Income Tax Appellate Tribunal - Hyderabad
Smt.N.Dhana Laxmi,L/R Of Late N.Prabhu ... vs Assessee on 22 July, 2015
IN THE INCOME TAX APPELLATE TRIBUNAL
HYDERABAD BENCHES "A", HYDERABAD
BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER
AND
SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER
I.T.A. No. 1/HYD/2013
Assessment Year: 2009-10
Smt. N. Dhana Laxmi, Asst. Commissioner of
L/R of Late N. Prabha Rao, Income Tax,
HYDERABAD Circle-6(1),
[PAN: AHCPN7075K] HYDERABAD
(Appellant) (Respondent)
For Assessee : Shri Mohd. Afzal, AR
For Revenue : Shri Rama Kishna, Bandi, DR
Date of Hearing : 03-06-2015
Date of Pronouncement : 15 -07-2015
ORDER
PER INTURI RAMA RAO, A.M. :
This is an appeal by assessee against the order of Commissioner of Income Tax (Appeals)-IV, Hyderabad, dated 29-06-2012 for the Assessment Year (AY) 2009-10, raising the following Grounds of Appeal:
"1. The order of the learned Commissioner of Income Tax (Appeals)-IV, Hyderabad is against law and probabilities of case.Page 1 of 10
2. The learned Commissioner erred in confirming the order of the Assessing Officer, wherein out of sale consideration of Rs. 10 Crore only Rs. 7 Crore are considered as sale consideration and Rs. 3 Crore considered as income from other sources.
3. The learned Commissioner erred in confirming the order of the Assessing Officer, wherein an amount of Rs. 3 Crore was treated as income from other sources and of total sale consideration of Rs.10 Crore offered for capital gains.
4. The learned Commissioner erred in not considering the Affidavit given by the assessee before the Income Tax Authority and also erred in not considering the statement of the assessee before the ADIT (Inv.), and further erred in not appreciating the theory of preponderance of evidence.
5. The learned Commissioner of Income Tax (Appeals) ought to have held the total sale consideration at Rs. 10 Crores and should have allowed the claim of deduction u/s. 54 at Rs.8,11,50,100/- as claimed on the strength of Affidavit filed by the appellant.
6. The appellant craves leave to add to amend or modify the above grounds of appeal either before or at the time of hearing of the appeal, if it is considered necessary."
2. The brief facts of the case are that, the appellant is an individual. The return of income for the assessment year 2009-10 was filed on 28.10.2009 declaring the taxable income at Rs.79,50,703/- comprising of Long Term Capital Gains of Rs.74,96,508/- and income from Other Sources of Rs.4,54,195/- and claimed refund of Rs.28,04,218/-.The return of income was accepted u/s. 143(1) of the Act. Subsequently, after gathering information relating to sale of property situated at Plot No.471, Dr.No.8-2-293/82/A/471, Road No.36, Jubilee Hills, Hyderabad admeasuring 1378 Sq. yards in Page 2 of 10 exercise of powers u/s. 133(6) of the Act, the reassessment notice u/s 148 dated 28.04.2011 was issued. From the details, the Assessing Officer formed an opinion that the appellant had not received the sale consideration of Rs. 3,00,00,000/- over and above the consideration stated in the conveyance deed and, therefore, he was of the opinion that the said sum of Rs.3,00,00,000/- was not eligible for exemption u/s. 54 of the Act. This made him to believe that income got escaped from the assessment and issued the notice u/s.148 of the Act. It is noticed from the records that the appellant at no stage of proceedings contested the legality of issue of notice u/s. 148 of the Act.
3. Subsequently, after issue of notice u/s. 143(2) of the Act, the Asst. Commissioner of Income Tax, Circle 6(1), Hyderabad, had completed the assessment u/s. 143(3) of the Act vide order dated 13.12.2011 at a total income of Rs.3,04,99,640/-. While doing so, the Assessing Officer made addition of Rs.3,00,00,000/- under the head "Income from Other Sources" by holding that this amount does not represent the sale consideration of the property sold and consequently, the exemption u/s. 54F of the Act was also denied. The brief facts highlighting the transaction are as follows:-
4. The appellant owned a house property situated at Plot No.471, Dr.No.8-2-293/82/A/471, Road No.36, Jubilee Hills, Hyderabad admeasuring 1378 Sq. yards allotted by the Jubilee Hills Co-operative House Building Society through Registered Deed No.3209 of 1985, dated 16.03.1985. Out of this land, to the extent of 400 Sq. yards was sold to one Mr. Narender Kumar vide Sale Deed dated 06.05.1997. A portion of the land was acquired by State Government for road-Page 3 of 10
widening purposes thereby leaving balance of 845 Sq. yards. It was stated that 50% of the land was gifted orally to her daughter, Smt. N. Dhanalaxmi. This land was sold along with her daughter to M/s. Balee Plastics Private Limited, Mumbai vide Sale Deed No.2216 of 2008, dated 10.06.2008. The consideration stated in the sale deed was only Rs.7,00,00,000/- and whereas according to the appellant the total sale consideration received was Rs.10,00,00,000/-. Accordingly, the appellant filed the return of income disclosing her share of consideration of Rs.5,00,00,000/- and claimed the exemption u/s. 54 of the Act. On similar lines, the appellant's daughter Smt. N.Dhanalaxmi also filed her return of income. While the matter stood thus, the reassessment proceedings were initiated in the circumstances mentioned supra. In the reassessment proceedings, the Assessing Officer noted that the oral gift is not valid in law and, therefore, he proposed to assess the entire sale consideration only in the hands of appellant alone. In response to this proposal, the appellant along with her daughter, Smt. N.Dhanalaxmi filed an affidavit averring inter alia that they sold the property for Rs.10,00,00,000/- out of which Rs.3,00,00,000/- was received in cash and in order to avoid litigation and buy peace with the department, agreed for assessment of entire sale consideration in the hands of appellant alone. It was further averred that they acquired another residential property out of sale consideration in the joint names of the appellant and her daughter for a sum of Rs.8,11,50,100/- and sought exemption u/s. 54 of the Act to the extent of Rs.8,11,50,100/-. However, the Assessing Officer, while assessing the sale consideration in the hands of the appellant alone, Page 4 of 10 made addition of Rs.3,00,00,000/- under the head "Income from Other Sources" by holding that this is not attributable to sale consideration of property sold also denied the exemption u/s. 54 of the Act on this amount.
5. Aggrieved by this order, an appeal was filed before the Commissioner of Income Tax (Appeals)-IV, Hyderabad. The appellant contended before the Commissioner of Income Tax (Appeals) that the Assessing Officer was not justified in making addition of Rs.3,00,00,000/- on the following grounds:-
(i) The Appellant had admitted before ADIT (Investigation) Unit-II, Hyderabad on 27.07.2008 i.e., immediately after transaction of the sale that sale consideration of Rs.3,00,00,000/- over and above what is stated in the conveyance deed was received in cash.
(ii) Advance tax was paid even on this amount on 29.07.2008 and, therefore, it was prayed before the CIT (Appeals) that the amount of Rs.3,00,00,000/- should be treated as part of sale consideration relatable to the sale of property in question. However, learned CIT(Appeals) had disagreed with the above submission and confirmed the action of the Assessing Officer in making the addition and dismissed the appeal vide his order dated 29.06.2012.
6. Being aggrieved, the appellant had come up with the present appeal before us with a delay of 110-days in filing the appeal. The appellant filed petition for condonation of the delay stating that the delay was on account of death of the appellant, leaving behind her lone daughter and her daughter alone in the capacity of Legal Page 5 of 10 Representative (LR) had to take steps for filing appeal and her daughter, following the death of her mother, went into cocoon for a long period and it was further stated that the order of CIT (Appeals) was received on 19.07.2012 and the appellant died on 27.08.2012. The appeal could be filed only after her daughter, who is also only Legal Representative recovered from the shock.
7. After consideration of the petition for condonation of delay, we deem it fit and proper to condone the delay as the delay was caused because of factors, which are beyond the control of the appellant and, therefore, we condone the delay and admit the appeal. Now, we proceed with the adjudication of the grounds of appeal. The appellant had raised as many as six grounds of appeal out of which ground No.1 and 6 are general in nature and do not require any adjudication. Grounds Nos.2, 3 and 4 are pertaining to addition of Rs.3,00,00,000/- under the head "Income from Other Sources" and Ground No.5 is pertaining to relief under Section 54 of the Act.
8. Now, we shall deal with the ground relating to addition of Rs.3,00,00,000/-. The learned Counsel for Appellant argued that having regard to the probabilities of human conduct, it is not imaginable that the appellant could have earned Rs.3,00,00,000/- from any other source, especially when the appellant was ailing from the nervous disorders and bedridden. The appellant also filed a photograph of the appellant when she was in the hospital undergoing treatment for the ailment. It was further submitted before us that the appellant was uneducated and unskilled and there was no probability of earning a sum of Rs.3,00,00,000/- from undisclosed sources and, Page 6 of 10 therefore, no addition should be made under the head "Income from Other Sources" u/s. 69 of the Act. In support of this proposition, he relied on the judgment of the Hon'ble Supreme Court in the case of CIT vs. Smt. P.K.Noorjahan 237 ITR 570. He further made submission that the conduct of appellant by paying advance tax on the said sum and as well as admission made before the ADIT (Investigation) that the total sale consideration was Rs.10,00,00,000/- out of which Rs.3,00,00,000/- was paid in cash goes to prove that the amount was receive d only in connection with the sale of property. He further relied on the decision of Allahabad High Court in the case of CIT vs. Intezar Ali in Income Tax Appeal No.162 of 2013, dated 26.07.2013 and Kerala High Court in the case of K.S.Kannan Kunhi vs. Commissioner of Income Tax in Income-tax 72 ITR 757 in support of proposition that when the preponderance of probability is more in favour of the explanation of the assessee, no addition should be made rejecting the explanation of the assessee.
9. On the other hand, the learned Senior Departmental Representative vehemently supported the orders of the lower authorities. He further argued that when the appellant had failed to furnish name and address of the buyer of the property, the explanation tendered by the appellant cannot be believed.
10. We heard the rival submissions and perused the material on record. The crux of the matter is whether the amount of Rs.3,00,00,000/- is relatable to the sale of the property as claimed by the appellant or not. This issue needs to be adjudicated in the backdrop of the facts of the case. In this case, the appellant had Page 7 of 10 maintained before the ADIT (Investigation), Hyderabad immediately after the sale of property that she received Rs.10,00,00,000/- as sale consideration out of which Rs.3,00,00,000/- were paid in cash. Her further conduct by paying advance tax as well as filing returns of income voluntarily disclosing total consideration of Rs.10,00,00,000/- goes to prove that the amount of Rs.3,00,00,000/- was received in connection with the sale of property only. Further, the statement before ADIT (Investigation) was brought on record by Assessing Officer himself and he has not chosen to examine the buyer of property in this regard. The fact that the appellant had failed even to reveal the name of the buyer of the property cannot trigger the Assessing Officer to draw adverse inference. The Sale Deed was executed and registered and is a public document and undisputedly is in the possession of the Assessing Officer. The mere perusal of the Sale Deed reveals the full details of the buyer. Therefore, it cannot be said that since the appellant failed to furnish the name of the buyer of the property, Assessing Officer had failed to carry out further investigation on the matter. Perhaps, the Assessing Officer as well as ADIT (Investigation) had chosen not to make further enquiries on being satisfied with the disclosure of higher consideration than was stated in the conveyance deed or in the sale deed. The statement made before ADIT (Investigation) remains uncontroverted. Simply because it was found subsequently that this statement goes against the interests of Revenue, it is not open to Revenue to reject the evidence. It is settled principles of law that in assessment proceedings, it is not open Page 8 of 10 to the Assessing Officer to ignore that part of evidence, which goes against him in the process of making addition.
11. It is also prevalent practice that in the land transactions, sometimes, the consideration was paid over and above the amounts stated in the Sale Deeds. There is nothing on record to suggest that the appellant was having any other source of income or the appellant is capable of earning that much of money. Having regard to her state of health, age and qualification etc., it is highly improbable that appellant could have earned so much of income from undisclosed sources. We, thus, find that the preponderance of probability is more in favour of explanation of the appellant. The Assessing Officer also failed to contradict the explanation furnished by the appellant with some positive evidence and, therefore, it can safely be said that the explanation furnished by the appellant cannot be doubted. Moreover, this kind of addition can be made by the Assessing Officer by using his discretionary power under the provisions of Sec. 69 of the Act and the Assessing Officer is not obliged under law to make addition in every case where the explanation offered by the assessee is found to be not satisfactory. This ratio was laid down by the Hon'ble Supreme Court in the case of CIT vs. P.K.Noorjahan - 237 ITR 570 which is squarely applicable to the facts of the present case. Therefore, we hold that the Assessing Officer is not justified in holding that the sum of Rs.3,00,00,000/- is not attributable to sale of property and making addition of the same. Thus, we accordingly direct the Assessing Officer to delete the addition of Rs.3,00,00,000/-. Therefore, this ground of appeal is allowed.
Page 9 of 1012. Next ground of appeal relates to exemption u/s. 54 of the Act. Since we held in the para supra that the money of Rs.3,00,00,000/- was receive as a part of sale consideration of the house property sold, the same is, therefore, eligible for consequential relief u/s.54 of the Act to the extent of the actual investment made in the new house. Accordingly we allow this ground of appeal also.
13. In the result, the appeal filed by the assessee is allowed in full.
Order pronounced in the Open Court on 15th July, 2015.
Sd/- Sd/- (SAKTIJIT DEY) (INTURI RAMA RAO) Judicial Member Accountant Member Hyderabad, dated 15th July, 2015. sps Copy to:
1. Smt. Dhana Laxmi, L/R of Late N. Prabha Rao, Hyderabad C/o Mohd. Afzal, Flat No. 402, Sherson's Residency, Criminal Court Road, Red Hills, Hyd = 500 004.
2. ACIT, Circle 6(1), Hyderabad.
3. CIT(A)-IV, Hyderabad
4. CIT -III, Hyderabad
5. The DR, ITAT, Hyderabad
6. Guard File Page 10 of 10