Asst.C.I.T., Mangalore V. Mr. B. Kunhi Ahmed, Mangalore

ITA 1448/BANG/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9429 (ITAT-BANGALORE)
• Duration Of Justice: 8 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 27-07-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 09-12-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Capital asset; Search and seizure
• Section: 132; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, BANGALORE BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ITA NO. 1448/ BANG/20 1 5 (ASSESSMENT YEAR: 20 08 - 09 ) ASST. COMMISSIONER OF INCOME - TAX, CENTRAL CIRCLE - 1 , MANGALORE. VS. APPELLANT SHRI B.KUNHI AHMED, HASNAIN NADIR, OPP. FR. MULLERS HOSTEL, DERALAKATTE, MANGALORE. PA NO.ABLPA 9471 B RESPONDENT APPELLANT BY : SHRI SANJAY KUMAR, CIT(DR) RESPONDENT BY : NONE DATE OF HEA RING : 27/07/2016 DATE OF PRONOUNCEMENT : 26 /08/2016 O R D E R PER I NTURI RAMA RAO, AM : THIS IS AN APPEAL FILED BY THE REVENUE DIRECTED AGAINST THE ORDER OF THE CIT(A), PANAJI - 2, DATED 25/08/2015 FOR THE ASSESSMENT YEAR 2008 - 09. 2 . BRIEFLY FACTS OF THE CASE ARE THAT THE RESPONDENT - ASSESSEE IS AN INDIVIDUAL ENGAGED IN BUSINESS OF PLYWOOD. RETURN OF ITA NO . 1448 /BANG/201 5 PAGE 2 OF 6 INCOME FOR THE ASSESSMENT YEAR 2008 - 09 WAS FILED ON 1/4/2009 DISCLOSING INCOME OF RS.21,06,490/ - . RETURN OF INCOME WAS PROCESSED U/S 143(1) OF T HE INCOME - TAX ACT, 1961 [HEREINAFTER REFERRED TO AS 'THE ACT' FOR SHORT]. THERE WERE NO SCRUTINY PROCEEDINGS. SUBSEQUENTLY A SEARCH AND SEIZURE OPERATIONS WERE CONDUCTED U/S 132 OF THE ACT IN THE CASE OF M/S.HASAN HAJI & CO. ON 04/08/2011. DURING THE CO URSE OF SEARCH PROCEEDINGS, PREMISES OF THE RESPONDENT - ASSESSEE WERE ALSO SEARCHED AND CASH OF RS.2,00,00,000/ - WAS ALLEGED TO BE SEIZED. CONSEQUENT TO THE ABOVE, A NOTICE U/S 153C WAS ISSUED ON 26/12/2011 IN RESPONSE TO WHICH ASSESSEE FILED SAME RETURN OF INCOME AS ORIGINALLY FILED U/S 139 OF THE ACT. DURING THE SAME SEARCH PROCEEDINGS, THE DEPARTMENT HAS FOUND AN AGREEMENT ENTERED BY THE RESPONDENT - ASSESSEE WITH M/S.NEW INDIA CONSTRUCTIONS FOR DEVELOPMENT OF PROPERTY SITUATED AT MANGALORE THOTA VILLAGE . THE ASSESSING OFFICER (AO) FOUND THAT THE ASSESSEE HAD NOT DISCLOSED THE SAID TRANSACTION TO THE DEPARTMENT AND THE RESPONDENT - ASSESSEE WAS SUMMONED AND EXAMINED ON THIS ASPECT AND STATEMENT WAS RECORDED ON 6/9/2011. THOUGH RESPONDENT - ASSESSEE ADMITTED THAT THERE WAS AN AGREEMENT ENTERED FOR DEVELOPMENT OF PROPERTY, THERE WAS NO TRANSFER INVOLVED AS ENVISAGED U/S 2(47)(V) OF THE ACT. THUS, IT WAS SUBMITTED THAT QUESTION OF CAPITAL GAINS DOES NOT ARISE. FURTHER IT IS CONTENDED THAT THE SAID PROPERTY WA S SHOWN AS BUSINESS ASSET . THE ABOVE CONTENTION OF THE RESPONDENT - ASSESSEE WAS NEGATIVE D ITA NO . 1448 /BANG/201 5 PAGE 3 OF 6 BY THE AO AND COMPUTED SHORT - TERM CAPITAL GAINS AT RS.6,33,11,122/ - AND BROUGHT TO TAX. 3. BEING AGGRIEVED, AN APPEAL WAS FILED BEFORE THE CIT(A) WHO, VIDE PARA.4.6 OF THE IMPUGNED ORDER, HELD THAT SINCE THE AGREEMENT OF DEVELOPMENT IS NOT REGISTERED, THE QUESTION OF TRANSFER OF PROPERTY DOES NOT ARISE AND THEREFORE, THERE ARE NO CHARGEABLE CAPITAL GAINS ARISING OUT OF A GREEMENT FOR DEVELOPMENT OF PROPERTY. 4. BEING AGGRIEVED, THE REVENUE IS IN APPEAL. REVENUE RAISED THE FOLLOWING GROUNDS OF APPEAL: ITA NO . 1448 /BANG/201 5 PAGE 4 OF 6 5. LD.CIT(DR) VEHEMENTLY CONTENDED THAT ONCE THE CONDITION SPECIFIED IN SECTION 2(47) OF THE ACT IS SATISFIED, THE FACT THAT THE AGREEMENT IS N OT REGISTERED IS NOT MATERIAL TO DETERMINE WHETHER THERE IS A TRANSFER OR NOT. ONCE POSSESSION OF THE PROPERTY IS HANDED OVER AND CONSIDER ATION RECEIVED, THERE IS A TRANSFER WITHIN THE MEANING OF SECTION 2(47) OF THE ACT. IN THIS CONNECTION, HE RELIED ON THE DECISION OF THE HON BLE BOMBAY HIGH ITA NO . 1448 /BANG/201 5 PAGE 5 OF 6 COURT IN THE CASE OF C HATURBHUJ DWARKADAS KAPADIA VS. CIT (260 ITR 491) AND THE HON BLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. DR.T.K.DAYALU (2 02 TAXMAN 531 ) AND ALSO THE FOLLOWING TRIBUNAL S DECISIONS: I. SURESHC HANDRA AGARWAL VS. ITO (15 TAXMANN.COM 115)(MUM); II. G.SREENIVASAN VS. DCIT (28 TAXMANN.COM 200)(COCH); A ND III. MAHESH NEMICHANDRA GANESHWADE VS. ITO (21 TAXMANN.COM 186(PUNE) NONE APPEARED ON BEHALF OF THE RESPONDENT - ASSESSEE DESPITE SERVICE OF NOTICE. 6. AFT ER HEARING THE LD.CIT(DR) AND PERUSING MATERIAL ON RECORD, WE ARE OF THE CONSIDERED OPINION THAT THE MATTER REQUIRES FRESH ADJUDICATION AS THE AO HAS RECORDED A FINDING THAT THE DEVELOPER HAS SO LD HIS PART OF THE BUILT UP AREA AND COMPLETED MOST OF THE CON STRUCTION. IF THE DEVELOPMENT AGREEMENT ENTERED BY THE RESPONDENT - ASSESSEE WITH DEVELOPER IS NOT REGISTERED, THE DEVELOPER HAS NO VALID TITLE TO SELL HIS SHARE OF BUILT - UP AREA. THEREFORE, IN ORDER TO DETERMINE TRUE NATURE OF THE TRANSACTIONS, WE ARE OF T HE CONSIDERED OPINION THAT MATTER BE REMANDED BACK TO THE FILE OF THE AO FOR FRESH ADJUDICA TION AFTER CONSIDERING THE SALE DEEDS ENTERED INTO IN RESPECT OF BUILT - UP AREA BY THE RESPONDENT - ASSESSEE AS WELL AS THE DE VELOPER OF THE PROPERTY AND THEN DECIDE TH E CASE IN LIGHT OF THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF DR.T.K.DAYALU (SUPRA). ITA NO . 1448 /BANG/201 5 PAGE 6 OF 6 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 26 TH AUGUST , 2016 S D/ - S D/ - (VIJAY PAL RAO) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE : BANGALORE D A T E D : 26 /0 8 /2016 SRINIVASULU, SPS COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A) - II BANGALORE 4 CIT 5 DR, ITAT, BANGAL ORE. 6 GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME - TAX APPELLATE TRIBUNAL BANGALORE