Habib Mohammed, Hyderabad V. DCIT,Central Circle-2, Hyderabad

ITA 929/HYD/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74687 (ITAT-HYDERABAD)
• Duration Of Justice: 9 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 03-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P SOMASEKHAR REDDY
• Assessee Lawyers: AJAY GANDHI
• Keywords: Search and seizure; Additional evidence
• Section: 54; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA.NO.929/HYD/2013 ASSESSMENT YEAR 2006-2007 MR. HABIB MOHAMMED HYDERABAD PAN ACQPM 2944R VS. DCIT, CENTRAL CIRCLE 2 HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : MR. AJAY GANDHI FOR REVENUE : MR. P. SOMASEKHAR REDDY DATE OF HEARING : 20.01.2014 DATE OF PRONOUNCEMENT : 07.03.2014 ORDER PER B. RAMAKOTAIAH, A.M. THIS IS AN APPEAL BY ASSESSEE AGAINST THE ORDER OF THE CIT(A)-I, HYDERABAD DATED 30.04.2013 FOR THE A. Y. 2006- 2007. THE ASSESSEE HAS RAISED 12 GROUNDS ON VARIOUS ISSUES OF BRINGING TO TAX CAPITAL GAINS IN THE YEAR UNDER CON SIDERATION. 2. BRIEFLY STATED, ASSESSEE, WITH TWO OTHER JOINT OWNERS HAS ENTERED INTO A DEVELOPMENT AGREEMENT WIT H M/S. SHANTA SRIRAM CONSTRUCTIONS PVT. LTD. ON 01.10.2003 . THIS AGREEMENT WAS REGISTERED ON 24.11.2005. THERE WAS A SEARCH AND SEIZURE OPERATIONS IN THE CASE OF THE SAID COMP ANY AND ITS DIRECTORS AND CONSEQUENT TO THAT, PROCEEDINGS IN TH E CASE OF THE ASSESSEE WERE INITIATED. AS THE ASSESSEE HAS FI LED RETURN OF INCOME ORIGINALLY THE SAME RETURN WAS FILED IN THE COURSE OF THE PRESENT PROCEEDINGS ALSO. HOWEVER, THE ASSESSEE COU LD NOT APPEAR BEFORE THE A.O. IN THE COURSE OF ASSESSMENT 2 ITA.NO.929/HYD/2013 MR. HABIB MOHAMMED, HYDERABAD PROCEEDINGS. ASSESSEE FILED RETURNS FROM ASSESSMENT YEARS 2004-05 TO 2009-10 AND ALL THE ASSESSMENTS HAVE BEE N COMPLETED BY THE AC, CENTRAL CIRCLE AT THE SAME TIM E EXPARTE. ASSESSEE ADMITTED CAPITAL GAINS ON THE SAID AGREEME NT BY CLAIMING VARIOUS EXEMPTIONS, ON THE PROPOSED DEVELO PMENT OF BUILT-UP AREA OF 76,650 SQ. FEET IN THE RESIDENTIAL COMPLEX AT 8- 2-465, ROAD NO.4, BANJARA HILLS AND ADMITTED TO HAV E RECEIVED 17 FLATS HAVING TOTAL AREA OF 44000 SQ. FEET AND TH E REFUNDABLE ADVANCE OF RS.5,00,000/-. ASSESSEE CLAIMED THAT THE CAPITAL GAINS AROSE IN A.Y. 2004-05 AS THE POSSESSION OF TH E PROPERTY WAS GIVEN AT THE TIME OF ENTERING INTO AGREEMENT IT SELF. ON THE OTHER HAND, THE A.O. FELT THAT THE PROPERTY WAS HAN DEDOVER TO THE BUILDER IN THE A.Y. 2006-2007, BASED ON THE LET TER STATED TO HAVE RECEIVED FROM THE SAID COMPANY. THEREFORE, CAP ITAL GAINS OFFERED IN A.Y. 2004-05 WAS NOT ACCEPTED AND BROUGH T TO TAX IN A.Y. 2006-2007. WHILE DOING SO, THE A.O. ALSO RE-WO RKED OUT THE CAPITAL GAIN, BROUGHT ENTIRE CAPITAL GAIN ON PR OPERTY IN THE HANDS OF ASSEESSEE AND DID NOT ALLOW THE CLAIM UNDE R SECTION 54 AND OTHER ISSUES MAKING ADDITION OF RS.8,21,12,2 50/- AS UNDISCLOSED LONG TERM CAPITAL GAINS AND RAISING DEM AND ACCORDINGLY. 3. IT WAS THE CONTENTION BEFORE THE LD. CIT(A) THA T ASSESSEE COULD NOT APPEAR BEFORE THE A.O. DUE TO IL L-HEALTH AND SUBMITTED VARIOUS CONTENTIONS. IT WAS THE CONTENTIO N OF THE ASSESSEE THAT THE PROPERTY WAS HANDED OVER TO THE C OMPANY IMMEDIATELY AFTER ENTERING INTO AGREEMENT AND VARIO US NOCS, CLEARANCES, PAYMENTS TO WATER SUPPLY AND SEWERAGE, IMPROVEMENT CHARGES ETC., WERE PAID BY THE SAID COM PANY AND NOT BY ASSESSEE. FURTHER, ADDITIONAL EVIDENCES WERE FILED BEFORE 3 ITA.NO.929/HYD/2013 MR. HABIB MOHAMMED, HYDERABAD THE LD. CIT(A) AS THE ASSESSEE COULD NOT REPRESENT BEFORE THE A.O. THE LD. CIT(A) NOT ONLY UPHELD THE EXPARTE ORD ER PASSED UNDER SECTION 144 BUT ALSO DID NOT ADMIT THE ADDITI ONAL EVIDENCE FILED BEFORE HIM AND DECIDED VARIOUS ISSUE S AGAINST THE ASSESSEE IN THE IMPUGNED ORDER. HENCE, THE ASSE SSEE IS AGGRIEVED. 4. LD. COUNSEL BEFORE US NOT ONLY CONTESTED VARIOU S ISSUES ON MERITS BUT ALSO PLACED ON RECORD THE ADDI TIONAL EVIDENCE IN SUPPORT OF CONTENTION THAT THE PROPERTY WAS HANDEDOVER TO THE DEVELOPER ON EXECUTION OF AGREEME NT ON 01.10.2003. FURTHER, IT WAS SUBMITTED THAT THE SO-C ALLED LETTER STATED TO HAVE BEEN FILED BY THE COMPANY TO THE A.O . ON WHICH THE ENTIRE ASSESSMENT WAS BASED, SO AS TO TAX THE C APITAL GAINS IN THIS A.Y., WAS NOT FURNISHED TO THE ASSESSEE. TH EREFORE, IN THE ABSENCE OF THE SAID LETTER DATED 12.12.2011 REF ERRED TO BY THE A.O. IN PAGE 3 AT PARA-1, ASSESSEE IS NOT IN A POSITION TO COUNTER THE DEPARTMENT ALLEGATIONS. HOWEVER, IN SUP PORT THAT POSSESSION WAS TAKEN MUCH EARLIER, ASSESSEE HAS PLA CED ON RECORD THE LETTER FROM THE SAID COMPANY, WHICH WAS ALSO STATED TO HAVE BEEN FILED BEFORE THE A.O. INDICATING THAT THE POSSESSION WAS TAKEN IN OCTOBER, 2003 I.E., RELEVAN T FOR A.Y. 2004-05 AND NOT IN THIS A.Y. LD COUNSEL ALSO OBJECT ED TO ASSESSING ENTIRE CAPITAL GAINS IN THE HAND OF ASSES SEE IGNORING THE OTHER TWO JOINT OWNERS. 5. WE HAVE ASKED THE LD. D.R. TO SUBMIT THE LETTER DATED 12.12.2011 AT THE TIME OF HEARING SO THAT THE ISSUE CAN BE EXAMINED. LD. D.R. FILED A LETTER DATED 19.02. 2014 INFORMING THAT THE SAID LETTER COULD NOT BE READILY TRACEABLE FROM RECORDS AND HAS ENCLOSED A LETTER FROM THE A.O . JUSTIFYING 4 ITA.NO.929/HYD/2013 MR. HABIB MOHAMMED, HYDERABAD THAT THE ASSESSMENT IN THIS IMPUGNED YEAR WAS BASED ON THE REGISTRATION OF THE DOCUMENT. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND EXAMINE D THE ISSUE. WITHOUT GOING INTO THE MERITS OF VARIOUS CLAIMS ON COMPUTATION OF CAPITAL GAINS, FIRST OF ALL, IT HAS TO BE ASCERTAINED ABOUT THE YEAR OF TAXABILITY OF CAPITAL GAIN. IT IS THE CONTENTION OF THE REVENUE THAT THE SAID COMPANY VIZ ., M/S. SHANTA SRIRAM CONSTRUCTIONS P. LTD. HAS GIVEN A LET TER DATED 12.12.2011 INDICATING THAT POSSESSION WAS TAKEN AFT ER THE AGREEMENT WAS REGISTERED, WHEREAS, IT WAS THE ASSES SEES CONTENTION, WITH SUPPORT OF ADDITIONAL EVIDENCE, TH AT THE POSSESSION WAS GIVEN IN OCTOBER, 2003 AND THE VARIO US PAYMENTS WERE MADE BY THE DEVELOPER ONLY AND NOT BY THE ASSESSEE. AS SEEN FROM THE ORDERS, THE A.O. COMPLET ED THE ASSESSMENT EXPARTE. WHEN ASSESSEE HIMSELF ADMITTED THE CAPITAL GAIN IN A.Y. 2004-2005, IGNORING THE SAME H AS BROUGHT TO TAX IN A.Y. 2006-07. THEREFORE, IT IS THE RESPON SIBILITY OF THE REVENUE TO ESTABLISH THAT POSSESSION WAS NOT HANDED OVER AT THE TIME OF AGREEMENT AND THAT CAPITAL GAIN IS TAXA BLE IN THE IMPUGNED A.Y. SINCE, THIS ASPECT WAS NOT EXAMINED A ND SO CALLED LETTER DATED 12.12.2011 WAS NOT PLACED ON RE CORD AND FURTHER, AS ASSESSEE FILED ADDITIONAL EVIDENCE IN S UPPORT OF HIS CONTENTIONS, WE ARE OF THE OPINION THAT THE ISSUE R EQUIRED EXAMINATION BY THE A.O. AFRESH. A.O. IS DIRECTED TO CONFRONT THE ASSESSEE WITH THE SAID LETTER RECEIVED FROM THE COM PANY AND ALSO ESTABLISH THAT THE CAPITAL GAINS AROSE IN THIS IMPUGNED A.Y. ASSESSEE IS FREE TO SUBMIT ALL THE NECESSARY E VIDENCES IN SUPPORT OF HIS CONTENTION. THIS BEING PRELIMINARY ISSUE, THE A.O. IS DIRECTED TO EXAMINE ALL ASPECTS AND DECIDE WHETHER 5 ITA.NO.929/HYD/2013 MR. HABIB MOHAMMED, HYDERABAD CAPITAL GAINS CAN INDEED BE TAXED IN THIS ASSESSMEN T YEAR. AO IS ALSO DIRECTED TO EXAMINE THE EXTENT OF OWNERSHIP IN THE PROPERTY AND TO COMPUTE ONLY THE SHARE OF ASSESSEE IN THE DEVELOPMENT AGREEMENT, IF TAXABLE IN THIS YEAR. THE REAFTER, COMPUTATION OF CAPITAL GAINS WILL ARISE. THE ISSUES ON COMPUTATION OF CAPITAL GAINS WERE LEFT OPEN FOR FUR THER CONSIDERATION, IF REQUIRED. ACCORDINGLY, THE ORDERS OF A.O. AND CIT(A) ON THIS ISSUE ARE SET ASIDE. GROUNDS OF THE ASSESSEE ARE ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 07.03.2014. SD/- SD/- (SAKTIJIT DEY) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACOUNTANT MEMBER HYDERABAD, DATED 07 TH MARCH, 2014 VBP/- COPY TO : 1. MR. HABIB MOHAMMED, PLOT NO.341/A, ROAD NO.10, B ANJARA HILLS, HYDERABAD C/O . GANDHI & GANDHI, C.AS, 1002, PAIGAH PLAZA, BASHEERBAGH, HYDERABAD 500 063. 2. DCIT, CENTRAL CIRCLE-2, HYDERABAD 3. CIT(A) - I , HYDERABAD 4. CIT, (CENTRAL), HYDERABAD 5. D.R. ITAT, A BENCH, HYDERABAD.