R.Mangala Devi, Hyderabad V. Income Tax Officer, Ward-4(5), Hyderabad

ITA 772/Hyd/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 3514 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 10 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-03-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-A
• Next Hearing Date: 28-01-2020
• Assessment Year: 2009-2010
• Appeal Filed On: 26-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: L SURESH
• Keywords: Sale consideration of property below Jantri Value; Gift
• Section: 50C; 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES SMC, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER ITA NO. A.Y. APPELLANT RESPONDENT 772/HYD/18 2009-10 SMT. R.MANGALA DEVI, HYDERABAD [PAN: AHWPD9341G] INCOME TAX OFFICER, WARD-4(5), HYDERABAD 773/HYD/18 2009-10 SRI RAMESH KUMAR JAIN, HYDERABAD [PAN: AFVPJ4785K] FOR ASSESSEE : SMT. S.SANDHYA, AR FOR REVENUE : SHRI L.SURESH, DR DATE OF HEARING : 28-01-2020 DATE OF PRONOUNCEMENT : 05-03-2020 O R D E R BOTH THE APPEALS ARE FILED BY THE RESPECTIVE ASSESSEES AGAINST THE SEPARATE ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS)- 1, HYDERABAD, DATED 20-12-2017 & 18-12-2017 RESPECTIV ELY. 2. BRIEF FACTS OF THE CASE ARE THAT BOTH THE ASSESSEES A RE HUSBAND AND WIFE. BASED ON THE INFORMATION THAT ASSESSE ES HAD SOLD A PROPERTY FOR A CONSIDERATION OF RS.40 LAKHS D URING THE RELEVANT PREVIOUS YEAR AND THAT THE VALUE OF THE SAME WA S ADOPTED BY THE REGISTRATION AUTHORITIES FOR THE PURPOSES OF STAMP DUTY AT RS.83,28,000/- AND SINCE THE ASSESSEES HAD NOT FILED THEIR RETURNS OF INCOME FOR THE AY.2009-10, THE ASSESSING OFFICER (AO) ISSUED A NOTICE U/S.148 OF THE INCOME TAX ACT [ACT] ON 14-03-201 6, REQUIRING THE ASSESSEES TO FILE THEIR RETURNS OF INCO ME. I.T.A. NOS. 772 & 773/HYD/2018 :- 2 -: IN RESPONSE TO THE SAME, ASSESSEES FILED THEIR RETURNS OF INCOME, ADMITTING THE INCOME OF RS.1,38,600/- EACH. THE AO OBSERVED THAT BOTH THE ASSESSEES HAVE SOLD THE IMMOVEABL E PROPERTY DURING THE PREVIOUS YEAR RELEVANT TO THE AY.20 09-10 VIDE DOCUMENT NO.1165/2008 WITH SRO, HYDERABAD (R.O.). THE VALUE ADOPTED BY THE SRO FOR THE PURPOSE OF STAMP DUTY FOR R EGISTRATION OF THE SAID PROPERTY WAS RS.83,28,000/-, WHEREAS THE ASSESSEES HAD DECLARED RS.40 LAKHS (RS.20 LAKHS EACH) ONLY AS SALE CONSIDERATION OF THE PROPERTY. THUS, THE AO OBSERVED THAT THE VALUE ADOPTED BY THE SRO IS MORE THAN THE SALE CONSIDE RATION DECLARED BY THE ASSESSEES. HENCE, THE AO HELD THAT THE PROVISIONS OF SECTION 50C OF THE ACT ARE APPLICABLE AND ACCORDING LY ISSUED SHOW CAUSE NOTICES TO BOTH THE ASSESSEES. 2.1. IN REPLY TO THE SHOW CAUSE NOTICES, BOTH THE ASSES SEES FILED LETTERS DT.15-12-2016, STATING THAT THEY HAVE PURCHASED TH E SAID LAND FOR RS.40 LAKHS THROUGH AGREEMENT OF SALE CUM GP A AND WITHIN A SPAN OF THREE MONTHS THEREAFTER, THEY HAVE REG ISTERED THE SAME IN FAVOUR OF THEIR BLOOD RELATIVES I.E., THEIR CH ILDREN AND THEREFORE THE SALE CONSIDERATION SHOULD BE ADOPTED AT R S.40 LAKHS ONLY AND IN THE ALTERNATIVE, THEY REQUESTED THAT THE MATTE R MAY BE REFERRED TO THE VALUATION CELL FOR VALUATION OF THE PROP ERTY. ASSESSEES ALSO MADE AN ALTERNATIVE CLAIM THAT SINCE TH E TRANSACTION IS WITH THEIR BLOOD RELATIVES (I.E., THEIR CHILDREN), IT SHOULD BE TREATED AS A GIFT WHICH IS EXEMPT FROM TAX IN THE HAND S OF THE DONOR AS WELL AS THE DONEE. THE AO DID NOT ACCEPT THE SUBMISSIONS OF ASSESSEES AND POINTED OUT THAT THOUGH THE TRANSACTION IS BETWEEN BLOOD RELATIVES, IT IS SEEN FROM THE DOCUMENT THAT THE ENTIRE TRANSACTION IS A SALE TRANSACTION . THUS, I.T.A. NOS. 772 & 773/HYD/2018 :- 3 -: HE BROUGHT THE DIFFERENCE OF VALUE (I.E., SRO VALUE AND THE AMOUNT DECLARED BY THE ASSESSEES) TO TAX IN THEIR RESPECTIVE HA NDS. 3. AGGRIEVED, THE ASSESSEES FILED APPEALS BEFORE THE CIT(A), WHO CONFIRMED THE ORDER OF AO AND ASSESSEES ARE IN SECON D APPEAL BEFORE THE TRIBUNAL. THE FOLLOWING GROUNDS ARE RAIS ED BY EACH OF THE PARTIES: 1) THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS ERRONEOUS BOTH ON FACTS AND IN LAW. 2) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN INITIATING P ROCEEDINGS U/S 147 OF THE I.T.ACT. 3) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN HOLDING THAT THERE WAS ANY TRANSFER OF PROPERTY IN FAVOUR OF THE CHILDREN BY THE APPELLANT AND FURTHER ERRED IN HOLDING THAT CAPITAL GAIN AROSE AGAINST SUCH TRANSACTION. 4) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN FIXING THE T OTAL CONSIDERATION AT RS.83,28,000/- AND IN DETERMINING THE CAPITAL GAIN ATTRIBUTABLE TO THE APPELLANT AT RS.21,21,285/- 5) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE SEEN THAT THE TRANSACTION WAS ENTERED INTO TO PROTECT TH E TITLE OF THE PROPERTY AS THE APPELLANT WAS HAVING THE GENERAL POWER OF ATTOR NEY IN HIS FAVOUR AND, THEREFORE, WITH A VIEW TO RETAIN THE TITLE, THE PRO PERTY WAS TRANSFERRED IN FAVOUR OF HIS CHILDREN. 6) IN THE ALTERNATIVE, THE ASSESSING OFFICER OUGHT TO HAVE HELD THAT THE PROVISIONS U/S.50C HAVE NO APPLICATION AS THE ASSES SING OFFICER DID NOT APPLY THE PROVISIONS U/S.50C(2) OF THE I.T.ACT AND IN VIEW OF THE FACT THAT THE TRANSFER IS ONLY TO HER CHILDREN. 7) ANY OTHER GROUND/GROUNDS THAT MAY BE URGED AT TH E TIME OF HEARING. 4. LD.COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIO NS MADE BEFORE THE AUTHORITIES BELOW WHILE THE LD.DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW 5. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATER IAL ON RECORD, WE FIND THAT BOTH THE ASSESSEES HAD PURCHASED TH E SAID I.T.A. NOS. 772 & 773/HYD/2018 :- 4 -: PROPERTY THROUGH AGREEMENT OF SALE CUM GPA ALONG WITH POSSESSION VIDE DOCUMENT NO.1165/2008, DT.25-03-2008, WHEREIN THE SALE CONSIDERATION FOR THE SAID LAND WAS MENTIONED AS RS.40 LAKHS ONLY AND SUBSEQUENTLY, VIDE REGISTERED SALE D EED NO.2476/2008, DT.21-07-2008, REGISTERED THE SAME IN F AVOUR OF THEIR CHILDREN, WHO ARE AGED 22, 20 AND 18 RESPECTIVE LY AND FROM THE DESCRIPTION GIVEN THEREIN, IT IS ALSO SEEN THAT THEY ARE ALL STUDENTS, WITHOUT ANY SOURCE OF INCOME OF THEIR OWN. B Y VIRTUE OF THE SAID AGREEMENT OF SALE CUM GPA, THE ASSESSEES HAVE ACQUIRED A RIGHT IN THE SAID PROPERTY BUT HAVE NOT BECOME ABSOL UTE OWNERS OF THE PROPERTY AND BY VIRTUE OF THE SALE DEED DT.21-07 -2008, THE ORIGINAL OWNERS THROUGH THE GPA HOLDERS HAD SOLD THE PROPERTY TO THE CHILDREN OF THE ASSESSEES BEFORE US. THUS, IT IS SEEN THAT THERE IS ACTUALLY NO SALE OF PROPERTY BY THE ASSESSEES BEF ORE US AND THE SALE DEED HAS BEEN EXECUTED BY THE ORIGINAL OWNERS THR OUGH GPA HOLDERS TO THE CHILDREN OF ASSESSEES. THEREFORE, IN MY OPINION, THERE IS NO TRANSFER OF PROPERTY BY THE ASSESSEES IN F ACT IT IS ACQUISITION OF PROPERTY BY THE ASSESSEES IN THE NAMES OF THEIR CHILDREN AND IT IS NOT THE CASE OF TRANSFER OR GAIN ON SALE OF PROPERTY. IN VIEW OF THE SAME, I ALLOW THE GROUNDS R AISED BY THE ASSESSEES AND IN THE RESULT, THE APPEALS OF BOTH THE AS SESSEES ARE ACCORDINGLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH MARCH, 2020 SD/- (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED: 05-03-2020 TNMM I.T.A. NOS. 772 & 773/HYD/2018 :- 5 -: COPY TO : 1. SMT.R.MANGALA DEVI, FLAT NO.204, RAJA RESIDENCY, STREET NO.7, HIMAYAT NAGAR, HYDERABAD. 2. SRI RAMESH KUMAR JAIN, FLAT NO.204, RAJA RESIDEN CY, STREET NO.7, HIMAYAT NAGAR, HYDERABAD. 3. THE INCOME TAX OFFICER, WARD-4(5), HYDERABAD. 4. CIT (APPEALS)-I, HYDERABAD. 5. THE PR.CIT-I, HYDERABAD. 6. D.R. ITAT, HYDERABAD. 7. GUARD FILE.