Abdul Aleem Khan, Hyd, Hyderabad V. ITO, Ward-6(4), Hyderabad

ITA 1914/HYD/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 66413 (ITAT-HYDERABAD)
• Duration Of Justice: 11 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 27-06-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 11-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M H NAIK
• Assessee Lawyers: A V RAGHURAM
• Keywords: Sale consideration of property below Jantri Value; Additional evidence; Cost of acquisition
• Section: 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO. 1913/HYD/2011 ASSESSMENT YEAR : 2008-09 RAZIA KHATOON, APPELLANT HYDERABAD. (PAN AXYPK5691A) VS. INCOME TAX OFFICER, WARD 6 (4), RESPONDEN T HYDERABAD ITA NO. 1914/HYD/2011 ASSESSMENT YEAR : 2008-09 ABDUL ALEEM KHAN, APPELLANT HYDERABAD. (PAN ABLPA4237B) VS. INCOME TAX OFFICER, WARD 6 (4), RESPONDEN T HYDERABAD APPELLANT BY : SHRI A.V. RAGHURAM RESPONDENT BY : SHRI M.H. NAIK DATE OF HEARING : 10/10/2012 DATE OF PRONOUNCEMENT : 31/10/ 2012 ORDER PER ASHA VIJAYARAGHAVAN, J.M.: BOTH THESE APPEALS FILED BY DIFFERENT ASSESSEES BEI NG HUSBAND AND WIFE ARE DIRECTED AGAINST THE RESPECTIVE ORDERS OF CIT(A)-IV, 2 ITA NO. 1913 & 1914/HYD/2011 RAZIA KHATOON & ABDUL ALEEM KHAN HYDERABAD AND SINCE IDENTICAL ISSUE IS INVOLVED IN BOTH THESE APPEALS, THEY WERE HEARD TOGETHER AND THEREFORE A C OMMON ORDER IS PASSED FOR THE SAKE OF CONVENIENCE. ITA NO. 1913/HYD/2011 IN THE CASE OF RAZIA KHATOO N 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE IS AN INDIVIDUAL. FOR THE YEAR UNDER CONSIDERATION, THE A SSESSEE FILED RETURN OF INCOME ADMITTING TOTAL INCOME OF RS. 46,5 3,464/-. DURING THE PREVIOUS YEAR RELEVANT TO AY UNDER CONSIDERATIO N, THE ASSESSEE ALONG WITH OTHER CO-OWNERS SOLD A RESIDENTIAL HOUSE SITUATED AT ROAD NO. 5, BANJARA HILLS, HYDERABAD CONSISTING OF 719.9 8 SQ. YARDS OF LAND AND BUILT UP AREA OF 4,100 SQ.FT. CONSISTING O F GROUND AND FIRST FLOOR. THE SALE CONSIDEATION AS PER THE SALE DEED W AS RS. 2,70,00,000/-. HOWEVER, FOR STAMP VALUATION PURPOSE S, THE SRO HAD ADOPTED RS. 3,82,12,000/- AS THE VALUE AND DETERMIN ED THE STAMP DUTY PAYABLE. WITH RESPECT TO INCOME-TAX, THE ASSES SEE DECLARED THE SALE VALUE AS PER THE SALE DEED AT RS. 2,70,00,000/ - AND PAID CAPITAL GAINS TAX ACCORDINGLY. THE ASSESSING OFFICER OPINED THAT AS THE SRO VALUE WAS MORE THAN THE SALE CONSIDERATION SHOWN, P ROVISIONS OF SEC. 50C CAME INTO FORCE. ACCORDINGLY, THE ASSESSEE WAS ASKED TO FILE HIS OBJECTIONS, IF ANY, AGAINST ADOPTION OF TH E SRO VALUE. THE ASSESSING OFFICER REFERRED THE ISSUE OF DETERMINATI ON OF MARKET VALUE TO THE VALUATION CELL. HOWEVER, AS THE CASE W AS GETTING BARRED BY LIMITATION, THE ASSESSMENT WAS COMPLETED, ADOPTI NG THE SALE VALUE OF THE PROPERTY AT RS. 3,81,13,000/- AS PER T HE PROVISIONS OF SEC. 50C, DETERMINING THE ASSESSEES SHARE IN THE S ALE PROCEEDS AT RS. 1,49,68,032/- BEING 39.17% OF RS. 3,82,13,000/- . 3 ITA NO. 1913 & 1914/HYD/2011 RAZIA KHATOON & ABDUL ALEEM KHAN 3. THE ASSESSEE WHILE FILING CAPITAL GAINS HAD CLAI MED INDEXED COST OF ACQUISITION AT RS. 1,47,469/- AND INDEXED C OST OF IMPROVEMENT AT RS. 24,43,170/- IN RESPECT OF THE CO ST OF IMPROVEMENT MADE IN 1990 AT RS. 8,07,000/-. THE ASS ESSEE ALSO CLAIMED SALES COMMISSION OF RS. 1,39,000/- PAID. HO WEVER, THE AO HAD ALLOWED ONLY INDEXED COST OF ACQUISITION OF RS. 1,47,496/- AND DISALLOWED INDEXED COST OF IMPROVEMENT ON THE GROUN D THAT THE PLINTH AREA MENTIONED IN SALE DEED DATED 31/05/1985 IS THE SAME AS THAT OF THE PLINTH AREA MENTIONED IN SALE DEED DATE D 10/09/2007. WITH RESPECT TO THE COMMISSION, THE AO HELD THAT NO EVIDENCE IS FURNISHED FOR PAYMENT OF THE SAME. THE AO COMPLETED THE ASSESSMENT ADOPTING THE SALE VALUE OF THE PROPERTY AT RS. 3,82,13,000/- AS PER THE PROVISIONS OF SECTION 50C, DETERMINING THE ASSESSEES SHARE IN THE SALE PROCEEDS AT RS. 1,49,6 8,032/- BEING 39.17% OF RS. 3,82,13,000/-. 4. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN AP PEAL BEFORE THE CIT(A). 5. BEFORE THE CIT(A), THE LEARNED AR OF THE ASSESSE E OBJECTED TO ADOPTION OF THE VALUE OF THE PROPERTY AT RS. 3,82,1 3,000/-, THE ASSESSEE FILED WRITTEN SUBMISSIONS BEFORE THE ASSES SING OFFICER STATING THAT THE VALUE AS PER STAMP PAPER AND REGIS TRATION DEPARTMENT (CARD) WAS RS. 2,15,70,000/-, AND THEREF ORE, WAS MUCH LOWER THAN THE AMOUNT OF RS. 2.7 CRORES OFFERE D TO TAX. THE AR OF THE ASSESSEE ALSO SUBMITTED A COPY OF THE VALUAT ION CERTIFICATE TO THAT EFFECT BEFORE THE ASSESSING OFFICER. IT WAS AL SO SUBMITTED THAT THE VALUE OF THE PROPERTY WAS WRONGLY TAKEN BY THE REGISTRATION DEPARTMENT AT THE TIME OF PROPERTY ON THAT PARTICUL AR DAY, AS THERE 4 ITA NO. 1913 & 1914/HYD/2011 RAZIA KHATOON & ABDUL ALEEM KHAN WAS CERTAIN AMBIGUITY AS TO THE VALUE OF THE PROPER TY. HE SUBMITTED THAT SINCE SALE CONSIDERATION OF RS. 2,70,00,000/- RECEIVED BY THE ASSESSEE AND OTHERS AS PER THE SALE DEED IS MORE TH AN THE VALUE DETERMINED AT RS. 2,15,70,000/- BY THE DEPARTMENT O F STAMPS AND REGISTRATION, THERE WAS NO OCCASION TO INVOKE THE P ROVISIONS OF SECTION 50-C OF THE ACT. THE AR OF THE ASSESSEE ALS O CONTENDED THAT THE AO ERRED IN ADOPTING COST OF ACQUISITION AT RS. 37,665/- ONLY AS AGAINST RS. 8,44,665/- CLAIMED BY THE ASSESSEE WIT HOUT ASSIGNING ANY REASONS. THE AR OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE ALSO AGGRIEVED BY THE DISALLOWANCE OF PAYMENT OF CO MMISSION FOR ARRANGING SALE WITHOUT ASSIGNING ANY REASONS. 6. WITH RESPECT TO INVOKING OF PROVISIONS OF SECTIO N 50-C, THE LEARNED AR SUBMITTED THAT THE ASSESSEE FILED A CERT IFICATE FROM THE SRO THAT THE VALUE AS PER THEIR REGISTER IS ONLY RS . 30,000/- PER SQ.YARD AND THAT THERE WAS SOME AMBIGUITY IN THE HI GHER VALUE. THE ASSESSEE ALSO SUBMITTED CERTIFICATES GIVEN BY THE S RO FOR INDIVIDUAL PLOTS 8/2/334/1 TO 9 & 19. FROM THE CERTIFICATES, T HE AO EXPLAINED THAT THE VALUE AS CERTIFIED BY THE SRO AS ON 01/09/ 2007, WHICH IS THE DATE OF REGISTRATION IS RS. 30,000/- PER SQ.YAR D. FOR ALL THE PLOTS EXCEPT PLOT NO. 4. FOR PLOT NO. 4 SURPRISINGLY THE VALUE IS COMPARED AT RS. 53,000/-, WHICH IS APPARENTLY AN ERROR WHICH HAS CREPT IN WHILE FEEDING IN COMPUTER. THE ASSESSEE ALSO ENCLO SED ANOTHER CERTIFICATE UNDER RIA ON 20/04/2011. IN RESPECT OF ALL THE THREE PLOTS WHEREIN IT WAS STATED AS RS. 20,000/- PER SQ. YARD AS ON 31/07/2007 AND AT RS. 30,000/- PER SQ.YARD AS ON 31 /01/2008. AS PER THIS, THE RATE SHOULD HAVE BEEN RS. 20,000/- SI NCE REGISTRATION WAS ON 01/09/2007 AND ONLY ON 31/01/2008 THE RATE G OT ENHANCED TO RS. 30,000/-. THE AR SUBMITTED THAT A CLARIFICAT ORY LETTER IN 5 ITA NO. 1913 & 1914/HYD/2011 RAZIA KHATOON & ABDUL ALEEM KHAN LR.NO. 166/2011, DT. 11/05/2011 ADDRESSED BY THE JT . SUB REGISTRAR TO THE SE, VALUATION CELL OF INCOME-TAX DEPT., IN W HICH IT IS CATEGORICALLY STATED THAT THE MARKET VALUE OF RS. 5 3,000 PER SQ.YARD HAPPENED TO BE STATED DUE TO WRONG FEEDING OF THE M ARKET RATE AT THE TIME OF REVISION AND THAT THE MARKET VALUE OF 8 -2-334/3 AND 4 AND 8-2-334/71/A IS ONLY RS. 30,000 PER SQ.YARD AT RD NO. 5 BANJARA HILLS, HYDERABAD. WITH RESPECT TO COST OF I MPROVEMENT, THE AO HAD GIVEN THE REASON FOR REJECTING THE CLAIM OF THE ASSESSEE STATING THAT THE AREA AS PER THE SALE DEED DT. 31/0 5/1985 I.E., WHEN PURCHASED AND AS PER THE SALE DEED DT. 10/09/2007 D ATE OF SALE IS THE SAME AND HENCE NO IMPROVEMENT IS TO BE CONSIDER ED. THE LEARNED AR SUBMITTED THE FOLLOWING WORKING: THE AREA OF BUILDING AS PER THESE SALE DEEDS ARE 62 .988 SQ.MTS. OF THE ASSESSEE AND 55.557 SQ.MTS. THE AREA S OF THESE TWO PROPERTIES PUT TOGETHER COME TO 118.545. THE CO NVERSION FACTOR FROM SQ.MTS. TO SQ.FT IS 10.7639104. APPLYIN G THIS CONVERSION FACTOR TO 118.545 X 10.7639104 THE AREA IN SQ.FT., COME TO 1276 SQ.FT. WHEREAS AS PER THE SALE DEED DT . 10/09/2007 THE AREA IS 4100 SQ.FT. THEREFORE IT IS SURPRISING THAT AO WHO MADE THE ASSESSMENT OF THE APPELLANTS WIFE MAKES SUCH A WRONG STATEMENT EVEN ON VERIFIABLE FAC T AND HAS NOT ALLOWED THE COST OF ACQUISITION. WHEREAS THE AC TUAL AREA IS 6161 SQ.FT. THE ASSESSEE IN THE ADDITIONAL EVIDENCE IS SUBMITTING A COPY OF THE PLAN AND ALONG WITH PAPERS THAT ARE SUBMITTED UNDER BRS SCHEME. SINCE THE APPROVAL UNDE R BRS WAS NOT RECEIVED BY THE TIME OF REGISTRATION THE SA ME IS NOT MENTIONED IN THE DOCUMENT. THE OBSERVATIONS OF THE AO IN THE ASSESSMENT ORDER OF THE ASSESSEES WIFE FOR DENYING THE COST OF IMPROVEMENT ARE ABSOLUTELY INCORRECT AND CONTRARY TO FACTS AVAILABL E ON RECORD. 7. WITH RESPECT TO THE DISALLOWANCE OF PAYMENT OF C OMMISSION, IT WAS SUBMITTED THAT THE AO HAD NOT ALLOWED THE SAME IN SPITE OF FILING EVIDENCE IN THE FORM OF RECEIPT AND IT IS NO T POSSIBLE TO SELL 6 ITA NO. 1913 & 1914/HYD/2011 RAZIA KHATOON & ABDUL ALEEM KHAN SUCH HUGE PROPERTY WITHOUT THE HELP OF REAL ESTATE AGENT. HE CONTENDED THAT NO ENQUIRY HAS BEEN MADE BY THE AO A S IT COULD BE SEEN THAT THE PAYMENT IS MADE THROUGH CHEQUE AND TH E PERSON CAN BE IDENTIFIED FROM THE BANK ACCOUNT AND ALSO BY FUR THER ENQUIRY. 8. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, DISCUSSED THE ISSUE AT LENGTH ELABORATELY AND DIREC TED THE AO TO ADOPT SALE CONSIDERATION AT RS. 2,70,00,000/- FOR T HE PURPOSE OF WORKING OUT THE ASSESSABLE CAPITAL GAINS. 9. WITH RESPECT TO COST OF IMPROVEMENT, THE CIT(A) HELD AS FOLLOWS:- 11. AS REGARDS THE CONTENTION OF THE APPELLANT THAT THE AO ADOPTED THE COST OF ACQUISITION AT RS. 37,665/- ONL Y, AS AGAINST THE APPELLANTS CLAIM THAT THE SAME WAS RS. 8,44,66 5/-. IT HAS BEEN CONTENDED THAT THE APPELLANT HAD INCURRED THE COST OF IMPROVEMENT OF RS. 8,63,400/- IN THE YEAR 1999. HOW EVER, IT IS CLEAR THAT AT NO STAGE THE APPELLANT HAS BEEN ABLE TO FURNISH ANY EVIDENCE REGARDING INCURRENCE OF SUCH IMPROVEME NT EXPENDITURE, IN THE ABSENCE OF ANY EVIDENCE THEREFO RE, THE CLAIM OF THE APPELLANT REMAINS UNSUBSTANTIATED. THE APPELLANT AHS NOT BEEN ABLE TO BRING OUT THE FACT OF IMPROVEM ENT EVEN DURING THE COURSE OF VALUATION OF THE PROPERTY. ACC ORDINGLY, FINDING NO BASIS FOR THE CLAIM, THE GROUND NO. 5 IS DECIDED AGAINST THE APPELLANT. 10. WITH RESPECT TO THE PAYMENT OF COMMISSION, THE CIT(A) HELD THAT THE ASSESSEE HAS NOT BEEN ABLE TO SUBSTANTIATE THE CLAIM THAT THE ALLEGED PAYMENT OF RS. 1,01,000/-, EVEN THOUGH MADE THROUGH AN ACCOUNT PAYEE CHEQUE, HAD BEEN MADE TOWARDS COMM ISSION FOR ARRANGING THE SALE OF THE IMPUGNED PROPERTY. HE FUR THER HELD THAT DESPITE CONTENDING THAT THE ASSESSEE COULD HAVE FUR NISHED THE ADDRESS OF THE AGENT, THE SAME COULD NOT BE PRODUCE D EVEN WHILE 7 ITA NO. 1913 & 1914/HYD/2011 RAZIA KHATOON & ABDUL ALEEM KHAN REQUESTING FOR ADMISSION OF ADDITIONAL EVIDENCE. HE THEREFORE CONFIRMED THE ACTION OF THE AO ON THIS ISSUE. 11. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE LEARNED CIT(A) IS NOT ONLY PERV ERSE BUT ALSO IS CONTRARY TO PROVISIONS OF LAW AND FACTS TO THE EXTENT IT IS PREJUDICIAL TO THE ASSESSEE. 2. THE LEARNED CIT(A) ERRED IN NOT ALLOWING THE GRO UND AGAINST THE VALUE OF COST OF ACQUISITION AND IMPROVEMENTS T HERE ON STATING THAT NO EVIDENCE IS PRODUCED ABOUT IMPROVEM ENT WHEN THE DOCUMENT OF PURCHASE INDICATE THE AREA OF STRUC TURE WHEN IT WAS PURCHASED AND THE DVOS REPORT REVEALS THE A REA OF STRUCTURE AT THE TIME OF SALE AND IGNORING THE FACT THAT ENLARGEMENT IN STRUCTURE COULD NOT HAVE COME WITHOU T SOME INVESTMENT. 3. THE LEARNED CIT(A) FURTHER ERRED IN NOT CONSIDER ING THE ADDITIONAL EVIDENCE THAT IS FILED BEING APPLICATION BEFORE CORPORATION AUTHORITIES FOR REGULARIZATION OF CONST RUCTION WHICH IS SUPPORTED BY PLAN OF THE STRUCTURE THAT IS SOUGH T TO BE REGULARIZED AND THEREBY ERRED IN HOLDING THAT THERE IS NO EVIDENCE OF IMPROVEMENT AND NOT ALLOWING THE GROUND ABOUT IMPROVEMENTS AND COST OF STRUCTURE ON THE LAND. 4. THE LEARNED CIT(A) ERRED IN NOT ALLOWING THE DED UCTION OF COMMISSION IN SPITE OF SUBSTANTIAL EVIDENCE AND HOL DING THAT THE ADDRESS OF THE PERSON WHO RECEIVED IS NOT FURNI SHED THOUGH THE SAME WAS VERY MUCH AVAILABLE IN RECORDS. 12. WE HAVE HEARD THE ARGUMENTS OF BOTH THE PARTIES , PERUSED THE RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW. WE FIND THAT THE CIT(A) HAS NOT CONSIDERED THE DVOS R EPORT, WHICH REVEALS THE AREA OF STRUCTURE AT THE TIME OF SALE. THE LOWER AUTHORITIES HAVE IGNORED THE FACT THAT ENLARGEMENT IN STRUCTURE COULD NOT HAVE COME WITHOUT SOME INVESTMENT. WE FIND MERI T IN THE ARGUMENT THAT ENLARGEMENT IN THE STRUCTURE COULD HA VE NECESSITATED 8 ITA NO. 1913 & 1914/HYD/2011 RAZIA KHATOON & ABDUL ALEEM KHAN THE ASSESSEE TO INCUR CERTAIN EXPENDITURE/INVESTMEN T, HOWEVER, THIS BEING A FACTUAL MATTER AND ALSO SINCE IT HAS BEEN O BSERVED BY THE DEPARTMENT THAT THERE IS NO ADDITION IN STRUCTURE, WHICH IS CONTRADICTORY TO THE STATEMENT OF THE ASSESSEE, WE SET ASIDE THIS ISSUE TO THE FILE OF THE AO TO VERIFY THE ACTUAL AR EA OF THE STRUCTURE FROM THE RECORDS, NAMELY, APPROVAL FROM BRS. IF IT IS ESTABLISHED ON VERIFICATION THAT THERE HAS BEEN AN ADDITION TO SUP ER STRUCTURE AND THAT HAS RESULTED IN FURTHER INVESTMENT BY THE ASSE SSEE, THE COST OF IMPROVEMENT AS CLAIMED BY THE ASSESSEE SHALL BE CON SIDERED. THE AO SHALL WORK OUT THE EXACT AREA OF ADDITIONAL STRU CTURE AND THE COST FOR CONSTRUCTING THE ADDITIONAL STRUCTURE WHILE WOR KING OUT THE COST OF IMPROVEMENT FOR THE PURPOSE OF CAPITAL GAINS WIT H THE SUPPORT OF THE APPLICATION FILED BY THE ASSESSEE BEFORE THE CO RPORATION AUTHORITIES AND THE APPROVED PLAN OF THE STRUCTURE SHOWING EVIDENCE OF IMPROVEMENT. 13. WITH RESPECT TO THE ISSUE OF COMMISSION, IT IS IMPERATIVE THAT THE AO SHOULD HAVE SUMMONED THE PERSON, WHO HAD REC EIVED THE COMMISSION AS THE ADDRESS OF THE PERSON CAN BE TRA CED WITH SOME EFFORT. IN THESE CIRCUMSTANCES, WE REMIT THIS ISSU E TO THE FILE OF THE AO TO INTERROGATE THE PERSON, WHO HAD RECEIVED THE COMMISSION AND DECIDE THE SAME IN ACCORDANCE WITH LAW. 14. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES. ITA NO. 1914/HYD/2011 IN THE CASE OF ABDUL ALEEM KH AN 9 ITA NO. 1913 & 1914/HYD/2011 RAZIA KHATOON & ABDUL ALEEM KHAN 15. AS THE FACTS IN THIS APPEAL ARE MATERIALLY IDEN TICAL TO THAT OF THE CASE OF RAZIA KHATOON BEING ITA NO. 1913/HYD/20 11 (SUPRA) AND THE GROUNDS RAISED ARE ALSO SIMILAR, RESPECTFULLY F OLLOWING THE CONCLUSION DRAWN THEREIN, WE REMIT THE ISSUES RAISE D IN THIS APPEAL TO THE FILE OF THE AO WITH IDENTICAL DIRECTIONS. 16. IN THE RESULT, THIS APPEAL IS TREATED AS ALLOWE D FOR STATISTICAL PURPOSES. 17. TO SUM UP, BOTH THE APPEALS UNDER CONSIDERATION ARE ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 31 ST OCTOBER, 2012. SD/- SD/- (CHANDRA POOJARI) (ASHA VIJAY ARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED:31 ST OCTOBER, 2012 KV COPY TO:- 1) RAZIA KHATOON & ABDUL ALEEM KHAN, C/O K. VASANTKUMAR & A.V. RAGHURAM ADVOCATES, 610, 6 TH FLOOR, BABUKHAN ESTATE, BASHEERBAGH, HYDERABAD 1. 2) ITO, WARD-6(4), HYDERABAD. 3) THE CIT (A)-IV, HYDERABAD 4) THE CIT-III, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDERABAD