HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 16 / 2017 Principal Commissioner of Income Tax, Jaipur-2, Jaipur ----Appellant Versus M/s. Vinayak Developers, B-123, Model Town, Jagatpura Road, Malviya Nagar, Jaipur PAN: AAFFV 1348 D ----Respondent For Appellant(s) : Mr. K.D. Mathur for Mr. R.B. Mathur For Respondent(s) : HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE INDERJEET SINGH Order 25/07/2017 1. By way of this appeal, appellant has assailed judgment and order of Tribunal whereby Tribunal has allowed appeal preferred by assessee. 2. Counsel for appellant has framed following substantial question of law:- Whether on facts and in circumstance of case and in law ITAT was justified in law in allowing appeal of assessee and in setting aside order of CIT(A) passed u/s 263 of IT Act, ignoring fact that in original return assessee has not declared he capital gain but only during assessment proceeding it revised its return of income which was not valid in terms of section 139 (5) of Act. 3. Counsel for appellant has taken us to order of (2 of 3) [ITA-16/2017] CIT(A) where while issuing notice, authority has clearly stated what is prejudicial to interest of assessee. 4. Taking into consideration, order passed by SDM and refund amount which is on record, Tribunal observed as under:- 4.2. We have heard rival contentions, perused material available on record and gone through orders of authorities below. basis of revising original assessment order in this case is that ld. CIT has accepted audit objection and treated two transactions separately. There is no dispute with regard to fact that powers under section 263 can be exercised if twin conditions are satisfied. order sought to be revised is erroneous and prejudicial to interests of revenue. In case in hand, assessee during assessment proceedings finding that land which was transferred was not agricultural land, therefore, it offered capital gains arising out of such transfer for taxation. This offer of assessee was accepted by AO. It is also not case of ld. CIT that entire sale consideration was undisclosed amount. ld. CIT has himself taken it as sale consideration and directed AO to recompute long term capital gain on basis of sale consideration of Rs. 3,61,58,999/- without giving set off of amount refunded by assessee. ld. CIT has taken two transactions differently. However, AO has taken two transactions as single transaction. We find that ld. CIT has not considered terms of original sale deed. As per one of conditions of Sale Deed, in case buyer losses possession or does not get entire land or part of land, in that event buyer was entitled to recover fair market value along with cost thereon from seller. It is demonstrated by assessee that there was dispute with regard to possession of land. Subsequently, compromise deed was executed between assessee and buyer on 07.07.2008 wherein it had expressly been agreed between parties that in case assessee fails to provide physical possession of entire land transferred, refund of sale consideration to extent of land not physically handed over will be made by assessee. Accordingly in terms of this agreement, assessee refunded amount of Rs.1,21,79,000/- to buyer for not giving (3 of 3) [ITA-16/2017] physical possession of portion of land and title to land was regained back by assessee vide Sale Deed dated 14.07.2009. This action of assessee finds support from order dated 19.05.2009 of Hon ble Court of SDM passed on civil suit filed by M/s. Renaissance Builders, wherein it is held that out of 3.02 hectares land initially sold to buyer, possession of portion of land measuring 0.77 hectares could not be taken by buyer and, therefore, assessee was legally bound to refund sale consideration amount in respect of land, possession of which could not be handed over to buyer in terms of sale deeds. In this regard, ld. CIT has failed to appreciate relevant clause of sale deeds and also consider order of Hon ble Court of SDM on civil suit filed by buyer. At time of hearing, ld. D/R could not controvert these aspects of matter, therefore, we find no force in argument of ld. D/R. In view of above, order of ld. CIT is hereby set aside. claim of assessee is allowed. 5. In view of observations made above, we see no reason to interfere with matter, no substantial question of law arise. 6. appeal being devoid of merit deserves to be dismissed. same is dismissed. (INDERJEET SINGH),J. (K.S. JHAVERI),J. A.Sharma/29 Principal Commissioner of Income-tax, Jaipur-2, Jaipur v. Vinayak Developer