Mohammed Iftekharuddin , Secunderabad V. Income Tax Officer, Ward-10(1), Hyderabad

ITA 748/Hyd/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 0958 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-A
• Next Hearing Date: 29-07-2019
• Assessment Year: 2006-2007
• Appeal Filed On: 13-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SATYA PRHANTH PINISETTY
• Assessee Lawyers: SYED JAMEELUDDIN
• Keywords: Sale consideration of property below Jantri Value; Value adopted by valuation officer; Cost of acquisition; Fair market value; Valuation report; Capital Gains
• Section: 143(3); 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 748/HYD/2019 ASSESSMENT YEAR : 2006 - 07 MOHAMMED IFTEKHARUDDIN, 1 - 11 - 251/18/C, 173, VATAN HOUSE, MOTILAL NEHRU NAGAR, BEGUMPET, SECUNDERABAD 500016. PAN: ADMPM 6748 E VS. INCOME TAX OFFICER, WARD - 10(1), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY: SRI SYED JAMEELUDDIN REVENUE BY: SRI SATYA PRHANTH PINISETTY, DR DATE OF HEARING: 29 /0 7 /2019 DATE OF PRONOUNCEMENT: 05 /0 9 /2019 ORDER PER SMT. P. MADHAVI DEVI, J.M: THIS IS ASSESSEES APPEAL FOR THE ASST. YEAR 2006 - 07 AGAINST THE ORDER OF THE LD. CIT(A) - 6, HYDERABAD DATED 27/03/2019. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, AN INDIVIDUAL, FILED HIS RETURN OF INCOME FOR THE A.Y. 2006 - 07 ON 20/01/2007 ADMITTING A TOTAL INCOME O F RS. 4,21,826/ - AND AGRICULTURAL INCOME OF RS. 1,50,000/ - . THE ASSESSMENT WAS COMPLETED U/S. 143(3) R.W.S 147 OF 2 THE IT ACT, 1961 ON 24/02/2014 BY DETERMINING THE TOTAL INCOME OF RS. 42,64,726/ - AFTER ADOPTING THE SRO VALUE OF RS. 41,42,900/ - AS THE FULL VALUE OF CONSIDERATION AS PER THE PROVISIONS OF SECTION 50C OF THE ACT TOWARDS ASSESSEES SHARE IN THE PROPERTY SOLD. THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A) AGAINST THE SAID ADDITION , WHO DISMISSED THE SAME AND ON FURTHER APPEAL BY THE ASSESS EE BEFORE THE TRIBUNAL, THE ITAT IN ITA NOS. 121/HYD/2016 DATED 25/11/2016 HAS ADMITTED THE LEGAL GROUND FOR REFERENCE TO THE DVO FOR VALUATION OF THE SAID PROPERTY. 3. DURING THE CONSEQUENTIAL ASSESSMENT PROCEEDINGS U/S. 143(3) R.W.S 254 OF THE ACT, THE ASSESSING OFFICER REFERRED THE MATTER TO THE DVO FOR ASCERTAINING THE VALUE OF THE SA ID PROPERTY. HOWEVER, SINCE THE ASSESSING OFFICER DID NOT RECEIVE THE VALUATION REPORT BEFORE THE COMPLETION OF ASSESSMENT PROCEEDINGS , HE ADOPTED THE VALUE PROPOSED BY THE VALUATION OFFICER IN THE SHOW CAUSE NOTICE I.E., AT RS. 33,37,000/ - AS THE DEEMED SALE CONSIDERATION AS PER THE PROVISIONS OF SECTION 50C AND COMPUTED THE SHORT TERM CAPITAL GAINS ACCORDINGLY . AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHO CALLED FOR A REMAND REPORT FROM THE ASSESSING OFFICER. THE ASSESSING OFFICER SUBMITTED THAT SINCE HE HAS NOT YET RECEIVED THE VALUATION REPORT AND SINCE THE ASSESSMENT WAS GETTING T IME BARRED, HE HAS ADOPTED THE VALUE PROPOSED BY THE DVO IN THE SHOW CAUSE NOTICE ISSUE D. MEANWHILE , THE ASSESSEE OBTAINED THE VALUATION COPY FROM THE DVO AND SUBMITTED THE 3 SAME TO THE LD. CIT(A). THE LD. CIT(A) OBSERVED THAT THE ITAT HAD ALREADY CONSIDE RED THE CONTENTIONS OF THE ASSESSEE ABOUT THE PROPERTY BEING A DISTRESS SALE AND HAS DECIDED THE ISSUE AND THEREFORE, IT NEEDS NO FRESH CONSIDERATION. ACCORDINGLY, THE LD. CIT(A) DISMISSED THE ASSESSEES APPEAL AND THE ASSESSEE IS IN FURTHER APPEAL BEFORE US BY RAISING THE FOLLOWING GROUNDS OF APPEAL: - 1. THE ORDER OF THE LD. CIT(A) - 6, HYDERABAD, CONFIRMING THE ORDER OF THE ASSESSING OFFICER, IS ERRONEOUS IN LAW AND IS AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LD. CIT(A) FAILED TO CONSIDER THE PLEA OF THE ASSESSEE THAT THE ASSESSING OFFICER HAS IGNORED THE SUBMISSIONS OF THE ASSESSEE, THOUGH SPECIFICALLY URGED BEFORE HIM, THAT THE PROVISIONS OF SECTION 50C ARE NOT APPLICABLE TO THE PROPERTY WITH DEFECTIVE LEGAL TITLE, WHICH HAS BEEN SOLD UNDER COMPULSION. 3. THE LD. CIT(A) ERRED IN NOT CONSIDERING THE OBSERVATIONS OF THE HONBLE ITAT, IN PARAS 2 AND 4 AT PAGE - 2 OF ITS ORDER DATED 25/11/2016, WHEREIN IT HAS BEEN CLEARLY STATED THAT AS PER THE ASSESSEE IT IS A CASE OF DISTRESS SALE, A ND THEREFORE, THE VALUE IS MUCH LOWER THAN THE GUIDELINE VALUE, AND THE ASSESSING OFFICER HAS BEEN DIRECTED TO CONSIDER ALL THE ISSUES RAISED BY THE ASSESSEE, AFRESH. 4. THE LD CIT(A) IS HIGHLY UNJUSTIFIED IN STATING IN PARA 6.24 AT PAGE 27 OF HIS ORDER, THAT THE ISSUE RAISED BY THE ASSESSEE THAT HE HAS NO LEGAL TITLE IN THE PROPERTY SOLD BY HIM AND WHATEVER AMOUNT HE RECEIVED ON SALE OF SUCH PROPERTY WITH DEFECTIVE TITLE WAS GRATUITOUS, HAS ALREADY BEEN DECIDED BY THE HONBLE ITAT; THIS IS BECAUSE IT HAS BEEN CLEARLY STATED BY THE HONBLE ITAT IN PARA - 4 AT PAGE - 2 OF ITS ORDERDATED 25/11/2016, THAT ALL THE GROUNDS RELATING TO MERITS RAISED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 5. ANY OTHER GROUND OR GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING. 4 4 . LEARNED COUNSEL FOR THE ASSESSEE , WHILE REITERATING THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW , SUBMITTED THAT THE PROPERTY IN QUESTION WAS OWNED BY NAWAB LIYAKAT JUNG S/O. GULAM MOHAMMAD KHAN WHO SOLD THE PROPERTY TO ONE MR. N. MOHAN REDDY S/O. RAM CHANDRA REDDY VIDE REGISTERED SALE DEED DOCUMENT NO.754 OF 1961, DATED 26/4/1961 AND THAT MR. N. MOHAN REDDY SOLD THE PROPERTY TO OMAR BIN MOHD, MOHSIN BIN MOHD OMER AND SMT. SULTANUNNISSA BEGUM VIDE REGISTERED SALE DEED DOCUMENT NO.20 87 OF 1964, DATED 18/11/1964 AND THEREAFTER, THEY CONSTRUCTED A HOUSE OVER AN EXTENT OF 1393.8 SQ MTS ABUTTING THE MAIN ROAD , ROAD NO.12, BANJARA HILLS, HYDERABAD. THEREAFTER, OUT OF FAMILY NECESSITY, THE VENDORS SOLD PART OF THE PROPERTY TO SMT. SUKANYA KAMALAKAR REDDY AND THE BALANCE OF THE PROPERTY WAS SOLD TO MOHSIN BIN MOHD OMER AND OMAR BIN MOHD TO TAUSEEF AUARAISHI AND MOHAMMAD IFTEKHARUDDIN I.E., THE ASSESSEE HEREIN, FOR A TOTAL CONSIDERATION OF RS. 5 LAKHS TO THE EXTENT OF 886 SQ. YDS OF OPEN LAN D SITUATED AT SOUTHERN SIDE OF THE HOUSE BEARING NO.8 - 2 - 700. THE LAND PURCHASED BY THE ASSESSEE AND ANOTHER WAS LAND LOCKED WITH THE PROPERTY ON THE NORTHERN SIDE AND HAD NO APPROACH ROAD TO THEIR PROPERTY. THEREFORE, THEY APPROACH ED THE COURT FOR AN INJ UNCTION AGAINST SMT. SUKANYA KAMALAKER REDDY. HOWEVER, THE COURT DISMISSED THE ASSESSEES PETITION HOLDING THAT THE PROPERTY WAS ALREADY SOLD TO SMT. SUKANYA KAMALAKER REDDY AND THAT THE VENDORS OF THE ASSESSEE HAD NO LEGAL RIGHT TO THE PROPERTY. THE COU RT FURTHER OBSERVED THAT THE 5 PROPERTY WAS SOLD BY MR. N. MOHAN REDDY TO THE VENDORS OF THE ASSESSEE AND ALSO TO SULTANUNNISSA BEGUM AND SINCE T HE VENDORS MOHSIN BIN MOHD OMER AND OMAR BIN MOHD ONLY REGISTERED THE PROPERTY IN FAVOUR OF THE ASSESSEE AND ANOT HER, THEY HAD NO LEGAL TITLE TO THE PROPERTY. IT IS SUBMITTED THAT THEREAFTER, THE ASSESSEE AND ANOTHER SETTLED THE MATTER WITH THE RESPONDENT SMT. SUKANYA KAMALAKAR REDDY IN THE CIVIL SUIT AND REGISTERED THE SAME IN HER FAVOUR FOR A CONSIDEATIO N OF RS. 6 LAKHS. THEREFORE, ACCORDING TO THE LEARNED COUNSEL FOR THE ASSESSEE, THIS IS A DISTRESS SALE AND THEREFORE, THE PROVISIONS OF SECTION 50C WILL NOT APPLY AND SINCE THE ASSESSEE HAD NOT BEEN DECLARED THE OWNER OF THE PROPERTY, THERE IS NO CAPITAL GAIN TO T HE ASSESSEE. THE LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT ALL THESE FACTS WERE BROUGHT TO THE NOTICE OF THE A.O., DVO AS WELL AS THE CIT(A), BUT NONE OF THEM HAVE CONSIDERED THE SAME, BUT IN FACT IGNORED THE ESSENTIAL FACTS AND HAVE ADOPTED RS. 33,37,000/ - AS THE FAIR MARKET VALUE U/S. 50C OF THE ACT AND HAVE RAISED HUGE DEMAND OF SHORT TERM CAPITAL GAINS. HE THEREFORE, PRAYED FOR DELETION OF THE ADDITIONS MADE BY THE A.O. AND CONFIRMED BY THE LD. CIT(A). 5 . ON THE OTHER HAND, LD. DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 6 6 . HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT THE ASSESSEE HAS PURCHASED THE PROPERTY FOR RS. 5 LAKHS AND THEREAFTER WITHIN A PERIOD OF SIX MONTHS THEY HAVE SOLD THE PROPERTY TO THE RESPONDENT IN THE CIVIL SUIT FOR A TOTAL CONSIDERATION OF RS. 6 LAKHS. ON PERUSAL OF THE DVO REPORT, IT IS NOTICED THAT THE PROPERTY WHICH HAS BEEN SOLD BY THE ASSESSEE W AS LAND LOCKED AND HA D NO APPROACH ROAD. I T IS ONLY SMT. SUKANYA KAMALAKAR REDDYS PROPERTY WHICH HAD THE APPROACH TO THE ROAD AND SINCE THE INJUNCTION WAS DENIED TO THE ASSESSEE AND PARTICULARLY SINCE IT HAS BEEN DECREED THAT THE VENDORS OF THE ASSESSEE D ID NOT HAVE ANY LEGAL TITLE OVER THE PROPE RTY, WE ARE OF THE VIEW THAT THE ASSESSEE WAS CONSTRAINED TO SELL THE PROPERTY TO SMT. SUKANYA KAMALAKAR REDDY ONLY. THEREFORE, IT IS CLEARLY A DISTRESS SALE. THOUGH THE ASSESSEE HAS RAISED THE OBJECTIONS BEFORE THE ASSESSING OFFICER AS WELL AS THE DVO, NEITHER THE A.O. NOR THE DVO HA VE PASSED ANY SPEAKING ORDER AS TO WHY THESE OBJECTIONS ARE NOT ACCEPT ABLE TO THEM . THE LD. CIT(A) HAS ALSO ERRED IN HOLDING THAT THE ITAT HAS ALREADY CONSIDERED THESE FACTS IN THE EARLIER PROCEEDINGS. WE HAVE GONE THROUGH T HE ORDER OF THE ITAT AND FIND THAT THE TRIBUNAL HAD ONLY REMANDED THE ISSUED TO THE FILE OF THE A.O. FOR RE - CONSIDERATION OF THE ISSUE ON MERITS AFTER CALLING FOR THE DVO REPORT, IF NECESSARY. THEREFORE, THE ITAT HAS NOT DECIDED THE ISSUE ON MERITS AND AL L THESE FACTS WERE NEVER CONSIDERED BY ANY OF THE AUTHORITIES BELOW. AT THIS STAGE, THE LD. DR SUBMITTED THAT THE ISSUE MAY BE REMANDED TO THE FILE OF THE LD. 7 CIT(A) , HOWEVER, WE DO NOT FIND IT NECESSARY TO DO SO AT THIS STAGE AS ALL THE RELEVANT DOCUMENT S ARE BEFORE US. FROM THE COMPUTATION OF TOTAL INCOME FILED ALONG WITH RETURN OF INCOME FOR THE A.Y. 2006 - 07, WE FIND THAT THE ASSESSEE HAD OFFERED THE SHORT TERM CAPITAL GAINS TO TAX BY CONSIDERING RS. 6 LAKHS AS SALE CONSIDERATION RECEIVED AFTER DEDUCTI NG THEREFROM , THE COST OF ACQUISITION. THE DOCUMENTS RELATING TO THE CIVIL SUIT ARE ALSO FILED BEFORE US AND WE FIND THAT THERE WAS A LEGAL DISPUTE AND THE ASSESSEE HAS BEEN HELD TO BE NOT A LEGAL TITLE HOLDER OF THE PROPERTY. IN VIEW OF THE SAME, WE ACC EPT THE CONTENTION OF THE ASSESSEE THAT IT IS A DISTRESS SALE AND ASSESSEE WAS CONSTRAINED TO SELL THE PROPERTY TO NONE OTHER THAN THE RESPONDENT IN THE CIVIL SUIT AND THEREFORE, THE PROPERTY COULD NOT HAVE BEEN SOLD AT THE FAIR MARKET VALUE. ACCORDINGLY, THE APPEAL OF THE ASSESSEE IS ALLOWED. 7 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 05 TH SEPTEMBER, 2019. SD/ - SD/ - (S. RIFAUR RAHMAN) (P. MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 05/09 / 2019 OKK 8 COPY TO: - 1) MOHD. IFTEKHARUDDIN C/O. SYED JAMEELUDDIN, INCOME TAX CONSULTANT, 16 - 7 - 302, ERRAM COTTAGE, AZAMPURA, CHADERGHAT, HYDERABAD - 024. 2) ITO, WARD - 10(1), IT TOWERS, AC GUARDS, MASAB TANK HYDERABAD. 3) THE CIT(A) - 6 , HYDERABAD 4) THE PR. CIT - 6 , HYDERABAD 5) THE DR, ITAT, HYDERABAD 6) GUARD FILE 9