ITO 2(1)(4), MUMBAI V. HIMALAYAN SALES P. LTD, MUMBAI

ITA 5586/MUM/2016

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 6275 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-06-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2008-2009
• Appeal Filed On: 14-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J SARAVANAN
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Additional evidence; Set aside
• Section: 50C; 80P; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D , MUMBAI BEFORE S HRI G.S. PANNU ( VP ) AND SHRI RAM LAL NEGI (JM) ITA NO. 5586/MUM/2016 ASSESSMENT Y EAR: 2008 - 09 THE ITO 2(1)(4), R. NO. 553, 5 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400020 VS. M/S HIMALAYAN SALES PVT. LTD., 17/19 MEZZANINE WADIA BUILDING, DALAL STREET, MUMBAI - 400023 PAN: AAACH2662N (APPELLANT) (RESPONDENT) REVENUE BY : SHRI J. SARAVANAN & MANOJ KUMAR SINGH (D R) ASSESSEE BY : SHRI DEVENDRA JAIN (A R) DATE OF HEARING: 22/03 /201 9 DATE OF PRONOUNCEMENT: 06 / 06 /201 9 O R D E R PER RAM LAL NEGI, JM THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER DATED 23.06.2016 PASSED BY THE COMMISSIONER O F INCOME TAX (APPEALS) - 4 (FOR SHORT THE CIT(A) , MUMBAI, FOR THE ASSESSMENT YEAR 2008 - 09 , WHEREBY THE LD. CIT(A) HAS PARTLY ALLOWED T HE APPEAL FILED BY THE ASSESSEE AGAINST THE ASSESSMENT ORDER PASSED U/S 143 (3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT). 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION DECLARING TOTAL LOSS OF RS. 23,026/ - , WHICH WAS PROCESSED U/S 143 (1) OF THE ACT. SUBSEQUENTLY, THE CASE WA S REOPENED BY ISSUING NOTICE U/S 148 ON THE GROUND THAT THE COMPANY DURING THE PREVIOUS YEAR SOLD PLOT NO. 41, LARGE IND USTRIAL AREA, KOTA (RAJASTHAN) MEASURING 9.5 ACRES FOR CONSIDERATION OF 20,00,000/ - UNDER SALE 2 ITA N O. 5586 / MUM/2016 ASSESSMENT YEAR: 2008 - 09 AGREEMENT DATED 09.01.2008 EXECUTED BETWE EN THE ASSESSEE COMPANY THROUGH SPECIAL POWER OF ATTORNEY HOLDER SH. RAMESH AGARWAL AND MADAN MOHAN VIJAY (TRANSFERRING). THE SUB - REGISTRAR VALUED THE PROPERTY FOR THE PURPOSE OF STAMP DUTY AT RS. 5,89,29,840/ - AND THE TRANSFEREE PAID STAMP DUTY OF RS. 19, 07,600/ - . THE ASSESSEE COMPANY DID NOT REFLECT THE INCOME ARISING OUT OF THE SAID TRANSACTION IN ITS RETURN OF INCOME. SINCE, AS PER THE PROVISIONS OF SECTION 50C, THE VALUE ADOPTED FOR THE PURPOSE OF SECTION 48 OF THE ACT IS DEEMED TO THE FULL VALUE OF CO NSIDERATION, THE CAPITAL GAIN ARISING IN RESPECT OF DEEMED CONSIDERATION OF RS. 5,89,29,840/ - HAS BEEN ESCAPED ASSESSMENT FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. 3. NO RESPONSE WAS RECEIVED TO THE NOTICE ISSUED U/S 148. IN RESPONSE TO NOTICE U/S 142 (1), THE AUTHORIZED REPRESENTATIVE APPEARED BEFORE T HE AO AND SUBMISSIONS WERE MADE. THE ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY THE CAPITAL GAIN ARISING FROM SALE OF PLOT NO 41(REFERRED ABOVE) SHOULD NOT BE BROUGHT TO TAX. THE ASSESSEE INTER ALIA CONTENDE D THAT SINCE THE COMPANY HAS NOT SOLD ANY PROPERTY NO CAPITAL GAIN HAS EARNED OR ACCRUED. THE ASSESSEE DENIED TO HAVE EXECUTED ANY POWER OF ATTORNEY IN FAVOUR OF SH. RAMESH AGARWAL FOR EFFECTING THE SALE IN QUESTION. SINCE, THE PLOT WAS A LEASE HOLD PR OPERTY THE ASSESSEE WAS NOT COMPETENT TO TRANSFER IT BY WAY OF SALE OR OTHERWISE WITHOUT PRIOR PERMISSION OF THE RAJASTHAN GOVERNMENT. HOWEVER, THE AO REJECTED THE CONTENTION OF THE ASSESSEE AND DETERMINED THE INCOME OF THE ASSESSEE AT RS. 5,88,29,770/ - IN TER ALIA MAKING ADDITION OF RS. 11,98,870/ - AS SHORT TERM CAPITAL GAIN AND RS. 5,75,91,232/ - AS LONG TERM CAPITAL GAIN. 4. THE ASSESSEE CHALLENGED THE ASSESSMENT ORDER BEFORE THE LD. CIT(A) INTER ALIA ON THE GROUNDS THAT THE AO HAS ERRED IN TREATING AMOUNT OF RS. 20,00,000/ - RECEIVED AS DEPOSIT AS CONSIDERATI ON RECEIVED FOR SALE OF A LEASE HOLD PROPERTY, THEREBY MAKING ADDITION OF RS. 5,87,90,102/ - A S CAPITAL GAIN ARISING ON SALE AND WITHOUT PREJUDICE, TO THE SAID GROUND THE AO HAS ERRED IN INVOKING SECTION 5 0C OF THE ACT TO THE CAPITAL ASSET ALLEGED TO HAVE TRANSFERRED, 3 ITA N O. 5586 / MUM/2016 ASSESSMENT YEAR: 2008 - 09 WHICH HAS BEEN TAKEN ON LEASE. THE LD. CIT(A) DECIDED BOTH THE GROUNDS TOGETHER IN FAVOUR OF THE ASSESSEE AND DELETED THE ADDITION MADE BY THE AO. AGAINST THE SAID FINDINGS OF THE LD. CIT(A), THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 5 . T HE REVENUE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL ON THE FOLLOWING EFFECTIVE GROUNDS : - ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT (A) HAS ERRED IN ALLOWING RELIE F TO THE ASSESSEE TO THE EXTENT IMPUGNED IN THE GROUNDS ENUMERATED BELOW: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) ERRED IN HOLDING THAT THE SALES DEED WAS FRAUDULENTLY EXECUTED WITHOUT CONSIDERING THE RECEIPT OF FULL A ND FINAL CONSIDERATION BY THE ASSESSEE FROM PROSPECTIVE BUYER AND ALSO THAT THE SALE DEED WAS DULY REGISTERED BY THE SUB - REGISTRAR, KOTA. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) HAS ERRED IN HOLDING THAT THE REGISTERED SALE DEED WAS A FRAUD EVEN BEFORE THE ALLEGATIONS MADE BY THE ASSESSEE ARE YET TO BE ADJUDICATED BY THE CIVIL COURT AND ALSO WITHOUT EXAMINING THE VERSION OF THE BUYER SHRI RAMESH AGARWAL. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) ERRED IN DELETING THE ADDITION MADE U/S 50C AND DISREGARDING THE FACTS ELABORATELY DISCUSSED BY THE A.O. IN THE ASSESSMENT ORDER. 6. BEFORE US , THE LD. DEPARTMENTAL REPRESENTATIVE (DR) SUBMITTED THAT THE LD.CIT (A) HAS ERRED IN HOLDING THAT THE SALE DEED WAS FRAUDULENTLY EXECUTED WITHOUT CONSIDERING THE RECEIPT OF FULL AND FINAL CONSIDERATION BY THE ASSESSEE FROM THE BUYER IGNORING THE FACT THAT THE ALLEGED FRAUD COMMITTED BY SH. RAMESH AGARWAL IS YET TO BE ESTABLISHED BY THE CIVIL COURT. TH E AO HAS POINTED OUT THAT FOR EFFECTING THE SALE A NEW COMPANY BY A RESEMBLING NAME HIMALAYAN SALES INDIA PVT. LTD. WAS FOUND. THE TRANSFER WAS MADE IN COLLUSION WITH SH. RAKESH AGARWAL, WHO WAS MADE THE HOLDER O F POWER 4 ITA N O. 5586 / MUM/2016 ASSESSMENT YEAR: 2008 - 09 ATTORNEY. THE LIABILITIES ARISING D UE TO NON - PAYMENT OF STATUTORY CHARGES FOR THE LEASEHOLD LAND OBTAINED FROM RAJASTHAN INDUSTRIAL INVESTMENT CORPORATION (RIICO) WERE NEITHER REFLECTED IN THE BOOKS OF ACCOUNT OF THE COMPANY NOR HAS ANY PROVISION BEEN MADE FOR THE SAID LIABILITY. HOWEVER, T HERE WAS A CLAUSE IN THE LEASE DEED THAT IF THE LEASE RENT IS NOT PAID THEN THE PLOT SHALL REVERT BACK TO RIICO . MOREOVER, THERE WAS NO MENTIONED OF YEARLY RENT FEES , WHICH WAS TO BE PAID TO RIICO AND LOCAL AUTHORITY TOWARDS THE HOLDING OF THE LAND AND BUI LDING IN QUESTION. THE LD. DR FURTHER SUBMITTED THAT THE AFORESAID FACTS AND CIRCUMSTANCES OF THE CASE ESTABLISH THAT THE ASSESSEE COMPANY HAS SOLD THE FACTORY BUILDING WITH LEASE HOLD RIGHTS IN THE LAND ALREADY TRANSFERRED TO HIMALAYAN SALES INDIA PVT. LT D. WHEREIN THE DIRECTOR OF THE ASSESSEE COMPANY WAS ALSO INITIAL DIRECTOR IN THE NEW COMPANY. UNDER THESE CIRCUMSTANCES, THE LD. CIT (A) HAS WRONGLY HELD THAT THERE IS MERIT IN THE ARGUMENT OF THE AR THAT SINCE NO PERMISSION WAS OBTAINED FOR SALE OR TRANSF ER OF LEASE HOLD LAND, THE CONTRACT FRAUDULENTLY EXECUTED IS VOID - AB - INITIO AND THE APPELLATE COMPANY CONTINUES TO HOLD THE RIGHT OVER THE LAND IN QUESTION. THE LD. DR FURTHER POINTED OUT THAT THE FINDINGS OF THE AO ARE BASED ON THE DECISION OF THE MUMBAI TRIBUNAL RENDERED IN THE CASE OF SHAVO NORGREN INDIA PVT. LTD. ITA NO. 8101 OF 2011 , WHEREIN THE TRIBUNAL HAS HELD THAT TRANSFER OF SUBSTANTIAL AND ABSOLUTE RIGHTS IN LAND AND BUILDING WILL ATTRACT PROVISIONS OF SECTION 50C OF THE ACT. ACCORDINGLY, THE LD. DR SUBMITTED THAT THE IMPUGNED ORDER PASSED BY THE LD. CIT (A) MAY BE SET ASIDE THE ORDER PASSED BY THE AO MAY BE RESTORED. 7. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE LD. CIT (A) HAS RIGHTLY DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE PARTICULARLY IN THE LIGHT OF THE FACT THAT THE ASSESSEE COMPANY HAS INITIATED CIVIL PROCEEDINGS AGAINST THE RESPONDENTS BY FILING CIVIL SUIT A FTER SERVING NOTICE U/S 80 OF THE CPC TO ALL THE DEFENDANTS INCLUDING RIICO, SUB - REGISTRAR, RAMESH A GARWAL, HIMALAYAN SALES INDIA PVT. LTD. AND OTHERS . THE LD. COUNSEL FURTHER 5 ITA N O. 5586 / MUM/2016 ASSESSMENT YEAR: 2008 - 09 SUBMITTED THAT THE ASSESSEE COMPANY NEVER AUTHORIZED SH. RAMESH AGARWAL TO SELL/TRANSFER THE SAID ASSETS . THE ASSESSEE BEING MERE HOLDER OF LEASE RIGHTS IN THE SAID LAND AND FACTOR Y BUILDING, WAS NOT COMPETENT TO SELL THE SAME WI THOUT PRIOR PERMISSION OF RIICO. THE LD. COUNSEL FURTHER POINTED OUT THAT SINCE THERE IS NO TRANSFER OF CAPITAL ASSETS, NO QUESTION OF TAXABILITY OF CAPITAL GAIN DOES ARISE. THE ASSESSEE COMPANY CAME TO KNOW ABOUT THE SAID TRANSACTION ON 05.09.2013 , WHEN IT RECEIVED NOTICE FROM THE AO. ACCORDINGLY, THE LD. COUNSEL FOR THE ASSESSEE RELYING ON THE ORDER PASSED BY THE LD. CIT (A) SUBMITTED THAT THERE IS NO INFIRMITY IN THE ORDER PASSED BY THE LD. CIT (A) TO INT ERFERE WITH. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTIES AND ALSO GONE THROUGH THE ENTIRE MATERIAL ON RECORD IN THE LIGHT OF THE RIVAL CONTENTIONS OF THE PARTIES. WE HAVE ALSO CAREFULLY GONE THROUGH THE ORDER PASSED BY THE LD. CIT (A). THE RELE VANT PARAS OF THE ORDER PASSED BY THE LD. CIT (A) READ AS UNDER: - 3 . 6. I HAVE CIRCUMSPECTED THE ENTIRE SPECTRUM OF FACTS AND CIRCUMSTANCES OF THE CASE AND HAVE CAREFULLY CONSIDERED THE FINDING OF THE AO IN THE ASSESSMENT ORDER, REPRESENTATION OF THE APP ELLANT, COUNTER - COMMENTS AND REPRESENTATION OF THE AO IN LETTER DATED 17.11.2015 AND COUNTER - COMMENTS/REJOINDER OF THE APPELLANT BY LETTER DATED 08.02.2016. I FIND THAT THE LD. AO HAS SIMPLY IGNORED THE VARIOUS FACTS AND DOCUMENTARY EVIDENCES SUPPORTING TH E CONTENTIONS OF THE APPELLANT MERELY ON THE GROUND THAT A SALE DEED WAS REGISTERED BY MR. RAMESH AGARWAL AND NOT BY MR. RAJESH AGARWAL. THE BACKGROUND FACTS OF THE CASE IS THAT THE APPELLANT COMPANY IS A LEASEHOLDER OF LAND BEARING PLOT NO. 41, INDUSTRIAL AREA, KOTA, RAJASTHAN, VIDE LEASE DEED DATED 06.02.1978 AS EXECUTED BETWEEN RAJASTHAN INDUSTRIAL DEVELOPMENT & INVESTMENT CORPORATION (RIICO), A CORPORATE BODY OF GOVERNMENT OF RAJASTHAN. THE LEASE DEED PROVIDES THAT THE APPELLANT COMPANY SHALL SET UP ON THE SAID PLOT OF LAND STONE PROCEEDING AND RCC MANUFACTURING INDUSTRY, FOR WHICH LAND HAS BEEN LEASED TO IT. THE ASSESSEE SHALL CONSTRUCT, ERECT AND BUILD ONLY 6 ITA N O. 5586 / MUM/2016 ASSESSMENT YEAR: 2008 - 09 SUCH BUILDINGS, SHEDS AND STRUCTURE AS ARE REQUIRED. FOR SETTING UP THE AFORESAID INDUSTRIES, TH E ASSESSEE WAS MADE RESPONSIBLE TO PAY RENT OF LEASED PLOT @ RS. 30/ - PER ACRE. FURTHER, THE ASSESSEE WAS MADE RESPONSIBLE TO PAY RENT OF FIRST YEAR OF RS. 14,250/ - BY WAY OF DEVELOPMENT CHARGES AS PER RAJASTHAN INDUSTRIAL AREA ALLOTMENT /RULES, 1959 . SUBS EQUENTLY , THE ASSESSEE HAS CONSTRUCTED/ERECTED FACTORY PREMISES BUT, DUE TO SOME REASON, THE FACTORY WAS SHUT DOWN AND COULD NOT BE REVIVED. SUBSEQUENTLY, THE APPELLANT COMPANY WANTED TO SELL OUT THE LEASED PROPERTY BY WAY OF TRANSFER OF RIGHT TO OTHER COM PANY/PERSON. AS PER THE LEASE DEED DATED 06.12.1978, THE ASSESSEE COULD NOT SUBLET, UNDER - LET OR SELL ITS LEASEHOLD RIGHTS UNDER THE LEASE DEED WITHOUT WRITTEN CONSENT OF THE RAJASTHAN' I NDUSTRIAL DEVELOPMENT & INVESTMENT CORPORATION. THE VARIOUS CLA USE/TE RMS OF LEASE DEED PROVIDE THAT IN CASE OF ANY DEFAULT COMMITTED BY THE ASSESSEE COMPANY, THE PLOT OF LAND SHALL REVERT TO RIICO. SUBSEQUENTLY, THE ASSESSEE HAS GIVEN A SPECIAL POWER OF ATTORNEY FOR TRANSFER OF LAND AND FACTORY MR. RAMESH AGARWAI, THE PROSP ECTIVE TRANSFEREE, WAS TO OBTAIN NECESSARY PRIOR PERMISSION FROM RIICO AND HE WAS ALSO TO PAY ALL THE DUES OF THE GOVERNMENT OF RAJASTHAN. FOR GIVING THIS RIGHT, THE ASSESSEE HAS RECEIVED RS. 20 LAKH AND THIS AMOUNT HAS BEEN SHOWN AS ADVANCE IN THE BALANCE SHEET. IN THIS SPECIAL POWER OF ATTORNEY BEING MEMORANDUM OF UNDERSTANDING (MOU) - CUM - AGREEMENT, IT WAS MENTIONED THAT THE PROPERTY WAS TO BE TRANSFERRED AFTER PRIOR PERMISSION FROM THE GOVERNMENT OF RAJASTHAN. HOWEVER, AS PER THE DECLARATION OF THE ASSESS EE AND NOTICE U/S 80 OF CPC 1908, PHYSICAL POSSESSION WAS NO GIVEN TO THE PURCHASER. THE TRANSFEREE COMPANY WAS INCORPORATED ON 14.03.2005 AT JAIPUR. SINCE THE AGREEMENT WAS NOT EXECUTED BEFORE 31 .03.2005, THE ASSESSEE HAS SHOWN AN AMOUNT OF RS. 20 LAKH A S DEPOSIT. ACCORDING TO THE ID A.R/APPELLANT, WHEN TERMS AND CONDITIONS OF MOU CUM - AGREEMENT WAS NOT FULFILLED AND SUCH ASSIGNMENT WAS NOT REGISTERED WITHIN THE STIPULATED TIME THAT MOU CUM AGREEMENT BECAME ENFORCEABLE . 7 ITA N O. 5586 / MUM/2016 ASSESSMENT YEAR: 2008 - 09 THE FACT THAT AFTER RECEIPT OF NOTIC E FROM THE INCOME - TAX DEPARTMENT REGARDING REGISTRATION OF SALE DEED DATED 09.01.2008, THE APPELLANT HAS IMMEDIATELY STARTED LEGAL PROCEEDING BY FILING A SUIT AT APPROPRIATE FORUM REVEAL THAT ACTUAL SALE WAS NOT DONE. THE APPELLANT HAS ALSO ISSUED A NOTICE U/S 80 OF CPC AS REFERRED TO ABOVE. IN NOTICE, THE APPELLANT HAS VERY CATEGORICALLY STATED THAT A COPY OF SPECIAL POWER OF ATTORNEY DATED 11.01.2005 SUBMITTED TO RIICO HAS BEEN TAMPERED BY MR. RAMESH AGARWAL WHILE SUBMITTING THE XEROX COPY OF ORIGINAL SPE CIAL POWER OF ATTORNEY. THE CLAUSE NO. 2 AND OTHER CLAUSES HAVE BEEN REMOVED/TAMPERED AS IS EVIDENT FROM THE ANNEXURE OF SALE DEED DATED 09.01.2008 REGISTERED IN THE OFFICE OF SUB - REGISTRAR - II, KOTA. DURING THE COURSE OF ASSESSMENT PROCEEDINGS ITSELF, THE APPELLANT HAS BROUGHT THIS FACT TO THE NOTICE OF AO VIDE REPLY TO THE NOTICE DATED 27.09.2013. WHEN THE APPELLANT HAS VERY CATEGORICALLY STATED LAND AND FACTORY UNDER REFERENCE WAS LEASEHOLD, WHICH COULD NOT BE SOLD OUT BY THE COMPANY WITHOUT ANY PERMISSIO N FROM THE GOVERNMENT OF RAJASTHAN AND THEREFORE, THE SALE AGREEMENT DATED 09.01.2008 WAS CAUSED FRAUDULENTLY BY ONE MR. RAMESH AGARWAL & APPELLANT COMPANY WAS NOT AWARE OF THE EXISTING REGISTRATION OF THE DOCUMENT, THEN IT WAS THE RESPONSIBILITY OF THE AO TO GET IT CONFIRMED FROM RAJASTHAN INDUSTRIAL DEVELOPMENT & INVESTMENT CORPORATION, BUT, AS EVIDENT FROM THE ASSESSMENT PROCEEDINGS THAT THE AO HAD NOT DONE SO AND HAS MERELY RELIED UPON THE SALE DEED, WHICH, VERACITY, HAS BEEN CHALLENGED BY THE APPELLAN T DURING THE ASSESSMENT PROCEEDINGS ITSELF. IT IS A FACT THAT THE ASSESSEE WANTED TO TRANSFER OR SALE THE PROPERTY, WHICH WAS SUBJECT TO FULFILMENT OF TERMS AND CONDITIONS OF RIICO AND RESPONSIBILITY WAS TAKEN BY ONE MR. RAMESH AGARWAL TO MEET OUT THE TERM S AND CONDITIONS. ONLY WHEN SUCH TERMS AND CONDITIONS ARE MET OUT, SUCH REGISTRATION COULD BE DONE, HENCE. I FIND NO REASON TO DISBELIEVE THE CONTENTION OF THE APPELLANT THAT THE SALE DEED WAS FRAUDULENTLY GOT EXECUTED MERELY ON THE BASIS OF MOU - CUM - AGREEM ENT. WHEN THE APPELLANT HAS CATEGORICALLY STATED, DURING THE COURSE OF ASSESSMENT PROCEEDINGS ITSELF, THAT IT HAS NOT SOLD OUT THE LEASEHOLD LAND BELONGING TO THE STATE OF 8 ITA N O. 5586 / MUM/2016 ASSESSMENT YEAR: 2008 - 09 RAJASTHAN, THE AO COULD HAVE VERIFIED FROM LEASEHOLD LAND BELONGING TO THE STATE OF RAJASTHAN, THE AO COULD HAVE VERIFIED FROM RIICO/RAJASTHAN GOVERNMENT AND THEN COULD HAVE REACHED TO THE CONCLUSION AS TO WHETHER SALE WAS REALLY A GENUINE SALE OR IT WAS A FRAUDULENT EXECUTION OF SALE DEED. FURTHER, I FIND NO REASON TO DISCARD THE SUIT FI LED BY THE APPELLANT BEFORE THE HONBLE DISTRICT JUDGE, KOTA. IN THIS SUIT, THE APPELLANT HAS VERY CATEGORICALLY STATED THE ENTIRE HAPPENING AND FRAUDULENT ACT OF SHRI RAMESH AGARWAL AND SHRI D.V. MAHESHWARI. IT IS WORTHWHILE TO MENTION THAT IN THE PETITIO N, THE APPELLANT HAS VERY CATEGORICALLY MENTIONED ABOUT THE FRAUDULENT EXECUTION OF SALE DEED BY MENTIONING LEASEHOLD LAND A FREEHOLD LAND. THE DESCRIPTION OF VARIOUS FACTS AND REPRESENTATION OF THE APPELLANT IN PETITION/SUIT DATED 18.03.2015 CORROBORATE S THE FACTS MENTIONED IN ITS EXPLANATION DATED 29.07.2014 AND 28.10.2013 GIVEN TO THE AO. THUS, MERELY, ON THE BASIS OF ARGUMENTS OF THE LD. AO IN LETTER DATED 17.11.2015, THE REPRESENTATION OF THE APPELLANT CANNOT BE IGNORED/BRUSHED ASIDE BECAUSE ALL SUCH FACTS ARE BASED ON DOCUMENTARY EVIDENCES SUBJECT TO LEGAL ACTION AND ALSO BASED ON NOTICE U/S 80P OF CPC 1908. THUS BOTH DOCUMENTS REVEAL THE FACT THAT THE CLAIM OF THE APPELLANT IS BASED ON LEGAL DOCUMENTS AND ARE WORTH CONSIDERATION. 3.7 AS REGARDS DIFF ERENT NAME LIKE RAMESH AGARWAL OR RAJESH AGARWAL, THE APPELLANT HAS VERY CATEGORICALLY STATED THAT THERE IS A TYPOGRAPHICAL MISTAKE, WHICH WAS CLARIFIED IN LETTER DATED 19.08.2015 AND THE ACTUAL NAME OF THE CONCERNED PERSON IS MR. RAMESH AGARWAL AND NOT MR . RAJESH AGARWAL. FURTHER, I FIND FORCE IN THE ARGUMENTS OF THE LD. AR THAT DOCUMENTS UNDER REFERENCE OF THE AO WERE NOT REGISTERED AND NO PERMISSION FOR SALE OR TRANSFER OF LAND AND FACTORY WAS OBTAINED, HENCE, CONTRACT WAS NOT CONCLUDED AND THEREFORE, TH E APPELLANT COMPANY WAS CONTINUED TO HOLD THE RIGHT IN THE PROPERTY TILL DATE. FURTHER. I FIND FORCE IN THE ARGUMENTS OF THE APPELLANT THAT IT WAS NOT AWARE OF THE FRAUD COMMITTED BY MR. RAMESH AGARWAL AND OTHER RELATED PERSONS AS IT WAS KEPT IN DARK. IN F ACT, NO DOCUMENTS BEAR THE SIGNATURE OF THE DIRECTOR OF THE APPELLATE COMPANY NOR DOES IT HAVE THE SEAL OF THE 9 ITA N O. 5586 / MUM/2016 ASSESSMENT YEAR: 2008 - 09 COMPANY. FURTHER, NO RESOLUTION HAS BEEN ATTACHED WITH SALE DEED. FURTHER, I FIND FORCE IN THE ARGUMENT OF THE ID. A.R. THAT ONLY AFTER RECEIVING NOTICE FROM THE OFFICE OF THE AO, THE APPELLANT CAME TO KNOW ABOUT FRAUDULENT SALE DEED. IT IS ALSO A FACT THAT IMMEDIATELY AFTER RECEIPT OF NOTICE THE ASSESSEE HAS ISSUED A LEGAL NOTICE TO RIICO AND SHRI. RAMESH AGARWAL. THEREFORE, IT IS VERY VISIBLE FRO M THE EXPLANATION OF THE APPELLANT THAT SAME FRAUD HAS BEEN COMMITTED BY ONE MR. RAMESH AGARWAL, WHO HAS MISUSED THE POWER OF ATTORNEY AND HAS WRONGLY GOT REGISTERED SALE DEED FOR SELLING OUT THE LEASED LAND OF THE APPELLANT COMPANY. SUCH CONTENTION AND EX PLANATION OF THE APPELLANT COMPANY CORROBORATED BY THE FACT THAT MR. RAMESH AGARWAL HAD ENTERED INTO SALE DEED ON 09.01.2008, AND AFTER THAT ON 11.01.2008, HE HAD ENTERED INTO AGREEMENT TO REGISTER THE SAME LAND AS LEASEHOLD. THE ADDITIONAL EVIDENCE SUBMIT TED BY THE APPELLANT FURTHER SUPPORT THE CONTENTION. THUS NONE OF THE COUNTER - ARGUMENTS OF THE LD. AO IN THE REPRESENTATION LETTER DATED 17.11.2015 IS FOUND WORTH APPROVAL OR TENABLE. 3.8. IT CAN BE SEEN FROM THE BALANCE SHEET SUBMITTED BY THE APPELLANT IN PAPER BOOK THAT SCHEDULE 2 OF THE BALANCE SHEET REVEALS THE FACT OF LEASEHOLD LAND, BUILDINGS AND SHEDS AT KOTA AS PART AND PARCEL OF FIXED ASSETS AS ON 31.3.2008. FURTHER, IN SUBSEQUENT YEARS ALSO, SAME LEASEHOLD LAND UND FACTORY DOES APPEAR IN THE BALAN CE SHEETS OF A.Y. 2009 - 10 TO 2012 - 13, HENCE, THE CONTENTION OF THE APPELLANT IS FOUND CORROBORATED THAT, IN REALITY, SUCH LAND AND FACTORY HAS NOT BEEN SOLD OUT. FURTHER, SCHEDULE 5 OF THE BALANCE SHEET REVEALS THE FACT THAT THE APPELLANT HAS SHOWN RS. 20 LAKH AS DEPOSITED FOR LAND. SUCH DEPOSIT WAS APPEARING IN THE BALANCE SHEET RIGHT FROM 31.03.2007 AND TILL DATE. THEREFORE, THIS TACT CANNOT BE IGNORED WHILE CONSIDERING THE ISSUE UNDER APPEAL. WHEN THE APPELLANT HAS SUBMITTED MORE THAN SUFFICIENT EVIDENCE S IN SUPPORT OF ITS CONTENTION, SAME CANNOT BE IGNORED OR DISCARDED AS ALL THESE EVIDENCES ARE ADMISSIBLE AS PRIMARY EVIDENCE. THUS, NO ADDITION COULD BE MADE ON THE BASIS OF SALE DEED, WHICH, VERACITY HAS BEEN CHALLENGED DURING THE COURSE OF ASSESSMENT PR OCEEDINGS ITSELF AND IT HAS BEEN MENTIONED VERY CATEGORICALLY 10 ITA N O. 5586 / MUM/2016 ASSESSMENT YEAR: 2008 - 09 THAT INITIAL INTENTION OF SALE OF LAND AND FACTORY AT KOTA WAS SUBJECT TO PERMISSION FOR TRANSFER FROM RIICO AND THE SAME COULD NOT BE REGISTERED BEFORE 31.03.2005, HENCE, THERE WAS NO OPTION LE FT BUT TO KEEP THE AMOUNT AS DEPOSIT IN ITS LOOKS OF ACCOUNT. THEREFORE, I FIND FORCE IN THE ARGUMENT OF THE LD. AR THAT NO PERMISSION WAS OBTAINED FOR SALE OR TRANSFER OF LEASEHOLD LAND AND THEREFORE, CONTRACT WAS NOT CONCLUDED AND THE APPELLANT COMPANY C ONTINUED TO HOLD THE RIGHT OVER THE LEASED LAND AS EVIDENT FROM BALANCE SHEETS. 3.9. FURTHER, WHEN IT IS HELD THAT SHRI. RAMESH AGARWAL HAS GOT REGISTERED THE DOCUMENTS WITHOUT PRIOR CONSENT OF THE APPELLANT AND WITHOUT OBTAINING PERMISSION FROM RIICO, THE RE IS NO PROPRIETY TO MAKE ADDITION BY ADOPTING READY RECKONER VALUE/CIRCLE VALUE OF THE PROPERTY AND MAKE ADDITION OF RS. 5,87,90,102/ - AS CAPITAL GAINS. THEREFORE , IN THE LIGHT OF ABOVE DISCUSSION AND FACTUAL ANALYSIS AND ALSO CONSIDERING DECISION OF THE HON'BLE ITAT IN THE CASE OF SHRI. ATUL G PURANIK VS. ITO12(1) - 1 ITA NO. 3051/MUM/2010 DATED 13.05.2011, AND ITO VS. PRADEEP STEEL RE - ROLLING MILLS (P) LTD. ITA NO. 341 /MUM) 2010 DATED 15.07.2011, THE ADDITION SO MADE O F RS. 5,76,91,232/ - IS DELETED. 3.8 IN THE RESULT, GROUND NO. 3 IS ALLOWED. 4. GROUND NO. 4 IS AGAINST INVOKING OF SEC. 50C. THE CORE ISSUE RELATING TO THIS GROUND OF APPEAL HAS ALREADY BEEN AGITATED IN GROUND NO. 3, WHICH HAS BEEN DECIDED IN FAVOUR OF THE APPELLANT, HENCE, GROUND NO. 4 GOT MERGED, HENCE NO FURTHER ADJUDICATION IS REQUIRED 9. WE NOTICE THAT THE LD. CIT (A) HAS DECIDED THE ISSUE BY TAKING INTO CONSIDERATION, THE ENTIRE FACTS OF THE CASE IN THE LIGHT OF THE EVIDENCE ON RECORD . THE LD. CIT (A) HAS POINTED OUT THAT AS PER T HE LEASE DEED DATED 06.12.1978, THE ASSESSEE WAS NOT COMPETENT TO SUBLET OR SELL ITS LEASEHOLD RIGHTS MENTIONED IN THE LEASE DEED WITHOUT OBTAINING WRITTEN CONSENT FROM RIICO. THE LD. CIT (A) HAS FURTHER POINTED OUT THAT AS PER THE DECLARATION AND NOTICE U /S 80 OF THE CPC, PHYSICAL POSSESSION WAS NOT GIVEN TO THE PURCHASER. THE ASSESSEE HAS 11 ITA N O. 5586 / MUM/2016 ASSESSMENT YEAR: 2008 - 09 FURTHER MENTIONED IN THE SAID NOTICE THAT A COPY OF SPECIAL POWER OF ATTORNEY DATED 11.01.2005 SUBMITTED TO RIICO HAS BEEN TAMPERED BY MR. RAJESH AGARWAL WHILE SUBMITTIN G THE XEROX COPY OF ORIGINAL SPECIAL POWER OF ATTORNEY. THE LD. CIT (A) HAS FURTHER POINTED OUT THAT IT WAS THE RESPONSIBILITY OF THE AO TO GET IT CONFIRMED FROM RIICO. HOWEVER, NO SUCH ENQUIRY WAS MADE BY THE AO AND HE RELIED UPON THE SALE DEED , GENUINENE SS OF WHICH HAS BEEN CHALLENGED BY THE ASSESSEE. THE LD. CIT (A) HAS FURTHER POINTED OUT THAT AS PER THE BALANCE SHEET, THE LEASEHOLD LAND BUILDING AND SHED ON THE SAID PLOT WERE EXISTING AS FIXED ASSETS AS ON 31.03.2008 AND IT REMAINED THE FIXED ASSET S OF THE COMPANY DURING THE ASSESSMENT YEAR 2009 - 10 TO 2012 - 13, WHICH FURTHER SUPPORT THE CONTENTION OF THE ASSESSEE THAT THE ASSESSEE DID NOT SELL ANY LAND/FACTORY. WE FURTHER NOTICE THAT THE FACTS OF THE CASE RELIED UPON BY THE AO ARE DIFFERENT FROM THE FACT S OF THE PRESENT CASE. 10. HENCE, WE ARE OF THE CONSIDERED VIEW THAT THE FINDINGS OF THE LD. CIT (A) ARE BASED ON THE EVIDENCE ON RECORD AS WELL AS IN ACCORDANCE WITH THE ESTABLISHED PRINCIPLES OF LAW. WE THEREFORE, WE DO NOT FIND ANY INFIRMITY LEGAL OR F ACTUAL IN THE ORDER PASSED BY THE LD. CIT (A). ACCORDINGLY, WE UPHOLD THE FINDINGS OF THE LD.CIT (A) AND DISMISS ALL THE GROUNDS OF APPEAL OF THE REVENUE. IN THE RESULT, APPEAL FILED BY THE REVENUE FOR ASSESSMENT YEAR 2008 - 2009 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 6 TH JUNE , 2019 . SD/ - SD/ - ( G.S. PANNU ) ( RAM LAL NEGI ) VICE PRESIDENT JUDICIAL MEMBER MUMBAI ; DATED: 06 / 06/ 201 9 ALINDRA, PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 12 ITA N O. 5586 / MUM/2016 ASSESSMENT YEAR: 2008 - 09 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