ANIL PRINTMDAS HOTCHANDANI, ULHASNAGAR V. ITO WD 2(1), KALYAN

ITA 1240/MUM/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 8530 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 05-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MATI JYOTHI LAKSHMI NAYAK
• Keywords: Salary income; Set aside
• Section: 143(1); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI G. MANJUNATHA , ACCOUNTANT MEMBER ITA NO. 1240 / MUM . /2018 ( ASSESSMENT YEAR : 20 11 12 ) SHRI ANIL PRITAMDAS HOTCHANDANI 6 TH FLOOR, DUKES HOUSE NEAR MADHUSUDHAN ASHRAM JAI MATADI NAGAR ULHASNAGAR 421 003 PAN AAIPH1777M . APPELLANT V/S INCOME TAX OFFICER WARD 2(1), MUMBAI . RESPONDENT ASSESSEE BY : SHRI K. GOPAL & MS. NEHA PARANJPE REVENUE BY : SHRI MATI JYOTHI LAKSHMI NAYAK DATE OF HEARING 21.06.2019 DATE OF ORDER 10.07.2019 O R D E R PER SAKTIJIT DEY. J.M. A FORESAID APPEAL HAS BEEN FILED BY THE ASSESSEE CHALLENGING THE ORDER DATED 6 TH DECEMBER 2017 , PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 3 , THANE , PERTAINING TO THE ASSESSMENT YEAR 20 11 12 . 2 SHRI ANIL PRITAMDAS HOTCHANDANI 2 . THE DISPUTE IN THE PRESENT APPEAL IS CONFINED TO THE ADDITION OF AN AMOUNT OF ` 1,21,10,700, ON ACCOUNT OF SALE OF IMMOVABLE PROPERTY. 3 . BRIEF FACTS ARE, THE ASSESSEE , AN INDIVIDUAL , DERIVES INCOME FROM SALARY AND REMUNERATION. FOR THE ASSESSMENT YEAR UNDER DISPUTE, THE ASSESSEE HAD FILED ITS RETURN OF INCOME ON 29 TH MARCH 2012 , DECLARING INCOME OF ` 6,67,870. INITIALLY, THE RETURN OF INCOME WAS PROCESSED UNDER SECTION 143(1) OF THE I NCOME TAX ACT, 1961 (FOR SHORT 'THE ACT' ). SUBSEQUENTLY, IN COURSE OF ASSESSMENT PROCEEDINGS FOR THE ASSESSMENT YEAR 2011 12 OF ANOTHER ASSESSEE, NAMELY ; SMT. RANI GOPE ARTAWANI, IT WAS FOUND THAT THE SAID ASSESSEE ALONG WITH THE PRESENT ASSESSEE HAD RECEI VED SALE CONSIDERATION OF ` 2,42,21,400, TOWARDS SALE OF IMMOVABLE ADMEASURING 3,066 SQ.FT. ON THE FIRST FLOOR OF SHIV SHA KTI COMPLEX, ULLHAS NAGAR. THEREFORE, THE CONCERNED ASSESSING OFFICER ADDED BACK 50% OF THE SAID SALE CONSID E R AT ION AT THE HANDS OF SMT. RANI G . ARTAWANI . ON THE BASIS OF SUCH INFORMATION , THE ASSESSING OFFICER RE OPENED THE ASSESSMENT UNDER SECTION 147 OF THE ACT IN RESPECT OF PRESENT ASSESSEE AND ASKED HIM TO EXPLAIN WHY 50% OF THE TOTAL SALE CONSIDERATION SHOULD NOT BE TREATED AS IN COME OF THE ASSESSEE. AS OBSERVED BY THE ASSESSING OFFICER, IN RESPONSE TO THE QUERY RAISED, THE ASSESSEE INITIALLY DID NOT APP EAR AND FURNISH ANY INFORMATION. HOWEVER , SUBSEQUENTLY, THE ASSESSEE APPEARED AND 3 SHRI ANIL PRITAMDAS HOTCHANDANI FURNISHED NECESSARY INFORMATION RELATING TO THE SALE OF PROPERTY INCLUDING COPY OF SALE AGREEMENT , DETAILS OF PLOT , AUDITED ACCOUNTS OF PARTNERSHIP FIRM WHEREIN THE ASSESSEE AND SMT. RANI G . ARTAWANI , ARE PARTNERS ETC . IT WAS SUBMITTED BY THE ASSESSEE THAT THE IMMOVABLE PROPERTY SOLD BELONGED TO THE PA RTNERSHIP FIRM. THEREFORE , THE INCOME DERIVED FROM SALE OF SUCH PROPERTY CANNOT BE ASSESSED AT THE HANDS OF THE ASSESSEE. HOWEVER, REJECTING THE SUBMISSIONS OF THE