ITO, Coimbatore V. K.Shameena, Coimbatore

ITA 1200/CHNY/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6434 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 15-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B SAGADEVAN
• Keywords: Sale consideration of property below Jantri Value; Reassessment proceedings

Judgement Text

, .. - , IN THE INCOME TAX APPELLATE TRIBUNAL SMC A BENCH, CHENNAI , !' # BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER . / ITA NO. 1200/MDS/2017 / ASSESSMENT YEAR : 2009-10 THE INCOME-TAX OFFICER, NON CORPORATE WARD-1(3), 63, RACE COURSE ROAD, COIMBATORE-641 001. VS. SMT. K. SHAMEENA , 177, V.H.ROAD, COIMBATORE-641 001. PAN ALTPS 3781 L ( $% / APPELLANT) ( &'$% /RESPONDENT) / APPELLANT BY : SHRI B. SAGADEVAN, JCIT / RESPONDENT BY : NONE / DATE OF HEARING : 12.07.2017 ! / DATE OF PRONOUNCEMENT : 21.08.2017 !( / O R D E R THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS)-2, COIMB ATORE DATED 30.01.2017 FOR ASSESSMENT YEAR 2009-10. - - ITA 1200/MDS/17 2 2. THE GROUNDS RAISED BY THE REVENUE IN THIS APPEAL IS AS UNDER : 1. THE ORDER OF THE LEARNED CIT(A) IS AGAINST FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LEARNED CIT(A) HAS ERRED IN NOT CONSIDERING THE FACT THAT THE TRANSFER OF THE PROPERTIES IN QUESTIO N WERE NOT DONE BY WAY OF A CONVEYANCE DEED. 3. THE LEARNED CIT(A) HAS ERRED IN NOT CONSIDERING THE FACT THAT NO CAPITAL GAINS IS OFFERED BY THE ASSESS EE IN THE YEAR IN WHICH THE TRANSFER TOOK PLACE AND THE S TAND TAKEN BY THE AO THAT NO TRANSFER TOOK PLACE. 4. THE LEARNED CIT(A) OUGHT TO HAVE CONSIDERED THAT THE ASSESSEE AND HER HUSBAND HAVE SOLD THE PROPERTI ES IN THEIR INDIVIDUAL CAPACITIES ONLY AND NOT IN THE CAPACITY OF THE FIRM. 5. THE LEARNED CIT(A) OUGHT TO HAVE CONSIDERED THE FACT THAT THE SALE PROCEEDS WERE DEPOSITED IN THE INDIVI DUAL ACCOUNTS OF THE ASSESSEE AND HER HUSBAND AND NOT IN THE BANK ACCOUNT OF THE FIRM. 6. THE LEARNED CIT(A) HAS ERRED IN NOT GIVING AN OPPORTUNITY TO REBUT THE CLAIM MADE BY THE ASSESSEE . 3. ON PERUSING THE APPEAL, WE FIND THAT THE AO HA D FILED THE APPEAL WITH DELAY OF 04 DAYS. THE LEARNED AO HAS SU BMITTED A PETITION DATED 12.05.2017 SEEKING CONDONATION OF DE LAY AND THE AO STATED IN THIS PETITION THAT THE DELAY OF 04 DAY S IN FILING THE APPEAL BEFORE THIS TRIBUNAL IS ON ACCOUNT OF ASCERT AINING THE - - ITA 1200/MDS/17 3 CORRECT FACTS, EVIDENCES, LAW OF THE ISSUE AND IT T OOK TIME TO LOCATE THE SAME AND AS SOON AS HE TRACED THE RECORD S, HE FILED THE APPEAL ON 15.05.2017. IN OUR OPINION, THE REASO NS EXPLAINED BY THE AO FOR FILING THE APPEAL BELATEDLY IS BONAFI DE. ACCORDINGLY, THE DELAY IS CONDONED AND THE APPEAL I S ADMITTED. 