Pushpa Gautam, New Delhi V. DCIT, New Delhi

ITA 5806/DEL/2015

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 5140 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2012-2013
• Appeal Filed On: 21-10-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VED PRAKASH MISHRA
• Keywords: Capital asset
• Section: 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES G: DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER & SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA.NO.5806/DEL./2015 ASSESSMENT YEAR 2012-13 PUSHPA GAUTAM 4/20, BLOCK NO. 4, EAST PATEL NAGAR, NEW DELHI. BAVPG1975L VS. DCIT CENTRAL CIRCLE-8, ARA CENTRE, JHANDEWALAN EXTENSION, NEW DELHI. (APPELLANT) (RESPONDENT) FOR ASSESSEE : SH. VED JAIN, CA FOR REVENUE : SH. VED PRAKASH MISHRA, SR. DR DATE OF HEARING : 17.10.2018 DATE OF PRONOUNCEMENT : 24 .10 .2018 ORDER PER SHRI BHAVNESH SAINI, J.M. THIS APPEAL BY ASSESSEE HAS BEEN DIRECTED AGAINST THE ORDER OF LD. CIT(A)-24, NEW DELHI DATED 28.08.2015 FOR AY 2012-13 CHALLENGING THE ADDITION OF RS. 52,65,000/- . 2 ITA.NO.5806/DEL./2015 2. BRIEFLY THE FACTS OF THE CASE ARE THAT SEARCH AN D SEIZURE ACTION U/S 132 OF THE ACT WAS CONDUCTED ON MITTAL A ND THE GAUTAM FAMILY GROUP OF CASES ON 17.01.2012. THE CA SE OF THE ASSESSEE WAS ALSO COVERED UNDER THE SEARCH. THESE CASES WERE CENTRALIZED. 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, FRO M THE PERUSAL OF THE SEIZED MATERIAL AND DETAILS FILED BY ASSESSEE, IT WAS NOTICED THAT ASSESSEE IS THE OWNER OF PROPERTY AT 7/5283 KISHAN NAGAR, KAROL BAGH, DELHI HAVING A SHARE OF 4 5% IN THE PROPERTY ALONG WITH SH. VISHWAJIT GAUTAM AND SHRI S HAILENDRA GAUTAM. DURING THE YEAR, THE ASSESSEE HAD ENTERED INTO AN AGREEMENT TO SELL WITH SHRI MOHIT MITTAL WITH REGAR D TO THE PROPERTY FOR A SUM OF RS. 7.5 CRORES. THE PROPERTY WAS TO BE REGISTERED AT RS. 1.2 CRORES AND THE REST OF THE CO NSIDERATION OF RS. 6.3 CRORES WAS TO BE RECEIVED IN CASH. DURING THE COURSE OF SEARCH CASH OF RS. 2.48 CRORES WAS FOUND AND SEI ZED AND SHRI MOHIT MITTAL HAS ACCEPTED THAT HE HAS PAID RS. 6.5 CRORES IN CASH TO THE SELLER EARLIER. IN HER STATEMENT RE CORDED DURING 3 ITA.NO.5806/DEL./2015 THE COURSE OF SEARCH, THE ASSESSEE HAS ACCEPTED THA T SHE HAS RECEIVED CASH OF RS. 1,19,25,000/- AS HER SHARE OUT OF TOTAL CASH RECEIVED OF RS. 2.65 CRORES. AO MENTIONED THA T NEITHER THE PURCHASER SHRI MOHIT MITTAL NOR THE SELLERS SH. VISHVAJIT GAUTAM, SH. SHAILENDER GAUTAM AND THE ASSESSEE HAVE FURNISHED ANY EXPLANATION REGARDING THE BALANCE CAS H CONSIDERATION OF RS. 1.17 CRORES (6.3 CRORES 5.13 CRORES). IN THE ABSENCE OF ANY EXPLANATION, AO NOTED THAT IT CA NNOT BE DENIED THAT ASSESSEE MUST HAVE RECEIVED HER SHARE O F THE AMOUNT OF RS. 1,17,00,000/- FROM THE PURCHASER EARL IER AND HAD NOT DISCLOSED THE SAME TO THE DEPARTMENT. THE SHARE OF THE ASSESSEE AT 45% OF THE SAID AMOUNT COMES TO RS. 52,65,000/- WHICH WAS ADDED TO THE INCOME OF ASSESS EE ON ACCOUNT OF UNDISCLOSED INCOME EARNED FOR THE YEAR U NDER CONSIDERATION. THE LD. CIT(A) CONFIRM THE ADDITION . 4. LD. COUNSEL FOR THE ASSESSEE, AT THE OUTSET, SUB MITTED THAT THE CO-OWNERS SHRI SHAILENDRA GAUTAM AND SH. V ISHVAJIT GAUTAM HAD PREFERRED APPEALS BEFORE ITAT DELHI G BENCH IN 4 ITA.NO.5806/DEL./2015 ITA NOS. 5891/DEL/2015, 5804/DEL/2015 & 5805/DEL/20 15, WHICH WERE DECIDED VIDE ORDER DATED 04.06.2018 AND THE IDENTICAL ADDITIONS HAVE BEEN DELETED. THE FINDING S OF THE TRIBUNAL IN PARA 9 TO 17 ARE REPRODUCED AS UNDER: 9. THE LD. CIT(A) AFTER ANALYZING THE PROVISIONS O F SECTION 53A OF THE TRANSFER OF PROPERTY ACT 1882 R.W.S 2(47)(V) & (VI) OF THE ACT OBSERVED THAT THE FOLLOWING PRECONDITIONS MUST EXIST TO INVOKE THE AFORESAID PROVISIONS: 1. THERE MUST BE A CONTRACT TO TRANSFER OF IMMOVABL E PROPERTY. 2. THERE MUST A CONSIDERATION FOR THE TRANSFER. 3. THE CONTRACT MUST BE IN WRITING, SIGNED BY THE TRANSFEROR OR SOMEONE ON HIS BEHALF. 4. THE WRITING MUST BE IN SUCH WORD FROM WHICH THE TERMS NECESSARY TO CONSTITUTE TRANSFER MUST BE ASCERTAINED. 5. THE TRANSFEREE MUST IN PART PERFORMANCE OF THE CONTRACT TAKE POSSESSION OF THE PROPERTY, OR IN PAR T THEREOF. 6. THE TRANSFEREE MUST HAVE DONE SOME ACT IN FURTHERANCE OF THE CONTRACT 7. THE TRANSFEREE MUST HAVE PERFORM OR BE WILLING T O PERFORM HIS PART OF THE CONTRACT. 10. ON THE AFORESAID PRECONDITIONS THE LD. CIT(A) EXAMINED THE FACTS OF THE CASE IN HAND BY ANALYZING THE FOLLOWING CHART: 5 ITA.NO.5806/DEL./2015 S.NO . DATE EVENT 1. 09.09.2011 SIGNING OF AGREEMENT BETWEEN THE TRANSFERORS AND TRANSFEREE. 2. 09.09.2011 ADVANC E PAYMENT MADE BY TRANSFEREE RS. 40,00,000/- BY CHEQUE RS. 85,00,000/- BY CASH 3. 11.01.2012 PAYMENT MADE BY TRANSFEREE RS. 20,00,000/- BY CHEQUE RS. 1,80,00,000/-BY CASH 4. 20.01.2012 PAYMENT MADE BY TRANSFEREE RS. 60,00,000/- BY CHEQUE 5. EXACT DATE NOT KNOWN, BUT ENTERED IN AGREEMENT DATE, OF COMPLETION OF AGREEMENT EXTENDED TO 30.01.2012. 6 27.01.2012 PAYMENT OF RS. 2,48,00,000/- IN CASH TO BE GIVEN TO THE OWNERS, BUT TRANSACTION INTERRUPTED DUE TO SEARCH ACTION. 11. FROM THE ABOVE CHART, THE LD. CIT(A) FOUND THAT THE ASSESSEE HAS RECEIVED PART PAYMENT. FURTHER, O N ANALYZING THE STATEMENT OF SHRI MOHIT MITTAL RECORD ED U/S 132(4) OF THE ACT, THE LD. CIT(A) NOTED THAT SH RI MOHIT MITTAL HAS TAKEN POSSESSION OF GROUND FLOOR O F THE PROPERTY AND A ROOM ON THE FIRST FLOOR. THE LD . CIT(A) CONCLUDED BY HOLDING THAT THE TRANSFEREE HAS ALSO TAKEN PART POSSESSION OF THE PROPERTY. ON FINDING THAT PART PAYMENT WAS FOLLOWING BY PART POSSESSION, THEREFORE, TRANSFER HAS TAKEN PLACE IN THE 6 ITA.NO.5806/DEL./2015 LIGHT OF PROVISIONS OF SECTION 53A OF THE TRANSFER OF PROPERTY ACT, 1882. 12. WE DO NOT FIND ANY FORCE IN THE CONCLUSION OF T HE LD. CIT(A) BECAUSE IN OUR UNDERSTANDING OF LAW QUA THE FACTS IN ISSUES, PROVISIONS OF SECTION 2(47)(V) OF THE ACT THE R.W.S 53A OF THE TRANSFER OF PROPERTY A CT 1882 ARE NOT APPLICABLE BECAUSE THIS ISSUE IS NOW WELL SETTLED BY THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. BALBIR SINGH MAINI CS ATWAL 398 ITR 531 WHEREIN IT WAS HELD THAT : 20. THE EFFECT OF THE AFORESAID AMENDMENT IS THAT, ON AND AFTER THE COMMENCEMENT OF THE AMENDMENT ACT OF 2001, IF AN AGREEMENT, LIKE THE JDA IN THE PRESENT CASE, IS NOT REGISTERED, THEN IT SHALL HAVE NO EFFECT IN LAW FOR THE PURPOSES OF SECTION 53A . IN SHORT, THERE IS NO AGREEMENT IN THE EYES OF LAW WHICH CAN BE ENFORCED UNDER SECTION 53A OF THE TRANSFER OF PROPERTY ACT. THIS BEING THE CASE, WE ARE OF THE VIEW THAT THE HIGH COURT WAS RIGHT IN STATING THAT IN ORDER TO QUALIFY AS A TRANSFER OF A CAPITAL ASSET UNDER SECTION 2(47)(V) OF THE ACT, THERE MUST BE A CONTRACT WHICH CAN BE ENFORCED IN LAW UNDER SECTION 53A OF THE TRANSFER OF PROPERTY ACT. A READING OF SECTION 17(1A) AND SECTION 49 OF THE REGISTRATION ACT SHOWS THAT IN THE EYES OF LAW, THERE IS NO CONTRACT WHICH CAN BE TAKEN COGNIZANCE OF, FOR THE PURPOSE SPECIFIED IN SECTION 53A . THE ITAT WAS NOT CORRECT IN REFERRING TO THE 7 ITA.NO.5806/DEL./2015 EXPRESSION OF THE NATURE REFERRED TO IN SECTION 53A IN SECTION 2(47)(V) IN ORDER TO ARRIVE AT THE OPPOSITE CONCLUSION. THIS EXPRESSION WAS USED BY THE LEGISLATURE EVER SINCE SUB-SECTION (V) WAS INSERTED BY THE FINANCE ACT OF 1987 W.E.F. 01.04.1988. ALL THAT IS MEANT BY THIS EXPRESSION IS TO REFER TO THE INGREDIENTS OF APPLICABILITY OF SECTION 53A TO THE CONTRACTS MENTIONED THEREIN. IT IS ONLY WHERE THE CONTRACT CONTAINS ALL THE SIX FEATURES MENTIONED IN SHRIMANT SHAMRAO SURYAVANSHI (SUPRA), THAT THE SECTION APPLIES, AND THIS IS WHAT IS MEANT BY THE EXPRESSION OF THE NATURE REFERRED TO IN SECTION 53A . THIS EXPRESSION CANNOT BE STRETCHED TO REFER TO AN AMENDMENT THAT WAS MADE YEARS LATER IN 2001, SO AS TO THEN SAY THAT THOUGH REGISTRATION OF A CONTRACT IS REQUIRED BY THE AMENDMENT ACT OF 2001, YET THE AFORESAID EXPRESSION OF THE NATURE REFERRED TO IN SECTION 53A WOULD SOMEHOW REFER ONLY TO THE NATURE OF CONTRACT MENTIONED IN SECTION 53A , WHICH WOULD THEN IN TURN NOT REQUIRE REGISTRATION. AS HAS BEEN STATED ABOVE, THERE IS NO CONTRACT IN THE EYE OF LAW IN FORCE UNDER SECTION 53A AFTER 2001 UNLESS THE SAID CONTRACT IS REGISTERED. THIS BEING THE CASE, AND IT BEING CLEAR THAT THE SAID JDA WAS NEVER REGISTERED, SINCE THE JDA HAS NO EFFICACY IN THE EYE OF LAW, OBVIOUSLY NO TRANSFER CAN BE SAID TO HAVE TAKEN PLACE UNDER THE AFORESAID DOCUMENT. SINCE WE ARE DECIDING THIS CASE ON THIS LEGAL GROUND, IT IS UNNECESSARY FOR US TO GO INTO THE OTHER QUESTIONS DECIDED BY THE HIGH COURT, NAMELY, WHETHER UNDER THE JDA 8 ITA.NO.5806/DEL./2015 POSSESSION WAS OR WAS NOT TAKEN; WHETHER ONLY A LICENCE WAS GRANTED TO DEVELOP THE PROPERTY; AND WHETHER THE DEVELOPERS WERE OR WERE NOT READY AND WILLING TO CARRY OUT THEIR PART OF THE BARGAIN. 13. THE LD. DR HAS STRONGLY OBJECTED TO THE RELIANC E OF THE AFORESAID JUDGMENT BY THE HON'BLE SUPREME COURT BY STATING THAT THIS DECISION WAS IN THE CONT EXT OF DEVELOPMENT AGREEMENT WHERE PART OF THE PROPERTY WAS TO BE RETURNED TO THE BUYER AFTER CONSTRUCTION. THE LD. DR CONTINUED BY STATING THAT IN THE CASE IN HAND, THE HANDING OVER OF THE POSSESSION TO THE BUYER WAS PERMANENT AND THE ASSESSEE HAD NO RIGHT OVER THE PROPERTY ONCE IT WAS HANDED OVER. 14. BEFORE PROCEEDING FURTHER, LET US EXAMINE THE PROVISIONS OF SECTION 53A OF THE TRANSFER OF PROPER TY ACT, 1882 RELATING TO PART PERFORMANCE AND THE SAME READ AS UNDER: WHERE ANY PERSON CONTRACTS TO TRANSFER FOR CONSIDERATION ANY IMMOVEABLE PROPERTY BY WRITING SIGNED BY HIM OR ON HIS BEHALF FROM WHICH THE TERMS NECESSARY TO CONSTITUTE THE TRANSFER CAN BE ASCERTAINED WITH REASONABLE CERTAINTY, AND THE TRANSFEREE HAS, IN PART PERFORMANCE OF THE CONTRACT, TAKEN POSSESSION OF THE PROPERTY OR ANY PART THEREOF, OR THE TRANSFEREE, BEING ALREADY IN POSSESSION, CONTINUES IN POSSESSION IN PART PERFORMANCE OF THE CONTRACT AND HAS DONE 9 ITA.NO.5806/DEL./2015 SOME ACT IN FURTHERANCE OF THE CONTRACT, AND THE TRANSFEREE HAS PERFORMED OR IS WILLING TO PERFORM HIS PART OF THE CONTRACT, THEN, NOTWITHSTANDING THAT 2[***] WHERE THERE IS AN INSTRUMENT OF TRANSFER, THAT THE TRANSFER HAS NOT BEEN COMPLETED IN THE MANNER PRESCRIBED THEREFOR BY THE LAW FOR THE TIME BEING IN FORCE, THE TRANSFEROR OR ANY PERSON CLAIMING UNDER HIM SHALL BE DEBARRED FROM ENFORCING AGAINST THE TRANSFEREE AND PERSONS CLAIMING UNDER HIM ANY RIGHT IN RESPECT OF THE PROPERTY OF WHICH THE TRANSFEREE HAS TAKEN OR CONTINUED IN POSSESSION, OTHER THAN A RIGHT EXPRESSLY PROVIDED BY THE TERMS OF THE CONTRACT: PROVIDED THAT NOTHING IN THIS SECTION SHALL AFFECT THE RIGHTS OF A TRANSFEREE FOR CONSIDERATION WHO HAS NO NOTICE OF THE CONTRACT OR OF THE PART PERFORMANCE THEREOF. 15. FROM THE ABOVE, IT IS QUITE CLEAR THAT THE TRANSFEREE EITHER HAD PERFORMED OR IS WILLING TO PERFORM HIS PART OF THE CONTRACT. FACTS ON RECORD SHOW THAT SHRI MOHIT MITTAL WAS NOT WILLING TO PERFORM HIS PART OF THE CONTRACT WHICH CULMINATED I NTO LITIGATION AND FIR AND WRIT PETITION BEFORE THE HON 'BLE DELHI HIGH COURT. THE DISPUTE WAS ULTIMATELY SETTLE D BY CANCELLATION OF THE AGREEMENT WHICH MEANS THAT THE TRANSFER NEVER HAPPENED. NO DOUBT, THE SETTLEMENT FOR CANCELLATION OF AGREEMENT TOOK PLACE ON 17.01.2013 I.E. AFTER THE CLOSE OF THE ASSESSMENT YEAR UNDER CONSIDERATION. BUT THIS FACT CANNOT BE 10 ITA.NO.5806/DEL./2015 IGNORED WHILE INVOKING THE PROVISIONS OF SECTION 53 A OF THE TRANSFER OF PROPERTY ACT WHEN IT WAS VERY MUCH AVAILABLE BEFORE THE ASSESSING OFFICER WHILE FRAMING THE ASSESSMENT ORDER. THE ITAT MUMBAI BENCH IT THE CASE OF GENERAL GLASS COMPANY [P] LTD VS. DCIT ITA NO. 8839/MUM/2004 DATED 07.12.2006 HAS HELD THAT WHEN TRANSFEREE, BY HIS CONDUCT AND BY HIS DEEDS, DEMONSTRATES THAT HE IS UNWILLING TO PERFORM HIS OBLIGATIONS UNDER THE AGREEMENT, THE DATE OF AGREEMENT CEASES TO BE RELEVANT. IN SUCH A SITUATION, IT IS ONLY THE ACTUA L PERFORMANCE OF TRANSFEREE'S OBLIGATIONS WHICH CAN GIVE RISE TO THE SITUATION ENVISAGED IN SECTION 53A OF THE TRANSFER OF PROPERTY ACT. 16. ON THE GIVEN FACTS OF THE CASE IN HAND, WE ARE OF THE OPINION THAT THE TRANSFEREE WAS NOT WILLING TO PERFORM HIS OBLIGATIONS IN THE FY ITSELF THOUGH THE LITIGATION TOOK PLACE IN THE SUCCEEDING YEAR. MOREOVER, THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. BALBIR SINGH MAINI C.S ATWAL [SUPRA] HAS CLEARLY LAID DOWN THE PRINCIPLE THAT NO CONTRACT IN THE EYES OF LAW IS ENFORCED U/S 53A OF THE TRANSFER OF PROPERTY ACT AFTER 2001 UNLESS THE SAID CONTRACT IS REGISTERED AND UNDISPUTED FACT IS THAT THE AGREEMEN T 11 ITA.NO.5806/DEL./2015 RELIED UPON BY THE REVENUE AUTHORITIES IS AN UNREGISTERED AGREEMENT. RESPECTFULLY FOLLOWING THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT [SUPRA ] WE SET ASIDE THE FINDING OF THE LD. CIT(A) AND DIRE CT TO DELETE THE IMPUGNED ADDITIONS. 17. IN THE RESULT, REVENUES APPEAL IN ITA NO. 5891/DEL/2015 IS DISMISSED AND THE APPEALS OF BOTH THE ASSESSEES IN ITA NO. 5804 AND 5805/DEL/2015 ARE ALLOWED. 5. COPY OF THE ABOVE ORDER IS PROVIDED TO THE LD. D R WHO DID NOT DISPUTE THAT ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE. 6. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE PA RTIES, WE ARE OF THE VIEW THAT ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY ORDER OF THE ITAT DELHI BENCH DATED 04.06.2018(S UPRA) PASSED IN THE CASE OF CO-OWNERS OF THE PROPERTY SHR I SHAILENDER KUMAR GAUTAM AND SHRI VISHVAJIT GAUTAM, WHEREBY THE TRIBUNAL DELETED THE SIMILAR ADDITION. THE APPEALS OF THE ASSESSEES HAVE BEEN ALLOWED AND DEPA RTMENTAL APPEAL HAS BEEN DISMISSED. FOLLOWING THE REASONS F OR DECISION 12 ITA.NO.5806/DEL./2015 OF THE ORDER DATED 04.06.2018, WE SET ASIDE THE ORD ERS OF THE AUTHORITIES BELOW AND DELETE THE ENTIRE ADDITION. 7. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (L.P. SAHU) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DELHI, DATED 24.10.2018 *KAVITA ARORA COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. CIT(A) CONCERNED 4. CIT CONCERNED 5. D.R. ITAT G BENCH, DELHI 6. GUARD FILE. // BY ORDER // ASSISTANT REGISTRAR : ITAT DELHI BENCHES : DELHI. DATE OF DICTATION 17.10.2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 23 .10.2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE AP PROVED DRAFT COMES TO THE SR. PS/PS 24.10.18 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 24.10.18 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 2 4.10.18 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WE BSITE OF ITAT 24.10.18 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 24.10.18 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER