Shri J. Kishore Kumar, CHENNAI V. ITO, CHENNAI

ITA 1834/CHNY/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8260 (ITAT-CHENNAI)
• Duration Of Justice: 3 year(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-10-2016
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 14-10-2013
• Court: TRIBUNAL
• Department Lawyers: SHIVA SRINIVAS
• Assessee Lawyers: D ANAND
• Keywords: Sale consideration of property below Jantri Value
• Section: 143(3); 50C; 142(1)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : CHENNAI , . ! , ' !# $ [ BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ] ./ I.T.A.NO.1834/MDS/2013 / ASSESSMENT YEAR : 2009-10 SHRI J. KISHORE KUMAR NO.7, SANNATHI STREET THIRUVANMIYUR CHENNAI 600 041 VS. THE INCOME TAX OFFICER BUSINESS CIRCLE III(1) CHENNAI [PAN AAKPK 1290 D] ( %& / APPELLANT) ( '(%& /RESPONDENT) / APPELLANT BY : SHRI D. ANAND, ADVOCATE /RESPONDENT BY : SHRI SHIVA SRINIVAS, JCIT / DATE OF HEARING : 22 - 08 - 2016 ! / DATE OF PRONOUNCEMENT : 20 - 10 - 2016 ) / O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER : THIS APPEAL OF THE ASSESSEEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS-V), CHE NNAI, DATED 2.7.2013 IN I.T.A.NO.120/11-12(A)-V FOR ASSESSMENT YEAR 2009-10 PASSED U/S 143(3) AND 250 OF THE INCOME-TAX ACT, 1 961(IN SHORT THE ACT). ITA NO. 1834/13 :- 2 -: 2. THE ASSESSEE RAISED THE GROUNDS THAT THE CIT(A) HA S TREATED THE ASSESSEE AS THE OWNER OF THE PROPERTY IRRESPE CTIVE OF THE FACT THAT THE PROPERTY WAS INHERITED BY THE ASSESSEE ON DEATH OF HIS FATHER WHEREAS THE ORIGINAL OWNER HAS SOLD THE PROPERTY IN 1995 AND RECEIVED THE SALE CONSIDERATION AND ALSO THE POWER OF ATTOR NEY WAS EXECUTED, THE CIT(A) HAS TREATED THE SUBSEQUENT SALE IRRESPEC TIVE OF THE FACT THAT THE PROPERTY WAS TRANSFERRED IN 1999, WHEN THE ORIG INAL OWNER OF THE PROPERTY DIED THE POWER OF ATTORNEY AUTOMATICALLY G ETS VACATED, THEREFORE, THE CONSIDERATION IS RECEIVED BY THE POW ER OF ATTORNEY HOLDER AND NOT THE ASSESSEE AND THE CIT(A) HAS NOT CONSIDERED THE JUDICIAL DECISIONS RELIED ON. FURTHER THE ALTERNAT IVE CLAIM BEING THAT THE PROPERTY TRANSFERRED IS AGRICULTURAL LAND U/S 2(1 4)(III) OF THE ACT AND THEREFORE, NO CAPITAL GAINS TAX IS LEVIABLE. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HAVI NG INCOME FROM PROPERTY AND PROFIT FROM BUSINESS AND FILED RE TURN OF INCOME ON 18.9.2009 WITH TOTAL INCOME OF ` 2,89,724/- AND THE RETURN WAS PROCESSED U/S 143(1) OF THE ACT. SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY AND DETAILS WERE CALLED FOR VIDE NOTIC E U/S 142(1) OF THE ACT. IN COMPLIANCE, THE LD. AR APPEARED FROM TIME TO TIME. THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS SOLD AN IMMOVABLE PROPERTY FOR A CONSIDERATION OF ` 32,25,000/-. THE FACTS ARE EXPLAINED BEFORE THE ASSESSING OFFICER IN THE ASSESSMENT PROC EEDINGS BEING THAT ITA NO. 1834/13 :- 3 -: THE ASSESSEE IS THE LEGAL DESCENDANT OF SHRI G.J. JAWAHARLAL, WHO EXPIRED ON 26.7.2005 WHEREAS THE ORIGINAL OWNER HAS EXECUTED A POWER OF ATTORNEY ON 26.5.1999 IN FAVOUR OF SHRI KR ISHNAN IN RESPECT OF THE PROPERTY AT KANATHUR VILLAGE, CHENGALPATTU TALU K, WHICH COMES UNDER THE SUB-REGISTRAR OFFICE, TIRUPORUR. THIS PO WER OF ATTORNEY HOLDER HAS NOT SOLD THE PROPERTY IN THE LIFE TIME O F THE ORIGINAL OWNER WHEREAS THE FATHER OF THE ASSESSEE RECEIVED ` 1 LAKH ON EXECUTION OF POWER OF ATTORNEY AND THE POSSESSION WAS HANDED OVE R ON 3.6.1999 AND AS PER THE PROVISIONS OF SEC. 2(47)(V) OF THE A CT THE SALE WAS COMPLETED. SINCE THE ASSESSEE HAVING A LEGAL OBLI GATION TO EXECUTE THE SALE DEED ON 14.5.2008, HIS NAME WAS INCLUDED. SINCE THE SALE WAS COMPLETED ON 3.6.1999, THIS IS NOT A SALE BY TH E ASSESSEE BUT BY THE POWER OF ATTORNEY HOLDER. THE LAND IN QUESTION TRANSFERRED IS AGRICULTURAL LAND WHICH FALLS WITHIN THE EXEMPTION PROVIDED U/S 2(14)(III) OF THE ACT. THE ASSESSING OFFICER HAS N OT CONSIDERED THE SUBMISSIONS AND HAS DETERMINED THE LONG TERM CAPITA L GAINS AS IF THE ASSESSEE HAS GIVEN THE POWER OF ATTORNEY FOR EXECUT ION OF SALE DEED ON 14.5.2008. THE SALE DEED WAS EXECUTED ON THE SAID DATE FOR A CONSIDERATION OF ` 8,60,000/- IRRESPECTIVE OF THE FACT THAT THE MARKE T VALUE OF THE PROPERTY BEING ` 32.25 LAKHS AND AS PER THE ASSESSING OFFICER, THE SAID PROPERTY COULD NOT HAVE BEEN SOLD FOR ` 1 LAKH AS THE ASSESSEE HAS CLAIMED IN ASSESSMENT PROCEEDINGS. FU RTHER, THE ITA NO. 1834/13 :- 4 -: ALTERNATIVE PLEA MADE BEFORE THE ASSESSING OFFICER WAS THAT THE PROPERTY SOLD ON 14.5.2008 IN FACT IS A VACANT LAN D AND SALE DEED ALSO DEPICTS THESE FACTS. BUT THE ASSESSING OFFICER FOU ND THAT THERE IS NO WORD ABOUT THE CHARACTER OF THE LAND SUCH AS PUNJA I LAND AND HE HAS PRESUMED THAT IF THE LAND BEING AGRICULTURAL LAND I T WOULD NOT HAVE FETCHED HIGHER VALUE AND RELIED ON THE DECISION OF KERALA HIGH COURT IN 229 ITR 574, 225 ITR 510 AND 167 ITR 136, AND CAME TO THE CONCLUSION THAT THE ASSESSEE IS THE OWNER OF THE PROPERTY AND THE PROPERTY WAS SOLD FOR A LESSER CONSIDERATION, THERE FORE, SEC. 50C IS APPLICABLE AND CALCULATED THE LONG TERM CAPITAL GAI NS OF ` 31,76,873/- AND PASSED ORDER U/S 143(3) OF THE ACT DATED 24.12 .2011. 4. AGGRIEVED BY THE ORDER, THE ASSESSEE FILED APPEAL BEFORE THE CIT(A). IN THE APPELLATE PROCEEDINGS, THE LD. AR O F THE ASSESSEE ARGUED THE GROUNDS AND NARRATED THE FACTS AND ALSO REITERATED THE SUBMISSIONS MADE BEFORE THE ASSESSING OFFICER. THE CIT(A) FOUND THAT THE INFORMATION WAS BASED ON AIR REPORT AND THIS CA SE WAS SQUARELY FALLS WITHIN THE PROVISIONS OF SEC. 50C OF THE ACT. THE CIT(A), HOWEVER, FOUND THAT THE POWER OF ATTORNEY HOLDER IN WHOSE NA ME IT WAS EXECUTED HAS NOT SOLD THE PROPERTY DURING THE LIFE TIME OF THE FATHER OF THE ASSESSEE WHEREAS THIS PROPERTY WAS SOLD FOR A CONSIDERATION OF ` 1 LAKH. SUBSEQUENT TO THE DEATH OF THE ORIGINAL OWNE R, AS A LEGAL HEIR, THE SON, THE ASSESSEE HAS EXECUTED THE SALE DEED I N FAVOUR OF THE ITA NO. 1834/13 :- 5 -: PURCHASER AND THEREFORE, THE CONTENTION OF THE SELL ER THAT HE IS ONLY A PROFORMA PARTY AND THE NET CONSIDERATION RECEIVED TOWARDS THE SALE IS REFLECTED IN THE HANDS OF POWER OF ATTORNEY HOLDER. WITH THESE OBSERVATIONS, THE CIT(A) HAS UPHELD THE ORDER OF TH E ASSESSING OFFICER. FURTHER, THE ALTERNATIVE PLEA OF THE LAND BEING AGR ICULTURAL LAND, THE CIT(A) ALSO RELIED ON THE FINDING OF THE ASSESSING OFFICER AND DISMISSED THE APPEAL OF THE ASSESSEE. 5. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. THE LD. AR ARGUED THE GROUNDS AND REITERATED THE SUBMISSIONS M ADE DURING ASSESSMENT PROCEEDINGS AND APPELLATE PROCEEDINGS AN D EXPLAINED THE FACTS WITH EVIDENCES. THE ARGUMENT OF THE LD. AR H AVING TWO FACETS. ONE ON THE APPLICABILITY OF PROVISIONS OF SEC. 50C WHERE THE ASSESSEE IS NOT THE REAL OWNER. FATHER OF THE ASSESSEE EXE CUTED POWER OF ATTORNEY IN FAVOUR OF THE PERSON AND SINCE THE ASS ESSEES FATHER HAS EXPIRED, ON LEGAL OBLIGATION THE ASSESSEE HAS BECO ME SIGNATORY AND GIVEN PAN. THEREFORE, THIS AMOUNT CANNOT BE TAXED IN THE HANDS OF THE ASSESSEE. SECOND ALTERNATIVE, THE LAND SOLD O N 14.5.2008 IS AN AGRICULTURAL LAND AND IT IS A VACANT LAND AND SUPPO RTED THE CASE WITH THE COPY OF THE SALE DEED AND ALSO GR FROM REGISTRA TION DEPARTMENT OF TAMILNADU GOVERNMENT WHERE THE SURVEY RECORD AT 37/ 3 AS PER THE SALE DEED IS AN AGRICULTURE GOVERNMENT WASTELAND AND PRAYED TO ALLOW THE APPEAL OF THE ASSESSEE ON THE ALTERNATIV E GROUND. ITA NO. 1834/13 :- 6 -: 6. CONTRA, THE LD. DR RELIED ON THE ORDER OF THE CIT(A ) AND OPPOSED TO THE SUBMISSIONS AND ALSO THE EVIDENCES F ILED IN THE COURSE OF HEARING PROCEEDINGS AND PRAYED FOR DISMISSING TH E APPEAL. 7. WE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIA L ON RECORD AND THE JUDICIAL DECISIONS AS RELIED. THE L D. ARS CONTENTION BEING THAT THE SALE IN RESPECT OF THE PROPERTY WHIC H IS IN THE NATURE OF AGRICULTURAL LAND, THE ASSESSEES FATHER HAS SOLD IT IN THE EARLIER YEAR AND THE ASSESSEE HAS NOT RECEIVED ANY SALE CONSIDE RATION DURING FINANCIAL YEAR 2007-08 AND THEREFORE, NO CAPITAL GA IN CAN BE WORKED OUT. FURTHER, THE LAND SOLD IS AN AGRICULTURAL LAN D AND FALLS WITHIN THE DEFINITION OF EXEMPTION PROVIDED U/S 2(14)(III) OF THE ACT AND ALSO SUPPORTED WITH THE DOCUMENTS OF REGISTRATION DEPART MENT. WHEREAS THE LD. DR OPPOSED VEHEMENTLY TO THE NEW DOCUMENTS MENTIONING THAT THAT THESE DOCUMENTS WERE NOT FILED BEFORE THE ASSE SSING OFFICER AND FOR THE FIRST TIME THIS WAS BROUGHT TO THE NOTICE O F THE DEPARTMENT AND THE ASSESSING OFFICER WAS DEPRIVED OF THE OPPORTUNI TY OF VERIFYING THE DOCUMENTS AND ITS GENUINITY. ON PERUSAL OF THE DO CUMENTS THAT WERE FILED BEFORE US, WE FIND THAT THE ASSESSEE HAS FIL ED A PETITION UNDER THE RTI ACT AND SOUGHT INFORMATION ABOUT THE NATURE OF LAND AND THE SAID INFORMATION WAS SUBMITTED BY THE PUBLIC INFORM ATION OFFICER, THIRUPORUR VIDE LETTER DATED 2.6.2016 MENTIONING TH AT THE SURVEY NUMBER 373/2 IS CLASSIFIED AS DRY SPECIAL CATEGORY LAND-II AND ALSO ITA NO. 1834/13 :- 7 -: GUIDELINE VALUE WAS MENTIONED AS ` 4,50,000/-. THE ASSESSEE FILED A TRANSLATED COPY OF THE LETTER DATED 2.6.2016. WE FI ND THAT THIS LETTER DATED 2.6.2016 IS A NEW EVIDENCE FILED FOR THE FIRS T TIME BEFORE US AND IT HAS TO BE VERIFIED BY THE ASSESSING OFFICER. TH E ASSESSING OFFICER HAS TO PROVIDE AN OPPORTUNITY TO THE ASSESSEE TO P ROVE THE CATEGORY OF LAND WITH DOCUMENTARY EVIDENCE. WE, THEREFORE, IN THE INTEREST OF JUSTICE, REMIT THIS ISSUE BACK TO THE FILE OF THE A SSESSING OFFICER FOR THE LIMITED PURPOSE OF VERIFYING THE NATURE OF LAND WHE THER AGRICULTURAL LAND OR NOT AND PASS AN ORDER ON MERIT AFTER PROVID ING ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOW ED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 20 TH OCTOBER, 2016, AT CHENNAI. SD/- SD/- ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER ( . ! ) (G. PAVAN KUMAR) ' / JUDICIAL MEMBER '# / CHENNAI $% / DATED: 20 TH OCTOBER, 2016 RD %& '()( / COPY TO: 1 . / APPELLANT 4. * / CIT 2. / RESPONDENT 5. (+, - / DR 3. *./ / CIT(A) 6. ,01 / GF