Sri K Sasibhushana Rao, Visakhapatnam V. The ITO, Ward-1(1), Visakhapatnam

ITA 501/VIZ/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 50253 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 7 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-06-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 29-03-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 10-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D S SUNDER SINGH
• Assessee Lawyers: R L N SOMAYAJULY
• Keywords: Capital asset; Opportunity of being heard
• Section: 2(14); 148

Judgement Text

ITA NOS 499 TO 501OF 2010 K.BADRINATH & OTHERS VIZA G PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER ITA NO.499/VIZAG/2010 ASSESSMENT YEAR: 2004 - 05 K. BADRINATH, VISAKHAPATNAM VS. ITO WARD-1(1) VISAKHAPATNAM (APPELLANT) PAN NO: ATTPK 4685 F (RESPONDENT) ITA NO.500/VIZAG/2010 ASSESSMENT YEAR: 2004-05 K. ANNAPOORNA RAO VISAKHAPATNAM VS. ITO WARD-1(1) VISAKHAPATNAM (APPELLANT) PAN NO: AZSPK 2289 C (RESPONDENT) ITA NO.501/VIZAG/2010 ASSESSMENT YEAR: 2004-05 K. SASIBHUSHANA RAO, VISAKHAPATNAM VS. ITO WARD-1(1) VISAKHAPATNAM (APPELLANT) PAN NO: BDTPK 5305 H (RESPONDENT) APPELLANT BY: SHRI R.L.N. SOMAYAJULY, CA RESPONDENT BY: SHRI D.S. SUNDER SINGH, SR. DR ORDER PER SHRI B. R. BASKARAN, ACCOUNTANT MEMBER: ALL THESE THREE APPEALS ARE DIRECTED AGAINST THE OR DERS PASSED IN THEIR RESPECTIVE HANDS BY THE LEARNED CIT (A) VISAKHAPATN AM AND THEY RELATE TO THE ASSESSMENT YEAR 2004-05. SINCE THE ISSUE URGED IN THESE APPEALS IS IDENTICAL IN NATURE AND ALSO ARISES OUT OF COMMON S ET OF FACTS, THEY WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CO MMON ORDER FOR THE SAKE OF CONVENIENCE. ALL THESE THREE APPEALS ARE B ARRED BY THE LIMITATION BY 213 DAYS AND THE ASSESSEES HAVE FILED PETITION FOR CONDONATION OF DELAY. HAVING REGARD TO THE SUBMISSIONS MADE IN THESE PETI TIONS, WE CONDONE THE DELAY AND ADMIT THESE APPEALS. ITA NOS 499 TO 501OF 2010 K.BADRINATH & OTHERS VIZA G PAGE 2 OF 5 2. ALL THE THREE ASSESSEES ARE ASSAILING THE DECISI ON OF LEARNED CIT (A) IN CONFIRMING THE ASSESSMENT OF CAPITAL GAIN OF RS. 4,15,536/- IN THEIR RESPECTIVE HANDS. 3. THE FACTS RELATING TO THE ISSUE ARE STATED IN BR IEF. SHRI K.BADRINATH AND SHRI K.ANNAPOORNA RAO ARE SONS SHRI K.SASHIBHUS HANA RAO. THUS ALL THE THREE ASSESSEES HEREIN ARE RELATED TO EACH OTHE R. THE DEPARTMENT CARRIED OUT A SURVEY OPERATION IN THE PREMISES OF S HRI K. BADRINATH ON 7.2.2008. AT THAT TIME, IT CAME TO LIGHT THAT THES E THREE ASSESSEES ALONG WITH OTHER FAMILY MEMBERS HAVE SOLD LANDS LOCATED A T A PLACE CALLED PARADESIPALEM, NEAR VISAKHAPATNAM ADMEASURING 2.20 ACRES ON 27.12.2003. THE SAID LANDS WERE SOLD TO DR. G.A. R AMARAJU AND SMT.V. SURYA UMA BHARATHI AND THE SALE CONSIDERATION WAS S HOWN AT RS.9.04 LAKHS IN THE CONVEYANCE DEEDS. AT THE TIME OF SURVEY, SH RI BADRINATH STATED THAT THE ABOVE SAID LANDS WERE SOLD FOR A CONSIDERATION OF RS.33.00 LAKHS. SINCE THESE ASSESSEES HAD NOT FILED THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2004-05 BY THE TIME OF SURVEY AND SINCE THE ASSESSI NG OFFICER FELT THAT THESE ASSESSES HAD TAXABLE INCOME, HE ISSUED NOTICE S UNDER SECTION 148 OF THE ACT TO THESE ASSESSEES CALLING FOR RETURN OF I NCOME. THEY FILED RETURN OF INCOME, BUT CLAIMED THAT THE SALE VALUE OF IMPUGNED LANDS IS ONLY RS.9.04 LAKHS. THEY FURTHER CLAIMED THAT THE IMPUGNED LAND S ARE AGRICULTURAL LANDS, NOT FALLING WITHIN THE DEFINITION OF CAPITAL ASSET WITHIN THE MEANING OF SEC. 2(14) OF THE ACT. ACCORDINGLY, THEY CLAIMED THAT N O CAPITAL GAINS TAX ARISES EVEN IF THE SALE CONSIDERATION IS ADOPTED AT RS.33. 