Smt. Jayamma, Bengaluru V. Assistant Commissioner of Income-Tax, Circle-6(3)(1), Bengaluru

ITA 203/BANG/2018

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 6405 (ITAT-BANGALORE)
• Duration Of Justice: 3 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-04-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 20-07-2020
• Assessment Year: 2013-2014
• Appeal Filed On: 22-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Capital Gains
• Section: 54F; 142(1); 234B; 133(6); 250; 201; 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: BANGALORE BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER ITA NO. 203 /BANG/20 1 8 ASSESSMENT YEAR: 201 3 - 1 4 SMT. JAYAMMA , NO.59, SRINIVASA GARDEN LAYOUT, BAGALUR POST, SATHANURU, BENGALURU 562 149. PAN NO : AXEPJ 5173 C VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-6(3)(1), BENGALURU. APPELLANT RESPONDENT APPELLANT BY : SHRI. RAVISHANKAR, ADVOCATE RESPONDENT BY : SHRI. RAMESH KUMAR , ADDL. CIT(DR)(ITAT) DATE OF HEARING : 01 .0 4 .2021 DATE OF PRONOUNCEMENT : 06 .0 4 .2021 O R D E R PER BEENA PILLAI, JUDICIAL MEMBER: PRESENT APPEAL HAS BEEN FILED BY ASSESSEE AGAINST ORDER DATED 27/11/2017 PASSED BY THE LD. CIT (A)-7, BANGALORE FOR ASSESSMENT YEAR 2013-14 ON FOLLOWING GROUNDS OF APPEAL:- 1. THE IMPUGNED ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)- 7, BANGALORE, PASSED UNDER SECTION 250 OF THE INCOME TAX ACT, 1961 IS OPPOSED TO LAW, WEIGHT OF EVIDENCE, PROBABILITIES, FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE. ITA NO.203/BANG/2018 PAGE 2 OF 8 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE ADDITION OF RS. 43,68,495/- MADE BY THE ASSESSING OFFICER WHICH IS NOT THE INCOME OF THE APPELLANT AS THE SAME WAS NOT PART OF THE SALE CONSIDERATION NEGOTIATED WITH THE BUYER NOR RECEIVED FROM THE BUYER ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN HOLDING THAT THE AMOUNT OF RS.2,18,42,471/- IS THE SALE CONSIDERATION OF THE TRANSFERABLE DEVELOPMENT RIGHT (TDR) IN THE HANDS OF THE APPELLANT AS AGAINST THE ACTUAL AMOUNT OF RS.1,74,73,976/- ONLY RECEIVED BY THE APPELLANT AS EVIDENT IN THE REGISTERED SALE DEED ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN HOLDING THAT THE CONFIRMING PARTY WHO WAS PAID A SUM OF RS.43,68,495/- DID NOT HAVE ANY RIGHT OR ENTITLEMENT OVER THE SUBJECT TDR AND THAT THERE WAS NO PRIOR ORAL OR WRITTEN CONTRACT OR AGREEMENT WHICH IS CONTRARY MATERIAL ON RECORD AND CONSEQUENTLY PERVERSE ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 5. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO APPRECIATE THAT THE ADDITION IS NOT JUSTIFIED THERE BEING NO COGENT MATERIAL TO HOLD THAT THE SAID AMOUNT WAS EITHER RECEIVED OR BELONGED TO THE APPELLANT AND THE ADDITION IS PURELY BASED ON CONJECTURE. SURMISE AND PRESUMPTION ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 6. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE HELD THAT THE ABOVE AMOUNT STANDS DIVERTED AT THE VERY SOURCE BY OVER-RIDING TITLE AND HENCE THE SAME COULD NOT HAVE BEEN ADDED ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 7. WITHOUT PREJUDICE, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE ALLOWED THE SAME AS DEDUCTION IN ARRIVING AT THE NET CONSIDERATION U/S 48(I) AS EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH THE TRANSFER ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 8. THE APPELLANT DENIES THE LIABILITY TO PAY INTEREST U/S 234B AND U/S 234C OF THE ACT IN VIEW OF THE FACT THAT THERE IS NO LIABILITY TO ADDITIONAL TAX AS DETERMINED BY THE LEARNED ASSESSING OFFICER. WITHOUT PREJUDICE THE RATE, PERIOD AND ON WHAT QUANTUM THE INTEREST HAS BEEN LEVIED IS NOT DISCERNIBLE FROM THE ORDER AND HENCE DESERVES TO BE CANCELLED ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 9. THE APPELLANT CRAVES FOR LEAVE OF THIS HON'BLE TRIBUNAL, TO ADD, ALTER, DELETE, AMEND OR SUBSTITUTE ANY OR ALL OF THE ABOVE GROUNDS OF APPEAL AS MAY BE NECESSARY AT THE TIME OF HEARING. ITA NO.203/BANG/2018 PAGE 3 OF 8 10. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING OF APPEAL, THE APPELLANT PRAYS THAT THE APPEAL MAY BE ALLOWED FOR THE ADVANCEMENT OF SUBSTANTIAL CAUSE OF JUSTICE AND EQUITY. 2. BRIEF FACTS OF THE CASE ARE AS UNDER: THE ASSESSEE IS AN INDIVIDUAL DERIVING INCOME FROM CAPITAL GAINS AND OTHER SOURCES. SHE FILED HER RETURN OF INCOME FOR YEAR UNDER CONSIDERATION ON 08/07/2013, DECLARING TOTAL INCOME OF RS.33,20,570/-. THE CASE WAS SELECTED FOR SCRUTINY, AND NOTICE UNDER SECTION 142(1) OF THE ACT, WERE ISSUED ALONG WITH NOTICE UNDER SECTION 143(2) OF THE ACT. IN RESPONSE TO STATUTORY NOTICES, REPRESENTATIVE OF ASSESSEE APPEARED BEFORE LD.AO AND FILED REQUISITE DETAILS AS CALLED FOR. 3. LD.AO FROM THE DETAILS, OBSERVED THAT, ASSESSEE HAS RECEIVED CAPITAL GAINS ON SALE OF TRANSFERABLE DEVELOPMENT RIGHTS ( HEREINAFTER REFERRED TO AS TDRS) AND HAD DECLARED INTEREST INCOME. ON VERIFICATION OF THE DOCUMENTS FILED, THE LD.AO OBSERVED THAT, ASSESSEE INCLUDED LONG TERM CAPITAL GAIN OF RS.30,03,585/- AFTER CLAIMING EXEMPTION PARTLY UNDER SECTION 54F OF THE ACT. THE LD.AO OBSERVED THAT, CERTAIN PORTION OF LAND OWNED BY ASSESSEE WAS ACQUIRED BY THE COMMISSIONER BBMP, AND IN RETURN, ASSESSEE WAS COMPENSATED BY WAY OF TDRS ISSUED VIDE SEVERAL DEVELOPMENT RIGHTS CERTIFICATES DATED 08/06/2012. THE LD.AO NOTED THAT, ASSESSEE TRANSFERRED THE TDRS ISSUED BY BBMP TO M/S.CENTURY BUILDING & INDUSTRIES PVT.LTD., VIDE COMMON DEED DATED 22/10/2012 FOR SUM OF RS.1,74,73,976/-. FROM THE DEED, THE ITA NO.203/BANG/2018 PAGE 4 OF 8 LD.AO NOTED THAT THE TOTAL CONSIDERATION WAS RS.2,18,42,471/- OUT OF WHICH, SUM OF RS.43,68,495/- WAS PAID TO THE CONFIRMING PARTY, DIRECTLY MADE BY THE BUYER AND BALANCE WAS THE COMPENSATION RECEIVED BY ASSESSEE FOR TOWARDS TRANSFER OF TDRS. ASSESSEE TREATED THE SALE VALUE ON TDRS IN COMPUTING LONG TERM CAPITAL GAINS. 4. THE LD.AO CALLED UPON ASSESSEE TO EXPLAIN THE EXPENDITURE CLAIMED OF RS.43,68,495/- MADE TO THE CONFIRMING PARTY, MR.KESHAV MURTHY HAVE BEEN MADE BY THE BUYER DIRECTLY WHILE PURCHASING/ACQUIRING THE TDRS FROM ASSESSEE. THE LD.AO ACCORDINGLY VIDE ORDER SHEET NOTING DATED 25/01/2016 CALLED UPON ASSESSEE TO EXPLAIN THE TRANSACTION AND TO PRODUCE DETAILS/EVIDENCES LIKE CONFIRMATION FROM THE CONFIRMING PARTY, MR.KESHAV MURTHY. 5. IT WAS SUBMITTED BY ASSESSEE IN RESPONSE THAT AT THE TIME OF REGISTRATION OF ASSESSEE RAISED DOUBT, AND QUESTIONED AS TO WHY MR.KESHAV MURTHYS NAME IS ENTERED IN THE DEED OF TRANSFER AS CONFIRMING PARTY. IT WAS SUBMITTED BEFORE THE LD.AO THAT ASSESSEES SON WAS INFORMED BY THE REPRESENTATIVE OF M/S.CENTURY, THAT THE DEED OF TDRS WAS PREPARED AS PER THE COMPANIES PROCEDURE, ACCORDING TO WHICH, MR.KESHAV MURTHYS NAME IS TO ENTERED AS CONFIRMING PARTY. THE ASSESSEE SUBMITTED BEFORE THE LD.AO THAT, THERE IS NO PRE-EXISTED ORAL OR WRITTEN CONTRACT OR ANY AGREEMENT BETWEEN ASSESSEE BEING THE SELLER OF TDR AND MR.KESHAV MURTHY OF WHATSOEVER NATURE. IT WAS SUBMITTED THAT WHATEVER IS PAID TO MR.KESHAV MURTHY IS AS PER THE DEED OF TRANSFER OF DEVELOPMENT ITA NO.203/BANG/2018 PAGE 5 OF 8 RIGHTS WHICH IS PAID BY M/S.CENTURY BUILDING INDUSTRIES, THROUGH BANKING CHANNELS. 6. LD.AO THEN ISSUED QUESTIONNAIRE TO M/S.CENTURY BUILDING INDUSTRIES PVT.LTD., CALLING FOR INFORMATION UNDER SECTION 133(6) OF THE ACT, WHICH HAS BEEN REPRODUCED BY LD.AO IN HIS ORDER IN PARA 6. LD.AO DID NOT RECEIVE ANY RESPONSE FROM M/S.CENTURY BUILDING INDUSTRIES PRIVATE LIMITED NEITHER HAVE THEY FILED ANY SUBMISSION IN RESPECT OF THE QUERIES RAISED. 7. AS ASSESSEES EXPLANATION WAS NOT ACCEPTABLE, AND WAS NOT SUPPORTED BY SUFFICIENT MATERIALS, LD.AO THUS MADE ADDITION IN THE HANDS OF ASSESSEE FOR SUM OF RS.43,68,495/-. 8. AGGRIEVED BY THE ORDER PASSED BY LD.AO ASSESSEE PREFERRED APPEAL BEFORE THE LD.CIT(A). 9. THE LD.CIT(A) OBSERVED THAT THE CONFIRMING PARTY WHO WAS PAID SUM OF RS.43,68,495/- DID NOT HAVE ANY RIGHT OR ENTITLEMENT OVER THE SUBJECT TDRS AND THAT THERE WAS NO PRIOR ORAL OR WRITTEN CONTRACT AS HAS BEEN SUBMITTED BY ASSESSEE BEFORE THE AUTHORITIES AND CONSEQUENTIALLY DID NOT ACCRUE ANY RIGHT TO RECEIVE SUCH SUM. LD.CIT(A) UPHELD THE ADDITION MADE BY LD.AO. 10. AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSESSEE IS IN APPEAL BEFORE US NOW. ITA NO.203/BANG/2018 PAGE 6 OF 8 11. BEFORE US, THE LD.AR SUBMITTED THAT THE AUTHORITIES BELOW HAVE ERRED IN HOLDING THAT SUM OF RS.43,68,495/- CANNOT BE ADDED IN THE HANDS OF ASSESSEE. IT WAS SUBMITTED THAT, THE SAID AMOUNT WAS PAID BY THE BUYER DIRECTLY TO THE CONFIRMING PARTY AND THAT THE SAME WAS NOT PART OF SALE CONSIDERATION NEGOTIATED BY ASSESSEE WITH THE BUYER. IT WAS ALSO SUBMITTED THAT THE SAID AMOUNT COULD NOT BE ADDED IN THE HANDS OF ASSESSEE FOR FAILURE OF THE BUYER TO PROVIDE DETAILS IN RESPONSE TO NOTICE SENT BY THE LD.AO DIRECTLY. 12. ON THE CONTRARY, THE LD.SR.DR SUBMITTED THAT, THE ALLEGED CONFIRMING PARTY DOES NOT HAVE ANY RIGHT IN WHATSOEVER NATURE ON THE TDRS TRANSFERRED BY ASSESSEE TO THE BUYER, AND THEREFORE ANY PAYMENTS MADE TO THE ALLEGED CONFIRMING PARTY IS UNACCEPTABLE. NOTHING HAS BEEN FILED BY ASSESSEE IN SUPPORT HER SUBMISSION, EXCEPT FOR MAKING ORAL STATEMENTS. HE THUS SUPPORTED THE ORDERS PASSED BY AUTHORITIES BELOW. 13. WE HAVE PERUSED SUBMISSIONS ADVANCED BY BOTH SIDES IN LIGHT OF RECORDS PLACED BEFORE US. 14. WE NOTE THAT IN THE TRANSACTION BETWEEN ASSESSEE AND THE BUYER FOR SALE OF TDR, AN AMOUNT HAS BEEN PAID TO THE ALLEGED CONFIRMING PARTY. NEITHER ASSESSEE IS UNABLE TO EXPLAIN THE REASON WHY THE AMOUNT WAS PAYABLE TO THE CONFIRMING PARTY, NOR IS THERE IS ANY EVIDENCE THAT IS BROUGHT ON RECORD AS TO WHY IT NECESSARY FOR THE ITA NO.203/BANG/2018 PAGE 7 OF 8 CONFIRMING PARTY TO BE THE PART OF THE AGREEMENT. THOUGH LD.AO ISSUED NOTICE UNDER SECTION 133 (6) TO THE BUYER OF TDR, NO RESPONSE WAS RECEIVED. HOWEVER, MERELY BECAUSE THE BUYER DID NOT RESPOND TO THE QUERIES RAISED BY THE LD.AO AND IT CANNOT BE A REASON TO ASSUME THAT THE SAID AMOUNT IS INCOME IN THE HANDS OF ASSESSEE. WE ARE THEREFORE REMANDING THIS ISSUE BACK TO THE LD.AO. THE LD. AO SHALL CARRY OUT ALL NECESSARY INVESTIGATION AS UNDER.: LD.AO SHALL CALL UPON THE ALLEGED CONFIRMING PARTY AND RECORD STATEMENTS. NEEDLESS TO SAY THAT ASSESSEE SHALL BE GRANTED ANY OPPORTUNITY OF CROSS-EXAMINING THE ALLEGED CONFIRMING PARTY. LD.AO SHALL CALL UPON THE BUYER TO SEEK INFORMATION IN RESPECT OF THE TRANSACTION AND TO VERIFY THE DETAILS IN ACCORDANCE WITH LAW. ANY OTHER ENQUIRIES /INVESTIGATIONS, DEEM FIT AND PROPER. 15. BASED UPON THE ABOVE THE LD.AO SHALL CONSIDER THE ISSUE IN ACCORDANCE WITH LAW. NEEDLESS TO SAY THAT PROPER OPPORTUNITY OF BEING HEARD SHALL BE GRANTED TO THE PARTIES CONCERNED IN ORDER TO ASSAY ASCERTAINED THE TRUE NATURE OF THE SAID TRANSACTION. WE MAY CAUTION THE LD.AO THAT INCOME HAS TO BE TAXED IN THE HANDS OF THE PERSON TO WHOM IT BELONGS. MERELY ON SURMISES AND CONJUNCTURES THE SALE AMOUNT CANNOT BE TAXED IN THE HANDS OF ANY ASSESSEE. WITH THE ABOVE DIRECTION WE REMAND THIS ISSUE TO THE LD.AO TO CARRY OUT DE NOVO ASSESSMENT, AND TO PASS DETAILED ORDER IN ACCORDANCE WITH LAW. ITA NO.203/BANG/2018 PAGE 8 OF 8 ACCORDINGLY THE GROUNDS RAISED BYASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. IN THE RESULT APPEAL FILED BY ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON. SD/- SD/- (CHANDRA POOJARI) (BEENA PILLAI) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE, DATED : 06.04.2021. COPY TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, BANGALORE.