ITO, Ward-3(3)(3), Ahmedabad V. Shri Nitin Ishwarbhai Patel, Ahmedabad

ITA 1448/AHD/2018

AI Insights

The case revolves around an appeal by the Income Tax Department against the order of the CIT(A) which had deleted the addition of Rs.59,12,890 made by the Assessing Officer (AO) on account of capital gains under section 50C of the Income Tax Act. The AO had added this amount as taxable capital gains in the hands of the assessee, Shri Nitin Ishwarbhai Patel, based on the Jantri value of a property transaction. However, it was argued that the actual sale proceeds were received by Shri Haresh K. Shah, who was the actual owner of the property at the time of sale, and not the assessee. The CIT(A) accepted this argument, leading to the Department's appeal to the tribunal.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 131494 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 8 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-02-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 22-01-2023
• Assessment Year: 2011-2012
• Appeal Filed On: 31-05-2018
• Other Referred Cases: CIT Vs. CARBO IND HOLD LTD 244 ITR 0422 (Cal)
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Diversion of income; Capital Gains
• Section: 50C; 133(6); 250

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “D” BENCH Before: Ms. Annapurna Gupta, Accountant Member And Shri Siddhartha Nautiyal, Judicial Member Th e ITO, Ward-3(3 )(3), Ah medabad (Appellant) Vs Shri Nitin Ishwarb hai Patel, 8, Narayan Dar shan Nr. Ash opalav Bunglows 1 00 Ft. Road , Thaltej, Ahmedab ad PAN: AC CPP372 6E (Resp ondent) Asses see b y : Shri Mah esh Ch hajed, A. R. Revenue by : Shri Atul Pandey , S r. D. R. Date of hearing : 23-01 -2 023 Date of pronouncement : 24-02 -2 023 आदेश/ORDER PER : SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER:- This is an appeal filed by the Revenue against the order of the ld. Commissioner of Income Tax (Appeals)-3, Ahmedabad in Appeal no. CIT(A)-3/486/3(3)(3)/14-15, under section 250 of the Act vide order dated 26/03/2018 passed for the assessment year 2011-12. ITA No. 1448/Ahd/2018 Assessment Year 2011-12 I.T.A No. 1448/Ahd/2018 A.Y. 2011-12 Page No. ITO vs. Shri Nitin Ishwarbhai Patel 2 2. The Department has taken the following grounds of appeal:- “1. The Ld.CIT(A) has erred in law and on facts in deleting the addition of Rs.59,12,890/- made by A.O. on account of capital gain without considering provisions of section 50C of the Act and without appreciating the fact that the assessee was the actual owner of the property and there was no share of rights of Shri Haresh K Shah. 2. On the facts and circumstances of the case, the Ld. Commissioner of Income-tax (A) ought to have upheld the order of the Assessing Officer in respect of above issues. 3. It is, therefore, prayed that the order of the Ld. Commissioner of Income-tax (A) may be set- aside and that of the Assessing Officer be restored.” 3. The brief facts of the case are that the assessee filed return of income for assessment year 2011-12 declaring total income of 4,65,310/ - and agricultural income of 75,000/-. During the course of assessment, the AO observed that the assessee had executed Banakhat on 23-08-2008 in favour of Shri Haresh K. Shah for 3,50,000/ -. The AO called for information from the sub- registrar for Jantri value as of the date of Banakhat i.e. 23-08- 2008 and as per the information furnished by sub- registrar, the value of the property in question was taken as 61,40,000/- as on the date of Banakhat on 23-08-2008. Accordingly, the AO added the sale consideration of 61,40,000/- as taxable capital gains in the hands of the assessee by invoking the provisions of section 50C of the Act. 4. In appeal before Ld. CIT(Appeals), the assessee submitted that the assessee had purchased the land by way of agreement dated 25-09-2007 for 1,76,000/-. Thereafter, the assessee sold this land to Shri Haresh K. Shah for 350,000/ - by way of Banakhat dated 23-08-2008 i.e. in assessment year 2009-10. Thereafter, this land was directly sold by Shri Haresh K. Shah to Shri Shyamal and Shri Suresh Kumar Jaiswal by way of sale deed dated I.T.A No. 1448/Ahd/2018 A.Y. 2011-12 Page No. ITO vs. Shri Nitin Ishwarbhai Patel 3 07-08-2010, wherein Shri Haresh K. Shah, the owner of this land by way of Banakhat dated the 23-08-2008 had become the confirming party to the sale deed. The assessee submitted that the sale proceeds have been received by Shri Haresh K. Shah directly from the buyers, the details of which are mentioned in the sale deed itself. Hence, the assessee had received only 350,000/- as per the Banakhat executed on 23-08-2008 and the sale proceeds as per the sale deed 07-08-2010 have been received by Shri Haresh K. Shah only. All these facts were submitted before the AO vide reply dated 23-12- 2013 along with copies of all relevant documents, however, the AO did not appreciate the same. Accordingly, the assessee submitted that in light of the above, facts the addition could not have been made in the hands of the assessee since the capital gains did not accrue in the hands of the assessee. 5. The Ld. CIT(Appeals) allowed the appeal of the assessee on the ground that it is evident that the entire sale consideration has gone to Shri Haresh K. Shah directly whose bank account was with the AO and the same was examined. The amount of sale consideration could not be added in the hands of the assessee simply on the ground that Shri Haresh K. Shah did not respond to notice under section 133(6) of the Act and this does not give the right to the AO to fasten the tax liability the hands of the assessee. The Ld. CIT(Appeals) made the following observations while allowing the appeal of the assessee: “4. Ground No.1 to 3 are relating to addition of Rs.59,12,890/- on account of capital gain u/s.50C of the IT Act, 1961/-. The AO has observed the following facts in the assessment order: "The assessee has not furnished any explanation to the show cause till the date of order. As the assessment is going barred by limitation on 31.03.2014 and assessee has not reply the show cause, the assessment order has been passed on I.T.A No. 1448/Ahd/2018 A.Y. 2011-12 Page No. ITO vs. Shri Nitin Ishwarbhai Patel 4 merit. In fact that there is no plausible evidence except bank account of Shri Haresh K. Shah. Even the consideration Is actually paid to Shri Haresh K. Shah it was paid beyond any authority and is clearly a diversion of income. The assessee submitted vide letter date not be punished for the default of a broker and on mere suspicion the claim of assesses should not be denied." The appellant did submit bank account of Haresh K. Shah to the AO and that is construed as sufficient compliance. The onus has been shifted successfully by the appellant to the AO. There is no evidence on record that the appellant has actually received the money for which he is being taxed. There is no reference made to DVO as per ratio laid down in the case of CIT Vs. CARBO IND HOLD LTD 244 ITR 0422 (Cal). In view of these facts and ratio laid down by Hon'ble Calcutta High Court, the grounds No.1 to 3 of appeal are allowed.” 6. The Department is in appeal before us against the order passed by Ld. CIT(Appeals) allowing the appeal of the assessee. 7. Before us, the counsel for the assessee reiterated the submissions made before ld. CIT(A) and has relied upon the observations made by ld. CIT(A) in the appellate order. In response, the ld. Departmental Representative placed reliance on the observations made by the ld. Assessing Officer in the assessment order. 8. We have heard the rival arguments and perused the material on record. In the instant facts, we find no infirmity in the order of ld. CIT(A) who has held that on perusal of the copy of the sale deed executed between Shri Haresh K. Shah and the buyer and also the copy of the bank account by Shri Haresh K. Shah which was also submitted by the assessee before the Assessing Officer, it is clear that the sale proceeds were received by Shri Harish K. Shah from the seller directly in his bank account. There is no evidence on record for the Assessing Officer to come to the conclusion that the sale proceeds were taxable in the hands of the assessee. The ld. CIT(A) I.T.A No. 1448/Ahd/2018 A.Y. 2011-12 Page No. ITO vs. Shri Nitin Ishwarbhai Patel 5 has correctly observed that assessee had executed banakhat dated 23-08- 2008 in favour of Shri Haresh K. Shah and the assessee cannot be fastened with tax liability on account of sale of property only on the basis that Shri Haresh K. Shah did not respond to notices issued u/s. 133(6) of the Act. The ld. CIT(A), in our considered view, has correctly held that there is no evidence on record that the assessee has actually received the money for which he has been subject to tax. In view of the above, we are of the considered view that there is no infirmity in the order of ld. CIT(A) so as to call for any interference by us. 9. In the result, the appeal of the Department is dismissed. Order pronounced in the open court on 24-02-2023 Sd/- Sd/- (ANNAPURNA GUPTA) (SIDDHARTHA NAUTIYAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad : Dated 24/02/2023 आदेश क त ल प अ े षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/ आदेश से, उप/सहायक पंजीकार आयकर अपील य अ धकरण, अहमदाबाद