Siripurapu Venkata Ramana Rao, Visakhapatnam V. The Income Tax Officer, Ward-2(4), Visakhapatnam

ITA 124/VIZ/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 3687 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 4 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 19-04-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D K SONOWAL
• Keywords: Salary income; Cost of acquisition; Corroborative evidences; Reassessment proceedings; Set aside
• Section: 143(3); 143(1); 201; 147; 263

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . . , BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , ACCOUNTANT MEMBER . / I . T .A.NO. 1 24 /V IZ /201 8 ( / ASSESSMENT YEAR : 20 09 - 10 ) SIRIPURAPU VENKATA RAMANA RAO D.NO.37 - 7 - 10, OPP.5 TH TOWN POLICE STATION, SATYANAGAR MANCHUKONDVA R I THOTA SIVALAYAM STREET VISAKHAPATNAM [PAN : CPTPS9594D ] VS. INCOME TAX OFFICER WARD - 2 ( 4 ) VISAKHAPATNAM ( / APPELLANT) ( / RESPONDENT) / APPELLANT BY : S HRI G.V.N.HARI , A R / RESPONDENT BY : SHRI D.K.SONOWAL , CIT D R / DATE OF HEARING : 03 . 0 7 . 201 9 / DATE OF PRONOUNCEMENT : 28 .0 8 . 201 9 / O R D E R P ER SHRI D.S.SUNDER SINGH, ACCOUNTANT MEMBER : DELAY : THE ASSESSEE FILED THE APPEAL WITH THE DELAY OF 39 DAYS. THE ASSESSEE FILED CONDONATION PETITION AND SUBMITTED THAT THE DELAY WAS DUE TO MEDICAL REASONS, HENCE, REQUESTED TO CONDONE THE DELAY. AFTER HEARING BOTH THE SIDES, WE CONDONE THE DELAY AND ADMIT T HE APPEAL. 2 I.T.A. NO . 1 24 /VIZ/201 8 . A.Y.20 09 - 1 0 S.VENKATA RAMANA RAO ., VISAKHAPATNAM THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE PR.COMMISSIONER OF INCOME TAX [PR.CIT] - 1, VISAKHAPATNAM VIDE F.NO.PR.CIT - 1/VSP/263/2017 - 18 DATED 29.12.2017 FOR THE ASSESSMENT Y EAR (A.Y.)2009 - 10. 2. IN THIS CASE, THE ASSESSEE IS AN INDIVIDUAL DRAWING SALARY FROM HINDUSTAN SHIPYARD LTD. HE HAS FILED THE RETURN OF INCOME ON 22.03.2010 DECLARING INCOME FROM SALARY OF RS.2,27,370/ - AND THE RETURN WAS PROCESSED U/S 143(1) OF THE IN COME TAX ACT (IN SHORT ACT). SUBSEQUENTLY, THE ASSESSING OFFICER (AO) RECEIVED INFORMATION FROM THE JOINT COMMISSIONER OF INCOME TAX, RANGE - 1, VISAKHAPATNAM THAT THE ASSESSEE HAD RECEIVED THE AMOUNT OF RS.8,00,000/ - TOWARDS COMMISSION FROM SHRI S.V.S.S.R.SASTRY (SHRI SASTRY). THE SAID INFORMATION WAS COLLECTED BY THE JOINT COMMISSIONER OF INCOME TAX, RANGE - 1, VISAKHAPATNAM DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS IN THE CASE OF SHRI S.V.S.S.R.SASTRY AND PASSED IT ON THE AO . THE AO FOUND THAT THE AMOUNT OF RS.8,00,000/ - RECEIVED FROM SHRI SASTRY WAS NOT DECLARED IN THE RETURN OF INCOME. HENCE, THE AO REOPENED THE ASSESSMENT U/S 147 AND TAKEN UP THE CASE FOR SCRUTINY AND THE ASSESSMENT WAS COMPLETED U/S 143(3) R.W.S. 147 OF THE ACT ACCEPT ING THE INCOME RETURNED. SUBSEQUENTLY, LD.PR.CIT HAS 3 I.T.A. NO . 