K L Sharma & Sons(Huf), Jaipur vs Department Of Income Tax

Jh vkj-ih-rksykuh] U;kf;d lnL; ,oa Jh Vh-vkj-ehuk] ys[kk lnL; ds le{k BEFORE: SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM

vk;dj vihy la-@ITA No. 88/JP/2013 fu/kZkj.k o"kZ@Assessment Year : 2009-10

The DCIT cuke Shri K.L. Sharma & Sons Circle- 2 Vs. (HUF ), 218, Vidyut Nagar, Jaipur Prince Road, Ajmer Road, Jaipur LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AADHK 4333 H vihykFkhZ@Appellant izR;FkhZ@Respondent

jktLo dh vksj ls@ Revenue by : Smt. Neena Jeph , JCIT -DR fu/kZkfjrh dh vksj ls@ Assessee by : None (A.D. on Record) )

lquokbZ dh rkjh[k@ Date of Hearing : 07/04/2015 ?kks"k.kk dh rkjh[k@ Date of Pronouncement : 30 /04/2015

vkns'k@ ORDER

PER R.P. TOLANI, JM

This is an appeal filed by the Revenue against the order of the ld.

CIT(A)-I, Jaipur dated 21-11-2012 for the assessment year 2009-10

raising following ground.

''Whether on the facts and in the circumstances of the case and in law, the ld. CIT(A) was justified in allowing relief of Rs. 33,79,558/- despite the fact that the assessee himself failed to claim the same by revising his return u/s 139(5) of the I.T. Act.'' 2 ITA No. 88/JP/2013 The DCIT, Circle- 2, Jaipur vs. Shri K.L. Sharma & Sons (HUF ).

2.1 Various chances of hearing have been given to assessee for the

hearing of this appeal; again none appeared on behalf of the assessee in

this hearing also. Consequently we are left with no alternative but to

decide the appeal on merits, ex parte qua the assessee, after hearing ld.

DR and after perusal of the materials available on record.

3.1 Brief facts of the case are that the assessee filed its return of

income declaring total income of Rs. 81,18,080/-. During the course of

assessment proceedings, the AO found difference in the value of

consideration of the property and the value adopted by the Sub-Registrar

in respect of sale of 17 shops amounting to Rs. 66,37,827/-. The assessee

by a letter revised the computation submitting that in respect of 07 shops,

which were offered for capital gains, sale deeds were cancelled by the

Court order. Therefore, the capital gains as increased by sec 50C required

to be reduced in the assessment. A further request was made to

accordingly reduce the capital gain offered by the assessee. The assessee

supported its submission relying on Hon'ble A.P. High Court judgment

in the case of CIT vs. Taxvs Bakelite Hylam Ltd. Hyderabad, 237 ITR

392 for the proposition that the AO was empowered to assess the income

of the assessee even below the returned income of the assessee. The AO 3 ITA No. 88/JP/2013 The DCIT, Circle- 2, Jaipur vs. Shri K.L. Sharma & Sons (HUF ).

however, rejected the assessee's claim and computed capital gain on the

registered value u/s 50C of the Act in respect of 17 shops.

3.2 Aggrieved, the assessee preferred first appeal before the ld. CIT(A)

who however, accepted the assessee's claim by following observations.

''4.3 I have carefully perused the order of the AO and the submissions of the A.R. alongwith paper book file and concur with the submissions of the A.R. on the basis of the facts supported by the evidence on record.

With respect to 7 shops sold to Shiv Kumar Sharma and Savitri Sharma, it is seen that the transfer was annulled vide District Court order dated 7-02-2011. Moreover, from the application made before the Upper District Court of Jaipur, it is seen that full payment was not made by Smt. Savitri Sharma and only Rs. 5,00,000/- out of the total cheques advanced of Rs. 26,82,000/- could be recovered by the seller for the 3 shops Nos. 707, 708 & 709. The other cheques bounced. Similarly, in the case of Shri Shiv Kumar Sharma, the agreement was to sell 4 shops Nos. 710, 711, 712 & 714 for a total amount of Rs. 35,64,000/-. Five cheques were given in advance by the purchaser but only one cheque for Rs. 5,00,000/- was deposited and the rest bounced. Since the payment was not received by the appellant neither the possession of the shops was handed over to the purchaser it is held that the transfer did not take place u/s 2(47) of the I.T. Act during this assessment year 4 ITA No. 88/JP/2013 The DCIT, Circle- 2, Jaipur vs. Shri K.L. Sharma & Sons (HUF ).

and so the question of taxing the capital gains does not arise in this assessment year more so, as the District Court annulled the agreement to sale vide its order dated 07-02- 2011 and ordered the sellers to restore Rs. 5,00,000/- each to Shri Shiv Kumar Sharma and Smt. Savitri Sharma.

In view of the above facts, it is held that no transfer of property was effected in the case of these 7 shops to Shri Shiv Kumar Sharma and Smt. Savitri Sharma during this assessment year u/s 2(47) of the I.T. Act and so the assessee is not liable for capital gains on transfer of these shops during this assessment year. Given the above decision it is held that Section 50C cannot be invoked with respect to transfer of these 7 shops and the addition of Rs. 33,79,558/- made u/s 50C is deleted. Thus Grounds of appeal Nos. 1,2, & 3 are decided in favour of the appellant.''

3.3 Aggrieved, the Revenue is before us with a specific ground that

assessee's contention has been accepted by the ld. CIT(A) without there

being a valid revised return from the assessee. The ld. DR supported the

order of the AO and contends that the AO could not have entertained the

assessee claim without there being a revised return u/s 139(5) of the Act

in view of the judgement of Hon'ble Apex Court in the case of Goetze

(India) Ltd. vs. CIT, (2006) 284 ITR 323.

5 ITA No. 88/JP/2013

The DCIT, Circle- 2, Jaipur vs. Shri K.L. Sharma & Sons (HUF ).

3.4 We have heard the ld. DR who supported the order of AO and

perused the materials available on record. It is settled law that assessment

should be framed at a proper figure and if any income is not liable to

income tax, the same cannot be added merely because inadvertently the

assessee has included it in the return. Besides ld. CIT(A) has coterminous

powers and inherent appellate powers to entertain even a new ground or

new material. Looking at the facts, the assessee made a valid claim about

the cancellation of sale of 07 shops implying thereby that by a Court

order the property in respect of 07 shops was not transferred to purchaser;

these facts are not disputed. In view of settled real income theory, a

hypothetical or notional income cannot be brought to tax. If the transfer

of property has not taken place in terms of Section 2(47) of I.T. Act, there

cannot be any liability for consequent capital gains. The effect of

cancellation of sale deeds of 07 shops has not been disputed by the

Department. Therefore, merely because the revised return was not filed

by the assessee u/s 139(5) cannot make hypothetical income as taxable

income. The Hon'ble Apex Court in the case of Goetze (India) Ltd. vs.

CIT, (supra) itself has held that the appellate authority has power to

entertain any valid claim raised by the assessee's though not made in

return but taken during assessment. Thus looking at the limited challenge 6 ITA No. 88/JP/2013 The DCIT, Circle- 2, Jaipur vs. Shri K.L. Sharma & Sons (HUF ).

to the issue by the Department, we are unable to interfere in ld. CIT(A)

order. In view thereof, we uphold the order of the ld. CIT(A). Therefore,

the Revenue ground is dismissed.

4.0 In the result, the appeal of the Revenue is dismissed.

Order pronounced in the open court on 30/04/2015.

Sd/- Sd/- ¼Vh-vkj-ehuk½ ¼vkj-ih-rksykuh½ (T.R. Meena) (R.P.Tolani) ys[kk lnL;@ Accountant Member U;kf;d lnL;@Judicial Member

Tk;iqj@Jaipur fnukad@Dated:- 30/04/ 2015 *Mishra

vkns'k dh izfrfyfi vxzfs 'kr@Copy of the order forwarded to:

1. vihykFkhZ@The Appellant- The DCIT, Circle- 2, Jaipur

2. izR;FkhZ@ The Respondent- Shri K.L.Sharma & Sons (HUF) , Jaipur

3. vk;dj vk;qDr¼vihy ) @ CIT(A), Jaipur

4. vk;dj vk;qDr@ CIT, Jaipur

5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur

6. xkMZ QkbZy@ Guard File (ITA No.88/JP/2013)

vkns'kkuqlkj@ By order,

lgk;d iathdkj@ Assistant. Registrar