Seema Jagota,, Jalandhar vs Assessee

Ms. Seema Jagotta, vs. Dy.Commr. of Income Tax, Civil Lines, Circle-III, Jalandhar. Jalandhar. (Appellant) (Respondent)

Appellant by:Sh.Sandeep Vijh, CA Respondent by:Sh.V.K.Singh, DR

Date of hearing:19/02/2015 Date of pronouncement:26/02/2015

ORDER

PER A.D.JAIN, JM:

This is assessee's appeal for the assessment year 2008-09, contending

that the ld. CIT(A) has erred in upholding the addition of Rs.13,78,316/-,

made under the head 'Short Term Capital Gain' thereby denying the benefit

of exemption u/s 54EC of the Income Tax Act, 1961 (In short, 'the Act'), to

the assessee.

2 ITA No.13(Asr)/2014

2. The addition of Rs.13,78,316/- was made by way of short term gain

on the sale of immovable property as against the assessee's claim that the

capital gain earned by the assessee was a long term capital gain. In her

appeal before the ld. CIT(A), the assessee had filed the following written

submission dated 23.10.2013:

"This is with reference to the hearing of the appeal when you had asked for certain information. In this connection we are to submit as under:

The agreement to sell dated 18.6.2003 in original was returned to the other party after the second registration deed was executed. The assessee had however retained a copy of the agreement to sell, a copy of which has been filed on page no. 21 & 22 of the submission dated 22.7.2013. The reverse of the agreement however was not photocopies while filing it with the above submission. We are now enclosing a complete photocopy of the agreement including the reverse of the page at page no. 1 & 2 where the name of the stamp vendor and also the serial number at which the transaction was recorded by the stamp vendor in his register is mentioned. The document was not registered with revenue authorities.

2. The paper for the agreement to sell was purchased on 17.6.2003 and this date is mentioned on the reverse of the document enclosed at pages no. 1 & 2 above.

As per the agreement the land was to be purchased by six buyers for Rs.14,62,500 as per the agreement itself, a sum of Rs.51,000 was given to the sellers immediately. Subsequently, for the land measuring 4 K-10M [assessee having 1/4th share] the payment of Rs.182,812 was made on 7/5/2004 through bank draft [mentioned in the purchase deed - please see page no. 19 of the submission dated 23.7.2003] and the registration deed was executed on 17.5.2004. Copy of the relevant pages of the registration deed with copy of the reverse is enclosed at page 3 ITA No.13(Asr)/2014

no.3. For the land measuring 4K 9M [assessee having 1/6th share ] the payment of Rs.121,875 was made on 26.10.2004 through cheques [mentioned in the purchase deed - please see oage no.11 of the submission dated 23.7.2013] and the registration deed was executed on 26.10.2004. Copy of the relevant page of the registration deed with copy of the reverse is enclosed at page no.4. The payment of Rs.51,000 lying with the sellers was returned at the time of the execution of the second registration deed. [Rs.182,812 x 4 + Rs.121,875 x 6 = Rs.14,62,500]. Also copy of the bank statement in support of the payment made by this assessee is enclosed at page no.4.

As submitted earlier, the ownership of the land would commence on the basis of the agreement to purchase the entire land and the effective date would be the date when the purchase deed dated 17.5.2004 was executed and the possession of the entire land was handed over. Reliance is also placed on the decision of the Kerala High Court in the case of Rajagiri Rubber & Produce Co. Ltd. vs. CIT reported at 203 ITR 663 wherein the view that the ownership is related to the date of possession was affirmed. Copy of the decision is enclosed at page no. 6 & 7.

3. The original sale deeds registered during the year under assessment are with the purchasers.

The action of the AO is thus not justified and the sale transactions of land have to be treated as long term and consequential benefit u/s 54EC should be allowed."

3. The ld. CIT(A) held as follows:

"5.4. I have considered the observations of the AO as made in the assessment order as well as the written submissions of the assessee company made vide letters dated 22.07.2013 & 23.10.2013, I have also considered the judicial pronouncement relied upon by the assessee as well as other material brought on record.

4 ITA No.13(Asr)/2014 5.5. On perusal of various documents brought on record, it has been noticed that an agreement to sell was entered into between the sellers and assessee along with others on 18.06.2003 in respect of a property measuring 8 K 19 M. As per the terms and conditions of the agreement to sell dated 18.06.2013, the vacant possession of whole of the property will be handed over by the sellers to the assessee along with others if the assessee & others (purchasers) will get sale deed executed in respect of at least half of the property under consideration on or before 25.05.2004. The first sale deed was got executed by the purchasers including the assessee each having 1/4th share on 6.5.2004 in respect of the part of property measuring 4 K 10 M. As per the agreement, the land was on lease at the time of execution of agreement to sell dated 18.6.2003 and it was to be got vacated and handed over to the purchasers if the conditions as laid down in the agreement are fulfilled. In reality no one can say with surety that as to whether the vacant possession of whole of the property was given to the assessee along with others on 6.5.2004 or not. The assessee claims that the possession of whole of the property was taken on 6.5.2004 as per the terms and conditions of the agreement. The sale deed in respect of the balance property measuring 4 K 9 M was also got executed on 25.10.2004 by the assessee along with other co-purchasers each having 1/4th share. On careful consideration of the contents of the sale deed dated 25.10.2004, it has been noticed that vacant possession of the balance property measuring 4 K 9 M was given only on 25.10.2004 as it has clearly been mentioned in the sale deed on pag 2. It has been clearly mentioned in the sale deed on page 2 that the vacant possession of property measuring 4 K 9 M has been given today i.e. on 25.10.2004 to the purchaser. In these facts and in the circumstances of the case, the version of the assessee that possession of whole of the property was taken on 6.5.2004 is incorrect in view of the above noted facts. It means, it has to be admitted that the vacant possession of the property measuring 4 kanal 9 marla was handed over to the assessee and others only on 25.10.2004 and not on 06.05.2004.

5.6. In these facts and in the circumstances of the case, I am of the opinion that the AO is justified in taking the gain on the 5 ITA No.13(Asr)/2014

sale of property which was purchased on 25.10.2004 as Short Term Capital Gain. Thus, the addition of Rs.13,78,316/- made by the AO on account of short term capital gain is justified and is, therefore, confirmed. In the result, grounds of appeal No. 1 & 1(a) taken by the assessee are, therefore, dismissed."

4. It was on the basis of the above observation that the ld. CIT(A)

confirmed the addition made by the AO.

5. Before us, the assessee has filed an application for additional

evidence, seeking to produce an affidavit of the seller of the agricultural

land purchased by the assessee. It has been contended in the application that

the ld. CIT(A) wrongly decided against the assessee on a specious

observation to the fact that there was no surety as to whether the possession

of the whole of the property was given to the assessee on 17.05.2004. The

assessee's grievance is that if the ld. CIT(A) nurtured this doubt, the

assessee should have been confronted with the same during the appeal

proceedings and the assessee should have been asked for an explanation. It is

contended that sans such an opportunity, there was no occasion for the

assessee to produce the affidavit of the seller at any stage. It has, therefore,

been requested that the additional evidence may be allowed to be placed on

record.

6 ITA No.13(Asr)/2014

6. Per contra, Ld. DR contended that it was the duty of the assessee to

place all documentary evidence in her favour before the AO in the

assessment proceedings.

7. We have heard the parties in the light of the material placed on

record. A perusal of the impugned order, as above, makes it evident that it is

only in the order that the ld. CIT(A) has expressed his doubt concerning the

date of handing over of the possession of the land purchased by the

assessee. Since this doubt was not put to the assessee before passing of the

order, the assessee was denied opportunity to offer her explanation by

supporting it with the affidavit now sought to be filed as additional

evidence. It is trite law that no one can be condemned unheard. Due

opportunity of hearing is the very basis of the principle of audi alteream

partem, which is the foundation of administration of natural justice.

8. In view of the above, we accept the application for additional

evidence filed by the assessee and remit the matter to the file of the AO to

be decided afresh in accordance with law, on taking into consideration the

affidavit filed by the assessee of the additional evidence. The assessee shall

be afforded adequate opportunity of hearing to her case and she will, no

doubt, co-operate with the AO in the remand proceedings. 7 ITA No.13(Asr)/2014

9. In the result, for statistical purposes, the appeal of the assessee is

treated as allowed.

Order pronounced in the open court on 26th February, 2015.

Sd/- Sd/- (B.P. JAIN) (A.D.JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 26th February, 2015 /SKR/ Copy of the order forwarded to:

1. The Assessee:Ms. Seema Jagota, Civil Lines, Jalandhar.

2. The DCIT, Cir. III, Jalandhar.

3. The CIT(A), Jalandhar.

4. The CIT, Jalandhar

5. The SR DR, ITAT, Amritsar.

True copy By order