TaxTMI 
TaxTMI 
2015 (11) TMI 866
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.... and in law the ld CIT(A) is justified in deleting the addition from sale of Rs. 36,12,659/- holding the assessability of LTCG in respect of four properties sold by the assessee in the hands of HUF." Ground of assessee's appeal ITA No. 862/JP/2012 "1. That the Assessing Officer did not have the valid jurisdiction to make re-assessment U/s 147 as the Service of the notice U/s 148 issued on 31/3/2011 and served on 31/3/2011 itself by way of 'affixture', in spite of presence of the assessee for accepting the notice, was invalid ab-inito. 2. That the ld CIT(A) has erred by confirming the action of the Assessing Officer for not providing the 'Reasons to believe for escapement' either with the notice/assessment order or despite the subsequent written request of assessee and therefore the re-opening proceedings are invalid U/s 147/148. 3. The Assessing Officer did not have the valid jurisdiction to make re-assessment U/s 147 as the formation of the 'Reasons to believe' for escapement/under-assessment of income were improper and defective based on the wrong foundation that assessee had not filed the Income tax return for A.Y. 2004-05, which is against the apparent fact, while it was....
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....are) 19/12/2003 100000 6888625 3394312 6966112 4. In all the cases, notice U/s 148 of the Income Tax Act, 1961 (hereinafter referred as the Act) was issued and detailed questionnaires were also sent by the Assessing Officer. There was no compliance from all the assessees, therefore, order U/s 144 was passed by the Assessing Officer in all the cases. All the cases were scrutinized by the Assessing Officer. In all the cases, notices were issued to the assessees to furnish the details but no compliance was made by them. Therefore, the ld Assessing Officer decided the case U/s 144 of the Act. The ld Assessing Officer observed that in all the cases, details available with the department revealed that all these properties were acquired by all the assessees prior to 01/4/1981 for ascertaining fair market value (in short FMV) of all the properties as on 01/4/1981. The ld Assessing Officer collected information in respect of transfer of immovable properties during the contemporary period in respect of similar properties sold and also to ascertain the FMV based on the value adopted by the registering authority during the period ne....
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....ion or other tangible thing, can be made only by way of registered instrument. 10.3 Sec. 17 of the Indian registration Act provides for compulsory registration of all instruments of gifts or immovable property and other non-testamentary instruments which purport or operate to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, of the value of one hundred rupees and upwards, to or in immovable property. 10.4 Sec. 23 of the Registration Act further provides that except in special circumstances, no document other than a will shall be accepted for registration unless presented for that purpose to the proper office within four months from the date of its execution other than special circumstances as provided U/s 25 thereof. 10.5 The Rajasthan Stamps Duty Act, 1998 requires every instrument to be duly stamped unless it is exempted under that Act. Thus all the instruments which operate to transfer or convey any right in respect of immovable property including instruments or partition, lease, mortgage, power of attorney etc. have to be duly stamped under the Rajasthan Stamp Duly Act. A plane reading o....
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....y, the first four properties of shows cause comes to Rs. 36,12,659/- (Rs. 1,08,1961+Rs. 7,37,875 + Rs. 8,02,627 + Rs. 9,90,196) and in the case of property situated at Hathi Babu Ka Ahata, Kachchi Basti, Jaipur it is Rs. 22,96,208/- (1/3 of Rs. 68,88,625/-). In show cause notice the evaluated value of this property was taken at Rs. 33,94,312/- in advertently instead of Rs. 68,88,625/-. Similarly, in view of the aforesaid discussion, the Fair Market Value of the properties sold, as on 01/04/1981 is taken at Rs. 7,08,076/- and at Rs. 1,69,628/- (1/3 of Rs. 5,08,884/-) respectively. The property situated at Hathi Babu Ka Ahata, Kachchi Basti, Jaipur was sold to Sh. Mohan Joshi by three Co-owners, Smt. Seema Mukherjee and two sons namely Alok Mukherjee and Aroop MUkherjee, therefore assessee's share in this property is 1/3rd. Long term capital gain arising to the assessee's hands is thus computed in the following manner:- Dt. Of registration Description of Property Indexed cost of acquisition Evaluated value taken by the Sub Registrar Long term capital gain 20/06/2003 P.No. 5, Vaibhav Nagar, Jaipur 234435/- Rs. 1081961 Rs. 8,47,526/- 10/07/2003 P.No. 10, Vaibhav Na....
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....made applicable retrospectively on transfer of these properties which took effect prior to 01/04/2003 as per Sec. 53A of TP Act, read with Sec.2(47)(v) of the I.T. Act, 196l . I have carefully perused the order of the AO and the submissions of the AR and consider it necessary to summarize the facts of the case to bring clarity to the issue. The facts of the case are as follows: 1. A suit for partition of immovable properly by metes and bounds was filed by Smt. Seema Mukherjee wife of Shri Avani Kumar Mukherjee father of Shri Aroop Mukherjee and Alok Mukherjee on 18/03/1963 in the court of Senior Civil Judge Jaipur City No.1. The plaintiff submitted that the impartible estate of the defendant was resumed by the Rajasthan Govt. on 01/11/1958 and Shri Avani Kumar Mukherjee was paid in terms of cash and bonds by way of compensation. It was pleaded by Smt. Seema Mukherjee that the rule or primogeniture ceased to be applicable after the resumption proceedings by the Govt. and so the property came under the personal law that is the Mitakshar Hindu Law. Thus it was sought that a partition of this HUF be made by metes and bounds and one fourth share of the property be given to Seema Mukh....
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....mpartible Estates by Bankim C.De at page 46, wherein it is mentioned that 'an estate or tenure which was originally impartible does not necessarily continue to be so and one single change in its nature of tenure, one single instance of non-observance of the custom will destroy it completely'. And also the maxim 'Cessante Causa, cessat effectus' which means when the cause ceases, the effect ceases, Thus the character of the property left with the defendant after the resumption of the State Grant i.e. the impartible estate assumes the character of the ancestral property as if in the hands of a sole surviving coparcener, having all the incidents of coparcenary property). The reliance by the learned advocate for the defendant on the provisions of Sec.27 of the I.T. Act, I96I , is not of any help to him, as firstly the provision relied on is a 'deeming' provision which is generally introduced in an enactment in order to enlarge the meaning of the words and treat a person or thing one which it may or may not be, and such provisions have to be limited in their scope to the statutes in which they occur, and secondly its applicability itself has been limited in its scope to the provisions o....
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....r consideration had become the individual property of Shri Alok Kumar Mukherjee after his intestate death it devolved upon his heirs in their individual capacity. 8. During the course of assessment proceedings the assessee informed the Assessing Officer vide letter dated 19/12/2011 that Shri Avani Kumar Mukherjee died on 13/05/1983 and his wife Smt. Seerna Mukherjee and his two sons namely Alok Mukherjee and Aroop Mukherjee became the owners of this property, accordingly each of them was one third coshares. Therefore, at the time of registering the document these co-owner signed in the capacity of one third share owners of this property. 9. Regarding the applicability of Sec.53A of TP Act, read with Sec,2(47)(v) of I.T. Act, it is observed that the object of section 53A of TPA was to safeguard the interest of the transferee and prevent fraud in cases of transfer when an Agreement to Sale was made but could not be registered. From the Income Tax point of view, cognizance of such transfers was taken by defining the receipts on such transfers as income u/s 2(47)(v) to be taxed as capital gains, to prevent defrauding the Department of due revenue in cases, where capital gains were ea....
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....perty. The courts will not treat such transactions as completed or concluded transfers or as conveyance as they neither convey title nor create any interest in an immovable property. They cannot be recognized as deeds of title, except to the limited extent of section 53A of the TP Act." Thus as clarified by the Hon'ble sc section 53A of TPA grants a limited privilege to the transferee to protect its right in case of unregistered Agreements to Sale. This privilege cannot be abused by the transferor to defraud the Income Tax Department of revenue. Therefore, the submissions of the AR are not acceptable given the facts of the case and the law applicable to these facts. The Agreements to Sale pertaining to A.Y. 1976-77 & 1981-82 cannot be recognized u/s 2(47)(v) of I.T. Act, 1961 since income was not declared, nor conditions u/s 53A of TPA fulfilled in the case of first 4 properties. It is held that the transfer came into effect by the registered sale deeds in A.Y. 2004-05. Since the sale deeds were registered after 01/04/2003 the deeming provisions of section 50C are squarely applicable to this transfer as it came into effect from 01/04/2003. ln view of the above facts of the case....
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.... A.Y. 2004-05 (See Paper Book page No. 31 to 36) 12667/- c) Rajkumar (Nominee of Shiv Ratan, original buyer), 2 Hathi Babu Ka Bagh, Jaipur. Alok Mukherjee (Minor) 01/12/1975 A.Y. 1976-77 (See Paper Book page No. 37 to 39) 14/08/2003 A.Y. 2004-05 (See Paper Book page No. 40 to 45) 6600/- d) Mahaveer Prasad (Nominee of Shihv Ratan, Original buyer), 2, Tahi Babu Ka Bagh, Jaipur Alok Mukherjee (minor) -do- 14/08/2003 A.Y. 2004-05 (See paper book page No. 46 to 51) 8680/- e) Shri Mohan Joshi (erstwhile partner of M/s Mahaveer Hotel, which bought the asset originally), Hathi Babu Ka Ahata, Kachhi Basti, Jaipur. Late Shri Avani Kumar Mukherjee 01/08/1980 A.Y. 1981-82 (See Paper Book page No. 52 to 57) 31/03/2003 A.Y. 2003-04 (See Paper Book Page NO. 58 to 66) 100000/- He further submitted that original buyers appearing in agreements had further transferred these capital assets to new parties in some of the cases and the registration has been done in the name of final buyers. Buyers/their subsequent buyers/legal nominees of these capital assets, had already built houses/commercial establishments on the impugned land plots and were occupying the properties and us....
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....ement on 01/08/1980 Shri Avani Kumar Mukherjee expired before the registration and the registration of property was got done subsequently by the successors as substituted executants i.e. Smt. Seema Mukherjee, Shri Alok KMkherjee and Shri Aroop Mukherjee on 31/3/2003. On the buyer's side, Shri Ramrikh Joshi, one of the two partners also expired and on dissolution of the firm, Shri Mohan Joshi, son of Ramrikh Joshi, became sole owner of the capital asset. Sub-Registrar, Jaipur valued the property land and hotel building for Rs. 68,88,625/- as on 31/3/2003 for the purpose of stamps. The ld Assessing Officer had computed the long term capital gain by taking Rs. 68,88,625/- as sale consideration and Rs. 5,08,884/- as indexed cost of the FMV as on 01/4/1981, working out Rs. 63,79,741/- as long term capital gain. Out of this Rs. 21,26,580/- (1/3rd share) was added to be relating to Shri Alok Mukherjee. The value of subsequent construction of hotel by the buyer after 01/8/1980 to 31/3/2003 has also been wrongly considered by ld A.O. as part of sale consideration of assessee, for the purpose of working out capital gains. 6.3 He further argued that the ld Assessing Officer had relied on the....
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....the provisions of Income Tax law as per Section 45 of the Act, any capital gain is to be computed in the previous year, in which the transfer giving rise to the accrual of the capital gain in question took place. He further relied on the decision in the case of CIT Vs. Vimal Chand Surana (2004) 269 ITR 288, 289 (Raj.) on transfer of agreement to sell and capital gain. He has further drawn our attention on Section 2(47) of the Act and argued that all the transactions are covered U/s 2(47) of the Act. The agreement in 1975 with Sh./Shri Ramesh Jain, Naresh Kumar Purohit, Rajkumar and Mahaveer Prasad and dated 01/08/1980 Mahaveer Hotel through its partner Shri Mohan Joshi were admittedly contracts in writing executed by late Shri Avani Kumar Mukherjee for the consideration and in pursuance of such agreement, the buyers have been placed in possession of the property, therefore, part performance as per Section 53A of the T.P. Act has been satisfied in the present case. Therefore, property as deemed to have been transferred within the meaning of Section 2(47)(v) of the Act. Mere deferring part of the consideration till the registration under the Registration Act, 1908 would not affect th....
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.... of agreement to sell is covered w.e.f. 01/10/2009 by extending the words assessed or assessable. The ld Assessing Officer substituted the consideration at Rs. 36,12,659/- in place of actual consideration of Rs. 40,859/- in the case of Ramesh Jain, Naresh Kumar Purohit, Rajkumar and Mahaveer Prasad and Rs. 68,88,625/- in place of actual consideration of Rs. 100000/- in the case of Mohan Joshi. These agreement were made prior to insertion of section 50C in the statute, therefore, Section 50C is not applicable on these transactions made on agreement to sell, for which he relied on the following decisions: (i) Navneet Thakkar Vs. ITO (2008) 110 ITD 525/(2007) 112 TTJ 76 (Jodh). (ii) M. Siva Parvathi & Ors. Vs. ITO (2010) 7 ITR (Trib) 468 (Visakha). (iii) CIT-1, Coimbatore Vs. R.Sugantha Ravindran 352 ITR 488 (Madras) (iv) Rajshree Bihani Vs. ITO, Ward 36(1), Kolkata (2011) 48 SOT 594/16 Taxmann.com 44 (Kol). The Hon'ble Coordinate Bench had decided that amendment made in Section 50C by inserting work 'assessable' in addition to 'adopted' or 'assessed' w.e.f. 01/10/2009. It is further argued that date of registration in case of Mohan Joshi i.e. property situated at Hathi Babu Ka A....
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....ri Alok Mukherjee in the capacity of guardian as Alok Mukherjee was minor on 09/8/1975. The second party was Shri Ramesh Jain. The total area disclosed in the alleged agreement to sell at 269 sq.yard with consideration of Rs. 12,912/-. The father of the assessee received advance of Rs. 6,456/- i.e. 50% of the sale consideration and remaining amount of Rs. 6456/- was to be paid at the time of registry. It has been mentioned in the sale agreement that minorship would be completed on 11th February, 1977. The attainment of majority would be informed to the second party thereafter immediately the registry of the said property would be made by paying remaining amount otherwise the advance given by the purchaser would be seized and agreement to sell would be treated as cancelled. If the assessee Alok Kumar Mukherjee after attaining the majority refused to sell this land to the second party, the second party has right to refund the advance money and cost of construction of house from the first party. As per item No. 4 of this agreement whatever construction would be pertained to the second party and there will be no additional amount would be paid for construction. The second party has tak....
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.... sell dated 28/8/1975 made with Smt. Kusum Devi whereas she had made agreement to sale on 20/01/1988 with Shri Umeshchand Purohit in the registry made in the name of Naresh Kumar Purohit as purchaser (second party) and claimed in this agreement for registry that his father was made agreement to sale with the second party i.e. Naresh Kumar Purohit. However, on examination of alleged agreement to sell, Smt. Kusum Devi was second party. Thereafter the agreement to sell had made between Smt. Kusum Devi to Umesh Chand Purohit, therefore, there is no connection with the purchaser from the original agreement to sell dated 28/8/1975. The outstanding amount received as per registry deed dated 07th July, 2003 at Rs. 12,667/- whereas outstanding consideration as per original alleged agreement to sell was Rs. 14,480/-. The stamp authority has calculated the stamp value of this property at Rs. 7,37,875/-. 8.2 The third property i.e. plot No. 2, Hathi Babu Ka Bagh, Station Road Jaipur was claimed to be transferred on agreement to sell on 01/12/1975 by Shri Avani Kumar Mukherjee father of the assessee Alok Kumar Mukherjee as a guardian in the name of Shri Shiv Ratan, son of Shri Ram Chandra. The....
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....o sell dated 01/8/1980 by the father of the assessee Shri Avani Kumar Mukherjee on 1st Sept. 1980 to Mahaveer Hotel through its partner Ram Rikh Joshi and Mohan Lal Joshi. The second party was enjoying position as tenant since 1959 on a rent of Rs. 165 per month, which was subsequently increased to Rs. 330 per month w.e.f. 01/1/1980. Shri Avani Kumar Mukherjee has made a agreement to sell for said property including land, building, fixture thereon alongwith marketable title thereof to the party of the second part for a consideration of Rs. 1 lac. Rs. 30,000/- was received as advance towards the said price from the party of the second part on execution of the indenture. In terms and conditions in clause (b) of this agreement it was stated that the party of the first part shall within 12 months from the date of this indenture shall execute and register the sale deed of the said property alongwith marketable title and all necessary rights of ownership in favour of the party of the second part before the Sub-Registrar, Jaipur and shall receive the balance price of Rs. 70,000/- from the party of second part at the time of the execution and registration of the said sale deed before Sub-R....
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....ore, it is a breach of contract. Even area as well as remaining consideration are not matching in the alleged agreement to sell and deed of registry of various dates. Therefore, sale consideration considered by the ld Assessing Officer for the purposes of computation of capital gain as per Section 50C is rightly assessed. Section 50C inserted by the Finance Act, 2000 w.e.f. 01/4/2003, therefore, same is squarely applicable on the transfer made during the financial year 2003-04 relevant to A.Y. 2004-05. The assessee claimed that these properties were covered U/s 2(47)(v) of the Act does not stand to support the assessee's case wherein number of discrepancies were noted above, as such alleged agreement to sale cannot be enforced by the court of law as time and manner prescribed in these alleged agreement to sell has much before and not followed by both the parties expired. The ld Assessing Officer has taken the consideration on the basis of deed U/s 50C, therefore, whatever construction was made on these lands were treated by him as belonged to assessee at the time of transfer as no documentary evidences were submitted by the assessee at the time of assessment that these lands has be....
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....Kumar Mukherjee, son of Shri Satkori Mukherjee whereas singed by 'Athak Kumar Mukherjee'. There is no witness on alleged agreement to sell dated 28/8/1975 to property but no address of the property and transferer written in the agreement as Avani Kumar Mukherjee, son of Shri Satkori Mukherjee whereas singed by 'Athak Kumar Mukherjee'. In both the alleged agreements to sell singed by Athak Kumar Mukherjee. The assessees have not produced any evidence that these transactions have been disclosed by the assessees at the time of alleged agreement to sell in respective years in their respective income tax returns. Accordingly, the assessee's appeal is dismissed and revenue's appeal is allowed. 9. ITA No. 871/JP/2012 A.Y. 2004-05 Late Smt. Seema Mukherjee through L/H Shri Alok Mukherjee & Sh. Aroop Mukherjee Vs. ITO Ward 3(2), Jaipur. This is assessee's appeal filed against the order dated 18/09/2012 passed by the ld CIT(A)-I, Jaipur for A.Y. 2004-05. Respective grounds of appeal are as under:- "1. That the ld. CIT(A) has erred by confirming the action of Assessing Officer who did not have the valid jurisdiction to make re-assessment U/s 147 as notices U/s 148 were not issued and serve....
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....long term capital gain which has not been disclosed by her. Thereafter a detailed questionnaire was issued by the Assessing Officer and after considering the assessee's reply, the long term capital gain of property at Hathi Babu Ka Ahata, Kachhi Basti, Jaipur was assessed at 1/3rd share of assessee at Rs. 21,26,580/- and capital gain on 56, Hathi Babu Ka Bagh, Station Road Jaipur was at Rs. 8,90,437/- which was challenged by the assessee before the ld CIT(A), who had confirmed the addition by holding that reopening U/s 148 is legal and year of assessability is 2004-05, 50C is applicable and Section 2(47) is not applicable in the case of property registered during the F.Y. 2003-04 relevant to assessment year 2004-05. The assessee has challenged before us. Ground No. 1 to 3 which pertains to reopening U/s 148 of the Act and same have not been pressed by the assessee. Thus, the same are dismissed as not pressed. 10.1 Ground No. 4 of the appeal is on transfer U/s 2(47)(v), ground No. 5 is against applicability of Section 50C(1) and ground No. 6 is for year of assessability, for which we have already expressed our view in case of Alok Mukherjee, same findings are applicable here. There....
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....gainst the order dated 11/09/2012 passed by the ld CIT(A)-I, Jaipur for A.Y. 2004-05. Respective grounds of appeal are reproduced as under:- "1. That the Assessing Officer did not have the valid jurisdiction to make re-assessment U/s 147 as the Service of the notice U/s 148 issued on 31/3/2011 and served on 31/3/2011 itself by way of 'affixture', in spite of presence of the assessee for accepting the notice, was invalid ab-inito. 2. That the ld CIT(A) has erred by confirming the action of the Assessing Officer for not providing the 'Reasons to believe for escapement' either with the notice/assessment order or despite the subsequent written request of assessee and therefore the re-opening proceedings are invalid U/s 147/148. 3. That the ld CIT(A) erred by confirming the action of Assessing Officer of assessing 'Capital Gains' in A.Y. 2004-05 by ignoring the basic fact that 'Transfer' of Capital Asset had already completed, in terms of Section 2(47)(v), 2(47)(vi) and explanation 2 to the section 2(47), in the relevant assessment years i.e. 2000-01 itself, when the agreement to sale was executed accompanied with handing over of the physical possession of capital asset and purchaser....
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.... applicable in this case. Therefore, we dismiss the assessee's appeal on this ground. 12.4 Ground No. 5 of the appeal is against upholding the action of Assessing Officer that property is assessable under Chapter 4(iv) of the Act, which is liable to be assessed U/s 11(1a) of the Act. On verification of the assessment order, the assessee has not raised this issue during the course of assessment proceedings, which was also not challenged before the ld CIT(A) as evident from the form NO. 35. Now the assessee raised this issue before the ITAT, which is not a technical issue and can be raised before the ITAT. For ready reference Section 11(1A) is reproduced as under:- 11 (1) subject to the provisions of sections 60 to 63, the following income shall not be included in the total income of the previous year of the person in receipt of the income- (a) income derived from property held under trust wholly for charitable or religious purposes, to the extent to which such income is applied to such purposes in India ; and, where any such income is accumulated or set apart for application to such purposes in India, to the extent to which the income so accumulated or set apart is not in excess....