Mohammad Amin Yashin Khan Tagala, CHENNAI V. ITO, CHENNAI

ITA 2334/CHNY/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6462 (ITAT-CHENNAI)
• Duration Of Justice: 11 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-08-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 02-05-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 12-08-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SANATH KUMAR RAHA JT
• Assessee Lawyers: K MEENAKSHISUNDARAM ITP
• Section: 143(3); 54

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL BENCH B, CHENNAI , ! ' . #$ , % &' ( BEFORE SHRI SANJAY ARORA, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY, JUDICIAL MEMBER ./ITA NO.2334/MDS/2016 % ) *) / ASSESSMENT YEAR : 2012-13 MOHAMMAD AMIN YASHIN KHAN TAGALA, OLD NO.32, NEW NO.67, CORNER ESTATES, SEMBUDOSS STREET, CHENNAI 600 001. [PAN: ABDPT 5563H] VS. INCOME TAX OFFICER, NON-CORPORATE WARD-11(2), CHENNAI. ( /APPELLANT ) ( / RESPONDENT ) +, . / / APPELLANT BY : SHRI K.MEENAKSHI SUNDARAM, ITP 01+, . / / RESPONDENT BY : SHRI SANATH KUMAR RAHA, JT. CIT . 2 / DATE OF HEARING : 16.05.2017 3* . 2 / DATE OF PRONOUNCEMENT : 03.08.2017 /ORDER PER SANJAY ARORA, AM : THIS IS AN APPEAL BY THE ASSESSEE AGITATING THE OR DER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-34, CHENNAI (CIT(A) FOR S HORT) DATED 28.06.2016, DISMISSING THE ASSESSEES APPEAL CONTESTING ITS ASS ESSMENT U/S. 143(3) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) DATED 27.03.2015 FOR THE ASSESSMENT YEAR (AY) 2012-13. 2. WE MAY BEGIN BY RECOUNTING THE BACKGROUND FACTS OF THE CASE, I.E., IN-SO- FAR AS ARE RELEVANT. THE ASSESSEE REALIZED . 188.22 LACS (VIDE DECREE UNDER 2 ITA NO. 2334/MDS/2016 (AY 2012-13) MOHAMMAD AMIN YASHIN KHAN T AGALA V. ITO COMPROMISE SUIT (C.S. NO. 229/2016 DATED 26.09.2008 /PB PGS. 61-77)) IN RESPECT OF HIS SHARE IN THE PROPERTY OF HIS LATE BR OTHER, Y. SHABIR TAGALA, WHO DIED INTESTATE ON (13.11.2000) ON 24.09.2008. THE R ESULTANT LONG TERM CAPITAL GAIN (LTCG) OF . 114.88 LACS WAS CLAIMED EXEMPT U/S. 54 OF THE ACT , INVESTING . 200 LACS IN THE CAPITAL GAINS SCHEME ACCOUNT AS S PECIFIED U/S. 54(2) OF THE ACT, ON 07.11.2008. THE ASSESSEE WAS ACCORDINGLY OBLIGED TO UTILIZE THE SAID DEPOSIT AMOUNT TOWARD PURCHASE OF A RESIDENTIAL HOUSE BY 23 .09.2010 OR CONSTRUCTION OF A NEW RESIDENTIAL HOUSE BY 23.09.2011, FAILING WHIC H THE AMOUNT CLAIMED (AND ALLOWED) EXEMPT WOULD, IN TERMS OF S. 54(2), BE CHA RGED TO TAX AS CAPITAL GAINS IN THE YEAR IN WHICH THE THREE YEAR PERIOD (FROM TH E DATE OF TRANSFER) EXPIRES. THE ASSESSEE PURCHASED A RESIDENTIAL HOUSE AT BANGALORE VIDE SALE DEED DATED 19.10.2011 FOR . 127.20 LACS, I.E., BEYOND A PERIOD OF TWO YEARS O F TRANSFER, EXPIRING ON 23.09.2010 . THE ASSESSEE HAVING BEEN SUBJECT TO CAPITAL GAINS TAX ON THE LTCG ( . 114.88 LACS) FOR THE CURRENT YEAR, IS IN SECOND A PPEAL BEFORE US. 3. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. THE PRIMARY FACTS ARE NOT IN DISPUTE. THE ASSESSEE STATES TO HAVE ENTERED INTO AN ORAL AGREEMENT FOR PURCHASE OF THE BANGALOR E PROPERTY ON 23.08.2010, I.E., IN EXCHANGE OF HIS PROPERTIES AT CHENNAI AND GUJARAT, PAYING THE SELLER, MR. MOHAN K. THOMAS, . 10,000 AS TOKEN MONEY IN CASH. HOWEVER, AS THERE WERE LEGAL HURDLES IN THE TRANSFER OF HIS PROPERTIES, TH E AGREEMENT COULD NOT BE CARRIED OUT, SO THAT THE PROPERTY WAS FINALLY PURCH ASED AGAINST CASH CONSIDERATION ON 19.10.2011, OSTENSIBLY THERE BEING NO FINDING OR MATERIAL IN THAT RESPECT ON RECORD, BY UTILIZING THE AMOUNT DEPOSITED IN THE CA PITAL GAIN SCHEME ACCOUNT. THE SAID PLEA, BEING WHOLLY UNSUBSTANTIATED, HAS BE EN REGARDED AS AN EYE WASH BY THE REVENUE. IT WOULD BE, TO BEGIN WITH, EXTREME LY UNLIKELY THAT THE SELLER, A BANGALORE BASED PERSON, WOULD BE INTERESTED IN, NOT ONE, BUT TWO PROPERTIES OF THE ASSESSEE-BUYER, LOCATED AT DIFFERENT PLACES, ON E OF WHICH IS IN THE REMOTE 3 ITA NO. 2334/MDS/2016 (AY 2012-13) MOHAMMAD AMIN YASHIN KHAN T AGALA V. ITO AREA IN GUJARAT. WE SAY SO AS THE SELLER IS NOT SHO WN TO BE A DEALER IN REAL ESTATE; A PERSON NORMALLY ACQUIRES A REAL ESTATE PROPERTY, WHICH INVOLVES CONSIDERABLE, IF NOT HUGE SUMS OF MONEY, ONLY WHERE IT SUITS HIS PERSONAL OR BUSINESS INTERESTS. THAT, THEREFORE, THE BUYER SHOULD BECOME INTERESTED IN TWO OF THE ASSESSEE- BUYERS PROPERTIES IS ITSELF INTRIGUING. ALSO, AN E XCHANGE PREDICATES AN AGREEMENT ON THE VALUE OF THE RELEVANT PROPERTIES, WHICH IS NORMALLY ACHIEVED ONLY AFTER HARD BARGAINING, SO THAT THE SAME IMPLIE S AN AGREEMENT ON THE VALUE OF THREE PROPERTIES UNDER EXCHANGE. BE THAT AS IT M AY, THERE IS IN FACT NO MENTION OF THE ORAL ARGUMENT IN THE SALE DEED DATED 19.10.2 011, AND WHICH CANNOT BE, I.E., WHERE IT WAS ACTUALLY UNDERTAKEN . CONTINUING FURTHER, WE ARE UNABLE TO FIND ANY BASI S, WHETHER IN LAW OR IN FACTS, IN THE ASSESSEES CASE WHICH, AS AFORE-STATE D, IS WHOLLY UNSUBSTANTIATED, WITH NO IMPROVEMENT THEREIN HAVING BEEN MADE EVEN B EFORE US. ASSUMING THAT THE ASSESSEE ENTERED INTO, AS STATED, AN ORAL AGREE MENT QUA THE PURCHASE OF A RESIDENTIAL HOUSE AT BANGALORE I.E., WHICH STANDS F INALLY PURCHASED, AND EVEN ASSUMING THAT ALL THE FORMALITIES IN RESPECT OF THE EXCHANGE OF THE THREE PROPERTIES COULD BE COMPLETED BY 23.09.2010, I.E., WITHIN A MONTH OF THE AGREEMENT, IT WOULD ONLY AMOUNT TO AN EXCHANGE, RES ULTING IN FRESH CAPITAL GAIN ARISING TO THE ASSESSEE, I.E., QUA HIS CHENNAI AND GUJARAT PROPERTIES TRANSFERRED BY WAY OF EXCHANGE; IT (EXCHANGE) BEING A MODE OF T RANSFER BOTH UNDER THE TRANSFER OF PROPERTY ACT AS WELL AS U/S. 2(47) OF T HE ACT. HOW DOES THAT, THEN, WE WONDER, ASSIST THE ASSESSEES CASE IN ANY MANNER ? WHAT THE ASSESSEE WAS IN LAW REQUIRED TO DO WAS TO UTILIZE THE AMOUNT DEPOSI TED IN THE CAPITAL GAIN ACCOUNT, INVESTING THUS THE ENTIRE CAPITAL GAIN OF . 114.88 LACS ARISING TO HIM DURING THE PREVIOUS YEAR RELEVANT TO AY 2009-10 BY THE RELEVANT DATE. IN FACT, THE DATE OF THE STATED ORAL AGREEMENT, AS STATED IN THE IMPUGNED ORDER, IS 27.09.2011, I.E., MUCH AFTER THE DATE BY WHICH THE NEW ASSET (RESIDENTIAL HOUSE) OUGHT TO HAVE BEEN PURCHASED, I.E., 23.09.2010, SO THAT IT IS OF NO CONSEQUENCE IN 4 ITA NO. 2334/MDS/2016 (AY 2012-13) MOHAMMAD AMIN YASHIN KHAN T AGALA V. ITO EXPLAINING THE DELAY. THAT IS, BESIDES BEGIN UN-EVI DENCED, THE DATE OF THE ORAL AGREEMENT, ASSUMING SO, IS NOT CERTAIN AND, IN ANY CASE, DEFEATS THE ASSESSEES CASE. IT IN FACT GIVES NO SUBSTANTIAL RIGHTS TO THE ASSESSEE IN THE SUBJECT PROPERTY, SO AS TO BE OF ANY CONSEQUENCE IN LAW (REFER TRANSF ER PROPERTY ACT, REGISTRATION ACT AND STAMP ACT). IT IS, AS AFORESAID, THE UTILIZ ATION OF THE FUNDS IN THE CAPITAL GAIN DEPOSIT ACCOUNT TOWARD PURCHASE OR CONSTRUCTIO N OF A NEW RESIDENTIAL HOUSE THAT IS RELEVANT, AND WHICH, EVEN ASSUMING THE EXIS TENCE OF AN ORAL AGREEMENT, WOULD NOT ADVANCE THE ASSESSEES CASE IN ANY MANNER AS THE SAME DOES NOT MEET THE MANDATE OF S. 54(2), NON-SATISFACTION OF WHICH HAS RESULTED IN THE CAPITAL GAIN BEING BROUGHT TO TAX FOR THE CURRENT YEAR. AS SUCH, CONSIDERED WHICHEVER WAY, THE ASSESSEES CASE IS WHOLLY WITHOUT MERIT, A ND NO WONDER HAS BEEN CONSIDERED AS A COLORABLE DEVICE BY THE REVENUE; TH ERE BEING NO BASIS TO HIS CLAIM, WITH THE ORAL AGREEMENT, ASSUMING SO, OPERAT ING TO, ON THE CONTRARY, OUST THE ASSESSEES CASE (I.E., QUA UTILIZATION OF FUNDS) AT THE OUTSET. THE CASE LAW CITED BEFORE THE LD. CIT(A) IS, AGAIN , WITHOUT REFERENCE TO THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, AND WE RE IN FACT NOT REFERRED TO DURING HEARING. THE SAME IS ON THE BASIS THAT WHERE THE MONEYS HAVE BEEN INVESTED TOWARD THE PURCHASE OR CONSTRUCTION OF A N EW ASSET, WHICH HAS NOT BEEN COMPLETED BY THE DUE DATE, AND HAS BEEN SO ONLY SUB SEQUENTLY, SUBSTANTIAL COMPLIANCE HAVING BEEN MADE, THE BENEFIT OF THE SEC TION SHOULD NOT BE DENIED IN-AS-MUCH AS IT IS NOT ALWAYS WITHIN THE CONTROL O F THE ASSESSEE TO COMPLETE THE PURCHASE OR THE CONSTRUCTION WITHIN THE TIME STATUT ORILY SPECIFIED. IN THE PRESENT CASE, AS AGAINST SUBSTANTIAL COMPLIANCE, THERE IS N O IOTA OF PROGRESS, I.E., SUBSEQUENT TO THE TRANSFER ON 24/9/2008, TOWARD PUR CHASE OF A HOUSE PROPERTY BY UTILIZING THE AMOUNT, WHICH REMAINED UNEXPENDED TIL L 19.10.2011. IN OTHER WORDS, THERE WAS NO UTILIZATION OF THE SAID DEPOSIT AMOUNT TILL THAT DATE, WHICH FALLS BEYOND THE TWO YEAR PERIOD AND, IN FACT, EVEN BEYOND THE EXTENDED PERIOD FOR CONSTRUCTION, WHICH WAS ADMITTEDLY NEITHER UNDE R PROGRESS NOR EVEN UNDER 5 ITA NO. 2334/MDS/2016 (AY 2012-13) MOHAMMAD AMIN YASHIN KHAN T AGALA V. ITO CONTEMPLATION. THE ASSESSEES PLEA FOR NON FORMALIZ ATION OF THE PURCHASE, WHICH WAS CONTEMPLATED TO BE BY WAY OF EXCHANGE (OF HIS E XISTING PROPERTIES), RATHER THAN ASSISTING, OUSTS HIS CASE AT THE THRESHOLD INA SMUCH AS THERE WOULD IN THAT CASE BE NO UTILIZATION OF THE DEPOSIT AMOUNT. IT WO ULD, RATHER, GIVE RISE TO A FRESH CAPITAL GAIN AND, CORRESPONDINGLY, TAX LIABILITY. T HE SAID CASE LAW THUS HAS NO APPLICATION IN THE FACTS AND CIRCUMSTANCES OF THE P RESENT CASE. IN FACT, MOST OF THE GROUNDS RAISED BY THE ASSESSEE BEFORE US ARE MI SCONCEIVED AND, BESIDES, DO NOT ARISE OUT OF THE ASSESSMENT OR THE IMPUGNED ORD ER. FOR THE REASONS AFORE-MENTIONED, WE HAVE NO HESITA TION IN UPHOLDING THE ASSESSMENT AND THE IMPUGNED ORDER. 4. IN THE RESULT, THE ASSESSEES APPEAL IS DISMISSE D. ORDER PRONOUNCED ON AUGUST 03, 2017 AT CHENNAI . SD/- SD/- ( ! ' . #$ ) (DUVVURU RL REDDY) % /JUDICIAL MEMBER ( ) (SANJAY ARORA) /ACCOUNTANT MEMBER /CHENNAI, 4 /DATED, AUGUST 03, 2017 EDN 5 . 0%267 87*2 /COPY TO: 1. +, /APPELLANT 2. 01+, /RESPONDENT 3. 92 ( )/CIT(A) 4. 92 /CIT 5. 7:; 0%2% /DR 6. ;$) < /GF