DCIT, Bangalore V. Sri. A.R. Chandrashekar, Bangalore

ITA 1216/BANG/2011

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7002 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 9 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 09-09-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 07-12-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PRISCILLA SINGSIT CITIIIDR
• Assessee Lawyers: V SUDHINDRANATH
• Keywords: Cost of acquisition

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER ITA NO.1216/BANG/2011 ASSESSMENT YEAR : 2006-07 THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 2(2), BANGALORE. VS. SHRI A.R. CHANDRASHEKAR REDDY, NO.17/1, BELLANDUR GATE, AMBLIPURA VILLAGE, HDFC ROAD, BANGALORE 560 102. PAN : AMRPR 1656E APPELLANT RESPONDENT APPELLANT BY : MS. PRISCILLA SINGSIT, CIT-III(DR) RESPONDENT BY : SHRI V. SUDHINDRANATH, ADVOCATE DATE OF HEARING : 09.09.2014 DATE OF PRONOUNCEMENT : 12.09.2014 O R D E R PER N.V. VASUDEVAN, JUDICIAL MEMBER THIS APPEAL BY THE REVENUE IS AGAINST THE ORDER DATED 21.9.2011 OF THE CIT(APPEALS)-VI, BANGALORE RELATING TO ASSESSME NT YEAR 2006-07. 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE REA DS AS FOLLOWS:- ITA NO.1216/BANG/2011 PAGE 2 OF 8 1. WHETHER CIT(A) WAS CORRECT IN ADOPTING THE PURC HASE PRICE AS CLAIMED BY THE ASSESSEE IN SPITE OF CLEAR DOCUMENTARY EVIDENCE AS PER THE SALE DEEDS. 2. WHETHER CIT(A) WAS CORRECT IN HOLDING THAT THE E XTRA PAYMENTS MADE BY ASSESSEES BY BANKING CHANNELS WER E FOR THE PROPERTY SOLD IN ABSENCE OF ANY CONFIRMATION FROM T HE SELLERS OR ANY OTHER EVIDENCE. 3. WHETHER CIT(A) WAS CORRECT IN ALLOWING THE EXPEN DITURE CLAIMED BY THE ASSESSEE EVEN THOUGH THE ASSESSEE HA D NOT FULLY DISCHARGED HIS ONUS TO CLAIM THE EXPENDITURE. 3. THE ASSESSEE IS AN INDIVIDUAL. THERE WAS A SEAR CH AND SEIZURE OPERATION CONDUCTED U/S.132 OF THE INCOME TAX ACT, 1961 (ACT) IN THE CASE OF ONE SHRI K.J. PURUSHOTTAM REDDY ON 26.8.2008. IN THE COURSE OF SEARCH, DOCUMENTS BELONGING TO THE ASSESSEE WERE FO UND AND SEIZED. PROCEEDINGS U/S. 153C OF THE ACT WERE INITIATED AGA INST THE ASSESSEE. IN THE PROCEEDINGS U/S. 153C OF THE ACT FOR THE A.Y. 2 006-07, THE ASSESSEE FILED A RETURN OF INCOME DECLARING INCOME OF RS.67, 35,027. THE INCOME DECLARED BY THE ASSESSEE INCLUDED INCOME EARNED BY THE ASSESSEE IN THE BUSINESS OF PURCHASE AND SALE OF PROPERTIES. 4. THE INCOME FROM SALE OF PROPERTIES INCLUDED THE FOLLOWING PROPERTIES:- A. LAND IN SURVEY NUMBER 168/2, DODDA THIMMASANDRA VILLAGE, SARJAPURA HOBLI ANEKAL TALUQ FOR A CONSIDE RATION OF RS.44,00,000/- DURING THE FINANCIAL YEAR 2005-06 RESULTING IN CAPITAL GAINS OF RS.23,83,000/- FOR TH E ASSESSMENT YEAR 2006-07. ITA NO.1216/BANG/2011 PAGE 3 OF 8 B. LAND IN SY. NO.450, SARJAPURA VILLAGE, ANEKAL T ALUQ FOR A TOTAL CONSIDERATION OF RS.76,25,000/- RESULTING IN CAPITAL GAINS OF RS.12,53,000/- FOR THE ASSESSMENT YEAR 200 6-07. 