P. Venkataraman, CHENNAI V. ITO, CHENNAI

ITA 2380/CHNY/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7848 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2017
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 15-11-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 18-08-2016
• Court: TRIBUNAL
• Department Lawyers: SUPRIYO PAL JT
• Assessee Lawyers: S KRISHNAN
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Opportunity of being heard; Reason to believe
• Section: 143(3); 50C; 148; 54

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI , . , % & BEFORE SHRI SANJAY ARORA, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A. NO. 2380/MDS/2016 / ASSESSMENT YEAR : 2007-08 P.VENKATARAMAN, G-3, KANAKADHARA, LAKSHMI CASTLE, NEW NO. 37, CHARI STREET, T.NAGAR, CHENNAI - 600 017. [PAN: AAFPV 6660A] VS. INCOME TAX OFFICER, BUSINESS WARD-II(2) CHENNAI 600 034. ( / APPELLANT) ( /RESPONDENT) ( ) / APPELLANT BY : SHRI S.KRISHNAN, CA ,-( ) / RESPONDENT BY : SHRI SUPRIYO PAL, JT. CIT ) /DATE OF HEARING : 15.11.2016 ) /DATE OF PRONOUNCEMENT : 31.01.2017 /O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER: THE ASSESSEE HAS FILED APPEAL AGAINST THE ORDER O F THE COMMISSIONER OF INCOME TAX (APPEALS) - 2, ITA NO. 146/CIT(A)-2/2014 -15 DATED 27.07.2016 PASSED U/S. 143(3) R.W.S 147 OF THE INCOME TAX ACT. :-2-: I.T.A. NO.2380/MDS/2016 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 2.1 ON THE FACTS AND CIRCUMSTANCE OF THE CASE AND I N LAW THE LD. CIT(A) ERRED IN CONFIRMING THE ORDER DATED 29 TH OCTOBER, 2014 OF THE INCOME-TAX OFFICER, BUSINESS WARD-II(2) CHENNAI WITHOUT APPREC IATING THE FACT THAT AS PER PROVISIONS OF S.2(47)(V) OF THE INCOME TAX ACT THAT HE POSSESSION OF THE OLD CAPITAL ASSET IN THE FORM OF A RESIDENTIAL PROPERTY WAS COMPLETE ON 12 TH OCTOBER, 2004 DURING HE FINANCIAL YEAR 2004-05 AND NOT DURING THE FINANCIAL YEAR 2006-07 AS THE KEYS OF THE OLD CAPIT AL ASSET IN THE FORM OF A RESIDENTIAL PROPERTY WERE HANDED OVER TO THE PURCHA SER ON 12 TH OCTOBER, 2004 THUS DULY COMPLYING WITH THE PROVISIONS OF S. 54 OF THE I.T. ACT WHEN THE NEW CAPITAL ASSET IN THE FORM OF A RESIDENTIAL PROPERTY WAS PURCHASED ON 13 TH OCTOBER, 2004. 2.2 THE APPELLANT THUS PRAYS THE DELETION OF DISALL OWANCE/ADDITION MADE OF RS.14,63,030/- BEING CAPITAL GAINS AND INVESTED IN NEW CAPITAL ASSET IN THE FORM OF A RESIDENTIAL PROPERTY. 3. THE BRIEF FACTS OF THE CASE THAT THE ASSESSEE HA S FILED INCOME TAX RETURN FOR THE ASSESSMENT YEAR 2007-08 ON 31.07.2007 WITH TOTAL INCOME OF RS. 1,14,900/- AND THE RETURN OF INCOME WAS PROCESSED U /S. 143(1) OF THE ACT. THE LD. AO, AS PER THE SUB REGISTRAR OFFICE RECORD FIND THAT THE ASSESSEE HAS SOLD PROPERTY ON 03.05.2006 AND AS AGAINST THE SALE CONS IDERATION OF RS. 16,00,050/- THE GUIDELINE VALUE FIXED BY SUB REGISTRAR IS RS. 2 4,25,000/- AND THE