00 LAKHS. 4. THE ASSESSING OFFICER NOTICED THAT THE IMPUGN ED LANDS WERE SHOWN AS VACANT LAND IN THE CONVEYANCE DEEDS. THE ASSESSI NG OFFICER ALSO NOTICED THAT THE IMPUGNED LANDS ARE LOCATED IN THE AREA CAL LED PARADESIPALEM, WHICH IS IN THE VICINITY OF MUNICIPAL CORPORATION. ACCORDINGLY HE HELD THAT THE SALE VALUE OF IMPUGNED LANDS IS EXIGIBLE TO CAP ITAL GAINS TAX, SINCE THEY ARE VACANT LANDS. HE FURTHER HELD EVEN IF THE IMPUG NED LANDS WERE TAKEN AS AGRICULTURAL LANDS, STILL THE ASSESSEES ARE LIABLE TO PAY CAPITAL GAINS TAX SINCE ITA NOS 499 TO 501OF 2010 K.BADRINATH & OTHERS VIZA G PAGE 3 OF 5 THE SAID LANDS ARE LOCATED NEAR THE MUNICIPAL LIMIT S. ACCORDINGLY HE COMPUTED LONG TERM CAPITAL GAINS AT RS.20,77,680/- BY ADOPTING THE SALE CONSIDERATION AT RS.33.00 LAKHS. ACCORDINGLY THE S HARE OF EACH CO-OWNER WAS COMPUTED AT RS.4,15,536/- AND THE SAME WAS ASSE SSED IN THEIR RESPECTIVE HANDS. 5. THESE ASSESSEES CARRIED THE MATTER IN APPEAL BEFORE LEARNED CIT(A). HOWEVER NONE APPEARED ON BEHALF OF THESE ASSESSEES AND HENCE THE LEARNED CIT(A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER. AGGRIEVED THESE ASSESSEES ARE IN APPEAL BEFORE US. 6. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITT ED THAT THE IMPUGNED LANDS WERE SOLD BY THESE THREE ASSESSEES ALONG WITH OTHER FAMILY MEMBERS. SHRI BADRINATH, ONE OF THE VENDORS, HAS STATED IN T HE STATEMENT TAKEN DURING THE COURSE OF SURVEY THAT THE SALE CONSIDERA TION OF IMPUGNED LANDS IS RS.33.00 LAKHS AS AGAINST THE SALE VALUE OF RS.9.04 LAKHS SHOWN IN THE CONVEYANCE DEEDS. HOWEVER, THE ASSESSING OFFICER H AS ADOPTED THE SALE CONSIDERATION OF RS.33.00 LAKHS WITHOUT CONFRONTING THE SAME TO THE OTHER VENDORS AND ALSO WITHOUT CROSS EXAMINING THE CONCER NED BUYERS. ACCORDINGLY, THE LEARNED A.R CONTENDED THAT THE SAL E CONSIDERATION OF RS.33.00 LAKHS ADOPTED BY THE ASSESSING OFFICER HAS NOT BEEN CONCLUSIVELY PROVED. THE LEARNED A.R FURTHER SUBMITTED THAT THE IMPUGNED LANDS WERE ORIGINALLY PURCHASED JOINTLY BY SHRI K. SASHIBHUSHA N RAO (ONE OF THE ASSESSEES HEREIN AND THE FATHER OF OTHER TWO ASSESS EES) AND HIS BROTHER. HENCE THE LAND ACTUALLY BELONGS TO THEM ONLY. THE OTHER TWO ASSESSES, VIZ., SHRI K.BADRINATH AND SHRI K.ANNAPOORNA RAO HA VE ONLY JOINED AS A CO- VENDOR AND THEY ARE NOT THE REAL OWNERS. ACCORDING LY HE CONTENDED THAT THE ASSESSING OFFICER IS NOT CORRECT IN DIVIDING TH E SALE CONSIDERATION BETWEEN FIVE PERSONS. THE LEARNED AUTHORISED REPRE SENTATIVE FURTHER CONTENDED THAT THE OBSERVATION OF THE ASSESSING OFF ICER THAT THE IMPUGNED LANDS ARE LOCATED NEAR THE MUNICIPAL CORPORATION LI MITS IS ALSO AGAINST THE FACTS. IN THIS REGARD, HE SUBMITTED THAT THE IMPUGN ED LANDS WERE SOLD IN THE YEAR 2003 AND THE GREATER VISAKHAPATNAM MUNICIP AL CORPORATION WAS ITA NOS 499 TO 501OF 2010 K.BADRINATH & OTHERS VIZA G PAGE 4 OF 5 FORMED ONLY ON 21.11.2005. ACCORDINGLY HE CONTENDE D THAT THE ASSESSING OFFICER HAS WRONGLY OBSERVED THAT THE IMPUGNED LAND S ARE LOCATED NEAR THE MUNICIPAL LIMITS AND HAS COMPUTED THE CAPITAL GAINS WITHOUT APPRECIATING THESE VITAL FACTS. 7. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL R EPRESENTATIVE SUBMITTED THAT CONTENTIONS NOW RAISED ABOUT THE MUN ICIPAL LIMITS WERE NOT BROUGHT TO THE NOTICE OF THE ASSESSING OFFICER AND IN ANY CASE THE SAID CONTENTIONS REQUIRE VERIFICATION. HE FURTHER SUBMI TTED THAT THE IMPUGNED LANDS HAVE BEEN SHOWN AS VACANT LANDS IN THE CONV EYANCE DEEDS AND HENCE THEY CANNOT BE TAKEN AS AGRICULTURAL LANDS, A S CLAIMED BY THE ASSESSEES. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND CARE FULLY PERUSED THE RECORD. THE VARIOUS CONTENTIONS RAISED BY THE ASSESSEE, VIZ ., THE OWNERSHIP OF LAND, NATURE OF LAND, THE LOCATION OF LAND, WHETHER THE L ANDS ARE LOCATED WITHIN THE MUNICIPAL LIMITS OR NOT, THE ACTUAL AMOUNT OF S ALE CONSIDERATION ETC. HAVE NOT BEEN EXAMINED IN DETAIL BY THE ASSESSING O FFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS. FURTHER THE ASSESSING O FFICER WAS ALSO NOT CLEAR ON THE POINT WHETHER THE IMPUGNED LANDS ARE A GRICULTURAL LANDS OR ONLY VACANT LANDS. BEFORE US, THE LEARNED DEPARTMENTAL REPRESENTATIVE, BY PLACING RELIANCE ON THE RECITALS OF THE CONVEYANCE DEEDS, CONTENDS THAT THE IMPUGNED LANDS ARE ONLY VACANT LANDS. HOWEVER, THE LEARNED A.R CONTENDS THAT THEY ARE AGRICULTURAL LANDS. IN OUR VIEW, THE RECITALS MADE IN THE CONVEYANCE DEEDS ALONE CANNOT BE TAKEN AS CONCLUSIV E PROOF TO ESTABLISH THE NATURE OF LAND. THE REVENUE RECORDS OF THE GOV ERNMENT AND THE ACTUAL USER OF LAND SHOULD ALSO BE TAKEN INTO CONSIDERATIO N IN ORDER TO ASCERTAIN THE NATURE OF LAND. THE FOREGOING DISCUSSIONS SHOW THA T THE IMPUGNED ISSUE OF COMPUTATION OF CAPITAL GAINS REQUIRES FRESH EXAMINA TION BY DULY VERIFYING THE RIVAL CLAIMS AND OTHER FACTORS SURROUNDING THE ISSUE. ACCORDINGLY WE SET ASIDE THE ORDER OF THE LEARNED CIT(A) AND RESTORE T HE ISSUE TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO EXAMINE THE S AME AFRESH, INTER ALIA, IN ITA NOS 499 TO 501OF 2010 K.BADRINATH & OTHERS VIZA G PAGE 5 OF 5 THE LIGHT OF VARIOUS CONTENTIONS DISCUSSED ABOVE, A FTER AFFORDING NECESSARY OPPORTUNITY OF BEING HEARD. 9. IN THE RESULT, THE APPEALS OF THE ASSESSEES ARE T REATED AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 21 ST JUNE, 2011. SD/- SD/- (SUNIL KUMAR YADAV) (B R BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PVV/SPS VISAKHAPATNAM, DATE: 21-06-2011 COPY TO 1 SHRI KONCHADA BADRINATH, 25-1-12 SPRING ROAD, NEA R READING ROOM, VISAKHAPATNAM 2 SHRI K. ANNAPOORNA RAO, 25-1-12 SPRING ROAD, NEAR READING ROOM, VISAKHAPATNAM 3 SHRI K. SASIBHUSHANA RAO, 25-1-12 SPRING ROAD, NE AR READING ROOM, VISAKHAPATNAM 4 THE ITO WARD-1(1) VISAKHAPATNAM 5 6. THE CIT 1, VISAKHAPATNAM THE CIT(A), VISAKHAPATNAM 7 THE DR, ITAT, VISAKHAPATNAM. 8 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM