ITO WD 21(3)(3), MUMBAI V. MUSTAFA ISMAL MUKADAM, MUMBAI

ITA 3796/MUM/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3289 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-07-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 29-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: I P RATHI
• Section: 143(3); 147; 69

Judgement Text

B IN THE INCOME TAX APPELLATE TRIBUNAL B BENC H, MUMBAI !' , $ % BEFORE SHRI I.P. BANSAL, JM AND SHRI KARUNAKARA RAO , AM ./I.T.A. NO.3796/M/2012 ( & ' (' / ASSESSMENT YEAR :2009-2010) ITO, WD - 21(3)(3), R.NO.507, 5 TH FLOOR, PRATYAKSHAKAR BHAVAN, BKC, BANDRA, MUMBAI. & / VS. SHRI MUSTAFA ISMAL MUKADAM, UNITY INDUSTRIES, GALA BO.12, BARETTO INDL. ESTATE, SAFED PAUL, SAKI NAKA, MUMBAI 400 070. ) $ ./PAN : AAJPM 2514 Q ( )* /APPELLANT) .. ( +,)* / RESPONDENT) )* - . / APPELLANT BY : SHRI MOHIT JAIN, DR +,)* - . / RESPONDENT BY : SHRI I.P. RATHI & - /$ /DATE OF HEARING : 24.6.2013 01( - /$ /DATE OF PRONOUNCEMENT : 3.7.2013 2 2 2 2 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE REVENUE ON 29.5.2012 IS AG AINST THE ORDER OF CIT (A)- 32, MUMBAI DATED 14.3.2012 FOR THE ASSESSMENT YEAR 2009-2010. 2. IN THIS APPEAL, REVENUE RAISED THE FOLLOWING GROU NDS WHICH READ AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE CIT (A) HAS ERRED IN DELETING ADDITION TO RS. 43,28,500/- AS UNDISCLOSED INCOME U /S 69. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE CIT (A) HAS FAILED TO APPRECIATE THAT THE ASSESSEE IS THE GRANDSON OF MRS. HUSANA ABBAS MUKADAM, AND THAT THE ASSESSEE IS A PART TO THE DEED OF ASSI GNMENT DATED 22.12.2008. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE CIT (A) HAS FAILED TO APPRECIATE THAT MRS. HUSANA ABBAS MUKADAM, HAS NOT OFFERED TO TAX THE CONSIDERATION STATED AS PER THE DEED OF ASSIGNM ENT DATED 22.12.2008. 4. THE APPELLANT PRAYS THAT THE ORDER OF THE LD CIT (A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE REST ORED. 2 3. THE ABOVE MENTIONED GROUNDS OF THE REVENUES APP EAL REVOLVE AROUND THE DELETION OF ADDITION OF RS. 43,28,500/- MADE PROTEC TIVELY BY THE AO U/S 69 OF THE ACT. THE AIR IS THE SOURCE OF THE INFORMATION TO THE AO AND IT IS ABOUT A TRANSACTION OF SALE OF PROPERTY, WHICH IS ACTUALLY ASSESSABLE I N THE HANDS OF THE MRS. HUSANA ABBAS MUKADAM, ASSESSEES GRAND-MOTHER WHO IS THE OWNER OF THE PRO PERTY. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PARTNER IN A FIRM NAMED M/S. UNITY INDUSTRIES. ASSESSEE FILED THE RETU RN OF INCOME DECLARING THE TOTAL INCOME OF RS. 3,22,226/-. AS A RESULT OF SCRUTINY ASSESSMENT U/S 143(3) OF THE ACT, THE ASSESSED INCOME OF THE ASSESSEE WAS DETERMINED AT RS 47,68,803/- AFTER MAKING ADDITION OF RS. 43,28,500/- PROTECTIVELY ON ACCOUNT OF SALE PROCEEDS OF A PROPERTY. DURING THE ASSESSMENT PROCEEDINGS, ASSESSEE SUBMITT ED THAT HE IS NOT THE OWNER OF THE PROPERTY AT ANY TIME AND HE IS MERELY ENGAGED I N THE BUSINESS OF COMMERCIALLY EXPLOITING THE SAID PROPERTY AS PER THE LEAVE AND L ICENSE AGREEMENT WITH MRS HUSANA ABBAS MUKADAM, WHO IS THE OWNER OF THE IMPUG NED PROPERTY. AO IGNORED THE SUBMISSIONS OF THE ASSESSEE AND REASONED WHY AS SESSEES NAME IS FIGURING IN THE AGREEMENT INVOLVING THE SALE TRANSACTION. FOR T HIS, AO RELIED ON AN AGREEMENT. ASSESSEES CLAIM IS THAT THE PROPERTY BELONGS TO HI S GRANDMOTHER AND SALE PROCEEDS SHOULD BE TAXED IN HER HAND. AO OBSERVED THAT SHE HAS NOT DISCLOSED THE SAID SALE RECEIPTS IN HER RETURN. THEREFORE, AO MADE IMPUGNED ADDITION PROTECTIVELY IN THE HANDS OF THE ASSESSEE KNOWING VERY WELL THAT THE AS SESSEE IS NOT THE OWNER OF THE PROPERTY. AGGRIEVED WITH THE SAME, ASSESSEE FILED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 4. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLAT E AUTHORITY, IT WAS SUBMITTED THAT THE AGREEMENT DEED DATED 22.12.2008 IS THE REL EVANT DOCUMENT WHICH SHOWS THAT THE ASSESSEE IS ONLY A CONFIRMING PARTY . ORIGINALLY, M/S. VIVEK INDUSTRIES OWNS THE SAID PREMISES FROM 16.12.1991. ON DISSOLU TION OF THE FIRM, W.E.F 1.4.1999, MRS. HUSANA ABBAS MUKADAM, THE EX-PARTNER OF M/S. V IVEK INDUSTRIES, BECAME THE OWNER. SUBSEQUENTLY, SHE GAVE THE SAID PREMISES ON THE BASIS OF LEAVE AND LICENSE AGREEMENT TO M/S. UNITY INDUSTRIES, WHERE ASSESSEE I S ONE OF THE THREE PARTNERS FOR A PERIOD FROM 1.1.2006 TO 31.12.2008 AND THIS ARRAN GEMENT HAS THE SUPPORT OF AN AGREEMENT DATED 22.12.2008. IN THE SAID AGREEMENT, ALL THE THREE PARTNERS OF M/S. 3 UNITY INDUSTRIES WERE INCLUDED AS CONFIRMING PARTIES . OTHERWISE, IT IS CLEAR FROM THE SAID AGREEMENT THAT THEY HAVE NO RIGHTS OF OWNE RSHIP IN THE IMPUGNED PROPERTY. IT IS ALSO MENTIONED THAT SALE PROCEEDS OF RS 15 LAK HS WERE RECEIVED BY MRS. HUSANA ABBAS MUKADAM AS EVIDENT FROM HER BANK ACCOUNT AND THE SAID AMOUNT WAS CONVERTED INTO FDRS, WHICH WAS OFFERED BY HER IN TH E TAX RETURN. IT IS ALSO CLARIFIED THAT THE ASSESSEE NEVER RECEIVED ANY PART OF THE SA LE CONSIDERATION. FURTHER, IT WAS ALSO CLARIFIED THAT THE SUM OF RS. 43,28,500/- IS THE VALUE OF THE PROPERTY AS PER THE STAMP VALUATION, BUT THE SALE CONSIDERATION IS ONLY RS. 15 LACS. FURTHER, IT WAS SUBMITTED THAT CONSIDERING THE FACT THAT THE ASSESSEE IS NOT A OWNER IN ANY FORM AND ONLY A CONFIRMING PARTY AND IT SHOU LD NOT HAVE BEEN ASSESSED PROTECTIVELY TOO. RELEVANT DISCUSSION AND FACTS ARE GIVEN IN PARA 3.2 OF THE IMPUGNED ORDER. CIT (A) CONSIDERED THE ABOVE SUBMISSIONS AN D PERUSED THE RELEVANT PAPERS AND ENTRIES IN THE BANK ACCOUNTS AS WELL AS THE INCOME TAX RETURNS OF MRS. HUSENE ABBAS MUKADAM AND HELD THAT ASSESSEE IS NOT A OWNER OF THE SAID PROPERTY AND HAS NOT RECEIVED ANY CONSIDERATION. T HUS, CIT (A) CONCLUDED BY STATING THAT THE SAID CONSIDERATION IS NOT TAXABLE IN THE HANDS OF T HE ASSESSEE BUT TAXABLE ON MRS. HUSENE ABBAS MUKADAM, PARTNER OF M/S. VIVEK INDUSTRIES. ACCORDINGLY, HE GRANTED RELIEF TO THE ASSESSEE . AGGRIEVED WITH THE SAME ASSESSEE IS IN APPEAL BEFORE US. 5. DURING THE PROCEEDINGS BEFORE US, LD DR ESSENTIA LLY RELIED ON THE ORDER OF THE AO AND THE DEED OF ASSIGNMENT DATED 22.12.2008 WHIC H MERELY SHOWS THAT ASSESSEE IS ONLY A CONFIRMING PARTY. 6. ON THE OTHER HAND, LD COUNSEL FOR THE ASSESSEE B ROUGHT OUR ATTENTION TO THE PAPER BOOK AND THE COPY OF THE APPEAL PAPERS BY MRS . HUSENE ABBAS MUKADAM AND ALSO COPIES OF HER BANK ACCOUNTS. LD COUNSEL TOOK U S THROUGH THE RELEVANT CONTENTS OF THE AGREEMENT TO DEMONSTRATE THE SUBMISSIONS OF THE ASSESSEE. HE ALSO MENTIONED THAT THE REVENUE HAS INITIATED PROCEEDING S AGAINST MRS. HUSENE ABBAS MUKADAM AND MADE AN ASSESSMENT ON HER ON SUBSTANTIV E BASIS VIDE ASSESSMENT ORDER DATED 31.1.2013 U/S 147 OF THE ACT. PRESENTLY , THE ASSESSEE HAS FILED AN APPEAL BEFORE THE CIT (A), WHICH IS YET TO BE ADJUD ICATED. ASSESSEE HAS ALSO FILED A COPY OF THE BANK STATEMENT FROM THE SAVINGS BANK AC COUNT IN THE CASE OF MRS. 4 HUSENE ABBAS MUKADAM AND DEMONSTRATED SUCCESSFULLY THAT AN AMOUNT OF RS. 15 LAKHS WAS DEPOSITED IN HER ACCOUNT ON 29.5.2008. F URTHER, HE MENTIONED THAT THE PRESENT ASSESSEE IS NEITHER THE OWNER IN ANY FORM N OR RECEIVED ANY CONSIDERATION AS PART OF THE TRANSACTIONS OF TRANSFER OF THE PREMISE S. HE WAS MERELY A PARTNER IN M/S. UNITY INDUSTRIES, WHICH ENTERED INTO AN AGREEMENT W ITH MRS. HUSENE ABBAS MUKADAM UNDER LEAVE AND LICENSE AGREEMENT, WHOSE NA ME WAS FIGURING IN THE DEED ONLY AS A CONFIRMING PARTY TO AVOID FURTHER LITIGAT IONS IF ANY. OTHERWISE, ASSESSEE HAS NO ROLE TO PLAY AND THEREFORE, PROTECTIVE ASSES SMENT MADE ON HIM IS PATENTLY ERRONEOUS. CIT (A) SINCE APPRECIATED THE TRANSACTI ONS IN THE RIGHT PERSPECTIVE SHOULD NOT CALL FOR ANY INTERFERENCE. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE O RDERS OF THE REVENUE AUTHORITIES AND THE PAPER BOOK FILED BEFORE US. WE HAVE CAREFULLY GONE THROUGH THE COPIES OF THE AGREEMENT PLACED BEFORE AND FIND THAT THE FACTS CULLED OUT BY THE CIT (A) VIDE THE PARAS 3.1 AND 3.2 OF THE IMPUGNED ORDE R ARE FOUND TO BE PROPER. ACCORDINGLY, WE FIND THAT THE ASSESSEE IS NOT THE O WNER OF THE PROPERTY AND ONLY A CONFIRMING PARTY TO THE TRANSACTION. HIS FIRM UNITY INDUSTRIES IS CONNECTED TO THE PROPERTY BY VIRTUE OF THE LEAVE AND LICENSE AGREEME NT WITH MRS. HUSENE ABBAS MUKADAM AND ASSESSEE DOES NOT HOLD ANY RIGHT ON THE SAID PROPERTY FOR RECEIVING ANY CONSIDERATION UNDER THE DEED OF ASSIGNMENT DATE D 22.12.2008. FURTHER, WE HAVE ALSO GONE THROUGH THE CONTENTS OF PARA 3.3 OF THE IMPUGNED ORDER, WHICH CONTAINS THE DISCUSSION AND CONCLUSION OF THE CIT ( A) THAT LED TO THE GRANT OF RELIEF TO THE ASSESSEE. IT IS THE FINDING IN VIEW OF THE SAID PARA. M/S. UNITY INDUSTRIES OR ITS PARTNERS (ASSESSEE AND TWO OTHERS) WERE NOT HAVING ANY LEGAL OWNERSHIP IN THE PROPERTY IS ALSO SUPPORTED BY THE FACT THAT NO PART OF THE ALE CONSIDERATION OF RS. 15 LACS WAS RECEIVED BY THE M/S. UNITY INDUSTRIES OR AN Y OF ITS PARTNERS. IT IS ALSO FINDING OF FACT OF CIT (A) THAT M/S. UNITY INDUSTRI ES AT NO POINT OF TIME BECAME THE OWNER OF THE PROPERTY. THEREFORE, THE IMPUGNED PRE MISES IS OWNED BY MRS. HUSENE ABBAS MUKADAM, WHO RIGHTLY RECEIVED THE SALE CONSI DERATION OF RS 15 LAKHS AND THE SAME IS DEPOSITED IN HER BANK ACCOUNT. IT IS THE E RROR OF THE FORWARDING AUTHORITIES OF THE AIR INFORMATION THAT THE INFORMATION SHOULD HAVE BEEN SENT TO THE AO OF MRS. HUSENE ABBAS MUKADAM AND NOT TO THE AO OF THE PRESE NT ASSESSEE. THEREFORE, WE 5 ARE OF THE OPINION THAT THE CONCLUSIONS GIVEN BY TH E CIT (A) IN PARA 3.3 OF THE IMPUGNED ORDER DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, GROUNDS RAISED BY THE REVENUE ARE DISMISSED . 8. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 3.7.2013. SD/- SD/- ( I.P. BANSAL) (D. KARUNAKARA RAO ) / JUDICIAL MEMBER $ / ACCOUNTANT MEMBER MUMBAI; 3& DATED: 3.7.2013 . & . ./ OKK , SR. PS 2 2 2 2 - -- - +/45 +/45 +/45 +/45 65(/ 65(/ 65(/ 65(/ / COPY OF THE ORDER FORWARDED TO : 1. )* / THE APPELLANT 2. +,)* / THE RESPONDENT. 3. 7 ( ) / THE CIT(A)- 4. 7 / CIT 5. 5 89 +/& , , / DR, ITAT, MUMBAI 6. 9!' : / GUARD FILE. ,5/ +/ //TRUE COPY// 2& 2& 2& 2& / BY ORDER, ; ;; ; / < < < < = = = = (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI