Sri Anil Kumar Agarwal, Hyderabad V. Asst.CIT,Circle 6(1), Hyderabad

ITA 1761/HYD/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5951 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 2 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 24-02-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 20-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D SRINIVAS
• Assessee Lawyers: P MURALI MOHAN RAO
• Keywords: Sale consideration of property below Jantri Value; Search and seizure; Salary income
• Section: 143(3); 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SMT P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 1761/HYD/2013 ASSESSMENT YEAR: 2008-09 SRI ANIL KUMAR AGARWAL, HYDERABAD. PAN AAKPA5812C VS. ASST. COMMISSIONER OF INCOME-TAX, CIRCLE 6(1), HYDERABAD. (ASSESSEE) (RESPONDENT) ASSESSEE BY : SHRI P. MURALI MOHAN RAO REVENUE BY : SHRI D. SRINIVAS DATE OF HEARING 24-02-2016 DATE OF PRONOUNCEMENT 11-03-2016 O R D E R PER S. RIFAUR RAHMAN, A.M.: THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST T HE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS)- II I, HYDERABAD, DATED 13/11/2013 FOR AY 2008-09. 2. IN THIS APPEAL, THE ASSESSEE HAS RAISED 14 GROU NDS OF APPEAL. GROUND NOS. 2 TO 5 ARE PERTAINING TO THE ADDITION O F RS. 35,000/- MADE TOWARDS LOW HOUSEHOLD WITHDRAWALS. GROUND NOS. 6 TO 13 ARE PERTAINING TO THE ADDITION MADE TOWARDS SHORT TERM CAPITAL GAINS. GROUND NOS. 1 & 14 ARE GENERAL IN NATURE. 3. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE, AN INDIVIDUAL, DERIVES INCOME FROM SALARY & CAPITAL GA INS. HE FILED HIS RETURN OF INCOME FOR THE AY 2008-09 ON 06/10/2008, DECLARING TOTAL INCOME AT RS. 2,80,310/-. AO COMPLETED THE ASSESSME NT ON 2 ITA NO. 1761 /HYD/2013 SRI ANIL KUMAR AGARWAL 23/12/2009 U/S 143(3) OF THE INCOME-TAX ACT, 1961, DETERMINING THE TOTAL INCOME AT RS. 16,25,458/-. 3. DURING THE ASSESSMENT PROCEEDINGS, THE AO NOTICE D FROM THE RETURNS FILED BY THE ASSESSEE FOR THE AYS 2002-03 T O 2008-09, FOLLOWING SEARCH AND SEIZURE OPERATION CONDUCTED IN THE PREMISES OF SRI LAXMI NARAYANA AND SRI SATYANARAYANA AGARWAL, T HAT THE WITHDRAWALS ADMITTED BY THE ASSESSEE WERE VERY LOW. WHEN IT WAS PUT BEFORE THE ASSESSEES AR FOR THE LOW WITHDRAWALS, L D. AR SUBMITTED THAT THE ASSESSEE IS UNMARRIED AND IS RESIDING WITH HIS FATHER AS WELL AS BROTHER AND THEY ARE HAVING A COMMON KITCHEN. FU RTHER, AR OF ASSESSEE ALSO SUBMITTED THAT THERE WERE WITHDRAWALS IN THE HANDS OF OTHER FAMILY MEMBERS ALSO. THEREFORE, LD. AR REQUES TED TO LOOK AT THE OVERALL WITHDRAWALS ADMITTED BY THE ASSESSEE, HIS F ATHER AND BROTHER. AFTER VERIFYING THE RETURNS FILED BY THE ASSESSEES FATHER AND BROTHER AND THE WITHDRAWALS ADMITTED BY THEM, THE AO OBSERV ED THAT THE WITHDRAWALS ADMITTED BY ALL THE FAMILY MEMBERS PUT TOGETHER ARE VERY LOW CONSIDERING ANY STANDARD OF LIVING. FURTHER, HE OBSERVED THAT THE ASSESSEE WORKED AS A SOFTWARE ENGINEER IN UK AND RE TURNED BACK TO INDIA AND BEING A SOFTWARE ENGINEER, HIS STANDARD O F LIVING ALSO MUST BE HIGH. CONSIDERING THE WITHDRAWALS MADE BY ASSESS EE AND HIS FAMILY MEMBERS, AN AMOUNT OF RS. 35,000/- WAS ADDED TOWARDS THE LOW WITHDRAWALS. 4. ON AN APPEAL, BEFORE THE CIT(A), THE ASSESSEE CO NTENDED THAT SINCE HE WAS UNMARRIED AND WAS STAYING WITH HIS PAR ENTS, THERE WAS NO REQUIREMENT FOR HIM TO MAKE ANY HOUSEHOLD WITHDR AWALS AND, THEREFORE, THE HOUSEHOLD WITHDRAWALS WERE ADEQUATE AND IN THE ABSENCE OF CONCRETE EVIDENCE, THE ADDITION MADE SHO ULD BE DELETED. 5. THE CIT(A) FOLLOWING THE DECISION OF ASSESSEE IN AY 2009-10, HELD THAT THE HOUSEHOLD WITHDRAWALS OF THE ASSESSEE AS WELL AS THAT OF HIS FATHER AND UNCLE EVEN COLLECTIVELY DO NOT JUSTI FY THE STATUS AND EXISTENCE OF THE FAMILY. ACCORDINGLY, HE SUSTAINED THE ADDITION. 3 ITA NO. 1761 /HYD/2013 SRI ANIL KUMAR AGARWAL 6. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL FACTS ON RECORD AS WELL AS THE ORDERS OF REVENUE AU THORITIES. WE FIND THAT IN ASSESSEES OWN CASE FOR AYS 2002-03 TO 2007 -08, THE COORDINATE BENCH OF THIS TRIBUNAL IN ITA NOS. 1755 TO 1760/HYD/2013 VIDE ORDER DATED 21/08/2015 DELETED ADDITION MADE IN RESPECT OF LOW WITHDRAWALS FROM 2002-03 TO 2007-08 ON THE GROUND T HAT THERE WAS NO MATERIAL ON THE BASIS OF WHICH SUCH AN ADDITION WAS MADE. THE RELEVANT PARAGRAPH IS REPRODUCED HEREUNDER FOR READ Y REFERENCE: 9. EVEN ON MERITS, THERE IS NO JUSTIFICATION FOR ES TIMATING THE LOW WITHDRAWALS ON ASSUMPTIONS AND PRESUMPTIONS, W ITHOUT THERE BEING ANY BASIS. IN VIEW OF THAT ALSO, THE AD DITION MADE IN ALL THE YEARS ABOUT THE LOW WITHDRAWALS CANNOT BE S USTAINED. THEREFORE, ON MERITS ALSO ASSESSEE HAS A GOOD CASE AND ADDITIONS SO MADE ARE TO BE DELETED. SINCE, THE ISSUE IS SIMILAR IN THE PRESENT CASE, WE DELETE THE ADDITION OF RS. 35,000/- MADE ON ACCOUNT OF LOW WITHDRAWALS. 8. AS REGARDS THE ADDITION OF RS. 13,11,092/- MADE ON ACCOUNT OF SHORT TERM CAPITAL GAINS, DURING THE YEAR UNDER CON SIDERATION, THE BRIEF FACTS ARE THAT THE ASSESSEE HAD PARTICIPATED IN AN AUCTION CONDUCTED BY THE SBI AND HAD PURCHASED PROPERTY BEARING NUMBE R 1-1-111 AND 112, AT RTC CROSS ROADS, HYDERABAD FOR AN AMOUNT OF RS. 1,27,09,000/-. THE ASSESSEE ALSO CLAIMED TO HAVE IN CURRED CERTAIN EXPENSES TOWARDS REGISTRATION, BROKERAGE, ADVOCATE FEE, MUNICIPAL TAXES ETC. AND STATED THAT THE TOTAL COST WAS RS. 1 ,42,99,058/-. THEREAFTER, THE ASSESSEE SOLD THE SAID PROPERTY THR OUGH REGISTERED SALE DEED NO. 34 OF 2008 FOR A CONSIDERATION OF RS. 1,43,00,000/- AND ADMITTED SHORT TERM CAPITAL GAINS OF RS. 942/-. THE AO, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, FOUND THAT THE MA RKET VALUE OF THE PROPERTY AS PER THE SRO RATES WAS RS. 1,55,60,600/- AND ACCORDINGLY HE APPLIED SECTION 50C OF THE IT ACT AND COMPUTED THE SHORT TERM CAPITAL GAINS AT RS. 13,11,092/- AS AGAINST RS. 942 /- ADMITTED BY THE ASSESSEE. AO ALSO DISALLOWED THE BROKERAGE PAYMENT OF RS. 49,550/- 4 ITA NO. 1761 /HYD/2013 SRI ANIL KUMAR AGARWAL AS THE PURCHASE OF THE PROPERTY WAS THROUGH BIDDIN G AND THERE IS NO CHANCE OF INVOLVING ANY AGENT. 9. BEFORE THE CIT(A), THE ASSESSEE CONTENDED THAT T HE TITLE OF THE PROPERTY WAS IN DISPUTE AND THERE WAS ALSO ROAD WID ENING HAPPENING, AS A RESULT OF WHICH THE MARKET VALUE OF THE PROPER TY WAS BELOW THE SRO RATES. IT WAS ALSO THE CONTENTION OF THE ASSESS EE THAT WHEN THE ASSESSEE OBJECTED TO THE SRO VALUE, THE AO WAS DUTY BOUND TO REFER THE CASE TO THE VALUATION OFFICER AND FAILURE TO DO SO WAS A STATUTORY DEFAULT. 10. THE CIT(A) WHILE REFUTING THE CONTENTIONS RAISE D BY THE ASSESSEE, HELD THAT THE CALCULATION OF CAPITAL GAIN S BY THE AO TO BE CORRECT AND THAT THERE WAS NO REASON TO INTERFERE W ITH THE SAME. 11. BEFORE US, THE LD. AR SUBMITTED THAT THE ASSESS EE HAS SOLD THE ABOVE PROPERTY FOR A CONSIDERATION OF RS. 1,43,00,0 00/- ONLY DUE TO CERTAIN DISPUTES WITH REGARD TO THE PROPERTY AND AL SO ROAD WIDENING BEING TAKEN UP. WITH REGARD TO DISPUTES WITH RESPEC T TO THE PROPERTY, HE BROUGHT TO OUR NOTICE THAT MR. AKKU VISWANATH, T HE ORIGINAL OWNER OF THE PROPERTY PUBLISHED THE PUBLIC NOTICE IN THE LOCAL NEWS PAPER AFTER THE PROPERTY WAS PURCHASED BY THE ASSESSEE (R EFER PAGE 11 OF PAPER BOOK). LD. AR CONTENDED THAT THE DISPUTE WAS WELL KNOWN TO THE PROPERTY DEALERS. IT HAS CREATED LOT OF CONSTRA INS TO SELL THIS PROPERTY LEADING TO SELL THIS PROPERTY AT LESS THAN THE MARKET PRICE TO THE AVAILABLE PURCHASER. HENCE, ASSESSEE HAS SOLD T HE PROPERTY AT LESSER THAN THE MARKET PRICE. 12. LD. DR, ON THE OTHER HAND RELIED UPON THE ORDER S OF REVENUE AUTHORITIES AND SUBMITTED THAT THERE IS NO DISPUTE AS REGARDS THE TITLE OF THE PROPERTY AS THE SAME WAS PURCHASED FROM AUCT ION CONDUCTED BY THE SBI AND THEREFORE ASSESSEE GOT PROPER TITLE TO THE PROPERTY BY DEFAULT. 13. CONSIDERING THE SUBMISSIONS OF BOTH THE COUNSEL S AND MATERIAL FACTS ON RECORD, THERE IS NO DOUBT THAT AS THE PROP ERTY WAS PURCHASED 5 ITA NO. 1761 /HYD/2013 SRI ANIL KUMAR AGARWAL THROUGH AUCTION CONDUCTED BY STATE BANK OF INDIA, A SSESSEE HAS GOT THE PROPER TITLE. BUT THE MARKET VALUE OF THE PROPE RTY NOT ONLY DEPENDS UPON THE TITLE OF THE PROPERTY, BUT, IT ALSO DEPEND S UPON THE PERCEPTION OF THE TITLE OF THE PROPERTY AMONG THE PROPERTY DEA LERS IN THE MARKET. AS THE ORIGINAL OWNER HAS GIVEN PUBLIC NOTICE AFTER THE PURCHASE OF THE PROPERTY BY ASSESSEE, IT WILL DEFINITELY CREATE MIX ED PERCEPTION ON THE TITLE OF THE PROPERTY. A CAUTIOUS BUYER WILL DEFINI TELY LOOK FOR CLEAR TITLE. FOLLOWING THE PUBLIC NOTICE, EVEN THOUGH ASSESSEE H AS GOOD TITLE ON RECORD, IT DEFINITELY MAY CREATE PANIC IN THE MINDS OF THE PURCHASERS. IT IS PERTINENT TO NOTICE THAT THE ASSESSEE HAS SOL D THE PROPERTY AT COST TO COST BASIS EVEN THOUGH IT HAS SOLD AT LESSER THA N THE MARKET VALUE. CONSIDERING THE ABOVE SITUATION, WE ARE OF THE VIEW THAT THE ASSESSEE HAS SOLD THE PROPERTY IN CONSTRAINT AND, THEREFORE, THE SRO VALUE CANNOT BE ADOPTED. FURTHER, AS RIGHTLY POINTED OUT BY THE LD. COUNSEL FOR THE ASSESSEE, WHEN THE ASSESSEE OBJECTED TO THE SRO VALUE, THE AO OUGHT TO HAVE REFERRED THE VALUATION OF THE PROP ERTY TO THE DEPARTMENTAL VALUATION OFFICER, BUT, THE AO FAILED TO DO SO. THEREFORE, WE ALLOW THE GROUND RAISED BY THE ASSESS EE. 14. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. PRONOUNCED IN THE OPEN COURT ON 11 TH MARCH, 2016. SD/- SD/- (P. MADHAVI DEVI) (S. RIFAUR RAH MAN) JUDICIAL MEMBER A CCOUNTANT MEMBER HYDERABAD, DATED: 11 TH MARCH, 2016 KV COPY TO:- 1) SRI ANIL KUMAR AGARWAL, C/O P. MURALI & CO., CA S., 6-3-655/2/3, 1 ST FLOOR, SOMAJIGUDA, HYDERABAD 500 082 2) ACIT, CIRCLE 6(1), HYDERABAD. 3 CIT(A)-III, HYDERABAD 4) CIT-II HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD.