DHIRAJLAL KALYANJI GALA, NAVI MUMBAI V. ITO 22(3)(1), NAVI MUMBAI

ITA 4970/MUM/2013

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2675 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 03-02-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 01-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LOVE KUMAR
• Assessee Lawyers: JITENDRA SINGH
• Keywords: Sale consideration of property below Jantri Value; Opportunity of being heard
• Section: 50C; 142(1); 234B; 147; 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI . . , !' , # , $ BEFORE S/SHRI B.R.BASKARAN, ACCOUNTANT MEMBER AND AMARJIT SINGH, JUDICIAL MEMBER / I .T.A. NO.4970/MUM/2013 ( / ASSESSMENT YEAR: 2005-06) SHRI. DHIRAJLAL KALYANJI GALA 27,MATHADI BHAVAN, PLOT NO. 14A, SEC. 19, VASHI, NAVI MUMBAI - 400703 / VS. INCOME TAX OFFICER 22(3)(1) ROOM NO. 306, 3 RD FLOOR, TOWER NO. 6, VASHI STATION COMPLEX, VASHI, NAVI MUMBAI % ./ & ./ PAN/GIR NO. : AEGPG2849M ( %' / APPELLANT ) .. ( ()%' / RESPONDENT ) ASSESSEE BY: SHRI. JITENDRA SINGH DEPARTMENT BY: SHRI. LOVE KUMAR 5 / DATE OF HEARING: 31.08.2015 678 5 /DATE OF PRONOUNCEMENT: 04.11.2015 9 / O R D E R PER AMARJIT SINGH, JM: THE ASSESSEE HAS FILED AN PRESENT APPEAL AGAINST TH E ORDER DATED 01/04/2013 OF THE LEARNED COMMISSIONER OF INCOME TA X (APPEALS)-19, MUMBAI [HEREINAFTER REFERRED TO AS THE LEARNED CIT(A)] P ASSED IN APPEAL NO.CIT(A)- 19/IT.T.443/2012-13 PERTAINING TO THE ASSESSMENT YE AR 2005-06. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. THE LD. COMMISSIONER OF INCOME TAX(APPEALS)[HER EINAFTER REFERRED TO AS LD. CIT(A)]ERRED IN PASSING THE OR DER DATED 1 ST APRIL, 2013 CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN D ETERMINING THE TOTAL INCOME OF THE APPELLANT AT 13,09,960/- AS AGAINST RETURNED INCOME OF 1,80,125/- ITA NO.4970/MUM/2013 ASSESSMENT YEAR: 2005-06 2 WITHOUT APPRECIATING THE FACTS AND CIRCUMSTANCE OF THE CASE. THE APPELLANT, THEREFORE, PRAYS THAT THE ORDER DATED 1 ST APRIL 2013 PASSED UNDER SECTION 250 OF THE ACT IS WITHOUT ANY BASIS AND THE SAME MAY BE QUASHED. 2. THE LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN MAKING AN ADDITION OF 11,28,000/- UNDER THE HEAD LONG TERM CAPITAL GAIN INVOKING THE PROVISIONS OF SECTION 50C OF THE ACT WITHOUT APPRECIATING THE FACTS AND CIRCUMSTANCE OF THE CASE . THE APPELLANT PRAYS THAT THE ADDITION OF 11,28,000/- UNDER SECTION 50C OF TH E ACT IS WITHOUT ANY BASIS AND HENCE, THE SAME MAY BE DELETED. 3. THE LD. CIT(A) FAILED TO APPRECIATE THAT THE APP ELLANT HAD SOLD THE PROPERTY IN THE CAPACITY OF THE POWER OF ATTORN EY HOLDER ONLY AND THE SALE CONSIDERATION RECEIVED BY THE APPELLANT WAS HANDED OVER TO THE MAHARASHTRA RAJA MATHADI TRANSPORT AND GENERAL KAMGAR UNION (RE GD.). THEREFORE, THE ADDITION OF 11,28,000/- INVOKING THE PROVISIONS OF SECTION 50C OF THE ACT IN THE HANDS OF THE APPELLANT IS UNJUSTIFIED AND THE SAME MAY BE DELETED. 4. THE APPELLANT DENIES ANY LIABILITY TO PAY INTERE ST UNDER SECTION 234B AND 234C. HENCE, THE SAME IS NOT LEVIABLE. 2. THE FACTS OF THE CASE ARE THAT THE ASSESSEE WAS AN INDIVIDUAL AND WAS DERIVING INCOME AS COMMISSION AGENT. ASSESSEE FILE D THE RETURN OF INCOME ON 30.08.2005, DECLARING THE TOTAL INCOME OF RS.1,80,1 25/-. THE RETURN WAS PROCESSED U/S. 143(1) OF THE INCOME TAX ACT, 1961( IN SHORT THE ACT) ON 24.11.2005. HOWEVER, THE ASSESSMENT WAS REOPENED U NDER SECTION 147 OF THE ACT BY ISSUE OF A NOTICE UNDER SECTION 148 DATED 03 .07.2008 WHICH WAS SERVED UPON THE ASSESSEE ON 10.07.2008. SUBSEQUENTLY NOTI CE U/S. 143(2) OF THE ACT DATED 25.11.2009 WAS ISSUED AND SERVED UPON THE ASS ESSEE. NOTICE U/S. 142(1) OF THE ACT WAS ALSO ISSUED ON 25.11.2009. THE FOLL OWING REASONS WERE RECORDED FOR REOPENING OF THE CASE:- THE ITO 24(2)(4) MUMBAI VIDE HIS LETTER NO. IT024( 2)4/MISC./2006-07 DT.21.09.2007 HAS INTIMATED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR THE ASSESSMENT YEAR 2005-06 IN HIS ASSESSEE'S CASE I.E. SHRI TIMIN N. DESAI, IT IS NOTICED THAT MY ASSESSEE SHRI DHIRAJ KALYANJI GALA HAS SOLD GALA TO SHRI TIMIR N. DESAI FOR RS.8,00,000/- AND THE SAID GALA IS AT 34, MATHADE B HAVAN, PLOT NO.14A, SEC.19, VASHI, NAVI MUMBAI. ON PERUSAL OF STAMP DUTY PAID B Y THE PURCHESER ON THE SAID PROPERTY, IT IS NOTICED THAT THE STAMP DUTY OFFICE ADOPTED THE VALUE OF THE SAID PROPERTY AT RS.11,28,.000/- INSTEAD OF THE VALUE DECLARED OF RS.8,00,000/- IN THE AGREEMENT. ON PERUSAL OF THE RETURN OF INCOME OF THE ASSESSEE FOR THE A. Y.2005-03, IT IS NOTICED THAT THE ASSESSEE HAS NOT DECLARED ANY LONG TERM CAPITAL GAIN ON SALE OF THE ABOVE SAID GALA. I HAVE, THEREFORE, REASON TO BELIE VE THAT THE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR THE ASSESSMENT YEAR 2005 -06. ISSUE NOTICE U/S.148. ITA NO.4970/MUM/2013 ASSESSMENT YEAR: 2005-06 3 THEREAFTER, AN OPPORTUNITY OF BEING HEARD WAS GIVEN TO THE ASSESSEE AND IT WAS NOTICED THAT THE ASSESSEE HAS SOLD A GALA AT 34, MATHADE BHAVAN, PLOT NO.14A, SEC.19, VASHI, NAVI MUMBAI AND RECEIVED AN AMOUNT OF RS. 8 LAKHS. HOWEVER, ON VERIFICATION OF THE SALE AGREEMENT, IT WAS SEEN THAT THE VALUE ADOPTED BY THE STAMP DUTY AUTHORITIES IS MORE THAN THE SALE VALUE I.E. AT RS.11,28,000/- AND NOTICE WAS GIVEN FOR THE ASSESSM ENT OF THE ASSESSEE IN VIEW OF THE PROVISION OF SECTION 50C OF THE ACT. HOWEVE R, THE ASSESSEE HAS NOT DECLARED ANY CAPITAL GAIN IN HIS RETURN OF INCOME. AFTER THE RECEIPT OF THE NOTICE, THE ASSESSEE REPLIED THAT HE WAS ONLY AN ATTORNEY H OLDER OF MAHARASHTRA RAJYA MATHADI TRANSPORT AND GENERAL KAMGAR UNION(REGD.) A ND ACCORDING TO HIM, THIS GALA WAS SOLD ON BEHALF OF THE MATHADI UNION A ND HE HAS FILED A COPY OF THE POWER OF ATTORNEY. THEREAFTER, ON THE BASIS OF THE AGREEMENT WHEREIN THE CAPACITY OF THE ASSESSEE WAS AS VENDOR/SELLER THE SALE OF THE GALA WAS ASSESSED TO THE TUNE OF RS.11,28,000/- AND ACCORDIN GLY, THE LONG TERM CAPITAL GAIN OF THE ASSESSEE WAS ASSESSED TOWARDS HIS TAXA BLE INCOME. THEREAFTER, THE ASSESSEE FILED THE APPEAL BEFORE THE CIT(A), MUMBAI AND THE LD CIT HAS ALSO ARRIVED AT THIS CONCLUSION THAT THE ASSESSEE COULD NOT FURNISH ANY EVIDENCE TO PROVE THAT THE ENTIRE CONSIDERATION WAS PASSED TO T HE KAMGAR UNION. THE ASSESSEE HAS ALSO FAILED TO SUBSTANTIATE THAT HE WA S NOT INTERESTED IN THE OWNERSHIP OF THE PROPERTY. THE LD. CIT(A) INTERPRE TED THE SECTION 50(C) OF THE ACT AND ALSO HAS RELIED UPON SOME CASE LAWS QUOTED IN HIS ORDER AND DISMISSED THE APPEAL OF THE ASSESSEE. FEELING AGGRIEVED THE ASSESSEE IS BEFORE THE TRIBUNAL. 3. WE HAVE HEARD THE REPRESENTATIVES OF THE PARTIES AND HAVE GONE THROUGH THE MATERIALS FILED. THE ASSERTION OF THE ASSESSEE IS THAT HE IS NOT THE OWNER OF THE PROPERTY IN QUESTION AND IN SUPPORT OF HIS CONT ENTION HE PLACED RELIANCE UPON IRREVOCABLE POWER OF ATTORNEY DATED 12.10.2003, REG ISTERED IN HIS FAVOUR WITH REGARD TO THE PROPERTY IN QUESTION. IN BRIEF THE A SSESSEE HAS CONTENDED THAT HE IS NOT THE OWNER OF THE PROPERTY NOR SOLD BY HIM. THE REFORE, LONG TERM CAPITAL GAIN WHICH HAS BEEN SHOWN IN THE ORDER OF THE LD. CIT(A) IS NOT PERTAINING TO HIM AND THE SAME IS NOT REQUIRED TO BE CONSIDERED AS TA XABLE INCOME. ON PERUSAL OF BOTH THE ORDERS, IT CAME INTO THE NOTICE THAT THE A SSESSING OFFICER AS WELL AS THE ITA NO.4970/MUM/2013 ASSESSMENT YEAR: 2005-06 4 LD. CIT(A) ONLY CONSIDERED THE AGREEMENT WHICH WAS REGISTERED IN FAVOUR OF THE ASSESSEE BY MAHARASHTRA RAJYA MATHADI TRANSPORT AND GENERAL KAMGAR UNION(REGD.). DOCUMENT OF TITLE WAS NOT CONSIDERED NOR SEEN AND DISCUSSED. ANYHOW, THE PAPER BOOK FILED BY THE ASSESSEE CONTAI NED POWER OF ATTORNEY DATED 12.10.2003 WHICH STATES THAT THE ASSESSEE WAS NOT T HE OWNER OF THE PROPERTY. THE SALE CONSIDERATION OF THE SALE DEED HAS BEEN AD DED WITH THE INCOME OF THE ASSESSEE AS LONG TERM CAPITAL GAIN. CERTAINLY WHEN THE OWNERSHIP WAS NOT WITH THE ASSESSEE THEN THE SALE CONSIDERATION OF THE SAI D PROPERTY IS NOT LIABLE TO BE CONSIDERED AS INCOME OF THE ASSESSEE AS LONG TERM C APITAL GAIN. WE ARE, THEREFORE, OF THE VIEW THAT THE MATTER ON THE ABOVE SAID POINT IS LIABLE TO BE CONSIDERED AFRESH. THEREFORE, THE LD. CIT(A)S ORD ER DATED 01/04/2013 UNDER QUESTION IS HEREBY ORDERED TO BE SET ASIDE AND THE APPEAL IS RESTORED BACK TO THE ASSESSING OFFICER TO CONSIDER AFRESH ABOVE SAID POI NTS REGARDING THE TITLE OF THE PROPERTY AS WELL AS POWER OF ATTORNEY AND TO DECIDE THE MATTER AFRESH. 4. IN THE RESULT, THE PRESENT APPEAL OF THE ASSESSE E IS HEREBY ALLOWED FOR THE STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ON 4 TH NOVEMBER, 2015 SD/- SD/- (B.R.BASKARAN) (AMARJIT SINGH) / ACCOUNTANT MEMBER # /JUDICIAL MEMBER MUMBAI; : DATED : 4 TH NOVEMBER, 2015 MP MP MP MP ITA NO.4970/MUM/2013 ASSESSMENT YEAR: 2005-06 5 / 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