.E. THE BUILDER SHALL MAKE ALL EFFORTS TO GET RELEASED THE LAND FROM ADA. IT WAS THEREFOR E SUBMITTED THAT SINCE THERE WAS NO TRANSFER OF LAND AS PER AGREEMENT WHICH IS YET TO BE RELEASED BY THE ADA THEREFORE THE AGREEMENT TO SALE WAS CONTINGENT AND WAS BASED ON FUTURE EVENTS. IT WAS THEREFORE EXPLAINED THAT THE PROVISIONS OF SE CTION 2(47) WOULD NOT APPLY IN THE CASE OF THE ASSESSEE. THE ASSESSEE ALSO EMPHASI ZED THAT ACCORDING TO SECTION 51 7 OF THE IT ACT IN CASE OF ADVANCE FORFEITED WHICH W AS RECEIVED THROUGH AGREEMENT TO SALE IT WOULD ONLY BE A CAPITAL RECEIPT. THE AS SESSEE ALSO EXPLAINED THAT THE AO HAS WRONGLY DENIED THE BENEFIT OF DEDUCTION TO THE ASSESSEE U/S. 54B AND 54F OF THE IT ACT BECAUSE THE ASSESSEE MADE INVESTMENT IN AGRI CULTURAL LAND ON DIFFERENT DATES ON 12.12.2005 AND 29.10.2005 IN A SUM OF RS.16 39 5 00/-. THEREFORE DEDUCTION SHOULD HAVE BEEN ALLOWED U/S. 54B OF THE ACT. FURTH ER THE AO HAS CONSIDERED THE ADVANCE MONEY AS SALE CONSIDERATION BUT NO BENEFIT HAS BEEN GIVEN U/S. 54B. THE LD. CIT(A) ALSO DIRECTED THE AO TO ASCERTAIN THE PR ESENT STATUS OF THE ACQUISITION OF THE LAND OF ASSESSEE BY THE ADA. THE LETTER DATED 1 1.12.2009 (PAGE 15 OF FIRST PAPER BOOK) HAS BEEN RECEIVED FROM LAND ACQUISITION OFFICER AGRA DEVELOPMENT AUTHORITY STATING THAT THE IMPUGNED LAND WAS ACQUIR ED ON 25.08.2000. FURTHER LETTER DATED 01.01.2010 (PAGE 14 OF FIRST PAPER BOO K) WAS RECEIVED FROM SPECIAL LAND ACQUISITION OFFICER CONFIRMING THAT THE LAND I N QUESTION WAS ACQUIRED ON 25.08.2000. AS THE MATTER WAS PENDING BEFORE THE HO NBLE HIGH COURT THEREFORE NO COMPENSATION HAS BEEN AWARDED IN RESPECT THEREOF . THE LD. CIT(A) CONSIDERING THE ABOVE FACTS AND EXPLANATIONS HELD THAT NO CAPIT AL GAIN ARISES FOR TAXATION. THE LD. CIT(A) FURTHER HELD THAT WITHOUT PREJUDICE TO T HE ABOVE FINDING THE LONG-TERM CAPITAL GAINS IS ALSO EXEMPT AS THE ASSESSEE HAS MA DE INVESTMENT IN TERMS OF SECTION 54B IN AGRICULTURAL LAND AND 54F IN RESIDEN TIAL HOUSE AS IS ASSESSED BY THE DVO VIDE REPORT DATED 30.04.2009 RECEIVED BY THE AO AFTER FINALIZATION OF THE 8 ASSESSMENT. THE LD. CIT(A) ACCORDINGLY DELETED TH E ADDITION OF RS.26 31 467/- AS LONG-TERM CAPITAL GAINS. 3.1 IT WAS FURTHER SUBMITTED BEFORE THE LD. CIT(A) THAT RS.10 00 000/- WAS DEPOSITED IN THE BANK ACCOUNT OF THE ASSESSEE OUT O F THE AMOUNT RECEIVED FROM THE BUILDER BY THE ASSESSEE AND TWO OF HIS BROTHERS. CA SH FLOW STATEMENT WAS ALSO FILED AS REPRODUCED IN PARA 4.2 OF THE APPELLATE ORDER TO EXPLAIN THAT OPENING CASH IN HAND AND CASH WITHDRAWN FROM IOB APART FROM AMOUNTS RECEIVED FROM BROTHERS WAS ALSO AVAILABLE TO THE ASSESSEE. THEREFORE ADDI TION SHOULD NOT BE MADE AGAINST THE ASSESSEE. THE LD. CIT(A) CONSIDERING THE EXPLA NATION OF THE ASSESSEE NOTED THAT THE AMOUNTS OF RS.2 17 000/- EACH RECEIVED BY THE ASSESSEE FROM HIS TWO BROTHERS HAS NOT BEEN PROVED WITH ANY COGENT EVIDEN CE. THEREFORE RS.4 34 000/- REMAINED UNEXPLAINED. THE OPENING BALANCE OF RS.2 7 5 000/- WAS CONSIDERED BUT THE ASSESSEE HAS NOT FURNISHED ANY EVIDENCE IN SUPP ORT THEREOF. THEREFORE IN ABSENCE OF ANY CORROBORATIVE DOCUMENTARY EVIDENCE THE LD. CIT(A) CONSIDERED REASONABLY THAT THE ASSESSEE COULD HAVE SAVED RS.1 75 000/-. THEREFORE RS.1 00 000/- WAS TREATED AS UNEXPLAINED. THE LD. C IT(A) OUT OF TOTAL ADDITION OF RS.7 84 000/- CONSIDERED THE FOLLOWING AMOUNTS AS E XPLAINED : (I). OPENING CASH IN HAND 1 75 000/- (II). CASH WITHDRAWN FROM IOB: ON 08.04.2004 45 000/- ON 20.05.2004 4 500/- 9 (III). OUT OF CURRENT INCOME OF RS.42200/- 25 500/- --------------- 2 50 000/- --------------- THE LD. CIT(A) GAVE BENEFIT TO THE ASSESSEE IN A SU M OF RS.2 50 000/- AND BALANCE OF RS.5 34 000/- WAS CONFIRMED FOR THE PURPOSE OF A DDITION ON WHICH THE REVENUE AS WELL AS THE ASSESSEE ARE IN APPEAL. 4. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND SUBMITTED THAT LAND IN QUESTI ON WAS COMPULSORILY ACQUIRED VIDE GAZETTE NOTIFICATION DATED 30.01.1989 (PAGE 1 OF SECOND PAPER BOOK). HE HAS SUBMITTED THAT THE ASSESSEE CHALLENGED THE ACQUISIT ION OF THE LAND BEFORE THE HONBLE HIGH COURT AND THE PROCEEDINGS HAVE BEEN ST ARTED. COPY OF THE INTERIM ORDER OF THE HIGH COURT IS FILED AT PAGE 11 OF THE SECOND PAPER BOOK. HE HAS SUBMITTED THAT THE LETTERS ISSUED BY THE ADA AND LA ND ACQUISITION OFFICERS CLEARLY MENTION THAT THE POSSESSION OF THE LAND HAS BEEN TA KEN BY THE ADA ON 25.08.2000 AND NO AMOUNT OF COMPENSATION HAS BEEN PAID TO THE ASSESSEE. HE HAS THEREFORE SUBMITTED THAT THE PROVISIONS OF SECTION 2(47) OF T HE IT ACT READ SECTION 45(5) WOULD NOT BE ATTRACTED FOR THE PURPOSE OF CHARGING OF CAPITAL GAINS. HE HAS SUBMITTED THAT SINCE AGREEMENT TO SALE WAS EXECUTED THEREAFTER ON 20.11.2004 (PAGE 1 OF FIRST PAPER BOOK) AND POSSESSION WAS NOT HANDE D OVER TO THE BUILDER AS IT WAS WITH THE ADA THEREFORE CAPITAL GAINS CANNOT BE CH ARGED IN THE MATTER. HE HAS 10 SUBMITTED THAT THE AGREEMENT TO SALE DEPENDS UPON T HE DE-NOTIFICATION OF THE LAND FOR WHICH THE BUILDER WILL BE RESPONSIBLE. THEREFOR E AGREEMENT TO SALE WAS CONTINGENT AGREEMENT AND NO CAPITAL GAIN COULD BE C HARGED ACCORDINGLY. HE HAS SUBMITTED THAT THE DVO HAS SUPPORTED THE CASE OF TH E ASSESSEE FOR INVESTMENT MADE IN AGRICULTURAL LAND AND RESIDENTIAL HOUSE. THEREFO RE THE LD. CIT(A) RIGHTLY DELETED THE ADDITION. AS REGARDS THE ADDITION ON THE UNEXPL AINED DEPOSIT IN THE BANK ACCOUNT HE HAS SUBMITTED THAT THE CASH FLOW STATEM ENT WAS FILED BEFORE THE LD. CIT(A) TO EXPLAIN THE DEPOSIT. THEREFORE THE LD. C IT(A) SHOULD HAVE DELETED THE ENTIRE ADDITION. CASH FLOW STATEMENT IS FILED AT PA GE 16 OF THE FIRST PAPER BOOK. 5. ON THE OTHER HAND THE LD. DR RELIED UPON THE OR DER OF THE AO AND SUBMITTED THAT FULL CONSIDERATION HAS BEEN RECEIVED THROUGH A GREEMENT TO SALE AND THE AMOUNT WAS NOT REFUNDABLE. THEREFORE THE AO RIGHTLY CHARG ED CAPITAL GAINS ON TRANSFER OF CAPITAL ASSET. THE LD. DR SUBMITTED THAT THOUGH THE ASSESSEE FILED CASH FLOW STATEMENT TO EXPLAIN THE DEPOSIT IN THE BANK ACCOUN T BUT NO CORROBORATIVE EVIDENCE WAS FILED IN SUPPORT OF THE CASH FLOW STATEMENT. TH EREFORE EVEN THE PART ADDITION DELETED BY THE LD. CIT(A) IS CLEARLY UNJUSTIFIED. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND THE MATERIAL ON RECORD. IT IS NOT IN DISPUTE THAT THE LAND IN QUESTION WAS COMPUL SORILY ACQUIRED BY THE 11 GOVERNMENT VIDE NOTIFICATION DATED 30.01.1989 AND P OSSESSION OF THE IMPUGNED LAND WAS TAKEN BY THE ADA ON 25.08.2000. IT IS ALSO NOT IN DISPUTE THAT NO COMPENSATION HAS BEEN GIVEN TO THE ASSESSEE BECAUSE THE MATTER WAS PENDING BEFORE THE HONBLE ALLAHABAD HIGH COURT. THE LETTER OF SPECIAL LAND ACQUISITION OFFICER DATED 01.01.2010 AND LAND ACQUISITION OFFIC ER DATED 11.12.2009 ARE FILED IN THE PAPER BOOK IN RESPECT OF THE SAME. IT IS TH EREFORE CLEAR THAT THE MATTER IS SUBJUDICE BEFORE THE HONBLE HIGH COURT FOR DE-NOTI FYING THE LAND IN QUESTION AND POSSESSION WITH THE ADA AND NO COMPENSATION HAS BEE N RECEIVED BY THE ASSESSEE. THE RELEVANT PROVISIONS OF SECTION 2(47)(III) & (V) READ AS UNDER : (47) TRANSFER IN RELATION TO A CAPITAL ASSET INC LUDES (I) (II) (III) THE COMPULSORY ACQUISITION THEREOF UNDER ANY LAW; O R (IV) . (IVA) . (V) ANY TRANSACTION INVOLVING THE ALLOWING OF THE POSSESSION OF ANY IMMOVABLE PROPERTY TO BE TAKEN OR RETAINED IN PART PERFORMANCE OF A CONTRACT OF THE N ATURE REFERRED TO IN SECTION 53A OF THE TRANSFER OF PROPE RTY ACT 1882 (4 OF 1882). SECTION 45(5) OF THE IT ACT READS AS UNDER (5). NOTWITHSTANDING ANYTHING CONTAINED IN SUB-SEC TION (1) WHERE THE CAPITAL GAIN ARISES FROM THE TRANSFER OF A CAPITAL ASSET BEING A TRANSFER BY WAY OF COMPULSORY ACQUISITION U NDER ANY LAW OR A TRANSFER THE CONSIDERATION FOR WHICH WAS DETERMINED OR APPROVED BY THE CENTRAL GOVERNMENT OR THE RESERVE BANK OF INDIA AND THE COMPENSATION OR THE CONSIDERATION FOR SUCH TRANSFER IS ENHANCED OR 12 FURTHER