SUNDER KATWARU RAJBHAR, MUMBAI V. INCOME TAX OFFICER WARD 3(4), KALYAN

MA 174/MUM/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 6584 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 18 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 26-02-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: I
• Assessment Year: 2010-2011
• Appeal Filed On: 09-03-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Capital asset; Recovery proceedings; Cost of acquisition
• Section: 254(2)

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES I , MUMBAI BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER, AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER M.A. NO.174/MUM/2018 (ARISING OUT OF ITA NO.2557/MUM/2015) ASSESSMENT YEAR: 2010-11 SHRI SUNDER KATWARU RAJBHAR, C/O- SURESH N OTWANI, 305, 3 RD FLOOR, ADAMJI BLDG. 413, KATHA BAZAR, MUMBAI-9 / VS. ITO, WARD-3(4), KALYAN ( /ASSESSEE) ( / REVENUE) P.A. NO.ABFPR8942L / DATE OF HEARING : 22/02/2019 / DATE OF ORDER: 26/02/2019 / O R D E R PER G. MANJUNATHA (ACCOUNTANT MEMBER) THE ASSESSEE HAS FILED THIS MISCELLANEOUS APPLICATI ON U/S 254(2) OF THE INCOME TAX ACT, 1961 TO RECALL ORDER PASSED BY THE ITAT, MUMBAI I BENCH IN ITA NO.2557/MUM/2014 DATED 29/11/2017 FOR AY 2010-11,. / ASSESSEE BY SHRI SURESH OTWANI / REVENUE BY MS. KUSUM BANSAL - DR 2 MA NO.174/MUM/2018 2. THE ASSESSEE HAS NARRATED FACTS AND MISTAKES ST ATED TO BE APPARENT FROM THE ORDER OF THE ITAT, MUMBAI, DATED 29/11/201 7 IN ITA NO.2557/MUM/2015. THE RELEVANT CONTENTS OF THE MISCELLANEOUS APPLICAT ION FILED BY THE ASSESSEE ARE REPRODUCED HEREUNDER:- THE TRIBUNAL BY ITS ORDER DATED 2911, NOVEMBER, 20 17 HAS ALLOWED, FOR STATISTICAL PURPOSE, THE APPELLANT'S A PPEAL FOR A.Y : 2010-11 IN ALLOWING THE APPELLANT'S APPEAL AND DIRE CTING THE A.O TO COMPUTE THE CAPITAL GAIN AND ALLOW CERTAIN DEDUCTIO NS AS DESCRIBED IN PARA 9 AND PARA 10 IN THE HANDS OF POWER OF ATTO RNEY HOLDER I.E, APPELLANT FOR WHOLE PORTION OF THE PROPERTY AND IN THE LIGHT OF OBSERVATION OF THE HONORABLE MEMBERS IN PANT 8, 011 LINE 11 THEREFORE, IF AT ALL CAPITAL GAIN NEEDS TO BE COMPU TED, THEN ONLY TO THE EXTENT OF HIS SHARE IN THE PROPERTY SHALL BE AD DED IN HIS HANDS.' AND 110 LINE THE ASSESSEE ALSO AGREED BEFORE THE AO THAT HIS MOTHER, BROTHER AND SISTERS HAVE NOT DECLARED ANY C APITAL GAIN IN PURSUANCE TO DEVELOPMENT AGREEMENT. THEREFORE, WE A RE OF THE VIEW THAT THE AO WAS RIGHT IN COMPUTING CAPITAL GAI N IN PURSUANCE TO DEVELOPMENT AGREEMENT IN THE HANDS OF ASSESSEE, HAS GOT VALID POWER OF ATTORNEY IN HIS FAVOR FROM HIS MOTHER, BRO THER AND SISTERS AND TOTAL CASH CONSIDERATION OF RS 65 LAKHS HAS BEE N CREDITED IN HIS BANK ACCOUNT. THE TRIBUNAL HAS PROCEEDED ON FACTUALLY INCORRECT B ASIS. HENCE, THE CERTAIN ERRORS ARE KEPT IN TRIBUNAL CONCLUSION IN T HE ORDER DATED 29.11.2017 WHICH ERROR REQUIRES RECTIFICATION. THE ERRORS ARE :- THE CAPITAL GAIN IS BY VIRTUE OF NOMENCLATURE IS A TAX ON TRANSFER OF CAPITAL ASSET BY OWNER AND TO THE EXTENT OF OWNERSH IP, WHICH HONORABLE MEMBERS HAVE AGREED DURING THE COURSE OF ARGUMENT AND HEARING IN ORIGINAL PETITION THAT THE CHARGE OF CAPITAL GAIN ON THE APPLICANT IS TO BE TO THE EXTENT OF APPELLANT S HARE IS CORRECT PROPOSITION AND THE SAME CANNOT BE EQUATED WITH THE COLLECTION OF CAPITAL GAIN TAX FROM APPELLANT ON BEHALF OF OTHER CO-OWNERS OF THE PROPERTY WHICH WAS MADE CLEAR AND NOTED BY WRITER O F THE JUDGEMENT IN LOG BOOK THAT THE RECOVERY OF TAX DUES OF CO-MEMBERS CAN DEFINITELY BE CARRIED ON BY THE A.O FROM POWER OF ATTORNEY HOLDER, SINCE HE HAS RECEIVED MONEY ON THEIR BEHALF IN HIS ACCOUNT. THIS PROPOSITION WAS ARGUED, ACCEPTED BY THE MEMBER S IN THE OPEN COURT AND DECISION QUOTED AND COPY OF JUDGEMENT / H ANDED OVER BY THE L.R OF HONORABLE MADRAS HIGH COURT IN THE CASE OF CIT VS SUKUMARAN IN I.T APPEAL NO 840/2014, SUBMITTED THAT THE CAPITAL GAIN CANNOT BE TAXED IN THE HANDS OF POWER OF ATTOR NEY HOLDER, 3 MA NO.174/MUM/2018 APPELLANT ON IDENTICAL FACTS, NEITHER A.R NOR MEMBE RS HAVE DISTINGUISHED. THE PARA 8 ITSELF BEGINNING WITH 'WE HAVE HEARD BOT H THE PARTIES, PERSUED THE MATERIAL AVAILABLE ON RECORD AND GONE T HROUGH THE ORDERS OF AUTHORITIES BELOW. THE FACT WITH REGARD T O THE DEVELOPMENT AGREEMENT AND TRANSFER OF LAND IN PURSUANCE TO DEVE LOPMENT AGREEMENT IS NOT DISPUTED BY THE ASSESSEE. THE ASSE SSEE'S CONTENTION IS THAT CAPITAL GAIN CANNOT BE COMPUTED IN HIS HANDS AS THE LAND IS BELONGING TO HIS MOTHER. HE IS ONLY A C ONFIRMING PARTY TO THE TRANSACTION. THEREFORE, IF AT ALL CAPITAL GAIN NEEDS TO BE COMPUTED, THEN ONLY TO THE EXTENT OF HIS SHARE IN T HE PROPERTY SHALL BE ADDED IN HIS HANDS. THE ASSESSEE HAS NEVER DISPU TED THE FACT THAT THERE IS A TRANSFER WITHIN THE MEANING OF SECT ION 2(47) WHICH IS EVIDENT FROM THE FACT THAT HE HAS AGREED BEFORE THE AO TO COMPUTE CAPITAL GAIN IN PURSUANCE TO DEVELOPMENT AGREEMENT. THE ASSESSEE ALSO AGREED BEFORE THE AO THAT HIS MOTHER, BROTHER AND SISTERS HAVE NOT DECLARED ANY CAPITAL GAIN IN PURSUANCE TO DEVEL OPMENT AGREEMENT. THEREFORE, WE ARE OF THE VIEW THAT THE A O WAS RIGHT IN COMPUTING CAPITAL GAIN IN PURSUANCE TO DEVELOPMENT AGREEMENT IN THE HANDS OF ASSESSEE, HAS GOT VALID POWER OF ATTOR NEY IN HIS FAVOR FROM HIS MOTHER, BROTHER AND SISTERS AND TOTAL CASH CONSIDERATION OF RS 65 LAKHS HAS BEEN CREDITED IN HIS BANK ACCOUNT. 'THIS GIVES CONTRADICTORY IMPRESSIONS WHICH ARE ERRONEOUS AND N EED CORRECTIONS SUCH AS THAT A.O NEED COMPUTE THE CAPIT AL GAIN IN PURSUANCE OF DEVELOPMENT AGREEMENT IN THE HANDS OF 'A' TO THE EXTENT OF APPELLANT'S SHARE AS PER VALID POWER OF A TTORNEY AND SHOULD ALSO COLLECT THE TAX PAYABLE BY OTHER CO- ME MBERS/ CO- OWNERS OF THE PROPERTY FROM APPELLANT, WHO HAS VOLU NTARILY AGREED BEFORE AO, BEFORE CIT(A) AND BEFORE HONORABLE MEMBE RS THROUGH AR TO DISCHARGE THEIR CO-OWNER'S TAX LIABILITY AND ALSO LEGALLY BOUND TO DO SO IN VIEW OF HOLDING POWER OF ATTORNEY, BUT TAX NEEDS TO BE COMPUTED IN THE HANDS OF ALL CO-OWNERS OF PROPERTY. IT WAS UNDERSTOOD IN OPEN COURT THAT THE CAPITAL GAIN IS T AX ON THE OWNERS OF THE PROPERTY WITH RESPECT TO THEIR SHARE IN PROP ERTY. POWER OF ATTORNEY HOLDER IS ONLY A VEHICLE THROUGH WHOM DOCU MENTATION AND PROCEDURE IS TO BE FOLLOWED. 3. WE HAVE HEARD BOTH OF PARTIES AND PERUSED THE M ISCELLANEOUS APPLICATION FILED BY THE ASSESSEE ALONG WITH ORDER OF THE TRIBUNAL IN ITA NO. 2557/MUM/2015, DATED 29/11/2017. WE FIND THAT THE T RIBUNAL HAS RECORDED FINDING IN RESPECT OF CAPITAL GAIN DERIVED FROM TRANSFER OF PR OPERTY IN THE HANDS OF THE ASSESSEE 4 MA NO.174/MUM/2018 IN RESPECT OF SHARES OF OTHER CO-MEMBERS BEING MOTH ER, BROTHER AND SISTER OF THE ASSESSEE IN LIGHT OF POWER ATTORNEY EXECUTED BY OTH ER CO-OWNERS IN FAVOUR OF THE ASSESSEE AND ALSO ADMISSION OF ASSESSEE BEFORE AO D URING ASSESSMENT PROCEEDINGS. THE TRIBUNAL WHILE RECORDING ITS FINDI NG HELD THAT TRANSFER OF PROPERTY IS ASSESSABLE IN THE HANDS OF THE ASSESSEE, HOWEVER, F OR THE PURPOSE OF COMPUTATION, IN LIGHT OF OTHER PLEA, MADE BY THE ASSESSEE REGARD ING COST OF ACQUISITION AND EXPENSE OF TRANSFER, THE ISSUE HAS BEEN RESTORED TO THE FILE OF THE LD AO TO CONSIDER THE CASE OF THE ASSESSEE IN THE LIGHT OF OBSERVATIO NS MADE IN PARAGRAPH 9 AND 10 OF THE ORDER DATED 29/11/2017. WE FURTHER NOTE THAT DURING THE ASSESSMENT PROCEEDING, THE ASSESSEE HAS FILED A LETTER AND ADM ITTED CAPITAL GAIN IN ITS HANDS IN RESPECT OF TRANSFER OF PROPERTY AND ALSO FILED REVI SED STATEMENT OF TOTAL INCOME. THE AO, AFTER CONSIDERING THESE FACTS AND ALSO TAKEN IN TO ACCOUNT, THE FACT THAT ENTIRE CONSIDERATION HAS BEEN RECEIVED BY THE ASSESSEE FRO M TRANSFER OF PROPERTY HELD THAT CAPITAL GAIN IS TAXABLE IN THE HANDS OF THE ASSESSE E. TAKING NOTE OF THIS FACT, THE TRIBUNAL HAS GIVEN ITS FINDING THAT THERE IS NO ERR OR IN THE FINDINGS RECORDED BY THE AO WHILE TAXING CAPITAL GAIN IN THE HANDS OF THE ASSES SEE. FURTHER, WHEN WE COMPARE CONTENTS OF THE MISCELLANEOUS APPLICATION FILED BY THE ASSESSEE TO THE FINDINGS RECORDED BY ITAT IN ITS ORDER DATED 29/11/2017, WE FIND THAT THE ASSESSEE HAS FAILED TO MAKE OUT A CASE OF MISTAKES APPARENT ON RECORD W HICH REQUIRES RECTIFICATION U/S 254(2) OF THE ACT, BUT SEEKS TO REVIEW DECISION OF ITAT IN THE GUISE OF RECTIFICATION WHICH IS NOT PERMISSIBLE. HENCE MISCELLANEOUS APPL ICATION FILED BY THE ASSESSEE IS DISMISSED. 5 MA NO.174/MUM/2018 5. FINALLY, THE MISCELLANEOUS APPLICATION FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 26/02/2019. SD/- SD/- ( MAHAVIR SINGH ) (G. MANJUNATHA) ! ' /JUDICIAL MEMBER # ' / ACCOUNTANT MEMBER MUMBAI; DATED : 26/02/2019 F{X~{T? F{X~{T? F{X~{T? F{X~{T? P.S P.S P.S P.S / /. /./. /. !.. %!&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. ! / THE APPELLANT (RESPECTIVE ASSESSEE) 2. '#$ ! / THE RESPONDENT. 3. $ $ % ( ) / THE CIT, MUMBAI. 4. $ $ % / CIT(A)- , MUMBAI, 5. '() $ ' * , $ $ * , , / DR, ITAT, MUMBAI 6. )- . / GUARD FILE. / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI