Konda Venkateswara Reddy, Vijayawada V. The Income Tax Officer, Ward - 3(3), Vijayawada

ITA 146/VIZ/2020

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 3249 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-04-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2016-2017
• Appeal Filed On: 17-06-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Gift; Condonation of delay; Set aside; Capital Gains
• Section: 148; 139; 143(3); 139(1)

Judgement Text

आयकरअपीलीयअधिकरण, धिशाखापटणम पीठ, धिशाखापटणम IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM श्री द ु व्वूरु आर एल रेड्डी, न्याधयक सदस्य एिं श्री एस बालाकृ ष्णन, लेखा सदस्य के समक्ष BEFORE SHRI DUVVURU RL REDDY, HON’BLE JUDICIAL MEMBER & SHRI S BALAKRISHNAN, HON’BLE ACCOUNTANT MEMBER आयकर अपील सं./I.T.A.No.146/Viz/2020 (ननधधारण वर्ा / Assessment Year : 2016-17) Konda Venkateswara Reddy D.No.44-15-97 Lenin Nagar, Gunadala Vijayawada [PAN : AKMPV9138J] Vs. Income Tax Officer Ward-3(3) Vijayawada (अपीलार्थी/ Appellant) (प्रत्यर्थी/ Respondent) अपीलधथी की ओर से/ Appellant by : Shri G.V.N.Hari, AR प्रत्यधथी की ओर से / Respondent by : Shri Karthik Manickam, DR सुनवधई की तधरीख / Date of Hearing : 11.04.2022 घोर्णध की तधरीख/Date of Pronouncement : 29.04.2022 आदेश /O R D E R Per Shri Duvvuru RL Reddy, Judicial Member : Condonation of Delay : This appeal is filed by the assessee against the order of the Commissioner of Income Tax (Appeals), Vijayawada dated 10.02.2020 with the delay of 34 days for the Assessment Year (A.Y.) 2016-17. The assessee filed petition for condonation of delay, stating that the delay was due to Covid-19 pandemic and lockdown declared by the State Government. There was no malafide intention in filing the appeal 2 I.T.A. No.146/Viz/2020, A.Y.2016-17 Konda Venkateswara Reddy, Vijayawada belatedly and hence requested to condone the delay and admit the appeal, for which the Ld.DR has raised no objection. After going through the condonation petition filed, we observe that there is sufficient cause for the delay in filing the appeal, hence, we condone the delay and admit the appeal. 2. Brief facts of the case are that the assessee is an individual, did not file his return of income for the A.Y.2016-17 u/s 139(1) of the Income Tax Act, 1961 (in short ‘Act’). Based on the information available on record, it was noticed by the Assessing Officer (AO) that the assessee sold immovable property, having an extent of 2420 sq.yards each at 115/3, situated at Gunadala vide document Nos.6713/2015, 6714/2015 and 6713/2015 during the F.Y.2015-16 for a consideration @Rs.72,60,000/- each, aggregating to Rs.2,17,80,000/-, whereas, the market value as per the basic register is Rs.10,000/- per sq.yd and the total chargeable value for each document is Rs.2,42,00,000/-, aggregating to Rs.7,26,00,000/-. Since the income from capital gains arising from transfer of said immovable property was not affected to tax by the assessee by filing his return of income, the case was reopened by issue of notice u/s 148 on 06.09.2017. In response to the said notice, the assessee filed his return of income for the A.Y.2016-17 on 05.03.2018, admitting total income of 3 I.T.A. No.146/Viz/2020, A.Y.2016-17 Konda Venkateswara Reddy, Vijayawada Rs.86,370/-. Assessment u/s 143(3) r.w.s.147 was completed on 31.12.2018 determining total income at Rs.6,47,51,940/- towards income from long term capital gains from sale of immovable property. 3. Aggrieved by the order of the AO, the assessee filed appeal before the Ld.CIT(A). After considering the facts and circumstances of the case, the Ld.CIT(A) disposed off the appeal by upholding the order of the AO. 4. On being aggrieved, the assessee preferred an appeal before the Tribunal by raising the following grounds : 1. The order of the learned Commissioner of Income Tax (Appeals) is contrary to the facts and also the law applicable to the facts of the case. 2. The learned Commissioner of Income Tax(Appeals) is not justified in deciding the appeal ex-parte. 3. Without prejudice to the above, the learned Commissioner of Income Tax (Appeals) is not justified in holding that the long term capital gains are chargeable for A.Y.2016-17 as against the claim of the appellant that the capital gains are chargeable to tax for A.Y.2013-14. 4. Without prejudice to Ground No.2 and Ground No.3, the learned Commissioner of Income Tax (Appeals) is not justified in sustaining the addition of Rs.6,47,51,940/- made by the assessing officer towards long term capital gains as against long term capital gains of Rs.22,75,576 admitted by the appellant for A.Y.2013-14. 5. a) The learned Commissioner of Income Tax (Appeals) is not justified in confirming the fair market value of Rs.7,26,00,000/- adopted by the assessing officer as per S.50C of the Act. 4 I.T.A. No.146/Viz/2020, A.Y.2016-17 Konda Venkateswara Reddy, Vijayawada b) The learned Commissioner of Income Tax (Appeals) ought to have directed the assessing officer to adopt the fair market value as on 15.06.2011 being the date of agreement of sale. 6. Any other grounds may be urged at the time of hearing. 5. Ground No.1 and 2. It was the submission the of the Ld.AR that the Ld.CIT(A) has not given sufficient opportunity and passed ex-parte order. Hence, requested to set aside the order passed by the Ld.CIT(A). 6. Per contra, it was the submission of the Ld.DR that the Ld.CIT(A) provided sufficient opportunity, but the assessee did not turn up, hence, the Ld.CIT(A) passed order on merits. Hence, requested to uphold the order of the Ld.CIT(A). 7. We have heard both the parties and perused the material placed on record. In this case, sufficient opportunities were provided by the Ld.CIT(A) to the assessee, but he did not turn up and hence, the Ld.CIT(A) had passed order on merits. Therefore, we do not find any infirmity in the order passed by the Ld.CIT(A), hence, ground No.1 and 2 are dismissed. 8. Ground No.3 to 5. It was the submission of the assessee that the assessee entered into agreement for sale during the F.Y.2012-13 and the entire sale consideration was paid by the vendee to the assessee and the assessee also handed over the possession to the vendee in the F.Y.2012- 5 I.T.A. No.146/Viz/2020, A.Y.2016-17 Konda Venkateswara Reddy, Vijayawada 13 itself. But only, the formality of registration was carried on in the F.Y.2015-16. Therefore, the liability for capital gains arises only during the A.Y.2013-14. He further submitted that the assessee filed return of income for the A.Y.2013-14 admitting capital gains on sale of land and filed his return of income on 31.03.2017, admitting capital gains on sale of land and paid taxes thereon. He further submitted that the declaration of capital gains income in respect of sale of immovable property for the A.Y.2016-17 does not arise. He further submitted that for the purpose of computing the tax liability for the purpose of income tax, the assessee has to comply with the provisions of section 2(47)(v) of the Act. Accordingly, the assessee offered capital gains tax as per the provisions of section 2(47)(v). He further submitted that the guideline value of land was Rs.3,000/- per sq.yd. during the F.Y.2012-13 and the same was revised in F.Y.2015-16. Therefore, at the time of registration of land, the buyer of the property had paid the stamp duty on Rs.2,42,00,000/- (2420 sq,yd x Rs.10,000/-) for each document at the rates in force as on that day. He further submitted that the assessee received consideration only at Rs.72,60,000/- (2420 x 3000) of each document, which is also equivalent to the guideline value during the F.Y.2012-13 and at the time of handing over of the possession. He further submitted that the actual transfer has 6 I.T.A. No.146/Viz/2020, A.Y.2016-17 Konda Venkateswara Reddy, Vijayawada been completed during the F.Y.2012-13 and it is only a formal completion of registration of the property during the F.Y.2015-16. The provisions of section 50 of the Act do not arise. He further submitted that the AO determined the capital gains at Rs.6,47,51,940/- only hypothetically and notionally, which is not permissible under law. Therefore, submitted that the Tribunal may be pleased to set aside the order passed by the Ld.CIT(A). 9. On the other hand, the Ld.DR submitted that the assessee filed the return of income in response to section 148 on 05.03.2018, a notice u/s 143(2) was issued on 15.03.2018 and the same was served on 19.03.2018. He further submitted that the assessee has also filed the return of income for the A.Y.2013-14 on 31.03.2017, wherein the assessee has admitted the entire sale consideration of Rs.2,17,80,000/-. But the return is not considered, as notice was issued requiring the assessee to file return of income or such return was filed within the time allowed u/s 139 of the Act. He further submitted that there is no registered agreement of sale and unregistered agreement is of no value in the eye of law. Therefore, the AO rightly considered the date of transfer from the date of registration of the capital asset i.e. relevant to the A.Y., therefore, the order passed by the Ld.CIT(A) to be confirmed. 7 I.T.A. No.146/Viz/2020, A.Y.2016-17 Konda Venkateswara Reddy, Vijayawada 10. We have heard both the parties and perused the material placed on record. The point for consideration is whether the sale transaction has been completed within the meaning of section 2(47)(v) of the Act for the A.Y.2013-14 or for the A.Y.2016-17. For the sake of clarity, we extract provisions of section 2(47)(v) of the Act as under : “2. In this Act, unless the context otherwise requires,— (47) "transfer", in relation to a capital asset, includes,— (v) any transaction involving the allowing of the possession of any immovable property to be taken or retained in part performance of a contract of the same nature referred to in section 53A of the Transfer of Property Act, 1882 (4 of 1882) No doubt, there is no registered agreement of sale between the buyer and the assessee, but the sale deed was registered. The contention of the assessee is that the entire sale consideration was received by him and he handed over the possession to the buyer in the F.Y.2012-13. Therefore, the entire sale transaction has been completed in the F.Y.2012-13. But only the formal registration was completed for the F.Y.2015-16. The delay of registration is due to some disputes between the family members of the assessee and the buyer. At this juncture, we have perused the registered sale deeds dated 15.12.2015 and 16.12.2015. In page No.3 of the sale deeds, para 2 reads as follows : 8 I.T.A. No.146/Viz/2020, A.Y.2016-17 Konda Venkateswara Reddy, Vijayawada “You have paid the entire sale consideration from 15.06.2011 to 29.01.2013 in instalments by cash, so we have received the entire sale consideration mentioned in 1 st para of this document for Rs.72,60,000/- (Rupees Seventy Two Lakhs Sixty Thousand only). So we have delivered the schedule property to you previously. From then you are enjoying the said property with absolute rights. But when you asked us for execution of the sale deed, since there are disputes in our family and with you so we have not executed any sale deed in favour of you. Now, we are free will and so executed this sale deed in favour of you. As earlier before from now also you can enjoy the schedule property with absolute rights of sale, gift etc. along with available strove, stone, water, treasure etc. resources from generation to generation. While enjoying the schedule property by you or your legal heirs or your successors etc. we or our legal heirs, or our successors will not make any suit or disputes.” Upon perusal of the registered sale deed, the entire sale consideration was paid during the period commencing from 15.06.2011 to 29.02.2013 and also the delivery of possession was handed over to the buyer by the assessee. When the registered sale deed recitals clearly establish that the sale consideration as well as the delivery of the possession was completed during the financial year 2012-13, we are of the firm view that the transfer has been taken place during the F.Y.2012- 13 within the meaning of 2(47)(v). Therefore, we direct the AO to adopt the fair market value as per the rates applicable in the F.Y.2012-13. Accordingly, Ground No.3 to 5 are allowed. 9 I.T.A. No.146/Viz/2020, A.Y.2016-17 Konda Venkateswara Reddy, Vijayawada 10. In the result, the appeal filed by the assessee is allowed. Order pronounced in the open court on 29 th April, 2022. Sd/- Sd/- (एस बालाकृ ष्णन) (द ु व्वूरु आर.एल रेड्डी) (S.BALAKRISHNAN) (DUVVURU RL REDDY) लेखा सदस्य/ACCOUNTANT MEMBER न्याधयक सदस्य/JUDICIAL MEMBER Dated : 29.04.2022 L.Rama, SPS आदेश की प्रतितिति अग्रेतिि/Copy of the order forwarded to:- 1. ननधधाऩरती/ The Assessee– Konda Venkateswara Reddy, D.No.44-15-97 Lenin Nagar, Gunadala, Vijayawada 2. रधजस्व/The Revenue – The Income Tax Officer, 3 rd Floor (Annexe), CR Buildings, M.G.Road, Vijayawada 3. प्रधान आयकर आयुक्त / The Pr.Commissioner of Income-tax, Vijayawada 4. आयकर आयुक्त / The Commissioner of Income Tax (Appeals), Vijayawada 5. नवभधगीय प्रनतनननध, आयकर अपीलीय अनधकरण, नवशधखधपटणम/ DR,ITAT, Visakhapatnam 6.गधर्ा फ़धईल / Guard file आदेशधनुसधर / BY ORDER Sr. Private Secretary ITAT, Visakhapatnam