Mukesh Kumar Gopiram Goyal, Surat V. Income Tax Officer, Ward-2(3)(3), Surat

ITA 3303/AHD/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9133 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 14-03-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 27-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SONIA KUMAR
• Assessee Lawyers: K R GHEEWALA
• Keywords: Sale consideration of property below Jantri Value; Business income; Opportunity of being heard; Source of fund
• Section: 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH (BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER & SHRI N.K. BILLAIYA, JUDICIAL MEMBER) ITA. NO: 3303/AHD/2015 (ASSESSMENT YEAR: 2011-12) SHRI MUKESH KUMAR GOPIRAM GOYAL 171- GAYATRI NAGAR, 1, GOYAL SHOPPING CENTRE, TEMPO STAND GALI, PIPODARA, SURAT V/S INCOME TAX OFFICER, WARD- 2 (3) (3), SURAT (APPELLANT) (RESPONDENT) PAN: AFZPG0160P APPELLANT BY : SHRI K. R. GHEEWALA, AR RESPONDENT BY : SMT. SONIA KUMAR, SR. D.R. ( )/ ORDER DATE OF HEARING : 14 -03-201 6 DATE OF PRONOUNCEMENT : 16 -03-2016 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. WITH THIS APPEAL, THE ASSESSEE HAS CHALLENGED THE C ORRECTNESS OF THE ORDER OF THE LD. CIT(A)-I, SURAT DATED 13.10.2015 P ERTAINING TO A.Y. 2011-12 ITA NO. 3303 /AHD/2015 . A.Y. 2011-1 2 2 2. THE GRIEVANCE OF THE ASSESSEE RELATES TO THE TREATM ENT OF PROFIT ON SALE OF PROPERTY AS CAPITAL GAIN INSTEAD OF BUSINESS INC OME. THE ASSESSEE IS FURTHER AGGRIEVED BY THE FACT THAT THE REVENUE AUTH ORITIES HAVE INVOKED/APPLIED PROVISIONS OF SECTION 50C OF THE AC T. THE ASSESSEE CLAIMS THAT THE INCOME SHOULD BE TREATED AS BUSINES S INCOME AND PROVISIONS OF SECTION 50C SHOULD NOT BE APPLIED. 3. ASSESSEE IS AN INDIVIDUAL, THE RETURN FOR THE YEAR WAS FILED ON 30.09.2011 DECLARING TOTAL INCOME AT RS. 2,80,995/- . THE RETURN WAS SELECTED FOR SCRUTINY ASSESSMENT AND ACCORDINGLY ST ATUTORY NOTICES WERE ISSUED AND SERVED UPON THE ASSESSEE. DURING TH E COURSE OF THE SCRUTINY ASSESSMENT PROCEEDINGS AND ON VERIFICATION OF THE AIR INFORMATION, THE A.O FOUND THAT THE ASSESSEE HAS EN TERED INTO ONE TRANSACTION OF SALE OF IMMOVABLE PROPERTY. HOWEVER, THE A.O NOTICED THAT THE ASSESSEE HAS NOT SHOWN ANY SUCH TRANSACTIO N IN HIS COMPUTATION OF INCOME. THE A.O PROCEEDED BY CALLING NECESSARY INFORMATION FROM THE OFFICE OF THE SUB-REGISTRAR, M ANGROL. 4. ON RECEIPT OF THE INFORMATION, THE A.O FOUND THAT T HE ASSESSEE HAS PURCHASED ONE PROPERTY BEING INDUSTRIAL SHED AT PIP ODARA, DISTRICT- SURAT AND AS PER THE REGISTERED DOCUMENTS, THE PURC HASE WAS MADE ON 06.08.2010 FOR RS. 26,25,000/-. THE A.O FURTHER FOU ND THAT THE SAID PROPERTY WAS SOLD ON 29.12.2010 FOR RS. 31 LACS THE REBY BOOKING A PROFIT OF RS. 4,75,000/-. THE A.O WAS OF THE FIRM B ELIEF THAT THE PROVISIONS OF SECTION 50C SQUARELY APPLY SINCE THE VALUATION MADE BY THE STAMP VALUATION AUTHORITY WAS OF RS. 36,97,800/ -. ASSESSEE WAS ASKED TO EXPLAIN THE SOURCE OF INVESTMENT AND ALSO TO EXPLAIN WHY THE STAMP DUTY VALUATION SHOULD NOT BE TAKEN AS THE FUL L VALUE OF CONSIDERATION. ITA NO. 3303 /AHD/2015 . A.Y. 2011-1 2 3 5. ASSESSEE FILED A DETAILED REPLY EXPLAINING THAT THE PROPERTY WAS PURCHASED FROM THE OPEN AUCTION CONDUCTED BY GUJARA T INDUSTRIAL INVESTMENT CORPORATION LTD. IT WAS FURTHER EXPLAINE D THAT THE ASSESSEE WAS ACTING ON BEHALF OF EAGLE FIBERS PRIVATE LTD. WITH AN UNDERSTANDING THAT THE ASSESSEE WILL BID IN THE AUC TION AND THE SAID COMPANY WILL MAKE THE PAYMENT. DETAILS OF PAYMENT O F RS. 26,25,000/- WAS FURNISHED ALONG WITH CONFIRMATION L ETTER. IN SO FAR AS THE APPLICABILITY OF SECTION 50 C IS CONCERNED. IT WAS EXPLAINED THAT SINCE THE PROPERTY WAS PURCHASED IN A PUBLIC AUCTIO N FROM AN INSTITUTION WHICH WAS UNDER THE COMPLETE CONTROL OF THE GOVERNMENT, THERE IS NO QUESTION OF ANY UNDER HAND CONSIDERATIO N AND SINCE THE PROPERTY WAS SOLD WITHIN SHORT SPAN OF TIME. THERE IS NO QUESTION OF INVOKING PROVISIONS OF SECTION 50C OF THE ACT. THIS REPLY OF THE ASSESSEE DID NOT FIND FAVOUR WITH THE A.O WHO PROCE EDED BY TAKING THE STAMP DUTY VALUATION AS THE FULL VALUE OF CONSIDERA TION AND MADE AN ADDITION OF RS. 10,72,800/- TO THE RETURN INCOME OF THE ASSESSEE. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) B UT WITHOUT ANY SUCCESS. BEFORE US, THE LD. COUNSEL FOR THE ASSESSE E VEHEMENTLY SUBMITTED THAT THE ENTIRE TRANSACTION SHOULD BE TRE ATED AS AN ADVENTURE IN THE NATURE OF TRADE AND, THEREFORE, TH E INCOME SHOULD BE TREATED AS BUSINESS INCOME OF THE ASSESSEE. THE LD. COUNSEL FURTHER STATED THAT THE PROVISIONS OF SECTION 50C ARE NOT A PPLICABLE ON THE FACTS OF THE CASE. IT IS THE SAY OF THE LD. COUNSEL THAT IN ALTERNATIVE, THE MATTER SHOULD HAVE BEEN REFERRED TO THE DVO IN THE LIGHT OF THE PROVISIONS OF SECTION 50C(2) OF THE ACT. PER CONTRA , THE LD. D.R. STRONGLY SUPPORTED THE FINDINGS OF THE REVENUE AUTH ORITIES. 6. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ORD ERS OF THE AUTHORITIES BELOW. AT THE VERY OUTSET, THE CONTENTI ON OF THE ASSESSEE ITA NO. 3303 /AHD/2015 . A.Y. 2011-1 2 4 THAT THE TRANSACTION SHOULD BE TREATED AS AN ADVENT URE IN THE NATURE OF TRADE DOES NOT HOLD ANY WATER BECAUSE THE ASSESSEE FAILED TO DEMONSTRATE BY BRINGING COGENT MATERIAL EVIDENCES O N RECORD WHICH COULD SUGGEST THAT THE ASSESSEE IN FACT WANTED TO T RADE IN THE IMPUGNED PROPERTY. ON THE CONTRARY, THE ASSESSEE HI MSELF HAS STATED THAT HE WAS PURCHASING PROPERTY FOR AND ON BEHALF O F M/S. EAGLE FIBERS PVT. LTD. FROM WHOM THE SOURCE OF FUNDS CAME FROM. THEREFORE, WE DO NOT FIND ANY ERROR IN SO FAR AS THE INCOME IS CONSI DERED IS UNDER THE HEAD CAPITAL GAIN. 7. HOWEVER, IN SO FAR AS, THE APPLICABILITY OF SECTION 50C IS CONCERNED. THERE IS NO DOUBT THAT PROVISIONS OF SECTION 50C SQ UARELY APPLY ON THE FACTS OF THE CASE BUT AT THE SAME TIME PROVISIONS O F SECTION 50C (2) OF THE ACT CANNOT BE BRUSHED ASIDE LIGHTLY SINCE THIS ISSUE WAS RAISED BEFORE THE REVENUE AUTHORITIES AND THE A.O HIMSELF HAS ADMITTED TO THIS EFFECT IN THE ASSESSMENT ORDER. THEREFORE, IN THE INTEREST OF JUSTICE AND FAIR PLAY, WE RESTORE THIS ISSUE TO THE FILES O F THE A.O. THE A.O IS DIRECTED TO REFER THE MATTER TO THE DVO AND DECIDE THE ISSUE AFRESH AS PER THE PROVISIONS OF THE LAW AFTER GIVING A REASON ABLE AND SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS TREATED AS ALLOWED IN PART FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN OPEN COURT ON 16 - 03 - 2016 SD/- SD/- (RAJPAL YADAV) (N. K. BILLAIYA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: TRUE COPY