T. Babu Reddy, Hyd, Hyderabad V. ITO, Ward-7(2), Hyderabad, Hyderabad

ITA 1028/HYD/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2556 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 05-06-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 18-07-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N SWAPNA
• Assessee Lawyers: P VINOD SHRI A V RAGHURAM
• Keywords: Sale consideration of property below Jantri Value; Additional evidence; Question of law; Cost of acquisition
• Section: 50C; 148

Judgement Text

IT A NO 1028 OF 2016 T BABU REDDY HYDERABAD. PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S.RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO.1028/HYD/2016 (ASSESSMENT YEAR: 2012-13) SRI T. BABU REDDY HYDERABAD PAN: ABJPT 1273 C VS INCOME TAX OFFICER WARD 7(2) HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI P. VINOD/ SHRI A.V.RAGHURAM FOR REVENUE : SMT. N. SWAPNA, DR O R D E R PER SMT. P. MADHAVI DEVI, J.M. THIS IS ASSESSEES APPEAL FOR THE A.Y 2012-13 AGAIN ST THE ORDER OF THE CIT (A)-3, HYDERABAD DATED 20.05.2 016. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : 1. THE ORDER OF THE LEARNED C.I.T.(APPEALS) CONFIRMING THE ORDER OF THE AO IS ERRONEOUS BOTH ON FACTS AND IN LAW IN SO FAR AS IT IS PREJUDICIAL TO THE ASSESSEE. 2. THE LEARNED CIT(A) ERRED IN DISMISSING THE GROUND AGAINST INITIATION OF PROCEEDINGS U/S.147 WITHOUT APPRECIATING THE FACT THAT THE NOTICE U/S.148 IS ISSUED WHEN THERE IS TIME TO ISSUE 142( 1) CALLING FOR RETURN OF INCOME AND THEREBY OUGHT TO HAVE HELD THE PROCEEDINGS INITIATED U/S.147 IS VOID ABINTIO. DATE OF HEARING : 22.09.2017 DATE OF PRONOUNCEMENT : 29.09.2017 IT A NO 1028 OF 2016 T BABU REDDY HYDERABAD. PAGE 2 OF 6 3. THE LEARNED CIT ERRED IN DISMISSING THE ADDITIONAL GROUND RAISED TO ADOPT THE RATE INVOKING PROVISIONS OF SEC.50C AS ON THE DATE OF AGREEMENT WITHOUT APPRECIATING THE FACT THAT IT IS A LEGAL GROUND THAT THERE IS ESTOPPEL ON A QUESTION OF LAW AND THAT THE POWERS OF THE CIT(A) ARE CO-TERMINUS WITH THAT OF THE AO AND THEREFORE OUGHT TO HAVE ADMITTED THE ADDITIONAL GROUND AND OUGHT TO HAVE PASSED ORDERS ON THE SAME. 4. THE LEARNED CIT (A) FAILED TO APPRECIATE THE LEGAL POSITION THAT AGREEMENT CAN ALSO BE ORAL AND THAT THE PAYMENT OF ADVANCE THROUGH CHEQUE EVIDENCES AGREEMENT AND NO REQUIREMENT OF REFERRING TO AGREEMENT AND THEREBY ERRED IN DISMISSING THE ADDITIONAL GROUND. 5. THE LEARNED CIT IN CONFIRMING THE ACTION OF THE AO IN RESTRICTING THE IMPROVEMENTS TO RS.5,00,000 WITHOUT APPRECIATING THAT THE AO IS NOT A TECHNICAL PERSON TO DETERMINE THE VALUE OF THE STRUCTURE AND FURTHER THAT THE MATTER OF IMPROVEMENTS WERE MORE THAN TWO DECADES OLD AND THEREFORE OUGHT TO HAVE DIRECTED THE AO TO ALLOW ENTIRE CLAIM OF IMPROVEMENT. 2. AT THE TIME OF HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE DOES NOT WISH TO PRESS GROUND OF APPEAL NO.2 AND IT IS ACCORDINGLY REJECTE D AS NOT PRESSED. 3. GROUND 1 IS GENERAL IN NATURE AND NEEDS NO ADJUDICATION. 4. AS REGARDS THE OTHER GROUNDS OF APPEAL, BRIEF FA CTS OF THE CASE ARE THAT THE ASSESSEE, AN INDIVIDUAL, HAD SOLD TWO PLOTS CONSISTING OF ONE SQUARE HOUSE IN EACH ONE SITUATED AT BANGALORE IT A NO 1028 OF 2016 T BABU REDDY HYDERABAD. PAGE 3 OF 6 FOR A SALE CONSIDERATION OF RS.24.00 LAKHS EACH DUR ING THE FINANCIAL YEAR 2011-12. AS THE ASSESSEE HAS NOT FIL ED THE RETURN OF INCOME FOR THE A.Y 2012-13, A NOTICE U/S 148 WAS ISS UED TO THE ASSESSEE ON 10.04.2013. DURING THE RE-ASSESSMENT PR OCEEDINGS THE AO OBSERVED THAT THE ASSESSEE HAS SOLD TWO PROP ERTIES FOR A SALE VALUE OF RS.24.00 LAKHS EACH BUT THE SRO VALUE OF THE PROPERTIES WAS RS.40,05,000 AND RS.36,45,000 RESPEC TIVELY. HE THEREFORE, CONSIDERED THE SAME AS SALE VALUE AND AF TER COMPUTING THE COST OF ACQUISITION, HE ARRIVED AT THE NET LONG TERM CAPITAL GAIN OF RS.64,65,737. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT (A) STATING THAT THERE WAS AN ORAL A GREEMENT BETWEEN THE ASSESSEE AND THE VENDEES FOR THE SALE O F PROPERTY AND THE ASSESSEE HAS RECEIVED THE ADVANCES AS ON 1.7.20 11 AND THEREFORE, THE SRO VALUE AS ON 1.7.2011 SHOULD BE C ONSIDERED AND NOT THE SRO VALUE ON THE DATE OF EXECUTION OF SALE DEED I.,E. 7.10.2011. THIS CONTENTION WAS RAISED AS AN ADDITIO NAL GROUND OF APPEAL BY THE ASSESSEE. THE CIT (A) HOWEVER, DID NO T ADMIT THE ADDITIONAL GROUND OF APPEAL AND CONFIRMED THE ADDIT IONS MADE BY THE AO. AGGRIEVED, THE ASSESSEE IS IN SECOND APPEA L BEFORE US. 5. THE LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMITT ED THAT THE ASSESSEE HAS RECEIVED THE ENTIRE SALE CONS IDERATION OF RS.24.00 LAKHS FOR EACH OF THE PROPERTY BY WAY OF C HEQUES ONLY AND AS IS SEEN FROM THE DATES OF RECEIPT OF THE PAY MENTS, SOME OF THE PAYMENTS WERE RECEIVED AS ON 1.7.2011 ITSELF. H E SUBMITTED THAT THE SRO VALUES WERE REVISED SUBSEQUENTLY, VIDE G.O DATED 21.09.2011, AND THEREFORE, THE SRO VALUE ON THE DAT E OF EXECUTION OF SALE DEED I.E. 7.10.2011, WAS MUCH HIGHER THAN T HE SRO VALUE ON THE DATE OF THE AGREEMENT. HE SUBMITTED THAT BY VIRTUE OF THE AMENDMENT TO SECTION 50C OF THE ACT, THE LEGISLATUR E HAS IT A NO 1028 OF 2016 T BABU REDDY HYDERABAD. PAGE 4 OF 6 PROVIDED THAT WHERE THE DATE OF AGREEMENT AND THE D ATE OF SALE ARE DIFFERENT THEN THE SRO VALUE ON THE DATE OF AGREEME NT IS TO BE CONSIDERED FOR THE PURPOSE OF SECTION 50C OF THE AC T. IN SUPPORT OF THIS CONTENTION, HE HAS PLACED RELIANCE UPON THE DE CISION OF THE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF IT O VS. SMT. MUMTAZ BEGUM IN ITA NO.877/HYD/2015 DATED 4.11.2015 WHEREIN IT HAS BEEN HELD THAT SINCE THE PROCESS OF SALE HAS BEEN INITIATED FROM THE DATE OF AGREEMENT, THE APPLICABI LITY OF PROVISIONS OF SECTION 50C SHOULD BE APPLIED ONLY FROM THE DATE OF SALE AGREEMENT. HE HAS ALSO PLACED RELIANCE UPON THE DEC ISION OF THE COORDINATE BENCH OF THIS TRIBUNAL AT VISAKHAPATNAM IN THE CASE OF SMT. CHALASANI NAGA RATNA KUMARI VS. ITO IN ITA NO.639/VIZAG/2013 DATED 23.12.2016 WHEREIN THE BENC H HAS HELD THAT THE AMENDMENT TO SECTION 50C INSERTED BY THE FINANCE ACT OF 2015 W.E.F. 1.4.2007 IS RETROSPECTIVE IN NAT URE. THE ASSESSEE HAS ALSO FILED ADDITIONAL EVIDENCE IN THE FORM OF BANK STATEMENT TO DEMONSTRATE THAT THE ASSESSEE HAS RECE IVED PART OF THE SALE CONSIDERATION MUCH PRIOR TO THE DATE OF TH E SALE DEED. 6. THE LEARNED DR, HOWEVER, OPPOSED THE ADMISSION O F THE ADDITIONAL GROUND OF APPEAL AND ALSO PLACED REL IANCE UPON THE JUDGMENT OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF PARAMJIT SINGH VS. ITO REPORTED IN 323 ITR 588 ( P&H) IN SUPPORT OF HER CONTENTION THAT THE ORAL EVIDENCE IS NOT ADMISSIBLE. 7. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, WE FIND THAT THE ASSESSEES CONTENTION T HAT THE ASSESSEE HAS RECEIVED PART OF THE SALE CONSIDERATIO N MUCH PRIOR TO THE EXECUTION OF THE SALE DEED, IS SUPPORTED BY THE BANK IT A NO 1028 OF 2016 T BABU REDDY HYDERABAD. PAGE 5 OF 6 STATEMENT. THEREFORE, WE ARE INCLINED TO ADMIT THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE. SINCE THE PAYMENTS ARE BY WAY OF CHEQUES, IT HAS TO BE PRESUMED THAT THERE WAS AN OR AL AGREEMENT OF SALE BETWEEN ASSESSEE AND THE VENDEES, PURSUANT TO WHICH, THEY HAVE PAID SOME AMOUNT TO THE ASSESSEE BY CHEQU ES. THE ORAL AGREEMENT HAS BEEN ACTED UPON AND THEREFORE, THE PR OVISIONS OF SECTION 50C AS ON THE DATE OF ORAL AGREEMENT HAVE T O BE CONSIDERED AS HELD BY US IN THE CASE OF SMT. MUMTAZ BEGUM IN ITA NO. 877/HYD/2015 (CITED SUPRA). IN THE CASE BEF ORE US, THERE IS NO DATE OF ORAL AGREEMENT AND THEREFORE, THE PAY MENT OF ADVANCE ON 1.7.2011 SHOULD BE CONSIDERED AS THE DAT E OF ORAL AGREEMENT. FURTHER, THE LEGISLATURE HAD AMENDED THE PROVISIONS OF SECTION 50C W.E.F. 1.4.2017 AND THE COORDINATE B ENCH OF THE TRIBUNAL AT VISAKHAPATNAM IN THE CASE OF SMT. CHALA SANI NAGA RATNA KUMARI IN ITA NO.639/VIZAG/2013 HAS HELD THE SAID AMENDMENT TO BE APPLICABLE RETROSPECTIVELY. IN VIEW OF THE SAME, WE DEEM IT FIT AND PROPER TO ADMIT THE ADDITIONAL G ROUND OF APPEAL AND ALSO THE ADDITIONAL EVIDENCE AND REMAND THE SAM E TO THE FILE OF THE AO FOR VERIFICATION AND CONSIDERATION IN ACC ORDANCE WITH LAW. 8. IN THE RESULT, ASSESSEES APPEAL IS TREATED AS A LLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH SEPTEMBER, 2017. SD/- SD/- (S.RIFAUR RAHMAN) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 29 TH SEPTEMBER, 2017. VINODAN/SPS IT A NO 1028 OF 2016 T BABU REDDY HYDERABAD. PAGE 6 OF 6 COPY TO: 1 S/SHRI K. VASANTKUMAR, A.V.RAGHU RAM, P.VINOD, AD VOCATES, 610 BABUKHAN ESTATE, BASHEERBAGH, HYDERABAD-01 2 INCOME TAX OFFICER WARD 7(2) 8 TH FLOOR, SIGNATURE TOWERS, KONDAPUR, HYDERABAD 3 CIT (A)-3 HYDERABAD 4 PR. CIT 3 HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER