- (1.) THE revenue has filed the instant appeal under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') against the order dated 03.11.2011 (Annexure A -6) passed by the Income Tax Appellate Tribunal, Chandigarh Bench "B", Chandigarh (hereinafter referred to as 'the Tribunal') in ITA No.550/Chd/2010, pertaining to the Assessment Year 2005 -06, raising the following substantial questions of law: - "(i) Whether on the facts and circumstances of the case, the Hon'ble ITAT has erred in law in deleting the addition of Rs. 1,33,54,388/ - made by the Assessing Officer after including the consideration received in kind i.e. the value of ground floor/flat in the total consideration received on account of sale of only 60% share in land. The Hon'ble ITAT has failed to appreciate the provisions of section 48 of the Income Tax Act which clearly states that 'full' value of consideration has to be taken into account while computing capital gains. (ii) Whether on the facts and circumstances of the case, the Ld. ITAT has erred in law in inferring that the ground floor flat was received by the assessee in lieu of the transfer of 40% land rights losing sight of the fact that the addition of Rs. 1,33,54,388/ - made by the AO in substance relates to transfer of 60% land rights only and that does not change the overall additions/computation of capital gains made by the AO."
(2.) THE brief facts of the case are that originally the assessment of the assessee (who derives income from salary, house property, capital gains and other sources) was framed by the Assessing Officer vide order dated 9.4.2007 (Annexure A -1) under Section 143(3) of the Act at an income of Rs.61,38,784/ -. Subsequently the Commissioner of Income Tax initiated the proceedings under Section 263 of the Act against the assessee on the ground that the capital gains declared by the assessee with reference to collaboration agreement dated 04.06.2004 had been accepted by the Assessing Officer without application of mind. After hearing the assessee, the assessment order was set aside by the Commissioner of Income Tax vide order dated 22.07.2008 (Annexure A -2) and the matter was remanded to the Assessing Officer for fresh adjudication in accordance with law. The assessee challenged the said order by filing an appeal before the Tribunal which was dismissed vide order dated 27.01.2009 (Annexure A -3).
(3.) THEREAFTER , the Assessing Officer re -framed the assessment under Section 143(3) of the Act vide order dated 30.11.2009 (Annexure A -4). By the said order, the Assessing Officer assessed the value of consideration received by the assessee in kind from the collaborator as Rs.1,63,33,333/ - and allowed exemption under Section 54 of the Act to the tune of Rs.29,78.965/ - and thereafter determined the capital gains earned by the assessee as Rs.1,33,54,368/ - on account of his share of 40% over and above what he has declared for 60% share of the property. Aggrieved against the said order, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) which was partly allowed by the Commissioner of Income Tax vide order dated 22.02.2010 (Annexure A -5) while holding that under the collaboration agreement the assessee had transferred 60% of the ownership in the plot for a consideration of Rs.1,90,00,000/ - on which the capital gains was paid and the addition made by the Assessing Officer of Rs.1,33,54,388/ - on account of remaining 40% of the plot could not have been made as the assessee did not transfer that share to the collaborator and retained the same for himself. With regard to penalty proceedings, it was held by the Commissioner of Income Tax that the penalty proceedings are independent proceedings and the issue could not be adjudicated in quantum proceedings. The said order was challenged by the revenue by filing an appeal before the Tribunal which has been dismissed by the impugned order dated 03.11.2011 (Annexure A -6).;