Dayashankar Sanwal Jhunjhunwala , Bangalore V. The Income Tax Officer Ward-7(2)(3), Bangalore

ITA 2876/BANG/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 2410 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 1 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 03-11-2020
• Assessment Year: 2005-2006
• Appeal Filed On: 17-10-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R PREMI
• Assessee Lawyers: H N KHINCHA
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Opportunity of being heard; Retrospective amendment; Set aside; Capital Gains
• Section: 50C; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI. B.R. BASKARAN, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER ITA NO.2876/BANG/2018 ASSESSMENT YEAR : 2005 06 DAYASHANKAR SANWAL JHUNJHUNWALA, NO.2537, 2 ND C CROSS, 15 TH MAIN, HAL 2 ND STAGE, INDIRANAGAR, BENGALURU-560 029. PAN AAOPJ 1490 P VS. THE INCOME TAX OFFICER, WARD-7(2)(3), BENGALURU. APPELLANT RESPONDENT APPELLANT BY : SHRI H.N KHINCHA, C.A RESPONDENT BY : SMT. R PREMI, JCIT (DR) DATE OF HEARING : 03-11-2020 DATE OF PRONOUNCEMENT : 27-11-2020 ORDER PER BEENA PILLAI, JUDICIAL MEMBER PRESENT APPEAL HAS BEEN FILED BY ASSESSEE AGAINS T ORDER DATED 17/09/2018 PASSED BY LD.CIT(A)-7, BANGALORE FOR ASS ESSMENT YEAR 2005-06 ON FOLLOWING GROUNDS OF APPEAL: THE LEARNED ASSESSING OFFICER HAD ERRED IN PASSING THE ORDER IN THE MANNER PASSED BY HER AND THE COMMISSIONER OF INCOME TAX (A PPEALS) HAS ERRED IN CONFIRMING THE SAME. THE 7 IMPUGNED ORDERS AS PASSE D ARE BAD IN LAW AND ARE LIABLE TO BE QUASHED. 2.1. IN ANY CASE AND WITHOUT PREJUDICE, THE AUTHORI TIES BELOW HAVE ERRED IN HOLDING THAT CAPITAL GAINS ON SALE OF PROPERTY HAD ACCRUED TO THE APPELLANT PAGE 2 OF 11 ITA NO.2876/BANG/2018 DURING THE PREVIOUS YEAR, THE YEAR UNDER APPEAL AND ACTUAL TAXING THE CAPITAL GAIN FOR THE YEAR UNDER APPEAL. 2.2. THE TRANSFER OF CAPITAL ASSET (TRANSFER OF PRO PERTY) NEVER TOOK PLACE IN THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR 2005- 06 AND THEREFORE TAXING OF THE CAPITAL GAINS AS INCOME FOR ASSESSMEN T YEAR 2005-06 IS BAD IN LAW AND ON FACTS AND IS TO BE DELETED. 2.3. THE ASSESSMENT OF CAPITAL GAINS FOR THE YEAR B EING WHOLLY ERRONEOUS IS TO BE DELETED IN ENTIRETY. 3. IN ANY CASE THE LEARNED ASSESSING OFFICER HAD ER RED IN A) INVOKING THE PROVISIONS OF SECTION SOC OF THE AC T FOR THE YEAR UNDER CONSIDERATION; B) ADOPTING THE SALE CONSIDERATION AT RS. 61,97,000 /-; C) COMPUTING THE LTCG AT RS. 49,36,674/-; AND THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE SAME; ON PROPER APPRECIATION OF FACTS AND CIRCUMSTANCES O F THE CASE, THE PROVISIONS OF SECTION SOC OF THE ACT ARE NOT APPLIC ABLE TO THE FACTS OF THE CASE. THE ACTION OF AUTHORITIES BELOW BEING (WHOLLY ERRONEOUS IS TO BE NEGATED AND THE ASSESSMENT OF LTCG AS DONE FOR THE YEAR UNDER CONSIDERATION BE DELETED. 4. IN ANY CASE AND WITHOUT PREJUDICE AND WITHOUT CO NCEDING, THE APPELLANT SUBMITS THAT THE ADOPTION OF SALE CONSIDE RATION AND ADOPTION OF INDEXED COST AS DONE IS WHOLLY ERRONEOUS. 5. THE APPELLANT DENIES LIABILITY TO PAY INTEREST. THE INTEREST LEVIED IS TO BE DELETED. 6. IN VIEW OF THE ABOVE AND ON OTHER GROUNDS TO BE ADDUCED AT THE TIME OF HEARING, IT IS REQUESTED THAT THE IMPUGNED ORDER BE QUASHED OR AT LEAST THE CAPITAL GAINS ADDED TO INCOME OF THE YEAR BE DELETE D AND INTEREST LEVIED BE ALSO DELETED. BRIEF FACTS OF THE CASE ARE AS UNDER: 2. FROM ASSESSMENT ORDER, WE NOTE THAT, THIS IS THE SECOND ROUND OF APPEAL. IN THE FIRST ROUND, THIS TRIBUNAL VIDE ORDER DATED 24/06/2016, REMANDED THE ADDITION OF RS.61,97,000/- WAS RESTORED TO THE FILE OF LD.AO FOR DE NOVO ASSESSMENT AFTER AFFORDING DUE OPPORTUNITY TO ASSESSEE IN ACCORDANCE WITH PROVISIONS OF LAW. WE NOTE THAT, ORIGINAL ASSESSMEN T ORDER WAS PASSED UNDER SECTION 144 OF THE ACT BECAUSE OF WHIC H THIS TRIBUNAL , REMANDED THE ISSUE. PAGE 3 OF 11 ITA NO.2876/BANG/2018 3. IN ACCORDANCE WITH THE DIRECTIONS OF THIS TRIBUNAL, LD.AO ISSUED NOTICE TO ASSESSEE GIVING OF OPPORTUNITY OF BEING HEARD. ASSESSEE IN RESPONSE TO THE LETTERS/NOTICES ISSUED, INTIMATED THAT HEARING MAY BE POSTPONED TO SECOND WEEK OF NOVEMB ER 2017. ACCORDINGLY, LD.AO FIXED HEARING ON 30/11/2017, HOW EVER ASSESSEE DID NOT APPEAR. ASSESSEE WAS ISSUED FINAL REMINDER NOTICE. VIDE LETTER DATED 19/12/2017 ALONG WITH DOC UMENTS RELATING WITH ASSESSMENT WAS FILED BEFORE LD.AO BY ASSESSEE 4. FROM THE DOCUMENTS FILED, LD.AO NOTED THAT, ASSE SSEE FILED ITS RETURN OF INCOME FOR YEAR UNDER CONSIDERATION O N 24/10/2005, DECLARING TOTAL INCOME OF RS.5,67,317/-. IT WAS NOT ED THAT, IN THE COMPUTATION OF INCOME, ASSESSEE SHOWN SALE CONSIDE RATION OF SALE OF PROPERTY TO BE RS.7,25,000/-AND DECLARED CA PITAL GAIN LOSS OF RS.5,71,962/-FROM SALE OF PROPERTY. LD.AO IN REG ARDS TO SALE OF PROPERTY OBSERVED AS UNDER: ASSESSEE WAS ALLOTTED SITE NO. 362, SITUATED AT IN BLOCK NO. 22, RAJMAHAL VILAS II STAGE EXTENSION, BANGALORE BY BDA ON 11 FOR 1991. THIS WAS REGISTERED BY EXECUTING A LEA SE COME SALE AGREEMENT ON 09/07/1991. POSSESSION OF THE SCH EDULE PROPERTY WAS DELIVERED TO ASSESSEE VIDE POSSESSION CERTIFICATE DATED 28/08/1991. VIDE MEMORANDUM OF AGREEMENT OF TRANSFER AND ASSIGN MENT DATED 17/03/1993, ASSESSEE ENTERED INTO AGREEMENT T O TRANSFER AND ASSIGN THE SAID PROPERTY TO M/S.SHANTA EXPORTS PVT.LTD REPRESENTED BY ITS DIRECTOR SH.V.RA THNAKR, S/O.SH.V.VENKATASUBA RAO, BANGALORE FOR CONSIDERATI ON OF PAGE 4 OF 11 ITA NO.2876/BANG/2018 RS.7,25,000/-. ASSESSEE RECEIVED THE SAID AMOUNT IN THE FOLLOWING MANNER: DD OF RS.25000/- ON 06/02/1993 DD OF RS.7,00,000/- ON 08/03/1993 BDA REGISTER THE SAID PROPERTY ON 02/02/2002 IN FAV OUR OF ASSESSEE WAS REPRESENTED BY SH.V.RATHNAKAR (WITH WH OM ASSESSEE ENTERED INTO TRANSFER AND ASSIGNMENT AGREE MENT) WAS HOLDING A GENERAL POWER OF ATTORNEY DATED 30/03 /1993 FOR REGISTRATION PURPOSES. 5. SUBSEQUENTLY ON 04/10/2004 THE SAID PROPERTY WA S SOLD TO SH. BALANDER VENKATA, S/O. SH.V.VENKATASUBB A RAO, ALONG WITH THE BUILDING CONSTRUCTED THEREON. LD.AO OBSERVED THAT, THOUGH ASSESSEE RECEIVED ENTIRE SALE CONSIDER ATION IN 1993, HE WAS UNABLE TO PROVE THAT HE HAS NOT RECEIV ED ANY FURTHER SALE CONSIDERATION AS ON THAT DATE REGISTRA TION BEING 04/10/2004, WHEN THE MARKET VALUE OF PROPERTY WAS RS.61,97,000/-, AND THAT SH.V.RATHNAKR BEING THE PO WER OF ATTORNEY HOLDER HAS NOT RECEIVED ANY CONSIDERATION ON HIS BEHALF FROM THE PURCHASER OF THE PROPERTY SH. BALAN DER VENKATA. 6. LD.AO WAS OF THE OPINION, THAT ASSESSEE HAS SH OWN SALE PROCEEDS OF SALE OF PROPERTY, WHICH IS MUCH LE SSER THAN, GUIDANCE VALUE, AND ACCORDINGLY AS PER PROVISIONS O F SECTION 50C, LONG TERM CAPITAL GAINS WAS REWORKED AT RS.49 ,36,647/- BASED ON THE GUIDANCE VALUE IN THE YEAR OF SALE BEI NG PAGE 5 OF 11 ITA NO.2876/BANG/2018 04/10/2004. LD.AO THUS MADE ADDITION IN THE HANDS O F ASSESSEE AMOUNTING TO RS.49,36,647/-. 7. AGGRIEVED BY THE ADDITION, ASSESSEE PREFERRED AP PEAL BEFORE THE LD.CIT(A). 8. LD.CIT(A) NOTED THAT, THE MEMORANDUM OF AGREEMEN T TO TRANSFER AND ASSIGNMENT DATED 17/03/1993 WAS BETWEE N ASSESSEE AND M/S SHANTA EXPORTS PVT.LTD COMPANY, TH AT WAS REPRESENTED BY ITS DIRECTOR MR.V.RATNAKAR. HOWEVER, SALE DEED DATED 04/10/2004 WAS NOT WITH M/S SHANTHA EXPORTS P VT.LTD. AS PURCHASE. LD.CIT(A) OBSERVED THAT, THE SALE DEED WAS EXECUTED BETWEEN ASSESSEE AND SH.BALENDER VENKATA, WHO IS AN INDIVIDUAL. LD.CIT(A) WAS OF THE OPINION THAT, T HE MEMORANDUM OF AGREEMENT OF TRANSFER AND ASSIGNMENT DATED 17/03/1993, AND FINAL SALE REGISTERED ON 04/10/200 4 WERE WITH 2 DIFFERENT PERSONS AND THAT MEMORANDUM OF AGR EEMENT OF TRANSFER AND ASSIGNMENT DATED 17/03/1993 HAS NO RELEVANCE FOR THE FINAL SALE DEED REGISTERED ON 04/ 10/2004. HE THUS UPHELD THE VIEW OF LD.AO REGARDING COMPUTING C APITAL GAINS AS PER SECTION 50C OF THE ACT AS ON THE DATE OF REGISTRATION OF SALE. 9. ASSESSEE ALSO CHALLENGED THE YEAR OF TAXABILITY OF CAPITAL GAINS, THAT THE TRANSFER OF CAPITAL ASSET NEVER TOO K PLACE IN THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR UNDER CON SIDERATION AND THEREFORE TAXING OF CAPITAL GAINS DURING RELEV ANT YEAR UNDER CONSIDERATION IS BAD IN LAW. THIS PREPOSITION WAS REJECTED BY LD.CIT(A) BY OBSERVING THAT, NO INCOME WAS OFFERED PAGE 6 OF 11 ITA NO.2876/BANG/2018 UNDER CAPITAL GAINS FOR ASSESSMENT YEAR 1993-94 BEI NG THE YEAR IN WHICH, ENTIRE CONSIDERATION WAS RECEIVED B Y ASSESSEE. LD.CIT(A) ALSO ASCERTAINED FROM THE STATEMENT OF IN COME FILED FOR ASSESSMENT YEAR 1993-94 THAT ASSESSEE HAS SHOWN INCOME IS UNDER THE HEAD BUSINESS, OTHER INCOME, BUT THERE IS NO INCOME OFFERED UNDER CAPITAL GAINS, AND THAT ASSESS EE HAS DECLARED CAPITAL LOSS DURING THE YEAR UNDER CONSIDE RATION. 10. AGGRIEVED BY THE ORDER PASSED BY LD. CIT (A) A SSESSEE IS IN APPEAL BEFORE US NOW. 11. LD.AR SUBMITTED THAT, GROUND NO.1 IS GENERAL IN NATURE AND THEREFORE DO NOT REQUIRE ADJUDICATION. 12. GROUND NO. 2.1-2.3 IS IN RESPECT OF YEAR OF TAXABILITY OF CAPITAL GAINS. IT HAS BEEN SUBMITTED THAT, ASSESSEE DO NOT WISH TO PRESS THIS GROUND. ACCORDINGLY THESE GROUNDS ARE DISMISSED AS NOT PRES SED. 13. GROUND NO. 3 RAISED BY ASSESSEE IS IN RESPECT OF INVOKING 50C OF THE ACT FOR YEAR UNDER CONSIDERATION AND COM PUTING CAPITAL GAINS BY TAKING GUIDANCE VALUE FOR YEAR UND ER CONSIDERATION. 14. LD.AR SUBMITTED THAT, TRANSFER OF PROPERTY AC TUALLY TOOK PLACE IN THE YEAR 1993, WHEN ENTIRE SALE CONSIDERAT ION WAS RECEIVED BY ASSESSEE. AND IN 2004, ONLY REGISTRATIO N OF THE DEED TOOK PLACE, TO COMPLETE THE CONTRACTUAL SHALL OBLIGATION. HE SUBMITTED THAT, COMPUTATION OF CAPITAL GAINS IN THE YEAR 2004 BY TAKING GUIDANCE VALUE OF THE PROPERTY IS TH EREFORE INCORRECT. LD.AR SUBMITTED THAT, ASSESSEE BEFORE AU THORITIES PAGE 7 OF 11 ITA NO.2876/BANG/2018 BELOW SUBMITTED THAT HE DID NOT RECEIVE ANY AMOUNT MORE THAN RS.7,25,000/- WHICH HAS ALSO BEEN MENTIONED IN THE FINAL SALE DEED REGISTERED DURING THE YEAR 2004. 15. AT THE OUTSET, LD.AR SUBMITTED THAT THOUGH THE PROVISO TO SECTION 50 C HAS BEEN INSERTED W.E.F. 01/04/2017, I T IS TO BE CONSIDERED WITH RETROSPECTIVE EFFECT. 16. LD.AR ALSO SUBMITTED THAT AUTHORITIES BELOW FA ILED TO NOTE THAT, MR.V.RATNAKAR, DIRECTOR OF M/S SHANTHA EXPORT S PVT.LTD., AND SH.BALENDER VENKATA, WHOSE NAME WAS MENTIONED IN THE SALE DEED THAT WAS REGISTERED IN T HE YEAR 2004 ARE BROTHERS. HE ALSO SUBMITTED THAT, FOR THE PURPOSE OF REGISTRATION OF THE SALE DEED IN 2004, MR.V.RATNAKA R, WAS THE GENERAL POWER OF ATTORNEY ON BEHALF OF ASSESSEE. IT HAS THUS BEEN SUBMITTED BY LD.AR THAT, ASSESSEE HAD NO ROLE TO PLAY AS IN BOTH THE MEMORANDUM OF TRANSFER AND ASSIGNMENT D EED, AS WELL AS THE FINAL SALE DEED REGISTERED THE AMOUNT O F SALE CONSIDERATION ISSUE TO BE RS.7,25,000/- HAVING RECE IVED BY ASSESSEE. IT HAS BEEN SUBMITTED THAT THE PROCESS OF SALE HAS BEEN COMPLETED ONLY DURING 2004, WHEN THE AGREEMENT WAS REGISTERED. 17. ON THE CONTRARY LD.SR.DR SUBMITTED THAT, CAPI TAL GAINS HAS NOT BEEN OFFERED TO TAX BY ASSESSEE IN THE YEAR 1993, WHICH IS ALLEGED TO BE THE YEAR OF SALE. IT HAS BEE N SUBMITTED THAT, ASSESSEE DECLARED LOSS FROM CAPITAL GAINS DU RING THE YEAR UNDER CONSIDERATION WHICH CLEARLY SHOWS THE INTENTI ON OF ASSESSEE. SHE THUS SUPPORTED THE ORDERS OF AUTHORIT IES BELOW. PAGE 8 OF 11 ITA NO.2876/BANG/2018 18. WE HAVE PERUSED SUBMISSIONS ADVANCED BY BOTH SIDES IN LIGHT OF RECORDS PLACED BEFORE US. 19. IN THE PRESENT CASE, AT THE TIME OF REGISTRAT ION IN THE YEAR 2004, ASSESSEE WAS REPRESENTED BY THE ORIGINAL PURC HASE THROUGH GENERAL POWER OF ATTORNEY EXECUTED BY ASSES SEE IN 1993. IT IS ALSO NOTED THAT, AT THE TIME OF REGISTE RING THE SALE DEED THE SAID PROPERTY STANDS TRANSFERRED IN THE NA ME OF ANOTHER PERSON WHO IS SUBMITTED TO BE THE BROTHER O F DIRECTOR IN THE COMPANY BEING ORIGINAL PURCHASER. THE RECITA LS IN THE REGISTERED SALE AGREEMENT PLACED AT PAGE 94-104 MEN TIONS DETAILS OF THE SALE CONSIDERATION HAVING RECEIVED B Y ASSESSEE UNDER MEMORANDUM OF AGREEMENT OF TRANSFER AND ASSIG NMENT ENTERED INTO ON 17/03/1993 BETWEEN ASSESSEE AND THE COMPANY. 20. PROVISIONS OF SECTION 50 C HAS BEEN INSERTED IN THE FORM OF CLARIFICATION TO THE SECTION AND ACCORDINGLY IS RETROSPECTIVELY APPLICABLE. IN OUR VIEW PROVISIONS OF SECTION 50 C SHOULD BE LOOKED INTO FROM THE DATE OF MEMORANDUM OF AGREEMEN T OF TRANSFER AND ASSIGNMENT ENTERED INTO BY ASSESSEE WI TH M/S SHANTHA EXPORTS PVT.LTD THROUGH ITS DIRECTOR. NOTHI NG HAS BEEN PLACED ON RECORD TO SHOW WHY THE SUBSEQUENT SA LE HAS BEEN REGISTERED IN THE NAME OF AN INDIVIDUAL WHO IS ALLEGED TO BE THE BROTHER OF THE DIRECTOR OF M/S SHANTHA EXPOR TS PVT LTD. IT ALSO HAS BEEN RECORDED BY LD.CIT(A) THAT ASSESSE E DID NOT DISCLOSE THE CAPITAL GAINS ON SUCH AMOUNT RECEIVED IN 1993. PAGE 9 OF 11 ITA NO.2876/BANG/2018 NOTHING HAS BEEN BROUGHT TO RECORD HOW THE LOSS IF ANY IS ALLOWABLE DURING THE YEAR UNDER CONSIDERATION. 21. WE THEREFORE SET ASIDE THE ISSUE BACK TO THE F ILE OF LD.AO TO CONSIDER IT DE NOVO IN THE LIGHT OF VARIOUS EVIDENCES FILED BY ASSESSEE. ASSESSEE IS DIRECTED TO ESTABLISH ALL REL EVANT LINKS AND REPLY TO QUERIES RAISED BY LD.AO IN ORDER TO C OMPLETE THE ASSESSMENT IN ACCORDANCE WITH LAW. NEEDLESS TO SAY THAT PROPER OPPORTUNITY OF BEING HEARD SHALL BE GRANTED TO ASSESSEE. 22. THE RESULT GROUNDS RAISED BY ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. 23. GROUND NO. 4 RAISED BY ASSESSEE IS AN ALTERNATE PLEA. AS WE HAVE ALREADY REMANDED THE ISSUE FOR CONSIDERATIO N, THIS ISSUE BECOMES ACADEMIC AT THIS STAGE. IN THE RESULT APPEAL FILED BY ASSESSEE STANDS PARTL Y ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH NOV, 2020 SD/- SD/- (B.R BASKARAN) (BEENA PILLAI) ACCOUNTANT MEMBER JUDICIAL ME MBER BANGALORE, DATED, THE 27 TH NOV, 2020. /VMS/ PAGE 10 OF 11 ITA NO.2876/BANG/2018 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE PAGE 11 OF 11 ITA NO.2876/BANG/2018 DATE INITIAL 1. DRAFT DICTATED ON ON DRAGON SR.PS 2. DRAFT PLACED BEFORE AUTHOR -11-2020 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER -11-2020 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. -11-2020 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS -11-2020 SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON -11-2020 SR.PS 7. DATE OF UPLOADING THE ORDER ON WEBSITE -11-2020 SR.PS 8. IF NOT UPLOADED, FURNISH THE REASON -- SR.PS 9. FILE SENT TO THE BENCH CLERK -11-2020 SR.PS 10. DATE ON WHICH FILE GOES TO THE AR 11. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 12. DATE OF DISPATCH OF ORDER. 13. DRAFT DICTATION SHEETS ARE ATTACHED NO SR.PS