LATE SMT. KRISHNA KOTHARI THROUGH LEGAL HEIR SANJAY C. KOTHARI, MUMBAI V. ITO 14(1)(3), MUMBAI

ITA 61/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2712 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 9 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-10-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 23-12-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 03-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Share purchase agreement
• Section: 50C; 142(1)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE HONBLE S/SHRI JOGINDER SINGH (JM), AND RAJESH KUMAR, ( AM ) ./ I.T.A. NO . 61 / MUM/20 1 4 ( / ASSESSMENT YEAR : 20 0 8 - 09 ) SANJAY C KOTHARI, LEGAL HEIR ON BEHALF OF LATE SMT KRISHNA KOTHARI, 15 - A, MITTAL COURT, NARIMAN POINT, MUMBAI - 400021 / VS. INCOME TAX OFFICER - 14(1)(3), 2 ND FLOOR, EARNEST HOUSE, NARIMAN POINT, MUMBAI - 400021 ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN NO. : AAP P K3528G / APPELLANT BY: SHRI K GOPAL / RESPONDENT BY SHRI KAILASH KANOJIYA / DATE OF HEARING : 2 1 .7 .2 01 6 / DATE OF PRONOUNCEMENT : 6.10 .2016 / O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE AND IT IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A) - 25 , MUMBAI D A T ED 22.10 .2013 PERTAINING TO A.Y. 20 0 8 - 09 . 2. THE ISSUE RAISED IN THE GROUNDS OF APPEAL NO.3 IS AGAINST THE CONFIRMATION OF ADDITION OF RS.23,83,141 / - UNDER THE HEAD SHORT TERM CAPITAL GAINS (STCG) ON THE TRANSFER OF RESIDENTIAL FLAT BY THE LD. CIT(A) BY ITA NO 61 /M/ 201 4 2 HOLDIN G THAT THE AO WITHOUT APPRECIATING THE FACT THAT THE FLAT HAS NOT ACTUALLY BEEN TRANSFER RED DURING THE YEAR AND UNDER THE PROVISIONS OF SECTION 2(47) OF THE INCOME TAX ACT, 1961( HEREINAFTER REFERRED TO AS THE ACT) , THEREFORE, THE INVOCATION OF THE PRO VISIONS OF SECTION 50C IS NOT JUSTIFIED AT ALL. 3 . FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE FILED HIS RETURN OF INCOME ON 29.9.2008 DECLARING TOTAL INCOME OF RS.5,97,600/ - WHICH WAS PROCESSED UNDER SECTION 143(1) OF THE ACT . THEREAFTER, THE CA SE WAS SELECTED FOR SCRUTINY AND STATUTORY NOTICES WERE ISSUED U/S 143(2) ON 5.8.2009 AND U/S 142(1) DATED 5.4.2010 WERE DULY ISSUED AND SERVED UPON THE ASSESSEE. THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOUND FROM THE BALANCESHEET FOR THE A SSESSMENT YER 2007 - 08 THAT A SUM OF RS.3,38,31,050/ - WAS APPEARING AS ADVANCE FOR PROPERTY BEING GUNDECHA GARDEN AND ALSO RECEIVED UNSECURED LOAN OF RS.33,66,631/ - FROM SHRI SANJAY KOTHARI WHICH WAS ALSO SHOWN IN THE BALANCESHEET. THE ASSESSEE GOT T HE POSSESSION OF THE SAID FLAT ON 7.2.2007 AND WHICH MEANS THE ASSESSEE GOT RIGHT IN THE SAID PROPERTY. HOWEVER, THE ASSESSEE CONTINUED TO SHOW THE ADVANCES OF PROPERTY IN THE BALANESHEET AS ON 31.3.2007 WHICH WAS WRONG AS THE ASSESSEE SHOULD HAVE SHOWN IN THE BALANCESHEET THE PURCHASE OF LAT AND INSTEAD. 4 . WE HA VE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL PLACED BEFORE US INCLUDING THE ORDERS OF AUTHORITIES BELOW. ON PERUSAL OF THE PAGE 139 OF THE PAPER BOOK REVEALS THAT SMT KRISHNA KOTHARI AND SANJAY KOTHARI WERE CO - OWNERS OF THE FLAT IN GUNDECHA GARDENS CO - ITA NO 61 /M/ 201 4 3 OP.SOC LTD AS EVIDENCED BY A CERTIFICATED DATED 10.6.2008 BEARING SHARE CERTIFICATE NO.216, MEMBERS REGISTRATION NO.D - 30. THE ASSESSEE DIED ON 13.9.2009 AS EVIDENCE D BY THE DEATH CERTIFICATE DATED 22.12.2010 ISSUED BY MUNICIPAL CORPORATION OF GREATER MUMBER, WHICH IS PLACED AT PAGE 141 OF THE PAPER BOOK. WE ALSO NOTE FROM PAGE NO.125 OF THE PAPER BOOK WHICH IS A COPY OF LETER ADDRESSED TO THE HONRARY SECRETARY O F THE SOCIETY FOR DELETION OF NAME OF ORIGINAL (DECEASED) MEMBER INFORMING THE SOCIETY THAT ONE OF THE CO - OWNER SMT.KRISHNA KOTHARI EXPIRED ON 13.9.2009 REQUESTING THE SOCIETY TO INSERT THE NAME OF MRS.MEENAKSHI SANJAY KOTHARI AS THE SECOND CO - OWNER IN THE RECORD OF THE SOCIETY IN PLACE OF THE DECEASED CO - OWNER. WE HAVE ALSO PERUSED THE PAGES 132,134 AND 138 WHICH COMPRISES OF INDEMNITY BOND FILED BY MRS.MEENAKSHI SANJAY KOTHARI AND UNDERTAKING OF MRS.MEENAKSHI SANJAY KOTHARI, AFFIDAVIT AT PAGE 136 TO 138 WHICH IS JOINT AFFIDAVIT OF SHRI SANJAY C KOTHARI , SON OF MRS.KRISHNA KOTHARI , SMT. SANGITA DINESH MOHTA, DAUGHTE, MRS. SUREKHAS SANJAY MIMANI , DAUGHTER AND MRS.SHALINI GIRDHRI CHANDAK , DAUGHTER AND MRS.MEENAKSHI SANJAY KOTHARI, DAUGHTER IN LAW RE QUESTING THE SOCIETY THAT ALL LEGAL HEIRS HAVE LEFT THEIR INTEREST AS WELL CLAIM IN THE SHARES CERTIFICATE NO.216 AS WELL AS RESIDENTIAL FLAT NO.1402 IN THE BUILDING OF THE SOCIETY EXCEPT SHRI SANJAY C KOTHARI WHO IS ALREADY HOLDING JOINT OWNERSHIP AL ONG WITH THE DECEASED JOINT OWNER AND SUCH HIS MEMBERSHIP SHOULD BE CONTINUED ALONG WITH HIS WIFE. TAKING INTO ACCOUNT ALL THE FACTS AND DOCUMENTS FILED ON RECORD, WE FIND THAT THE DECEASED ASSESSEE HAS NOT TRANSFERRED THE FLAT IN FAVOUR OF HER SON SANJAY C ITA NO 61 /M/ 201 4 4 KOTHARI AND THE AO HAS MERELY QUEST AND IMAGINE ON THE BASIS OF DELETION OF CERTAIN ENTRIES IN THE BALANCE SHEET OF BOTH PERSONS THAT TRANSFER OF FLAT HAS TAKEN PLACE AND ACCORDINGLY INVOKED THE PROVISIONS OF SECTION 50C O HE ACT IN ORDER TO CALCULATE STCG AND ADDED THE SUM OF RS.23,83,145/ - IN THE HANDS OF DECEASED ASSESSEE WHICH WAS CONFIRMED BY T HE LD. CIT(A) BY UPHOLDING T HE FINDING OF THE AO. IN OUR CONSIDERED OPINION, THE PROVISIONS OF SECTION 50C CAN ONLY BE INVOKED WHEN THE TRANSFER OF PROP ERTY /LAND/FLAT H AS TAKEN PLACE AND NOT OTHERWISE. IN VIEW OF OUR OBSERVATIONS, THE ORDER OF THE LD.CI T (A) SUSTAINING THE ADDITION CANNOT BE SUSTAINED. ACCORDINGLY, WE SET ASIDE HE LD.CIT(A) AND DIRECT THE AO TO DELETE THE ADDITION. 5 . IN THE RESULT , THE APPEAL OF THE ASSESSEE IS ALLOWED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 6 TH OCT , 2016 . 6 TH OCT , 2016 S D SD (JOGINDER SINGH ) ( RAJESH KUMAR ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI: 6 TH OCT , 2016 . . . ./ SRL , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - CONCERNED 4. / CIT CONCE RNED 5. 6. , , / DR, ITAT, MUMBAI CONCERNED / GUARD FILE. / BY ORDER, T RUE COPY (ASSTT. REGISTRAR) , /ITAT, MUMBAI