Mallikarjuna Prasad Kosaraju , Hyderabad V. Income Tax Officer, Ward-14(2), Hyderabad

ITA 1585/Hyd/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 7792 (ITAT-HYDERABAD)
• Duration Of Justice: 11 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-07-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB-A
• Next Hearing Date: 04-07-2019
• Assessment Year: 2010-2011
• Appeal Filed On: 23-07-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K KOMALI KRISHNA
• Assessee Lawyers: P MURALI
• Keywords: Opportunity of being heard; Additional evidence; Set aside
• Section: 147; 148; 144; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH : HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMANY , ACCOUNTANT MEMBER ITA NO. 1585 /HYD./201 8 ASSESSMENT YEAR: 2010 - 11 SHRI MALLIKARJUNA PRASAD KOSARAJU VS. I.T.O. WARD - 1 4(2) H.NO.102, BLOCK A, 2 ND FLOOR ROOM NO.634, 6 TH FLOOR MADHAPUR C BLOCK, I.T. TOWERS HYDERABAD 500 081 A.C. GUARDS , PAN: ALGPK7596Q HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSE : SH. P.MURALI MOHAN RAO, A.R. FOR REVENUE : SMT. K.KOMALI KRISHNA, D.R. DATE OF HEARING : 04/07/19 DATE OF PRONOUNCEMENT : 17/07/19 O R D E R PER SMT. P. MADHAVI DEVI, J.M. THIS IS ASSESSEES APPEAL FOR A.Y. 2010 - 11 AGAINST THE ORDER OF THE CIT(A), HYDERABAD, DATED 16.5.2018. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE , AN INDIVIDUAL ALONG WITH THREE OTHERS , NAMELY SHRI G.HARISH KUMAR, SRI S.G.CHANDRA AND SRI J.SUDHAKAR SRINIVAS HAS SOLD AN IMMOVABLE PROPERTY BEARING MUNICIPAL NO. 8 - 2 - 293/91/HE/27 ADMEASURING 2420 SQ.YARDS IN SURVEY NO.91 SITUATED AT SHAIKPET VILLAGE & MANDAL, HYDERABAD TO ONE PERSON NAMELY SRI KALAVAKOLANU VENKAT RAMANA FOR TOTAL SALE CONSIDERATION OF ITA NO.1585/HYD./ 2018 AY:2010 - 11 SH. MALLIKARJUNA PRASAD KOSARAJU, HYD. 2 RS.9,68, 00,000/ - AS PER THE SALE AGREEMENT - CUM - GENERAL POWER OF ATTORNEY DATED 22.02.2010. THE FOUR PERSONS HAV E EQUAL SHARE I.E. 1/4 TH SHARE EACH AND THEIR PROPORTIONATE CONSIDERATION WAS RS.2,42,00,000/ - . THE AO OBSERVED THAT THE ASSESSEE SHRI K.MALLIKARJUN A PRASAD HAS NOT ADMITTED ANY CAPITAL GAIN ON THE TRANSFER OF ABOVE MENTIONED PROPERTY AND HA S NOT FILED ANY RETURN. THEREFORE, NOTICE U/S 142 (1) OF THE I.T. ACT WAS ISSUED TO RE - OPEN THE ASSESSMENT. IN RE - ASSESSMENT PROCEEDINGS , AO HELD THAT THE ASSES SEE IS LIABLE TO PAY CAPITAL GAIN TAX AND ACCORDINGLY COMPUTED LONG TERM CAPITAL GAIN OF RS. 2,36,83,300/ - AND BROUGHT IT TO TAX. 3. AGGRIEVED , THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) WHO CONFIRMED THE ORDER OF AO BECAUSE THE ASSESSEE DID NOT APPEAR BEFORE HIM. 4. THE ASSESSEE , THEREFORE , IS IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS OF APPEAL. 1. LEARNED COMMISSIONER OF INC OME TAX (APPEALS) - 6, HYDERABAD [ CIT(A) ] HAS ERRED ON FACTS AND IN LAW. 2. (A) LEARNED C IT(A) IS NOT LEGALLY JUSTIFIED IN DISMISSING THE APPEAL ON THE GROUND OF ALLEGED NON - PROSECUTION OF APPEAL. (B) RELIANCE OF CIT(A) ON JUDGMENTS CITED FOR DISMISSING THE APPEAL IS MISPLACED. CIT (A) IS NEITHER A COURT NOR A TRIBUNAL. (C) LEARNED CIT(A) HAS ERRED IN RECORDING THAT THE ASSESSMENT WAS MADE U / S. 144 R.W.S. 147 OF THE I.T. ACT WHEREAS IT WAS MADE U/S. 143(3) R. W.S. 147 OF THE I.T. ACT. THE APPELLATE ORDER SUFFERS FROM NON - APPLICATION OF MIND. (D) LEARNED CIT(A) HAS ERRED IN NOT CONSIDERING THE GROUNDS OF APPEAL ON MERITS. ADDITIONAL GROUNDS OF APPEAL (GROUND NOS. 3 & 4 ONLY) 3. PROCEEDINGS U / S. 147 ARE LEGALLY INVALID BECAUSE THE NOTICE TO THE ASSESSEE U /S 148 AS AN INDIVIDUAL IS NOT VALID. IMPUGNED PROPERTY WAS JOINTLY PURCHASED AND JOINTLY SOLD AS PER THE ASSESSMENT ORDER. THE STATUS OF THE SELLER OF THE PROPERTY IS ITA NO.1585/HYD./ 2018 AY:2010 - 11 SH. MALLIKARJUNA PRASAD KOSARAJU, HYD. 3 BODY OF INDIVIDUALS, OR ASSOCIATION OF PERS ONS UNDER EXPLANATION TO SEC. 2(31) OF THE I. T. ACT. 4. ASSESSMENT ORDER IS INVALID AS IT IS INCOMPLETE FOR WANT OF ANNEXURES STATED TO HAVE BEEN ATTACHED TO IT. 5. (A) ASSESSMENT MADE IS ARBITRARY WITHOUT ANY EVIDENCE. A. O. HAS TOTALLY IGNORED THE FACTS AND CIRCUMSTANCES OF THE CASE BROUGHT TO HIS NOTICE. (B) THE ASSESSMENT IS A HIGH PITCHED ASSESSMENT MADE IGNORING THE FACTS AND WITHOUT GATHERING ANY EVIDENCE AGAINST THE ASSESSEE. (C) A. O. HAS FAILED TO REBUT THE CONTENTIONS OF THE ASSESSEE. 6. THE ORDER OF THE ASSESSING OFFICER IS COMPLETELY ERRONEOUS IN LAW AND IT IS COMPLETELY CONTRARY TO THE FACTS OF THE CASE SINCE CONSIDERATION WAS NOT RECEIVED. TRANSACTION AGPA IS TOTALLY NULL AND VO ID AS THE VENDEE HAD NEVER PAID ANY CONSIDERATION. 7. THE ASSESSING OFFICER SHOULD HAVE APPRECIATED THE FACT THAT THE VENDOR HAS BEEN MISREPRESENTED AND PERPETUATED A FRAUD ON HIM SO AS TO OBTAIN AND TAKE AWAY THE ENTIRE MONEY BY MORTGAGING THE PROPERTY TO THIRD PARTY BANK I.E. SICOM LTD, A MAHARASHTRA GOVERNMENT UNDERTAKING. 8. THE ASSESSING OFFICER SHOULD HAVE INVESTIGATED THE TRANSACTION BEFORE ADDING HUGE SUM OF CONSIDERATION TO THE TOTAL INCOME OF THE APPELLANT SINCE IT WAS NEVER RECEIVED FROM THE V ENDEE WHO HAD MORTGAGED THE PROPERTY IMMEDIATELY WITH A BANK FOR HIS OWN BENEFIT AND HAD DEPLOYED THE FUNDS FOR OTHER PURPOSES OF VENDEE, INSTEAD OF MEETING THE CONSIDERATION MENTIONED IN AGPA. 9. THE ASSESSING OFFICER ALSO SHOULD HAVE APPRECIATED THE FAC T THAT THE VENDOR HAD FILED A WRIT PETITION BEFORE THE HON'BLE AP HIGH COURT VIDE WP NO. 22867/2013 FOR CANCELLATION AND REVOKING OF AGPA AS THE CONSIDERATION WAS NOT RECEIVED FROM THE VENDEE DESPITE BEST EFFORTS FROM THEM. 10. THE A. O. SHOULD ALSO HAVE APPRECIATED THAT THERE WOULD BE NEITHER ANY SALE NOR RECEIPT OF ANY CONSIDERATION ONCE THE HON'BLE COURT DECREES THE WHOLE ISSUE SINCE NO CONSIDERATION WAS RECEIVED FROM THE VENDEE THOUGH MENTIONED IN THE DOCUMENT (THROUGH) MISREPRESENTATION OF FACTS) WHIC H IS FACTUALLY UNTRUE. 11. THE ASSESSING OFFICER ALSO SHOULD HAVE APPRECIATED THE PENDING PROCEEDINGS WITH THE HON'BLE HIGH COURT. 12. THE A.O ALSO SHOULD HAVE EXAMINED THE BANK ACCOUNTS AND OTHER EVIDENCES OF THE VENDOR PLACED DURING THE ASSESSMENT PRO CEEDINGS BEFORE ADDING HUGE SUM OF LONG TERM CAPITAL GAIN OF RS. 2,36,83,300 TO THE TOTAL INCOME ALTHOUGH IT WAS NEVER RECEIVED FROM THE VENDEE. ITA NO.1585/HYD./ 2018 AY:2010 - 11 SH. MALLIKARJUNA PRASAD KOSARAJU, HYD. 4 13. THE ASSESSING OFFICER ALSO SHOULD HAVE APPRECIATED THE FACT THAT THE VENDOR HAS NO MEANS EVEN TO PAY TAX SINCE CONSIDERATION WAS NOT RECEIVED. 14. AGPA HAS LOST LEGAL VALIDITY AS IT WAS EXECUTED ON ACCOUNT OF MISREPRESENTATION AND SUBSEQUENT COERCION. ASSESSMENT ON THE BASIS OF SUCH AGPA IS LIABLE TO BE SET ASIDE. 15. FOR THESE AND ANY OTHER GROUNDS THAT MAY BE ADDED TO OR ALTERED OR SUBSTITUTED, IT IS PRAYED THAT THE ASSESSMENT ORDER BE ANNULLED AS INVALID IN LAW OR ALTERNATIVELY THE ADDITION DELETED . 4.1. FURTHER THE ASSESSEE HAS ALSO FILED A LETTER STATING THAT THE FOLLOWING ARE ADDITIONAL GROUNDS OF APPEAL , WHICH ARE RAISED BEFORE THE TRIBUNAL FOR THE FIRST TIME. 3. PROCEEDINGS U/S. 147 ARE LEGALLY INVALID BECAUSE THE NOTICE TO THE ASSESSEE U/S 148 AS AN INDIVIDUAL IS NOT VALID. IMPUGNED PROPERTY WAS JOINTLY PURCHASED AND JOINTLY SOLD AS PER THE ASSESSMENT ORDER. THE STATUS OF THE SELLER OF THE PROPERTY IS BODY OF INDIVIDUALS, OR ASSOCIATION OF PERSONS UNDER EXPLANATION TO SEC. 2(31) OF THE I.T. ACT. 4. ASSESSMENT ORDER IS INVALID AS IT IS INCOMPLETE FOR WANT OF ANNEXURES STATED TO HAVE BEEN ATTACHED TO IT. 5 . AT THE TIME OF HEARING , LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE CASE OF THE CO - OWNER ASSESSEE HA D COME UP BEFORE THIS TRIBUNAL IN ITA NO.1584/2018 AND THE ASSESSEE THEREIN HAD FILED ADDITIONAL EVIDENCES IN THE FORM OF COPY OF AGREEMEN T FOR SALE, COPY OF WRIT PETITION FILED BEFORE THE HONBLE HIGH COURT OF ANDHRA PRADESH AGAINST THE VENDEE WHO HAD CHE ATED THE VENDORS HEREIN BY NOT PAYING SALE CONSIDERATION ETC . HE SUBMITTED THAT THE TRIBUNAL HAD INDICATED THAT THE MATTER WOULD BE REMANDED TO THE FILE OF AO FOR DE - NOVO CONSIDERATION IN THE LIGHT OF ADDITIONAL EVIDENCES FILED BY ASSESSEE THEREIN. HE SU B MITTED THAT SINCE PROPERTY IS SAME AND ISSUE ALSO IS SAME AND SINCE IN THIS MATTER ALSO ITA NO.1585/HYD./ 2018 AY:2010 - 11 SH. MALLIKARJUNA PRASAD KOSARAJU, HYD. 5 ADDITIONAL EVIDENCE I S FILED , IT MAY KINDLY BE ADMITTED AND THE MATTER MAY BE REMANDED FOR DE - NOVO CONSIDERATION. 5.1. THE LD.DR WAS ALSO HEARD. 6 . AFTER CONSIDERING RIVAL CONTENTIONS AND MATERIAL PLACED ON RECORD, WE FIND THAT IN THE CASE OF CO - OWNER SRI G.HAREESH KUMAR IN ITA 1584/18 THE COORDINATE BENCH VIDE ORDER DT. 10/7/19 HAS HELD AS UNDER. 3. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE SUBMIT TED BEFORE THE AO THAT THE ASSESSEE AND THREE OTHERS WERE THE OWNERS OF THE PROPERTY WHICH WAS SOLD VIDE SALE AGREEMENT CUM GPA BUT THE VENDEE HAD CHEATED THE VENDORS AND HAD NOT COMPLIED WITH THE TERMS OF THE AGREEMENT INCLUDING THE PAYMENT OF CONSIDERATI ON TO ALL THE VENDORS WHO HAVE EXECUTED THE SALE AGREEMENT CUM GPA. IT WAS ALSO SUBMITTED THAT THE VENDEE HAS NOT PAID ANY CONSIDERATION TO THE ASSESSEE AND THE CO - OWNERS TILL THE DATE OF NOTICE AND HENCE SALE AGREEMENT WAS SOUGHT TO BE CANCELLED. THE ASSE SSEE ALSO SUBMITTED THAT THE SUBJECT PROPERTY IS UNDER HIS POSSESSION EVEN ON THE DATE OF FILING THE AFFIDAVIT. THE AO, HOWEVER, OBSERVED FROM THE RECITALS IN THE AGPA THAT THE ASSESSEE AND OTHERS HAVE EXECUTED THE SALE AGREEMENT CUM GPA AND AS PER THE AGR EEMENT, IT IS SEEN THAT THEY HAVE GIVEN VACANT AND PEACEFUL POSSESSION OF THE PROPERTY TO THE VENDEES BY DULY RECEIVING THE SALE CONSIDERATION. IT WAS ALSO OBSERVED THAT SINCE THE ASSESSEE HAS RECEIVED THE CONSIDERATION AND HAS PARTED WITH THE POSSESSION O F THE PROPERTY, PROVISIONS OF SECTION 53A OF THE TRANSFER OF PROPERTY ACT WOULD APPLY AND THE PROVISIONS OF SECTION 2(47)(V) OF THE ACT ALSO WOULD APPLY. HE FURTHER OBSERVED THAT THE VENDEE HAD PLEDGED THE PROPERTY WITH FINANCIAL INSTITUTIONS AND HAD OBTAI NED THE LOAN OF RS.32.00 CRORES IN THE NAME OF THE COMPANY IN WHICH HE IS A DIRECTOR. HE THEREFORE, HELD THAT THE ASSESSEE AS WELL AS THE OTHER OWNERS HAVE PHYSICALLY HANDED OVER THE PROPERTY TO THE VENDEE AND HENCE THE CAPITAL GAINS IS CHARGEABLE TO TAX I N THE HANDS OF THE ASSESSEE FOR THE RELEVANT A.Y. 4. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT (A) WHO DISMISSED THE SAME FOR WANT OF APPEARANCE BY THE ASSESSEE. THE CIT (A) HAS RECORDED THAT ON A NUMBER OF OCCASIONS, THE APPEAL WAS POSTE D FOR HEARING AND THE ASSESSEE HAS BEEN ITA NO.1585/HYD./ 2018 AY:2010 - 11 SH. MALLIKARJUNA PRASAD KOSARAJU, HYD. 6 SEEKING ADJOURNMENTS EXCEPT FOR THE LAST DATE OF HEARING I.E. 26.04.2018. AGAINST THIS ORDER OF THE CIT (A), THE ASSESSEE IS IN APPEAL BEFORE US. IN ADDITION TO THE GROUNDS OF APPEAL FILED ALONG WITH FORM 36, THE ASS ESSEE HAS ALSO RAISED CERTAIN OTHER ADDITIONAL GROUNDS OF APPEAL. HE SOUGHT ADMISSION OF THE SAME AND ADJUDICATION OF THE ADDITIONAL GROUNDS AS WELL. THE ASSESSEE ALSO FILED ADDITIONAL EVIDENCE BEING THE COPY OF THE CANCELLATION OF SALE AGREEMENT CUM GPA A LONG WITH THE PUBLIC NOTICE ALSO AND COPY OF THE PETITION FILED BEFORE THE HON'BLE A.P. HIGH COURT AGAINST THE VENDEE AND ALSO DISTRICT REGISTRAR FOR CANCELLATION OF THE EARLIER AGREEMENT OF SALE CUM GPA. HE SUBMITTED THAT THESE DOCUMENTS GOES TO THE ROOT OF THE MATTER AND TO SUBSTANTIATE THE ASSESSEES CLAIM THAT THE ASSESSEE HAS NOT RECEIVED THE SALE CONSIDERATION AND THE POSSESSION OF THE PROPERTY ALSO WAS NOT HANDED OVER TO THE VENDEE. HE THEREFORE, PRAYED THAT THE ADDITIONAL GROUNDS AND ALSO THE ADDITI ONAL EVIDENCE BE ADMITTED AND REMANDED TO THE FILE OF THE AO FOR DENOVO CONSIDERATION. 5. THE LEARNED DR, HOWEVER, SUPPORTED THE ORDERS OF THE AO AND SUBMITTED THAT THE ASSESSEE FAILED TO COOPERATE WITH THE CIT (A) DUE TO WHICH THE CIT (A) DISMISSED THE APPEAL. THE LEARNED DR SUBMITTED THAT THE MATTER MAY BE REMANDED TO THE FILE OF THE CIT (A), IF NECESSARY, FOR ADJUDICATION ON MERITS. 6. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT THE ASSESSEES STAND HAS BEEN THAT HE HAS NOT RECEIVED THE SALE CONSIDERATION AND ALSO THAT HE HAS NOT GIVEN THE POSSESSION OF THE PROPERTY TO THE VENDEE. THE AO HAS GONE BY THE RECITALS IN THE REGISTERED AGREEMENT OF SALE - CUM - GPA THAT THE ASSESSEE HAS RECEIVED THE PAYMENT AND HA S GIVEN THE POSSESSION OF THE PROPERTY. WE ARE OF THE OPINION THAT THE AGREEMENT OF SALE CUM GPA CANNOT BE HELD TO BE THE COMPLETE LEGAL TRANSFER OF THE TITLE. FURTHER, THE ASSESSEES CONTENTION THAT HE HAS FILED AN APPLICATION FOR CANCELLATION OF THE REGI STRATION DOCUMENT AND ALSO THAT HIS PETITION FOR SUCH CANCELLATION IS PENDING BEFORE THE HON'BLE A.P. HIGH COURT IS ALSO WORTH CONSIDERATION. IN VIEW OF THE SAME, WE DEEM IT FIT AND PROPER TO ADMIT THE ADDITIONAL GROUNDS AS WELL AS THE ADDITIONAL EVIDENCE. SINCE THIS EVIDENCE REQUIRES VERIFICATION, WE DEEM IT FIT TO REMAND THE ISSUE TO THE FILE OF THE AO FOR DE NOVO CONSIDERATION IN ACCORDANCE WITH THE LAW. NEEDLESS TO MENTION THAT THE ASSESSEE SHOULD BE GIVEN A FAIR OPPORTUNITY OF HEARING AND THE ITA NO.1585/HYD./ 2018 AY:2010 - 11 SH. MALLIKARJUNA PRASAD KOSARAJU, HYD. 7 ASSESSEE ALSO SHALL CO - OPERATE WITH THE AO FOR EARLY COMPLETION OF THE ASSESSMENT. 7. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 7 . FACTS AND CIRCUMSTANCES BEING THE SAME, RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINATE BENCH , IN THIS CASE ALSO THE ADDITIONAL EVIDENCE I S ADMITTED AND REMANDED TO THE FILE OF AO FOR DE - NOVO CONSIDERATION IN ACCORDANCE WITH LAW. NEEDLESS TO MENTION THAT THE ASSESSEE SHALL BE GIVEN A FAIR OPPORTUNITY OF BEING HEARD. 8 . ASSESSEES APPEAL IS ACCORDINGLY TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 17 TH JULY, 2019. SD/ - SD/ - (A MOHAN ALANKAMANY) (P MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 17 TH JULY, 2019. *GMV C OPY FORWARDED TO: 1. SRI MALLIKARJUNA PRASAD KOSARAJU, H.NO.102, B LOCK A, 2 ND FLOOR, UHASSU APTS, VITALRAONAGAR, MADHAPUR, HYDERABAD 500 081. 2. ITO, WARD 14(2), ROOM NO.634, 6 TH FLOOR, C BLOCK, I.T. TOWERS, A.C. GUARDS, HYDERABAD. 3. CCIT, HYDERABAD . 4. PR. CIT - 6, HYDERABAD 5. JCIT, RANGE 14, HYDERABAD 6. D.R. ITAT HYDERABAD 7. GUARD FILE // C O P Y // ITAT HYDERABAD BENCH HYDERABAD ITA NO.1585/HYD./ 2018 AY:2010 - 11 SH. MALLIKARJUNA PRASAD KOSARAJU, HYD. 8 1. DRAFT DICTATED ON 05/07/19 2. DRAFT PLACED BEFORE THE AUTHOR 09/07/19 & 1 1 /07/19 3. DRAFT PLACED BEFORE THE SECOND MEMBER 4. DRAFT APPROVED BY SECOND MEMBER 5. APPROVED DRAFT COMES TO SRPS 6. KEPT FOR PRONOUNCEMENT 17/07/19 7. FILE SENT TO BENCH CLERK