1 24 /VIZ/201 8 . A.Y.20 09 - 1 0 S.VENKATA RAMANA RAO ., VISAKHAPATNAM TAKEN UP THE CASE FOR REVISION U/S 263 AND FOUND THAT THE ASSESSEE HA D PURCHASED THE VACANT SITE OF 180 SQ.YDS AT BALAYYA SASTRY LAYOUT FROM ONE SHRI SASTRY ON 21.04.1999 FOR A CONSIDERATION RS.30,000/ - AND HAD BEEN ENJOYING THE SAME SINCE THEN AND THE RIGHTS OVER THE PROPERTY WERE VE ST ED WITH HIM TILL DISPOSAL OF THE SAME IN THE YEAR 2008. AS PER THE RECITALS OF REGISTERED SALE AGREEMENT EXECUTED ON 21.04.1999, THE ASSESSEE HA S PAID THE CONSIDERAT ION OF RS.30,000/ - AND TAKEN POSSESSION OF THE PROPERTY AT THE TIME OF EXECUTION OF THE DOCUMENT. HENCE, THE LD.PR.CIT VIEW ED THAT THE TRANSFER WAS COMPLETE AS PER SECTION 53A OF THE TRANSFER OF PROPERTY ACT AS ON THE DATE OF EXECUTION OF THE SALE AGREEMENT I.E. 21.04.1999. SUBSEQUENTLY, THE ASSESSEE HAS TRANSFERRED THE ABOVE PROPERTY TO SHRI SASTRY ON 06.09.2008 FOR A STATED CONSIDERATION OF RS.8,00,000/ - . HENCE, THE LD.PR.CIT IS OF THE VIEW THAT THE ASSESSEE IS LIABLE TO PAY LONG TERM CAPITAL GAINS TAX ON THE PROFIT S ACCRUED FROM TRANSFER OF THE SAID PROPERTY. HOWEVER, THE PR.CIT FOUND THAT THE AO H AS COMPLETED THE ASSESSMENT WITHOUT MAKING PROPER VERIFICATION OR ENQUIR IES REGARDING LIABILITY OF CAPITAL GAINS TAX ON TRANSFER OF THE SAID PROPERTY. ACCORDINGLY, THE LD.PR . CIT HA S ISSUED NOTICE U/S 263 DIRECTING THE ASSESSEE TO EXPLAIN AS 4 I.T.A. NO . 1 24 /VIZ/201 8 . A.Y.20 09 - 1 0 S.VENKATA RAMANA RAO ., VISAKHAPATNAM TO WHY THE ASS ESSMENT FRAMED U/S 143(3) R.W.S. 147 SHOULD NOT BE REVISED U/S 263 OF THE ACT. 3. IN RESPONSE TO THE NOTICE ISSUED, THE ASSESSEE HAS EXPLAINED THAT THOUGH THE SALE AGREEMENT WAS ENTERED FOR INITIAL CONSIDERATION OF RS.30,000/ - , HE HAS PAID THE AMOUNT OF RS.8,00,000/ - ON VARIOUS OCCASIONS UPTO THE FINANCIAL YEAR 2006 - 07 FOR ACQUIRING THE PROPERTY . THE ASSESSEE ALSO FURNISHED THE DETAILS OF THE SOURCES FOR PAYMENT OF THE SUM OF RS.8,00,000/ - . THE ASSESSEE FURTHER STATED THAT THE PROPERTY WAS N OT REGISTERED IN HIS NAME BY SALE DEED SINCE, THE TOTAL SALE CONSIDERATION WAS NOT PAID. HE FURTHER SUBMITTED THAT THE IMPUGNED PROPERTY WAS ALSO UNDER LITIGATION BY THIRD PARTY NAMELY SHRI KALIKESWARA REDDY AND THE COMMISSIONER, GVMC. WHE N THE PROCEEDING S WERE PENDING BEFORE THE HONBLE II ADDITIONAL JUNIOR CIVIL JUDGE, THE ISSUE WAS SETTLED BY COMPROMISE DEAL FOR A SUM OF RS.8,00,000/ - WHICH WAS PAID TO THE ASSESSEE . THUS SUBMITTED BEFORE THE LD.PR.CIT THAT THE ASSESSEE HA S RECEIVED BACK THE AMOUNT THAT WAS GIVEN TO SHRI SASTRY AND THERE WA S NO GAIN TO THE ASSESSEE ON ACCOUNT OF THE TRANSACTION, HENCE, ARGUED THAT THERE IS NO CASE FOR ASSESSMENT OF CAPITAL GAINS. THE LD.PR.CIT CONSIDERED THE EXPLANATION OF THE ASSESSEE VIS - - VIS MATERIAL PLACED BEFORE HI M AND 5 I.T.A. NO . 1 24 /VIZ/201 8 . A.Y.20 09 - 1 0 S.VENKATA RAMANA RAO ., VISAKHAPATNAM OBSERVED THAT THE ASSESSEE HAD PURCHASED THE IMPUGNED PROPERTY ADMEASUR I NG 180 SQ.YDS OF VACANT LAND AT BALAYYA SASTRY LAYOUT FROM SHRI SASTRY THROUGH REGISTERED AGREEMENT CUM SALE. AS PER THE AGREEMENT, THE POSSESSION OF THE PROPERT Y WAS GIVEN AFTER RECEIPT OF THE ENTIRE CONSIDERATION OF RS.30,000/ - AND THE SAID DOCUMENT WAS REGISTERED IN THE OFFICE OF THE DISTRICT REGISTRAR, VISAKHAPATNAM. THUS, THE TRANSACTION WAS COMPLETE AS PER SECTION 53A OF TRANSFER OF PROPERTY ACT. THOUGH TH E ASSESSEE STATED TO HAVE PAID THE AMOUNT OF RS.8 LAKHS SUBSEQUENTLY ON VARIOUS DATES, NO EVIDENCE WAS FURNISHED BEFORE THE LD.PR.CIT. THE ASSESSEES CLAIM WITH REGARD TO THE EXPENDITURE FOR GRAVEL FILLING, LEVELING OF SITE AND CONSTRUCTION OF WALL A ND SHED WAS ALSO NOT ACCEPTED BY THE LD.PR.CIT IN THE ABSENCE OF SUPPORTING EVIDENCES. HENCE, THE LD.PR.CIT HELD THAT THE ASSESSMENT ORDER PASSED BY THE AO WITHOUT VERIFICATION OF THE ISSUES IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE, ACC ORDINGLY SET ASIDE THE ASSESSMENT AND DIRECTED THE AO TO BRING THE ENTIRE LONG TERM CAPITAL GAINS ARISING FROM TRANSFER OF SUBJECT PROPERTY TO TAX BY TAKING THE AMOUNT OF RS.32,400/ - AS COST OF ACQUISITION AND RS.8,00,000/ - AS SALE CONSIDERATION. THE LD.P R.CIT FURTHER DIRECTED THE AO TO VERIFY THE CORRECTNESS OF ASSESSEES CLAIM WITH REGARD TO COST OF 6 I.T.A. NO . 1 24 /VIZ/201 8 . A.Y.20 09 - 1 0 S.VENKATA RAMANA RAO ., VISAKHAPATNAM IMPROVEMENT FOR CONSTRUCTION OF SHED AND TO ALLOW THE INDEXED COST OF ACQUISITION AND DECIDE THE COMPUTATION OF CAPITAL GAINS AFTER HEARING THE ASSESSEE. 4. AGGRIEVED BY THE ORDER THE OF LD.PR.CIT, THE ASSESSEE IS IN APPEAL BEFORE THIS TRIBUNAL. DURING THE APPEAL HEARING, THE LD.AR ARGUED THAT THE ASSESSMENT WAS REOPENED FOR THE PURPOSE OF VERIFICATION OF COMMISSION RECEIVED FROM SHRI SASTRY. THE AO HAS E XAMINED THE COMPLETE DETAILS AND THE SAME IS EVIDENT FROM THE ASSESSMENT ORDER DATED 27.11.2015. THE AO HA D ACCEPTED THE ASSESSEES CONTENTION REGARDING THE RECEIPT OF MONEY FROM SHRI SASTRY WHICH IS NOTHING BUT THE REPAYMENT OF ADVANCE PAID BY HIM . T HERE FORE ARGUED THAT THE ISSUE WA S EXAMINED BY THE AO DURING THE ASSESSMENT. HENCE THERE IS NO ERROR IN THE ASSESSMENT ORDER AND REQUESTED TO QUASH THE NOTICE ISSUED U/S 263 AND RESTORE THE ASSESSMENT ORDER. 5. ON THE OTHER HAND, THE LD.DR ARGUED THAT THE AO IN THE SCRUTINY PROCEEDINGS CONFINED H ER SELF WITH REGARD TO THE RECEIPT OF THE AMOUNT FROM SHRI SASTRY. SH E HAS NOT MADE ANY ENQUIRIES AS TO WHY THE MONEY WAS RECEIVED AND THE TAXATION OF CAPITAL GAINS ON SALE OF PROPERTY. SHE BELIEVED THAT THE ASSESSEE HAS MADE THE PAYMENT OF RS.8,00,000/ - TO SASTRY T HOUGH 7 I.T.A. NO . 1 24 /VIZ/201 8 . A.Y.20 09 - 1 0 S.VENKATA RAMANA RAO ., VISAKHAPATNAM THE ASSESSEE FAILED TO FURNISH ANY EVIDENCE AND THE SAME WA S NOT MENTIONED IN THE REGISTERED SALE AGREEMENT, THUS ARGUED THAT THE AO HAS NOT MADE PROPER ENQUIRY AND DID NOT APPLY HER MIND WITH REGARD TO TAXABILITY OF CAPITAL GAINS . IN VIEW OF THE ABOVE, THE LD.DR ARGUED THAT THE ASSESSMENT ORDER PASSED BY THE AO IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE AND THE LD.PR.CIT HAS RIGHTLY TAKEN THE CASE FOR REVISION WHICH REQUIRED TO BE UPH ELD. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. IN THIS CASE, THE ASSESSMENT WAS REOPENED FOR VERIFICATION OF THE COMMISSION RECEIVED FROM SHRI SASTRY. DURING THE REASSESSMENT PROCEEDINGS, THE ASSESSEE EXPLAINED THAT HE HAD RECEIVED THE MONEY OF RS.8.00 LAKHS FROM SHRI SASTRY IN THE YEAR 2008 WHICH WAS HIS OWN MONEY RETURNED BY SHRI SASTRY WHICH WAS GIVEN IN THE YEAR 1999 FOR PURCHASE OF THE LAND ADMEASURING 180 SQ.YDS AT BALAYYASASTRY LAYOUT. ACCORDING TO THE ASSESSEE I T WAS NOT A COMMISSION. THOUGH THE ASSESSEE STATED THAT HE HAD RECEIVED THE MONEY PAID BY HIM TO SHRI SASTRY, NO EVIDENCE WAS PRODUCED BEFORE THE AO REGARDING THE PAYMENTS MADE TO SHRI SASTRY FOR PURCHASE OF THE SAID LAND IN QUESTION. THE RECITALS OF THE AGREEMENT ALSO DID NOT SUPPORT THE CONTENTION OF THE ASSESSEE. THE AO HAD ACCEPTED THE 8 I.T.A. NO . 1 24 /VIZ/201 8 . A.Y.20 09 - 1 0 S.VENKATA RAMANA RAO ., VISAKHAPATNAM EXPLANATION OF THE ASSESSEE WITHOUT PRODUCTION OF ANY EVIDENCE TO SHOW THAT THE ASSESSEE HAS PAID THE AMOUNT TO SHRI SASTRY EARLIER . NOT EVEN CONFI RMATION WAS OBTAINED FROM SHRI SASTRY WITH REGARD TO PAYMENT OF RS.8 LAKHS FOR PURCHASE OF THE LAND. THE ASSESSEE HAD ENTERED INTO AGREEMENT CUM POSSESSION OF THE PROPERTY DATED 21.04.1999 PLACED IN PAGE NO.8 TO 10 OF THE PAPER BOOK AS PER WHICH THE TOTAL CONSIDERATION WAS ONLY RS.30,000/ - AND THE PROPERTY WAS GIVEN POSSESSION WITH A CONDITION TO REGISTER THE SAID LAND WHENEVER THE ASSESSEE REQUESTED FOR REGISTRATION. AS PER THE SAID SALE AGREEMENT CUM POSSESSION, THE TRANSACTION WAS COMPLETE AND THE SALE CONSIDERATION WAS FIXED AT RS.30,000/ - WHICH WAS FULLY PAID BY THE ASSESSEE. THOUGH THE ASSESSEE STATED TO HAVE PAID RS.8,00,000/ - SUBSEQUENT TO REGISTRATION, THERE WAS NO MENTION REGARDING THE AMOUNTS PAYABLE IN THE SALE AGREEMENT OR THE EVIDENCE WITH THE ASSESSEE REGARDING THE PAYMENT. THE AO SIMPLY ACCEPTED THE EXPLANATION OF THE ASSESSEE WITHOUT ANY SUPPORTING EVIDENCE. THE AO DID NOT EXAMINE THE SETTLEMENT DEED OF THE ASSESSEE AND SHRI SASTRY WHICH RESULTED IN PAYMENT OF RS.8 LAKHS TO THE ASSESSEE. T HE AO ALSO DID NOT EXAMINE THE SALE DEED EXECUTED BY SHRI SASTRY IN FAVOUR OF THIRD PARTY. LETTER DATED 24.06.2007 PLACED IN PAPER BOOK ANNEXED IN PAGE NO.14 SHOWS THAT THE PROPERTY WAS IN 9 I.T.A. NO . 1 24 /VIZ/201 8 . A.Y.20 09 - 1 0 S.VENKATA RAMANA RAO ., VISAKHAPATNAM POSSESSION OF SHRI S.V.RAMANA RAO AND THE ASSESSEE INTENDED TO REG ISTER THE PROPERTY IN HIS OWN NAME. ALL THESE FACTS ESTABLISH THAT THE AO DID NOT VERIFY THE DETAILS AND ACTUAL SALE CONSIDERATION, HENCE, THERE WAS AN ERROR IN THE ASSESSMENT ORDER. SIMILARLY, THE ASSESSEE HAD RECEIVED A SUM OF RS.8 LAKHS. THE SAME WAS ALLOWED WITHOUT SUPPORTING EVIDENCE. HENCE, THE ASSESSMENT ORDER PASSED BY THE AO WAS PREJUDICIAL TO THE INTEREST OF THE REVENUE. THEREFORE, WE HOLD THAT THE LD.PR.CIT HAS RIGHTLY TAKEN UP THE CASE FOR REVISION U/S 263 AND THE SAME IS UPHELD. HOWEVER, T HE LD.PR.CIT DIRECTED THE AO TO BRING THE SALE CONSIDERATION FOR LONG TERM CAPITAL GAINS AND THE COST OF ACQUISITION TO BE TAKEN AS RS.32,400/ - AFTER ALLOWING THE INDEXED COST OF ACQUISITION. THE LD.PR.CIT ALSO DIRECTED THE AO TO EXAMINE THE TAXABILITY OF CONSIDERATION RECEIVED BY THE ASSESSEE WITH PARTICULAR REFERENCE TO SETTLEMENT DEED BETWEEN THE ASSESSEE AND SHRI SASTRY OR THE SALE DEED OF SHRI SASTRY AFTER EXAMINING SHRI SASTRY AND DECIDE THE ISSUE ON MERITS. HOWEVER, WE KEEP ALL THE ISSUES MENTIONED I N THE REVISION ORDER OPEN BEFORE THE AO TO EXAMINE AFRESH AND DECIDE THE SAME ON MERITS. THE AO IS DIRECTED TO GIVE REASONABLE OPPORTUNITY TO THE ASSESSEE AND DECIDE THE ISSUE ON MERITS. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. 10 I.T.A. NO . 1 24 /VIZ/201 8 . A.Y.20 09 - 1 0 S.VENKATA RAMANA RAO ., VISAKHAPATNAM ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH AUGUST, 2019. S D/ - S D/ - ( . ) ( . . ) (V. DURGA RAO) ( D.S. SUNDER SINGH ) /JUDICIAL MEMBER /ACCOUNTANT MEMBER /VISAKHAPATNAM /DATED : 28 .0 8 .2019 L.RAMA, SPS / COPY OF THE ORDER FORWARDED TO: - 1. / THE ASSESSEE - SRI SIRIPURAPU VENKATA RAMANA RAO, D.NO.37 - 7 - 10, OPP.5 TH TOWN POLICE STATION, SATYANAGAR, MANCHUKONDVA R I THOTA, SIVALAYAM STREET, VISAKHAPATNAM 2. / THE REVENUE - INCOME TAX OFFICER, WARD - 2(4), VISAKHAPATNAM 3. THE PR. COMMISSIONER OF INCOME TAX - 1 , VI SAKHAPATNAM 4 . , , / DR, ITAT, VISAKHAPATNAM 5 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM