Sri. A. Prakash, Bangalore V. Income Tax Officer, Circle- 7(2)(4), Bangalore

ITA 2086/BANG/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 2217 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 2 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-12-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 13-08-2020
• Assessment Year: 2006-2007
• Appeal Filed On: 30-09-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PRIYADARSHI MISHRAJCIT
• Assessee Lawyers: V SRINIVASAN
• Keywords: Unexplained investment; Sale consideration of property below Jantri Value; Document seized; Documents seized; Capital Gains
• Section: 69C; 143(3); 50C; 69

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. 2 0 86 /BANG/201 9 ASSESSMENT YEAR: 20 06 - 07 SHRI. APPAIAH PRAKASH , NO.4, 47 TH CROSS, 8 TH BLOCK, JAYANAGAR, BANGALORE 560 011. PAN NO : AEJPP 9918 H VS. ITO , CIRCLE 7[2][4], BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SHRI. V. SRINIVASAN, ADVOCATE RESPONDENT BY : S HRI . PRIYADARSHI MISHRA , JCIT (DR)(ITAT) DATE OF HEARING : 01 . 1 2 .20 20 DATE OF PRONOUNCEMENT : 03 . 1 2 .20 20 O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THIS APPEAL IS BY THE ASSESSEE DIRECTED AGAINST THE ORDER OF CIT(A) DATED 13.09.2019. 2. THE ASSESSEE RAISED THE FOLLOWING GROUNDS: 1. THE ORDERS OF THE AUTHORITIES BELOW IN SO FAR AS THEY ARE AGAINST THE APPELLANT, ARE OPPOSED TO LAW, EQUITY, WEIGHT OF EVIDENCE, PROBABILITIES, FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LEARNED OT[A] IS NOT JUSTIFIED IN UPHOLDING THE VALIDITY OF THE REOPENING OF THE ASSESSMENT REJECTING THE ITA NO. 2086/BANG/2019 PAGE 2 OF 9 OBJECTIONS RAISED BY THE APPELLANT UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANT'S CASE. 2.1 THE LEARNED CIT[A] OUGHT TO HAVE APPRECIATED THAT THERE WAS NO LIVE-LINK BETWEEN THE REASONS STATED BY THE LEARNED A.O. AND THE BELIEF ENTERTAINED BY HIM THAT INCOME OF THE APPELLANT HAD ESCAPED ASSESSMENT AND HENCE, HE OUGHT NOT TO HAVE UPHELD THE REOPENING OF THE ASSESSMENT UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANT'S CASE. 3. WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED CIT[A] ERRED IN IMPLIEDLY UPHOLDING THE ADDITION OF RS. 44,51,000/- MADE AS UNEXPLAINED INVESTMENT U/S 69 OF THE ACT IN RESPECT OF THE ALLEGED CONSIDERATION PAID BY THE APPELLANT BASED ON THE SALE AGREEMENT DATED 04/02/2005 THAT DOES NOT BEAR THE SIGNATURE OF THE APPELLANT UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANT'S CASE. 3.1 THE LEARNED CIT[A] OUGHT TO HAVE APPRECIATED THAT THE APPELLANT HAS LED EVIDENCE IN SUPPORT OF THE FACT THAT THERE WAS NO SUCH INVESTMENT MADE BY HIM AND CONSEQUENTLY, THE ADDITION SUSTAINED BY THE LEARNED CIT[A] DESERVES TO BE DELETED. 3.2 THE LEARNED CIT[A] OUGHT TO HAVE APPRECIATED THAT ADDITION U/S 69 WAS MADE ON THE BASIS OF AN AGREEMENT TO SELL DATED 04/02/2005 FOUND IN THE COURSE OF A SEARCH BY THE DEPARTMENT IN THE CASE OF ONE SRI. S. GANGADHAR WITH REGARD TO PURCHASE OF PROPERTY FROM SRI MANMOHAN SABOO AND THERE WAS NO MATERIAL TO SHOW THAT THE APPELLANT HAD ACTED UPON THE SAID AGREEMENT OR EVEN SIGNED IT TO DRAW AN INFERENCE THAT THE CONSIDERATION AS STATED IN THE SAID AGREEMENT WAS PAID AND HENCE, THE ADDITION MADE OUGHT TO HAVE BEEN DELETED UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANT'S CASE. 3.3 THE LEARNED CIT[A] OUGHT TO HAVE APPRECIATED THAT THE HON'BLE ITAT, C BENCH, HAD IN THE CASE OF THE SELLER OF THE PROPERTY VIZ., SRI MANMOHAN SABOO IN ITA NO. 1297/B/2015 DATED 22/07/2016, HELD THAT THE CONSIDERATION AS MENTIONED IN THE SALE AGREEMENT DATED 04/02/2005 CANNOT BE THE BASIS FOR ASSESSMENT OF CAPITAL GAINS IN THE HANDS OF THE SAID SELLER WHILE HOLDING THAT THE CONSIDERATION ASSESSABLE IN TERMS OF SECTION 50C ITA NO. 2086/BANG/2019 PAGE 3 OF 9 OF THE ACT SHOULD BE ADOPTED AND IN THIS VIEW OF THE MATTER, IT CANNOT BE HELD THAT THE APPELLANT HAD PAID THE SALE CONSIDERATION AS PER THE AGREEMENT TO SELL DATED 04/02/2005 AND THEREFORE, THE ADDITION MADE IN HANDS OF THE APPELLANT U/S. 69 OF THE ACT, OUGHT TO HAVE BEEN DELETED. 4. WITHOUT PREJUDICE TO THE RIGHT TO SEEK WAIVER WITH THE HON'BLE CCIT/DG, THE APPELLANT DENIES HIMSELF LIABLE TO BE CHARGED TO INTEREST U/S. 234-A, 234-B AND 234-C OF THE ACT, WHICH UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANT'S CASE AND THE LEVY DESERVES TO BE CANCELLED. 5. FOR THE ABOVE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING OF THE APPEAL, YOUR APPELLANT HUMBLY PRAYS THAT THE APPEAL MAY BE ALLOWED AND JUSTICE RENDERED AND THE APPELLANT MAY BE AWARDED COSTS IN PROSECUTING THE APPEAL AND ALSO ORDER FOR THE REFUND OF THE INSTITUTION FEES AS PART OF THE COSTS. 3. THE FACTS OF THE CASE ARE AN APPEAL WAS ORIGINALLY FILED BY THE ASSESSEE SHRI. APPAIAH PRAKASH BEFORE CIT(A) ON 26.02.2013 FOR THE ASSESSMENT YEAR 2006-07 AGAINST THE ORDER DATED 31-01-2013, U/S 143(3) R.W.S. 147 OF THE TAX ACT, 1961, PASSED BY THE INCOME TAX OFFICER, WARD-4(4), BANGALORE. THIS APPEAL WAS DISPOSED OFF BY THE CIT(A)-11, BANGALORE BY DISMISSING THE APPEAL VIDE ORDER DATED 02-01.2014. IN FIRST ROUND, THE ASSESSEE FILED AN APPEAL BEFORE THIS TRIBUNAL AND THE TRIBUNAL VIDE ORDER DATED 17.10.2014 DIRECTED AS UNDER: 3. AGAINST THE ORDER OF - THE CIT(A). THE ASSESSEE IS IN APPEAL BEFORE US AND DURING THE EARLIER DATE OF HEARING THE LEARNED DEPARTMENTAL REPRESENTATIVE WAS DIRECTED TO FURNISH THE REASONS FOR REOPENING TO THE ASSESSEE AND IN COMPLIANCE THEREOF THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS FURNISHED THE REASONS. THE ASSESSEE HAS ALSO FILED HIS OBJECTIONS TO THE REASONS FOR REOPENING. TODAY I.E. ON 9 TH OCTOBER 2014, ON GOING THROUGH THE MATERIAL ON RECORD, WE FIND THAT THE ASSESSEE HAS RAISED A SPECIFIC CONTENTION IN HIS WRITTEN SUBMISSIONS BEFORE THE CIT(A) BUT THE C177:4) HAS NOT DISCUSSED 'THE ISSUE AT ALL IN HER ORDER: SINCE THE POWERS OF THE . FIRST APPELLATE AUTHORITY ARE CO-TERMINUS WITH THAT OF THE AO, WE ARE: OF THE OPINION THAT THE CIT(4) OUGHT TO HAVE DECIDE THE ISSUE IN ACCORDANCE WITH LAW ITA NO. 2086/BANG/2019 PAGE 4 OF 9 RATHER THAN PROCEED TO DISPOSE OF THE APPEAL ON MERITS. IN VIEW OF THE SAME, WE DEEM IT FIT AND PROPER TO REMAND THE ISSUE BACK TO THE FILE OF THE CIT(A) WITH A DIRECTION TO DISPOSE OF THE ASSESSEE 'S CONTENTION AS REGARDS THE SUFFICIENCY OR OTHERWISE OF THE REASONS FOR REOPENING OF THE ASSESSMENT, IN ACCORDANCE WITH LAY. 4. AS THE LEGAL ISSUE IS BEING REMANDED TO THE C.IT(A) THE MERITS ARE NOT BEING ADJUDICATED AT THIS STAGE. 4. IN THE SECOND ROUND, ON REOPENING THE ASSESSMENT, CIT(A) CONFIRMED THE ORDER OF THE AO. LEARNED DR SUBMITTED THAT DURING THE COURSE OF SEARCH ON 06.10.2009 IN THE CASE OF SHRI. S. GANGADHAR, THERE WAS A SALE AGREEMENT FOUND WHICH SHOWS THAT THE ASSESSEE HAS PURCHASED A PROPERTY LOCATED AT NO.22, OLD NO.15, RAGHUVANAHALLI VILLAGE, THALLAGHATAPURA GRAMAPANCHYAT, UTTARAHALLI HOBLI, BANGALORE SOUTH. FROM THE SEIZED DOCUMENTS, THE TOTAL SALE CONSIDERATION WAS SHOWN AT RS.52,51,000/-. HOWEVER, SALE DEED WAS REGISTERED FOR RS.8,00,000/-. THE DIFFERENCE OF RS.44,51,000/- IS CONSIDERED AS UNDISCLOSED SALE CONSIDERATION AND TREATED AS INCOME OF THE ASSESSEE BY REOPENING THE ASSESSMENT OF THE ASSESSEE. HE RELIED ON THE ORDER OF CIT(A) STATING THAT THE REOPENING WAS WITHIN 4 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR AND IT SHOULD BE UPHELD SINCE THERE IS EVIDENCE TO SHOW THAT THERE IS ESCAPEMENT OF INCOME. 5. LEARNED AR SUBMITTED THAT ON EARLIER OCCASION, THE ISSUE RELATING TO THE VALIDITY OF RE-OPENING OF ASSESSMENT IS CONCERNED, IT WAS DECIDED BY THE HON'BLE CIT[A]-2, BANGALORE IN THE APPELLATE ORDER DATED 02/01/2014 WITHOUT GIVING THE ASSESSEE THE COPY OF THE REASONS RECORDED AND TAKING INTO ACCOUNT THE OBJECTIONS OF THE ASSESSEE ON RE-OPENING. IT WAS ALSO SUBMITTED THAT THE REASONS RECORDED WERE NOT FURNISHED AND THEREUPON, THE TRIBUNAL DIRECTED THE LEARNED DR TO FURNISH THE COPY OF THE REASONS RECORDED FOR RE-OPENING OF THE ASSESSMENT. THE SAME WAS FURNISHED ON 12/08/2014 AND THE TRIBUNAL DIRECTED THE ASSESSEE TO FILE OBJECTIONS ON THE REASONS RECORDED FOR RE-OPENING OF THE ASSESSMENT. THESE OBJECTIONS WERE FILED BY THE ASSESSEE BEFORE THE TRIBUNAL ITA NO. 2086/BANG/2019 PAGE 5 OF 9 ON 25/08/2014. IN ACCORDANCE WITH THE DIRECTIONS OF THE TRIBUNAL AND IN LIGHT OF THE AFORESAID OBJECTIONS FILED BY THE ASSESSEE, THE GROUND RELATING TO RE- OPENING OF THE ASSESSMENT URGED BY THE ASSESSEE MAY KINDLY BE CONSIDERED AND DECIDED. IT WAS FURTHER STATED THAT FOR THE REASONS STATED IN THE AFORESAID OBJECTIONS, THE MANDATORY REQUIREMENT FOR REOPENING THE ASSESSMENT DOES NOT EXIST AND HAS NOT BEEN COMPLIED WITH AND CONSEQUENTLY, THE ENTIRE ASSESSMENT PROCEEDINGS STAND VITIATED AND THE SAME REQUIRES TO BE CANCELLED. LEARNED AR SUBMITTED THAT THE ISSUE RELATING TO THE ADDITION MADE UNDER SECTION 69C OF THE ACT, THE AFORESAID ADDITION WAS MADE BY THE LEARNED AO BASED ON A SEIZED AGREEMENT TO SELL DATED 04/02/2005 THAT WAS FOUND AND SEIZED IN COURSE OF SEARCH CONDUCTED BY THE DEPARTMENT IN THE CASE OF ONE SRI. S.GANGADHAR. IN THIS AGREEMENT, THE SALE CONSIDERATION FOR THE PROPERTY BEARING NO.22, OLD NO.15, RAGHUVANAHALLI VILLAGE, THALLAGHATTAPURA GRAMAPANCHAYAT, UTTARAHALLI HOBLI, BANGALORE SOUTH BELONGING TO ONE SHRI MANMOHAN SABOO WAS STATED TO BE RS. 52,51,000/- AND THE PURCHASERS OF THE PROPERTY WERE SHOWN AS SRI GANGADHAR AND SRI A PRAKASH, THE ASSESSEE. THIS AGREEMENT WAS SIGNED BY SRI. MANMOHAN SABOO AND SRI GANGADHAR AND THE ASSESSEE HAD NOT SIGNED THE SAME AS HE WAS TOTALLY UNWARE OF THE EXISTENCE OF THE SAID AGREEMENT. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. WE HAVE CAREFULLY GONE THROUGH THE SALE AGREEMENT FOUND DURING THE COURSE OF SEARCH ACTION IN THE CASE OF SHRI. S. GANGADHAR ON 06.10.2009. THIS SALE AGREEMENT WAS ENTERED BETWEEN THE FOLLOWING PARTIES ON 04.02.2005: ITA NO. 2086/BANG/2019 PAGE 6 OF 9 ITA NO. 2086/BANG/2019 PAGE 7 OF 9 7. THIS SALE AGREEMENT WAS SIGNED BY FOLLOWING PARTIES: 8. AS SEEN FROM ABOVE, THIS SALE AGREEMENT DOES NOT BEAR THE SIGNATURE OF PRESENT ASSESSEE SHRI. A. PRAKASH AND ONLY THE VENDOR SHRI. MANMOHAN SABOO AND PURCHASER SHRI. S. GANGADHAR HAS SIGNED THE SAME. HOWEVER, THE FINAL SALE DEED WAS EXECUTED IN FAVOUR OF SHRI. A. PRAKASH ON 09.12.2005 VIDE ITA NO. 2086/BANG/2019 PAGE 8 OF 9 DOCUMENT NO. BNG(U)-KNSR/18662/2005-2006 DATED 09.12.2005 BEFORE SUB-REGISTRAR, KENGERI, BANGALORE. IT IS TO BE NOTED THAT THE AO NEITHER EXAMINED THESE PARTIES NOR GAVE ANY OPPORTUNITY TO CROSS-EXAMINE THESE PARTIES. HE ARBITRARILY CONCLUDED THAT THERE WAS A DIFFERENCE IN VALUE DISCLOSED IN SALE AGREEMENT AND SALE DEED THOUGH SHRI. A. PRAKASH IS NOT SIGNATORY TO THE SALE AGREEMENT DATED 04.02.2005. FURTHER SALE AGREEMENT WAS EXECUTED ON 04.02.2005 I.E., IN FINANCIAL YEAR 2004-05 RELEVANT TO ASSESSMENT YEAR 2005-06. THE ASSESSMENT YEAR INVOLVED HERE IS 2006-07. FROM THIS POINT OF VIEW ALSO, SALE AGREEMENT DOES NOT FALL IN THE ASSESSMENT YEAR 2006-07. IN OUR OPINION, THERE IS NO LIVE LINK BETWEEN THE REASON RECORDED AND THE MATERIAL CONSIDERED FOR REOPENING THE ASSESSMENT. ACCORDINGLY, WE QUASH THE REASSESSMENT ORDER. SINCE WE HAVE QUASHED THE REASSESSMENT ORDER ITSELF, WE REFRAIN FROM GOING INTO OTHER GROUNDS OF APPEAL RAISED BY ASSESSEE ON MERITS. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE. SD/- SD/- (BEENA PILLAI) (CHANDRA POOJARI) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED : 03.12.2020. NS* ITA NO. 2086/BANG/2019 PAGE 9 OF 9 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.