A.Mohamed Nazar, Coimbatore V. ACIT, Coimbatore

ITA 1408/CHNY/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 96455 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2015
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 02-09-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 09-06-2015
• Court: TRIBUNAL
• Assessee Lawyers: V S JAYAKUMAR
• Keywords: Capital asset

Judgement Text

, , IN THE INCOME-TAX APPELLATE TRIBUNAL B BENCH, CHE NNAI . , . # $% , ' ( BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER & SHRI V.DURGA RAO, JUDICIAL MEMBER ./ I.T.A.NO.1408/MDS./2015 ( / ASSESSMENT YEAR :2008-09) MR.A.MOHAMED NAZAR , T-1/88,MARUDAM EMPIRE, BHARATHI PARK ROAD, NO.2,SAIBABA COLONY, COIMBATORE 641 043. VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, NON-CORPORATE CIRCLE-2, COIMBATORE 641 018. PAN AIBPM 2356 H ( )* / APPELLANT ) ( +,)* / RESPONDENT ) / APPELLANT BY : MR.V.S.JAYAKUMAR,ADVOCATE / RESPONDENT BY : DR.B.NISCHAL, JCIT,D.R / DATE OF HEARING : 02.09.2015 /DATE OF PRONOUNCEMENT : 20.11.2015 - / O R D E R PER A.MOHAN ALANKAMONY , ACCOUNTANT MEMBER: THIS APPEAL IS FILED BY THE ASSESSEE, AGGRIEVED B Y THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(A)-2, COIMBA TORE DATED 31.03.2015 IN ITA NO.107/12-13 PASSED U/S 143(3 ) READ WITH SECTION 250 OF THE ACT. ITA NO.1408 /MDS/2015 2 2. THE ASSESSEE HAS RAISED EIGHT ELABORATE GROUNDS IN HIS APPEAL; HOWEVER, THE CRUX OF THE ISSUE IS THAT THE ASSESSEE IS AGGRIEVED BY THE ORDER OF THE LD. CIT(A) FOR HAVEN ING SUSTAINED THE ADDITIONS MADE BY THE LD. ASSESSING OFFICER BY HOLD ING THAT THE SALE OF RESIDENTIAL PROPERTY AT 303,TRISTAR APARTMENTS, AVANASHI ROAD, COIMBATORE IS NOT TO BE TAXED UNDER THE HEAD LONG TERM CAPITAL GAINS BUT THE ENTIRE SUM OF ` 45 LAKHS AS INCOME FROM OTHER SOURCES. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE IS AN INDIVIDUAL, ENGAGED IN THE BUSINESS AND WAS RESIDIN G WITH HIS FATHER MR.ABDUL WAHAB AT SELVAPURAM, COIMBATORE. THE ASSES SEE ADVANCED RS.6 LAKHS PRIOR TO THE FINANCIAL YEAR 200 2 FROM THE AMOUNT RECEIVED FROM HIS FATHER FROM TIME TO TIME, TO HIS FRIEND MR.NARAIN RAJAN WHO WAS ENGAGED IN THE BUSINESS OF FLAT DEVEL OPMENT, ON THE BASIS OF ASSURANCE GIVEN THAT A RESIDENTIAL FLAT WI LL BE ALLOTTED TO THE ASSESSEE FROM HIS JOINT VENTURE PROJECTS. DURING TH E FINANCIAL YEAR 2001-02, MR. NARANIN RAJAN PROVIDED FLAT NO.303, AT TRISLTAR AVINASHI ROAD, COIMBATORE-37 AND THE ASSESSEE SHIFTED FROM H IS FATHERS ITA NO.1408 /MDS/2015 3 HOUSE TO THIS FLAT. THE ASSESSEE STAYED IN THAT HO USE FOR SIX YEARS. SUBSEQUENTLY THE ASSESSEE VACATED THE HOUSE AFTER R ECEIVING ` 45 LAKHS FROM MR. NARANIN RAJAN. THE ASSESSEE DECLARED THE AMOUNT RECEIVED OF ` 45 LAKHS AS HIS LONG TERM CAPITAL GAIN IN HIS RET URN OF INCOME. DURING THE ASSESSMENT PROCEEDINGS, THE LD. ASSESSING OFFICER REJECTED THE ASSESSEES CLAIM OF LONG TERM CAPITAL GAIN AND TREATED THE SAME AS INCOME FROM OTHER SOURCES SIN CE THERE WAS NO TRANSFER OF ASSET VIZ. THE FLAT PROVIDED BY MR. NAR ANIN RAJAN TO THE ASSESSEE FOR HIS RESIDENTIAL PURPOSE. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) AND THE LD.CIT(A) CONFIRMED T HE ADDITION MADE BY THE LD. ASSESSING OFFICER. WHEN THE MATTER CROP PED UP BEFORE THE TRIBUNAL, THE ASSESSEE FILED CERTAIN ADDITIONAL EVI DENCES AND THEREFORE THE TRIBUNAL REMITTED THE MATTER BACK TO THE FILE OF THE LD. ASSESSING OFFICER FOR VERIFICATION OF THE EVIDENCE AND TO DECIDE THE MATTER AFRESH VIDE ORDER DATED 02.02.3012 IN ITA NO .1801/MDS./2011. 3.2 DURING THE SECOND ROUND BEFORE THE LD. ASSESSI NG OFFICER, THE ASSESSEE HAD SUBMITTED EVIDENCE IN SUPPORT OF HIS C LAIM THAT HE RESIDED IN THAT PROPERTY, HIS FATHERS INCOME TAX R ETURN TO ESTABLISH THE ITA NO.1408 /MDS/2015 4 SOURCE OF ` 6 LAKHS PAID BY HIM TO MR. NARANIN RAJAN, SALE AGRE EMENT MADE WITH MR.NARAIN RAJAN, CONSTRUCTION AGREEMENT M ADE BETWEEN THE ASSESSEE AND M/S.TRISTAR APARTMENT AND FURTHER RELIED IN THE DECISION OF THE MADRAS HIGH COURT IN THE CASE OF K. R.SRIMATH VS. ACIT. HOWEVER, THE LD. ASSESSING OFFICER AFTER EXAM INING THE FRESH EVIDENCES FILED BY THE ASSESSEE REJECTED THE CLAIM OF THE ASSESSEE AND OBSERVED AS UNDER:- THE ASSESSEE WHO HAS FILED THE FRESH EVIDENCE BEFO RE THE ITAT WAS EXAMINED. THE ASSESSEE FILED THE VARIOUS EVIDENCE I N SUPPORT OF HIS CLAIM THAT HE WAS RESIDED IN THAT PROPERTY, PROOF FOR HIS FATHER AS AN ASSESSEE OF INCOME TAX DEPARTMENT (FROM WHERE THE SOURCE OF PAY MENT OF RS.6 LAKHS ARISE), SALE AGREEMENT MADE WITH MR.NARAIN RAJAN, C ONSTRUCTION AGREEMENT MADE BETWEEN THE ASSESSEE AND M/S.TRISTRAR APARTMEN T. THE ASSESSEE ALSO SUBMITTED THE CASE LAWS OF MADRAS HIGH COURT IN THE CASE OF K.R.SRIMATH VS. ACIT AND THE SAME WAS EXAMINED. 1. THE VARIOUS MATERIAL EVIDENCE FURNISHED BY THE A SSESS PROVED THAT THE ASSESSEE WAS RESIDED IN THE SAID PROPERTY. 2. SALE AGREEMENT WITH M. NARAIN RAJAN : THE ASSESSEE HAS MADE A SALE AGREEMENT ON 3.8.2001 WHICH IS NOT A REGISTERED DEED. AS PER THIS UNREGISTERED DEED, THERE IS NO MENTION OF ANY PAYMENT MADE TO THE TUNE OF RS. 6 LAKHS AS MENTIONED BY THE ASSESSE E AND ALSO TOTAL CONSIDERATION TO BE PAID FOR THE PROPERTY BY THE AS SESSEE WAS NOT FILLED. THE SALE AGREEMENT WAS INCOMPLETE ONE. 3. CONSTRUCTION AGREEMENT WITH TRISTAR ACCOMMODATION L TD .: THE ASSESSEE HAS MADE A CONSTRUCTION AGREEMENT ON 0 3.08.2001 WHICH WAS NOT A REGISTERED DEED. AS PER THIS UNREGISTERED AGREEMENT THERE IS NO MENT ION OF ANY TOTAL CONSIDERATION TO BE PAID FOR THE CONSTRUCTION OF FL AT BY THE ASSESSEE WAS NOT FL/ED. THE CONSTRUCTION AGREEMENT WAS INCOMPLETE ON E. ITA NO.1408 /MDS/2015 5 4. THE ASSESSEE HAS NOT SUBMITTED ANY EVIDENCE FOR THE CANCELLATION OF THE SALE AGREEMENT MADE ON 03.08.2001 TO PROVE THAT REL INQUISHMENT OF RIGHT OVER THE PROPERTY WHICH IS MANDATORY AS PER SECTION 2(4 7) OF THE IT ACT IN ORDER TO CONSIDER AS A TRANSFER IN RELATION TO TH E CAPITAL ASSET. THE MADRAS HIGH COURT IN THE CASE OF K.R. SRINATH VS. ACIT MAD E IT CLEAR THAT TRANSFER IN S.2(47) IS WIDE ENOUGH TO INCLUDE RELINQUISHMENT OF AN ASSET HERE THE ASSESSEE HAS NOT SUBMITTED ANY EVIDENCE OR PROOF FO R THE RELINQUISHMENT OF AN ASSET WITH RESPECT TO THE UNREGISTERED AND INCOM PLETE SALE AGREEMENT MADE ON 03.08.2001. SO, THIS TRANSACTION CANNOT BE CONSIDERED AS A TRANSFER IN RELATION TO THE CAPITAL ASSET. 5. THE ASSESSEE STATED THAT HE HAS RECEIVED A SUM O F F?S. 6 LACS FROM HIS MOTHER WHICH IS THE SOURCE FOR THE PAYMENT. FOR THI S, HIS MOTHER MRS. MUMTAZ BE GUM HAS FILED AN AFFIDAVIT DATED 9.11.201 1 BEFORE THE ITAT, IN WHICH SHE STATED THAT SHE HAS GIVEN THISAMOUNT OUT OF HER LATE HUSBAND SAVINGS. THIS ABOVE SAID AFFIDAVIT DOES NOT CONTAIN THE SIGNATURE OF THE ADVOCATE BEFORE WHOM SHE HAS SIGNED THE AFFIDAVIT. THE AFFIDAVIT IS INCOMPLETE ONE. 6. THE ASSESSEES MOTHER MRS. MUMTAZ BEGUM HAS STAT ED IN THE AFFIDAVIT THAT HER LATE HUSBAND WAS ASSESSED TO INCOME TAX. A T THE TIME OF EXPIRY, HER LATE HUSBAND HAS LEFT BEHIND THE CASH OF RS.6 TO 9 LAKHS. IN SUPPORT OF THIS CASH BALANCE AVAILABLE WITH HER HUSBAND, NEITHER TH E ASSESSEE NOR MRS.MUMTAZ BEGAM SUBMITTED ANY EVIDENCE EXCEPT MR. WAS AN ASSESSEE IN THE INCOME TAX DEPARTMENT. THIS WAS NOT ACCEPTABLE DUE TO THE FACT THAT AN ASSESSEE IN THE INCOME-TAX DEPARTMENT DOES NOT MEAN THAT HE HAS HOLDING CASH OF RS. 6-9 LAKHS IN HAND. THIS SHOULD HAVE BEE N SUPPORTED WITH EITHER IN THE FORM WEALTH TAX RETURN OR CASH BOOK. 7. THERE IS NO DOCUMENTARY EVIDENCE FILED BY THE AS SESSEE TO SHOW THAT THE OWNER OF THE SAID PROPERTY HAS RECEIVED A SUM OF RS . 6 LAKHS FROM THE ASSESSEE EVEN IF SMT. MUMTAZ WAS GIVEN THE SAID AMO UNT TO THE ASSESSEE. THERE IS A FACTUAL DIFFERENCE BETWEEN THE ASSESSEE CASE AND MADRAS HIGH COURT JUDGEMENT IN THE CASE OF K.R.SRINATH VS. ACIT . IN K.R. SRIKANTH CASE , THE RELINQUISHMENT OF RIGHT WAS PROVED BY THE WAY OF ENTERING INTO THE SALE AGREEMENT AND THE CANCELLATION OF SALE AGREEMENT BO TH THE PARTIES AND BOTH THE AGREEMENT WAS REGISTERED ONE. HERE, THE ONLY TH E SALE AGREEMENT FOR THE SAID ASSET WAS ENTERED BETWEEN THE PARTIES WHIC H IS UNREGISTERED AND ALSO THERE IS NO DEED OF CANCELLATION FOR THE SALE AGREEMENT MADE BETWEEN TWO PARTIES ON 03.08.2001 ON THE SAID ASSET WHICH E NSURES THE RELINQUISHMENT OF THE RIGHT OVER THE ASSET. THERE I S NO MATERIAL EVIDENCE OF THE RELINQUISHMENT OF RIGHT OVER THE ASSET. THIS DO ES NOT COME UNDER THE MEANING OF TRANSFER IN RELATION TO THE CAPITAL AS SET, U/S.2(47) OF THE ACT. ITA NO.1408 /MDS/2015 6 UNDER THESE CIRCUMSTANCES, THE RECEIPT FROM THE MR. NARAIN RAJAN CANNOT BE CONSIDERED AS A SALE RECEIPT FROM THE TRANSFER OF T HE PROPERTY. THIS INCOME OR RECEIPT WILL BE TREATED AS INCOME FROM OTHER SOU RCES. 3.3 ON APPEAL, THE LD. CIT (A) AGREED WITH THE FIN DINGS OF THE LD. ASSESSING OFFICER AND CONFIRMED HIS ORDER. THE RELE VANT PARA IS REPRODUCED HEREIN BELOW FOR REFERENCE:- (I) THERE IS NO DOCUMENTARY EVIDENCE FOR THE APPELL ANT HAVING PAID ` 6 LAKHS TO TRISTAR ACCOMMODATION LTD. (II) THE SALE AGREEMENT CONSTRUCTION AGREEMENT ARE BLANK WITHOUT ANY AMOUNT OR ANY DETAILS. (III) THE APPELLANT DID NOT HAVE ANY POWER TO TRANS FER THE ASSET: THE RATIO OF THE HONBLE APEX COURT CITATION IS SQUAREL Y APPLICABLE TO THE FACTS OF THE CASE. THEREFORE, THE RECEIPT CAN BE ON LY CONSIDERED AS A COMPENSATION FOR CLEARING THE PREMISES AND THE APPE LLANTS RECOURSE TO SECTION 53A OF THE TRANSFER OF PROPERTY ACT IS N OT ACCEPTED. (IV) THE PAYMENT HAS BEEN MADE TO M/S.ANU MARBLES A ND NOT TO THE APPELLANT. THE RECEIPT IS ACTUALLY TO BE PAID TO TH E SELLER IN ANY SALE. IN VIEW OF THE ABOVE, THE ASSESSING OFFICERS ACTIO N OF TREATING THE RECEIPT AS INCOME FROM OTHER SOURCES IS CONFIRMED. ITA NO.1408 /MDS/2015 7 4. THE LD. A.R. SUBMITTED BEFORE US THAT THE ASSES SEE HAD PAID ` 6 LAKHS TO MR. NARANIN RAJAN ON THE BASIS OF THE UNDE RSTANDING WITH MR. NARANIN RAJAN TO ALLOT A FLAT TO THE ASSESSEE FROM HIS JOINT VENTURE CONSTRUCTION PROJECT AND ALSO TO PROVIDE A FLAT FOR HIS RESIDENCE UNTIL THE POSSESSION OF THE NEWLY CONSTRU CTED FLAT IS HANDED OVER TO THE ASSESSEE BY MR. NARANIN RAJAN AND ACCOR DINGLY, THE SAME WAS PROVIDED TO THE ASSESSEE. HOWEVER, SINCE T HE PROJECT OF MR. NARANIN RAJAN HAS NOT TAKEN OFF, THE ASSESSEE H AD TO VACATE THE PREMISES PROVIDED BY MR. NARANIN RAJAN AGAINST WHIC H THE AMOUNT OF ` 45 LAKHS WAS PAID TO THE ASSESSEE BY MR. NARANIN RA JAN IN ORDER TO VACATE THE FLAT AND AVOID FURTHER LITIGATION. THE L D. A.R. FURTHER SUBMITTED THAT THERE WAS ENOUGH PROOF FOR THE ASSES SEE TO HAVE RESIDED IN THE PREMISES PROVIDED BY MR. NARANIN RAJ AN. IT WAS THEREFORE ARGUED THAT THE AMOUNT RECEIVED BY THE AS SESSEE WAS FOR EXTINGUISHMENT OF HIS BUNDLE OF RIGHTS AND HENCE TH E AMOUNT OF ` 45 LAKHS RECEIVED BY HIM, HAS TO BE TAXED UNDER THE HE AD LONG TERM CAPITAL GAIN AS PROVIDED UNDER THE PROVISIONS OF T HE ACT. LD. D.R ITA NO.1408 /MDS/2015 8 VEHEMENTLY ARGUED BY SUPPORTING THE ORDERS OF THE R EVENUE AND PLEADED THAT THE SAME MAY BE SUSTAINED. 5. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY PE RUSED THE MATERIALS AVAILABLE ON RECORD. IN THE SUBSEQUENT A SSESSMENT ORDER, THE LD. ASSESSING OFFICER HAS HIMSELF AGREED THAT T HE ASSESSEE HAD RESIDED IN THE PROPERTY PROVIDED BY MR. NARANIN RAJ AN. IT IS ALSO CLEAR FROM THE PAPER BOOK SUBMITTED BY THE ASSESSEE. FRO M THE SUBMISSIONS OF THE ASSESSEE AND THE VARIOUS DOCUMEN TS PRODUCED BY HIM, IT IS EVIDENT THAT MR. NARANIN RAJAN HAD PROVI DED A FLAT TO THE ASSESSEE WITH A PROMISE TO ALLOT A FLAT FROM HIS JO INT VENTURE PROJECT. THE PAYMENT OF ` 45 LAKHS TO THE ASSESSEE BY MR. NARANIN RAJAN IS ALSO NOT IN DISPUTE. IT APPEARS FROM THE ENTIRE TRA NSACTIONS THAT MR. NARANIN RAJAN HAS PAID THIS HEFTY AMOUNT OF ` 45 LAKHS IN ORDER TO VACATE HIS FLAT AND ALSO TO COME OUT OF THE TRANSAC TIONS ENTERED BETWEEN HIM AND THE ASSESSEE. HOWEVER, FROM THE LET TER ADDRESSED BY MR. NARANIN RAJAN TO THE COMMISSIONER OF INCOME TAX DATED 25.11.2013 WHICH IS ENCLOSED IN PAGE-38 OF THE PAPE R BOOK, HE HAS CLEARLY STATED THAT THE PAYMENT OF ` 45 LAKHS WAS PAID TO THE ASSESSEE FOR SUPPLY OF MARBLES BY THE ASSESSEE. THUS WE FIN D THAT THERE IS ITA NO.1408 /MDS/2015 9 CONTRADICTION OF FACTS AS EXPLAINED BY THE ASSESSEE AND WHAT IS STATED BY MR. NARANIN RAJAN. FURTHER, IT APPEARS T HAT THE ASSESSEE WAS NOT PROVIDED WITH AN OPPORTUNITY TO CROSS EXAMI NE MR. NARANIN RAJAN IN ORDER TO BRING OUT THE CORRECT FACTS BEFOR E THE REVENUE. THEREFORE IN THE INTEREST OF JUSTICE WE ARE OF THE CONSIDERED VIEW THAT THE ENTIRE MATTER HAS TO BE REMITTED BACK TO THE FI LE OF LD. ASSESSING OFFICER FOR DENOVO CONSIDERATION. IT IS ORDERED ACC ORDINGLY. 6. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 20 TH NOVEMBER,2015 AT CHENNAI. SD/- SD/- ( . # $% ) (V. DURGA RAO) ( . ) (A.MOHAN ALANKAMONY) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 20 TH NOVEMBER, 2015. K S SUNDARAM. COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE