GHANSHYAM HARJIVANDAS PATADIA, MUMBAI V. ITO WD 25(3)(1), MUMBAI

ITA 3643/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3368 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 15-06-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 22-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Opportunity of being heard
• Section: 2(14); 142(1); 133(6); 147; 148; 54; 144

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL G B ENCH, MUMBAI BEFORE SHRI D.KARUNAKARA RAO, ACCOUNTANT MEMBER A ND SHRI C.N. PRASAD, JUDICIAL MEMBER / I .TA NO. 3643/MUM/2014 ( / ASSESSMENT YEAR:2005-06 MR. GHANSHYAM HARJIVANDAS PATADIA, C/O SWEET HOME DEVELOPERS PVT. LTD., 193, BUBNA HOUSE, 1 ST FLOOR, S.V. ROAD, KANDIVALI(W), MUMBAI-400 067 / VS. THE ITO - 25(3)(1), MUMBAI ./ ./ PAN/GIR NO. AABPP 4713A ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY: SHRI JAYESH DADIA / RESPONDENT BY: SHRI AIRIJU JAIKARAN / DATE OF HEARING :15.06.2016 ! / DATE OF PRONOUNCEMENT :31.08.2016 / O R D E R PER C.N. PRASAD, JM: THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A)-35, MUMBAI DATED 14.2.2014 PERTAINING TO ASS ESSMENT YEAR 2005-06 ARISING OUT OF THE ORDER PASSED U/S. 144 OF THE ACT BY THE ASSESSING OFFICER. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS IN ITS APPEAL: ITA NO.3643/M/2014 2 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN TAXING RS. 52,50,000/- AS UNDISCLOSED I NCOME. THE ACTION IS UNJUSTIFIED AND UNWARRANTED AND THE ADDITION IS MADE MORE ON ALLEGATION THAN ON EVIDENC E. 2. WITHOUT PREJUDICE TO THE ABOVE, THE LD. CIT(A) H AS ERRED IN LAW AND ON THE FACTS OF THE CASE IN GIVING FINDINGS THAT THERE IS TRANSFER OF LAND, ACCORDINGLY CAPITAL GAIN HAS ARISEN AND INCOME IS SUBJECT TO TAX UNDER THE HEAD CAPITAL GAINS. THE ACTION IS UNJUSTIFIED AND UNWARRANTED A S THERE IS NO TRANSFER OF LAND. 3. BRIEF FACTS ARE THAT IN THIS CASE, INFORMATIO N WAS RECEIVED BY THE REVENUE DEPARTMENT FROM HON'BLE BOMBAY HIGH COU RT AND IT WAS DIRECTED THEREIN TO CONDUCT NECESSARY ENQUIRIES. IT WAS POINTED OUT BY THE HON'BLE HIGH COURT IN NOTICE OF MOTION NO.37 78 OF 2007 IN SUIT NO.2763 OF 2007 THAT THE PLAINTIFF SHRI PRASHA NT NAVNITBHAI PAREKH, ETC. HAD PAID RS.50 LAKHS IN CASH TOWARDS S ALE OF SOME PROPERTY TO DEFENDANT, SHRI GHANSHYAM HARJIVANDAS P ATADIA, ON THE INSISTENCE OF SHRI GHANSHYAM HARJIVANDAS PATADIA TH AT HIS ACCOUNTS WERE FROZEN BY THE I.T. DEPARTMENT. AS THE DEFENDAN T HELD POWER OF ATTORNEY PERTAINING TO THE PROPERTY UNDER CONSIDERA TION AND DUE TO SOME DISPUTE AND REVOKING OF POWER OF ATTORNEY, THE PROPERTY WAS NOT TRANSFERRED TO THE PLAINTIFF, WHEREAS IT WAS CL AIMED BY THEM TO HAVE MADE PAYMENT OF RS.50 LAKHS IN CASH OUT OF TOT AL RS.52.5 LAKHS CONSIDERATION. IT WAS OBSERVED IN THE ASSESSMENT OR DER THAT THE SUBJECT MATTER OF ASSESSMENT ORDER IS ONLY FOR VERI FICATION AS PER THE DIRECTIONS OF THE HIGH COURT, REGARDING HOW THE DEF ENDANT HAS ACCEPTED SUCH HUGE AMOUNT IN CASH. RELEVANT PARA OF THE HIGH COURT ORDER IS REPRODUCED. 9. IN FACT, THE MATTER REQUIRES TO BE INVESTIGATED BY THE INCOME TAX DEPARTMENT AGAINST PLAINTIFFS AS TO HOW CASH AM OUNT OF ITA NO.3643/M/2014 3 RS.50.00 LAKHS WAS AVAILABLE WITH THE PLAINTIFFS, W HICH THEY CLAIM TO HAVE PARTED TO DEFENDANT NO.I THAT TOO IN SPITE OF KNOWLEDGE THAT THE BANK ACCOUNT OF DEFENDANT NO.I WAS ALREADY ATTACHED BY THE INCOME TAX DEPARTMENT. THE INCOME TAX DEPARTMEN T WILL ALSO HAVE TO PURSUE APPROPRIATE ACTION AGAINST DEFE NDANT NO.I WHO HAS ACCEPTED SUCH HUGE AMOUNT IN CASH/ WHICH IS THE CASE MADE OUT OF THE PLAINTIFFS ON AFFIDAVIT. A COPY OF THIS ORDER BE FORWARDED TO THE COMMISSIONER OF INCOME TAX (VIGI1A NCE, AAYAKAR BHAVAN, MUMBAI TO CONSIDER ALL THESE ASPECT S AND TAKE THE MATTER TO ITS LOGICAL AND AGAINST PLAINTIFFS AN D DEFENDANT NO.1, AS MAY BE ADVISED. THE COMMISSIONER OF INCOME TAX TO APPRAISE THIS COURT ABOUT THE COURSE OF ACTION ADOP TED BY HIM IN THE FACT SITUATION OF THIS CASE. THAT REPORT BE SUB MITTED WITHIN SIX WEEKS FROM TODAY. COPY OF THIS ORDER BE ALSO FORWAR DED TO THE STANDING COUNSEL FOR THE INCOME TAX DEPARTMENT AS A LSO THE ADDITIONAL SOLICITOR GENERAL OF INDIA (OFFICE AT MU MBAI) FOR NECESSARY ACTION. ' 4. A LETTER WAS ISSUED TO THE ASSESSING OFFICER BY THE CHIEF COMMISSIONER OF INCOME-TAX, MUMBAI DATED 17.2.2010 FORWARDING THE ABOVE ORDER OF HIGH COURT AND DIRECTED TO CONDU CT NECESSARY VERIFICATION IN RESPECT OF SHRI GHANSHYAM H PATADIA . TO FIRST VERIFY THE VERACITY OF THE CLAIM OF THE PLAINTIFFS THE ASS ESSEE WAS ISSUED NOTICE U/S.133(6) DATED 18.3.2010 WITH PERMISSION O F THE COMMISSIONER OF INCOME-TAX- 25, MUMBAI TO FURNISH F OLLOWING DETAILS. (1) NATURE OF BUSINESS CARRIED OUT BY YOU. (2) DETAILS AND ADDRESSES OF ALL CONCERNS IN WHICH YOU ARE A PROPRIETOR, PARTNER OR DIRECTOR ETC. (3) COPY OF RETURN FOR A. Y. 05-06 ALONG WITH ALL ANNEXURES. (4) COPY OF THE SALE AGREEMENT AS ABOVE ALONG WITH DETAILS OF RECEIPT OF SALE PROCEEDS. (5) DETAILS OF ALI YOUR BANK ACCOUNTS. ITA NO.3643/M/2014 4 5. HOWEVER THE ASSESSEE FAILED TO FILE ANY REPLY BE FORE THE PRESCRIBED DATE AND HENCE THE CASE WAS REOPENED BY ISSUE OF NOTICE U/S.148 DATED 29.3.2010 RECORDING THE FOLLOWING REA SONS. THE HONBLE HIGH COURT, BOMBAY VIDE ORDER DATED 1.11.2007 IN THE MATTER SUIT NO.2763 OF 2007 IN THE CASE OF PRASHANT NAVNITBHAI PAREKH AND ANOTHER (PLAINTIFF) VS. GHANSHYAMBHAI HARJIVANDAS PATADIA AND OTHERS (DEFEN DANTS) HAS DIRECTED TO INVESTIGATE AND PURSUE APPROPRIATE ACTION AGAINST RESPONDENT; SHRI GHANSHYAMBHAI H. PATADIA W HO HAS ACCEPTED CASH OF RS.50 LAKHS FROM PLAINTIFF, PRASHA NT NAVNITBHAI PAREKH (AGPPP6105N) AND RAJESH MAHASHANKAR JOSHI (AIVPJ7180M) ON EXECUTING AN AGREEMENT DATED 21.3.2 005 IN RELATION TO PROPERTY ADMEASURING ABOUT 25000 SQ.MTR S. FOR WHICH GHANSHYAMBHAI H. PATADIA HAD POWER OF ATTORNEY. IN ORDER TO VERIFY THE FACT WHETHER THE RECEIPTS WE RE DISCLOSED IN THE RETURN FILED WITH THE DEPT. A NOTI CE DT 18.03.10 WAS ISSUED TO THE ASSESSEE UNDER SECTION 133(6) OF THE IT ACT 1961 WITH APPROVAL OF CIT-25, AND DULY SERVED ON TH E ASSESSEE ON 19.03.10 REQUIRING HIM TO FURNISH RELEVANT DETAILS ON OR BEFORE 24.03.10. HOWEVER, THERE IS NO COMPLIANCE FROM THE ASSESSEE . THE ASSESSEE HAS ALSO NOT FILED THE ROI FOR THE PERIOD UNDER CONSIDERATION. AND HENCE IN ORDER TO GIVE EFFECT ON THE INFORMATION AND DIRECTIONS CONTAINED IN AN ORDER PA SSED BY THE HON BLE HIGH COURT APPROVAL MAY BE GRANTED FOR REO PENING THE ASSESSMENT FOR THE A Y. 2005-06. ' 6. LATER, THE ASSESSEE FILED ONLY A LETTER IN RESPO NSE TO 133(6) DATED 18.3.2010 IN WHICH HE STATED AS FOLLOWS: AS I RECEIVED ABOVE NOTICE SAYING THAT I ENTERED INTO SALE TRANSACTION OF RS.50 LAC ON 21.03.2005 AND ACCEPT T HE CASH, IN REGARDS I CLARIFY THAT I ENTERED INTO TRAN SACTION BUT PARTY MAKE FRAUD WITH ME AND MONEY IS NOT PAID. IN THIS REFERENCE I ALREADY FILE POLICE COMPLAINT AGAINST MR.PRASHANT NAVNEET PEREKH, RAJU FADDU AND OTHERS O N 13 TH FEBRUARY, 2006. FOR YOUR READY REFERENCE AND CLARIFICATION I ATTACHED HEREWITH PHOTOCOPY OF FIR (FIRST INFORMATION REPORT). THERE IS NO BUSINESS CARRIED OUT BY ME. ITA NO.3643/M/2014 5 I AM NEITHER PARTNER IN PARTNERSHIP FIRM NOR DIRECT OR IN ANY COMPANY. I HAVE REGULARLY FILED THE RETURN OF INCOME IN THE INCOME TAX DEPARTMENT. 7. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER FURTHER ISSUED NOTICE U/S. 142(1) DATED 3.8.2001 TO SUBSTANTIATE THE ALLEGATION. THE ASSESSEE FAILED TO RESPOND THE NOT ICE. THE ASSESSEE ALSO FAILED TO RESPOND THE NOTICE U/S. 148 AND NO R ETURN WAS FILED SINCE INFORMATION AND MATERIAL WAS NOT COMING FORTH FROM THE ASSESSEE. THE ASSESSING OFFICER MADE BEST JUDGEMEN T ASSESSMENT U/S. 144 R.W. SEC. 147 OF THE ACT AND BROUGHT TO TA X THE ALLEGED RECEIPT OF RS. 50 LAKHS IN CASH IN THE HANDS OF THE ASSESSE E. 8. ON APPEAL, THE LD. CIT(A) SUSTAINED THE ORDER OF THE ASSESSING OFFICER OBSERVING THAT THE ASSESSEE HAS ENTERED INT O AN AGREEMENT FOR SALE OF LAND ON 21.3.2005 WITH THE BUYER. LATER ON DEED OF CANCELLATION WAS ENTERED INTO ON 10.2.206 WITH THE BUYER. BOTH ASSESSEE AND THE BUYER DISPUTED WITH REGARD TO THE AGREEMENT FOR SELLING AND BUYING LAND. THE LD. CIT(A) WAS ALSO OF THE VIEW THAT SINCE THE DEED OF CANCELLATION SIGNED BY BOTH THE P ARTIES MENTIONED THAT THE BUYER HAD ENJOYED PHYSICAL POSSESSION OF T HE PROPERTY FROM THE DATE OF AGREEMENT TILL THE DATE OF DEED OF CANC ELLATION, HE WAS OF THE VIEW THAT THE ASSESSEE MIGHT HAVE RECEIVED THE PAYMENT AS THERE IS A TRANSFER RIGHT TO CANCELLATION THEREFORE HE S USTAINED THE CONTENTION OF THE ASSESSING OFFICER THAT THERE IS A TRANSFER AND THE ASSESSEE HAS RECEIVED THE PAYMENT. 9. THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT: ITA NO.3643/M/2014 6 I) THE ASSESSEE HAD NEVER HANDED OVER THE PHYSICAL POSSESSION OF THE PROPERTY. II) THE ASSESSEE STATED THAT IMPUGNED LAND TRANSFER UN DER CONSIDERATION HAS BEEN COMPULSORILY ACQUIRED BY GOVERNMENT UNDER THE SALT SECTION. III) THE TOTAL SALE CONSIDERATION WAS NOT RECEIVED BY TH E ASSESSEE . IV) THE PROVISIONS OF SEC. 53A OF THE TRANSFER OF PROP ERTY ACT COULD NOT SAID TO HAVE BEEN FULFILLED, NO TRANS FER OF ANY PROPERTY OUGHT TO HAVE TAKEN PLACE. 10. IT WAS FURTHER SUBMITTED DURING THE REMAND PROC EEDINGS BEFORE THE ASSESSING OFFICER AS UNDER: A) DURING THE YEAR UNDER ASSESSMENT ASSESSEE HAS MA DE A SALE DEED FOR PLOT OF LAND DATED 21ST MARCH 2005 FOR A S UM OF RS. 52, 50, 000/- WITH MR. PRASHANT NAVEET PAREKH. B) AS THE PURCHASING PARTY I.E. ( MR. PRASHANT NAVEET PAREKHHAS CHEATED ASSESSEE BY NOT PAYING THE ABOVE SUM, SO DEED OF CANCELLATION HAS BEEN MADE DATED 10TH FEBRU ARY 2006. C) FIR HAS BEEN LODGED AGAINST MR. PRASHANT NAVEET PA REKH DATED 12TH FEBRUARY 2006 FIR NO. 55/06, YEAR 2006, KANDIVALI POLICE STATION (MUMBAI). D) THE ABOVE PLOT LAND HAS BEEN COMPULSORILY ACQUIRED BY THE GOVERNMENT OF INDIA WITH NEW SURVEY NO. 378 UNDER S ALT SECTION. ITA NO.3643/M/2014 7 E) THE PROPOSED BUYER HAS ALSO FILED A SUIT AGAINST TH E SELLER FOR THE REFUND OF THE EARNEST MONEY OF RS.50,00,000 /- TOGETHER WITH THE INTEREST AT THE RATE OF 18% PER A NNUM AS SPECIFIED IN THE PETITION FILED BY THE BUYER (PARA. D PAGE NO 3) F) THE CASE IS STILL PENDING FOR IN BOMBAY HIGH COURT FOR ITS FINAL ORDER. 11. THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT N ONE OF THE SUBMISSIONS WERE CONSIDERED BY THE LD. CIT(A) OR TH E ASSESSING OFFICER, THE ASSESSMENT WAS MADE EX-PARTE. HE SUBM ITS THAT SINCE THE MATTER IS STILL PENDING WITH THE HONBLE HIGH COURT , THE ISSUE MAY BE REMANDED TO THE ASSESSING OFFICER FOR FRESH EXAMINA TION AND IN THE LIGHT OF THE DECISION OF THE HONBLE HIGH COURT. 12. THE LD. DEPARTMENTAL REPRESENTATIVE VEHEMENTLY SUPPORTS THE ORDERS OF THE AUTHORITIES BELOW. 13. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW. THIS ASSESSMENT WAS MADE EX -PARTE BY THE ASSESSING OFFICER U/S. 144 AS BEST JUDGEMENT ASSES SMENT AS THE ASSESSEE COULD NOT FILE THE REQUISITE DETAILS CALLE D FOR. THE ASSESSEE SUBMITTED BEFORE THE ASSESSING OFFICER AS UNDER: OUT OF THE TOTAL CONSIDERATION OF RS.52,50,000/- A MOUNT EQUAL TO RS.50,00,000/- RECEIVED BY THE ASSESSEE IS CONSIDERED AS 'EARNEST MONEY' RECEIVED. FOR YOUR REEDY REFERENCE WE SUBMIT A CLOSE DEFINIT ION OF 'EARNEST MONEY' S AS UNDER: AN EARNEST MONEY DEPOSIT SHOWS THE SELLER THAT A B UYER IS SERIOUS ABOUT PURCHASING A PROPERTY. WHEN THE TRANS ACTION IS FINALIZED, THE FUNDS ARE PUT TOWARD THE BUYER'S DOW N PAYMENT. IF THE DEAL FALLS THROUGH, THE BUYER MAY NOT BE ABL E TO RECLAIM ITA NO.3643/M/2014 8 THE DEPOSIT. TYPICALLY, IF THE SELLER TERMINATES TH E DEAL, THE EARNEST MONEY WILL BE RETURNED TO THE BUYER. WHEN T HE BUYER IS RESPONSIBLE FOR RETRACTING THE OFFER, THE SELLER WI LL USUALLY BE AWARDED THE MONEY. FOR THE ABOVE THE ASSESSEE HAS ALSO ADMITTED THAT T HE AMOUNT RECEIVED IS IN TERMS OF EARNEST MONEY WHICH THE ASS ESSING OFFICER HAS ALSO CONFIRMED FROM THE PETITION FILED BY THE PURCHASER (MR.PRASHANT NAVEET PAREKH) IN THE BOMBAY HIGH COURT IN WHICH THE PURCHASER HAS CLAIMED THAT HE HA S PAID THE EARNEST MONEY OF RS.50,00,000/- FROM PARA. D PAGE N O 3 OF THE PETITION .THE ASSESSING OFFICER IN HIS REMAND REPOR T DATED 29TH MAY, 2012 HAS ALSO CONSIDERED THE AMOUNT RECEIVED B Y THE ASSESSEE IS IN TERMS OF EARNEST MONEY. FROM THE ABOVE POINTS IT CAN BE CONCLUDED THAT THE AMOUNT OF RS.50,00,000/- (RECEIVED IN CASH) IS CONS IDERED AS AN EARNEST MONEY AND NOT AS A SALE CONSIDERATION AGAIN ST THE TRANSFER OF LAND AS PER THE ARTICLE OF AGREEMENT OUT OF THE TOTAL CONSIDERATION OF RS.52,50,000/-, A MOUNT OF RS 50,00,000/- IS RECEIVED AS AN EARNEST MONEY A S SPECIFIED ABOVE. THE REMAINING BALANCE OF RS.2,50,000/- WAS N OT RECEIVED BY THE ASSESSEE AS THE SAME WAS TO BE RECE IVED AT THE TIME OF EXECUTION OF CONVEYANCE DEED. FOR YOUR READY REFERENCE, WE SUBMIT THE FOLLOWING C ASE LAW ON IMMOVABLE PROPERTY: TITLE TO IMMOVABLE PROPERTY OF VALUE OVER RUPEES ON E HUNDRED GETS TRANSFERRED ONLY ON THE EXECUTION OF T HE SALE DEED. A MERE AGREEMENT TO SELL WOULD NOT CONSTITUTE A SAL E. - (1957) 32 ITR 190 (SC) PROVIDENT INVESTMENT CO. L TD. (1985) 152 ITR 744 (MAD) JAYALAKSHMI RAJENDRAN ALL THAT THE INTENDED PURCHASER ACQUIRES UNDER SUCH AGREEMENT IS AN EQUITY TO OBTAIN SPECIFIC PERFORMAN CE. (1986) 161 ITR 92 (BOM) R.R. SOOD ITA NO.3643/M/2014 9 DELIVERY OF POSSESSION OF IMMOVABLE PROPERTY CANNOT BY ITSELF BE TREATED AS EQUIVALENT TO CONVEYANCE OF TH E 'IMMOVABLE PROPERTY AND TITLE TO LAND AND BUILDING AND PLANT A ND MACHINERY CANNOT PASS TO THE BUYER TILL CONVEYANCE IS EXECUTED AND REGISTERED:- (1965) 57 ITR 185 (SC) ALAPATI VENKATARARAMIAH MERE DELIVERY OF POSSESSION ACCOMPANIED BY REALIZAT ION OF SALE' CONSIDERATION DOES NOT DIVERT THE VENDOR O F THE OWNERSHIP OF THE PROPERTY AND, THEREFORE, IT CONTIN UES TO BELONG TO THE VENDOR AND CAN BE INCLUDED IN HIS NET WEALTH. (1986) 162 ITR 888 (SC) NAWAB SIR OSMAN ALI KHAN. THE CONCEPT OF SALE OF AN IMMOVABLE PROPERTY WHICH IS INCLUDED IN THE 'CAPITAL ASSET' AS DEFINED UNDER SE CTION 2(14) HAS TO BE GATHERED FROM SECTION 54 OF THE TRANSFER OF PROPERTY ACT, 1882. WHERE IT IS APPARENT THAT THE PARTIES HA D CLEARLY INTENDED THAT DESPITE THE EXECUTION AND REGISTRATIO N OF THE SALE DEEDS, TRANSFER BY WAY OF SALE WILL BECOME EFFECTIV E ONLY ON PAYMENT OF THE ENTIRE CONSIDERATION AMOUNT. ON THIS BACKGROUND OF FACTS, IT HAS TO BE HELD THAT THERE W AS NO TRANSFER OF LAND COVERED BY THE SALE DEEDS MAKING THE ASSESS EE LIABLE FOR CAPITAL GAINS TAX, UNDER SECTION 45. (1993) 201 ITR 1032 (PATNA) SMT. RAJ RANI DEVI RAMN A TITLE TO IMMOVABLE PROPERTY WILL NOT PASS TILL CONV EYANCE IS EXECUTED AND REGISTERED. THE FOLLOWING IS THE SHORT SUMMARY OF ALL THE TRANSACTIONS TOOK PLACE WITH REFERENCE TO THE CASE UNDER CONSIDERATION: A) DURING THE YEAR UNDER ASSESSMENT ASSESSEE HAS MADE A SALE DEED FOR PLOT OF LAND DATED 21ST MARCH 2005 FOR A S UM OF RS. 52, 50, 000/- WITH MR. PRASHANT NAVEET PAREKH. B) AS THE PURCHASING PARTY I.E. ( MR. PRASHANT NAVEET PAREKH ) HAS CHEATED ASSESSEE BY NOT PAYING THE ABOVE SUM, SO DE ED OF CANCELLATION HAS BEEN MADE DATED 10TH FEBRUARY 2006 . ITA NO.3643/M/2014 10 C) FIR HAS BEEN LODGED AGAINST MR. PRASHANT NAVEET PA REKH DATED 12TH FEBRUARY 2006 FIR NO. 55/06, YEAR 2006, KANDIV ALI POLICE STATION (MUMBAI). D) THE ABOVE PLOT LAND HAS BEEN COMPULSORILY ACQUIRED BY THE GOVERNMENT OF INDIA WITH NEW SURVEY NO. 378 UNDER S ALT SECTION. E) THE PROPOSED BUYER HAS ALSO FILED A SUIT AGAINST TH E SELLER FOR THE REFUND OF THE EARNEST MONEY OF RS.50,00,000/- T OGETHER WITH THE INTEREST AT THE RATE OF 18% PER ANNUM AS S PECIFIED IN THE PETITION FILED BY THE BUYER (PARA. D PAGE NO 3) F) THE CASE IS STILL PENDING FOR IN BOMBAY HIGH COURT FOR ITS FINAL ORDER. FOR YOUR READY REFERENCE WE SUBMIT AN IMPORTANT LA W ON COMMERCIAL PRINCIPLES: THE ACT HAS GOT TO BE INTERPRETED ACCORDING TO COMM ERCIAL PRINCIPLES AND THE UNDERSTANDING OF PRACTICAL BUSIN ESSMEN.- (1965) 57 ITR 306 (SC) COCANADA RADHASWAMI BANK LT D. IN COMPUTING PROFITS OR LOSSES FOR PURPOSE OF INCOM E TAX, COMMERCIAL PRINCIPLES OR PRACTICES COMMONLY USED BY ACCOUNTANTS MUST BE OBSERVED AND APPLIED. THUS, IN WORKING OUT CAPITAL GAINS OR LOSSES, THE PRINCIPLES THAT HAVE TO BE APPLIED ARE THOSE WHICH ARE A PART OF COMMERCIAL PRACTICE OR THOSE TO WHICH AN ORDINARY M AN OF BUSINESS WILL RESORT WHEN COMPUTING HIS BUSINESS IN COME. (1967) 63 ITR 651 (SC) MISS DHUN DADABHOY KAPADIA FROM THE ABOVE POINTS IT CAN BE CONCLUDED THAT: ITA NO.3643/M/2014 11 A. THE PHYSICAL POSSESSION OF THE PROPERTY WAS NOT GIV EN BY THE ASSESSEE TO THE PROPOSED BUYER AS THE SAME HAS BEEN ACQUIRED BY THE GOVERNMENT OF INDIA UNDER SALT SECT ION B. TOTAL SALE CONSIDERATION IS NOT RECEIVED BY THE ASSESSEE AS SPECIFIED ABOVE. THE ABOVE MENTIONED POINTS ARE THE BASIC CRITERIA FOR THE COMPLETION OF A SALE TRANSACTION W HICH THE ASSESSING OFFICER IS REQUIRED TO CONSIDER. HENCE IT CAN BE SAID THAT THE SALE TRANSACTION IS NULL & VOID AS THE BAS IC CONDITION ARE NOT FULFILLED. 14. NONE OF THE ABOVE SUBMISSIONS HAVE BEEN CONSIDERED/EXAMINED BY THE AUTHORITIES BELOW IN PRO PER PERSPECTIVE. WE ALSO NOTICED THAT THE HONBLE HIGH COURT OBSERVE D THAT IT IS REQUIRED TO MAKE INVESTIGATION BY THE DEPARTMENT AG AINST THE PLAINTIFFS AS TO HOW CASH AMOUNT OF RS. 50 LAKHS WA S AVAILABLE WITH THEM WHICH THEY CLAIMED TO HAVE PAID TO THE ASSESSE E. THE DEPARTMENT HAS NOT CARRIED OUT ANY ENQUIRY WITH THE PLAINTIFFS WHETHER ANY SUM WAS AVAILABLE WITH THEM WHICH WAS S AID TO HAVE BEEN PAID TO ASSESSEE. THEREFORE, IN THE ABSENCE O F ANY SUCH ENQUIRY AND SINCE THE DEPARTMENT DID NOT FIND ANY CASH HAVI NG BEEN POSSESSED WITH THE PLAINTIFFS, IT CANNOT BE PRESUME D THAT THE SAME WAS PAID TO THE ASSESSEE. THEREFORE TAKING THE TOTA LITY OF FACTS AND CIRCUMSTANCES INTO CONSIDERATION WE ARE OF THE CONS IDERED VIEW THAT THIS ISSUE HAS TO BE RESTORED TO THE FILE OF THE AS SESSING OFFICER FOR PROPER AND THOROUGH EXAMINATION AND THE ASSESSEE SH ALL CO-OPERATE WITH THE PROCEEDINGS. THUS, WE RESTORE THE ISSUE T O THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO EXAMINE THE I SSUE THOROUGHLY AND PASS APPROPRIATE ORDERS IN ACCORDANCE WITH LAW AFTER GIVING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE . ITA NO.3643/M/2014 12 15. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST AUGUST, 2016. SD/- SD/- (D.KARUNAKARA RAO ) (C.N. PRASAD ) ' / ACCOUNTANT MEMBER $ %' /JUDICIAL MEMBER MUMBAI; (' DATED 31 ST AUGUST, 2016 . % . ./ RJ , SR. PS !'#$#! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ) ( ) / THE CIT(A)- 4. ) / CIT 5. *+ ,%%-. , -.! , / DR, ITAT, MUMBAI 6. , /01 / GUARD FILE. / BY ORDER, *% //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI