N Andalamma L/r N Rarsimha, Hyderabad V. ACIT, Hyderabad

ITSSA 25/HYD/2007

• Counselvise Citation: [2012] 124 COUNSELVISE.COM (IT) 7662 (ITAT-HYDERABAD)
• Duration Of Justice: 5 year(s) 1 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 09-03-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 19-07-2011
• Assessment Year: misc
• Appeal Filed On: 08-03-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B V PRASAD REDDY
• Assessee Lawyers: V RAGHAVENDRA RAO
• Keywords: Capital asset; Document seized; Principle of natural justice; Cost of acquisition; Block assessment; Documents seized
• Section: 132; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE CHANDRA POOJARI, ACCOUNTANT MEMBER & SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER IT(SS)A NO.25/HYD/2007 BLOCK PERIOD 1996-97 TO 1999-2000 ENDING ON 12.6.2000 SMT. ANDALAMMA LR. TO N. NARASIMHA VS THE ACIT, CIRCLE 7(1), HYDERABAD APPELLANT RESPONDENT IT(SS)A NO.51/HYD/2009 BLOCK PERIOD 1.4.1990 TO 12.6.2000 SMT. N. ANDALAMMA HYDERABAD VS THE ACIT, CIRCLE 7(1), HYDERABAD APPELLANT RESPONDENT APPELLANT BY : SHRI V. RAGHAVENDRA RAO RESPONDENT BY : SHRI B.V. PRASAD REDDY DATE OF HEARING : 14.2.2012 DATE OF PRONOUNCEMENT : 9.3.2012 ORDER PER ASHA VIJAYARAGHAVAN, JM . THESE TWO APPEALS ARE PREFERRED BY THE ASSESSE ES. THE APPEAL IN THE CASE OF ANDALAMMA, LEGAL REPRESENTATIVE OF S HRI N. NARASIMHA, IN IT(SS)A.NO.25/HYD/2007 IS APPEAL BEFO RE THIS TRIBUNAL DIRECTED AGAINST THE ORDER OF THE CIT(A) P ASSED ON 16.11.2006 AGAINST ASSESSMENT ORDER DATED 27.2.2002 FRAMED U/S 144 R.W.S. 158BD OF THE ACT FOR THE BLOCK PERIO D COMPRISING OF ASSESSMENT YEARS 1996-97 TO 1999-2000 BLOCK PERI OD ENDING ON 12.6.2000. THE OTHER APPEAL IN THE CASE OF SMT . N. IT(SS)A.25 & 51/H/07-09 SMT. ANDALAMMAL, HYDERABAD 2 ANDALAMMA, VIZ., ITSS(A) NO.51/HYD/2009 IS DIREC TED AGAINST THE ORDER OF THE ORDER OF THE CIT(A) GUNTUR DATED 13.3.2009 FOR THE BLOCK PERIOD COMPRISING OF ASSESSMENT YEARS 199 1-92 TO 2000-01 AND FROM 1.4.1990 TO 12.6.2000. SINCE COMM ON ISSUES ARE INVOLVED, THEY ARE BEING DISPOSED OF, WITH THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. BRIEF FACTS OF THE CASE ARE THAT SEARCH AND SEI ZURE OPERATIONS U/S 132 OF THE IT ACT 1961 WAS CONDUCTED IN THE RESIDENTIAL PREMISES OF SRI AMBATI SATYANARAYANA O N 12.6.2000 WHO WAS A RETIRED EMPLOYEE OF THE DRDL, HYDERABAD A ND WAS ENGAGED IN REAL ESTATE BUSINESS. CERTAIN LAND ADME ASURING 10160 SQ. YARDS SITUATED AT SURVEY NO.102/1 AND 102 /2, NAMPALLY HYDERABAD WAS UNDER THE POSSESSION OF THRE E GROUPS OF PEOPLE SUCH AS (1) SMT. N ANDALAMMA AND RELATIVE S HAVING 31.5% SHARE IN THIS PROPERTY BEING 3202 SQ. YARDS. (2) A. ANJAIAH/A. KESAVULU/A. RAMULU HOLDING JOINT SHARE O F 38.5% OF THE TOTAL AREA OF 10160 SQ. YARDS APPROXIMATELY 331 3 SQ. YARD/SRI SRINIVAS/SRI N. GANESH/SRI RAJU HAVING 30% JOINT SHARE IN THE TOTAL LAND OF 10160 SQ. YARD I.E. APPR OXIMATELY 3049 SQ. YARD. THE ENTIRE PROPERTY OF 10160 SQ. YARD WA S A SERVICE INAMDARI LAND WHICH WAS ORIGINALLY ALLOTTED TO SRI NARKARI ANANTHAIAH AND SRI A. CHENNAIAH. THE THREE GROUP O F PERSONS STATED ABOVE HAPPENED TO BE THE DESCENDENT OF THE O RIGINAL OWNERS. 2. 1 A COMPANY UNDER THE NAME AND STYLE OF M/S SAI SRI FINANCERS AND M/S SAI SRI PROJECTS P LTD. OWNED BY ONE SRI M. SAMBA SIVA RAO HAD ENGAGED MR. AMBATI SATYANARAYANA AS A KIND OF MANAGER/MIDDLE MAN /BROKER FOR NEGOTIATING A PURCHASE DEAL OF THE ENTIRE LAND 10160 SQ. YARD FROM THE THR EE GROUPS OF OWNERS. IT(SS)A.25 & 51/H/07-09 SMT. ANDALAMMAL, HYDERABAD 3 2.2. CERTAIN SALE AGREEMENT WERE ALSO PREPARED FOR SUCH FOR SUCH PROPOSED TRANSFER OF LAND BY SHRI A. SATYANAR AYANA ON BEHALF OF THE OWNERS. MEANWHILE, THE ENFORCEMENT D IRECTORATE HAD CONDUCTED CERTAIN INVESTIGATIONS W.R.T. TO CERT AIN SECRET COMMISSION RECEIVED BY SHRI SAMBASIVA RAO. SUBSEQU ENTLY, ON THE BASIS OF DEPARTMENTAL INFORMATION, SEARCH AND S EIZURE U/S 132 WERE CONDUCTED IN THE PREMISES OF SHRI A. SATY ANARAYANA AND OTHERS AND INCRIMINATING MATERIALS WERE SEIZED SHOWING VARIOUS PAYMENTS TO THE OWNERS OF THE LAND WERE UTI LISED IN INITIATING BLOCK ASSESSMENT PROCEEDINGS U/S 158BD A GAINST THE ASSESSEE. 2.3. ON THE BASIS OF MATERIALS AVAILABLE IN THE SE IZED DOCUMENTS FOUND FROM THE RESIDENCE OF A. SATYANARAY ANA AND HIS RELATIVE SHRI K. SUBBA RAO, THE ASSESSING OFFIC ER APPEARS TO HAVE OBSERVED THAT THE APPARENT TRANSACTION RELATIN G TO TRANSFER OF LAND BY THE ASSESSEE AND HIS OTHER RELATIVES IN FINANCIAL YEAR 1995-96 WAS NOT DISCLOSED IN THE REGULAR RETURNS OF INCOME FIELD. THE ASSESSING OFFICER HAD GIVEN A FINDING THAT AS P ER THE SEIZED DOCUMENTS THE ACTUAL SALE CONSIDERATION RECEIVED BY THE ASSESSEE FROM PURCHASER I.E. M/S SAI SREE FINANCIER S AND M/S SAI SREE PROJECTS P LTD. THROUGH MR. M. SAMBASIVA R AO WAS AT THE RATE OF RS.6000 PER SQ. YARD AND FOR THE SALE V ALUE OF 972.280 SQ. YARDS AS PER THE SALE DEED EXECUTED BY N. NARSIMHA ON 2.4.1996 WOULD AMOUNT TO RS.58,69,710/-. SINCE THE PROPERTY WAS INHERITED BY THE ASSESSEE ALONG WITH H IS OTHER RELATIVES FROM THEIR FORE FATHERS PRIOR TO 1.4.1981 , THE COST OF ACQUISITION WAS ADOPTED AT RS.40PER SQ. YARD. ON T HE BASIS OF INFORMATION OBTAINED FROM THE LAND REGISTERED AUTHO RITIES AND THE INDEXED COST OF ACQUISITION FOR THE YEAR OF SAL E 1996-97 WAS DETERMINED AT RS.11,8617/-. THE DIFFERENCE BETWEEN THE SALE CONSIDERATION OF RS.5869710/- LAKHS AND THE INDEXED COST OF IT(SS)A.25 & 51/H/07-09 SMT. ANDALAMMAL, HYDERABAD 4 ACQUISITION COMPUTED AT RS.11,8617/- AMOUNTING TO R S.5751093 WAS CHARGED TO TAX AS LONG TERM CAPITAL GAINS FOR T HE BLOCK PERIOD 1995-96 TO 2002-03 AS UNDISCLOSED INCOME ON WHICH INCOME TAX WAS LEVIED AT THE PRESCRIBED RATE OF 60% . 3. AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A). THE CIT(A) ELABORATELY CONCLUDED DRAWING THE FOLLOW ING INFERENCE: A) THE ASSESSEE SRI N,. NARSIMHA HAD THE LAWFUL RI GHTS OVER THE LAND AREA ADMEASURING 978.285 SQ. YARD WHICH WA S OBTAINED BY HIM FROM HIS BROTHERS TO SOME KIND OF M UTUAL SETTLEMENTS. B) THE EXECUTION OF THE SALE DEED REFLECTING THE TR ANSFER OF SALE CONSIDERATION AT THE RATE OF 6000/- PER SQ.Y. FROM THE BUYER TO SRI N. NARSIMHA HAD ACTUALLY TAKEN PLACE. THE ORIGINAL LAND OWNER N NARSIMHA ON A RECEIPT OF SALE CONSIDERATION HAD EXECUTED THE SALE DEED BY PUTTING HIS SIGNATURE ON THE DEED OF CONVEYANCE IN FAVOUR OF SA I SREE PROJECTS. KEEPING IN ABEYANCE OF THE REGISTRATION OF THE EXEC UTED SALE DEED BY THE REGISTERING AUTHORITY DUE TO EXTRANEOUS CIRCUMSTANCES CANNOT DEFER THE PASSING OF THE TITLE OF THE TRANSFERRED PROPERTY FROM N. NARSIMHA TO SAI SREE P ROJECTS LTD. IN THE ABSENCE OF ANY OTHER COMPARABLE COST OF ACQU ISITION THE ASSESSING OFFICER WAS JUSTIFIED TO ADOPT THE FM V OF THE TRANSFERRED PROPERTY AS ON 1.4.1981 AT RS.40 PER SQ . YARD AS CERTIFIED BY THE LAND REGISTERING AUTHORITY, GOV T. OF AP. IT(SS)A.25 & 51/H/07-09 SMT. ANDALAMMAL, HYDERABAD 5 SINCE THE ASSESSEE HAD NOT DISCLOSED THE TRANSACTIO NS IN SUCH LAND RESULTING IN ANY GAIN OR LOSS IN ANY RETU RN OF INCOME VOLUNTARILY FILED PRIOR TO THE INITIATION OF BLOCK ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER WAS JU STIFIED TO ASSESS THE CAPITAL GAINS AS UNDISCLOSED INCOME F OR THE BLOCK PERIOD. AS SUCH ALL THE GROUNDS OF APPEAL ARE CONSIDERED NO TENABLE AND THE FINDINGS OF THE ASSESSING OFFICER ARE CONFI RMED. 4. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US AND RAISED THE FOLLOWING OBJECTIONS: A). THE LEARNED COUNSEL FOR THE ASSESSEE SHRI V. R AGHAVENDRA RAO SUBMITTED BEFORE US THAT THE WHEREABOUTS OF SHR I N. NARASIMHA ARE NOT KNOWN AND ASSESSMENT OF THE LEGAL REPRESENTATIVE OF SHRI NARASIMHA VIZ., SMT. ANDALAM MA IS INVALID SINCE THE PERSON I.E. SHRI NARSIMHA IS STI LL ALIVE, THOUGH ABSCONDING. B). THE SECOND OBJECTION RAISED BY THE LEARNED COU NSEL WAS THAT THE CIT(A) DID NOT GIVE ADEQUATE OPPORTUNITY T O THE ASSESSEE. C) WHEN THE AREA OF IMPUGNED LAND OF 978.285 SA. YA RDS DID NOT RECONCILE WITH THE TOTAL AREA OF 10160 SQ. YARD S THE CIT(A) OUGHT TO HAVE HELD THAT THE MONEY RECEIVED BY THE A SSESSEE WITHOUT ACTUAL LAND IN RETURN THERE FOR, AS A CAPIT AL RECEIPT. D). THE CIT(A) HAS ERRED IN HOLDING THAT THE ASSES SEE HAS BECOME THE OWNER OF THE LAND OF 978.285 SQ. YARDS B ESIDES THE IT(SS)A.25 & 51/H/07-09 SMT. ANDALAMMAL, HYDERABAD 6 3202 SQ. YARDS INHERITED BY SMT. N. AANDALAMMA, THE WIFE OF THE ASSESSEE WHO IS THE ONLY DAUGHTER OF HER FATHER. T HE CIT(A) HAVING NOTICED THE AREA FALLING TO SHARE OF EACH OF THE THREE GROUPS WHO INHERITED, AN AREA OF 10160 SQ. YARDS TH ERE IS NO AREA WHICH WAS CAN BE SAID TO FALL TO THE SHARE OF THE ASSESSEE AND PASSED THE ORDER WITHOUT VERIFYING THE DETAILS. E). THE CIT(A) WAS ALSO WRONG IN HOLDING THAT PROV ISIONS OF SECTION 2(47) OF THE IT ACT WOULD APPLY SINCE CONSI DERATION WAS NOT FULLY RECEIVED AND POSSESSION WAS NOT GIVEN IN PURSUANCE OF THE AGREEMENT. THE SALE DEED WAS EXECUTED BUT NOT REGISTERED. THE LEARNED COUNSEL ALSO SAID THAT THE LAND IS IN P OSSESSION OF SMT. ANDALAMMAL TILL THE DATE AND PRODUCED THE REC EIPTS FROM THE TENANTS WHO WERE OCCUPYING THE PREMISES EVEN AS OF TO-DAY. F). THE LEARNED COUNSEL ALSO POINTED OUT THAT THE LAND BECAME THE SUBJECT MATTER OF ATTACHMENT THROUGH COURT OF L AW BEFORE THE REGISTRATION OF THE SALE DEED AND PROCEEDINGS OF C BI HAD STARTED FURTHER CONSIDERATION WAS NOT COMPLETELY PAID. G). THE CIT(A) FAILED TO NOTE THAT NARASIMHA DOES NOT HAVE VALID LEGAL TITLE TO ANY PORTION OF THE LAND INHERI TED BY HIS WIFE ANDALAMMA FROM HER FATHER. H). THE CIT(A) ERRED IN SURMISING THAT THE ASSESSE E GOT THE LAND BY WAY OF SOME SETTLEMENT AMONG HIS BROTHERS W ITHOUT ANY EVIDENCE. 5. THE DR RELIED ON THE ORDER OF THE ASSESSING OFF ICER AND THE CIT(A). 6. WE HEARD BOTH THE PARTIES AND PERUSED THE MATER IALS AVAILABLE ON RECORD. WE FIND THAT THE CIT(A) HAS N OT CONSIDERED IT(SS)A.25 & 51/H/07-09 SMT. ANDALAMMAL, HYDERABAD 7 THE FACTS OF THE CASE AND IN THE CASE OF THE PURCHA SER M/S SAI SREEE PROJECTS P LTD. THE CO-ORDINATE BENCH OF THE TRIBUNAL VIDE ITS ORDER DATED 10.2.2012 HAS DECIDED THE ISSUE IN IT(SS)A.NOS.26 & 27/HYD/2007. THE TRIBUNAL HAS HEL D AS FOLLOWS: WE HEARD BOTH SIDES AND PERUSED THE IMPUGNED ORDER OF THE CIT(A) IN THE LIGHT OF THE ABOVE GROUNDS OF THE REVENUE AL LEGING VIOLATION OF PRINCIPLES OF NATURAL JUSTICE AND RULE 46A OF THE A CT BY THE CIT(A). WE FIND THAT THE FIRST APPELLATE AUTHORITY HAS INDE ED RELIED ON CERTAIN AVERMENTS MADE DURING THE COURSE OF HEARING, AND WR ITTEN SUBMISSIONS FILED BEFORE HIM, WITH REGARD TO THE CA SE FILED BY N.ANDALAMMA AND OTHERS BEFORE THE CHIEF JUDGED, CIV IL COURT IN SR NO.17560/2000 IN OP NO.518 OF 1997 AND THE COMMI SSIONER OF INCOME-TAX BASED HIS CONCLUSION ON THE AVERMENTS MA DE IN THIS PETITION, WITHOUT APPRECIATING THAT THE SAME HAVE N OT ATTAINED FINALITY, HAVING BEEN NOT ACCEPTED BY THE JUDICIAL AUTHORITY BEFORE WHICH THE SAME HAVE BEEN MADE. THIS ACTION OF THE C IT(A), IN THIS BEHALF, IN OUR OPINION, IS BAD IN LAW. FURTHER, THE ASSESSING OFFICER HAS NO OCCASION TO GO THROUGH THESE AVERMENTS, AND OFFER HIS COMMENTS THEREON. IN THE CIRCUMSTANCES, WE ARE OF T HE VIEW THAT IT WOULD BE IN THE INTERESTS OF JUSTICE TO SET ASIDE T HE ORDER OF THE CIT(A) AND RESTORE THE ENTIRE ISSUE TO THE FILE OF THE ASSESSING OFFICER, TO RE-EXAMINE THE SAME AND REDECIDE THE IS SUE IN ACCORDANCE WITH LAW AFTER GIVING REASONABLE OPPORTU NITY OF HEARING TO THE ASSESSEE. 7. IN THE CASE OF VENDEE M/S SAI SRE PROJECTS P LTD., THE MATTER HAS BEEN SET ASIDE TO THE FILE OF THE AO TO RE EXAMINE, WE DEEM IT FIT TO SET ASIDE THE ISSUE IN THE CASE OF V ENDOR SHEET ANDALAMMA ALSO TO THE FILE OF ASSESSING OFFICER TO RE-EXAMINE THE ISSUE. IT(SS)A.25 & 51/H/07-09 SMT. ANDALAMMAL, HYDERABAD 8 8. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE S ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON: 9.3.20 12 SD/- SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER DATED THE 9TH MARCH, 2012 COPY FORWARDED TO: 1. M/S GP ASSOCIATES, CAS, 603, CYBER HEIGHTS, PLOTS NO.13, ROAD NO.2, BANJARA HILLS, HYDERABAD. C/O SM T. N. AANDALAMMAL, 11-6-192/3/A, NAMPALLY, HYDERABAD 2. THE ACIT, CIRCLE 7(1), HYDERABAD 3. THE CIT(A)- GUNTUR & HYDERABAD 4. THE CIT, HYDERABAD 5. THE DR, ITAT, HYDERABAD NP/