D. Hari Prasad, Hyd, Hyderabad V. ITO, Ward-11(2), Hyderabad, Hyderabad

ITA 823/HYD/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 8423 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-01-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 14-11-2018
• Assessment Year: 2008-2009
• Appeal Filed On: 01-06-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NILANJAN DEY
• Keywords: Opportunity of being heard; Additional evidence; Reassessment proceedings
• Section: 143(1); 147; 148

Judgement Text

1 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.823/HYD/2016 ASSESSMENT YEAR: 2008 - 09 MR. D. HARI PRASAD, 4 - 1 - 103/9, FLAT NO.503, SAI PRASANNA TOWERS, BHAVANI NAGAR, NACHARAM, HYDERABAD. PAN: AEFPD 6589 L VS. INCOME TAX OFFICER, WARD - 11(2), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY: SRI Y. RATNAKAR REVENUE BY: SRI NILANJAN DEY, DR DATE OF HEARING: 14.11.2018 DATE OF PRONOUNCEMENT: 02.01.2019 ORDER PER SMT. P. MADHAVI DEVI, J.M.: THIS IS ASSESSEES APPEAL FOR THE ASSESSMENT YEAR 2008 - 2009 AGAINST THE ORDER OF THE CIT(A) - 7, HYDERABAD DATED 30.12.2015. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2008 - 09 ON 17.02.2009 ADMITTING TOTAL INCOME OF RS . 3,61,500/ - REPRESENTING INCOME FROM CONTRACTUAL WORKS. ASSESSEE ALSO DISCLOSED AGRICULTURAL INCOME OF RS. 10 LAKHS. THE RETURN WAS INITIALLY PROCESSED U/S 143(1) OF THE ACT AND LATER ON REOPENED U/S 147 BY ISSUING A NOTICE U/S 148 OF THE ACT. DURING T HE REASSESSMENT PROCEEDINGS, THE A.O. NOTICED THAT THE ASSESSEE , ALONG WITH ANOTHER INDIVIDUAL I.E., SRI R.V.K. VARMA , HAD SOLD A HOUSE PROPERTY BEARING 2 M UNICIPAL NO.8 - 2 - 293/82/L/28/A/2 ON PLOT NO.28/A/2 ADMEASURING 600 SQUARE YARDS LOCATED IN SURVEY NO.40 3/1 OF SHAIKPET VILLAGE AND SURVEY NO.101/1 OF HAKIMPET VILLAGE OF SRI VENKATESWARA COOPERATIVE HOUSING BUILDING SOCIETY AT ROAD NO.12, BANJARA HILLS, HYDERABAD FOR A TOTAL CONSIDERATION OF RS. 2,10,56,000/ - BY WAY OF A REGISTERED SALE DEED EXECUTED ON 18. 09.2007. HE OBSERVED THAT THE ASSESSEE HAD ACQUIRED THE PROPERTY FOR A CONSIDERATION OF RS. 5 LAKHS THROUGH AN AGREEMENT OF SALE - CUM - GENERAL POWER OF ATTORNEY EXECUTED BY SMT. SAMYUKTA BULLAYYA ON 24.07.2007 UNDER THE DOCUMENT NO.2832/2007. THUS, HE WAS OF THE OPINION THAT THE ASSESSEE EARNED SHORT TERM CAPITAL GAINS OF RS. 1,02,78,000/ - . BUT THE ASSESSEE DID NOT DISCLOSE ANY CAPITAL GAINS FROM THE ABOVE TRANSACTION. THEREFORE, THE ASSESSEE WAS ASKED TO SHOW CAUSE AS TO WHY THE SAME SHOULD NOT BE BROUGH T TO TAX. THE ASSESSEE, HOWEVER, DID NOT APPEAR AND FILE ANY EXPLANATION BEFORE THE A.O. AND THEREFORE, THE A.O. HAS TREATED THE GAINS FROM THE ABOVE TRANSACTION AS SHORT TERM CAPITAL GAINS AND BROUGHT IT TO TAX. 3. AGGRIEVED, ASSESSEE PREFERRED AN APPEA L BEFORE THE CIT(A) STATING THAT THE ASSESSEE IS ONLY A FACILITATOR IN REAL ESTATE BUSINESS AND THE PROPERTY IN QUESTION WAS COVERED BY AN OVERLAP BETWEEN VENKATESWARA HOUSING COOPERATIVE SOCIETY AND JUBILEE HILLS HOUSING COOPERATIVE SOCIETY. IN VIEW OF T HE SAME, ONE OF THE FAMILY MEMBERS OF THE VENDOR MR. R.V.K. VARMA APPROACHED THE ASSESSEE FOR HELPING THEM IN CLEARING THE PROPERTY. IT WAS SUBMITTED THAT THE ASSESSEE TOOK UP THIS LIAISON WORK AND DID ALL THE WORK FOR THE CLEARANCE AND SUCCEEDED IN GETTI NG THE ALLOTMENT OF AN ALTERNATIVE PLOT BEARING NO. 28/A/2 IN THE PLACE OF PLOT NO. 259/A/A TO SMT. SAMYUKTA BULLAYYA . IT WAS ALSO SUBMITTED THAT HE ALSO WORKED TO GET AN EXEMPTION FROM THE REGISTRATION DEPARTMENT FOR THE EXEMPTION OF THE ALTERNATIVE PLOT IN THE NAME OF SMT. SAMYUKTA BULLAYYA. DUE TO PERSONAL INVOLVEMENT IN THE MATTER, HIS NAME WAS INCLUDED IN THE POWE R OF ATTORNEY AND WHEN IT WAS ULTIMATELY CLEAR ED 3 AND SOLD TO A THIRD PARTY, THE ASSE SSEE S NAME WAS ALSO INCLUDED BUT THE ASSESSEE MADE A NOMINAL PROFIT OUT OF THIS TRANSACTION. IT WAS SUBMITTED THAT THE ASSESSEE IS NOT THE OWNER OF THE PROPERTY AND THEREF ORE, BRINGING TO TAX THE SHORT TERM CAPITAL GAINS IN HIS HANDS IS WITHOUT ANY BASIS AND SHOULD BE DELETED. CIT(A) CALLED FOR A REMAND REPORT AND AFTER CONSIDERING THE SAME, CIT(A) HELD THAT THE TRANSACTION OF PURCHASE AND SALE ARE EVIDENCED BY CLEAR REGIS TERED DOCUMENTS AND THE DOCUMENTARY EVIDENCE ON RECORD AND THE CLAIM OF THE ASSESSEE IS WITHOUT ANY BASIS OR EVIDENCE ON RECORD. HE, THEREFORE, CONFIRMED THE ASSESSMENT ORDER AND THE ASSESSEE IS IN SECOND APPEAL BEFORE US BY RAISING THE FOLLOWING GROUNDS: 1. THE ORDER OF THE HON'BLE COMMISSIONER OF INCOME TAX IN SO FAR AS IT IS AGAINST THE APPELLANT, IS CONTRARY TO THE FACTS OF THE CASE AND THE PROVISIONS OF LAW. 2. THE HON'BLE COMMISSIONER OF INCOME TAX ERRED IN UPHOLDING THE TAXING AN AMOUNT OF RS.1 ,02 ,78,000/ - AS SHORT - TERM CAPITAL GAIN IN THE HANDS OF THE APPELLANT IN RESPECT OF , PROPERTY BEARING NO.28/A/2, HAVING D.NO.8 - 2 - 293/82/U28/A/2. 3. THE HON'BLE COMMISSIONER OF INCOME TAX IS NOT JUSTIFIED IN HOLDING THAT THE APPELLANT INDULGED IN PURCHASE A ND SALE OF THE PROPERTY WHEREAS THE APPELLANT ONLY DID LIAISON WORK BEFORE THE MINISTERS, THE CONCERNED PRINCIPAL SECRETARY AND THE CONCERNED DEPARTMENTS IN THE SECRETARIAT. 4. THE HON'BLE COMMISSIONER OF INCOME TAX SHOULD HAVE APPRECIATED THAT THE APPEL LANT'S WORK CONSISTS ONLY LIAISON WORK IN THE GOVERNMENT DEPARTMENTS AND THEREFORE, HE SHOULD HAVE TREATED THIS AS HIS CONTRACT RECEIPT AND SHOULD HAVE TAXED ONLY AS PERCENTAGE OF THE AMOUNT AS BASIS. 5. THE HON'BLE COMMISSIONER OF INCOME TAX SHOULD HAVE APPRECIATED THAT THE INVOLVEMENT OF THE APPELLANT IS VERY CLEAR FROM THE TRANSACTION WHERE A PROFIT IN LESS THAN, TWO MONTHS IS REFLECTED AS RS.2,05,56,000/ - . THEREFORE, THE HON'BLE COMMISSIONER OF INCOME TAX SHOULD HAVE APPRECIATED THAT THIS IS NOT A REG ULAR TRANSACTION OF PURCHASE AND SALE AS NO TRANSACTION WITHIN A SPAN OF LESS THAN 60 DAYS WILL GIVE A PROFIT OF MORE THAN RS.2 CRORES ON AN INVESTMENT OF RS.5,00,000/ - . 6. THE HON'BLE COMMISSIONER OF INCOME TAX SHOULD HAVE APPRECIATED THAT THE APPELLANT HAS INCURRED A LOT OF MONEY IN CLEARING THE PLOT AND IN THE ALLOTMENT OF AN ALTERNATIVE PLOT IN THE NAME OF MS.L.SAMYUKTA BULLAYYA. 7. THE HON'BLE COMMISSIONER OF INCOME TAX SHOULD HAVE DIRECTED THE ASSESSING OFFICE TO TAX ONLY THE PERCENTAGE OF THE REC EIPT AS IS PROFIT INSTEAD OF TREATING 50% OF THE SALE PRICE AS SHORT - TERM CAPITAL GAIN IN THE HANDS OF THE APPELLANT. 4 8. THE HON'BLE COMMISSIONER OF INCOME TAX SHOULD HAVE APPRECIATED THAT THE APPELLANT HAS NO DIRECT AND PERSONAL INTEREST IN THE TRANSACTION AND THAT HIS NAME IS INCLUDED IN THE POWER OF ATTORNEY FOR THE SAKE OF CLEARANCE OF THE TRANSACTION IN THE, DEPARTME NTS AND AS A PROTECTION TO COVER THE COSTS INCURRED IN CONNECTION WITH THE CLEARANCE OF THE PLOT. THE APPELLANT, ONLY AS A POWER OF ATTORNEY HOLDER SHOULD NOT HAVE BEEN TAXED TO CAPITAL GAIN. 9. THE HON'BLE COMMISSIONER OF INCOME TAX SHOULD HAVE APPRECIA TED THAT THE VALUE OF THE PROPERTY IS SHOWN AT RS.2,10,46,000/ - IN THE GPA WHERE THE APPELLANT'S NAME IS INCLUDED. 10. THE HON'BLE COMMISSIONER OF INCOME TAX SHOULD HAVE SEEN THAT THE MARKET VALUE AT THE TIME OF GPA IS SHOWN AS RS.2,1 0,46,000/ - WHEN THE PURCHASE IS ASSESSED BY THE , ASSESSING OFFICER. 11. THE HON'BLE COMMISSIONER OF INCOME TAX IS NOT JUSTIFIED IN HOLDING THAT THE SUBMISSIONS MADE ARE NOT SUPPORTED BY ANY EVIDENCE WHEREAS THE DOCUMENTS AND PAPERS FILED BEFORE THE HON'BLE COMMISSIONER O F INCOME TAX AMPLY SUPPORT THE CLAIM OF THE APPELLANT. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING OF THE APPEAL, IT IS REQUESTED THAT THE ASSESSMENT ORDER U/S.143(3) OF THE INCOME TAX ACT, 1961, BE SET ASIDE OR MODIFIED AS MAY BE DEEMED FIT. 4. AT THE TIME OF HEARING, LEARNED COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE ADDITIONAL EVIDENCE FILED BEFORE THE CIT(A) IN THE FORM OF AFFIDAVIT OF SRI D. HARI PRASAD, WHICH IS CONFIRMED BY SRI M. RAMA RAO (EX. MLA), THE THEN SECRETARY OF SRI VENKATESWARA COOPERATIVE HOUSE BUILDING SOCIETY AND AUTHORIZATION LETTER 01/01/2005 EXECUTED BY SMT. G. VIJAYA KUMARI, W/O . LATE SRI GMC BALAYOGI, FORMER LOK SABHA SPEAKER, TO DEMONSTRATE THAT HE WAS DOING A LIAISON WORK IN ACQUIRING PROPERT IES FOR THEM . THE LEARNED COUNSEL FOR THE ASSESSEE SOUGHT ADMISSION OF THE SAME AND PRAYED FOR A REMAND TO THE A.O. FOR RECONSIDERATION OF THE ISSUE. HE ALSO DREW OUR ATTENTION TO THE FACT THAT THE PLOT WAS REGISTERED IN THE NAME OF SMT. SAMYUKTA BULLAYYA FOR A SUM OF RS. 2,10,56,000/ - WHEREAS , IMMEDIATELY, A MONTH THEREAFTER , AGREEMENT OF SALE - CUM - GENERAL POWER OF ATTORNEY WAS EXECUTED IN FAVOUR OF THE ASSESSEE AND ANOTHER ONLY FOR A SUM OF RS. 5 LAKHS AND I MMEDIATELY, THEREAFTER , THE PROPERTY WAS SOLD FOR A SUM OF RS. 2,10,56,000/ - . T HEREBY IT IS CLEARLY PROVE D THAT THE AGREEMENT WAS ONLY TO INCLUDE HIS NAME AS A FACILITATOR AND NOT AS A PURCHASER AND THE ENTIRE AMOUNT CANNOT BE BROUGHT TO TAX IN THE ASSESSEES HANDS. 5 LEARNED CO UNSEL FOR THE ASSESSEE ALSO SUBMITTED THOUGH THERE WAS ANOTHER PERSON NAMED R.V.K. VERMA, WHO WAS ALSO A PARTY TO THE DOCUMENT AND BOTH OF THEM ARE ALLEGEDLY THE OWNERS OF THE PROPERTY, THE ENTIRE CAPITAL GAINS HAS BEEN BROUGHT TO TAX IN THE H ANDS OF ONLY THE ASSESSEE. FURTHER, HE POINTED OUT THAT T HERE IS NO MENTION ABOUT THE RATIO OF THEIR ALLEGED HOLDINGS IN THE SAID DOCUMENT AND THEREFORE, IT IS NOT AGREEMENT OF SALE AND I S ONLY A GENERAL POWER OF ATTORNEY AND THEREFORE, THE ASSESSEE CANNOT BE TREATED AS THE OWNER. HE SUBMITTED THAT THE DOCUMENT NOW FILED ARE THE ADDITIONAL EVIDENCE WHICH GOES TO PROVE THAT THE ASSESSEE IS ONLY A FACILITATOR AND NOT THE PURCHASER / VENDOR OF THE PROPERTY. 5. LEARNED DEPARTMENTAL REPRESENTATIVE, HOWEVER, OPPOSED THE AD MISSION OF THE ADDITIONAL EVIDENCE AND SUBMITTED THAT THE A.O. AND THE CIT(A) HAVE VERIFIED ALL THE DOCUMENTS FILED BY THE ASSESSEE, BEFORE HOLDING THAT THE ASSESSEE IS THE OWNER OF THE PROPERTY AND THEREFORE, ACCORDING TO HIM THE ADDITIONAL EVIDENCE HAS N O EVIDENTIARY VALUE AND SHOULD NOT BE ADMITTED AND ASSESSMENT ORDER SHOULD BE CONFIRMED. 6. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT THE EX. MLC SMT. SAMYUKTA BULLAYYA WAS THE ORIGINAL ALLOTTEE OF THE PROPERTY AND SU BSEQUENTLY , AN ALTERNATIVE PROPERTY WAS ALLOTTED TO HER AND IMMEDIATELY THEREAFTER , AN AGREEMENT OF SALE - CUM - GENERAL POWER OF ATTORNEY WAS ENTERED INTO THROUGH WHICH THE PROPERTY WAS SUBSEQUENTLY SOLD. ON THE DATE OF ALLOTMENT OF ALTERNATIVE PROPERTY , THE VALUE WAS SHOWN A S RS. 2,10,56,000/ - WHEREAS THE AGREEMENT OF SALE - CUM - GENERAL POWER OF ATTORNEY MENTIONS THE TOTAL CONSIDERATION AS RS. 5 LAKHS ONLY AND IMMEDIATELY THEREAFTER , AGAIN THE PROPERTY WAS SOLD FOR RS. 2,10,56,000/ - . THUS, IT IS CLEAR THAT THE AGREEMENT OF SALE - CUM - GENERAL POWER OF ATTORNEY IS NOT FOR TRANSFER OF THE PROPERTY AS SUCH. FURTHER, AS RIGHTLY POINTED OUT BY THE LEARNED COUNSEL FOR THE 6 ASSESSEE, A.O. HAS NOT CONSIDERED THE CAPITAL GAIN ON THE EXECUTION OF THE AGREEMENT OF SALE - CUM - GENERAL POWER OF ATTORNEY IN THE HANDS OF SMT. SAMYUKTA BULLAYYA . FURTHER, T HE RATIO OF HOLDING OF PROPERTY BETWEEN THE ASSESSEE AND R.V.K. VERMA IS A LSO NOT SHOWN IN THE SAID DEED. THEREFORE, THE CONTENTION OF THE ASSESSEE THAT THE ASSESSEE ACTED ONLY AS A FACILITATOR APPEARS TO BE ACCEPTABLE . HOWEVER, SINCE THE ADDITIONAL EVIDENCE HAS BEEN FILED BEFORE US AND AS IT GO ES TO THE ROOT OF THE MATTER IN PROVING THE ASSESSEE AS A FACILITATOR , THE SAME NEEDS VERIFICATION BY THE A.O. ACCORDINGLY, WE DEEM IT FIT AND PROPER TO ADMIT THE SAME AND REMAND THE ISSUE TO THE FILE OF THE A.O FOR RECONSIDERATION OF THE ISSUE AFRESH IN ACCORDANCE WITH LAW. NEEDLESS T O MENTION THAT THE ASSESSEE HAS TO BE GIVEN A FAIR OPPORTUNITY OF BEING HEARD. 7. IN THE RESULT, ASSESSEES APPEAL IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 02 ND JANUARY , 201 9 . SD/ - SD/ - (S. RIFAUR RAHMAN) (P. MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 02 ND JANUARY , 201 9 OKK COPY TO: - 1) C/O. VENUGOPAL & CHENOY, CHARTERED ACCOUNTANTS, 4 - 1 - 889/16/2, TILAK ROAD, HYDERABAD. 2) THE INCOME TAX OFFICER, WARD - 11(2), HYDERABAD. 3) THE CIT(A) - 7 , HYDERABAD 4) THE PR. CIT - 7 , HYDERABAD 5) THE DR, ITAT, HYDERABAD 6) GUARD FILE