ROOPAM P. BHARTIYA, MUMBAI V. ITO 14(3)(4), MUMBAI

ITA 4537/MUM/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9466 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-09-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: H
• Next Hearing Date: 28-06-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 01-07-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M C OMI NINGSHENDR
• Keywords: Recovery proceedings; Question of law; Cost of acquisition; Non-deduction of tax; Onus to prove
• Section: 143(3); 194C

Judgement Text

H IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ./ I.T.A. NO.4537/ MUM/2016 ( / ASSESSMENT YEAR : 2011-12) SHRI ROOPAM P. BHARTIYA, 146, KRISHNA BHAVAN, 2 ND FLOOR, ROOM NO. 15, DR. VIGHAS STREET, KALBADEVI ROAD, MUMBAI 400 002. / V. INCOME TAX OFFICER 14(3)(4), MUMBAI. ./ PAN : ADXPB 6346A ( / APPELLANT ) .. ( / RESPONDENT ) ASSESSEE BY : SHRI PIYUSH CHHAJED REVENUE BY : SHRI M.C.OMI NINGSHEN,DR / DATE OF HEARING : 28-09-2017 / DATE OF PRONOUNCEMENT : 29.09.2017 / O R D E R PER RAMIT KOCHAR, ACCOUNTANT MEMBER THIS APPEAL, FILED BY THE ASSESSEE, BEING ITA NO. 4537/MUM/2016, IS DIRECTED AGAINST THE APPELLATE ORDER DATED 23 RD MARCH, 2016 PASSED BY THE ITA 4537/MUM/2016 2 LEARNED COMMISSIONER OF INCOME TAX (APPEALS)- 29, M UMBAI (HEREINAFTER CALLED THE CIT(A)), FOR THE ASSESSMENT YEAR 2011- 12, THE APPELLATE PROCEEDINGS BEFORE THE LEARNED CIT(A) ARISING FROM THE ASSESSMENT ORDER DATED 28 TH FEBRUARY, 2014 PASSED BY THE LEARNED ASSESSING OFF ICER (HEREINAFTER CALLED THE AO ) U/S 143(3) OF THE I NCOME-TAX ACT,1961 (HEREINAFTER CALLED THE ACT). 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE IN MEMO OF APPEAL FILED WITH THE INCOME-TAX APPELLATE TRIBUNAL, MUMBAI (HER EINAFTER CALLED THE TRIBUNAL) READ AS UNDER:- 1) ON THE FACTS AND THE CIRCUMSTANCE OF THE CASE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFI RMING DISALLOWANCE OF RS.7,000/- ON ACCOUNT OF BROKERAGE, RS.15,000/- O N ACCOUNT OF COMMISSION AND RS.17,985/- ON ACCOUNT OF INTEREST PA ID ON LOAN UNDER SECTION 40(A)(IA). 2) ON THE FACTS AND THE CIRCUMSTANCE OF THE CASE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFI RMING ADDITION OF RS.20,00,000/- AS LONG TERM CAPITAL GAINS WITHOUT APP RECIATING THAT ASSESSEE DID NOT OWNED ANY APARTMENT AND THE FLAT SOLD DURING THE YEAR WAS SOLD BY MR. PRAHLADRAI BHARTIA AND ALL THE SALES PROCEEDS WERE ALSO RECEIVED BY HIM. 3) ON THE FACTS AND THE CIRCUMSTANCE OF THE CASE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN NOT AL LOWING THE COST OF PURCHASE AND INDEXATION THEREAFTER EVEN AFTER PRESUM ING THAT THE ABOVE FLAT WAS OWNED BY THE ASSESSEE. 3. AT THE OUTSET LEARNED COUNSEL FOR THE ASSESSEE F AIRLY SUBMITTED BEFORE THE BENCH THAT HE DONOT WANT TO PRESS GROUND NO. 1 WHIC H IS RELATED TO DISALLOWANCE U/S 40(A)(IA) AS TO ITS APPLICABILITY ON THE AMOUNT OF COVERED EXPENDITURE WHICH ARE OUTSTANDING FOR PAYMENT AS AT YEAR END OR WILL IT APPLY ON ALL EXPENDITURES WHICH ARE COVERED BY THE PROVIS IONS OF SECTION 40(A)(IA) EVEN IF THE SAID EXPENSES ARE ALREADY PAID DURING T HE YEAR AND NOTHING REMAINS TO BE PAYABLE AS AT THE YEAR END, WHEREIN H ONBLE SUPREME COURT IN ITA 4537/MUM/2016 3 THE CASE OF PALAM GAS SERVICE V. CIT (2017) 394 ITR 300(SC) HAS RECENTLY DECIDED THE ISSUE AGAINST ASSESSEE BY HOLDING THAT DISALLOWANCE U/S 40(A)(IA) SHALL BE MADE EVEN IF THE ENTIRE AMOUNT OF COVERED EXPENDITURE ARE PAID DURING THE FINANCIAL YEAR AND NOTHING REMAINS TO BE PAID AT THE YEAR END, WHICH DECISION OF HONBLE SUPREME COURT IS BINDING ON THE ASSESSEE AS IT IS NOW LAW OF THE LAND. THE RELEVANT EXTRACT OF DECISI ON OF HONBLE SUPREME COURT IS AS UNDER: 14. IN THE AFORESAID BACKDROP, LET US NOW DEAL WITH TH E ISSUE, NAMELY, THE WORD 'PAYABLE' IN SECTION 40(A)(IA) WOULD MEAN ONLY WHEN THE AMOUNT IS PAYABLE AND NOT WHEN IT IS ACTUALLY PAID. GRAMMATIC ALLY, IT MAY BE ACCEPTED THAT THE TWO WORDS, I.E. 'PAYABLE' AND 'PAID', DENO TE DIFFERENT MEANINGS. THE PUNJAB & HARYANA HIGH COURT, IN P.M.S. DIESELS (SUP RA) REFERRED TO ABOVE, RIGHTLY REMARKED THAT THE WORD 'PAYABLE' IS, IN FAC T, AN ANTONYM OF THE WORD 'PAID'. AT THE SAME TIME, IT TOOK THE VIEW THAT IT WAS NOT SIGNIFICANT TO THE INTERPRETATION OF SECTION 40(A)(IA). DISCUSSING THI S ASPECT FURTHER, THE PUNJAB & HARYANA HIGH COURT FIRST DEALT WITH THE CONTENTION OF THE ASSESSEE THAT SECTION 40(A)(IA) RELATES ONLY TO THOSE ASSESSEES WHO FOLLO W THE MERCANTILE SYSTEM AND DOES NOT COVER THE CASES WHERE THE ASSESSEES FOLLOW THE CASH SYSTEM. THOSE CONTENTION WAS REJECTED IN THE FOLLOWING MANNER: '19. THERE IS NOTHING THAT PERSUADES US TO ACCEPT T HIS SUBMISSION. THE PURPOSE OF THE SECTION IS TO ENSURE THE RECOVERY OF TAX. WE SEE NO INDICATION IN THE SECTION THAT THIS OBJECT WAS CONFINED TO THE RE COVERY OF TAX FROM A PARTICULAR TYPE OF ASSESSEE OR ASSESSEES FOLLOWING A PARTICULAR ACCOUNTING PRACTICE. AS FAR AS THIS PROVISION IS CONCERNED, IT APPEARS TO MAKE NO DIFFERENCE TO THE GOVERNMENT AS TO THE ACCOUNTING S YSTEM FOLLOWED BY THE ASSESSEES. THE GOVERNMENT IS INTERESTED IN THE RECO VERY OF TAXES. IF FOR SOME REASON, THE GOVERNMENT WAS INTERESTED IN ENSURING T HE RECOVERY OF TAXES ONLY FROM ASSESSEES FOLLOWING THE MERCANTILE SYSTEM, WE WOULD HAVE EXPECTED THE PROVISION TO SO STIPULATE CLEARLY, IF NOT EXPRESSLY . IT IS NOT SUGGESTED THAT ASSESSEES FOLLOWING THE CASH SYSTEM ARE NOT LIABLE TO DEDUCT TAX AT SOURCE. IT IS NOT SUGGESTED THAT THE PROVISIONS OF CHAPTER XVI I-B DO NOT APPLY TO ASSESSEES FOLLOWING THE CASH SYSTEM. THERE IS NOTHI NG IN CHAPTER XVII-B EITHER THAT SUGGESTS OTHERWISE. 20. OUR VIEW IS FORTIFIED BY THE EXPLANATORY NOTE T O FINANCE BILL (NO. 2) OF 2004. SUB-CLAUSE (IA) OF CLAUSE (A) OF SECTION 40 WAS INT RODUCED BY THE FINANCE BILL ITA 4537/MUM/2016 4 (NO. 2) OF 2004 WITH EFFECT FROM 01.04.2005. THE EX PLANATORY NOTE TO FINANCE BILL-2004 STATED:- ' ** ** ** WITH A VIEW TO AUGMENT COMPLIANCE OF TDS PROVISIONS , IT IS PROPOSED TO EXTEND THE PROVISIONS OF SECTION 40(A)(I) TO PAYMENTS OF I NTEREST, COMMISSION OR BROKERAGE, FEES FOR PROFESSIONAL SERVICES OR FEES F OR TECHNICAL SERVICES TO RESIDENTS, AND PAYMENTS TO A RESIDENT CONTRACTOR OR SUB-CONTRACTOR FOR CARRYING OUT ANY WORK (INCLUDING SUPPLY OF LABOUR FOR CARRYI NG OUT ANY WORK), ON WHICH TAX HAS NOT BEEN DEDUCTED OR AFTER DEDUCTION, HAS N OT BEEN PAID BEFORE THE EXPIRY OF THE TIME PRESCRIBED UNDER SUB-SECTION(1) OF SECTION 200 AND IN ACCORDANCE WITH THE OTHER PROVISIONS OF CHAPTER XVI I-B. ' 21. THE ADHERENCE TO THE PROVISIONS ENSURES NOT MER ELY THE COLLECTION OF TAX BUT ALSO ENABLES THE AUTHORITIES TO BRING WITHIN THEIR FOLD ALL SUCH PERSONS WHO ARE LIABLE TO COME WITHIN THE NETWORK OF TAX PAYERS. TH E INTENTION WAS TO ENSURE THE COLLECTION OF TAX IRRESPECTIVE OF THE SYSTEM OF ACC OUNTING FOLLOWED BY THE ASSESSEES. WE DO NOT SEE HOW THIS DUAL PURPOSE OF A UGMENTING THE COMPLIANCE OF CHAPTER XVII AND BRINGING WITHIN THE DEPARTMENT' S FOLD TAX PAYERS IS SERVED BY CONFINING THE PROVISIONS OF SECTION 40(A)(IA) TO ASSESSEES WHO FOLLOW THE MERCANTILE SYSTEM. NOR DO WE FIND ANYTHING THAT IND ICATES THAT FOR SOME REASON THE LEGISLATURE INTENDED ACHIEVING THESE OBJECTIVES ONLY BY CONFINING THE OPERATION OF SECTION 40(A)(IA) TO ASSESSEES WHO FOL LOW THE MERCANTILE SYSTEM. 22. THE SAME VIEW WAS TAKEN BY A DIVISION BENCH OF THE CALCUTTA HIGH COURT IN COMMISSIONER OF INCOME TAX V. CRESCENT EXPORT SYNDI CATE, (SUPRA). IT WAS HELD:- '12.3. IT IS NOTICEABLE THAT SECTION 40(A) IS APPLI CABLE IRRESPECTIVE OF THE METHOD OF ACCOUNTING FOLLOWED BY AN ASSESSEE. THEREFORE, B Y USING THE TERM 'PAYABLE' LEGISLATURE INCLUDED THE ENTIRE ACCRUED LIABILITY. IF ASSESSEE WAS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING, THEN THE MOMENT AM OUNT WAS CREDITED TO THE ACCOUNT OF PAYEE ON ACCRUAL OF LIABILITY, TDS WAS R EQUIRED TO BE MADE BUT IF ASSESSEE WAS FOLLOWING CASH SYSTEM OF ACCOUNTING, T HEN ON MAKING PAYMENT TDS WAS TO BE MADE AS THE LIABILITY WAS DISCHARGED BY MAKING PAYMENT. THE TDS PROVISIONS ARE APPLICABLE BOTH IN THE SITUATION OF ACTUAL PAYMENT AS WELL OF THE CREDIT OF THE AMOUNT. IT BECOMES VERY CLEAR FRO M THE FACT THAT THE PHRASE, 'ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVI I-B', WAS NOT THERE IN THE BILL BUT INCORPORATED IN THE ACT. THIS WAS NOT WITH OUT ANY PURPOSE.' 15. WE APPROVE THE AFORESAID VIEW AS WELL. AS A FORTIO RARI, IT FOLLOWS THAT SECTION 40(A)(IA) COVERS NOT ONLY THOSE CASES WHERE THE AMOUNT IS PAYABLE BUT ALSO WHEN IT IS PAID. IN THIS BEHALF, ONE HAS TO KE EP IN MIND THE PURPOSE WITH WHICH SECTION 40 WAS ENACTED AND THAT HAS ALREADY B EEN NOTED ABOVE. WE ITA 4537/MUM/2016 5 HAVE ALSO TO KEEP IN MIND THE PROVISIONS OF SECTION S 194C AND 200. ONCE IT IS FOUND THAT THE AFORESAID SECTIONS MANDATE A PERSON TO DEDUCT TAX AT SOURCE NOT ONLY ON THE AMOUNTS PAYABLE BUT ALSO WHEN THE SUMS ARE ACTUALLY PAID TO THE CONTRACTOR, ANY PERSON WHO DOES NOT ADHERE TO THIS STATUTORY OBLIGATION HAS TO SUFFER THE CONSEQUENCES WHICH ARE STIPULATED IN THE ACT ITSELF. CERTAIN CONSEQUENCES OF FAILURE TO DEDUCT TAX AT SOURCE FRO M THE PAYMENTS MADE, WHERE TAX WAS TO BE DEDUCTED AT SOURCE OR FAILURE TO PAY THE SAME TO THE CREDIT OF THE CENTRAL GOVERNMENT, ARE STIPULATED IN SECTION 201 O F THE ACT. THIS SECTION PROVIDES THAT IN THAT CONTINGENCY, SUCH A PERSON WO ULD BE DEEMED TO BE AN ASSESSEE IN DEFAULT IN RESPECT OF SUCH TAX. WHILE S TIPULATING THIS CONSEQUENCE, SECTION 201 CATEGORICALLY STATES THAT THE AFORESAID SECTIONS WOULD BE WITHOUT PREJUDICE TO ANY OTHER CONSEQUENCES WHICH THAT DEFA ULTER MAY INCUR. OTHER CONSEQUENCES ARE PROVIDED UNDER SECTION 40(A)(IA) O F THE ACT, NAMELY, PAYMENTS MADE BY SUCH A PERSON TO A CONTRACTOR SHALL NOT BE TREATED AS DEDUCTIBLE EXPENDITURE. WHEN READ IN THIS CONTEXT, IT IS CLEAR THAT SECTION 40(A)(IA) DEALS WITH THE NATURE OF DEFAULT AND THE CONSEQUENCES THE REOF. DEFAULT IS RELATABLE TO CHAPTER XVIIB (IN THE INSTANT CASE SECTIONS 194C AN D 200, WHICH PROVISIONS ARE IN THE AFORESAID CHAPTER). WHEN THE ENTIRE SCHE ME OF OBLIGATION TO DEDUCT THE TAX AT SOURCE AND PAYING IT OVER TO THE CENTRAL GOVERNMENT IS READ HOLISTICALLY, IT CANNOT BE HELD THAT THE WORD 'PAYA BLE' OCCURRING IN SECTION 40(A)(IA) REFERS TO ONLY THOSE CASES WHERE THE AMOU NT IS YET TO BE PAID AND DOES NOT COVER THE CASES WHERE THE AMOUNT IS ACTUALLY PA ID. IF THE PROVISION IS INTERPRETED IN THE MANNER SUGGESTED BY THE APPELLAN T HEREIN, THEN EVEN WHEN IT IS FOUND THAT A PERSON, LIKE THE APPELLANT, HAS VIO LATED THE PROVISIONS OF CHAPTER XVIIB (OR SPECIFICALLY SECTIONS 194C AND 200 IN THE INSTANT CASE), HE WOULD STILL GO SCOT FREE, WITHOUT SUFFERING THE CONSEQUENCES OF SUCH MONETARY DEFAULT IN SPITE OF SPECIFIC PROVISIONS LAYING DOWN THESE CONS EQUENCES. THE PUNJAB & HARYANA HIGH COURT HAS EXHAUSTIVELY INTERPRETED SEC TION 40(A(IA) KEEPING IN MIND DIFFERENT ASPECTS. WE WOULD AGAIN QUOTE THE FO LLOWING PARAGRAPHS FROM THE SAID JUDGMENT, WITH OUR COMPLETE APPROVAL THERE TO: '26. FURTHER, THE MERE INCURRING OF A LIABILITY DOE S NOT REQUIRE AN ASSESSEE TO DEDUCT THE TAX AT SOURCE EVEN IF SUCH PAYMENTS, IF MADE, WOULD REQUIRE AN ASSESSEE TO DEDUCT THE TAX AT SOURCE. THE LIABILITY TO DEDUCT TAX AT SOURCE UNDER CHAPTER XVII-B ARISES ONLY UPON PAYMENTS BEIN G MADE OR WHERE SO SPECIFIED UNDER THE SECTIONS IN CHAPTER XVII, THE A MOUNT IS CREDITED TO THE ACCOUNT OF THE PAYEE. IN OTHER WORDS, THE LIABILITY TO DEDUCT TAX AT SOURCE ARISES NOT ON ACCOUNT OF THE ASSESSEE BEING LIABLE TO THE PAYEE BUT ONLY UPON THE LIABILITY BEING DISCHARGED IN THE CASE OF AN AS SESSEE FOLLOWING THE CASH SYSTEM AND UPON CREDIT BEING GIVEN BY AN ASSESSEE F OLLOWING THE MERCANTILE SYSTEM. THIS IS CLEAR FROM EVERY SECTION IN CHAPTER XVII. 27. TAKE FOR INSTANCE, THE CASE OF AN ASSESSEE, WHO FOLLOWS THE CASH SYSTEM OF ACCOUNTING AND WHERE THE ASSESSEE WHO THOUGH LIA BLE TO PAY THE ITA 4537/MUM/2016 6 CONTRACTOR, FAILS TO DO SO FOR ANY REASON. THE ASSE SSEE IS NOT THEN LIABLE TO DEDUCT TAX AT SOURCE. TAKE ALSO THE CASE OF AN ASSE SSEE, WHO FOLLOWS THE MERCANTILE SYSTEM. SUCH AN ASSESSEE MAY HAVE INCURR ED THE LIABILITY TO PAY AMOUNTS TO A PARTY. SUCH AN ASSESSEE IS ALSO NOT BO UND TO DEDUCT TAX AT SOURCE UNLESS HE CREDITS SUCH SUMS TO THE ACCOUNT O F THE PARTY/PAYEE, SUCH AS, A CONTRACTOR. THIS IS CLEAR FROM SECTION 194C S ET OUT EARLIER. THE LIABILITY TO DEDUCT TAX AT SOURCE, IN THE CASE OF AN ASSESSEE FO LLOWING THE CASH SYSTEM, ARISES ONLY WHEN THE PAYMENT IS MADE AND IN THE CAS E OF AN ASSESSEE FOLLOWING THE MERCANTILE SYSTEM, WHEN HE CREDITS SU CH SUM TO THE ACCOUNT OF THE PARTY ENTITLED TO RECEIVE THE PAYMENT. 28. THE GOVERNMENT HAS NOTHING TO DO WITH THE DISPU TE BETWEEN THE ASSESSEE AND THE PAYEE SUCH AS A CONTRACTOR. THE PROVISIONS OF THE ACT INCLUDING SECTION 40 AND THE PROVISIONS OF CHAPTER XVII DO NO T ENTITLE THE TAX AUTHORITIES TO ADJUDICATE THE LIABILITY OF AN ASSES SEE TO MAKE PAYMENT TO THE PAYEE/OTHER CONTRACTING PARTY. THE APPELLANT'S SUBM ISSION, IF ACCEPTED, WOULD REQUIRE AN ADJUDICATION BY THE TAX AUTHORITIE S AS TO THE LIABILITY OF THE ASSESSEE TO MAKE PAYMENT. THEY WOULD THEN BE REQUIR ED TO INVESTIGATE ALL THE RECORDS OF AN ASSESSEE TO ASCERTAIN ITS LIABILI TY TO THIRD PARTIES. THIS COULD IN MANY CASES BE AN EXTREMELY COMPLICATED TASK ESPE CIALLY IN THE ABSENCE OF THE THIRD PARTY. THE THIRD PARTY MAY NOT PRESS THE CLAIM. THE PARTIES MAY SETTLE THE DISPUTE, IF ANY. THIS IS AN EXERCISE NOT EVEN REMOTELY REQUIRED OR EVEN CONTEMPLATED BY THE SECTION.' 16. AS MENTIONED ABOVE, THE PUNJAB & HARYANA HIGH COUR T FOUND SUPPORT FROM THE JUDGMENTS OF THE MADRAS AND CALCUTTA HIGH COURT S TAKING IDENTICAL VIEW AND BY EXTENSIVELY QUOTING FROM THE SAID JUDGMENTS. 17. INSOFAR AS JUDGMENT OF THE ALLAHABAD HIGH COURT IS CONCERNED, READING THEREOF WOULD REFLECT THAT THE HIGH COURT, AFTER NO TICING THE FACT THAT SINCE THE AMOUNTS HAD ALREADY BEEN PAID, IT STRAIGHTAWAY CONC LUDED, WITHOUT ANY DISCUSSION, THAT SECTION 40(A)(IA) WOULD APPLY ONLY WHEN THE AMOUNT IS 'PAYABLE' AND DISMISSED THE APPEAL OF THE DEPARTMEN T STATING THAT THE QUESTION OF LAW FRAMED DID NOT ARISE FOR CONSIDERATION. NO D OUBT, THE SPECIAL LEAVE PETITION THEREAGAINST WAS DISMISSED BY THIS COURT I N LIMINE. HOWEVER, THAT WOULD NOT AMOUNT TO CONFIRMING THE VIEW OF THE ALLA HABAD HIGH COURT (SEE V.M. SALGAOCAR & BROS. (P.) LTD. V. CIT [2000] 243 ITR 383/110 TAXMAN 67 (SC) AND SUPREME COURT EMPLOYEES WELFARE ASSOCIATION V. UNIO N OF INDIA [1989] 4 SCC 187 . 18. IN VIEW OF THE AFORESAID DISCUSSION, WE HOLD THAT THE VIEW TAKEN BY THE HIGH COURTS OF PUNJAB & HARYANA, MADRAS AND CALCUTT A IS THE CORRECT VIEW AND THE JUDGMENT OF THE ALLAHABAD HIGH COURT IN VECTOR SHIPPING SERVICES (P) LTD. (SUPRA) DID NOT DECIDE THE QUESTION OF LAW CORRECTL Y. THUS, INSOFAR AS THE ITA 4537/MUM/2016 7 JUDGMENT OF THE ALLAHABAD HIGH COURT IS CONCERNED, WE OVERRULE THE SAME. CONSEQUENCES OF THE AFORESAID DISCUSSION WILL BE TO ANSWER THE QUESTION AGAINST THE APPELLANT/ASSESSEE THEREBY APPROVING TH E VIEW TAKEN BY THE HIGH COURT. THE LEARNED DR DID NOT RAISE ANY OBJECTION TO THE DISMISSAL OF GROUND NO. 1 ON ACCOUNT OF HONBLE SUPREME COURT DECISION IN THE CASE OF PALAM GAS SERVICE (SUPRA) . AFTER HEARING BOTH THE PARTIES, W E ORDER DISMISSAL OF GROUND NO. 1 ON MERITS IN VIEW OF BINDING DECISION OF HON BLE SUPREME COURT IN THE CASE OF PALAM GAS SERVICE (SUPRA) WHEREIN ISSUE IS DECIDED AGAINST THE ASSESSEE AS DETAILED ABOVE. WE , THEREFORE, DISMISS GROUND NO. 1 ON MERITS BY DECIDING THE SAME AGAINST ASSESSEE. THIS ISSUE IS D ECIDED AGAINST THE ASSESSEE. WE ORDER ACCORDINGLY. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E CARRIED ON THE BUSINESS OF RETAIL TRADING IN FABRICS IN THE PROPRIETARY CON CERN M/S R.S. SYNTEX. DURING THE COURSE OF ASSESSMENT PROCEEDINGS U/S 143(3) OF 1961 ACT, THE A.O. OBSERVED THAT DURING THE PREVIOUS YEAR UNDER CONSID ERATION, THE RESIDENTIAL FLAT SITUATED AT B-201, 2 ND FLOOR RUNWAL TOWERS CHS LTD., LBS MARG, MULUND (W), MUMBAI WAS SOLD FOR A CONSIDERATION OF RS. 60 LACS. THE AGREEMENT FOR SALE DATED 23.07.2010 WAS FILED BEFORE THE A.O. WHI CH REVEALED THAT THERE WERE NAMES OF THREE PERSONS NAMELY MR. PRAHLADRAI B HARTHIYA, ROOPAM PRAHLADRAI BHARTHIYA AND MRS. USHA P. BHARTHIYA AS TRANSFERORS OF THE SAID FLAT. THE ASSESSEE CONTENDED THAT THE ENTIRE PAYME NT TOWARDS THE PURCHASE OF FLAT WAS MADE BY MR. PRAHLADRAI BHARTHIYA ONLY AND HENCE THE ENTIRE SALE CONSIDERATION OF RS. 60 LACS WAS CREDITED TO THE BA NK O/D ACCOUNT OF MR. PRAHLADRAI BHARTHIYA. THE A.O. CONSIDERED THE SUBM ISSION OF THE ASSESSEE AND OBSERVED AS UNDER:- I) THOUGH THE ASSESSEE CLAIMS THAT THE ENTIRE PURCHASE COST OF THE FLAT WAS MET BY MR.PRALHADRAI BHARTIYA ONLY, NOTHING ITA 4537/MUM/2016 8 HAS BEEN KEPT IN SUPPORT THEREOF ON RECORD, SUCH AS , THE PHOTO COPY OF THE RELEVANT PAGE OF THE BANK STATEME NT, EVIDENCING THE OUTFLOW OF FUNDS TOWARDS AGREEMENT D ATED 29.11.1999 MADE AND ENTERED INTO WITH M/S. RUNWAL CHEMBERS, CHEMBUR, MUMBAI-400072, COPY OF THE ANNUA L ACCOUNTS IN GENERAL AND THE BALANCE SHEET IN PARTIC ULAR OF MR.PRALHADRAI BHARTIYA ETC. II. THE ASSESSEE FAILED TO FILE THE PHOTO COPY OF T HE AGREEMENT DATED 29.11.1999. III. THE ASSESSEE FAILED TO QUOTE THE PURCHASE COST OF THE FLAT. IV) THE QUANTUM OF THE AMOUNT TOWARDS SALE CONSIDER ATION RECEIVED BY EACH OF THE TRANSFEROR NO WAY LEAD TO A N ANSWER TO MILLION DOLLAR QUESTION AS TO 'IN WHOSE HANDS, T HE CAPITAL GAINS TAX WILL BE CHARGED'. THE A.O. OBSERVED THAT THE ASSESSEE HAS NOT BROUGHT ON RECORD SUCH AS PHOTOCOPY OF THE PURCHASE AGREEMENT DATED 29 TH NOVEMBER, 1999 ENTERED INTO WITH M/S RUNWAL CHAMBERS FOR PURCHASE OF SAID FLAT B-201, 2 ND FLOOR RUNWAL TOWERS CHS LTD., LBS MARG, MULUND (W), MUMBAI . THU S, THE A.O. ADOPTED A SUM OF RS. 20 LACS AS ASSESSEES SHARE IN SALES CON SIDERATION FOR ARRIVING AT THE WORKING OF THE AMOUNT OF LONG TERM CAPITAL GAIN ON SALE OF SAID FLAT AND NO CREDIT WAS GIVEN TOWARDS INDEXED COST OF ACQUISITIO N AND HENCE THE LONG TERM CAPITAL GAIN OF RS 20 LACS ( BEING 1/3) WAS BROUGHT TO TAX BY THE AO VIDE ASSESSMENT ORDER DATED 28-02-2014 PASSED U/S 143(3) OF 1961 ACT. 5. AGGRIEVED BY THE ASSESSMENT ORDER DATED 28-02-20 14 PASSED BY THE A.O. U/S 143(3) OF 1961 ACT, THE ASSESSEE FILED FIRST AP PEAL BEFORE THE LD. CIT(A). 6.THE ASSESSEE REITERATED THE SUBMISSION MADE BEFOR E THE A.O. AND SUBMITTED THAT THE SAID FLAT B-201, 2 ND FLOOR RUNWAL TOWERS CHS LTD., LBS MARG, MULUND (W), MUMBAI WAS OWNED BY MR. PRAHLADRAI BHAR THLYA AND THE ENTIRE PURCHASE PRICE FOR THE FLAT I.E. RS.14,12,951/- WAS PAID BY MR. PRAHLADRAL ITA 4537/MUM/2016 9 BHARTHLYA ALONE. IT WAS SUBMITTED THAT THE ASSESSEE AND MRS. USHA P. BHARTIYA DID NOT CONTRIBUTE ANYTHING AND THEREFORE THEY DID NOT HAVE ANY RIGHT IN THE SAID FLAT. MR. PRAHLADRAI BHARTHIA HAD MORTGAGED THE FLAT AND OBTAINED THE LOAN FROM KARUR VYSYA BANK AND OUT OF THE SALE PROCEEDS OF RS.60 LACS RECEIVED FROM SALE OF THE SAID FLAT, RS. 55 LACS WERE DIRECTLY DEPOSITED IN THE BANK TOWARDS DISCHARGE OF LOANS TA KEN BY SHRI. PAHLADRAI BHARTHIYA. IT WAS FURTHER SUBMITTED THAT THE SAID F LAT WAS NEVER SHOWN IN THE BALANCE SHEET OF THE ASSESSEE BUT WAS REFLECTED AS AN ASSET IN THE BALANCE SHEET OF MR. PRAHLADRAI BHARTLVA. THE ASSESSEE SUB MITTED THAT THE COPIES OF THE BALANCE SHEET FOR THE ASSESSMENT YEAR 2003-04 O F MR. PRAHLADRAI BHARTIYA HAD BEEN FILED WHICH SHOWED THE FLAT AS OFFICE PREM ISES VALUED AT 14,12,951/- IN THE BALANCE SHEET. THE LD. CIT(A) OBSERVED THAT THE PURCHASE DEED FOR PURCHASE OF THIS FLAT WAS NOT PRODUCED EITHER BEFOR E THE A.O. OR BEFORE THE LD. CIT(A). THE LEARNED CIT(A) OBSERVED THAT EVEN IF PU RCHASE DEED IS NOT PRODUCED BUT SINCE THE ASSESSEE HAS SOLD THE PROPER TY, CLEARLY INDICATE THAT THE ASSESSEE HAD A RIGHT IN THE PROPERTY AND IN THE ABSENCE OF THE DETERMINATION OF SHARES, IT WAS PRESUMED THAT HIS S HARE WOULD BE EQUAL TO 1/3 RD AS THERE WERE THREE CO-OWNERS. THE LD.CIT(A) OBSER VED THAT THE CONTENTION OF THE ASSESSEE THAT THE ASSESSEE DID NO T MADE ANY PAYMENT TOWARDS THE PURCHASE OF FLAT WAS NOT SUPPORTED BY A NY EVIDENCE. IT WAS ALSO OBSERVED THAT THE FLAT HAD BEEN SOLD FOR A CONSIDER ATION OF RS. 60 LACS BUT NO CAPITAL GAIN HAD BEEN PAID BY ANY OF THE PARTIES. MR. PRAHLADRAI BHARTIYA HAD NOT FILED THE RETURN OF INCOME WITH THE REVENUE FOR THE IMPUGNED ASSESSMENT YEAR AND NO TAXES HAVE BEEN PAID, HENCE, THE LD. CI T(A) UPHELD THE ADDITION MADE BY THE A.O. , VIDE APPELLATE ORDER DATED 23-03 -2016 PASSED BY THE LEARNED CIT(A). 7. AGGRIEVED BY THE APPELLATE ORDER DATED 23-03-201 6 PASSED BY THE LD. CIT(A), THE ASSESSEE FILED AN APPEAL BEFORE THE TRIBUNAL. ITA 4537/MUM/2016 10 8. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE FLAT WAS PURCHASED IN THE YEAR 1999 AND THE AGREEMENT FOR PURCHASE OF THE FLAT WAS ENTERED INTO BY THREE PERSONS NAMELY MR. PRAHLADRAI BHARTIYA, MR . ROOPAM PRAHLADRAI BHARTIYA AND MRS. USHA P. BHARTIYA. THE LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE DID NOT CONTRIBUTED ANY AMOUNT NOR HIS MOTHER MRS. USHA P. BHARTIYA CONTRIBUTED ANY AMOUNT TOWARD S PURCHASE OF THE SAID FLAT . IT IS SUBMITTED THAT THE ENTIRE SALE CONSIDE RATION WAS CREDITED TO THE BANK ACCOUNT OF MR. PRAHLADRAI BHARTIYA. THE ASSES SEE BROUGHT ON RECORD AGREEMENT DATED 29-11-1999 FOR PURCHASE OF FLAT. TH E COPY OF AGREEMENT FOR SALE WITH RUNWAL ESTATES P. LTD. IS PLACED ON RECOR D VIDE PAPER BOOK PAGE 48- 92. IT WAS SUBMITTED THAT THE SAID AGREEMENT DATED 29-11-1999 FOR PURCHASE OF THE SAID FLAT WAS NOT PRODUCED BEFORE THE A.O. . COPY OF AGREEMENT DATED 23-07-2010 FOR SALE OF THE SAID FLAT IS PLACED ON R ECORD AT PAPER BOOK PAGE 97 TO 123. IT IS SUBMITTED THAT LOAN WAS OBTAINED FRO M KARUR VYASA BANK AGAINST MORTGAGE OF THE SAID FLAT. IT WAS SUBMITTED THAT FATHER OF THE ASSESSEE PURCHASED THE SAID FLAT IN THE YEAR 1999 WHICH WAS SOLD IN THE YEAR 2010. OUR ATTENTION WAS INVITED TO PAPER BOOK PAGE 106 WH EREBY SHRI PRAHLADRAI BHARTHIA HAS BEEN SHOWN AS OWNER AS REGISTERED HOL DER OF THE SHARES IN SOCIETY. OUR ATTENTION WAS ALSO DRAWN TO PAPER BOO K PAGE 36 WHEREBY STATEMENT OF SCHEDULE OF FIXED ASSETS AND DEPRECIAT ION FOR FINANCIAL YEAR 2002- 03 IS PLACED OF SHREE KESHAV TEXTILE , WHEREIN OFF ICE PREMISES OF RS. 14,21,951/- IS SHOWN. IT IS SUBMITTED THAT SH. PRAH ALADRAI BHARTHIYA IS PROPRIETOR OF SHREE KESHAV TEXTILES., FOR WHICH OUR ATTENTION TO THAT EFFECT IS DRAWN TO TAX-AUDIT REPORT DATED 06-10-2003 WHICH IS PLACED IN PAPER BOOK /PAGE 25. IT IS SUBMITTED THAT OLD RECORDS HAVE BE EN SEIZED IN A CRIMINAL CASE AS THERE WAS SOME PROPERTY DISPUTE AND THE SAME IS NOW NOT AVAILABLE. OUR ATTENTION WAS DRAWN TO PAPER BOOK PAGE 56 OF THE AG REEMENT FOR SALE CLAUSE 5.2 WHEREIN PURCHASE CONSIDERATION FOR PURCHASE OF THE FLAT IS MENTIONED. IT IS SUBMITTED THAT MR. PRAHLADRAI BHARTHIYA HAS ALSO NO T FILED RETURN OF INCOME AND NO TAXES HAD BEEN PAID BY ANY OF THE THREE PERS ONS NAMELY MR. ITA 4537/MUM/2016 11 PRAHLADRAI BHARTHIYA, MR. ROOPAM PRAHLADRAI BHARTHI YA AND MRS. USHA P. BHARTHIYA WHOSE NAME APPEAR IN PURCHASE AND SALE DE ED OF THE SAID PROPERTY. THE LD. COUNSEL ALSO DREW OUR ATTENTION TO LETTER D ATED 23 RD DECEMBER, 2013, 17 TH JANUARY 2014 AND 29 TH JANUARY 2014 WHICH WERE SUBMITTED BEFORE THE A.O. WHEREIN ALL THE SAID FACTS WERE NARRATED. THE SAID REPLIES FILED BEFORE THE AO ARE PLACED IN PAPER BOOK/PAGE 9-15.IT IS SUBMITT ED THAT IN ALTERNATIVE WITHOUT PREJUDICE , IF THE ISSUE IS DECIDED AGAINST THE ASSESSEE , THEN IN THAT CASE , THE ASSESSEE SHALL BE ALLOWED BENEFIT OF DED UCTION OF COST OF THE FLAT(ASSESSEES SHARE OF 1/3) AND INDEXATION BENEFI T SHOULD BE GRANTED TO THE ASSESSEE. IT IS SUBMITTED THAT NO SANCTION LETTER O F THE BANK IS AVAILABLE NOR ANY BANK STATEMENTS OF PRAHALADRAI BHARTHIYA ARE AV AILABLE. THE LD. COUNSEL FOR THE ASSESSEE, IN THE REJOINDER, SUBMITTED THAT AUDITED BALANCE SHEET OF FATHER OF THE ASSESSEE NAMELY MR. PRAHLADRAI BHARTI YA WAS FILED FOR FINANCIAL YEAR 2002-03 . 9. THE LD. D.R. SUBMITTED THAT THE PURCHASED DEED W AS NOT SUBMITTED BEFORE THE A.O. AND ALSO WAS NOT SUBMITTED BEFORE T HE LD. CIT(A). IT WAS SUBMITTED THAT THE ASSESSEE HAS NOT FILED ANY EVIDE NCE THAT THE ENTIRE PAYMENT FOR PURCHASE OF THE FLAT WAS MADE BY THE FA THER OF THE ASSESSEE. THE LEARNED DR SUPPORTED THE ORDERS OF AUTHORITIES BELO W. HE FAIRLY AGREED THAT IF THE SHARE OF SALE OF THE SAID FLAT IS TO BE BROUGHT TO TAX IN THE HANDS OF THE ASSESSEE, THEN THE ASSESSEE WILL BE ENTITLED FOR SH ARE IN PURCHASE PRICE OF THE SAID FLAT. IT IS SUBMITTED THAT IT IS AN ADMITTED P OSITION THAT NONE OF THE THREE CO-OWNERS OF THE FLAT PAID CAPITAL GAIN TAX ON SALE OF THE FLAT.IT WAS SUBMITTED THAT NAME OF THE ASSESSEE IS COMING IN SALE AND PUR CHASE AGREEMENT. IT IS SUBMITTED THAT IT IS A JOINT FAMILY WHO IS LIVING T OGETHER AND EACH OWNER HAS 1/3 SHARE. 10. WE HAVE CONSIDERED RIVAL CONTENTION AND ALSO PE RUSED THE MATERIAL AVAILABLE ON RECORD. WE HAVE OBSERVED THAT THE ASS ESSEE HAS IN ITS NAME ITA 4537/MUM/2016 12 JOINTLY WITH HIS FATHER AND MOTHER, A FLAT SITUATE D AT 201, B-201, RUNWAL TOWERS CHS LTD., LBS MARG, MULUND (W), MUMBAI WHICH WAS SOLD FOR A CONSIDERATION OF RS. 60 LACS DURING THE PREVIOUS YE AR RELEVANT TO THE IMPUGNED ASSESSMENT YEAR ON 23-07-2010. THE SAID FL AT WAS PURCHASED IN THE NAME OF THESE THREE OWNERS IN THE YEAR 1999 ON 29-11-1999. THE NAME OF THE ASSESSEE IS APPEARING IN PURCHASE DEED FOR PURC HASE OF FLAT AS WELL SALE DEED FOR SALE OF FLAT ALONG WITH NAME OF MR. PRAHLA DRAI BHARTIYA, AND MRS. USHA P. BHARTIYA WHO ARE FATHER AND MOTHER OF THE A SSESSEE. THE SAID DEEDS FOR PURCHASE AND SALE OF THE FLAT UNDER CONSIDERATI ON ARE PLACED IN PAPER BOOK FILED WITH THE TRIBUNAL. IT IS THE CONTENTION OF TH E ASSESSEE THAT THE ASSESSEE HAS NOT MADE ANY PAYMENT FOR PURCHASE OF THE SAID F LAT WHILE HIS NAME IS ONLY ADDED FOR THE SAKE OF CONVENIENCE BEING THE FL AT OWNED BY THE FAMILY. THE TWO OTHER PERSONS WHO ARE JOINTLY HOLDING THE FLAT ARE MR. PRAHLADRAI BHARTIYA AND MRS. USHA P. BHARTIYA WHO ARE FATHER AND MOTHE R OF THE ASSESSEE. THUS, THE FLAT WAS JOINTLY OWNED BY CLOSE FAMILY MEMBERS OF THE ASSESSEE AND THE ASSESSEE HIMSELF, WHICH IS NOT UNUSUAL IN INDIAN CO NTEXT. IT IS THE SAY OF THE ASSESSEE THAT FATHER OF THE ASSESSEE PAID ENTIRE CO NSIDERATION FOR PURCHASE OF THIS FLAT IN THE YEAR 1999. THE ASSESSEE COULD NOT PRODUCE BANK STATEMENT OR ANY OTHER COGENT EVIDENCES TO SUBSTANTIATE THAT THE ENTIRE PAYMENT OF THIS FLAT WAS MADE BY MR PRAHALADRAI BHARTHIYA IN THE YEAR 19 99. THE ASSESSEE HAS PRODUCED INCOME TAX RETURN FOR ASSESSMENT YEAR 2003 -04 OF HIS FATHER , WHEREIN ONLY OFFICE PREMISES RS. 14,12,925/- IS M ENTIONED(PAPER BOOK/PAGE 36), WHEREIN NO OTHER DETAILS WHATSOEVER ARE MENTI ONED. THIS PIECE OF EVIDENCE CLAIMED BY THE ASSESSEE IS AN UNSUBSTANTIA TED/UNVERIFIABLE DOCUMENTS AND CANNOT BE RELIED UPON TO GIVE RELIEF TO THE ASSESSEE , UNLESS IT IS CORROBORATED INDEPENDENTLY. THE ASSESSEE HAS PRO DUCED PURCHASE AGREEMENT DATED 29-11-1999 FOR THE FIRST TIME BEFOR E TRIBUNAL WHICH NEEDS VERIFICATION BY AUTHORITIES BELOW AND IS A VALUABLE DOCUMENTS FOR ADJUDICATING THIS ISSUE BEFORE US. WE FIND THAT THE ASSESSEE HA S PRODUCED THE SALE DEED DATED 23 RD JULY, 2010 WHICH CLEARLY SHOWS VIDE CLAUSE (C), (D ) & (E) THAT THE ITA 4537/MUM/2016 13 ASSESSEE IS THE CO-OWNER AMONG THE THREE PARTIES I. E. ASSESSEES FATHER AND MOTHER. LOAN WAS TAKEN FROM THE BANK BY ALL THE TH REE PARTIES WHICH FACT ALBEIT DISPUTED BY THE ASSESSEE IS , HOWEVER, EMANA TING FROM THE RECORDS. THE SAID CLAUSES OF THE SALE AGREEMENT DATED 23-07-2010 ARE REPRODUCED HEREUNDER (PAGE 98/PB) : (C) INITIALLY TRANSFEROR NO. 1, 2 & 3 HAVE JOINTLY PURCHASED AND ACQUIRED THE SAID FLAT FROM THE PROMOTER M/S RUNWAL ESTATE P RIVATE LIMITED, A COMPANY INCORPORATED AND REGISTERED IN INDIA AND HA VING ITS REGISTERED OFFICE SITUATE AT RUNWAL CHAMBERS, FIRST ROAD, CHEM BUR, MUMBAI- 400072 BY VIRTUE OF AN AGREEMENT DATED 29 TH DAY OF NOVEMBER , 1999. THE SAID AGREEMENT IS DULY REGISTERED WITH THE JURI SDICTIONAL SUB REGISTRAR. (D) THE TRANSFEROR 1, 2 & 3 HAVE AVAILED FINANCIAL ASSISTANCE FROM KARUR VYSYA BANK LTD AGAINST MORTGAGE/CHARGE ON THE SAID FLAT AND SAID SHARES. (E) THE TRANSFEROR HAVE AGREED TO CLEAR ALL LOAN LI ABILITY OF KARUR VYSYA BANK LTD ON THE SAID FLAT , AND WILL GIVE CLEAR , M ARKETABLE TITLE FREE FROM ENCUMBRANCES AND VACANT POSSESSION OF THE SAID FLAT PERUSAL OF THE SALE AGREEMENT DATED 23-07-2010 LEAV ES NO DOUBT THAT ALL THE THREE PERSONS NAMELY MR. PRAHLADRAI BHARTIYA, MR. R OOPAM PRAHLADRAI BHARTIYA AND MRS. USHA P. BHARTIYA HAVE OWNERSHIP R IGHT , TITLE AND INTEREST IN THE SAID FLAT ALONG WITH THEY JOINTLY AVAILED LO AN FROM KARUR VYSYA BANK UNLESS SAID PRESUMPTION IS REBUTTED BY THE ASSESSEE WITH COGENT EVIDENCES. THE ASSESSEES FATHER HAS NOT FILED INCOME TAX RETU RN FOR THE YEAR UNDER CONSIDERATION AND CAPITAL GAIN EARNED ON THIS FLAT WAS NOT DECLARED TO THE ITA 4537/MUM/2016 14 REVENUE , AND ONLY ONE YEAR RECORDS I.E. FOR ASSESS MENT YEAR 2003-04 OF FATHER ARE PRODUCED AND THAT ALSO DID NOT ESTABLISH ES THAT THE FATHER OF THE ASSESSEE HAS DECLARED THIS FLAT IN THE SAID RETURN OF INCOME AS GENERAL DESCRIPTION OFFICE PREMISES IS MENTIONED . NO E VIDENCE IS BROUGHT ON RECORD WHICH COULD SHOW THAT THE PAYMENT WERE MADE BY THE ASSESSEES FATHER AS NO BANK STATEMENT OF FATHER IS PRODUCED BY THE ASSESSE E. NOR BANK STATEMENT WHEREIN PROCEEDS OF THE SALE OF OFFICE ARE CREDITED ARE BROUGHT ON RECORD. ANY ASSUMPTION OF THE FACTS IN THE ABSENCE OF EVIDENCE WILL BE CONTRARY TO MATERIAL ON RECORDS AND SHALL BE IN THE REALM OF CONJECTURES AND SURMISES. IT IS INCUMBENT ON THE ASSESSEE TO HAVE BROUGHT ON RECORD ALL THE EVIDENCES WHEREAS THE ASSESSEE DID NOT BROUGHT ON RECORD ANY EVIDENCE TO REBUT THE PRESUMPTION WHICH IS AGAINST THE ASSESSEE THAT THE ASSESSEE IS ONE OF THE CO- OWNER OF THE SAID FLAT AS IS EMANATING FROM PURCHAS E AND SALE DEED AS WELL LOAN OBTAINED BY THE ASSESSEE AGAINST THE MORTGAGE OF SAID FLAT FROM KARUR VYSYA BANK LIMITED. THE ENTIRE SALE CONSIDERATION OF RS. 60 LACS WAS CLAIMED TO BE CREDITED TO THE BANK O/D ACCOUNT OF MR. PRALH ARAI BHARTIYA , WHILE THE SALE AGREEMENT CLEARLY STIPULATES THAT ALL THE THRE E TRANSFEROR HAVE AVAILED FINANCIAL ASSISTANCE FROM KARUR VYSYA BANK AND ALL OF THREE HAVE DECIDED TO CLEAR THE LOAN. THE DOCUMENTS OF BANK LOAN ARE NOT BROUGHT ON RECORD ON THE PRETEXT THAT THERE WAS SOME DISPUTE WITH THE BANK A ND HENCE THE BANK IS NOT PROVIDING BANK STATEMENTS / LOAN DETAILS. THE PURCH ASE AND SALE DOCUMENTS LEAVE NO ROOM OF DOUBT THAT THE FLAT IS JOINTLY OWN ED BY ALL THE THREE FAMILY MEMBERS NAMELY MR. PRAHLADRAI BHARTIYA, MR. ROOPAM PRAHLADRAI BHARTIYA AND MRS. USHA P. BHARTIYA . THE BURDEN OF PROOF AND ONUS OF PROOF IS ON THE ASSESSEE TO PROVE THE FACTS AS THESE FACTS ARE ESPE CIALLY WITHIN KNOWLEDGE OF THE ASSESSEE. THE PRESUMPTION U/S 106 OF INDIAN EVI DENCE ACT, 1872 SHALL APPLY. SECTION 106 OF INDIAN EVIDENCE ACT ,1872 CLE ARLY STIPULATES AS UNDER: 106. BURDEN OF PROVING FACT ESPECIALLY WITHIN KNOW LEDGE ITA 4537/MUM/2016 15 WHEN ANY FACT IS ESPECIALLY WITHIN THE KNOWLEDGE OF ANY PERSON, THE BURDEN OF PROVING THAT FACT IS UPON HIM. ILLUSTRATIONS (A)**** (B) A IS CHARGED WITH TRAVELING ON A RAILWAY WITHOU T A TICKET. THE BURDEN OF PROVING THAT HE HAD A TICKET IS ON HIM. THE ASSESSEE WAS NOT ABLE TO DISCHARGE BURDEN OF PR OOF/ONUS OF PROOF CAST U/S 106 OF 1872 ACT AS THE ASSESSEE DID NOT FILE DOCUMENTS FOR SHOWING THA T THE FLAT WAS EXCLUSIVELY OWNED BY FATHER OF THE ASS ESSEE AND PAYMENTS FOR ACQUISITION OF THE FLAT WAS EXCLUSIVELY PAID BY FAT HER OF THE ASSESSEE. THE ASSESSEE COULD NOT REBUT THE PRESUMPTION OF OWNERSH IP OF THE FLAT JOINTLY WITH THE MOTHER AND FATHER OF THE ASSESSEE , WITH COGENT EVIDENCES THAT THE ASSESSEE NAME IS MERELY INCLUDED IN THE SAID FLAT F OR NAME SAKE . THE ASSESSEE ONLY FILED ONE UNSUBSTANTIATED ACCOUNTS FO R ASSESSMENT YEAR 2003- 04 OF FATHER OF THE ASSESSEE WHICH ONLY SHOWED GENE RAL DESCRIPTION OFFICE PREMISES WITHOUT HAVING ANY DETAILS OF THE SAID FL AT AND VERIFICATION FROM THE REVENUE THAT THE TOTAL CONSIDERATION WAS PAID BY TH E ASSESSEES FATHER WHICH WAS REFLECTED IN HIS STATEMENT OF AFFAIRS/BALANCE S HEET FILED WITH REVENUE. THE FATHER OF THE ASSESSEE HAD ALSO NOT PAID TAXES ON CAPITAL GAIN EARNED FROM THE SALE OF THE SAID FLAT AND HENCE NO TAXES ON THI S SALE OF FLAT IS PAID TO REVENUE. IN VIEW OF PECULIAR FACTS AND CIRCUMSTANC ES OF THE CASE, THE CONTENTIONS OF THE ASSESSEE CANNOT BE ACCEPTED. THE ASSESSEE HAS HOWEVER FILED PURCHASE AGREEMENT FOR THE PURCHASE OF THIS F LAT FOR THE FIRST TIME BEFORE THE TRIBUNAL. WE HAVE PERUSED BOTH THE SALE AGREEM ENT AND PURCHASE AGREEMENT WHICH ARE PLACED ON RECORD IN PAPER BOOK FILED WITH THE TRIBUNAL. THUS, WE ARE OF THE CONSIDERED VIEW THAT THE CAPITA L GAIN ON SALE OF ASSESSEES SHARE IN THE SAID FLAT ( BEING 1/3 )IS TO BE BROUGH T TO TAX IN THE HAND OF THE ASSESSEE. HOWEVER, THE A.O. IS DIRECTED TO GIVE RE LIEF FOR THE COST OF ACQUISITION ITA 4537/MUM/2016 16 OF THE FLAT AND COST INFLATION INDEX , AS PER PROV ISIONS OF SECTION 48 & 49 OF THE ACT IN ACCORDANCE WITH LAW AFTER VERIFICATION O F THE PURCHASE DEED DATED 29-11-1999 AND OTHER COGENT AND CREDIBLE MATERIAL B ROUGHT ON RECORD BY THE ASSESSEE. WE ORDER ACCORDINGLY. 11. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IN ITA NO. 4537/MUM/2016 FOR ASSESSMENT YEAR 2011-12 IS PARTLY ALLOWED FOR S TATISTICAL PURPOSES AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH SEPTEMBER, 2017. # $% &' 29.09.2017 ( ) SD/- SD/- (JOGINDER SINGH) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER $ MUMBAI ; & DATED 29.09.2017 ! '#$% &%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. 9 ( ) / THE CIT(A)- CONCERNED, MUMBAI 4. 9 / CIT- CONCERNED, MUMBAI 5. <=( >>?@ , ?@ , $ / DR, ITAT, MUMBAI H BENCH 6. (BC D / GUARD FILE. / BY ORDER, < > //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , $ / ITAT, MUMBAI