Smt. Kanchanben V. Patel, Ahmedabad V. The Income Tax Officer, Ward-6(4), Ahmedabad

ITA 2140/AHD/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 6058 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 8 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-04-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 10-02-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 19-08-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DEEPAK SUTARIA
• Assessee Lawyers: S N DIVATIA
• Keywords: Cost of acquisition
• Section: 143(3)

Judgement Text

ITA NO. 2140 / AHD / 201 3 A SSESSMENT Y EAR: 20 0 9 - 10 PAGE 1 OF 3 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH, SMC , AHMEDABAD [CORAM: PRAMOD KUMAR AM] ITA NO. 2140 /AHD/201 3 ASSESSMENT Y EAR : 20 0 9 - 10 KANCHANBEN V. PATEL, ..... .......... .APPELLANT 22, NIRMAL BUNGALOWS, OPP. BARODA EXPRESS HIGHWAY , CTM , AMRAWA D I, AHMEDABAD 380 026 . [PAN: A FEPP 4241 B ] VS. INCOME TAX OFFICER , WARD 6(4), AHMEDABAD. .. ......... RESPONDENT APPEARANCES BY: S.N. DIVATIA , FOR THE APPELLANT DEEPAK SUTARIA , FOR THE RESPONDENT D ATE OF CONCLUDING TH E HEARING : 10 . 0 2 . 201 7 DATE OF PRONOUNCING THE ORDER : 28 .04. 2017 O R D E R 1. BY WAY OF THIS APPEAL, THE ASSESSEE APPELLANT HAS CHALLENGED CORRECTNESS OF THE ORDER DATED 6 TH J UNE 201 3 , PASSED BY THE LEARNED CIT(A) , IN THE MATTER OF ASS ESSMENT UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961, FOR THE ASSESSMENT YEAR 20 0 9 - 10 . 2. GROUND NO. 1 IS GENERAL IN NATURE AND DOES NOT CALL FOR ANY SPECIFIC ADJUDICATION. 3. IN GROUND NOS. 2 AND 3, WHICH WE WILL TAKE UP TOGETHER, THE ASSESSEE HAS R AISED THE FOLLOWING GRIEVANCES: 2. 1 THE LD. CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITION OF RS. 651,600 TOWARDS SHORT TERM CAPITAL GAINS. 2.2 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LD. CIT(A ) OUGHT NOT TO HAVE UPHELD THE ADDITION OF RS.6,51,600 TOWARDS SHORT TERM CAPITAL GAINS ON SALE OF LAND BEING FP NO.9, SP NO.341/7, AT NIKOL. 3.1 THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE BANAKHAT RIGHTS IN RESPECT OF LAND BEING FP NO.9, SP NO.341/ 7, AT NIKOL, WERE NOT TRANSFERRED TO MAHASAGAR TRAVELS LTD . SO THAT THE SALE CONSIDERATION OF RS.43.44 LAKH ACCRUED TO THE ORIGINAL 8 CO - OWNERS, INCLUDING THE APPELLANT. THE ITA NO. 2140 / AHD / 201 3 A SSESSMENT Y EAR: 20 0 9 - 10 PAGE 2 OF 3 OBSERVATIONS MADE AND CONCLUSION REACHED BY CIT(A) FOR CONFIRMING THE STCG ARE NO T ADMITTED BY THE APPELLANT IN SO FAR AS THE SAME ARE CONTRARY TO THE FACTS ON RECORD AND PREJUDICIAL TO THE APPELLANT. THE LD . CIT(A) HAS ERRED IN HOLDING THAT THE TRANSACTION WITH MAHASAGAR TRAVELS LTD . WAS A CLEAR CUT CASE OF TAX EVASION. 3.2 THAT IN T HE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE ID. CIT(A) HAS GRIEVOUSLY ERRED IN UPHOLDING THAT THE BANAKHAT RIGHTS OF THE SAID LAND WERE NOT TRANSFERRED TO M/S . .VAISHNADEVI DEVELOPERS AND SALE CONSIDERATION OF RS.8,01,600 HAD ACCRUED TO TH E APPELLANT. 4. BRIEFLY STATED, THE RELEVANT MATERIAL FACTS ARE AS FOLLOWS. THE ASSESSEE BEFORE US IS AN INDIVIDUAL AND SHE DERIVES INCOME BY WAY OF SHARE OF PROFIT FROM THE FIRM S, NAMELY SUMAN DEVELOPERS AND SHUBH DEVELOPERS, AND CAPITAL GAINS ETC. DUR ING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE, ONE OF THE COWERS OF LAND SITUATED AT SURVEY NO.. 341/7 AT MAUJE NIKOL, AHMEDABAD, ADMEASURING 2,226 SQUARE METERS, HAD SOLD HER SHARE IN THE SAID PROPERTY. THE PROPERTY WAS SOLD FOR RS 53,44,000, VIDE SALE DEED DATED 18 TH AUGUST 2008, BUT OUT OF THIS CONSIDERATION OF RS 53,44,000, THE OWNERS RECEIVED ONLY RS 10,00,000 AND THE BALANCE RS 43,44,000 WAS PAID TO A CONFIRMING PARTY BY THE NAME OF MAHANAGAR TRAV ELS PVT LTD (MTPL, IN SHORT) . IT IS ALSO A COINCIDENCE THAT THE SALE CONSIDERATION OF THE LAND IS EXACTLY THE SAME AS ITS VALUATION BY STAMP DUTY REGISTRATION AUTHORITY. THE ASSESSEE S SHARE IN THE SALE CONSIDERATION OF RS 10,00,000 WORKED OUT TO RS 1,50, 000 , AND, AFTER DEDUCTING THE COST OF ACQUISITION AND OTHER EXPENSES, THE SHORT TERM CAPITAL GAINS WERE COMPUTED AT RS 18,009. THE ASSESSING OFFICER, HOWEVER, DID NOT ACCEPT THIS TRANSACTION AT FACE VALUE. WHEN HE PROBED THE THINGS A LITTLE FURTHER , HE FO UND THAT THE OWNERS OF THE LAND, INCLUDING THE ASSESSE, ENTERED INTO A BANAKHAT (I.E. AGREEMENT TO SELL) WITH MTPL ON 14 TH AUGUST 2008, I.E. JUST FOUR DAYS PRIOR TO THE DATE OF SALE AGREEMENT, FOR SALE OF LAND FOR RS 10,50,000 . UNDER THE SAID AGREEMENT, MT PL HAD THE RIGHT TO BUY HIMSELF, OR FOR HIS NOMINEE, THE LAND FOR RS 10,50,000. THE ASSESSING OFFICER REJECTED THIS ARRANGEMENT AS SHAM ARRANGEMENT, ONLY TO HOODWINK THE REVENUE AUTHORITIES, AND PROCEEDED TO BRING TO TAX CAPITAL GAINS IN THE HANDS OF THE A SSESSEE BY TREATING ENTIRE RS 53,44,000 AS CONSIDERATION FOR SALE IN THE HANDS OF SELLERS. ON THIS BASIS, AN ADDITION OF RS 6,69,609 WAS MADE IN THE HANDS OF THE ASSESSEE AS CAPITAL GAINS. AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A ) BUT WITHOUT ANY SUCCESS. NOT SATISFIED WITH THE ORDER OF THE CIT(A), THE ASSESSEE IS IN FURTHER APPEAL BEFORE THIS TRIBUNAL. 5. I HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE APPLICABLE LEGAL POSITION. 6. I FIND IT AGAINST THE PREPONDERANCE OF PROBABILITIES THAT WITHIN FOUR DAYS OF ASSESSEE ENTERING INTO AN AGREEMENT WITH MTPL, THE PRICE OF LAND, FOR WHATEVER REASONS, SHOT UP FROM 10.50 LAKHS TO 53.44 LAKHS. THE ASSESSEE BEFO RE US A BUSINESS LADY IN THE REAL ESTATE BUSINESS, AND NOT AN INNOCENT ASSESSEE WHO WOULD HAVE NO IDEA ABOUT WHAT IS GOING ON IN THE MARKET. IT IS DIFFICULT TO BELIEVE THIS KIND OF NAIVETY IN THE ASSESSEE. THE BANAKHAT IS NOT EVEN A REGISTERED DOCUMENT. I T WOULD INDEED SEEM TO US THAT IT IS A SHAM ARRANGEMENT. AS HAS BEEN OBSERVED BY HON BLE SUPREME COURT, IN THE LANDMARK CASE OF CIT VS. DURGA PRASAD MORE (1971) 82 ITR 540 (SC), IT IS TRUE THAT APPARENT MUST BE CONSIDERED REAL UNTIL IT IS SHOWN THAT THERE ARE REASONS TO BELIEVE THAT APPARENT IS NOT REAL ITA NO. 2140 / AHD / 201 3 A SSESSMENT Y EAR: 20 0 9 - 10 PAGE 3 OF 3 BUT THEN THE TAXING AUTHORITIES WERE NOT REQUIRED TO PUT ON BLINKERS WHILE LOOKING AT THE DOCUMENTS PRODUCED BEFORE THEM . THEIR LORDSHIPS HAVE FURTHER OBSERVED THAT, 'SCIENCE HAS NOT YET INVENTED ANY INST RUMENT TO TEST THE RELIABILITY OF THE EVIDENCE PLACED BEFORE A COURT OR A TRIBUNAL. THEREFORE, THE COURTS AND TRIBUNALS HAVE TO JUDGE THE EVIDENCE BEFORE THEM BY APPLYING THE TEST OF HUMAN PROBABILITIES.' EXAMINED IN THE LIGHT OF THIS GUIDANCE ALSO, I FIND THAT THE AUTHORITIES BELOW WERE QUITE JUSTIFIED IN CONCLUDING THIS ARRANGEMENT TO BE A SHAM ARRANGEMENT. THIS ARRANGEMENT DOES NOT, IN MY VIEW, REFLECT THE ACTUAL TRANSACTION IN ESSENCE. I, THEREFORE, CONFIRM THE STAND OF THE AUTHORITIES BELOW AND DECLIN E TO INTERFERE IN THE MATTER. 7. GROUND NO. 2 AND 3 ARE THUS DISMISSED. 8. GROUND NO. 4 WAS NOT PRESSED AND IS DISMISSED AS SUCH. 9. IN THE RESULT, THE APPEAL IS DISMISSED. PRONOUNCED IN THE OPEN COURT TODAY ON THE 28 TH D AY OF APRIL, 2017. SD/ - PRAMOD KUMAR (ACCOUNTANT MEMBER) DATED: 28 TH DAY OF APRIL , 2017 . COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) CIT (4) CIT(A) (5) DR (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD