2022 (10) TMI 688 - HC - Income Tax

Assessment of capital gains on account of transfer of property - Transfer of capital asset u/s 2(45) - scope of conditional sale transaction - basic contention of the appellant which was that registration document could not be taken as a conclusive proof to hold that there was transfer resulting in capital gains - ITAT confirming the addition made by the AO - Whether Tribunal was justified in passing the order after the period of 3 months from the date of hearing misunderstanding the letter and spirit of Rule 34(5) of Income Tax (Appellate Tribunal) Rules, 1963 and judicial precedents - HELD THAT - According to the Tribunal, appellant had already executed a registered sale deed which is treated as valid transfer under Section 2(47)(V) of the Act. The other documents relied upon by the appellant were only pleadings before civil and criminal courts, which proceedings were yet to attain finality. Accordingly, Tribunal upheld the addition of long term capital gains made by the assessing officer as confirmed by the CIT(A). After holding so, Tribunal noted that the appeal was decided after a period of 90 days from the date of hearing; the same was because of the covid lock down situation and referred to the orders passed by the Supreme Court extending limitation. On thorough consideration of all aspects of the matter, we are of the view that no substantial question of law arises out of the order of the Tribunal dated 02.09.2021. Findings returned by the Tribunal are clear findings of fact which does not call for any interference. Appeal as well as I.A. filed for condonation of delay of 76 days in filing the appeal are accordingly dismissed.

Summary

Issues involved:
1. Interpretation of provisions of the Income Tax Act, 1961 regarding capital gains assessment.
2. Violation of principles of natural justice in the appellate process.
3. Consideration of additional evidence in tax assessment proceedings.
4. Adherence to time limits in delivering judgments during exceptional circumstances like a lockdown.

Issue 1: Interpretation of provisions of the Income Tax Act, 1961 regarding capital gains assessment:
The appellant challenged the addition of long-term capital gains by the assessing officer for the assessment year 2010-11. The assessing officer considered the sale deed and applied relevant provisions, leading to the computation of capital gains. The CIT(A) upheld the assessing officer's decision, emphasizing that the execution of the sale deed constituted a transfer under Section 2(47) of the Act, resulting in capital gains. The Tribunal concurred, highlighting that the registered sale deed superseded any oral or unregistered documents. The Tribunal cited legal precedents to support its decision, ultimately upholding the addition of capital gains. The High Court found no substantial question of law in the Tribunal's decision, leading to the dismissal of the appeal.

Issue 2: Violation of principles of natural justice in the appellate process:
The appellant raised concerns about the rejection of an adjournment request by the Appellate Tribunal, citing the ill health of the counsel on record. The Tribunal, however, proceeded with the hearing, leading to the appellant's contention that natural justice principles were violated. The High Court did not find this issue substantial, as the Tribunal's decision was based on factual findings and did not warrant interference.

Issue 3: Consideration of additional evidence in tax assessment proceedings:
The appellant sought to introduce additional evidence related to civil and criminal court proceedings to challenge the capital gains assessment. However, the Tribunal deemed these documents as mere pleadings pending finality in other courts, emphasizing the significance of the registered sale deed in determining the transfer for tax purposes. The Tribunal rejected the appellant's reliance on additional evidence, leading to the dismissal of the appeal by the High Court due to lack of legal merit.

Issue 4: Adherence to time limits in delivering judgments during exceptional circumstances like a lockdown:
The Tribunal's decision was delivered after a 90-day period from the date of the hearing, which exceeded the time limit prescribed by Rule 34(5) of the IT(AT) Rules 1963. The Tribunal justified this delay by citing the exceptional circumstances of the COVID-19 lockdown and referred to Supreme Court orders extending limitation periods. The High Court acknowledged this explanation and found no grounds to interfere with the Tribunal's decision, leading to the dismissal of the appeal and related applications.

This comprehensive analysis of the judgment covers the interpretation of legal provisions, procedural aspects, and the application of precedents in resolving the issues raised in the appeal before the High Court.