K. Nagarjuna Reddy, Kurnool, Hyderabad V. ITO, Ward-2, Kurnool, Kurnool

ITA 1122/HYD/2016

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 0858 (ITAT-HYDERABAD)
• Duration Of Justice: 4 year(s) 10 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2021
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB-B
• Next Hearing Date: 08-06-2021
• Assessment Year: 2006-2007
• Appeal Filed On: 23-08-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Invalid notice; Competent authority; Set aside; Capital Gains
• Section: 201; 192; 13; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD (THROUGH VIRTUAL CONFERENCE) BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER S.NO. ITA NO. AY APPELLANT RESPONDENT 1. 1123/H/2016 2006 - 07 K. VISHWESHWAR REDDY, L/R BHEEMI REDDY, KURNOOL PAN - AMSPK 4325J INCOME - TAX OFFICER, WARD 2 , KURNOOL. 2. 1127/H/2016 2006 - 07 K. SURENDRANATH REDDY, KURNOOL PAN - DNTPK 1541M - DO - 3. 1122/H/2016 2006 - 07 K. NAGARJUNA REDDY, KURNOOL PAN - AYUPR 3026K - DO - 4. 1124/H/2016 2006 - 07 K. BHEEMI REDDY, KURNOOL. PAN - AMSPK4325J - DO - 5. 1125/H/2016 2006 - 07 K. THIRUMALESWARA REDDY, KURNOOL. PAN - AIEPR 4934Q - DO - ASSESSEE BY: SHRI K.C. DEVDAS REVENUE BY: SHRI ROHIT MUJUMDAR DATE OF HEARING: 08 /0 6/2021 DATE OF PRONOUNCEMENT: 13 /0 7 /2021 I TA NO. 1122 /HYD /20 1 6 AND OTHERS K. NARASIMHA REDDY, KURNOOL AND OTHERS : - 2 - : O R D E R PER L.P. SAHU, A.M. : ALL THESE APPEAL S FILED BY THE ASSESSEE S BELONG TO A FAMILY ARE DIRECTED AGAINST CIT(A) , KURNOOL S SEPARATE ORDER S, ALL DATED 30/05/2016 FOR AY 20 1 06 - 07 INVOLVING PROCEEDINGS U/S 14 3(3) RWS 147 OF THE INCOME - TAX ACT, 1961; IN SHORT THE ACT . AS IDENTICAL ISSUES ARE INVOLVED IN APPEALS IN ITA NOS. 1123 & 1127/HYD/2016, THE SAME WERE CLUBBED AND HEARD TOGETHER AND, THEREFORE, A COM MON ORDER IS PASSED FOR THE SAKE OF CONVENIENCE. 1.1 THE GROUNDS RAISED IN ITA NO. 1123/HYD/2016 IN THE CASE OF LATE K. VISWHESHWAR REDDY ARE AS UNDER: 1. THE ORDER OF THE HON'BLE C!T(A) IS ERRONEOUS IN LAW AS WELL AS FACTS OF THE CASE. 2. THE HON'BLE CIT(A) OUGHT TO HAVE OBSERVED THAT THE ASSESSING OFFICER ERRED IN ASSESSING THE CAPITAL GAINS OF RS.40 LAKHS IN THE HANDS OF THE APPELLANT IN THE STATUS OF INDIVIDUAL. 3. THE HON'BLE CIT(A) OUGHT TO HAVE APPRECIATED THAT THE TRANSACTION OF SALE OF PROPERTY BELONGING TO THE SHARE OF K.VISHWESHWAR REDDY [HUF] HAS TAKEN PLACE ON 02.02.2006 AND THEREFORE NO CAPITAL GAINS ARISES IN THE HANDS OF THE INDIVIDUAL I.E. K.VISHWESHWAR REDDY. 4. THE HON'BLE CIT(A) OUGHT TO HAVE APPRECIATED THAT THE FA CT OF PARTITION AS PER DOCUMENT DT. 31.12.1966 BETWEEN UMA MAHESHWAR REDDY, K.SURENDRANATH REDDY AND K.VISHWESHWAR REDDY, IN WHICH THE SUBJECT PROPERTY IS DIVIDED AMONG THE THREE BROTHERS AND FORMED INDEPENDENT HUF'S. I TA NO. 1122 /HYD /20 1 6 AND OTHERS K. NARASIMHA REDDY, KURNOOL AND OTHERS : - 3 - : 5. THE HON'BLE CIT(A) OUGHT TO HAVE OBSERVED THAT THE ASSESSING OFFICER ERRED IN ASSUMING THAT THE INCOME FROM CAPITAL GAINS IS TO BE TAXED IN THE HANDS OF INDIVIDUAL STATUS, IGNORING THE FAMILY TREE DRAWN BY HIMSELF WHEREIN THE STATUS OF K.UMA MAHESHWAR REDDY, K.VISHWESHWAR REDDY, K.SURENDR ANATH REDDY & K.V.KRISHNA REDDY IS SHOWN AS THAT OF HUF. 6. THE HON'BLE CIT(A) OUGHT TO HAVE OBSERVED THAT THE NOTICE U/S.148 WAS ISSUED WITHOUT MENTIONING ANY STATUS OF THE APPELLANT AND THEREFORE, IT WAS AN INVALID ONE AND THE ASSESSMENT MADE CONSEQUEN T TO ISSUANCE OF SUCH INVALID NOTICE CANNOT BE HELD AS VALID ONE. 7. ANY OTHER GROUND WILL BE RAISED AT THE TIME OF HEARING. 2. THE FACTS AS TAKEN FROM ITA NO. 112 3 /HYD/2016 ARE THAT THE AO OBSERVED THAT THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUT INY ON THE BASIS OF NON - FILING OF RETURNS AND NON - PAYMENT OF CAPITAL GAINS TAX FOR AY 2006 - 07, THEREBY RESULTING IN ESCAPEMENT OF INCOME. ACCORDINGLY, THE AO ISSUED NOTICE U/S 148 OF THE ACT ON 28/03/2013 AND SINCE NO RESPONSE FROM THE ASSESSEE, SUMMONS WE RE ISSUED AND AGAIN A LETTER DATED 19/02/2014 WAS ISSUED TO THE ASSESSEE. THE AR OF THE ASSESSEE FILED THE REQUIRED INFORMATION AS CALLED FOR. 2.1 THE AO OBSERVED THAT THE ASSESSEE (LATE) SRI. K. VISHWESHWAR REDDY, SRI K. SURENDRANATH REDDY AND SRI K.V. KRISHNA REDDY HAVE SOLD A LAND OF AC 2.15 GTS AT SURVEY NO.122(OLD) AND 160/1 (NEW). SITUATED AT ROAD NO.10. I TA NO. 1122 /HYD /20 1 6 AND OTHERS K. NARASIMHA REDDY, KURNOOL AND OTHERS : - 4 - : BANJARA HILLS, HYDERABAD , FOR SALE CONSIDERATION OF RS.2.00 CRORES, WHICH WAS SHARED @20% BY VENDORS NO.1 & 2 AND 60% BY VENDOR NO.3 (AS PER PAGE NO.2 OF THE SALE DEED), HENCE, THE CAPITAL GAINS ATTRACTED @20% ON RS.2.00 CRORES, IN RESPECT OF SHARE OF THE ASSESSEE, FOR THE PURPOSE OF CALCULATION OF CAPITAL GAIN TAX: ON ACCOUNT OF THE ABOVE SALE CONSIDERA TION. 2. 2 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ARS OF THE ASSESSEE PRODUCED COPY OF AGREEMENT OF SALE - CUM - GPA & COPY OF PARTITION DEED AMONG SRI UMA MAHESHWAR REDDY. (LATE) SRI K. VISHWESWARA REDDY AND SRI K. SURENDRANATH REDDY. THEY STATED THAT THE SCHEDULE PROPERTY (AS PER PAGE - 2 OF THE SALE DEED) WAS HELD TO BE A PART OF THE JOINT FAMILY PROPERTY. AS IT WAS PURCHASED BY LATE K. UMA MAHESHWAR REDDY AS A KARTA OF THE HINDU UNDIVIDED FAMILY. THE VENDOR NO.1 MR.KV KRISHNA REDDY IS THE SON OF LATE K. UMA MAHESHWAR REDDY, AND VENDOR NOS. 2 AND 3 I.E. SRI K. VISHWESWARA REDDY AND SRI K. SURENDRANATH REDDY ARE THE BROTHERS OF SRI UMA MAHESHWAR REDDY. ALL THESE THREE PERSONS (VENDORS NO.1.2 &3) ARE THE OWNERS OF THE SCHEDULE PROPERTY, AS PER THE SALE D EED. THE SCHEDULE PROPERTY WAS SOLD TO SMT.V. KAMALAMMA. HYDERABAD, SRI T. ASHOK KUMAR AND M R. SHANTHA SRI RAM CONSTRUCTIONS PVT. . HYDERABAD. I TA NO. 1122 /HYD /20 1 6 AND OTHERS K. NARASIMHA REDDY, KURNOOL AND OTHERS : - 5 - : 2. 3 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ARS OF THE ASSESSEE STATED THAT LATE K. UMA MAHESWAR RED DY PURCHASED PROPERTY IN SY.NO,122 (OLD). 160F1(NEW) ADMEASURING AC2 - 10GTS SITUATED AT ROAD NO.10, BANJARA HILLS OF SHAIPET VILLAGE & MANDA L , HYDERABAD DISTRICT, IN THE CAPACITY OF KARTA OF THE HINDU UNDIVIDED FAMILY. IT WAS FURTHER STATED THAT A TOTAL PA RTITION WAS TAKEN PLACE ON 31.12.1966 AMONG SRI K. UMA MAHESWAR REDDY. (LATE) K. VISHWESWARA REDDY & SRI K. SURENDRANATH REDDY, BEING CO - PARCENERS OF THE HUF. THE BIGGER HUF WAS DIVIDED INTO THREE INDEPENDENT HUF'S AS PER THE CUSTOM OF THE HINDU FAMI LI ES, WHICH IS. ALSO RECOGNIZED BY THE I.T. ACT. AFTER DEMISE OF K. UMA MAHESHWAR REDDY, HIS SON SRI K.V. KRISHNA REDDY BECAME KAR TA OF THE HUF, IN RESPECT OF LATE UMA MAHESHWAR REDDY'S SHARE OF PROPERTIES RECEIVED ON PARTITION. THE PROPERTY AT BANJARA HILLS WA S ALSO PARTITIONED AND' AGREED TO 'BE SHARED 1/3RD EACH, BY THE THREE HUFS. THE ARS OF THE ASSESSEE FURTHER STATED THAT SUBSEQUENTLY. THIS PROPERTY WAS TRANSFERRED TO SMT. V . KAMALAMMA , SRI T. ASHOK KUMAR AND M/S. SHANTA SRI RAM CONSTRUCTIONS PVT. LTD., ON 2.2.2006, VIDE AGREEMENT OF SALE - CUM - GPA REGISTERED AS OOCURNERN NO.P113/06. DT.3.2.2Q06, FOR A CONSIDERATION OF RS.2 CRORES, WHICH IS TO BE SHARED AMONG THE THREE HUF ASSESSEES EQUALLY. 2 .4. THE ARS OF THE ASSESSEE FURTHER STATED THAT AS THE TRANSACTIO N HAS NOT TAKEN PLACE IN THE HANDS OF INDIVIDUAL, I TA NO. 1122 /HYD /20 1 6 AND OTHERS K. NARASIMHA REDDY, KURNOOL AND OTHERS : - 6 - : SRI K. NAGARJUNA REDDY (ASSESSEE), A 'NIL' RETURN WAS FILED IN RESPONSE TO NOTICE U/S.148 OF THE I. T. ACT. 2. 5 THE ARS OF THE ASSESSEE FURTHER STATED THAT THE SHARE OF LAND OF HUF - KV. KRISHNA REDDY, WAS TRANSFERRED ALONG WITH THE PROPERTY OF (LATE) K VISHWESWARA REDDY (HUF) AND SRI K. SURENDRANATH REDDY (HUF) TO SMT.V. KAMALAMMA, HYDERABAD AND TWO OTHERS FOR A CONSIDERATION OF RS.2.00 CRORES (RUPEES TWO CRORES ONLY), VIDE AGREEMENT OF SALE - CUM - GPA, REGISTERED ON 4.2.2006, BEFORE THE SUB - REGISTRAR, BANJARA HILLS, HYDERABAD. THEY HAVE FURTHER SUBMITTED THAT THE SHARE OF LAND TRANSFERRED ON 4.2.2006 IS THE PROPERTY OF SRI K. NAGARJUNA REDDY, LEGAL HEIR O F (LATE) K. VISHWESWARA REDDY (HUF), AS THE SAME IS RECEIVED ON ACCOUNT OF PARTITION OF HUF OF (LATE) SRI K. UMA MAHESHWAR REDDY AND OTHER TWO CO - PARCENERS. THE INCOME TAX DEPARTMENT HAS NOT ISSUED ANY NOTICE IN THE NAME OF SRI K. NAGARJUNA REDDY (HUF). T HEY STATED THAT THE LD. AO ISSUED A NOTICE U/S.148 IN THE NAME OF SRI K NAGARJUNA REDDY, INDIVIDUAL. HENCE, THEY SUBMITTED THAT THE ASSESSEE, SRI K. NAGARJUNA REDDY, IN THE CAPACITY OF INDIVIDUAL, HAS NO INCOME FROM ANY SOURCE. THEREFORE, A 'NIL' RETURN IS SUBMITTED IN RESPONSE TO THE NOTICE U/S.148 OF THE I.T. ACT. 2.6 . IN VIEW OF THE ABOVE, THE AO OBSERVED THAT IT IS A CLEAR FACT THAT THE SCHEDULE PROPERTY WAS SOLD FOR AN AMOUNT OF RS.2.00 CRORES BY THE ASSESSEE, (LATE) K. VISHWESWARA I TA NO. 1122 /HYD /20 1 6 AND OTHERS K. NARASIMHA REDDY, KURNOOL AND OTHERS : - 7 - : REDDY, SRI K SURENDRANATH REDDY, AND SRI K.V. KRISHNA REDDY. THE ASSESSEE AND THE ARS OF THE ASSESSEE HAVE ALSO ACCEPTED THE SAM E. THE ASSESSEE HAS NO PAN EITHER IN INDIVIDUAL OR IN HUF CAPACITY AND NO RETURN OF INCOME HAS BEEN FILED SINCE A LONG TIME. IT WAS NOTICED THAT ALL THE ABOVE PERSONS IN THE FAMILY ARE NOT FILING RETURNS AND THEY HAVE NOT PAID CAPITAL GAIN TAXES. HENCE, A LL THE PERSONS AND LEGAL HEIRS ARE COVERED U/S.147 TO DETECT THE ESCAPEMENT OF INCOME IN RESPECT OF THEIR SHARES. HENCE, REASONS ARE RECORDED IN THE ORDER - SHEET VIDE ORDER - SHEET ENTRY DATED 28.3.2013 AND ACCORDINGLY, A NOTICE U/S.148 OF THE ACT WAS ISSUED. THE UNDERSIGNED HAS NOT MENTIONED THE STATUS OF THE ASSESSEE IN THE NOTICE ISSUED U/S.148 OF THE ACT. THE ASSESSEE HAS, THEREFORE, BEEN TAKING ADVANTAGE OF THAT TECHNICAL POINT OF STATUSES LIKE INDIVIDUAL OR HUF, ETC . AND TRIED TO AVOID THE PAYMENT OF CAP ITAL GAIN TAXES. IN FACT, HE HAS FILED A MANUAL RETURN FOR THE A.Y.2006 - 07, SHOWING 'NIL' INCOME IN INDIVIDUAL CAPACITY IN RESPONSE TO THE NOTICE U/S.148. WITHOUT PANO., HOW CAN HE FILE A 'NIL' RETURN OF INCOME? BUT HE HAS FILED IT BY POST. NO OTHER PERSON INCLUDING THE PRESENT ASSESSEE IS HAVING PANO. IN THE ENTIRE FAMILY, EXCEPT SRI K. V. KRISHNA REDDY ( INDIVIDUAL ). HE HAS NO PANO. IN HUF CAPACITY ALSO AS WELL AS HE HAS NOT BEEN FILING RETURNS OF INCOME I N HUF CAPACITY ALSO. 2.7 REFERRING TO THE FAMILY T REE OF THE ASSESSEE - GROUP, WHICH IS DRAWN AT PAGE 4 OF HIS ORDER, THE AO OBSERVED THAT I TA NO. 1122 /HYD /20 1 6 AND OTHERS K. NARASIMHA REDDY, KURNOOL AND OTHERS : - 8 - : F ROM THE ABOVE CHART, IT IS NOT KNOWN THAT THE SCHEDULE PROPERTY WHICH WERE SOLD, ORIGINALLY PURCHASED BY LATE K. UMA MAHESWAR REDDY IN HUF CAPACITY OR INDIVIDUAL CAPAC ITY. BUT, THE ASSESSEE HAS TO ESTABLISH THAT WHETHER FROM THE TOTAL FAMILY FUND OF THE BIGGER HUF OF FATHER (NAME NOT KNOWN) OF SRI K. UMA MAHESWAR REDDY, THE SCHEDULE PROPERTY HAS COME TO THREE CO - PARCENERS, NAMELY, 1.(18TE) SRI K. UMA MAHESWARA REDDY (HU F), 2. SRI K. THIRUMALESWARA REDDY (HUF) - THE PRESENT ASSESSEE; AND. 3. SRI K. NAGARJUNA REDDY (HUF), OR NOT? THE ASSESSEE HAS NOT ESTABLISHED THE SAME. HE HAS NOT FILED EVEN THE ORDER U/S.171(1) OF THE I.T. ACT, I .E. ASSESSMENT AFTER PARTITION OF A HINDU UNDIVIDED FAMILY FROM TWO STAGES. THE FIRST STAGE IS FROM BIGGER HUF TO MIDDLE LEVEL OF HUF AND ANOTHER STAGE IS FROM MIDDLE LEVEL OF HUFS TO SMALLER HUFS, AS PER THE CHART. 2 .8 SO, IT IS A CLEAR CASE OF CRIMINAL INTENTION TO AVOID THE TAXES SINCE 1966 ONWARDS BY BIGGER H U F AND SINCE 2006 ONWARDS BY SMALLER HUFS. THE SAID AGREEMENT DATED 2.2.2006 WAS WRITTEN, AS PER THEIR WILL WITHOUT ANY BASIS (AS PER PAGE - 2 OF THE AGREEMENT) TO AVOID TAXES. EVEN IF IT IS ACCEPTED AS CORRECT, ONE OF THE PARAS MENTIONED IN PAGE - 2 OF THE SALE AGREEMENT STATED AS UNDER: 'WHEREAS ALL THE VENDORS ARE HELD TO BE OWNERS OF THE SCHEDULE PROPERTY, THE VENDORS 1, 2 & 3 OFFERED TO SELL THE SCHEDULE PROPERTY FOR A TOTAL CONSIDERATION OF RS.2, 00,00,000/ - (RUPEES TWO CRORES ONLY).' I TA NO. 1122 /HYD /20 1 6 AND OTHERS K. NARASIMHA REDDY, KURNOOL AND OTHERS : - 9 - : 2.9 AS PER THE ABOVE CLAUSE, ALL THE VENDORS ARE INDIVIDUALS, BUT THEY ARE NOT HUFS. THEY ARE INDIVIDUAL OWNERS. THIS TRANSACTION IS TO BE ASSESSED IN THE HANDS OF INDIVIDUAL ONLY. BUT, THE ASSESSEE ARGUED THAT IT BELONGS TO HUF ONLY. IT IS NOT ESTABLIS HED BY THE ASSESSEE THAT WHETHER THE PROPERTY COMES FROM BIGGER HUF TO HUF OF LATE K. UMA MAHESWAR REDDY AND FROM THAT OF HUF TO ASSESSEE - HUF. THERE IS NO ORDER AS SUCH U/S.171 (1) OF THE ACT, EITHER IN 1966 OR IN 2006. HENCE, THE ASSESSEE'S CONTENTIONS A RE NOT ACCEPTABLE AND THIS SALE OF SCHEDULE PROPERTY UNDER INCOME FROM CAPITAL GAINS IS TO BE TAXED IN THE HANDS OF INDIVIDUAL STATUS OF THE ASSESSEE ONLY. IF HE HAD NO CRIMINAL INTENTION TO AVOID TAXES, HE MIGHT HAVE PAID TAXES IN ANY OF THE STATUSES EITH ER IN HUF OR INDIVID UAL CAPACITY. BUT, HE HAS NOT DONE SO. HE HAS NEITHER PAID IN HUF CAPACITY NOR PAID IN INDIVIDUAL CAPACITY. 2.10 . IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, THE AO HELD THAT THE ASSESSEE'S CONTENTIONS ARE NOT ACCEPTABL E AS HE IS IN THE HABIT OF AVOIDING CAPITAL GAIN TAXES IN ANY OF THE STATUSES HENCE, HIS SHARE OF CAPITAL GAIN IS CALCULATED @ 20% OF THE SALE CONSIDERATION OF RS. 2 CRORES, WHICH COMES TO RS. 40,00,000/ - AS CAPITAL GAINS IN THE HANDS OF THE ASSESSEE. I TA NO. 1122 /HYD /20 1 6 AND OTHERS K. NARASIMHA REDDY, KURNOOL AND OTHERS : - 10 - : 3. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A), WHO CONFIRMED THE ORDER OF AO. 4. AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE ITAT. 5. BEFORE US, THE LD. AR OF THE ASSESSEE FILED WRITT EN SUBMISSIONS, WHICH ARE AS UNDER: 3. K.V KRISHNA REDDY, SUCCEEDING KARTA OF LATE UMA MAHESHWARA REDDY HUF; K. VISHESWARA REDDY, S/O K. BHEEM REDDY AND K. SURENDRANATH REDDY, S/O BHEEM REDDY, ALL CONSTITUTED HUF IN THEIR OWN RIGHTLY BY VIRTUE OF HAVING ACQUIRED LAND IN SURVEY NO. 112 (OLD); 167/1 (NEW) ADMEASURING 2 ACRES 15 GUNTAS SITUATED AT ROAD NO. 10, BANJARA HILLS OF SHEKPET (VILLAGE & MANDAI) HAVING PURCHASED THIS PROPERTY IN THE YEAR 1962. 4. K. UMAMAHESHWARA REDDY; K. VISHWESHWARA REDDY AND K . SURENDRANATH REDDY BEING BROTHERS CONSTITUTED A HUF AND K. UMAMAHESHWAR REDDY PURCHASED THE AFORESAID PROPERTY IN THE YEAR 1962 WITH JOINT FAMILY FUNDS. 5. K. UMAMAHESHWAR REDDY DIED ON 11/1/1993, K. SURENDRANATH REDDY DIED ON 16/05/2018 AND K. VISHWES HWARA REDDY DIED 9N 01/04/2009. THE ELDEST MALE MEMBER OF AFORESAID HUF'S BECAME THE KARTA SUBSEQUENTLY. 6. K. UMAMAHESHWAR REDDY, K. VISHWESHWAR REDDY AND K. SURENDRANATH REDDY CONSTITUTED HUF WHICH WAS PARTITIONED ON 31/12/1966 INCLUDING THE AFORESAID I TA NO. 1122 /HYD /20 1 6 AND OTHERS K. NARASIMHA REDDY, KURNOOL AND OTHERS : - 11 - : PROPERTY IN EQUAL SHARES. ENGLISH TRANSLATION OF THE PARTITION DEED ALONG WITH ITS TELUGU VERSION WAS FILED ALON G WITH LETTER DATED 15/1/2021 OF VINAY BHUSHAN REDDY SUCCESSOR OF K. SURENDRANATH REDDY BY DEPOSITING THE SAME IN DROP BOX ON 15/1/2021. THE NAMES OF THE PARTIES WERE ALSO GIVEN IN ANNEXURE - 1 TO THE LETTER. 7. THE AFORESAID IMMOVABLE PROPERTY WHICH WAS P URCHASED IN THE YEAR 1962 WAS SOLD ON 2/2/2006 FOR A SUM OF RS. 2 CRS UNDER A REGISTERED AGREEMENT OF SALE - CUM - GPA AND THE SALE DEED WAS ENTERED INTO BY THE FOLLOWING: - (I) K. V. KRISHNA REDDY (S/O. LATE K. UMAMAHESWARA REDDY) (II) K. VISHVESHWAR REDDY (III) K. SURENDRANATH REDDY 8. THE FACT THAT THE PARTIES' STATUS WAS HUF IS BORNE OUT RECITAL AT PAGE 2 OF THE AGREEMENT OF SALE - CUM - GPA EXECUTED ON 2/2/2006. THE FACT OF THE STATUS BEING HUF IS ALSO BORNE OUT BY THE PROCEEDINGS OF THE SPECIAL OFFICER AND COMPETENT AUTHORITY, URBAN LAND CEILING ACT, HYDERABAD ON 21/5/2005 WHICH FINDS A PLACE AT PAGES 18 TO 28 OF THE PAPER BOOK FILED ON 20/02/2017. IN THE AFORESAID PROCEEDINGS THE FACT THAT THE PARTIES CONSTITUTE HUF IS BROUGHT OUT IN THIS STATUTORY ORD ER OF 21/5/2005 AND AT PARAGRAPH (E) THE FACT THAT THE PARTIES HAVING CONSTITUTED HUF IS CLEARLY BROUGHT OUT. IT HAS ALSO BEEN STATED THAT K. UMAMAHESHWAR REDDY DIED ON 11/1/1993. AGAIN AT PARAGRAPH (I), PAGE 12/23 IT HAS BEEN CLEARLY STATED THAT THE PARTI ES CONSTITUTED HUF AND THE PROPERTY WAS PURCHASED WITH JOINT FAMILY FUNDS. 9. COPIES OF AGREEMENT OF SALE - CUM - GPA AND COPY OF PARTITION DEED WERE PRODUCED BEFORE THE ASSESSING OFFICER WHICH HAS BEEN BROUGHT OUT AT PARA 2 OF THE ASSESSMENT ORDER. I TA NO. 1122 /HYD /20 1 6 AND OTHERS K. NARASIMHA REDDY, KURNOOL AND OTHERS : - 12 - : 10.THE DEPARTMENT RECEIVED INFORMATION FROM THE SUB - REGISTRAR'S OFFICE THAT THE THREE ASSESSEES SOLD AN IMMOVABLE PROPERTY (SUPRA) ON 2/2/2006 AND THIS TRIGGERED THE RE - ASSESSMENT PROCEEDINGS. THE RESPECTIVE APPELLANT HUFS WERE AGRICULTURISTS AND THEY DID NOT HA VE ANY TAXABLE INCOME AND WERE NOT ON THE ROLLS OF THE INCOME TAX DEPARTMENT. 1 L1. NOTICES U/S. 148 WERE ISSUED WITHOUT ANY PAN OR THE STATUS IN WHICH NOTICES WERE ISSUED WAS MENTIONED. ACCORDINGLY, THE ENTIRE CAPITAL GAINS ON SALE OF THE IMMOVABLE PROPE RTY WERE ASSESSED IN THE INDIVIDUAL STATUS OF THE THREE HUFS AND THE ENTIRE SALE CONSIDERATION OF RS. 2 CRS WAS ADOPTED FOR THE PURPOSES OF COMPUTING CAPITAL GAINS IN THE RATIO OF 20%; 20% AND 60% IN THE HANDS OF K.V. KRISHNA REDDY; K. VISHVESHWAR REDDY AN D K. SURENDRANATH REDDY, IN THEIR INDIVIDUAL CAPACITY. 12.APART FROM THE AFORESAID THREE ENTITIES, THE ASSESSING OFFICER ALSO ASSESSED THE CAPITAL GAINS IN THE HANDS OF K. NAGARJUNA REDDY; K. BHEEM REDDY AND K. TIRUMALESHWARA REDDY WHO WERE NOT PARTIES T O THE SALE DEED AS THEY WERE MEMBERS OF THE RESPECTIVE AFORESAID HUFS. 13.AT THIS JUNCTURE, IT WOULD BE USEFUL TO REPRODUCE AS TO HOW THE SALE CONSIDERATION WAS ASSESSED IN THE HANDS OF THE RESPECTIVE HUFS AS WELL AS IN THE HANDS OF SRI K. TIRUMALESHWAR REDDY; K. BHEEMI REDDY AND K. NAGARJUNA REDDY. THE ATTENTION OF THE HON'BLE TRIBUNAL IS INVITED TO THE TABULAR STATEMENT AT PAGE 11 OF THE PAPER BOOK FILED IN THE CASE OF K. SURENDRANATH REDDY ON 20/02/2017. A PERUSAL OF THE TABULAR STATEMENT WOULD SHOW TH AT THE TOTAL SALE CONSIDERATION ADOPTED WAS RS. 3,20,00,000/ - AS AGAINST RS. 2,00,00,000/ - SHOWN IN THE SALE DEED. THUS A SUM OF RS. 1,20,00,000/ - @ RS. 40,00,000/ - EACH WAS ASSESSED IN THE HANDS OF K. TIRUMALESHWAR REDDY; K. BHEEMREDDY AND K. I TA NO. 1122 /HYD /20 1 6 AND OTHERS K. NARASIMHA REDDY, KURNOOL AND OTHERS : - 13 - : NAGARJUNREDD Y WHO WERE NOT PARTIES TO THE SALE DEED. THUS, THE SALE PROCEEDS WERE ADOPTED IN EXCESS BY RS. 1,20,00,000/ - (SUPRA). 14. THE ASSESSING OFFICER WHILE ACCEPTING THE STATUS AS HUF AS COULD BE SEEN FROM THE ASSESSMENT ORDER OBSERVED AT PARA 4.1 OF THE AO TH AT THERE WAS NO ORDER U/S. 171(1) OF THE ACT RECOGNIZING THE PARTITION OF 31/12/1966. 1 5 . AT THIS JUNCTURE, THE APPELLANT SUBMITS THAT THE PROVISIONS RELATING TO PASSING OF AN ORDER U/S. 171(1) DOES NOT ARISE AS THIS SECTION IS APPLICABLE ONLY TO AN HUF WHICH IS 'HITHERTO ASSESSED TO TAX'. NONE OF THE HUFS WERE HITHERTO ASSESSED TO TAX. FOR THIS PROPOSITION, THE APPELLANT RELIES ON THE FOLLOWING JUDGMENTS OF THE PAPER BOOK FILED ON 22/1/202 IN THE CASE K. SURENDRANATH REDDY AND OTHERS. 1. ADD L . CIT VS. DURGAMMA , 166 ITR 776 (PGS. 9 TO 11) 2. CIT VS. KANTILAL AMBALAL, ( GUJ. ) HC 192 ITR 376 (PAGES 12 TO 14 ) 16. 0N APPEAL THE CIT (A) CONFIRMED THE ORDER O F THE ASSESSING OFFICER HOLDING THAT THE STATUS WOULD BE THAT OF INDIVIDUAL CONSIDERING THE ENTIRE WRITTEN SUBMISSIONS AND THE FACTS ON RECORD. 17.AS REGARDS THE ASSESSMENT OF RS. 1,20,00,000/ - AS SALE CONSIDERATION OF THE PROPERTY IN THE HANDS OF K. THI RUMALESHWAR REDDY, K. BHEEM REDDY AND K. NAGARJUNREDDY THE CIT(A) HELD THAT AT THE MOST THIS CAN BE HELD AS A PROTECTIVE ADDITION WHICH HAS BEEN CHALLENGED BY THE THREE INDIVIDUAL COPARCENERS ON THE GROUND THAT THEY WERE NOT PARTIES TO THE SALE DEED. I TA NO. 1122 /HYD /20 1 6 AND OTHERS K. NARASIMHA REDDY, KURNOOL AND OTHERS : - 14 - : 18. THEREFORE, THE APPELLANT SUBMITS THE FACT THAT THE THREE ENTITIES CONSTITUTE A HUF IS BORNE OUT BY THE RECORD OF THE DEED OF PARTITION OF 1966 AND THE ORDER OF THE SPECIAL OFFICER AND COMPETENT AUT HORITY, URBAN LAND CEILING ACT, HYDERABAD DATED 21/5/2005 WHICH FINDS A PLACE AT PAGES 18 TO 28 OF THE PAPER BOOK FILED IN THE CASE OF K. SURENDRANATH REDDY ON 20/02/2017 AND THE RECITAL IN THE AGREEMENT OF SALE - CUM - GPA (SUPRA). 19. THEREFORE, THE APPELL ANT SUBMITS THAT THE STATUS OF THE ASSESSEES IS HUF ON THE BASIS OF FACTS AND EVIDENCE PLACED BEFORE THE ASSESSING OFFICER AND CIT (A) AND THEREFORE CONCLUDES TO SAY THAT THE ENTIRE ASSESSMENT IN THE STATUS AS 'INDIVIDUAL' IS TOTALLY CONTRARY TO THE FACTS AND EVIDENCE ON RECORD AND HENCE THE ASSESSMENTS U/S 148 IN THE HANDS OF THREE INDIVIDUAL ENTITIES IS NOT SUSTAINABLE. 5.1 THE LD. AR OF THE ASSESSEE RELIED ON THE FOLLOWING CASE LAW: 1. GUTTA ANJANEYULU AND CO. VS. CIT, 347 ITR 135 (AP HC) 2. GUNDLAPA LLI MHOAN RAO AND OTHERS VS. GUNDLAPALLI SATYANARAYANA AND OTHERS, 84 ITR 685(AP HC) 3. LACHMANDAS & SONS VS. DCIT (KERALA), 104 DTR 165 4. SMT. RAJ RANI DEVI RAMNA VS. CIT(PATNA), 201 ITR 1032. 6. ON THE OTHER HAND, THE LD. DR RELIED ON THE ORDERS OF REVENUE AUTHORITIES AND SUBMITTED THAT THE ASSESSEE WAS UNABLE TO PROVE THAT WHEN THE PARTITION WAS TAKEN PLACE. HE IS ALSO NOT CLEAR THAT THE PROPERTY BELONGS TO BIGGER HUF OR SMALLER HUF OR IT BELONGS TO THE INDIVIDUAL. HE SUBMITTED THAT THE AO HAS EXAMINED THE ISSUE IN DETAIL AND FAMILY TREE WAS ALSO DRAWN WHILE MAKING ASSESSMENT. I TA NO. 1122 /HYD /20 1 6 AND OTHERS K. NARASIMHA REDDY, KURNOOL AND OTHERS : - 15 - : 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD AS WELL AS GONE THROUGH THE ORDERS OF REV ENUE AUTHORITIES. IT IS OBSERVED THAT THE IMMOVABLE PROPERTY WHICH WAS PURCHASED IN THE YEAR 1962 WAS SOLD ON 02/02/2006 FOR A SUM OF RS. 2 CRORES UNDER A REGISTERED AGREEMENT OF SALE - CUM - GP A AND THE SALE DEED WAS ENTERED INTO BY THE FOLLOWING: (I) K. V. KRISHNA REDDY (S/O. LATE K. UMAMAHESWARA REDDY) (II) K. VISHVESHWAR REDDY (III) K. SURENDRANATH REDDY 7.1 IT IS FACT THAT THE PROPERTY WAS SOLD BY AFOREMENTIONED THREE PERSONS, WHO BELONG TO HUF, WHEREAS THE NOTICE HAS BEEN ISSUED IN THE NAME OF INDIVIDUAL CAPACITY AND THE ASSESSMENT HAS ALSO BEEN MADE IN THE INDIVIDUAL HANDS. IN THIS CONNECTION, WE REFER TO THE AGREEMENT OF SALE - CUM - GPA, WHEREIN AT PAGE 2 OF THE AGREEMENT, THE CLAUSE READS AS UNDER: W HREAS THE S CHEDULE PROPERTY WAS HELD TO BE A PART OF THE JOINT FAMILY PROPERTY AS IT W A S PURCHA SE D THE LATE K. UMA MAHESHWAR REDDY AS A KARTHA OF THE HINDU 'VIDE VENDOR NO, 1 K. V. KRISHNA REDDY IS SON OF LATE K. UMA MAHESHWAR REDDY AND VENDOR NO.2 & 3 ARE THE BROTHERS OF THE LATE K. UMA MAHESH WAR REDDY I.E., VENDOR NO.1, 2 & 3 ARE THE OWNERS OF THE SCHEDULE PROPERTY AS HELD IN THE REVISED FINAL ORDERS OF THE SPECIAL OFFICER OF COMPETENT AUTHORITY, ULC HYDERABAD I TA NO. 1122 /HYD /20 1 6 AND OTHERS K. NARASIMHA REDDY, KURNOOL AND OTHERS : - 16 - : IN PROCEEDINGS NO.B2I2592/CCI76, B2/5218/CC/76, DATED: 21 - 05 - 2005. 7.2 IT IS CLEAR FORM THE CLAUSE AS NOTED ABOVE, THE SPECIAL OFFICER AND COMPETENT AUTHORITY, ULC, HYDERABAD HAS PASSED THE ORDER THAT THE PROPERTY BELONGS TO HUF. THE AO ASSESSED THE CAPITAL GAINS IN THE HANDS OF THE INDIVIDUAL ASSESSEES, WHICH IS NOT PROPER. WE, THEREFORE, SET ASIDE THE ORDER OF CIT(A) IN THIS CASE AND ACCORDINGLY, ALLOW THE APPEAL OF THE ASSESSEE. 7.3 SINCE THE FACTS AND GROUNDS RAISED IN ITA NO. 1127/HYD/2016 ARE MATERIALLY IDENTICAL TO THAT OF ITA NO. 1123/HYD/2016, THE DECISION TAKEN IN ITA NO. 1123/HYD/2016 SHALL APPLY MUTATIS MUTANDIS TO ITA NO. 1127/HYD/2016. THEREFORE, FOLLOWING THE DECISION IN ITA NO. 1123/HYD/2016, WE ALLOW THE APPEAL IN ITA NO. 1127/HYD/2016. 8. NOW COMING TO THE APPEALS IN ITA NOS. 1122/HYD/2016 IN THE CASE O F K. NAGARJUNA REDDY, 1124/HYD/2016 IN THE CASE OF K. BHEEMI REDDY & 1125/HYD/2016 IN THE CASE OF K. THIRUMALESWARA REDDY, AT THE TIME OF HEARING, THE LD. AR SUBMITTED THAT THE ASSESSEES IN THESE APPEALS ARE NOT PART IES IN THE AGREEMENT OF SALE - CUM - GPA, WHEREAS, THE AO HAS FRAMED THE ASSESSMENTS IN THE NAME OF THE ABOVE THREE PERSONS ON THE SAME PROPERTY . I TA NO. 1122 /HYD /20 1 6 AND OTHERS K. NARASIMHA REDDY, KURNOOL AND OTHERS : - 17 - : HE, THEREFORE, CONTENDED THAT THESE ASSESSMENTS ARE NULL AND VOID. 9. IN THIS REGARD, THE LD. DR COULD NOT CONTROVERT THE SUBMISSION MADE BY THE LD. AR. 10. CONSIDERING THE FACTS AND SUBMISSIONS OF THE LD. AR OF THE ASSESSEE, WE OBSERVE THAT THESE THREE APPELLANTS NAMES WERE NOT FOUND IN THE AGREEMENT OF SALE - CUM - GPA FOR T HE IMPUGNED PROPERTY . THEREFORE, ASSESSMENTS MADE IN THESE THREE APPELLANTS CASES ARE VOID - AB - INITIO. IN THE RESULT, THESE THREE APPEALS ARE ALLOWED. 11 . IN THE RESULT, ALL THE APPEALS UNDER CONSIDERATION ARE ALLOWED IN ABOVE TERMS. A COPY OF THIS COMMON ORDER BE PLACED IN THE RESPECTIVE CASE FILES. PRONOUNCED IN THE OPEN COURT ON 13 TH JU LY , 2021 . SD/ - SD/ - ( S.S. GODARA ) (L . P . SAHU) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDE RABAD, DATED : 13 TH JU LY , 20 2 1 . K V I TA NO. 1122 /HYD /20 1 6 AND OTHERS K. NARASIMHA REDDY, KURNOOL AND OTHERS : - 18 - : C OPY TO : 1 2 3 4 5 K. NAGARJUNA REDDY, KURNOOL K. VISHWESHWAR REDDY, L/R BHEEMI REDDY, KURNOOL K. BHEEMI REDDY, KURNOOL. K. THIRUMALESWARA REDDY, KURNOOL. K. SURENDRANATH REDDY, KURNOOL 6 IT O , WARD 2, KURNOOL 3 C I T(A) , KURNOOL. 4 PR. CIT , KURNOOL. 5 ITAT, DR, HYDERABAD. 6 GUARD FILE.