A.Durairaj, Salem V. ITO, Salem

ITA 3498/CHNY/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7466 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-03-2017
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 15-03-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 30-12-2016
• Court: TRIBUNAL
• Assessee Lawyers: M NAARAYANAN RETD ADD CIT S
• Keywords: Cost of acquisition

Judgement Text

, A/ SMC , IN THE INCOME TAX APPELLATE TRIBUNAL A/SMC BENCH, CHENNAI . , BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER ./ I.T.A.NO.3498 /MDS./2016 ( / ASSESSMENT YEAR :2008-09) MR.A.DURAIRAJ , 35,KANNANKURICHI MAIN ROAD, HASTHAMPATTY, SALEM-7. VS. ITO, WARD I(4), SALEM. PAN ACVPD 0766 D ( / APPELLANT ) ( / RESPONDENT ) ! ' # / APPELLANT BY : MR.M.NAARAYANAN, RETD.ADD.CIT, ASSESSEES COUNSEL $% ! ' # / RESPONDENT BY : MR.ASHISH TRIPATHI, JCIT, D.R & ' ' ( ) / DATE OF HEARING : 15.03.2017 *+ ' ( ) /DATE OF PRONOUNCEMENT : 22.03.2017 / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THIS APPEAL IS FILED BY THE ASSESSEE, AGGRIEVED B Y THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(A), DATED 31.10.2016 PERTAINING TO ASSESSMENT YEAR 2008-09 . ITA NO. 3498/MDS/2016 2 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS F OR ADJUDICATION. 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS BAD IN LAW AND AGAINST THE FACTS AND CIRCUMSTANCES OF T HE CASE. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE ASSESSMENT ORDER WITHOUT ADDRESSING ANY OF THE SUBMISSIONS FILED IN WRITING IN THE STATEMENT OF FACTS AND THAT TOO G IVING ONLY A SINGLE HEARING WITHOUT EXPRESSING HIS NON ACCEPTANCE OF TH E SUBMISSION OR SEEKING ANY CLARIFICATIONS THEREON 3. THE LEARNED COMMISSIONER OF INCOME TAX FAILED TO NOTE THAT HE HAS NOT ADDRESSED ANY OF THE GROUNDS RAISED IN GROUNDS NO 3 ,4,AND 5 SPECIFICALLY WHICH ARE CRUCIAL TO THE DETERMINATION OF THE INCOME AND FAILED TO PASS A REASONED AND SPEAKING ORDER ON THE GROUNDS RAISED 4. FOR THESE AND OTHER GROUNDS THAT MAY BE TAKEN TH E ASSESSED INCOME MAY BE DELETED IN THE INTERESTS OF JUSTICE. 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE EN TERED INTO PARTNERSHIP DEED WITH SHRI A.RAJENDRAN AND OTHERS A ND STARTED A FIRM M/S. ANANDA SUPER MARKET VIDE PARTNERSHIP DEED DATE D 17.09.2003. THE ASSESSEE HAS GIVEN HIS LAND MEASURING 69143/4 S Q.FEET ON LEASE TO THE FIRM M/S.ANANDA SUPER MARKET AND THE LESSEE M/S.ANANDA ITA NO. 3498/MDS/2016 3 SUPER MARKET HAS TO CONSTRUCT A BUILDING ON THE LEA SED LAND. THE ASSESSEE SOLD HIS 50% OF LAND TO SHRI A.RAJENDRAN AND SMT R PADMAVATHY ON 14.07.2005 FOR A CONSIDERATION OF RS 18 LAKHS. THE ASSESSEE, SHRI A.RAJENDRAN AND SMTR.PADMAVATHY ALL SOLD THEIR RESPECTIVE SHARE TOTALING TO 69143/4 SQ.FEET FOR SA LE CONSIDERATION OF RS.1.26 CRORES ON 13.07.2007. THE ASSESSEE HAS NOT OFFERED TO TAX CAPITAL GAINS ARISING OUT OF THE SAID TRANSACTION A ND NOTICE U/S.148 WAS ISSUED AND WAS SERVED ON 03.04.2013. IN RESPONS E TO THE NOTICE, THE ASSESSEE HAS FILED REPLIES ON VARIOUS DATES. HE HAS STATED THAT IN HIS REPLY, HE HAS EXECUTED A SALE AGREEMENT ON 11.1 2.2006 WITH SHRI A.SUBRAMANIAM FOR SALE OF 50% OF LAND AND BUILDING OWNED BY HIM MEASURING 3208 SQ.FEET FOR A SALE CONSIDERATION OF ` 19 LAKHS AND HAS RECEIVED ` 1 LAKH AS ADVANCE ON THE SAME DAY. HE HAS RECEIVED THE BALANCE CONSIDERATION OF ` 18 LAKHS ON 13.07.2007. THE PHYSICAL POSSESSION OF THE PROPERTY WAS HANDED OVER TO SHRI A.SUBRAMANIAM AND THE TRANSACTION BETWEEN SHRI A.DURAIRAJ AND SHR I A.SUBRAMANIAM HAVE THE EFFECT OF TRANSFERRING OF PROPERTY AS PER SECTION 2(47) OF THE INCOME TAX ACT. HE CLAIMED THAT THERE IS NO CAPITAL GAINS ARISING TO HIM AND H HAS NOT FILED RETURN OF INCOME. ITA NO. 3498/MDS/2016 4 3.1 IN THE MEANTIME SHRI A.SUBRAMANIAM HAS STATED THAT THE SALE AGREEMENT HAS NOT MATERIALIZED AND HE HAS GOT BACK THE ADVANCE OF RS.1 LAKH AND HE AS POWER OF ATTORNEY FOR SHRI A.RA JENDRAN, SMT R.PADMAVATHY AND SHRI A.SHANMUGAM AS POWER OF ATTOR NEY FOR A.DURAIRAJ HAVE SOLD THE PROPERTY FOR A CONSIDERATI ON OF ` 1.26 CRORES AND THE POWER OF ATTORNEY HOLDERS SETTLED THE PROCE EDS TO SHRI A.RAJENDRAN AND SMT R.PADMAVATHY AND SHRI ADURAIRAJ . THE SALE AGREEMENT BETWEEN A.DURAIRAJ & A.SHANMUGAM THROUGH THEIR RESPECTIVE POWER HOLDERS SHRI V.SHANMUGAM AND SHRI A.SUBRAMANIAM WAS CAREFULLY EXAMINED. THE SALE AGRE EMENT STATES THAT SHRI A.SUBRAMANIAM HAS TO PURCHASE THE SHARE O F A.DURAIRAJ FOR A SALE CONSIDERATION OF ` 19 LAKHS AND HAS RECEIVED ` 1 LAKH AS ADVANCE AND THE BALANCE ` 18 LAKH IS TO BE PAID WITHIN 6 MONTHS AND TO REGISTER THE PROPERTY. IT HAS BEEN SPECIFICALLY WRITTEN THAT IF SHRI A.SHANMUGAM DOES NOT PAY THE BALANCE SALE CONSIDERA TION OF ` 18 LAKHS AND REGISTER THE PROPERTY IN HIS NAME THE SAL E AGREEMENT WILL BE CANCELLED AND ADVANCE OF ` 1 LAKH WILL BE FORFEITED. AS PER THE CONTENTION OF SHRI A.SHANMUGAM THE SALE AGREEMENT H AS NOT BEEN ITA NO. 3498/MDS/2016 5 EXECUTED AND THE PROPERTY HAS BEEN SOLD TO DIFFEREN T PERSONS ON 13.07.2007 FOR A CONSIDERATION OF ` 1.26 CRORES. 3.2 THE BUILDING WAS CONSTRUCTED BY THE FIRM M/S.A NANDA SUPER MARKET AND SHOWN AS ASSET IN THEIR BALANCE SHEET. I N THE ASSESSMENT ORDER, THE AO NOTED THAT ASSESSEE IS HOLDING OF 50% OF OWNERSHIP OF 50% OF LAND AND HIS SHARE OF SALE CONSIDERATION AFT ER REDUCING THE INDEXED COST OF ACQUISITION OF LAND OF ` 30,54,674/- HAS BEEN SUBJECTED TO CAPITAL GAINS IN THE HANDS OF THE ASSE SSEE. IT IS SEEN THAT IN THE ASSESSMENT ORDER, ALL THE AMOUNTS OF SA LE CONSIDERATION WERE CREDITED IN THE ACCOUNT OF M/S.ANANDA SUPER MA RKET AND THE CONTENTION OF THE ASSESSEE IS THAT THE SALE PROCEED S WERE APPROPRIATED BY THE FIRM ON ACCOUNT OF LOAN. THE LI ABILITY FOR CAPITAL GAINS TAX IS RIGHTLY CAST ON THE ASSESSEE AS HE IS HAVING THE OWNERSHIP OVER THE PROPERTY IN THESE CIRCUMSTANCES, THE ASSESSING OFFICER HAS RELIED ON THE JUDGMENT OF THE HONBLE H IGH COURT, BOMBAY IN THE CASE OF CIT VS. HUSSAIN MERCHANT IN 275 ITR 231 (BOM) AND THE DECISION OF THE APEX COURT IN THE CASE OF CIT V S.ATTILI. N. RAO IN 252 ITR 880. AGGRIEVED WITH THE ORDER OF AO, THE AS SESSEE CARRIED THE APPEAL BEFORE THE LD.CIT(A). ON APPEAL, THE LD. CIT(A) ENDORSED ITA NO. 3498/MDS/2016 6 THE VIEW OF THE AO AND THE LD.CIT(A) PLACING RELIA NCE ON THE JUDGEMENT RELIED BY THE AO IN THE CASE OF CIT VS.AT TILI. N. RAO IN 252 ITR 880(SC), DISMISSED THE APPEAL OF ASSESSEE. AGAI NST THIS, THE ASSESSEE IS IN APPEAL BEFORE US. 4. NOW THE MAIN GRIEVANCE OF THE LD.A.R IS THAT TH E ORDER PASSED BY AO IS AN EXPARTE U/S.144 OF THE ACT AND ALSO LD. CIT(A) NOT AT ALL CONSIDERED ALL SUBMISSIONS MADE BEFORE HIM AND HE H AS MADE VERY CRYPTIC ORDER. ACCORDING, LD.A.R PRAYED THAT THE E NTIRE ISSUE MAY BE REMITTED TO THE FILE OF AO FOR HIS CONSIDERATION SO AS TO GET PROPER OPPORTUNITY OF HEARING TO THE ASSESSEE. 5. ON THE OTHER HAND, LD.D.R RELIED ON THE ORDER O F LOWER AUTHORTIEIS. 6. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL ON RECORD. THE MAIN CONTENTION OF LD.A.R IS THAT THE ORDER OF LD.CIT(A) IS VERY NON-SPEAKING AND HE HAS NOT RECORDED ALL THE S UBMISSIONS OF THE LD.A.R. FURTHER, LD.A.R SUBMITTED THAT LD.CIT(A) HA S NOT ADDRESSED TO THE ANY OF THE GROUNDS RAISED IN GROUND NOS. 3, 4 & 5. ADMITTEDLY, THE ORDER OF LD.CIT(A) IS VERY CRYPTIC. THE LD.CIT( A) HAS NOT PASSED SPEAKING ORDER. HE HAS NOT CONSIDERED ALL THE SUBMI SSIONS OF THE ITA NO. 3498/MDS/2016 7 LD.A.R. HOWEVER, THE LD.CIT(A) IN A SUMMARY MANNER ENDORSED THE ORDER OF THE ASSESSING OFFICER WITHOUT ASCERTAINING ANY REASONS AND THE ORDER OF LD.CIT(A) CANNOT BE SUSTAINED. IN THES E CIRCUMSTANCES, WE ARE OF THE OPINION THAT THE MATTER SHOULD BE RES TORED BACK TO THE FILE OF LD.CIT(A) FOR FRESH ADJUDICATION AND HE IS DIRECTED TO PASS SPEAKING ORDER AFTER AFFORDING REASONABLE OPPORTUNI TY OF HEARING TO THE ASSESSEE AND HE SHALL CONSIDER THE SAME IN ACC ORDANCE WITH LAW AND DECIDE IT AFRESH. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 22 ND MARCH, 2017 AT CHENNAI. SD/- ( ) ( CHANDRA POOJARI ) /ACCOUNTANT MEMBER CHENNAI, DATED THE 22 ND MARCH, 2017 . K S SUNDARAM. , ' $(-. /.( / COPY TO: 1 . ! / APPELLANT 3. & 0( () / CIT(A) 5. .3 4 $(5 / DR 2. $% ! / RESPONDENT 4. & 0( / CIT 6. 4 6 7 ' / GF