Shri Chirag Navnitbhai Patel, Ahmedabad V. ITO, Ward-5(2)(1), Ahmedabad

ITA 2166/AHD/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 0764 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-03-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2015-2016
• Appeal Filed On: 23-10-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S K DEV
• Keywords: Cost of acquisition
• Section: 143(3); 5(2)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL, A BENCH, AHMEDABAD BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND MS MADHUMITA ROY, JUDICIAL MEMBER ./ ITA NO. 2166/AHD/2018 & / ASSTT. YEAR: 2015 - 201 6 SHRI CHIRAG NAVNITBHAI PATEL, A - 1/1 MADHAV APARTMENT, OPP. MUNCIPAL GARDEN, VASNA , AHMEDABAD . PA N: AMQPP0571K VS . INCOME TAX OFFICER, WARD - 5( 2 )(1) , AHMEDABAD. (APPLICANT) (RESPONENT) ASSESSEE BY : SHRI PARIN SHAH , A.R REVENUE BY : SHRI S.K. DEV , SR. D . R / DATE OF HEARING : 01 / 02 / 201 9 / DATE OF PRONOUNCEMENT: 26 / 03 /201 9 / O R D E R PER MS MADHUMITA ROY, JUDICIAL MEMBER : THE INSTANT APPEAL HAS BEEN PREFERRED BY THE ASSESSEE IS AGAINST THE ORDER PASSED BY THE LEARNED COMMI SSIONER OF INCOME TAX( APPEALS) - 5, AHMEDABAD DATED 17.08 . 2018 ARISING OUT O F ORDER DATED 27.12.2017 ISSUED BY THE ITO, WARD - 5(2) (1) AHMEDABAD UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 ( HEREIN AFTER REFERRED TO AS THE ACT ) FOR THE ASSESSMENT YEAR 2015 - 16 . ITA NO. 2166/AHD/2018 A.Y. 2015 - 2016 2 2. THE ASSESSEE BEING AN INDIVIDUAL FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2015 - 16 O N 02.09.2015 DECLARING TOTAL INCOME OF RS.4,63,4 50/ - . UPON SCR UTINY NOTICE U/S.143(2) OF THE A CT DAT E D 28.07.2016 FOLLOWED BY A FURTHER NOTICE U/S.142(1) DATED 31.08.2016 ALONG WITH THE QUESTIONNAIRE WAS ISSUED TO THE ASSESSEE. DURING THE COURSE OF ASSESSM ENT PROCEEDING IT WAS FOUND THAT THE ASSESSEE ALONG WITH OTHER 4 PERSONS PURCHASED A LAND FOR AN AMOUNT OF RS.1 , 85 , 00,000/ - AND STAMP DUTY OF RS.9 , 00 , 700/ - WAS ALSO PAID THEREON . THE SHARE OF THE ASSESSEE FOR SUCH TRANSACTION WAS OF RS.48 , 50 , 175 / - . THE SOURCE OF SUCH INVESTMENT WAS CLAIMED TO HAVE BEEN RECEIVED ON CANCELLATION OF BANAKHAT (AGREEMENT) ENTERED INTO BY AND BETWEEN THE ASSESSEE AND HIS BROTHER SHRI AMIT N.PATEL IN RESPECT TO LAND SITUATED AT SURVEY NO.233/1 VILLAGE GOTA, AHMEDABAD ON 27.08.2010. THE ASSESSEE ALSO CLAIMED DEDUCTION U/S.54 OF THE ACT . A SHOW CAUSE NOTICE DATED 18.08.2017 WAS ISSUED TO THE ASSESSEE TO EXPLAIN AS TO WHY THE AMOUNT OF RS.50 LACS CLAIM TO HAVE BEEN RECEIVED BY THE ASSESSEE ON CANCELLATION OF BANAKHAT SHOU LD NOT BE TREATED AS INCOME FROM OTHER SOURCES AND AS TO WHY THE CLAIM OF INDEX ED COST OF ACQUISITION AND DEDUCTION U/S.54 SHOULD NOT BE DISALLOWED 3. THE EXPLANATION RENDERED BY THE ASSESSEE WAS NOT FOUND ACCEPTABLE BY THE LD.AO AND HE THEREFORE ADDED THE AMOUNT OF RS.50 LACS TO THE INCOME OF THE ASSESSEE WHICH WAS IN TURN CONFIRMED BY THE LD.CIT(A). HENCE THE INSTANT APPEAL BEFORE US. 4. THE ASSESSEE ALONG WITH HIS BROTHER SHRI AMIT N. PATEL ENTERED INTO AN AGREEMENT WITH ONE SHRI RAMESHBHAI AMBALAL SHAH THROUGH A NOTARIZED DEED DATED 27.08.2010 FOR PURCHASE OF AN AGRICULTURE LAND AMOUNTING TO RS.5,50,000/ - . B OTH THE BROTHERS INDIVIDUALLY PAID THEIR SHARES TO THE TUNE OF RS.2,45,000/ - TO THE SAID SHRI RAMESHBHAI AMABALAL SHAH. SUBSEQUENTLY SUCH ITA NO. 2166/AHD/2018 A.Y. 2015 - 2016 3 AGREE MENT WAS CANCELLED ON 06.05.2014 AND THE ASSE SSEE RECEIVED RS.50 LACS FROM THE SAID RAMESHBHAI FOR SUCH CANCELLATION OF AGREEMENT AS CLAIMED BY THE ASSESSEE BEFORE THE LD.AO. A FURTHER FACT UPON PERUSAL OF THE NOTORIZED DEED DATED 2 7.08.2010 WAS FOUND BY THE LD.AO THAT THE SAID SHRI RAMESHBHAI AMABALAL SHAH HAS ALREADY ENTERED INT O AN AGREEMENT ON 16.11.2009 WITH THE ORIGINAL OWNER OF THE SAID PROPERTY NAMELY BABUBEN CHUTHAJI FOR PURCHASE OF THE SAME PROPERTY IN QUESTION . IT FURTHER APPEARS FR OM THE SAID DEED THAT THE ASSESSEE WAS GIVEN ASSURANCE T HAT IN THE EVENT THE PROPERTY WOULD NOT BE HANDED OVER BY THE ORIGINAL OWNER TO THE ASSESSEE THE SAID SHRI RAMESHBHAI AMBALAL SHAH WOULD DELIVERED OWNERSHIP THROUGH COURT PROCEEDINGS. 5. THE LD.AO OBSERVED THAT NO SUCH PA YMENT OF RS.50 LACS WAS MADE BY THE ASSESSEE BY SAID SHRI RAMESHBHAI AMBALAL SHAH, RATHER SAME WAS PAID BY ONE VYAPTI BUILD ICON. THE STATEMENT OF SHRI RAMESHBHAI AM BALAL SHAH SO RECORDED BY THE LD.AO FURTHER REVEALS THAT THE SAID SH RI RAMES HBHAI AMBALAL SHAH WAS THE FATHER IN LAW OF THE ASSESSEE. IT WAS FURTHER STATED THAT NEITHER THE SAID SHRI RAMESHBHAI AMBALAL SHAH KNEW THE OWNER OF THE LAND NOR HE CARRIED OUT ANY AGREEMENT WITH THE ASSESSEE. 