ENHANCED BY ANY COURT TRIBUNAL OR OTHER AU THORITY THE CAPITAL GAIN SHALL BE DEALT WITH IN THE FOLLOWING MANNER N AMELY : (A) THE CAPITAL GAIN COMPUTED WITH REFERENCE TO THE COMPENSATION AWARDED IN THE FIRST INSTANCE OR AS T HE CASE MAY BE THE CONSIDERATION DETERMINED OR APPROVED IN THE FIRST INSTANCE BY THE CENTRAL GOVERNMENT OR THE RES ERVE BANK OF INDIA SHALL BE CHARGEABLE AS INCOME UNDER T HE HEAD CAPITAL GAINS OF THE PREVIOUS YEAR IN WHICH SUCH COMPENSATION OR PART THEREOF OR SUCH CONSIDERATION OR PART THEREOF WAS FIRST RECEIVED; AND (B) THE AMOUNT BY WHICH THE COMPENSATION OR CONSIDERATI ON IS ENHANCED OR FURTHER ENHANCED BY THE COURT TRIBUNAL OR OTHER AUTHORITY SHALL BE DEEMED TO BE INCOME CHARGE ABLE UNDER THE HEAD CAPITAL GAINS OF THE PREVIOUS YEAR IN WHICH SUCH AMOUNT IS RECEIVED BY THE ASSESSEE; (C) WHERE IN THE ASSESSMENT FOR ANY YEAR THE CAPITAL G AIN ARISING FROM THE TRANSFER OF A CAPITAL ASSET IS COM PUTED BY TAKING THE COMPENSATION OR CONSIDERATION REFERRED T O IN CLAUSE (A) OR AS THE CASE MAY BE ENHANCED COMPENS ATION OR CONSIDERATION REFERRED TO IN CLAUSE (B) AND SUB SEQUENTLY SUCH COMPENSATION OR CONSIDERATION IS REDUCED BY AN Y COURT TRIBUNAL OR OTHER AUTHORITY SUCH ASSESSED C APITAL GAIN OF THAT YEAR SHALL BE RECOMPUTED BY TAKING THE COMPENSATION OR CONSIDERATION AS SO REDUCED BY SUCH COURT TRIBUNAL OR OTHER AUTHORITY TO BE THE FULL V ALUE OF THE CONSIDERATION EXPLANATION. FOR THE PURPOSES OF THIS SUB-SECTION - (I) IN RELATION TO THE AMOUNT REFERRED TO IN CLAUSE (B) THE COST OF ACQUISITION AND THE COST OF IMPROVEMENT SHA LL BE TAKEN TO BE NIL; (II) THE PROVISIONS OF THIS SUB-SECTION SHALL APPLY ALSO IN A CASE WHERE THE TRANSFER TOOK PLACE PRIOR TO THE 1 ST DAY OF APRIL 1988; 13 (III) WHERE ANY REASON OF THE DEATH OF THE PERSON WHO MAD E THE TRANSFER OR FOR ANY OTHER REASON THE ENHANCED COMPENSATION OR CONSIDERATION IS RECEIVED BY ANY OT HER PERSON THE AMOUNT REFERRED TO IN CLAUSE (B) SHALL BE DEEMED TO BE THE INCOME CHARGEABLE TO TAX UNDER TH E HEAD CAPITAL GAINS OF SUCH OTHER PERSON. 6.1. THE COMBINED READING OF ABOVE PROVISIONS PROVI DES THAT TRANSFER IN RELATION TO CAPITAL ASSETS INCLUDES THE COMPULSORY ACQUISITI ON UNDER ANY LAW AND THAT THE CAPITAL GAIN COULD BE CHARGED IN THE PREVIOUS YEAR IN WHICH SUCH COMPENSATION OR PART THEREOF OR SUCH CONSIDERATION OR PART THEREOF WAS FIRST RECEIVED. HONBLE MADRAS HIGH COURT IN THE CASE OF ANIL KUMAR FORMA ( HUF) VS. CIT 289 ITR 245 (MAD.) HELD HELD THAT THE RIGHT TO THE AMOUNTS RECEIVED BY TH E ASSESSEES AS PART OF THE COMPENSATION WAS ONLY AN INCHOATE R IGHT DURING THE PENDENCY OF THE APPEALS BEFORE THE HIGH COURT AND T HE AMOUNTS COULD BE ASSESSED ONLY WHEN THE APPEALS WERE FINALLY DETE RMINED BY THE HIGH COURT ON APRIL 20 2000. THE AMOUNTS RECEIVED UNDER INTERIM CONDITIONAL ORDERS OF THE COURT WERE NOT LIABLE TO TAX IN THE ASSESSMENT YEARS 1997-98 AND 1998-99. 6.2 HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. KARANBIR SINGH 303 ITR 231 (P&H) HELD HELD THAT THE REVENUE WAS NOT ENTITLED TO TAX THE AMOUNT OF INTEREST RECEIVED BY THE ASSESSEE ON ACCOUNT OF ACQ UISITION OF LAND TILL SUCH TIME THE PROCEEDINGS IN REFERENCE THERETO ATTA INED FINALITY. 14 6.3. SINCE IN THIS CASE THE LAND IS ACQUIRED COMPU LSORILY AND NO AMOUNT OF COMPENSATION HAS BEEN RECEIVED BY THE ASSESSEE AND FURTHER THE MATTER IS STILL PENDING BEFORE THE HONBLE ALLAHABAD HIGH COURT AND HAS NOT ATTAINED FINALITY THEREFORE THE PROVISIONS OF SECTION 2(47) (III) AN D (V) SECTION 45(5) WOULD NOT APPLY IN THE CASE OF THE ASSESSEE. FURTHER THE AO CHARGED CAPITAL GAINS BECAUSE THE ASSESSEE RECEIVED THE AMOUNT FROM THE BUILDER THROU GH THE AGREEMENT TO SALE DATED 20.11.2004. THE AGREEMENT TO SALE WAS EXECUTED ON 2 0.11.2004 AFTER THE LAND WAS ACQUIRED AND POSSESSION WAS TAKEN BY THE ADA. IT WA S MENTIONED IN THE AGREEMENT TO SALE THAT IT WAS DUTY OF THE BUILDER TO PURSUE T HE MATTER FOR DE-NOTIFICATION OF THE LAND IN QUESTION AND IN CASE THE BUILDER FAILS TO G ET IT DE-NOTIFIED THEN THE AMOUNT PAID TO THE ASSESSEE WOULD NOT BE REFUNDED. THUS T HE POSSESSION COULD HAVE BEEN GIVEN TO THE BUILDER WHEN THE LAND IN QUESTION WOUL D BE DE-NOTIFIED BY THE ADA. IT WAS THEREFORE A CONTINGENT AGREEMENT BASED ON THE HAPPENING OF THE EVENTS IN FUTURE. THUS THERE WAS NO TRANSFER OF CAPITAL ASSE T WITHIN THE MEANING OF SECTION 2(47) (V) OF THE IT ACT. THERE IS NO TRANSFER OF PO SSESSION OF ANY IMMOVABLE PROPERTY IN FAVOUR OF THE BUILDER BECAUSE THE POSSE SSION WAS ALREADY WITH THE ADA PRIOR TO ENTERING INTO THE AGREEMENT TO SALE IN QUE STION. UNDER SECTION 53A OF THE TRANSFER OF PROPERTY ACT IT IS NECESSARY THAT FOR PART CONSIDERATION THE POSSESSION SHOULD HAVE BEEN HANDED OVER TO THE TRANSFEREE. THE REFORE THESE PROVISIONS WOULD NOT APPLY IN THE CASE OF THE ASSESSEE. IT IS THERE FORE A CASE WHERE ON ACCOUNT OF 15 COMPULSORY ACQUISITION OF LAND AND POSSESSION TAKEN BY THE ADA NO COMPENSATION IS GIVEN TO THE ASSESSEE AND IN CASE O F ENTERING INTO AGREEMENT TO SALE THOUGH CONSIDERATION IS RECEIVED POSSESSION COULD NOT BE GIVEN TO THE BUILDER BECAUSE IT WAS ALREADY WITH THE ADA. THUS NONE OF THESE PROVISIONS WOULD APPLY IN THE CASE OF THE ASSESSEE. MERELY BECAUSE FULL CO NSIDERATION HAS BEEN RECEIVED BY THE ASSESSEE ON ACCOUNT OF AGREEMENT TO SALE BY ITS ELF IS NO GROUND TO CHARGE CAPITAL GAINS ON THE SUBJECT MATTER IN ISSUE. SINCE THE CON DITIONS OF ABOVE PROVISIONS ARE NOT FULFILLED IN THE CASE OF THE ASSESSEE THEREFOR E THE LD. CIT(A) RIGHTLY HELD THAT NO CAPITAL GAIN IS CHARGEABLE TO TAX. THE LD. CIT(A ) APART FROM THE ABOVE FINDINGS HAS FURTHER NOTED THAT AS PER DVOS REPORT WHICH W AS FILED BEFORE THE AO AFTER COMPLETION OF THE ASSESSMENT WOULD SHOWS THAT THE ASSESSEE MADE INVESTMENT IN AGRICULTURAL LAND AND RESIDENTIAL HOUSE IN TERMS OF SECTION 54B AND 54F. THEREFORE ON ALTERNATE CONTENTION THE ASSESSEE WOULD BE ENTI TLED FOR DEDUCTION ON ACCOUNT OF CAPITAL GAINS. ADMITTEDLY THE AO REFERRED THE MATT ER TO THE DVO FOR CLARIFICATION OF INVESTMENTS AS PER LAW AND THE DVO HAS GIVEN REP ORT IN FAVOUR OF THE ASSESSEE. THEREFORE THE AO WOULD BE BOUND BY THE SAME. CONSI DERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES NOTED ABOVE WE DO NOT FIN D ANY INFIRMITY OR ILLEGALITY IN THE ORDER OF THE LD. CIT(A) IN DELETING THE ADDITIO N ON ACCOUNT OF CAPITAL GAINS ON SALE OF LAND. GROUND NO. 1 OF APPEAL OF THE REVENUE HAS NO MERIT AND IS ACCORDINGLY DISMISSED. 16 7. WITH REGARD TO GROUND NO.2 OF THE DEPARTMENTAL A PPEAL AND GROUND NO.1 OF THE CROSS-OBJECTION OF THE ASSESSEE REGARDING DEPOS IT MADE IN THE BANK ACCOUNT OF THE ASSESSEE IN A SUM OF RS.10 00 000/- IN CASH T HE LD. CIT(A) GAVE PART BENEFIT TO THE ASSESSEE OUT OF ADDITION OF RS.7 84 000/-. THE ASSESSEE IN THE CASH FLOW STATEMENT CLAIMED BENEFIT OF RS.2 17 000/- EACH REC EIVED BY BOTH OF HIS BROTHERS RADHEY SHYAM AND SUKH SINGH BUT ADMITTEDLY NO EVI DENCE WAS PRODUCED BEFORE THE AUTHORITIES BELOW TO SUPPORT SUCH CONTENTION. M AY BE THEY HAVE RECEIVED THE AMOUNT IN QUESTION FROM THE BUILDER BUT NO EVIDENC E WAS PRODUCED BEFORE THE AUTHORITIES BELOW THAT THE BROTHERS OF THE ASSESSEE HAVE GIVEN THESE AMOUNTS TO THE ASSESSEE FOR DEPOSITING IN THE BANK ACCOUNT OF THE ASSESSEE. NO SUCH EVIDENCE IS ALSO PRODUCED BEFORE US IN SUPPORT OF THE CLAIM. TH EREFORE THE LD. CIT(A) RIGHTLY DECIDED NOT TO GIVE ANY BENEFIT OF RS.2 17 000/- EA CH (TOTAL RS.4 34 000/-) IN FAVOUR OF THE ASSESSEE. WE THEREFORE DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDER OF THE LD. CIT(A) IN THIS REGARD. THE ASS ESSEE FURTHER CLAIMED IN THE CASH FLOW STATEMENT THAT THE OPENING CASH IN HAND WAS RS .2 75 000/- BUT NO EVIDENCE COULD BE FURNISHED BY THE ASSESSEE IN SUPPORT THERE OF. IN ABSENCE OF ANY CORROBORATIVE DOCUMENTARY EVIDENCE THE LD. CIT(A) MERELY GAVE BENEFIT TO THE ASSESSEE FOR RS.1 75 000/-. WE DO NOT APPROVE THE F INDING OF THE LD. CIT(A) EVEN FOR GRANTING PART RELIEF TO THE ASSESSEE ON THIS IS SUE. THE LD. CIT(A) SPECIFICALLY 17 NOTED IN THE IMPUGNED ORDER THAT NO EVIDENCE HAS BE EN GIVEN BY THE ASSESSEE IN RESPECT OF AVAILABILITY OF OPENING CASH IN HAND OF RS.2 75 000/- AND FURTHER NO CORROBORATIVE EVIDENCE HAS BEEN FURNISHED. ON THE F ACE OF THESE FINDINGS OF THE LD. CIT(A) HE SHOULD NOT HAVE CONSIDERED THE SAVINGS O F THE ASSESSEE IN A SUM OF RS.1 75 000/-. NO EVIDENCE IS ALSO PRODUCED BEFORE US IN RESPECT OF THIS CONTENTION. WE THEREFORE SET ASIDE THE ORDER OF THE LD. CIT(A ) AND REVERSE HIS FINDING FOR GRANTING BENEFIT TO THE ASSESSEE IN A SUM OF RS.1 7 5 000/-. THE LD. CIT(A) FURTHER GAVE BENEFIT OF RS.45 000/- AND RS.4500/- OUT OF CA SH WITHDRAWN FROM IOB ON 08.04.2004 AND 20.05.2004. THE AO NOTED THAT AS PER THE REPORT RECEIVED FROM AIR AND BANK STATEMENT OF THE ASSESSEE THE ASSESSE E MADE CASH DEPOSIT OF RS.10 00 000/- IN IOB ON 22.11.2004. NO EVIDENCE TO SHOW ANY CO-RELATION BETWEEN THE WITHDRAWALS MADE FROM IOB IN APRIL / MA Y 2004 WITH CASH DEPOSIT IN NOVEMBER 2004 HAS BEEN FILED. CONSIDERING THE MEAG ER INCOME DECLARED IN THE RETURN OF INCOME IT IS POSSIBLE THAT THE AMOUNT WI THDRAWN BY THE ASSESSEE FROM IOB IN EARLIER DATES WOULD HAVE BEEN SPENT BY THE A SSESSEE FOR HOUSEHOLD PURPOSES. THEREFORE IN ABSENCE OF ANY PLAUSIBLE EXPLANATION AND EVIDENCE ON RECORD THE LD. CIT(A) SHOULD NOT HAVE GIVEN BENEFIT OF RS.45 000/- AND RS.4500/- TO THE ASSESSEE. WE THEREFORE REVERSE THE FINDING OF THE LD. CIT(A ) ON THIS ISSUE BY SETTING ASIDE HIS ORDER. THE LD. CIT(A) FURTHER GAVE BENEFIT OF C URRENT INCOME OF RS.25 500/- IN WHICH WE DO NOT FIND ANY INFIRMITY. IT IS THEREFOR E CLEAR THAT AT THE MOST THE 18 ASSESSEE WOULD BE ENTITLED FOR DEDUCTION OF RS.25 5 00/- OUT OF ADDITION OF RS.7 84 000/-. WE ACCORDINGLY MODIFY THE ORDER OF THE LD. CIT(A) TO THAT EXTENT AND DIRECT THAT THE ASSESSEE WOULD BE ENTITLED FOR REDUCTION OF RS.25 500/- OUT OF THE TOTAL ADDITION MADE BY THE AO IN A SUM OF RS.7 84 000/-. ACCORDINGLY THE ADDITION ON THIS ISSUE WOULD BE MAINTAINED IN A SUM OF RS.7 58 500/-. IN THE RESULT GROUND NO.2 OF THE APPEAL OF THE REVENUE IS PARTLY ALLOWED AND GROUND NO. 1 OF THE ASSESSEES CROSS-OBJECTION IS DISMISSED. NO OTH ER POINT IS ARGUED OR PRESSED. 8. IN THE RESULT THE APPEAL OF THE REVENUE IS PART LY ALLOWED AND CROSS-OBJECTION OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (A.L. GEHLOT) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) CONCERNED BY ORDER 4. CIT CONCERNED 5. DR ITAT AGRA 6. GUARD FILE ASSISTANT REGISTRAR TRUE COPY