J.Vijender Reddy, Hyderabad V. Income Tax Officer, Hyderabad

ITA 1379/HYD/2013

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6190 (ITAT-HYDERABAD)
• Duration Of Justice: 3 year(s) 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2017
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 06-09-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 24-10-2013
• Court: TRIBUNAL
• Department Lawyers: U MINICHANDRAN
• Assessee Lawyers: S RAMA RAO
• Keywords: Cost of acquisition
• Section: 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER I.T.A. NO. 1379/HYD/2013 ASSESSMENT YEAR: 2007-08 J. VIJENDER REDDY, SECUNDERABAD [PAN: ACZPJ8037H] VS THE INCOME TAX OFFICER, WARD-10(2) HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI S. RAMA RAO, AR FOR REVENUE : SMT U. MINICHANDRAN, DR DATE OF HEARING : 08-12-2016 DATE OF PRONOUNCEMENT : 31-01-2017 O R D E R PER B. RAMAKOTAIAH, A.M. : THIS IS AN APPEAL BY ASSESSEE AGAINST THE ORDER OF TH E COMMISSIONER OF INCOME TAX (APPEALS)-VI, HYDERABAD, DATED 10-07-2013. THE ISSUE IN THIS APPEAL IS WITH REFEREN CE TO ADDITION OF RS. 1,16,19,800/- AS CAPITAL GAINS PURSUANT TO THE SETTLEMENT OF THE CONTRACT OF PURCHASE. 2. BRIEFLY STATED, ASSESSEE, AN INDIVIDUAL IS INTO TH E BUSINESS OF PURCHASE AND SALE OF LANDS. DURING THE COURSE OF SU RVEY PROCEEDINGS CONDUCTED IN THE CASE OF M/S. SURAKSHITA H OMES ON 04-09-2008, CERTAIN DOCUMENTS WERE FOUND AND IMPOUNDED RELATING TO THE TRANSACTION OF PURCHASE OF LANDS BY THE SAID FIRM. ONE OF THE TRANSACTIONS INVOLVED ASSESSEE. A MEMORAND UM OF I.T.A. NO. 1379/HYD/2013 J. VIJENDER REDDY :- 2 - : UNDERSTANDING [MOU] DT. 18-09-2006 BETWEEN THE LAND OWNERS M/S. SIDHARTHA ESTATES REPRESENTED BY SMT.C. AMARAVATH I AS VENDOR AND ASSESSEE AS AN AGREEMENT-HOLDER FOR PURC HASE OF LANDS AT AUSHAPUR FROM THE SAID SIDHARTHA ESTATES AS CONFIRMIN G PARTY AND M/S. SURAKSHITA HOMES AS BUYER WAS FOUND. AS PER THE SAID MOU, ASSESSEE HAS RECEIVED AN AMOUNT OF RS. 40 LAKHS TOWARDS REPAYMENT OF CONSIDERATION PAID BY ASSESSEE TO THE LAND OWNERS VIDE AGREEMENT FOR SALE DT. 13-12-2002 ENTERED BETWEE N THESE TWO PARTIES. IN ADDITION TO THE ABOVE AMOUNT, RS. 1 CROR E WAS TO BE RECEIVED FROM M/S. SURAKSHITA HOMES FOR CONSENTING NO T TO LITIGATE FURTHER FOR HAVING FILED A CIVIL SUIT AGAINST THE LAND OWNERS FOR NON- PERFORMANCE OF THE AGREEMENT DT. 13-12-2002. SINCE THE LAND OWNER AS WELL AS M/S. SURAKSHITA HOMES AGREED FOR THE PAYMENT OF TOTAL AMOUNT OF RS. 1,40,00,000/-, THE ENTIRE CONSIDERA TION WAS BROUGHT TO TAX IN THE HANDS OF ASSESSEE AFTER ALLOWING THE COST OF ACQUISITION. THUS NET AMOUNT BROUGHT TO TAX AS CAPITAL G AINS WAS OF RS. 1,16,19,800/-. ASSESSEE IS AGGRIEVED ON THE A BOVE ADDITION. 3. BEFORE THE LD. CIT(A) IT WAS CONTENDED THAT ASSESSE E HAS NOT RECEIVED THE AMOUNT OF RS 1 CRORE. IT WAS SUBMITTED T HAT HE WAS NOT FAMILIAR WITH THE AGREEMENT WHICH WAS IN ENGLISH AND FURTHER THE AMOUNT CANNOT BE BROUGHT TO TAX IN HIS HANDS AS IT WA S UTILISED FOR SURRENDERING THE RIGHT TO SPECIFIC PERFORM ANCE. LD. CIT(A) FOUND THAT THERE WERE CERTAIN INCONSISTENCIES IN THE FIGURES OF THE AMOUNTS STATED TO HAVE BEEN RECEIVED BY ASSESSEE AS REFERRED TO IN THE MOU AND THE IMPOUNDED MATERIAL AND THE STATEMENTS RECORDED FROM THE REPRESENTATIVES OF M/S. SURA KSHITA HOMES. THE MATTER WAS REFERRED TO AO FOR RECONCILIATI ON OF THE AMOUNTS AND SUBMISSION OF THE REPORT. AFTER RECEIVING THE REPORT I.T.A. NO. 1379/HYD/2013 J. VIJENDER REDDY :- 3 - : OF THE AO, LD.CIT(A) CONFIRMED THE ADDITION AND REJECT ED THE ENHANCEMENT REQUESTED BY THE AO BY HIS ORDER AS UNDER : 5.3 PERUSED THE OBSERVATIONS OF THE A.O AND THE SU BMISSIONS OF THE APPELLANT. BRIEFLY STATED, THE FACTS OF THE CASE RE VEAL THAT THE APPELLANT, BEING IN THE BUSINESS OF PURCHASE AND SALE OF LANDS , HAVE ENTERED INTO AN AGREEMENT FOR SALE WITH M/S. SIDHARTHA ESTATE REPRE SENTED BY MRS. C. AMARAVATHI AND MR. C. JAGDISWAR RAO, FOR PURCHASE O F LANDS AT AUSHAPUR, BY PAYING THE AMOUNT OF RS. 20,00,000/-. HOWEVER, THE LAND OWNER SHOWN TO HAVE SOLD THE SAME PROPERTY TO M/S. SRI SURAKSHITA HOMES, FOR A HIGHER CONSIDERATION, FOR WHICH THE AP PELLANT HAS FILED CIVIL SUIT, AGAINST THE LAND OWNER, FOR ENFORCING THE SPE CIFIC PERFORMANCE OF AGREEMENT FOR SALE. IN THIS CONTEXT, THE THREE PART IES INVOLVED IN THE MATTER, I.E. MR. VIJENDER REDDY, THE APPELLANT, AS AN AGREE MENT HOLDER, M/S. SIDHARTHA ESTATES, THE LAND OWNERS AND M/S. SRI SUR AKSHITA HOMES, THE PURCHASERS, HAVE ENTERED INTO AN MOU DATED 18.12.20 06, IN ORDER TO SOLVE THE ISSUE AMICABLY, AS PER WHICH, AN AMOUNT OF RS. 40,00,000/- WAS PAID BY THE LAND OWNERS AND RS. 1,00,00,000/- BY M/S. SU RAKSHITA HOMES TO MR. VIJENDER REDDY. WHILE MR. VIJENDER REDDY HAS AC CEPTED THE RECEIPT OF RS. 40,00,000/- EQUALLY PAID IN CASH AND THROUGH DE MAND DRAFTS, HAS DENIED TO HAVE RECEIVED THE AMOUNT OF RS. 1,00,00,0 00/- FROM M/S. SURAKSHITA HOMES. THE REASONS GIVEN BY THE APPELLAN T ARE THAT, HE WAS AN ILLITERATE AND WAS NOT AWARE OF THE CONTENTS OF MOU, AS IT WAS WRITTEN IN ENGLISH