Sarlaben R. Arora, Ahmedabad V. The Income Tax Officer, Ward-10(3), Ahmedabad

ITA 2072/AHD/2015

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 6665 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2007-2008
• Appeal Filed On: 13-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: BIREN SHAH
• Keywords: Capital asset; Cost of acquisition; Reason to believe; Capital Gains
• Section: 143(3); 201; 54

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL, SM C BENCH, AHMEDABAD BEFORE SHRI WASEEM AHMED , ACCOUNTANT MEMBER AND MS MADHUMITA ROY, JUDICIAL MEMBER ./ ITA NO. 2072/AHD/2015 AND ITA NO.3285/AHD/2016 / ASSTT. YEAR: 2007 - 2008 SARLABEN R. ARORA , C/O, MILIN J. JANI & CO. , 306, SHITAL VARSHA ARCADE, GIRISH COLD DRINK CROSS ROAD, C.G. ROAD, AHMEDABAD - 380 009 PAN NO. ACQPA2981G VS . INCOME TAX OFFICER, WARD - 10(3), AHMEDABAD (APPLICANT) (RESPONENT) ASSESSEE BY : SHRI BIREN SHAH, A .R REVENUE BY : SHRI APOORVA BHARDWAJ / DATE OF HEARING : 06 / 12 / 201 8 / DATE OF PRONOUNCEMENT: 28 / 02 /201 9 / O R D E R PER MS MADHUMITA ROY, JUDICIAL MEMBER : TH ESE INSTANT APPEAL S FILED BY THE ASSESSEE ARE AGAINST THE ORDER DATED 11.11.2014 PASSED BY THE LEARNED COMMI SSIONER OF INCOME TAX(APPEALS) - XVI , AHMEDABAD , ARISING OUT OF ORDER DATED 17.01. 2014 PASSED UNDER SECTION 143(3) R.W.S 147 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT ) PASSED BY THE ITO WARD - 10(3) AHMEDABAD FOR THE ASSESSMENT YEAR 2007 - 08 AND AGAINST THE ORDER DATED 03.10. 2016 PASSED BY THE COMMISSIONER OF INCOME TAX ITA NOS.2072/AHD/2015 & 3285/AHD/2016 A.Y .2007 - 08. 2 (APPEALS) - 5 ARISING OUT OF THE PENALTY ORDER PASSED BY THE ITO, WARD - 5(2)(3) AHMEDABAD U/S.271(1)(C) OF THE ACT RESPECTIVELY FOR THE ASSESSMENT YEAR 2007 - 08. 2. SINCE BOTH THE APPEALS RELATES TO THE ASSESSMENT ORDER OF THE S AME ASSESSEE AND CONSEQUENTIAL TO EACH OTHER, THESE ARE HEARD ANALOGOUSLY AND ARE BEING DISPOSED OF BY THIS COMMON ORDER. 3. AN APPLICATION FOR CONDO NATION OF DELAY OF 160 DAYS IN FILING THE APPEAL ON THE BEHALF OF THE APPELLANT HAS ALSO BEEN FILED . IT APPEARS FROM THE SAID APPLICATION THAT THE O RDER IN APPEAL WAS PASSED ON 11.11. 2014 WHICH WAS R ECEIVED BY THE APPELLANT ON 27.11. 2014. HENCE THE LAST D ATE OF FILING SUCH APPEAL WAS 26.01. 2015 . H OWEVER, THE SAME WAS FILED ON 13.07. 2015 DUE TO CERTAIN REASON S WHICH HAS BEEN PROPERLY EXPLAINED BY THE ASSESSEE IN THE SAID APPLICATION FOR CONDONATION OF DELAY. ALSO AN AFFIDAVIT A FFIRMED BY THE ASSESSEE HAS BEEN FILED ALONG WITH THE SAID APPLICATION . IT WAS CONTENDED BY THE ASSESSEE THAT T HE RELEVANT PAPERS RELATING TO THE FILING OF APPEAL WERE SENT BY THE APPELLANT THROUGH COURIER TO THE CONSULTANT AT AHMEDABAD FOR TAKING NECESSARY STEPS THEREON BUT DUE TO NEGLIGENCE ON THE PART OF COU RIER SERVICE PROVIDER T HE SAME WAS NOT RECEIV ED BY THE CONSULTANT . U LTIMATELY THE PAPERS WERE AGAIN SENT TO HIM AT AHMEDABAD AND NECESSARY STEPS WERE TAKEN THEREAFTER AS IT APPEARS FROM THE EXPLANATION MADE BY THE ASSESSEE. 4. WE HAVE GONE THROUGH THE ENTIRE APPLICAT ION. WE F IND THERE IS NO MALAFI D E INTENTION ON THE PART OF THE ASSESSEE IN NOT FILLING THE APPEAL WITHIN THE PRESCRIBED PERIOD. NO OTHER LA CHES AND/OR FAULT IS FOUND ON THE PART OF THE APPELLANT BY US. WE FIND SUFFICIENT CAUSE FOR SUCH DELAY IN PREFERRING THE INSTA NT ITA NOS.2072/AHD/2015 & 3285/AHD/2016 A.Y .2007 - 08. 3 AP PEAL BEFORE THIS HON BLE TRIBUNAL BY THE ASSESSEE . IN THAT VIEW OF THE MATTER WE CONDONE THE DELAY. 5 . NOW WE PROCEED TO DEAL WITH THE MERIT OF THE MATTER. THE APPELLANT IS AN INDIVIDUAL DECLARING INCOME FROM LONG TERM CAPITAL GAIN AND OTHER SOURCE S OF INCOME BY FILING RETURN OF INCOME ON 26.12.2007 DECLARING TOTAL INCOME AT RS.3,42,781/ - IN THE ASSESSMENT YEAR 2007 - 08. UPON SCRUTINY THE MATTER WAS RE - OPENED FOR ASSESSMENT U/S.143(3) R.W.S 147 OF THE ACT. NOTICE U/S.148 OF THE ACT WAS ISSUED ON 05. 11.12 UPON THE ASSESSEE FOLLOWED BY FURTHER NOTICE DATED 06.02.2013 U/S.148 OF THE ACT. 6 . THE AO WAS PRIMA FACIE OF THE OPINION THAT INCOME MIGHT HAVE ESCAPED ASSESSMENT AND THUS THE CASE WAS RE - OPENED AFTER RECORDING THE REASONS RECEIVING APPROVAL FROM THE COMMISSIONER OF INCOME TAX CONCERN ED. 6 .1 TH EREAFTER THE ASSESSEE FILED A LETTER DATED ON 27 .02. 20 13 REQUESTING THE AUTHORITY TO CONSIDER T HE ORIGINAL RETURN OF INCOME AS DEEMED TO BE FILED IN RESPECT OF NOTICE ISSUED U/S.148 OF THE ACT. FURTHER THAT THE ASSESSEE ALSO REQUESTED TO PROVIDE THE REASONS RECORDED FOR SU CH RE - OPENING OF THE CASE OF THE ASSESSEE. NEEDLESS TO MENTION TH E ASSESSEE WAS PROVIDED WITH SUCH REASONS BY AND UNDER THE LETTER DATED 04.03.2013 ISSUED BY THE AUTHORITY WHICH IS AS FOLLOWS. ' .. IT IS SEEN THAT THE ASSESSEE HAS SOLD PROPERTY NAMED KAILASH NAGAR ON 06/09/2006 AT RS.36,20,000/ - AND HAS OFFERED RS.2,48,197/ - AS LTCG AFTER CLAIMING DEDUCTION OF IN DEXED COST OF ACQUISITION AT RS.18, 71,803/ - AND INVESTMENT OF RS.L5,00,000 / - IN REC BONDS. HOWEVER, IT IS OBSERVED THAT THE PROPERTY WAS ACQUIRED ON 10/11/ /2005 AS PER SALE DEED DATED 10/11/20O5 AND AS SUCH, THERE WOULD BE STCG OF RS.25,20,000/ - AS AGAINST THE LTCG OF ITA NOS.2072/AHD/2015 & 3285/AHD/2016 A.Y .2007 - 08. 4 RS,2,48,000 / - SHOWN BY THE ASSESSEE. THUS, THERE IS REASON TO BELIEVE THAT THE INCOME CHARGEABLE TO T AX TO THE EXTENT OF RS.25,20,000 / - HAS ESCAPED ASSESSMENT FOR THE PERIOD RELEVANT TO A.Y.2007 - 08 ' 6 .2 THE ASSESSEE THEREAFTER FILED A LETTER DATED 18.03.2013 STATING THAT HE ACQUIRED SUCH PROPERTY BY WAY OF POWER OF AT TORNEY AS ON 30 .12.1966 FOR A CONSIDERATION OF RS.11,00,000/ - P AYMENT WHEREOF WERE ALREADY BEEN MADE THROUGH CHEQUE S ON 10.04.1996 AND 01.01.1997 . T HE ASSESSEE FURTHER CLARIFIED THAT THE SALE DEED WAS EXECUTED FINALLY ON 22.07.2004 THROUGH THE CONSTITUTED ATTORNEY APPOINTED BY AND UNDER PO WER OF ATTORNEY EXECUTED ON 30. 1 2 .1996 BY THE VENDORS OF THE PROPERTY . I T WAS FURTHER EXPLAINED THAT THE POSSESSION OF SUCH PROPERTY WAS HANDED OVER TO THE ASSESSEE BY THE VENDORS IN THE YEAR 1996 ITSELF. THE COPY OF EACH OF THE SALE DEED EXECUTED ON 22.07.2004 , THE POWER OF ATTORNEY EXECUTED ON 30 . 12.1996 , THE COPY OF THE MUNICIPAL TAX RECEIPTS FOR THE YEAR 1999, CREDIT CARD , DIVIDEND WARRANT DATED 06.1 1.2000 WERE ALSO PLACED ON RECORD ALONG WITH THE SAID LETTER DATED 18.03.2013 WRITTEN BY THE ASSESSEE. APART FROM THAT THE ASSESSEE FURTHER STATED THE FOLLOWING : PART - PERFORMANCE OF THE CONTRACT OF SALES RECOGNIZED AS COMPLETE S ALES OF LAND AND BUILDING UNDER SECTION 53A OF TH E TRANSFER OF PROPERTY ACT, 1882 6 . 3 ACCORDING TO THE ASSESSEE HE HAS COMPLIED ALL THE CONDITION S OF SECTION 53A TO ACQUIRE THE PR OPERTY UNDER CONSIDERATION IN THE YEAR 1996 . S UCH EXPLANATION AS FORWARDED BY THE ASSESSEE WAS NOT FOUND ACCEPTABLE BY THE REVENUE PARTICULARLY THE EXPLANATION TO THE CLAIM OF LONG TERM CAPITAL GAIN ON THE BASIS OF THE ACTUAL DATE OF SALE AS ON 1996 INSTEAD OF SHORT TERM CAPITAL GAIN AS SOUGHT TO BE DETERMINED BY T HE REVENUE ON THE BASIS OF REGISTERED DEED ON 22.07.2007 RELYING ON SECTION 53A OF THE ACT TRANSFER OF PROPERTY ACT 18 82 AND ITA NOS.2072/AHD/2015 & 3285/AHD/2016 A.Y .2007 - 08. 5 THEREFORE SHOW CAUSE WAS ISSUED AS TO WHY THE LONG TERM CAPITAL SHOWN BY THE ASSESSEE AT RS.2,48,000 ARISING ON SALE OF IMMOVABLE PROPERTY SHOULD NOT BE TREATED AS SHORT TERM CAPITAL GAIN OF RS.25,20,000/ - AS PER THE REASONS RECORDED FOR RE - OPENING OF THE CASE BY AND UNDER LETTER DATED 04.03.2013 ISSUED BY THE REVENUE AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE . I N RESPONSE TO THE SAME THE ASSESSEE SUBMITTED A REPLY DATED 04.01.2014 INTER ALIA NARRATIN G THE FOLLOWINGS: 1. THE ASSESSEE HAS ACQUIRE D SUCH PROPERTY BY W AY OF POWER OF ATTORNEY AS ON 30 TH DECEMBER, 1996. 2. POA REGISTERED IN THE NAME OF MR. RAJENDRAKUMAR ARORA HUSBAND OF THE ASSESSEE FOR WHICH ASSE SSEE HAS MADE PAYMENT RS.LL,00,0 00/ - IN FAVOUR OF MR. MERAJ HUSAIN SABRI HUSAIN GOGHAI & JULFIKAR ALI SABIR HUSAIN GOGHAL. 3. IT'S APPEAR FROM THE POA THAT THE ASSESSEE HAS ACQUIRED ALL THE RIGHTS RELATED TO THE PROPERTY UNDER CONSIDERATION AND APPOINTED HER HUSBAND TO DEAL WITH SUCH PROPERTY IN HER BEHALF. CONSIDERATION OF THE SAID POA TO ACQUIRE RIGHTS RELATED TO THE ASSETS UNDER CONSIDERATION WA S MADE BY THE ASSESSEE AS UNDER. PARTICULARS RS. BANK OF BA ROD A, ASHRAM ROAD BR. CH. NO,LO715O DATED 1O.04.1996 4,00,000 / - BANK OF BARODA, ASHRAM ROAD BR. CH. NO.L73OL DATED 10. 04. 1996 2,00,000 / - BANK OF BARODA, ASHRAM ROAD BR. CH. NO.0173O4 DATED 1.1.1997 2,50,000 - BANK OF BARODA, ASHRAM ROAD BR. CH. NO.O173O5 DATED 1.1.1997 2,50,000 / - TOTAL CONSIDERATION 11,00,000 / - ITA NOS.2072/AHD/2015 & 3285/AHD/2016 A.Y .2007 - 08. 6 COPY OF THE SAID POWER OF ATTORNEY IS ATTACHED HEREWITH. REFER ANNEXURE I. 1. THE ASSESSEE HAS OBTAINED ALL RIGHTS IN A.Y. 1997 - 1998 THROUGH POWER OF ATTORNEY REGISTERED ON BEHALF HER IN THE NAME OF HER HUSBAND. IN THE A. Y. 2004 - 05, THE ASSESSEE HAS GOT REGISTER SALE DEED IN HER NAME ON 22/O7/2004 FROM HER HUSBAND WHO HOLDS THE POA ON HER BEHALF WHICH APPEARS FROM THE POA DATED 3O/12/1996 A N D REGISTER SALE DEED DATED 22/04/200 4. REGISTER SALE DEED EXECUTED BETWEEN THE ASSESSEE AND HER HUSBAND FOR WHICH HER HUSBAND HAS NOT RECEIVED ANY KIND OF CONSIDERATION AS HE WAS APPOINTED AS POA HOLDER OF THIS PROPERTY ON BEHALF OF THE ASSESSEE. BY EXEC UTING REGISTER SALE DEED THE ASSESSEE RECEIVED REGISTERED TITLE OF THE PROPERTY, WHICH SHE OWNED THROUGH THE POA. FURTH ER NO SEPARATE SALES CONSIDERATION HAD BEEN MADE TO HIS/HER ORIGINAL SELLERS I.E. MR. MERAJ HUSA IN SABRI HUSAIN GOGHA I & JULFIKAR ALL SABIR HUSAIN GOGHAI AS THEY HAVE ALREADY BEEN PAID FOR IN A.Y. 1997 - 98 BY THE ASSESSEE TO ACQUIRE RIGHTS THROUGH THE POA. COPY OF REGISTER SALE DEED DT. 22/04/2004 GIVEN IN ANNEXURE II. IT APPEARS FROM THE POA & REGISTER SALE DEED THE PROPERTY HAS BEEN TRANSFERRED IN THE NAME OF THE ASSESSEE IN A.Y, 1997 - 98 AND GOT REGISTER TITLE IN A.Y. 2005 - 06. THE ASSESSEE IN THE SAID SUBMISSION, THEREAFTER, REPRODUCED THE DEFINITION OF SHORT TERM CAPITAL ASSET AS PER SECTIO N : 2(42A) FROM (A) TO (HB)(II) WITH EXPLANATION 1, 2 & 3 OF THE INCOME TAX ACT, 1961. IN THE SAID SUBMISSION, T HE ASSESSEE FURTHER STATED THAT 'I ) THE ASSESSEE HOLDING SUCH ASSETS RIGHTS SINCE 30.12.1996 THROUGH POA. II) THE ASSESSEE HAS GOT REGISTERED OF SUCH RIGHT INTO OWNERSHIP ON 22/04/20O4 THOROUGH REGISTER SALES DEED. II I) PERIOD OF HOLDING FOR SHORT TERMS COUNTS FROM DATE ON WHICH ASSESSEE HOLDING RIGHT IN THE PROPERTY I.E. 30.12.1996. ITA NOS.2072/AHD/2015 & 3285/AHD/2016 A.Y .2007 - 08. 7 IV) POSSESSION OF THE PROPERTY HAS BEEN HANDED OVER TO THE ASSESSEE BY THE SELLER IN THE YEAR 1996/ - WHICH CAN BE SUBSTANTIATED BY THE ASSESSEE BY PAYMENTS OF A) MUNICIPAL TAX YR. 1999 REFER ANNEXURE III B) STATEMENT OF CREDIT CARD DATED OS/10/96 & 7/4/97 , REFER ANNEXURE IV C) DIVIDEND WARRANT DATED 6/11/2000 REFER ANNEXURE V D) RATION CARD COPY REFER ANNEXURE VI V) PART - PERFORMANCE OF THE CONTRACT OF SALES RECOGNIZED AS COMPLETE SALES OF LAND AND BUILDING UNDER SECTION 53A OF THE TRANSFER OF PROPERTY ACT, 1882 6 .4 THE ASSESSEE ALSO PLACED RELIANCE ON THE CERTAIN JUDICIAL PRONOUNCEMENT S ON THIS ASPECT. THE CONTENTION AS MADE BY THE ASSESSEE WA S NOT ACCEPTED . A CCORDING TO THE LD. AO SINCE THERE IS NO MENTIONING OF ANY SALE CONSIDERATION TO BE PAID OR PAYABLE OR PAID IN ACCORDANCE OF /SALE AND/OR PURCHASE OF SAID PROPERTY . T HE POWER OF ATTORNEY IS ONLY A DOCUMENT WHICH REFERRED ONLY TO THE AGREEMENT TO TRANSFER THE RIGHT TITLE AND INTEREST OF PROPERTY BY APPOINTING SHRI RAJ ENDRA KUMAR ARORA IN FUTURE IN THE NAME OF THE ASSESSEE AND THUS PROPERTY HAS NOT BEEN TRANSFERRED WHOLLY IN THE NAME OF THE ASSESSEE AS ON 30.12.1996. THE POWER OF ATTORNEY FURTHER MENTIONED ABOUT THE POSSESSION GI VEN TO THE ASSESSEE AND HENCE THE LD.AO WAS OF THE OPINION THAT THE ASSESSEE HAS NEVER GOT POSSESSION OF THE SAID PROPERTY ON THE DAT E OF POWER OF ATTORNEY I.E IN THE YEAR 1996 WHICH THE ASSESSE E CLAIMED TO HAVE ACQUIRED . 6 .5 AS PER THE OBSERVATI ON MADE BY THE LD.AO T HE ASSESSEE FAILED TO FULFILL THE CONDITIONS OF SECTION 53A OF THE ACT S INCE THERE IS NO CONTRACT BETWEEN THE SELLER AND THE PURCHASER I.E THE ASSESSEE AS ON 30 .12.1996 WHEN THE POWER OF ATTO R NE Y WAS CONSTITUTED ONLY BETWEEN THE OWNER AND ATTORNEY HOLDER AND NOT EXECUTED BETWEEN THE OWNER AND THE ASSESSEE . T HE POW ER OF ATTORNEY DOES NOT ITA NOS.2072/AHD/2015 & 3285/AHD/2016 A.Y .2007 - 08. 8 BEAR THE SIGNATURE OF ASSESSEE ON ACCEPTING RIGHT S TITLE AND INTEREST OF THE PROPERTY . N EITHER THE SAME CONFER ANY RIGHT OF THE PROPERTY TO THE ASSESS EE. THE JUDGMENT CITED BY THE ASSESSEE WAS NOT APPLICABLE TO THE CASE OF ASSESSEE AS ALSO FOUND BY THE LD. AO . A CCORDING TO HIM THE ASSESSEE HAS RECEIVED THE POSSESSION OF PROPERTY IN QUESTI ON AS ON 22.07.2004 AS IT APPEARS AT PAGE 10 PARA 4 OF SALE DEED . U LTIMATELY THE AO CAME TO THE CONCLU SION THAT BY VIRTUE OF THE POWER OF ATTORNEY DATED 30.12.1996 SHRI RAJENDRAKUMAR ARORA REMAIN ED THE OWNER OF THE PROPERTY FROM 30.12.1996 TO 21.07.2004 AND ONLY ON 22.07.2004 CONSEQUENT UPON THE REGISTERED DEED OF SALE THE ASSESSEE BECOME THE OWNER OF THE SAID PROPERTY. PRIOR TO THAT THE ASSESSEE DID NOT ACQUIRE ANY RIGHT , TITLE AND INTEREST OF THE PROPERTY AS CLAIMED . THE ASSESSEE SINCE SOLD SUCH PROPERTY ON 06.09.2006 AT A COST OF RS.36,20,000/ - THOUGH OFFERED RS. 2,48 ,197/ - AS LONG TERM CAPITAL GAIN AFTER CLAIMING DEDUCTION OF COST ACQUISITION AND COST OF INDEXATION AT RS.18,71,803/ - AND INVESTMENT OF RS.15,00,000/ - IN REC BONDS , SHO RT TERM CAPITAL GAIN CONSIDERING THE PERIOD OF HOLDING INSTEAD OF LONG TERM CAPITAL GA IN OFFERED BY THE ASSESSEE AT RS.2,48,197/ - WAS NEGATED . F INALLY SHORT TERM CAPITAL GAIN WAS ASSESSED AT RS.25,20,000/ - AND SINCE THE ASSESSEE OFFERED RS.248197/ - THE BALANCE AMOUNT OF RS.22,71,803/ - WAS ADDED TO THE INCOME OF THE ASSESSEE AS SHORT TERM CAPITAL GAIN AGAINST WHICH AP PEAL WAS PREFERRED BEFORE THE LD.CIT(A) WHO IN TURN DISMISSED THE SAME . HENCE INSTANT APPEAL BEFORE US. 7 . AT THE TIME OF HEAR ING OF THE INSTANT APPEAL THE LD.COUNSEL APPEARING FOR THE ASSESSEE VEHEMENTLY ARGUED BEFORE US C ON TENDING THAT THE TRANSACTION OF SALE WAS PRACTICALLY COMPLETED IN THE YEAR 1997 WHEN THE PAYMENT WAS MADE BY THE ASSESSEE AND POSSESSION THEREOF WAS HANDED OVER TO HIM . T HEREFORE THOUGH PROPERTY WAS SOLD OUT IN THE YEAR 2006 THE CAPITAL GAIN OUT OF SUC H SALE WILL BE CONSIDERED AS LONG TERM CAPITAL GAIN AND NOT SHORT TERM CAPITAL GAIN. O N ITA NOS.2072/AHD/2015 & 3285/AHD/2016 A.Y .2007 - 08. 9 THAT SCORE ALONE, HE SUBMITTED THAT THE ORDER PASSED BY THE AU THORITY IS LIABLE TO BE QUASHED. IT WAS FUR THER ADDED THAT THERE WAS NO LA CHES ON THE PART OF THE ASSESSE E TO GET THE PROPERTY REGISTERED IN HIS NAME BY CONSTITUTED ATTORNEY. SINCE THE PROPERTY SITUATED IN A SENSITIVE ZONE ONLY UPON THE APPROVAL GRANTED BY THE COLLECTOR PROPERTY COULD HAVE BEEN TRANSFERRED IN THE NAME OF THE ASSESSEE WHICH IS ALSO EVIDENT FRO M SUCH APPROVAL OF THE CONCERNED AUTHORITY BEING PART OF THE PAPER BOOK BEFORE US . 8 . ON THE OTHER HAND THE LD.REPRESENTATIVE OF THE REVENUE SUBMITTED BEFORE US THAT SINCE THE TRANSACTION W AS FINALIZED BY WAY OF REGISTERED SALE DEED DAT ED 22.07.2004 THE POSSESSION HENCE HANDED OVER TO THE ASSESSEE ONLY ON 1996 IS NOT CORRECT . IN THAT VIEW OF THE MATTER T HE ORDER PASSED BY THE AUTHORITIES BELOW HAS BEEN PRAYED TO BE CONFIRMED BY US. 9 . WE HAVE HEARD THE RESPECTIVE PARTIES AND PERUSED THE RELEVANT MATERIAL S AVAILABLE ON RECORD. IT IS EVIDENT FROM TH E RECORDS THAT THE PROPERTY IN QUESTION WAS ACQUIRED BY THE ASSESSEE IN THE YEAR 1996 AND THE SAME WAS PRACTICALLY CONFIRMED UPON THE PAYMENT OF FINAL CONSIDERATION THROUGH CHEQUE ON 01.01.1997 TO THE V ENDORS. IT IS A FACT THAT THE POWER OF ATTORNEY WAS EXECUTED BY THOSE VENDORS ON 30.12.1996 TO TRANSFER THE RIGHT , TITLE AND INTEREST UPON THE ASSESSEE AND THE SAME WAS ULTIMATELY TRANSFERRED BY VIRTUE OF REGISTERED DEED OF SALE EXECUTED ON 22 .07.2004. IT APPEARS FROM THE STATEMENT S OF FACT SO PLAC ED BY THE ASSESSEE BEFORE THE LD.CIT (A) THAT THE PROPERTY SINC E SITUATED IN A NOTIFIED AREA UNDER DISTURBED AREA ACT IN FINANCIA L YEAR 1996 - 1997 FOR THAT PURPOSE POSSESSION OF SAID PROPERTY WAS HANDED OVE R TO HIM BY VIRTUE OF THE POWER OF ATTORNEY. IT IS RELEVANT TO MENTION THAT THE PROPERTY SITUATED IN A DISTURBED AREAS IS ONLY PERMITTED TO BE TRANSFER RED UPON PRIOR SANCTION AND/OR APPROVAL OF THE COLLECTOR CONCERNED. ITA NOS.2072/AHD/2015 & 3285/AHD/2016 A.Y .2007 - 08. 10 9 .1 IN THE INSTANT CASE PERMISSION OF TRANSFER OF SAID PROPERTY WAS RECEIVED FROM DY. COLLECTOR MADHYAHAN BHOJAN YOJNA AHMEDABAD BY AND UNDER ORDER NO.AMD/DISTURBED AREA/SRN 76/2003 DATED 01.05.2003 THE SAME IS ALSO REFLECTING AT CLA USE 18 OF THE SALE DEED DAT ED 22 .07.2004 BEING PART OF THE RECORD BEFORE US . T HE BUILDING THEREON WAS CONSTRUCTED UNDER THE YEAR 1979 AS ALSO EVIDENT FROM THE SAID DEED OF SALE. IT IS THEREFORE CANNOT BE SAID THAT THE PROPERTY IS TRANSFERRED ONLY ON 22.07.2004 BY VIRTUE OF THE DEED OF SALE. 9.2 ONCE THE CONSIDERATION IS PAID TO THE VENDORS THERE WOULD HAVE BEEN NO REASON IN NOT TRANSFERRING THE PROPERTY IN QUESTION TO THE PUR CHASER UNLESS THERE IS LEGAL BAR TO THAT EFFECT. SINCE THE APPROVAL/SANCTI ON BY THE CONCERNED AUTHORITY IS T HE CONDITION PREC EDENT OF SUCH TRANSFER IT CAN BE CONCLUDED THAT THE POWER OF ATTORNEY WAS EXECUTED BY THE VENDORS CONSTITUTING SHRI RAJENDRAKUMAR ARORA BEING THE HUSBAND OF THE ASSESSEE AS THE ATTORNEY TO TRANSFER THE RIGHT, TITLE AND INTEREST OF THE PRO PERTY TO TH E ASSESSEE IN ORDER TO CONFIRM SUCH TRANSACTION IN THE ABSENCE OF ANY DEED OF SALE. 9.3 THUS V IRTUALLY , THE APPELLANT ACQUIRED THE POSSESSION OF THE PROPERTY FROM THE VENDORS ON PAYMENT OF CONSIDERATION IN THE F.Y 1996 - 1997. THE SAME IS ALSO EV IDENT FROM THE MUNICIPAL RECEIPT WHERE THE NAME AS APPEARING IN THE MUNICIPAL RECORD WAS OF THE ATTORNEY AND NOT OF THE ORIGINAL VENDOR S BECAUSE OF THE PARTICULAR REASON THAT BY 1999 THE ORIGINAL VENDOR S HAD HANDED OVER THEIR POSSESSION OVER THE PROP ERTY TO THE REGISTERED ATTORNEY BY RELINQUISHING THEIR RIGHTS . W E FIND NO FAULT ON THE PART OF THE ASSESSEE , SINCE THE ASSESSEE IS IN POSSESSION OF THE PROPERTY FROM 1996 THE NATURAL COROLARY WOULD BE THAT THE SALE OR TRANSFER OF RIGHT TITLE INTEREST HAS BEEN COMPLETED BY V IRTUE OF HAND ING OVER POSSESSION TO THE ASSESSEE BY THE VENDORS UPON PAYMENT OF CONSIDERATION . ITA NOS.2072/AHD/2015 & 3285/AHD/2016 A.Y .2007 - 08. 11 T HE POSSESSION OF THE PROPERTY HAS BEEN HANDED OV ER TO THE ASSESSEE BY THE VENDORS IN THE YEAR 1996 WHICH WAS BE SUBSTANTIATED BY THE ASSESSEE BY P AYMENT OF CONSIDERATION OF RS.11,00,000/ - . I F THAT BE SO , THEN THE CAPITAL GAIN ARISING OUT OF SUCH PROPERTY NEEDS TO DETERMINED AS LONG T ERM CAPITAL GAIN TAKING INTO CONSIDERATION THE DATE OF THE POSSESSION OF THE PROPERTY BY THE ASSESSEE AS ON 1996 AND NOT SHORT TERM CAPITAL GAIN AS HELD BY THE AUTHORITIES BELOW. 9.4 THE GAIN ARISING OUT OF A TRANSFER OF A CAPITAL ASSET IF, IS THE CONSIDERATION FOR DETERMINING CAPITAL GAIN THEN IN THIS PARTICULAR CASE WE CAN SAFELY CONCLUDE THAT THE GAIN ARISING OUT OF THE RECEIPT TOWARD S PURCHASE OF THE PROPERTY TOOK PLACE AND/OR FINALIZED ON 01.01.1997 OUGHT TO HAVE BEEN CONSIDERED . VIRTUALLY RIGHT TITLE INTEREST OF THE PROPERTY WAS TRANSFERRED UPON THE ASSESSEE UPON PAYMENT OF CONSIDERATION IN 1996. C ERTAIN LIMITATION S WERE IMPOSED BY THE STATUE TOWARD S SALE OF PROPERTY BY WAY OF REGISTERED DEED OF SALE PREVAILING AT THAT MATERIAL POINT OF TIME AND ONLY UPON APPROVAL OF THE CONCERNED COLLECTOR THE SAID PROPERTY W A S REGISTERED ON 22.07.2004 . THUS CAPITAL GAIN , IN THIS PARTICUL AR CASE , RELATES BACK TO 1996 WHEN THE PAYMENT AND /OR CONSIDERATION WAS FULLY PAID BY THE ASSESSEE TO THE V ENDORS. DOCTRINE OF RELATING BACK IS THE PRINCIPLE BE APPLIED HERE. THUS, THE CLAIM THE ASSESSEE , IN THIS PARTICULAR CASE, THAT HE SOLD THE PROPERTY ON 06.09.2006 AT A COST OF RS.36,20,000 / - AND OFFERED RS.2 , 48 , 197 / - AS LONG TERM CAPITAL GAIN TAKING INTO CONSIDERATION OF THE DATE OF PAYMENT MADE AND ACQUIRED POSSESSION THEREOF AND OFFER ING LONG TERM CAPITAL GAIN AF TER CLAIMING DEDUCTION OF COST OF ACQUIS ITION AND COST OF INDEXATION OF RS.18 , 7 1 , 803 / - AND INVESTMENT OF 50 CR IN REC BOND DOES NOT SUFFER FROM ANY AMBIGUITY. MERELY NON REGISTRATION OF THE DEED OF SALE WOULD NOT CHANGE THE ACTUAL DATE OF TRANSFER OF THE PROPERTY. ITA NOS.2072/AHD/2015 & 3285/AHD/2016 A.Y .2007 - 08. 12 9.5 WE FIND BOTH THE PARTIES BELOW FAILED TO CONSIDER THIS PARTICULAR ASPECT OF THE MATTER TAKING INTO CONSIDERATION THE PECULIAR FACT AND CIRCUMSTANCES OF THE MATTER AND WRONGLY IDENTIFIED CAPITAL GAIN A S SHORT TERM CAPITAL GAIN CONSIDERING THE DATE OF ACQUISITION OF THE PROPERTY BY THE ASSESSEE AS ON 22.07.2004 INSTEAD OF 30.12.1996 . 9.6 THE JUDGMENT CITED BY THE LD.AR, ON THIS ASPECT REPORTED IN (2011) 15 (115) (MUM.) ITAT MUMBAI IN CASE OF SURESHCHANDRA AGARWAL VS INCOME - TAX OFFICER HAS BEEN CAREFU LLY CONSIDERED BY US. THE RATIO OF JUDGMENT IS AS FOLLOWS: SECTION 2(47), READ WITH SECTION 54, OF THE INCOME - TAX ACT, 1961 - CAPITAL GAINS - TRANSFER - ASSESSMENT YEAR 2005 - 06 - WHETHER AMENDMENT MADE IN SECTION 53A O F TRANSFER OF PROPERTY ACT, 1882, BY WHICH REQUIREMENT OF REGISTRATION F TRANSFER DEED HAS BEEN INDIRECTLY BROUGHT ON STATUTE NEED NOT BE APPLIED WHILE CONSTRUING MEANING OF'TRANSFER' WITH REFERENCE TO SECTION 2(47) - HELD, YES ASSESSEE SOLD A BUILDING ON 30 - 4 - 2004 - HE CLAIMED DEDUCTION UNDER SECTION 54 IN RESPECT OF CAPITAL GAIN ARISING ON SALE OF BUILDING CONTENDING THAT HE HAD PURCHASED A NEW FLAT ON 25 - 6 - 2003, I.E. WITHIN ONE YEAR FROM DATE OF TRANSFER OF BUILDING - ASSESSING OFFICER FOUND THAT DATE O F REGISTRATION OF TRANSFER DEED - OF BUILDING WAS 26 - 8 - 2004 - HE THUS OPINED THAT ASSESSEE SOLD BUILDING AS ON 26 - 8 - 2004 AND, CONSEQUENTLY, HIS CLAIM FOR DEDUCTION UNDER SECTION 54 COULD NOT BE ALLOWED - WHETHER IN VIEW OF FACT THAT ASSESSEE AND BUYER HAD PE RFORMED THEIR PART OF OBLIGATIONS AS ON 30 - 4 - 2004, IN SUCH A SITUATION, MERE NON - REGISTRATION OF TRANSFER DEED WOULD NOT CHANGE DATE OF TRANSFER OF BUILDING TO 26 - 8 - 2004 - HELD, YES 9.7 TAKING INTO CONSIDERATION THE ENTIRE FACTS OF THE CASE, THE RECO RDS LYING BEFORE US, AND RESPECTFULLY FOLLOWING THE JUDGMENT CITED ABOVE, WE FIND IT FIT ITA NOS.2072/AHD/2015 & 3285/AHD/2016 A.Y .2007 - 08. 13 AND PROPER TO DELETE SUC H ADDITION MADE BY THE AUTHORITIES BELOW FOR THE REASONS MENTIONED ABOVE TREATING THE CAPITAL GAIN AS SHORT TERM CAPITAL GAIN . WE FURTHER D IRECT THE AO TO CALCULATE THE CAPITAL GAIN AS LONG TERM CAPITAL AND P A SSED ORDER IN ACCORDANCE WITH LAW . ASSESSEE S APPEAL IS THUS ALLOWED. 10 . IN THE RESULT , THE APPEAL OF THE ASSESSEE IS ALLOWED. 11. SINCE THE PENALTY APPEAL BEARING NO. ITA NO.2072/AHD/2015 FOR ASSESSMENT Y E AR 2007 - 08 IS ALLOWED IN FAVOUR OF THE ASSESSEE THE OTHER APPEAL BEARING NO.3285/AHD/2016 FOR ASSESSMENT YEAR 2007 - 08 ARISING OUT OF THE PENALTY ORDER DATED 03.10.2016 PASSED BY THE LD. CIT(A) ARISING OUT OF THE ASSESSMENT ORDER DATED 17.01.2014 PASSED BY THE LD.AO BECOMES INFRUCTUOUS AND HENCE DISMISSED AS INFRUCTUOUS . ORDER PRONOUNCED IN THE COURT ON 28 /02 /2019 AT AHMEDABAD. - SD - - SD - ( WASEEM AHMED ) ACCOUTANT MEMBER ( MS MADHUMITA ROY ) JUDICIAL MEMBER (TRUE COPY) AHMEDABAD; DATED 28 / 02 /201 9 MANISH / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) 5. , / DR, ITAT, 6. / GUARD FILE . / BY ORDER, / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD