2015 (1) TMI 1057 - AT - Income Tax

Income escaping assessment - proceedings u/s 147/148 - AO seeking to tax capital gain in the hands of the assessee in assessment year 1999-2000 on account of the agreement with MTDC dated 26.03.1999 - Held that - Revenue has not demonstrated any reason in the present cases so as to justify departure of the Department from its accepted stand in similarly placed other cases where capital gains in pursuance to agreement with MTDC dated 26.03.1999 have been taxed over the years and not in assessment year 1999- 2000. It is also not denied that the assessee has declared capital gains in the return for assessment year 2003-04 onwards on the basis of the entitlement certificates issued by MTDC in terms of the agreement dated 26.03.1999. Infact in the case two of the appellants before us namely S/Shri Amol Krishna Ashtekar and Atul Krishna Ashtekar the Assessing Officer has made scrutiny assessment for assessment year 2007-08 u/s 143(3) dated 17.12.2009 wherein the capital gains declared by the assessee in the returns of income have been assessed. Ostensibly such assessments which are in line with the stand of the Department in the cases of other farmers who are similarly placed as the assessee itself show that in the impugned proceedings Revenue has departed from its accepted position. There is no justification brought out by the Revenue for such a departure. Therefore on the principle of uniformity of approach which is required to be adopted by the Revenue in relation to similarly placed assessees as laid down by the Hon ble Supreme Court in our view the action of the income-tax authorities in the present case to initiate proceeding u/s 147/148 to assess capital gains on the basis of the agreement dated 26.03.1999 with MTDC is not justified. - Decided in favour of assessee.

Summary

Issues Involved:
1. Validity of proceedings initiated by the Assessing Officer under sections 147/148 of the Income-tax Act, 1961.
2. Determination of the assessment year for taxing capital gains arising from the agreement with Magarpatta Township Development and Construction Co. Ltd. (MTDC).
3. Consistency and uniformity in the treatment of similar cases by the Revenue Department.

Issue-wise Detailed Analysis:

1. Validity of Proceedings Initiated Under Sections 147/148:
The first issue raised by the assessee concerns the validity of the proceedings initiated by the Assessing Officer by issuing a notice under sections 147/148 of the Income-tax Act, 1961. The Assessing Officer issued the notice on the grounds that the agreement dated 26.03.1999 with MTDC had resulted in a capital gain chargeable to tax for the assessment year 1999-2000. The assessee contended that there was no 'transfer' of land as per the agreement dated 26.03.1999 and that the capital gain was not taxable in the assessment year 1999-2000 but was to be taxed over the years when the consideration was receivable from MTDC. The Tribunal found that the Department's action was inconsistent with its treatment of similar cases, where capital gains were taxed over the years based on the entitlement certificates issued by MTDC.

2. Determination of the Assessment Year for Taxing Capital Gains:
The second issue involves determining the correct assessment year for taxing the capital gains arising from the agreement with MTDC. The Assessing Officer taxed the capital gains in the assessment year 1999-2000, while the assessee argued that the gains should be taxed over the years when the consideration was received. The Tribunal noted that the agreement dated 26.03.1999 did not involve the transfer of possession or any consideration being paid at that time. The possession of land and the receipt of consideration occurred over the years starting from the assessment year 2003-04 onwards. The Tribunal observed that the assessee had declared agricultural income from the land till 2004 and had shown the capital gains in the years when the consideration was actually received from MTDC.

3. Consistency and Uniformity in Treatment by the Revenue Department:
The third issue pertains to the principle of consistency and uniformity in the treatment of similar cases by the Revenue Department. The assessee highlighted that other similarly placed farmers who entered into agreements with MTDC were not taxed for capital gains in the assessment year 1999-2000 but over the years when the consideration was received. The Tribunal noted that the Department had accepted the claims of other farmers and taxed the capital gains over the years. The Tribunal emphasized the importance of uniformity of approach by the Revenue in relation to similarly placed assessees, as laid down by the Hon'ble Supreme Court in several cases. The Tribunal found no justification for the Revenue's departure from its accepted position in the case of the assessee and directed the Assessing Officer to delete the addition in dispute.

Conclusion:
The Tribunal set aside the order of the Commissioner of Income Tax (Appeals) and directed the Assessing Officer to delete the addition of capital gains for the assessment year 1999-2000. The decision was based on the principles of consistency and uniformity, rather than the merits of the controversy. The Tribunal's decision in ITA No.1063/PN/2013 in the case of Shri Krishna Rajaram Ashtekar was applied mutatis mutandis to all other appeals, resulting in all the appeals of the assessee being allowed.