Dr. Shaik Dawood, L/R. of Late Ummasalma, CHENNAI V. ITO, CHENNAI

ITA 2837/CHNY/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7342 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-03-2017
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 02-01-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 30-09-2016
• Court: TRIBUNAL
• Department Lawyers: SUPRIYO PAL
• Assessee Lawyers: G BASKAR
• Keywords: Reopening of assessment; Sale consideration of property below Jantri Value; Capital asset; Cost of acquisition; Fair market value; Reassessment proceedings
• Section: 143(3); 50C; 147; 148; 54

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL B BENCH, CHENNAI , . , BEFORE SHRI CHANDRA POOJARI , ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY , JUDICIAL MEMBER ./ I.T.A.NO. 2 837 /MDS/2016 / ASSESSMENT YEAR :20 08 - 09 DR. SHAIK DAWOOD, L/R OF LATE UMMASALMA, NO. 1, R.K. SALAI, 4 TH STREET, CHENNAI 600 0 86 . [PAN: AAJPU9591P ] VS. THE INCOME TAX OFFICER , INTERNATIONAL TAXATIO N 2(2), CHENNAI . ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI G. BASKAR , ADVOCATE / RESPONDENT BY : S HRI S UPRIYO PAL , J CIT / DATE OF HEARING : 0 3 . 0 1 .201 7 / DATE OF P RONOUNCEMENT : 30 . 0 3 .201 7 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER : TH I S APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMIS SIONER OF INCOME TAX (APPEALS) 16 , C HENNAI DATED 1 2 . 0 8 .201 6 REL EVANT TO THE ASSESSMENT YEAR 20 08 - 09 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. THE ORDER OF THE COMMISSIONER OF INCOME - TAX (APPEALS) DISPOSING OFF THE APPEAL IN A SUMMARY MANNER WITHOUT ADVERTING TO THE MATERIAL ON RECORD AND THE SUBMISSIONS MAD E IN THE PROPER PERSPECTIVE; IS WRONG, ILLEGAL AND OPPOSED TO FACTS. I.T.A. NO . 2 837 / M/ 1 6 2 2. THE COMMISSIONER OF INCOME - TAX (APPEALS) WENT WRONG IN HOLDING THAT SERVICE OF NOTICE U/S.148 IS IMMATERIAL AS THE REPRESENTATIVE HAS PARTICIPATED IN THE ASSESSMENT PROCEEDING. HE FA ILED TO NOTE THAT SERVICE OF NOTICE U/S.148 IS A PRECONDITION FOR REASSESSMENT PROCEEDINGS AND HENCE THE ENTIRE RE - ASSESSMENT PROCEEDINGS GET VITIATED AND OUGHT TO HAVE THEREFORE BEEN CANCELLED IN TOTO. 3. THE COMMISSIONER OF INCOME - TAX (APPEALS) WENT W RONG IN HOLDING THAT TRANSFER OF LAND TOOK PLACE IN THIS YEAR AND NOT THE EARLIER YEAR, A.Y: 2007 - 08. 4. THE COMMISSIONER OF INCOME - TAX (APPEALS) ERRED IN HOLDING THAT VALUE ADOPTED BY THE STAMP AUTHORITIES OUGHT TO BE TREATED AS THE GROSS SALE CONSIDER ATION FOR COMPUTING CAPITAL GAINS, WITHOUT APPRECIATING THE VARIOUS DEPRESSING FACTORS STATED BEFORE THE LOWER AUTHORITIES. 5.1 THE COMMISSIONER OF INCOME - TAX (APPEALS) ERRED IN HOLDING THAT FAIR MARKET VALUE AS ON 1.4.1981 FIXED BY THE ASSESSING OFFICE R FOR COMPUTING CAPITAL GAINS IS CORRECT. 5.2 THE COMMISSIONER OF INCOME - TAX (APPEALS) FAILED TO APPRECIATE THAT WHAT THE ASSESSEE ACQUIRED IN 1969 WAS AGRICULTURAL LAND WHICH WAS CONVERTED INTO HOUSING SITES DURING 1975 ITSELF, AND HENCE THE AO WENT WR ONG IN ADOPTING THE PURCHASE COST IN 1969 AS FAIR MARKET VALUE AS ON 1ST APRIL 1981. 2. THE DECEASED ASSESSEE SMT. UMMASALMA IS A NON - RESIDENT , VIZ., MALAYSIAN CITIZEN RESIDING AT PENANG HAVING RENTAL INCOME FROM PROPERTIES IN INDIA. SHE FILED HER RETU RN OF INCOME ADMITTING INCOME AT .6,82,300/ - . AS PER THE I NFORMATION AVAILABLE WITH THE DEPARTMENT, THE ABOVE ASSESSEE HAS SOLD LANDS AT THANJAVUR FOR A SALE CONSIDERATION OF . 12,00,000/ - ON 12.04.2007, WHEREAS THE VALUE OF THE PROPERTY AS PER STAMP VALUATION WAS TAKEN AT .39,41,600 / - . AS PER SEC 50C OF THE INCOME TAX ACT 1961 [ ACT IN SHORT] , IF THE SALE CONSIDERATION OF LAND OR I.T.A. NO . 2 837 / M/ 1 6 3 BUILDING ADMITTED IS LESS THAN VALUE ADOPTED BY ANY AUTHORITY OF A STATE GOVERNMENT FOR THE PURPOSE OF PAYMENT OF STAMP DUTY, THE VALUE ADOPTED BY THE SAID AU THORITY SHALL BE DEEMED TO BE THE FULL VALUE OF CONSIDERATION FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAINS. IN THE ABOVE CASE, ON PERUSAL OF SALE DEED IT IS SEEN THAT THE SALE CONSIDERATION WA S . 39,41,600/ - AS PER 50C OF THE INCOME TAX ACT AS AGAINST .12,00,000/ - SHOWN IN THE SALE DEED. AS THE INCOME C HARGEABLE TO TAX HAS ESCAPED ASSESSMENT, THE CASE WAS REOPENED UNDER SECTION 14 7 OF THE ACT AND N OTICE U NDER SECTION 148 OF THE ACT WAS ISSUED O N 25.03.2015 AND DULY SERVED. IN RESPONSE TO NOTICE UNDER SECTION 148 OF THE ACT , THE ASSESSEE FILED HER SUBMISSIONS ON 23.07.2015, WHEREIN SHE HAS STATED THAT THE RETURN OF INCOME FOR ASSESSMENT YEAR 2008 - 09 FILED ON 31.10.2010 ENCLOSING COPY OF RETURN AL READY FILED AND THE INCOME COMPUTATION STATEMENT. FURTHER SHE STATED THAT THE LONG TERM CAPITAL GAIN WAS OFFERED IN HER MOTHER SMT. HAZARAM BEEVI'S RETURN FOR ASSESSMENT YEAR 2008 - 09 AND HENCE REQUESTED TO CANCEL THE PROCEEDINGS INITIATED U NDER SECTION 147 OF THE ACT. AS THE SALE TRANSACTION WAS IN THE NAME OF THE ASSESSEE SMT. UMMASALMA THE SAME HAS TO BE ASSESSED IN ASSESSEE'S HANDS ONLY , THE ASSESSING OFFICER HAS REJECTED THE REQUEST OF THE ASSESSEE TO CANCEL THE PROCEEDINGS INITIATED UNDER SECTION 147 O F THE A CT. THEREAFTER, NOTICE U NDER SECTION 143(2) OF THE ACT WAS ISSUED ON I.T.A. NO . 2 837 / M/ 1 6 4 29.07.2015 AND DULY SERVED. IN RESPONSE THERETO, THE ASSESSEE S REPRESENTATIVE SUBMITTED THE DETAILS AS CALLED FOR. AFTER EXAMINING THE DETAILS FILED BY THE ASSESSEE AND CONSIDERIN G THE SUBMISSIONS OF THE ASSESSEE, THE ASSESSMENT UNDER SECTION 143(3) R.W.S. 147 OF THE ACT WAS COMPLETED BY ASSESSING TOTAL INCOME OF THE ASSESSEE AT .53,50,984/ - AFTER DETERMINING THE LONG TERM CAPITAL GAINS AT .46,62,968/ - . 3. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) AND THE LD. CIT(A) DISMISSED THE APPEAL FILED BY THE ASSESSEE. 4. ON BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. WITH REGARD TO FIRST ISSUE AS RAISED IN GROUND NO. 2, BY RELYING ON THE GROUN DS OF APPEAL, AS REPRODUCED HEREINABOVE, THE LD. COUNSEL FOR THE ASSESSEE HAS PLEADED THAT THE REASSESSMENT PROCEEDINGS INITIATED SHOULD BE CANCELLED. 5. PER CONTRA, THE LD. DR HAS SUBMITTED THAT THE REASSESSMENT PROCEEDINGS WERE INITIATED PROPERLY AFTE R RECORDING THE REASONS AND SERVICE OF NOTICE UNDER SECTION 148 OF THE ACT AND STATED THAT THE GROUND RAISED BY THE ASSESSEE IS INVALID AND SHOULD BE REJECTED. 6. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE O RDERS OF AUTHORITIES BELOW. IN THIS CASE, I.T.A. NO . 2 837 / M/ 1 6 5 ON PERUSAL OF THE ASSESSMENT ORDER, AFTER RECORDING THE REASONS FOR REOPENING OF ASSESSMENT UNDER SECTION 147 OF THE ACT, NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED ON 25.03.2015 AND DULY SERVED ON THE ASSESSEE . IN RESPONSE TO THE ABOVE NOTICE, THE ASSESSEE FILED HER SUBMISSIONS ON 23.07.2015, WHEREIN , SHE HAS STATED THAT SHE HAS FILED THE RETURN OF INCOME FOR ASSESSMENT YEAR 2008 - 09 FILED ON 31.10.2010 ENCLOSING COPY OF RETURN ALREADY FILED AND THE INCOME COMPU TATION STATEMENT. FURTHER , SHE STATED THAT THE LONG TERM CAPITAL GAIN WAS OFFERED IN HER MOTHER SMT. HAZARAM BEEVI'S RETURN FOR ASSESSMENT YEAR 2008 - 09 AND HENCE REQUESTED TO CANCEL THE PROCEEDINGS INITIATED U NDER SECTION 147 OF THE ACT. FROM THE ABOVE, IT IS CLEAR THAT NOTICE UNDER SECTION 148 OF THE ACT WAS PROPERLY SERVED ON THE ASSESSEE AND THE ASSESSEE, IN TURN, REQUESTED THE ASSESSING OFFICER TO CANCEL THE INITIATION OF PROCEEDINGS UNDER SECTION 147 OF THE ACT. THE ASSESSEE HAS WRONGLY RAISED THIS GRO UND EVEN BEFORE THE LD. CIT(A), WHICH IS DEVOID OF MERITS. THUS, THE GROUND RAISED BY THE ASSESSEE IS DISMISSED. 7. THE NEXT GROUND RAISED IN THE APPEAL OF THE ASSESSEE IS THAT THE LD. CIT(A) WENT WRONG IN HOLDING THAT TRANSFER OF LAND TOOK PLACE IN THE CURRENT ASSESSMENT YEAR AND NOT IN THE EARLIER ASSESSMENT YEAR 2007 - 08. I.T.A. NO . 2 837 / M/ 1 6 6 7.1 THE ASSESSEE SOLD A PROPERTY ON 12.04.2007 FOR A SALE CONSIDERATION OF .12,00,000/ - , WHEREAS, THE MARKET VALUE OF THE PROPERTY AS PER DEED WAS .39,41,600/ - . BEFORE THE ASSESSI NG OFFICER, THE ASSESSEE HAS CLAIMED THAT THE TRANSFER OF THE PROPERTY WAS EFFECTED ON 02.02.2007 AND HENCE CAPITAL GAIN, IF ANY, HAS TO BE ASSESSED IN THE ASSESSMENT YEAR 2007 - 08. SINCE THE SALE DEED WAS REGISTERED ON 12.04.2007 AND THE ENTIRE SALE CONSID ERATION WAS PAID ONLY IN THE ASSESSMENT YEAR 2008 - 09, THE ASSESSING OFFICER REJECTED THE CLAIM OF THE ASSESSEE. 7.2 ON APPEAL, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE LD. CIT(A) CONFIRMED THE ORDER PASSED BY THE ASSESSING OFFICER SINCE THE SALE DEED WAS REGISTERED ON 12.04.2007 AND THE TRANSFER TOOK PLACE IN THE ASSESSMENT YEAR 2008 - 09. 7.3 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE AGREEMENT FOR SALE AS WELL AS SALE DEED FILED BY THE ASSESSEE . ADMITTEDLY, THE ASSESSEE HAS E XECUTED AN AGREEMENT FOR SALE ON 02.02.2007 WITH A CONDITION THAT IF THE PURCHASER FAILS TO COMPLETE THE REGISTRATION WITHIN A PERIOD OF SIXTY DAYS , TH E SAID AGREEMENT STANDS CANCELLED AND AN AMOUNT OF .50,00,000/ - PAID TOWARDS ADVANCE WILL NOT BE PAID BACK AND DEDUCTED AS DAMAGES. ADMITTEDLY, THE PROPERTY WAS NOT REGISTERED WITHIN SIXTY DAYS AS STIPULATED IN THE SALE OF AGREEMENT DATED 02.02.2007. THEREFORE, THE ASSESSEE CANNOT CLAIM THE EXISTENCE OF T HE AGREEMENT FOR SALE. AS PER SALE I.T.A. NO . 2 837 / M/ 1 6 7 DEED S DATED 12.04.2007 FILED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER, IT IS CLEAR THAT THE SALE DEED REGISTERED ON 12.04.2007 WAS IN THE FINANCIAL YEAR 2007 - 08 RELEVANT TO THE ASSESSMENT YEAR 2008 - 09. FURTHER, THE AS SESSING OFFICER HAS NOTICED THAT THE ASSESSEE ALONG WITH HER MOTHER SMT. HAZARAM BEEVI SOLD LANDS HELD JOINTLY BY THEM IN THANJAVUR VIDE DOCUMENTS NO. 997/2007 ON 12.04.2007 AND THE ASSESSEE'S MOTHER SMT. HAZARAM BEEVI HAS FILED THE RETURN OF INCOME ADMITT ING THE CAPITAL GAIN IN THE ASSESSMENT YEAR 2008 - 09 ONLY. SINCE THE SALE DEED WAS EXECUTED AND REGISTERED ONLY ON 12.04.2007 I.E., IN THE FINANCIAL YEAR 2007 - 08 RELEVANT TO THE ASSESSMENT YEAR 2008 - 09, THE ASSESSING OFFICER WORKED OUT THE LONG TERM CAPITAL GAINS FOR THE ASSESSMENT YEAR 2008 - 09. ON APPEAL, THE LD. CIT(A) UPHELD THE ORDER OF THE ASSESSING OFFICER. 7.4 WE HAVE GONE THROUGH THE AGREEMENT FOR SALE EXECUTED ON 02.02.2007 AS WELL AS SALE DEED EXECUTED ON 12.04.2007. A S PER CLAUSE 3 [PAGE 4] OF T HE AGREEMENT OF SALE, IT IS MENTIONED THAT 3. IT WAS MUTUALLY AGREED BETWEEN THE PARTIES THAT ON THE RECEIPT OF THE ADVANCE, THE POSSESSION OF THE PROPERTY HANDED OVER TO THE PURCHASER FOR FIXING NEW BOUNDARY STONE, MAINTENANCE AND REPAIRS OF ROADS AND THE PURCHASER HEREBY ACKNOWLEDGE THE RECEIPT OF POSSESSION. FROM THE ABOVE CLAUSE MENTIONED IN THE UNREGISTERED AGREEMENT FOR SALE, IT IS CLEAR THAT AGAINST THE ADVANCE MONEY PAID BY THE PURCHASER, THE I.T.A. NO . 2 837 / M/ 1 6 8 POSSESSION OF THE PROPERTY WAS HANDED OVER TO THE P URCHASER AND IN TURN THE PURCHASER HAS ACKNOWLEDGED THE RECEIPT OF POSSESSION. 7.5 HOWEVER, AT PAGE 3 OF THE REGISTERED SALE DEED EXECUTED ON 12.04.2007, IT IS MENTIONED THAT AS ON THE DATE OF EXECUTION OF THE SALE DEED, THE POSSESSION WAS GIVEN TO THE P URCHASER. IF IT IS SO, IT IS NOT CLEAR AS TO WHEN THE PURCHASER HAS TAKEN POSSESSION OF THE PROPERTY. FURTHER, THERE IS NO RECITAL IN THE REGISTERED SALE DEED ABOUT THE AGREEMENT FOR SALE EXECUTED BY THE ASSESSEE WITH THE PURCHASER. 7.6 MOREOVER, ON PERU SAL OF THE REGISTERED SALE DEED DATED 14.02.2007, IT IS MENTIONED THAT ENTIRE SALE CONSIDERATION WAS RECEIVED BY WAY OF CHEQUES, BUT, THE SALE DEED DOES NOT TRANSPIRE WHEN THE SALE CONSIDERATION WAS ACTUALLY RECEIVED BY THE ASSESSEE. AS PER SECTION 54 OF T HE TRANSFER OF PROPERTY ACT, 1882, THE SALE IS A TRANSFER OF OWNERSHIP IN EXCHANGE FOR A PRICE PAID OR PROMISED OR PART - PAID AND PART - PROMISED. 7.7 UNDER THE ABOVE FACTS AND CIRCUMSTANCES, WE REMIT THE MATTER BACK TO THE LD. CIT(A) WITH A DIRECT ION TO VERIFY THE DETAILS AND EXAMINE AS TO WHEN THE ASSESSEE HAS RECEIVED THE SALE CONSIDERATION AND WHEN THE PURCHASER HAS TAKEN POSSESSION OF THE PROPERTY OF THE ASSESSEE. WE ALSO DIRECT THE ASSESSEE TO FILE THE ENGLISH VERSION OF THE SALE DEED AND RECEIPT OF PAYMENT DETAILS, ETC. BEFORE THE LD. CIT(A) FOR VERIFICATION AND DECIDING THE ISSUE IN I.T.A. NO . 2 837 / M/ 1 6 9 ACCORDANCE WITH LAW AFTER GIVING SUFFICIENT OPPORTUNITIES OF HEARING BOTH THE SIDES . 8. THE NEXT TWO GROUND S RAISED IN THE APPEAL OF THE ASSESSEE IS THAT THE LD. CIT( A) HAS ERRED IN HOLDING THAT FAIR MARKET VALUE AS ON 01.04.1981 FIXED BY THE ASSESSING OFFICER FOR COMPUTING THE CAPITAL GAINS IS CORRECT AND THE LD. CIT(A) FAILED TO APPRECIATE THAT WHAT THE ASSESSEE ACQUIRED IN 1969 WAS AGRICULTURAL LAND WHICH WAS CONVER TED INTO HOUSING SITES DURING 1975 ITSELF, AND HENCE THE AO WENT WRONG IN ADOPTING THE PURCHASE COST IN 1969 AS FAIR MARKET VALUE AS ON 1ST APRIL 1981 . 8.1 THE COST OF LAND FOR CALCULATING INDEXED COST OF ACQUISITION WAS TAKEN AT .3,200/ - AS PER THE PURCHASE DEED SUBMITTED BY THE ASSESSEE AND ACCORDINGLY CAPITAL GAINS WAS CALCULATED. BEFORE THE LD. CIT(A) THAT ASSESSEE HAS RAISED A SPECIFIC GROUND THAT IN GROUND NO. 8 THE LEARNED OFFICER FAILED TO CONSIDER THE COST OF LAND AS ON 01.04.1981 & IN GROUND NO. 9 THE LD. OFFICER FAILED TO CONSIDER THE COST OF DEVELOPMENT WHILE DERIVING THE CAPITAL GAIN . HOWEVER, IN THE APPELLATE ORDER, THE LD. CIT(A) HAS NOT ADJUDICATED AS TO WHETHER THE ASSESSEE CAN CLAIM INDEXED COST OF ACQUISITION FROM 01.04.1981 OR NOT AND ALSO WITH REGARD TO THE COST OF DEVELOPMENT FOR ARRIVING CAPITAL GAIN. ACCORDINGLY, WE DIRECT THE LD. CIT(A) TO DECIDE THE ISSUE BY EXAMINING THE SALE DEED DATED 12.04.2007 AFTER ALLOWING OPPORTUNITY OF HEARING TO THE ASSESSEE. THE ASSESSEE IS DIRECTED TO FILE ENGLISH I.T.A. NO . 2 837 / M/ 1 6 10 TRANSCRIPTION OF THE SALE DEED DATED 12.04.2007. THUS, BOTH THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 9 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL P URPOSES . ORDER PRONOUNCED ON THE 30 TH MARCH , 201 7 AT CHENNAI. SD/ - SD/ - (CHANDRA POOJARI) ACCOUNTANT MEMBER ( DUVVURU RL REDDY ) JUDICIAL MEMBER CHENNAI, DATED, THE 30 . 0 3 .201 7 VM/ - / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / GF.