Smt. K.S. Seethamma, Bangalore V. CIT, Bangalore

ITA 530/BANG/2014

• Counselvise Citation: 53021114 RSA 2014
• Duration Of Justice: 10 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-03-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 25-02-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 21-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C H SUNDAR RAO CITIDR
• Assessee Lawyers: P DINESH
• Keywords: Unexplained investment; Opportunity of being heard; Source of fund
• Section: 263; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, JUDICIAL MEMBER AND SHRI JASON P. BOAZ, ACCOUNTANT MEMBER ITA NO.530/BANG/2014 ASSESSMENT YEAR : 2009-10 SMT.K.S. SEETHAMMA, NO.31, 3 RD STAGE, 1 ST BLOCK, 11 TH CROSS, GAYATHRI HOUSE BUILDING CO-OP. SOCIETY LTD., BASAVESHWARNAGAR, BANGALORE 560 079. PAN: APWPS 4789P VS. THE COMMISSIONER OF INCOME TAX, BANGALORE-IV, BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SHRI P. DINESH, ADVOCATE RESPONDENT BY : SHRI C.H. SUNDAR RAO, CIT-I(DR) DATE OF HEARING : 25.02.2015 DATE OF PRONOUNCEMENT : 05.03.2015 O R D E R PER N.V. VASUDEVAN, JUDICIAL MEMBER THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER DATED 20.2.2014 OF THE COMMISSIONER OF INCOME-TAX, BANGALORE-IV, BANGA LORE RELATING TO ASSESSMENT YEAR 2009-10. 2. THE ASSESSEE IS AN INDIVIDUAL. THE RETURN OF IN COME FOR AY 09-10 WAS FILED BY HER DECLARING TAXABLE INCOME OF RS.1,9 2,134. THE ITS DATA ITA NO.530/BANG/2014 PAGE 2 OF 5 REFLECTED A TRANSACTION OF PURCHASE OF IMMOVABLE PR OPERTY BY THE ASSESSEE FOR A SALE CONSIDERATION OF RS.36.55 LAKHS BEARING NEW KHATA NO.589/25/19/23 IN SY. NO.23 AT GULLOBANAHALLI VILL AGE, DEVANAHALLI TOWN MUNICIPALITY. THE SUB-REGISTRAR, DEVANAHALLI, BANG ALORE CONFIRMED THAT THE PROPERTY WAS REGISTERED IN THE NAME OF ASSESSEE. I N THESE CIRCUMSTANCES, THE AO CALLED UPON THE ASSESSEE BY A NOTICE DATED 2 8.10.2011 TO ESTABLISH THE SOURCE OF FUNDS OUT OF WHICH THE PROPERTY WAS P URCHASED. 3. THE ASSESSEE SENT A REPLY TO THE AO EXPLAINING THAT HE HAD PURCHASED THE PROPERTY AT NEW KHATA NO.23/2A, SITE NO.15, GOLLAHALLI VILLAGE, UTTARAHALLI HOBLI, BANGALORE UNDER A REGIS TERED SALE DEED DATED 4.9.2002 FROM ONE MR. KRISHNAMURTHY. IT LATER TRANS PIRED THAT MR. KRISHNAMURTHY DID NOT HAVE PROPER TITLE OVER THE PR OPERTY AND THEREFORE THE SALE IN FAVOUR OF THE ASSESSEE WOULD BE NULL AND VO ID. AFTER NEGOTIATION, MR. KRISHNAMURTHY AGREED TO CONVEY ANOTHER PROPERTY VIZ. NEW KHATA NO.589/25/19/23 IN SY. NO.23 AT GULLOBANAHALLI VILL AGE, DEVANAHALLI TOWN MUNICIPALITY. THIS IS THE PROPERTY REFERRED TO BY THE AO IN HIS SHOW CAUSE NOTICE DATED 28.10.2011. THE ASSESSEE POINTED OUT THAT THOUGH THE SALE DEED DATED 5.12.2008 MENTIONS THAT A SUM OF RS.36,5 5,000 WAS PAID BY THE ASSESSEE TO MR. KRISHNAMURTHY, NO SUCH PAYMENT WAS IN FACT MADE, AS THE PROPERTY WAS CONVEYED TO THE ASSESSEE IN VIEW O F THE FACT THAT THE SALE OF PROPERTY AT GOLLAHALLI VILLAGE TURNED OUT TO BE NULL AND VOID. THE ASSESSEE THUS EXPLAINED THAT NO CONSIDERATION WHATS OEVER WAS PAID AS ITA NO.530/BANG/2014 PAGE 3 OF 5 RECITED IN THE SECOND SALE AGREEMENT DATED 5.12.200 8. THE AFFIDAVIT OF MR. KRISHNAMURTHY AFFIRMING THE ABOVE FACTS WAS ALSO FI LED BEFORE THE AO. 4. THE AO PASSED AN ORDER OF ASSESSMENT U/S. 143(3 ) OF THE ACT ACCEPTING THE AFORESAID CLAIM OF THE ASSESSEE. 5. THE CIT IN EXERCISE OF HIS POWERS U/S. 263 OF T HE ACT WAS OF THE VIEW THAT THE ASSESSMENT ORDER WAS ERRONEOUS AND PR EJUDICIAL TO THE INTERESTS OF REVENUE, INASMUCH AS THE AO HAS MERELY TAKEN COGNIZANCE OF AN AFFIDAVIT FILED BY MR. KRISHNAMURTHY WHICH WAS C ONTRARY TO THE RECITAL IN THE SALE DEED DATED 5.12.2008. THE CIT ALSO FOUND THAT THE FIRST SALE DEED DATED 4.9.2002 BY WHICH PROPERTY AT GOLLAHALLI VILL AGE WAS TRANSFERRED ONLY FOR A CONSIDERATION OF RS.2,85,000 AND THEREFORE TH E VALUATION DID NOT JUSTIFY SELLING THE GULLOBANAHALLI PROPERTY FOR A SUM OF RS .36,55,000. ACCORDING TO THE CIT, THERE OUGHT TO HAVE BEEN AN EXCHANGE TH AT OUGHT TO HAVE TAKEN PLACE IF THE CONTENTION OF THE ASSESSEE HAS TO BE A CCEPTED. THE CIT THEREFORE CONCLUDED THAT ASSESSEE HAS FAILED TO EXP LAIN THE SOURCE OF FUNDS FOR MAKING INVESTMENT IN PURCHASE OF THE PROPERTY U NDER SALE DEED DATED 5.12.2008 AT GULLOBANAHALLI VILLAGE. HE ACCORDINGL Y DIRECTED THE AO TO REVISE THE ORDER OF ASSESSMENT BY MAKING AN ADDITIO N OF RS.36.55 LAKHS AS UNEXPLAINED INVESTMENT. 6. AGGRIEVED BY THE ORDER OF CIT, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. ITA NO.530/BANG/2014 PAGE 4 OF 5 7. WE HAVE HEARD THE SUBMISSIONS OF THE LD. COUNSE L FOR THE ASSESSEE AND THE LD. DR. IN OUR VIEW, THE EXERCISE OF JURIS DICTION U/S. 263 OF THE ACT WAS CALLED FOR AS THE AO HAD ACCEPTED THE EXPLANATI ON OFFERED BY THE ASSESSEE WITHOUT MAKING ANY FURTHER INVESTIGATION, WHICH HE OUGHT TO HAVE MADE. WE ARE, HOWEVER, OF THE VIEW THAT THE CIT OU GHT TO HAVE SET ASIDE THE ORDER OF AO AND REMANDED THE ISSUE FOR FRESH CO NSIDERATION AND OUGHT NOT TO HAVE DIRECTED THE AO TO REVISE THE ORDER OF ASSESSMENT BY MAKING AN ADDITION OF RS.36.55 LAKHS AS UNEXPLAINED INVEST MENT. ADMITTEDLY, THE AFFIDAVIT OF MR. KRISHNAMURTHY WAS FILED WHICH SUPP ORTED THE PLEA PUT FORTH BY THE ASSESSEE BEFORE THE AO. IN THE PROCEEDINGS BEFORE THE CIT, THE ASSESSEE ALSO FILED GUIDELINE VALUATION TO SHOW THA T THE VALUE OF PROPERTY AT GOLLAHALLI VILLAGE WAS MUCH MORE THAN THE PROPERTY WHICH THE ASSESSEE ULTIMATELY GOT AT GULLOBANAHALLI VILLAGE. IN THESE CIRCUMSTANCES, BEFORE COMING TO THE CONCLUSION THAT THERE WAS UNEXPLAINED INVESTMENT, IT WAS INCUMBENT ON THE PART OF THE CIT TO HAVE EXAMINED M R. KRISHNAMURTHY AND THE ASPECT OF VALUATION OF THE PROPERTY OUGHT TO HA VE BEEN GONE INTO. FURTHER, IT WAS ALSO NECESSARY TO SEE AS TO HOW THE FIRST SALE DATED 49.9.2002 OF GOLLAHALLI VILLAGE PROPERTY HAD IMPROP ER TITLE AND CONSEQUENTLY AS A MEASURE OF COMPROMISE KRISHNAMURTHY SOLD THE G ULLOBANAHALLI VILLAGE PROPERTY. WITHOUT MAKING SUCH ENQUIRIES, IT IS NO T POSSIBLE TO MAKE AN ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENT. 8. WE THEREFORE MODIFY THE ORDER OF CIT AND HOLD TH AT THE DIRECTION OF THE CIT TO MAKE AN ADDITION OF RS.36.55 LAKHS AS UN EXPLAINED INVESTMENT ITA NO.530/BANG/2014 PAGE 5 OF 5 BE DELETED. INSTEAD, THE ORDER OF THE AO ON THIS I SSUE IS SET ASIDE AND REMANDED TO THE AO FOR FRESH CONSIDERATION AFTER AF FORDING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TR EATED AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 5 TH DAY OF MARCH , 2015 . SD/- SD/- ( JASON P. BOAZ ) ( N.V. VASUDEVA N ) ACCOUNTANT MEMBER JUDICIAL MEMBE R BANGALORE, DATED, THE 5 TH MARCH , 2015 . /D S/ COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY ITAT, BANGALORE.