Mr. Syed Shafiulla, Chamarajanagar V. DCIT, Mysore

ITA 170/BANG/2012

• Counselvise Citation: 17021114 RSA 2012
• Duration Of Justice: 2 year(s) 6 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 04-08-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 02-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M K BIJU J
• Assessee Lawyers: K Y NINGOJI RAO
• Keywords: Capital asset; Income from undisclosed sources; Search and seizure; Block assessment
• Section: 2(14)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH C : BANGALORE BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI ABRAHAM P GEORGE , ACCOUNTANT MEMBER ITA NO. 168/ BANG/20 1 2 (ASSESSMENT YEAR: 20 07 - 08 ) ITA NO.169/BANG/2012 (ASSESSMENT YEAR: 20 07 - 08) AND ITA NO.1 70 /BANG/2012 (ASSESSMENT YEAR: 2007 - 08) 1. MR. SYED SHAFIULLA, PAN:ABCPS1264C 2. MR. SYED KHALEELULLA, PAN:ADPPK7295C 3. MR.SYED AMANULLA, PAN: AHEPA9428R UGANIYA VILLAGE, DODDA INDAVADI POST 571440 KOL LEGAL TALUK, CHAMARAJANAGAR DISTRICT. APPELLANT VS. DEPUTY COMMISSIONER OF INCOME - TAX, CIRCLE 1(2), MYSORE. RESPONDENT A SSESSEES BY: SHRI K.Y.NINGOJI RAO, CA. RESPONDENT BY: SHRI M.K.BIJU, JCIT(DR) D ATE OF HEARING : 04 - 08 - 2014 DATE OF PRONOUNCEMENT: 14 - 08 - 2014 O R D E R PER SMT. P.MADHAVI DEVI, JM : THESE APPEALS BY THREE ASSESSEES ARE DIRECTED AGAINST THE ORDER OF THE CIT(A), MYSORE, DATED 29 - 11 - 2011 FOR THE ASSESS MENT ITA NO S . 168 TO 170/BANG/2012 MR.SYED SHAFIULLA & OTHERS PAGE 2 OF 5 YEAR 2007 - 08 . SINCE ALL THE ASSESSEES ARE RELATED TO EACH OTHER AND THE ISSUE INVOLVED IS ALSO COMMON, ALL THESE APPEALS WERE HEARD TOGETHER AND ARE DISPOSED OF BY THIS COMMON AND CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. IN ALL THESE APPEALS, THE ASSESSEES ARE AGG RIEVED BY THE ASSESSMENT OF LONG TERM CAPITAL GAINS IN THE HANDS OF THE RESPECTIVE ASSESSEE. ACCORDING TO THE RESPECTIVE ASSESSEES, THE LANDS SOLD ARE NOT CAPITAL ASSETS U/S 2(14) OF THE INCOME - TAX ACT, 1961[HEREINAFTER REFERRED TO AS 'THE ACT'] BUT THE L ANDS ARE AGRICULTURAL LANDS AND THEREFORE ARE NOT CAPITAL ASSETS THE GAIN FROM WHICH IS LIABLE TO TAX AS CAPITAL GAIN . 3. AT THE TIME OF HEARING, LEARNED COUNSEL FOR THE ASSESSEE, SHRI NINGOJI RAO, DREW OUR ATTENTION TO THE FACT THAT THERE WAS A SEARCH AND SEIZURE OPERATION IN THE CASE OF DR.SYED ANWAR DURING WHICH CERTAIN DOCUMENTS WERE FOUND AND SEIZED. DURING THE BLOCK ASSESSMENT PROCEEDINGS OF DR.SYED ANWAR, THE REVENUE OBSERVED THAT THE AGRICULTURAL LAND WAS PURCHASED IN THE NAMES OF T HE ASSESSEES HEREIN WHILE THE LANDS, IN FACT, BELONGED TO DR.SYED ANWAR. HE SUBMITTED THAT SUBSTANTIVE ASSESSMENT WAS DONE IN THE CASE OF DR.SYED ANWAR AND PROTECTIVE ASSESSMENTS WERE COMPLETED IN THE HANDS OF THE ASSESSEES HEREIN. HE SUBMITTED THAT THE ISSUE HAD COME UP BEFORE THIS TRIBUNAL AND A BENCH OF THIS TRIBUNAL VIDE ORDERS DATED 16 - 5 - 2014 HAS HELD THAT THE ITA NO S . 168 TO 170/BANG/2012 MR.SYED SHAFIULLA & OTHERS PAGE 3 OF 5 ASSESSEES HEREIN DID NOT HAVE FUNDS TO INVEST IN THE LANDS AND THAT THE INVESTMENT WAS MADE BY DR.SYED ANWAR AND DR.SYED ANWAR IS THE OWNER OF THE LAND S . T HE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT I N THESE CIRCUMSTANCES, THE ASSESSMENT OF CAPITAL GAIN ARISING OUT OF THE SALE OF VERY SAME AGRICULTURAL LAND IN THE HANDS OF THE ASSESSEES IS NOT MAINTAINABLE. COPY OF THE ORDER OF THE T RIBUNAL HAS BEEN PLACED BEFORE US. THE LEARNED DEPARTMENTAL REPRESENTATIVE, SHRI M.K.BIJU, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT FOR THE RELEVANT ASSESSMENT YEAR, THE ASSESSEES HEREIN HAVE FILED THEIR RETURNS OF INCOME AND HAV E ALSO DECLARED AGRICULTURAL INCOME FROM THESE LANDS AND THEREFORE THE LANDS SHOULD BE CONSIDERED AS BELONGING TO THE ASSESSEES HEREIN AND CAPITAL GAINS ARISING THEREF R O M IS LIABLE TO TAX. 3. HAVING HEARD BOTH THE PARTIES AND HAVING CONSIDERED THE R IVAL CONTENTIONS AND ALSO THE MATERIAL ON RECORD, WE FIND THAT THE ISSUE OF OWNERSHIP OF LAND HAD ARISEN IN THE CASE OF DR.SYED ANWAR FOR THE BLOCK PERIOD 1991 - 92 TO 2000 - 01 AND 1 - 4 - 2000 TO 24 - 1 - 2001 AND AFTER DETAILED DISCUSSION ON THE ISSUE, TH E TRIBUNAL, IN PARA.29.3, HAS HELD AS UNDER: 29.3 WE HAVE CAREFULLY CONSIDERED THE ISSUE ON HAND. THE AMOUNT OF RS.58,20,297 ADDED TO THE INCOME OF THESE FIVE ASSESSEES IS THE PURCHASE PRICE OF THE IMPUGNED LANDS AS PER THE SALE DEEDS, WHICH IS CLA IMED TO BE THEIR INVESTMENT IN THE ACQUISITION THEREOF. THE SOURCE OF THIS INVESTMENT IS SAID TO BE RS.35,36,991 OUT OF THEIR OWN FUNDS AND RS.2,282,936/ - OUT OF FUNDS BORROWED FROM JANSON INVESTMENTS PVT. LTD. IT IS THE CASE OF REVENUE ITA NO S . 168 TO 170/BANG/2012 MR.SYED SHAFIULLA & OTHERS PAGE 4 OF 5 THAT THE ENTIRE I NVESTMENT IN THE IMPUGNED LANDS HAS BEEN MADE BY DR.SYED ANWAR SINCE THESE FIVE PERSONS BEING AGRICULTURAL LABOURERS HAVE BEEN ESTABLISHED TO BE MEN OF NO MEANS. IT IS NOT THE CASE OF THE DEPARTMENT THAT THESE FIVE PERSONS HAVE SOME UNDISCLOSED INCOME, WH ICH HAS BEEN USED FOR MAKING THE INVESTMENT OF RS.58,20,927 SINCE THEY DID NOT HAVE SOURCES FOR INVESTMENT OF RS.35,34,991 IN THE FIRST PLACE. REVENUE HAD ESTABLISHED THAT THE CLAIM OF OWN FUNDS OF THESE FIVE PERSONS WAS FROM UNACCOUNTED SOURCES OR THAT TH E CLAIM OF BORROWINGS FROM JANSON INVESTMENTS PVT. LTD. WAS PROVED TO BE WRONG. THE SIMPLE STAND OF REVENUE IS THAT THE ACTUAL INVESTMENT IN THE IMPUGNED LANDS HAS BEEN MADE BY DR.SYED ANWAR AND HENCE THE ENTIRE INVESTMENT, INCLUDING THE SALE DEEDS PRICES AND THE ON - MONEY PAYMENT, HAS BEEN HELD TO BE THE UNDISCLOSED INCOME OF DR.SYED ANWAR. MERELY BECAUSE THE ASSESSMENT OF DR.SYED ANWAR IS DISPUTED BEFORE THE TRIBUNAL, IT DOES NOT AUTOMATICALLY BECOME THE UNACCOUNTED INCOME OF THESE FIVE ASSESSEES, EVEN O N A PROTECTIVE BASIS. IF THE ASSESSMENT OF UNACCOUNTED INCOME IN THE HANDS OF DR.SYED ANWAR SUCCEEDS IN THE APPELLATE FORUM, THEN THE ASSESSMENTS IN THE HANDS OF THESE FIVE ASSESSEES FAILS AUTOMATICALLY. HOWEVER, IF THE ASSESSMENT OF DR.SYED ANWAR FAILS I N THE APPELLATE FORUM THAT DOES NOT AUTOMATICALLY MEAN THAT THE UNACCOUNTED INCOME CAN BE ASSESSED IN THE HANDS OF THESE FIVE PERSONS. IN THE LATTER CASE, WHAT FAILS IS ONLY THE STAND OF REVENUE THAT THE ACTUAL INVESTMENT IN THE IMPUGNED LANDS IS BY DR.SY ED ANWAR. BY NO STRETCH OF IMAGINATION CAN THESE FIVE ASSESSEES BE SADDLED WITH THE CHARGE OF UNDISCLOSED INCOME, MERELY BECAUSE THE ASSESSMENT OF UNDISCLOSED INCOME IN THE CASE OF DR.SYED ANWAR HAD FAILED. IN THIS VIEW OF THE MATTER, THE ACTION OF THE A SSESSING OFFICER IN TREATING THE CONSIDERATION AS PER THE SALE DEED IN THE IMPUGNED LANDS, AMOUNTING TO RS.58,20,927 AS UNACCOUNTED INCOME IN THE HANDS OF THESE FIVE ASSESSEES IS NOT TENABLE. AS A CONSEQUEN CE OF THE ABOVE ORDER, THE ASSESSEES HEREIN H AVE BEEN HELD TO BE NOT THE OWNERS OF THE AGRICULTURAL LAND. IN SUCH A SITUATION, ON SALE OF LAND, CAPITAL GAIN ARISING THERE - FROM CANNOT ALSO BE BROUGHT TO TAX IN THE HANDS OF THE SE THREE PERSONS. THE ASSESSMENTS ARE THEREFORE SET ASIDE. ITA NO S . 168 TO 170/BANG/2012 MR.SYED SHAFIULLA & OTHERS PAGE 5 OF 5 4. IN THE RESU LT, ALL THE APPEALS ARE ALLOWED. PRON OUNCED IN THE OPEN COURT ON 14 TH OF AUGUST , 201 4. SD/ - SD/ - ( ABRAHAM P GEORGE ) ( SMT. P.MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER EKSRINIVASULU COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME - TAX APPELLATE TRIBUNAL BANGALORE