ANIL C. KILACHAND, MUMBAI V. DCIT CIR 8(1), MUMBAI

ITA 1041/MUM/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54907 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 30-12-2009
• Assessment Year: 2004-2005
• Appeal Filed On: 16-02-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: P K B MENON
• Keywords: Salary income
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, A BENCH, MUMBAI. BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER AND SHRI VIJAY PAL RAO, JUDICIAL MEMBER I.T.A NO.1041/ MUM/2009 ASSESSMENT YEAR: 2004-05 ANIL C KALICHAND, .. APPELLANT KALICHAND HOUSE, 95, NEPEANSEA ROAD, MUMBAI-400 006 PA NO.AACPK 3838 J VS DY. CIT, CIRCLE 8(1) ,. RESPONDEN T AAYAKAR BHAVAN, M.K. ROAD, MUMBAI. APPEARANCES: JITENDRA SANGHVI, FOR THE APPELLANT P.K.B. MENON, FOR THE RESPONDENT DATE OF HEARING : 3.8.2011 DATE OF PRONOUNCEMENT : 12 -08-2011 O R D E R PER PRAMOD KUMAR: 1. BY WAY OF THIS APPEAL, THE ASSESSEE HAS CALLED INTO Q UESTION CORRECTNESS OF CIT(A)S ORDER DATED 12 TH DECEMBER, 2008, IN THE MATTER OF ASSESSMENT UNDER SECTI ON 143(3) OF THE INCOME TAX ACT, 1961, FOR THE ASSESSMEN T YEAR 2004-05. 2. GROUNDS NO.1 TO 4 ARE INTERCONNECTED, WHICH READ AS UNDER: I.T.A NO.1041/ MUM/2009 ASSESSMENT YEAR: 2004-05 2 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD CIT(A) ERRED IN REJECTING TO CONSIDER SECOND AGREEMENT OF SAL E DATED 11.6.2003 SUBMITTED BY THE APPELLANT IN SUPPORT OF TA XABLE CAPITAL GAINS OFFERED FOR TAXATION BY THE APPELLANT. 2. THE LD CIT(A) OUGHT TO HAVE NOTED THE FACT THAT THE LD AO HAD AT NO POINT OF TIME POINTED OUT TO THE APPELLANT THAT EVI DENCE SUBMITTED BY THE APPELLANT IN SUPPORT OF TAXABLE CAPITAL GAINS ON SALE OF PROPERTY WAS NOT SUFFICIENT/NOT ACCEPTABLE. 3. THE LD CIT(A) OUGHT TO HAVE CALLED UPON THE APPE LLANT TO EXPLAIN THE REASONS FOR NOT MAKING AVAILABLE SECOND AGREEMENT OF SA LE DATED 11.6.2003 TO THE AO BEFORE REJECTING TO ADMIT THE E VIDENCE. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LA W, THE LD CIT(A) ERRED IN CONFIRMING THE ACTION OF THE AO DETERMININ G APPELLANTS SHARE OF TAXABLE LONG TERM CAPITAL GAINS ON SALE OF PROPERT Y AT ` .70,29,550 AS AGAINST ` .55,29,550 DECLARED BY THE APPELLANT. 3. BRIEFLY STATED THE RELEVANT MATERIAL FACTS ARE LIK E THIS. THE ASSESSEE IS AN INDIVIDUAL HAVING INCOME FROM SALARY, HOUSE PROPERTY INCOME, OTHER SOURCES, LONG TERM CAPITAL GAINS AND SHORT TERM CAPITAL LOSS. DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE H AS SHOWN LONG TERM CAPITAL GAIN OF ` .63,85,939 BEING THE SALE PROCEEDS OF GIRGAUM BUNGLOW OWNED BY KILACHAND DEVCHAND TRUST, IN WHICH THE ASSESSEE IS A BENE FICIARY OF 20% SHARE. FROM THE COPY OF DEVELOPMENT AGREEMENT DATED 16 TH SEPTEMBER, 2002, THE AO NOTICED THAT THE SAID PROPERTY WAS SOLD FOR ` .12 CRORES WHEREAS IN THE WORKING OF DISTRIBUTION, THE SALE PRICE WAS SHOWN ONLY AT ` .11.25 CRORES. THE ASSESSING OFFICER HAS CALLED UPON THE ASSESSEE TO EXPLAIN THE DISCREPANCY , TO WHICH, THE ASSESSEE HAS SUBMITTED A COPY OF MINUTES OF MEETING CONTENDING THA T A REVISED AGREEMENT WAS MADE AT A LOWER PRICE OF ` .11.25 CRORES DUE TO CERTAIN CLAIMS FOR POSSESSION OF SECOND FLOOR OF NEW BUNGLOW. THE ABOVE CONTENTION W AS DECLINED BY THE AO ON THE GROUND THAT NO OTHER DOCUMENT WAS PRODUCED TO PROVE THAT THE FINAL SALE TRANSACTION WAS FIXED AT ` .11.25 CRORES. ACCORDINGLY, THE AO ADOPTED TOTAL SA LE CONSIDERATION AT ` .12 CRORES AND MADE AN ADDITION OF ` .70,29,550. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) BUT WITHOUT ANY SUCCESS. I.T.A NO.1041/ MUM/2009 ASSESSMENT YEAR: 2004-05 3 4. AT THE TIME OF HEARING, LEARNED COUNSEL FOR THE A SSESSEE HAS FILED A REVISED AGREEMENT DATED 11.9.2003, COPY OF WHICH IS PLACED I N PAPER BOOK AT PAGES 34 TO 71, WHICH SHOWS THAT THE TRANSACTION TOOK PLACE AT A LOWER PRICE THAN THE PRICE STATED IN THE INITIAL AGREEMENT OF SALE. HE, HOWEVER, FAIRLY CONCEDES THAT THE AUTHORITIES BELOW DID NOT HAVE AN OPPORTUNITY TO EXAMINE THIS AGREEMEN T. ACCORDINGLY, HE PRAYED TO REMIT THE MATTER BACK TO THE FILE OF THE AO TO EXA MINE THE REVISED AGREEMENT FOR DENOVO CONSIDERATION. 5. HAVING HEARD THE RIVAL CONTENTIONS AND HAVING PER USED THE MATERIAL ON RECORD, WE FIND THAT THE ASSESSEE HAS FILED A REVISED AG REEMENT DATED 11.9.2003, WHEREIN, IT HAS BEEN CLEARLY MENTIONED THAT THE DEVE LOPERS WILL PAY TO THE OWNERS LUMPSUM CONSIDERATION OF ` .11,25,00,000. IN VIEW OF THIS, AND WITH THE CONSEN T OF THE PARTIES, THE MATTER IS REMITTED TO THE FILE OF T HE ASSESSING OFFICER FOR ADJUDICATION DENOVO, INTER ALIA , IN THE LIGHT OF THE REVISED AGREEMENT MADE BY THE ASSESSEE. WHILE DOING SO, THE ASSESSING OFFICER WILL GIVE DUE AND FAIR O PPORTUNITY OF HEARING TO THE ASSESSEE.. THE MATTER ACCORDINGLY STANDS RESTORED TO THE F ILE OF THE ASSESSING OFFICER. 6. GROUND NOS. 1 TO 4 ARE THUS ALLOWED FOR STATISTICAL PURPOSES. 7. IN GROUND NO.5, THE ASSESSEE HAS RAISED THE FOLLOWING GRIEVANCE: 5. THE LD CIT(A) ERRED IN CONFIRMING DISALLOWANCE M ADE BY AO OF SHORT TERM LOSS OF ` .19,11,837 INCURRED BY THE APPELLANT ON SALE OF CERTAIN SECURITIES ETC. 8. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS CLAIMED SHORT TERM LOSS OF ` .88,00,370. IN RESPONSE TO ASSESSING OFFICERS REQUISITION TO SUBMIT THE DETAILS OF SHO RT TERM CAPITAL LOSS I.E. DATE OF PURCHASE AND SALE OF SECURITIES AND ALSO TO EXP LAIN AS TO WHY SHORT TERM CAPITAL LOSS IN EXCESS OF DIVIDEND SHOULD NOT BE COVERED U/S.94(7) OF THE ACT, THE ASSESSEE HAS ONLY FURNISHED A XEROX COPY OF DIVIDEND RECE IVED. AGAINST THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO THE DETAILS OF SH ORT TERM CAPITAL LOSS OF ` .88,00,370. IN ITS REPLY, THE ASSESSEE SUBMITTED THE DE TAILS OF SHORT TERM LOSS FOR THE PERIOD APRIL, 2003 TO MARCH, 2004 AND CONTENDED THA T MOST OF THE INVESTMENTS WERE I.T.A NO.1041/ MUM/2009 ASSESSMENT YEAR: 2004-05 4 HELD BY HIM FOR MORE OR CLOSE TO 60 DAYS. THE EXPLA NATION SO FURNISHED BY THE ASSESSEE DID NOT FIND FAVOUR BY THE ASSESSING OFFICER. HE WAS OF THE VIEW THAT IT IS CLEAR CASE OF DIVIDEND STRIPPING. THE AO FURTHER OB SERVED THAT THE DIVIDEND INCOME HAS NOT BEEN SET OFF AGAINST THE LOSS OF ` .19,11,387 AND, ACCORDINGLY, HE DISALLOWED THE CAPITAL LOSS OF ` .19,11,387 AS PER PROVISIONS OF SECTION 94(7). AGGRIEV ED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) . THE CIT(A) OBSERVED THAT THE TRANSFER OF SECURITIES AND UNITS IS WITHIN A PERIO D OF THREE MONTHS AND CLEARLY COVERED UNDER THE PROVISIONS OF SECTION 94(7) OF THE A CT. ACCORDINGLY, HE CONFIRMED THE ACTION SO TAKEN BY THE ASSESSING OFFICER. 9. WHILE, THE ASSESSEE IS NOT SATISFIED AND IS IN FURTHER A PPEAL BEFORE US, NO SPECIFIC ARGUMENTS HAVE BEEN RAISED BY THE ASSESSEE. WE, THEREFORE, TREAT THIS GROUND OF APPEAL AS ABANDONED AND NOT PRESSED. DISMISSED ACCORDINGLY. 10. GROUND NO.5 IS THUS DISMISSED. 11. IN THE RESULT, APPEAL IS PARTLY ALLOWED IN THE TE RMS INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT ON 12 TH AUGUST, 2011 SD/- (VIJAY PAL RAO) JUDICIAL MEMBER SD/- (PRAMOD KUMAR) ACCOUNTANT MEMBER MUMBAI, DATED 12 TH AUGUST, 2011 PARIDA COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS),VIII, MUMBAI 4. COMMISSIONER OF INCOME TAX, VIII , MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH A MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI