Ramchandra Reddy Pothuganty, Hyderabad V. Income Tax Officer, Ward-15(1), Hyderabad

ITA 1897/Hyd/2017

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 5658 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-10-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Next Hearing Date: 30-09-2020
• Assessment Year: 2008-2009
• Appeal Filed On: 20-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A VENKATA RAO
• Keywords: Sale consideration of property below Jantri Value; Gift; Source of fund; Revised return; Capital Gains
• Section: 50C; 13; 148

Judgement Text

ITA NO 1897 OF 2017 RAMACHANDRA REDD Y POTHUGANTY HYDERABAD. PAGE 1 OF 7 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B SMC BENCH, HYDERABAD (THROUGH VIDEO CONFERENCING) BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER ITA NO.1897/HYD/2017 ASSESSMENT YEAR: 2008-09 SHRI RAMA CHANDRA REDDY POTHUGANTY, SECUNDERABAD PAN:AEJPP5652G VS. INCOME TAX OFFICER WARD 15(1) HYDERABAD (APPELLANT) (RESPONDENT) ASSESSEE BY: SMT. S. SANDHYA REVENUE BY : SRI A. VENKATA RAO, DR DATE OF HEARING: 30/09/2020 DATE OF PRONOUNCEMENT: 05/10/2020 ORDER THIS IS ASSESSEES APPEAL FOR THE A.Y 2008-09 AGAIN ST THE ORDER OF THE CIT (A)-7, HYDERABAD, DATED 6.9.20 17. 2. BRIEF FACTS OF THE CASE ARE THAT THE AO RECEIVED INFORMATION THAT THE ASSESSEE HAD SOLD TWO PLOTS, I .E. OPEN PLOT NO.19, ADMEASURING 416.67 SQ. YARDS AND OPEN PLOT N O.21, ADMEASURING 233.33 SQ. YARDS, TOTAL ADMEASURING 650 SQ. YARDS, IN SURVEY NO.44, SITUATED AT MACHA BOLLARUM, SECUND ERABAD CANTONMENT, FOR A CONSIDERATION OF A TOTAL OF RS.13 .00 LAKHS AS PER REGISTERED SALE DEED NO.1182/2007 DATED 30.06.2 007, AS AGAINST THE SRO VALUE OF RS.17,55,000/- ON WHICH TH E STAMP DUTY WAS PAID. THEREFORE, HE OBSERVED THAT THE ASSESSEE IS LIABLE TO PAY CAPITAL GAINS TAX IN TERMS OF PROVISIONS OF SECTION 50C(1) OF THE I.T. ACT. ON VERIFICATION OF THE RECORDS, IT WAS NOTICED THAT NO CAPITAL GAIN WAS ADMITTED BY THE ASSESSEE AND SINCE THE AO WAS SATISFIED THAT THE CAPITAL GAIN ON SALE OF PROPERTY HAD ESCAP ED ASSESSMENT, ITA NO 1897 OF 2017 RAMACHANDRA REDD Y POTHUGANTY HYDERABAD. PAGE 2 OF 7 HE ISSUED A NOTICE TO THE ASSESSEE U/S 148 ON 25.3. 2015. THE NOTICE WAS SERVED ON THE ASSESSEE ON 31.3.2015. HOW EVER, THE ASSESSEE DID NOT RESPOND AND NONE APPEARED FOR THE ASSESSEE TILL 2/6/2015 ON WHICH DATE A LETTER WAS FILED STATING T HAT THE ASSESSEES SOURCE OF INCOME IS COMMISSION FROM LAND DEALS AND HE HAS BEEN FILING HIS INCOME TAX RETURNS REGULARLY AN D FOR THE A.Y 2008-09 ALSO, HE HAD FILED HIS INCOME TAX RETURN ON 2.9.2008 DECLARING TOTAL INCOME OF RS.1,24,520/-. A COPY OF THE RETURN OF INCOME FOR THE A.Y 2008-09 AND THE REVISED RETURN O F INCOME DECLARING TOTAL INCOME OF RS.14.00 LAKHS WERE FILED . WITH REGARD TO THE REGISTERED DOCUMENT NO.1182/2007, IT WAS STATED THAT THE ASSESSEE IS NOT THE OWNER OF THE PROPERTY AND THAT HE HAS REGISTERED THE SALE DEED AS A POWER OF ATTORNEY HOL DER ONLY AND NOT AS AN OWNER OF THE PROPERTY AND THAT THE DOCUME NT CLEARLY STATES THIS FACT AND THEREFORE, THERE CANNOT BE ANY CAPITAL GAINS IN HIS HANDS. 3. SINCE THE ASSESSEE DID NOT FILE ANY DOCUMENT TO PROVE THAT THE PROPERTY DID NOT BELONG TO HIM AND THAT HE HAS EXECUTED THE REGISTERED DOCUMENT AS POWER OF ATTORNEY AND NO T OWNER OF THE PROPERTY, THE AO DID NOT ACCEPT THIS ARGUMENT. HE ACCORDINGLY ISSUED A LETTER DATED 29.07.2015 REQUIRING THE ASSE SSEE TO FURNISH CERTAIN INFORMATION CALLED THEREIN. IN REPLY THERET O, THE ASSESSEE FILED A COPY OF THE G.P.A VIDE DOCUMENT NO.618 OF 1 990- DATED 3.8.1990 AND BANK A/C STATEMENT FOR THE FINANCIAL Y EAR 2007-08 AND WITH REGARD TO THE DIRECTION OF THE AO TO PRODU CE THE VENDORS AS WELL AS HIS VENDEES, HE REQUESTED THE AO TO ALLO W SOME MORE TIME. THEREAFTER, IT WAS ALSO STATED THAT AS HE COU LD NOT SELL THE ENTIRE PROPERTY, THE LEFTOVER 2 PLOTS WERE PURCHASE D BY HIM AND REGISTERED IN THE NAMES OF HIS SON SRI P. SREENIVAS A REDDY AND HIS ITA NO 1897 OF 2017 RAMACHANDRA REDD Y POTHUGANTY HYDERABAD. PAGE 3 OF 7 NEPHEW SHRI P. SATISH REDDY AND THE AMOUNT WAS PAID OUT OF THEIR FAMILY INCOME TO THE VENDORS. HE ALSO EXPRESS ED HIS INABILITY TO PRODUCE THE VENDORS. WHEN THE ASSESSEE WAS ASKED TO FURNISH THE PAYMENT DETAILS OF RS.13.00 LAKHS TO THE OWNERS OF THE PROPERTY AND THE DATE ON WHICH THE SAME WAS RECEIVE D FROM THE VENDEES AND THE DETAILS OF THE COMMISSION RECEIVED BY THE ASSESSEE ON THIS DEAL, THE ASSESSEE PRODUCED THE VE NDEES SHRI P. SATISH REDDY AND SRI P. SREENIVAS REDDY. THE AO REC ORDED THEIR STATEMENTS ON 13.10.2015 WHO DENIED HAVING PAID ANY AMOUNT FOR THE PURCHASE OF THE PROPERTY SINCE THEY HAD NO SOURCES OF INCOME AT THAT TIME AND STATED THAT THE AMOUNT OF R S.13.00 LAKHS WAS PAID BY THEIR RESPECTIVE FATHERS OUT OF THEIR F AMILY SAVINGS TO THE LAND OWNERS AND WHEN THEY WERE ASKED TO FURNISH THE PROOF OF PAYMENT OF THE AMOUNT TO THE LAND OWNERS, THEY HAVE STATED THAT THEY DO NOT REMEMBER THE DETAILS. FROM THE DOCUMENT PRODUCED BY THE ASSESSEE, THE AO OBSERVED THAT THE GPA DOCUM ENT NO.618 OF 1990 DATED 3.8.1990 WAS AN IRREVOCABLE GENERAL P OWER OF ATTORNEY GIVEN BY THE LAND OWNERS IN RESPECT OF THE LAND IN SURVEY NO.44, ADMEASURING 28 GUNTAS OR 3388 SQ.YARDS SITUA TED AT MACHA BOLLARAM, SECUNDERABAD CANTONMENT AND THAT TH E ASSESSEE HAS ACQUIRED AN ABSOLUTE RIGHT/INTEREST OV ER THE PROPERTY AND THAT HE CAN SELL, GIFT, LEASE, MORTGAG E ETC., THE SAID PROPERTY. THEREFORE, HE OBSERVED THAT THE ASSESSEE HAS BECOME THE ABSOLUTE OWNER OF THE PROPERTY AND THEREAFTER, HE T RANSFERRED THE PROPERTY TO SHRI P. SATISH REDDY AND SRI P. SREENIV AS REDDY AND THEREFORE, CAPITAL GAIN HAS ARISEN THEREFROM. HE AC CORDINGLY TREATED IT AS A TRANSFER AND HAS TAKEN INTO CONSIDE RATION THE SRO VALUE OF THE PLOTS AT RS.17.55 LAKHS AS LONG TERM C APITAL GAINS U/S 50C OF THE ACT AND BROUGHT IT TO TAX. ITA NO 1897 OF 2017 RAMACHANDRA REDD Y POTHUGANTY HYDERABAD. PAGE 4 OF 7 4. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFO RE THE CIT (A) WHO CONFIRMED THE ORDER OF THE AO AND THE A SSESSEE IS IN SECOND APPEAL BEFORE THE TRIBUNAL BY RAISING THE FO LLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) IS ERRONEOUS BOTH ON FACTS AND IN LAW . 2. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN HOLDING THAT THE APPELLANT TRANSFERRED TWO PLOTS ADMEASURING TOTALLY TO 650 SQ. YARDS SITUATED AT MACHA BOLARUM, SECUNDERABAD CANTONMENT WITHOUT CONSIDERING THE FACT THAT THERE IS NO TRANSFER OF T HE PROPERTY. 3. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT TO HAVE CONSIDERED THE FACT THAT THE APPELLAN T ACTED AS A GPA BUT NOT AS THE OWNER OF THE PROPERTY AND, THEREFORE, CAPITAL GAIN IS NOT ASSESSABLE IN T HE ASSESSMENT OF THE APPELLANT. 4. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT TO HAVE CONSIDERED THE FACT THAT THE GPA WAS EXECUTED VIDE DOCUMENT NO.618/1990 ON 3.8.1990 AND THE GPA HOLDER CANNOT TRANSFER THE PROPERTY TO HIMSELF AND, THEREFORE, THE APPELLANT TRANSFERRED T HE PROPERTY IN FAVOUR OF HIS CHILDREN. 5. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT TO HAVE CONSIDERED THE FACT THAT THE TRANSACT ION DOES NOT ATTRACT LIABILITY OF CAPITAL GAIN. 6. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME O F HEARING. 5. THE LEARNED COUNSEL FOR THE ASSESSEE SMT. S. SAN DHYA WHILE REITERATING THE SUBMISSIONS OF THE ASSESSEE B EFORE THE AUTHORITIES BELOW SUBMITTED THAT THE ASSESSEE WAS N OT THE OWNER OF THE PROPERTY BUT WAS ONLY A GPA HOLDER AND IN TH E RELEVANT PREVIOUS YEAR, THE PROPERTIES WERE REGISTERED IN TH E NAMES OF ASSESSEES SON AND NEPHEW BY THE ASSESSEE AS A GPA HOLDER BUT THE SALE CONSIDERATION HAS BEEN RECEIVED BY THE LAN D OWNERS. SHE ALSO DREW OUR ATTENTION TO THE STATEMENT OF ONE OF THE OWNERS I.E. SHRI K.DHARMA REDDY, S/O LATE K. MALLA REDDY WHEREI N HE HAD ITA NO 1897 OF 2017 RAMACHANDRA REDD Y POTHUGANTY HYDERABAD. PAGE 5 OF 7 ADMITTED TO HAVE RECEIVED CERTAIN AMOUNTS FROM THE ASSESSEE TOWARDS SALE OF SUBJECT LAND. THEREFORE, SHE SUBMIT TED THAT THE PROPERTY WAS NOT SOLD BY THE ASSESSEE AS AN OWNER B UT WAS SOLD AS A GPA HOLDER AND THERE WAS NO TRANSFER FROM WHIC H ANY CAPITAL GAIN HAS ARISEN IN THE HANDS OF THE ASSESSEE. 6. THE LEARNED DR, ON THE OTHER HAND, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE IRREVOCABLE GPA WAS GIVEN TO THE ASSESSEE IN THE YEAR 1990, WHE REAS THE PROPERTIES WERE REGISTERED IN THE NAME OF ASSESSEE S SON AND NEPHEW ON 30.06.2007 AND THEREFORE, IT IS CLEARLY A TRANSFER WITHIN THE MEANING OF SECTION 240 OF THE I.T. ACT. HE SUBM ITTED THAT THE RELATIONSHIP BETWEEN THE ASSESSEE AND THE VENDEES A LONE WILL NOT PROVE THAT THERE IS NO TRANSFER OF PROPERTY AND SIN CE THE SALE CONSIDERATION IS MENTIONED IN THE SALE DEED, THE AS SESSEE IS DEEMED TO HAVE RECEIVED THE SALE CONSIDERATION. HE FURTHER SUBMITTED THAT THE PROVISION OF SECTION 50C IS APPL ICABLE TO THE FACTS ON HANDS AND THEREFORE, THE AO HAS RIGHTLY IN VOKED THE PROVISIONS AND COMPUTED THE LONG TERM CAPITAL GAINS . 7. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, I FIND THAT THE GPA WAS GIVEN BY THREE PERSONS I.E. (I) SHRI K. PRATAP REDDY, SRI K. MADHAV REDDY AND SHRI K. DHARMA REDDY IN FAVOUR OF THE ASSESSEE IN THE YEAR 1990 AN D IT IS MENTIONED THEREIN THAT THE POSSESSION OF THE SAID L AND WAS ALSO GIVEN TO THE ASSESSEE, BUT THERE IS NO CONSIDERATIO N MENTIONED IN THE SAID GPA. AS SEEN FROM THE SALE DEED DATED 28.0 6.2007, THE LANDOWNERS ARE SHOWN AS THE VENDORS REPRESENTED BY THE GPA HOLDER I.E. THE ASSESSEE HEREIN AND THE CONSIDERATI ON MENTIONED THEREIN IS RS.13.00 LAKHS. FURTHER, FROM THE STATEM ENT OF SHRI K. ITA NO 1897 OF 2017 RAMACHANDRA REDD Y POTHUGANTY HYDERABAD. PAGE 6 OF 7 DHARMA REDDY ON QUESTION NO.15 AND 16 THEREIN, IT I S CLEAR THAT HE DID NOT RECEIVE ANY CONSIDERATION ON ACCOUNT OF GPA DOCUMENT AND IN REPLY TO QUESTION NO.25, HE HAD STATED THAT THE TOTAL CONSIDERATION FOR THE ENTIRE LAND SITUATED AT MACHA BOLARUM, SECUNDERABAD CANTONMENT WAS RECEIVED BY HIM AND BY HIS BROTHERS AT RS.12 TO 13 LAKHS AND HE ALSO CONFIRMED THE AGREEMENT CUM SALE DATED 30.06.2008 AS SIGNED BY HI M CONFIRMING THE RECEIPT OF SALE CONSIDERATION. IN RE PLY TO QUESTION NO.27, HE ALSO STATED THAT THE AMOUNT SHOWN TO HAVE BEEN RECEIVED AFTER 2004 WAS RECEIVED BY HIS BROTHERS AN D NOT BY HIM. THIS IS THE STATEMENT OF SHRI K. DHARMA REDDY UNDER OATH AND THEREFORE, IT IS CLEAR THAT THE GPA GIVEN TO THE AS SESSEE IS NOT FOR THE ANY CONSIDERATION AND THEREFORE, THE ASSESSEE H AS NOT BECOME THE OWNER OF THE PROPERTY BY VIRTUE OF THE GPA. WHE N THE ASSESSEE IS NOT THE OWNER OF THE PROPERTY, THE SALE CONSIDER ATION ON ACCOUNT OF SALE DEEDS IN FAVOUR OF HIS SON AND NEPH EW CANNOT BE DEEMED TO HAVE BEEN RECEIVED BY HIM IN HIS OWN RIGH T AND THEREFORE, NO CAPITAL GAIN HAS ARISEN IN HIS HANDS. IF THE VENDEES ARE NOT ABLE TO EXPLAIN THEIR SOURCES OF FUNDS, IT IS TO BE BROUGHT TO TAX IN THEIR HANDS AND NOT IN THE HANDS OF THE A SSESSEE. 8. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH OCTOBER, 2020. SD/- (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 5 TH OCTOBER, 2020. VINODAN/SPS ITA NO 1897 OF 2017 RAMACHANDRA REDD Y POTHUGANTY HYDERABAD. PAGE 7 OF 7 COPY TO: 1 SHRI RAMA CHANDRA REDDY POTHUGANTY, PLOT NO.160, VAYUPURI OFFICERS COLONY, SAINIKPURI, SECUNDERABAD 500094 2 ITO WARD 15(1) IT TOWERS, AC GUARDS, HYDERABAD 3 CIT (A)-7, HYDERABAD 4 PR. CIT 7 HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER