ADAMALA MOHANA ,HYDERABAD V. INCOME TAX OFFICER, WARD-9(1), HYDERABAD

ITA 2288/HYD/2018

AI Insights

The case involves Adamala Mohana, who appealed against the order of the Commissioner of Income Tax (Appeals)-7, Hyderabad, which confirmed the assessment order denying her exemption under section 54F of the Income Tax Act, 1961. The dispute centered on the nature of the property transaction and the ownership of the property sold. Adamala Mohana argued that the property belonged to her son, Shri A.Shailender Reddy (HUF), and not to her individually, thus the capital receipt should be considered in the hands of her son as HUF. The Tribunal found that the property was owned and the sale proceeds received by Adamala Mohana in her individual capacity, and thus upheld the lower authorities' decisions except for the issue of indexation, which was remitted back to the Assessing Officer for appropriate action.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 472513 (ITAT-HYDERABAD)
• Duration Of Justice: 5 year(s) 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-10-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-A
• Next Hearing Date: 16-10-2024
• Assessment Year: 2009-2010
• Appeal Filed On: 06-12-2018
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHISH KUMAR SHUKLA; LD
• Assessee Lawyers: P.BALAKRISHNA; LD
• Keywords: Opportunity of being heard; Capital receipt; Capital Gains; Search and seizure
• Section: 147; 148; 54; 54F

Judgement Text

" आयकर अपीलीय अधिकरण, हैदराबाद पीठ में IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES “A” , HYDERABAD BEFORE SHRI LALIET KUMAR, HON’BLE JUDICIAL MEMBER AND SHRI MANJUNATHA G., HON’BLE ACCOUNTANT MEMBER ITA No.2288/Hyd/2018 Assessment Year – 2009-10 Adamala Mohana Hyderabad PAN : AFBPA7072C Vs. Income Tax Officer Ward-9(1) Hyderabad (Appellant) (Respondent) Assessee by: Shri P.Balakrishna, Ld.AR Revenue by: Shri Ashish Kumar Shukla, Ld.DR Date of hearing: 16.10.2024 Date of pronouncement: 17.10.2024 O R D E R PER LALIET KUMAR, J.M. This appeal is filed by the assessee, feeling aggrieved by the order passed by the Commissioner of Income Tax (Appeals)-7, Hyderabad [Ld.CIT(A)] dated 11.10.2018 for the AY 2009-10 by raising the following grounds : 1. The CIT(A) erred in law and on facts of the case 2 ITA No.2288/Hyd/2018 2. The AO erred and failed to appreciate the nature of transaction which was wrongly projected while filing the return of income as capital receipt by the then A.R of the appellant. 3. The Hon'ble CIT(A) ought to have considered the additional ground submitted by the appellant and ought to have allowed the appeal considering the nature of receipt in the hands of appellant. 4. Therefore, confirming the order of the Asst.by CIT(A) is arbitrary and therefore, liable to be squashed by allowing the prayer of the appellant. 5. Any other ground at the time of hearing with the permission of Hon'ble Bench. 2. Brief facts of the case are that the assessee is an individual. The assessee received Rs.66,25,000/- on 19.03.2009 from sale of joint property and invested Rs.66,35,000/- in purchase of property in the name of her son, Shri A.Shailender Reddy, ahead of 14 months of receipt of money on 21.01.2008 and claimed for deduction under section 54 of the Income tax Act, 1961 (“the Act”). During the course of assessment proceedings, learned Assessing Officer observed that the income from capital gains escaped assessment for the A.Y.2009-10 since the assessee has not furnished any evidence. The assessee in her reply explained that since the pension received by her for the A.Y.2009-10 is below taxable limit, she did not file her return of income for the A.Y.2009- 3 ITA No.2288/Hyd/2018 10. The case was reopened u/s 147 of the Act and notice u/s 148 was issued. In response, the assessee filed return of income for the A.Y.2009-10 by showing her income at Rs.1,43,420/-, which includes pension and income from house property. Learned Assessing Officer observed that since the assessee made investment on 21.01.2008, well ahead of 14 months of receipt of money on account of sale of property on 19.03.2009, in contravention to the conditions laid down in the provisions of section 54F of the Act and also since the assessee could not furnish any documentary evidence for transfer of funds in order to prove the utilization of sale proceeds, completed the assessment by disallowing the exemption claimed u/s 54F of the Act of Rs.64,90,023/-. 3. Aggrieved by the order of the learned Assessing Officer, assessee preferred appeal before the CIT(A) and filed additional grounds stating that the property sold does not belong to assessee (Individual) and belongs to her son A.Shailender Reddy (HUF) and therefore requested for consideration of the claim in the hands of Sri A.Shailender Reddy (HUF) as amounts to gracious payment made by Sri A.Shailender Reddy (HUF) and the same is capital 4 ITA No.2288/Hyd/2018 receipt. The Ld.CIT(A) held that entire new claim made by the Ld.AR of the assessee in the course of appellate proceedings about entrusting the ownership of the property entirely in the hands of Sri A.Shailender Reddy (HUF) without attributing a share in the hands of the assessee is an after-thought and hence upheld the order of the learned Assessing Officer and dismissed the appeal of the assessee. 4. Aggrieved by the order of the Ld.CIT(A), assessee preferred appeal before us. Ld.AR had drawn our attention to the order passed by the Ld.CIT(A), wherein, the Ld.CIT(A) refused to admit additional grounds of appeal along with the documents. For the above said purpose, Ld.AR had drawn our attention to paragraph 6.1 of the order of the Ld.CIT(A) at page 7 to 10 as under: “6.1 However, during the course of appellate proceedings, the Ld.AR of the appellant filed additional grounds of appeal vide letter dated 5-2-2018 stating that the property sold does not belong to assessee (Individual) and belongs to A.Shailender Reddy (HUF) and therefore requested for consideration of the claim in the hands of Sri A.Shailender Reddy (HUF). It was the stand of the appellant that, assessee being wife of A.Venkata Prabhakar Reddy does not have any right in the property which was sold. I have perused the copy of Agreement of Sale cum General Power of Attorney vide document No.1065/09, dated 19-3-2009, wherein, 4 vendors were stated to be (i) assessee, Smt.A.Mohana W/o Late Sri A.V.Prabhakar Reddy (ii)DR.A.Shailender Reddy, S/o Late Sri A.V.Prabhakar Reddy (iii) Smt.Ranaboth Lavanya, W/o Rajasekhar Reddy, D/o Late A.V.Prabhakar Reddy (iv) Smt.Musula Chandana W/o 5 ITA No.2288/Hyd/2018 Jagadeesh Reddy, D/o Late Sri A.V.Prabhakar Reddy and 9 consenting parties. The vendee was Sri G.Siva Rama Krishna, S/o Late Sri G.Sambasiva Rao. The clause(1) of Agreement of Sale cum General Power of Attorney vide document No.1065/09 is reproduced hereunder : “The vendors and the consenting parties offered to sell the schedule property for a sale consideration of Rs.6,65,00,000/- (Rupees six crores and sixty five lakhs only) and the Vendee agreed and accepted for the said sale consideration. The Vendee has paid an amount of Rs.3,32,50,000/- (Rupees three crores thirty two lakhs and fifty thousand only) out of total sale consideration of Rs.6,65,00,000/- (Rupees six crores and sixty five lakhs only) to the Vendors 1 to 4 and paid the balance sale consideration of Rs.3,32,50,000/- (Rupees three crores thirty two lakhs and fifty thousand only) to the consenting parties No.2, 7, 8,9 and 10 and they have acknowledged the receipt of the same. Further, in written submission made before Assessing Officer vide letter dated 31-7-2015, the appellant clearly stated that she has received Rs.43,27,920/- through cheques in the bank account standing in her name and balance amount of Rs.22,97,030/- was received on her behalf by her son Sri A.Shailender Reddy. The appellant clearly stated that the purchaser has p[aid an amount of Rs.2,91,61,540/- by way of cheques to all the joint owners and consenting parties and she has received the consideration towards her share being 1/4th share. However, the AR of the appellant claimed that the nature of the payment received by assessee amounts to gracious payment made by Sri A.Shailender Reddy (HUF) to his mother and the same is capital receipt. This contention of the AR of the appellant is not acceptable to the undersigned. The title of the property stands in the name of assessee Smt A.Mohana, w/o.Late Sri A.V.Prabhakar Reddy on account of transfer of membership of Jubileehills Cooperative Building Society, Hyderabad. The averments made in the registered Agreement of Sale cum General Power of Attorney No.7065/09, the membership of the assessee in Jubileehills Cooperative Building Society, Hyderabad and submissions made by the appellant before Assessing Officer on 3I-7-2015 clearly speak that the amounts received by the assessee was in consideration 6 ITA No.2288/Hyd/2018 of the sale of the property and assessee received her 1/4th share. Therefore, the contention of the AR of the appellant that the assessee does not have right in the property is not acceptable. The facts prove that the appellant is having 1/4th share in the ownership of the property. Moreover, the new evidences brought in the additional grounds of appeal raised by the appellant were not brought before Assessing Officer for the reasons best known to the AR of the appellant. Hence, the additional grounds of appeal raised by the appellant in the course of appellate proceedings are rejected as the contents of these grounds of appeal are contrary to the averments made in the registered sale deed, the appellant's submissions and the membership in the Jubileehills Cooperative Building Society, Hyderabad. Further, the contention of the AR of the appellant that Sri A.Shailender Reddy (HUF) had offered entire sale consideration of Rs.1,66,25,000/- in the RoI filed for A.Y.2009- 10 and claimed exemption u/s.54F is not borne out of facts, The sale consideration declared in the hand of Sri A.Shailender Reddy (HUF) was Rs.1,00,00,000/- only and not Rs.1,66,25,000/- as contended by the AR of the appellant. The consideration of Rs.66,25,000/- received by assessee Smt.A.Mohana was not part of the computation of capital gains in the hand of Sri A.Shailender Reddy (HUF). Therefore, the question of double taxation also does not arise. Therefore, the new claim made by the Ld.AR of the appellant in the course of appellate proceedings that the appellant did not receive consideration of Rs.66,25,000/- in lieu of any share in the sale of property and received consideration of Rs.66,25,000/- in the nature of gracious payment by her son is not borne out of facts. The entire new claim made by the Ld.AR of the appellant in the course of appellate proceedings about entrusting the ownership of the property entirely in the hands of Sri A.Shailender Reddy (HUF) without attributing a share in the hands of assessee is an after-thought and needs to be rejected. Hence, I uphold the order of the Assessing Officer.” 5. It was further submitted by the Ld.AR that the son of the assessee who was also co-seller in the property, after inheriting the property from the deceased husband of the assessee, namely Shri A.Venkata Prabhakar Reddy had filed return of income and 7 ITA No.2288/Hyd/2018 in the return of income, the said son of the assessee, Shri A.Shailender Reddy had claimed the property as HUF and the Ld.AO had granted the benefit of HUF while adjudicating the claim of the said son of the assessee. Our attention was drawn to page No.96 to 99 of the paper book and also page No.102 of the paper book. It was further submitted that the Ld.AO of the assessee had also denied the benefit of indexation and had not treated the property as HUF. It was lastly submitted that the matter may kindly be remitted back to the file of the Ld.AO with a direction to consider the documents and to pass denovo assessment in the hands of the assessee. 6. Per contra, Ld.DR submitted that the assessee is changing and shifting her stand; as at the stage of assessment, the assessee had claimed the property to be owned by her and therefore, she had claimed exemption u/s 54F. It was further submitted that the assessee cannot be permitted to take contrary stand in the assessment proceedings as well as in appellate proceedings. Further Ld.DR drew our attention to the sale document and also submitted that consideration was received in individual names and not in the name of HUF. 8 ITA No.2288/Hyd/2018 7. In rebuttal, Ld.AR had submitted that it is the duty of the Ld.AO to tax the correct income of the assessee and ignorance of the assessee should not be for the benefit of the Revenue and he has drawn strength from the Board Circular dated 11.04.1955 at page No.107 of the paper book. It was further submitted that Revenue on the same set of facts has once taken a position that the property is HUF property and the said proposition has been accepted by the Revenue by giving benefit to the son and the same cannot be denied to the assessee. 8. We have heard rival contentions and perused the material on record. In the present case, it is undisputed fact that the property was initially owned by one Shri.A.Venkat Reddy and thereafter, it was transferred in favour of Shri A.Venkata Prabhakar Reddy. The said Shri A.Venkata Prabhakar Reddy died intestate on 20.02.1998 leaving behind his wife, Smt.Adamala Mohana, his son, Shri Shailender Reddy and daughters, Smt.Ranaboth Lavanya and Smt.Musula Chandana. Property was treated by the Ld.AO in order dated 24/03/2016 of Shri Shailender Reddy as HUF property and to that extent, there is no quarrel. 9 ITA No.2288/Hyd/2018 9. In the present case, though it is the case of the assessee that the assessment order of the son dated 24.03.2016 should be applied in the case of mother by the Ld.CIT(A), we are afraid this argument cannot be accepted, for the simple reason that the order in the case of the mother was passed on 19.08.2015, treating the property as individual, which was prior in time, and therefore, there was no occasion for the Ld.AO of assessee to consider the order passed by the Ld.AO of the son on 24.03.2016. Furthermore, record shows that the agreement of sale was entered by the assessee in individual capacity along with others and the consideration were also received by them in their individual capacity. So, we are not able to convince ourselves that the sale of the property was by the HUF and hence, there was no reason to assessee as HUF property. Therefore, we do not find any reason to interfere in the above order passed by the Ld.CIT(A). 10. In our view, Ld.AO of the son should have followed the order of the assessee as it was prior in time and the consistency was required to be observed by the Ld.AO of the son. Having held that property has rightly been assessed in the individual capacity, now we are left with the last submission before us, whether the 10 ITA No.2288/Hyd/2018 assessee is entitled to the cost of indexation while computing the long-term capital gains or not. In this regard, we find it is duty of the Ld.AO to grant indexation of the property, even if the assessee has not claimed being individual. For the above said purposes, we rely on the Board Circular dated 11.04.1955, which was passed by the Board for the benefit of individuals like assessee before us, who happen to be infirm, widow and old lady. In the light of the above, we remit this limited issue of grant of indexation to the file of the Ld.AO with a direction to grant indexation as per law, after affording opportunity of being heard to the assessee. 11. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 17th October, 2024. Sd/- Sd/- Sd/- d/- Sd/- Sd/- (MANJUNATHA G.) ACCOUNTANT MEMBER Sd/- (LALIET KUMAR) JUDICIAL MEMBER Hyderabad, dated 17.10.2024. L.Rama, SPS 11 ITA No.2288/Hyd/2018 Copy to: S.No Addresses 1 Smt.Adamala Mohana, Flat No.404, #16-11-771/3, Venkata Ramana Residency, Chaitanyapuri, Opp.Chaitanya High School, Hyderabad 2 The Income Taxc Officer, Ward-9(1), Hyderabad 3 Pr.CIT-7, Hyderabad 4 DR, ITAT Hyderabad Benches 5 Guard File By Order "