Income Tax Appellate Tribunal - Chennai
R.Prabhashankar, Coimbatore vs Department Of Income Tax on 18 July, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL
'B' BENCH, CHENNAI
BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER
AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER
I.T.A. No. 634/Mds/2011
(Assessment Year : 2003-04)
Shri J.S. Kamath, The Deputy Commissioner of
118, Ponnurangam Road (West), Income Tax,
R.S. Puram, v. Central Circle III,
Coimbatore - 641 002. Coimbatore.
PAN : AFPPK2802Q
(Appellant) (Respondent)
I.T.A. No. 752/Mds/2011
(Assessment Year : 2003-04)
The Joint Commissioner of Shri R. Prabhashankar,
Income Tax (OSD), 48, Father Rhondy Street,
Central Circle III, Coimbatore. v. R.S. Puram,
Coimbatore - 641 002.
PAN : AFPPK2802J
(Appellant) (Respondent)
I.T.A. No. 753/Mds/2011
(Assessment Year : 2003-04)
The Joint Commissioner of Shri Suresh Kamath,
Income Tax (OSD), No.5, Ponnurangam Road (East),
Central Circle III, Coimbatore. v. R.S. Puram,
Coimbatore - 641 002.
PAN : AFPPK2803R
(Appellant) (Respondent)
2 I.T.A. No. 634/Mds/10
I.T.A. Nos. 752 to 754/Mds/11
I.T.A. No. 797/Mds/11
I.T.A. No. 754/Mds/2011
(Assessment Year : 2003-04)
The Joint Commissioner of Shri R. Jagannathan,
Income Tax (OSD), 39, LIC Colony, R.S. Puram,
Central Circle III, Coimbatore. v. Coimbatore - 641 002.
PAN : AEEPK4030Q
(Appellant) (Respondent)
I.T.A. No. 797/Mds/2011
(Assessment Year : 2003-04)
Mrs. P. Manju (Legal Heir), The Deputy Commissioner of
Late R. Prabhashankar, Income Tax,
48, Father Fhondy Street, v. Central Circle III,
R.S. Puram, Coimbatore.
Coimbatore - 641 002.
PAN : AFPPK2802J
(Appellant) (Respondent)
Assessees by : Shri S. Sridhar, Advocate
Revenue by : Shri Vikramaditya, JCIT
Date of Hearing : 18.07.2012
Date of Pronouncement : 08.08.2012
O R D E R
PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER :
These appeals of which, two are of the assessees and three are of the Revenue. All relate to an assessment of capital gains for certain properties sold at Coimbatore. Since the basic facts giving raise to the 3 I.T.A. No. 634/Mds/10 I.T.A. Nos. 752 to 754/Mds/11 I.T.A. No. 797/Mds/11 assessment in appeals are same, the appeals are disposed by this consolidated order.
2. Facts apropos are that during a search conducted on 26.11.2002, in the premises of one M/s Pavizham Jewellers owned by one Shri C.V. Sunny, a floppy disc was found from which it was ascertained by the Revenue that the said Shri C.V. Sunny had purchased certain properties at Coimbatore from Shri J.S. Kamath, one of assessee here and his brother Shri J.R. Kamath. It seems a consequential search was conducted in the premises of Shri J.S. Kamath on 2.12.2002. In the course of above mentioned searches, it was noted by the Revenue that Shri J.S. Kamath, one of the assessees here along with his brother Shri J.R. Kamath, had sold certain pieces of land to one Shri T. Shantakumar of M/s Kirtilal Kalidas & Co. and certain other persons, including M/s Pavazham Jewellers, as detailed hereunder:-
Sl.No. Name of the buyer Extent Date of Sale Actual of land sale consideration consideration as per Sale As per Deed Revenue ` `
1. T Shantakumar 30.888 10.06.2002 21,621,600 30,888,000 M/s Kirtilal Kalidas & cents of Co., Raja Street, land & Coimbatore building
2. Mrs Pinky Lijo 3.24 06.08.2002 1,982,000 3,402,000 Pavizham Jewellery cents of Group land & building 4 I.T.A. No. 634/Mds/10 I.T.A. Nos. 752 to 754/Mds/11 I.T.A. No. 797/Mds/11
3. Mr. Lijo S Chungath 0.931 06.08.2002 690,000 977,550 Pavizham Jewellery cents of Group land & building
4. Shri C.V. Sunny 3.241 28.10.2002 1,616,685 3,403,050 Pavizham Jewellery cents of Group land & building
5. Mr. Lijo S Chungath 2.32 28.10.2002 1,146,990 2,436,000 Pavizham Jewellery cents of Group land & Total 9.732 cents of land & building TOTAL 40.62 27,057,275 41,106,600 cents (30.888 + 9.732) Thereafter, block assessment proceedings were initiated against Shri J.S. Kamath and such block assessment was completed on 12.12.2006 computing the capital gains arising out of the sale taking the realized consideration as ` 4,11,06,600/-. Fifty percent of the capital gains alone was considered in the hands of Shri J.S. Kamath, since the property as aforementioned was jointly held by him along with his brother Shri J.R. Kamath. Shri J.S. Kamath, thereafter, moved in appeal against the above mentioned block assessment, and in such appeal, he assailed the validity of the block assessment and the computation of long term capital gains made by the Assessing Officer in the block assessment. Since the transactions of sale took place in the previous year in which search was 5 I.T.A. No. 634/Mds/10 I.T.A. Nos. 752 to 754/Mds/11 I.T.A. No. 797/Mds/11 conducted, CIT(Appeals) was of the opinion that income arising out of such transactions had to be determined on the basis of books of accounts. According to the ld. CIT(Appeals), transaction recorded in documents maintained in normal course could not be considered as undisclosed income. As per the ld. CIT(Appeals), the transactions were recorded in a registered sale deed and registration of such sale deed was effected before the date of the search. Therefore, such amounts which were recorded in the registered sale deed could not be considered as part of undisclosed income for the block period. With regard to the computation of the capital gains made by the Assessing Officer, CIT(Appeals) was of the opinion that though assessee had mentioned ` 3,08,88,000/- as payment made to Shri T. Shantakumar for property mentioned at Sl.No.1 of the table above, Shri T. Shantakumar in his statement before the Revenue had affirmed that what was paid by him was only ` 2,16,21,600/- mentioned in the registered deed. Assessee in his statement given during the course of search, had mentioned that a sum of ` 92 lakhs was paid by Shri T. Shantakumar directly to the tenants for vacating the premises and therefore, this was also considered by the Assessing Officer as a part of total consideration of ` 3,08,80,000/-. However, as per CIT(Appeals), none of the tenants had accepted receipt of any amount from Shri T. Shantakumar and according to him, the statement given by the assessee was not good 6 I.T.A. No. 634/Mds/10 I.T.A. Nos. 752 to 754/Mds/11 I.T.A. No. 797/Mds/11 enough to consider ` 92 lakhs as undisclosed income. Effectively, CIT(Appeals) held that ` 2,16,21,600/- mentioned in the registered sale deed for the sale effected to Shri T. Shantakumar could be considered only in the regular assessment for previous year though it fell within the fag end of the block period, and that the sum of ` 92 lakhs alleged to have been paid by Shri T. Shantakumar to the tenants for vacating the premises, could not be considered as undisclosed income at all.
However, he did not accept the argument of the assessee that the assessment itself was not valid. Both assessee and Revenue moved before this Tribunal and this Tribunal dismissed the appeal of the Revenue and accepted the appeal of the assessee holding that block assessment itself was invalid, for want of satisfaction of the requirements specified in Section 158BD of Income-tax Act, 1961 (in short 'the Act').
3. Thereafter, the Assessing Officer, while doing the regular assessment of the assessee Shri J.S. Kamath for previous year ending 31.3.2003 relevant to impugned assessment year, considered the directions of the CIT(Appeals) in the block assessment proceedings, and made an addition for long term capital gains arising out of the above transactions mentioned in the table at para 2 above. In such regular assessment, however, the A.O. considered only the consideration 7 I.T.A. No. 634/Mds/10 I.T.A. Nos. 752 to 754/Mds/11 I.T.A. No. 797/Mds/11 recorded in the registered document for the computation of long term capital gains. Nevertheless, with regard to the fair market value as on 1.4.1981, the A.O. made some additions. Regular assessment was accordingly completed.
4. Assessee moved in appeal before the CIT(Appeals) against the addition made in the regular assessment for the long term capital gains. According to assessee, the A.O. had done such a regular assessment for the impugned assessment year based on the directions of the CIT(Appeals) for the block period which stood quashed by the Tribunal. As per the assessee, such directions were therefore, no more valid. Though various other grounds were also raised by the assessee, it has been clearly mentioned by the CIT(Appeals) in his order that none of such grounds were pressed by the assessee before him. On the legal ground raised by the assessee, ld. CIT(Appeals) was of the opinion that the regular assessment order for the impugned assessment year having been passed taking into account the merits of the case could not be held invalid. According to him, additions made in the regular assessment had nothing to do with block assessment order, which stood quashed by the Tribunal. Directions of the CIT(Appeals) for the block assessment proceedings was not hit by quashing of the block assessment. Ld. CIT(Appeals) also noted that for the impugned assessment year, it was not an assessment by way of the reopening but, only a regular 8 I.T.A. No. 634/Mds/10 I.T.A. Nos. 752 to 754/Mds/11 I.T.A. No. 797/Mds/11 assessment done under Section 143(3) of the Act. He, therefore, held that the A.O. was justified in considering the long term capital gains in the regular assessment.
5. Since the property sold was jointly held by Shri J.S. Kamath, the assessee with Shri J.R. Kamath, and Shri J.R. Kamath expired, Assessing Officer initiated proceedings against the legal heirs of Shri J.R. Kamath also. The legal heirs, namely, Shri R. Prabhasankar, Shri R. Jagannathan and Shri R. Suresh are all parties to these appeals, in addition to Shri J.S. Kamath. Proceedings were initiated against these three persons since they were entitled to one-third of the half-share held by their father Shri J.R. Kamath. In other words, each of these were entitled to one-sixth of the total consideration received on the sale of the property mentioned in the table at para 2 above. Such proceedings were initiated under Section 147 of the Act. These three assessees filed returns on receipt of notices under Section 148 of the Act and claimed long term capital a loss as arising on the sale of the property mentioned in the table at para 2 above. Claim of loss by these three assessees were worked out as under:-
(Amount in Rupees) Gross Sale Consideration received on sale 4,10,06,600 Less: Expenses in connection with transfer. 92,86,400 3,17,20,200 Less: 50% share due to Shri J.S. Kamath 1,59,10,100 1,58,10,100 9 I.T.A. No. 634/Mds/10 I.T.A. Nos. 752 to 754/Mds/11 I.T.A. No. 797/Mds/11 Less: Liabilities settled 64,70,000 Net Sale Consideration 94,40,100 Less: Indexed Cost of Acquisition 1,36,49,073 Long Term Capital Loss 42,08,973 Share of capital loss claimed by each of the three assessees 14,02,991
6. Against the claim of expenses of ` 92,86,400/- in connection with transfer, and ` 64,70,000/- claimed as liabilities of Shri J.R. Kamath, settled by the assessees, Assessing Officer was of the opinion that no evidence whatsoever was produced. According to him, liabilities which pertained to Shri J.R. Kamath were settled by legal heirs using the sale proceeds, and this was only an application of the sale proceeds and not an expense incurred in connection with transfer. Insofar as the claim of ` 92,86,400/- was concerned, A.O. was of the opinion that these amounts which were stated to have been paid by Shri T. Shantakumar, one of the purchasers, to the tenants directly, were denied both by Shri T. Shantakumar as well as the tenants. Therefore, according to him, the claim of expenses of ` 92,86,400/- also could not be allowed. In this view of the matter, he worked out the capital gains of these three assessees as under:-
Gross Sale Consideration as per table at para 2 above. 4,11,06,600 Less: Expenses in connection with transfer claimed at ` 92,86,400 by the assessee not allowed. Nil Less: 50% share due to Shri J.S.Kamath 2,05,53,300 10 I.T.A. No. 634/Mds/10 I.T.A. Nos. 752 to 754/Mds/11 I.T.A. No. 797/Mds/11 Less: Liabilities claimed at ` 64,70,000 by the assessee not allowed. Nil Net sale Consideration 2,05,53,300 Less: Indexed Cost of Acquisition, taken by the A.O. 8,89,530 Long Term Capital Gains 1,96,63,770 Share due to each assessee (1/3) 65,54,590 Indexed Cost of Acquisition claimed by the assessee at ` 1,36,49,073/-
was reduced by the Assessing Officer to ` 8,89,530/- on the basis of a valuation report from the Valuation Department.
7. All the three assessees moved in appeal before CIT(Appeals). Grounds taken before CIT(Appeals) was that assessment for capital gains could not have been made in the regular assessments, but should have been made only in a block assessment as per Section 158BD of the Act. According to the assessees, when incriminating documents belonging to third parties were found during the course of a search, procedure prescribed under Section 158BD had to be followed. Assessing Officer fell in error in making a regular assessment of income, which otherwise would have been part of undisclosed income. Insofar as the disallowance of payment of ` 64,70,000/- claimed as settlement of liabilities of Shri J.R. Kamath was concerned, argument of the assessees was that these liabilities were attached to the property sold and hence, they were bound to pay such amounts. As for the disallowance of ` 92,86,400/- claimed as expenses relating to transfer, 11 I.T.A. No. 634/Mds/10 I.T.A. Nos. 752 to 754/Mds/11 I.T.A. No. 797/Mds/11 argument of the assessee was that if this was considered as part of sale consideration, then it had to be allowed as expense.
8. CIT(Appeals) was not impressed by the legal argument of the three assessees that Assessing Officer could not have made an assessment under Section 147 read with Section 143(3) of the Act for the impugned assessment year. According to him, there was no incriminating documents pertaining to these assessees found during the search of Shri J.S. Kamath. The search in the case of Pavizham Jewellers had only evidenced payment of on-money to Shri J.S. Kamath and others. Just because assessee was one of the parties in a transaction mentioned in a print-out taken from premises of another person during the course of search, it would not be possible to say that proceedings under Section 158BD alone ought have been initiated. Therefore, according to him, Assessing Officer was justified in making an assessment under Section 147 r.w.s. 143(3) of the Act. As far the claim of liabilities paid to M/s Municipal Sowbagya Nidhi Ltd. and M/s Lord Krishna Bank Ltd., CIT(Appeals) noted that there were no evidence furnished by the assessee to show that these liabilities were attached to the subject property. According to him, it was nothing but payments made out of the money received. However, CIT(Appeals) held that the disallowance of ` 92,86,400/- was not called for since, according to him, 12 I.T.A. No. 634/Mds/10 I.T.A. Nos. 752 to 754/Mds/11 I.T.A. No. 797/Mds/11 there was no material to support such disallowance. As per the CIT(Appeals), if the sum of ` 92 lakhs stated by Shri J.S. Kamath to have been paid to Shri T. Shantakumar to the tenants was disbelieved, then the consideration received by the assessee on the sale of the property would go down accordingly. If it was believed, then such payment has to be considered as expenses in connection with the transfer and had to be deducted. Since the registered sale deeds were for ` 2,16,21,600/- and not for ` 3,08,80,000/-, CIT(Appeals) was of the opinion that the consideration on sale had to be taken as the former amount. Thus, he confirmed the order of the Assessing Officer in the case of all these three assessees except for deleting the disallowance of ` 92,86,400/-, while computing the long term capital gains.
9. Now before us, appeals have been filed by the assessee Shri J.S. Kamath and Late R. Prabhasankar represented by his legal heir Mrs. P. Manju. Other appeals are by the Revenue. Out of these appeals, we are taking the appeal of Shri J.S. Kamath first. Grounds taken by Shri J.S. Kamath are a bit different when compared to those in the other appeals. Grievance of the assessee Shri J.S. Kamath is that the CIT(Appeals) sustained the order of assessment relating the technical objections with regard to the proceedings done under Section 143(3) of the Act, despite the block assessment order in assessee's own case 13 I.T.A. No. 634/Mds/10 I.T.A. Nos. 752 to 754/Mds/11 I.T.A. No. 797/Mds/11 being quashed. As per the assessee, the CIT(Appeals) in his order in the appeal against the block assessment had given direction to the Assessing Officer for doing a regular assessment for the impugned assessment year for computing long term capital gains arising out of the sale of property, based on consideration mentioned in registered deeds. Since this order of CIT(Appeals) had been set aside by the Tribunal, the regular assessment done for the impugned assessment year which had its genesis on the directions of the CIT(Appeals), was invalid. Assessee is also aggrieved that CIT(Appeals) considered other grounds raised before him to have been not pressed by the assessee.
10. Before us, learned A.R. strongly assailing the orders of authorities below, submitted that the search was done in the case of the assessee on 2.12.2002 and sale transactions of land were all completed before that date. According to him, therefore, assessment of such amounts, whether under the head "long term capital gains" or any other head, could only be done in the block assessment proceedings. In such block assessment, these amounts were considered by the Assessing Officer for computing long term capital gains. Reliance was placed on the block assessment order placed at paper-book pages 8-18. According to him, CIT(Appeals), on assessee's appeal, had upheld such block assessment order of the A.O., but for the sum of ` 92 lakhs alleged to have been 14 I.T.A. No. 634/Mds/10 I.T.A. Nos. 752 to 754/Mds/11 I.T.A. No. 797/Mds/11 paid by Shri T. Shantakumar to the tenants for vacating the property. Nevertheless, he had directed the Assessing Officer to consider the amounts as mentioned in the registered sale deeds in the regular assessment for the impugned assessment year and not in the block period. However, learned A.R. pointed out that the Tribunal had quashed the block assessment itself on legal grounds. Therefore, according to him, such direction of the CIT(Appeals) had no legs to stand. Assessing Officer could not do a regular assessment for any income found at the time of search and pertaining to the period prior to the date of search in a regular assessment. Therefore, according to him, the regular assessment done for impugned assessment year had to be quashed. In any case, pointing out the statement given by the assessee Shri J.S. Kamath under Section 132(4) of the Act, placed at paper-book pages 4-7, learned A.R. pointed out that Shri J.S. Kamath had himself mentioned as answer to question No.3 that registered amount as per the document, was only ` 2,16,21,600/- and the balance amount out of the total sum of ` 3,08,80,000/- was paid by Shri T. Shantakumar for settling the tenants in getting them evacuated. Therefore, according to him, if at all the amount was to be considered in the regular assessment, then only the amount recorded in the document alone could have been taken, and this was rightly appreciated by the CIT(Appeals).
15 I.T.A. No. 634/Mds/10
I.T.A. Nos. 752 to 754/Mds/11 I.T.A. No. 797/Mds/11
11. Per contra, learned D.R. submitted that just because the assessment under block assessment proceedings stood quashed would not mean that the Assessing Officer was left with no power to proceed with a regular assessment. Especially so, since the date of transfer of the property fell within the previous year in which search itself was conducted and assessee was still to file a return for the relevant previous year. There was nothing in Chapter XIV-B which stipulated that Assessing Officer was deprived of his power to make a regular assessment. Therefore, according to him, the assessment which was done was perfectly valid. On other grounds raised by the assessee, learned D.R. pointed out that no such grounds were pressed by the assessee before the CIT(Appeals) and CIT(Appeals) had recorded a specific finding to this effect in his order.
12. We have perused the orders and heard the rival submissions. There is no doubt that the impugned sale transactions mentioned at table at para 2 above, fell before date of the search, but, nevertheless, were within the previous year relevant to impugned assessment year. Date of search in assessee's case was 2.12.2002 and in the case of M/s Pavizham Jewellers was on 26.11.2002. Last of the sale transaction was completed on 28.10.2002. So, all these events happened within the previous year 1.4.2002 to 31.3.2003. No doubt, there was a block 16 I.T.A. No. 634/Mds/10 I.T.A. Nos. 752 to 754/Mds/11 I.T.A. No. 797/Mds/11 assessment done on the assessee for the period 1.4.96 to 26.11.2002. In such assessment, the undisclosed income arising out of alleged sale of land was indeed considered by the Assessing Officer. In assessee's appeal, CIT(Appeals) held that the values mentioned in registered documents had to be considered only in a regular assessment. At the same time, he deleted the addition of ` 92 lakhs since the buyer as well as tenants had denied any such amounts to have been paid and received. Such block assessment stood quashed by this Tribunal vide its order dated 26th June, 2009. The question before us is whether such quashing of block assessment for the period 1.4.96 to 26.11.2002 will render the Assessing Officer helpless for making a regular assessment for the impugned assessment year, considering the transactions which happened not only during the period 27.11.2002 to 31.3.2003, but also for the period 1.4.2002 to 26.11.2002. Pertinent point which is to be noted here is that what was assessed by the Assessing Officer in the regular assessment was the computation of long term capital gains, based on the documented value. The documented value was ` 2,70,57,275/- which, inter alia, included ` 2,16,21,600/- pertaining to the sale of property to Shri T. Shantakumar. Assessing Officer did not take the sale consideration from the statement given by the assessee during the course of the search, in which he clearly mentioned that consideration was ` 3,08,80,000/-, against registered value of ` 17 I.T.A. No. 634/Mds/10 I.T.A. Nos. 752 to 754/Mds/11 I.T.A. No. 797/Mds/11 2,16,21,600/-. In other words, Assessing Officer in the regular assessment had only considered the amount recorded in the registered deeds for computing long term capital gains. There is nothing in the Income-tax Act which says that pending regular assessment proceedings were to be frozen or to be substituted when an assessment of undisclosed income for a block period was done. Exercise under Section 143(2) and (3) for regular assessment is in contrast to the exercise of a block assessment under Section 158BD read with Section 158BC(b) where an Assessing Officer has to assess only undisclosed income based on evidence found as a result of search. Assessee had, for the impugned assessment year, filed return of income on 30.9.2003. Once assessee had filed such a return of income, Assessing Officer was duty bound to complete the assessment and the Assessing Officer was only doing his statutory duty while completing such assessment.
13. "Previous year" is defined in Section 3 of the Act and accordingly, "previous year" means financial year immediately preceding an assessment year. Only exceptions are for a business or profession newly set up, or where the source of income was newly coming into existence in the said financial year. Section 2(45) of the Act states that "total income" means total amount of income referred to in Section 5. Section 5 stipulates that total income of any previous year of a person 18 I.T.A. No. 634/Mds/10 I.T.A. Nos. 752 to 754/Mds/11 I.T.A. No. 797/Mds/11 who is a resident, shall include income from whatever source derived. The charge of income-tax is on the total income of a person for the previous year relevant to a given assessment year. Thus the previous year in all case but for the exceptions provided under Section 3, will be a financial year. Therefore, Assessing Officer is empowered to consider all income of an assessee for the previous year and only where undisclosed income is detected as a result of search, such amount shall be excluded from such regular assessment. CIT(Appeals) was, in our opinion, correct in taking a view that what was disclosed in the registered sale deeds were nothing but transactions recorded in documents maintained in normal course. When the documents are considered as maintained in normal course, the amounts recorded therein could not be considered as part of undisclosed income. Assessing Officer had, for the computation of long term capital gains in the case of Shri J.S. Kamath, considered only the amount mentioned in the registered deeds. He had not even gone by the admission given by the assessee in his oath statement that the actual consideration was more. We, therefore, cannot find any infirmity in the order of CIT(Appeals) holding that regular assessment for the impugned assessment year was valid.
19 I.T.A. No. 634/Mds/10
I.T.A. Nos. 752 to 754/Mds/11 I.T.A. No. 797/Mds/11
14. Insofar as other grounds raised by the assessee which are on merits, we find that none of these issues were pressed by the assessee before the CIT(Appeals).
15. We are, therefore, of the opinion that there is no merit in the appeal of the assessee Shri J.S. Kamath. Such appeal stands dismissed.
16. Now we take up the appeals of the Revenue in the case of other assessees, who are legal heirs of Shri J.R. Kamath.
17. Learned D.R., strongly assailing the orders of CIT(Appeals) in these three cases, stated that CIT(Appeals) allowed deduction of ` 92,86,400/- while computing the capital gains. According to him, Shri J.S. Kamath had in his admission during the course of search, stated that the total consideration received from Shri T. Shantakumar was ` 3,08,80,000/- and not ` 2,16,21,600/-. Therefore, to allow such sums as expenses, when neither the buyer nor the alleged tenants affirmed, it was not correct.
18. Per contra, learned A.R. supported the orders of CIT(Appeals) in all the three cases.
20 I.T.A. No. 634/Mds/10
I.T.A. Nos. 752 to 754/Mds/11 I.T.A. No. 797/Mds/11
19. We have perused the orders in the case of these assessees and also heard the rival submissions. In all these three cases, assessees had shown gross consideration on sale of land ` 4,10,06,600/- (correct figure ought have been ` 4,11,06,600/- vide statement given by Shri J.S. Kamath - table at para 2 above.) They had computed loss from sale of property as ` 14,02,991/-. Assessing Officer had disallowed the claim of expenses in connection with transfer ` 92,86,400/-. It would be pertinent to reproduce the answer to query No.3 given by Shri J.S. Kamath when he was examined at the time of search:-
"Q.No.3: As answer to Q.No.3 of your statement dated 27.11.02, you had stated that a net sale consideration of ` 10.00 lakhs per cent was received by you from Shri T. Shantakumar of M/s Kirtilal Kalidas & Co. and that T. Shantakumar discharged a liability of ` 84.00 lakhs towards vacating three tenants from the said land as detailed below:-
(1) M/s Rangasamy Chettiar & Co. - ` 16.00 lakhs (2) Coir-on Shop - ` 26.00 lakhs (3) M/s Sree Krishna Sweet House - ` 42.00 lakhs ` 84.00 lakhs Do you confirm the above facts once again now?
Ans: We once again confirm the sale consideration of ` 10.00 lakhs per cent in respect of sale of 30.88 cents to Shri T. Shantakumar. Thereby a total sale consideration for the extent of 30.88 cents was payable by Shri T. Shantakumar which was worked out as 3,08,80,000/-. Out of this, the transaction was registered for ` 2,16,21,600/-. And this was received by me by way of cheques. Apart from this amount of ` 2,16,21,600/-, another sum of ` 42 lakhs was handed over to me for settling the tenants viz. M/s Rangasamy Chettiar & Co. and 21 I.T.A. No. 634/Mds/10 I.T.A. Nos. 752 to 754/Mds/11 I.T.A. No. 797/Mds/11 M/s Coir-on Shop, Pollachi. I along with a confidente of Shri T. Shantakumar went to the respective parties and disbursed ` 16.00 lakhs and ` 26.00 lakhs respectively. In the light of the above facts, I stood myself as a witness to the above disbursements. However, for the balance consideration of ` 50,58,400/- {3,08,80,000 - (2,16,21,600 + 42,00,000)}, I was told by Shri T. Shantakumar that he has disbursed a sum of ` 42,00,000/- to Shri B. Babu of M/s Sree Krishna Sweet House, Coimbatore and the remaining sum of ` 8,58,400/- was said to have been utilized for incidentals in the transaction, the detailed accounts of which were not furnished to me by Shri T. Shantakumar."
It is, however, not disputed that Shri T. Shantakumar had stated that what was received by him was only ` 2,16,21,600/- and nothing whatsoever was paid by him to any tenants. Statement of Shri T. Shantakumar to this effect was also recorded. What the assessee stated was that amount in excess of ` 2,16,21,600/- was paid for settling the tenants for vacating the premises. Thus, if we take ` 3,08,80,000/- as mentioned by Shri J.S. Kamath as the actual sale consideration paid by Shri T. Shantakumar, then of course, the sum of ` 92,86,400/- would have to be considered as expenses relating to incurred wholly in connection with the transfer. If we believe that what Shri T. Shantakumar said was true, then nothing changed hands on the sale of property, but only the sum of ` 2,16,21,600/- mentioned in the registered deed. So, either the sale consideration has to be taken as ` 2,16,21,600/- or if it is taken as ` 3,08,80,000/-, then the claim of payment made for vacating the property would have to be allowed. 22 I.T.A. No. 634/Mds/10
I.T.A. Nos. 752 to 754/Mds/11 I.T.A. No. 797/Mds/11 Assessee's statement given at the time of search could not have been disbelieved in part. Thus, in our opinion, the CIT(Appeals) was justified in giving direction that sum of ` 92 lakhs had to be excluded if the gross sale consideration was taken as ` 4,11,06,600/-. We do not find any reason to interfere with such directions of the CIT(Appeals).
20. Appeals of the Revenue in the case of Shri R. Prabhasankar, Shri Suresh Kamath and Shri R. Jagannathan stand dismissed.
21. Now we are left with a cross appeal by one of the assessees, namely, Shri R. Prabhasankar, who is represented by his legal heir Mrs. P. Manju, for assessment year 2003-04.
22. Grievance of the assessee raised vide ground Nos.2 to 6 is that proceedings ought have been initiated under Section 158BD of the Act and re-assessment done under Section 147 read with Section 143(3) of the Act for impugned assessment year was not valid. We do not find any merits on this issue since the concerned assessee had not filed any return for the concerned impugned assessment year under Section 139 of the Act, but, had filed a return in pursuance of notice under Section 148 issued on 4.7.2007. There being no original assessment, and no return filed by the assessee, in our opinion, Assessing Officer was justified in proceeding under Section 147 of the Act, having found that 23 I.T.A. No. 634/Mds/10 I.T.A. Nos. 752 to 754/Mds/11 I.T.A. No. 797/Mds/11 assessee had not returned the long term capital gains arising out of sale of land in respect of his father Shri J.R. Kamath.
23. As for the claim of the assessee that proceedings ought have been initiated only under Section 158BD of the Act, we have already held at paras 12 and 13 above in the appeal of Shri J.S. Kamath that Assessing Officer was justified in considering the long term capital gains in regular assessment. Especially so, since what was considered was only the value as per the registered sale deed for the computation of capital gains. Sum of ` 92,66,400/- was excluded while computing the capital gains. Here also, the sale consideration would be nothing but what was disclosed in the registered sale deed to Shri T. Shantakumar and Assessing Officer was not deprived of his power to consider such sum in the re-assessment proceeding. Therefore, ground Nos.2 to 6 of the assessee stand dismissed.
24. Ground Nos.7 and 8 are not pressed by the assessee.
25. Vide its ground Nos.9 and 10, grievance of the assessee is that claim of liabilities paid to M/s Municipal Sowbhagya Nidhi Limited and M/s Lord Krishna Bank Ltd., was not allowed.
26. Nothing was brought before us to show that these were pre- existing charges on the property transferred. Assessee has been unable 24 I.T.A. No. 634/Mds/10 I.T.A. Nos. 752 to 754/Mds/11 I.T.A. No. 797/Mds/11 to show that the liabilities to these entities were in any was connected to the property sold by Shri J.R. Kamath. Therefore, we do not find any reason to interfere with the order of CIT(Appeals) in this regard.
27. Ground Nos.9 and 10 stand dismissed.
28. Other grounds raised by the assessee are general needing no adjudication.
29. Appeal of the assessee is dismissed.
30. To summarise the result, all the Revenue's appeals as well as assessees' appeals are dismissed.
The order was pronounced in the Court on Wednesday, the 8th of August, 2012, at Chennai.
sd/- sd/-
(Vikas Awasthy) (Abraham P. George)
Judicial Member Accountant Member
Chennai,
Dated the 8th August, 2012.
Kri.
Copy to: (1) Assessees
(2) Assessing Officer
(3) CIT(A)-II, Coimbatore
(4) CIT, Central-III, Chennai
(5) D.R.
(6) Guard file