2022 (3) TMI 767 - AT - Income Tax

Reopening of assessment u/s 147 - income arising out of the sale of the land - Assessment in hands of assessee individual or HUF - proceedings on assessee's HUF by issue of notice u/s. 148 and had brought the same income arising out of the conversion of land in subsequent sale of tax substantially in the hands of the assessee - HELD THAT - We notice that the land was family property until partition and the assessee got the share as part of the partition deed executed on 28/06/2012 and the issue here is whether the income arising out of the sale of the land should be assessed in the hands of the assessee in his individual capacity or in the hands of assessee's HUF. The proceedings initiated u/s. 148 assessing the same income in the hands of Assessee's HUF is in appeal before the CIT(A)-4. In the impugned order under appeal here, the CIT(A) has decided that the income should be assessed in the hands of the assessee's HUF merely based on the fact that the same income is also assessed in HUF and is subjudice. CIT(A) has not gone into the merits of the case to come to the conclusions that the income should be assessed in the hands of the HUF. We therefore remand the case back to CIT(A) to consider the materials on record and decide the issue accordingly after giving reasonable opportunity of being heard to the assessee. Appeal of the assessee is allowed for statistical purposes.

Summary

Issues:
Assessment of income arising from the sale of land in the hands of an individual or Hindu Undivided Family (HUF).

Analysis:
The appeal before the Appellate Tribunal ITAT Bangalore concerned the assessment of income from the sale of land in the hands of an individual or HUF for the assessment year 2013-14. The Revenue raised several grounds challenging the order of the CIT(A). The primary issue revolved around whether the income arising from the sale of land should be assessed in the hands of the individual or the HUF. The assessee, an individual, inherited land as part of a family partition and later converted it into stock in trade, leading to its sale. The Assessing Officer (AO) assessed the long-term capital gains on the conversion of land to stock in trade in the individual's hands and not in the HUF's hands.

The CIT(A) allowed the appeal in favor of the assessee, highlighting that the Department had initiated proceedings on the assessee's HUF and brought the income arising from the land sale into the individual's tax substantially. The CIT(A) noted that the HUF had also filed an appeal against this order. Subsequently, the Revenue appealed before the Tribunal challenging the CIT(A)'s decision.

During the Tribunal hearing, the arguments presented by both sides reiterated the assessment of income in the hands of the individual and the HUF. The Tribunal examined the facts and determined that the key issue was whether the income from the land sale should be assessed in the individual's capacity or in the HUF's hands. The Tribunal observed that the CIT(A) had decided to assess the income in the HUF's hands based on the ongoing assessment in the HUF's case without delving into the merits of the individual's assessment. Consequently, the Tribunal remanded the case back to the CIT(A) for a thorough review of the materials on record and a reasoned decision after providing a fair opportunity for the assessee to present their case.

In conclusion, the Tribunal allowed the appeal of the assessee for statistical purposes, emphasizing the need for a comprehensive reconsideration of the assessment of income from the land sale in either the individual's or the HUF's hands. The order was pronounced in court on 10th March 2022.