Arkala Suresh Goud, Hyderabad V. Income Tax Officer, Hyderabad

ITA 1365/HYD/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5905 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 5 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 16-03-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 15-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M SITARAM
• Assessee Lawyers: S RAMA RAO
• Keywords: Sale consideration of property below Jantri Value; Gift; Additional evidence; Fair market value
• Section: 50C; 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA.NO.1365/HYD/2013 ASSESSMENT YEAR 2009-2010 MR. ARKALA SURESH GOUD, HYDERABAD. PAN AGJPA1148E VS. THE INCOME TAX OFFICER, WARD-11(1), HYDERABAD. (APPELLANT) (RESPONDENT) FOR ASSESSEE : MR. S. RAMA RAO FOR REVENUE : MR. M. SITARAM DATE OF HEARING : 16.03.2016 DATE OF PRONOUNCEMENT : 24 .03.2016 ORDER PER SMT. P. MADHAVI DEVI, J.M. THIS IS ASSESSEES APPEAL FOR THE A.Y. 2009- 2010. IN THIS APPEAL, THE ONLY GRIEVANCE OF THE ASS ESSEE IS THAT THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE C APITAL GAIN ON SALE OF PROPERTY IS TAXABLE FOR THE YEAR UN DER CONSIDERATION WHEN THE SALE OF THE PROPERTY ITSELF IS IN DISPUTE AND WAS ULTIMATELY SALE WAS HELD AS NOT VAL ID. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, AN INDIVIDUAL, FILED HIS RETURN OF INCOME FOR THE A.Y. 2009- 2010 ON 30.04.2009 ADMITTING INCOME OF RS.1,97,540 FROM THE BUSINESS OF CARRYING ON THE FAMILY DHABA. THE SAME WAS PROCESSED UNDER SECTION 143(1) OF THE ACT. 2 ITA.NO.1365/HYD/2013 MR. ARKALA SURESH GOUD, HYDERABAD. THEREAFTER, THE INFORMATION ABOUT THE SALE OF A PRO PERTY FOR RS.62,50,000 CAME TO THE NOTICE OF THE A.O. TO EXAMINE THE ISSUE, THE CASE WAS SELECTED FOR SCRUTI NY. DURING THE ASSESSMENT PROCEEDINGS UNDER SECTION 143 (3) OF THE ACT, NOTICE UNDER SECTION 142(2) AND 142(1) WERE ISSUED BUT THERE WAS NO RESPONSE FROM THE ASSESSEE. THEREFORE, THE A.O. ADDRESSED A LETTER TO THE SUB-R EGISTRAR OFFICE (SRO), QUTUBULLAPUR AND OBTAINED COPIES OF THE SALE DEEDS FOR PURCHASE AS WELL AS SALE OF THE PROP ERTIES BY THE ASSESSEE. AS PER THE SAID DOCUMENTS OBTAINED FROM SRO, THE A.O. OBSERVED THAT THE ASSESSEE HAD MADE A SALE TRANSACTION AS AGPA HOLDER OF AGRICULTURAL LAND OF AC.0.15 GUNTAS IN SURVEY NO.256 AND AC.0.36 GUNTAS IN SURVE Y NO.257 TOTALLING AC.1.10 GUNTAS SITUATED AT BOURAMP ET VILLAGE, QUTUBULLAPUR MANDAL FOR A CONSIDERATION OF RS.62,50,000 ON 26.09.2008. 3. SINCE THE ASSESSEE WAS NOT RESPONDING TO THE NOTICES ISSUED BY THE A.O, TO ARRIVE AT THE VALUE A T WHICH THE ASSESSEE HAS PURCHASED THE PROPERTY WHICH WAS S OLD NOW, THE A.O. ISSUED SUMMONS TO THE PURCHASERS MR. N. SASIKAR AND SMT. D. SRIDEVI. IN RESPONSE TO THE SAI D SUMMONS, MR. N. SASIKAR APPEARED AND THE A.O. HAS RECORDED HIS STATEMENT WHEREIN HE CONFIRMED THE PAY MENT OF RS.62,50,000 JOINTLY WITH SMT. D. SRIDEVI AND TH AT THE ASSESSEE HOLDS THE OWNERSHIP OF THE PROPERTY. IT WA S ALSO STATED THAT THE PROPERTY WAS AGRICULTURAL LAND AT T HE TIME OF SALE AND WAS ALSO USED FOR AGRICULTURAL PURPOSES AFTER THE SALE. SMT. D. SRIDEVI ALSO CONFIRMED THE STATEM ENT 3 ITA.NO.1365/HYD/2013 MR. ARKALA SURESH GOUD, HYDERABAD. GIVEN BY MR. N. SASIKAR. TAKING NOTE OF THE SAME, A .O. OBSERVED THAT THE ASSESSEE HAS PURCHASED THE SAID PROPERTY FOR A CONSIDERATION OF RS.37,50,000 IN THE YEAR 2006-07 AND HAS SOLD IT FOR RS.62,50,000 IN THE REL EVANT ASSESSMENT YEAR THEREBY EARNING PROFIT OF RS.25 LAK HS. HE OBSERVED THAT THE GAIN HAS TO BE TREATED AS SHORT T ERM CAPITAL GAIN SINCE THE TRANSACTION IS WITHIN THREE YEARS FROM THE DATE OF PURCHASE. HE ACCORDINGLY HELD THAT IT IS TO BE BROUGHT TO TAX AS SHORT TERM CAPITAL GAIN. IN RE SPONSE TO THE FINAL NOTICE ISSUED BY THE A.O., THE ASSESSE E APPEARED ON 27.12.2011 AND SUBMITTED THAT THE INVESTMENT IN THE LAND WAS OUT OF THE AMOUNTS RECEI VED AS GIFTS AT THE TIME OF MARRIAGE AND THAT THE PROPERTY WHICH HAS BEEN SOLD BY THE ASSESSEE WAS IN DISPUTE AND THEREFORE, THE LAND WAS PURCHASED BY HIM AT A VERY LESS PRICE THAN THE VALUE MENTIONED IN THE SALE DEED AND THE SALE VALUE MENTIONED IN THE SALE DEED MADE BY HIM I S ALSO LESS. THE ASSESSEE ALSO FILED WRITTEN SUBMISSIONS D ATED 29.12.2011 OBJECTING TO THE SALE CONSIDERATION BEIN G TAKEN AT RS.62,50,000. IT WAS STATED THAT THE SALE CONSIDERATION PAID BY THE ASSESSEE WAS ONLY RS.25 L AKHS THOUGH THE SAME WAS REGISTERED FOR RS.37,50,000 AND IN PROOF THEREOF, THE ASSESSEE PRODUCED THE CASH RECEI PT DATED 11.10.2008 ISSUED BY THE SELLER OF THE LAND. ASSESSEE ALSO CLAIMED TO HAVE INCURRED RS.1,72,000 FOR LAND LEVELING AND RS.1 LAKHS TOWARDS COMMISSION AND BROKERAGE. THE A.O. HOWEVER, DID NOT ACCEPT THE ASSESSEES CONTENTIONS AND HELD THAT THE SALE CONSIDERATION RECEIVED BY THE ASSESSEE WAS RS.62,50 ,000 4 ITA.NO.1365/HYD/2013 MR. ARKALA SURESH GOUD, HYDERABAD. AS PER THE VALUE OF THE SRO AS ALSO CONFIRMED BY TH E PURCHASERS. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WHO CONFIRMED THE ORDER OF TH E A.O. ON THIS ISSUE. AGAINST THE ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE CONFIRM ATION OF THE SHORT TERM CAPITAL GAIN BY TAKING THE SALE CONSIDERATION ON SALE OF THE PROPERTY AT RS.62,50,0 00 AS AGAINST THE ACTUAL SALE CONSIDERATION OF THE PROPER TY RECEIVED BY THE ASSESSEE AND ALSO IN BRINGING TO TA X THE CAPITAL GAIN IN THE RELEVANT ASSESSMENT YEAR WHEN T HE SALE ITSELF HAS BEEN HELD TO BE NOT VALID. 4. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT WHEN THE ASSESSEE HAS OBJECTED TO THE SRO VALU E BEING TAKEN AS THE VALUE OF THE PROPERTY UNDER SECT ION 50C OF THE I.T. ACT, THE A.O. OUGHT TO HAVE REFERRE D THE VALUATION OF THE PROPERTY TO A REGISTERED VALUER UN DER SECTION 50C(2) OF THE I.T. ACT. HE SUBMITTED THAT A SSESSEE HAS RAISED OBJECTIONS BEFORE THE A.O. AND HAS ALSO STATED THAT ASSESSEE DID NOT RECEIVE THE SALE CONSIDERATIO N AS RECORDED IN THE SALE DEED DUE TO VARIOUS DISPUTES A ND THAT BOTH THE A.O. AS WELL AS THE LD. CIT(A) HAVE DISREG ARDED THE SAME AND HAVE ADOPTED THE SRO VALUE WHICH IS NO T SUSTAINABLE. HE HAS FILED THE COPIES OF VARIOUS ORD ERS OF COURTS AND OTHER DOCUMENTS TO DEMONSTRATE THAT THE PROPERTY WAS IN DISPUTE AND HENCE DID NOT FETCH THE VALUE AS PER THE SRO RECORDS. THEREFORE, ACCORDING TO HIM , THE MATTER NEEDS TO BE REMITTED TO THE FILE OF THE A.O. WITH A DIRECTION TO REFER THE MATTER TO THE REGISTERED VAL UER TO 5 ITA.NO.1365/HYD/2013 MR. ARKALA SURESH GOUD, HYDERABAD. ASCERTAIN THE FAIR MARKET VALUE OF THE PROPERTY. TH OUGH THE ASSESSEE HAS RAISED A GROUND THAT THE SALE WAS HELD AS NOT VALID, THE LD. COUNSEL FOR THE ASSESSEE DID NOT ADVANCE ANY ARGUMENTS ON THIS ISSUE. 5. THE LD. D.R. HOWEVER, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 6. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT THE A.O. HAD OBTAI NED THE RELEVANT DOCUMENTS FROM THE SRO, QUTUBULLAPUR AND H AS ALSO EXAMINED AND RECORDED STATEMENTS OF THE PURCHA SERS WHO HAVE CONFIRMED THE PAYMENT OF RS.62,50,000 TOWA RDS SALE CONSIDERATION OF THE PROPERTY. THE ASSESSEE HA S NOT ASKED FOR CROSS-EXAMINATION OF THOSE PARTIES BUT HA S OBJECTED TO THE ADOPTION OF THE SRO VALUE AS THE SA LE CONSIDERATION RECEIVED BY THE ASSESSEE. THE BASIC CONTENTION OF THE ASSESSEE BEFORE US IS THAT WHEN T HE ASSESSEE HAS OBJECTED TO THE HIGHER VALUE OF THE SR O BEING TAKEN AS THE SALE CONSIDERATION RECEIVED BY T HE ASSESSEE, THE A.O. IS MANDATORILY REQUIRED TO REFER THE MATTER FOR VALUATION TO THE DEPARTMENT VALUATION OF FICER UNDER SECTION 50C(2) OF THE ACT. WE FIND THAT THE A SSESSEE HAS RAISED THE ISSUE OF DISPUTES ON THE TITLE OF TH E PROPERTY AS THE REASON FOR THE RECEIPT OF THE LESSER SALE CONSIDERATION AS COMPARED TO THE SRO VALUE EVEN BEF ORE THE A.O. BEFORE US ALSO, LD. COUNSEL FOR THE ASSESS EE HAS FILED COPIES OF VARIOUS DOCUMENTS INCLUDING COURT O RDERS IN SUPPORT OF HIS CONTENTION THAT THE PROPERTY WAS A 6 ITA.NO.1365/HYD/2013 MR. ARKALA SURESH GOUD, HYDERABAD. DISPUTED PROPERTY. HOWEVER, WE FIND THAT THE A.O. AND THE LD. CIT(A) HAVE HELD THAT THE ASSESSEE HAS FAIL ED TO PROVIDE ANY MATERIAL EVIDENCE IN SUPPORT OF THIS CONTENTION. SINCE THESE DOCUMENTS GO TO PROVE THAT THERE WAS A DISPUTE ON THE PROPERTY AND THEREFORE, THE AS SESSEE DID NOT HAVE A CLEAR MARKETABLE TITLE, WE ARE INCLI NED TO ADMIT THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE . SINCE THESE DOCUMENTS NEED VERIFICATION BY THE A.O. AND T HE LD. CIT(A), WE DEEM IT FIT AND PROPER TO REMAND THE ISS UE TO THE FILE OF THE A.O. FOR VERIFICATION OF THESE DOCU MENTS AND ALSO FOR THE VALUATION OF THE PROPERTY UNDER SECTIO N 50C(2) OF THE ACT, WE DIRECT THE A.O. TO REFER THE MATTER FOR VALUATION OF THE PROPERTY TO A DEPARTMENTAL VALUATI ON OFFICER UNDER SECTION 50C(2) OF THE I.T. ACT. THE A .O. SHALL ALSO CONSIDER THE NATURE OF THE PROPERTY SOLD AND W HETHER THE INCOME THEREFORE, IS EXIGIBLE TO INCOME TAX. 7. IN THE RESULT, ASSESSEES APPEAL IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 24.03.2016. SD/- SD/- (S. RIFAUR RAHMAN) (SMT. P. MADHAVI DEVI) ACOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 24 TH MARCH, 2016 VBP/- 7 ITA.NO.1365/HYD/2013 MR. ARKALA SURESH GOUD, HYDERABAD. COPY TO : 1. MR. ARKALA SURESH GOUD, HYDERABAD. C/O. MR. S. RAMA RAO, ADVOCATE, FLAT NO.102, SHRIYAS ELEGANCE, H.NO.3-6-643, STREET NO.9, HIMAYATNAGAR, HYDERABAD 500 029. 2. THE INCOME TAX OFFICER, WARD - 11(1), HYDERABAD. 3. CIT(A) - V I, 6A, I.T. TOWERS, A.C. GUARDS, HYDERABAD. 4. CIT - V , HYDERABAD . 5. D.R. ITAT A BENCH, HYDERABAD. 6. GUARD FILE