THOUGH HE HAS SUBSCRIBED HIS SIGNATURE T O IT AND HE DID NOT BELIEVE THE VERSION OF THE REPRESENTATIVES OF M/S. SIDHARTHA ESTATES AND M/S. SURAKSHITA HOMES, SINCE, THEY MIGHT HAVE WRITT EN THE DETAILS, TO SUPPRESS THEIR INCOMES. THE SUBMISSIONS OF THE APPE LLANT CLEARLY INDICATE THAT HE IS NOT READY TO ACCEPT THE FACTS, WHICH WER E AVAILABLE IN BLACK AND WHITE. THE MOU WAS NOT ONLY SIGNED BY ONE OF THE PA RTIES BUT BY ALL THE 3 PARTIES, WHERE IN THE AMOUNTS WERE INDICATED TO HAV E BEEN PAID/PAYABLE AS PER THE SPECIFIED DATES/SCHEDULES. SOME OF THE A MOUNTS ARE PAID BY DEMAND DRAFTS, WHICH WERE ACCEPTED BY THE APPELLANT HIMSELF. A DOCUMENT CANNOT INDICATE THE HALF TRUTH, AS THE CON TENTS ARE EITHER CAN BE FULLY DENIED OR FULLY ACCEPTED, BASED ON THE VERACI TY OF THE CONTENTS INSCRIBED THEREIN. IT ALSO APPEARS THAT IT IS NOT C ORRECT ON THE PART OF THE APPELLANT TO AVER THAT BEING AN ILLITERATE, HE DID NOT UNDERSTAND THE CONTENTS OF MOU, AS IT WAS WRITTEN IN ENGLISH. AT T HE SAME LENGTH AND BREADTH, THE ASSESSMENT ORDER AS WELL AS THE OTHER CORRESPONDENCES MADE BY THE APPELLANT INCLUDING THE SUBMISSIONS MADE BEC OME IRRELEVANT, SINCE THE SAME ARE ALSO MADE IN ENGLISH LANGUAGE. FURTHER , THE INFORMATION AS INSCRIBED IN THE MOU, AS RELIED MAINLY BY THE A.O/ WAS ALSO SUPPORTED BY THE STATEMENTS ON OATH RECORDED FROM THE REPRESENTA TIVES OF M/S. SIDHARTHA ESTATES AND M/S. SURAKSHITA HOMES. THE IN FORMATION AS AVAILABLE IN THE IMPOUNDED MATERIAL ALSO INDICATE T HE PAYMENT OF RS. 1,40,00,000/- TO MR. VIJENDER REDDY, INCLUDING THE AMOUNTS PAID BY DEMAND DRAFTS TO THE EXTENT OF RS. 20,00,000/-. FU RTHER, AS OBSERVED BY I.T.A. NO. 1379/HYD/2013 J. VIJENDER REDDY :- 4 - : THE A.O, THE APPELLANT APPEARS TO HAVE STOPPED PURS UING OR WITHDRAWN THE CIVIL SUIT FILED AGAINST M/S. SIDHARTHA ESTATES, AS PER THE MOU, FOR HAVING RECEIVED THE CONSIDERATION OF RS. 1,00,00,000/- FRO M M/S. SURAKSHITA HOMES, THE BUYERS OF THE LAND. ALL THESE FINDINGS A ND FACTS INDICATE THAT THE APPELLANT RECEIVED THE AMOUNTS OF RS. 1,40,00,0 00/- AS INDICATED IN THE MOU DATED 18.12.2006 AND THE IMPOUNDED MATERIAL , IN PURSUANCE OF THE TERMS AND CONDITIONS AS LAID DOWN IN MOU, WHICH HAS BEEN SIGNED BY ALL THE THREE PARTIES, IN PRESENCE OF WITNESSES. TH ERE IS NO REQUIREMENT OF FURTHER EVIDENCES, TO CONFIRM THE RECEIPT OF THE AM OUNT OF RS 1,40,00,000/- BY THE APPELLANT FOR FORFEITING HIS CLAIM OVER THE LAND. ACCORDINGLY, IT IS HELD THAT THE A.O IS JUSTIFIED IN ADOPTING THE AMOU NTS RECEIVED BY THE APPELLANT AT RS. 1,40,00,000/- AND COMPUTING THE PR OFITS AT RS. 1,16,19,800/-. THIS GROUND OF APPEAL ON THIS COUNT, ACCORDINGLY STANDS DISMISSED. 5.4 THE CONTENTION OF THE A.O FOR ENHANCEMENT OF AS SESSMENT BY RS. 22,75,000/- ON ACCOUNT OF RECEIPT OF THE SAID AMOUN TS BY THE APPELLANT, TOWARDS THE SETTLEMENT OF PLOT OF 1105 SQ. YDS., IS NOT MAINTAINABLE, ON THE GROUND THAT THERE IS NO COMPLETE INFORMATION AS REGARD TO THE SAID TRANSACTION EITHER IN THE ASSESSMENT ORDER OR THE I NFORMATION BROUGHT ON THE RECORD, EITHER BY THE A.O OR BY THE APPELLANT. IN ABSENCE OF THE CLEAR INFORMATION, IT IS HELD THAT THE INCOME OF THE APPE LLANT CANNOT BE ENHANCED AT THIS STAGE. HENCE, THERE IS NO CHANGE IN THE TOT AL INCOME ASSESSED BY THE A.O. 3.1. AGGRIEVED ON THE ABOVE ORDER, ASSESSEE HAS RAIS ED THE FOLLOWING MATERIAL GROUNDS: 2. THE LEARNED CIT(A) ERRED IN HOLDING THAT THE AP PELLANT RECEIVED AN AMOUNT OF RS. 1,40,00,000/- FROM SURAKSHITHA HOM ES WHEREAS THE ACTUAL AMOUNT RECEIVED IS ONLY RS. 40,00,000/-. 3. THE LEARNED CIT(A) OUGHT TO HAVE SEEN THAT THERE IS NO EVIDENCE WITH SURAKSHITHA HOMES THAT AN AMOUNT OF RS. 1,40,0 0,000/- WAS PAID TO THE APPELLANT HEREIN. 4. ALTERNATIVELY, THE LEARNED CIT(A) ERRED IN HOLDI NG THAT THE AMOUNT REALIZED BY SURRENDERING THE RIGHT TO SPECIFIC PERF ORMANCE REPRESENTS THE INCOME ASSESSABLE FOR THE YEAR UNDER CONSIDERATION . GROUND NOS. 1 & 5 ARE GENERAL IN NATURE. 4. IT WAS THE CONTENTION OF THE LD. COUNSEL THAT THE SO CA LLED STATEMENTS RECORDED BY THE AO HAVE NOT BEEN FURNISHED TO I.T.A. NO. 1379/HYD/2013 J. VIJENDER REDDY :- 5 - : ASSESSEE NOR HE WAS CONFRONTED WITH THE ACCOUNT COPIES. THERE WAS NO PROOF OF PAYMENT AND ASSESSEE DENIES THE AMOUN TS. IT WAS FURTHER SUBMITTED THAT VIDE MOU DT. DECEMBER, 2002 I.E., PURCHASE AGREEMENT BY ASSESSEE, THE TOTAL AMOUNT PAYABLE WAS ABO UT RS. 92 LAKHS AND ASSESSEE PAID RS. 20 LAKHS AND BALANCE WA S TO BE PAID. EVEN THOUGH ASSESSEE HAS NOT RECEIVED THE AMOUNTS STATE D TO HAVE BEEN MENTIONED IN THE MOU, SINCE THE SO CALLED STATEMEN TS AND ACCOUNTS HAVE NOT BEEN CONFRONTED, IT IS REQUESTED FOR SETTING ASIDE THE MATTER TO GIVE PROPER OPPORTUNITY TO ASSESSEE TO EXP LAIN. 5. LD.DR, HOWEVER, OBJECTED TO THAT. HOWEVER, IT HAS A GREED THAT STATEMENTS RECORDED ON SECTION 131 FROM THOSE PARTIES ARE AFTER COMPLETION OF THE ASSESSMENT, IN THE REMAND PROC EEDINGS. 6. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE ORDERS OF THE AUTHORITIES. EVEN THOUGH THERE IS EVIDENC E THAT ASSESSEE IS STATED TO HAVE BEEN RECEIVED RS. 1,40,00,0 00/- BY WAY OF ACCOUNT COPIES MAINTAINED BY THE SAID FIRM AND ALSO BY WAY OF AGREEMENT ENTERED BETWEEN THREE PARTIES, THE STATEMENTS RECORDED AND THE ACCOUNT COPIES HAVE NOT BEEN CONFRONTED TO ASSES SEE. EVEN THE ORDER OF THE CIT(A) DOES NOT MENTION THAT ASSESS EE HAS BEEN GIVEN AN OPPORTUNITY AFTER THE REMAND REPORT. AS SEEN FROM THE COPY OF THE ACCOUNT HEADED AUSHAPUR LAND PAYMENT, ASSESSEE WAS STATED TO HAVE RECEIVED RS. 90 LAKHS- BY WAY OF DD OF RS. 20 LAKHS AND BALANCE BY WAY OF CASH- BETWEEN 04-09-200 6 TO 04-12- 2006. ONE PAYMENT ON 09-11-2006 WAS THROUGH SHRI KR ISHNA REDDY. BALANCE OF THE AMOUNT OF ABOUT RS. 72,75,000/- WAS ALSO TRANSFER ENTRIES FROM SHRI KRISHNA REDDY ACCOUNT. THE ROLE OF SHRI KRISHNA REDDY WAS NOT BROUGHT ON RECORD AND WE ARE NO T SURE I.T.A. NO. 1379/HYD/2013 J. VIJENDER REDDY :- 6 - : WHETHER ANY STATEMENT HAS BEEN RECORDED FROM SHRI KRIS HNA REDDY. PRIMA-FACIE THERE SEEMS TO BE EVIDENCE IN SUPPORT OF THE REVENUE CONTENTIONS, BUT SINCE THE ACCOUNT COPIES AND STA TEMENTS HAVE NOT BEEN CONFRONTED TO ASSESSEE, CONSIDERING THE REQUEST MADE BY THE LD. COUNSEL IN THE COURSE OF ARGUMENTS, WE ARE OF THE OPINION THAT THE MATTER IS TO BE SET ASIDE TO THE FILE OF THE AO TO GIVE PROPER OPPORTUNITY TO ASSESSEE TO EXPLAIN HIS STAND AND ALSO TO OFFER CROSS-EXAMINATION OF THE PARTIES, IF REQUIRED. THE ROLE OF SHRI KRISHNA REDDY ALSO REQUIRES EXAMINATION. 6.1. IN VIEW OF THIS, ORDERS OF THE AO AND CIT(A) ARE SET ASIDE AND MATTER IS RESTORED TO THE FILE OF THE AO TO COMPLETE ASS ESSMENT AFTER GIVING DUE OPPORTUNITY TO ASSESSEE AS STATED ABOVE. SI NCE THE ISSUE IS RESTORED TO THE FILE OF AO, THE ALTERNATE CONTENTION I N GROUND NO. 3 IS NOT BEING EXAMINED NOW. AO, HOWEVER, IS DIRECT ED TO EXAMINE THIS ASPECT ALSO AND COMPLETE THE ASSESSMENT AS PER THE FACTS AND LAW ON THE SUBJECT. ASSESSEES GROUNDS ARE ALLOWED F OR STATISTICAL PURPOSES. 7. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED FOR S TATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST JANUARY, 2017 SD/- SD/- (P. MADHAVI DEVI) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEM BER HYDERABAD, DATED 31 ST JANUARY, 2017 TNMM I.T.A. NO. 1379/HYD/2013 J. VIJENDER REDDY :- 7 - : COPY TO : 1. J. VIJENDER REDDY, SECUNDERABAD. C/O. S. RAMA RA O, ADVOCATE, FLAT NO. 102, SHRIYAS ELEGANCE, ROAD NO. 9, HIMAYAT NAGAR, HYDERABAD. 2. THE INCOME TAX OFFICER, WARD-10(2), HYDERABAD. 3. CIT (APPEALS)-VI, HYDERABAD. 4. CIT-V, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.