IN HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH 229 ITA-511-2017 Date of Decision : 20.8.2019 Pr. Commissioner of Income Tax, Gurgaon Appellant Versus Shri Amit Gupta Respondent CORAM : HON'BLE MR.JUSTICE AJAY TEWARI : HON'BLE MR. JUSTICE HARNARESH SINGH GILL Present : Mr.T.K.Joshi, Senior Standing Counsel for appellant. Mr. Pankaj Jain, Senior Advocate with Mr. Sachin Bhardwaj, Advocate for respondent. AJAY TEWARI, J. (Oral) 1. This appeal has been filed by Revenue against judgment and order dated 10.3.2017 passed by Income Tax Appellate Tribunal, (Delhi Benches: 'F' New Delhi) in ITA No. 190/Del/2016 whereby appeal filed by assessee was allowed on preliminary ground of maintainability (without touching issue on merits). 2. Brief facts are that respondent sold property called 'Gupta House' situated at Kherki Daula, NH-8, Gurgaon on 24.2.2009. He filed his return on 12.10.2012 for A.Y 2009-10 declaring income of Rs.56,74,539/- under heads 'income from house property', Rs.2,93,704/- as 'income from other sources' and Rs.10,67,16,676/- as 'long term capital gain' totaling Rs.11,26,84,919/- . He claimed to have 1 of 6 ITA-511-2017 2 sold immovable property for consideration of Rs. 21.5 crores and further claimed that cost of acquisition and cost of improvement after indexation came to Rs. 5,99,74,218/-. Thus, he claimed deduction of Rs. 4,83,09,106/- under Section 54 of Income Tax Act, 1961 (for short 'the Act') on pretext that it was residential building and after sale thereof, proceeds were reinvested in residential building and consequently, he was entitled to set off capital gain. return was processed under Section 143 (1) of Act and subsequently, it came to notice of Assessing Officer that in fact property which was named as 'Gupta House' was actually 'industrial plot' and not 'residential house' and consequently, Assessing Officer issued notice under Section 147 (1) of Act bringing to notice of respondent that deduction under Section 54 of Act was not allowable and recorded reasons to believe that income chargeable to tax had escaped assessment for AY 2009-10. 3. respondent filed appeal before CIT (Commissioner of Income Tax) in which following grounds were raised :- 1. That appellant denies his liability to be assessed at total income of Rs. 16,09,94,025/- and accordingly denies his liability to pay tax interest, surcharge and education cess demanded thereon. 2. That having regard to facts and circumstances of case, Ld. A.O, has erred in law and on facts in framing impugned order without assuming jurisdiction as per law. 3. That having regard to facts and circumstances of case, Ld. A.O. has erred in law and on facts in framing impugned assessment order and that too without complying mandatory conditions Sections 147 to 151 of Income Tax Act 2 of 6 ::: Downloaded on - 29-08-2019 11:52:20 ::: ITA-511-2017 3 1961 and reasons recorded are invalid in eyes of law and reopening of case and framing impugned assessment order is bad in law and beyond jurisdiction. 4. That in my case and in any view of matter, action of Ld. AO in framing impugned assessment order us 14 and that too without complying with mandatory conditions of Section 147 to 151 is had to law and against facts and circumstances of case. 5. That having regard to facts and circumstances of case. Ld. A.O. has erred in law and on facts. In denying benefit deduction of Rs. 4,83,09,106/- u/s 54 of Income Tax Act 1961 and that too by recording incorrect facts and findings and without giving adequate opportunity to assessee. 6. That in any case and in any view of matter, action of Ld. A.O. in denying benefit of deduction of Rs.4,83,09,16/- u/s 54 and in framing impugned assessment order is illegal, bad in law, contrary to law and facts and beyond jurisdiction, by recording incorrect facts and findings and same are not sustainable on various legal and factual grounds. 7. That having regard to facts and circumstances of case, Ld. A.O, has erred in law and on facts in charging interest u/s 234B and 2134C of Income Tax Act, 1961. 8. That appellant craves leave to add, modify, amend or delete any of grounds of appeal at time or hearing and all above grounds are without prejudice to each other. 4. CIT dismissed appeal and thereafter, respondent filed second appeal before Income Tax Appellate Tribunal (for short 'the Tribunal'). Tribunal allowed appeal on preliminary ground that proceedings under Section 147 (1) of Act were wrongly initiated since as per Tribunal Assessing Officer did not have 'reasons to believe' that income chargeable to tax had escaped assessment and remand back case to CIT for fresh adjudication. 3 of 6 ::: Downloaded on - 29-08-2019 11:52:20 ::: ITA-511-2017 4 Tribunal has recorded following reasons of Assessing Officer :- Perusal of records of assessee revealed lire assessee had sold industrial property consisting of property named - `Gupta House' at 42 Rri Milestone, Village Kherki Daula, for Rs.21.5 crores. indexed cost of acquisition of this property was claimed at Rs.5,99,74,218/-. Net capital gain for year under consideration as per return of assessee is Rs.15.50 crore. assessee is also holding 8 flats in his name, out of which, 7 are in DLF Park Place. DLF City, Phase-V, Golf Course Road; Gurgaon and 1 flat in Belaire, DLF City Phase-V, Golf Course Road, Gurgaon. Further, assessee has claimed deduction u/s 54 of I.T. Act, 1961 on basis of amount invested in two flats, viz Flat No.D-153. DLF City and Flat No.B-1916, DLF City, Gurgaon, total investment amounting to Rs.4,85,16,233/-. However perusal of records has revealed that Flat No.D-153, DLF City, Gurgaon is in name of Smt. Nirmala Gupta, mother of assessee. Hence claim u/s 54 regarding Flat No.D-153, DLF City cannot be allowed. Further, deduction claimed u/s 54 of Act by assessee on property named `Gupta House' situated at Kherki Daula, N.H. 8, Gurgaon is not permissible as same was Industrial property. Therefore, assessee's claim as to entitlement for benefit of deduction u/s 54 needs to be examined. Therefore, capital gain amounting to Rs.15.50 crores chargeable to tax has escaped assessment for AY 2009-10 by reasons of failure on part of assessee to disclose fully and truly all material facts necessary for his assessment. 5. It is apposite to mention here that Assessing officer further found that in sale deed of 'Gupta House' it was mentioned as follows :- After purchasing aforesaid piece of land vendor had applied to state govt, for seeking necessary 4 of 6 ::: Downloaded on - 29-08-2019 11:52:20 ::: ITA-511-2017 5 permission to set up industry over said piece of land. Director Town and Country planning, Haryana, Chandigarh, granted required permission vide his letter Memo No. G-1239 10DP-99/9666 on 18.7.1999...After obtaining necessary permission of change of land use, vendor constructed industrial building consisting of Ground, First, Second, Third, Fourth floors, Mumty and machine room on terrace having total covered area 1988.948 sq. meters. industrial land and building known as Gupta House . 6. Learned Senior counsel appearing for respondent is not in position to deny extract from same. 7. In this view of matter, it is clear that illegal set off was sought to be claimed by respondent (which probably succeeded because of misleading appellation of property in dispute viz. 'Gupta House'). We set aside finding of Tribunal that there were no reasons for Assessing Officer to believe that income chargeable to tax had escaped assessment. 8. Facing this, learned Senior counsel for respondent has argued that in penultimate paragraph of impugned order, Tribunal had noticed that it was deciding appeal on preliminary questions and had consequently, not decided other questions and has prayed that matter should be remanded back to Tribunal so that other questions can be urged. 9. In our considered opinion, once recitals made in sale deed are not disputed, other questions do not arise. 10. In these circumstances, appeal stands allowed and judgment of Tribunal is set aside and orders of Commissioner and Assessing Officer are upheld. 5 of 6 ::: Downloaded on - 29-08-2019 11:52:20 ::: ITA-511-2017 6 11. Since main case has been decided, pending CM., if any, also stands disposed of. (AJAY TEWARI) JUDGE (HARNARESH SINGH GILL) JUDGE 20.8.2019 anuradha Whether speaking/reasoned - Yes/No Whether reportable - Yes/No 6 of 6 Pr. Commissioner of Income-tax, Gurgaon v. Amit Gupta