SUMITRABAI R. SHUKLA, MUMBAI V. ACIT CIR-3, MUMBAI

ITA 854/MUM/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 8353 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-02-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 31-01-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 09-02-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SRHI JITENDRA YADAV
• Assessee Lawyers: SUDHIR V H EMANGIPUR
• Keywords: Value adopted by valuation officer; Question of law; Cost of acquisition; Fair market value; Valuation report; Bonafide mistake
• Section: 54F; 142(1); 54; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, E, MUMBAI BEFORE SHRI J SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SHRI VIJAY PAL RAO, JUDICIAL MEMBER ITA NO. 854/MUM/2009 (ASSESSMENT YEARS 2005-06) SUMITRABAI R SHUKLA 1 MANDA TITWALA, PO OPOSITE BANK OF MAHARASHTRA, KALYAN DIST THANE PAN: AXMPS3664B .APPELLANT VS ACIT CIR-3 RANI MENSION, MURBAD ROAD, KALYAN DIST.THANE RESPONDENT ITA NO. 855/MUM/2009 (ASSESSMENT YEARS 2005-06) SHOBHABAI R AGNIHOTRI 1 MANDA TITWALA, PO OPOSITE BANK OF MAHARASHTRA, KALYAN DIST THANE PAN: AGGPA2800E .APPELLANT VS ACIT CIR-3 RANI MENSION, MURBAD ROAD, KALYAN DIST.THANE ASSESSEES BY : SHRI SUDHIR V H EMANGIPUR REVENUE BY : SRHI JITENDRA YADAV ITA NO. 855 AND 855/MUM/2009 (ASSESSMENT YEARS 2005-06) 2 O R D E R PER VIJAY PAL RAO THESE APPEALS BY THE TWO ASSESSEES ARE DIRECTED AGAINST THE TWO DIFFERENT ORDERS OF THE CIT(A) BO TH DATED 14.11.2008 FOR THE ASSESSMENT YEAR 2005-06. SINCE T HE ASSESSEE ARE CO-OWNER OF THE PROPERTY IN QUESTION A ND THE ISSUE AS WELL AS THE FACTS IN BOTH THE APPEALS AR E IDENTICAL, THEREFORE, FOR THE SAKE OF CONVENIENCE, WE HAVE HEA RD THESE APPEALS TOGETHER AND ARE BEING DECIDED BY THIS CONS OLIDATED ORDER. 2. THE ASSESSEE HAVE FILED THE MODIFIED GROUNDS WH ICH ARE COMMON IN BOTH THE APPEALS AS UNDER : 1. THAT THE ORDER PASSED BY THE LD. CIT(A) THANE IS A NON-SPEAKING ORDER AND DEVOID OF APPLICATION O F MIND AS REGARDS THE QUESTION OF LAW ARISING FROM FA CTS WHICH ARE ALREADY ON RECORD AS SET OUT IN MODIFIED/ADDITIONAL GROUNDS OF APPEAL IN THE MEMORANDUM OF APPEAL (FROM NO.36) B) GROUNDS OF APPEAL (AS MODIFIED ) 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD CIT(A) WAS NOT JUSTIFIED IN COMPUTING T HE INCOME FROM THE LONG TERM CAPITAL GAINS WITHOUT CONSIDERING THE GENUINE DEDUCTIONS AND THE LEGAL CLAIM OF DEDUCTION U/S 54F OF THE IT ACT, 1961 FOR THE KIND CONSIDERATION IN FORM OF THE AREA OF THE RESIDENTIAL FLATS VALUED AT RS.9,07,500/- BY THE S UB- REGISTRAR ASSURANCES, KALYAN FOR STAMP DUTY PURPOSES; 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS NOT JUSTIFIED IN COMPUTING THE INCOME FROM THE LONG TERM CAPITAL GAINS WITHOUT ITA NO. 855 AND 855/MUM/2009 (ASSESSMENT YEARS 2005-06) 3 CONSIDERING THE GENUINE DEDUCTIONS AND THE LEGAL CLAIM OF DEDUCTION U/S 48 OF THE IT ACT 1961 OF THE FAIR MARKET VALUE AS ION 1.4.1981 BASED ON THE PROPER VALUATION OF THE GOVERNMENT APPROVED VALUER OF THE INCOME TAX DEPARTMENT. 4. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS NOT JUSTIFIED IN COMPUTING THE INCOME FROM THE LONG TERM CAPITAL GAINS WITHOUT CONSIDERING THE GENUINE LEGAL CLAIM TO DETERMINE TH E FULL VALUE OF THE CONSIDERATION ACTUALLY RECEIVED O R ACCRUED BY THE APPELLANT IN CONNECTION WITH THE TRANSFER 5. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS NOT JUSTIFIED IN COMPUTING THE INCOME FROM THE LONG TERM CAPITAL GAINS WITHOUT CONSIDERING GENUINE LEGAL CLAIM TO DETERMINE THE PROPER TAX LIABILITY U/S 112 OF THE ACT, 1961 AFTER CONSIDERING THE BASIS TAX EXEMPTION LIMIT UNDER TH E INCOME TAX ACT, 1961 AND REBATE IN CASE OF WOMEN BELOW 65 YEARS U/S 88C OF THE IT ACT, 1961 3. THE ASSESSEE HAVE ALSO FILED THE PETITION FOR AD MISSION OF THE GROUND NO.1 WHICH IS ADDITIONAL AND NOT PART OF THE GROUNDS RAISED IN THE MEMO OF APPEAL. 4. WE HAVE HEARD THE LEARNED AR AS WELL AS THE LEAR NED DR AND CONSIDERED THE RELEVANT RECORD. GROUNDS OF APP EAL NO.1 IS GENERAL IN NATURE AND DEPENDS ON THE OUT COME OF THE OTHER GROUNDS RAISED BY THE ASSESSEE. THEREFORE, NO SPEC IFIC FINDINGS IS REQUIRED TO BE GIVEN IN RESPECT OF GR OUNDS OF APPEAL NO.1. IF THE ASSESSEE SUCCEEDS IN THE OTHER GROUNDS THE GROUNDS OF APPEAL NO.1 IS AUTOMATICALLY ADJUDIC ATED IN TERMS OF THE OTHER GROUNDS. IN VIEW OF THE FACTS, AND ITA NO. 855 AND 855/MUM/2009 (ASSESSMENT YEARS 2005-06) 4 CIRCUMSTANCES OF THE CASE, WE DO NOT FIND ANY SUFF ICIENT REASONS FOR ADMITTING THIS GROUND AT THIS STAGE. ACCORDINGLY, WE REJECT THE GROUNDS OF APPEAL NO.1 IN LIMINE. 5. WITH REGARD TO THE GROUNDS OF APPEAL NO.2 TO 5. THE ASSESSEES ARE OLD LADIES AND NOT REGULARLY ASSESSE D TO TAX. THE ASSESSEES BEFORE US WERE HAVING THE SHARE IN TH E PROPERTY BEING THE LEGAL HEIR. THE PROPERTY WAS TRANSFERRED UNDER DEVELOPMENT AGREEMENT DATED 16.6.2004 WITH M /S VAIBHAVE DEVELOPERS. THE ASSESSEES NEVER FILED AN Y RETURN OF INCOME IN THE PAST AND HAVE ALSO NOT FILED THE R ETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. THE AO ON THE BASIS OF ARI INFORMATION REGARDING THE TRAN SFER OF PROPERTY ISSUED NOTICE U/S 142(1) TO THE ASSESSEES. THE ASSESSEES DID NOT COMPLY WITH THE NOTICE AND ALSO N OT FURNISHED THE REPLY TO THE NOTICE OF THE AO. THE AO ACCORDINGLY PROCEEDED U/S 144 OF THE ACT AND COMP LETED THE ASSESSMENT BY ASSUMING THE SALE CONSIDERATION AS L ONG TERM CAPITAL GAIN WITHOUT ADJUSTING ANY COST OF ACQUISIT ION AND OTHER DEDUCTIONS. AGAINST THE ASSESSMENT ORDER, THE ASSE SSEE FILED THE APPEALS BEFORE THE CIT(A) WHO HAS RESTRICTED TH E ADDITION TO THE SHARES OF THE ASSESSEE IN THE PROPERTY IN QU ESTION AND ACCORDINGLY THE ADDITION WAS CONFIRMED TO THE EXTEN T OF RS.14,80,730/- IN EACH CASE AFTER GIVING THE BENEFI T OF INDEXATIONS COST OF ACQUISITION AS ON 1.4.1981. ITA NO. 855 AND 855/MUM/2009 (ASSESSMENT YEARS 2005-06) 5 6. BEFORE US, THE LEARNED AR OF THE ASSESSEE HAS SU BMITTED THAT THE ASSESSEE BEING THE ILLITERATE LADY HAVING NO OTHER SOURCE OF INCOME AND NOT AWARE ABOUT THE INTRICAC IES OF TAXATION LAW NOT FILED RETURN OF INCOME AND ALSO N O REPRESENTATION WAS MADE BEFORE THE AO. THE LEARN ED AR OF THE ASSESSEE HAS FURTHER CONTENDED THAT THE ASS ESSEE ALSO ENTITLED FOR DEDUCTION U/S 54 IN RESPECT OF THE RE SIDENTIAL FLAT IN THE DEVELOPED PROPERTY. HE HAS FURTHER CONTENDE D THAT THE ASSESSEE IS ALSO ENTITLED FOR DEDUCTION U/S 48 OF THE ACT AND ACCORDINGLY AFTER GIVING THE RELIEF FOR WHICH THE A SSESSEE IS ENTITLED UNDER LAW, THE INCOME HAS TO BE ASSESSED . 7 ON THE OTHER HAND, THE LEARNED DR HAS SUBMITTED T HAT THE ASSESSEE HAS ALSO NOT FILED RETURN OF INCOME, THEREFORE, THERE WAS NO CLAIM BEFORE THE LOWER AUTHORITIES. TH E ASSESSMENT WAS COMPLETED UNDER SECTION 144. WHEN NO RETURN WAS FILED AND NO CLAIM WAS MADE BEFORE THE AO THE ASSESSEE CANNOT RAISE THE CLAIM AT THIS STAGE. HE HAS VEHEMENTLY OBJECTED THE APPEAL OF THE ASSESSEES AND RELIED UPON THE ORDERS OF THE LOWER AUTHORITIES 8. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PE RUSED THE RELEVANT RECORD. THE FACTS EMERGED FROM THE REC ORD ARE THAT THE ASSESSEES BEFORE US ARE ILLITERATE WOMEN HAVING SHARE IN THE PROPERTY WHICH WAS TRANSFER UNDER THE ITA NO. 855 AND 855/MUM/2009 (ASSESSMENT YEARS 2005-06) 6 DEVELOPMENT AGREEMENT DATED 16.6.2004. THUS, THE A SSESSEE GOT THEIR RESPECTIVE SHARES IN THE CONSIDERATION IN THE FORM OF AREA OF THE RESIDENTIAL FLAT VALUE OF RS.19,07,500/ - APART FROM THE SHARE IN THE CASH CONSIDERATION OF RS.24,07,000 /- THE ASSESSEES BEFORE US NEVER ASSESSED TO TAX BECAUSE THEY HAVE NO TAX LIABILITY UNDER THE INCOME TAX EXCEPT T HE CAPITAL GAIN ARISING ON TRANSFER OF THE PROPERTY IN QUESTIO N AND THE ASSESSEES ARE HAVING SHARE IN THE SAME. 9. THE AO FRAMED THE ASSESSMENT AS PER THE ANNUAL INFORMATION RETURN FURNISHED UNDER SECTION 285B OF THE ACT. THUS, THE BASIS OF COMPUTATION OF THE INCOME IN THE HANDS OF THE ASSESSEE BY THE AO IS THE DEVELOPMENT AGREEMENT AND CONSIDERATION SHOWN IN THE DEVELOPMENT AGREEMENT. T HOUGH THE ASSESSEE DID NOT RESPOND TO THE NOTICE ISSUED B Y THE AO U/S 142(1) AND THE ASSESSMENT WAS COMPLETED U/S 144 OF THE ACT, HOWEVER, NO TAX HAS TO BE RECOVERED WHICH IS NOT AS PER LAW. HAVING REGARD TO THE FACT THAT THESE ASSESSES ARE ILLITERATE WOMEN AND HAVING NO OTHER SOURCE OF IN COME AND HAD NEVER FILED ANY RETURN OF INCOME AND THIS IS TH E SOLE INSTANCE OF THE INCOME ARISING FROM TRANSFER OF PROPERTY IN WHICH, THE ASSESSEES ARE HAVING SHARE, THEREFORE , NON- FILING OF THE RETURN AS WELL AS NO RESPONSE TO THE NOTICE U/S 142(1) IS DUE TO THE BONAFIDE MISTAKE AND UNAWAREN ESS ABOUT THE PROCEDURE AND REQUIREMENT OF THE INCOME TAX AC T. THUS, ITA NO. 855 AND 855/MUM/2009 (ASSESSMENT YEARS 2005-06) 7 IT CANNOT BE SAID THAT THE ASSESSEE HAD DELIBERATE LY VIOLATED THE PROVISIONS OF LAW AND DID NOT COMPLY WITH THE N OTICE TO AVOID THE TAX LIABILITY. FURTHER, IT IS PERTINENT TO NOTE THAT THE CLAIM OF DEDUCTION U/S 54 IS BASED ON THE DEVELOPME NT AGREEMENT ITSELF WHICH IS ALSO THE BASIS OF THE AS SESSMENT FRAMED BY THE AO U/S 144 OF THE ACT. IN VIEW OF THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT T HE ASSESSEE HAS MADE OUT A FIT CASE FOR INDULGENCE OF THE TRI BUNAL FOR ADMITTING THE ADDITIONAL GROUND RAISED BY THE ASSES SEE WHICH WERE NOT RAISED BEFORE THE AO AS NO RETURN WAS FILE D. THE CIT(A) THOUGH GIVEN SOME RELIEF ON ACCOUNT OF INDEX ATION OF COST OF ACQUISITION, HOWEVER, THE COMPUTATION OF THE INCOME ON THE BASIS OF INDEXATION OF COST OF ACQUISITION I S NOT BASED ON ANY VALUATION REPORT. DVO REPORT. THE ASSESSE ES FILED THE VALUATION REPORT BEFORE THE CIT(A) WHICH WAS R EJECTED BY THE CIT(A). 10. SINCE, THE ISSUE WERE NOT EXAMINED BY THE AO IN THE ABSENCE OF REPRESENTATION OF THE ASSESSEE, THEREFOR E, IN THE INTEREST OF JUSTICE AND FAIR PLAY, THE MATTER IS SE T ASIDE TO THE RECORD OF THE AO FOR VERIFICATION OF FACTS AND DEN OVO ADJUDICATION OF THE MATTER. THE AO IS DIRECTED TO VERIFY EXAMINE AND CONSIDER THE CLAIM OF THE ASSESSEES MAD E BEFORE US AND DECIDE AS PER LAW. ITA NO. 855 AND 855/MUM/2009 (ASSESSMENT YEARS 2005-06) 8 11. THE APPEALS OF THE ASSESSEE ARE ALLOWED FOR STA TISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 18TH FEB, 2011 SD SD (J.SUDHAKAR REDDY) (V IJAY PAL RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, ON THIS 18 TH DAY OF FEB 2011 SRL:11211 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT CONCERNED 4. CIT(A) CONCERNED 5. DR CONCERNED BENCH BY ORDER TRUE COPY ASSTT. REGISTRAR, ITAT, MUMBAI