ACIT, Panaji V. Mr. Sadiq Sheikh, Panaji

ITA 125/PAN/2013

• Counselvise Citation: 12524114 RSA 2013
• Duration Of Justice: 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 07-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHA DESAI
• Assessee Lawyers: P Y VAIDYA; S C ANVEKAR
• Keywords: Gift
• Section: 132; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI P.K. BANSAL, HONBLE ACCOUNTANT MEMBER AND SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER ITA NO. 125/PNJ/2013 : (ASST. YEAR : 2005 - 06) ASST. COMMISSIONER OF INCOME - TAX, CENTRAL CIRCLE, PANAJI, GOA (APPELLANT) VS. MR. SADIQ SHAIKH NR. DON BOSCO, ODXEL, DONA PAULA, GOA. (RESPONDENT) PAN : AMFPS2073J ITA NO. 126/PNJ/2013 : (ASST. YEAR : 2005 - 06) ASST. COMMISSIONER OF INCOME - TAX, CENTRAL CIRCLE, PANAJI, GOA (APPELLANT) VS. MR S . SADIA SHAIKH NR. DON BOSCO, ODXEL, DONA PAULA, GOA. (RESPONDENT) PAN : AKQPS9076A REVENUE BY : SMT. ASHA DESAI, DR ASSESSEE BY : P.Y. VAIDYA, ADV. & S.C. ANVEKAR, CA DATE OF HEARING : 24/06/2013 DATE OF PRONOUNCEMENT : 31 / 07 /2013 O R D E R PER D.T. GARASIA : 1. THESE TWO APPEALS ARE FILED BY THE DEPARTMENT AGAINST THE ORDERS OF CIT(A) DT. 27.3.2013 FOR A.Y 2005 - 06 FOR BOTH THE ASSESSEES U/S 5A OF THE INCOME TAX ACT. THE ONLY COMMON GROUND IN THIS APPEALS READS AS UNDER : THE LEARNED CIT(A) ERRED IN LAW AND IN FACT IN DELETING THE ADDITION OF RS.1,36,01,000/ - (BEING 50% OF RS.11,26,50,112/ - AS PER SECTION 5A OF THE I.T. ACT) MADE ON A CCOUNT OF PROFIT ARISING FROM SALE OF 11 FLATS. 2 ITA NOS. 125 & 126/PNJ/2013 (ASST. YEAR : 2005 - 06) 2. THE SHORT FACTS OF THE CASE ARE THAT MR. SADIQ SHAIKH AND MRS. SADIA SHAIKH ARE GOVERNED BY SYSTEM OF COMMUNITY OF PROPERTY ( KNOWN UNDER THE PORTUGUESE CIVIL CODE O F 1 8 60 ) IN FORCE IN THE STATE OF GOA, A CCORDING TO SEC. 5A OF THE INCOME TAX ACT THE INCOME OF THE HUSBAND AND WIFE UNDER ANY HEAD OF INCOME SHALL NOT BE ASSESSED AS THAT OF THAT COMMUNITY OR PROPERTY BUT SUCH INCOME OF HUSBAND AND WIFE UNDER EACH HEAD OF INCOME SHALL BE APPORTIONED BETWEEN THE HUSBAND AND WIFE AND INCOME SO APPORTIONED SHALL BE INCLUDED SEPARATELY IN THE TOTAL INCOME OF THE HUSBAND AND WIFE RESPECTIVELY. CONSIDERING THIS, A CONSOLIDATED ORDER HAS BEEN PASSED BY CIT IN THE CASE OF THE ABOVE TWO ASSESSEES BEING HUSBAND AND WIFE. THE DISPUTE IS REGARDING ADDITION OF RS.2,72,02,000/ - ON ACCOUNT OF PROFIT ARISING FROM SALE OF 11 FLATS ADMEASURING 1943 SQ. MTRS. CLAIMED TO HAVE BEEN TO MR. ATANASIO MONSERRATE BY MR. SADIQ SHAIKH, THE ASSESSEE, IN WHICH 50% HAS BEEN TAXED IN THE HAND S OF THE ASSESSEE AND 50% IN THE HANDS OF THE SPOUSE, MRS. SADIA SHAIKH AS PER SEC. 5A OF THE INCOME TAX ACT. THE AO FOUND THAT OUT OF SHARE OF 42 FLATS IN CABO PROJECT WHICH MR. SADIQ SHAIKH WAS TO RECEIVE AS PER AGREEMENT WITH M/S. LANDSCAPE DEVELOPERS, 11 FLATS HAD BEEN RELINQUISHED IN FAVOUR OF ONE MR. ATANASIO MONSERRATE. IT WAS STATED THAT MR. ATANASIO MONSERRATES FAMILY WAS CONTROLLING THE LAND AND PLUCKING NUTS FROM COCONUT TREES LOCATED ON THE PROPERTY AND THAT THE SAID FLATS WERE SURRENDERED IN ORDER TO CLEAR THE TITLE OF THE LAND. HOWEVER, THE AO WAS NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE AND A SUM OF RS.2,72,02,000/ - @ RS.14,000/ - PER SQ. MTR. FOR 1943 SQ. MTRS. WAS ADOPTED AS VALUE OF THE FLATS SURRENDERED AND BROUGHT TO TAX IN T HE HANDS OF THE ASSESSEE AS INCOME OF THE ASSESSEE. THE ASSESSEE HAS TAKEN THE CONTENTION THAT THE SAID INCOME OF THE FLATS IS DECLARED IN THE HANDS OF MR. ATANASIO MONSERRATE IN A.Y. 2006 - 07. THEREFORE, TAXING THE SAME INCOME IN THE HANDS OF ASSESSEE WO ULD AMOUNT TO DOUBLE ADDITION. HOWEVER, THE AO DID NOT AGREE WITH THIS AND MADE THE ADDITION. MATTER CARRIED TO CIT(A) AND CIT(A) HAS DELETED THE ADDITION BY OBSERVING AS UNDER : 3 ITA NOS. 125 & 126/PNJ/2013 (ASST. YEAR : 2005 - 06) 6. I HAVE EXAMINED THE FACTS OF THE CASE AND THE SUBMISSIONS PUT FORWARD AND FROM RECORDS, I FIND THAT THE APPELLANT HAS FAILED TO PUT FORWARD ANY DETAIL OR EVIDENCE TO SUGGEST THAT MR ATANASIO MONSERRATE HAD ANY CLAIM OVER THE PROPERTY IN QUESTION EITHER BEFORE THE ASSESSING OFFICER OR BEFORE ME IN APPEAL. THERE IS ALSO NO COR RESPONDENCE OR ANY COURT PROCEEDINGS OR DETAILS OF ANY BOUNDARY ISSUE BROUGHT ON RECORD. 7. THE ASSESSING OFFICE R H AS BROUGHT ON RECORD THAT MR SADIQ SHEIKH FAILED TO ESTABLISH AS TO HOW MR MONSERRATE WAS A TENANT ON THE LAND AND WHY SUCH A HUGE COMPENSAT ION WAS PAID. MR SADIQ SHEIKH FAILED TO PROVIDE THE DETAILS OF THE AREA IN WHICH MR MOMSERRATE WAS A TENANT ON THE TOTAL AREA OF 1,28,8 26 SQ MTS. IN S.NO. 235/1 AT TALEIGAO, OR A PART OF THE LAND (ON WHICH THE CABO PROJECT WA S CONSTRUCTED). THE ASSESSING OFFICER HAS POINTED OUT THAT ACCORDING TO THE GOA AGRICULTURAL TENANCY ACT, 1964, TENANT IS A PERSON WHO HOLDS THE LAND ON L EASE AND WHO CULTIVATES PERSONALLY AND THAT THE FACT OF TENANCY MUST BE RECORDED IN THE RECORD OF RIGHTS. THE SURREND ER OF TENANCY MUST BE IN WRITING AND APPROVED BY MAMLATDAR IN ACCORDANCE WITH SECTION 10 OF THE ACT. IT IS EVIDENT FROM THE DEEDS OF PURCHASE OF THE ABOVE LAND THAT THERE IS NO MENTION OF TENANCY OF MR MONSERRATE ON THE ABOVE LAND. MR SADIQ SHEIKH STATED O N OATH THAT HE DID NOT RECEIVE ANY RENT FROM MR MONSERRATE. IT IS OBSERVED THAT THE CLAIM OF TENANCY IS ALSO NOT RECORDED IN THE AGREEMENT OF SALE AND DEVELOPMENT DATED 05.10.2002 WITH M/S LANDSCAPE DEVELOPERS. AS SUCH, THIS SURRENDER OF FLATS BY THE APPEL LANT TO MR ATANASIO MONSERRATE IN 2004 CANNOT BE SAID TO BE ATTRIBUTABLE TOWARDS CLEARING THE TITLE OF THE PROPERTY IN QUESTION AS CLAIMED BY THE APPELLANT AND AS RIGHTLY DISALLOWED BY THE ASSESSING OFFICER. 8. IT IS INTERESTING TO NOTE THAT AS PER THE EAR LIER AGREEMENT DATED 19.07.2004, THE ENTIRE 42 FLATS SOUGHT TO BE RECEIVED BY THE APPELLANT WERE TO BE TRANSFERRED TO MR ATANASLO MONSERRATE, THIS WAS LATER MODIFIED TO ONLY 11 FLATS AS PER AGREEMENT ADDENDUM CLAIMED TO HAVE BEEN ENTERED INTO ON 05/03/20 08. IT IS UNBELIEVABLE WHY ALL 42 FLATS TO BE RECEIVED AS APPELLANTS SHARE SHOULD BE SURRENDERED TO THE SO CALLED TENANT AND HAVING SURRENDERED THEM, AFTER 3 - 4 YEARS, THE SAME PERSONS SHOULD AGREE TO SETTLE FOR 11 FLATS ONLY. THE WHOLE TRANSACTION IS NO T AT ARMS LENGTH FOR SURE. HOWEVER, THERE IS NO EVIDENCE ON RECORD TO SUGGEST THAT THE FLATS WERE ACTUALLY SOLD AND THE PROCEEDS OF SALE OF THESE FLATS OR INCOME THERE - OF HAS ACCRUED TO THE APPELLANT. THE TAXATION IN THE HANDS OF THE APPELLANT, IN SUCH CIRCUMSTANCES IS ONLY A NOTIONAL ADDITION OF INCOME WHICH IS NOT IN ORDER AND THEREFORE DELETED. IT IS HOWEVER BROUGHT ON RECORD THAT THE PURPOSE OF THIS SURRE NDER OF 11 FLATS I S NOT EXPLAINED AND IS CLEARLY NOT TOWARDS OBTAINING A CLEAR 4 ITA NOS. 125 & 126/PNJ/2013 (ASST. YEAR : 2005 - 06) TITLE ON THE PROPERTY AS CLAIMED BY THE APPELLANT. AS SUCH, IT IS EITHER A GIFT OR MAY BE EVEN A GRATIFICATION FOR SOME SERVICES WHICH MAY HAVE BEEN R ENDERED TO THE APPELLANT BY MR ATANAS I O MONS ERRATE WHO WAS A PERSON ENJOYING POWER. NO EVIDENCE OF MR ATANASIO MONSERRATE HAVING ANY RIGHTS IN THE PROPERTY HAVE BEEN PROVED OR BROUGHT ON RECORD BY THE APPELLANT EVEN DURING THE COURSE OF APPEAL. 9. AS HELD BY ME ABOVE, NO INCOME ON THIS TRANSACTION A RISES IN THE HANDS OF THE APPELLANT ON THE BASIS OF FACTS ON RECORD. HOWEVER, THIS TRANSACTION CANNOT BE CLAIMED AS AN EXPENDITURE BY THE APPELLANT TOWARDS THE COST OF THE SAID PROJECT, AS IT IS CLEARLY BROUGHT OUT THAT IT DOES NOT RELATE TO THE TRANSFER O F LAND AS CLAIMED BY THE APPELLANT. WITH THESE OBSERVATIONS, THE APPEAL FOR THE YEAR IN QUESTION ARE TREATED AS ALLOWED. 2.1 THE LD. DR RELIED UPON THE ORDER OF AO. THE LD. DR SUBMITTED THAT THERE WAS A SEARCH U/S 132 OF THE ACT CONDUCTED IN THE RESIDEN TIAL PREMISES OF THE ASSESSEE SITUATED NEAR DON BOSCO ODXEL, DONA PAULA, GOA. DURING THE SEARCH PROCEEDINGS, AN AGREEMENT WAS FOUND AND AS PER THE AGREEMENT, THE ASSESSEE HAS RECEIVED RIGHTS OVER 42 FLATS IN ACCORDANCE WITH THE AGREEMENT WITH THE BUILDER, M/S. LANDSCAPE DEVELOPERS FOR RELINQUISHING HIS RIGHTS. THE VALUE OF THE 42 FLATS REPRESENTS THE INCOME ACCRUING TO THE ASSESSEE AS PER THE AGREEMENT WITH M/S. LANDSCAPE DEVELOPERS. DURING THE COURSE OF SEARCH, SOME RECORDS AND SEIZED MATERIALS WERE FOU ND AND NONE OF THE SALE DEED OR MATERIAL MENTIONS THE TENANCY RIGHTS OF MR. ATANASIO MONSERRATE . THE ASSESSEE HAS NOT RECEIVED ANY RENT FROM MR. ATANASIO MONSERRATE DURING THE PERIOD OF TENANCY. HOWEVER, DEED OF ADDENDUM DT. 26.3.2010 ENTERED INTO BETWEE N MR. SADIQ SHAIKH AND MR. ATANASIO MONSERRATE FOR DEVELOPMENT AGREEMENT ON 5.10.2002 HAS BEEN EXECUTED WHEREIN THESE FACTS HAVE BEEN MENTIONED. THEREFORE, IT IS A COLOURABLE DEVICE. THEREFORE, INCOME WAS ASSESSED IN THE HANDS OF THE ASSESSEE. 2.2 THE LD. AR SUBMITTED THAT THE ASSESSEE HAD AGREEMENT WITH MR. ATANASIO MONSERRATE AND THE ABOVE FLATS WERE ASSIGNED TO MR. ATANASIO MONSERRATE VIDE AGREEMENT DT. 19.7.2004 WHICH IS ASSIGNMENT OF RIGHT RECEIVABLE ON ABOVE 5 ITA NOS. 125 & 126/PNJ/2013 (ASST. YEAR : 2005 - 06) AGREEMENT IN FAVOUR OF MR. ATANASIO MONSERRATE FOR ENTIRE 42 FLATS AND BY MODIFICATION TO SAME AGREEMENT ON 5.3.2008 AND ADDENDUM TO THE AGREEMENT DT. 19.7.2004 RE - ASSIGNING ONLY 11 OUT OF 42 FLATS AS MODIFICATION OF AGREEMENT WHEREBY 31 FLATS WERE RECEIVABLE BY THE OWNERS OF THE LAND AND T HE ASSESSEE AND 11 FLATS WERE GIVEN TO MR. ATANASIO MONSERRATE AND ALL THESE DOCUMENTS WERE FOUND DURING THE COURSE OF SEARCH. MOREOVER, MR. ATANASIO MONSERRATE HAS ALREADY SHOWN THIS INCOME IN HIS HANDS. THEREFORE, NO INCOME CAN BE CHARGED FOR THE SAME FLATS. THEREFORE, CIT(A) IS JUSTIFIED IN HIS ACTION. 2.3 WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT CIT(A) HAS HELD THAT ASSESSEE COULD NOT BRING ANY EVIDENCE TO SUGGEST THAT MR. ATANASIO MONSERRATE HAD ANY CLAIM OVER THE PROPERTY IN QUESTION EITHER BEFORE THE AO OR BEFORE THE CIT(A). WE FIND THAT CIT(A) HELD THAT THERE IS NO EVIDENCE TO ESTABLISH THAT MR. ATANASIO MONSERRATE WAS A TENANT ON THE LAND AND SUCH COMPENSATION WAS PAID TO HIM. MOREOVER, THERE IS NO EVIDENCE TO SUGGEST THAT THE ASSESSEE HAS RECEIVED ANY INCOME FROM THE ABOVE FLATS. THEREFORE, CIT(A) HAS DELETED THE ADDITION. WE FIND THAT THERE WAS AN AGREEMENT FOR DEVELOPMENT AND SALE OF CABO LAND WHICH IS ADMEAS URING 5989 . 50 SQ. MTRS. ON THIS LAND THERE WAS TENANT AND SOME RESIDENTIAL HOUSE. THEREFORE, TO BUILD THE CONSTRUCTION RIGHT WAS ASSIGNED TO MR. ATANASIO MONSERRATE FOR ENTIRE 42 FLATS. THEREAFTER, THERE WAS AN ADDENDUM TO THE AGREEMENT DT. 9.7.2004 FROM WHERE 31 FLATS WAS TO BE ALLOTTED TO MR. SADIQ SHAIKH AND 11 FLATS TO MR. ATANASIO MONSERRATE. THEREAFTER, THERE WAS CANCELLATION OF THIS AGREEMENT AND THIS AGREEMENT WAS SEIZED BY THE DEPARTMENT AND MR. ATANASIO MONSERRATE HAD RETURNED THIS INCOME OF 11 FLATS IN HIS RETURN OF INCOME AND THIS HAS ALREADY BEEN OFFERED TO TAX. THEREFORE, IN OUR OPINION, CIT(A) IS JUSTIFIED IN HIS ACTION AND OUR INTERFERENCE IS NOT REQUIRED. 6 ITA NOS. 125 & 126/PNJ/2013 (ASST. YEAR : 2005 - 06) 3. IN THE RESULT, BOTH THE APPEALS OF THE DEPARTMENT ARE DISMISSED. 4. ORDER PRON OUNCED IN THE OPEN COURT ON 3 1 / 0 7 /2013. S D / - (P.K. BANSAL) ACCOUNTANT MEMBER S D / - (D.T.GARASIA) JUDICIAL MEMBER PLACE : PANAJI / GOA DATED : 3 1 / 0 7 / 2013 *SSL* COPY TO : (1) APPELLANT (2) RESPONDENT (3) CIT, PANAJI (4) CIT(A), PANAJI (5) D.R (6) GUARD FILE TRUE COPY, BY ORDER SR. P RIVATE S ECRETARY ITAT, PANAJI, GOA