Shri Bipinchandra Parshottam Patel, Ahmedabad V. The Income Tax Officer, Ward-7(1), Ahmedabad

ITA 382/AHD/2014

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 9907 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 1 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 22-06-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 06-02-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: M K PATEL
• Section: 143(3)

Judgement Text

, A IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER ./ I.T.A. NO. 382/AHD/2014 ( ASSESSMENT YEAR : 2010-11) SHRI BIPINCHANDRA PARSHOTTAM PATEL 01, TRILOK BUNGALOWS, NEAR LAD SOCIETY, BODAKDEV, AHMEDABAD 380015 / VS. THE I.T.O. WARD 7 (3), AHMEDABAD ./ ./ PAN/GIR NO. : AZWPP6689D ( APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI M. K. PATEL, A.R. / RESPONDENT BY : SHRI MUDIT NAGPAL, SR.DR DATE OF HEARING 27/03/2019 !'# / DATE OF PRONOUNCEMENT 29/03/2019 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-9, AHMEDABAD (CIT(A) IN SHORT), DATED 29.11.2013 ARI SING IN THE ASSESSMENT ORDER DATED 22.11.2012 PASSED BY THE ASS ESSING OFFICER (AO) UNDER S. 143(3) OF THE INCOME TAX ACT, 1961 (T HE ACT) CONCERNING AY 2010-11. ITA NO.382/AHD/14 [SHRI BIPINCHANDRA P. PATEL VS. ITO] A.Y. 2010-11 - 2 - 2. THE RELEVANT GROUND OF APPEAL RAISED BY THE ASSE SSEE READS AS UNDER: 1. THAT ON FACTS, AND IN LAW, THE LEARNED CIT(A) H AS GRIEVOUSLY ERRED IN CONFIRMING THE ADDITION OF LONG TERM CAPIT AL GAINS OF RS.61,18,591/- IN THE HANDS OF THE APPELLANT. 2. THAT ON FACTS, AND IN LAW, THE LEARNED CIT(A) HA S GRIEVOUSLY ERRED IN CONFIRMING THE ADDITION OF RS.1,37,474/- A S UNDISCLOSED INTEREST INCOME. 3. THAT ON FACTS, AND IN LAW, THE LEARNED CIT(A) HA S GRIEVOUSLY ERRED IN CONFIRMING THE ADDITION OF RS.19,000/- AS UNEXPLAINED BANK DEPOSIT. 3. THE RELEVANT FACTS APROPOS TO GROUND NO.1 ARE AS FOLLOWS: ASSESSEE, AN INDIVIDUAL, FILED HIS RETURN OF INCOM E FOR AY 2010-11 WHICH WAS SELECTED FOR COMPULSORY SCRUTINY THROUGH CASS. IN THE COURSE OF THE ASSESSMENT, THE ASSESSEE WAS C ONFRONTED WITH THE FACTS OF SALE OF IMMOVABLE PROPERTY. IN RESPON SE, THE ASSESSEE DISCLOSED THAT HE HAS SOLD IMMOVABLE PROPERTY SITUA TED AT BODAKDEV, AHMEDABAD AND RECEIVED SALE CONSIDERATION OF RS.63L AKHS THEREON. THE ASSESSEE CLAIMED BEFORE THE AO THAT THERE ARE F OUR JOINT OWNERS OF THE PROPERTY SOLD AND ASSESSEE IS ONLY ONE OF TH E CO-OWNERS ALONGWITH THREE OTHER CO-OWNERS. THE ASSESSEE ADMI TTED THAT LONG TERM CAPITAL GAINS ON SALE OF THE PROPERTY WAS NOT DISCLOSED IN THE RETURN OF INCOME AND AGREED TO PAY TAXES FOR SUCH V OLUNTARY DISCLOSURE IN THE COURSE OF THE ASSESSMENT. THE AS SESSEE FURTHER SUBMITTED THAT HE BEING THE JOINT OWNER OF THE PROP ERTY THE CAPITAL GAIN ATTRIBUTABLE TO ASSESSEE WORKS OUT TO RS.15,29 ,648/- BUT HOWEVER WANTED TO PAY TAX ON THE WHOLE AMOUNT OF CA PITAL GAINS OF RS.61,18,591/-. THE ASSESSEE ACCORDINGLY ACCEPTED THE CAPITAL GAINS OF RS.61,18,591/- ACCRUED IN HIS HANDS AND PAID TAX ES. THE AO NOTED THAT THE ASSESSEE COULD NOT PRODUCE THE PURCH ASE DEED OF THE ITA NO.382/AHD/14 [SHRI BIPINCHANDRA P. PATEL VS. ITO] A.Y. 2010-11 - 3 - PROPERTY BUT HOWEVER AS PER THE SALE DEED, THE PROP ERTY WAS STATED TO BE INHERITED PROPERTY. IT WAS FURTHER OBSERVED THA T THE ASSESSEE BECAME DE FACTO OWNER OF THE PROPERTY AND ALSO RECEIVED AND APPROPRIATED ENTIRE SALE CONSIDERATION TO HIS BANK ACCOUNT. BASED ON THE CATEGORICAL ADMISSION OF THE ASSESSEE AND WI LLINGNESS OF THE ASSESSEE TO OWN UP THE PAYMENT OF TAX FOR WHOLE OF SALE CONSIDERATION WITHOUT ANY RESERVATION DESPITE NAME OF THREE OTHER CO-SELLERS INCLUDED IN THE SALE DEED, THE AO DETERM INED AND ASSESSED THE ENTIRE CAPITAL GAIN OF RS.61,18,591/- AS UNDISC LOSED LONG TERM CAPITAL GAINS IN THE HANDS OF THE ASSESSEE. 4. AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A). THE CIT(A) ALSO ENDORSED THE ACTION OF THE AO ON TH E GROUND THAT ASSESSEE HAS DULY ACCEPTED THAT HE HAS TO PAY TAX O N ENTIRE AMOUNT AND OTHER CO-OWNERS WERE THUS NOT TAXED OWING TO SU CH ADMISSION. 5. FURTHER AGGRIEVED BY THE DENIAL OF RELIEF BY THE CIT(A), THE ASSESSEE PREFERRED APPEAL BEFORE THE TRIBUNAL. 6. BEFORE THE TRIBUNAL, THE LEARNED AR FOR THE ASSE SSEE SUBMITTED THAT THE ADMITTED FACTS ON RECORD ARE THAT THE ASSE SSEE IS ONLY ONE OF THE JOINT OWNERS ALONGWITH OTHER THREE JOINT OWNERS AND THEREFORE WHOLE OF THE CAPITAL GAINS CANNOT BE TAXED IN THE H ANDS OF THE ASSESSEE NOTWITHSTANDING WRONGFUL ADMISSION MADE BY THE ASSESSEE IN THIS REGARD BEFORE THE AO. THE LEARNED AR FURTH ER CONTENDED THAT THE CORRECT ENTITY FOR THE TAXATION OF THE CAPITAL GAIN IN THE INSTANT CASE IS AN HUF AS THE PROPERTY IS INHERITED PROPERT Y AND THUS, CANNOT BE TAXED IN THE HANDS OF THE INDIVIDUAL. THE LEARN ED AR RELIED UPON THE DECISION OF THE CO-ORDINATE BENCH REFERRED IN T HE CASE OF SHRI KISHORE R. PITHVA VS. ITO ITA NO. 2931/AHD/2010 ORD ER DATED ITA NO.382/AHD/14 [SHRI BIPINCHANDRA P. PATEL VS. ITO] A.Y. 2010-11 - 4 - 17.10.2014 FOR THE PROPOSITION THAT THE TAX LIABILI TY IS TO BE DETERMINED AS PER THE LAW AND THE WRONGFUL ADMISSIO N OF THE ASSESSEE FOR TAXABILITY OF CAPITAL GAIN IN HIS HAND S CANNOT OPERATE AS AN ESTOPPEL BEING IN CONTRAVENTION OF LAW. 7. PER CONTRA, THE LEARNED DR STRONGLY OBJECTED TO THE PLEA RAISED ON BEHALF OF THE ASSESSEE AND SUBMITTED THAT THE AS SESSEE HAS NOT DISCLOSED THE SALE CONSIDERATION EITHER IN HIS HAND S OR IN THE HANDS OF THE JOINT OWNERS OR IN THE HANDS OF SO CALLED HU F. THE CASE OF THE ASSESSEE WAS PICKED UP ON THE BASIS OF SPECIFIC INFORMATION ON EXECUTION OF SALE BY THE ASSESSEE. THE ASSESSEE BE LATEDLY AND LEFT WITH NO OPTION DECLARED THE CAPITAL GAINS UNDER HIS PAN NUMBER AND THUS PROTECTED THE OTHER JOINT OWNERS FROM INQUIRY AND PREVENTED THE REVENUE FROM COLLECTION OF TAX FROM OTHER SO CALLED STAKE HOLDERS. THE LEARNED DR SIGNIFICANTLY EMPHASIZED THAT THE AS SESSEE HAS RECEIVED THE ENTIRE SALE CONSIDERATION WHICH WAS NO T APPROPRIATED TO OTHER CO-OWNERS. THE WHOLE OF THE INCOME BY WAY OF CAPITAL GAINS HAS THUS ACCRUED IN THE HANDS OF THE ASSESSEE FOR T HE PURPOSES OF S.45 OF THE ACT. THE LEARNED DR ALSO CONTENDED THA T THE AO HAS SUCCESSFULLY DEMONSTRATED ON THE FACTS AVAILABLE BE FORE HIM THAT ASSESSEE IS THE DE FACTO OWNER. THE ASSESSEE HAS ALSO SUO MOTU CAME FORWARD EXPRESSED ITS WILLINGNESS TO OWN UP THE ENT IRE CAPITAL GAIN IN HIS HANDS IN INDIVIDUAL CAPACITY SANS OTHER CO-O WNERS. THE LEARNED DR THUS SUBMITTED THAT WHERE THE OTHER CO-O WNERS HAVE NEITHER RECEIVED THE SALE CONSIDERATION NOR HAS THE ASSESSEE SHIFTED THE RESPONSIBILITY TOWARDS OTHER CO-OWNERS IN THIS REGARD BASED ON KNOWLEDGE OF FACTS AVAILABLE TO THE ASSESSEE, THE P RESUMPTION HAS RIGHTLY DRAWN AGAINST THE ASSESSEE BY THE REVENUE A UTHORITIES. THE LEARNED DR FURTHER CONTENDED THAT THE ISSUE OF TAXA BILITY OF CAPITAL GAINS IN THE HANDS OF ONE OR MORE OF THE JOINT OWNE RS IS ESSENTIALLY A ITA NO.382/AHD/14 [SHRI BIPINCHANDRA P. PATEL VS. ITO] A.Y. 2010-11 - 5 - QUESTION OF FACT AND THEREFORE, THE DOCTRINE OF EST OPPEL WOULD NOT APPLY AS WRONGFULLY CONTENDED BY THE OTHER SIDE. T HE LEARNED DR SUPPORTED THE AFORESAID ARGUMENT ON THE PREMISE ON THE FACT THAT WHOLE OF THE SALE CONSIDERATION HAS RECEIVED AND TH US ACCRUED IN THE HANDS OF THE ASSESSEE OWING TO TRANSFER OF SO CALLE D INHERITED PROPERTY. THE LEARNED DR FURTHER CONTENDED THAT TH E ASSESSEE COULD NOT DEMONSTRATE AS TO HOW THE PROPERTY BELONGED TO HUF. IT WAS CONTENDED THAT THE INHERITANCE OF THE PROPERTY UNDE R SUCCESSION LAWS DOES NOT BECOME THE PROPERTY OF THE HUF AUTOMATICAL LY BY IMPLICATION UNDER GENERAL LAW. THE ASSESSEE HAS FA ILED TO DEMONSTRATE THE RELEVANT FACTS IN THIS REGARD. THE LEARNED DR ACCORDINGLY CONTENDED THAT REVENUE AUTHORITIES WERE FULLY JUSTIFIED IN TAXING THE ENTIRE UNDISCLOSED LONG TERM CAPITAL GAIN IN THE HANDS OF THE INDIVIDUAL ASSESSEE HEREIN. THE LEARNED DR ACCORDINGLY SUBMITTED THAT NO INTERFERENCE WITH THE ORDER OF TH E REVENUE AUTHORITIES IS WARRANTED IN THE PECULIAR FACTS OF T HE CASE. 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. THE CASE OF THE ASSESSEE IS TWOFOLD; (I) THE INCOME ARISING FROM SALE OF INHERITED PROPERTY SHOULD BE TAXED IN THE HANDS OF THE RIGHT PERSON I.E. HUF AND SECONDLY & ALTERNATIVELY, THE TAXABILI TY OF LONG TERM CAPITAL GAIN IN THE HANDS OF THE ASSESSEE REQUIRES TO BE RESTRICTED IN PROPORTION TO THE EXTENT OF HIS CO-OWNERSHIP. WE D O NOT FIND ANY FORCE IN EITHER OF THE SUBMISSIONS. THE CLAIM OF T HE ASSESSEE THAT THE INHERITED PROPERTY MUST BE TAXED IN THE HANDS O F THE HUF ALONE IS WITHOUT ANY SOUND BASIS. THE INHERITED PROPERTY DOES NOT NECESSARILY DEVOLVE IN HANDS OF HUF AUTOMATICALLY U NDER GENERAL LAWS. THE ASSESSEE HAS FAILED TO DEMONSTRATE THE I NTENTION FOR DEVOLVEMENT OF SUCH PROPERTY IN THE HANDS OF HUF. FURTHER, HUF CAN BE A BROADER OR NARROWER FAMILY STRUCTURE AND M AY NOT BE IN ITA NO.382/AHD/14 [SHRI BIPINCHANDRA P. PATEL VS. ITO] A.Y. 2010-11 - 6 - SYNC WITH THE EXISTING CO-OWNERSHIP. IT IS FOR THE ASSESSEE TO DEMONSTRATE THAT THE AFORESAID PROPERTY CAME TO BE BELONGING TO HUF BY OPERATION OF LAW OR BY ANY OTHER MEANS. THE REFORE, THE TAX LIABILITY ON A NONEXISTENT HUF OF THE SELLERS CANNO T BE FASTENED NOR WAS SUCH PLEA TAKEN BEFORE THE REVENUE AUTHORITIES. THE FIRST CONTENTION IS ACCORDINGLY REJECTED. 9. WE NOW ADVERT TO THE SECOND LINE OF ARGUMENT ON BEHALF OF THE ASSESSEE THAT PROFITS & GAINS ARISING FROM TRANSFER OF PROPERTY SHOULD BE CHARGEABLE IN THE HANDS OF THE ASSESSEE I N PROPORTION TO HIS JOINT OWNERSHIP. THE RELEVANT FACTS AS POINTED OUT ON BEHALF OF THE REVENUE ARE CARDINAL TO DETERMINE THE ISSUE. A DMITTEDLY, THE ASSESSEE HEREIN HAS RECEIVED THE ENTIRE SALE CONSID ERATION TO HIS CREDIT IN EXCLUSION TO OTHER CO-OWNERS. THE ASSESS EE HIMSELF HAS ADMITTED THE TAX LIABILITY AND EXPRESSED HIS WILLIN GNESS TO PAY TAX ON ENTIRE AMOUNT. THIS CLEARLY GIVES RISE TO A PRESUM PTION THAT THE ASSESSEE ALONE WAS THE DE FACTO OWNER OF THE PROPERTY NOTWITHSTANDING INCLUSION OF OTHER CO-OWNERS IN THE PURPORTEDLY INHERITED PROPERTY. THIS CONSCIOUS ACT OF THE ASSE SSEE THEREFORE WOULD CLEARLY LEAD TO AN INTERFERENCE THAT HE HAS A CTED ON THE BASIS OF SPECIFIC KNOWLEDGE OF FACTS TO WHICH HE ALONE WA S PRIVY TO. THE ASSESSEE NOW THEREFORE CANNOT PLEAD THE OPPOSITE AN D CONTEND THAT WHAT HE STATED BEFORE THE QUASI JUDICIAL AUTHORITY WAS A LIE OR UNTRUE STATEMENT AND IS ENTITLED TO SHIFT THE POSITION SO TAKEN AT A BELATED STATE AT WHIMS TO THE PREJUDICE OF REVENUE. A JOINT OWNERSHIP IN A PROPERTY DOES NOT NECESSARILY MEAN THAT THE TAX LIA BILITY WOULD ACCRUE IN THE SAME PROPORTION OF THE JOINT OWNERSHI P IN SO FAR AS SCHEME OF THE INCOME TAX IS CONCERNED. THE PLEA OF DOCTRINE OF ESTOPPEL IS ALSO NOT WELL FOUNDED IN THE ABSENCE OF ANY CONTRAVENTION OF STATUTE IN SUCH ADMISSION PER SE. WE THUS FIND NO ITA NO.382/AHD/14 [SHRI BIPINCHANDRA P. PATEL VS. ITO] A.Y. 2010-11 - 7 - MERIT IN THE CONTENTIONS MARSHALED ON BEHALF OF THE ASSESSEE. HENCE, WE SEE NO REASON TO INTERFERE WITH THE VIEW TAKEN BY THE REVENUE AUTHORITIES. GROUND NO.1 OF THE ASSESSEES APPEAL IS DISMISSED. 10. GROUND NOS. 2 & 3 ARE ALSO STANDS DISMISSED IN THE ABSENCE OF ANY PLEA ON BEHALF OF ASSESSEE TO DISPLACE THE ACTI ON OF THE CIT(A). 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMIS SED. SD/- SD/- (MAHAVIR PRASAD) (PRADIP KUMA R KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED 29/03/2019 TRUE COPY S. K. SINHA !'#' / COPY OF ORDER FORWARDED TO:- &. / REVENUE 2. / ASSESSEE (. )*+ , / CONCERNED CIT 4. ,- / CIT (A) /. 012 33*+4 *+#4 56) / DR, ITAT, AHMEDABAD 7. 289 : / GUARD FILE. BY ORDER / 4 /5 *+#4 56) THIS ORDER PRONOUNCED IN OPEN COURT ON 29/03/2019