Bhavin Piyushbhai Palkhiwala, Ahmedabad V. Income Tax Officer, Ward-2(1)(4), Ahmedabad

ITA 2646/AHD/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 4945 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 30-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P PATHAK
• Assessee Lawyers: DIPAK R THAK KAR
• Keywords: Gift; Salary income; Benefit of exemption
• Section: 143(3); 54; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ./ITA NO. 2646/AHD/2017 ( / ASSESSMENT YEAR : 2010-11) BHAVIN PIYUSHBHAI PALKHIWALA 302, SHAPATH-3 NR.GNFC INFO TOWER SG HIGHWAY AHMEDABAD-380 054 / VS. THE INCOME TAX OFFICER WARD-2(1)(4) AHMEDABAD ./ ./ PAN/GIR NO. : AEAPP 8972 Q ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI DIPAK R. THAKKAR, AR / RESPONDENT BY : SHRI O.P. PATHAK, SR.DR / DATE OF HEARING 28/03/2019 !'# / DATE OF PRONOUNCEMENT 27 /05/2019 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TA X (APPEALS)2, AHMEDABAD [CIT(A) IN SHORT] VIDE APPEAL NO.CIT(A)-2 /181/ITO, WD.2(1)(4)/2015-16 DATED 06/10/2017 ARISING IN T HE ASSESSMENT ORDER PASSED UNDER S.143(3) R.W.S.263 OF THE INCOME TAX A CT, 1961(HEREINAFTER REFERRED TO AS 'THE ACT') DATED 29/07/2015 RELEVANT TO ASSESSMENT YEAR (AY) 2010-11. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- ITA NO.2646/AHD/2017 SHRI BHAVIN PIYUSHBHAI PALKHIWALA VS. ITO ASS T.YEAR 2010-11 - 2 - 1.01. THAT LEARNED CIT(A)-2, AHMEDABAD HAS ERRED IN CONFIRMING ADDITION OF LONG TERM CAPITAL GAIN OF RS.27,00,000/-. 1.02. THAT VARIOUS REASONS ADVANCED BY LEARNED CIT(A)-2, ARE CONTRARY TO THE FACTS AND CIRCUMSTANCES OF MY CASE. 1.03. THEREFORE ADDITION OF RS.27,00,000/- CONFIRMED BY LEARNED CIT(A)-2, AHMEDABAD SHOULD BE DELETED. 3. THE INTERCONNECTED ISSUE RAISED BY THE ASSESS EE IS THAT THE LD. CIT (A) ERRED IN CONFIRMING THE ADDITION MADE BY THE AO FOR A SUM OF RS. 27,00,000/- AS INCOME UNDER THE HEAD CAPITAL GA IN. 4. THE FACTS OF THE CASE ARE THAT THE ASSESSEE I S AN INDIVIDUAL AND DERIVING HIS INCOME FROM SALARY, HOUSE PROPERTY, AN D INTEREST. THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION RECEIV ED HAS DEPOSITED A SUM OF RS. 31,00,000/- IN HIS BANK ACCOUNT WHICH WA S RECEIVED FROM THE SALE OF PROPERTY (BUNGALOW NO.16, ASHWAMEGH, AHMEDA BAD) AND HIS FATHER FOR RS. 27,00,000/- AND RS. 4,00,000/- RESPE CTIVELY. 5. THE ASSESSEE FURTHER SUBMITTED THAT HE RELIN QUISHED HIS RIGHT IN THE BUNGALOW NO.15, ASHWAMEGH, AHMEDABAD WHICH WAS JOIN TLY HELD BY HIM IN FAVOR OF FAMILY MEMBERS IN THE F.Y.2008-09 T HROUGH REGISTERED DOCUMENT DATED 28/05/2008 WITHOUT ANY CONSIDERATION . 5.1. HOWEVER, THE AO DID NOT MAKE ANY INQUIRY REGARDING THE ABOVE FACTS IN HIS ASSESSMENT PROCEEDINGS UNDER SECTION 1 43(3) OF THE ACT. LATER ON THE LD. PCIT WAS OF THE VIEW THAT ORDER FRAMED B Y THE AO UNDER SECTION 143(3) OF THE ACT WAS ERRONEOUS AND PREJUDI CIAL TO THE INTEREST OF ITA NO.2646/AHD/2017 SHRI BHAVIN PIYUSHBHAI PALKHIWALA VS. ITO ASS T.YEAR 2010-11 - 3 - REVENUE. THUS THE LD. PCIT PASSED HIS ORDER UNDER S ECTION 263 OF THE ACT AFTER OBSERVING AS UNDER; 1. THAT THE SUM WAS CREDITED IN THE ASSESSEES BANK AC COUNT IN THE YEAR UNDER CONSIDERATION WAS RECEIVED FROM PIYUSH P ALKHIWALA (ASSESSEES FATHER) AND MANOJ KUMAR VASUDEO SOMPURA AGAINST THE SALE OF THE PROPERTY. 2. THAT THE ASSESSEE RECEIVED THE SAID SUM FOR THE REL INQUISHMENT OF HIS RIGHT IN THE IMMOVABLE PROPERTY DETAILED AS BUN GALOW NO. 15 ASHWAMEGH, SATELLITE, AHMEDABAD. IT IS BECAUSE THE ASSESSEE RELINQUISHED HIS RIGHT OF THE OWNERSHIP BEFORE THE DATE OF THE CONVEYANCE DEED DATED 18/08/2009. 3. THE ASSESSEE RELINQUISHED HIS RIGHT IN FAVOR OF THE FAMILY MEMBERS BY REGISTERING THE DOCUMENT DATED 28/05/2008 (I.E., F.Y. 2008-09). 4. THE ASSESSEES CLAIM THAT HE DID NOT RECEIVE ANY CO NSIDERATION AGAINST HIS RELINQUISHMENT OF RIGHT WAS NOT ACCEPTA BLE. 5. THE ASSESSEE WAS THE SIGNATORY OF THE CONVEYANCE DE ED OF THE BUNGALOW NO-16, ASHWAMEGH, AHMEDABAD WHICH WAS SOLD TO SHREE MANOJKUMAR YADAV SOMPURA. 6. THE ASSESSEE DID NOT SUBMIT ANY EVIDENCE OR RELATED DOCUMENT WHETHER HE OFFERED TO TAX ON THE CAPITAL GAIN AROSE UPON RELINQUISHMENT OF HIS RIGHT. 7. THE CLAIM OF RECEIPT FOR RS. 4,00,000/- FROM THE FA THER AS A GIFT WAS SUPPORTED WITH THE CONFIRMATION, BANK STATEMENT AND RETURN OF INCOME. HOWEVER, THE AO NEITHER CALLED ANY INFORMATION REGA RDING THIS, NOR THE ASSESSEE SUBMITTED ANY DOCUMENTS DURING THE ASSESSM ENT PROCEEDINGS UNDER SECTION 143(3) AND PROCEEDINGS UNDER SECTION 263 OF THE ACT. ITA NO.2646/AHD/2017 SHRI BHAVIN PIYUSHBHAI PALKHIWALA VS. ITO ASS T.YEAR 2010-11 - 4 - ACCORDINGLY, THE LD. PCIT DIRECTED THE AO TO MAKE A N ADDITION OF RS. 27,00,000/- TO THE TOTAL INCOME OF THE ASSESSEE AS LONG TERM CAPITAL GAIN. ACCORDINGLY, THE AO IN PURSUANCE TO THE DIRECTION O F THE LEARNED PCIT MADE AN ADDITION OF 27 LACS UNDER THE HEAD CAPITAL GAIN ON ACCOUNT OF RELINQUISHMENT OF THE RIGHT TO THE TOTAL INCOME OF THE ASSESSEE. 6. THE AGGRIEVED ASSESSEE PREFERRED AN APPEAL BEF ORE THE LD. CIT (A). THE ASSESSEE BEFORE THE LD. CIT (A) SUBMITS THAT IF HE IS LIABLE TO TAX UNDER THE HEAD CAPITAL GAIN ON THE INCOME CONSIDERE D BY AO, THEN HE IS ALSO ELIGIBLE FOR DEDUCTION UNDER SECTION 54 OF THE ACT. BUT THE FACT OF PURCHASE OF ANOTHER PROPERTY JOINTLY WITH THE FAMIL Y MEMBER WAS IGNORED BY THE AO DURING THE ASSESSMENT PROCEEDINGS. AS SUC H THE INVESTMENT WAS MADE TO PURCHASE ANOTHER PROPERTY WITHIN THE TI ME LIMIT SPECIFIED UNDER THE PROVISION OF SECTION 54 OF THE ACT. HOWEVER, THE LD. CIT (A) OBSERVED THAT THE ASSESSE E WAS THE OWNER OF BUNGALOW NO. 15 AND 16 ASHWAMEGH, ABAD ALONG WITH HIS FAMILY MEMBERS. AS SUCH THE ASSESSEE RELINQUISHED HIS SHAR E IN THE OWNERSHIP IN OWNERSHIP IN BUNGALOW NO. 15 WITHOUT ANY CONSIDERAT ION THROUGH THE REGISTERED DOCUMENT IN FAVOR OF HIS FAMILY MEMBERS DATED 27/05/2008. THE LD. CIT-A ALSO OBSERVED THAT THE ASSESSEE SOLD BUNGALOW NO 16, ASHWAMEGH ABAD AS PER THE CONVEYANCE DEED EXECUTED ON 18/08/2009 AND RECEIVED CONSIDERATION OF RS. 27,00,000/- AGAIN ST HIS SHARE IN THE SAID BUNGALOW. AFTER THAT ASSESSEE INVESTED THE SALE PRO CEEDS RS. 27,00,000/- AND RS. 4,00,000/- RECEIVED FROM HIS FATHER TO PURC HASE BUNGALOW NO 16, NEELKANTH GREEN BUNGALOW ON 29/09/2000. THEREFORE T HE ASSESSEE DID ITA NO.2646/AHD/2017 SHRI BHAVIN PIYUSHBHAI PALKHIWALA VS. ITO ASS T.YEAR 2010-11 - 5 - NOT OFFER THE TAX ON CAPITAL GAIN INCOME AS PER THE PROVISION OF SECTION 54F. HOWEVER, THE LD. CIT (A) WAS OF THE VIEW THAT ASSE SSEE DID NOT DECLARE ANY CAPITAL GAIN ON RELINQUISHMENT OF HIS SHARE IN BUNGALOW NO. 15, ASHWAMEGH, AHMEDABAD THOUGH IT IS CONSIDERED A TRAN SFER UNDER THE INCOME TAX ACT. AS SUCH ON PERUSAL OF THE SALE AND PURCHASE DEED THE LD. CIT (A) OBSERVED THAT THE ASSESSEE SOLD BUNGALO W NO. 16, ASHWAMEGH, AHMEDABAD TO MANOJ V. SOMPURA DATED 18/0 8/2009, AND AFTER 41 DAYS THE SAME BUNGALOW WAS PURCHASED BY HI M. IN VIEW OF THE ABOVE, THE LD. CIT (A) WAS OF THE OP INION THAT THE ASSESSEES CONTENTION WAS CONTRADICTORY AND THEREFO RE ADDITION MADE BY THE AO WAS UPHELD. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT (A), TH E ASSESSEE IS IN APPEAL BEFORE US. 7. THE LD. AR BEFORE US FILED A PAPER BOOK RUNN ING FROM PAGES 1 TO 123 AND SUBMITTED THAT THE ASSESSEE IS ENTITLED TO THE BENEFIT UNDER SECTION 54 OF THE ACT. THE LD. AR BEFORE US REITERATED THE SUBMISSION AS MADE BEFORE THE AUTHORITIES BELOW. 8. ON THE OTHER HAND, THE LD. DR VEHEMENTLY SU PPORTED THE ORDER OF THE AUTHORITIES BELOW. ITA NO.2646/AHD/2017 SHRI BHAVIN PIYUSHBHAI PALKHIWALA VS. ITO ASS T.YEAR 2010-11 - 6 - 9. WE HAVE HEARD THE RIVAL CONTENTION OF BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE ISSUE IN THE INSTANT CASE RELATES TO THE FACT THAT THE ASSESSEE HAS NOT OFFERED INCOME U NDER THE HEAD CAPITAL GAIN ON THE RELINQUISHMENT OF HIS RIGHT IN THE PROP ERTY AGAINST WHICH IT RECEIVED CONSIDERATION OF RS. 27,00,000.00. THE ASSESSEE WAS THE JOINT-OWNER IN 2 BUNGALOWS BEA RING NO. 15 AND 16 LOCATED AT ASHWAMEGH AHMEDABAD ALONG WITH HIS FAMIL Y MEMBERS. THE ASSESSEE CLAIMED TO HAVE RELINQUISHED HIS RIGHT IN BUNGALOW NO. 15 WITHOUT ANY CONSIDERATION IN FAVOR OF HIS RELATIVES . HOWEVER, THE AO WAS OF THE VIEW THAT THE ASSESSEE RECEIVED CONSIDERATIO N OF 27 LACS ON ACCOUNT OF RELINQUISHMENT OF HIS RIGHT IN THE PROPE RTY WHICH WAS NOT DISCLOSED IN THE INCOME TAX RETURN. ACCORDINGLY, TH E AO TREATED SUCH SUM OF 27 LACS AS INCOME OF THE ASSESSEE UNDER THE HEAD CA PITAL GAIN. THE LEARNED CIT (A) SUBSEQUENTLY CONFIRMED THE ORDER OF THE AO. FROM THE PRECEDING DISCUSSION, WE INTER-ALIA ALSO N OTE THAT THE ASSESSEE HAS INVESTED IN ANOTHER PROPERTY DATED 29-09-2009 B EARING ADDRESS BUNGALOW NO. 16, NEELKANTH GREEN BUNGALOW FOR RUPE ES 93,00,000.00 IN THE YEAR UNDER CONSIDERATION ALONG OTHER TWO CO- OWNERS BEING FAMILY MEMBERS. ACCORDINGLY, THE ASSESSEE CLAIMED TO HAVE INVESTED IN HIS SHARE THE PROPERTY FOR 31 LAKHS ONLY. THE COPY OF THE SALE DEED IS AVAILAB LE ON PAGES 106 TO 123 OF THE PAPER BOOK. AS SUCH THE ASSESSEE BEFORE THE LEARNED CIT (A) CLA IMED TO ALLOW THE BENEFIT OF EXEMPTION UNDER SECTION 54 OF THE ACT IF THE SUM OF 27 LACS ITA NO.2646/AHD/2017 SHRI BHAVIN PIYUSHBHAI PALKHIWALA VS. ITO ASS T.YEAR 2010-11 - 7 - IS TREATED AS HIS INCOME ON ACCOUNT OF RELINQUISHME NT OF HIS RIGHT THE PROPERTY. BUT THE LEARNED CIT (A) REJECTED THE CONT ENTION OF THE ASSESSEE BY OBSERVING THAT THE ASSESSEE HAS MADE A CONTRADIC TORY STATEMENT. AS SUCH THE ASSESSEE BEFORE THE LEARNED CIT (A) CLAIME D TO HAVE RECEIVED CONSIDERATION OF 27 LACS AGAINST THE SALE OF BUNGALOW NO. 16 AND WHI CH WAS INVESTED IN 16, NEELKANTH GREEN BUNGALOW ON 29/ 09/2009. HOWEVER, THE LEARNED CIT (A) MISUNDERSTOOD THE CLAI M OF THE ASSESSEE AND OBSERVED IN HIS ORDER THAT THE ASSESSEE AFTER S ELLING BUNGALOW NO. 16 ASHWAMEGH AHMEDABAD TO MANOJ KUMAR VASUDEO SOMPURA HAD PURCHASED AGAIN AFTER A GAP OF 41 DAYS. INDEED THE ASSESSEE HAS INVESTED AFTER 41 DAYS OF BUNGALOW NO. 16 ASHWAMEGH AHMEDABA D SALE, BUT THE SAME WAS NOT REPURCHASED BY HIM AS ALLEGED BY THE L D. CIT-A. IN FACT, THE ASSESSEE HAS INVESTED IN THE BEARING NUMBER 16, NEE LKANTH GREEN BUNGALOW ON 29/09/2009. THIS FACT FOR THE PURCHASE OF BUNGALOW NO. 16, LOCATED AT NEELKANTH GREEN BUNGALOW ON 29/09/2009 W AS NOT DOUBTED BY THE AUTHORITIES BELOW. WE ARE ALSO CONSCIOUS TO THE FACT THE RELINQUISHMEN T DEED WAS MADE ON 27/05/2008 FY 2008-09 CORRESPONDING TO AY 2009-10 A S EVIDENT FROM THE RELINQUISHMENT DEED PLACED ON PAGES 63 TO 76 OF THE PB. THUS IF ANY TAX IS REQUIRED TO BE LEVIED, THEN IT HAS TO BE LEV IED IN THE AY 2009-10. IN VIEW OF THE ABOVE, WE CONCLUDE THAT THE ASSESSEE WAS ENTITLED TO THE BENEFIT UNDER SECTION 54 OF THE ACT IN THE GIVEN FA CTS AND CIRCUMSTANCES. ACCORDINGLY, WE ARE NOT INCLINED TO ADJUDICATE OTHE R CONTENTIONS RAISED BY THE ASSESSEE BEFORE THE AUTHORITIES BELOW. THUS WE REVERSE THE ORDER OF ITA NO.2646/AHD/2017 SHRI BHAVIN PIYUSHBHAI PALKHIWALA VS. ITO ASS T.YEAR 2010-11 - 8 - THE LEARNED CIT (A) AND DIRECT THE AO DELETE THE AD DITION MADE BY HIM. HENCE, THE GROUND OF APPEAL OF THE ASSESSEE IS ALL OWED. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS AL LOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 27/05/2019 SD/- SD/- ( RAJPAL YADAV ) ( WASEEM AHMED ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 27/05/2019 &.., .(.. / T.C. NAIR, SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. )*+ , / CONCERNED CIT 4. , ( ) / THE CIT(A)-2, AHMEDABAD 5. /01 ((*+ , *+# , ) / DR, ITAT, AHMEDABAD 6. 145 6 / GUARD FILE. / BY ORDER, / ( //TRUE COPY// / ( DY./ASSTT.REGISTRAR) $%, / ITAT, AHMEDABAD 1. DATE OF DICTATION 14.5.19 (WORD PROCESSED BY HON BLE AM IN HIS COMPUTER BY DRAGON) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER .. 17.5.19 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.27.5.19 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 27.5.19 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER