Income Tax Appellate Tribunal - Hyderabad
Sri I. Venkateswara Reddy, , Kadapa vs Department Of Income Tax on 11 January, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL
HYDERABAD BENCH 'B', HYDERABAD
BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER
AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER
ITA No. 474/Hyd/12
Asst. Year: 2008-09
Income Tax Officer, V/s. Sri I. Venkateswara Reddy,
Ward - 1, Kadapa. Bangalore.
(PAN - AADP16938G)
(Appellant) (Respondent)
Appellant by : Smt. Amisha S. Gupt
Respondent by : Shri M. Chandramouleswara
Rao
Date of Hearing 25-04-2013
Date of 25-04-2013
Pronouncement
O R D E R
Per Saktijit Dey, Judicial Member:
This appeal filed by the revenue is directed against the order of CIT(A), dated 11/01/2012 Hyderabad passed in appeal No. ITA No. 0182/CIT(A)/GNT/10-11.
2. The grievance of the Department in the present appeal is with regard to the order passed by the CIT(A) in deleting the addition of Rs. 22,43,110/- on account of short term capital gain.
3. Briefly the facts relating to the issue in dispute are the assessee is an individual deriving income from house property and income from reiki and healing practices. For the year under dispute, the assessee filed his return of income on 29/06/2009 2 ITA NO. 474/H/12 Shri I. Venkateswara Reddy declaring total income of Rs. 1,97,680/-. Initially the return was processed u/s 143(1) of the Act. Subsequently, however, the assessee's case was selected for scrutiny assessment. In course of the scrutiny assessment proceedings, the AO noted that the assessee had sold agricultural land to the extent of 5 acres 20 guntas in Survey No. 5 & 6 at Manasandhra Village, Harahalli Hubli in rural Bangalore on 11/09/2007 for a consideration of Rs. 55.00 lakhs. The assessee claimed exemption u/s 54B in respect of capital gains arising from the transfer of agricultural land by purchasing agricultural land before the due date for filing the return of income. The details of agricultural land purchased are disclosed by the assessee as under:
Date of Cost of new Registration Stamp duty Total cost purchase agricultural charges (Rs.) as eligible land (Rs.) (Rs.) u/s 54B 22/07/2008 500000 35935 301390 837325 22/04/2008 500000 17205 143540 660745 03/04/2008 587500 13735 112540 713775 14/03/2008 500000 13245 110040 623245 Total cost of agrl. Lands eligible for exemption 2835130 u/s 54B
4. The AO on verification of the statement of income, noted that the assessee had claimed the cost of new agricultural land bought from Smt. Chudamma on 22/07/2008 as Rs. 35,44,000/-
as against Rs. 5,00,000/- mentioned in the registered sale deed No. I 2078/08-09, though the valuation adopted by the Stamp Valuation Authority for the land was Rs. 35,44,000/-. When the AO asked the assessee to explain the discrepancy, the assessee submitted that although he had paid an amount of Rs. 35,44,000/- towards the cost of land, it was mentioned as Rs. 5,00,000/- at the instance of the seller. In support of his contention, the assessee submitted copies of four vouchers bearing left thumb impression of Smt. Chudamma as a token of 3 ITA NO. 474/H/12 Shri I. Venkateswara Reddy receipt of the following amounts:
S.No. Voucher Amount Mode of Cheque
date paid (Rs.) payment No. if any
1 22/07/2008 500000 By cheque 839942
2 22/07/2008 2700000 By Cheque 839943
3 22/07/2008 100000 By Cash -
4 22/07/2008 244000 By Cash -
5. The AO, though, accepted that there is evidence of payment of Rs. 35,44,000/- towards purchase of 1 acre 23 guntas of land at Survey No. 79/2 of Hosakate, he nevertheless rejected the contention of the assessee on the reasoning that stamp valuation authority being appropriate authority, the amount of Rs. 5,00,000/- mentioned as sale consideration in the registered sale deed has to prevail. Accordingly, the AO worked out the 'short term capital gain' by reducing the exemption claimed u/s 54B of the Act to Rs. 28,35,130/-, thereby determining the short term capital gain at Rs. 22,43,110/-, which was added to the income of the Assessee.
6. The assessee being aggrieved of the short term capital gain determined by the AO, preferred an appeal before the CIT(A).
7. In the course of the hearing of the appeal before the CIT(A), the assessee apart from reiterating the stand taken before the AO submitted that though the assessee has actually paid an amount of Rs. 35,44,000/- to Smt. Chudamma towards sale consideration of agricultural land to the extent of 1 acre and 23 guntas in survey No. 79/2 but the sale consideration has been wrongly quoted as Rs. 5,00,000/- in the registered document in stead of actual sale consideration of Rs. 35,44,000/-. He submitted that this is clearly evident from the fact that even though in the registered document the sale consideration has been mentioned 4 ITA NO. 474/H/12 Shri I. Venkateswara Reddy at Rs. 5,00,000/-, but, the stamp valuation authority has assessed the registration charges on the amount of Rs. 35,44,000/- and which was also paid by the assessee. In support of his contention, the assessee also submitted a sworn affidavit of Smt. Chudamma wherein she affirmed that she had sold her agricultural land in Survey No. 79/2, Hosakate Village admeasuring 1 acre 23 guntas to the assessee for a sale consideration of Rs. 35,44,000/- and received Rs. 32,00,000/- through cheque and balance of Rs. 3,44,000/- by cash on 22/07/2008. It was further stated in the affidavit that she has issued receipts duly signed by her as a token of receipt of Rs. 35,44,000/- from the purchaser, i.e., the assessee. The CIT(A) after considering the contentions raised on behalf of the assessee deleted the addition made on account of 'short term capital gain' by observing as under:
"6.2.2 In as much as the issue of not taking the actual price paid vis-a-vis the one appearing in the deed is concerned, it requires a little background to be mentioned. It is that the appellant has sold agricultural lands admeasuring 5 acres and 20 guntas in rural Bangalore on 11/09/2007 for a consideration of Rs. 55,00,000/- and claimed exemption u/s 54B by purchasing agricultural lands before the due date for filing return u/s 139(1), i.e., before 30/07/2008. As regards to such purchases, purchase of agricultural lands from Smt. Chudamma on 22/07/2008 is one of the transactions. The amount paid as per receipts produced and also the value adopted for the purpose of stamp duty by the registration authorities was Rs. 35,44,000/-. But, however this amount was mentioned as Rs. 5,00,000/- in the sale (purchase for the appellant) deed, as requested by the person who sold the lands, i.e., Smt. Chudamma. This situation was not convincing to the Assessing Officer, who has believed that actual amount involved is Rs. 5,00,000/- only but not Rs. 35,44,000/- and accordingly reworked the capital gains at Rs. 22,43,110/- and brought the same to tax disregarding the explanations offered at the time of assessment proceedings. It is seen that the Assessing Officer has rejected the evidence produced by the appellant without assigning any reasons. Thus, the addition made by the Assessing Officer without mentioning any cogent reasons or 5 ITA NO. 474/H/12 Shri I. Venkateswara Reddy bringing any cogent material on record is not sustainable. Accordingly, the Assessing Officer is directed to delete the same."
8. Being aggrieved of the aforesaid order of CIT(A), the revenue is in appeal before us.
9. The learned DR submitted before us that the registered sale deed having clearly mentioned the fact that the property in question was purchased at Rs. 5,00,000/-, the CIT(A) was not justified in ignoring the registered sale deed and accepting the assessee's claim that the property was purchased for a consideration of Rs. 35,44,000/-. She further submitted that though the assessee submitted the affidavit of the seller of the property for the first time before him, the CIT(A) without calling for a remand report of the AO to examine the veracity of the statement made in the affidavit has accepted the same which is contrary to the accepted procedure in admitting additional evidence.
10. The learned AR supporting the order passed by the CIT(A) submitted that apart from the affidavit submitted before the CIT(A) the other evidences produced before the AO clearly establishes the fact that the assessee had purchased the agricultural land from Smt. Chudamma for a consideration of Rs. 35,44,000/- and not Rs. 5,00,000/-. He submitted that the payments made through cheques clearly bear testimony to this fact. It was further submitted that in fact the assessee is taking steps for correction of the amount mentioned in the registered sale deed.
11. We have heard the rival submissions and perused the 6 ITA NO. 474/H/12 Shri I. Venkateswara Reddy material on record. It is a fact on record that the registered sale deed for purchase of 1 acre 23 guntas of land at Survey No. 79/2 mentions the sale consideration as Rs. 5,00,000/-. The registered sale deed is most authentic document to show the actual sale consideration for which the property is sold. Therefore, when the registered sale deed mentioned the sale consideration at Rs. 5,00,000/- it is for the assessee to substantiate by producing clinching evidence that the actual sale consideration paid was Rs. 35,44,000/- and not Rs. 5,00,000/- as mentioned in the registered sale deed. It is also a fact that the affidavit from the seller of the agricultural land was submitted for the first time before the CIT(A) and the AO never had any opportunity to examine the veracity of statement made in the affidavit. The seller of the property Smt. Chudamma was also not produced for examination either before the AO or before the CIT(A). In these circumstances, the CIT(A) was not correct in accepting the claim of the assessee by ignoring the amount mentioned in the registered sale deed. Therefore, after considering the totality of facts and circumstances, we are of the view that the entire issue requires to be considered afresh by the AO. Accordingly, we set aside the order passed by the CIT(A) and remit the matter back to the file of the AO who shall decide the issue afresh after considering all the materials and evidences on record and any further material or evidences which may be produced by the Assessee in support of his claim. The AO may also, if necessary, consider examining the seller Smt. Chudamma for arriving at a definite conclusion as to what is the exact amount received by her from the assessee towards sale consideration of the agricultural land in question. The AO shall afford a reasonable opportunity of being heard to the assessee in the matter.
7ITA NO. 474/H/12 Shri I. Venkateswara Reddy
12. In the result, appeal of the assessee is allowed for statistical purposes.
Order pronounced in the court on 25 th April, 2013.
Sd/- Sd/-
(Chandra Poojari) (Saktijit Dey)
Accountant Member Judicial Member
Hyderabad, Dt/- 25 th April, 2013.
kv
Copy forwarded to:
1. Income-tax Officer, Ward-1, Simhapuri Colony, Kadapa
- 516 001.
2. Sri I. Venkateswara Reddy, O-101, Mantri Paradise, Bannergatta Road, Arekere Gate, Bangalore - 560 076.
3. CIT(A), Guntur.
4. CIT, Tirupathi
4. Departmental Representative, ITAT, Hyderabad.