ACIT, Hyderabad V. Sri Mohd. Usnuddin, R.R.Dist

ITA 1448/HYD/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61957 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 7 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-07-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 23-11-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B V PRASAD REDDY
• Assessee Lawyers: K A SAI PRASAD
• Keywords: Search and seizure; Opportunity of being heard; Cost of acquisition
• Section: 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DAY, JUDICIAL MEMBER ITA NO. 1448/HYD/2010 ASSESSMENT YEAR : 2008-09 ACIT, CC--6, APPELLANT HYDERABAD. VS. SRI MOHD. USNUDDIN, RESPONDENT R.R DISTRICT. PAN: ABCPU 8632 R APPELLANT BY : SHRI B.V. PRASAD REDDY RESPONDENT BY : SHRI K.A. SAI PRASAD DATE OF HEARING : 04/06/2012 DATE OF PRONOUNCEMENT : 20/07/2012 ORDER PER SAKTIJIT DEY, J.M.: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER DATED 8-9-2010 OF CIT(A)-I, HYDERABAD PASSED IN ITA NO.1012/CC-6,HYD/CIT (A)-I/2009-10 AND IT PERTAINS TO THE ASSESSMENT YEAR 2008-09. 2. THE REVENUE HAS RAISED FOLLOWING GROUNDS BEFORE US:- 1. THE CIT (A) ERRED ON FACTS AND IN LAW IN DIRECTIN G TO DELETE THE ADVANCE AMOUNTS RECEIVED FROM M/S RADHA RELATY CORPORATION (RS.11,50,000/-) AND SRI MUTHYA M REDDY (RS.11,66,666.) 2. THE CIT (A) OUGHT TO HAVE APPRECIATED THE FACT T HAT THE PAYMENTS RECEIVED EARLIER AS ADVANCES ACCRUED A S 2 ITA NO.1448/HYD/2010 SRI MOHD. USNUDDIN, RR DISTRICT. INCOME DURING THE YEAR BECAUSE THE LAND TRANSFER TO OK PLACE DURING THE YEAR. 3. THE CIT (A) ERRED ON FACTS IN DISTINGUISHING TH E TRANSACTION OF SALE MADE DURING THE YEAR AND THE LA ND TRANSACTION ON WHICH THE ASSESSEE RECEIVED ADVANCE AS TWO DIFFERENT TRANSACTIONS. 4. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME F O HEARING. 3. BRIEFLY, THE FACTS OF THE CASE ARE THE ASSESSEE WAS ONE OF THE CO-OWNERS OF THE LAND OF AC.14.02 GUNTAS AT PUPPALG UDA VILLAGE, RAJENDRANAGAR MANDAL, RANGA REDDY DISTRICT. THE LA ND WAS SOLD ON 22-8-2007 TO GRANDBAY ESTATE DEVELOPERS LIMITED AND VENEZIA ESTATE DEVELOPERS LIMITED, NEW DELHI BY THE ASSESSE E ALONG WITH OTHER CO-OWNERS FOR A CONSIDERATION OF RS.2,73,58,8 20/-. A SEARCH AND SEIZURE OPERATION WAS CONDUCTED U/S 1323 OF THE ACT ON 17-10-2007 IN THE RESIDENTIAL PREMISES OF THE AS SESSEES FATHER. IN COURSE OF ASSESSMENT PROCEEDINGS, HE AO FOUND THAT THE ASSESSEE ALONG WITH HIS OTHER FAMILY MEMBERS HA D SOLD THEIR LAND TO THE DLF GROUP COMPANY. FROM THE SEIZED DOC UMENT, THE AO ALSO FOUND THAT THE ASSESSEE DURING THE FINANCIA L YEAR 2004-05 HAD RECEIVED RS.11,50,000/- FROM RADHA REALTY CORP ORATION PVT. LIMITED AND RS.1,66,666/- ON 30-12-2003 FROM SRI M UTHYAM REDDY TOWARDS ADVANCES FOR SALE OF LAND WHICH WAS U LTIMATELY SOLD TO DLF GROUP OF COMPANIES DURING THE FINANCIAL YEAR 2007-08 RELEVANT TO THE ASSESSMENT YEAR UNDER DISPUTE. IN COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE CONTENDED THAT THOUGH IN THE FINANCIAL YEAR 2004-05, THE ASSESSEE HAD RECEIV ED ADVANCES TOWARDS SALE OF THE LAND FROM RADHA REALTY CORPORAT ION PVT. LTD.,AND SRI MUTHYAM REDDY TOWARDS SALE OF LAND SIN CE THE TRANSACTION DID NOT MATERIALISE THE SAME LANDS WER E AGAIN SOLD TO 3 ITA NO.1448/HYD/2010 SRI MOHD. USNUDDIN, RR DISTRICT. THE DLF COMPANY DURING THE PREVIOUS YEAR RELEVANT T O THE ASSESSMENT YEAR UNDER DISPUTE. IN COURSE OF ASSESS MENT PROCEEDINGS, THE ASSESSEE CONTENDED THAT THOUGH IN THE FINANCIAL YEAR 2004-05, THE ASSESSEE HAD RECEIVED ADVANCE TOW ARDS SALE OF THE LAND DURING THE FINANCIAL YEAR 2004-05 WAS S PENT ON LEGAL EXPENSES AND THEREFORE IT IS NOT TAXABLE IN THE ASS ESSMENT YEAR 2008-09. THE AO HOWEVER REJECTING THE CONTENTIONS OF THE ASSESSEE BROUGHT THE AMOUNT OF RS.11,50,000/- AND RS.11,66,666/- TO TAX IN THE HANDS OF THE ASSESSEE FOR ASSESSMENT YEAR 2008-09. THE ASSESSEE BEING AGGRIEV ED FILED AN APPEAL BEFORE THE CIT (A). BEFORE THE CIT (A), IT WAS CONTENDED ON BEHALF OF THE ASSESSEE THAT THE ADVANCE WAS RECE IVED DURING THE FINANCIAL YEAR 2003-04 AND 2004-05. AND THE ENT IRE AMOUNT WAS SPENT FOR LEGAL EXPENSES. THE CIT (A) AFTER C ONSIDERING THE CONTENTIONS OF THE ASSESSEE HELD IN THE FOLLOWING M ANNER:- I HAVE GONE THROUGH THE ISSUE. THE AO HIMSELF ADMI TS IN THE ASSESSMENT ORDER THAT THE AMOUNT WAS RECEIVED D URING THE FINANCIAL YEAR 2004-05 AND NOT DURING THE YEAR UNDER CONSIDERATION. ACCORDINGLY, IN MY VIEW THE SAME CA NNOT BE TAXED IN THIS YEAR. THE AO IN THE ASSESSMENT ORDER HAD MADE THE ADDITION ON THE GROUND THAT THE LAND FOR W HICH THE AMOUNT WAS RECEIVED WAS AGAIN SOLD TO DLF GROUP OF COMPANY IN THE YEAR UNDER CONSIDERATION. THE AO MA DE THE ADDITION ONLY BECAUSE THE APPELLANT COULD NOT PRODU CE EVIDENCE THAT THE AMOUNT RECEIVED WAS SPENT FOR THE LEGAL EXPENSES. NO FURTHER REASON HAS BEEN GIVEN AS TO H OW THE AMOUNT STATED TO BE RECEIVED IN THE FINANCIAL YEAR 2004-05 IS TAXABLE IN THE ASSESSMENT YEAR 2008-09. I DO NOT AGREE WITH THE CONTENTION OF THE AO. IT IS A FACT ON REC ORD THAT THE LAND WHICH WAS SOLD TO DLF WAS UNDER VARIOUS LITIGATIONS. THE LAND TRANSACTION WITH DLF IS A DI FFERENT ONE THAN THE LAND TRANSACTION OF THE APPELLANT WITH RAD HA 4 ITA NO.1448/HYD/2010 SRI MOHD. USNUDDIN, RR DISTRICT. REALTY CORPORATION. THE INCIDENCES OF THE TRANSACT ION ARE ALSO IN DIFFERENT YEARS. SINCE THE AMOUNT WAS RECE IVED IN THE FINANCIAL YEAR 2004-05 AND FOR A DIFFERENT TRAN SACTION THAN THE ONE WITH DLF, IN MY VIEW THE SAME CANNOT B E T AXED IN THE YEAR UNDER CONSIDERATION. IN OTHER WOR DS, I HOLD THAT THE AMOUNT RECEIVED BY THE ASSESSEE FROM RADHA REALTY CORPORATION IN THE FINANCIAL YEAR 2004-05 CA NNOT BE TAXED IN THE YEAR UNDER CONSIDERATION. THE ADDITIO N MADE BY THE AO IS DIRECTED TO BE DELETED. ON THE SAME REASONING, THE CIT (A) ALSO DELETED THE ADDITION OF RS.11,66,666/- RECEIVED FROM SRI MUTHYAM REDDY IN THE FINANCIAL YEAR 2003-04. 4. THE LEARNED DR, AT THE OUTSET SUBMITTED BEFORE U S THAT THE GROUNDS RAISED IN THE PRESENT APPEAL ARE SQUARELY C OVERED BY THE ORDER OF THE ITAT PASSED IN THE OTHER GROUP OF CASES IN ITA NOS. 1572/HYD/2010 AND BATCH IN THE CASE OF MOHD. MOINU DIN AND OTHERS DATED 10-2-2012. 5. THE LEARNED AR ALSO SUBMITS THAT THE ISSUE RAISE D IN THE APPEAL IS COVERED BY THE DECISION OF ITAT, HYDERABAD BENCH IN THE CASES OF OTHER CO-OWNERS. 6. WE HAVE HEARD RIVAL SUBMISSIONS OF THE PARTIES A ND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS SEEN FROM THE ORDER DATED 10-2- 2012 PASSED IN THE OTHER GROUP OF CASES IN ITA NOS . 1572/HYD/2010 AND BATCH IN THE CASE OF MOHD. MOINUDDIN AND OTHER S, THE REVENUE HAS RAISED IDENTICAL GROUNDS IN CASE OF OTHER CO-OWNER S. THE ITAT AFTER CONSIDERING THE CONTENTIONS RAISED BY THE PARTIES, UPHELD THE ORDER OF THE CIT (A) ON THE FOLLOWING REASONS. WE HEARD THE PARTIES AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES. WE FIND THAT THE CIT (A) DELETED THE D ISPUTED ADDITIONS MADE BY THE AO OBSERVING THAT THE AMOUNTS IN 5 ITA NO.1448/HYD/2010 SRI MOHD. USNUDDIN, RR DISTRICT. QUESTION WERE RECEIVED IN AN EARLIER FINANCIAL YEA R AND FOR A DIFFERENT TRANSACTION THAN THE ONE WITH DLF, AND TH E SAME CANNOT BE TAXED IN THE YEAR UNDER CONSIDERATION. N O EVIDENCE TO CONTRADICT THE ABOVE FINDINGS OF THE CIT (A) HAS B EEN BROUGHT ON RECORD BEFORE US BY THE REVENUE. IN THE CIRCUMS TANCES, WE UPHOLD THE ORDERS OF THE CIT (A), AND REJECT THE GR OUNDS OF THE REVENUE IN THESE APPEALS. WE FOLLOW THE ORDER PASSED BY THE CO-ORDINATE BENCH OF THE TRIBUNAL AND AGREE WITH THE PROPOSITION THAT AN AMOUNT WHIC H HAS BEEN RECEIVED IN AN EARLIER FINANCIAL YEAR AND FOR A DIF FERENT TRANSACTION THAN THE ONE WITH DLF, CANNOT BE TAXED IN THE YEAR UNDE R CONSIDERATION. HOWEVER, THE ADVANCE RECEIVED HAS TO BE DEDUCTED FR OM THE COST FOR WHICH THE ASSET WAS ACQUIRED IN COMPUTING THE COST OF ACQUISITION AS PROVIDED U/S 51 OF THE ACT. THIS ASPECT HAVING NOT BEEN CONSIDERED BY THE ITO AS WELL AS CIT (A), WE THINK IT PROPER TO R ESTORE THE MATTER BACK TO THE FILE OF THE AO WITH A DIRECTION TO COMP UTE THE COST OF ACQUISITION AFTER TAKING INTO CONSIDERATION THE ADV ANCES RECEIVED BY THE ASSESSEE IN THE EARLIER FINANCIAL YEARS AS PER SECT ION 51 OF THE ACT. THE AO SHALL COMPLETE THE ASSESSMENT AFTER AFFORDIN G AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 20-7-2012. SD/- SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER (SAKTIJIT DEY) JUDICIAL MEMBER HYDERABAD, DATED 20 TH JULY, 2012. 6 ITA NO.1448/HYD/2010 SRI MOHD. USNUDDIN, RR DISTRICT. COPY TO:- 1) ACIT, CENTRAL CIR-6, HYDERABAD. 2) SRI MOHD. USNUDDIN, 1-64, NARSINGHI VILLAGE, RAJ ENDRA NAGFAR MANDAL, RANGA REDDY DISTRICT. 3) THE CIT (A)-I, HYDERABAD 4) THE CITCONCERNED, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDERABA D. JMR*