Income Tax Officer, Ward -1(2), Panaji., Panaji V. M/s Omkar Realators, Panaji

ITA 88/PAN/2015

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1405 (ITAT-PANAJI)
• Duration Of Justice: 5 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-08-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 19-08-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 11-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANAND S MARATHE LD
• Assessee Lawyers: SAMIR C ANVEKAR
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI N.S. SAINI, HON'BLE ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, HONBLE JUDICIAL MEMBER ITA NO. 88/PNJ/2015 : (A.Y 2009 - 10) INCOME TAX OFFICER, WARD - 1(3), PANAJI (APPELLANT) VS. M/S. OMKAR REALTORS PATTO CENTRE BUILDING, NR. EDC COMPLEX, KADAMBA BUS STAND, PANAJI (RESPONDENT) PAN : AABFO9379H ASSESSEE BY : PRAMOD VAIDYA, ADV. & SAMIR C. ANVEKAR, CA REVENUE BY : ANAND S. MARATHE, LD. DR DATE OF HEARING : 19/08/2015 DATE OF PRONOUNCEMENT : 19/08/2015 O R D E R PER GEORGE MATHAN : 1. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A), PANAJI - 1 IN ITA NO. 143/PNJ/14 - 15 DT. 17.12.2014 FOR THE A.Y 2009 - 10. SHRI PRAMOD VAIDYA, ADVOCATE ALONGWITH SHRI SAMIR C. ANVEKAR, CA REPRESENTED ON BEHALF OF THE ASSESSEE AND SHRI ANAND S. MARATHE, LD. DR REPRESENTED ON BEHALF OF THE REVENUE. 2. IT WAS SUBMITTED BY THE LD. DR THAT THE ASSESSEE IS A PARTNERSHIP FIRM DOING THE BUSINESS OF REAL ESTATE. ONE OF THE PARTNERS OF THE ASSESSEE FIRM WAS ALSO THE SHAREHOLDER IN M/S. PRIMESLOTS PROPERTIES PVT. LTD. IT WAS THE 2 ITA NO. 88/PNJ/2015 (A.Y : 2009 - 10) SUBMISSION THAT M/S. PRIMESLOTS PROPERTIES PVT. LTD. HAD PURCHASED 1,01,000 SQ. MTRS. OF LAND IN SURVEY NO. 48/10 AT KUNDAIM VILLAGE, PON DA FOR A CONSIDERATIOIN OF RS. 1,16,15,000/ - VIDE SALE DEED DT. 17.8.2006. IT WAS IN THE COURSE OF THE SEARCH ON 25.2.2010 ON SHRI SADIQ SHEIKH AND SHRI PRADEEP PALYEKAR THAT IT WAS NOTICED THAT THE SAID M/S. PRIMESLOTS PROPERTIES PVT. LTD. HAD SOLD THE S AID PROPERTY TO THE ASSESSEE FOR A CONSIDERATION OF RS. 46,50,000/ - VIDE SALE DEED DT. 16.10.2008. IT WAS THE SUBMISSION THAT M/S. PRIMESLOTS PROPERTIES PVT. LTD. HAD INCURRED LOSS OF RS. 69,65,000/ - . SHRI SADIQ SHAIKH WAS THE SHAREHOLDER OF M/S. PRIMESL OTS PROPERTIES PVT. LTD. AT THE TIME WHEN THE SAID PROPERTY WAS PURCHASED AND HE WAS A PARTNER IN M/S. OMKAR REALTORS TO WHOM THE SAID PROPERTY WAS SOLD. IT WAS THE SUBMISSION THAT THE AO CONSEQUENTLY INVOKED THE PROVISIONS OF SEC. 28(IV) OF THE ACT IN TH E CASE OF THE ASSESSEE TO BRING TO TAX THE VALUE OF THE BENEFIT OR PERQUISITE, WHETHER CONVERTIBLE INTO MONEY OR NOT, ARISING FROM THE BUSINESS. IT WAS THE SUBMISSION THAT M/S. OMKAR REALTORS, THE ASSESSEE HEREIN HAD BENEFITED WITH M/S. RS. 69,65,000/ - AR ISING OUT OF THE TRANSACTION WITH M/S. PRIMESLOTS PROPERTIES PVT. LTD. IT WAS THE SUBMISSION THAT ON APPEAL, THE LD. CIT(A) DELETED THE ADDITION BY HOLDING THAT IN TERMS OF SEC. 28(IV) OF THE ACT NO ADDITION ON NOTIONAL BASIS CAN BE MADE. IT WAS THE SUBM ISSION THAT THE ORDER OF THE LD. CIT(A) WAS LIABLE TO BE REVERSED. 3. IN REPLY, THE LD. AR SUBMITTED THAT SHRI SADIQ SHAIKH WAS INTRODUCED AS THE PARTNER OF M/S. OMKAR REALTORS, THE ASSESSEE HEREIN, ONLY FOR THE PURPOSE OF REMOVING THE TENANCY LITIGATION ISSUES PRESENT IN THE PROPERTY. IT WAS THE SUBMISSION THAT, IN FACT, M/S. OMKAR REALTORS HAD PURCHASED THIS PROPERTY ON THE BASIS OF THE FUNDS INTRODUCED BY DOMINA DSOUZA FROM HER PERSONAL RESOURCES. IT WAS THE FURTHER SUBMISSION THAT THE ASSESSEE, M/S. OMKAR REALTORS DID NOT GET ANY SPECIFIC BENEFIT U/S 28(IV) OF THE ACT INSOFAR AS M/S. 3 ITA NO. 88/PNJ/2015 (A.Y : 2009 - 10) OMKAR REALTORS WAS NOT A SHAREHOLDER IN M/S. PRIMESLOTS PROPERTIES PVT. LTD. IT WAS THE FURTHER SUBMISSION THAT AFTER THE CLOSURE OF THE LITIGATION, THE ASSESSEE, M/S. O MKAR REALTORS HAD SOLD THE PROPERTY DURING NOVEMBER, 2014 FOR A CONSIDERATION OF RS. 5 CRORES AND THE SAME WAS ALSO BEING OFFERED TO TAX IN THE RETURN FILED FOR THE A.Y 2015 - 16. IT WAS ALSO THE SUBMISSION THAT THE LOSS OF RS.69,65,000/ - INCURRED BY M/S. P RIMESLOTS PROPERTIES PVT. LTD. WAS ALSO ACCEPTED BY THE REVENUE IN THE ASSESSMENT PASSED U/S 153C R.W.S 143(3) OF THE ACT. IT WAS THE SUBMISSION THAT THE ORDER OF THE LD. CIT(A) WAS LIABLE TO BE SUSTAINED. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. AT THE OUTSET, A PERUSAL OF THE PROVISIONS OF SEC. 28(IV) OF THE ACT SHOWS THAT THERE SHOULD BE SOME NEXUS BETWEEN THE TWO ASSESSEES FOR THE BENEFIT OR PERQUISITE TO BE ADDED IN THE HANDS OF ONE. THERE IS NO CONNECTION BETWEEN M/S. PRIMESLOTS PROPERTIES PVT . LTD. AND M/S. OMKAR REALTORS, THE ASSESSEE HEREIN. IF SHRI SADIQ SHAIKH IS TO BE CONSIDERED, WHO IS A PARTNER IN THE ASSESSEE FIRM AND A SHAREHOLDER IN M/S. PRIMESLOTS PROPERTIES PVT. LTD., THEN, IF AT ALL ANY BENEFIT HAS ARISEN, IT WOULD BE IN THE HAND S OF SHRI SADIQ SHAIKH AND NOT IN THE HANDS OF THE ASSESSEE HEREIN. IN ANY CASE, THE SUBMISSION OF THE ASSESSEE THAT SHRI SADIQ SHAIKH WAS BROUGHT IN AS A PARTNER ONLY FOR THE PURPOSE OF CLEARING UP THE LITIGATION IN RESPECT OF THE SAID PROPERTY HAS NOT B EEN DISPROVED BY THE REVENUE. FURTHER, IT HAS BEEN ADMITTED THAT THIS PROPERTY HAS BEEN CLEARED OF LITIGATION AND SOLD IN NOVEMBER, 2014 FOR A CONSIDERATION OF RS. 5 CRORES AND THE PROFIT THEREON ARE BEING OFFERED TO TAX IN THE RETURN FOR THE A.Y 2015 - 16. THESE FACTS CLEARLY SHOW THAT NO BENEFIT HAS ARISEN TO THE ASSESSEE HEREIN IN RESPECT OF THE TRANSACTION WITH M/S. PRIMESLOTS PROPERTIES PVT. LTD. IN FACT, THE LOSS INCURRED BY M/S. PRIMESLOTS PROPERTIES PVT. LTD. HAS ALSO BEEN ACCEPTED BY THE REVENUE. T HERE IS NO QUESTION OR AVERMENT THAT THE 4 ITA NO. 88/PNJ/2015 (A.Y : 2009 - 10) TRANSACTION IS A BOGUS OR SHAM TRANSACTION. BY INCREASING THE COST OF THE PROPERTY IN THE HANDS OF THE ASSESSEE IT WILL ONLY REDUCE THE LEVY OF TAX WHEN THE PROPERTY IS SOLD I.E. IF THIS AMOUNT OF RS. 69,65,000/ - I S ADDED FOR THE A.Y 2009 - 10 IN THE HANDS OF THE ASSESSEE, THE INCOME RETURNED FOR A.Y 2015 - 16 WHEN THE PROPERTY WAS SOLD WOULD AUTOMATICALLY REDUCE BY THE SAME AMOUNT. THIS HAS ALSO NOT BEEN CLAIMED BY THE ASSESSEE. IN THESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE FINDING OF THE LD. CIT(A) IN DELETING THIS ADDITION IS ON A RIGHT FOOTING AND DOES NOT CALL FOR ANY INTERFERENCE. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 19/08/2015. S D / - (N.S. SAINI) ACCOUNTANT MEMBER S D / - ( GEORGE MATHAN ) JUDICIAL MEMBER PLACE : PANAJI / GOA DATED : 19/08/ 201 5 *SSL* COPY TO : (1) APPELLANT (2) RESPONDENT (3) CIT(A) CONCERNED (4) CIT CONCERNED (5) D.R (6) GUARD FILE TRUE COPY, BY ORDER , 5 ITA NO. 88/PNJ/2015 (A.Y : 2009 - 10) DATE INITIAL ORIGINAL DICTATION PAD & DRAFT ORDER ARE ENCLOSED IN THE FILE 1. DRAFT DICTATED ON 19/08/2015 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 19/08/2015 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 19/08/2015 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 19/08/2015 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 19/08/2015 SR.PS 6. DATE OF PRONOUNCEMENT 19/08/2015 SR.PS 7. FILE SENT TO THE BENCH CLERK 19/08/2015 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER