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Tax Publishers
Anant Raj Ltd. v. Dy. CIT [ITAs No. 4736/DEL/2017,
ITAs No. 5237 & 5238/DEL/2017, dt. 27-11-2020] : 2020 TaxPub(DT) 5007
(Del-Trib)
Cancellation of property sale agreement and assessee
claiming refund of paid taxes by filing a revised return arising out of a
reassessment and claiming it as a rectification petition
Facts:
Assessee sold certain properties and was in receipt of part
consideration. Subsequently the sale agreement did not materialize as buyer was
unable to pay the balance consideration. Meanwhile the assessee had returned
the capital gains and the said capital gains/return was assessed in a scrutiny
assessment. Assessee filed a suit and by means of a court settlement the said
transfer was cancelled and the monies paid to the assessee were decreed to be
retained by them. Mean while the revenue reopened the assessee's case citing
that the property transferred was a depreciable asset and thus the entire
consideration was subject to capital gains and not on indexed basis as
erroneously claimed by the assessee. Assessee's plea was this was not a
depreciable asset and no depreciation was claimed on the same. While filing the
return for the reassessment assessee attached all the documents manually and
filed a revised return whereby they withdrew the capital gains offered to tax
assailing that the said agreement itself was cancelled and the monies which
were decreed to be retained by court were Mesne profits for the deprivation of
the said property by the buyer and thus is a capital receipt exempt from tax and
whatever tax was paid on the said transfer was also claimed as refund. This
reassessment on appeal was held to be incorrect by the Commissioner (Appeals).
Besides this the Commissioner (Appeals) also held that since the reassessment
itself was cancelled and held to be incorrect the revised return filed also
cannot be considered and the only route to file revised return was under
section 139(5) for which it was belated now. The plea of the assessee was this
revised return may be considered as a rectification petition under section 154
was also not accepted by the Commissioner (Appeals). Aggrieved both parties
appealed to ITAT -- revenue pleaded that the reassessment was erroneously
struck down while assessee's claim was that the revised return filed pursuant
to notice under section 147/148 be treated as rectification request and thus
when no tax payable was actually payable and the compensation awarded was Mesne
profits nothing can be taxed and they cannot be deprived of their equitable
right to get refund of the wrongly paid taxes. On appeal --
Held in favour of the assessee that the reassessment
deserved to be cancelled and thus the order of Commissioner (Appeals) required
no interference. As regards the rectification request, the fact of the
cancellation of the agreement by the court was all filed and since section 154
does not prescribe any format or applicable form the request of the assessee to
retract the capital gains offered should have been considered by the
Commissioner (Appeals) on principles of equity. To this extent they had a right
of rectification and it is not necessary that it has to be an arithmetical
mistake to fall in the scope of rectification all the time. Even non-heeding a
court decreed judgment of cancelling a property agreement deserves
rectification as mistake apparent from record. Thus the case was remanded to
assessing officre to pass the rectification order and grant assessee refund of
the wrongly paid taxes within 3 months from the ITAT order.
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