ASSESSEE, THE ASSESSING OFFICER HELD THAT OUT OF THE TOTAL SALE CONSIDERATION RECEIVED FROM THE SALE OF THE IMMOVABLE PROPERTY , 50% AMOUNTING TO ` 1,21,10,700, HAS TO BE ADDED UNDER SECTION 69A OF THE ACT TO THE INCOME OF THE ASSESSEE FOR THE IMPUGNED ASSESSMENT YEAR. BEING AGGRIEVED WITH THE ADDITION MADE BY THE ASSESSING OFFICER, ASSESSEE PREFE RRED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. HOWEVER, LEARNED COMMISSIONER (APPEALS) ALSO AGREED WITH THE ASSESSING OFFICER THAT THE INCOME DERIVED FROM SALE OF PROPERTY HAS TO BE ASSESSED AS INCOME OF THE ASSESSEE. THOUGH , OF COURSE, HE HELD THAT SUC H INCOME HAS TO BE ASSE SSE D UNDER THE HEAD CAPITAL GAIN . 4 . THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED , THE IMMOVABLE PROPERT Y SOLD DURING THE YEAR BELONGED TO A PARTNERSHIP FIRM VIZ. M/S SHIV S HAKTI BUILDERS AND DEVELOPERS , WHEREIN THE ASSESSEE AND SMT. RANI G . ARTAWANI , ARE THE TWO PARTNERS. HE SUBMITTED , THE PROPERTY WAS SOLD BY THE PARTNERSHIP FIRM AND THE PROFIT DERIVED FROM SALE OF 4 SHRI ANIL PRITAMDAS HOTCHANDANI SUCH PROPERTIES WAS DECLARED AS INCOME BY THE PARTNERSHIP FIRM IN ITS PROFIT & LOSS ACCOUNT. HE SUBMITTED , WHILE CO MPLETING THE ASSESSMENT IN THE CASE OF PARTNERSHIP FIRM FOR ASSESSMENT YEAR 2011 12, THE ASSESSING OFFICER HAS ALSO ACCEPTED SUCH INCOME , THOUGH, HE DISALLOWED THE EXPENDITURE CLAIMED BY THE ASSESSEE. THUS, HE SUBMITTED , SINCE THE INCOME DERIVED FROM SALE OF PROPERTY BELONGED TO THE PARTNERSHIP FIRM , IT CANNOT BE ADDED TO THE INCOME OF THE ASSESSEE. 5 . THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED, WHILE DECIDING THE ISSUE RELATING TO SIMILAR ADDITION MADE IN CASE OF THE OTHER PARTNER SMT. RANI G. ARTAWANI, THE TRIBUNAL IN ITA NO.629/MUM./2016, DATED 11 TH MAY 2018, B EING CONVINCED WITH THE FACT THAT THE INCOME DERIVED FRO M SALE OF THE PROPERTY BELONGED TO THE PARTNERSHIP FIRM , DELETED THE ADDITION MADE AT THE HANDS OF THE SAID PARTNER. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED , SINCE, THE ASSESSEE STANDS ON THE SAME FOOTING, THE DECISION OF THE TRIBUNAL IN CASE OF SMT. RANI G. ARTAWANI , WILL SQUARELY APPLY. TO DEMONSTRATE THAT THE INCOME DERIVED FROM SALE OF PROPERTY BELONG ED TO THE PARTNERSHIP FIRM, LEARNED AUTHORISED REPRESENTATIVE DREW OUR ATTENTION TO VARIOUS DOCUMENTARY EVIDENCES , SUCH AS , COPY OF PARTNERSHIP DEED, AUDITED FINANCIAL STATEMENT S , ASSESSMENT ORDER PASSED IN CASE OF PARTNERSHIP FIRM, RETURN OF INCOME OF THE P ARTNERSHIP FIRM ETC . THUS, HE SUBMITTED , THE ADDITION MADE AT THE HANDS OF THE ASSESSEE SHOULD BE DELETED. 5 SHRI ANIL PRITAMDAS HOTCHANDANI 6 . THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED , IN COURSE OF PROCEEDINGS BEFORE THE DEPARTMENTAL AUTHORITIES, THE ASSESSEE HAS NOT FURNISHED VALI D EVIDENCE TO DEMONSTRATE THAT THE INCOME DERIVED FROM THE SALE OF IMMOVABLE PROPERTY BELONG ED TO THE PARTNERSHIP FIRM AND NOT TO THE PARTNERS. SH E SUBMITTED , EVEN TILL DATE THE ASSESSEE HAS NOT FURNISHED THE REGISTERED SALE DEED. SH E SUBMITTED , THOUGH , TH E AMOUNT REPRESENTING THE SALE CONSIDERATION OF THE PROPERTY MATCHES WITH THE FIGURE SHOWN IN THE PROFIT & LOSS ACCOUNT OF THE PARTNERSHIP FIRM FOR THE PERIOD ENDING 31 ST MARCH 2011, HOWEVER, THAT ITSELF DOES NOT PROVE THAT INCOME BELONGED TO THE PARTNERSH IP FIRM. THUS, SHE SUBMITTED , IN ABSENCE OF ANY COGENT EVIDENCE FURNISHED BY THE ASSESSEE, IT CANNOT BE SAID THAT THE INCOME BELONGS TO THE PARTNERSHIP FIRM AND NOT TO THE ASSESSEE. 7 . WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. AS COULD BE SEEN FROM THE FACTS ON RECORD AND MORE PARTICULARLY THE REASONS RECORDED BY THE ASSESSING OFFICER FOR RE OPENING THE ASSESSMENT, GENESIS OF THE DISPUTED ADDITION LIES IN THE ASSESSMENT PROCEEDINGS OF SMT. RANI G . ARTAWANI , WHO ALONG WITH THE AS SESSEE HAPPEN TO BE THE PARTNER S OF M/S SHIV HAKTI BUILDERS AND DEVELOPERS. THE ASSESSING OFFICER OF THE PRESENT ASSESSEE FOUND THAT WHILE COMPLETING THE ASSESSMENT FOR THE IMPUGNED ASSESSMENT YEAR IN 6 SHRI ANIL PRITAMDAS HOTCHANDANI CASE OF SMT. RANI G . ARTAWANI ADDED UNDER SECTION 69A OF THE ACT AN AMOUNT OF 50% OUT OF THE SALE CONSIDERATION OF ` 2,42,21,400 ALLEGEDLY RECEIVED SALE OF AN IMMOVABLE PROPERTY BY TREATING SMT. RANI G. ARTAWANI AND THE PRESENT ASSESSEE AS THE JOINT OWNERS OF THE SUBJECT PROPERTY. RELYING UPON THE ASSESSMENT ORDER PASSED IN CASE OF SMT. RANI G . ARTAWANI , IN CASE OF THE PRESENT ASSESSEE ALSO THE ASSESSING OFFICER HAS ADDED THE BALANCE 50% OF THE SALE CONSIDERATION. IT APPEARS FROM THE FACT ON RECORD , FROM THE STAGE OF ASSESSMENT PROCEEDINGS ITSELF IT IS THE CA SE OF THE ASSESSEE THAT THE SUBJECT IMMOVABLE PROPERTY BELONGS TO THE PARTNERSHIP FIRM AND NOT THE PARTNER. ON A PERUSAL OF THE AUDITED PROFIT & LOSS ACCOUNT OF THE PARTNERSHIP FIRM M/S SHIV S HAKTI BUILDERS AND DEVELOPERS FOR THE ASSESSMENT YEAR 2011 12 IT IS NOTICED THAT THE SALE CONSIDERATION RECEIVED FROM THE SALE OF THE SUBJECT PROPERTY HAS BEEN REFLECTED IN THE CREDIT SIDE . FURTHER, ON A PERUSAL OF THE ASSESSMENT ORDER PASSED FOR THE IMPUGNED ASSESSMENT YEAR IN CASE OF THE PARTNERSHIP FIRM, IT IS EVIDE NT, T HE ASSESSING OFFICER HAS STARTED THE COMPUTATION FROM THE NET PROFIT SHOWN IN THE AUDITED PROFIT & LOSS ACCOUNT. THE ONLY DISALLOWANCE MADE BY THE ASSESSING OFFICER IS IN RESPECT OF EXPENDITURE CLAIMED. FURTHER, FROM THE SALE DEED A ND OTHER DOCUMENTS FURNISHED , IT IS EVIDENT, THE PROPERTY SOLD BELONG ED TO THE PARTNERSHIP FIRM AND THE INCOME DERIVED FROM THE SALE OF THE SAID PROPERTY WAS 7 SHRI ANIL PRITAMDAS HOTCHANDANI ALSO REFLECTED IN THE BOOKS OF ACCOUNT OF THE PARTNERSHIP FIRM. IN SUCH CIRCUMSTANCES, ASSESSEES CLAIM THAT THE INCO ME DERIVED FROM SALE OF PROPERTY BELONGS TO THE PARTNERSHIP FIRM AND HAS ALSO BEEN ASSESSED AT THE HANDS OF THE PARTNERSHIP FIRM CANNOT BE DISCARDED ON FLIMSY GROUND. MOREOVER, IN CASE OF SMT. RANI G . ARTAWANI , AT WHOSE HAND THE BALANCE 50% OF THE SALE CONSIDERATION WAS ADDED BY THE ASSESSING OFFICER , THE DISPUTE CAME UP FOR CONSIDERATION BEFORE THE TRIBUNAL IN ITA NO.629/MUM./ 2016, DATED 11 TH MAY 2018, WHILE DECIDING THE ISSUE THE TRIBUNAL HELD AS UNDER: 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE HAVE GONE THROUGH THE FACTS NARRATED ABOVE BY THE LEARNED COUNSEL FOR THE ASSESSEE WHICH ARE UNDISPUTED. ADMITTEDLY, THE PROPERTY IS SOLD BY THE FIRM M/S S HIV SHAKTI BUILDERS AND DEVELOPERS FOR A TOTAL CONSIDERATION OF RS. 2,42,21,400/ - BUT THROUGH THE PARTNERS NAMELY ANIL P HOTCHANDANI & RANI GOPELAL ARTWANI, THE ASSESSEE. BUT THESE TWO PARTNERS ONLY EXECUTED THE SALE IN FAVOUR OF THE THANE DISTRICT CENTRAL CO - OP. BANK LTD. IT MEANS THAT THE ASSESSEE IS NOWHERE OWNER OF THE PROPERTY, SHE BEING A PARTNER HAS EXECUTED THE SALE DEED. DURING THE ASSESSMENT PROCEEDINGS AND EVEN DURING FIRST APPELLATE PROCEEDINGS THE ASSESSEE HAS PRODUCED REGISTERED AGREEMENT DATE D 24.12.2010 AND THE BANK ACCOUNT OF THE ASSESSEE FIRM MAINTAINED WITH THE CANARA BANK WHICH CLEARLY EVIDENCE THAT THE ENTIRE SALE CONSIDERATION IS RECEIVED BY THE FIRM AND NOT THE PARTNERS. EVEN THE REGISTERED AGREEMENT CLEARLY STATES THAT THE ASSESSEE BE ING A PARTNER AS ONLY FACILITATED THE SALE TRANSACTION. THE ASSESSEE IS ONLY PARTNER IN THE FIRM SHIV SHAKTI BUILDERS AND DEVELOPERS AND THAT THE INCOME FROM THE SALE CONSIDERATION OF THE SAID COMMERCIAL PREMISES TO THE THANE DISTRICT CENTRAL CO - OP. BANK L TD. ARISES IN THE HANDS OF THE PARTNERSHIP FIRM AND NOT IN THE HANDS OF THE ASSESSEE. ACCORDINGLY, WE SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND DELETED THE ADDITION AND ALLOW THIS ISSUE OF ASSESSEES APPEAL. 8 SHRI ANIL PRITAMDAS HOTCHANDANI 8 . IN CASE OF THE PRESENT ASSESSEE, THE ASSESSING OFFICER HAS MADE THE ADDITION RELYING UPON THE ASSESSMENT ORDER PASSED IN CASE OF SMT. G. RANI ARTAWANI. THUS, KEEPING IN VIEW THE OVERALL FACTS AND CIRCUMSTANCES OF THE CASE AND , MORE PARTICULARLY , THE DECISION OF THE TRIBUNAL IN CASE OF SMT. RA NI G. ARTAWANI, AS REFERRED TO ABOVE, WE ARE OF THE CONSIDERED OPINION THAT THE ADDITION MADE AT THE HANDS OF THE ASSESSEE IS NOT SUSTAINABLE. IT IS RELEVANT TO OBSERVE , THOUGH, THE ASSESSING OFFICER HAS MADE THE DISPUTED ADDITION UNDER SECTION 69A OF THE ACT, HOWEVER, LEARNED COMMISSIONER (APPEALS) HAS HELD THAT THE ADDITION CAN ONLY BE MADE UNDER THE HEAD CAPITAL GAIN . SINCE , THE PROPERTY DOES NOT BELONG TO THE PARTNERS BUT BELONGS TO THE PARTNERSHIP FIRM, THE INCOME DERIVED FROM SALE OF PROPERTY CANNOT BE ASSESSED AT THE HANDS OF THE ASSESSEE. IN VIEW OF THE AFORESAID, WE DELETE THE ADDITION MADE BY THE ASSESSING OFFICER AND SUSTAINED BY THE LEARNED COMMISSIONER (APPEALS). GROUNDS RAISED ARE DISMISSED. 9 . IN THE RESULT, APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN C OURT ON 10.07.2019 SD/ - G. MANJUNATHA ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 10.07.2019 9 SHRI ANIL PRITAMDAS HOTCHANDANI COPY OF THE ORDER FORWARDED TO : ( 1 ) THE ASSESSEE; ( 2 ) THE REVENUE; ( 3 ) THE CIT(A); ( 4 ) THE CIT, MUMBAI CITY CONCERNED; ( 5 ) THE DR, ITAT, MUMBAI; ( 6 ) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY ASSISTANT REGISTRAR ITAT, MUMBAI