Shri Tapan Saraswatichandra Desai, Ahmedabad V. The Income Tax Officer, Ward-11(2), Ahmedabad

ITA 1923/AHD/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6064 (ITAT-AHMEDABAD)
• Duration Of Justice: 11 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-06-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 13-06-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 10-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P BATHEJA
• Assessee Lawyers: S N DIVATIA
• Keywords: Cost of acquisition

Judgement Text

, , , , , , , , IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A BENCH, AHMEDABAD , !' # $ $ $ $ %, # BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER $./ I.T.A. NO.1923/AHD/2013 ( ( )( ( )( ( )( ( )( / / / / ASSESSMENT YEAR : 009-10) TAPAN SARASWATICHANDRA DESAI 18, JAWAHAR NAGAR OPP.ANJALI CINEMA PALDI, AHMEDABAD / VS. THE ITO WARD-11(2) AHMEDABAD #* !' $./+, $./ PAN/GIR NO. : ACVPD 8610 Q ( *- / // / APPELLANT ) .. ( ./*- / RESPONDENT ) *- 0 ! / APPELLANT BY : SHRI S.N. DIVATIA, A.R. ./*- 1 0 ! / RESPONDENT BY : SHRI O.P.BATHEJA, SR.DR 2 1 ' / / / / DATE OF HEARING : 13/06/2014 34) 1 ' / DATE OF PRONOUNCEMENT : 27/06/2014 !5 / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE LD.COMMISSIONER OF INCOME TAX(APPEALS)-XVI, AHMEDAB AD (CIT(A) IN SHORT) DATED 03/05/013 PERTAINING TO ASSESSMENT YEAR (AY) 2009-10. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF A PPEAL:- THE LD.C.I.T. APPEAL XV-AHMEDABAD HAS ERRED IN LAW AND FACTS IN CONFIRMING THE ADDITION OF RS.33,00,000/- (RUPEES T HIRTY THREE LACS ONLY) ADDED BY LD. I.T.O. THE ASSESSEE PREFERS & A PPEAL ON THE FOLLOWING GROUNDS:- ITA NO.1923/AHD /2013 TAPAN SARASWATICHANDRA DESAI VS. ITO ASST.YEAR 2009-10 - 2 - 1) ADDITION OF RS.33,00,000/- THE LD.INCOME-TAX OFFICER HAS ADDED RS.33,00,000/- (RUPEES THIRTY THREE LACS ONLY) CONSIDERING THAT NO COST IS INCURR ED FOR ACQUIRING ASSETS I.E. PLOT NO.18/B, JAWAHAR NAGAR SOCIETY, VA SNA, AHMEDABAD AND SALE CONSIDERATION OF RS.33,00,000/- (RUPEES TH IRTY THREE LACS ONLY) IS ADDED TO THE TOTAL INCOME AS PER RETURN FI LED BY THE ASSESSEE. 2) THE FIRST APPEAL WAS PREFERRED WITH C.I.T.(APPE AL) XVI AGAINST THE ORDER PASSED BY THE INCOME-TAX OFFICER SUBMITTING T HAT THE PLOT NO.18 WAS OWNED BY BHANUMATIBEN SARASWATICHANDRA DESAI. BHANUMATIBEN SARASWATICHANDRA DESAI DIED WITHOUT MAKING ANY WILL , SO THE LEGAL HEIRS OF BHANUMATIBEN SARASWATICHANDRA DESAI ARE EN TITLED TO BECOME A OWNER OF PROPERTY OF BHANUMATIBEN SARASWATICHANDR A DESAI. THE FAMILY SETTLEMENT WAS MADE AMONG THE LEGAL HEIRS OF BHANUMATIBEN SARASWATICHANDRA DESAI WHICH IS SIGNED BY ALL LEGAL HEIRS AND ON THE BASIS OF FAMILY SETTLEMENT THE LEGAL HEIRS I.E. SAR ASWATICHANDRA DESAI, VIJAY SARASWATICHANDRA