5.1 IT WAS THE CASE OF THE ASSESSE E BEFORE TH E LD.AO THAT SINCE THE ASSESSEE PAID 89% OF THE TOTAL CONSIDERATION FOR PURCHASE OF SAID AGREEMENT TO SHRI RAMESHBHAI AMBALAL SHAH FO R ALL PRACTICAL PURPOSES HE BECA ME THE OWNER OF THE LAND. IT WAS FURTHER CONTENTED THAT T HE PRICE OF THE PROPER TY INCREASED 20 TIMES WITHIN THE PERIOD OF 3.5 YEARS; INITIALLY THE ASSESSEE PAID RS.2 , 45 , 000/ - FOR ENTERING INTO AGREEMENT WITH THE SAID SHRI RAMESHBHAI AMBALAL SHAH BUT ULTIMATELY RECEIVED RS. 50 LACS AFTER 3.5 YEARS UPON CANCELLATION OF SUCH BANAKHAT ( AGREEMEN T) RIGHT. ACCORDI NG TO THE ASSESSEE IT WAS A DEAL OF IMMOVABLE PROPERTY AND THEREFORE IT CAN ONLY BE TAXED UNDER THE HEAD ITA NO. 2166/AHD/2018 A.Y. 2015 - 2016 4 CAPITAL GAIN HAVING BEEN TRANSFERRED U/S.2(47)(V) OF THE ACT AND NOT UNDER THE HEAD INCOME FROM OTHER SOURCES . U LTIMATELY THE SAID AMOUNT OF RS.50 LACS WAS RECEIVED BY THE ASSESSEE BY WAY OF A SETTLEMENT ARISING OUT OF A COURT PROCEEDINGS. THE LD.AO UPON CONSIDERING THE ENTIRE ASPECT OF THE MATTER RECORDED HIS OBSERVATION THAT SUCH PAYMENT OF RS.50 LACS NOT FOR THE TRANSFER OF T HE PROPERTY NEITHER IT IS A SALE CONSIDERATION OF THE SAID PROPERTY. IT IS RELEVANT TO MENTION THAT IT APPEARS FROM THE STATEMENT GIVEN BY ONE SMT. TRUPTI YOGESH BHAVAS PARTNER OF VYAPTI BUILDCON THAT THE SAID VYAPTI BUILDCON HAS P URCHASED SAID LAND FROM THE ORIGINAL LAND OWNER NAMELY BABUBEN CHITABHAI AND STARTED CONSTRUCTION THEREON. AT THAT MATERIAL POINT OF TIME THE SAID RAMESHBHAI A MBALAL SHAH FILED A CIVIL SUIT BEFORE THE CIVIL COURT AND TH E ENTIRE MATTER WAS SETTLED OUT OF T HE COURT; PAYMENT TO THE TUNE OF RS.50 LACS WHEREOF WAS THUS GIVEN TO THE ASSESSEE. 6. THE LD.AO ULTIMATELY CAME TO THE FINDING THAT NOT THE SAID SHRI RAMESHBHAI AMBALAL SHAH BUT BABUBEN CHUTHAJI WAS THE ACTUAL O W NER OF THE LAND. T HE PAYMENT UPON CANC ELLATION OF THE AGREEMENT WAS MADE BY VYAPTI BUILDICON AND NOT BY RAMESHBHAI UPON THE ASSESSEE AND HIS BROTHER. N O AGREEMENT , WHATSOEVER, WAS EXECUTED BY AND BETWEEN THE SAID BUILDER AND THE ASSESSEE BEFORE US. THUS THE ASSESSEE DID NOT ACQUIRE ANY VESTED RIGHT OVER THE PROPERTY IN QUESTION. THE AMOUNT OF RS.50 LACS W A S FINALLY NOT ACCEPTED AS CA PITAL GAIN NEITHER COMING UNDER THE PROVISION OF S.54B OF THE ACT. THE SAME WAS TREATED AS BOGUS AND INCOME FROM OTH ER SOURCES WHILE ADDING THE SAME TO THE INCOME OF THE ASSESSEE. 7. THE LD.CIT (A) IN APPEAL AFF IRMED THE ORDER PASSED BY THE LD.AO BY OBSERVING AS FOLLOWS: ITA NO. 2166/AHD/2018 A.Y. 2015 - 2016 5 3.4. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE APPELLANT HAS CONTENDED THAT RAMESHBHAI AMBALAL SHAH PAID AMOUNT IN SIX INSTALLMENTS STARTING FROM 8 TH APRIL, 2000 AND ENDING ON 8 TH APRIL, 2009 AMOUNTING TO RS.2,25,000/ - AS BANAKHAT MONEY TO LAND OWNERS. AS PER BANAKHAT THE ASSESSEE WAS HANDED OVER THE POSSESSION OF LAND ON 8.4.2009. IT IS CON TENDED THAT THE SAID BANAKHAT DTD. 29.07.2009 WAS REGISTERED ON 16.11.2009. IT IS FURTHER CONTENDED THAT NOTARIZED SALE AGREEMENT WITH POSSESSION DTD. 8.4.2009 SIGNED ALL LAND LORDS, AGRICULTURISTS AND FURTHER ON 8.4.2009 THE POWER OF ATTORNEY WAS GIVEN BY ALL LAND LORDS TO SHRI RAMESHBHAI AMBALAL SHAH. IT IS CONTENDED THAT THE SAID LAND WAS SOLD ON 4.9.2009 FOR A TOTAL SALE CONSIDERATION OF RS.3,55,00,0007 - TO TRIUPTIBEN YOGESHBHAI BHAVSAR AND KAPILBHAI H. CHIKANIWALA. IT IS CONTENDED THAT WHEN RAMESBHIA C AME TO KNOW THE FACT OF SALE OF LAND HE FILED SPECIAL SUIT ON 1.1.2010. IT IS FURTHER CONTENDED THAT RAMESHBHAI WAS TIRED AND FELT DIFFICULT TO HANDLED THE COMPLEX SITUATION HE ENTERED INTO A BANAKHAT AND GIVEN UP HIS RIGHTS IN LAND TO CHIRAG N. PATE L WITH AMIT N. PATEL ON 27.8.2010. IT IS ALSO CONTENDED THAT THE ASSESSEE HANDLED WHOLE MATTER AND SUIT CAME TO AN END AND SETTLEMENT WAS MADE BY PARTIES ON 19.04.2014. MOREOVER BANAKHAT CANCELLATION DEED DTD. 19.4.2014 WAS ENTERED INTO AND ASESSEE HAS REC EIVED RS.50 LAKSH FORM VYAPTI BUILDCON. SINCE HE WAS HOLDING ALL RIGHTS IN LAND. IT IS THE CONTENTION OF THE APPELLANT THAT ASSESSEE HAS POSSESSION OF LAND BY ENTERING INTO BANAKHAT AGREEMENT AND HAS RECEIVED;AMOUNT ON ACCOUNT OF HIS RIGHTS IN LAND AND THE REFORE IT CANNOT BE TAXED AS INCOME FROM OTHER SOURCES. IT IS FURTHER CONTENDED THAT CONDITIONS OF SECTION 2(47) R.W.S. 53A OF TRANSFER OF PROPERTY ACT ARE SATISFIED. 3.5. FACTS OF THE CASE AND THE SUBMISSION ARE CONSIDERED. THE AO HAS REJECTED THE APPELLANT'S CONTENTION OF LONG TERM CAPITAL GAIN OF RS.50 LAKHS ON THE GROUND THAT NO RIGHT WAS VESTED IN THE HANDS OF THE ASSESSEE IN THE AFORESAID LAND. THE LAND WAS ORIGINALLY OWNED BY AGRICULTURIST WHICH WAS SOLD TO TRUPTIBEN Y. BHAVSAR AND KAPILBHAI H . CHIKANIWALA BY SALE DEED DTD. 4.9.2009. IN THIS SALE DEED, THERE WAS NO MENTION OF SHRI RAMESHBHAI A. SHAH WITH WHOM IT IS CONTENDED BY THE ASSESSEE THAT A BANAKHAT WAS ENTERED INTO AND THE RIGHTS IN THE LAND WAS TRANSFERRED BY THIS BANAKHAT. THE AO HAS TAKEN THE GROUND THAT RAMESHBAHI A. SHAH IS NOT A REAL OWNER OF THE PROPERTY AS CLEAR FROM THE VARIOUS DEEDS AND BANAKHATS SUBMITTED BY THE ASSESSEE AND WHEN SHRI RAMESH A. SHAH IS NOT THE REAL OWNER OF THE PROPERTY THEN HOW THE RIGHTS IN THE PROPERTY CAN BE TRANSFERRED BY HIM TO THE ASSESSEE. THE SAID LAND WAS SOLD ON 4.9.2009 HOWEVER FROM THE PERUSAL OF THE DOCUMENTS SUBMITTED BY THE APPELLANT IT IS NOTICED THAT A BANAKHAT WAS ENTERED INTO BY SHRI RAMESH AMBALAL SHAH WITH THE LAND OWNERS WHICH WAS REGISTE RED ON 16.11.2009. WHEN THE LAND HAS ALREADY BEEN SOLD ON 4.9.2009, THE SANCTITY OF BANAKHANT REGISTERED ON 16.11.2009 FOUND TO BE SUSPICIOUS. AS PER THE CONTENTION OF THE APPELLANT RAMESHBHAI AMBALAL SHAH ENTERED INTO BANAKHAT AND GIVEN UP HIS RIGHTS IN T HE LAND INCLUDING POSSESSION TO THE ASSESSEE AND HIS BROTHER 8. AT THE TIME OF HE ARING OF INSTANT APPLICATION LD.ADVOCATE APPEARING FOR THE ASSESSEE VEHEMENTLY ARGUED IN SUPPORT OF HIS CASE. IT WAS CONTENDED BY HIM THAT THE ASSESSEE ENTERED INTO AN AGR EEMENT WITH THE SAID SHRI RAMESHBHAI AMBALAL SHAH ON 29.07.2009 SUBSEQUENTLY REGISTERED ON 16.11.2009 . W HEN THE ITA NO. 2166/AHD/2018 A.Y. 2015 - 2016 6 FACT OF SUBSEQUENT SALE OF SAID PROPERTY TO ONE SMT. TR UPTI YOGESH BHAVSAR FOR CONSIDERATION OF RS.3.55 CR. ON 04.09.2009 CAME TO THE KNOWLEDGE OF SAID SHRI RAMESHBHAI AMBALAL SHAH, HE FILED A CIVIL S UIT ON 01.01.2010 AND ULTIMATELY THE DISPUTE WAS SETTLED ON 19.04.2014 BY WAY OF CANCELLATION DEED WHEREUPON THE ASSESSEE RECEIVED RS.50LACS FROM THE THE N OWNER VYAPTI BUILDCON AND THEREFORE IT WAS A RGUED THAT THE SAME CANNOT BE TAXED AS INCOME FROM OTHER SOURCES . C ONDITION OF SECTION 2 ( 47 ) R.W.S 53A OF THE T RANSFER OF PROPERTY ACT HAVE BEEN DULY SATISFIED AS ALSO SUBMITTED BY THE LD.AR . 9. ON THE OTHER HAND LD.DR, RELIED UPON THE ORDER PASSED BY THE AUTHORITIES BELOW. 10. WE HAVE HEARD THE RESPECTIVE PARTIES AND PERUSED THE RELEVANT MATERIAL S AVAILABLE ON RECORD INCLUDING THE DEED AND THE ORIGINAL DEGREE PA SSED BY THE HON BLE AHMEDABAD (R URAL) 5 TH SENI OR CIVIL JUDGE AT MIRZAPUR IN SPECIAL CIVIL SUIT N O. 3/2010 DATED 19.12.2014. THE CANCELLATION DEED BETWEEN THE SAID SHRI RAMESHBHAI AMBALAL SHAH AND THE ASSESSEE ALONG WITH HIS BROTHER DATED 06.05.2014 IS ALSO ON RECORD BEFORE US . IT ALSO APPEARS THAT CANCELLATION DEED BETWEEN SHR I RAMESHBHAI AMBALAL SHAH AND THE ASSESSEE ALONG WITH HIS BROTHER WAS EXECUTED ON 06.05.2014. WE F AILED TO UNDERSTAND WHEN THE DEC REE WAS PASSED BY THE CIVIL COURT IN MONTH OF DECEMBER HOW CANCELLATION COULD TOOK PLACE I N THE MONTH OF M AY AND SUBSEQUENTLY SUCH CANCELLATION HAS BEEN CLAIMED TO HAVE BEEN EXECUTED ON THE BASIS OF DEC REE PASSED ON A SUBSEQUENT DATE AS IT APPEARS FROM PAGE 399 OF THE PAPER BOOK BEFORE US. 10.1 FURTHER THAT WE F IND NO SUCH RECORDING IN THE DEC REE RELATING TO PAYMENT OF RS.50 LACS TO THE ASSESSEE EITHER BY SHRI RAMESHBHAI AMBALAL SHAH OR BY BABUBEN CHUTHAJI . T HEREFORE CONTENTION OF RECEIVING SAID AMOUNT OF RS.50 LACS ITA NO. 2166/AHD/2018 A.Y. 2015 - 2016 7 ON THE BASIS OF DEGREE PASSED BY T HE CIVIL COURT APPEARS TO BE NOT GENUINE. EVEN ASSUMING THE SAID WAS PAID TO THE ASSESSEE, FACTUALLY THE SAME WAS PAID BY THE BUILDER AND NOT BY THE SAID SHRI RAMESHBHAI AMBALAL SHAH WITH WHOM THE ASSESSEE CLAIM ED TO HAVE ENTERED INTO AN AGREEMENT TO PURCHASE PROPERTY IN QUESTION BY WAY OF NOTARIZED DEED EXECUTED IN THE YEAR 2009. IT IS EVIDENT FROM THE RECORD S THAT THE SAID SHRI RAMESHBHAI AMBALAL SHAH WAS NOT THE ACTUAL OWN ER OF THE SAID PROP ERTY IN QUESTION RATHER THE BABUBEN CHUTHAJI WAS THE OWNER THEREOF . I F THAT BE , SO THE N THE PERSON WHO DOES NOT HAVE ANY RIGHT , TITLE , INTER EST OVER A PROPERTY CANNOT TRANSFER SUCH RIGHTS TO THE THIRD PARTY. IN THAT VIEW OF THE MATTER THE AGREEMENT TO SALE THE PROPERTY EXECUTED BY AND BETWEEN THE SAID SHRI RAMESHBHAI AMBALAL SHAH AS THE VENDOR AND THE ASSESSEE AS CO - PURCHASER IS VOID AB INIT IO . T HERE IS NO AGREEMENT IN THE EYE OF LAW . W HEN THERE IS NO AGREEMENT IN THE EYE OF LAW THE QUESTION OF CLAIMING THE SAME AS COMPLETE TRANSFER U/S.2(47)(V) OF THE ACT DOES NOT AND CANNOT ARISE AT ALL. THE AMOUNT OF RS.50 LACS IS FINALLY, THEREFORE, CANNO T AT ALL BE CONSIDERED AS CAPITAL GAIN . D EDUCTION U/S.54 OF THE ACT IS , THUS , RIGHTLY DISALLOWED BY THE AUTHORITIES BELOW. 10.2 IN THAT VIEW OF THE MATTER, WE FIND NO INFIRMITY IN THE ORDER PASSED BY THE AUTHORITIES BELOW SO AS TO WARRANT INTERFERE NCE . HENCE THE APPEAL IS DISMISSED. 11 . IN THE RESULT A PPEAL OF THE ASSESSEE IS DISMISSED . ORDER PRONOUNCED IN THE COURT ON 26 /03/ /2019 AT AHMEDABAD. - SD - - SD - ( WASEEM AHMED ) ACCOUNTANT MEMBER ( MS MADHUMITA ROY ) JUDICIAL MEMBER (TRUE COPY) AHMEDABAD; DATED 26 / 03 /201 9 MANISH ITA NO. 2166/AHD/2018 A.Y. 2015 - 2016 8 / 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