Nivee Property Developers Developers P Ltd, Hyderabad V. DCIT, Hyderabad

ITA 934/HYD/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 53591 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 2 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 09-12-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 18-06-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: T DIWAKAR PRASAD
• Assessee Lawyers: P MURALI MOHANA RAO
• Keywords: Unexplained investment
• Section: 271(1)(c); 69; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SHRI G.C. GUPTA, VICE PRESIDENT AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER ITA NO. 934/HYD/2010 (ASSESSMENT YEAR 2005-06) M/S. NIVEE PROPERTY DEVELOPERS PVT. LTD. HYDERABAD PAN: AABCN5025G VS DCIT, CIRCLE-16(1) HYDERABAD APPELLANT RESPONDENT APPELLANT BY: SHRI P. MURALI MOHANA RAO RESPONDENT BY: SHRI T. DIWAKAR PRASAD DATE OF HEARING: 23.08.2011 DATE OF PRONOUNCEMENT: 09.09.2011 ORDER PER CHANDRA POOJARI, A.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF THE CIT(A)-V, HYDERABAD DATED 22.4.2010 FOR ASSESSMENT YEAR 2005-06. 2. THE SOLE ISSUE INVOLVED IN THIS APPEAL IS WITH R EGARD TO ADDITION OF RS. 6,52,800 U/S. 69 OF THE INCOME-TAX ACT, 1961. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE ALONG WITH THE CO-OWNER PURCH ASED 2508 SQUARE METRES (SQM) OF LAND VIDE DOCUMENT NO. 1490/2002. THE SHARE OF THE ASSESSEE COMES TO 600 SQM. THE ASSESSEE ALONG WITH CO-OWNERS APPROACHED THE MUNICIPAL CORPORATION OF HYDERABAD ( MCH) FOR GRANT OF SANCTION FOR CONSTRUCTING A RESIDENTIAL COMPLEX ON THE ABOVE PLOT. THE MCH RAISED OBJECTION WITH REGARD TO THE AVAILABILIT Y OF ACCESS AND PASSAGE TO THE SAID PLOT. THEREAFTER, THE ASSESSEE REGISTERED A DOCUMENT ON 8.11.2004 BEFORE THE SUB-REGISTRAR OF H YDERABAD VIDE NO. 3455/2004 IN RESPECT OF PIECE OF LAND OF 489 SQM AT 8-2-415/1, 8-2-415/2 AND 8-2-415/3, KHAIRATABAD MANDAL, BANJARA HILLS, H YDERABAD WITH RESPECT TO EASEMENT RIGHT. THE ABOVE DOCUMENT DISC LOSED A VALUE OF RS. 32,64,000 FOR THE ABOVE PIECE OF LAND FOR WHICH THE ASSESSEE HAD I.T.A. NO. 934/HYD/2010 M/S. NIVEE PROPERTY DEVELOPERS P. LTD. ============================ 2 1/5 TH SHARE. THE ASSESSEE STATED THAT THE ABOVE TRANSAC TION WAS NOT A GENUINE TRANSACTION AND NO EXPENSE HAD BEEN INCURRE D. ON THE OTHER HAND, THE ASSESSING OFFICER HELD THAT THE ASSESSEE' S SHARE IN THE ABOVE MENTIONED TRANSACTION AMOUNTING TO RS. 6,52,800 WAS OUT OF UNDISCLOSED SOURCES AND ADDED THE SAME AMOUNT UNDER SECTION 69 OF THE ACT GIVING THE FOLLOWING REASONS: 'THUS, AS SEEN FROM THE ABOVE, THE ASSESSEE ALONG W ITH FOUR OTHERS VIDE SALE DEED DATED 8.11.2004 HAVE PURCHASED FOR RS. 32,64,000/-. THE ASSESSEE'S SHAR E OUT OF THE ABOVE 1/5 TH WHICH COMES TO RS. 6,52,800/-. THE ASSESSEE CLAIMS THAT THE ABOVE TRANSACTION I.E., PU RCHASE OF LAND WAS MADE FOR THE PURPOSE OF OBTAINING ROAD/ PATH FROM MCH AND IT IS STATED THAT ACTUALLY NO CONSIDER ATION HAS BEEN PAID. HOWEVER, SINCE THE SALE DEED (PURCH ASE DEED) SHOWS THAT CONSIDERATION HAS BEEN MADE, THE ASSESSEE'S CONTENTION IS NOT ACCEPTABLE. ACCORDING LY, THE ASSESSEE'S SHARE OF INVESTMENT OF RS. 6,52,800/- IS TREATED AS UNEXPLAINED INVESTMENT AND ADDED UNDER SECTION 6 9 OF INCOME-TAX ACT. PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) ARE INITIATED SEPARATELY ON THIS ASPECT. 3. ON APPEAL THE CIT(A) CONFIRMED THE ADDITION. AG GRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 4. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE MCH RAISED OBJECTION WITH REGARD TO THE AVAILABILITY OF THE ACCESS AND PASSAGE TO THE SAID PLOT AS THERE WAS NO DOCUMENT EVIDENCIN G THE TRANSFER OF THE ABSOLUTE AND EXCLUSIVE RIGHTS OF USE OF PASSAGE OVE R THE ADJOINING PASSAGE, AND WE HAD APPROACHED THE OWNERS FOR THE O BJECTION RAISED BY THE MCH AND REQUESTED THE OWNERS OF THE LAND TO EXE CUTE ANY OTHER DOCUMENT FOR THE PURPOSE OF PERFECTING THE RIGHTS O F THE SAID LAND PURCHASED BY THE COMPANY ALONG WITH OTHER CO-OWNERS . ACCORDINGLY, AS PER THE REQUEST MADE BY US ALONG WITH OTHER CO-OWNE RS THE ORIGINAL LAND OWNERS HAVE AGREED TO ENTER A MEMORANDUM OF UNDERST ANDING (MOU) ONLY FOR THE PURPOSE OF CONVEYANCE AS THE SAID PORT ION OF LAND IS USED FOR COMMON PASSAGE AS ROAD/PATH, THE MOU WAS ENTERED ON 15 TH DAY OF MAY, 2003. THE MOU STATES THAT THE EASEMENT RIGHTS AND EXCLUSIVE RIGHTS OF PATH AND PASSAGE OVER THE LAND STOOD EXCL USIVELY TRANSFERRED TO I.T.A. NO. 934/HYD/2010 M/S. NIVEE PROPERTY DEVELOPERS P. LTD. ============================ 3 THE LAND OWNERS ONLY FOR THE PURPOSE OF APPROVAL BE FORE THE MCH I.E., TO ASSESSEE COMPANY AND OTHER CO-OWNERS. 5. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT AS PER PAGE NO. 4 OF THE SAID MOU SERIAL NOS. 5, 6, 7 IT WAS CL EARLY MENTIONED THAT THE SAID DOCUMENT BEING NEEDED FOR THE PURPOSE OF P AYMENT OF STAMP DUTY AND REGISTRATION FEE, AND NO REAL CONSIDERATIO N WHICH WOULD BE MENTIONED SOLELY FOR THE PURPOSE OF PAYING STAMP DU TY AND REGISTRATION CHARGES. 6. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE ASSESSEE-COMPANY HAS REGISTERED THE DOCUMENT ON 8.1 1.2004 BEFORE THE SUB-REGISTRAR, HYDERABAD (R.O.) VIDE DOCUMENT N O. 3455/2004 IN RESPECT OF THE PIECE OF LAND FOR 489 SQM SITUATED A T 8-2-415/1, 8-2-415/2 AND 8-2-415/3, KHAIRATABAD MANDAL, BANJARA HILLS, H YDERABAD. THERE IS NO APPLICABLE CONSIDERATION FOR THE SAID PIECE OF L AND USED EXCLUSIVELY FOR THE PURPOSE OF BEING USED AS A ROAD / PATH FOR THE VENTURE TAKEN UP BY THE COMPANY ALONG WITH THE CO-OWNERS AT BANJARA HILLS, HYDERABAD. 7. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER SUB MITTED THAT THE ASSESSEE-COMPANY HAS REGISTERED ANY SALE DEED ON 9. 8.2004. HOWEVER, THE COMPANY HAS REGISTERED A DOCUMENT ON 8 .11.2004 AND BASING UPON THE UNDERSTANDING BETWEEN THE VENDORS A ND VENDEE THE PROPOSED SALE DEED TO BE REGISTERED IS ONLY BE A SH AM AND NO REAL CONSIDERATION IS TO BE PAYABLE TO THE VENDORS AS IT IS SOLELY NEEDED FOR THE PURPOSE OF PAYING STAMP DUTY AND REGISTRATION F EES AS THE LAND IS REGISTERED WHICH IS TO BE USED EXCLUSIVELY FOR THE PURPOSE OF BEING USED AS A ROAD/PATH FOR THE SAID PLOT OF 2508 SQM PURCHA SED BY THE FIVE OWNERS FOR THE CONSTRUCTION OF RESIDENTIAL FLATS AT BANJARA HILLS. AS PER THE MOU DATED 15.05.2003 IT IS A SHAM DOCUMENT WHIC H IS TO BE REGISTERED FOR USAGE OF ROAD/PATH WITHOUT CONSIDERA TION IN THE NAME OF FIVE CO-OWNERS OF THE PROPERTY OUT OF WHICH COMPAN Y EQUAL SHARE IS 1/5 TH OF THE SAID LAND. ACCORDINGLY, THE COMPANY ALONG W ITH OTHER FOUR CO- OWNERS HAVE ENTERED A SALE DEED FOR RS. 32,64,000 S OLELY FOR THE I.T.A. NO. 934/HYD/2010 M/S. NIVEE PROPERTY DEVELOPERS P. LTD. ============================ 4 PURPOSE OF APPROVAL BY THE MCH TO GIVE NECESSARY PE RMISSION FOR THE CONSTRUCTION OF RESIDENTIAL FLATS AT ROAD NO. 4, BA NJARA HILLS, HYDERABAD. 8. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER SUB MITTED THAT THE DOCUMENT NO. 3455/2004, VALUE SHOWN FOR THE PURPOSE OF STAMP DUTY IS RS. 32,64,000 OF WHICH ASSESSEE-COMPANY HAS 1/5 TH EQUAL SHAM SHARE WHICH IS REGISTERED ON 8.11.2004. THE REGISTRATIO N CHARGES PAID FOR THE SAID DOCUMENT TO THE SUB-REGISTRAR, HYDERABAD IS RS . 7,95,510/- (RS. 4,41,140 + RS. 3,54,370) OF WHICH ASSESSEE-COMPANY SHARE OF REGISTRATION CHARGES AMOUNTING TO RS. 1,59,102 WAS DEBITED TO THE PROFIT AND LOSS A/C. IN THE F.Y. 2004-05. THERE IS NO SAL E OF PROPERTY ON THE SAID DATE AS MENTIONED IN THE AIR STATEMENT. HOWEV ER, IT IS A DOCUMENT WHICH IS REGISTERED FOR RS. 32,64,000/- AS A PURCHA SE DOCUMENT (SALE DEED) FOR THE PURCHASE OF LAND EXCLUSIVELY USED FOR THE PURPOSE OF A ROAD/PATH. 9. THE LEARNED DR STRONGLY RELIED ON THE ORDER OF T HE CIT(A). 10. WE HAVE HEARD BOTH THE PARTIES AND ALSO CONSIDE RED THE MATERIAL ON RECORD. IN THIS CASE THERE IS A REGISTERED DOCU MENT WHICH IS A VALID DOCUMENT UNDER LAW AND HAVING FULL SANCTITY. IT IS ALSO ACCOMPANIED BY AFFIDAVITS BY THE TWO PARTIES AND ALSO SALE DEED IS EVIDENCED BY TWO INDEPENDENT WITNESSES AND CERTIFIED BY THE SUB-REGI STRAR. THIS DOCUMENT CATEGORICALLY STATES THAT THE TITLE OF THE PROPERTY IN QUESTION HAS TRANSFERRED TO THE ASSESSEE AND ITS CO-OWNERS. IN OTHER WORDS, AS ON 8.11.2004, THE LEGAL RIGHTS OVER THE PROPERTY WE RE TRANSFERRED FROM THE ORIGINAL OWNERS TO THE ASSESSEE AND ITS CO-OWNE RS. THIS IS SIGNIFICANT BECAUSE NOW THE ORIGINAL OWNERS CANNOT CLAIM ANY RIGHT TO THIS PROPERTY WHICH WOULD BE WORTH CRORES OF RUPEES TODAY. IT IS IMPORTANT TO UNDERSTAND THAT NO PERSON WHO IS LOGIC AL WOULD TRANSFER HIS LEGAL RIGHTS TO HIS PROPERTY IF HE DID NOT INTEND T O AND WITHOUT TAKING ANY CONSIDERATION WHATSOEVER. THE REGISTRAR HAS CERTIF IED THAT AN AMOUNT OF RS. 32,64,000/- HAD TRANSFERRED FROM THE ASSESSEE A ND ITS CO-OWNERS TO I.T.A. NO. 934/HYD/2010 M/S. NIVEE PROPERTY DEVELOPERS P. LTD. ============================ 5 THE ORIGINAL OWNERS AND THIS FACT HAS BEEN VERIFIED BY THE INDEPENDENT WITNESSES AS WELL. 11. THIS ARGUMENT RAISED BY THE LEARNED COUNSEL FOR THE ASSESSEE IS MISCONCEIVED AND MISLED. THE REGISTERED DEED SHOUL D BE CONSIDERED AS A VALID DOCUMENT ENTERED BETWEEN THE TWO PARTIES WH EREIN THE IMPUGNED CONSIDERATION HAS BEEN PASSED BETWEEN THE PARTIES. IN OUR OPINION, ALL COMMERCIAL ARRANGEMENTS AND DOCUMENTATION OR TRANSA CTIONS HAVE TO BE GIVEN EFFECT TO, EVEN THOUGH, THEY RESULT IN DEDUCT ION OF TAX OR ENHANCEMENT OF TAX, AS THE CASE MAY BE, PROVIDED TH AT THEY ARE GENUINE, BONA-FINE AND NOT COLOURABLE TRANSACTIONS. THE APPARENT IS TO BE CONSIDERED AS REAL UNLESS PROVED OTHERWISE. THE INCOME-TAX AUTHORITIES HAVE NO RIGHT TO VARY THE TERMS OF THE AGREEMENT OR DOCUMENT BETWEEN THE PARTIES BECAUSE THE AGREED TERMS ARE NO T TO THEIR LIKING. SIMILARLY, THE ASSESSEE ALSO CANNOT VARY THE TERMS OF THE AGREEMENT OR DOCUMENT TO ITS CHANGING NEEDS. THE ASSESSEE CANNO T RELY ON ONE DOCUMENT FOR ONE PURPOSE AND THEREAFTER CANNOT CHAN GE THE PURPOSE OF THAT DOCUMENT DIFFERENTLY. IN THE PRESENT CASE, WE ARE NOT IN A POSITION TO SAY THAT THERE IS NO CONSIDERATION PASSED THROUG H THE IMPUGNED DOCUMENT. ACCORDINGLY, WE CONFIRM THE ADDITION MAD E BY THE LOWER AUTHORITIES. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH SEPTEMBER, 2011. SD/- (G.C. GUPTA) VICE PRESIDENT SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED THE 9 TH SEPTEMBER, 2011 TPRAO I.T.A. NO. 934/HYD/2010 M/S. NIVEE PROPERTY DEVELOPERS P. LTD. ============================ 6 COPY FORWARDED TO: 1. M/S. NIVEE PROPERTY DEVELOPERS P. LTD., C/O. M/S . P. MURALI & CO., CHARTERED ACCOUNTANTS, 6-3-6555/2/3, 1 ST FLOOR, SOMAJIGUDA, HYDERABAD-500 082. 2. THE DCIT, CIRCLE-16(1), HYDERABAD. 3. THE CIT(A)-V, HYDERABAD. 4. THE CIT-IV, HYDERABAD. 5. THE DR, A-BENCH, ITAT, HYDERABAD.