Commissioner of Income Tax vs Surjit Singh

Rakesh Kumar Garg, J.—This judgment shall dispose of two appeals i.e., IT Appeal No. 567 of 2007 and IT Appeal No. 578 of 2007 arising out of a common order of the Tribunal, Chandigarh Bench, Chandigarh (for short the Tribunal'') passed in ITA No. 655/Chandi/2005 and ITA No. 656/Chandi/ 2005, dt. 14-9-2006 for the assessment year 2001-02. The revenue has raised the following similar substantial question of law in both these appeals:

Whether on the facts and law, the Hon*ble Tribunal was justified in holding that the capital gains could not be charged in assessment year 2001-02 merely because assessee had offered the same subsequently in assessment year 2002-03 and whether chargeability of capital gains could be postponed to assessment year 2002-03 despite the fact that transfer u/s 2(47) had taken place in the previous year relevant to assessment year 2001-02 and assessee had also disclosed the capital gains in first instance in this assessment year

The assessee is an individual, who had shown income from business, salary, long-term capital gain and other sources in the year under appeal. The assessee had filed return of income for the assessment year 2001-02 on 31-3-2002 declaring income of Rs. 8,28,791. The assessment was completed by Assistant Commissioner-II, Ludhiana, vide order dated 9th Feb., 2004 at income of Rs. 18,62,450. In the return of income assessee had shown capital gains of Rs. 17,17,730 on sale of land against which deduction of Rs. 10,33,660 was claimed u/s 54F of Income Tax Act. It was however, noticed during assessment proceedings that the conditions as prescribed under Sub-section (4) of Section 54F of the Act were not fulfilled. On being confronted with this fact, the respondent withdrew exemption claimed for assessment year 2001-02 stating as under in the letter dated 7-1-2004:

Exemption relating to capital gains as claimed for the assessment year 2001-02 stand withdrawn and has been offered for tax for the assessment year 2002-03.

The assessing officer thus completed the assessment after disallowing exemption claimed u/s 54F of Income Tax Act and taxed capital gains of Rs. 17,17,730 in assessment year 2001-02.

Being aggrieved against the order of the assessing officer, the respondent preferred an appeal before the Commissioner (Appeals), Ludhiana, who vide his order dated 28-1-2005 allowed the appeal of the assessee on the reasoning that the assessee himself had offered capital gain for tax in the assessment year 2002-03 instead of assessment year 2001-02 and the same capital gain cannot be taxed twice.

Feeling aggrieved against the said order of the Commissioner (Appeals), Ludhiana, the revenue filed an appeal before the Tribunal. The Tribunal dismissed the appeal of the revenue relying upon the decision of Hon''ble apex Court; in the case of Jain Bros. and Others Vs. The Union of India (UOI) and Others, , H.H. Prince Azam Jha Bahadur (Dead) through LRs Vs. Expenditure Tax Officer, , Laxmipat Singhania Vs. Commissioner of Income Tax, U.P., , Income Tax Officer Vs. Atchaiah, , on the sole principle that the assessee cannot be taxed twice.

Mr. Sanjiv Bansal, advocate, learned Counsel appearing for the revenue has argued that the assessee was supposed to furnish/file the return on due date and time which is specified for furnishing return in Sub-sections (1) and (2) of Section 139 of the Income Tax Act. Permissibility under Sub-section (4) of Section 139 of the Income Tax Act for filing return before assessment does not extend time which is prescribed under the statute. He has further argued that it is not in dispute that the transfer of these capital gains under Sub-section 2(47) had taken place in the financial/previous year i.e., assessment year 2000-01 and the capital gains were chargeable in the assessment year 2001-02 only.

We have heard learned Counsel for the revenue and perused the record.

It is not in dispute that the offer of assessee for taxing capital gains in the subsequent year i.e., in assessment year 2002-03 and affirmation of the same by the Commissioner (Appeals), Ludhiana, and the Tribunal is against the provisions of Sections 4 and 45 read with Section 2(47) of the Income Tax Act, as there is no ambiguity in the statute and the first appellate authority as well and the Tribunal cannot go by the consent of the parties to give relief to the assessee. However, we refuse to interfere in the present appeal on the facts of the case as the tax effect in question is very negligible and the assessee has already been taxed for the same amount during the subsequent assessment year i.e., 2002-03 and there is no substantial loss to the revenue.

In view of the above, both the appeals are dismissed.