Manoj Rupani, Hyderabad, Secunderabad V. DCIT, Circle-3(1), Hyderabad, Hyderabad

ITA 739/HYD/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 3852 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 9 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Next Hearing Date: 27-01-2020
• Assessment Year: 2007-2008
• Appeal Filed On: 01-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: L SURESH
• Assessee Lawyers: C SURESH
• Keywords: Principle of natural justice; Assessment record

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES SMC, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER I.T.A. NO. 739/HYD/2017 ASSESSMENT YEAR: 2007-08 MANOJ RUPANI, HYDERABAD [PAN: AAZPR3816N] VS DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-3(1), HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI C.SURESH, AR FOR REVENUE : SHRI L.SURESH, DR DATE OF HEARING : 27-01-2020 DATE OF PRONOUNCEMENT : 28-02-2020 O R D E R THIS IS ASSESSEES APPEAL FOR THE AY.2007-08, DIRECT ED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)10, HYDERABAD, DATED 01-11-2016. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, AN IND IVIDUAL AND DIRECTOR OF M/S.RHIZOME DISTILLERIES (P) LTD., HY DERABAD, FILED HIS RETURN OF INCOME FOR THE AY.2007-08 ON 29- 02-2008 DECLARING TOTAL INCOME OF RS.4,60,040/-. 3. DURING THE ASSESSMENT PROCEEDINGS U/S.143(3) OF TH E INCOME TAX ACT [ACT], THE ASSESSING OFFICER (AO) NOTICE D THAT THE ASSESSEE HAS SOLD ONE OF HIS PROPERTIES AT OOTY (T AMIL NADU) ON 14-05-2007 AND HAS RECEIVED A SUM OF RS.7 LAKHS. HE OBSERVED THAT SALE DEED DT.14-05-2007 MAKES NO MENTI ON OF THIS RECEIPT BUT ONLY SPECIFIES RECEIPT OF RS.18 LA KHS (ON 10.04.2007 AND 8.5.2007) AS SALE CONSIDERATION. THE ASSESSEE ITA NO. 739/HYD/2017 :- 2 -: WAS THEREFORE ASKED TO EXPLAIN AS TO WHY THE RECEIPT OF RS.7 LAKHS SHOULD NOT BE TREATED AS EXTRA CONSIDERATION OVER AND ABOVE RS.18.00 LAKHS RECEIVED BY THE ASSESSEE. IN R EPLY, THE ASSESSEE SUBMITTED THAT THE SUM OF RS.7.00 LAKHS IS ONL Y AN ADVANCE RECEIVED ON 24-03-2007 AND THAT THE TOTAL OF RS. 25.00 LAKHS IS THE RECEIPT ON WHICH CAPITAL GAIN IS TAXABLE I N THE A.Y 2008-09. THE AO, HOWEVER, DID NOT ACCEPT THE ASSESSEE S CONTENTION AND HELD THAT THE SUM OF RS.7 LAKHS IS THE MON EY RECEIVED BY THE ASSESSEE OVER AND ABOVE THE SALE CONS IDERATION AND ACCORDINGLY, BROUGHT THE SAME TO TAX IN A.Y 2007-0 8. 4. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFOR E THE CIT(A) AND ALSO SUBMITTED THAT THE PROPERTY WAS SOLD BY WAY OF TWO SALE DEEDS AND COPIES OF THE SALE DEEDS ONE FOR A SUM OF RS.7.00 LAKHS AND THE OTHER FOR A SUM OF RS.18.00 LAK HS, TOTALING TO RS.25 LAKHS WERE FILED. THE CIT(A) CALLED FOR A REMAND REPORT FROM THE AO. IN THE REMAND REPORT, THE AO STATED THAT THE ENTIRE AMOUNT WAS RECEIVED BY CHEQUES AN D THAT THE SALE DEEDS HAVE BEEN EXECUTED IN THE SUBSEQUEN T FINANCIAL YEAR, AFTER RECEIVING THE WHOLE SALE CONSID ERATION. THE CIT(A), HOWEVER, CONFIRMED THE ORDER OF AO AND THE AS SESSEE IS IN SECOND APPEAL BEFORE THE TRIBUNAL, RAISING THE FO LLOWING GROUNDS: 1.THE LEARNED COMMISSIONER OF INCOME TAX, APPEALS- 10, HYDERABAD, ERRED ON FACT AND IN LAW IN FAILING TO NOTE THAT TH E SUM OF RS.7 LAKHS WAS RECEIVED BY YOUR APPELLANT BY CHEQUE ON 24.03.2 007 FROM SMT.UMA AGARWAL, AS ADVANCE FOR SALE OF PROPERTY, A ND THAT THE REGISTRATION OF THE PROPERTY HAS ACTUALLY TAKEN PLA CE ON 14.05.2007 FOR THE SAID AMOUNT OF RS.7 LAKHS, AND THEREFORE TH E LONG TERM CAPITAL GAIN ARISING THEREFROM IS EXIGIBLE TO TAX ONLY IN T HE ASSESSMENT YEAR 2008-09. ITA NO. 739/HYD/2017 :- 3 -: 2. THE LEARNED COMMISSIONER OF INCOME TAX, APPEALS- 10, HYDERABAD, FAILED TO NOTE THAT THE SALE DEED FOR THE SUM OF RS .7 LAKHS OF 14.05.2007 CLEARLY MENTIONS THE PARTICULARS OF THE PAYMENT DATED 24.03.2007 IN RESPECT OF THE SUM OF RS.7 LAKHS. IN THE RESULT THE LEARNED COMMISSIONER OF INCOME TAX, APPEALS-10, HYD ERABAD, IS IN ERROR IN BRINGING THE SUM OF RS.7 LAKHS TO TAX IN R ESPECT OF ASSESSMENT YEAR 2007-08, UNDER THE HEAD' INCOME FRO M OTHER SOURCES'. 3. THE LEARNED COMMISSIONER OF INCOME TAX, APPEALS- 10, HYDERABAD, HAS ERRED IN FAILING TO NOTE THAT AS BORNE OUT BY T HE ASSESSMENT RECORD, YOUR APPELLANT WAS NEVER ASKED DURING THE A SSESSMENT PROCEEDINGS TO ADDUCE EVIDENCE THAT THE CAPITAL GAI N ATTRIBUTABLE TO THE SALE CONSIDERATION OF RS.7 LAKHS HAD BEEN BROUG HT TO TAX IN THE ASSESSMENT YEAR 2008-09, AND HENCE IN KEEPING WITH THE PRINCIPLES OF NATURAL JUSTICE, THE DECISION OF THE LEARNED COM MISSIONER OF INCOME TAX, APPEALS-10, HYDERABAD, IN TREATING THE SUM OF RS.7 LAKHS AS TAXABLE UNDER THE HEAD INCOME FROM OTHER SOURCES IS NOT ONLY FACTUALLY INCORRECT BUT BAD IN LAW. 4. THE LEARNED COMMISSIONER OF INCOME TAX, APPEALS- L0, HYDERABAD, ERRED IN LAW AND IN FACT IN NOT APPRECIATING THE FA CT THAT YOUR APPELLANT IS WELL WITHIN HIS RIGHTS TO ADDUCE ADDIT IONAL EVIDENCE AS PER RULE 46A(1) OF THE I T RULES. 5. TAKING INTO ACCOUNT THE CLEAR FACTS ON RECORD TH E LEARNED COMMISSIONER OF INCOME TAX, APPEALS10, HYDERABAD, I S CLEARLY IN ERROR IN TREATING THE SUM OF RS.7 LAKHS RECEIVED AS ADVANCE BY YOUR APPELLANT, AS INCOME FROM OTHER SOURCES IN RESPECT OF THE ASSESSMENT YEAR 2007-08 FAILING TO NOTE THAT THE SAID SUM HAS BEEN DULY CONSIDERED IN THE DETERMINATION OF YOUR APPELLANT'S TAXABLE INCOME FOR THE ASSESSMENT YEAR 2008-09. 6. ANY OTHER GROUND/S THAT MAY BE URGED AT THE TIME OF HEARING. 5. LD.COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISS IONS MADE BEFORE THE AO AND CIT(A) WHILE THE LD.DR SUPPORTE D THE ORDERS OF THE AUTHORITIES BELOW. 6. HAVING REGARD TO THE RIVAL CONTENTIONS AND MATERIAL ON RECORD, I FIND THAT THE ASSESSEE IS THE OWNER OF 0.25 CENT PROPERTY WITH A HOUSE THEREON AT OOTY AND HAS ACCORDIN GLY ITA NO. 739/HYD/2017 :- 4 -: SOLD THE SAME BY OF TWO SALE DEEDS, 16 CENT WITH THE HO USE THERE ON FOR RS.18.00 LAKHS BY RECEIVING AN ADVANCE OF RS.7 LAKHS IN THE RELEVANT FINANCIAL YEAR AND THE BALANCE I N THE SUBSEQUENT FINANCIAL YEAR, WHILE THE BALANCE OF 0.9 CENTS HAS ALSO BEEN SOLD FOR RS.7.00 LAKHS REGISTERED IN THE N AMES OF VENDEES IN THE SUBSEQUENT FINANCIAL YEARS. SINCE THE ENTIRE SALE CONSIDERATION HAS BEEN RECEIVED IN THE SUBSEQU ENT ASSESSMENT YEAR AND THE PROPERTY ALSO BEEN HANDED OVE R TO THE VENDEES, I AM OF THE OPINION THAT THE SALE HAS TAKE N PLACE ONLY IN THE SUBSEQUENT ASSESSMENT YEAR. THE LD.COUNSE L FOR THE ASSESSEE ALSO SUBMITTED THAT THE ASSESSEE HAS OFFERE D TO TAX THE ENTIRE RECEIPT IN THE SUBSEQUENT ASSESSMENT YEAR A ND THEREFORE NO FURTHER ADDITION IS CALLED-FOR. SINCE THE ASSESSEE HAS OFFERED THE CAPITAL GAIN TO TAX IN THE SUBSEQUENT YE AR, BRINGING THE SAME TO TAX AGAIN IN THE YEAR OF RECEIPT OF ADVANCE WITHOUT THERE BEING ANY TRANSFER/POSSESSION WOULD ONLY AMOUNT TO DOUBLE ADDITION. IN THE VIEW OF THE SAME, I A M INCLINED TO ACCEPT THE CONTENTIONS OF ASSESSEE THAT THERE IS NO SALE DURING THE RELEVANT FINANCIAL YEAR AND CONSEQUEN TLY, NO CAPITAL GAIN ARISES TO THE ASSESSEE TO BE TAXED IN THE RE LEVANT ASSESSMENT YEAR. ACCORDINGLY, THE APPEAL OF ASSESSEE IS ALLOWED. 7. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH FEBRUARY, 2020 SD/- (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED: 28-02-2020 TNMM ITA NO. 739/HYD/2017 :- 5 -: COPY TO : 1. SHRI MANOJ RUPANI, C/O. SEKHAR AND SURESH, CHART ERED ACCOUNTANTS, 133/4, RASHTRAPATHI ROAD, SECUNDERABAD . 2. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-3(1), HYDERABAD. 3. CIT(APPEALS)-10, HYDERABAD. 4. PR.CIT-3, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.