ITO, Ward 1(3), Pune V. Shri Kalidas Sopan Bahirat, Pune

ITA 762/PUN/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 79911 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-06-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2004-2005
• Appeal Filed On: 02-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUNITA BILLA
• Assessee Lawyers: SONALI PATHANKAR
• Keywords: Capital asset; Additional evidence; Cost of acquisition

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO.762/PN/2013 (A.Y: 2004-05) ITO, WARD 1(3), PUNE APPELLANT VS. SHRI KALIDAS SOPAN BAHIRAT S.NO.193, BAHIRAT VASTI, SADESATRANALI, HADAPSAR, PUNE 411028 PAN: AKEPB7267L RESPONDENT APPELLANT BY : MS SUNITA BI LLA RESPONDENT BY : MS SONALI PATHANKAR DATE OF HEARING: 11.06.2014 DATE OF ORDER : 20.06.2014 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEAL)-I, [IN SHORT CIT(A)] PUNE, DATED 18.01.2013 FOR A.Y. 2004-05 ON THE FOLLOWING GROUNDS. 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME- TAX(APPEALS) IS CONTRARY TO LAW AND TO THE FACTS AN D CIRCUMSTANCES OF THE CASE. 2. THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS) GROSSLY ERRED IN HOLDING THAT CAPITAL GAINS IS ASSE SSABLE IN THE HANDS OF THE ASSESSEE IN THE A.Y. 2008-09 AN D NOT IN THE A.Y. 2004-05. 3. THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS) GROSSLY ERRED IN DECIDING THE ISSUE IN FAVOUR OF THE ASSESSEE ON THE BASIS OF ADDITIONAL EVIDENCES I.E C OPY OF DEVELOPMENT AGREEMENT NO.5737/07 DATED 27.07.2007 IN RESPECT OF 29R. (WHICH WAS NOT PRODUCED BEFORE THE 2 ITA NO.762 OF 13 KALIDAS SOPAN BAHIRAT ASSESSING OFFICER) GIVING THE ASSESSING OFFICER OPPORTUNITY FOR REBUTTAL, WHICH IS IN CONTRAVENTION OF RULE 46A OF THE INCOME-TAX RULES, 1962. 4. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) GROSSLY ERRED IN FAILING TO APPRECIATE THAT THE AGR EEMENTS EXECUTED BY THE ASSESSEE ON 26.03.2004 AND 27.07.20 07 WERE DIFFERENT IN NATURE SINCE WHILE THE FIRST ONE WAS FOR TRANSFER OF DEVELOPMENT RIGHTS, THE SECOND ONE WAS IN THE NATURE OF TRANSFER OF PROPERTY; AND THEREFORE, THE TWO SHOULD NOT HAVE BEEN MIXED UP. 5. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) GROSSLY ERRED IN HOLDING THAT THE ORIGINAL DEED DAT ED 26.03.2004 STOOD CANCELLED. 6. FOR THESE AND SUCH OTHER GROUNDS AS MAY BE URGED AT THE TIME OF THE HEARING, THE ORDER OF THE LD. COMMISSIONER OF INCOME-TAX(APPEALS) MAY BE VACATED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 7. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER OR DELETE ANY OF THE ABOVE GROUNDS OF APPEAL DURING THE COURS E OF THE APPELLATE PROCEEDINGS BEFORE THE HON'BLE TRIBUN AL. 2. THE ASSESSEE ALONG WITH HIS ALL FAMILY MEMBERS E NTERED INTO A DEVELOPMENT AGREEMENT WITH CITY DEVELOPERS AND PR OMOTERS LTD. ON 26.03.2004 FOR DEVELOPMENT OF THEIR ANCESTR AL LAND ADMEASURING 73 R 84 SQ. MTRS. AT SURVEY NOS.193/2/9 , 193/2/13, 193/2/14/1, 193/2/14/2 & 193/2/14/3 AT SA DE SATARA NALLI, HADAPSAR, PUNE 28. THE TOTAL SALE CONSIDERATION WAS AGREED AT 60,54,880/-. 3. THE ASSESSING OFFICER ISSUED A NOTICE U/S.148 OF THE I.T. ACT SINCE THE ASSESSEE HAD NOT FILED RETURN OF INCOME W ITHIN THE STIPULATED TIME PERIOD. IN RESPONSE TO THE SAME, T HE ASSESSEE FILED RETURN OF INCOME ON 13.04.2011 DECLARING TOTA L INCOME AT NIL. DURING THE ASSESSMENT PROCEEDINGS, IT WAS STA TED BEFORE THE ASSESSING OFFICER THAT THE DEVELOPMENT COULD NOT BE EXECUTED SINCE THE ASSESSEE AND OTHERS HAD FILED A CIVIL SUI T AGAINST THE CITY CORPORATION LTD. THEREAFTER, A FRESH JOINT VE NTURE AGREEMENT 3 ITA NO.762 OF 13 KALIDAS SOPAN BAHIRAT WAS EXECUTED ON 27.07.2007 AS PER WHICH 44.84 R OF LAND WAS SOLD OUTRIGHT TO THE COMPANY AND 29R WAS GIVEN AS P ART OF DEVELOPMENT AGREEMENT WITH THE SAME COMPANY FROM OU T OF THE TOTAL LAND CO-OWNED BY THE ASSESSEE OF 73 R 84 SQ. MTRS. AS PER DOCUMENT FOR OUTRIGHT SALE REGISTERED VIDE DOCUMENT NO.5763/2007, THE SALE CONSIDERATION WAS AGREED AT THE SAME PRICE AS PER 2004 AGREEMENT AT 60,54,880/-. THE COMPANY ADJUSTED 23,25,960/- PAID ON VARIOUS DATES TO THE ASSESSEE AND OTHER FAMILY MEMBERS ONLY THE BALANCE WAS PAID. 4. THE ASSESSING OFFICER DID NOT ACCEPT THE SUBSEQU ENT SALE DEED SINCE THERE WAS NO CANCELLATION OF ORIGINAL SA LE DEED DT.26.03.2004. HE COMPUTED THE CAPITAL GAINS IN TH E HANDS OF THE ASSESSEE BY TAKING 60.72% AS HIS SHARE AGAINST THE SALE CONSIDERATION ASSESSED BY STAMP DUTY AUTHORITIES AT 1,29,54,104/- AND APPLIED COST OF ACQUISITION OF 15 PER SQ. FT. AS ON 01.04.1981 IN COMPARABLE CASES. THEREFORE, T HE TOTAL INCOME ASSESSED AT 47,49,230/- AND DEMAND OF 19,95,293/- WAS RAISED. 5. THE MATTER WAS CARRIED BEFORE FIRST APPELLATE AU THORITY, WHEREIN THE VARIOUS CONTENTIONS WERE RAISED ON BEHA LF OF ASSESSEE AND HAVING CONSIDERED THE SAME, THE CIT(A) HELD THA T THE CAPITAL GAINS IS ASSESSABLE IN THE HANDS OF ASSESSEE NOT IN A.Y. 2004-05 BUT IN A.Y. 2008-09. THE SAME HAS BEEN OPPOSED BEF ORE US ON BEHALF OF REVENUE, INTER ALIA, THE LEARNED DEPARTME NTAL REPRESENTATIVE HAS SUBMITTED THAT THE CIT(A) ERRED IN HOLDING THAT CAPITAL GAINS IS ASSESSABLE IN THE HANDS OF TH E ASSESSEE IN THE A.Y. 2008-09 AND NOT IN THE A.Y. 2004-05. THE CIT(A) ERRED IN DECIDING THE ISSUE IN FAVOUR OF THE ASSESSEE O N THE BASIS OF ADDITIONAL EVIDENCES I.E. COPY OF DEVELOPMENT AGREE MENT NO.5737/07 DATED 27.07.2007 IN RESPECT OF 29R. (WH ICH WAS NOT PRODUCED BEFORE THE ASSESSING OFFICER) GIVING T HE ASSESSING 4 ITA NO.762 OF 13 KALIDAS SOPAN BAHIRAT OFFICER OPPORTUNITY FOR REBUTTAL, WHICH IS IN CONTR AVENTION OF RULE 46A OF THE INCOME-TAX RULES, 1962. THE CIT (A) ERRED IN FAILING TO APPRECIATE THAT THE AGREEMENTS EXECUTED BY THE ASSESSEE ON 26.03.2004 AND 27.07.2007 WERE DIFFEREN T IN NATURE SINCE WHILE THE FIRST ONE WAS FOR TRANSFER OF DEVEL OPMENT RIGHTS, THE SECOND ONE WAS IN THE NATURE OF TRANSFER OF PRO PERTY; AND THEREFORE, THE TWO SHOULD NOT HAVE BEEN MIXED UP. ACCORDINGLY, THE ORDER OF CIT(A) BE SET ASIDE AND THAT OF ASSESS ING OFFICER BE RESTORED. ON THE OTHER HAND, THE LEARNED AUTHORIZED REPRESENTATIVE MS. SONALI PATHAK HAS SUBMITTED THAT THE CIT(A) HAS CORRECTLY ASSESSED THE CAPITAL GAINS IN THE HAN DS OF ASSESSEE IN A.Y. 2008-09 INSTEAD OF A.Y. 2004-05 DONE BY THE ASSESSING OFFICER, BECAUSE OF CIVIL LITIGATION, THE FIRST AGR EEMENT DT. 26.03.2004 COULD NOT BE ACTED UPON AND FINALLY ISSU ES WERE SETTLED AND FINAL AGREEMENT WAS EXECUTED ON 27.07.2 007. ACCORDINGLY, THE PROPERTY WAS TRANSFERRED IN THE PE RIOD RELEVANT TO THE ASSESSMENT YEAR 2008-09 AND THE SAME WAS RIG HTLY APPRECIATED BY THE CIT(A). SO, THE ORDER OF CIT(A) ON THE ISSUE BE UPHELD. 6. AFTER GOING THROUGH THE RIVAL SUBMISSIONS AND MA TERIAL ON RECORD, WE FIND THAT THE ASSESSEE INITIALLY ENTERED INTO THE DEVELOPMENT AGREEMENT IN THE RELEVANT ASSESSMENT YE AR WITH CITY DEVELOPERS AND PROMOTERS LTD. HOWEVER, SINCE THE L AND OWNED BY THE ASSESSEE AT SURVEY NOS.193/2/9, 193/2/13, 19 3/2/14/1, 193/2/14/2 & 193/2/14/3, TOTAL ADMEASURING 73 R 84 SQ. MTRS., AT SADE SATARA NALLI, HADAPSAR, PUNE 28, W AS NOT MUTATED / ENTERED IN 7/12 EXTRACTS BUT STILL APPEAR ING AS ANCESTRAL PROPERTY PRIOR TO PARTITION BETWEEN THE A SSESSEES FATHER AND UNCLES. ACCORDINGLY, THE SAID DEVELOPMENT AGRE EMENT COULD NOT BE ACTED UPON AS THERE WAS A CIVIL SUIT AGAINST THE DEVELOPER WITH A PRAYER OF CANCELLATION OF THE SAID AGREEMENT . APART FROM THAT, THE POLICE COMPLAINTS WERE MADE AGAINST THE D EVELOPER WITH 5 ITA NO.762 OF 13 KALIDAS SOPAN BAHIRAT CONCERNED POLICE AUTHORITIES FOR THE PURPOSES OF NO N-PROSECUTION OF THE CONTRACT DT. 26.03.2007. IN RESPONSE TO THE SAME, THE DEVELOPER ALSO FILED A CAVEAT BEFORE THE CONCERNED CIVIL COURT WHICH IS MATTER OF RECORD AND NOT DISPUTED BY THE P ARTIES AND THE ASSESSING OFFICER. HOWEVER, THE ASSESSING OFFICER CONCLUDED THAT THE SALE DEED WAS EXECUTED AND TRANSFER WAS AFFECTE D OF THE CAPITAL ASSET IN QUESTION IN THE YEAR RELEVANT TO T HE ASSESSMENT YEAR I.E. 2004-05 WHICH IS CONTRARY TO THE FACTS ON RECORDS. IT IS A MATTER OF FACT THAT THE ASSESSEE WAS ABLE TO CONCLU DE HIS CIVIL AND CRIMINAL DISPUTES WITH CITY DEVELOPER ONLY ON 27.07 .2007 WITH THE CONSENT OF ASSESSEES UNCLES, SHRI RAGHUNATH BA HIRAT AND HIS FAMILY MEMBERS. AS PER SETTLEMENT, THE CONSENTING PARTIES REFERRED TO ABOVE AGREED THAT THEIR NAMES WERE MIST AKENLY APPEARING IN 7/12 EXTRACTS AND THEY HEREBY GIVE NO OBJECTION AND CONSENT TO THE EXECUTION OF AGREEMENT. THUS, AFTER REDUCING 23,78,000/- (FOR WHICH SEPARATE DEVELOPMENT AGREEME NT WAS SIGNED) FROM ORIGINAL PRICE OF 60,54,880/-, THE ASSESSEE SOLD THE BALANCE 44.84 ARE FOR A CONSIDERATION OF 36,76,880/-. THESE FACTS HAVE BEEN DETAILED IN PARA 3 OF THE SUBSEQUEN T SALE DEED REGISTERED VIDE DOCUMENT NO.5736/2007 DT. 27.07.200 7. SINCE 23,25,960/- HAD ALREADY BEEN RECEIVED BY THE ASSESS EE AND HIS BROTHER AS DISCUSSED ABOVE, HE HAS RECEIVED THE BAL ANCE OF 13,50,920/- VIDE CHEQUE NO.090620, DT. 27.07.2007. THIS MAKES CLEAR THAT THE AGREEMENT ENTERED INTO BY THE ASSESS EE ON 26.03.2004, STANDS SUPERSEDED BY THE SUBSEQUENT SAL E DEED FOR TRANSFER OF 44.84 ARE DT. 27.07.2007 (DOCUMENT NO.5 736/2007). IN THIS BACKGROUND, THE CIT(A) WAS JUSTIFIED IN HOL DING THAT THE CAPITAL GAINS ASSESSABLE IN THE HANDS OF ASSESSEE N OT IN THE ASSESSMENT YEAR 2004-05 BUT IN 2008-09. THIS REASO NED FINDING OF CIT(A) NEEDS NO INTERFERENCE FROM OUR SIDE. WE UPHOLD THE SAME. 7. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DI SMISSED. 6 ITA NO.762 OF 13 KALIDAS SOPAN BAHIRAT PRONOUNCED IN THE OPEN COURT ON THIS THE DAY 20 TH OF JUNE, 2014. SD/- SD/- (R.K. PANDA) (SHAILENDRA KUMAR YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 20 TH JUNE, 2014 GCVSR COPY TO:- 1) DEPARTMENT 2) ASSESSEE 3) THE CIT(A)-I, PUNE 4) THE CIT-I, PUNE 5) THE DR, A BENCH, I.T.A.T., PUNE. 6) GUARD FILE BY ORDER //TRUE COPY// SENIOR PRIVATE SECRETARY, I.T.A.T., PUNE