4. THE FACTS OF THE CASE ARE THAT THE AO RECEIVED INTIMATION FROM THE AO IN THE CASE OF THE ASSESSEES HUSBAND T HAT SHE ALONG WITH HER HUSBAND SHRI ANWAR BASHA SOLD CERTAI N IMMOVABLE PROPERTIES AND THAT THE CAPITAL GAINS FRO M THAT SALE WAS NOT OFFERED TO TAX BY HIM. AS PER THE INFORMAT ION RECEIVED, THEY SOLD TWO PROPERTIES VIDE DOCUMENT NO.2128/2008 DATED 30.4.2008 FOR 27,00,000/- (GUIDE-LINE VALUE- 37,05,000/-) AND DOCUMENT NO.2129/2008 DATED 30.4.2008 FOR 27,00,000/- (GUIDE-LINE VALUE- 37,05,000/-). THE AO OBSERVED THAT IN THE RETURN FILED BY THE ASSESSEE FOR THE A.Y. 2009-10, HER SHARE OF CAPITAL GAINS WAS ALSO NOT ADMITTED IN THAT RETURN. THEREFORE, THE AO REOPENED THE ASSESSMENT PROCEEDINGS BY ISSUING N OTICE U/S.148 OF THE ACT. IN RESPONSE, THE ASSESSEE STAT ED THAT THE - - ITA 1200/MDS/17 4 ORIGINAL RETURN FILED ON 21.1.2010 MAY BE TREATED A S RETURN IN RESPONSE TO NOTICE U/S.148 OF THE ACT. 4.1 DURING THE REASSESSMENT PROCEEDINGS, THE ASSESS EES REPRESENTATIVE EXPLAINED THAT THE PROPERTIES SOLD W ERE HELD AS THIS YEARS OPENING STOCK OF THE PARTNERSHIP FIRM C ALLED M/S. BABA & COMPANY, WHEREIN THE ASSESSEE AND HER HUSBAND WER E PARTNERS. THE PROPERTIES IN QUESTION WERE ORIGINAL LY PURCHASED BY THE PARTNERS I.E. THE ASSESSEE AND HER HUSBAND A ND HAD BEEN INTRODUCED INTO THE FIRM AS CAPITAL AFTER THE CONST ITUTION OF THE FIRM ON 1.4.2006. THOSE PROPERTIES WERE SOLD BY THE PAR TNERSHIP FIRM AND RELEVANT TRANSACTIONS WERE REFLECTED IN THE RET URN FILED BY THE FIRM. THE ASSESSEE ALONG WITH HER HUSBAND WERE ONLY AUTHORIZED SIGNATORIES FOR THE DOCUMENTS EXECUTED O N BEHALF OF THE FIRM. SO, THE SALE OF PROPERTIES CANNOT BE HEL D AS SALES MADE BY THEM IN THEIR INDIVIDUAL CAPACITIES AND THE RE WAS NO QUESTION OF COMPUTING THE CAPITAL GAINS IN THEIR IN DIVIDUAL HANDS. THE AO WAS HOWEVER NOT CONVINCED WITH THE SUBMISSIO NS OF THE ASSESSEE. ACCORDING TO THE AO, THE PROPERTIES WERE PURCHASED BY THE ASSESSEE AND HER HUSBAND IN THEIR INDIVIDUAL CAPACITIES AND THEY COULD NOT HAVE BECOME THE PROPERTIES OF TH E - - ITA 1200/MDS/17 5 PARTNERSHIP FIRM WITHOUT ANY DEED CONVEYING THE PRO PERTIES TO THE FIRM. FURTHER, THE NAME OF THE PARTNERSHIP DID NOT APPEAR IN THE SALE DEEDS. ON THAT REASONING, THE AO DID NOT ACCE PT THE ASSESSEES CLAIM THAT THE SAID PROPERTIES HAVE BEEN INTRODUCED INTO THE FIRM. ACCORDING TO THE AO, THE ASSESSEE CONVERTED THE LANDS AS STOCK IN TRADE IN HER BUSINESS AND THEREFO RE THE GAINS ON SALE SHOULD HAVE BEEN OFFERED AS SHORT TERM CAPI TAL GAINS IN HER HANDS. HENCE, THE AO PROCEEDED TO COMPUTE THE CAPITAL GAINS IN HER HANDS BY APPLYING THE PROVISIONS OF SE C.50C AND MADE THE ADDITION OF SHORT TERM CAPITAL GAINS AMOUN TING TO 31,52,250/-. AGGRIEVED, THE ASSESSEE WENT IN APPEA L BEFORE THE CIT(APPEALS). 4.2 BEFORE THE CIT(APPEALS), THE LD. AR OF THE ASSE SSEE EXPLAINED THE FACTS OF THE CASE AND FILED WRITTEN S UBMISSIONS ALONG WITH THE DOCUMENTS EVIDENCING THE SALE OF LAN DS, THE INCOME-EXPENDITURE AND BALANCE SHEET STATEMENTS OF THE ASSESSEE AND HER HUSBAND FOR A.YS 2007-08 TO 2009-1 0, PROFIT AND LOSS ACCOUNT AND BALANCE SHEET OF M/S. BABA & C OMPANY FOR THE YEARS RELEVANT TO THE A.YS 2007-08 TO 2010-11, COPIES OF RETURNS FILED BY THE ASSESSEE, HER HUSBAND AND THE PARTNERSHIP - - ITA 1200/MDS/17 6 FIRM FOR THE ABOVE YEARS IN A PAPER BOOK FORM. THE LD. AR EXPLAINED BEFORE THE CIT(APPEALS) THAT THE SAID LAN DS WERE PURCHASED BY THE ASSESSEE AND HER HUSBAND THROUGH P OWER OF ATTORNEYS EXECUTED IN THEIR FAVOUR. THEREAFTER, TH E LANDS WERE BROUGHT INTO BOOKS OF ACCOUNTS OF THE PARTNERSHIP F IRM M/S. BABA & CO. IN THE ACCOUNTS FILED BY THE PARTNERSHIP FOR M ALONG WITH THE RETURN FOR A.Y 2007-08 ITSELF, THE PURCHASE AMO UNT PAID WAS REFLECTED AS AN ASSET SIDE IN THE BALANCE SHEET OF THE FIRM UPON INTRODUCTION OF THE SAME BY THE PARTNERS INTO THE F IRM AND CREDITING THE PARTNERS CURRENT CAPITAL ACCOUNT. T HE SAID PROPERTIES CONTINUED TO BE SHOWN IN AY 2008-09 ALSO BY TRANSFERRING THEM TO THE PURCHASES AND WHEN THE PRO PERTIES HAVE BEEN ACTUALLY SOLD IN THE FY 2008-09 I.E. IN THE AS SESSMENT YEAR IN QUESTION, THE SALES WERE SHOWN IN THE PROFIT AND LOSS ACCOUNT OF THE PARTNERSHIP FIRM AND THE PROFITS FROM THE SA LE OF THESE PROPERTIES HAS BEEN OFFERED TO TAX BY THE FIRM. CO PIES OF RELEVANT ACCOUNTS AND A RECONCILIATION OF PURCHASES AND SALE S REFLECTED IN THE BOOKS OF THE FIRM HAVE BEEN FILED IN THE PAPER BOOK. SO, THE AR ARGUED THAT THE AO WAS NOT CORRECT IN HOLDING TH AT THE ASSESSEE SOLD THE PROPERTIES IN HER INDIVIDUAL CAPA CITY. SINCE - - ITA 1200/MDS/17 7 THE PURCHASES OF THE IMPUGNED PROPERTIES WERE MADE BY THE ASSESSEE AND HER HUSBAND THROUGH POWER OF ATTORNEY BUT NOT THROUGH A CONVEYANCE DEED, THE SAME WERE INTRODUCED IN THE FIRM AS SUCH WITHOUT EXECUTING ANY CONVEYANCE DEED IN FAVOUR OF THE PARTNERSHIP FIRM. THE LD. AR FURTHER ARGUED TH AT THE PARTNERSHIP FIRM IS NOT A DISTINCT LEGAL ENTITY DIF FERENT FROM THE PARTNERS CONSTITUTING THE PARTNERSHIP AND THEREFORE NO SEPARATE CONVEYANCE IS REQUIRED WHEN THOSE LANDS WERE CONTRI BUTED AS CAPITAL IN THE FIRM, MORE SO, WHEN THE PURCHASES WE RE THROUGH POWER OF ATTORNEY. HE SUBMITTED THAT THE RETURN FO R THE FIRM FOR ALL THE ABOVE YEARS I.E. FROM THE A.YS 2006-07 TO 2 009-10 WERE FILED WITHIN STIPULATED TIME REFLECTING THE ABOVE T RANSACTIONS. THEREFORE, THERE IS NO QUESTION OF AN AFTERTHOUGHT IN SHOWING THE SALES IN THE HANDS OF THE FIRM. IN FACT, THE FIRM WAS GENUINELY CONSTITUTED FOR CARRYING ON BUSINESS OF REAL ESTATE AND THE ASSESSMENTS IN THE CASE OF THE FIRM HAVE BEEN SEPAR ATELY COMPLETED WITHOUT DISPUTING THE SALES SHOWN IN THE ACCOUNTS OF THE FIRM. THE AR ALSO BROUGHT TO THE NOTICE OF THE CIT(APPEALS) THAT SIMILAR ADDITION MADE BY THE AO IN THE CASE OF ASSESSEES HUSBAND, SHRI ANWAR BASHA HAS BEEN DELETED BY THE C IT(A). IN - - ITA 1200/MDS/17 8 HIS CASE ALSO, THE ASSESSMENT WAS COMPLETED BY ASSE SSING HIS SHARE OF CAPITAL GAINS ON THE SALE OF THE VERY SAME PROPERTIES ALONG WITH HIS WIFE I.E. THE ASSESSEE, IGNORING THE FACT THAT THE SALE OF THOSE LANDS WAS REFLECTED IN THE ACCOUNT OF THE PARTNERSHIP FIRM, M/S./ BABA & CO. AND PROFIT OFFER ED TO TAX. AGAINST THAT ASSESSMENT, THE CIT(A)-I, COIMBATORE V IDE ORDER IN APPEAL NO.237/11-12 DATED 28.10.2013 DELETED THE AD DITION OF SHORT TERM CAPITAL GAINS BY HOLDING THAT PROFITS OF FERED IN THE HANDS OF THE FIRM SHOULD NOT HAVE BEEN REASSESSED A S INCOME IN THE HANDS OF SHRI ANWAR BASHA AS SHORT TERM CAPITAL GAINS. 5. THE CIT(APPEALS) OBSERVED THAT AS PER THE ASSESS MENT ORDER, THE AO CAME TO A VIEW THAT GAINS ON SALE OF THE SAID PROPERTIES SHOULD BE ASSESSED IN THE HANDS OF THE A SSESSEE, SINCE SHE WAS A SIGNATORY FOR THE SALE DEED EXECUTE D IN FAVOUR OF THE BUYERS ON SALE OF THOSE PROPERTIES. FURTHER, TH E CIT(APPEALS) OBSERVED THAT THE AO WAS OF THE OPINION THAT THE PR OPERTIES SHOULD HAVE BEEN CONVEYED TO THE FIRM THROUGH SEPAR ATE DEEDS, WHEN THEY HAD BEEN INTRODUCED IN THE BOOKS OF THE F IRM AND THE ASSESSEES VERSION THAT THE PROPERTIES WERE INTRODU CED IN THE FIRM AND PROFITS ON SALES WERE OFFERED TO TAX BY TH E FIRM WAS AN - - ITA 1200/MDS/17 9 AFTERTHOUGHT. THE CIT(APPEALS) DID NOT AGREE WITH THE AO BECAUSE THE FACT THAT THE PROPERTIES WERE INTRODUCE D INTO THE FIRM, M/S. BABA & CO. IS EVIDENT FROM THE RETURNS F ILED BY THE FIRM EVEN BEFORE THIS ASSESSMENT. ACCORDING TO THE CI T(APPEALS), THERE IS NO REQUIREMENT OF TRANSFERRING THE PROPERT IES TO THE FIRM THROUGH A SEPARATE CONVEYANCE DEED, WHEY THEY WERE INTRODUCED AS CAPITAL IN THE FIRM. THE PROPERTIES OF THE FIRM ARE USUALLY HELD IN THE NAME OF THE PARTNERS EVEN WHEN FUNDS OF THE FIRM ARE USED FOR PURCHASE, SINCE THE PARTNERSHIP F IRM IS NOT A LEGAL PERSON CAPABLE OF HOLDING THE PROPERTIES. T HE CIT(APPEALS) OBSERVED THAT THE PARTNERSHIP FIRM IS ONLY A COMPENDIUM OF INDIVIDUALS, WHO UNITE FOR A COMMON B USINESS PURPOSE AND SECONDLY, THE SALE OF THE IMPUGNED PROP ERTIES IN THE ASSESSMENT YEAR IN QUESTION HAS BEEN REFLECTED IN T HE BOOKS OF ACCOUNTS OF THE FIRM AND NET PROFIT HAS BEEN ARRIVE D AT IN ITS PROFIT AND LOSS ACCOUNT SUBMITTED ALONG WITH THE RETURN FO R THIS ASSESSMENT YEAR. THE CIT(APPEALS) FURTHER OBSERVE D THAT SCRUTINY ASSESSMENT OF THE FIRM HAS ALSO BEEN COMPL ETED ACCEPTING THE SALE OF THESE PROPERTIES SHOWN UNDER SALES AND THE PROFITS SO WORKED OUT. WITHOUT DISPUTING THA T, ACCORDING TO - - ITA 1200/MDS/17 10 THE CIT(APPEALS), THE AO ONCE AGAIN INTENDS TO TAX THE PROFIT ON THE SALE OF THE VERY SAME PROPERTIES IN THE HANDS O F THE ASSESSEE, WHICH AMOUNTS TO DOUBLE TAXATION OF THE S AME PROFITS, WHICH IS NOT PERMISSIBLE IN LAW. THEREFORE, THE CIT(APPEALS) OBSERVED THAT THE AO IS NOT JUSTIFIED IN ASSESSING THE SHORT TERM CAPITAL GAINS ON SALE OF THE IMPUGNED PROPERTIES IN THE HANDS OF THE ASSESSEE AND DELETED THE ADDITION. AGAINST THI S, THE REVENUE IS IN APPEAL BEFORE US. 6. AFTER HEARING THE LD.D.R AND PERUSING THE MATER IALS ON RECORD, I AM OF THE OPINION THAT THE LD.CIT(A) DECI DED THE ISSUE IN FAVOUR OF ASSESSEE ON THE REASON THAT THE IMPUGN ED PROPERTY WAS INTRODUCED INTO THE FIRM, NAMELY, M/S.BABA & CO MPANY ACCORDING TO HIM, IT WAS DISCLOSED TO THE DEPARTMEN T IN THE RETURN OF INCOME FILED BY THE FIRM, VIZ. M/S.BABA & COMPANY. IT IS ALSO NOTED BY THE LD.CIT(A) THAT FUNDS OF THE FIRM WAS USED FOR PURCHASE OF PROPERTY. FURHTER, ALL THE IMPUGNED PR OPERTY WAS REFLECTED IN THE BOOKS OF ACCOUNT OF THE FIRM AND N ET PROFIT SHOWN IN THE P&L A/C DISCLOSED IN THE RETURN OF INCOME FI LED BY THE FIRM. IN THE ASSESSMENT OF THE FIRM, THE LD. ASSESSING OF FICER ACCEPTED - - ITA 1200/MDS/17 11 THE SAME AND COMPLETED THE ASSESSMENT. THE AO WITH OUT DISPUTING THESE FACTS, THE SALE OF IMPUGNED PROPERT Y WAS BROUGHT INTO TAX IN THE HANDS OF ASSESSEE, WHICH WAS NOT CO RRECT AND IT AMOUNTS TO DOUBLE TAXATION. BEING SO, IN MY OPINION , I DO NOT FIND ANY INFIRMITY IN THE ORDER OF LD.CIT(A) AND THE SA ME IS TO BE CONFIRMED. HENCE, THIS GROUND OF APPEAL RAISED BY T HE DEPARTMENT STANDS REJECTED. 7. IN THE RESULT THE APPEAL OF REVENUE IS DISMISSED . ORDER PRONOUNCED ON 21 ST AUGUST, 2017 AT CHENNAI. SD/- ( ' # $ % ) &'()*+,)-../),01 234566.7*8)*89:;<:, '= /CHENNAI, >2 /DATED, THE 21 ST AUGUST, 2017 K S SUNDARAM 2? @ABA / COPY TO: 1 . / APPELLANT 3. C&1 / CIT(A) 5. ADE F / DR 2. / RESPONDENT 4. C / CIT 6. EGH / GF