MOHD. AFZAL ABUBAKER MITHA, Nagpur V. ITO-WARD-6(3), Nagpur

ITA 187/NAG/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1295 (ITAT-NAGPUR)
• Duration Of Justice: 2 year(s) 8 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-12-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 25-07-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 08-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NARENDRA KANE
• Assessee Lawyers: R P C HANDEKAR
• Keywords: Unexplained investment; Sale consideration of property below Jantri Value; Business income; Opportunity of being heard; Cost of acquisition
• Section: 50C

Judgement Text

1 ITA NO. 187/NAG/2014. IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI, JUDICIAL MEMBER.. I.T.A. NO. 187/NAG/2014 ASSESSMENT YEAR : 2009 - 10. MOHD. AFZAL ABUBAKER MITHA, THE INCOME - TAX OFFICER, NAGPUR. VS. WARD - 6(3), NAGPUR. PAN AAQPM2378D. APPELLANT. RESPONDENT. APPELLANT BY : SHRI R.P. CHANDEKAR. RESPONDENT BY : SHRI NARENDRA KANE. DATE OF HEARING : 2 4 - 11 - 2016 DATE OF PRONOUNCEMENT : 28 TH DEC., 2016 O R D E R. PER SHAMIM YAHYA, A.M . : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(APPEALS) - II, NAGPUR DATED 08 - 01 - 2014 AND PERTAIN TO ASSESSMENT YEAR 2009 - 10. THE GROUNDS OF APPEAL READ AS UNDER : 1. THE HON. CIT(APPEALS), NAGPUR FAILED TO CONSIDER THAT FACTS OF THE CASE AND EVIDENCE IN TRUE PERSPECTIVE AND ERRED IN DISALLOWING GROUND NO. 1(A) AND FURTHER ERRED IN APPLYING SEC. 50C. 2. THE HON. CIT(APPEALS), NAGPUR FAILED TO CONSIDER THE FACTS OF THE CASE AND EVIDENCE IN TRUE PERSPECTIVE AND ERRED IN DISALLOWING G ROUND NO. 1(B) AND FURTHER ERRED IN TREATING BUSINESS LOSS OF RS.28,280/ - AS CAPITAL LOSS. 3. THE HON.CIT(APPEALS), NAGPUR FAILED TO CONSIDER THAT FACTS OF THE CASE AND EVIDENCE IN TRUE PERSPECTIVE AND ERRED IN DISALLOWING GROUND NO. 1(C) AND FURTHER ERRED IN TREATING RS.29.53 LACS AS UNEXPLAINED INVESTMENT. 2. IN THIS CASE THE AO NOTED THAT THE ASSESSEE HAS FILED A RETURN OF INCOME IN FORM ITR - 2. THE RETURN WAS PROCESSED U/S 143(1). THEREAFTER THE CASE WAS 2 ITA NO. 187/NAG/2014. SELECTED FOR SCRUTINY. THE AO NOTED THAT THE ASSESS EE HAS SOLD ONE PROPERTY REFERRED AS PROPERTY NO.1 FOR A CONSIDERATION OF RS.34 LAKHS. THE VALUE AS PER STAMP DUTY VALUATION WAS RS.90,56,000/ - . THE AO PROCEEDED TO ADOPT THE PROVISIONS OF SECTION 50C. IT WAS SOUGHT TO BE EXPLAINED BY THE APPELLANT THAT HE HAD PURCHASED THE ABOVE PROPERTY WITH AN IDEA OF SETTING UP OF HOSTEL BUT SIN C E HE DID NOT HAVE LIQUIDITY HE DECIDED TO SELL THE SAID PROPERTY ALMOST IMMEDIATELY A ND THAT EARNING PROFIT WAS THE MAIN MOTIVE BEHIND THE TRANSACTION. THE AO, HOWEVER, DISREGAR DED THE EXPLANATION OF THE APPELLANT AND BROUGHT THE SAID AMOUNT OF RS.54,73,140/ - TO TAX AS SHORT TERM CAPITAL GAIN. 3. THE AO FURTHER NOTED THAT THE APPELLANT HAD SOLD HIS SHARE OF PROPERTY LOCATED AT GOKUL GOVIND APARTMENT FOR A CONSIDERATION OF RS.7,3 2,000/ - . THE AO WORKED OUT THE COST OF ACQUISITION OF THE SAID SHARE OF THE APPELLANT AND CALCULATED THE SHORT TERM CAPITAL LOSS ON THE SALE OF SAID PROPERTY (REFERRED TO AS PROPERTY NO. II BY THE AO IN HIS ASSESSMENT ORDER) AT RS.28,280/ - AS UNDER : PRO PERTY SOLD FOR RS.36,60,000/ - ON 12 - 12 - 2008 ASSESSEE HAS 1/5 TH SHARE RS.7,32,000/ - LESS COST OF PURCHASE ASSESSEES SHARE CALCULATED AT PARA 2(A) RS.7,60,280/ - ------------------ SHORT TERM LOSS ON SALE OF PROPERTY NO.II RS. 28,280/ - ------------------ THE AO FURTHER NOTED THAT THE APP ELLANT HAD EXECUTED A REGISTERED POWER OF ATTORNEY WITH ONE SMT. SUGARBEE ABDUL BASHIR (REFERRED AS PROPERTY NO. III BY THE AO IN HIS ASSESSMENT ORDER) FOR ONE PROPERTY SITUATED AT MOUZA CHINCHBHAWAN, NAGPUR FOR A CONSIDERATION OF RS. 77 LACS. IT WAS FURTH ER NOTED THAT THE APPELLANT HAD BORNE TOTAL COST FOR EXECUTING THE POWER OF ATTORNEY AT RS.2953840/ - AND CONSEQUENTLY THE AO ASKED THE APPELLANT TO EXPLAIN THE SOURCE OF SAID CASH. SINCE THE APPELLANT WAS UNABLE TO FURNISH ANY EXPLANATION WITH REGARD TO TH E SOURCE OF INVESTMENT OF THE SAID PROPERTY, HE ADDED THE SAID AMOUNT OF RS. 2953840/ - TO THE INCOME OF THE APPELLANT. 3 ITA NO. 187/NAG/2014. 4. BEFORE THE LEARNED CIT(APPEALS) THE ASSESSEE SUBMITTED THAT HE WAS REGULARLY DOING BUSINESS OF SALE AND PURCHASE OF PROPERTY AND THE SAID FACT WAS NOTICED BY THE AO IN AY 2008 - 09 ALSO DURING THE COURSE OF SCRUTINY PROCEEDINGS. IT WAS SUBMITTED THAT IN ASSESSMENT PROCEEDINGS AND APPELLATE PROCEEDINGS FOR AY 2008 - 09 IT WAS ESTABLISHED THAT THE APPELLANT IS TRADING IN PROPERTY AND THAT TH EREFORE PROVISIONS OF SECTION 50C WOULD NOT BE APPLICABLE. IT WAS FURTHER SUBMITTED THAT IF THE APPELLANT IS TREATED TO BE A TRADED IN PROPERTIES, PROVISIONS OF SECTION 50C WOULD NOT BE ATTRACTED. IT WAS ALSO SUBMITTED THAT THE APPELLANT CLAIMED BEFORE THE AO , AT THE TIME OF ASSESSMENT PROCEEDINGS, THAT THE PROPERTY SHOULD BE REFERRED TO VALUATION OFFICER BUT THE AO DID NOT REFER THE PROPERTY TO THE VALUATION OFFICER AND DENIED THE ALTERNATE REMEDY AVAILABLE UNDER SECTION 50C OF THE ACT. 5. THE LEARNED CIT(APPEALS), HOWEVER, WAS NOT SATISFIED. HE HELD THAT THE ASSESSEE HAS NOT SHOWN THE ABOVE TRANSACTION OF PURCHASE AND SALE OF THE PROPERTY IN ITS RETURN OF INCOME. HE FURTHER NOTED THAT THE ASSESSEE HAS FILED RETURN IN FORM ITR - 2 WHICH AL SO MAKES IT EVIDENT THAT THE ASSESSEE IS NOT ENGAGED IN THE BUSINESS OF PURCHASE AND SALE OF PROPERTY. LEARNED CIT(APPEALS) PROCEEDED TO DISMISS THE ASSESSEES PLEA AND UPHELD THE AOS ACTION. 6. LEARNED CIT(APPEALS) FURTHER DISMISSED THE ASSESSEES PLEA OF SHORT TERM CAPITAL LOSS OF RS.28,280/ - ON THE GROUND THAT IT HAS BEEN HELD THAT THE ASSESSEE IS NOT ENGAGED IN THE BUSINESS OF PURCHASE AND SALE OF PROPERTY. 7. AS REGARDS THE ADDITION OF RS.29,53,840/ - BEING UNACCOUNTED INVESTMENT, THE ASSESSEE SUBMITTED THAT THE SAID INVESTMENT WAS DULY REFLECTED IN THE BOOKS OF ACCOUNTS AND OFFERED TO PRODUCE THE CASH BOOK, BANK BOOK ETC. HOWEVER, LEARNED CIT(APPEALS) OBSERVED THAT THE ASSESSEE HAS NOT PRODUCED NECESSARY CASH BOOK AND BANK BOOK. HE NOTED THAT S UFFICIENT OPPORTUNITY WAS GIVEN BY THE AO TO THE ASSESSEE. HENCE HE CONFIRMED THE ADDITION ON THIS ACCOUNT. 4 ITA NO. 187/NAG/2014. 8. AGAINST THE ABOVE ORDER, THE ASSESSEE IS IN APPEAL BEFORE US. 9. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. WE FIND THAT IN THE E ARLIER ASSESSMENT YEAR THE AO HAS HELD THAT THE ASESSEES INCOME FROM SALE OF LAND WAS INCOME FROM BUSINESS. DESPITE THIS SUBMISSION THE AUTHORITIES BELOW HAVE CHOSEN TO IGNORE THIS ASPECT ON THE PLEA THAT THE ASSESSEE HAS SUBMITTED THE RETURN OF INCOME IN FORM ITR - 2. IN OUR CONSIDERED OPINION THIS IS NOT AT ALL A COGENT REASONING. IN THE PRECEDING SCRUTINY ASSESSMENT THE REVENUE HAS HELD THAT THE ASSESSEES TRANSACTION IN SALE AND PURCHASE OF LAND WAS A BUSINESS INCOME. IF THIS BE SO, THERE IS NO QUESTIO N OF APPLYING THE PROVISIONS OF SECTION 50C. FURTHER MORE EVEN IF THE SAME IS NOT TREATED AS BUSINESS ASSET, IT IS INCUMBENT UPON THE AO TO REFER THE MATTER TO THE VALUATION CELL IF THE ASSESSEE OBJECTS IT. FURTHER MORE THE ASSESSEES PLEA OF SUBMISSION OF BOOKS OF ACCOUNTS HAS ALSO NOT BEEN ENTERTAINED. 10. WE FIND THAT THE HONBLE APEX COURT IN THE CASE OF MAHARANA BHIMSINGH VS. CIT IN ORDER DATED 6 TH DECEMBER, 2016 HAS HELD THAT THOUGH PRINCIPLES OF RES JUDICATA DO NOT APPLY, THE DEPARTMENT SHOULD NOT E NDLESSLY PURSUE MATTER WHICH HAVE ATTAINED FINALITY IN EARLIER YEARS. IN THIS REGARD THE HONBLE APEX COURT HAS ALSO REFERRED TO ITS EARLIER DECISION IN M/S RADHA SWAMY SA T SANG. EXAMINING THE PRESENT CASE ON THE TOUCH STONE OF ABOVE SAID DECISION, WE FIND THAT THE REVENUE HAVING HELD THAT IN EARLIER YEARS THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF PURCHASE AND SALE OF LAND CANNOT MAKE AN ABOUT - TURN AND HOLD THAT THE ASSESSEE WAS NOT ENGAGED INTO THE SAME MERELY BECAUSE THE RETURN OF INCOME HAS BEEN FIL ED IN FORM ITR - 2. HENCE ON THE ANVIL OF AFORESAID SUPREME COURT DECISION, IN OUR CONSIDERED OPINION, INTEREST OF JUSTICE WOULD BE SERVED IF THE MATTER IS REMITTED TO THE FILE OF THE AO. THE AO IS DIRECTED TO DECIDE AFRESH AFTER TAKING INTO ACCOUNT THE RES ULT OF EARLIER YEARS ASSESSMENT AND THE HONBLE APEX COURT EXPOSITION AS MENTIONED ABOVE. NEEDLESS TO ADD THE ASSESSEE SHOULD BE GRANTED ADEQUATE OPPORTUNITY OF BEING HEARD. 5 ITA NO. 187/NAG/2014. 1 1 . IN THE RESULT, THIS APPEAL BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE S. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 28 TH DAY OF DEC., 2016. SD/ - SD/ - (RAM LAL NEGI) ( SHAMIM YAHYA) JUDICIAL MEMBER. ACOUNTANT MEMBER. NAGPUR, DATED: 28 TH DEC. , 2016. COPY FORWARDED TO : 1. MOHD. AFZAL ABUBAKER MITHA, NEAR GUMAN BUILDING, SADAR, NAGPUR - 440001. 2. I.T.O., WARD - 6(3), NAGPUR. 3. C.I.T. - III , NAGPUR. 4. CIT(APPEALS) - II , NAGPUR. 5. D.R., ITAT, NAGPUR. 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR. WAKODE.