Mohammed IIyas Akbani, Adilabad V. Income Tax Officer, Ward-1, Adilabad

ITA 926/Hyd/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 0959 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 3 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Next Hearing Date: 30-07-2019
• Assessment Year: 2014-2015
• Appeal Filed On: 11-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NILANJAN DEY
• Assessee Lawyers: K A SAI PRASAD
• Keywords: Sale consideration of property below Jantri Value; Additional evidence
• Section: 50C; 56(2); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 926/HYD/2018 ASSESSMENT YEAR : 2014 - 15 MOHAMMED ILYAS AKBANI, 3 - 2 - 516, GANDHI CHOWK, ADILABAD. PAN: AJFPA 1294 E VS. INCOME TAX OFFICER, WARD - 1, ADILABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY: SRI K.A. SAI PRASAD REVENUE BY: SRI NILANJAN DE Y, DR DATE OF HEARING: 30/07/2019 DATE OF PRONOUNCEMENT: 05 /0 9 /2019 ORDER PER SMT. P. MADHAVI DEVI, J.M: THIS IS ASSESSEES APPEAL FOR THE ASST. YEAR 2014 - 15 AGAINST THE ORDER OF THE LD. CIT(A) - 5, HYDERABAD DATED 09/03/2018. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE , AN INDIVIDUAL , ENGAGED IN THE BUSINESS OF RETAIL CLOTH , FILED HIS RETURN OF INCOME FOR THE ASST. YEAR 2014 - 15 ON 02/09/2014 RETURNING THE INCOME OF RS. 2,20,000/ - . AS PER THE INFORMATION RECEIVED BY THE A.O, THE ASSESSEEHAD PURCHASED A PLOT FOR A SALE CO NSIDERATION OF RS. 12,11,000/ - AGAINST THE 2 GOVERNMENT VALUATION OF RS. 22,87,500/ - (PROPERTY VALUE OF RS.21,37,500 + STAMP DUTY OF RS. 1,50,000) VIDE DOCUMENT NO. 7337 / 2013, DATED 12/11/2013. THE A.O. OBSERVED THAT THE ASSESSEE HAS NOT DISCLOSED THIS TR ANSACTION IN THE RETURN OF INCOME. THEREFORE, A NOTICE U/S. 148 WAS ISSUED ON 01/03/2016 WHICH WAS SERVED ON HIM ON 03/03/2016. IN RESPONSE TO THE SAME, THE ASSESSEE FILED A REPLY DATED 07/12/2016 STATING THAT THE ASSESSEE HAS ALREADY FILED THE RETURN OF INCOME ON 2/09/2014 AND THEREFORE, THE SAME MAY BE TREATED AS A RETURN FILED IN RESPONSE TO THE NOTICE U/S. 148 OF THE ACT. THE ASSESSEE ALSO ASKED THE REASONS FOR REOPENING OF THE ASSESSMENT U/S. 147 OF THE ACT. THEY WERE ACCORDINGLY COMMUNICATED TO TH E ASSESSEE VIDE LETTER DATED 25/11/2016 TO WHICH THE ASSESSEE FILED HIS OBJECTIONS. THE A.O. DISPOSED OF THE OBJECTIONS VIDE ORDER DATED 14/12/2016 AND THEREAFTER PROCEEDED TO CONSIDER THE ASSESSEES SUBMISSIONS. IT WAS SUBMITTED BEFORE THE AO THAT THE A SSESSEE HAD ENTERED INTO AN UNREGISTERED AGREEMENT OF SALE ON 15/03/2016 FOR PURCHASE OF PROPERTY AND AN ADVANCE OF RS. 1 LAKH WAS PAID AND THE POSSESSION HAS ALSO TAKEN. THEREFORE, THE TRANSFER WAS COMPLETE IN THE A.Y. 2013 - 14 ITSELF AND THE SRO VALUE AS ON THE DATE OF SALE IS TO BE CONSIDERED IF THE PROVISIONS OF SECTION 50C WERE TO BE APPLIED. THE A.O. DID NOT ACCEPT THE ASSESSEES CONTENTION AND IN FACT EXAMINED THE NOTARY & ADVOCATE SRI K. ANAND RAO WHO DEPOSED THAT HE HAS NOT NOTARIZED THE SAID AGRE EMENT OF SALE. THE VENDOR SRI JAGIR MOHAN RAO , WAS ALSO EXAMINED , WHO ALSO DENIED 3 HAVING RECEIVED THE ADVANCE OF RS. 1 LAKH. THE A.O. THEREFORE HELD THAT THE AGREEMENT OF SALE IS AN INVALID DOCUMENT AND CONSIDERED THE REGISTERED SALE DEED ONLY AS A VALID DOCUMENT. HE HELD THAT THE PROVISIONS OF SECTION 50C ARE APPLICABLE AND SINCE THERE IS A DIFFERENCE BETWEEN THE GOVERNMENT VALUATION AND THE CONSIDERATION PAID BY THE ASSESSEE, THE PROVISION OF SECTION 56(2)(VII)(B)(II) IS APPLICABLE. HE ACCORDINGLY MAD E THE ADDITION OF RS. 11,46,500/ - . 3. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) CHALLENGING BOTH THE INITIATION OF PROCEEDINGS U/S. 148 OF THE ACT AND ALSO MERITS OF THE ADDITIONS MADE BY THE A.O. LD. CIT(A) HOWEVER DISMISSED THE ASSE SSEES APPEAL AND THE ASSESSEE IS IN SECOND APPEAL BEFORE US BY RAISING THE FOLLOWING GROUNDS: 1. THE ORDER OF THE LD. FIRST APPELLATE AUTHORITY IS NOT CORRECT EITHER ON THE FACTS OR IN LAW AND IN BOTH. 2. THE LD. FIRST APPELLATE AUTHORITY FAILED TO APPRECIATE THE LEGAL POSITION THAT IN THE ABSENCE OF FRESH MATERIAL INITIATION OF PROCEEDINGS U/S. 147 IS BAD IN LAW. 3. THE LD. FIRST APPELLATE AUTHORITY FAILED TO APPRECIATE THE FACT THAT THE REASONS FOR INITIATION OF THE PROCEEDINGS U/S. 148 ITSELF ARE NOT CORRECT AND HENCE EVERYTHING FOLLOWED IS EQUALLY BAD IN LAW. 4. THE LD. FIRST APPELLATE AUTHORITY IS NOT JUSTIFIED IN CONFIRMING AN ADDITION OF RS. 9,26,500/ - MADE BY ASSESSING OFFICER. 5. THE LD. FIRST APPELLATE AUTHORITY FAILED TO APPRECIATE THE F ACT THAT SINCE THE SALE DEED ITSELF INDICATE THE PAYMENT OF RS. 1 LAKHS AS 4 ADVANCE OF RS. 15/03/2013 THE PROVISIONS OF SECTION 56(2)(VII)(B)(II) ARE NOT APPLICABLE IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 6. THE LD. FIRST APPELLATE AUTHORITY FAILED TO APPRECIATE THE FACT THAT THE AUTHORISED REPRESENTATIVE OF THE APPELLANT RESPONDED TO ALL THE NOTICES EXCEPT THE LAST NOTICE DATED 19/02/2018 AND HENCE THE ORDER OF THE FIRST APPELLATE AUTHORITY DISMISSING THE APPEAL IS AGAINST THE PRINCIPLES OF NATURAL JUS TICE. 7. THE LEARNED FIRST APPELLATE AUTHORITY IS NOT JUSTIFIED IN CONFIRMING AN ADDITION MADE BY ASSESSING OFFICER BASED ON THE STATEMENT OF THE SELLER AND THE NOTARY AUTHORITY WHICH ARE CONTRADICTORY TO THE FACT APPEARING IN THE REGISTERED DEED OF SALE. 3.1. FURTHER, THE ASSESSEE HAS RAISED THE FOLLOWING ADDITIONAL GROUND OF APPEAL: - SINCE THE POSSESSION OF THE PROPERTY IN QUESTION WAS HANDED OVER ON 15/03/2013, THE DATE OF AGREEMENT OF SALE, THE TRANSFER IS COMPLETED U/S. 2(47) IN ASST. YEAR 2013 - 14 AND THE PROVISIONS OF SECTION 56(2)(VII)(B)(II) ARE NOT APPLICABLE TO THE FACTS OF THE CASE. 4. IN ADDITION TO THE ADDITIONAL GROUND, THE ASSESSEE HAS ALSO FILED THE ADDITIONAL EVIDENCE WHICH IS THE JUDGMENT OF THE JUNIOR CIVIL JUDGE, ADILABAD HOLDING T HE AGREEMENT OF SALE DATED 15/3/2013 AS GENUINE. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND ARGUED THAT THE NOTICE ISSUED U/S. 148 DATED 01/03/2016 IS INVALID AS IT DOES NOT MENTION THE REASONS FOR REOPENING OF THE ASSESSMENT. HE REFERRED TO PAGE 9 OF THE PAPER BOOK WHEREIN THE REASONS FOR REOPENING OF THE ASSESSMENT ARE FURNISHED AND SUBMITTED THAT IT DOES NOT DISCL OSE THAT THE INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT TO INVOKE THE PROVISIONS OF SECTION 56(2)(VII)(B)(II) OF 5 THE ACT. HE PLACED RELIANCE UPON THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF HINDUSTAN LEVER LTD VS. R.B. WADKAR [2004] 13 7 TAXMAN 479 (BOM.) WHEREIN IT WAS HELD THAT THE REASONS RECORDED SHOULD BE CLEAR AND UNAMBIGUOUS AND SHOULD NOT SUFFER FROM ANY VAGUENESS. IT WAS FURTHER HELD THAT THE REASONS RECORDED SHOULD BE SELF - EXPLANATORY AND SHOULD NOT KEEP THE ASSESSEE GUESSING FOR THE REASONS. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN THE REASONS RECORDED BY THE ASSESSING OFFICER , THERE IS NO REFERENCE TO SECTION 56(2) OF THE ACT , HENCE THE ASSESSEE WAS NOT IN A POSITION TO COUNTER OR SUBMIT THE RELEVANT FACTS BEFO RE THE A.O. FURTHER, HE SUBMITTED THAT THE ASSESSING OFFICER HAD CALLED FOR CERTAIN INFORMATION PRIOR TO ISSUANCE OF NOTICE U/S. 148. HE REFERRED TO PAGE 3 OF THE PAPER BOOK WHICH THE LETTER ISSUED BY THE INCOME TAX OFFICER WHEREIN THE DETAILS WITH REGAR D TO THE AMOUNT PAID FOR PURCHASE OF IMMOVABLE PROPERTY AND SOURCE FOR THE ABOVE INVESTMENT W ERE CALLED FOR. HE ALSO REFERRED TO THE REPLY DATED 07/09/2015 WHEREIN THE ASSESSEE HAS GIVEN THE DETAILS THAT THE ASSESSEE HAS EXECUTED THE AGREEMENT OF SALE ON 15/03 / 2013 FOR RS. 12,11,000/ - AND AT THE TIME OF EXECUTION , AN ADVANCE OF RS. 1 LAKH WAS PAID AND POSSESSION OF THE SCHEDULED PROPERTY WAS ALREADY HANDED OVER AND THE BALANCE WAS TO BE PAID AT TIME OF EXECUTION OF THE SALE DEED. IT WAS ALSO SUBMITTED THA T ON THE DATE OF AGREEMENT OF SALE, THE GOVERNMENT VALUE OF THE PROPERTY WAS RS. 11,48,550/ - AND IT WAS SUBSEQUENT THERETO, THAT THE GOVERNMENT HAS REVISED THE MARKET VALUE 6 W.E.F 01/04/2013 FROM RS. 8,06,000/ - PER ACRE TO RS. 15 LAKHS PER ACRE AND THE LAND ADMEASURING 1 ACRE 17 GUNTAS WAS ADOPTED AT RS. 21,37,500/ - FOR REGISTRATION PURPOSES. IT IS SUBMITTED THAT AFTER CONSIDERING THESE SUBMISSIONS, THE PROCEEDINGS WERE DROPPED BY THE A.O., TO BUT THE NOTICE U/S. 148 WAS ISSUED ON 01/03/2016 AND AS IS EVIDE NT FROM THE REASONS RECORDED THERE IS NO WHISPER OF APPLICATION OF SECTION 56(2) OF THE ACT. THE LEARNED COUNSEL FOR THE ASSESSEE HAS ALSO TAKEN US TO THE RELEVANT PORTION OF THE ASSESSMENT ORDER WHEREIN IT WAS MENTIONED THAT THE SUM OF RS. 1 LAKH WAS PAI D TO THE VENDOR BY WAY OF CASH AND THE REGISTRATION OF THE SALE DEED WAS TO BE COMPLETED ON OR BEFORE 31/3/2014 AND THAT THE VENDOR HAS DELIVERED THE POSSESSION OF THE SAID PROPERTY TO THE VENDEE AT THE TIME OF AGREEMENT OF SALE ITSELF. HE SUBMITTED THAT ULTIMATELY, THE SALE DEED WAS EXECUTED ON 04/11/2013 AND IN THE SALE DEED , THERE IS A MENTION OF AGREEMENT OF SALE AND THE PAYMENT OF RS. 1 LAKH ON 15/3/2013 WHICH IS THE DATE OF AGREEMENT OF SALE. THEREFORE, HE SUBMITTED THAT THE PREMISE OF THE ASSESSING OFFICER THAT THE AGREEMENT OF SALE IS AN INVALID DOCUMENT IS NOT CORRECT. HE FURTHER RELIED UPON THE JUDGMENT OF THE CIVIL COURT WHEREIN THE AGREEMENT OF SALE HAS BEEN HELD TO BE GENUINE. 5. LEARNED DR IS ALSO HEARD, WHO RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 7 6. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT THE NOTICE U/S. 148 WAS ISSUED WITHIN 4 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR AND IT WAS ISSUED AFTER RECORDING OF THE REASONS. HOWEVER, AS RIGHTLY POINTED OUT BY THE LEARNED COUNSEL FOR THE ASSESSEE, THE REASONS RECORDED DOES NOT DISCLOSE THAT THERE IS AN ESCAPEMENT OF INCOME IN THE CASE OF THE ASSESSEE. 7. BEFORE ISSUING OF NOTICE U/S. 148 OF THE ACT, THE ASSESSING OFFICER SHOULD BE S ATISFIED THAT THERE IS AN ESCAPEMENT OF INCOME IN THE RETURN AND THE REASONS RECORDED ARE REPRODUCED HEREUNDER: - YOU HAVE FILED YOUR RETURN OF INCOME FOR THE A.Y. 2014 - 15 ON 22/09/2014 ADMITTING TOTAL INCOME OF RS. 2,20,000/ - ON THE TURNOVER OF RS. 22 LAKHS U/S. 44AD. YOU HAD PURCHASED A PLOT FOR A SALE CONSIDERATION OF RS. 21,37,900/ - VIDE DOCUMENT NO. 7337/2013 DATED 12/11/2013, BUT YOU HAD NOT DISCLOSED THE SAME IN YOUR RETURN OF INCOME FOR THE A.Y. 2014 - 15. 8. THUS, WE FIND THAT T HERE IS NO WHISP ER , WHATSOEVER , ABOUT THE ESCAPEMENT OF INCOME IN THE CASE OF THE ASSESSEE. IT ONLY STAT ES THAT THE ASSESSEE HAD NOT DISCLOSED THE PURCHASE OF THE PLOT BY THE ASSESSEE FOR THE ASST. YEAR 2014 - 15. FURTHER, AS RIGHTLY POINTED OUT BY THE LEARNED COUNSEL FOR THE ASSESSEE, THE ASSESSING OFFICER HAD GATHERED ALL THE NECESSARY INFORMATION PRIOR TO ISSUANCE OF NOTICE U/S. 148 AND ONLY ON THE PREMISE THAT AGREEMENT OF SALE IS NOT A VALID DOCUMENT , THE A.O. PROCEEDED TO ISSUE A NOTICE U/S. 148 OF THE ACT. NOW, SIN CE THAT AGREEMENT OF SALE HAS BEEN HELD TO BE GENUINE BY THE CIVIL COURT, THE FINDING OF THE A.O. IS CLEARLY ERRONEOUS. FURTHER, SINCE THE 8 AGREEMENT OF SALE AND THE SALE DEED ARE NOT IN THE SAME ASSESSMENT YEAR, THE MARKET VALUE OF THE PROPERTY U/S. 50C S HOULD BE THE MARKET VALUE AS ON THE AGREEMENT OF SALE. THE VALUE OF RS. 12,11,000/ - WHICH IS MENTIONED IN THE AGREEMENT OF SALE , IS THE VALUE WHICH HAS BEEN ADOPTED AND THE ASSESSEE HAS ALSO DISCLOSED THE SAME IN THE RETURN OF INCOME FILED BY THE ASSESSEE . THEREFORE, THERE IS NO REASON FOR COMING TO THE CONCLUSION THAT THE ASSESSEE HAS NOT DISCLOSED THESE FACTS IN HIS RETURN OF INCOME. THUS, THE REOPENING OF THE ASSESSMENT ITSELF IS BAD IN LAW BOTH ON LEGAL GROUND AS WELL AS ON MERITS. THUS, ALL THE GRO UNDS, BOTH ON VALIDITY OF THE ASSESSMENT AS WELL AS ON MERITS AND THE ADDITIONAL GROUND OF APPEAL ARE ALLOWED. 9. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 05 TH SEPTEMBER, 2019. SD/ - SD/ - (S. RIFAUR RAHMA N) (P. MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 0 5/09 / 2019 OKK 9 COPY TO: - 1) MOHAMMED ILYAS AKBANI, C/O. CH. PARTHASARATHY & CO., 1 - 1 - 298/2/B/3, 1 ST FLOOR, SOWBHAGYA AVENUE, ST. NO.1, ASHOKNAGAR, HYD - 20. 2) ITO, WARD - 1, NEAR TIRUMALA FILLING STATION, DASNAPUR, ADILABAD. 3) THE CIT(A) - 5, HYDERABAD 4) THE PR. CIT - 5, HYDERABAD 5) THE DR, ITAT, HYDERABAD 6) GUARD FILE