ITO, New Delhi V. M/s Mona Mehta, New Delhi

ITA 2822/DEL/2011

• Counselvise Citation: 282220114 RSA 2011
• Duration Of Justice: 2 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-08-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 04-08-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 01-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R S NEGI
• Keywords: Capital asset; Business income; Additional evidence; Cost of acquisition

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E NEW DELHI) BEFORE SHRI RAJPAL YADAV AND SHRI K.D. RANJAN ITA NO. 2822/DEL/2011 ASSESSMENT YEAR: 2007-08 INCOME-TAX OFFICER, VS. MONA MEHTA, WARD 24(3), W-19/9, WESTERN AVENUE, NEW DELHI. SANIK FARMS, NEW DELHI. (PAN: AAMPM2542F) (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI R.S. N EGI, SR.DR RESPONDENT BY: NONE ORDER PER RAJPAL YADAV: JUDICIAL MEMBER THE REVENUE IS IN APPEAL BEFORE US AGAINST THE ORD ER OF LEARNED CIT(APPEALS) DATED 31.03.2011 PASSED FOR ASSESSMENT YEAR 2007-08. THE REVENUE HAS PLEADED THAT LEARNED CIT(APPEALS) HAS E RRED IN TREATING THE GAINS FROM TRANSFER OF CAPITAL ASSETS AS A LONG TER M CAPITAL GAIN BY ADMITTING ADDITIONAL EVIDENCE IN VIOLATION TO RULE 46A OF THE INCOME-TAX RULES, 1962. IN RESPONSE TO THE NOTICE OF HEARING, NO ONE HAS CO ME PRESENT ON BEHALF OF THE ASSESSEE. WE HAVE HEARD THE APPEAL EX PARTE QUA THE ASSESSEE. 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE HA S FILED HER RETURN OF INCOME ON 31.10.2007 DECLARING TAXABLE INCOME O F RS.2,75,510. HER CASE 2 WAS SELECTED FOR SCRUTINY ASSESSMENT AND NOTICE UNDER SECTION 143(2) WAS ISSUED. IN RESPONSE TO THE NOTICE, SHRI SATYAVE ER AHLAWAT, CA APPEARED BEFORE THE ASSESSING OFFICER FROM TIME TO TIME AND SUBMITTED THE REQUISITE DETAILS. ON PERUSAL OF THE ACCOUNTS, IT REVEALED TH AT A HOUSE PROPERTY COMPRISED AT A-13/8, VASANT VIHAR, NEW DELHI MEASUR ING 410 SQ. YD. WAS OWNED AND POSSESSED BY SHRI RAM KISHAN CHOPRA. HE D IED ON 17.8.1974. THIS PROPERTY DEVOLVED UPON MRS. SANTOSH CHOPRA W/O LATGE SHRI RAM KISHAN CHOPRA AS A SOLE OWNER OF THE PROPERTY. SHE SOLD 3/4 TH OF THE PROPERTY TO SHRI SURINDER MEHTA, THE FATHER OF THE ASSESSEE ON 30 TH SEPTEMBER 1986. THE 1/4 TH PROPERTY WAS RETAINED BY MRS. SANTOSH CHOPRA. 4. SHRI SURINDER MEHTA EXPIRED ON 16.1.1994 LEAVING THE FOLLOWING LEGAL HEIRS: I. MRS. ANJU MEHTA - WIDOW OF SHRI SURINDER MEHTA II. SHRI RATTAN MEHTA - SON OF SHRI SURINDER MEHT A III. MS. MONA MEHTA - DAUGHTER OF SH. SURINDER ME HTA IV. MRS. PRIYA VIG - DAUGHTER OF SH. SURINDER MEH TA 5. SMT. SANTOSH CHOPRA HAD AGREED TO SELL HER 1/4 TH SHARE TO THE ASSESSEE AND HER BROTHER RATTAN MEHTA ON 6.12.2006 FOR A CON SIDERATION OF RS.1,25,000 PLUS RS.8,75,000 AS STAMP DUTY. 3 6. THE ASSESSEE AND HER BROTHER RATTAN MEHTA, SOLD THE ENTIRE PROPERTY ON 12.12.2006 FOR A CONSIDERATION OF RS. 5 CRORES TO S HRI LALIT MODI (HUF) THROUGH ITS KARTA SHRI LALIT MODI. ACCORDING TO THE ASSESSING OFFICER, PRIOR TO THE EXECUTION OF THE SALE DEED IN FAVOUR OF SHRI LALIT MODI, HUF, SHRI ANJU MEHTA AND MRS. PRIYA VIG, MOTHER AND SISTER OF THE ASSESSEE HAD RELINQUISHED THEIR SHARES IN FAVOUR OF THE ASSESSEE AND HER BROTHER ON 3 RD OCTOBER 2006 WITHOUT ANY CONSIDERATION. ASSESSING O FFICER WAS OF THE OPINION THAT ASSESSEE AND HER BROTHER BECAME ABSOLU TE OWNER OF THE PROPERTY ONLY AFTER EXECUTION OF RELINQUISHMENT DEED, THEREF ORE, THE SHARES OF THE MOTHER AND SISTER DEVOLVED UPON THE ASSESSEE ON 3 RD OCTOBER, 2006, HAS BEEN SOLD IN DECEMBER 2006, A SHORT TERM CAPITAL GAIN HA D ACCRUED TO THE ASSESSEE BECAUSE THE ASSET WAS NOT RETAINED FOR A PERIOD OF MORE THAN THREE YEARS. ACCORDINGLY, ASSESSING OFFICER HAS COMPUTED THE LON G TERM CAPITAL GAIN AS WELL AS SHORT TERM CAPITAL GAIN. WITH REGARD TO THE SHARES SOLD BY SMT. SANTOSH CHOPRA, THE ASSESSING OFFICER DID NOT COMPU TE ANY GAIN BECAUSE HE WAS OF THE OPINION THAT NO GAIN MUST HAVE ARISEN ON THIS TRANSACTION AS THE AGREEMENT TO SELL WAS EXECUTED ON 6.12.2006 WHICH E NABLE THE ASSESSEE TO SELL THE ENTIRE PROPERTY. THE PROPERTY HAS BEEN SOL D ON 12.12.2006 WITHIN A PERIOD OF SIX DAYS. THERE MIGHT NOT HAVE ACCRUED AN Y GAIN. THEREFORE, HE DID NOT COMPUTE ANY GAIN ON THIS SHARE. HE TREATED THE COST OF ACQUISITION OF 1/4 TH 4 SHARE AT PAR WITH THIS SALES CONSIDERATION AND DEBI TED THE AMOUNT OF RS.1,33,75,000 FROM THE TOTAL SALES CONSIDERATION W HILE WORKING OUT THE LONG TERM CAPITAL GAIN AS WELL AS SHORT TERM CAPITAL GAI N FOR REST OF THE PROPERTY. IN OTHER WORDS, CASE OF THE ASSESSEE IS THAT 3/4 TH OF THE PROPERTY HAS BEEN SOLD AT A CONSIDERATION OF RS.3,66,25,000 OUT OF WHICH 50% SHARES BELONGED TO THE ASSESSEE AND HER BROTHER WHICH WAS INHERITED BY THE M. TO THIS EXTENT ONLY, LONG TERM CAPITAL GAIN HAS ARISEN TO THE ASSESSEE. WITH REGARD TO THE SHARES RELINQUISHED BY HER MOTHER AND SISTER, A SHORT TERM CAPITAL GAIN HAS BEEN COMPUTED. 7. DISSATISFIED WITH THE COMPUTATION MADE BY THE AS SESSING OFFICER, IT WAS CONTENDED BY THE ASSESSEE THAT ON THE DEATH OF HER FATHER, A FAMILY SETTLEMENT WAS ARRIVED BETWEEN THE PARTIES. HER MOT HER AND SISTER HAVE RELINQUISHED THEIR SHARES IN THE YEAR 1995. A FAMIL Y SETTLEMENT WAS EXECUTED AND THIS SETTLEMENT WAS GIVEN EFFECT IN THE MUNICIP AL RECORD. THE ALLEGED RELINQUISHMENT DEED CONSIDERED BY THE ASSESSING OFF ICER IS NOTHING JUST TO GIVE A CLEAR TITLE TO THE VENDEE. FOR BUTTRESSING H ER CONTENTIONS, MCD RECORD WAS CALLED FOR. LEARNED FIRST APPELLATE AUTHORITY H AS DIRECTED THE ASSESSEE TO PRODUCE THAT RECORD. AFTER GOING THROUGH THE REC ORD, LEARNED CIT(APPEALS) ARRIVED AT A CONCLUSION THAT MUTATION ORDER WAS PASSED BY THE 5 MCD ON 30.3.1995 WHEREBY THE PROPERTY HAS BEEN MUT ATED IN FAVOUR OF THE ASSESSEE AND HER BROTHER SHRI RATTAN MEHTA. THE OTH ER TWO LEGAL HEIRS I.E. MRS. ANJU MEHTA AND PRIYA VIG HAD RELINQUISHED THEI R SHARES IN FAVOUR OF THE ASSESSEE AND HER BROTHER. THIS FACT HAS SPECIFI CALLY BEEN RECORDED. ON THE BASIS OF THIS DOCUMENT, LEARNED CIT(APPEALS) HAS DI RECTED THE ASSESSING OFFICER TO COMPUTE LONG TERM CAPITAL GAIN ONLY ON T RANSFER OF THIS CAPITAL ASSETS. 8. WITH THE ASSISTANCE OF LEARNED DR, WE HAVE GONE THROUGH THE RECORD CAREFULLY. LEARNED DR HAS SUBMITTED THAT LEARNED C IT(APPEALS) HAS NOT GIVEN AN OPPORTUNITY TO THE ASSESSING OFFICER TO RE BUT THE EVIDENCE SUBMITTED BY THE ASSESSEE AND, THEREFORE, VIOLATION TO SUB-RULE(3) OF RULE 46A HAS BEEN COMMITTED. WE HAVE CONFRONTED THE LEAR NED DR TO SHOW THAT RELIANCE PUT BY THE LEARNED CIT(APPEALS) ON THE MUT ATION ORDER AVAILABLE ON RECORD OF MUNICIPALITY WHICH IS MAINTAINED IN THE O RDINARY COURSE BY THE PUBLIC SERVANT IN PERFORMANCE OF THEIR STATUTORY DU TY UNDER THE LAND REVENUE ACT IS FACTUALLY INCORRECT. HE WAS UNABLE T O CONTROVERT THE FINDINGS OF THE LEARNED CIT(APPEALS). ON PERUSAL OF THE ASSE SSMENT ORDER, WE FIND THAT THE ASSESSING OFFICER DID NOT CONSIDER THIS AS PECT RATHER HE HARPED UPON THE ALLEGED RELINQUISHMENT DEED. HE HAS NOT DISCUSS ED THE ISSUE IN DETAIL. LEARNED CIT(APPEALS) HAS DIRECTED THE PARTY TO PROD UCE THE MUNICIPAL 6 RECORD. THIS POWER HAS BEEN EXERCISED UNDER SUB-RUL E(4) OF RULE 46A OF THE INCOME-TAX RULE, 1962. IN THE GROUND OF APPEAL, REV ENUE HAS PLEADED THAT LEARNED CIT(APPEALS) HAS VIOLATED THE CONDITIONS EN UMERATED IN SUB-RULE(3) OF RULE 46A. SUB-RULE (3) CONTEMPLATES THAT LEARNED FIRST APPELLATE AUTHORITY SHALL NOT TAKE INTO ACCOUNT ANY EVIDENCE PRODUCED UNDER SUB- RULE(I), UNLESS THE ASSESSING OFFICER HAS BEEN ALLO WED A REASONABLE OPPORTUNITY TO EXAMINE THE EVIDENCE OR DOCUMENTS OR TO CROSS EXAMINE THE WITNESSES PRODUCED BY THE ASSESSEE, OR TO PRODUCE A NY EVIDENCE OR DOCUMENT OR ANY WITNESS IN REBUTTAL OF THE ADDITIONAL EVIDEN CE PRODUCED BY THE APPELLANT I.E. ASSESSEE. THIS RULE DOES NOT APPLY T O THE EVIDENCE CALLED FOR BY THE LEARNED CIT(APPEALS) BY EXERCISING POWERS UNDER SUB-RULE(4). UNDER THIS SUB-RULE, IN A WAY, LEARNED CIT(APPEALS) HAS E XERCISED THE POWERS OF AN ASSESSING OFFICER. HE CAN DIRECT ANY PARTY TO PR ODUCE ANY EVIDENCE WHICH CAN ENABLE HIM TO DISPOSE OF THE APPEAL. THOUGH THE RE IS NO SPECIFIC MENTION IN THE ORDER OF THE LEARNED CIT(APPEALS) THAT HE IS EXERCISING POWERS UNDER RULE (4) BUT FROM READING OF PARAGRAPH 5, IT IS IMP LIEDLY DISCERNIBLE THAT ASSESSEE WAS ASKED TO FILE THE MUTATION ORDER PASSE D BY THE MCD, IN RESPECT OF THE PROPERTY, IN ORDER TO FIND OUT IF THE CONTEN TION RAISED BY THE ASSESSEE IN THIS REGARD WAS CORRECT. THIS OBSERVATION SPECIFICA LLY MAKES IT CLEAR THAT IT IS THE LEARNED FIRST APPELLATE AUTHORITY IN ORDER TO D ISPOSE OF THE APPEAL IN 7 ACCORDANCE WITH LAW DIRECTED THE PARTY TO PRODUCE M UTATION. THUS, THERE IS NO VIOLATION OF RULES. THE RELINQUISHMENT DEED REFE RRED BY THE ASSESSING OFFICER EXECUTED BY THE MOTHER AND SISTER OF THE AS SESSEE IN THE MONTH OF OCTOBER 2006 COULD BE CONSTITUTED FOR PASSING A BET TER TITLE TO THE VENDEE. IT MUST HAVE BEEN INSISTED UPON BY THE VENDEE IN ORDER TO AVOID ANY FUTURE LITIGATION, OTHERWISE FROM ALL PRACTICAL PURPOSES T HE ASSESSEE AND HER BROTHER WERE MADE ABSOLUTE OWNER OF THE PROPERTY BY WAY OF A FAMILY SETTLEMENT WHICH HAS BEEN GIVEN EFFECT IN THE MUTATION ORDER O N 30.5.1995. LEARNED DR DID NOT POINT OUT THAT THIS FINDING OF THE LEARNED CIT(APPEALS) IS FACTUALLY CORRECT. TAKING INTO CONSIDERATION THESE ASPECTS, W E DO NOT FIND ANY MERIT IN THE APPEAL OF THE REVENUE. IT IS DISMISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 04.08.2011 SD/- SD/- ( K.D. RANJAN ) ( RAJPAL YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 04 /08/2011 MOHAN LAL COPY FORWARDED TO: 1) APPELLANT 2) RESPONDENT 3) CIT 4) CIT(APPEALS) 5) DR:ITAT ASSISTANT REGISTRAR