Income Tax Appellate Tribunal - Amritsar
Late Sh. Om Parkash, Through Legal Heir, ... vs The Income-Tax Office,, Jammu on 20 March, 2019
IN THE INCOME TAX APPELLATE TRIBUNAL
AMRITSAR BENCH, AMRITSAR (SMC)
BEFORE SH. SANJAY ARORA, ACCOUNTANT MEMBER
I.T.A. No. 177/Asr/2013
Assessment Year: 2002-03
Late Om Parkash Gupta, vs. Income Tax Officer,
[Through LRs Raj Ward-1 (2), Jammu
Mohini Gupta & Ors],
H. No. 16 F, Sector-14,
Nanak Nagar, Jammu
[PAN: AEGPP 2866R]
(Appellant) (Respondent)
Appellant by : Sh. P. N. Arora (Adv.)
Respondent by: Sh. Charan Dass (D.R.)
Date of Hearing: 30.01.2019
Date of Pronouncement: 20.03.2019
ORDER
Per Sanjay Arora, AM:
This is an Appeal by the Assessee directed against the Order by the Commissioner of Income Tax (Appeals) Jammu ('CIT(A)' for short) dated 10.01.2013, dismissing the assessee's appeal contesting his assessment u/s. 143(3) read with section 147 of the Income Tax Act, 1961 ('the Act' hereinafter) dated 29.12.2006 for the Assessment Year (AY) 2002-03.
2. At the outset, it was observed that the appeal is presented by the assessee's wife, Smt. Raj Mohini Gupta, as his legal heir, who has authorized the ld. counsel, Sh. Arora. A perusal of her affidavit, as well as the AO's report dated 25.5.2018, however, confirms the assessee to have two sons as well, i.e., Pankaj Gupta and 2 ITA No. 177/Asr/2013 (AY 2002-03) Lt. Om Parkash Gupta v. ITO Varun Mahajan, who are neither present in person nor through an authorized representative. Sh. Arora, on being questioned in the matter, would submit that he had been representing in the matter for quite some time, and that he makes a statement at bar that he has the authorization of all the family members, even though the Vakalatnama may have been signed only by Smt. Raj Mohini Gupta. Her affidavit (copy on record), he continued, be construed as she having authorized him on behalf of the family, i.e., the late assessee's wife and two sons, living together, as evident from the affidavit itself. The hearing in the matter was accordingly proceeded with.
3. The assessee, at the time of hearing, sought admission of additional grounds, raising legal pleas, challenging the reopening of the assessment in the instant case, as under:
'1. That the initiation of proceedings u/s. 147/148 is illegal, invalid in the eyes of law as the case has been reopened on the basis of borrowed satisfaction and there was no application of mind. As such the initiation of proceedings u/s. 147/148 is illegal, invalid and void abinitio and the assessment order is liable to be cancelled.
2. That the reopening of the case is illegal, invalid and bad in the eyes of law.' The reasons recorded, i.e., prior to the issue of notice u/s. 148(1) on 10.3.2006 (served on 16.3.2006), conveyed by the Assessing Officer (AO) to the assessee vide his letter dated 16/17.11.2006 (PB pg. 4), are as under:
'The ACIT (HQ) vide his office letter No. 6358 dated 03-03-2006 passed on a consequential information in case of search and seizure operation in case of M/s Mahajan & Co., Group of cases. This information was received from the ADI (Inv.) Jammu for taking action u/s. 153C in respect of the following transactions:-3 ITA No. 177/Asr/2013 (AY 2002-03)
Lt. Om Parkash Gupta v. ITO Name & address of the Particulars of Transactions Date of payment Amount person Sh. Om Prakash Gupta Sale of H. No. 559-A 01-06-2001 8,00,000/- S/o Sh. Jagri Mal Gandhi Nagar, Jammu 01-06-2001 2,00,000/-
R/o Sh. 16-F, Sector 14, 20-07-2001 2,00,000/-
Nanak Nagar, Jammu 15.09.2001 2,00,000/-
12-12-2001 21,00,000/-
35,00,000/-
As per this office record the above assessee has not filed any return of income for the above relevant assessment years. I have reason to believe that capital gain of Rs. 35 lac in the financial year 2001-02 has escaped assessment and hence the case is reopened u/s. 147 of the income tax act to assess the income of the assessee for the assessment year 2002-03.' On the basis of the same, it was submitted by Sh. Arora that it was apparent that there was no independent application of mind by the AO, and he had, in reopening the assessment, proceeded on borrowed satisfaction, not permissible in law, as explained per various decisions, viz. CIT v. SFIL Stock Broking Ltd. [2010] 325 ITR 285 (Del.); Mohamed Yusuf Wani v. ITO (in ITA No. 372/Asr/2009, dated 06.06.2011); Karanvir Verma v. ITO (in ITA No. 352/Asr/2014, dated 18.05.2016); Charanjiv Lal Aggarwal v. ITO (in ITA No. 598/Asr/2015, dated 15.09.2016).
The ld. Departmental Representative (DR), Sh. Charan Dass, would object to the admission thereof, claiming the same to be only an afterthought, which could not be allowed, as clarified per several decisions, viz.
1. Manji Dana vs. CIT [1966] 60 ITR 582 (SC)
2. Ultratech Cement Ltd. vs. Addl. CIT (in ITA No. 1060/2014, dated 18/04/2017)(Bom)
3. Mukti Properties (P.) Ltd. v. CIT [2012] 344 ITR 177 (Cal) [50 DTR 273]
4. Goodfaith Construction (P) Ltd. vs. ACIT [2013] (Amritsar ITAT).
On merits, it was argued by him that what was required for the purpose of reopening an assessment, as explained per several decisions by the Apex Court, settling the law in the matter, is that there must be a honest belief, held bona fide, 4 ITA No. 177/Asr/2013 (AY 2002-03) Lt. Om Parkash Gupta v. ITO even if prima facie, i.e., as to escapement of income chargeable to tax from assessment. The sufficiency of the reasons, or even the correctness of the information, cannot be gone into at that stage, which is a matter subsequent.
4. The assessee has, on the basis of the material on record, yielding primary facts, which are not disputed, raised legal pleas. How could the same be ousted at the threshold? The same is admitted (NTPC Ltd. v. CIT [1998] 229 ITR 383 (SC)).
On merits, I find, equally, the assessee to have no case. The information received from the Investigation Wing of the Revenue is on the basis of material seized during search proceedings u/s. 132 of the Act. The statutory presumption u/s. 292C is as to the truth of its' contents. Further, the source of the information leading to the reason to believe, further, is the agreement to sell dated 01.6.2001 entered into between the assessee and one, Raj Kumar s/o Sh. Sardari Lal, per which the assessee sold a residential house (at 559A, Gandhi Nagar, Jammu) to the latter for Rs.35 lacs. The information is relevant, from a reliable source, and specific, i.e., has a direct and live nexus with the reason to believe the assessee to have income in the form of capital gain, which had escaped assessment in-as-much as it was, on verification, found by the AO that the assessee had not returned any income for the relevant year, or otherwise disclosed this transaction to the Revenue. How could it be said that there is no application of mind? All the ingredients necessary for the issue of notice u/s. 148(1) are satisfied. That the AO can; rather, is obliged to rely on the information that comes to him from another wing of the Department, as the Investigation Wing in the instant case, is well- settled, per a series of decisions, which were in fact communicated to the ld. counsel, Sh. Arora (viz. ITO v. Purushottam Dass Bangur [1997] 224 ITR 362 (SC); Frontier Trading Co. v. Choudhary (P.N.) v. ITO [1982] 136 ITR 503 (P&H); Hazi Amir Mohd. Mir Ahmed v. CIT [1997] 110 ITR 630 (P&H); Jash 5 ITA No. 177/Asr/2013 (AY 2002-03) Lt. Om Parkash Gupta v. ITO Bhai F. Patel v. CIT [1982] 136 ITR 799 (P&H); Kripa Ram Ramji Dass v. ITO [1982] 135 ITR 68 (P&H); Ranbir Engineering Mills Store v. ITO [1980] 126 ITR 512 (P&H), Varadarajulu Naidu (M.) v. CIT [1978] 111 ITR 301 (Mad) and Brij Mohan Agarwal v. Asst. CIT [2004] 268 ITR 400 (All)). He did not seek time to respond; the matter being even otherwise well-settled. Further, neither the sufficiency of the reason/s nor even the correctness of the information can be examined at that stage, which aspect is again well-settled (Raymond Woollen Mills Ltd. v. ITO [1999] 236 ITR 34 (SC); Astt. CIT v. Rajesh Jhaveri Stock Brokers (P.) Ltd. [2007] 291 ITR 500 (SC), both decisions rendered following judicial precedents by the Apex Court). It must also be borne in mind that the Apex Court has laid down a procedure in GKN Driveshafts (India) Ltd. v. ITO [2003] 259 ITR 19 (SC), whereby the assessee can object to the reasons recorded after filing the return of income in response to the notice u/s. 148, and where so, the AO is bound to dispose the said objections per a speaking order prior to proceeding further in the matter. The assesseee in the present case has not raised any objection to the reason/s for issuing the notice u/s. 148 even till the date of the assessment (refer pg. 2 of the assessment order).
5.1 The only issue raised on the merits of the assessment as framed is the disallowance of the assessee's claim u/s. 54 on the application of the capital gain arising to the assessee on the admitted sale of the Gandhi Nagar Property, i.e., on purchase of a residential house at 16F (Plot No. 358), Sector 14, Nanak Nagar, Jammu for a consideration of Rs.27.10 lacs from one, Smt. Amriti Devi ('AD'). The basis of the said claim, made per a return filed on 21.6.2006 (PB pgs. 1-3), is the agreement to sell (ATS) dated 25.12.2001 (PB pgs. 38-39). The assessee failing to produce AD, claiming her whereabouts to be not known, the AO located her and 6 ITA No. 177/Asr/2013 (AY 2002-03) Lt. Om Parkash Gupta v. ITO recorded her statement u/s. 131 of the Act on 13.12.2006, wherein - her statement being reproduced at pgs. 3-4 of the assessment order, she averred that:
(a) she had never owned any landed property at the stated address, much less sold it to any one;
(b) that she had in fact taken a small room (without kitchen) in the backyard of the said residential property at a rent rs. 35-40 per month from Sh. Om Prakash Gupta (OPG), the assessee, where she lived for 5-6 year before vacating it about two years back; and
(c) that she being a non-state subject, could not either purchase or sell any immovable property in the said of J&K, further adding that she was resident of Village Barnala, Distt. Gurdaspur, Punjab.
She, further, on being confronted with the ATS dated 25.12.2001, purportedly excecuted by her, categorically denied having executed any such document, clarifying to be an illiterate, having no knowledge of hindi or english alphabets - the agreement (ATS) being in English and 'her' signature in hindi. The statement of AD was confronted to the assessee vide show cause letter dated 20.12.2006 (PB pgs. 13-16), who questioned the evidentiary value of the said statement, being unilateral and, further, taken at his back, and without his cross-examination, which was asked for. The AO observed that he had already allowed several opportunities to the assessee, who in fact had failed to produce AD or even furnish her postal address, further stating that seeking her cross-examination at that late stage was only an attempt to frustrate the assessment which was getting time barred. In fact, the assessee's statement had been recorded on oath u/s. 131 on 27.3.2005 in connection with the search and seizure proceedings in the case of M/s. Mahajan & Co. (in the course of which the ATS dated 01.6.2001 was found), wherein he had, on being specifically asked, stated that he had not purchased or sold any house property in the past other than at 559A, Gandhi Nagar, Jammu. This, in fact, also agreed with the assessee's original return for the current year filed on 27.3.2003 7 ITA No. 177/Asr/2013 (AY 2002-03) Lt. Om Parkash Gupta v. ITO (PB pg. 3, also pgs. 2-3 of the assessment order). Summons were also issued to Sh. Anil Kumar s/o Sh. Brij Mohan and Sh. Sai Dass s/o Sh. Krishan Lal, i.e., the witnesses to the ATS dated 25.12.2001, at the addresses stated in the said ATS, to, however, no reply. The Inspector deputed to ascertain the existence of the 'witnesses', Sh. K.K. Sharma, reported that the said persons were presently not residing at the stated addresses. The assessee, on being show caused in the matter, furnished a certificate from the Jammu Development Authority (JDA) to the effect that the property at Plot No. 358, Sector 14, Nanak Nagar, Jammu stood in the name of Sh. Rattan Lal (RL) before being transferred to the assessee (OPG). The AO, accordingly, made enquiries in the matter, writing a letter to JDA, apart from issuing summons u/s. 131 to the Naib Tehsildar (JDA, Zone B), who appeared on 26.12.2006 and informed the basis on which the said certificate had been issued, i.e., as being in response to an application for regularization/correction of the said house by OPG, and which (record) stood, after verification, corrected on 02.01.2004. As the relevant record was with the office of the Director, Land Management (DLM), JDA, the said office was enquired with by the AO, requiring it to clarify the ownership of the said property and, further, if OPG had purchased it from RL. On the basis of the documents provided by the Director's office, it transpired that RL had submitted an affidavit dated 13.11.2003 stating that Sh. Om Prakash s/o Sh. Jagiri Mal Gupta, is the sole occupant of plot no. 358 (House No.
16), measuring 9 Marlas, at Sector 14, Nanak Nagar, Jammu, who had constructed a house thereat. And that he had occupied the said premises as a tenant, and had no other concern/interest therein. And, accordingly, had no objection to the said plot being regularized in favour of OPG, passing the correction order. The assessee had also furnished an affidavit dated 04.9.2003 to the effect that he was in possession of the said plot of land, and had constructed a pucca house thereat, residing therein with his family for the last two years. Apart from the said affidavit, 8 ITA No. 177/Asr/2013 (AY 2002-03) Lt. Om Parkash Gupta v. ITO RL had made a declaration on oath before the Munsiff, Judicial Magistrate, first class, Jammu, again on 13.11.2003, to the same effect, also stating the circumstances under which his name had entered as an occupant of plot no. 358 (House No. 16), Sector 14, Nanak Nagar, Jammu, i.e., as OPG was not present at the time of survey made by the JDA for regularizing the said colony, so that his (Rattan Lal's) name, occupying the premises as a tenant, came to be entered in the list of the occupants. It is for the correction of this entry that OPG moved the JDA vide his application dated 06.8.2003 for correction/regularization of the said plot in his name.
5.2 The AO, in view of the fore-going, concluded as under:
'On comparing and perusal of all the above statements/declarations made by the assessee, Sh. Rattan Lal and Smt. Amriti Devi at different times revealed the crux that Sh. Rattan Lal alongwith his wife Smt. Amriti Devi were putting up as tenant in the above referred property and Sh. Om Parkash Gupta was the owner of the referred property. It was only inadvertently that the name of Sh. Rattan Lal was entered in the list of occupants of the plot maintained by JDA which was corrected/regularized by Sh. Om Parkash Gupta after applying for the same before the JDA authorities concerned. The assessee has not furnished any documentary evidence or any corroborating evidence substantiating the purchase of above refereed house property in spite of the fact that the assessee had already been requested and show cause vide this office order sheet entry dated 18/(not clear)/2006 and show cause dated 16/11/2006 asking him to furnish the documentary evidence substantiating his claim of purchase of above referred property. The assessee had not furnished any documentary evidence in his replies submitted in response to this office letters & show- cause. It was only after this office had proved that agreement to sell furnished by the assessee is a bogus and had not been signed by Sh. Amriti Devi. The assessee on 22/12/2006, with the knowledge of that the case was going to be barred by time on 31/12/2006 furnished a copy of the above discussed Nazool list with the contention that no further verification/investigation could be made in such a short span of time. The enquiries conducted with the authorities 9 ITA No. 177/Asr/2013 (AY 2002-03) Lt. Om Parkash Gupta v. ITO concerned with reference to the documents furnished by the assessee clearly shows that the property was not sold by Smt. Amriti Devi or Sh. Rattan Lal to Sh. Om Parkash Gupta. The discussion made in the proceedings paragraph clearly shows that Sh. Om Parkash did not made any investment on the purchase of new house property at Nanak Nagar, Jammu. In his return of income filed subsequent to the issue of notice u/s 148, he has admitted that he had sold his house property at 559-A, Gandhi Nagar, Jammu for a consideration of Rs. 35 lacs. He has, however, claimed in the said return that he had purchased a new residential house at Nanak Nagar, Jammu from Smt. Amriti Devi w/o Sh. Rattan Lal. He was given innumerable opportunities to produce evidence to show that the new residential house was actually purchased by him subsequent to his selling of his house at 559-A, Gandhi Nagar, Jammu.
However, discussion in the asstt. order clearly shows that he has not able to show that the new residential house was actually purchased by him. On the contrary sustained enquiries, investigations and examinations conducted by this office has proved beyond any doubt that no residential property at Nanak Nagar, Jammu was purchased by the assessee as claimed by him in his return of income for the relevant Asstt. Year. In fact examination has proved that "Agreement to Sell" entered into by the assessee with Smt. Amriti Devi was a bogus and a forged document which was fabricated by him with the sole intention of reducing his tax liability under the head Long Term Capital Gains arising from the sale of property at 559-A, Gandhi Nagar, Jammu.
I, therefore, hold that the assessee will not be entitled for any deduction under section 54 of the Income Tax Act as claimed by him in his return of income filed on 21/06/2006 subsequent to issue of the notice u/s 148 dated 10/03/2006. Further for reasons already discussed in the preceding paras the benefit of the cost of improvement claimed by the assessee on the property at 559-A, Gandhi Nagar, Jammu in his return of income shall not be allowed while computing the Long Term Capital Gain arising from the sale of the above referred property.
Hence the deduction claimed by the assessee u/s 54 of the Income Tax Act is hereby rejected and the long-term capital gain arised to the assessee on the sale of the above referred property of the assessee is recomputed as under.' (emphasis, supplied) 10 ITA No. 177/Asr/2013 (AY 2002-03) Lt. Om Parkash Gupta v. ITO The assessee, in appeal, relying on the ATS dated 25.12.2001, with the plot entered in his name in the records of JDA on 03.01.2004, the ld. CIT(A) decided thus:
'4. Determination 4.1. The A.O. has made an addition on account of long-term capital gain at Rs. 30,76,316.
I have considered the submission of the appellant and findings of the AO in the assessment order and remand report. It is admitted by the appellant that he has sold a property at 559-A, Gandhi Nagar, Jammu for a consideration of Rs.35 lakhs during the financial year 2001-02 relevant to assessment year 2002-03. However, the appellant has claimed exemption u/s 54 of the Act on the ground that he has purchased a house property on 25.12.2001 from Amriti Devi w/o Sh Rattan Lal for a consideration of Rs 27.10 lakhs in cash. However, as per the JDA certificate, plot no. 358 (H No. 16, Sector 14, Nanak Nagar, Jammu) was transferred to the appellant on 03.01.2004. In the said transfer the name of occupier is shown as Sh. Rattan Lal s/o Sh. Sant Ram permanent resident of the State. As on 03.01.2004 if Sh. Rattan Lal was alive, then how come Smt. Amriti Devi sold the property to the appellant?
The provisions of section 54 are reproduced as under:............
On the perusal of above section, it is clear that the appellant should have purchased the property one year before or two years after the date of transfer.
4.2 As far as the agreement to sell and irrevocable power of attorney dated 25.12.2001 produced by the appellant is concerned, the document does not seem to have legal validity on the basis of following grounds-
a) Firstly the property claimed to have been purchased by the appellant was in the name of Sh Rattan Lal and after the death of Sh. Rattan Lal he was survived by a wife and sons. Smt Amriti devi wife of Late Sh. Rattan Lal has herself declared in the statement dated 14.12.2009 recorded during remand proceedings that her husband was a state subject and her sons are state subject but she does not hold a state subject of the state. As per the laws of the state, after the death of Sh. Rattan Lal, only his sons will get the rights in property and not his wife as she is a non state subject. Therefore, she cannot sign an agreement to sell or issue an irrevocable power of attorney in respect of a property in which she does not have any legal right. Thus, the documents submitted by the appellant have no legal validity.
b) Secondly, the plot in question belongs to Jammu Development Authority and cannot be transferred without prior approval of Jammu Development Authority. It is only after the 11 ITA No. 177/Asr/2013 (AY 2002-03) Lt. Om Parkash Gupta v. ITO permission of the JDA that property and legal possession can be transferred after getting a transfer letter & possession letter from the JDA after paying requisite transfer fee.
In view of above facts and legal position, I am of the opinion that the AO is justified in withdrawing the exemption claimed by the appellant u/s 54 of the Act. As per the certificate of the JDA, the plot was transferred on 03.01 2004, i.e., after the period specified u/s 54 of the Act for making the investment in the house property.'
6. Before me, the assessee's principal arguments were as follows:
(a) No cross-examination (CE) having been provided by the AO, the statement of AD could not be relied upon. That is, the assessment must be set aside and the matter restored to the file of the AO to allow cross-examination to the assessee;
(b) The matter in fact admits of no two views in light of the remand report dated 21.12.2009 (PB pg. 48), whereupon the AO, on the basis of enquiry by his Inspector, Sh. Rakesh Kumar, reports that AD confessed to have sold House No. 16F, Sector 14, Nanak Nagar, Jammu to OPG about six years back; and which fact was confirmed by him from the neighborhood. Further, OPG had submitted (copy of) the revenue record from the office of the Naib Tehsildar, which shows that the property has been transferred in his name.
The ld. counsel for the assessee, Sh. Arora, on being asked during hearing about the remand report (dated 04.02.2008), as furnished by the AO during the appellate proceedings (at PB pgs. 17-21), as well as that dated 14/12/2009, which do not find reference in the impugned order, would submit that the same is essentially a reproduction of what stands stated in the assessment order.
The ld. Departmental Representative (DR), Sh. Charan Dass, on the other hand, would submit that in view of the categorical findings by the AO in the assessment order, not rebutted, no credence could be given to the remand report dated 21.12.2009. Sh. Arora would, in rejoinder, submit that the Revenue had no case in view of the subsequent remand report by the AO, which had been ignored by the ld. CIT(A) in passing his order.
12 ITA No. 177/Asr/2013 (AY 2002-03)Lt. Om Parkash Gupta v. ITO
7. I have heard the parties, and perused the material on record. 7.1 Section 54 of the Act reads as under:
'Profit on sale of property used for residence.
(1) Subject to the provisions of sub-section (2), where, in the case of an assessee being an individual or a Hindu undivided family, the capital gain arises from the transfer of a long-
term capital asset, being buildings or lands appurtenant thereto, and being a residential house, the income of which is chargeable under the head "Income from house property" (hereafter in this section referred to as the original asset), and the assessee has within a period of one year before or two years after the date on which the transfer took place purchased, or has within a period of three years after that date constructed, one residential house in India, then, instead of the capital gain being charged to income-tax as income of the previous year in which the transfer took place, it shall be dealt with in accordance with the following provisions of this section, that is to say,--
(i) if the amount of the capital gain is greater than the cost of the residential house so purchased or constructed (hereafter in this section referred to as the new asset), the difference between the amount of the capital gain and the cost of the new asset shall be charged under section 45 as the income of the previous year; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase or construction, as the case may be, the cost shall be nil; or
(ii) if the amount of the capital gain is equal to or less than the cost of the new asset, the capital gain shall not be charged under section 45; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase or construction, as the case may be, the cost shall be reduced by the amount of the capital gain.
(2) The amount of the capital gain which is not appropriated by the assessee towards the purchase of the new asset made within one year before the date on which the transfer of the original asset took place, or which is not utilised by him for the purchase or construction of the new asset before the date of furnishing the return of income under section 139, shall be deposited by him before furnishing such return [such deposit being made in any case not later than the due date applicable in the case of the assessee for furnishing the return of income under sub-section (1) of section 139] in an account in any such bank or institution as may be specified in, and utilised in accordance with, any scheme which the Central Government may, by notification in the Official Gazette, frame in this behalf and such return shall be accompanied by proof of such deposit, and for the purposes of sub-section (1), the amount, if any, already utilised by the assessee for the purchase or construction of the new asset together with the amount so deposited shall be deemed to be the cost of the new asset:
Provided that if the amount deposited under this sub-section is not utilised wholly or partly for the purchase or construction of the new asset within the period specified in sub- section (1), then,--13 ITA No. 177/Asr/2013 (AY 2002-03)
Lt. Om Parkash Gupta v. ITO
(i) the amount not so utilized shall be charged under section 45 as the income of the previous year in which the period of three years from the date of the transfer of the original asset expires; and
(ii) the assessee shall be entitled to withdraw such amount in accordance with the scheme aforesaid.' (emphasis, supplied) The assessee in the instant case has sold his residential house at Gandhi Nagar, Jammu during the previous year relevant to AY 2002-03 for a consideration of Rs.35 lacs, receiving Rs.2 lacs by cheque and the balance Rs.33 lacs in cash, during the period from 01.6.2001 to 12.12.2001 (refer para 1 (pg.1) of the assessment order, para 3.1 of the appellate order). He is, therefore, entitled to deduction u/s. 54 in computation of capital gains arising on the said transfer upon investment of the said capital gain on:
(a) purchase of a residential house in India within a year prior to the date of transfer; or
(b) purchase of a residential house in India within a period of two years from the date of the transfer; or
(c) construction of a residential house in India within a period of three years from the date of transfer.
7.2 The assessee has admitted capital gain at Rs.26.64 lacs (PB pgs. 1 - 3), which it appears would stand to be enhanced by Rs.4.10 lacs in-as-much as his claim toward cost of improvement (at Rs.1.75 lacs before indexation) has not been accepted, and which has also not been appealed against before the tribunal (also refer para 4.1 of the appellate order). The claim u/s. 54 is for Rs.27.10 lacs, being the purchase consideration of a residential house at 16F, Sector 14, Nanak Nagar, Jammu, and in support of which he relies on the ATS dated 25.12.2001 entered into between him and AD, and the fact that the said house stands transferred in his name by the JDA, albeit subsequently. An examination of the assessee's claim during assessment proceedings, however, reveals the following:
14 ITA No. 177/Asr/2013 (AY 2002-03)Lt. Om Parkash Gupta v. ITO
(a) the assessee's original return filed on 27.3.2003 does not bear reference to any income by way of capital gains (on sale of house property) or claim of deduction u/s. 54;
(b) application dated 06.8.2003 by the assessee to the JDA for correction of the record in-as-much as he was the owner of the said house property (at plot no. 358, sector 14, Nanak Nagar, Jammu), having constructed a house thereat, substituting his name instead of that of Sh. Rattan Lal, whose name had wrongly been entered in its records as its occupant;
(c) statement on oath u/s. 131 by the assessee on 27.03.2005, stating that he had not purchased or sold any house property at any time in the past, i.e., except the Gandhi Nagar, Jammu property;
(d) affidavit dated 04.9.2003 by the assessee (copy of which has been marked by the AO as Annexure 'A' to the assessment order, though has not been enclosed along with the appeal) to the JDA, averring that he was in possession of Plot No. 358 (House No. 16) (measuring 9 marlas), Sector 14, Nanak Nagar, Jammu, and had constructed a house thereat, where he was residing with his family for the past two years;
(e) affidavit dated 13.11.2003 by Sh. Rattan Lal s/o Sh. Sant Ram (copy of which has been marked by the AO as Annexure 'B' to the assessment order, though has not been enclosed along with the appeal), as well as the declaration on oath before Munsiff, Judicial Magistrate (JM), first class, Jammu, again on 13.11.2003, by him to the effect that OPG (assessee) was the sole occupant of the said plot at Nanak Nagar (measuring 9 marlas) and had constructed a house thereat, wherein he was putting up as a tenant of OPG s/o Sh. Jagiri Mal Gupta, in whose favour, therefore, the plot may be regularized, passing a correction entry (in the records of the JDA), to which he had no objection;
(f) statement of Sh. Kulwant Singh, Naib Tehsildar, JDA (Zone-B) in response to summons u/s. 131, that the certificate issued by the JDA in respect of the correction of its record on 02.01.2004, i.e., listing the assessee as the occupant of the property, was in response to an application for regularization/correction of the said property in his name;
(g) statement on oath u/s. 131 of the Act dated 13.12.2006 by Smt. Amriti Devi w/o Sh. Rattan Lal, deposing to have occupied the Nanak Nagar property as a 15 ITA No. 177/Asr/2013 (AY 2002-03) Lt. Om Parkash Gupta v. ITO tenant of OPG (assessee) and, further, had not sold any property to him at any time; in fact, having not owned any property in J&K, which she was not entitled to in view of her being not a state subject, and that, she being illiterate, with no knowledge of written language, the ATS dated 25/12/2001 is a forged document;
(h) the statement dated 14/12/2009 by AD, recorded in the course of remand proceedings, reiterating her statement dated 13/12/2006;
(i) the sale agreement dated 25/12/2001 is not registered even subsequently, even as required by law (Registration Act, 1908).
7.3 All the above statements are corroborative and, in fact, not denied or rebutted at any stage with any material/evidence. The facts of the case stand elaborately discussed in the assessment order (pgs. 2-9) and the remand report dated 04.02.2008 (PB pgs. 17-21). All this makes it abundantly clear that the assessee purchased/acquired the subject plot (at Sector 14, Nanak Nagar, Jammu) and constructed a residential house thereat. RL s/o Sh. Sant Ram, and his wife AD, lived in the said house as tenants for several (5-6) years, and apparently enjoyed good relations with the assessee (OPG) and his family. As, however, the assessee was not present at his residence at the time of the survey by the JDA for regularizing unauthorized colonies in and around Jammu, the name of Sh. Rattan Lal got entered in the list of the occupants (qua the subject property) by JDA. An application was accordingly moved by the assessee with JDA for correction of its' record. The affidavits by him and RL, as well as the statement on oath by the latter before the Court of JM, is only toward this, and agrees with the basis of the assessee's application to JDA for correction/regularization of the said house property in his name, i.e., as against the name of RL, inadvertently entered. In view thereof as well as no objection by RL, the property was transferred in the records of JDA in the assessee's name, and a certificate dated 03.01.2004 issued to this effect. It may though be clarified that the JDA record does not in any manner prove 16 ITA No. 177/Asr/2013 (AY 2002-03) Lt. Om Parkash Gupta v. ITO title. RL died subsequently, leaving behind his wife AD, and, as it appears, two sons. It is in fact this that brings AD into the picture. However, surprisingly, she is the named seller on 25/12/2001, i.e., much before the death of her husband, RL. How could that be? Accordingly, she was called upon to depose before the AO in December, 2006. She stated likewise, i.e., of being a tenant of the assessee (OPG), further confirming that she being not a state subject, could not purchase any landed property in the State of J&K, so that the question of selling it does not arise. That, therefore, the ATS dated 25.12.2001 is a forged document, with in fact she being an illiterate, putting her thumb impression, who had no knowledge of either Hindi or English alphabets. It is clear that neither she nor her husband owned the subject property at any time. Needless to add, there is no registration of the ATS dated 25/12/2001, nor the returning of capital gain by AD on the sale of the subject property, with the Revenue making no attempt - and rightly so, to assesss the same in her hands or her late husband.
The assessee's plea of her cross-examination is wholly misplaced. As clarified by the AO, both in the assessment order and the remand report, she is the assessee's witness. The onus was on the assessee to, in discharge of his burden of proof, exhibit that ATS dated 25.12.2001 is a valid document. Why, until the AO made efforts to contact her, it could not even be said if RL had a wife, and with that name, as her name appeared in no other document. She was, however, despite several opportunities extended during the assessment proceedings, not produced by the assessee, nor even her address furnished, stating that he was not liable to keep track of her, which was regarded as unreasonable and irrational by the AO, particularly considering that the document (ATS dated 25.12.2001) being relied upon by the assessee to claim his right to the property, was an unregistered document, so that the assessee would require her presence for registration thereof in future or for executing a document of title, viz. sale deed. Why, as it transpires, 17 ITA No. 177/Asr/2013 (AY 2002-03) Lt. Om Parkash Gupta v. ITO RL, her husband, extended full cooperation to the assessee in causing the correction in the records of the JDA, and which was only subsequent to 25/12/2001! Clearly, therefore, the two families were in contact with each other, even as the onus to produce her was on the assessee, which has not been met at any stage. Why did, then, the assessee not produce AD, giving lame excuses instead? In fact, even the witnesses to the ATS were not produced, though were sought to be, again, contacted by the AO. The plea of her cross-examination, accepting which would require the matter being restored back to the file of the AO for allowing cross-examination to the assessee (refer ITO v. M. Pirai Choodi [2011] 334 ITR 262 (SC)), would accordingly be of no consequence. In fact, her locus standi is to be proved in-as-much as there is nothing on record to exhibit her title to the subject property and, thus, her capacity to execute any instrument of transfer. Again, only if she is the owner of the property in December, 2001, could she validly execute the ATS dated 25/12/2001.
Further, as per the assessee's own admission, it is a case of construction of a residential house and not its' purchase. When was the plot purchased? From whom? For what consideration? No document toward this has been produced at any stage. There is no mention thereof, even as, without doubt, acquisition of land, whether by way of purchase or otherwise, viz. allotment, would have to be regarded as toward construction of a house. Further, when was the house built; at what cost? Whether it was during the current year, or subsequent thereto, or in a preceding year? RL states in September, 2003 of residing in the said house as a tenant of the assessee. The assessee clarifies in September, 2003 of residing in a pucca house, constructed by him, for the last two years. AD, in December, 2006, states of having resided as a tenant for 5-6 years prior to vacating it about 2 years back. The date of purchase (or acquisition) of plot and period of construction of house thereat, is thus not clear, nor has the assessee, at any stage, despite being 18 ITA No. 177/Asr/2013 (AY 2002-03) Lt. Om Parkash Gupta v. ITO called upon regularly to do so, produced any document toward the same. If the assessee did indeed construct a house thereat, as the material on record suggests, he, in receipt of Rs. 33 lacs in cash from June to December, 2001 (with Rs. 21 lacs being received on 12/12/2001 itself), implying him to be the owner of the land, why one wonders did not state so, producing the document of title to the land? The same is understandable as it is inconsistent with his case of having bought a built house from AD. If, as stated, he was in September, 2003 already residing in the house for two years, the house would have been constructed earlier. The period indicated by the statement dated 13/12/2006 of AD also suggests the same. Clearly, therefore, the ATS dated 25/12/2001 is a forged document, and even otherwise of no consequence as AD was never the owner of the subject property, much less in December, 2001, i.e., during the life time of RL. RL, however, having expired by the time the reassessment proceedings were initiated, the assessee replaced him with his wife. In fact, an agreement with RL himself would have been of little assistance in view of his affidavit and deposition of November, 2003, besides absence of any document evidencing his title to the subject property.
As regards the remand report dated 21.12.2009 (PB pg. 48), what, one wonders, was the need for calling for the same. There was no inconsistency in the facts on record, with the assessee's case being wholly unproved, nay, disproved, and who had, even until then, i.e., December, 2009, and despite the proceedings having commenced in March, 2006, not produced any witness or document to prove or in support of his claim, with that produced, i.e., ATS dated 25.12.2001, being disproved or, in the very least, unproved. Rather, what, one wonders, explains the volte face attributable to AD per a statement dated 21/12/2009, i.e., days after reiterating her version (of 13/12/2006) on 14/12/2009. This is indeed quizzical, as is the need to, in the absence of any contrary material on record, record her statement again, the onus to do so being in any case on the assessee.
19 ITA No. 177/Asr/2013 (AY 2002-03)Lt. Om Parkash Gupta v. ITO Even so, as aforesaid, there is no document of title or any material on record evidencing her title to the subject property, for the statement ascribed to her, not on record, to be given any credence. Why, she admittedly being not a state subject, could not have held or transferred any immovable property in J&K, i.e., her locus standi, as afore-stated, is unproved or suspect. In fact, upon this, the ld. CIT(A) vide his letter dated 24/3/2010 (PB pg. 32) required the AO to bring on record any material to evidence the ownership of the subject property by AD, and which was replied to by the AO on 15/4/2010 (PB pg. 46), clarifying that the property was in the name of RL, also furnishing the list of illegal occupants (PB pg. 47), which bears the name of RL against plot no. 358 (house no.16). It has already been clarified that neither AD nor her husband, RL, was the owner of the subject property at any time, as well as the circumstances in which the name of RL came to be entered qua the said plot in the records of JDA. And, further, that her ownership in December, 2001, when RL was alive, only would validate the ATS dated 25/12/2001, on the basis of which the assessee makes a claim of transfer. Why, the house was admittedly constructed, and not purchased, by the assessee, disproving the said ATS, which is for the purchase of a built house property.
8. The assessee's case, i.e., on the merits of the denial of claim u/s. 54, whichever way one may look at it, is completely unproved; in fact, disproved. The assessee has abysmally failed to exhibit the satisfaction of the conditions for claim of s. 54. Nothing has been brought on record to rebut the clear findings by the Revenue authorities which, being consistent with the material on record, have been endorsed. I am, under the circumstances, of the clear view that no case for allowing a deduction u/s. 54, claimed at Rs.27.10 lacs, in respect of purchase of a residential house in December, 2001 by the assessee, is made out. The assessee is apparently the owner of the subject property, having constructed it, but that by itself would 20 ITA No. 177/Asr/2013 (AY 2002-03) Lt. Om Parkash Gupta v. ITO not entitle him for a claim u/s. 54, the ingredients of which remain to be satisfied, and the case as made out, completely unproved, if not disproved. I, therefore, decline interference, and uphold the impugned disallowance. I decide accordingly.
9. In the result, the assessee's appeal is dismissed.
Order pronounced in the open court on March 20, 2019 Sd/-
(Sanjay Arora) Accountant Member Date: 20.03.2019 /GP/Sr. Ps.
Copy of the order forwarded to:
(1) The Appellant: Late Om Parkash Gupta, Through Legal Heirs, Raj Mohini Gupta & Ors, H.No. 16/F, Sector-14, Nanak Nagar, Jammu (2) The Respondent: Income Tax Officer, Ward-1(2), Jammu (3) The CIT(Appeals), Jammu (4) The CIT concerned (5) The Sr. DR, I.T.A.T. True Copy By Order