ANAND SHAH, MUMBAI V. ITO 13(1)(2), MUMBAI

ITA 1862/MUM/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0260 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-02-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 30-03-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M C OMI NINGSHEN
• Keywords: Gift; Additional evidence; Cost of acquisition
• Section: 143(3); 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A, MUMBAI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI AMARJIT SINGH , JUDICIAL MEMBER ITA NO. 1862/MUM/2015 : A.Y : 2011 - 12 SHRI ANAND SHAH 12, 2 ND FLOOR, DESAI CHAMBERS, 44, NAGDEVI CROSS LANE, MUMBAI 400003. (APPELLANT) PAN : AACPS6914P VS. ADDL. CIT - 17(1), MUMBAI (RESPONDENT) APPELLANT BY : SHRI VIJAY MEHTA & SHRI GOVIND JAVERI RESPONDENT BY : SHRI M.C. OMI NINGSHEN DATE OF HEARING : 21 /12/2017 DATE OF PRONOUNCEMENT : 14 /0 2 /2018 O R D E R PER G.S. PANNU , AM : THE CAPTIONED APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(A) - 28 , MUMBAI DATED 26.02.2015 , PERTAINING TO THE ASSESSMENT YEAR 2011 - 12 , WHICH IN TURN HAS ARISEN FROM THE ORDER PASSED BY THE ASSESSING OFFICER, MUMBAI UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. IN HIS APPEAL, ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : - 2 ITA NO. 1862/MUM/2015 SHRI ANAND SHAH 1. ON THE FACTS AND CIRCUMS TANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) ERRED IN HOLDING THAT THE APPELLANT IS A CO - OWNER OF THE PROPERTY AND THAT HE HAS NOT TRANSFERRED HIS 50% SHARE IN THE PROPERTY TO HIS BROTHER BY WAY OF GIFT AND CONSEQUENTLY ERRED IN CONFIRMING 50% OF THE C APITAL GAINS AMOUNTING TO RS.71,00,000 AS CHARGEABLE IN THE HANDS OF THE APPELLANT. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) ERRED IN NOT ALLOWING ALTERNATE CLAIM OF EXEMPTION UNDER SECTION 54 FOR INVESTMENT OF THE SAME SALE PROCEEDS INTO ANOTHER RESIDENTIAL HOUSE FROM THE JOINT BANK ACCOUNT. THE DENIAL OF THE EXEMPTION UNDER SECTION 54 BEING BAD - IN - LAW NEEDS TO BE CANCELLED. 3. IN ORDER TO APPRECIATE THE CONTROVERSY IN THIS APPEAL, THE FOLLOWING DISCUSSION IS RELEVANT . IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT IN TERMS OF A SALE AGREEMENT DATED 22.02.2011 ASSESSEE ALONGWITH HIS BROTHER, SHRI GAUTAM NAVINCHANDRA SHAH HAD SOLD A PROPERTY FOR A CONSIDERATION OF RS.1.90 CRORES AND THE ASSES SEE HAD NOT DECLARED ANY GAIN THEREOF. THE ASSESSING OFFICER ALSO NOTED THAT THE SAID PROPERTY WAS PURCHASED VIDE PURCHASE DEED DATED 30.09.2004 IN THE NAME OF THE ASSESSEE AND HIS BROTHER, SHRI GAUTAM NAVINCHANDRA SHAH. ON BEING SHOW - CAUSED, ASSESSEE EX PLAINED THAT THE SALE WAS EFFECTED BY HIS BROTHER AND THE ENTIRE AMOUNT OF SALE CONSIDERATION WAS ALSO FULLY RECEIVED BY THE ASSESSEES BROTHER, WHO HAD OFFERED THE SAME TO TAX IN HIS RETURN OF INCOME. THE ASSESSEE ALSO POINTED OUT THAT THROUGH A GIFT DEE D, ASSESSEE HAD GIFTED HIS PART OF THE OWNERSHIP OF THE PROPERTY TO HIS BROTHER AND, THEREFORE, AT THE TIME OF SALE, ASSESSEES BROTHER WAS THE COMPLETE OWNER OF THE S OLD PROPERTY. THE ASSESSING OFFICER DID NOT ACCEPT THE PLEA OF THE ASSESSEE BY NOTICING THAT THE GIFT DEED WAS NEITHER REGISTERED NOR SIGNED BY THE DONEE, I.E. ASSESSEES BROTHER AND THAT THE RECEIPT FOR SALE CONSIDERATION AT PAGE 12 3 ITA NO. 1862/MUM/2015 SHRI ANAND SHAH OF THE SALE DEED OF THE PROPERTY WAS ALSO SIGNED BY THE ASSESSEE. FOR THE SAID REASONS, THE ASSESSING OFFICER CONCLUDED THAT THE ASSESSEE OUGHT TO HAVE DECLARED THE LONG TERM CAPITAL GAINS ON SALE OF THE PROPERTY TO THE EXTENT OF HIS SHARE, WHICH HE DETERMINED AT 50%. ACCORDINGLY, THE ASSESSING OFFICER ADOPTED THE SALE CONSIDERATION OF RS.1.90 CRORES AND AFTER R EDUCING THE INDEXED COST OF ACQUISITION OF RS.47,79,994/ - , COMPUTED THE LONG TERM CAPITAL GAINS AT RS.1,42,20,006/ - AND BROUGHT TO TAX ASSESSEES SHARE THEREON OF RS.71,10,000/ - . THE ASSESSEE CHALLENGED THE MATTER IN APPEAL BEFORE THE CIT(A) WHO HAS SINCE UPHELD THE STAND OF THE ASSESSING OFFICER. AGAINST SUCH A DECISION OF THE CIT(A), ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4. BEFORE US, THE LEARNED REPRESENTATIVE FOR THE ASSESSEE REFERRED TO THE PAPER BOOK WHEREIN ARE PLACED THE PURCHASE DEED DATED 30.09.2004 AS WELL AS THE SALE DEED DATED 22.02.2011 EVIDENCING THE PURCHASE AND SALE OF THE PROPERTY IN QUESTION. THE LEARNED REPRESENTATIVE POINTED OUT THAT THOUGH IN THE PURCHASE DEED AS WELL AS THE SALE DEED THE NAME OF THE ASSESSEE APPEARS, BUT IN SUBSTANCE, THE PURCHASE WAS EFFECTED BY ASSESSEES BROTHER FROM HIS OWN SOURCES AND, THEREFORE, EVEN THE SALE CONSIDERATION HAS BEEN FULLY RECEIVED BY THE ASSESSEES BROTHER ; A FACT WHICH IS ALSO EMERGING FROM THE SALE DEED WHICH PRESCRIBES THAT THE CO NSIDERATION IS TO BE PAID TO THE ASSESSEES BROTHER. IN THIS CONTEXT, THE LEARNED REPRESENTATIVE ALSO POINTED OUT THAT THE BANK ACCOUNT FROM WHERE THE MONEY WAS PAID TO ACQUIRE THE PROPERTY AND ALSO THE ACCOUNT IN WHICH THE SALE CONSIDERATION HAS BEEN DEP OSITED, IS BENEFICIALLY OWNED BY THE ASSESSEES BROTHER AND THE INCOMES IN THIS BANK ACCOUNT HAVE ALWAYS BEEN DECLARED BY THE ASSESSEES BROTHER OVER THE YEARS IN HIS RESPECTIVE RETURNS OF INCOME. IN THIS CONTEXT, THE LEARNED REPRESENTATIVE REFERRED TO PA GES 8 TO 10 OF THE PAPER BOOK WHEREIN 4 ITA NO. 1862/MUM/2015 SHRI ANAND SHAH IS PLACED THE RELEVANT PAGES OF THE BANK STATEMENT BELONGING TO THE ASSESSEES BROTHER FROM WHERE THE AMOUNTS HAVE BEEN PAID FOR PURCHASE OF THE PROPERTY. THE LEARNED REPRESENTATIVE EMPHASISED THAT THOUGH IT WAS A JOI NT BANK ACCOUNT, BUT IT HAS BEEN FULLY ACCOUNTED FOR ONLY IN THE RETURN S OF INCOME OF ASSESSEES BROTHER AND NOT OF THE ASSESSEE. THE LEARNED REPRESENTATIVE POINTED OUT THAT EVEN THE USE AND MAINTENANCE OF THE FLAT WAS DONE BY ASSESSEES BROTHER AND, IN TH IS CONTEXT, HE REFERRED TO PAGES 12 TO 20 OF THE PAPER BOOK WHEREIN IS PLACED THE MAINTENANCE RECEIPTS ISSUED BY THE HOUSING SOCIETY, TELEPH ONE BILLS AND ELECTRICITY BILLS, WHICH ARE IN THE NAME OF THE ASSESSEES BROTHER FOR THE RELEVANT PERIOD. THE LEARN ED REPRESENTATIVE POINTED OUT THAT THOUGH THE ASSESSEE HAD SIGNED THE SALE DEED ALSO, IT WAS DONE ON THE INSISTENCE OF THE PURCHASERS. THE LEARNED REPRESENTATIVE EXPLAINED THAT THE PURCHASERS HAD INSISTED ON ASSESSEE SIGNING THE DEED AND, FOR THAT MATTER, HE REFERRED TO PAGE 71 OF THE PAPER BOOK WHEREIN IS PLACED A DECLARATION DATED 12.04.2017 ISSUED BY THE PURCHASERS OF THE PROPERTY. THE ASSESSEE EXPLAINED THAT THIS WAS AN ADDITIONAL EVIDENCE , WHICH WAS HITHERTO NOT BEFORE THE LOWER AUTHORITIES AND PRAYE D FOR ITS ADMISSION IN TERMS OF RULE 29 OF THE INCOME TAX (APPELLATE TRIBUNAL) RULES, 1963 AS ACCORDING TO THE ASSESSEE, THE SAME IS AN INDEPENDENT PIECE OF EVIDENCE WHICH IS RELEVANT TO DECIDE THE CONTROVERSY AND GOES TO SUPPORT THE PLEA OF THE ASSESSEE W HICH HAS BEEN ASSERTED AT EVERY STAGE. THE LEARNED REPRESENTATIVE ALSO REFERRED TO THE COMPUTATION OF INCOME OF ASSESSEES BROTHER FOR ASSESSMENT YEAR 2011 - 12 WHEREIN THE LONG TERM CAPITAL GAIN ARISING ON SALE OF THE FLAT AND DEDUCTION CLAIMED U/S 54 OF T HE ACT TOWARDS PURCHASE OF ANOTHER NEW RESIDENTIAL FLAT HAVE BEEN DULY REFLECTED. IN SUM AND SUBSTANCE, THE PLEA OF THE LEARNED REPRESENTATIVE IS THAT THOUGH THE NAME OF THE ASSESSEE APPEARED IN THE PURCHASE DEED AS WELL 5 ITA NO. 1862/MUM/2015 SHRI ANAND SHAH AS IN THE SALE DEED, IN EFFECT , AS SESSEE HAD NO BENEFICIAL OWNERSHIP IN THE PROPERTY AND, THEREFORE, NO PART OF THE CAPITAL GAINS ACCRUING ON THE SALE OF THE PROPERTY COULD BE ASSESSED IN THE HANDS OF THE ASSESSEE. 5. ON THE OTHER HAND, THE LD. DR APPEARING FOR THE REVENUE REITERATED THE STAND OF THE LOWER AUTHORITIES BY POINTING OUT THAT THE PURCHASE DEED AS WELL AS THE SALE DEED INCLUDED THE NAME OF THE ASSESSEE, AND THAT EVEN THE BANK ACCOUNT IN QUESTION WAS IN THE JOINT NAMES AND, THEREFORE, THE ASSESSING OFFICER WAS JUSTIFIED IN BRING ING TO TAX 50% OF THE LONG TERM CAPITAL GAIN IN THE HANDS OF THE ASSESSEE. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. AS THE AFORESAID DISCUSSION REVEALS, THE CRUX OF THE CONTROVERSY REVOLVES AROUND AS TO WHETHER THE GAIN ARISING ON SALE OF T HE PROPERTY, NAMELY, FLAT IN TARDEO COURT HOUSING SOCIETY CAN BE PARTLY ASSESSE D IN THE HANDS OF THE ASSESSEE? THE CASE MADE OUT BY THE REVENUE IS THAT THE AGREEMENT FOR PURCHASE OF THE PROPERTY DATED 30.09.2004 REFLECTS ASSESSEE ALONGWITH HIS BROTHER, SH RI GAUTAM NAVINCHANDRA SHAH AS JOINT OWNERS. SIMILAR IS THE SITUATION IN THE SALE AGREEMENT DATED 22.02.2011 IN TERMS OF WHICH SAID PROPERTY HAS BEEN SOLD. ON THE FIRST LOOK, THE PLEA OF THE REVENUE APPEARS TO BE QUITE POTENT; SO HOWEVER, THE ASSESSEE HAS REFERRED TO VARIOUS FACTS TO JUSTIFY HIS ASSERTION THAT FOR ALL INTENTS AND PURPOSES, THE PROPERTY WAS BENEFICIALLY FULLY OWNED BY ASSESSEES BROTHER, AND THAT HIS NAME WAS MERELY A TECHNICAL FORMALITY. IN SUPPORT OF THE SAID ASSERTION, THE LEARNED RE PRESENTATIVE FOR THE ASSESSEE HAS TAKEN US THROUGH THE BANK STATEMENT THROUGH WHICH THE PAYMENTS HAVE BEEN MADE TO ACQUIRE THE FLAT. THOUGH THE SAID BANK ACCOUNT IS ALSO IN THE JOINT NAME WITH ASSESSEES BROTHER, BUT WHAT IS SOUGHT TO BE EMPHASISED IS 6 ITA NO. 1862/MUM/2015 SHRI ANAND SHAH THA T ALL ALONG, THE TRANSACTIONS IN THIS BANK ACCOUNT HAVE BEEN OFFERED FOR TAXATION IN THE HANDS OF THE ASSESSEES BROTHER ONLY. THE ASSESSEE HAS ALSO REFERRED TO THE EXPENSES INCURRED ON THE MAINTENANCE OF THE FLAT, ELECTRICITY AND TELEPHONE BILLS IN THE I NTERREGNUM PERIOD OF HOLDING OF THE PROPERTY TO DEMONSTRATE THAT THE FLAT WAS MAINTAINED BY ASSESSEES BROTHER ALONE. ALL THESE ASPECTS HAVE A CRITICAL BEARING ON EVALUATION OF ASSESSEES PLEA THAT HIS NAME WAS INCLUDED IN THE TRANSACTION ONLY FOR TECHNIC AL CONSIDERATION WHEREAS, IN SUM AND SUBSTANCE, THE BENEFICIAL OWNERSHIP OF THE PROPERTY WAS ALWAYS OF ASSESSEES BROTHER ALONE. IT IS ALSO A FACT THAT SO FAR AS ASSESSEES BROTHER IS CONCERNED, HE HAS DECLARED THE LONG TERM CAPITAL GAIN ACCRUING ON THE S ALE OF THE PROPERTY IN HIS RETURN OF INCOME. PERTINENTLY , WHAT IS EMERGING FROM THE ORDER S OF THE AUTHORITIES BELOW IS THAT THE FACTUAL ASSERTION S OF THE ASSESSEE HAVE BEEN NOTED, BUT THE SAME HAVE NEITHER BEEN NEGATED AND NOR PUT TO VERIFICATION AT ANY STAGE. IN OUR CONSIDERED OPINION, IF THE ASSERTIONS OF THE ASSESSEE THAT THE TRANSACTIONS IN THE RELEVANT BANK ACCOUNT, WHICH HAS BEEN USED TO ACQUIRE THE PROPERTY, HAVE ALL ALONG BEEN DECLARED IN THE INCOME - TAX RETURNS OF ASSESSEES BROTHER, IT WO ULD JUSTIFY THE STAND OF THE ASSESSEE THAT HE WAS NOT THE BENEFICIAL OWNER OF THE PROPERTY, AND THAT THE ENTIRE OWNERSHIP OF THE PROPERTY VESTED IN ASSESSEES BROTHER. FURTHER, THE CIRCUMSTANCES IN WHICH ASSESSEES NAME APPEARED IN THE SALE DEED HAS ALSO BEEN SOUGHT TO BE JUSTIFIED ON THE BASIS OF A CONFIRMATION ISSUED BY THE PURCHASERS, COPY OF WHICH IS PLACED AT PAGE 71 OF THE PAPER BOOK. THIS PIECE OF EVIDENCE WAS NOT BEFORE THE LOWER AUTHORITIES, BUT IN OUR VIEW, IT IS QUITE GERMANE TO DECIDE THE CONT ROVERSY AND, THEREFORE, WE DEEM IT FIT AND PROPER TO ADMIT THE SAME. IN TERMS OF AFORESAID DISCUSSION, WE ARE INCLINED TO HOLD THAT THE SAY OF THE ASSESSEE THAT HE IS NOT THE BENEFICIAL OWNER OF THE PROPERTY HAS NOT BEEN APPROPRIATELY DEALT WITH BY 7 ITA NO. 1862/MUM/2015 SHRI ANAND SHAH THE LO WER AUTHORITIES INASMUCH AS THE FACTUAL ASSERTIONS MADE BY THE ASSESSEE DESERVE TO BE CONSIDERED AND APPRECIATED APPROPRIATELY. FOR INSTANCE, I F THE ASSESSEE IS ABLE TO DEMONSTRATE BEFORE THE ASSESSING OFFICER THAT THE FUNDS IN THE BANK ACCOUNT USED TO AC QUIRE THE PROPERTY HAVE INDEED BEEN DECLARED BY THE ASSESSEES BROTHER IN HIS INCOME - TAX RETURNS, IT WOULD IMPLY THAT THE SAID FUNDS BENEFICIALLY BELONGED TO ASSESSEES BROTHER WHICH WILL ENABLE THE ASSESSING OFFICER TO CORRECTLY COMPLY WITH THE PROVISIONS OF SEC. 45(1) OF THE ACT FOR THE PURPOSE OF ASSESSING THE CAPITAL GAINS IN THE RIGHT HANDS. FOR THE SAID PURPOSE, AND FOR ENABLING THE ASSESSING OFFICER TO APPROPRIATELY CONSIDER AFRESH THE ASSESSEES STAND, WE DEEM IT FIT AND PROPER TO REMAND THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL ALLOW THE ASSESSEE A REASONABLE OPPORTUNITY TO PRESENT HIS SUBMISSIONS AND MATERIAL IN SUPPORT OF HIS STAND AND ONLY THEREAFTER, THE ASSESSING OFFICER SHALL PASS AN ORDER AFRESH ON TH E ISSUE REGARDING ASSESSABILITY OF LONG TERM CAPITAL GAIN, IF ANY, IN THE HANDS OF THE ASSESSEE, AS PER LAW. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH F EBRUARY , 2018. SD/ - SD/ - ( AMARJIT SINGH ) JUDICIAL MEMBER (G.S. PANNU) ACCOUNTANT MEMBER MUMBAI, DATE : 14 TH FEBRUARY , 201 8 *SSL* 8 ITA NO. 1862/MUM/2015 SHRI ANAND SHAH COPY TO : 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT(A) CONCERNED 4) THE CIT CONCERNED 5) THE D.R, A BENCH, MUMBAI 6) GUARD FILE BY ORDER DY./ASSTT. REGISTRAR I.T.A.T, MUMBAI