IBRAHIM (EBRAHIM) J. SOPARIWALA, MUMBAI V. DCIT -CIR -5(3)(1), MUMBAI

ITA 2879/MUM/2017

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 7818 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2007-2008
• Appeal Filed On: 21-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SATISH CHANDRA RAJORE
• Assessee Lawyers: MATHURIA
• Keywords: Sale consideration of property below Jantri Value; Gift; Opportunity of being heard
• Section: 50C

Judgement Text

P A G E | 1 ITA NO.2879/MUM/2017 A.Y. 2007 - 08 SHRI IBRAHIM (EBRAHIM) J. SOPARIWALA VS. THE. DY. COMM. OF INCOME TAX, CIRCLE - 5(3)(1) IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, JUDICIAL MEMBER ITA NO. 2879/MUM/2017 (ASSESSMENT YEAR: 2007 - 08 ) SHRI IBRAHIM (EBRAHIM) J. SOPARIWALA, AAKASH APARTMENT, 8 TH FLOOR, SANE GURUJI MARG, AGRIPADA MUMBAI - 400011 VS. THE DY. COMM. OF INCOME TAX, CIRCLE - 5(3)(1), MUMBAI - 400 020 PAN AAAPI0646J ( APPELLANT ) ( RESPONDENT ) APPELLANT BY: SHRI M.S. MATHURIA, A.R RESPONDENT BY: SHRI SATISH CHANDRA RAJORE, D.R DATE OF HEARING: 19 .12.2018 DATE OF PRONOUNCEMENT: 26 .12.2018 O R D E R PER RAVISH SOOD, JM THE PRESENT APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT( A) - 10, MUMBAI, DATED 13.01.2017, WHICH IN TURN ARISES FROM THE ORDER PASSED BY THE A.O UNDER SEC.254 OF THE INCOME TAX ACT, 1961 (FOR SHORT I.T. ACT), DATED 30.03.2015 GIVING EFFECT TO THE ORDER PASSED BY THE TRIBUNAL IN THE FIRST ROUND OF APPEAL . THE AS SESSEE ASSAILING THE ORDER OF THE CIT(A) HAS RAISED BEFORE US THE FOLLOWING GROUN DS OF APPEAL: 1. ON THE FACTS AND IN LAW, LEARNED CIT (A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.36,86,500/ - MADE BY THE AO AS UNEXPLAINED INCOME OF THE I. T. ACT, 1961 IN THE HAND OF THE APPELLANT, INSTEAD OF ASSESSING 1/13 TH OF SAID SALE CONSIDERATION OF RS.36,86,500/ - (I . E. RS. 2,83,577/ - ] IN THE HANDS OF THE APPELLANT BEING ONE OF THE CO - OWNERS (OWNERS IN COMMON). 2. THE APPELLANT CRAVE LEAVE TO ADD, TO ALTER AND / OR AMEND ANY OF THE FOREGOING GROUND AND TO MAKE NEW OR ADDITIONAL SUBMISSIONS AT THE HEARING OF THE APPEAL AS WELL AS TO SUBMIT FRESH DOCUMENTS AND INFORMATION AS ADVISED . P A G E | 2 ITA NO.2879/MUM/2017 A.Y. 2007 - 08 SHRI IBRAHIM (EBRAHIM) J. SOPARIWALA VS. THE. DY. COMM. OF INCOME TAX, CIRCLE - 5(3)(1) 2. BRIEFLY STATED, ASSESSMENT UNDER SEC.143(3) OF THE I.T. ACT WAS FRAMED BY THE A.O IN THE CASE OF THE ASSESSEE FOR A.Y. 2007 - 08 ON 30.10.2009 ASSESSING HIS TOTAL INCOME AT RS.61,96,630/ - AS AGAINST THE RETURNED INCOME OF RS.25,10,127/ - . THE ASSESSEE HA D SOLD A RESIDENTIAL PROPERTY VIZ. FL AT NO. 5, 2 ND FLOOR, NIYAMAT PARK, PLOT NO. 82 - D, PROFESSOR ALMEIDA ROAD, BANDRA (WEST), MUMBAI FOR A CONSIDERATION OF RS. 28,00,000/ - (DEEMED VALUE AS PER SEC. 50C : RS. 36,86,500/ - ) . THE CLAIM OF THE ASSESSEE THAT THE SAID PROPERTY WAS CO - OWNED BY 13 PERSONS (INCLUDING THE ASSESSEE) AND HE WAS ONE OF THE CO - OWNER WAS HOWEVER REJECTED BY THE A.O , AND THE ENTIRE AMOUNT OF RS.36,86,500/ - WAS ASSESSED AS HIS UNEXPLAINED INCOME. THE APPEAL OF THE ASSESSEE AGAINST THE ORDER UNDER SEC.143(3) WAS DISMISSED BY THE CIT(A), VIDE HIS ORDER DATED 24.06.2010 . O N FURTHER APPEAL , THE TRIBUNAL VIDE ITS ORDER DATED 27.02.2013 IN ITA NO. 6255/MUM/2010 RESTORED THE ISSUE TO THE FILE OF THE A.O WITH A DIRECTION TO FRAME A DE NOVO ASSESSMENT AFTER GIVING THE ASSESSEE A R EASONABLE OPPORTUNITY OF BEING HEARD. THE A.O WAS FURTHER DIRECTED THAT THE ASSESSEE MAY ALSO BE ALLOWED TO PLACE ON RECORD ALL THE EVIDENCE S INCLUDING THE GENERAL POWER OF ATTORNEY (FOR SHORT GPA) , AS WELL AS MATERIAL PERTAINING TO CASH WITHDRAWALS AN D DISPUTES WITH THE OTHER CO - OWNERS WHICH WOULD SUPPORT HIS CASE. 3. IN THE COURSE OF THE SET ASIDE PROCEEDINGS THE A.O CALLED UPON THE ASSESSEE TO SUBSTANTIATE ON THE BASIS OF DOCUMENTARY EVIDENCE THAT THE PROPERTY VIZ. FLAT NO. 5, 2 ND FLOOR, NIYAMAT PAR K, PLOT NO. 82 - D, PROFESSOR ALMEIDA ROAD, BANDRA (WEST), MUMBAI WAS CO - OWNED BY 13 PERSONS. THE ASSESSEE WAS ALSO DIRECTED TO PLACE ON RECORD THE GPA THAT WAS EXECUTED IN HIS FAVOUR BY THE REMAINING 12 CO - OWNERS AS REGARDS THE PROPERTY UNDER CONSIDERATION . ALSO , THE ASSESSEE WAS DIRECTED TO SUPPORT HIS CLAIM THAT TWO OF THE CO - OWNERS HAD WITHDRAWN THE SALE CONSIDERATION FROM THE BANK WITHOUT HIS KNOWLEDGE , AND THE SAME HAD RESULT ED TO DISPUTES WITH THEM . FURTHER, THE ASSESSEE WAS CALLED UPON TO SHOW AS TO W HEN THE SALE CONSIDERATION OF THE PROPERTY WAS DISTRIBUTED AMONG ST ALL THE 13 CO - OWNERS, AS WELL AS PLACE ON RECORD THE COPIES OF THEIR RETURNS OF INCOME FOR THE YEAR P A G E | 3 ITA NO.2879/MUM/2017 A.Y. 2007 - 08 SHRI IBRAHIM (EBRAHIM) J. SOPARIWALA VS. THE. DY. COMM. OF INCOME TAX, CIRCLE - 5(3)(1) UNDER CONSIDERATION I.E A.Y 2007 - 08. HOWEVER, THE ASSE SSEE FAILED TO COOPERATE IN THE COU RSE OF THE ASSESSMENT PROCEEDINGS AND DID NOT PLACE ON RECORD THE DOCUMENTS AS WERE CALLED FOR BY THE A.O. ON THE BASIS OF THE AFORESAID FACTS THE A.O ASSESSED THE ENTIRE AMOUNT OF RS.36,86,500/ - RECEIVED BY THE ASSESSEE ON SALE OF THE AFORESAID PROPERTY V IZ. FLAT NO. 5, 2 ND FLOOR, NIYAMAT PARK, PLOT NO. 82 - D, PROFESSOR ALMEIDA ROAD, BANDRA (WEST), MUMBAI AS THE UNEXPLAINED INCOME OF THE ASSESSEE. 4. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) THE CIT(A) OBSERVED THAT A PERUSAL OF THE GPA REVEALED THAT THE ASSESSEE HAD GOT OMNIBUS POWERS TO ACT ON BEHALF OF THE CO - OWNERS WITH REGARD TO SEVERAL ACTIVITIES REGARDING THE PROPERTY UNDER CONSIDERATION. IT WAS OBSERVED BY THE CIT(A) THAT A PERUSAL OF THE GPA REVEALED THAT THE ASSESSEE WA S THE MAIN PERSON WHO DISCHARGED ALL THE LEGAL OBLIGATIONS ON HIS BE H ALF AND ON THE BEH ALF OF ALL THE OTHER 12 CO - OWNERS WITH REGARD TO PURCHASE AND SALE OF THE PROPERTY UNDER CONSIDERATION. AS PER THE GPA DATED 19.09.1995 THE ASSESSEE HAD INTER ALIA GOT THE FOLLOWING POWERS: - TO DO AND EXECUTE ALL AND ANY OF THE ACTS AND DEEDS AND THINGS IN RESPECT OF SHARES IN THE IMMOVABLE PROPERTY IN QUESTION ON BEHALF OF ALL THE CO - OWNERS. - ALL THE POWERS TO MANAGE AND DEVELOP THE SAME IN ANY MANNER THE APPELLANT D EEMS PROPER AND FURTHER PURPOSE TO DEAL WITH TENANTS AND ALL AUTHORITIES INCLUDING STATE GOVERNMENT AND BOMBAY MUNICIPAL CORPORATION IN ALL RESPECTS COMPLETELY AND EFFECTIVELY . - TO APPROACH ALL AUTHORITIES TO GET PLAN FOR THE DEVELOPMENT OF THE SAID PROPE RTY . - TO LET OUT OR GIVE ON LEAVE AND LICENCE THE SAID PROPERTY . - TO TAKE ALL LAWFUL PROCEEDINGS AND MEANS AT LAW BY DISTRESS WARRANT, SUITS OR OTHERWISE FOR RECOVERING AND RECEIVING THE SAID RENTS OR COMPENSATION AND OTHER DUES AND ALSO TO TAKE POSSESSION OF THE PREMISES OR ANY PART OF THE SAID PROPERTY FROM THE TENANTS OR LICENSEES CONDUCTORS OR TRESPASSERS OF THE PROPERTY ON THEIR BEHALF . - TO PROSECUTE AND DEFEND ALL LEGAL PROCEEDINGS TOUCHING ANY OF THEIR PROPERTY OR REGARDING ANY OF THE MATTERS CONCERNING THEM . - TO FILE THEIR RETURN OF INCOME BEFORE THE I NCOME TAX, AND SALES TAX AUTHORITIES AND TO MAKE ANY APPLICATION AND SUBMIT PLANS BEFORE ANY OFFICE AND TO PRESENT ANY DOCUMENTS FOR REGISTRATION . - TO APPOINT AND CONSTITUTE ON THEIR BEHALF PLEADERS, ADVOCATES, VAKILS, ARCHITECTS OR CHARTERED ACCOUNTANTS OR OTHER ATTORNEYS OR AGENTS AND CONTRACTORS WHENEVER THE APPELLANT THINKS PROPER TO DO SO . - TO WITHDRAW AND RECEIVE DOCUMENTS AND/OR MONEY FROM A NY COURT, OFFICE OR INDIVIDUAL OR OPPOSITE PARTY OR GOVERNMENT OR MUNICIPAL AUTHORITIES ETC. P A G E | 4 ITA NO.2879/MUM/2017 A.Y. 2007 - 08 SHRI IBRAHIM (EBRAHIM) J. SOPARIWALA VS. THE. DY. COMM. OF INCOME TAX, CIRCLE - 5(3)(1) - TO SELL, ASSIGN, MORTGAGE EXCHANGE, SURRENDER, GIFT LEASE OR DISPOSE OFF ALL THE PROPERTY OR PART TH E REOF ON THEIR BEHALF. 5. THE CIT(A) WAS OF THE VIEW THAT THE ASSESSEE ON THE BASIS OF THE AFORESAID GPA WAS VESTED WITH OMNIBUS POWER S TO ACT ON BEHALF OF THE OTHER CO - OWNERS WITH REGARD TO SEVERAL ACTIVITIES AS REGARDS THE PROPERTY UNDER CONSIDERATION, WHICH AMONGST OTHER S INCLUDED THE POWER T O APPOINT CHARTERED ACCOUNTANT AND FILE THE INCOME TAX RETURNS ON THEIR BEHALF. FURTHER, T HE CIT(A) WAS OF THE VIEW THAT ONUS WAS C A ST UPON THE ASSESSEE EITHER TO BEAR THE ENTIRE TAX LIABILITY ON SUCH CAPITAL GAINS ALL BY HIMSELF , OR TO FILE THE RETURN OF INCOME ON BEHALF OF THE OTHER CO - OWNERS WITH RESPECT TO THEIR SHARES AS HE WAS VESTED WITH THE POWER S TO DO SO. THE CIT(A) HELD A CONVICTION THAT AS THE ASSESSEE HAD FAILED TO FILE THE INCOME TAX RETURN S OF THE OTHER CO - OWNERS DESPITE THE POWER BEING VESTED WITH HIM, THEREFORE, HE HAD DELIBERATELY EVADED TO PAY THE TAX UNDER THE PROVISIONS OF THE I.T. ACT . ON THE BASIS OF HIS AFORESAID OBSERVATIONS THE CIT(A) CONCLUDED THAT THE ENTIRE INCOME BY WAY OF CAP ITAL GAINS ON SALE OF THE PROPERTY UNDER CONSIDERATION WAS LIABLE TO BE ASSESSED IN THE HANDS OF THE ASSESSEE, AND HELD THE ASSESSEE AS RESPONSIBLE TO BEAR THE ENTIRE TAX LIABILITY WHICH INCLUDED THE LIABILITY OF THE OTHER 12 CO - OWNERS . 6. THE ASSESSEE BE ING AGGRIEVED WITH THE ORDER OF THE CIT(A) HAS CARRIED THE MATTER IN APPEAL BEFORE US. WE HAVE PERUSED THE COPY OF THE GPA, DATED 19.09.1995 THAT WAS EXECUTED BY THE REMAINING 12 PERSONS VIZ. (I) M OHAMED YUNUS JUSA M ; (II) MRS. RUKHSANA MAHOMED ASLAM; (III) MRS. JENAB M OHAMMED MUSTAQ; (IV) RAFIQ ABDUL GAFFAR; (V) ABDULKAD E R ALI MOHAM M ED; (VI) SHAKIL EBRAHIM; (VII) AFZAL ABDUL SATTAR; (VIII) MRS. JUBEDA ABDUL G AFFAR SATTAR; (IX)KHALID ISMAIL; (X) IQBAL ISMAIL; (XI) MRS. HABIBA ABDUL REHMAN; (XII) MRS. RABIBA MAHOMED YUSUF , IN FAVOUR OF THE ASSESSEE. FURTHER, THE LD. A.R HAD ALSO DRAWN OUR ATTENTION TO THE COPY OF THE PURCHASE DEED , DATED 01.09.1991, PERTAINING TO THE PROPERTY UNDER CONSIDERATION VIZ. FLAT NO. 5, 2 ND FLOOR, NIYAMAT PARK, PLOT NO. 82 - D, PROFESSO R ALMEIDA ROAD, BANDRA (WEST), MUMBAI. ON A CURSORY GLANCE OF THE PURCHASE DEED DATED 01.09.1991, IT STANDS REVEALED THAT THE PROPERTY UNDER CONSIDERATION WAS P A G E | 5 ITA NO.2879/MUM/2017 A.Y. 2007 - 08 SHRI IBRAHIM (EBRAHIM) J. SOPARIWALA VS. THE. DY. COMM. OF INCOME TAX, CIRCLE - 5(3)(1) PURCHASED BY THE ASSESSEE ALONG WITH THE AFOREMENTIONED 12 CO - OWNERS , ALL RESIDENTS OF 29, ERSKIN E ROAD, NULL BAZAR, BOMBAY. IN THE BACKDROP OF THE AFORESAID FACTS AS ARE DISCERNIBLE FROM A PERUSAL OF THE AFOREMENTIONED REGISTERED DOCUMENTS VIZ. (I) GENERAL POWER OF ATTORNEY; AND (II).REGISTERED PURCHASE DEED, IT CAN SAFELY BE CONCLUDED THAT THE OBSER VATION OF THE LOWER AUTHORITIES THAT THE AFOREMENTIONED 12 PERSONS WERE DUMMY PERSONS IS FOUND TO BE ABSOLUTELY MISCONCEIVED. 7. WE HAVE DELIBERATED AT LENGTH ON THE ISSUE UNDER CONSIDERATION AND ARE UNABLE TO PERSUADE OURSELVES TO SUBSCRIBE TO THE OBS ERVATIONS OF THE LOWER AUTHORITIES. ADMITTEDLY, NOW WHEN THE AFOREMENTIONED PERSONS I.E THE ASSESSEE ALONG WITH THE REMAINING 12 PERSONS ARE CONCLUSIVELY PROVED TO BE THE CO - OWNERS IN THE PROPERTY UNDER CONSIDERATION, THEREFORE, THERE COULD HAVE BEEN NO REASON FOR THE A.O TO HAVE ASSESS ED THE ENTIRE CAPITAL GAIN INCOME ARISING ON THE SALE OF THE SAID PROPERTY IN THE HANDS OF THE ASSESSEE. INTERESTINGLY, THE ASSESSEE IN THE COURSE OF THE PROCEEDINGS BEFORE THE CIT(A) , VIDE HIS LETTER DATED 10.01.2017 ( P AGE 55 - 77 OF THE ASSESSES PAPER BOOK) HAD PLACED ON HIS RECORD THE AFFIDAVITS ALONGWITH THE COPIES OF THE PAN CARDS OF 11 CO - OWNERS ( IN CASE OF 2 OF THEM VIZ. LATE MRS. JENAB MOHAMMED MUSTAQ AND LATE MRS. HABIBA ABDUL REHMAN, THROUGH THEIR L/HEIRS), WH EREIN THEY HAD AFFIRMED CERTAIN MATERIAL FACTS VIZ. (I). THAT THEY ALONGWITH THE ASSESSEE CO - OWNED THE PROPERTY UNDER CONSIDERATION; (II). THAT THEY HAD FOR THE BETTER MAINTENANCE OF THE PROPERTY UNDER CONSIDERATION EXECUTED A GPA IN FAVOUR OF THE ASSESSEE ; (III). THAT THE ASSESSEE HAD SOLD THE PROPERTY ON BEHALF OF HIMSELF AS WELL AS THE OTHER CO - OWNERS; (IV). THAT THE SALE PROCEEDS WERE DISTRIBUTED AMONGST ALL THE CO - OWNERS; AND (V) THAT THEIR SHARE OF LTCG WAS OFFER E D BY THEM IN THEIR RESPECTIVE RETURNS OF INCOME . HOWEVER, IN CASE OF ONE OF THE CO - OWNER VIZ. MR. SHAKIL EBRAHIM (SUPRA) NO AFFIDAVIT/CONFIRMATION IS FOUND ON RECORD. BE THAT AS IT MAY, W E ARE UNABLE TO COMPREHEND THAT DE HORS ASSESSING OF THE CAPITAL GAIN INCOME FROM THE SALE OF THE PROPERTY UNDER CONSIDERATION IN THE HANDS OF THE AFOREMENTIONED 12 CO - OWNERS , HOW THE ASSESSEE COULD HAVE BEEN SADDLED WITH THE TAX LIABILITY IN RESPECT OF THE SALE TRANSACTION PERTAINING TO THE SAID REMAINING P A G E | 6 ITA NO.2879/MUM/2017 A.Y. 2007 - 08 SHRI IBRAHIM (EBRAHIM) J. SOPARIWALA VS. THE. DY. COMM. OF INCOME TAX, CIRCLE - 5(3)(1) CO - OWNERS . WE FIND THAT T HE AFORESAID OBSERVATIONS OF THE LOWER AUTHORITIES CLEARLY MILITATES AGAINST THE SETTLED POSITION OF LAW AS HAD BEEN SO LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF ITO VS. C H. ATTCHAIAH (1996) 218 ITR 239 (SC) . THE HONBLE APEX COURT IN ITS AFORE SAID JUDGMENT HAD OBSERVED THAT THE INCOME HAS TO BE BROUGHT THE TAX IN THE HANDS OF THE RIGHT PERSON AND THE RIGHT PERSON ALONE. IT HAD FURTHER BEEN OBSERVED BY THE HONBLE APEX COURT THAT THE INTEREST OF THE REVENUE WILL NOT HAVE ANY PLACE WHILE GIVING E FFECT TO ITS AFORESAID OBSERVATIONS. IN THE BACKDROP OF THE AFORESAID FACTS AND THE SETTLED POSITION OF LAW WE ARE UNABLE TO SUBSCRIBE TO THE VIEW ARRIVED AT BY THE LOWER AUTHORITIES , WHICH IN OUR CONSIDERED OPINION IS ABSOLUTELY MISCONCEIVED BOTH ON FACTS AND THE SETTLED POSITION OF LAW. WE THUS SET ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE A.O TO REWORK THE CAPITAL GAIN INCOME OF THE ASSESSEE ON THE BASIS OF HIS SHARE IN THE ENTIRE SALE CONSIDERATION /DEEMED SALE CONSIDERATION UNDER SEC. 50C . BEFORE PARTING, WE MAY HEREIN OBSERVE THAT OUR AFORESAID OBSERVATIONS SHALL IN NO WAY IMPINGE ON THE POWERS OF THE REVENUE TO RECOVER THE TAX LIABILITY ARISING FROM THE SALE TRANSACTION UNDER CONSIDERATION , AS PER THE EXTANT LAW . 8. THE APPEAL OF THE ASSE SSEE IS ALLOWED. ORDER PRO NOUNCED IN THE OPEN COURT ON 26 . 12.2018 SD/ - SD/ - ( SHAMIM YAHYA ) (RAVISH SOOD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; 26 .12 .2018 PS. ROHIT P A G E | 7 ITA NO.2879/MUM/2017 A.Y. 2007 - 08 SHRI IBRAHIM (EBRAHIM) J. SOPARIWALA VS. THE. DY. COMM. OF INCOME TAX, CIRCLE - 5(3)(1) / 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 . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI