ARVIND PESHAWARIA, MUMBAI V. ITO WD 12(2)(3), MUMBAI

ITA 32/MUM/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3655 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 20-08-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 02-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VISHWAS JADHAV
• Assessee Lawyers: R C JAIN
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC , MUMBAI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NO. 32/MUM/2014 : (A.Y : 20 04 - 05 ) MRS. ARVIND PESHAWARIA 26, MOHINI MANSION, STRAND ROAD, COLABA, MUMBAI 400 005. (APPELLANT) PAN : AAIPP0014F VS. ITO, CIRCLE - 12(2)(3), MUMBAI (RESPONDENT) ASSESSEE BY : SHRI R.C. JAIN REVENUE BY : SHRI VISHWAS JADHAV (DR) DATE OF HEARING : 17/12/2015 DATE OF PRONOUNCEMENT : 09 /03/2016 O R D E R THE CAPTIONED APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(A) - 23, MUMBAI DATED 14.10.2013, PERTAINING TO THE ASSESSMENT YEAR 2004 - 05, WHICH IN TURN HAS ARISEN FROM THE ORDER PASSED BY THE ASSESSING OFFICER DATED 23.12.2011 UNDER SECTION 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 19 61 (IN SHORT THE ACT). 2. ALTHOUGH THE ASSESSEE HAS RAISED MULTIPLE GROUNDS OF APPEAL, BUT THE SOLITARY DISPUTE REVOLVES AROUND AN ADDITION OF RS.8,51,692/ - MADE BY THE I NCOME - TAX AUTHORITIES ON ACCOUNT OF INCOME UNDER HEAD LONG TERM CAPITAL GAINS ON SALE OF PROPERTY. 3. IN THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT ASSESSEE HAD SOLD A PART OF THE PROPERTY AT LAWRENCE ROAD, AMRITSAR VIDE FOUR SALE DEEDS. THE FACTUAL POSITION WHICH IS RELEVANT IN 2 MRS. ARVIND PESHAWARIA ITA NO. 32/MUM/2014 THIS REGARD CAN BE SU MMARIZED AS FOLLOWS. THE ORIGINAL PROPERTY AT LAWRENCE ROAD WAS PURCHASED BY THE ASSESSEES FATHER AND AFTER HIS DEMISE ON 12.4.1996, THE SAID PROPERTY WAS WHOLLY INHERITED BY HIS WIFE AND MOTHER OF THE ASSESSEE, I.E., SMT. MOHANDEVI SINGH. SMT. MOHANDEV I SINGH IS STATED TO HAVE EXPIRED ON 14.8.2002. THE SAID PROPERTY WAS DIVIDED AND SOLD IN FOUR PARTS AS PER TH E DETAILS TABULATED HEREINAFTER : - DESCRI - PTION DATE OF SALE DEED AREA SQ. YDS. TOTAL SALE CONSIDERA - TION (RS) CONSIDERA - TION RECEIVED UPTO 14.0 8.2002 CONSIDERA - TION RECEIVED AFTER 14.08.2002 VENDOR/ TRANSFE - ROR PURCHASER / TRANSFEREE STAMP DUTY VALVE U/S 50 - C PART - I 17.07.2003 252 15,00,000 11,15,000 3,85,000 ARVIND PESHORIA BAINDER KAUR 22,45,000 PART - II 01.03.2002 127.97 4,48,000 4,48,000 NIL MOHAN - DEVI RENU BHATIA 8,96,000 PART - III 17.07.2003 13.48 70,000 NIL 70,000 ARVIND PESHORIA JASPAL DHAWAN 1,16,500 PART - IV 17.07.2003 124 6,00,000 NIL 6,00,000 ARVIND PESHORIA SUSHMA ARORA & OTHER 10,54,000 4. INSOFAR AS THE SALE OF PART - II IS CONCERNED, THE CLAIM OF THE ASSESSEE WAS THAT IT WAS SOLD BY HER MOTHER DURING HER LIFETIME AND THE ASSESSING OFFICER HAS ACCEPTED THIS POSITION . WITH RESPECT TO THE SALE OF PART - III AND PART - IV, THE ASSESSEE CLAIMED TO HAVE SOLD IT AND DECLARED C APITAL G AINS ON IT, WHICH IS ALSO NOT IN DISPUTE. THE ONLY DIFFERENCE BETWEEN ASSESSEE AND THE REVENUE IS WITH RESPECT TO THE GAIN ARISING ON SALE OF PART - I OF THE PROPERTY. IN THE RETURN OF INCOME FILED BY THE ASSESSEE, GAIN ARISING ON SALE OF PART - I OF THE PRO PERTY WAS NOT OFFERED FOR TAXATION. THE ASSESSING OFFICER HAS DISAGREED WITH THE ASSESSEE ON THIS ASPECT OF THE MATTER , AS ACCORDING TO HIM , ASSESSEE WAS LIABLE TO DECLARE LONG TERM CAPITAL GAINS IN RESPECT OF THE SALE OF PART - I OF THE PROPERTY ALSO. THE ASSESSING OFFICER NOTED THAT THE SALE DEED FOR PART - I WAS EXECUTED ON 17.7.2003 AND POSSESSION WAS HANDED OVER TO THE PURCHASER ON EXECUTION 3 MRS. ARVIND PESHAWARIA ITA NO. 32/MUM/2014 OF THE SALE DEED AND THAT AN AMOUNT OF RS.3,85,000/ - OUT OF TOTAL CONSIDERATION OF RS.15,00,000/ - , WAS RECEIVED BY THE ASSESSEE AFTER THE DEMISE OF HER MOTHER, SMT. MOHANDEVI SINGH. FOR SUCH REASONS , THE ASSESSING OFFICER ADOPTED THE FULL VALUE OF THE CONSIDERATION OF THE PROPERTY AT RS.22,45,000/ - CORRESPONDING TO THE VALUE ADOPTED BY THE STAMP VALUATION AUTHORITY A ND ACCORDINGLY, COMPUTED CAPITAL GAINS OF RS.8,51,692/ - , WHICH WAS ADDED TO THE RETURNED INCOME. THE CIT(A) HAS ALSO AFFIRMED THE STAND OF THE ASSESSING OFFICER AGAINST WHICH ASSESSEE IS IN FURTHER APPEAL BEFORE THE TRIBUNAL. 5. IN THE COURSE OF HEARING, THE LEARNED REPRESENTATIVE FOR THE ASSESSEE HAS MADE VARIOUS ARGUMENTS ASSAILING THE STAND OF THE I NCOME - TAX AUTHORITIES. ONE OF THE PERTINENT POINTS RAISED BEFORE ME IS TO THE EFFECT THAT IN RESPECT OF PART - I OF THE PROPERTY , ALMOST 85% OF THE CONSIDERA TION WAS RECEIVED BY THE DECEASED MOTHER DURING HER LIFETIME, AND ALSO THAT POSSESSION WAS HANDED OVER TO THE BUYER BY THE MOTHER OF THE ASSESSEE DURING HER LIFETIME ITSELF. THEREFORE, ACCORDING TO THE A PPELLANT , TAXABILITY OF THE CAPITAL GAINS ON SALE OF PART - I OF THE PROPERTY HAS TO BE EXAMINED IN THE HANDS OF THE MOTHER OF THE ASSESSEE, SMT. MOHANDEVI SINGH. FURTHERMORE, IT IS POINTED OUT THAT PART CONSIDERATION AND HANDING OVER POSSESSION TO THE BUYER WAS DONE BY THE ASSESSEES MOTHER DURING THE PRECE DING YEAR, AND THEREFORE, THE ASSESSMENT OF THE IMPUGNED CAPITAL GAINS IN THE HANDS OF THE ASSESSEES MOTHER IS TO BE RECKONED WITH IN ASSESSMENT YEAR 2003 - 04, AND CERTAINLY NOT IN THE HANDS OF THE ASSESSEE, AND THAT TOO, FOR ASSESSMENT YEAR 2004 - 05, AS DO NE BY THE ASSESSING OFFICER. THE LEARNED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE CIT(A) HAS ERRONEOUSLY REJECTED THE PLEA OF THE ASSESSEE. IN SUPPORT OF HIS PLEA THAT THE POSSESSION OF THE SAID PROPERTY WAS HANDED 4 MRS. ARVIND PESHAWARIA ITA NO. 32/MUM/2014 OVER BY ASSESSEES MOTHER D URING HER LIFETIME, THE LEARNED REPRESENTATIVE FOR THE ASSESSEE REFERRED TO PAGES 21 TO 23 OF THE PAPER BOOK WHEREIN IS PLACED A COPY OF THE ENGLISH TRANSLATION OF THE SALE DEED DATED 17.7.2003 RELATING TO PART - I OF THE PROPERTY, WHICH RECORDS THAT POSSESS ION OF THE PROPERTY WAS DELIVERED TO THE BUYER BY SMT. MOHANDEVI SINGH IN HER LIFETIME ITSELF. ON THIS BASIS THE IMPUGNED ASSESSMENT OF CAPITAL GAINS IN THE HANDS OF THE ASSESSEE HAS BEEN ASSAILED. 6. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPRESENT ATIVE (IN SHORT THE DR) APPEARING FOR THE REVENUE HAS DEFENDED THE ACTION OF THE LOWER AUTHORITIES BY POINTING OUT THAT THE SALE DEED HAS BEEN EXECUTED BY THE ASSESSEE ON 17.7.2003 AFTER THE DEMISE OF HER MOTHER AND PART OF CONSIDERATION OF RS.3,85,000/ - WAS ALSO RECEIVED BY THE ASSESSEE, THEREFORE, GAIN RELATING TO PART - I OF THE PROPERTY IS ASSESSABLE IN THE HANDS OF THE ASSESSEE. 7. I HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. FACTUALLY SPEAKING, THERE IS NO DISPUTE TO THE ASSERTIONS OF THE ASSESSEE THAT THE SALE DEED EXECUTED ON 17.7.2003 IN RELATION TO PART - I OF THE PROPERTY BEARS AN AVERMENT THAT POSSESSION OF THE PROPERTY W AS DELIVERED TO THE BUYER BY ASSESSEES MOTHER, SMT. MOHANDEVI SINGH IN HER LIFETIME. IT IS ALSO EMERGING FROM THE RECORD THAT SALE DEED DATED 17.7.2003 WAS EXECUTED BY THE ASSESSEE IN TERMS OF THE SPIRIT OF THE WILL OF HER MOTHER, SMT. MOHANDEVI SINGH. THE AFORESAID ASSERTIONS OF THE ASSESSEE HAVE ALSO BEEN NOTED WITH AFFIRMATION BY THE CIT(A) IN PARA 2.3 OF HIS ORDER. SO HOWEVER, THE CIT(A) HAS PROCEEDED TO DISREGARD AND DISBELIEVE THE SAME ON THE GROUND THAT ASSESSEE DID NOT PRODUCE ANYTHING ON RECORD TO ESTABLISH THAT POSSESSION OF THE PROPERTY WAS HANDED OVER TO THE BUYER DURING THE LIFETIME OF THE MOTHER, AND NOT ON THE EXECUTION OF THE SALE 5 MRS. ARVIND PESHAWARIA ITA NO. 32/MUM/2014 DEED ON 17.7.2003. IN MY CONSIDERED OPINION, THE AFORESAID APPROACH OF THE CIT(A) IS QUITE INEXPLICABLE. OS TENSIBLY, THE SALE DEED DATED 17.7.2003 IS A REGISTERED DOCUMENT , WHICH IS DULY SIGNED BY THE BUYER ALSO. THE SAID SALE DEED CLEARLY CONTAINS AN AVERMENT THAT POSSESSION OF THE PROPERTY HAD BEEN DELIVERED TO THE BUYER BY SMT. MOHANDEVI SINGH DURING HER LI FETIME ITSELF , I.E. BEFORE HER DEMISE ON 14.8.2002 . UNDER THESE CIRCUMSTANCES, THE CIT(A) ERRED IN PUTTING THE ONUS ON THE ASSESSEE TO ESTABLISH THE GIVING OF POSSESSION BY HER MOTHER; RATHER, IF THE AVERMENTS IN THE SALE DEED WERE UNDER CHALLENGE, THEN, ONUS WAS ON THE REVENUE TO ESTABLISH THE VERACITY OF SUCH CHALLENGE AND SUCH BURDEN COULD NOT BE SHIFTED TO THE ASSESSEE. IT IS QUITE CLEAR THAT APART FROM MAKING BALD ASSERTIONS, THERE IS NO MATERIAL LED BY THE REVENUE TO ESTABLISH CONTRARY TO WHAT HAS B EEN STATED IN THE SALE DEED. CONSIDERED IN THIS LIGHT, IN MY VIEW, THE ASSERTION OF THE ASSESSEE DESERVES TO SUCCEED AND THE CAPITAL GAINS WITH RESPECT TO PART - I OF THE PROPERTY WAS LIABLE TO BE CONSIDERED ONLY IN THE HANDS OF THE ASSESSEES MOTHER, AND T HAT TOO, FOR THE ASSESSMENT YEAR 2003 - 04 AND CERTAINLY NOT IN THE HANDS OF THE ASSESSEE FOR THE INSTANT ASSESSMENT YEAR. 8. IN THE RESULT, ORDER OF THE CIT(A) IS SET - ASIDE AND ASSESSING OFFICER IS DIRECTED TO DELETE THE ADDITION OF RS. 8,51,692/ - . 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED, AS ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 9 T H MARCH, 2016. SD/ - (G.S. PANNU) ACCOUNTANT MEMBER MUMBAI, DATE : 9 T H MARCH, 2016 *SSL* 6 MRS. ARVIND PESHAWARIA ITA NO. 32/MUM/2014 COPY TO : 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT(A) CONCERNED 4) THE CIT CONCERNED 5) THE D.R, SMC BENCH, MUMBAI 6) GUARD FILE BY ORDER DY./ASSTT. REGISTRAR I.T.A.T, MUMBAI