Income-tax Officer, Pune V. Shri Sitaram Sahadu Bhondve, Pune

ITA 1929/PUN/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 0286 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 15-06-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 31-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L KUREEL
• Assessee Lawyers: VIPIN K GUJRATHI; KRISHNA V GUJRATHI
• Keywords: Capital asset; Retrospective amendment; Question of law; Cost of acquisition; Fair market value; Valuation report; Tax effect; Revised return
• Section: 54B; 54F; 133(6); 32; 131; 54; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E , , !'#'' $ , % & BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM / ITA NO. 1919/PN/2013 %' ( ')( / ASSESSMENT YEAR : 2007-08 SITARAM SAHADU BHONDAVE, 129 DATTA BANKAR PLOT, SATAVWADI, HADAPSAR, PUNE 411028 PAN : AGAPB7238B ....... / APPELLANT ' /VS. INCOME TAX OFFICER, WARD 7(3), PUNE / RESPONDENT / ITA NO. 1929/PN/2013 %' ( ')( / ASSESSMENT YEAR : 2007-08 THE INCOME TAX OFFICER, WARD 6(4), PUNE ....... / APPELLANT ' /VS. SHRI SITARAM SAHADU BHONDVE, 129 DATTA BANKAR, SATAV WADI, HADAPSAR, PUNE 411028 PAN : AGAPB7238B / RESPONDENT ASSESSEE BY : SHRI VIPIN K. GUJRATHI & SHRI KRISHNA V. GUJRATHI REVENUE BY : SHRI P.L. KUREEL / DATE OF HEARING : 03-11-2016 / DATE OF PRONOUNCEMENT : 23-12-2016 2 ITA NOS. 1919 & 1929/PN/2013, A.Y. 2007-08 * / ORDER PER VIKAS AWASTHY, JM : THESE TWO CROSS APPEALS BY THE ASSESSEE AND REVENUE ARE DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-III, PUNE DATED 19-08-2013 FOR THE ASSESSMENT YEAR 2007-08. 2. THE FACTS OF THE CASE AS EMANATING FROM RECORDS ARE : THE ASSESSEE HAS INHERITED AGRICULTURAL LAND AND HOUSE FROM HIS FATHER SHRI SITARAM SAHADU BHONDVE BY VIRTUE OF REGISTERED WILL DATED 09-05-1988. THE ASSESSEE ALONG WITH OTHER CO-OWNERS OF THE PROPERT Y SOLD THE LAND AND DISCLOSED THE INCOME ARISING THEREFROM IN HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2007-08. THE ASSESSEE ALSO CLAIMED DEDUCTION U/S. 54B AND 54F OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) IN RESPECT OF CAPITAL GAINS ARISING ON SALE OF THE SAID LAND. THE ASSESSEE FILED HIS RETURN OF INCOME ON 31-07-2007 DEC LARING TOTAL INCOME OF ` 89,120/-. THEREAFTER, THE ASSESSEE FILED REVISED RETURN OF INCOME ON 26-05-2008 DECLARING TOTAL INCOME OF ` 1,89,360/-. IN THE REVISED RETURN OF INCOME THE ASSESSEE DECLARED LONG TER M CAPITAL GAIN ON SALE OF HIS SHARE OF LAND ADMEASURING 7.97 HECTARES COM PRISING IN SURVEY NO. 72 & 73, VILLAGE-RAVET, TAL.-HAVELI, DISTT.-PUNE. FROM THE TOTAL CONSIDERATION OF ` 4,74,73,721/- RECEIVED, THE ASSESSEE CLAIMED DEDUCTION OF ` 3,35,40,721/- ON ACCOUNT OF PART OF SALE CONSIDERATION DIRECTLY PAID BY THE PURCHASE OF LAND TO HIS FOUR BROTHER S AND COUSINS. THE ASSESSING OFFICER DID NOT ACCEPT THE CLAIM OF ASSESSEE AND REJECTED THE EXPENDITURE CLAIMED BY THE ASSESSEE IN RESPECT OF AM OUNT PAID TO 3 ITA NOS. 1919 & 1929/PN/2013, A.Y. 2007-08 HIS FOUR BROTHERS AND COUSINS. THE ASSESSING OFFICER FURTHE R REJECTED THE CLAIM OF ASSESSEE IN RESPECT OF DEDUCTION U/S. 54F OF THE ACT. THE ASSESSING OFFICER VIDE ORDER DATED 29-12-2009 ASSESS ED THE INCOME OF ASSESSEE AT ` 4,05,36,819/- INCLUDING INCOME FROM LONG TERM CAPITAL GAIN OF ` 3,67,68,904/-. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE PREFERRED APPEAL BEFORE THE COMMISSIONER OF INCO ME TAX (APPEALS). THE COMMISSIONER OF INCOME TAX (APPEALS) REJECTED THE CONTENTIONS OF ASSESSEE AND UPHELD THE ASSESSMENT ORDE R WITH RESPECT TO LONG TERM CAPITAL GAIN AND REJECTION OF CLAIM OF ASSESSE E U/S. 54F OF THE ACT. HOWEVER, THE COMMISSIONER OF INCOME TAX (APP EALS) ACCEPTED THE CONTENTIONS OF THE ASSESSEE WITH REGARD T O ADDITION OF ` 18,00,000/- AND ` 3,53,510/- MADE ALLEGEDLY ON ACCOUNT OF CASH PAYMENTS TOWARDS PURCHASE OF LAND. AGAINST THE FINDINGS O F COMMISSIONER OF INCOME TAX (APPEALS), THE ASSESSEE AS WELL AS THE DEPARTMENT IS IN APPEAL BEFORE THE TRIBUNAL. 3. THE ASSESSEE HAS ASSAILED THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) BY RAISING ELABORATE GROUNDS IN THE GROUNDS OF APPEAL AS WELL AS BY RAISING ADDITIONAL GROUNDS ON VARIOUS D ATES. THE GROUNDS RAISED BY ASSESSEE IN APPEAL ARE AS UNDER: 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND M L AW, THE LEARNED C.I.T.[A] HAS ERRED IN HOLDING THAT THE SHARE OF TH E APPELLANT IN AGRICULTURE LANDS SITUATED AT S.NO.72 & 73 AT VILLA GE RAWET WORKED OUT TO 56%. THE AFORESAID FINDING BEING BAD IN LAW , ARBITRARY, PERVERSE AND DEVOID OF MERITS THE SAME MAY PLEASE BE DELETED AND THE CAPITAL GAINS ON TRANSFER OF THE SAID LANDS MAY BE DIRECTED TO BE COMPUTED AS PER APPELLANT'S LETTER DT.18/12/2009 FILED BEFORE T HE LEARNED ASSESSING OFFICER. 4 ITA NOS. 1919 & 1929/PN/2013, A.Y. 2007-08 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LEARNED C.I.T.[A] HAS ERRED IN HOLDING THAT THE FAMILY ARRA NGEMENT VIDE UNREGISTERED DEED EXECUTED ON 08/05/2003 BETWEEN TH E APPELLANT AND HIS BROTHERS AND SISTERS AND OTHER CLOSE RELATI VES WAS NOT HONOURED IN LETTER AND SPIRIT TO THAT EXTENT AND TH E SAME DID NOT CHANGE THE RIGHTS OF THE SIGNATORIES OVER THE IMPUG NED PROPERTY. THE SAID FINDING BEING BAD IN LAW, ARBITRARY, PERVERSE AND DEVOID OF MERITS THE SAME MAY PLEASE BE DELETED AND THE SAID FAMILY ARRANGEMENT MAY PLEASE BE ACCEPTED AS LEGAL AND CORRECT. 3. WITHOUT PREJUDICE TO GROUNDS OF APPEAL NOS. 1 & 2 A BOVE AND BY WAY OF AN ALTERNATE SUBMISSION, THE APPELLANT CLAIMS TH AT IF IT IS HELD THAT THE APPELLANT'S 56% SHARE IN CONSIDERATION ACCRUING ON TRANSFER OF THE IMPUGNED LANDS WHICH WORKS OUT TO RS.4,74,73,321.00 , THEN THE DIFFERENCE OF RS.3,35,40,321.00 [RS.4,74,73,321.00 MINUS RS.1,39,33,000.00 BEING AMOUNT ACTUALLY RECEIVED UN DER DEVELOPMENT AGREEMENT] BEING THE AMOUNT SURRENDERED BY THE APPE LLANT IN FAVOUR OF HIS BROTHERS, SISTERS AND RELATIVES BE HELD AS COST OF TRANSFER AND THE SAME MAY PLEASE BE ALLOWED U/ S 48 OF THE LT. ACT 1 961. 4. THE LEARNED C.IT.[A] OUGHT TO HAVE ACCEPTED THE VAL UATION REPORT OF MR.G.L. KULKARNI & MR. A.K.JADKAR SUBMITTED BY THE APPELLANT BEFORE THE LEARNED ASSESSING OFFICER FOR DETERMINATION OF VALU E OF THE PROPERTY AS ON 01/04/ 1981. THE VALUE OF THE IMPUGN ED PROPERTY AS ON 01/04/1981 BE DIRECTED TO BE ADOPTED AS PER THE AFO RESAID VALUATION REPORT. 5. THE VARIOUS CONCLUSIONS AND INFERENCES DRAWN BY THE LEARNED C.I.T[A) IN THE MATTER OF DETERMINATION OF SHARE OF THE APPELLA NT IN THE CONSIDERATION FOR TRANSFER OF IMPUGNED LANDS BEING PATENTLY ILLEGAL, CONTRARY TO THE LEGAL PROVISIONS OF VARIOUS APPLICA BLE LAWS AND BEING LEGALLY UNSUSTAINABLE THE SAME MAY PLEASE BE VACATE D. IT MAY PLEASE BE HELD THAT THE CORRECT AMOUNT OF SALE CONSIDERATI ON RECEIVED BY THE APPELLANT FOR SALE OF HIS SHARE IN THE AGRICULTURE LANDS SITUATED AT S. NO. 72 & 73 WORKS OUT TO RS.1,57,33,000.00 AS DI SCLOSED BY THE APPELLANT IN HIS LETTER DT.18/12/2009 FILED BEFORE THE LEARNED ASSESSING OFFICER. 6. THE LEARNED C.I.T. [A] HAS ERRED IN DENYING THE EXE MPTION UNDER SECTION 54 F OF THE LT. ACT 1961 TO THE APPELLANT. IN THE FACTS AND 5 ITA NOS. 1919 & 1929/PN/2013, A.Y. 2007-08 CIRCUMSTANCES OF THE CASE AND IN LAW, THE SAID EXEM PTION MAY PLEASE BE ALLOWED TO THE APPELLANT. 7. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW THE LEARNED C.I.T. [A] HAS FAILED TO PROPERLY APPRECIATE THE CO MPUTERIZED CASH BOOK FILED BY THE APPELLANT FOR THE PERIOD 01/01/2006 TO 31/03/2008 BEFORE THE LEARNED ASSESSING OFFICER ON 18/12/2009. THE SAID CASH BOOK MAY PLEASE BE DIRECTED TO BE ACCEPTED. 8. THE RECEIPTS AND PAYMENTS STATEMENT GIVEN BY THE LE ARNED C.I.T. [A] IN PARA NO.5.6 ON PAGE NO.27 OF THE IMPUGNED APPELL ATE ORDER SUFFERS FROM SERIOUS FACTUAL MISTAKES AND HENCE THE SAME MA Y PLEASE BE DISCARDED AND CONSEQUENTLY THE VARIOUS CONCLUSIONS AND INFERENCES DRAWN BY THE LEARNED C.LT. [A] ON THE BASIS OF SUCH ERRONEOUS WORKING DESERVE TO BE VACATED. 9. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LEARNED C.I.T. [A] HAS ERRED IN CONFIRMING THE ADDITION OF RS.10,43,000.00 MADE BY THE LEARNED ASSESSING OFFICER ON THE GROUND OF ALLEGED UNEXPLAINED CASH DEPOSITS MADE BY THE APPELLANT DUR ING THE RELEVANT PREVIOUS YEAR IN S.B.AI C NO.11096 OF JANSEVA BANK. THE SAID ADDITION BEING PATENTLY ILLEGAL, BAD IN LAW, ARBITRARY, PERV ERSE AND DEVOID OF MERITS THE SAME MAY PLEASE BE DELETED. 10. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LEARNED C.I.T. [A] HAS ERRED IN CONFIRMING THE ADDITION OF RS.3,00,000.00 MADE BY THE LEARNED ASSESSING OFFICER ON THE GROUND OF A LLEGED UNEXPLAINED CASH DEPOSITS MADE BY THE APPELLANT DURING THE RELE VANT PREVIOUS YEAR IN S.B.AI C NO.20857 OF JANSEVA BANK IN THE NAME OF HIS WIFE. THE SAID ADDITION BEING PATENTLY ILLEGAL, BAD IN LAW, A RBITRARY, PERVERSE AND DEVOID OF MERITS THE SAME MAY PLEASE BE DELETED. 11. THE APPELLANT CRAVES THE PERMISSION TO ADD, AMEND, MODIFY, ALTER, REVISE, SUBSTITUTE, DELETE ANY OR ALL GROUNDS OF AP PEAL, IF DEEMED NECESSARY AT THE TIME OF HEARING OF THE APPEAL. THE ADDITIONAL GROUND RAISED BY ASSESSEE ON 15 TH JUNE, 2016 IS: 'ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE REFERENCE MADE BY THE LEARNED AO TO THE DEPARTMENTAL VALUATIO N OFFICER U/S 55A 6 ITA NOS. 1919 & 1929/PN/2013, A.Y. 2007-08 OF THE ACT FOR THE DETERMINATION OF FAIR MARKET VAL UE OF THE PROPERTY IS WITHOUT JURISDICTION AND LEGALLY UNTENABLE. THE APP ELLANT REQUESTS YOUR HONOUR TO KINDLY ACCEPT THE VALUATION SUBMITTED BY THE GOVERNMENT REGISTERED VALUER FOR THE PURPOSE OF CALCULATION OF COST OF ACQUISITION OF THE PROPERTY.' THE ADDITIONAL GROUNDS RAISED BY ASSESSEE ON 22 ND DECEMBER, 2015 ARE: 1) IN THE FACTS OF THE CASE THE SHARE OF APPELLANT IN THE LAND UNDER CONSIDERATION SOLD BY THE APPELLANT AND HIS SHARE I N THE LAND 53.50% (H 7= 87 ARES DIVIDED BY TOTAL LAND SOLD H 14=71 ARES) . THE LEARNED AO HAS CONSIDERED THE SHARE OF THE APPELLANT AT 56%. THIS IS A FACTUAL ERROR. THE SALE CONSIDERATION ADOPTED BY THE LEARNED AO AND CO NFIRMED BY THE HONOURABLE CIT(A) IS RS.4,74,73,721/- FOR THE PURPO SE OF CALCULATING CAPITAL GAIN. THE CORRECT AMOUNT OF SALE CONSIDERAT ION CONSIDERING THE CORRECT SHARE OF THE APPELLANT AT 53.50% IS RS.4,54 ,75,866/- (H 7=87 ARES X H 14=71 ARES X RS. 8,50,00,0001-). THE APPEL LANT REQUESTS YOUR HONOUR THAT IN CASE THE ADDITION IS CONFIRMED THE V ALUE OF THE SHARE OF APPELLANT IN THE SALE CONSIDERATION MAY PLEASE BE T AKEN AT RS.4,54,75,866/-. 2) THE APPELLANT HAD DECLARED THE SALE CONSIDERATION O F HIS SHARE IN THE LAND AT RS.1,39,33,000/- CORRESPONDING TO HIS SHARE 16.66% WHEREAS THE SALE CONSIDERATION RS.4,74,73,721/- CORRESPONDING T O 56% IS TAXED IN THE HANDS OF THE APPELLANT. THE FIVE CO-OWNERS HAVE PAI D TAXES ON THEIR SHARE 16.66% EACH. THIS AMOUNTS TO DOUBLE TAXATION OF THE SAME AMOUNT. THEREFORE, IF THE ADDITION IS CONFIRMED, TH E APPELLANT REQUESTS THAT THE CREDIT OF THE TAXES PAID BY THE CO-OWNERS TO THE EXTENT OF 56% OF THE CONSIDERATION SHOULD BE ALLOWED AS SET OFF AGAI NST THE TAX LIABILITY OF THE APPELLANT. THEREFORE, THE APPELLANT REQUESTS YO UR HONOUR TO KINDLY SET ASIDE THE CASE TO THE LEARNED AO FOR PURPOSE OF VER IFICATION OF TAXES PAID BY THE CO-OWNERS AND ALLOWING THE SET OFF OF THE SA ME IN THE HANDS OF THE APPELLANT. THE ADDITIONAL GROUND RAISED BY ASSESSEE ON 3 RD NOVEMBER, 2016 IS : 'IN CASE THE GROSS CONSIDERATION OF RS.4,74,73,321/ - (RS. FOUR CRORES 7 ITA NOS. 1919 & 1929/PN/2013, A.Y. 2007-08 SEVENTY FOUR LACS SEVENTY THREE THOUSAND THREE HUND RED AND TWENTY ONE ONLY), BEING 56% OF THE GROSS CONSIDERATION, IS CONSIDERED AS FULL VALUE OF CONSIDERATION IN THE HANDS OF THE APPELLAN T AND CAPITAL GAIN IS COMPUTED ACCORDINGLY, THEN RS.3,35,40,321/- BEING A MOUNT PAID TO CO- OWNERS BY THE PURCHASER/DEVELOPER MAY PLEASE BE CON SIDERED AS COST OF SALES IN THE HANDS OF THE APPELLANT OR MAY PLEASE B E ALLOWED AS EXPENDITURE INCURRED IN CONNECTION WITH THE TRANSFE R IN THE HANDS OF THE APPELLANT AND BE REDUCED FROM THE GROSS CONSIDERATI ON.' 4. BEFORE PROCEEDINGS WITH THE GROUNDS OF APPEAL IT WOULD BE RELEVANT TO UNDERSTAND THE BACKGROUND AND FACTUAL MATR IX OF THE CASE: ORIGINALLY, GRANDFATHER OF THE ASSESSEE SHRI KUSHABA NARAY AN BHODAVE WAS THE TENANT ON AGRICULTURAL LAND ADMEASURING 15H 21R IN SURVEY NO. 72 & 73, VILLAGE-RAVET, TALUKA-HAVELI, DISTT.-PUNE SINCE, 1 935. AFTER HIS DEATH IN 1937 HIS ELDER SON SHRI KUSHABA BHONDA VE STEPPED INTO HIS SHOES AND WAS RECORDED AS TENANT IN POSSESSION AND OCCUPATION OF THE SAID LAND IN REVENUE RECORDS. ON 28-03 -1949 KUNDALIK K. BHONDAVE BECOME PROTECTED TENANT OF THE LAND UNDER THE PROVISIONS OF THE BOMBAY TENANCY ACT, 1948. IN 1951 SHR I KUNDALIK K. BHONDAVE PURCHASED ONE ANNA SHARE (1/16 TH SHARE) IN LAND, ACCORDINGLY IN THE REVENUE RECORDS HIS NAME WAS RECORD ED AS OWNER OF THE LAND TO THAT EXTENT. KUNDALIK K. BHONDAVE DIED ON 29 -12-1953. UPON HIS DEATH, NAME OF SADHU K. BHONDVE (FATHER OF ASSESS EE) AND TWO SONS OF KUNDALIK K. BHONDAVE I.E. DATTATRAYA AND PANDU RANG WAS RECORDED AS OWNERS IN THE REVENUE RECORD. THE NAME O F SADHU K. BHONDVE WAS RECORDED AS TENANT IN THE REVENUE RECORD S WITH RESPECT TO 15 ANNA SHARE IN LAND. SUBSEQUENTLY, AFTER AMENDMENT TO THE PROVISIONS OF SECTION 32 OF THE BOMBAY TENANCY AND AGRICU LTURAL LAND 8 ITA NOS. 1919 & 1929/PN/2013, A.Y. 2007-08 ACT, 1948 AS AMENDED IN 1956 THE NAME OF SADHU K. BHOND VE WAS RECORDED AS OWNER OF LAND IN THE REVENUE RECORDS. SHRI SADHU K. BHONDVE DIED ON 05-09-1988. AT THE TIME O F HIS DEATH, SAHDU K. BHONDVE WAS RECORDED AS OWNER IN POSS ESSION OF LAND ADMEASURING 14 HECTARES 27 R COMPRISING IN SURVEY NO. 72 & 73 AT VILLAGE-RAVET, TAL.-HAVELI, DISTT.-PUNE. SHRI SAHADU K. BHOND VE HAD EXECUTED REGISTERED WILL DATED 09-05-1988 BEQUEATHING HIS PROPERTY TO HIS SONS INCLUDING THE ASSESSEE. SHRI SAHADU BHONDVE WAS SURVIV ED BY HIS FIVE SONS I.E. SHANTARAM SAHADU BHONDAVE, VASTAJ SAHAD U BHONDAVE, RAMDAS SAHADU BHONDAVE, SITARAM SAHADU BHOND AVE (ASSESSEE) AND KALURAM SAHADU BHONDAVE AND FOUR DAUGHT ERS (ALL MARRIED). ACCORDING TO THE AFORESAID WILL THE PROPERTY OWN ED BY SADHU K. BHONDVE WAS DIVIDED AMONGST HIS SONS AND NEPHEW AS UNDER : I. SHANTARAM SAHADU BHONDAVE 1H, 25R. II. VASTAJ SAHADU BHONDAVE 0H, 30R. III. RAMDAS SAHADU BHONDAVE 1H, 20R. IV. SITARAM SAHADU BHONDAVE 7H, 97R PLUS RESIDENTIAL BUILDING. V. KALURAM SAHADU BHONDAVE 0H, 35R. VI. PANDURANG KUNDLIK BHONDAVE (NEPHEW) 3H & 20R. (S/O KUNDLIK K. BHONDAVE) 4.1 AFTER THE DEMISE OF SHRI SAHADU K. BHONDVE MULTIPLE DIS PUTES ERUPTED BETWEEN HIS LEGAL HEIRS REGARDING SHARE IN PROPER TY COMPRISING IN SURVEY NO. 72 & 73 AT VILLAGE-RAVET. SHRI SITARAM SAHA DU BHONDVE (ASSESSEE), RAMDAS SAHADU BHONDAVE AND PANDURANG KUNDLIK BHONDAVE FILED CIVIL SUIT NO. 881/91 SEEKING INJUNCTION AGAINST 9 ITA NOS. 1919 & 1929/PN/2013, A.Y. 2007-08 SHANTARAM SAHADU BHONDAVE, VASTAJ SAHADU BHONDAVE AN D KALURAM SAHADU BHONDAVE, ETC. THE CIVIL COURT VIDE DECREE DATED 27-06-2001 HELD THE WILL DATED 09-05-1998 TO BE LEGAL AND PROPER AND GRANTED PERMANENT INJUNCTION RESTRAINING THE RESPONDENTS NOT TO OBJECT IN THE POSSESSION AND OWNERSHIP OF THE PLAINTIFFS. SHRI SHANTARAM SAHADU BHONDAVE FILE APPEAL AGAINST THE DECREE OF CIVIL COURT IN CIV IL APPEAL NO. 673/2001. THE APPELLATE COURT VIDE ORDER DATED 31-0 3-2004 DISMISSED THE APPEAL. THE OTHER DEFENDANTS IN THE AFORESA ID CIVIL SUIT FILED SEPARATE APPEALS AGAINST THE DECREE OF CIVIL COURT. T HE SAID APPEAL WAS ALSO DISMISSED ON 13-06-2004. THEREAFTER, NO FURTHER APPEAL WAS FILED AND JUDGMENT AND DECREE PASSED IN CIVIL S UIT NO. 881/91 ATTAINED FINALITY. HOWEVER, THERE WERE OTHER SUITS BETWEEN THE LEGAL HEIRS OF SHRI SAHADU K. BHONDVE AND OTHERS WITH RES PECT TO SHARE IN JOINT FAMILY PROPERTY, CHALLENGING THE ENTRIES MADE IN THE RECORD OF RIGHTS, ETC. THE NAME OF THE ASSESSEE AND OTHERS WAS M UTATED IN THE REVENUE RECORDS IN ACCORDANCE WITH THE SHARE MENTIONED IN WILL. 4.2 DURING THE LIFE TIME OF SHRI SAHADU K. BHONDVE AN AGRE EMENT WAS ENTERED INTO BETWEEN SHRI KANHAIYALAL MOTILAL TALERA A ND SHRI SAHADU KUSHABA BHONDAVE AND OTHERS FOR SALE OF LAND CO MPRISING IN SURVEY NO. 72 & 73 AT VILLAGE-RAVET. SINCE, THE SAID AGREEMENT WAS NOT ACTED UPON, SHRI KANHAIYALAL M. TALERA FILED SPECIAL CIVIL SUIT NO. 952 IN THE COURT OF CIVIL JUDGE, SR. DIVISION, PUNE AGAINST SHRI SAHA DU K. BHONDVE AND HIS LEGAL HEIRS (INCLUDING ASSESSEE) FOR SPECIFIC PERFORMANCE OF AGREEMENT OF SALE DATED 12-05-1986. IN V IEW OF MULTIPLE LITIGATIONS, ALL LEGAL HEIRS OF SHRI SAHADU K. BHONDVE ARRIVED AT FAMILY SETTLEMENT DIVIDING THE PROPERTY IN EQUAL SHARE COM PRISING IN 10 ITA NOS. 1919 & 1929/PN/2013, A.Y. 2007-08 SURVEY NO. 72 & 73. IT WAS FURTHER AGREED THAT ALL LITIGAT ING PARTIES SHALL WITHDRAW THEIR RESPECTIVE CASES PENDING IN VARIOUS CO URTS RELATING TO PROPERTY UNDER QUESTION. ACCORDINGLY, DEED OF COMPRO MISE DATED 08-05-2003 WAS EXECUTED. AS PER THE MUTUAL SETTLEMENT SHANTARAM SAHADU BHONDAVE, VASTAJ SAHADU BHONDAVE, RAMDAS SAHAD U BHONDAVE, SITARAM SAHADU BHONDAVE (ASSESSEE) AND KALURA M SAHADU BHONDAVE WERE TO GET 2H 53.5R EACH IN THE PROPERTY AN D SHRI DATTA KUNDLIK AND PANDURANG KUNDALIK BHONDAVE JOINTLY GOT 2H 5 3.5R SHARE IN THE LAND. IT WAS FURTHER MUTUALLY AGREED THAT THE FOU R MARRIED DAUGHTERS OF SHRI SAHADU K. BHONDVE WOULD GET SALE PROC EEDS EQUIVALENT TO THE VALUE OF PROPERTY ADMEASURING 45R IN EQUAL SHARE. 4.3 THEREAFTER, THE ASSESSEE ALONG WITH HIS BROTHERS, SISTE RS AND COUSINS ENTERED INTO DEVELOPMENT AGREEMENT WITH M/S. EMP IRE PROPERTIES (HEREINAFTER REFERRED TO AS THE FIRM) ON 19-05 -2006 WHEREIN THE RIGHTS IN LAND COMPRISING IN SURVEY NO. 72 AND 73 ADME ASURING 15H & 21R WAS AGREED TO BE TRANSFERRED TO THE SAID FIR M FOR DEVELOPMENT IN LIEU OF TOTAL CONSIDERATION OF ` 8.50 CRORES. THE CONSIDERATION WAS PAID BY THE FIRM TO VENDORS THROUGH VA RIOUS CHEQUES IN A PHASED MANNER. THE ASSESSEE AND HIS BROTHERS REC EIVED ` 1,39,33,000/- EACH, AS CONSIDERATION. THE DAUGHTERS OF SHR I SAHADU K. BHONDVE RECEIVED ` 3 LACS EACH AS PART OF THEIR SHARE IN TOTAL CONSIDERATION FROM THE FIRM. SHRI DATTA KUNDALIK AND PANDU RANG KUNDALIK BHONDAVE RECEIVED ` 15,05,000/- AND ` 1,24,30,000/-, RESPECTIVELY AS THEIR SHARE AND THE TWO DAUGHTERS OF S HRI KUNDALIK K. BHONDAVE RECEIVED ` 1 LAKH EACH. THUS, THE TOTAL CONSIDERATION OF 11 ITA NOS. 1919 & 1929/PN/2013, A.Y. 2007-08 ` 8,50,00,000/- WAS DIVIDED AMONGST THE LEGAL HEIRS OF SHRI SA HADU K. BHONDVE AND SHRI KUNDALIK BHONDAVE. 4.4 THE LD. AR SUBMITTED THAT THE ADDITIONAL GROUNDS RAISED IN THE APPEAL ARE ARISING FROM FACTS OF THE CASE WHICH HAVE BEEN DISCUSSED IN DETAIL BY THE AUTHORITIES BELOW. THE ADDITIONAL GROUND NO. 1 RAISED ON 15-06-2016 EMANATES FROM MAIN GROUND NO. 4 OF THE APPEA L AND PER SE IS NOT AN ADDITIONAL GROUND. IN RESPECT OF ADDITIONAL GROUND RAISED ON 22-12-2015 THE LD. AR SUBMITTED THAT GROUND NO. 1 IS FACTUAL AND GROUND NO. 2 IS LEGAL. IN RESPECT OF ADDITIONAL GROUND RAISED ON 03-11-2016 THE LD. AR SUBMITTED THAT THE GROUND RAISED IS LEGAL. THE LD. AR CONTENDED THAT ADDITIONAL GROUNDS HAVE BEEN TAKEN TO SUPPLEMENT THE MAIN GROUNDS. FOR THE ADMISSION OF ADDITIO NAL GROUNDS, THE LD. AR TAKES THE SUPPORT OF THE JUDGMENT O F HONBLE SUPREME COURT OF INDIA IN THE CASE OF NATIONAL THERMAL PO WER CORPORATION LTD. VS. COMMISSIONER OF INCOME TAX REPORTED AS 229 ITR 383. 5. SHRI VIPIN K. GUJRATHI & SHRI KRISHNA V. GUJRATHI APPEARIN G ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE AUTHORITIES BELO W HAVE ERRED IN HOLDING THAT THE ASSESSEE WAS HAVING 56% SHARE IN THE AGRICULTURAL LAND COMPRISING IN SURVEY NO. 73 AND 73 AT VILLAGE-RAWET. T HE ASSESSEE RECEIVED 1/6 TH SHARE OF CONSIDERATION AS PER FAMILY ARRANGEMENT IN RESPECT OF HIS SHARE 2H AND 53.5R IN LAND . THE AUTHORITIES BELOW HAVE FAILED TO DISBELIEVE THE FAMILY ARRANGE MENT 12 ITA NOS. 1919 & 1929/PN/2013, A.Y. 2007-08 MERELY ON THE GROUND THAT IT IS UNREGISTERED. A PERUSA L OF DEVELOPMENT AGREEMENT AND SUBSEQUENT SALE DEED EXECUTED IN FAVOUR OF M/S. EMPIRE PROPERTIES WOULD CLEARLY SHOW THAT THE ASSESSEE HAS RE CEIVED ONLY ` 1,39,33,000/- AS HIS SHARE FROM THE TOTAL CONSIDERATION OF ` 8.50 CRORES. THE AUTHORITIES BELOW HAVE PLACED RELIANCE ON THE RECITAL OF WILL AND THE MUTATION ENTRIES IN THE REVENUE RECORD TO MAKE ADDITION IN THE HANDS OF THE ASSESSEE. HOWEVER, THE AUTHORITIES BELOW HA VE FAILED TO TAKE INTO CONSIDERATION THAT ENTRIES IN THE REVENUE RECO RD ARE NOT EVIDENCE OF TITLE. AFTER ENFORCEMENT OF WILL, A FAMILY SETTLEMEN T WAS ARRIVED AT WHERE THE ASSESSEE GOT LAND ADMEASURING 2H & 53.5R FROM THE TOTAL LAND OWNED BY HIS FATHER. THE ASSESSEE AGREE D FOR THE COMPROMISE TO PUT CAP ON LONG RUN LITIGATION AMONG THE LE GAL HEIRS OF SHRI SAHADU K. BHONDVE. THE LD. AR SUBMITTED THAT THE CO MMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN OBSERVING THAT THE C OMPROMISE DEED WAS NOT FULLY ENFORCED BY THE PARTIES. NEITHER THE CASES PENDING IN CIVIL COURTS WERE WITHDRAWN NOR THE MUTATION ENTRIES WE RE CARRIED OUT IN ACCORDANCE WITH THE TERMS OF COMPROMISE DEED. TH E LD. AR POINTED THAT ALTHOUGH NO SPECIFIC APPLICATIONS WERE MADE TO WITHDRAW THE SUITS, MOST OF THE CIVIL SUITS CAME TO AN END AS NO ON E PURSUED THEM. AS FAR AS MUTATION ENTRIES ARE CONCERNED, THE SAM E WERE NOT CARRIED OUT AS THE LAND WAS ULTIMATELY TO BE SOLD. THE LD . AR IN SUPPORT OF HIS CONTENTIONS THAT ENTRIES IN THE REVENUE RECORD AR E NOT EVIDENCE OF TITLE PLACED RELIANCE ON THE FOLLOWING DECISIONS : I. SMT. SAWARNI VS. SMT. INDER KAUR AND OTHERS, 1996 SCALE (6) 333 (SC); 13 ITA NOS. 1919 & 1929/PN/2013, A.Y. 2007-08 II. GURUNATH MANOHAR PAVASKAR & ORS. VS. NAGESH SIDDAPPA NAVALGUND & ORS., APPEAL (CIVIL) 5794 OF 2007 DECIDED ON 11-12 - 2007 (SC); III. NAVALSHANKAR ISHWARLAL DAVE AND ORS. VS. STATE OF GUJARAT AND ORS., 1994 AIR 1496 (SC). 5.1 THE LD. AR IN SUPPORT OF HIS SUBMISSIONS THAT REGISTRAT ION OF FAMILY SETTLEMENT DEED IS NOT MANDATORY PLACED RELIANCE ON THE DECISION OF SUPREME COURT OF INDIA IN THE CASE OF KALE & OTHERS VS . DEPUTY DIRECTOR OF CONSOLIDATION REPORTED AS 1976 AIR 807 AND T HE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF SMT. P.N. WANKUDR E VS. C.S. WANKUDRE AND ORS. REPORTED AS AIR 2002 BOM 129. 5.2 THE LD. AR CONTENDED THAT ALTHOUGH THE ASSESSEE IN H IS RETURN OF INCOME HAS INADVERTENTLY SHOWN INCOME FROM SALE OF LAND AS ` 4,74,73,721/-. WHEREAS, THE ASSESSEE HAS ACTUALLY RECEIVE D ` 1,39,33,000/- ONLY AS HIS SHARE OF CONSIDERATION. THE DIFFERE NCE BETWEEN THE SAID TWO AMOUNTS ` 3,35,40,721/- WHICH HAS BEEN RECEIVED BY HIS BROTHERS AND SISTERS MAY BE ALLOWED AS EXPENDITU RE FROM THE TOTAL CONSIDERATION. THE LD. AR SUBMITTED THAT THE AMOUNT RECEIVED BY THE BROTHERS OF ASSESSEE AS THEIR SHARE OF CONSIDERATION HAVE BEEN DISCLOSED BY THEM IN THEIR RESPECTIVE RETURN OF INCOME. TH EREFORE, IF THE ADDITION IS CONFIRMED IN THE HANDS OF THE ASSESSEE, THE SAM E AMOUNT WILL BE TAXED TWICE. THE LD. AR SUBMITTED THAT THE BROTHER S OF THE ASSESSEE ARE NOT ON TALKING TERM OF THE ASSESSEE, THEREFORE, THE AS SESSEE COULD NOT OBTAIN THE DETAILS OF THEIR RETURN OF INCOME AND THE ASSESSMENT ORDER PASSED IN THEIR RESPECTIVE CASES. THE ASSESSEE HAD 14 ITA NOS. 1919 & 1929/PN/2013, A.Y. 2007-08 FILED APPLICATION UNDER RTI ACT FOR OBTAINING THE RETURN OF IN COME OF OTHER CO-OWNERS, BUT THE DEPARTMENT REFUSED TO GIVE AN Y INFORMATION/DETAILS IN THIS REGARD. 5.3 IN RESPECT OF GROUND NO. 6 RELATING TO DENIAL OF EXEMPT ION U/S. 54F OF THE ACT, THE LD. AR CONTENDED THAT THE AUTHORITIE S BELOW HAVE ERRED IN SEEKING VALUATION REPORT FROM DVO IN VIOLATION OF TH E PROVISIONS OF SECTION 55A OF THE ACT. THE LD. AR SUBMITTED THAT THE ASSESSEE HAD OBTAINED VALUATION REPORT FROM THE REGISTER ED VALUER IN RESPECT OF LAND IN QUESTION. AS PER THE REPORT OF REGISTE RED VALUER, THE VALUE OF LAND AS ON 01-04-1981 IS ` 23,70,000/-. THE ASSESSING OFFICER REJECTED THE SAME AND SOUGHT THE REPORT OF DVO. THE DVO VALUED THE LAND AS ON 01-04-1981 AT ` 11,62,090/-. AS PER PROVISIONS OF SECTION 55A OF THE ACT, AS THEY WERE APPLICABLE DURING THE ASSES SMENT YEAR UNDER APPEAL, REFERENCE TO DVO COULD NOT BE MADE WHERE THE VALUE DECLARED BY THE ASSESSEE IS MORE THAN THE FAIR MARKET VALUE. IN SU PPORT OF HIS SUBMISSIONS THE LD. AR PLACED RELIANCE ON THE FOLLOWING DECISIONS: I. COMMISSIONER OF INCOME TAX VS. DAULAL MOHTA (HUF), 360 ITR 680 (BOM); II. COMMISSIONER OF INCOME TAX VS. PUJA PRINTS, 360 ITR 697 (BOM); III. ITO VS. DHIRENDRA MAHENDRAPRASAD MEHRA & SURENDRA SHRIRANGPRASAD MEHRA IN ITA NO. 672/PN/2014 AND 674/PN/2014 DECIDED ON 15-04-2016. 5.4 THE LD. AR OF THE ASSESSEE PRAYED FOR SETTING ASIDE TH E FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) AGAINST WHICH THE ASSE SSEE IS IN APPEAL. 15 ITA NOS. 1919 & 1929/PN/2013, A.Y. 2007-08 6. SHRI P.L. KUREEL REPRESENTING THE DEPARTMENT VEHEMENT LY SUPPORTED THE FINDINGS OF COMMISSIONER OF INCOME TAX (APP EALS) IN REJECTING THE CONTENTIONS OF THE ASSESSEE. THE LD. DR SU BMITTED THAT THE LAND IN QUESTION COMPRISING IN SURVEY NO. 72 AND 73 AT VILLAGE- RAVET IS NOT THE PROPERTY OF HUF. AS PER WILL AND THE EN TRIES IN THE MUTATION REGISTER, 56% OF THE TOTAL LAND IN QUESTION WAS ACQUIRED BY T HE ASSESSEE. THUS, THE SUBSTANTIAL PART OF PROPERTY BELONGE D TO THE ASSESSEE. ACCORDINGLY, ANY CAPITAL GAIN ARISING ON SALE O F LAND IS TAXABLE IN THE HANDS OF THE ASSESSEE. THE DEED OF COMP ROMISE DATED 08-05-2003 ON WHICH THE LD. AR HAS PLACED RELIANCE IS UNR EGISTERED DOCUMENT. THEREFORE, COGNIZANCE OF THE SAME SHOULD NOT B E TAKEN. THE ASSESSEE IN ITS RETURN OF INCOME HAS HIMSELF DISCLOSED ` 4,74,73,721/- AS LONG TERM CAPITAL GAIN AND HAS CLAIMED ` 3,35,40,721/- AS EXPENDITURE ON ACCOUNT OF PAYMENTS MADE TO HIS BROTHERS AND SISTERS. HOWEVER, THE ASSESSEE HAS FAILED T O SHOW FROM RECORDS THAT PAYMENTS TO BROTHERS AND SISTERS WERE M ADE BY THE ASSESSEE. 6.1 IN RESPECT OF VALUATION REPORT, THE LD. DR CONTENDED THAT THE APPROVED VALUER HAD ADOPTED RATES AS APPLICABLE TO PLOTS INSTEAD OF RATES APPLICABLE TO AGRICULTURAL LAND AS PER READY RECKONE R. THE ASSESSEE DURING ASSESSMENT HAS NOT PROVIDED THE DETAILS /DOCUMENTS TO SUBSTANTIATE HIS CONTENTIONS. 6.2 IN RESPECT OF ASSESSEES CLAIM OF DEDUCTION U/S. 54F, T HE LD. DR POINTED THAT THE ASSESSEE ONLY FURNISHED A COPY OF COM PLETION CERTIFICATE TO CLAIM DEDUCTION U/S. 54F. THE ASSESSEE HAS CLAIMED 16 ITA NOS. 1919 & 1929/PN/2013, A.Y. 2007-08 THAT ` 11,00,000/- WAS SPENT BY HIM ON CONSTRUCTION OF FIRST FLOOR OF HIS BUNGALOW. HOWEVER, THE ASSESSEE FAILED TO SUBMIT EVEN ON E BILL IN RESPECT OF THE EXPENDITURE INCURRED ON CONSTRUCTION OF B UNGALOW. IN VALUATION REPORT THE VALUER HAS MADE VALUATION OF ENTIRE B UNGALOW AT ` 18,54,555/-. THE VALUER HAS NOT GIVEN THE DETAILS OF EXPE NDITURE IN RESPECT OF CONSTRUCTION MADE DURING THE YEAR. 7. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESEN TATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIE S BELOW. WE HAVE ALSO CONSIDERED THE DOCUMENTS ON WHICH THE LD. AR OF THE ASSESSEE HAS PLACED RELIANCE TO SUPPORT HIS CONTENTIONS. THE ASSESSEE IN APPEAL HAS RAISED ELABORATE GROUNDS INTER ALIA CHALLENGIN G THE ADDITION ON ACCOUNT OF LONG TERM CAPITAL GAINS AS WELL AS OTHER PERIPHERAL ISSUES SUCH AS DISALLOWANCE OF CLAIM OF EXEMPTION U/S. 54F OF THE ACT, VALUATION REPORT ETC. THE ASSESSEE HAS ALSO RAISED ADDITIONAL GROUNDS OF APPEALS. A PERUSAL OF THE ADDITIONAL GROUNDS RA ISED BY THE ASSESSEE SHOW THAT THE SAME ARE EITHER TO SUPPLEMENT THE GROUNDS ALREADY TAKEN IN MAIN GROUNDS OF APPEAL OR ARE ARISING FRO M THE FACTS ALREADY DISCUSSED IN DETAILED BY THE AUTHORITIES BELOW. IN ADDITIONAL GROUND RAISED BY THE ASSESSEE VIDE APPLICATION DATED 22- 12-2015 THE ASSESSEE HAS ASSAILED THE FINDINGS OF AUTHORITIES BELOW IN HO LDING THAT THE SHARE OF ASSESSEE IN LAND IS 56% AS AGAINST THE ACTU AL SHARE OF ASSESSEE AT 53.50%. THE ADDITIONAL GROUND RAISED VIDE APP LICATION DATED 22-12-2015 IS AN ALTERNATE GROUND TO THE MAIN GR OUNDS RAISED BY THE ASSESSEE IN GROUNDS OF APPEAL CHALLENGING THE ENTIRE A DDITION ON ACCOUNT OF LONG TERM CAPITAL GAIN. SINCE, THE ADDITIONAL GR OUNDS ARE 17 ITA NOS. 1919 & 1929/PN/2013, A.Y. 2007-08 EMANATING FROM THE FACTS ALREADY ON RECORD AND ONE OF T HE ADDITIONAL GROUNDS IS LEGAL IN NATURE, THE SAME ARE ADMITTED. 8. THE FACTUAL MATRIX OF THE CASE HAS ALREADY BEEN DISCU SSED IN ORDER ABOVE. THE FIRST ISSUE THAT HAS TO BE DECIDED IN T HE PRESENT APPEAL IS THE EXTENT OF LONG TERM CAPITAL GAIN ARISING FROM SALE OF LAND TAXABLE IN THE HANDS OF ASSESSEE. UNDISPUTEDLY, THE ASSE SSEE HAD ACQUIRED AGRICULTURAL LAND ADMEASURING 7H 97R COMPRISING IN SURVEY NO. 72 & 73 AT VILLAGE-RAVET AND A RESIDENTIAL BUILDING FROM H IS FATHER THROUGH REGISTERED WILL DATED 09-05-1988. ON THE BASIS O F REGISTERED WILL MUTATION ENTRIES WERE MADE IN THE REVENUE RECORD. TH E SAID WILL WAS CHALLENGED BY THE SIBLINGS OF THE ASSESSEE. THERE WER E MULTIPLE LITIGATIONS CHALLENGING THE ENTRIES IN THE REVENUE RECORDS A ND THE SHARE IN OWNERSHIP RIGHTS OF THE AGRICULTURAL LAND. ONE SHRI KANHA IYALAL TALERA HAD ALSO FILED SUIT FOR SPECIFIC PERFORMANCE OF AGREEMEN T OF SALE DATED 12-05-1986 EXECUTED BY THE FATHER OF THE ASSESS EE. THE ASSESSEE IN ORDER TO SETTLE THE DISPUTES AND PUT LID TO THE LONG D RAWN LITIGATION AGREED FOR FAMILY SETTLEMENT. ACCORDING TO FAMILY SETTLEMEN T, THE LAND OWNED BY THE FATHER OF THE ASSESSEE WAS EQUALLY DIVIDED AMONGST THE ASSESSEE AND HIS FOUR BROTHERS. THE FAMILY SETTLEMENT WA S REDUCED IN WRITING. AS PER DEED OF COMPROMISE DRAWN ON 07-05-2003 ALL THE SONS OF SAHADU K. BHONDVE INCLUDING ASSESSEE GOT 2H 53.50R EAC H AS THEIR SHARE IN THE LAND. FURTHER, IT WAS AGREED BY THE WARRIN G PARTIES TO WITHDRAW ALL THE CASES PENDING IN THE COURT OF LAW IN CONNE CTION WITH THE LAND. SUBSEQUENTLY, THE ASSESSEE ALONG WITH OTHER LE GAL HEIRS OF SAHADU K. BHONDVE ENTERED INTO DEVELOPMENT AGREEMENT W ITH M/S. EMPIRE PROPERTIES ON 19-05-2006 IN RESPECT OF THE AGRICU LTURAL LAND. 18 ITA NOS. 1919 & 1929/PN/2013, A.Y. 2007-08 AS PER DEVELOPMENT AGREEMENT, THE ASSESSEE AND OTHER CO-OWNERS WOULD TRANSFER THEIR RIGHTS IN THE LAND IN FAVOUR OF M/S. EMP IRE PROPERTIES AGAINST TOTAL CONSIDERATION OF ` 8.50 CRORES. THE DEVELOPMENT AGREEMENT WAS FOLLOWED BY SALE DEED EXECUTED IN FAVOUR OF M/S. EMPIRE PROPERTIES ON 23-12-2009 IN RESPECT OF SAID AGRICULTURAL LAND. THE ASSESSEE AND THE OTHER LEGAL HEIRS OF SAHADU K. BHONDVE RECEIVED THE SALE CONSIDERATION IN A PHASED MANNER BY WAY OF CHEQUES FROM M/S. EMPIRE PROPERTIES. THE DETAILS OF THE AMOUNT RECEIVED BY THE ASSESSEE AND OTHER PARTIES TO THE AGREEMENT/SALE DEED ARE AS UNDER : STATEMENT SHOWING AMOUNT RECEIVED BY CO-OWNERS AS P ER DEVELOPMENT AGREEMNT DATED 19/05/2006 SR. NO. NAME OF THE PERSON AMOUNT RECEIVED ON 15/02/2006 18/05/2006 18/11/2006 18/05/2007 18/11 /2007 TOTAL 1 MR. SHANTARAM SAHADU BHONDAVE 900000 4700000 1666600 3333200 3333200 13933000 2 MR. SITARAM SAHADU BHONDAVE 900000 4700000 1666600 3333200 3333200 13933000 3 MR. VASTAD SAHADU BHONDAVE 900000 4700000 1666600 3333200 3333200 13933000 4 MR. KALURAM SAHADU BHONDAVE 900000 4700000 1666600 3333200 3333200 13933000 5 MR. RAMDAS SAHADU BHONDAVE 900000 4700000 1666600 3333200 3333200 13933000 6 MRS. HARANABAI NIVRUTTI TARAS 200000 100000 0 0 0 300000 7 MRS. LEELABAI ALIAS LAXMIBAI BABAN SHIKHARE 200000 100000 0 0 0 300000 8 MRS. SHALAN JALINDER GARADE 200000 100000 0 0 0 300000 9 MRS. SUMITRA TANAJI MHALUNKAR 200000 100000 0 0 0 300000 10 MR. DATTA KUNDALIK BHONDAVE 200000 470000 167000 334000 334000 1505000 11 MR. PANDURANG KUNDALIK BHONDAVE 700000 4230000 1500000 3000000 3000000 12430000 12 MRS. HEERABAI BAJIRAO KEDARI 0 100000 0 0 0 100000 13 MRS. TARABAI NATHU LOHAR 0 100000 0 0 0 100000 TOTAL 6200000 28800000 10000000 20000000 20000000 85000000 19 ITA NOS. 1919 & 1929/PN/2013, A.Y. 2007-08 9. THE ASSESSEE IN HIS RETURN OF INCOME WHILE COMPUTING CA PITAL GAIN ON SALE OF LAND DISCLOSED SALE CONSIDERATION AS ` 4,74,73,721/- BEING THE PROPORTIONATE CONSIDERATION FOR 7H 97R OF LAND O UT OF TOTAL LAND OF 14H 27R. FROM THE SAID SALE CONSIDERATION THE AS SESSEE CLAIMED THE AMOUNT PAID TO OTHER CO-OWNERS AS COST OF SALES. THE RELEVANT EXTRACT OF THE WORKING OF CAPITAL GAIN ON SALE OF LA ND AS COMPUTED BY THE ASSESSEE IN RETURN OF INCOME IS AS UNDER : WORKING NOTE CAPITAL GAIN ON SALE OF LAND AT RAWET, TAL. MULASH I SALES CONSIDERATION 47473721 (PROPORTIONATE CONSIDERATION OF 7.97 HECTOR OUT OF TOTAL LAND OF 14.27 HECTOR) LESS : INDEXED COST OF ACQUISITION VALUE AS ON 01/04/1981 2370000 INDEX FOR 1981-82 100 INDEX FOR 2006-2007 519 INDEXED COST 2370000/100 * 519 12300300 BALANCE 35173421 LESS : COST OF SALE AMOUNT PAID TO SHANTARAM S. BHONDAVE, VASTAZ S. BHO NDAVE, RAMDAS S. BHONDAVE, KALURAM S. BHONDAVE, PANDURANG K. BHONDAVE 33540721 1632700 LONG TERM CAPITAL GAIN LESS : EXEMPTION U/S. 54B AGRICULTURAL LANDS PURCHASED LAND AT NANE 2157480 LAND AT NANE 581580 LAND AT NANE 183440 LAND AT KHADKALE 1536010 LAND AT KHADKALE 215060 (S.T. MAXI UPTO CAPITAL GAIN) 4673570 1632700 LONG TERM CAPITAL GAIN NIL 20 ITA NOS. 1919 & 1929/PN/2013, A.Y. 2007-08 10. THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDIN GS DISALLOWED THE COST OF SALES I.E. THE AMOUNT CLAIMED BY THE A SSESSEE PAID TO SHANTARAM S. BHONDAVE, VASTAZ S. BHONDAVE, RAMD AS S. BHONDAVE, KALURAM S. BHONDAVE, PANDURANG K. BHONDAVE I.E. ` 3,35,40,721/-. IN FIRST APPEAL, THE COMMISSIONER OF INCOME TA X (APPEALS) UPHELD THE FINDINGS OF ASSESSING OFFICER. THE SAID AMO UNT WAS DISALLOWED ON THE GROUND THAT THE ASSESSEE IS THE O WNER OF LAND TO THE EXTENT OF 7H 97R AS PER ENTRIES IN THE REVENUE REC ORD. THE AUTHORITIES BELOW FURTHER REJECTED THE FAMILY SETTLEMENT O N TWO GROUNDS: (I) THE COVENANTS MENTIONED IN THE FAMILY SETTLEMENT ARE NO T COMPLETELY ACTED UPON BY THE SIGNATORIES; AND (II) THE FAMILY AGREEMEN T IS AN UNREGISTERED DOCUMENT. 11. BEFORE PROCEEDINGS FURTHER WITH THE MAIN ISSUE IT WOUL D BE RELEVANT TO FIRST DECIDE THE ISSUES, WHETHER THE ENTRIES RECORDED IN THE REVENUE RECORD CONFER TITLE OF PROPERTY. IT IS A WELL SETT LED LAW THAT THE MUTATION ENTRIES IN THE REVENUE RECORD DOES NOT CONFER TITLE OF THE LAND IN THE NAME OF PERSON IN WHOSE FAVOUR THE ENTRIES ARE RE CORDED. THE ENTRIES IN THE REVENUE RECORD ARE ONLY FOR THE LIMITED P URPOSE TO COLLECT LAND REVENUE. THE HONBLE SUPREME COURT OF INDIA IN THE CASE OF SURAJ BHAN & ORS. VS. FINANCIAL COMMISSIONER & ORS REPORTED AS (2007) 6 SCC 186 HAS HELD, THAT AN ENTRY IN REVENUE RECORDS DO ES NOT CONFER TITLE ON A PERSON WHOSE NAME APPEARS IN RECORD OF RIGHTS . IT IS SETTLED LAW THAT ENTRIES IN THE REVENUE RECORDS OR JAMABANDI HA VE ONLY 'FISCAL PURPOSE' I.E. PAYMENT OF LAND-REVENUE AND NO OWNERSHIP IS CONFERRED ON THE BASIS OF SUCH ENTRIES. SO FAR AS TITLE TO THE PROPERTY IS CONCERNED, IT CAN ONLY BE DECIDED BY A COMPETENT CIVIL COURT. 21 ITA NOS. 1919 & 1929/PN/2013, A.Y. 2007-08 12. THE HONBLE SUPREME COURT OF INDIA IN THE CASE OF SM T. SAWARNI VS. SMT. INDER KAUR AND OTHERS REPORTED AS 1996 SCALE (6) 333 HAS OBSERVED THAT A REVENUE RECORD IS NOT A DOCUMENT OF T ITLE. IT MERELY RAISES A PRESUMPTION IN REGARD TO POSSESSION. THIS VIEW H AS BEEN REITERATED BY THE HONBLE APEX COURT AND THE VARIOUS H IGH COURTS IN CATENA OF JUDGMENTS. THUS, THE FINDINGS OF AUTHORITIES BELOW IN THE PRESENT CASE THAT THE ASSESSEE IS OWNER OF LAND TO THE EXTENT OF 7H 97R ON THE BASIS OF ENTRIES IN THE REVENUE RECORD IS NOT T ENABLE. THE LOWER AUTHORITIES HAVE FAILED TO TAKE INTO CONSIDERATION THE FACT THAT SUBSEQUENT TO THE ENTRIES IN THE REVENUE RECORD LITIGATI ON ERUPTED BETWEEN THE LEGAL HEIRS OF SAHADU K. BHONDAVE. TO PUT EN D TO THE LITIGATIONS A FAMILY SETTLEMENT WAS ENTERED WHEREIN ALL THE S ONS OF SAHADU K. BHONDAVE GOT EQUAL SHARE IN THE LAND. 13. ANOTHER ISSUE WHICH HAS EMERGED FROM THE ORDERS OF AUTHORITIES BELOW IS, WHETHER THE DEED OF COMPROMISE ARISING OUT OF FA MILY ARRANGEMENT REQUIRES REGISTRATION? THE ASSESSEE IN GRO UND NO. 2 OF THE APPEAL HAS ASSAILED THE ACTION OF COMMISSIONER OF INCOME TAX (APPEALS) IN NOT CONSIDERING THE DEED OF COMPROMISE. THE AUTHORIT IES BELOW HAVE DECLINED TO CONSIDER THE DEED OF COMPROMISE ON THE GROUND THAT THE SAME IS NOT REGISTERED. THE COMMISSIONER OF INCOME TAX (APPEALS) IN HIS ORDER HAS FURTHER OBSERVED THAT ALL THE TERMS AND CONDITIONS OF THE AGREEMENT SUCH AS WITHDRAWAL OF CASES BY THE PART IES TO THE AGREEMENT PENDING IN VARIOUS COURTS WITH RESPECT TO PRO PERTY IN QUESTION HAVE NOT BEEN ACTED UPON AND MUTATION ENTRIES ARE NOT RECORDED AS PER FAMILY ARRANGEMENT. THE CONTENTION OF T HE ASSESSEE IS THAT REGISTRATION OF DEED OF COMPROMISE IS NOT NECESSARY AS THE PROPERTY 22 ITA NOS. 1919 & 1929/PN/2013, A.Y. 2007-08 IS NOT DIVIDED BY MEETS AND BOUNDS BETWEEN THE PARTIES TO THE AGREEMENT. 14. THE HONBLE SUPREME COURT OF INDIA IN ITS LAND MARK J UDGMENT IN THE CASE OF KALE & OTHERS VS. DEPUTY DIRECTOR OF CONSOLIDA TION REPORTED AS 1976 AIR 807 HAS DEALT WITH THE ISSUE RELATING TO PRIN CIPLE GOVERNING REGISTRATION OF FAMILY ARRANGEMENT. THE HONBLE COURT IN AN UNAMBIGUOUS MANNER HAS EXPLAINED THE OBJECT BEHIND THE FAMILY ARRANGEMENT AND THE CIRCUMSTANCES UNDER WHICH THE REG ISTRATION OF FAMILY ARRANGEMENT IS MANDATORY. THE RELEVANT EXTRACT O F THE JUDGMENT RENDERED IN THE SAID CASE READS AS UNDER : BEFORE DEALING WITH THE RESPECTIVE CONTENTIONS PUT FORWARD BY THE PARTIES, WE WOULD LIKE TO DISCUSS IN GENERAL THE EF FECT AND VALUE OF FAMILY ARRANGEMENTS ENTERED INTO BETWEEN THE PARTIES WITH A VIEW TO RESOLVING DISPUTES ONCE FOR ALL. BY VIRTUE OF A FAMILY SETTLE MENT OR ARRANGEMENT MEMBERS OF A FAMILY DESCENDING FROM A COMMON ANCEST OR OR A NEAR RELATION SEEK TO SINK THEIR DIFFERENCES AND DISPUTE S, SETTLE AND RESOLVE THEIR CONFLICTING CLAIMS OR DISPUTED TITLES ONCE FO R ALL IN ORDER TO BUY PEACE OF MIND AND BRING ABOUT COMPLETE HARMONY AND GOODWI LL IN THE FAMILY. THE FAMILY ARRANGEMENTS ARE GOVERNED BY A SPECIAL E QUITY PECULIAR TO THEMSELVES AND WOULD BE ENFORCED IF HONESTLY MADE. IN THIS CONNECTION, KERR IN HIS VALUABLE TREATISE 'KERR ON FRAUD' AT P. 364 MAKES THE FOLLOWING PERTINENT OBSERVATIONS REGARDING THE NATU RE OF THE FAMILY ARRANGEMENT WHICH MAY BE EXTRACTED THUS; 'THE PRINCIPLES WHICH APPLY TO THE CASE OF ORDINARY COMPROMISE BETWEEN STRANGERS, DO NOT EQUALLY APPLY TO THE CASE OF COMPROMISES IN THE NATURE OF FAMILY ARRANGEMENTS. F AMILY ARRANGEMENTS ARE GOVERNED BY A SPECIAL EQUITY PECUL IAR TO THEMSELVES, AND WILL BE ENFORCED IF HONESTY MADE, A LTHOUGH THEY HAVE NOT BEEN MEANT AS A COMPROMISE, BUT HAVE PROCE EDED FROM AN ERROR OF ALL PARTIES, ORIGINATING IN MISTAKE OR IGNORANCE OF FACT AS TO THAT THEIR RIGHTS ACTUALLY ARE, OR OF THE POI NTS ON WHICH THEIR RIGHTS ACTUALLY DEPEND.' 23 ITA NOS. 1919 & 1929/PN/2013, A.Y. 2007-08 THE OBJECT OF THE ARRANGEMENT IS TO PROTECT THE FAM ILY FROM LONG DRAWN LITIGATION CR PERPETUAL STRIFES WHICH MAR THE UNITY AND SOLIDARITY OF THE FAMILY AND CREATE HATRED AND BAD BLOOD BETWEEN THE VARIOUS MEMBERS OF THE FAMILY. TODAY WHEN WE ARE STRIVING TO BUILD UP AN EGALITARIAN SOCIETY AND ARE TRYING FOR A COMPLETE RECONSTRUCTION OF THE SOCIETY, TO MAINTAIN AND UPHOLD THE UNITY AND HOMOGENEITY OF THE FAMILY WHICH ULTIMATELY RESULTS IN THE UNIFICATION OF THE SOCIETY AND, THER EFORE, OF THE ENTIRE COUNTRY, IS THE PRIME NEED OF THE HOUR. A FAMILY AR RANGEMENT BY WHICH THE PROPERTY IS EQUITABLY DIVIDED BETWEEN THE VARIO US CONTENDERS SO AS TO ACHIEVE AN EQUAL DISTRIBUTION OF WEALTH INSTEAD OF CONCENTRATING THE SAME IN THE HANDS OF A FEW IS UNDOUBTEDLY A MILESTONE IN THE ADMINISTRATING OF SOCIAL JUSTICE. THAT IS WHY THE TERM 'FAMILY' HAS T O BE UNDERSTOOD IN A WIDER SENSE SO AS TO INCLUDE WITHIN ITS FOLD NOT ON LY CLOSE RELATIONS OR LEGAL HEIRS BUT EVEN THOSE PERSONS WHO MAY HAVE SOM E SORT OF ANTECEDENT TITLE, A SEMBLANCE OF A CLAIM OR EVEN IF THEY HAVE A SPES SUCCESSIONS SO THAT FUTURE DISPUTES ARE SEALED FOR EVER AND THE FAMILY INSTEAD OF FIGHTING CLAIMS INTER SE AND WASTING TIM E, MONEY AND ENERGY ON SUCH FRUITLESS OR FUTILE LITIGATION IS ABLE TO D EVOTE ITS ATTENTION TO MORE CONSTRUCTIVE WORK IN THE LARGER INTEREST OF THE COU NTRY. THE COURTS HAVE, THEREFORE, LEANED IN FAVOUR OF UPHOLDING A FAMILY A RRANGEMENT INSTEAD OF DISTURBING THE SAME ON TECHNICAL OR TRIVIAL GROUNDS . WHERE THE COURTS FIND THAT THE FAMILY ARRANGEMENT SUFFERS FROM A LEGAL LA CUNA OR A FORMAL DEFECT THE RULE OF ESTOPPEL IS PRESSED INTO SERVICE AND IS APPLIED TO SHUT OUT PLEA OF THE PERSON WHO BEING A PARTY TO FAMILY ARRANGEMENT SEEKS TO UNSETTLE A SETTLED DISPUTE AND CLAIMS TO REVOKE THE FAMILY ARRANGEMENT UNDER WHICH HE HAS HIMSELF ENJOYED SOME MATERIAL BE NEFITS. THE LAW IN ENGLAND ON THIS POINT IS ALMOST THE SAME. IN HALSBU RY'S LAWS OF ENGLAND, VOL. 17, THIRD EDITION, AT PP. 215-216, TH E FOLLOWING APT OBSERVATIONS REGARDING THE ESSENTIALS OF THE FAMILY SETTLEMENT AND THE PRINCIPLES GOVERNING THE EXISTENCE OF THE SAME ARE MADE: 'A FAMILY ARRANGEMENT IS AN AGREEMENT BETWEEN MEMBE RS OF THE SAME FAMILY, INTENDED TO BE GENERALLY AND REASONABL Y FOR THE BENEFIT OF THE FAMILY EITHER BY COMPROMISING DOUBTF UL OR DISPUTED RIGHTS OR BY PRESERVING THE FAMILY PROPERTY OR THE PEACE AND SECURITY OF THE FAMILY BY AVOIDING LITIGATION OR BY SAVING-ITS HONOUR. 24 ITA NOS. 1919 & 1929/PN/2013, A.Y. 2007-08 THE AGREEMENT MAY BE IMPLIED FROM A LONG COURSE. OF DEALING, BUT IT IS MORE USUAL TO EMBODY OR TO EFFECTUATE THE AGR EEMENT IN A DEED TO WHICH THE TERM 'FAMILY ARRANGEMENT' IS APPL IED. FAMILY ARRANGEMENTS ARE GOVERNED BY PRINCIPLES WHIC H ARE NOT APPLICABLE TO DEALINGS BETWEEN STRANGERS. THE COURT , WHEN DECIDING THE RIGHTS OF PARTIES UNDER FAMILY ARRANGE MENTS OR CLAIMS TO UPSET SUCH ARRANGEMENTS, CONSIDERS WHAT IN THE B ROADEST VIEW OF THE MATTER IS MOST FOR THE INTEREST OF FAMILIES, AND HAS REGARD TO CONSIDERATIONS WHICH IN DEALING WITH TRANSACTIONS B ETWEEN PERSONS NOT MEMBERS OF THE SAME FAMILY, WOULD NOT B E TAKEN INTO ACCOUNT. MATTERS WHICH WOULD BE FATAL TO THE VALIDI TY OF SIMILAR TRANSACTIONS BETWEEN STRANGERS ARE NOT OBJECTIONS- TO THE BINDING EFFECT OF FAMILY ARRANGEMENTS'. IN OTHER WORDS TO PUT THE BINDING EFFECT AND THE ES SENTIALS OF A FAMILY SETTLEMENT IN A CONCRETISED FORM, THE MATTER MAY BE REDUCED INTO THE FORM OF THE FOLLOWING PROPOSITIONS: (1) THE FAMILY SETTLEMENT MUST BE A BONA FIDE ONE S O AS TO RESOLVE FAMILY DISPUTES AND RIVAL CLAIMS BY A FAIR AND EQUI TABLE DIVISION OR ALLOTMENT OF PROPERTIES BETWEEN THE VARIOUS MEMBERS OF THE FAMILY; (2) THE SAID SETTLEMENT MUST BE VOLUNTARY AND SHOUL D NOT BE INDUCED BY FRAUD, COERCION OR UNDUE INFLUENCE: (3) THE FAMILY ARRANGEMENT MAY BE EVEN ORAL IN WHIC H CASE NO REGISTRATION IS NECESSARY; (4) IT IS WELL-SETTLED THAT REGISTRATION WOULD BE N ECESSARY ONLY IF THE TERMS OF THE FAMILY ARRANGEMENT ARE REDUCED INT O WRITING. HERE ALSO, A DISTINCTION SHOULD BE MADE BETWEEN A D OCUMENT CONTAINING THE TERMS AND RECITALS OF A FAMILY ARRAN GEMENT MADE UNDER THE DOCUMENT AND A MERE MEMORANDUM PRE PARED AFTER THE FAMILY ARRANGEMENT HAD ALREADY BEEN MADE EITHER FOR THE PURPOSE OF THE RECORD OR FOR IN FORMATION OF THE COURT FOR MAKING NECESSARY MUTATION. IN SUCH A CASE THE MEMORANDUM ITSELF DOES NOT CREATE OR EXTINGUISH ANY RIGHTS IN IMMOVABLE PROPERTIES AND T HEREFORE DOES NOT FALL WITHIN THE MISCHIEF OF S. 17(2) OF THE REG ISTRATION ACT AND IS, THEREFORE, NOT COMPULSORILY REGISTRABLE; 25 ITA NOS. 1919 & 1929/PN/2013, A.Y. 2007-08 (5) THE MEMBERS WHO MAY BE PARTIES TO THE FAMILY AR RANGEMENT MUST HAVE SOME ANTECEDENT TITLE, CLAIM OR INTEREST EVEN A POSSIBLE CLAIM IN THE PROPERTY 'IT WHICH IS ACKNOWLEDGED BY THE PARTIES TO THE SETTLEMENT. EVEN IF ONE OF THE PARTIES TO THE S ETTLEMENT HAS NO TITLE BUT UNDER THE ARRANGEMENT THE OTHER PARTY REL INQUISHES ALL ITS CLAIMS OR TITLES IN FAVOUR OF SUCH A PERSON AND ACK NOWLEDGES HIM TO BE THE SOLE 9 OWNER, THEN THE ANTECEDENT TITLE M UST BE ASSUMED AND THE FAMILY ARRANGEMENT WILL BE UPHELD AND THE C OURTS WILL FIND NO DIFFICULTY IN GIVING ASSENT TO THE SAME; (6) EVEN IF BONA FIDE DISPUTES, PRESENT OR POSSIBLE , WHICH MAY NOT INVOLVE LEGAL CLAIMS ARE SETTLED BY A BONA FIDE FAM ILY ARRANGEMENT WHICH IS FAIR AND EQUITABLE THE FAMILY ARRANGEMENT IS FINAL AND BINDING ON THE PARTIES TO THE SETTLEMENT. THE PRINCIPLES INDICATED ABOVE HAVE BEEN CLEARLY EN UNCIATED AND ADROITLY ADUMBRATED IN A LONG COURSE OF DECISIONS OF THIS CO URT AS ALSO THOSE OF THE PRIVY COUNCIL AND OTHER HIGH COURTS, WHICH WE S HALL DISCUSS PRESENTLY. 15. THERE IS SUBSTANTIAL DIFFERENCE BETWEEN THE FAMILY SETT LEMENT AND THE DOCUMENTS RECORDING PARTITION. A FAMILY SETTLEMENT WH ERE NO SPECIFIC SHARES IN THE IMMOVABLE PROPERTY ARE CARVED OUT DOES NOT REQUIRE REGISTRATION AND STAMPING, WHEREAS A DEED OF PART ITION REQUIRES PAYMENT OF STAMP DUTY AS WELL AS REGISTRATION OF THE DOCU MENT. THE FAMILY SETTLEMENT CAN BE ORAL BUT TO PUT TO BINDING EFFECT THEY ARE SOMETIME REDUCED TO THE WRITING. THERE IS A FINE DISTINCTIO N BETWEEN A DOCUMENT CONTAINING THE TERMS AND RECITALS OF A FAMILY ARR ANGEMENT AND A MERE MEMORANDUM PREPARED AFTER THE FAMILY ARRANG EMENT PREPARED FOR THE PURPOSE OF RECORDING MUTUALLY AGREED T ERMS AND CONDITIONS OF THE FAMILY ARRANGEMENT WHERE THE IMMOVABLE P ROPERTY IS NOT DIVIDED AMONGST THE MEMBERS OF FAMILY IN THE MEMORAN DUM BY MEETS AND BOUNDS. SUCH MEMORANDUM ITSELF DOES NOT CREA TE OR 26 ITA NOS. 1919 & 1929/PN/2013, A.Y. 2007-08 EXTINGUISH ANY RIGHTS IN IMMOVABLE PROPERTIES. THE SAID DOC UMENTS DOES NOT FALL WITHIN THE MISCHIEF OF SECTION 17 OF THE REGISTR ATION ACT AND IS, THEREFORE, NOT COMPULSORILY REGISTRABLE. 16. IN THE PRESENT CASE, IF THE DEED OF COMPROMISE ENTER ED INTO BETWEEN THE LEGAL HEIRS OF SAHADU K. BHONDAVE IS TESTED O N TOUCHSTONE OF THE PRINCIPLE LAID DOWN BY THE HONBLE APEX COURT IN THE CASE OF KALE & OTHERS VS. DEPUTY DIRECTOR OF CONSOLIDATION (SUPRA), IT WOU LD BE EVIDENT THAT THE DEED OF COMPROMISE DOES NOT REQUIRE RE GISTRATION. THE FIRST TEST RELATES TO BONAFIDE OF FAMILY SETTLEMENT. IN THE INSTANT CASE FAMILY SETTLEMENT HAS BEEN ARRIVED AT TO RESOLVE THE FAMIL Y DISPUTE AND TO PUT AN END TO THE MULTIPLE LITIGATIONS PENDING IN VARIOUS COURTS WITH RESPECT TO THE LAND BEQUEATHED BY SAHADU K. BHONDAVE TO HIS LEGAL HEIRS VIDE REGISTERED WILL DATED 05-09-1988. BY WAY OF FAMIL Y SETTLEMENT THE AGRICULTURAL LAND WAS EQUALLY DIVIDED AMONGS T THE SONS OF SAHADU K. BHONDAVE. THE SECOND CONDITION IS THAT THE FAMILY SETTLEMENT MUST BE VOLUNTARILY AND WITHOUT ANY FRAUD COE RCION ETC. IN THE PRESENT CASE NO VOICE HAS BEEN RAISED FROM ANY QU ARTER THAT THE FAMILY SETTLEMENT IS A RESULT OF COERCION OR UNDUE INFERENC E. ALL THE EXECUTANTS TO THE DEED OF COMPROMISE HAVE VOLUNTARY AG REED TO THE TERMS AND CONDITIONS OF THE FAMILY ARRANGEMENT. THE THIRD CONDITION IS THAT THE FAMILY ARRANGEMENT CAN BE ORAL. IN THE PRESEN T CASE, THE FAMILY ARRANGEMENT HAS BEEN REDUCED TO WRITING AND HAS BEEN TILED AS DEED OF COMPROMISE. THE FOURTH PRINCIPLE LAID DOWN BY THE HONBLE APEX COURT IS THAT FAMILY ARRANGEMENT EVEN IF REDUCED TO WRITING AND REQUIRES COMPULSORY REGISTRATION IN CERTAIN CIRCUMSTANCES. IN THE PRESENT CASE THE DEED OF COMPROMISE HAS BEEN MADE CON TAINING THE 27 ITA NOS. 1919 & 1929/PN/2013, A.Y. 2007-08 TERMS AND RECITAL OF THE FAMILY ARRANGEMENT. A PERUSAL O F THE DEED OF COMPROMISE SHOWS THAT IT DOES NOT CREATE OR EXTINGUISH ANY RIGHTS IN THE IMMOVABLE PROPERTIES I.E. THE AGRICULTURAL LAND IS NEITHER DIVIDED AMONGST THE PARTIES TO THE AGREEMENT BY MEETS AND BO UNDS NOR DOES IT EXTINGUISHES RIGHTS OF ANY INDIVIDUAL IN IMMOVABLE PROPERTY. THE DOCUMENT ONLY SPECIFY THE SHARE OF EACH FAMILY MEMBER P ARTY TO THE ARRANGEMENT. THE FIFTH CONDITION AS SET OUT BY THE HON BLE APEX COURT IS THAT THE MEMBERS OF FAMILY ARRANGEMENT MUST HAVE ANT ECEDENT TITLE, CLAIM OR INTEREST EVEN A POSSIBLE CLAIM IN THE PROPERTY. I N THE PRESENT CASE THE PARTIES TO THE DEED OF COMPROMISE ARE THE LEGAL HEIRS OF SAHAD U K. BHONDAVE. SAHADU K. BHONDAVE VIDE HIS REGISTERED WILL DA TED 09-05-1998 HAD BEQUEATHED HIS IMMOVABLE PROPERTIES TO H IS SONS AND NEPHEW. THE DISPUTE AROSE BETWEEN THEM AS THE LAND WA S NOT EQUALLY DIVIDED BY SAHADU K. BHONDAVE AMONGST HIS SONS IN THE WILL. THE ASSESSEE GOT MAXIMUM SHARE OF 7H 97R FROM THE TOTAL LAND OF 14H 27R, WHEREAS THE OTHERS SONS OF SAHADU K. BHONDAVE GOT MA RGINAL SHARE AS LESS THAN 50% OF THE TOTAL LAND TO BE DIVIDED AMONGST THE REMAINING FOUR SONS. APART FROM THE SONS OF SAHADU K. BHONDAVE TH E OTHER PERSONS PARTY TO THE FAMILY ARRANGEMENT ARE HIS FOUR DA UGHTERS, HIS TWO NEPHEWS, AND HIS TWO NIECE. SAHADU K. BHONDAVE IN HIS WILL H AS ALSO BEQUEATHED PART OF HIS PROPERTY TO ONE OF HIS NEPHEWS. THUS, ALL THE PARTIES TO THE DEED OF COMPROMISE HAD SOME ANTECEDENT TITLE, INTEREST AND EVEN POSSIBLE CLAIMS TO THE PROPERTY. AFTER HAVING TESTED THE DEED OF COMPROMISE BASED ON FAMILY ARRANGEMENT AGAINST THE BE NCHMARK SET BY HONBLE APEX COURT, IT CAN BE SAFELY CONCLUDED THAT T HE SAID DEED WAS NOT REQUIRED TO BE COMPULSORILY REGISTERED. THE AUT HORITIES BELOW HAVE ERRED IN BRUSHING ASIDE THE SAID DOCUMENT ON THE P REMISE THAT 28 ITA NOS. 1919 & 1929/PN/2013, A.Y. 2007-08 SINCE THE FAMILY ARRANGEMENT REQUIRES COMPULSORY REGISTRA TION THE DEED OF COMPROMISE BEING A UNREGISTERED DOCUMENT IS NOT AN AD MISSIBLE DOCUMENT. 17. IN SO FAR AS THE OBJECTIONS OF THE COMMISSIONER OF IN COME TAX (APPEALS) THAT ALL THE TERMS AND CONDITIONS SET OUT IN THE FAMILY ARRANGEMENT WERE NOT COMPLIED, A REFERENCE WAS MADE IN R ESPECT OF VARIOUS CASES PENDING IN THE CIVIL COURT TO BE WITHDRAWN A ND RECORDING OF NAMES IN THE REVENUE RECORD IN ACCORDANCE WITH THE FA MILY ARRANGEMENT, THE LD. AR HAS STATED AT THE BAR THAT ALL T HE CASES I.E. CIVIL SUITS, APPEALS ETC. PENDING IN VARIOUS CIVIL COURTS WERE NOT PURSUED BY THE RESPECTIVE PARTIES AND THUS, WERE EITHER DISMISSED IN DEFAULT OR FOR NON-PROSECUTION. THE LD. AR HAS FURTHER CLARIFIED THAT THE NAMES OF THE PARTIES TO THE AGREEMENT WERE NOT RECORDED IN THE REV ENUE RECORDS AS ALL THE EXECUTANTS OF THE DEED OF COMPROMISE HAD MUTUALLY D ECIDED TO SELL THE LAND AND SHARE THE SALE RECEIPTS IN PROPORTION TO TH EIR SHARE IN LAND MUTUALLY AGREED AS PER FAMILY ARRANGEMENT. THUS, WE FIND MERIT IN THE SUBMISSIONS OF THE LD. AR. THE GROUND NO. 2 RAISED IN THE A PPEAL IS DECIDED IN FAVOUR OF THE ASSESSEE. 18. NOW, WE PROCEED WITH THE MAIN ISSUE REGARDING THE SH ARE OF ASSESSEE IN THE SALE CONSIDERATION RECEIVED FROM SALE OF AG RICULTURAL LAND AND ITS TAXABILITY. THE ASSESSEE IN HIS RETURN OF INCOM E HAS SHOWN THE TOTAL SALE CONSIDERATION RECEIVED IN RESPECT OF 7H 97R LAND I.E. THE LAND WHICH HAS BEEN RECORDED IN HIS NAME OF THE REVENUE RECORDS ON THE BASIS OF WILL BY HIS FATHER. THE ASSESSEE THEREAFTER HA S CLAIMED THE AMOUNT PAID BY M/S. EMPIRE PROPERTIES DIRECTLY TO HIS BRO THERS AS COST 29 ITA NOS. 1919 & 1929/PN/2013, A.Y. 2007-08 OF SALES. A PERUSAL OF DEVELOPMENT AGREEMENT AND SALE DE ED EXECUTED IN FAVOUR OF M/S. EMPIRE PROPERTIES SHOW THAT THE ASSESS EE HAS RECEIVED ` 1,39,33,000/- AS HIS SHARE OF SALE CONSIDERATION. THE SAID SALE CONSIDERATION HAS BEEN RECEIVED BY THE ASSESSEE BY WAY OF CHEQUES. M/S. EMPIRE PROPERTIES HAVE PAID SALE CONSIDERAT ION IN PHASED MANNER TO ALL THE PARTIES (VENDORS) IN ACCORDANCE WITH THE S HARE AS PER FAMILY ARRANGEMENT. MERELY FOR THE REASON THAT LAND ADMEASURING 7H 97R IS RECORDED IN THE NAME OF ASSESSEE IN THE REVENUE RECORDS, IT CANNOT BE SAID THAT THE ASSESSEE IS THE OWNER OF LAND TO THAT EXTENT. A PERUSAL OF DEED OF COMPROMISE WHIC H IS ALREADY ON RECORD SHOW THAT THE ASSESSEE HAS MERELY 1/6 TH SHARE IN THE TOTAL AGRICULTURAL LAND ADMEASURING 14H 27R. THUS, THE LAND FALLING IN THE SHARE OF ASSESSEE WAS 2H 53.50R. THE ASSESSEE HAS REC EIVED HIS SHARE OF SALE CONSIDERATION ` 1,39,33,000/- AGAINST THE SALE OF HIS SHARE OF LAND. THE ASSESSEE IS LIABLE FOR CAPITAL GAIN TAX ONLY TO T HE EXTENT OF SALE CONSIDERATION RECEIVED IN RESPECT OF HIS SHARE OF LAND, ALTHOUGH, IN THE RETURN OF INCOME THE ASSESSEE HAS SHOWN SALE CONSID ERATION PROPORTIONATE TO 7H 97R I.E. THE LAND RECORDED IN HIS NAME IN THE REVENUE RECORDS. THE AUTHORITIES BELOW HAVE ERRED IN CO MING TO THE CONCLUSION THAT THE ASSESSEE IS LIABLE FOR THE CAPITAL GAIN T AX TO THE EXTENT OF 56% SHARE IN LAND. ACCORDINGLY, THE GROUND NO. 1 RAISED IN THE APPEAL IS DECIDED IN FAVOUR OF THE ASSESSEE. 19. IN GROUND NO. 3 THE ASSESSEE HAS MADE ALTERNATE S UBMISSIONS WITHOUT PREJUDICE TO THE GROUNDS OF APPEAL NOS. 1 AND 2. SINCE, THE GROUND NOS. 1 AND 2 HAVE ALREADY BEEN ALLOWED IN FAVOUR O F THE 30 ITA NOS. 1919 & 1929/PN/2013, A.Y. 2007-08 ASSESSEE, THE GROUND NO. 3 HAS BECOME INFRUCTUOUS AND IS DISMISSED AS SUCH. 20. THE GROUND NO. 4 AND THE ADDITIONAL GROUND RAISED O N 15 TH JUNE, 2016 RELATES TO VALUATION REPORT. THE ASSESSEE SUBMITT ED APPROVED VALUER REPORT DATED 30-07-2007 IN RESPECT OF AGRICULTURA L LAND FOR THE PURPOSE OF VALUATION OF LAND AS ON 01-04-1981. THE APPRO VED VALUER DETERMINED THE VALUE OF LAND AS 23,70,000/- BASED ON REA DY RECKONER. THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS R EFERRED THE VALUATION OF LAND TO THE DVO. THE DVO DETERMINED THE VALU E OF LAND AS ON 01-04-1981 AS ` 11,62,090/-. THE ASSESSING OFFICER ADOPTED THE SAID VALUE FOR DETERMINING THE LONG TERM CAPITAL GAIN. THE COMMISSIONER OF INCOME TAX (APPEALS) UPHELD THE FINDINGS OF A SSESSING OFFICER. THE ASSESSEE BY WAY OF ADDITIONAL GROUND OF APPEA L HAS RAISED LEGAL GROUND THAT REFERENCE TO DVO U/S. 55A OF THE ACT C AN BE MADE ONLY WHERE THE VALUE DETERMINED BY THE APPROVED VALUER IS LESS THAN THE FAIR MARKET VALUE. WE FIND MERIT IN THE SUBMISSIONS MAD E ON BEHALF OF THE ASSESSEE. THE RELEVANT PROVISIONS OF SECTION 55A AS THEY WERE APPLICABLE TO THE ASSESSMENT YEAR UNDER APPEAL READS AS UND ER : 55A. WITH A VIEW TO ASCERTAINING THE FAIR MARKET VALUE O F A CAPITAL ASSET FOR THE PURPOSES OF THIS CHAPTER86, THE 87[ASSESSIN G] OFFICER MAY REFER THE VALUATION OF CAPITAL ASSET TO A VALUATION OFFIC ER (A) IN A CASE WHERE THE VALUE OF THE ASSET AS CLAIM ED BY THE ASSESSEE IS IN ACCORDANCE WITH THE ESTIMATE MADE BY A REGISTERED VALUER, IF THE [ASSESSING] OFFICER IS OF OPINION TH AT THE VALUE SO CLAIMED IS LESS THAN ITS FAIR MARKET VALUE ; THE PROVISIONS OF SECTION 55A WERE AMENDED BY THE FINANC E ACT, 2012 W.E.F. 01-07-2012. BY THE AMENDMENT THE WORDS IS L ESS THAN ITS 31 ITA NOS. 1919 & 1929/PN/2013, A.Y. 2007-08 FAIR MARKET VALUE WERE SUBSTITUTED BY IS AT VARIANCE WIT H ITS FAIR MARKET VALUE. HOWEVER, THIS AMENDMENT IS APPLICABLE W.E.F. 01-07-2012 AND WOULD NOT APPLY TO THE ASSESSMENT YEAR UNDE R APPEAL. 21. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF COMMISS IONER OF INCOME TAX VS. PUJA PRINTS REPORTED AS 360 ITR 697 HE LD THAT REFERENCE U/S. 55A COULD BE MADE TO THE DVO ONLY WHEN THE VALUE ADOPTED BY THE ASSESSEE WAS LESS THAN THE FAIR MARKET VALUE. THE RELEVANT EXTRACT OF THE JUDGMENT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. PUJA PRINTS (SUPRA) READS AS UNDER : 7. WE FIND THAT SECTION 55A(A) OF THE ACT VERY CLE ARLY AT THE RELEVANT TIME PROVIDED THAT A REFERENCE COULD BE MADE TO THE DEPA RTMENTAL VALUATION OFFICER ONLY WHEN THE VALUE ADOPTED BY THE ASSESSEE WAS LESS THAN THE FAIR MARKET VALUE. IN THE PRESENT CASE, IT IS AN UN DISPUTED POSITION THAT THE VALUE ADOPTED BY THE RESPONDENT-ASSESSEE OF THE PROPERTY AT RS. 35.99 LAKHS WAS MUCH MORE THAN THE FAIR MARKET VALU E OF RS. 6.68 LAKHS EVEN AS DETERMINED BY THE DEPARTMENTAL VALUATION OF FICER. IN FACT, THE ASSESSING OFFICER REFERRED THE ISSUE OF VALUATION T O THE DEPARTMENTAL VALUATION OFFICER ONLY BECAUSE IN HIS VIEW THE VALU ATION OF THE PROPERTY AS ON 1981 AS MADE BY THE RESPONDENT-ASSESSEE WAS H IGHER THAN THE FAIR MARKET VALUE. IN THE AFORESAID CIRCUMSTANCES, THE INVOCATION OF SECTION 55A(A) OF THE ACT IS NOT JUSTIFIED. 8. THE CONTENTION OF THE REVENUE THAT IN VIEW OF TH E AMENDMENT TO SECTION 55A(A) OF THE ACT IN 2012 BY WHICH THE WORD S 'IS LESS THEN ITS FAIR MARKET VALUE' IS SUBSTITUTED BY THE WORDS 'IS AT VA RIANCE WITH ITS FAIR MARKET VALUE' IS CLARIFACTORY AND SHOULD BE GIVEN R ETROSPECTIVE EFFECT. THIS SUBMISSION IS IN FACE OF THE FACT THAT THE 201 2 AMENDMENT WAS MADE EFFECTIVE ONLY FROM JULY 1, 2012. PARLIAMENT H AS NOT GIVEN RETROSPECTIVE EFFECT TO THE AMENDMENT. THEREFORE, T HE LAW TO BE APPLIED IN THE PRESENT CASE IS SECTION 55A(A) OF THE ACT AS EX ISTING DURING THE PERIOD RELEVANT TO THE ASSESSMENT YEAR 2006-07. AT THE REL EVANT TIME, VERY CLEARLY REFERENCE COULD BE MADE TO DEPARTMENTAL VAL UATION OFFICER ONLY IF THE VALUE DECLARED BY THE ASSESSEE IS IN THE OPINIO N OF ASSESSING OFFICER LESS THAN ITS FAIR MARKET VALUE. 32 ITA NOS. 1919 & 1929/PN/2013, A.Y. 2007-08 9. THE CONTENTION OF THE REVENUE THAT THE REFERENCE TO THE DEPARTMENTAL VALUATION OFFICER BY THE ASSESSING OFFICER IS SUSTA INABLE IN VIEW OF SECTION 55A(A)(II) OF THE ACT IS NOT ACCEPTABLE. TH IS IS FOR THE REASON THAT SECTION 55A(B) OF THE ACT VERY CLEARLY STATES THAT IT WOULD APPLY IN ANY OTHER CASE, I.E., A CASE NOT COVERED BY SECTION 55A (A) OF THE ACT. IN THIS CASE, IT IS AN UNDISPUTABLE POSITION THAT THE ISSUE IS COVERED BY SECTION 55A(A) OF THE ACT. THEREFORE, RESORT CANNOT BE HAD TO THE RESIDUARY CLAUSE PROVIDED IN SECTION 55A(B)(II) OF THE ACT. IN VIEW OF THE ABOVE, THE CENTRAL BOARD OF DIRECT TAXES CIRCULAR DATED NOVEMBER 25 19 72, CAN HAVE NO APPLICATION IN THE FACE OF THE CLEAR POSITION IN LA W. THIS IS SO AS THE UNDERSTANDING OF THE STATUTORY PROVISIONS BY THE RE VENUE AS FOUND IN CIRCULAR ISSUED BY THE CENTRAL BOARD OF DIRECT TAXE S IS NOT BINDING UPON THE ASSESSEE AND IT IS OPEN TO AN ASSESSEE TO CONTE ND TO THE CONTRARY. 10. THE CONTENTION OF THE REVENUE THAT THE ASSESSIN G OFFICER IS ENTITLED TO REFER THE ISSUE OF VALUATION OF THE PROPERTY TO THE DEPARTMENTAL VALUATION OFFICER IN EXERCISE OF ITS POWER UNDER SECTIONS 131 , 133(6) AND 142(2) OF THE ACT IS ENTIRELY BASED UPON THE DECISION OF THE GUWAHATI HIGH COURT IN SMT. AMIYA BALA PAUL (SUPRA). HOWEVER, THE APEX COUR T IN SMT. AMIYA BALA PAUL (SUPRA) HAS REVERSED THE DECISION OF THE GUWAHATI HIGH COURT AND HELD THAT IF THE POWER TO REFER ANY DISPUTE WIT H REGARD TO THE VALUATION OF THE PROPERTY WAS ALREADY AVAILABLE UND ER SECTIONS 131(1), 136(6) AND 142(2) OF THE ACT, THERE WAS NO NEED TO SPECIFICALLY EMPOWER THE ASSESSING OFFICER TO DO SO IN CIRCUMSTANCES SPE CIFIED UNDER SECTION 55A OF THE ACT. IT FURTHER HELD THAT WHEN A SPECIFI C PROVISION UNDER WHICH THE REFERENCE CAN BE MADE TO THE DEPARTMENTAL VALUA TION OFFICER IS AVAILABLE, THERE IS NO OCCASION FOR THE ASSESSING O FFICER TO INVOKE THE GENERAL POWERS OF ENQUIRY. IN VIEW OF THE ABOVE AND PARTICULARLY IN VIEW OF CL EAR PROVISIONS OF LAW AS EXISTING DURING THE PERIOD RELEVANT TO THE ASSESSME NT YEAR 2006-07, WE ARE OF THE VIEW THAT QUESTIONS (A) AND (B) DO NOT R AISE ANY SUBSTANTIAL QUESTION OF LAW. SIMILAR VIEW HAS BEEN TAKEN BY THE HONBLE BOMBAY HIGH CO URT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. DAULAL MOHTA (HUF) REPORTED AS 360 ITR 689. 33 ITA NOS. 1919 & 1929/PN/2013, A.Y. 2007-08 22. IN THE PRESENT CASE, WE OBSERVE THAT THE APPROVE D VALUER HAS DETERMINED THE VALUE OF LAND COMPRISING IN SURVEY NO. 72 & 73, VILLAGE- RAVET AS ON 01-04-1981 AS ` 23,70,000/-. THE ASSESSING OFFICER WITHOUT COMPARING THE VALUE ADOPTED BY THE ASSESSEE WIT H THE FAIR MARKET VALUE HAS REFERRED THE VALUATION TO THE DVO. IN OUR CONSIDERED OPINION THIS ISSUE NEEDS A REVISIT TO THE FILE OF ASSESSING OFFIC ER. THE ASSESSING OFFICER SHALL COMPARE THE VALUE ADOPTED BY THE A PPROVED VALUER AGAINST THE FAIR MARKET VALUE AS ON 01-04-1981. IF THE VALUE ADOPTED BY THE ASSESSEE IS LESS THAN THE FAIR MARKET VA LUE, IN THAT EVENT ONLY THE VALUE DETERMINED BY DVO IN REFERENCE U/S. 55A S HOULD BE ADOPTED. THUS, THE GROUND NO. 4 AND THE ADDITIONAL GROUN D RAISED ON 15 TH JUNE, 2016 BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSE, IN THE AFORESAID TERMS. 23. IN GROUND NO. 6 OF THE APPEAL THE ASSESSEE HAS AS SAILED THE DENIAL OF EXEMPTION U/S. 54F OF THE ACT. AS PER CONTENTIO NS OF THE LD. AR OF THE ASSESSEE, THE ASSESSEE HAS UTILIZED LONG TERM CAPITAL GAIN FROM SALE OF LAND TOWARDS PURCHASE OF ANOTHER PARCEL OF LAN D AS WELL AS TOWARDS THE CONSTRUCTION OF BUNGALOW. A PERUSAL OF THE C OMPUTATION OF INCOME FILED ALONG WITH THE RETURN OF INCOME THE ASSESSEE H AS NOT CLAIMED EXEMPTION U/S. 54F AS LONG TERM CAPITAL GAIN AFTER AVAILING EXEMPTION U/S. 54B IS NIL. THE LD. DR HAS SUBMITTED THAT TH E ASSESSEE DURING THE ASSESSMENT PROCEEDINGS HAS FAILED TO FURNISH TH E DETAILS OF EXPENDITURE TOWARDS CONSTRUCTION OF FLOOR 1 AND 2 WHICH I S ALLEGEDLY CONSTRUCTED AFTER SALE OF LAND BY UTILIZING THE LONG TERM C APITAL GAIN ARISING FROM SALE OF LAND. THE COMMISSIONER OF INCOME TAX (AP PEALS) HAS UPHELD THE FINDINGS OF ASSESSING OFFICER ON THE GROUND T HAT THE 34 ITA NOS. 1919 & 1929/PN/2013, A.Y. 2007-08 ASSESSEE HAS NOT FURNISHED THE DETAILS OF EXPENDITURE INC URRED ON THE NEW CONSTRUCTION/ADDITION IN THE RENOVATION OF THE EXISTIN G HOUSE. ALTHOUGH, IN THE REGISTERED VALUATION REPORT DATED 29-07- 2006 IT HAS BEEN MENTIONED THAT APPROXIMATELY AMOUNT OF ` 5,80,000/- IS INCURRED ON LABOUR CEMENT, STEEL ETC. THROUGH CONTRACTOR AND ` 14,00,000/- HAS BEEN SPENT ON CONSTRUCTION MATERIAL SUCH AS BRICKS, CEME NT, TILES DOORS AND WINDOWS. HOWEVER, NOT A SINGLE BILL TO SUPPORT THE CONT ENTIONS WAS FURNISHED BY THE ASSESSEE BEFORE THE AUTHORITIES BELOW. I T WAS CONTENDED BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) THAT BUILDING CONSTRUCTED WAS UNAUTHORIZED. THE SAID CONSTRUC TION STARTED IN JUNE, 2006 AND COMPLETED IN MARCH, 2007. WHEREAS REC ORDS SHOW THAT THE NEW CONSTRUCTION/ADDITION WAS REGULARIZED BY TH E BUILDING CONTROL DEPARTMENT PMC ON 16-03-2006. THE DOCUMENTS ON RECORD AND THE CONTENTIONS OF THE ASSESSEE ARE CONTRARY. THU S, IN VIEW OF UN- REBUTTED FINDINGS OF THE COMMISSIONER OF INCOME TAX (APPEA LS) THE GROUND NO. 6 RAISED IN THE APPEAL IS DISMISSED. 24. THE ASSESSEE IN GROUND NOS. 9 AND 10 OF THE APPEAL HAS ASSAILED THE ADDITION WITH RESPECT TO UNEXPLAINED CASH DEPOSITS. I N GROUND NO. 9 THE ASSESSEE HAS ASSAILED ADDITION OF ` 10,43,000/- AS UNEXPLAINED CASH DEPOSIT IN THE SAVING BANK A/C. NO. 11096. IN GROUN D NO. 10 THE ASSESSEE HAS ASSAILED THE ADDITION OF ` 3,00,000/- ON ACCOUNT OF UNEXPLAINED CASH DEPOSITS IN SAVING BANK A/C. NO. 20857 IN THE NAME OF ASSESSEES WIFE. BOTH THE BANK ACCOUNTS ARE MAINTAINE D WITH JANSEVA BANK. THE LD. AR OF THE ASSESSEE HAS NOT MADE ANY SUBMISSIONS IN RESPECT OF BOTH THESE GROUNDS. THE LD. AR OF THE ASSESSEE HAS NOT SHOWN AS TO HOW THE FINDINGS OF COMMISS IONER OF 35 ITA NOS. 1919 & 1929/PN/2013, A.Y. 2007-08 INCOME TAX (APPEALS) IN CONFIRMING BOTH THE ADDITIONS ARE BA D. SINCE, THE LD. AR OF THE ASSESSEE HAS FAILED TO CONTROVERT THE FIN DINGS OF COMMISSIONER OF INCOME TAX (APPEALS) IN RESPECT OF BOTH TH E ADDITIONS, THE GROUND NOS. 9 AND 10 RAISED IN THE APPEAL BY THE AS SESSEE ARE DISMISSED. 25. THE ADDITIONAL GROUND RAISED BY THE ASSESSEE VIDE A PPLICATION DATED 22-12-2015 HAS BECOME INFRUCTUOUS IN VIEW OF OUR D ETAILED FINDINGS IN RESPECT OF GROUND NO. 1 IN THE MAIN GROUNDS OF APPEAL. 26. THE ADDITIONAL GROUND RAISED VIDE APPLICATION DATED 03- 11-2016 IS ONLY TO SUPPLEMENT THE GROUND NO. 1 RAISED IN THE MAIN GROUNDS OF APPEAL. SINCE, THE GROUND NO. 1 HAS BEEN ALLOWED CONSEQUE NTLY THE ADDITIONAL GROUND RAISED BY THE ASSESSEE ON 03-11-2016 IS ALSO ALLOWED. 27. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED IN THE AFORESAID TERMS. 28. THE DEPARTMENT HAS FILED CROSS-APPEAL ASSAILING THE FIN DINGS OF COMMISSIONER OF INCOME TAX (APPEALS) ON THE FOLLOWING GROUNDS : 1. THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEAL S) IS CONTRARY TO LAW AND TO THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN C ONCLUDING THE CASH EXPENDITURE MADE TOWARDS PURCHASE OF AGRICULTURAL LAND IS OUT OF THE ALLEGED UNACCOUNTED SALE CONSIDERATION RECEIVED BY THE ASSESSEE. 3. FOR THIS AND SUCH OTHER REASONS AS MAY BE URGED AT THE TIME OF HEARING, THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEAL S) MAY BE VACATED AND THAT OF THE A.O. BE RESTORED. 4. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER OR DELETE ANY OF THE ABOVE GROUNDS OF APPEAL DURING THE COURSE OF APPELL ATE PROCEEDINGS BEFORE THE HON'BLE TRIBUNAL. 36 ITA NOS. 1919 & 1929/PN/2013, A.Y. 2007-08 29. THE LD. AR HAS POINTED THAT THE APPEAL OF THE DEPARTMENT IS LIAB LE TO BE DISMISSED ON ACCOUNT OF LOW TAX EFFECT. UNDISPUTEDLY , THE TAX EFFECT IN THE APPEAL BY DEPARTMENT IS LESS THAN ` 10 LAKHS. THE CBDT VIDE CIRCULAR NO. 21/2015, DATED 10-12-2015 HAS RAISED T HE MONETARY LIMIT OF TAX EFFECT FOR FILING OF APPEALS BY THE DEPARTMENT BEFOR E THE TRIBUNAL TO ` 10 LAKHS. THE CIRCULAR APPLIES TO THE APPEALS TO BE FILED B Y THE DEPARTMENT IN FUTURE, AS WELL AS THE APPEALS PENDING BEFORE THE TRIBUNAL. THUS, IN VIEW OF THE CBDT CIRCULAR THE PRESENT AP PEAL OF THE REVENUE IS LIABLE TO BE DISMISSED ON ACCOUNT OF LOW TAX EFFECT. 30. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED AND THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON FRIDAY, THE 23 RD DAY OF DECEMBER, 2016. SD/- SD/- ( . . / R.K. PANDA) ( ! ' / VIKAS AWASTHY) #' / ACCOUNTANT MEMBER $ % #' / JUDICIAL MEMBER / PUNE; &# / DATED : 23 RD DECEMBER, 2016 RK *+,%-.#/#)- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ' () / THE CIT(A)-III, PUNE 4. ' / THE CIT-IV, PUNE 5. !*+ %%,- , ,- , B ./0 , / DR, ITAT, . BENCH, PUNE. 6. + 1 23 / GUARD FILE. // ! % // TRUE COPY// #4 / BY ORDER, %5 ,0 / PRIVATE SECRETARY, ,- , / ITAT, PUNE