Kushal Kumar Kankaria, Hyderabad V. ACIT, Central Circle-1, Hyderabad

ITA 673/HYD/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 91556 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-04-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 12-03-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 03-05-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: G APARNA RAO
• Keywords: Capital asset; Search and seizure; Opportunity of being heard; Additional evidence
• Section: 143(3); 153A; 54; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO. 673/HYD/2012 ASSESSMENT YEAR: 2008-09 KUSHAL KUMAR KANKARIA, HYDERABAD PAN ACEPJ2001J VS. ASST. COMMISSIONER OF INCOME- TAX, CENTRAL CIRCLE 1, HYDERABAD. (APPELLANT) (RESPONDENT) ITA NO. 674/HYD/2012 ASSESSMENT YEAR: 2008-09 DINESH KUMAR KANKARIA, HYDERABAD PAN AENPK9804K VS. ASST. COMMISSIONER OF INCOME- TAX, CENTRAL CIRCLE 1, HYDERABAD. (APPELLANT) (RESPONDENT) ITA NO. 675/HYD/2012 ASSESSMENT YEAR: 2008-09 SANJAY KUMAR KANKARIA, HYDERABAD PAN ACEPJ2003L ASST. COMMISSIONER OF INCOME- TAX, CENTRAL CIRCLE 1, HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI Y. RATNAKAR REVENUE BY : SMT. G. APARNA RAO DATE OF HEARING 12-03-2015 DATE OF PRONOUNCEMENT 10-04-2015 O R D E R PER SAKTIJIT DEY, J.M.: THESE APPEALS BY THREE DIFFERENT ASSESSEES ARE DIRE CTED AGAINST SEPARATE ORDERS OF LD. CIT-III PASSED U/S 263 OF TH E ACT, FOR THE AY 2008- 09. 2 ITA NOS. 673, 674 & 675/HYD/2012 SRI KUSHAL KUMAR KANKARIA & OTHERS 2. SINCE THE FACTS AND ISSUES INVOLVED IN THESE APP EALS ARE IDENTICAL, FOR THE SAKE OF CONVENIENCE, WE WILL DISCUSS THE FA CTS AS INVOLVED IN ITA NO. 673/HYD/12. 3. BRIEFLY STATED, ASSESSEE IS AN INDIVIDUAL. FOR T HE AY YEAR CONSIDERATION, ASSESSEE FILED HIS RETURN OF INCOME ON 11/09/09 DECLARING TOTAL INCOME OF RS. 1,22,100. A SEARCH AND SEIZURE OPERATION WAS CONDUCTED IN CASE OF ASSESSEE ON 11/09/07 AND ASSES SMENT INCASE OF ASSESSEE WAS COMPLETED U/S 143(3) READ WITH SECTION 153A VIDE ORDER DATED 09/12/09. LD. CIT WHILE EXAMINING THE ASSESSM ENT RECORDS OF ASSESSEE FOR THE YEAR UNDER CONSIDERATION WAS OF TH E VIEW THAT ASSESSMENT ORDER PASSED IS ERRONEOUS AND PREJUDICIA L TO THE INTERESTS OF REVENUE, AS AO HAS FAILED TO BRING TO TAX THE CAPIT AL GAIN ARISING FROM TRANSFER OF LAND TO THE DEVELOPER UNDER DEVELOPMENT AGREEMENT. ACCORDINGLY, HE ISSUED A NOTICE U/S 263 OF THE ACT TO ASSESSEE TO SHOW CAUSE AS TO WHY ASSESSMENT ORDER SHOULD NOT BE REVI SED. IN RESPONSE TO THE SAID SHOW CAUSE NOTICE, IT WAS SUBMITTED BY ASS ESSEE THAT THE DEVELOPMENT AGREEMENT EXECUTED WITH THE DEVELOPER I S ONLY A JOINT VENTURE AGREEMENT FOR THE PURPOSE OF DEVELOPMENT OF THE PROPERTY IN TO A COMMERCIAL COMPLEX AND THEREAFTER SHARING THE CON STRUCTED AREA IN THE RATIO PROVIDED IN THE DEVELOPMENT AGREEMENT. THE PO SSESSION GIVEN TO THE DEVELOPER IS ONLY FOR THE PURPOSE OF CONSTRUCTI ON OF THE COMMERCIAL COMPLEX AS PER THE TERMS AND CONDITIONS AGREED UPON . ASSESSEE SUBMITTED, TRANSFER LIABLE TO CAPITAL GAIN WILL O CCUR ONLY WHEN THE CONSTRUCTED AREA FALLING TO THE SHARE OF THE LAND O WNER IS HANDED OVER TO HIM BY THE DEVELOPER AND NOT BEFORE. IT WAS SUBMITT ED, AT THE TIME OF DEVELOPMENT AGREEMENT NO CONSIDERATION PASSES TO TH E OWNER AS THE CONSTRUCTED AREA CONTEMPLATED THEREIN DID NOT EXIST BUT WILL COME INTO EXISTENCE ONLY AT A LATER DATE. THE SECURITY DEPOSI TS TAKEN IS ONLY TO GUARD AGAINST THE OBLIGATION TO BE CARRIED OUT BY T HE DEVELOPER UNDER THE DEVELOPMENT AGREEMENT. IN SUPPORT OF SUCH CONTENTIO N, ASSESSEE RELIED UPON SOME DECISIONS OF ITAT. 3 ITA NOS. 673, 674 & 675/HYD/2012 SRI KUSHAL KUMAR KANKARIA & OTHERS 4. LD. CIT AFTER CONSIDERING THE SUBMISSIONS OF ASS ESSEE, OBSERVED THAT AFTER AMENDMENT OF DEFINITION OF TRANSFER AS ENVISAGED U/S 2(47) OF THE ACT, ANY TRANSACTION INVOLVING ALLOWING OF POSS ESSION TO BE TAKEN OR RETAINED IN PART PERFORMANCE OF A CONTRACT OF THE NATURE REFERRED TO IN SECTION 53A OF THE TRANSFER OF PROPERTIES ACT WOULD COME WITHIN THE AMBIT OF SECTION 2(47)(V). THUS, ASSESSEE HAVING EN TERED INTO A DEVELOPMENT AGREEMENT AND DELIVERED POSSESSION, THE RE IS TRANSFER OF CAPITAL ASSET WITHIN THE MEANING OF SECTION 2(47)(V ) DURING THE RELEVANT PY. IN THIS CONTEXT, LD. CIT RELIED UPON A DECISION OF THE ITAT, HYDERABAD BENCH IN CASE OF DR. MAYA CHENOY VS. ACI T. LD. CIT FURTHER OBSERVED THAT ASSESSEE ALONG WITH OTHER TWO COOWNER S HAVE EXECUTED A REGISTERED SALE DEED-CUM-GPA ON 07/06/10 WITH THE S AME DEVELOPER AND THE AMOUNT WHICH WAS RECEIVED BY ASSESSEE ALONG WIT H COOWNERS TOWARDS ADVANCE ON 16/04/07 WAS DECLARED AS FULL AN D FINAL SALE CONSIDERATION. FROM THIS, LD. CIT INFERRED THAT ASS ESSEES CLAIM THAT HE HAS ENTERED INTO A DEVELOPMENT AGREEMENT AND NOT A SALE IS PROVED TO BE INCORRECT. LD. CIT OBSERVED, WITH AN INTENTION T O POSTPONE TAX LIABILITY ASSESSEE HAS TRIED TO GIVE THE TRANSACTION A DIFFER ENT COLOUR. ACCORDINGLY, LD. CIT DIRECTED AO TO COMPUTE THE CAP ITAL GAIN IN THE IMPUGNED AY. BEING AGGRIEVED OF THE ORDER PASSED BY LD. CIT, ASSESSEE HAS PREFERRED APPEAL BEFORE US RAISING NUMBER OF GR OUNDS CHALLENGING THE ORDER PASSED U/S 263 BOTH ON JURISDICTIONAL ISS UE AS WELL AS ON MERITS. 5. IN COURSE OF HEARING, LD. AR ALSO HAS RAISED THE FOLLOWING ADDITIONAL GROUNDS: 1. THE APPELLANT CONTENDS THAT IN THE FACTS AND CIR CUMSTANCES OF THE CASE THE SUBJECT MATTER RELATING TO THE LEVY OF TAX ON CAPITAL GAINS PURSUANT TO THE DEVELOPMENT AGREEMENT IS DEBA TABLE, NOT FREE FROM DOUBT AND ON WHICH DIVERGENT VIEWS ARE PO SSIBLE. HENCE THE LD. CIT COULD NOT HAVE EXERCISED HIS REVISIONAR Y JURISDICTION U/S 263 OF THE IT ACT. 2. IT IS CONTENDED THAT THE FACTS OBTAINING IN THE ABOVE APPEAL, INDEPENDENT OF THE LEGAL ISSUE ALSO REVEAL THAT THE ISSUE IS DEBATABLE AND CONTROVERSIAL. HENCE THE CIT COULD NO T HAVE EXERCISED HIS JURISDICTION U/S 263 OF THE IT ACT. 4 ITA NOS. 673, 674 & 675/HYD/2012 SRI KUSHAL KUMAR KANKARIA & OTHERS 6. LD. AR SUBMITTED BEFORE US THAT ASSESSEE ALONG W ITH HIS TWO BROTHERS HAVE JOINTLY PURCHASED THE LAND SITUATED I N PLOT NO. 8-2- 293/82/A/714 -714/A IN ROAD NO. 6, JUBILEE HILLS, H YDERABAD VIDE REGISTERED SALE DEEDS EXECUTED ON 26/02/05 FOR LAND ADMEASURING 1280 SQ.YDS. WITH BUILT UP AREA OF 600 SQ.FT. FOR A TOTA L CONSIDERATION OF RS. 1,05,60,000. SUBSEQUENTLY, ASSESSEE HAS TRANSFERRED HIS SHARE IN THE PROPERTY ADMEASURING 426 SQ.YDS. ALONG WITH BUILT U P AREA OF 200 SQ.FT. TO HIS WIFE SMT. CHHAYA DEVI KANKARIA. IT WAS SUBMI TTED, THOUGH, AS PER THE GENERAL LAW A SALE IS YET TO BE COMPLETED, HOWE VER, AS FAR AS THE INCOME-TAX ACT IS CONCERNED, TRANSFER OF THE ASSET HAS TAKEN PLACE IN FAVOUR OF SMT. CHHAYA DEVI KANKARIA AT THE TIME OF EXECUTION OF THE REGISTERED AGREEMENT OF SALE-CUM-GPA ON 04/04/06, H ENCE, NO CAPITAL GAIN CAN BE ASSESSED AT THE HANDS OF ASSESSEE AS HE NO LONGER WAS THE OWNER OF THE PROPERTY. FURTHER, LD. AR SUBMITTED, M ERE DEVELOPMENT AGREEMENT CANNOT BE TREATED AS DEEMED TRANSFER UNDE R THE INCOME-TAX ACT. HE SUBMITTED, AS DEVELOPER WAS NOT READY AND W ILLING TO PERFORM HIS PART DUE TO DISPUTE BETWEEN THE LAND OWNERS AND TH E DEVELOPER, DEVELOPMENT AGREEMENT DATED 16/04/07 HAD TO BE CANC ELLED BY A MOU DATED 06/06/10. IT WAS SUBMITTED, A SALE DEED WAS U LTIMATELY EXECUTED ON 07/06/10 SELLING PROPERTY TO THE DEVELOPER, ONLY FOR THE REASON, THE DEVELOPER WAS NOT WILLING TO PERFORM HIS PART OF TH E OBLIGATIONS UNDER THE DEVELOPMENT AGREEMENT NOR WAS HE COOPERATING IN REL EGATING THE PARTIES TO THEIR ORIGINAL POSITION. THEREFORE, PROPERTY WAS SOLD BY LAND OWNERS FOR A CONSIDERATION OF RS. 7.20 CRORE. IT WAS SUBMI TTED, AS THE PROPERTY WAS FINALLY SOLD DURING FY 2010-11, THE CAPITAL GAI N WAS DECLARED BY LAND OWNERS IN AY 2011-12. LD. AR SUBMITTED, IN AN Y CASE OF THE MATTER, WHETHER THERE IS TRANSFER IN PURSUANCE TO THE DEVELOPMENT AGREEMENT IS A DEBATABLE ISSUE AS MORE THAN ONE VI EW IS POSSIBLE DUE TO DIVERGENT VIEWS EXPRESSED BY DIFFERENT HIGH COUR TS AS WELL AS DIFFERENT BENCHES OF THE TRIBUNAL. THEREFORE, IF THE VIEW TAK EN BY AO IS ONE OF THE POSSIBLE VIEW, THEN, POWER U/S 263 OF THE ACT CANNO T BE INVOKED TO SET ASIDE SUCH VIEW OF AO. ALTERNATIVELY, IT WAS CONTEN DED BY LD. AR, IF LD. CIT FELT THAT THERE WAS ABSENCE OF ENQUIRY AND NON- APPLICATION OF MIND BY AO, THEN, HE SHOULD HAVE DIRECTED AO TO EXAMINE THE ISSUE INSTEAD OF 5 ITA NOS. 673, 674 & 675/HYD/2012 SRI KUSHAL KUMAR KANKARIA & OTHERS STRAIGHTWAY DIRECTING HIM TO COMPUTE CAPITAL GAIN. IN SUPPORT OF SUCH CONTENTION, LD. AR RELIED UPON THE FOLLOWING DECISI ONS: 1. SURAJ LAMP & INDUSTRIES (P) LTD., VS. STATE OF HARYANA, 340 ITR 01 (SC) 2. PARVEZ NAZIR HUSSEIN JAFRI VS. CIT 354 ITR 235 (SC) 3. CIT VS. MAX INDIA LTD. 295 ITR 282 (SC) 4. CIT VS. GREENWORLD CORPORATION 314 ITR 81 (SC) 5. CIT VS. ANSAL PROPERTIES & INDUSTRIES (P) LTD. 3 15 ITR 225 (DEL.) 6. CIT VS. MUNJAL CASTINGS 303 ITR 23 (P&H) 7. CIT VS. ASMA EXPORTS 305 ITR 332 (MAD.) 8. CIT VS. DLF LTD., 350 ITR 555 (DEL.) 9. SPECTRA SHARES AND SCRIPS P. LTD. VS. CIT, 354 ITR 35 (A.P.) 10. BINJUSARIA PROPERTIES PVT. LTD. VS. ACIT, ITA NO. 157/HYD/2011, DATED 04/04/2014. 11. ACIT VS. R. SRINIVASA RAO IN ITA NO. 1 786/HYD/12 AND OTHERS DATED 28/08/14 7. LD. DR CONTESTING THE CLAIM OF ASSESSEE SUBMITTE D BEFORE US, ASSESSMENT ORDER WOULD CLEARLY REVEAL THAT AO HAS N EITHER ENQUIRED INTO THE MATTER NOR HAS APPLIED MIND TO THE MATERIALS ON RECORD. THEREFORE, WHEN AO HAS NOT TAKEN ANY VIEW AT ALL, IT CANNOT BE SAID THAT THE VIEW TAKEN BY AO IS ONE OF THE POSSIBLE VIEW. LD. DR REF ERRING TO THE DEVELOPMENT AGREEMENT SUBMITTED BEFORE US, DEVELOP MENT AGREEMENT CLEARLY ESTABLISHES THE FACT THAT ASSESSEE HAS TRAN SFERRED THE LAND TO THE DEVELOPER IN TERMS WITH THE DEVELOPMENT AGREEMENT F OR A CONSIDERATION. THEREFORE, ONCE THE POSSESSION IS DELIVERED THERE I S A TRANSFER WITHIN THE MEANING OF SECTION 2(47)(V). IN THIS CONTEXT, SHE R ELIED UPON A DECISION OF THE HONBE AP HIGH COURT IN CASE OF P. NAGESWARA RAO VS. CIT, 365 ITR 249 AND THE FOLLOWING DECISION: 1. TAHER AUMOHAMMED POONAWALA VS. ADDLL. CIT, 124 TTJ 387 LD. DR ALSO RAISED OBJECTIONS WITH REGARD TO THE AD DITIONAL GROUND RAISED BY ASSESSEE AND THE ADDITIONAL EVIDENCE PRODUCED BE FORE THE TRIBUNAL BY SUBMITTING THAT THERE BEING NO VALID REASONS SHO WN BY ASSESSEE AS TO 6 ITA NOS. 673, 674 & 675/HYD/2012 SRI KUSHAL KUMAR KANKARIA & OTHERS WHY THEY WERE NOT TAKEN BEFORE AO OR LD. CIT THEY C ANNOT BE ENTERTAINED AT THIS STAGE. 8. IN THE REJOINDER, LD. AR SUBMITTED BEFORE US, AS THERE IS NO QUANTIFICATION OF SALE CONSIDERATION UNDER THE DEVE LOPMENT AGREEMENT EXCEPT THE PERCENTAGE OF CONSTRUCTED AREA TO BE REC EIVED, IT CANNOT BE SAID THAT THERE WAS TRANSFER OF LAND FOR A CONSIDER ATION. 9. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIE S AND PERUSED THE ORDERS OF REVENUE AUTHORITIES AS WELL AS OTHER MATERIAL ON RECORD. WE HAVE ALSO APPLIED OUR MIND CAREFULLY TO THE DECISIO NS RELIED UPON BY THE PARTIES. THERE IS NO DISPUTE TO THE FACT THAT ASSES SEE ALONG WITH OTHER CO-OWNERS HAS ENTERED INTO A DEVELOPMENT AGREEMENT WITH A DEVELOPER, VIZ; M/S SHANTA SRIRAM CONSTRUCTIONS PVT. LTD. ON 1 6/04/07. AS PER TERMS OF THE SAID DEVELOPMENT AGREEMENT, ASSESSEE A LONG WITH CO- OWNERS IS TO RECEIVE BUILT UP AREA OF 40% APART FRO M REFUNDABLE DEPOSIT OF RS. 5 CRORES. IT IS ALSO NOT DISPUTED THAT IN PU RSUANCE TO THE DEVELOPMENT AGREEMENT ASSESSEE HAS HANDED OVER POSS ESSION OF LAND TO THE DEVELOPER AND THE DEVELOPER HAS STARTED DEVE LOPMENT ACTIVITY. THE MAIN THRUST OF THE ARGUMENT OF ASSESSEE IS TWO FOLD. FIRSTLY, ASSESSEE IS NOT THE OWNER OF LAND AS HE HAS TRANSFE RRED IT TO HIS WIFE VIDE REGISTERED AGREEMENT OF SALE-CUM-GPA EXECUTED ON 04/04/06. THUS, IT WAS SUBMITTED, WHEN ASSESSEE IS NOT AT ALL OWNER OF THE PROPERTY, CAPITAL GAIN CANNOT BE ASSESSED AT HIS HA ND. SECOND ARGUMENT OF ASSESSEE IS, THE ISSUE WHETHER CAPITAL GAIN ACCR UES ON EXECUTION OF DEVELOPMENT AGREEMENT IS A DEBATABLE ISSUE AS THERE ARE DIVERGENT JUDICIAL OPINION ON THE ISSUE. THEREFORE, WHEN THE ISSUE INVOLVED IS A DEBATABLE ISSUE, ON WHICH MORE THAN ONE VIEW IS POS SIBLE, LD. CIT CANNOT EXERCISE POWER U/S 263 BY OBSERVING THAT THE VIEW TAKEN BY AO IS NOT CORRECT VIEW. AS FAR AS THE FIRST ARGUMENT OF A SSESSEE IS CONCERNED, MATERIAL ON RECORD INDICATE THAT ASSESSEE HAS ENTER ED INTO REGISTERED AGREEMENT OF SALE-CUM-GPA WITH HIS WIFE SMT. CHHAYA DEVI KANKARIA ON 04/04/06 AGREEING TO SALE HIS SHARE IN PROPERTY FO R A CONSIDERATION OF RS. 44,73,000. A COPY OF THE SAID DOCUMENT, WHICH I S PLACED AT PAGE 73 7 ITA NOS. 673, 674 & 675/HYD/2012 SRI KUSHAL KUMAR KANKARIA & OTHERS OF THE PAPER BOOK ALSO INDICATES THAT THE AMOUNT OF RS. 44,73,000 WAS PAID TO ASSESSEE VIDE CHEQUE NO. 963374 DATED 04/04 /06 DRAWN ON CANARA BANK, MASAB TANK, HYDERABAD. HOWEVER, IT IS TO BE NOTED THAT IN THE DEVELOPMENT AGREEMENT OF SALE-CUM-GPA DATED 16/ 04/07 NAME OF ASSESSEE APPEARS AS LAND OWNER, WHEREAS, SMT. CHHA YA DEVI KANKARIA HAS BEEN SHOWN AS CONSENTING PARTY, BUT, STRANGELY IN THE SUPPLEMENTARY AGREEMENT EXECUTED ON THE VERY SAME D AY WITH THE DEVELOPER, WHICH OF COURSE IS NOT A REGISTERED DOC UMENT, THE NAME OF SMT. CHHAYA DEVI KANKARIA DOES NOT APPEAR AT ALL. F URTHER, IN THE VERY SAME SUPPLEMENTARY AGREEMENT, A REFUNDABLE ADVANCE OF RS. 7.20 CRORES WAS PAID TO THE LAND OWNERS BY THE DEVELOPER . IT IS ALSO INTERESTING TO NOTE THAT IN ANOTHER SUPPLEMENTARY A GREEMENT EXECUTED BETWEEN PARTIES ON FIRST DAY OF OCTOBER07, THE NAM E OF SMT. CHHAYA DEVI KANKARIA DOES NOT APPEAR AS LAND OWNER. THEREF ORE, IF AT ALL THE LAND WAS AGREED TO BE SOLD TO SMT. CHHAYA DEVI KANK ARIA ON 04/04/06, THEN, HOW COME THE NAME OF SMT. CHHAYA DEVI KANKARI A AS LAND OWNER IS NOT APPEARING IN THE SUPPLEMENTARY AGREEMENT EXE CUTED WITH THE DEVELOPER ON FIRST DAY OF OCTOBER07 AND 16/04/07 R EQUIRES TO BE EXAMINED. 10. FURTHERMORE, ON PERUSAL OF THE ASSESSMENT ORDER IT IS VERY MUCH EVIDENT THAT AO HAS NOT DISCUSSED EVEN A SINGLE SEN TENCE WITH REGARD TO THE ISSUE OF TRANSFER OF LAND TO THE DEVELOPER. NO OTHER MATERIAL HAS BEEN BROUGHT TO OUR NOTICE TO INDICATE THAT AO IN C OURSE OF THE ASSESSMENT PROCEEDING HAS EITHER CONDUCTED ANY ENQU IRY WITH REGARD TO THE DEVELOPMENT AGREEMENT OR EXAMINED THE ISSUE BY APPLYING HIS MIND TO THE MATERIALS ON RECORD RELATED TO THAT ISSUE. T HOUGH, LD. AR TRIED TO IMPRESS UPON US THAT ALL THE DOCUMENTS RELATING TO THE DEVELOPMENT AGREEMENT WERE PART OF THE SEIZED MATERIAL, BUT, TH AT DOES NOT IPSO-FACTO PROVE THAT AO HAS EXAMINED THE ISSUE RELATING TO TR ANSFER OF LAND UNDER THE DEVELOPMENT AGREEMENT AND HAS FORMED AN OPINION . ON THE CONTRARY, IT REVEALS TOTAL NON-APPLICATION OF MIND BY AO. AVA ILABILITY OF MATERIAL ON RECORD DOES NOT ABSOLVE THE AO FROM MAKING ENQUIRY OR APPLYING HIS MIND TO THE SAID MATERIAL. AVAILABILITY OF MATERIA LS ON RECORD BY ITSELF WILL 8 ITA NOS. 673, 674 & 675/HYD/2012 SRI KUSHAL KUMAR KANKARIA & OTHERS NOT PROVE THAT AO HAS APPLIED HIS MIND TO THOSE MAT ERIALS AND FORMED AN OPINION UNLESS DISCUSSION IN THE ASSESSMENT ORDER O R ENTRIES IN THE ORDER SHEET OR COMMUNICATION MADE BY AO INDICATE SO. WHET HER A PARTICULAR ISSUE IS DEBATABLE OR MORE THAN ONE VIEW IS POSSIBL E ON THE ISSUE CAN BE KNOWN ONLY WHEN THERE IS A DEBATE AND DIALOGUE BETW EEN THE AO AND ASSESSEE ON THE ISSUE. MATERIAL ON RECORD MUST INDI CATE THAT AO HAS APPLIED HIS MIND TO FACTS AND MATERIALS ON RECORD T HROUGH A PROCESS OF ENQUIRY AND INVESTIGATION AND FORMED A VIEW ON THE ISSUE. HOWEVER, WHEN THE FACTS AND MATERIALS ON RECORD ARE SO GLARI NG TO INDICATE THAT AO HAS NOT AT ALL ENQUIRED INTO THE MATTER OR APPLIED HIS MIND TO THE ISSUE ON WHICH THE ORDER IS SOUGHT TO BE REVISED, THEN, IT C ANNOT BE SAID THAT LD. CIT CANNOT INVOKE THE POWER U/S 263 OF THE ACT AS T WO VIEWS ARE POSSIBLE ON THAT ISSUE. IN THE PRESENT CASE, THOUGH , ASSESSEE ALONG WITH OTHER COOWNERS HAS ENTERED INTO A DEVELOPMENT AGREEMENT AND HANDED OVER POSSESSION OF PROPERTY TO DEVELOPER, AD MITTEDLY ASSESSEE HAS NEITHER OFFERED ANY CAPITAL GAIN IN THE RETURN OF INCOME FILED FOR THE IMPUGNED AY NOR DISCLOSED THE REASONS FOR NOT DOING SO. EVEN THOUGH, SEIZED MATERIAL AVAILABLE ON RECORD REVEALED THE FA CT THAT ASSESSEE HAS ENTERED INTO DEVELOPMENT AGREEMENT HANDING OVER HIS PROPERTY TO DEVELOPER, THE AO TOTALLY FAILED TO APPLY HIS MIND TO THESE MATERIALS AND EXAMINE THE ISSUE WHETHER THERE WAS TRANSFER OF C APITAL ASSET IN TERMS OF SECTION 2(47)(V) GIVING RISE TO CAPITAL GAIN IN THE IMPUGNED ASSESSMENT YEAR. MORE SO, WHEN THE HONBLE JURISDIC TIONAL HIGH COURT IN CASE OF P. NAGESWARA RAO VS. CIT (SUPRA) HAS HELD T HAT ONCE POSSESSION IS HANDED OVER TO DEVELOPER IN PURSUANCE TO A DEVELOPMENT AGREEMENT THERE IS TRANSFER IN TERMS WITH SECTION 2(47)(V). IN THESE CIRCUMSTANCES, THE FAILURE ON THE PART OF AO IN MAK ING ANY ENQUIRY AND EXAMINING THE ISSUE OF ACCRUAL OF CAPITAL GAIN HAS RENDERED THE ASSESSMENT ORDER ERRONEOUS AND PREJUDICIAL TO THE I NTERESTS OF REVENUE. THEREFORE, INVOKING OF POWER U/S 263 OF THE ACT IN THE FACTS OF THE PRESENT CASE IS JUSTIFIED. 11. AS FAR AS THE DECISIONS RELIED UPON BY LD.AR AR E CONCERNED, ON CAREFUL EXAMINATION OF THE SAME WE ARE OF THE VIEW THAT THEY WILL NOT 9 ITA NOS. 673, 674 & 675/HYD/2012 SRI KUSHAL KUMAR KANKARIA & OTHERS APPLY TO THE FACTS OF THE PRESENT CASE. LD. AR HAS RELIED UPON THE DECISION OF HONBLE SUPREME COURT IN CASE OF SURAJ LAMP & INDUSTRIES (P.) LTD. VS. STATE OF HARYANA (SUPRA) FOR THE PROP OSITION THAT TRANSFER OF IMMOVABLE PROPERTY CAN BE VALIDLY MADE ONLY THROUGH A REGISTERED DEED OF CONVEYANCE. HOWEVER, ON A CAREFUL READING OF THE AFORESAID JUDGMENT OF THE HONBLE APEX COURT IT BECOMES CLEAR THAT THE RATIO LAID DOWN IS APPLICABLE TO CONTRACT OF SALE AS ENVISAGED U/S 54 AND 55 AND NOT SECTION 53A OF THE T.P. ACT. MOREOVER, IN THE AFORE SAID DECISION THE HONBLE APEX COURT WAS NOT CALLED UPON TO EXAMINE I MPORT OF EXPRESSION TRANSFER AS ENVISAGED U/S 2(47) AND MORE PARTICUL ARLY SUB-CLAUSE (V) OF SECTION 2(47) OF THE I.T. ACT, 1961, WHICH TAKES WI THIN ITS AMBIT CONTRACTS OF THE NATURE REFERRED TO IN SECTION 53A OF T.P. AC T. FURTHER, A REFERENCE TO SECTION 53A OF T.P. ACT MAKES IT CLEAR, THE REQ UIREMENT IS, THERE MUST BE AN AGREEMENT IN WRITING FROM WHICH TRANSFER CAN BE ASCERTAINED WITH REASONABLE CERTAINTY. THUS, THE AFORESAID DECISION WILL BE OF NO HELP TO ASSESSEE. IN CASE OF BINJUSARIA PROPERTIES VS. ACIT , ITA NO. 157/HYD/2011 DATED 04/0414 AND IN CASE OF ACIT VS. R. SRINIVASA RAO, ITA NO. 1786/HYD/12 DATED 28/08/14, ITAT HELD THAT THERE IS NO TRANSFER U/S 2(47)(V) BECAUSE THERE WAS MATERIAL ON RECORD T O SHOW THAT DEVELOPER WAS NOT WILLING TO PERFORM HIS PART OF TH E CONTRACT. WHEREAS, IN THE PRESENT CASE, AO HAS NOT AT ALL EXAMINED THE IS SUE. AS FAR AS OTHER DECISIONS OF THE HONBLE HIGH COURTS RELIED UPON BY THE LD. AR, THERE CANNOT BE ANY DISPUTE WITH REGARD TO THE PRINCIPLE DECIDED THEREIN TO THE EFFECT THAT WHERE TWO VIEWS ARE POSSIBLE AND AO HAS TAKEN ONE OF THE VIEW, JURISDICTION U/S 263 WILL NOT ARISE. HOWEVER, IN THE PRESENT CASE, AO HAS NEITHER APPLIED HIS MIND NOR EXAMINED THE IS SUE BY MAKING ANY ENQUIRY, HENCE, FORMATION OF ANY VIEW BY AO DOES NO T ARISE. THAT BEING THE CASE, THESE DECISIONS WILL NOT BE APPLICABLE. F OR THE VERY SAME REASON, THE RATIO LAID DOWN BY THE HONBLE JURISDIC TIONAL HIGH COURT IN CASE OF SPECTRA SHARES AND SCRIPS, 354 ITR 35 WILL ALSO NOT APPLY. THOUGH, IT MAY BE A FACT THAT THERE ARE DIVERGENT V IEWS WHETHER THERE IS TRANSFER GIVING RISE TO CAPITAL GAIN ON THE DATE OF DEVELOPMENT AGREEMENT, BUT, FACT REMAINS, THE ISSUE REQUIRES EX AMINATION BY THE AO AND HAS TO BE DECIDED ON THE BASIS OF FACTS INVOLVE D. AO HAS TO DECIDE 10 ITA NOS. 673, 674 & 675/HYD/2012 SRI KUSHAL KUMAR KANKARIA & OTHERS THE ISSUE OF ACCRUAL OF CAPITAL GAIN UNDER A DEVELO PMENT AGREEMENT BY EXAMINING VARIOUS FACTORS, LIKE DATE OF HANDING OVE R OF POSSESSION, WILLINGNESS OF DEVELOPER TO START DEVELOPMENT WORK, CONSIDERATION RECEIVED ETC. HOWEVER, IN THE PRESENT CASE, AO HAS NOT AT ALL EXAMINED THE ISSUE, THOUGH, MATERIALS RELATING TO ENTERING INTO THE DEVELOPMENT AGREEMENT ARE AVAILABLE ON RECORD. THEREFORE, THERE BEING FAILURE ON THE PART OF AO TO CONDUCT ENQUIRY AND EXAMINE THE ISSUE OR OTHERWISE APPLY HIS MIND TO FACTS AND MATERIALS ON RECORD, ASSESSME NT ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE R EVENUE, THEREBY AMENABLE TO THE JURISDICTION U/S 263 OF THE ACT. HO WEVER, IN OUR VIEW, LD. CIT WAS NOT JUSTIFIED IN STRAIGHTAWAY DIRECTING AO TO COMPUTE CAPITAL GAIN ON TRANSFER OF LAND TO THE DEVELOPER AS PER TH E DEVELOPMENT AGREEMENT. IN OUR VIEW, BEFORE COMING TO CONCLUSION THAT THERE IS A TRANSFER IN TERMS OF SECTION 2(47)(V) VARIOUS FACTO RS AS INDICATED HEREINBEFORE, NEED TO BE EXAMINED. ASSESSEES CLAIM THAT THERE WAS DISPUTE BETWEEN THE PARTIES AND DEVELOPER WAS NOT W ILLING TO CARRY OUT DEVELOPMENT WORK REQUIRES EXAMINATION ON THE BASIS OF EVIDENCE PRODUCED BY ASSESSEE. FURTHER, AO IS REQUIRED TO EX AMINE ASSESSEES CLAIM THAT HE IS NO MORE OWNER OF THE PROPERTY AS I T WAS SOLD TO HIS WIFE BY REGISTERED AGREEMENT OF SALE ON 04/04/06. AO ALS O IS REQUIRED TO DETERMINE THE YEAR OF TAXABILITY CONSIDERING THE CL AIM OF ASSESSEE THAT CAPITAL GAIN ON TRANSFER OF LAND TO THE BUILDER WAS OFFERED BY THE LAND OWNERS IN A.Y. 2011-12 UPON CANCELLATION OF DEVELOP MENT AGREEMENT AND EXECUTION OF SALE DEED. IN THE AFORESAID FACTS AND CIRCUMSTANCES, THOUGH, WE UPHOLD THE EXERCISE OF JURISDICTION U/S 263 BY LD. CIT, BUT, WE MODIFY HIS ORDER BY DIRECTING AO TO EXAMINE THE ISS UE OF ACCRUAL OF CAPITAL GAIN IN THE IMPUGNED AY, INDEPENDENTLY, WIT HOUT BEING INFLUENCED BY ANY OF THE OBSERVATIONS OF LD. CIT. AO MUST DECI DE THE ISSUE CONSIDERING ALL FACTS AND MATERIALS ON RECORD AS WE LL AS THE SUBMISSIONS OF ASSESSEE AND KEEPING IN VIEW THE JUDICIAL PRECED ENTS WHICH MAY BE RELIED UPON BY ASSESSEE AS WELL AS DEPARTMENT. NEED LESS TO SAY, AO SHALL AFFORD REASONABLE OPPORTUNITY OF BEING HEARD TO ASSESSEE BEFORE DECIDING THE ISSUE. 11 ITA NOS. 673, 674 & 675/HYD/2012 SRI KUSHAL KUMAR KANKARIA & OTHERS 12. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 13. AS THE GROUNDS, FACTS AND CIRCUMSTANCES EXCEPT THE ISSUE OF OWNERSHIP, ARE MATERIALLY IDENTICAL IN ITA NOS. 674 & 675/HYD/2012 TO THAT OF ITA NO. 673/HYD/2012 (SUPRA), WE DIRECT AO TO DECIDE THE ISSUE OF ACCRUAL OF CAPITAL GAIN AS PER OUR DIRECTIONS TH EREIN. 14. TO SUM UP, ALL THE THREE APPEALS UNDER CONSIDER ATION ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 10 TH APRIL, 2015. SD/- SD/- (B. RAMAKOTAIAH) (SAKTIJIT DEY ) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 10 TH APRIL, 2015 KV COPY TO:- 1) KUSHAL KUMAR KANKARIA, 2) DINESH KUMAR KANKARIA, AND 3) SANJAY KUMAR KANKARIA, C/OVENUGOPAL & CHENOY, CAS, 4-1 -889/16/2, TILAK ROAD, HYDERABAD 500 001. 4) ITO, WARD 6(3), IT TOWERS, MASAB TANK, HYDERA BAD 5) CIT-III, HYDERABAD 6) ADDL. CIT, RANGE 6,HYDERABAD 7) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD.