Shri Karsanbhai Khodidas Patel, Ahmedabad V. The ACIT.,Circle-5, Ahmedabad

ITA 1191/AHD/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0036 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 6 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-11-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 27-10-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 29-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: H C SHAH

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER ./ ITA NO. 1188/AHD/2013 / ASSESSMENT YEAR : 2005-06 RAKESHBHAI KARSANBHAI PATEL, NIRMA HOUSE, ASHRAM ROAD, AHMEDABAD-380009 PAN : AGGPP 2910 C VS ACIT, CIRCLE-5, AHMEDABAD ./ ITA NO. 1191/AHD/2013 / ASSESSMENT YEAR : 2005-06 KARSANBHAI KHODIDAS PATEL, NIRMA HOUSE, ASHRAM ROAD, AHMEDABAD-380009 PAN : AGGPP 2909 K VS ACIT, CIRCLE-5, AHMEDABAD / (APPELLANT) / (RESPONDENT) ASSESSEE(S) BY : SHRI H.C. SHAH, AR REVENUE BY : SHRI MUDIT NAGPAL, SR DR / DATE OF HEARING : 27/10/2016 / DATE OF PRONOUNCEMENT: 11/11/2016 / O R D E R PER MAHAVIR PRASAD, JUDICIAL MEMBER:- THESE TWO APPEALS FILED BY DIFFERENT ASSESSEES ARE DIRECTED AGAINST RESPECTIVE ORDERS OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-XI, AHMEDABAD OF EVEN DATED 30.03.2013 FOR ASSESSMENT Y EAR 2005-06. SINCE COMMON ISSUE INVOLVED IN BOTH THE APPEALS, THESE AP PEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLID ATED ORDER FOR THE SAKE OF CONVENIENCE. 2. THE COMMON GROUND RAISED BY THE ASSESSEE(S) IS TO THE EFFECT THAT THE LD. CIT(A) HAS GROSSLY ERRED IN CONFIRMING ADDITION OF RS.4,55,000/- EACH IN ITA NOS. 1188 & 1191/AHD/2013 RAKESHBHAI & KARSANBHAI PATEL VS. ACIT AY : 2005-06 2 THE CASE OF SHRI RAKESHBHAI KARSANBHAI PATEL AND SH RI KARSANBHAI KHODIDAS PATEL UNDER THE HEAD INCOME FROM HOUSE PROPERTY. 3. IN THESE CASES, THE RETURN WAS FILED ON 31.08.20 05 DECLARING TOTAL TAXABLE INCOME OF RS.1,82,06,190/- IN THE CASE OF S HRI RAKESHBHAI K. PATEL AND THE RETURN WAS FILED ON 30.08.2005 DECLARING TO TAL TAXABLE INCOME OF RS.1,17,15,720/- IN THE CASE OF KARSANBHAI K. PATEL FOR THE YEAR UNDER CONSIDERATION. ASSESSEES ARE INDIVIDUAL, HAVING IN COME FROM SALARY, LONG TERM CAPITAL GAIN AND INCOME FROM OTHER SOURCES LIK E INTEREST, DIVIDEND ETC AND ALSO HAVING AGRICULTURAL INCOME AND THEIR INCOM E WAS PROCESSED U/S 143(1) OF THE ACT. SUBSEQUENTLY, NOTICES U/S 143(2 ) OF THE ACT WERE ISSUED WHICH WAS ATTENDED BY THE LD. AR FOR THE ASSESSEE(S ). ON PERUSAL OF THE BALANCE SHEET OF THE PREVIOUS YEAR, AO FOUND THAT T HE ASSESSEE JOINTLY OWNS FOLLOWING IMMOVABLE PROPERTIES: NIRMA HOUSE RS.26,96,436/- NIMA HOUSE RS. 10,17,3937- FARM HOUSE RS. 19,99,234/- FARM FURNITURE RS.12,34,992/- 3.1 DURING THE ASSESSMENT PROCEEDINGS OF PRECEDING YEAR, THE ASSESSEE WAS ASKED TO EXPLAIN WHY THE INCOME FROM NIMA HOUSE PROPERTY SHOULD NOT BE DETERMINED AS PER THE PROVISIONS OF SECTION 23 OF THE ACT AS THE ASSESSEE WAS HAVING MORE THAN ONE SELF OCCUPIED PRO PERTY. AFTER CONSIDERING THE ASSESSEE'S SUBMISSIONS IN THIS REGA RD FOR A.Y. 2004-05, AS THE SAME WERE FOUND NOT JUSTIFIED, THEREFORE AO HELD AS UNDER: (I) SINCE NIRMA HOUSE IS USED FOR BUSINESS PURPOSE, THE SAME DOES NOT FALL UNDER THE PURVIEW OF SECTION 23(2) OF THE ACT. (II) SINCE THE BOOK VALUE OF NIRMA- FARM HOUSE IS H IGHER THAN THE BOOK VALUE OF NIMA HOUSE, THEREFORE, THE FARM HOUSE IS T AKEN TO BE THE PROPERTY IN RESPECT OF WHICH ASSESSSEE WOULD HAVE E XERCISED HIS OPTION UNDER CLAUSE (A) OF SECTION 23(4) OF THE ACT . ITA NOS. 1188 & 1191/AHD/2013 RAKESHBHAI & KARSANBHAI PATEL VS. ACIT AY : 2005-06 3 (III)ACCORDINGLY, THE INCOME FROM HOUSE PROPERTY IN RESPECT OF NIMA HOUSE WAS ESTIMATED ON THE BASIS OF ITS AREA SIZE A ND MONTHLY RENT FETCHING CAPACITY ETC., AT RS.4,55,000/- AND ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. 3.2 WITH THIS BACKGROUND, WHEN THE RETURN OF CURREN T YEAR WAS EXAMINED, THE AO FOUND THAT THE PROPERTY OF NIMA HOUSE AND TH E FARM-HOUSE ETC. HAVE NOT BEEN REFLECTED IN THE BALANCE SHEET AS SUC H. WHEN THE AO CONFRONTED THE ASSESSEE WITH THESE INFORMATION, IT WAS CONTENDED THAT THE SAID PROPERTIES HAVE BEEN TRANSFERRED TO KARSANBHAI KHODIDAS PATEL-HUF AND THE FARM HOUSE AND ITS FURNITURE HAVE BEEN TRAN SFERRED TO KARSANBHAI KHODIDAS PATEL. IN SUPPORT OF HIS CLAIM THE ASSESSE E HAS FILED AN AFFIDAVIT IN THIS REGARD. ACCORDINGLY, IT WAS CONTENDED BY THE A SSESSEE BEFORE THE AO THAT THE ADDITION MADE IN THE EARLIER A.Y. 2004-05, UNDER THE HEAD INCOME FROM HOUSE PROPERTY, CANNOT BE MADE DURING THE CURR ENT YEAR, AS THESE PROPERTIES DO NOT BELONG TO THE ASSESSEE NOW. FURTH ER, THE ASSESSEE SUBMITTED THE WORKING OF COMPUTATION OF LONG TERM C APITAL LOSS, WHICH WAS OTHERWISE NOT CLAIMED IN THE RETURN OF INCOME F OR CURRENT YEAR. THE ASSESSEE ALSO SUBMITTED BEFORE THE AO THE DETAILS O F PAYMENT RECEIVED ON THIS ACCOUNT IN THE FOLLOWING MANNER:- (1) CHEQUE NO.649107 DATED 06.10.2005 RS.32,34 ,227/- (2) CHEQUE NO.949963 DATED 06.10.2005 RS. 14,6 8,750/- 3.3 THE ASSESSEE'S ABOVE CONTENTION WAS EXAMINED BY THE AO AND THE SAME WAS FOUND NOT ACCEPTABLE TO HIM FOR THE FOLLOW ING REASONS. (I) THOUGH THE ASSESSEE HAS CLAIMED THAT THE PROPE RTIES HAVE BEEN TRANSFERRED AND SHOWN IN THE ANNUAL ACCOUNTS, HOWEV ER, FROM THE RETURN OF INCOME, IT WAS TRANSPIRED THAT THE ASSESS EE HAS NOT FURNISHED COPY OF THE BALANCE SHEET AND OTHER DETAILS FROM WH ICH IT COULD BE DEDUCED THAT THE ABOVE TRANSACTION WAS REALLY HAPPE NED AND ALSO ITA NOS. 1188 & 1191/AHD/2013 RAKESHBHAI & KARSANBHAI PATEL VS. ACIT AY : 2005-06 4 REFLECTED IN THE BOOKS OF ACCOUNT AND THE RETURN OF INCOME, PRECISELY IN THE BALANCE SHEET, AS SUCH. (II) THE FARM HOUSE, NIMA HOUSE AND OTHER ASSETS O F THE ASSESSEE, WHICH ARE CLAIMED TO HAVE BEEN TRANSFERRED TO OTHER RELAT ED ENTITIES, ARE IMMOVABLE PROPERTIES IN NATURE AND THE SAME CAN ONLY BE TRANSFERRED TO ANOTHER PERSON BY WAY OF PROPER AGRE EMENT TO THIS EFFECT AND ALSO BY PAYING PROPER STAMP DUTY TOWARDS REGISTRATION OF SUCH AGREEMENT WITH THE REGISTRAR OF TRANSFER OF PR OPERTY, AS SUCH. HOWEVER, THE ASSESSEE HAS NOT SUBMITTED ANY SUCH DOCUMENTS/RECORDS TO SUGGEST THAT THE ABOVE ESSENTI AL LEGAL FORMALITIES HAS EVER BEEN COMPLIED WITH. (III) IN THE COMPUTATION OF INCOME, THE ASSESSEE HA S NOT REFLECTED THE SALE/TRANSFER OF SUCH PROPERTY AND RESPECTIVE CAPIT AL GAIN/LOSS ON SUCH ACCOUNT. HAD IT BEEN A GENUINE TRANSACTION OF TRANSFER OF PROPERTIES, THE RESPECTIVE CAPITAL GAIN/LOSS SHOULD HAVE BEEN REFLECTED IN THE RETURN OF INCOME. THUS NOT CLAIMIN G SUCH SO CALLED CAPITAL TRANSACTIONS ON THE GROUND THAT THE CAPITAL LOSS WAS NOT TO BE CLAIMED, IS NOTHING BUT AN AFTERTHOUGHT ONLY. (IV) MOREOVER, THE ASSESSEE HAS SIMPLY PROVIDED THE DETAILS OF THE SO CALLED PAYMENTS THROUGH CHEQUES. THE ASSESSEE HAS ALSO NOT PROVIDED BASIC DETAILS LIKE THE TOTAL CONSIDERATION FOR THE TRANSF ER OF PROPERTY, FURTHER DETAILS OF AMOUNT RECEIVED ON SUCH TRANSACTION, WOR KING OF CAPITAL GAIN, IF ANY, OUT OF ABOVE DEALING ETC. MOREOVER IN ABSENCE OF AGREEMENT TO SALE OF PROPERTY ETC., IT CANNOT BE ASCERTAINED THAT THE ABOVE PAYMENTS WERE RECEIVED IN RESPECT OF THE ABOVE PROPERTIES ONLY. THE DATE OF CHEQUE I.E. 06.10.2005 ALSO PERTA INS TO THE SUBSEQUENT YEAR ONLY. THE ASSESSEE HAS NOT PROVIDED COPY OF BA NK STATEMENT/BOOKS TO EXAMINE THE NATURE OF ABOVE PAYM ENT ETC. THUS ITA NOS. 1188 & 1191/AHD/2013 RAKESHBHAI & KARSANBHAI PATEL VS. ACIT AY : 2005-06 5 THE ASSESSEE'S EXPLANATION IN RESPECT OF PAYMENT RE CEIVED TOWARDS SALE OF THE ABOVE PROPERTIES WERE FOUND NON VERIFIABLE, AS SUCH. (V) THE ASSESSEE HAS ALSO SIMPLY SUBMITTED AN AFFID AVIT FROM THE ASSESSEE'S SIDE IN WHICH THE TRANSFER OF PROPERTY IN THE NAME OF OTHER RELATED ENTITIES HAVE BEEN MENTIONED. IT IS A SETTLED LAW T HAT THE AFFIDAVIT IS NOTHING BUT A SELF SERVING DOCUMENT WHICH CANNOT PA RTAKE THE NATURE OF EVIDENCE UNTIL AND UNLESS HAS BEEN SUPPORTED WIT H OTHER CIRCUMSTANTIAL EVIDENCES THERETO. MOREOVER, AN IMMO VABLE PROPERTY CANNOT BE TRANSFERRED SIMPLY ON AN AFFIDAVIT OR ORA L AGREEMENT AS THE TRANSFER OF PROPERTY ACT STIPULATES NOT ONLY WRITTE N AGREEMENT TO THIS EFFECT, BUT ALSO PAYMENT OF REQUISITE STAMP DUTY ON SUCH TRANSACTION, FOR REGISTRATION OF SUCH TRANSACTION. (VI) THE ASSESSEE ALSO DID NOT FURNISH THE BALANCE SHEET AND COPY OF URN OF SHRI KARSANBHAI K. PATEL (HUF) TO PROVE THAT NIMA H OUSE HAS BEEN REFLECTED THEREIN, AS CLAIMED. 3.3 THE ASSESSING OFFICER FINALLY MADE THE ADDITION OF RS.4,55,000/- EACH U/S 23 OF THE ACT TOWARDS THE INCOME FROM HOUSE PRO PERTY ON BOTH THE ASSESSEES ACCOUNT BY FOLLOWING OBSERVATIONS:- 5.3 FROM THE ABOVE FACTS AND CIRCUMSTANCES WHAT AP PEARS IS THAT THE ASSESSEE HAS NOT TRANSFERRED THE PROPERTY TO OTHER RELATED ENTITIES AS SUCH, BUT HAS RESORTED TO A PAPER EXERCISE JUST TO AVOID OR C IRCUMVENT THE PROVISIONS OF SECTION 23 OF THE ACT. IN ABSENCE OF ANY SUPPORTING LEGAL DOCUMENTS AND OTHER INFORMATION, IT IS HELD THAT THE ASSESSEE'S C ONTENTION IS NOTHING BUT AN EYEWASH OR AFTERTHOUGHT TO AVOID THE LEGITIMATE TAX LIABILITY IN RESPECT OF THE ADDITIONAL HOUSE PROPERTY BEING OWNED BY HIM AND LI ABLE FOR THE DEEMED PROPERTY INCOME U/S 23(4)(B) OF THE ACT. ACCORDINGL Y ASSESSEE'S CONTENTION IS REJECTED WHILE HOLDING THAT THE PROPERTY UNDER CONS IDERATION I.E. NIMA HOUSE FOR ALL LEGAL AND PRACTICAL PURPOSES STILL BELONGS TO THE ASSESSEE ONLY. ACCORDINGLY, INCOME FROM HOUSE PROPERTY TOWARDS NIM A HOUSE, U/S 23 OF THE I.T. ACT IS WORKED OUT AT RS.4,55,000/-, BASED ON T HE WORKING GIVEN IN THE A.Y. 2004-05. ITA NOS. 1188 & 1191/AHD/2013 RAKESHBHAI & KARSANBHAI PATEL VS. ACIT AY : 2005-06 6 3.4 THEREAFTER, THE APPELLANT-ASSESSEE PREFERRED FI RST STATUTORY APPEAL BEFORE THE CIT(A) WHO DISMISSED THE APPEAL HOLDING THAT THE IMMOVABLE PROPERTY HAS NOT BEEN TRANSFERRED IN THE NAME OF KA RSANBHAI KHODIDAS PATE HUF. ACCORDINGLY, HE HELD THAT INCOME DERIVED FROM THE SAID PROPERTY AMOUNTING TO RS.4,55,000/- DESERVES TO BE TAXED IN THE HANDS OF THE APPELLANT-ASSESSEE AND CONFIRMED THE ADDITION OF RS .4,55,000/-. 4. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS AS WERE MADE BEFORE THE LOWER AUTHORITIES. ON THE CONTRARY , LD. DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 5. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD, GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW AS WELL AS THE AFFIDAVIT FILED BY THE ASSESSEE. WE HAVE ALSO GONE THROUGH THE VOLUMINOUS PAPER-BOOK FILED BY THE ASSESSEE WHICH HAS BEEN CON SIDERED UNDER RULE 18(6) OF THE INCOME-TAX (APPELLATE TRIBUNAL) RULES. THE LD. COUNSEL FOR THE ASSESSEE ALSO FILED THE BALANCE-SHEET OF BOTH THE A PPELLANT/ASSESSEES AND IT IS MANIFESTED FROM THE BALANCE-SHEET OF THE ASSESSEE(S ) THAT THE IMMOVABLE PROPERTY NIMA HOUSE HAS BEEN REFLECTED AS TRANSFER IN THE NAME OF KARSANBHAI KHODIDAS PATEL HUF. IT IS, THEREFORE, CR YSTAL CLEAR THAT THE PROPERTY HAS BEEN TRANSFERRED TO KARSANBHAI KHODIDA S PATEL HUF. IN VIEW THEREOF, WE SET ASIDE THE ORDER OF THE LD. CIT(A) I N CONFIRMING THE ADDITION OF RS.4,55,000/- MADE BY THE ASSESSING OFFICER AND BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. 6. IN THE RESULT, ASSESSEES APPEALS ARE ALLOWED. ORDER PRONOUNCED IN THE COURT ON 11 TH NOVEMBER, 2016 AT AHMEDABAD. SD/- SD/- N.K. BILLAIYA (ACCOUNTANT MEMBER) MAHAVIR PRASAD (JUDICIAL MEMBER) AHMEDABAD; DATED 11/11/2016 ITA NOS. 1188 & 1191/AHD/2013 RAKESHBHAI & KARSANBHAI PATEL VS. ACIT AY : 2005-06 7 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE . / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD