IT: Where premium arising from sale of land was added on substantive basis to income of an AOP which consisted of nine persons including assessee, protective assessment of said amount again in hands of assessee in its individual capacity was not sustainable
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[2013] 38 taxmann.com 394 (Allahabad)
HIGH COURT OF ALLAHABAD
Commissioner of Income-tax, Kanpur
v.
Teachers Housing Cooperative Society*
R.K. AGRAWAL AND RAM SURAT RAM (MAURYA), JJ.
IT APPEAL NO. 187 OF 1999
OCTOBER 29, 2012
Section 4 of the Income-tax Act, 1961 - Association of persons - Assessable as [Double Taxation] - Assessment year 1987-88 - In course of assessment, Assessing Officer noted that assessee sold plots of land on heavy premium which was not disclosed in its books of account - He thus added certain amount to assessee's income on protective basis - Simultaneously, substantive assessment of said amount was also made in case of AOP on ground that AOP consisting of nine persons including assessee had actually received premium and appropriated same to themselves - Commissioner (Appeals) as well as Tribunal took a view that when amount of premium had been added to income of AOP on substantive basis, protective assessment of same in hands of assessee was not sustainable - Whether on facts, impugned order passed by Tribunal did not require any interference - Held, yes [Para 5] [In favour of assessee]
Shambhu Chopra, A. Kumar, A.N. Mahajan, B. Agarwal, G. Krishna and P. Krishna for the Petitioner. Rakesh Kumar for the Respondent.
JUDGMENT
1. Present appeal filed under Section 260-A of the Income Tax Act, 1961 (hereinafter referred to as the Act) against the order dated 28th May, 1999 passed by the Income Tax Appellate Tribunal, Allahabad has been admitted by this Court on the following substantial questions of law:
| "(1) | Whether on the facts and circumstances of the case and material available on records, the Income-tax Appellate Tribunal was legally correct in confirming the order of the Commissioner of Income tax (Appeals), allowing a relief of Rs. 17,45,689/- to the assessee? | |
| (2) | Whether on the facts and in circumstances of the case and material available on records, the Income-tax Appellate Tribunal was legally correct in upholding the order of the Commissioner of Income Tax (Appeals) allowing a relief of Rs. 17,45,689/- to the assessee out of addition of Rs. 17,62,384/-made by the Assessing Officer on account of income earned on the sale of plots of land by the assessee society, without considering the facts of the assessment in the case of AOP of nine persons (M/s Farmers Association) and its final outcome?" |
2. Briefly stated the facts giving rise of the present appeal are as follows:
The appeal relates to the Assessment Year 1987-88. The respondent assessee is a cooperative society dealing in sale and purchase of land. A search was conducted by the Income Tax Department on 23rd July, 1986 in the premises of the respondent's society. In the course of search the Department came in possession of papers which showed that plots of land belonging to respondent assessee was sold on heavy premium which was not disclosed in its books of account. The Assistant Commissioner of Income Tax, Circle I, Kanpur vide order dated 24th August, 1990 assessed an income of Rs. 17,99,840/- being amount of premium received on sale of plots on protective basis at the hands of the respondent assessee. Simultaneously, substantive assessment of the same amount was also made in the case of AOP consisting of nine persons in the name of M/s Farmers Association. The respondent assessee carried the matter in appeal. The Commissioner of Income Tax (Appeals), Kanpur, vie order dated 8th March, 1991 granted relief and deleted the addition of Rs. 17,45,689/- on the ground that the aforesaid amount has been assessed on substantive basis at the hands of the AOP consisting of nine persons who had actually received the premium and appropriated the same to themselves. The Revenue, feeling aggrieved, preferred an appeal before the Income Tax Appellate Tribunal. The Tribunal by the impugned order had dismissed the appeal with the following observations:
"4. The Ld. first appellate authority sought a report from A.C.I.T. on the submission of the assessee. The version of the assessee was confirmed and it was reported that substantive additions had been made later on in the status of A.O.P. of 9 person connected with the assessee society. After taking into consideration the report of A.C.I.T. and the other facts of the case, the Ld. CIT (A) reduced the addition of Rs. 17,45,689/- and sustained the addition to the extent of rs. 16,695/- and by observing as under:
Considering the AR's contention, the report of the ACIT and the other facts of the case, I am of the opinion that the addition made on account of receipt of premium on sale of plots having been made on protective basis in not sustainable since the assessment has already been made on substantive basis on AOP consisting of 9 persons who had actually received the premium and appropriated the same to themselves. However, since the amount of the appellant's society are not reliable an addition of rs. 16,695/- is upheld being profit @ 2% on sale of plot.
Appeal is partly allowed. Appellant gets relief of Rs. 17,45,689/-(Rs.17.62,384/- - 16,695/-).
Before us, the Ld. D.R. conceded that as substantive addition in the hands of the AOP and has been made on the issue has been finally settled, there is no necessity of making addition on protective basis in the hands of the assessee"
3. Sri S. Chopra, learned senior standing counsel appearing for the Revenue submitted that the Tribunal was not justified in upholding the deletion of addition of Rs. 17,45,689/- on the ground that heavy premium has been earned by the Society on the sale of plots belonging to it and any premium received on its sale should be included in income. He further submitted that substantive assessment has been made on the AOP consisting of nine persons but that would not absolve the society from its liability of being assessed on protective basis. The submission is wholly misconceived.
4. It has come on record that admittedly the Departmental representative who had appeared before the Tribunal had conceded that the substantive assessment of Rs. 17,45,689/- has been made at the hands of the AOP which has been finally settled. That being the position, protective assessment of the same amount at the hands of the assessee has rightly been deleted.
5. In view of the foregoing discussions, the appeal fails and is dismissed.
Regards
Prarthana Jalan
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