Shaik Mohd.Abdul Waheed, Hyderabad V. ITO, Ward-5(2), Hyderabad

ITA 159/HYD/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2925 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2002-2003
• Appeal Filed On: 12-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAVINDRA SAI
• Assessee Lawyers: S RAMA RAO
• Keywords: Capital asset; Condonation of delay
• Section: 143(3); 147; 54; 263; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER S.NO. ITA NO. AY APPELLANT RESPONDENT 1. 159/H/13 2002-03 SHAIK MOHD. ABDUL WAHEED, HYDERABAD. (PAN AANPW7063J) INCOME TAX OFFICER, WARD 5(2), HYDERABAD. 2. 160/H/13 2002-03 SHAIK MOHD ABDUL QUADEER -DO- 3. 204/H/13 2002-03 SHAIK MOHD. ABDUL QUAYYUM -DO- APPELLANT BY : SHRI S. RAMA RAO RESPONDENT BY : SHRI RAVINDRA SAI DATE OF HEARING : 30/05/2013 DATE OF PRONOUNCEMENT : 31/05/ 2013 ORDER PER ASHA VIJAYARAGHAVAN, J.M.: THESE THREE APPEALS PREFERRED BY DIFFERENT ASSESSEE S ARE DIRECTED AGAINST THE ORDERS OF CIT(A), VIJAYAWADA F OR THE ASSESSMENT YEAR 2002-03. SINCE SIMILAR ISSUE IS INV OLVED IN ALL THE APPEALS, THEY WERE CLUBBED AND HEARD TOGETHER A ND, THEREFORE, A COMMON ORDER IS BEING PASSED FOR THE S AKE OF CONVENIENCE. 2. THE APPEAL BEING 204/H/13 WAS FILED BEFORE US W ITH A DELAY OF 5 DAYS. TO THIS EFFECT, THE ASSESSEE HAS FILED P ETITION FOR CONDONATION OF DELAY AND EXECUTED AN AFFIDAVIT AFFI RMING THE REASONS THEREIN FOR DELAY IN FILING THE APPEAL. AFT ER HEARING THE PARTIES, WE CONDONE THE DELAY OF THE SAID FIVE DAYS AND ADMIT THE FOR ADJUDICATION. 2 ITA NOS. 159, 160 & 204/H/13 SHRI MOHD. ABDUL QUAYYUM AND OTHERS. 2. THE THREE ASSESSEES, NAMELY, SHAIK MD. ABDUL WAH EED, SHAIK MOHD. ABDUL QUADHEER AND SHAIK MD. ABDUL QUAY YUM ARE BROTHERS WHO ENTERED INTO DEVELOPMENT OF PROPERTY. 3. THE ASSESSEES FILED RETURN OF INCOME ADMITTING NIL INCOME UNDER THE HEAD CAPITAL GAINS. THE ASSESSMENT WAS REOPENED AND COMPLETED U/S 143(3) BY MAKING AN ADDITION TOWARDS LONG TERM CAPITAL GAINS. THE CIT-VI INVOKING POWERS U/S 263 H AS PASSED ORDERS WHEREIN BESIDES GIVING DIRECTIONS DIRECTED T HE AO TO VERIFY CERTAIN ISSUES AND MAKE ADDITIONS AFTER VERIFICATIO NS. 4. THE AO PASSED THE ORDERS U/S 143(3) READ WITH SE CTION 263. AGAINST THE ORDER OF THE AO THE ASSESSEES PREFERRED APPEAL BEFORE THE CIT(A). 5. THE CIT(A) PASSED A COMMON ORDER WHEREIN HE HELD AS FOLLOWS: NOTICES WERE SENT BY REGISTERED POST DIRECTLY TO TH E APPELLANT ON 06/02/2012, 21/03/2012, 17/04/2012 AND 09/05/2012. ALL THE NOTICES HAVE BEEN RETURNED WITH THE REMARK ADDRESSEE LEFT. SINCE THE DEPARTMENT HAS B EEN SENDING THE NOTICES FOR THE PAST THREE YEARS AND TH ERE IS NO REPRESENTATION AND FURTHER THE APPELLANT HAS NOT BO THERED TO FURNISH ANY OTHER ADDRESS, THERE IS NO OTHER OPTION EXCEPT TO CONCLUDE THAT THE APPELLANT IS NOT SERIOUS OR INCLI NED TO PURSUE THE APPEAL. FURTHER, NO EVIDENCE HAS BEEN FI LED IN SUPPORT OF THE GROUNDS OF APPEAL. THEREFORE, THE AD DITIONS MADE IN THE ASSESSMENT ORDER UNDER APPEAL ARE HEREB Y SUSTAINED AND THE APPEAL IS DISMISSED. 6. AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US AN D HAS RAISED THE FOLLOWING GROUNDS OF APPEAL, WHICH ARE COMMON I N ALL THE THREE APPEALS, ARE AS FOLLOWS: 1. THE ORDER OF THE CIT(A) IS ERRONEOUS BOTH ON FAC TS AND IN LAW. 3 ITA NOS. 159, 160 & 204/H/13 SHRI MOHD. ABDUL QUAYYUM AND OTHERS. 2. THE CIT(A) ERRED IN FINALIZING THE APPEAL WITHOU T PROVIDING PROPER OPPORTUNITY TO THE APPELLANT. THE CIT(A) OUGHT TO HAVE SERVED THE NOTICE BEFORE DECIDING THE APPEAL. 3. THE CIT(A) OUGHT TO HAVE SEEN THAT THE ISSUE INV OLVED IN A QUESTION OF DETERMINATION OF CAPITAL GAIN ARISING ON TRANSFER OF LAND AND BUILDING THROUGH A DEVELOPMENT AGREEMENT. THE CIT(A) OUGHT TO HAVE SEEN THAT BY TH E TIME HE WAS DECIDING THE ISSUE THE ENTIRE CAPITAL GAIN A SSESSABLE IN ACCORDANCE WITH THE DEVELOPMENT AGREEMENT WAS HE LD BY THE HONBLE ITAT, HYDERABAD AS ASSESSABLE FOR THE ASSESSMENT YEAR 1997-98 AND, THEREFORE, NO PART OF THE CAPITAL GAIN IS ASSESSABLE FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. 4. THE CIT(A) OUGHT TO HAVE DECIDED THE APPEAL ON M ERITS BY CONSIDERING THE FACT THAT THE CAPITAL GAIN IS NOT A SSESSABLE FOR THE ASSESSMENT YEAR 2002-03 WHEN IT WAS ASSESSE D FOR THE ASSESSMENT YEAR 1997-98 AND THAT THE AMOUNT WAS ACTUALLY DETERMINED FOR THE ASSESSMENT YEAR 1997-98 WHICH CANNOT BE ASSESSED AGAIN NOW. 5. THE CIT(A) OUGHT TO HAVE SEEN THAT THE DETERMINA TION OF THE CAPITAL GAIN IS NOT CORRECTLY MADE BY THE AO AN D THE EXEMPTION U/S 54 IS ALSO NOT ALLOWED BY THE AO. 6. THE CIT(A) ERRED IN CONFIRMING THE DETERMINATION OF CAPITAL GAIN WITHOUT CONSIDERING THE CORRECT COST O F ACQUISITION OF THE CONSTRUCTED AREA SOLD BY THE APP ELLANT. 7. THE CIT(A) ERRED IN CONFIRMING THE ACTION OF THE AO IN DETERMINING THE TOTAL INCOME WITHOUT CONSIDERING TH E FACTS OF THE CASE PROPERLY AND WITHOUT PROVIDING PROPER OPPORTUNITY TO THE APPELLANT HEREIN. 7. THE LEARNED COUNSEL FOR THE ASSESSEE SHRI S. RAM A RAO DESCRIBED THE BRIEF FACTS, WHICH ARE AS FOLLOWS: THE ASSESSEES VIZ., MOHD. ABDUL KHADER, MR. ABDUL WAHID AND ABDUL QUYYUM AND 14 OTHERS ENTERED INTO AN AGRE EMENT OF DEVELOPMENT OF LAND OWNED BY THESE PARTIES, AN E XTENT OF 4512 SQ.YARDS ON 14/05/1996 FOR CONSTRUCTION OF FLA TS ON THIS LAND. AS PER THE TERMS OF THE AGREEMENT, 60% O F CONSTRUCTED AREA WAS TO BE SURRENDERED BY THE OWNER S TO THE BUILDER AND THESE LAND OWNERS GET 40% OF CONSTR UCTED AREA OF THE FLATS. THESE LAND OWNERS WOULD GET AT 1 0,187 4 ITA NOS. 159, 160 & 204/H/13 SHRI MOHD. ABDUL QUAYYUM AND OTHERS. SQ.FT. IN ADDITION TO THE CAR PARKING AREA, TERRACE RIGHTS ETC. FURTHER THESE ASSESSEES ALSO RECEIVED DEPOSIT/ADVAN CE FOR SURRENDERING 60% OF THE LAND FOR CONSTRUCTION AS PE R THE DEVELOPMENT AGREEMENT AS FOLLOWS: I) MR. ABDUL WAHEED RS. 4 LAKHS, II) MR. ABDUL QUAD EER 4.35 LAKHS, III) MR. ABDUL QUAYYUM RS. 4.10 LAKHS. THEREAFTER, THE FLATS WERE HANDED OVER TO THE ASSES SEES DURING THE MONTH OF APRIL, 2001 RELEVANT ASSESSMENT YEAR 2002-03. THE AO HAVING GONE THROUGH THE DEVELOPMENT AGREEMENT, OBSERVED THAT POSSESSION OF THE LAND WAS GIVEN TO THE BUILDER IN THE ASSESSMENT YEAR THE CONSIDERA TION I.E. 40% OF THE CONSTRUCTED AREA FOR SURRENDERING 60% OF THE LAND WAS PASSED TO THE ASSESSEES. IN ADDITION TO TH AT, AS PER THE DEVELOPMENT AGREEMENT, AN ADVANCE ALSO RECEIVED BY THE ASSESSEES. HE ALSO OBSERVED THAT BUILDER OBTAIN ED LOAN OF RS. 1.15 CRORES BY OFFERING 60% OF SHARE OF LAND TO THE PRUDENTIAL COOPERATIVE BANK AS SECURITY. ACCORDING TO THE AO, THERE WAS TRANSFER OF LAND TO THE EXTENT OF 60% IN LIEU OF CONSIDERATION OF 40% OF CONSTRUCTED AREA. FURTHE R ACCORDING TO HIM, AS PER THE DEVELOPMENT AGREEMENT DATED 14/05/1996, THERE WAS A TRANSFER ON 14/05/1996 ITSE LF AND THE ASSESSEE IS LIABLE FOR CAPITAL GAIN TAX FOR THE ASSESSMENT YEAR 1997-98. SINCE THE ASSESSEES HAVE NOT DECLARED THE INCOME ARISED OUT OF 148 AND THEREAFTER COMPLETED ASSESSMENT U/S 144 READ WITH SECTION 147 AND BROUGH T THE CAPITAL GAIN INTO TAX ON TRANSFER OF 60% OF THE LAN D IN LIEU OF 40% OF THE CONSTRUCTED AREA OF FLAT. ON APPEAL TO CIT(A), THE CIT(A) DISTINGUISHED THE J UDGMENT OF BOMBAY HIGH COURT IN THE CASE OF CHATURBUJH DWAR AKA DAS KAPADIYA VS. CIT(A) 260 ITR 491 (BOMBAY) AND OBSERVED THAT THERE WAS NO TRANSFER OF CAPITAL ASSE T IN THE 5 ITA NOS. 159, 160 & 204/H/13 SHRI MOHD. ABDUL QUAYYUM AND OTHERS. ASSESSMENT YEAR 1997-98 AS PER SECTION 2(47) (V&VI) OF THE IT ACT, 1961. 8. AGAINST THE ORDER OF CIT(A) THE REVENUE FILED AP PEAL AND THE TRIBUNAL VIDE ITA NOS. 288, 289 & 290/HYD/04 FOR AY 1997-98 ORDER DATED 30 TH SEPTEMBER, 2009 HELD AS FOLLOWS: 18.1 FURTHER THE LEARNED COUNSEL OF THE ASSESSEE TRIED TO DISTINGUISH THE JUDGMENT OF BOMBAY HIGH COURT IN THE CASE OF CHATURBHUJ DWARKADAS KAPADIA VS. CIT [260 I TR 491] AND PLACED RELIANCE ON ORDER OF THE TRIBUNAL D ATED 30/07/2004 IN THE CASE OF S. RAGHURAMI REDDY, PRODD ATUR VS. ITO IN ITA NO. 296/HYD/2003 FOR THE ASSESSMENT YEAR 1991. IN OUR OPINION, THE JUDGMENT OF THE BOMBAY HI GH COURT CITED SUPRA WHEREIN HELD THAT SECTION 2 (47) READ WITH SECTION 45 INCLUDES THAT CAPITAL GAINS WAS TAXABLE IN THE YEAR IN WHICH SUCH TRANSACTIONS WERE ENTERED INTO EVEN I F THE TRANSFER OF IMMOVABLE PROPERTY IS NOT EFFECTIVE OR COMPLETE UNDER THE GENERAL LAW, PROPERTY FOR THE PURPOSE OF CONSTRUCTION OF FLATS WHICH LAID DOWN THE CORRECT P RINCIPLES OF LAW AND THIS JUDGMENT WILL PREVAIL OVER THE ORDER O F THE TRIBUNAL RELIED BY THE LEARNED COUNSEL FOR THE ASSE SSEE 9. THE LEARNED COUNSEL SUBMITTED THAT THE MATTER HA S ALREADY BEEN DECIDED BY THE TRIBUNAL THAT CAPITAL GAIN IS A SSESSABLE IN THE ASSESSMENT YEAR 1997-98 AND NOT IN THE ASSESSMENT Y EAR 2002- 03. 10. THE LEARNED COUNSEL ALSO SUBMITTED THAT IF THE CIT(A) HAD GIVEN THE ASSESSEES AN OPPORTUNITY TO REPRESENT TH EIR CASES THE MATTER WOULD HAVE BEEN RESOLVED EASILY. 11. WE HAVE HEARD BOTH THE PARTIES. WE ARE OF THE O PINION THAT SINCE THE ISSUE OF ENTIRE CAPITAL GAIN ASSESSABLE I N ACCORDANCE WITH THE DEVELOPMENT AGREEMENT WAS HELD BY THE TRIB UNAL, HYDERABAD (SUPRA) AS ASSESSABLE FOR THE ASSESSMENT YEAR 1997- 98 AND, THEREFORE, NO PART OF THE CAPITAL GAIN IS A SSESSABLE FOR THE 6 ITA NOS. 159, 160 & 204/H/13 SHRI MOHD. ABDUL QUAYYUM AND OTHERS. ASSESSMENT YEAR UNDER CONSIDERATION. HENCE, THE CIT (A) SHOULD HAVE DECIDED THE APPEAL ON MERITS BY CONSIDERING TH E FACT THAT THE CAPITAL GAIN IS NOT ASSESSABLE FOR THE ASSESSME NT YEAR 2002- 03 WHEN IT WAS ASSESSED FOR THE ASSESSMENT YEAR 199 7-98 AND THAT THE AMOUNT WAS ACTUALLY DETERMINED FOR THE ASS ESSMENT YEAR 1997-98 WHICH CANNOT BE ASSESSED AGAIN NOW. THEREFO RE, WE SET ASIDE THE ORDER OF THE CIT(A) IN ALL THE APPEALS UN DER CONSIDERATION AND ALLOW THE GROUNDS RAISED BY THE A SSESSEES IN THEIR RESPECTIVE APPEALS. 12. IN THE RESULT, ALL THE THREE APPEALS UNDER CONS IDERATION ARE ALLOWED. PRONOUNCED IN THE OPEN COURT ON 31 ST MAY, 2013. SD/- SD/- (CHANDRA POOJARI) (ASHA VIJAYARAGH AVAN) ACCOUNTANT MEMBER JUDICIAL MEMBE R HYDERABAD, DATED: 31 ST MAY, 2013. KV COPY TO:- 1) MR. SHAIK MOHD. ABDUL QUAYYUM, MOHD. ABDUL WAHEED, AND SHAIK MOHD. ABDUL QUADEER, C/O SHRI S. RAMA RAO , ADVOCATE, FLAT NO. 102, SHRIYAS ELEGANCE, H.NO. 3- 6- 643, ST. NO. 9, HIMAYATNAGAR, HYDERABAD 500 029. 2) ITO, WARD 5(2), HYDERABAD. 3) THE CIT (A), VIJAYAWADA 4) THE CIT IV, CONCERNED 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDERABAD.