Santokben Rameshbhai Mali, Ahmedabad V. The Income Tax Officer, Ward-1(2)(5), Vadodara

ITA 265/AHD/2023

AI Insights

The case involves Santokben Rameshbhai Mali, who appealed against the orders of the CIT(A) and the Income Tax Officer (ITO) regarding the assessment of her income for the Assessment Year 2012-13. The primary contention was the classification of Rs.5,40,000 received by her as a 'confirming party' in a sale deed, which was treated by the ITO as income from other sources, whereas the assessee argued it was capital gain. The Tribunal agreed with the assessee's classification, noting her joint ownership and receipt of the sale proceeds directly from the land sale, thus qualifying it as capital gain.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 129341 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-10-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: SMC
• Next Hearing Date: 24-09-2023
• Assessment Year: 2012-2013
• Appeal Filed On: 20-04-2023
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 148; 143(2); 208

Judgement Text

ITA No.265/Ahd/2023 Assessment Year: 2012-13 Page 1 of 4 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “SMC” BENCH, AHMEDABAD BEFORE Ms. SUCHITRA KAMBLE, JUDICIAL MEMBER ITA No.265/Ahd/2023 Assessment Year: 2012-13 Santokben Rameshbhai Mali, Deda Talavdi, Vasana Bhaily Road, Bhayali, Vadodara – 391 410. [PAN – BIMPM 4992 A] Vs. The Income Tax Officer, Ward – 1(2)(5), Vadodara. (Appellant) (Respondent) Assessee by Ms. Kinjal Shah, CA Revenue by Shri Ramesh Kumar, Sr. DR Da te o f He a r in g 25.09.2023 Da te o f P ro n o u n ce m e n t 18.10.2023 O R D E R This appeal is filed by the Assessee against order dated 28.02.2023 passed by the CIT(A), National Faceless Appeal Centre (NFAC), Delhi for the Assessment Year 2012-13. 2. The Assessee has raised the following grounds of appeal :- “1. The CIT (A) has erred both in Law and in Fact in upholding the Reopening of the Assessment u/s.147 and therefore order passed by the ITO is bad in Law and Void. Your Appellant submits that the notice u/s.148 was issued on 30.3.2019 for A.Y. 2012-13 is bad in Law and Time Barred and therefore not operative and also the day of issue of Notice was Saturday a Holiday in Government Office and therefore the issue of Notice is bad in Law. 2. (a) Without prejudice your Appellant submits that the reasons recorded by the AO for Reopening the assessment are dated 27.11.2019 which means after issue of notice u/s.148 of 30-03-2019 making the entire proceedings bad in Law. (b) Further also the Reasons Recorded are not valid since para – 4 mentions "inquires made by the AO" is left blank and incomplete still it has been finally relied for Reopening on para 4 mentioned in para 6 of the Reasons Recorded. ITA No.265/Ahd/2023 Assessment Year: 2012-13 Page 2 of 4 (c) Further the Reasons Recorded are for escapement of "Capital Gain" and addition made as Income for "other sources" runs counter making the very basis of Reopening of Assessment bad in Law and Void. II. On Merits: (a) Your Appellant submits that the amount of Rs.5,40,000/- received by your Appellant as "Confirming party" to the Sale Document is Capital Gain and not income from other sources as assessed. (b) Your Appellant further submits that the Sale Deed would have remained incomplete without signature of Confirming Party and therefore confirming party is the root of Capital Gain and receipt in his hands is therefore liable to Capital Gain. (c ) Your Appellant submits that even the Reasons Recorded for escapement was for Capital Gain and final assessment is as income from other sources is illegal and bad in Law and Void. III. On Interest u/s.234 1. The CIT(A) has erred both in Law and in Fact in upholding charging of Interest u/s.234A of Rs.35,496/- and u/s.234B of Rs.37,944/- which is not chargeable both on point of Law and on point of Fact since Interest u/s.234 which was not specifically mentioned by the AO and in general remark to "charge Interest u/s.234A/B/C/D, "wherever applicable" does not amount to order after application of mind and therefore Interest is not chargeable. 2. On facts of the case your Appellant submits that since the Assessee had genuine and bonafidly belief that his Income is not liable to tax and is not required to file Return of Income in time, was for good and valid reason and therefore Interest of Rs.35,496/- u/s.234A is not chargeable and also is not correctly worked out. 3. Your Appellant also submits that Interest u/s.234B is also not chargeable since your Appellant was not liable to pay Advance Tax u/s. 208 of the Act and hence there is no question of his failure and Section does not apply and therefore Interest of Rs.37,944/- be deleted.” 3. The assessee has not filed her return of income for A.Y. 2012-13. The case was reopened after recording the reasons and notice u/s 148 of the Act dated 30.03.2019 was issued and served upon the assessee. In response to the notice the assessee filed here return of income on 26.11.2019 declaring total income of Rs. 3,200/-. The reasons for reopening of the case was provided to the assessee and notice u/s 143(2) of the Act was issued on 27.11.2019. The Assessing Officer observed that during the year, the assessee derived income from other sources. ITA No.265/Ahd/2023 Assessment Year: 2012-13 Page 3 of 4 The Assessing Officer observed that the assessee purchased immovable property and the assessee was one of the confirming parties who received Rs.5,40,000/- in cash and claimed the long term capital gain of Rs.4,94,500/-. The Assessing Officer held that being one of the confirming parties the assessee is not eligible to claim regarding the cost of acquisition or exemption and the said amount was treated as receipt of the assessee. Thus, the Assessing Officer made addition of Rs.5,40,000/- as income from other sources. 4. Being aggrieved by the Assessment order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee. 5. The Ld. AR submitted that the amount of Rs.5,40,000/- received by the assessee as “Confirming party” to the Sale Document is capital gain and not income from other sources. The Sale Deed would have remained incomplete without signature of the Confirming Party and therefore, confirming party is the root of Capital Gain and receipt in her hand is therefore, liable to Capital Gain. The Ld. AR further submitted that the assessee is wife of Late Shri Rameshbhai Mali a joint owner of the land and thus, she inherited the share in land. The Ld. AR submitted that on sale of land, she received Rs. 5,40,000/- as here right as “Samdi Apnay” (consent giver) confirming party. Thus, the Ld. AR submitted that the addition made on this account and treating the said amount as income from other sources by the Assessing Officer is not correct. 6. The Ld. DR submitted that the treatment given by the Assessing Officer to the income of the assessee deriving from the sale of land as income from other sources was right as the assessee is not a seller but a confirming party. The Ld. DR relied upon the assessment order and order of the CIT(A). 7. Heard both the parties and perused all the relevant material available on record. As regards to Ground No.1 and 2, the same are general hence not adjudicated. It is pertinent to note that the assessee is joint owner of the property which was sold as per the Sale Deed. Though the nomenclature is describing her as Confirming Party, yet she received the consideration of Rs.5,40,000/- after selling the agricultural land and her share in the said land. Thus, the said amount to Capital Gain only. Therefore, the treatment given by the assessing Officer to the income as income from other sources is not justifiable. Hence, the Assessing Officer and the CIT(A) were not right in treating the said income as income from ITA No.265/Ahd/2023 Assessment Year: 2012-13 Page 4 of 4 other sources and making addition. Thus, Ground No.II on merit is allowed. As relates to Ground No.III, the same is consequential, hence not adjudicated at this juncture. 8. In result, appeal of the assessee is partly allowed. Order pronounced in the open Court on this 18 th October, 2023. Sd/- (SUCHITRA KAMBLE) Judicial Member Ahmedabad, the 18 th October, 2023 PBN/* Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Assistant Registrar Income Tax Appellate Tribunal Ahmedabad benches, Ahmedabad