Kedar Ganapatrao Sawant, Kolhapur V. Income-tax Officer,

ITA 52/PUN/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1497 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 6 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 14-06-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 12-01-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Charitable institution; Fair market value; Capital receipt
• Section: 44AD

Judgement Text

- IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC , PUNE , BEFORE MS. SUSHMA CHOWLA, JM . / ITA NO. 52 /PN/201 5 / ASSESSMEN T YEAR : 20 11 - 12 LATE MR. KEDAR GANPATRAO SAWANT THROUGH L/H 1 . SMT. SHAMA KEDAR SAWANT (WIFE) 2 . MR. ANIRUDDHA KEDAR SAWANT (SON) 3 . MISS POONAM KEDAR SAWANT (DAUGHTER) ADDRESS AT 79, JAGRUTI NAGAR, SAGARMAL, KOLHAPUR 416008 . / APPELLANT PAN: A D PPS5712H VS. THE INCOME TAX OFFICER , WARD 2 ( 2 ), KOLHAPUR . / RESPONDENT / APPELLANT BY : SHRI S.N. PURANIK / RESPONDENT BY : SHRI SUHAS KULKARNI, JCIT / DATE OF HEARING : 1 8 . 0 7 .201 6 / DATE OF PRONOUNCEMENT: 29 . 0 7 .201 6 / ORDER PER SUSHMA CHOWLA, J M : TH IS APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORDER OF CIT (A) , KOLHAPUR , DATED 13 . 1 0 .20 1 4 RELATING TO ASSESSMENT YEAR 20 11 - 12 AGAINST ORDER PASSED UNDER SECTION 14 3(3) OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF CASE AND IN LAW, BOTH THE LEARNED ASSESSING OFFICER AND CIT(APPEALS) WE RE CORRECT IN ARRIVING AT THE CONCLUSION THAT PART CONSIDERATION OF RS.11,00,000/ - RECEIVED FOR SALE OF PROPERTY IS UNEXPLAINED AND HENCE INCOME OF APPELLANT WITHOUT ITA NO. 52 /PN/20 1 5 KEDAR GANPATRAO SAWANT 2 APPRECIATING THE FACT THAT APPELLANT ACTED ONLY AS POWER OF ATTORNEY HOLDER AND REPRES ENTED THE TRUE OWNER AND ALLEGED AMOUNT RECEIVED WAS ON THEIR BEHALF. 3. THE ISSUE ARISING IN THE PRESENT APPEAL IS AGAINST THE ADDITION OF RS.11 LAKHS. 4. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE WAS AN INDIVIDUAL AND HAD FURNISHED RETURN OF INC OME FOR THE YEAR UNDER CONSIDERATION AT RS.2,00,367/ - . THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY. THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF CONSTRUCTION SERVICES AND HAD FILED RETURN OF INCOME ON PRESUMPTIVE BASIS UNDER SECTION 44AD OF THE ACT . ON VERIFICATION OF INFORMATION AVAILABLE ON RECORD, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD TRANSFERRED PROPERTY ADMEASURING 27266.70 SQ.MTRS., SITUATED AT A - WARD, DEVKAR PANAND, SAMBHAJINAGAR, KOLHAPUR . AS PER SALE DEED DATED 15.10.2010, TOT AL CONSIDERATION WAS RS.35 LAKHS AS AGAINST FAIR MARKET VALUE OF RS. 29,80,100/ - . THE SAID PROPERTY WAS PURCHASED BY A CHARITABLE TRUST. THE ASSESSEE IN THIS REGARD EXPLAINED THAT HE WAS THE POWER OF ATTORNEY HOLDER ON BEHALF OF TWO OWNERS (1) SHRI PRAMOD SHANKAR SOHONI AND (2) SHRI RAMCHANDRA VINAYAK BHIDE. THE ASSESSEE CLAIMED THAT HE HAD NOT BENEFITED IN ANY MANNER FROM THE SAID TRANSACTION AND WAS ALSO NOT IN RECEIPT OF ANY MONEY IN THE TRANSACTION OF SALE OF LAND. HE FURTHER STATED THAT THE PURCHASE R HAD DIRECTLY MADE THE PAYMENT FOR PURCHASE OF LAND TO THE ABOVE TWO PERSONS. IT WAS FURTHER STATED BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE BEFORE THE ASSESSING OFFICER THAT THE ASSESSEE WAS NOT THE OWNER AT ANY TIME OF THE SAID PROPERT Y AND HE WAS ONLY A POWER OF ATTORNEY HOLDER OF THE SAID TWO PERSONS. IT WAS FURTHER STATED THAT THE SAID POWER OF ATTORNEY WAS WITHOUT CONSIDERATION AND HE HAD NOT RECEIVED THE SALE CONSIDERATION OF RS.35 LAKHS IN HIS ACCOUNT FROM THE CHARITABLE TRUST . HE REITERATED THAT THE SALE CONSIDERATION ITA NO. 52 /PN/20 1 5 KEDAR GANPATRAO SAWANT 3 WAS PAID BY THE TRUST TO THE TWO OWNERS DIRECTLY. HE FURTHER REFERRED TO CLAUSE (C)(8) OF THE POWER OF ATTORNEY AND POINTED OUT THAT WHATEVER MONEY WAS RECEIVED BELONG TO THE TWO OWNERS AND THE COPY OF POWER OF AT TORNEY OF GOVERNMENT VALUATION OF RS. 23,80,100/ - , DATED 05.04.2008 WAS FILED BY THE ASSESSEE. THE ASSESSING OFFICER VIDE PARA 5.3 OF THE ASSESSMENT ORDER OBSERVED THAT AS PER DEED OF SALE, IT WAS APPARENT THAT THE ASSESSEE WAS THE VENDOR IN THE TRANSACTIO N FOR SALE OF PROPERTY AS WELL AS HE WAS IN RECEIPT OF ENTIRE SALE CONSIDERATION OF RS.35 LAKHS. THE SALE DEED HAS BEEN REGISTERED AND PAN NUMBER OF THE ASSESSEE WAS MENTIONED IN THE TRANSACTION. THIS FACT WAS CONFIRMED BY THE CHARITABLE TRUST AS PER LET TER RECEIVED ON 19.12.2013. THE ENTIRE PAYMENT WAS MADE TO THE ASSESSEE BY CHEQUES ISSUED IN HIS FAVOUR AS CONTAINED IN THE CONFIRMATION RECEIVED FROM THE TRUST . T HE DETAILS OF CHEQUES ARE TABULATED UNDER PARA 5.3 AT PAGE 3 OF THE ASSESSMENT ORDER. FURT HER, THE ASSESSING OFFICER ALSO RECEIVED THE COPIES OF BANK STATEMENT OF THE SAID TRUST. FURTHER, THE ASSESSING OFFICER CALLED FOR INFORMATION FROM THE CONCERNED BANKS, UNDER WHICH IT WAS ESTABLISHED THAT THE ASSESSEE ALONE HAD RECEIVED THE ENTIRE SALE CO NSIDERATION OF RS.35 LAKHS, OUT OF WHICH RS.11 LAKHS WAS RECEIVED DURING THE PERIOD RELEVANT TO ASSESSMENT YEAR 2011 - 12. THE ASSESSEE WAS CONFRONTED WITH THE SAME. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE ON 10.10.2013 AS PER OFFICE NOTING SAID THE NECESSARY PAPERS REGARDING LAND TRANSACTION WOULD BE SUBMITTED SHORTLY I.E. ON 15.10.2013. HOWEVER, ON 14.03.2014, THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE ATTENDED AND SAID HE COULD NOT GIVE NECESSARY INFORMATION REGARDING TRANSACT ION WITH SOHONI AND BHIDE. HE REITERATED HIS EARLIER CONTENTION THAT THE ASSESSEE WAS ONLY A POWER OF ATTORNEY HOLDER. THE ASSESSING OFFICER FURTHER OBSERVED THAT IT WAS NOT CLEAR AS TO WHY THE AMOUNT RECEIVED BY THE ASSESSEE WAS NOT PAID TO THE OWNERS O F THE PROPERTY SINCE 2008 ONWARDS. IN VIEW ITA NO. 52 /PN/20 1 5 KEDAR GANPATRAO SAWANT 4 THEREOF, THE ASSESSING OFFICER TAXED SUM OF RS.11 LAKHS AS INCOME FROM OTHER SOURCES IN THE HANDS OF ASSESSEE. 5. BEFORE THE CIT(A), THE ASSESSEE CLAIMED THAT HE WAS ONLY TRUSTEE ON BEHALF OF THE OWNERS AND THE AMOUNT WAS RECEIVED ON BEHALF OF T HE OWNERS, WHICH WAS LATER PAID. THE CIT(A) AFTER GOING THROUGH THE CHANGING STANDS OF ASSESSEE, UPHELD THE ORDER OF ASSESSING OFFICER IN TAXING SUM OF RS.11 LAKHS IN THE HANDS OF ASSESSEE. 6. THE ASSESSEE IS IN APPEAL A GAINST THE ORDER OF CIT(A). 7. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE HAD MADE ELABORATE SUBMISSIONS AND POINTED OUT THAT THE ASSESSEE HAD RECEIVED THE MONEY ON SALE OF PROPERTY AS POWER OF ATTORNEY HOLDER OF ORIGINAL OWNERS. HE FURTHER S TATES THAT THE SALE DEED WAS EXECUTED ON 15.10.2010 FOR TOTAL FURTHER S TATES THAT THE SALE DEED WAS EXECUTED ON 15.10.2010 FOR TOTAL CONSIDERATION OF RS.35 LAKHS. IN CASE THE AMOUNT WAS IN RELATION TO SALE OF PROPERTY, THEN THE SAME SHOULD BE TAXED AS CAPITAL GAINS IN THE YEAR OF AGREEMENT TO SELL I.E. DATED 17.05.2008 . HE FURTHER POINTED OUT THAT IN ANY CASE, NO AMOUNT IS TO BE TAXED IN THE YEAR UNDER CONSIDERATION. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE STRESSED THAT THE SOURCE OF SAID CHEQUES WAS ON ACCOUNT OF CONSIDERATION FOR SALE OF LAND OWNED BY SHRI SOHONI AND SHRI BHIDE AND THE ASSESSEE HAD RECEIVED THE SAID AMOUNT AS POWER OF ATTORNEY HOLDER. AS PER REGISTERED SALE DEED, WHERE THE AMOUNT OF RS.11 LAKHS WAS PART OF CONSIDERATION FOR SALE OF PROPERTY OWNED BY SHRI SOHONI AND SHRI BHIDE AND WHERE THE AMOUNT OF RS.11 LAKHS WAS HELD IN TRUST FOR THEM, THEN THE SAME COULD NOT BE ADDED IN THE HANDS OF ASSESSEE. ANOTHER POINT RAISED BY HIM THAT THE POSSESSION OF THE SAID PROPERTY WAS GIVEN ON REGISTERED AGREEMENT OF SALE ON 08.04.2008 AND CAPITAL GAINS, IF ANY, TO BE ASSESSED IN THE HANDS OF ITA NO. 52 /PN/20 1 5 KEDAR GANPATRAO SAWANT 5 OWNERS WAS TAXABLE FOR ASSESSMENT YEAR 2009 - 10 AND NO ADDITION SHOULD BE MADE IN THE HANDS OF ASSESSEE, WHO WAS JUST POWER OF ATTORNEY HOLDER. IN THIS REGARD, HE POINTED OUT THAT WHERE SOURCE OF AMOUNT RECEIVED IS EXPL AINED, THEN IT IS CAPITAL RECEIPT AND NOT TO BE ADDED IN THE HANDS OF ASSESSEE. HE FURTHER POINTED OUT THAT THE ASSESSEE WAS NOT IN A POSITION TO EXPLAIN WHETHER ANY AMOUNT WAS PAID TO THE ORIGINAL OWNERS. 8. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR T HE REVENUE POINTED OUT THAT THERE WERE CONTRADICTIONS IN THE ARGUMENTS OF ASSESSEE. ATTENTION WAS DRAWN TO THE SALE DEED EXECUTED FOR SALE OF LAND AT KOLHAPUR AND IT WAS POINTED OUT THAT THERE WAS NO CLEAR TITLE AND THE ASSESSEE WAS TO REMOVE THE HUTMENTS ON THE SAID PROPERTY AND WHERE THE ASSESSEE WAS A CIVIL CONTRACTOR AND HE WAS ENGAGED IN THE ACTIVITIES OF CLEARING THE LAND AND REMOVING THE HUTMENTS AND RECEIPTS WERE TOWARDS HIS CHARGES AND INCLUDABLE IN HIS HANDS. HE FURTHER POINTED OUT THAT WHERE TH E ASSESSEE HAS NOT BEEN ABLE TO SHOW THAT THE AMOUNT HAS BEEN PAID TO THE SAID OWNERS OF THE PROPERTY, THEN THE AMOUNT IS INCLUDABLE IN THE HANDS OF ASSESSEE AS INCOME FROM OTHER SOURCES. 9. ON PERUSAL OF RECORD AND AFTER HEARING BOTH THE LEARNED AUTHORIZ ED REPRESENTATIVES, THE ISSUE WHICH IS ARISING IN THE PRESENT APPEAL IS IN RELATION TO THE ASSESSABILITY OF RS.11 LAKHS RECEIVED BY THE ASSESSEE. THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF CONSTRUCTION ACTIVITY. THE CASE OF THE ASSESSEE BEFORE THE ASSES SING OFFICER WAS THAT HE WAS A POWER OF ATTORNEY HOLDER OF A PROPERTY, WHICH WAS OWNED BY TWO OWNERS SOHONI AND BHIDE. THE SAID PROPERTY WAS SOLD AS PER SALE DEED DATED 15.10.2010 FOR TOTAL CONSIDERATION OF RS.35 LAKHS. THE EXECUTOR OF SALE DEED WAS THE ASSESSEE. SINCE THE INFORMATION WAS RECEIVED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAD TRANSFERRED THE PROPERTY SITUATED AT SAMBHAJINAGAR, KOLHAPUR , THE ASSESSEE ITA NO. 52 /PN/20 1 5 KEDAR GANPATRAO SAWANT 6 WAS ASKED TO EXPLAIN THE TRANSACTION. BEFORE THE ASSESSING OFFICER, THE ASSESSEE VEHEME NTLY STATED THAT THE TRANSACTION OF SALE WAS ON ACCOUNT OF TWO PERSONS SOHONI AND BHIDE AND THE PURCHASER CHARITABLE TRUST HAD TRANSFERRED THE SALE CONSIDERATION TO THE SAID OWNERS AND HE HAD NOT RECEIVED ANY CONSIDERATION. HE ALSO MADE REFERENCE TO THE C LAUSES OF POWER OF ATTORNEY AND POINTED OUT THAT THE AMOUNT OF SALE CONSIDERATION BELONGS TO THE TWO OWNERS. HOWEVER, ON VERIFICATION, THE ASSESSING OFFICER FOUND THAT AS PER THE DEED OF SALE, THE ASSESSEE WAS THE VENDOR IN THE TRANSACTION FOR SALE OF PRO PERTY AND HAD ALSO RECEIVED THE TOTAL CONSIDERATION OF RS.35 LAKHS AND EVEN THE CHARITABLE TRUST VIDE LETTER DATED 19.12.2013 CONFIRMED THAT THE ENTIRE PAYMENT WAS MADE TO THE ASSESSEE BY CHEQUES, ISSUED IN HIS FAVOUR. FURTHER, THE ASSESSING OFFICER CALLE D FOR INFORMATION FROM THE RESPECTIVE BANKS, UNDER WHICH IT WAS ESTABLISHED THAT THE ASSESSEE HAD RECEIVED THE TOTAL SALE CONSIDERATION OF RS.35 LAKHS AND SUM OF RS.11 LAKHS WAS RECEIVED IN THE INSTANT ASSESSMENT YEAR. WHEN ALL THIS INFORMATION WAS PUT TO THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS, HE SOUGHT TIME TO EXPLAIN THE SAME, BUT THEREAFTER, HE DID NOT FURNISH ANY INFORMATION, EXCEPT REITERATING HIS EARLIER CLAIM THAT HE WAS ONLY THE POWER OF ATTORNEY HOLDER. THE TRANSACTION OF SALE HAD STARTED IN 2008 AND NO PART OF SALE CONSIDERATION OF RS.35 LAKHS WAS PAID BY THE ASSESSEE TO THE OWNERS SINCE 2008. IN VIEW THEREOF, SUM OF RS.11 LAKHS WAS ADDED AS INCOME FROM OTHER SOURCES IN THE HANDS OF ASSESSEE IN THE INSTANT ASSESSMENT YEAR AS A SSESSEE HAD RECEIVED RS.11 LAKHS DURING THE YEAR. THE CIT(A) NOTED THE CHANGING STANDS OF THE ASSESSEE AND HAD REJECTED THE SAME. DURING THE COURSE OF HEARING, THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE VEHEMENTLY MADE VARIOUS SUBMISSIONS WHI CH WILL BE DEALT IN THE PARAS HEREINAFTER. ITA NO. 52 /PN/20 1 5 KEDAR GANPATRAO SAWANT 7 10. THE FIRST OBJECTION OF THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE WAS THAT IN CASE SUM OF RS.35 LAKHS WAS RECEIVED ON ACCOUNT OF SALE DEED EXECUTED ON 15.10.2010, THE N THE SAME IS TO BE TAXED AS INCOME FROM CAPITAL GAINS IN THE YEAR OF AGREEMENT TO SELL I.E. 17.05.2008. THERE IS NO MERIT IN THE SAID CLAIM OF THE ASSESSEE SINCE THE SALE DEED WAS EXECUTED ON 15.10.2010. THE NEXT STAND OF THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE WAS THAT WHERE THE CONSIDERATION WAS RECEIVED AGAINST SALE OF LAND OWNED BY SOHONI AND BHIDE AND WHERE THE ASSESSEE HAD RECEIVED THE SAID AMOUNT AS POWER OF ATTORNEY, THEN THE SAID SUM OF RS.11 LAKHS WHICH WAS HELD BY THE ASSESSEE IN TRUST ON BEHALF OF THE OWN ERS, COULD NOT BE TAXED IN THE HANDS OF ASSESSEE. THE PECULIARITY OF THE FACTS DOES NOT JUSTIFY THE CLAIM OF ASSESSEE. IN CASE ANY PERSON HAS RECEIVED THE AMOUNT ON THE BASIS OF POWER OF ATTORNEY ON BEHALF OF ANY PERSON, THEN IT IS AN ENDEAVOUR OF THE RE CIPIENT OF MONEY WHO IS THE CUSTODIAN OF MONEY, TO TRANSFER THE SAID CONSIDERATION TO THE ORIGINAL OWNERS. AS POINTED OUT IN THE PARAS HEREINABOVE, THE ASSESSEE HERE TILL DAT E HAS NOT TRANSFERRED THE SAID CONSIDERATION TO THE ORIGINAL LAND OWNERS. THE AS SESSEE HAD RECEIVED THE SAID CONSIDERATION ON THE BASIS OF POWER OF ATTORNEY UNDOUBTEDLY, BUT ON THE OTHER HAND, THE ASSESSEE IS NOT THE OWNER OF LAND. IN SUCH A SITUATION, WHERE THE LAND IS HELD BY THE ORIGINAL OWNERS AND WHERE THE ASSESSEE IS ONLY THE P OWER OF ATTORNEY HOLDER, THEN THE CONSIDERATION RECEIVED FOR SUCH TRANS ACTION CANNOT BE ASSESSED UNDER THE HEAD INCOME FROM CAPITAL GAINS, SINCE THE ASSESSEE IS NOT THE OWNER OF LAND. HOWEVER, THE SAID AMOUNT MERITS TO BE ASSESSED IN THE HANDS OF ASSESS EE AS INCOME FROM OTHER SOURCE, SINCE THE ASSESSEE HAS NOT BEEN ABLE TO SUBSTANTIATE HIS STAND OF ONLY BEING THE POWER OF ATTORNEY HOLDER. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE ADMITTED THAT HE WAS NOT IN A POSITION TO EXPLAIN WHETHER ANY AMOUNT WAS PAID TO THE ORIGINAL OWNE RS TILL DATE . IN THIS REGARD, THERE IS MERIT IN THE ITA NO. 52 /PN/20 1 5 KEDAR GANPATRAO SAWANT 8 CONTENTION RAISED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE THAT THERE WAS NO CLEAR TITLE OF ORIGINAL OWNERS AND THE ASSESSEE WAS ASKED TO REMOVE THE HUTMENTS ON THE SAID PROPERTY. SINCE THE ASSESSEE WAS A CIVIL CONTRACTOR AND WAS ENGAGED IN THE AFORESAID ACTIVITY OF CLEARING THE LAND AND REMOVING HUTMENTS, THEN THE CONSIDERATION RECEIVED BY THE ASSESSEE WAS HIS INCOME AND THE SAME WAS TO BE INCLUDED IN HIS HANDS. UPHOLDING THE ORDER OF CIT(A), THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS, DISMISSED. 11 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON THIS 29 TH DAY OF JU LY , 201 6 . SD/ - (SUSHMA CHOWLA) / JUDICIAL MEMBER / PUNE ; DATED : 29 TH JU LY , 201 6 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A) , KOLHAPUR ; 4. / THE CIT - I/II, KOLHAPUR/CIT (CENTRAL), PUNE ; 5. 6. , , , - / DR SMC , ITAT, PUNE; / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE