Shri. Vijay, Bangalore V. ITO, Bangalore

ITA 100/BANG/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7240 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 9 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-11-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 19-06-2017
• Assessment Year: 2005-2006
• Appeal Filed On: 01-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B R RAMESH JOINT
• Assessee Lawyers: H GURUSWAMY ITP
• Keywords: Deemed to accrue or arise in india
• Section: 54F; 69; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, B E NGAL U R U BEFORE SHRI VIJAY PAL RAO , JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ITA NO. 100 / BANG/20 1 6 (ASSESSMENT YEAR: 20 05 - 06 ) SHRI VIJAY , NALLURAHALLI VILLAGE, WHITEFIEL D POST, K.R. PURAM, BENGALURU. PAN: AEMPN 8678 R VS. APPELLANT INCOME - TAX OFFICER, WAR 7(4), BENGALURU. RESPONDENT APPELLANT BY : SHRI H.GURUSWAMY, ITP. RESPONDENT BY : SHRI B.R.RAMESH, JOINT CIT (DR) DATE OF HEARING : 24/0 8/2017 DATE OF PRONOUNCEMENT : 22 /11/2017 O R D E R PER I NTURI RAMA RAO, AM : THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - 4, BANGALORE , [CIT(A)] DATED 30 TH NOVEMBER 2015 FOR T HE ASSESSMENT YEAR 2005 06. 2. THE ASSESSEE RAISE D THE FOLLOWING GROUNDS OF APPEAL : ITA NO. 100 /BANG/201 6 PAGE 2 OF 7 ITA NO. 100 /BANG/201 6 PAGE 3 OF 7 3. BRIEFLY FACTS OF THE CASE ARE AS UNDER: THE ASSESSEE IS AN INDIVIDUAL . THE ASSESSEE HAD NOT FILED RETURN OF INCOME VOLUNTARILY FOR THE ASSESSMENT YEAR 2005 - 06. THE ASSESSING O FFICER , AFTER RECEIPT OF INFORMATION FROM THE OFFICE OF THE SUB R EGISTRAR KRISHNARAJAPURA , BANGALORE , THAT THE ASSESSEE AT SOLD PROPER TY FOR A CONSIDERATION OF RS. 59 , 37 , 500 / - ON 23 / 11 / 2004 H AD ISSUED NOTICE U/S 142 OF THE INCOME - TAX ACT,196 1 [HEREINAFTER REFERRED TO AS 'THE ACT'] ON 13 /09/ 2007 ASKING THE ASSESSEE TO FILE RETURN OF INCOME ON OR BEFORE 26 /09/ 2 0 07 . HOWEVER, ASSESSEE HAD NOT COMPLIED WITH THE SAID NOTICE. THEREFORE, THE AO HAD PROCEEDED TO MAKE EX - P ARTE ASSESSMENT U /S 144 OF T HE ACT ASSESSING THE ENTIRE CONSIDERATION AS DEEMED INCOME U/S 69 OF THE ACT. 4. BE ING AGGRIEVED , ASSESSEE FILED AN APPEAL BEFORE T HE CIT (A) CONTENDING INTER ALIA THAT THE PROPERTY WHICH WAS SOLD DOES NOT BELONG TO THE ASSESSEE BUT TO THE H UF OF FATHER OF THE ASSESSEE, AS THE PROPERTY WAS INHERITED FROM HIS GRAND - FATHER S HUF. I T WAS FURTHER CONTENDED WITHOUT PREJUDICE TO THIS THAT THE SHARE OF THE ASSESSEE S FATHER S HUF IS ONLY RS.8,99,900/ - AND THEREFORE ENTIRE AMOUNT CANNOT BE ASSESSED IN HIS HAND S AND ALSO A CLAIM WAS MADE FOR EXEMPTION U/S 54F AS AN AMOUNT OF RS.8,99,900/ - WAS S TATED TO HAVE BEEN INVESTED IN CONSTRUCTION OF RESIDENTIAL PROPERTY. THE CIT(A), AFTER CONSIDERING THE REMAND REPORT SUBMITTED BY THE AO , CONFIRM ED THE ADDITION ONLY TO THE EXTENT OF RS. 8,99,900/ - . THE RELEVANT PARAGRAPH IS EXTRACTED BELOW: ITA NO. 100 /BANG/201 6 PAGE 4 OF 7 5. BEING AGGRIEVED , THE APPELLANT IS BEFORE U S IN THE PRESENT APPEAL . THE WRITTEN SUBMISSIONS FILED BY THE LEARNED AR OF THE ASSESSEE READ AS UNDER: ITA NO. 100 /BANG/201 6 PAGE 5 OF 7 6. THUS, LEARNED AR OF THE ASSESSEE SUBMITTED THAT THE SALE CONSIDERATION RECEIVED OF RS.8,99,900/ - BELONGED TO HUF OF HIS FATHER AND THEREFORE, CANNOT BE ASSESSED IN HIS HANDS. HE HAS SIGNED THE SALE DEED ONLY AS A CONFIRMING PARTY. H E FURTHER SUBMITTED THAT , IN ANY EVE NT , THE ASSESSEE S FATHER HAD BROUGHT VACANT SITE BEARING NO.73, NALURHALLI VILLAGE, KRISHNARAJAPURA HOBLI, BANGALORE EAST, WHICH IS ELIGIBLE FOR EXEMPTION U/S 54F OF THE ACT. THUS, HE PRAYED THAT THE AMOUNT IS NOT TAXABLE IN THE INDIVIDUAL CAPACITY. THER EFORE, THE ADDITION ITA NO. 100 /BANG/201 6 PAGE 6 OF 7 SHOULD BE DELETED. HE FURTHER SUBMITTED THAT EVEN ASSUMING THAT SAID AMOUNT IS TAXABLE IN THE HANDS OF H UF OF HIS FATHER , NO CAPITAL GAINS AROSE SINCE SALE PROCEEDS HAVE BEEN INVESTED IN THE CONSTRUCTION OF NEW HOUSE AND THE SAME ARE E XEMPT FROM TAX. THEREFORE, NO RETURN OF INCOME WAS FILED. 7. O N THE OTHER HAND , LEARNED DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. 8. WE HEARD RIVAL SUBMISSIONS AND PERUSED MATERIAL ON RECORD. T HE ONLY ISSUE IN THE PR ESENT APPEAL SALE CONSIDERATION OF RS.8,99,900/ - RECEIVED ON ACCOUNT OF SALE OF PROPERTY SITUAT ED AT NALLURAHALLI VILLAGE, K.R.PURAM HOBLI, BANGALORE EAST I S TAXABLE IN THE HANDS OF THE APPELLANT . O N PERUSAL OF THE RECITALS TO THE SALE D EED , IT IS CLEAR T HAT THIS PROPERTY WAS ORIGINALLY O WNED BY ONE MR V ENKATARAMANAPPA WHO WAS THE ABSOLUTE OWNER OF THE PROPERTY SITUATED AT SY.NO.76/1, N ALLURHALLI VILLAGE , KR PURAM HOBLI, BANGALORE EAST. A FTER DEATH OF SHRI V ENKATARAMANAPPA , HIS SON CHIKKARAMAIAH BECAME A BSOLUTE OWNER. O N THE DEMISE OF CHIKKARAMAIAH, THROUGH A PARTITION DEED, BETWEEN TWO SONS VIZ., NANJUNDA REDDY AND GUR REDDY, IN TERMS OF WHICH THIS PROPERTY HAS FALLEN TO THE SHARE OF LATE NANJUNDA REDDY, AND ACCORDINGLY MUTATION ENTRIES WERE PASSED IN THE NAME OF LATE NANJUNDA REDDY. ON THE DEATH OF LATE NANJUNDA REDDY, HIS SIX SONS VIZ., S/SHRI (I) HANUMA REDDY, (II) VENKATESH (III) RAJAPPA REDDY (IV) GOPAL REDDY (V) KUMAR REDDY AND (VI) RAVINDRA REDDY BECAME OWNERS OF THE PROPERTY AND ACCORDINGLY MUT ATIN ENTRIES WERE MADE. THESE SIX SONS OF LATE NANJUNDA REDDY JOINTLY SOLD THIS PROPERTY FOR A CONSIDERATION OF RS.59,37,500/ - VIDE REGISTERED SALE DEED DATED 23/11/2004 IN FAVOUR OF ONE BHASKARAN. THE APPELLANT IS THE SON OF VENKATESH WHO IS THE SON OF ONE OF THE 6 SONS OF LATE NANJUNDA REDDY. THUS THERE IS NO EVIDENCE ON RECORD TO SHOW THAT THE APPELLANT IS THE ABSOLUTE OWNER OF THE PROPERTY SOLD. HOWEVER, HIS NAME WAS FOUND AS ONE OF THE SELLERS IN THE SALE DEED VIDE SERIAL NO.5. IT DOES NOT MEAN TH AT HE HAS AN INTEREST OR ABSOLUTE OWNER OF THIS PROPERTY. T HERE IS MERIT IN THE SUBMISSION MADE BY THE LEARNED AR OF THE ASSESSEE THAT THE APPELLANT WAS MADE A PARTY TO THE SA LE DEED ITA NO. 100 /BANG/201 6 PAGE 7 OF 7 A S A CONFIRMING PARTY . T HERE IS NO EVIDENCE BROUGHT ON RECORD TO SHOW TH AT THERE IS PARTITION AMONG V ENKATARAMANAPPA AND HIS SONS . I N THE CIRCUMSTANCES , THIS AMOUNT CANNOT BE T AXED IN THE HANDS OF THE ASSESSEE. IT IS A SETTLED PROPOSITION OF LAW HELD BY THE HON BLE SUPREME COURT IN THE CASE OF ITO VS. CH.ATCHAIAH (218 ITR 2 39)(SC) THAT RIGHT AMOUNT SHOULD BE TAXED IN THE RIGHT HANDS ONLY T HEREFORE , WE HOLD THAT T HIS AMOUNT CANNOT BE TAXED IN THE HANDS OF THE APPELLANT. HENCE, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND NOVEMBER, 201 7 SD/ - SD/ - ( VIJAY PAL RAO ) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE : B EN GAL URU D ATE : 22 / 1 1 /2017 SRINIVASULU, SPS COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A) - 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY INCOME - TAX APPELLATE TRIBUNAL BANGALORE