Ch Raja Reddy, Nizamabad District, Hyderabad V. ITO,Ward-2, Nizamabad, Nizamabad

ITA 1161/HYD/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6100 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 1 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 07-06-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 14-09-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A SITARAMA RAO
• Assessee Lawyers: D SATYANARAYANA
• Keywords: Opportunity of being heard; Principle of natural justice; Cost of acquisition

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER S.NO. ITA NO. AY ASSESSEE RESPONDENT 1 & 2 1168/H/15 & 1167/H/15 2006-07 & 2007-08 CH. GANGAHDHAR, NIZAMABAD DIST. PAN AMHPC 0253 A INCOME TAX OFFICER, WARD 2, NIZAMABAD 3 1171/H/15 2006-07 KONKA GANGAVVA, NIZAMABAD DT. PAN BLWPK 3024N -DO- 4 1161/H/15 2007-08 CH. RAJA REDDY, NIZAMABAD DIST. PAN AMHPC 9756E -DO- 5 1162/H/15 2006-07 CH. SHOBHA RANI, NIZAMABAD DIST. PAN AMHPC 0243J -DO- 6 & 7 1163/H/15 & 1164/H/15 2006-07 & 2007-08 CH. HANUMANDLU, NIZAMABAD DIST. PAN AMHPC 9773F -DO- 8&9 1165/H/15 & 1166/H/15 2006-07 & 2007-08 S. MOHAN REDDY, NIZAMABAD DIST. PAN CJRPS 6470 G -DO- 10 1172/H/15 2006-07 KURMI YADALA SAYANNA, NIZAMABAD DIST. PAN BLWPK 3023 M -DO- 11 1173/H/15 2006-07 KURMA DANDU SURAMMA, NIZAMABAD DIST. PAN BLWPK 3035 R -DO 2 ITA NO. 1167/H/15 AND OTHERS CH. GANGADHAR AND OTHERS ASSESSEE BY : SHRI D. SATYANARAYANA REVENUE BY : SHRI A. SITARAMA RAO DATE OF HEARING 20-09-2016 DATE OF PRONOUNCEMENT 28-09-2016 O R D E R PER BENCH: ALL THESE APPEALS ARE PERTAINING TO VARIOUS ASSESS EES DIRECTED AGAINST THE ORDERS OF CIT(A) 5, HYDERABAD, ALL DA TED, 19/06/2015. AS IDENTICAL ISSUES ARE INVOLVED IN ALL THESE APPEA LS, THEY WERE CLUBBED AND HEARD TOGETHER, THEREFORE, A COMMON ORD ER IS PASSED FOR THE SAKE OF CONVENIENCE. 2. TO DISPOSE OF THESE APPEALS, WE REFER TO THE FAC TS FROM ITA NO. 1168/HYD/15 FOR AY 2006-07 IN THE CASE OF CH. GANGA DHAR. 3. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE HEREIN IS AN INDIVIDUAL AND DERIVES AGRICULTURAL INCOME. DURING THE FINANCIAL YEAR RELEVANT FOR THE ASSESSMENT YEAR 2006-2007, THE ASS ESSEE HAD ENTERED INTO SALE OF 30 GUNTAS OF LAND SITUATED AT BARDIPUR VILLAGE SIVAR, DICHPALLY MANDAL, NIZAMABAD DIST. TO M/S.SLN REAL ESTATES, NIZAMABAD THROUGH ITS MANAGING PARTNER SRI K. NAREN DER REDDY. THE SAID PARTNERSHIP FIRM IN TURN SOLD THE LAND TO M/S. P.SRINIVAS AND OTHERS, AOP, NIZAMABAD. A SURVEY WAS CONDUCTED AT T HE PREMISES OF M/S. LAXMI PRIYA BUILDERS AND DEVELOPERS, NIZAMABAD ON 20.02.2008. ACCORDING TO THE INFORMATION AVAILABLE AT THE SAID PREMISES, M/S.SLN REAL ESTATES, NIZAMABAD THROUGH ITS MANAGING PARTNE R SRI K.NARENDER REDDY PURCHASED 30 GUNTAS OF LAND FROM T HE ASSESSEE FOR A CONSIDERATION OF RS.13,95,000/- AS AGAINST THE RE GISTERED VALUE OF RS.56,000/-, THE SAME WAS SRO VALUE AT THAT POINT O F TIME. BASED ON THE STATEMENT OF MR. K.NARENDER REDDY, THE ASSESSIN G OFFICER ISSUED A NOTICE U/S.148 ON 7.11.2008 REQUIRING THE ASSESSE E TO FILE THE RETURN OF INCOME, IN RESPONSE TO WHICH, THE ASSESSEE FILED THE RETURN OF INCOME ON 20.08.2009 ADMITTING 'NIL' INCOME. THE AS SESSING OFFICER 3 ITA NO. 1167/H/15 AND OTHERS CH. GANGADHAR AND OTHERS ISSUED NOTICES FROM TIME TO TIME U/S.143(2) AND REC ORDED A STATEMENT FROM THE ASSESSEE. HE QUESTIONED ABOUT THE SALE OF THE AGRICULTURAL LAND MENTIONED ABOVE AND REQUIRED THE ASSESSEE TO E XPLAIN THE AMOUNT RECEIVED. HE CATEGORICALLY STATED THAT HE RE CEIVED ONLY RS.56,000/- FOR THE FIRST TRANSACTION AND RS.93,500 /- FOR THE SECOND TRANSACTION. THE ASSESSING OFFICER MENTIONED TO THE ASSESSEE THAT ACCORDING TO THE STATEMENT OF SRI K.NARENDER REDDY AT HIS OFFICE, THE SALE PRICE IS NOTED AS RS.1395000/-. THE ASSESSEE C LEARLY DENIED HAVING RECEIVED ANY AMOUNT IN ADDITION TO THE SALE CONSIDERATION AS PER THE REGISTERED DOCUMENT. BUT AO RELIED ON THE S TATEMENT OF MR. K. NARENDER REDDY RECORDED DURING THE SURVEY ON 02/12/ 09 AND COMPLETED THE ASSESSMENT U/S.143(3) R.W.S.147 ON 29 .12.2009, DETERMINED THE TOTAL LONG TERM CAPITAL GAIN AT RS.1 3,87,545/-. WHILE DOING SO, HE DETERMINED THE CAPITAL GAIN AT RS.13,8 7,545/- BY CONSIDERING THE SALE CONSIDERATION OF THE LAND AT R S.13,95,000/- AND THE COST OF ACQUISITION OF RS.7,455/-. THE ASSESSEE SUBMITTED THAT HE DID NOT RECEIVE ANY AMOUNT IN ADDITION TO THE AMOUN T MENTIONED IN THE REGISTERED DOCUMENT BUT THE ASSESSING OFFICER DID N OT ACCEPT THE EXPLANATION EVEN THOUGH THERE IS NO DISPUTE WITH RE GARD TO THE REGISTERED VALUE ADOPTED, WHICH IS AS PER SRO VALUA TION. 4. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE P REFERRED AN APPEAL BEFORE THE CIT(A). 5. THE CIT(A) PASSED A COMMON ORDER IN THE SAID CAS E OF THE ASSESSEE FOR AY 2006-07 AND 2007-08. 6. BEFORE THE CIT(A), THE ASSESSEE CONTENDED THAT THE ADDITION WAS MADE MERELY BASED ON A STATEMENT BY THIRD PARTY , WHOSE CORRECTNESS OR OTHERWISE WAS NOT TESTED OR CORROBOR ATED WITH ANY MATERIAL EVIDENCE, WHERE NO SUCH MATERIAL WAS AVAIL ABLE WITH THE ASSESSING OFFICER AND THE ASSESSING OFFICER HAD NO PROOF FOR RECEIPT OF EXCESS SALE CONSIDERATION THAN SHOWN IN THE SALE DEED AND IT WAS 4 ITA NO. 1167/H/15 AND OTHERS CH. GANGADHAR AND OTHERS PLEADED, THAT THE STATEMENT MADE BY THE BUYERS BE P UT TO STRICT TEST OF EVIDENCE. IT WAS ALSO CONTENDED THAT THE ASSESSING OFFICER VIOLATED NORMS OF NATURAL JUSTICE IN NOT PROVIDING THE COPY OF DEPOSITION GIVEN BY BUYER AND BY NOT PROVIDING OPPORTUNITY TO CROSS EXAMINE THE WITNESS, AS THE SAME WAS PROPOSED TO BE USED AS EVI DENCE AGAINST THE ASSESSEE. 7. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSE E, THE CIT(A) ELABORATELY DISCUSSED THE ISSUE AT LENGTH AND CONFI RMED THE ACTION OF THE AO BY OBSERVING AS UNDER: THUS, BASED ON FACTS, IT IS REASONABLE TO HOLD THA T THERE IS PRIMARY EVIDENCE IN THE FORM OF IMPOUNDED MATERIAL TO SHOW THAT THE SELLERS HAVE RECEIVED THE SAID AMOUNTS WHICH IS OVER AND ABOVE THE AMOUNTS MENTIONED IN REGISTERED DOCUMENTS . THE SAME GETS FURTHER CONFIRMED THROUGH THE STATEMENTS RECORDED FROM MR. NARENDER REDDY & OTHERS, WHO HAD CATEGORIC ALLY MENTIONED THAT THE AMOUNTS AS MENTIONED ABOVE WERE PAID TO THE FARMERS, BEING THE SELLERS OF LAND. THUS, BASED ON FACTS, IT IS REASONABLE TO CONCLUDE THAT THE ARGUMENT OF THE ASS ESSEE THAT THEY HAVE NOT RECEIVED ANY AMOUNT OTHER THAN THE AM OUNTS MENTIONED IN THE REGISTERED DOCUMENTS, DO NOT HAVE LEGS TO STAND, WITH THE CLEAR EVIDENCE BROUGHT ON RECORD IN THE FORM OF IMPOUNDED MATERIAL AND THE STATEMENTS RECORDED FROM THE CONCERNED PARTIES. ACCORDINGLY, IT IS HELD THAT THE ASSESSING OFFICER IS JUSTIFIED IN ADOPTING THE VALUE OF SALE TRANSACTIONS AT RS.13,95,000/- & RS.23,25,000/- AND COMPUTING THE CAPITAL GAINS AT RS.13,87,545/- & RS.23,12,025/- FOR A.YS. 2006-0 7 & 2007-08 RESPECTIVELY. ON THESE LINES, THE GROUNDS OF APPEAL TREATED AS DISMISSED. 8. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSESS EE IS IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS, WHICH ARE COMMON IN ALL THE APPEALS UNDER CONSIDERATION, EXCEPT THE QUANTUM OF ADDITIONS: 1) THE ORDER OF THE LEARNED CIT(A) IS ERRONEOUS TO THE EXTENT IT IS PREJUDICIAL TO THE ASSESSEE. 2) THE LEARNED CIT (A) ERRED IN CONFIRMING THE ACTI ON OF THE ASSESSING OFFICER IN ADOPTING THE SALE CONSIDERATIO N OF THE LAND SOLD AT RS.13,95,000/- AGAINST THE ACTUAL SALE CONS IDERATION RECEIVED OF RS.56,000/-. 5 ITA NO. 1167/H/15 AND OTHERS CH. GANGADHAR AND OTHERS 3) THE LEARNED CIT(A) ERRED IN HOLDING THAT THERE W AS ANY INFORMATION AVAILABLE SUPPORTING THE PAYMENT OF SAL E CONSIDERATION TO THE ASSESSEE FOUND DURING THE COUR SE OF SURVEY; 4) THE LEARNED CIT(A) ERRED IN CONFIRMING THE ACTIO N OF THE ASSESSING OFFICER IN DETERMINING THE COST PRICE OF THE LAND AT RS. 7,455/- . 5) ANY OTHER GROUND OR GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING. 9. CONSIDERED THE SUBMISSIONS OF BOTH THE COUNSELS AND MATERIAL FACTS ON RECORD. THE ASSESSEE DID NOT HAVE THE STAT EMENT RECORDED DURING THE CROSS EXAMINATION WITH THE LAND OWNERS A ND MR. K. NARENDER REDDY ON 12/11/09 AND 19/11/09. THERE WERE OTHER DEPOSITIONS RECORDED BY AO WITH THE CO-OWNERS AND M EMBERS OF AOP ON 02/12/09, 09/12/09 AND 15/12/09. SINCE THEY DID NOT HAVE COPIES OF STATEMENTS ON WHICH AO RELIED AND COMPLETED THE ASSESSMENT, THEY FILED A PETITION UNDER RTI ACT WITH THE DEPART MENT. THE PETITION WAS FILED ONLY AFTER FILING THE APPEAL BEFORE ITAT. WE ARE CONCERNED WITH THE ATTITUDE OF THE ASSESSEE AS WELL SINCE THE RIGHT TO MAKE APPEAL BEFORE ITAT WILL NOT BE AUTOMATIC UNLESS THE APPEAL IS FILED WITH PROPER INFORMATION AS PER RULES SET BY THE STA TUTE. THE ASSESSEE SUBMITTED BEFORE US THAT THEY COULD NOT GET THE REQ UIRED INFORMATION FROM THE DEPARTMENT WHICH WAS USED TO COMPLETE THE ASSESSMENT. IT IS WORTH TO NOTE THAT THEY FILED THE PETITION BEFOR E DEPARTMENT UNDER RTI ACT BUT EVEN THEN THE AO CHOSE NOT TO SHARE THE INFORMATION WITH THE ASSESSEE. HE HAD SUPPLIED THE STATEMENT RECORDE D BY MR. K. NARENDER REDDY ON 02/12/09 AND SOME LOOSE SHEETS WH ICH ARE FOUND DURING THE SURVEY. 9.1 THE FACTS ARE VERY CLEAR THAT THE AO COMPLETED THE ASSESSMENT BASED ON THE STATEMENT RECORDED BY MR. K. NARENDER REDDY ON 02/12/09 EVEN THOUGH HE DENIED MAKING SUCH PAYMENTS AT THE TIME OF CROSS EXAMINATION BY THE FARMERS/OWNERS OF THE LAND . EVEN IN THE STATEMENT RECORDED BY MR. K. NARENDER REDDY ON 02/1 2/2009, HE ACCEPTS THAT HE MAKES PAYMENTS TO THE CO-OWNERS AND NOT TO THE 6 ITA NO. 1167/H/15 AND OTHERS CH. GANGADHAR AND OTHERS FARMERS DIRECTLY. WE ARE NOT SURE WHETHER THE PAYME NTS MADE THROUGH THE CO-OWNERS HAD REACHED THE FARMERS, CONSIDERING THE ILLITERATE BACK GROUND OF THE FARMERS. 9.2 CONSIDERING THE OVERALL FACTS OF THE CASE AND T HE CRUCIAL STATEMENTS ON WHICH AO COMPLETED THE ASSESSMENT WER E NOT SHARED WITH THE FARMERS. EVEN AFTER FILING OF RTI PETITION TO SEEK THOSE STATEMENTS BY THE ASSESSEE, THE AO CHOSE NOT TO SHA RE THOSE INFORMATION, LEAD US TO INFER THAT THE AO HAS COMPL ETED THE ASSESSMENT RELYING MAINLY ON THE STATEMENTS OF MR. K. NARENDER REDDY AND WITHOUT ANY COGENT MATERIAL ON RECORD. 9.3 IN VIEW OF THE ABOVE DISCUSSION, FOR THE SAKE O F JUSTICE AND FAIR TRIAL TO THE ASSESSEE AND OTHERS, WE REMIT THE ISSU E BACK TO THE FILE OF THE AO WITH A DIRECTION TO SHARE ALL THE STATEMENTS COMPLETELY WITH THE FARMERS AND DO THE ASSESSMENT DE NOVO. NEEDLESS TO MENTION THAT PROPER OPPORTUNITY OF BEING HEARD TO THE ASSESSEE A ND OTHERS IN THE MATTER. 10. AS THE ISSUE IS MATERIALLY IDENTICAL IN ALL OTH ER APPEALS UNDER CONSIDERATION, FOLLOWING THE CONCLUSIONS DRAWN IN T HE CASE OF CH. GANGADHAR (SUPRA), WE REMIT THESE APPEALS ALSO TO T HE FILE OF THE AO WITH IDENTICAL DIRECTIONS. 11. IN THE RESULT, ALL THE APPEALS ARE TREATED AS A LLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 28 TH SEPTEMBER, 2016. SD/- SD/- (D. MANMOHAN) (S. RIFAUR RAHMAN ) VICE PRESIDENT ACCOUNTANT MEMBER HYDERABAD, DATED: 28 TH SEPTEMBER, 2016 7 ITA NO. 1167/H/15 AND OTHERS CH. GANGADHAR AND OTHERS KV COPY TO:- 1. CH. GANGAHDHAR, NIZAMABAD DIST. C/O SRI S. RAMA RAO, ADVOCATE, FLAT NO. 102, SHRIYAS ELEGANCE, H. NO. 3-6-643, ST. NO. 9, HIMAYAT NAGAR, , HYDERABAD 500 029 2. KONKA GANGAVVA, NIZAMABAD DT. 3. CH. RAJA REDDY, NIZAMABAD DIST. 4. CH. SHOBHA RANI, NIZAMABAD DIST. 5. CH. HANUMANDLU, NIZAMABAD DIST. 6. S. MOHAN REDDY, NIZAMABAD DIST. 7. KURMI YADALA SAYANNA, NIZAMABAD DIST. 8. KURMA DANDU SURAMMA, NIZAMABAD DIST. 9. ITO, WARD 2, NIZAMABAD 10. CIT(A) 5, HYDERABAD 11 CIT 5, HYDERABAD 12. DR, ITAT, HYDERABAD ` 13. GUARD FILE