DHANSUKH RAWAJIBHAI PATEL, PALGHAR V. ACIT PALGHAR, PALGHAR

ITA 2802/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8587 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 05-06-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 19-04-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value
• Section: 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH D, MUMBAI BEFORE D.T. GARASIA, JUDICIAL MEMBER AND SHRI N. K. PRADHAN, ACCOUNTANT MEMBER ITA NO.2802/M/2017 ASSESSMENT YEAR: 2012-13 SHRI DHANSUKH RAWAJIBHAI PATEL MACHHIPADA SARAWALI, PO, BOISAR, TAL & PO, PALGHAR - 401501 PAN: ABQPP9188B VS. ACIT PALGHAR. (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI BHUPENDRA SHAH REVENUE BY : SHRI PURUSHOTTAM KUMAR DATE OF HEARING : 12.09.2017 DATE OF PRONOUNCEMENT : 16.11.2017 O R D E R PER D.T. GARASIA , JUDICIAL MEMBER: THE ABOVE TITLED APPEAL HAS BEEN PREFERRED BY THE A SSESSEE AGAINST THE ORDER DATED 01.03.2017 OF THE COMMISSIONER OF INCOM E TAX (APPEALS) 3, MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A)] RELE VANT TO ASSESSMENT YEAR 2012-13. 2. THE EFFECTIVE GROUNDS OF THE APPEAL ARE AS UNDER: 1. TO QUASH THE REASSESSMENT WHICH IS BASED ON PRE SUMPTION AND SURMISES AND WITHOUT FURNISHING THE REASONS RECORDED FOR REOPENI NG. 2. TO DELETE THE MARKET VALUE OF RS.2,47,32,000/- A DOPTED BY THE ASSESSING OFFICER U/S.50C. 3. TO DELETE THE ADDITION OF LTCG OF RS.63,19,167/- BY OVERLOOKING THE TAXES PAID BY THE CO-OWNERS ON THE SAME AND THEREFORE, DO UBLE ADDITION OF THE SAME INCOME. 4. TO DELETE THE ADDITION OF LTCG OF RS.63,19,167/- BY OVERLOOKING THE TAXES PAID BY THE CO-OWNERS ON THE SAME AT THE SAME RATE @20%+EC AS APPLICABLE. 5. TO DELETE THE ADDITION OF LTCG OF RS.63,19,167/- WITHOUT ISSUING NOTICE U/S.133(6) OR SUMMONS U/S.131. 6. TO DELETE THE ADDITION OF LTCG OF RS.63,19,167 O N SUBSTANTIVE BASIS INSTEAD OF PROTECTIVE BASIS. 7. TO ALLOW THE DEDUCTION OF RS.1,00,000/- U/S.80C. ITA NO2802/M/17 A.Y.2012-13 2 8. TO DELETE THE INTEREST CHARGES U/S.234B & D AND INITIATION OF PENALTY U/S.271(1)(C). 3. THE SHORT FACTS OF THE CASE ARE AS UNDER:- RETURN OF INCOME DECLARING TOTAL INCOME AT RS.20,43 ,813/- WAS FILED ON 19.03.2013. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING IN SALT AND DECLARED INCOME FROM BUSINESS OF RS.2,40,330/-, LON G TERM CAPITAL GAIN OF RS.15,73,301/- AND INCOME FROM OTHER SOURCES OF RS .3,30,470/-. NOTICE U/S.148 WAS ISSUED AS THE APPELLANT FAILED TO OFFER ED LTCG IN ITS RETURN OF INCOME AND THE AO ADOPTED THE STAMP DUTY VALUATION OF RS.2,47,32,000/- U/S.50C(1) OF THE ACT ON SALE OF IMMOVABLE PROPERTY AS AGAINST THE SALE AGREEMENT VALUE OF RS.2,17,92,750/-. THE APPELLANT HAS ALSO PAID THE STAMP DUTY OF RS.14,65,600/-. THE AO REJECTED THE ARGUME NT OF THE APPELLANT THAT THE PROPERTY WAS AN ANCESTRAL PROPERTY AND BELONGED TO FOUR INDIVIDUALS NAMELY, HARISHCHANDRA RAWAJIBHAI PATEL, SITARAM RAWAJIBHAI PATEL, GITABEN ARJUN PATEL AND DHANSUKHBHAI RAWAJIBHAI PATEL WITH THE MU TUAL CONSENT OF ALL THE OWNERS, THE AGREEMENT OF SALE WAS MADE ONLY IN THE NAME OF THE APPELLANT. HOWEVER, THE REPLY OF THE APPELLANT WAS REJECTED ON THE GROUNDS THAT THE AMOUNT OF SALE WAS CREDITED IN APPELLANTS A/C AND AGREEMENT OF SALE IS ALSO MADE IN THE NAME OF THE APPELLANT AND PROVISIONS OF SECTION 50C ARE ALSO ATTRACTED IN THIS CASE. THEREFORE, THE AO APPLIED THE PROVISIONS OF SECTION 50C AND CALCULATED LONG TERM CAPITAL GAIN AT RS.78,92,1 80/-. 4. GROUND NO.1 IS NOT PRESSED. 5. THE LEARNED AR SUBMITTED THAT ALL 4 BROTHERS THA T ASSESSEE AND OTHER 3 CO-OWNERS RECEIVE EQUAL SHARE IN THE SALES PROCEEDI NGS OF THE SAID PROPERTY BECAUSE ALL HAD EQUAL RIGHT IN PLOT OF LAND SOLD DU RING THE YEAR. THE PROPERTY WAS IN THE NAME OF THE ASSESSEE, THEREFORE SALE DEE D WAS EXECUTED IN HIS NAME. IN THE AGREEMENT ITSELF THAT THE SAID PLOT WAS ANCE STRAL PROPERTY AND ALL THE FOUR BROTHERS WERE EQUALLY ELIGIBLE TO SHARE TH SHARE I N THE SALES PROCEEDS DURING THE YEAR. THE ASSESSING OFFICER DID NOT ISSUE SUMM ONS TO CO-OWNERS BEFORE MAKING ANY ENQUIRY. THE ASSESSING OFFICER HAD ADDE D WHOLE LONG TERM ITA NO2802/M/17 A.Y.2012-13 3 CAPITAL GAIN ARISING ON THE SALE OF PLOT IN FULL WI THOUT CONSIDERING THE FACT THAT ALL 3 CO-OWNERS HAVE SHOWN THEIR SHARE OF THE LTC G IN THEIR RESPECTIVE RETURNS. THE LEARNED AR RELIED UPON THE DECISION O F KISHANCHAND CHELLARAM VS. CIT [1980] 125 ITR 713, PONKUNNAM TRADERS [83 I TR 508 & 102 ITR 366(KER.], PRAKASH CHAND NATHA VS. COMMISSIONER OF INCOME TAX (2008) 301 ITR 134 AND P.C.NAHATA [247 ITR 274 SC], S. KHADER KHAN SON [300 ITR 157 MADRAS] & VINODKUMAR SOLANKI [233 ELT 157S.]. THE LEARNED AR RELIED UPON THE DECISION OF THE JURISDICTIONAL HIGH COURT IN CASE OF ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-3, NAGPUR VS. KA MLAKAR MOGHE [2015] 64 TAXMANN.COM 413. LEARNED AR RELIED UPON THE ORD ER OF REVENUE AUTHORITIES. 6. WE HAVE HEARD THE RIVAL CONTENTION OF BOTH THE P ARTIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT T HE ASSESSEE HAD SHOWN THE SAID PROPERTY WAS AN ANCESTRAL PROPERTY BELONGING T O FOUR INDIVIDUALS NAMELY, HARISCHANDRA RAWAJIBHAI PATEL, SITARAM RAWAJIBHAI P ATEL, GITABEN ARJUN PATEL AND DHANSUKHBHAI PATEL. DUE TO FRAGMENTATION OF LA W, THE PROPERTY WAS ONLY IN THE NAME OF THE ASSESSEE AND IT WAS MUTUALLY AG REED UPON BY THEM ORALLY IN THE ASSESSEE TO DISTRIBUTE THE SALE CONSIDERATION A ND HENCE SALE PROCEEDS RECEIVED OF RS.2,27,92,750/- WAS DISTRIBUTED AMONGS T THEMSELVES EQUALLY. EACH ONE HAS CALCULATED HIS/HER OWN CAPITAL GAINS A ND PAID TAXES AND FILED THEIR RETURNS INDIVIDUALLY. AS THE PROPERTY WAS IN THE N AME OF THE APPELLANT, THE AGREEMENT FOR SALE WAS ALSO MADE IN THE NAME OF ASS ESSEE. 7. WE HAVE PERUSED THE DOCUMENTARY EVIDENCE PRODUCE D BEFORE US THE PAPER BOOK ON PAGE NO.37 WHEREIN 7/12 ABSTRACT OF T HE PROPERTY WAS IN THE NAME OF SHRI DHANSUKHBHAI PATEL. WE HAVE ALSO VERI FIED THAT THIS ORIGINAL PROPERTY WAS ALSO HELD BY SHREE PALANJI GODREJ FROM THEM THIS PROPERTY WAS TRANSFERRED IN THE NAME OF SHRI RAVJIBHAI PATEL, SH RI GANPATBHAI PATEL, SHRI SITARAMBHAI PATEL, SHRI ARJUNBHAI PATEL AND SHRI HA RISHCHANDRABHAI PATEL WHICH IS ON PAGE 45 OF THE PAPER BOOK. PAGE 49 OF THE PAPER BOOK WHICH ITA NO2802/M/17 A.Y.2012-13 4 SHOWS THAT DUE TO FRAGMENTATION OF LAW, THE PROPERT Y WAS IN THE NAME OF ASSESSEE. WE FIND THAT SURVEY NO.156 HISS NO.6, AR EA H. ARE 17-60.0 & VALUATION 21-50 WAS PURCHASED BY SHRI RAVJIBHAI PAT EL AND HIS BROTHERS ON 20.02.1972. THEREAFTER, THIS PROPERTY WAS DISTRIBU TED AMONG THE 7 MEMBERS AND SHRI DHANSUKHBHAI BECAME THE REGISTERED PART OW NER OF THE SAID PROPERTY AS PER PAGE NO. 117-121. WHEN THE PROPERTY WAS SOL D TO KARAMTAA STEEL PVT. LTD. AND ASSESSEE AND TWO BROTHERS AND LEGAL HEIRS OF 4 TH BROTHER ARE THE CO- OWNERS. WE ALSO FIND FROM THE SALE DEED WHEREIN AL L THE ASSESSEE AND THREE BROTHERS NAME ARE MENTIONED IN THE SALE DEED. LOOK ING TO THE FACTS AND CIRCUMSTANCES OF THE CASE THAT AO IS NOT JUSTIFIED IN ADDING THE LONG TERM CAPITAL GAIN IN THE HANDS OF THE ASSESSEE. THEREFOR E, WE ARE OF THE OPINION THAT AO AND CIT(A) ARE NOT JUSTIFYING THIS. 8. WE GOT SUPPORT FROM THE DECISION OF JURISDICTION AL HIGH COURT IN THE CASE OF ACIT VS. KAMLAKAR MOGHE [2015] 64 TAXMANN.C OM 413 (BOMBAY) WHEREIN IT IS HELD AS UNDER: I. SECTION 48 OF THE INCOME-TAX ACT, 1961 - CAPITA L GAINS - COMPUTATION OF (EXPENSES IN CONNECTION WITH TRANSFER) - ASSESSEE R ECEIVED A PROPERTY WITH CLAUSE IN HIS MOTHER'S WILL PROVIDING OVERRIDING TITLE IN FAV OUR OF HIS THREE SISTERS - HE PAID CERTAIN AMOUNT TO HIS SISTERS SO THAT IN FUTURE THE Y SHOULD NOT CLAIM ANY RIGHT IN PROPERTY - A FAMILY SETTLEMENT WAS ACCORDINGLY REDU CED INTO WRITING - ASSESSEE, AFTER SALE OF SAID PROPERTY, CLAIMED SUCH AMOUNT UN DER SECTION 48 AND REDUCED IT WHILE WORKING OUT CAPITAL GAINS - WHETHER SINCE ASS ESSEE'S SISTERS HAD A TITLE IN PROPERTY AND WITHOUT THEIR CO-OPERATION THERE COULD NOT HAVE BEEN ANY SALE, AMOUNT PAID TO THEM WOULD BE CONSIDERED AS EXPENDIT URE IN CONNECTION WITH TRANSFER OF PROPERTY AND WOULD BE REDUCED WHILE COM PUTING CAPITAL GAIN - HELD, YES [PARA 8] [IN FAVOUR OF ASSESSEE] 9. RESPECTFULLY FOLLOWING THE DECISION OF JURISDICT IONAL HIGH COURT, WE ALLOW THE APPEAL OF THE ASSESSEE AND RESTORE THIS I SSUE TO THE FILE OF AO AND IS DIRECTED TO VERIFY WHETHER THE SALE PROCEEDS RECEIV ED OF RS.2,27,92,750/- WAS DISTRIBUTED AMONGST CO-SELLERS OF THE PROPERTY AND CO-SELLERS HAVE FILED THEIR INDIVIDUAL RETURNS. THE AO IS DIRECTED TO VERIFY T HE SAME AND ALLOW THE CLAIM. 10. IN THE RESULT, APPEAL IS ON THIS GROUND IS ALLO WED FOR STATISTICAL PURPOSES. ITA NO2802/M/17 A.Y.2012-13 5 11. GROUND NO.7 IS RELATED TO DEDUCTION OF RS.1,00, 000/- U/S.80C. IN THIS RESPECT, ASSESSEE DID NOT FILE ANYTHING BEFORE US A LSO, THEREFORE WE CONFIRM THE FINDING HELD BY THE LD. CIT(A). IN THE RESULT, APP EAL ON THIS GROUND IS DISMISSED. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS P ARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 16.11.2017. SD/- (N.K. PRADHAN) SD/- ACCOUNTANT MEMBER (D.T. GARASIA) JUDICIAL MEMBER MUMBAI, DATED: 16.11.2017. * MP . / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / ( THE CIT(A) ) 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / /(DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI