Shaik Haneef, Hyderabad V. Asst. Commissioner of Income Tax, Circle-6(1), Hyderabad

ITA 1150/Hyd/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 0838 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-06-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB-A
• Next Hearing Date: 23-01-2020
• Assessment Year: 2007-2008
• Appeal Filed On: 05-07-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: M MURTHY NAIK
• Keywords: Unexplained investment; Cost of acquisition; Capital receipt
• Section: 201; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A - SMC BENCH : HYDERABAD BEFORE S HRI A. MOHAN ALANKAMONY , ACCOUNTANT MEMBER ITA NO. 1150 /HYD./201 7 ASSESSMENT YEAR: 20 07 - 08 MR. SHAIK AHMED VS. ACIT CIRCLE 6 (1) LEGAL REPRESENTATIVE OF LATE SHAIK HANEEF HYDERABAD C/O MR. MOHD. AFZAL, ADVOCATE 402, SHERSONS RESIDENCY 11 - 5 - 465, CRIMINAL COURT ROAD RED HILLSS, HYDERABAD 500 004 PAN: BOXPS1192F (APPELLANT) (RESPONDENT) FOR ASSESSE E : MR. MOHD. AFZAL, A.R. FOR REVENUE : S H. M. MURTHY NAI K , D.R. DATE OF H EARING : 23 / 01/2020 DATE OF PRONOUNCEMENT : 09 / 06 / 2020 O R D E R THIS APPEAL IS FILED BY ASSESSEE A GAINST THE ORDER OF THE LD.CIT(A) - 9 DATED 30.03.2017 IN ITA NO. 02 90 / A CIT , CIRCLE 6(1)/ 201 5 - 16 FOR THE A.Y. 20 07 - 08 . 2. THE ASSESSEE HAS RAISED SEVERAL GROUNDS IN HIS APPEAL. HOWEVER, THE CRUX OF THE ISSUE S ARE AS FOLLOWS: (I) LD.CIT(A) HAS ERRED IN CONFIRMING THE ORDER OF THE LD.AO TO THE EXTENT OF RS.4,96,000/ - INVOKING THE PROVISIONS OF SEC.69 OF THE INCOME TAX ACT, 1961 (THE ACT) WITH RESPECT TO CERTAIN PROPERTIES PURCHASED BY THE ASSESSEE. (II) LD.CIT(A) HAS ERRED IN UPHOLDING THE ORDER OF THE LD.AO WHO HAD MADE ADDITION OF RS. 2,12,400 / - TOWARDS SHORT TERM CAPITAL GAIN. ITA NO. 1150/HYD/2017 AY 2007 - 08 MR. SHAIK AHMED, L.R. OF LATE SHAIK HANEEF , HYD. 2 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL , FAILED TO FURNISH HIS RETURN OF INCOME FOR THE RELEVANT A.Y 2007 - 08. SUBSEQUENTLY INFORMATION WAS RECEIVED BY THE DEPARTMENT THAT THE ASSESSEE HAD MADE SEVERAL INVESTMENTS IN PURCHASE OF IMMOVAB LE PROPERTIES. HENCE NOTICE U/S 148 OF THE ACT WAS ISSUED TO THE ASSESSEE . SUBSEQUENTLY THE ASSESSEE FILED HIS RETURN OF INCOME ON 3.12.2009 ADMITTING TAXABLE INCOME OF RS.1,06,400/ - 3.1. DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS , IT WAS O BSERVED BY THE LD.AO THAT THE ASSESSEE HAD PURCHASED 16 PROPERTIES AGGREGATING TO TOTAL PURCHASE CONSIDERATION OF RS . 5,19,600/ - AS STATED IN THE REGISTERED SALE DEED AGAINST WHICH MARKET VALUE (SRO) OF THE PROPERTY WAS RS.37 , 41,500/ - . ON QUERY, THE ASSES SEE HAD FILED WRITTEN SUBMISSIONS STATING THAT THE ASSESSEE AND TWO OTHER INDIVIDUALS HAD PAID RS.25,00,000/ - TO OWNERS OF LAND WHICH IS TO BE ADJUSTED IN FUTURE SETTLEMENTS WITH RESPECT TO THEIR LAND. THEREAFTER VARIOUS DISPUTES AROSE AND FINALLY THE ASS ESSEE RECEIVED 16 PROPERTIES FROM THE LAND - OWNERS AS A RESULT OF COMPROMISE ENTERED BETWEEN THE M BEING THE COMPENSATION FOR STERILISATION OF THE PROFIT EARNING SOURCE. HOWEVER, SINCE THE ASSESSEE HAS NOT PRODUCED SUFFICIENT EVIDENCE TO JUSTIFY THE CLAIM OF DISPUTE AND SETTLEMENT, THE LD.AO TREATED THE AGGREGATE PURCHASE CONSIDERATION OF RS.5,19,600/ - AS UNEXPLAINED INVESTMENT INVOKING THE PROVISIONS OF SEC.69 OF THE ACT. 4. ON APPEAL THE LD.CIT(A) CONFIRMED THE ORDER OF THE LD.AO BY AG R EEI NG WITH HIS FINDINGS. HOWEVER, LD.CIT(A) GRANTED RELIEF OF RS.23,600/ - AND ACCORDINGLY CONFIRMED THE ADDITION OF RS.4,96,000/ - . 5. BEFORE ME THE LD.AR VEHEMENTLY ARGUED STATING THAT THE ACQUISITION OF THE IMMOVABLE PROPERTIES WAS THE RESULT OF COMPENSA TION RECEIVED FOR FOREGOING THE PROFIT EARNING SOURCE AND, THEREFORE, IT DID NOT RESULT FROM THE ORDINARY COURSE OF BUSINESS OF ASSESSEE. IT WAS THEREFORE, ARGUED THAT THE ITA NO. 1150/HYD/2017 AY 2007 - 08 MR. SHAIK AHMED, L.R. OF LATE SHAIK HANEEF , HYD. 3 IMMOVABLE PROPERTY RECEIVED BY THE ASSESSEE SHOULD BE TREATED AS CAPITAL RECEIPT AND NOT REVENUE RECEIPT. 6 . LD.DR ON THE OTHER HAND VEHEMENTLY ARGUED IN SUPPORT OF THE ORDERS OF LD. REVENUE AUTHORITIES AND PLEADED FOR CONFIRMING THEIR ORDERS. 7 . I HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY PERUSED THE MATERIALS ON RECORD , AND I DO NOT FIND ANY MERIT IN THE SUBMISSIONS OF THE LD.AR. FROM THE FACTS OF THE CASE IT IS EVIDENT THAT THE ASSESSEE WA S VENTURING INTO REAL ESTATE BUSINESS AND IN THE COURSE OF THAT BUSINESS MADE SOME INVESTMENTS WHICH YIELDED INCOME TO HIM BY WAY OF RECEI PT OF 16 IMMOVABLE PROPERTIES, THE ACTUAL CONSIDERATION OF WHICH AS PER REGISTRATION DEED WAS RS . 5,19,600/ - THOUGH THE MARKET VALUE OF THE PROPERTY AS PER STATE VALUATION AUTHORITY WAS RS.37,41,500/ - . THIS RECEIPT OF THE IMMOVABLE PROPERTY IS NO DOUBT FR OM THE BUSINESS VENTURE EXERCISED BY THE ASSESSEE AND THEREFORE PROVISIONS OF SEC.28(IV) OF THE ACT WILL BE ATTRACTED. MOREOVER, THE LD.AO WAS GRACEFUL ENOUGH TO BRING TO TAX THE AMOUNT OF RS.5,19,600/ - BEING THE SALE CONSIDERATION DECLARED IN THE SALE DEED THOUGH THE MARKET VALUE OF THE REGISTERED PROPERTY WAS RS.37,41,500/ - . CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE ISSUE, I AM OF THE CONSIDERED VIEW THAT THE ORDER OF THE LD.AO WHICH IS FURTHER CONFIRMED BY THE LD.CIT(A) BY GRANTING MARGINAL RELIEF OF RS.23,600/ - , IS QUITE APPROPRIATE AND DOES NOT CALL FOR ANY INTERFERENCE. HENCE , I HEREBY CONFIRM THE ORDER OF THE LD.CIT(A) ON THIS ISSUE. ACCORDINGLY GROUND NO.1 IS DECIDED AGAINST THE ASSESSEE . 8 . T HE OTHER GROUND RAI SED BY ASSESSEE IS THAT THE LD.AO HAS MADE ADDITION OF RS.2,12,400/ - UNDER THE HEAD SHORT TERM CAPITAL GAIN ERRONEOUSLY . DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS IT WAS OBSERVED BY THE AO THAT THE ASSESSEE HAS SOLD ONE OF THE PROPERTIES ACQU IRED BY HIM TOWARDS COMPENSATION OF RS.23,600/ - DURING THE RELEVANT ASSESSMENT YEAR VIZ., PLOT NO.26, IN SURANGA VILLAGE ADMEASURING 590 SQ.YDS THROUGH REGISTERED DOCUMENT BEARING NO. 20155/06 DATED 6.10.2006 FOR SALE ITA NO. 1150/HYD/2017 AY 2007 - 08 MR. SHAIK AHMED, L.R. OF LATE SHAIK HANEEF , HYD. 4 CONSIDERATION OF RS. 2,36,000/ - . S INCE THE COST OF ACQUISITION OF THE PROPERTY WAS RS . 23,600/ - , THE LD.AO COMPUTED THE SHORT TERM CAPITAL GAIN AT RS.2,12,400/ - BEING THE DIFFERENCE BETWEEN RS.2,36,000/ - AND RS.23,600/ - . LD.CIT(A) ALSO CONFIRMED THE ORDER OF THE LD.AO. I DO NOT FIND ANY I NFIRMITY IN THE ORDER OF THE LD.REVENUE AUTHORITIES ON THIS COUNT BECAUSE THEY HAVE WORKED OUT THE SHORT TERM CAPITAL GAIN BEING THE DIFFERENCE BETWEEN THE COST OF ACQUISITION DURING THE RELEVANT A..Y. AND THE SALE CONSIDERATION RECEIVED FOR THE SAME PROPE RTY IN THE SAME AY. ACCORDINGLY , THIS GROUND ALSO IS DECIDED AGAINST THE ASSESSEE. 9 . BEFORE PARTING, IT IS WORTHWHILE TO MENTION THAT THIS ORDER IS PRONOUNCED AFTER 90 DAYS OF HEARING WHICH IS THOUGH AGAINST THE USUAL NORMS, I FIND IT APPROPRIATE TAKING INTO CONSIDERATION OF THE EXTRA - ORDINARY SITUATION IN THE LIGHT OF THE LOCK - DOWN DU E TO COVID 19 PANDEMIC. WHILE DOING SO I HAVE RELIED IN THE DECISION OF MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS. JSW LTD. IN ITA NO.6264/M/2018 AND 6103/M/2018 FOR AY 2013 - 14 ORDER DATED 14 TH MAY, 2020. 10 . IN THE RESULT, THE APPEAL OF THE ASS ESSEE IS DISMISSED . ORDER PRONOUNCED IN OPEN COURT ON THE 09 TH JUNE, 2020 . SD/ - (A. MOHAN ALANKAMONY ) ACCOUNTANT MEMBER DATED: 09 TH JUNE, 2020 . *GMV COPY FORWARDED TO: 1. MR. SHAIK AHMED , LEGAL REPRESENTATIVE OF LATE SHAIK HANEEF , C/O MR. MOHD. AFZAL, ADVOCATE , 402, SHERSONS RESIDENCY , 11 - 5 - 465, CRIMINAL COURT ROAD , RED HILLS, HYDERABAD 500 004 2. ACIT, CIRCLE 6 (1), HYDERABAD. /ACIT, RANGE 6, HYDERABAD. 3. CIT(A) - 9, HYDERABAD. 4. PR.CIT - 6 , HYDERABAD 5 . D.R. ITAT HYDERABAD 6 . GUARD FILE // C O P Y // ITA NO. 1150/HYD/2017 AY 2007 - 08 MR. SHAIK AHMED, L.R. OF LATE SHAIK HANEEF , HYD. 5 1. DRAFT DICTATED ON 0 4 /06/2020 2. DRAFT PLACED BEFORE THE AUTHOR 0 8 /06/2020 3. DRAFT PLACED BEFORE THE SECOND MEMBER 4. DRAFT APPROVED BY SECOND MEMBER 5. APPROVED DRAFT COMES TO SRPS 6. KEPT FOR PRONOUNCEMENT 7. FILE SENT TO BENCH CLERK