Motilal Roy, Cuttack V. DCIT, Cuttack

ITA 462/CTK/2011

• Counselvise Citation: 46222114 RSA 2011
• Duration Of Justice: 1 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-12-2011
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 17-11-2011
• Court: TRIBUNAL
• Department Lawyers: PARAMITA TRIPATHY
• Assessee Lawyers: D K SETHM SETH ARS
• Keywords: Gift; Principle of natural justice

Judgement Text

IN THE INC O ME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE : SHRI K.K.GUPTA, AM , AND SHRI K.S.S.PRASAD RAO, JM SL. NO. ITA NO. APPELLANT RESPONDENT A.Y. 1 ) 462/CTK/2011 MOTILAL ROY, C/O. RADHAGOVINDO ROY & CO., MIMCHOURI, CUTTACK 753 002 PAN: AATPR 3227 K DCIT, CIRCLE 2(1), CUTTTACK. 2005 -- 06 2 ) 463/CTK/2011 MADANLAL ROY, PAN: AAJPR 1392 M ADDRESS AS ABOVE. - DO - 2005 - 06 3 ) 464/CTK/2011 PANNALAL ROY, PAN: ACJPR 1391 J - DO - 2005 - 06 FOR THE ASSESSEES : SHRI D.K.SETH/M.SETH, ARS FOR THE DEPAR TMENT: SMT. PARAMITA TRIPATHY, DR DATE OF HEARING : 19.12.2011 DATE OF PRONOUNCEMENT : 22.12.2011 ORDER PER BENCH : ALL THESE APPEALS ARE FILED BY THE ASSESSEES HAVING BEEN AGGRIEVED BY THE ORDERS OF THE COMMISSIONER OF INCOME - TAX ( APPEALS) FOR THE ASSESSMENT YEAR 2005 - 06. SINCE THE ISSUES IN ALL THESE APPEALS ARE COMMON EXCEPT FOR DISPUTED AMOUNTS, THEY WERE HEARD TOGETHER AND DISPOSED BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. COMMON ISSUES HAVE BEEN RAISED BY THEM IN THE SE APPEALS, WHICH READ AS UNDER : 1. FOR THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, INITIATION OF PROCEEDING U/S.147 AND ASSESSMENT AS MADE U/S.143(3)/147 IS UNCALLED FOR AND UNWARRANTED AND UNJUSTIFIED. 2. FOR THAT THE ADDITION MADE UNDER THE HE AD LONG TERM CAPITAL GAIN IS ARBITRARY AND UNJUSTIFIED. 3. FOR THAT THE EXPLANATION AND SUBMISSION MADE BY THE APPELLANT SHOULD HAVE BEEN ACCEPTED. FOR THAT DISALLOWANCE OF ITA 462 TO 464/CTK/2011 (GROUP CASES) 2 CLAIM OF DEDUCTION U/S.48 OR IGNORING SUCH DEDUCTION IS HIGHLY UNJUSTIFIED. 4. FOR THAT THE LEARNED COMMISSIONER FAILED TO APPRECIATE THE CONTENTIONS OF THE APPELLANT AND IS NOT JUSTIFIED TO CONFIRM THE ASSESSMENT AND DISMISS THE APPEAL. 3. AT THE TIME OF HEARING, THE LEARNED AR OF THE ASSESSEE DID NOT PRESS THE ISSUE NO.1 REGARDING IN ITIATION OF PROCEEDINGS U/S.147 OF THE INCOME - TAX ACT,1961. THEREFORE, THE COMMON GROUND RAISED RELATING TO SAID ISSUE IN ALL THESE APPEALS, IS DISMISSED AS NOT PRESSED. 4. BOTH THE PARTIES WERE HEARD REGARDING THE OTHER COMMON ISSUES RAISED IN THE APPEALS AND THEIR LEGAL IMPLICATIONS. 5. ON CAREFUL CONSIDERATION OF THE MATERIAL MADE AVAILABLE TO THE TRIBUNAL AND ANALYZING THE SAME IN THE LIGHT OF THE SUBMISSIONS OF BOTH THE PARTIES, THE UNDISPUTED FACTS RELATING TO THE ISSUES ARE THAT ALL THE ASSESSEES ARE OWNER OF A LAND AND THEY HAD ENTERED INTO AN AGREEMENT WITH A DEVELOPER FOR CONSTRUCTION FLATS AND THE ASSESSEES, ACCORDING TO THE SAID AGREEMENT, WILL GET OF THE PARKING AREA OF THE CONSTRUCTED PROPERTY AND TWO FLATS IN THE FIRST FLOOR. AFTER COMPLETIO N OF THE CONSTRUCTION, THEY HAVE RECEIVED THE PROPERTY AS PER THE AGREEMENT AND FILED THE RETURN OF INCOME SHOWING THE CAPITAL GAINS ARISING OUT OF THIS AGREEMENT WHILE GIVING PROPERTY FOR DEVELOPMENT. BUT THE DEPARTMENTAL AUTHORITIES HAVE NOT AGREED FOR T HE CAPITAL GAINS RETURNED BY THE ASSESSEES. THE LEARNED CIT(A) ALSO CONFIRMED THE ASSESSMENT ORDERS PASSED BY THE ASSESSING OFFICER. THEREFORE, THE PRESENT APPEALS ARE FILED BY THE ASSESSEES BEFORE THE TRIBUNAL. 6. DURING THE COURSE OF HEARING THE LEARNED AR OF THE ASSESSEES HAS VEHEMENTLY ARGUED ASSAILING THE VIEWS TAKEN BY THE DEPARTMENTAL AUTHORITIES ON THE ASPECT OF CALCULATING THE CAPITAL GAINS TO BE TAXED IN THE HANDS OF THE ITA 462 TO 464/CTK/2011 (GROUP CASES) 3 ASSESSEES BY REITERATING WHAT HE HAD RAISED BEFORE THE DEPARTMENTAL AUTHORIT IES . THEREFORE, HE SOUGHT FOR SETTING ASIDE THE ASSESSMENT ORDERS BY ALLOWING THE APPEALS OF THE ASSESSEE. 7. CONTRARY TO THIS, THE LEARNED DR HAS ARGUED THAT THE ASSESSEES HAVE SUPPRESSED SOME IMPORTANT FACTUAL ASPECTS IN THE MATTER POINTING OUT THAT THE ASSESSEES HAVE RECEIVED FLATS FROM THE BUILDER AS GIFT AND THOSE FLATS WERE SOLD BY THE ASSESSEES. IN THAT VIEW OF THE MATER, THE VALUATION OF THE FLATS TAKEN BY THE DEPARTMENTAL AUTHORITIES AT NIL VALUE IS VERY MUCH CORRECT AND VALID IN LAW. HENCE, THE C ONTENTION OF THE ASSESSEES IS UNTENABLE IN LAW AND THEREFORE, THE DEPARTMENTAL AUTHORITIES HAVE NOT ACCEPTED THE SAME AND CONCLUDED THE CAPITAL GAIN TO BE ASSESSED IN THE HANDS OF THE ASSESSEES CORRECTLY. THEREFORE, HE SUBMITTED THAT THE IMPUGNED ORDERS AR E VERY MUCH RIGHT AND ARE NOT SUFFERING FROM ANY INFIRMITY REQUIRING INTERFERENCE. THUS CONTENDING, HE SOUGHT FOR UPHOLDING THE SAME BY DISMISSING THE APPEALS OF THE ASSESSEES. 8. AS A REJOINDER, THE LEARNED AR OF THE ASSESSEE HAS PLEADED THAT THERE IS SUB SEQUENT MODIFIED AGREEMENT IN WHICH THE PRESENT FLATS INVOLVED IN THE CALCULATION OF CAPITAL GAINS WERE HANDED OVER TO THE ASSESSEES. THIS ASPECT WAS NOT REQUIRED TO BE CLARIFIED TO THE AUTHORITIES THEREFORE IS NOT ABLE TO PLACE THE SAID SUBSEQUENT AGREEME NT BEFORE THE DEPARTMENT. 9. ON CAREFUL ANALYSIS OF THE ORDERS PASSED BY THE DEPARTMENTAL AUTHORITIES, IT IS FOUND THAT THE CALCULATION OF CAPITAL GAINS MADE BYTHE DEPARTMENTAL AUTHORITIES IS NOT IN ACCORDANCE WITH THE CONCERNED PROVISIONS AVAILABLE IN THE I.T.ACT FOR CALCULATION OF CAPITAL GAINS IN THE LIGHT OF THE DEVELOPMENT AGREEMENT ENTERED INTO BETWEEN THE ASSESSEES AND BUILDER. SINCE THE DR HAS BROUGHT TO THE NOTICE OF THE TRIBUNAL THAT THE FLATS SOLD BY THE ASSESSEES ARE NOT THE SHARE AS THEY HAVE M ENTIONED IN THE DEVELOPMENT ITA 462 TO 464/CTK/2011 (GROUP CASES) 4 AGREEMENT ENTERED INTO BY THE ASSESSEES AND BUILDER AND FLATS ACTUALLY SOLD BY THE ASSESSEES ARE RECEIVED BY THEM AS GIFT FROM THE DEVELOPER, THEREFORE BASING ON THAT FACT, THE CALCULATION OF CAPITAL GAINS WERE MADE BY THE DEPAR TMENTAL AUTHORITIES. SINCE THE ASSESSEES HAVE CONCEDED BEFORE THE TRIBUNAL THAT THERE IS ANOTHER SUBSEQUENT AGREEMENT MODIFYING THE AGREEMENT ENTERED INTO BETWEEN THE ASSESSEES AND DEVELOPER AND ACCORDING TO THE LATER AGREEMENT THE ASSESSEES HAVE RECEIVED THE FLATS SOLD BY THEM. HENCE, THE STAND TAKEN BY THE DEPARTMENT THAT THE FLATS SOLD BY THE ASSESSEE ARE NOT THE FLATS REFERRED TO IN THE DEVELOPMENT AGREEMENT IS NOT CORRECT. IN THESE FACTS AND CIRCUMSTANCES OF THE CASE, IT IS CLEAR THAT THERE ARE DIFFERE NT FACTUAL ASPECTS TAKEN INTO ACCOUNT BY THE ASSESSEES THAN THAT TAKEN BY THE DEPARTMENTAL AUTHORITIES. SINCE THE ASSESSEES ARE CONTENDING THAT THE ORIGINAL DEVELOPMENT AGREEMENT WAS SUBSEQUENTLY MODIFIED IN WHICH PROPERTY WAS RECEIVED BY THEM , WE ARE OF THE CONSIDERED VIEW THAT THESE MATTERS ARE FIT TO BE RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR DE NOVO CONSIDERATION OF THE ISSUE TAKING INTO ACCOUNT THE SUBSEQUENT MODIFIED AGREEMENT AS PLEADED BY THE ASSESSEES AND THE ASSESSEES ARE ALSO HEREBY DI RECTED TO PRODUCE THE SAID MODIFIED AGREEMENT ON WHICH BASIS THEY HAVE RECEIVED THE FLATS SUBJECT TO COMPUTATION OF CAPITAL GAINS AND PROVE THE RELEVANT FACTS BEFORE THE ASSESSING OFFICER. THE ASSESSING OFFICER IS HEREBY DIRECTED TO RECONSIDER THE ISSUE IN THE LIGHT OF THE MODIFIED AGREEMENT ENTERED INTO BY THE ASSESSEES WITH THE DEVELOPER AND PASS NECESSARY CONSEQUENTIAL ORDER AS PER LAW OF COURSE STRICTLY FOLLOWING THE PRINCIPLES OF NATURAL JUSTICE. THE ASSESSEES ARE ALSO DIRECTED TO COOPERATE WITH THE AS SESSING OFFICER FOR EARLY COMPLETION OF THE ASSESSMENTS. IN VIEW OF THE ABOVE, THE IMPUGNED ORDERS OF THE AUTHORITIES BELOW ARE SET ASIDE BY ITA 462 TO 464/CTK/2011 (GROUP CASES) 5 RESTORING THE SAME TO THE FILE OF THE ASSESSING OFFICER FOR DE NOVO CONSIDERATION AS STATED SUPRA. 10. IN THE RESUL T, ALL THE APPEALS FILED BY THE ASSESSEES ARE ALLOWED FOR STATISTICAL PURPOSES. SD/ - SD/ - (K.K.GUPTA) ACCOUNTANT MEMBER ( K.S.S.PRASAD RAO) JUDICIAL MEMBER DATE: 22.12.2011 H.K.PADHEE, SENIOR PR IVATE SECRETARY. COPY OF THE ORDER FORWARDED TO : 1 . THE APPELLANT: MOTILAL ROY, C/O. RADHAGOVINDO ROY & CO., MIMCHOURI, CUTTACK 753 002 PAN: AATPR 3227 K MADANLAL ROY, PAN: AAJPR 1392 M ADDRESS AS ABOVE. PANNALAL ROY, PAN: ACJPR 13 91 J 2 . THE RESPONDENT: DCIT, CIRCLE 2(1), CUTTTACK. 3 . THE CIT, 4 . THE CIT(A), 5 . THE DR, CUTTACK 6 . GUARD FILE (IN DUPLICATE) TRUE COPY, BY ORDER, SENIOR PRIVATE SECRETARY.