Late M.P. Chary, Hyderabad V. Asst. CIT, Central Circle-6, Hyderabad

ITA 1661/HYD/2012

• Counselvise Citation: 166122514 RSA 2012
• Duration Of Justice: 1 year(s) 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 07-11-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: KIRAN KATTA
• Assessee Lawyers: C P RAMASWAMI
• Keywords: Sale consideration of property below Jantri Value; Principle of natural justice; Retraction
• Section: 143(3); 50C; 54F; 6; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO. 1661/HYD/2012 ASSESSMENT YEAR 2005-06 LATE SRI M.P. CHARY LEGAL HEIR: SRI M.A. CHARY HYDERABAD PAN: ACYPC4731E VS. THE ASST. CIT CENTRAL CIRCLE-6 HYDERABAD APPELLANT RESPONDENT APPELLANT BY: SRI C.P. RAMASWAM I RESPONDENT BY: SRI KIRAN KATTA DATE OF HEARING: 0 4 .0 8 .2014 DATE OF PRONOUNCEMENT: 31 . 1 0.2014 ORDER PER ASHA VIJAYARAGHAVAN, J.M.: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE CIT(A)-I, HYDERABAD DATED 30.08.2012 F OR A.Y. 2005-06. 2. THE ASSESSEE FILED HIS RETURN OF INCOME FOR A.Y. 2005-06 ORIGINALLY ON 28.7.2005 ADMITTING AN INCOME OF RS. 8,91,500 AND AGRICULTURAL INCOME OF RS. 84,600. THE ASSESSING OFFICER PASSED ASSESSMENT ORDER U/S. 143( 3) OF INCOME-TAX ACT, 1961 ON 20.12.2007 DETERMINING THE INCOME AT RS. 10,29,270 (INCLUDING LONG TERM CAPIT AL GAINS OF RS. 1,37,775). SUBSEQUENTLY, A SEARCH & S EIZURE OPERATION U/S. 132 OF THE ACT WAS CONDUCTED AT THE RESIDENTIAL PREMISES OF SRI M.A. CHARY, SON OF THE ASSESSEE, ON 28.8.2008 AND IN THE CASE OF M/S. ELBI T MEDICAL DIAGNOSTIC CENTRE LTD., FOUNDED BY THE ASSE SSEE. DURING THE COURSE OF SEARCH AT THE RESIDENCE OF THE SON OF 2 ITA NO.1 661/HYD/2012 LATE SRI M.P. CHARY =================== THE ASSESSEE CERTAIN DOCUMENTS INDICATING RECEIPT O F ON- MONEY BY THE ASSESSEE ON THE SALE TRANSACTION OF LA ND WERE FOUND AND, THEREFORE, NOTICE U/S. 153C WAS ISS UED CALLING FOR RETURNS OF INCOME FOR A.YS. 2003-04 TO 2008- 09. IN RESPONSE TO THE SAID NOTICE, THE ASSESSEE'S SON SRI M.A. CHARY INFORMED THAT HIS FATHER EXPIRED ON 26.9 .2005 AND FILED RETURN OF INCOME IN THE CAPACITY OF LEGAL HEIR OF SRI M.P. CHARY ON 21.5.2010 DECLARING INCOME OF RS. 10,29,270 AND AGRICULTURAL INCOME OF RS. 84,600. T HE AR OF THE ASSESSEE APPEARED IN RESPONSE TO THE NOTICES ISSUED U/S. 143(2) AND 142(1 AND FURNISHED INFORMATION CAL LED FOR. 3. DURING THE COURSE OF SEARCH AT THE RESIDENTIAL PREMISES OF THE SON OF THE ASSESSEE, SRI M.A. CHARY, CERTAIN SALE DOCUMENTS IN THE NAME OF THE ASSESSEE WERE FOUND AND SEIZED AND MARKED AS ANNEX URE A/EM D /P01/4. PAGES 4 AND 5 OF THIS ANNEXURE ARE THE SALE AGREEMENT DT . 25 TH AU G UST, 2004 FOR SALE OF PLOT NO . 564-A - 22 -III IN S URVEY N . 403/ 1 ( OLD), SURVEY N O. 120 ( N EW) OF SH A IKPET VILLAGE, ADMEASURING 2677 SQUARE YAR DS (SQY) BY LATE SRI M.P. CHARY TO SRI M. S . PRASAD. THE TOTAL CONSID E RATI O N FOR THE SALE OF THIS PROPERTY AS MENTIONED ON THIS AGREEMENT IS RS. 3 .06 CRORES AND ON THE OTHER H AND , PAGE S 6 TO 43 OF THIS ANNEXURE , ARE THREE AGREE MENTS OF SALE C U M GPA DATED 18TH NOVEMBER , 2004 BETWEEN SRI M. P . C HARY AND SRI T. NARENDRA CHOUDARY AND SRI M. SRINIVAS PRASAD FOR THE SAME ABOVE MENTIONED PL O T OF LAND SHOWING THE TOTAL CONSIDERATION AS ONLY RS. 1 ,47,23, 500 /-. 4. WHEN THE DIFFERENCE OF CONSIDERATION BETWEEN THE SALE AGREEMENT (RS. 3.06 CRORES) AND THE SALE DEED (RS. 3 ITA NO.1 661/HYD/2012 LATE SRI M.P. CHARY =================== 1. 47 CRORES) W AS PUT TO SRI M.A. CHARY, HE HAS ACCEPTED VIDE HIS SWORN STATEMENT RECORDED ON 29 . 9 . 2008 THAT THE TOTAL CONS I DERAT I ON FOR THE SAID PROPERTY WAS RS. 3.06 CRORES. SUBSEQUENTLY, IN HIS STATEMENT RECORDED ON 13 . 10.2008, SRI M.A. CHARY CHANGED HIS STAND ON THIS ISSUE AND STATED THAT THE FIGURE OF RS. 3.06 CRORES IS NOT CORRECT SINCE HIS LATE FATHER HAD QUOT E D TH I S FIGURE IN THE INITIAL NEGOTIATION, BUT SINCE THERE WAS SOME PROBL EM WITH THE PROPERTY REGARDING URBAN LAND CEILING (ULC) , THE VENDEES DID NOT AGREE TO PAY THE FIGURE QUOTED BY H IS LATE FATHER AND ARGUED THAT THE TOTAL C ONSIDERATION WAS ONLY RS. 1.47 CRORES AND NOT RS. 3.06 CRORES. HE HAS FURTHER STATED THAT THE AGREEMENT REFERRED TO WAS ONLY AN UNSIGNED DRAFT PREPARED FOR OWN GUIDANCE BEFORE FINALIZING THE TRANSACTION AND BECAUSE OF THE PROBLEMS LINKED WITH THE LAND LIKE HIGH-TENSION WIRES GOING THROUGH THE LAND, ULC PROBLEM AND OTHERS, THE PURCHASER DID NOT AGREE WITH THE TERMS OF T HE SAID AGREEMENT AND , THEREFORE, THE SALE WAS MADE AS MENTIONED IN THE REGISTERED SALE DEED A T RS. 147.23 L AKHS A N D NOT RS. 3.06 CRORES. THE LATER SUBMISSIONS OF THE ASSESSEE WERE NOT ACCEPTED BY THE ASSESSING OFFICER AND HOLDING THE SAME TO BE AN AFTERTHOUGHT, HE HAS ASSESSED T HE DIFFERENCE OF RS . 1 ,58,76, 500 /- BETWEEN THE AGREEMENT OF SALE AND SALE DEEDS AS UNDISCLOSED LONG TERM CAPITAL GAIN. AGGRI EVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). 5. IN THE COURSE OF APPELLATE PROCEEDINGS, THE AR OF THE ASSESSEE FILED WRITTEN SUBMISSIONS AND CONTENDE D THAT THE INCOME ON THE SALE OF PLOT OF LAND AFTER CLAIMI NG NECESSARY EXEMPTION IN ACCORDANCE WITH THE PROVISIO NS OF SECTION 54F OF THE ACT, HAS ALREADY BEEN ASSESSED V IDE 4 ITA NO.1 661/HYD/2012 LATE SRI M.P. CHARY =================== ASSESSMENT ORDER U/S. 143(3) DATED 20.12.2007. NOW AFTER SEARCH AS AGAINST THE ABOVE LONG TERM CAPITAL GAINS ADMITTED, THE ASSESSING OFFICER HAS WRONGLY DETERMI NED THE CAPITAL GAINS OF RS. 1,40,14,275 ADOPTING SALE CONSIDERATION OF RS. 3.06 CRORES AND ADOPTION OF TH E SAID AMOUNT OF SALE CONSIDERATION HAS NO BASIS. IT WAS SUBMITTED THAT THE AGREEMENT RELIED UPON BY THE ASSESSING OFFICER WAS ONLY AN UNSIGNED DRAFT AGREEM ENT PREPARED BY THE ASSESSEE FOR THE PURPOSE OF DISCUSS ION AND NEGOTIATION. IT WAS FURTHER SUBMITTED THAT THE SAID AGREEMENT HAS NO LEGAL SANCTITY AND THE SAME CANNOT BE ENFORCED IN LAW. 6. IT WAS ALSO POINTED OUT THAT LATE SRI M.P. CHARY WAS LOOKING AFTER ALL THE TRANSACTIONS TILL HIS DEA TH AND SRI M.A. CHARY BEING HIS SON AND LEGAL HEIR WAS NOT AWA RE OF THE TRANSACTIONS AND IT WAS ONLY AFTER DISCUSSION W ITH THE FAMILY MEMBERS AFTER THE SEARCH OPERATION THAT THE SON OF THE ASSESSEE CAME TO KNOW ABOUT THE DETAILS OF THE TRANSACTION. INFORMATION WAS GIVEN BY THE FAMILY MEMBERS OF THE ASSESSEE THAT THE PROPERTY UNDER REFERENCE WAS HAVING LEGAL AND OTHER PROBLEMS SUCH AS ULC, BOUNDARY DISPUTE, HT ELECTRIC LINE AND OCCUPAT ION BY THE HUT DWELLERS AND ALSO DISPUTE WITH R & B DEPARTMENT. IT WAS SUBMITTED THAT THE PROPOSED BUY ERS HAD AGREED FOR HIGHER PRICE PROVIDED THE PROBLEMS A RE SOLVED BY THE ASSESSEE AND AS THE ASSESSEE WAS NOT AGREEABLE FOR THE SAME, THE PROPOSED BUYERS HAD DISCOUNTED THE PROPERTY VALUE AND AFTER NEGOTIATION S, THE SALE CONSIDERATION WAS FINALLY FIXED AT RS. 147.23 LAKHS AND THE SALE DEAL WAS EXECUTED. 5 ITA NO.1 661/HYD/2012 LATE SRI M.P. CHARY =================== 7. THE LEARNED AR, THEREFORE, SUBMITTED THAT THE SALE CONSIDERATION WAS ONLY RS. 147.23 LAKHS AND THE CAP ITAL GAINS WAS ACCORDINGLY COMPUTED AND ADMITTED BY THE ASSESSEE. THE AR SUBMITTED THAT THE ASSESSEE WANTE D TO GET RID OF THE PROPERTY FOR A DISCOUNTED PRICE OF R S. 147.23 LAKHS INSTEAD OF RS. 3.06 CRORES. THE AO ASSESSED THE DIFFERENCE OF RS. 1,58,76,500 BETWEEN THE AGREEMENT OF SALE AND SALE DEED AS UNDISCLOSED LONG TERM CAPITAL GAINS. IT WAS PLEADED THAT THE AO IS NOT CORRECT T O ASSUME THE SALE CONSIDERATION MENTIONED ON THE UNSI GNED SALE AGREEMENT AS THE REAL CONSIDERATION FOR COMPUT ING THE LONG TERM CAPITAL GAINS ON SALE OF THE PROPERTY . THE CIT(A) ACCEPTED THAT THE PROPERTY WAS BURDENED WITH VARIOUS ISSUES SUCH AS ULC, REPLACEMENT OF HT ELECT RIC POLE, BOUNDARY DISPUTE, ETC., WHICH HAS TO BE CLEAR ED BEFORE SALE OF THE PROPERTY. 8. HOWEVER, THE CIT(A) OBSERVED THAT AS PER THE AGREEMENT THE VENDEE PAID AN ADVANCE OF RS. 9 LAKHS VIDE CHEQUE NO. 142514 DATED 25.8.2004 DRAWN ON SBH, JUBILEE HILLS, HYDERABAD . IT WAS FURTHER OBSERVED BY THE CIT(A) THAT THE VENDEE AGREED FURTHER TO PAY FURTHE R RS. 41 LAKHS BEFORE 1 ST SEPTEMBER, 2004 AND THE REGISTRATION OF THE PLOT WILL BE COMPLETED BY 1 ST NOVEMBER, 2004. THEREAFTER ON 18.11.2004, THE SAID PROPERTY IN QUES TION WAS SOLD TO SRI M.S. PRASAD AND T. NARENDRA CHOWDAR Y VIDE THREE AGREEMENTS OF SALE CUM GPA. THE AR COUL D NOT EXPLAIN PROPERLY ABOUT THE NEED FOR REGISTERING THE SAME PROPERTY IN THREE DIFFERENT AGREEMENTS. IT WAS POINTED OUT BY THE CIT(A) THAT LAND ADMEASURING 1,0 71 SQY WAS SOLD FOR A CONSIDERATION OF RS. 58,90,500, LAND ADMEASURING 765 SQY WAS SOLD FOR RS. 42,07,500 AND LAND 6 ITA NO.1 661/HYD/2012 LATE SRI M.P. CHARY =================== ADMEASURING 841 SQY WAS SOLD FOR RS. 46,25,500, THE REBY TOTALLING TO RS. 1,47,23,500 WHICH WAS DISCLOSED IN THE BOOKS AS AGAINST AGREED CONSIDERATION OF RS. 3.06 C RORES AS PER SALE AGREEMENT FOUND IN THE PREMISES OF SRI M.A. CHARY AND THE SAID DOCUMENT FOUND IN THE POSSESSIO N OF SRI M.A. CHARY AT THE TIME OF SEARCH CANNOT BE IGNO RED AS A DUMB DOCUMENT DUE TO THE FACT THAT THE CONTENTS O F THE LETTER ARE INDEPENDENTLY CORROBORATED. IT WAS FURT HER NOTICED BY THE CIT(A) THAT THE PROPERTY MENTIONED I N THE SALE AGREEMENT WAS ULTIMATELY SOLD TO THE SAME VEND EE AS AGREED IN THE MONTH OF NOVEMBER, 2004. THE AMOUNT OF ADVANCE PAID BY CHEQUE BY SRI M.S. PRASAD, TO THE ASSESSEE WAS NOT IN DOUBT. THEREFORE, THE CIT(A) HE LD THAT SUCH DOCUMENT COULD NOT HAVE BEEN DISCARDED AS HAVI NG NO EVIDENTIARY VALUE ATTACHED TO IT AND AT THE TIME OF AGREEMENT ITSELF IT HAS BEEN IDENTIFIED AND RECORDE D IN WRITING ABOUT THE ISSUES OF ULC CLEARANCE, BOUNDARY DISPUTES, DISPUTES WITH R & B DEPARTMENT AND HOUSIN G SOCIETY IN RESPECT OF THE PROPERTY IN QUESTION. THE CIT(A) OBSERVED THAT THESE PROBLEMS HAVE NOT CROPPED UP SUBSEQUENTLY AND THE ASSESSEE HAS TO TAKE THE RESPONSIBILITY OF CLEARING THOSE ISSUES AND IT HAS BEEN VERY CLEARLY AND CATEGORICALLY DEDUCED IN WRITING BY THE ASSESSEE TO FASTEN THE RESPONSIBILITY OF CLEARING T HE PROBLEMS ON THE VENDEE AND AGREED FOR A CONSIDERATI ON OF RS. 3.06 CRORES. THE CIT(A) POINTED OUT THAT THE A SSESSEE NEVER ATTEMPTED TO RESOLVE THE ISSUES BEFORE SALE O F THE PROPERTY AND IT IS ALWAYS HIS INTENTION TO GET RID OF THE PROPERTY ALONG WITH THE PROBLEMS ATTACHED TO THIS PROPERTY. THE CIT(A) HELD THAT THE AR WAS NOT CORRE CT TO CONTEND THAT THE AGREED SALE CONSIDERATION WAS REDU CED BECAUSE OF THE SHIFTING OF THE BURDEN OF RESOLVING THE 7 ITA NO.1 661/HYD/2012 LATE SRI M.P. CHARY =================== DISPUTES ON THE PROPERTY TO BUYERS AND IN THE INSTA NT CASE, THE BUYERS ARE VERY MUCH IN THE KNOWLEDGE OF PROBLEMS ATTACHED TO THE PROPERTY AND ALONG WITH TH E PROBLEMS THEY ACQUIRED THE PROPERTY, THEREFORE, THE SAID CONTENTION OF THE AR HAS NO FORCE. THE CIT(A) OPINE D THAT THE ASSESSEE COULD NOT REBUT THE EVIDENCE FOUND AND THE CONTENTION OF THE AO ON THIS ISSUE WITH ANY COGENT OR REASONABLE EVIDENCES. THE CIT(A) HELD THAT THE DOCU MENT OF SALE AGREEMENT FOUND IN THE RESIDENTIAL PREMISES OF SRI M.A. CHARY IS A VALID DOCUMENT IN VIEW OF THE CONTEMPORANEOUS EVIDENCE TO THE CONTENTS OF THIS AGREEMENT. FURTHER, THE CIT(A) HELD THAT ON THE DA Y OF SEARCH, SRI M.A. CHARY DEPOSED THAT HIS FATHER SOLD PLOT FOR RS. 3.06 CRORES AS PER AGREEMENT. SUBSEQUENTLY I.E., AFTER A GAP OF TWO MONTHS HE RETRACTED FROM THE ORI GINAL STATEMENT. BUT THE FACT OF RECEIPT OF ADVANCE AS P ER THE AGREEMENT BY HIS LATE FATHER COULD NOT BE REBUTTED BY SHI M.A. CHARY, LEGAL HEIR OF THE ASSESSEE. THE CIT(A) POINTED OUT THAT STATEMENT RECORDED ON THE DAY OF SEARCH IS PRIMARY STATEMENT AND IT WAS GIVEN ON CONFRONTING VARIOUS DOCUMENTS AND MATERIAL FOUND DURING SEARCH. IT WAS FURTHER POINTED OUT BY THE CIT(A) THAT THE DEPO NENT WOULD NOT HAVE VENTURED TO STATE ANYTHING WHICH IS NOT IN HIS KNOWLEDGE, WHEREAS IN THE INSTANT CASE, IT HAS BEEN CLEARLY STATED ABOUT THE FACT OF SALE OF PROPERTY A ND QUANTUM OF CONSIDERATION RECEIVED AND HENCE THE SUBSEQUENT RETRACTION COULD NOT BE CONSIDERED AS A VALID RETRACTION AND IT IS ONLY AN AFTERTHOUGHT. THE CIT (A) REFERRED TO THE DECISION OF MUMBAI BENCH OF THE TRI BUNAL REPORTED IN 83 ITD 102 AND ALSO THE HON'BLE GAUHATI HIGH COURT WHERE RETRACTION WAS MADE AFTER A GAP OF 3 MO NTHS AND IT WAS HELD THAT SUCH RETRACTION IS NOT ALLOWAB LE AS 8 ITA NO.1 661/HYD/2012 LATE SRI M.P. CHARY =================== REPORTED IN 263 ITR 169 IN THE CASE OF GREEN VIEW RESTAURANT VS. ACIT. FOLLOWING JUDICIAL DECISIONS WERE ALSO TAKEN AS SUPPORT BY THE CIT(A) FOR DISALLOWING THE SUBSEQUENT RETRACTION OF SRI M.A. CHARY. (A) R.C. GUPTA & CO., 122 ITR 547 (RAJ). (B) 169 ITR 589 (MP) (C) 66 ITD 441 (DELHI) IN THE CASE OF VASANTHI SETHI VS . ACIT, (D) 219 ITR 235 (KERALA) (E) 168 ITR 375 (BOMBAY). THE CIT(A) DISMISSED THE APP EAL OF THE ASSESSEE. 9. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. THE LEARNED COUNSEL FOR THE ASSESSEE, SRI C.P. RAMA SWAMI SUBMITTED THAT THE REVENUE AUTHORITIES HAD ERRED IN RELYING ON THE UNSIGNED DRAFT AGREEMENT DATED 25.8. 2004 FOR ADOPTING THE SALE CONSIDERATION AT RS. 306 LAKH S. IT WAS FURTHER SUBMITTED THAT THE UNSIGNED AGREEMENT W AS MERELY TYPED ON THE LETTERHEAD OF THE ASSESSEE WHIC H WAS PREPARED BY THE ASSESSEE HIMSELF FOR HIS GUIDANCE B EFORE NEGOTIATING THE SALE TRANSACTION. IT WAS FURTHER S UBMITTED THAT THE SON AND LEGAL HEIR OF THE ASSESSEE HAD ACC EPTED THE SALE CONSIDERATION OF RS. 3.06 CRORES IN A STAT E OF UTTER CONFUSION AND WITHOUT KNOWING THE FACTS REGARDING T HE SALE TRANSACTION HE HAD STATED IN THE SWORN STATEME NT THAT THE SALE CONSIDERATION IS AT RS. 306 LAKHS AS APPEARING IN THE AGREEMENT. THE SON AND LEGAL HEIR OF THE ASSESSEE WAS NOT AWARE OF THE TRANSACTION OF SALE A ND HE WAS NOT A PARTY TO IT AND HIS LATE FATHER SRI M.P. CHARY WAS ONLY LOOKING AFTER THE TRANSACTION TILL HIS DEA TH AND ONLY AFTER DISCUSSION WITH THE FAMILY MEMBERS CONSE QUENT TO THE SEARCH OPERATION, THE SON AND LEGAL HEIR OF THE ASSESSEE CAME TO KNOW THAT THE SALE CONSIDERATION O F THE PLOT WAS ONLY RS. 147.23 LAKHS. BECAUSE OF LACK OF KNOWLEDGE OF THE FACTS OF THE TRANSACTION, THE ASSE SSEE'S 9 ITA NO.1 661/HYD/2012 LATE SRI M.P. CHARY =================== SON DID NOT RAISE ANY OBJECTION DURING THE COURSE O F STATEMENT RECORDED ON 29.9.2008. 10. IT WAS SUBMITTED BY THE LEARNED COUNSEL FOR THE ASSESSEE THAT SINCE THERE WERE PROBLEMS CONNECTED W ITH THE PLOT OF LAND SUCH AS OBTAINING ULC, ETC., THE P LOT HAD TO BE SOLD ONLY FOR RS. 147.23 LAKHS AND NOT AT RS. 306 LAKHS AS FOUND IN THE DRAFT AGREEMENT. THE LEARNED COUNSEL FOR THE ASSESSEE RELIED ON THE ADDITIONAL E VIDENCE BEING THE COPY OF RETURN OF INCOME OF THE VENDEE WH EREIN NO ADDITION HAS BEEN MADE IN THE HANDS OF THE VENDE E WHICH PROVES THAT THERE HAS NOT BEEN ANY ON-MONEY RECEIPT. FURTHER, THE DEPARTMENT HAS ALSO RECORDED SWORN STATEMENT FROM THE VENDEE WHICH WAS PRODUCED AT PAG ES 21 AND 22 OF THE PAPER BOOK. IT WAS ALSO STATED BY SRI M.S. PRASAD (THE VENDEE) THAT IT TOOK MORE THAN 5 Y EARS TO GET SETTLED THE PROBLEMS CONNECTED WITH THE PLOT OF LAND SUCH AS ULC, CHANGING OF HT ELECTRIC POLE, ETC., AN D BROUGHT TO ORDER. THE LEARNED COUNSEL FOR THE ASSE SSEE RELIED ON THE DECISION OF DCIT VS. KRISHNA YADAV (1 2 TAXMANN.COM 4) (HYD) AND IN THE CASE OF M/S. PRATIM A EDUCATIONAL SOCIETY IN ITA NO. 1768/HYD/2011 DATED 8 TH NOVEMBER, 2013. THE LEARNED COUNSEL FOR THE ASSESS EE ALSO RELIED ON THE DECISION IN THE CASE OF 291 ITR 172 IN THE CASE OF CIT VS. ASHOK KUMAR WITH RESPECT TO RET RACTION BY THE ASSESSEE'S SON. 11. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO STATED THAT THE ASSESSEE HAD NOT RETRACTED WITH RESPECT TO ALL THE STATEMENTS MADE BY HIM AND POINTED OUT TO PAGE 18 O F THE PAPER BOOK THAT THE ASSESSEE HAD MADE A VOLUNTA RY DISCLOSURE OF RS. 4.50 CRORES SPREAD OVER THE PERIO D OF FY 10 ITA NO.1 661/HYD/2012 LATE SRI M.P. CHARY =================== 2003-03 TO FY 2008-09 AND HAD NOT RETRACTED FROM TH E SAME. THE COUNSEL POINTED OUT THAT THIS SHOWS THAT THE ASSESSEE'S RETRACTION WITH RESPECT TO THE AGREED SA LE PRICE IS A BONA-FIDE ONE AS THE ASSESSEE IS NOT RETRACTIN G ALL THE STATEMENTS WHICH HE HAD MADE. 12. THE LEARNED COUNSEL FOR THE ASSESSEE DISTINGUISHED THE CASE-LAW RELIED ON BY THE CIT(A) I.E., 168 ITR 375 (BOM) WITH THE FACTS OF THE PRESENT CASE AND RELIED ON THE DECISION IN THE CASE OF PADMASUNDARA RAO V. STATE O F TAMIL NADU (255 ITR 147) (SC) WHEREIN THE APEX COUR T HELD AS UNDER: '... THERE IS ALWAYS PERIL IN TREATING THE WORDS OF A SPEECH OR JUDGMENT AS THOUGH THEY ARE WORDS IN A LEGISLATIVE ENACTMENT, AND IT IS TO BE REMEMBERED THAT JUDICIAL UTTERANCES ARE MADE IN THE SETTING OF THE FACTS OF A PARTICULAR CASE, SAID LORD MORRIN IN HARRINGTON V. BRITISH RAILWAYS BOARD [1972] 2 WLR 537 (HL). CIRCUMSTANTIAL FLEXIBILITY, ONE ADDITIONAL OR DIFFERENT FACT MAY MAKE A WORLD OF DIFFERENCE BETWEEN CONCLUSIONS IN TWO CASES....' THEREFORE, THE OBSERVATIONS OF THE HON'BLE SUPREME COURT IN MALABAR INDUSTRIAL CO. LTD'S CASE (SUPRA) ON WHICH RELIANCE HAS BEEN PLACED BY THE LEARNED COUNSEL CANNOT BE READ IN ISOLATION. THE JUDGMENT DESERVES TO BE READ IN ITS ENTIRETY TO CULL OUT THE LAW LAID DOWN BY THE HON'BLE SUPREME COURT. IF SO READ, IT IS QUITE EVIDENT THAT THE ORDERS PASSED ON AN INCORRECT ASSUMPTION OF FACTS OR INCORRECT APPLICATION OF LAW OR WITHOUT APPLYING THE PRINCIPLES OF NATURAL JUSTICE OR WITHOUT APPLICATION OF MIND WILL SATISFY THE REQUIREMENT OF THE ORDER BEING ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. IF THE ORDER SOUGHT TO BE REVISED UNDER SECTION 263 SUFFERS FROM ANY OF THE AFORESAID VICES, IT CANNOT BE SAID THAT THE ASSESSING OFFICER HAS 'ADOPTED', IN SUCH AN ORDER, A COURSE PERMISSIBLE IN LAW OR 11 ITA NO.1 661/HYD/2012 LATE SRI M.P. CHARY =================== 'TAKEN' A VIEW WHERE TWO OR MORE VIEWS ARE POSSIBLE. 13. THE ASSESSEE'S COUNSEL ALSO RELIED ON THE DECISION IN THE CASE REPORTED 219 ITR 235 (KERALA). HE ALSO POINTED OUT THAT THE EXPLANATION TO SECTION 132 IS NOT APPLICABLE IN THE PRESENT CASE. THE LEARNED COUNSE L FOR THE ASSESSEE SUBMITTED THAT GROUND NO. 3 HAS BEEN R AISED AS A LEGAL GROUND WHEREIN IT HAS BEEN ARGUED THAT T HE VALUE U/S. 50C CAN BE ENHANCED AT MOST TO THE GUIDE LINE VALUE AND THE AO HAD NO POWER TO ENHANCE THE VALUE TO A FIGURE MORE THAN THE GUIDELINE VALUE. 14. THE DR SUBMITTED THAT IT IS NOT IN DISPUTE ABOUT THE LOCATION OF THE PROPERTY SITUATED IN POSH COMME RCIAL AREA OF JUBILEE HILLS IN HYDERABAD. BECAUSE OF ITS PRIME LOCATION, THE PROPERTY IN DISPUTE DEFINITELY FETCHE S HIGHER VALUE THAN THE VALUE DISCLOSED IN THE SALE DEEDS BY THE ASSESSEE. THE FACT THAT THE SALE AGREEMENT IS STILL AVAILABLE WITH THE LEGAL HEIR OF THE ASSESSEE EVEN AFTER LAPS E OF CONSIDERABLE TIME, CLEARLY DEMONSTRATES THE VALUE A ND THE IMPORTANCE OF SUCH DOCUMENT. SUCH CIRCUMSTANTIAL EVIDENCE CANNOT BE BRUSHED ASIDE. THEREFORE, IT IS DIFFICULT TO IGNORE SUCH EVIDENCE WHILE COMPUTING T HE TOTAL INCOME OF THE ASSESSEE. THEREFORE, THE CIT(A) HAS RIGHTLY HELD THAT THE TOTAL AMOUNT RECEIVED BY THE ASSESSEE IS RS. 3.06 CRORES ONLY AND CONFIRMED THE ACTION OF THE AO IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE BY TAKIN G INTO ACCOUNT FULL VALUE OF CONSIDERATION OF RS. 3.06 CRO RES AND REJECTED THE CONTENTION OF THE ASSESSEE. 15. WE HAVE HEARD BOTH THE PARTIES. WE FIND THAT WHEN THE DIFFERENCE OF CONSIDERATION BETWEEN THE SALE 12 ITA NO.1 661/HYD/2012 LATE SRI M.P. CHARY =================== AGREEMENT (RS. 3.06 CRORES) AND THE SALE DEED (RS. 1.47 CRORES) WAS PUT TO SRI M.A. CHARY, HE HAS ACCEPTED VIDE HIS SWORN STATEMENT RECORDED ON 29.9.2008 THAT THE TOTAL CONSIDERATION FOR THE SAID PROPERTY WAS RS. 3.06 CR ORES. SUBSEQUENTLY, IN HIS STATED RECORDED ON 13.10.2008, SRI M.A. CHARY CHANGED HIS STAND ON THIS ISSUE AND STAT ED THAT THE FIGURE OF RS. 3.06 CRORES IS NOT CORRECT S INCE THERE WAS SOME PROBLEM WITH THE PROPERTY RECORDING URBAN LAND CEILING AND THE VENDEES DID NOT AGREE TO PAY T HE FIGURE QUOTED BY HIS LATE FATHER. IT WAS STATED BY HIM THAT THE TOTAL CONSIDERATION WAS ONLY RS. 1.47 CRORES AN D NOT RS. 3.06 CRORES AND IT WAS FURTHER STATED THAT THE AGREEMENT REFERRED TO WAS ONLY AN UNSIGNED DRAFT PREPARED FOR OWN GUIDANCE BEFORE FINALISING THE TRANSACTION. THE ASSESSING OFFICER DID NOT ACCEPT THE ARGUMENT OF THE ASSESSEE AND IN OUR OPINION THE ASSESSING OFFICER WAS RIGHT IN HOLDING HIS VIEW AS THE FACT IS THAT A S PER THE A GREEMENT THE VENDEE PAID AN ADVANCE OF RS. 9 LAKHS VIDE CHEQUE NO . 142514, DATED 25 . 8 . 2004 DRAWN ON SBH, .JUBILEE HILLS, HYDERABAD. THE VENDEE A G REED FURTHER TO PAY FURTHER RS . 41 L AKHS BEFORE 1 ST SEP TEMBER, 2004 AND THE RE GISTRATION OF THE P L OT W ILL BE COMPLETED BY 1 ST NOV EMBER, 2004. THEREAFTER ON 18 . 11 . 2004 , THE SAID PROPERTY IN QUESTION WAS SOLD TO SHRI M . S. PRASAD AND T. NARENDRA CHOWDARY VIDE THREE AGREEMENTS OF SALE CUM GPA. AS HELD BY THE CIT(A), THE AR COULD NOT EXPLAIN PROPERLY ABOUT THE NEED, FOR REGISTERING THE SAME PROPERTY IN THREE DIFFERENT AGREEMENTS. LAND ADMEASURING 1,071 SQUARE YARDS WAS SOLD FOR A CONSIDERATION OF RS. 58,90,500, LAND AD M EASURING 765 SQ. Y ARDS WAS SOLD FOR RS. 42,07,500 AND LAND AD M EASUR I N G 841 SQ. Y ARDS WAS SOLD FOR RS. 13 ITA NO.1 661/HYD/2012 LATE SRI M.P. CHARY =================== 46,25,500 THEREBY TOTALLING TO RS. 1 ,47,23, 500 /- WAS DISCLOSED I N THE BOOKS AS AGAINST AGREED CONSIDERATION OF RS. 3.06 CRORES AS PER SALE AGREEMENT FOUND IN THE PREMISES OF SHR I M.A. CHARY. 16. WE ARE IN AGREEMENT WITH THE ORDER OF THE CIT(A) AND THE REASONS GIVEN BY THE CIT(A) FOR DISMISSING THE ASSESSEE'S APPEAL ARE VERY WELL REASONED AND CLINCH ING. WE CONFIRM THE ORDER OF THE CIT(A) AND EXTRACT THE RELEVANT PORTION WHICH HAS PERSUADED US TO CONFIRM THE ORDER OF THE CIT(A). THE RELEVANT PORTION IS AS FO LLOWS: 'THE SAID DOCUMENT FOUND IN THE POSSESSION OF SHR I M.A. CHARY AT THE TIME OF SEARCH CANNOT BE IGNORED AS A DUMB DOCUMENT DUE TO THE FACT THAT THE CONTENTS O F THE LETTER ARE INDEPENDENTLY CORROBORATED. THE PROPERTY MENTIONED IN THE SAL E AGREEMENT WAS ULTIMATELY SOLD TO THE SAME VENDEE AS AGREED IN THE M ONTH OF NOVEMBER 2004. THE AMOUNT OF ADVANCE PAID BY CHEQUE BY SHRI M.S. PRASAD TO THE ASSESSEE WAS N OT IN DOUBT. THEREFORE, SUCH DOCUMENT COULD NOT HA VE BEEN DISCARDED AS NO EVIDENTIARY VALUE ATTACHED TO IT. AT THE TIME OF AGREEME NT ITSELF IT HAS BEEN IDENTIFIED AND RECORDED IN WRITING ABOUT THE ISSUES OF ULC CLEARANCE, BOUNDARY DISPUTES, DISPUTES WITH R&B DEPARTMENT AND HOUSING SOCIETY IN RESPECT OF THE PROPERTY IN QUESTION. IT IS NOT THAT THESE PROBLEMS HAVE BEEN CROPPED UP SUBSEQUENTLY AND THE ASSESSEE H A D TO TAKE THE RESPONSIBILITY OF CLEARING THOSE ISSUES. IT HAS BEEN VER Y CLEARL Y AND CATEGORICALLY DEDUCED IN WRITING BY THE ASSESSEE TO FASTEN THE RESPONSIBILITY OF CLEARING THE PROBLEMS ON THE VENDEE A N D AGREED FOR A CONSIDERATION OF RS. 3.06 CRORES . THE ASSESSEE NEVER ATTEMPTED TO RESOLVE THE ISSUES BEFORE SALE OF THE PROPERTY . IT IS ALWAYS HIS INTENTION TO GET RID OF THE PROPERTY ALONG WITH THE PROBLEMS ATTACHED TO THIS PROPERTY. THE AR IS NOT CORRECT TO CONTEND 14 ITA NO.1 661/HYD/2012 LATE SRI M.P. CHARY =================== THAT THE AGREED SALE CONS ID ERA TI ON WAS REDUCED BECAUSE OF THE SHIFTING OF THE BURDEN OF RESOLVI N G THE DISPUTES ON THE PROPERTY TO BUYERS. IN THE INSTANT C ASE, THE BUYERS ARE VERY MUCH IN THE K NOWLE D GE OF PROBLEMS ATTACHED TO THE PROPERTY AND ALONG WITH THE PROBLEMS THEY ACQUIRE D THE PROPERTY. THEREFORE, THE SAID CONTENTION OF T HE AR HAS NO FORCE. THE ASSESSEE COULD NOT REBUT THE EVIDENCE FOUND AND THE CONTENTION OF T HE AO ON THIS ISSUE WITH ANY COGENT OR REAS O NABLE EVIDENCES . T HE DOCUMENT OF SALE A G REE MENT FOUND IN THE RES I DENTIAL PREMISES OF SHRI M.A. CHARY I S A VALID DOCUMENT IN VIEW OF THE CONTEMPORANEOUS EVIDENCE TO THE CONTENTS OF THE AGREEMENT. ON TH E D A Y OF SEARCH SHRI M .A . CH ARY DEPOSED THAT HIS FATHER SOLD PLOT FOR RS 3.06 CRORES AS PER AGREEMENT . SUBSEQUENTLY I.E ., AFTER A GAP OF TWO MONTHS HE RETRACTED FROM THE ORIGINAL STATEMENT. BUT THE FACT OF RECEIPT OF ADVANCE AS PER THE AGREEMENT BY HIS LATE RATHER COULD NOT BE REBUTTED BY SHRI M .A. CHARY LEGA L HEIR OF THE ASSESSEE . STATEMENT RECORDED ON THE DAY OF SEARCH IS PRIMARY STATEMENT AND IT WAS GIVEN ON CONFRONTING VARIOUS DOCUMENTS AND MATERIAL FOUND D URING SEARCH. THE DEPONENT WOULD NOT HAVE VENTURED TO STATE ANYTHING WHICH IS NOT IN HIS KNOWLEDGE. WHEREAS IN THE INSTANT CASE, IT HAS BEEN CL EARLY STATED AB O UT THE FACT OF SALE OF PROPERTY AND QUANTUM OF CONSIDERATION RECEIVED. THE SUBSEQUENT RETRACTION COULD NOT BE CONSIDERED AS A VALID RETRACTION AND IT IS ONLY AN AFTERTHOUGHT. REFERENCE IS INVITED TO THIS DECISIO N OF MUMBAI ITAT REPORTED IN 83 ITD 102. SIMILARLY, THE HONBLE GAUHATI HIGH COURT HAD AN OCCASION TO EXAMINE A CASE WHERE A RETRACTION WAS MADE AFTER GAP OF 3 MONTHS AND HELD THAT SUCH RETRACTION IS NOT ALLOWABLE AS REPORTED IN 263 ITR 168 IN THE CASE OF GREEN VIEW RESTAURANT VS. ACIT.' 17. FURTHER, WE NOTE THAT THE PROPERTY IS SITUATED IN A POSH COMMERCIAL AREA OF JUBILEE HILLS, HYDERABAD AN D BECAUSE OF ITS PRIME LOCATION IT WILL DEFINITELY FE TCH HIGHER VALUE THAN THAT WAS DISCLOSED BY THE ASSESSEE. WE ARE ALSO AWARE THAT THE BUYER OF THE PROPERTY WILL BE H AVING 15 ITA NO.1 661/HYD/2012 LATE SRI M.P. CHARY =================== THE REGISTERED DOCUMENT AND HENCE THE UNSIGNED AGREEMENT BEING IN THE POSSESSION OF THE SELLER VIZ ., THE ASSESSEE WOULD NOT AMOUNT TO 'DUMB DOCUMENT'. IN T HE INSTANT CASE, THE CIRCUMSTANTIAL EVIDENCE CANNOT BE BRUSHED ASIDE PARTICULARLY WHEN GOING THROUGH THE PROCESS OF THE AGREEMENT, WE FIND THAT ALL THE CLAU SES IN THE AGREEMENT HAVE BEEN FOLLOWED. WE ALSO NOTE THA T THE PROPERTY WAS REGISTERED BY WAY OF THREE DIFFERENT AGREEMENTS OF WHICH THE AGREEMENT DATED 18.11.2004 MENTIONED CONSIDERATION OF SALE CONSIDERATION OF RS . 42,07,500 WITHOUT BRINGING OUT THE SCHEDULE OF PAYM ENT WHEREAS IN THE OTHER TWO DOCUMENTS PAYMENT SCHEDULE S HAVE BEEN MENTIONED WHICH ONLY THROWS SUSPICION THA T THE CONSIDERATION HAS BEEN CONSCIOUSLY REDUCED. HE NCE, WE CONFIRM THE ORDER OF THE CIT(A) AND HOLD THAT TH E TOTAL AMOUNT RECEIVED BY THE ASSESSEE IS RS. 3.06 CRORES ONLY. 18. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 31 ST OCTOBER, 2014 SD/ - (B. RAMAKOTAIAH) ACCOUNTANT MEMBER SD/ - (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER HYDERABAD, DATED THE 31 ST OCTOBER, 2014 TPRAO COPY TO: 1. LATE SRI M.P. CHARY, C/O. SRI C.P. RAMASWAMI, ADVOCATE, FLAT NOS. 102/203, GITANJALI APTS., PLOT NO. 108, SRINAGAR COLONY, HYDERABAD-500 073. 2. THE ASST. CIT, CENTRAL CIRCLE - 6 , HYDERABAD. 3 . THE CIT(A) - I, HYDERABAD. 4 . THE CIT (CENTRAL) , HYDERABAD. 5 . THE DR, A - BENCH, ITAT, HYDERABAD.