Manguben Somsingh Zala, Ahmedabad V. The Dy.CIT.,Circle-9, Ahmedabad

ITA 2743/AHD/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80380 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 11 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 04-08-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 24-09-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: S N DIVETIA
• Keywords: Principle of natural justice
• Section: 143(3); 54B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH BEFORE: SRI G.C. GUPTA, VICE PRESIDENT AND SHRI ANIL CHATURVEDI, ACCOUNTAN T MEMBER MANGUBEN SOMSINGH ZALA, 25, SOMVILLA SOCIETY, B/H. BAIKAKANAGAR, THALTEJ, AHMEDABAD PAN: AAGPZ 6155 K (APPELLANT) VS DY. CIT CIRCLE-9 (RESPONDENT) REVENUE BY: SRI NIMESH YADAV, SR. D.R. ASSESSEE BY: SRI S.N. DIVETIA, A.R. DATE OF HEARING : 04-08-2014 DATE OF PRONOUNCEMENT : 19-09-20 14 / ORDER PER : ANIL CHATURVEDI, ACCOUNTANT MEMBER:- THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE O RDER OF LD. CIT(A)- XV AHMEDABAD DATED 19-08-2010. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI AL ON RECORD ARE AS UNDER. 3. THE ASSESSEE IS A INDIVIDUAL STATED TO BE DERIVI NG INCOME FROM PARTNERSHIP FIRM, CAPITAL GAINS AND INTEREST. ASSE SSEE FILED HIS RETURN OF ITA NO. 2743/AHD/2010 ASSESSMENT YEAR 2007-08 I.T.A NO. 2743/AHD/2010 A.Y. 2007-08 PAGE NO MANGUBEN SOMSINGH ZALA VS. DCIT 2 INCOME FOR A.Y. 2007-08 ON 06-12-2007 DECLARING TOT AL INCOME AT RS. 15,49,010/-. THE CASE WAS SELECTED FOR SCRUTINY AN D THEREAFTER ASSESSMENT WAS FRAMED U/S. 143(3) VIDE ORDER DATED 11-12-2009 AND THE TOTAL INCOME WAS DETERMINED AT RS. 64,22,110/-. AG GRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A), LD. CIT(A) VIDE ORDER DATED 19 TH AUGUST, 2010 DISMISSED THE APPEAL OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF LD. CIT(A), ASSESSEE IS NOW IN APPE AL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS:- 1.1 THE ORDER PASSED U/S. 250 ON 19.8.2010 FOR A.Y . 2007-08 BY CIT(A)-XV, ABAD, CONFIRMING THE ORDER PASSED U/S. 143(3) DATED 11.12.2009 TREATING THE CAPITAL GAINS ON SALE OF LA ND AS STCG INSTEAD OF LTCG CLAIMED BY THE APPELLANT, IS WHOLLY ILLEGAL, UNLAWFUL AND AGAINST THE PRINCIPLES OF NATURAL JUSTICE. 1.2 LD. CIT(A] HAS GRIEVOUSLY ERRED IN LAW AND OR O N FACTS IN PASSING THE IMPUGNED ORDER WITHOUT CONSIDERING FULLY AND PR OPERLY THE SUBMISSIONS MADE AND EVIDENCE PRODUCED BY THE APPELLANT DURING THE COURSE OF HEARING. THE LD.CIT(A) HAS PASSED A CRYPTIC AND NON -REASONED ORDER BY COMPLETELY IGNORING THE MATERIAL PLACED BEFORE HER SO THAT IT IS LIABLE TO BE QUASHED. 2.1 LD. CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND ON FACTS IN CONFIRMING THAT THE CAPITAL GAIN ON SALE OF LAND AS SHORT TERM INSTEAD OF LONG TERM CLAIMED BY THE APPELLANT. 2.2 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LD. CLT(A) OUGHT NOT TO HAVE UPHELD THAT (A) TH E APPELLANT HAD NOT DISPUTED BOTH THE DATES I.E. 23.4.2004 AND 19.4.200 6, (B) THE POSSESSION OF THE LAND WAS ACQUIRED ON 23.4.2004, [C] CAPITAL GAIN ON SALE OF LAND WAS STCG. 3.1 THE LD. CLT(A) HAS FAILED TO APPRECIATE THAT T HE ENTIRE CONSIDERATION FOR PURCHASE OF THIS LAND WAS PAID BY THE DECEASED HUSBAND OF THE APPELLANT PRIOR TO THE BANAKHAT EXECUTED ON 13.9.94 IN RESPECT OF DEAL BETWEEN PRATAPSING THAKORE AND SOMAJI THAKORE AND THEREFORE THE POSSESSION WAS ALREADY TAKEN OF THAT TIME WHEREAS T HE CONVEYANCE DEED EXECUTED ON 22.4.2004 DID NOT CONFER ANY LEGAL TITL E ON THE APPELLANT AND OTHERS. BEFORE US LD. A.R. SUBMITTED THAT THOUGH THE ASSESS EE HAS RAISED VARIOUS GROUNDS, BUT THE ONLY EFFECTIVE GROU ND IS WITH I.T.A NO. 2743/AHD/2010 A.Y. 2007-08 PAGE NO MANGUBEN SOMSINGH ZALA VS. DCIT 3 RESPECT TO TREATMENT OF PROFIT ON SALE OF LAND AS S HORT TERM CAPITAL GAINS. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS AO N OTICED THAT ASSESSEE HAD SOLD A PLOT OF LAND ADMEASURING 12383 SQ MTS SITUATED AT BODAKDEV (SURVEY NO 101/1, 101/2 AND 101/3) TO VIEN NA DEVELOPERS FOR RS 1,30,02,150/- AND THE ASSESSEES SHARE OF 50% WAS 65,01,075/-. THE AFORESAID LAND WAS STATED TO HAVE BEEN ACQUIRED ON 13.9.1994 FOR RS 2,32,420/-BY HER HUSBAND, LATE SOMAJI ZINAJI THAKOR E ALONGWITH HER SON JIVANBHAI. AFTER THE DEATH OF SOMAJI THAKORE, THE PROPERTY CAME TO HER BY WAY OF INHERITANCE. ASSESSEE CONSIDERED THE GAIN ON SALE OF LAND TO BE LONG TERM CAPITAL GAIN AS ACCORDING TO HER SINCE TH E LAND WAS ACQUIRED BY HER HUSBAND IN 1994, DATE OF ACQUISITION OF THE LAN D SHOULD BE CONSIDERED AS 1994 AND AFTER INDEXING, THE COST OF LAND WORKED OUT TO RS 4,63,734/-. SHE ACCORDINGLY WORKED OUT THE LONG TERM CAPITAL GA IN AT RS 45,52,711/- AND THE SAME WAS CLAIMED AS EXEMPT U/S 54B OF THE A CT ON THE GROUND THAT AGAINST THE SALE OF LAND, ASSESSEE HAD ACQUIRE D A NEW AGRICULTURAL LAND AT VILLAGE KOLLATE, SANAND. THE CLAIM OF EXEMP TION U/S 54B WAS HOWEVER WITHDRAWN DURING THE COURSE OF ASSESSMENT P ROCEEDINGS FOR THE REASON THAT THE PURCHASE OF LAND DID NOT MATERIALIZ ED. WITH RESPECT TO THE CLAIM OF GAIN CONSIDERED AS LONG TERM, AO NOTICED THAT THE LAND IN FACT CAME TO ASSESSEE BY A REGISTERED SALE DEED DATED 23 .4.2004 FOR AGGREGATE PURCHASE CONSIDERATION OF RS 3,49,505 (CO MPRISING OF PURCHASE CONSIDERATION OF LAND OF RS 3,09,575/- + STAMP DUTY OF RS 35,000 + REGISTRATION CHARGES OF RS 4,930/-). AO WAS OF THE VIEW THAT SINCE THE LAND CAME IN POSSESSION OF THE ASSESSEE IN THE YEAR 2004 AND SINCE THE SAME WAS SOLD IN THE YEAR UNDER CONSIDERATION I.E. BEFOR E 3 YEARS FROM THE DATE OF ACQUISITION, THE GAINS ON ITS SALE HAS TO BE TAX ED AS 'SHORT TERM CAPITAL GAIN' AND NOT AS 'LONG TERM CAPITAL GAIN' AS CLAIME D BY THE ASSESSEE. HE ACCORDINGLY REWORKED THE CAPITAL GAINS AND CONSIDER ED THE ASSESSEE'S I.T.A NO. 2743/AHD/2010 A.Y. 2007-08 PAGE NO MANGUBEN SOMSINGH ZALA VS. DCIT 4 SHARE AT RS 63,26,322/- AS SHORT TERM CAPITAL GAIN . AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A). LD. CIT(A) CONFIRMED THE ORDER OF AO BY HOLDING AS UNDER:- 4. A. GROUND NO.1 AND 2 PERTAIN TO TREATMENT OF ST CG DECLARED BY THE APPELLANT ON SALE OF LAND AS LTCG. THE FACTS HAVE BEEN MENTIONED IN A VERY CLEAR WAY I N THE ASSESSMENT ORDER IN PARA 3. IN BRIEF LAND ADMEASURING 12383 SQ .MTR BEARING SURVEY NO.101/1-2-3AT BODAKDEV AHMEDABAD WAS SOLD TO ONE V IENNA DEVELOPERS VIDE DEVELOPMENT AGREEMENT DATED 19.4.2006 FOR RS. 1,30,02,150 IN WHICH APPELLANT'S SHARE AT 50% CAME TO RS.65,01,075 . THE AO ON THE BASIS OF INQUIRIES MADE HELD THAT THE LAND CAME INT O POSSESSION OF THE APPELLANT ONLY ON 23.4.2004 BY SALE DEED, AND CONSE QUENT TO THAT THE DEVELOPMENT AGREEMENT WAS MADE. ACCORDING TO THE A O THUS THE CAPITAL GAINS WAS TAXABLE AS LONG TERM AND NOT SHORT TERM. 5. VIDE WRITTEN SUBMISSION DATED 22.7.2010 THE ID. AR TRIED TO ESTABLISH THAT THE APPELLANT INHERITED THE LAND FROM HER HUSB AND ON HIS DEATH ON 22.10.2003, THAT HER HUSBAND - SHRI SOMAJI ZALA - H AD ACQUIRED THE LAND BEARING SURVEY NO.101/1-2-3 AT BODAKDEV- AHMEDABAD - THROUGH A DULY NOTARIZED BANAKHAT ON 13.9.1994 FOR RS.4,62,840 FRO M ONE SHRI PRATAPSINGH THAKOR. SHRI PRATAPSINGH THAKOR DIED ON 17.3.2010 AND THE H USBAND OF THE APPELLANT - SHRI SOMAJI ZALA ON 22.10.2003, THEREFO RE A SALE DEED DATED 22.4.2004 WAS EXECUTED AMONGST THE LEGAL HEIRS OF B OTH ORIGINAL VENDOR AND PURCHASER ON 22.4.2004 (THROUGHOUT THE WRITTEN SUBMISSION THE ID AR HAS MENTIONED TWO DIFFERENT DATES OF THIS DEED, SOM EWHERE THE DATE HAS BEEN MENTIONED AS 22.4.2004 AND AT OTHER PLACES AS 23 4.2004) IN WHICH IT WAS STATED THAT THE POSSESSION OF THE LAND WAS G IVEN ON THE DATE OF THE SALE DEED. THE POINT OF THE ID.AR WAS THAT THE DATE OF PURCHASE OF THE LAND SHOULD BE TAKEN AS 13.9.1994 WHEN THROUGH BANAKHAT THE HUSBAND OF THE APPELLANT ACQUIRED THE PROPERTY AND NOT 23.4.2004 T HE DATE OF THE SALE DEED OF THE PROPERTY THAT IS WHEN THE SALE DEED WAS EXECUTED. IT WAS STATED THAT ON DEATH OF THE SELLER OF THE PROPERTY THAT IS SHRI PRATPSINGH THAKOR HIS LEGAL HEIRS DEMANDED INCREASE IN SALE PR ICE AND THAT IS WHY THE CONVEYANCE DEED WAS EXECUTED BUT THE POSSESSION OF THE LAND HAD ALREADY BEEN GIVEN TO THE HUSBAND OF THE APPELLANT THE DATE OF BANAKHAT THAT IS 13.9.1994 WHICH SHOULD BE TREATED AS DATE O F ACQUISITION OF THE PROPERTY AND WHEN 13.9.1994 IS THE DATE THEN THE CA PITAL GAINS IS LONG TERM ONLY. 6. AFTER GOING THROUGH RIVAL SUBMISSIONS I AM UNAB LE TO AGREE WITH THE ID.AR BECAUSE A FORMAL SALE DEED THROUGH WHICH THE APPELLANT BECAME THE OWNER / POSSESSOR OF THE PROPERTY IS DATED 23.4 .2004 AND THE DEVELOPMENT AGREEMENT DATED19.4.2006 THROUGH WHICH APPELLANT SOLD THE PROPERTY TO ONE VIENNA DEVELOPERS. BOTH THE DATES R EMAIN UNDISPUTED BY THE APPELLANT AND THEREFORE THE CAPITAL GAINS HAS C ORRECTLY BEEN TREATED AS I.T.A NO. 2743/AHD/2010 A.Y. 2007-08 PAGE NO MANGUBEN SOMSINGH ZALA VS. DCIT 5 STCG BY THE AO WHICH HAS BEEN DONE BY THE AO AFTER ALLOWING AMPLE OPPORTUNITIES TO THE APPELLANT. 5. AGGRIEVED BY THE ORDER OF LD. CLT(A), ASSESSEE I S NOW IN APPEAL BEFORE US. BEFORE US, LD AR REITERATED THE SUBMISSI ONS MADE BEFORE AO AND LD. CIT(A). HE FURTHER SUBMITTED THAT THE HUSBA ND OF THE ASSESSEE BECAME THE OWNER OF LAND IN THE YEAR 1994 WHICH WAS THROUGH BANAKHAT AND THE POSSESSION OF THE LAND WAS ALREADY GIVEN IN 1994 TO THE HUSBAND OF ASSESSEE AND THEREFORE THE DATE OF ACQUISITION W AS 1994 AND NOT 2004 WHEN THE SALE DEED OF PROPERTY WAS EXECUTED. HE ALS O PLACED RELIANCE ON THE DECISION IN THE CASE OF SANJEEV LAL VS CIT REPO RTED IN 365 ITR 389. HE FURTHER SUBMITTED THAT IN CASE OF THE SON, WHO WAS PART OWNER OF THE LAND, THE CAPITAL GAIN WAS CONSIDERED BY HIM AS 'LONG TER M CAPITAL GAIN' AND THE SAME WAS ACCEPTED U/S 143(1). HE ALSO PLACED ON REC ORD THE COPY OF THE ACKNOWLEDGEMENT OF RETURN OF INCOME IN THE CASE OF JIVANSINGH ZALA, THE SON OF THE ASSESSEE. HE THEREFORE SUBMITTED THAT SI NCE THE LAND WHICH HAS BEEN SOLD IS SAME, NO DIFFERENTIAL TREATMENT IS CAL LED FOR IN THE CASE OF ASSESSEE AND THAT OF HER SON. LD DR ON THE OTHER HA ND SUBMITTED THAT THE PROPERTY GETS TRANSFERRED ONLY ON THE EXECUTION OF SALE DEED. HE ALSO PLACED RELIANCE ON THE DECISION OF APEX COURT IN TH E CASE OF SURAJ LAMPS & INDUSTRIES (P) LTD VS. STATE OF HARYANA REPORTED IN (2011) 14 TAXMAN.COM 103 (SC). HE THUS SUPPORTED THE ORDER OF AO AND LD . CIT(A). 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS ABOUT THE DATE OF ACQUISITION OF LAND AND THEREBY THE CONSIDERATION RECEIVED ON ITS SALE AS TO WHETHER IT IS TO BE TREATED AS LONG TERM CAPITAL GAIN OR SHORT TERM CAPITAL GAIN. IT IS AN UNDISPUTED FACT THAT THE LAND IN QUESTION IS AN AGR ICULTURAL LAND. IT IS ASSESSEES SUBMISSION THAT THE LAND WAS ACQUIRED BY HER HUSBAND THROUGH BANAKHAT IN 1994 AND HE WAS ALSO HAVING THE POSSESS ION SINCE 1994 AND I.T.A NO. 2743/AHD/2010 A.Y. 2007-08 PAGE NO MANGUBEN SOMSINGH ZALA VS. DCIT 6 THEREFORE THE LAND SHOULD BE CONSIDERED TO BE IN PO SSESSION SINCE 1994. IT IS FURTHER ASSESSEE'S SUBMISSION THAT ON THE DEATH OF SHRI PRATAPSINGH THAKOR, (THE SELLER) HIS LEGAL HEIRS DEMANDED INCRE ASE IN SALE PRICE AND THEREFORE THE CONVEYANCE DEED WAS EXECUTED IN 2004. ON PERUSING THE COPY OF THE ENGLISH TRANSLATION OF THE SALE DEED PL ACED ON RECORD, WE FIND THAT THERE IS NO REFERENCE IN THE SALE DEED DATED 2 3/04/2004 ABOUT ENTERING INTO 1994 OF A BANAKHAT BY THE SELLER (SHRI PRATAPS ING THAKOR) AND THE HUSBAND OF THE ASSESSEE (SHRI SOMAJI ZALA) NOR THER E IS ANY MENTION OF THE AMOUNT WHICH IS STATED TO HAVE BEEN PAID AT THE TIME OF ENTERING INTO BANAKHAT. FURTHER, THE SALE DEED STATES THAT FROM THE DATE OF SALE DEED AND ON RECEIPT OF THE AGREED AMOUNT OF RS 3,09,575/ - (BUT WITHOUT ANY REFERENCE TO THE AMOUNT OF RS 2.32 LACS STATED TO H AVE BEEN PAID AT THE TIME OF BANAKHAT) ALL THE RIGHTS AND AUTHORITIES HA VE BEEN TRANSFERRED BY THE SELLER TO THE PURCHASER AND NEITHER THE SELLER OR THEIR FAMILY MEMBERS HAVE ANY RIGHT IN THE LAND. FURTHER, ON THE QUERY R AISED BY THE BENCH, WE WERE INFORMED THAT THE BANAKHAT HAS NOT BEEN REGIST ERED IN THE NAME OF THE ASSESSEE'S HUSBAND IN THE REVENUE RECORDS. FURT HER THERE IS NOTHING ON RECORD TO DEMONSTRATE THAT IN THE INTERVENING PE RIOD OF 10 YEARS (I.E. FROM THE STATED DATE OF BANAKHAT AND THE DATE OF RE GISTRATION OF SALE DEED) ANY AGRICULTURAL OPERATIONS WERE CARRIED ON BY THE ASSESSEE AND THE ASSESSEE WAS IN FULL CONTROL AND POSSESSION OF THE LAND. BEFORE US IT IS ALSO THE SUBMISSION ON BEHALF OF ASSESSEE THAT THE PART OF THE LAND WHICH HAS BEEN SOLD BY HIS SON HAS BEEN ACCEPTED AS LONG TER M CAPITAL GAIN AND THE SAME SHOULD THEREFORE BE ACCEPTED IN THE CASE O F ASSESSEE. WE FIND THAT THOUGH IN THE COMPUTATION OF INCOME FILED FOR A.Y. 2007-08, HIS SON HAS SHOWN THE GAINS TO BE LONG TERM, BUT NO ASSESSM ENT HAS BEEN FRAMED IN HIS CASE U/S 143(3) AND IN SUCH CIRCUMSTANCES IT CANNOT BE SAID THAT THE CONTENTION HAS BEEN ACCEPTED BY THE REVENUE. FURTHE R THE CASE LAWS RELIED UPON BY THE ASSESSEE ARE DISTINGUISHABLE ON FACTS AND THEREFORE NOT I.T.A NO. 2743/AHD/2010 A.Y. 2007-08 PAGE NO MANGUBEN SOMSINGH ZALA VS. DCIT 7 APPLICABLE TO THE PRESENT FACTS. WE ALSO FIND SUPP ORT BY THE DECISION OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF LATHA R AMACHANDRA INAMDAR VS DCIT REPORTED IN (2014) 360 ITR 367 WHERE THE HO NBLE HIGH COURT HAS ALSO OBSERVED THAT THE WORD 'TRANSFER' U/S 2(47) IN CLUDES SITUATION WHERE TRANSACTION INVOLVES ALLOWING OF POSSESSION OF ANY IMMOVABLE PROPERTY IN PART PERFORMANCE OF CONTRACT. BUT THAT SHOULD BE MA DE GOOD ON MATERIAL PLACED ON RECORD AND THROUGH COGENT EVIDENCE. CONSI DERING THE TOTALITY OF THE AFORESAID FACTS, WE FIND NO REASON TO INTERFERE WITH THE ORDER OF LD. CIT(A) AND THUS THE GROUNDS OF ASSESSEE ARE DISMIS SED. 7. IN THE RESULT THE APPEAL OF THE ASSESSEE IS DISM ISSED ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE AT CAPTION PAGE SD/- SD/- (G.C. GUPTA) (ANIL CHATURVEDI) VICE PRESIDENT ACCOUNTANT MEMBER AHMEDABAD : DATED 19/09/2014 AK / COPY OF ORDER FORWARDED TO:- 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,