ACIT 24(1), Mumbai V. SHRI. AJAY JAGDISHNARAIN AGARWAL, Mumbai

ITA 4033/MUM/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 4166 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2015-2016
• Appeal Filed On: 06-06-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SATYA PINISETTY
• Assessee Lawyers: VISHNU GARWAL
• Keywords: Salary income; Set aside
• Section: 10; 56(2)(vii)(b); 142(1); 143(1); 143(2); 48; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER AND SHRI AMARJIT SINGH, J UDICIAL MEMBER / I .T.A. NO. 4033 /MUM/201 9 ( / ASSESSMENT YEAR: 20 1 5 - 16 ) ACIT - 24(1) ROOM NO.604, PIRAM AL CHAMBERS, JEEJEEBHOY LANE, LALBAUG, PAREL MUMBAI - 400 012 / VS. AJAY JAGDISHNARAIN AGARWAL 10 TH FLOOR, 1 ST AVENUE GOREGAON MULUND ROAD OPP. INORBIT MALL MALAD(W), MUMBAI - 400 064 ./ ./ PAN/GIR NO. : AAA PA7571Q ( / APPE LLANT ) .. ( / RESPONDENT ) / DATE OF HEARING: 24/03 /2021 /DATE OF PRONOUNCEMENT: 31 /0 5 /2021 / O R D E R PER AMARJIT SINGH, JM: THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 29 /03/2019 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 3 6 , MUMBAI [HEREINAFTE R REFERRED TO AS THE CIT(A)] RELEVANT T O THE A.Y. 20 1 5 - 16 2 . THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: - 1. 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN ALLOWING APPEAL OF THE ASSESSEE ON THE ISSU OF INCOME FROM OTHER SOURCES OF RS.2,85,42,47 7/ - U/S 56(2)(VII) OF REVENUE BY : SHRI SATYA PINISETTY, DR ASSESSEE BY: SHRI VISHNU GARWAL, AR ITA NO. 4033 /M/201 9 A.Y.20 1 5 - 16 2 THE I.T.ACT, WITHOUT CONSIDERING THE FOLLOWING FACTUAL AND LEGAL ASPECTS: I) THE ASSESSEE COULD NOT FURNISH ANY DOCUMENTARY EVIDENCE FOR PROVIDING THAT THE SAID PROPERTY WAS PURCHASED BY THE ASSESSEES FATHER JN AGARWAL IN 1974 ITSEL F. II) AS PER SECTION 53A OF THE TRANSFER OF PROPERTY ACT, THE TRANSFER WILL BE COMPLETED ONLY WHEN FULL SALE CONSIDERATION RECEIVED BY THE SELLER, PROPERTY IS REGISTERED IN THE NAME OF PURCHASER AND POSSESSION WAS GIVEN TO THE PURCHASE. IN THE CASE OF THE ASSESSEE, THE ABOVE SAID THERE CONDITIONS WERE NOT FULFILLED IN THE YEAR 1974 WHEREAS THE SAID CONDITIONS WERE FULFILLED IN THE YEAR 2014 2. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(APPEALS) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE AO BE RES TORED 3. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR TO SUBMIT ADDITIONAL NEW GROUND WHICH MAY BE NECESSARY 3. THE FACTS OF THE PRESENT CASE ARE THAT T HE ASSESSEE FILED HIS RETURN OF INCOME ON 18/09/2015, DECLARING TOTAL INCOME TO THE TUN E OF RS.81 , 99 , 170/ - FOR THE AY 2015 - 16. THE RETURN WAS PROCESSED U/S 143(1) OF THE ACT. THE ASSES SMENT WAS SELECTED FOR SCRUTINY. N OTICES U/S. 143(2) AND 142(1) WERE ISSUED AND SERVED UPON THE ASSESSEE. THE ASSESSEE WAS THE PARTNER OF M/S GOKUL CONSTRUCTI ON COMPANY, CITY LIFE DEVELOPERS, AGARWAL CONSTRUCTION CO., KRISH ENTERPRISES, ORCHID ENTERPRISE, PUNIT CONSTRUCTION CO., GEOPRENEUR REALTY CO., AND A DITYA GP REALTY CO., ENGAGED IN THE CONSTRUCTION BUSINESS . T HE INCOME OF THE ASSESSEE WAS MAINLY FROM INC OME FROM THE HOUSE PROPERTY , INCOME FROM SALARY , SHARE PROFIT UNDER INCOME FROM BUSINESS OR PROFESSION AND INCOME FROM OTHER SOURCES. IN THE RELEVANT AY, THE ASSESSEE PURCHASED THE PROPERTY BY VIRTUE OF CONVEYANCE DEED REGISTERED ON 05/09/2017 . T HE MARKE T VALUE OF THE SAID PROPERTY WAS OF RS. 9 , 75 , 27 , 000/ - . THE TRANSACTION VALUE OF RS. 70 , 20 , 570/ - AND STAMP DUTY IN SUM OF RS. 48 , 79 , 000/ - WAS PAID. THE INCOME OF THE ASSESSEE WAS ASSESSED IN VIEW OF THE PROVISIONS U/S 56(2)(VII) OF THE I.T.ACT AND HIS SHAR E IN SUM ITA NO. 4033 /M/201 9 A.Y.20 1 5 - 16 3 OF S. 2 , 8 5 , 42,477 / - WAS ADDED TO THE INCOME OF THE ASSESSEE, THE TOTAL INCOME OF THE ASSESSEE WAS ASSESSED IN SUM OF RS 3 , 67 , 41 , 642/ - . FEELING AGGRIEVED, THE ASSESSEE FILED APPEAL BEFORE THE LD.CIT(A) , WHO ALLOWED THE CLAIM OF THE ASSESSEE. THEREF ORE, THE REVENUE HAS FILED THE PRESENT APPEAL BEFORE US. ISSUES NO.1 AND 2: 4. U NDER THESE ISSUES, THE ASSESSE E HAS CHALLENGED THE ALLOWANCE OF THE CLAIM OF RS.2 , 8 5,42 , 477/ - U/S 56(2)(VII) OF I.T.ACT. THE LD. DR HAS ARGUED THAT THE CIT(A) WRONGLY ALLOWED THE CLAIM OF THE A SSESSEE , T HEREFORE, FINDING OF THE CIT(A) IS NOT JUSTIFIABLE , HENCE IS LIABLE TO BE SET ASIDE . H OWEVER , ON THE OTHER HAND. THE LD. AR OF THE ASSESEE HAS STRONGLY RELIED UPON ORDER PASSED BY THE LD.CIT(A) IN QUESTION. BEFORE GOING FURTHE R , IT IS NECESSARY TO ADVERT THE FINDING OF THE LD.CIT(A). BE IN QUESTION. 4. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE, THE SUBMISSIONS OF THE APPELLANT AND THE VIEWS ENUMERATED BY THE AO IN HIS ORDER AND HAVE ARRIVED AT THE CONCLUSION AS UNDER. 4.1. THE GROUNDS OF APPEAL NO.S.1 & 2 RELATE LO THE ADDITION OF RS.2.85.42.477/ - MADE BY THE AO U/S 56(2)(VII)(B) OF THE ACT. ON PERUSAL OF THE DOCUMENTS AND SUBMISSION II CAN BE STATED THAT LAND WAS PURCHASED BY LATE SHRI. JAGDISHNARAIN AGARWAL IN THE YE AR 1974. FULL PAYMENT OF PURCHASE CONSIDERATION WAS ALSO MADE LO VENDORS AND ORIGINAL OWNERS AND CONFIRMING PARTIES IN THE PAST. THE ORIGINAL OWNERS AND CONFIRMING PARTIES HAD GIVEN REQUISITE CONFIRMATIONS BEFORE THE DEPUTY DISTRICT COLLECTOR THA T THEY HA D TRANSFERRED POSSESSION OF SAID LAND TO LAIC SHRI. JAGDISHNARAIN AGARWAL. FURTHER, THE ORIGINAL OWNERS AND CONFIRMING PARTIES HAD GIVEN POWER OF ATTORNEY TO LATE SHRI. JAGDISHNARAIN AGARWAL WHICH GAVE HIM WIDE POWERS RELINQUISHING THE RIGHTS AND TITLE OF ORIGINAL OWNERS AND CONFIRMING PARTIES. THESE FACTS DEARLY SUGGEST THAT RIGHTS IN THE IMMOVABLE PROPERTY HAD BEEN CREATED IN THE HANDS OF LATE SHRI. JAGDISHNARAIN AGARWAL AND WHICH WERE ACQUIRED BY WAY OF INHERITANCE BY DIE APPELLANT AND OTHER LEGAL HEIRS ON DEMISE OF ITA NO. 4033 /M/201 9 A.Y.20 1 5 - 16 4 HIS FATHER. AS SUCH. THE AO CANNOT MAKE ADDITION IN THE HANDS OF THE APPELLANT FOR PROPERTY WHICH ALREADY BELONGS LO HIM AND FOR U INCH HE HAD ENTERED IN CONVEYANCE DEED TO MAKE SUCH PROPERTY FORMALLY IN HIS NAME 4.2 THE FACTS OF THE CASE REV EAL THAT THE APPELLANT HAD MADE PAYMENT TO PARTIES INVOLVED IN THE LITIGATION LO DROP THEIR CLAIMS OVER THE PROPERTY. THESE PAYMENTS WERE IN THE NATURE OF COMPENSATION FOR SETTLEMENT OF THEIR CLAIMS AND NOT TOWARDS PURCHASE CONSIDERATION. THE PURCHASE CONS IDERATION HAD ALREADY BEEN PAID BY FATHER OF THE APPELLANT TO VENDORS AND ORIGINAL OWNERS AND CONFIRMING PAR T IES. ALL THE AFORESAID FACTS WERE AGREED BY THE VENDORS AND ORIGINAL OWNERS AND CONFIRMING PAR T IES IN THE CO NVEYAN C E DEED. IT IS ALSO A FACT THAT THE PROPERTY WAS NOT REGISTERED IN THE NAME OF LATE SHRI. JAGDISHNARAIN AGA RWAL DUE TO PENDING LITIGATION . THE SAID REGISTRATION COULD HA VE BEEN DONE VIDE A CONVEYANCE DEED WHICH WAS ENTERED INTO BY THE APPELLANT BEING SUCCESSOR OF LATE SHRI. JAGDISHNARA IN AGARWAL IN THE FY 2014 - 15 AFT ER OPTING FOR OUT OF COURT SETTLEMENT WITH LITIGATING PARTIES. IT IS BUT NATURAL THAT AS (HE CONVEYANCE IS MADE IN FY 2014 - 15. THE OFFICE OF SUB - REGISTRAR HAD CHARGED STAMP DU TY ON PREVAILING READY RECKONER VALUE FOR THE SAID PROPERTY. THIS FACT CAN BE VERI FIED FROM PAGE NO 31 OF THE PAPE R BOOK WHEREIN THE APPELLANT HAD SUBMITTED CHALLAN OF PAYMENT OF STAMP DU TY AND REGISTRATION CHARGES. THE NATURE OF ARTICLE MENTIONED AS 'A - 25 CO NVEYANCE/SALE/TRANSFER/ASSIGNMENT DEED. SO THE STAMP DULY FOR CONVEYANCE AND SALE IS SAME AS THE WORDS ARE USED INTERCHANGEABLY. 4.3 FURTHER, IT IS ALSO NOTED THA T ONE OF THE RECIPIENTS OF PAYMENT WAS SHRI. PARSHURAM SHIND E . HE WAS NEITHER O WNER OF THE LAND NOR HE WAS SUCCESSOR OF THE ORIGINAL OWN ERS AND CONFIRMING PARTIES. HOWEVER, THE APPELLANT HAD MADE THE PAYMENT TO HIM IN ORDER TO MAKE HIM RELINQUISH RIGHTS, CLAIMS, IF ANY WHICH HE WAS HAVING PURSUANT LO CONDITIONAL PURCHASE AGREEMENT LIE HAD ENTERED INTO WITH ONE OF THE ORIGINAL OWNERS AND CONFIRMING PARTIES IN THE YEAR 1 986 IF THE PRESENT AGREEMENT HAD BEEN A PURCHASE AGREEMENT. THEN THE APPELLANT WOULD NOT HAVE MADE PAYMENT TO SHRI PARSHURAM SHIND E WHO WAS NOT THE OWNER OF THE PROPERLY. 4.4 THREADING OF CONVEYANCE DEED WHICH IS SUBJECT M ATTER OF LITIGATION IN ISOLATION AND WITHOUT CONSIDERING PRIOR AGREEMENT LO SALE, DOCUMENTS OF THE CASE FILED WITH BOMBAY HIGH COURT. NOTICE ITA NO. 4033 /M/201 9 A.Y.20 1 5 - 16 5 OF MOTION AND ORDER OF BOMBAY HIGH COURT AGAINST SUCH NOTICE OF MOTION. POWER OF ATTORNEYS ISSUED B Y ORIGINAL OWNER S AND CONFIRMING PARTIES LO LATE SHRI. JAGDISHNARA IN AGARWAL. MEMORANDUM OF RECORDING OF POSSESSION IN FAVOR OF LAIC SHRI. JAGDISHNARAIN AGARWAL. MEMORANDUM OF FAMI LY SETTLEMENT. DEED OF CONFIRMATION BETWEEN THE APPELLANT AND VENDORS WOULD BE UNFAIR, UNJUS TIFIED AND WITHOUT CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 5. AFTER GOING TH ROUGH THE ORDER PASSED BY THE CI T(A), WE NOTICE D THAT THE PROPERTY WAS PURCHASED BY JAGDISH N ARIAN AGARWAL IN THE YEAR 1974 AFTER PAYING THE FULL C ONSIDERATION . THE ORIGINAL OWNER S /VENDOR S CONFIRM ED THE TRANSACTION AND THE PARTIES HAD GIVEN REQUISITE CONFIRMATION BEFORE THE DISTRICT COLLECTOR . T HEY TRANSFERRED THE P OSSESSIO N OF THE SAID LAND TO LATE SHRI JAGDISH NARIAN AGARWAL . O RIGINAL OWNER S AND CO NFIRMATION PARTIES ALSO EXECUTED THE POWER OF ATTORNEY IN FAVOUR OF LATE SHRI JAGDISH NARIAN AGARWAL IN WHICH ALL RIGHTS WERE GIVEN TO HIM . T HE PROPERTY WAS EXCLUSIVELY UNDER THE OWNERS HIP AND POSSESSION O F THE SHRI JAGDISH NARIAN AGARWAL , WHICH WAS ACQUIRED BY THE APPELLANT OR OTHER LEG AL HEIR ON DEMISE OF HIS FATHER SHRI JAGDISH NARIAN AGARWAL . T HE PROPERTY WAS UNDER LITIGATION FOR A LONG TIME AND THE COMPENSATION WAS GIVEN FOR THE SETTLEMENT. T HE PROPERTY WAS REGISTERED WITH THE NAME OF SHRI JAGDISH NARIAN AGARWAL TILL THE PENDING OF THE LITIGATION , HOWEVER, THE SAME WAS CAME WITH THE NAME OF THE APPELLANT AND OTHER LEGAL HEIRS BY VIRTUE OF CONVEYANCE DEED IN THE FY 2014 - 15 . T HE REGISTRAR HA D CHARGED STAMP DUTY AND PREVAILING MARKET VALUE FOR THE SAID PROP ER TY. ACCORDINGLY, IT IS OPINED B Y THE CIT(A) THAT THE LAND WAS NOT A FRESH PURCHASE. HENCE, DELETED THE ADDITIONS RA ISED IN VIEW OF THE PROVISIONS U/S 56(2)(VII)(B) OF THE ACT IN SUM OF RS.2 , 85 , 4 2 , 770/ - . THE FACTS ARE NOT DISTINGUISHABLE AT THIS STAGE . T HE ITA NO. 4033 /M/201 9 A.Y.20 1 5 - 16 6 FACTUAL INTERPRETATION OF THE TRANSACTION WA S CLEAR LY DESCRIBED BY THE CIT(A). ACCORDINGLY, WE ARE OF THE VIEW THAT THE LD.CIT(A) HAS PASSED THE ORDER JU D IC IOUSLY INCORRECTLY, WHICH IS NOT LIABLE TO THE INTERFERE WITH THE APPEAL AT THIS STAGE. ACCORDING LY , ALL THE ISSUES ARE DECIDING IN FAVOUR OF THE ASSESSEE , AGAINST THE REVENUE. ISSUE NO.3 6. ISSUE NO.3 IS FORMAL IN NATURE, WHICH DOES NOT REQUIRE ANY ADJUDICATION AT ALL. 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN TH E OPEN COURT ON 31 /0 5 /2021 SD/ - SD/ - ( RAJESH KUMAR ) (AMARJIT SINGH) ACCOUNTANT MEMBER J UDICIAL MEMBER MUMBAI; DATED : 31 /0 5 /2021 THIRUMALESH, 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. / GUARD FILE. / BY ORDER, //TRUE COPY// / /(DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI