Income Tax Appellate Tribunal - Hyderabad
Nikhil Surana,, Secunderabad vs Assessee
IN THE INCOME TAX APPELLATE TRIBUNAL
HYDERABAD "A " BENCH, HYDERABAD
BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI
SAKTIJIT DEY, JUDICIAL MEMBER
ITA No.954 /Hyd/13
Assessment Year: 2009-10.
Harish Chand Surana, -vs- Dy. CIT, CC-2, Hyderabad.
Secunderabad.
Hyderabad.
PAN:AIRPS 7926 G
ITA No.1087/Hyd/.2013
Asst. year: 2009-10.
Dy. CIT, CC-2, Hyderabad Harish Chand Surana,
. Secunderabad .
ITA No.955/Hyd/.2013
Asst. year: 2009-10.
Sri Nikhil Surana vs- Addl CIT, Cir-11,
Secunderabad. Hyderabad.
PAN:AOPPS 3582L
ITA No.1102/Hyd/2013
Asst. year: 2009-10.
ITO, Ward-11(1) Hyderabad. Vs. Sri Nikhil Surana
Secunderabad.
(Appellants) (Respondents)
Assessees by Shri K.C. Devdas
Department by Smt. Harita (DR)
Date of Hearing 03-01-2014.
Date of pronouncement 21-02-2014
2
ITA nos.954 of 2013 and others,
Harishchand Surana & Others, Secunderabad.
ORDER
PER SAKTIJIT DEY, J.M:
These are cross appeals in case of two different assessees against two separate orders of CIT (A) pertaining to the assessment year 2009-10. Since identical issues are involved in these appeals, these are heard, clubbed together and disposed of by this consolidated order for the sake of convenience.
2. First we will deal with the cross appeals relating to Harish Chand Surana in ITA No. 954/Hyd/13 of assessee and ITA No.1087/Hyd/13 of the department. The effective grounds raised by the assessee are as under:-
i. The order of the CIT (A)-I, Hyderabad in confirming the addition of Rs.1,52,90,250 representing the appellant's alleged share in the extra consideration arising out of "unsigned receipts" of Rs.1,60,00,000 is totally contrary to the facts and evidence on record and is therefore unsustainable both on facts and in law.
ii. The ld CIT erred in placing reliance on the statement of
Prem Sagar Rao who did not respond to the specific
demand of the appellant for cross examination and
therefore the statement could not be relied upon for the purposes of determining the sale consideration of the immovable property.
iii. The ld CIT ought to have adopted tame F.M.V. of the property as on 1-4-81 at Rs.56,14,000 before indexation 3 ITA nos.954 of 2013 and others, Harishchand Surana & Others, Secunderabad.
as valued by the registered valuer and indexed for the purposes of determinant the cost of property.
iv. The ld. CIT having referred to the decision of the Delhi High Court in CIT vs. Geeta Duggal (2013) 30 Taxman.com.230 ought to heave allowed exemption ui/s 54F of the IT Act 1961, in respect of the value of all flats allotted to the appellant."
3. The grounds raised by the department read as under:-
1. The order of the CIT (A) is erroneous both on facts and in law.
2. The CIT (A) is not justified in directing the Assessing Officer to adopt the cost of acquisition as on 1-4-1981 at Rs.100/- per sq. yard instead of Rs.10/- per sq. yard, as adopted by the Assessing Officer on the basis of the information received from SRO.
3. The CIT (A) is not justified in directing the Assessing Officer to allow exemption u/s 54F on both the units considering as one residential unit instead of one unit only as allowed by the Assessing Officer without appreciating the fact that the assessee has purchased two different houses with two different documents and assessee is eligible for exemption on one house only."
4. Ground Nos.1 & 2 are with regard to CIT (A) confirming an addition of Rs.1,52,90,250/- as undisclosed income of the assessee for the impugned assessment year on account of on money received on sale of land. Briefly the facts relating to the issue in 4 ITA nos.954 of 2013 and others, Harishchand Surana & Others, Secunderabad.
dispute are the assessee is an individual. A search and seizure operation u/s 132 of the Act was conducted in case of M/s. Sainath Estates Pvt. Ltd., on 17-3-2009. During search and seizure operation, certain incriminating material relating to the assessee disclosing sale of immovable property by the assessee to Sainath Estates Pvt. Ltd., was found and seized. Consequent thereupon a notice u/s 153C was issued to the assessee calling upon him to file returns for the assessment year 2003-04 to 2008-09. For the impugned assessment year, the assessee filed his return of income originally on 31-7-2009 declaring income of Rs.11,45,03,041/- including long term capital gains of 11,27,68,778/-. The Assessing Officer initiated assessment proceeding u/s 143(3) of the Act by issuing notice u/s 143(2) on 24-8-2010 and a notice u/s 142(1) on 13-9-2010. Subsequently another notice was issued on 28-10-2010 calling upon the assessee to furnish certain information. It may be noted that the assessee on 26-10-2010 filed a revised return declaring a total income of Rs.13,50,08,700 including long term capital gains of Rs.12,23,28,778/-.
5. In course of assessment proceedings, the Assessing Officer noticed that the assessee and his son Sri Nikhil Surana have sold a vacant land admeasuring 11566 sq. yards situated at plot A/16, Nacharam, Hyderabad to M/s Sainath Estates Pvt. Ltd., for a consideration of Rs.4,21,00,000 vide document No. 5-2-91/08 dated 12-6-2008 and another piece of land admeasuring 533.32 sq. yards having the same plot No. A/16, Nacharam, Hyderabad to M/s Sainath Estates Pvt. Ltd., for consideration of Rs.98,10,000/- vide document No.5292/08 dated 12-6-2008. Whereas as per the seized documents from M/s Sainath Estates Pvt. Ltd., the total 5 ITA nos.954 of 2013 and others, Harishchand Surana & Others, Secunderabad.
consideration paid by M/s Sainath Estates Pvt. Ltd. Towards sale consideration of aforesaid land was Rs.16,20,00,000/-. As per the seized document in annexure AA-SEPL/01 which contained payment receipts, the assessee and his son were paid an amount of Rs.3,10,00,000 in the financial year 2007-08 and balance amount of Rs.13,10,00,000/- was paid in the financial year 2008-09. The Assessing Officer noticed that the vouchers forming part of the seized document, some signed and some unsigned by the receiver, clearly revealed substantial cash payments. He further noted that during the post search proceeding a summon u/s 131 was issued to Sri K. Premsagar Rao, the Managing Director of Sainath Estates Pvt. Ltd. In the statement recorded u/s 131 on 12-5-2009 Sri K. Premsagar Rao categorically admitted that an amount of Rs.16,20,00,000 was paid towards sale consideration for acquiring the property in question. In his deposition Sri K. Premsagara Rao also furnished the details of payment made to Badal Chand Surana ( assessee's father) and his family members as under:
in cash Rs.3,45,00,000/-
By cheques Rs. 10,00,00,000/-
Adjustment by way of sale of flats Rs.2,75,00,000/-.
6. He further deposed that the entire amount of Rs.16,20,00,000/- was paid during the financial year 2007-08 and 2008-09 i.e., Rs.3,10,00,000 in financial year 2007-08 and Rs.13,10,00,000/- in financial year 2008-09. In the light of the deposition made by Sri K. Premsagar Rao summons u/s 131 were issued to Sri Harishchand Surana and Nikhil Surana for verifying actual consideration paid to them . In response to the summons, Sri 6 ITA nos.954 of 2013 and others, Harishchand Surana & Others, Secunderabad.
Badalchand Surana, assessee's father, appeared and a statement was recorded from him. In the statement Sri Badalchand Surana admitted that though as per the sale deed the sale consideration was Rs.4,21,00,000 but actually an amount of Rs.11.55 crores was received by Sri Harishchand Surana and an amount of Rs.98.10 lakhs was received by Sri Nikhil Surana totalling to Rs.12.53 crores. With regard to the mode or receipt he stated that Sri Harishchand Surana received an amount of Rs.9.29 crores by cheques and balance amount by way of adjustment towards flats purchase. He further stated, similarly Sri Nikhil Surana received an amount of Rs.70 lakhs and balance amount by way of adjustment towards flats purchase. When Sri Badal Chand Surana was specifically asked about receiving any amount over and above consideration admitted by him he stated that they have not received any consideration over and above what he has already stated. When Sri Badalchand Surana was confronted with the payment vouchers of M/s Sainath Estates Pvt. Ltd., found and seized and questioned as to why the total consideration of sale as admitted by Sri Sainath Estates Pvt. Ltd., and which is also evident from the seized document shall not be adopted at Rs.16,20,00,000/-, Sri Badal Chand Surana stated that total sale consideration received is Rs.12.53 crores. However, he added that if there is any contrary evidence he will examine and revise the statement.
7. During the post search proceeding, as appears from the discussion made by the Assessing Officer, the assessee was also provided with copies of the seized documents. On the basis of the seized documents, a statement was again recorded from Sri Badalchand Surana on 27-5-2009. In the statement Sri Badalchand 7 ITA nos.954 of 2013 and others, Harishchand Surana & Others, Secunderabad.
Surana stated that the total consideration received by Sri Harishchand Surana and Nikhil Surana was Rs.14 crores including cash of Rs.1,85,00,000/- as per the seized vouchers. At the same time, he also stated that the amount of Rs.1,85,00,000/- received in cash was repaid to Sainath Estates Pvt. Ltd., as consideration over and above the agreement value towards purchase of flat from the said company. He however denied of having received the amount of Rs.1,75,00,000 as mentioned in the unsigned vouchers found and seized. He also stated the details of consideration received as under:-
By way of cheques Rs.10,00,00,000/-
By way of allotment of 10 flats Rs. 4,00,00,000
------------------------
Total Rs.14,00,00,000/-
-------------------------
8. On the basis of the evidence as available on record in the form of seized material as well as depositions of the M.D of Sainath Estates Pvt. Limited, Sri K. Premsagar Rao and assessee's father Sri Badalchand Surana, the Assessing Officer concluded that the total sale consideration was Rs.16,20,00,000/-. He noted that that as per the ledger account of Sainath Estates Pvt. Limited which was seized during the search and seizure operation, the total consideration paid was shown at Rs.16,20,00,000/-. The seized vouchers also reveal payment of Rs.3,45,00,000/- in cash over and above what is paid by way of cheque.
9. The Assessing Officer noted that initially the assessee disclosed the total sale consideration received at Rs.12.53 crores and nothing 8 ITA nos.954 of 2013 and others, Harishchand Surana & Others, Secunderabad.
more. However, when he was confronted with seized payment vouchers bearing his signature he shifted his stand by admitting that the total sale consideration received was Rs.14 cores inclusive of cash payment of Rs.1,85,00,000/-. The payments mentioned in unsigned vouchers was however denied to have been received. The Assessing Officer was of the view that seized materials as well as the books of accounts of M/s Sainath Estates Pvt. Ltd made it clear that consideration paid to the assessee and his son for sale of land is Rs.16.20 crores. He opined that when some payments in a transaction are accepted as genuine, it will follow that other payments mentioned in the ledger account of that transaction should be considered to be genuine. He noted that major portion of the payment mentioned in the ledger account was accepted by the vendors themselves. Only payments which are not evidenced by signed payment vouchers or due to non availability of payment vouchers are not accepted by the assessee. The Assessing Officer felt that from the statement recorded from Sri Badal Chand Surana it becomes clear that when any evidence is shown to him regarding receipt of on money only then he accepts receipt of such on money. The Assessing Officer noted that prevaricating stand of the assessee is further revealed from the fact that in the original return the assessee had stated the total sale consideration to be Rs.12.53 crores which was subsequently revised to Rs.14.48 crores when assessee was confronted with seized material showing payment of on money, but still leaving behind a balance of Rs.1.20 crores.
10. The Assessing Officer therefore held that the entire amount of Rs.16.20 crores was actually paid to the assessee and his son towards sale consideration. The Assessing Officer further noted that as per the original agreement, adjustment by way of sale of flats was only Rs.2.75 cores. However, as per the details furnished in the revised return assessee's family 9 ITA nos.954 of 2013 and others, Harishchand Surana & Others, Secunderabad.
member's received 10 flats, the total value of which as per agreement of sale was Rs.2.90 crores. Hence the excess consideration received of Rs.15 lakhs also has to be considered as part of sale consideration, hence the total sale consideration should be treated as Rs.16.35 crores. The Assessing Officer concluded that cash component of Rs.1.60 crores should be treated as undisclosed income of assessee and his son and accordingly proceeded to quantify an amount of Rs.1,52,90,250/- at the hands of the assessee and an amount of Rs.7,09,750/- at the hands of his son for the purpose of computing capital gain. Being aggrieved of the addition so made assessee preferred appeal before the CIT (A).
11. In course of proceeding before CIT (A), it was contended on behalf of the assessee that during the relevant previous year the assessee and his son have sold the property in question on 12-6-2008 for a total consideration of Rs.14,75,60,000/-, including the recorded/unrecorded consideration in the sale deed. It was submitted that entire transaction was carried out in the assessment year under consideration. The assessee strongly denied of having received the amount of Rs.1,60,00,000/- recorded in the unsigned vouchers. The assessee also disputed the addition made on the basis of unsigned vouchers. It was also contended that much importance cannot be given to the statement of Sri K. Premsagara Rao, M.D. M/s Sainath Estates Pvt. Ltd., as he did not appear for cross examination. Thus, it was pleaded by the assessee that the addition of Rs.1,52,90,250/- is unsustainable. The CIT (A) however, rejecting the contentions of the assessee sustained the addition by holding as under:-
"09.0 I have gone through the facts of the case and the submissions of the appellant. It can't be disputed that the Nacharam lands were sold by Sri Harish Chand Surana and Sri Nikhil Surana to SEPL for the recorded consideration of Rs. 4,21,00,000/- and Rs. 98,10,000/- only. On the other hand, as per the books of SEPL, the total sale consideration was Rs.10
ITA nos.954 of 2013 and others, Harishchand Surana & Others, Secunderabad.
16,20,00,000/-, out of which Rs. 3,10,00,000/- was paid in the financial year 2007-08 and the remaining in the financial year 2008-09. This fact was confirmed by the MD of SEPL, Sri Premsagar Rao also in his statement dated 12.5.2009, giving the full break-up of modes of payments.
09.1 In view of the clear documentation of sale consideration by SEPL and the categorical statement of Sri Premsagar Rao, Sri Badal Chand Surana, in his statement dated 18.5.2009, clearly admitted that the actual consideration received was much more than the recorded consideration. Though he admitted receipt of Rs. 11.55 crores by Sri Harish Chand Surana and Rs. 98.10 lakhs by Sri Nikhil Surana, the total deal Rs. 12.53 crores, only in the beginning, on being confronted with the payment vouchers of SEPL and the ledger accounts, in his statement dated 27.5.2009, he admitted the total sale consideration received by the two persons at Rs.14 crores, including cash of Rs. 1,85,00,000 by way of signed vouchers. He only denied the receipt of Rs. 1.75 crores represented by "unsigned vouchers" and further claimed that Rs. 1,85,00,000 received in cash were paid back to SEPL only as consideration over and above the agreement value of flats.
09.2 From the discussion above, it is amply clear that majority of the entries in the documents evidencing the total sale consideration of Rs. 16.20 crores, have been admitted as true and correct by both the parties. Under the circumstances, it is clear that the claim regarding non-receipt of amounts appearing in the vouchers without signatures has been made only in view of some technical deficiencies in those vouchers. However, it is clear that even the receipts of Rs. 1.85 crores in cash represented by vouchers with signatures had been initially denied by the appellant. The appellants were compelled to admit such receipts only on account of the fact that the said vouchers contained their signatures. The denial of the unsigned vouchers is therefore only an afterthought raised with a view to take advantage of the deficiencies in the document, even though the amounts represented therein are appearing in the ledger also. However, it is an established position of law that if part of a document is admitted as true and correct, the remaining entries therein have also to be presumed true and correct. Therefore, I am of the considered view that the consideration of Rs. 16.20 crores received for the Nacharam lands by Sri Harish Chand Surana and Nikhil Surana has been duly established. Further, nothing could be explained regarding excess consideration in kind of Rs. 15 lakhs as flats. Therefore, it is to be held that the total consideration received by the two vendors has been rightly taken at Rs. 16.35 lakhs. "11
ITA nos.954 of 2013 and others, Harishchand Surana & Others, Secunderabad.
12. We have heard the parties and perused the orders of the authorities below as well as other materials on record. The main thrust of argument of the learned AR is that the amount of Rs.1,60,00,000/- represented by unsigned vouchers was never received by the assessee and his son. The learned AR referring to the payment vouchers of Sainath Estates Pvt. Ltd., in the paper book submitted that many of the vouchers do not bear signature of either assessee or any of his family members. He submitted, apart from these unsigned vouchers there is no other evidence to show that assessee along with his son has received the amount of Rs.1,60,00,000/- over and above what has been declared by them in the revised return. Strongly contesting the statement made by Sri K. Prema Sagar Rao, M.D. of M/s Sainath Estates Pvt. Ltd., the learned AR submitted that much importance cannot be given to it as he never stood the test of cross examination by the assessee. He submitted that, even though the assessee specifically pleaded for cross examining Sri Premasagar Rao, but on some pretext or other he never turned up for cross examination. The learned AR referring to reconciliation statement of amounts debited to Nacharam land account in the books of M/s Sainath Estates submitted, amount of Rs.1.60 crores representing cash payments on different dates and journal entry of Rs.1,09,40,000/- on 9-6-2008 were neither paid by Sainath Estates nor received by the assessee. The learned AR referring to letter dated 2-12- 2010 accompanying the revised return, a copy of which is at page 23 of paper book, and note appended to revised return, a copy of which is at page 36 of paper book, submitted that in the original return the assessee and his son have disclosed total sale consideration of Rs.13,80,00,000/- which was subsequently revised to Rs.14,75,60,000/- by voluntarily declaring additional amount of Rs.95,60,000/- at the hands of the assessee. It was 12 ITA nos.954 of 2013 and others, Harishchand Surana & Others, Secunderabad.
submitted that assessee and his son have not received a single rupee more than the amount of Rs.14,75,60,000/- as sale consideration of the land at Nacharam. In support of his contention that no addition can be made on the basis of unsigned vouchers the learned AR relied upon the order of the Hon'ble Supreme Court dismissing S.L.P in case of CIT vs. Vasant S. Adani (323 ITR (Stat) 49) and in case of DCIT vs. C. Krishna Yadav (46 SOT 250) (URO).
13. The learned DR, on the other hand, defending the orders passed by the Assessing Officer as well as CIT (A) submitted that unsigned vouchers are not the only evidence found during search which revealed the sale consideration of the property at Rs.16.20 crores. He submitted the payment vouchers, both signed and unsigned were corroborated by entries made in the books of accounts of the developer M/s Sainath Estates. He submitted that the M.D. of M/s Sainath Estates also categorically stated in his sworn deposition that actual amount paid towards sale consideration was Rs.16.20 crores. He further submitted that assessee initially admitted sale consideration of Rs.12.54 crores. Subsequently, when he was confronted with the seized materials viz., payment vouchers, books of accounts of M/s Sainath Estates and also the statement of K. Premsagar Rao, he came forward to disclose additional sale consideration by filing revised return. The assessee accepted major portion of the sale consideration shown in the books of M/s Sainath Estates except an amount of Rs.1,60,00,000/- represented by unsigned payment vouchers. The leaned DR therefore submitted that when the assessee is accepting cash payments mentioned in signed payment vouchers there is no reason to believe that assessee has not received the amount as per unsigned payment vouchers.
14. Having heard the parties in the light of materials on record, we record our finding as under:-
13ITA nos.954 of 2013 and others, Harishchand Surana & Others, Secunderabad.
15 Undisputedly, the assessee and his son sold land admeasuring 11,566 sq. yards and 533.32 sq. yard situated at plot No. A/16, Nacharam, Hyderabad to M/s Sainath Estates under registered sale deed No.5291/08 and 5292 dated 12-6-2008 for Rs.4,21,00,000/- and Rs.98,10,000/- respectively. However, as per the books of accounts and payment vouchers found and seized from M/s Sainath Estates Pvt. Ltd., the total sale consideration paid was Rs.16,20,00,000/-. During the post search proceeding the M.D. of M/s Sainath Estates deposed in his sworn statement that an amount of Rs.16,20,00,000/- was paid to assessee and his son towards sale consideration of land. The details of payments as stated by him are as under:-
i) Cash payments Rs.3,45,00,000/-
ii) Cheque payments Rs.10,00,00,000
iii) Adjustment by
Way of sale of flats Rs. 2,75,00,000
16. As it appears from record, there is no dispute to the payments made by cheque and by way of adjustment of sale of flats as the assessee accepts of receiving them. The dispute is only with regard to cash payment of Rs.3,45,00,000/- while the assessee admits of having received an amount of Rs.1,85,00,000/- as mentioned in signed payment vouchers and receipts, the Assessing Officer has concluded that entire cash payment of Rs.3,45,00,000/- represented by signed and unsigned payment vouchers found and seized was received by the assessee and his son. As can be seen, during the post search proceeding in response to summons issued u/s 131 of the Act assessee's father Sri Badal Chand Surana appeared on his behalf. In the statement recorded on 18-5-2009 he deposed that an amount of Rs.11.55 crores consisting of cheque payments of Rs.9.29 cores and balance by way of adjustments towards flats purchased was received by Harish 14 ITA nos.954 of 2013 and others, Harishchand Surana & Others, Secunderabad.
Chand Surana and an amount of Rs.98.10 lakhs consisting of Rs.70 lakhs by cheque and balance by adjustment of flats purchased was received by Nikhil Surana . Thus, the total receipt admitted by him was Rs.12.53 crores. After being provided, with the photocopy of the seized material when Sri Badal Chand Surana again appeared on 27-5-2009, a statement was recorded from him. In the statement recorded he deposed that total sale consideration received by Harish Chand Surana and Nikhil Surana is Rs.14,00,00,000/- including cash payment of Rs.1,85,00,000/- as per page Nos. 5,8,9 and 10 of seized material marked as annexure AAA/SEPL/01 which represent signed payment vouchers. The sale consideration admitted in deposition of Sri Badal Chand Surana was followed up by the original returns filed on 31-7-2009 wherein an amount of Rs.12,54,48,700/- at the hands of Harish Chand Surana and an amount of Rs.1,25,51,300/- at the hands of Nikhil Surana total amounting to Rs.13.80 crores was shown towards sale consideration. On 26-10-2010 the assessee filed a revised return declaring additional sale consideration of Rs.95,60,000/-. Thus the total sale consideration finally shown both by the assessee and his son Nikhil Surana is Rs.14,75,60,000/-. From the aforesaid narration of facts it becomes absolutely clear that assessee's stand from the very beginning remains inconsistent and untrustworthy. Initially, the assessee totally denied of having received any cash payments. Subsequently when he was confronted with the seized payment vouchers and receipts, he only accepted the signed receipts representing an amount of Rs.1,85,00,000/-. It is a fact on record that amounts mentioned in t he seized payment vouchers have also been recorded in books of accounts of M/s Sainath Estates Pvt. Ltd. The M.D. of the said company also deposed of having paid sale consideration of Rs.16.20 crores as recorded in the books of accounts. Taking into consideration the entire gamut of facts and materials we are of the view that assessee's conduct is not above board. When the assessee is 15 ITA nos.954 of 2013 and others, Harishchand Surana & Others, Secunderabad.
accepting the cash payment as per the seized payment vouchers he cannot deny the rest of it only on the ground that those are represented by unsigned payment vouchers, when fact remains that payments reflected in all the payment vouchers are also entered in the books of accounts of M/s Sainath Estates Pvt. Ltd apart from the fact that the M.D. of M/s Sainath Estates also admitted that sale consideration paid was Rs.16.20 crores.
17. The contention of the assessee that no addition can be made on the basis of unsigned documents is also not tenable because such unsigned documents are not the only evidence but they are corroborated by entries made in the books of accounts of M/s Sainath Estates. Assessee's plea is also not acceptable considering the fact that initially he totally denied of receiving cash payments. Only when he was confronted with seized payment vouchers he was forced to accept a part of the cash payment mentioned in the payment vouchers bearing either his signature or signature of other family members. In these circumstances, assessee's contention that it has not received sale consideration of Rs.16.20 crores is not believable. So far as assessee's contention that he was not given an opportunity to cross examine Sri K. Prema Sagar Rao, we do not find any merit in it. It is very much evident from the impugned assessment order that when assessee was given opportunity to cross examine Sri Prema Sagar Rao on 9-11-2010 neither the assessee nor Sri Prema Sagar Rao appeared. That apart cross examining Sri Prema Sagar Rao no way would have improved the case of the assessee. The entries made in the books of accounts of Sainath Estates and payments reflected in seized payments vouchers coupled with the fact that assessee himself has also accepted a part of the cash payment clearly establish that sale consideration of Rs.16.20 crores recorded in the books of accounts of M/s Sainath Estate is the actual amount received by the assessee and his son. So far as decisions relied upon by the learned AR are 16 ITA nos.954 of 2013 and others, Harishchand Surana & Others, Secunderabad.
concerned, on careful examination we find them to be not applicable to the facts of the present case in those cases apart from the unsigned documents/loose sheets there are no other corroborative evidence. Whereas, in case of the assessee, the payment vouchers are corroborated by other evidences which demonstrate payment of sale consideration of Rs.16.20 crores. In aforesaid view of the matter, we do not find any infirmity in the order of the CIT (A). However, we need to mention here that in course of hearing the learned AR submitted that according to Assessing Officer total sale consideration received was Rs.16,35,00,000/-. The amount offered by assessee and his son is Rs.14,75,60,000/-. Therefore, shortfall is Rs.1,59,40,000/- whereas the Assessing Officer has added an amount of Rs.1,60,00,000/- resulting in excess addition of Rs.60,000. After considering the submissions of the learned AR, we direct the Assessing Officer to verify this aspect and if there is any excess addition as pointed out by the assessee the same may be modified. With the aforesaid observation, we dismiss the ground raised by assessee.
18. Ground No.3 of the assessee corresponding to ground No.2 of department is with regard to F.M.V. of the property as on 1-4-1981. While the assessee's case is CIT (A) should have adopted the F.M.V of Rs.56,14,000 before indexation as per the registered valuer, the department wants restoration of F.M.V adopted by the Assessing Officer.
19. Facts in brief are, the Assessing Officer while examining the computation of capital gain by the assessee noticed that assessee has adopted a sum of Rs.12,54,487/- as the cost of asset on 1-4-1981 and indexed the same to Rs.73,01,114. In this context, the Assessing Officer noted that assessee has received the property as gift vide registered gift 17 ITA nos.954 of 2013 and others, Harishchand Surana & Others, Secunderabad.
deed dated 28-3-2006 from the partnership firm M/s Surana Industries. Therefore, for the purpose of computing capital gain, the cost of acquisition of asset as per sec. 49(1), shall be the cost for which the previous owner acquired the property. The Assessing Officer noted, it is mentioned in the gift deed that M/s Surana Industries has acquired 8 acres of land situated at Nacharam on 3-9-1968 under a registered document. However, the gift deed did not mention anything about the cost of land purchased on 3-9- 1968. The Assessing Officer therefore asked the assessee to furnish the cost at which the asset was purchased by the previous owner. The assessee explained since details are not available, they have roughly adopted 1% of the present sale value of Rs.12,54,487/-. The Assessing Officer not being convinced with the explanation of the assessee adopted the cost of land as on 1-4-1981 at Rs.10 per sq yard and quantified the cost of entire land at Rs.1,15,660/- and determined the indexed cost of acquisition at Rs.6,73,140/- and computed capital gain accordingly.
20. The assessee raised the issue in appeal before the CIT (A). It was contended before CIT (A) that assessee has taken 1% of sale value keeping in view normal trends of disclosure. It was submitted that a report of a registered valuer was also filed before the Assessing Officer requesting him to adopt the value of property as on 1-4-1981 at Rs.8,59,000/- which was also ignored. It was submitted that the Assessing Officer adopted the rate of Rs.10/- per sq. yard on the basis of SRO value which cannot be considered to be the F.M.V.
21. The CIT (A) held that registered valuer's reasoning for adopting the rate of Rs.250 per sq. yard is not acceptable as he has adopted the said rate by adopting 50% of the rate Rs.500 per sq. yard in Banjara Hills on 1-4- 1981. The CIT (A) was of the view that land rate of Banjara Hills cannot be the basis for assessing land rate at Nacharam, as on 1981 when Banjara 18 ITA nos.954 of 2013 and others, Harishchand Surana & Others, Secunderabad.
Hills has already started developing, there is no such development at Nacharam. He further opined that the registered valuer's opinion is not on the basis of any comparable instances in the same locality but only on the basis of his personal and subjective opinion. Similarly, the CIT (A) also did not approve the value of Rs.10 per sq. yard adopted by the Assessing Officer on the basis of SRO value. The CIT (A) having rejected the value adopted both by the Assessing Officer as well as registered valuer proceeded to estimate the value of land as on 1-4-1981 at Rs.100 per sq. yard.
22. We have heard the parties. On a perusal of the materials on record as well as orders of the Assessing Officer and CIT (A), we are of the view that neither the Assessing Officer nor the CIT (A) have correctly adopted the FMV of the property as on 1-4-1981. While the CIT (A) was correct in rejecting the FMV of Rs.10 per sq. yard adopted by Assessing Officer on the basis of SRO guidelines, but the FMV of Rs.100 per sq. yard as on 1-4-1981 adopted by him is also without any basis. Neither the Assessing Officer nor the CIT (A) conducted necessary enquiry and brought on record comparative instances of sale of land in that locality or nearby area which could have thrown some light on the FMV of the property as on 1-4-1981. When the CIT (A) is rejecting the FMV adopted by the registered valuer for the reason that it is only on the basis of his personal and subjective opinion he could not have committed the same error by estimating the FMV as on 1-4-1981 at Rs.100 per sq. yard which has no basis at all. However, we need to mention here that on perusing the registered valuer's report, a copy of which is at page 25 of the paper book, we find that he has adopted the FMV of Rs.250/- per sq. yard on the basis of few instances of sale of property in Banjara Hills. In our view, FMV of a property at Nacharam cannot be determined on the basis of few instances of sale at Banjara Hills as it is not in the immediate vicinity. Considering the fact that the departmental 19 ITA nos.954 of 2013 and others, Harishchand Surana & Others, Secunderabad.
authorities as well as the assessee have failed to factually establish the FMV of the land as on 1-4-1981, we remit the matter back to the file of the Assessing Officer who shall conduct necessary enquiry to ascertain the FMV of the land as on 1-4-1981. The assessee may also substantiate his claim by bringing comparative instances of sale of property in the same locality or nearby areas. Needless to mention, the Assessing Officer must afford a reasonable opportunity of being heard to the assessee before deciding the issue. Since we are remitting the issue back to the file of the Assessing Officer, it is not necessary to deal with the decisions relied upon by the assessee. However, the assessee is at liberty to cite these decisions before the Assessing Officer who shall consider the applicability of the same while deciding the issue. In view of the above assessee's ground is allowed for statistical purposes and department's ground is dismissed.
23. The issue raised in ground No.4 of the main grounds and ground No.3 ofadditional ground is a common issue relating to assessee's claim of deduction u/s 54F in respect of all the flats allotted to him. Hence, we will deal with it at a later stage while considering the additional grounds raised by the assessee.
24. The assessee has raised three additional grounds. The learned AR contended that the additional grounds do not require investigation into new facts and can be decided on the basis of facts already on record. The addl. grounds are as under:-
1. The ld. CIT (A) failed to note that the flat No.215 admeasuring 2010 sq. ft. was only one flat which was split by the vendee M/s Sainath Estates (P) Ltd., into two sale deeds in order to enable them to claim exemption u/s 80IB(10) of the Income-
tax Act, 19961.
20ITA nos.954 of 2013 and others, Harishchand Surana & Others, Secunderabad.
2. The ld. CIT (A) failed to note that the purchase of flat No.2315 was evidenced by an agreement of sale deed dated 9-6-2008 which clearly shows that the flat No.215 with a built up area of 2010 sq.ft., was only one flat and therefore the exemption as claimed by the appellant at Rs.57,11,200/- must be allowed.
3. The ld. CIT (A) ought to have allowed exemption u/s 54F for all the residential flats acquired by the appellant against sale of factory building and plot."
25. In additional ground Nos. 1 and 2, the assessee has raised the issue of allowing claim of deduction u/s 54F by treating Flat No.215 as one flat. On going through the orders of the revenue authorities, we are of the view that issue raised in these grounds can be decided on the basis of facts already on record. Hence, we admit these grounds and proceed to decide the same.
26. Briefly stated, in the computation of income filed with the return of income, the assessee had claimed deduction u/s 54F of the Act of an amount of Rs.57,11,200/- as investment made in purchase of new house. During the assessment proceeding while examining the sale deeds, the Assessing Officer noticed that assessee has purchased two flats i.e., 215 & 215A from M/s Sainath Estates under two separate registered sale deeds for consideration of Rs.32,55,000/- and Rs.22,28,200/- respectively excluding registration charges of Rs.2,28,000/-. The Assessing Officer was of the view that assessee is eligible to get deduction u/s 54F in respect of only one flat. The assessee explained that both documents represent sale of one residential house and the builder for his convenience of claiming deduction/s 80IB (10) has registered it as two separate units. The Assessing Officer however was not convinced with assessee's explanation and allowed deduction of Rs.33,53,770 u/s 54F by restricting it to one house. In proceeding before the CIT (A), the assessee reiterated the stand taken 21 ITA nos.954 of 2013 and others, Harishchand Surana & Others, Secunderabad.
before Assessing Officer. The CIT (A) held that as the built up areas registered under two separate sale deeds were contiguous and adjacent and were having a common wall, deduction u/s 54F cannot be restricted to one of such residential built up area. He therefore directed to allow exemption in respect of both of them.
27. Having heard the parties and perused the materials on record, we are of the view that the issue raised in these two additional grounds have become purely academic as the CIT (A) has allowed the deduction claimed by the assessee u/s 54F of the Act by directing the Assessing Officer to treat it as one residential house. Therefore, it is totally unnecessary to go into the issue whether it is actually one residential house registered as two units under two separate documents by the builder M/s Sainath Estates for claiming deduction u/s 80IB. That apart, the view of the CIT (A) is not only in tune with the decisions of the Income-tax Appellate Tribunal relied upon by him but also in conformity with the view expressed by different High Courts. Therefore, we do not find any infirmity in the order of the CIT (A) on this issue which is accordingly confirmed.
28. As we have upheld the order of the CIT (A) on this issue ground No.3 of the department is dismissed.
29. In additional ground No.3 and main ground No.4, the assessee has raised the issue of allowability of deduction u/s 54F in respect of all the flats allotted to the assessee.
30. We have heard the parties. It is the contention of the learned AR that out of the 10 flats allotted by the builder 9 flats belong to the assessee, though they are registered in name of different family members. It was contended that as all the flats are in different floors of the same building assessee is eligible for deduction u/s 54F on all the flats. In support of such 22 ITA nos.954 of 2013 and others, Harishchand Surana & Others, Secunderabad.
contention, the learned AR relied upon number of decisions which are as under:
i) Vittal Krishna Conjeevaram vs. ITO (144 ITD 325)
ii) CIT vs. Syed Ali Adil (352 ITR 418(AP)
iv) DLF Commerciasl Projects Corporation and Another vs. ACIT (357 ITR 211 (Delhi)
v) CIT vs. Smt. K.G. Rukminiamma (331 ITR 211 (Karn) On perusal of materials on record, it is to be seen that in the computation of income filed along with the return of income the assessee had claimed deduction u/s 54F amounting to Rs.57,11,200/- in respect of one house.
During the assessment proceeding also assessee never claimed deduction u/s 54F in respect of all flats. Even before the CIT (A) the assessee never raised any issue with regard to deduction u/s 54F in respect of all the flats. Hence, at this belated stage the assessee cannot be permitted to raise this issue before us for the first time. Though we fully agree with the principles decided in the decisions relied upon by the learned AR, but assessee's claim cannot be accepted at this stage. That part, some of the flats admittedly are registered in the name of others and not in the name of assessee. Therefore, it requires investigation into/ consideration of new facts which cannot be done in an additional ground as held by the Hon'ble Supreme Court in case of National Thermal Power Company vs. CIT (229 ITR 383). Therefore we cannot permit the assessee to raise this additional ground. Similarly, ground No.4 of the main grounds cannot be entertained as it does not arise out of the order passed by the CIT (A). As a result, main ground No.4 and additional ground No.3 are dismissed.
23ITA nos.954 of 2013 and others, Harishchand Surana & Others, Secunderabad.
ITA No.955/Hyd/2013 - Nikhil Surana31. Ground No.1 is identical to ground Nos. 1 & 2 decided in case of Harishchand Surana (supra) in ITA No.954/Hyd/2013. Therefore, following our reasoning given there under, we dismiss this ground also.
32. Ground No.2 is identical to ground No.3 of ITA No.954/Hyd/13. Following our decision therein, we remit this issue to the file of Assessing Officer for considering afresh in terms with our direction.
33. Ground No.3 relates to claim of deduction u/s 54F of the Act in respect of all flats. Similar issue has been considered by us while deciding ground No.4 of ITA No.954/Hyd/13. Following our decision therein, we dismiss this ground.
Ground No.4- The issue raised in ground No.4 is relating to addition of an amount of Rs.62,50,000/- being the value of flat Nos.739 and 740 received after 15-3-2009.
34. We have heard the parties. It is the contention of the assessee that these two flats have already been considered at the hands of Sri Harish Chandra Surana. Hence, they cannot be considered again in the hands of assessee. He further submitted that though the assessee has filed a petition u/s 154 of the Act before the Assessing Officer for rectifying the mistake but it still remains unattended. After considering the submissions of the parties, we are of the view that this issue is required to be remitted to the Assessing Officer for verifying the claim of the assessee. If these two flats have already been considered at the hands of Sri Harish Chand Surana, they cannot be considered again at the hands of the assessee This ground is allowed for statistical purposes.
24ITA nos.954 of 2013 and others, Harishchand Surana & Others, Secunderabad.
35. In addition to the above main grounds, the assessee has also raised three additional grounds which are identical to the additional grounds raised in case of the other assessee Sri Harishchand Surana in ITA No.954/Hyd/2013. Following our decision in that case, we dismiss all the additional grounds raised.
ITA No.1102/Hyd/2013 - (departmental appeal):36. The first issue raised in ground Nos. 1 and 2 of the aforesaid cross appeals is with regard to f.m.v of land as on 1-4-1981 adopted by the CIT (A) at Rs.100 per sq. yard.
37. This issue is similar to ground No.2 of the department in ITA No.1087/Hyd/13 in case of Harishchand Surana. In view of our finding while deciding the aforesaid ground of the department, we dismiss the grounds raised by the department in this appeal also.
38. The next issue as raised in ground No.3 is with regard to CIT (A) allowing deduction claimed by the assessee u/s 54F of the Act.
39. Similar issue came up for consideration in the cross appeals relating to Harishchand Surana, following our finding given therein, we uphold the order of the CIT (A) and dismiss the ground raised by the department.
40. To sum up, ITA No.954 and 955/Hyd/2013 of the assessees are partly allowed for statistical purposes and both the appeals of the department being ITA Nos. 1087/Hyd/2013 and 1102/Hyd/13 are dismissed.
Order pronounced in the court on 21-02-2014.
Sd/- Sd/-
(B. RAMAKOTAIAH) (SAKTIJIT DEY)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Hyderabad,
Dated the 21 st February, 2014.
Jmr*
25
ITA nos.954 of 2013 and others,
Harishchand Surana & Others, Secunderabad.
Copy to:-
1) C/o Sekhar & Co., 133/4, R.P. Road, Secunderabad.
2) DCIT, Central Cir-2, Hyderabad.
3) CIT (A)-I Hyderabad.
4) CIT (Central), Hyderabad.
5) The Departmental Representative, I.T.A.T.,
Hyderabad.
26
ITA nos.954 of 2013 and others,
Harishchand Surana & Others, Secunderabad.