Sri N M Raju , Chikkaballapur V. The Income tax Officer Ward-1 , Chikkaballapur

ITA 2512/BANG/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 4183 (ITAT-BANGALORE)
• Duration Of Justice: 5 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 03-09-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LAKSHMI K
• Assessee Lawyers: V CHANDRASHEKAR
• Keywords: Capital asset; Principle of natural justice
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH (SMC) : BANGALORE BEFORE SHRI JASON P BOAZ , ACCOUNTANT MEMBER ITA NO. 2512 /BANG/201 8 ASSESSMENT YEAR : 20 13 - 14 SHRI. N. M. RAJU, BALUVANAHALLI VILLAGE, VENKATAPURA POST, JANGAMAKOTE HOBLI, SIDDLAGHATTA TALUK, CHIKKABALLAPUR 562 102. PAN : ALCPR 9482 J VS. THE INCOME TAX OFFICER, WARD - 1, CHIKKABALLAPUR. APPELLANT RESPONDENT ASSESSEE BY : SHRI. V. CHANDRASHEKAR, ADVOCATE REVENUE BY : SMT. LAKSHMI K, JCIT DATE OF HEARING : 10 . 0 1 .201 9 DATE OF PRONOUNCEMENT : 13 . 02 .201 9 O R D E R PER JASON P BOAZ, ACCOUNTANT MEMBER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-14, BANGALORE, DATED 29.06.2018 FOR ASSESSMENT YEAR 2013-14. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE AS UNDER: 2.1 THE ASSESSEE FILED THE RETURN OF INCOME FOR ASSESSMENT YEAR 2013-14 ON 02.03.2015 DECLARING INCOME OF RS.2,47,250/- AND AGRICULTURAL INCOME OF RS.2,50,000/-. THE CASE WAS SUBSEQUENTLY SELECTED FOR SCRUTINY FOR THIS ASSESSMENT ITA NO. 2512/BANG/2018 PAGE 2 OF 7 YEAR. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER (AO) NOTICED THAT IN THE PERIOD RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION, THE ASSESSEE; HIS SIBLINGS N. SUMA, N. MANJUNATH, N. RADHA AND N. NANJEGOWDA, CHILDREN OF SMT. NANJAMMA; ALONG WITH SMT. DYAVAMMA, C. V. LOKESH GOWDA, C. V. SUDHA, C. V. INDIRA, C. V. GAYATRI, C. V. SOBHA AND C. V. RAKESH, CHILDREN OF SHRI. C. VENKATESH GOWDA AS CONFIRMING PARTIES, SOLD AGRICULTURAL LAND OF ABOUT 2 ACRES IN SY. NO. 25 IN BALUVANAHALLI, KOLAR DISTRICT VIDE REGISTERED SALE DEED DATED 28.11.2012 FOR A CONSIDERATION OF RS.80 LAKHS; WHICH IS PAID AS UNDER: N. M. RAJU (THE ASSESSEE) - RS.40,00,000/- N. SUMA - RS. 5,00,000/- N. MANJUNATH - RS.15,00,000/- N. RADHA - RS. 5,00,000/- N. NANJEGOWDA - RS.15,00,000/- TOTAL RS.80,00,000/- THE AFORESAID PROPERTY AT BALUVANAHALLI WAS JOINTLY PURCHASED BY THE ASSESSEES MOTHER SMT. NANJAMMA AND HER BROTHER SHRI. VENKATESH GOWDA VIDE REGISTERED SALE DEED DATED 16.01.1982. SUBSEQUENTLY, BOTH THESE PERSONS EXPIRED LEAVING BEHIND THEIR CHILDREN AS THEIR LEGAL HEIRS. 2.2 THE AO, WHILE ASSESSING THE INCOME OF THE ASSESSEE ARISING FROM THE SALE OF THE AFORESAID PROPERTY AT BALUVANAHALLI; UNDER THE HEAD LONG TERM CAPITAL (LTCG), ALLOWED THE AMOUNT OF RS.32 LAKHS PAID TO THE CHILDREN OF THE LATE SHRI. C. VENKATESH GOWDA, AS A REDUCTION FROM THE SALE CONSIDERATION OF RS.40 LAKHS DIRECTLY RECEIVED BY HIM FROM THE PURCHASER. HOWEVER, THE AO ADDED THE SUM OF RS.40 LAKHS; RECEIVED BY THE 4 SIBLINGS OF THE ASSESSEE DIRECTLY FROM THE PURCHASER AND WHICH FINDS MENTION IN THE REGISTERED SALE DEED; AS THE SALE CONSIDERATION OF THE ASSESSEE. IN THESE CIRCUMSTANCES, AS NARRATED ABOVE, THE AO PROCEEDED TO COMPUTE THE LTCG OF THE ITA NO. 2512/BANG/2018 PAGE 3 OF 7 ASSESSEE ON SALE OF THE AFORESAID PROPERTY ON RS.48 LAKHS AS AGAINST RS.8 LAKHS CLAIMED BY THE ASSESSEE AT RS.18,66,224/-. THE ASSESSMENT WAS ACCORDINGLY CONCLUDED U/S 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) VIDE ORDER DATED 30.03.2016; WHEREBY THE ASSESSEES INCOME WAS DETERMINED AT RS.21,13,474/-. AGRICULTURAL INCOME WAS ACCEPTED AS RETURNED AT RS.2,50,000/-. ON APPEAL, THE CIT(A) CONFIRMED THE ACTION OF THE AO; DISMISSING THE ASSESSEES APPEAL VIDE THE IMPUGNED ORDER DATED 29.06.2018. 3. AGGRIEVED BY THE ORDER OF CIT(A)-14, BANGALORE DATED 29.06.2018 FOR ASSESSMENT YEAR 2013-14, THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL RAISING THE FOLLOWING GROUNDS: 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IN SO FAR AS IT IS AGAINST THE APPELLANT IS OPPOSED TO LAW, EQUITY AND WEIGHT OF EVIDENCE, NATURAL JUSTICE, FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE APPELLANT DENIES HIMSELF LIABLE TO BE ASSESSED TO A TOTAL INCOME OF RS.23,63,474/ AS AGAINST THE TOTAL INCOME RETURNED BY THE APPELLANT OF RS. 4,74,527/- FOR THE IMPUGNED ASSESSMENT YEAR 2013-14 ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THE LEARNED CIT(A) WAS NOT JUSTIFIED IN LAW AND ON FACTS IN HOLDING THAT THE APPELLANT'S SIBLINGS DID NOT POSSESS ANY MANNER OF RIGHT OVER THE PROPERTY, WHICH IS A PERVERSE FINDING AND WAS BEYOND THE SCOPE OF THE APPEAL, ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 4. THE LEARNED CIT(A) WAS NOT JUSTIFIED IN STATING THAT THE AO HAS REJECTED THE CLAIM OF THE APPELLANT IN SO FAR AS THE RIGHT OF HIS SIBLINGS IN THE PROPERTY WAS CONCERNED, WHICH IS NOT BORNE OUT OF RECORD, ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 5. THE LEARNED CIT(A) WAS NOT JUSTIFIED ON FACT, IN NOT HOLDING THAT THE REVISED COMPUTATION AS FILED BY THE AR OF THE APPELLANT WAS ERRONEOUS, IN SO FAR AS THE INDEXATION OF THE CAPITAL ASSET WAS NOT COMPUTED AND THE CIT(A), OUGHT TO HAVE DISREGARDED THE REVISED COMPUTATION AND HELD THAT THE REVISED CLAIM MADE IN THE APPELLATE PROCEEDINGS WAS PROPER, ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 6. THE LEARNED CIT(A) WAS NOT JUSTIFIED IN LAW, IN APPRECIATING THE SETTLED PRINCIPLE, 'CONSENT DOES NOT CONFER JURISDICTION', AND OUGHT TO HAVE ACCEPTED THE REVISED COMPUTATION AS ARRIVED AT DURING THE APPELLATE ITA NO. 2512/BANG/2018 PAGE 4 OF 7 PROCEEDINGS AND DIRECTED THE AO TO ADOPT THE SAME, ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 7. THE LEARNED CIT(A) WAS NOT JUSTIFIED IN LAW AND ON FACTS IN APPRECIATING THAT THE SALE CONSIDERATION RECEIVED FROM SALE OF LAND OUGHT TO HAVE BEEN ASSESSED FOR CAPITAL GAINS IN THE INDIVIDUAL HANDS OF THE RECIPIENTS, ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 8. THE LEARNED CIT(A) WAS NOT JUSTIFIED ON FACT, IN APPRECIATING THAT THE AO HAS DISREGARDED THE EXPENDITURE INCURRED OF RS.5,00,000/- IN COMPUTING THE CAPITAL GAINS, THEREBY ADOPTED A PICK AND CHOOSE METHOD IN ARRIVING AT THE TAXABLE CAPITAL GAINS, WHICH WAS IMPERMISSIBLE ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 9. THE LEARNED CIT(A) WAS NOT JUSTIFIED IN APPRECIATING THAT THE AO HAS ADOPTED AN ADHOC FIGURE OF RS.56,770/- TOWARDS ADDITIONS OF BOREWELL AND COMPOUND MADE TO THE PROPERTY AGAINST THE AMOUNT OF RS.5,00,000/-, WITHOUT COGENT REASONING ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 10. WITHOUT PREJUDICE, THE AUTHORITIES BELOW OUGHT TO HAVE ESTIMATED THE COST OF CONSTRUCTION OF A COMPOUND WALL AND A BOREWELL, BY APPRECIATING THAT THE SAME WERE PRESENT ON THE PROPERTY, ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 11. WITHOUT FURTHER PREJUDICE, THE RESULTING CAPITAL GAINS AFTER ADOPTING THE AMOUNT OF ESTIMATED IMPROVEMENTS FOR INDEXATION, THE RESULTING CAPITAL GAINS WAS BELOW THE TAXABLE LIMITS IN EACH OF THE INDIVIDUAL MEMBERS OF THE FAMILY AND HENCE THERE AROSE NO LIABILITY TO TAX. 12. THE LEARNED CIT(A) WAS NOT JUSTIFIED IN NOT ADJUDICATING THE GROUND ON THE ERROR APPARENT FROM RECORD, IN SO FAR AS THE ADDITION OF RS.50,122/-, ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 13. THE APPELLANT DENIES THE LIABILITY TO PAY INTEREST UNDER SECTION 234A AND 2348 OF THE ACT IN VIEW OF THE FACT THAT THERE IS NO LIABILITY TO ADDITIONAL TAX AS DETERMINED BY THE LEARNED ASSESSING OFFICER. WITHOUT PREJUDICE THE RATE, PERIOD AND ON WHAT QUANTUM THE INTEREST HAS BEEN LEVIED ARE NOT DISCERNABLE FROM THE ORDER AND HENCE DESERVES TO BE CANCELLED ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 14. IN VIEW OF THE ABOVE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF THE HEARING OF THE APPEAL, THE APPELLANT PRAYS THAT THE APPEAL MAY BE ALLOWED AND APPROPRIATE RELIEF BE GRANTED IN THE INTEREST OF JUSTICE AND EQUITY. 15. THE APPELLANT CRAVES LEAVE OF THIS HON'BLE TRIBUNAL, TO ADD, ALTER, DELETE, AMEND OR SUBSTITUTE ANY OR ALL OF THE ABOVE GROUNDS OF APPEAL AS MAY BE NECESSARY AT THE TIME OF HEARING. ITA NO. 2512/BANG/2018 PAGE 5 OF 7 16. IN VIEW OF THE ABOVE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF THE HEARING OF THE APPEAL, THE APPELLANT PRAYS THAT THE APPEAL MAY BE ALLOWED AND APPROPRIATE RELIEF BE GRANTED IN THE INTEREST OF JUSTICE AND EQUITY. 4.1 I HAVE HEARD THE RIVAL CONTENTIONS; CONSIDERED THE SUBMISSIONS MADE AND THE OTHER MATERIAL ON RECORD. THE FACTS OF THE MATTER IN RESPECT TO THE SALE OF THE AFORESAID PROPERTY AT BALUVANAHALLY, KOLAR DISTRICT, AS NARRATED ABOVE AT PARAS 2.1 AND 2.2 OF THIS ORDER (SUPRA) ARE UNCONTROVERTED. IT IS SEEN THAT THE AO IN HIS ORDER, ACCEPTS THE PAYMENT OF RS.32 LAKHS MADE BY THE ASSESSEE TO THE CHILDREN OF THE LATE C. VENKATESH GOWDA; THOUGH NOT FIGURING IN THE RECITALS IN THE REGISTERED SALE DEED DATED 28.11.2012; AND REDUCES THE SAME FROM THE AMOUNT OF RS.40 LAKHS RECEIVED BY THE ASSESSEE FROM THE PURCHASER. ON THE OTHER HAND, I FIND THAT THE AO, WHILE COMPUTING THE ASSESSEES SHARE OF LTCG ON SALE OF THE KOLAR PROPERTY ADDS THE SUM OF RS.40 LAKHS RECEIVED BY THE ASSESSEES 4 SIBLINGS DIRECTLY FROM THE PURCHASER AND WHICH FACT OF RECEIPT / PAYMENT IS NOTICED FROM THE RECITALS IN THE SALE DEED DATED 18.11.2012. IN MY CONSIDERED VIEW, THE AOS TREATMENT OF THIS AMOUNT OF RS.40 LAKHS DIRECTLY RECEIVED BY THE ASSESSEES 4 SIBLINGS (VIZ., AS PER DETAILS EXTRACTED AT PARA 2.1 OF THIS ORDER), WHO HAVE A RIGHT IN THEIR MOTHERS PROPERTY, AS PART OF THE ASSESSEES CONSIDERATION FOR COMPUTATION OF HIS LTCG DOES NOT STAND TO REASON. 4.2 IN THE HEARINGS BEFORE THE TRIBUNAL, THE ASSESSEE HAS FURNISHED ON 05.11.2018 COPIES OF FAMILY TREE CERTIFIED BY THE VILLAGE ACCOUNTANT, JANGAMANA KOTE HOBLI DATED 24.09.2010 (IN KANNADA); COPY OF AFFIDAVIT SHOWING FAMILY TREE DATED 03.10.2018 AND TRANSLATION THEREOF, COPIES OF DEATH CERTIFICATES OF THE ASSESSEES PARENTS, SHRI. T. NARAYANASWAMI (FATHER) AND SMT. NANJAMMA (MOTHER) AT PAGES 48 TO 53 OF PAPER BOOK. THESE DETAILS, IT APPEARS, HAVE NOT BEEN FILED BEFORE THE AUTHORITIES BELOW. ACCEPTING THE PLEAS OF THE LEARNED AR OF THE ASSESSEE THAT THESE DOCUMENTS ARE TO BE ADMITTED FOR CONSIDERATION AS WOULD GO TO THE ROOT OF THE MATTER IN DETERMINING THE LTCG OF THE ASSESSEE ON SALE OF AFORESAID PROPERTY, I ADMIT THE ITA NO. 2512/BANG/2018 PAGE 6 OF 7 AFORESAID DETAILS/DOCUMENTS AT PAGES 48 TO 53 OF PAPER BOOK UNDER RULE 29 OF THE INCOME TAX (APPELLATE TRIBUNAL) RULES, 1963. 4.3 IN VIEW OF THE FACTUAL MATRIX AND THE CIRCUMSTANCES OF THE CASE, AS NARRATED ABOVE, I AM OF THE CONSIDERED VIEW THAT THE INTEREST OF SUBSTANTIAL JUSTICE WOULD BE WELL SERVED IF THE IMPUGNED ORDER OF ASSESSMENT DATED 30.03.2016 FOR ASSESSMENT YEAR 2013-14 IS SET ASIDE AND RESTORED BACK TO THE FILE OF THE AO FOR THE LIMITED PURPOSE OF VERIFYING WHETHER THE PERSONS SHOWN AS SIBLINGS, I.E., CONSENTING WITNESSES ARE ACTUALLY THE SIBLINGS OF THE ASSESSEE AND WHETHER THEY HAVE RECEIVED THE PAYMENTS AS LAID OUT IN THE RECITALS OF THE SALE DEED DATED 18.11.2012. IF THE ASSESSEES CLAIM IS FOUND TO BE FACTUALLY CORRECT, THEN THE AO SHALL ADOPT THE SALE CONSIDERATION ARISING/ACCRUING TO THE SHARE OF THE ASSESSEE AT RS. 8 LAKHS AND RE-COMPUTE THE ASSESSEES LTCG ON SALE OF THE AFORESAID PROPERTY AT BALUVANAHALLI, KOLAR DIST ACCORDINGLY COMPLETE THE ASSESSMENT FOR ASSESSMENT YEAR 2013-14 IN THE CASE ON HAND. 5. IN VIEW OF SETTING ASIDE THE ORDER OF ASSESSMENT DATED 30.03.2016 FOR ASSESSMENT YEAR 2013-14 FOR THE LIMITED PURPOSE AS LAID OUT ABOVE, THE OTHER GROUNDS RAISED BY THE ASSESSEE (SUPRA) REQUIRE NO ADJUDICATION AT THIS JUNCTURE. 6. IN THE RESULT, THE ASSESSEES APPEAL FOR ASSESSMENT YEAR 2013-14 IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 13 TH DAY OF FEBRUARY, 2019. SD/- SD/- BANGALORE. DATED: 13 TH FEBRUARY, 2019. /NS/* (N. V. VASUDEVAN) (JASON P BOAZ) JUDICIAL MEMBER ACCOUNTANT MEMBER ITA NO. 2512/BANG/2018 PAGE 7 OF 7 COPY TO: 1. APPELLANTS 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.