Income Tax Appellate Tribunal - Hyderabad
Ponnapula Sanjeeva Parthasarathy, ... vs Acit, Central Circle-3(2), Hyderabad on 3 February, 2023
IN THE INCOME TAX APPELLATE TRIBUNAL
Hyderabad 'A' Bench, Hyderabad
Before Shri Rama Kanta Panda, Accountant Member
AND
Shri K.Narasimha Chary, Judicial Member
ITA No.396/Hyd/2022
Assessment Year: 2011-12
Ponnapula Sanjeeva Vs. ACIT,CC-3(2)
Parthasarathy Hyderabad
C/o. P.Murali & Co.
Chartered Accountants
6-3-655/2/3
Somajiguda
Hyderabad-500 082
PAN : AJMPP5829K
(Appellant) (Respondent)
&
S.A No.23/Hyd/2022
(in ITA. No.396/Hyd/2022)
Assessment Year: 2011-12
Ponnapula Sanjeeva Vs. ACIT,CC-3(2)
Parthasarathy Hyderabad
C/o. P.Murali & Co.
Chartered Accountants
6-3-655/2/3
Somajiguda
Hyderabad-500 082
PAN : AJMPP5829K
(Appellant) (Respondent)
Assessee by: Shri P.Murali Mohan Rao, CA
Revenue by: Shri Rajendra Kumar, CIT-DR
Date of hearing: 05.01.2023
Date of pronouncement: 03.02.2023
ORDER
Per Shri Rama Kanta Panda, A.M.
This appeal filed by the assessee is directed against the order dated 29.07.2022 of the Learned Commissioner of Income Tax (Appeals)-11, Hyderabad relating to AY 2011-12.
2Ponnapula Sanjeeva Parthasarathy
2. Facts of the case, in brief, are that the assessee is an individual and derives interest income from saving bank account and FDs. He filed his original return of income u/s. 139(1) on 27.07.2011 declaring total income of Rs. 2,44,340/-. The same was processed u/s. 143(1). Subsequently, a search and seizure action u/s. 132 of the I.T.Act was conducted in the case of M/s. Goldstone Infratech Ltd. and its other associated companies on 09.11.2017. The residence of the assessee was also covered u/s. 132 of the I.T. Act. Consequent to search, the case of the assessee was centralized and notice u/s. 153A of the Act was issued to the assessee on 23.05.2019 after recording the satisfactory note regarding the sale of an asset in the form of immovable properties being land, on agreed consideration of Rs. 5 crores as received by the assessee wherein the registered value of the property was Rs.10.52 crores and which is falling beyond six assessment years but not later than ten assessment years as explained in Explanation 1 read with Explanation 2 u/s. 153A of the I.T.Act. In response to the same, the assessee filed his return of income on 15.06.2019 declaring total income of Rs.2,44,340/-. The AO thereafter issued statutory notices u/s. 143(2) and 142(1) to which the AR of the assessee appeared before the AO from time to time and filed the relevant details.
2.1 During the course of assessment proceedings, the AO observed that during the course of search proceedings documents were found and seized according to which assessee has sold land admeasuring 2.07 acres to M/s. Shroff Apparels Pvt. Ltd. vide document no.4355/2011 dated 26.08.2010, which was registered at SRO. Kukatpally. The property is located at Sy.No.172, Hydernagar village. From the document, the AO found that M/s. Shroff Apparels Ltd. has paid only Rs.5 crores towards sale consideration for the above property, whereas as per the 3 Ponnapula Sanjeeva Parthasarathy registered sale deed, that the value adopted for the purpose of stamp duty is Rs.10,52,70,000/-. Thus, the price received by assessee is less in comparison to the value adopted by the stamp duty authority. He, therefore asked the assessee to explain as to why the market value of the land for the purpose of stamp duty i.e., Rs.10,52,70,000/- shall not be considered as full value of consideration as per the provisions of section 50C of the I.T. Act. The assessee in response to the same submitted that the provisions of section 50C of the I.T. Act are not applicable, since there is no transfer of property in respect of the properties mentioned in the document by the AO. It was submitted that the title of properties in question is pending before the Hon'ble High Court of Telangana and various other Courts and therefore, the question of applicability of provisions of section 45 and 50C of the Act are not applicable. It was submitted that the value in respect of properties in question were not estimated by the DVO as on date keeping in view of the decision of the Hon'ble Supreme Court of India in the civil appeal and further, the properties in question are notified in the prohibited register of Registration and Stamp Department as government lands by the Government of Telangana State.
3. However, the AO was not satisfied with the arguments advanced by the assessee. He noted the facts of the issue which are as under:-
6.1 Facts of the issue: Mr. Khurshid Jahi Paigah is one of the army suppliers to the HEH Nizam. The HEH Nizam in turn had given various lands to him for maintenance of the army. On succession of Government of India over Nizam of Hyderabad, the legal heirs of Khurshid Jahi Paigah started claiming ownership on these lands and filed a civil suit in CS No.14 of 1958 for partition of the properties of Khursheed Jahi Paigah. The lands claimed arc in villages of Hafeezpur, Ghansmiyaguda, Hafeezpet, Hasmathpet, Quadirabad, Sahebguda, Lallaguda, Hydernagar etc. 6.2 Subsequently, the State of Andhra Pradesh and Jagir Administrator have claimed that some of the lands of CS 14 are 4 Ponnapula Sanjeeva Parthasarathy government lands and were impleaded as defendants 53 and 43 in CS No.14 of 1958. Further the Hon'ble High court of undivided A.P passed a preliminary decree in the suit on 28.06.1963, whereby the share of each legal heirs was determined and final decrees were passed. About 80% of the sharers in the preliminary decree had sold their decretal rights under registered sale deed in favor of HEH Nizam and one Kazim Nawaz Jung and the remaining 20% unsold shares are still pursuing the suit. The HEH Nizam who got impleded as defendant had in turn sold away all his rights in favor of M/s Cyrus Investments ltd(Formerly known as M/s F E Dinshaw Ltd.).
4. According to the AO when it was known to the assessee that the land was in dispute, it is not known as to what forced the assessee to enter into the agreement and made him compel to pay the requisite stamp duty. According to the AO by acting this, the assessee has deceived the other party in the transaction and also deceived the concerned state government. Further, the argument of the assessee that the deed was done to keep the outside parties not to claim on it, and the property has not been divided was rejected by the AO on the ground that the property in question has been transferred which is supported by a registered deed and requisite stamp duty has been paid. Rejecting the various explanations given by the assessee, the AO made addition of Rs. 10,52,70,000/- by recording the following.
Thus, the assessee has transferred his rights and consequent to which he has derived benefit there from and the same has not been offered while filing the return of income u/s 139(1) and u/s 153A. Hence considering the above, the income of the assessee is determined and assessment is completed as under:
a) As per the provisions of Sec. 50C of Income Tax Act, 1961 whenever the full value consideration is less than the value adopted [or the purpose of calculating stamp duty, by the stamp duty authority, then the stamp duty value shall be considered as full value consideration for the purpose of Sec. 48 on Income Tax Act. In this case the sale consideration is mentioned at Rs.
5,00,00,000/-, whereas the value adopted [or the purpose of stamp duty is Rs. 10,52,70,000/-. Therefore for the purpose of Sec. 50C of 5 Ponnapula Sanjeeva Parthasarathy the I.T. Act, full value consideration shall be considered as Rs. 10,52,70,000/- for the purpose of computing Capital Gains.
b) The Document 4355/2011 dated 26.08.2010 at SRO, Kukatpally Hyderabad pertaining to Sy. No. 172 of Hydernagar Village is duly registered before the competent authority of stamp department Therefore as per provisions of the Income Tax Act, it amounts to transfer of property and the vendor companies have received the property transaction. For all the purposes of provisions of Income Tax Act, the transaction was completed and the sale consideration in the hands of the assessee shall be considered as the value adopted for the purpose of stamp duty, i.e., Rs. 10,52,70,000/-.
6.7 As discussed above in Para a and b the value of property as per stamp duty of Rs.10,52,70,000/- is considered. Since assessee had not declared any capital gain in his return of income, the amount of Rs.10,52,70,000/- is added back to total income of assessee as assessee has not provided any details with regard to cost price of land and also any expenses incurred for the sale of the property as called for by this office notice dated 18.10.2019. Hence, considering various judicial decision in similar cases and provisions of sec 48 r.w.s. 50C r.w.s. 2(47) of the Income Tax Act, the entire amount of Rs.10,52,70,000/- is added back to assessee total incom3e as capital gains. Penalty proceeding under sec 271(1)(C) of the I.T.Act are initiated for concealment of income.
5. In appeal, the ld.CIT(A) dismissed the appeal filed by the assessee and upheld the action of the AO.
6. Aggrieved with such order of the Ld.CIT(A), the assessee is in appeal before the Tribunal by raising the following grounds
1. The order of the CIT(A) is erroneous both on facts and in law.
2. The ld.CIT(A) erred in dismissing the appeal.
3.a. the ld.CIT(A) erred in dismissing ground nos. 3,6,&7 taken before him b. The ld.CIT(A) erred in holding that the sale deeds found during the course of search would surely constitute incriminating material dehors the fact that the sale deeds are public documents which are available on public domain.
c.The ld.CIT(A) ought to have appreciated that there is no seized material based on which all the additions are made.
d.The ld.CIT(A) ought to have deleted all the additions made in the assessment made u/s. 143(3) r.w.s. 153A of the Act on the ground that they are not based on any seized material.
6Ponnapula Sanjeeva Parthasarathy e. The ld.CIT(A) ought to have appreciated that an addition which is not based on seized material, can be considered to be made in the assessment completed u/s. 143(3) r.w.s. 153A of the Act only when the assessment is abated.
f. the ld.CIT(A) ought to have appreciated that an addition which is not based on seized material, can be considered to be made in the assessment completed u/s. 143(3) r.w.s. 153A of the Act only when the assessment is abated.
g. The ld.CIT(A) ought to have appreciated that since the time for issue of notice u/s. 143(2) of the Act has already lapsed on 31.03.2012 in the appellant's case, the assessment cannot be said to be an "abated assessment".
h. the ld.CIT(A) ought to have appreciated that for the assessment under consideration i.e., assessment year 2011-12, notice u/s. 143(2) of the Act could be given only within the time specified u/s. 139(4) of the Act i.e, on or before 31.03.2012 and that, therefore, the assessment for the assessment year 2011-12 is an unabated assessment.
i. The ld.CIT(A) ought to have appreciated that since the impugned assessment is unabated, all the additions made in the assessment which are not based on any seized material, are void abinitio, j. The ld.CIT(A) ought to have appreciated that by no stretch of imagination, the impugned registered documents based on which all the additions have been made u/s. 50C of the Act, can be taken as the material seized in the search.
k. The ld.CIT(A) ought to have appreciated that the entire information with regard to the impugned documents is available on regard not only with the Assessing Officer but also in public domains much earlier to the date of search.
4. Without prejudice to ground nos. 3(a) to 3(k), the ld.CIT(A) erred in confirming the addition of Rs.10,52,70,000/- made u/s. 50C of the Act.
5.a. Without prejudice to ground nos. 3(a) to 3(k), the ld.CIT(A) erred in dismissing ground nos. 10 and 11 taken before him. b. Without prejudice to ground nos. 3(a) to 3(k), the ld.CIT(A) erred in appreciating that the appellant has transferred the impugned land to M/s. Shroff Apparels Pvt.Ltd., vide document no.4355/2011 dated 26.08.2010 in his capacity of General Power Attorney Holder and not in his individual capacity.
c. Without prejudice to ground nos. 3(a) to 3(k), the ld.CIT(A) erred in appreciating that the sale consideration with regard to the impugned land has already been offered to tax by the real transferor, M/s. Trinity Infraventures Limited for the assessment years 2009-10 and 2010-11.
7Ponnapula Sanjeeva Parthasarathy d. Without prejudice to ground nos. 3(a) to 3(k), the Ld.CIT(A) erred in appreciating that when the sale consideration in respect of document no.4322/2011, has been offered to tax for the assessment years 2009- 10 and 2010-11, by M/s. Trinity Infraventures, taxing of the sale consideration again in the hands of the general power of Attorney holder, the appellant, tantamount to double taxation.
e. The ld.CIT(A) ought to have appreciated that the CIT(A)-11, Hyderabad vide his order dated 03.08.2020 has also confirmed the taxation of the impugned transfer of property in the hands of M/s. Trinity Infraventures Limited.
f. Without prejudice to ground nos. 3(a) to 3(k), the ld.CIT(A) erred in being silent on the appellant's argument that the capital gains arising out of the sale of the impugned land has already been taxed in the hands of M/s. Trinity Infraventures Limited for the AY 2009-10 and 2010-11.
g. Without prejudice to ground nos. 3(a) to 3(k), the Ld.CIT(A) having extracted certain paras of the Bombay High Court order in Suit No.643 of 2014 dated 28.04.2017 where in the appellant herein, was none other than the holder of Power of Attorney and not the owner of the impugned land, has erred in holding that it clearly implies that the appellant was the owner of the subject lands in legal terms.
h. Without prejudice to ground nos. 3(a) to 3(k),the ld.CIT(A) ought to have appreciated that since the impugned sale consideration has already been taxed in the hands of M/s. Trinity Infractures Limited, taxing the same once again in the hands of the appellant tantamount to double taxation which is not justified.
i. Without prejudice to ground nos. 3(a) to 3(k), the Ld.CIT(A) erred in holding that the appellant is supposed to enjoy all the benefits and incur all the liabilities with regard to the impugned properties.
j. Without prejudice to ground nos. 3(a) to 3(k), the ld.CIT(A) erred in holding that the taxability and its liability will also be in the hands of the appellant.
k. Without prejudice to ground nos. 3(a) to 3(k), the Ld.CIT(A) erred in holding that the appellant is the owner of the impugned properties having the possession and has also decided to sell to the person it desires and also decides the consideration in respect of the properties.
l. Without prejudice to ground nos. 3(a) to 3(k), the ld.CIT(A) erred in holding that the appellant is held as the owner of the property with in the meaning of Income Tax Act and the said transfer of the properties will be liable for capital gains in the hands of the appellant as per the manner provided in the Act and this is not a case of holding a simple Power of Attorney.
m. Without prejudice to ground nos. 3(a) to 3(k), the ld.CIT(A) erred in observing that it is not a simple GPA but effectively an ownership within 8 Ponnapula Sanjeeva Parthasarathy the meaning and intent of the Income Tax Act and all the benefits have gone to the appellant.
n. Without prejudice to ground nos. 3(a) to 3(k), the Ld.CIT(A) erred in observing that the appellant has been vested with all the rights for the properties mentioned in Schedule II of the impugned documents.
6.a. Without prejudice to ground nos.3(a) to 3(k), the Ld.CIT(A) erred in dismissing ground nos. 14 to 20 taken before him.
b. Without prejudice to ground nos. 3(a) to 3(k), the ld.CIT(A) ought to have appreciated that there is no valid transfer of the impugned property because the title of the impugned lands in Sy.No.172 of Hydernagar village is the subject matter of Civil Suit in C.S.No.14/1958 in Telangana High Court where in the property is shown at item no.2 of Schedule IV (A) of the Plaint Schedule Properties.
c. Without prejudice to ground nos. 3(a) to 3(k), the ld.CIT(A) ought to have appreciated that the title of the impugned property is in dispute and that the land in Sy.No.172 of Hydernagar village has been notified as one of the "Prohibited Properties" as on date vide Gazette Notification of Govt.of Telangana G.O.M.S.No.863 dated 26.09.2013.
7.a.Without prejudice to ground nos. 3(a) to 3(k), the ld.CIT(A) erred in dismissing ground nos. 13 and 22 taken before him.
b. Without prejudice to ground nos. 3(a) to 3(k), the ld.CIT(A) erred in holding that it is fair to conclude that the appellant has accepted the valuation of the impugned properties.
c. Without prejudice to ground nos. 3(a) to 3(k), the ld.CIT(A) ought to have appreciated that the AO ha snot referred the valuation to the DVO as stipulated in section 50Cofthe Act.
d. Without prejudice to ground nos. 3(a) to 3(k), the ld.CIT(A) ought to have appreciated that if the stamp duty valuation is higher than the consideration received, the AO is obliged to refer the valuation to the DVO even if there is no request made by the assessee in this regard.
8. The appellant may, add or alter or amend or modify or substitute or delete and/or rescind all or any of the grounds of appeal at any time before or at the time of hearing of the appeal.
7. The ld.counsel for the assessee at the outset submitted that the co-ordinate Bench of the Tribunal under identical circumstances in the case of Severa Constructions Pvt.Ltd. and batch of other appeals vs CIT vide ITA No.388 to 392/Hyd/2021 order dated 19/10/2022 for AY 2017-18 following the decision of 9 Ponnapula Sanjeeva Parthasarathy the co-ordinate Bench of the Tribunal in the case of Smt. Indrani Prasad vs. ACIT vide ITQA No.402/Hyd/2021 order dated 08.04.2022 has remanded the issue to the file of the AO for fresh adjudication. He accordingly submitted that he has no objection if the matter is remanded back to the file of the AO for fresh adjudication of the issue in the light of the direction of the Tribunal.
8. The ld.CIT-DR while opposing the arguments advanced by the ld.counsel for the assessee fairly conceded that he has no objection if the matter is restored to the file of the AO with direction to adjudicate the issue afresh in the light of the decision of the Tribunal in the other group concerns.
9. We have heard the rival arguments made by both the sides, perused the orders of the AO and the ld.CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the AO in the instant case has made addition of Rs.10,52,70,000/- on the ground that assessee has entered into transaction pertaining to sale deed 4355/2011 dated 26.10.2010 and disclosed the sale consideration at Rs.5 crores whereas the SRO value was Rs. 10,52,70,000/-. Accordingly, the AO invoking the provisions of section 50C of the Act made addition of the same which has been upheld by the ld.CIT(A). It is the argument of the ld.counsel for the assessee that title of the alleged property was in dispute before the Hon'ble High Court of Telangana and various other Courts and therefore, the question of applicability of provisions u/s. 45 and section 50C of the Act will not arise and hence, the impugned addition has no legs to stand.
9.1 We find under identical circumstances, the co-ordinate Bench of the Tribunal in the case of Severa Constructions Pvt.Ltd.
10Ponnapula Sanjeeva Parthasarathy & batch of other appeals (supra) vide order dated 19.10.2022 has restored the issue to the file of the AO by observing as under:-
4. The brief facts of the lead appeal are that assessee has filed its original return of income for A.Y. 2017-18 on 31.03.2018 declaring loss of Rs.1,36,71,286/-. Subsequently, search and seizure operations u/s 132 of the IT Act, 1961 were carried out in the case of M/s. Goldstone Infratech Ltd. And its other associated companies on 09.11.2017. The case had been centralized and notice u/s 153A had been issued to the assessee and in response, the assessee filed its return of income for A.Y. 2017-18 on 25.09.2019 declaring loss of Rs.1,36,71,286/-. Thereafter, the assessment was completed u/s 143(3) r.w.s. 153C of the I.T. Act by making an addition of Rs.18,46,153/- as undisclosed capital gains accruing on account of sale of land.
5. Feeling aggrieved with the order of AO, assessee carried the matter before ld.CIT(A), who partly allowed the appeal of assessee.
6. Before us, ld. AR for the assessee submitted that in an identical case i.e. Smt. Indrani Prasad Vs. ACIT (ITA No.402/Hyd/2021 dt.08.04.2022), the Tribunal has remanded the matter to the file of Assessing Officer with the following observations :
"2. Coming to the assessee's sole substantive grievance that both the lower authorities have erred in law and on facts in making undisclosed income addition of the alleged capital gains income of Rs.16,66,666 in the course of assessment dt.27.12.2019 as upheld in the CIT(A)'s order, learned counsel's first and former argument is that the very sale transfer deed herein stands annulled in hon'ble jurisdictional high court's detailed judgment dt.16.08.2018 and therefore, the impugned addition has no legs to stand.
3. The Revenue's case on the other hand is that the assessee has raised the foregoing argument for the first time before the tribunal which requires afresh factual verification.
4. We have given our thoughtful consideration to the preceding rival submissions and find merit in both parties' stands in principle. Case records prima facie suggest that hon'ble jurisdictional high court's common detailed judgment in W.P. Nos.11032, 11034 and 11037 of 2018 dt.16.08.2018 hereinabove has indeed quashed the Revenue's action in issue therein. The fact also remains that whether or not the assessee's capital asset forming subject matter of transfer herein is covered under the said decision or not indeed requires the Assessing Officer's factual verification. We thus restore the instant issue back to the learned assessing authority for its fresh adjudication. We make it clear that in case it is found that the impugned transfer itself stands annulled, the impugned addition would be treated to be non- est since having no legs to stand. Ordered accordingly.11
Ponnapula Sanjeeva Parthasarathy
5. This assessee's appeal is allowed for statistical purposes in above terms."
7. Ld.AR further submitted that similar directions may be issued in the present cases.
8. ld. DR for the Revenue has raised no objection for remanding the matter back to the file of Assessing Officer for fresh adjudication in the light of the decision of Co-ordinate Bench of the Tribunal in the case of Smt. Indrani Prasad (supra).
9. We have heard the rival submissions and perused the material on record. In the present case, the sole grievance of the assessee is that both the lower authorities passed an erroneous order by making addition of Rs.18,46,153/- u/s 50C of the Act. Ld.AR for the assessee argued that the title of the alleged property vide document no.3867/2016 dt.24.04.2016 was in dispute before the Hon'ble High Court of Telangana and in various other courts and as such the question of applicability of provisions u/s 45 and 50C of the Act will not arise and hence, the impugned addition has no legs to stand. Whereas, ld. DR before us contended that the assessee has raised the foregoing argument for the first time before the Tribunal which requires afresh factual verification. In view of the rival submissions of the parties and on perusal of the case record, we feel that the matter requires fresh adjudication for determination of capital gain arising out of the transfer of capital asset, which as per the case of the assessee is covered by the decision of jurisdiction High Court in the case referred W.P. Nos.11032, 11034 and 11037 of 2018 dt.16.08.2018 hereinabove. The Assessing Officer is directed to record categorical finding with respect to owning of capital asset, if any, by the assessee or not and the effect of decision of jurisdictional High Court on the ownership of the capital asset by the assessee. After deciding the factual issues referred hereinabove, the Assessing Officer shall conduct afresh assessment. In the light of the above, we restore the instant issue back to the learned assessing authority for its fresh adjudication. Ordered accordingly.
10. In the result, the appeal of assessee in ITA No.388/Hyd/2021 is allowed for statistical purposes.
10. Since the facts of the instant appeal are identical to the facts of the case decided by the Tribunal in the case of Severa Constructions Pvt.Ltd. & batch of other appeals(supra), therefore, respectfully following the same we restore the issue to the file of the AO for fresh adjudication of the issue in the light of the direction of the Tribunal in the aforementioned case. Needless to say, the AO shall give due opportunity of being heard to the assessee and decide the issue as per fact and law. We hold and 12 Ponnapula Sanjeeva Parthasarathy direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.
11. In the result, the appeal filed by the assessee is allowed for statistical purposes.
SA.No.23/Hyd/2022 in ITA No.396/Hyd/2022:
12. After hearing both the sides, we find the appeal of the assessee has been heard and the matter has been restored to the file of the AO for fresh adjudication. Therefore, the stay application filed by the assessee becomes infructuous and accordingly, the same is dismissed.
13. In the result, the appeal filed by the assessee is allowed for statistical purposes and the stay application filed by the assessee is dismissed.
Order pronounced in the Open Court on 3rd February, 2023 Sd/- Sd/-
(K.NARASIMHA CHARY) (RAMA KANTA PANDA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Hyderabad, dated 3rd February, 2023
PVV/Thirumalesh/sps
Copy to:
S.No Addresses
1 Ponnapula Sanjeeva Parthasarathy, C/o. P.Murali &
Co.Chartered Accountants, 6-3-655/2/3, Somajiguda Hyderabad-500 082 2 ACIT,CC-3(2), Hyderabad 3 CIT(A)-11, Hyderabad 4 Pr.CIT(Central),Hyderabad 5 DR, ITAT Hyderabad Benches 6 Guard File By Order