Sri. Javeed Ahmed, Bangalore V. DCIT, Bangalore

ITA 873/BANG/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9309 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 3 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 17-10-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 27-06-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: KAMALADHAR
• Keywords: Principle of natural justice; Valuation report
• Section: 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ITA NO.873/BANG/2014 ASSESSMENT YEAR : 2007-08 SRI JAVEED AHMED, # 51, H SIDDAIAH ROAD, J J AUTOMOBILES, OPP. 4 TH CROSS, BANGALORE 560 027. PAN: ABEPJ 7343J VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 9(1), BANGALORE. APPELLANT RESPONDENT APPELLANT BY : NONE RESPONDENT BY : SHRI KAMALADHAR, STANDING COUNSEL DATE OF HEARING : 17.10.2016 DATE OF PRONOUNCEMENT : 21.10.2016 O R D E R PER SUNIL KUMAR YADAV, JUDICIAL MEMBER THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF CIT(APPEALS) INTER ALIA ON THE FOLLOWING GROUNDS:- L. THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS),LTU, HEREINAFTER REFERRED TO AS CIT(A)-LT U ,WHEREVER SUCH REFERENCE APPEARS, IS OPPOSED TO LAW AND FACTS OF THE CASE. ITA NO.873/BANG/2014 PAGE 2 OF 8 1. COST OF ADDITION/IMPROVEMENT OF RS.14,50,000/- REPLY TO PARAS 4 AND 4.L OF THE CIT (A)-LTU ORDER I S AS FOLLOWS:- THE CIT(A)-LTU HAS ERRED IN CONFIRMING THE ADDITI ONS OF RS.L4,50,000/-,MADE BY THE AO, SINCE A REGISTERED VALUER'S' REPORT (EVIDENCE DOCUMENT NO.1) WAS SUBMITTED DISCLOSING THE VALUE OF ADDITION OF RS. I4,50,000/- , THE CIT(A)- LTU'S CLAIM THAT SANCTIONED PLAN WAS NOT SUBMITTED IS NOT CORRECT BECAUSE NO CONSTRUCTION CAN BE TAKEN UP IN BANGALOR E, ESPECIALLY IN THE HEART OF THE CITY WITHOUT A SANCTIONED PLAN. FURTHER CLAIM BY THE CIT(A)- LTU THAT THE DIRECT EVIDENCE OF INCU RRING EXPENDITURE TOWARDS CONSTRUCTION IS ALSO NOT VALID SINCE WHEN A BUILDING IS CONSTRUCTED ON A 'MATERIAL CONTRACT' BA SIS, THE MATERIALS AND LABOUR ARE SUPPLIED BY THE CONTRACTOR HIMSELF A ND ONLY CASH /CHEQUE PAYMENTS ARE MADE TO HIM FROM TIME TO TIME, WHICH HAS BEEN CONFIRMED BY THE CIT(A)-LTU HERSELF IN PARE 4. L OF HER ORDER, THAT A PAYMENT OF RS.10 LACS HAS BEEN PAID B Y CHEQUE TO M/S MOHITE AND MOHITE ON 26/06/2006 , AND AS PER HER STATEMENT, THAT BILLS FOR PAYMENT OF LABOUR, ATTENDANCE REGIST ER MAINTAINED, BORE WELL DIGGING EXPENSES ARE NOT MAINTAINED BY TH E APPELLANT IS TRUE, BUT ALSO NOT NECESSARY, SINCE THE SAME IS TO BE MAINTAINED BY THE CONTRACTOR HIMSELF, HER FURTHER CLAIM THAT BILL HAS NOT BEEN RAISED BY THE CONTRACTOR IN ALSO NOT VALID, SINCE T HE CONSTRUCTION HAD JUST STARTED, AND IS INCOMPLETE EVEN TILL THE D AY OF FILING OF THIS APPEAL, SINCE THE PROPERTY EVEN AFTER THE SALE DEED WAS EXECUTED, CONTINUED TO BE A DISPUTED ONE, WITH ONE OR THE OTHER OF THE RELATIVES OF THE SELLER FILING SUITES, FED UP W ITH THIS, THE APPELLANT HAD SOLD THE SITE ALONG WITH THE INCOMPLE TE CONSTRUCTION ON THE SAID SITE. HER FURTHER CLAIM THAT THE AREA OVER WHICH THE WORK EXCAVATION ETC HAVE BEEN MADE IN NOT MENTIONED BY THE REGISTER ED VALUER IS ALSO NOT CORRECT BECAUSE A COPY OF THE SALE DEED SU BMITTED CLEARLY SHOWS THE SITE DIMENSION ETC IN THE SCHEDULE ATTACH ED TO SUCH SALE DEED ,(COPY OF THE SALE DEED AND THE SKETCH, SHOWING THE DIMENSIONS , IS ENCLOSED AS EVIDENCE DOC NO.2) , MORE OVER EVERY REGISTERED VALUER SHALL ALWAYS ATTACH A COPY OF THE SALE DEED TO HIS VALUATION REPORT .THE CIT(A)-LTU'S CLAIM THAT THE QUANTITY AND UNIT IS BLANK BUT MENTIONED AS LOC AL SUPPLY IS BECAUSE THE CONSTRUCTION IS AT THE VERY INITIAL STA GES AND IS NOT YET COMPLETED, ONLY THE FINAL REPORT SHALL HAVE ALL THE DETAILS, EVEN TILL THIS DAY THE CONSTRUCTION IS INCOMPLETE, AGAIN BECA USE OF ITA NO.873/BANG/2014 PAGE 3 OF 8 DISPUTES, THERE WAS DELAY IN COMMENCEMENT OF CONSTR UCTION (11/10/2006) BY THE CONTRACTOR, EVEN THOUGH ADVANCE PAYMENT WAS MADE TO CONTRACTOR ON 26/02/2006 AND THAT TO PROVE, THE DISPUTED NATURE OF THE PROPERTY (EVIDENCE NO.3- SAMPLE OF ONE OF THE MANY SUITES FILED BY THE SELLERS RELATIV ES IS ENCLOSED). AGAIN THE CLAIM BY THE CIT(A)-LTU THAT THE PAYMENT TO CONTRACTOR ON 26/02/2006, WELL BEFORE THE START OF CONSTRUCTION (11110/2006), IS ACCEPTABLE BECAUSE WITHOUT AN ADVA NCE NO CONTRACTOR WILL COMMENCE THE CONSTRUCTION, FURTHER AS ALREADY STATED, THE START OF CONSTRUCTION WAS ALSO DELAYED BECAUSE OF THE DISPUTED NATURE OF THE PROPERTY AND OBSTRUCTIONS MA DE BY SOME OF THE LEGAL HEIRS/RELATIVES OF THE SELLER, FURTHER HE R CLAIM THAT ESTIMATES ARE ROUNDED OFF, IS BECAUSE THE ESTIMATES CAN ALWAYS BE ROUNDED TO THE NEAREST HUNDREDS OR THOUSANDS BY THE REGISTERED VALUER, AND ALSO THE CONSTRUCTION WAS IN ITS INITIAL STAGES, WITH ONLY THE FOUNDATION LAID AND T HE COLUMNS ARE ALSO IN THEIR INITIAL STAGES, AND REMAIN TO BE SO, EVEN TO THIS DAY. THEREFORE THE CIT(A)-LTUS DECISION TO CONFIRM THE ADDITIONS OF RS.14,50,000/-, MADE BY THE AO , IS ARBITRARY AND A GAINST THE PRINCIPLES OF NATURAL JUSTICE AND HENCE THE APPELLA NT HUMBLY BEGS THAT THIS ADDITION OF RS 14,50,000/-, BE SET A SIDE BY THE HONOURABLE TRIBUNAL. 2. EVICTION EXPENSES OF RS.20,50,000/- REPLY TO PARAS 5.1 5.25.3 OF THE CIT (A)-LTU ORDER IS AS FOLLOWS:- THE CIT(A)-LTU HAS ERRED IN CONFIRMING THE ADDITION S OF EVICTION EXPENSES PAID TO VARIOUS TENANTS OF THE PR EVIOUS OWNER TOTALING TO RS. 20,50,000/-. (COPIES OF RECEIPTS FOR COMPENSATION RECEIVED BY ALL THE 22 TENANTS IS ENCLOSED AS EVIDE NCE DOCUMENTS NO.4), BY THE APPELLANT. THE NECESSITY TO PAY EVICT ION CHARGES AROSE DUE TO THE REASON THAT THEY WERE TENANTS OF T HE PREVIOUS OWNER AND HAD REFUSED TO VACATE AND THE APPELLANT W AS BOUND TO EVICT THEM BEFORE PUTTING UP A NEW STRUCTU RE, THE CIT(A)-LTUS CLAIM THAT ALL THE 21 CONFIRMATIONS WE RE WRITTEN IN IDENTICAL LANGUAGE AND ISSUED ON 20/05/2009 IS TRUE BECAUSE ALL THE TENANTS WERE CALLED FOR A MEETING BY THE APPELL ANT AND EXPLAINED TO THEM THAT THEY HAD TO ISSUE A RECEIPT FOR THE COMPENSATION THAT THEY HAD RECEIVED FROM THE APPELL ANT, SINCE THE ITA NO.873/BANG/2014 PAGE 4 OF 8 APPELLANT HAD RECEIVED A NOTICE U/S. 148, FOR WHICH ALL OF THEM ACCEPTED ,FURTHER THE CIT(A)-LTU 'S CLAIM THAT ALL THE RECEIPTS WERE DATED 20/05/2009 AND THE APPELLANTS CLAIM THAT THE COMPENSATION PAID WAS NOT BEFORE THE FOUNDATION WAS PUT UP IS ALSO NOT CORRECT ,BECAUSE SHE HAS NOT GONE THROUGH THE RECEIPT PROPERLY, SINCE THE RECEIPT THOUGH DATED 20/05/2009 CLEARLY STATES THAT THE AMOUNT WAS RECEIVED ON 15/10/2006 AND THE DISMANTLING AND DEMOLITION OF THE OLD STRUCTURE ,STARTED ON 11/ 10/2006 , THE DAY THE TENANTS ACCEPTED TO VACATE THE SHOPS, MOREO VER THERE IS A GAP OF JUST 4 DAYS ONLY, MORE OVER THE TENANTS AFTE R RECEIVING THE EVICTION CHARGES ON 15/10/2006 HAD NOT ISSUED A RECEIPT BUT THE APPELLANT HAD TO CONVINCE THEM INTO ISSUING SUCH A RECEIPT BECAUSE HE HAD BEEN ISSUED A NOTICE U/S. 148 AND HA D TO PROVE SUCH EVICTION EXPENSES AS COST OF TRANSFER TO THE D CIT-CIRCLE 9(1) AND THE TENANTS HAD AGREED TO SIGN SUCH RECEIPTS ON 20/05/2009 DURING THE ASSESSMENT PROCEEDINGS BUT HAVE CLEARLY STATED IN THE RECEIPT THAT THE PAYMENT HAD BEEN RECEIVED ON 15/10 /2006. THEREFORE IT IS CLEAR THAT THE CIT HAS NOT APPLIED HER MIND PROPERLY IN HER DISCUSSION IN PARA 5.3 REPLY TO PARA 5.4 OF THE CIT(A)-LTU ORDER IS AS FOL LOWS:- THE CLAIM OF THE CIT (A)-LTU THAT ONE OF THE TENANT S SRI MUNEER PASHA WAS PAID A LESSER COMPENSATION WAS BECAUSE HE HAD A SMALLER SHOP COMPARED TO OTHERS. AGAIN THE CLAIM OF THE CIT (A)-LTU THAT THE RENTS WERE NOT DISCLOSED I N THE IT RETURNS BY THE SELLER IS BECAUSE THE PREVIOUS OWNER HAD LET OUT THE SHOP TO THE TENANTS, ON A MEAGER RENT BECAUSE T HE TENANTS BEING SCRAP DEALERS, COULD NOT AFFORD HIGHER RENTS, MOREOVER ,AS STATED BY HIM, THE EX- OWNER HAD ONLY THIS PROPERTY AND THE RENTS RECEIVED BY HIM WERE BELOW THE TAXABLE LIMITS AND H AVING NO OTHER INCOME HE WAS NOT AN IT ASSESSEE ,THIS IS THE FACT DISCLOSED BY THE PREVIOUS OWNER TO THE APPELLANT, W HO IN TURN, HAD INFORMED THE SAME TO THE CIT(A)-LTU, DURING THE APP ELLATE PROCEEDINGS AND HENCE HER CLAIM THAT THIS IS ONE SI DED OR SELF SERVING ARGUMENT IS NOT CORRECT. MOREOVER HER FURTH ER CLAIM AS TO WHETHER THE TENANTS WERE ILLEGAL OCCUPANTS OR WHETH ER THE PREVIOUS OWNER HAD TAKEN LEGAL ACTION AGAINST THEM IS OF NO CONSEQUENCE TO THE APPELLANT, BECAUSE HIS AIM WAS T O VACATE THE TENANTS, AND TO BUY AND ENJOY PEACEFUL POSSESSION O F THE PROPERTY AND NOT GO DEEP INTO THE LEGALITIES OF THE TENANTS ISSUES ITA NO.873/BANG/2014 PAGE 5 OF 8 REPLY TO PARA 5.5 OF THE CIT (A)-LTU ORDER IS AS FO LLOWS:- THE CLAIM BY THE CIT(A)-LTU THAT THE SHOPS CONSISTE D OF TIN SHEDS IS NOT CORRECT , SINCE THE OLD DILAPIDATED HO USE WHICH WAS LET OUT TO THE TENANTS BY THE PREVIOUS OWNER HAD BE EN MODIFIED BY THE TENANTS BY PUTTING UP METAL DOORS F OR THEIR SAFETY ONLY AND AFTER HAVING BEEN PAID THE COMPENSATION, T HE TENANTS WILL HAVE TAKEN AWAY THEIR STOCK OF SCRAP AND METAL (TIN )DOORS, BUT STILL THE REMNANT STRUCTURE CONSISTING OF STONE S, BRICKS AND MORTAR WILL NOT BE CARTED AWAY, BY THE TENANTS BUT SHALL HAVE TO BE CLEARED BY THE APPELLANT ONLY AND HAVE TO BE DIS POSED AWAY FROM THE CITY LIMITS, THAT WAS WHAT WAS STATED BY T HE REGISTERED VALUER, IN HIS REPORT, AS BEING 30 KMS A WAY FROM SITE, FURTHER THE CLAIM BY THE CIT(A)-LTU, THAT THE SALE DEED DOES NOT MENTION THE EXISTENCE OF 22 SHEDS IS CORRECT, BECAU SE DILAPIDATED STRUCTURES WHICH HAVE NO VALUE IS NOT SHOWN IN THE SALE DEED AT THE TIME OF REGISTRATION, FURTHER CLAIM BY CIT(A)-L TU THAT THE AR'S CLAIM THAT THE OMISSION WAS DELIBERATE TO REDU CE THE STAMP DUTY IS ALSO NOT CORRECT, SINCE NO STAMP DUTY IS LE VIED ON DILAPIDATED STRUCTURES IN SUCH TRANSACTIONS. IN THE CASE OF PIROJA C PATEL, IF COMPENSATION PAID TO THE HUTMENT DWELLERS, BEING ILLEGAL OCCUPANTS, IS TREATED AS CO ST OF IMPROVEMENT BY THE HON'BLE COURT, THEN WHY NOT THE COMPENSATION PAID TO THE SHOP KEEPERS TO PROVIDE VA CANT POSSESSION, BE NOT TREATED AS COST OF IMPROVEMENT, MOREOVER THE HON'BLE CIT(A-_LTU, HERE HAS FAILED TO UNDERSTAND T HAT THE COMPENSATION PAYABLE TO THE EXISTING TENANTS CAN BE OF TWO KINDS, IT CAN BE PAID EITHER BY THE SELLER AND HAND OVER V ACANT POSSESSION OR BY THE PURCHASER ASSESSEE, AS IN THE PRESENT CAS E AND CLAIM THE SAME AS COST OF IMPROVEMENT BY HIM, IT IS AS PER MU TUAL AGREEMENT BETWEEN THE SELLER AND THE BUYER. HENCE THE DECISION OF THE CIT(A)-LTU TO CONFIRM THE ADDITION OF EVICTION EXPENSES OF RS. OF RS.20,50,000/- BY THE AO IS AGAINST THE LAW AND FACTS OF THE CASE AND IS ARBITRARY. AND THEREFORE THE APPELLANT HUMBLY BEGS THAT THIS ADDITION OF RS.20,5 0,000/- BE SET ASIDE, BY THE HONOURABLE ITAT. ITA NO.873/BANG/2014 PAGE 6 OF 8 3. OUT OF COURT SETTLEMENT OF RS. OF RS.4,70,000/- REPLY TO PARA 6.1, 6.2, 6.3 AND 6.4 OF THE CIT(A)-L TU ORDER IS AS FOLLOWS:- THE DECISION OF THE CIT(A)LTU TO CONFIRM THE ADDITI ON OF OUT OF COURT SETTLEMENT OF RS. OF RS.4,70,000/-(EVIDENCE D OCUMENT NO.5) IS AGAINST THE LAW AND FACTS OF THE CASE AND IS ARBITRARY. AS ALREADY STATED IN THE SUBMISSIONS HEREINABOVE TH E SAID PROPERTY IS A DISPUTED ONE, AND ONE SUCH PARTY CREA TING HURDLES FOR THE SALE OF THE PROPERTY IS THE BROTHER OF THE SELLER SRI G RAMA RAO, AND THE FACT THAT HE FILED A SUIT AGAIN ST THE SELLER IS CLEARLY MENTIONED IN THE SETTLEMENT AGREEMENT DATED 27/12/2006 ,THE SUIT PERTAINS TO THE YEAR 1995 (OS NO.6240/199 5) NEARLY A DECADE BEFORE THE EXECUTION OF THIS SALE DEED AND C LAIM BY THE CIT(A)-LTU THAT THE COMPENSATION WAS PAID AFTER THE SALE DEED SHOWS THAT SHE HAS NOT APPLIED HER MIND PROPERLY TO THE FACTS OF THE CASE , MOREOVER HER FURTHER CLAIM THAT COMPENSA TION SHOULD HAVE BEEN PAID BY THE SELLER TO HIS BROTHER IS ALSO NOT CORRECT BECAUSE WHEN ANY DISPUTED PROPERTY IS TO BE PURCHAS ED A CLEAR TITLE IS TO BE CREATED BY THE BUYER HIMSELF, IF THE SELLER IS UNABLE TO CREATE SUCH A CLEAR TITLE, TO FACILITATE THE PURCHA SE OF SUCH PROPERTIES, MOREOVER THERE SHALL BE SUCH CONDITIONS IMPOSED AND AGREED TO, BETWEEN THE SELLER AND THE BUYER USUALLY MUTUALLY, TO AVOID LEGAL HURDLES FOR THE SMOOTH EXECUTION OF THE SALE TRANSACTION, MOREOVER THE CIT(A)- LTU S CLAIM THAT THE PAYMENT OF COMPENSATION WAS NOT LINKED TO THE LAND PURCHASE , NOR WAS IT LEGALLY NECESSARY AND IS NOT LINKED TO TITLE IMPROV EMENT, IS NOT CORRECT, BECAUSE LEGAL HURDLES CAN BE CREATED, EVEN AFTER THE EXECUTION OF A SALE DEED, BY THE LEGAL HEIRS OF THE SELLER AND A SUIT CAN BE FILED FOR CANCELLATION OF THE SALE DEED ITSE LF. HENCE THE DECISION OF THE CIT(A)-LTU TO CONFIRM THE ADDITION OF OUT OF COURT SETTLEMENT OF RS. OF RS.4,70,000/- IS AGAINST THE LAW AND FACTS OF THE CASE AND IS ARBITRARY AND THEREFOR E THE APPELLANT HUMBLY BEGS THAT THIS ADDITION OF RS.4,70,000/- BE SET ASIDE BY THE HON'BLE ITAT. FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING OF THE APPEAL, THE APPELLANT MOST RESPECTFU LLY BEGS THE HONORABLE ITAT TO SET ASIDE THE ORDER OF CIT (A)-LT U, IN THE INTEREST OF NATURAL LAW AND JUSTICE. ITA NO.873/BANG/2014 PAGE 7 OF 8 2. THIS APPEAL WAS LISTED FOR HEARING ON 17.10.201 6, BUT NONE APPEARED ON BEHALF OF ASSESSEE. ON CAREFUL PERUSAL OF RECORD, IT IS NOTICED THAT THIS APPEAL WAS LISTED FOR HEARING FOR A NUMBE R OF TIMES, BUT NONE APPEARED ON BEHALF OF ASSESSEE. 3. ON THE LAST DATE OF HEARING, THE ASSESSEE HAS SE NT AN APPLICATION FOR ADJOURNMENT AND ACCORDINGLY HEARING WAS ADJOURNED. THE DATE OF HEARING WAS ALSO INFORMED TO THE ASSESSEE BY REGISTERED LET TER WHICH HAS BEEN RECEIVED BACK UNSERVED WITH THE REMARKS LEFT RETUR N TO SENDER. SINCE THE APPEAL WAS FILED BY THE ASSESSEE AND HE HAS SOU GHT THE ADJOURNMENT ON THE LAST DATE OF HEARING, IT IS HIS RESPONSIBILI TY TO FIND OUT THE NEXT DATE OF HEARING. EVEN OTHERWISE, THE TRIBUNAL HAS SENT A N OTICE OF HEARING TO HIM, BUT IT WAS RECEIVED BACK UNSERVED. UNDER THESE CIR CUMSTANCES, WE ARE OF THE VIEW THAT THE ABSENCE OF ASSESSEE IS INTENTIONA L AND WE THEREFORE PROCEED EX PARTE AGAINST HIM. ACCORDINGLY, THE REVENUE WAS HEARD ON ALL THE ISSUES RAISED BY THE ASSESSEE. 3. WE HAVE CAREFULLY EXAMINED THE ORDER OF AUTHORIT IES BELOW IN THE LIGHT OF REVENUES CONTENTION AND WE FIND THAT THE CIT(APPEALS) HAS ADJUDICATED ALL THE ISSUES IN DETAIL IN HIS ORDER I N THE LIGHT OF RELEVANT PROVISIONS OF THE ACT. SINCE WE DO NOT FIND ANY IN FIRMITY IN THE ORDER OF CIT(APPEALS), WE CONFIRM HIS ORDER. ITA NO.873/BANG/2014 PAGE 8 OF 8 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. PRONOUNCED IN THE OPEN COURT ON THIS 21 ST DAY OF OCTOBER, 2016. SD/- SD/- ( S. JAYARAMAN ) (SUNIL KUMAR YA DAV ) ACCOUNTANT MEMBER JUDIC IAL MEMBER BANGALORE, DATED, THE 21 ST OCTOBER, 2016. /D S/ COPY TO: 1. APPELLANT 2. RESPONDENTS 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.