5. THE AO NOTICED THAT THE DECLARED INCOME FROM SAL E OF THE ABOVE PROPERTIES HAD BEEN COMPUTED BY THE ASSESSEE BY TAK ING A FIGURE AS COST OF ACQUISITION OF THESE PROPERTIES WHICH WAS MUCH H IGHER THAN THE PRICE AT WHICH THE AFORESAID PROPERTIES WERE PURCHASED UNDER REGISTERED DOCUMENTS. THE FOLLOWING WAS THE DISCREPANCY NOTIC ED IN THIS REGARD: SL. NO. PARTICULARS OF PROPERTY SOLD SALE CONSIDERATION COST OF ACQUISITION DIFFERENCE [ 4 5 ] AS IN COMPUTATION STATEMENT AS PER PURCHASE DEED 1 SY.NO.168/2, DODDA THIMMASANDRA 44,00,000 20,17,000 2,12,500 18,04,500 2 SY.NO.450, SARJAPURA VILLAGE 76,25,000 42,50,000 15,00,000 1,35,700 26,14,300 44,18,000 6. THE AO CONFRONTED THE ASSESSEE WITH THE ABOVE D ETAILS AND THE ASSESSEE DOES NOT HAVE EVIDENCE TO SUBSTANTIATE THE HIGHER CLAIM OF COST OF ACQUISITION IN THE COMPUTATION STATEMENT. THE AO THEREFORE BROUGHT TO TAX THE DIFFERENCE IN COST OF ACQUISITION OF RS.44, 18,800/-. ITA NO.1216/BANG/2011 PAGE 4 OF 8 7. BEFORE THE CIT(APPEALS), THE ASSESSEE SUBMITTED THAT THE ACTUAL CONSIDERATION PAID TOWARDS PURCHASE OF THE PROPERTY IN SURVEY NO.168/2, DODDA THIMMASANDRA WAS RS.20,17,000 AND NOT RS.2,12 ,500 AS RECORDED IN THE PURCHASE DEED. SIMILARLY, IT WAS SUBMITTED THAT THE COST OF ACQUISITION OF PROPERTY AT SURVEY NO.450, SARJAPURA WAS RS.42,50,000 AND NOT RS.16,35,700. THE ASSESSEE ALSO SUBMITTED THAT THE PROPERTIES WERE PURCHASED AND SOLD WITHIN A SHORT SPAN OF 2 YEARS AND IT WAS IMPROBABLE TO GET SUCH HIGH PRICE APPRECIATION. THE ASSESSEE ALSO POINTED OUT THAT THE PAYMENTS AS CLAIMED BY THE ASSESSEE WERE MADE BY CH EQUES AND WERE MADE EVEN AFTER THE REGISTRATION OF THE PURCHASE DE ED. THE CIT(A) ACCEPTED THE CONTENTION OF THE ASSESSEE AND DETERMI NED INCOME FROM SALE OF THE AFORESAID PROPERTIES BY SUBSTITUTING THE COS T OF ACQUISITION AS CLAIMED BY THE ASSESSEE. THE FOLLOWING WERE THE RELEVANT O BSERVATIONS OF THE CIT(A):- (B) THE A.O. HAS ADOPTED THE COST OF PURCHASE OF PROPERTY IN SURVEY NO. 168/2, DODDA THIMMASANDRA AT RS. 2,12,50 0/-. THIS WAS PURCHASED ON 28.01.2004 AND SOLD ON 19.04.2006 WITHIN A PERIOD OF TWO YEARS THREE MONTHS. THE SALE CONSIDER ATION ADOPTED FOR WORKING OUT THE INCOME WAS RS. 44,00,000/-. EVE N THE COMMON SENSE APPROACH TO THE ISSUE IS SUFFICIENT EN OUGH TO CONCLUDE THAT THE PROPERTY WHICH COSTED 2,12,500/- CANNOT BE SOLD FOR TWENTY TIMES THE COST FOR 44,00,000/- WITHIN A PERIOD OF TWO YEARS THREE MONTHS, WHATEVER MAY BE THE BOOM AND TH E RATE OF APPRECIATION. COMING TO THE FACTS, THE APPELLANT HA S SUBMITTED THE DETAILS OF PAYMENTS MADE TOWARDS THE PURCHASE OF TH E PROPERTY FOR WHICH THEY HAVE PAID A SUM OF RS. 3,20,000/- BE FORE 31.03.2004 RS. 12,75,000/- UPTO 31.03.2005 AND 20,1 7,000/- UPTO 31.03.2006. THE SIGNIFICANT FACT IS THAT THE APPELL ANT IS FOUND TO HAVE PAID AMOUNTS EVEN BEYOND THE DATE OF REGISTRAT ION WHICH IS STATED TO BE ACCEPTED FACT IN VILLAGES. SIMILARLY, TOWARDS THE ITA NO.1216/BANG/2011 PAGE 5 OF 8 PURCHASE OF THE PROPERTY AT SARJAPUR, THE APPELLANT HAS CLAIMED TOTAL PAYMENTS OF RS. 42,50,000/- UPTO 31.03.2006. IN RESPECT OF THIS PROPERTY ALSO, THE DATE OF PURCHASE WAS 04.09. 2004 AND SOLD ON 23.01.2006 WITHIN A PERIOD OF ONE YEAR FIVE MONT HS. HERE ALSO, IF PURCHASE CONSIDERATION IS REGARDED AS RS.16,35,7 00/- AND THE SALE CONSIDERATION IS TAKEN AT 76,25,000/-, THE PRO FIT WORKS OUT TO 466% WHICH IS AN IMPOSSIBILITY. ACCORDINGLY, IT IS DIRECTED THAT THE A.O. SHALL ADOPT THE PURCHASE CONSIDERATION AS PAID AND AS CLAIMED TO DETERMINE THE INCOME EARNED FROM THE TRA NSACTION, SINCE THE PAYMENTS FOR PURCHASE ARE EVIDENCED BY TH E BANK PAYMENTS. ACCORDINGLY, THE ADDITION OF RS.44,18,80 0 IS DELETED. 8. AGGRIEVED BY THE ORDER OF THE CIT(APPEALS), THE REV ENUE HAS PREFERRED THE PRESENT APPEAL BEFORE THE TRIBUNAL. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS. THE LD. D R REITERATED THE STAND OF THE REVENUE AS REFLECTED IN THE GROUNDS OF APPEAL. THE LD. COUNSEL FOR THE ASSESSEE RELIED ON THE ORDER OF THE CIT(APP EALS). 10. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. IT IS NOT DISPUTED BY THE ASSESSEE THAT THE SALE CONSIDERATION FOR THE PURCHA SE OF PROPERTY AT SY.NO.168/2, DODDA THIMMASANDRA AND THE PROPERTY AT SY.NO.450, SARJAPURA WAS RS.2,12,500 AND RS.16,35,700 RESPECTI VELY AS RECORDED IN THE REGISTERED DOCUMENT OF PURCHASE. THE DETAILS O F PAYMENTS MADE BY THE ASSESSEE OVER AND ABOVE WHAT WAS PAID UNDER THE REGISTERED DOCUMENT TO THE VENDORS OF THESE PROPERTIES HAVE BE EN FURNISHED BY THE ASSESSEE WHICH IS AS FOLLOWS:- ITA NO.1216/BANG/2011 PAGE 6 OF 8 ADVANCE PAID DETAILS OF PROPERTY AT SY NO.168/2, D ODDA THIMMASANDRA, BANGALORE. DATE NAME AMOUNT BANK NAME CH.NO. 13.04.2004 NARASIMHAIH 30000 SRINIDHI BANK 42332 13.04.2004 LAKSHMAIAH 10000 SRINIDHI BANK 42331 15.04.2004 RAMAIAH 50000 SRINIDHI BANK 42333 10.08.2004 NARASIMHAIH 80000 SRINIDHI BANK 44793 10.08.2004 NARASIMHAIH 40000 SRINIDHI BANK 44794 10.08.2004 MUNIRAJU 120000 SRINIDHI BANK 44791 22.05.2004 VENKATRAMA 25000 SRINIDHI BANK 43752 14.08.2004 VENKATARAMANAPPA 30000 SRINIDHI BANK 44792 04.03.2005 LAKSHMAIAH 175000 SRINIDHI BANK 52745 28.01.2005 SUBRAMANI 150000 SRINIDHI BANK 50786 28.01.2005 VENKATARAMANAPPA 100000 SRINIDHI BANK 44796 22.05.2004 VENKATARAMANAPPA 25000 SRINIDHI BANK 43752 22.05.2004 SHIVAPPA 20000 SRINIDHI BANK 43751 