V.K. Easwaran, Coimbatore V. ITO, CHENNAI

ITA 2265/CHNY/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6182 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 1 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 27-06-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 01-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P RADHAKRISHNAN
• Assessee Lawyers: A ARJUN RAJ
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Additional evidence
• Section: 143(3); 50C; 142(1); 144

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI ... , , $ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ I.T.A. NO. 2265/MDS/2016 / ASSESSMENT YEARS : 2006-07 SHRI V.K. ESWARAN, 28/11, PERIYATHOTTAM, VEERAKERALAM, COIMBATORE 641 007. [PAN: AADPE 5280H] VS. THE INCOME TAX OFFICER, BUSINESS WARD VI (2), CHENNAI 34. ( / APPELLANT) ( / RESPONDENT) &' / APPELLANT BY : SHRI. A. ARJUNRAJ, CA *+&' / RESPONDENT BY : SHRI. P. RADHAKRISHNAN, JCIT ' /DATE OF HEARING : 27.06.2017 ' /DATE OF PRONOUNCEMENT : 19.09.2017 /O R D E R PER S. JAYARAMAN, ACCOUNTANT MEMBER: THE ASSESSEE FILED THIS APPEAL AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-10, CHENNAI IN ITA NO. 97/2014- 15/CIT(A)-10, DATED 16.06.2016. :-2-: I.T.A. N0. 2265/MDS/2016 2. SHRI V.K. ESWARAN, THE ASSESSEE, AN INDIVIDUAL, RUNNING A PETROL BUNK FILED HIS RETURN FOR ASSESSMENT YEAR 2006-07 0N 31. 10.2006 ADMITTING AN INCOME OF RS. 1,13,430/- FROM BUSINESS AND AN AGRI CULTURAL INCOME OF RS.30 LAKHS. THE AO BEGAN THE SCRUTINY ASSESSMENT BY SER VING THE NOTICE BY AFFIXURE ON 31.10.2007. IN THE ASSESSMENT ORDER P ASSED U/S. 144 ON 31.12.2008, THE AO LEVIED TAX ON CAPITAL GAINS, O N THE SALE OF LAND WHICH WAS NOT INCLUDED IN THE RETURN, AT RS. 1,03,25,100 /- AND DETERMINED THE TOTAL INCOME AT RS. 1,04,38,530/-. THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) IN WHICH, INTER ALIA, HAD TAKEN A GROUND THAT THE OFFICER ERRED IN TAKING THE CAPITAL GAINS BELONG TO HUF AS THAT OF THE ASSESSE . THE CIT(A)-IX, CHENNAI DISMISSED THE APPEAL IN HIS ORDER DATED 27.03.2012 FOR NON-PROSECUTION. ON FURTHER APPEAL, THIS TRIBUNAL IN ITS ORDER IN ITA N O. 1184/MDS/2012 DATED 15.11.2012 REMITTED THE CASE BACK TO THE OFFICER WI TH THE FOLLOWING OBSERVATIONS: IN THIS VIEW OF THE MATTER, WE DEEM IT APPROPRIATE THAT THE ISSUE IN HAND BE RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER, WHO WILL DECIDE IT AFRESH IN ACCORDANCE WITH LAW ON MERITS AFTER AFFOR DING ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE, WHO WILL BE AT LIBERTY TO LEAD FURTHER EVIDENCE ALSO, IF ANY, IN SUPPORT OF THE CLAIM RAIS ED. 3. SUBSEQUENTLY, THE ITO, BUSINESS WARD- VI(2), CHE NNAI PASSED AN ORDER U/S. 143(3) R.W.S. 254 DETERMINING THE TOTAL INCOME AT RS. 4,38,80,049/-. WHILE DOING SO, HE ADOPTED THE SALE CONSIDERATION S HOWN IN THE SALE DEED U/S. 50C FOR THE FIRST TIME WHILE IN THE ORIGINAL ASSESS MENT ORDER MADE U/S. 144 :-3-: I.T.A. N0. 2265/MDS/2016 DATED 31.12.2008, THE AO HAS ADOPTED THE SALE VALU E SHOWN IN THE DOCUMENTS AS THE SALE CONSIDERATION. THUS, IN THE CONSEQUENTIAL ORDER THERE WAS AN ENHANCEMENT OF TAX LIABILITY. AGGRIEVED, AP ART FROM OTHER ISSUES, ON THE ISSUE U/S 50C , WHICH WAS NEITHER BEFORE THE C IT(A) NOR BEFORE THE ITAT IN THE FIRST ROUND OF APPEAL, THE ASSESSEE FILED A N APPEAL BEFORE THE CIT(A) . THE CIT(A) -10, CHENNAI UPHELD THE ASSESSMENT IN T O-TO. AGGRIEVED AGAINST THE CIT(A) ORDER, THE ASSESSEE FILED THIS APPEAL CH ALLENGING, INTER ALIA, THE LEGALITY OF THE ORIGINAL ASSESSMENT IE THAT THERE W AS NO PROPER SERVICE NOTICES U/SS. 143(2)& 142 (1), THE CIT(A) IS NOT CORRECT IN UPHOLDING THE CAPITAL GAINS ON SALE OF AGRICULTURAL LAND BELONGING TO HUF IN TH E HANDS OF INDIVIDUAL ASSESSMENT, THE CIT(A) IS ALSO NOT CORRECT IN UPHOL DING THE DEEMED SALE CONSIDERATION U/S 50C IN THE REMAND ORDER WHEREAS T HERE WAS NO COMPUTATION OF INCOME U/S. 50C IN THE ORIGINAL ORDER AND THE IS SUE OF 50C WAS NOT BEFORE THE APPELLATE AUTHORITIES IN THE FIRST ROUND. WITH OUT PREJUDICE TO THE ABOVE, IT IS ALSO SUBMITTED THAT THE CIT(A) ; ERRED IN UPHOLD ING THE DEEMED SALE CONSIDERATION U/S. 50C WITHOUT REFERRING TO THE VAL UATION OF THE CAPITAL ASSET TO THE DISTRICT VALUATION OFFICER , ERRED IN UPHOLDING THE ASSESSMENT WITHOUT TAKING THE CORRECT COST VALUE AS ON 01.04.81, CORRE CT COST OF IMPROVEMENT AND EXEMPTION ON FURTHER INVESTMENTS IN AGRICULTURAL LA NDS AND HOUSE PROPERTY ETC. :-4-: I.T.A. N0. 2265/MDS/2016 4. THE ASSESSEE ALSO FILED A PETITION FOR ADMISSION S OF ADDITIONAL EVIDENCE UNDER RULE 29 OF THE APPELLANT TRIBUNAL RULES, 1963 SUBMITTING AS UNDER: 1. THE ASSESSING OFFICER HAS TAKEN THE COST OF TH E PURCHASE IN 1971 AS THE VALUE AS ON 01.08.01981 IN THE COMPUTAT ION OF LONG TERM CAPITAL GAINS, IN THE EXPARTE ASSESSMENT MADE ON 31 .12.2008. ON THE REMAND BY THE HONOURABLE ITAT, AGAIN THE A O HAS PASSED ON 25.03.2014 ONLY EXPARTE ORDER. SO THE AS SESSEE COULD NOT PLACE BEFORE THE AO, THE DOCUMENT COPY TO CLAIM THE VALUE AS ON 01.04.1981. AT THE TIME OF HEARING BEFORE CIT(A) ON 23.05.201 6, THE ASSESSEE HAD SUBMITTED THE SALE DEED COPY DTD 30.03 .1981, DOCUMENT NO. 1572/81 BUT THE CIT(A) HAD OMITTED TO TAKE COGNIZAN CE OF THE SAME IN THE APPELLATE ORDER. 2. IN THE CIRCUMSTANCES NOW THE APPELLANT PLACES T HE SAME REGISTERED DOCUMENT AS ADDITIONAL EVIDENCE BEFORE T HE HONOURABLE BENCH WHICH ARE ENCLOSED IN THE PAPER BOOK PAGES 175-185. 3. THERE IS NO WILFUL DEFAULT OR ANY CONTUMACIOUS DISREGARD OF ANY OBLIGATION CAST ON THE APPELLANTS. 4. THE ABOVE EVIDENCE WILL HELP THE HONOURABLE BEN CH IN ARRIVING THE CORRECT VALUE AS ON 01.04.1981. 5. WE HEARD THE RIVAL CONTENTIONS AND ACCEPT THE AD DITIONAL EVIDENCE FOR THE MERITS STATED IN THE PETITION. THE AR PLEADED THAT NO PROPER SERVICE OF NOTICE U/S. 143(2) WAS MADE AT THE TIME OF ORIGINAL ASSESSMENT, NOTICES U/S. 142(1) DATED 11.09.2008 AND 20.04.2008 WERE TIME BA RRED. THE CIT(A) IS NOT CORRECT IN UPHOLDING THE CAPITAL GAINS ON SALE OF A GRICULTURAL LAND BELONGING TO HUF IN THE HANDS OF THE INDIVIDUAL ASSESSMENT, THE IMPUGNED LANDSWERE PURCHASED IN THE NAME OF THE ASSESSEE AND HIS BROT HER BY HIS FATHER WHEN THEY WERE STUDENTS, FATHER SETTLED AGRICULTURAL LAN D IN THE BENEFIT OF THE FAMILY :-5-: I.T.A. N0. 2265/MDS/2016 WHICH ARE HUF PROPERTIES ONLY. HE EXCHANGED HUF PRO PERTIES WITH HIS BROTHER WHICH SHALL ALSO BE HUF PROPERTIES ONLY. BY RELYING ON CASE LAWS, IT IS SUBMITTED THAT INDIVIDUAL PROPERTIES, BY OWN VOLITI ON AND INTENTION, COULD ALSO BECOME HUF PROPERTIES. THE ASSESSEES FAMILY I.E., HIMSELF, WIFE, SONS K.E. GNANAVEL RAJA& K.E. SRIDHAR AND DAUGHTER P. SHANTHI NI WERE BROUGHT UP, EDUCATED, GOT MARRIED THROUGH THE INCOME FROM THESE PROPERTIES AND DAY TO DAY FAMILY EXPENSES WERE ALSO MADE FROM THE AGRICUL TURAL INCOME. THE PROPERTIES WERE DISPOSED TO MEET THE NECESSITY FOR FUNDS, INTER ALIA, TOWARDS FAMILY EXPENSES, TO DISCHARGE THE UNDIVIDED HALF SH ARE, FAMILY DEBTS ETC., CASES WERE FILED BEFORE THE FOURTH ADDITIONAL DISTR ICT COURT COIMBATORE BY HIS SONS AND DAUGHTER CLAIMING THAT THE PROPERTY WERE J OINT FAMILY PROPERTYAND THEIR RESPECTIVE SHARES. THEREAFTER, A COMPROMISE PETITION WAS FILED BEFORE CIVIL COURT AND A FINAL DECREE WAS PASSED BY THE HO NBLE FOURTH ADDITIONAL DISTRICT COURT, COIMBATORE ON 19.06.2014 IN OS NO. 114/14-ITA NO. 393/14. THE FINAL DECREE SPEAKS THAT THE COMPROMISE PETITI ON FILED AND SIGNED BYBOTH SIDES. THE SUIT PROPERTIES ARE ORDERED TO PARTITION AS PER COMPROMISE PETITION AND THE TERMS OF COMPROMISE READ OVER AND EXPLAINED , ADMITTED BY BOTH PARTIES ARE CORRECT. FINAL DECREE IS PASSED IN TER MS OF COMPROMISE AND IF THE PROPERTIES TO THE DISPUTES ARE NOT HUF PROPERTIES THEN THE CHILDREN WOULD NOT HAVE ANY RIGHT IN IT AND THE SHARES CANNOT BE ALLOT TED TO THEM. IN THE INDIVIDUAL RETURN, THE ASSESSEE HAS NOT ADMITTED AN Y CAPITAL GAIN ON SALE OF AGRICULTURAL LAND SINCE THE IMPUGNED LANDS BELONG T O THE HUF. THE FINAL :-6-: I.T.A. N0. 2265/MDS/2016 DECREE PASSED BY THE CIVIL COURT IS BINDING BETWEEN THE PARTIES AND THE CONSEQUENTIAL EFFECT IS TO BE GIVEN BY THE IT AUTHO RITY AS DECIDED IN CIT VS RATTAN LAL, 284 ITR 162 (ALI). WHEN THE ASSESSEE H AS PLACED MATERIALS TO SUBSTANTIATE THAT THE LAND SOLD ARE HUF PROPERTIES THEN THE ONUS SHIFTS ON THE DEPARTMENT TO PROVE THAT THE PROPERTY BELONG TO IND IVIDUAL ONLY. THE ASSESSING OFFICER CANNOT TRAVEL BEYOND THE DIRECTI ONS OF ITAT IN THE REMAND ORDER I.E., THE ASSESSEE CANNOT BE PUT IN A WORSE P OSITION THAN THE ONE IN THE ORIGINAL ASSESSMENT PROCEEDINGS , WHEN THERE IS NO SUCH DIRECTION IN THE ORDER OF THE ITAT. SECTION 50C WAS NOT IN THE ISSUE OF TH E ORIGINAL ASSESSMENT ORDER DATED 31.12.2008. THE AO HAS NOT RAISED ANY ISSUE U/S. 50C IN THE ORIGINAL ASSESSMENT ORDER AND SEC 50C WAS NOT AN ISSUE EITH ER BEFORE THE CIT(A) OR THE ITAT. THE HONBLE ITAT HAS CLEARLY STATED IN I TS ORDER DATED 15.11.2012. SO, IN THE SECOND INNINGS, THE OFFICER CANNOT MAKE AN ADDITION U/S. 50C. THE ASSESSING OFFICER CANNOT VENTURE TO TAKE NEW ISSUE WHICH WAS NOT ADJUDICATED BEFORE THE CIT(A) OR ITAT. WHEN A REFERENCE TO THE VALUATION OFFICER IS NOT MADEAND NO OTHER ADDITIONAL EVIDENCE WAS RELIED ON BY THE AO , THE CONSIDERATION IN THE SALE DEED TO BE ACCEPTED. TH E VALUE MENTIONED IN THE SALE DEED IS CORRECT, BECAUSE THE SALES WERE DISTR ESS SALES ETC. THE AR ALSO SOUGHT OUR ATTENTION TO THE VALUATION MADE ON CERTA IN PROPERTIES AS ON 3.4.2004 UNDER TAMILNADU COURT FEES AND SUITS VALUA TION ACT AND A SALE MADE BY HIM ON 31.03.1981 OF HIS OWN PROPERTIES AT THE SAME LOCALITY AND PLEADED THAT THE ASSESSING OFFICER WHILE COMPUTING THE LON G TERM CAPITAL GAINS IN THE :-7-: I.T.A. N0. 2265/MDS/2016 EXPARTE ORDER MADE ON 31.12.2008, HAS TAKEN THE C OST OF THE PURCHASE IN 1971 AS THE VALUE AS ON 01.08.01981. HE COULD NOT P LACE BEFORE THE AO, THE DOCUMENT COPY TO CLAIM THE VALUE AS ON 01.04.1981. AT THE TIME OF HEARING BEFORE CIT(A) ON 23.05.2016, HE HAD SUBMITTED THE S ALE DEED COPY DT 30.03.1981, DOCUMENT NO. 1572/81 BUT THE CIT(A) HAD OMITTED TO TAKE COGNIZANCE OF THE SAME IN THE APPELLATE ORDER. IN THE CIRCUMSTANCES , THE ASSESSEE PLEADED THAT THE REGISTERED DOCUMENT MA Y BE ADMITTED AS AN ADDITIONAL EVIDENCE FOR THE PURPOSES OF DETERMINATI ON OF VALUE AS ON 01.4.1981, COST OF IMPROVEMENT ETC AND RENDER JUST ICE. PER CONTRA, THE DR SUPPORTED THE ORDER OF THE CIT(A). 6. WE HEARD THE RIVAL CONTENTIONS AND PERUSED THE O RDERS, DOCUMENTS AND PAPER BOOK. THE ISSUE IS THAT THE AO HELD THAT THE ASSESSEE HAS SOLD 10.35 ACRES OF LAND AND ITS CAPITAL GAIN HAS TO BE ASSESS ED IN THE ASSESSEES HANDS. HOWEVER, THE ASSESSEE WITH DETAILED BACKGROUND SUBM ITTED THAT THE LAND BELONGED TO HUF WHICH INCLUDED THE PROPERTIES GOT I N EXCHANGE OF HUF PROPERTIES ALSO. IN THIS REGARD, THE ASSESSEE RELI ED ON THE EVIDENCES OF VARIOUS DOCUMENTS, COMPROMISE PETITION FILED BY THE FAMILY MEMBERS VIZ SONS & DAUGHTER OF THE ASSESSEE UNDER ORDER 23 RULE 3 OF THE CIVIL PROCEDURE CODE IN 2014 AND THE FINAL DECREE PASSED IN THE COURT OF FO URTH ADDITIONAL COURT, SESSION JUDGE IN IA 393/14 IN OS NO. 114/2014 DATED 19.06.2014. IN ORDER TO JUSTIFY THAT THE PROPERTY BELONGED TO HUF, THE AR RELIED BEFORE THE CIT(A) THE :-8-: I.T.A. N0. 2265/MDS/2016 FAMILY SETTLEMENT DEED DATED 06.11.1971 AS PER WHIC H THE FATHER OF THE APPELLANT SETTLED THE PROPERTY FOR THE BENEFIT OF T HE FAMILY INCLUDING THE APPELLANT AND THE ASSESSEE MAKES OUT A CASE THAT TH E ASSESSEE AND HIS BROTHER WERE STUDENTS AT THE TIME OF ACQUISITION OF THE IMPUGNED PROPERTY ETC. IN SUCH FACTS AND CIRCUMSTANCES, THE DECISION AS TO OWNERSHIP OF THE IMPUGNED PROPERTY IS SINE QUA NON IN THIS CASE. HO WEVER, WE ARE NOT ABLE TO APPRECIATE THE ARS SUBMISSIONS THAT THE DECREE AN D THE ORDER PASSED BY THE CIVIL COURT IS BINDING BETWEEN THE PARTIES AND THE REFORE THE CONSEQUENTIAL EFFECT IS TO BE GIVEN BY THE IT AUTHORITIES IN THEI R ORDER, FOR THE REASON THAT THE COMPROMISE PETITION WAS FILED IN 2014 , ALMOST AFTER 2 YEARS AFTER THIS TRIBUNAL PASSED THE ORDER ON 15.11.2012. IN THE F ACTS AND CIRCUMSTANCE, WE ARE OF THE VIEW THAT THE OWNERSHIP OF THE PROPERTY SHOULD BE DECIDED, AFRESH, ON APPRECIATION OF THE RELEVANT DOCUMENTS AND OTHE R MATERIAL AND HENCE WE REMIT THIS ISSUE BACK TO THE AO TO RE-EXAMINE THE ASSESSEES CLAIM, AFRESH , AND DECIDE THE SAME IN ACCORDANCE WITH LAW. ON THE ISSUE IS DETERMINATION OF CORRECT MARKET VALUE AS ON 01.04.1981 ETC , THE AS SESSEE PLACED A COPY OF SALE DEED EXECUTED BY HIM ON 30 TH MARCH, 1981 IN DOCUMENT NO. 572/81 BY WAY OF ADDITIONAL EVIDENCE AND SOUGHT OUR ATTENTION TO THE VALUATION MADE ON CERTAIN PROPERTIES AS ON 3.4.2004 UNDER TAMILNADU COURT FEES AND SUITS VALUATION ACT AT THE SAME LOCALITY ETC AND PLEADED THAT THE CORRECT VALUE AS ON 01.4.1981, THE COST OF IMPROVEMENT ETC BE DETERMINE D BASED ON THESE MATERIALS AND RENDER JUSTICE. SINCE, WE HAVE ADMIT TED ADDITIONAL EVIDENCE, WE :-9-: I.T.A. N0. 2265/MDS/2016 DEEM IT FIT TO DIRECT THE AO TO RE-EXAMINE THE ISSU E OF CORRECT MARKET VALUE BASED ON THIS DOCUMENT AND OTHER MATERIALS WHICH A RE ALREADY COLLECTED OR LIKELY TO BE COLLECTED BY HIM AND DECIDE THIS ISSUE IN ACCORDANCE WITH LAW. SINCE, THE PRIMARY ISSUES ARE REMITTED BACK, WE DEE M IT FIT THAT THE ASSOCIATED GROUNDS ARE ALSO REMITTED FOR RE-EXAMINATION IN ACC ORDANCE WITH LAW . AFTER CONSIDERING THE FACTS AND CIRCUMSTANCES OF THIS CA SE, WE DEEM IT FIT TO DIRECT THE ASSESSEE TO FURNISH RELEVANT MATERIAL BEFORE TH E AO AND ACTIVELY COOPERATE IN THE EARLY DISPOSAL OF THE ASSESSMENT IN ACCORDAN CE WITH LAW. 7. IN THE RESULT, THE ASSESSEES APPEAL IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON TUESDAY, THE 19 TH DAY OF SEPTEMBER, 2017 AT CHENNAI. SD/- ( . . . ) (N.R.S. GANESAN) !' /JUDICIAL MEMBER SD/- ( ) (S. JAYARAMAN) ' /ACCOUNTANT MEMBER /CHENNAI, 1 /DATED: 19 TH SEPTEMBER, 2017 JPV '*2343 /COPY TO: 1. &/ APPELLANT 2. *+& /RESPONDENT 3. 5 ( )/CIT(A) 4. 5 /CIT 5. 3* /DR 6. 8 /GF