TaxTMI 
TaxTMI 
2015 (11) TMI 866
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....ether on the facts and in the circumstances of the case 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....
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....aveer Pd. P.No.2, Hathi Babu Bagh, Station Road Jaipur 15/10/2003 8680 990196 981516 Alok Mukherjee (1/2 share) Mohan Joshi Hathi Babu Ka Ahata, Kachi Basti, Jaipur (1/2 Share) 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 Office....
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....s 54 of the said Act as transfer or ownership in exchange for a price paid or promised or partpaid and part-promised. Such transfer, in the case of tangible immovable property of the value of one hundred rupees and upwards, or in the case of a reversion 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. T....
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....and the value adopted by the registering authority for the purpose of stamp duty is taken as the full value of consideration received or accrued as a result of such transfer for the purpose of calculation of capital gain. 11.2 The value adopted by the registering authority, 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 1/3^rd. Long term capital gain arising to the assessee's hands is thus computed in the following m....
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.... as guardian of his minor son Alok Mukherjee in A.Y. 1976-77, and in case of the property transferred to Mohan Joshi in A.Y. 1981 - 82 the transfers came within the ambit of Sec.2(47)(v) of the I.T. Act, 1961. The subsequent registration of the sale deeds of these properties took place in A.Y. 2004-05. As Sec.50C was introduced in this statute with effect from 01/04/2003 it cannot be 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 ....
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.... his heir or heirs according to his personal law, and thus the most important incident of an impartible, estate i.e. the right of devolution by rule of primogeniture on a single heir having gone, the other incident refusing right of partition, which was necessary to maintain the integrity of the estate and save it from fragmentation, automatically dwindles. Reference may be made to the Law of Impartible 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 ....
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....e Hindu Succession Act is that a HUF properly might not come into being on the death of a Hindu male, even if he dies intestate as his separate and self acquired property would devolve upon individual heirs in the prescribed proportion and not on a HUF constituted by his heirs as was the case before the coming into force of this Act. 7 . Since after partition, effected on 31/07/1963, the property under 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....
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..... in state of Haryana & 2011 STPL (web) 879 SC. Wherein it has been observed as follows: "We therefore reiterate that immovable property can be legally and lawfully transferred/conveyed only by a registered deed of conveyance. Transaction of the nature of 'GPA sales' or 'SA/GPA/WILL transfers' do not convey title and do not amount to transfer, nor can they be recognized or valid mode of transfer of immovable property. 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.....
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....ority by buyer Agreement value Rs. a) Ramesh Jain, 5, Hathi Babu Ka Bgh, Jaipur Alok Mukherjee (Minor) 09/08/1975 A.Y. 1976-77 (See Paper Book page No. 13 to 14) 05/05/2003 A.Y. 2004-05 (See Paper Book page No. 15 to 23) 12912/- b) Naresh Kumar PUrohit (Second buyer from original buyer Smt. Kusum Devi) 10, Hathi Babu Ka Bagh, Jaipur. Alok Mukherjee (Minor) 28/05/1975 A.Y. 1976-77 (See Paper Book page No. 24 to 30) 07/07/2003 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 Bo....
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....ns. The ld CIT(A) had held the above properties belonging to Alok Mukherjee (HUF) and accordingly deleted the addition in the hands of individual, while upholding the same in hands of HUF. 6.2 The ld AR further submitted that Mahaveer Hotel, a partnership firm having Late Shri Ramrikh Joshi and his son Shri Mohan Joshi as partners, occupied this property, measuring 488.49 sq.m since 1959 as tenant. Late Shri Avani Kumar Mukherjee sold this property for Rs. 100000/- to Mahaveer Hotel by executing an agreement 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 con....
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.... Alok Mukherjee and Late Shri Avani Kumar Mukherjee might had not disclosed any capital gain in the ITRs of 1976-77 and 1981-82, therefore the transfer would be deemed for A.Y. 2004-05 and capital gain tax would be payable now as the same was not paid earlier. The presumption of the ld CIT(A) is unilateral, therefore, he further relied on the decision of Hon'ble Supreme Court in the case of Suraj Lapms (supra) and justified the transfer in A.Y. 2004-05 in contrast to the definition U/s 2(47). It is contrary to 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 a....
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....e following case laws:- (i) CIT Vs. Hormasji Vaid 250 ITR 542. (ii) CIT Vs. Rajasthan Mirror Mfg. Co. (2002) 125 Taxman 1. (iii) CIT Vs. Vishnu trading & Investment Co. (2003) 128 Taxman 777. 6.5 The ld AR further argued that Section 50C is not applicable in the case of assessee as this section brought in the statute w.e.f. A.Y. 2003-04 is aimed to substitute the valuation assessed by the Sub-Registrar in the case the consideration received by assessee is lesser that such valuation and transfer on the basis 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 ....
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.... the Assessing Officer on the ground that the provisions of Section 2(47)(v) of the Act is applicable on this transfer, Section 50C is not applicable on this transaction and year of assessability is A.Y. 2003-04 and not for A.Y. 2004-05. The assessee made five transactions as mentioned by the Assessing Officer in his assessment order. The first property is plot No. 5, Baibhav Nagar, Hathi Babu Ka Bagh, Station Road Jaipur. The assessee claimed that the transfer took place on 09/08/1975 by Late shri Avani Kumar Mukherjee father of Shri 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 11^th 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 remainin....
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....8,000/- at the time of agreement and it was decided that remaining amount of Rs. 12,480/- would be paid at the time of registry to the original owner i.e. Shri Alok Kumar Mukherjee. Finally the registry of this plot was got on 07^th July, 2003 by Shri Alok Kumar Mukherjee in the capacity of individual in the name of Shri Naresh Kumar Purohit, son of Shri Panna Lal Purohit. There was a reference in this registration deed about the partition order dated 30/05/1963, the minority of the assessee but no reference has been made on agreement to 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 ....
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....v Ratan. The remaining consideration against the alleged agreement to sell dated 01/12/1975 has been shown at Rs. 7640/-whereas on page No. 4 of conveyance remaining consideration has been shown at Rs. 8680/-. The assessee has claimed at the time of deed that he is sole owner of this plot and now as per this deed he transferred this plot to Shri Mahaveer Prasad and handed over the possession on it at the time of registration. 8.4 The property situated at Hathi Babu Ka Ahata, Kachhi Basti, jaipur was alleged to be sold through the agreement to sell dated 01/8/1980 by the father of the assessee Shri Avani Kumar Mukherjee on 1^st 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....
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.... only. As per this deed, remaining amount has been received by the first party at Rs. 50,000/- at the time of registry. 8.6 On the basis of alleged agreement to sell and deed of registration, it is proved that alleged agreement to sell are different. Even alleged agreement to sell is presumed to be genuine as per the terms and conditions, the alleged agreement to sell is not existed on the date of registry. As both the parties have not performed terms and conditions of the alleged agreement to sell in prescribed time and prescribed manner. Therefore, 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 num....
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....head HUF as argued by the ld DR, these properties were sold in the capacity of individual and the assessee had claimed status as individual. No where it has been claimed that these properties were belonged to HUF, therefore, the status of assessability of these four immovable properties referred by the ld CIT(A) is to be held assessable in the capacity of individual not HUF. Further only one witness has been signed on alleged agreement to sell dated 09/8/1975 of property at Hathi Babu Ka Bagh, Jaipur and transferer written in the agreement as Avani 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 a....
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....04-05, as sale deed in question was not registered in the said assessment year. The relevant sale deed i.e. Mohan Joshi was executed, presented and registered before Registration Authority on 31/3/2003 i.e. assessment year 2003-04. Hence the whole proceedings for assessing capital gains is void ab- inito for the sale deed in favour of Mohan Joshi. 10. Regarding transfer of property at 56, Hathi Babu Ka Bagh, Station Road, Jaipur, which was sold on 22/5/2003 at Rs. 8,90,437/-. In this case also, the case was reopened by the Assessing Officer on both the properties 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 1/3^rd 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 applica....
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....is capital gain as individual, therefore, assessability in the hands of individual, we have already decided this issue in the hands of Alok Mukherjee and Late Smt. Seema Mukherjee (Individual) as Shri Aroop Mukherjee has 1/3^rd share in this property. The same findings are applicable here and accordingly, we dismiss the revenue's appeal. It is informed that no appeal has been filed in case of Shri Aroop Mukherjee (Individual) for A.Y. 2004-05. 12. ITA No. 872/JP/2012 for A.Y. 2004-05 Satkori Mukherjee Charitable Trust Vs. ITO, Ward 3(2), Jaipur. This is an assessee's appeal filed against 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/ass....
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....sessment as valid assessment. 12.3 Now the assessee Trust is before us and it has challenged the reopening U/s 148 on ground No. 1 and 2 of the appeal, which have not been pressed by the assessee, therefore, the same are dismissed as not pressed. Ground No. 3 is for challenging for not considering the transfer U/s 2(47)(v)(vi) of the Act and ground No. 4 is application of Section 50C, which has been decided by this Bench in detail in the case of Alok Mukherjee. The facts and circumstances are identical, therefore, our view are same as given in the order of Alok Mukherjee (Individual), which is squarely 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 ....