ITA No. 298 of 2017 1 IN HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 298 of 2017 Date of decision: 29.8.2017 Pr. Commissioner of Income Tax-I, Amritsar Appellant Vs. Sh. Sewa Singh Sekhwan S/o Sh. Ujagar Singh, R/o Guru Ram Dass Colony, Jalandhar Road, Batala. ..Respondent CORAM: HON BLE MR. JUSTICE AJAY KUMAR MITTAL HON BLE MR. JUSTICE AMIT RAWAL Present: Mr. Arun Biriwal, Advocate for Mr. Denesh Goyal, Senior Standing Counsel for appellant. Ajay Kumar Mittal,J. 1. appellant-revenue has filed present appeal under Section 260A of Income Tax Act, 1961 (in short, Act ) against order dated 02.12.2016, Annexure-3, passed by Income Tax Appellate Tribunal, Amritsar Bench, Amritsar (in short, Tribunal ) in ITA No. 602(ASR)/2015, for assessment year 2007-08, claiming following substantial questions of law:- (i) Whether on facts and in circumstances of case and in law, Hon ble ITAT was right in deleting penalty when assessee had not fully disclosed accrued capital gain and addition on this account had been upheld by ITAT and Hon ble High Court and appeal was pending before Hon ble Supreme Court? (ii) Whether on facts of case and in law, Hon ble ITAT was right in deleting penalty when assessee had not 1 of 5 ::: Downloaded on - 13-09-2017 11:11:49 ::: ITA No. 298 of 2017 2 fully disclosed accrued capital gain and thereby furnishing inaccurate particulars of income? (iii) Whether on facts of case and in law, Hon ble ITAT was right in deleting whole amount of penalty of ` 35,85,888/- levied by AO in respect of addition made on account of Long Term Capital Gain by relying on order of Hon ble Punjab and Haryana High Court dated 22.07.2015 in case of C.S. Atwal Vs. Commissioner of Income Tax whereas Hon ble High Court has held that sale consideration to extent of amount received are exigible to tax in instant year and assessee is bound to pay tax on receipt of further amounts? 2. Briefly, facts as narrated in appeal, necessary for adjudication of controversy involved may be noticed. Return declaring income of ` 95,100/- was filed by assessee on 31.03.2008. assessee being Member of Punjabi Co-operative House Building Society owned one plot of land measuring 500 square yards in that society. society entered into Tripartite Joint Development Agreement dated 25.02.2007, with M/s Harsh Builders Private Limited, Chandigarh (HASH) and M/s Tata Housing Development Company Limited, Mumbai (THDC). Through irrevocable Special Power of Attorney dated 26.02.2007, society transferred entire land, measuring 21.2 acres to purchaser/developer party. As per agreement, assessee was to be given one flat measuring 2250 square yards each, valued at ` 1,01,25,000/- and monetary consideration of ` 82,50,000/-. total consideration for transfer of his share in capital asset of society was to tune of ` 1,83,75,000/-. As Joint development agreement was dated 25.02.2007 and transfer of capital asset under Section 2(47) of Act, had taken place in assessment year 2007-08, entire amount of ` 1,83,75,000/- accruing on account of 2 of 5 ::: Downloaded on - 13-09-2017 11:11:50 ::: ITA No. 298 of 2017 3 transfer of asset was chargeable to long term capital gain tax under Section 45 of Act. In return filed by assessee, capital gain was declared only in respect of sale consideration of ` 17,65,000/-. Assessing Officer calculated capital gain on total consideration of ` 1,60,79,890/- and made addition of ` 1,59,82,147/- vide order dated 27.12.2010 under Section 143(3)/147 of Act holding that case fell within ambit of Section 2(47) of Act. Total consideration of ` 1,60,79,890/- was held to have accrued to assessee during assessment year 2007-08 and chargeable to long term capital gain as provided under Section 45 of Act read with Section 48 of Act. Aggrieved by order, assessee filed appeal before Commissioner of Income Tax (Appeals) [CIT(A)], but same was dismissed. assessee challenged order passed by CIT(A) as well as Assessing Officer before Tribunal. This appeal was also dismissed. Vide order dated 27.03.2014, Assessing Officer imposed penalty of ` 35,85,888/- upon assessee under Section 271(1)(c) of Act. Against penalty order, assessee filed appeal before CIT(A). Vide order dated 18.08.2015, CIT(A) deleted penalty. Not satisfied with order, Department filed appeal before Tribunal. Vide order dated 02.12.2016, Annexure-3, appeal was dismissed by Tribunal. Hence, instant appeal by appellant-revenue. 3. We have heard learned counsel for appellant-revenue. 4. matter is no longer res integra regarding taxability of capital gains arising from transaction entered by assessee in present facts and circumstances. In C.S. Atwal s case (supra) in ITA No. 200 0f 2013 decided on July 22, 2015, issue involved in this appeal stands decided by this Court. In said case, following issues emerged for consideration:- 3 of 5 ::: Downloaded on - 13-09-2017 11:11:50 ::: ITA No. 298 of 2017 4 (i) Scope and legislative intent of Section 2(47)(ii), (v) and (vi) of Act; (ii) essential ingredients for applicability of Section 53A of 1882 Act; (iii) Meaning to be assigned to term possession ? (iv) Whether in facts and circumstances, any taxable capital gains arises from transaction entered by assessee? After considering relevant statutory provisions and case law, following conclusions were drawn:- (1) Perusal of JDA dated 25.02.2007 read with sale deeds dated 2.03.2007 and 25.04.2007 in respect of 3.08 acres and 4.62 acres respectively would reveal that parties had agreed for pro-rata transfer of land. (2) No possession had been given by transferor to transferee of entire land in part performance of JDA dated 25.02.2007 so as to fall within domain of Section 53A of 1882 Act. (3) possession delivered, if at all, was as licencee for development of property and not in capacity of transferee. (4) Further Section 53A of 1882 Act, by incorporation, stood embodied in section 2(47)(v) of Act and all essential ingredients of Section 53A of 1882 Act were required to be fulfilled. In absence of registration of JDA dated 25.02.2007 having been executed after 24.09.2001, agreement does not fall under Section 53A of 1882 Act and consequently Section 2(47)(v) of Act does not apply. (5) It was submitted by learned counsel for assessee-appellant that whatever amount was received from developer, capital gains tax has already been paid on that and sale deeds have also been executed. In view of cancellation of JDA dated 25.02.2007, no further amount has been received and no action thereon has been taken. It was urged that as and when any amount is received capital gains tax shall be discharged 4 of 5 ::: Downloaded on - 13-09-2017 11:11:50 ::: ITA No. 298 of 2017 5 thereon in accordance with law. In view of aforesaid stand, while disposing of appeals, we observe that assessee appellants shall remain bound by their said stand. (6) issue of exigibility to capital gains tax having been decided in favour of assessee, question of exemption under Section 54F of Act would not survive any longer and has been rendered academic. (7) Tribunal and authorities below were not right in holding assessee-appellant to be liable to capital gains tax in respect of remaining land measuring 13.5 acres for which no consideration had been received and which stood cancelled and incapable of performance at present due to various orders passed by Supreme Court and High Court in PILs. Therefore, appeals are allowed. 5. Learned counsel for appellant has not been able to controvert applicability of decision rendered in C.S. Atwal s case (supra) that no capital gains on unrealized amount would accrue or arise to assessee. Once that is so, no penalty under Section 271(1) (c) of Act would be exigible. No substantial question of law as claimed in this appeal arises. Consequently, appeal stands dismissed. (Ajay Kumar Mittal) Judge August 29, 2017 (Amit Rawal) gs Judge Whether speaking/reasoned Yes Whether reportable Yes 5 of 5 ::: Downloaded on - 13-09-2017 11:11:50 ::: Pr. Commissioner of Income-tax-I, Amritsar v. Sewa Singh Sekhwan