K.Narendra Varma, CHENNAI V. ITO, CHENNAI

ITA 282/CHNY/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8905 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 18-04-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 12-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Assessee Lawyers: M KARUNAKARAN
• Keywords: Capital asset
• Section: 143(3); 54B

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , C B ENCH, CHENNAI . , . , # $ BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI G.PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A.NO.282/MDS/2016 ( / ASSESSMENT YEAR: 2011-12) MR. K.NARENDRA VARMA, L-26, 3 RD WEST STREET, KAMARAJ NAGAR,TIRUVANMIYUR, CHENNAI-600 041. VS . INCOME TAX OFFICER, NON CORPORATE WARD-15(3), CHENNAI. PAN: ADMPN7396K ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. M.KARUNAKARAN, ADVOCATE /RESPONDENT BY : MR. A.V.SREEKANTH, JCIT /DATE OF HEARING : 18 TH APRIL, 2016 /DATE OF PRONOUNCEMENT : 1 ST JULY, 2016 / O R D E R PER A. MOHAN ALANKAMONY, AM:- THIS APPEAL IS FILED BY THE ASSESSEE AGGRIEVED BY THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS)- 15, CHENNAI DATED 14.12.2015 IN ITA NO.196/CIT(A) -15/14- 15 PASSED UNDER SECTION 143(3) R.W.S. 250(6) OF THE ACT. 2. THE ASSESSEE IN HIS APPEAL HAS RAISED SEVERAL GROUNDS, HOWEVER, THE CRUX OF THE ISSUE IS THAT, T HE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE ORDER OF THE LEARNED ASSESSING OFFIC ER, WHO HAD HELD THE ASSESSEE TO BE LIABLE FOR CAPITAL GAIN TAX BY 2 ITA NO.282/MDS/2016 PRESUMING THE SALE CONSIDERATION OF ` 1,93,84,560/- WAS RECEIVED BY HIM. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL DERIVING INCOME FROM BUSINESS FILED HI S RETURN OF INCOME FOR THE ASSESSMENT YEAR 2011-12 ON 15.09.201 1 ADMITTING INCOME OF ` 2,98,720/-. BY AIR INFORMATION IT WAS REVEALED THAT THE ASSESSEE HAS SOLD CERTAIN IMMOVAB LE PROPERTIES. WHEN QUERIED THE ASSESSEE EXPLAINED THA T HE HAD ALREADY SOLD THOSE PROPERTIES TO SHRI C.K.PARI ON 4 .9.2006 FOR SALE CONSIDERATION OF RS.50,00,01,750/- AND THE SAM E WAS DISCLOSED IN THE RETURN OF INCOME FOR THE ASSESSMEN T YEAR 2007-08 WHEREIN THE ASSESSEE HAD CLAIMED EXEMPTION UNDER SECTION 54B OF THE ACT FOR REINVESTING THE SALE CON SIDERATION BY PURCHASE OF AGRICULTURAL LAND. HOWEVER, THE FIND ING OF THE LEARNED ASSESSING OFFICER WAS THAT THE ASSESSEE HAD PURCHASED ANOTHER PROPERTY ONLY ON 22.03.2012 WHICH IS BEYOND TWO YEARS FROM THE DATE OF SALE OF THE PROPE RTY AND HENCE THE ASSESSEE WAS NOT ELIGIBLE FOR EXEMPTION UNDER SECTION 54B OF THE ACT. FURTHER, THE ASSESSEE THRO UGH POWER OF ATTORNEY ASSIGNED TO SHRI K.PARI ON 4.9.2006 HAD SOLD THE 3 ITA NO.282/MDS/2016 ENTIRE PROPERTY ON 26.8.2010 AND 27.08.2010 FOR SAL E CONSIDERATION OF RS.1,56,96,000/- AND RS.36,28,560/ - RESPECTIVELY. THEREFORE, THE LEARNED ASSESSING OFF ICER OPINED THAT THE ASSESSEE WAS LIABLE FOR CAPITAL GA IN TAX FOR THE RELEVANT ASSESSMENT YEAR 2011-12 TOWARDS THE SA LE CONSIDERATION OF RS.1,93,84,560/-. 4. ON APPEAL THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) CONFIRMED THE ORDER OF THE LEARNED ASSESS ING OFFICER BY OBSERVING AS UNDER:- 5.1.5. IN THE CASE OF THE APPELLANT, THE SALE AGR EEMENT DATED 4.9.2006 IS NOT REGISTERED WHEREAS THE REGIST ERED SALE DOCUMENT DATED 28.8.2010 SHOWS THE APPELLANT A S THE ABSOLUTE OWNER ACTING THROUGH THE POWER OF ATTO RNEY HOLDER (AGENT). SHRI K.PARI DID NOT RESPOND TO THE LETTER OF THE ASSESSING OFFICER AND THE APPELLANT HAS ALSO NO T BEEN ABLE TO GIVE ANY DETAILS. IN VIEW OF THE LEGAL DICT UMS LAID DOWN BY THE HONBLE SUPREME COURT IN THE ABOVE MENTIONED CASE THAT GENERAL POWER OF ATTORNEY TRANSACTIONS CAN ONLY BE TREATED AS AGREEMENT FOR S ALE AND NOT TRANSFERS OR SALES AND FROM THE FACTS OF T HE CASE IT CAN BE SAID THAT THE SALE AGREEMENT AND POWER OF AT TORNEY AGREEMENTS DATED 04.09.2006 CAN BE TREATED AS AGREEMENT FOR SALE ONLY AND COMPLETE SALE TOOK PLAC E VIDE SALE DEED DATED 28.08.2010. THE ACTION OF THE ASSES SING OFFICER IN HOLDING THAT THE APPELLANT RECEIVED THE SALE CONSIDERATION OF RS.1,93,84,560/- AND CALCULATING T HE RESULTANT LONG TERM CAPITAL GAINS IS CONFIRMED. 5. BEFORE US, THE LEARNED AUTHORIZED REPRESENTATIVE SUBMITTED A PAPER BOOK CONTAINING 1 TO 30 PAGES CON TAINING 4 ITA NO.282/MDS/2016 THE SALE AGREEMENT BETWEEN THE ASSESSEE AND K.PARI DATED 4.9.2006 WHEREIN IT WAS STATED THAT (PAGE 3 CLAUSE 2) THE SALE CONSIDERATION FOR THE SALE OF IMMOVABLE PROPERTY TO MR. PARI WAS RS.50,00,01,750/-. THE GENERAL POWER OF ATTORNE Y EXECUTED AND REGISTERED BY THE ASSESSEE IN FAVOUR O F SHRI K.PARI ON THE SAME DAY WAS ALSO ENCLOSED. FURTHER, IN THE PAPER BOOK THE RETURN OF INCOME FILED BY THE ASSESS EE FOR THE ASSESSMENT YEAR 2007-08, VIDE ACKNOWLEDGMENT DATED 28.7.2007 WAS ALSO ENCLOSED WHEREIN THE ASSESSEE HA D DISCLOSED THE SALE OF LAND AND CLAIMED EXEMPTION UN DER SECTION 54B OF THE ACT. BASED ON THE ABOVE DOCUMEN TS, THE LEARNED AUTHORIZED REPRESENTATIVE SUBMITTED THAT TH E ASSESSEE HAD SOLD THE PROPERTY TO MR. PARI BY EXECU TING SALE AGREEMENT AND BY SIMULTANEOUSLY REGISTERING POWER O F ATTORNEY IN FAVOUR OF HIM AGAINST SALE CONSIDERATIO N OF RS.50,00,01,750/- RECEIVED BY HIM. IT WAS FURTHER S UBMITTED THAT AS PER SECTION 2(47) OF THE ACT THIS TRANSACT ION CONSTITUTE TRANSFER OF CAPITAL ASSET BY THE ASSESSEE AND ACCOR DINGLY, THE ASSESSEE HAD DISCLOSED THE SAME IN HIS RETURN OF IN COME AND CLAIMED EXEMPTION UNDER SECTION 54B OF THE ACT BY REINVESTING IN AGRICULTURAL LAND. THE LEARNED AUTHO RIZED 5 ITA NO.282/MDS/2016 REPRESENTATIVE FURTHER SUBMITTED THAT EVEN WHEN THE SE FACTS WERE BROUGHT TO THE KNOWLEDGE OF THE LEARNED ASSESS ING OFFICER DURING THE ASSESSMENT PROCEEDINGS FOR THE R ELEVANT ASSESSMENT YEAR, NO ACTION WAS TAKEN FOR REOPENING THE ASSESSMENT FOR THE ASSESSMENT YEAR 2007-08 THEREBY THE REVENUE HAD ACCEPTED THE TRANSACTION OF THE ASSESSE E FOR THE ASSESSMENT YEAR 2007-08. HENCE, IT WAS PLEADED THAT THE REVENUE CANNOT TREAT AN ASSET THAT WAS ALREADY TRANSFERRED BY THE ASSESSEE DURING THE ASSESSMENT Y EAR 2007-08, ONCE AGAIN AS TRANSFER OF THE ASSET IN THE RELEVANT ASSESSMENT YEAR 2011-12. MOREOVER, THE LEARNED AUT HORIZED REPRESENTATIVE SUBMITTED THAT THE ASSESSEE HAD NOT RECEIVED THE SALE CONSIDERATION OF RS.1,93,84,560/- AND THE SAME WAS RECEIVED BY MR. PARI TO WHOM THE ASSESSEE HAD TRANS FERRED THE ASSET ON 4.9.2006. THEREFORE, IT WAS PLEADED TH AT THE CAPITAL GAIN TAX LEVIED BY THE LEARNED ASSESSING OF FICER IN THE HANDS OF THE ASSESSEE MAY BE DELETED. 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE VEHEMENT LY ARGUED IN SUPPORT OF THE ORDERS OF THE REVENUE AND REQUESTED THE SAME TO BE UPHELD. 6 ITA NO.282/MDS/2016 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y PERUSED THE MATERIALS AVAILABLE ON RECORD. FROM THE DOCUMENTS SUBMITTED BY THE ASSESSEE IT IS EVIDENT T HAT THE ASSESSEE HAD SOLD HIS IMMOVABLE PROPERTY ON 4.9.200 6 BY RECEIVING SALE CONSIDERATION OF RS.50,00,01,750/- A ND BY SIMULTANEOUSLY EXECUTING SALE AGREEMENT AND GENERAL POWER OF ATTORNEY VIDE REGISTRATION NO.1946 OF 2006 TO SH RI PARI ON 4.9.2006 IN THE SUB-REGISTRAR OFFICE, ADYAR. AS PE R SECTION 2(47)(V) OF THE ACT TRANSFER IN RELATION TO CAPITA L ASSET INCLUDES ANY TRANSACTION INVOLVING THE ALLOWING OF POSSESSI ON OF ANY IMMOVABLE PROPERTY TO BE TAKEN OR RETAINED I N PART PERFORMANCE OF A CONTRACT OF THE NATURE REFERRED TO IN SECTION 53AOF THE TRANSFER OF PROPERTY ACT, 1882 . FROM THE ABOVE IT IS EVIDENT THAT THE ASSESSEE HAD TRANSFERRED THE PR OPERTY TO MR. PARI ON 4/09/2006 BECAUSE HE HAD RECEIVED THE S ALE CONSIDERATION RS.50,00,01,750/- (PAGE 3 - CLAUSE 2 OF THE SALE AGREEMENT) AND HANDED OVER VACANT POSSESSION OF THE PROPERTY ALONG WITH THE ORIGINAL TITLE DEEDS (PAGE NO.4 - CLAUSE 10 OF THE SALE AGREEMENT). THE SUBSEQUENT TRANSFER OF THE PROPERTY BY MR. K.PARI THROUGH EXERCISING THE GENER AL POWER 7 ITA NO.282/MDS/2016 OF ATTORNEY OBTAINED IN HIS FAVOUR WILL AMOUNT TO T RANSFER OF PROPERTY BY MR. PARI, HENCE, IN THAT EVENTUALITY MR .K. PARI WOULD BE LIABLE FOR CAPITAL GAIN TAX FOR THE SALE T RANSACTION EFFECTED ON 26.08.2010 & 27.08.2010 FOR RS.1,56,96, 000/- AND RS.36,88,560/- RESPECTIVELY. FROM THESE FACTS OF THE CASE, IT APPEARS THAT THE REVENUE IN ITS ANXIETY TO TAX THE INNOCENT ASSESSEE HAS LET GO THE REAL TAX EVADER. H OWEVER, WE FIND THAT THE PAPER BOOK SUBMITTED BY THE ASSESS EE IS NOT CERTIFIED TO HAVE BEEN PRODUCED BEFORE THE LOWER AU THORITIES, THEREFORE IN THE INTEREST OF JUSTICE, WE REMIT THE ENTIRE MATTER BACK TO THE FILE OF THE LEARNED ASSESSING OFFICER F OR EXAMINING THE PAPER BOOK FILED BY THE ASSESSEE BEFORE US AND IF FOUND TO BE GENUINE, PASS APPROPRIATE ORDERS AS PER LAW & MERIT AND BASED ON OUR ABOVE MENTIONED OBSERVATIONS. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES AS INDICATED HEREINABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON THE 1 ST JULY, 2016 SD/- SD/- ( . ) ( . ) (G.PAVAN KUMAR) ( A.MOHAN ALANKAMONY ) # % / JUDICIAL MEMBER % / ACCOUNTANT MEMBER 8 ITA NO.282/MDS/2016 # /CHENNAI, ( /DATED 1 ST JULY, 2016 SOMU *+ ,+ /COPY TO: 1. APPELLANT 2. RESPONDENT 3. - () /CIT(A) 4. - /CIT 5. + 1 /DR 6. /GF