ASSESSEE HAS NOT OFFERED TO TAX THE CAPITAL GAIN IN RESPECT OF THE SALE TRANSACTION IN :-3-: I.T.A. NO.2380/MDS/2016 ASSESSMENT YEAR 2007-08. THE LD. ASSESSING OFFIC ER HAS NO REASON TO BELIEVE THAT THERE IS CONCEALMENT OF INCOME AND ISSUED NOTI CE U/S. 148 OF THE ACT. IN RESPONSE TO NOTICE, THE ASSESSEE APPEARED AND FILED LETTER DATED 11.09.2014. THE LD. AO CONSIDERED THE SUBMISSIONS AND THE ASSES SEE HAS EXECUTED SALE DEED ON 03.05.2006 WHEREAS THE MARKET VALUE FIXED BY THE SUB-REGISTRAR IS RS. 24,25,000/- AND THE ASSESSEE HAS FILED EXPLANATIONS VIDE HIS LETTER DATED 10.09.2014 AT PAGE 2 TO 3 WHICH READ AS UNDER: ' AFTER THE RECEIPT OF YOUR NOTICE, I VERIFIED MY T AX RECORDS AND ADMIT THE MISTAKE OF NOT INCLUDING THE INCOME FROM CAPITAL GAINS IN MY RETURN OF INCOME FOR THE ASSESSMENT YEAR 2005-06. I SINCERELY APOLOGIZE FOR THE MISTAKE AND ATTACHED HERETO COMPUTATION OF TOTAL INCOME. TRANSFER/SALE OF PROPERTY: FOLLOWING THE UNTIMELY DEATH OF MY WIFE, MY CHILDREN WANTED TO CHANGE THE HOUSE AND MOVE TO A NEW PLACE. I AM A RETIRED PERSON WITH NO PENSION BENEFITS. FAMILY PENSION IS MY MAIN SOURCE OF INCOME (WIFE RETIRED GOVERNMENT STAFF). I HAVE TO SELL MY EXISTING HOUSE TO SOURCE A NEW HOUSE. AT THIS TIME , MY FRIEND MR. RAJA AGREED TO BUY MY HOUSE FOR A CONSIDERATION OF RS. 1 6,00,050/- AND PAID ME AN ADVANCE OF RS. 13,00,000/- WITH THIS ADVANCE MONEY AND FROM MY SAVINGS. I BOUGHT ANOTHER SMALL RESIDENTIAL FLAT F OR RS. 15,00,000/- AND STRAIGHT AWAY MOVED TO THAT HOUSE. I HANDED OVER T HE VACANT POSSESSION OF THE OLD PROPERTY AND KEYS TO THE BUYER MR. RAJA ON 12TH OF OCTOBER 2004. BUYER WANTED TO REGISTER THE PROPERTY BUT I COULD NOT GO ALONG WITH HIM TO REGISTRAR OFFICE DUE TO FAMILY CIRCUMSTANCES . (MY DAUGHTER SUFFERING FROM EPILEPSY AND REQUIRES CONTINUOUS MED ICAL ATTENTION). FINALLY THE REGISTRATION OF TITLE DEEDS TOOK PLACE DURING M AY 2006. TRANSFER U/S. 2(47)(V) OF THE INCOME TAX ACT : I U NDERSTAND THAT, AS PER SEC 2(47)(V) OF THE INCOME TAX ACT, REGARDING T AXABILITY OF CAPITAL :-4-: I.T.A. NO.2380/MDS/2016 ASSETS OF THE NATURE OF SEC. 53A OF THE TRANSFER OF PROPERTY ACT, THE DATE OF HANDING OVER THE POSSESSION OF THE PROPERTY FROM ONE PERSON TO ANOTHER IS THE DEEMED DATE OF TRANSFER IRRESPECTIVE OF REGI STRATION OF DOCUMENTS FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAINS. HENCE IN MY REVISED WORKINGS, I HAVE TAKEN DATE OF TRANSFER/SALE AS 12T H OF OCTOBER 2004 (DATE OF HANDING OVER THE KEYS) AND COMPUTED THE LONG TER M CAPITAL GAINS FOR THE ASSESSMENT YEAR 2005-06. I AM ENCLOSING HERETO THE FOLLOWING DOCUMENTS FOR YOUR REFERENCE RECORDS. 1) PROOF FOR HANDING OVER THE POSSESSION: I AM ATTACHI NG TOW PROOFS. A) ACKNOWLEDGMENT LETTER FROM THE BUYER FOR HAVING REC EIVED THE KEYS FROM ME. B) PROOF OF MYSELF VACATING THE HOUSE AND MOVED TO TH E NEW ADDRESS. (I) NOTING OF CHANGE OF ADDRESS IN MY RATION CARD ON 30 TH NOVEMBER 2004. (II) I HAVE FILED THE RETURN OF INCOME FOR THE ASSESSMEN T YEAR 2004-05 ON 27TH OCTOBER 2004, QUOTING THE NEW RESIDENTIAL ADDRESS. PLEASE ALSO REFER POINT NO 9 IN THE REGISTERED SALE DEED WHEREIN IT IS CLEARLY MENTIONED THAT 'VENDOR HAS ALREADY DELIVERE D THE VACANT POSSESSION TO THE PURCHASER.' 2) COPY OF REGISTERED SALE DEED FOR RS. 16,00,000/- (G UIDELINE VALUE RS. 24,25,000/-). 3) PROOF FOR RE-INVESTMENT IN NEW PROPERTY-PURCHASE DO CUMENTS. 4) COMPUTATION OF INCOME FROM CAPITAL GAINS AND STATEM ENT OF TOTAL INCOME. SINCE THE ABOVE INCOME FROM SALE OF ASSETS IS INCLU DED IN THE ASSESSMENT YEAR 2005-06, I CONFIRM THAT, I HAVE REPORTED ALL T HE INCOME CHARGEABLE TO :-5-: I.T.A. NO.2380/MDS/2016 TAX FOR THE ASSESSMENT YEAR 2007-08 AND NO FURTHER INCOME HAS REMAINED TO BE OFFERED FOR TAXATION FOR THE SAID YEAR.' 4. THE LD. AO CONSIDERED THE WRITTEN SUBMISSIONS AN D THE COPY OF DOCUMENTS FURNISHED IN THE COURSE OF ASSESSMENT PROCEEDINGS, WHERE ASSESSEES SUBMITTED THAT THE TRANSFER TOOK PLACE IN THE FINANCIAL YEAR 2004-05 RELEVANT TO ASSESSMENT YEAR 2005-06 BUT WHEREAS THE ASSESSING OFFICER OBSE RVED THAT THE SUPPORTING ACKNOWLEDGMENT LETTER FROM THE BUYER HAVING RECEIVE D THE KEYS AND NOTINGS OF CHANGE OF ADDRESS, ASSESSEE RATION CARD CANNOT SUPP ORT THE TRANSFER OF POSSESSION. FURTHER, THE LD. AO PERUSED THE SALE D EED AND VIEWED THAT THE VACANT POSSESSION WAS ALREADY DELIVERED AND THE FIN AL PAYMENT WAS RECEIVED ON 04.04.2006 AND SUBSEQUENTLY THE SALE DEED WAS REGIS TERED ON 03.05.2006. THE SALE CONSIDERATION MENTIONED IN THE SALE DEED IS RS . 16,00,050/- AND WHEREAS SUB REGISTRAR VALUE IS RS. 25,24,000/-. THEREFORE, SALE CONSIDERATION OF THE TRANSACTION FIXED AT RS. 24,25,000/- AS ASSESSED BY THE STAMP VALUATION AUTHORITY. THE LD. AO IS OF THE OPINION THAT THE A SSESSEE HAS INVESTED IN PURCHASE OF THE NEW RESIDENTIAL PROPERTY ON 15.10.2 004 FOR AN AMOUNT OF RS. 16,35,180/- WHICH WAS CLAIMED IN THE REVISED COMPUT ATION OF INCOME CANNOT BE ALLOWED. AS PER PROVISIONS OF SECTION 54 OF THE AC T, THE TIME LIMIT FOR INVESTMENT IN NEW RESIDENTIAL PROPERTY BEING ONE YEAR BEFORE O R TWO YEARS AFTER THE DATE OF TRANSFER OF ORIGINAL ASSET AND MADE ADDITION AND PA SSED ORDER U/S. 143(3) R.W.S. 147 OF THE ACT WITH TOTAL INCOME OF RS.15,77,940/-D ATED 29.10.2004. :-6-: I.T.A. NO.2380/MDS/2016 5. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE FILED AN APPEAL WITH CIT(A) AND THE LD. AR ARGUED AND FILED THE WRITTEN SUBMISSIONS AND REITERATED THE SUBMISSIONS OF ASSESSMENT PROCEEDING S. THE ASSESSEE FILED LETTER DATED 12.10.2004 FROM THE BUYER IN RESPECT OF HANDI NG OVER OF THE POSSESSION. THE LD. CIT(A) DEALT ON SAID LETTER AT PAGE 5 OF HI S ORDER AND OBSERVED THAT IT IS NOT ACKNOWLEDGEMENT LETTER FROM THE BUYER, BUT ONLY LETTER ADDRESSED TO THE APPELLANT WITH UNDATED SIGNATURES. WITH THESE OBSE RVATIONS, THE LD. CIT(A) CONCLUDED THAT THE ASSESSEE FAILED TO ESTABLISH WIT H ANY EVIDENCE THAT THE PROPERTY WHICH WAS HANDED OVER ON 12.10.2004 AND UP HELD THE ACTION OF THE ASSESSING OFFICER. 6. AGGRIEVED BY THE ORDER, THE ASSESSEE HAS FILED APPEAL WITH THE TRIBUNAL. BEFORE US THE LD. LD. A.R OF THE ASSESSEE ARGUED T HAT THE LD. CIT(A) ERRED IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER IN CO NCLUDING THAT THE TRANSFER TOOK PLACE IN THE FY 2006-07 AND NOT IN FY 2004-05. THE ASSESSEE FILED RETURN OF INCOME AND CLAIMED EXEMPTION U/S. 54 OF THE ACT ON INVESTMENT IN RESIDENTIAL PROPERTY PURCHASED ON 13 OCTOBER 2004. WHEREAS, ASS ESSING OFFICER TREATED THE SALE OF PROPERTY TOOK PLACE IN THE FY 2006-07 BASED ON THE REGISTERED SALE DEED DATED 03.05.2006. THE LD. LD. AR FURTHER SUBMITTED THAT THE ASSESSEE GAVE POSSESSION ON 12.04.2004 AND SUBSTANTIATE THE POSSE SSION OF PROPERTY WITH THE PAPER BOOK CONTAINS LIST OF DOCUMENTS ALONG WITH TH E HANDING OVER LETTER. THE ASSESSEE HAS SOLD THE PROPERTY AND GAVE POSSESSION U/S. 53A OF TRANSFER OF PROPERTY ACT AFTER RECEIPT OF SALE CONSIDERATION BU T THE FINAL PAYMENT OF RS. 3,00,000/- WAS AFTER 01.04.2005, OUT OF TOTAL SALE CONSIDERATION OF RS.16,00,050/, :-7-: I.T.A. NO.2380/MDS/2016 THE ASSESSEE HAS PAID RS. 13,00,050/- IN THE FY 200 4-05 AND POSSESSION WAS MADE AVAILABLE TO THE BUYER. FURTHER, THE ASSESSEE HAS INVESTED THE CAPITAL GAINS FOR PURCHASE OF ANOTHER RESIDENTIAL PROPERTY BY REG ISTERED SALE DEED ON 13 OCTOBER 2004. SINCE, THE ASSESSEE HAS SOLD THE RES IDENTIAL PROPERTY AND PURCHASED ANOTHER RESIDENTIAL PROPERTY AND COMPLIED THE PROVISIONS OF S. 54 OF THE ACT, ON PURCHASING A PROPERTY WITHIN TWO YEARS FROM THE DATE OF TRANSFER. THEREFORE, ASSESSEE IS NOT LIABLE FOR PAYMENT OF CA PITAL GAIN TAX AND IN RESPECT OF THE SALE DEED REGISTERED ON 03.05.2006. THE ASSESS ING OFFICER APPLIED THE PROVISION OF S. 50C OF THE ACT BASED ON SALE DEED E XECUTED IN THE FY 2006-07 WHICH IS NOT IN ACCORDANCE WITH LAW AND PRAYED FOR ALLOWING APPEAL. CONTRA THE LD. DR RELIED ON THE ORDERS OF THE ASSESSING OFFICE R. 7. WE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATE RIAL ON RECORD AND THE PAPER BOOK FILED BY THE ASSESSEE, THE LD. LD. A.R C ONTENTION IS THAT THE ASSESSEE SOLD THE PROPERTY IN THE FY 2004-05 AND HANDED OVER THE POSSESSION OF THE PROPERTY ON 12.04.2004 TO THE BUYER WHERE SUBSTANTI AL AMOUNT WAS RECEIVED IN THE FY 2004-05 BEING RS.13,00,050/- AND RS. 3,00,00 0/- WAS RECEIVED ON 04.04.2006 AND THE REGISTRATION OF PROPERTY TOOK PL ACE ON 03.05.2006. THE LD. LD AR SUBMITTED THAT THE ASSESSEE HAS GIVEN THE PHYSI CAL POSSESSION OF THE PROPERTY ON 12 TH OCTOBER 2004 AND ALSO EXPLAINS THE REASONS IN THE ASSESSMENT PROCEEDINGS WHERE ENTIRE PROPERTY WAS SOLD AND