C.Sugumaran, CHENNAI V. ACIT, CHENNAI

ITA 518/CHNY/2013

• Counselvise Citation: 51821714 RSA 2013
• Duration Of Justice: 10 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 18-02-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 27-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHAJI P JACOB IRS
• Assessee Lawyers: S SRIDHAR
• Keywords: Sale consideration of property below Jantri Value; Fair market value; Corroborative evidences
• Section: 143(3); 50C

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . . . , . . ! , ' !# $ BEFORE DR. O.K. NARAYANAN, VICE PRESIDENT & SHRI S.S. GODARA, JUDICIAL MEMBER ./ I.T.A. NO.518/MDS/2013 ( / ASSESSMENT YEAR : 2009-2010) SHRI. C. SUGUMARAN, T2/2, CAUVERY SALAI, BESANT NAGAR SOUTH, CHENNAI 600 090 [PAN: AMTPS4558Q] ( %& /APPELLANT) VS THE ASSISTANT COMMISSIONER OF INCOME TAX, BUSINESS CIRCLE V, CHENNAI ( '(%& /RESPONDENT) . / APPELLANT BY : SHRI. S. SRIDHAR, ADVOCATE / RESPONDENT BY : SHRI. SHAJI . P. JACOB, IRS, ADDL. CIT /DATE OF HEARING : 18.02.2014. /DATE OF PRONOUNCEMENT : 21.02.2014. !) / O R D E R PER S.S. GODARA, JUDICIAL MEMBER THIS APPEAL OF THE ASSESSEE EMANAT ES FROM THE ORDER DATED 17.12.2012 PASSED BY THE CIT(A)-VIII, CHENNAI IN IT A NO.157/2011-2012 FOR -2- ITA NO.518/MDS/2013. ASSESSMENT YEAR 2009-2010, IN PROCEEDINGS UNDER SEC TION 143(3) OF THE INCOME TAX ACT 1961 [IN SHORT THE ACT]. 2. IN THE INSTANT CASE, THE ASSESSEE RAISES THREE PLEAS CHALLENGING THE ACTION OF THE LOWER AUTHORITIES IN ASSESSING CAPITA L GAINS ON SALE OF THE PROPERTY ON 23.10.2008, APPLYING SECTION 50C AND QU A FAIR MARKET VALUE OF THE PROPERTY AS H11,00,000/- AS ON 1.4.1981 FOR THE PURPOSE OF INDEXATION. 3. THE ASSESSEE IS AN INDIVIDUAL. HE IS A RETIRE D GOVERNMENT SERVANT HAVING PENSION AND INTEREST INCOME. ON 7.10.2009, THE ASSESSEE FILED ITS RETURN DECLARING INCOME OF H7,65,590/-. 4. IN THE COURSE OF SCRUTINY AND ON THE BASIS OF AIR INFORMATION, THE ASSESSING OFFICER CAME TO KNOW THAT THE ASSESSEE HA D SOLD ONE PLOT TO DR. MEERA BAI (HIS WIFE) ON 23.10.2008 FOR H25,00,000/- HAVING GUIDELINE VALUE OF THE PROPERTY AS H60,00,000/-. THEREIN, THE ASSESSEE CONTESTED ASSESSMENT OF CAPITAL GAINS IN HIS HANDS BY PLEADING THAT HE HAD ACTED ONLY AS A POWER OF ATTORNEY HOLDER AGENT OF THE ACTUAL OWNER. IN THE ASSESSMENT ORDER DATED 30.12.2011, THE ASSESSING OFFICER REJECTED ASSESSE ES PLEA; ASSESSED CAPITAL GAINS FROM THE SALE OF PLOT BY ADOPTING VALUE OF T HE PROPERTY AT H60,00,000/- AS THE FAIR MARKET VALUE AND INDEX COST AS H11,00, 000/- AS ON 1.4.1981. -3- ITA NO.518/MDS/2013 ACCORDINGLY, HE COMPUTED THE TOTAL INCOME AS H61,25 ,290/- RESULTING IN DEMAND OF H16,94,560/-. 5. IN THE LOWER APPELLATE PROCEEDINGS, THE ASSESSEE CONTESTED THE ASSESSMENT ORDER ON THREE COUNTS I.E. HE HAD MEREL Y ACTED AS POWER AGENT OF THE ACTUAL OWNER SHRI. M. VISWANATHAN, VALUE OF THE PROPERTY TAKEN FOR THE PURPOSE OF SECTION 50C AS WELL AS INDEXATION (SUPR A). THE CIT(A) HAS TURNED DOWN ALL HIS ARGUMENTS. THEREFORE, THE ASSESSEE IS AGGRIEVED. 6. BEFORE US, THE ASSESSEE REITERATES THE STAND ADO PTED IN THE LOWER APPELLATE PROCEEDINGS, AND ARGUES THAT HE HAD ACTED AS POWER OF AGENT ON BEHALF OF THE ACTUAL OWNER/VENDOR SHRI. M. VISWANAT HAN, THE SALE PRICE OF THE PROPERTY HAS BEEN WRONGLY INCREASED FROM H25,00,00 0/- STATED IN THE SALE DEED TO H60,00,000/- AS PER GUIDELINE VALUE, AND EV EN THE PROPERTY SOLD HAS BEEN INAPPROPRIATELY VALUED AT H11,00,000/- AS ON 1 .4.1981 WITHOUT ANY BASIS. HE HAS FILED A PAPER BOOK AND PRAYS FOR ACCEPTANCE OF THE APPEAL. 7. IN REPLY, THE REVENUE STRONGLY SUPPORTS THE ORD ER OF THE CIT(A) AND PRAYED FOR CONFIRMING THE SAME. -4- ITA NO.518/MDS/2013 8. WE HAVE HEARD BOTH SIDES AND GONE THROUGH THE CA SE FILE. THE FIRST QUESTION ARISES FOR OUR CONSIDERATION AS TO WHETHE R THE CAPITAL GAINS IN QUESTION HAVE BEEN RIGHTLY ASSESSED IN ASSESSEES H ANDS OR NOT. IN THIS REGARD, WE FIND THAT SHRI. M. VISWANATHAN WAS OWNE R OF A PLOT MEASURING 1920 SQ.FT AT THIRUVANMIYUR VILLAGE, MYLAPORE-TRIPL ICANE TALUK, CHENNAI DISTRICT, BEACH KUPPAM ROAD, THIRUVANMIYUR, CHENNAI . ON 1.9.2006, HE HAD EXECUTED REGISTERED GENERAL POWER OF ATTORNEY IN AS SESSEES NAME WITHOUT ANY CONSIDERATION AS FOLLOWS:- 01. TO NEGOTIATE FOR SALE OF THE SCHEDULE MENTION ED PROPERTY AS A WHOLE OR AN UNDIVIDED SHARES. 02. TO EXECUTE ANY AGREEMENT/S FOR SALE OR OTHER DO CUMENT/S NECESSARY TO EFFECTUATE THE AFORESAID PURPOSES TO CAUSE THE SAME TO THE STAMPED REGISTERED OR AUTHENTICATED INCLUDIN G PURCHASE OF STAMP PAPER AS THE CASE MAY BE. 03. TO RECEIVE OR AGREE TO RECEIVE THE CONSIDERATIO N FOR THE SAID SALE OR SALES IN RESPECT THEREOF. 04. TO APPEAR BEFORE SUB REGISTRAR, REGISTRAR OR OTHER AUTHORITY FOR THE PURPOSE OF THE SAID SALE OR TRANSFER. 05. TO CAUSE MUTATION WHERE NECESSARY EFFECTED IN REVENUE RECORDS AND TO MAKE SUCH STATEMENTS PERSONALLY OR THROUG H PLEADER OR OTHER AGENTS TO EFFECTUATE THE AFORESAID PURPOSE . 06. TO DELIVER VACANT POSSESSION OF THE PROPERTY SOLD TO THE PURCHASER/S TO BE SOLD. 07. TO APPLY FOR DEMOLITION AND DEMOLISH THE EXIS TING BUILDING IN THE SCHEDULE MENTIONED PROPERTY. -5- ITA NO.518/MDS/2013 08. TO EXECUTE SALE DEED/S IN FOVOUR OF THE PURCH ASER/S FOR THE SAID PROPERTY AS A WHOLE OR AN UNDIVIDED SHARES AND ALSO RECTIFICATION DEED/S IF NECESSARY. 09. TO BORROW MONEY ON THE SECURITY OF THE SCHEDU LE MENTIONED PROPERTY FROM ANY FINANCIAL INSITUTUTION /BANK T O CREATE A M MORTGAGE OVER THE SAME TO SUCH AN EXTENT THAT PR INCIPAL AND INTEREST DO NOT EXCEED THE MARKET VALUE OF THE S CHEDULE MENTIONED PROPERTY AND WITHOUT THE PRINCIPAL TO THIS POWER BEING MADE LIABLE. 10. TO SIGN PATTA TRANSFER FORMS, LAND CEILING FO RMS AND OTHER DECLARATIONS, ETC., THAT MAY BE NECESSARY AND IN CIDENTAL FEE EFFECTIVELY TRANSFERRING THE LAND IN FAVOUR OF T HE PURCHASER/S. 11. TO DEVELOP THE PROPERTY BY PUTTING HOUSES, FL ATS AND OTHER SUPERSTRUCTURES. 12. TO SIGN BUILDING PLANS AND SUBMIT THE SAME TO APPROPRIATE AUTHORITIES FOR APPROVAL. 13. TO PRESENT ME BEFORE CORPORATION OF CHENNAI, PANCHAYAT UNION, TOWN PANCHAYATS, CHENNAI METROPOLITAN DEVELOPMEN T AUTHORITY, TAMIL NADU ELECTRICTY BOARD, REVENUE AUTHORITIES IN CONNECTION WITH THE ABOVE SAID SCHEDULE MENTIONE D PROPERTY. 14. TO FOLLOW UP TOWN PANACHAYAT OR CMDA FOR APPR OVAL OF THE BUILDING PLAN. 15. TO APPLY FOR WATER AND DRAINAGE CONNECTION TO CMWSSB AND IN THAT CONNECTION TO SIGN APPLICATION AND NECESSAR Y PAPERS. 16. TO SIGN AND GET INCOME TAX CLEARANCE CERTIFIC ATE UNDER SECTION 230-A OF INCOME TAX ACT IF NECESSARY FOR PROPOSED SALE/S. 17. IN CASE OF ANY DISPUTE TO INSTITUTE LEGAL PRO CEEDINGS AND OR DEFEND SUITS OR CASES FILED AND IN THAT CONNECTION TO ENGAGE ADVOCATE, TO SIGN VAKLATHS, PLAINTS, AFFIDAVITS, PETITIONS, P LEADINGS, STATEMENT AND ALSO TO GIVE EVIDENCE BEFORE COMPETENT COURT . 18. TO RECEIVE LETTERS AND REGISTERED COMMUNICATI ON, PARCELS ETC., RELATING TO THE SCHEDULE MENTIONED PROPERTY. -6- ITA NO.518/MDS/2013 19. TO APPLY FOR ELECTRICITY SUPPLY TO MES AND IN THAT CONNECTION TO SIGN APPLICATION, INDEMNITY BONDS, AS SUCH OTHE R DECLARATIONS, PAPERS THAT MAY BE NECESSARY FOR GETTING SUPPLY. 20. TO ADVERTISE FOR SALE OF THE SCHEDULE MENTION ED PROPERTY EITHER AS WHOLE OR AS UNDIVIDED SHARES. 21. TO DO ALL THINGS NECESSARY AND ESSENTIAL FOR PROPER MANAGEMENT OF OUR PROPERTY INCLUDING DISPOSAL AND COMPLETIO N OF SALE OF THE SCHEDULE PROPERTY. AND GENERALLY TO DO THE SUCH ACT ARE NECESSARY AND INCIDENTAL IN THIS REGARD. NO CONSIDERATION IS RECEIVED FROM POWER AGENT FO R GIVING THIS POWER OF ATTORNEY. THE POWER AGENT SHALL MAINTA IN PROPER ACCOUNTS AND RENDER THE SAME. THE PROPERTY RIGH T HAS NOT BEEN HANDED OVER THE POWER AGENT. 9. IT IS TO BE SEEN FROM THE CASE FILE THAT ON THE STRENGTH OF AFORESAID DELEGATION, THE ASSESSEE HAD EXECUTED THE REGISTERE D SALE DEED IN QUESTION DATED 23.10.2008 IN FAVOUR OF HIS WIFE DR. MEERA BA I FOR H25,00,000/- SUBJECT MATTER OF INSTANT LIS. DURING SCRUTINY THE ASS ESSING OFFICER ISSUED NOTICE TO SHRI. M. VISWANATHAN FOR VERIFYING ASSESSEES PLEA TO HAVE ACTED AS HIS AGENT. IN REPLY, THE ACTUAL OWNER SENT A LETTER DATED 18.1 1.2011 TO THE ASSESSING OFFICER AS UNDER:-. WITH REFERENCE TO THE LETTER CITED, I WISH TO STA TE THAT I WAS THE LAWFUL OWNER OF THE PROPERTY AT DOOR NO.108(OLD NO.19), 2 ND CROSS STREET, BEACH KUPPAM ROAD, THIRUVANMIYUR, CHENNAI 600 041 COMPREISED IN RS NO.188/1,188/2&188/3, PATTA CA NO.444/2005, BLOCK NO.62, TS NO.61, MEASURING AN EXTENT OF 2000SQ FT OR THEREABOUTS. -7- ITA NO.518/MDS/2013 I WAS ORIGINALLY RESIDING AT DOOR NO.71 (OLD NO.33) , I MAIN ROAD, GANDHI NAGAR, ADYAR, CHENNAI 600 020 BUT HAS SHIFTED TO T HE NEW ADDRESS MENTIONED ABOVE. I AM AGED 72 YEARS AND A HEART PATIENT SINC E 1993. UNTIL RECENTLY, I WAS RUNNING A NEWS AGENCY OF RELI GIOUS JOURNALS AND MAGAZINES AND THAT WAS MY MAIN SOURCE OF INCOME. I AM NOT A PENSIONER NOR GAINFULLY EMPLOYED TO RECEIVE ANY RETIREMENT BENEFI TS. YOU MAY BE AWARE OF THE TSUNAMI IN DEC-2004-JAN 200 5. AFTER TSUNAMI DEVASTATION, THE LAND PRICES IN THE COASTAL AREAS C RASHED AND NO ONE WAS WILLING TO BUY THESE PROPERTY EVEN AT LESSER PRICE. MOREOV ER, THE SAID PLOT IS AN UNAPPROVED ONE AND SITUATED VERY CLOSE THE FISHERMA NS COLONY AND WITHIN 300M FROM THE HIGH-TIDE LINE AND HENCE BUILDING CON STRUCTION WAS BANNED UNDER COASTAL REGULATION ZONE ACT. THE PLOT WAS LOW LYING AND WAS BEING USED FOR DUMPI NG GARBAGE & THE DILAPIDATED BUILDING WAS OFTEN MISUSED BY THE ANTIS OCIAL ELEMENTS WHICH WAS ONE OF THE DETERRENTS IN DEVELOPING/SELLING T HE PLOT. AS I WAS IN NEED OF FUNDS TO CLEAR CERTAIN DEBTS AN D MY HEALTH WAS NOT GOOD, I APPOINTED MR. C SUGUMARAN S/O. MR. CHENNA KESAVAN, RESIDING AT DOOR NO. 29, KAVERI STREET, BESANT NAGAR, CHENNAI 90 AS MY P OWER OF ATTORNEY IN ORDER TO SELL THE ABOVE PROPERTY VIDE THE GENERAL POWER O F ATTORNEY DATED 01.09.2006 AND REGISTERED THE SAME AS DOC NO.1936/2 006, SRO ADYAR CHENNAI. HE APPROVED ME SUBSEQUENTLY STATING THAT H E WAS ALSO NOT ABLE TO FIND A SUITABLE BUYER BUT CAME FORWARD TO BUY IT FO R HIMSELF FOR AN AMOUNT OF RS.25.00 LAKHS. IN VIEW OF MY FAILING HEALTH AND IN ORDER TO MEET O UT MY URGENT FINANCIAL COMMITMENTS AND TAKING INTO ACCOUNT THE FAILURE OF MY EARLIER ATTEMPTS TO DEVELOP/SELL THIS PROPERTY TO OTHERS AND DERIVE SOM E ADDITIONAL INCOME THOUGH DEPOSITS AFTER CLEARING THE DEBTS, I ACCEPTED THE O FFER MADE BY THIRU C. SUGUMARAN FOR RS.25.00 LAKHS WHICH WAS THE BEST OFF ER I COULD GET AT THE THEN PREVAILING SITUATION. I RECEIVED THE SAID SUM OF R S.25.00 LAKHS FROM MR. C. SUGUMARAN IN 2006. ON THE BASIS OF THIS CLARIFICATION, THE ASSESSING O FFICER HAS TAXED THE IMPUGNED CAPITAL GAINS IN ASSESSEES HAN DS. 10. AFTER GIVING OUR THOUGHTFUL CONSIDERATION TO TH E ISSUE, WE ARE OF THE VIEW THAT AS PER THE RECITALS IN THE REGISTERED POW ER OF ATTORNEY DATED 01.09.2006, NO CONSIDERATION HAD BEEN PAID BY THE A SSESSEE TO THE ACTUAL -8- ITA NO.518/MDS/2013 OWNER. IN THE SALE DEED AS WELL, THE ASSESSEE HAD MERELY ACTED AS AN AGENT (SUPRA). THEREFORE, AFORESAID STAND ADOPTED BY THE ACTUAL OWNER OF HAVING RECEIVED H25,00,000/-, AT THE TIME OF EXECUTING POW ER OF ATTORNEY DOES NOT INSPIRE CONFIDENCE. WE REITERATE THAT CONTENTS OF A REGISTERED DOCUMENT CANNOT BE DISBELIEVED BY A LETTER PARTICULARLY WITH OUT ANY OTHER SUPPORTING EVIDENCE. WE ALSO TAKE NOTICE THE FACT THAT EARLIE R AS WELL, THE SAME OWNER HAD EXECUTED SIMILAR POWER OF ATTORNEYS AND REVOKED THEM LATER ON (SR.NO.7&8 IN THE PAPER BOOK). IN VIEW OF THESE CIR CUMSTANCES, WE OBSERVE THAT THE ASSESSEE COULD NOT HAVE BEEN TREATED AS OW NER OF THE PROPERTY SOLD ON 23.10.2008 RESULTING IN COMPUTATION OF CAPITAL G AINS IN HIS HANDS. THUS, THE FIRST PLEA OF THE ASSESSEE WHICH IS LEGAL IN NA TURE STANDS ACCEPTED. THE OTHER ARGUMENTS (SUPRA) ARE ONLY ALTERNATE. SO, TH EY HAVE BECOME INFRUCTUOUS. 11. IN RESULT, THE APPEAL OF THE APPELLANT IS ALLOW ED. ORDER PRONOUNCED ON FRIDAY , THE 21ST OF FEBRUARY, 2014, AT CHENNAI. SD/- SD/- (DR. O.K. NARAYANAN) VICE PRESIDENT (S.S. GODARA) JUDICIAL MEMBER DATED:21ST FEB, 2014. K.V COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR