Sri Simhadri Krishnamurthy, Sindhanoor V. Income Tax Officer Ward-2 , Raichur

ITA 963/BANG/2017

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 2435 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-11-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 02-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P RENUGADEVI
• Assessee Lawyers: S V RAVISHANKAR
• Keywords: Sale consideration of property below Jantri Value; Question of law; Fair market value; TDS
• Section: 40A(3); 50C; 234B; 250; 263

Judgement Text

ITA NO. 963 (B)/201 7 1 S IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCHES : B , BANGALORE BEFORE SHRI B.R.BASKARAN , ACCOUNTANT MEMBER AND S MT. BEENA PILLAI, JUDIC I AL MEMBER ITA NO. 96 3 (BANG)/201 7 (ASSESSMENT YEAR : 20 09 - 10) SRI SIMHADRI KRISHNAMURTHY, PROP: MAHALAKSHMI TRADERS, NO.140, MAIN ROAD, BHEEMRAJ CAMP, SINDHANOOR - 534 128 PAN NO. A FXPK9961N APPELLANT VS THE INCOME TAX OFFICER, WARD - 2, RAICHUR RESPONDENT APPELLANT BY : S HRI S.V.RAVISHANKAR, ADVOCATE RE VENUE BY : SMT. P.RENUGADEVI, J CIT DATE OF HEARING : 2 6 - 11 - 2019 DATE OF PRONOUNCEMENT : 29 - 11 - 2019 O R D E R PER SMT BEENA PILLAI , JUDICIAL MEMBER : P RESENT APPEAL HAS BEEN FILED BY ASSESSEE AGAINST ORDER DATED 20/02/17 PASSED BY LD. CIT (A) GULBARGA FOR ASSESSMENT YEAR 2009 - 10 ON FOLLOWING GROUNDS OF APPEAL: ITA NO. 963 (B)/201 7 2 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME - TAX(APPEALS) PASSED UNDER SECTION 250 OF THE ACT IN SO FAR AS IT IS AGAINST THE APPELLANT IS OPPOSED TO LAW, WEIGHT OF EVIDENCE, PROBABILITIES, FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE. 2. THE APPELLANT DENIES TO BE ASSESSED TO AN INCOME OVER AN D ABOVE THE ASSESSED INCOME OF RS. 7,77,250/ - ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THE LEARNED CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE DISALLOWANCE OF THE COMMISSION PAID OF RS. 8,05,406/ - (I.E. RS. 2,92,532/ - + RS.5,12,874/ - ) SOLELY RELYING ON T HE OBSERVATION OF THE ASSESSING OFFICER ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 4. THE LEARNED CIT(A) WAS NOT JUSTIFIED IN IGNORING THE FACT THAT THE COMMISSION PAID WAS IN THE NORMAL COURSE OF BUSINESS AND THE BUSINESS EXPEDIENCY OUGHT NOT TO HAVE BEEN QUESTIONED BY THE ASSESSING OFFICER ON THE FACTS AND CIRCUMSTANCES OF THE CASE. THE LEARNED CIT(A) WAS NOT JUSTIFIED IN IGNORING THAT THE APPELLANT HAS DEDUCTED TDS ON THE COMMISSIONS PAID AND THE CLAIM OF EXPENDITURE WAS NOT DISPUTED BY THE ASSESSING OFFI CER IN THE REGULAR ASSESSMENTS ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 6. THE LEARNED CIT(A) WAS NOT JUSTIFIED IN NOT APPRECIATING THAT THE AMOUNTS PAID AS COMMISSION ETC WERE RUNNING ACCOUNTS ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 7. THE LEARNED CIT(A) WAS NOT JUSTIFIED IN IGNORING THE FACT THAT THE COMMISSION PAID WAS OFFERED TO TAX BY THE RECIPIENTS AND THE REVENUE WAS NOT PERMITTED TO TAX THE SAME AMOUNTS TWICE ON THE FACTS AND CIRCUMSTANCES OF THE CASE. ITA NO. 963 (B)/201 7 3 8. THE LEARNED CIT(A) WAS NOT JUSTIFIED IN APPREC IATING THAT THE PROVISIONS OF SECTION 50C ARE NOT APPLICABLE TO THE FACTS AND CIRCUMSTANCES OF THE CASE. 9. THE LEARNED CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITIONS OF RS.6,81,000/ - AS BEING THE DIFFERENCE OF CONSIDERATION AS COMPUTED UNDER SECTION 50 C IN RESPECT OF SALE OF LAND ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 10. THE LEARNED CIT(A) WAS NOT JUSTIFIED IN IGNORING THE FACT THAT THE ASSESSING OFFICER HAS IGNORED THE REPORT OF THE VALUATION OFFICER, VALUING THE LAND AT RS.9,60,000/ - WHICH OUGHT TO HAVE BEEN ADOPTED ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 11. THE APPELLANT DENIES THE LIABILITY TO PAY INTEREST UNDER SECTION 234B AND 234D OF THE ACT IN VIEW OF THE FACT THAT THERE IS NO LIABILITY TO ADDITIONAL TAX AS DETERMINED BY THE LEARNED ASSESSING OFFICER. WITHOUT PREJUDICE THE RATE, PERIOD AND ON WHAT QUANTUM THE INTEREST HAS BEEN LEVIED ARE NOT DISCERNABLE FROM THE ORDER AND HENCE DESERVES TO BE CANCELLED ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 12. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, SUBSTITUTE AND DELETE ANY OR ALL OF THE GROUNDS OF APPEAL URGED ABOVE. 13. FOR THE ABOVE AND OTHER GROUNDS TO B URGED DURING THE HEARING OF THE APPEAL THE APPELLANT PRAYS THAT THE APPEAL BE ALLOWED IN THE INT E REST OF EQUITY AND JUSTICE. 2. BRIEF FACTS OF THE CASE ARE AS UNDER: A SSESSEE FILED HIS RETURN OF INCOME DECLA RING TOTAL INCOME OF RS.4,89, 850/ - AND AGRICULTURAL INCOME OF RS.8,16,960/ - . LD. AO COMPLET ED ASSESSMENT UNDER SECTION 143 (3) BY ASSESSING TOTAL ITA NO. 963 (B)/201 7 4 INCOME AT RS.7,77, 250/ - . THEREAFTER , ORDER UNDER SECTION 263 OF THE ACT WAS PASSED BY LD. CIT ON THE ISSUE OF UNSECURED LOA NS, APPLICABILITY OF SECTION 50 C , AND ADDITION UNDER SECTION 40A (3). SUBSEQUENT TO ORDER PASSED UNDER SECTION 263, LD. AO PASSED ORDER GI VING EFFECT TO ORDER OF LD. CIT AND DETE RMIN ED TOTAL INCOME AT RS.29,47, 020/ - BY MAKING FOLLOWING ADDITIONS: ADDITION ON ACCOUNT OF REDUCING THE UNSECURED LOANS RS.8,05,406/ - ADDITION ON ACCOUNT OF APPLICABILITY OF SECTION 50C - RS.6,81,000/ - ADDITION UNDER SECTION 40A(3) RS.6,83, 364/ - 2.1 AGGRIE VED BY ADDITIONS MADE BY LD. AO ASSESSEE PREFERRED APPEAL BEFORE LD.CIT (A) , U PHELD ADDITION UNDER THE HEAD UNSECURED LOANS AND ADDITION MADE UNDER SECTION 50 C. 2.2 AGGRIEVED BY ORDER OF LD.CIT (A) ASSESSEE IS IN APPEAL BEFORE US NOW. 3. GROUND NO. 1 - 2, 12 - 13 ARE GENERAL IN NATURE AND GROUND NO. 11 IS CONSEQUENTIAL THEREFORE DO NOT REQUIRE ADJUDICATION. AMONGST OTHER GROUNDS RAISED, ASSESSEE RAISED FO LLOWING ADDITIONAL GROUND ON ISSUE OF UNSECURED LOANS , WHEREIN IT IS ALLEGED THAT ORDER PASSED BY LD.AO CONSEQUENT TO ORDER UNDER SECTION 263 IS BEYOND SCOPE OF DIRECTION GIVEN BY LD.CIT , AND ACCORDINGLY BAD IN LAW. ADDITIONAL GROUND: 1. THE AUTHORITIES BLOW WERE NOT JUSTIFIED IN NOT APPRECIATING THAT THE SCOPE OF PROCEEDING CONSEQUENT TO A REVISION ORDER PASSED UNDER SECTION 263 OF THE ACT IS LIMITED TO VERIFICATION OF CASH LOANS AND CONSEQUENTLY, THE ORDER PASSED IS BEYOND THE SCOPE OF THE DIRECTION GIVEN BY THE CIT AND CONSEQUENTLY THE ORDER PASSED IS BAD IN LAW, ON THE FACTS AND CIRCUMSTANCES OF THE C A SE. ITA NO. 963 (B)/201 7 5 2. THE AUTHORITIES BELOW HAVE FAILED TO APPRECIATE THAT THE ADDITION MADE IN THE ASSESSMENT ORDER OF A SUM OF RS.8,05,406/ - (I.E RS.2,92,532/ - + RS.5,12,874/ - ) WAS NOT THE SUBJECT MATTER OF THE PROCEEDINGS UNDE R SECTION 263 OF THE ACT AND CONSEQUENTLY, THE ASSESSMENT ORDER PASSED IS BAD IN LAW ON THE FACTS AND CIR C UMSTANCES OF THE C A S E . 3. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, MODIFY, DELETE OR SUBSTITUTE ANY OR ALL OF THE GROUNDS AT THE TIME OF HEARING THE APPEAL. 4. IN VIEW OF THE ABOVE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING OF THE APPEAL, THE APPELLANT PRAYS THAT TH E APPEAL MAY BE ALLOWED AND APPROPRIATE RELIEF MAY BE GRANTED IN THE INTEREST OF JUSTICE AND EQUITY. IT HAS BEEN SUBMITTED BY LD. AR THAT THESE ADDITIONAL GROUNDS WERE NOT SPECIFICALLY URGED WHILE FILING ORDER TOTAL GROUNDS OF APPEAL BEFORE THIS T RIBUNAL I S AND ALSO BEFORE LD. CIT (A). HOWEVER THESE GROUNDS DO NOT INVOLVE INVESTIGATION OF ANY NEW FACTS , BEING PURE QUESTION OF LAW. HE THUS PRAYED FOR ADMISSION OF THESE GROUNDS. ON THE CONTRARY , LD. S ENIOR DR SUBMITTED THAT ASSESSEE IS RAISING TH ESE GROUND S F OR FIRST TIME BEFORE THIS T RIBUNAL AND THEREFORE DESERVES TO BE DISMISSED. 3.1 WE HAVE PERUSED SUBMISSIONS ADVANCED BY BOTH SIDES IN LIGHT OF RECORDS PLACED BEFORE US. HONBLE SUPREME COURT IN CASE OF NATIONAL THERMAL POWER COMPANY LTD VS CIT REPORTED IN 2 29 ITR 383 HELD THAT, ISSUE THAT EMANATES FROM RECORD , AND THAT WHIC H DO NOT REQUIRE FRESH EVIDENCE TO BE ADJUDICATED , DESERVES TO BE ADMITTED, EVEN IF RAISED FOR FIRST TIME . 3.2 IN THE PRESENT CASE ISSUE RAISED BY ASSESSEE IS PURE QUESTION OF LAW , FOR WH ICH NO NEW EVIDENCES/DOCUMENTS NEEDS TO BE REFERRED TO. RESPECTFULLY FOLLOWING RATIO OF HONBLE SUPREME COURT IN CASE OF ITA NO. 963 (B)/201 7 6 NATIONAL THERMAL POWER COMPANY LTD VS CIT (SUPRA) WE ADMIT ISSUES RAISED BY ASSESSEE BY WAY OF ADDITIONAL GROUNDS. IT IS OBSERVED THAT ADDITIONAL GROUNDS RELATES TO GROUND NO. 3 - 7 DEALS WITH COMMISSION PAID BY ASSESSEE TO HIS SONS. 3.3 AT THE OUTSET , LD.AR SUBMITTED THAT WHILE PASSING ORDER GIVING EFFECT TO 263 ORDER , LD.AO HAS NOT FOLLOWED DIRECTIONS OF LD. CIT , WHEREIN LD. AO WAS DIRECTED TO VERIFY UNSECURED LOANS. HE SUBMITTED THAT LD.AO ON THE CONTRARY, DECIDED ON THE COMMISSION PAID BY ASSESSEE TO HIS SONS AMOUNTING TO RS. 2.92 LAKH AND 15.12 LAKH. HE SUBMITTED THAT LD.AO PROCEEDED ON DECIDING WHETHER COMMISSION PAID BY ASSESSEE WAS REASONABLE OR NOT , AND THAT WHETHER TDS COMPLIANCES WERE MADE IN RESPECT OF SUCH PAYMENTS. 3.4 HE THUS SUBMITTED THAT ISSUE VERIFIED BY LD. AO DOES NOT ARISE OUT OF SCOPE OF DIRECTIONS OF LD.CIT , IN ORDER PASSED UNDER SECTION 263, AND TH AT LD.AO HAD N O JURISDICTION TO VERIFY GENUINENESS OF COMMISSION PAID. 4. ON THE CONTRARY , LD.SR.DR SUBMITTED THAT , AS THIS ISSUE WAS NOT RAISED BEFORE LD.CIT (A) HE DID NOT HAVE AN OPPORTUNITY TO ANALYSE THE SAME , AND THEREFORE , THE ISSUE NEEDS TO BE REVERTED BACK TO A UTHORITIES BELOW FOR DUE VERIFICATION. 4.1 WE HAVE PERUSED SUBMISSIONS ADVANCED BY BOTH SIDES IN THE LIGHT OF RECORDS PLACED BEFORE US. 4.2 ON PERUSAL OF ORDER PASSED BY LD.CIT, 263 PROCEEDINGS WERE INITIATED ON UNSECURED LOANS, BECAUSE FORM 3 CD REPORT F ILED BY ASSESSEE, REVEALED INCREASE IN UNSECURED LOANS FROM RS.23,37,437/ - IN PRECEDING YEAR TO RS.34,41,264/ - DURING YEAR UNDER CONSIDERATION. ITA NO. 963 (B)/201 7 7 I T WAS NOTICED BY LD.CIT THAT COLUMN NO. 24 (A) OF REPORT, AUDITOR REPORTED UNSECURED LOAN AS NIL. 4.3 IT WAS F OR THESE REASONS THAT LD.CIT DIRECTED LD.AO TO VERIFY UNSECURED LOANS FOR YEAR UNDER CONSIDERATION AS EMANATES FROM FORM 3 CD REPORT. 4.4 IN PAPER BOOK FILED BY ASSESSEE BEFORE US, PAGE 26 IS REPLY FILED BY ASSESEE IN SUBSEQUENT PROCEEDINGS BEFORE LD.AO , D ETAILS OF UNSECURED LOAN DEPOSITORS WERE GIVEN WHICH ARE AS UNDER: SMT. RAJESHWARI RS.5,33,011/ - S JAGANMOHAN RS.21,70,514/ - S VENKATESH RS.7,37,739/ - ASSESSEE ALSO FILED LEDGER ACCOUNTS OF THESE LOAN DEBTORS AT PAGE 28 - 30 BEING PART OF THE REPLY FILED BEFORE LD. AO. 4.5 AT PAGE 50 OF PAPER BOOK IS REPLY FILED BY ASSESSEE BEFORE LD. AO DURING GENERAL ASSESSMENT PROCEEDINGS IN RESPONSE TO NOTICE UNDER SECTION 14 2(1), WHEREIN DETAILS OF COMMISSION AMOUNTING TO RS.8,05,406/ - WAS PAID BY ASSESSEE, ON WHICH TDS HAS BEEN STATED TO BE DEDUCTED. THIS COMMISSION HAS BEEN PAID TO ASSESSEES SONS SH. VENKATESH RS.5,12,874/ - AND SH. S JAGANMOHAN RS.2,92,532/ - 5. LD.AO EVE N AFTER RECORDING DIRECTION OF LD.CIT, ANALYSED COMMISSION PAID BY ASSESSEE WHICH WAS ISSUE RAISED BY HIM AT THE TIME OF ORIGINAL ASSESSMENT PROCEEDINGS . LD.AO DID NOT FOLLOW DIRECTIONS OF LD.CIT AND PROCEEDED TO DECIDE ISSUE OF COMMISSION PAID WHICH WAS BEYOND HIS JURISDICTION. THIS IN OUR VIEW IS NOT PERMITTED WHILE GIVING EFFECT SPECIFIC TO ORDER PASSED BY LD.CIT UNDER SECTION 263 OF THE ACT. WE ARE THUS OF ITA NO. 963 (B)/201 7 8 OPINION THAT THE ASSESSMENT ORDER PASSED BY LD.AO IS WITHOUT JURISDICTION AND ASSESSEE SUCCEEDS O N THE ADDITIONAL GROUND RAISED. 5.1 AS WE HAVE DECIDED THE LEGAL PLEA RAISED BY ASSESSEE IN ITS FAVOUR OTHER GROUNDS RAISED ON MERITS BECOMES ACADEMIC. ACCORDINGLY WE ALLOW THESE GROUNDS AND ADDITIONAL GROUND RAISED BY ASSESSEE. 6. GROUND NO. 8 - 10 ARE IN RESPECT OF APPLYING SECTION 50 C TO FACTS OF THE CASE. IT HAS BEEN SUBMITTED BY LD.AR THAT, LD.CIT DIRECTED ASSESSING O FFICERS TO APPLY PROVISIONS OF SECTION 50C AND FAIR MARKET VALUE AMOUNTING TO RS.14,81,000/ - SHOULD BE ADOPTED FOR PURPOSES OF COMPUTING SHORT TERM CAPITAL GAIN. ASSESSEE DURING SUBSEQUENT PROCEEDINGS OBJECTED FOR FAIR MARKET VALUE TO BE ADOPTED AND CASE WAS REFERRED TO VALUATION CELL . THE V ALUATION O FFICER VALUED PRI C E OF LAND AT RS.9,60,500/ - . IT HA S BEEN SUBMITTED BY LD.AR THAT A SSESSING O FFICER REFUSED TO ADOPT VALU E AS PER VALUATION O FFICERS REPORT AND TOOK VALUE AT FAIR MARKET VALUE. 6.1 HE SUBMITTED T HAT THIS CANNOT BE DONE ONCE V ALUATION O FFICER DETERMINED THE VALUE UPON REFERENCE BY LD.AO. . 7. ON THE CONTRARY , LD.SR.DR PLA CED RELIANCE UPON ORDERS OF AUTHORITIES BELOW. 7.1 WE HAVE PERUSED SUBMISSIONS ADVANCED BY BOTH SIDES IN LIGHT OF RECORDS PLACED BEFORE US. SUB - SECTION (2) OF SECTION 50C PROVIDES THAT , WHERE ANY REFERENCE IS MADE TO A DISTRICT V ALUATION O FFICER BY LD.AO, VALUE SO DETERMINED BY V ALUATION O FFICER IS MUST BE CONSIDERED. IT IS NOTICED THAT THE VALUE TAKEN BY ASSESSEE WAS AT RS.8,00,000/ - AND VALUE DETERMINED BY ITA NO. 963 (B)/201 7 9 DVO WAS RS.9,60,500/ - . UNDER SUCH CIRCUMSTANCES IS SECTION 50C VERY CLEAR THAT ASSESSING OFFICER DO NOT HAVE ANY OTHER OPTIO N BUT TO PROCEED TO COMPLETE COMPUTATION OF CAPIT AL GAINS IN CONFORMITY WITH VALUATION BY V ALUATION O FFICER OF THE ASSET IN QUESTION. WE THEREFORE DIRECT LD.AO TO COMPUTE STCG AS PER VALUE DETERMINED BY DVO ACCORDINGLY THIS GROUND RAISED BY ASSESSEE STANDS ALLOWED. IN THE RESULT APPEAL FILED BY ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 - 11 - 2019. SD/ - SD/ - ( B.R.BASKARAN ) ( BEENA P ILLAI ) ACCOUNTANT MEMB ER JUDICIAL MEMBER DATED: 2911 - 2019 *AM COPY OF THE ORDER FORWARDED TO: 1.APPELLANT; 2.RESPONDENT; 3.CIT; 4.CIT(A); 5. DR 6. ITO (TDS) 7.GUARD FILE BY ORDER ASST. REGISTRAR