ITO WD 20(1)(2), MUMBAI V. GANESHCHANDRA A RACKVI (HUF), MUMBAI

ITA 1520/MUM/2011

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9298 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2015
• Appeal Filed By: Department
• Bench Allotted: G
• Next Hearing Date: 13-01-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 22-02-2011
• Court: TRIBUNAL
• Department Lawyers: AKHILENDRA YADAV
• Assessee Lawyers: SUBODH RATNAPARKHI
• Keywords: Tax effect
• Section: 143(3)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL J , BENCH MUMBAI , BEFORE SHRI I. P. BANSAL, J M & SHRI R.C.SHARMA , A M ITA NO. 1520 / MUM/20 1 1 ( ASSESSMENT YEAR : 20 06 - 07 ) ITO WD 20(1)(2), MUMBAI VS. GANESHCHANDRA A RACKVI (HUF), 203 - 3, ASMITA MOGRA CHS LTD. NEAR SHER - E - PUNJAB COLONY, ANDHERI (E), MUMBAI PAN/GIR NO. : A A CHG 7714 H ( APPELLANT ) .. ( RESPONDENT ) AND ITA NO. 2002/ MUM/20 1 1 ( ASSESSMENT YEAR :20 06 - 07 ) GANESHCHANDRA A RACKVI (HUF), 203 - 3, ASMITA MOGRA CHS LTD. NEAR SHER - E - PUNJAB COLONY, ANDHERI (E), MUMBA I VS. ITO WD 20(1)(2), MUMBAI PAN/GIR NO. : A ACHG 7714 H ( APPELLANT ) .. ( RESPONDENT ) /REVENUE BY : SHRI AKHILENDRA YADAV /ASSESSEE BY : SHRI SUBODH RATNAPARKHI DATE OF HEARING : 2 ND MARCH , 201 5 DATE OF PRONOUNCEMENT 11 TH MARCH ,2015 O R D E R PER R.C.SHARMA (A.M) : THE SE ARE THE CROSS APPEALS FILED BY THE ASSESSEE AND REVENUE AGAINST THE ORDER OF CIT(A) FOR THE AS SESSMENT YEAR 20 06 - 07 , IN THE MATTER OF ORDER PASSED U/S. 143(3) R.W.S147 OF THE ACT . ITA NO S . 1520&2002 / 1 1 2 2. THE ASSESSEE IN ITS APPEAL (I.E. ITA NO. 2002/M/2011) IS AGGRIEVED BY THE ACTION OF AO FOR ADDITION OF RS. 43,50,000/ - AS LONG TERM CAPITAL GAIN ON SALE OF HIS SHARE IN T HE PROPERTY AT BHYAYANDER , BY ASSUMING THAT ASSESSEE WAS IN RECEIPT OF CASH CONSIDERATION IN EXCESS OF PRICE QUOTED IN THE SALE DEED. THE AO BASED HIS CONCLUSION ON THE PLEA THAT ONE OF THE CO - OWNERS HAVE SOLD HIS SHARES IN THE SAID LAND FOR A HIGHER CONSI DERATION, AS COMPARED TO THE CONSIDERATION SHOWN BY ASSESSEE. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. FACTS IN BRIEF ARE THAT THE ASSESSEE IS AN INDIVIDUAL HAVING INCOME FROM CAPITAL GAIN ON SALE OF LAND AND INCO ME FROM OTHER SOURCES DUR ING THE RELEVANT ASSESSMENT YEAR. DURING THE COURSE OF ASSESSMENT, THE AO HAS OBSERVED THAT THE ASSESSEE AN HUF IS THE CO - OWNER ALONG WITH 4 OTHER HUFS EACH HAVING EQUAL SHARE IN THEIR ANCESTRAL LAND BEARING OLD SURVEY NOS.661, 675,689,691,692,693,695,696, 702 AND 689 SITUATED AT REVENUE VILLAGE: BHAYANDER, TAL & DISTT. THANE. ALL THESE HUFS (INCLUDING THE ASSESSEE ) ARE REPRESENTED BY 5 BROTHERS NAMELY SHRI GANESHCHANDRA A. RAKVI (THE ASSESSEE ), SHRI BHALCHANDRA A. RAKVI, SHRI . VINAYAK A. RAKVI, AND SHRI MO RESHWAR A. RAKVI. THE 5 TH BROTHER SHRI GANP AT A. RAKVI, EXPIRED ABOUT 20 YEARS BACK AND ACCORDINGLY, HIS SHARE OF PROPERTY IS TRANSFERRED IN THE NAMES OF HIS SONS SHRI RAJEEV G. RAKVI AND SHRI AMOL G. RAKVI. DURING THE RELEVANT ASSESSMENT YEAR THE A SSESSEE HAS SOLD HIS SHARE OF THE PROPERTY ALONG WITH THREE OTHER CO - OWNERS NAMELY SHRI BHALCHANDRA A. RAKVI (HUF) SHRI VINAYAK A. RAKVI (HUF) , SHRI MORESHWAR A. RAKVI ITA NO S . 1520&2002 / 1 1 3 (H UF) FOR A TOTAL CONSIDERATION OF RS.2.66 CRORES TO SHRI SANJAY M. PUNAMIYA OF M/ S. SANDHYA E NTERPRISES AND M/ S SANKESHWAR ENTERPRISES VIDE AGREEMENT DATED 31.10.2005. THEREFORE, OUT OF THE TOTAL ANCESTRAL LAND HOLDINGS OF FIVE BROTHERS, THE 4/5LH SHARE OF THE PROPERTY BELONGING TO FOUR BROTHERS APPEARING IN THE NAME OF THEIR RESPECTIVE HUFS WAS S OLD TO SHRI SANJAY PUNAMIYA ON 31.10.2005 FOR A NET SALES CONSIDERATION OF RS.2.66 CRORES. THE BALANCE 1/51H SHARE OF THE LAND BELONGING TO' RAJEEV U. RAKHVI (HUF) WAS ALSO SEPARATELY SOLD TO SHRI SANJAY M. PUNAMIYA VIDE A SEPARATE AGREEMENT FOR SALE DATED 25.10.2005 FOR A NET CONSIDERATION OF RS.1.1 0 CRORES. THEREFORE, IN VIEW OF THE SAME THE ASSESSEES SHARE BEING 1/4'' IN THE AB OVE LAND OF 4/5'' SHARE OF RS.2.66 CRORES WORKS OUT TO RS.66,50,000 - . WITH THIS BACKGROUND, THE AO HAS OBSERVED THAT THE LONG TE RM CAPITAL GAIN ON SALE OF THE LAND WAS NOT DISCLOSED BY THE ASSESSEE IN ITS RETURN OF INCOME FILED FOR THE RELEVANT ASSESSMENT YEAR. ACCORDINGLY, THE FULL VALUE OF THE SALE CONSIDERATION IN THE HANDS OF THE ASSESSEE AMOUNTING TO RS. 1.10 CRORES WAS ADDED I N THE HANDS OF THE ASSESSEE AS ON DATE OF TRANSFER FOR THE COMPUTATION OF LTCG ON SALE OF LAND. ACCORDINGLY, THE AO HELD THAT THE ASSESSEES SHARE OF LONG TERM CAPITAL GAIN ARISEN ON SALE OF LAND AMOUNTING TO RS.1.10 CRORES IS FULLY TAXABLE IN THE HANDS OF THE ASSESSEE IN THE RELEVANT ASSESSMENT YEAR. 4. BY THE IMPUGNED ORDER, THE CIT(A) CONFIRMED THE ACTION OF THE AO AND THE ASSESSEE IS FURTHER APPEAL BEFORE US. ITA NO S . 1520&2002 / 1 1 4 5. IT WAS CONTENDED BY LD. AR THAT THE ASSESSEE ALONG WITH OTHER 3 OTHER CO - OWNERS NAMELY VINAY AK A. RAKVI (HUF), BHALCHANDRA A. RAKVI (HUF) AND MORESHWAR A. RAKVI (HUF) HAVE ONLY RECEIVED RS.2.66 CRORES AS SHOWN IN THE SALE AGREEMENT DATED 31.10.2005. IT WAS SUBMITTED THAT BEYOND THIS, NO OTHER CONSIDERATION WAS RECEIVED EITHER IN CASH OR IN KIND. THEREFORE, ACCORDING TO THE AR, THE CONSIDERATION IN THE HANDS OF THE ASSESSEE ON SALE OF LAND CANNOT BE AS ASSESSED AT MORE THAN RS.66.50 LAKHS FOR THE COMPUTATION OF LONG TERM CAPITAL GAIN. REGARDING, THE HIGHER SALE PRICE SHOWN BY RAJIV G. RAKVI (HUF) O N THE SAME LAND AT THE SAME POINT OF TIME, THE AR HAS SUBMITTED THAT THE SAME IS DUE TO THE COERCIVE TACTICS RESORTED TO BY SHRI RAJIV G. RAKVI AND HIS BROTHER SHRI ARNOL O. RAK.VI WITH THE SAID BUILDER. IT WAS FURTHER SUBMITTED THAT AS THE SALE DEEDS ARE SEPARATELY EXECUTED ON DIFFERENT DATES, THEREFORE, IT CANNOT BE HELD THAT THE SALE CONSIDERATION IN THE HANDS OF RAJIV G. RAKVI (HUF) WOULD BE THE SAME AS SHOWN IN CASE OF THE ASSESSEE . 'FURTHER, HE HAS ALSO FILED A CONFIRMATION FRO M THE PURCHASER SHRI SAN JAY M PUNAMIYA CONFIRMING THAT HE HAS PAID RS.66.50 LAKHS EACH TO THE ASSESSEE AND 3 OTHER CO - OWNERS NAMELY SHRI VINAYAK A. RAKVI (HUF), BHALCHANDRA A. RAKVI(HUF) AND SHRI MORESHWAR A. RAKVI(HUF); WHEREAS, HE HAS PAID RS. 1.10 CRORES TO SHRI ARNOL O. RAKVI . (HUF ). 6. ON THE OTHER HAND, LD. DR RELIED ON THE FINDINGS RECORDED BY LOWER AUTHORITIES. ITA NO S . 1520&2002 / 1 1 5 7. WE HAVE CONSIDERED RIVAL CONTENTIONS, GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND FROM THE RECORD THAT THE ASSESSEE ALONG WITH 3 OTHER CO - OWNER S VIZ VINAYAK A. RAKVI,(HUF) BHALCHANDRA A. RAKVI (HUF) AND. MORESHWAR A. RAKVI (HUF) HAVE SOLD 4/5 TH SHARE OF THEIR PROPERTY AS DISCUSSED ABOVE TO SHRI SANJAY M. PUNAMIYA OF MLS.SANDHYA ENTERPRISES AND MIS SANKESHWAR ENTERPRISES FOR A CONSIDERATION OF RS. 2.66 CRORES AS PER THE AGREEMENT DATED 31.10.2005. THE BALANCE 1/5 T H PART OF THE LAND BELONGING TO RAJIV G. RAKVI (HUF) (SON OF 5TH BROTHER OF THE EARLIER MENTIONED FOUR CO - OWNERS) HAS SOLD ITS SHARE IN THE SAME LAND FOR RS.L.I0 CRORES. TO THE SAME PARTY V IDE AGREEMENT DATED 25.10.2005 . WE FOUND THAT THE ASSESSEE HAS DISCLOSED 1/4 TH SHARE AMOUNTING TO RS. 66.50 LAKHS IN THE SUSPENSE ACCOUNT IN ITS BALANCE SHEET. IT IS ALSO CLEAR FROM RECORD THAT RAJIV G. RAKVI (HUF) HAS SOLD HIS PROPERTY ONLY 5 DAYS PRIOR TO THE SALE OF PROPERTY OR LAND BY THE ASSESSEE AND ITS OTHER 3 CO - OWNERS. THE PROPERTIES SOLD ARE THE SAME PROPERTY, THE SELLERS ARE CLOSELY RELATED PARTIES. THE BUYER IS ALSO THE SAME PARTY, THEREFORE, IT I S HIGHLY UNBELIEVABLE THAT THE SALE CONSIDERATION RECEIVED BY ASSESSEE WAS ONLY AT RS.66.50 LAKHS; WHEREAS AMOUNT RECEIVED BY RAJIV G. RAKHVI (HUF) FOR THE SAME SHARE OF VERY SAME PROPERTY WAS RS.1.10 CRORES . IN THE APPEAL FILED BEFORE US, ASSESSEE IS AGGRIEVED FOR THE ADDITION OF RS.43.50 LAKHS WHICH IS THE AMOUNT CONSIDERED BY THE AO AS HAVING BEEN RECEIVED BY CASH OVER AND ABOVE THE SALE CONSIDERATION RECEIVED THROUGH CHEQUE. THE CONCLUSION OF THE LOWER AUTHORITIES THAT ASSESSEE WAS IN ITA NO S . 1520&2002 / 1 1 6 ACTUAL RECEIPT OF RS. 1.10 CRORES IN RESPECT OF 1/4 TH SHARE IN HIS PR OPERTY WAS BASED ON THE FACT THAT OTHER CO - OWNERS OF THE VERY SAME PROPERTY RECEIVED A SUM OF RS.1.10 CRORES IN CONSIDERATION OF SALE OF HIS SHARE IN THE PROPERTY WHICH WAS EFFECTED JUST 5 DAYS PRIOR TO THE SALE OF PROPERTY BY THE ASSESSEE AND ITS THREE CO - OWNERS. 8. IT APPEARS THAT OUT OF ADDITION OF RS.1.10 CRORES, THE ASSESSEE HAS CONCEDED FOR CAPITAL GAIN OF RS.66.50 LAKHS WHICH WAS RECEIVED THROUGH CHEQUE, THEREFORE, ASSESSEE IS NOT IN APPEAL FOR THE CONSIDERATION AS WORK ED OUT ON THE BASIS OF ITS SAL E DEED, BUT IS DISPUTED THE EXTRA SALE CONSIDERATION TAKEN BY THE AO ON THE BASIS OF SALE DEED EXECUTED BY OTHER CO - OWNER OF THE VERY SAME PROPERTY NAMELY RAJIV G. RAKVI (HUF). WE FOUND THAT WITHOUT MAKING ANY INDEPENDENT ENQUIRY FROM THE MARKET, THE AO HA S ASSUMED THAT ASSESSEE HAS RECEIVED THE SAME AMOUNT OF SALE CONSIDERATION AS WAS RECEIVED BY OTHER CO - OWNERS. NO COGENT MATERIAL WAS BROUGHT ON RECORD TO SUBSTANTIATE ITS STAND BY THE AO , NOR THE CIT(A) TO THE EFFECT THAT ASSESSEE H AS ACTUALLY RECEIVED SA LE CONSIDERATION MORE THAN WHAT HAS BEEN MENTIONED IN THE SALE DEED. IN THE INTEREST OF JUSTICE AND FAIRPLAY, WE RESTORE THIS GROUND BACK TO THE FILE OF AO WITH A DIRECTION TO THE AO TO MAKE ENQUIRY SO AS TO FIND OUT ANY SALE CONSIDERATION RECEIVED BY THE ASSESSEE IN EXCESS OF SALE CONSIDERATION MENTIONED IN THE SALE DEED. IT IS PERTINENT TO MENTION HERE THAT AS PER CONTENTION OF LD. AR THE SALE CONSIDERATION RECEIVED BY THE ASSESSEE AS PER THE SALE DEED WAS MORE THAN THE REGISTRATION VALUE DETERMINED BY TH E ITA NO S . 1520&2002 / 1 1 7 SUB - REGISTRAR, THEREFORE, IT IS MORE IMPORTANT TO BRING COGENT MATERIAL ON RECORD FOR ARRIVING AT A DEFINITE CONCLUSION WITH REGARD TO THE EXCESS AMOUNT RECEIVED ON SALE WHICH HAS NOT BEEN RECORDED IN THE BOOKS OF ACCOUNT. WE DIRECT ACCORDINGLY. 9 . IN T HE RESULT APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 10 . IN THE REVENUES APPEAL I.E. ITA NO. 1520/M/2011, THE DELETION OF ADDITION OF RS.10,13,000/ - ON ACCOUNT OF SALE CONSIDERATION OF LAND HAS BEEN AGITATED BY THE REVENUE. THE CIT(A) DELE TED THE ADDITION BY OBSERVING THAT IN THE ABSENCE OF ANY CONCRETE EVIDENCE BROUGHT ON RECORD BY THE AO, THE ADDITION MADE ON THIS ACCOUNT IS NOT JUSTIFIED. FURTHERMORE, THE TAX EFFECT IN THE APPEAL FILED BY THE REVENUE IS BELOW RS.3 LAKHS, THEREFORE, IN VI EW OF THE CBDT INSTRUCTION NO. 3/2011 [F. NO. 279/MISC. 142/2007 - ITJ], DATED 9 - 2 - 2011 , THE APPEAL OF THE REVENUE IS NOT MAINTAINABLE AND THE SAME IS HEREBY DISMISSED. 1 1 . IN THE RESULT, AP PEAL OF THE ASSESSEE (ITA NO.2002/M/2011) IS ALLOWED FOR STATISTICAL PURPOSES AND APPEAL OF THE REVENUE (ITA NO. 1520/M/2011) IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 11/03/ 201 5 . SD/ - SD/ - ( ) ( I. P. BANSAL ) ( ) ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 11/03 /201 5 /PKM , PS ITA NO S . 1520&2002 / 1 1 8 COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( ASSTT. REGISTRAR) / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A), MUMBAI. 4. / CIT 5. / DR, ITAT, MUMBA I 6. GUARD FILE. //TRUE COPY//