DESAI AND KUMAR SARASWATICHA NDRA DESAI FORGO THEIR LEGAL RIGHT IN THE PROPERTY OF BHANUMAT IBEN SARASWATICHANDRA DESAI PROVIDED RS.31,31,000/- (RUP EES THIRTY ONE LACS & THIRTY ONE THOUSANDS ONLY) IS PAID TO LEGAL HEIRS NAMELY SARASWATICHANDRA DESAI, VIJAY SARASWATICHANDRA DESA I AND KUMAR SARASWATICHANDRA DESAI BY THE ASSESSEE. RS.31,31,0 00/- (RUPEES THIRTY ONE LACS & THIRTY ONE THOUSANDS ONLY) IS PAID BY TH E ASSESSEE FOR ACQUIRING THE OWNERSHIP RIGHT IN PLOT NO.18/B AND A FTER MAKING THE PAYMENT TO THE LEGAL HEIRS OF BHANUMATIBEN SARASWAT ICHANDRA DESAI, THE TITLE OF PLOT NO.18/B BECOMES CLEAR & MARKETABL E, RS.50,000/- (RUPEES FIFTY THOUSANDS ONLY) IS PAID AS BROKERAGE SO THE CONSIDERATION PAID FOR ACQUIRING THE OWNERSHIP RIGH T IS CONSIDERED AS THE COST OF ASSETS SOLD BY THE ASSESSEE, BROKERAGE OF RS.50,000/- (RUPEES FIFTY THOUSANDS ONLY) PAID IS DEDUCTED IN GROSS CON SIDERATION BUT C.I.T. APPEAL HAS NOT CONSIDERED THIS FACT AND HAS ERRED IN DECIDING THE CASE, SO THE ORDER REQUIRES TO BE SET-A-SIDE. 2. BRIEFLY STATED FACTS ARE THAT THE CASE OF THE AS SESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S.143( 3) OF THE INCOME TAX ACT,1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS FRAMED VIDE ORDER DATED 29/12/2011, THEREBY THE ASSESSING OFFICER (AO IN SHORT) MADE ADDITION OF RS.33 LACS BEING THE SALE CONSIDERATION OF THE IMMOVABLE ITA NO.1923/AHD /2013 TAPAN SARASWATICHANDRA DESAI VS. ITO ASST.YEAR 2009-10 - 3 - PROPERTY DESCRIBED AS PLOT NO.18-B JAWAHAR NAGAR CO -OP.SOCIETY LTD.. THE ASSESSEE FILED AN APPEAL BEFORE THE LD.CIT(A), WHO ALSO DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND DISMISSED THE ASSESSEES APPEAL. NOW THE ASSESSEE IS IN APPEAL BEFORE THIS TRIBUNAL. 3. SHRI S.N.DIVATIA, LD.COUNSEL FOR THE ASSESSEE VE HEMENTLY ARGUED THAT THE ACTION OF THE AUTHORITIES BELOW IS TOTALLY ILLEGAL AND UNJUSTIFIED IN MAKING THE ADDITION. HE SUBMITTED THAT THE ASSESSE E ACQUIRED THE PROPERTY BY WAY OF FAMILY SETTLEMENT AND PAID AN AM OUNT OF RS.31,31,000/- TO OTHER LEGAL HEIRS OF MOTHER OF TH E ASSESSEE. HE SUBMITTED THAT THE PROPERTY IN QUESTION WAS IN THE NAME OF SMT.BHANUMATIBEN SARASWATICHANDRA DESAI, MOTHER OF THE ASSESSEE, WHO EXPIRED ON 18/09/2006 AND ON HER DEATH THE PROPERTY IN QUESTION DEVOLVED UPON HER LEGAL HEIRS. THE APPELLANT BEIN G ONE OF THE LEGAL HEIRS. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE ASSESSEE PURCHASED SHARES OF OTHER LEGAL HEIRS/FATHER AND MA DE PAYMENT TO THEM BEGINNING FROM 19/04/2007 TO 8/11/2007 BY WAY OF VA RIOUS CHEQUES. HE ALSO PLACED CERTAIN DOCUMENTS IN THE FORM OF THE BA NK STATEMENTS, ETC. BELONGING TO FATHER OF THE ASSESSEE. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT AT THE TIME OF ASSESSMENT PROCEEDING S, BANK STATEMENT PERTAINS TO THE FATHER OF THE ASSESSEE WAS NOT AVAI LABLE. 3.1. ON THE CONTRARY, SHRI O.P.BATHEJA, LD.SR.DR S UBMITTED THAT THE ONUS WAS UPON THE ASSESSEE TO GIVE THE CORRECT COST OF ACQUISITION OF THE PROPERTY AND TO PROVE THE PAYMENT MADE THEREOF. IN THE PRESENT CASE, ASSESSEE FAILED TO GIVE THE COST OF ACQUISITION AS WELL AS TO PROVE THE ITA NO.1923/AHD /2013 TAPAN SARASWATICHANDRA DESAI VS. ITO ASST.YEAR 2009-10 - 4 - PAYMENT MADE TO THE OTHER LEGAL HEIRS WAS MADE AS C ONSIDERATION OF THE PROPERTY. 3.2. IN REJOINDER, LD.COUNSEL FOR THE ASSESSEE SUBM ITTED THAT MOU WAS EXECUTED AMONGST THE LEGAL HEIRS OF SMT.BHANUBEN SA RASWATICHANDRA DESAI, MOTHER OF THE ASSESSEE. HE SUBMITTED THAT A S PER CLAUSE (4) OF THE MOU, THE ASSESSEE WAS REQUIRED TO MAKE PAYMENT OF R S.31,31,000/- TO OTHER LEGAL HEIRS AND OTHER LEGAL HEIRS WERE NOT EN TITLED TO CLAIM FOR ANY INTEREST. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE UNDISPUTED FACT EMERGES FROM THE RECORDS THAT T HE PROPERTY IN QUESTION BELONGED TO MOTHER OF THE APPELLANT AFTER WHOSE DEATH A MOU WAS EXECUTED BY THE LEGAL HEIRS IN RESPECT OF THE P ROPERTY IN QUESTION. THE ASSESSEE PURCHASED THE SHARES OF OTHER LEGAL HE IRS AND ULTIMATELY SOLD THE PROPERTY TO THE THIRD PARTY IN CONSIDERATION OF RS.33 LACS. HOWEVER, THE AO HAS ADDED THE ENTIRE SALE CONSIDERATION AS T HE INCOME OF THE ASSESSEE WITHOUT DEDUCTING THE COST OF ACQUISITION. THE LD.CIT(A) HAS ALSO NOTED THE FACT THAT THE PROPERTY OF SMT.BHANUB EN SARASWATICHANDRA DESAI, MOTHER OF THE ASSESSEE WOULD DEVOLVE UPON HE R NATURAL LEGAL HEIRS, I.E. IN THE CASE OF HUSBAND AND SONS. HE FURTHER N OTED THAT THE FACT THAT THE PROPERTY IN QUESTION WAS ACQUIRED BY THE APPELL ANT BY VIRTUE OF FAMILY ARRANGEMENT/MEMORANDUM OF UNDERSTANDING DATED 05/04 /2007. HOWEVER, HE OBSERVED THAT THE PLOT SOLD BY THE ASSE SSEE VIDE DEED OF CONVEYANCE IN THE NAME OF MRS. FALGUNI HIMANSHU BAV ISHI WHICH WAS REGISTERED ON 09/05/2008. THE QUESTION IS WHETHER THE IMPUGNED ITA NO.1923/AHD /2013 TAPAN SARASWATICHANDRA DESAI VS. ITO ASST.YEAR 2009-10 - 5 - TRANSACTION INVOLVED, I.E. PLOT NO.18/B, SMT.FALGUN I HIMANSHU BAVISHI CAN BE RECOGNIZED AS A LONG-TERM CAPITAL GAIN OR NO T. THE CIT(A) AFTER MAKING A DETAILED ANALYSIS OF THE FACTS HAS HELD AS UNDER:- AN INTERESTING PART OF THE FACTS OF THE CASE IS TH AT THE APPELLANT HAS NOT GIVEN ANY BREAKUP AS TO HOW MUCH AMOUNT WAS PAID TO WHOM. HE HAS MERELY FILED SOME DETAILS OF CHEQUE NUMBERS WITH DA TES. THE APPELLANT HAS NOT FURNISHED ANY COPY OF BANK ACCOUNT TO ESTAB LISH AS TO FROM WHICH BANK ACCOUNT THESE AMOUNTS WERE ROUTED. VIDE LETTER DATED 15-2- 2013 OF THIS OFFICE, THE APPELLANT WAS REQUESTED TO GIVE SPECIFIC DETAILS INDICATING NAME AND ADDRESS ALONGWITH I.T. PARTICUL ARS OF EACH PERSONS TO WHOM ABOVE IMPUGNED AMOUNTS WERE PAID ALONGWITH COPY OF APPELLANTS BANK ACCOUNT FOR THE PERIOD 1-4-2007 TO 31-3-2008 CLEARLY IDENTIFYING THE DEBIT OF ABOVE PAYMENTS IN THE BANK ACCOUNT. INSPITE OF REPEATED OPPORTUNITIES, NO SUCH DETAILS WAS FILED B Y THE APPELLANT. THUS, IT IS JUST NOT CLEAR AS TO WHO WAS PAID AND H OW MUCH. THEN AGAIN, VIDE LETTER DATED 15-2-2013, 20-3-2013 AND 16-4-201 3 THE APPELLANT WAS REQUESTED TO FILE CONFIRMATIONS OF ABOVE PERSON S TO WHOM THESE AMOUNTS OF MONIES WERE PAID, THEIR I.T.RETURNS. TH E SAME WAS ALSO NOT PROVIDED BY THE APPELLANT INSPITE OF REPEATED OPPOR TUNITIES ON SOME PRETEXT OR THE OTHER. CONSEQUENTLY, THE VERACITY O F THE PAYMENT OF RS.31,31,000/- WHICH APPELLANT CLAIMS TO HAVE PAID FOR ACQUIRING OWNERSHIP RIGHTS IN RESPECT OF PLOT NO.18-B REMAINS UNVERIFIED AND CONSEQUENTLY CANNOT BE ALLOWED AS A DEDUCTION TO TH E APPELLANT. THE FAILURE ON THE PART OF THE APPELLANT TO BRINGFORTH ANY EVIDENCE IN SUPPORT OF AMOUNTS PAID TO THE OTHER LEGAL HEIRS OF THE PRO PERTY IN TERMS OF THEIR CONFIRMATION, I T RETURNS, COPIES OF BANK ACCOUNTS, ETC. CLEARLY INDICATE THAT THE APPELLANT IS CONCEALING TRUE DISCLOSURE OF FACTS OF THE CASE AND THE SAME LEADS TO ONLY CONCLUSION THAT THE SO CALLE D FAMILY ARRANGEMENT/MOU IS AN AFTERTHOUGHT AND IS A DEVICE USED BY APPELLANT TO SUPPRESS THE TRUE INCIDENCE OF TAXATION. INCID ENTALLY NON-DISCLOSURE OF TRANSACTIONS PERTAINING TO THIS PROPERTY IN HIS RETURN OF INCOME WHICH CAME TO THE KNOWLEDGE OF THE AO BY WAY OF AIR TRANS ACTIONS ITSELF INDICATES THAT THE APPELLANT WAS ATTEMPTING TO CONC EAL DISCLOSURE OF THE IMPUGNED TRANSACTION FROM THE VERY BEGINNING. BUT FOR AIR MODULE APPELLANTS TRANSACTION IN THIS PROPERTY WOULD NEVER BEEN COME TO DEPARTMENTS KNOWLEDGE. AN EQUALLY INEXPLICABLE FAC T OF THE CASE IS DISCLOSURE BY APPELLANT IN HIS BALANCE SHEET FOR YE AR ENDING 31-3-2008 AND YEAR ENDING 31-3-2009 WHEREIN THE VALUE OF THIS LAND HAS BEEN SHOWN AT RS.18,86,500/-. IT IS ALSO UNIMAGINABLE A S TO WHEN THE PROPERTY WAS SOLD BY A REGISTERED CONVEYANCE DEED 9 -5-2008, HOW CAN ITA NO.1923/AHD /2013 TAPAN SARASWATICHANDRA DESAI VS. ITO ASST.YEAR 2009-10 - 6 - THE SAME APPEAR IN THE BALANCE SHEET OF THE APPELLA NT ON 31-3-2009 AT RS.18,86,500/-. THE APPELLANT HAS NOT BEEN ABLE TO EXPLAIN AS TO HOW WHEN THE PROPERTY, I.E. PLOT 18-B WAS SOLD BY HIM O N 9-5-2008, IT CONTINUED TO BE SHOWN IN HIS BALANCE SHEET FOR F.Y. ENDING 2008-09 RELEVANT TO A.Y. 2009-10. EQUALLY UNCONVINCING IS THE ARGUMENT OF THE APPELLANT WHILE EXPLAINING THE VALUE OF THE LAND, A PPEARING RS.18,86,500/- THAT THIS FIGURE WAS ADOPTED SO AS T O PROJECT A HEALTHY BALANCE SHEET. THUS, THERE IS NO EVIDENCE ON RECOR D TO INDICATE THAT THE AMOUNT OF RS.31,31,000/- OR EVEN RS.18,86,500/- FOR THAT MATTER, WAS EVER PAID BY THE APPELLANT TO ANY PERSON WHICH CAN ENTITLE HIM FOR HIS CLAIM OF DEDUCTION SO AS TO WORK OUT THE STCG. 4.1. THE CONTENTION OF THE LD.COUNSEL FOR THE ASSES SEE IS THAT THE AUTHORITIES BELOW WERE NOT JUSTIFIED IN REJECTING T HE CLAIM OF THE ASSESSEE IN RESPECT OF COST OF ACQUISITION. WE FIND THAT T HE ASSESSEE HAS PLACED ON RECORD BANK STATEMENT PERTAINING TO FATHER OF THE A PPELLANT, WHEREIN VARIOUS CREDIT ENTRIES HAVE BEEN MADE. THE CLAIM O F THE ASSESSEE IS THAT THOSE ENTRIES ARE PERTAINING TO THE SALE CONSIDERAT ION, I.E. COST OF ACQUISITION OF THE PROPERTY IN QUESTION MADE BY THE ASSESSEE. AFTER CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE, WE ARE OF THE CONSIDERED VIEW THAT THE CLAIM OF THE ASSESSEE REGARDING PAYME NT MADE TO HIS FATHER NEEDS TO BE VERIFIED AND TO FIND OUT THE COST INCUR RED BY THE ASSESSEE FOR ACQUIRING RIGHTS AND TITLE INTO THE PROPERTY IN QUE STION. BOTH THE AUTHORITIES BELOW FAILED TO TAKE NOTE OF THE FACT, THAT FOR THE PURPOSE OF COMPUTING GAIN ARISING OUT OF THE TRANSFER OF IMMOV ABLE PROPERTY, THERE HAS TO BE SOME COST OF ACQUISITION. EVEN IF THE AS SESSEE HAS NOT INCURRED ANY COST IN A GIVEN CASE, THEN ALSO THE GAIN HAS TO BE COMPUTED IN ACCORDANCE WITH THE PROVISIONS OF LAW. IN THE PRES ENT CASE, THE ASSESSEE HAS PROVED ACQUISITION OF TITLE INTO THE PROPERTY B UT AT WHAT TERMS AND COST NEEDS TO BE VERIFIED. HENCE, WE RESTORE THIS IS SUE BACK TO THE FILE OF AO ITA NO.1923/AHD /2013 TAPAN SARASWATICHANDRA DESAI VS. ITO ASST.YEAR 2009-10 - 7 - FOR VERIFICATION WHETHER THE PAYMENTS CLAIMED BY TH E ASSESSEE ARE IN RESPECT OF THE PROPERTY IN QUESTION AND WERE MADE I N PURSUANCE OF THE FAMILY ARRANGEMENT MADE IN THE FORM OF MOU DATED 05 /04/2007. IN CASE, THE AO FINDS THAT THE PAYMENTS AMOUNTING TO R S.31,31,000/- AS REFLECTED IN THE BANK STATEMENT OF SHRI SARASWATICH ANDRA RATANLAL DESAI, FATHER OF THE ASSESSEE AS THE COST OF ACQUISITION, THEN DECIDE THE ISSUE ACCORDINGLY. THUS, GROUNDS OF ASSESSEES APPEAL AR E ALLOWED FOR STATISTICAL PURPOSES. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN COURT ON THE DATE MENTIONED HER EINABOVE AT CAPTION PAGE SD/- SD/- ( ) ( %) !' # # ( ANIL CHATURVEDI ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 27/06/2014 8 .., .../ T.C. NAIR, SR. PS !5 1 .9 :!9) !5 1 .9 :!9) !5 1 .9 :!9) !5 1 .9 :!9)/ COPY OF THE ORDER FORWARDED TO : 1. *- / THE APPELLANT 2. ./*- / THE RESPONDENT. 3. $$ ; / CONCERNED CIT 4. ;() / THE CIT(A)-XVI, AHMEDABAD 5. 9%< . , , / DR, ITAT, AHMEDABAD 6. <=( >2 / GUARD FILE. !5 !5 !5 !5 / BY ORDER, /9 . //TRUE COPY// ? ?? ?/ // / $+ $+ $+ $+ ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD