Income Tax Appellate Tribunal - Ahmedabad
Shyamlee R. Varma,, Ahmedabad vs The Income Tax Officer, Ward-5(2)(4),, ... on 3 August, 2017
आयकर अपीलीय अिधकरण,
अिधकरण अहमदाबाद यायपीठ 'बी' अहमदाबाद।
IN THE INCOME TAX APPELLATE TRIBUNAL
"B" BENCH, AHMEDABAD
BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER
AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER
ITA No. 3150/Ahd/2014 & CO No. 332/Ahd/2014
नधारण वष/Assessment Year: 2006-07
ITO, Vs. Smt. Madhvi R. Varma,
Ward 5 (2)(3), Hariom Avenue,
Ahmedabad 31/B, Nr. Municipal Market,
Navrangpura, Ahmedabad
PAN : ABLPV 7171 P
ITA No. 3213/Ahd/2014 & CO No. 333/Ahd/2014
नधारण वष/Assessment Year: 2006-07
ITO, Vs. Smt. Shitaldevi M. Varma
Ward 5 (2)(3), Hariom Avenue,
Ahmedabad 31/B, Nr. Municipal Market,
Navrangpura, Ahmedabad
PAN : AASPV 6479 N
ITA No. 3214/Ahd/2014 & CO No. 334/Ahd/2014
नधारण वष/Assessment Year: 2006-07
ITO, Vs. Shyamlee R. Varma,
Ward 5 (2)(3), Hariom Avenue,
Ahmedabad 31/B, Nr. Municipal Market,
Navrangpura, Ahmedabad
PAN : ACPPV 6094 E
अपीलाथ / (Appellant) यथ / (Respondent/Cross-
Objector)
Revenue by : Shri Mudit Nagpal, Sr. DR
Assessee by : Shri P.M. Mehta with
Shri Gulab Thakor, AR
सु न वा ई क ता र ख/ Date
of Hearing : 02/08/2017
घोषणा क तार ख / Date of Pronouncement: 03/08/2017
आदे श/O R D E R
PER RAJPAL YADAV, JUDICIAL MEMBER:
The Revenue has challenged separate orders of the ld. CIT(A)-XVI, Ahmedabad dated 29.09.2014 passed on the respective appeal of the ITA Nos. 3150, 3213, 3214 & CO Nos. 332, 333, 334/Ahd/2014 Assessee : Madhvi, Shitaldevi & Shyamlee Varma For AY: 2006-07 2 aforesaid three respondents in Assessment Year 2006-07. On receipt of notice in the Revenue's appeal, all the three respondents have filed Cross- Objection bearing Nos. 332 to 334/Ahd/2014.
2. With the assistance of the ld. Representatives, we have gone through the record carefully. It was pointed out that the issues involved in all these appeals are common and therefore, we proceed to decide all these appeals by this common order.
3. The grievance of the Revenue is that the ld. CIT(A) has erred in deleting the addition of Rs.39,35,166/- made in the hands of each respondent in these three appeals. It is pertinent to observe that ld. Assessing Officer has made a discussion by taking cognizance of the assessment order passed in the family group persons which is reproduced as under:-
"The Search & seizure action carried out by the department on 10.05.2006 in the Swagat group. Group business activities controlled by three Varma brothers namely Shri Mahesh, Ravi and Rajni R. Varma, the residence of all three brothers also covered in the search action. During the search proceedings carried out at the residence premises of Shri Mahesh Varma some incrementing papers seized which were inventorised as per annexure A-1. Assessment proceedings in the case of Shri Ravi Ramlabhaya Varma u/s. 153A r.w.s, 143(3) of the I.T. Act was completed on 31.12.2008 by Assistant Commissioner of Income-tax, Central Circle-2(4), Ahmedabad and total assessed income of Rs.91,19,910/- with made an addition of totaling Rs.89,32,989/- on account of various issues. During the assessment proceedings on deep scrutinized of seized papers as per Annexure A-1, page no. 3 the assessing officer ascertained that on the said page detailed mentioned related to land sales at Thattej belongs to Varma brothers and other family members in which the total consideration received by the Varma family members of Rs. 2,36,11,000/- (11111000+12500000) as per the table-I and fable-2 drawn by the assessee in seized papers is being utilized partly for the purpose of Ghuma land, out of total said sale consideration i.e. Rs. 2,36,00,000/- received by the assessee group, only Rs. 60,00,000/- has been declared by the assessee group as a undisclosed income related to sale of Thaltej land. Therefore the remaining balance of Rs.1,76,11,000/-
ITA Nos. 3150, 3213, 3214 & CO Nos. 332, 333, 334/Ahd/2014 Assessee : Madhvi, Shitaldevi & Shyamlee Varma For AY: 2006-07 3 (23611000-6000000) required to be treated as cash received by the Varma family members on account of sale of Thaltej land and added back to the all six family members in equal share i.e. 1/6 (one sixth) of Rs. 1,76,11,000/- which is comes at Rs. 29,35,166/- in the hand of each members including the three brothers and their spouse(wives). Accordingly, the A.O. addition made of Rs.29,35,166/- in the case of Shri Ravi Ramlabhaya Varma, Shri Mahesh R. Varma and Shri Rajni R. Varma but the addition was not made by the A.O. in the case of wives of the all three brothers as the case of all three ladies are not centralized with the central circle. Accordingly, the A.O. sent intimation to the concerned assessing officers of the all the three lady members vide letter dated 04.02.2009 for faking necessary action and made an addition of Rs. 29,35,166/- in the case of each lady members."
4. On the basis of above discussion, ld. Assessing Officer has made addition of Rs.29,35,166/- in the hands of each respondent. Similarly, he made addition of Rs.10 lacs in the hands of each assessee which represents 1/6th of Rs.60 lacs alleged to be received as advance for sale of the land.
5. On appeal, ld. CIT(A) has deleted this addition.
6. Before us, at the very outset ld. Counsel for the assessee(s) submitted that in the case of assessees' husbands viz. Shri Ravi Ramlabhaya Varma, Shri Mahesh R. Varma and Shri Rajni R. Varma this identical issue was considered wherein remaining 1/6th portion was added. In other words, out of total amount, the Assessing Officer has added 1/6th in each hand of the six individuals, i.e. husbands & wives. The Tribunal has held that the land did not belong to the individual, rather it belongs to the HUFs. Similarly, the Tribunal has held that the land was not sold during this year; rather it was sold in Assessment Year 2007-08. The advance received by the HUFs and forfeited by the vendor would go to reduce the cost of acquisition when capital or business gain would be computed on sale of that land. The discussions made by the Tribunal read as under:-
"73. After going through rival submissions and material on record, we find that the first question which arises in this case is whether the land at Thaltej ITA Nos. 3150, 3213, 3214 & CO Nos. 332, 333, 334/Ahd/2014 Assessee : Madhvi, Shitaldevi & Shyamlee Varma For AY: 2006-07 4 belongs to the individuals or their HUF that is, Mahesh R Varma HUF, Rajni R Varma HUF and Ravi R Varma HUF. In order to know as to who was the owner of the Thaltej land, the ld. Authorized Representative was asked by CIT(A) to furnish the copies of purchase deeds etc to establish that the survey number 147 and 150 are inherited by the appellants from their forefathers. After examining the details filed by the ld. Authorized Representative. It is noticed that the agricultural land bearing survey number 150 was purchased by the grandfather Shri Khanchand Varma before his death in 1961. Shri Khanchand Varma had three sons namely Shri Ramlabhaya K Varma, Ishwardas K Varma and Shri Santaram K Varma. Vide release deed dated 28/4/1997, Shri Santaram K Varma and Ishwardas K Varma released their rights in survey number 150 in favour of their brother Shri Ramlabhaya K Varma. The relevant entry has been made in the records on 30/4/1997.
74. Shri Ramlabhaya K Varma had five sons namely Mukesh R Varma, Mahesh R Varma, Mahendra R Varma, Rajni R Varma and Ravi R Varma. The land bearing survey number 147 at Thaltej was purchased by Shri Ramlabhaya K Varma on 27/10/1988. Before his death on 9/3/1997 a will was made by him which was executed on 9/1/1997. As per this will, the movable and immovable properties of Shri Ramlabhaya K Varma was to be given to his legal heirs. The property of Thaltej land was to be equally distributed among his five sons namely Mukesh, Mahesh, Mahendra, Rajni and Ravi Varma.Vide declaration dated 14/12/2002 Shri Mukesh R Varm'a, Mahendra R Varma and Madhu ben R Varma daughter of Ramlabhaya K Varma released their rights in favour of Mahesh R Varma, Rajni R Varma and Ravi R Varma. Their names were deleted from the records of the Talati on 1/1/2003 as per the form number 6 -- the statement of rights. The rights of records in form number 6 of survey number 147 and 150 was produced before CIT(A). The copies of declaration and release deeds were also filed before him. In view of the above facts, it was found that the land at Thaltej bearing survey number 147 and 150 was never purchased by the appellants but was inherited by them from their father Shri Ramlabhaya K Varma as discussed above.
75. In support of the existence of HUF, the copies of original return of income for assessment year 2005 - 2006, 2006 - 2007 and 2007 - 2008 was filed by the AR in respect of the following entities :
1. Ramlabhaya K Varma HUF proprietor of Hariom Corporation engaged in the business of commission and finance.
2. Mahesh R Varma HUF
3. Rajni R Varma HUF and ITA Nos. 3150, 3213, 3214 & CO Nos. 332, 333, 334/Ahd/2014 Assessee : Madhvi, Shitaldevi & Shyamlee Varma For AY: 2006-07 5
4. Ravi R Varma HUF 5. Khanchand Ladharam HUF proprietor of Kishore Corporation for assessment years 2005-06 filed on 31/8/2005 and assessment year 2006-07 filed on July 2006.
From the above, it was found clear that the HUF of Shri Mahesh R Varma, Rajni R Varma and Ravi R Varma were in existence. This reasoned finding of CIT(A) is upheld by us.
76. The next question arose as to who was assessable entity in respect of the sale of survey number 147/150. According to the Assessing Officer since the above mentioned land was standing in the name of the three brothers and their wives, the sale proceeds of the land was assessable in their individual capacity. Another argument of the Assessing Officer was that the sale proceeds of the part of same land in subsequent years had been shown in the returns of the individuals namely the three brothers and their wives in equal ratio. The argument of Authorized Representative was that since the land bearing survey number 147 and 150 was inherited land, the same belongs to the HUF of Mahesh R Varma, Rajni R Varma and Ravi R Varma and not to the individuals. At the time of appellate proceedings, Authorized Representative admitted that it was a mistake on the part of the assessees to show the sale proceeds of the land in subsequent years in individual hands as against in the bands of the HUF which does not change the legal situation on the issue that land in question belong to respective HUFs.
77. Once the land was not sold to Bhavesh Chandulal, the person mentioned in the seized paper, could the cash amount received from him against the sale of the land, be taxed as unaccounted income of the seller. As stated above, the part of the Thaltej land was agreed to be sold to one Bhavesh Chandulal. Against the sale of the land some amount was received from bim. However, the land could not be finally sold to him because he wanted the land to be developed in a particular way which was not possible as per the rules and regulations of AUDA. The appellant therefore, forfeited an amount of Rs. 60 Lacs and returned the balance amount to him. The amount of Rs. 60 Lacs has been shown by the three HUF of Shri Mahesh Varma, Rajni Varma and Ravi Varma in their return of income in equal proportion of Rs.20 Lacs each. The portion of the land was subsequently sold to Chandrakant K Shah on 1/2/2007, a copy of sale deed was also produced before CIT(A) at first appellate stage. In this background, CIT(A) observed that since the sale was not finally made to Shri Bhavesh Chandulal, the cash amount received against the sale of the land could not be taxed in the hands of the seller particularly when the portion of same land has been sold to somebody else, that is, Shri Chandrakant K Shah in subsequent year. Therefore, the amounts received from Shri Bhavesh Chandulal against the sale of the Thaltej land could not be taxed unless the land has been finally sold to him. Since in this ITA Nos. 3150, 3213, 3214 & CO Nos. 332, 333, 334/Ahd/2014 Assessee : Madhvi, Shitaldevi & Shyamlee Varma For AY: 2006-07 6 case, the land has not been sold to Shri Bhavesh Chandulal but to Shri Chandrakant K Shah, the amount received from Shri Bhavesh Chandulal could not be treated as unaccounted income of the appellants. Had the Assessing Officer established that the payments were made by Shri Bhavesh Chandulal but the land was registered in the name of Shri Chandrakant K Shah at the instructions of Shri Bhavesh Chandulal, then only the amount received from him could have been taxed in the hands of the sellers. It was admitted by the Assessing Officer that an amount of Rs. 25 Lacs was received by cheque against the sale of Thaltej land. This amount was stated to have been received by the bigger HUF namely Kishore Corporation a proprietary concern of Khanchand Varma HUF, the grandfather of the appellants on 12/9/2005, which was returned back during the period 22/3/2006 to 30/3/2006. Further, 17,503 sq. mtr. of land of survey number 147 has been sold to Shri Chandrakant K Shah on 1/2/2007 for Rs. 60 Lacs. As per the sale deed, the cheques of Rs. 10 Lacs each has been paid to Shri Rajni R Varma, Mahesh R Varma, Ravi R Varma and their wives namely Madhvi Varma, Shyamalina Varma and Sheetal Varma by Shri Chandrakant K Shah. The case of the Assessing Officer was that since the sale proceeds of the land had been equally distributed by the above-mentioned six members of Varma family, the amount received from Bhavesh Chandulal was also required to be assessed among the same six members in equal proportion. As held above that the land in question has been inherited by the HUF of three brothers, the sale proceeds of the land was taxable in the hands of their HUF and not in the individual capacity. The Assessing Officer was therefore rightly directed to assess the sale proceeds received from Shn Chandrakant K Shah in the hands of the Rajni R Varma HUF, Mahesh R Varnia HUF aiidRayi R Varma HUF in equal proportion. As the sale of the land could not be finally made to Shri Bhavesh Chandulal, the amount received from him could not be taxed either in the hands of HUF or individuals. However, the Assessing Officer was left free to investigate the actual sale proceeds of survey number 147 finally sold to Chandrakant K Shah on the basis of the entries made in the seized papers which indicates the cash portion of Rs.2.36 crores over and above the cheque amount of Rs. 25 Lacs. He might have taken into consideration the fact that in the last quarter of 2005 the total sale consideration of survey number 147 was to the tune of Rs. 2.61 crores. This reasoned factual finding of CIT(A) needs no interference from our side. We uphold the same.
78. The next issue is regarding whether the entries made in both the tables in the seized paper represent the amount received from Bhavesh Chandulal or the lower table was in respect of the transactions in respect of another land at Ghuma which was developed by the group company of the appellants namely Ralson infrastructure Pvt Ltd. According to the Assessing Officer the transactions in both the tables were in continuation of the same land deal ITA Nos. 3150, 3213, 3214 & CO Nos. 332, 333, 334/Ahd/2014 Assessee : Madhvi, Shitaldevi & Shyamlee Varma For AY: 2006-07 7 bearing survey number- 147 at Thaltej. Whereas, the case' of the appellant was that the lower table did not represent the transactions of Thaltej land but represents the receipt from the members of Hariom Villa and expenditures there, on incurred by Ralson infrastructure Pvt Ltd. On the perusal of the transactions, CIT(A) rightly agreed with the Assessing Officer that the transactions mentioned in both the tables are in continuation. This was evident from the fact that the table number-1 referred to by the Assessing Officer in the assessment order represents rec&ipt of cash and cheque on the left side from Bhavesh Chandulal. In the right hand side of this table the application of the said amounts had been mentioned up to November 2005. In the second table'the first entry of rupees 2 lacs represents the closing balance of the first table and was shown as carried forward balance in the second table. In the left side of the second table, the name of Bhavesh Chandulal was appearing along with the dates of amount received from him. On the right hand side of this second table, the application of money received from Bhavesh Chandulal had been mentioned for the month of December 2005 and January 2006. Against the total of 125 (which represents 1.25 crores), the name of Shri Bhavesh Chandulal was appearing. This means that in the second table total amount of Rs. 1.25 crores had been received from Bhavesh Chandulal. Therefore, CIT(A) rightly held that the transactions in first and second table were in continuation. In fact the name of Ghuma land was appearing on the right hand side of this table which only proves that the money received from Bhavesh Chandulal has been invested or utilised for the expenses of Ghuma property. It did not give the details of the members contributions or the expenditure in respect of Hariom Villa which was developed by Ralson infrastructure Pvt Ltd at Ghuma.
79. In sum and substance, it was held that the survey number 147 and 150 at Thaltej was owned by the HUF of Shri Rajni Varma, Mahesh Varma and Ravi Verma and not by the six individuals as held by the AO in the assessment order. The sale proceeds were accordingly taxable in the hands of Rajni Varma HUF, Mahesh Varma HUF and Ravi Verma HUF on substantive basis. In fact the appellants have rightly shown the forfeiture income of Rs. 60 Lacs in equal proportion in the hands of the three HUF, since the land was not sold to Bhavesh Chandulal, the cash received from him against the sale of the land could nnot be taxed. The sale proceeds was taxable only when the land was finally sold to Shri Chandrakant K Shah in the hands of the three HUF in assessment year 2007-2008. The addition of Rs. 29,35,166 made on account of entry on the loose papers and addition of Rs. 10 lakh towards the sale of block of land bearing survey number 150 at Thaltej made in the case of the individual appellants was rightly directed to be deleted. The forfeiture income of Rs. 60 Lacs was taxable in the hands of three HUFs of Rajni Varma HUF, Mahesh Varma HUF and Ravi Varma HUF in equal proportion of Rs. 20 Lacs each on substantive basis."
ITA Nos. 3150, 3213, 3214 & CO Nos. 332, 333, 334/Ahd/2014 Assessee : Madhvi, Shitaldevi & Shyamlee Varma For AY: 2006-07 8
7. Respectfully following the above findings of the Co-ordinate Bench, we are of the view that the additions made in the hands of each assessee are not sustainable.
8. So far as the Cross-objections are concerned, the ld. Counsel for the assessee did not press the cross-objections; hence rejected.
9. In the result, all the appeals filed by the Revenue and the Cross- objections filed by the assessee are dismissed.
Order pronounced in the Court on 3rd August, 2017 at Ahmedabad.
Sd/- Sd/-
(AMARJIT SINGH) (RAJPAL YADAV)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Ahmedabad; Dated 03/08/2017
Biju T., Sr.PS
आदे श क त ल प अ!े षत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent.
3. संबं धत आयकर आयु"त / Concerned CIT
4. आयकर आयु"त(अपील) / The CIT(A)
5. %वभागीय त न ध, आयकर अपील य अ धकरण, अहमदाबाद / DR, ITAT, Ahmedabad
6. गाड फाईल / Guard file.
/ BY ORDER,
आदे शानुसार
TRUE COPY
उप/सहायक पंजीकार (Dy./Asstt.Registrar)
/ ITAT, Ahmedabad
आयकर अपील य अ'धकरण, अहमदाबाद