Sri. Manmohan Saboo, Bangalore V. ITO, Bangalore

ITA 1297/BANG/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0157 (ITAT-BANGALORE)
• Duration Of Justice: 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-07-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 15-06-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 30-10-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SWAPNA DAS
• Assessee Lawyers: V SRINIVASAN
• Keywords: Sale consideration of property below Jantri Value; Cost of acquisition; Difference of opinion; Reason to believe; Change of opinion
• Section: 143(3); 234B; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRI BUNAL BANGALORE BENCH C, BANGALORE BEFORE SHRI A.K.GARODIA, AM (SMC) ITA NO.1297 (B)/2015 (ASSESSMENT YEAR : 2006-07) SHRI MANMOHAN SABOO, NO.117, KEERTHI PLAZA, 1 ST FLOOR, NAGARTHPET, BANGALORE-560 053. PAN NO.AOJPS8597M APPELLANT VS THE INCOME TAX OFFICER, WARD-1(4), HUBBALLI RESPONDENT ASSESSEE BY : SHRI V.SRINI VASAN, ADVOCATE REVENUE BY : SMT. SWAPNA DAS, JCIT DATE OF HEARING : 04-07-2016 DATE OF PRONOUNCEMENT : 22-07 -2016 O R D E R PER SHRI A.K.GARODIA, AM: THIS IS ASSESSEES APPEAL DIRECTED AGAINST THE ORD ER OF THE LD.CIT(A), BANGALORE-2 DATED 30-09-2015 FOR THE ASS ESSMENT YEAR 2006- 07. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER; 1 THE ORDER OF THE CIT (A) IN SO FAR AS THEY ARE AGAINST THE APPELLANT ARE OPPOSED TO LAW, EQUITY, AND WEIGHT OF EVIDENCE, PROBABILITIES, FACTS AND CIRCUMSTANCES OF THE CASE. 2 THE ORDER OF RE-ASSESSMENT IS BAD IN LAW AND VOID-AB-INITIO FOR WANT OF REQUISITE JURISDICTION ESPECIALLY, THE MANDATORY REQUIREMENTS TO ASSUME JURISDICTION U/S 148 OF THE ACT DID NOT EXIST AND HAVE NOT BEEN COMPLIED WITH AND CONSEQUENTLY, THE RE-ASSESSMENT REQUIRES TO BE CANCELLED. 3 THE LEARNED CIT (A) IS NOT JUSTIFIED IN SUSTAINING ITA NO.1297(B)/2015 2 THE ADDITION OF R.44,51,000/- MADE TOWARDS LTCG TO THE INCOME REPORTED Y THE APPELLANT UNDER THE FACTS AND IN THE FACTS AND CIRCUMSTANCES OF THE CAS E. 4. WITHOUT PREJUDICE TO THE RIGHT TO SEEK WAIVER WITH THE HON'BLE CHIEF COMMISSIONER OF INCOME TAX/DIRECTOR GENERAL OF INCOME TAX, THE APPELLANT DENIES HIMSELF LIABLE TO BE CHARGED TO INTEREST UNDER SECTION 234B OF THE ACT WHICH UNDER THE FACTS AND CIRCUMSTANCES OF THE APPELLANTS CASE DESERVES TO BE CANCELLED. 5. FOR THE ABOVE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING OF THE APPEAL, YOUR APPELLANT HUMBLY PRAYS THAT THE APPEAL MAY BE ALLOWED AND JUSTICE RENDERED AND THE APPELLANT MAY BE AWARDED COSTS IN PROSECUTING THE APPEAL AND ALSO ORDER FOR THE REFUND OF THE INSTITUTION FEES AS PART OF THE COSTS. 3. GROUND NO. 1 IS GENERAL AND HENCE REQUIRES NO A DJUDICATION. REGARDING VALIDITY OF RE-OPENING AS PER GROUND NO. 2, IT WAS SUBMITTED BY THE LD. AR OF THE ASSESSEE THAT THE RE ASONS RECORDED BY THE AO FOR RE-OPENING ARE AVAILABLE ON PAGES 15-16 OF THE PAPER BOOK. HE FURTHER SUBMITTED THAT THE AGREEMENT OF SA LE IN DISPUTE IS AVAILABLE ON PAGES 23 TO 28 OF THE PAPER BOOK WHICH WAS SUPPLIED BY THE AO TO THE ASSESSEE ALONG WITH HIS ORDER DATED 1 8-0-2014 FOR DISPOSING OF THE OBJECTIONS OF THE ASSESSEE AGAINST THE RE-OPENING. HE FURTHER SUBMITTED THAT A COPY OF FINAL SALE DEED IS AVAILABLE ON PAGES 38 -45 OF THE PAPER BOOK, AS PER WHICH, THE B UYER IS A. PRAKASH AND THE SALE CONSIDERATION IS ONLY RS.8.00 LAKHS AS AGAINST SALE CONSIDERATION AS PER THE AGREEMENT TO SELL OF RS.52,51,000/-. ITA NO.1297(B)/2015 3 HE SUBMITTED THAT THIS AGREEMENT OF SALE IS AVAILAB LE ON PAGES 23-28 OF THE PAPER BOOK BUT IS NOT A REAL AGREEMENT AND I T WAS EXECUTED FOR THE PURPOSE OF ATTRACTING BUYERS AS ADVISED BY SHRI S.GANGADHAR AND THEREFORE, THE SAME CANNOT FORM THE BASIS FOR R E-OPENING OF THE ASSESSMENT. 4. THE LD. DR OF THE REVENUE SUPPORTED THE ORDER O F THE LD. CIT(A). 5. I HAVE CONSIDERED THE RIVAL SUBMISSIONS. I FIND THAT THE ISSUE REGARDING VALIDITY OF RE-OPENING HAS BEEN DECIDED B Y THE LD. CIT(A) AS PER PARA NO.3.4 TO 3.5 OF HIS ORDER AND THESE PA RAS ARE RE- PRODUCED BELOW FOR THE SAKE OF READY REFERENCE; 3.4 I HAVE CAREFULLY CONSIDERED THE APPELLANT'S SUBMISSIONS. AS IS CLEAR FROM THE ASSESSMENT ORDER, THE AO WAS IN POSSESSION OF INFORMATION THAT, IN A SEAR CH CONDUCTED IN THE CASE OF SHRI S.GANGADHAR, THERE WA S AN AGREEMENT FOR SALE BETWEEN THE APPELLANT VIS-A-VIS SHRI S.GANGADHAR AND ONE SHRI A.PRAKASH IN WHICH THE SAL E CONSIDERATION FOR WHICH THE APPELLANT HAD AGREED TO SELL THE SAID PROPERTY FOR RS.51,51,000/-. THE APPELLANT 'S STAND WHILE FILING THE RETURN OF INCOME WAS THAT HE HAD ULTIMATELY SOLD THE PROPERTY FOR RS.8,00,000/- ONLY . HENCE, THE AO TOOK RECOURSE TO ACTION U/S 147 BY ISSUE OF A NOTICE U/S 148 OF THE ACT. IT IS CLEAR THAT THE REOPENING OF THE ASSESSMENT WAS NOT DUE TO CHANGE OF OPINION ON THE PART OF THE AO. THE APEX COURT IN THE CASE OF ACIT VS RA JESH JHAVERY STOCK BROKERS P. LTD. REPORTED IN (2007) 29 1 ITR ITA NO.1297(B)/2015 4 500 AFTER CONSIDERING VARIOUS DECISIONS RENDERED BY IT IN THE PAST, CONSTRUED THE WORDS 'REASON TO BELIEVE' I N SECTION 147 OF THE ACT AND HELD THAT, THE AO HAS CAUSE OR JUSTIFICATION TO KNOW OR SUPPOSE THAT ANY INCOME HA S ESCAPED ASSESSMENT, THEN IT COULD BE SAID THAT THE AO HAD REASON TO BELIEVE THAT THE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. THE APEX COURT FURTHER HELD THAT THE EXPRESSION 'REASON TO BELIEVE' IN SECTION 147 O F THE ACT CANNOT BE READ TO MEAN THAT THE AO SHOULD HAVE FINA LLY ASCERTAINED THE FACT BY LEGAL EVIDENCE OR CONCLUSIO N. THE APEX COURT FURTHER HELD THAT, AT THE STAGE OF ISSU E OF NOTICE U/S 148 OF THE ACT, THE ONLY QUESTION TO BE CONSIDE RED IS, WHETHER THERE WAS RELEVANT MATERIAL ON WHICH A REASONABLE PERSON COULD HAVE FORMED A REQUISITE BEL IEF AND NOT WHETHER THE MATERIALS WOULD CONCLUSIVELY :- :.E ESCAPEMENT OF INCOME. THE RELEVANT PORTIONS FROM TH E SAID JUDGMENT ARE REPRODUCED BELOW: '16. SECTION 147 AUTHORISES AND PERMITS THE ASSESSI NG OFFICER TO ASSESS OR REASSESS INCOME CHARGEABLE TO TAX IF HE HAS REASON TO BELIEVE THAT INCOME FOR ANY ASSESSMENT YEAR HAS ESCAPED ASSESSMENT. THE WORD ' REASON ' IN THE PHRASE 'REASON TO BELIEVE' WOULD ME AN CAUSE OR JUSTIFICATION. IF THE ASSESSING OFFICER HA S CAUSE OR JUSTIFICATION TO KNOW OR SUPPOSE THAT INCO ME HAD ESCAPED ASSESSMENT, IT CAN BE SAID TO HAVE REASON TO BELIEVE THAT AN INCOME HAD ESCAPED ASSESSMENT. THE EXPRESSION CANNOT BE READ TO MEAN THAT THE ASSESSING OFFICER SHOULD HAVE FINALLY ASCERTAINED THE FACT BY LEGAL EVIDENCE OR CONCLUSIO N. THE FUNCTION OF THE ASSESSING OFFICER IS TO ADMINIS TER THE STATUTE WITH SOLICITUDE FOR THE PUBLIC EXCHEQUE R ITA NO.1297(B)/2015 5 WITH AN IN BUILT IDEA OF FAIRNESS TO TAXPAYERS. AS OBSERVED BY THE SUPREME COURT IN CENTRAL PROVINCES IN CENTRAL PROVINCES MANGANESE ORE CO. LTD. V ITO (199 1) 191 ITR 662, FOR INITIATION OF ACTION UNDER SECTIO N 147(A) (AS THE PROVISION STOOD AT THE RELEVANT TIME ) FULFILLMENT OF THE TWO REQUISITE CONDITIONS I N THAT REGARD IS ESSENTIAL. AT THAT STAGE, THE FINAL OUTCO ME OF THE PROCEEDING IS NOT RELEVANT. IN OTHER WORDS, AT THE INITIATION STAGE , WHAT IS REQUIRED IS 'REASON TO B ELIEVE', BUT NOT THE ESTABLISHED FACT OR ESCAPEMENT OF INCOM E. AT THE STAGE OF ISSUE OF NOTICE, THE ONLY QUESTION IS WHETHER THERE WAS RELEVANT MATERIAL ON WHICH A REASONABLE PERSON COULD HAVE FORMED A REQUISITE BELIEF. WHETHER THE MATERIALS WOULD CONCLUSIVELY PROVE THE ESCAPEMENT IS NOT THE CONCERN AT THAT STA GE. THIS IS ALSO BECAUSE THE FORMATION OF BELIEF BY THE ASSESSING OFFICER IS WITHIN THE REALM OF SUBJECTIVE SATISFACTION [SEE ITO V SELECTED DALURBAND COAL CO. P. LTD. (1996) 217 ITR 597 (SC); RAYMOND WOOLLEN MILLS LTD. V ITO [(1999) 236 34(SC)]. 17. THE SCOPE AND EFFECT OF SECTION 147 AS SUBSTITU TED WITH EFFECT FROM APRIL 1, 1989, AS ALSO SECTIONS 14 8 TO 152 ARE SUBSTANTIALLY DIFFERENT FROM THE PROVISIONS AS THEY STOOD PRIOR TO SUCH SUBSTITUTION. UNDER THE OL D PROVISIONS OF SECTION 147, SEPARATE CLAUSES (A) AND (B) LAID DOWN THE CIRCUMSTANCES UNDER WHICH INCOME ESCAPING ASSESSMENT FOR THE PAST ASSESSMENT YEARS COULD BE ASSESSED OR REASSESSED. TO CONFER JURISDICTION UNDER SECTION 147(A) TWO CONDITIONS WE RE ITA NO.1297(B)/2015 6 REQUIRED TO BE SATISFIED: FIRSTLY, THE ASSESSING OF FICER MUST HAVE REASON TO BELIEVE THAT INCOME, PROFITS OR GAINS CHARGEABLE TO INCOME-TAX HAVE ESCAPED ASSESSMENT, AND, SECONDLY, HE MUST ALSO HAVE REASON TO BELIEVE THAT SUCH ESCAPEMENT HAS OCCURRED BY REASON OF EITHER OMISSION OR FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY OR TRULY ALL MATERIAL FA CTS NECESSARY FOR HIS ASSESSMENT OF THAT YEAR. BOTH THE SE CONDITIONS WERE CONDITIONS PRECEDENT TO BE SATISFIE D BEFORE THE ASSESSING OFFICER COULD HAVE JURISDICTIO N TO ISSUE NOTICE UNDER SECTION 148 READ WITH SECTION 147(A). BUT UNDER THE SUBSTITUTED SECTION 147 EXISTENCE OF ONLY THE FIRST CONDITION SUFFICES. IN OTHER WORDS, IF THE ASSESSING OFFICER FOR WHATEVER REASON HAS REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT IT CONFERS JURISDICTION TO REOPEN THE ASSESSMENT. IT IS, HOWEVER, TO BE NOTED THAT BOTH T HE CONDITIONS MUST BE FULFILLED IF THE CASE FALLS WITH IN THE AMBIT OF THE PROVISION TO SECTION 147. THE CASE AT HAND IS COVERED BY THE MAIN PROVISION AND NOT THE PROVIS O. 18. SO LONG AS THE INGREDIENTS OF SECTION ARE FULFILLED, THE ASSESSING OFFICER IS FREE TO INITIAT E PROCEEDING UNDER SECTION 147 AND FAILURE TO TAKE ST EPS UNDER SECTION 143(3) WILL NOT RENDER THE ASSESSING OFFICER POWERLESS TO INITIATE REASSESSMENT PROCEEDI NGS EVEN WHEN INTIMATION UNDER SECTION 143(1) HAD BEEN ISSUED.' 3.5 APPLYING THE RATIO LAID DOWN BY THE APEX COU RT IN THE AFORESAID CASE, I HOLD THAT THE AO WAS JUSTIFIED I N TAKING ITA NO.1297(B)/2015 7 RECOURSE TO ACTION U/S 147 OF THE ACT FOR REOPENING THE ASSESSMENT, WHICH STOOD ONLY AT THE STAGE OF INTIMA TION HAVING BEEN SENT U/S 143(1) OF THE ACT WHEN THE AO DID NOT HAVE WITH HIM THE BENEFIT OF INFORMATION ABOUT THE AGREEMENT FOR HAVING SOLD THE PROPERTY FOR A CONSID ERATION OF RS.52,51,000/- AND NOT RS.8,00,000/- AS HAD BEEN MADE OUT BY THE APPELLANT WHILE FILING THE RETURN O F INCOME. UNDER SUCH FACTS, IT IS CLEAR THAT THE ASS ESSING OFFICER HAD PRIMA FACIE BELIEF THAT INCOME HAD ESCA PED ASSESSMENT WITHIN THE MEANING OF SEC.147 FOR NOTICE U/S.148 TO BE ISSUED. MOREOVER, IT IS ON RECORD THA T THE REASONS RECORDED HAVE BEEN COMMUNICATED TO THE APPELLANT AND THE OBJECTIONS RAISED BY THE APPELLAN T AGAINST ACTION U/S.147 HAVE BEEN DISPOSED OF VIDE PROCEEDINGS DATED 18/3/2014 BEFORE MAKING THE ASSESSMENT. THEREFORE, ALL PROCEDURES AS LAID DOWN FOR INITIATING AND PROCEEDING WITH REOPENING OF THE CAS E HAVE BEEN FOLLOWED. THE REOPENING HAVING BEEN MADE WITHI N TIME ALLOWED UNDER THE ACT, ON SPECIFIC REASONS TO BELIEVE, RECORDED BY THE A.O. AND COMMUNICATED TO THE APPELL ANT IS IN ORDER AND THE ASSUMPTION OF JURISDICTION U/S. 147 READ WITH SECTION 143(3) IS THEREFORE UPHELD. 5. FROM THE ABOVE PARAS OF THE ORDER OF LD. CIT(A) , IT COMES OUT THAT THE AO HAD PRIMA FACIE BELIEF THAT INCOME HAD ESCAP ED ASSESSMENT AND THEREFORE, I FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) ON THIS ISSUE. HENCE, GROUND NO.2 OF THE ASSESSEES APPEAL IS REJE CTED. 6. REGARDING GROUND NO.3, IT WAS SUBMITTED BY THE LD.AR OF THE ASSESSEE THAT THE ISSUE ON MERIT HAS BEEN DECIDED B Y THE LD.CIT(A) AS PER ITA NO.1297(B)/2015 8 PARA 4.5 TO 4.7 OF HIS ORDER. HE FURTHER SUBMITTED THAT AS PER LETTER DATED 24-03-2014, SUBMITTED BY THE ASSESSEE BEFORE THE AO , COPY AVAILABLE ON PAGE 32-34 OF THE PAPER BOOK, IT WAS SUBMITTED BY T HE ASSESSEE BEFORE THE AO THAT THE SALE AGREEMENT DATED 04-02-2005 IS TOTA LLY UNRELIABLE AND UNWORTHY OF PLACING CREDENCE AND IT WAS ALSO SUBMIT TED BY THE ASSESSEE IN THIS LETTER THAT THE ASSESSEE HAS EXECUTED AN AF FIDAVIT ON 20-02-2013 AND COPY OF THE SAME WAS FURNISHED TO THE AO ALSO A ND ITS COPY IS AVAILABLE ON PAGES 46-48 OF THE PAPER BOOK. HE POI NTED OUT THAT IT IS EXPLAINED IN THE AFFIDAVIT THAT THE AGREEMENT FOR S ALE OF RS.52.51 LAKHS HAS BEEN EXECUTED ON THE ADVICE OF MR. GANGADHAR, W HO SUGGESTED THAT THIS AGREEMENT WILL HELP IN GETTING A BUYER FOR A G OOD CONSIDERATION AND ON HIS ADVICE ONLY, IT WAS STATED IN THE SAID AGREE MENT THAT THE ASSESSEE HAD RECEIVED AN ADVANCE OF RS.12,51,000/- BUT IN FA CT, NO SUCH ADVANCE WAS RECEIVED. IT IS ALSO EXPLAINED IN THE AFFIDAV IT THAT THERE WAS A ROAD ACQUISITION PROPOSED, WHICH WOULD RESULT IN A LARGE PORTION OF THE PROPERTY BEING ACQUIRED FOR THAT PURPOSE AND SINCE MR.GANGADHAR COULD NOT BRING ANY BUYER AS SUGGESTED BY HIM, THE ASSESS EE HAD AGREED TO SELL THE PROPERTY TO MR. A. PRAKASH FOR A SUM OF RS.8.00 LAKHS AND THEREFORE, NO ADDITION IS JUSTIFIED. 7. THE LD. DR OF THE REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BLOW. 8. I HAVE CONSIDERED THE RIVAL SUBMISSIONS. FIRST OF ALL, I RE-PRODUCE THE RELEVANT PORTION FROM THE ORDER OF THE LD. CIT( A) BEING PARA 4.4 TO 4.8 OF THE ORDER OF THE LD. CIT(A).. ITA NO.1297(B)/2015 9 4.4 THE RELEVANT WRITTEN SUBMISSIONS OF THE APPELLANT IN THIS REGARD ARE REPRODUCED BELOW: 4.3 IT IS SUBMITTED THAT THE LEARNED A.O. IS NOT JUSTIFIED IN HOLDING THAT THE CLAIM OF THE APPELLANT IS AN AFTER -THOUGHT. IT IS WORTH MENTIONING HERE THAT THE EXPLANATION OF TH E APPELLANT IS ENTIRELY PLAUSIBLE AND WITHIN THE REAL MS OF PROBABILITIES. THE FACT THAT THE SALE AGREEMENT WAS ENTERED INTO BY THE APPELLANT WITH SRI GANGADHAR AND SRI A. PRAKASH HAS TO BE BORNE IN MIND. IT IS ALSO TO BE BORNE IN MIND THAT SRI A.PRAKASH, WHO ULTIMATELY PURCHASED THE PROPERTY, H AS NOT SIGNED THE SEIZED SALE AGREEMENT AND HE WAS NOT EVE N PRESENT WHEN THE SALE AGREEMENT WAS GOT UP. NEITHER HAS SRI GANGADHAR, WHO HAS SIGNED THE SALE AGREEMENT BECOME A PARTY TO THE SALE DEED OR HAS AFFIXED HIS SIGNATURE AS A WITNESS IN THE SALE DEED. IN OTHER-WORDS, THE SALE AGREEMENT AND SALE DEED ARE TOTALLY DIVORCED WITH ONE ANOTHER AND CANNOT REFER TO THE SAME TRANSACTION BETWEEN THE AP PELLANT AND SRI A.PRAKASH. 4.4 THE AFORESAID SUBMISSION OF THE APPELLANT IS A LL THE MORE SO WHEN THE DATE OF EXECUTION OF THE SALE DEED AND THE CONTENTS OF THE SEIZED SALE AGREEMENT ARE CONSIDERE D. IT IS SUBMITTED THAT THE APPELLANT HAS EXECUTED THE REGIS TERED SALE DEED ON 09/12/2005 I.E., MORE THAN 10 MONTHS AFTER THE SEIZED SALE AGREEMENT DATED 04/02/2005. IT IS WORTH MENTIONING HERE THAT THE SEIZED SALE AGREEMENT HAD PROVIDED FOR A TIME OF 3 MONTHS TO COMPLETE THE SALE TRANSAC TION. THEREFORE, THE SEIZED SALE AGREEMENT HAS NO NEXUS O R CONNECTION WITH THE SALE OF THE PROPERTY BY THE APP ELLANT TO SRI A.PRAKASH AND THEREFORE, THE EXPLANATION OF THE APPELLANT THAT THE SEIZED SALE AGREEMENT IS NOT RELIABLE FOR COMPUTATION OF THE CAPITAL GAINS ON THE SALE OF THE PROPERTY BY THE ITA NO.1297(B)/2015 10 APPELLANT CANNOT BE BRUSHED ASIDE AS AN AFTER-THOUG HT. 4.5THAT APART, IT IS ALSO RELEVANT TO MENTION HERE THAT THE LEARNED A.O. HIMSELF HAS OBSERVED IN THE ASSESSMENT ORDER THAT THE MARKET VALUE OF THE PROPERTY ON THE DATE O F SALE WAS RS 14 68 500/ AND THE GUIDANCE VALUE OF THE PROPERT Y FOR REGISTRATION THE PROPERTY FOR REGISTRATION WAS RS. 14,96,000/- . IN AS MUCH AS THE PROPERTY OF THE APPELLANT HAD V ARIOUS ENCUMBRANCES AND THE SALE MADE BY THE APPELLANT WAS A DISTRESS SALE, THE APPELLANT SOLD THE PROPERTY FOR SUM OF RS. 8,00,000/-. THE SALE CONSIDERATION MENTIONED IN THE SEIZED AGREEMENT TO SELL IS RS. 52,51,000/-, WHICH IS MORE THAN 3 1/2 TIMES THE MARKET VALUE OF THE PROPERTY. HENCE, THE CLAIM OF THE APPELLANT THAT THE SEIZED SALE AGREEMENT WAS MERELY GOT UP ON THE ADVICE OF SRI GANGADHAR TO OBTAIN HIG HER PRICE CANNOT BE REJECTED ON THE MERE GROUND THAT THE SAME IS AN AFTER-THOUGHT. THE UNDISPUTED FACTS SHOW THAT THE S ALE CONSIDERATION MENTIONED IN THE SEIZED SALE AGREEMEN T DOES NOT CORRESPOND WITH THE GROUND REALITIES AND HENCE, THE SAME CANNOT BE HELD TO BE RELIABLE. 4.6 THE NEXT ASPECT OF THE MATTER IS THE OBSERVATIO N OF THE LEARNED A.O. THAT THE APPELLANT HAS NOT PRODUCED AN Y FURTHER EVIDENCE IN SUPPORT OF THE PLEA THAT THE SEIZED SAL E AGREEMENT WAS NOT RELATED TO THE SALE OF THE PROPER TY BY THE APPELLANT AND IN ANY CASE, THE SAME WAS NOT REPRESE NTING THE REAL STATE OF AFFAIRS, EXCEPT THE SELF DECLARED AFFIDAVIT. IT IS SUBMITTED THAT THE APPELLANT HAS GIVEN EVIDENCE BY WAY OF MAKING A STATEMENT ON OATH IN THE AFFIDAVIT FILED B EFORE THE LEARNED A.O. AFTER FILING THE AFFIDAVIT, THE LEARNE D A.O. HAS NOT SUMMONED THE APPELLANT TO RECORD A STATEMENT ON THE AVERMENTS MADE IN THE AFFIDAVIT ON OATH TO DISCREDI T THE VERSION OF THE APPELLANT. IN THE CASE OF MEHTA PARI KH AND ITA NO.1297(B)/2015 11 CO. V. CIT REPORTED IN 30 ITR 181, THE HON'BLE SUPR EME COURT OBSERVED AS UNDER :- 'IT HAS TO BE NOTED, HOWEVER, THAT BEYOND THESE CAL CULATIONS OF FIGURES, NO FURTHER SCRUTINY WAS MADE BY THE INC OME-TAX OFFICER OR THE APPELLATE COMMISSIONER OF THE ENTRIE S IN THE CASH BOOK OF THE APPELLANTS. THE CASH BOOK OF THE A PPELLANTS WAS ACCEPTED AND THE ENTRIES THEREIN WERE NOT CHALL ENGED. NO FURTHER DOCUMENTS OR VOUCHERS IN RELATION TO THO SE ENTRIES WERE CALLED FOR, NOR WAS THE PRESENCE OF THE DEPONE NTS OF THE THREE AFFIDAVITS CONSIDERED NECESSARY BY EITHER PAR TY. THE APPELLANTS TOOK IT THAT THE AFFIDAVITS OF THESE PAR TIES WERE ENOUGH AND NEITHER THE APPELLATE ASSISTANT COMMISSI ONER, NOR THE INCOME-TAX OFFICER, WHO WAS PRESENT AT THE HEARING OF THE APPEAL BEFORE THE APPELLATE ASSISTANT COMMISSIO NER, CONSIDERED IT NECESSARY TO CALL FOR THEM IN ORDER T O CROSS- EXAMINE THEM WITH REFERENCE TO THE STATEMENTS MADE BY THEM IN THEIR AFFIDAVITS. UNDER THESE CIRCUMSTANCES IT WAS OPEN TO THE REVENUE TO CHALLENGE THE CORRECTNESS OF THE CASH BOOK ENTRIES OR THE STATEMENTS MADE BY THOSE DEPONE NTS IN THEIR AFFIDAVITS.' 4.7 IN LIGHT OF THE ABOVE POSITION, IT IS SUBMITTED THAT THE LEARNED A.O. BRUSH ASIDE THE EVIDENCE GIVEN BY THE APPELLANT BY WAY OF THE SWORN AFFIDAVIT. IT IS ALSO RELEVANT TO MENTION HERE AT THIS STAGE THAT, APART FROM THE AFORESAID E VIDENCE IN THE FORM OF AN AFFIDAVIT, THE APPELLANT HAD ALSO PL EADED BEFORE THE A.O. TO SUMMON SRI GANGADHAR AND SRI A.P RAKASH TO ASCERTAIN THEIR VERSION IN RESPECT OF THE TRANSA CTION ENTERED INTO BY THE APPELLANT. THE LEARNED A.O. HAS CHOSEN TO REMAIN SILENT AND HAS NOT SUMMONED THE AFORESAID 2 PARTIES . THUS, THE LEARNED A.O. CANNOT HOLD THAT THE APPELLANT HAS NOT PRODUCED ANY FURTHER EVIDENCE WHEN IN-FACT, THE APP ELLANT HAS EXPLAINED THE CIRCUMSTANCES THAT GO TO SHOW THA T THE ITA NO.1297(B)/2015 12 SEIZED SALE AGREEMENT CANNOT BE THE BASIS FOR COMPU TATION OF CAPITAL GAINS AND WHEN THE APPELLANT HAS PLEADED FO R EXAMINATION OF CERTAIN PERSONS TO SUPPORT THE VERSI ON OF THE APPELLANT. HENCE, THE REJECTION OF THE EXPLANATION OF THE APPELLANT ON THE GROUND THAT NO EVIDENCE IS PRODUCE D IS OPPOSED TO LAW AND FACTS OF THE APPELLANT'S CASE AN D CONSEQUENTLY, THE ADDITION MADE BY THE LEARNED A.O. IS UNJUSTIFIED AND THE SAME DESERVES TO BE DELETED.' 4.5 I HAVE CAREFULLY CONSIDERED THE APPELLANT'S SUBMISSIONS AND PERUSED THE ASSESSMENT ORDER AND OTHER MATERIALS PLACED BEFORE ME. THE CLAIM OF THE APPELLANT THAT HE ULTIMATELY SOLD THE PROPERTY FOR ONLY RS.8,E0,000I-, WHICH IS MUCH BELOW THE CONSIDERATIO N AS PER THE AGREEMENT BETWEEN THE APPELLANT AND THE BUYER, WHICH IS MUCH BELOW THE GUIDANCE VALUE OF RS.14,96,000/- FOR PURPOSES OF REGISTRATION WITH TH E SUB-REGISTRAR. IT IS, INDEED, STRANGE THAT THE APPE LLANT AGREED TO SELL A PROPERTY WHICH WAS ORIGINALLY AGRE ED TO BE SOLD FOR A CONSIDERATION OF AS MUCH AS RS.52,51,000/- AS PER THE AGREEMENT BETWEEN THE APPELLANT AND THE PURCHASER. IN A METROPOLITAN CITY LIKE BENGALURU WHERE THE COST OF LAND RULES VERY HIGH DU E TO ENORMOUS DEMAND FOR LAND FOR RESIDENTIAL OR OTHER PURPOSES, IT IS HIGHLY IMPROBABLE THAT ANYONE WOULD HAVE REDUCED THE SALE VALUE OF THE LAND TO AS MUCH AS RS.8,08,000/- FROM THE ORIGINALLY AGREED SALE CONSIDERATION OF RS.52,51,000/- AND EVEN BELOW THE GUIDANCE VALUE OF RS.14,96,000/-. THE APPELLANT'S CONTENTION THAT THE TRANSACTION WAS DUE TO DISTRESS SALE APPEARS TO BE AN OFFSHOOT OF BELATED THOUGHT CONCOC TION AS THE DIFFERENCE BETWEEN THE DATE OF ORIGINAL AGRE EMENT ITA NO.1297(B)/2015 13 AND THE SALE DEED IS ONLY 10 MONTHS. IF THE CONDITI ONS FOR DISTRESS SALE HAD DEVELOPED DURING THE INTERREG NUM, THE APPELLANT WOULD HAVE PERSISTED WITH THE SALE CONSIDERATION AS ENVISAGED IN THE ORIGINAL AGREEMEN T IN ORDER TO GET OVER THE CAUSE OF DISTRESS. THE APPELL ANT'S CONTENTION IN THIS REGARD SURPASSES COMPREHENSION. IN THE CIRCUMSTANCES, THE ACTION OF THE AO IN TAKING T HE SALE CONSIDERATION AT RS.52,51,000/- FOR PURPOSES O F DETERMINING THE LONG TERM CAPITAL GAINS, WHICH IS O N THE BASIS OF THE ORIGINAL AGREEMENT BETWEEN THE APPELLA NT AND THE PURCHASER AND IS NOT BASED ON SURMISES AND CONJECTURES. 4.6 IT IS ON RECORD THAT THE AGREEMENT TO SELL DATE D 4/2/2005 IS BETWEEN THE APPELLANT AS SELLER AND SHR I S.GANGADHAR AS BUYER WHEREIN SHRI A.PRAKASH IS THE PURCHASER. THE ULTIMATE SALE HAS FRUCTIFIED WITHIN 10 MONTHS OF THE APPELLANT AGREEING TO SELL THE SAME T O THE PURCHASER. NO EVIDENCE OR ANY REASONS FOR THE ALLEG ED DISTRESS SALE HAVE BEEN FURNISHED BY THE APPELLANT EITHER BEFORE THE AO OR BEFORE ME DURING THE COURSE OF APPEAL HEARING. AS PER THE SAID AGREEMENT TO SELL, A SUM OF RS.12,51,000/- HAD ALREADY BEEN RECEIVED IN CASH BY THE APPELLANT ON THE DAY OF THE AGREEMENT I .E. 4/2/2005. UNDER SUCH CIRCUMSTANCES, TO TURN BACK AN D SAY THAT THE SAID AGREEMENT WAS NOT CORRECT AS MADE OUT IN THE AFFIDAVIT DATED 20/2/2013, IS NOT ACCEPT ABLE. THE RELEVANT PARAGRAPHS FROM THE AFFIDAVIT ARE REPRODUCED BELOW: 3. THAT, ON THE ADVICE OF MR. GANGADHAR, I AGREED T O SIGN A SALE AGREEMENT BROUGHT BY HIM SHOWING THAT THE AGRE ED CONSIDERATION FOR THE SALE OF THE PROPERTY WAS RS.5 2,51,000/- ITA NO.1297(B)/2015 14 AND THAT I HAD RECEIVED AN ADVANCE OF RS.12,51,000/ - THOUGH, FACTUALLY, THERE WAS NO AGREEMENT TO SELL T HE PROPERTY AND NO ADVANCE RECEIVED AT THAT TIME, 9. THAT, I REITERATE THAT THE SALE AGREEMENT DATED 04-022005 SIGNED BY ME IS NOT A REAL DOCUMENT BUT WAS ONLY CR EATED ON ACCOUNT OF CIRCUMSTANCES MENTIONED ABOVE AND I HAVE RECEIVED THE CONSIDERATION ONLY IN TERMS OF THE REG ISTERED SALE DEED EXECUTED IN FAVOUR OF SRI PRAKASH DATED 9-12-2 005.' 4.7 AN AFFIDAVIT FILED BY THE APPELLANT ON 20/2/201 3 (AFTER 8 YEARS) IS MERELY A SELF-SERVING DOCUMENT. THE ARGUMENT OF THE APPELLANT THAT :-E 'AGREEMENT TO SE LL' WAS SIGNED ONLY BY SHRI GANGADHAR (AND NOT THE OTHE R PURCHASER, SHRI A.PRAKASH) WHEREAS IN THE FINAL SAL E DEED, ONLY SHRI A. PRAKASH IS THE PURCHASER AND SHR I GANGADHAR IS NOT MENTIONED AS A PARTY DOES NOT HELP THE APPELLANT. THIS IS MORE SO AS ONE OF THE WITNES SES IS COMMON IN THE AGREEMENT TO SELL AND THE REGISTERED DOCUMENT. THE APPELLANT HAS ADMITTED THAT HE HAD SIGNED THE AGREEMENT TO SELL DATED 4/2/2005 FOR A CONSIDERATION OF RS.52,51,000/- (AS PER WHICH A SUM OF RS.12,51,000/- HAD ALREADY BEEN RECEIVED AS ADVANCE IN CASH). UNDER SUCH FACTS, WHERE THE BUYER IS THE SAME AND, IN THE ABSENCE OF ANY EVIDENCE OF A 'DISTRESS SALE' THE SALE HAVING BEEN EXECUTED WITHIN A SHORT SPAN O F TIME, THE CLAIM OF THE APPELLANT CANNOT BE ACCEPTED . 4.8 EVEN IF THE APPELLANT'S CONTENTION WAS TO BE ACCEPTED AS PER SECTION 50C, THE SALE PRICE WOULD B E RS.14,68,500/AND NOT RS.8,00,000/- (AS ALSO ADMITTE D BY THE APPELLANT) SHOWN BY THE APPELLANT. HOWEVER, IN THIS CASE, THE SALE PRICE HAS TO BE TAKEN AT ITA NO.1297(B)/2015 15 RS.52,51,000/- AS PER THE AGREEMENT TO SELL DATED 4/2/2005, WHICH THE APPELLANT HAD NOT DECLARED AND WHICH WAS UNEARTHED FROM THE INFORMATION COLLECTED BY THE INVESTIGATION DEPARTMENT FOR THE REASONS DETAIL ED ABOVE. 9. FROM THESE PARAS, IT IS SEEN THAT IT WAS SUBMIT TED BY THE ASSESSEE BEFORE LD. CIT(A) ALSO THAT APART FROM FUR NISHING EVIDENCE IN THE FORM OF AFFIDAVIT, THE ASSESSEE HAD ALSO REQUESTED THE AO TO SUMMON SHRI A.GANGADHAR AND SHRI A. PRAKASH TO ASCERTAIN THEIR VERSION IN RESPECT OF THE TRANSACTION ENTERED INTO BY THE ASSESSEE BUT T HE AO HAS NOT SUMMONED THEM AND UNDER THESE FACTS, IT CANNOT BE SAID THAT THE ASSESSEE HAS NOT PRODUCED ANY FURTHER EVIDENCE. 10. THE LD. CIT(A) ALSO NOTED IN PARA 4.8 OF HIS O RDER THAT EVEN IF THE ASSESSEES CONTENTION WAS TO BE ACCEPTED THEN ALSO, AS PER SEC.50C, THE SALE PRICE WOULD BE RS.14,68,500/- AND NOT RS.8.00 LAKHS AS ALSO ADMITTED BY THE ASSESSEE. BUT THEREAFTER, HE HAS P ROCEEDED TO DECIDE ON THIS BASIS THAT IN THE PRESENT CASE, THE SALE PRICE HAS TO BE TAKEN AT RS.52,51,000/- AS PER AGREEMENT TO SELL DATED 04-02 -2005. I FAIL TO UNDERSTAND AS TO HOW THE AFFIDAVIT OF THE ASSESSEE CAN BE DISREGARDED BY THE LOWER AUTHORITIES BY SAYING THAT IT IS A SELF S ERVING DOCUMENT WITHOUT SUMMONING THE RELEVANT PERSONS I.E. MR. GANGADHAR A ND MR. A.PRAKASH. THIS FACT IS ALSO RELEVANT THAT AS PER STAMP DUTY V ALUE, THE SALE PRICE IS STATED TO BE RS.14,68,500/- AS NOTED BY THE LD. CIT (A) IN PARA-4.8 OF HIS ORDER AND IF THAT BE SO, THEN THE SALE AGREEMENT DA TED 04-02-20-05 SHOWING A SALE CONSIDERATION OF RS.52.51 LAKHS BECO MES DOUBTFUL, ITA NO.1297(B)/2015 16 PARTICULARLY, WHEN THERE WAS PROPOSED ACQUISITION O F LAND IN THAT AREA WOULD HAVE RESULTED IN ACQUISITION OF A LARGE PORTI ON OF THE PROPERTY FOR THAT PURPOSE AND THE AUTHORITIES BELOW HAVE NOT CON TROVERTED THIS CLAIM OF THE ASSESSEE REGARDING ACQUISITION FOR ROAD. IT IS ALSO IMPORTANT THAT AS PER THE A.O., THE AGRE EMENT TO SELL DATED 4.2.2005 FOR SALE OF THIS PROPERTY TO SHRI S. GANGA DHAR AND SHRI A. PRAKASH IS CORRECTLY INDICATING THE SALE VALUE OF T HIS LAND AND HE ADOPTED THAT VALUE FOR COMPUTING CAPITAL GAIN BUT IF THAT A GREEMENT IS REAL AND VALID THEN FULL EFFECT THEREOF SHOULD HAVE BEEN GIV EN BY THE A.O. BUT HE HAS NOT DONE SO. AS PER THAT AGREEMENT, THE ASSESSE E RECEIVED AN ADVANCE OF RS. 12.51 LACS AND THE SAME WAS TO BE FORFEITED IF THE FULL PAYMENT IS NOT MADE IN THE PRESCRIBED TIME. THE SALE IS TO SHR I A. PRAKASH ALONE AND NOT TO SHRI S. GANGADHAR AND SHRI A. PRAKASH AND TH EREFORE IF THE A.O. CONSIDERED THAT THIS AGREEMENT IS REAL AND VALID, H E SHOULD HAVE GIVEN FULL EFFECT TO IT BY REDUCING THE ADVANCE AMOUNT OF RS. 12.51 LACS FROM COST OF ACQUISITION BECAUSE THE SAME GETS FORFEITED BUT THE A.O. HAS NOT DONE SO AND HE HAS ALLOWED DEDUCTION ON ACCOUNT OF INDEXED COST ACQUISITION WITHOUT ANY SUCH REDUCTION. THIS SHOWS THAT THE A.O . ALSO HAS NOT GIVEN FULL EFFECT TO THIS AGREEMENT. CONSIDERING ALL THES E FACTS, I FEEL IT PROPER THAT IN THE FACTS OF THE PRESENT CASE, THE STAMP DU TY VALUE OF THE PROPERTY IN QUESTION OF RS.14,68,500/- NOTED BY THE LD. CIT( A) IN PARA 4.8 OF HIS ORDER AND ALSO BY THE A.O. IN PARA 7 OF THE ASSESSM ENT ORDER SHOULD BE ADOPTED AS THE SALE VALUE OF THE PROPERTY FOR COMPU TING THE LONG TERM ITA NO.1297(B)/2015 17 CAPITAL GAINS INSTEAD OF RS.52.51 LAKHS AS HAS BEEN DONE BY THE AO. THIS GROUND IS PARTLY ALLOWED. 11. REGARDING GROUND NO.4 IN RESPECT OF CHARGING O F INTEREST U/S 234B, I FEEL THAT THIS ISSUE IS CONSEQUENTIAL IN NA TURE AND THEREFORE, NO SEPARATE ADJUDICATION IS CALLED FOR. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS P ARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MEN TIONED IN CAPTIONED PAGE. (A.K.GARODIA) ACCOUNTANT MEMBER D A T E D : - 07-2016 PLACE: BANGALORE AM COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A) BANGALORE 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FILE BY ORDER AR, ITAT, BANGALORE ITA NO.1297(B)/2015 18 1. DATE OF DICTATION .. 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P. S. .. 4 DATE ON WHICH THE ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT .. 5. DATE ON WHICH THE ORDER COMES BACK TO THE SR. P.S. .. 6. DATE OF UPLOADING THE ORDER ON WEBSITE .. 7. IF NOT UPLOADED, FURNISH THE REASON FOR DOING SO . 8. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 9. DATE ON WHICH ORDER DOES FOR XEROX & ENDORSEMENT . 10. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK. 11 THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER. 12 THE DATE ON WHICH THE FILE GOES TO THE DISPATCH SECTION FOR DISPATCH OF THE TRIBUNAL ORDER 13 DATE OF DISPATCH OF ORDER