Dr. Satish Deshpande, Mumbai V. AO, Ward 1(2) Nashik, Nashik

ITA 455/PUN/2012

• Counselvise Citation: 45524514 RSA 2012
• Duration Of Justice: 3 year(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-03-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 04-02-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 05-03-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: NIKHIL PATHAK SUHAS BORA
• Keywords: Sale consideration of property below Jantri Value
• Section: 143(3); 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.455/PN/2012 (ASSESSMENT YEAR : 2006-07) DR. SATISH DESHPANDE, 17-207, RAMKRISHNA NAGAR, S. V. ROAD, KHAR (W), MUMBAI 400 005. PAN : AJMPD4320L . APPELLANT VS. INCOME TAX OFFICER, WARD- 1(2), NASHIK. . RESPONDENT ASSESSEE BY : MR. NIKHIL PATHAK / SUHAS BORA DEPARTMENT BY : MR. SANTOSH KUMAR DATE OF HEARING : 04-02-2015 DATE OF PRONOUNCEMENT : 30-03-2015 ORDER PER G. S. PANNU, AM THE CAPTIONED APPEAL BY THE ASSESSEE IS DIRECTED AG AINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-II, NASHIK DATED 13.01.2012 WHICH, IN TURN, HAS ARISEN FROM AN ORDER DATED 31.1 2.2009 PASSED BY THE ASSESSING OFFICER U/S 143(3) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT) PERTAINING TO THE ASSESSMENT YEAR 2006-07. 2. IN THIS APPEAL, ASSESSEE HAS RAISED THE FOLLOWIN G GROUNDS OF APPEAL :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE CIT (APPEALS) ERRED IN CONFIRMING THE ASSESSMENT OF CAP ITAL GAIN MADE BY THE ASSESSING OFFICER, IN THE APPELLANT'S INDIVIDUAL HA NDS. THE SAME IS NOT ASSESSABLE IN THE APPELLANT'S HANDS AND MAY BE DELE TED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE CIT (APPEALS) ERRED IN CONFIRMING THE ASSESSING OFFICER ASSESSING THE ENTIRE CAPITAL GAIN IN THE HANDS OF THE APPELLANT INDIVIDU ALLY. THE APPELLANT WAS NOT THE SOLE OWNER OF THE PROPERTY, AND THERE WERE 10 L EGAL HEIRS AMONG WHOM THE SALE PROCEEDS WERE DISTRIBUTED. THIS STANCE IS CONT RARY TO THE FACTS OF THE CASE, AND NOT AS PER THE APPLICABLE PROVISIONS OF T HE ACT. ITA NO.455/PN/2012 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE CIT (APPEALS) ERRED IN CONFIRMING THE ASSESSING OFFICER ASSESSING THE ENTIRE CAPITAL GAIN IN THE HANDS OF THE APPELLANT, WHEN AS PER 7/12 EXTRACTS, THE OWNERSHIP VESTS IN THE THREE MEMBERS. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE CIT (APPEALS) ERRED IN CONFIRMING AND THE LEARNED ASSES SING OFFICER ERRED IN ESTIMATING THE MARKET VALUE OF THE LAND AS AT RS.3, 66,100/-. THE APPELLANT PRAYS THAT THE SAME MAY BE ENHANCED AND THE ADDITIO N REDUCED TO THAT EXTENT. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, MODIFY AN Y OR ALL GROUNDS OF APPEAL. 3. AT THE TIME OF HEARING, THE LD. REPRESENTATIVE F OR THE ASSESSEE SUBMITTED THAT IN SO FAR AS THE GROUND OF APPEAL NO S.2 AND 4 ARE CONCERNED, THE APPELLANT DOES NOT WISH TO PRESS THE SAME. ACC ORDINGLY, THE GROUND OF APPEAL NO.2 AND 4 ARE DISMISSED AS NOT PRESSED. 4. IN THE RESIDUAL GROUND OF APPEAL, THE DISPUTE RE LATES TO INCOME BY WAY OF CAPITAL GAINS OF RS.18,41,483/- ASSESSED IN THE HANDS OF THE ASSESSEE WITH RESPECT TO THE SALE OF PROPERTY AT MHASARUL, TAL. N ASHIK ADMEASURING 5.50 ACRES. IT WAS FOUND THAT ASSESSEE SOLD THE SAID AG RICULTURAL LAND IN TERMS OF A SALE DEED DATED 24.12.2005 FOR A TOTAL CONSIDERATIO N OF RS.7,00,000/-. HOWEVER, BY APPLYING SECTION 50C OF THE ACT, THE AS SESSING OFFICER TREATED THE VALUE FOR THE STAMP VALUATION PURPOSES AS THE FULL VALUE OF CONSIDERATION FOR COMPUTING CAPITAL GAINS, SUCH VALUE BEING RS.36,61, 000/-. ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) CHALLENGING THE ASSESSMENT OF CAPITAL GAINS ON VARIOUS GROUNDS. THE PLEA OF THE ASSESSEE WAS THAT IT WAS AN ANCESTRAL PROPERTY WHICH WAS ORIGINALLY OWNED BY ON E SHRI TRIMBAK HARI DESHPANDE AND ON HIS DEATH ON 15.05.1937, IT WAS TR ANSFERRED BY INHERITANCE TO HIS 4 SONS AND 3 DAUGHTERS. HOWEVER, BY MUTUAL UNDERSTANDING THE PROPERTY WAS TRANSMITTED IN THE NAME OF ONE OF THE SONS ONLY, SHRI VINAYAK TRIMBAK DESHPANDE (BEING THE FATHER OF THE ASSESSEE ). AFTER THE DEATH OF SHRI VINAYAK TRIMBAK DESHPANDE ON 16.03.1993, IT WAS CLA IMED BY THE ASSESSEE THAT THE SAID PROPERTY WAS INHERITED BY ASSESSEE AL ONG WITH HIS BROTHER, SHRI AJIT V. DESHPANDE AND SISTER, SAU. ASHA NARHAR DANI . ASSESSEE SUBMITTED ITA NO.455/PN/2012 THAT HIS BROTHER AND SISTER PREPARED A GENERAL POWE R OF ATTORNEY (GPA) AND TRANSFERRED THE RIGHTS TO THE ASSESSEE. IN THIS BA CKGROUND, ASSESSEE POINTED OUT THAT THOUGH THE PROPERTY WAS SOLD BY HIM FOR RS .7,00,000/-, BUT AFTER DEDUCTING EXPENSES ON SALE THE BALANCE CONSIDERATIO N WAS REMITTED TO ALL THE 9 LEGAL HEIRS, WHEREBY ASSESSEE RECEIVED ONLY RS.1, 50,000/-. ASSESSEE ALSO ENCLOSED A CONFIRMATION FROM THE OTHER SET OF LEGAL HEIRS TO JUSTIFY SUCH DISTRIBUTION OF THE SALE CONSIDERATION. ON THIS BA SIS, IT WAS CANVASSED THAT THE ENTIRE CAPITAL GAINS WAS NOT ASSESSABLE IN THE HAND S OF THE ASSESSEE. THE CIT(A) HAS REJECTED THE AFORESAID PLEA OF THE ASSES SEE AND INSTEAD CONFIRMED THE ACTION OF THE ASSESSING OFFICER IN TREATING CAP ITAL GAIN OF RS.18,41,483/- AS ASSESSABLE IN THE HANDS OF THE ASSESSEE ALONE. THE FOLLOWING DISCUSSION IN THE IMPUGNED ORDER OF THE CIT(A) IS RELEVANT :- 6. I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORDE R, SUBMISSIONS OF THE APPELLANT AND THE REMAND REPORT. A PERUSAL OF GPA D T.24/12/2005 GIVEN TO THE APPELLANT BY HIS BROTHER SHRI. AJIT VINAYAK DESHPAN DE AND SISTER SMT. ASHA NARHAR DANI IN REGARD TO THE LAND IN QUESTION (2.20 HQ AT MHASARUL, TAL.NASHIK) REVEALS THAT THE APPELLANT WAS THE SOLE BENEFICIARY OF THE SALE PROCEEDS OF THE ABOVE REFERRED LAND. HE HAD SHOWN T HE SALE PROCEEDS OF RS.7 LAC IN HIS BALANCE SHEET ALSO. HE, HOWEVER, DID NOT OFFER CAPITAL GAIN TAX IN THE RETURN OF INCOME FILED BY HIM ON 22/05/2006. DURING THE ASSESSMENT PROCEEDINGS HE DID NOT PRODUCE THE CONFIRMATIONS OF THE VARIOUS PERSONS TO WHOM HE HAS CLAIMED TO HAVE GIVEN PART OF THE SALE PROCEEDS. THE APPELLANT HAS ALSO NOT FILED ANY COMMENTS ON THE REMAND REPOR T OF THE A.O. IN VIEW OF THE ABOVE THE CONFIRMATIONS FILED BY THE APPELLANT BEFORE ME CANNOT BE ADMISSIBLE U/R 46A OF THE IT RULES. ALL THESE CONFI RMATIONS SEEM TO HAVE BEEN OBTAINED AFTER THE FINALIZATION OF THE ASSESSMENT O RDER ON 29/12/2009 BUT BEFORE FILING APPEAL ON 03/02/2010 (SOME OF THE CON FIRMATIONS ARE DATED 18/02/2010, 04/02/2010, 11/02/2010). IN VIEW OF THE ABOVE, APPELLANT'S CLAIM THAT HE RECOVERED ONLY RS.1.5 LAC IS NOT SUSTAINABL E AND HENCE REJECTED. THE AO HAS RIGHTLY INVOKED THE PROVISIONS OF SEC 50C TO COMPUTE CAPITAL GAIN. HIS CALCULATION OF CAPITAL GAINS OF RS.18,41,483/- DOES NOT REQUIRE ANY INTERFERENCE. THE SAME IS CONFIRMED. 5. AGAINST THE AFORESAID, THE LD. REPRESENTATIVE FO R THE ASSESSEE HAS RAISED A SINGULAR PLEA BEFORE US. ACCORDING TO THE APPELLANT, ONLY 1/3 RD OF THE SHARE IN THE CAPITAL GAIN ON SALE OF PROPERTY IS AS SESSABLE IN THE HANDS OF THE ASSESSEE AS THE PROPERTY WAS INHERITED BY ASSESSEE ALONG WITH HIS BROTHER AND SISTER IN EQUAL PROPORTION. IT HAS ALSO BEEN C ANVASSED THAT THE GENERAL ITA NO.455/PN/2012 POWER OF ATTORNEY DATED 24.12.2005 EXECUTED BY THE ASSESSEES BROTHER AND SISTER ONLY EMPOWERS THE ASSESSEE TO FINALIZE THE S ALE TRANSACTION IN RESPECT OF THE ABOVE PROPERTY BUT IT DOES NOT GIVE HIM A RIGHT OVER THE PROPERTY MORE THAN HIS SHARE INHERITED FROM HIS FATHER I.E. 1/3 RD . THE LD. REPRESENTATIVE ALSO POINTED OUT THAT CLAUSE (8) OF THE SALE DEED DATED 24.12.2005 EXECUTED BY THE ASSESSEE ALSO MAKES A MENTION THAT THE CONSIDERATIO N OF RS.7,00,000/- PAID BY THE PURCHASER TO ASSESSEE INCLUDED THE SHARE REL ATING TO THE OTHER CO- OWNERS OF THE PROPERTY, NAMELY, ASSESSEES BROTHER, SHRI AJIT V. DESHPANDE AND ASSESSEES SISTER, SAU. ASHA NARHAR DANI. THE LD. REPRESENTATIVE POINTED OUT THAT THE AFORESAID POSITION WAS ALSO CA NVASSED BY THE ASSESSEE BEFORE THE CIT(A) BUT THERE IS NO FINDING ON THIS A SPECT THOUGH ALL THE AFORESAID MATERIAL WAS ON RECORD BEFORE THE LOWER AUTHORITIES . 6. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESEN TATIVE APPEARING FOR THE REVENUE HAS REFERRED TO THE DISCUSSION MADE BY THE CIT(A) IN PARA 6 OF HIS ORDER, WHICH WE HAVE ALREADY REPRODUCED IN THE EARLIER PART OF THIS ORDER AND IS NOT BEING REPEATED AGAIN FOR THE SAKE OF BRE VITY. IN NUTSHELL, THE LD. DEPARTMENTAL REPRESENTATIVE HAS REFERRED TO THE OBS ERVATION OF THE CIT(A) THAT THE GENERAL POWER OF ATTORNEY DATED 24.12.2005 VESTED THE ASSESSEE AS THE SOLE BENEFICIARY OF THE SALE PROCEEDS OF THE LA ND IN QUESTION. 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. OSTENSIBLY, ASSESSEE WAS INITIALLY AGGRIEVED WITH THE ACTION OF THE ASSESSING OFFICER IN ASSESSING A SUM OF RS.18,41,483/- AS CAPITAL GAIN O N VARIOUS COUNTS. SO HOWEVER, BEFORE US THE ONLY GRIEVANCE PROJECTED IS THAT THE ONLY 1/3 RD OF THE CAPITAL GAIN BE ASSESSED IN THE HANDS OF THE ASSESS EE, BEING HIS SHARE IN THE PROPERTY INHERITED FROM HIS FATHER, SHRI VINAYAK TR IMBAK DESHPANDE. IN THIS CONTEXT, WE HAVE PERUSED THE SALE DEED DATED 24.12. 2005 EXECUTED BY THE ASSESSEE AND THE OTHER TWO CO-OWNERS WHEREBY THE IM PUGNED PROPERTY HAS ITA NO.455/PN/2012 BEEN SOLD FOR A TOTAL CONSIDERATION OF RS.7,00,000/ -. THE RECITAL OF THE SALE DEED ITSELF MAKES IT CLEAR THAT ASSESSEE EXECUTED T HE SALE DEED ON HIS OWN BEHALF AND AS A GENERAL POWER OF ATTORNEY HOLDER ON BEHALF OF OTHER TWO CO- OWNERS, NAMELY, SHRI AJIT V. DESHPANDE AND SAU. ASH A NARHAR DANI, HIS BROTHER AND SISTER. CLAUSE (8) OF THE DEED ALSO MA KES IS CLEAR THAT THE TOTAL CONSIDERATION OF RS.7,00,000/- WAS PAID BY THE PURC HASER TO THE ASSESSEE WHICH INCLUDED THE SHARE OF CONSIDERATION OF THE OT HER TWO EXECUTANTS, I.E. ASSESSEES BROTHER AND SISTER. THE AFORESAID MATER IAL ON RECORD CLEARLY SUGGESTS THAT CAPITAL GAIN ON SALE OF THE AFORESAID PROPERTY CAN BE ASSESSED IN THE HANDS OF THE ASSESSEE ONLY TO THE EXTENT OF HIS SHARE BEING 1/3 RD SHARE. THE CIT(A), ON THE OTHER HAND, HAS STATED THAT THE GENERAL POWER OF ATTORNEY DATED 24.12.2005 GIVEN TO THE ASSESSEE BY HIS BROTH ER AND SISTER WITH REGARD TO THE IMPUGNED AMOUNT SHOWS THAT ASSESSEE BECAME T HE SOLE BENEFICIARY OF THE SALE PROCEEDS OF THE LAND. THEREFORE, AS PER T HE CIT(A), AMOUNT HAS BEEN RIGHTLY ASSESSED BY THE ASSESSING OFFICER. IN OUR CONSIDERED OPINION, HAVING REGARD TO THE CONTENTS OF THE GENERAL POWER OF ATTO RNEY DATED 24.12.2005, A COPY OF WHICH IS ON RECORD, THE AFORESAID FINDING O F THE CIT(A) IS UNTENABLE. THE GENERAL POWER OF ATTORNEY HAS BEEN EXECUTED BY THE ASSESSEES BROTHER AND SISTER IN HIS FAVOUR ONLY TO FINALIZE THE SALE TRANSACTION WITH SHRI SUNIL KISANRAO BAGUL, THE PURCHASER OF THE PROPERTY IN QU ESTION. IN VIEW OF THE AFORESAID FACT-POSITION, WHICH EMERGES FROM THE MAT ERIAL ON RECORD, WE THEREFORE FIND AMPLE FORCE IN ASSESSEES PLEA THAT CAPITAL GAIN BE ASSESSED IN HIS HANDS TO THE EXTENT OF HIS SHARE IN THE PROPERT Y, BEING 1/3 RD SHARE. THUS, WE SET-ASIDE THE IMPUGNED ORDER OF THE CIT(A) AND D IRECT THE ASSESSING OFFICER TO RE-WORK THE CAPITAL GAINS IN THE HANDS O F THE ASSESSEE IN ACCORDANCE WITH THE AFORESAID FINDING. NEEDLESS TO SAY, THE A SSESSING OFFICER SHALL ALLOW THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING BEAR D BEFORE QUANTIFYING THE CAPITAL GAINS ASSESSABLE IN THE HANDS OF THE ASSESS EE AS PER LAW. ITA NO.455/PN/2012 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED ON 30 TH MARCH, 2015. SD/- SD/- (SUSHMA CHOWLA) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED: 30 TH MARCH, 2015. SUJEET COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-II, NASHIK; 4) THE CIT-II, NASHIK; 5) THE DR B BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// ASSISTANT REGISTRAR I.T.A.T., PUNE