ITO, CHENNAI V. I.A.Zafarullah, CHENNAI

ITA 3321/CHNY/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3985 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-07-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 15-05-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 08-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MURUGABOOPATHY
• Assessee Lawyers: G BASKAR
• Keywords: Sale consideration of property below Jantri Value

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI ... , , # BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ I.T.A. NO. 3321/MDS/2016 / ASSESSMENT YEAR : 2007-08 INCOME TAX OFFICER, INTERNATIONAL TAXATION -2(2), BSNL BUILDING, IV FLOOR, GREAMS ROAD, CHENNAI 600 006. VS. SHRI I.A. ZAFARULLAH, NO. 190, R.K. MUTT ROAD, MANDAVELLI, CHENNAI 600 028. [PAN: AARPZ 2550R] ( / APPELLANT) ( / RESPONDENT) % & / APPELLANT BY : SHRI MURUGABOOPATHY, JCIT )*% & / RESPONDENT BY : SHRI G. BASKAR, ADVOCATE & /DATE OF HEARING : 15.05.2017 & /DATE OF PRONOUNCEMENT : 26.07.2017 /O R D E R PER S. JAYARAMAN, ACCOUNTANT MEMBER: THE REVENUE HAS FILED THIS APPEAL AGAINST THE ORD ER OF COMMISSIONER OF INCOME TAX (APPEALS)-16, CHENNAI IN ITA NO. 25/CIT(A)- 16/2007-08 DATED 22.09.2016 . :-2-: I.T.A. N0. 3321/MDS/2016 2. SHRI I.A. ZAFARULLAH , THE ASSESSEE, AN NRI , HIS DAUGHTER MRS HAMSA PARVIN AHAMED AND SON-IN-LAW SHRI S.IMTIAZ AHMED PURCHAS ED CONTIGUOUS LAND OF A TOTAL EXTENT OF 46.93 CENTS AT NEELANGARAI VILLAGE, TAMBARAM TALUK AND CLAIMED TO HAVE SOLD IT BY AN ORAL AGREEMENT WITH WAVOO MAG DOOM REALTORS (PURCHASER) FOR A TOTAL CONSIDERATION OF RS. 40 LAKHS. OUT OF WHICH, THE ASSESSEE'S SHARE IS RS.20 LAKHS. ON THE RECEIPT OF THE ENTIRE SALE CON SIDERATION ON 19.10.2005, THE ASSESSEE ALONG WITH THE OTHER TWO CO-OWNERS CLAIME D TO HAVE HANDED OVER THE POSSESSION TO THE PURCHASER ON 19.10.2005 ITSELF. H OWEVER, THE SALE DEED WAS EXECUTED ON 07.07.2006 .THE GUIDE LINES VALUE WAS A T RS.815 PER SQ FT WHICH WORKED OUT TO RS. 1,66,14,721/-. WHEN THE MATTER OF VALUATION WAS REFERRED TO THE COLLECTOR U/S. 47A OF THE INDIAN STAMP ACT AND ITS PROCEEDINGS WERE PENDING ADJUDICATION, THE GOVERNMENT OF TAMILNADU INTRODUC ED A SAMADHAN SCHEME AND THE BUYER AVAILED THE SAID SCHEME AND THEREFORE THE REGISTRATION TOOK PLACE ON 07.07.2006. THE ASSESSEE SUBMITTED THAT ENTIRE CONS IDERATION WAS RECEIVED IN CHEQUE DATED 19.10.2005 AND IT WAS CREDITED TO HIS ACCOUNT ON THE SAME DAY. IT WAS ALSO SUBMITTED THAT POSSESSION WAS ALSO HANDED OVER TO THE BUYER ON 19.10.2005 ITSELF. SO, THE TRANSFER WAS COMPLETE I N A Y 2006-07, THEREFORE, PLEADED THAT THE QUESTION OF BRINGING CAPITAL GAINS TO TAX IN THIS AY , IE AY 2007- 08 , DOESN'T NOT ARISE. THE AO NOTICED THAT THE IMP UGNED PROPERTY WAS SOLD BY A REGISTERED SALE DEED DT.7.7.2006, I.E.IN AY 2007-08 AND HENCE HE ASKED FOR THE PROOF OF HANDING OVER THE POSSESSION OF THE PROPERT Y. IN THE ABSENCE OF ANY SUCH PROOF, THE AO TREATED THE SALE DEED AS THE CONCLUSI VE EVIDENCE FOR THE SAID TRANSFER, I.E. THE YEAR IN WHICH THE SALE DEED IS R EGISTERED AS THE YEAR OF TRANSFER. :-3-: I.T.A. N0. 3321/MDS/2016 THEREFORE, HE APPLIED SECTION 50C(1) OF THE ACT AN D ADOPTED THE STAMP DUTY VALUE AS THE DEEMED SALE CONSIDERATION FOR THE PURP OSE OF CAPITAL GAIN AND DETERMINED THE LTCG AT RS.62,75,480/- . AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A). THE CIT (A) HELD THAT ASSESSEE H AS RECEIVED THE ENTIRE SALE CONSIDERATION OF THE PROPERTY SOLD IN FY 2005-06 AN D IT IS SUPPORTED BY EVIDENCES LIKE THE PAYMENT HAS BEEN RECEIVED BY WAY OF CHEQUE S AND THE SAME IS FOUND REFLECTED IN ASSESSEE'S SAVING BANK ACCOUNT 6171 OF MR. I A R ZAFARULLAH IN BANK OF BARODA, MRC NAGAR BRANCH, ON DT.19.10.2005. MORE OVER, THE PROOF OF POSSESSION OF THE PROPERTY HANDED OVER DT.19.10.200 5 IS ALSO ASUFFICIENT EVIDENCE THAT POSSESSION OF THE PROPERTY IS HANDED OVER TO T HE PURCHASER IN 19.10.2005. FOLLOWING THE FINDING OF THE APEX COURT IN THE CASE OF SANGILAL VS CIT 365 ITR 389, THE CIT(A) ARRIVED A CONCLUSION THAT CAPITAL GAIN AROSE TO THE ASSESSEE IN FY 2005-06 AND NOT IN FY 2006-07. AGGRIEVED AGAINST T HAT ORDER, THE REVENUE FILED THIS APPEAL WITH THE FOLLOWING GROUNDS. 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS CONTRARY TO THE LAW AND FACTS OF THE CASE. 2. THE LD. CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE AO ON ACCOUNT OF LONG TERM CAPITAL GAIN OF RS. 62,75,480/-, HOLDING THAT THE T RANSFER HAD TAKEN PLACE IN AY 2006-07. 3. THE LD. CIT(A) FAILED TO CONSIDER THE ISSUE OF YEAR IN WHICH THE TRANSFER OF PROPERTY HAD TAKEN PLACE IN THE LIGHT OF THE PROVISIONS OF SECTION 53A OF THE TRANSFER OF PROPERTY ACT 1882 AND SECTION2(47)(V) OF THE INCOME TAX ACT 1961 WHICH IS EMPHASIZED BY HONBLE BOMBAY HIGH COURT IN ITS DECISION IN THE CASE OF CHATURBHUJ DWA RKADAS KAPADIA VS. CIT DATED 13.02.2003. THE DECISION OF THE HONBLE SUPREME COURT IN THE CA SE OF SANJEEV LAL VS. CIT IN 365 ITR 389 RELIED UPON BY THE CIT(A) IS DISTINGUISHABLE ON FAC TS FROM THE PRESENT CASE. :-4-: I.T.A. N0. 3321/MDS/2016 4. THE CIT(A) FAILED TO APPRECIATE THE FACT THAT THE S ALE OF PROPERTY WAS REGISTERED ONLY IN FY 2006-07 AND THE SALE DEED IS THE ONLY DOCUMENT IN W RITING EVIDENCING THE TRANSFER. ONE OF THE PRE-REQUISITE CONDITION FOR TRANSFER AS PER SEC TION 53A IS THAT THERE SHOULD BE A CONTRACT FOR CONSIDERATION IN WRITING AND THE SAME SHOULD BE SIGNED BY THE TRANSFEROR. IN THE PRESENT CASE, THIS CONDITION IS NOT SATISFIED AS THERE IS N O WRITTEN AGREEMENT IN SUPPORT OF ASSESSEES CLAIM THAT TRANSFER HAD TAKEN PLACE IN THE FY 2005- 06. 5. THE LD. CIT(A) ERRED IN CONCLUDING THAT THE TRANSFE R HAD TAKEN PLACE IN AY 2006-07 ON THE BASIS OF FRESH EVIDENCE FILED BY THE ASSESSEE DURIN G THE APPELLATE PROCEEDINGS IN SUPPORT OF HANDING OVER OF POSSESSION. HE OUGHT TO HAVE CALLE D FOR A REMAND REPORT OR REMITTED THE ISSUE BACK TO THE ASSESSING OFFICER FOR EXAMINING T HE GENUINENESS OF THE CLAIM. 6. THE LD. CIT(A) FAILED TO CONSIDER THE FACT THAT THE ASSESSEE HAD NOT FILED ANY R/I FOR THE AY 2006-07 ADMITTING THE CAPITAL GAINS IN SUPPORT OF H IS CLAIM THAT TRANSFER WAS MADE IN AY 2006-07. 7. FOR THESE AND OTHER GROUNDS THAT MAY BE ADDUCED AT THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE LEARNED CIT(A) MAY BE SET ASIDE AND TH AT OF THE ASSESSING OFFICER BE RESTORED. 3. THE DR QUESTIONED THE VERACITY OF THE COPY OF P OSSESSION DELIVERY LETTER FILED BEFORE THE CIT (A), A COPY OF WHICH WAS IN TH E PAPER BOOK FILED BY THE AR, FOR THE REASON THAT IT LACKED DATE ETC , REITERATED THE STAND TAKEN BY THE AO AND THE ABOVE GROUNDS OF APPEAL. PER CONTRA, THE AR TO OK US THROUGH THE PAPER BOOK AND SUBMITTED THAT THE ASSESSEE IS AN NRI, GAVE POW ER OF ATTORNEY TO HIS SON- IN -LAW SHRI S.IMTIAZ AHMED ON 05.01.2005 AND IN PURSU ANCE OF THAT GPA , THE PROPERTY WAS SOLD ON 19.10.2015 , FULL CONSIDERATIO N WAS RECEIVED BY CHEQUE AND DEPOSITED IN HIS BANK ACCOUNT WITH THE BOB, MRC NAG AR ON 19.10.2005 ITSELF AND THE POSSESSION WAS ALSO HANDED OVER TO THE PURCHASE R ON THAT DATE ITSELF. AS THERE WAS VALUATION PROBLEM WITH STATE AUTHORITIES, THE PURCHASER COULD NOT :-5-: I.T.A. N0. 3321/MDS/2016 COMPLETE THE REGISTRATION AND WHEN THE PROCEEDINGS WERE PENDING, THE GOVERNMENT OF TAMILNADU INTRODUCED A SAMADHAN SCHE ME. THE BUYER AVAILED THE SAID SCHEME AND THEREFORE THE REGISTRATION TOOK PLACE ON 07.07.2006. THE ASSESSEE SUBMITTED THAT ENTIRE CONSIDERATION WAS RE CEIVED IN CHEQUE DATED 19.10.2005 , IT WAS CREDITED TO HIS ACCOUNT ON THE SAME DAY AND THE POSSESSION WAS HANDED OVER. HENCE , THE TRANSFER WAS COMPLETE IN AY 2006-07 ITSELF. THE DR SUBMITTED THAT THE ASSESSEE HAS NOT DISCLOSED THESE FACTS IN AY 2006-07. THEN, AR SUBMITTED THAT SINCE THE ASSESSEE DID NOT HAVE ANY TAXABLE INCOME IN AY 2006-07, HE DID NOT FILE THE RETURN. THE AR FURTHER SUBMITTED THAT THE AO OF THE CO- OWNER HAS INITIATED SIMILAR PROCEEDINGS IN SHR I S.IMTIAZ AHMEDS CASE IN AY 2007-08 AND WHEN SHRI S. IMTIAZ AHMED POINTED OUT T HAT THE IMPUGNED TRANSACTION TOOK IN AY 2006-07 AND HENCE IT CANNOT BE CHARGED IN AY 2007-08 . IN VIEW SUCH PLEA, THE AO OF THE CO OWNER, SHRI S.IMT IAZ AHMED HAS DROPPED THE PROCEEDINGS FOR AY 2007-08 BY AN ORDER DT 11.11.201 4 , A COPY OF WHICH WAS IN THE PAPER BOOK. HE PLEADED THAT THE ASSESSEE DESERV ES SIMILAR JUSTICE LIKE HIS COOWNER . FURTHER, HE HAS INVITED OUR ATTENTION TO THE FACT THAT THE REGISTERED SALE DEED MENTIONS THAT .... THE VENDORS HEREBY A CKNOWLEDGE HAVING ALREADY DELIVERED VACANT POSSESSION OF THE SAID LANDS TO TH E PURCHASERS IN PAGE 12 OF THE PAPER BOOK . THIS EVIDENCES THE FACT CANVAS SED BY THE ASSESSEE ALL ALONG AND HENCE PLEADED THAT THE ORDER OF THE CIT(A) BE SUSTAINED. 4. WE HEARD THE RIVAL SUBMISSIONS AND FIND MERIT IN THE ARS SUBMISSIONS. ON THE ABOVE FACTS AND CIRCUMSTANCES, WE ARE OF THE VI EW THAT THE IMPUGNED :-6-: I.T.A. N0. 3321/MDS/2016 TRANSACTIONS ARE COMPLETE IN AY 2006-07 ITSELF AND HENCE THE ASSESSMENT MADE IN AY 2007-08 CANNOT BE SUSTAINED . HENCE , DISM ISS THE REVENUES APPEAL. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED ON WEDNESDAY, THE 26 TH DAY OF JULY, 2017 AT CHENNAI. SD/- ( . . . ) (N.R.S. GANESAN) ! ' /JUDICIAL MEMBER SD/- ( ) (S. JAYARAMAN) ' /ACCOUNTANT MEMBER /CHENNAI, 0 /DATED: 26 TH JULY, 2017 JPV & )12 32 /COPY TO: 1. %/ APPELLANT 2. )*% /RESPONDENT 3. 4 ( )/CIT(A) 4. 4 /CIT 5. 2 ) /DR 6. 7 /GF