The ACIT, Circle-3(1)., Surat V. Shri Jagdish Lakhubhai Patel, Surat

ITA 1501/AHD/2017

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 2407 (ITAT-SURAT)
• Duration Of Justice: 4 year(s) 8 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 02-03-2022
• Assessment Year: 2012-2013
• Appeal Filed On: 18-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Cost of acquisition; Valuation report; Set aside; Capital Gains
• Section: 54; 154; 143(3); 50C; 251; 264

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND Dr. ARJUN LAL SAINI, ACCOUNTANT MEMBER ITA No. 1501/AHD/2017 (AY 2012-13) (Hearing in Virtual Court) Assistant Commissioner of Income Tax, Circle-3(1), 1 st Floor, Anvil Business Centre, Adajan-Hajira Road, Surat-395009 Vs Shri Jagdish Lakhubhai Patel, B-324, ‘Nikki’ House, Dumas Road, New Magdalla, Surat PAN : AIXPP 3776 D Appellant / Revenue Respondent / assessee Assessee by Ms. Urvashi Shodhan, Advocate Revenue by Shri Ritesh Mishra, CIT-DR Date of hearing 03.03.2022 Date of pronouncement 14.03.2022 Order under section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by Revenue is directed against the order of ld. Commissioner of Income tax (Appeals)-3,Surat [for short to as “CIT(A)”] dated 08.03.2017for assessment year (AY) 2012-13, which in turn arise out assessment order passed by the Assessing Officer under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 30.03.2015. The Revenue has raised the following grounds of appeal:- “1. Whether on facts and in law, the Hon. CIT(A) was justified in holding that the capital gains from impugned transfer arose in A.Y 2013-14; even though transfer of the property took place on 23.03.2012 relevant to AY 2012-13, when payment of full consideration was received and possession of the property was handed over to the purchase vide agreement dated 23.03.2012? ITA No.1501/AHD/2017 Sh. Jagdish L Patel 2 2.Whether on facts and in law, the Hon. CIT(A) was justified in relying upon the decision of the Hon'ble Supreme Court in the case of Chandra Prakash v. State of UP [(2002) 4 SCC 234 (SC)] especially when the facts of the case of assessee are different than that of Chandra Prakash case wherein the importance of binding precedent nature of ‘pronouncement of law’ of the Apex Court in light of hierarchical character of the judicial system was dealt with? 3. Whether on facts and in law, the Hon. CIT(A) was justified in relying upon the decision of the Hon'ble Supreme Court in the case of M.A. Murthy v. State of Karnataka [(2003) 264 ITR 1 (SC)] especially when the facts of the case of assessee are different than that of M.A. Murthy case wherein the importance of doctrine of binding precedents vis-à-vis doctrine of prospective overruling was dealt with? 4.Whether on facts and in law, the Hon. CIT(A) was justified in deleting the addition merely on the ground that different approach has been adopted by other Assessing Officer in case of other co- owners; ignoring the fact wrong approach in other cases do not correct the wrong decision in this case? 5.Whether on facts and in law, the Hon. CIT(A) was justified in deleting the addition merely on the ground that different approach has been adopted by the Assessing Officer for subsequent AY by accepting version of the assessee ignoring the fact wrong approach in another year does not correct the wrong decision for this year? Moreover, the order passed by the Assessing Officer in subsequent AY is not final as that order is liable to be modified by Revenue as erroneous and prejudicial under provisions of the Act. 6.Whether on facts and in law, the Hon. CIT(A) was correct in holding that only ‘execution’ of sale agreement entails transfer for purpose of section 45 despite the fact that transfer is to be interpreted in accordance with the provisions section 2(47) of the Act? 7.Whether on facts and in law, the Hon. CIT(A) was justified in deleting the addition merely on basis of non-uniformity and ITA No.1501/AHD/2017 Sh. Jagdish L Patel 3 inconsistency despite settled Law that doctrines of estoppels and res judicata do not strictly apply to proceedings under the Income Tax Act, especially where the impugned decisions are perverse and amenable to challenge and substitution by Revenue itself and in view of the Law laid down in C.K.Gangadharan v CIT [(2008) 304 ITR 61 (SC)] and Bharat Sanchar Nigam Ltd. v. Union of India [(2006) 282 ITR 273 (SC)]” (ii) On the facts and circumstances of the case and in Law, the Ld. CIT(A) has failed to appreciate the fact that the entire purchase from alleged concerns was bogus and it was only to suppress the profit of the beneficiaries which has been duly substantiated bythe statement on oath given by the entry provider. (iii) On the facts and circumstances of the case and in Law, the Ld. CIT(A), Surat ought to have upheld the order of the Assessing Officer. It is, therefore, prayed that the order of the LD. CIT(A)-1 Surat maybe set-aside and that of the Assessing Officer’s order may be restored.” 2. Vide application filed on 11.01.2020, the assessee has raised following additional grounds of appeal:-* “1. Ld. CIT(A) erred in law and on facts in giving direction to AO to invoke provision of Sec. 50C in subsequent year i.e. in A.Y. 2013-14 in case of the appellant which is beyond the powers given under section 251 of the Income Tax Act to appellate authority.” * (this appeal is filed by the revenue and the above ground of appeal by assessee is raised without any sanction of law) 3. Brief facts of the case are that assessee is an individual, filed his return of income on 31.07.2012 for the assessment year 2012-13, declaring total income of Rs. 3,74,894/-. Subsequently, case of assessee was selected for scrutiny. ITA No.1501/AHD/2017 Sh. Jagdish L Patel 4 During the assessment proceedings, the Assessing Officer noted that assessee along with his other co-owner purchase of agricultural land in Revenue Survey (R.S.) No. 28, block No. 78 Sarsana, Surat for a consideration of Rs. 3.96 Crores and was paid stamp duty of Rs. 19,43,000/-. On further, inquiry about the source of investment, the assessee furnished the sale deed of land bearing R.S. No. 296 T.P. Scheme No. 7, F.P. No. 52 at Vesu, Surat at 23.03.2012 and ultimately registration number of sale transaction was recorded in sub-registrar office on 03.04.2012. On further, perusal of details, the Assessing Officer found that no long term capital gain was computed and offered by the assessee while filing the return of income. On confronting this fact, the assessee submitted that possession of land in R.S. No. 296 at Vesu, Surat was handed over on 04.04.2012, thus, the transaction of sale was completed on 04.04.2012. The assessee also furnished copy of ‘Kabja Rashid’ dated 04.04.2012. The Assessing Officer took his view that ‘Kabja Rashid’ is nothing but a cooked up story to avoid long term capital gain in A.Y. 2012-13. ITA No.1501/AHD/2017 Sh. Jagdish L Patel 5 4. The Assessing Officer issued show cause notice and asked the assessee as to why long term capital gain, which is claimed in A.Y. 2013-14 should not be treated as income of assessee for A.Y. 2012-13. The assessee filed his reply dated 10.03.2015 and again on 27.03.2015 and stated at per definition of transactions three conditions must be satisfied. (i) there should be a contract in writing, (ii) transferee has paid consideration or is willing perform his part of contract and (iii) transferee should have taken possession of the property. In case of assessee only condition of payments and writing of contract were fulfilled on 23.03.2012. The reply of assessee was not accepted by the Assessing Officer, the assessing officer held that registered of sale deed was executed on 23.03.2012, the assessee has received full payment of consideration and as per clause at page 15 of the sale deed. It is clearly mentioned that possession of property has been given on 23.03.2012. As per information with assessing officer from AIR Information, the sale deed was executed on 23.03.2012 for sale consideration of Rs. 15.00 Crores. The liability of tax payment arises in A.Y. 2012-13 but to avoid the same, the assessee ITA No.1501/AHD/2017 Sh. Jagdish L Patel 6 adopted tactics and claimed that actual gain was earned in A.Y. 2013-14, which is wrong. 5. The Assessing Officer further noted that Stamp Valuation assessed the value of property at Rs. 24.72 Crores, against the consideration of Rs. 15 Crores shown by assessee. The valuation of stamp duty authority is not challenged by assessee. The assessee claimed cost of acquisition as on 01.04.1981at Rs. 700/- per Sq. Meter, the comparative of the sale instances given by registered valuer in his report dated 12.10.2013. The assessing officer further recorded that on looking into rate adopted a registered valuer, is on higher side. The Assessing Officer made reference to Department Valuation Officer (DVO) under section 50C on 25.10.2015 of valuation of property as on 01.04.1981. The report of DVO was not received and time period for passing the assessment order was expiring on 31.03.2015. The Assessing Officer finalized the assessment and adopted the average value of land as on 01.04.1981 at Rs. 12/- per square meter, subject to outcome of valuation report of DVO. The Assessing Officer computed total long term capital gain of Rs. 24,59,.87,965/-. The ITA No.1501/AHD/2017 Sh. Jagdish L Patel 7 assessee was having 1/5 share thereby the assessee’s share was worked out at Rs. 4,91,97,593/-(Rs. 4.92 Crores approx.) and made addition of long term capital gain in the income of assessee. 6. On appeal before ld. CIT(A), the assessee filed detailed written submissions. The written submissions of assessee is recorded in para 6 of order the ld. CIT(A). The assessee in sum and substance of his submission submitted that assessee is doing job Ambuja Cement Ltd., Magdalla, Surat. The assessee along with his four brothers had sold land in R.S. No. 296, T.P. Scheme No. 7, Vesu, Surat admeasuring 9602.50 Sq. Mts. The assessee contended that there are two main issues/grounds of appeal,first relates to whether capital gain if arise in A.Y. 2013-14 and second is regarding cost of acquisition and share of sale consideration to be adopted. 7. The assessee further submitted that assessee along with other co-owners sold the said land and offer the capital gain in A.Y. 2013-14 on the ground that sale deed was duly registered on 03.04.2012. The assessee transferred the possession of land only on 03.04.2012 when possession was handed over. The ITA No.1501/AHD/2017 Sh. Jagdish L Patel 8 assessee offered capital gain in A.Y. 2013-14, which has been accepted in A.Y. 2013-14 and taxing the same income in A.Y. 2012-13 would be double taxation of the same income. The copy of assessment order in A.Y. 2013-14was also furnished. The assessee further stated that they have filed an application for rectification of assessment order in A.Y. 2013-14 by filing an application under section 154 of the Act but there was no response from the Assessing Officer. The assessee prayed for consideration the long term capital gain in A.Y. 2013-14. The assessee also stated that co-owners / brothers no such issue of capital gain in A.Y. 2012-13 were raised. During appellate stage, the ld CIT(A) directed the assessee to file copies of Income-tax return, computation of income and assessment orders of co-owners, which were furnished by assessee. 8. The ld. CIT(A) after considering the submission of assessee recorded that assessee sold the land along with his four co- owners and executed the sale deed on 03.04.2012. The assessee and his co-owners have disclosed capital gain in A.Y. 2013-14. The Assessing Officer accepted the long term capital gain in A.Y. 2013-14. The same assessing officers completed ITA No.1501/AHD/2017 Sh. Jagdish L Patel 9 assessment order under section 143(3) in A.Y. 2013-14 for assessee and all co-owners; however, long term capital gain was computed by applying section 50C and adopting valuation ascertained by district valuation officer. The ld. CIT(A) held that Assessing Officer taxed the capital gain in A.Y. 2012-13 took a different view. Thus, the long term capital gain taxed twice in the hand of the assessee. Hence, there is no deviation regarding year of taxability in the hands of assessee out of five co-owners, which is against the well-established principle of uniformity and consistency in assessee’s case next year the decision was not followed uniformity. 9. On the basis of the aforesaid observation, the ld. CIT(A) deleted addition of capital gain in A.Y. 2012-13. The ld. CIT(A) further noted that in assessee’s case, the capital gain is accepted in AY 2013-14, however, in case of co-owners substantial addition has been made by applying section 50C and adopted value suggested by DVO. The Assessing Officer was directed to examine the discrepancy and take remedial action as deemed fit for A.Y. 2013-14. Aggrieved by the order of ld. CIT(A), the Revenue has filed the present appeal before us. ITA No.1501/AHD/2017 Sh. Jagdish L Patel 10 10. We have heard the submissions of learned Commissioner of Income Tax-Departmental Representative (CIT-DR) for the Revenue and learned Authorized Representative (AR) of the assessee and perused the records of the case carefully. The ld. CIT-DR for the Revenue submits that assessee along with his four co-owners sold the assets/land at Vesu, Surat on 23.03.2012 and received entire sale consideration as reflected in the sale deed itself. In the sale deed, the assessee clearly mentioned that transfer of possession of the land has been hand over to the purchaser. Though, ultimately document was granted registration number in the sub-registrar office on 04.04.2012. In case of sale the transfer of property relates back to the date of execution of sale deed. In the present case, the asset was transferred on 23.03.2012 and all remaining formality was completed before the presentation of sale deed before the Sub-registrar. The assessee is claiming that transfer of land was handed by ‘Kabja rasid’, which is nothing but a self-serving document of land. The ‘Kabja rasid’ cannot be substitute the contents of sale deed dated 23.03.2012. The assessee has offered long term capital gain in subsequent ITA No.1501/AHD/2017 Sh. Jagdish L Patel 11 assessment year, though earned in A.Y. 2012-13. The assessee cannot change the taxability by his own choice. The ld. CIT(A) in his order wrongly held that sale deed was executed on 30.04.2012[para 7.2(b)]. The ld. CIT-DR for the revenue further submits that ld. CIT(A) decided the issue on flimsy ground on uniform approach in case of other co-owners. The ld. CIT(A) failed to appreciate the wrong approach is adopted in other cases of co-owner by not bringing the capital gain to tax, do not render the correct decision in case of assessee as wrong. The ld CIT(A) failed to appreciate that the assessment order passed by Assessing Officer in those cases are neither final nor acceptable to the revenue as those orders are amenable to modification by revenue being erroneous and prejudicial to the interest of Revenue. The ld CIT-DR submits that the statement of fact filed before the Tribunal filed along with grounds of appeal may kindly to look into and prayed to set aside the order of ld CIT(A) and restore the order of assessing officer. 11. On the other hand, ld. AR of the assessee supported the order of ld. CIT(A). The ld. AR of the assessee submits that possession of land was handed only on 04.04.2012 and ITA No.1501/AHD/2017 Sh. Jagdish L Patel 12 complete transfer took place only handing over of possession. The ld. AR submits that copy of possession receipt is filed on record. The ld. AR while referring the contents of possession receipt submits that there were certain encumbrances on the land, which was removed and vacant and peaceful possession was handed over to purchaser only on 04.04.2012. The ld. AR submits that in case of all four co-owners the assessment was completed under section 143(3) and long term capital gain was accepted in A.Y. 2013-14. One of the Assessing Officer in assessee’s case and in case of other co-owner was common. The ld. AR submits that assessee offered long term capital gain in A.Y. 2013-14 and has been accepted. Similarly, it was added in 2012-13. Thus, there is double taxation of same income. The ld. AR submits that in case the Tribunal to allow the appeal of Revenue by taking view that assessee is exigible to capital gain in A.Y. 2012-13 and not in A.Y. 2013-14, a direction may be given to the Revenue authority to pass rectification order for not taxing the capital gain in A.Y. 2013- 14 which would otherwise tantamount the double taxation. The ld. AR submits that application of assessee under section ITA No.1501/AHD/2017 Sh. Jagdish L Patel 13 154 filed before Assessing Officer for rectification and for exclusion of capital gain for A.Y. 2013-14 has been rejected on 30.06.2016. 12. We have considered the submission of both the parties and have gone through the orders of lower authorities carefully. There is no dispute that assessee along with his four other co- owner sold theland in R.S. No. 296, T.P. No. 7 at Vesu, Surat. It is admitted fact that sale deed was executed on 23.03.2012 and was presented for registration on 23.03.2012 itself. The assessee along with his four co-owner acknowledged in the sale deed that entire sale consideration of Rs. 15.00 Cores is received before on 23.01.2012. The detail of all payments is duly reflected in the sale deed. Further, the assessee and his co-owner has acknowledged and accepted that first party (assessee and his brother) handed over the peaceful possession to the transferee. As per section 54 of Transfer of Property Act, the sale of immovable property is complete on receipt of consideration and registration of deed of transfer and paid stamp duty chargeable by State Government. Before us, the ld AR for the assessee strongly relied on 'Kabja Rashid’ ITA No.1501/AHD/2017 Sh. Jagdish L Patel 14 dated 04.04.2012. The document dated 03.04.2012 (Kabja Rashid) cannot replace legality and authenticity of registered sale deed dated 23.03.2012. Thus, the document produced by assessee i.e. 'Kabja Rashid’ to claim the capital gain in subsequent assessment order does not inspire of confidence, which cannot substitute the evidentiary value of registered instrument. 13. We also find that ld. CIT(A) in accepting the plea of assessee, that sale deed was executed on 03.04.2012, is factually incorrect. In fact, the transaction of transfer of immovable property would take effect from the execution of the sale deed. However, mere registration number, volume number and additional book number and pages number is given to the sale deed for the purpose of identification of sale transaction. Thus, the specific registration number was recorded on the registered document on 03.04.2014. So far as, the submission of ld. AR of the assessee and observation of ld. CIT(A), with regard to taxing of long term capital gain in the hand of co-owners in subsequent assessment order is concern, we find that observation of ld. CIT(A) and submission of ld. AR of the ITA No.1501/AHD/2017 Sh. Jagdish L Patel 15 assessee are misplaced. In our view, the assessee can claim parity under law only on the basis of legally and sustainable view taken in case of co-owners. We are further view that if some wrong approach was adopted which is not in accordance with mandate of law, is accepted in case of other co-owners, the assessee cannot take benefit thereof. Therefore, the order of ld. CIT(A) is set aside. 14. At the time of submission, the ld. AR of the assessee submits that in case of this Bench of the view that long term capital gain is taxable in A.Y. 2012-13, necessary direction may be given for rectification of assessment order for A.Y. 2013-14 as the assessee has offered the capital gain in A.Y. 2013-14 which would amount to double taxation on similar capital gain. We find merit in the submission of ld. AR of the assessee and direct the Assessing Officer to exclude the capital gain in A.Y. 2013-14. We further find that at the time of passing the assessment order, report of DVO was not received and in Assessing Officer computed the capital gain, therefore, we further direct the assessing officer to grant opportunity to the assessee to file his objection if so desired and after considering ITA No.1501/AHD/2017 Sh. Jagdish L Patel 16 the same compute the long term capital gain in accordance with law. In the result, the grounds of appeal raised by the revenue are allowed. 15. In the results, the grounds of appeal raised by the revenue are dismissed. Order pronounced in open court on 14/03/2022 by placing result on notice Board. Sd/- Sd/- (Dr ARJUN LAL SAINI) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Surat, Dated: 14/03/2022 SKM* Copy to: 1. Appellant- 2. Respondent- 3. CIT(A)- 4. CIT 5. DR 6. Guard File True copy/ By order // True Copy // Assistant Registrar, ITAT, Surat True copy/