Sri T.Charan KUmar, Chttoor District V. ITO, Madanapalle

ITA 413/HYD/2009

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 66305 (ITAT-HYDERABAD)
• Duration Of Justice: 3 year(s) 5 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-09-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 20-06-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 23-03-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S RAMA RAO
• Assessee Lawyers: M H NAIK
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Corroborative evidences

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL M EMBER ITA NO.315/HYD/2009 : ASSESSMENT YEAR 2006-07 INCOME - TAX OFFICER, WARD - 1, MADANAPALLE. V/S. SHRI J.CHARAN KUMAR, MADANAPALLE. ( PAN - AAFCS 1508 R) (APPELLANT) (RESPONDENT) ITA NO.413/HYD/2009 : A SSESSMENT YEAR 2006-07 SHRI J. CHARAN KUMAR, MADANAPALLE. ( PAN - AAFCS 1508 R) V/S. INCOME-TAX OFFICER, WARD 1, MADANAPALLE. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI M.H.NAIK, D.R. RESPO N DENT BY : SHRI S.RAMA RAO DATE OF HEARING 30.8.2012 DATE OF PRONOUNCEMENT 21.9.2012 O R D E R PER SAKTIJIT DEY, JUDICIAL MEMBER: THESE ARE CROSS-APPEALS FOR THE ASSESSMENT YEAR 2 006-07 AND THEY ARE DIRECTED AGAINST THE ORDER OF THE COMMISSI ONER OF INCOME-TAX (APPEALS) TIRUPATI DATED 31.12.2008. 2. FACTS OF THE CASE IN BRIEF LEADING TO THE FIL ING OF THE PRESENT APPEALS BEFORE US ARE THAT THE ASSESSEE, AN INDIVID UAL FIELD HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2006-07 ON 31.7.2006 ADMITTING TOTAL INCOME OF RS.44,000 AND THE SAME WAS PROCESSED UNDE R S.143(1) OF THE ACT ITA NO.315 & 413/HYD/2009 SHRI J. CHARAN KUMAR, MADANAPALLE 2 ON 6.11.2006. THE CASE WAS SELECTED FOR SCRUTINY, AND IN THE REGULAR ASSESSMENT THAT ENSUED, THE ASSESSING OFFICER BROUG HT TO TAX LONG TERM CAPITAL GAINS OF RS.1,15,47,483, ON GOING THROUGH T HE INFORMATION FILED ALONGWITH THE RETURN AND IN THE COURSE OF HEARING D URING ASSESSMENT PROCEEDINGS. THE ADDITIONS MADE BY THE ASSESSING OFFICER DISALLOWING VARIOUS CLAIMS OF THE ASSESSEE ARE DISCUSSED HEREUNDER- (A) ON VERIFICATION OF STATEMENT OF COMPUTATION OF CAPI TAL GAIN FILED ALONGWITH THE RETURN OF INCOME, THE ASSESSING OFFIC ER OBSERVED THAT THE ASSESSEE HAS ADMITTED THE SALE CONSIDERATION IN RESPECT OF PLOTS AT RS.1,04,69,000. THE CALLED FOR RELEVANT INFORMA TION FROM SUB- REGISTRARS OFFICER AND VERIFIED THE SAME WITH THE ASSESSEES SALE CONSIDERATION, AND FOUND THAT THE ASSESSEE ADMITTE D ONLY AN AMOUNT OF RS.1,04,69,000 AS AGAINST THE MARKET VALU E OF THE PLOTS SOLD OF RS.1,20,39,500. IN RESPONSE TO THE PROPOSA L OF THE ASSESSING OFFICER TO ADD BACK THE DIFFERENCE AS CAPITAL GAINS IN THE HANDS OF THE ASSESSEE, ASSESSEE PLEADED FOR SYMPATHETIC VIEW AND DROP THE PROPOSAL. HE ALSO PLEADED THAT THE DIFFERENCE WAS MARGINAL AND SHOULD BE IGNORED. NOT CONVINCED WITH THE EXPLANAT ION OF THE ASSESSEE, AND OBSERVING THAT AS PER S.50C OF THE AC T, IT IS ONLY THE MARKET VALUE THAT SHOULD BE ADOPTED, THE ASSESSING OFFICER MADE AN ADDITION OF RS.15,70,500 TO THE CAPITAL GAINS LIABLE TO BE TAXED IN THE HANDS OF THE ASSESSEE. (B) THE ASSESSING OFFICER FURTHER NOTED ON COMPARISON O F THE INFORMATION RECEIVED FROM THE SUB-REGISTRARS OFFICE WITH THE O NE FURNISHED BY THE ASSESSEE THAT THE ASSESSEE HAS NOT DISCLOSED SA LE CONSIDERATION IN RESPECT OF FROM PLOTS AMOUNTING TO RS.4,45,500. WHEN THIS OMISSION WAS PUT TO THE ASSESSEE FOR EXPLANATION IF ANY, ASSESSEE PLEADED THAT HE HAD DEPENDED UPON THE THIRD PARTY/ BROKERS FOR THE ITA NO.315 & 413/HYD/2009 SHRI J. CHARAN KUMAR, MADANAPALLE 3 SALE OF THE LANDS AND HE HAD RECEIVED THE SALE CONS IDERATION DURING THE MONTH OF MAY, 2006. NOT CONVINCED WITH THIS EX PLANATION OF THE ASSESSEE AND OBSERVING THAT AS PER THE REGISTRATION ACT THE SALE CONSIDERATION HAS TO BE RECEIVED ON THE SPOT AND FR OM THE SALE DOCUMENT ALSO IT IS CLEAR THAT THE ASSESSEE RECEIVE D THE SALE CONSIDERATION ON THE SAME DAY OF REGISTRATION, AND FURTHER THAT WHO EVER MIGHT HAVE COMMITTED THE MISTAKE, THE CAPITAL GAINS ARE ASSESSABLE IN THE HANDS OF THE ASSESSEE IN THE ASSE SSMENT YEAR UNDER CONSIDERATION, THE ASSESSING OFFICER MADE A F URTHER ADDITION OF RS.4,26,003, AS AGAINST CAPITAL GAINS RECEIVED IN R ESPECT OF THOSE FOUR PLOTS OF RS.4,45,500. (C) ON VERIFICATION OF THE STATEMENT OF COMPUTATION OF CAPITAL GAINS FILED BY THE ASSESSEE ALONGWITH THE RETURN, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE WORKED OUT THE COST OF ACQUISITIO N OF THE LAND SOLD DURING THE YEAR OF 40,149 SQ. YARDS AT RS.15,96,324 , TAKING THE MARKET VALUE AT RS. 8 PER SQ. YARD IN THE BASE YEAR OF 1981. HOWEVER, AS PER THE INFORMATION OBTAINED FROM THE S UB-REGISTRAR OFFICE MADANAPALLE ON 22.10.2007, THE MARKET VALUE AS ON 1981 PER SQ. YARD IS RS.2.48. NOT CONVINCED WITH THE EXPLAN ATION WITH REGARD TO THIS VARIATION IN THE MARKET VALUE OF THE LAND I N 1981 DISCLOSED BY THE ASSESSEE, THE ASSESSING OFFICER MADE AN ADDITIO N OF RS.11,01,416 TOWARDS DIFFERENCE ARISING ON ACCOUNT OF ADOPTING THE COST OF INDEXATION 1981. (D) THE ASSESSING OFFICER FURTHER NOTED THAT THE ASSESS EE IN THE COMPUTATION OF CAPITAL GAINS HAS CLAIMED THE STAMP DUTY, REGISTRATION FEES AND DOCUMENTS CHARGES OF RS.12,89 ,090 AS HAVING BEEN PAID BY HIM AND HENCE DEDUCTIBLE IN THE COMPUT ATION OF THE CAPITAL GAINS. IN THE ABSENCE OF ANY EVIDENCE TO SHOW THAT IT WAS IN FACT THE ASSESSEE WHO PAID THE STAMP DUTY, ETC. AND SUCH DUTY, EVEN ITA NO.315 & 413/HYD/2009 SHRI J. CHARAN KUMAR, MADANAPALLE 4 IF PAID BY THE ASSESSEE WAS EXEMPT FROM TAX, AND FU RTHER OBSERVING THAT ON ENQUIRIES WITH THE PURCHASERS, DULY RECORDI NG THEIR STATEMENTS, IT WAS FOUND THAT IT IS THEY, WHO CLAIM ED TO HAVE PAID THE STAMP DUTY, REGISTRATION FEES, DOCUMENT CHARGES , ETC., AND ALSO NOT CONVINCED WITH THE EXPLANATION OF THE ASSESSEE IN THE FACE OF SUCH EVIDENCE GATHERED, THE ASSESSING OFFICER MADE AN ADDITION OF RS.12,89,089 ON THIS COUNT TO THE CAPITAL GAINS ASS ESSABLE IN THE HANDS OF THE ASSESSEE.. (E) THE ASSESSING OFFICER FURTHER NOTICED THAT THE ASSE SSEE CLAIMED DEDUCTION OF AN AMOUNT OF RS.55,140 REPRESENTING IN TEREST PAID TO THE SBI HOUSING LOAN, IN THE COMPUTATION OF CAPITAL GAINS. IN THE ABSENCE OF ANY JUSTIFICATION FOR SUCH A DEDUCTION C LAIMED BY THE ASSESSEE, THE ASSESSING OFFICER DISALLOWED THIS AMO UNT OF RS.55,140 ADDING THE SAME TO THE CAPITAL GAINS CLAIMED BY THE ASSESSEE. (F) ASSESSEE CLAIMED THAT THE COST OF IMPROVEMENT MADE TO THE LAND IN QUESTION DURING 2006-07 IS AN AMOUNT OF RS.4,05,500 . THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS NOT FURNISHED A NY SUPPORTING EVIDENCE TO THE SAID CLAIM AND HAS FURNISHED ONLY THE NAMES OF FOUR PERSONS TO WHOM AMOUNTS OF RS.1,01,375 EACH HAS BEE N PAID. ENQUIRIES MADE BY THE ASSESSING OFFICER THROUGH INS PECTOR REVEALED THAT THE NAMED PERSONS WERE NOT AVAILABLE AT THE AD DRESSES GIVEN BY THE ASSESSEE. FOR CONFIRMATION, SUMMONS WERE IS SUED ON 3.3.2008, BUT THE SAME WERE RETURNED UNSERVED BY TH E POSTAL AUTHORITIES. NOT WITHSTANDING THIS POSITION, THE A SSESSING OFFICER CONSIDERING THE ASSERTION OF THE ASSESSEE WITH REGA RD TO THE WORKS CARRIED OUT FOR THE IMPROVEMENT OF THE LAND IN QUES TION, ALLOWED PART OF THE CLAIM OF THE ASSESSEE AND MADE A ROUNDSUM DI SALLOWANCE OF RS.2,00,000, WHICH IS ADDED TO THE CAPITAL GAINS.. ITA NO.315 & 413/HYD/2009 SHRI J. CHARAN KUMAR, MADANAPALLE 5 (G) THE ASSESSING OFFICER FOR SIMILAR REASONS ALSO DISA LLOWED THE LOSS CLAIMED ON IMPROVEMENT IN EARLIER YEARS OF RS.21,71 ,560, WHICH IS ALSO ADDED TO THE CAPITAL GAINS DISCLOSED BY THE AS SESSEE. THUS, WITH THE ABOVE ADDITIONS TO THE CAPITAL GAINS ARISING OUT OF SALE OF PLOTS, AND REJECTING THE REJECTING VARIOUS CLAIMS MADE BY THE ASSESSEE WITH REGARD TO THE CAPITAL GAINS DECLARED BY HIM IN THE RETURN, REJECTING THE ASSESSEES CLAIMS FOR EXEMPTION UNDER S.54/54F IN RESPECT OF C ONSTRUCTION MADE TO HOUSE AT CHENNAI WITH AN AMOUNT OF RS.24,75,000; AN D ADVANCE GIVEN TO THE NEWLY RESIDENTIAL HOUSE OF AN AMOUNT OF RS.10,50,0 00, THE ASSESSING OFFICER COMPUTED THE LONG TERM CAPITAL GAINS WHICH COULD BE BROUGHT TO TAX AT RS.1,15,47,383 AND ACCORDINGLY COMPLETED THE ASSESS MENT ON A TOTAL INCOME OF RS.1,15,91,383, VIDE ORDER OF ASSESSMENT DATED 12.3.2008 PASSED UNDER S.143(3) OF THE ACT. 3 DURING THE COURSE OF THE FIRST APPELLATE PROCEED INGS, THE CIT(A) REMANDED THE MATTER WITH CERTAIN DIRECTIONS ON VARI OUS ASPECTS OF THE MATTER AND CALLED FOR A REMAND REPORT FROM THE ASSESSING O FFICER. CONSIDERING SUCH REMAND REPORT FROM THE ASSESSING OFFICER, DULY TAKI NG INTO ACCOUNT THE SUBMISSIONS OF THE ASSESSEE THEREON, BESIDES OTHER ARGUMENTS OF THE ASSESSEE ON VARIOUS POINTS IN DISPUTE IN RELATION T O THE COMPUTATION OF CAPITAL GAINS BROUGHT TO TAX BY THE ASSESSING OFFICER, THE CIT(A) CONFIRMED VIEW TAKEN BY THE ASSESSING OFFICER IN THE ASSESSMENT O RDER ON VARIOUS ASPECTS, THOUGH GRANTED RELIEF TO THE ASSESSEE IN RESPECT OF THE FOLLOWING ASPECTS- (A) DISALLOWANCE OF RS.21,71,560 ON ACCOUNT OF IMPROVEM ENT OF LANDS MADE IN EARLIER YEARS : THE CIT(A) DIRECTED THE ASS ESSING OFFICER TO DELETE THIS ADDITION VIDE PARA.9.6 OF TH E IMPUGNED ORDER. ITA NO.315 & 413/HYD/2009 SHRI J. CHARAN KUMAR, MADANAPALLE 6 (B) DENIAL OF RELIEF UNDER S.54F OF RS.24,75,000: THE CIT(A) DIRECTED THE ASSESSING OFFICER TO GRANT EXEMPTION UNDER S.54 F TOWARDS COST OF NEW RESIDENTIAL HOUSE AT CHENNAI, VIDE PARA 10.6 OF THE IMPUGNED ORDER. (C) DISALLOWANCE OF LOSS CLAIMED OF RS.12,08,625 : THE CIT(A) DIRECTED THE RE-COMPUTATION OF LONG TERM CAPITAL G AINS FOR ASSESSMENT YEAR 2005-06 AND CARRY FORWARD OF THE R ESULTANT LOSS TO THE SUBSEQUENT YEAR ACCORDINGLY, VIDE PARA 11.2 OF THE IMPUGNED ORDER. 4. WHILE THE ASSESSEE PREFERRED APPEAL AGAINST THE SAID ORDER OF THE CIT(A) AGGRIEVED BY THE ADDITIONS TO CAPITAL GAINS ON VARIOUS COUNTS, SUSTAINED BY THE CIT(A), REVENUE PREFERRED ITS APPE AL QUESTIONING THE RELIEF GRANTED BY THE CIT(A) IN RELATION TO THE ASSESSEES CLAIM WITH REGARD TO EXPENDITURE ON DEVELOPMENT OF LAND. 5. WE HEARD BOTH THE PARTIES AND PERUSED THE MATER IAL ON RECORD. BEFORE GOING INTO THE GROUNDS RAISED BY THE ASSESSE E AS WELL AS THE REVENUE IN THESE APPEALS, IT IS PERTINENT TO MENTION AT THE VERY OUTSET, THAT THE ASSESSEE HAS FILED A PETITION BEFORE US SEEKING TO RAISE AN ADDITIONAL GROUND, WHICH READS AS UNDER- THE ASSESSING OFFICER AND THE LEARNED CIT(A) ERRED IN HOLDING THAT THE CAPITAL GAIN ON SALE OF AGRICULTURAL LAND IS TAXABL E, PARTICULARLY WHEN THE AGRICULTURAL LAND IS SITUATED IN A VILLAGE AND NOT WITHIN THE AREA NOTIFIED FOR THE PURPOSE. THE ASSESSING OFFICER AND THE LEARNED CIT(A) OUGHT TO HAVE CONSIDERED THESE FACTS AND EXEMPTED I NCOME FROM CAPITAL GAINS. SINCE THE ABOVE GROUND IS A MATERIAL GROUND AND HAS A CLINCHING EFFECT ON THE DISPOSAL OF THE ENTIRE ISSUE IN DISPUTE IN THESE AP PEALS, WE ARE INCLINED TO ADMIT THE ABOVE ADDITIONAL GROUND. ITA NO.315 & 413/HYD/2009 SHRI J. CHARAN KUMAR, MADANAPALLE 7 6. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE LANDS IN QUESTION GIVING RISE TO THE CAPITAL GAINS ARE OF AG RICULTURAL NATURE SITUATED IN A VILLAGE AND NOT WITHIN THE AREA NOTIFIED FOR THE PU RPOSE, AND THE SALE PROCEEDS ARISING ON THE SALE OF THE SAID LAND CANNOT BE TREA TED AS CAPITAL ASSET FOR CHARGING CAPITAL GAINS. AS SUCH, IT IS PLEADED THA T THERE IS NO SCOPE FOR COMPUTING ANY CAPITAL GAINS ASSESSABLE IN THE HANDS OF THE ASSESSEE. 7. THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND, STRONGLY SUPPORTED THE IMPUGNED ORDERS OF THE LOWER AUTHORITIES, ON THE MAIN ISSUE OF BRINGING TO TAX THE CAPITAL GAINS DERIVED BY THE ASSESSEE ON THE SALE OF THE LANDS IN QUESTION. HE SUBMITTED THAT THE PL EA OF THE ASSESSEE WITH REGARD TO THE AGRICULTURAL NATURE OF THE LAND OR TH E SITUATION OF THE LAND IN A VILLAGE AND NOT WITHIN THE AREA NOTIFIED FOR THE PU RPOSE, IS RAISED FOR THE FIRST TIME BEFORE THE TRIBUNAL HAVING NOT BEEN RAISED BEF ORE THE LOWER AUTHORITIES, AND IT IS IN FACT, A MERE AFTER-THOUGHT WITH AN ULT ERIOR DESIGN TO AVOID PAYMENT OF DUE TAXES AND HENCE THE SAME SHOULD NOT BE ENTERTAINED. 8. WE HEARD BOTH SIDES AND PERUSED THE IMPUGNED OR DERS OF THE LOWER AUTHORITIES. IT IS AN UNDISPUTED FACT THAT TH E PLEA OF THE ASSESSEE WITH REGARD TO THE NATURE OF THE LAND GIVING RISE TO CAP ITAL GAINS BROUGHT TO TAX BY THE ASSESSING OFFICER, BEING OF AGRICULTURAL NATURE AND THE SITUATION OF THE SAME BEING IN A VILLAGE AND NOT WITHIN THE AREA NO TIFIED FOR THE PURPOSE, HAS BEEN RAISED FOR THE FIRST TIME BEFORE US. EVEN IF SUCH A PLEA IS URGED ONLY ON ACCOUNT OF AN AFTER-THOUGHT, THE SAME HAS TO BE ENT ERTAINED AND GONE INTO TO ASCERTAIN THE CORRECTNESS OF THE SAME, EVEN IF IT I S TAKEN AT THIS BELATED STAGE BEFORE THE TRIBUNAL, SINCE IT RELATES TO A FACTUAL ASPECT AS TO THE VERY NATURE OF THE LANDS, SALE OF WHICH GAVE RISE TO THE CAPITA L GAINS ASSESSED IN THE HANDS OF THE ASSESSEE. SINCE SUCH A PLEA HAS A CLIN CHING EFFECT ON THE DETERMINATION OF THE ISSUE AS TO THE VERY ASSESSABI LITY OF CAPITAL GAINS IN THE ITA NO.315 & 413/HYD/2009 SHRI J. CHARAN KUMAR, MADANAPALLE 8 HANDS OF THE ASSESSEE, IT CAN BE RAISED AT ANY STAG E OF THE APPELLATE PROCEEDINGS, AND THE SAME HAS TO BE ENTERTAINED AND ADJUDICATED. HOWEVER, SINCE THE ISSUE RELATING TO THE NATURE OF THE LAND IN QUESTION IS RAISED FOR THE FIRST TIME BEFORE US, THE LOWER AUTHORITIES DID NOT HAVE ANY OPPORTUNITY TO EXAMINE THE CORRECTNESS OF THE SAID CLAIM, AND EVEN BEFORE US THERE IS NO MATERIAL AVAILABLE ON RECORD TO ASCERTAIN THE CORRE CTNESS OF THE CLAIM OF THE ASSESSEE IN THIS REGARD. IN THIS VIEW OF THE MATTE R, WE SET ASIDE THE IMPUGNED ORDERS OF THE LOWER AUTHORITIES, AND RESTO RE THE MATTER TO THE FILE OF THE ASSESSING OFFICER, WITH A DIRECTION TO VERIFY T HE CORRECTNESS OF THE CLAIM OF THE ASSESSEE WITH REGARD TO AGRICULTURAL NATURE OF THE LAND AND THE LOCATION OF THE SAME IN A VILLAGE AND NOT WITHIN THE AREA NOTIF IED FOR THE PURPOSE, AND CONSEQUENTLY REDECIDE THE ISSUE RELATING TO THE ASS ESSABILITY OF THE CAPITAL GAINS IN THE HANDS OF THE ASSESSEE IN ACCORDANCE WI TH LAW. THE ASSESSING OFFICER IS DIRECTED ACCORDINGLY TO FRAME THE ASSESS MENT DE-NOVO, AFTER GIVING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. 9. IN VIEW OF OUR DECISION ON THE ADDITIONAL GROUN D RAISED BY THE ASSESSEE IN HIS APPEAL, WE ARE NOT INCLINED TO GO I NTO THE MERITS OF THE OTHER GROUNDS RAISED IN THESE APPEALS OF THE ASSESSEE AS WELL AS THE REVENUE. 10. IN THE RESULT, APPEALS OF THE ASSESSEE AS WELL AS THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 21.9.2012 SD/- SD/- (CHANDRA POOJARI) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DT/- 21 ST SEPTEMBER, 2012 ITA NO.315 & 413/HYD/2009 SHRI J. CHARAN KUMAR, MADANAPALLE 9 COPY FORWARDED TO: 1. SHRI J.CHARAN KUMAR, 8 - 290, NEHRU BAZAR, MADANAPALLE, CHITTUR DISTRICT. 2. 3. 4 INCOME-TAX OFFICER, WARD-1, MADANAPALLE. COMMISSIONER OF INCOME-TAX(APPEALS) TIRUPATI. COMMISSIONER OF INCOME-TAX, TIRUPATI 5 DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. B.V.S.