RAJNI ASHOKLAL WADH WA, ULHASNAGAR V. ITO WD 2(3),

ITA 3000/MUM/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7995 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 25-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SUNIL M MAKH IJA
• Keywords: Sale consideration of property below Jantri Value; Opportunity of being heard; Principle of natural justice; Cost of acquisition
• Section: 143(3); 50C

Judgement Text

D IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI C.N PRASAD JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ./ I.T.A. NO. 3000/ MUM/2016 ( / ASSESSMENT YEAR: 2011 - 12) SMT. RAJNI ASHOKLAL WADH WA , BK. NO. 784, ROOM NO.7 - 8 - 9, SHYAMLAL KUNJ, OPP. ULHASNAGAR MUNICIPAL CORPORATION , ULHASNAGAR - 421003. / V. ITO WARD 2(3), KALYAN. ./ PAN : AABPW7866M ( / APPELLANT ) .. ( / RESPONDENT ) ASSESSEE BY: SHRI. SUNIL M. MAKHIJA REVENUE BY : SHRI. PURUSHOTTAM KUMAR / DATE OF HEARING : 13.12.2017 / DATE OF PRONOUNCEMENT : 20 .12.2017 / O R D E R PER RAMIT KOCHAR, ACCOUNTANT MEMBER THIS APPEAL, FILED BY THE ASSESSEE, BEING ITA NO. 3000/MUM/2016 FOR ASSESSMENT YEAR 2011 - 12, IS DIRECTED AGAINST THE APPELLATE ORDER DATED 04.01.2016 PASSED BY LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) - 3, THANE (HEREINAFTER CALLED THE CIT(A)) FOR ASSESSMENT YEAR 2011 - 12, APPELLATE PROCEEDINGS HAD ARISEN BEFORE LEARNED CIT(A) FROM THE ASSESSMENT ORDER DATED 21.03.2014 PASSED BY LEARNED ASSESSING OFFICER (HEREINAFTER CALLED THE AO) U/S 143(3) OF THE INCOM E - TAX ACT, 1961 (HEREINAFTER CALLED THE ACT). 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE IN THE MEMO OF APPEAL FILED WITH THE INCOME - TAX APPELLATE TRIBUNAL, MUMBAI (HEREINAFTER CALLED THE TRIBUNAL) READ AS UNDER: - I.T.A. NO. 3000/ MUM/2016 2 1. THE LD. CIT (APPEALS) HAS ERRED IN HOLDING THAT ASSESSEE WAS OWNER OF THE WHOLE PROPERTY TRANSFERRED WITHOUT APPRECIATING THAT THE REGISTERED DOCUMENT ON RECORD ( REGISTERED SALE DEED) CLEARLY INDICATES THAT ASSESSEE HAD ONLY 1/3 RD SHARE IN THE SAME. 2. 2. THE LD. CIT (APPEALS) HAS ERRED IN BRINGING TO TAX THE ENTIRE LONG TERM CAPITAL GA IN DUE ON THE TRANSFER OF WHOLE PROPERTY IN THE HANDS OF ASSESSEE WITHOUT APPRECIATING THAT ASSESSEE HAD ONLY 1/ 3 RD SHARE IN THE SAME AND THEREFORE WAS LIABLE TO PAY TAX ON THE 1/3 RD OF THE LONG TERM CAPITAL GAIN ONLY. 3. THE APPELLANT CRAVES LEAVE TO ADD. AMEND, ALTER AND OR VARY ANY OF THE GROUNDS AT THE TIME OR BEFORE THE HEARING OF THIS APPEAL. 4. THE APPELLANT THEREFORE PRAISE (SIC. PRAYS) THAT ADDITION MADE BY THE ASSESSING OFFICER AT RS. 5 6 , 77,247/ - AS AND BY WAY OF LONG TERM CAPITAL GAIN MAY PLEASE BE REDUCED TO RS. 9.76,854/ - ONLY . 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL HAVING DECLARED INCOME FROM OTHER SOURCES IN THE RETURN OF INCOME FILED WITH REVENUE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS U/S 143(3) R.W.S. 143(2), IT WAS OBSERVED BY THE A.O THAT ASSESSEE HAD SOLD A PROPERTY WHICH WAS AN OFFICE ON 1 ST FLOOR AT PLOT NO. 9, SECTION - 5, NEAR SAIBABA MANDIR, ULHASNAGAR - 3 ON 15.12.2011 FOR TOTAL CONSIDERATION OF RS.21,29,250/ - . T HE MARKET VALUE AS PER GOVERNMENT VALUATION WAS RS.56,90,000/ - FOR THE PURPOSES OF SECTION 50C . THE AO INVOKED PROVISIONS OF SECTION 50C AND THE ASSESSEE WAS SHOW CAUSED BY THE AO . THE ASSESSEE CLAIMED THAT THE ASSESSEE IS CO - OWNER OF THE SAID PROPERTY AND SHE HAS 1/3 SHARE IN THE SAID PROPERTY ALONG WITH CO - OWNERS NAMELY SHRI. SHANKARLAL WADHWA AN D SH. MANHORLAL WADHWA . I T WAS SUBMITTED THAT THE PROPERTY WAS MORTGAGE AS COLLATERAL SECURITY AGAINST LOAN OBTAINED BY SHRI SHANKARLAL WADHWA WHO WAS UNABLE TO PAY THE LOAN AND THE ASSESSEE BEING CLOSE RELATIVE WAS APPOINTED TO SETTLE THE DUES OF THE BAN K OWED BY SHRI. SHANKARLAL WADHWA TO THE BANK . IT WAS SUBMITTED THAT THE SALE PROCEEDS OF THIS PROPERTY WAS DEPOSITED IN THE BANK TO CLEAR THE LOAN OWED BY SH. SHANKARLAL WADHWA TO THE BANK . THE A.O OBSERVED FROM THE SALE DEED THAT THE ASSESSEE HAS BECOM E SOLE / ABSOLUTE OWNER OF THE PROPERTY AND ASSESSEE HAS RECEIVED THE SAID AMOUNT ON THE SALE OF THE PROPERTY OF WHICH THE GOVERNMENT VALUATION OF THE PROPERTY WAS RS.56,90,000/ - . THE AO INVOKED SECTION 50C AND THE AMOUNT OF FOLLOWING CAPITAL GAIN WAS BR OUGHT TO TAX BY THE AO VIDE ASSESSMENT ORDER DATED 21 - 03 - 2014 PASSED BY THE AO U/S 143(3), AS UNDER : - I.T.A. NO. 3000/ MUM/2016 3 TOTAL SALE CONSIDERATION AS PER GOVT. VALUATION RS. 56,90,000/ - LESS: - INDEXED COST OF ACQUISITION RS.12,753/ - 4000 X 711 223 _ _ _ _ _ _ _ _ _ LONG TERM CAPITAL GAIN RS.56,77,247/ - 4. AGGRIEVED BY THE ASSESSMENT ORDER DATED 21 - 03 - 2014 PASSED BY THE AO , THE ASSESSEE CARRIED THE MATTER FURTHER IN APPEAL TO LEARNED CIT - A BY FILING FIRST APPEAL. THE ASSESSEE SUBMITTED BEFORE LEARNED CIT(A) THAT THE ASSESSEE IS 1/3 OWNER OF THE SAID PROPERTY WHICH WAS CO - OWNED BY ASSESSEE ALONG WITH SHRI. SHANKER LAL WADHWA AND DR. MANHOR WADHWA . THE SAID PROPERTY WAS MORTGAGED WITH THE CENTRAL BANK OF INDIA TO SECURE LOANS OBTAINED BY MR SHANKARLAL WADHWA . TH E PROPERTY WAS SOLD TO PAY THE LOAN OF SHRI. SHANKARLAL WADHW A WHO WAS PROPRIETOR OF M/S. MUKESH SILK MILL S . DUE TO THE FINANCIAL DIFFICULTIES FACED BY SAID SHRI. SHANKARLAL WADHWA , THE ASSESSEE WAS ASKED TO SETTLE THE DISPUTE AN D DUES WITH BANKERS . IT WAS SUBMITTED THAT MERELY BECAUSE THE ASSESSEE WAS APPOINTED BY OTHER CO - OWNERS TO SETTLE BANK DUES DOES NOT MEAN THAT THE ASSESSEE HAS BECOME FULL OWNER OF THE PROPERTY. THE LEARNED CIT - A REJECTED THE CONTENTION S OF THE ASSESSEE BUT GAVE THE RELIEF TO THE EXTENT OF COST OF ACQUISITION TO THE TUNE OF RS.3,94,575/ - AND THE BALANCE AMOUNT WAS ORDERED BY LEARNED CIT(A) TO BE BROUGHT TO TAX , VIDE APPELLATE ORDER DATED 04 - 01 - 2016 PASSED BY LEARNED CIT(A) . 5. AGGRIEVED BY THE APPELLATE ORDER DATED 04 - 01 - 2016 PASSED BY LEARNED CIT(A), THE ASSESSEE FILED AN APPEAL WITH TRIBUNAL. T HE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ASSESSEE HAS 1/3 SHARE IN THE SAID PROPERTY . O UR ATTENTION WAS DRAWN TO THE ORDERS OF THE AUTHORI TIES BELOW AND ALSO TO THE PAPER BOOK FILED WITH THE TRIBUNAL WHEREIN THE AGREEMENT TO SALE OF THE PROPERTY IS PLACED ON RECORD AT PAGE NO. 8 TO 22. IT WAS SUBMITTED THAT THE AUTHORITIES BELOW HAVE NOT PROPER L Y APPRECIATED THAT THE ASSESSEE IS THE OWNER TO THE TUNE OF 1/3 OF THE PROPERTY WHILE 2/3 OF THE PROPERTY WAS OWNED BY CLOSE RELATIVE S NAMELY SHRI. SHANKERLAL WADHWA AND DR. MANHOR WADHWA . IT WAS SUBMITTED THAT MR SHANKARLALA WADHWA OBTAINED LOAN FROM CENTRAL BANK OF INDIA AND BEING IN DEFAULT, THE ASS ESSEE WAS APPOINTED TO SETTLE THE DISPUTE WITH CENTRAL BANK OF INDIA AND TO REPAY THE LOAN. IT IS I.T.A. NO. 3000/ MUM/2016 4 SUBMITTED RS. 1.20 CRORE WAS PAID TO CLEAR LOAN INCLUSIVE OF INTEREST PAYABLE TO CENTRAL BANK OF INDIA. IT WAS SUBMITTED THAT THE ASSESSEE WAS MERELY APPOINTE D TO SETTLE THE DISPUTE WITH BANKERS AND THE ASSESSEE CONTINUED TO BE OWNER OF 1/3 OF THE SAID PROPERTY. IT WAS SUBMITTED THAT THE ENTIRE SALE PROCEED WERE DEPOSITED WITH CENTRAL BANK OF INDIA TO CLEAR THE DUES OF MR. SHANKARLAL WADHWA. I T IS SUBMITTED THA T ONE MORE OPPORTUNITY BE GIVEN TO THE ASSESSEE WHEREIN THE ASSESSEE WILL BE ABLE TO BRING ON RECORD ALL NECESSARY COGENT EVIDENCES TO SUBSTANTIATE ITS CONTENTION THAT ASSESSEE IS OWNER ONLY TO THE TUNE OF 1/3 OF THE PROPERTY AND HENCE LIABLE FOR CAPITAL GAIN TAX TO THAT EXTEN T ONLY . IT WAS SUBMITTED THAT AUTHORITIES BELOW HAVE NOT APPRECIATED THE FAMILY ARRANGEMENT IN PROPER PERSPECTIVE. THE LD. DR ON THE OTHER HAND SUBMITTED THAT ASSESSEE HAS ACQUIRED INTEREST IN THE ENTIRE PROPERTY FROM OTHER CO - OWNERS AS SHE WAS APPOINTED TO SETTLE DISPUTE AND REPAY LOAN OBTAINED BY CLOSE RELATIVE SHANKARLAL WADHWA FROM CENTRAL BANK OF INDIA AND OTHER CO - OWNERS HAVE SURRENDERED THEIR SHARE IN PROPERTY IN FAVOUR OF ASSESSEE. IT WAS SUBMITTED THAT WHEN PROPERTY WAS SOLD , IT IS REFLECTED IN THE AGREEMENT OF SALE THAT THE ASSESSEE IS THE SOLE OWNER OF THE PROPERTY AND ASSESSEE HAS CLEAR ED THE OUTSTANDING AMOUNT OF THE LOAN PAYABLE TO CENTRAL BANK OF INDIA, BOMBAY CENTRAL BRANCH OF RS. 1,20,00,000/ - INCLUSIVE OF INTEREST AND HENCE THERE W AS NO FAULT ON THE PART OF THE R EVENUE TO BRING TO TAX TOTAL CAPITAL GAIN IN THE HANDS OF THE ASSESSEE . H OWEVER , IT WAS FAIRLY AGREED BY THE LD. DR THAT THE MATTER MAY BE SET ASIDE TO THE FILE OF THE A.O . FOR DENOVO DETERMINATION OF THE ISSUE AND THE MATTER CAN BE LOOKED INTO AGAIN BY REVENUE IN THE LIGHT OF EVIDENCE ON RECORD AS WELL AS FURTHER EVIDENCE /EXPLANATIONS W.R.T. FAMILY SETTLEMENT S ENTERED INTO BY THE ASSESSEE WITH CLOSE RELATIVES. 6. WE HAVE CONSIDERED RIVAL CONTENTION S AND HAV E PERUSED MATERIAL ON RECORD . W E HAVE OBSERVED THAT THE ASSESSEE HAS SOLD OFFICE PROPERTY ON FIRST FLOOR AT PLOT NO. 9, SECTION - 5, NEAR SAIBABA MANDIR, ULHASNAGAR - 3 ON 15.12.2011 FOR TOTAL CONSIDERATION OF RS.21,29,250/ - WHEREIN ALTHOUGH THE ASSESSEE HAS MENTIONED IN THE AGREEMENT TO SALE THAT SHE IS THE SOLE OWNER OF THE SAID PROPERTY , HOWEVER IT IS ALSO OBSERVED FROM THE AGREEMENT TO SALE THAT THE ASSESSEE WAS APPOINTED BY OTHER CO - OWNERS TO SETTLE THE DISPUTE AND CLEAR THE LOANS WHICH WAS OBTAINED BY SHRI. SHANKER WADHWA FROM CENTRAL BANK OF INDIA AND THERE WAS AN AGREEMENT BETWEEN THE THREE PARTIES TO CLEAR I.T.A. NO. 3000/ MUM/2016 5 THE SAID AMOUNT OF LOAN WHICH WAS ULTIMATELY SETTLED BY THE ASSESSEE FOR RS. 1.2 CRORE (INCLUSIVE OF INTEREST) . F URTHER IT IS ALSO OBSERVED THAT IT IS CLAIMED THAT THE ENTIRE SALE PROCEED OF THIS PROPERTY WAS DEPOSITED IN THE CENTRAL BA NK OF INDIA TO CLEAR THE DUES OF MR SHANKARLAL WADHWA UNDER THE FAMILY ARRANGEMENT BETWEEN ALL THE THREE PARTIES . T HESE FACTS ARE REQUIRED TO BE LOOKED INTO IN THE PROPER PER SPECTIVE IN THE LIGHT OF EVIDENCE ON RECORD AS WELL FURTHER EVIDENCES WHICH THE ASSESSEE IS CLAIMING TO PRODUCE INCLUDING FAMILY SETTLEMENTS , FUND FLOW STATEMENTS AND TAXABILITY OF THE CAPITAL GAIN IN THE HANDS OF THE OTHER CO - OWNERS. THUS , THE MATTER NEED TO BE SET ASIDE AND RESTORED TO THE FILE OF THE A.O FOR FRESH DETERMINATION OF THE ISSUE BY THE A.O O N MERITS IN ACCORDANCE WITH LAW . NEEDLESS TO SAY PROPER AN D ADEQUATE OPPORTUNITY OF BEING HEARD SHALL BE PROVIDED BY THE A.O TO THE ASSESSEE I N ACCORDANCE WITH PRINCIPLES OF NATURAL JUSTICE IN ACCORDANCE WITH LAW . N EEDLESS TO SAY THAT THE A.O SHALL ADMIT ALL NECESSARY EVIDENCES SUBMITTE D BY THE ASSESSEE IN THE DE - NOVO PROCEEDINGS IN THE INTEREST OF JUSTICE. WE ORDER ACCORDINGLY. 7. IN THE RES ULT APPEAL OF THE ASSESSEE IN I.T.A. NO. 3000/MUM/2016 FOR ASSESSMENT YEAR 2011 - 12 IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRON OUNCED IN THE OPEN COURT ON 2 0 .12.2017 2 0 .12.2017 S D / - S D / - ( C.N PRASAD ) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 2 0 .12.2017 NISHANT VERMA SR. PRIVATE SECRETARY I.T.A. NO. 3000/ MUM/2016 6 COPY TO 1 . THE APPELLANT 2 . THE RESPONDENT 3 . THE CIT(A) CONCERNED, MUMBAI 4 . THE CIT - CONCERNED, MUMBAI 5 . THE DR BENCH, E 6 . MASTER FILE // TUE COPY// BY ORDER DY/ASSTT. REGISTRAR ITAT, MUMBAI