Baburao Gangaram Jadhav, Nashik V. Income-tax Officer,

ITA 2208/PUN/2013

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1066 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 4 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-05-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 14-05-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 23-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B C MALAKAR
• Assessee Lawyers: N O N E
• Keywords: Capital asset; Capital receipt

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE: SHRI R.K. PANDA, ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER ITA NO. 2208 /PN/201 3 ASSESSMENT YEAR : 20 08 - 09 SHRI BABURAO GANGARAM JADHAV, 374, SHRI GANESH, GANGAPUR ROAD, JADHAV MALA, ANANDWALLI, NASHIK VS. INCOME TAX OFFICER, WARD 1(3), NASHIK (APPELLANT) (RESPONDENT) PAN NO. ADFPJ8246F ASSESSEE BY: N O N E REVENUE BY: SHRI B.C. MALAKAR DATE OF HEARING : 14-05-2015 DATE OF PRONOUNCEMENT : 22-05-2015 ORDER PER VIKAS AWASTHY, JM:- THE APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDE R OF COMMISSIONER OF INCOME TAX (APPEALS)-I, NASHIK DATED 08-11 -2013 FOR THE ASSESSMENT YEAR 2008-09. 2. THE ASSESSEE HAS FILED PRESENT APPEAL ON 23-12-2013 BY POST. THE NOTICE OF THE APPEAL WAS SENT TO THE ASSESSEE ON THE ADDRESS MENTIONED IN FORM NO. 36. DESPITE SERVICE OF NOTICE NONE APPEARED O N BEHALF OF THE ASSESSEE ON THE FIRST DATE OF HEARING I.E. 22-10-2014. THE REAFTER, FRESH NOTICE WAS ISSUED TO THE ASSESSEE THROUGH RPAD AND TH E APPEAL WAS ADJOURNED TO 16-02-2015. AGAIN ON THE SAID DATE NONE APPEARED ON BEHALF OF THE ASSESSEE AND THE APPEAL WAS ADJOURNED TO 14-05-2015. THE NOTICE WAS AGAIN ISSUED TO THE ASSESSEE THROUGH RPAD. TODAY, AGAIN NO 2 ONE HAS APPEARED ON BEHALF OF THE ASSESSEE. IN SPITE O F REPEATED NOTICES NEITHER THE ASSESSEE NOR HIS AUTHORIZED REPRESENTATIVE IS APPEARING BEFORE THE TRIBUNAL. THE APPEAL IS, THEREFORE, TAKEN UP FOR HEARING IN THE ABSENCE OF AUTHORIZED REPRESENTATIVE OF THE ASSESSEE. 3. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RECORD S ARE: THE ASSESSEE IS AN INDIVIDUAL AND IS IN THE BUSINESS OF RETAIL TRA DING. THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEA R 2008-09 ON 10-12-2008, DECLARING TOTAL INCOME OF RS.1,05,000/-. DURING THE COURSE OF SCRUTINY ASSESSMENT, IT TRANSPIRED THAT THE ASSESSEE HAD RECEIVED AN AMOUNT OF RS.20 LACS ON ACCOUNT OF SETTLEMENT OF DISPUTE B ETWEEN HIM AND HIS BROTHER SHRI BHIMRAO GANGARAM JADHAV, IN RESPECT OF LAND BEARING S. NO. 14/1A/2 AND 14/1A/5 AT ANANDVALLI, NASHIK. T HE ASSESSEE DID NOT PAY ANY ADVANCE TAX ON THE AFORESAID AMOUNT RECEIVED. EVEN THE AMOUNT WAS NOT DISCLOSED IN THE RETURN OF INCOM E. THE ASSESSING OFFICER HELD THAT THE ASSESSEE HAS RECEIVED THE AMOUNT FROM SALE OF ANCESTRAL LAND WHEREIN HE IS ONE OF THE COPARCENER . THE ASSESSEE HAS EARNED LONG TERM CAPITAL AND IS THUS, LIABLE FOR CAPITAL GAIN TAX. IN THE ABSENCE OF ANY DOCUMENTARY EVIDENCE WITH RESPECT T O SALE, THE ASSESSING OFFICER ADOPTED THE VALUE OF SALE CONSIDERATION, AS WAS TAKEN IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2007-08. I N THE PRECEDING ASSESSMENT YEAR THE ASSESSEE HAD SOLD ADJOINING LAND CO MPRISING IN S. NO. 14/1A/4. AFTER GRANTING THE BENEFIT OF INDEXATION, THE A SSESSING OFFICER COMPUTED LONG TERM CAPITAL GAIN OF RS.1,16,11,600/- IN THE IMPUGNED ASSESSMENT YEAR. AGGRIEVED BY THE ASSESSMENT ORDER DATED 20-03-2013, T HE ASSESSEE PREFERRED AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). THE COMMISSIONER OF INCOME TAX (APPEALS) AFTER ANALYZING TH E FACTS OF THE CASE HELD THAT THE ASSESSEE WAS NOT THE OWNER OF LAND. THE ASSESSEE 3 HAS RECEIVED RS.20 LACS TOWARDS SETTLEMENT OF DISPUTE FROM HIS BROTHER IN ACCORDANCE WITH THE JUDGMENT OF THE CIVIL COURT. THE CO MMISSIONER OF INCOME TAX (APPEALS) DELETED THE CAPITAL GAIN TAX COMPUTE D BY THE ASSESSING OFFICER AND DIRECTED THE AO TO TREAT THE AMOUN T OF RS.20 LACS UNDER THE HEAD, INCOME FROM OTHER SOURCES. STILL AGGRIEVED THE ASSESSEE HAS COME IN SECOND APPEAL IM PUGNING THE FINDINGS OF THE FIRST APPELLATE AUTHORITY. 4. IN APPEAL, THE ASSESSEE HAS RAISED FOLLOWING GROUNDS: 1) ON THE FACTS AND IN LAW THE LD. CIT(A) HAS ERRED IN MA KING ADDITION OF RS.20,00,000/- ON ACCOUNT OF AMOUNT RECEIVED FROM BR OTHER TOWARDS ASSESSEES RIGHTS IN THE PROPERTY BY TREATIN G THE SAME AS INCOME FROM OTHER SOURCES. 2) ON THE FACTS AND IN LAW THE LD. CIT(A) HAS ERRED IN NO T ALLOWING ANY DEDUCTION ON ACCOUNT OF INDEXED VALUE OF THE RIGHT I N THE PROPERTY AS ON 1/4/1981 AND OTHER RELATED EXPENDITURE AS CLAIMED BEFORE THE CIT(A) VIDE LETTER DATED 13/4/2013. 3) ON THE FACTS AND IN LAW THE LD. CIT(A) HAS ERRED IN NO T PASSING SPEAKING ORDER AFTER CONSIDERING VARIOUS CONTENTION S RAISED BY THE ASSESSEE INCLUDING THE CONTENTIONS RAISED VIDE LETTER DATED 23/4/2013, IN VIEW OF PROVISIONS OF 250(6) OF THE ACT. 4) ON THE FACTS AND IN LAW THE LD. CIT(A) HAS ERRED IN NO T APPRECIATING THE FACT THAT THE AMOUNT OF RS.20,00,000/- PAID BY ASS ESSEES BROTHER IS CAPITAL RECEIPT. 5. SHRI B.C. MALAKAR APPEARING ON BEHALF OF THE REVENUE HAS SUPPORTED THE FINDINGS OF COMMISSIONER OF INCOME TAX (APP EALS) AND PRAYED FOR DISMISSING THE APPEAL OF THE ASSESSEE. 6. WE HAVE HEARD THE SUBMISSIONS MADE BY THE DEPARTMEN TAL REPRESENTATIVE AND HAVE PERUSED THE ORDERS OF THE AUT HORITIES BELOW. THE COMMISSIONER OF INCOME TAX (APPEALS) WHILE REVERSING THE FINDINGS OF ASSESSING OFFICER HAS HELD AS UNDER: 4 6. ..SHRI BHIMRAO JADHAV VIDE LETTERS DATED 14/08/2013 SUBMITTED THAT HE HAS ALREADY PAID CAPITAL GAIN ON SALE OF THE ABOVE TWO PROPERTIES AT S.NO. 14/1A/5 AND S.NO. 14/1A/2 AT ANANDWALLI. HE ALSO FURNISHED COPIES OF I.T . RETURNS INCLUDING COMPUTATION OF INCOME FOR A.YS. 2008-09 AND 2 010-11 SHOWING CAPITAL GAINS AND PAYMENT OF TAX THEREON ON SALE OF LANDS AT S.NO.14/1A/2 AND 14/1 A/5. THE AO IN HIS REMAND REP ORT DATED 10/10/2013 HAS CONFIRMED THE FACT OF PAYMENT OF TAX BY SHRI BHIMRAO JADHAV AND HIS SON SANDEEP BHIMRAO JADHAV ON SALE OF LAND AT S.NO. 14/1 A/2. IN VIEW OF THE FACTS GIVEN ABO VE AO WAS NOT JUSTIFIED IN TREATING THE APPELLANT AS OWNER OF THE PROPERTIES AT S.NO. 14/1 A/2 AND 14/1 A/5 AND DETERMINING CAPITAL GAINS A ND TAXING HIM AT RS.1,16,11,600/-. I FIND THAT THE AO HAS NOT APPRE CIATED THE FACTS IN TOTALITY AND CONSIDERED THE CAPITAL GAINS IN THE HANDS OF THE APPELLANT WITHOUT ASCERTAINING FROM THE RECORD THAT T HE APPELLANT WAS NOT THE OWNER OF THE ABOVE LANDS. THE SAME IS TH EREFORE DELETED. 6.1 A PERUSAL OF THE RECORD REVEALS THAT THE APPELLANT HAD RECEIVED RS.20 LACS ON ACCOUNT OF SETTLEMENT OF DISPU TE BETWEEN HIM AND HIS BROTHER FOR THE ABOVE REFERRED LANDS AS PER THE ORDER OF THE ADDITIONAL CIVIL JUDGE DATED 06/10/2007. THE APPELLANT HAS MENTIONED EARLIER RECEIVING RS.20 LACS FROM HIS BROT HER ON ACCOUNT OF SETTLEMENT OF RIGHTS IN THE SAID PROPERTY IN PURSUAN CE OF THE COURT ORDER WHICH THE APPELLANT HAS NOT SHOWN AS HIS INCOM E IN THE RETURN OF INCOME. RS.20 LACS IS THEREFORE, TREATED AS APPELL ANT'S INCOME FROM OTHER SOURCES AS THIS AMOUNT HAS BEEN PAID BY SHRI BHIMRAO JADHAV TO THE APPELLANT TO BUY PEACE WITH HIM AND ALS O TO AVOID FURTHER LITIGATION. 7. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. 7. THE FINDING OF FACT GIVEN BY COMMISSIONER OF INCOME TAX (APPEALS) THAT THE BROTHER OF THE ASSESSEE SHRI BHIMRAO GANGARAM JADHAV, HAS PAID CAPITAL GAINS TAX ON THE SALE PROCEEDS OF LAND IN QUES TION HAS NOT BEEN DISPUTED BY THE DEPARTMENT. THE BROTHER OF THE A SSESSEE IN SUPPORT OF HIS CONTENTIONS HAS FURNISHED COPIES OF RETURN OF INCOME INCLUDING COMPUTATION OF INCOME FOR ASSESSMENT YEAR 2008-0 9 AND 2010-11, SHOWING CAPITAL GAINS AND PAYMENT OF TAX THEREON . ONCE THE LONG TERM CAPITAL GAINS HAS BEEN ASSESSED TO TAX IN THE HANDS OF BROTHER OF ASSESSEE, THE SAME AMOUNT CANNOT BE TAXED IN THE HA NDS OF THE ASSESSEE. 5 8. HOWEVER, WE DO NOT AGREE WITH THE FINDINGS OF THE COMM ISSIONER OF INCOME TAX (APPEALS) THAT THE AMOUNT OF RS.20 LAKHS RECEIV ED BY HIM ON SETTLEMENT OF HIS CLAIM HAS TO BE TAXED UNDER THE HAD INCOME FROM OTH ER SOURCES. THE BROTHER OF THE ASSESSEE HAS CLAIMED SOLE OWNERSHIP OF THE LAND IN DISPUTE ON THE BASIS OF WILL EXECUTED BY THEIR FATH ER. THE ASSESSEE HAS DISPUTED THE CLAIM OF HIS BROTHER. IN THE MEANWHILE, THE BROTHER OF THE ASSESSEE SOLD THE ALLEGED ANCESTRAL LAND. THE DISPUTE BETWEEN THE BROTHERS TRAVELLED TO THE COURT OF LD. ADDITIO NAL CIVIL JUDGE, JR. DIVISION, NASHIK. THE MATTER WAS COMPROMISED. THE ASSE SSEE RECEIVED RS.20 LACS IN LIEU OF RELINQUISHING HIS RIGHT OVER THE ANCESTRAL PROPERTY. THE CIVIL SUIT WAS DECIDED VIDE ORDER DATED 06-10-2007 . 9. WE OBSERVE THAT THE COMMISSIONER OF INCOME TAX (APP EALS) WHILE DECIDING THE APPEAL HAS NOT CONSIDERED THE JUDGMENT OF T HE CIVIL COURT DATED 06-10-2007. THE COMMISSIONER OF INCOME TAX (APPEA LS) HAS NOT ELUCIDATED THE FINDINGS OF CIVIL COURT WITH RESPECT TO RIGHTS OF THE ASSESSEE VIZ--VIZ THE LAND IN QUESTION. THE ASSESSEE HAS FURTHER CONTENDED THAT THE AMOUNT O F RS.20 LACS RECEIVED AS COMPENSATION IN LIEU OF RELINQUISHING HIS RIGHTS OV ER ANCESTRAL PROPERTY HAS BEEN RECEIVED BY THE ASSESSEE FORM ONE SHRI BHUPENDRA SHANTILAL SHAH VIDE DEMAND DRAFT DATED 09-10-2 007 TO WHOM THE LAND WAS SOLD BY THE BROTHER OF THE ASSESSEE. WHEREAS, IN THE REMAND REPORT IT HAS BEEN MENTIONED THAT LAND WAS SOLD BY THE BROTHER OF THE ASSESSEE TO SHRI JAIRAJ MANHARSINGH JHALA VIDE SA LE DEED DATED 23-12-2007 AND 29-09-2009. IT IS NOT CLEAR FROM THE FAC TS ON RECORD THAT IF LAND IS SOLD TO SHRI JAIRAJ MANHARSINGH JHALA, WHY THE AMO UNT OF COMPENSATION WAS PAID BY SHRI BHUPENDRA SHANTIAL SHAH. T HE COMMISSIONER OF INCOME TAX (APPEALS) IS SILENT ON THIS ASPE CT OF TRANSACTION. THE COMMISSIONER OF INCOME TAX (APPEALS) WHILE DECIDING 6 THE APPEAL HAS NOT CONSIDERED THESE VITAL FACTS TO DETER MINE THE NATURE OF PAYMENT RECEIVED BY ASSESSEE. 10. IT WOULD BE RELEVANT TO MENTION HERE THAT THE TERM TRANSFER AS DEFINED IN SECTION 2(47) INCLUDES, THE EXTINGUISHMENT OF ANY R IGHT IN THE CAPITAL ASSET. IN THE PRESENT CASE THE ASSESSEE HAS P URPORTEDLY RECEIVED COMPENSATION FOR RELINQUISHING HIS RIGHT OVER CAPITAL ASSET. ACCORDINGLY, THE AMOUNT OF COMPENSATION RECEIVED WOULD BE IN THE NAT URE OF CAPITAL RECEIPT. 11. WE ARE OF CONSIDERED VIEW THAT THE FILE NEEDS A REVISIT TO THE COMMISSIONER OF INCOME TAX (APPEALS) FOR EXAMINATION OF VITAL FACTS WHICH WERE NOT LOOKED INTO. THE COMMISSIONER OF INCOME T AX (APPEALS) AFTER ASCERTAINING THE FACTS, SHALL DECIDE THE NATURE OF CO MPENSATION RECEIVED BY THE ASSESSEE. THE FILE IS REMITTED BACK TO TH E COMMISSIONER OF INCOME TAX (APPEALS) TO DECIDE THE LIMITED ISSUE IN THE LI GHT OF ABOVE OBSERVATIONS. THE COMMISSIONER OF INCOME TAX (APPEALS SHALL DECIDE THE ISSUE AFTER AFFORDING OPPORTUNITY OF HEARING TO THE ASSESSE E, IN ACCORDANCE WITH LAW. 12. THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON THE 22 ND DAY OF MAY, 2015. SD/- SD/- (R.K. PANDA) (VIKAS AWASTHY) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 22 ND MAY, 2015 RK/SUJEET 7 COPY TO 1 ASSESSEE 2 DEPARTMENT 3 THE CIT(A) - I, NASHIK 4 THE CIT - I , NASHIK 5 6 THE DR, ITAT, B BENCH, PUNE. GUARD FILE. BY ORDER //TRUE COPY// ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, PUNE