SH. SARABJIT SINGH, AMRITSAR V. INCOME TAX OFFICER, WARD 3(4), AMRITSAR

ITA 388/ASR/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 9186 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 9 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 20-02-2019
• Assessment Year: 2013-2014
• Appeal Filed On: 14-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAT INDER KAUR LD
• Assessee Lawyers: SANAT KAPOOR LD ADV S
• Keywords: Set aside
• Section: 69C; 133(6); 131

Judgement Text

IN THE INCOME TAX APPELLATE TRI BUNAL AMRITSAR BENCH, AMRIT SAR BEFORE SH. N.S.SAINI, ACCOUNTANT MEMBER AND SH. N.K.CHOUDHRY, JUDICIAL MEMBER ITA NO.388(ASR)/2017 ASSESSMENT YEAR:201 3-14 SARABJIT SINGH H.NO.37, NEW GARDEN COLONY, AMRITSAR. [PAN:ABQPS 7679J] VS. INCOME TAX OFFICER, WARD 3(4), AMRITSAR (APPELLANT) (RESPONDENT) APPELLANT BY: SH. SALIL KAPOOR & S H. SANAT KAPOOR ( LD. ADV S.) RESPONDENT BY : SMT. RATI NDER KAUR (LD. DR) DATE OF HEARING: 20.02.2019 DATE OF PRONOUNCEMENT: 27.03.20 19 ORDER PER N.K.CHOUDHRY, JM: THE INSTANT APPEAL HAS BEEN PREFERRED BY THE ASSESSEE/APPELLANT AGAINST THE ORDER DATED 10.04.2017 PA SSED BY THE LD. CIT(A)-1, AMRITSAR U/S 250(6) OF THE I.T. ACT, 1961 (HEREINAFTER CALLED AS THE ACT). 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL. 1. THAT THAT THE LD. COMMISSIONER OF INCOME TA X (APPEALS)-I, AMRITSAR HAS, IN VIEW OF THE FACTS & CIRCUMSTANCES OF THE CASE, GROSSLY ERRED IN LAW AND ON FACTS IN CONFIRMING ADDITION OF RS.64,50,000/- MADE BY A. O. IN RESPECT OF LONG TERM CAPITAL GAINS. THE ADDITION MA DE WAS ILLEGAL, UNJUST AND UNLAWFUL AND THE SAME HAS BEEN WRONGLY CONFIRMED. ITA NO.388 /ASR/2017 (A.Y.2013-14) SARABJ IT SINGH VS. ITO 2 2. THAT ALL THE FACTS AND CIRCUMSTANCES OF THE CASE , EXPLANATIONS GIVEN AND ALL THE EVIDENCE PLACED ON R ECORD, HAVE NOT BEEN PROPERLY CONSIDERED AND JUDICIALLY IN TERPRETED AND THE ADDITION OF RS.64,50,000/- HAS BEEN MADE AN D CONFIRMED ARBITRARILY WITHOUT ANY LAWFUL BASIS. 3. THAT ALL THE PAYMENTS IN QUESTION WERE MADE BY ACCOUNT PAYEE CHEQUES ONLY AND THE SAME WAS PROVED FROM THE BANK ACCOUNTS AND ALL OTHER EVIDENCE PLACED ON RECORD. ALL THE EVIDENCE HAS BEEN ARBITRARILY IGNORED. 4. THAT THE OBSERVATION MADE ARE AGAINST FACTS A ND ARE BASED ON SURMISES AND CONJECTURES AND DO NOT AFFORD ANY LEGAL JUSTIFICATION TO THE ADDITION OF RS.64,50,000 /- MADE IN RESPECT OF LONG TERM CAPITAL GAINS DECLARED BY THE APPELLANT. 5. THAT AS ADMITTED ON RECORD, THE RECIPIENTS OF TH E AMOUNTS HAD ADMITTED TO HAVE RECEIVED THE PAYMENTS FROM THE ASSESSEE IN RESPONSE TO NOTICES U/S. 133(6) AND AS SUCH NO FURTHER EVIDENCE WAS REQUIRED. IN ANY CASE, THE A.O.S ORDER TO THE ASSESSEE TO PRODUCE THE PERSONS WHO HA D BEEN IN ILLEGAL OCCUPATION OF THE PREMISES WAS ILLEGAL A ND BAD IN LAW. THE APPELLANT HAD NO LEGAL AUTHORITY TO BRING THE ADVERSE PARTIES BEFORE THE A.O. 6. THAT THE LOWER AUTHORITIES HAVE FAILED TO APP RECIATE THAT THE NON-APPEARANCE OF THE ERSTWHILE TENANTS CANNOT BE HELD AGAINST THE APPELLANT, WHEN ADMITTEDLY THEY HAVE AL READY CONFIRMED THE RECEIPT OF PAYMENT IN RESPONSE TO NOT ICE U/SEC. 133(6) OF THE ACT. 7. THAT IN ANY CASE, THE REFERENCE TO LONG COU RT PROCEEDINGS AND ULTIMATE SETTLEMENT WITH THE ILLEGA L OCCUPANTS HAS BEEN WRONGLY IGNORED AND THE ADDITION OF RS.64,50,000/- HAS BEEN WRONGLY MADE AND CONFIRMED. THE ADDITION IS UNCALLED FOR AND THE ADDITION IS ILLEGA L, BAD IN LAW AND ALSO EXCESSIVE. 8. THAT THE LD. CIT(A) HAS FAILED TO APPRECIATE THE FACT THAT THE SETTLEMENT WITH THE TENANTS AFTER PROLONG LITIGATION, COULD NOT BE COMPLETED WITHOUT PAYMENT OF COMPENSAT ION AND THE SAME WAS NOT REQUIRED TO BE MENTIONED IN TH E CONSENT DECREE IN THE FORM OF COURT SETTLEMENT. THE ENTIRE EVIDENCE PLACED ON RECORD HAS BEEN BRUSHED ASIDE ON THE BASIS OF SURMISES AND WHIMS MENTIONED IN SUMMARY MANNER IN THE LAST PARA OF THE ORDER. 9. THAT THE OBSERVATIONS OF THE CIT(A) ARE IRRELEVA NT AND UNCALLED FOR. THE CIT(A) HAS WRONGLY AND ILLEGA LLY NOT CONSIDERED THE AGREEMENTS AND HAS ALSO WRONGLY AND ITA NO.388 /ASR/2017 (A.Y.2013-14) SARABJ IT SINGH VS. ITO 3 ILLEGALLY IGNORED ALL OTHER EVIDENCE AS WELL AS THE ORDER OF THE COURTS PLACED ON RECORD. IN ANY CASE, THE ORDER PASSED BY THE CIT(A) IS CRYPTIC AND LACKS REASONING. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER ADDED AN AMOUNT OF RS.64,50,000/- AS LONG TERM CAPITAL GAIN, WHICH WAS CLAIMED BY THE ASSESSEE TO BE INCURRED FOR GETTI NG THE PLOT (PROPERTY) VACATED FROM THE OCCUPANTS AND PAYMENT OF BROKERAGE. THE ASSESSEE WAS ASKED BY THE ASSESSING OFFICER TO JUSTIFY HIS CLAIM, WHEREBY THE ASSESSEE HAS CLAIMED THAT T HE ASSESSEE HAD INHERITED THE PROPERTY FROM HIS FATHER WHICH WAS IN OCCUPATION OF ILLEGAL OCCUPANTS FOR THE LAST MORE THAN 20 YEARS AND THEREFORE IN ORDER TO GET VACATE AND TO GET POSSESSI ON, THE ASSESSEE WAS UNDER COMPULSION TO MAKE SETTLEMENT WITH THE OCCUPANTS OF THE LAND. THE SETTLEMENTS DEEDS SUBSEQUENTLY REGISTERED IN THE COURT AND PAYMENTS TO THE ILLEGAL OCCUPANTS HAVE BEEN MADE BY CHEQUES. THE ASSESSING OFFICER IN ORDER TO VERIFY ASKED THE ASSESSEE TO PRODUCE THE SAID OCCUPANTS FOR EXAMINATION INN ORDER TO UNEARTH THE TRUTH INVOLVED IN SUCH PAYMENT HOWEVER THE ASSESSEE INSTEAD OF PRODUCING THE PAR TIES REQUESTED THE ASSESSING OFFICER TO ISSUE SUMMONS U/S 131 OF TH E ACT, THEREFORE THE ASSESSING OFFICER HAS OBSERVED THAT THE ONUS LIES UPON THE ASSESSEE TO PROVE THE GENUINENESS OF THE EXPENDITURE INCURRED AS PROVIDED U/S 69C OF THE ACT. AL THOUGH THE ASSESSING OFFICER ISSUED THE SUMMONS U/S 131 OF THE ACT T O THE PERSONS INVOLVED FOR APPEARANCE ON 23.02.2016, HOW EVER THE SUMMONS HAVE BEEN RECEIVED BACK FROM THE POSTAL AUTH ORITY WITH THE POSTAL REMARKS REFUSED THEREFORE, THE ASSESSIN G OFFICER HELD THAT THE AUTHENTICITY OF THE PAYMENTS MA DE BY THE ASSESSEE COULD NOT BE SUBJECTED TO VERIFICATION. THE ASSESSING OFFICER ALSO PERUSED THE COPIES OF AGREEMENTS FILED BY TH E ASSESSEE AND CAME TO THE CONCLUSION THAT IT IS NOWHERE ME NTION ITA NO.388 /ASR/2017 (A.Y.2013-14) SARABJ IT SINGH VS. ITO 4 THAT THE TENANTS HAVE BEEN PAID ANY COMPENSATION IN L IEU OF VACATION OF PROPERTY. THE ASSESSING OFFICER FURTHER HELD THAT THERE WAS NO NEED FOR ASSESSEE TO MAKE THE ALLEGED PAYME NTS TO THE OCCUPANTS TO GET THE LAND VACATED WHEN THE ASSESSEE HAS GOT DECREE FROM THE CIVIL COURT IN HIS FAVOUR. FURTHER, T HE ASSESSEE COULD NOT EXPLAIN THE NEED AND THE MANNER OF MAKING PART PAYMENT TO THE ALLEGED OCCUPANTS BEFORE THE DECISION OF THE HONBLE COURT. 3.1 THE ASSESSEE WHILE CHALLENGING THE ASSESSMENT ORDER BEFORE THE LD. CIT(A) NOT ONLY RAISED THE VERBAL ARG UMENT BUT ALSO FILED THE WRITTEN SUBMISSION. THE LD. CIT(A) AFTE R CONSIDERING THE AGREEMENT ON WHICH THE ASSESSEE HAS RELIED, HELD THAT THE AGREEMENT GIVEN BY THE APPELLANT CAN NOT BE REL IED UPON . THE CONSIDERATION IS A PRE-REQUISITE OF VALI D CONTRACT. IN THE SAID AGREEMENT, THE CONSIDERATION IS MISSING. THUS THE AGREEMENT SUBMITTED CANNOT BE RELIED UPON. FURTHER AS PER JUD GMENT OF HIGH COURT, THE PARTIES HAVE ENTERED INTO COMPROMISE. TH E AGREEMENTS GIVEN DO NOT LAY DOWN ANY AMOUNT WHICH IS TO BE GIV EN BY OWNER. THUS THE AO HAS RIGHTLY REJECTED THE CLAIM OF THE A SSESSEE IN THE ABSENCE OF COGENT MATERIAL ON RECORD. 3.2 THE ON AGGRIEVED, THE ASSESSEE BY WAY OF THIS APPEAL CHALLENGED THE ORDER OF THE LD. CIT(A). 4. HAVING HEARD THE PARTIES AT LENGTH AND PERUSED THE MATERIAL AVAILABLE ON RECORD. AS PER ASSESSEE THE PROPERT Y NO.268, EAST MOHAN NAGAR, AMRITSAR WAS PURCHASED BY THE ASSESSEES FATHER ON 08.05.1964 FROM IMPROVEMENT TRUST, AMRITSAR AND THREE PERSONS NAMELY SMT. KULDIP KAUR, SH . HARDIP SINGH AND SMT. SURJIT KAUR WERE IN POSSESSION OF DIFFE RENT PARTS OF THE PROPERTY. THE ASSESSEES FATHER THOUGH ENTERED IN TO THE ITA NO.388 /ASR/2017 (A.Y.2013-14) SARABJ IT SINGH VS. ITO 5 AGREEMENT TO SALE QUA SOME PARTS OF THE PROPERTY TO TH E OCCUPANTS IN 1971 HOWEVER DID NOT EXECUTE ANY SALE DEED TILL HIS DEATH I.E. UPTO 28.09.1986 AND THEREAFTER THE OCCUPAN TS OF THE PROPERTY STARTED COURT LITIGATIONS ON DATED 01.09.19 88 FOR EXECUTION OF SALE DEED IN THEIR FAVOUR, WHICH CONTINUED FOR AN ABOUT 24 YEARS. AS THE ASSESSEE'S FATHER HAD BEQUEATHED T HE SAID PROPERTY TO THE ASSESSEE THEREFORE THE ASSESSEE BY VIRT UE OF DECREE DATED 15.06.1998 FROM THE CITY CIVIL COURT, A MRITSAR, BECAME THE ABSOLUTE OWNER OF THE PROPERTY IN QUESTION AND FINALLY, AFTER PROLONGED LITIGATIONS, THE OCCUPANTS VE RBALLY AGREED TO RECEIVE THE AMOUNT OF RS.63,50,000/- (RS.37,00,000/ -, RS.24,00,000/- AND RS. 2,50,000) AS COMPENSATION IN LIEU OF VACATION OF THE SUBJECTED PROPERTY AND SUBSEQUENTLY ALSO MADE COMPROMISE DEEDS DATED 23.04.2012 FOR WITHDRAWAL OF T HE CASES PENDING BEFORE THE JURISDICTIONAL HIGH COURT AND THE COMPROMISE DEEDS WERE ALSO ACCEPTED BY THE HONBLE HIGH COU RT VIDE ORDER DATED 18.07.2012. 4.1 THE BONE CONTENTION OF THE ASSESSEE IS THAT IN ORDER TO SELL THE LAND, THE ASSESSEE WAS UNDER COMPULSION TO MAKE THE SETTLEMENT WITH THE OCCUPANTS OF THE SAID LAND/PROPERTY WHICH WAS INHERITED BY THE ASSESSEE FROM HIS LATE FATHER AS THE SAME WAS IN ILLEGAL OCCUPANCY FOR THE LAST MORE THAN 20 YEAR S. IT IS A FACT THAT THE CASE PERTAINS TO THE PROPERTY UNDER REFER ENCE WAS PENDING SINCE 2007 IN THE HIGH COURT AND THE HON'BLE C OURT ON THE BASIS OF THREE MUTUAL REGISTERED SETTLEMENTS DEEDS DA TED 23.04.2012 ULTIMATELY DECIDED THE CASE ON DATED 18.07. 2012. THOUGH THE CONSIDERATION AMOUNT HAS NOT BEEN MENTIONED IN THE AGREEMENT OF COMPROMISE BUT IT IS AN UNDISPUTED FACT TH AT THE AMOUNT UNDER CONSIDERATION HAS BEEN CHANNELIZED THROUGH BANKING CHANNEL BY WAY OF CHEQUES AND DETAILS OF OCCUPAN TS ITA NO.388 /ASR/2017 (A.Y.2013-14) SARABJ IT SINGH VS. ITO 6 (RECIPIENTS), COPIES OF RECEIPTS, COPIES OF BANK PASSBOOKS DETAILING THE CLEARANCE OF CHEQUES HAVE BEEN FURNISHED B EFORE THE ASSESSING OFFICER. VARIOUS COURTS IN VARIOUS CASES ALLOWE D THE AMOUNT PAID TO THE TENANT AS ALLOWABLE DEDUCTION U/S 48(I) OF THE ACT. IT IS ALSO NOT THE CASE OF THE REVENUE THAT THE AMOUNT UNDER CONSIDERATION CANNOT BE CONSIDERED AS ALLOWABLE EXPENDITURE U/S 48(I) OF THE ACT. FOR REFERENCE SOME O F THE CASES IN WHICH ISSUE QUA CONSIDERATION OF AMOUNT UNDER CONSIDER ATIONS AS ALLOWABLE EXPENDITURE HAS BEEN DEALT WITH ARE QUOT ED AS UNDER: (I) CIT VS. SMT. SAKUNTLA RAJESWARI (DELHI HIGH COURT) [1986] 160 ITR 840 (DELHI) DATED 25.03.1986 (II) NAOZAR CHENOY VS. CIT [1998] 234 ITR 95 (ANDHRA PRA DESH) (III) CIT VS. EAGLE THEATERS (DELH HIGH COURT) [2012] 19 TAXMAN.COM 07 (DELH). (IV) ITO & ANORS. VS. MADHAVARAM UADAYASHPEE AND ANORS. ITA NO. 709 & 716 /HYD/14 [2017] 51 CCH 0557 (HYD) 14 DECIDED BY HYDRABAD TRIBUNAL ON DATED 20.12.2017. 4.2 WE HAVE ALSO INDEPENDENTLY APPLIED OUR MIND TO THE ISSUE UNDER CONSIDERATION, THOUGH WE ARE IN AGREEMENT WITH THE OBSERVATION OF THE LD. CIT(A) THAT THE CONSIDERATION I S A PRE- REQUISITE OF A VALID CONTRACT WHICH IS MISSING IN THE AGRE EMENTS RELIED UPON BY THE APPELLANT THEREFORE THE SAME CANNO T BE RELIED UPON. WE ARE CONSCIOUS OF THE FACTS AND LAW THAT AGREEMEN T WHICH IS ENFORCEABLE BY LAW CAN ONLY BE RELIED UPON AND CAN BE GIVEN EFFECT BUT IN THE INSTANT CASE THE ASSESSEE'S CASE IN NOT BASED UPON SOLE CONTENTION/MATERIAL WHICH IS AGREEMENT H EREIN SUBMITTED BEFORE THE HIGH COURT BUT ALSO BASED UPON VAR IOUS CORROBORATIVE MATERIALS STATED ABOVE. ITA NO.388 /ASR/2017 (A.Y.2013-14) SARABJ IT SINGH VS. ITO 7 4.3 WE OBSERVE, THE OCCUPANTS OF THE PROPERTY NOT ONLY EXECUTED RECEIPTS DATED 23.04.2012 ACKNOWLEDGING THE PAYMENTS AND HANDING OVER THE POSSESSION TO THE ASSE SSEE BUT ALSO ACCEPTED TO HAVE RECEIVED THE AMOUNT UNDER CONSIDERATION IN RESPONSE TO THE NOTICE U/S 133(6) O F THE ACT. THE ASSESSING OFFICER DID NOT DOUBT THE PAYMENT S MADE TO THE PARTIES HOWEVER ONLY TAKEN THE ADVERSE VI EW ON NON-APPEARANCE AND REFUSAL OF SUMMONS BY THE OCCUPANTS. FURTHER THE REVENUE DEPARTMENT FAILED TO BRI NG ANY MATERIAL CONTRARY TO THE CLAIM OF THE ASSESSEE AN D/OR TO THE JUDGMENTS RELIED UPON BY THE ASSESSEE. EVEN WE DO NOT FIND ANY JUSTIFICATION IN DECLINING THE CLAIM OF TH E ASSESSEE. CONSIDERING THE PECULIAR FACTS AND CIRCUMSTANCES AND MATERIAL AVAILABLE ON RECORD, WE ARE OF THE CONSIDERED VIEW, AS AMOUNT OF RS. 63,50,000/- PAID TO THE OCCUPANTS OF THE PROPERTY AND AMOUNT OF RS. 100000/- PAID TO THE BROKER, UNDER CONSIDERATION HAVE BEEN INCURRED AS EXPENDITURE F OR PROCUREMENT AND SAFEGUARDING OF THE PROPERTY, THEREFORE I S ALLOWABLE UNDER SECTION 48(I) OF THE ACT, HENCE WE ARE INCLINED TO ALLOW THE APPEAL OF THE ASSESSEE. RESUL TANTLY THE ORDER UNDER CHALLENGE IS SET ASIDE. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOW ED . ORDER PRONOUNCED IN THE OPEN COURT ON 27.03.2019. SD/- SD/- (N.S.SAINI) (N.K.CHOUDHRY) ACCOUNTANT MEMBER JUDI CIAL MEMBER DATED: 27.03.2019 /PK/ PS. ITA NO.388 /ASR/2017 (A.Y.2013-14) SARABJ IT SINGH VS. ITO 8 COPY OF THE ORDER FORWARDED TO: (1) SARABJIT SINGH, H.NO.37, NEW GARDEN COLONY, AMRITSAR . (2) THE INCOME TAX OFFICER, WARD 3(4), AMRITRSAR. (3) THE CIT(A)-1, AMRITSAR. (4) THE CIT CONCERNED (5) THE SR DR, I.T.A.T., AMRITSAR TRUE COPY BY ORDER