PROP ERTY WAS HANDED OVER AND COMPLIED THE PROVISIONS OF SECTION 53A OF THE TRANS FER OF PROPERTY ACT. THE LD. AR REFERRED HANDING OVER LETTER AT PG. NO.13 OF THE PAPER BOOK DATED 12.10.2004 WHERE THE BUYER OF THE PROPERTY ON SAID DATE CONFIR MED HAVING RECEIVED OF RS. :-8-: I.T.A. NO.2380/MDS/2016 13.05 LAKHS AND ONLY RS. 3 LAKHS WAS DUE AND HANDED OVER PROPERTY TO THE BUYER MR. RAJA. THE ASSESSEE ALSO SUBSTANTIATED THAT HE HAS CHANGED THE PLACE OF RESIDENCE BY MAKING NECESSARY CORRECTIONS IN THE RA TION CARD REFERRED AT PG. 14 OF HIS PAPER BOOK AND ALSO FILED RETURN OF INCOME F OR THE ASSESSMENT YEAR 2004- 05 WITH NEW ADDRESS REFERRED AT PG. 16 OF THE PAPER BOOK AND SIMILARLY LETTER HAS BEEN FORWARDED TO THE INCOME TAX. THE LD. AR REFER RED TO THE COPY OF SALE DEED AT PG. 18 AND 22 WHERE THE CONSIDERATION OF RS. 16. 50 LACS WAS MENTIONED. ON ITS PERUSAL WE FIND THAT ABOUT RS. 13.50 LACS WAS P AID IN THE FY 2004-05 AND WHEREAS RS. 3 LACS WAS PAID ON 04.04.2006 AND TOTAL CONSIDERATION WAS PAID BEFORE REGISTRATION OF SALE DEED ON 03.05.2006. FU RTHER, THE ASSESSEE HAS PURCHASED RESIDENTIAL PROPERTY ON 13.10.2004, WHICH IS NOT DISPUTED. THE LD. AR RELIED ON THE JURISDICTIONAL HIGH COURT DECISION IN MADATHIL BROTHERS V. DCIT 301 ITR 345 (MDS) TO SUPPORT THAT THE ASSESSEE IS NOT I N POSSESSION OF THE PROPERTY AND HANDED OVER PROPERTY ON 12.10.2004. WHEREAS, T HE LD. DR SUBMITTED THAT THE ASSESSEE COULD NOT PRODUCE EVIDENCE FROM THE PU RCHASER ON CHANGES MADE TO OR OCCUPATION OF THE PROPERTY BY THE BUYER. WE, CONSIDERING THE FACTS, MATERIAL ON RECORD AND JUDICIAL DECISIONS, THE ASSE SSEE HAS RECEIVED SUBSTANTIAL SALE CONSIDERATION IN THE FY 2004-05 AND CLAIMS TO HAVE HANDED OVER THE POSSESSION OF THE PROPERTY ON 12.10.2004, THOUGH TH E SALE DEED WAS EXECUTED AND REGISTERED ON 03.05.2006. THE QUESTION, THEREF ORE, IS OF ESTABLISHING DELIVERY OF POSSESSION AND THUS, SATISFYING THE CONDITION OF SEC. 2(47))(V) OF THE ACT. THIS EXCHANGE OF LETTER BETWEEN TWO INTERESTED PARTIES C ANNOT BE REGARDED AS CONCLUSIVE DELIVERY OF POSSESSION. THE LD. AR, UPO N OUR SO EXPRESSING DURING THE :-9-: I.T.A. NO.2380/MDS/2016 HEARING, WOULD SUBMIT THAT THE ASSESSEE SHALL, IF A LLOWED OPPORTUNITY, ESTABLISHING POSSESSION OF THE BUYER ON THE BASIS O F CONTEMPORANEOUS MATERIAL, VIZ., ELECTRICITY RECORDS, MUNICIPAL RECORDS, ETC, IN FAVOUR OF THE BUYER. WE ACCORDINGLY, REMIT THE MATTER TO AO AND ASSESSEE SH ALL BE PROVIDED OPPORTUNITY OF BEING HEARD BEFORE PASSING THE ORDER. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON TUESDAY, THE 31ST DAY OF JANUAR Y, 2017 AT CHENNAI. SD/ - ( ) (SANJAY ARORA) ! / ACCOUNTANT MEMBER SD/ - ( . ) (G. PAVAN KUMAR) $ ! /JUDICIAL MEMBER /CHENNAI, 1 /DATED: 31ST JANUARY, 2017 EDN ) ,%34 54 /COPY TO: 1. ( /APPELLANT 2. ,-( /RESPONDENT 3. 6 )/CIT(A) 4. 6 /CIT 5. 4 ,%% /DR 6. : /GF