ACIT, Bangalore V. Sri. C. Narasimhaiah, Bangalore

ITA 206/BANG/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0234 (ITAT-BANGALORE)
• Duration Of Justice: 4 year(s) 4 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 20-06-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 09-02-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: M V SESHACHALA MRS NEERA M
• Assessee Lawyers: E
• Keywords: Principle of natural justice
• Section: 143(3); 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH B, BANGALORE BEFORE SHRI A. K. GARODIA, ACCOUNTANT MEMBER AND SHRI VIJAY PAL RAO, JUDICIAL MEMBER ITA NO.206(BANG) 2012 (ASSESSMENT YEAR : 2006-07) THE ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1(4), BANGALORE APPELLANT VS SHRI N.MANJESH, LEGAL HEIR OF LATE C NARASIMHAIAH 11, DWARAKA NILAYA, 7 TH PHASE, JP NAGAR, NEAR NATARAJA LAYOUT, BANGALORE-560 078 PAN NO.ABXPN4318C RESPONDENT AND C.O. NO.4(BANG)/2015 (ASSESSMENT YEAR 2006-07) (BY ASSESSEEE) REVENUE BY : SHRI M.V.SESHACHALA, ADVOCATE ASSESSEE BY : MRS. NEERA MALHOTRA, CIT DATE OF HEARING : 20-06-2016 DATE OF PRONOUNCEMENT : 30-06-2016 O R D E R PER SHRI A. K. GARODIA, AM: THIS APPEAL IS FILED BY THE REVENUE WHEREAS THE CRO SS OBJECTION IS FILED BY THE ASSESSEE WHICH ARE DIRECTED AGAINST THE ORDE R OF THE LD. CIT(A)-IV, BANGALORE DATED 15-11-2011 FOR THE ASSESSMENT YEAR 2006-07. 2. IN THIS APPEAL, THE REVENUE HAS RAISED THE FOLLO WING GROUNDS; 1. THE ORDER OF THE LD.CIT(A) IS OPPOSED TO LAW FA CTS AND FACTS OF THE CASE. 2. THE CIT(A) OUGHT TO HAVE DELETED THE ADDITIONS O F TCG INCOME OF RS.2,15,97,770/- AS THE ASSESSEE HIMSELF HAD ADM ITTED THE UNDISCLOSED INCOME VIDE HIS LETTER DATED 09-3-2009. ITA NO.206(B)/12 & C.O. NO.4(B)2015 2 3. THE CIT(A) OUGHT TO HAVE CONFIRMED THE ADDITION AS THE ASSESSEE HAD GIVEN POSSESSION OF THE PROPERTY TO M/ S RENAISANCE AND RECEIVED THE SALE CONSIDERATION AND ALSO THERE WAS NO EVIDENCE TO PROVE THAT THE AMOUNT RECEIVED I N LIEU OF THE ABOVE LAND TRANSACTION WAS RETURNED BACK. 4. THE CIT(A) OUGHT TO HAVE DELETED THE ADDITIONS F STCG MADE BY THE AO SINCE THE ISSUE O VALIDITY OF THE TRANSAC TION DECIDED BY THE HONBLE HIGH COURT IS STILL ALIVE AND IS PENDIN G BEFORE THE HONBLE SUPREME COURT. 5. THE APPELLANT CRAVES LEAVE TO ADD, ALTER AD SUBS TITUTE ANY OR ALL GROUNDS OF APPEAL URGED ABOVE. . 3. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS IN IT S CROSS OBJECTION: 1. THE LEARNED CIT(A) ERRED IN NOT CONSIDERING WH ETHER THE CAPITAL GAINS IN THE CASE OF THE RESPONDENT WERE LO NG TERM CAPITAL GAINS OR SHORT TERM CAPITAL GAINS. 