Income Tax Appellate Tribunal - Amritsar
Suman Aggarwal ,C/O M/S Jagan Nath ... vs Department Of Income Tax on 26 August, 2016
IN THE INCOME TAX APPELLATE TRIBUNAL
AMRITSAR BENCH; AMRITSAR.
BEFORE SH. A.D. JAIN, JUDICIAL MEMBER
AND SH. T.S. KAPOOR, ACCOUNTANT MEMBER
ITA No.444(Asr)/2014
Assessment Year:2005-06
PAN: AARPA1618D
Income Tax Officer, vs. Shri Suman Aggarwal,
Ward 2(2), C/o M/s. Jagan Nath Janki Dass,
Amritsar. Bazar Gujran, Majith Mandi,
Amritsar.
(Appellant) (Respondent)
Appellant by: Sh.Rahul Dhawan, DR
Respondent by: Sh. Ashwani Kalia, CA
Date of hearing: 26/07/2016
Date of pronouncement: 26/08/2016
ORDER
PER A.D. JAIN, JM:
This is the Department's appeal for the assessment year 2005-06, against the order, dated 12.05.2014, passed by the ld. CIT(A), Amritsar, contending that the ld. CIT(A) has erred in deleting the addition made on account of capital gain of Rs.1,47,80,892/- by invoking the provision of section 50C of the Income Tax Act, 1961, on protective basis.
2. The completed assessment of the assessee was reopened by recording reasons on the basis of the following information received from ACIT, Haridwar:
"Reasons for reopening the case was that information was received from the Asstt. Commissioner of Income Tax, Circle, Haridwar vide his office letter F. No. ACIT/CIT/HDR/PASSING OF 2 ITA No.444(Asr)/2014 A.Y. 2005-06 INFORMATION/2009-10/2089 dated 18.01.2010 sending there under copy of Sale Deed registered with Sub Registrar, Haridwar that Shri Suman Kumar S/o Shri Dharam Pal, resident of 838/7, Bazar Lachmansar, Amritsar, sold land measuring 72,292/- Sq. feet (6718.58 Sq. Meter situated within Municipal Limits, Haridwar on the basis of General Power of Attorney given by Sh. Ashutosh Sharma and Atharav Sharma sons of late Shri Bhushan Sharma, village Landowal, Tehsil and District Ludhiana, on 30.04.2004 for Rs.30,00,000/- to M/s. S.R.Traders through its partner Shri Sanjeev Aggarwal as against value determined by the Stamp Valuation Authority at Rs.1,47,80,892/- as per sale deed executed on 30.04.2004. The value so adopted for the purpose of payment of Stamp Duty therefore, shall for the purpose of section 48 be deemed to be the full value of consideration received as a result of such transfer as provided u/s 50C of the income Tax Act, 1961. The land in question has been sold by the assessee on the basis of Power of Attorney and as such the cost price to the assessee in this case is NIL and the entire amount of Rs.1,47,80,892/- is chargeable to Capital Gain Tax."
3. In the assessment proceedings, the assessment had been completed on protective basis. In the assessment proceedings, the assessee denied ownership of the land in dispute and has stated that the land had been purchased by late Sh. Bharat Bhushan and Sh. Atharav Sharma; and that he the assessee, was Power of Attorney holder in respect of legal heir of Sh. Bhushan Sharma. Against the protective addition made, the assessee filed appeal before the ld. CIT(A), contending that he was only Power of Attorney holder and sold land on behalf of Sh. Ashuthosh Sharma and Sh. Atharav Sharma. He also challenged the application under section 50C of the Act, taking cost of acquisition at Nil and making protective assessment before substantive assessment in the hands of the actual owners. He also filed a certified copy of Khatoni of the concerned land. This Khatoni showed various litigations of various 3 ITA No.444(Asr)/2014 A.Y. 2005-06 claims over the land. The land was at that time shown in the name aof Sh. Hemchand S/o Sh. Kundan and Sh. Shubash Singh S/o Sh. Amir Singh. In a writ petition filed before the Hon'ble Uttranchal Pradesh High Court, by the owners Sh. Shubash Singh and Sh. Hemchand against Sh. Ashutosh Sharma and Atharav Sharma and others against the order of SDM, Haridwar, passed on 25.07.2005, regarding admission of Sh. Ashutosh Sharma, Sh. Atharav Sharma, and in another application filed before the Hon'ble High Court of Uttranchal Pradesh, in a contempt application by the same parties and against the same respondents, it was found to have been clearly mentioned that there were several claimants to the legal ownership of the land in question, i.e., the legal heir of Ramanand, Sh. Bhushan Sharma and Sh. Dinesh Mehta. The ld. CIT(A) found these claims to have started in 1956 and it was observed that there were large number of claims pending in different Courts; that the issue had been raised by the assessee in view of the sale of the land vide registration deed dated 30.03.2004 by Sh. Ashutosh Sharma and Sh. Atharav Sharma through the assessee, who was their Power of Attorney holder to S.R. Traders through partner, Sh. Sanjeev Aggarwal for Rs.30,00,000/-. The ACIT, Haridwar was found to have informed that Circle rate was of Rs.1,47,80,892/- as above, and that as such, the price should have been shown on this amount, in accordance with the provisions of section 50C of the Act. It was observed that in the registration deed, also, the assessee had been shown only as Power of 4 ITA No.444(Asr)/2014 A.Y. 2005-06 Attorney holder of Sh. Bhushan Sharma, as owner. The General Power of Attorney in favour of the assessee was found to have been executed by Sh. Ashutosh Sharma and Sh. Atharav Sharma. In this regard, title deed dated 03.07.1964 for purchase of the property had been submitted by the assessee. Mutation dated 09.07.1984 in the name of Sh. Bharat Bhushan, order dated 10.04.1987 passed by the SDM, Haridwar and decree dated 18.05.1987, observing the land belong to Sh. Bhushan Sharma and holding the mutation in favour of Sh. Ramanand, Sh. Amir Singh and Sh. Kundan Singh to be cancelled, were also perused by the ld. CIT(A). The Power of Attorney dated 14.02.1991 was also gone into. In this regard, the ld. CIT(A) had accepted the assessee's contentions that the Power of Attorney in his favour had been executed by Sh. Bhushan Sharma, as Sh. Bhushan Sharma had planned to shift from Haridwar to Ludhiana; that the land in question was fiercely disputed land, on which two other parties had also been claiming total/ownership and numerous cases, civil and criminal were pending in different Courts, which had been desired to look after and followed up by the assessee; that after the death of Bhushan Sharma on 15.11.2001, the land had been inherited by Sh. Ashutosh Sharma and Sh. Atharav Sharma; that however, the land could not be registered in their names due to pendency of the said numerous disputes in various Courts. The ld. CIT(A) also duly took into consideration the affidavit filed by Sh. Ashutosh Sharma and Sh. Atharav Sharma regarding ownership of the land by their father and the 5 ITA No.444(Asr)/2014 A.Y. 2005-06 inheritance of the land by them on the demise of their father. The Power of Attorney executed in favour of the assessee by Sh. Ashutosh Sharma and Sh. Atharav Sharma was also considered.
4. The ld. CIT(A) found as follows:
"Thus, it can be seen from above court cases and affidavit that land is a disputed property at village Shakupura, Kankhal, Sub Division Jawalapur, Haridwar and various court proceedings regarding ownership of above land is going on at present. It is clear from these records that assessee is not the owner of above land and the AO has not brought on record any material or evidence to prove that assessee was owner or even the claimant of ownership for above land. The AO has not controverted affidavit filed by Sh. Ashutosh Sharma and Atharav Sharma regarding ownership of land of his father and legal inheritance of it. In view of the above and in view of these disputes going on in various courts, ownership of land cannot be ascertained at present. Further, land price also cannot be decided on basis of circle rate as circle rate is normally price of undisputed, encumberance free property. However, in view of sale deed executed by Sh. Atharav Sharma and Sh. Ashutosh Sharma through Power of Attorney of the assessee, land should be taxed in the hand of legal heir of Sh. Bhushan Sharma, i.e., Sh. Athrav Sharma and Sh. Ashutosh Sharma. In view of above, taxation of capital gain in the hand of assessee is not correct and hence deleted. As ground number one has been decided in favour of the assessee, ground number two to six have become infructuous and academic.
5. Having considered the entire conspectus of the matter, we do not find any error whatsoever in the order under appeal, as correctly observed by the ld. CIT(A) and not successfully disputed before us, the land in question is a disputed property having come under numerous litigations in different Courts pertaining to its ownership. The assessee, it is observed, as rightly held by the ld. CIT(A), is not the owner of the land. Too, he does not even claim the ownership thereof. Hitherto, the ownership of the land is unascertainable. The price of the land also 6 ITA No.444(Asr)/2014 A.Y. 2005-06 cannot be decided on the basis of circle rate, in view of the various disputes going on. It is trite that the circle rate is normally applicable to undisputed, unencumbrance property. The ld. CIT(A) has also correctly held that the land ought to be taxed in the hands of the legal heirs of Sh. Bhushan Sharma and not in the hands of the assessee, as the sale deed with regard to the land was executed by Sh. Ashutosh Sharma and Sh. Atharav Sharma, legal heirs of late Sh. Bhushan Sharma, their father, through the assessee, who is the Power of Attorney holder only. The assessee being a power of attorney, he cannot in any manner be said to be the owner of the land.
6. The ld. DR has sought to place reliance on the following decisions:
i) 'Bhagmalo Saudagar Mal vs. CIT', 267 ITR 637 (All)
ii) 'Lalji Haridas vs. ITO', 43 ITR 387 (SC)
7. However, as rightly contended on behalf of the assessee, these decisions are relevant only in cases of doubt, as to, to which present income belongs. In the present case, this is not so, as observed, it is the legal heirs of late Sh. Bhushan Sharma, in whose hands, the land ought to be taxed, i.e. Sh. Ashutosh Sharma and Sh. Atharav Sharma. The observation of the ld. CIT(A) to this effect, have not been successfully rebutted by the Department. In this regard, in the certified copy (APB 89-104) of the written reply filed by the Respondent nos. 3 & 4 in Suit No. 318/2004 in the Court of Civil Judge (J.D.) Haridwar, titled Dinesh 7 ITA No.444(Asr)/2014 A.Y. 2005-06 Kumar Mehta vs. Sanjeev Aggarwal, in para 10 thereof, it has been submitted as follows:
"10. That this submission of the plaintiffs is also incorrect that the respondent/defendants are dispute creating persons of any manner and they misrepresented the son of Bhushan Sharma before yourself rather the respondents/defendants are the sons of Bhushan Sharma in reality and as the legal heirs, Bhushan Sharma has appointed the Defendant No.2 as the General Power of Attorney Holder and the Defendant No.2 having capacity of the General Power of Attorney Holder, has held rights in favour of the Defendant No.1 and other persons had executed the Sale Deed and the Respondents/Defendants had obtained consideration shown in sale deed of dat3 30.04.2004 from the Defendant Number 2, rest of the submissions of the plaintiffs are incorrect."
8. Thus, reliance by the ld. DR on the aforesaid two decisions, in our considered opinion, is of no aid to the cause of the Department.
9. In view of the above, finding no error whatsoever in the order of the ld. CIT(A), the same is hereby affirmed. The grievance sought to be raised by the Department being found shorn of merits, is rejected.
10. In the result, the appeal of the Department is dismissed.
Order pronounced in the open court on 26/08/ 2016.
Sd/- Sd/-
(T.S. KAPOOR) (A.D. JAIN)
ACCOUNTANT MEMBER JUDICIAL MEMBER
/SKR/
Dated: 26/08/2016
Copy of the order forwarded to:
1. The Assessee:Sh. Suman Aggarwal, Amritsar
2. The ITO Ward 2(2), Asr.
3. The CIT(A), Asr
4. The CIT, Asr
5. The SR DR, ITAT, Amritsar.
True copy
By order