27.05.2004 NARSIMHAIH 25000 SRINIDHI BANK 43754 27.05.2004 NARAYANAPPA 25000 SRINIDHI BANK 43755 14.12.2004 SUBRAMANI 50000 SRINIDHI BANK 50872 23.03.2006 VENKATARAMANAPPA 250000 SRINIDHI BANK 65413 SUB TOTAL 1205000 AMOUNT PAID BY RAJKUMAR 492000 TOTAL 2017000 DETAILS FOR AMOUNT PAID FOR PURCHASE OF PROPERTY AT SY NO. 450 SARJAPURA DATE NAME AMOUNT BANK NAME CH.NO. 14.09.2004 ABIDA BEGUM 750000 SRINIDHI BANK 44797 20.04.2006 K.H. MUSTAFA 1000000 SRINIDHI BANK 66362 21.04.2006 K.H. MUSTAFA 1000000 SRINIDHI BANK 66363 SUB TOTAL 2750000 AMOUNT PAID BY RAJKUMAR 1500000 TOTAL PAID 4250000 ITA NO.1216/BANG/2011 PAGE 7 OF 8 11. AS FAR AS THE PROPERTY AT DODDA THIMMASANDRA IS CONCERNED, IT WAS PURCHASED ON 28.1.2004 AND SOLD ON 19.4.2006. THE PROPERTY AT SARJAPURA WAS PURCHASED ON 4.9.2004 AND SOLD ON 23.1.2006. I N RESPECT OF THE PROPERTY AT SARJAPURA, CONSIDERATION OVER AND ABOVE THAT RECORDED IN THE REGISTERED DOCUMENT AS CLAIMED BY THE ASSESSEE HAS BEEN PAID BY THE ASSESSEE TO THE VENDORS EVEN AFTER THE COMPLETION O F THE PURCHASE TRANSACTION. THERE IS NO EVIDENCE ON RECORD TO SHO W THAT THE PAYMENTS BY THE ASSESSEE AT THE TIME OF PURCHASE TO THE VENDORS OVER AND ABOVE WHAT IS RECORDED IN THE REGISTERED DOCUMENT, WAS TOWARDS CONSIDERATION FOR PURCHASE OF THE PROPERTY. IN FACT, THE SALE DEED R ECITES THAT THE CONSIDERATION FOR PURCHASE OF THE PROPERTIES AT DOD DA THIMMASANDRA WAS RS.2,12,500 AND THE ONE AT SARJAPURA IS RS.16,35,70 0. THE EVIDENCE SOUGHT TO BE RELIED UPON BY THE ASSESSEE IN THE PRE SENT PROCEEDINGS ARE CONTRARY TO THE WRITTEN REGISTERED DOCUMENT BETWEEN THE PARTIES. IN OUR VIEW, SUCH A CLAIM COULD NOT HAVE BEEN ENTERTAINED BY THE CIT(A). THERE IS NOT EVEN CONFIRMATION BY THE PERSONS WHO SOLD THE P ROPERTY TO THE ASSESSEE THAT THEY RECEIVED PAYMENTS OVER AND ABOVE WHAT HAS BEEN STATED IN THE REGISTERED DOCUMENT AS CONSIDERATION FOR SALE OF THEIR PROPERTIES. IN SUCH A SITUATION, IN OUR VIEW, THE CIT(APPEALS) FELL INTO ERROR IN ACCEPTING THE CLAIM OF THE ASSESSEE. IN OUR VIE W, THE ASSESSEE HAS FAILED TO SUBSTANTIATE THE COST OF ACQUISITION OF T HE PROPERTY AS CLAIMED BY HIM. THE ADDITION WAS RIGHTLY MADE BY THE AO, WHIC H WAS DELETED BY THE ITA NO.1216/BANG/2011 PAGE 8 OF 8 CIT(A) ON IRRELEVANT CONSIDERATIONS. WE, THEREFORE , REVERSE THE ORDER OF THE CIT(APPEALS) AND RESTORE THE ORDER OF THE ASSESSING OFFICER. 12. IN THE RESULT, THE APPEAL BY THE REVENUE IS AL LOWED. PRONOUNCED IN THE OPEN COURT ON THIS 12 TH DAY OF SEPTEMBER , 2014 . SD/- SD/- ( ABRAHAM P. GEORGE ) ( N.V. VASUD EVAN ) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE, DATED, THE 12 TH SEPTEMBER , 2014 . /D S/ COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR / SENIOR PRIVATE SECRETARY ITAT, BANGALORE.