Atluri Padma, Vijayawada V. The Income Tax Officer, Ward-2(3), Vijayawada

ITA 116/VIZ/2020

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 2631 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 3 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2014-2015
• Appeal Filed On: 05-03-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMAN MALIK
• Keywords: Additional evidence; Capital Gains
• Section: 22; 131; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM (T HROUGH WEB - BASED VIDEO CONFERENCING PLATFORM) BEFORE SHRI N.K. CHOUDHRY, HONBLE JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH, HON'BLE ACCOUNTANT MEMBER I.T.A. NO. 116 /VIZ/2020 (ASST. YEAR : 2014 - 1 5 ) SMT. ATLURI PADMA, D.NO. 27 - 37 - 133/1, MG ROAD, VIJAYAWADA . VS. ITO, WARD - 2( 3 ) VIJAYAWADA. PAN NO. ABLPA 3941 N (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI C.SUBRAHMANYAM , FC A DEPARTMENT BY : SMT.SUMAN MALIK, SR. DR DATE OF HEARING : 22 / 06 /2021 . DATE OF PRONOUNCEMENT : 25 / 0 6 /2021 . O R D E R PER N.K. CHOUDHRY , JUDICIAL MEMBER THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAINST THE ORDER DATED 20 /1 2 /2019 IMPUGNED HEREIN PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) [FOR SHORT , LD. COMMISSIONER] , VIJAYAWADA U/SEC. 250(6) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'ACT') FOR THE A.Y. 20 1 4 - 1 5 . 2 ITA NO. 116/VIZ/2020 ( SMT. ATLURI PADMA ) 2. IN THIS CASE, THE ASSESSEE HAD CLAIMED DEDUCTION OF RS.90 LAKHS U/SEC. 54 OF THE ACT. THE AO AFTER EXAMIN ING THE CLAIM OF THE ASSESSEE HELD THAT THE ASSESSEE HAS SOLD ONE PROPERTY ON 29/11/2013 FOR A CONSIDERATION OF RS. 1,34,03,175/ - AND SUBSEQUENTLY ENTERED INTO AN AGREEMENT WITH SHRI VEERAPANENU SUBBA RAO FOR PURCHASE OF PROPERTY VIDE AGREEMENT DATED 19/05/2014 AND PAID RS. 90 LAKHS (OUT OF TOTAL SALE CONSIDERATION OF RS. 1.5 CRORE) THROUGH RTGS AS ADVANCE TO THE SELLER . THE AO EXAMINED THE SELLER U/SEC. 131 OF THE ACT AND NOTICED THAT THE SELLER IS A CLOSE RELATIVE OF THE ASSESSEE AND FROM THE BANK ACCOUNT STATEMENTS OF THE SELLER IT APPEARS THAT TH ERE WERE WITHDRAWALS OF RS. 90 LAKHS IMMEDIATELY AFTER RECEIPT OF THE ADVA NCE AMOUNT . FURTHER, THERE WERE WITHDRAWAL S TO THE TUNE OF RS.27 LAKHS BY THE ASSESSEE HERSELF ON 21/05/2014 . THE AO ALSO OBSERVED THAT THE ASSESSEE DID NOT GET REGISTER THE PROPERTY EVEN AFTER LAPSE OF 2 YEARS FROM THE DATE OF AGREEMENT . NO PRUDENT PERSON WILL WAIT FOR SUCH A LONG TIME AFTER GIVING SUCH HUGE ADVANCE AND THE ADVANCE GIVEN BY THE ASSESSEE TO HER RELATIVE IS AN ARRANGED TRANSACTION AND COLOURABLE DEVISE TO AVOID CAPITAL GAINS TAX . ULTIMATELY , THE AO DENIED THE CLAIM OF DEDUCTION U/SEC. 54 OF THE ACT AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE . 3 . ON APPEAL BEFORE THE LD. COMMISSIONER, THE ASSESSEE FURNISHED THE ADDITIONAL EVIDENCE AS MENTIONED IN PARA 12 OF THE IMPUGNED ORDER WHICH WERE FORWARDED TO THE AO FOR EXAMINATION AND FURNISHING THE REMAND REPORT , A GAINST WHICH, THE AO FILED REMAND REPORT . 3 ITA NO. 116/VIZ/2020 ( SMT. ATLURI PADMA ) T HEREFORE , ON THE BASIS OF ADDITI ONAL EVIDENCE AND REMAND REPORT, T HE LD. COMMISSIONER HELD THAT T HE DELAY IN INITIATING LEGAL ACTION CANNOT BE INFERRED TO BE PART O F A COLOURABLE DEVICE BY THE ASSESSEE FOR AVOIDING PAYMENT OF CAPITAL GAINS TAX AS INFERRED BY THE AO. THE LD. COMMISSIONER THOUGH HELD THE TRANSACTION/ AGREEMENT FOR SALE UNDER CONTROVERSY AS GENUINE , HOWEVER PARTLY SUSTAINED THE DISALLOWANCE/ ADDITION OF RS. 27 LAKHS (WHICH WAS WITHDRAWN BY THE ASSESSEE FROM THE BANK ACCOUNT OF SELLER) ON THE GROUND THAT IT WAS CLAIMED BY THE ASSESSEE THAT SHE HAD WITHDRAWN THE SAID AMOUNT ON BEHALF OF THE SELLER AT HIS REQUEST. HOWEVER, NO EVIDENCE WAS FURNISHED BY THE ASSESSEE IN SUPPORT OF THE SAID EXPLANATION. 4 . THE ASSESSEE IS IN APPEAL BEFORE US FOR THE AMOUNT OF RS.27.00 LAKHS WHICH HAS BEEN DISALLOWED U/SEC. 54 OF THE ACT. IT IS NOT IN CONTROVERSY THAT CIVIL SUIT FOR SPECIFIC PERFORMANCE OF THE AGREEMENT OF SALE FOR REGISTRATION OF THE SALE DEED IN FAVOUR OF THE ASSESSEE HAS BEEN FILED BEFORE THE 2 ND ADDITIONAL DISTRICT JUDGE, VIJAYAWADA ON 14/11/2019 BY PAYING C OURT FEE OF RS. 1,52,426/ - AND THE REVENUE DEPARTMENT NOT DOUBTED THE SAME. ON THE BASIS OF DOCU MENTS THE LD. COMMISSIONER CLEARLY HELD THAT THE SALE AGREEMENT DATED 19/05/2014 BY WHICH THE PROPERTY WAS PURCHASED BY THE ASSESSEE AND ADVANCE OF RS. 90 LAKHS WAS PAID, IS A GENUINE TRANSACTION AND NOT A N ARRANGED TRANSACTION AND COLOURABLE DEVICE TO AVO ID PAYMENT OF CAPITAL GAINS TAX AS ALLEGED BY THE AO IN THE ASSESSMENT ORDER AND THE REMAND REPORT. 4 ITA NO. 116/VIZ/2020 ( SMT. ATLURI PADMA ) 4.1 WHAT CAN BE SEEN THAT IN PURSUANCE TO THE AGREEMENT REFERRED ABOVE, THE ASSESSEE HAS PAID RS. 90 LAKHS THROUGH RTGS TO THE SELLER WHICH IS NOT IN DISPUTE. THE ONLY CONTROVERSY RELATES TO THE AMOUNT OF RS. 27 LAKHS WHICH WAS WITHDRAWN BY THE ASSESSEE FROM THE ACCOUNT OF THE SELLER WHO IS UNDISPUTEDLY RELATIVE OF THE ASSESSEE. IN THIS REGARD, THE LD. COMMISSIONER IN PARA 21 OF THE IMPUGNED ORDER OBSERVED THAT IT WAS CLAIMED BY THE ASSESSEE THAT SHE HAD WITHDRAWN THE SAID AMOUNT ON BEHALF OF THE SELLER AT HIS REQUEST. HOWEVER, NO EVIDENCE WAS FURNISHED BY THE ASSESSEE IN SUPPORT OF THE SAID EXPLANATIO N. IN VIEW OF THE SAME, IT IS REQUIRED TO BE CONSIDERED THAT THOUGH THE ASSESSEE MADE INVESTMENT OF RS. 90 LAKHS TOWARDS PURCHASE OF RESIDENTIAL HOUSE BY MAKING PAYMENT OF ADVANCE OF RS. 90 LAKHS AS PER AGREEMENT OF SALE, THE ASSESSEE RECEIVED BACK ADVANC E TO THE EXTENT OF RS. 27 LAKHS FROM THE SELLER. NOTHING APPEARS FROM THE ASSESSMENT ORDER WHEREIN THE STATEMENT OF SELLER HAS BEEN DEPICTED, QUA REFUND OF RS 27 LAKHS TO THE ASSESSEE. EVEN W E ARE UNABLE TO FIND OUT ANY MATERIAL FROM THE RECORD IN SUPPOR T OF THE CONCLUSION OF THE LD. COMMISSIONER TO THE EFFECT THAT THE ASSESSEE HAD RECEIVED BACK ADVANCE TO THE EXTENT OF RS. 27 LAKHS FROM THE SELLER. MAY BE THE ASSESSEE HAS WITHDRAWN RS.27 LAKHS FROM THE SELLERS ACCOUNT BUT WITHOUT ANY EVIDENCE THAT CANN OT BE CONSTRUED THAT THE ASSESSEE HAS RECEIVED BACK ADVANCE TO THE EXTENT OF RS. 27 LAKHS FROM THE SELLER , SPECIFICALLY IN VIEW OF THE FACT THAT THE LITIGATIONS ARE PENDING QUA REGISTRATION OF THE SALE DEED AND IN THE LITIGATIONS DOCUMENTS SUBMITTED BY THE SELLER ALSO, THE AMOUNT OF RS . 90 LAKHS IS IN CONTROVERSY. 5 ITA NO. 116/VIZ/2020 ( SMT. ATLURI PADMA ) FROM THE CERTIFICATION OF PAPER BOOK FILED BY THE ASSESSEE IT APPEAR S THAT LEGAL NOTICE SENT BY THE ASSESSEE TO THE SELLER AND REPLY OF THE SELLERS ADVOCATE WERE PRODUCED BEFORE THE LD. COMMISSIONER. FROM THE SAID DOCUMENTS IT IS CLEAR THAT THE ASSESSEE HAD ISSUED A LEGAL NOTICE THROUGH HER LAWYER ON DATED 28 - 01 - 2019 TO TH E SELLER WHEREIN ALLEGED TO HAVE BEEN PAID RS. 90 LAKHS TO THE SELLER AND CALLED UPON THE SELLER TO EXECUTE AND REGISTER THE SALE DEED. THE SELLER VIDE REPLY DATED 12 - 02 - 2019 THROUGH HIS LAWYER DID NOT REFUTE THE ACCEPTANCE OF RS 90 LAKHS AND OFFERED NO OBJECTION TO PERFORM HIS PART OF AGREEMENT SUBJECT TO PAYMENT OF REMAINING SALE CONSIDERATION OF RS. 60 LAKHS WITH INTEREST @ 24% AFTER THE GRACE T IME I.E. AFTER 110 DAYS OF TIME BUT NOTING SAID ABOUT REFUND OF RS. 27 LAKHS. IT IS THE CASE OF THE ASSESSEE THAT TOTAL SALE CONSIDERATION WAS FIXED @ 1.5 CRORE S AND OUT OF WHICH RS. 90 LAKHS WAS PAID AS ADVANCE AMOUNT A ND REMAINING BALANCE TO BE PAYABLE WAS RS. 60 LAKHS ONLY. FROM THE REPLY OF THE SELLER TO THE NOTICE SENT BY THE ASSESSEE, IT IS CLEAR THAT THE SELLER WAS ASKING REMAINING AMOUNT OF RS. 60 L A KHS ONLY AND HAS NOT DISPUTED THE RECEIVING OF RS. 90 LAKHS, WHICH GOES TO SHOW THAT QUESTION FOR REFUND OF RS. 27 LAKHS TO THE ASSESSEE BY THE SELLER AS OBSERVED BY THE LD. COMMISSIONER, AT ALL DOES NOT ARISE AND IF THAT WOULD HAVE BEEN THERE THAT CERTAINLY THE SELLER WOULD HAVE RAISED OBJECTION QUA PAYMENT OF RS. 90 LAKHS. ON THE BASIS OF AFORESAID CONSIDERATION S AND ANALYZATIONS , WE ARE INCLINED TO ALLOW DEDUCTION OF RS. 27 LAKHS AS WELL U/S 5 4 OF THE ACT. 6 ITA NO. 116/VIZ/2020 ( SMT. ATLURI PADMA ) 5 . IN THE RESULT, APPEAL FILED BY THE ASSESSEE STANDS ALLOWED . ORDER PRONOUNCED IN OPEN COURT ON TH IS 2 5 T H DAY OF JUNE , 2021 . S D / - S D / - (D.S. SUNDER SINGH) ( N.K. CHOUDHRY ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 2 5 T H JUNE , 20 2 1 . VR/ - COPY TO: 1. THE ASSESSEE - SMT. ATLURI PADMA, D.NO. 27 - 37 - 133/1, MG ROAD, VIJAYAWADA. 2. THE REVENUE ITO, WARD - 2(3), VIJAYAWADA. 3. THE PR. CIT , VIJAYAWADA. 4. THE CIT(A) , VIJAYAWADA. 5. THE D.R . , VISAKHAPATNAM. 6. GUARD FILE. BY ORDER (VUKKEM RAMBABU) SR. PRIVATE SECRETARY, ITAT, VISAKHAPATNAM.