Income Tax Appellate Tribunal - Pune
Radhesham Ramnarayan Rathi, Jalna vs Department Of Income Tax on 5 May, 2014
IN THE INCOME TAX APPELLATE TRIBUNAL
PUNE BENCHE "B", PUNE
BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER
AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER
ITA No.981/PN/2013
(Assessment Year : 2007-08)
Income Tax Officer,
Ward 1 (3), Jalna. .... Appellant
Vs.
Shri Radhesham Ramnarayan Rathi,
Manoj Agencies, New Mondha,
Jalna.
PAN : ABBPR3463J .... Respondent
C.O. No.54/PN/2014
(Arising out of ITA No.981/PN/2013)
(Assessment Year : 2007-08)
Shri Radhesham Ramnarayan Rathi,
C/o Bansilal Kabra, 20, Ambika Market,
Jalna - 431 203.
PAN : ABBPR3463J .... Cross Objector
Vs.
Income Tax Officer,
Ward 1 (3), Jalna. .... Appellant in Appeal
Department by : Shri S. P. Walimbe
Assessee by : Shri Parikshit S. Kabra
Date of hearing : 05-05-2014
Date of pronouncement : 20-05-2014
ORDER
PER G. S. PANNU, AM
The captioned appeal by the Revenue and the Cross-objection by the assessee is directed against an order of the Commissioner of Income Tax (Appeals), Aurangabad dated 15.02.2013 which, in turn, has arisen from an order dated 15.12.2011 passed by the Assessing Officer u/s 144 r.w.s. 147 of the Income-tax Act, 1961 (in short "the Act") pertaining to the assessment year 2007-08.
2 ITA No.981/PN/2013C.O. No.54/PN/2014
2. Although, the Revenue has raised multiple Grounds of Appeal but the solitary issue raised in this appeal is relating to the action of the CIT(A) in deleting an addition of Rs.36,43,600/- made by the Assessing Officer on account of long term capital gains.
3. In brief, the relevant facts are that assessee is an individual engaged in the business of distributor and trading as general merchants. For the assessment year 2007-08, he filed a return of income declaring total income of Rs.1,00,390/- which was processed u/s 143(1) of the Act on 11.03.2008. However, the Assessing Officer reopened the assessment by issuance of notice u/s 148 of the Act dated 08.02.2011 on the ground that certain income chargeable to tax has escaped assessment. As per the Assessing Officer, assessee had failed to declare capital gain on sale of plot of land at Survey No.4076, Municipal Property No.1-28-76, Mantha Road, Jalna for a total consideration of Rs.21,00,000/-. In the subsequent assessment finalized u/s 144 r.w.s. 147 of the Act dated 15.12.2011, the Assessing Officer has relied upon a sale-deed dated 25.07.2006 whereby it has been held that assessee sold the aforesaid land for a total consideration of Rs.21,00,000/-. Further, as per the Assessing Officer, the value of the said land for the purposes of stamp duty valuation was Rs.36,43,000/- and therefore he invoked the provisions of section 50C of the Act and computed the total long term capital gain of Rs.36,43,000/-, which was added to the originally returned income of Rs.1,00,390/-.
4. In appeal, the assessee broadly contended that he was not the owner of the land sold and in-fact he was only a General Power of Attorney (GPA) holder for the specific purpose of executing the sale-deed dated 25.07.2006 in favour of the purchasers of land i.e. Shri Deepak Kundanlal Rathi and Shri Shivratan Motilal Rathi whereas the seller was Shri Pawankumar Bhavarilal Agrawal. In support of the same, assessee furnished the following : (i) copy of 3 ITA No.981/PN/2013 C.O. No.54/PN/2014 registered sale-deed of land dated 25.07.2006; (ii) copy of Register maintained by the Government authorities; (iii) copy of the GPA dated 25.07.2006 given to assessee by the owner of the land, Shri Pawankumar Bhavarilal Agrawal; (iv) copy of affidavits of the purchasers of land, Shri Deepak Kundanlal Rathi and Shri Shivratan Motilal Rathi dated 25.07.2006; (v) copy of Court decree dated 30.10.2003 and compromise decree of the Court dated 10.11.2003 in respect of the dispute between the purchasers of the land and the owner/seller of the land, Shri Pawankumar Bhavarilal Agrawal. On the basis of the aforesaid, assessee submitted that the owner of the land i.e. Shri Pawankumar Bhavarilal Agrawal was the seller and that assessee was merely a GPA holder for specific purpose of executing the sale-deed dated 25.07.2006. The CIT(A) noted that the assessment proceedings were completed ex-parte u/s 144 of the Act and therefore he furnished the submissions of the assessee and other material relied upon by the assessee to the Assessing Officer for his comments. The CIT(A) has duly considered the comments of the Assessing Officer furnished and has thereafter considered the replies of the assessee. After considering the stand of the Assessing Officer as well as the material on record, the CIT(A) has come to a conclusion that there was no evidence to suggest that the impugned land was ever purchased, owned or sold by the assessee. Accordingly, he held that the Assessing Officer was not justified in assessing the capital gains of Rs.36,43,000/- in the hands of the assessee. Against such decision of the CIT(A), Revenue is in appeal before us.
5. Before us, the learned Departmental Representative relied upon the stand of the Assessing Officer as manifested in the remand report dated 31.12.2002 furnished to the CIT(A). According to the learned Departmental Representative, the Assessing Officer had rightly asserted before the CIT(A) that entire set of documents furnished before the CIT(A) were an afterthought and the same were not before the Assessing Officer during the assessment 4 ITA No.981/PN/2013 C.O. No.54/PN/2014 proceedings. On the said basis, the order of the CIT(A) is sought to be assailed.
6. We have carefully considered the objections raised by the Revenue in the context of the findings of the CIT(A) which are to the effect that assessee was never the owner of the plot of land in question and that he was only a GPA holder for specific purpose as is evident from the stand of Shri Pawankumar Bhavarilal Agrawal, who is the owner-seller. The following factual findings made by the CIT(A) are relevant :-
"I have carefully considered the facts of the case and rival contentions. On perusal of the same, it has been noticed that the said land admeasuring 984.55 Sq.Mtrs. at Mantha Road, Jalna has been transferred by Shri Pawankumar Banwarilal Agrawal residing at Banjara Hill Road No.12, Hyderabad (AP) to Shri Deepak Kundanlal Rathi, Shri Shivratan Motilalji Rathi residing at Jalna on 28/08/2003 by entering into a notarized agreement and giving possession of the said land after receiving substantial consideration. In respect of the said land, the sale deed dated 25/07/2006 has been entered into between Shri Pawankumar Banwarilal Agrawal, seller and Shri Deepak Kundanlal Rathi, Shri Shivratan Motilalji Rathi, purchasers. It has also been noticed that Shri Radhesham Ramnarayan Rathi (appellant) is only a GPA holder for specific purpose mentioned in the GPA dated 25/07/2006. The appellant, Shri Radhesham Rathi has never owned the said plot of land. The A.O. has not brought on record or pointed our any evidence to hold that the appellant has purchased and sold the impugned plot of land and hence question of taxing capital gain on transfer of the said plot in the hands of the appellant does not arise.
10. In fact, though there is no evidence that the appellant has purchased the impugned property from Shri Pawankumar Banwarilal Agrawal and has sold the same to Shri Deepak Kundanlal Rathi and Shri Shivratan Motilalji Rathi, the A.O. has held that the appellant has sold the impugned property and has earned capital gain.
In the report dated 31/12/2012, the A.O. has tried to justify the assessment made u/s 144 of the Act wherein it has been held that the appellant has sold the impugned property to Shri Deepak Kundanlal Rathi and Shri Shivratan Motilalji Rathi and the capital gain is taxable in the hands of the appellant. For justifying the assessment order, the A.O. has stated various observations/reasons which are summarized in the earlier paragraph. The said reasons are apparently incorrect and are serially dealt with as under -
(1) The sale deed dated 25/07/2006 nowhere indicates that the appellant is a seller of the land sold.
(2) The provisions of section 50C cannot be applied to the case of appellant as the appellant is not seller of the land. (3) The appellant i.e. Shri Radhesham R. Rathi has not sold the impugned land and hence question of showing capital gain in his return of income does not arise.5 ITA No.981/PN/2013 C.O. No.54/PN/2014
(4) The documents filed by the appellant i.e. registered sale deed dated 25/07/2006, notarized agreement to sale dated 28/08/2003, GPA dated 25/07/2006 cannot be regarded as additional evidence as from the assessment order passed by the A.O. u/s 144 r.w.s. 147, the above mentioned documents are available on his record.
Further, the said evidence which is in fact not additional evidence is necessary for deciding the issue under appeal and the same has to be considered for deciding the appeal. The A.O. has been given sufficient opportunity to consider & verify the said documents and submission of the appellant and to file his report on the said submission of the appellant. (5) The reasons stated by the A.O. for rejecting the documents are incorrect as observed below -
(i) The signature of the appellant is appearing in the sale deed as GPA holder and not as consenting party as claimed by the A.O.
(ii) The A.O. has not brought on record any unregistered document to support his claim that the appellant has purchased the impugned property by unregistered document.
(iii) The notarized agreement dated 28/08/2003 is in existence as the same is available on record.
(iv) The contention of the A.O. that the seller has not received any consideration for the property in the year 2003-04 is apparently incorrect as the said consideration has been received by the seller from the purchasers of the impugned land by bank cheques in the said year as mentioned in the registered sale deed which is duly signed by the purchasers and the seller.
(v) The contention of the A.O. that the purchaser Shri Deepak Kundanlal Rathi has deposited cash in his bank account and has issued cheques there from has no relevance for deciding the issue under appeal.
(vi) The contention of the A.O. that the payment mentioned in the registered sale deed for purchase of impugned property is not towards purchase of plot but in respect of some other business transaction is not supported by any evidence.
(vii) & (viii) The contentions of the A.O. are irrelevant and has no relevance for deciding the issue under appeal.
(ix) The contention of the A.O. is not correct as claimed by the appellant as the payment of Rs.5 Lakhs has been mentioned by post dated cheque of 30/09/2003 in the agreement dated 28/08/2003. Further, the contention of the A.O. is not relevant for deciding the issue under appeal.
(x) The contention of the A.O. in respect of admissibility of evidence in respect of agreement dated 28/08/2003 has no relevant for deciding the issue under appeal.
In view of the above facts and discussion, the contentions raised by the A.O. in the report dated 31/12/2012 are found to be incorrect and hence rejected. From the above facts and discussion, it is evident that there is no evidence available on record to show that the appellant has purchased and sold the impugned plot of land."
7. The aforesaid discussion by the CIT(A) brings out two points. Firstly, the documents relied upon by the assessee before the CIT(A) i.e. registered sale-deed dated 25.07.2006; the notarized agreement dated 28.08.2003; the 6 ITA No.981/PN/2013 C.O. No.54/PN/2014 GPA dated 25.07.2006 are not pieces of additional evidence as sought to be made out by the learned Departmental Representative before us inasmuch as according to the CIT(A) the abovementioned documents were available on the record of the Assessing Officer. Therefore, we are unable to appreciate the say of the Revenue before us that the CIT(A) has entertained additional evidence which was not before the Assessing Officer. Moreover, the CIT(A) further records that the Assessing Officer was given sufficient opportunity in the remand proceedings to consider and verify the said documents and furnish a report. Considering the aforesaid, in our view, there is no merit in the plea of the Revenue that the CIT(A) has relied upon any additional evidence.
8. The other conclusion raised by the CIT(A) is to say that the sale-deed dated 25.07.2006 "nowhere indicates that the appellant is a seller of the land sold". The aforesaid finding is supported by the material on record. At the time of hearing, the learned counsel for the assessee appeared and has furnished a Paper Book wherein a copy of the sale-deed dated 25.07.206 is placed. The aforesaid assertion of the CIT(A) is borne out of record and in the absence of any cogent evidence to the contrary lead by the Revenue, we find no reason to interfere with the said finding of the CIT(A). In view of the aforesaid, considering that the CIT(A) has correctly appreciated the material and evidence placed before him, we hereby affirm his conclusion. As a result, we find no error on the part of the CIT(A) in holding that the Assessing Officer was not justified in assessing the capital gain in the hands of the assessee and accordingly the order of the CIT(A) is hereby affirmed.
9. In the result, the appeal of the Revenue is dismissed.
10. In the cross-objection preferred by the assessee, the Grounds raised are only in support of the order of the CIT(A), which we have already affirmed 7 ITA No.981/PN/2013 C.O. No.54/PN/2014 in the foregoing paragraphs. Thus, the cross-objection is also dismissed, as infructuous.
11. Resultantly, the appeal of the Revenue as well as the cross-objection filed by the assessee are dismissed, as above.
Order pronounced in the open Court on 20 th May, 2014.
Sd/- Sd/-
(R.S. PADVEKAR) (G.S. PANNU)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Pune, Dated: 20 th May, 2014.
Sujeet
Copy of the order is forwarded to: -
1) The Assessee;
2) The Department;
3) The CIT(A), Aurangabad;
4) The CIT, Aurangabad;
5) The DR "B" Bench, I.T.A.T., Pune;
6) Guard File.
By Order
//True Copy//
Sr. Private Secretary
I.T.A.T., Pune