2. THE LEARNED CIT(A) ERRED IN NOT APPRECIATING WHE THER THE POSSESSION OF THE PROPERTY GIVEN PURSUANT TO THE AG REEMENT DATED 27.11 . 1997 SHOULD BE CONSIDERED AS RELEVANT FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAINS OR NOT . 3. THE LEARNED CIT(A) ERRED IN NOT APPRECIATING THE FACT THAT THE RESPONDENT HAVING SPENT HUGE MONIES TOWARDS DEVELOPMENT OF THE PROPERTY IN QUESTION PURSUANT TO THE AGREEMENT DATED 27.11.1997, WHICH WAS MUCH PRIOR TO THE DATE OF REGISTRATION ON 29.10.2005, THE CAPITAL GAI NS ARE LIABLE TO BE ASSESSED AS LONG TERM IN TERMS OF SECT ION 53(A) OF TRANSFER OF PROPERTY ACT, 1882. 4. THE CIT(A) ERRED IN NOT CONSIDERING THAT SINCE T HE ASSESSEE TOOK BONAFIDE POSSESSION AND ENJOYMENT OF THE PROPERTY PURSUANT TO THE AGREEMENT DATED 27.11.1997 HE WAS ABLE TO SPEND A SUM OF RS.1.05 CRORES TOWARDS IMPRO VEMENTS OF THE PROPERTY IN QUESTION, HOWEVER THE LEARNED AA HAS ITA NO.206(B)/12 & C.O. NO.4(B)2015 3 ERRONEOUSLY RESTRICTED THE SAID EXPENSES TO AN EXTE NT OF RS.90 LAKH . 5. THE CIT(A) ERRED IN NOT ALLOWING THE BROKERAGE A ND COMMISSION PAID TO AN EXTENT OF RS.30 LAKH BY THE R ESPONDENT WHICH WAS DENIED BY THE LEARNED AA WITHOUT ANY VALI D REASON. 6. THE LEARNED CIT(A) ERRED IN NOT APPRECIATING THE FACT THAT A SUM OF RS.1 ,06,81 ,200/ - WHICH IS REINVESTED BY THE RESPONDENT SHALL BE ALLOWED WHILE COMPUTING LONG TE RM CAPITAL GAINS. 7 .THE LEARNED CIT(A) ERRED IN NOT REVERSING THE DETERMINATION OF SHORT TERM . , CAPITAL GAINS IN THE CASE OF THE RESPONDENT BY THE LEARNED AA WHICH WAS BA S ED ON THE STATEMENT GIVEN BY SRI. V.DODDAPPA, THE CO-OWNER W HO ADMITTED FOR PAYMENT OF SHORT TERMS CAPITAL GAINS. 8. THE AUTHORITIES BLOW OUGHT TO HAVE CONSIDERED TH E CASE OF THE RESPONDENT BASED ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 9. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING, THE CROSS OBJECTIONS FILED Y THE RESPONDEN T BE ALLOWED. 10. AN OPPORTUNITY OF PERSONAL HEARING E GRANTED TO THE CROSS OBJECTOR BEFORE DISPOSAL OF THE CROSS OBJECTION TO MEET THE ENDS OF JUSTICE. 4. THE ASSESSEE HAS ALSO RAISED SOME ADDITIONAL GR OUNDS BEFORE CIT (A) WHICH ARE AVAILABLE ON PAGES 11 TO 15 OF THE PAPER BOOK AND THE SAME ARE AS UNDER; 1. THE ORD ER PASSED U / S 153A READ WIT H SECTION 143(3) BY THE DEPUTY COMMISSIONER OF INCOME TAX, C I RCLE 1(4) , BANGALO R E IS OPPOSED TO LAW AND FACTS AND CIRCUMSTANCES OF THE C ASE . HENCE , THE ASSESSEE HAS COME UP WITH TH I S APP E A L. 2. THE MOO T QUESTION TO BE DECIDED AND ANSWERED IN TH I S APPEAL ITA NO.206(B)/12 & C.O. NO.4(B)2015 4 - WHETHE R GA I NS ARI S EN IS 'LON G T ERM CAPITAL , GAINS' OR 'SHORT TERM CAP I TAL GAI N S'? 3. THE ASSES S ING OFFICER ERRED WH I LE COMPUTING GAINS AS 'SHORT TERM CAP I TAL GAINS' AS A GAINST ELIGIBLE 'LONG TERM CAPITAL GAINS'. 4. THE ASSESS I NG OFF I CER FAI L ED TO ADMIT & RECOGNIZE THE FACT, 'UNREGISTERED AGREEMEN T DOCUMEN T DATED 27 . 11 . 1997 AS BASIC EVIDENCE INSTEAD THE ASSESSING OFFICER RE LI E D ON R EGISTERED DOCUMENT DATED 29.10.2005 TO ERR ON REVENUE SID E . 5. T HE ASS E S SIN G OFF I C ER FAILED TO APP R ECIA T E THE FACT THAT THE REGISTRATION I S PRO CED URAL ASPEC T IN ACCO R DANCE WIT H L AW AND ALSO TO MAKE MORE CLEAR A ND SEC URE T HE TITLE OF PROPERTY . 6. THE A SSESSIN G OFFICER FAILED TO A PPRECIATE THE FACT THAT THE ASSESSEE WAS IN DEEM E D POSSESSIO N AND ENJOYMENT OF THE PROPERTY RIGHT FROM THE B E G I NNING O F THE DA Y OF AGREEMENT DA T ED 27 . 11 . 1997 . HENCE, THE ASSESSEE IS GOVER N ED BY 53A O F TRANSFER OF PROPERTY ACT 1882. 7.THE AS SES S ING OFFIC ER FAILED TO CROSS-E X AMINE SMT.RATHNAMMA BEFORE HE CAME TO D R ASTIC CONC L US I ON. 8. THE A S S ESSIN G O FFIC E R HAS NOT VERIFIED, THE GENUINENESS OF THE AGREEMENT DATED 27. 1 1 . 1 9 97 E NT ERED WITH SMT.RATHNAMMA BUT DISQUALIFIED ON SUM ARI S E. 9. THE ASS E S S ING OFFIC E R FAILED TO APPRECIATE THE FACT THAT THE ASSESSEE WOULD N O T HAVE SPE NT HUGE MONEY RS.1 . 05 CRORES IN IMPROVEMENTS UN L E S S T H E ASSESSEE I S BONAFIDE POSSESS I ON AND ENJOYMENT OF THE PROP E RTY. 10. THE AO ERRED IN DECIDING THE ISSUE OF GAINS TOWARDS PROREVENUE SIDE. 11. THE ASSESSEE SPENT R.1.05 CRORES IN IMPROVEMENT OF PROPERTY BUT THE AO RESTRICTED TO THE EXTENT OF RS.90 LAKHS ONLY. T HIS AMOUNT OF RS.1.05 CRORES EXPENDED AFTER THE AGREEMENT DATED 27.11.19 97 BUT BEFORE REGISTRATION DATE 29.10.2005. THEREFORE, IT IMPLI ES THAT THE AO ADMITTED THE FACT THAT THE PROPERTY IN QUESTION WAS IN POSSE SSION AND ENJOYMENT OF ASSESSEE. HENCE, THE ASSESSEE IS GOVERNED SC.53 A TRANSFER OF PROPERTY ACT, 1882. THEREFORE, THE ACTUAL DATE OF TRANSFER SHOULD BE TAKEN AS 27.11.1997 AND NOT 29-10.2005. 12. WHEN THE ASSESSEE IS IN POSSESSION AND ENJOYMEN T OF PROPERTY IT IS ITA NO.206(B)/12 & C.O. NO.4(B)2015 5 SEEMED TRANSFER FOR THE PURPOSE OF COMPUTING CAPITA L GAINS UNDER THE INCOME TAX ACT, 1961 AND ACCORDINGLY CAPITAL GAINS SHOULD HAVE BEEN COMPUTED. 13. THE AO ERRED IN ADOPTING THE FORMAL REGISTRATIO N DATED 29.10.2005 INSTEAD OF THE CORRECT DATE 27.11.1997 ONWARDS FOR THE PURPOSE OF TRANSFER & IMPROVEMENTS FOR COST INDEXATION. 14.THE BROKERAGE AND COMMISSION PAID OF RS.30 LAKHS BY CHEQUES WAS DENIED WITHOUT CROSS EXAMINATION OF THE PARTIES IS AGAINST THE PRINCIPLE OF NATURAL JUSTICE. 15. THE REINVESTMENT MADE BY THE ASSESSEE TO THE TU NE OF RS.1,06,81,200/- IS NOT CONSIDERED AS REQUIRED UNDER LONG TERM CAPIT AL GAINS SCHEME BUT THE AO TREATED AS SHORT TERM CAPITAL GAINS, THEREBY THE AO ERRED ON REVENUE SIDE. 16. THE AO GENERALIZED BY QUOTING THE CASE OF V. D ODDAPPA AND STATING THAT HE HAS ADMITTED A SHORT TERM CAPITAL GAINS HEN CE, SRI C.NARASIMHAIAH SHOULD ALSO ADMIT AS SHORT TERM CAPI TAL GAINS. THE FACTS AND CIRCUMSTANCES OF EACH CASE WILL BE DIFFERENT FR OM ONE CASE TO OTHER, THE JUDGMENT SHOULD BE ON ACTUAL POSITION. HENCE , THE AO ERRED IN QUOTING THE CASE. 17. AS PER THE ORDER OF THE HIGH COURT OF KARNATAKA , THE OWNERSHIP OF THE ENTIRE SUBJECT PROPERTY OF SRI C.NARASIMHAIAH IS ST RUCK DOWN AND NEEDS TO BE RETURNED TO M/S RENAISANCE HOLDING & DEVELOPE RS PVT. LTD. ON TECHNICAL GROUNDS THEREFORE, THE SALE DEED ITSELF B ECAME NULL AND VOID OR IN OTHER WORD NULLIFIED. THEREFORE, ADOPTING THE REGISTRATION DATE FOR COMPUTATION FOR SHORT TERM GAINS HAS NO BASIS WHATE VER AND IT WILL LEAD TO MISLEADING JUDGMENT. 18. DUE TO NULLIFICATION OF SALE DEED EXECUTED BY S HRI C.NARASIMHAIAH TO M/S RENAISANCE HOLDING & DEVELOPERS PVT.LTD THERE I S NO GAINS EITHER SHORT TERMS CAPITAL GAINS OR LONG TERM CAPITAL GAIN S. AS A MATTER OF FACTS, THE ENTIRE AMOUNT OF SALE CONSIDERATION RECE IVED NEEDS TO BE RETURNED BACK TO M/S RENANISANCE HOLDING PVT.LTD., IN FACT, IT WOULD RESULT IN CAPITAL LOSS. HOWEVER, THE ASSESSEE STA NDS TO HIS VOLUNTARY ADMISSION OF LONG TERM CAPITAL GAINS AND TAXES TH EREON AS ADMITTED IN THE RETURN OF INCOME FOR THE AY: 2006-07 SINCE THE ASSESESE WANTS TO BUY PEACE FROM THE DEPARTMENT AS HE CANNOT AFFORD TO LI TIGATION DUE TO HIS POOR HEALTH I.E., BLOOD CANCER PATIENT. ITA NO.206(B)/12 & C.O. NO.4(B)2015 6 5. AT THE VERY OUTSET, IT WAS SUBMITTED BY THE LD. AR OF THE ASSESSEE THAT AS PER GROUND NO.2 & 3 OF ADDITIONAL GROUNDS RAISED BEFORE CIT (A), IT IS THE CONTENTION OF THE ASSESSEE THAT THE MAIN ISSUE IN THIS APPEAL IS WHETHER THE GAIN ARISING IN THE PRESENT CASE IS SHO RT TERM CAPITAL GAIN OR LONG TERM CAPITAL GAIN BUT THIS ASPECT OF THE MATTE R HAS NOT BEEN DECIDED BY THE LD. CIT(A) AND THEREFORE, THE ENTIRE MATTER SHOULD GO BACK TO HIS FILE FOR FRESH DECISION AFTER DECIDING THIS ASPECT. 6. THE LEARNED DR OF THE REVENUE SUPPORTED THE ASSE SSMENT ORDER. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIN D THAT AS PER THE ADDITIONAL GROUNDS NO.2 RAISED BEFORE THE LD. C IT(A), THE QUESTION RAISED WAS THIS WHETHER THE GAIN IN QUESTION IS LON G TERM CAPITAL GAIN OR SHORT TERMS CAPITAL GAIN BECAUSE THE AO ASSESSED TH IS AS SHORT TERM CAPITAL GAIN WHEREAS AS PER THE ASSESSEE THE GAIN I S TAXABLE AS LONG TERM CAPITAL GAINS. WE FIND THAT THIS ASPECT OF THE MAT TER HAS NOT BEEN DECIDED BY THE LD. CIT(A) AS PER THE IMPUGNED ORDER AND THEREFORE, WE FIND FORCE IN THE SUBMISSIONS OF THE LD. AR OF THE ASSESSEE THAT THE ENTIRE MATTER IN THE PRESENT CASE SHOULD GO BACK TO THE FILE OF THE LD. CIT(A) FOR A FRESH DECISION AND ACCORDINGLY, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE THE ENTIRE MATTERS BACK TO H IS FILE FOR A FRESH DECISION ON ALL ASPECTS OF THE MATTER INCLUDING THI S ASPECT AS TO WHETHER THE GAIN IN QUESTION IS SHORT TERM CAPITAL GAIN OR LONG TERM CAPITAL GAIN. THE LD. CIT(A) SHOULD DECIDE THE ISSUE AFRESH AS PE R THE ABOVE DISCUSSION AFTER PROVIDING ADEQUATE OPPORTUNITY OF HEARING TO BOTH THE SIDES. ITA NO.206(B)/12 & C.O. NO.4(B)2015 7 8. IN VIEW OF OUR ABOVE DECISION, NO ADJUDICATION I S CALLED FOR AT THIS STAGE IN RESPECT OF OTHER ISSUES RAISED BY BOT H SIDES IN THEIR RESPECTIVE APPEAL/CROSS OBJECTION. 9. IN THE RESULT, THE APPEAL OF THE REVENUE AS WELL AS CROSS OBJECTION OF THE ASSESSEE ARE ALLOWED FOR STATISTIC AL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENT IONED ON THE CAPTION PAGE. (VIJAY PAL RAO) (A.K. GARODIA) JUDICAL MEMBER ACCOUNTANT MEMBER BANGALORE: D A T E D :30.06.2016 AM* COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A)-II BANGALORE 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FILE BY ORDER, AR, ITAT, BANGALORE ITA NO.206(B)/12 & C.O. NO.4(B)2015 8 1. DATE OF DICTATION .. 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER . 3. DATE ON WHICH THE APPROVE D DRAFT COMES TO THE SR. P. S. .. 4 DATE ON WHICH THE ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT .. 5. DATE ON WHICH THE ORDER COMES BACK TO THE SR. P.S. .. 6. DATE OF UPLO ADING THE ORDER ON WEBSITE .. 7. IF NOT UPLOADED, FURNISH THE REASON FOR DOING SO . 8. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 9. DATE ON WHICH ORDER DOES FOR XEROX & ENDORSEMENT . 10. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK. 11 THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER. 12 THE DATE ON WHICH THE FILE GOES TO THE DISPATCH SEC TION FOR DISPATCH OF THE TRIBUNAL ORDER 13 D ATE OF DISPATCH OF ORDER