Sh. Kamaljit Singh, Zirakpur V. DCIT, Mohali

ITA 592/CHANDI/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 63949 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-09-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 30-08-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 27-05-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: N K SAINI
• Keywords: Gift; Business income; Cost of acquisition

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A, CHANDIGARH BEFORE SHRI H.L. KARWA, VP AND SHRI T.R. SOOD, A.M ITAS NO. 592 & 593/CHD/2011 ASSESSMENT YEAR : 2004-05 & 2005-06 KAMALJIT SINGH V D.C.I.T. CIRCLE 6(1) H NO. 14, WARD NO. 11 MOHALI ZIRAKPUR AVSPS 5259 C (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUDHIR SEHGAL RESPONDENT BY : SHRI N.K. SA INI DATE OF HEARING : 30.08.2012 DATE OF PRONOUNCEMENT : 24.09.2012 O R D E R PER T.R.SOOD, A.M IN BOTH THESE APPEALS, IDENTICAL ISSUES ARE INVOLVE D AND THE ASSESSEE HAS RAISED IDENTICAL GROUNDS OUT OF WHICH GROUND NO. 1 REGARDING RE-OPENING OF ASSESSMENT WAS NOT PRESSED. THEREFORE, THE SAME IS DISMISSED AS NOT PRESSED. OTHER GROUND S ARE AS UNDER:- 2 NOTWITHSTANDING THE ABOVE SAID GROUND OF APPEAL, IT IS SUBMITTED THAT THE LD. CIT(A) HAS ERRED IN UPHOLDIN G THE ADDITION OF RS. 24,59,500/- MADE BY THE ASSESSING O FFICER AS UNDISCLOSED SALE. 3. THAT THE LD. CIT(A) HAS ERRED IN CONSIDERING THE SALE OF PLOTS DURING THE YEAR UNDER CONSIDERATION ON THE BA SIS OF REGISTRATION DEED WAS EXECUTED DURING THE YEAR UNDE R CONSIDERATION WHICH IS AGAINST THE FACTS AND CIRCUM STANCES OF THE CASE. 4. THAT THE LD. CIT(A) HAS ERRED IN NOT GIVING THE CREDIT IN RESPECT OF PURCHASE OF PLOT AND INDEXED COST OF AC QUISITION . 5. NOTWITHSTANDING ABOVE FACTS, IT IS SUBMITTED THA T OUT OF SALE OF 10 PLOTS, 7 PLOTS WERE SOLD FOR RS. 24,59,5 00/- IN EARLIER YEAR AND ALL THE CONSIDERATION WAS RECEIVED IN THAT YEAR AND POSSESSION OF PLOTS WAS GIVEN IN THE EARLIER YEAR. THUS, THE TRANSFER WAS COMPLETE UNDER THE DEFINITION OF SECTI ON 2(47) OF THE ACT IN THE EARLIER YEAR AND ONLY REGISTRY WAS U NDERTAKEN DURING THE YEAR UNDER CONSIDERATION AND THUS, FOR SEVEN PLOTS, NOTHING WAS TO BE TAXED IN THE YEAR UNDER CONSIDERA TION. 6. THAT WHILE ASSESSING SALE VALUE OF PLOTS IN THE HAND OF THE APPELLANT, THE LD. CIT(A) HAS ERRED IN NOT CONS IDERING THAT NO CREDIT IN RESPECT OF PURCHASE OF PLOTS AND INDE XED COST OF ACQUISITION WAS REQUIRED TO BE GIVEN. 2 2. BRIEF FACTS OF THE CASE ARE THAT A SURVEY WAS CO NDUCTED IN THE PREMISES OF THE ASSESSEE AND DURING SURVEY IT WAS N OTICED THAT THE ASSESSEE HAD SOLD VARIOUS RESIDENTIAL PLOTS IN BOTH THESE YEARS. THIS FACT WAS ADMITTED BY THE ASSESSEE. IT WAS ALS O ADMITTED THAT THE ASSESSEE HAS NOT FILED RETURN OF INCOME AND NO BOOKS OF ACCOUNT WERE MAINTAINED FOR THE SAME. ACCORDINGLY ASSESSME NT ORDER WAS REOPENED. IN RESPONSE TO NOTICE AFTER OBTAINING TH E REASONS FOR REOPENING, THE ASSESSEE FILED RETURNS DECLARING INC OME OF RS. 7,02,900/- AND 11,20,400/- FOR A.Y 2004-05 & 2005-0 6 ON 4.11.2009. HOWEVER, FROM THE INFORMATION GATHERED DURING SURVE Y IT WAS NOTICED THAT THE ASSESSEE HAD SOLD MANY OTHER PLOTS AND REC EIVED RS. 31,62,400/- AND RS. 38,,15,700/- IN A.Y 2004-05 AND 2005-06. THE ASSESSEE WAS GIVEN CHART OF PLOTS SOLD. IN RESPONS E IT WAS STATED THAT THESE SALES WERE CONDUCTED IN THE EARLIER YEAR S AND DURING RELEVANT YEARS ONLY SALES DEEDS WERE EXECUTED. SIN CE TRANSACTIONS PERTAINED TO EARLIER YEARS I.E. 1.4.2001 AND ALL IN GREDIENTS OF TRANSFER AS PER SECTION 2(47) OF THE ACT HAD ALREAD Y TAKEN PLACE, THEREFORE, THE CONSIDERATION SHOULD BE CONSIDERED I N THE EARLIER YEARS. THE ASSESSING OFFICER AFTER EXAMINATION OF THE SAME FOUND THAT THIS IS FACTUALLY INCORRECT. IT HAS BEEN MENT IONED IN THE SALE DEED THAT SHRI KAMALJIT SINGH I.E. THE ASSESSEE WAS HIMSELF G.P.A HOLDER WHICH WAS EXECUTED ON 5.4.2001 IN HIS FAVOUR , SOLD THE PLOTS DURING RELEVANT ASSESSMENT YEAR. IN FACT IT WAS ME NTIONED IN THE SALE INSTRUMENT THAT SHRI KAMALJIT SINGH HAD RECEIV ED FULL CONSIDERATION HIMSELF AND GAVE POSSESSION OF THE PR OPERTY ONLY ON THE DATE OF EXECUTION OF THE SALE DEED, THEREFORE, IT WAS CLEAR THAT TRANSFER OF PLOTS NEVER TOOK PLACE EARLIER. ACCORD INGLY A SUM OF RS. 31,62,400/- AND RS. 38,15,700/- WAS TREATED AS BALA NCE CONSIDERATION AND RS. 24,59,400/- AND RS. 26,95,300 /- WERE ADDED TO THE INCOME OF THE ASSESSEE IN A.YS 2004-05 AND 2 005-06 3 RESPECTIVELY. 3. ON APPEAL BEFORE THE LD. CIT(A), IT WAS MAINLY S UBMITTED THAT THE ASSESSEE WAS NOT ABSOLUTE OWNER OF THE PLOTS AN D HE HAD SOLD THE SAME ONLY IN THE CAPACITY OF BEING A GPA HOLDER WHICH WAS GIVEN BY HIS FATHER PM 3.5.2001. THE GPA WAS REVOC ABLE AT ANY POINT OF TIME. THE GPA WAS GIVEN BY HIS FATHER TO SELL THE PLOTS BECAUSE OF HIS OLD AGE AND THERE WAS NO INTENTION T O GIVE THE PLOTS BY WAY OF GIFT. HIS FATHER HAD PROMISED HIS SON TH AT IS THE ASSESSEE TO RETAIN THE CONSIDERATION OF THREE PLOTS IN LIEU OF HIS EFFORTS IN FINDING THE BUYER. IT WAS ALSO CONTENDED THAT ONL Y THREE PLOTS WERE SOLD DURING THE YEAR AND REST OF THE SEVEN PLOTS WE RE SOLD IN THE PREVIOUS YEAR AND MONEY HAD BEEN RECEIVED AND THE P OSSESSION OF THE PLOTS WAS GIVEN, THEREFORE, ALL THE FORMALITIE S IN RESPECT OF COMPLETE THE TRANSFER AS PER SECTION 2(47) OF THE A CT WERE COMPLETED IN THE EARLIER YEARS AND THEREFORE, SALE CONSIDERATION COULD NOT BE ADDED IN THIS YEAR. IN ANY CASE THE A SSESSEE WAS A GPA HOLDER AND NOT ABSOLUTE OWNER, THEREFORE, SALE CONSIDERATION OF THREE PLOTS ONLY COULD HAVE BEEN ADDED. THE VAL UE OF THESE THREE PLOTS HAS ALREADY BEEN OFFERED FOR INCOME BY THE AS SESSEE. EVEN NO CREDIT WAS CLAIMED FOR INDEXED COST OF ACQUISITION OR COST OF ACQUISITION OR PURCHASE PRICE OF THE PLOTS WHICH SH OWS THAT ONLY THREE PLOTS WERE SOLD BY THE ASSESSEE. IT WAS ALS O POINTED OUT THAT THE ASSESSING OFFICER HAS NOT GIVEN ANY CREDIT FOR PURCHASE PRICE OR INDEXED COST OF ACQUISITION WHICH IS A COMMERCIAL PRINCIPLE. 4. THE LD. CIT(A) DID NOT FIND ANY FORCE IN THE SUB MISSIONS AND DECIDED THE ISSUE IN PARAS 9 &10 AS UNDER:- 9 AFTER TAKING INTO ACCOUNT THE RIVAL CONTENTIONS, I FIND THAT THE APPELLANT HAS FAILED TO PROVE THAT HE HAD SOLD THE PLOTS ON BEHALF OF HIS FATHER. THE APPELLANT WAS HOLDER OF GPA WHICH WAS EXECUTED ON .4.2001AND WAS SELLING PLOTS SIN CE THAT TIME. DURING THE COURSE OF SURVEY IT WAS FOUND THA T THE APPELLANT HAD SOLD 10 PLOTS AMOUNTING TO RS. 31,62, 400/- THE DETAILS OF WHICH ARE GIVEN IN PARA 5 ABOVE. THE DE TAILS OF PAYMENTS FROM THE PURCHASERS ALSO ESTABLISHED THIS FACT AS ALL 4 THE PAYMENTS WERE MADE IN THE NAME OF THE APPELLANT . ON THE OTHER HAND, THE APPELLANT SUBMITTED THAT HE HAD SO LD ONLY THREE PLOTS VALUING AT RS. 7,02,900/-. PERUSAL OF THE SUBMISSIONS OF THE APPELLANT AND THE EVIDENCE COLLE CTED FROM HIS PREMISES CLEARLY SHOWS THAT THE APPELLANT HAD N OT GIVEN A TRUE PICTURE OF HIS INCOME RELATING TO SALE OF PLOT S. IF FOR ARGUMENT SAKE THE CONTENTION OF THE APPELLANT REGAR DING SELLING OF PLOTS ON BEHALF OF HIS FATHER IS ACCEPTE D, WHICH SHOULD HAVE RIGHTFULLY BEEN CREDITED TO HIS FATHER S ACCOUNT. BUT NO SUCH EVIDENCE TO ESTABLISH THAT THE PROCEEDS OF PLOTS WERE EVER PASSED ON TO APPELLANTS FATHER WAS PROVI DED. 10 AS REGARDS, THE SUBMISSION OF THE APPELLANT REGA RDING BENEFIT OF INDEXED COST ON THE PLOTS SOLD, THE SAME CANNOT BE PROVIDED, SINCE AT NO TIME DURING THE ASSESSMENT OR APPELLATE PROCEEDINGS DID THE APPELLANT GIVE ANY DETAILS OF P ROPERTY SOLD, DATE WHEN THE LAND WAS ORIGINALLY PURCHASED, PROOF OF OWNERSHIP, DETAILS OF PERSONS TO WHOM LAND SOLD ETC . IN THE ABSENCE OF SUCH VITAL INFORMATION NO BENEFIT OF IND EXED COST CAN BE GIVEN TO THE APPELLANT. 5. BEFORE US, THE LD. COUNSEL OF THE ASSESSEE REITE RATED THE SUBMISSIONS MADE BEFORE THE LD. CIT(A). HE FURTHER SUBMITTED THAT INDEXED COST OF ACQUISITION SHOULD HAVE BEEN AT LEA ST REDUCED BEFORE DETERMINING THE PROFIT FROM THE SALE CONSIDE RATION OF THESE PLOTS. 6. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE S UBMITTED THAT FIRST OF ALL THE ASSESSEE HAS HIMSELF FILED RETURN SHOWING THE INCOME UNDER THE HEAD BUSINESS INCOME AND NO PURCHASE PR ICE HAS BEEN REDUCED BY THE ASSESSEE HIMSELF WHICH CLEARLY SHOWS THAT THE ASSESSEE HAS NOT INCURRED ANY COST. IN ANY CASE IF IT IS PRESUMED THAT SOME COST WAS INCURRED THEN SAME CANNOT BE ALL OWED WITHOUT PROPER DETAILS AND THE ASSESSEE HAS MISERABLY FAILE D TO PROVIDE THE DETAILS OF THE PURCHASE BEFORE THE ASSESSING OFFICE R, THE LD. CIT(A) AND EVEN BEFORE THE TRIBUNAL. IN THIS REGARD HE IN VITED OUR ATTENTION TO THE FINDINGS OF THE LD. CIT(A) IN PARA 10. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS CAREFULLY AN D ARE UNABLE TO AGREE WITH THE SUBMISSIONS OF THE LD. COUNSEL OF THE ASSESSEE. FIRST OF ALL THE ASSESSEE HAS HIMSELF ADMITTED THE SALE OF THREE PLOTS AND FILED THE RETURN OF INCOME DECLARING TOTAL CONS IDERATION AS BUSINESS INCOME. THE ASSESSEE NEVER CLAIMED ANY PU RCHASE PRICE. 5 EVEN IF ASSUMING THAT THIS WAS WRONG ON THE PART OF THE ASSESSEE, HE SHOULD HAVE FILED SOME DETAILS BEFORE THE ASSESS ING OFFICER OR THE LD. CIT(A) FOR MAKING CLAIM REGARDING PURCHASE PRICE. ONCE THE ASSESSEE HIMSELF SHOWS THE SALE OF PLOTS AS BUSINE SS INCOME THEN ONLY SAME CAN BE CONSIDERED AS CAPITAL GAIN BY THE ASSESSING OFFICER OTHERWISE THE FACTS SHOWS THAT PERHAPS THE ASSESSEE HAS DIVIDED A HUGE CHUNK OF LAND INTO SMALLER PLOTS. T HIS ONLY LED TO THE CONCLUSION THAT INTENTION WAS TO SELL PLOTS AS BUSI NESS OF SELLING PLOTS. THOUGH WE FEEL THAT THE COST OF PURCHASE SHO ULD HAVE BEEN REDUCED BUT IN THE ABSENCE OF DETAILS EVEN BEFORE U S, NOTHING CAN BE DONE AT THIS STAGE. THERE IS FURTHER NO FORCE I N THE SUBMISSIONS THAT THE ASSESSEE IS NOT ABSOLUTE OWNER OF THE PRO PERTY BECAUSE THE ASSESSEE HAS MISERABLY FAILED TO PROVE THAT THE CON SIDERATION WAS RECEIVED ON BEHALF OF HIS FATHER BY SHOWING THAT HI S FATHER HAD DEPOSITED OR FILED ANY RETURN RATHER THE ASSESSEE H AS HIMSELF FILED RETURN THROUGH WHICH HE OFFERED THREE PLOTS AND IT WAS ONLY DURING SURVEY THAT A SALE OF OTHER PLOTS WAS DETECTED. IN THESE CIRCUMSTANCES WE FIND NOTHING WRONG IN THE ORDER OF THE LD. CIT(A) AND CONFIRM THE SAME. 8. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED ON 24.09.2012 SD/- SD/- (H.L. KARWA) (T.R. SOOD) VICE PRESIDENT ACCOUNTANT MEMBER DATED : 24.09. 2012 SURESH COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT/THE C IT(A)/THE DR 6