ACIT, Circle-7(1), Hyderabad, Hyderabad V. Gollu Sudha Kiran, Hyd, Hyderabad

ITA 1098/HYD/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2570 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-09-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 26-07-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 18-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMAN MALIK
• Assessee Lawyers: K A SAI PRASAD
• Keywords: Sale consideration of property below Jantri Value; Opportunity of being heard
• Section: 50C; 142(1); 148

Judgement Text

ITA NO 109 8 OF 2016 GOLLU SUDHA KIRAN HYDERABAD PAGE 1 OF 8 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S.RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO.1098/HYD/2016 (ASSESSMENT YEAR: 2007-08) ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 7(1) HYDERABAD VS SRI GOLLU SUDHA KIRAN, HYDERABAD PAN: BPBPG 0802 D (APPELLANT) (RESPONDENT) FOR REVENUE : SMT. SUMAN MALIK, DR FOR ASSESSEE : SHRI K.A. SAI PRASAD O R D E R PER SMT. P. MADHAVI DEVI, J.M. THIS IS REVENUES APPEAL FOR THE A.Y 2007-08. THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE AS UNDE R: 1. THE LEARNED CIT(A) ERRED BOTH IN LAW AND ON FACTS OF THE CASE. 2. LD. CIT(A) ERRED IN DIRECTING THAT CAPITAL GAINS AROSE IN A. Y.2005-06 WHEN THERE WAS NO SALE. 3. LD. CIT(A) ERRED IN CONSIDERING THE TRANSACTION IN F.Y.2004-05 BETWEEN THE ASSESSEE AND HIS FATHER IS SALE. 4. LD. CIT(A) FAILED TO APPRECIATE THAT THE SALE HAS TAKEN PLACE IN F.Y.2006-07 RELEVANT FOR A. Y.2007-08. DATE OF HEARING : 27.07.2017 DATE OF PRONOUNCEMENT : 29.09.2017 ITA NO 109 8 OF 2016 GOLLU SUDHA KIRAN HYDERABAD PAGE 2 OF 8 5. ANY OTHER GROUND(S) THAT MAY BE URGED AT THE TIME OF HEARING . 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, A N INDIVIDUAL, IS A NON-RESIDENT INDIAN. THE AO GOT IN FORMATION THAT THE ASSESSEE HAS SOLD PLOTS OF LAND BEARING NOS. 20 6(PART), 207, 208 AND 209 ADMEASURING 1900 SQ. YDS IN SURVEY NO.1 16 SITUATED AT ALAKAPOOR TOWSHIP IN SECTOR-III, IN BLOCK-B OF N EKNAMPUR VILLAGE, RAJENDRANAGAR MANDAL, RANGA REDDY DISTT. T O THREE PERSONS SHRI RAJENDER KUMAR AGARWAL, SRI ASHOK KUMA R AGARWAL AND SRI PRAVEEN KUMAR AGARWAL FOR A TOTAL SALE CONS IDERATION OF RS.11,40,000 ON 9.3.2007. IT WAS NOTICED THAT THE A SSESSEE HAS NOT FILED HIS RETURN OF INCOME FOR THE A.Y 2007-08. IN VIEW OF THE SAME, THE AO REOPENED THE ASSESSMENT BY ISSUANCE OF NOTICE U/S 148 OF THE ACT DATED 11.3.2014. THE ASSESSEE, VIDE LETTER DATED 29.3.2014, SUBMITTED THAT HE IS AN NRI SINCE LAST S EVERAL YEARS AND IS PRESENTLY RESIDING IN USA. HE SUBMITTED THAT HE VISITED INDIA ON 5.2.2005 AND LEFT FOR USA ON 4.3.2005 AND ALL THESE FACTS ARE CLEAR FROM THE COPIES OF THE PASSPORT SUBMITTED BY HIM. HE FURTHER SUBMITTED THAT DURING HIS VISIT TO INDIA, H E EXECUTED AN AGREEMENT OF SALE CUM-GPA IN FAVOUR OF HIS FATHER S RI GOLLU APPA RAO AND HANDED OVER THE POSSESSION OF THE PROPERTY TO HIM AND THEREFORE, BY VIRTUE OF THE SAID DOCUMENT, THE PROP ERTY WAS TRANSFERRED TO HIS FATHER ON 2.3.2005 AND THE ASSES SEE IS NOT HAVING ANY INCOME AS SUCH FOR THE A.Y 2007-08 AND TH EREFORE, HE WAS NOT LIABLE TO FILE ANY RETURN OF INCOME AS SUCH . 3. THE AO, THEREAFTER, ISSUED STATUTORY NOTICES U/S 142(1) AND 143(2) OF THE ACT WHICH WAS ALSO SERVED ON THE ASSESSEE. THE ITA NO 109 8 OF 2016 GOLLU SUDHA KIRAN HYDERABAD PAGE 3 OF 8 ASSESSEE THROUGH HIS FATHER, FILED HIS RETURN OF IN COME, DECLARING NIL INCOME AND VIDE LETTER DATED 2.2.2015 SUBMITT ED THAT THE PROPERTY WAS TRANSFERRED TO HIS FATHER VIDE REGISTE RED AGREEMENT OF SALE CUM GPA VIDE DOCUMENT NO.1732/2005 DATED 2.3.2 005 FOR A CONSIDERATION OF RS.4,09,500. IT WAS SUBMITTED THAT SUBSEQUENTLY HIS FATHER HAS SOLD THE SAID PROPERTY TO THE ABOVE VENDEES MENTIONED IN THE SALE DEED VIDE DOCUMENT NO.132 OF 2005 FOR A CONSIDERATION OF RS.11,40,000. THUS, THE ASSESSEE R EITERATED THAT THE CAPITAL GAINS ARE TO BE ASSESSED FOR THE A.Y 200 5-06 AND NOT FOR THE A.Y 2007-08. 4. THE AO, HOWEVER, WAS NOT CONVINCED WITH THE ASSESSEES CONTENTION. HE OBSERVED THAT THE AGREEME NT OF SALE CUM GPA EXECUTED BY THE ASSESSEE IN FAVOUR OF HIS F ATHER IS NOT A VALID ONE AND A POWER OF ATTORNEY IS NOT AN INSTRUM ENT OF TRANSFER BUT THAT IT ONLY AUTHORIZES THE ASSESSEES FATHER T O SELL HIS PROPERTY ON BEHALF OF HIM. THUS, ACCORDING TO HIM, THE GPA HOLDER HAS SOLD THE PROPERTY ON 9.3.2007 FOR A CONSIDERATI ON OF RS.11,40,000. HE OBSERVED THAT THE MARKET VALUE AS PER THE STAMP DUTY AUTHORITIES IS RS.66,50,000 AND THEREFOR E, HE TOOK IT AS SALE CONSIDERATION U/S 50C OF THE ACT. ACCORDING LY, HE BROUGHT THE LONG TERM CAPITAL GAIN OF RS.66,50,000 TO TAX. THE AO ALSO OBSERVED THAT THE GPA HOLDER ALSO HAS NOT SHOWN THE SALE CONSIDERATION OF RS.66,50,000 IN HIS RETURN OF INCO ME FOR THE A.Y 2007-08 AND THEREFORE, THE ASSESSEES CONTENTION OF TRANSFER OF PROPERTY DURING A.Y 2005-06 IS AN AFTERTHOUGHT TO AV OID TAXABLE INCOME IN HIS HANDS. AGGRIEVED BY THE ABOVE FINDING S OF THE AO AND THE DEMANDS RAISED THERE UNDER, THE ASSESSEE FI LED AN APPEAL BEFORE THE CIT (A) WHO ALLOWED THE SAME. AGGRIEVED BY THE RELIEF ITA NO 109 8 OF 2016 GOLLU SUDHA KIRAN HYDERABAD PAGE 4 OF 8 GRANTED BY THE CIT (A), THE REVENUE IS IN APPEAL BE FORE US RAISING THE ABOVE GROUNDS OF APPEAL. 5. THE LEARNED DR, WHILE SUPPORTING THE ORDER OF TH E AO, SUBMITTED THAT THE AGREEMENT OF SALE CUM GPA BETWEE N THE ASSESSEE AND HIS FATHER IS NOT A VALID DOCUMENT AND IF AT ALL IT IS TO BE CONSIDERED, IT CAN ONLY BE TREATED AS A GPA. SHE SUBMITTED THAT THERE IS NO PROOF OF THE CONSIDERATION OF RS.4 ,09,500 PASSING ON FROM THE ASSESSEES FATHER TO THE ASSESSEE. THER EFORE, ACCORDING TO HER, IT IS ONLY A DOCUMENT ALLOWING THE FATHER T O DO CERTAIN ACTS ON BEHALF OF HIS SON AND NO RIGHT OR TITLE IN THE P ROPERTY WAS TRANSFERRED TO THE GPA HOLDER. FURTHER, SHE ALSO SUB MITTED THAT THE ASSESSEE HAS NOT REFLECTED THE CAPITAL GAIN IN HIS RETURN OF INCOME FOR THE A.Y 2005-06 NOR OFFERED THE CAPITAL G AIN HIS HANDS DURING THE A.Y 2007-08. THEREFORE, THE ENTIRE ARGUME NT OF THE TRANSFER OF TITLE AND THE POSSESSION BEING HANDED O VER TO THE FATHER IS AN AFTERTHOUGHT TO AVOID PAYING TAX IN EI THER OF THE HANDS. SHE FURTHER SUBMITTED THAT IF THE TRIBUNAL A CCEPTS THE CONTENTION OF THE ASSESSEE THAT THERE IS A TRANSFER OF PROPERTY FROM THE ASSESSEE TO HIS FATHER BY VIRTUE OF THE AGREEME NT OF SALE CUM GPA, THEN UNDER THE PROVISIONS OF EXPLANATION 3 TO SECTION 153 OF THE ACT, THE TRIBUNAL MAY DIRECT THE AO TO BRING TH E CAPITAL GAINS TO TAX IN THE HANDS OF HIS FATHER. 6. THE LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTH ER HAND, REITERATED THE SUBMISSIONS MADE BY THE ASSESS EE BEFORE THE AO AND THE CIT (A) AND SUPPORTED THE FINDINGS OF TH E CIT (A). HE SUBMITTED THAT THERE IS NO PROVISION IN LAW THAT TH E PROPERTY ITA NO 109 8 OF 2016 GOLLU SUDHA KIRAN HYDERABAD PAGE 5 OF 8 CANNOT BE TRANSFERRED BY A SON TO HIS FATHER FOR A VALID CONSIDERATION. HE SUBMITTED THAT THE AGREEMENT OF S ALE CUM GPA IS A REGISTERED DOCUMENT AND THE POSSESSION WAS ACC ORDINGLY HANDED OVER TO THE FATHER AND THEREFORE, THE TRANSF ER IS COMPLETE. HE SUBMITTED THAT SINCE THE TRANSFER HAS TAKEN PLAC E BETWEEN THE ASSESSEE AND HIS FATHER DURING THE FINANCIAL YEAR R ELEVANT TO THE A.Y 2005-06, THE ASSESSEE IS NOT LIABLE TO PAY ANY T AX DURING THE A.Y 2007-08 AND THEREFORE, THE DIRECTIONS OF THE AO HAVE RIGHTLY BEEN SET ASIDE BY THE CIT (A). 7. AS REGARDS THE PRAYER OF THE DR THAT DIRECTIONS SHOULD BE GIVEN IN ACCORDANCE WITH THE EXPLANATION 3 TO SU B SECTION (3) TO SECTION 153 OF THE ACT, HE SUBMITTED THAT THERE WAS NO SUCH GROUND RAISED BY THE REVENUE ALONG WITH THE MEMORAN DUM OF APPEAL AND THEREFORE, THE SAID GROUND CANNOT BE ENT ERTAINED AT THIS STAGE AND PARTICULARLY WHEN NO NOTICE HAS BEEN GIVEN TO ASSESSEES FATHER BEFORE GIVING SUCH A DIRECTION. 8. HAVING CONSIDERED THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, THERE IS NO DISPUTE ABOUT THE A GREEMENT OF SALE CUM GPA BEING A REGISTERED DOCUMENT AND ALSO S UBSEQUENT SALE DEEDS BEING REGISTERED. COPIES OF THE AGREEMEN T OF SALE CUM GPA AS WELL AS THE SUBSEQUENT SALE DEED HAVE BEEN F ILED BEFORE US. AS PER THE AVERMENTS IN THE AGREEMENT OF SALE C UM GPA, THE ASSESSEE IS THE VENDOR AND HIS FATHER SHRI GOLLU AP PA RAO IS THE VENDEE AND THE PROPERTY HAS BEEN SOLD FOR A CONSIDE RATION OF RS.4,09,500 AND IT IS ALSO MENTIONED THAT THE VENDE E HAS ALREADY PAID THE ENTIRE SALE CONSIDERATION TO THE VENDOR AN D THAT THE ITA NO 109 8 OF 2016 GOLLU SUDHA KIRAN HYDERABAD PAGE 6 OF 8 VENDOR HAS DELIVERED THE VACANT POSSESSION OF THE S CHEDULED PROPERTY TO THE VENDEE WITH ALL THE RIGHTS AND TITL E AND INTEREST WHICH HE HAS BY VIRTUE OF BEING THE OWNER. THEREAFT ER, THE VENDOR HAS GIVEN GPA TO HIS FATHER. IT IS STATED BY THE LE ARNED COUNSEL FOR THE ASSESSEE THAT THE AGREEMENT OF SALE CUM GPA HAS BEEN ENTERED ONLY TO SAVE THE STAMP DUTY WHICH COULD BE REFUNDED WHEN THE FINAL SALE DEED HAS BEEN ENTERED INTO BUT ACCORDING TO HIM, THE ENTIRE SALE CONSIDERATION HAS BEEN RECEIVE D BY THE ASSESSEE AND THEREFORE, THE TRANSFER IS COMPLETE. H E SUBMITTED THAT HE DOES NOT HAVE ANY INSTRUCTIONS AS TO WHETHE R THE ASSESSEE HAS OFFERED CAPITAL GAIN DURING THE A.Y 2004-05 AND THAT THE REVENUE IS FREE TO TAKE ACTION IN ACCORDANCE WITH T HE LAW. IN VIEW OF THE ABOVE AND AS SEEN FROM THE FINAL REGISTERED SALE DEED, THE ASSESSEE IS SHOWN AS VENDOR REPRESENTED BY A GPA HO LDER SHRI GOLLU APPA RAO AND THE PROPERTY HAS BEEN SOLD FOR A CONSIDERATION OF RS.11,40,000 WHICH HAS BEEN PAID T HROUGH CHEQUES AND THE STAMP DUTY PAID ON THE AGREEMENT OF SALE CUM GPA HAS BEEN ADJUSTED AGAINST THE STAMP DUTY PAID O N THE FINAL SALE DEED. THE REVENUE ACCEPTS THAT THE FINAL SALE DEED EXECUTED BY THE GPA HOLDER IN FAVOUR OF 3 RD PARTY AS A VALID DOCUMENT. HOWEVER, THE REVENUE IS ONLY CONTESTING THE VALIDIT Y OF THE REGISTERED AGREEMENT OF SALE. A DOCUMENT HAS TO BE EITHER ACCEPTED OR REJECTED IN TO-TO AND CANNOT BE CONSIDE RED AS PARTLY IN FAVOUR AND PARTLY AGAINST THE ASSESSEE. THE AGREEME NT OF SALE- CUM-GPA IS ONE SINGLE DOCUMENT AND IS ALSO A REGIST ERED DOCUMENT. BOTH THE AGREEMENT OF SALE CUM GPA AND TH E FINAL SALE DEEDS ARE REGISTERED DOCUMENTS AND THE ASSESSEES C ONTENTION THAT THERE IS A TRANSFER OF PROPERTY IN THE A.Y 2005 -06 CANNOT BE SAID TO BE AN AFTERTHOUGHT. THERE IS NO PROHIBITION AGAINST THE SALE ITA NO 109 8 OF 2016 GOLLU SUDHA KIRAN HYDERABAD PAGE 7 OF 8 OF PROPERTY BETWEEN A SON AND HIS FATHER AS LONG AS BOTH THE PARTIES ARE COMPETENT TO ENTER INTO A CONTRACT. AS LONG AS IT IS NOT A PROHIBITED TRANSACTION, THE DOUBTS RAISED BY THE REVENUE CANNOT BE SUSTAINED WITHOUT ANY APPROPRIATE EVIDENCE. BY V IRTUE OF AGREEMENT OF SALE, WITH HANDING OVER OF THE POSSESS ION, THERE IS A VALID TRANSFER U/S 2(47)(V) OF THE I.T. ACT THOUGH THE LEGAL TITLE GETS TRANSFERRED ONLY ON THE REGISTRATION OF THE SALE DE ED. THEREFORE, THE ASSESSEE HAS TO BE SHOWN AS THE VENDOR IN THE SUBSE QUENT AND FINAL SALE DEED EXECUTED IN FAVOUR OF THE THREE PER SONS. THEREFORE, THE MERE MENTION OF THE ASSESSEE IN THE SALE DEED A S THE VENDOR DOES NOT CONFER ANY TITLE ON HIM WHICH HE HAS ALREA DY TRANSFERRED TO HIS FATHER BY VIRTUE OF THE AGREEMENT OF SALE CU M GPA. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO HAS SUBMITTED THAT THE ENTIRE SALE CONSIDERATION OF RS.11,40,000 HAS ALREA DY BEEN PAID TO THE ASSESSEES FATHER VIDE CHEQUES MENTIONED IN THE SALE DEED AND THIS FACT HAS NOT BEEN REFUTED BY THE DEPARTMENT. T HE LEARNED DRS SUBMISSION THAT UNDER EXPLANATION 3 TO SECTION 153 OF THE I.T. ACT, A DIRECTION SHOULD BE GIVEN TO TAX THE FA THER, THE ULTIMATE OWNER, IS ALSO NOT SUSTAINABLE BECAUSE THE REVENUE HAS NOT RAISED ANY SUCH GROUND OF APPEAL ALONG WITH FORM 36 AND SI NCE THE OTHER PERSON WAS NOT GIVEN AN OPPORTUNITY OF BEING HEARD BEFORE PASSING SUCH ORDER. THE HON'BLE SUPREME COURT IN TH E CASE OF RAJINDER NATH VS. CIT REPORTED IN (1979) 120 ITR 14 (S.C) HAS HELD THAT THE FINDING THAT THE INCOME REPRESENTS THE INC OME OF ANOTHER PERSON REQUIRES A PROPER ENQUIRY AND FOR THAT PURPO SE, AN OPPORTUNITY OF BEING HEARD WAS NECESSARY UNDER EXPL ANATION 3 TO SECTION 153(3) OF THE ACT. THE ABOVE PRINCIPLE HAS BEEN REITERATED BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF ITO VS. RAMNARAIN SONS P LTD (1979) 119 ITR 83 (BOM.),AND T HE HON'BLE ITA NO 109 8 OF 2016 GOLLU SUDHA KIRAN HYDERABAD PAGE 8 OF 8 ALLAHABAD HIGH COURT IN THE CASES OF GUPTA TRADERS VS. CIT (1982) 135 ITR 504 (ALL.) AND RANI RAJENDRA KUMARI BA VS. ITO (1981) 130 ITR 708 (ALL.). IN THE CASE OF RANI RAJENDRA KU MARI BA, THE RE-ASSESSMENT NOTICE WAS ISSUED TO THE WIFE IN ORDE R TO GIVE EFFECT TO A FINDING BY THE TRIBUNAL IN AN APPEAL BY THE HU SBAND THAT THE INCOME OF THE WIFE COULD NOT BE INCLUDED IN THE TOT AL INCOME OF THE HUSBAND UNDER THE THEN SECTION 64(III) OF THE ACT. SINCE SUCH A FINDING WAS GIVEN WITHOUT GIVING THE WIFE AN OPPORT UNITY OF BEING HEARD IN THE COURSE OF THE HUSBANDS APPEAL, IT WAS HELD THAT THE INITIATION WHICH WAS BEYOND THE NORMAL PERIOD OF LI MITATION COULD NOT BE UPHELD U/S 150 BECAUSE THE CONDITION OF EXPL ANATION 3 TO SECTION 153 WAS NOT FULFILLED. THEREFORE, THE SAID GROUND RAISED ORALLY BY THE LEARNED DR, ALSO CANNOT BE ENTERTAINE D. 9. IN THE RESULT, REVENUES APPEAL IS DISMISSED. 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 COPY TO: 1 ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 7(1) RO OM NO.812, 8 TH FLOOR, SIGNATURE TOWERS, OPP: BOTANICAL GARDENS, KON DAPUR, HYDERABAD 2 SRI GOLLU SUDHA KIRAN, D.NO.13-6-432/3 SRINIVASA NAGAR, RING ROAD, HYDERABAD 3 CIT (A)-3 HYDERABAD 4 PR. CIT 3 HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER