J.S. Ananth, V. ACIT, Bangalore

ITA 328/BANG/2013

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7617 (ITAT-BANGALORE)
• Duration Of Justice: 4 year(s) 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-09-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 10-08-2017
• Assessment Year: 2002-2003
• Appeal Filed On: 13-03-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: N C KHINCHA
• Section: 69

Judgement Text

ITA.328, 346, 513 & 1667/BANG/2013 PAGE - 1 IN THE INCOME TAX APPELLATE TRIBUNAL BENGALURU BENCH 'B', BENGALURU BEFORE SHRI. A. K. GARODIA, ACCOUNTANT MEMBER AND SHRI. LALIET KUMAR, JUDICIAL MEMBER 1. I.T.A NO.328/BANG/2013) (ASSESSMENT YEAR : 2002-03) 2. I.T.A NO.346/BANG/2013) (ASSESSMENT YEAR : 2002-03) 3. I.T.A NO.513/BANG/2013) (ASSESSMENT YEAR : 2002-03) 4. I.T.A NO.1667/BANG/2013) (ASSESSMENT YEAR : 2002-03) 1. SHRI. J. S. ANANTH, NO.3, SUDHARSHANA NILAYA, 5 TH CROSS, CUBBONPET, BENGALURU .. APPELLANT PAN : ACHPA5995P 2. SHRI. J. S. VENKATESH, NO.3, SUDHARSHANA NILAYA, 5 TH CROSS, CUBBONPET, BENGALURU .. APPELLANT PAN : ABMPV6975A 3. SHRI. J. S. SRINIVAS, NO.3, SUDHARSHANA NILAYA, 5 TH CROSS, CUBBONPET, BENGALURU .. APPELLANT PAN : AJPPS2308M 4. SMT. KOMALA RAMESH, (L/R OF J. S. RAMESH), C/O. M/S. SUDARSHAN SILKS, NO.231, KRISHNA MARKET, CHICKPET, BENGALURU .. APPELLANT V. INCOME-TAX OFFICER (TDS), WARD 18(2), BENGALURU .. RESPONDENT ITA.328, 346, 513 & 1667/BANG/2013 PAGE - 2 ASSESSEE BY : SHRI. N. C. KHINCHA, CA REVENUE BY : MS. NEERA MALHOTRA, CIT - DR HEARD ON : 10.08.2017 PRONOUNCED ON : 13.09.2017 O R D E R PER LALIET KUMAR, JUDICIAL MEMBER : ALL THESE APPEALS ARE FILED BY FOUR DIFFERENT ASSE SSEE, BELONGING TO THE SAME GROUP. THESE APPEALS ARE FILED AGAINST THE SEPARATE ORDERS OF THE CIT (A), MYSURU, AGAINST THE RESPECTIVE ASSE SSEE, FOR THE ASSESSMENT YEAR 2002-03. SINCE THE ISSUES INVOLVED ARE IDENTICAL IN ALL THE CASES, THEY ARE CLUBBED TOGETHER AND A COMMON O RDER IS PASSED HEREWITH, FOR THE SAKE OF CONVENIENCE AND BREVITY. 02. AT THE TIME OF HEARING, THE ASSESSEE HAS RESTRI CTED HIS ARGUMENTS ONLY WITH RESPECT TO COMMON GROUND NOS.2 AND 3, WHI CH ARE REPRODUCED HEREINBELOW : 2. WITHOUT PREJUDICE, THE ASSESSING OFFICER HAS ERR ED IN APPLYING THE PROVISIONS OF SEC.69B OF THE ACT TO TH E CASE OF THE APPELLANT AND THE LEARNED COMMISSIONER OF INCOME TA X (APPEALS) HAS ERRED IN CONFIRMING THE SAME. ON FAC TS AND CIRCUMSTANCES OF THE CASE THE PROVISIONS OF SEC. 69 B OF THE ACT ITA.328, 346, 513 & 1667/BANG/2013 PAGE - 3 ARE NOT AT ALL APPLICABLE TO THE APPELLANT AND THER EFORE THE ADDITION MADE ON SUCH BASIS IS REQUIRED TO BE DELETED. 3. IN ANY CASE THERE BEING NO EVIDENCE FOR HAVING P AID ANY EXTRA AMOUNT AND THE INVESTMENTS AS SHOWN BEING THE ACTUAL INVESTMENT IN THE PROPERTY, THERE IS NO BASIS FOR T HE ADDITION AND SAME IS TO BE DELETED. APPEAL NO I.T.A NO.328/BANG/2013 03. BRIEF FACTS ARE, A SEARCH U/S.132 WAS CARRIED O UT IN THE CASE OF THE ASSESSEE, ALONGWITH OTHERS OF M/S. SUDARSHAN SI LKS GROUP ON 11.10.2007. DURING THE COURSE OF SEARCH VARIOUS DO CUMENTS WERE FOUND AND SEIZED. NOTICE U/S.153A WAS ISSUED, IN R ESPONSE TO WHICH, THE ASSESSEE FILED THE RETURN. AO FOUND THAT DURIN G THE PREVIOUS YEAR FOR THE ASSESSMENT YEAR 2002-03, THE ASSESSEE PURCH ASED 1/4 TH SHARE OF THE PROPERTY BEARING NO.5, PALACE CROSS ROAD, BENGA LURU, FROM ONE SRI. S. SADANANDA, KARTHA OF HUF OF M/S. S. K. SHIV ANNA & SONS. AT THE TIME OF SEARCH, AN AGREEMENT OF SALE IN RESPECT OF THE ABOVE SAID PROPERTY WAS FOUND. AS PER THIS DOCUMENT, THE AGRE ED CONSIDERATION WAS RS.24,71,500/- IN RESPECT OF 1/4 TH SHARE IN THE PROPERTY. THE ITA.328, 346, 513 & 1667/BANG/2013 PAGE - 4 AGREEMENT OF SALE WAS EXECUTED ON 18.12.2000. AS P ER THE FOLLOWING CLAUSE, THE STATUS OF THE PROPERTY WAS MENTIONED AS UNDER : ITA.328, 346, 513 & 1667/BANG/2013 PAGE - 5 ITA.328, 346, 513 & 1667/BANG/2013 PAGE - 6 04. IN THE SAID AGREEMENT, AT SL.NO.4, IT IS ALSO M ENTIONED AS UNDER : 05. DURING THE SEARCH, THE SALE DEED OF THE CORRESP ONDING AGREEMENT OF SALE WAS ALSO FOUND, WHICH WAS REGISTERED ON 15. 11.2001, WHEREIN CONSIDERATION FOR 1/4 TH SHARE I.E., 1312.5 SFT WAS SHOWN AS RS.14,43,750/-. DURING THE COURSE OF DEPOSITION U/ S.132(4) OF THE ACT, THE ASSESSEE AGREED TO THE DIFFERENCE IN CONSIDERAT ION OF PALACE ROAD SITE AT RS.45,29,600/-. THE ASSESSEE VIDE LETTER D T.06.12.2007 AGREED FOR ADDITION OF RS.3 CRORES. IT WAS LATER ON MENTI ONED BY THE ASSESSEE THAT THOUGH IN THE AGREEMENT OF SALE DT.18.12.2000, THE SALE CONSIDERATION WAS MENTIONED AS RS.24,17,500/-, HOWE VER, LATER ON IT CAME TO THE KNOWLEDGE OF THE ASSESSEE THAT THE PROP ERTY IS UNDER LITIGATION AND THEREFORE, THE PRICE WAS RENEGOTIATE D. HOWEVER, THE AO HAS NOT AGREED TO THE CONTENTION OF THE ASSESSEE AN D MADE ADDITION OF RS.11,32,400/- EACH IN THE HANDS OF EACH OF THE IND IVIDUALS. THUS THE ITA.328, 346, 513 & 1667/BANG/2013 PAGE - 7 TOTAL ADDITION OF RS.45,29,600/- WAS MADE IN RESPEC T OF UNDER VALUATION OF THE PROPERTY. THE REASONING GIVEN BY THE AO WAS REPRODUCED BY THE CIT (A) IN PARA 3.2, WHICH IS REP RODUCED HEREIN BELOW : ITA.328, 346, 513 & 1667/BANG/2013 PAGE - 8 06. FEELING AGGRIEVED, ASSESSEE FILED APPEAL BEFORE THE CIT (A). THE CIT (A) DECLINED TO INTERFERE WITH THE FINDING OF THE AO AND CONFIRMED THE FINDING OF THE AO. FEELING AGGRIEVED , ASSESSEE IS IN APPEAL BEFORE US. 07. THE LD. AR FOR THE ASSESSEE ARGUED THE MATTER B EFORE US AND IN THE WRITTEN SUBMISSIONS IT WAS SUBMITTED AS UNDER : ITA.328, 346, 513 & 1667/BANG/2013 PAGE - 9 08. IN ADDITION TO THE ABOVE WRITTEN SUBMISSIONS, I T WAS FURTHER SUBMITTED THAT THESE AMOUNTS WERE PART OF THE SURRE NDER MADE BY THE M/S. SUDARSHAN SILKS OF WHICH THE ASSESSEE WAS / IS PARTNER AND WAS DULY ACCOUNTED FOR IN THE SURRENDERED AMOUNT OF 3 C RORE. ONCE THE ITA.328, 346, 513 & 1667/BANG/2013 PAGE - 10 AMOUNT HAS BEEN SURRENDERED BY THE FIRM OF THE ASSE SSEE, NAMELY M/S. SUDARSHAN SILKS, IT CANNOT BE ADDED IN THE HANDS OF THE ASSESSEES INDIVIDUALLY. 09. ON THE OTHER HAND, THE LD. DR VEHEMENTLY ARGUED THAT THE AUTHORITIES HAVE GIVEN THE COGENT REASON FOR MAKING THE ADDITIONS AND THEREFORE THE APPEAL OF THE ASSESSEES IS DEVOID OF ANY MERIT AND IS LIABLE TO BE DISMISSED. 10. WE HAVE GIVEN OUR CAREFUL CONSIDERATION TO THE RIVAL ARGUMENTS AND ALSO PERUSED THE RECORD. IN OUR VIEW, THE APPE AL OF THE ASSESSEE IS REQUIRED TO FAIL ON THE FOLLOWING REASONS : 10.I) IT IS NOT DISPUTED BY THE ASSESSEE THAT THE A SSESSEE HAD ENTERED INTO AGREEMENT OF SALE DT.18.12.2000. IT IS ALSO A N ADMITTED CASE OF THE ASSESSEE THAT THE PROPERTY WAS FREE FROM ANY LITIGA TION AS MENTIONED HEREIN ABOVE IN PARA 3 OF THIS ORDER (SUPRA). IF WE LOOK INTO THE EXTRACTED PORTION AS ABOVE, THEN IT IS CLEAR THAT A T THE TIME OF ENTERING INTO THE AGREEMENT OF SALE IN DECEMBER, 2000, NO LI TIGATION WAS PENDING. VIDE ORDER DT.30.9.1997, THE HONBLE HIGH COURT OF KARNATAKA HAS PERMITTED THE VENDOR TO DEMOLISH AND CONSTRUCT THE ITA.328, 346, 513 & 1667/BANG/2013 PAGE - 11 PROPERTY WITHIN 18 MONTHS. HOWEVER, RIGHT TO RE-EN TER IN THE PROPERTY WAS GIVEN TO THE TENANT AFTER RECONSTRUCTING THE PR OPERTY. AT THIS STAGE IT IS PERTINENT TO REPRODUCE THE CONDITION MENTIONE D IN THE SALE DEED, DT.22.10.2001, AT PAGE NO.9, WHICH IS AS UNDER : IT IS CLEAR FROM THE ABOVE THAT BY VIRTUE OF THE CO MPROMISE PETITIONS WHICH WERE FILED BEFORE THE HONBLE HIGH COURT, EVE N THE RIGHT TO RE- ENTER WAS SURRENDERED BY THE TENANT IN FAVOUR OF TH E VENDOR ON 20.07.2001. THUS THOUGH THE PROPERTY WAS FREE FROM ALL ENCUMBRANCE AND THE VENDOR WAS HAVING ABSOLUTE TITLE AT THE TIM E OF ENTERING IN AGREEMENT TO SELL AND FURTHER ASSESSEE WAS FULLY A WARE OF RIGHT OF RE- ENTRY IN THE PROPERTY , DESPITE THAT ASSESSEE AGREE D TO PURCHASE AT A HIGHER RATE , HOWEVER SAID RIGHT OF THE TENANT TO R E-ENTER IN THE PROPERTY ALSO CEASED TO EXIST IN VIEW OF THE COMPROMISE, ACT ED UPON AND RECORDED BY THE HONBLE HIGH COURT ON 20.07.2001. THUS IN OUR VIEW ITA.328, 346, 513 & 1667/BANG/2013 PAGE - 12 THE VALUE OF THE PROPERTY SHOULD INCREASE INSTEAD O F DECLINE AS PROJECTED BY THE ASSESSEE, AS THERE IS IMPROVEMENT IN THE RIGHT OF ASSESSEE. THUS THE REASONING GIVEN BY THE ASSESSEE THAT THE PROPERTY WAS IN LITIGATION AND THERE WAS DISPUTE IS CONTRARY TO THE WRITTEN DOCUMENTS(THE RELEVANT EXTRACT OF WHICH ARE REPRODU CED ABOVE). ADMITTEDLY, IT IS THE CASE BEFORE US THAT THE BALAN CE PAYMENT OF RS.19,71,500/- WAS REQUIRED TO BE MADE BY 30.04.200 1. HOWEVER THE ASSESSEE HAD FAILED TO BRING ON RECORD ANY DOCUMENT SHOWING EITHER THE CANCELLATION OF THE AGREEMENT OR TAKING ANY STE P FOR RENEGOTIATION OF THE AGREEMENT, IF THE ASSESSEE HAD MADE THE EAR NEST PAYMENT OF RS.5 LAKHS AS MENTIONED IN THE AGREEMENT, BY WAY OF A PAY-ORDER DT.16.12.2000 AND IF AFTER DUE VERIFICATION OF THE TITLE OF THE VENDOR AS MENTIONED HEREIN ABOVE WAS KNOWN TO THE ASSESSEE AT THE TIME OF ENTERING INTO AGREEMENT TO SELL. THEREFORE IN OUR VIEW, THE ARGUMENT OF THE ASSESSEE WITH RESPECT TO LITIGATION OR RENEG OTIATION IS NOT CONVINCING OR PLAUSIBLE. IN VIEW THEREOF, THIS ARG UMENT OF THE ASSESSEE IS DEVOID OF ANY MERIT AND ACCORDINGLY REJ ECTED. 10.II) THE ASSESSEE HAS MENTIONED THAT THE AMOUNT O F RS.45,29,600/- WAS INCLUDED IN THE ADMITTED AMOUNT OF RS.3 CRORES AS PER THE LETTER ITA.328, 346, 513 & 1667/BANG/2013 PAGE - 13 DT.06.12.2007. THERE IS NO DISPUTE ON THIS ASPECT BECAUSE AS PER THE ORDER OF CIT (A) RENDERED IN THE CASE OF M/S. SUDAR SHAN SILKS, DT.26.09.2011, FOR AY 2004-05, 2005-06, 2007-08 AND 2008-09, IT IS NOTED BY THE CIT (A) IN PARA 5.9.1 THAT THERE IS AN AMOUNT DECLARED OF RS.3,04,25,500/- INCLUDING RS.45,29,600/- BEING CON SIDERATION FOR PALACE ROAD SITE. DISCUSSION ON THIS ISSUE BY THE CIT (A) IS AS PER PARA 5.9.3 OF THAT ORDER AND IS IS REPRODUCED BELOW FOR THE SAKE OF READY REFERENCE: ITA.328, 346, 513 & 1667/BANG/2013 PAGE - 14 FROM THE ABOVE EXTRACT OF THE ORDER OF THE CIT (A), IT IS SEEN THAT THE AMOUNT OF RS.55,29,600/- WHICH IS INCLUSIVE OF THE AMOUNT IN DISPUTE OF RS.45,29,600/-, IS TO BE CONSIDERED IN THE HANDS OF THE PARTNERS, I.E., THE PRESENT ASSESSEES. AS PER THE ASSESSMENT ORDER IN THE HANDS OF THE PRESENT ASSESSEES BEFORE US, IT IS SEEN THAT NEITHE R ANY AMOUNT HAS BEEN DECLARED BY THE ASSESSEE AS INCOME ON THIS ACCOUNT NOR ANY SEPARATE ADDITION WAS MADE BY THE AO ON THIS ACCOUNT APART F ROM MAKING ADDITION OF RS.11,32,400/- BEING 1/4 TH OF THE AMOUNT OF RS.45,29,600/- IN THE HANDS OF EACH OF THESE FOUR ASSESSEES. IN V IEW OF THE ABOVE SAID POSITION, WE ARE OF THE CONSIDERED OPINION THAT NO INTERFERENCE IS CALLED FOR IN THE ORDER OF THE CIT (A) ON THIS ISSU E ON ACCOUNT OF THIS ARGUMENT ALSO. 10.III) THE LAST ARGUMENT PLACED BEFORE US IS THAT THE ASSESSEE HAS NOT BEEN GIVEN THE OPPORTUNITY OF CROSS EXAMINING S HRI. SADANANDA, WHO HAD VERIFIED IN HIS STATEMENT THAT THE MONEY AC TUALLY RECEIVED BY HIM WAS MORE THAN THE MONEY REFLECTED IN THE SALE D EED. IN THE PRESENT CASE THE ADDITIONS WERE MADE BY THE AO ON VARIOUS EVIDENCES ITA.328, 346, 513 & 1667/BANG/2013 PAGE - 15 AS MENTIONED HEREIN ABOVE AND NOT SOLELY ON THE BA SIS OF STATEMENT GIVEN BY SHRI. SADANANDA. FURTHER ON THE BASIS OF THE STAMP VALUE SHOWN AND PAID BY THE ASSESSEE ON THE SALE DOCUMEN T ,AS PER THE KARNATAKA STAMPS ACT , WAS MORE THAN THE CONSIDERAT ION MENTIONED IN THE SALE DOCUMENT . THEREFORE IN OUR VIEW, THE PLE A OF CROSS EXAMINING IS NOT SUSTAINABLE. MOREOVER IN OUR VIEW , ONCE THE ADDITIONS WERE MADE BY THE AO ON VARIOUS GROUNDS IN CLUDING THE STATEMENT GIVEN BY SHRI. SADANANDA, THE ASSESSEE CO ULD HAVE VERY WELL RAISED THIS GROUND IN THE APPEAL BEFORE THE CIT (A) ITSELF AND ASK FOR CROSS EXAMINATION. . HOWEVER, WE FIND FROM THE GRO UNDS RAISED BEFORE THE CIT (A), THAT NO SUCH OBJECTION WAS RAISED SEEK ING CROSS EXAMINATION OF SHRI. SADANANDA. THE ASSESSEE IS RE QUIRED TO BE VIGILANT AND CAREFUL IN EXERCISING HIS RIGHT. ONCE THE ASSESSEE HAS BEEN DULY ASSISTED BY A COMPETENT, EXPERIENCED AUTH ORISED REPRESENTATIVE, THEN IT IS NOT EXPECTED ON THE PART OF THE ASSESSEE TO CLAIM THAT HE WAS NOT AWARE OF HIS RIGHTS AND THERE FORE CROSS EXAMINATION WAS NOT SOUGHT. IN OUR VIEW NO FAULT CA N BE ATTRIBUTED TO THE AO OR THE CIT (A) ORDERS ON THIS COUNT AS WELL . ITA.328, 346, 513 & 1667/BANG/2013 PAGE - 16 11. IN THE LIGHT OF THE ABOVE REASONS, THE APPEAL O F THE ASSESSEE IS LIABLE TO BE DISMISSED. ACCORDINGLY, THE APPEAL IS DISMISSED. 12. AS THE FACTS OF ALL THE OTHER THREE APPEALS IN ITA.346, 513 & 1667/BANG/2013 ARE COMMON, THEREFORE BY BORROWING T HE REASONINGS GIVEN IN THE MAIN APPEAL IN ITA.328/BANG/2017, THES E APPEALS ARE ALSO DISMISSED. 13. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEES ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 13TH DAY OF S EPTEMBER, 2017. SD/- SD/- (A. K. GARODIA) (LALIET KUMAR) ACCOUNTANT MEMBER JUDICIAL M EMBER BENGALURU DATED : 13.09.2017 MCN* COPY TO: 1. THE ASSESSEE 2. THE ASSESSING OFFICER 3. THE COMMISSIONER OF INCOME-TAX 4. COMMISSIONER OF INCOME-TAX(A) 5. DR 6. GF, ITAT, BANGALORE BY ORDER SENIOR PRIVATE SECRETARY